COMMISSIONER OF POLICE v BURGESS [2016] NZHC 3096

COMMISSIONER OF POLICE v BURGESS [2016] NZHC 3096 [16 December 2016]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYCIV-2010-404-002893[2016] NZHC 3096BETWEEN COMMISSIONER OF POLICEApplicantAND ROBIN ADRIAN BURGESSFirst RespondentLLANNYS GWEN BURGESSSecond RespondentLOUISE ANNETTE BRINSDENFirst Non-respondentKARL ROBIN BURGESSSecond Non-respondentHearing: (On the papers)Appearances: D Johnstone and A Park for ApplicantS Kilian and F Hawkins for First RespondentF C Deliu and P Finau for Second RespondentA Simperingham and H Vaughn for First and Second Non-RespondentsJudgment: 16 December 2016SUBSTANTIVE COSTS JUDGMENT OF VENNING JThis judgment was delivered by me on 16 December 2016 at 12.15 pm, pursuant to Rule 11.5 of the High Court Rules.Registrar/Deputy RegistrarDateSolicitors: Meredith Connell, AucklandCopy to: Kilian & Associates, AucklandWoodward Chrisp, GisborneF C Deliu & P Finau, AucklandThe result of the substantive hearing[1] In a judgment delivered on 2 November 2016 this Court ruled on the Commissioner's application for an assets forfeiture order and profit forfeiture order.1The Court ordered the forfeiture of a number of assets including a property at Henwood Road and made a finding the Commissioner was entitled to a profit forfeiture order to a maximum value of $2,031,180.00. The maximum recoverable amount is not able to be fixed until the property directed to be forfeited in accordance with the assets forfeiture order has been sold.[2] The Court also granted partial relief to Mrs Burgess in the sum of $372,000.00 and to Mr Karl Burgess in the sum of $42,000.00.The parties' positions as to costs[3] The Commissioner now seeks costs on the substantive hearing and also asks that the Court deal with costs issues from earlier interlocutory applications determined during the course of the proceeding. The Commissioner seeks costs on a 2B basis against Robin Burgess, Mrs Burgess and Ms Brinsden. He submits costs should lie where they fall on the application by Karl Burgess for relief.[4] Robin Burgess opposes costs on the basis that he is legally aided.[5] Mrs Burgess opposes costs and submits she is entitled to costs on a 2B basis on her application for forfeiture.[6] Ms Brinsden submits that no order for costs should be made against her even though she was unsuccessful in her application for relief against forfeiture as she is in receipt of legal aid.[7] Karl Burgess is also in receipt of legal aid but seeks costs on the basis that he was successful in his application for forfeiture.1 Commissioner of Police v Burgess [2016] NZHC 2625.The earlier interlocutory applications[8] There have been a number of interlocutory applications in these proceedings. In a costs judgment dated 25 February 2016 Duffy J ruled that costs on Mrs Burgess'application to vary/discharge the restraining orders heard by both Thomas and Andrews JJ was to be dealt with by one of those Judges.2 Duffy J also noted that Mrs Burgess was in principle entitled to costs on three other applications which Duffy J had dealt with. The Judge directed memoranda to be exchanged. As yet, those costs are yet to be determined. Given the rulings of Duffy J as to how costs on the applications were to be dealt with has not been appealed, I am not able to accede to the Commissioner's request to deal with those earlier applications. This costsjudgment is limited to the substantive proceedings and the issue of costs on an earlier judgment of Asher J3 which was not addressed by Duffy J's orders.Joint and several liability[9] The Commissioner succeeded in his applications for asset and profit forfeiture orders. The applications were directed against Mr Robin Burgess and Mrs Burgess. Prima facie, the Commissioner is entitled to costs against them on those applications. I deal with the issue of costs on the various applications for relief separately. The evidence of Ms Brinsden and Karl Burgess was not restricted to theirapplications for relief but was also made in support of their parents' opposition to theforfeiture orders. As best as I can estimate it, I apply three and a half days of the four and a half days of hearing to the Commissioner's applications, a half day to Mrs Burgess' application for relief and a half day for both Ms Brinsden and Karl Burgess'application for relief.Robin Burgess[10] It is accepted Mr Burgess is in receipt of legal aid. Section 45(2) Legal Services Act 2011 applies. An award can only be made against a legally aided person in exceptional circumstances. Mr Burgess was unsuccessful in his opposition and the Court did not accept his evidence. Nonetheless I do not consider the criteria under s 45(3) are met in this case. While Mr Burgess was unsuccessful in relation to2 Commissioner of Police v Burgess [2015] NZHC 267.3 Commissioner of Police v Burgess HC Auckland CIV-2010-404-2893, 10 May 2011.the main asset, Henwood Road, the Court did release certain items from seizure. Mr Burgess was able to retain certain items such as his pipe and woodworking tools collection. Mr Burgess' defence was conducted responsibly by Mr Kilian.Exceptional circumstances do not exist.[11] However, I make an order under s 45(5) that were it not for s 45 of the Act costs would have been awarded against Mr Burgess on a 2B basis which I calculate at $29,217.50 in accordance with Schedule A together with disbursements as fixed by the Registrar.Ms Brinsden[12] Ms Brinsden was unsuccessful in her application for relief against forfeiture. While the Court did not accept her evidence and criticised her actions after her father was arrested, exceptional circumstances are not made out. Again however, the Commissioner is entitled to an order under s 45(5) that were it not for s 45 of the Act the Court would have awarded costs on a 2B basis against Ms Brinsden in relation to her unsuccessful application for relief against forfeiture. I calculate those at $5,017.50.4Karl Burgess[13] Mr Simperingham seeks an order for costs of $15,833 calculated as 50 per cent of the costs incurred on the basis that counsel represented both Ms Brinsden andKarl Burgess on their applications. Karl Burgess' prescribed repayment amount is$36,805.36. The Commissioner submits costs should lie where they fall on KarlBurgess' application for relief against forfeiture.[14] While Karl Burgess was successful to the extent of recovering $42,000.00 and the Court also directed the return of NZ$6,000 and US$1,000 to him he failed on a number of arguments and heads of claim for relief. He failed on the suggestion made during the course of his evidence that a previous property he had owned was effectively his, and was not able to establish a claim to the property at HenwoodRoad on the basis he had made "mortgage payments". Nor did he succeed in his4 Filing the opposition and affidavits (2 days); appearance of counsel at the hearing ¼ day.claim for some of the materials and workmanship he claimed to have paid for. On balance, and to reflect the measure of his success, I consider a fair result to be that he have costs but that they be two-thirds of the amount sought, after adjustment to reflect the half day spent on his and his sister's application for relief. The result is anaward of $7,582.Mrs Burgess[15] Mr Johnstone submits Mrs Burgess was unsuccessful in opposing the Commissioner's application for forfeiture of Henwood Road noting that the Courtfound Mrs Burgess had unlawfully benefited from significant criminal activity. She was also not successful in her claim that Henwood Road was not tainted property.[16] While Mrs Burgess did succeed in her application for forfeiture to the extent of $372,000 Mr Johnstone noted that the Court had observed the balance fell "just in her favour".[17] For Mrs Burgess Mr Deliu submits Mrs Burgess was not unsuccessful. She was successful in some part because the Court declined to make asset forfeiture orders in relation to certain items, including certain jewellery items. Mr Deliu submits costs on the Commissioner's application should lie where they fall, oralternatively they should be apportioned with costs relating to other parties removed.[18] Mr Deliu submits that Mrs Burgess should be entitled to costs on her application for relief as she succeeded.[19] I propose to deal with the costs on the Commissioner's applications and Mrs Burgess' application separately.[20] First I address the issue of the "without prejudice save as to costs" offers. InMarch 2015 the Commissioner offered to settle on the basis that if the Burgesses agreed Henwood Road and a number of other assets were to be forfeited he would not pursue the profit forfeiture order. That was rejected. During the hearing on 14 July Mr Deliu made an offer of $250,000 in full settlement. The Crown responded with a counteroffer of $2,030,000. Given the outcome of the proceeding, theCommissioner's offer was a reasonable one. However, r 14.11(3) and (4) are notengaged on the facts. In this case the offers and counteroffers have little relevance to the issue of costs.[21] The Commissioner was substantially successful in his application for theassets forfeiture order and in defeating Robin Burgess and Mrs Burgess' oppositionto the order forfeiting the Henwood Road property which was the principal focus of the hearing. While some assets in dispute were not directed to be forfeited, the principal focus of the parties was on Henwood Road. The Commissioner is to have costs on the applications that he was substantially successful in.[22] I calculate the Commissioner's costs on his application at $29,217.50 inaccordance with Schedule A, together with disbursements as fixed by the Registrar.[23] In fixing those costs, I have allowed for second counsel. Mr Deliu submitted second counsel did not lead evidence, cross-examine or address submissions. While that is correct, the volume of material and evidence in this case warranted the assistance of second counsel for the Commissioner. The Commissioner also faced two actively represented respondents and two further parties seeking relief (albeit represented by the same counsel).Mrs Burgess' application for relief[24] Mrs Burgess succeeded in part and to a limited extent on her application for relief. At [106] of the judgment the Court noted:5 I accept Mrs Burgess should have some relief from forfeiture in relationto her interest in Henwood Road. However the relief should be limited. Mrs Burgess should not benefit from the maintenance and improvements to the property which were from the sale of stolen gold, and nor should she benefit from the inflationary increase in the value of the property, given that the property was sustained in part by the proceeds of criminal activity. In my assessment, a fair result is to grant relief to Mrs Burgess for half of the untainted contribution to the property but based on the 2007 valuation of $1.2 million and after deducting the borrowing. Most of the improvementsfunded by Mr Burgess' illegal activity were carried out after that time. That leads to a figure for relief of approximately $372,000.5 Commissioner of Police v Burgess, above n 1.Given the measure of success Mrs Burgess had, which was not entire, I consider a fair outcome is to award her two-thirds of the costs sought on her application for relief, noting that her application for relief effectively occupied one half day of the hearing. The result is a costs award of $9,492.00 as set out in Schedule B plus disbursements as fixed by the Registrar. I do not allow for second counsel in her case. Mr Deliu did not have to deal with the breadth of issues that the Commissioner's counsel had to respond to.[25] In accordance with r 14.7 those costs are to be set off against the costs payable to the Commissioner. The net result is that the Commissioner is to have a costs order against Mrs Burgess in the sum of $19,725.50 together with disbursements as fixed by the Registrar in each case (which also should be netted off against each other but not apportioned).Costs on the 2011 decision of Asher J[26] Mrs Burgess also seeks costs against the Commissioner in relation to the Commissioner's application for an examination order dated 2 March 2011 against Mrand Mrs Burgess. Costs are sought on a 2B basis totalling $3,476.50.[27] The application for an examination order became somewhat complicated. Initially Asher J indicated he would adjourn the application pending the determination of the criminal proceedings against Mr and Mrs Burgess. In order to facilitate an appeal the Commissioner invited Asher J to formally dismiss the application. The Judge did so.[28] However by the time the matter came before the Court of Appeal the Commissioner had concluded there was no jurisdiction for the appeal as the application for the order for examination was in the nature of a criminal proceeding. Ultimately the Court of Appeal concluded that the better view was that applications for examination orders are criminal proceedings and that s 66 of the Judicature Act 1908 was not applicable in relation to decisions to grant or refuse examination orders made by High Court Judges. There was no jurisdiction to hear the appeal.[29] The first issue is whether there is jurisdiction to award costs given that the application for an order for examination was regarded as a criminal proceeding. I note at this stage the Court of Appeal awarded costs in that Court noting that"surprisingly" the particular provisions of the Court of Appeal (Civil) Rules 2005applied.6 At the same time the Court confirmed that the Costs in Criminal Cases Act 1967 did not apply.[30] The Commissioner submits there is no jurisdiction to make an order. If thereis, in any event, Mrs Burgess did not "succeed" with her opposition to theapplication, given the way the matter developed and given that a subsequent application for examination order was granted with no costs being sought or made.[31] I consider that jurisdiction exists to make an order for costs. High Court Rule 14.1 provides:14.1 Costs at discretion of court(1) All matters are at the discretion of the court if they relate to costs—(a) of a proceeding; or(b) incidental to a proceeding; or(c) of a step in a proceeding.(2) Rules 14.2 to 14.10 are subject to subclause (1).(3) The provisions of any Act override subclauses (1) and (2).[32] A proceeding is defined as an application to the Court for the exercise of its civil jurisdiction and the costs in issue are sought in relation to an examination order which the Court of Appeal confirmed was a criminal proceeding. Neverthelesstaking a purposive approach to the interpretation of r 14 I consider r 14.1(1)(b)applies. The costs incurred were incurred on the application for an order forexamination which was itself incidental to a proceeding, namely the application forforfeiture.[33] However even accepting there is jurisdiction for an award of costs, I declineto make an order for costs in Mrs Burgess' favour on this issue.6 Commissioner of Police v Burgess [2013] NZCA 317.[34] The application was properly brought, albeit that it was initially adjourned by Asher J. Of note the Court of Appeal went on to confirm that if they had jurisdictionthey would have allowed the appeal against the Judge's dismissal of the application but upheld the Judge's original decision to adjourn the application until after the criminal trial. It is clear that ultimately the order sought would have been made. And as noted, an order was subsequently made. Costs are to lie where they fall on that application.Result/orders[35] The result/orders are as follows:(a) Were it not for s 45 of the Legal Services Act costs of $29,217.50 would have been awarded against Mr Burgess in favour of the Commissioner.(b) Were it not for s 45 of the Legal Services Act costs of $5,017.50 would have been awarded against Ms Brinsden in favour of the Commissioner.(c) Karl Burgess is to have costs of $7,582 from the Commissioner (together with disbursements).(d) Mrs Burgess is to pay the Commissioner net costs of $19,725.50, together with disbursements as fixed by the Registrar (netted off).(e) Costs are to lie where they fall on the application determined by Asher J in 2011.(f) All other issues of costs are to be referred back to Duffy J to be dealt with in accordance with her judgment of 25 February 2016.__________________________ Venning JSCHEDULE AItem Description Allocation(schedule 3)AmountrecoverableSteps pre-1 July 2015 ($1,990 per day)37 Filing application (dated 8 May 2015) and supportingaffidavits2.010 Preparation for first case management conference 0.411 Memorandum at first mention (dated 20 May 2015) 0.412 Appearance at mentions hearing on 21 May 2015 0.229 Sealing orders (restraining orders dated 21 May 2015) 0.2Sub-total: 3.2 $6,360.00Steps post-1 July 2015 ($2,230 per day)13 Appearance at case management conference on 28October 2015 (Heath J)0.311 Memorandum in advance of pre-trial conference (dated 13May 2016)0.429 Sealing orders (restraining extending restraining ordersdated 19 May 2016)0.215 Preparation for an appearance at pre-trial conference on19 May 2016 (Lang J)0.511 Memorandum seeking telephone conference (dated 14June 2016)0.411 Memorandum in advance of telephone conference (dated21 June 2016)0.413 Appearance at teleconference on 23 June 2016 (Lang J) 0.340 Preparation of written submissions 1.541 Preparation of bundle for hearing 0.642 Appearance at civil forfeiture hearing from 11 to 15 July2016 (principal counsel) (3½ days allowed)3.543 2016 (second counsel) 1.7529 Sealing orders (orders extending restraining orders dated15 July 20160.229 Assets forfeiture orders (dated 2 November 2016) 0.2Sub-total 10.25 $22,857.50Total 2B costs $29,217.50SCHEDULE BItem Date Step Time Cost37 Application for relief dated10 June 2015Filing application andsupporting affidavits2.0 $3,980 (as per$1,990 daily rate)40 Synopsis of submissionsdated 10 July 2016Preparation of writtensubmissions1.5 $3,345 (as per$2,230 daily rate)42 Appearance beforeVenning J for trial on 11 to15 July 2016Appearance at hearing ofdefended application forprincipal counsel0.5 $1,115 (as per$2,230 daily rate)29 At a future date when costorder is madeSealing order or judgment 0.2 $446 (as per$2,230 daily rate)11 Case managementmemorandum dated 17May 2016Filing memorandum forfirst or subsequent casemanagement conference0.4 $892 (as per$2,230 daily rate)13 Appearance at pre-trialteleconference beforeLang J on 19 May 2016Appearance at first orsubsequent casemanagement conference0.3 $669 (as per$2,230 daily rate)15 Preparation for anappearance at pre-trialconference on 19 May 2016before Lang JPreparation for andappearance at pre-trialconference0.5 $1,115 (as per$2,230 daily rate)11 Case managementmemorandum dated 21June 2016 forteleconference with Lang Jon 23 June 2016Filing memorandum forfirst or subsequent casemanagement conference0.4 $892 (as per$2,230 daily rate)13 Appearance atteleconference beforeLang J on 23 June 2016Appearance at first orsubsequent casemanagement conference0.3 $669 (as per$2,230 daily rate)15 Preparation for anappearance at pre-trialconference on 23 June 2016before Lang JPreparation for andappearance at pre-trialconference0.5 $1,115 (as per$2,230 recoveryrate)TOTAL: $14,238.00Two thirds of $14,238 = $9,492.00.