SANDILANDS v NEW ZEALAND LAW SOCIETY [2021] NZHC 713

SANDILANDS v NEW ZEALAND LAW SOCIETY [2021] NZHC 713 [1 April 2021]IN THE HIGH COURT OF NEW ZEALANDWELLINGTON REGISTRYI TE KŌTI MATUA O AOTEAROATE WHANGANUI-A-TARA ROHECIV-2020-485-707[2021] NZHC 713UNDER the Judicial Procedure Act 2016BETWEEN DUNCAN NIMMO SANDILANDSPlaintiffAND NEW ZEALAND LAW SOCIETYRespondentOn the PapersAppearances: Applicant in personP N Collins for RespondentJudgment: 1 April 2021JUDGMENT OF ISAC JIntroduction[1] The New Zealand Law Society (NZLS) has applied for orders directingMr Sandilands to pay security for costs and staying this proceeding pending payment.The application is made under r 5.45 of the High Court Rules 2016 on the ground thatMr Sandilands is resident out of New Zealand.[2] The central question for this Court is whether it should exercise its discretionto order security.The judicial review[3] Mr Sandilands has applied for judicial review, it appears in relation to twodecisions of the Wellington Standards Committee (the Committee) made in 2019 and2021. The decisions involved a complaint by Mr Sandilands about a lawyer,Ms Smith. The Committee decided to take no further action on both occasions.Background[4] It is necessary to give a brief overview of the background to the judicial reviewproceeding. Many of the facts underlying this dispute are contested, but I think thereare some points of commonality.[5] Mr Sandilands' father (Mr Sandilands Snr) died in June 2012. He had fourchildren. Mr Sandilands and his brother, Mr Erskine Sandilands, were appointed asthe executors of the estate.[6] Mr Sandilands Snr left his residual estate to his four children but in unequalshares. The unequal distribution of the estate was seen as unfair amongst the fourchildren. A solicitor, Ms Signal, was therefore instructed by the executors to preparea deed of family arrangement varying the terms of Mr Sandilands Snr's will to providefor the equal distribution of the estate.[7] Mr Sandilands understood that another of his brothers, Mr MalcolmSandilands, had received money from his parents over the years. Mr Sandilandswanted the details of these payments before the deed of family arrangement wasfinalised and the estate distributed. Ms Signal was instructed to communicate withMalcolm Sandilands about these payments.[8] On 14 February 2013 Ms Signal received an email from Malcolm Sandilandsin which he disclosed details of the payments he had received. Erskine Sandilands,the other executor, apparently asked Ms Signal not to pass this information on toMr Sandilands, his co-executor.[9] Despite this, Ms Signal passed the information on to Mr Sandilands' personalsolicitor, Ms Smith, in an email dated 20 February 2013. It seems this was an error onMs Signal's part, given Erskine Sandilands' previous request.[10] As a result, Ms Signal subsequently phoned Ms Smith explaining that she hadsent the email by mistake, indicating she did not have the authority of the otherexecutor to disclose it. Ms Smith complied with that request and appears to havedeleted the email.[11] On 12 March 2013 Ms Signal wrote to Erskine Sandilands recommending theinformation should be provided to Mr Sandilands. Erskine Sandilands eventuallyaccepted that advice. Ms Signal then sent a letter to Ms Smith on 26 March 2013,once again disclosing the information. The information was then made available toMr Sandilands on 27 March 2013.[12] Mr Sandilands' core complaint was that two documents – the 14 Februaryemail from Malcolm Sandilands and the 20 February letter from Ms Signal toMs Smith – were withheld from him by Ms Smith in breach of her professional duties.It appears Mr Sandilands' position may be that he signed the deed of familyarrangement at a time when he was unaware of relevant information, and thatinformation may have affected his decision to enter into it.1Procedural historyThe Committee's 2018 decision[13] Mr Sandilands alleged that Ms Smith and/or a Mr Barrett (a principal of therelevant firm) entered into an agreement with Ms Signal to withhold documents.[14] Focusing on r 7.4 of the Conduct and Client Care Rules 2008, the Committeeconcluded that this was not a situation where a lawyer had actively agreed to withholdinformation from their client. The Committee accepted Mr Barrett's explanation thatMs Signal had telephoned Ms Smith to advise that an email had been sent to her inerror, and that Ms Smith had then deleted the email.21 This is by no means a clear inference from Mr Sandilands' pleadings and evidence.2 Notice of Decision by Wellington Standards Committee 1 No. 16976 & 16977 1 [2018 decision],at [15].[15] The Committee was satisfied that there was no evidence to support theallegations made by Mr Sandilands. The Committee considered that Ms Smith andMr Barrett had not breached any rule that would justify disciplinary action andconsequently decided pursuant to s 138(2) of the Lawyers and Conveyancers Act 2006to take no further action.[16] It is unclear on the material before me why the Committee did not addressMr Sandilands' complaint under r 7, which provides:A lawyer must promptly disclose to a client all information that the lawyer hasor acquires that is relevant to the matter in respect of which the lawyer isengaged by the client.(Emphasis added)[17] The footnote to r 7 states:See McKaskell v Benseman [1989] 3 NZLR 75 in which Jeffries J at 87said, "The fiduciary must, in dealing with those to whom he owes such anobligation, reveal fully all circumstances that might affect their affairs, and isthus under a duty of disclosure not imposed on others. For whatever reasons,and notwithstanding the perceived detrimental consequences to the plaintiffs,the solicitors still were obliged to disclose to them the letter no matter whatthe consequences."[18] Be that as it may, on Mr Sandilands' current pleading it does not appear that hetakes issue with the 2018 Committee decision.The Committee's 2019 decision[19] Following the 2018 decision, Mr Sandilands issued proceedings againstMs Signal in the High Court. During the course of these proceedings, AlistairDarroch, counsel for Ms Smith, stated that:It is accepted that Ms Signal asked Ms [Smith] not to forward an email sent toher onto Mr Sandilands.[20] Against this background, Mr Sandilands made a new complaint againstMs Smith. He said that the statement made by Mr Darroch above conflicted with theexplanation provided by Ms Smith to the Committee during the course of the previouscomplaint. He said that this, along with the email itself, amounted to "fresh evidence"which required the Committee to reconsider the decision made in the previouscomplaint. Specifically, Mr Sandilands said that that Mr Darroch's statement that "MsSignal asked Ms [Smith] not to forward an email" to Mr Sandilands was inconsistentwith Ms Smith's statement that she had been telephoned by Ms Signal and asked todelete an email which was sent in error.3[21] The Committee noted that Mr Sandilands' complaint essentially sought torelitigate the issues raised in the previous complaint, and that it is well established thatstandards committees do not have jurisdiction to reconsider complaints about conducton which a decision has already been made, and that committees may resolve to takeno further action on repeat complaints.4[22] Nonetheless, the Committee, having reviewed all of the material provided bythe parties, was of the view that there was nothing in the fresh evidence which wouldalter the conclusions reached by it in the previous complaint.5 It said:6The Standards Committee considered that there was no inconsistency betweenthe statements made by Ms Smith and Ms Signal regarding the email. Therecollections of both practitioners were entirely consistent with Ms Signalasking Ms Smith, in good faith, to hold back an email which Ms Signal hadsent in error. As there was no record of the conversation between Ms Signaland Ms Smith, the Standards Committee could not conclude exactly whatMs Signal had asked of Ms Smith. However, the Standards Committee notedthat the email was deleted by Ms Smith, which was consistent with herposition on the matter[23] The Committee decided to take no further action, pursuant to s 138 of theLawyers and Conveyancers Act, as no further action was necessary or appropriate. 7The Committee's 2021 decision[24] During Mr Sandilands' ongoing High Court proceedings against Ms Signal,counsel for Ms Signal submitted that:83 Notice of Decision by Wellington Standards Committee 1 No.18199 [2019 decision], at [14].4 At [12].5 At [16].6 At [17].7 At [25].8 Notice of Decision by Wellington Standards Committee 1 No. 21103 [2021 decision], at [4].On 14 February 2013, Ms Signal received an email from Mr MalcolmSandilands [Mr Sandilands' brother]. This contained further informationabout the way his parents had provided funds to him in Australia. It alsoreferred to concerns about Mr Sandilands. Ms Signal prepared and sent anemail to Mr Sandilands' then lawyer with this information. However, she thenrequested that it was not passed on to Mr Sandilands because Mr ErskineSandilands did not want it to be shared with him. This was agreed by thelawyer then acting for Mr Sandilands.[25] Mr Sandilands once again argued that this statement from Ms Signal's counselconstituted new evidence that Ms Smith conspired to withhold material from him.[26] The Committee reviewed the material provided by Mr Sandilands in thecomplaint. It noted that it had previously addressed Mr Sandilands' concernsregarding Ms Smith's conduct by not referring the email on to Mr Sandilands and hadfound that Ms Smith had been notified by Ms Signal that the email was sent in errorand had been asked to delete it. The Committee was not satisfied that there wasanything in the submission by counsel for Ms Signal which could amount to newevidence that, by complying with Ms Signal's request to delete the email, Ms Smithhad entered into any conspiracy to withhold information from Mr Sandilands.[27] The Committee concluded Mr Sandilands had not provided new evidencewarranting reconsideration of its 2018 decision.[28] The Committee decided to take no further action, pursuant to ss 137(1)(c) and138(2) of the Lawyers and Conveyancers Act.9Discussion[29] Rule 5.45 of the High Court Rules 2016 provides jurisdiction for an order forsecurity for costs.[30] The decision to order security for costs requires the Court to balance twocompeting – and often irreconcilable – interests. On the one hand, Mr Sandilands hasa right of access to the court and to present his case. Mr Sandilands' right musthowever be balanced against the NZLS' right not to be unreasonably exposed to an9 At [11].unreasonable costs risk. The balancing of the interests of the parties is the overridingconsideration.10[31] Another consideration in this case is that the substantive proceeding is anapplication for judicial review. The right to justice is affirmed by s 27 of the NewZealand Bill of Rights Act 1990. Section 27 includes the right to the observance ofthe principles of natural justice and the right to apply, in accordance with law, forjudicial review.[32] The general approach to applications for security for costs was summarised inBusch v Zion Wildlife Gardens Ltd (in rec and in liq) as follows:11(a) Has the applicant satisfied the court of the threshold under r 5.45(1)?(b) How should the court exercise its discretion under r 5.45(2)?(c) What amount should security for costs be fixed at?(d) Should a stay be ordered?[33] I now turn to consider each of these questions in turn.Has the applicant satisfied the Court of the threshold under r 5.45(1)?[34] The threshold in r 5.45(1) will be met if either:(a) the plaintiff is resident out of New Zealand; or(b) there is reason to believe that the plaintiff will be unable to pay costs ifunsuccessful.[35] There is no dispute that Mr Sandilands lives in Australia. The threshold inr 5.45(1) is therefore met.10 Highgate on Broadway Limited v Devine [2012] NZHC 2288, [2013] NZCAR 1017 at [24](c).11 Busch v Zion Wildlife Gardens Ltd (in rec and in liq) [2012] NZHC 17 at [2].How should the Court exercise its discretion under r 5.45(2)?[36] Rule 5.45(2) provides that a Judge may order the giving of security if it is "justin all the circumstances". This language reflects the discretionary nature of the powerto grant security for costs.12[37] Although the discretion is a broad one sometimes security will be required evenif to do so would prevent a plaintiff from pursing a claim.13 Applications for securitycall for careful consideration and judges are slow to make an order for security whichwill stifle a claim.14Merits[38] In my view the merits of the case is the most significant factor informing theCourt's discretion.[39] I think it is relevant to note at this point that Mr Sandilands has opted – eitherintentionally or not – to apply for judicial review rather than appeal the Committee'sdecisions under ss 193 and 194 of the Lawyers and Conveyancers Act. Of course, itis Mr Sandilands' prerogative as to how he runs his case. But I do wonder if judicialreview was the appropriate avenue given there remained open to him a statutoryprocess to examine the Committee's decision by an independent officer.[40] At the end of the Committee's decisions, it says:Right to apply for review – Legal Complaints Review Officer (LCRO)22. If you have received this Notice, you may have a right to apply for a reviewof this decision by the LCRO. On review, the LCRO may:a. Direct the Standards Committee to reconsider the whole or any partof the complaint;b. Confirm, modify or reverse the decision of the StandardsCommittee; and/orc. Exercise any of the powers that could have been exercised by theStandards Committee in relation to this complaint.12 McLachlan v MEL Network Ltd [2002] 16 PRNZ 747 (CA).13 Lee v Lee [2019] NZCA 345 at [20].14 Reekie v Attorney-General [2014] NZSC 63, [2014] 1 NZLR 737 at [3].[41] And at the end of the 2019 decision, the Committee noted:15although Mr Sandilands had made his complaint out of a genuine concernthat the decision made by the Standards Committee in the previous complaintwas incorrect, it was not appropriate for Mr Sandilands to make repeatedcomplaints regarding the conduct of the same practitioners. If Mr Sandilandsis dissatisfied with a decision made by a Standards Committee, the correctprocedure is to apply for a review by the Legal Complaints Review Officer.Details of how to make a review application are set out below.[42] A court is only required to form an impression of the merits rather than give adefinite indication of the ultimate outcome after trial.16 Of course, the moremeritorious the claim the more the scales tend to favour the plaintiff's interest in beingable to pursue it, and the more meritorious the defence the more scales tend to favourthe defendant's entitlement to a degree of protection.17 But an application for securityfor costs should not generally become an opportunity to explore the merits in anydepth.18[43] Mr Sandilands is reviewing two decisions of the Committee. As a lay litigantit is of course understandable that Mr Sandilands has not strictly identified – in ajudicial review sense – the reviewable error(s) made by the Committee. Even with agenerous approach and of course keeping in mind Mr Sandilands is not a lawyer, it isnonetheless difficult to pin down just what Mr Sandilands' application for judicialreview involves.[44] He questions how a self-regulatory body such as the Committee can be seen as"100% independent". He equally takes issue with how he, a "common man", had torepresent himself at the Committee while Ms Smith was able to call on the expertiseof a senior barrister. Mr Sandilands says this is hardly a "level playing field."[45] Mr Sandilands highlights issues with the decision-making processes of theCommittee, specifically the Committee's view that it was not its role to require personsto provide affidavits during the course of the complaint process. Instead,Mr Sandilands says the Committee had to "just accept what Ms Smith was saying was15 2019 decision, above n 3, at [26].16 Mclachlan Ltd v MEL Network Ltd, above n 12, at [21].17 Sandilands v Signal [2020] NZHC 2354 at [25].18 Lee v Lee, above n 13, at [73].true and correct" which he labels as "farcical". And, Mr Sandilands says theCommittee failed to disclose certain documentation to him surrounding Ms Smith'sevidence that the email was deleted.[46] Some of these complaints may go to the procedural fairness of the decisions ornatural justice concerns, but the link is not a strong one.[47] More fundamentally though, it appears Mr Sandilands takes issue with thefactual findings of the Committee, especially around the 20 February email sent toMs Smith by Ms Signal. He says Ms Smith and Ms Signal colluded to withholdinformation from him and denies Ms Smith's account that she deleted the email. Ofcourse, it is not for courts in an application for judicial review to assess whether thedecision was right or wrong in a substantive sense, but whether the decision-makingprocess was lawful. Mr Sandilands must identify an error of law, a failure to haveregard to a relevant consideration (or regarding an irrelevant consideration) or a defectin procedure.[48] To the extent that Mr Sandilands attempts to challenge the substance of thedecision and the Committee's findings, the merits of his application appear to berelatively weak.[49] Had Mr Sandilands identified a ground of review that more clearly engagedthe Court's review jurisdiction, such as an error of law by the Committee inconsidering his complaint under r 7.4 of the Rules of Conduct and Client Care ratherthan r 7, my assessment of the merits of his claim might have been different.[50] I am reinforced in the impression that the merits of the claim as currentlyframed are weak given Mr Sandilands had a right of appeal to the Legal ReviewComplaints Officer but chose not to exhaust that right before applying for judicialreview. That must go to the question of whether he would be entitled to relief, even ifhe was able to point to an error of process before the Committee.Relationship with Judicial Review Procedure Act 2016[51] In Mallon J's minute of 1 February 2021, her Honour said:19I note that the application relies on Rule 5.45 of the High Court Rules. Therespondent (the NZLS)'s submissions should address the applicability of thisrule in light of [section] 14 of the Judicial Review Procedure Act.[52] Mallon J was in essence inviting counsel to discuss the relationship betweens 14 of the Judicial Review Procedure Act and r 5.45 of the High Court Rules.[53] Counsel for the NZLS have referred to several cases involving applications forsecurity in judicial review decisions, including Prescott v Thompson and DistrictCourt at Auckland.20 In that case, Palmer J declined the application for security basedon the importance of the right to access to justice and giving the plaintiff his day incourt.21 This may indicate that in judicial review proceedings – concerning as they doexercises of public power – courts are more alive to access to justice concerns, andmay be more readily inclined to decline orders for security in finely balanced cases.[54] However, if an application for judicial review appears unmeritorious or hasbeen brought for ulterior purposes,22 the courts do not seem to have treated the judicialreview context as warranting a different approach to security.23[55] At its height, Mr Sandilands' case concerns the processes of the Committeeand whether its powers were exercised correctly. Alternatively, Mr Sandilands' casecould be viewed as a private citizen simply disputing an unfavourable outcome.[56] I view the fact the proceeding is an application for judicial review as a neutralfactor.19 Sandilands v New Zealand Law Society HC Wellington CIV 2020-485-707, 1 February 2021 at[5].20 Prescott v Thompson and District Court at Auckland [2019] NZHC 3028; Sax v Campbell and theDistrict Court at Tauranga [2020] NZHC 1297 (security of $10,000); Cooke v ValuersRegistration Board [2015] NZHC 2815 (security of $18,000); Hauraki Gulf Enhancement SocietyInc v Auckland Council and Others [2017] NZHC 1332 (security of $12,500).21 Prescott v Thompson and District Court at Auckland, above n 20, at [8].22 Sax v Campbell and the District Court at Tauranga, above n 20.23 Cooke v Valuers Registration Board above n 20; Hauraki Gulf Enhancement Society Inc vAuckland Council and Others above n 20.Previous judicial review[57] Mr Sandilands points to the previous judicial review proceedings where theNZLS did not seek security.24 He says this establishes a precedent and the NZLSshould not be entitled to security now.[58] However, in that case NZLS as the respondent admitted a reviewable error hadoccurred and a decision of the Manawatu Standards Committee was set aside byconsent. The position in this case is fundamentally different. NZLS is contestingMr Sandilands' claim. And, the fact one party has on a previous occasion not soughtsecurity does not bind it in the future. Each case – and application for security – mustbe assessed on its facts.Mr Sandilands' claimed impecuniosity[59] Mr Sandilands says if security is awarded, he "will have no choice but towithdraw this claim." This is of course a relevant consideration for this Court in thatordering security may have the effect of stifling Mr Sandilands' claim. This concernmust however be balanced against all the other factors already discussed and NZLS'right to be protected from an unreasonable costs exposure.Conclusion[60] The authorities are clear that the essential question the Court must answer inan application for security for costs is whether it is just to make an order. Given thelimited merits of the proceeding as it is currently framed, I think Mr Sandilands' rightto bring his case must come second to NZLS' right not to be subjected to anunreasonable costs exposure.[61] I do however recognise two things: first, it might still be possible forMr Sandilands to alter the assessment of the merits if he were able to re-frame his casein a way that had greater merit, and second, the potential impact an order for securitymay have on his claim and his right to access the Court.24 Sandilands v New Zealand Law Society [2017] NZHC 2369.[62] Having weighed these competing factors, I conclude that the interests of justicecurrently weigh in favour of the grant of a modest security. I will order securityaccordingly, but I will also reserve leave for Mr Sandilands to re-plead his claim if heconsiders it might be open to him to raise an error of law (or any other recognisedground of review Mr Sandilands considers he can advance).What amount should security for costs be fixed at?[63] The amount of security is a discretionary matter. An order for security willusually be for an amount that is less than the full amount of the likely award of costsas calculated under sch 3 of the High Court Rules.25[64] NZLS has sought security of $16,969. That sum appears to include a claim forsecurity for steps already completed to date, including filing of the statement ofdefence, attendance at a case management conference and filing the application forsecurity.[65] As this Court has noted previously, security is forward looking; it is generallynot appropriate to order security for steps undertaken prior to the application.26[66] It seems the total amount of forward-looking security sought by NZLS is$8,365 (being 2B costs for completion of evidence and attendance at a half-dayhearing).[67] I therefore make an order for security in favour of the NZLS in the sum of$3,500. That sum is just over 40% of the security sought by the respondent for stepsto the completion of a half-day hearing of the application for review. My decision toset the security at that level reflects the public law context in which it arises, the factthat Mr Sandilands is a lay-person representing himself against a professional body,and his indication that he is not in a position to meet an adverse costs award.25 McGechan on Procedure (online looseleaf ed, Thomson Reuters) at [HR 5.45.07].26 Ambrose v Pickard [2009] NZCA 502, and adopted in Sisson v IAG New Zealand Ltd [2014]NZHC 616 at [71] and Oxygen Air Ltd v LG Electronics Australia Pty Ltd [2018] NZHC2504, [2018] NZAR 1699 at [74].[68] I consider a staged approach to the payment of security is also appropriate, asit may assist Mr Sandilands to meet the requirement to pay security. I direct:(a) Payment of $1,000 should be made within 15 working days of the dateof this judgment.(b) Payment of the balance ($2,500) should be made 10 working days afterthe filing of evidence by both parties in support and in opposition to theapplication for review.[69] As I have foreshadowed, I also reserve leave to Mr Sandilands to re-frame hisstatement of claim. If he is able to do so in a way that alters the Court's assessment ofthe merits, it would be open for him to have the Court revisit the orders I have made.Should a stay be ordered?[70] The Court will generally stay a proceeding until the security ordered is given.27[71] The Court may also make a pre-emptive order to stay a proceeding if paymentis not made by the date ordered.28[72] Mr Sandilands has 15 working days to pay the first tranche of the securityordered. If that payment is not made I make an order staying this proceeding untilfurther order of the Court. If Mr Sandilands wishes to file an amended pleading, heshould do so within the 15 working day time-frame. He will not be permitted to takeany other steps in the proceeding until security is paid in accordance with thisjudgment.Result[73] NZLS' application is granted. Orders are made in accordance with thisjudgment at [68] and [72].27 Tomanovich Holdings Limited v Gibbston Community Water Company (2014) Ltd [2018] NZHC990 at [68]-[85].28 Westpac New Zealand Ltd v Adams [2013] NZHC 3112 at [92](c).[74] As NZLS has been largely successful in its application, it is entitled to costs.I order costs in its favour on a 2B basis in relation to this interlocutory application,together with disbursements as fixed by the Registrar.____________________________________Isac JSolicitors:P N Collins, AucklandCopy to:D N Sandilands