TONISE v WOODROFFE LAW PARTNERSHIP [2020] NZHC 2277

TONISE v WOODROFFE LAW PARTNERSHIP [2020] NZHC 2277 [2 September 2020]IN THE HIGH COURT OF NEW ZEALANDWELLINGTON REGISTRYI TE KŌTI MATUA O AOTEAROATE WHANGANUI-A-TARA ROHECIV-2019-485-582[2020] NZHC 2277BETWEEN IORITANA TONISEAppellantAND WOODROFFE LAW PARTNERSHIPRespondentOn the papersCounsel: J C Gwilliam and H Joubert for the appellantO Woodroffe for the respondentJudgment: 2 September 2020JUDGMENT OF CULL J[On Costs][1] Following my judgment of 3 August 2020 in which I dismissed Mr Tonise'sappeal,1 Woodroffe Law Partnership (Woodroffe's) seeks costs against Mr Tonise.[2] I had indicated that I considered 2B costs to be appropriate for this case2 andWoodroffe's has sought costs on that basis. However, it has since come to my attentionthat Mr Tonise was in receipt of legal aid for the application.[3] Costs against a legally aided person in civil proceedings are regulated by s 45of the Legal Services Act 2011. Costs may not be made against an aided person unlessthe Court is satisfied that there are exceptional circumstances.3 In determining1 Tonise v Woodroffe Law Partnership [2020] NZHC 1926.2 At [55].3 Legal Services Act 2011, s 45(2).whether there are exceptional circumstances, the Court may take account of thefollowing conduct of the aided person:4(a) any conduct that causes the other party to incur unnecessarycost:(b) any failure to comply with the procedural rules and orders ofthe court:(c) any misleading or deceitful conduct:(d) any unreasonable pursuit of 1 or more issues on which the aidedperson fails:(e) any unreasonable refusal to negotiate a settlement or participatein alternative dispute resolution:(f) any other conduct that abuses the processes of the court.[4] If there are such exceptional circumstances, the costs order must not exceed anamount that is reasonable having regard to all the circumstances, including the meansand conduct of all the parties.5[5] The starting point is therefore that Mr Tonise, as a legally-aided person, hasgeneral immunity from an award of costs against him unless this Court is satisfied that"exceptional circumstances" justify an order for costs, and he has the means to meetsuch an order.6[6] Woodroffe's seek 2B costs on the basis that there are exceptional circumstancesjustifying costs. It submits the following matters make the circumstances exceptional:(a) Woodroffe's was put to unnecessary cost by Mr Tonise unreasonablypursuing a "misconceived and baseless appeal" relying on SimpsonGrierson v Gilmour7 when that case clearly had no relevance;8(b) Mr Tonise engaged in misleading or deceitful conduct in stating to theNew Zealand Law Society that he was a duly appointed officer of the4 Section 45(3).5 Section 45(1).6 Almond v Read [2019] NZCA 26 at [149].7 Simpson Grierson v Gilmour [2009] 19 PRNZ 865 (HC).8 Relying on s 45(3)(a) and (d); and Almond v Read, above n 6, at [149]-[155].Green Valley Church congregation, and in making two contradictorystatements as to whether he had met Mrs Woodroffe before;9(c) in a letter dated 6 July 2020 (15 days before the hearing), Woodroffe'soffered to settle the matter if Mr Tonise paid half the outstandingamount of the debt. The settlement proposal was refused byMr Tonise;10 and(d) there is an expectation that the congregation will pay some or all of thecosts incurred. The evidence to support this comes from a letter dated20 July 2020 in which Counsel for Mr Tonise refused Woodroffe'ssettlement offer on the basis that "Our client is personally not in afinancial position to make payment to you in the amount of $32,445.47,and we were further not able to obtain an undertaking from thecongregation to do so in the short period of time available."[7] Woodroffe's submits it is suffering financially because of the failure ofMr Tonise to pay his debt and that Mr Tonise has the ability to seek financial assistancefrom other members of the congregation to pay the legal costs for his unsuccessfulappeal. Together with the above points, it submits these factors justify a finding of"exceptional circumstances" under s 45(2) and 2B costs are appropriate.[8] Mr Gwilliam opposes the award of costs against his client. He submits thatWoodroffe's were not put to unnecessary cost, there has been no misleading ordeceitful conduct and nor was there an unreasonable pursuit of the issue. He says itwas reasonable in the circumstances to pursue the appeal point given that theDistrict Court judge had referred to one of his other decisions where the Judge hadaccepted that the defendant had an arguable defence based on the Limitation Act whereproceedings had been delayed as a result of the effect of s 161 of the Lawyers andConveyancers Act 2006. As to the settlement proposal, Mr Gwilliam submits that theproposal made by Woodroffe's was too late to be able to be given serious consideration9 Section 45(3)(c).10 Section 45(3)(e).before the hearing of this appeal and there was no unreasonable refusal to negotiate asettlement.[9] I am satisfied that Mr Tonise did not unreasonably pursue the appeal and thereare no exceptional circumstances justifying the award of costs in this instance. Theappeal was appropriately confined only to the limitation issue, and other issuesdecided in the District Court were not appealed. This shows a considered approach tothe legal issues and the costs involved in taking the appeal.[10] Turning to the unreasonable submission, there has been conflictingDistrict Court authority and I do not consider it was unreasonable for Mr Tonise topursue the appeal in the way he did. Although I have found his argument to beincorrect, particularly that based on the Simpson Grierson v Gilmour authority, theinterpretation of s 161 of the Lawyers and Conveyancers Act had not beenauthoritatively determined by the courts and requires further legislative clarificationon how s 161 affects the limitation period for commencing and continuing civil claimsin contract. It was a valid point to raise on appeal.[11] As to the settlement proposal and misleading conduct submission, I do notconsider that Mr Tonise's failure to accept the settlement proposal was anunreasonable refusal to negotiate that could amount to "exceptional circumstances"under s 45. Communication between the parties was forthcoming but ultimately therewas not enough time to seriously consider the proposal before the hearing. Finally, onthe submission of misleading conduct, for the same reasons I outlined in my judgment,I put that submission to one side.11 Such allegations should be resolved at thesubstantive hearing.[12] To conclude, Woodroffe's has not satisfied me that there are exceptionalcircumstances in this instance requiring an order for costs. I decline to make an orderfor costs.[13] Section 45(5) provides that if, because of s 45, no order for costs is madeagainst the aided person, an order may be made specifying what order for costs would11 Tonise, above n 1, at [51].have been made against that person if s 45 had not affected that person's liability.Woodroffe's has asked that in the event that costs are refused on the basis of s 45, as 45(5) order be made. I make that order below.Result[14] No order for costs is made. I am not satisfied there are exceptionalcircumstances justifying the award of costs against a legally aided person.12[15] I make the following order under s 45(5):If s 45 of the Legal Services Act 2011 had not applied to this situation, I wouldhave made an order for costs on a 2B basis, pursuant to Woodroffe's scheduleat [12] of their submissions dated 17 August 2020. That would be an orderfor $10,157.50 to be awarded to Woodroffe's.Cull JSolicitors:Main Street Legal Limited, Upper Hutt for the appellantWoodroffe Lawyers, Auckland for the respondent12 Legal Services Act, s 45.