OPAI v THE ATTORNEY-GENERAL OF NEW ZEALAND [2019] NZHC 1915

OPAI v THE ATTORNEY-GENERAL OF NEW ZEALAND [2019] NZHC 1915 [7 August 2019]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYI TE KŌTI MATUA O AOTEAROATĀMAKI MAKAURAU ROHECIV-2014-092-1026[2019] NZHC 1915BETWEEN MELISSA JEAN OPAIPlaintiffAND THE ATTORNEY-GENERAL OF NEWZEALANDDefendantHearing: (On the papers)Counsel: N Woods for PlaintiffM F McClelland QC and A Todd for DefendantJudgment: 7 August 2019COSTS JUDGMENT OF BREWER JThis judgment was delivered by me on 7 August 2019 at 4:00 pmpursuant to Rule 11.5 High Court Rules.Registrar/Deputy RegistrarSolicitors:Rice Craig (Papakura) for PlaintiffCrown Law (Wellington) for DefendantIntroduction[1] This is a costs judgment.[2] In my judgment dated 30 August 2018 I dismissed all five of Ms Opai's causesof action.1 I did not consider any of the statements or documents to amount todefamation. There was no evidence of harm. All five claims were negated by thedefence of qualified privilege and would have also been defeated by the defence ofhonest opinion had I been required to consider it. Most of the claims were time-barred.[3] I indicated that the defendant was entitled to costs.2 Ms Opai appealed mydecision. In a minute dated 23 October 2018 I reserved the question of costs pendingthe Court of Appeal's decision. As of 3 May 2019, that appeal expired and was deemedabandoned. Both parties have now filed memoranda as to costs.Costs[4] It is not in dispute that costs will follow the event, nor that this proceedingshould be categorised as 2B for costs purposes. The defendant seeks an order forincreased costs of 40 per cent under r 14.6. The plaintiffs seeks a reduction in costsunder r 14.7. There is a dispute over aspects of the defendant's schedule of costs.Submissions[5] The parties have agreed the costs of various interlocutory applications andreviews. No costs are sought by either party in relation to those interlocutories and Iwill not address them.[6] I will address the disputes over the schedule before turning to the claims forincreased/reduced costs.1 Opai v Attorney-General [2018] NZHC 2267.2 At [134].Quantification[7] At item 36 of the schedule the defendant seeks 2B costs for one-and-a-halfdays, for matters relating to the admissibility of the plaintiff's brief of evidence. Thesum is $3,345. The work includes a detailed notice under r 9.11 challenging theadmissibility of evidence, a mentions hearing before Toogood J on 17 May 2018 anda detailed reply to the plaintiff's response filed 8 June 2018. Justice Lang issuedminutes on the matter on 7, 8, 11 and 12 June 2018 and a judgment on 13 June 2018upholding the parts of the defendant's challenge to admissibility that had not beenresolved.[8] Counsel for the defendant submits this process took significant time and effortshortly before trial, hence the defendant seeking one-and-a-half days.[9] The plaintiff submits the defendant's notice of objections was excessivelyprolix and the majority of objections raised were either taken no further or rejected bythe Court. Further, the plaintiff was required to file notice in response. The plaintiffsubmits these pre-trial skirmishes did not have a clear or even equivocal winner, andas such costs in respect of the objections regarding admissibility of evidence shouldlie where they fall.[10] I accept the plaintiff's submission that the parties had mixed success and costsshould lie where they fall. While some evidence was ultimately excluded, and somewas consensually amended, the majority of the issues raised by the defendants wereultimately either minor objections or better dealt with through trial than through thepre-trial process.Disbursements[11] The defendant claims $1,319.97 as the cost of air travel and $3,336.00 as thecost of accommodation for counsel located out of Auckland.[12] The plaintiff submits it would be unjust to require her to pay those sums.Counsel submits they would not have been incurred if local counsel had beeninstructed, as had been the case at earlier stages in the proceedings.[13] Whether such costs are a proper disbursement will turn on the details of thecase.3 Generally the Court has required particular circumstances making it reasonableto instruct out of town counsel, such as legal complexity or the location of the client.4[14] I do not consider the circumstances of this case sufficient to grant thesedisbursements. The legal issues were not novel, the case was not complex, and itappears to have been largely run out of the Auckland office of Crown Law. Thedefendant may not recover the cost of air travel or accommodation.Increased costs[15] Rule 14.6 provides for orders to pay increased costs. Various circumstances inwhich the Court may make such orders are listed at r 14.6(3). Of these, the defendantemphasises that the Court may make an order for increased costs against a party whohas contributed unnecessarily to the time or expense of the proceeding by:(a) taking or pursuing an unnecessary step or an argument that lacks merit;5or(b) failing, without reasonable justification, to accept an offer of settlementwhether in the form of an offer under r 14.10 or some other offer tosettle or dispose of the proceeding;6 or(c) where some other reason exists which justifies the court making anorder for increased costs despite the principle that the determination ofcosts should be predictable and expeditious.7[16] The threshold for such a departure is unreasonable conduct by the partyopposing costs.8 That conduct must be in relation to the proceeding, not after or beforeit was commenced.9 Uplift will be justified to the extent the failure to act reasonably3 Buis v Accident Compensation Corporation (2010) 19 PRNZ 585 (HC) at [25].4 See discussion in Ainsworth & Collinson Ltd v Edmunds (2009) 19 PRNZ 565 (HC) at [5]–[9].5 Rule 14.6(3)(b)(ii).6 Rule 14.6(3)(b)(v).7 Rule 14.6(3)(d).8 Bradbury v Westpac Banking Corp [2009] NZCA 234, [2009] 3 NZLR 400 at [27].9 See Paper Reclaim Ltd v Aotearoa International Ltd [2006] 3 NZLR 188 (CA) at [160].contributed to the time or expense of the proceeding.10 The party seeking increasedcosts bears the onus of convincing the Court they are justified.11[17] When making an order for increased costs the Court uplifts from scale, ratherthan awarding a percentage of actual costs.12 This is usually calculated on a step bystep basis. However, where they are awarded because an argument lacked merit andwas inherently unlikely to succeed, increased costs apply to all steps.13[18] I note that financial hardship is not a ground for declining to make a costsorder14 and impecuniosity is not a shield from a costs award.15Submissions[19] The defendant submits this is an appropriate case for an increase of 40 per centon scale costs for the following reasons:(a) None of the five causes of action was capable of succeeding formultiple reasons, including that the words were not defamatory; therewas no publication; there was insufficient harm; qualified privilegeapplied; the lack of improper advantage or ill-will; honest opinionlikely applied; and the time bar.(b) There was no basis for the defamation claim given the employmentcontext and the fact that the statements in question were part of a formalworkplace process.(c) The defamation claim was brought for an improper purpose, being thatthe potential yield in damages was greater in the High Court than theEmployment Relations Authority.10 Commissioner of Inland Revenue v Chesterfields Preschools Ltd [2010] NZCA 400, (2010) 24NZTC 24,500 at [165].11 Strachan v Denbigh Property Ltd HC Palmerston North CIV-2010-454-232, 3 June 2011.12 Holdfast NZ Ltd v Selleys Pty Ltd (2005) 17 PRNZ 897 (CA) at [40].13 NR v MR [2014] NZCA 623, (2014) 22 PRNZ 636; and Broadspectrum (New Zealand) Ltd vNathan [2017] NZCA 434, (2017) 15 NZELR 398 at [57].14 Bruns v Gay HC Auckland CIV-2004-404-0297, 28 October 2004.15 Teitiota v Chief Executive of the Ministry of Business, Innovation and Employment [2013] NZHC3401 at [6].(d) Qualified privilege was always going to provide a complete defenceand the plaintiff led no credible evidence of ill-will or improperadvantage to counteract it. Associate Judge Bell and Katz J ininterlocutory decisions both identified the defence of qualifiedprivilege as a significant hurdle for the plaintiff.16(e) The plaintiff alleged multiple instances of publication but in large partcalled no evidence to establish them.(f) The plaintiff made serious and personalised allegations regardingsenior Police officers but led no evidence to support them.(g) The plaintiff filed a lengthy brief of evidence including irrelevant andtherefore inadmissible material.(h) The plaintiff did not accept, or even respond to, an offer of settlementon behalf of the defendant dated 15 May 2018.[20] The defendant submits he was wholly successful and that this case lacked anyparticular importance and did not clarify the law.[21] The plaintiff submits this is not a case warranting increased costs. Insteadcounsel argues a reduction in costs may be appropriate.17[22] The plaintiff argues that multiple pre-trial determinations relating to thedefamatory meanings, the de minimis threshold, and the jurisdiction of the High Courtto hear a case regarding defamation in the workplace confirmed that the defamatorymeanings for various statements pleaded were reasonably arguable.18 As such, theargument had some merit.16 Opai v Culpan [2016] NZHC 3004 at [82]; and Opai v Culpan [2017] NZHC 307 at [80].17 High Court Rules 2016, r 14.7(e) and (g).18 Opai v Culpan [2017] NZHC 1036; Opai v Culpan [2017] NZHC 668; Opai v Culpan [2017]NZHC 307; and Opai v Culpan [2015] NZHC 2010.[23] The plaintiff contends she directed her argument at trial towards the issue ofwhether qualified privilege applied and might have ceased to apply due to malice orimproper purpose. As such, her claims failed due to the Court's finding on bothparties' evidence, rather than due to being unreasonably argued. The plaintiff notesthat no adverse findings of credibility were made in relation to her witnesses.[24] The plaintiff submits this case did clarify aspects of the law of defamation inan employment context. Counsel submits it also had some wider significance relatingto public confidence in the Police internal integrity reporting systems, reflected bymedia coverage of the case.[25] The plaintiff submits her claim was not brought before the High Court for animproper purpose (the larger yield in damages) but because the Employment RelationsAuthority's jurisdiction expressly excludes claims in tort. As such, the defamationproceeding could only be brought in the High Court. The defendant twice attemptedto strike the proceeding out on a jurisdictional basis and failed. The fact thatdefamation awards are historically larger than those obtained through the EmploymentRelations Authority is irrelevant.[26] The plaintiff notes that a 40 per cent increase on costs would be at the veryhigh end of any possible increase, given the daily recovery rate is two-thirds of thedaily rate considered reasonable for the particular proceeding. Instead, some reductionmay be appropriate to reflect the public interest and other argued factors.19[27] Finally, the plaintiff submits that the settlement offer dated 15 May 2018should not affect my decision on costs as it was in respect of the EmploymentRelations Authority proceeding as well as this one, and also required that she resignfrom her position.Discussion[28] At the outset I make clear I am not influenced by the rejected settlement offer.It was tied to the separate employment proceeding and went only to allowing costs to19 High Court Rules 2016, r 14.7(e) and (g).lie where they fell. My decision on increased costs will turn on whether Ms Opaiclearly pursued an argument without merit.[29] I accept the defendant's description of the defects in the plaintiff's case. Noneof the five pleaded causes of action could succeed for multiple reasons: the words werenot defamatory, there was no publication, there was no harm for the purpose of thetest, qualified privilege applied, the defence of honest opinion was likely available,and the majority of the claims were time-barred.[30] The plaintiff was forewarned that qualified privilege posed a particularobstacle. Associate Judge Bell in his interlocutory judgment on strike-out was clearthat qualified privilege appeared to plainly apply to the various statements inquestion.20 On appeal, Katz J overturned aspects of that decision but was nonethelessrelatively frank about Ms Opai's prospects, though did not go so far as to state thecause was hopeless:21[80] Ms Opai is likely to face considerable hurdles at trial, including inovercoming the qualified privilege defence. Nevertheless, the Attorney-General's application to strike out the entirety of the claim as an abuse ofprocess on triviality/disproportionality grounds was declined by the Judge.The Attorney-General has not challenged that decision. Ms Opai willtherefore have her day in Court. If judgment is entered in her favour, herreputation will be vindicated.[31] While these judgments were clear that qualified privilege would be asignificant issue, Ms Opai's claim was not struck out. At trial, arguments on her behalfwere directed towards the proposition that qualified privilege might not apply, as wellas the proposition it might have ceased to apply due to ill-will or the taking of improperadvantage.[32] However, these arguments never came close to mounting a serious challengeto the defence. At the close of the case Ms Opai remained a significant distance awayfrom proving multiple essential elements of each of the five causes of action. On theevidence, that was inevitable.20 Opai v Culpan [2016] NZHC 3004.21 Opai v Culpan [2017] NZHC 1037; and Opai v Culpan [2017] NZAR 1142.[33] This was an employment dispute, and its framing in defamation wasmisconceived. I am satisfied a defamation claim in the High Court was brought, atleast in part, because the potential yield in damages exceeded that possible in theEmployment Relations Authority. The problem for Ms Opai with doing that was her caseceased to be about relationships at work and the duties owed to her by a reasonableemployer. Instead, she had to address strict legal tests in an unrelated area. Her case wassimply unsuited for that.[34] Beyond the implications inherent in the allegations of defamation, Ms Opaifurther made personalised allegations about the character and behaviour of particularpolice officers that were not supported by any evidence beyond her own.[35] The threshold for an order of increased costs is high. More is required thansimply the failure of a factual or legal argument.22 There must be a lack of merit. Iam conscious that the default position limits potential plaintiffs' liability and therebypromotes access to justice, which is an important consideration underpinning thenormal approach.23 Given this case involved a claim against the Police, I am aware ofthe need not to create an unwarranted deterrent.[36] Nonetheless, I am satisfied that Ms Opai bringing this particular claim in thisparticular forum was unreasonable and put the defendant to significant expense.Discouraging unmeritorious claims has been recognised as coming within the "catchall" provision in relation to increased costs.24 For the reasons set out it is appropriateto award order increased costs for all steps in the proceeding.[37] It follows that I do not consider this an appropriate case for reduced costs. Thiscase did not meaningfully clarify the law of defamation, nor did its focus on internalPolice functions serve any recognisable public interest.[38] With that said, Ms Opai largely conducted the case in good faith and has notdeliberately disregarded or violated the law or the processes of the Court. Ms Opai,sadly, lost perspective in an employment dispute in which she felt deeply wronged.22 Nandro Homes Ltd v Datt HC Auckland CIV-2008-404-006676, 12 July 2009, at [11].23 Bradbury v Westpac Banking Corp, above n 8, at [28].24 Victoria University of Wellington v Alton Lee [2001] ERNZ 305 (CA).Indemnity costs would not be appropriate.25 I consider the 40 per cent uplift soughtby the defendant, which is at the higher end of potential awards, to be excessive. Iconsider an uplift of 25 per cent on scale costs appropriate.Result[39] Costs on a category 2B basis amount to $55,527.00. A 25 per cent uplift bringsthat total to $69,408.75.[40] The defendant claims $7,227.91 in disbursement costs. Minus the $4,655.97for accommodation and air travel costs that figure is $2,571.94. Allowable costs anddisbursements together produce a figure of $71,980.69.[41] I order that the plaintiff is to pay the defendant $71,980.69.________________________________Brewer J25 High Court Rules 2016, r 14.6(4).