NEW ZEALAND LAW SOCIETY v DELIU [2015] NZHC 652

NEW ZEALAND LAW SOCIETY v DELIU [2015] NZHC 652 [2 April 2015]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYCIV-2014-404-000427[2015] NZHC 652UNDER Sections 266 - 268 of the Lawyers andConveyancers Act 2006IN THE MATTER of interlocutory applications inproceedings for an application for an orderthat the name of a barrister and solicitor ofthe High Court of New Zealand be struckoff the rollBETWEEN NEW ZEALAND LAW SOCIETYPlaintiffAND FRANCISC CATALIN DELIUDefendantHearing: On the papersCounsel: JC Gordon QC and ZR Johnston for PlaintiffDefendant in personJudgment: 2 April 2015JUDGMENT OF ASHER JThis judgment was delivered by me on Thursday, 2 April 2015 at 11ampursuant to r 11.5 of the High Court Rules.Registrar/Deputy RegistrarSolicitors/Counsel:Meredith Connell, Auckland.FC Deliu, Auckland.Introduction[1] On 8 October 2014, I delivered a judgment in which I entered summary judgment for Mr Deliu as defendant against the New Zealand Law Society("NZLS") as plaintiff.1 I held that NZLS's claim could not proceed in the HighCourt and that the New Zealand Lawyers and Conveyancers Disciplinary Tribunal isbetter suited to the hearing of this case. I held that a High Court action wasunsuitable and inappropriate, and would fail at the substantive hearing for thatprocedural reason.[2] As the successful applicant, Mr Deliu seeks costs on a 3C basis. He asks thatthose costs be indemnity costs, or in the alternative, that there be increased costs.The NZLS, in response, submits that costs should lie where they fall or, if the Courtwas minded to award costs, that they should be awarded on a 2B basis and thatneither indemnity costs nor increased costs are appropriate.Should there be a costs order?[3] Mr Deliu did not have a lawyer representing him. He represented himself. He is a barrister and solicitor of the High Court of New Zealand with a practisingcertificate, and is in active practice. In such circumstances, there is a body ofauthority stating that a lawyer who brings or defends a proceeding in his or her ownname is generally entitled to the same costs as when acting on behalf of a client.This line of authority in England may have been based on the fact that solicitors, asdistinct from other self-represented litigants, were entitled to costs because thesecosts could be quantified by the Court and its officers.2 Such solicitor-litigantsappear to have been an exception to the basic rule that a lay litigant could not recoveranything but out-of-pocket expenses.3 Doubts were expressed about the propositionby the Australian High Court in Cachia v Hanes.41 New Zealand Law Society v Deliu [2014] NZHC 2467, [2015] 2 NZLR 224.2 See Guss v Veenhuizen (Taxation of Costs) [1976] HCA 57, (1976) 136 CLR 47.3 Buckland v Watts [1970] 1 QB 27 (CA).4 Cachia v Hanes (1994) 120 ALR 385 at 395–397.[4] In New Zealand, the rule has been described by the Court of Appeal as "long-established"5 and I regard myself as bound to allow costs to a solicitor-litigant.Ms Gordon QC, for NZLS, accepted that this was so. However, she submitted thatcosts should not follow the event because, although the plaintiff had succeeded inbringing the proceeding to an end, the NZLS had succeeded in its application to setaside Mr Deliu's protest to jurisdiction, and that Mr Deliu had made everyconceivable argument to have the case dismissed on a preliminary basis. The claimwas not dismissed because it was without merit or lacked substance, and theplaintiff's claim had been a genuine attempt to address issues in the exercise ofNZLS's responsibility as a regulator.[5] It is often the case that when there are various heads of claim, the claim willsucceed on one but not others, and a Court will determine that full costs should beordered.6 Whether that should happen is always a question that involves aconsideration of the specific circumstances of the hearing, and the time spent on theunsuccessful causes of action.[6] It is correct, as Ms Gordon submits, that the protest to jurisdiction issue tookup a considerable portion of the hearing and occupied a considerable portion of thejudgment.7 However, it must be said that much of the ground covered in the protestto jurisdiction argument and discussion would have been covered in any event byway of background, prior to the determination of the summary judgment applicationor as part of the strike-out application. In the end, Mr Deliu was entirely successfulin his summary judgment application. He failed on his protest to jurisdiction, andthe outcome in relation to the third (strike-out) did not need to be determined.[7] Exercising my discretion as best I can, and applying the principle that costsshould follow the event, I conclude that Mr Deliu has succeeded in "the event" andthe digression created by his objection to jurisdiction was insufficient to warrant adeparture from that basic rule.5 Brownie Wills v Shrimpton [1998] 2 NZLR 320 (CA) at 327.6 Shotter v Westpac Bank Corporation [1988] 2 NZLR 316 (HC).7 New Zealand Law Society v Deliu, above n 1, at [7]–[47].[8] I determine therefore that Mr Deliu should be awarded costs without any deduction for a lack of success on the protest to jurisdiction aspect of the claim. I also do not accept that there should be a deduction because Mr Deliu made every conceivable argument. He certainly did argue with vigour and at considerable length but I do not consider any of his arguments to have crossed the threshold of irrelevance or inexcusable prolixity.[9] Ms Gordon referred to the fact that the proceedings were in the public interestas relevant to whether any costs should be ordered. Rule 14.7(e) of the High CourtRules provides:14.7 Refusal of, or reduction in, costsDespite rules 14.2 to 14.5, the court may refuse to make an order for costs or may reduce the costs otherwise payable under those rules if-(e) the proceeding concerned a matter of public interest, and the partyopposing costs acted reasonably in the conduct of the proceeding; or[10] I accept that NZLS filed this proceeding in good faith and had a regulatoryinterest. However, this was not a case where a party such as the Financial MarketsAuthority intervened with the consent of the parties in the performance of a statutoryrole, as was the case in Hotchin v Ka No 4 Trustee Ltd.8 It was not a case such as inCommerce Commission v Southern Cross Medical Society where the CommerceCommission intervened to assist the High Court by presenting necessary evidence inargument in opposition to an appeal in the public interest.9 Nor did it have thefeature of clarifying a confused and important area of law, such as pursuing theinterests of taonga as an important part of the heritage of New Zealand, as in NewZealand Maori Council v Attorney-General.108 Hotchin v Ka No 4 Trustee Ltd [2014] NZHC 978 at [22]–[26].9 Commerce Commission v Southern Cross Medical Society [2004] 1 NZLR 491 (CA) at [21].10 New Zealand Maori Council v Attorney-General [1994] 1 NZLR 513 (PC) at 525.[11] This is a case where a body, which is recognised by statute,11 and has both regulatory powers12 and representative powers,13 sought to obtain a remedy (strikingoff of a solicitor) from the Courts. The case itself is not of particular public interest.Although NZLS issued proceedings as part of its regulatory function, it has taken adecision to initiate proceedings in the High Court (rather than before the DisciplinaryTribunal) and must face the costs consequences of choosing the wrong procedure. Itis the plaintiff that has chosen one route when it had options, and that route hasproven to be the incorrect route. In all these circumstances, r 14.7(e) does not apply.[12] I conclude that costs should follow the event in the usual way. There shouldbe an order without deduction in favour of Mr Deliu against NZLS.Indemnity costs[13] Rule 14.6(3) and (4) set out the circumstances where a Court may order aparty to pay increased or indemnity costs. I deal with indemnity costs first.[14] Rule 14.6(4)(a) relevantly provides that the Court may order a party to pay indemnity costs if:(a) the party has acted vexatiously, frivolously, improperly, or unnecessarily in commencing, continuing, or defending a proceeding or a step in a proceeding; or[15] Mr Deliu argues that NZLS elected to press ahead with what should havebeen obviously a hopeless proceeding. He argues that a fair and independentassessment would have shown that the proceedings were doomed to fail and relies onextracts from the judgment to support that submission. I accept the comment inMcGechan on Procedure that, apart from the situations listed in r 14.6(4)(c) to (e),which are not related to behaviour, indemnity costs can be awarded where a partyhas behaved either badly or very unreasonably.1411 Lawyers and Conveyancers Act 2006, s 63.12 Above n 11, s 67.13 Above n 11, s 67.14 Andrew Beck and others McGechan on Procedure at [14.6.03(1)(a)]; Bradbury v Westpac Banking Corp [2009] NZCA 234, [2009] 3 NZLR 400 at [27]–[28].[16] The Court of Appeal observed in Ben Nevis Forestry Ventures Ltd vCommissioner of Inland Revenue that, in the absence of a finding of flagrantmisconduct, it is not appropriate to award indemnity costs simply because a claimwas shown after due consideration to have been unsubstantiated.15 Failure, evenwhen by a considerable margin, does not lead inevitably to indemnity costs.16[17] The NZLS was found to have chosen the wrong procedure. However, therecan be no doubt that it acted in good faith, and chose the procedure for which therewas no jurisdictional bar.17 I found there were two parallel jurisdictions and that,after a detailed consideration of the legal history of the relevant provisions and thefacts, this was not an appropriate case for hearing in the High Court and Court ofAppeal. There was no case that was on all fours with the case before the Court.Both parties co-operated to hear the preliminary challenge in an expeditious and costeffective manner. I described the proceeding as a genuine attempt to resolve issuesin the High Court.18[18] All summary judgment decisions involve a clear determination of thecorrectness of a particular argument, but that does not mean that all successfulsummary judgment applications warrant indemnity costs. There has been no bad orunreasonable behaviour or flagrant misconduct of the type that might warrantindemnity costs. In this case, indemnity costs are not warranted and I decline thatapplication.Increased costs[19] In respect of the increased costs threshold, there are none of the specificbases set out in r 14.6(3) warranting increased costs. The nature of the proceedingwas not such as to require costs that substantially exceed time allocated underband C. The NZLS has not contributed unnecessarily to the time or expense of theproceeding, save for making the decision to pursue striking off in the High Court,which has been the subject matter of the decision. The NZLS pursued the case in the15 Ben Nevis Forestry Ventures Ltd v Commissioner of Inland Revenue [2014] NZCA 348 at [33].16 Diagnostic Medlab Ltd v Auckland District Health Board HC Auckland CIV-2006-404-4724, 13 June 2007.17 New Zealand Law Society v Deliu, above n 1, at [45].18 At [114].High Court because it considered that it had jurisdiction to do so, and that the High Court procedure was better suited to the disposition of the claim. The fact that the Court has disagreed with that assessment does not mean that costs beyond the scale should be paid. NZLS is not guilty of any of the particular failings set out in r 14.6(3)(b).[20] I decline to make any order for increased costs.Quantum of costs[21] Mr Deliu seeks costs on a 3C basis, the NZLS on a 2B basis.[22] In terms of the categorisation of the proceeding, I do not see it as one wherethe complexity or significance of the case required counsel of special skill andexperience. Mr Deliu has experience as a barrister and has knowledge of thisprofessional disciplinary area of law. This is in part because of the variousdisciplinary cases in which he has been involved, but he has also acted for others inthe area. However, it is not an area of law like, for instance patent law, whichdemands particular expertise built up by years of specialisation and the ability tounderstand and present complex propositions of fact and law. While it was entirelysensible for NZLS to brief senior counsel, I do not consider that this was arequirement. The case did not require any detailed analysis of matters of fact orspecialised knowledge.[23] As to the time involved, I must determine whether a comparatively large amount of time was required for any particular step. I consider that the usualcategorisation of 2B should apply as the case is of average complexity, involving anormal amount of time. The only matter Mr Deliu has referred to as requiring extratime was the consideration of discovered documents. While I accept that there weremany documents, I also note that Mr Deliu, as he was the lawyer involved in all theproceedings, would have already been familiar with them.Conclusion[24] The NZLS is to pay scale costs to Mr Deliu on a 2B basis.[25] Given that both parties have had a measure of success in their submissions on the issues arising in this costs decision, I make no order for costs on this costapplication. Those costs will lie where they fall...Asher J