OCEAN FISHERIES LTD v MARITIME NEW ZEALAND [2022] NZHC 3202

OCEAN FISHERIES LTD v MARITIME NEW ZEALAND [2022] NZHC 3202 [1 December 2022]IN THE HIGH COURT OF NEW ZEALANDCHRISTCHURCH REGISTRYI TE KŌTI MATUA O AOTEAROAŌTAUTAHI ROHECRI-2020-409-000161[2022] NZHC 3202BETWEEN OCEAN FISHERIES LIMITEDAppellantAND MARITIME NEW ZEALANDRespondentHearing: On the papersCounsel: A F Pilditch KC and A L Fraser for the AppellantD R La Hood and M A Heslip for the RespondentJudgment: 1 December 2022JUDGMENT OF NATION JAS TO COSTS[1] On 18 October 2015, a fishing trawler belonging to the appellant (OceanFisheries) sank. Three crew members drowned. Ocean Fisheries pleaded guilty to acharge under the Health and Safety in Employment Act 1992 for failing to take allreasonable steps to ensure the safety of the three men on board the fishing vessel.[2] Ocean Fisheries was ordered to pay a total of $230,325.25 in reparation foreconomic loss and $505,000 in reparation for emotional harm. The company wasfined $46,000 and order to pay court costs of $130.[3] Ocean Fisheries appealed the award for emotional harm reparation.[4] The appeal was argued in the High Court on 25 February 2021. In a judgmentof 13 August 2021, I dismissed the appeal.1 In doing so, I held the respondent(Maritime NZ) was entitled to costs on the appeal.2 I made directions for the filing ofmemoranda if agreement could not be reached.[5] Ocean Fisheries sought leave to appeal from the Court of Appeal. The partiesagreed to defer the matter of costs given they were doing so.[6] The Court of Appeal declined leave to appeal in a judgment of 5 May 2022.3[7] Subsequent to that, the parties filed memoranda confirming they had beenunable to agree on costs and sought a decision from the Court on the issue.[8] The scale costs payable to a party under the Costs in Criminal CasesRegulations 1987 (the criminal costs scale) would be $130.4 Maritime NZ is seekingcosts, equivalent to the scale 2B costs in civil proceedings in the High Court Rules2016, of $8,365 for fees and $716.34 for expenses, a total of $9,081.34.The legislation[9] Ocean Fisheries was prosecuted for an offence under the Health and Safety inEmployment Act but in proceedings pursuant to the Criminal Procedure Act 2011. Thelaw on criminal costs in proceedings under the Criminal Procedure Act is governed bythe Costs in Criminal Cases Act 1967 (the Act).[10] Section 8 of the Act relevantly provides:8 Costs on appeals(1) Where any appeal is made pursuant to any provision of Part 6 of theCriminal Procedure Act 2011 the court which determines the appeal may,subject to any regulations made under this Act, make such order as tocosts as it thinks fit.1 Ocean Fisheries Ltd v Maritime New Zealand [2021] NZHC 2083, [2021] 3 NZLR 443.2 At [173].3 Ocean Fisheries Ltd v Maritime New Zealand [2022] NZCA 164.4 Costs in Criminal Cases Regulations 1987, sch 1 pt 1 subpt C.(5) If the court which determines an appeal is of opinion that the appealincludes any frivolous or vexatious matter, it may, if it thinks fit,irrespective of the result of the appeal, order that the whole or any part ofthe costs of any party to the proceedings in disputing the frivolous orvexatious matter shall be paid by the party who raised the frivolous orvexatious matter.(6) If the court which determines an appeal is of opinion that the appealinvolves a difficult or important point of law it may order that the costsof any party to the proceedings shall be paid by any other party to theproceedings irrespective of the result of the appeal.[11] The criminal costs scale sets the maximum amount recoverable for each halfday in court for a sentence appeal as $130.[12] The section on the regulations made under the Act refers to the court's abilityto impose costs in excess of the criminal costs scale:13 Regulations(3) Where any maximum scale of costs is prescribed by regulation, the courtmay nevertheless make an order for the payment of costs in excess of thatscale if it is satisfied that, having regard to the special difficulty,complexity, or importance of the case, the payment of greater costs isdesirable.Submissions[13] Maritime NZ claimed costs equivalent to those on a 2B scale under the HighCourt Rules.[14] Maritime NZ claimed costs on a 2B basis as "fair, just and reasonable" andjustified under s 13(3) of the Act because:(a) the time allocations in a civil appeal fairly reflect the amount of work andcomplexity of the issues on appeal;(b) the inadequate nature of the award under the criminal costs scale supportsan award, and it is not required that scale costs be imposed;(c) departure from the regulated costs amount has been done before for casesunder the Health and Safety in Employment Act;(d) this was not a typical criminal appeal where a criminal conviction or theliberty of the appellant is at stake and therefore courts are reluctant toaward costs for an appellant exhausting their legal rights –– as such, it iswrong for the Crown entity (and the taxpayer) to pay the costs of anappellant seeking a private benefit; and(e) section 152 of the new Health and Safety at Work Act 2015 allows for aregulator to be awarded costs without reference to the criminal costs scaleon a routine basis.[15] Ocean Fisheries submits criminal scale costs should be awarded and there isno basis to depart from them. It submits Maritime NZ is asking the Court to disregardthe statutory criteria for allowing costs awards in excess of the maximum. It says theawards under the criminal costs scale are mandatory, and the fact they are inadequateis a matter for legislation but cannot be a justification for departing from them.[16] It submits there is no basis in the statute or the case law to suggest prosecutionsunder health and safety legislation should be treated differently as to costs. It alsosubmits it is inaccurate (and irrelevant) to describe this litigation as being private-interest litigation. It also suggested the litigation was not funded by taxpayers, butprimarily through levies on commercial maritime operators. In any event, costs underthe Act are paid to a consolidated fund, not Maritime New Zealand.5[17] Ocean Fisheries submitted courts should be and are conservative in orderingcosts against a defendant in a criminal proceeding.6 It submitted, to award costs wheredefendants have responsibly exercised a statutory right of appeal, criminal cases wouldimproperly inhibit that right to do so.5 Costs in Criminal Cases Act 1967, s 7(1)(a).6 Referring to the judgment of the High Court in Green v Watercare Services Ltd [2012] NZHC2889.AnalysisReflection of work done[18] It was accepted in Wallace Corporation Ltd v Waikato Regional Council that,where costs in excess of the criminal scale are awarded, the civil scale can providesome indication as to what a reasonable costs award is.7 Other cases have also lookedto what costs would have been awarded in civil cases as a comparison.8[19] Nevertheless, there is no authority for the proposition that, because the civilscale would more appropriately reflect the work done, it could, of itself, be reason forawarding costs in excess of the criminal scale.Inadequacy of criminal costs[20] It has been judicially noted that the maximum awards allowable under thecriminal costs scale are low and do not reflect the reality of costs incurred by theparties.9[21] The Court of Appeal in Solicitor-General v Moore said the inadequate natureof the scale is not a relevant consideration in determining whether to award costs inexcess of scale because it does not relate to the test of "special difficulty, complexity,or importance" of the case in s 13(3) of the Act.10 Tipping J in T v Collector of Customssaid "[t]he fact that the scale is miserable, indeed insultingly so, naturally leads a Judgeto strain to find sufficient cause to exceed the scale" and "[a]ny such tendency mustbe resisted, albeit with little enthusiasm".11 Moore J in Jia v Auckland Council said"the modest rates under the Regulations align with the Courts' appropriatelyconservative approach to these cases".127 Wallace Corporation Ltd v Waikato Regional Council [2012] NZHC 1420 at [42], citing TairuaMarine Ltd v Waikato Regional Council [2006] NZRMA 485 (HC).8 See Carruthers v Otago Regional Council [2014] NZHC 2212, (2013) 17 ELRNZ 156 at [15];and Registrar of Companies v Feeney HC Auckland CRI-2011-404-14, 21 June 2011 at [32].9 See Law Commission Costs in Criminal Cases (NZLC R60, 2000) at [90]; Pawson v HeavyliftCargo Airlines Pty Ltd HC Auckland CRI-2005-404-278, 1 March 2006 at [12]; R v Bublitz [2018]NZHC 373 at [59]; R v Lyttle [2022] NZCA 52 at [19]; Carruthers v Otago Regional Council,above n 8, at [12]; and Page v Page [2008] NZCA 80 at [25].10 Solicitor-General v Moore [2000] 1 NZLR 533 (CA) at [29].11 T v Collector of Customs HC Christchurch AP167/94, 28 February 1995 at 4.12 Jia v Auckland Council [2020] NZHC 570 at [31].[22] Maritime NZ submitted the Court of Appeal's judgment in Bublitz v Rsupported the contention that, while criminal scale costs are relevant, they are not amandatory amount that must be awarded.13 I do not accept that submission. In thatcase, the Court of Appeal found the High Court Judge did not err in setting a costsaward of $75,000 under the Act.14 The High Court Judge had already determined thatthe threshold, in s 13(3) of the Act for an award in excess of the scale, had been met.15Bublitz v R is not authority for the proposition that a Judge can set whatever costs theythink just, even if the threshold for an award in excess of scale under the Act has notbeen met.Nature of health and safety proceedings[23] Maritime NZ argues, as justification for an award in excess of criminal scalecosts, health and safety prosecutions are different from general criminal proceedings.In essence, it argues this difference means the court should more readily award costsand costs in excess of the criminal scale.[24] Maritime NZ cites cases where costs had been awarded in excess of thecriminal scale in prosecutions under the Health and Safety in Employment Act.16 Thefact that costs in excess of scale were awarded in those cases does not, of itself, indicatethey should be awarded here. Costs in excess of scale can be granted only where therequirements of s 13(3) are met; the fact those requirements were met in other casesdoes not mean they must have been met here.[25] Maritime NZ refers to s 152 of the Health and Safety at Work Act, the successorto the Health and Safety in Employment Act. This section enables the court to orderthe offender to pay the regulator a sum that it thinks just and reasonable towards thecosts of the prosecution. This section has been applied by the courts to mean that costsare more readily available than under the Costs in Criminal Cases Act.1713 Bublitz v R [2019] NZCA 379.14 At [56].15 R v Bublitz, above n 9, at [59].16 Department of Labour v The New Zealand King Salmon Company Ltd DC Blenheim CRI-2008-006-2653, 15 July 2009; and Maritime New Zealand v Rereti DC Chatham Islands CRI-2010-008-6, 11 May 2011.17 Stumpmaster v Worksafe New Zealand [2018] NZHC 2020, [2018] 3 NZLR 881 at [25].[26] Maritime NZ cited this section in support of its contention that health andsafety prosecutions should be treated differently from general criminal prosecutions.The courts dealing with prosecutions under that legislation however saw s 152 aschanging the law, not reflecting the prior position under the Costs in Criminal CasesAct and the Health and Safety in Employment Act, the latter of which did not have aprovision equivalent to s 152 of the Health and Safety at Work Act.18 This case wasnot brought under the Health and Safety at Work Act, and therefore it cannot directlyapply to setting costs.[27] Maritime NZ did not cite any cases which demonstrate a different approachwould be taken as to costs in health and safety cases. The cases all indicate thethreshold in s 13(3) of the Act must be met before there can be a departure from thecriminal scale.[28] Maritime NZ's next argument was that this was different to a typical criminalappeal because a criminal conviction was not in issue and neither was the liberty ofthe appellant. It therefore submitted the court does not need to be concerned aboutOcean Fisheries' entitlement to exercise its legal rights as a reason to be reluctant toorder costs. Maritime NZ said, instead, Ocean Fisheries was a body corporate withinsurers who wished to minimise their liability to pay compensation. Maritime NZsubmitted the appeal was therefore for private benefit.[29] Maritime NZ did not provide any case law to support this argument. InMinistry of Business, Innovation and Employment v CentrePort Ltd, where there wasreference to rights in the context of regulatory offences, the court pointed towardsrights being relevant in the same way rights are relevant in general criminalproceedings.19 The Court had to be careful not to undermine a right to a fair trial byawarding costs against a defendant which would deter them from defending a charge.20I also note s 29 of the New Zealand Bill of Rights Act 1990 provides that the rightscontained in that Act apply to legal persons as well as natural persons as far as theycan.18 At [25].19 Ministry of Business, Innovation and Employment v CentrePort Ltd [2015] NZDC 10429.20 At [34].[30] I was neither referred to or found authority for the proposition that costs shouldbe more readily awarded against a defendant because they were insured. The DistrictCourt Judge in Department of Labour v P F Olsen & Co Ltd held that insurance is"not a free ride" and cannot be used as a reason to refuse a defendant costs.21The basis on which costs in excess of scale can be awarded[31] The decision to award costs is discretionary as the Act gives Judges the power,but does not mandate them, to award costs. However, courts have also noted that,while the costs jurisdiction is discretionary, it is not unprincipled. The discretion mustbe exercised generally in accordance with the principles set out in the costs rules.22 Itwould not be consistent with those rules to award costs on a novel basis that is notcontained within the Act.[32] An award of costs in excess of the criminal scale can thus not be justified onthe ground that such a costs award would be "fair, just and reasonable" and awardsunder the criminal costs scale would be derisory. An award in excess of the scale canhowever be justified if the party seeking costs established there was a "specialdifficulty, complexity, or importance of the case".[33] In T v Collector of Customs, Tipping J said of the test:23The use of the word "special" when applied to the concepts of difficulty,complexity and importance means it is not enough simply to say that the casewas difficult, complex or important. The necessary difficult, complexity orimportance must be such that it could be said to be significantly greater thanis ordinarily encountered.[34] The "importance" aspect of the test refers to legal importance, not theimportance of the case to the defendant.2421 Department of Labour v P F Olsen & Co Ltd [2003] DCR 196 at [13]–[20]; compare Departmentof Labour v Crighton Engineering & Manufacturing Ltd DC Auckland CRN-9004034594-5, 7June 2000.22 Morris v Police [2013] NZHC 1336 at [16] citing Shirley v Wairarapa District Health Board[2006] NZSC 63, [2006] 3 NZLR 523 at [16]−[17].23 T v Collector of Customs, above n 11, at 2.24 Purcell v R [2015] NZHC 531 at [60] citing R v Russ [1998] 3 NZLR 159 (CA) and Underwoodv Police HC New Plymouth CRI-2010-443-11, 16 September 2010 at [30].[35] I accept there was "special difficulty, complexity, and importance" on thisappeal. In its submissions on the costs issue, Ocean Fisheries said it: and many others in the fishing and maritime transport industries wereconcerned about the implications of the District Court decision given thesignificant departure from the amount awarded in other cases and fullysupported the appeal.(footnote omitted)[36] It would be apparent from the Court's substantive judgment of 13 August 2021that Ocean Fisheries mounted a broadly based challenge to the way the award foremotional harm had been assessed. It sought to have the Court qualify the statutorybasis on which reparation could be awarded by requiring the Court to assess awardson a per family, rather than per person, basis. It argued that the awards of reparationshould also be related to the Court's assessment as to the level of culpability andcausation. It also argued that awards had to be consistent with the methodology andcalculation of emotional harm reparation in other cases, an argument that requiredMaritime NZ and the Court to carefully consider the basis on which emotional harmreparation awards had been made in numerous other sentencing decisions orjudgments, as indicated by the 47 cases tabled in sch A of the High Court decision. Italso argued there had been an error in the District Court Judge failing to reduce thelevel of emotional harm payments to reflect $60,000 that had already been paid byOcean Fisheries to the families.[37] As was confirmed by the Court of Appeal's decision declining leave to appeal,Ocean Fisheries' appeal to the High Court generally involved a challenge toestablished principles and the statutory basis for awards of emotional harm reparation.[38] There is accordingly a basis in the Act for the Court to award costs to MaritimeNZ as the successful party on the appeal and in excess of the scale. With that havingbeen established, I must determine what would be fair and reasonable costs forMaritime NZ in responding successfully to the appeal.[39] In Registrar of Companies v Feeney, Asher J said:25Once the s 13(3) threshold is crossed the Court is not, in my view, bound solelyby the considerations of special difficulty, complexity or importance inassessing quantum, although those factors remain of importance. There is ageneral discretion given to the Court by s 5(1) to order a payment of such sumas it "thinks just and reasonable" towards the cost of the defence. That sets thegeneral test. The considerations set out in s 5(2) apply specifically to the"amount of any costs granted" as well as whether to apply costs.[40] In Carruthers v Otago Regional Council, the Court remarked that a prosecutionfor a regulatory offence under the Resource Management Act 2021 was more akin toa civil suit when determining the amount of costs to be awarded.26 It was accepted inWallace Corporation Ltd v Waikato Regional Council that, where costs in excess ofthe criminal scale are awarded, then the civil scale can provide some indication as towhat a reasonable costs award would be.27[41] Costs on a 2B basis under the High Court Rules would have been $8,365.Maritime NZ's actual costs after the hearing in the High Court were $8,804.80. Thedaily rates allowed for in the High Court are broadly intended to equate to two thirdsof the actual costs incurred with counsel in the relevant category or proceedings.Having regard to that and also the conservative approach which is appropriate inawarding costs for a prosecuting authority, Maritime NZ is entitled to costs in the sumof $4,000 and disbursements of $716.34.Solicitors:Richmond Chambers, AucklandMcElroys, AucklandLukeCunninghamClere, Wellington.25 Registrar of Companies v Feeney, above n 8, at [28]; see also T v Collector of Customs, above n11, at 4.26 Carruthers v Otago Regional Council, above n 8.27 Wallace Corporation Ltd v Waikato Regional Council, above n 7, at [42].