LAGOLAGO v WELLINGTON STANDARDS COMMITTEE 2 [2018] NZCA 406

LAGOLAGO v WELLINGTON STANDARDS COMMITTEE 2 [2018] NZCA 406 [5 October 2018]IN THE COURT OF APPEAL OF NEW ZEALANDI TE KŌTI PĪRA O AOTEAROACA263/2018[2018] NZCA 406BETWEEN PAPALI'I TOTI LAGOLAGOApplicantAND WELLINGTON STANDARDSCOMMITTEE 2RespondentHearing: 17 September 2018Court: Miller, Gilbert and Williams JJCounsel: A C Beck for ApplicantD R La Hood and R M A Kós for RespondentJudgment: 5 October 2018 at 3.00 pmJUDGMENT OF THE COURTThe application for leave to appeal is declined.____________________________________________________________________REASONS OF THE COURT(Given by Williams J)[1] The applicant, Ms Lagolago, is a lawyer. The New Zealand Lawyers andConveyancers Disciplinary Tribunal (the Tribunal) found her:1(a) guilty of negligence or incompetence in her professional capacity tosuch a degree as to reflect on her fitness to practice or as to bring herprofession into disrepute;2 or1 Wellington Standards Committee 2 v Lagolago [2015] NZLCDT 25 at [92]–[93].2 Lawyers and Conveyancers Act 2006, s 241(c).(b) in the alternative, guilty of unsatisfactory conduct, that is conduct thatfell short of the standard of competence and diligence that a member ofthe public is entitled to expect of a reasonably competent lawyer.3Some relevant background[2] In November 2009, Ms Lagolago filed proceedings in the District Court onbehalf of Mr and Mrs F (the Fs). They challenged the lawfulness of a credit contractthey had entered into with a firm called Finance Now Ltd. In addition to challengingthe legitimacy of the contract, they claimed $100,000 in compensation for emotionalstress and anxiety. The claim failed. In a costs judgment following the event,Judge Tuohy in the District Court at Porirua awarded increased costs. A short extractfrom the judgment gives a sense of that Judge's concern over the way in which thecase had been handled:4[40] The whole conduct of the litigation on behalf of the [Fs] has beenseriously ill-judged, lacking in proper legal analysis and commercialcommonsense. It is disturbing that what should have been a dispute about theamount owing under a loan contract (not exceeding $12,000), which couldhave been satisfactorily resolved in the Disputes Tribunal without legal fees,has been escalated into a two day hearing in the District Court, necessitatinga 107 paragraph judgment which has cost the successful parties a total of over$75,000 in legal fees and disbursements and leaves the [Fs] now facingjudgment, not just for the balance of the loan contract, but for far greater sumsin costs, apart altogether from their own legal costs — all this despite someclear warnings from the defendants.[3] As Clifford J noted in his subsequent substantive judgment on appeal fromthe Tribunal, the Fs subsequently lost their house in a mortgagee sale.5[4] A dispute then arose between Ms Lagolago and her clients over payment of herlegal fees. The Fs complained to the New Zealand Law Society (the Law Society).Charges followed.3 Section 12(a).4 F and F v Finance Now Ltd DC Porirua CIV-2009-091-639 and CIV-2009-091-527, 7 September2012.5 Lagolago v Wellington Standards Committee 2 [2016] NZHC 2867 at [20].[5] The charges were heard before the Tribunal. Ms Lagolago's presentationbefore the Tribunal was commented upon in these terms:6[25] [Ms Lagolago's] presentation as a witness was of some concern tothe Tribunal. She still appeared to misunderstand some of the legal issues, onwhich the Court had made clear decisions. She did not appear to understandthe nature of her role, particularly in initial stages, with her clients, and herobligation to be clear and firm and provide unemotional, objective advice tothem. She was frequently tangential and unclear in her response to questions.[26] Her affidavit spanned 168 paragraphs over 94 pages. It was rambling,lacked focus, and was at times difficult to follow.[27] Overall, we were concerned that, even after the very clear and strongcomments made by the District Court Judge about the F litigation,the practitioner did not have a high level of insight into her failings.[6] The Tribunal found that Ms Lagolago's conduct did not amount to misconductin terms of s 7(1)(a)(i) of the Lawyers and Conveyancers Act 2006 (the Act),7 but herconduct of the proceedings and a failure to fully advise her clients in relation to anearly settlement offer amounted to negligence in terms of s 241(c) of the Act.8 In thealternative, the Tribunal considered that Ms Lagolago's conduct would amount tounsatisfactory conduct.9[7] In the High Court Clifford J allowed Ms Lagolago's appeal and set asidethe Tribunal's verdict.10 In a separate costs judgment Clifford J declinedMs Lagolago's application for costs in the Tribunal.11[8] Ms Lagolago's application for leave to appeal to this Court in relation to thatcosts ruling was declined in the High Court by Churchman J.12 She now seeks leaveof this Court to appeal the costs ruling. The respondent, Wellington StandardsCommittee 2, opposes.6 Wellington Standards Committee 2 v Lagolago, above n 1.7 At [81].8 At [92].9 At [93].10 Lagolago v Wellington Standards Committee 2, above n 5, at [132].11 Lagolago v Wellington Standards Committee 2 [2017] NZHC 3038 at [37] [Costs judgment].12 Lagolago v Wellington Standards Committee 2 [2018] NZHC 1102.[9] The statutory pathway for this appeal is contained in s 254 of the Act:254 Appeal to Court of Appeal on question of law(1) Any party to an appeal under section 253(1) who is dissatisfied withany determination of the High Court in the proceedings as beingerroneous in point of law may, with the leave of that court, or, ifthe High Court refuses leave, with the leave of the Court of Appeal,appeal to the Court of Appeal against the determination; andsection 56 of the Senior Courts Act 2016 applies to any such appeal.(2) In determining whether to grant leave to appeal under this section,the Court of Appeal must have regard to whether the question of lawinvolved in the appeal is one that, by reason of its general or publicimportance or for any other reason, ought to be submitted tothe Court of Appeal for its decision.(3) The Court of Appeal, in granting leave under this section, may, in itsdiscretion, impose such conditions as it thinks fit, whether as to costsor otherwise.(4) The decision of the Court of Appeal on any appeal under this sectionis final.Proposed questions of law[10] Ms Lagolago seeks leave to appeal on the following questions of law:(a) whether the general approach to costs in civil litigation is the startingpoint for determination of costs in a disciplinary proceeding in theTribunal;(b) whether the principles relating to Calderbank letters are applicable indisciplinary proceedings; and(c) whether the High Court failed to take all relevant matters into accountor took irrelevant matters into account in making its decision.[11] Ms Lagolago argues that there is sufficient general or public importance dueto the lack of appellate court authority guiding the applicable costs principles inTribunal proceedings.High Court costs judgment[12] Clifford J reasoned that the New Zealand approach as to costs in disciplinaryproceedings is that the Tribunal has a broad discretion and costs do not simply followthe event.13 While it is wrong, he considered, to suggest "extraordinarycircumstances" would be required before costs could be ordered against theLaw Society, the Tribunal nonetheless has a broad evaluative exercise to undertake.14This reflects the special role of disciplinary proceedings and the fact that it ispractitioners themselves who must fund it.15[13] As to the Calderbank letter sent by Ms Lagolago offering a settlement thatultimately reflected the result on appeal, Clifford J considered the usual effect on costsof Calderbank letters did not apply to disciplinary proceedings in the rigid mannerprovided for in the High Court Rules 2016.16 He nonetheless accepted suchcommunications can be relevant to costs in some circumstances.17[14] The Judge concluded that while Ms Lagolago succeeded on appeal, she wasnot blameless.18 Comments from the District Court Judge whose proceedingstriggered the complaint showed the Law Society was right to be concerned aboutMs Lagolago's performance.19 Further, Clifford J found Ms Lagolago's inexperiencemeant the factual narrative both in the District Court in the substantive proceedingsand in the Tribunal was confused and complicated.20 Clifford J considered in thecircumstances it was a sufficient recognition of Ms Lagolago's success to quash thecosts order made against her by the Tribunal but it was not appropriate to award costsagainst the Law Society.2113 Costs judgment, above n 11, at [33].14 At [33].15 At [34].16 At [35].17 At [35].18 At [36].19 At [36(a)].20 At [36(d)].21 At [37].Applicant submissions[15] For Ms Lagolago, Mr Beck submitted that the applicable principles in thematter of costs in Tribunal proceedings are in need of clarification from this Court.While there is authority from this Court with respect to costs in High Court appealsfrom disciplinary tribunals,22 this is not the position with respect to costs inthe Tribunal itself. This made it a matter of general or public importance in terms ofs 254(2).[16] Mr Beck submitted that the costs approach generally applied in the High Courtand able to be deduced from the High Court Rules ought to be the starting point forany consideration of costs in the Tribunal. Mr Beck relied upon Shirley v WairarapaDistrict Health Board and Prebble v Awatere Huata (No 2) in support of thatsubmission.23 Mr Beck submitted logically the same approach should apply toCalderbank offers in disciplinary proceedings, citing Z v Dental ComplaintsAssessment Committee.24 Mr Beck submitted that the Judge was arguably in error onthis question of principle.[17] Mr Beck argued that the Judge had failed to take account of the fact thatMs Lagolago had been left substantially out of pocket even though she was thesuccessful party. This was both inconsistent with general authority and unfair.Further, it was not relevant to the question of costs in the Tribunal that the evidenceadduced in the District Court was confused and complicated (even if that was true).They were entirely distinct proceedings. Finally, the finding that Ms Lagolago hadcontributed to the unfavourable decision in the Tribunal due to the confused way inwhich the case was constructed in that forum was an ex post facto justification.Analysis[18] The authorities establish the essential applicable propositions. Roberts vA Professional Conduct Committee of the Nursing Council of New Zealand establishes22 See Roberts v A Professional Conduct Committee of the Nursing Council of New Zealand [2014]NZCA 141, (2014) 21 PRNZ 753.23 Shirley v Wairarapa District Health Board [2006] NZSC 63, [2006] 3 NZLR 523; and Prebble vAwatere Huata (No 2) [2005] NZSC 18, [2005] 2 NZLR 467.24 Z v Dental Complaints Assessment Committee [2008] NZSC 55, [2009] 1 NZLR 1.that the ordinary High Court Rules on costs apply in the High Court on appeal from aprofessional conduct tribunal. This Court considered the standard presumption thatcosts follow the event applied but, at the discretion of the High Court,"the presumption may be more easily displaced than usual on account of the publicfunction of professional conduct committees".25 Contrary to the view ofthe High Court however, this Court found that a "compelling reason" to award coststo the practitioner is not required.26[19] The Court did however emphasise the fact that professional conductcommittees carry out an important public function.27 That function is the maintenanceof public confidence in the particular profession through enforcement of professionalstandards of conduct. Implicit in that emphasis is the proposition that a strict costswill follow the event rule risks undermining that function.[20] Two High Court decisions in Daniels v Complaints Committee 2 of theWellington District Law Society and Simes v Canterbury-Westland StandardsCommittee 2 of the New Zealand Law Society deal with costs in the Tribunal itself(the issue in this case).28 Both decisions emphasised the wide discretion available tothe Tribunal on the question of costs, a discretion that includes the power to awardcosts against the practitioner even if acquitted.29[21] Section 249 of the Act deals with costs in Tribunal proceedings:249 Order for payment of costs(1) The Disciplinary Tribunal may, after hearing of any proceedings,make such order as to the payment of costs and expenses as it thinksfit.(2) In particular, the Disciplinary Tribunal may order that costs beawarded to any person to whom the proceedings relate, and that thosecosts be paid—25 At [29].26 At [29].27 At [27]–[29].28 Daniels v Complaints Committee 2 of the Wellington District Law Society [2011] 3 NZLR 850(HC); and Simes v Canterbury-Westland Standards Committee 2 of the New Zealand Law Society[2013] NZHC 1501.29 Daniels v Complaints Committee 2 of the Wellington District Law Society, above n 28, at [43]referring both to s 129 of the Law Practitioners Act 1982 and s 249 of the Act; and Simes vCanterbury-Westland Standards Committee 2 of the New Zealand Law Society, above n 28, at [27].(a) by the New Zealand Law Society (if that person is a lawyeror a former lawyer or an incorporated law firm or formerincorporated law firm or an employee or former employee ofa lawyer or incorporated law firm); or(b) by the New Zealand Society of Conveyancers (if that personis a conveyancing practitioner or a former conveyancingpractitioner or an incorporated conveyancing firm or formerincorporated conveyancing firm or an employee or formeremployee of a conveyancing practitioner or incorporatedconveyancing firm).(3) In particular, without finding the person charged to be guilty, theDisciplinary Tribunal may, if it considers that the proceedings werejustified and that it is just to do so, order that person to pay to theNew Zealand Law Society or the New Zealand Society ofConveyancers such sums as the Disciplinary Tribunal thinks fit inrespect of the expenses of and incidental to the proceedings and anyinvestigation of that person's conduct or of that person'saffairs or trust account carried out by, or on behalf of, aStandards Committee or the Legal Complaints Review Officer.(4) In this section, expenses includes not only out-of-pocket expenses butalso such amounts in respect of salaries of staff and overhead expensesincurred by either the New Zealand Law Society or the New ZealandSociety of Conveyancers as the Disciplinary Tribunal considersproperly attributable to an investigation.[22] In addition to the wide terms of s 249(1), s 249(3) empowers the Tribunal toorder the practitioner to pay the out-of-pocket expenses and overheads of theLaw Society even where the proceeding has resulted in an acquittal, provided theTribunal is satisfied the proceedings "were justified" and such order is "just". Asimilar provision was contained in s 129(1)(b) of the Law Practitioners Act 1982 andbefore that in s 41(b) of the Law Practitioners Act 1955.[23] In light of the factual findings in the Tribunal and the High Court (which weaddress at [26] below) Ms Lagolago had no realistic prospect of convincing eitherforum that she was entitled to costs even if, as Mr Beck proposed, the High CourtRules provided the "starting point".[24] As to the applicability of the Calderbank rules, the Judge concluded thatCalderbank letters will be relevant in the exercise of the Tribunal's costs discretion,but, unlike the approach of the High Court Rules, not determinative.30 For the reasons30 Costs judgment, above n 11, at [35].already expressed, we do not consider this point could make any difference to theresult. The Calderbank rules are a corollary of the standard costs follows the eventapproach and so are of limited assistance in assessing costs on these facts.[25] The applicant's question relating to relevant considerations is really a re-workof the earlier questions, the substance of which we have dealt with.[26] The final question relates to the High Court's finding that the way in which thehearing before the Tribunal was conducted produced a confused factual narrative inthat forum, and the way in which Ms Lagolago conducted her client's case in theDistrict Court produced a similar impression. Clifford J found that both contributedto the unfavourable decision in the Tribunal.31[27] These are factual issues refitted as irrelevant considerations. There can be nodoubt that if the Tribunal's wrong conclusions were in part the result of a poorly arguedcase and that this was consistent with the way Ms Lagolago had performed in theDistrict Court, such considerations could properly be taken into account in costs. Thetrue question is whether there was any evidence to support such conclusion(see Edwards (Inspector of Taxes) v Bairstow).32 It is clear that there was. There isno merit in this aspect of Ms Lagolago's argument and it raises no issue of general orpublic importance.Result[28] The application for leave to appeal is dismissed.Solicitors:Luke Cunningham Clere, Wellington for Respondent31 Costs judgment, above n 11, at [36].32 Edwards (Inspector of Taxes) v Bairstow [1956] AC 14 (HL).