LAGOLAGO v WELLINGTON STANDARDS COMMITTEE 2 [2018] NZHC 1102

LAGOLAGO v WELLINGTON STANDARDS COMMITTEE 2 [2018] NZHC 1102 [18 May 2018]IN THE HIGH COURT OF NEW ZEALANDWELLINGTON REGISTRYI TE KŌTI MATUA O AOTEAROATE WHANGANUI-Ā-TARA ROHECIV-2015-485-635[2018] NZHC 1102IN THE MATTER of an appeal under s 253 of the Lawyers andConveyancers Act 2006BETWEEN PAPALI'I TOTI LAGOLAGOAppellantAND WELLINGTON STANDARDSCOMMITTEE 2RespondentHearing: 2 May 2018Counsel: A C Beck for AppellantD R La Hood for RespondentJudgment: 18 May 2018JUDGMENT (NO. 2) OF CHURCHMAN JIntroduction[1] The applicant has filed an application for leave to appeal to the Court of Appealthe decision of Clifford J in the High Court at Wellington on 8 December 2017 inrespect of costs.1[2] The respondent opposes that application.Background[3] The applicant was found by the Lawyers and Conveyancers DisciplinaryTribunal ("the LCDT") to have been negligent in her professional capacity such as1 Lagolago v Wellington Standards Committee 2 [2017] NZHC 3038 [Lagolago].might bring the legal profession into disrepute on 13 August 2015.2 The LCDT madean alternative finding that, if it was wrong about negligence, the appellant would havebeen guilty of "unsatisfactory conduct".3[4] The applicant appealed against this decision to the High Court. On30 November 2016, Clifford J allowed the appeal.4 He held that, while it was clearthere was a degree of negligence, he was not satisfied that the negligence brought theprofession into disrepute.5 He also allowed the appeal against the alternative findingof unsatisfactory conduct on the basis that there was an absence of reasoning in theLCDT's decision and that it was not self-evident the applicant was guilty ofunsatisfactory conduct.6 He quashed the costs orders in favour of the Law Societymade in the LCDT.7[5] On 8 December 2017, Clifford J made orders for costs, which are the subjectof this application. He ordered that:(a) no award of costs against the Law Society in the LCDT was called for;(b) the costs order against the applicant in respect of her unsuccessful stayapplication should not be reversed;(c) the respondent should pay the applicant costs on her successful appealin the High Court; and(d) costs on the costs application itself should lie where they fall.Application for leave to appeal[6] Leave is required by s 254 of the Lawyers and Conveyancers Act 2006 ("theLCA"). This section provides as follows:2 Wellington Standards Committee 2 v Lagolago [2015] NZLCDT 25; Lawyers and ConveyancersAct 2006, s 241(c).3 Lawyers and Conveyancers Act 2006, s 12(a).4 Lagolago v Wellington Standards Committee 2 [2016] NZHC 2867.5 At [127].6 At [131].7 At [134].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 being erroneous inpoint of law may, with the leave of that court, or, if the High Court refusesleave, with the leave of the Court of Appeal, appeal to the Court of Appealagainst the determination; and section 56 of the Senior Courts Act 2016applies to any such appeal.(2) In determining whether to grant leave to appeal under this section, theCourt of Appeal must have regard to whether the question of law involved inthe appeal is one that, by reason of its general or public importance or for anyother reason, ought to be submitted to the 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 costs orotherwise.(4) The decision of the Court of Appeal on any appeal under this sectionis final.[7] Any appeal against a High Court decision is confined to questions of law and,in determining whether to grant leave, the Court must have regard to whether thequestion of law involved in the appeal is one that, by reason of its general or publicimportance or for any other reason, warrants the attention of the Court of Appeal.Grounds of appeal[8] The applicant seeks leave on the grounds that the decision is wrong in law inthe following respects:(a) The High Court held that the principle that costs follow the event doesnot apply to disciplinary proceedings. The Court effectively created aspecial class of civil proceedings.(b) The High Court adopted conflicting principles to determinations in theLCDT and the Court in relation to disciplinary matters. It held that, inthe High Court, costs do follow the event. In relation to costs in theLCDT, it held that costs should not follow the event.(c) The High Court followed the decision of Baxendale-Walker v LawSociety8 rather than the decision in Roberts v Professional ConductCommittee of the Nursing Council of New Zealand.9(d) The High Court held that the principles relating to Calderbank lettersdo not as a matter of course apply in disciplinary proceedings. TheCourt failed to give proper weight to the Calderbank letter in relationto Tribunal costs; it took no account of the letter in relation to the HighCourt costs.(e) The High Court failed to take relevant matters into account and tookirrelevant matters into account in determining the costs for the LCDThearing.(f) The High Court did not take all relevant matters into account indetermining whether there was a good reason to apply a differentapproach to costs on the stay application.(g) The Court departed from the time allocations in the Third Schedule tothe Rules without any proper basis for doing so.[9] The respondent submits that leave to appeal should not be granted because:(a) the asserted errors lack merit;(b) the substantive merits of the appeal do not warrant a grant of leave; and(c) no issue of general or public importance arises, the Court of Appealhaving already considered the issues in an analogous context.8 Baxendale-Walker v Law Society [2007] EWCA 233, [2008] 1 WLR 426.9 Roberts v Professional Conduct Committee of the Nursing Council of New Zealand [2014] NZCA141, (2014) 21 PRNZ 753 (CA).Costs in disciplinary cases[10] The general common law rule in civil proceedings, which is reflected in theHigh Court Rules, r 14.2(1)(a), is that the losing party makes a contribution to the costsof the successful party. In Prebble v Awatere Huata (No 2), the Supreme Court said:10The general rule that a successful party to an appeal will be entitled to costs wasadopted as the practice of the English Court of Appeal in 1875. It has been theinvariable practice of the Court of Appeal in New Zealand. It is a presumptionlegislatively provided for in the High Court Rules. It is consistent with the practice ofthe Privy Council.[11] And further:11In New Zealand, costs have not been awarded to indemnify successful litigants fortheir actual solicitor and client costs, except in rare cases generally entailing breachof confidence or flagrant misconduct. Except in such cases, in both the Court ofAppeal and the High Court orders for party and party costs have been limited to areasonable contribution to the costs of the successful party. That approach is of longstanding and may have been adopted partly for reasons of access to justice, asWilliams J suggested in the course of argument in Sargood v Corporation of Dunedin.[12] The Supreme Court has held that disciplinary proceedings are civilproceedings,12 which would suggest that the general approach to costs in civilproceedings in the High Court should be the starting point for the exercise of any costsdiscretion.[13] In the case of Roberts v Professional Conduct Committee of the NursingCouncil, the normal practice in civil litigation in the High Court of awarding costs onthe appeal to the successful party was followed.13 The Court of Appeal, however,accepted that the presumption of costs following the event might be more easilydisplaced in disciplinary proceedings, although it did not require a compelling reason:[27] That is not to say we consider costs should always follow the event inthese sorts of cases. We accept (as indeed did Mr Waalkens) that the factprofessional conduct committees are performing a public function and havean immunity at Tribunal level may properly be taken into account indetermining whether costs may be awarded and if so in what amount.10 Prebble v Awatere Huata (No 2) [2005] NZSC 18, [2005] 2 NZLR 467 at [3] (footnotes omitted).11 At [6] (footnotes omitted).12 Z v Dental Complaints Assessment Committee [2008] NZSC 55, [2009] 1 NZLR 1.13 Roberts, above n 9.[28] Given that the fact conduct committees are performing a publicfunction will be a factor in every appeal, it might be thought that taking thisinto account will for all intents and purposes produce exactly the same resultas that proposed by the Judge's compelling reason threshold. Taking thepublic function into account will effectively mean that "something else" inaddition to success may sometimes be required before costs can be awardedto a successful applicant. Ultimately, however, it is a question of degree oremphasis.[29] In our view, the correct and more principled approach is simply thatthe usual presumption still applies but, at the discretion of the Judge, thepresumption may be more easily displaced than usual on account of the publicfunction of professional conduct committees. A successful appellant is not,however, required to satisfy a "compelling reason" threshold.[14] The applicant submitted that the leading authority on LCDT costs was Danielsv Complaints Committee 2 of the Wellington District Law Society.14 In that case, thepractitioner had argued that the costs imposed against him were excessive andexceeded an accepted measure of costs of 50 per cent applicable in disciplinaryproceedings. The Court declined Mr Daniels' appeal, electing not to adopt amathematical approach to the award of costs, instead finding that the LCDT wasentitled to award costs of an amount it considered to be appropriate:[43] An award of costs under s 129 of the 1982 Act (and the 2006 Act) isentirely discretionary. A practitioner may be ordered to pay costs if theTribunal considers that the proceedings were justified, despite the practitionernot being subject to a guilty finding. It is clear that expenses include salariesand staff and overhead expenses incurred by the societies that investigate andbring proceedings before the Tribunal. So the scope or ambit for a costs orderis very wide. The Court will only interfere in the exercise of a tribunal'sdiscretion if it is wrong in principle or clearly unreasonable.[15] This reasoning was also reflected in Simes v Canterbury-Westland StandardsCommittee 2 of the New Zealand Law Society, where the High Court said:15Section 249 of the Act confers a broad discretion on the Tribunal to awardcosts in any given case. The Tribunal must not disable itself from exercisingits discretion in a particular case by rigidly adopting and applying fixed rulesor policies. To do so would be to improperly fetter its discretion and precludemeaningful participation in the decision-making process.[16] In that case, charges of misconduct and unsatisfactory conduct had been laidagainst Ms Simes. The LCDT found that there was no evidence that the offences had14 Daniels v Complaints Committee 2 of the Wellington District Law Society [2011] 3 NZLR 850.15 Simes v Canterbury-Westland Standards Committee 2 of the New Zealand Law Society [2013]NZHC 1501 at [27].been committed and awarded costs against the Standards Committee, directing themto pay a sum that represented approximately two thirds of Ms Simes' counsel's costsin respect of the substantive matter, but rejecting her application for costs on her costsapplication.16[17] In the present case, Clifford J said:17In my view, therefore, the correct approach in New Zealand in disciplinaryproceedings where the relevant Tribunal does have a broad jurisdiction toaward costs is that costs do not simply follow the event. The fact that aregulatory function is being discharged in the public interest is a relevantconsideration, but is not determinative. What is required is an evaluativeexercise of the discretion provided by the Act.[18] Counsel for the applicant, Mr Beck, argues that the approach adopted byClifford J treats disciplinary cases as a separate class of case where the normalapproach to costs is not to be followed and instead a different approach is to be applied,effectively creating a special class of civil proceedings. Mr Beck submits that it isseriously arguable that this is not the proper approach to adopt and that it does notaccord with what the Court of Appeal said in Roberts. He submits that as the questionas to how costs ought to be approached in the LCDT accordingly remains a matter ofconsiderable uncertainly and has never been addressed in the Court of Appeal, this is,therefore, a matter that should properly be addressed by the Court of Appeal.[19] However, Roberts concerned a professional conduct committee operating in adifferent context and under a different statutory regime, namely the HealthPractitioners Competence Assurance Act 2003 ("the HPCAA"). The HPCAAprovides that, in proceedings before the Health Practitioners Disciplinary Tribunal,costs can be awarded in favour of a conduct committee but not against one.18 Thiscontrasts with the LCA, under which the LCDT can award costs both for and againstthe Law Society. More importantly, Roberts did not specifically address the approachto the award of costs at the tribunal level as opposed to costs in the courts. Therefore,the Court of Appeal's findings in relation to Roberts are of limited assistance indetermining the correct approach to the award of costs at the LCDT level.16 At [9]-[13].17 Lagolago, above n 1, at [33].18 Health Practitioners Competence Assurance Act 2003, s 101(1)(f).[20] In terms of the cases that did consider costs at the LCDT, the case of Danielsis largely irrelevant as it concerns the amount of costs awarded against the applicantrather than whether or not he should have been required to pay costs. However, it isof note that the Court in Daniels stated that, in a situation where the proceedings werejustified, the practitioner may be required to pay costs even if he or she is not foundguilty. Simes can be distinguished from the facts before us given that costs wereawarded against the Law Society as there was found to have been no evidence of anywrongdoing on the part of Ms Simes, whereas Ms Lagolago was found to have beennegligent, albeit not to the standard to justify the conclusion reached by the LCDT.General or public importance[21] In order to obtain leave, the applicant has to demonstrate not just that theproposed appeal raises a question of law but that the question is one of general orpublic importance. None of the propositions relied on by the applicant and set out in[8] of this decision are made out.[22] The approach to be taken by the courts to costs at the LCDT is not uncertain.It is discretionary and the fact that costs will not necessarily reflect the standardprinciple for civil proceedings of costs following the event reflects the public functionthat the standards committee is fulfilling. By exercising his discretion not to awardcosts against the Law Society, Clifford J was not creating a special class of civilproceedings. Accordingly, this particular issue is not a matter that needs to beaddressed by the Court of Appeal. Neither is there any conflict in the approaches takento costs in the High Court and the LCDT. There is no obligation on the LCDT to applythe High Court costs regime to matters before it. It has a discretion whichappropriately reflects the public benefit nature of its function.Baxendale-Walker v Law Society[23] Mr Beck submitted that Clifford J's decision was wrong in law as it followedthe decision of Baxendale-Walker v Law Society19 rather than Roberts.19 Above n 8.[24] Baxendale-Walker was a decision of the Court of Appeal of England andWales, dealing with a solicitor who faced two allegations of conduct unbecoming asolicitor, one of which was dismissed while the other was admitted by Mr Baxendale-Walker. The Law Society had been ordered by the Tribunal to pay 30 per cent of hiscosts. This costs order was found to have been unjustified, with the Court of Appealreasoning that:20 [its] regulatory function places the Law Society in a wholly differentposition to that of a party to ordinary civil litigation. The normal approach tocosts decisions in such litigation – dealing with it very broadly, that properlyincurred costs should follow the "event" and be paid by the unsuccessful party– would appear to have no direct application to disciplinary proceedingsagainst a solicitor.[25] And:21Unless the complaint is improperly brought or, for example, proceeds as a"shambles from start to finish", when the Law Society is discharging itsresponsibilities as a regulator of the profession, and order for costs should notordinarily be made against it on the basis that costs follow the event. The"event" is simply one factor for consideration. It is not a starting point.[26] The Court of Appeal, therefore, found that:22[T]he tribunal misdirected itself when it ordered the Law Society to pay partof the solicitor's costs on the basis that the first allegation against him hadfailed and that costs should follow the event. This overlooked not only thepublic obligation of the Law Society ... but the additional fact that the solicitorbrought the proceedings in relation to both allegations on himself.[27] It is therefore clear from the paragraphs cited above that the Court in Englandand Wales take a comparatively rigid view of not awarding costs in disciplinaryproceedings. While it is true that Clifford J referred to Baxendale-Walker in hisjudgment, he concluded that the LCDT had, in exercising its costs jurisdiction on thebasis of Baxendale-Walker, set the bar too high as regards costs orders in favour ofthose who successfully defend disciplinary proceedings.23 He also acknowledged thatRoberts indicates that the fact an application for costs has been made against aregulator is not as telling a consideration in the regulator's favour in New Zealand.2420 At [34].21 At [39].22 At [40].23 Lagolago, above n 1, at [17].24 At [32].[28] Clifford J followed neither Baxendale-Walker nor Roberts, but merely tooktheir reasoning into consideration in arriving at his conclusion on the facts. Asaddressed above, the case of Roberts was decided in the context of a differentdisciplinary body operating under different statutory provisions, and concerned costsat the High Court level rather than at the tribunal level, meaning that it was not anappropriate precedent to follow. While Baxendale-Walker concerned costs at thetribunal level, it was a decision from another jurisdiction where a more rigid view ofcosts is taken. It cannot be said that Clifford J made an error of law.Calderbank letters[29] Clifford J, having already held that the normal civil costs approach does notapply to disciplinary proceedings, also held that that the Calderbank rules do not apply.He said:[35] I am satisfied that, as Mr Beck submits, my judgment on MsLagolago's appeal reflected the "offer" Ms Lagolago made in her settlementletter. But that is not to say that the Calderbank rules apply accordingly. Thoserules are a response to the presumption in the High Court Rules that costsfollow the event and, in effect, allow a defendant to redefine the event for thatpurpose. It follows that the outcomes provided for by those principles do not,as a matter of course, apply when the Tribunal exercises its costs discretionunder the Act. Rather, such a letter, and indeed less formal exchanges betweena practitioner and the Law Society relating to the progress of disciplinaryproceedings, may be relevant when the question of costs falls to be assessed.[30] Mr Beck submitted that this was not the correct approach and that the startingpoint should have been the normal civil costs regime. He submitted that the policybehind Calderbank offers of achieving settlements in appropriate cases is equally validin disciplinary proceedings.[31] Mr Beck further submitted that, whatever the correct position in the Tribunalmight be, the Calderbank offer was undoubtedly relevant in the High Court. In failingto address the relevance of the Calderbank offer to the High Court appeal, Clifford Jfailed to take a material factor into account in determining the costs to be awarded inthe appeal.[32] Mr La Hood, for the Law Society, submitted that Clifford J's decision in respectof the Calderbank letter was consistent with the Court of Appeal's decision in Robertsthat the public interest factors that inform disciplinary proceedings differ to ordinarycivil proceedings and are relevant to costs awards. He submitted that it wasappropriate that the principles relating to Calderbank letters be held not to apply indisciplinary proceedings, given that a Standards Committee is not in the same positionas an ordinary litigant looking to initiate civil litigation.[33] Mr La Hood further submitted that the applicant's submission that theCalderbank offer ought to have been taken into account in assessing the High Courtcosts is incorrect as the applicant was awarded costs in the High Court and theCalderbank offer could only have had relevance to the LCDT proceedings.[34] I do not accept Mr Beck's submission that the policy behind Calderbank offersof achieving settlements in appropriate cases is equally valid in disciplinaryproceedings. Disciplinary proceedings have a dimension that is absent in most othercivil litigation. That dimension justifies a different approach to Calderbank offers.While Ms Lagolago had offered to waive the balance of fees owing to her if the chargeswere withdrawn, the complaint alleged negligence. The Committee had an importantpublic role to exercise in investigating possible professional misconduct. As discussedabove, the normal rule with regard to costs in civil proceedings do not apply indisciplinary proceedings. Therefore, Clifford J did not err in deciding not to factor inthe Calderbank offer when declining to award costs against the Committee at theLCDT level.[35] With regards to costs at the High Court level, Mr Beck is correct in his assertionthat Clifford J did not specifically address the relevance of the Calderbank offer to thisHigh Court appeal. However, as her case was not one in which the offer made wasappropriate, the relevance of the Calderbank offer to the High Court appeal was not amaterial factor that Clifford J needed to take into account when determining the coststo be awarded on the appeal. He made no error of law in this regard.Relevant and irrelevant factors[36] Mr Beck submits that Clifford J failed to take into account the fact thatMs Lagolago was wholly successful in her appeal. However, while the appeal wasallowed, she was found to have been negligent, just not to such a degree as to warrantdisciplinary action. His decision was not a wholesale vindication. As noted in Danielsat [43], the LCDT may order a practitioner to pay costs even if he or she is not subjectto a guilty finding, provided the proceedings were justified.[37] Mr Beck submits that Clifford J held the fact that Ms Lagolago's factualnarrative was confused and complicated against her when it was up to the StandardsCommittee to provide the appropriate factual narrative.[38] I do not accept that submission. Clifford J found that Ms Lagolago's confusedand complicated narrative in this matter reflected how she had adduced evidence inthe District Court on the case which was the subject of the complaint, and is thereforeof relevance in determining whether the Law Society was justified in bringing theseproceedings before the LCDT.Stay application[39] Clifford J held that costs should not be awarded on the stay application becausethey had to "follow the event".25 Mr Beck submitted that the issue is what shouldhappen to costs in the situation where the whole of the appeal has gone against theCommittee and the appeal would not have been necessary had the Committee acceptedthe Calderbank offer made by Ms Lagolago.[40] However, the High Court Rules on this are clear. The party who fails withrespect to an interlocutory application should pay costs to the party who succeeds.26This is so, regardless of whether the party then goes on to succeed at the hearing. Itherefore decline to grant leave to appeal on this ground.Costs on the High Court appeal[41] The appeal at the High Court began half an hour early at the request of CliffordJ who determined that the early start was not sufficient to justify anything more thatthe half day for which the appeal was set down.2725 Lagolago, above n1, at [38].26 High Court Rules, r. 14.2(1)(a).27 Lagolago, above n1, at [39].[42] Mr Beck, however, submitted that Ms Lagolago is entitled to 0.75 of a day forthe hearing of the appeal as, if the hearing had commenced at the scheduled time, itwould have been necessary to reconvene in the afternoon.[43] The awarding of costs is discretionary. It was perfectly reasonable thatClifford J elected not to award 0.25 of a day on the basis of a hearing being half anhour longer than anticipated. No issue of law of general or public importance isinvolved.Conclusion[44] The application does not meet the threshold in s 254. Accordingly, leave toappeal is declined.Churchman JSolicitors:Luke Cunningham Clere, Wellington for Respondent