BUBLITZ v R [2019] NZCA 379

BUBLITZ v R [2019] NZCA 379 [22 August 2019]IN THE COURT OF APPEAL OF NEW ZEALANDI TE KŌTI PĪRA O AOTEAROACA138/2018[2019] NZCA 379BETWEEN PAUL NEVILLE BUBLITZAppellantAND THE QUEENRespondentCA168/2018BETWEEN LANCE DAVID MORRISONAppellantAND THE QUEENRespondentHearing: 25 September 2018Court: Kós P, Winkelmann and Williams JJCounsel: R S Reed QC and H M Z Ford for Appellant BublitzD H O'Leary and R J Beca for Appellant MorrisonB J Horsley and R K Thomson for RespondentJudgment: 22 August 2019 at 11 amJUDGMENT OF THE COURTA Mr Bublitz's appeal is dismissed.B Mr Morrison's appeal is dismissed.C There is no order made as to costs.____________________________________________________________________REASONS OF THE COURT[1] Mr Bublitz and Mr Morrison were charged, initially, with multiple criminalcounts under ss 220 and 242 of the Crimes Act 1961 and s 377 of the Companies Act1993, arising from the collapse of two finance companies, Viaduct Capital Ltd andMutual Finance Ltd. After nine months, their trial was aborted by Woolford J becauseof what the Judge described as "extensive" and "unprecedented" late disclosure bythe Crown.1[2] Mr Bublitz and Mr Morrison sought costs. The Judge awarded Mr Morrison$75,000 under s 5 of the Costs in Criminal Cases Act 1967 and made an award of$50,000 under s 364 of the Criminal Procedure Act 2011 to be split five ways betweenMr Bublitz, Mr Morrison, two other defendants and the Crown.2[3] Mr Bublitz appeals the quantum of the CPA award. Mr Morrison appealsthe quantum of the CCCA award.Background[4] The charges arose from the 2010 collapse of two companies controlled byMr Bublitz, Viaduct Capital Ltd and Mutual Finance Ltd. Following extensiveinvestigations by the Financial Markets Authority,3 in 2014 Mr Bublitz andMr Morrison were charged with the offences noted at [1], along with four other men.4[5] The two companies had the benefit of Crown guarantees under the CrownRetail Deposit Guarantee Scheme. The Crown case was that the defendants, led byMr Bublitz, entered into a series of transactions that breached limitations on relatedparty transactions in the companies' trust deeds and the Crown guarantees. The Crownalso alleged the defendants misled potential investors and the Crown by failing to1 R v Bublitz [2017] NZHC 1059 [Reasons to abort trial] at [63] and [66].2 R v Bublitz [2018] NZHC 373 [Costs decision] at [131]. We refer to the Costs in Criminal CasesAct 1967 and Criminal Procedure Act 2011 as the CCCA and CPA respectively.3 We refer to the Financial Markets Authority as the FMA.4 Bruce McKay, Richard Blackwood, Nicholaas Wevers and Peter Chevin were also charged.Mr Chevin pleaded guilty to all charges against him. Mr Wevers died shortly after he was charged.Mr McKay and Mr Blackwood did not appeal the costs decision. We refer to Mr McKay,Mr Blackwood, Mr Bublitz and Mr Morrison collectively as the defendants.disclose these transactions in prospectuses and investment statements. It was allegedthose actions were undertaken to deal with cashflow problems in other investmentcompanies controlled by Mr Bublitz that occurred in the wake of the 2007–2008 globalfinancial crisis.[6] The defendants pleaded not guilty. Their trial commenced in the High Courtat Auckland before Woolford J on 8 August 2016. The trial significantly exceededthe allocated three months. Mr Bublitz funded his defence privately until the start ofthe fifth month of the trial, at which point he was approved for legal aid. Mr Morrisonretained private counsel until October 2015, whereupon he represented himself withthe assistance from May 2016 of counsel appointed by the Court. During the Crowncase, a number of charges were either withdrawn or dismissed, reducing the chargesto 15 in all against the appellants.[7] On 23 March 2017, after the Crown case had closed but before the conclusionof Mr Bublitz's defence, the Crown disclosed to the defence a list of documents fromthe files of Deloitte, investigative agents for the FMA. These documents had beenreviewed by Crown counsel between September and October 2016 and were notdisclosed on the grounds that they were irrelevant or able to be withheld. The latedisclosure of this list was an admitted breach of ss 13(2)(b) and (5) ofthe Criminal Disclosure Act 2008.5 Woolford J aborted the trial on 10 May 2017 onthe basis that the prosecution's non-compliance with the Criminal Disclosure Act gaverise to a reasonable danger of a miscarriage of justice, compounded by a prosecutionof "unnecessary length and complexity".6[8] The Crown chose not to proceed against Mr Morrison again. The remainingcharges against him were dismissed. Subsequently Mr Bublitz was retried andconvicted on four charges of theft by a person in a special relationship and two chargesof making a false statement as a promoter of securities.7 Toogood J sentencedMr Bublitz to three years and two months' imprisonment on these charges.8Mr Bublitz's appeal to this Court against conviction and sentence was recently allowed5 Costs decision, above n 2, at [11].6 Reasons to abort trial, above n 1, at [93]–[98].7 Crimes Act 1961, ss 220, 223(a) and 242.8 R v Bublitz [2019] NZHC 592 [Sentencing notes] at [110].in part. Convictions on the two false statement charges were set aside. The otherconvictions were sustained. His sentence was reduced to 11 months' home detention.9Application for costs[9] Following the aborted trial, but before the conclusion of the retrial, Mr Bublitzand Mr Morrison applied to the High Court for costs. Mr Bublitz sought costs of$1,284,493.57. Of that, $200,000 was sought under the CCCA and $1,084,493.57under the CPA.10 Mr Morrison applied for costs totalling $212,992.90 underthe CCCA and CPA but did not specify how much was sought under each Act.11Statutory scheme[10] Section 364 of the CPA provides:364 Costs orders(1) In this section,—costs order means an order under subsection (2)procedural failure means a failure, or refusal, to comply with arequirement imposed by or under this Act or any rules of court orregulations made under it, or the Criminal Disclosure Act 2008 or anyregulations made under that Actprosecution—(a) means any proceedings commenced by the filing of acharging document; but(b) does not include an appeal.(2) A court may order the defendant, the defendant's lawyer, orthe prosecutor to pay a sum in respect of any procedural failure by thatperson in the course of a prosecution if the court is satisfied thatthe failure is significant and there is no reasonable excuse for thatfailure.(3) The sum must be no more than is just and reasonable in the light ofthe costs incurred by the court, victims, witnesses, and any otherperson.9 Bublitz v R [2019] NZCA 364.10 Costs decision, above n 2, at [15].11 At [19].(4) A costs order may be made on the court's own motion, or onapplication by the defendant, the defendant's lawyer, orthe prosecutor.(5) Before making a costs order, the court must give the person againstwhom it is to be made a reasonable opportunity to be heard.(6) A costs order may be made even if the defendant has not yet beenconvicted, or is eventually discharged, or the charge is dismissed.(7) The court may make more than 1 costs order against the same personin the course of the same prosecution.(8) The court may order that some or all of the amount ordered to be paidunder a costs order be paid to any person connected withthe prosecution.(9) Subsections (2) to (8) do not limit or affect the Costs in Criminal CasesAct 1967.[11] Section 5 of the CCCA provides:5 Costs of successful defendant(1) Where any defendant is acquitted of an offence or where the charge isdismissed or withdrawn, whether upon the merits or otherwise,the court may, subject to any regulations made under this Act, orderthat he be paid such sum as it thinks just and reasonable towardsthe costs of his defence.(2) Without limiting or affecting the court's discretion under subsection(1), it is hereby declared that the court, in deciding whether to grantcosts and the amount of any costs granted, shall have regard to allrelevant circumstances and in particular (where appropriate) to—(a) whether the prosecution acted in good faith in bringing andcontinuing the proceedings:(b) whether at the commencement of the proceedingsthe prosecution had sufficient evidence to supportthe conviction of the defendant in the absence of contraryevidence:(c) whether the prosecution took proper steps to investigate anymatter coming into its hands which suggested thatthe defendant might not be guilty:(d) whether generally the investigation into the offence wasconducted in a reasonable and proper manner:(e) whether the evidence as a whole would support a finding ofguilt but the charge was dismissed on a technical point:(f) whether the charge was dismissed because the defendantestablished (either by the evidence of witnesses called by himor by the cross-examination of witnesses for the prosecutionor otherwise) that he was not guilty:(g) whether the behaviour of the defendant in relation to the actsor omissions on which the charge was based and tothe investigation and proceedings was such that a sum shouldbe paid towards the costs of his defence.(3) There shall be no presumption for or against the granting of costs inany case.(4) No defendant shall be granted costs under this section by reason onlyof the fact that he has been acquitted or that any charge has beendismissed or withdrawn.(5) No defendant shall be refused costs under this section by reason onlyof the fact that the proceedings were properly brought and continued.Judgment appealedCosts under the CCCA[12] The Judge considered that costs under the CCCA were available only toMr Morrison. The "unique circumstances" of the case meant it was inappropriate tohear Mr Bublitz's application while significant charges remained outstanding againsthim.12 The analysis of the dismissed charges would depend on the outcome ofthe retrial.13 All charges against Mr Morrison having been dismissed, there was nobarrier to determining his CCCA application.14[13] In determining whether Mr Morrison should be awarded costs under s 5 ofthe CCCA, the Judge considered the factors under s 5(2),15 as well as various otherissues unique to the trial, including the breadth and complexity of the Crown chargenotice, a Crown application to admit hundreds of documents underthe co-conspirator's rule, the unavailability of a Crown expert, the admitted breach bythe Crown of the Criminal Disclosure Act and the length of the trial.16 In light of thesefactors, the Judge considered that an award under s 5 was appropriate.12 At [36]–[37].13 At [38]–[40].14 At [41]–[44].15 At [46]–[55].16 At [56].[14] In terms of quantum, the Judge found that scale costs would be inadequate.17The question of quantum therefore became one of discretion and judgment. Bearing inmind all the factors for and against Mr Morrison's application (includingMr Morrison's failure to establish his innocence despite all charges against him havingbeen dismissed), the Judge considered that Mr Morrison was entitled to a substantialamount, although not reaching the level of indemnity costs. The Judge decided anaward of $75,000 would be just and reasonable in the circumstances.18Costs under the CPA[15] Turning to the applications for costs under s 364 of the CPA, it was commonground that the prerequisites of a "significant procedural failure" with "no reasonableexcuse" had been met.19 The Judge concluded that orders should be made under s 364against the FMA to sanction its procedural failure in carrying out the investigation andinitiating the prosecution.20 On appeal, there was no challenge by the Crown to thatconclusion, and it was common ground that the FMA was the appropriate prosecutor.[16] The remaining question was, what quantum would be just and reasonable inthe circumstances?[17] In order to answer this question, the Judge considered the purpose of s 364 andagainst whom the order should be made.21 In light of the wording of the section,legislative history and wider context the Judge found that s 364, in contrast tothe CCCA, was "primarily intended to serve as a means of sanction, but may well offersome compensation to defendants and others who have incurred loss".22 It would beunthinkable to suggest the defence compensate the Crown for its actual costs if asimilar inadvertent error were made by defence counsel or the defendant resulting inan aborted trial.23 Looking at the "global position", the Judge considered that an17 At [59], pursuant to CCCA, s 13(3).18 At [60]–[64].19 At [76].20 At [122].21 At [76].22 At [107].23 At [128].overall award of $50,000 was appropriate to censure the FMA for its non-compliance,to be paid to each of the four defendants and the Court equally.24Issues[18] This appeal raises five issues: 25(a) Issue One: does s 364 of the CPA give rise to an appeal againstdiscretion or a general appeal?(b) Issue Two: does s 364 of the CPA have a primarily penal purpose?(c) Issue Three: did the Judge err in determining the quantum of the awardunder s 364 of the CPA?(d) Issue Four: did the Judge err in determining the quantum of the awardunder s 5 of the CCCA?(e) Issue Five: did the Judge err in failing to make a costs award followingthe successful costs application?[19] The first three issues arise on Mr Bublitz's appeal; the latter two onMr Morrison's.Issue One: does s 364 of the CPA give rise to an appeal against discretion or ageneral appeal?[20] Mr Bublitz's appeal is brought under s 271 of the CPA, which provides a rightof appeal against a decision to make or refuse to make a costs order.26 This Court mayconfirm, vary or set aside the costs decision made below, or make any other orders itdeems appropriate.27 An issue arises as to whether the Judge's decision regarding24 At [129]–[130].25 Mr Bublitz also advanced an argument in his written submissions based on s 162 of theSenior Courts Act 2016. It was not pursued in oral submissions and we are satisfied it does notoffer an independent source of jurisdiction additional to the CPA and CCCA in the context of thisappeal.26 A costs order is defined as an order for the payment of costs under s 364 of the CCCA: CPA, s 270.27 Section 274.quantum under s 364 is "an evaluative decision" to be assessed as a general appeal byway of rehearing,28 or an assessment of a discretionary decision, to be determinedunder the more limited review outlined in May v May.29[21] Ms Reed QC submitted that the question of what quantum is "just andreasonable" under s 364 is a question of law requiring an evaluative, and notdiscretionary, consideration analogous to the question of whether evidence should beadmissible under the Evidence Act 2006.30[22] Mr Horsley, on the other hand, submitted that whether to make a costs awardand how much to award under s 364 is a purely discretionary decision. The onlytouchstone for the Court is that the sum must be "no more than is just and reasonable";the summary context in which costs awards are made suggests that these areprocedural rather than principled decisions; and more than one view of the appropriatequantum is legally possible.31Discussion[23] Both parties recognised that little turns on this distinction, as Mr Bublitz'sprimary argument is that the Judge exercised the discretion on wrong principle.Indeed, as recognised by this Court in Taipeti v R, the distinction is incapable of precisedefinition, and its value has been questioned.32[24] It is unnecessary for us to decide this issue given Mr Bublitz's primaryargument. However, were we required to do so we would have held that the Judge'sdecision under s 364 as to quantum is one of the residual areas remaining ofdiscretionary determination, having regard to the indicia noted in Taipeti:28 Austin, Nichols & Co Inc v Stichting Lodestar [2007] NZSC 103, [2008] 2 NZLR 141 at [5].29 May v May (1982) 1 NZFLR 165 (CA) at 170, approved in Kacem v Bashir [2010] NZSC 112,[2011] 2 NZLR 1 at [32].30 R v Gwaze [2010] NZSC 52, [2010] 3 NZLR 734 at [49].31 Taipeti v R [2018] NZCA 56, [2018] 3 NZLR 308.32 At [50], citing M B Rodriguez Ferrere "The Unnecessary Confusion in New Zealand's AppellateJurisdictions" (2012) 12 Otago LR 829.[49] These decisions show that the classes of case which appeal courtsclassify as an exercise of discretion are dwindling. Three possible indicia ofthe presence of discretion emerge. First, the extent to whichthe decision-maker can apply his or her own "personal appreciation" has beenidentified as a "key indication". Clearly, the greater the level of prescriptionin terms of what is required of the decision-making process the more likelythe decision is an evaluative process, rather than the exercise of a discretion.Second, procedural decisions are more likely to be an exercise of discretionthan wider issues of principle involving the application of law to the facts.Third, if only one view is legally possible, that points away from a discretion.In other words, where there is scope for choice between multiple legally"right" outcomes, that points towards a discretion.(footnotes omitted)[25] We would have done so essentially for the reasons offered by Mr Horsley at[22] above. Ultimately, once the evaluative decision is made to impose a sanctionunder s 364, the precise quantum is a matter of discretionary impression for the Judge,subject to review grounds rather than general right of appeal.[26] For the appeal to succeed it follows we would need to be satisfied thatthe Judge's decision involved an error of law or principle, took account of irrelevantconsiderations, failed to take account of a relevant consideration or was plainlywrong.33Issue Two: does s 364 of the CPA have a primarily penal purpose?[27] Ms Reed submitted that the Judge erred in principle by interpreting s 364 ashaving a primarily penal purpose. Such an interpretation would be consistent withthe CPA's purpose of promoting the fair and efficient disposition of criminalproceedings, as wasted costs orders promote fairness and efficiency. Given the plainmeaning of the section, Ms Reed submitted that there was no need for the Judge tohave recourse to extrinsic materials. In any case, the legislative documents, supportedby the approach to wasted costs in England and Wales, indicated that compensationshould be the touchstone for quantum.[28] Mr Horsley submitted that Parliament's purpose when designing the CPA wassquarely on improving procedural efficiency through a system of incentives and33 Kacem v Bashir, above n 29, at [32].punishment, not compensating defendants for the costs of their prosecution.While s 364 may be used to compensate parties affected by failures to abide byprocedural requirements, this is an incidental effect rather than the primary purpose ofthe provision.Discussion[29] Prior to the introduction of s 364, the court's source of power to order costs fordereliction of duty lay in its inherent jurisdiction to make wasted costs orders againstcounsel. Although such an order could be expressed in compensatory terms, itsprimary purpose was to punish practitioners who had failed to fulfil their duty towardsthe court.34 Given the existence of this separate power, the Law Commission's2000 report on reforming the CCCA did not address the need for costs as proceduralsanctions.35 By contrast, the Law Commission viewed the CCCA as primarilycompensatory in nature, achieving the appropriate balance between providing "a levelof reimbursement to innocent defendants and a means to censure improper prosecutionconduct".36[30] In 2005, the Law Commission released a report recommending large-scalereform of criminal procedure. In the report, the Law Commission recommended thatcosts orders for failures without reasonable excuse to comply with proceduralobligations be introduced as a sanction, to be used as a last resort to change entrenchedpractices of procedural non-compliance within the criminal justice system.37The Law Commission stated:[400] A costs order on a prosecutor, who is employed by a state agency,might be colloquially described as a money-go-round: money given bythe government with one hand (in the budget process) is then taken with theother (a costs order to the benefit of the consolidated fund). The agency is atrustee of money on behalf of the state and ultimately the taxpayer.If the agency is fined to the detriment of whatever other service it is supposedto be providing, it is embarrassing for the agency and its responsible Minister,but the taxpayer rather than the agency is the ultimate loser. However, costsorders on government agencies are still salutary and we consider that theyshould be imposed if appropriate. Not only do they promote accountability34 Harley v McDonald [2002] 1 NZLR 1 (PC) at [49].35 Law Commission Costs in Criminal Cases (NZLC R60, 2000) at [6].36 At [4].37 Law Commission Criminal Pre-Trial Processes: Justice Through Efficiency (NZLC R89, 2005)at [383] and [398]–[400].by making performance failure explicit and public, but their impact onthe budget of the agency concerned is likely to be sheeted home tothe individual in their performance assessment, and therefore modify theirbehaviour, and the behaviour of their colleagues, in the future.(footnotes omitted)[31] Of relevance also is the footnote to that paragraph, which discussesthe possibility of the defendant being the recipient of such a payment:38Arguably, it is the defendant's right to be promptly tried that has been affected:the defendant, not the consolidated fund, should therefore be remunerated fordelays. However, whether those who are found guilty should benefitfinancially from a failure of the criminal justice system, when they have onlybeen exposed to that system by virtue of proven criminal offending, is likelyto be a matter for some debate, and regarded as a last resort, if appropriate atall. For recent consideration of a similar issue, see the Prisoners' and Victims'Compensation Bill first reading debate. See also, in relation to an acquittedperson, R v Brown in which the majority of the five member bench of the Courtof Appeal declined to express a view on the availability of compensation forbreach of fair trial rights, but acknowledged the strength of the viewsexpressed (obiter dicta) by William Young J in a separate judgment. Young Jstated that he would regret such a development; it was not one that had foundfavour overseas; and there were better remedies within the jurisdiction of trialand appellate courts, which would be consistent with evidentiary exclusion forinvestigative breaches of the Bill of Rights.[32] The Law Commission evidently viewed the scope of requisite reform as asanction or penalty for failure to comply with procedural requirements. Little weightwas given to the possibility that this could result in any compensation to the defendant.Certainly, it was not the primary purpose of the order proposed bythe Law Commission.[33] In due course the Criminal Procedure (Reform and Modernisation) Bill 2010was introduced.39 In the debate on the Bill's second reading, the then Minister ofJustice, the Hon Simon Power, observed that the most significant changes included"enabling costs ordered against a party for not complying with proceduralrequirements to be paid to people connected to the proceedings who incurredadditional costs because of the non-compliance".40 Throughout the debate the costsprovisions were described as sanctions for "procedural non-compliance", rather than38 At 119, n 219 (citations omitted).39 Criminal Procedure (Reform and Modernisation) Bill 2010 (243–1).40 (27 September 2011) 676 NZPD 21418.as a compensatory measure. A departmental report on the Bill also noted thatthe "suite of incentives and sanctions in the Bill are intended to encourage parties tocomply with procedural requirements".41 This reflected the views of District Courtjudges, who considered that the ability to impose costs orders would incentivisecompliance.42 The report specifically described the orders a "sanction".43 However,the report also proposed the following amendment:[229] Clause 361(3) indicates that the amount imposed needs to reflect costsincurred by the court, victims, witnesses and any other person. However, thereis no requirement that payment received for those costs must be passed on tothose persons. Consistent with the principles of reparation, this oversightshould be addressed.[230] Therefore, advisers recommend that clause 361 should be amended toprovide that, when a costs order is made that is intended to reflect costsincurred by any person connected with the proceedings, the court may orderthat some or all of the amount is to be paid [to] the affected person(s).[34] This amendment was adopted by the Justice and Electoral Committee,44resulting in s 364(8) referring to "any person connected with the prosecution".Ms Reed submitted that this demonstrates that compensation should be the touchstonefor quantum. However, in our view, the amendment is more consistent with s 364'sprimary purpose being to operate as a sanction, while providing the ability tocompensate in appropriate cases.[35] In light of this history, we consider that the focus of the regime created by s 364is certain kinds of procedural default.45 Only a failure or refusal to comply withthe CPA or the Criminal Disclosure Act and associated rules and regulations can resultin a costs award. There are other kinds of default which could lead to delay (such aswitness mismanagement) for which there is no provision for costs orders. We inferthat the primary purpose of the provision is to encourage compliance with the CPAand Criminal Disclosure Act, to avoid defaults which may delay or derail a trial,thereby ensuring the efficiency of the criminal justice system.41 Criminal Procedure (Reform and Modernisation) Bill 2010 (243–1) (departmental report forthe Justice and Electoral Committee) at [203].42 At [222].43 At [225].44 Criminal Procedure (Reform and Modernisation) Bill 2010 (243–2), cl 361(8).45 CPA, s 364(1).[36] When Parliament enacted s 364 it would of course have been aware ofthe CCCA regime, which operates to compensate the cost of defending criminalproceedings where appropriate: s 364(9) provides that s 364 does not limit or affectthe CCCA. A court may legitimately take into account, when making an order underthe CCCA, the extent of any recovery under s 364. It would not, for example, be justand reasonable to make an award under the CCCA which resulted in over-recovery ofcosts, because of an earlier award under the CPA.[37] While all this is tempered by the fact that costs under the CCCA are unlikelyto be available where the proceedings have not yet been finally determined, whereasthe CPA is not limited thus, we agree with the Judge that other factors point away froman interpretation that the two provisions complement one another for compensationpurposes.46[38] The only preconditions for the making of an order under s 364 are that the courtis satisfied that the procedural failure is significant and there is no reasonable excusefor the failure.47[39] The ultimate merits of the trial or the defendant's responsibility forthe offending are not listed as relevant to the making of the costs award.48Rather, the sum awarded must be no more that is just and reasonable in light of thecosts incurred by the court, victims, witnesses and any other person.49 While weaccept that s 364 does contemplate awards having some potential compensatory effect,and that the extent of any wasted costs is a mandatory relevant consideration, otherfactors will also weigh in the setting of just and reasonable costs.[40] Where a failure has led to significant costs being incurred by other parties, alarger award may be appropriate.50 Equally, where a failure has not resulted in costs46 Costs decision, above n 2, at [86].47 CPA, s 364(2).48 Indeed, an order may be made at any stage before the conclusion of the prosecution againstthe defendant or the prosecuting agency regardless of the eventual outcome and may be mademultiple times against the same party if necessary: s 364(6) and (7). This may be contrasted withthe discretion to make an award under the CCCA, which is explicitly linked to the outcome ofthe proceedings: CCCA, ss 5 and 6.49 CPA, s 364(3).50 Costs decision, above n 2, at [89].being incurred, this may reduce the amount that is "just and reasonable" inthe circumstances. But in contrast to the CCCA regime, compensation is not the soleor even primary focus of any award. This is apparent in the language of s 364.[41] That the focus of the provision is not compensatory is made clearer still bythe fact that neither the prosecutor nor defendant are expressly named in the list ofthose whose costs may be taken into account under s 364(3). Although we do notdoubt that the prosecutor and defendant are captured within the catch all "any otherperson", their absence from the list is telling of the purpose of the provision. This maybe compared to the discretion to an award under s 5 CCCA, which is expresslyreferable to the defendant.[42] Further evidence that compensation is not the focus of the s 364 jurisdiction isthat absent an order under s 364(8) that the costs be paid to a person connected withthe prosecution, the costs are to be paid to the court — that is the default position.[43] This interpretation is supported by the High Court's only other substantiveexamination of s 364, McLean v Auckland District Court.51 Lang J considered it"obvious" that s 364 was intended to increase the criminal justice system's efficiencyand effectiveness.52 The power to award costs was not contingent upon actual costsbeing incurred, although any order would be reduced if no costs had been incurred.53However, no such orders were made in that instance, as the Court considered thatthe procedural failures were not "significant" for the purposes of s 364(2).54[44] We conclude that the primary purpose of s 364 is penal, for non-compliance,rather than compensatory. As s 364(3) makes plain, wasted costs of the courts, victims,witnesses and parties will be relevant to fixing the award of costs. In determiningwhat is a just and reasonable award, the court will have regard to all relevant factors,including the extent of non-compliance, its effect on the administration of justice andalso upon the participants in the proceeding. Just what weight will be given to thesevarious factors will depend upon the particular circumstances of the case assessed51 McLean v Auckland District Court [2018] NZHC 552, [2018] NZAR 684.52 At [8].53 At [12]–[13].54 At [40] and [48].against the purpose of incentivising compliance with the parties' proceduralobligations.Issue Three: did the Judge err in determining the quantum of the award unders 364 of the CPA?[45] It was submitted by Ms Reed that the need to impose a sanction ought notprevent the Court from making an order that meaningfully compensates the partyaffected by the failure. The Judge therefore erred in allowing s 364's potential to servea punitive purpose to drive the determination of quantum. Rather, the appropriatequantum ought to have been determined by reference to what is a just and reasonablesum in light of the costs incurred. This required consideration of the significance ofthe breach, the significance of the resulting wasted costs, the carelessness involved,the need for deterrence, the fact that the FMA had the means to pay such an award,the civil costs scale and the need for overall fairness. In light of these factors, a moresignificant award was warranted.[46] Furthermore, Ms Reed submitted that the Judge erred in his treatment of theimpact upon Mr Bublitz of the Crown's breach, having rejected the argument thatMr Bublitz would be unable to secure counsel of his choice at the retrial.55 Ms Reedwould not act for him on that basis, and other counsel he had approached had turnedhim down. By the time of the appeal, Mr Bublitz's retrial was under way inthe High Court. Further evidence was adduced to the effect that Mr Bublitz had beenable to secure services of counsel through legal aid at a higher charge out rate thannormal.[47] Mr Horsley submitted that what will be relevant to quantum must be decidedwith respect to each case, rather than there being particular mandatory relevant factors.Section 364(3) sets an upper limit to the costs order that can be made but does notrequire that the costs will equal the costs incurred. The relevant circumstances can beenumerated as the Judge did. Neither the civil costs scale nor the costs scale underthe Costs in Criminal Cases Regulations 1987 are relevant factors or points ofcomparison, because they are aimed at providing some measure of compensation for55 Costs decision, above n 2, at [125].litigants, not sanctioning procedural failures. The Judge therefore made no error ofprinciple when setting the costs order at $50,000.Discussion[48] We consider that, in the circumstances, Woolford J's award was appropriate.While having a primarily punitive purpose, the assessment of quantum under s 364requires consideration of both the nature and seriousness of the breach and theconsequences for the other parties, as mandated by s 364(3). The expression "just andreasonable" emphasises that there is flexibility to respond to the justice of theparticular case, the ultimate question being whether the sanction provides anappropriate incentive to ensure future compliance both in the instant proceeding andmore generally. The court must then decide under subs (8) whether some or all ofthe sanction should be paid to affected parties connected with the prosecution.[49] We are satisfied that the Judge had regard to the significance of the breach,the significance of the resulting wasted costs, the carelessness involved, the need fordeterrence, the fact that the FMA had the means to pay such an award and the need foroverall fairness. The civil costs scale we do not consider relevant to quantum unders 364. We do not consider that the Judge made any error of principle in hisconsideration of these issues. It is true that this Court might have made a moresubstantial order, given the scale of the FMA's neglect and to reflect the fact that, atthe time of hearing, it appeared that Mr Bublitz would be unable to be represented byhis preferred counsel at his retrial.[50] The question for this Court is whether, in fixing the quantum under s 364(a discretionary decision), the Judge erred in law, took account of irrelevantconsiderations, failed to take account of a relevant consideration or was plainlywrong. At the end of the day we are not persuaded the Judge erred in principle insetting a more modest sanction, and that is the end of the matter. Whether or not anaward equal to the actual costs incurred could ever be warranted as the appropriatepunitive response to ensure a fair trial is best left for a case where the issue isdeterminative.Issue Four: did the Judge err in determining the quantum of the award unders 5 CCCA?[51] We can deal with Mr Morrison's appeal relatively briefly. Both parties agreedthat s 5 of the CCCA involves the exercise of a statutory discretion, so we do notconsider that point further.[52] Mr O'Leary submitted first, the Judge erred in adopting a "proof of innocence"test when he had declared a mistrial before Mr Morrison could open and prove hisdefence. Secondly, the Judge erred in failing to consider Mr Morrison's affidavitevidence of his innocence in his affidavit supporting the application for costs, and intaking into consideration a Crown memorandum outlining the evidence againstMr Morrison as tending to prove his supposed knowledge when determiningthe quantum of the award. Given these errors, the Judge's award was not "just andreasonable".[53] Mr Horsley submitted that absence of cross-examination does not equate toacceptance of evidence. In this instance Mr Morrison's affidavit was not accepted bythe Judge. It did not respond to many inferences the Crown suggested ought to bedrawn from the evidence. In all the circumstances, the Judge was entitled to and ableto draw his own conclusion about Mr Morrison's innocence. There was a logicalinconsistency in Mr Morrison's submission that he both had no opportunity toestablish innocence and that the Judge did not accept his affidavit in which heattempted to establish his innocence.Discussion[54] We consider it inherent in s 5(2) that the merits of the Crown (and byassociation, defence) case are relevant to the assessment of whether costs should beawarded under s 5 of the CCCA.[55] We also think the Judge's assessment of Mr Morrison's position has been rathermischaracterised by counsel. The Judge took s 5(2)(b), (e) and (f) together and notedthree things. First, the Crown memorandum as raising a case to be answered as toMr Morrison's culpability. Secondly, that at no point did Mr Morrison seek adischarge on the basis of evidential insufficiency. Thirdly, that none ofthe seven charges against him were dismissed on their merits, and that two had beenthe subject of a failed application by Mr Bublitz which in part at least was adverse tonon-culpability by Mr Morrison.56 Inherent in the Judge's reasoning is an assessmentthat there was sufficient evidence to convict absent evidence from the defence, thatthe charges were dismissed on technical rather than merits grounds and thatthe charges were not dismissed because Mr Morrison had established that he was notguilty. In other words, all three were hurdles Mr Morrison could not say he hadcleared. The affidavit he tendered did not respond in any detail to the Crownmemorandum demonstrating a basis to infer knowledge of related party transactions,but confined itself to broad-brush denials.[56] The Judge was entitled to make his own assessment of these matters,57 and weare not persuaded the Judge erred in exercising the discretion conferred by s 5(1) indetermining that a $75,000 award was appropriate.Issue Five: did the Judge err in failing to make a costs award following thesuccessful costs application?[57] Mr O'Leary submitted that the Judge did not expressly respond toMr Morrison's separate application for costs in relation to his successful costsapplication. The normal rule that "costs follow the event" should apply in this caseand Mr Morrison should have been awarded appropriate costs in relation to hissuccessful costs application.[58] We are however persuaded by Mr Horsley's submission that there was nodemonstrable error by the Judge. Mr Morrison was not entitled to costs as of right,58and did not provide evidence of costs incurred on the costs application. The Judgewas entitled to consider that the costs ought to lie where they fell.56 At [51]–[54].57 Per Reid v R [2007] NZSC 90, [2008] 1 NZLR 575 at [21], an appellate court cannot overturn adecision because they would weigh discretionary factors differently.58 There is no provision in the CCCA itself for costs to be awarded on a successful application forcosts, and the power to do so under s 162 of the Senior Courts Act is discretionary.Result[59] Mr Bublitz's appeal is dismissed.[60] Mr Morrison's appeal is dismissed.[61] There is no order made as to costs.Solicitors:Beca & Co, Auckland for Appellant MorrisonCrown Law Office, Wellington for Respondent