Basham v Abdollahi

[2023] NZHC 3517

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2023-404-408

[2023] NZHC 3517

IN THE MATTER

of an appeal against a cost order by the District Court at Auckland

BETWEEN

CYRUS BASHAM

Appellant

AND

ARSALAN ABDOLLAHI

First Respondent

AND

SEYEN MOHAMMAD TAGHI DERHAMY

Second Respondent

Hearing:

On the papers

Appearances:

CT Patterson for the Appellant

First Respondent self-represented
A Abdollahi for the Second Respondent

Judgment:

5 December 2023

JUDGMENT OF FITZGERALD J

[As to costs]

This judgment was delivered by me on 5 December 2023 at 4.00pm, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date……………

Solicitors:      Boyle Matheson, Auckland

Schofield Law, Invercargill

BASHAM v ABDOLLAHI [2023] NZHC 3517 [5 December 2023]

Introduction

[1]                 In separate proceedings, Arsalan Abdollahi and Seyed Derhamy applied to the District Court for restraining orders against Cyrus Basham.1 On 11 October 2022, Judge D J Clark dismissed the applications on the basis the applicants had failed to establish that Mr Basham had acted in a way that would justify the issue of the orders.2

[2]                 On 2 February 2023, Judge Clark made a costs order in favour of Mr Basham that was equivalent to his legal aid grants—totalling $5,079.3 The Judge proceeded on the basis that Mr Basham and his counsel, Mr Patterson, had entered into a valid conditional fee agreement wherein Mr Patterson would be entitled to receive payment of fees from Mr Basham that exceeded Mr Basham’s legal aid grants (provided that the District Court awarded scale 2B costs in Mr Basham’s favour; that there was recovery of those costs from the respondents; and that any recovered costs were paid to Legal Services in priority to counsel). However, Judge Clark declined to exercise his discretion under r 14.1 of the District Court Rules 2014 to award scale costs that would exceed Mr Basham’s legal aid grants. He concluded that making such an order would effectively circumvent the legal aid rates prescribed by legislation and it would improperly consider how costs impacted counsel (compared to the parties).

[3]                 Mr Basham appealed against Judge Clark’s costs decision. At the outset of the appeal, this Court directed—by consent—that Mr Basham was to deposit $1,195 as security for costs. In a minute dated 19 April 2023, Powell J observed that because the respondents were then both self-represented, the deposited sum would only be payable towards disbursements properly incurred in the event they were successful on appeal.

[4]                 On appeal, Davison J found that the conditional fee agreement did not comply with the relevant legislative requirements.4 He found that even if Judge Clark had exercised his discretion to award scale costs, Mr Patterson was not, absent approval

1      Harassment Act 1997, s 16.

2      Abdollahi v Basham [2022] NZDC 19489.

3      Abdollahi v Basham [2023] NZDC 1061.

4      Basham v Abdollahi [2023] NZHC 2432. The requirements for conditional fee agreements are contained in the Lawyers and Conveyancers Act 2006 and the Lawyers and Conveyances Act (Lawyers: Conduct and Client Care) Rules 2008.

from the Legal Services Commissioner, in a position to legally receive any amount from Mr Basham that exceeded the legal aid grant. Davison J further concluded that Judge Clark had not erred in exercising his discretion to not award scale 2B costs in any event. The appeal was accordingly dismissed. Davison J reserved costs pending the filing of memoranda by the respondents and the Legal Services Commissioner.

[5]The Legal Services Commissioner has chosen not to pursue costs.

Respondents’ submissions

[6]                 The respondents were self-represented on the appeal. Since the appeal, however, the first respondent has been admitted as a barrister and solicitor of this Court, and issued with a practising certificate. Reflecting that at the time of the substantive appeal the respondents were both self-represented lay litigants, they do not seek costs in respect of the substantive hearing. However, they do seek scale 2B costs for filing a cost memorandum ($956), plus recovery of certain itemised disbursements, namely: the sealing fee for an order for costs ($50); photocopying ($50); and phone and internet expenses ($20). The respondents accordingly seek a total of $1,076 in costs and disbursements.5 From the funds deposited by the appellant as security for costs, the respondents ask that the Court direct the Registrar to transmit $1,076 to their nominated bank account.

[7]                 The costs (as opposed to disbursements) are sought by the first respondent on the basis of the “lawyer-in-person” exception confirmed by the Supreme Court in McGuire v Secretary for Justice.6 In that case, the Supreme Court confirmed that a successful litigant in person is entitled to recover disbursements but not costs. The Court confirmed, however, the lawyer-in-person exception to this rule, namely that a lawyer who is a party to proceedings and appears on their own behalf may recover costs.7

5      This compares with $18,045, being the amount the respondents say they would have been entitled to by way of costs had they been represented by counsel throughout the appeal.

6      McGuire v Secretary for Justice [2018] NZSC 116, [2019] 1 NZLR 335.

7      At [55] and [88].

[8]                 The second respondent seeks costs on the basis that he is represented by counsel for the purposes of seeking costs of the appeal hearing. The second respondent has not, however, filed a notice of change of representation in accordance with High Court Rule 5.40(1)(a). The first respondent has also confirmed that the second respondent has not been invoiced or paid an amount by way of costs in relation to the appeal.

Appellant’s submissions

[9]                 Mr Patterson, counsel for Mr Basham, accepts that as the respondents were successful on the appeal, it would be appropriate for the Court to order the payment of the sealing fee for a costs order from the secured sum, if a costs award is made in the respondents’ favour (as to which, see further below). Further, while in principle he accepts that the respondents ought to recover any disbursements paid by them, he notes that the respondents have not provided any evidence to support that they incurred the photocopying, phone and internet disbursements claimed.

[10]             Mr Patterson submits that, in any event, the Court should refuse to make an order for costs because the appeal was one of public interest.8 He characterises the appeal as concerning the interrelationship between the civil legal aid regime and the use of conditional fee agreements. In support of this submission, Mr Patterson highlights that on its own initiative, the Court invited the New Zealand Law Society, the New Zealand Bar Association and the Legal Services Commissioner to intervene.9

Discussion

[11]             As the successful parties on appeal, the starting point is that the respondents are entitled to claim disbursements for expenses that they reasonably incurred in the appeal proceedings. Rule 14.12 of the High Court Rules relevantly provides:

14.12   Disbursements

(1)In this rule,—

disbursement, in relation to a proceeding,—

8      High Court Rules 2016, r 14.7(e).

9      In the event, only the Legal Services Commissioner took part in the appeal.

(a)means an expense paid or incurred for the purposes of the proceeding that would ordinarily be charged for separately from legal professional services in a solicitor’s bill of costs; and

(b)includes—

(i)fees of court for the proceeding:

(ii)expenses of serving documents for the purposes of the proceeding:

(iii)expenses of photocopying documents required by these rules or by a direction of the court:

(iv)expenses of conducting a conference by telephone or video link; but

(c)does not include counsel’s fee.

(2)A disbursement must, if claimed and verified, be included in the costs awarded for a proceeding to the extent that it is—

(a)of a class that is either—

(i)approved by the court for the purposes of the proceeding; or

(ii)specified in paragraph (b) of subclause (1); and

(b)specific to the conduct of the proceeding; and

(c)reasonably necessary for the conduct of the proceeding; and

(d)reasonable in amount.

(3)Despite subclause (2), a disbursement may be disallowed or reduced if it is disproportionate in the circumstances of the proceeding.

(4)A Judge or an Associate Judge may direct a Registrar to exercise the powers of the court under subclause (2) or (3).

…

[12]             The disbursements claimed are likely to be considered the types of expenses that would be regarded as recoverable. However, the respondents have not provided any materials to verify the amounts they have claimed for photocopying, phone and internet services, or that those amounts have actually been paid by them. Rule 14.12 requires disbursements to be verified. The process of verifying a disbursement claim is generally undertaken by attaching copies of invoices or receipts for the expenses sought by the relevant party. I accordingly decline to make an order that the

respondents be paid the claimed amounts for photocopying and phone/internet services.

[13]             As noted, the respondents have also claimed costs for filing their costs memorandum, by reference to step 11 of sch 3 to the High Court Rules 2016 (on a 2B basis).

[14]             Given the respondents were self-represented litigants at the time of the substantive appeal, the only recovery they could claim from Mr Basham would be disbursements. There is no doubt that the respondents could recover any sealing fee paid by them; as noted, that is not in dispute and ought to have been able to be agreed between the parties. The respondents have, however, been unsuccessful in seeking recovery of the only other disbursements claimed. In these circumstances, it would be wrong to award the respondents the costs of filing a costs memorandum where they have not been successful in seeking disbursements.

[15]             Moreover, the amount sought by way of costs (for the costs memorandum), is approaching $1000, when the disbursements claimed are only $70 (putting aside the sealing fee, which only arises if a costs award is made). In the ordinary course, in order for the second respondent to seek costs of $956 for the costs memorandum, he would need to have been charged and paid at least that amount by way of costs. It hardly seems efficient to spend $956, or more, to seek disbursements of $70.10 As noted earlier however, the second respondent has not been charged or paid any amount by way of costs, so it is also not appropriate to make a costs award in his favour for that reason alone.

[16]             I accordingly decline to make an award of costs in favour of either of the respondents.

[17]             For completeness, had I been minded to award the first respondent costs for the costs memorandum, I am far from satisfied that the award should have been made on a scale 2B basis. The memorandum is brief, extending to just over one page. I do

10     Properly verified, these ought to have been the subject of agreement by the parties and consent orders in relation that amount being paid out of the security for costs.

not expect it took 0.4 of a day (or more) to prepare, which is the basis for step 11 of sch 3 to the High Court Rules. Accordingly, had costs been awarded to the first respondent, there would have been a costs award in the first respondent’s favour for step 11 but on a scale 2A basis, equating to $478.

[18]             Also for completeness, and given the matters raised on behalf of Mr Basham, I briefly address the submission that costs should not be awarded in any event given the proceedings were in the public interest.

[19]             Pursuant to r 14.7(e) of the High Court Rules, the Court may refuse to make an order for costs, or to reduce the costs otherwise payable, if the proceeding concerned a matter of public interest. A party seeking the refusal or reduction in costs must satisfy both limbs of the provision:11

(a)first, the proceeding must have been one of genuine public interest, it must have had merit, and have had some importance beyond the interest of the unsuccessful litigant; and

(b)second, the litigant must have acted reasonably in the conduct of the proceeding.

[20]             There is nothing to suggest that either Mr Basham or his counsel acted unreasonably in the conduct of the proceeding.

[21]             In determining whether the proceeding was in the public interest, the Court will consider whether it was “brought for personal gain of any type.”12 A matter that arises out of a private interest will not become a matter of public interest simply because the public would benefit from the determination of the legal issues raised. This is because all litigation, particularly matters such as the correct interpretation of a statute, or its application, contributes in one way or the other to the clarification of the law.13

11     Taylor v District Court at North Shore (No 2) HC Auckland CIV-2009-404-2350, 13 October 2010 at [9].

12     Save Kapiti Inc v New Zealand Transport Agency [2013] NZHC 3314 at [19].

13     Wong v Registrar of the Auckland High Court (2008) 19 PRNZ 32 (HC) at [18]; and Belgiorno- Nettis v Auckland Council [2018] NZHC 926 at [16].

[22] On balance, I do not consider the appeal was of the type that means any costs otherwise payable ought not to be paid on the basis of public interest. While I accept that the appeal had some “public interest” components (leading to this Court directing that those entities referred to at [10] above be served), it is notable that only the Legal Services Commissioner chose to take a role in the appeal. Had the proceedings been of broader importance to the profession as a whole, the Law Society and/or the New Zealand Bar Association might have been expected also to intervene. Further and in any event, the core of the appeal concerned the implications of the conditional fee agreement entered into between Mr Basham and Mr Patterson, and thus Mr Patterson’s private interest, as Mr Basham’s counsel, in seeking recovery of something greater by way of costs than Mr Basham’s legal aid grants. While the implications of a successful appeal by Mr Basham on this point might have had wider ramifications, that may be said for much litigation in this Court.

[23]             I accordingly would have declined to apply r 14.7(e) in reducing to zero what would have otherwise be ordered by way of costs in this proceeding. Given the point was not argued, I make no comment on whether the public interest aspects of the proceeding might have warranted a reduction in costs otherwise payable.

Result

[24]             I decline to make any order for costs or disbursements in favour of the respondents.

[25]             Given this step completes the appeal proceedings in this Court, the parties should now liaise with the Registrar in relation to the release of the security for costs paid by Mr Basham.

Fitzgerald J