Commissioner of Police v Nicholas

[2017] NZHC 748

IN THE HIGH COURT OF NEW ZEALAND TAURANGA REGISTRY

CIV-2010-470-000360 [2017] NZHC 748

BETWEEN

THE COMMISSIONER OF POLICE

Applicant

AND

VALENTINE BARCLAY NICHOLAS First Respondent

SHEILA PETRINA PAYNE Second Respondent

WILLIAM FRANCIS NICHOLAS Third Respondent

Applicant for Relief

BRETT ANTHONY GEORGE, KARYN JANE GEORGE and VLN TRUSTEE LIMITED as trustees of the BA & KJ GEORGE TRUST

Fourth Respondents

Applicants for Relief

CLINTON MILLS Fifth Respondent Applicant for Relief

On thepapersand

bytelephone:

5 April 2017

Appearances:

R Jenson for the Applicant, by telephone
W Nabney for the First and Second Respondents, by telephone
No appearance for the Third and Fifth Respondents

Judgment:

13 April 2017

[COSTS] JUDGMENT OF HINTON J

THE COMMISSIONER OF POLICE v NICHOLAS & OTHERS [2017] NZHC 748 [13 April 2017]

This judgment was delivered by me on 13 April 2017 at 1.00 pm pursuant to Rule 11.5 of the High Court Rules

……………………………………………………………………

Registrar/Deputy Registrar

Counsel/Solicitors:

Hollister-Jones Lellman, Tauranga

William Nabney, Barrister, Tauranga
Jonathan Temm, Barrister, Rotorua

Parties:

W Nicholas

C Mills

[1]      On 17 August 2016, I delivered my judgment in this proceeding.  I allowed the Commissioner’s application for asset and profit forfeiture orders and I dismissed the applications for relief by the third to fifth respondents.  Costs were reserved.

[2]      The  first  and  second  respondents  were  legally  aided  throughout  the proceeding and the Commissioner does not seek costs against them.

[3]      The Commissioner seeks costs against the third to fifth respondents.

[4]      The Commissioner filed a memorandum dated 7 September 2016 seeking

2A costs in the sum of $8,251 against each of the third and fifth respondents and

2B costs in the sum of $27,986.50 against the fourth respondent.  Two separate costs schedules were provided, one listing all steps on a 2A basis and the other listing all steps on a 2B basis.

[5]      I issued a Minute noting that those costs appeared to be somewhat on the high side.  I asked that the third to fifth respondents be notified as fully as possible of the application and given further time to respond.  I am satisfied that the application has been brought to their attention in every way possible by the Registrar and by other counsel and they have had ample time to make any submissions.

[6]      Mr Temm, who was formerly counsel for the fourth respondents, filed a memorandum dated 4 April 2017 on the basis that it was to assist the Court and not on instructions.  I thank him for that.  Mr George apparently then insisted that the Registrar include Mr Temm in the teleconference that I arranged on 5 April 2017 to give any parties an opportunity to be heard.  However, as Mr Temm was clear that he still  had  no  instructions,  I excused  him  from  the  teleconference.    Mr  George’s position was well-covered, in any event, by Mr Temm’s memorandum.

[7]      Mr  Nabney  was  joined  in  the  teleconference,  but  was  excused  as  no application is made against the first and second respondents.  He had kindly, again without instructions, filed a brief memorandum to assist the third and fifth respondents.

[8]      The Commissioner also filed a further memorandum dated 4 April 2017 for the teleconference.

Applicable costs principles

[9]      I have decided that the Commissioner’s two-schedule approach is incorrect. Although the third to fifth respondents are all applicants for relief, the entire matter has been dealt with in the one proceeding and their applications arise out of the Commissioner’s application for forfeiture.

[10]     I accept the Commissioner’s submission that he was the successful party in the proceeding and that costs should follow the event.  But the Commissioner should then make one application for costs, in respect of which as a general rule, the losing respondents would be jointly and severally liable:  r 14.14.

[11]     There  should  be  one  costs  categorisation  for  the  proceeding,  albeit  that different steps can be categorised differently.1    I consider that 2B is an appropriate costs categorisation for this proceeding.

[12]     I consider, and the Commissioner recognises this albeit by submitting two different schedules, that this is clearly one of those situations where the award of costs against the third to fifth defendants should not be on a joint and several basis, but rather by apportioning to each a fair allocation, in accordance with my overriding discretion.  The case overall was primarily against the first and second respondents, against  whom  costs  have  not  been  sought.    As  the  Court  of  Appeal  said  in

Hong v Deliu:2

… where costs are not sought against one unsuccessful defendant, it does not follow that the other should be liable for the whole scale measure of costs. Likewise where a defendant has taken a reduced part in opposing judgment such as by abiding the outcome or admitting the cause of action. (sic)

1      Cf Commissioner of Police v Read [2015] NZHC 3085, although costs against applicants for relief were still approached on a broadly proportionate basis.

2      Hong v Deliu [2016] NZCA 75.

Costs against the fourth respondents

[13]     I agree with the Commissioner that in the case of the fourth respondents’ application for relief, it was very much the flip side, or heavily intertwined with the claim for forfeiture against the first and second respondents.   The Caravel Block, which was one of the main assets at issue and a key focus of the six-day hearing, was allegedly owned by the fourth respondents and on that basis they were seeking relief. I found that the first respondent was the equitable owner of the Caravel Block and rejected the version of events put forward by Mr Nicholas and Mr George.

[14]     However, at least half of the hearing time was spent on the Commissioner’s case against the first and second respondents, outside of the issue of the Caravel Block, albeit that the issues were not entirely distinct.  Also, as I have said, the case overall was primarily against the first and second respondents.   Costs against the fourth respondents should be reduced to reflect these factors.

[15]     Mr Temm, in his submissions to assist, says I should award no costs against the fourth respondents as they were excluded from the hearing; acquitted following a second trial and the Commissioner has the benefit of success on the forfeiture application.

[16]     I do not agree with these points.   First, the fourth respondents were not “excluded by the Court”.  What actually happened is fully addressed in my Minute of 1 March 2016.   I declined leave for the fourth respondents to file an affidavit, which they sought to do towards the end of the Commissioner’s case in the lengthy hearing.   That did not constitute exclusion from the proceeding.   The fourth respondents were entitled to cross-examine any witness, make submissions and otherwise participate in the proceeding.   Mr Temm did in fact cross-examine the first respondent.   Mr George’s lengthy Police interview formed part of the record. Secondly, the fact of the first-named fourth respondent having endured two trials without conviction and having had to meet the consequent costs of those trials cannot be relevant.   This is a separate proceeding and furthermore one where convictions are expressly not necessary.  Third, the Commissioner does not receive any direct benefit from the forfeiture orders.  The funds are placed in a hypothecated

fund.  Even if the funds were retained by the Commissioner himself, his success on the substantive application does not go against an award of costs, to the contrary.

[17]     As  I have said,  I consider there should  be some apportionment of costs against the fourth respondents.  In this case, the fourth respondents’ application for relief was significant and intertwined with the Commissioner’s claim (unlike the application in Read),3 but the case against the first and second respondents nonetheless clearly involved wider issues.  Viewed overall, I consider a fair approach is to allow the Commissioner 50 per cent of all costs sought on a 2B basis.   The

consequential costs award against the fourth respondents is $13,993.25.

Costs against the third and fifth respondents

[18]     The applications for relief by the third and fifth respondents were much more minor than the application for relief by the fourth respondent.

[19]     As I say, the Commissioner reflected that, to some extent, by seeking costs on a 2A basis against these respondents and further, by seeking a time allocation of one day (out of six) in respect of the hearing.   The principle is correct, though I have decided the approach is wrong.

[20]     Mr Nabney submits that the respective applications for relief by the third and fifth respondents occupied approximately 15 minutes of the trial and that any costs award in favour of the Commissioner should reflect their limited involvement.

[21]     It does not follow that if an unsuccessful party’s case has taken a small percentage of time, the costs relate only to that time percentage. As is clear, it is one matter that can be taken into account.

[22]     I have already said that these were relatively minor applications.  The time spent on them at the hearing is not as limited as Mr Nabney suggests, but it was

relatively minor.

3      Commissioner of Police v Read, above n 1.

[23]     I consider it fair that the third and fifth respondents pay one-fifth each of the

2B costs.

[24]     I therefore award costs against each of the third and fifth respondents in the sum of $5,597.30.

[25]     I note for completeness that the third respondents successfully obtained relief in relation to a property at Odey Road, but the applicant at no stage opposed orders to that effect.

Further order regarding share dividends

[26]     In my judgment of 17 August 2016 I reserved leave to the parties to apply for such other orders as are required to implement the judgment.  I have already made one such order in respect of shares.  That is recorded in my Minute of 14 November

2016.

[27]     The Commissioner seeks a further order in respect of a modest amount of dividends not covered by the previous orders.  Mr Nabney said he did not oppose the order.  I consider it appropriate in any event. The order logically follows on from the previous orders I have made and I now order as follows:

The dividends  obtained  on  the Trust  Power shares  (referred  to  at paragraph 3.5(n) of the sealed Profit Forfeiture Order dated 24 August

2016) between 9 December 2011 and 10 June 2016, being $3,538.32, be realised to satisfy the Profit Forfeiture Order made against the first respondent on 17 August 2016.

------------------------------------------ Hinton  J