Commissioner of Police v Pham
[2024] NZHC 3426
•18 November 2024
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2022-404-1144
[2024] NZHC 3426
UNDER Criminal Proceeds (Recovery) Act 2009 BETWEEN
COMMISSIONER OF POLICE
Applicant
AND
KY VAN PHAM
First Respondent
THU HUONG LE
Second RespondentKY VAN PHAM and THU HUONG LE as
trustees of the TOMKAT FAMILY TRUST Third Respondent
Hearing: On the papers Counsel:
A Mackenzie and L Lai for the applicant D Stevens for the first respondent
K Hogan for the second respondent
Judgment:
18 November 2024
JUDGMENT OF GORDON J
[As to costs]
This judgment was delivered by me
on 18 November 2024 at 2.30 pm pursuant to r 11.5 of the High Court Rules
Registrar/Deputy Registrar Date:
Solicitors/Counsel:
Meredith Connell, Auckland D Stevens, Barrister, Auckland K Hogan, Barrister, Auckland
COMMISSIONER OF POLICE v PHAM [2024] NZHC 3426 [18 November 2024]
[1] The Commissioner of Police (Commissioner) applied for further orders over restrained property, a residential property at 1 Garcia Place (Garcia Place) associated with the first respondent, Ky Van Pham, and the second respondent, Thu Huong Le, pursuant to ss 33–35 of the Criminal Proceeds (Recovery) Act 2009 (the Act).
[2] The orders sought were for the sale of Garcia Place, for the Official Assignee (OA) to oversee the sale, for the OA to use the net proceeds to repay a loan the respondents owed to Nam Phan which was accruing interest, and for surplus proceeds of sale to be held in an account pending further order of the Court.
[3] Mr Pham and Ms Le agreed that Garcia Place needed to be sold and that Mr Phan needed to be repaid but opposed the OA overseeing the sale process and sought further distribution from the proceeds of sale to repay various expenses.
[4] The substantive hearing took place on 17 July 2024, with further submissions received on 22 and 23 July 2024 from the Commissioner and Ms Le. On 14 August 2024, I made the orders sought by the Commissioner (the judgment).1
[5] I reserved costs and stated that, as the successful party, the Commissioner was prima facie entitled to costs. The Commissioner has since filed a memorandum seeking increased costs against Mr Pham of $16,491, representing a 50 per cent uplift on 2B scale costs. The Commissioner does not seek costs against Ms Le, as she was legally aided throughout the proceeding.
[6] Mr Pham was self-represented at the hearing. After the hearing, on 23 July 2024, Mr Stevens submitted an application for legal aid on behalf of Mr Pham. The grant was confirmed by Legal Aid on 23 August 2024. Mr Stevens says that Mr Pham has immunity from an award of costs against him because he is a legally aided person pursuant to s 45 of the Legal Services Act 2011 (LSA), and in any case Mr Pham opposes any award of costs against him.
1 Commissioner of Police v Pham [2024] NZHC 2283 [judgment].
Issues
[7] There are three primary issues. First, for the purposes of s 45 of the LSA whether Mr Pham was legally aided for the whole or part of the proceedings such that he is immune from a costs order being made against him. Second, if the immunity applies, whether there are exceptional circumstances that mean an order of costs against Mr Pham should nonetheless be made. Third, whether an award of increased costs against Mr Pham is justified in the circumstances.
When did the s 45 immunity apply?
[8] Section 45 of the LSA gives a legally aided person prima facie immunity from an award of costs being made against him or her. That section relevantly provides:
45 Liability of aided person for costs
(1)If an aided person receives legal aid for civil proceedings, that person’s liability under an order for costs made against him or her with respect to the proceedings must not exceed an amount (if any) that is reasonable for the aided person to pay having regard to all the circumstances, including the means of all the parties and their conduct in connection with the dispute.
(2)No order for costs may be made against an aided person in a civil proceeding unless the court is satisfied that there are exceptional circumstances.
…
[9]“Aided person is defined in s 4(1) of the LSA as follows:
aided person—
(a)means a person who is granted legal aid under this Act or the former Act; and
(b)includes—
(i)a person who is granted legal aid on an interim basis:
(ii)a person whose grant of legal aid has been withdrawn under section 30
[10] Mr Stevens notes that the letter from Legal Aid on 23 August 2024 advised that the application for legal aid had been granted and identified the “matter” as “Proceeds
of Crime”.2 Although legal aid was only sought after the hearing and confirmed after the judgment was delivered, Mr Stevens contends that Mr Pham was a legally aided person for the whole of the proceeding and accordingly the s 45 immunity prevents any costs orders being made against him on the judgment.
[11] Mr Stevens relies on Gill v Lethlean which involved an appeal of a costs order made in the District Court.3 At the substantive hearing in the District Court on 19 May 2020, counsel for Mr Gill appeared and advised that Mr Gill would not oppose the respondent’s application, being a restraining order being made against him. An order was made accordingly and the issue of costs was reserved. However, Mr Gill’s grant of legal aid was only confirmed and communicated to the Court on 16 June 2020. Following a costs hearing on 25 June 2020, the District Court Judge found that the s 45 immunity applied but there were exceptional circumstances justifying an award of costs against Mr Gill.
[12] On appeal, when answering the question of when the s 45 immunity applied, Dunningham J referred to AA v LA where Mander J proceeded on the basis that the s 45 immunity applied for the whole proceeding.4 Justice Mander wrote:
[17] Legal aid grants which apply retrospectively can, therefore, provide s 45 immunity in relation to prior costs where no costs order has already been made. The question is not when legal aid was approved, but to which costs the grant of legal aid attaches.
[13] Applying Mander J’s approach, Dunningham J held that at the point the District Court Judge was considering costs, Mr Gill was a legally aided person and the s 45 immunity applied to all steps taken in the proceeding. This is because legal aid was granted for the defence of the restraining order application, and the involvement of Mr Gill’s lawyer in that hearing meant the application was resolved expeditiously.5
2 I note that I place no weight on the submission of counsel for the Commissioner that the proceedings do not (yet) involve a forfeiture application. The wording “the wider forfeiture proceeding” was that of Mr Stevens, counsel for Mr Pham, in his submissions.
3 Gill v Lethlean [2021] NZHC 296.
4 AA v LA [2017] NZHC 646.
5 Gill v Lethlean, above n 3, at [27].
[14] Justice Dunningham was also satisfied that the case of B v A was distinguishable from Gill v Lethlean.6 In B v A, Wylie J considered that the s 45 immunity did not apply to steps taken before the grant was confirmed for the following reasons:
[14] In the present case, I held that Mrs B was entitled to her reasonable costs and disbursements on 20 March 2020. Mr A was not then an aided person. Having made that order, I became functus officio in relation to the issue of liability for costs. I expressed the preliminary view that costs should be fixed on a 2B basis in the expectation that counsel would be able, with that indication, to agree the quantum of costs. They were unable to do so and memoranda were filed. The filing of those memoranda permitted me to fix the quantum of costs payable – not to undo the order as to liability I had already made.
[15] Justice Wylie considered his reasoning to be consistent with AA v LA, because in that case (as was the case in Gill v Lethlean) no order as to liability for costs had been made prior to the grant of legal aid being confirmed.7 Justice Wylie’s approach was endorsed as “persuasive” by Campbell J in Ngāti Tama Custodian Trustee Ltd v Phillips.8
Analysis
[16] I consider that Mr Pham was not an aided person for the whole proceeding and accordingly is not immune from an order of costs being made against him for the following reasons.
[17] First, I consider that the judgment made a finding as to liability of costs, with the issue of quantum reserved pending the filing of memoranda. The relevant paragraphs of the judgment stated:
[110] … the Commissioner expressly reserves his right to seek costs against Ky Pham (unrepresented) and Ms Le.
[111] The Commissioner, as the successful party, is prima facie entitled to costs. I did not hear submissions on costs and accordingly costs are reserved. If the Commissioner intends to seek costs, a memorandum is to be filed and served within 10 working days of the date of this judgment.
6 B v A [2020] NZHC 580.
7 B v A, above n 6, at [12].
8 Ngāti Tama Custodian Trustee Ltd v Phillips [2021] NZHC 5 at [18].
[112] Ms Le and Ky Pham are to file and serve a memorandum in reply within 10 working days of the date of service of the Commissioner’s memorandum.
[18] Applying the reasoning in B v A, as Mr Pham was not an aided person before and at the time the judgment was delivered, he is not entitled to the s 45 immunity on all the steps of the proceeding.
[19] Second, even if I had not made a liability finding as to costs in the judgment, I consider the grant of legal aid cannot be retrospective in this case because Mr Pham was not represented by counsel leading up to or at the hearing. In both AA v LA and Gill v Lethlean, the unsuccessful party was represented at the date of the substantive hearing, which allowed the grant of legal aid to attach to those steps in the proceeding. This can be distinguished from the present case because even though the grant of legal aid is broadly stated as for the matter of “Proceeds of Crime”, legal aid cannot have been engaged in circumstances where Mr Pham did not have a lawyer to provide legal services to him. The immunity for a costs award is not a shield for unsuccessful self-represented litigants to avoid an award of costs being made against them after the hearing.
Are there exceptional circumstances?
[20] Given my finding that the s 45 immunity did not apply to Mr Pham at the time of the hearing and judgment, it is not strictly necessary to consider whether there are exceptional circumstances that nonetheless mean an order of costs may be made pursuant to s 45(2) of the LSA. However, I record my view that, in any case, I am satisfied there are exceptional circumstances that would justify an award of costs against Mr Pham.
[21] Factors relevant to exceptional circumstances are contained in s 45(3) as follows:
(3)In determining whether there are exceptional circumstances under subsection (2), the court may take account of, but is not limited to, the following conduct by the aided person:
(a)any conduct that causes the other party to incur unnecessary cost:
(b)any failure to comply with the procedural rules and orders of the court:
(c)any misleading or deceitful conduct:
(d)any unreasonable pursuit of 1 or more issues on which the aided person fails:
(e)any unreasonable refusal to negotiate a settlement or participate in alternative dispute resolution:
(f)any other conduct that abuses the processes of the court.
…
[22] Mr Mackenzie submits that exceptional circumstances exist due to Mr Pham’s conduct and his unreasonable pursuit of issues on which he failed. A letter sent on behalf of the Commissioner to Mr Pham on 10 May 2024 advised Mr Pham that his opposition was considered “meritless” and continued opposition would result in the Commissioner seeking costs (including increased or indemnity costs) against him. The letter also asserted that Mr Pham had “repeatedly attempted to frustrate, delay, or interfere with the various sales processes in this proceeding”, including conduct as follows:
(a)not granting the OA access to restrained properties following sale orders by the Court;
(b)likely dumping rubbish at a restrained property subject to a restraining order;
(c)failing to feed or move livestock on restrained property, resulting in the OA taking the step of arranging for its sale;
(d)making various threats; and
(e)illegally transferring the sale proceeds from the sale of a restrained property to other accounts, preventing them from being applied in accordance with orders of the Court.
[23] I note that the restrained property in relation to Mr Pham’s conduct mentioned above were all restrained property other than Garcia Place. I return to this point when discussing the availability of increased costs.
[24] Mr Pham’s conduct caused the Commissioner to incur unnecessary cost, such as arranging for malnourished livestock to be sold, and his conduct included failure to comply with the orders of the Court. Even if Mr Pham was an aided person, his conduct is the kind of conduct captured by the factors in s 45(3) and accordingly I am satisfied that there are exceptional circumstances justifying an award of costs against him.
Are increased costs justified?
[25]I now turn to consider whether increased costs are justified against Mr Pham.
[26] The award of costs and disbursements is governed by part 14 of the High Court Rules 2016 (HCR). The Court has a broad discretion to award the costs of a proceeding.9 The first step in determining costs is by applying the appropriate category of proceeding and daily recovery rate (set under the Rules) to the time taken for each step required by the proceeding.10 The time taken must be objectively reasonable and does not necessarily reflect the time actually spent.11
[27]The Court may order a party to pay increased costs if, relevantly:12
(b)the party opposing costs has contributed unnecessarily to the time or expense of the proceeding or step in it by—
…
(ii)taking or pursuing an unnecessary step or an argument that lacks merit; or
…
(d) some other reason exists which justifies the court making an order for increased costs despite the principle that the determination of costs should be predictable and expeditious.
9 High Court Rules 2016, r 14.1.
10 Rule 14.2(1)(b)–(c).
11 Rule 14.2(1)(e).
12 Rule 14.6(3)(b)(ii), (d).
Submissions for the Commissioner
[28]The Commissioner seeks total costs of $16,491, being 2B scale costs of
$10,994 uplifted by 50 per cent. The calculation of scale costs is set out in the table (which was included in the submissions on behalf of the Commissioner) annexed as Appendix A to this judgment.
[29] Mr Mackenzie submits that a 50 per cent uplift is justified because Mr Pham has pursued an unnecessary step or an argument that lacks merit, and because Mr Pham failed to act reasonably in the proceeding.13 Mr Mackenzie acknowledges that any percentage uplift from scale can only be justified to the extent to which Mr Pham’s meritless pursuit or unreasonable conduct contributed to the time or expense of the proceeding.
[30] Mr Mackenzie refers to Holdfast NZ Limited v Selleys Pty Limited, where the Court of Appeal said:14
An increase of 50% on scale costs should therefore grant the costs-claiming party a fair recovery for the step unnecessarily forced on it, assuming that the time allocated to the step has been reasonably calculated under the bands or under r 48C(3)(a). Any greater recovery than that would mean that the party paying costs is contributing to the other party’s choice of special counsel.
[31] To support an uplift of 50 per cent on scale costs, Mr Mackenzie refers to New Pastures Ltd v FM Custodians Ltd.15 In that case, the High Court awarded increased costs with 50 per cent uplift as the plaintiff, who discontinued the proceeding just prior to the hearing, held a position that was “self-evidently weak from the outset”.16
Submissions for Mr Pham
[32] Mr Stevens submits that it would not be fair for costs to be ordered against Mr Pham but not Ms Le, especially as Mr Pham is now also legally aided. Further,
13 Bradbury v Westpac Banking Corporation [2009] NZCA 234, [2009] 3 NZLR 400 at [27(b)].
14 Holdfast NZ Limited v Selleys Pty Limited (2005) 17 PRNZ 897 (CA) at [47].
15 New Pastures Ltd v FM Custodians Ltd HC Christchurch CIV-2009-409-000231, 2 November 2009.
16 At [13].
the reasonableness of Mr Pham’s conduct should be assessed by reference to the fact that he was self-represented during the proceeding.
[33] In any case, Mr Stevens submits that a costs award against Mr Pham when he is of limited means and incapable of meeting a costs award from unrestrained property could constitute disproportionately harsh takings by the Commissioner.
Analysis
[34] I am not satisfied that an order for increased costs is justified against Mr Pham for the following reasons.
[35] First, Mr Pham’s involvement in the proceeding was limited to filing an affidavit and being available for cross-examination at the hearing. Neither of those steps can be said to be unnecessary, nor could they be said to have contributed unnecessarily to the time or expense of the proceeding. The affidavit recorded Mr Pham’s position that he opposed the OA overseeing the sale of Garcia Place. He did not file submissions in support of his position, instead relying on the submissions made by Ms Le’s legal aid counsel. It follows that Mr Pham was not himself “pursuing an unnecessary step or an argument that lacks merit” as contemplated by r 14.6(3)(b)(ii).
[36] Second, although Mr Pham was the unsuccessful party, I am not persuaded that the arguments made by Mr Pham or the position he took lacked merit to the extent required to justify increased costs. Unlike the plaintiff’s position in New Pastures, Mr Pham’s position was not so untenable that discontinuance of proceedings was preferable to filing submissions in response.17
[37] One of the grounds of Mr Pham’s opposition to the OA conducting the sale process was his concern that the OA would not be able to achieve the best price for the property. As Mr Stevens contends, this was not a baseless concern, as sale prices obtained by the OA for the sale of Mr Pham’s other restrained properties were substantially below the registered valuation, or were sold for approximately $300,000
17 New Pastures Ltd v FM Custodians Ltd, above n 15, at [19].
less than the purchase price (I note however that there were valid reasons for the sale prices as discussed in the judgment).
[38] Another ground of Mr Pham’s opposition was that various expenses incurred should be repaid with the surplus proceeds of sale from Garcia Place, including work carried out by Mr Pham’s company, HandymanKiwi Ltd, and Mr Phan’s company, Specialist Tiling Services Ltd. Mr Pham produced five invoices as evidence for the former and gave oral evidence as to the latter.18 Although I found against Mr Pham on this issue, I have regard to Mr Stevens’ submission that Mr Pham’s preparation for and conduct at the hearing must be assessed against the fact that he was self-represented throughout. His imperfect presentation of evidence and lack of submissions is not a good reason to justify an uplift in costs.
[39] As to Mr Pham’s conduct, I do not consider that he acted to such an unreasonable extent so as to support an award of increased costs against him. It is helpful to keep in mind that even where the court is satisfied there are exceptional circumstances for the purposes of s 45 of the LSA, it does not necessarily follow there should be an uplift of costs.19
[40] On the face of it, the legislative test for exceptional circumstances in s 45 is drafted to capture broader conduct than the test for increased costs in relation to r 14.6 of the HCR. Section 45 of the LSA expressly allows the court to take into account broadly unreasonable conduct by the aided person, whereas r 14.6 of the HCR specifies matters justifying increased costs as those which contribute unnecessarily to the time or expense of the proceeding or step in it.
[41] The Commissioner is claiming increased costs on steps taken in relation to the proceeding, being the application for further orders over the restrained property of Garcia Place. Although Mr Pham’s conduct in relation to other restrained property (not Garcia Place) raised by Mr Mackenzie above at [22] may be relevant to the question of exceptional circumstances in s 45, it is of limited relevance to the question
18 In the judgment at [103]–[105], I refused to admit evidence that purportedly showed work completed by Specialist Tiling Services Ltd as it was unsworn and filed after the hearing by counsel for Ms Le at the request of Mr Pham.
19 Gill v Lethlean, above n 3, at [62].
of increased costs. That conduct has not “unnecessarily forced” any step of the proceeding onto the Commissioner.20
[42] I also do not consider that “some other reason” exists which justifies the court making an order for increased costs despite the principle that the determination of costs should be predictable and expeditious.21 Accordingly, I decline to make an order for increased costs.
Scale costs
[43] I now turn to the availability of an award of scale costs being made against Mr Pham.
[44] Mr Pham says that it would be unfair to make an award of costs against him and not Ms Le when the Commissioner’s application was opposed by both him and Ms Le on essentially the same grounds. However, there is one critical difference between Mr Pham and Ms Le: Ms Le was represented by legal aid counsel throughout the proceeding, while Mr Pham was self-represented until after delivery of the judgment. Ms Le enjoys prima facie immunity from costs being made against her, while Mr Pham does not. In those circumstances, there is no disparity or unfairness in making an award of costs against Mr Pham and not Ms Le.
[45] Mr Stevens also submits that a costs award would constitute “disproportionately harsh takings” against Mr Pham, referring to the Court of Appeal decision of Nicholas v Commissioner of Police.22 That case applied a specific test under s 56 of the Act for whether property subject to a profit forfeiture order should be excluded on the basis of undue hardship. Section 56 is not engaged here. Nor has Mr Pham filed any evidence as to his limited means. Accordingly, I do not consider the making of a costs award against Mr Pham is disproportionately harsh takings by the State.
20 Holdfast NZ Limited v Selleys Pty Limited, above n 14, at [47].
21 High Court Rules, r 14.6(3)(d).
22 Nicholas v Commissioner of Police [2017] NZCA 473, [2018] NZAR 172 at [41].
[46] As there is no reason to depart from the usual rule that costs follow the event, I consider it appropriate to make an award of scale costs against Mr Pham calculated on a 2B basis as set out in Appendix A.
Result
[47] I order Mr Pham to pay costs of $10,994 to the applicant, the Commissioner of Police.
Gordon J
Appendix A
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6
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