Commissioner of Police v Salter
[2021] NZHC 2164
•19 August 2021
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2019-404-2622
[2021] NZHC 2164
UNDER the Criminal Proceeds (Recovery) Act 2009 BETWEEN
COMMISSIONER OF POLICE
Applicant
AND
RONALD THOMAS SALTER
Respondent
Hearing: On the papers Appearances:
M R Harborow and A R Masters for the applicant
R M Mansfield QC, S L Cogan and J P Cundy for the respondents
Judgment:
19 August 2021
JUDGMENT NO 2 OF PALMER J
(Costs)
This judgment was delivered by me on Thursday 19 August 2021 at 12.00 pm.
Pursuant to Rule 11.5 of the High Court Rules.
………………………… Registrar/Deputy Registrar
Counsel/Solicitors:
R M Mansfield QC, Auckland S L Cogan, Barrister, Auckland Lee Salmon Long, Auckland
Meredith Connell, Crown Solicitor, Auckland
COMMISSIONER OF POLICE v SALTER [2021] NZHC 2164 [19 August 2021]
The judgment
[1] On 25 June 2021, I issued a judgment in these proceedings.1 In summary, I held:
[1] In September 2015, a young man died while welding a tank containing highly hazardous substances at the premises of Salters Cartage Ltd (SCL) in Wiri, South Auckland. SCL and its shareholder, director, and chief executive, Mr Ron Salter, were convicted of health and safety and hazardous substances offences. The Commissioner of Police (the Commissioner) has applied under the Criminal Proceeds (Recovery) Act 2009 (the Act) for restraining orders over properties belonging to SCL and to Mr and Mrs Salter. The Commissioner alleges that SCL was systemically non-compliant with health and safety and hazardous substances law, operating blatantly and dangerously for at least seven years. He submits SCL’s revenue is unlawfully derived and he will apply for forfeiture orders to recover the unlawful benefits. SCL and the other respondents do not oppose the restraining orders as long as the Commissioner gives an undertaking to pay any consequential damages and costs. The Commissioner opposes having to provide an undertaking.
[2] I accept the nature of the proceedings is novel. It is difficult to assess the strength of the Commissioner’s application for forfeiture orders at this point. But I accept that the Commissioner has an arguable case that could result in some sort of forfeiture orders. There are no presumptions about whether an undertaking should be ordered. The day to day operations of the SCL Group appear to have been satisfactorily undertaken under the without notice restraining orders to date. But I consider it is reasonably clear that the restraining orders could have a negative effect on the ability of the SCL Group to undertake significant borrowing for the purposes of investment. I am satisfied some discount on a sale price for the business is likely as a result of commercial perception of the restraining orders complicating a sales transaction, particularly for potential overseas purchasers. The longer the period of restraint, the more likely it is that there will be a negative impact. The period of restraint is likely to be at least three years. I accept that an undertaking as to damages is likely to act as an additional incentive on the Commissioner to respond to reasonable requests for variations to the orders in a reasonable, and reasonably timely, way. I do not consider the Commissioner’s administration of the restraining orders in this case will be unduly “chilled” by an undertaking. I order the Commissioner to provide an undertaking and, on that basis, grant the application on notice for restraining orders.
[2] If the parties could not work out costs between themselves, I reserved leave for them to file submissions on costs.2 They have done so. The respondents claim costs of $56,643 and disbursements of $67,183. The Commissioner objects to several aspects of the costs claimed, which I deal with in turn.
1 Commissioner of Police v Salter [2021] NZHC 1531.
2 At [58].
Steps claimed in the proceeding
[3] The judgment dealt with an application by the Commissioner for on notice restraining orders under the Criminal Proceeds (Recovery) Act 2009 (the Act). The respondents opposed the orders sought unless the Commissioner provided an undertaking. They applied for an undertaking, in the form of an interlocutory application. So the hearing largely concerned whether the Commissioner was required to provide an undertaking.
[4] Mr Harborow, for the Commissioner, submits the respondents have used the incorrect steps for calculation of their costs, and have double-counted in some areas. Mr Mansfield QC disputes this. I resolve these issues as follows.
[5] Rule 19.2(r) of the High Court Rules 2016 (the Rules) provides that applications under the Act must be made by originating application. So the Commissioner’s application for on notice restraining orders should be treated as an originating application. The Commissioner relies on case law that has held that applications to vary restraining orders are made by way of originating application too.3 I agree with that case law. So I award costs for the respondents’ application for an undertaking as an originating application.
[6] Mr Mansfield, for the respondents, submits they are entitled to an additional four days for the preparation of their affidavits. He relies on Trust v Global Oil Services Ltd.4 He submits the hearing was a significant and unprecedented matter and the time required very substantially exceeded the time allocations in sch 3 of the Rules.
[7] Mr Harborow, for the Commissioner, seeks to distinguish Trust v Global Oil Services Ltd, which involved the interplay of law between three jurisdictions. He submits the affidavits here were not particularly complex, the hearing only lasted
2.5 days, and it is difficult to see how a further four days can be justified. He submits no extra time should be awarded for preparation of the affidavits, including because sch 3 of the Rules includes preparation and filing of supporting affidavits in the step
3 See Commissioner of Police v Gong [2018] NZHC 1686 at [12]–[13].
4 Trust v Global Oil Services Ltd [2019] NZHC 3418 at [19]–[20] and [29].
for filing an originating application. He submits the respondents may not claim the costs they have claimed for all of: the notice of opposition to the application for restraining orders; the application for an undertaking as an interlocutory application; and preparation of affidavits for a standard proceeding. Mr Harborow also submits the respondents did not file affidavits in support of their notice of opposition but in support of their application for an undertaking. So they are not entitled to costs on a 2B basis for the notice of opposition, for two full days.
[8] I consider the work required of counsel on both sides for this hearing was out of the ordinary. The respondents filed five affidavits, by two witnesses of fact and three experts. The Commissioner was represented by three counsel. There was extensive cross-examination. I accept Mr Mansfield’s submission that the hearing was more like a trial than a normal application hearing. That was not unreasonable, given the novel legal issues at stake and the nature of the factual context.
[9] I do not consider the effort required was analogous to that in Trust v Global Oil Services Ltd. But I do consider additional costs are fairly awarded for the preparation of affidavits in the circumstances of this case. I approve costs for an additional two days for preparation of the affidavits. The respondents may claim costs for the steps they have claimed, on the basis their application for an undertaking was an originating application. I also consider the respondents are entitled to costs on a 2B basis for the notice of opposition, which was required and upheld. I consider the amount of the ensuing costs for that is fair in the circumstances of this case.
Band C
[10] Rule 14.5(2) of the Rules requires determination of what is a reasonable time for a step in proceedings, in order to determine costs. As I held in TSB Bank Ltd v Dollimore (No 2):5
[6] The assessment is of each step – so a different band may apply to different steps of a proceeding.6 The assessment is an objective one; involving what time would be “considered reasonable” rather than what time was actually spent.
5 TSB Bank Ltd v Dollimore (No 2) [2016] NZHC 253.
6 Commissioner of Inland Revenue v Chesterfields Preschools Ltd [2010] NZCA 400, (2010) 24 NZTC 24,500 at [161].
[7] The distinctions between the three bands are relative to each. Band B involves a “normal” amount of time and bands A and C and [are] “comparatively” small and large amounts of time respectively – rather like Goldilocks’ choices. Contrary to (one interpretation of) Ms Dollimore’s submission, the B band is not a default except in the sense that a step in a case could often be expected to be “normal”.
[8] The assessment of a “normal” vis a vis a comparatively small or large amount of time in a step may, depending on the step, relate to such factors as:
(a)the scope of the facts that are material to the issue;
(b)the degree of difficulty in identifying the law relevant to the issue; and
(c)the number and complexity of the arguments by both sides applying the law to the facts.
[11] The respondents claim costs for four steps on a band C basis, for filing the application for the undertaking, preparing opening submissions, preparation for the hearing and preparing the written closing submissions. Mr Mansfield submits their response to a novel and complex application was a time-consuming process and actual costs far exceed those claimed. He submits the costs claimed are reasonable in the circumstances.
[12] Mr Harborow, for the Commissioner, submits the scope of material facts was relatively limited, the law was limited and the preparation allowed should only be on a band B basis.
[13] I consider the material facts were of medium scope. But the difficulty in identifying the relevant law was relatively high. And the number and complexity of the arguments by both sides in applying the law to the facts was extensive, as demonstrated by the summary of the parties’ submissions in the judgment.7 In the judgment, I accepted the respondents’ submission that the nature of the proceedings, and the circumstances in which the Act was sought to be applied, were novel.8 I observed that “[t]he novelty of the proceedings appears to have generated evidence and arguments that risk complicating the otherwise straightforward issue here”.9 But that was not a criticism of counsel. It was an observation about the effect of novelty.
7 Commissioner of Police v Salter, above n 1, at [46]–[47].
8 At [2] and [48].
9 At [49].
I consider a relatively large bear’s amount of time, at band C, is justified for the steps for which the respondents claim it.
Hearing time and second counsel
[14] The respondents claim costs for a three-day hearing and for second counsel. Mr Harborow, for the Commissioner, objects that the hearing lasted two and a half days and says the basis on which second counsel is claimed is not clear. Mr Mansfield accepts the claim should be restricted to two and a half days, as he must. He submits the hearing warranted second counsel and points out the Commissioner was represented by three counsel throughout the hearing. I agree costs for second counsel is warranted.
Experts’ fees
[15] Rule 14.12(2) and 14.12(3) provide, in summary, that claimed and verified disbursements must be included in the costs to the extent they are of a class approved by the court, be specific to, and reasonably necessary for the conduct of the proceeding, reasonable in amount, and not disproportionate in the circumstances of the proceeding.
[16] The respondents claim the full fees of two of their expert witnesses, and 50 per cent of the third, as reasonable disbursements. Mr Mansfield submits the amounts claimed are reasonable and proportionate.
[17] Mr Harborow, for the Commissioner, submits that the evidence suggests the third expert’s evidence was not prepared specifically for the proceeding and it is not clear that 50 per cent of his fees are attributable to the proceeding. He points to the evidence being mentioned only in passing in the judgment, in which I said I was “not confident” of the third expert’s evidence. He submits the opinions of the first two experts were ultimately unhelpful for the conduct of the proceedings. He also submits the invoices include almost no factual information, contrary to Auckland Waterfront
Development Agency Ltd v Mobil Oil New Zealand Ltd,10 and it is impossible for the Court to determine whether the amount charged is reasonable.
[18] Mr Mansfield responds that the assertion that the third witness was engaged to provide a valuation report and then co-opted into giving evidence is incorrect and is advanced without any factual basis. He submits the expert was instructed to prepare evidence specifically for the purpose of the proceeding. He submits the expert evidence was reasonably necessary for the conduct of the proceeding in proving likelihood of loss, as required by the Court of Appeal for these sorts of applications in Yan v Commissioner of Police.11
[19] I approve the expert fees, as a class of disbursement. I consider the experts’ evidence was reasonably necessary for the conduct of the proceeding. With the 50 per cent discount proposed by the respondents for the third expert’s evidence, I consider they are reasonable in amount and not disproportionate.
[20] I do not consider Auckland Waterfront Development Agency Ltd impedes those conclusions. That case involved claimed costs of some $1.4 million in a case which settled before the Judge heard the experts or saw most the briefs. Katz J said only that, in those circumstances, there was “some merit” to the submission that she should take an approach similar to the four-step approach for assessing the reasonableness of solicitor-client costs.12 But her approach essentially rested on not being satisfied of the reasonableness of specific aspects of the claimed costs and imposing a 30 per cent reduction accordingly.13 That is not the case here. I approve the experts’ fees as reasonable disbursements as claimed.
Costs on costs
[21] The respondents seek costs for the memoranda seeking costs. The Commissioner opposes that. I do not consider the issues raised by the respondents justify awarding costs on costs.
10 Auckland Waterfront Development Agency Ltd v Mobil Oil New Zealand Ltd [2015] NZHC 470, (2015) 23 PRNZ 200 at [32]
11 Yan v Commissioner of Police [2015] NZCA 576 [2016] 2 NZLR 593 at [79].
12 Auckland Waterfront Development Agency Ltd v Mobil Oil New Zealand Ltd, above n 10, at [44].
13 At [46] and [51].
Appeal
[22] The Commissioner suggests I might wish to defer the determination of costs, because an appeal will be filed and a stay is sought. The respondents submit I should not defer determining costs. I do not consider there are good reasons to defer determining costs.
Palmer J
4
6
1