Commissioner of Police v Yim

[2019] NZHC 1986

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV 2016-404-0518

[2019] NZHC 1986

BETWEEN

COMMISSIONER OF POLICE

Applicant

AND

KA KIT YIM

First Respondent

CHIEN-HUI WU

Second Respondent

Hearing:

On the papers

Appearances:

K Eastwood and L J Fraser for the applicant

No appearance for the first respondent (B L Sellars QC excused) S J Bonnar QC for the second respondent

Judgment:

14 August 2019

JUDGMENT OF JAGOSE J

[Costs]

This judgment was delivered by me on 14 August 2019 at 3pm Pursuant to Rule 11.5 of the High Court Rules

…………………………

Registrar/Deputy Registrar

Solicitors/Counsel:

Meredith Connell, Auckland McVeagh Fleming, Auckland

S Bonnar QC, Barrister, Auckland

COMMISSIONER OF POLICE v YIM [2019] NZHC 1986 [14 August 2019]

[1]    Mr Yim and Ms Wu comprehensively were unsuccessful in their resistance to the Commissioner’s application for civil forfeiture orders under the Criminal Proceeds (Recovery) Act 2009, and on Ms Wu’s application for relief on grounds of ‘undue hardship’.1 I provisionally allowed only one of the myriad items challenged as not ‘tainted property’: a Chanel wristwatch, if acquired in 2002 in advance of her relationship with Mr Yim as Ms Wu claimed.2 But the Commissioner since has established the relevant model was not marketed until 2004, and in its particular presentation until 2007.

[2]    The Commissioner now seeks indemnity – alternatively, increased – costs. Ms Wu disputes indemnity costs are available in the circumstances, but accepts she is liable for increased costs. I do not need to recite the familiar general principles applying to the determination of costs; it is enough to recall “so far as possible the determination of costs should be predictable and expeditious”.3

[3]HCR 14.6(4) provides:

The court may order a party to pay indemnity costs if—

(a)  the party has acted vexatiously, frivolously, improperly, or unnecessarily in commencing, continuing, or defending a proceeding or a step in a proceeding; or

(b)              the party has ignored or disobeyed an order or direction of the court or breached an undertaking given to the court or another party; or

(c)              costs are payable from a fund, the party claiming costs is a necessary party to the proceeding affecting the fund, and the party claiming costs has acted reasonably in the proceeding; or

(d)              the person in whose favour the order of costs is made was not a party to the proceeding and has acted reasonably in relation to it; or

(e)              the party claiming costs is entitled to indemnity costs under a contract or deed; or

(f)              some other reason exists which justifies the court making an order for indemnity costs despite the principle that the determination of costs should be predictable and expeditious.

1      Commissioner of Police v Yim [2019] NZHC 1681.

2 At [43].

3      High Court Rules 2016 (“HCR”), r 14.2(1)(g).

[4]    The Commissioner relies in particular on Commissioner of Police v Zhang,4 “where, in addition to the respondent’s misleading and deceptive conduct, the respondents brought an application entirely lacking in merit, notwithstanding the receipt of a detailed settlement offer from the Commissioner”. He observes Ms Wu’s response may similarly be characterised.

[5]    Unreasonable failure to accept settlement offers may give rise to that party’s unnecessary contribution to the other’s time or expense in the proceeding, warranting increased costs.5 But such ‘unnecessary’ contribution exceptionally may resound also for indemnity costs,6 “in rare cases generally entailing breach of confidence or flagrant misconduct”,7 of “very unreasonable” conduct.8

[6]    Ms Wu’s failure to accept the Commissioner’s settlement offers does not have the necessary quality to justify indemnity costs. The Commissioner does not point to any ‘flagrant misconduct’ on Ms Wu’s part in refusing the Commissioner’s offers. None is apparent in the parties’ correspondence made available to me.

[7]    Neither does the lack of merit of Ms Wu’s cases against forfeiture and for relief justify indemnity costs. Again, that is expressly a factor warranting increased costs, if contributing unnecessarily to the time or expense of the party claiming costs.9 The lack of merit of her cases is not attributable to any qualifying misconduct on her part. Rather, the Commissioner required to satisfy me the forfeiture orders were sought of probable criminal proceeds.

[8]    But Ms Wu did act ‘improperly’ in the proceeding. As also substantiated by the circumstances of the Chanel watch, her evidence was untrue in such significant part, I did not believe her account at all.10 This was not a mistaken account (as may occur wherever facts are disputed), but her determined attempt to mislead the court through

4      Commissioner of Police v Zhang [2018] NZHC 636.

5      HCR 14.6(3)(b)(v).

6      HCR 14.6(4)(a) and/or (f); and see Flujo Holdings Pty Ltd v Merisant Company Inc [2018] NZCA 226 at [34]–[35].

7      Prebble v Awatere Huata (No 2) [2005] NZSC 18; 2 NZLR 467 at [6]; and see also Bradbury v Westpac Banking Corporation [2009] NZCA 234; [2009] 3 NZLR 400 at [6] and [28].

8      Flujo Holdings Pty Ltd v Merisant Company Inc, above n 6, at [34].

9      HCR 14.6(3)(b)(ii).

10     Commissioner of Police v Yim, above n 1, at [30], [33], [36], and [43].

persistent falsehoods, in deliberate breach of her formal affirmations her evidence was true and correct. It is one thing for a respondent to put an applicant to test (subject to scale or increased costs on failure). It is another entirely for a respondent to dispute an applicant’s case on known false evidence. In the context of legal proceedings founded on witnesses’ enforceable obligations to tell the truth, Ms Wu’s reliance on her own false evidence was exceptional and constituted ‘flagrant misconduct’. It was an attempt to obtain judgment in her favour by conscious and deliberate dishonesty; by fraud.11

[9]    Ms Wu thus should be liable to the Commissioner for indemnity costs. But she should not be liable to the Commissioner for all his costs on the forfeiture application, commenced 16 March 2018. That is because the Commissioner had an initial burden to satisfy me the property should be forfeited. Being successful, he presumptively is entitled at least to scale costs, claimed at 2B (and 2C for affidavits and written submissions). Rather, Ms Wu’s 20 July 2018 opposition being wholly founded on her evidence, Ms Wu should only thereafter be liable in indemnity costs.

[10]   Ms Wu accepts she should be liable for increased costs, predominantly for her rejection of the Commissioner’s offers. Those offers preceded formal issue of the forfeiture application. Even so, Ms Wu’s rejection of the Commissioner’s offers is material to my consideration of increased costs only to the extent such “contributed unnecessarily to the time or expense of the proceeding or step in it”.12 Such unnecessary contribution logically must be of steps not otherwise required to be taken in the proceeding, or materially in excess of the scale time allowed for each such step to the party claiming costs, such being how costs usually are calculated.13 The Commissioner bears the burden of establishing such qualification:14 “[c]lear cause must be shown to justify an increase”.15

11     Commissioner of Inland Revenue v Redcliffe Forestry Venture Ltd [2012] NZSC 94, [2013] 1 NZLR 804 at [29].

12     See Commissioner of Inland Revenue v Chesterfields Preschools Ltd [2010] NZCA 400, (2010) 24 NZTC 24,500 at [165], citing Bradbury v Westpac Banking Corp, above n 7, at [27].

13     HCR 14.2(1)(c); see both HCR 14.6(3)(a) and Holdfast NZ Ltd v Selleys Pty Ltd (2005) 17 PRNZ 897 (CA) at [43]–[44].

14     Corrick v Silich [2018] NZCA 221, (2018) 24 PRNZ 210 at [60].

15     Bradbury v Westpac Banking Corp, above n 7, at [28].

[11]   The Commissioner’s offer proposed forfeiture “by consent”. I am unsure what fewer steps the Commissioner anticipated taking before receipt of Ms Wu’s opposition. In the absence of any alternative contention from the Commissioner, I assume – to meet s 50(1) – he would have filed at least his application and initial five supporting affidavits. Subsequent steps in the proceeding follow Ms Wu’s opposition, on which the Commissioner is to be indemnified.

[12]   Given the respondents’ joint and several liability in this proceeding,16 costs liabilities should follow accordingly.

Result

[13]The respondents jointly and severally are liable to pay the Commissioner:

(a)scale costs for all the Commissioner’s steps in the proceeding prior to 20 July 2018 (calculated at 2C for step 37, but otherwise 2B); and

(b)indemnity costs thereafter.

—Jagose J

16     Commissioner of Police v Yim, above n 1, at [51].