Deliu v Connell
[2016] NZHC 361
•4 March 2016
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV 2015-404-00812 [2016] NZHC 361
UNDER the Judicature Amendment Act 1972 and
Part 30 of the High Court Rules
IN THE MATTER
of an application for judicial review
BETWEEN
FRANCIS CATALIN DELIU Plaintiff
AND
RICHARD JOHN CONNELL First Defendant
LEGAL COMPLAINTS REVIEW OFFICER
Second Defendant
NEW ZEALAND LAW SOCIETY Third Defendant
Hearing: 3 and 4 February 2016 Counsel:
Plaintiff in person
P M Fee and L M Fraser for first defendant Appearance excused for second defendant M J Hodge for third defendant
Judgment:
4 March 2016
JUDGMENT OF PALMER J
This judgment was delivered by me on 4 March 2016 at 4 pm, pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Date……………
Solicitors: Fee Langstone, Auckland
Meredith Connell, Auckland
To: F C Deliu, Auckland
Deliu v Connell [2016] NZHC 361 [4 March 2016]
Summary
[1] The National Standards Committee determined not to take further action on a complaint made by the plaintiff, Mr F C Deliu, about a fellow law practitioner, Mr Connell, the first defendant. The Legal Complaints Review Officer (LCRO) then declined an application for review by Mr Deliu of the Committee’s determination. The LCRO also ordered costs against Mr Deliu. Mr Deliu challenges these two LCRO decisions by way of judicial review.
[2] The orthodox principles of lawful decision-making that are upheld by the law of judicial review are not to be either read down or elevated in the context of professional discipline. A review by the LCRO is neither a judicial review nor an appeal. Those seeking a review of a Committee determination are entitled to a review based on the LCRO’s own opinion rather than on deference to the view of the Committee. A review by the LCRO is informal, inquisitorial and robust. It involves the LCRO coming to his or her own view of the fairness of the substance and process of a Committee’s determination.
[3] Here, I decline the challenges to the LCRO’s review decision. However, I find that the costs decision was unreasonable and did not take into account relevant submissions on costs and a recusal application by Mr Deliu that were received late but before the decision was issued. I quash the costs decision.
The Law of Judicial Review and Review by an LCRO
Judicial Review and Intensity
[4] Mr Deliu challenges the two LCRO decisions by way of judicial review. He challenges the review decision on four grounds and the decision to award costs against him on seven grounds. The law relating to the particular grounds of challenge do not need to be rehearsed in abstract. However, there is one aspect of relevant legal principle that is worth considering at the outset.
[5] Mrs Fee, counsel for Mr Connell the first defendant, submitted that it is important in applying the law of judicial review to be conscious of the statutory
context. She says it would be wrong to examine the LCRO’s decisions under a microscope or with too demanding an eye. She points to the purpose of the relevant statutory framework, considered below, being the speedy, simple and comprehensible resolution of complaints by laypeople against lawyers in a context of regulating standards of professional behaviour. She encourages me to stand back to consider the matter overall. Mrs Fee acknowledged that this was a submission about the appropriate intensity of judicial review which should be applied by the Court.
[6] The intensity of the standard of judicial review that should be applied has vexed the New Zealand courts in recent years. There is now a considerable body of academic commentary confirming that common law courts do and should apply variable, variegated or sliding standards of review depending on the context, such as
the interests at stake.1 As Dean Knight has demonstrated, New Zealand courts
clearly do so, though they do not always acknowledge it explicitly.2 A number of High Court decisions and the occasional Court of Appeal decision have invoked American “hard look” or British “anxious scrutiny” language in relation to judicial review, particularly of decisions that affect human rights.3 Yet the ultimate judicial authority in New Zealand, the Supreme Court, has determinedly refused to adopt any such approach. Indeed, the Chief Justice suggested in one case that statutory interpretation was not “helpfully advanced by consideration of the scope and intensity of the High Court’s supervisory jurisdiction to ensure reasonableness in substantive result in the exercise of statutory powers”.4
[7] There are undoubtedly good reasons of legal policy for avoiding the straight jacket that often mechanistically follows adoption of a label. But while Lord Steyn
was undoubtedly correct that in this area, as in others, “context is everything”,5 that
1 See, for example, Hanna Wilberg and Mark Elliott (eds) The Scope and Intensity of Substantive
Review: Traversing Taggart’s Rainbow (Hart Publishing, Oxford, 2015).
2 Dean R Knight “Mapping the Rainbow of Review: Recognising Variable Intensity” [2010] NZ L
Rev 393.
3 See, for example, Wolf v Minister of Immigration [2004] NZAR 414 (HC) (Wild J) at [47] and, in a human rights context, T v Immigration and Protection Tribunal [2012] NZHC 1871 (Collins
J) at [22]. For Court of Appeal authority, see Pharmceutical Management Agency Ltd v Roussel
Uclaf Australia Pty Ltd [1998] NZAR 58 at 66 (CA).4 Westfield (New Zealand) Ltd v North Shore City Council [2005] NZSC 17, [2005] 2 NZLR 597, at [5]. And see the exchange with the Supreme Court in argument in Ye v Minister of Immigration [2009] NZSC 76, [2010] 1 NZLR 104 reproduced by Knight above, n 2 at 400-401.
5 R (Daly) v Secretary of State for the Home Department [2001] 2 AC 532 (HL) at [28].
is hardly a useful guide to future judicial decisions. The late Professor Taggart was rightly concerned that some order be brought to the field, otherwise “the law will continue to be rather chaotic, unprincipled, and result-orientated”.6 The consequences could include more litigation than necessary, lack of certainty, and diminution of the rule of law.
[8] This judgment is not the place to propose a new approach to the intensity of judicial review. But I do agree that “it would be desirable for New Zealand courts to engage more openly with the matters that influence the allocation of interpretative authority between courts and administrators”.7 That bears directly on the courts’ approach to judicial review of LCRO decisions.
[9] In professional discipline cases I simply note that the interests at stake, namely professional reputations, can reasonably be expected to be keenly felt by the participants. The purpose of the Act here is undoubtedly focused on the expeditious resolution of complaints. However, the process and substance of that resolution is explicitly required to be consistent with the principles of natural justice. It must also accord with the other orthodox principles of lawful decision-making that are upheld by the law of judicial review. Those principles are not to be either read down or elevated in the context of professional discipline.
The Legislative Framework for LCRO decisions
[10] Section 3(1) sets out three purposes of the Act:
(a) to maintain public confidence in the provision of legal services and conveyancing services:
(b) to protect the consumers of legal services and conveyancing services:
(c) to recognise the status of the legal profession and to establish the new profession of conveyancing practitioner.
[11] To achieve those purposes the Act, relevantly, “provides for a more
responsive regulatory regime in relation to lawyers and conveyancers” and “states
6 Michael Taggart, “Proportionality, Deference, Wednesbury” [2008] NZ L Rev 423 at 453.
7 Bree Huntley “Judicial Review of Administrative Interpretations: Lessons for New Zealand from
the United States” (2015) 25 NZULR 791 at 817.
the fundamental obligations with which, in the public interest, all lawyers and conveyancing practitioners must comply in providing regulated services” (s 3(2)(b) and (d)).
[12] Part 7 of the Act establishes a complaints and disciplinary regime to deal with alleged misconduct or unsatisfactory conduct by lawyers. Section 120(3) makes clear that an important purpose of the framework for complaints and discipline is to hear and determine disciplinary charges expeditiously. The complaints service “must deal, in a fair, efficient, and effective manner, with all complaints received” (s 123).
[13] The NZLS is required to establish Standards Committees, composed predominantly of law practitioners, to inquire into and investigate complaints, to promote their resolution, to make final determinations about them and to lay charges before the Disciplinary Tribunal (ss 126, 130). Relevantly, a Committee may decide to take no action on a complaint if:
(a) in its opinion “the complaint is frivolous, vexatious or is not made in good faith” (s 138(1)(c)); or
(b)“in the course of investigation of the complaint, it appears to the Standards Committee that, having regard to all the circumstances of the case, any further action is unnecessary or inappropriate” (s 138(2)).
[14] A complainant has a right to apply “for a review” of a Committee’s determination by the LCRO (s 193, 194). The LCRO is appointed by the Minister and is required not to be a practising lawyer (s 190). Section 200, which is headed “Avoidance of unnecessary formality,” requires the LCRO to conduct a review:
with as little formality and technicality, and as much expedition, as is permitted by—
(a) the requirements of this Act; and
(b) a proper consideration of the review; and
(c) the rules of natural justice.
[15] The LCRO has the power to review all or any of the aspects of an inquiry by a Committee (s 203). To do so, the LCRO has wide powers to obtain information (s 204) and to regulate his or her procedure as he or she thinks fit but must do so “in a way that is consistent with the rules of natural justice (s 206). The LCRO may confirm, modify or reverse a Committee’s determination (s 211) or may direct a Committee to reconsider a whole or any part of a complaint (s 209). The LCRO is prohibited from making “any comment that is adverse to a person unless that person has been given a reasonable opportunity to be heard” (s 214).
[16] After conducting a review, s 210 empowers the LCRO to “make such order as to the payment of costs and expenses as the [LCRO] thinks fit” and that power explicitly extends to awarding costs:
(a) to be paid by the NZLS to the person to whom the proceedings relate;
or
(b)if the LCRO considers that the proceedings were justified and that it is just to do so, by the person to whom the proceedings to the NZLS relate, even without a finding of unsatisfactory conduct.
The Nature of an LCRO Review
[17] It is not entirely clear from the Act what a “review” by the LCRO entails. In
Deliu v Hong Winkelmann J considered that:8
[39] It is true that s 138 is expressed in terms of the exercise of a discretion, however the power of review is not appropriately equated with a general appeal. The obligations and powers of the Review Officer as described in the Act create a very particular statutory process.
[40] The Review Officer has broad powers to conduct his or her own investigations including the power to exercise for that purpose all the powers of a Standards Committee or an investigator and seek and receive evidence.9
These powers extend to “any review”. He or she may also postpone the
review while attempting to negotiate, conciliate or mediate a resolution.
8 Deliu v Hong [2012] NZHC 158 at [39]-[41].
9 Lawyers and Conveyancers Act 2006, section 207.
[41] In my view the power of review is much broader than an appeal.10 It gives the Review Officer discretion as to the approach to be taken on any particular review as to the extent of the investigations necessary to conduct that review, and therefore clearly contemplates the Review Officer reaching his or her own view on the evidence before her. Nevertheless, as the Guidelines properly recognise, where the review is of the exercise of a discretion, it is appropriate for the Review Officer to exercise some particular caution before substituting his or her own judgment without good reason.
[18] I agree, as did Dobson J in Q v Legal Complaints Review Officer,11 Fogarty J in A v Legal Complaints Review Officer and Mr Deliu in his oral submissions (at least in relation to paragraph [41]).12
[19] As Katz J has held, the nature of the disciplinary process under the Act is sui generis.13 And Duncan Webb, writing as the founding LCRO, was correct that the review function of the LCRO is “unique in a number of respects”.14 It is neither a judicial review nor an appeal. A “review” of a determination by a Committee dominated by law practitioners, by the LCRO who must not be a practising lawyer,
is potentially broader and more robust than either an appeal or a judicial review. The statutory powers and duties of the LCRO to conduct a review suggest it should be relatively informal and inquisitorial while complying with the principles of natural justice. The LCRO decides on the extent of the investigations necessary to conduct a review in the context of the circumstances of that review. The LCRO must form his or her own view of the evidence. Naturally an LCRO will be cautious but, consistent with the scheme and purpose of the Act and Austin, Nichols & Co Inc v Stichting
Lodestar,15 those seeking a review of a Committee determination are entitled to a
review based on the LCRO’s own opinion rather than on deference to the view of the
10 This same point was made by a Review Officer in the review decision, BK v YM LCRO
177/2010.
11 Q v Legal Complaints Review Officer [2012] 3082, [2013] NZAR 69, at [24]. The result of this decision was overturned by the Court of Appeal on the facts in Q v Legal Complaints Review
Officer [2013] NZCA 570, [2014] NZAR 134. That Court heard submissions about the scope of
the LCRO’s powers of review and the scope of judicial review of LCRO decisions (at [44] to
[46]) but did not engage with them.
12 A v Legal Complaints Review Officer [2013] NZHC 1100, (2013) 21 PRNZ 542, at [41].
13 Orlov v The National Standards Committee 1 and the Auckland Standards Committee 1 [2013] NZHC 1955.
14 Duncan Webb “The Legal Complaints Review Officer” [2008] NZLJ at 408.
15 Austin, Nichols & Co Inc v Stichting Lodestar [2007] NZSC 103, [2008] 2 NZLR 141 at [16].
Webb endorsed the application of Austin, Nichols at 408. He also suggested that the standards committee decision stands unless it can be shown to have been in error, which I do not consider is consistent with Austin, Nichols or the scheme of the Act.
Committee. That applies equally to review of a determination under ss 138(1)(c) and s 138(2).
[20] This view is reinforced by reference to the relevant legislative history. In the third reading debate over the Bill, the previous Minister of Justice the Hon Phil Goff, the then Shadow Attorney-General Christopher Finlayson, and the Minister of Justice the Hon Mark Burton, all referred to the importance of the independent LCRO who would assume “an ombudsman-like” role.16 The hallmark of the Ombudsman’s role is independent scrutiny of the fairness of the substance and process of administrative decisions. While the office of the LCRO does not have the formal powers and functions of an Ombudsman, it can be expected to be similarly
concerned with the underlying fairness of the substance and process of Committee determinations in conducting a review.
[21] A review by the LCRO is informal, inquisitorial and robust. It involves the LCRO coming to his or her own view of the fairness of the substance and process of a Committee’s determination.
Context
The Original Interactions
[22] In September 2012, Mr Richard Zhou and Mrs Zhenzhen Chen were lawyers in Mr Deliu’s incorporated law firm Amicus Barristers Chambers. Acting for a client, Mr Zhao served proceedings on a client of Mr Richard Connell, principal of Connell & Connell Lawyers. The Notice of Claim dated 20 September 2012 concerned a dispute over building renovations. It included a pleading of the tort of deceit for a fraudulent misrepresentation. Mr Zhao was listed on the intituling of the Notice of Claim as “Counsel Acting” but the text of the Notice stated Mrs Chen was the plaintiff’s lawyer and gave her details for service.
[23] Mr Connell had an initial exchange regarding the claim by letter of
12 October to the instructing solicitor Mr McClymont and an email reply by
16 (2 March 2006) 629 NZPD 1696 (see 1697 for comments by the Hon Phil Goff; and 1702 for Christopher Finlayson); (14 March 2006) 629 NZPD 1739 (see 1739-1740 for comments by Hon Mark Burton).
Mr Deliu on 15 October 2012. On 16 October Mr Connell wrote to Mr McClymont seeking an explanation of the steps taken to ensure that there were reasonable grounds for the pleading of deceit. Such grounds are required by Rule 13.8.1 of the Lawyers and Conveyancers (Lawyers: Conduct and Client Care) Rules 2008 (the Rules). Mr Deliu replied by email on 16 October 2012 as “Head of Chambers”. His email characterised Mr Connell’s letter as an implied threat attempting to coerce withdrawal of the claim and did not provide the grounds requested.
The Complaints to the National Standards Committee
[24] On 23 October 2012 Mr Connell complained to the NZLS on behalf of his client that Mrs Chen had breached r 13.8 and complained on his own behalf that Mr Deliu’s emails had breached r 10.1 requiring that a lawyer must treat other lawyers with respect and courtesy. On 1 November 2012, as “Head of Chambers”, Mr Deliu made his own complaint with the NZLS about Mr Connell’s complaint, alleging an intention to intimidate Mrs Chen.
[25] On 30 November 2012 the National Standards Committee dismissed Mr Deliu’s complaint. It resolved not to take any further action on the complaint under s 138(2) of the Lawyers and Conveyancers Act 2006 (the Act) on the basis of its finding that Mr Connell had a sufficient evidential basis to make his complaint against Mrs Chen. It also resolved not to take further action under s 138(1)(c) on the basis that it considered Mr Deliu’s complaint was vexatious or not made in good faith based on it lacking adequate evidential basis and being a cross-complaint.
[26] Mr Deliu applied to the LCRO to review the decision of the Standards Committee. Its review did not uphold Mr Deliu’s position and it awarded costs against him. These are the two decisions of the LCRO which Mr Deliu challenges. Each of the next two parts of the judgment outlines the nature of each decision and determines the challenges made to it.
The LCRO Review Decision
The Decision
[27] On 25 January 2013 Mr Deliu applied to the LCRO to review the decision of the Standards Committee on four grounds that Mr Deliu characterises as similar to the grounds of this judicial review:
(a) the Committee did not consider submissions and materials provided to it;
(b)the Committee failed to consider that Mr Connell had failed to make proper inquiry before complaining against Mrs Chen;
(c) the Committee did not consider whether Mr Connell’s complaint was
bona fide or was made for an ulterior purpose;
(d) the Committee gave no reasons for its conclusion that Mr Deliu’s
complaint was vexatious or not made in good faith.
[28] The LCRO, Dorothy Thresher, received written submissions and held a hearing on 1 October 2013. She sought and obtained further information from Mr McClymont.
[29] On 21 January 2014, in considering whether to order Mr Deliu to pay costs and, if so, in what amount, the LCRO requested of Mr Connell’s counsel evidence of the costs he had incurred. Mr Connell’s counsel responded on 30 January 2014. On
23 January 2014 Mr Deliu protested that this constituted pre-determination. In her response the following day the LCRO invited Mr Deliu to provide, by 7 February
2014, any further substantially helpful information regarding his complaint being laid vexatiously or not in good faith. She also referred to s 206(5) which empowers the LCRO to regulate her procedures in such manner as the LCRO thinks fit. Mr Deliu responded on 3 February 2014 with examples of other complaints by him against law practitioners. On 7 February 2014 the LCRO acknowledged receipt.
[30] On 27 August 2014 the LCRO issued her decision dismissing the application for review and sought submissions from the parties on costs. The LCRO considered that the question on review was “whether there is any good reason to disturb the decision to take no further action on Mr Deliu’s complaint” on the basis of either s138(2) or 138(1)(c).17 She decided there was not. The LCRO found:
(a) there was “nothing unreasonable” in the Committee’s finding that there was a valid basis for Mr Connell’s concerns expressed in his complaint or that the complaint was honestly made;18
(b) in relation to good faith:
(i)Mr Deliu was invited to provide anything substantially helpful and did not;19
(ii)Mr Deliu consistently ignored the presence of Mrs Chen’s name as lawyer in the text of the Notice of Claim which constituted the evidential basis for Mr Connell’s complaint that Mr Deliu said did not exist; so consequently Mr Deliu’s complaint “lacked any real evidential basis or prospect of success from the outset and served only to cause annoyance to Mr Connell” and “falls squarely within the realms of a
vexatious complaint”.20
Relevant Considerations and Breach of Statutory Duty
[31] First, Mr Deliu submits the LCRO did not take into account the four grounds for review identified in Mr Deliu’s application for review of 25 January 2013 (summarised at paragraph [27] above).
[32] However the LCRO decision summarises exactly these four grounds at paragraphs [16] and [17] of its decision so it clearly took them into account. It did
17 FD v RC LCRO 36/2013 (27 August 2014) at [20] [The Substantive Decision].
18 At [77] and [87].
19 At [100].
20 At [106]-[109].
not systematically address each ground of review in its decision, as this Court does in a judicial review proceeding. Responding to the reasons why a review is requested is likely to be a sensible course of action by an LCRO, if only to avoid an unrequited sense of grievance and subsequent proceedings such as these. But, strictly speaking, as long as an LCRO is taking the reasons for a review being requested into account, an LCRO review is not required specifically to respond to each one. The LCRO is required to conduct a robust review of the Committee’s determination and come to his or her own view of it. That is what she did here; taking the grounds of review into account.
[33] Similarly, Mr Deliu submits that the LCRO failed to take into account other material he sent her: an email of 15 March 2013; supporting submissions dated
25 September 2013; and supplementary memorandum provided on 3 February 2014.
[34] But the LCRO is not required to refer in its decision to all the material it received. And the LCRO decision records that:21
In forming my own judgement, I have carefully reviewed all of the information that was before the Committee, and which has been provided to this Office on review, including the parties’ evidence at the review hearing, their submissions, and correspondence.
[35] Unless there is reason to doubt its veracity, such a statement disposes of this ground of challenge. I do not accept there is reason to doubt the statement here. It is not inconsistent with the substance of the decision, as Mr Deliu submitted.
[36] Mr Deliu’s allegation of breach of statutory duty is founded on the same alleged failure to take into account relevant considerations and fails for the same reason.
Error of Law
[37] Second, Mr Deliu submits that the LCRO did not apply the right legal test for a review because she failed to apply the High Court’s decision in Deliu v Hong and,
21 The Substantive Decision, above n 17 at [49]. Paragraph [50] repeats the sentiment in saying
“[a]fter independently reviewing all of the information available . . .”
in particular, paragraphs [39] to [43] of that decision.22
[38] It is true that the LCRO decision does not cite Deliu v Hong. However it is clear that paragraphs [18] and [19] of the decision summarise key principles from Deliu v Hong including: the need for an LCRO to reach her own view of the evidence; the broad powers to conduct her own investigation, which is broader than on appeal; and the discretion as to the approach to be taken and the extent of investigations necessary in a review.
[39] Paragraph [20] is more troubling in identifying that “[t]he issues on review are whether there is any good reason to disturb the [Committee’s] decision”. That could be taken as deference to the Committee’s decision, which would be inappropriate given the role of the LCRO outlined above. But it is clear from the rest of the decision that the LCRO does come to her own view of the evidence, as she noted in paragraph [18] was required to do. Accordingly, I do not consider the LCRO decision erred in law and I decline to uphold Mr Deliu’s challenge on this ground.
Error of fact
[40] Third, Mr Deliu submits that the review decision was based on a material error of fact: that he had not provided evidence of his bona fides as a complainant. Mr Deliu bases this on the fact that he did indeed respond to the LCRO’s invitation to provide such evidence, in his supplementary memorandum of 3 February 2014. Yet, he says, the LCRO’s decision said otherwise at paragraph [100] of its report.
[41] However, at paragraph [100] the LCRO said that Mr Deliu did not provide any “evidence that might be substantially helpful in reaching a view that might undermine the reasonableness of the Committee’s view on the point [of whether his complaint had been laid without good faith]”. Mr Deliu’s response of 3 February consisted of provision of evidence that he had made previous complaints about other law practitioners which had been upheld. I agree that it would have been better for
the LCRO to have acknowledged that Mr Deliu had responded to its invitation. But,
22 Deliu v Hong, above n 8.
as Mrs Fee submits on behalf of Mr Connell, it was certainly open to the LCRO to conclude that the response was not “substantially helpful”. This is the implication of what she said later in its costs decision about this matter at paragraph [37]. So I do not regard this as a material error of fact by the LCRO and do not uphold Mr Deliu’s challenge on this ground.
Irrationality
[42] Fourth, Mr Deliu submits the LCRO was irrational in finding “without a scintilla of evidence” that he had acted vexatiously. Mrs Fee submits that this is the same as the previous ground. But it is not quite the same ground as it invites me to examine the substance of the conclusion rather than whether there was an error in one particular fact.
[43] The LCRO’s conclusion was essentially based on the proposition that Mr Deliu ignored “evidence that fundamentally contradicted the factual basis he relied on for his complaint”.23 That evidence was said by the LCRO to be the identification of Ms Chen as the plaintiff’s lawyer in the original Notice of Claim. It was said to defeat Mr Deliu’s proposition that Mr Connell’s complaint was made “without a scintilla of evidential basis”.24
[44] I’m not sure that I would have come to the same conclusion as the LCRO on this matter. While Ms Chen’s identification as the plaintiff’s lawyers gives some basis for Mr Connell complaining against her, his previous interactions had been with Mr Deliu, Mr Zhao and the instructing solicitor. In those circumstances it was not unreasonable for the basis for the complaint being made against Ms Chen to be questioned. It was clearly reasonable for such a question to be dismissed: contrary to Mr Deliu’s complaint there was more than a scintilla of evidence for Mr Connell’s complaint. And Mr Deliu’s complaint may well have been regarded as irritating. But I do not see that Mr Deliu’s complaint rises to the level of vexatiousness and not
being made in good faith just because there was a basis for Mr Connell’s complaint.
23 The Substantive Decision, above n 17 at [108].
[45] The legal difficulty here is that I am conducting a judicial review, not the sort of review conducted by the LCRO. The threshold for me to overturn a conclusion of the LCRO on the merits in a judicial review is high. Whether expressed as Wednesbury unreasonableness (“a conclusion so unreasonable that no reasonable authority could ever have come to it”25) or some other version of the threshold, I do not consider that the LCRO’s conclusion in her review decision was so unreasonable that I should substitute my own judgment for hers. For this reason I decline to uphold Mr Deliu’s challenge on this ground.
[46] It follows that I decline to uphold any of Mr Deliu’s challenges to the
LCRO’s review decision.
The Costs Decision
The Decision
[47] In issuing her review decision the LCRO sought submissions on costs by
25 September 2014. She received submissions on Mr Connell’s behalf on that date
but nothing from Mr Deliu.
[48] On 26 November 2014 the LCRO, Ms Thresher, issued her (first) costs decision.26 She noted that Mr Deliu had previously been warned in another LCRO matter that he may be at risk of a costs order against him should he make a similar unmeritorious complaint to that one.27 She characterised Mr Deliu’s conduct in laying and continuing the complaint and review application as improper.28 In this (the first costs decision), the LCRO:
(a) awarded costs of $3,200 against Mr Deliu to the NZLS which was a one third increase on the NZLS Guideline amount for costs for a
factually or legally complex or particularly significant review;29
25 Associated Provincial Picture Houses Ltd v Wednesbury Corporation (1948) 1 KB 223, at [12].
26 FD v RC LCRO 36/2013 (26 November 2014) [The First Costs Decision].
27 At [4] and LCRO 112/2013 (30 August 2014) at [74] (unpublished) (party identifiers omitted).
28 At [41].
(b)awarded costs of $2,700 against Mr Deliu to Mr Connell which represented a two thirds discount from Mr Connell’s actual costs (one third “which has the opposite effect of an ‘uplift’” and one third representing the general policy of less than total recovery).30
[49] Mr Deliu received the decision on 3 December 2014 and, the same day, objected to the procedure and substance and asked whether he had been served with Mr Connell’s costs submissions. On 18 December 2014 Mr Deliu objected that he had not been provided with Mr Connell’s submissions on costs and so could not respond. He also indicated that he would be filing a recusal application. In response the LCRO recalled her costs decision and provided to Mr Deliu both Mr Connell’s
30 January 2014 and 25 September 2014 submissions. She later extended the time for Mr Deliu to make submissions on costs from 30 January 2015 to 27 February
2015.
[50] In response, Mr Deliu filed a document dated 27 February 2015 with the LCRO. Seven and a half pages of the document applied for recusal of the LCRO Ms Thresher for acting with bias, or apparent bias. Central to his application were arguments about Mr Deliu’s good faith in making the complaint. Mr Deliu also argued that, having issued and recalled the first costs decision and coming to a firm view in doing so, the LCRO could not act impartially a second time around and should recuse herself, citing Official Assignee v Bassett as an example of where
Keane J did so in similar circumstances.31 Mr Deliu sought that recusal be
determined before costs were determined and he sought a hearing on recusal. [51] One and a half pages of the document also made submissions on costs:
(a) objecting that if proposed costs are to be based on actual costs then evidence of actual costs is required;
(b) disputing that Mr Connell had incurred costs due to insurance;
(c) objecting that Mr Deliu had not been put on notice as to quantum.
30 At [65].
[52] Attached to the document was:
(a) an email of 27 February 2015 from Mrs Chen confirming that she consented to the complaint being made by Mr Deliu as her employer; and
(b)a statutory declaration by Mr Deliu of 27 February 2015 to the effect that he was convinced that Mr Connell had acted improperly in making his complaint and offering to be cross-examined or take a lie detector test on that issue.
[53] The 27 February document was not received by the LCRO until 5 March
2015. Mrs Fee submits that the document was not the submissions on costs that had been invited and the LCRO could not have been expected to trawl though it looking for such material. However, the document is clearly set out as, first, an application for recusal and, second, observations on the proposed award of costs. Mr Deliu explained from the bar that this document was sent by post rather than hand delivered due to miscommunication in his office.
[54] On 9 March 2015 Mr Deliu asked by email for a copy of the reply submissions, reiterated his application for a hearing on recusal and supplied another judgment, Daimler AG v Sany Group Co Ltd where Collins J recused himself on the basis of the similarity of issues with a previous judgment that was under appeal.32
There is no record of a reply.
[55] At 4.25pm on 16 March 2015 Mr Connell’s counsel noted by email that he had not received submissions from Mr Deliu and so had nothing further to file in reply, which had been timetabled as due on 13 March 2015. At 4.30pm or 4.31pm, the LCRO issued her final costs decision.33 After that, starting at 4.36pm and extending until 18 March, there was a series of email exchanges between the Office
of the LCRO and Mr Deliu over whether the 27 February 2015 document had been
32 Daimler AG v Sany Group Co Ltd [2015] NZHC 290.
received at all. After avoiding the question, this eventually culminated in the Office advising that it had been received on 5 March 2015.
[56] The LCRO’s final costs decision was the same as the recalled decision apart from updating information as to events since then. However it did not mention Mr Deliu’s application for recusal and submissions on costs dated 27 February and received 5 March. It stated:
[17] There is no record of this Office having received any further correspondence or submissions from Mr Deliu by 27 February 2015.
[18] In the circumstances, this costs decision proceeds on the basis of the information available on 27 February 2015.
[57] Compared with the first costs decision the final costs decision made less mention of earlier objections by Mr Deliu to the prospect of being ordered to pay costs34 and again noted that Mr Deliu “did not file submissions on costs by
27 February 2015”.35 It also provided a more summarised version of other passages
of its reasoning,36 toned down some of its criticism of Mr Deliu’s conduct,37 and identified some, rather than no, redeeming features in Mr Deliu’s conduct.38 The amounts of costs awarded, and the basis for them, were the same as in the first costs decision.
Failure to take into account the late submissions and recusal application
[58] Mr Deliu challenges the LCRO’s final costs decision on seven inter-related grounds. The first two challenges are that the LCRO was unreasonable in ignoring the recusal application and that her decision breached natural justice in not taking into account his 27 February submissions and recusal application. I deal with them
first.
34 First Costs Decision, above n 26, at [21] to [24] compared with Final Costs Decision, above n 33, at [36] to [37].
35 Final Costs Decision, above n 33, at [36].
36 Compare First Costs Decision, above n 26, at [25] to [30] with Final Costs Decision, above n 33, at [38]; for another passage where the same occurred, see First Costs Decision at [34]-[43] compared with Final Costs Decision, at [41] -[45].
37 Compare First Costs Decision, above n 26, at [50] with Final Costs Decision, above n 33 at [52].
38 Compare First Costs Decision, above n 26, at [52] with Final Costs Decision, above n 33 at [54].
[59] The LCRO was entitled to set and enforce a deadline for Mr Deliu’s
submissions. If her decision had been issued before receipt of his submissions dated
27 February 2015, no blame could attach. However, she received the recusal application and submissions on 5 March, eight days before the timetable she had set called for reply submissions from Mr Connell and eleven days before the LCRO issued her decision. And the recusal application had previously been foreshadowed.
[60] I was not invited to, and do not, make a finding on whether recusal would have been justified. But the issuance of the first costs decision at least provided a basis on which such an application could be made. The case Mr Deliu referred to in his recusal application, Official Assignee v Bassett, concerned a very similar situation.39 Keane J had issued a judgment before receiving written submissions from both parties and recalled his judgment and vacated his determination. He then recused himself because he considered “it would be a reasonable perception on the part of a reasonable person that I would not be able to approach matters again on the basis that Mr Bassett and/or Mr Hawken were potentially reliable witnesses”.40
[61] In addition in Greymouth Petroleum Ltd v Solicitor-General the plaintiff filed a recusal application but it was not received by Mackenzie J until after he had issued judgment.41 Nevertheless, Mackenzie J recalled the judgment and directed a rehearing by a different judge on the basis that “the plaintiff was entitled to expect that the recusal application would have been dealt with before judgment was delivered”.42
[62] An award of costs is a different context. But important to the LCRO’s first costs decision were findings about Mr Deliu’s conduct and motivation in making the complaint. The prospect that the same LCRO might reasonably be perceived not to approach the matter a second time on an unbiased basis provides at least a potential
ground for recusal, if not a dispositive one.
39 Official Assignee v Bassett HC Auckland CIV 2005-404-4380, 8 June 2007.
40 At [9].
41 Greymouth Petroleum Ltd v Solicitor-General HC Wellington CIV 2009-485-1425, 3 February
2010.
42 At [12].
[63] All counsel before me were agreed that an application for recusal must at least be considered. Yet there is no indication that it was. Rather, the determined insistence in the costs decision issued on 16 March 2015 that the LCRO took into account only that information received by 27 February 2015, indicates that the recusal application was not considered. That insistence, combined with the failure to acknowledge that the LCRO had received submissions after that deadline, was not a candid portrayal of the situation.
[64] Furthermore, in addition to going to the recusal, the arguments and attachments to the 27 February 2015 document were directly relevant to the substance of the LCRO’s costs decision since it rested on findings about Mr Deliu’s conduct and motivation. For example, the LCRO’s final cost decision says, at paragraph [42], that Mr Deliu “did not claim to be acting as counsel for Ms Chen, or on her instructions” so was not entitled to the protections of counsel; yet that does not sit comfortably with Mrs Chen’s email attached to the 27 February document.
[65] No party argued that there would have been any prejudice in the LCRO considering the 27 February 2015 application and submissions. Mr Hodge for the NZLS observed it would have been preferable for it to have done so. I consider there is a real risk that Mr Deliu suffered material prejudice from the application for recusal and submissions dated 27 February 2015 not being considered. Section 214 of the Act requires that the LCRO may not “make any comment that is adverse to any person unless that person has been given a reasonable opportunity to be heard”. Although s 214 is not expressed to apply to the LCRO’s power to award costs under s 210, the same obligation exists in relation to that power as a matter of natural justice according to the common law of judicial review and s 206(3).
[66] Given the respective dates of its receipt of submissions and issuance of its decision, I consider the LCRO should not have ignored Mr Deliu’s submissions and recusal application dated 27 February 2015. In doing so she failed to have regard to relevant considerations in its costs decision and she acted unreasonably.
Other Challenges
[67] The challenges upheld also deal with the challenge on the basis of bias and with Mr Deliu’s challenge that the decision was plainly wrong for concluding that he was not an interested party. I do not uphold Mr Deliu’s other challenges to the costs decision. I note my reasons briefly.
[68] First, I consider it was legitimate for the LCRO to take into account a previous warning issued by the LCRO to Mr Deliu. Mr Deliu complains that the previous decision was not public. But it was known to both the office of the LCRO and Mr Deliu. There is no reason why the LCRO could not refer to it. Indeed there is good reason for the LCRO to be able to do so, in order to strengthen her ability to perform her statutory function of undertaking a robust review.
[69] Second, I do not consider that the LCRO’s decision was based on an error of law, viz., that Mr Deliu was acting in his capacity as a lawyer as identified in paragraph [43] of the LCRO’s decision. Mr Deliu was and is a lawyer. His objection, that he took the complaint as head of chambers, rather proves that point; rather than proving the point he proffers, that he was acting in a business capacity rather than as a member of the legal profession. Indeed, in some respects that point is helpful to him.
[70] Third, I do not consider that the LCRO breached legitimate expectations in awarding costs or founded her decision on a lack of evidence. The expectations that Mr Deliu refers to are founded on the LCRO’s Costs Orders Guidelines. But paragraph 14 of those Guidelines, in referring to costs between the parties taking into account actual costs, has not been breached. Some such evidence was provided. I regard it as reasonable for the LCRO to rely on information from Mrs Fee about costs incurred. Mr Deliu even had notice of the quantum under consideration via the LCRO’s first costs decision. And, as Mrs Fee submits, it is not uncommon for insurers to be subrogated to the rights of the insured, including in matters of costs.
Relief
[71] Because I uphold Mr Deliu’s challenge to the LCRO’s failure to take into account his 27 February submissions and application, he is entitled to relief. In accordance with orthodox relief in successful judicial review proceedings, I quash the LCRO’s costs order.
[72] However, I do not regard it as productive to order that the LCRO reconsider the award of costs and the recusal application. Mr Deliu submitted that reconsideration was not required as did Mrs Fee, though she submitted that reconsideration of costs would not be onerous. Mr Hodge for the NZLS submitted that there should be reconsideration of costs if the award was in error but that it would be up to the parties if they wanted to let the matter rest. As in other such
proceedings,43 there has been considerable delay since the complaint was first
initiated three and a quarter years ago that resulted in the decision to take no further action on it. Reconsideration is likely simply to prolong this unfortunate series of events.
[73] Furthermore, I am inclined to let the costs of this proceeding lie where they fall. Mr Deliu did not succeed in any of his challenges to the LCRO review decision and only one of his challenges to the costs decision. Mr Connell and the NZLS did not succeed in defending the LCRO’s costs decision. If, despite this indication, Mr Deliu wishes to make submissions on costs he must file them with the court and serve them on Mr Connell and the NZLS within 10 working days of this decision. Mr Connell and the NZLS would then have 10 working days to file and serve their responses, if any.
…………………………
Palmer J
43 Harold v Legal Complaints Review Officer [2012] NZHC 145, [2012] 2 NZLR 559 (HC); Zhao v Legal Complaints Review Officer [2012] NZHC 3247, [2013] NZAR 193 at [100]-[102].
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