Deliu v Johnstone
[2022] NZHC 467
•15 March 2022
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2019-404-1098
[2022] NZHC 467
BETWEEN FRANCIS CATALIN DELIU
Plaintiff
AND
DAVID JOHNSTONE, MARK HARBOROW, NICK FLANAGAN
First to Third Defendant
THOM CLARK
Fourth Defendant
NEW ZEALAND POLICE
Fifth Defendant
MIKE BUSH, STEPHEN PEAT, GILLIAN HOLLAND and TONI JORDAN
Sixth to Ninth Defendants
Hearing: 17 February 2022 Appearances:
N F Flanagan for himself and first and second defendants as applicants
F C Deliu in person as respondent
A P Lawson for the fourth to ninth defendantsJudgment:
15 March 2022
JUDGMENT OF HARLAND J
[ON APPLICATION BY FIRST – THIRD DEFENDANTS UNDER R 7.48]
This judgment was delivered by me on 15 March 2022, at 4:00 pm Pursuant to Rule 11.5 High Court Rules
Registrar/Deputy Registrar Date……………………………..
Solicitors:
Crown Law, Wellington Meredith Connell, Auckland
Copy to: Plaintiff
DELIU v JOHNSTONE [2022] NZHC 467 [15 March 2022]
Introduction
[1] The first, second and third defendants (the Meredith Connell parties) apply for orders under r 7.48 of the High Court Rules 2016 (HCR) that the sum of $10,958.50, held on trust at the High Court in a separate proceeding involving Mr Deliu, be paid to them in partial satisfaction of the costs awards made against Mr Deliu in their favour in this proceeding and in relation to three unsuccessful appeals to the Court of Appeal arising from it.1 They rely on Kidd v van Heeren as authority to support their application.
[2] Mr Deliu opposes the application. He submits that there is no jurisdiction either as a matter of law to enforce the orders for costs made against him under r 7.48 (rather enforcement under Part 17 of the HCR applies) or generally, the Meredith Connell parties have no standing in the separate proceedings and therefore Kidd v van Heeren is distinguishable, and there is no lis pendens for the Court to adjudicate.
[3] I have decided to dismiss the application. This judgment sets out my reason for so doing.
Background
Costs in this proceeding
[4] I start by referring to a judgment of Palmer J which is the basis for the costs award against Mr Deliu in favour of the Meredith Connell parties. This judgment determined applications for security for costs by various defendants in four separate proceedings, including this proceeding.
[5] In his judgment, Palmer J summarised the nature of this proceeding, against both the Meredith Connell parties and the other defendants (the Police parties), as comprising an application by Mr Deliu for judicial review and a suit first for misfeasance in public office in relation to an alleged investigation of him by the Police and members of Meredith Connell (the firm of the Auckland Crown Solicitor) and second, for abuse of process in reactivating an investigation against him for assault.
1 [2021] NZCA 337; [2021] NZCA 488; [2021] NZCA 646 (See Applicants’ Bundle).
[6] In relation to the application for security for costs, Palmer J identified his primary consideration to be whether the proceeding issued by Mr Deliu had such a limited chance of success that a security for costs order should be made, when ordering such security would have the effect of terminating the proceeding. Palmer J was required to consider this because, as he said, “Mr Deliu now resides in Europe and accepts he cannot pay security”.2
[7] Palmer J determined that Mr Deliu’s claim against the members of Meredith Connell was insufficiently pleaded and lacked the evidential foundation Mr Deliu claimed it had. He found that the claim could not succeed and was not reasonably arguable. He ordered that Mr Deliu provide security for costs of $5,000 if he wished to pursue it. However, in relation to the judicial review claim by Mr Deliu for misfeasance in public office and abuse of process against the Police parties, Palmer J determined that the claims were reasonably arguable because they had an evidential foundation. Accordingly, he could not infer the claims were without merit. He declined to order security for costs in respect of Mr Deliu’s claim against the Police parties.
[8] Palmer J awarded costs on a 2B basis against Mr Deliu, in favour of the Meredith Connell parties and he also awarded costs in favour of Mr Deliu against the Police parties. Subsequently, the order for costs and disbursements against Mr Deliu in favour of the Meredith Connell parties was sealed in the sum of $9,043.
[9] Mr Deliu then sought leave to appeal Palmer J’s judgment to the Court of Appeal. His application for leave to appeal was declined in a judgment dated 26 July 2021.3 The Court of Appeal ordered Mr Deliu to pay the Meredith Connell parties’ costs in respect of his unsuccessful application for leave to appeal on a Band A basis and ordered that he pay disbursements. Both amounted to $1,006 and were sealed by the Court of Appeal on 1 February 2022.
[10] Mr Deliu then applied to the Court of Appeal to recall its judgment in respect of leave to appeal. He requested that a new panel be convened to consider his recall
2 Deliu v Chapman [2020] NZHC 2100 at [1].
3 Deliu v Chapman [2021] NZCA 337.
application. In its judgment of 24 September 2021, the Court of Appeal declined both to convene a new panel and the application for recall. Costs and disbursements were awarded against Mr Deliu in favour of the Meredith Connell parties in respect of his unsuccessful application for recall and recusal. These costs and disbursements amounted to $528 and were sealed by the Court of Appeal on 1 February 2022.
[11] Mr Deliu responded by filing a second application for recall of both the Court of Appeal’s prior judgments. He also filed an application that the Division of the Court of Appeal that had determined both judgments recuse themselves.
[12] By judgment dated 2 December 2021, the Court of Appeal declined both Mr Deliu’s applications and costs were awarded against him in favour of the Meredith Connell parties. These costs and disbursements amounted to $528. I was advised that these have also been sealed by the Court of Appeal.
[13] Mr Deliu has not paid any of the awards of costs made against him in favour of the Meredith Connell parties, however, no demand to pay them by way of letter, email or otherwise has been made to him to do so, a matter which Mr Deliu submits is relevant to this application.
[14] Mr Deliu has not paid the security for costs ordered by Palmer J, neither has he discontinued his claim against the Meredith Connell parties or taken any further steps to progress it.
Funds held on trust in the High Court
[15] In separate proceedings under CIV-2016-404-2150 (the 2150 proceeding), Mr Deliu has sued the police for public law and tortious damages in relation to the execution by the Police of a search warrant at his law firm’s office. The substantive proceeding was determined by a judgment of Duffy J on 24 September 2020. Her Honour found that Mr Deliu had been unlawfully detained by the Police and ordered that he be compensated by way of public law damages of $3,000 and provided with a
written apology.4 Mr Deliu was also awarded costs and disbursements in the sum of
$10,958.50.5
[16] Duffy J’s judgment was appealed by the Police to the Court of Appeal. Duffy J stayed the execution of her judgment pending the outcome of the appeal to the Court of Appeal.
[17] Prior to this hearing, counsel for the Police parties in this proceeding filed a memorandum6 advising the Court that on 19 July 2021, the parties to the 2150 proceeding had filed a joint memorandum seeking orders by consent that the Police pay the total amount awarded by Duffy J in favour of Mr Deliu into Court pending the disposition of the Police appeal by the Court of Appeal.
[18] The orders sought in the joint consent memorandum were made by Jagose J on 20 July 2021, as follows:
(a)If the appeal is dismissed or discontinued in full, the funds are to be released to Mr Deliu;
(b)If the appeal is allowed in full, the sums are to be released to the Police; and
(c)If the appeal is allowed in part, and dismissed or discontinued in part, the parties will make submissions to the Court as to the funds' disposition.
[19] The amount of $10,958.50 was paid into Court in accordance with His Honour’s order.
[20] Counsel for the Police parties further advised that on 23 September 2021, the Police amended their grounds of appeal to the Court of Appeal with Mr Deliu’s consent. I was advised that the amendment:
4 Deliu v Police [2020] NZHC 2506.
5 Deliu v Police [2021] NZHC 1744.
6 Dated 15 February 2021.
(a)removed the substantive challenge by the Police to Duffy J’s finding that the Police had breached s 22 of the Bill of Rights Act; but
(b)the challenge to the remedies granted by Her Honour remained.
[21] Leave to amend the grounds of appeal was granted on 23 September 2021. I was advised that the Police recorded in their submissions on appeal that this amendment meant that the High Court’s costs order in Mr Deliu’s favour would stand.
[22] Further, the memorandum of counsel for the Police parties in respect of this application advised:
12In light of the above background, Police confirm that it no longer holds an interest in the money held on trust for the purpose of that proceeding.
[23] I was advised that the Court of Appeal heard the appeal in the 2150 proceeding on 18 October 2021, but its decision was reserved and has not yet issued.
[24] Mr Flanagan submits that given the above, the funds in Court in the 2150 proceeding are, therefore, now held on trust for Mr Deliu. Mr Deliu does not accept this. He submits that:
(a)the funds are held in terms of the order of Jagose J; and
(b)I do not have jurisdiction to determine anything in relation to that order as this application only relates to proceeding 1098 and my jurisdiction is seized only in relation to it.
Additional costs award in favour of the Police
[25] Counsel for the Police advised that there is another proceeding in which the Police have been successful in obtaining costs against Mr Deliu.7 I was advised that Jagose J awarded the Minister of Police costs of $10,516, but that this award post-
7 Deliu v Minister of Police [2021] NZHC 2800 (CIV-2020-404-2483).
dates the awards of costs that are the basis of the Meredith Connell parties’ application now before this Court.
[26] Counsel advised that if the Meredith Connell parties’ application is dismissed, the Minister of Police will assert an interest in the funds held in Court in relation to the 2150 proceeding.
Brewer J order
[27] On 12 November 2021, Brewer J made an order that the funds held on trust at the High Court in proceeding 2150 be retained and not disbursed until further order of a Judge.
Discussion
[28] The key issue I need to determine is whether the costs orders in favour of the Meredith Connell parties can be enforced under r 7.48 in respect of the funds held in the 2150 proceeding, relying on the authority of Kidd v van Heeren.
[29]Rule 7.48 of the High Court Rules provides:
7.48 Enforcement of interlocutory order
(1)If a party (the party in default) fails to comply with an interlocutory order or any requirement imposed by or under subpart 1 of Part 7 (case management), a Judge may, subject to any express provision of these rules, make any order that the Judge thinks just.]
(2)The Judge may, for example, order—
(a)that any pleading of the party in default be struck out in whole or in part:
(b)that judgment be sealed:
(c)that the proceeding be stayed in whole or in part:
(d)that the party in default be [fined, ordered to do community work, or committed to prison under section 16 of the Contempt of Court Act 2019]:
(e)if any property in dispute is in the possession or control of the party in default, that the property be sequestered:
(f)that any fund in dispute be paid into court:
(g)the appointment of a receiver of any property or of any fund in dispute.
(3)An interlocutory order may only be enforced by the following (in accordance with subpart 4 of Part 2 of the Contempt of Court Act 2019):
(a)an order imposing a fine or community work:
(b)a warrant committing the person to prison:
(c)a sequestration order.
[30] The order requiring Mr Deliu to pay costs to the Meredith Connell parties arose because they succeeded in their interlocutory application seeking an order that he pay security for costs in relation to his claim against them in this proceeding. It is an interlocutory order made in this proceeding and in my view, r 7.48 can be used to enforce it. The substantive claim Mr Deliu has made against the Meredith Connell parties has not been discontinued or resolved. It remains a “live” albeit inactive proceeding. However even it was not, this would not change my conclusion about the inherent nature of this order, namely that because it is an interlocutory order, it is able to be enforced under r 7.48.
[31] Although not argued before me, so far as the Court of Appeal costs are concerned, in Kidd v van Heeren, Cooper J said:8
Insofar as the costs awarded by the Court of Appeal are concerned, s 63 of the Judicature Act provides that all orders of the Court of Appeal may be enforced by the High Court as if they have been given or made by that Court. Where the Court of Appeal has made the costs order in the course of dealing with an appeal from an interlocutory order made by the High Court, it seems plain that an order for costs made by the Court of Appeal may be enforced pursuant to Rule 258.
[32] Section 63 of the Judicature Act has been replaced verbatim by s 58 of the Senior Courts Act 2016. I therefore consider that the Court of Appeal costs can also be enforced under r 7.48.
[33] The orders for costs have not been complied with by Mr Deliu because the costs have not been paid. Although Mr Deliu submitted that demand has not formally
8 Kidd v van Heeren, HC Auckland CIV-2004-404-6352, 16 November 2006, at [20], followed by AJ Bell in Elvidge v ASB Bank Ltd [2015] NZHC 44 at [194].
been made requiring him to pay the costs, it is evident by the fact of this proceeding that the Meredith Connell parties want him to pay them and for whatever reason he has not done so.
[34] I agree with Mr Deliu however, that parts of r 7.48 are problematic, including how subss (1) and (3) relate to each other. Mr Deliu’s submission was that the only way to enforce the costs order in this proceeding is under (3). This is an interesting argument, but I need not resolve it because of what follows.
[35] Rule 7.48 was considered by the Court of Appeal in Kidd v van Heeren,9 a subsequent case involving the same parties referred to in paragraph [31] above. The Meredith Connell parties rely on this decision to support their application. One of the issues in that case was whether the court had the jurisdiction to make an order enforcing an interlocutory order made in a separate but related proceeding.
[36] Mr Kidd had, in a proceeding commenced 2014, obtained an order that Mr Van Heeren pay USD 25 million into the Court. Mr Van Heeren did not pay. Mr Kidd then brought a separate proceeding, against both Mr Van Heeren and a company of which Mr Kidd argued Mr Van Heeren was the beneficial owner. He sought the sale of company assets, and the proceeds to be paid into the Court to enforce the 2014 order under r 7.48.10
[37] Although observing that it would almost always be the case that such an order would not be made, the Court of Appeal agreed that in some circumstances such an order could be made. In other words, there was no jurisdictional bar to an order being made but whether it would be made would depend on the facts of the case. Paragraph
[38] of the judgment puts the Court of Appeal’s decision in context:
[38] Having granted permission to commence the 2017 Proceeding for the very purpose of enforcing the Interim Payment Order in the 2014 Proceeding, it might be thought odd that the Court subsequently determined there was no jurisdiction to make any such order. We do not consider the Court’s jurisdiction to enforce compliance with its orders should be frustrated by such technicalities. While the 2017 Proceeding is technically distinct from the 2014 Proceeding, this is a matter of form rather than substance. The two
9 Kidd v van Heeren [2019] NZCA 275.
10 At [1]–[3].
proceedings are closely interrelated. The additional parties could have been joined as defendants in the 2014 Proceeding and the current orders sought in that proceeding. The Court gave permission to pursue the same end using the originating application procedure in the 2017 Proceeding. We reject the respondents’ suggestion that the Court’s sanction of this process raised a jurisdictional block to the orders now sought. Such a formalistic reading of the rules is not consistent with their stated objective of securing “the just, speedy and inexpensive determination of any proceeding or interlocutory application”.11
[38] This case is distinguishable from Kidd v van Heeren on the facts. In Kidd v van Heeren, the parties to the two proceedings were substantially the same. This is not the case in this proceeding. The Meredith Connell parties are not parties in the 2150 proceeding either actually or via another entity in which they have an interest. The proceedings are quite separate. This is not a case where it could be said that the two proceedings are closely interrelated even if technically distinct. For these reasons, even though the jurisdiction to do so may exist, this is not a case where I am persuaded that the Court should make the order.
[39] Having reached this view, I do not need to address the remaining arguments made by Mr Deliu opposing the application.
Result
[40]The application is dismissed.
[41] Mr Deliu has sought costs, and asked to further address me on this if he succeeded. Mr Deliu is to file and serve a memorandum (not exceeding three pages) in relation to costs within 14 days of the date of receipt of this judgment. The Meredith Connell parties are to file any memorandum in reply (not exceeding three pages) no later than 14 days thereafter. Costs will be dealt with by me on the papers unless upon reading the memoranda I consider that a further hearing is required.
Harland J
11 High Court Rules 2016, r 1.2.
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