Department of Labour v Southroads Limited
[2014] NZHC 1384
•19 June 2014
IN THE HIGH COURT OF NEW ZEALAND DUNEDIN REGISTRY
CRI 2012-412-000052 [2014] NZHC 1384
DEPARTMENT OF LABOUR Appellant
v
SOUTHROADS LIMITED Respondent
Hearing: (On Papers) Judgment:
19 June 2014
COSTS JUDGMENT OF WHATA J
[1] This is a costs judgment. In my judgment of 1 July 20131 I dismissed the appeal by the Department of Labour against the decision of Judge Crosbie. In that decision Judge Crosbie dismissed the charge against Southroads under the Health and Safety in Employment Act 1992. He found that Southroads took all practicable steps to ensure that no employee was harmed while doing any work that Southroads was engaged to do.
Further background
[2] The further background to this is that Southroads was subcontracted by KiwiRail Limited to replace two rail bridges. During the construction of the second bridge a 50 tonne crane slid off a temporary building platform and into the sea. No-
one was injured.
1 Department of Labour v Southroads Limited [2013] NZHC 1620.
[3] The appeal to me was broadly framed by reference to the following “question of law”:
[4] The Department of Labour now appeals against the decision of Judge Crosbie. The “question of law” arising by way of case stated as follows:
Whether it was open to me to find, on the evidence available and on the proper construction of s 18(1)(a) Health and Safety in Employment Act 1992, that Southroads Limited was not required, and nor was it reasonably practicable for Southroads Limited to take the steps which the Appellant alleges it should have taken (as referred to at paragraph 135 of the Judgment).
[4] Underlying this general question of law, the Department alleged that the
Judge erred in the following ways:2
(a) Erred in concluding that a party with an obligation under the Act can contract out of that obligation by assigning it to a third party whether it be an engineer or specialist subcontractor;
(b) Erred in concluding that the obligations, expectations or failures of KiwiRail in respect of the contractor were of assistance in determining the practicable steps the respondent company was required to take in the circumstances;
(c) Erred in incorrectly drawing a distinction between obligations to monitor matters of a technical nature as opposed to general matters of basic and obvious health and safety;
(d) Misdirected itself when it concluded that s 18 of the Act was not intended to be a provision which in effect requires a principal to be an insurer in respect of compliance with statutory obligations by subcontractors; and in considering it was a question of fact and degree as to whether the delegation of responsibility to address a particular issue relating to safety was appropriate;
(e) Was incorrect in its view that in order to conclude that the appellant company had failed in its obligations pursuant to s 18, evidence of industry standards in practice would be necessary.
2 At [6].
(a) The case stated did not raise a valid question of law;
(b) The Judge did not err in any of the ways asserted by the Department; (c) The Judge did not apply a subjective test of practicality.
[6] I then purported to award costs on a 2B basis but I have been reminded by counsel that this being a criminal appeal, the Costs in Criminal Cases Act 1967 applies. Southroads nevertheless seeks costs under s 13(3) of the Costs in Criminal Cases Act and reimbursement of actual costs as follows:
(a) District Court prosecution: 33% of actual costs - $31,210.41; (b) High Court appeal: 50% of actual costs - $10,210;
(c) Total inclusive of GST $41,420.41;
(d) Disbursements inclusive of GST $22,322.08. [7] Southroads also seeks costs on this application.
[8] The Department have offered to pay scale costs under the Act of $3,390 plus scale disbursements and a further $10,000 ex gratia contribution to disbursements not covered by the scale.
The key contentions
[9] In summary, Southroads submit that both the hearing in the District Court and in the High Court involved issues of special difficulty, complexity and importance, such that an order in excess of scale should be made against the Department. Mr Bates for the Department resists that claim suggesting that the District Court and the High Court hearings involved an orthodox prosecution (in light of leading authority) concerning a serious accident.
Assessment
Jurisdiction
[11] I have been asked to address costs in both the District Court and in this Court.
[12] For that purpose ss 5, 8 and 13 are directly relevant. Section 5(1) provides:
5 Costs of successful defendant
(1) Where any defendant is acquitted of an offence or where the charge is dismissed or withdrawn, whether upon the merits or otherwise, the court may, subject to any regulations made under this Act, order that he be paid such sum as it thinks just and reasonable towards the costs of his defence.
…
[13] Section 5(2) then identifies potentially relevant considerations and in particular:
(a) whether the prosecution acted in good faith in bringing and continuing the proceedings:
(b) whether at the commencement of the proceedings the prosecution had sufficient evidence to support the conviction of the defendant in the absence of contrary evidence:
(c) whether the prosecution took proper steps to investigate any matter coming into its hands which suggested that the defendant might not be guilty:
(d) whether generally the investigation into the offence was conducted in a reasonable and proper manner:
(e) whether the evidence as a whole would support a finding of guilt but the charge was dismissed on a technical point:
(f) whether the charge was dismissed because the defendant established (either by the evidence of witnesses called by him or by the cross-examination of witnesses for the prosecution or otherwise) that he was not guilty:
(g) whether the behaviour of the defendant in relation to the acts or omissions on which the charge was based and to the investigation and proceedings was such that a sum should be paid towards the costs of his defence.
[14] There is no presumption for or against granting costs in any case.3 No defendant shall be granted costs under this section by reason only of the fact that he has been acquitted or that any charge has been dismissed or withdrawn;4 and no defendant shall be refused costs under this section by reason only of the fact that the proceedings were properly brought and continued.5
[15] In terms of an appeal, s 8 states that I may “make such order as to costs as [I]
think fit”. The following subsections are particularly relevant to this case:
(3) No defendant or convicted defendant shall be refused costs under this section by reason only of the fact that the appeal was reasonably brought and continued by another party to the proceedings.
…
(6) If the court which determines an appeal is of opinion that the appeal involves a difficult or important point of law it may order that the costs of any party to the proceedings shall be paid by any other party to the proceedings irrespective of the result of the appeal.
[16] Section 13 confers a power to make regulations prescribing the heads of costs that may be ordered under the Act, maximum scales of costs, and related matters.
[17] Most relevant to this case, subs (3) provides:
Where any maximum scale of costs is prescribed by regulation, the Court may nevertheless make an order for the payment of costs in excess of that scale if it is satisfied that, having regard to the special difficulty, complexity, or importance of the case, the payment of greater costs is desirable.
[18] For the purposes of my discretion I am assisted by the observations of the Court of Appeal in R v Connolly6 adopted by the Court of Appeal in V v The Queen, namely:7
(a) People accused of criminal offences can be put to a great deal of expense in defending themselves. Unlike defendants in civil actions, they cannot simply compromise their positions because their liberty, reputation and pocket may be at risk: see Acuthan v. Coates (1986) 6
NSWLR 472 at 480.
3 Section 5(3).
4 Section 5(4).
5 Section 5(5).
6 R v Connolly (2007) 23 NZTC 21.172 (CA) at 22.
7 V v R [2013] NZCA 2011 at [16].
(b) If a prosecution has been brought for a malicious or improper reason, the defendant should receive costs.
(c) It is reasonable that, if a prosecution has been conducted in a negligent manner (for example if the facts have not been properly investigated) that the defendant should receive costs.
(d) Costs should not be awarded simply because a defendant has been acquitted. This arises because of the “lucky to get off factor” as well as because the verdict is expressed negatively as “not guilty”.
(e) In cases where the prosecution has been reasonably conducted, but the defendant has been able to show he or she is definitely or probably innocent by showing a deficiency in the prosecution case or bringing credible witnesses to shed a more favourable light on the circumstances, it will be reasonable for a costs award to be made in favour of a defendant.
[19] I also adopt the observation of Tipping J in T v Collector of Customs that
The necessary difficulty, complexity or importance must be such that it can be said to be significantly greater than is ordinarily encountered.
[20] And, I am mindful of the following observation of the Court of Appeal in
R v Rust:8
... There was nothing of special difficulty, complexity or importance. The last word is used in the sense of being objectively of importance in legal consequence, and is not relative to the subjective position of the applicant, for whom of course the matter was all important. There is no basis for the Court to conclude that to order payment of greater than scale costs was an option open to it.
[21] This re-emphasises the basic principle that the assessment of whether or not there was special difficulty, complexity or importance must be assessed against a backdrop that criminal cases and criminal appeals will invariably involve some difficulty, complexity or importance, at least to the parties involved in the particular case.
Preliminary issue
[22] Before I turn to the assessment, there is a preliminary issue as to whether I
should make an award of costs for the hearing in the District Court. That issue was
8 R v Rust [1998] 3 NZLR 159 at 164.
thoroughly canvassed by Duffy J in Field v Police,9 including by reference to R v Reed10 later approved by the Court of Appeal in R v Rust.11 Duffy J considered that she was bound by Reed and Rust and for that reason she determined all aspects of Mr Field’s costs application. Notably, the Court of Appeal in Reed observed that
it is:
… usually more appropriate that the Court of Appeal should deal with the costs of the first trial at the same time as it deals with the costs of the appeal, partly for the reason that before ordering a new trial, the Court of Appeal will necessarily have reviewed the first trial.
[23] This reasoning resonates here. As I will explain, it was necessary for me to review the first hearing in some detail. Accordingly, I consider that I am able in the circumstances to resolve the issue of District Court costs. Indeed, it seems more efficient to do so.
Application of principles to facts
District Court
[24] I think there is a proper basis to award costs in the District Court according to scale. On my reading of the judgment and the evidence, Southroads marshalled credible evidence to satisfy the District Court Judge that it had taken all practicable steps in accordance with s 18. This was not simply a case where the Department was left to discharge its burden. Rather, Southroads actively met the Department’s case and rebutted it. This is a relevant factor contemplated by the Court of Appeal in R v Connolly.
[25] There was however nothing extraordinary about the District Court case that might justify uplift on scale. Plainly the Department was justified, and it could be said obliged, to bring a prosecution involving an incident of some seriousness, namely the collapsing of a temporary platform holding a 50 tonne crane. There is no suggestion of bad faith or improper conduct. I also do not put much weight on a
letter sent on behalf of Southroads disputing the merits of the charges. That was
9 Field v Police (2010) 24 CRNZ 795.
10 R v Reed [1981] 1 NZLR 524.
11 R v Rust [1998] 3 NZLR 159.
really just a statement of position and while Southlands was ultimately vindicated, public safety considerations demanded a thorough evaluation of its conduct.
[26] In those circumstances I am satisfied that the defendant should have costs and disbursements according to scale in the District Court.
High Court
[27] I consider that costs in excess of scale are payable for the appeal, because it was, in short, a wholesale challenge to the substantive merits of the District Court judgment, necessitating a thorough review of the judgment and the evidence. It was not an ordinary appeal on a point of law. Or as Tipping J put it, the difficulty caused by this broad based appeal was significantly greater than ordinarily encountered (or for that matter anticipated by Parliament.)
[28] It is sufficient for me to refer to my observations at [20] and [22]:
[20] The question before me, by contrast, posits the ultimate issue. The Department is really seeking a fresh decision from me. That is plainly not an appropriate use of an appellate jurisdiction on questions of law. A Court of appellate jurisdiction on points of law might entertain a focused inquiry on a discrete issue of fact on the basis that the finding was not one that a Judge could reasonably come to on the evidence. But there is nothing discrete about the case stated.
…
[22] I do not think that the case stated is saved by the reference to “on the proper construction of section 18.” If the Judge has erred on the construction, then how that is so should be clearly specified as the question of law.
[29] As Mr Bates submitted, I went on to resolve the appeal in terms of five identified errors on the assumption that if the Department was correct it might mean that the legal conditions necessary to establish breach of s 18 were in fact present.
[30] It transpires, however, that in relation to most of the alleged errors I could identify no error of law. Rather, the challenges were in substance directed to the
merits assessments made by the Judge:12
12 Refer [68], [69], [72]-[74], [77], [81]-[82] of my substantive judgment.
[31] The final issue concerned whether the Judge engaged in a subjective assessment rather than the required objective assessment of practicability. I also rejected this ground. I observed that Mr Bates cannot reframe what is a substantive appeal into a question of law by asserting that the Judge’s assessment lacked requisite objectivity. And, as I noted in my judgment:
[83] … In reality, the Judge assembled all of the evidence available to him for the purposes of assessing whether all practicable steps were taken in the circumstances. First, the Judge analysed the respective contractual obligations, as varied by approval. He then examined the nature of the hazard and the cause of it, resolving that it was in fact caused by error by DIL. He considered the evidence given by Mr Lake as lacking the requisite objectivity and preferred the evidence given by Mr Charters as to the practicability of the suggestions made by the Department. He then examined whether the steps suggested by the Department would make a material difference and he resolved that they would not. Moreover, he was satisfied that the technical exercise undertaken by DIL (and OCEL) was not something that Southroads could be reasonably expected to review, bearing in mind that Southroads are not experts on such matters. It is quite clear, therefore, that the Judge synthesised both the subjective expectations of the parties and the objective evidence of reasonableness to form a view that the steps promoted by the Department were counsel of perfection.
[32] In summary, the appeal was an extraordinary invitation to test the full merits of the Judge’s decision. I did so and the appeal was declined.
[33] As to quantum, Southroads has promoted an award of 50% of actual costs, citing the decision of Wild J in Wallace Corporation Limited v Waikato Regional Council.13 In that case the Judge provides a helpful essay of the relevant principles applying for the purposes of assessing quantum. For present purposes I note that the Court confirmed that the civil scale can provide some indication of what might be considered a reasonable quantum, citing Tairua Marine Limited v Waikato Regional Council (Costs).14 The Court then resolved that costs in the order of 48% of actual costs were appropriate noting also that it was significantly below the 66% (two- thirds of the daily rate considerable reasonable) stipulated at r 14.2(d) of the High
Court Rules.
13 Wallace Corporation Limited v Waikato Regional Council [2012] NZHC 1420.
14 Tairua Marine Limited v Waikato Regional Council (Costs) EnvC A180/2005, 7 November
2005; affirmed [2006] NZRMA 485 (HC).
[34] I am satisfied in light of this authority, and in light of the wide ranging nature of the appeal, the Department should pay 50% of the costs actually paid by Southroads together with its disbursements in the High Court.
Outcome
[35] The Department must pay:
(a) The costs and disbursements in the District Court according to scale; (b) 50% of the costs and full disbursements in the High Court.
[36] I will leave it to the parties to agree the exact quantum.
Solicitors:
Wilkinson Adams, Dunedin
Duncan Cotterill, Christchurch
0
3
0