Dotcom v Attorney-General
[2022] NZHC 2733
•20 October 2022
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV 2012-404-1928
[2022] NZHC 2733
BETWEEN KIM DOTCOM
Plaintiff
AND
HIS MAJESTY'S ATTORNEY-GENERAL
First Defendant
THE DISTRICT COURT AT NORTH SHORE
Second Defendant
CIV 2017-404-1679 UNDER
The Judicial Review Procedure Act 2016
IN THE MATTER OF
An application for Judicial Review
BETWEEN
KIM DOTCOM
Applicant
AND
THE DEPUTY SOLICITOR-GENERAL (CROWN LEGAL RISK)
Respondent
On the papers Counsel
R M Mansfield KC and S L Cogan for the applicant/plaintiff D J Boldt and B C Charmley for the respondent/defendants
Judgment:
20 October 2022
JUDGMENT OF CAMPBELL J
This judgment was delivered by me on 20 October 2022 at 04.00 pm pursuant to Rule 11.5
of the High Court Rules
Registrar/Deputy Registrar
DOTCOM v HIS MAJESTY'S ATTORNEY-GENERAL [2022] NZHC 2733 [20 October 2022]
[1] These two proceedings arise from the 2012 seizure of electronic devices from Kim Dotcom’s residence and one other property. In CIV-2012-404-1928 (the 2012 proceeding), Mr Dotcom and associates applied to judicially review the warrants issued for the seizure. In CIV-2017-404-1679 (the 2017 proceeding), Mr Dotcom applied to judicially review two decisions made by the Deputy Solicitor-General under the Mutual Assistance in Criminal Matters Act 1992 (the MACMA). The first decision, made in 2017, was to send clones of the seized electronic devices to United States authorities and the second, in 2022, was to send the original seized devices along with the clones.
[2]In a judgment dated 25 July 2022,1 Hinton J determined two applications:
(a)An application by the Attorney-General in the 2012 proceeding to release four former or serving police officers from their undertakings to not provide hard drive encryption codes to anyone, in particular any representative of the United States government (the undertakings application).
(b)Mr Dotcom’s substantive application in the 2017 proceeding to judicially review the decisions of the Deputy Solicitor-General under the MACMA.
[3] Hinton J granted the Attorney-General’s undertakings application and declined Mr Dotcom’s application for judicial review. Her Honour said this on costs:
[115] The defendants/respondent [the Attorney-General/the Deputy Solicitor- General] are entitled to costs. If agreement cannot be reached on quantum, they are to file a memorandum within 15 working days and Mr Dotcom is to reply within 10 further working days.
[4] Agreement on quantum was not reached. Memoranda were filed. Determination of costs was referred to me under r 14.9 of the High Court Rules 2016, as Hinton J was not available conveniently to make the determination.
1 Dotcom v Attorney-General [2022] NZHC 1708.
[5] After reading the costs memoranda, I issued a minute directing that further memoranda be filed.
[6] Having considered the further memoranda, there are four issues that I have to determine, identified below.
Has Hinton J already determined that Mr Dotcom is to pay costs?
[7] The costs memorandum initially filed on behalf of the Attorney-General and the Deputy Solicitor-General (who together I will refer to as the Crown parties) addressed only the quantum of costs. Mr Dotcom’s liability to pay costs was assumed.
[8] By contrast, in Mr Dotcom’s initial costs memorandum his primary submission was that the court should refuse to make an order for costs (that is, that costs should lie where they fall). Mr Dotcom also addressed quantum, but only as a fall-back position.
[9] In the minute that I issued after considering the initial memoranda, I expressed the provisional view that Hinton J had already determined that Mr Dotcom was to pay costs to the Crown parties, and that therefore only quantum remained in issue. I referred to [115] of her Honour’s judgment, quoted above at [3]. I directed the parties to file memoranda addressing this issue.
[10] In response, Mr Dotcom says that at the time of her Honour’s judgment neither party had been heard in relation to costs. He submits that [115] of her Honour’s judgment “can be seen as simply an observation of the general rule that costs follow the event, rather than as a final determination of liability for costs”. He says that the absence of any final determination is implicit in her Honour’s direction that the parties file memoranda.
[11] I do not accept that submission. Hinton J said that the Crown parties “are entitled to costs”. That was a definitive statement. It was not (as is sometimes the case) a merely provisional view as to liability for costs. That her Honour was determining liability for costs is reinforced by her direction for the filing of memoranda. That direction was conditional on the parties being unable to reach
agreement on quantum. Her Honour did not contemplate that anything remained to agree in relation to liability.
[12] I therefore hold to my provisional view: Hinton J has already determined that Mr Dotcom is to pay costs to the Crown parties. It is therefore not open to Mr Dotcom (other than by way of recall, which he has not sought, or appeal, which would be for another court) to argue that there should be no order for costs.
[13] Mr Dotcom said that, in the event that I reached that conclusion, he could instead rely on his arguments (for the court refusing to make an order for costs) to support a reduction in the quantum of costs under r 14.7. I agree that it is open to Mr Dotcom to argue for a reduction in costs on this basis. I will consider his arguments after addressing the quantum of costs that should otherwise be awarded.
What quantum of costs should be awarded?
[14] At my direction, counsel filed a joint memorandum as to the quantum of costs. It was helpful. I am grateful to counsel for their co-operation.
[15]There are only two matters in dispute.
What is a reasonable time allowance for item 30?
[16] Item 30 of Schedule 3 of the High Court Rules is for the step of “Preparation of affidavits, list of issues or authorities; and agreeing common bundle”.
[17] The Crown parties submit that item 30 should be placed in band C. This would mean that, under r 14.5 and Schedule 3, a reasonable time for item 30 would be six days.
[18] Mr Dotcom submits that band B is appropriate. This would produce a reasonable time of three days. Mr Dotcom further submits that, whichever band is appropriate, the time allowance should be reduced by half. This, he says, is because the Crown parties tendered a single set of evidence in response to both Mr Dotcom’s application for judicial review of the MACMA decisions and a separate application
for judicial review of the same decisions brought by Messrs Ortmann and van der Kolk.
[19] I deal first with the dispute over the appropriate band. Band B applies if a “normal” amount of time for the step is considered reasonable, and band C if a “comparatively large” amount of time is considered reasonable. The Crown parties say that band C is appropriate because:
(a)The affidavits were technical and complex, with Mr Dotcom’s affidavit alone running to several hundred pages. They say that Mr Dotcom’s key assertion (that separating relevant from irrelevant material was a viable and straightforward process) was a critical point that the Deputy Solicitor-General had to answer.
(b)The defendant’s bundle of authorities was extensive and the common bundle ran to three volumes, requiring the time-consuming assembly of a broad range of material.
[20] I accept that the Crown parties, when preparing their affidavits, had to consider and respond to Mr Dotcom’s two affidavits. The bodies of Mr Dotcom’s affidavits totalled about 40 pages. The exhibits to his affidavits were voluminous, but do not appear to have contained material with which the Crown parties were unfamiliar. The Crown parties prepared three affidavits for the hearing. They totalled 21 pages. (The common bundle also included affidavits from between 2012 and 2014, but these were not prepared for the hearing, and so are not covered by item 30.) The Crown parties also participated in the preparation of a joint expert report for the hearing. I consider that a normal amount of time is reasonable for preparation of this amount of material (including review of Mr Dotcom’s affidavits), even allowing for some complexity.
[21] The Crown parties’ reference to the size of Mr Dotcom’s bundle of authorities and to the assembly of the common bundle are irrelevant to an assessment of a reasonable time for item 30. Consideration of the authorities prepared by an opposing party is covered by item 32 (preparation for hearing). Preparation of the
common bundle is covered by item 31. The Crown parties have claimed for those items (and that claim is not disputed by Mr Dotcom).
[22]For these reasons, I consider band B is appropriate for item 30.
[23] I do not consider that there is any basis for Mr Dotcom’s contention that the time for item 30 should be reduced by half. I accept that some of the Crown parties’ work covered by item 30 was undertaken to respond to similar allegations made by Messrs Ortmann and van der Kolk in their separate judicial review proceeding. That does not detract from the fact that the Crown parties were successful as against Mr Dotcom. They are therefore entitled to costs against him. Mr Dotcom did not cite any principle or authority for the proposition that, where a party undertakes work that is of benefit to that party in two proceedings, and succeeds in one proceeding, the party can recover only a portion of its costs from the party against whom it has succeeded.2 A recent decision of Simon France J suggests there is no such principle.3
[24]In conclusion, I allow three days for item 30.
Should there be an allowance for second counsel?
[25] The Crown parties, relying on the volume and complexity of the materials before the court on the applications, seek an allowance for second counsel. Mr Dotcom resists this. He says one counsel should have been sufficient, given that lead counsel for the Crown parties has been involved in this matter since 2012.
[26] At the hearing, the common bundle was in three volumes. The bundles of authorities were large. The written submissions were extensive. It is evident from Hinton J’s judgment that the arguments were hard fought (and that the Crown parties would have reasonably expected, in advance of the hearing, that to be so). Taking all
2 The position may be different if the successful party has recovered costs in respect of the work from a party to the other proceeding, as an award of costs should not exceed the costs incurred by the party (r 14.2(1)(f)). Here, the Crown parties did not recover any costs from Messrs Ortmann or van der Kolk.
3 Cridge v Studorp Ltd [2022] NZHC 2024.
these matters into account, I have no doubt that it is appropriate to allow for second counsel.
Summary on quantum
[27] The parties helpfully agreed that, if I reached the above decisions on the two matters in dispute, but subject to the arguments of Mr Dotcom for a reduction in costs, the award of costs should be $39,016.75, plus $595.65 in disbursements.
Should there be a reduction in the costs otherwise awarded?
[28] Mr Dotcom made two distinct arguments for a reduction in costs. First, he said that the Attorney-General’s undertakings application sought an indulgence. Secondly, he submitted that the judicial review application (in the 2017 proceeding) concerned a matter of public interest.
Did the Attorney-General’s undertakings application seek an indulgence?
[29] Mr Dotcom submitted that the Attorney-General’s undertakings application sought what other cases had characterised as an “indulgence”. He said the Crown was seeking to be released from a binding and enforceable obligation in the undertakings to keep the passwords confidential. The corollary of the release was that Mr Dotcom would lose the legal right to enforce the undertaking.
[30] Mr Dotcom said there was a general principle that the grant of an indulgence is made at the expense of a costs award to the party obtaining the indulgence. He said that the undertakings application was also analogous to an application under s 317 of the Property Law Act 2007 for the court to modify or extinguish an easement or covenant. A respondent who unsuccessfully opposes a s 317 application will not be ordered to pay costs, so long as the respondent acted reasonably.4
[31] Mr Dotcom said he had acted reasonably in opposing the undertakings application. It was reasonable for him to seek to maintain the undertakings, given that
4 Synlait Milk Ltd v New Zealand Industrial Park Ltd [2020] NZSC 157, [2020] 1 NZLR 657 at [204].
they had been ordered by the court and he had, in reliance on the undertakings, disclosed confidential information that he would not otherwise have been required to disclose.
[32]For these reasons, he submitted that the costs award should be reduced.
[33] I accept the general costs principles on which Mr Dotcom relies. But I do not accept the characterisation that the Attorney-General’s undertakings application was seeking an indulgence. Mr Dotcom’s characterisation conflicts with findings in Hinton J’s judgment. Before her Honour, Mr Dotcom argued that the undertakings were given as part of a compromise. Hinton J rejected Mr Dotcom’s argument and accepted the Attorney-General’s argument that the undertakings had been directed by the court and had the effect of a court order. In particular, her Honour accepted that the undertakings were “made at the Court’s direction with a view to maintaining the integrity of an existing remedial order”.5
[34] I accept the submission of the Crown parties that the release of the undertakings was not an indulgence. It was simply the consequence of the Supreme Court’s final confirmation that the warrant to search Mr Dotcom’s property was valid and the Court of Appeal’s consequent decision to quash remedial orders that had been made in the High Court. The undertakings had been designed to safeguard those remedial orders. It was the quashing of those orders (rather than any indulgence to the Attorney-General) that justified a release of the undertakings.6
[35] For the same reason, the analogy that Mr Dotcom seeks to draw with applications under s 317 of the Property Law Act is false.
[36]I therefore reject this part of Mr Dotcom’s argument for a reduction in costs.
Did the judicial review application concern a matter of public interest?
[37] Mr Dotcom referred to r 14.7(e), by which the court may reduce the costs otherwise payable if the proceeding concerned a matter of public interest and the party
5 Dotcom v Attorney-General [2022] NZHC 1708 at [33].
6 At [39].
opposing costs acted reasonably. He acknowledged that, for r 14.7(e) to apply, the proceeding must concern a matter of genuine public interest, have merit, and be of general importance beyond the interests of the particular unsuccessful litigant.
[38] Mr Dotcom said the judicial review application concerned matters of public interest, namely the extent to which New Zealand authorities can under s 49 of the MACMA deal with irrelevant material on mixed content devices that have been seized under a search warrant. Determination of this issue engaged s 21 of the New Zealand Bill of Rights Act 1990. Mr Dotcom said claims under the Bill of Rights Act were a recognised category of public interest. He said the principles determined in the case are not only relevant to him but are of general application to directions under s 49 of the MACMA.
[39] In my view, the judicial review application did not concern any matter of genuine public interest. Section 21 of the Bill of Rights Act was engaged on only one of the several grounds that Mr Dotcom raised in his challenge. The engagement of s 21 did not raise any matter of principle. Rather, it turned on the facts. That is true also of most of the grounds raised by Mr Dotcom. Other grounds were largely resolved by reference to a Supreme Court decision in related proceedings. This also meant that most of Mr Dotcom’s grounds lacked merit.
[40]I therefore find that there is no basis for a reduction in costs on this ground.
Should I order Mr Dotcom to pay the costs award within 21 days?
[41] The Crown parties seek an order that Mr Dotcom pay any costs award within 21 days of this judgment. They acknowledge that such an order should be unnecessary, as costs normally become payable when they are fixed, but note that Mr Dotcom does not have a record of paying costs awards timeously.
[42] I decline to make such an order. Costs awards are, as the Crown parties acknowledge, payable as soon as they are fixed. Non-payment has consequences, including the obligation to pay interest. The order sought would delay the date on which those consequences are triggered.
Result
[43] I order Mr Dotcom to pay to the Crown parties costs of $39,016.75 and disbursements of $595.65.
Campbell J
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