Jing Dian Company Limited v Police
[2014] NZHC 1121
•26 May 2014
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV 2013-404-005277 [2014] NZHC 1121
BETWEEN JING DIAN COMPANY LIMITED
First Plaintiff
WEN ZHU Second Plaintiff
AND
NEW ZEALAND POLICE First Defendant
JOHN DOES Second Defendant
Hearing: 22 May 2014 Appearances:
F C Deliu for Plaintiffs
A Longdill and C Henley for DefendantsJudgment:
26 May 2014
(RESERVED) JUDGMENT OF ANDREWS J
This judgment is delivered by me on 26 May 2014 at 1:00pm pursuant to r 11.5 of the High Court Rules.
..................................................... Registrar / Deputy Registrar
JING DIAN CO LTD v NEW ZEALAND POLICE [2014] NZHC 1121 [26 May 2014]
Background
[1] The plaintiffs operate a brothel in Auckland.
[2] In April 2012 the plaintiffs obtained in the District Court at Auckland a restraining order under the Harassment Act 1997, against Sergeant O’Neill of the Auckland Police.
[3] On 16 August 2013, members of the Police conducted a search of the plaintiffs’ brothel in Auckland. The search was without a search warrant. The plaintiffs allege that the defendants’ actions were illegal.
[4] On 23 December 2013 the plaintiffs filed a statement of claim against the New Zealand Police as first defendant and “John Does, of New Zealand, Second Defendants (to be named later)” alleging trespass, harassment, unreasonable search and seizure under s 21 of the New Zealand Bill of Rights Act 1990, cruel or degrading treatment under s 9 of the New Zealand Bill of Rights Act, arbitrary detention/false imprisonment under s 22 of the Bill of Rights Act, breach of fiduciary duties, breach of statutory duty under s 15(1) of the Official Information Act 1982, and s 40(1) of the Privacy Act 1993, and conspiracy. The plaintiffs sought the following relief:
(i) A judgment in their favour;
(ii) An order for damages in an amount to be nominated;
(iii) A declaration (to be particularised) that the defendants have
breached the plaintiff’s human rights;
(iv) A permanent injunction enjoining the defendants from similar such behaviour in the future;
(v) A direction that the Minister for Police and/or Independent Police Complaints Authority investigate the Police and individuals involved;
(vi) Costs; and or
(vii) Such other relief as seem fit by this Honourable Court.
[5] The plaintiffs also sought, against the same defendants, interim orders as follows:
(a) That a declaratory order (or writ of prohibition) issue as to the First Defendant and/or an injunction issue as to the Second Defendants enjoining them from:
(i) trespassing at 8 Waverley Street, Auckland 1010, New
Zealand;
(ii) harassing the plaintiffs;
(iii) conducting any unreasonable search and seizure against the plaintiffs;
(iv) subjecting the second plaintiff to any cruel or degrading treatment;
(v) arbitrarily detaining or falsely imprisoning the First
Plaintiff’s staff or Second Plaintiff; and/or
(vi) such other conditions as termed appropriate by this
Honourable Court.
(b) That an undertaking as to damages not be a prerequisite to be applying for, or granting of, said declaratory relief/injunction; and/or
(c) Such other relief as deemed fit by this Honourable Court in light of the pleadings, evidence and submissions tendered to it at the interim hearing.
[6] A notice of opposition to the application for interim orders was filed on
28 February 2014. On the same date, a statement of defence was filed in the substantive proceeding. An affidavit in opposition to the application for interim orders, sworn on 27 February 2014, was also filed on 28 February 2014.
[7] The defendants contend that they entered the brothel because they had received information that under-age sex workers were working there, and that breaches of the Immigration Act 2009 were occurring. In an affidavit in support of the defendants’ opposition to the application for interim orders, it was said that entry was pursuant to ss 277 and 286 of the Immigration Act, and s 72 of the Children, Young Persons, and Their Families Act 1989.
[8] The Police conducted a second search, executed under a search warrant, on 6
March 2014. Five females located at the brothel were issued with Deportation Liability Notices by Immigration New Zealand. A further affidavit in support of the opposition was sworn and filed on 17 April 2014, setting out the circumstances of this search.
[9] The plaintiffs’ application for interim orders was set down for hearing on
22 May 2014.
[10] In his written submissions filed on 9 May 2014 in support of the application for interim orders, Mr Deliu submitted that the plaintiffs were not asking for injunctive relief to prevent the Police investigating legitimate inquiries. Rather, they were asking that the defendants be prevented from trespassing, harassing, violating the plaintiffs’ rights, illegally holding the plaintiffs, failing to fulfil duties owed to the plaintiffs, or conspiring against them. He submitted that the relief sought would preclude illegal behaviour but preserve the ability to conduct proper law enforcement operations. He further submitted that the Court should send a message to the Authorities that they cannot “on the flimsiest of unreliable anonymous tips” engage in “raids” that were “in reality a form of continuing subjection to the plaintiffs to illegality that dates a number of years back”.
[11] In her written submissions for the defendants filed on 19 May 2014, Ms Longdill submitted that there was no serious question to be tried, as the plaintiffs were not entitled to restrain the Police from lawfully exercising search powers. She submitted that “effectively” the plaintiff is inviting this Court to declare that the Police “should comply with the law of New Zealand”, and that this was not a matter requiring intervention from the Court. Ms Longdill further submitted that the Police had serious concerns about the welfare of staff at the brothel, and the legality of the operation was demonstrated, she submitted, by the outcome of the search in March
2014.
[12] On 20 May 2014 the defendant filed a notice of discontinuance.
[13] The defendants have applied for an order for costs against the plaintiffs. The defendants contend that indemnity costs should be ordered or, in the alternative, scale costs on a 2B basis. The plaintiffs contend that indemnity costs should not be ordered and that scale costs should be on a 1A basis.
Relevant provisions as to costs
[14] Pursuant to r 15.19 of the High Court Rules, a plaintiff may discontinue a proceeding at any time before judgment is given, by filing a notice of discontinuance and serving a copy on every other party to the proceeding. Pursuant to r 15.23, a plaintiff who discontinues a proceeding against a defendant must pay costs to the defendant of an incidental to the proceeding up to and including the discontinuance, unless the defendant otherwise agrees or the court otherwise orders. The authors of McGechan on Procedure summarise the principles with respect to costs on a
discontinuance:1
(a) Although the r 15.23 presumption is designed to give a certain and predictable outcome upon discontinuance, it may be displaced if the Court finds there are circumstances which make it just and equitable that it should not apply.
(b) Although the Court is not limited in the factors it may take into account when considering whether the presumption is displaced, generally:
i. the Court will not consider the merits of the respective cases, unless they are so obvious that they should influence the costs outcome.
ii. the Court will consider the reasonableness of the stance of both parties: whether it was reasonable for the plaintiff to bring and continue the proceeding, and for the defendant to oppose the proceeding up to the point of discontinuance.
iii. conduct prior to the commencement of the proceeding may relevant (for example, if any conduct by a defendant precipitated the litigation), as may be the case for discontinuing (for example, a change of circumstances rendering the proceeding unnecessary).
(c) The Court’s general discretion in r 14.1 as to costs can also override the general principles relating to discontinuance.
[15] Rule 14.6 allows the Court to make an order for indemnity costs. Pursuant to r 14.6(4):
The court may order a party to pay indemnity costs if –
1 AC Beck McGechan on Procedure (looseleaf ed, Brookers at [HR 15.23.01], citing Kroma Colour Prints Ltd v Tridonicatco NZ Limited [2008] NZCA 150, (2008) 18 PRNZ 973 and FM Custodians Ltd v Pati & Ors [2012] NZHC 1902 at [10]-[12].
(a) the party has acted vexatiously, frivolously, improperly, or unnecessarily in commencing, continuing, or defending a proceeding or a step in a proceeding; or
(b) the party has ignored or disobeyed an order or direction of the court or breached an undertaking given to the court or another party; or
(c) costs are payable from a fund, the party claiming costs is a
necessary party to the proceeding affecting the fund, and the party claiming costs has acted reasonably in the proceeding; or
(d) the person in whose favour the order of costs is made was not a party
to the proceeding and has acted reasonably in relation to it; or
(e) the party claiming costs is entitled to indemnity costs under a contract or deed; or
(f) some other reason exists which justifies the court in making an order for indemnity costs despite the principle that the determination of
costs should be predictable and expeditious.
Submissions as to costs
[16] Ms Longdill noted that the plaintiffs’ notice of discontinuance was filed two days before the interim injunction hearing (after written submissions had been filed) and six months after the proceedings had been issued. The defendants seek costs on the grounds that the plaintiffs have “acted vexatiously, frivolously, improperly or unnecessarily in commencing and continuing” the proceeding. She submitted that the plaintiffs’ proceeding is a “hopeless case”, as discussed by the Court of Appeal in Bradbury v Westpac Banking Corp, being allegations which ought never to have been made, or unduly prolonging a case by groundless contentions – in essence, the
“hopeless case” test.2 Ms Longdill submitted that the plaintiffs were never entitled
to restrain the Police from lawfully exercising search powers and that the plaintiffs were in effect inviting the Court to order that the Police should not do their job to investigate and enforce the law of New Zealand.
[17] Ms Longdill further submitted that the plaintiffs were inviting the Court to declare that the Police should comply with the law of New Zealand through not engaging in unlawful searches or cruel or degrading treatment. She submitted that self-evidently, this is not a matter which could ever require the Court’s intervention, as Parliament had already passed laws such as the New Zealand Bill of Rights Act which cover this area. She submitted that the defendants had been put to significant
costs in preparing a statement of defence, notice of opposition, affidavit evidence
2 Bradbury v Westpac Banking Corp [2009] NZCA 234, [2009] 3 NZLR 400 (CA) at [29].
outlining the real circumstances of the Police searches, and in preparing written submissions.
[18] Ms Longdill submitted that the defendants’ actual costs were $13,123. In the alternative, she submitted that an order should be made for scale costs on a 2B basis amounting to $9,751, together with disbursements (filing fees) of $220.
[19] Mr Deliu accepted that, on a discontinuance, scale costs may be ordered against the plaintiffs. He submitted that if scale costs were awarded, then the appropriate scale is 1A rather than 2B. He submitted that there was no complexity to the proceeding and no need for “Category 2” counsel. He submitted that the absence of complexity could be seen in the brevity of documents filed for the defendants. He submitted that, in total, some 20 pages, only, had been filed.
[20] Mr Deliu further submitted that an order for indemnity costs was “not even remotely” appropriate. He first submitted that it is not appropriate for the Court on a discontinuance to inquire into the merits of the case. He submitted that the Court may express an opinion or impression, but cannot make findings. Regarding the “impression”, Mr Deliu submitted that in this case, there is a history of one of the Police officers involved having been found by the District Court to have harassed the plaintiffs, such that a restraining order had been issued against him. This, he contended, shows that orders of the type sought by the plaintiffs can be, and have been, made against the defendants. Accordingly, Mr Deliu did not accept that the plaintiffs’ case could be described as hopeless from the outset.
[21] Secondly, Mr Deliu submitted that from neither the August 2013 raid, nor the March 2014 raid, had anyone been arrested, charged, or convicted of any illegal conduct. He submitted that child sex workers had never been found on the premises. Accordingly, he submitted, the plaintiffs had a prima facie basis to be aggrieved at the warrantless search carried out by the Police in August 2013, and were entitled to seek redress from the Court.
[22] Thirdly, Mr Deliu submitted that the plaintiffs’ allegations were not wild, spurious, or unsupported. There was an evidential basis to argue that they had been harassed.
[23] Fourthly, Mr Deliu submitted that this is a “public law case” involving members of the public bringing proceedings against the State alleging illegal actions. He submitted that such actions should not be discouraged by an award of indemnity costs if they have wrongly sued the State in the belief that they have a legitimate grievance.
[24] Finally, Mr Deliu accepted that the Police cannot be prevented from performing their legal functions. He submitted that that was not what was sought by the plaintiffs. He further submitted that the plaintiffs were entitled to seek injunctive relief against illegal conduct, just as injunctive relief can be sought to prevent any other form of illegal conduct by any other person.
[25] In her reply submissions, Ms Longdill submitted that Mr Deliu’s submission that the Court cannot consider the substantive merits of the case did not withstand scrutiny, as it would mean that the Court would be unable to apply the “hopeless case” test. She further submitted that it is no answer for the plaintiffs to suggest that because this is a “public law” case, indemnity costs should not be awarded for the reason that such proceeding should not be impeded. She submitted that there should be such an impediment against bringing a hopeless case.
[26] As to scale costs, Ms Longdill submitted that this proceeding is squarely within the 2B scale, as very serious allegations had been made and a wide range of orders, declarations, and directions were sought by way of relief.
Should indemnity costs be ordered?
[27] I accept Mr Deliu’s submission that it is not appropriate to consider the merits of the respective cases, in the context of considering costs on a discontinuance, only to the extent that the merits are not “so obvious that they should influence the outcome” of the costs issue. If the merits are “so obvious” they can be considered.
However, I do not consider it is necessary to consider the merits of the plaintiffs’ case. While there was, in my view, very little chance of the plaintiffs succeeding in obtaining the orders sought; there was a slim chance of that happening.
[28] I have concluded that indemnity costs should not be allowed against the plaintiffs. The plaintiffs’ case was not self-evidently “hopeless”, in the sense discussed in Bradbury v Westpac Banking Corporation. Further, I am not persuaded that the proceeding and application for interim orders was brought vexatiously, frivolously, or improperly. I accept that the plaintiffs may have believed (albeit wrongly) that they could succeed in their claims against the defendants.
[29] Accordingly, I decline to order indemnity costs.
What scale costs are payable?
[30] As noted above, Mr Deliu accepted that scale costs were payable on a discontinuance, but contended that the appropriate scale was 1A.
[31] It is evident from the allegations made by the plaintiffs, and the relief sought both in their statement of claim and in their application for interim orders, that the allegations were very serious. The allegations were made against the New Zealand Police, as a whole, and sought directions against the Minister for Police and the Independent Police Complaints Authority. The proceeding required representation by counsel “of skill and experience considered average in the High Court.”3 I reject Mr Deliu’s submission that the proceedings were “of a straightforward nature able to be conducted by counsel considered junior in the High Court”.4
[32] Mr Deliu cited the number of pages of the pleadings and affidavits filed by the defendants as evidence of the “straightforward” nature of the matter. I do not accept that the fact that pleadings and evidence can be expressed succinctly is
evidence of any lack of complexity.
3 See High Court Rules r 14.3.
4 Ibid.
[33] Accordingly, I find that the proceeding is properly classified as a 2B
proceeding. The plaintiffs are ordered to pay costs to the defendants calculated on a
2B scale, together with disbursements as fixed by the Registrar.
Costs on this application
[34] In the event that the defendants did not succeed in their claim for indemnity costs, Mr Deliu sought an order that costs be awarded in favour of the plaintiff on this application. He submitted that an offer as to costs had been made to the defendants, and rejected. Ms Longdill submitted that the offer made (in the order of
$3-4,000) was entirely inadequate, and was properly rejected.
[35] I decline to order costs in favour of the plaintiffs. The defendants sought 2B scale costs in the alternative to indemnity costs, and have been awarded costs in a sum that far exceeds the offer made by the plaintiffs. Pursuant to r 14.11(3) there is no basis on which the plaintiffs can be awarded costs.
[36] As the defendants have succeeded in their application for costs, which was opposed by the plaintiffs, they are entitled to an order for costs in relation to the application, calculated on a 2B scale.
Result
[37] The plaintiffs are ordered to pay costs to the defendants in relation to the proceeding and this application, calculated on a 2B scale, together with
disbursements as fixed by the Registrar.
Andrews J
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