Lagolago v Judicial Conduct Commissioner

IN THE COURT OF APPEAL OF NEW ZEALAND

I TE KŌTI PĪRA O AOTEAROA

CA251/2021
[2023] NZCA 423

BETWEEN	PAPALI’I TOTI LAGOLAGO Appellant
AND	JUDICIAL CONDUCT COMMISSIONER Respondent

Hearing:	28 April 2022 (further submissions received on 6 and 23 June, and 8 July)
Court:	Cooper P, Courtney and Collins JJ
Counsel:	A C Beck for Appellant N M H Whittington and K S Rouch for Respondent
Judgment:	5 September 2023 at 11.00 am

JUDGMENT OF THE COURT

AThe appeal is allowed.
BThe costs judgment is set aside.
CThe Commissioner is to pay Ms Lagolago’s costs in the High Court calculated on a 2B basis, but reduced by one half. Ms Lagolago is also to be paid the disbursements she incurred.
D The Commissioner must also pay Ms Lagolago’s costs in this Court for a standard appeal on a band A basis and usual disbursements.

____________________________________________________________________

REASONS OF THE COURT

(Given by Cooper P)

Introduction

This is an appeal from a judgment of the High Court declining an application for costs against the respondent in the context of an application for judicial review (the costs judgment).[1]
[1]Lagolago v Judicial Conduct Commissioner [2021] NZHC 832 [Costs judgment].
The appellant, Papali’i Toti Lagolago, is a solicitor. She made two complaints to the Judicial Conduct Commissioner against Churchman J under the Judicial Conduct Commissioner and Judicial Conduct Panel Act 2004 (the JCC Act). The complaints arose in the context of a judgment in which Churchman J dealt with an application for leave to appeal to this Court from a costs judgment delivered by Clifford J in the High Court.
Both complaints were dismissed, and it is not necessary to explain the detail of them. It is sufficient for present purposes to record that the Commissioner considered there was no jurisdiction for him to consider the first complaint, because he saw it as a challenge to the correctness of a judicial decision, which he was prevented from considering by ss 8(2) and 16(1)(a) and (f) of the JCC Act. In the Commissioner’s view the subject matter of the second complaint had been previously considered in dealing with the first complaint, and was therefore outside his jurisdiction under s 16(1)(i).[2]
[2]Section 16(1)(i) of the JCC Act provides that the Commissioner must dismiss complaints if the subject matter of the complaint has previously been considered, and the complaint fails to raise any issue of significance that that has not been previously considered.
Ms Lagolago then applied for judicial review under the Judicial Review Procedure Act 2016. She alleged that the Commissioner was wrong to determine there was no jurisdiction to consider the complaints. She was partially successful.[3] Edwards J held that the Commissioner was right to dismiss the first complaint on jurisdictional grounds under ss 8 and 16(1)(a) and (f) of the JCC Act, save in respect of one aspect of the complaint. The exception related to an alleged failure by Churchman J to disclose a previous involvement he had in relation to an application Ms Lagolago made in respect of legal aid in other litigation. Edwards J held the alleged failure to disclose was not excluded from consideration by either ss 8(2) or 16(1)(f) of the JCC Act.[4] The Judge reached the same conclusion in respect of the second complaint, since the failure to disclose issue had not previously been considered for the purposes of s 16(1)(i).[5]
[3]Lagolago v Judicial Conduct Commissioner [2020] NZHC 3413, (2020) 25 PRNZ 610.
[4]At [45], [48] and [51]–[52].
[5]At [54].
The complaint about the alleged failure to disclose was remitted back to the Commissioner for further investigation, but the remaining aspects of the application for judicial review were dismissed.[6]

The costs judgment

[6]At [67]–[68].

In the costs judgment, Edwards J determined that costs should lie where they fell, applying what she described as orthodox costs principles set out in the High Court Rules 2016 (the Rules). She noted she had not found it necessary for her costs determination to engage with the arguments of the parties about the nature of the Commissioner’s role.[7]
[7]Costs judgment, above n 1, at [6].
She gave two reasons. First, although Ms Lagolago was the successful party, her success had to be seen in the context of the proceeding as a whole. She had only succeeded on one aspect of the complaint, which related to the failure to disclose. Most of the challenges on jurisdictional grounds had been unsuccessful.[8]
[8]At [7].
Second, the proceeding was an application for review. The Commissioner had not filed a statement of defence, limiting his involvement to filing a notice of appearance in order to assist the Court on questions about the Commissioner’s jurisdiction and reserving rights in respect of costs. The matter had been heard by way of formal proof, although the Commissioner had, without objection, filed submissions on the jurisdiction issues and made oral submissions at the formal hearing. Those submissions had been of assistance to the Court. The Judge thought an award of costs in these circumstances might “provide a disincentive to that assistance being provided in the future”.[9]

The appeal

[9]At [8].

Mr Beck, for Ms Lagolago, argued that the Judge had failed to apply the fundamental principle that Ms Lagolago was entitled to costs as the successful party. In doing so she had failed to apply this Court’s decision in Roberts v A Professional Conduct Committee of the Nursing Council of New Zealand and had wrongly held the Commissioner was entitled to a form of special dispensation in order to encourage him to provide assistance to the Court.[10]
[10]Roberts v A Professional Conduct Committee of the Nursing Council of New Zealand [2014] NZCA 141, (2014) 21 PRNZ 753.
Mr Beck said the Judge mischaracterised Ms Lagolago’s success as partial when in fact she had achieved exactly what she set out to do — by showing that the Commissioner was not entitled to dismiss her complaints for want of jurisdiction. Success even on limited terms, Mr Beck argued, is still success.[11] It could not be said that Ms Lagolago advanced any issues which significantly increased the costs of the Commissioner. She was therefore entitled to costs in full.
[11]Relying on Weaver v Auckland Council [2017] NZCA 330, (2017) 24 PRNZ 379.
Further, Mr Beck submitted there was no reason to deprive Ms Lagolago of an award of disbursements. It was she who had incurred the disbursements. The Judge had in addition wrongly concluded that there was no public interest component in the proceeding and had failed to take the public interest into account.
In submissions filed after the hearing in this Court, Mr Beck referred to the decision of the United Kingdom Supreme Court in Competition and Markets Authority v Flynn Pharma Ltd in which the Competition Appeal Tribunal had made a costs order against the Competition and Markets Authority following unsuccessful proceedings.[12] The Tribunal’s decision was reversed by the Court of Appeal, applying a principle based on the “chilling effect” doctrine that orders for costs should not be made against a public body that has been unsuccessful in bringing or defending proceedings in the exercise of statutory functions.[13]
[12]Competition and Markets Authority v Flynn Pharma Ltd [2022] UKSC 14, [2022] 1 WLR 2972 [Flynn Pharma (UKSC)].
[13]Competition and Markets Authority v Flynn Pharma Ltd [2020] EWCA Civ 617, [2020] Costs LR 695 [Flynn Pharma (UKCA)], relying on a line of authority beginning with Bradford Metropolitan District Council v Booth (2000) 164 JP 485 (QB).
The Supreme Court reversed the decision of the Court of Appeal, holding that there was no generally applicable principle that public bodies should have a protected status insofar as litigation costs are concerned.[14]
[14]Flynn Pharma (UKSC), above n 12, at [97]–[98].
Mr Whittington, for the Commissioner, submitted that the Judge had considered Ms Lagolago to be the successful party, but found that the fact she had succeeded on one only of the issues raised warranted a reduction in costs. Further, the Commissioner had acted appropriately by making submissions on jurisdiction in circumstances where an issue had arisen about the proper scope of the JCC Act and there was no other party to put the relevant arguments to the Court.

Analysis

Rule 14.2 of the Rules sets out principles which apply to the determination of costs. The first principle, stated in r 14.2(1)(a) is that “the party who fails with respect to a proceeding or an interlocutory application should pay costs to the party who succeeds”.
Rule 14.6 of the Rules sets out the basis upon which the court may order increased costs and indemnity costs. Following that, r 14.7 deals with the refusal of, or reduction in, costs. It provides that despite r 14.2, the court may refuse to make an order for costs or may reduce the costs otherwise payable if:
(a)the nature of the proceeding or the step in a proceeding is such that the time required by the party claiming costs would be substantially less than the time allocated under band A; or
(b)the property or interests at stake in the proceeding were of exceptionally low value; or
(c)the issues at stake were of little significance; or
(d)although the party claiming costs has succeeded overall, that party has failed in relation to a cause of action or issue which significantly increased the costs of the party opposing costs; or
(e)the proceeding concerned a matter of public interest, and the party opposing costs acted reasonably in the conduct of the proceeding; or
(f)the party claiming costs has contributed unnecessarily to the time or expense of the proceeding or step in it by—
(i)failing to comply with these rules or a direction of the court; or
(ii)taking or pursuing an unnecessary step or an argument that lacks merit; or
(iii)failing, without reasonable justification, to admit facts, evidence, or documents, or accept a legal argument; or
(iv)failing, without reasonable justification, to comply with an order for discovery, a notice for further particulars, a notice for interrogatories, or other similar requirement under these rules; or
(v)failing, without reasonable justification, to accept an offer of settlement whether in the form of an offer under rule 14.10 or some other offer to settle or dispose of the proceeding; or
(g)some other reason exists which justifies the court refusing costs or reducing costs despite the principle that the determination of costs should be predictable and expeditious.
Where a party has raised a number of issues and only succeeded on one, it is a legitimate exercise of the costs discretion for the judge to take that into account and to reduce costs which might otherwise be payable in application of the general rule that costs should follow the event. That is clearly contemplated by r 14.7(d) and in some cases might fall within r 14.7(f)(ii), or within the general words of r 14.7(g).
The argument in the present case has focused more on the second ground that the Judge gave for declining costs, set out in the following passage of the costs judgment. The Judge said:[15]
[8] Second, regard must be had to the nature of the hearing. The proceeding was an application for judicial review. The Commissioner did not file a statement of defence but filed a notice of appearance in order to assist the Court on questions of jurisdiction and as to costs. Although the proceeding was heard by way of formal proof, there was no objection to the Commissioner filing written submissions and making further oral submissions at the formal proof hearing in accordance with the Commissioner's notice of appearance. Those submissions were taken into account in determining the substantive application and were of assistance to the Court. An award of costs in those circumstances may provide a disincentive to that assistance being provided in the future.
[15]Costs judgment, above n 1.
Mr Beck was critical of that passage, submitting that it was contrary to this Court’s decision in Roberts and contrary to the approach taken by the UK Supreme Court in Flynn Pharma.[16]
[16]Roberts, above n 10; and Flynn Pharma (UKSC), above n 12.
In Roberts, this Court held that the fact a professional conduct committee was performing a public function, and had an immunity for costs when proceedings were before the New Zealand Health Practitioners Disciplinary Tribunal | Taraipuinara Whakatika Kaimahi Hauora, might properly be taken into account in determining whether costs should be awarded and if so in what amount.[17] Nevertheless, the Court rejected a suggestion that r 14.7(g) would justify an approach to costs in the High Court which would require some “compelling reason” to order the payment of costs by a conduct committee which had acted reasonably in opposing an appeal. This Court said, with reference to r 14.7(g), that:[18]
[24] The “other reason” exception has been invoked to support the creation of other categories of cases exempt from the general rule, for example cases involving indulgences. However, in our view, the number of such exempt categories should be kept limited, having regard to the policy of the costs regime and the emphasis it places on costs following the event. Otherwise the exception will swallow the rule. In our view, the fact that professional conduct committees perform a public function is not of sufficient weight to justify the wholesale creation of a new exempt category and the displacement of the usual presumption with another higher threshold.
[17]Roberts, above n 10, at [27].
[18]Footnote omitted.
The correct approach was simply that the usual presumption about costs following the event would apply but, at the discretion of the Judge, the presumption could more easily be displaced than usual, on account of the public function of professional conduct committees. But a successful appellant was not required to satisfy a “compelling reason” threshold.[19]
[19]At [29].
Mr Beck argued that the second reason given by the Judge in this case was tantamount to determining that a “compelling reason” would be necessary to order costs against the Commissioner, contrary to the approach required by Roberts. Insofar as the reasoning was based on the possibility that an award of costs might provide a disincentive to the Commissioner to the provision of assistance such as had been provided here in the future, this was contrary to the approach of the United Kingdom Supreme Court in Flynn Pharma.[20]
[20]Flynn Pharma (UKSC), above n 12.
Mr Beck relied on the following passages in the judgment of Lady Rose in that case, writing for a unanimous Court:
97 In my judgment, there is no generally applicable principle that all public bodies should enjoy a protected status as parties to litigation where they lose a case which they have brought or defended in the exercise of their public functions in the public interest. The principle supported by the Booth line of cases is, rather, that where a public body is unsuccessful in proceedings, an important factor that a court or tribunal exercising an apparently unfettered discretion should take into account is the risk that there will be a chilling effect on the conduct of the public body, if costs orders are routinely made against it in those kinds of proceedings, even where the body has acted reasonably in bringing or defending the application. …
98 Where I depart from the [Competition and Markets Authority’s] argument and from the decision of the Court of Appeal in this case is in making the jump from a conclusion that in some circumstances the potential chilling effect on the public body indicates that a no order as to costs starting point is appropriate, to a principle that in every situation and for every public body it must be assumed that there might be such a chilling effect and hence that the body should be shielded from the costs consequences of the decisions it takes. …
Mr Beck also referred to another passage in which the Supreme Court acknowledged High Court authorities that referred to the prospect of an adverse costs award as encouraging better decision-making by government agencies, more realistic appraisal of the merits of defending any particular applications and the efficient and proportionate conduct of proceedings. It was acknowledged that persons wronged by the actions of public bodies should be reimbursed for their costs.[21]
[21]At [133].
We are not persuaded of the relevance of these passages to the present case. As Mr Whittington pointed out, Flynn Pharma was decided under rules of procedure that were specific to the jurisdiction of the Competition Appeal Tribunal. The principal aspects of that Tribunal’s jurisdiction comprised appeals from decisions taken by competition enforcement authorities under the Competition Act 1998 (UK), appeals from decisions of sectoral regulators, judicial review of decisions made by the CMA in respect of merger and market investigations and claims for damages by private parties harmed by infringement of competition rules by other private parties.[22] He submitted the passages relied on by Mr Beck were not purporting to lay down a general rule about the appropriate approach to be taken by a court under rules governing civil procedure. We agree. The Court in Flynn Pharma was concerned with jurisdictions in which a tribunal or court’s power to make a costs order did not include an express general rule or default position — that is, the tribunal or court was exercising an “apparently unfettered discretion”.[23] That is to be contrasted with the starting point under the Rules that costs should follow the event.[24]
[22]At [17]–[20].
[23]At [2], [94]–[95] and [97].
[24]High Court Rules 2016, r 14.2(1)(a).
The Supreme Court’s decision in Flynn Pharma, then, neither detracts from nor supports Mr Beck’s proposition that the Rules do not contemplate a starting point that a person or body performing public functions should not be subject to an award of costs.
In the present case, Ms Lagolago was only partially successful, and it was legitimate for the Judge to take into account under r 14.7 the fact that she had not succeeded on most of the issues pursued.[25] The Judge did not proceed on the basis that the Commissioner should be generally protected from awards of costs. Rather, she was concerned to avoid creating a disincentive for the Commissioner to adopt the helpful position he had in the present case. The issue is whether the Judge erred in concluding in these circumstances that it was inappropriate for there to be any award of costs in Ms Lagolago’s favour.
[25]The Judge relied on r 14.7(d) and (g) but in our view the proper justification for reducing costs is in r 14.7(f)(ii).
We have concluded that the reasons identified by the Judge justified a reduced costs order, but not a complete denial of costs. Our reasons are that:
(a)A reduction in the costs otherwise payable would be the proper way to reflect the fact that Ms Lagolago had succeeded, but only in part, thereby giving proper effect to the general principle that costs should follow the event.
(b)It is clear that in terms of r 14.7(f)(ii) Ms Lagolago pursued a number of arguments that were clearly lacking in merit and put the Commissioner, as well as the Court, to unnecessary time and expense.
(c)Although the Commissioner properly abided the decision of the High Court, he made submissions supporting the basis on which Ms Lagolago’s complaint had been dismissed on jurisdictional grounds. At issue was the proper scope of important statutory provisions going to the Commissioner’s jurisdiction. We consider that Ms Lagolago’s partial success on issues concerning the extent of the Commissioner’s jurisdiction ought to have received some recognition in the form of a costs order. That would reflect the public interest that exists in the proper definition of the extent of the Commissioner’s jurisdiction.
(d)While we accept, as Mr Whittington submitted, that the Judge did not proceed on the basis that the Commissioner should not be the subject of awards of costs because of the “chilling effect” of such an order on the carrying put of the Commissioner’s functions, the Judge did refer to the possibility that an award of costs might make the Commissioner reluctant in future to assist the court with submissions in the helpful way that occurred in the present case. For our part we are not prepared to assume that might be the effect of a moderate award of costs when the issue concerns the proper scope of the Commissioner’s jurisdiction.

In the result we are satisfied that it is appropriate to allow the appeal. Although the Commissioner submitted that if we reached that conclusion we should remit the matter to the High Court to fix the costs, we think it is more expedient to resolve the issue by the orders now set out.

Result

For the reasons we have given we allow the appeal.
The costs judgment is set aside.
We order that the Commissioner is to pay Ms Lagolago’s costs in the High Court calculated on a 2B basis, but reduced by one half. Ms Lagolago is also to be paid the disbursements she incurred.
The Commissioner must also pay Ms Lagolago’s costs in this Court for a standard appeal on a band A basis and usual disbursements.

[2023] NZCA 423

5 September 2023 at 11.00 am