Mailley v Legal Services Commissioner
[2024] NZHC 813
•16 April 2024
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE
CIV-2023-485-605
[2024] NZHC 813
UNDER Legal Services Act 2011 IN THE MATTER
of an appeal under the Legal Services Act 2011
BETWEEN
MARTIN MAILLEY
Appellant
AND
LEGAL SERVICES COMMISSIONER
Respondent
Hearing: On the Papers Counsel
Appellant in Person
L M Hansen for Respondent
Judgment:
16 April 2024
JUDGMENT OF McQUEEN J
[1] Mr Mailley seeks a waiver of the requirement to pay security for costs on appeal.
Procedural background
[2] On 9 January 2015, Mr Martin Mailley was granted legal aid for an appeal to the Court of Appeal. In February 2016, the Legal Aid Commissioner (the Commissioner) wrote to Mr Mailley advising that the debt Mr Mailley was to repay was set at $2,860.
[3] In May 2023, the Commissioner sent Mr Mailley a statement of the debt. Mr Mailley applied for the debt to be written off. In June 2023, the Commissioner
MAILLEY v LEGAL SERVICES COMMISSIONER [2024] NZHC 813 [16 April 2024]
wrote off the interest (being $813.72) but declined to write off the principal debt of
$2,860.
[4] Mr Mailley sought a reconsideration of this decision, as permitted under s 51 of the Legal Services Act 2011 (the Act), which the Commissioner declined. Mr Mailley then applied to the Legal Aid Tribunal (the Tribunal) for a review of the Commissioner’s reconsideration of the decision (as permitted under s 52 of the Act).
[5] On 13 September 2023, the Tribunal confirmed the Commissioner’s decision, concluding that the Commissioner’s decision not to write off the debt was not manifestly unreasonable or wrong in law (the Tribunal Decision).1 On 21 September 2023, Mr Mailley appealed the Tribunal Decision to this Court (as permitted under s 59 of the Act, on a question of law).2
[6] On 31 October 2023, counsel filed a joint memorandum seeking timetable directions. The memorandum also indicated that Mr Mailley seeks a waiver of security for costs for the appeal and that the Commissioner will abide any decision on security of costs.
[7] In a minute dated 3 November 2023, La Hood J directed the parties to file memoranda addressing the reasons why security for costs should be waived. His
1 Mailley v Legal Services Commissioner [2023] NZLAT 7. The circumstances leading up to this point are described in the Tribunal decision as follows. Mr Mailley is a New Zealand citizen who was a resident in Australia. In 2005 he was charged with fraud in Queensland relating to offences between 1999 and 2002. He was granted bail but fled to New Zealand before he could face trial. In 2008, Mr Mailley was arrested in New Zealand. Extradition was sought and was granted by the District Court after a four-day hearing completed in September 2009. The decision to extradite was appealed and there followed a complex series of legal actions, including two appeals to the Court of Appeal, and fee complaints against Mr Mailley’s various lawyers. The end point of these actions was the Court of Appeal upholding the decision to extradite: see Mailley v District Court at North Shore [2016] NZCA 83. Mr Mailley was returned to Queensland, was convicted, and has subsequently returned to New Zealand.
2 On 9 October 2023 Mr Mailley made a second application to the Commissioner to write off the principal sum of $2,860. This application refers to s 43(1)(b) of the Legal Services Act 2011, which provides that then Commissioner may write off a debt if the cost of enforcing the debt is likely to exceed the amount of the debt that is likely to be repaid. On 8 November 2023, this second application was declined, and on the same day Mr Mailley applied for reconsideration. On 17 November 2023, this request was declined. On 22 November 2023, Mr Mailley applied to the Legal Aid Tribunal for a review of the Commissioner’s decision. On 8 February 2024, the Tribunal issued its decision, in which it struck out the application on the basis that Mr Mailley is either estopped from raising the particular issues, or raising them is an abuse of process, see Mailley v Legal Services Commissioner [2023] NZLAT 015.
Honour specified that the memoranda should address why waiver of security is in the interests of justice including the importance of the issues raised and the public interest in determining them, any impecuniosity of the appellant, and the merits of the case.3 La Hood J then indicated that the issue of waiving security for costs would be determined on the papers. Memoranda have been filed by the parties.
The Tribunal Decision
[8] As noted above, the Tribunal dismissed Mr Mailley’s application for review. Before the Tribunal, Mr Mailley argued that the debt should be written off on the following grounds:4
(a)the age of the debt meant the primary limitation period of six years in the Limitation Act 2010 applied;
(b)section 34 of the Act sets a period of five years for the Commissioner to organise repayment and it had not done so in that time; and
(c)the Commissioner did not keep Mr Mailley, informed meaning he was not aware of his right under s 90 of the Act to seek a re-examination of the cost of the services provided.
[9]The Commissioner argued that:
(a)Mr Mailley had been advised of his obligations to repay the debt in 2015 and 2016;
(b)The Commissioner had attempted to contact Mr Mailley in 2016 about a WINZ deduction notice, and by telephone, and Mr Mailley had requested his file in 2021;
(c)The Limitation Act does not apply to the debt; and
3 La Hood J referred to the following case law: G v Chief Executive of the Ministry of Social Development [2010] NZSC 141, (2010) 20 PRNZ 705; and Reekie v Attorney-General [2014] NZSC 63, [2014] 1 NZLR 737.
4 Mailley v Legal Services Commissioner, above n 1, at [7].
(d)While acknowledging that the delays in recovery have caused distress, Mr Mailley has not been disadvantaged by the age of the debt as the Commissioner has written off the interest.
[10] The Tribunal concluded that s 34(5) of the Act gives the Commissioner a discretion as to how timeframes are to be applied and therefore the age of the debt did not assist Mr Mailley.5 The Tribunal noted that the Commissioner did write off the interest and gave effect to the non-mandatory principles it was to have regard to.6 The Tribunal also found that the Commissioner was not in breach of its duty to keep Mr Mailley informed. Rather, the Tribunal found that, although sparse, the correspondence from the Commissioner to Mr Mailley met the requirements of s 26 of the Act.7 In addition, Mr Mailley obtained his legal aid file in 2021, which included relevant information about invoicing, and made fee complaints to the New Zealand Law Society.8 The Tribunal concluded, after examining the material available, that the Commissioner’s decision not to write off the debt was not manifestly unreasonable or wrong in law.9
Security for costs—general principles
[11] Under r 20.13(2) and (3) of the High Court Rules 2016 (the Rules), there is a presumption that an appellant will be required to provide security for costs calculated according to a formula. In this case, application of the formula means the amount of security would be $1,195.10
[12] An order for security for costs will be made unless the appellant is funded by legal aid, or the Court considers that in the interests of justice no security is required.11
5 Mailley, above n 1, at [13].
6 At [13].
7 At [16]–[19].
8 At [17].
9 At [23]. Section 52(1) provides for the Tribunal to review the Commissioner’s reconsideration of a decision on the grounds that it is manifestly unreasonable or wrong in law.
10 The parties jointly sought directions that the proceeding be categorised as category 2 in terms of r 14.3 of the High Court Rules 2016, that the time for hearing be a half day, and the appeal be determined on the papers. These directions were made by La Hood J in his minute dated 3 November 2023.
11 High Court Rules 2016, r 20.13 (1) and (2).
Mr Mailley is not legally aided and therefore it is necessary to consider whether it is in the interests of justice that Mr Mailley is not required to provide security for costs.
[13] Exceptional circumstances are normally required for the High Court to waive the requirement to pay security.12 The rationale is that respondents should not face the threat of hopeless appeals without provision for security.13 The appellant must honestly intend to pursue the appeal and it must be arguable.14 Impecuniosity in itself is an insufficient reason to waive the provision of security, but an appellant’s impecuniosity can be a reason to reduce the quantum of security payable.15 The Court should have particular regard to the importance of the issues raised and the public interest in their determination.16
[14] The Supreme Court considered the approach to waiver of security for costs in Reekie v Attorney-General.17 In Skagen v Wellington Standards Committee of the New Zealand Law Society, Williams J referred to the Supreme Court’s discussion in Reekie v Attorney-General, noting that the same policy considerations apply to the appellate schemes in both the Court of Appeal and High Court.18 Williams J distilled the principles expressed in Reekie as follows:19
[10] Impecuniosity alone does not warrant a waiver of security for costs. The overarching enquiry is whether or not it is right to require the respondent to defend the judgment under challenge without the usual protection as to costs provided by security. Because respondents will in any case not often be fully compensated for the costs of defending a judgment, the security for costs will be of "limited economic significance." It imposes nonetheless some discipline on a prospective appellant. Where legal aid has been granted, or counsel is representing the appellant on deferred or conditional fee arrangement, the prospects of the appeal will have been subject to some independent scrutiny. Frivolous proceedings are therefore less likely in such circumstances. Thus the exception for security in respect of legally aided appellants. But a litigant in person who is also impecunious has not necessarily been subject to those disciplines, and may initiate litigation that is in its costs disproportionate to its purpose.
12 See RIG v Chief Executive of the Ministry of Social Development [2010] NZCA 370 at [3].
13 At [4].
14 At [4].
15 At [4].
16 At [4].
17 Reekie v Attorney-General [2014] NZSC 63, [2014] 1 NZLR 737.
18 Skagen v Wellington Standards Committee of the New Zealand Law Society [2015] NZHC 675 at
[9]citing Reekie v Attorney-General, above n 17.
19 Skagen, above n 18, at [10]–[11] (footnotes omitted); see Reekie, above n 17, at [31]–[44].
[11] The discretion to not fix security for costs should, therefore, be exercised so as to:
(a) preserve access to the Court ... by an impecunious appellant in the case of an appeal which a solvent appellant would reasonably wish to prosecute; and
(b) prevent the use of impecuniosity to secure the advantage of being able to prosecute an appeal which would not be sensibly pursued by a solvent litigant.
The parties’ positions on the application for waiver of security
[15] Mr Mailley says that it would not be in the interests of justice to require security from him when the Commissioner does not come to the proceeding with clean hands. He says the Commissioner has inexcusably failed for more than seven years to take any action to pursue the alleged debt. Mr Mailley alleges the Commissioner has acted in bad faith in what was said to the Tribunal about his 2021 request under the Privacy Act 2020 for his file. Mr Mailley says that the Commissioner’s pursuit of the debt is unreasonable, unfair, inequitable and outside normal rational legal aid debt recovery criteria. Moreover, he says it is a waste of court resources and taxpayers’ money. Mr Mailley suggests it is motivated by malice. He says the write-off of interest is an acknowledgment by the Commissioner it failed to communicate adequately with him.
[16] Mr Mailley says that the appeal involves a genuine question of law, a judgment on which will impact the general public being a matter of general and public importance. He says the appeal has merit and is not frivolous, vexatious or an abuse of process. Mr Mailley cites several cases he says support a complete or partial waiver of security.20
[17] Despite the request by La Hood J in his minute, the Commissioner has not assisted the Court with submissions as to whether it would be in the interests of justice to waive security for costs. Rather, the Commissioner reiterates that they abide the decision of the Court (noting that impecuniosity is not established), firmly rejects the allegations that they do not come to the Court with clean hands, that they are motivated
20 Siemer v Complete Construction Ltd [2020] NZCA 350; Banks v Ports of Auckland Ltd [2015] NZCA 150; and B v Waitemata District Health Board [2014] NZCA 65.
by malice or has acted in bad faith, and says that the reasons not to write off the debt are set out in the Tribunal decision.
Discussion
[18] The parties have filed detailed submissions on the substantive appeal, as required by the timetable orders made by consent.21 I have perused the submissions for the purpose of ascertaining the issues on appeal.
[19] I consider that the primary issue raised in Mr Mailley’s appeal is one of statutory interpretation: does the Act preclude the recovery of the debt given its age and the Commissioner’s (alleged) inactivity in its recovery?
[20] I consider that the appeal has an element of public interest given that it relates to the Commissioner’s powers to recover legal aid debt, particularly in circumstances where there has been delay in pursuing recovery. Mr Mailley’s concerns about the use of further public funds to recover a debt in such a situation are also likely of public interest.
[21] I am satisfied that Mr Mailley honestly intends to pursue the appeal. Although the money sum at issue is small, his concerns are ones of principle and are not inherently unreasonable.
[22] I regard Mr Mailley’s arguments as unlikely to succeed but my view is necessarily a preliminary one. Given that the Commissioner does not refer to any case law on the issue, I presume that the relevant provisions of the Act have not been considered by the Courts to date. Neither party’s submissions discuss the relevant legislative history of the Act. Accordingly, it is appropriate to conclude for present purposes that the appeal is arguable, if not strong.
[23] Mr Mailley does not expressly rely on impecuniosity to support his application for waiver of security for costs. He suggests that any costs award would be small given
21 Mr Mailley has also filed a memorandum dated 15 February 2024 seeking leave to file further submissions on the substantive appeal (which are set out in the same memorandum). Such leave is yet to be granted and accordingly, I have not had regard to the arguments there made for the purpose of the application for security for costs.
that the matter is to be dealt with on the papers—and it is in this context that he says “no evidence exists that [he] cannot pay costs (if any)”. While dealing with the matter on the papers will have some impact on a costs award, determining costs (if the appeal proceeds) is a matter for another day. Mr Mailley says he is in receipt of a pension and of course he has previously received legal aid. Mr Mailley notes that he is 72 years old and suffers with cancer. Beyond this context, there is no detail about his financial position.
[24] I also observe that given the appeal is to be determined on the papers and submissions have already been filed, the Commissioner’s costs on the substantive matter have been incurred before the question of waiver of security for costs has been addressed.
[25] In combination, these matters are in my view sufficient to amount to exceptional circumstances justifying a shift from the starting point that security will be fixed. I conclude that it is in the interests of justice that no security is required.
Result
[26]Security for costs on the appeal is waived.
McQueen J
Solicitors:
Legal Services Commissioner, Wellington
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