Mailley v New Zealand Law Society

[2024] NZHC 3391

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE

CIV-2024-485-44

[2024] NZHC 3391

UNDER

the Judicial Review Procedure Act 2016

IN THE MATTER

of an application for judicial review of the respondent’s decision to decline the applicant’s claim on the Lawyers Fidelity Fund

BETWEEN

MARTIN JAMES MAILLEY

Applicant

AND

THE NEW ZEALAND LAW SOCIETY

Respondent

Hearing:

On the papers

Counsel:

Applicant in person

K M Hursthouse for Respondent

Judgment:

14 November 2024

JUDGMENT OF McQUEEN J

[Costs]

[1]                 In a judgment dated 13 September 2024, I granted an application by the   New Zealand Law Society (the Law Society) for security of costs and declined applications by Mr Mailley for leave to issue interrogatories and to exclude part of the evidence (the Judgment).1 A timetable for the filing of memoranda as to costs was directed, should the parties not be able to agree costs, with costs then to be determined on the papers.

1      Mailley v New Zealand Law Society [2024] NZHC 2648. Mr Mailley has filed an application for leave to appeal the Judgment in relation to which timetable directions have been made: Mailley v New Zealand Law Society HC Wellington CIV-2024-485-44, 11 November 2024 (Minute of McQueen J).

MAILLEY v THE NEW ZEALAND LAW SOCIETY [2024] NZHC 3391 [14 November 2024]

[2]                 The parties were not able to agree costs. The Law Society filed submissions in accordance with the timetable. Mr Mailley was to file any submissions by 18 October 2024. None have been received by the Court.

[3]Accordingly, I now determine costs.

Costs sought by the Law Society

[4]                 The  Law  Society  made   a   proposal   to   Mr Mailley   by   letter   dated   18 September 2024 that he agree to pay scale costs only. Mr Mailley did not reply to that letter.

[5]                 Absent agreement, the Law Society  seeks  scale  costs,  with  an  uplift  of  50 per cent, in the sum of $15,594.75, plus disbursements in the sum of $629.26. It also seeks costs on its submissions on costs, with an uplift of 50 per cent, in the sum of $1,792.50. The total sum sought is $18,016.51, and counsel for the Law Society attaches a schedule setting out these calculations to their submissions.2

Legal principles

[6]                 While costs are ultimately at the discretion of the Court, under r 14.1(1) of the High Court Rules 2016 (the Rules), the party who fails with respect to an application should pay costs to the party who succeeds.3

[7]                 Costs should ordinarily be determined by applying the appropriate daily recovery rate to the time considered reasonable for each step reasonably required,4 as specified in sch 2 of the Rules.5

[8]                 The Court may award increased costs where the party opposing costs has contributed unnecessarily to the time or expense of the proceeding or a step in it, for

2      I note that there appears to be an error in the Law Society’s submissions at [3] where the amount sought for preparing submissions on costs is recorded as being $629.26. The schedule attached to their submissions clarifies disbursements are $629.26 and the amount claimed for preparing submissions on costs is $1,792.50.

3      High Court Rules 2016, r 14.2(1)(a).

4      Rule 14.2(1)(c).

5      Rule 14.4(a).

example by pursuing an unnecessary step or an argument that lacks merit, or failing, without reasonable justification, to admit facts, evidence, documents, or accept a legal argument.6

Discussion

[9]                 I agree with the Law Society’s submission that the relevant applications in this matter were of average complexity and costs are appropriately assessed on a category 2 basis.

[10]             For the majority of steps, the Law Society seeks costs on a band B basis. The Law Society does, however, acknowledge that the memoranda on case management took a comparatively small amount of time and so costs on those steps are sought on a band A basis.

[11]             These memoranda were required in response to proceeding to a hearing of both the Law Society’s application for security for costs and the two applications made by Mr Mailley. For the avoidance of doubt, I record that these memoranda are not the memoranda to be filed to progress the substantive judicial review proceeding to hearing, which were allowed for in the order made for security for costs.

[12]             I have reviewed the schedule of costs  on  a  scale  basis  attached  to  the  Law Society’s submissions. I do not consider that costs for the preparation of submissions on costs is appropriate in this instance. While it is within the Court’s power to award costs on costs, such awards remain discretionary and are rare.7 I consider all other steps appropriate.

[13]The Law Society seeks an uplift of 50 per cent on all steps, highlighting that:

(a)it requested a proposal from Mr Mailley for security for costs at a very early stage, prior to filing its application for security for costs, which Mr Mailley failed, without reasonable justification, to engage with;

6      Rule 14.6(3)(b)(ii)–(iii); and Holdfast NZ Ltd v Selleys Pty Ltd (2005) 17 PRNZ 897 (CA).

7      Oraka Technologies Ltd (in liq) Geostel Vision Ltd [2023] NZHC 1738 at [8], citing Legler v Formannoij [2022] NZHC 1804.

(b)Mr Mailley failed to admit the fact of his impecuniosity until a very late stage (at the hearing of the application for security for costs) and his opposition to the application on grounds that there was no evidence he was impecunious was entirely without merit as:

(i)he admitted during the course of the hearing that he was unable to meet a costs order; and

(ii)the Court accepted the Law Society submission there were, in any event, other reasons to believe that Mr Mailley would be unable to pay costs;

(c)Mr Mailley’s applications were unnecessary and lacked merit because:

(i)the interrogatories sought did not relate to a matter at issue in the proceeding, and the Law Society had already explained its position with respect to the bankruptcy notices;

(ii)the Law Society did not obtain the bankruptcy notices improperly, nor were there any other reasons to exclude that evidence; and

(iii)ultimately, the Judgment described the applications as “largely pointless” in view of Mr Mailley’s admission of impecuniosity.

[14]             The Law Society submits that Mr Mailley failed, without reasonable justification, to accept the offer by the Law Society to agree on scale costs. The   Law Society confirms that the sum it seeks does not exceed its actual costs.8

[15]             In the circumstances, I am satisfied that an order for increased costs is appropriate and that a 50 per cent uplift is warranted. I have reviewed the schedule of increased costs attached to the submissions of counsel for the Law Society and consider it correctly calculated (although as I am not granting costs for the preparation

8      Rule 14.2(1)(f).

of submissions on costs, the increased costs sought in relation to this step is to be excluded).

[16]Accordingly, I order that Mr Mailley is to pay the Law Society:

(a)increased costs of $15,594.75;

(b)disbursements of $629.26; and

(c)interest under s 10 of the Interest on Money Claims Act 2016 on the total sum due from the date of this judgment until the date of payment.

McQueen J

Solicitors:
Lee Salmon Long, Auckland for Respondent