Mailley v Shaw
[2021] NZHC 3433
•14 December 2021
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2015-404-1185
[2021] NZHC 3433
BETWEEN MARTIN MAILLEY
First Plaintiff
SABRINA NUTARELLI
Second PlaintiffAND
ANTONY SHAW
First Defendant
TONY ELLIS (Discontinued) Second Defendant
THE NEW ZEALAND LAW SOCIETY
Third Defendant
Hearing: 10 November 2021 Appearances:
First plaintiff in person
No appearance for second plaintiff J E G San Diego for first defendant
D A C Bullock and S D Wakefield for third defendant
Judgment:
14 December 2021
JUDGMENT OF TOOGOOD J
[Applications for leave to appeal and review of costs judgment]
This judgment was delivered by me on 14 December 2021 at 11am, pursuant to r 11.5 of the High Court Rules
Solicitors:
Registrar/Deputy Registrar Date:
Ord Legal, Wellington for first defendant
Lee Salmon Long, Auckland for third defendant
Copy to:
The plaintiffs
MAILLEY v SHAW [2021] NZHC 3433 [14 December 2021]
Introduction [1]
The application for leave to appeal against the strike-out review judgment [8]
Applicable principles [8]
The plaintiffs’ submissions – refusal to direct provision of transcripts [10]
The plaintiffs’ submissions – other grounds of appeal [16]
Discussion [19]
Conclusion – application for leave to appeal dismissed [26]
Application for review of the strike-out costs decision [27]
Claim for indemnity or increased costs by Mr Shaw [29]
Claim for indemnity or increased costs by NZLS [31]
Costs award in favour of Mr Shaw [38]
Whether the NZLS should have disclosed its invoices [46]
NZLS claim for costs [49]
Costs [57]
Introduction
[1] On 24 November 2020, Associate Judge Andrew issued a judgment in which the proceeding against the first and third defendants was struck out.1 On 9 September 2021, I issued a judgment confirming that judgment.2
[2] In upholding the strike-out decision, I dealt also with a number of interlocutory applications made by the plaintiffs or by Mr Mailley alone and I made costs directions.
[3] The background to the proceeding and the strike-out review judgment is conveniently set out at [1] to [5] of the strike-out review judgment:3
[1] Martin Mailley and Sabrina Nutarelli were prosecuted in Queensland for fraud in 2003. Ms Nutarelli pleaded guilty to charges arising from her part in the fraudulent activity and was sentenced on conviction to three years’ imprisonment, although the sentence was suspended after she had served six months. Mr Mailley, however, absconded in 2005 and a warrant for his arrest was issued in March 2005.
[2] On 2 July 2008, Mr Mailley was arrested in New Zealand and remanded in custody, an event that began 16 years of proceedings before the New Zealand courts and disciplinary bodies of the New Zealand Law Society (NZLS), the third defendant. The proceedings concerned the extradition of Mr Mailley to Queensland; an application (successful) by him for the issue of a writ of habeas corpus; and four determinations by Standards Committees regarding complaints against legal practitioners (including the first defendant, Mr Antony Shaw) over their conduct in connection with the proceedings. Mr Shaw is a barrister who had acted for Mr Mailley for a period of about 12 months in 2008 and 2009.
1 Mailley v Shaw [2020] NZHC 3102 [the strike-out decision]. A claim in the proceeding against a barrister, Mr Tony Ellis, had earlier been discontinued.
2 Mailley v Shaw [2021] NZHC 2359 [the strike-out review judgment].
3 Footnotes omitted.
[3] On 2 June 2015, Mr Mailley and Ms Nutarelli issued proceedings against Mr Shaw; another barrister, Mr Tony Ellis; and the NZLS. Ms Nutarelli’s claim is based on an assertion that she paid at least some of the fees charged to Mr Mailley. After a “revised” statement of claim was filed by the plaintiffs on 22 January 2016, Mr Shaw and the NZLS applied, on 15 February 2016, to strike out the proceeding under r 15.1(1) of the High Court Rules 2016 on the ground that the pleadings disclosed no reasonably arguable cause of action, were frivolous or vexatious and an abuse of the process of the Court. Over the ensuing five years, the statement of claim underwent several re-iterations, culminating in the third amended statement of claim dated 26 August 2020 (the third ASOC). In the meantime, the plaintiffs discontinued their claims against Mr Ellis.
[4] The strike-out applications by Mr Shaw and the NZLS, by then focused on the third ASOC, were addressed by Associate Judge Andrew in a judgment delivered on 24 November 2020 (the strike-out decision). The Associate Judge struck out all causes of action by the plaintiffs against Mr Shaw and NZLS, bringing the proceeding to an end.
[5] Mr Mailley and Ms Nutarelli now apply for a review of the strike-out decision, under s 26P(1) of the Judicature Act 1908, in accordance with r 2.3 of the High Court Rules that were in force at the time the proceeding was commenced.
[4] On 21 April 2021, Associate Judge Andrew delivered a judgment awarding the defendants costs on the strike-out decision.4 On 28 April 2021, the day before the hearing of the application for a review of the strike-out decision, the plaintiffs filed an application to review the strike-out costs decision and a decision by the Associate Judge refusing to recuse himself from the proceeding. The defendants had not had an opportunity to respond to it other than to inform me orally that the application would be opposed. I directed that notices of opposition were not required, made timetable orders for the filing of submissions and directed that the application to review the strike-out costs decision should be set down for hearing.5
[5] On 13 September 2021, the plaintiffs filed a notice of an interlocutory application seeking leave to appeal against the strike-out review judgment.
[6] On 22 September 2021, the plaintiffs filed a further interlocutory application for leave to appeal that part of the strike-out review judgment which dismissed an application for review of Associate Judge Andrew’s decision, on 19 April 2021, to decline an application by Mr Mailley for transcripts of the hearing of the strike-out
4 Mailley v Shaw [2021] NZHC 841 [the strike-out costs decision].
5 Mailley v Shaw, above n 2 at [134(b)].
application before the Associate Judge and the transcript of an interlocutory hearing before me on procedural matters. Then, on 23 September 2021, the plaintiffs filed another application seeking leave to appeal the strike-out review judgment adding further grounds to the application of 13 September 2021.
[7] To correct a misapprehension by Mr Mailley that filing separate applications for leave to appeal the judgment would result in separate hearings for each application, I directed that the second and third iterations of the application for leave to appeal would be treated as amendments to the initial application and that all matters would be heard together.6 The application to review the strike-out costs decision was heard at the same time and is addressed below.
The application for leave to appeal against the strike-out review judgment
Applicable principles
[8] Section 26P(1AA) of the Judicature Act 1908, which applies because it was in force at the time the proceeding was issued, provides that the determination of this Court on a review of any order or decision made by an Associate Judge under s 26P(1) is final unless this Court grants leave, or the Court of Appeal grants special leave, to appeal.
[9] The legal principles for the grant of leave to appeal are the same as those applicable to a second appeal under the former s 67 of the Judicature Act 1908,7 and they are well-settled:8
(a)The appeal must raise some question of law or fact capable of bona fide and serious argument in a case involving some interest, public or private, of sufficient importance to outweigh the cost and delay of the further appeal.
6 Minute of 8 November 2021 at [13].
7 Haines v Herd [2016] NZHC 3193 at [5].
8 Waller v Hider [1998] 1 NZLR 412 (CA) at 413–414; Snee v Snee [2000] NZFLR 120, (1999)
13 PRNZ 609 (CA) at [15].
(b)On a second appeal, the Court of Appeal’s function is not to generally correct error but to clarify the law and determine whether it has been properly interpreted and applied by the court below;
(c)It is not every alleged error of law that is of such importance, either generally or to the parties, as to justify further pursuit of litigation which has already been considered twice and ruled upon by a court.
(d)The scarce time and resources of the Court of Appeal should not be used, nor additional expense incurred for the parties, without realistic hope of benefit.
(e)In theory, a wholly factual issue could justify allowing a second appeal, but issues of fact in a matter falling within the jurisdiction of this Court will seldom be of public importance.
The plaintiffs’ submissions – refusal to direct provision of transcripts
[10] The plaintiffs’ submissions in support of the application for leave to appeal address separately the refusal of the request for the production of transcripts. They argue that what they describe as the first application for leave to appeal dated 13 September 2021, which was amended by the application dated 23 September 2021, was in respect of that part of the strike-out review judgment that related to the strike- out decision following a defended hearing before the Associate Judge. The plaintiffs say that what they call the second application for leave to appeal, filed on 22 September 2021, related to that part of the strike-out review judgment which pertained to an “undefended hearing transcript minute ruling of Associate Judge Andrew 19 April 2021”. That was an application made by the plaintiffs for a direction that they be provided with transcripts of the hearing of the strike-out application before the Judge on 21 October 2020 and a case management hearing before me on 3 March 2021. The plaintiffs argued that they required the hearing transcripts “to complete their preparation for the review hearing scheduled for 29 April 2021”.
[11] In his minute dated 19 April 2021, Associate Judge Andrew declined to make the order, saying that the plaintiffs had provided few reasons to support their request
for transcripts and it was probable that there was insufficient time for the transcripts to be compiled. The Associate Judge observed that a transcription involves a significant use of court resources and good reasons must be shown before one would be ordered.9 The Judge said, however, that his decision did not preclude the plaintiffs from making a further application for the transcripts at the review hearing on 29 April 2021, should that become relevant.
[12] On 23 April 2021, Mr Mailley applied to review Associate Judge Andrew’s decision that transcripts would not be provided. I dismissed that review application at the beginning of the hearing on 29 April 2021 on the basis that the transcripts would not assist me to determine the review application, as I noted at [134(a)] of the strike-out review judgment. Nothing arose during the strike-out review hearing to cause me to alter that assessment and the plaintiffs have not suggested otherwise.
[13] The plaintiffs argue, however, that because the Associate Judge’s decision not to require the preparation of transcripts was made at an undefended hearing, the review of that decision by me should have proceeded as a full rehearing in accordance with r 2.3(5) of the High Court Rules that applied. They say that, since the other matters which they sought to have reviewed were matters addressed following a defended hearing before the Associate Judge and were supported by documented reasons, a full hearing of those matters was not required by the Rules and it was not appropriate for me to deal with the transcripts issue contemporaneously.
[14] There is no merit in this point. The request for transcripts was an administrative matter to which the defendants were not a party and it did not call for them to oppose or consent. It is not clear that the Judge’s refusal to meet the request is a decision susceptible to review under s 26P(1) of the Judicature Act but, even if it is, there is no material difference between a rehearing under r 2.3(4) of an administrative decision made on the papers and a “full” rehearing of that decision under r 2.3(5). The distinction between a rehearing and a full rehearing that existed under the Rules then in force was intended to benefit a respondent who sought review of a decision that had been made against them unopposed. The rule was not intended
9 Minute of 19 April 2021 at [5], citing Zhang v Westpac New Zealand Ltd [2019] NZHC 2797. See also Siemer v Heron [2011] NZSC 116, [2012] 1 NZLR 293 at [9].
to give a party who is dissatisfied with an administrative decision by an Associate Judge the right to a full-blown hearing of the same issue on review.
[15] I heard Mr Mailley’s renewed request for transcripts and, for the reasons given, rejected it. The plaintiffs suffered no unfair prejudice by having the issue addressed at the start of the strike-out review hearing in that way. Nothing in the approach or the outcome justifies allowing an appeal to the Court of Appeal on that issue.
The plaintiffs’ submissions – other grounds of appeal
[16] I do not propose to list all of the many grounds relied upon by the plaintiffs in their application for leave to appeal against the striking out of the claims against Mr Shaw. It is sufficient to quote Mr Mailley’s oral submissions at the hearing (which he had reduced to writing and read to the Court):
The Plaintiffs’ primary ground for leave to appeal is that both Associate Judge Andrew and Justice Toogood have made many errors in law and in fact. In addition to those errors in law and in fact identified in the written material relied upon by the plaintiffs as above,10 we draw the Court’s attention to the following errors in fact and in law….
[17] Although the allegations of errors in the strike-out review judgment as described in the three iterations of the plaintiffs’ application for leave to appeal tend to overlap, it is possible to identify more than 12. In the oral submissions, it is alleged that there are errors in 36 paragraphs of the judgment, including errors indicating partiality or bias against the plaintiffs. The majority of the submissions assert errors in statements of background facts, commonly by an alleged failure to accept as proved contrary statements made in affidavits filed by or on behalf of the plaintiffs.
[18] The grounds on which the plaintiffs wish to appeal, therefore, amount to a widespread challenge to almost every instance in which I upheld the findings made by Associate Judge Andrew for the purposes of his consideration of whether the plaintiffs’ claims disclosed any reasonably arguable cause of action. They include matters of
10 Mr Mailley had listed 11 interlocutory applications or written submissions filed prior to the hearing, including oral submission presented to the Court of Appeal in an unsuccessful appeal against an order limiting his submissions on the costs review application to three pages: Mailley v Shaw [2021] NZCA 593.
legal principle and inferences properly drawn from facts that were sufficiently proved. In essence, the plaintiffs challenge my conclusions that there was no material error in the Judge’s description of the facts nor any omission of relevant facts by him; that the Judge’s summary of the pleadings is concise and accurate; and that there is no error or relevant omission from the Judge’s orthodox description of the legal principles relevant to a strike-out application.11
Discussion
[19] Answering each of the plaintiffs’ asserted errors regarding the strike-out of claims against Mr Shaw would require a reiteration of the judgment in which I addressed comprehensively each of the complaints made about a comprehensive judgment of the Associate Judge. I do not intend to repeat those findings.
[20] There is no merit in the submissions challenging the Associate Judge’s findings or mine on limitation issues concerning the claims against Mr Shaw. The Associate Judge decided, on the application of orthodox principles, that the overcharging claims were out of time and barred by statute. Moreover, the Judge’s finding that the plaintiffs’ pleading did not demonstrate that they had suffered any loss justifying an award of damages was also entirely justified. I held accordingly.
[21] The plaintiffs’ claims against Mr Shaw are founded on complaints of overcharging and other misconduct in his representation of Mr Mailley which have been the subject of five separate determinations by Standards Committees constituted under the Lawyers and Conveyancers Act 2006 (LCA). The determinations were considered fully by both Associate Judge Andrew and me in our respective judgments. The plaintiffs’ application for leave to appeal contrives to continue their pursuit of a remedy for those grievances, despite being rebuffed on every prior occasion.
[22] The plaintiffs do not identify any important question of law or fact capable of bona fide and serious argument so as to justify the cost and delay of having the matters about which they have complained at length over many years being given further consideration by the Court of Appeal.
11 Mailley v Shaw, above n 2, at [58].
[23] So far as the claim against the New Zealand Law Society (NZLS) is concerned, both the strike-out decision and the strike-out review judgment addressed the pleadings and asserted facts at greater length than was strictly necessary. The short and clear answer to the claims against the NZLS is that the statutory immunity conferred on the Society by s 272 of the LCA provides a complete answer to the purported claims in the absence of any credible evidence of bad faith. It did not escape the notice of the Associate Judge, or me, that the allegations of bad faith were made by the plaintiffs only after the NZLS drew to their attention the need to establish bad faith to circumvent the barrier of the s 272 immunity from suit.
[24]Makeweight grounds for the intended appeal include:
(a)the assertion that I was wrong to address unresolved interlocutory applications, some of which had been made by Mr Mailley after the hearing before me, in a judgment dealing with substantive issues; and
(b)an assertion – first made only a few days before the hearing of the applications addressed in this judgment – that I should have recused myself from the proceeding on grounds that are so contrived that I spare the plaintiffs the embarrassment of having them described in a published judgment.
[25]None of the additional grounds meets the test for leave.
Conclusion – application for leave to appeal dismissed
[26] The plaintiffs having failed to satisfy the test for a grant of leave to appeal against the judgment declining to review Associate Judge Andrew’s strike-out decision, the application for leave to appeal is dismissed. I address costs below.
Application for review of the strike-out costs decision
[27] Following the issuing of the strike-out decision, Associate Judge Andrew received applications from Mr Shaw for an award of indemnity costs or, alternatively,
increased costs, and from the NZLS for an award of costs increased by 50 per cent.12 The costs submissions on behalf of the defendants were filed on 8 December 2020. The plaintiffs’ submissions in response were dated 2 February 2021. They may have been filed slightly out of time (bearing in mind the hiatus imposed by the Court’s long vacation)13 but no point was made of that. Supplementary costs submissions were filed by the plaintiffs on 3 and 4 February 2021, the latter submissions questioning the failure of the NZLS to provide details of the invoices supporting its costs claims. Following receipt of reply submissions by the defendants, Mr Mailley filed further costs submissions on 1 March 2021. It is apparent from the strike-out costs decision that the Associate Judge took all submissions into account.
[28] Associate Judge Andrew rejected the plaintiffs’ submission that, notwithstanding the striking out of the proceeding, they had achieved a significant measure of success. As the Associate Judge observed correctly, the fact that some findings in the strike-out decision arguably supported the plaintiffs’ case did not mean that the defendants were not ultimately successful or should be deprived of a costs award.14
Claim for indemnity or increased costs by Mr Shaw
[29] Associate Judge Andrew considered whether an award of indemnity or increased costs was appropriate and referred to the applicable principles.
[30] The Judge rejected the submission on behalf of Mr Shaw that indemnity costs were warranted, finding that the high threshold for such an award had not been made out.15 Nevertheless, the Associate Judge held that Mr Shaw was entitled to increased costs on a category 2B basis, uplifted by 25 per cent. He said:
[20] … It is clear that both plaintiffs failed to act reasonably by contributing unnecessarily to the time and expense of the proceedings by pursuing arguments that lacked merit (and following indications from a number of Judges that the pleadings were weak and deficient). This included claims that Mr Shaw had breached his obligations by overcharging but in circumstances where a number of the invoices at issue had never been paid.
12 High Court Rules (1 February 2009 to 17 October 2016), r 14.6.
13 Rule 1.18.
14 Mailley v Shaw, above n 4, at [17].
15 At [19].
There were also serious allegations of impropriety by Mr Shaw without sufficient probative evidence.
[21] I also note that the plaintiffs failed to appear on numerous occasions at various fixtures and case management conferences and failed to prosecute their claims overall in a timely fashion. The proceedings were first filed in 2015 and the protracted litigation since that time has given rise to unnecessary costs.
[22] Mr Mailley failed to appear on the following dates: 25 February 2016, stating that he was unable to appear due to “health reasons” (I note these were never substantiated despite a request to do so);19 March 2016; 31 July 2019; 11 February 2020; and 3 March 2020.
[23] Ms Nutarelli failed to appear in at least seven case management conferences; on 25 February 2016, 19 May 2016, 29 June 2018, 11 February 2019, 31 July 2019, 11 February 2020 and 3 March 2020.
[24] I accept, as sought, that Mr Shaw is entitled to claim band C costs in relation to the first statement of defence of 28 July 2015 and also the second statement of defence of 16 September 2020.
[25] Accordingly, the plaintiffs are to pay costs increased by 25 per cent to Mr Shaw in the sum of $63,255.63 (excluding GST), together with disbursements, as sought, of $426.62 (excluding GST) and court disbursements of $2,687.49 (excluding GST) as set out in sch 2 attached to Mr Shaw’s submissions date 8 December 2020.
Claim for indemnity or increased costs by NZLS
[31] In considering the costs claim by the NZLS, Associate Judge Andrew referred to the view of the Court of Appeal that, where the basis for increased costs is that an argument lacked merit and was inherently unlikely to succeed, the increase applies to all steps, rather than a “blow by blow” assessment on the rationale that none of the steps ought to have been necessary.16
[32] Acting on that principle, Associate Judge Andrew concluded the plaintiffs had failed to act reasonably by:
(a)contributing unnecessarily to the time and expense of the proceeding by pursuing arguments against the NZLS that lacked merit;17
16 NR v MR [2014] NZCA 632 at [52].
17 High Court Rules (1 February 2009 to 17 October 2016), r 14.6(3)(b)(ii).
(b)continuing to pursue their claims after the NZLS had provided them with opportunities to reconsider their position; and
(c)continuing to put the NZLS to further unnecessary costs by not constructively responding to proposals to resolve their claim and costs.
[33]In reaching those conclusions, Associate Judge Andrew held:
(a)it was obvious from the inception of the proceeding the plaintiffs had no prospect of success because of the very clear statutory immunity in s 272 of the LCA;
(b)serious allegations of bad faith made against NZLS, only after NZLS pointed out the statutory immunity, lacked any foundation and should never have been made; and
(c)the plaintiffs failed to engage with proposals by the NZLS that scale costs and certain nominated sums being half of the amount the Judge ultimately awarded would have been acceptable to the NZLS.
[34] Adopting the approach of the Court of Appeal in Holdfast NZ Ltd v Selleys Pty Ltd,18 the Judge considered an uplift of 50 per cent beyond scale was appropriate and awarded the NZLS total costs and disbursements of $58,264.97. The award included costs and disbursements of $2,018 to the NZLS for preparing its costs submissions, its notice of opposition to Mr Mailley’s application to stay the costs decision and the memorandum and appearance on that matter, plus a filing fee.
[35] The plaintiffs’ challenge to the costs award in favour of Mr Shaw includes an assertion that there is an unjustified claim for the filing of a statement of defence and amended statement of defence to their third amended statement of claim. It is argued by the plaintiffs that when they challenged the failure of the NZLS to file a defence to the third amended statement of claim, I ruled that there was no need for the NZLS to plead to the new causes of action in the third amended statement of claim pending a
18 Holdfast NZ Ltd v Selleys Pty Ltd (2005) 17 PRNZ 897 (CA).
decision on whether the claims should be struck out.19 That observation was made in the context of the submission by the plaintiffs that, because the NZLS had not filed a defence to the third amended statement of claim, the two new causes of action of breach of statutory duty and misfeasance in public office pleaded for the first time should be treated as being admitted unchallenged. The plaintiffs argued, therefore, that the NZLS had no standing to make written or oral submissions on those allegations.
[36] Those new pleadings did not apply to Mr Shaw but, notwithstanding that the applications to strike out the plaintiffs’ pleadings had been made, Mr Shaw was entitled to file defences to the new pleading in accordance with the Rules. The pleading served to assist the Court to identify whether the pleadings to which the statement of defence responded should be preserved for trial. While a claim for costs was made for the statement of defence to the third amended statement of claim, there was no claim for costs in respect of the amended defence to the third amended statement of claim. The costs were properly sought and awarded.
[37] Addressing the claim for indemnity/increased costs by Mr Shaw more generally, the plaintiffs submit that:
(a)there is merit in the asserted grounds for appeal against the judgment upholding the strike-out decision and that it is premature for the costs award to be upheld at this time;
(b)they were unfairly restricted by the direction that their submissions on the costs review were to be limited to three pages and by a direction that only one hour had been set aside for the hearing;
(c)they had repeatedly expressed concerns about the veracity of Mr Shaw’s billing and said that they required proof that the award of costs made should not exceed the costs incurred by the party claiming costs;20
19 Mailley v Shaw, above n 2, at [126].
20 Joint Action Funding Ltd v Eichelbaum [2017] NZCA 249, [2018] 2 NZLR 70.
(d)(in relation to the NZLS) the NZLS had consistently refused to present its invoices for examination so as to justify its claims for costs;
(e)the Court and the defendants had acknowledged Ms Nutarelli’s minor role in the proceeding and submitted that to give recognition to that circumstance, the normal principle that costs should be joint and several as between related parties should be departed from;21
(f)in any event, the first and second plaintiffs’ costs should be determined separately because they had made their claim as separate not joint plaintiffs;
(g)Mr Shaw’s claim for costs included the costs of a memorandum of counsel seeking an extension of time to file documents which should not have resulted in an award against the plaintiffs for $956 on a category 2B basis; and
(h)there were errors of approach by Associate Judge Andrew to the strike-out application which should be determined on appeal before any decision is made about the appropriateness of the costs award.
Costs award in favour of Mr Shaw
[38] The Associate Judge was well-placed to determine whether any of the grounds for awarding increased costs against the plaintiffs was justified in accordance with the costs principles. Relying on the matters he discussed at length in the strike-out decision, the Judge was entitled to conclude that the plaintiffs had not acted reasonably by contributing unnecessarily to the time and expense in pursuing arguments lacking in merit. He was also entitled to take into account the failure of the plaintiffs from time to time to appear in court as required.
[39] Associate Judge Andrew acknowledged that Ms Nutarelli’s role in the proceeding was “a relatively minor one with the focus of the claims relating to the
21 Hotchin v Guardian Trust [2016] NZSC 24, [2016] 1 NZLR 906.
position of Mr Mailley”,22 and took that into account in deciding not to award indemnity costs. It is not immediately apparent from the pleadings, however, why Ms Nutarelli’s interest in the proceeding, as opposed to her engagement in the conduct of the proceeding, should be distinguished from that of Mr Mailley. The pleading at para 2 of the third amended statement of claim is that Ms Nutarelli:
… is Mr Mailley’s partner and it was she who provided funds for the habeas corpus and extradition proceedings to the first defendant on the understanding that the funds would cover all legal work required in these proceedings.
[40] Ms Nutarelli sought separate awards of damages from Mr Shaw on the basis of causes of action for breach of contract, negligence and deceit on essentially the same grounds and for the same amounts as claimed by Mr Mailley.
[41] Although Mr Mailley cited Hotchin v Guardian Trust as authority for the proposition that the principle that costs should be joint and several should be departed from, he did not refer me to anything in the Supreme Court’s judgment in that case supporting that proposition. In any event, that is an issue going to the Judge’s discretion as to costs. Given the identity of their interests in the proceeding, I see no reason to disturb Associate Judge Andrew’s view that costs should fall jointly on the shoulders of both plaintiffs.
[42] I consider the plaintiffs’ challenge to the costs award in favour of Mr Shaw should succeed on one point. On 9 September 2020, counsel for Mr Shaw filed a memorandum seeking a variation to the timetable order for steps prior to a one-day hearing of interlocutory applications on 21 October 2020. Mr Shaw was required by the timetable to file and serve some further evidential material relevant to the applications by 11 September 2020. Counsel said, however, that it had become apparent that Mr Shaw would be unable to meet that filing deadline because of difficulties he had experienced from the most recent COVID lockdown and from his workload. He sought a short extension of time of three working days so that the material required could be finalised and asked for consequential changes to subsequent steps in the timetable. Counsel observed in the memorandum that, if the plaintiffs had been represented, the request would have been sought through counsel and agreement
22 Mailley v Shaw, above n 4 at [19].
very likely given. Because the plaintiffs were self-represented, however, counsel considered that the resolution of the issue would likely be done more efficiently and with clarity through a memorandum.
[43] The memorandum contained a request by Mr Shaw for an indulgence. There is no evidence that the plaintiffs opposed it, nor even that they were consulted with regard to it, but in any event they were clearly not responsible for Mr Shaw’s inability to meet the original timetable. There is no principled basis on which they should pay for the costs of Mr Shaw’s counsel obtaining that indulgence for his client.
[44] Upon review, therefore, I consider the Associate Judge erred in including the award of costs in the amount of $1,195, being scale costs of $956 uplifted by 25 per cent, for the 9 September 2020 memorandum. In all other respects, however, the award of increased costs in favour of Mr Shaw was appropriate.
[45] The costs award in favour of Mr Shaw is set aside, therefore, and replaced by an order that the plaintiffs shall pay Mr Shaw a total of $62,060.63 (excluding GST), together with disbursements, as sought, of $426.62 (excluding GST) and court disbursements of $2,687.49 (excluding GST) as set out in sch 2 attached to Mr Shaw’s submissions dated 8 December 2020.
Whether the NZLS should have disclosed its invoices
[46] It is trite law that costs awards must not exceed actual costs.23 In his further supplementary costs submissions, Mr Mailley asked for the invoices purportedly rendered in support of the NZLS costs claim. Associate Judge Andrew awarded scale costs on a 2B basis to the NZLS and uplifted this by 50 per cent without requiring the NZLS to produce invoices to demonstrate that the costs award did not exceed the actual costs incurred.
[47]The Court of Appeal has said:24
… Where increased costs (as opposed to indemnity costs) are being considered, the focus remains on the notional solicitor or counsel appropriate
23 High Court Rules 2016, r 14.2(1)(f).
24 Holdfast NZ Ltd v Selleys Pty Ltd, above n 18, at [48].
for the category of proceeding, not the actual solicitor or counsel involved or the costs actually incurred by the party claiming costs.
[48] In line with the focus of the High Court Rules on the speedy and inexpensive administration of justice,25 it is not common practice for parties making costs applications to provide invoices to the Court to demonstrate that the scale costs sought do not exceed the actual costs incurred. Such a process would add to the cost of preparing such memoranda, on which the Court is generally reluctant to award costs.26 Unless there is an issue about indemnity costs, the actual costs incurred by a party are not by themselves relevant.27 Since counsel submitting costs memoranda according to scale are officers of the Court, judges rely on them to refrain from claiming a contribution to costs above the amount actually incurred by their client. Associate Judge Andrew was entitled on that basis to accept the costs submitted by counsel, before he followed the appellate guideline to increasing costs.28
NZLS claim for costs
[49] I am satisfied for the reasons given by the Associate Judge that it was appropriate to award the NZLS increased costs of 150 per cent of the scale costs. The claim against the NZLS was bound to fail because of the existence of the statutory immunity from suit and the failure of the plaintiffs to plead any particulars of bad faith such as would justify setting aside the immunity. But there is one matter on which I consider the Associate Judge fell into error.
[50] In reaching his decision, Associate Judge Andrew accepted, without explanation, that NZLS was entitled to claim costs on an appearance before Edwards J that was an unsuccessful application by Mr Shaw for a review of a decision of Associate Judge Bell recorded in a minute dated 6 November 2018.29 Associate Judge Bell had declined to determine applications for a permanent stay and security for costs, and instead adjourned the hearing with various timetable directions as to the disposal
25 High Court Rules 2016, r 1.2.
26 See for example Jeffreys v Morgenstern [2013] NZHC 1361 at [40]; Epsom Woods Ltd v Waitakere Farms Ltd [2020] NZHC 3137 at [4]; and Combined Property Maintenance Ltd v Singh [2021] NZHC 621.
27 Taunoa v Attorney-General (2004) 8 HRNZ 53 (HC) at [45].
28 Mailley v Shaw, above n 4, at [38], see also at [27] applying NR v MR [2014] NZCA 632.
29 Mailley v Shaw [2019] NZHC 3171.
of these and other applications. The application for review was opposed by the plaintiffs, but there was no appearance at the hearing by them or on their behalf; Edwards J heard the review application in their absence.
[51] The NZLS was not a party affected by Associate Judge Bell’s decision but submitted that it was reasonable for its counsel to attend the hearing because the plaintiffs had a “history of making misleading and scandalous submissions about the NZLS.” Justice Edwards noted that Mr Mullins appeared at the hearing on behalf of the NZLS but did not take an active part in it as the NZLS abided the decision of the Court.30
[52] Dismissing the application for review, Edwards J observed that the plaintiffs would normally be entitled to an order of costs but, given their non-attendance at the hearing, considered they could not properly be characterised as the successful party. In the circumstances, the Judge declined to make an order as to costs in their favour and, unsurprisingly, did not make any reference to considering an award of costs to the NZLS.
[53] The NZLS was entitled to regard it as prudent to have counsel attending the hearing despite abiding the Court’s decision and taking no active part in the matter. When I challenged Mr Bullock to identify the basis upon which the plaintiffs could reasonably have been held liable to the NZLS for costs in such circumstances, he submitted that the Associate Judge must simply have considered the cost of that appearance to be costs in the cause generally. If that was Associate Judge Andrew’s approach, I consider it to be wrong.
[54] While the NZLS may have decided it would be in its best interests to have Mr Mullins at the hearing with a watching brief, there is no principled basis by reference to any costs rule, or in the reasonable exercise of judicial discretion as to costs under r 14.1, for the plaintiffs to contribute to the cost of the NZLS making that choice:
30 Mailley v Shaw, above n 29, at [3].
(a)the plaintiffs were respondents to Mr Shaw’s application because the orders Mr Shaw sought to have reviewed had been made in their interests; but
(b)the review application failed – even though Edwards J did not consider the plaintiffs had taken any step justifying a costs award in their favour, their opposition to the application succeeded; and
(c)the plaintiffs took no step regarding that interlocutory matter that compelled the NZLS to have counsel in attendance.
[55] Upon review, therefore, I consider allowing the NZLS costs for the appearance before Edwards J to be an error; that part of the award must be set aside. The costs award in favour of the NZLS, therefore, must be reduced by the sum of $717, being the amount of $478 scale costs for that step, uplifted by 50 per cent.
[56] The costs award in favour of the NZLS is set aside and replaced by an order that the plaintiffs shall pay the NZLS a total of $55,720.40 in costs and disbursements.
Costs
[57] As the successful parties, the defendants are entitled to costs on the application for leave to appeal and the application for a review of the strike-out costs decision, in accordance with the High Court Rules and the categorisation of the proceeding as category 2B for costs purposes.
[58] If costs cannot be agreed between the parties, the defendants shall have until 4 February 2022 to file and serve memoranda seeking costs. The plaintiffs shall have until 25 February 2022 to file and serve memoranda in response. The defendants may file and serve brief reply memoranda only by leave of the Court. Costs shall then be determined on the papers unless the Court directs otherwise.
Toogood J
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