Mailley v Shaw
[2021] NZHC 2359
•9 September 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 2359
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: 29 April 2021; further submissions 6 May 2021 and 21 July 2021 Appearances:
First and second plaintiffs in person J E G San Diego for first defendant
T P Mullins and D A C Bullock for third defendant
Judgment:
9 September 2021
Reissued:
28 October 2021
JUDGMENT OF TOOGOOD J
This reissued judgment was delivered by me on 28 October 2021 at 10am, pursuant to r 11.5 of the High Court Rules
Solicitors:
Registrar/Deputy Registrar Date:
Doug Cowan, Auckland for first defendant
Lee Salmon Long, Auckland for third defendant
Copy to:
The plaintiffs
MAILLEY v SHAW [2021] NZHC 2359 [9 September 2021]
Introduction [1]
The result [10]
Background facts [11]
The pleaded claims [53]
Applicable legal principles [54]
The strike-out decision [58]
No error in the account of the facts, the pleadings and the strike-out principles [58]
The discussion of the issues [59]
The defects in Mr Mailley’s pleadings [61]
The plaintiffs’ submissions [63]
Wrong application of legal principles [64]
Allegation that defendants responsible for delay [67]
Error in holding plaintiffs’ claims not established [68]
Error in application of Limitation Act 1950 [80]
The conclusions on Mr Shaw’s application to strike out Mr Mailley’s claims [87] The conclusions on Mr Shaw’s application to strike out Ms Nutarelli’s claims [90] Allegation of misunderstanding of formulation of damages [91]
Allegation of misunderstanding of fee capping agreement [93]
The plaintiffs’ claims against the NZLS [110]
The plaintiffs’ pleading of bad faith [117]
Alleged error in interpretation of misfeasance in public office [121]
Argument that NZLS had no standing to make submissions [126]
Request for further opportunity to replead [127]Allegation of perceived bias [128]
The decisions on the review application [130]
Interim suppression of costs judgment of 21 April 2021 from publication [131] Miscellaneous interlocutory applications [134]
Costs [135]
Introduction
[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.
[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,1 were frivolous or vexatious2 and an abuse of the process of the Court.3 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).4 The Associate Judge struck out all causes of action by the plaintiffs against Mr Shaw and NZLS, bringing the proceeding to an end.5
[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.6
[6] The former r 2.3(4)(a) provides that a review is to proceed as a rehearing. That requires the Court on review to form its own view of the merits but the plaintiffs carry the burden of persuading the Court that Associate Judge Andrew’s judgment was
1 High Court Rules 2016, r 15.1(1)(a).
2 Rule 15.1(1)(c).
3 Rule 15.1(1)(d).
4 Mailley v Shaw [2020] NZHC 3102.
5 At [146].
6 Senior Courts Act 2016, sch 5, cl 11(2) and (3)(b); Sutcliffe v Tarr [2017] NZCA 360, [2018] 2 NZLR 92.
wrong, either as being based on findings of fact that are insupportable or having been reached by the application of the wrong principles.7
[7] At the hearing of the review application, the plaintiffs sought additional time to reply to the oral submissions of counsel for the defendants. Even though counsel had not raised any new matter not covered in their written submissions, I granted the plaintiffs that indulgence, but the material filed on 6 May 2021 extended well beyond matters in reply and included detailed assertions of factual errors by Associate Judge Andrew in the strike-out decision. The alleged “errors” are principally findings of the Associate Judge with which the plaintiffs disagree or relate to minor and inconsequential matters of detail. The balance of the reply submissions traverse the same ground as the submissions filed in support of the review application.
[8] On 21 July 2021, the plaintiffs filed an application seeking a recall of the strike- out decision on the grounds of alleged misconduct by Mr Mullins as counsel for NZLS. The application contained further, largely repetitive submissions on matters raised in the plaintiffs’ earlier submissions.
[9] The plaintiffs also filed several interlocutory applications after the hearing. I address them at the end of the judgment.
The result
[10] After careful consideration of the large volume of documents placed before the Court; the submissions filed by and on behalf of the parties; and the reasoning of the Associate Judge, I have concluded that the strike-out decision is right. The formal orders confirming the orders made on 24 November 2020 are set out at [130] below. My reasons for those conclusions now follow.
7 Shirley v Wairarapa District Health Board [2006] NZSC 63, [2006] 3 NZLR 523 at [15]; Grey District Council ex parte Banks [2017] NZHC 1110 at [12]; Fillimore Imperial Ltd v St John’s College Trust Board [2018] NZHC 2145 at [25].
Background facts
[11] Associate Judge Andrew attached to his judgment a chronology of relevant events, noting that a comprehensive understanding of the background and context was critical to determining the strike-out applications.8 I have adopted Associate Judge Andrew’s accurate and helpful summary of the relevant background with some additions and omissions.
[12] In 2005, the Queensland District Court issued a warrant for Mr Mailley’s arrest. He had earlier been committed for trial there on 11 counts of fraud (involving more than $2 million) under s 408C(1)(b) of the Queensland Criminal Code Act 1899.
[13] Ms Nutarelli is Mr Mailley’s de facto partner. She pleaded guilty in Queensland to her part in the fraudulent dealings and was convicted and sentenced to three years’ imprisonment. Her sentence was suspended after she had been in prison for six months.9
[14] On 2 July 2008, Mr Mailley was arrested in New Zealand and the Police applied to the District Court under s 45 of the Extradition Act 1999 to determine Mr Mailley’s eligibility for surrender.
[15] In August 2008, Mr Shaw was first engaged to represent Mr Mailley in place of his previous counsel, Mr Barry Hart. Mr Mailley says that he agreed to Mr Shaw replacing Mr Hart because of excessive overcharging by Mr Hart.10
[16] On 27 August 2008, Mr Shaw issued an invoice to Mr Hart for representing Mr Mailley in the extradition proceedings in the District Court in the total sum of
$28,125 (including GST). An initial payment of $20,000 plus GST was payable immediately and then a further $5,000 plus GST was payable within seven days of the conclusion of the extradition hearing. This is the first of Mr Shaw’s invoices at issue
8 Mailley v Shaw, above n 4, at [6].
9 Mailley v District Court at North Shore [2016] NZCA 83 at [5].
10 Mr Mailley’s complaint to the NZLS about excessive charging by Mr Hart was upheld by a Standards Committee. Mr Hart was subsequently found guilty of professional misconduct by the New Zealand Lawyers and Conveyancers Disciplinary Tribunal and struck off the roll of barristers and solicitors; see Hart v Auckland Standards Committee 1 of New Zealand Law Society [2013] NZHC 83, [2013] 3 NZLR 103.
in these proceedings. On 29 August 2008, $22,500 of that first invoice was paid to Mr Shaw.
[17] On 29 August 2008, Mr Hart issued a statement of account to Mr Nigel Cooke, an Auckland solicitor, in the name of Mr Mailley. The statement of account referred to “Disbursements – Antony Shaw” paid to Mr Shaw in the sum of $25,000.
[18] On 27 November 2008, Mr Shaw met Ms Nutarelli and Mr Greg Davison to discuss Mr Shaw’s representation of Mr Mailley. The plaintiffs allege that, at that meeting, Mr Shaw agreed to cap his fees for all legal services in relation to the extradition and representation of Mr Mailley at $150,000. At this time, another barrister, Mr Graeme Minchin, had been engaged to act for Mr Mailley on some civil matters and in relation to some Rotorua charges faced by Mr Mailley, but not on the extradition proceeding. Mr Minchin drove Mr Shaw to Whangaparāoa for the meeting but was not present during it.
[19] On 4 December 2008, Ms Nutarelli deposited two payments of $75,000 into the solicitor’s trust account of Marshall Bird & Curtis, Ms Curtis having agreed to act as the solicitor instructing Mr Shaw. On 5 December 2008, Mr Davison sent an email to Mr Shaw purporting to record the agreement reached with Mr Shaw over costs at the 27 November meeting and in subsequent conversations. The email reads, in part:11
3/Graeme Minchin is not on the extradition case, rather he is handling civil matters and the Rotorua charges and for that he has already been paid 50K and is expecting another 12-15K.
4/Including Graeme’s fees of 12-15K and the fees for Tony and you in Wellington the total fees to take the extradition case all the way through to the end are capped at 150K.
5/The money for the fees is to be held in your solicitors trust account and only disbursed on Martin’s written approval.
[20] There is no written evidence confirming that Mr Shaw accepted Mr Davison’s record of the arrangements.
[21] On 12 December 2008, Mr Shaw issued a second invoice for services in relation to representing Mr Mailley in the total sum of $104,452.75. The invoice
11 Emphasis added.
referred to professional services rendered during the period of 6 November to 12 December 2008 at the “agreed rate of $800 per hour, plus GST, plus disbursements”. The invoice consisted of four pages of narration detailing the work performed by Mr Shaw. It included fees in excess of $15,000 for travel at the rate of
$800 per hour. That invoice was paid on 17 December 2008 by funds held in the Marshall Bird & Curtis trust account.
[22] On 15 December 2008, Mr Mailley dated and signed a pre-printed, partly handwritten two-page client appointment contract on the letterhead of Marshall Bird & Curtis. On the second page, under the heading “SCHEDULE ONE – FEES”, Mr Mailley is shown as the client and the words “Habeas Corpus, HC Bail, Extradition” are inserted as the services to be provided. Beneath that, the words “FEE AGREED” are scored out and “Retainer provided” written above, followed by “$150,000”. It appears the document was sent by Mr Minchin to Ms Curtis by facsimile; her signature also appears on the second page.
[23] On 17 December 2008, Mr Mailley was released from custody after Mr Shaw and Mr Ellis successfully sought a writ of habeas corpus on his behalf. Mr Mailley remained on bail from then until his extradition to Queensland in 2016.
[24] On 1 January 2009, Mr Mailley and Mr Shaw met at the Rutherford Hotel in Nelson. On 21 January 2009, Mr Shaw issued a third tax invoice to Marshall, Bird & Curtis for legal services performed for Mr Mailley in the sum of $53,615.45. The invoice related to professional services rendered during the period 13 December 2008 to 21 January 2009 “at the agreed rate of $800 per hour (13-31 December 2008) and
$1,000 per hour (1-21 January 2009), plus GST, plus disbursements as itemised”. The invoice included a six-hour meeting at the Rutherford Hotel on 1 January 2009.
[25] In late January 2009, Mr Grant Illingworth QC was engaged as counsel to represent Mr Mailley, replacing Mr Shaw.
[26] On 10 March 2009, Mr Shaw emailed Mr Mailley agreeing to reduce his invoice of 21 January 2009 by $6,750 ($6,000 plus GST), being the time involved in their meeting at the Rutherford Hotel, making a new total sum of $46,865.45.
Mr Mailley contended and maintains that those six hours (charged at $1,000 per hour) were spent driving around Nelson.
[27] In late May 2009, however, Mr Mailley re-engaged Mr Shaw to represent him in the extradition proceedings. Mr Shaw says there was an agreement for a fixed fee for the then-upcoming extradition hearing. On 2 June 2009, Mr Shaw and Mr Ellis represented Mr Mailley at the extradition hearing before Judge Hubble in the Auckland District Court. The hearing could not be completed and was adjourned to 31 August 2009.
[28] On 21 August 2009, Mr Shaw issued a fixed fee invoice (the fourth) to Mr Mailley in the sum of $22,960, including GST and disbursements, related to professional services rendered during the period “post 21 January 2009–24 June 2009”. It also referred to “all matters connected with Auckland District Law Society complaint against BJ Hart”.
[29] A fifth invoice was issued on the same day by Mr Shaw to Marshall, Bird & Curtis for legal services representing Mr Mailley in the total sum of $34,550 including GST and disbursements, for professional services rendered during the period “post
24.6.09 to 1.9.09 plus”. Mr Shaw says he did not receive any payments for the third, fourth and fifth invoices.
[30] On 27 August 2009, Mr Shaw and Mr Ellis filed an application with the North Shore District Court, Auckland seeking leave to withdraw from representing Mr Mailley. The application referred to Mr Minchin having been appointed counsel by Mr Mailley.
[31] On 31 August 2009, at the continued extradition hearing before Judge Hubble, Mr Shaw and Mr Ellis were granted leave to withdraw as counsel. Mr Mailley was represented by Mr Minchin for the remainder of the hearing. In affidavits that were before Associate Judge Andrew at the strike-out hearing, Mr Mailley and Mr Minchin say that Mr Shaw told the Court it should not grant an adjournment as Mr Shaw’s termination as counsel was a ploy by Mr Minchin and Mr Mailley to get an adjournment. They say Mr Shaw made no mention to the Court of the dispute regarding his fees. Associate Judge Andrew accepted that it was arguable that
Mr Shaw’s submissions to Judge Hubble at the time he withdrew from the proceeding were both intemperate and inappropriate.12
[32] On 11 September 2009, Judge Hubble issued his reserved decision determining Mr Mailley was eligible for surrender to Queensland.13 Mr Mailley says that he was so distressed by these events that he attempted suicide and was hospitalised.
[33] Between 2010 and 2013, Mr Mailley made three complaints to the NZLS about the conduct and fees of Mr Shaw. He also laid a complaint against Mr Ellis. The Standards Committee subsequently opened its own motion investigation into Mr Shaw’s conduct. In total, five Standards Committee determinations (four relating to Mr Shaw) resulted from these complaints and their investigation.
[34] In its first determination, dated 15 July 2010, the Standards Committee said Mr Mailley complained that he asked Mr Hart to act for him to oppose the application for extradition. Mr Hart engaged Mr Shaw to assist and Mr Mailley paid him $20,000. Mr Ellis was engaged to bring the habeas corpus application and Mr Shaw then presented two further accounts, the first for $104,453.72 and the second for
$53,615.45. He said he had also paid two accounts for $25,000 and $20,000 to Marshall Bird & Curtis, the instructing solicitors. Mr Mailley’s complaint was that the $25,000 Mr Shaw received, via Mr Hart, was a generous amount for what he did and Mr Ellis did all the work in relation to the habeas corpus application. He complained of gross overcharging and improper conduct in that he said once he received the second account he thought it was exorbitant and sacked Mr Shaw who then turned up at the extradition hearing and told the Judge that he had not been paid. He thought this was putting him in a bad light in front of the Judge, especially considering the charges he faced in Australia were for fraud.14 The Standards Committee said it decided to take no action on Mr Mailley’s complaint because the parties had resolved the issues between them.
[35] In its second determination, dated 20 November 2012, the Standards Committee concluded that Mr Mailley’s complaint was a “resurrection” of the
12 Mailley v Shaw, above n 4, at [94].
13 Police v Mailley DC North Shore CRI-2000-063-544086, 11 September 2009 at [58].
14 I note that this allegation is directly contrary to the evidence given in the affidavits of Mr Mailley and Mr Minchin for the hearing of the strike-out application referred to at [31] above.
previous fees complaint. The Committee concluded Mr Shaw had not breached any professional obligations nor acted improperly. The Committee also referred to reg 29 of the Lawyers and Conveyancers Act (Lawyers: Complaints Service and Standards Committees) Regulations 2008 (the Complaints Service regulations). That regulation provides that a Standards Committee must not deal with a complaint if the bill of costs was rendered more than two years prior to the date of the complaint, unless there is evidence of “special circumstances” to justify otherwise. The Committee held there was no evidence of any special circumstances relating to Mr Mailley.15
[36] In its second determination, the Standards Committee recorded that Mr Mailley said he had engaged Mr Minchin for his extradition case in the District Court and Mr Illingworth QC for his appeal, but then began to run out of funds. As a result, he took up Mr Shaw’s offer to undertake the legal work and paid him a
$150,000.00 retainer ($27,000.00 of which was paid to Mr Ellis). After he lodged his earlier complaint with the Law Society, the parties agreed between themselves that Mr Shaw would undertake further legal work and so he withdrew his complaint. However, Mr Shaw insisted that Mr Mailley sack Mr Minchin before undertaking the work and also said that he was not prepared to work with Mr Illingworth. Mr Mailley said he did not agree to the conditions imposed by Mr Shaw, so the agreement was not fulfilled.
[37] The Standards Committee said Mr Mailley complained that Mr Shaw breached his obligations under their agreement and charged him a further $80,000.00, including
$6,000.00 for what he believed was a social visit, which fees he alleged were excessive. He said that after he sacked Mr Shaw, Mr Shaw told the Judge he was withdrawing from Mr Mailley’s case because he had not been paid.
[38] On 24 December 2012, Mr Martin Lyttelton made an application on behalf of Mr Mailley to the Legal Complaints Review Officer (LCRO) for a review of the Standards Committee’s second determination. On 13 January 2013, Mr Lyttelton, on behalf of Mr Mailley, wrote to Mr Shaw setting out in detail the substance of the complaints by Mr Mailley in relation to Mr Shaw’s fees and conduct.
15 Notice of Decision by Wellington Standards Committee 1, 20 November 2012 at [2] and [3].
[39] In its third determination, dated 10 September 2013, the Standards Committee referred to Mr Mailley’s complaints as follows:16
Mr Mailley says that he has provided fresh evidence which justifies the reopening of his previous complaints. Mr Mailley also makes a number of further complaints in relation to Mr Shaw’s conduct, which include the following matters:
·Mr Shaw conspired with Mr Hart in order to fraudulently obtain
$22,500 from Mr Mailley;
·Mr Shaw misled the Law Society in its response to Mr Mailley’s previous complaint;
·Mr Shaw’s fees were excessive and in breach of an agreement to cap his fees at $150,000;
·Mr Shaw breached a number of the rules and obligations which are [i]mposed by the Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules 2008 (the Rules).
[40] In that third determination, the Standards Committee concluded Mr Shaw had not breached any of his professional obligations under the rules. Mr Mailley had provided further evidence in support of his allegations of breach of the fee agreement and excessive fees, but the Committee held that Mr Mailley had not provided sufficient evidence to substantiate those allegations or to justify any further inquiry into them.
[41] On 14 October 2013, an application for review of the third Standards Committee decision was filed with the LCRO on Mr Mailley’s behalf by Mr Lyttelton.
[42] In its fourth determination, dated 3 December 2013, the Standards Committee decided to take no further action in relation to its own motion investigation of Mr Shaw pursuant to s 138(2) of the Lawyers and Conveyancers Act 2006 (LCA). The Committee described the background to that investigation as follows:17
In January 2013, Mr Ellis contacted the Law Society and confirmed that Mr Mailley had laid a complaint with the Police against himself, Mr Hart and Mr Shaw in relation to an allegedly fraudulent fee arrangement. In his police complaint, Mr Mailley alleged that Mr Hart had rendered an invoice which was fraudulent as it did not relate to services that were provided by Mr Hart and was actually used to repay an unrelated debt Mr Hart owed to Mr Shaw.
16 Notice of Decision by Wellington Standards Committee 1, 10 September 2013 at [7].
17 Notice of Decision by Wellington Standards Committee 1, 3 December 2013 at [3]-[5].
The Standards Committee subsequently opened an own motion investigation into the conduct of Mr Shaw.
In March of 2013, Mr Mailley lodged a complaint in relation to the conduct of Mr Shaw, reference 7302. The Standards Committee has now considered that complaint and decided to take no further action in relation to it.
[43]In June 2015, the plaintiffs filed and served these proceedings.
[44] On 1 December 2015, Associate Judge Doogue made timetable directions and determined that Mr Lyttelton was not able to act as an advocate for the plaintiffs in these proceedings. On 18 March 2016, the LCRO directed that the two applications for review be stayed until these proceedings had been determined.18
[45] In 2016, Mr Mailley was extradited to Australia following the Court of Appeal’s decision in Mailley v District Court at North Shore upholding the decision of District Court Judge Sinclair to make an order for surrender.19 Mr Mailley subsequently pleaded guilty to the Queensland fraud charges and was sentenced to a term of imprisonment.
[46] On 19 May 2016, Associate Judge Doogue issued a minute recording the plaintiffs’ failure to attend case management events and the “inactivity of the plaintiffs and the uncertainty over Mr Mailley’s continued residency in New Zealand”.20 The Associate Judge directed that this proceeding was to be stayed until further order of the Court. That meant that the then-extant, unopposed applications by the defendants for security for costs and strike-out were not to be brought on for hearing at that time. Associate Judge Doogue directed that, if the plaintiffs determined at some future time that they wished to resurrect the proceedings, the Court would obviously consider the position.
[47] On 31 August 2016, the LCRO determined he had no jurisdiction to consider the two applications for review of the Standards Committee determinations and declined to do so. The LCRO tendered his apologies to the parties for not having considered and decided that issue sooner. On 24 January 2018, Mr Mailley filed and
18 See Mailley v Shaw LCRO 337/2012 and 304/2013, 31 August 2016 [Decision as to Jurisdiction] at [9].
19 Mailley v District Court at North Shore, above n 9; see also the decision of Supreme Court in
Mailley v District Court at North Shore [2016] NZSC 73, where leave to appeal was refused.
20 Mailley v Shaw HC Auckland CIV-2015-404-1185, 19 May 2016 (Minute of Associate Judge Doogue).
served judicial review proceedings challenging the determination of the LCRO that he had no jurisdiction to entertain the review application (CIV-2018-404-134).
[48] On 6 November 2018, Associate Judge Bell issued a minute rejecting a claim by the defendants that Associate Judge Doogue had made an order permanently staying the proceedings. Associate Judge Bell made directions for a defended hearing on the applications to strike out and also granted leave to the plaintiffs to discontinue the proceedings against Mr Ellis with no order as to costs.21
[49] On 16 November 2018, the plaintiffs filed a document entitled “Second Amended Statement of Claim”.
[50] On 18 December 2018, in Mailley v Legal Complaints Review Officer,22 Clark J ordered that the judicial review proceedings challenging the LCRO decision be stayed until final disposition of this proceeding and made an order barring Mr Minchin from acting as counsel in the judicial review proceedings. The Judge recorded that Mr Shaw, the second respondent in the judicial review proceedings before her, had asked the Court to stay those review proceedings on the ground that the judicial review proceedings related to the same complaints as at issue in this proceeding. Mr Shaw contended that this proceeding had not been prosecuted. Clark J concluded as follows:
[13] The applications to the LCRO for review of the Standards Committees’ decisions are in respect of Case Nos. 337/2012 and 304/2014. In other words, what Mr Mailley seeks in CIV-2018-134 [the judicial review proceedings] is what he seeks, albeit differently articulated, from the High Court in CIV-2015-1185 [i.e. these proceedings]. The application for judicial review of the LCRO in substance and effect, is to require the LCRO to investigate the very matters which Mr Mailley has put before the High Court in CIV-2015-1185. Yet Mr Mailley appears to have walked away from CIV-2015-1185 without taking steps towards its resolution or discontinuing it. If CIV-2015-1185 is determined in Mr Mailley’s favour, he would achieve what he seeks by that proceeding namely, a review of counsels’ conduct and costs charges. If Mr Mailley is unsuccessful there is no utility in this Court ordering the LCRO to review the Standards Committees’ determinations of Mr Mailley’s complaint. In any event there is a real question over the LCRO’s jurisdiction to entertain Mr Mailley’s application for review …
21 Mailley v Shaw HC Auckland CIV-2015-404-1185, 6 November 2018 (Minute of Associate Judge Bell).
22 Mailley v Legal Complaints Review Officer [2018] NZHC 3363, [2019] NZAR 347. See also Mailley v Legal Complaints Review Officer [2019] NZHC 1608, where Clark J declined leave to appeal to the Court of Appeal.
[14] I am satisfied that the manner by which Mr Mailley seeks to engage the judicial processes relates in such unfairness to Mr Shaw that CIV-2018- 134 (the judicial review proceedings) should be stayed as an abuse of process. Mr Geiringer [counsel for Mr Shaw] makes a fair point. Having effectively “defended” himself before the Standards Committees, and engaged in CIV-2015-1185 [i.e. these proceedings] by filing a statement of defence, an interlocutory application, successive memoranda of counsel, and attended case management conferences, Mr Shaw should not now have to give answer to the complaints before the High Court arising out of the application for judicial review when Mr Mailley has neither discontinued nor sought to resolve his 2015 proceedings.
[51] On 13 August 2020, Lang J made timetable directions for the plaintiffs to file amended pleadings and for the determination of these applications. The Judge said that the plaintiffs were on notice that, “this is their final chance to re-plead their claim”.23
[52] On 26 August 2020, the plaintiffs filed the third ASOC that is the subject of the strike-out decision and this review.
The pleaded claims
[53]The third ASOC contains 13 causes of action:
(a)There are four causes of action by Mr Mailley against Mr Shaw for breach of fiduciary duty, breach of contract, deceit and negligence. For the alleged breach of fiduciary duty and deceit, Mr Mailley seeks general damages in the sum of $150,000, punitive damages in the sum of $250,000 and damages for emotional harm in the sum of $50,000. For the alleged breach of contract and negligence, Mr Mailley seeks general damages of $150,000 and damages for emotional harm of
$50,000.
(b)There are three causes of action by Mr Mailley against the NZLS in negligence, breach of statutory duty and “public misfeasance”. In each case, Mr Mailley seeks general damages of $150,000, punitive damages of $250,000 and damages for emotional harm in the sum of
$50,000.
23 Mailley v Shaw HC Auckland CIV-2015-404-1185, 13 August 2020 (Minute of Lang J).
(c)Three causes of action are brought by Ms Nutarelli against Mr Shaw alleging breach of contract, negligence and deceit. In each case Ms Nutarelli seeks general damages of $150,000 and damages for emotional harm of $50,000. For deceit, she also seeks punitive damages of $250,000.
(d)There are three causes of action by Ms Nutarelli against the NZLS for negligence, breach of statutory duty and “public misfeasance”. In each case Ms Nutarelli claims general damages of $150,000, punitive damages of $250,000 and damages for emotional harm in the sum of
$50,000.
Applicable legal principles
[54]Rule 15.1 of the High Court Rules 2016 reads:
15.1 Dismissing or staying all or part of proceeding
(1)The court may strike out all or part of a pleading if it –
(a)discloses no reasonably arguable cause of action, defence, or case appropriate to the nature of the pleading; or
(b)is likely to cause prejudice or delay; or
(c)is frivolous or vexatious; or
(d)is otherwise an abuse of the process of the court.
(2)If the court strikes out a statement of claim or a counterclaim under subclause (1), it may by the same or a subsequent order dismiss the proceeding or the counterclaim.
(3)Instead of striking out all or part of a pleading under subclause (1), the court may stay all or part of the proceeding on such conditions as are considered just.
(4)This rule does not affect the court's inherent jurisdiction.
[55] As Associate Judge Andrew noted,24 the general principles applicable to the exercise of the Court’s powers under r 15.1 are summarised in the Court of Appeal’s
24 Mailley v Shaw, above n 4, at [55].
decision in Attorney-General v Prince,25 as endorsed by the Supreme Court in Couch v Attorney-General.26 They include:
(a)pleaded facts, whether or not admitted, are assumed to be true; this does not extend to pleaded allegations which are entirely speculative and without foundation;
(b)the cause of action or defence must be clearly untenable;
(c)the jurisdiction is to be exercised sparingly and only in clear cases;
(d)the jurisdiction is not excluded by the need to decide difficult questions of law, requiring extensive argument; and
(e)if a defect in the pleading can be cured by amendment, the claim should not be struck out.
[56] In Attorney-General v McVeagh,27 it was held that the Court is entitled to receive evidence on strike-out applications and will do so in a proper case. The Court of Appeal said the Court hearing the strike-out application:
… will not attempt to resolve genuinely disputed issues of fact and therefore will generally limit evidence to that which is undisputed. Normally it will not consider evidence inconsistent with the pleading, for a striking-out application is dealt with on the footing that the pleaded facts can be proved; … But there may be a case where an essential factual allegation is so demonstrably contrary to indisputable fact that the matter ought not to be allowed to proceed further.
[57] The Court of Appeal has said that a “frivolous” pleading is one that “trifles with the court’s process”.28 It is a pleading that lacks the seriousness required for a court to determine a matter.29 A vexatious pleading is one that contains “an element of impropriety”.30 It may also be vexatious to bring proceedings in respect of the same matter in different courts or tribunals.31
25 Attorney-General v Prince and Gardner [1998] 1 NZLR 262 (CA) at 267.
26 Couch v Attorney-General [2008] NZSC 45, [2008] 3 NZLR 725 at [33].
27 Attorney-General v McVeagh [1995] 1 NZLR 558 (CA) at 566.
28 Commissioner of Inland Revenue v Chesterfields Preschools Ltd [2013] NZCA 53, [2013] 2 NZLR 679 at [89].
29 Burchell v Auckland District Court [2012] NZHC 3413, [2013] NZAR 219 at [16].
30 Commissioner of Inland Revenue v Chesterfields Preschools, above n 28, at [89].
31 Registered Securities Ltd (in liq) v Yates (1991) 5 PRNZ 68 (HC) at 70.
The strike-out decision
No error in the account of the facts, the pleadings and the strike-out principles
[58] After a brief introduction to the applications for strike-out, Associate Judge Andrew’s careful and thorough judgment sets out the factual background in some detail.32 I have considered the underlying evidential and procedural matters traversed by the Associate Judge in his comprehensive discussion and have found no material errors in the Judge’s description nor any omissions of relevant facts. The Associate Judge’s summary of the pleadings is concise and accurate.33 There is no error or relevant omission from the Judge’s orthodox description of the relevant legal principles on a strike-out application.34
The discussion of the issues
[59] Associate Judge Andrew’s discussion of the issues raised by the defendants is sympathetic to the plaintiffs, recognising the disadvantages, in what the Judge described as a complex case, of the plaintiffs being self-represented and having no access to competent legal advice and representation. Although counsel then appearing for Mr Shaw was critical of the pleadings and lack of clarity about the plaintiffs’ core complaints, the Judge took a constructive approach in finding, after his review of the documentary evidence before the Court, that the plaintiffs’ principal concerns and contentions were reasonably clear. Judge Andrew held that the critical issue was not so much identifying the plaintiffs’ core complaints as determining whether they gave rise to tenable causes of action.35
[60] The Associate Judge summarised the complaints about the nature and amounts of the fees charged by Mr Shaw, contrary to what the plaintiffs say was a $150,000 fee cap, and Mr Shaw exercising undue coercive influence over Mr Mailley knowing that he was vulnerable. He then addressed what he described as the critical issue of whether the multiple defects in the proceedings, when considered in combination and
32 Mailley v Shaw, above n 4, at [6]–[52].
33 At [53].
34 At [54]–[58].
35 At [61].
overall, reached the r 15.1 threshold of being frivolous, vexatious and/or an abuse of the process of the Court.36
The defects in Mr Mailley’s pleadings
[61] Associate Judge Andrew summarised the critical defects in the pleadings as follows:37
(a)Mr Mailley does not plead that he paid three out of the five disputed invoices (i.e. the third, fourth and fifth invoices). Furthermore, there is no probative evidence that any of those three invoices were paid and likewise no evidential foundation to support the claim that the alleged fee cap of $150,000 was breached.
(b)No actual loss is pleaded despite causes of action in both negligence and breach of contract.
(c)Some of the critical allegations of dishonesty are not particularised, have been investigated and rejected by the NZLS and again are unsupported by an adequate evidential foundation;
(d)Each of the five invoices at issue were rendered by Mr Shaw more than six years before these proceedings were filed. Likewise, the first and second invoices (the only invoices that were paid) were paid on dates more than six years prior to the filing of the proceedings. This raises limitation issues;
(e)The amount of damages claimed is excessive (i.e. general damages of $150,000 and punitive damages of $250,000), particularly when viewed in the context of the significant success Mr Mailley had in deferring his extradition and obtaining bail, during the period 2008 – 2016. The quantum is also to be assessed in circumstances where no actual out- of-pocket loss is claimed.
[62] The judgment then addresses the individual causes of action brought by Mr Mailley and Ms Nutarelli. Because I agree with the reasoning of the Associate Judge, I adopt, in dealing with the grounds on which the plaintiffs seek this review, much of what he said in the judgment.
36 Mailley v Shaw, above n 4, at [68].
37 At [69].
The plaintiffs’ submissions
[63] The plaintiffs’ approach in their challenge to the strike-out judgment is multi- faceted. Where appropriate, I have addressed the point or points raised immediately below the summary of each.
Wrong application of legal principles
[64] The plaintiffs challenge the application of legal principle by the Associate Judge on the grounds that he failed to have proper regard to authorities that establish that the Court should be cautious before striking out a claim as being incapable of success and that the strike-out jurisdiction should be exercised sparingly.
[65] I do not accept that submission. Associate Judge Andrew addressed the relevant legal principles for a strike out application under r 15.1 at [54]–[58]. He accurately summarised the Court of Appeal’s decision in Prince and Gardner,38 as endorsed by the Supreme Court in Couch.39 The plaintiffs refer also to Berryman v Attorney-General,40 and more recent authorities where the courts summarised and applied the same principles.41 Referring to a multiplicity of High Court judgments that all say the same thing by reference to authorities in the Supreme Court and the Court of Appeal adds nothing to the quality of the reasoning in a judgment, and Associate Judge Andrew’s omission to refer to those cases cannot be criticised.
[66] The plaintiffs also refer to the judgment in Hong v Auckland Standards Committee No 3,42 which was also not discussed by Associate Judge Andrew. Hong was an application for judicial review of a Standards Committee’s finding of unsatisfactory conduct on the part of a legal practitioner. Woolford J referred to the standard for strike-out as being “very high” and held that, in that case, criticisms of the Law Society’s arguments and the decision of the Standards Committee were matters that ought to go to trial. Woolford J applied the same principles to his decision in that case as the Associate Judge applied in the present one. The differences between
38 Mailley v Shaw, above n 4, at [55], citing Attorney-General v Prince and Gardner, above n 25.
39 At [55], citing Couch v Attorney-General, above n 26.
40 Berryman v Attorney-General HC Wellington CIV-2006-485-751, 31 July 2009 at [14].
41 Siemer v Judicial Conduct Commissioner [2013] NZHC 1853; McGuire v Secretary for Justice
[2017] NZHC 365; Re Ngāti Pāhauwera [2020] NZHC 1139; Re Dargaville [2020] NZHC 2028.
42 Hong v Auckland Standards Committee No 3 [2015] NZHC 667.
the two cases arise from their facts; there is nothing in the judgment in Hong to indicate that Associate Judge Andrew was not justified in finding, for the reasons he set out at considerable length, that Mr Mailley’s and Ms Nutarelli’s claims could not succeed. Those reasons include not only fundamental difficulties with the claims in negligence and contract, including the major obstacle of limitation, but also insurmountable obstacles to the claims against the NZLS.
Allegation that defendants responsible for delay
[67] The plaintiffs assert that, although delay on the part of the plaintiffs may result in a strike-out, the defendants and not the plaintiffs were responsible for the delay in bringing the proceeding to a point where the causes of action alleged in the third ASOC could be considered. But Associate Judge Andrew made no reference to delay on the part of the plaintiffs as being a ground for striking out their claims. The plaintiffs’ submissions address a matter not in issue.
Error in holding plaintiffs’ claims not established
[68] The plaintiffs’ submissions re-assert facts alleged in support of the statement of claim as grounds for an argument that the Associate Judge erred in holding that the proper foundation for the plaintiffs’ claims had not been established.43 Their arguments include reference to Associate Judge Andrew having accepted that a charge- out rate of $800 per hour at the relevant times (in the early 2000s) was substantial.44 They also submit that, given Associate Judge Andrew’s acknowledgement that Mr Shaw’s conduct had been arguably intemperate and inappropriate when he appeared before Judge Hubble on the extradition matter,45 it is inexplicable that the Associate Judge then struck out their claims against Mr Shaw.
[69] The sympathetic references by the Associate Judge to the high charge-out rate and arguably inappropriate conduct by Mr Shaw when appearing before Judge Hubble do not give rise to any illogicality or inconsistency in the Judge’s decision to strike out the claims. They were observations made in passing. The decision was founded on
43 Mailley v Shaw, above n 4, at [69].
44 At [66].
45 At [94].
clearly articulated principles and a close analysis of the pertinent facts. The Judge commented that, although allowing the plaintiffs to pursue the claims to trial might result in some criticism of Mr Shaw, that was not a proper basis for allowing the case to proceed further.46
[70] It is a sufficient answer to the plaintiffs’ arguments against the decision that they had not established their claims in contract and tort to record the comprehensive findings of the Associate Judge. I agree with them.
[71] As to the alleged breaches of fiduciary duty, Associate Judge Andrew identified that Mr Mailley’s allegation is that Mr Shaw breached his fiduciary duties by failing to inform Mr Mailley and his instructing solicitors of the alleged $150,000 fee cap arrangement said to have been reached with Ms Nutarelli. Assuming the allegations to be true, the Associate Judge said it was difficult to see how Mr Mailley could be entitled to any damages for the alleged breach, given that he had never paid the billed sums that exceeded the alleged fee cap. He noted that lawyers engaged after Mr Shaw, whose retainer was for a limited 12-month period, were not bound by any such fee agreement. The Associate Judge also recorded that Mr Mailley alleges Mr Shaw breached a fiduciary duty because:
(a)he failed to act to the standard of competence and professionalism expected of a senior barrister;
(b)Mr Shaw represented to the Court that he was concerned about Mr Mailley’s physical and mental state of health;
(c)Mr Shaw overcharged for his work and charged for work he did not do (notwithstanding that Mr Mailley only paid two out of the five invoices rendered).
[72] Associate Judge Andrew held, correctly in my view, that these were not allegations of breach of fiduciary duty. As Elias CJ said in Chirnside v Fay, not every
46 Mailley v Shaw, above n 4, at [112].
breach of duty by a fiduciary is a breach of a fiduciary duty. The distinguishing obligation of a fiduciary is the obligation of loyalty.47
[73] The Associate Judge also held that invoices rendered but not paid could not give rise to a credible allegation of breach of duty.48 As to Mr Shaw’s withdrawing from representation in the hearing before Judge Hubble, apparently on the basis that his fees had not been paid, Associate Judge Andrew said Mr Mailley had “significant success in the exercise of his appeal rights”.49 The Judge found it difficult to accept that Mr Mailley was prejudiced in any material way by the allegedly improper conduct. Associate Judge Andrew further noted that a potentially serious allegation that Mr Shaw “took it upon himself to isolate Mr Mailley in a central Auckland hotel room for two nights near the offices of [his instructing solicitors] to facilitate payment of his second invoice” was unsupported by particulars explaining how Mr Shaw detained him and how improper pressure to facilitate payment of the invoice was exerted.50
[74] Regarding the claims based on alleged breaches of contract, Associate Judge Andrew identified that Mr Mailley’s principal complaints amounted to allegations of fraud; namely, that the billing initially done for work in August 2008, through another barrister, was work done for others and that a fee cap of $150,000 that had been agreed was not adhered to by Mr Shaw. The Associate Judge held that a fundamental problem for Mr Mailley in relation to the alleged breach of the fee cap is that the primary evidence (the written document signed by Mr Mailley being the retainer between Marshall Bird & Curtis and Mr Mailley) records the words “FEE AGREED” being replaced with “Retainer provided”. I address that issue more fully below at [93]-[109].
[75] The Associate Judge noted that the allegation had been dealt with by two Standards Committee determinations in the context of the disciplinary proceedings under the Lawyers and Conveyancers Act 2006 (LCA). Even if there had been an agreed fee cap, there was no probative evidence that it was breached in any way. Having been put on notice by Mr Shaw that he disputed the allegation he had paid
47 Chirnside v Fay [2006] NZSC 68, [2007] 1 NZLR 433 at [15].
48 Mailley v Shaw, above n 4, at [76].
49 At [77].
50 At [78].
three of the five invoices, there is no pleaded claim that the three invoices had been paid, any claim for recovery of excessive fees that were paid, and the plaintiffs have provided no documentary evidence of any payments. The Associate Judge observed that the circumstances in which the invoices were rendered made it implausible that the fees were paid, since non-payment would be consistent with the allegation of breach of an agreed fee cap.51 Moreover, three lawyers (Mr Shaw, Mr Ellis and Ms Curtis) provided evidence to the Standards Committee that they were unaware of the existence of any fee-capping arrangement. Bearing in mind that there is no evidence that Mr Mailley had suffered any loss arising from alleged breaches of the alleged fee-capping arrangement, I agree with Associate Judge Andrew that there cannot be any basis for the awarding of even nominal general damages for the mere receipt of an invoice, let alone the sums of $150,000 general damages, $250,000 punitive damages and $50,000 damages for emotional harm claimed in the third ASOC.
[76] The Associate Judge identified the plaintiffs’ allegations of deceit as being that Mr Shaw:52
(a)did not inform Mr Mailley of the existence of the fee agreement;
(b)informed Mr Mailley that all the extradition work could be done within the fee of $150,000;
(c)did not inform Mr Mailley’s instructing solicitors, Marshall Bird & Curtis, of the $150,000 fee cap agreement;
(d)did not keep Mr Mailley apprised of the “spiralling costs” and not informing him at the earliest opportunity that the final costs of the extradition would exceed $150,000;
51 Mailley v Shaw, above n 4, at [82].
52 At [86].
(e)engaged in deceitful conduct against Mr Mailley – “a vulnerable, ill man who had attempted suicide” – and the allegation of billing for the Nelson visit ($6,000) is repeated;
(f)isolated Mr Mailley physically and socially with numerous lies such as that his partner, Ms Nutarelli, was having an affair;
(g)was deceitful in his representations before Judge Hubble at the extradition hearing on 31 August 2009; and
(h)was a party to deceit with Mr Hart in respect of the first invoice for
$28,125.
[77] Associate Judge Andrew held that general allegations, however strong the words may appear to be, are insufficient to amount to a proper allegation of fraud.53 A claim of fraud must not only be fully and precisely pleaded and particularised, but must also be of sufficient cogency that it should go to trial.54 Although the Associate Judge accepted that some attempt had been made by Mr Mailley to provide particulars of the deceit or fraud alleged, the principles requiring the particularity in pleading must be observed by any plaintiff, even one who is self-represented.55
[78] The Associate Judge held that there was clearly insufficient cogency to Mr Mailley’s allegations and that some of the critical allegations lacked adequate particulars. Although the plaintiffs had relied on correspondence from Mr Ellis, Mr Ellis had given evidence before the Standards Committee in a hearing in September 2013 that he never had any suspicion or belief that Mr Shaw had engaged in fraud in relation to his dealings with Mr Mailley. The Standards Committee had concluded in two determinations that Mr Shaw had not breached any professional obligations nor acted improperly in relation to Mr Mailley. Associate Judge Andrew held that the Standards Committee had been dealing in substance with the same
53 Mailley v Shaw, above n 4, at [87], citing Schmidt v Pepper New Zealand (Custodians) Ltd [2012] NZCA 565 at [15].
54 Commissioner of Inland Revenue v Redcliffe Forestry Venture Ltd [2012] NZSC 94, [2013] 1 NZLR 804 at [33].
55 Mailley v Shaw, above n 4, at [89]. See also Schmidt v Pepper New Zealand (Custodians) Ltd, above n 53, at [16].
matters that Mr Mailley complained about in this proceeding and that the determinations of the Standards Committee were relevant background to the assessment of whether the claims had been properly and precisely pleaded and were supported by sufficiently cogent evidence.56 While the Associate Judge acknowledged that it was arguable that Mr Shaw’s submissions to Judge Hubble at the time he withdrew from the proceeding were both intemperate and inappropriate, they were insufficient to found an allegation of deceit or dishonesty and that the precise and fully particularised pleading to which Mr Shaw was entitled had not been provided by the plaintiffs.57
[79] Regarding the claims in negligence, the Associate Judge referred to the essential principle that proof of damage was a key element in a claim of negligence and that “damage” could be either physical or economic harm, or some identifiable psychiatric disorder or illness that is a result of a sudden and shocking event.58 The Judge held that there was no basis for the claims for general and exemplary damages because there was no valid primary claim for compensatory damages founded on the elements of negligence, including damage.
Error in application of Limitation Act 1950
[80] The plaintiffs assert that Associate Judge Andrew erred in his findings on the application of the Limitation Act 1950 because he did not accept the evidence of fraud, mistake and disability, in respect of which the plaintiffs seek to adduce new evidence relating to Mr Mailley’s mental health issues and evidence of deceit on the part of Mr Shaw. The plaintiffs say that the Court of Appeal held in Commerce Commission v Carter Holt Harvey Ltd that to strike out a claim on limitation grounds requires the absence of any reasonable possibility that the application or proceeding has been brought within time so that the limitation point is a defence to be assessed on the basis of all of the evidence led at trial.59 But in that case the Commission’s claim was struck out on limitation grounds because the evidence established to the clear satisfaction of the Court that the case had been brought out of time. In this case, also, there is no
56 Mailley v Shaw, above n 4, at [94].
57 At [94].
58 At [97].
59 Commerce Commission v Carter Holt Harvey Ltd [2009] NZCA 40, [2009] 3 NZLR 573 at [26].
doubt about when the events upon which the plaintiffs’ pleaded causes of action rely occurred, so no further factual inquiry at trial is necessary for the Court to determine when the causes of action accrued and rule on the limitation point. The plaintiffs also argue that the Associate Judge’s decision regarding the application of the Limitation Act was inconsistent with his judgment in Brinsdon v Beazley.60 That decision concerned, in part, a limitation argument in a case concerning insurance issues arising from the Canterbury earthquakes. It has no bearing on the limitation arguments relevant to the present case.
[81] Associate Judge Andrew expressly addressed the considerable difficulties faced by the plaintiffs regarding the pleaded defences to the breach of contract and negligence claims against Mr Shaw founded on s 4(1)(a) of the Limitation Act 1950.61 That section applies to the proceeding notwithstanding the replacement of the 1950 Act by the Limitation Act 2010.62 The Associate Judge noted that the plaintiffs’ original statement of claim, dated 2 June 2015, contains claims for alleged breach of contract and negligence arising from events in 2008 and early 2009.63 The alleged breaches having occurred more than six years prior to the filing date of the proceeding, the plaintiffs must confront the limitation that no action founded on tort and contract may be brought after the expiration of six years from the date on which the cause of action accrued. Associate Judge Andrew held that this limitation affected the allegation about the breach of the alleged fee cap, the allegation of billing for work done while engaged by someone else and the allegations about the conduct of Mr Mailley’s habeas corpus application that was heard and determined on 17 December 2008.64 The Associate Judge found that the only allegation relating to the negligence cause of action that fell within the six-year limitation period was that relating to Mr Shaw’s appearance before Judge Hubble on 31 August 2009.65
[82] In Murray v Morel & Co Ltd,66 it was held that a claim can be struck out on limitation grounds where the cause of action is so clearly statute-barred that it ought
60 Brinsdon v Beazley [2019] NZHC 808 at [21].
61 Mailley v Shaw, above n 4, at [99].
62 Limitation Act 2010, s 59; Taylor v Roper [2020] NZCA 268 at [69].
63 Mailley v Shaw, above n 4, at [100].
64 At [100].
65 At [101].
66 Murray v Morel & Co Ltd [2007] NZSC 27, [2007] 3 NZLR 721.
properly to be regarded as frivolous, vexatious or an abuse of process. The Supreme Court said that to avoid strike-out, a plaintiff must produce something by way of pleadings, particulars or evidence, in order to give an “air of reality” to the claim that they are entitled to an extension of time.67 The Associate Judge noted that Mr Mailley sought to rely on s 24 of the Limitation Act which provides that if a claimant lacks the capacity to bring proceedings because they are under a disability at the date of accrual, the cause of action is deemed not to have accrued at that date and that it will only accrue and time start to run once the incapacity ceases.
[83] Associate Judge Andrew then referred to the Court of Appeal’s explanation for the postponement of the start of the limitation period set out in Taylor v Roper:68
(a)The incapacity must exist at the time the cause of action would otherwise have accrued.
(b)Even if the incapacity does exist at what would otherwise have been the date of accrual but is thereafter intermittent, from the first occasion on which the disability ceases or ceases to have an incapacitating effect, the cause of action accrues and time runs as normal. In other words, the incapacity must persist and be continuous. Any cessation, no matter how brief, will cause time to start running.
(c)The claimant must prove that the alleged unsoundness of mind resulted from a demonstrable and recognised mental illness and that, as a result of that illness, they did not have the capacity to bring proceedings.
(d)The claimant is not required to show general unsoundness of mind. That is, they are not required to show they are unable to manage their affairs generally.
(e)On the other hand, the inability to face up to issuing proceedings is not enough to trigger s 24.
67 Murray v Morel & Co Ltd, above n 66, at [33]–[34].
68 Mailley v Shaw, above n 4, at [104], citing: Taylor v Roper, above n 62, at [95] and [97].
[84]Applying those principles, Associate Judge Andrew found – as was inevitable
– that there was “very little probative evidence to discharge the burden” Mr Mailley carried and that there was no “air of reality” to his claim that he was under any requisite disability capable of extending the limitation period.69 The Associate Judge accepted that there had been evidence of Mr Mailley’s psychiatric history of bi-polar affective disorder, including around the time of the events in the original statement of claim, but found that there was no evidence to suggest that this ever affected his capacity to bring proceedings. On the contrary, Associate Judge Andrew noted that the multiple complaints made by Mr Mailley to NZLS between 2010 and 2013 suggested he did have capacity. He also observed that Mr Mailley was represented by senior counsel in 2009, 2010 and 2014, as well as in relation to the extradition proceedings. The Associate Judge considered that the real reason for the delay in filing the proceedings might have been the delays by the LCRO in determining the review of the Standards Committee’s decisions under the NZLS disciplinary process, which was acknowledged as regrettable, but that does not provide a basis for extending the limitation period. Associate Judge Andrew also noted that Mr Mailley’s mental health issues had been specifically addressed by Judge Sinclair in a judgment given in June 2014,70 in which the District Court Judge had concluded that Mr Mailley’s mental health issues were not so severe or grave that he was incapable of functioning or bereft of choice.71
[85] Associate Judge Andrew concluded that, in the main, Mr Mailley’s breach of contract and negligence causes of action were statute-barred and that all that remained was the conduct of Mr Shaw on 31 August 2009 for which the plaintiffs have pleaded no actual loss.72 In the Associate Judge’s view, while he was sympathetic to the difficulties Mr Mailley’s mental ill-health may have caused him, the limitation defence provided a “formidable and insurmountable challenge for the plaintiffs”.73
69 Mailley v Shaw, above n 4, at [105].
70 Commonwealth of Australia v Mailley DC North Shore CRI-2008-044-1978, 20 June 2014. (Mr Mailley was represented by senior counsel in those proceedings).
71 Mailley v Shaw, above n 4, at [106].
72 At [107].
73 At [108].
[86] Associate Judge Andrew observed that the outcome on the limitation issue reflected the policy of reg 29 of the Complaints Service regulations, which provides that a Standards Committee must not deal with a complaint relating to a bill of costs rendered more than two years prior to the date of the complaint, unless there are special circumstances that would justify otherwise. The Associate Judge commented that, although reg 29 does not provide a legal bar to the bringing of the proceedings in this Court, it provides in policy terms a clear recognition that there are real difficulties for judicial bodies investigating bills of costs a long time after the work was performed and the fee invoice rendered.74
The conclusions on Mr Shaw’s application to strike out Mr Mailley’s claims
[87] Associate Judge Andrew set out his conclusions on the application by Mr Shaw to strike out Mr Mailley’s claims in these terms:
[110] In considering the overall effect of the multiple defects I have identified, I find that the proceedings against Mr Shaw are incapable of success. The defects are not capable of being amended to disclose tenable causes of action. In any event, the plaintiffs have, in reality, had numerous opportunities to amend them.
[111] Some critical aspects of the proceedings can properly be characterised as frivolous or vexatious (for example, suing in relation to unpaid invoices when it is not pleaded that they were paid and where there is no evidence of payment), whereas others are an abuse of process (for example, making deceit/fraud allegations in the absence of sufficiently cogent evidence).
[88] Although it was acknowledged that the plaintiffs might achieve some criticism of Mr Shaw if their claims went to trial, there was no reasonable prospect of any finding of liability. The Associate Judge noted that none of Mr Mailley’s similar allegations to the four Standards Committee hearings, the determinations of which comprehensively addressed the complaints, was upheld. The Associate Judge said, pertinently:75
… The constant re-litigating of the same issues needs to be brought to an end, especially when the events at issue now occurred more than 10 years ago.
74 Mailley v Shaw, above n 4, at [109].
75 At [113].
[89] Associate Judge Andrew recognised that Clark J’s order made on Mr Shaw’s application stayed any consideration of the disciplinary complaints by the LCRO pending final disposition of the proceeding.76 He also noted that the principal reason for the stay was that Mr Mailley appeared to have walked away from the proceeding without taking steps towards its resolution. The Associate Judge, nevertheless, considered that the Court was entitled to look very critically at whether a sufficiently adequate evidential basis for the serious allegations made in the pleadings had been established, given that Standards Committees have, on multiple occasions, investigated and rejected the same allegations of deceit and dishonesty. The Judge concluded that Mr Mailley had not met that requirement.77
The conclusions on Mr Shaw’s application to strike out Ms Nutarelli’s claims
[90] Turning to Ms Nutarelli’s claims against Mr Shaw, Associate Judge Andrew accepted that Ms Nutarelli had paid two deposits of $75,000 into Mr Shaw’s instructing solicitors’ trust account in December 2008 and that Mr Shaw’s second invoice of $104,452.75 was paid from those funds. Ms Nutarelli claims to have been a party to the alleged fee cap agreement and her claim in contract is pleaded as an alternative to Mr Mailley’s breach of contract claim. It was noted that Ms Nutarelli alleges deceit, negligence and breach of contract by Mr Shaw in failing to complete the habeas corpus and extradition work within the $150,000 cap and, although Ms Nutarelli did not allege any breach of fiduciary duty towards her, her claims were essentially the same as Mr Mailley’s. That led the Associate Judge to conclude that, for the reasons given in respect of Mr Mailley’s claims, Ms Nutarelli’s allegations against Mr Shaw were equally incapable of success and should be struck out, at least in part because most of the claims were barred by the Limitation Act.78 Moreover, Associate Judge Andrew pointed out that Ms Nutarelli made no claim to have suffered any loss and that her claims for general damages, punitive damages and damages for emotional harm could not survive in the absence of a proper foundation.79
76 Mailley v Shaw, above n 4, at [114]. See Mailley v Legal Complaints Review Officer, above n 22.
77 At [115].
78 At [120].
79 At [122].
Allegation of misunderstanding of formulation of damages
[91] The plaintiffs allege that Associate Judge Andrew failed to understand the way in which the damages claims were formulated, referring to the fact that the claim for
$150,000 was based on their assertion that had Mr Shaw completed all of the habeas corpus and extradition work within the agreed capped fee of $150,000, they would not have incurred an additional $150,000 paid to subsequent lawyers to complete the work they had contracted Mr Shaw to carry out. They say the claims for punitive damages of $250,000 and damages for emotional harm of $50,000 flowed from those provable economic losses.
[92] It is sufficient to say that the Associate Judge was justified in concluding, on the material before the Court, that no arguable loss was identified in the plaintiffs’ pleading.80
Allegation of misunderstanding of fee capping agreement
[93]Under a series of separate headings, the plaintiffs assert that:
(a)Associate Judge Andrew suppressed, failed to refer to or failed to fully consider affidavit evidence related to the alleged fee cap and Mr Shaw’s overcharging;
(b)Mr Shaw was guilty of fraud and perjury regarding the charging issues that had been addressed by the Standards Committees;
(c)they have available new evidence, in the form of affidavits they sought to tender at the hearing of this review, shedding new light on their complaints about Mr Shaw’s fees and billing practices;
(d)evidence, including new evidence, is available to prove that Mr Shaw committed perjury when making statements in pleadings and affidavits denying knowledge of Mr Mailley’s mental health issues at relevant times; and
80 Mailley v Shaw, above n 4, at [69].
(e)new evidence is available concerning Associate Judge Andrew’s finding that an amendment to the client contract form by which the words “FEE AGREED” were deleted and substituted by the words “Retainer provided” indicated forgery.
[94] These arguments are related to the plaintiffs’ assertion that the Associate Judge had misunderstood the nature of the $150,000 fee capping agreement, arguing that the replacement of the words “FEE AGREED” with “Retainer provided $150,000” correctly reflected the agreement of Mr Shaw that the plaintiffs would receive a refund of any part of the retainer that was unspent. I turn to consider these propositions.
[95] At the beginning of the hearing of the review application, Mr Mailley and Ms Nutarelli sought to produce and rely upon four affidavits which they said comprised new evidence relating to the matters at issue. The first was an affidavit of Mr Mailley, described as his fourth in the proceeding, comprising 99 closely typed pages and 131 pages of attachments. The matters covered in the affidavit include details of Mr Mailley’s arrest on 1 July 2008 and his instruction of Mr Barry Hart as counsel, including the fee arrangements. The document also traverses details of the various hearings related to the extradition proceedings, the application for a writ of habeas corpus and details of the billing by lawyers for their fees in these proceedings and the payments made. Also covered are assessments of Mr Mailley’s mental health made from time to time by medical practitioners. The exhibits include correspondence, medical reports and submissions made to, and the decisions of, various courts and tribunals.
[96] An affidavit sworn by Ms Nutarelli, comprising 82 closely typed pages, covers similar ground and the exhibits also include billing records, time sheets and invoices.
[97] There is an affidavit from Mr Martin Lyttelton comprising 53 closely typed pages. Mr Lyttelton says that he has assisted Mr Mailley in providing “commercial help and support since September 2021” and in conjunction with extradition proceedings in the District Court, High Court, Court of Appeal and Supreme Court (leave application). The affidavit contains details of the complaints made to the NZLS including to the LCRO and Standards Committees regarding Mr Shaw’s conduct.
[98] The three affidavits cover the same ground as that traversed by the Standards Committee in the disciplinary proceeding and the numerous affidavits and other documents previously filed in this Court, including those that were before Associate Judge Andrew and which were addressed in the strike-out decision. It may be that the affidavits go into some of the issues in more detail than was previously the case, but I have been unable to detect any material of a kind not previously considered. Importantly, none of the matters traversed in those three affidavits provides any new basis for challenging the Associate Judge’s decision to strike out the proceeding.
[99] A fourth affidavit, sworn by Mr Minchin, addresses in more detail than previously Mr Minchin’s involvement as counsel assisting Mr Shaw in late 2008 in connection with legal services provided to Mr Mailley, and the circumstances in which Mr Mailley and Ms Curtis signed the client appointment contract. In the affidavit, Mr Minchin says that he had viewed the facsimile transmission coversheet and attached client appointment contract but has no recollection of sending them to Ms Curtis. He acknowledges that the document is on his fax letterhead and assumes that he had been asked to complete the document and send it to Ms Curtis. Mr Minchin says that the name, address and phone number for Mr Mailley and the nature of the instructions on the first page of the contract are in his handwriting. He says also that the handwriting on the second page in the fees schedule is his and that he crossed out the words “FEE AGREED” and wrote in “Retainer provided $150,000”. Mr Minchin says he would not have altered the document without being asked to by either Ms Curtis or Mr Shaw and he has no recollection of speaking to Ms Curtis around that time.
[100] Mr Minchin expresses a view about the difference between what was set out in Mr Davison’s email and the notation on the client appointment contract “Retainer provided $150,000” but says that he has no recollection of presenting the contract to Mr Mailley or explaining the nature of the contract or the alteration to him. He then speculates about what might have happened over the signing of the contract and that he had Mr Mailley sign the contract when he was attending on him at the High Court in support of a bail application on 12 December 2008. As to that, however, the document is dated 15 December 2008 and it is more likely, in my view, that Mr Mailley
signed the contract when, as Mr Minchin’s time records show, Mr Minchin visited Mr Mailley in prison that day. Nothing turns on that.
[101] Under the High Court Rules that apply in this case, a judge reviewing an associate judge’s decision following a defended hearing is permitted to receive further evidence. Rule 2.3(4) reads, so far as is relevant:
2.3 Review of decision
…
(4)If the order or decision being reviewed was made following a defended hearing and is supported by documented reasons,—
(a)the review proceeds as a rehearing; and
(b)the Judge may, if he or she thinks it is in the interests of justice, rehear the whole or part of the evidence or receive further evidence.
[102] The essential ground for the admission of new evidence on a review is that the interests of justice require it. In the context of the admission of evidence in the hearing of a criminal appeal, the Privy Council in Lundy v R set out the test as requiring, first, a consideration of whether the evidence was credible; and second, whether it was fresh in the sense that it is evidence which could not have been obtained at trial with reasonable diligence.81 The Court said that if the evidence was both credible and fresh it should generally be admitted unless the Court was satisfied at the appellate stage that, if admitted, it would have no effect on the safety of the conviction.82
[103] Considering those propositions in a different context, the Supreme Court said in Ellis v R:83
… there is no reason why the three central ideas of the Lundy test should not still apply, that is, that the evidence must be fresh, credible and cogent in relation to an issue in the appeal.
81 Lundy v R [2013] UKPC 28, (2013) 26 CRNZ 699.
82 At [119]–[120].
83 Ellis v R [2021] NZSC 77 at [30].
[104] The same test should apply in a review of a decision that proceeds by way of a rehearing, although I accept that the threshold under r 2.3(4) may be regarded as being lower than the threshold with appeals.84
[105] At the hearing, I declined leave to the plaintiffs to produce and rely on the new affidavits, not being satisfied that the interests of justice required it. I said I would give my reasons as part of this substantive judgment.
[106] The affidavits of Mr Mailley, Ms Nutarelli and Mr Lyttelton are not fresh or cogent; they cover much of the ground, although arguably in greater detail, covered in the material before Associate Judge Andrew and would not have altered the strike-out decision.
[107] Mr Minchin’s evidence was arguably new, but only in the sense that it provided more detail about the circumstances in which Mr Mailley signed the client contract than had previously been provided to the Court. But it is certainly evidence that could have been made available for the hearing before Associate Judge Andrew, Mr Minchin having sworn an affidavit dated 16 January 2019 dealing with his engagement in relevant matters that was part of the bundle of material before the Associate Judge. In any event, Mr Minchin’s evidence is not cogent in the sense that it is not capable of making any difference to the outcome of a review of the strike-out decision. The point made by Associate Judge Andrew at [81] of his judgment was that the primary evidence that had been signed by Mr Mailley, being the fee schedule in the client appointment contract, referred to a retainer provided rather than an agreed fee. Whoever made the alteration, Mr Mailley accepted it when he signed the document. But in any event, the point is of no real moment, even though Mr Minchin said in his 2019 affidavit that Mr Mailley himself had referred to a retainer. The point is whether or not there was an agreed fee cap of $150,000 and, more fundamentally, whether the cap had been breached by Mr Shaw. As Associate Judge Andrew was at pains to point out,85 Mr Mailley failed to prove that he had paid invoices totalling more than
$150,000 and there was no proof of an excess he was entitled to recover.
84 See, in contrast, r 20.16 where special reasons are required before a court may grant leave to adduce evidence on appeal. And see the comments of Duffy J in McCullagh v Robt. Jones Holdings Ltd [2016] NZHC 263 at [40].
85 Mailley v Shaw, above n 4, at [72].
[108] I was not persuaded, therefore, that Mr Minchin’s second affidavit dated 13 April 2021 would assist me upon a review of the strike-out decision. As well, it is now far too late for the plaintiffs to attempt to adduce still further evidence dealing with Mr Mailley’s mental health issues and his ability to comprehend so as to make damages claims in respect of Mr Shaw’s overcharging.
[109] The plaintiffs’ assertions that the Associate Judge misunderstood the particularisation of their damages claims and the clarification of their losses does not address the more fundamental issue that the causes of action cannot be made out. So far as the claim for $150,000 in general damages is concerned, it is not founded upon any proposition of loss flowing from any provable breach by Mr Shaw in contract, tort or otherwise and has never been particularised. The claims for other damages would only be relevant if the causes of action were arguable and the Associate Judge held, rightly in my view, that they are not.
The plaintiffs’ claims against the NZLS
[110] The strike-out decision addresses the three causes of action brought by Mr Mailley and Ms Nutarelli against the NZLS in negligence, breach of statutory duty and “public misfeasance” at [123]–[145]. It is said that the duties arise from the conduct of public and quasi-judicial regulatory functions by Standards Committees established by the NZLS under the provisions of the LCA.
[111] The plaintiffs submit the Associate Judge failed to address alleged breaches of statutory duty founded on the New Zealand Bill of Rights Act 1990 (NZBORA). This is a particularly pertinent omission, they say, given their assertion that the six-year limitation on proceedings under NZBORA introduced by the Limitation Act 2010 did not apply to the proceeding.
[112] It is true that Associate Judge Andrew did not refer specifically in his judgment to the pleading at paragraph 117 of the third ASOC that the statutory duty of NZLS “to conduct all its complaint processes in good faith in a fair, impartial manner” rested not only on the LCA but also on NZBORA. Although they did not plead the provision of NZBORA on which they rely, it is apparent that the plaintiffs were relying on s 27(1), which provides that:
Every person has the right to the observance of the principles of natural justice by any tribunal or other public authority which has the power to make a determination in respect of that person’s rights, obligations, or interests protected or recognised by law.
[113] Section 27(2) affirms the right of any person claiming a breach under s 27(1) to apply for judicial review but damages are generally not awarded for breaches of s 27. As the NZLS submits, NZBORA damages:86
… should be confined to circumstances where there is no other effective remedy; where human dignity or personal integrity or (possibly) the integrity of property are engaged; and where the breach is of such constitutional significance and seriousness that it would shock the public conscience and justify damages being paid out of the public purse.
[114] Noting that the plaintiffs were endeavouring to create a private right to bring causes of action out of challenged decisions and processes that involve the exercise of quasi-judicial powers, Associate Judge Andrew referred to the judgment of this Court in Parker v Legal Services Commissioner.87 It was held in that case that challenges to the processes adopted in the determination of complainants against decisions of the Law Society’s disciplinary bodies must be brought by the express right of review to the LCRO and via judicial review proceedings, not tort. I agree with Associate Judge Andrew that Parker provides another bar to the plaintiffs’ claims against the NZLS.
[115] Moreover, as Mr Mullins submitted, the plaintiffs’ claim is pleaded as a private law cause of action; namely, the tort of breach of statutory duty. It must fail because it falls outside the six-year limitation period under the Limitation Act 1950 discussed above.88
[116] In any event, it was unnecessary for Associate Judge Andrew to refer explicitly to the alternative basis upon which the plaintiffs relied in alleging breach of statutory duty by NZLS. In agreement with Associate Judge Andrew, I accept the submission of counsel for NZLS that the claims are in reality based on the plaintiffs’ disagreement with the regulatory decisions and acts of the Standards Committee, meaning that the plaintiffs’ claims in negligence and for breach of statutory duty are clearly within the
86 McKean v Attorney-General [2009] NZCA 553 at [21].
87 Parker v Legal Services Commissioner [2015] NZHC 524, [2015] NZAR 637 at [119].
88 At [80]–[86].
scope of the statutory immunity from civil liability conferred on NZLS by s 272 of the LCA.89 That section provides:
272 Protection of New Zealand Law Society and New Zealand Society of Conveyancers and other persons
Neither the New Zealand Law Society nor the New Zealand Society of Conveyancers, nor any member, officer, or employee of either of those bodies, is to be under any criminal or civil liability in respect of anything done or omitted to be done, or in respect of words spoken or written, –
(a)at, or for the purposes of, any inquiry or the hearing of, or otherwise dealing with, any proceedings under this Part; or
(b)in connection with any investigation of a practitioner’s conduct or affairs or accounts for the purposes of this Part; or
(c)in the publication of any report or statement relating to any proceedings before a Standards Committee or the Legal Complaints Review Officer or the Disciplinary Tribunal under this Part, in the exercise or purported exercise of any power conferred by this Act or any rules made under this Act to publish any such report or statement, –
unless it is proved to the satisfaction of the court before which any proceedings are taken that the defendant in those proceedings acted in bad faith.
The plaintiffs’ pleading of bad faith
[117] No doubt mindful of the bad faith exemption in s 272, the plaintiffs have alleged that the dismissal of the complaints against Mr Shaw were acts of bad faith by the Standards Committees because the determinations were perfunctory and simply and improperly an acceptance of Mr Shaw’s versions of events. The Associate Judge summarised these as allegations of corruption by the NZLS in the sense that, because Mr Shaw was said by the plaintiffs to be “an established high-profile barrister” and part of the “legal establishment”, the Committees had failed to hold him to account for conduct that was clearly improper.90
[118] As the Associate Judge held, the allegations of bad faith were unsupported by evidence showing a sustainable basis for a conclusion that the Standards Committees acted in bad faith and fell well short of the standard of sufficient cogency to justify
89 Mailley v Shaw, above n 4, at [124]–[125].
90 At [129].
putting the matter to trial.91 Associate Judge Andrew noted that, notwithstanding repeated requests to put their pleadings in order by providing appropriate particulars about bad faith, and despite counsel for NZLS having “helpfully and responsibly” brought the relevant principles to the plaintiffs’ attention, they had failed to meet the required standard. The Associate Judge held it was not appropriate to consider the plaintiffs should be granted any further opportunity to replead their case; they had failed to take such opportunities as had been given to them in the past.92
[119] In response to those observations, the plaintiffs filed in support of the application for review a lengthy document containing further submissions about the allegations of bad faith on the part of the NZLS. As Mr Mullins argued, however, it is not satisfactory for the plaintiffs to attempt to rectify their pleadings through submission. In any event, the submissions do not overcome the deficiencies in the plaintiffs’ pleadings because they do no articulate any properly formed and particularised allegations of bad faith. The plaintiffs’ approach has been to identify various statements or steps taken by the NZLS, the Standards Committee or named individuals and to assert repeatedly that those steps amounted to “bad faith misconduct”. It is not a proper pleading of bad faith to simply assert it. As the Court of Appeal has said:93
Allegations of fraud or dishonesty are very serious. They must be pleaded with care and particularity. As the authors of Bullen & Leake & Jacobs Precedents of Pleadings emphasise, counsel must not draft any originating process or pleading containing an allegation of fraud unless they have reasonably credible material which, as it stands, establishes a prima facie case of fraud – that is, material of such a character which would lead to the conclusion that serious allegations could properly be based upon it. Fraud cannot be left to be inferred from the facts – fraudulent conduct must be distinctly alleged and as distinctly proved. General allegations, however strong the words may appear to be, are insufficient to amount to a proper allegation of fraud.
[120] Referring to that statement, the Court of Appeal in Stockman v Health and Disability Commissioner emphasised that it was clear that those “obligations fall equally upon unrepresented litigants as upon counsel”.94 Although a strike out
91 Mailley v Shaw, above n 4, at [139].
92 At [142].
93 Schmidt v Pepper New Zealand (Custodians) Limited, above n 53, at [15] (footnotes omitted).
94 Stockman v Health and Disability Commissioner [2020] NZCA 588 at [80].
application proceeds on the basis that the pleaded facts are true, inferences are not pleaded facts; whether an inference can properly be drawn from any particular facts is a question of law.95 The plaintiffs’ real complaint is simply that the Standards Committee did not make the findings that they sought or that there were somehow deficiencies in the Standards Committee’s processes. They are concerns that are properly addressed through appeals processes and judicial review, not in a contrived private law claim founded on bare assertions of a breach of statutory duty.
Alleged error in interpretation of misfeasance in public office
[121] The plaintiffs assert the Associate Judge erred in his interpretation and application of the “developing area of law” concerning allegations of misfeasance in public office. As they did in their submission that the wrong legal principles were applied by the Associate Judge, the plaintiffs refer to Hong v Auckland Standards Committee No 3 in which Woolford J declined to strike out such an allegation notwithstanding the prospect that the high standard for proving misfeasance in public office might ultimately not be reached.96
[122] In the strike-out decision, Associate Judge Andrew identified the elements to be established for a claim of misfeasance in public office and explained why the claim should not succeed.97 He applied the principles explained by the Court of Appeal in Currie v Clayton,98 and held the following elements had not been pleaded or established:
(a)standing;
(b)identification of the defendant as a public officer;
(c)unlawful conduct;
(d)an intention to act maliciously, knowingly or recklessly with a view to harming the plaintiffs; and
95 Stockman v Health and Disability Commissioner, above n 94, at [81].
96 Hong v Auckland Standards Committee No 3, above n 42.
97 Mailley v Shaw, above n 4, at [135] and [136].
98 Currie v Clayton [2014] NZCA 511, [2015] 2 NZLR 195 at [40].
(e)resulting loss.
[123] Moreover, as discussed above, the allegations of bad faith were wholly unsupported by evidence showing a sustainable basis for a conclusion that the Standards Committees acted in bad faith; they fell well short of the standard of sufficient cogency to justify putting the matter to trial.
[124] The plaintiffs attempted to overcome deficiencies in their pleadings of misfeasance in a public office by naming various employees of the NZLS or the Standards Committee in their submissions and asserting that their conduct amounts to “bad faith misconduct”. These allegations take them no further towards providing a tenable pleaded claim for that tort. As well, the addition of new claims and parties is now long since time-barred. I consider also that there is force in the submission on behalf of NZLS that a claim that individuals, or a group of them comprising a Standards Committee, have acted improperly cannot be sheeted home to the NZLS.
[125] On that basis, I am satisfied that the Associate Judge was right to conclude that the claims against NZLS, including the claim for misfeasance in public office, must be struck out.
Argument that NZLS had no standing to make submissions
[126] It is necessary to address the plaintiffs’ submission that, because the NZLS had not filed a defence to the third ASOC, the plaintiffs’ two new causes of action of breach of statutory duty and misfeasance in public office should be treated as being admitted unchallenged. Accordingly, they say, the NZLS had no standing to make written or oral submissions on those allegations. The submission is misconceived; there was no need for the NZLS to plead to the new causes of action pending a decision on whether the claims should be struck out.99
Request for further opportunity to replead
[127] The plaintiffs also submitted that if their third ASOC was defective, then they should have been given yet another opportunity to rectify it. I agree with the
99 Mailley v Shaw, above n 4, at [145].
defendants and Associate Judge Andrew that it is simply too late, and that it would in any event be grossly unfair to the defendants, to allow yet another indulgence to the plaintiffs in that regard.
Allegation of perceived bias
[128] The plaintiffs make an allegation of “perceived bias” on the part of Associate Judge Andrew based on allegations that the plaintiffs and the defendants had been treated differently by the Court. The plaintiffs say they have been “denigrated” for pursuing six versions of the pleadings and it was found that their actions were an abuse of the process of the Court, frivolous and vexatious, whereas the Court made no comment about Mr Shaw’s conduct and his dragging out of this proceeding with impunity for nearly a year and a half. Further, it is alleged that the Judge refused to allow Ms Nutarelli to address the Court at the hearing on 21 October 2020 and that the Judge permitted and sanctioned needless and unjustifiable denigration of the plaintiffs for their past convictions by counsel for the defendants.
[129] Counsel in any hearing before a court or tribunal may make submissions that opposing parties may consider to be unreasonable, unfair, unjust or unfounded, and which may cause them to be upset. But that is a regrettable consequence of the adversarial process. There is no evidence that, if any unfounded submissions were made by opposing counsel in the hearing before the Associate Judge, that the Judge took any of them into account. Moreover, a judicial officer is entitled to conduct a hearing in the manner he or she determines and there is no merit in the plaintiffs’ complaints that the Associate Judge did not allow them to argue their case fully. His judgment is a careful and measured analysis of the pleadings and legal principles; his conclusions are well-founded on the material properly before him; and there is no evidence that the Judge overlooked any relevant argument the plaintiffs raised. The determination of costs by Associate Judge Andrew (the costs decision),100 following the issuing of the strike-out decision, was appropriate and the plaintiffs raise no principled basis for his decision not to recuse himself from making a costs decision. The allegation of “perceived bias” on the part of the Associate Judge has no
100 Mailley v Shaw [2021] NZHC 841.
foundation. Casting aspersions on the integrity of a judge without any demonstrable basis is an abuse of the Court’s process.
The decisions on the review application
[130] In the result, therefore, I am satisfied that Associate Judge Andrew was right to grant the applications by Mr Shaw and by NZLS to strike out the proceeding on the grounds fully articulated in the strike-out decision.101 I confirm the decision with the result that all causes of action by both plaintiffs against both defendants are struck out. Save for the decision on Mr Mailley’s application for a suppression order discussed below and the defendants’ entitlement to costs, the proceeding is ended.
Interim suppression of costs judgment of 21 April 2021 from publication
[131] On 21 April 2021, as part of the costs decision, Associate Judge Andrew declined an application that he recuse himself and ordered the plaintiffs to pay costs on the strike-out decision. By a minute dated 23 April 2021, the Associate Judge made an order, on application by Mr Mailley, that the “costs judgment of 21 April 2021 shall not be published pending any further order or determination of the Judge hearing the review application [then] scheduled for 29 April 2021.” The Associate Judge said it would be:102
… for the Judge hearing the review application to determine whether and on what basis any further orders restricting publication should be made.
[132] In his minute, Associate Judge Andrew noted that no reasons had been provided as to why a non-publication order should be granted and that non-publication was opposed by counsel for Mr Shaw.
[133] I am inclined to set aside the order for interim non-publication since there is no obvious reason for it, but Mr Mailley has a right to be heard on the issue. Mr Mailley shall have until 5 pm on 13 September 2021 to file and serve a memorandum providing grounds why the order of 23 April 2021 should not be set aside. The memorandum shall be 1.5-spaced, typed in Times New Roman 12-point
101 Mailley v Shaw, above n 4, at [146].
102 Mailley v Shaw, HC Auckland CIV-2015-404-1185, 23 April 2021 at [8] (Minute of Associate Judge Andrew).
font and shall not exceed two pages in length, including footnotes but excluding the coversheet. The defendants shall have until 5 pm on 16 September 2021 to file any memoranda in response, applying the same rule as to length.
Miscellaneous interlocutory applications
[134] Before and after the hearing of the review application, the plaintiffs filed various miscellaneous interlocutory applications that have not been finally disposed of or my decisions recorded. I address them now:
(a)The first is an application dated 23 April 2021 by Mr Mailley to review a decision of Associate Judge Andrew dated 19 April 2021 to decline Mr Mailley’s application for an order that the Registrar should provide transcripts of:
(i)the hearing of the strike-out application on 21 October 2020; and
(ii)an interlocutory hearing on 3 March 2021 at which I declined to order that Associate Judge Andrew should not make any order for costs following the strike-out decision.
I dismissed the application at the beginning of the hearing on the basis that the transcripts would not assist me to determine the review application.
(b)Next, there is an application by Mr Mailley and Ms Nutarelli to review the costs decision. That application was dated 28 April 2021 and an amended application was filed on the day of the hearing of the review application. The defendants had not had an opportunity to respond to it. To the extent that the application addresses the Associate Judge’s decision not to recuse himself on the grounds of bias, it has been rendered redundant by the hearing of the review application because I have addressed the baseless allegations of bias against Associate Judge Andrew above at [128] and [129]. The application to review the costs
element of the decision remains extant. The defendants have indicated to the Court that they would oppose that application and there is no need, therefore, for a notice of opposition to be filed. I direct the plaintiffs to file submissions in support of the review of the costs decision by 15 September 2021. The submissions shall be 1.5-spaced, typed in Times New Roman 12-point font and shall not exceed three pages in length, including footnotes but excluding the cover sheet. The defendants shall have until 22 September 2021 to file any submissions in opposition to the review, applying the same rule as to length. I request the Registrar to set the review application down for a one hour hearing before me as soon as possible after 22 September 2021.
(c)Third, the plaintiffs filed an application dated 12 July 2021 asking for a temporary stay of my judgment on the review application on the grounds of misconduct by Mr Mullins, counsel for NZLS in the hearing of the application to strike out and in the hearing before me. Mr Mullins naturally felt it was necessary to respond to the allegations, which he did in a measured and responsible manner. There is no merit in the application which is frivolous, vexatious and an abuse of the Court’s process and I dismiss it. NZLS may apply for costs in respect of that application on the grounds that it was appropriate that Mr Mullins should file a memorandum in reply to it.
(d)Fourth, there are further interlocutory applications dated 13 July 2021 and 14 July 2021 seeking to recall the costs judgment of Associate Judge Andrew of 21 April 2021 and his subsequent minute of 23 April 2021. It is appropriate to address those applications in a separate judgment that will be issued before the hearing of the application by Mr Mailley and Ms Nutarelli to review the costs decision of Associate Judge Andrew referred to at [134(b)] above.
(e)Fifth, the plaintiffs filed an application dated 21 July 2021 for the recall of the strike-out decision on the grounds of alleged misconduct by
Mr Mullins in the manner in which he made his submissions at the hearing of the review application on 29 April 2021. Having presided over that hearing and observed Mr Mullins’ conduct in the courtroom, and having read the written material submitted by Mr Mullins for the assistance of the Court, there is no basis for the application. Nor is there any basis on which Associate Judge Andrew has jurisdiction to make any decision that addresses the validity of the strike-out decision. This application is frivolous, vexatious and an abuse of the process of the Court and I dismiss it accordingly. The defendants may apply for costs for any step taken by them in response to that application.
Costs
[135] As the successful parties, the defendants may apply for costs on the review application and on such of the interlocutory applications as indicated above, in accordance with the High Court Rules 2016 and the categorisation of the proceeding as category 2B for costs purposes.
[136] If costs cannot be agreed between the parties, the defendants shall have until 8 October 2021 to file and serve memoranda seeking costs. The plaintiffs shall have until 5 November 2021 to file and serve memoranda in response. The defendants may file and serve brief reply memoranda only by leave of the Court. Costs shall be determined on the papers unless the Court directs otherwise.
Toogood J
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