New Zealand Law Society v Deliu

[2015] NZHC 652

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2014-404-000427 [2015] NZHC 652

UNDER

Sections 266 - 268 of the Lawyers and

Conveyancers Act 2006

IN THE MATTER

of interlocutory applications in

proceedings for an application for an order that the name of a barrister and solicitor of the High Court of New Zealand be struck off the roll

BETWEEN

NEW ZEALAND LAW SOCIETY Plaintiff

AND

FRANCISC CATALIN DELIU Defendant

Hearing:	On the papers
Counsel:	JC Gordon QC and ZR Johnston for Plaintiff Defendant in person
Judgment:	2 April 2015

JUDGMENT OF ASHER J

This judgment was delivered by me on Thursday, 2 April 2015 at 11am pursuant to r 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Solicitors/Counsel:

Meredith Connell, Auckland.

FC Deliu, Auckland.

NEW ZEALAND LAW SOCIETY v DELIU [2015] NZHC 652 [2 April 2015]

Introduction

[1]      On 8 October 2014, I delivered a judgment in which I entered summary judgment  for  Mr  Deliu  as  defendant  against  the  New  Zealand  Law  Society (“NZLS”) as plaintiff.1     I held that NZLS’s claim could not proceed in the High Court and that the New Zealand Lawyers and Conveyancers Disciplinary Tribunal is better suited to  the hearing of this  case.    I held  that  a High  Court  action  was unsuitable and inappropriate, and would fail at the substantive hearing for that procedural reason.

[2]      As the successful applicant, Mr Deliu seeks costs on a 3C basis.  He asks that those costs be indemnity costs, or in the alternative, that there be increased costs. The NZLS, in response, submits that costs should lie where they fall or, if the Court was minded to award costs, that they should be awarded on a 2B basis and that neither indemnity costs nor increased costs are appropriate.

Should there be a costs order?

[3]      Mr Deliu did not have a lawyer representing him.  He represented himself. He is a barrister and solicitor of the High Court of New Zealand with a practising certificate, and is in active practice.   In such circumstances, there is a body of authority stating that a lawyer who brings or defends a proceeding in his or her own name is generally entitled to the same costs as when acting on behalf of a client. This line of authority in England may have been based on the fact that solicitors, as distinct from other self-represented litigants, were entitled to costs because these

costs could be quantified by the Court and its officers.2     Such solicitor-litigants

appear to have been an exception to the basic rule that a lay litigant could not recover anything but out-of-pocket expenses.3   Doubts were expressed about the proposition

by the Australian High Court in Cachia v Hanes.4

1      New Zealand Law Society v Deliu [2014] NZHC 2467, [2015] 2 NZLR 224.

2      See Guss v Veenhuizen (Taxation of Costs) [1976] HCA 57, (1976) 136 CLR 47.

3      Buckland v Watts [1970] 1 QB 27 (CA).

4      Cachia v Hanes (1994) 120 ALR 385 at 395–397.

[4]      In New Zealand, the rule has been described by the Court of Appeal as “long- established”5  and I regard myself as bound to allow costs to a solicitor-litigant. Ms Gordon QC, for NZLS, accepted that this was so.  However, she submitted that costs should not follow the event because, although the plaintiff had succeeded in bringing the proceeding to an end, the NZLS had succeeded in its application to set aside  Mr Deliu’s  protest  to  jurisdiction,  and  that  Mr  Deliu  had  made  every

conceivable argument to have the case dismissed on a preliminary basis.  The claim was  not  dismissed  because  it  was  without  merit  or  lacked  substance,  and  the plaintiff’s claim had been a genuine attempt to address issues in the exercise of NZLS’s responsibility as a regulator.

[5]      It is often the case that when there are various heads of claim, the claim will succeed on one but not others, and a Court will determine that full costs should be ordered.6     Whether that should happen is always a question that involves a consideration of the specific circumstances of the hearing, and the time spent on the unsuccessful causes of action.

[6]      It is correct, as Ms Gordon submits, that the protest to jurisdiction issue took up a considerable portion of the hearing and occupied a considerable portion of the judgment.7   However, it must be said that much of the ground covered in the protest to jurisdiction argument and discussion would have been covered in any event by way of background, prior to the determination of the summary judgment application or as part of the strike-out application.  In the end, Mr Deliu was entirely successful

in his summary judgment application.  He failed on his protest to jurisdiction, and the outcome in relation to the third (strike-out) did not need to be determined.

[7]      Exercising my discretion as best I can, and applying the principle that costs should follow the event, I conclude that Mr Deliu has succeeded in “the event” and the digression created by his objection to jurisdiction was insufficient to warrant a

departure from that basic rule.

5      Brownie Wills v Shrimpton [1998] 2 NZLR 320 (CA) at 327.

6      Shotter v Westpac Bank Corporation [1988] 2 NZLR 316 (HC).

7      New Zealand Law Society v Deliu, above n 1, at [7]–[47].

[8]      I determine therefore that Mr Deliu should be awarded costs without any deduction for a lack of success on the protest to jurisdiction aspect of the claim.  I also do not accept that there should be a deduction because Mr Deliu made every conceivable argument.  He certainly did argue with vigour and at considerable length but  I  do  not  consider  any  of  his  arguments  to  have  crossed  the  threshold  of irrelevance or inexcusable prolixity.

[9]      Ms Gordon referred to the fact that the proceedings were in the public interest as relevant to whether any costs should be ordered.  Rule 14.7(e) of the High Court Rules provides:

14.7 Refusal of, or reduction in, costs

Despite rules 14.2 to 14.5, the court may refuse to make an order for costs or may reduce the costs otherwise payable under those rules if-

…

(e)   the proceeding concerned a  matter of public  interest, and the party opposing costs acted reasonably in the conduct of the proceeding; or

…

[10]     I accept that NZLS filed this proceeding in good faith and had a regulatory interest.  However, this was not a case where a party such as the Financial Markets Authority intervened with the consent of the parties in the performance of a statutory role, as was the case in Hotchin v Ka No 4 Trustee Ltd.8   It was not a case such as in Commerce Commission v Southern Cross Medical Society  where the Commerce Commission intervened to assist the High Court by presenting necessary evidence in argument in opposition to an appeal in the public interest.9     Nor did it have the feature of clarifying a confused and important area of law, such as pursuing the interests of taonga as an important part of the heritage of New Zealand, as in New

Zealand Maori Council v Attorney-General.10

8      Hotchin v Ka No 4 Trustee Ltd [2014] NZHC 978 at [22]–[26].

9      Commerce Commission v Southern Cross Medical Society [2004] 1 NZLR 491 (CA) at [21].

10     New Zealand Maori Council v Attorney-General [1994] 1 NZLR 513 (PC) at 525.

[11]     This is a case where a body, which is recognised by statute,11  and has both regulatory powers12 and representative powers,13 sought to obtain a remedy (striking off of a solicitor) from the Courts.  The case itself is not of particular public interest. Although NZLS issued proceedings as part of its regulatory function, it has taken a

decision to initiate proceedings in the High Court (rather than before the Disciplinary Tribunal) and must face the costs consequences of choosing the wrong procedure.  It is the plaintiff that has chosen one route when it had options, and that route has proven to be the incorrect route.  In all these circumstances, r 14.7(e) does not apply.

[12]     I conclude that costs should follow the event in the usual way.  There should be an order without deduction in favour of Mr Deliu against NZLS.

Indemnity costs

[13]     Rule 14.6(3) and (4) set out the circumstances where a Court may order a party to pay increased or indemnity costs.  I deal with indemnity costs first.

[14]     Rule 14.6(4)(a) relevantly provides that the Court may order a party to pay indemnity costs if:

(a) the  party  has  acted  vexatiously,  frivolously,  improperly,  or unnecessarily in commencing, continuing, or defending a proceeding or a step in a proceeding; or

[15]     Mr Deliu argues that NZLS elected to press ahead with what should have been obviously a hopeless proceeding.   He argues that a fair and independent assessment would have shown that the proceedings were doomed to fail and relies on extracts from the judgment to support that submission.   I accept the comment in McGechan on Procedure that, apart from the situations listed in r 14.6(4)(c) to (e), which are not related to behaviour, indemnity costs can be awarded where a party

has behaved either badly or very unreasonably.14

11 Lawyers and Conveyancers Act 2006, s 63.

12     Above n 11, s 67.

13     Above n 11, s 67.

14     Andrew Beck and  others  McGechan on  Procedure at  [14.6.03(1)(a)]; Bradbury v  Westpac

Banking Corp [2009] NZCA 234, [2009] 3 NZLR 400 at [27]–[28].

[16]   The Court of Appeal observed in Ben Nevis Forestry Ventures Ltd v Commissioner of Inland Revenue that, in the absence of a finding of flagrant misconduct, it is not appropriate to award indemnity costs simply because a claim was shown after due consideration to have been unsubstantiated.15     Failure, even when by a considerable margin, does not lead inevitably to indemnity costs.16

[17]     The NZLS was found to have chosen the wrong procedure.  However, there can be no doubt that it acted in good faith, and chose the procedure for which there was no jurisdictional bar.17    I found there were two parallel jurisdictions and that, after a detailed consideration of the legal history of the relevant provisions and the facts, this was not an appropriate case for hearing in the High Court and Court of Appeal.   There was no case that was on all fours with the case before the Court. Both parties co-operated to hear the preliminary challenge in an expeditious and cost

effective manner.  I described the proceeding as a genuine attempt to resolve issues in the High Court.18

[18]   All summary judgment decisions involve a clear determination of the correctness of a particular argument, but that does not mean that all  successful summary judgment applications warrant indemnity costs.  There has been no bad or unreasonable behaviour or flagrant misconduct of the type that might warrant indemnity costs.  In this case, indemnity costs are not warranted and I decline that application.

Increased costs

[19]     In respect of the increased costs threshold, there are none of the specific bases set out in r 14.6(3) warranting increased costs.  The nature of the proceeding was  not  such  as  to  require costs  that  substantially exceed  time  allocated  under band C.  The NZLS has not contributed unnecessarily to the time or expense of the proceeding, save for making the decision to pursue striking off in the High Court,

which has been the subject matter of the decision.  The NZLS pursued the case in the

15     Ben Nevis Forestry Ventures Ltd v Commissioner of Inland Revenue [2014] NZCA 348 at [33].

16     Diagnostic Medlab Ltd v Auckland District Health Board HC Auckland CIV-2006-404-4724,

13 June 2007.

17     New Zealand Law Society v Deliu, above n 1, at [45].

18 At [114].

High Court because it considered that it had jurisdiction to do so, and that the High Court procedure was better suited to the disposition of the claim.  The fact that the Court has disagreed with that assessment does not mean that costs beyond the scale should be paid.   NZLS is not guilty of any of the particular failings set out in r 14.6(3)(b).

[20]     I decline to make any order for increased costs.

Quantum of costs

[21]     Mr Deliu seeks costs on a 3C basis, the NZLS on a 2B basis.

[22]     In terms of the categorisation of the proceeding, I do not see it as one where the complexity or significance of the case  required counsel of special  skill and experience.   Mr Deliu  has  experience as  a barrister and  has knowledge of this professional disciplinary area of law.   This is in part because of the various disciplinary cases in which he has been involved, but he has also acted for others in the area.   However, it is not an area of law like, for instance patent law, which demands particular expertise built up by years of specialisation and the ability to understand and present complex propositions of fact and law.  While it was entirely sensible for NZLS to brief senior counsel, I do not consider that this was a requirement.   The case did not require any detailed analysis of matters of fact or specialised knowledge.

[23]     As to the time involved, I must determine whether a comparatively large amount of time was  required for any particular step.   I consider that the usual categorisation of 2B should apply as the case is of average complexity, involving a normal amount of time.  The only matter Mr Deliu has referred to as requiring extra time was the consideration of discovered documents.  While I accept that there were many documents, I also note that Mr Deliu, as he was the lawyer involved in all the proceedings, would have already been familiar with them.

Conclusion

[24]     The NZLS is to pay scale costs to Mr Deliu on a 2B basis.

[25]     Given that both parties have had a measure of success in their submissions on the issues arising in this costs decision, I make no order for costs on this cost application. Those costs will lie where they fall.

……………………………..

Asher J