Slavich v Legal Complaints Review Officer HC Hamilton CIV 2009-419-1674

[2011] NZHC 1500

IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY

CIV 2009-419-1674

BETWEEN  JOHN KENNETH SLAVICH AND ANTHONY NICHOLAS SLAVICH Applicants

ANDLEGAL COMPLAINTS REVIEW OFFICER

First Respondent

ANDHANNEKE BOUCHIER Second Respondent

ANDMURRAY BRANCH Third Respondent

Hearing:         25 and 28 October 2011

Appearances: A J Nolan for applicants (on 28 October)

No appearance for first and second respondents
K I Bond for third respondent

Judgment:      1 November 2011

JUDGMENT OF ALLAN J

Solicitors/Party:

AJ Nolan, Hamilton  [email protected]

J Slavich,  [email protected]

Harkness Henry, Hamilton  [email protected]

SLAVICH AND ANOR V LEGAL COMPLAINTS REVIEW OFFICER HC HAM CIV 2009-419-1674 1

November 2011

[1]      In this proceeding, Mr Slavich seeks judicial review of certain decisions of the  first  and  second  respondents  made  in  consequence  of  a  complaint  by  the applicant to the New Zealand Law Society (NZLS), concerning the activities of the third respondent, who is a practising lawyer.  The Standards Committee appointed by the NZLS dismissed Mr Slavich’s complaint on 29 July 2009.   He appealed.   On

9 October 2009, the first respondent, via the second respondent, made a decision upholding the Standards Committee’s decision.

[2]      In a decision given on 16 July 2010, Ellis J made orders:

(a)       Granting security for costs in the sum of $20,000, such sum to be paid into court.  Pending payment, the review application was stayed;

(b)Striking  out  certain  portions  of  the   applicants’  third  amended statement of claim;

(c)       Striking out the second respondent as a party to the proceeding.

[3]      By  notice  of  application  dated  11  August  2011,  counsel  for  the  third respondent applied for an order directing that the proceeding be struck out unless the amount of security for costs was paid by 31 August 2011.

[4]      Mr Slavich signified his opposition to the application.   On 21 September

2011, Keane J gave timetable directions for the hearing of the third respondent’s

application which he set down for hearing on 25 October 2011, commencing at

10 am.

[5]      Mr Slavich  filed  a  notice  of  opposition  and  subsequently  an  affidavit  in support.   He advanced the following grounds in opposition to the making of an order:

(a)      There had been a prior opportunity to the first and second respondents and to the Law Society to deal with the matter in a manner which might avoid criminal proceedings;

(b)In the absence of any such initiatives by those bodies, criminal proceedings were filed against the third respondent on 29 July 2011 in the District Court at Hamilton.   The subject matter of the criminal proceedings  is  largely co-extensive with  the subject  matter of the judicial review proceeding;

(c)      It would be inappropriate for the judicial review proceeding to be actioned by payment of security for costs, or for these proceedings to be struck out while the matter is being dealt with criminally.

[6]      The first and second respondents have taken no part in the conduct of the present application, although they support it and associate themselves with it.

[7]      The application was called at 10 am on 25 October 2011.  Mr Bond appeared for the third respondent.  There was no appearance by any other party.  Having heard briefly from Mr Bond, I indicated to him that I was prepared to make the order sought, and that I would issue a brief judgment to that end.

[8]      After the court had adjourned, the Registrar provided to me a memorandum from Mr Slavich dated 24 October 2011.  The memorandum having been referred to Mr Bond, it appears that it was received by e-mail at his firm at 4.38 pm on Monday

24 October 2011.  At the hearing of 25 October, Mr Bond assumed that I had seen

Mr Slavich’s memorandum.  I had not.

[9]      The memorandum reads as follows:

1.The applicant when preparing an interlocutory application for recall, of the court’s decision of 16 July 2010, realised he had placed the hearing date for this “unless order” hearing in his diary as being 28

October rather than 25 October.

2.As  the  Registrar  is  aware  the  applicant  is  away,  thus  he  has instructed counsel to attend two hearing,(sic) on different matters, on the 26 October on his behalf.

3.The applicant had arranged to be in Hamilton on the 28 October for the hearing.  Unfortunately, as he has just realised his mistake over the weekend it is impossible to attend or to fully instruct counsel.

4.The applicant seeks and(sic) adjournment of the hearing to the next available date.

5.It  is  submitted  there  is  no  disadvantage  to  the  third  defendant, Mr Branch, as these civil matters have effectively been overtaken by criminal proceedings.

6.Thus making his application’s reasons moot.  As name suppression will not be granted in the criminal proceedings given the court’s principles  of  open  justice  measured  against  the  admissible  and reliable evidence in support of the very serious criminal charges he faces.

[10]     The memorandum was unsatisfactory.  In the first place, although Mr Slavich said that he was “away”, he did not say where he was, nor why he was unable to attend court.  Moreover, his absence did not prevent him from instructing counsel. As he indicated at paragraph 2 of his memorandum, he had instructed counsel to attend two hearings on different matters scheduled for 9 am on 26 October 2011.

[11]     Mr Slavich has considerable experience in the conduct of legal proceedings over the past few years, and plainly has access to counsel, given his recent instructions for the hearings on 26 October.   The court was not told why he was unable to organise an appearance by counsel to explain his position at the hearing of the application on 25 October.

[12]     The  timetable  directions  given  by  Keane J  required  Mr Slavich  to  file submissions by 19 October 2011.  That was not done.  Mr Slavich was therefore in default, and clearly not ready to argue his case in any event.

[13]     Against that background I referred Mr Slavich’s memorandum of 24 October

2011 to Mr Bond, who filed a further memorandum of his own.  In it Mr Bond said that:

(a)      He had assumed that I was aware at the hearing on 25 October of the contents of Mr Slavich’s memorandum of 24 October (as noted above I was not so aware);

(b)Mr Slavich’s explanation for his non-appearance was unsatisfactory and the conclusion to which I had come at the hearing ought to stand.

[14]     Although  having  a  great  deal  of  sympathy  for  Mr  Bond’s  stance,  I nevertheless  concluded  that  the  proper  course  was  to  direct  that  the  third respondent’s application be called for further hearing on Friday 28 October 2011 at

10 am, that being the date upon which Mr Slavich had understood the fixture would proceed. On 26 October 2011 I issued a minute to that effect.

[15]     Mr Slavich did not appear on 28 October, but there was an appearance by Mr Nolan, instructed by the plaintiffs.   Mr Nolan simply summarised the grounds upon  which  Mr Slavich  opposed  the  present  application.    They  were  the  same grounds as set out in his notice of opposition, supplemented by a further ground, namely the fact that Mr Slavich has now applied, by interlocutory application dated

24 October 2011, to recall or set aside the judgment of Ellis J in which the order for security for costs was made.

[16]     At the conclusion of the brief oral hearing on 28 October, I indicated to counsel that I remained of the view that the third respondent was entitled to the order sought, and that I would deliver a reasoned judgment in due course.   This is that judgment.

[17]     There  is  a  strong  case  in  principle  for  granting  the  order,  given  that Mr Slavich has failed for more than a year to make payment of the amount of security for  costs  ordered  by Ellis  J.    Mr Slavich’s  position  is  that  the  present proceeding has, in effect, been overtaken by the criminal proceeding, and that accordingly the civil proceeding ought to remain in a state of stasis until the criminal proceedings are resolved.  In other words, as plaintiff in the one case and informant in the other, Mr Slavich chooses to advance the criminal proceeding but not the civil case.  He says that Mr Branch will suffer no disadvantage thereby.  I disagree.

[18]     Mr Branch is a practising lawyer of considerable reputation and experience. Putting the pending criminal proceedings to one side, the existence of the civil proceeding,  which  is  concerned  with  allegations  of  misconduct  on  the  part  of

Mr Branch,  is  itself  highly prejudicial.    Irrespective of the criminal  proceeding, Mr Branch is entitled to seek to have the civil proceeding determined expeditiously. While it remains on foot, it is liable to give rise both to general and special prejudice. In any event, Mr Slavich’s own conduct is inconsistent with an argument that no steps ought to be taken in the civil proceeding pending determination of the criminal proceeding.  He has applied for the recall of the judgment of Ellis J of 16 July 2010, in which the order for security for costs was made.  In other words, while taking a step in the proceeding himself, he argues (inconsistently) that Mr Branch ought to be prevented from doing likewise.

[19]     An extended discussion of the circumstances in which it would be proper to make an unless order is to be found in Jagwar Holdings Ltd v Fullers Corporation Ltd[1] and in Prager-Macholl v Michell.[2]

[1] Jagwar Holdings Ltd v Fullers Corporation Ltd (1991) 4 PRNZ 577 (HC).

[2] Prager-Macholl v Michell (2011) 20 PRNZ 364 (HC).

[20]     Among the principles discussed in those cases is the need for a party to be given a reasonable opportunity to comply with an order to provide security, but where  that  opportunity  is  not  taken  and  continuation  of  the  proceeding  would involve substantial prejudice to the defendants, a court is entitled to direct that the action be dismissed.  Where, as here, a party intentionally omits to comply with the terms of a court order for a period in excess of one year, then the obligation lies upon him to establish proper grounds for that failure.  Each case will turn on its own facts. Generally speaking, the court will make an unless order only if the innocent party can be shown to be prejudiced by the continuing default, but in most cases, including this one, prejudice to the innocent party flows naturally from the failure of the defaulting party to comply with the order.

[21]     Applying those principles, I am satisfied that the third respondent is entitled to  the  order  sought.    The  fact  that  Mr Slavich  has  now  filed  an  interlocutory application for recall of the judgment of Ellis J makes no difference.  He appealed against the order to the Court of Appeal, but ultimately abandoned that appeal.  In the recall application he contends that new evidence establishes that the decision of

Ellis J was fundamentally flawed “in procedure”.

[22]    The new evidence is that a District Court Judge has considered certain documentary  material  provided  to  the  court  by  Mr Slavich  in  the  criminal proceeding, and has determined that the documents supplied are sufficient to justify the issue of a summons.  Mr Slavich contends that the District Court Judge has in effect found that there is a “prima facie case” in the criminal proceeding in the District Court.   He is of course quite wrong.   The threshold for the issue of a

summons is a low one. All but hopeless cases are permitted to proceed.[3]

[3] Daemar v Soper [1981] 1 NZLR 66 (CA) at 70 and De Montalk v Hobbs [1999] DCR 1115 at 1129.

[23]     But in any event, the merits (or otherwise) of the applicants’ case in this proceeding were not alluded to by Ellis J in her judgment of 16 July 2010.  She was not obliged to do so.  Where it is possible at an early stage of a case to assess the merits and prospects of success in a claim, then the court will take those prospects

into account on a security application  in a general sense,[4]  but in a complex matter

such as this, any assessment could never be more than an overall impression.[5]

[4] Meates v Taylor (1992) 5 PRNZ 524 (CA).

[5] McLachlan Ltd v MEL Network Ltd (2002) 16 PRNZ 747 (CA) at [21].

[24]     Here, the merits were not taken into account by Ellis J.  That being so, I do not consider Mr Slavich’s evidence about the issue of a summons in the criminal proceedings alters the balance on the present application in any way.

[25]     I am satisfied that the third respondent is entitled to the order sought.   A defendant facing both criminal and civil proceedings will not lightly be prevented from seeking to advance the civil proceeding simply on the ground of the existence of the criminal proceeding.   This case is quite different from that sometimes encountered in which a defendant seeks a stay of a civil proceeding pending the outcome of the criminal case.

[26]     Mr Branch is, and will continue to be, prejudiced by the mere existence of the present civil proceeding which is founded on the making by Mr Slavich of very serious  allegations  which  impugn  the  integrity  and  reputation  of  Mr  Branch. Mr Slavich’s failure to provide security for costs is intentional and Mr Branch will

suffer substantial prejudice as a result.

[27]     There will accordingly be an order directing that the applicants’ causes of action against each respondent be struck out unless security for costs (ordered by Ellis J in her judgment of 16 July 2010) is paid by 30 November 2011.

[28]     The third respondent is entitled to the costs of this application, calculated in accordance with category 2B.

C J Allan J