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

[2010] NZHC 1273

IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY

CIV-2009-419-1674

IN THE MATTER OF     Section 4 of the Judicature Amendment Act

1972 and Schedule 3, item 11 of the

Lawyers and Conveyancers Act 2006

AND

IN THE MATTER OF     an application for judicial review and separate relief under Rule 626 High Court Rules

BETWEEN  JOHN KENNETH SLAVICH AND ANTHONY NICHOLAS SLAVICH Applicants

ANDLEGAL COMPLAINTS REVIEW OFFICER

First Respondent

ANDHANNEKE BOUCHIER Second Respondent

ANDMURRAY BRANCH Third Respondent

Hearing:         7 July 2010

Appearances: J K Slavich in Person

D Webb for First and Second Respondents
T M Braun for the Third Respondent

Judgment:      16 July 2010

RESERVED JUDGMENT OF ELLIS J

This judgment was delivered by me on 16 July 2010

At 4.30 pm, pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar

Solicitors:      Lane Neave, PO Box 13149, Christchurch 8141

Harkness Henry, PO Box 3077, Hamilton 324

Copy To:      J K Slavich, PO Box 120, Hamilton 3240

SLAVICH V LEGAL COMPLAINTS REVIEW OFFICER AND ORS HC HAM CIV-2009-419-1674  16 July

2010

[1]      These proceedings concern an application for judicial review of a decision made by the second respondent in her capacity as the presiding officer of the Legal Complaints Review Officer in relation to a complaint made by the applicants about the third respondent.  That decision was itself a review of an earlier decision made by the Lawyers Standards Committee of the Waikato Bay of Plenty Branch of the New Zealand Law Society.

[2]      The complaint related to certain events that occurred between 2005 and 2007 involving Mr John Slavich and the company Pacesetter Print Ltd, of which he was a shareholder.

[3]      The three respondents have applied for security for costs and to strike out certain parts of the applicants’ third amended statement of claim.   There is an associated application for an order striking out the second respondent as a party to these proceedings.

[4]      All are opposed by Mr John Slavich on behalf of the applicants, although it was my sense during the hearing before me that his opposition to aspects of the applications was somewhat less trenchant once the nature and parameters of judicial review proceedings had been discussed with him.

Security for Costs

[5]      The  amount  of  security  sought  by  the  respondents  is  $26,880  which represents costs anticipated for a four day hearing calculated on a 2B basis (prior to the changes to the daily rates that came into effect on 24 May 2010).

[6]      Rule 5.45 provides that the Court may order security and stay a proceeding until such security is paid where:

There is reason to believe that an applicant will be unable to pay the costs of the respondent if the applicant is unsuccessful in the applicant’s proceeding.

[7]      I am in no doubt that there is sufficient information before me from which to infer  that  the  applicants  here  may  be  unable  to  pay  the  respondents’  costs  if

ultimately unsuccessful.  I do not refer to all the matters put forward on behalf of the respondents but note, in particular, that Mr John Slavich has only very recently been discharged from bankruptcy and that he has so far failed to pay the $60,000 in reparation that was ordered by Heath J in R v Slavich.[1]In fact, Mr Slavich submitted to the High Court on a recent occasion that “he had no disposable income and assets, the only other source of funds to meet the obligation to pay reparation would have to come from his wider family.”[2]

[1] R v Slavich HC Hamilton CRI-2006-419-89, 21 November 2006.

[2] R v Slavich 19 March 2010 HC Hamilton CRI-2006-419-89, 19 March 2010 at [17].

[8]      While Mr Slavich’s position was that all these matters went to his personal financial status and inability to pay as opposed to that of the Trust, the reality is that the Trust has failed to respond to requests from the respondents as to its financial position.   Nor has the Trust yet paid the security for costs recently ordered by Associate Judge Christiansen in related proceedings filed in another Registry of this

Court.[3]     I note in particular what the learned Judge said at [11] – [15] of his

[3] Slavich v New Zealand Institute of Chartered Accountants – Professional Conduct Committee & Anor HC Tauranga CIV-2009-470-000826, 25 May 2010.

judgment in that respect:

[11]   [Mr Slavich] says he brings this review on behalf of a family trust. That much is pleaded by his statement of claim. Mr Slavich argues therefore that his personal financial status and inability to pay have no relevance to the claim for security.

[12]   That position overlooks the fact that the security is sought from the applicant, whoever Mr Slavich says that is. The fact is that if he was to fail on the review, then notwithstanding he represents a family trust, any costs payable would have to be met by him. Mr Slavich has not provided any information at all that he (or his trust) is with means to meet an adverse costs award. No details of the family trust have been provided, of assets, or indeed of its existence. Further, because Mr Slavich is or has until very recently been an undischarged bankrupt, the Court has credible evidence from which it can reasonably infer that the ‘applicant’ will be unable to pay the costs. In this case Mr Slavich’s failure to disclose his or his trust’s financial circumstances gives rise to an adverse inference as to ability to meet costs.

[13]   The remaining matter for my consideration is Mr Slavich’s claim that this is a matter of public importance. He says there is unlikely to be a more important case.  It is about a public body that makes rules under its statutory power, he says. Those rules are to protect the public from members who are in a privileged position who break the rules.

[14]   But in this description of things it is no different to the kinds of cases often referred to the High Court for review.

[15]   I disagree with Mr Slavich’s claim that the case involves a matter of public interest. I think it is very much a private matter. The review is about whether the Institute/PCC properly considered and determined Mr Slavich’s complaint. I prefer the submission of Mr McClelland that the PCC is not a judicial body and that the Court will be slow to review a prosecutorial discretionary decision.

[9]      And although Mr Slavich handed up to me a letter from the Third Respondent (Mr Branch) recording advice received as to Mr Anthony Slavich’s financial position in 2006, that letter does not in fact constitute evidence of Mr Anthony Slavich’s financial position, either in 2006 or in 2010.

[10]     Lastly, I accept Mr Braun’s submission that, on the basis of what Mr Slavich has told the Court, an order requiring the payment of the application for security would  not  prevent  Mr  Slavich  from  pursuing  these  proceedings.    Indeed,  if  as Mr Slavich says, his brother and the Trust have very sound financial positions, there will be no difficulty presumably in paying any modest amount by way of security that is ordered and thus no impediment to the proceedings continuing.

[11]     For all these reasons I consider it is a proper case for the Court to exercise its discretion to fix security for costs.  I fix security in the sum of $20,000 accordingly. That sum is to be paid into the Court and until it is, the review application will be stayed.

Application to Strike Out Parts of the Third Amended Statement of Claim

[12]   Although the third amended statement of claim represents a significant improvement on earlier statements of claim filed, there remain in it a number of allegations which the respondents say are objectionable and unnecessary.  Particular exception was taken to the numerous allegations of bad faith, misfeasance, bias, intentional wrong-doing, outrageous conduct and known invalidity or wrong-doing.

[13]     It is apparent to me that at the heart of the applicants’ claim is the allegation that the first respondent made what the claim refers to as a number of “false” factual findings which, in turn, dictated the outcome of the Tribunal’s hearing and resulted

in the dismissal of Mr Slavich’s complaint about the third respondent.  This is made clear in paragraph 3.3 of the third amended statement of claim which states:

Paragraphs [19] to [21] and [52] to [57] statements (as pleaded in paragraph 3.1 above) of the second respondents’ decision were false as those statements were not fundamental facts or contained omissions of fundamental facts.  Consequently the resulting decisions in paragraphs [57] and [58] were unreasonable.

[14]     Notwithstanding the allegation of unreasonableness here (which is of course an accepted ground of judicial review) it seems to me after hearing from Mr Slavich that the focus of this pleading is that the first respondent has (allegedly) breached natural justice in the sense noted in Re Erebus Royal Commission[4], where at 671 the Judicial Committee said:

[4] Re Erebus Royal Commission [1983] NZLR 662.

The first rule is that the person making a finding in the exercise of a[n investigative] jurisdiction must base his decision upon evidence that has some probative value ....

What is required ... is that the decision to make the finding must be based upon some material that tends logically to show the existence of facts consistent with the finding and that the reasoning supportive of the finding, if it be disclosed, is not logically self-contradictory.

[15]     What the applicants have done, however, is to expand upon paragraph 3.3 of the claim by pleading the inferences that they themselves have drawn from what they allege to be the first respondent’s “false” factual findings.  Essentially they seek to extrapolate from the core (3.3) allegation that the first respondent “must” therefore have been actuated by malice or bias.  This can clearly be seen in paragraphs 3.4 –

3.7 of the claim:

3.4  Those false statements collectively cannot be put down to incompetence or error, they are calculated.   They are indicative of the second respondent acting in bad faith and bias towards a particular outcome in favour of the Standards Committee and the third respondent; In effect nullifying  the  complaint  and  were  misfeasance  and  malfeasance  in public office.

3.5  The  way  in  which  the  hearing  was  conducted,  no  recognition  of Stace Hammond’s forceful opinion on the matter and the subsequent refusal to answer the fundamental question of fact in the decision is also indicative of that bad faith behaviour and misfeasance.

3.6  The second respondents’ actions were also negligent in that by acting in bad faith (or independent of it) she was biased, exercised her power for an improper purpose, was procedurally improper and therefore her decision was knowingly invalid.

3.7  The first respondent decision was invalid.   The decision results from actions, or inaction, that was negligent.  In that they did not ensure that the complaint was or would be handled in: good faith; an unbiased way; exercising powers in a proper manner and a procedurally correct way. And they did not ensure the decision itself was or would be reasonable.

[16]     A materially identical similar pleading occurs at paragraphs 5.3 to 5.6 of the third amended statement of claim.

[17]     In my view much of this pleading is unnecessary in the sense that it adds nothing of factual (or legal) substance to the core 3.3 allegation.  Perhaps to put it in a more literary way, these paragraphs are replete with sound and fury, but signify nothing.  Insofar as references are made to negligence and misfeasance, this is not a tortious claim and there are (quite properly) no longer any claims for damages.  Nor has any tenable factual foundation for such claims been pleaded.  That last point is of additional concern in relation to the allegations of bad faith, misfeasance and intentional wrong where the law requires such allegations to be “specific, pointed and relevant”.  Compliance with both rules 5.17(2) and 5.26 are in issue.  And in the present case, I do not consider that the central (3.1) allegation as to factual errors and omissions in the first respondent’s decision is adequate to meet that requirement or to justify pleadings of this kind.

[18]     The same reasoning applies by analogy to certain later parts of the claim.

[19]     On this basis I am satisfied that those parts of the third amended statement of claim identified in the following paragraph should be struck out on the grounds that they do not disclose a “reasonably arguable cause of action” or “case appropriate to the nature of the pleading” in terms of rule 15.1(1)(a).  I do not consider that I need to go so far as to apply rules 15.1(1)(c) and (d), although record that they were also quite properly raised as grounds for the respondents’ application.

[20]     Those parts of the third amended statement of claim to be struck out are:

a)        All of paragraphs 3.4 to 3.6;

b)The second sentence in paragraph 3.7 and the words “good faith; an unbiased way; exercising powers in a proper manner” in the third sentence of paragraph 3.7;

c)       The  third  sentence  of  paragraph  3.8  (beginning  “If  the  second respondents review”);

d)       The prayers for relief (other than the words “Such further relief as the

Court deems fit in the circumstances.”) in paragraphs 3.11 and 3.12;

e)        Paragraphs 5.3 to 5.5;

f)        The second sentence of paragraph 5.6 and the words “good faith; an unbiased way; exercise of powers in a proper manner” in the third sentence of paragraph 5.6;

g)        The third sentence in paragraph 5.7;

h)        The prayers for relief (other than the words “Such further relief as the

Court deems fit in the circumstances.”) in paragraphs 5.10 and 5.11;

i)         All  the  words  following  “Section  377  complaint”  in  paragraphs

6.3(c); and

j)         All of paragraph 6.4.

Position of second respondent

[21]     Ms Bouchier has been named as the second respondent in these proceedings because she was the presiding officer of the Tribunal that made the decision about which the applicants complain.   She submits that she was improperly joined and should be struck out as a respondent pursuant to rule 4.56.

[22] I am also satisfied that this application should succeed. The joinder of Ms Bouchier is contrary to s 9(4A) of the Judicature Amendment Act 1972. And in light of my decision to strike out the allegations of bad faith there is no basis upon which to suggest that she might in any sense be held personally liable for the impugned decision in terms of the exception to the general indemnity contained in clause 11 of Schedule 3 of the Lawyers and Conveyancers Act 2006.

Conclusion

[23]     To summarise, I order that:

a)       Security for costs is fixed in the sum of $20,000.  That sum is to be paid into the Court and until it is, the review application will be stayed;

b)Those parts of the third amended statement of claim identified in paragraph [20] above are struck out;

c)      Ms Bouchier is to be struck out as the second respondent in the proceedings.

[24]     Although the respondents sought an award of indemnity or increased costs I decline to order that in relation to the present application.  I consider that Mr Slavich has made genuine efforts to improve his pleadings and I am prepared to make some allowance for his self-represented status.   However it is right that, in light of the success of all three of the respondents’ applications, the applicants be required to pay the respondents’ costs on a 2B basis.

[25]     Lastly, I mention that in the course of the hearing Mr Webb asked me to record that, in terms of the substantive proceeding, the first respondent will abide the decision of the Court in the usual way (subject to any later issues as to costs) and accordingly I do so.  I explained to Mr Slavich that it would be the third respondent who would (also in the usual way) play the active role in defending the proceeding,

and that is understood by him.

Rebecca Ellis J