Tonise v Woodroffe Law Partnership

[2020] NZHC 2277

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE

CIV-2019-485-582

[2020] NZHC 2277

BETWEEN

IORITANA TONISE

Appellant

AND

WOODROFFE LAW PARTNERSHIP

Respondent

On the papers
Counsel:	J C Gwilliam and H Joubert for the appellant O Woodroffe for the respondent
Judgment:	2 September 2020

JUDGMENT OF CULL J

[On Costs]

[1]                  Following my judgment of 3 August 2020 in which I dismissed Mr Tonise’s appeal,1 Woodroffe Law Partnership (Woodroffe’s) seeks costs against Mr Tonise.

[2]                  I had indicated that I considered 2B costs to be appropriate for this case2 and Woodroffe’s has sought costs on that basis. However, it has since come to my attention that Mr Tonise was in receipt of legal aid for the application.

[3]                  Costs against a legally aided person in civil proceedings are regulated by s 45 of the Legal Services Act 2011. Costs may not be made against an aided person unless the Court is satisfied that there are exceptional circumstances.3 In determining

1      Tonise v Woodroffe Law Partnership [2020] NZHC 1926.

2 At [55].

3      Legal Services Act 2011, s 45(2).

TONISE v WOODROFFE LAW PARTNERSHIP [2020] NZHC 2277 [2 September 2020]

whether there are exceptional circumstances, the Court may take account of the following conduct of the aided person:4

(a)any conduct that causes the other party to incur unnecessary cost:

(b)any failure to comply with the procedural rules and orders of the court:

(c)any misleading or deceitful conduct:

(d)any unreasonable pursuit of 1 or more issues on which the aided person fails:

(e)any unreasonable refusal to negotiate a settlement or participate in alternative dispute resolution:

(f)any other conduct that abuses the processes of the court.

[4]                  If there are such exceptional circumstances, the costs order must not exceed an amount that is reasonable having regard to all the circumstances, including the means and conduct of all the parties.5

[5]                  The starting point is therefore that Mr Tonise, as a legally-aided person, has general immunity from an award of costs against him unless this Court is satisfied that “exceptional circumstances” justify an order for costs, and he has the means to meet such an order.6

[6]                  Woodroffe’s seek 2B costs on the basis that there are exceptional circumstances justifying costs. It submits the following matters make the circumstances exceptional:

(a)Woodroffe’s was put to unnecessary cost by Mr Tonise unreasonably pursuing a “misconceived and baseless appeal” relying on Simpson Grierson v Gilmour7 when that case clearly had no relevance;8

(b)Mr Tonise engaged in misleading or deceitful conduct in stating to the New Zealand Law Society that he was a duly appointed officer of the

4      Section 45(3).

5      Section 45(1).

6      Almond v Read [2019] NZCA 26 at [149].

7      Simpson Grierson v Gilmour [2009] 19 PRNZ 865 (HC).

8      Relying on s 45(3)(a) and (d); and Almond v Read, above n 6, at [149]-[155].

Green Valley Church congregation, and in making two contradictory statements as to whether he had met Mrs Woodroffe before;9

(c)in a letter dated 6 July 2020 (15 days before the hearing), Woodroffe’s offered to settle the matter if Mr Tonise paid half the outstanding amount  of  the  debt.  The  settlement  proposal  was   refused  by   Mr Tonise;10 and

(d)there is an expectation that the congregation will pay some or all of the costs incurred. The evidence to support this comes from a letter dated 20 July 2020 in which Counsel for Mr Tonise refused Woodroffe’s settlement offer on the basis that “Our client is personally not in a financial position to make payment to you in the amount of $32,445.47, and we were further not able to obtain an undertaking from the congregation to do so in the short period of time available.”

[7]                  Woodroffe’s submits it is suffering financially  because  of  the  failure  of  Mr Tonise to pay his debt and that Mr Tonise has the ability to seek financial assistance from other members of the congregation to pay the legal costs for his unsuccessful appeal. Together with the above points, it submits these factors justify a finding of “exceptional circumstances” under s 45(2) and 2B costs are appropriate.

[8] Mr Gwilliam opposes the award of costs against his client. He submits that Woodroffe’s were not put to unnecessary cost, there has been no misleading or deceitful conduct and nor was there an unreasonable pursuit of the issue. He says it was reasonable in the circumstances to pursue the appeal point given that the District Court judge had referred to one of his other decisions where the Judge had accepted that the defendant had an arguable defence based on the Limitation Act where proceedings had been delayed as a result of the effect of s 161 of the Lawyers and Conveyancers Act 2006. As to the settlement proposal, Mr Gwilliam submits that the proposal made by Woodroffe’s was too late to be able to be given serious consideration

9      Section 45(3)(c).

10     Section 45(3)(e).

before the hearing of this appeal and there was no unreasonable refusal to negotiate a settlement.

[9]                  I am satisfied that Mr Tonise did not unreasonably pursue the appeal and there are no exceptional circumstances justifying the award of costs in this instance. The appeal was appropriately confined only to the limitation issue, and other issues decided in the District Court were not appealed. This shows a considered approach to the legal issues and the costs involved in taking the appeal.

[10]              Turning to the unreasonable submission,  there  has  been  conflicting  District Court authority and I do not consider it was unreasonable for Mr Tonise to pursue the appeal in the way he did. Although I have found his argument to be incorrect, particularly that based on the Simpson Grierson v Gilmour authority, the interpretation of s 161 of the Lawyers and Conveyancers Act had not been authoritatively determined by the courts and requires further legislative clarification on how s 161 affects the limitation period for commencing and continuing civil claims in contract. It was a valid point to raise on appeal.

[11]              As to the settlement proposal and misleading conduct submission, I do not consider that Mr Tonise’s failure to accept the settlement proposal was an unreasonable refusal to negotiate that could amount to “exceptional circumstances” under s 45. Communication between the parties was forthcoming but ultimately there was not enough time to seriously consider the proposal before the hearing. Finally, on the submission of misleading conduct, for the same reasons I outlined in my judgment, I put that submission to one side.11 Such allegations should be resolved at the substantive hearing.

[12]              To conclude, Woodroffe’s has not satisfied me that there are exceptional circumstances in this instance requiring an order for costs. I decline to make an order for costs.

[13]              Section 45(5) provides that if, because of s 45, no order for costs is made against the aided person, an order may be made specifying what order for costs would

11     Tonise, above n 1, at [51].

have been made against that person if s 45 had not affected that person’s liability. Woodroffe’s has asked that in the event that costs are refused on the basis of s 45, a   s 45(5) order be made. I make that order below.

Result

[14]              No  order  for  costs   is  made.     I am not satisfied there are exceptional circumstances justifying the award of costs against a legally aided person.12

[15]I make the following order under s 45(5):

If s 45 of the Legal Services Act 2011 had not applied to this situation, I would have made an order for costs on a 2B basis, pursuant to Woodroffe’s schedule at [12] of their submissions dated 17 August 2020. That would be an order for $10,157.50 to be awarded to Woodroffe’s.

Cull J

Solicitors:

Main Street Legal Limited, Upper Hutt for the appellant Woodroffe Lawyers, Auckland for the respondent

12     Legal Services Act, s 45.