Zhao v New Zealand Law Society

[2012] NZHC 3112

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV 2012-404-2777 [2012] NZHC 3112

BETWEEN  RICHARD ZHAO Plaintiff

ANDTHE NEW ZEALAND LAW SOCIETY Defendant

On papers

Judgment:      22 November 2012

JUDGMENT OF THE HON JUSTICE KÓS (Costs)

[1]      My judgment of 24 August 2012[1] granted judicial review of one of three decisions of the New Zealand Law Society concerning an application by Mr Zhao to practice on his own account as a solicitor, under s 30 of the Lawyers and Conveyancers Act 2006.

[1] Zhao v The New Zealand Law Society [2012] NZHC 2169.

[2]      The offending decision was to convene the Society’s Fitness for Practice Committee to consider Mr Zhao’s application when the Society had not yet honoured assurances that Mr Zhao would receive a letter explaining the perceived problems with his application and would be given an opportunity to address the Committee. Those assurances  gave  rise to  a legitimate expectation  as  to  process  which  the Society had not met.

[3]      Mr Zhao therefore succeeded in obtaining judicial review, but in relation to only one of three decisions impugned, and on the basis of one out of seven causes of action advanced.  The remedy sought by Mr Zhao in relation to the cause of action in respect of which he succeeded was misconceived.  It was necessary for the Court to

refashion remedy.  Ultimately a declaration was given, along with certain mandatory

ZHAO v THE NEW ZEALAND LAW SOCIETY HC AK CIV 2012-404-2777 [22 November 2012]

orders as to disclosure and opportunity to address the Committee.   In fairness to Mr Zhao, however, I should add the Society advanced an affirmative defence on the basis that the judicial review proceedings were premature.  I did not agree, and held for Mr Zhao on that issue.

[4]      At the end of my judgment I said:[2]

Mr Zhao has succeeded, albeit somewhat modestly against the bold palette of grounds originally advanced.  He is perhaps entitled to costs.  If sought, I will receive memoranda.

[2] At [106].

[5]      Costs are sought by Mr Zhao.   The parties have not agreed them.   I have received memoranda.  Mr Zhao seeks costs on a global category 2 band B basis in respect of items 1, 3, 9, 11, 24, 25, 29, 30, 31, 33 and 34 of schedule 3.  If all were granted on a category 2 band B basis, that would total $30,901.   He also seeks disbursements of $3,507.   The Society suggests an order of $5,000 costs is appropriate.  It makes no submission on the disbursements.

[6]      I bear in mind these points:

(a)      It is the overall result that matters most of all.  As Wylie J put it in

Shotover v Westpac Banking Corporation:[3]

[3] Shotover v Westpac Banking Corporation HC Auckland A995/85, 5 June 1991.

... it is not uncommon for a party to succeed on one issue and to fail on several others and in the ordinary course not to suffer in costs for that reason alone ...

(b)Rule 14.2(f) requires that the scale allocation of costs be displaced if such an  award would  exceed  costs  actually incurred  by the party claiming.

(c)      Costs  are  intended  to  be  predictable  so  the  parties  may  make appropriate decisions along the way as to carriage and continuation of

proceedings: r 14.2(g).

(d)If costs are to be reduced below scale, then that really needs to be justified in accordance with r 14.2(f) and r 14.7 (which deals with refusal or reduction of costs in certain particular circumstances).

[7]      I have read the submissions of counsel, and I do not intend to repeat them here.  I reach the following conclusions.

[8]      First, the plaintiff is entitled to costs, calculated on a category 2 band B basis, subject only to the next three conclusions.

[9]      Secondly, I agree with Mr Collins for the Society that certain items claimed on a band B basis exceed what is appropriate in the circumstances of this proceeding. Each item in schedule 3 is to be assessed: r 14.2(c).  While it is often the case that costs are awarded on a global basis, that is not invariably the case.  In this case, the strict application of r 14.2(c) is appropriate.  Where costs would be excessive on a band B basis, which may occur with judicial review, the appropriate course is to reduce the time allocation to band A.  That will apply in relation to the following items: 1 (commencement of proceeding), 31  (preparation of common  bundle of documents) and 33 (preparation for hearing).  I am not satisfied that the allowances for these items need to be reduced any further, in accordance with r 14.7(a).  The result is that the calculation of costs is reduced in accordance with r 14.2 to $24,135.

[10]     Third, the statement of claim was excessive and ventured causes of action that could not succeed.   It could and should have been focused on the causes of action concerning the intended convening of the Fitness for Practice Committee, and on legitimate expectation and breach of natural justice in particular.[4]   Ordinarily that might justify substantial reduction of costs under r 14.7(d).  However, I bear in mind also the Society’s failed affirmative defence as to prematurity.   That occupied a

significant part of the case.  I will therefore reduce the level of costs produced in the preceding paragraph – $24,135 – by one quarter only.  Subject only to the remaining

point made in [11], costs will therefore be $18,000.

[4] The  challenge  to  the  original  interview process  and  its  outcome  was  quite  misconceived.

Likewise the remarkable challenge to the Society’s third decision – to call a halt to processing the application once its processes had been challenged.  As I said in my judgment, it is difficult to see what else the Society could have done in that case.

[11]     Fourthly, the Society is entitled to be certain that the requirements of r 14.2(f) are met.  That is, that costs do not exceed costs actually incurred.  In a memorandum Mr Deliu, Mr Zhao’s counsel, says that he has checked his records and can confirm that Mr Zhao had incurred costs of $30,751 plus GST and instructing solicitor’s fees. If proof is still required by the Society, that is to be given on a counsel to counsel basis.

[12]     Mr Collins for the Society took no issue about the disbursements claimed

$3,507.   Subject only the point made in [11], therefore, there will be an order for costs in favour of the plaintiff of $18,000 together with disbursements of $3,500.

Stephen Kós J

Solicitors:

New Zealand Law Society, Lambton Quay, Wellington 6145

Counsel:

F C Deliu, PO Box 68559, Auckland for Plaintiff ([email protected]) P N Collins, Auckland for Defendant ([email protected])