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Lawyer loses bid to have costs covered

30 November 2018 - By NZLS Regulatory

The Court of Appeal has declined Wellington lawyer Papali’i Toti Lagolago leave to appeal a High Court decision in relation to costs.

Ms Lagolago had faced charges in the New Zealand Lawyers and Conveyancers Disciplinary Tribunal in relation to her role in representing clients in litigation proceedings which ultimately failed.

The Tribunal made a finding of negligence against Ms Lagolago in terms of section 241(c) of the Lawyers and Conveyancers Act 2006 and imposed a term of supervision along with a censure, an order to reduce her fee, and an order to pay costs.

Ms Lagolago appealed these findings to the High Court and was generally successful in having the finding and outcomes quashed. However, in a judgment dated 8 December 2017 (Papali’i Toti Lagolago v Wellington Standards Committee 2 [2017] NZHC 3038), the High Court declined to award Ms Lagolago costs in the Tribunal, despite her successful appeal.

Ms Lagolago sought leave from the High Court to appeal this issue to the Court of Appeal and when that was declined, sought leave from the Court of Appeal itself. In its judgment dated 5 October 2018, the Court of Appeal declined Ms Lagolago leave to appeal (Papali’i Toti Lagolago v Wellington Standards Committee 2 [2018] NZCA 406).

In the High Court, argument centred on what the correct approach was towards the awarding of costs in disciplinary proceedings.

The starting point is section 249 of the Act, which allows the Tribunal to make any costs orders that it thinks fit. Further, section 249(3) of the Act explicitly states that the Tribunal may order a practitioner to pay costs even if it does not find that person guilty.

Ms Lagolago argued that costs in disciplinary proceedings are to be decided under the standard regime in the High Court Rules 2016 (Roberts v Professional Committee of the Nursing Council of New Zealand [2014] NZCA 141, (2014) 21 PRNZ 753) and that therefore Ms Lagolago was entitled to an award of costs because of her successful appeal.

The standards committee, however, argued that costs in disciplinary proceedings do not generally follow the event, as to take that approach would ignore the public interest function of the Law Society when bringing a disciplinary action against a practitioner. It relied on the English case of Baxendale-Walker v Law Society [2007] EWCA Civ 233, [2008] 1 WLR 426 which, it highlighted, had been approved in several decisions in the Tribunal and the High Court.

High Court decision

The High Court found that the correct approach in disciplinary proceedings in New Zealand is that costs do not simply follow the event. However, it held further that while the regulatory function being discharged in the public interest by disciplinary proceedings is a relevant factor, it is not a determinative one. It considered that what was required was “an evaluative exercise of the discretion provided by the [Lawyers and Conveyancers] Act”.

Further, the High Court found that the Calderbank rules, which deal with increased costs being sought in situations where a settlement offer has been declined, did not apply to the Tribunal’s exercise of its costs discretion, but that any settlement letters or correspondence between a practitioner and the Law Society would simply be relevant when the question of costs was being considered.

In deciding not to award costs to Ms Lagolago in relation to the proceedings in the Tribunal, the High Court found that Ms Lagolago was out of her depth in the proceeding she took for her clients in the District Court. Further, the factual narrative she put before the Tribunal was confused and complicated. As such, there were reasons for the Law Society to be concerned. The High Court concluded that Ms Lagolago contributed to the unfavourable decision in the Tribunal in a material way.

Grounds for seeking leave to appeal

Ms Lagolago sought leave to appeal on three questions:

  1. Whether the general approach to costs in civil litigation was the starting point for determining costs in a disciplinary proceeding in the Tribunal;
  2. Whether the principles relating to Calderbank letters were applicable in disciplinary proceedings; and
  3. Whether the High Court failed to consider all relevant factors (or considered irrelevant factors) in making its decision.

In declining leave to appeal, the Court of Appeal stated that the decision in Roberts had emphasised the importance of the public function carried out by professional conduct committees. It found that “implicit in that emphasis is the proposition that a strict costs will follow the event rule risks undermining that function”.

The Court of Appeal further referred to two High Court cases which emphasised the wide discretion available to the Tribunal in respect of costs, including the discretion to award costs against a practitioner who successfully defends the charges.

It found no issue with the Tribunal’s or High Court’s factual findings in relation to Ms Lagolago’s conduct in the District Court litigation and found that Ms Lagolago had “no realistic prospect of convincing either forum that she was entitled to costs”.

It then briefly considered the application of the Calderbank rules but concluded that they were “a corollary of the standard costs will follow the events approach and so are of limited assistance in assessing costs on these facts”.

Considering the Court of Appeal’s decision and the findings of the High Court, the issue of costs in relation to proceedings in the Tribunal appear to be well-established. The relevant legislative framework gives the Tribunal a wide discretion to award costs, including the award of costs against a practitioner who successfully defends the charges brought against them.

Further, the case law has clarified that in New Zealand the standard costs will follow the events rules will not apply. However, that does not mean that practitioners who are successful in defending charges brought against them in the Tribunal will never be awarded costs. The fact that there is a public interest involved in the disciplinary proceedings is not a determinative factor, but simply a relevant one. As such, all factors will need to be considered by the Tribunal or appellate Court(s) when deciding whether an award of costs in favour of a practitioner is justified.

Last updated on the 30th November 2018