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Counsel ordered to pay costs in failed private prosecution

8 Mar 2024

| Author: Anna Longdill

Costs – Criminal Cases Act 1967, ss 8 and 13 – private prosecution – leave to appeal dismissal of charge denied – application for costs – good grounds for costs award on appeal –  costs in excess of scale but not full indemnity costs – costs against prosecuting counsel personally

New Zealand Commercial Law Corp Ltd v Lepionka & Company Investments Ltd [2023] NZHC 3878 per Becroft J.

 

From 2015 to 2021 there was extensive civil litigation between Garth Paterson and Stefan Lepionka (and both of their associated entities). In August 2020, the High Court made an order effectively declaring Paterson, an undischarged bankrupt, to be a vexatious litigant.

Paterson’s lawyer, barrister David Hayes, is the sole director and shareholder of New Zealand Commercial Law Corp Ltd. This company in 2021 filed a private prosecution against Lepionka & Company Investments Ltd, alleging theft by a person in a special relationship (ss 220 and 223 Crimes Act 1961). The evidence relied on by the prosecution was principally a statement by Paterson.

In July 2022, the District Court dismissed the charge because there was no case to answer and the proceedings were an abuse of process. The judge concluded the prosecution was seemingly brought in bad faith as part of an ongoing campaign of harassment by Paterson, who had turned to the criminal jurisdiction after he was declared a vexatious litigant in the civil jurisdiction. The judge noted the evidence was woefully insufficient, and the prosecutor failed to take basic investigatory steps or critically examine the witness statement or documentation.

The District Court awarded $35,000 in costs jointly and severally against the prosecuting company and Hayes personally – an award well in excess of scale costs under the Costs in Criminal Cases Regulations ($1,285), but less than the indemnity costs sought by the defendant ($73,213.52 plus disbursements).

The prosecuting company sought leave to appeal the District Court’s decision dismissing the charge on a question of law. There was no appeal from the costs decision.

When the matter first came before the High Court, the judge raised serious concerns regarding Hayes’ position, noting the Solicitor-General’s requirement for officers of the court to adhere to the Solicitor-General’s prosecution guidelines when acting for a private prosecutor. Hayes was afforded time to consider his position.

Hayes later confirmed that he had done so, he was still instructed to proceed, and he felt able to present arguments to the court. It quickly became apparent, however, that the application was doomed. After a short adjournment, the leave application was abandoned and was, by consent, dismissed with costs reserved. The respondent subsequently sought full indemnity costs.

 

Applicable principles: Costs in Criminal Cases Act 1967, ss 8 and 13 – costs on appeal – private prosecution – whether there were good grounds for making an award of costs on appeal – should the scale costs in the Costs in Criminal Cases Regulations be exceeded? – whether case was appropriate for a costs award against counsel personally.

 

Held: Costs of $22,000 plus disbursements awarded against the applicant company. Hayes is jointly and severally liable for costs totalling $16,500 plus disbursements.

There were “spectacularly good” grounds for making an award of costs on appeal. Costs in excess of scale are desirable but full indemnity costs are not justified. Hayes acted negligently by bringing the application for leave to appeal and a costs order against him is justified.

 

Note: The court noted the $226 per half-day scale costs under the Costs in Criminal Cases Regulations were “derisory”, “hopelessly out of date”, and “border[ed] on the farcical”. It was noted there have been continuing calls for prompt remedial attention.

 

New Zealand Commercial Law Corp Ltd v Lepionka & Company Investments Ltd [2023] NZHC 3878.

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