Gough Finance Ltd v Westpac Bank of Tonga [2005] TOLawRp 31; [2005] Tonga LR 390 (14 September 2005)

IN THE SUPREME COURT OF TONGA

Gough Finance Ltd

v

Westpac Bank of Tonga

Supreme Court, Nuku'alofa
Ford Acting CJ
CV 684/2003

14 September 2005

Costs – taxation of costs – overseas lawyers – not registered in Tonga – costs not recoverable

For the full facts see [2005] Tonga LR 302.

On 15 June 2005 the Court issued a Ruling which concluded that overseas lawyers were unable to claim costs on taxation in the Kingdom unless, at the material time, they held a valid practising certificate. The plaintiff filed an application for review. The plaintiff submitted that there was no provision in the Law Practitioners Act which prohibited costs such as those being claimed in the Buddle Finlay bill from being recovered. In the alternative, the plaintiff sought a deferral of the taxation exercise so as to allow Mr Palmer and his colleagues time to be admitted as law practitioners in Tonga in order that they might be issued with practising certificates with retrospective effect. The defendant opposed any suggestion that a retrospective admission and practising certificate could and should be issued.

Held:

1. A party could file for costs and expenses incurred by a law practitioner only if that law practitioner was registered and admitted under section 3 of the Law Practitioners Act. Section 12 provided that only costs incurred by a law practitioner could be recovered in proceedings. Therefore the relevant question to be considered at any taxation hearing was whether the law practitioner whose name was on the bill of costs i.e. the person who would receive the payment, was admitted and certified to practise in Tonga.

2. As neither Mr Palmer nor his colleagues were admitted and certified to practise law in Tonga the costs and disbursements listed in the Buddle Finlay bill were not recoverable upon taxation in Tonga.

3. The Court was not prepared to accede to the plaintiff's alternative request to defer taxation so as to allow the Buddle Finlay fee earners time to seek admission to the Roll of Law practitioners in Tonga with retrospective effect.

4. Had counsel found it necessary to obtain an opinion from a New Zealand solicitor or law clerk on any peculiarly New Zealand aspect of the case, then the costs of such an exercise would have been recoverable and could have been listed as a disbursement to the plaintiff's lawyer's bill of costs.

Case considered:

Polynesian Airlines v Kingdom of Tonga [2000] Tonga LR 145

Statutes considered:

Law Practitioners Act 1989

Personal Property Securities Act 1999 (NZ)

Rules considered:

Supreme Court Rules

Counsel for plaintiff: Mr Niu
Counsel for defendant: Mr Waalkens QC

Supplementary Ruling on Costs

Background

On 24 August 2004 I delivered judgment on an interlocutory issue, namely, whether this Court has jurisdiction to hear the present case (as claimed by the plaintiff) or whether the action should properly have been brought in New Zealand (as claimed by the defendant). I found for the plaintiff and held that Tonga was the appropriate forum. I also awarded costs to the plaintiff on that interlocutory application in a sum to be either agreed or taxed.

On 20 September 2004 two bills of costs were filed on behalf of the plaintiff. The first bill from Mr Niu claimed costs of $4515.50 together with disbursements of $325.50. The second bill of costs was in the name of W. J. Palmer, a Christchurch based partner with Buddle Finlay --one of New Zealand's leading law firms. The "Buddle Finlay bill" (as I will refer to it) claimed costs incurred by Mr Palmer and various other named "fee earners" in his Christchurch firm totalling NZ $11,182.00 together with disbursements of NZ $206.00. Defence counsel opposed both bills of costs and they were subsequently referred to me for taxation.

I proceeded to tax Mr Niu's bill of costs in the usual way but I had concerns as to whether the Christchurch solicitors were entitled to recover costs upon taxation in Tonga and that is the short point at issue in this supplementary ruling. My concern was expressed in a Minute to counsel dated 3 June 2005. The Minute read:

"MINUTE

Both counsel are invited if they so wish, to file supplementary submissions within seven days of receipt of this Minute (a faxed submission from Mr Waalkens would be acceptable) as to whether the Court has jurisdiction and/or whether it is appropriate to make an award of costs in respect of attendances by persons outside the jurisdiction (Mr Palmer and his colleagues) who do not hold practising certificates under the Law Practitioners Act 1989."

As it turned out, neither counsel filed submissions within the stipulated seven-day period and, therefore, on 15 June 2005 I issued a Ruling in which I concluded that overseas lawyers were unable to claim costs on taxation in the Kingdom unless, at the material time, they held a valid practising certificate. My Ruling centred on the relevant sections of the Law Practitioners Act 1989 which make it an offence for any person to practise as a law practitioner without holding a valid practising certificate. The definition of a law practitioner is broad. The term encompasses anyone who advises any person on a matter of law or legal procedure.

Plaintiff's Supplementary Submissions

Shortly after I issued my Ruling, Mr Niu filed an application for a review of my decision. His application was accompanied by an affidavit deposing that my Minute of 3 June 2005 had not been placed in his "pigeonhole at the Registry" by Court staff until 9 June 2005 and, therefore, the seven-day period fixed for the filing of submissions should not have expired until 16 June. I accepted that explanation and I then proceeded to consider Mr Niu's supplementary written submissions on the point. I also allowed Mr Waalkens the opportunity to file submissions in reply. Both sets of submissions were succinct and helpful.

Mr Niu agreed that, on the face of it, the provisions of the Law Practitioners Act had the effect I had expressed in my Ruling but he submitted that such a literal interpretation of the statutory provisions is not what Parliament could have intended. As counsel expressed it:

"4. On the face of these provisions, it would appear that costs of Mr Palmer and of his colleagues in New Zealand who have acted for the Plaintiff in connection with this matter may not be able to recover their costs against the Defendant, unless they are all admitted to the Roll and have been issued practising certificates in Tonga.

5. However, it is respectfully submitted that that is not what these provisions mean. These provisions were enacted and intended to ensure that only persons duly admitted by the Chief Justice, that is, persons with sufficient professional knowledge and experience, of good character and suitability and who intend to practice in Tonga (were admitted) to the Roll of Law Practitioners of Tonga. This was to ensure that the general public and the judiciary in Tonga are protected against unqualified persons acting as law practitioner(s) in Tonga.

. . . .

8. Furthermore, if a literal interpretation is applied in this case, and it is held that Mr Palmer and his New Zealand colleagues are not to receive their costs (because they have acted as Law practitioners in this matter without having been admitted to the roll and without having in force a valid practising certificate) then they may be said to have committed offences under section 10 and 11 of the Act.

9. Such a position would be harsh and unreasonable. It would mean that no practitioner would want to act on instructions from a practitioner in another country unless he has become admitted and taken out a practising certificate in that country. Such a requirement would be cumbersome, expensive and time-consuming and would greatly impede the execution of legal duties of the practitioners to their clients."

Mr Niu submitted that there was no provision in the Law Practitioners Act which prohibited costs such as those being claimed in the Buddle Finlay bill from being recovered. He also referred to Polynesian Airlines v Kingdom of Tonga [2000] Tonga LR 145, where Finnigan J allowed costs on taxation for lawyers in the United Kingdom and in New Zealand even though they had held no practising certificate in Tonga, and he invited the Court to take a similar approach in the present case.

In the alternative, Mr Niu sought a deferral of the taxation exercise so as to allow Mr Palmer and his colleagues time to be admitted as law practitioners in Tonga in order that they might be issued with practising certificates with retrospective effect.

Defendant's submissions

In reply, Mr Waalkens submitted that the Court's Ruling of 15 June 2005 was correct. In relation to the Polynesian Airlines case (where he had appeared as counsel) Mr Waalkens submitted that the point now at issue had never been raised before Finnigan J and he, therefore, took issue with Mr Niu's contention that Finnigan J had "correctly dealt with the matter."

Mr Waalkens also took issue with Mr Niu's approach to the interpretation of the Law Practitioners Act. He submitted that the proper approach to any question of statutory interpretation: "requires the court to give effect to the plain and literal meaning of the words used in the statute." As Mr Waalkens expressed it:

"The Law Practitioners Act 1989, with respect, could not be clearer. Indeed, in paragraph 4 of the plaintiff's supplementary submissions, it is acknowledged "on the face of those provisions" the interpretation arrived at by the Court is correct."

Mr Waalkens opposed any suggestion that a retrospective admission and practising certificate could and should now be issued.

Findings

I agree with Mr Waalkens's observations about the Polynesian Airlines case. I find that decision of limited assistance only because, for some reason, it did not directly consider the application of the Law Practitioners Act or how it fits in with the Supreme Court Rules relating to costs claims.

I also agree with Mr Waalkens's approach to questions of statutory interpretation. Mr Niu invites the Court, effectively, to ignore the literal interpretation of the relevant sections of the Law Practitioners Act and focus instead on what Parliament must have intended when the provisions were enacted. The problem with that submission is that it overlooks one of the primary principles of statutory construction, namely, that it is not permissible for the courts to speculate as to Parliament's intention. As is stated in Halsbury, vol 44 para 857:

"If the words of a statute are clear and unambiguous, they themselves indicate what must be taken to have been the intention of Parliament, and there is no need to look elsewhere to discover their intention or their meaning."

In the present case there is no suggestion of any ambiguity of meaning and, as Mr Waalkens's observed in the passage cited above, Mr Niu freely acknowledged in his supplementary submissions that the plain and literal meaning of the relevant statutory provisions is the interpretation arrived at by the Court in its Ruling of 15 June 2005. That really is the end of the matter but it may be helpful if I try and summarise my analysis of the position:

(1). A successful party is entitled to lodge a claim for cost under Order 29 Rule 3(2) of the Supreme Court Rules;

(2). The successful party is entitled under that provision to claim costs incurred by the law practitioner in respect of:

(a) the amount of time spent in preparation of pleadings and general preparation for trial;

(b) the amount of time spent in court;

(c) counsel's fee; and

(d) any other disbursements;

(3). Order 29 Rule 4(1) provides that what shall then be allowed to the successful party are: "all such costs, charges and expenses as are reasonably necessary or proper for the attainment of justice or for maintaining or defending the rights of any party";

(4). The Law Practitioners Act ("LPA ") provides that only a "law practitioner" is entitled to sue for or recover fees, outlays or expenses in relation to any act or proceeding (LPA s12);

(5). Therefore, only costs, outlays and expenses incurred by a "law practitioner" can be recovered in costs proceedings;

(6). "Law practitioner" is defined in section 3(2) of the LPA and section 3(1) of the LPA requires that a law practitioner must be registered on the Roll of Law Practitioners in the Kingdom of Tonga and hold a valid practising certificate.

It follows from the foregoing analysis that a party can file for costs and expenses incurred by a law practitioner only if that law practitioner is registered and admitted under section 3 of the LPA. Section 12 of the LPA then provides that only costs incurred by a law practitioner can be recovered in proceedings.

The relevant question to be considered at any taxation hearing, therefore, is whether the law practitioner whose name is on the bill of costs i.e. the person who will receive the payment, is admitted and certified to practise in Tonga.

The Buddle Finlay bill covers work carried out by eight different fee earners in that firm. It is expressed in New Zealand dollars and it is in the name of "W. J. Palmer --Solicitor for the plaintiff." As neither Mr Palmer nor his colleagues are admitted and certified to practise law in Tonga the costs and disbursements listed in the Buddle Finlay bill are not recoverable upon taxation in Tonga.

I am not prepared to accede to Mr Niu's alternative request to defer taxation so as to allow the Buddle Finlay fee earners time to seek admission to the Roll of Law practitioners in Tonga with retrospective effect.

There is a final matter I wish to touch upon briefly. The defendant in its challenge to jurisdiction had raised issues relating to the significance and application of the (New Zealand) Personal Property Securities Act 1999. On behalf of the plaintiff, Mr Niu submitted:

"There was no choice in this matter for the plaintiff. Local counsel was not versed with New Zealand law or at least with the Personal Properties Securities Act. It had to engage Mr Palmer and his firm to attend to the submissions in respect of the issue of jurisdiction."

As perhaps the foremost senior counsel at the Tonga Bar, Mr Niu was perfectly capable of drafting and presenting submissions on the critical jurisdictional point and in dealing adequately with all other aspects of the case for the plaintiff. Had counsel found it necessary to obtain an opinion from a New Zealand solicitor or law clerk on the Properties Securities Act or any other peculiarly New Zealand aspect of the case, then no doubt the costs of such an exercise would have been recoverable and could have been listed as a disbursement to Mr Niu's bill of costs. It appears, however, from the submission quoted above that the plaintiff company elected to instruct Mr Palmer of Buddle Finlay to prepare all the submissions relating to jurisdiction. In his bill of costs Mr Niu makes no reference to the Buddle Finlay bill and he refers to Mr Palmer as his "instructing counsel".

It is always open to a party, of course, to proceed in such a manner but, as it is not an approach catered for under the provisions of the Supreme Court Rules and the Law Practitioners Act, the luxury of using overseas solicitors in such a way must be borne by the client itself.

As the issue dealt with in this Supplementary Ruling was raised by the Court rather than the parties, I decline to make any award of costs.