The (Almost) Secret Ransom For An Appearance Of Justice

‘To no one will we sell, to no one deny or delay right or justice’ came into English law lexicon via the Magna Carta exactly 800 years ago.  Today it is the longest surviving, if not the most rooted, legal tenet in democracies around the world.magna-carta-banner

Earlier this year, the New Zealand Court of Appeal broke with precedent when one of its many registrars decided one appellant needed to pay $344,000 ‘security’ to obtain a hearing.

Security is collected by the NZ Court of Appeal to insure payment of the respondent’s legal costs if the appeal proves unsuccessful.

The registrar issued this historic impediment after initially setting security at the $23,520 figure provided by the rules – 7% of his/her revised ruling.

The legal community and public do not know the date of the decision, nor can we view this precedent.  We do not know the name of the registrar; and, we may not have known of its mere existence if the decision had not been appealed to a judge under rule 7(2) of the Court of Appeal (Civil) Rules 2005.

Yet this judicial decision by an administrative registrar with a meagre and notably non-legal education becomes a more important decision in New Zealand jurisprudence than the Magna Carta itself, for it bestows the keys to New Zealand’s highest court by right potentially upon the clerk who answers the bell at the front counter. Yet this may not be the most intriguing facet of the travesty.

Under the Supreme Court decision in Reekie v Attorney General issued last year, orders of security by Court of Registrars have one and only one appeal; that to a single judge sitting alone in chambers – and no right to a hearing.  However, when the Registrar’s decision in Houghton v Credit Suisse was challenged by Colin Carruthers QC on behalf of the appellant, three permanent judges of the Court of Appeal convened an unprecedented hearing on 13 April 2015 to “review” the judicial decision of the almighty court clerk.  This composition of the Court was yet again atypical, as New Zealand Court of Appeal panels are commonly comprised of a mix of Court of Appeal and High Court judges – and, more stunning, this charade was over a court clerk’s ruling.

At least 6 court-friendly lawyers packed the Court of Appeal to be heard – some would say ‘feast’ – at this unprecedented banquet.  They included Alan Galbraith QC in addition to Carruthers.  Relevantly, overseas litigation funders backed the appellant and overseas insurance companies backed the investment banking respondents.    New Zealand judges have increasingly and privately expressed worry among their inbred clan that such overseas intrusion into the business of our most hallowed courts threatens their supremacy – and, of course, the justice that goes along with it.

Two years ago overseas litigation funders financed a class action challenge to ANZ Bank’s rape and pillage charging practices against depositors who overdraw their accounts.  The many judges who owe their beachside baches to the banks who pay their mortgages spent a less-than-pleasant holiday at the beach that year and came back with a renewed vigour to uphold all the principles we in Aotearoa hold dear.

The three judge panel in Houghton issued its reserved judgment last week.  Common for New Zealand courts – albeit more than a little embarrassing for its law-abiding citizenry – this panel of New Zealand’s brightest judges proved the wisdom of Solomon never reached our shores in ruling, “We consider that total security of $100,000 appropriately balances the parties’ interest in the circumstances” notwithstanding their acceptance at [14] and [15] of the Judgment that this order was still $6,000 more than the maximum justified under law!

Pertinently, the Court of Appeal recognised in this important judgment that Mr Houghton had exhausted the $5 million legal indemnity of his primary litigation funder.  The back-up funder is now expected to pony-up the overage, with the Court of Appeal leaving the door open for considering a higher ransom if the funder is stupid enough to pay it, warning “Preparation will be correspondingly extensive. Each party is likely to have three counsel.”, before foretelling, “As noted, the (security) amount may be revisited if circumstances plainly warrant it.”

What is “plain” is three counsel acting for each party in the appeal may not be enough, despite some charging $1,000 per hour or more.  For this level of glad-handing you would expect one counsel to wax your Maserati and one to give you a happy ending at the same time they are arguing your appeal.

Getting what the legal idealists and naïve do not expect is nothing new in the New Zealand courts.  At least it was a good day for fishing in New Zealand.  Litigation funders who bring their fishing rods to New Zealand to investigate what went wrong will likely lose themselves in the beauty sufficient to not care about their wallets.