Accident Compensation Corporation v Carey
[2021] NZHC 748
•7 April 2021
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE
CIV-2020-485-0419
[2021] NZHC 748
BETWEEN ACCIDENT COMPENSATION CORPORATION
AppellantAND
WILLIAM PHILLIP CAREY
Respondent
Hearing: 23 February 2021 Counsel:
P J McBride and S J Hack for Appellant W Aldred as counsel assisting the Court No appearance for the Respondent
Judgment:
7 April 2021
JUDGMENT OF GRICE J
(Appeal against costs)
[1] This is an appeal from the District Court on a question of law against a decision to award costs of $13,179 and disbursements of $1,552.80 against the Accident Compensation Corporation (the Corporation) following Mr Carey’s successful appeal to the District Court.1
[2]Leave was granted in the following terms:2
[10]The simple issue for determination by the High Court is whether or not this Court has the jurisdiction to award costs on the determination of an appeal. That would include also the power to award disbursements. If there is such a power, can costs be awarded in favour of a lay litigant who is not represented by a certified lawyer.
1 Accident Compensation Corporation v Carey [2020] NZACC 31 [“Costs Decision”].
2 Accident Compensation Corporation v Carey [2020] NZACC 95 [“Leave Decision”].
ACC v CAREY [2021] NZHC 748
[11]Clearly, within that broad legal issue the questions of law posed by the corporation are appropriately referred to the High Court for determination.
[3]The Corporation says that the Judge erred in the following respects:
(a)by failing to properly address and/or decide issues of law determining availability of an award of costs to the respondent;
(b)by applying scale costs for counsel appearing in the District Court to non-counsel; and
(c)by failing to provide any adequate reasons for the decision made.3
[4] Mr Carey had been represented throughout the Accident Compensation Corporation (ACC)4 review process and subsequent District Court appeal by his son, Mr Damien Carey. Mr Carey Junior does not hold a lawyer’s practising certificate nor does he generally appear as an advocate in the ACC jurisdiction.5
[5] Following a successful appeal to the District Court, Mr Damien Carey had sought “reimbursement” of total costs of $308,375.6 He produced to the Court a document headed up “Damien Carey Law”. This purported to be an invoice to his father for $373,127.03. The invoice dated 27 October 2019 included a list of hours (units) apparently spent on the appeal with narrations. A further account from Mr Damien Carey to his father set out a fee based on 520 hours at $500 per hour, which, together with disbursements and GST, totalled $308,775. That account had attached to it a document titled “Terms of engagement for Damien Carey” on “Damien Carey Law” letterhead.
[6] The Corporation negotiated with Mr Damien Carey over costs following the appeal. It made a without prejudice offer that was not accepted. The issue of costs
3 Leave Decision, above n 2, at [3].
4 I refer to “ACC” as a general reference to Accident Compensation.
5 Leave Decision, above n 2, at [8] and [9].
6 Costs Decision, above n 1, at [2].
was therefore determined on the papers by the District Court Judge who had heard the substantive appeal.
[7] The Judge noted that Mr Damien Carey had effectively acted as an advocate for his father in the appeal and had rendered his father an account for $308,375. However, Mr Damien Carey had said that he would not seek to enforce payment of this account should he not be successful in obtaining that amount as an award of costs.7
[8] As an alternative, Mr Damien Carey sought costs in an amount calculated by reference to the District Court Rules 2014 prescribed scale for a category 3 daily rate. This is one of three daily rate categories prescribed in sch 5 of the District Court Rules as rates for costs awards based on an assessment of the skill and expertise required of counsel to conduct proceedings relevant to the case. The levels range from straightforward proceedings able to be conducted by junior counsel (category
1) to complex requiring counsel to have special skill and experience (category 3).8
[9] The Judge rejected Mr Carey’s alternative claim based on a category 3 daily rate, noting that r 14.3 of the District Court Rules provided that the category 3 daily rate related to “[p]roceedings that because of their complexity or significance require counsel to have special skill and experience”.9 The Judge selected category 2 as the appropriate rate and went on to apply the District Court Rules time allocations for various steps taken in the appeal.10 These are set out in three bands in sch 4. The total costs award made in favour of Mr Carey based on a category 2 rate was
$13,179.11
7 Costs Decision, above n 1, at [1] and [2].
8 For a further description of the principles applying to the determination of costs in the District Court Rules 2014, see below at [20].
9 Costs Decision, above n 1, at [12].
10 Category 2 daily rates are for proceedings of average complexity requiring counsel of average skill and experience.
11 Costs Decision, above n 1, at [13], [14] and [15].
The background facts12
[10] In brief, Mr Carey Senior had been a self-employed fisherman. As a result of a head injury suffered in about 1975, he suffered hearing loss. He saw an ear, nose and throat specialist and in May 1978 underwent a right stapedectomy operation at Nelson Hospital. Following infections and other complications, he resumed employment as a fisherman but by the mid 1980’s he had reached the stage where he could not work because of the problems with his ear.
[11] In 2002, some 24 and a half years after the surgery, Mr Carey first made a claim to the Corporation in respect of “medical misadventure arising from the ear surgery of 19 May 1978”. That claim was declined in May 2003. Thirteen and a half years later, in September 2016, Mr Carey, with the assistance of his son, lodged a late application for review of the May 2003 decision. This was permitted to proceed, and the Corporation then accepted cover for the 1978 medical misadventure.
[12] In August 2017, the Corporation declined backdated weekly compensation noting that the substantial period between the personal injury being sustained and a claim for weekly compensation of 39 years prejudiced its ability to determine the claim. Mr Carey successfully reviewed this decision.
[13] However, the Corporation subsequently declined the backdated earnings- related compensation on the basis that Mr Carey could not prove he had suffered a loss of earnings due to an incapacity to work. Mr Carey was unsuccessful in his review of that decision and filed an appeal to the District Court in December 2018.
[14] The appeal to the District Court was partly successful in that the District Court allowed earnings related compensation until the commencement of Mr Carey’s employment with Sealords in October 1987.13 Mr McBride, for the Corporation, also appeared in the District Court. He noted that the hearing in the District Court
12 Carey v Accident Compensation Corporation [2019] NZACC 126 [“Substantive Appeal Decision”]. I base the following background on the judgment of the District Court in the substantive appeal decision.
13 At [205].
concluded in under a day. He said appeals usually last only a few hours. Mr McBride noted that Mr Damien Carey had addressed the Court for most of that day’s hearing.
[15] As Ms Aldred, counsel assisting the Court, pointed out the Judge in the appeal decision made a number of references to Mr Damien Carey’s advocacy. For instance, the Judge while noting the brief of evidence, which had been compiled by Mr Carey “in collaboration with his son”, at times presented as more in “nature of comment and submissions” than on what the appellant said occurred, nevertheless said:
[24] …the brief has been diligently prepared and as we will be seeing later, the appellant and his son have gone to considerable efforts to locate and produce appropriate documents relating to all matters to this appeal. … I have nevertheless concluded that both the appellant and his son have striven to provide the Court with accurate evidence relating to what has occurred.
[16] I now turn to consider the issues on appeal. The first is whether the District Court Judge failed to properly address and/or decide issues of law determining any availability of an award of costs.
Did the Judge fail to properly address and/or decide issues of law determining any availability of an award of costs?
[17] The relevant legislation is the Accident Compensation Corporation Act 2001 (AC Act 2001).
[18] Mr Damien Carey in a memorandum on costs to the District Court attached his bill of costs of $308,775 but submitted to the District Court that he was “willing to accept the order of costs with a condition the courts deem the costs reasonable and fair”.
[19] Mr Carey Junior went on to say that it was accepted that he was not a “professional” and that the process for awarding costs to an advocate is “not clear and well established”. He requested the Court to determine costs.
The District Court costs judgment
[20] The costs judgment referred to r 14.1 of the District Court Rules noted that all matters are at the discretion of the Court as they relate to costs.14
[21] The Judge then went on to note that the issue of costs was dealt with in Dickson-Johansen v Accident Compensation Corporation.15 In that decision, the Judge had said that rr 14.3 through to 14.19 of the District Court Rules provided a detailed framework for costs in the District Court based on set bands of appropriate daily recovery rates.16
[22] The Judge noted that in Campbell v Accident Compensation Corporation17 Judge Ongley had said that an extension of the principle that an unrepresented litigant is not entitled to an award of costs in judicial proceedings was that a litigant is not able to recover a sum in costs for the time and trouble of an unpaid person assisting the litigant.18
[23] However, the Judge then went on to make his determination on costs as follows:
[8]Mr McBride also refers to the case of McGuire v Secretary for Justice19 which confirmed that an award of costs should not exceed the costs incurred by the party claiming costs.
[9]There also needs to be an assessment as to whether the costs claimed have been reasonably incurred. Mr McBride also refers to the Court of Appeal decision in Health Waikato v Elmsley20 where the Court of Appeal noted at paragraph [14]:
[14]A starting point at 66 per cent is generally regarded as helpful in ordinary cases.
[10]As to disbursements Mr McBride refers to the McGechan commentary on High Court Rule 14.12.01, that disbursements must be specific to the particular proceeding, “reasonably necessary”, “reasonable amount” and “proportionate”.
14 Costs Decision, above n 1, at [4].
15 Dickson-Johansen v Accident Compensation Corporation [2018] NZACC 36 (DC) at [6].
16 Costs Decision, above n 1, at [6].
17 Campbell v Accident Compensation Corporation [2013] NZACC 197.
18 Costs Decision, above n 1, at [7].
19 McGuire v Secretary for Justice [2018] NZSC 116, [2019] 1 NZLR 335.
20 Health Waikato Ltd v Elmsley [2004] 17 PRNZ 16 (CA).
[11]I agree with what Judge Powell says at paragraph [18] of the Dickson-Johansen decision that there appears to be no reason why the scales set out in the District Court Rules should not be used for the calculation of costs in accident compensation appeals.
[24] The Judge rejected Mr Carey’s suggestion that category 3 costs should be awarded and then applied the scale daily recovery rate on a category 2 basis to the time allocations specified for various steps based on the bands in Schedule 4 of the District Court Rules.
[25] In summary, the Judge relied on Dickson-Johansen as authority for applying the scale to award costs in favour of a non-lawyer advocate.
[26] There is little argument that a successful legally represented litigant is generally entitled to an award of costs. However, lay advocates generally do not have the same rights of audience in the courts that lawyers enjoy. The District Court Rules provisions concerning costs are designed to provide a contribution toward litigants’ legal costs. However, they do not expressly deal with non-lawyer advocates.
[27] The Dickson-Johansen case had concerned an award of costs to a lawyer. The Judge in that decision had made comments suggesting the scale might be applied more widely but confined the judgment to the costs to be awarded for legal representation. In this case the judgment failed to properly address and/or decide issues of law determining the availability of an award of costs to the respondent where a non-lawyer advocate was representing Mr Carey. The Court applied the scale to calculate costs without adequate the reasons as to why it should apply here. The Judge did not address the issue of whether the scale should be used to calculate costs incurred for non-lawyer advocates, nor did he provide reasons for his decision to apply the scale.
[28] Ms Aldred submitted that there was even a more fundamental issue involved than whether the Court was able to award scale costs or any costs for non-lawyer advocates. That was whether non-lawyer representatives had a right of audience in the District Court on an ACC appeal at all. This was because of the “clumsy” interface between the statutory ACC Dispute Resolutions Scheme, the District Court
Rules and the District Court Act 2016. To consider that issue requires an outline of the ACC dispute resolution scheme and the District Court Act and Rules.
The ACC dispute resolution process
[29] In broad terms, the relevant legislation is the AC Act 2001, which sets out the decision-making process follows:21
(a)Where cover, entitlement (compensation), or similar claims are made,
ACC must investigate, and issue its decision.22
(b)A party who is dissatisfied with ACC’s decision can seek a statutory independent review of that decision.23 That results in a review decision.
(c)Where representation costs have been incurred in that review, a costs award may be available.24 Maximum amounts, including as to disbursements, are fixed by regulations.25 Costs can extend to non-lawyer representatives.26
(d)A party dissatisfied with a review decision may appeal to the District Court.27 That is a general appeal by way of rehearing based on the evidence at review (and additional evidence by leave28). Most appeals to the District Court are heard in a 1.5–hour fixture.
21 Dean v Chief Executive of the Accident Compensation Corporation [2007] NZCA 462, [2008] NZAR 318; and Hawke v Accident Compensation Corporation [2015] NZCA 189, [2015] NZAR 897.
22 Accident Compensation Act 2001, pt 3. The limited rights that existed under repealed acts have been preserved: Accident Compensation Act 1972, Accident Compensation Act 1982, Accident Rehabilitation, Compensation Insurance Act 1992 and Accident Insurance Act 1998. The existence and extent of any such entitlement falls for consideration under the Acts and Regulations.
23 Accident Compensation Act 2001, pt 5.
24 Section 148.
25 Accident Compensation (Review Costs and Appeals) Regulations 2002.
26 Schedule 1.
27 Accident Compensation Act 2001, ss 149 to 164.
28 Accident Compensation Act 2001, s 156; and Chief District Court Judge Guidelines to Practice and Procedure for Accident Compensation Appeals in the District Court (Ministry of Justice, April 2017) [“Guidelines for ACC Appeals in the District Court”] at [5].
(e)Issues as to costs in an appeal to the District Court are not specifically addressed in the AC Act 2001. However, s 150 expressly incorporates the District Court Rules.
[30]Section 155(1) of the AC Act 2001 relevantly provides as follows:
155 Hearing of appeal
(1)The following persons are entitled to appear at the hearing of the appeal and to be heard at it, either personally or by a representative:
(a) The appellant;
(b) Any other person who had a right to be present and heard at the hearing of the review.
(Emphasis added).
[31] Ms Aldred provided a useful comparative table of the wording used in similar provisions in earlier ACC legislation. The Accident Insurance Act 1998 had similar wording29 however its predecessor the Accident Compensation and Rehabilitation Insurance Act 1998 (ARCI Act) was worded slightly differently as follows:
92. Hearing and determination of appeal–
…
(3)At any appeal, any party may appear and be heard personally or by any person authorised by the party to do so.30
(Emphasis added)
[32] Ms Aldred noted that in the explanatory note to the Accident Insurance Bill, which introduced the wording “either personally or by a representative” in the 1998 Act, there was no explanation for the change in wording. The general comment in the Explanatory Note under the heading “Disputes Resolution” said:31
… mechanisms established for resolving disputes regarding cover and entitlements between insurers, employers, claimants and health professionals are designed to ensure that dispute can be resolved quickly, fairly, and cost effectively. The disputes procedures are consistent with the current disputes procedures contained in the ARCI Act 1992 …
29 Accident Insurance Act 1998, s 158(1).
30 Accident Compensation and Rehabilitation Insurance Act 1992, s 92(3).
31 Accident Insurance Bill 2001 (49).
This involves a process of independent review, based on the principles of natural justice and procedural fairness, prior to any appeal to the District Court. Parties to the dispute will be able to appeal a review officer’s decision to the District Court …
[33] The AC Act 2001 makes no mention of costs on appeals to the District Court. That contrasts with s 148, which specifically deals with costs arising from review hearings. These are awarded in accordance with the Accident Compensation (Review Costs and Appeals) Regulations 2002.32 In that case, costs may be claimed by the applicant or made in respect of a representative of the applicant.33
[34] A District Court appeal is to be “dealt with in accordance” with the District Court Rules promulgated under the District Court Act 2016.34 Ms Aldred submitted that s 107(4) of that Act may preclude a representative of an ACC claimant on appeal from entitlement to any fee or in particular an award of costs.
[35] Section 107(4) of the District Court Rules provides for rights of appearance in the District Court as follows:
107 Right to appear
(1)A natural person who is a party to a proceeding in the court may—
(a)appear and act for himself or herself; or
(b)be represented by a lawyer.
(2)A corporation may—
(a)appear and act through any officer or attorney of the corporation; or
(b)be represented by a lawyer.
(3)In special circumstances and with the permission of the court, a person (P), whether a natural person or a corporation, may be represented—
(a)by an agent authorised in writing by P, if P is in New Zealand or carries on business in New Zealand; or
(b)if P is not in New Zealand or does not carry on business in New Zealand, by an agent authorised by a person holding P’s
32 Accident Compensation (Review Costs and Appeals) Regulations 2002, schs 1 and 4.
33 Schedule 1.
34 Accident Compensation Act 2001, s 150.
power of attorney to become a party to the proceeding in P’s name.
(4)An agent who represents a person under subsection (3) is not entitled to receive any fee or reward for doing so.
[36] Mr McBride pointed out that in practice under the present ACC legislation and its predecessors, full rights of audience in an ACC appeal in the District Court have been granted to any representative of an appellant, not just counsel. However, he noted that the issue had not been specifically determined. Mr McBride also pointed out the provisions in s 27(1)(b) of the Lawyers and Conveyancers’ Act 2006. That provision indicated that the prohibition on non-lawyers representing parties did not apply if the representation was allowed by any act or regulation or by the Court or Tribunal.35
[37] While Ms Aldred pointed out an arguable inconsistency between the two pieces of legislation, in my view, the specific provisions of the AC Act 2001 override the general provisions in s 107 of the District Court Act. Section 155 of the AC Act 2001 specifically provides that a party is entitled to appear at the hearing of the appeal and to be heard at it “either personally or by a representative”.
[38] The usual rules of interpretation apply here. Interpretation commences with the text informed by the purpose and the context,36 including the statutory scheme of the relevant legislation.37
[39] Section 107 of the District Court Act prohibits an agent or attorney “who represents” a person from receiving a fee or reward. However, that must be read in context. Section 107(3) allows the Court to give permission to a person to be represented by an agent authorised in writing or an agent authorised by a person holding a relevant power of attorney to become a party to the proceeding in the name of the litigant. The reference to “agent” here indicates a principal/agent relationship, rather than a lay advocate/client relationship. This is reinforced by the reference to
35 Lawyers and Conveyancers Act 2006, s 27(1)(b).
36 Interpretation Act 1999, s 5; and Commerce Commission v Fonterra Co-Operative Group Ltd
[2007] NZSC 36, [2007] 3 NZLR 767 at [24].
37 Westfield (New Zealand) Ltd v North Shore City Council [2005] NZSC 17, [2005] 2 NZLR 597 at [6].
appointment under a power of attorney. The donee of a power of attorney subject to the terms of appointment steps into the shoes of the donor. That contrasts with the nature of representation contemplated by s 155 of the AC Act 2001, which denotes representation in the form of advocacy not personal agency.
[40] A “representative” in the AC Act 2001 refers to a representative of a party who is an advocate. “Represented…by an agent”, in s 107(3) and “[a]n agent… who represents...” in s 107(4) refer to a person acting in a personal agency capacity or as a donee under a power of attorney.
[41] This interpretation is supported by the well-established practice that any representative of a party, not just counsel, has been allowed full rights of audience in an ACC appeal before a District Court. The Chief District Court Judge also contemplates that a party may be represented by a non-lawyer advocate and makes provision for that and for the award of costs in the Guidelines to Practice and Procedure for Accident Compensation Appeals in the District Court.38
[42] An interpretation allowing a party to have recourse to a non-lawyer advocate is also consistent with access to justice and the notion that disputes under the ACC dispute mechanisms should allow disputes to be resolved “quickly, fairly and cost effectively”.39
[43] I conclude that non-lawyer representatives have a right of audience in District Court Act appeals in the Accident Compensation jurisdiction. There is no bar under s 107 to their charging a fee.
[44] Therefore, Mr Damien Carey was entitled to appear and prima facie there was no bar to an award of costs for a non-lawyer advocate. The next step is to consider how that award should be approached.
38 Guidelines for ACC Appeals in the District Court, above n 28, at [3.1] and [7.2] for a non-lawyer representative or advocate to appear and to seek costs.
39 Accident Insurance Bill 2001 (49), Explanatory Note.
Treatment of representative’s costs on ACC appeals to the District Court
[45] Until the 2018 judgment in Dickson-Johansen,40 the District Court had generally addressed costs on a “tariff based or guided approach” for ACC appeals.41 Scale costs were awarded in respect of counsel only, but less frequently.
[46]The fixed “tariff” approach was summarised in a 2008 decision as follows:42
[12] Notwithstanding the approach set out in the Rules, the conventional starting point for determination of costs in this jurisdiction is as set out by Judge Barber in P v Accident Compensation Corporation43 which in summary provided:
•The Court has a complete discretion in respect of costs.
•Each case must be determined on its own particular facts.
•An award for costs on appeal was confined to costs that are incurred in that appeal proceeding.
•The normal award for a successful appellant for a fully argued appeal in this jurisdiction is the range of $2,000-$2,500
(“although I add that it could rise to $3,000 or more if there has been more extensive evidence or submissions which were warranted”).
•Although a party may incur legal expenses considerably greater than the range normally awarded, a higher award will not be made unless there is something exceptional or unusual that warrants a higher award.
•Where an appeal has been settled prior the hearing, an award should not exceed the normal award of costs for successful appellants following a full hearing unless, again there is something exceptional or unusual that warrants such an award.
[47] Judge Powell (as he then was) in Dickson-Johansen commented that in respect of costs sought for a legal representative “… I can see no reason why the scale set out in the Rules should not be used for the calculation of costs in accident
40 Dickson-Johansen v Accident Compensation Corporation, above n 15.
41 P v Accident Compensation Corporation [2008] NZACC 152 (DC); Henson v Accident Compensation Corporation [2018] NZACC 104; and Howard v Accident Compensation Corporation [2018] NZACC 37 (DC).
42 Dickson-Johansen v Accident Compensation Corporation, above n 15.
43 P v Accident Compensation Corporation, above n 41, at [15]—[21] and [39].
compensation appeals. The Court will in fact continue to retain flexibility in appropriate cases, including whether costs sought are by advocates”.44
[48] Since Dickson-Johansen, the costs of counsel have been more frequently fixed with reference to scale costs. However, Dickson-Johansen did not change the position in relation to the costs where a party retained a representative or lay advocate. Nevertheless, Judge Powell made some useful observations to which I will return.
[49] In the case of lay advocates, Judge Henare in Jacob v Accident Compensation Corporation45 concluded that the costs scale under the District Court Rules did not apply in the case of a representative or advocate who had a law degree, was enrolled as a barrister and solicitor but did not hold a practising certificate.46
[50] In that case, the Judge noted there was an “important professional distinction” between an advocate, including one with a law degree, and a lawyer. She noted the advocate was not subject to review and oversight by Te Kāhui Ture o Aotearoa | New Zealand Law Society and did not “have the additional costs, professional responsibilities and liabilities borne by a lawyer”.47 The Judge also noted there was a range of background experience and competencies of advocates appearing in the ACC jurisdiction: “at one end of the spectrum an advocate may be a family member or a friend. At the other end of the spectrum, an advocate may be a representative with considerable experience in the jurisdiction”.48
Approach under the District Court Rules
[51] The usual approach to costs awarded in the District Court is set out in the District Court Rules. These provide that costs are at the discretion of the District Court.49
44 Dickson-Johansen v Accident Compensation Corporation, above n 15, at [18].
45 Jacob v Accident Compensation Corporation [2018] NZACC 141 at [14].
46 At [9].
47 At [11].
48 At [10].
49 District Court Rules 2014, r 14.1.
[52]The principles applying to costs are set out at r 14.2 as follows:
The following general principles apply to the determination of costs:
(a)the party who fails with respect to a proceeding or an interlocutory application should pay costs to the party who succeeds:
(b)an award of costs should reflect the complexity and significance of the proceeding:
(c)costs should be assessed by applying the appropriate daily recovery rate to the time considered reasonable for each step reasonably required in relation to the proceeding or interlocutory application:
(d)an appropriate daily recovery rate should normally be two thirds of the daily rate considered reasonable in relation to the proceeding or interlocutory application:
(e)what is an appropriate daily recovery rate and what is a reasonable time should not depend on the skill or experience of the solicitor or counsel involved or on the time actually spent by the solicitor or counsel involved or on the costs actually incurred by the party claiming costs:
(f)an award of costs should not exceed the costs incurred by the party claiming costs:
(g)so far as possible the determination of costs should be predictable and expeditious.
[53] Rules 14.3 to 14.19 then provide further guidance and, in particular, prescribe appropriate daily recovery rates (categories 1–3)50 and time allocations attributable to all steps in a proceeding or an appeal using the appropriate band. Bands A to C set out allocated days or parts thereof for each step.51
[54] The costs are then generally calculated by selecting a category for the proceedings and multiplying the selected daily rate for each step by a time allocation. The total will be the costs award subject to any other adjustments.
[55] At the same time the Court retains a discretion as to costs. In addition, the Court may decline, decrease or increase costs from those figures based on various factors set out in the District Court Rules.
50 Schedule 5.
51 Schedule 4. Band A requires the least time for each step and Band C the most for each step.
[56] The use of a scale takes the costs exercise away from how long each step actually took and from assessing the skill of a particular counsel. It provides a framework for an objective assessment of the skill and experience required due to the nature or complexity of the proceedings as well as an objective assessment of the time that each step should reasonably take. This allows a degree of predictability in the award of costs and also allows costs to be awarded expeditiously by the Judge.
[57] The District Court Rules, and particularly the scales, were designed for parties who had counsel representing them. The wording makes that clear. For instance, in relation to the allocation of categories, r 14.3 provides:
14.3Categorisation of proceedings
(1)For the purposes of rule 14.2(1)(b), proceedings must be classified as falling within 1 of the following categories:
Category 1 proceedings Proceedings of a straightforward
nature able to be conducted by counsel considered junior
Category 2 proceedings Proceedings of average complexity
requiring counsel of skill and experience considered average
Category 3 proceedings Proceedings that because of their
complexity or significance require counsel to have special skill and experience
Other jurisdictions – employment relations
[58] Counsel provided information on the cost’s regime in the Employment Relations Authority and Employment Court.52 Both the Employment Relations
52 Counsel cited the Employment Relations Act 2000, sch 3 (Employment Relations Authority, cl 19); Reid v New Zealand Fire Service Commission [1996] 1 ERNZ 228 (EmpC); and Canterbury Westland Kindergarten Association v Barnes [2021] NZEmpC 7.
Authority and the Employment Court allow non-lawyer advocates to represent parties. Those jurisdictions allow for the exercise of a broad discretion in assessing costs. The authority may award “such costs and expenses (including the expenses of witnesses) as the authority thinks reasonable”.53 A similar provision allows the Employment Court to award costs.54
[59] In the Employment Relations Authority, a Practice Note provides for “tariff” costs as a starting point. This is then adjusted upwards or downwards depending on the circumstances of the case. The daily tariff from 1 August 2016 was $4,500 for the first day of any matter and $3,500 for any subsequent day of the same matter.55 The practice note goes on to say:
9.The daily tariff that the Authority applies gives no more than a guide to the starting point that the Authority will use in calculating the entitlement of the successful party to costs; there may be factors in the particular case which require the Authority to either increase the daily tariff figure or reduce it.
10.For instance, if the behaviour of the successful party created cost that was unnecessarily incurred, then the Authority may reduce the daily tariff amount. Conversely, if the unsuccessful party turned down an operative Calderbank offer56 then that may encourage the Authority Member to increase the daily tariff proportionately.
[60] If parties are seeking an award of costs they must make it clear in their submissions what claim they make and the reasons for that position and provide supporting materials such as copies of invoices showing fees and “other expenses that have been incurred, the time taken by the practitioner or advocate and the relevant hourly rate”.57
[61]The practice note concludes:
53 Employment Relations Act 2000, sch 2 (Employment Relations Authority, cl 15).
54 Schedule 3 (Employment Relations Authority, cl 19).
55 Chief of the Employment Relations Authority “Practice Note 2: Costs in the Employment Relations Authority”, 30 June 2016 [“Practice Note 2”]at [4].
56 An operative Calderbank offer is an offer made by one party to the other party in litigation the effect of which is that the offering party agrees to accept a particular sum of money in settlement of the claim in circumstances where, if that offer is not accepted by the other party and the Authority then makes a finding which leaves the offering party less well off than they would have been if the offer in the Calderbank were accepted, the terms of the Calderbank offer can be put before the Authority when costs are being fixed as evidence for the view that the offering party reasonably tried to resolve the matter by agreement but was unsuccessful.
57 Practice Note 2, above n 56, at [11].
15. Costs fixing in the Authority, as in all courts and tribunals, is often the source of controversy. The goal is to leave the successful party with a contribution to the costs that the party has reasonably incurred. Typically, successful parties want the award of costs to be as high as possible while unsuccessful parties want the converse.
16. There needs to be a level of predictability concerning the fixing of costs and the exercise typically involves balancing the right of the successful party to have a contribution to its costs so as to ensure that it gets, as far as possible, the benefit of its win, against the need of the unsuccessful party not have such a great impost on its financial resources as to preclude it contemplating litigation in the first place.
[62] A “Costs - Guideline Scale” is set out in Part 16 of the Employment Court practice directions.58 It is noteworthy that:
(a)The guideline scale is applicable to both lawyer and non-lawyer advocates in the Employment Court;
(b)Reasonable times for each step are to be determined by reference to a schedule. Schedule 4 provides time allocations schedule referring to band A (if a comparatively small amount of time is considered reasonable); band B (if a normal amount of time is considered reasonable); and band C (if a comparatively large amount of time for a particular step is considered reasonable).59
(c)Provisions for daily rates by category are related to the nature of the proceedings as follows:60
(i)Category 1 – proceedings that are of a straightforward nature able to be conducted by a representative considered junior by the Employment Court.
(ii)Category 2 – proceedings of average complexity requiring a representative of skill and experience considered average in the Employment Court.
58 “Employment Court of New Zealand Practice Directions, Part 16: Costs – Guideline Scale” (14 December 2018) Employment Court < 18.
60 At 19.
(iii)Category 3 – proceedings that because of their complexity or significance, require a representative to have special skill or experience in the Employment Court.
[63] The appropriate daily rates for categories of proceedings are the same as those prescribed in sch 2 of the High Court Rules 2016 as amended from time to time.
[64] Mr McBride pointed out that both the ACC and the employment relations regime operate in the context of jurisdictions where there is likely to be a power imbalance between the parties and where access to legal aid has its limitations. Counsel also noted that before the Employment Court was established, the predecessor institutions61 allowed limited legal representation, so lay advocates have long been a prominent feature of employment litigation.
[65] Mr McBride submitted that in his experience, lay advocate appearances are less common in the Employment Court, than is the case in the District Court ACC appeals. The Employment Court’s application of the High Court’s daily rate for lawyers to non-lawyers has, counsel submitted, not been specifically judicially considered.
[66] However, counsel located two Employment Court judgments in which scale costs had been awarded to advocates.
[67] In Canterbury Westland Kindergarten Association v Barnes,62 her Honour Chief Judge Inglis commented as follows:
[3] The Court has a discretion as to costs. The discretion must be exercised in the interests of justice and in accordance with established principles. The Court has adopted the Guideline Scale to assist parties and the Court, and to promote predictability, expedition and consistency. As the Guidelines make clear, there will be occasions where a departure from the Scale is appropriate, including having regard to matters such as conduct unnecessarily increasing costs.
61 The Arbitration Court, Labour Court and other associated bodies.
62 Canterbury Westland Kindergarten Association v Barnes [2021] NZEmpC 7 at [3].
[68] Judge Inglis in that case had no difficulty in awarding scale-based costs for a non-lawyer advocate. She noted that the plaintiff could not afford counsel, required assistance of an expert advocate from outside the locality and required a considerable amount of pastoral care.63 The Judge allocated the steps she considered were appropriately taken and applied category 2B for costs purposes.
The Corporation’s position
[69] Mr McBride emphasised the wide differences in skill and experience of non-lawyer advocates in the ACC jurisdiction. Advocates ranged from non- practising lawyers to advocates employed by medical insurance companies to friends and family and to ACC claimants with a grievance against the Corporation. Mr McBride noted family members often appeared in support of ACC claimants who claimed to be a party’s representative in order to obtain costs. In reality, they had not acted in a “representative” capacity. Therefore, the Court should scrutinise family members’ claims in particular.
[70] The Corporation was concerned about the effect on ACC appeals if costs were awarded by reference to a scale. Mr McBride submitted that to allow costs based on a scale would encourage non-lawyer advocates to take on cases tempted by a rewarding costs outcome.
[71] Mr McBride indicated that the Corporation rarely sought costs in the District Court and would not do so against a bona fide but unsuccessful claimant.64 The Corporation would signal any potential for a costs claim as early as practicable. Mr McBride indicated if the Corporation were successful in this appeal no costs would be sought.
[72] Mr McBride suggested a number of principles that should apply to the consideration of costs in these cases, including:
63 At [7]
64 Howard v Accident Compensation Corporation, above n 41.
(a)The indemnity principle: that costs should not exceed the costs incurred.65
(b)The costs must be actually and reasonably incurred in the relevant proceeding. This requires an evidential basis to determine that the costs were incurred in the proceeding and so there was no “double-dipping” by including costs in relation to, for instance, the review hearing.
(c)An appropriate adjustment to recognise that costs should not be fully indemnified: the “two-thirds principle” applies.66
(d)A check against and calculations based on scale costs might be appropriate to ensure any costs award to a non-lawyer advocate was not higher than the scale costs that might have been awarded for legal representation.
[73] Mr McBride suggested that any costs award in respect of a non-lawyer advocate should properly be modest and take into account the following factors:
(a)The (invariably greater) reasonable costs of a lawyer (in that ordinarily costs in respect of a non-lawyer undertaking legal work would properly be less than those of a lawyer);
(b)The reasonable and/or actual duration of hearing;
(c)Work established to have been done on the particular appeal since the particular review decision;
(d)The amount of work reasonably involved in the appeal hearing;
(e)The extent to which that person has expertise that has been brought to bear in the appeal;
(f)The extent to which that person has facilitated prompt and efficient disposal of the appeal.
65 District Court Rules 2014, r 14.2(1)(f). The indemnity principle provides that costs are given by law as an indemnity to the person entitled to them, not as a punishment on the party who pays them nor as a bonus to the party who receives them. The principle is described as the “touchstone” for the recoverability of costs between parties. Today it is expressed in terms of the costs having to be reasonably incurred and proportionate in the amount. Therefore, in the case of legal representation, the principle required is that the costs awarded do not exceed the actual fee charged.
66 District Court Rules, r 14.2(d). See above at [52].
[74] Mr McBride suggested that an appropriate recovery might be fixed at two-thirds of that reasonable amount. He suggested a flexible “tariff approach” taking into account the above discretionary factors might be appropriate for lay ACC advocates in the District Court. He noted that the Court was likely to develop a body of knowledge and an appropriate range of costs awards over time.
[75] Ms Aldred suggested that additional factors to be taken into account in assessing quantum might include:
1) The level of qualification and skill of the advocate in ACC law.
2) The complexity of the appeal and the volume of the evidence required.
[76] Ms Aldred submitted that given the additional costs incurred by lawyers to maintain their legal practice and the regulation of legal profession as discussed by Judge Henare in Jacob, it seemed reasonable that the District Court would generally take the view that awards of somewhat below the scale might be justified in the case of lay advocates. She submitted that there should be no blanket rule that scale costs could not be utilised by the Court in cases involving a lay advocate and there might be special reasons why the application of the scale is justified.
Should the scale of costs for counsel appearing in the District Court apply to non- counsel?
[77] Judge Powell in Dickson-Johansen noted that applying scale costs in ACC appeals, where a lawyer acted for the successful claimant, was consistent with the purpose of the Act, which was to provide a “fair and sustainable scheme for managing personal injury”.67 He referred to recent research which had confirmed that the complexity of the jurisdiction meant legal representation was important to claimants and that there was merit in the submission that a successful claimant should not be out of pocket at the conclusion of the appeal process.
[78] The Judge appeared to contemplate that scale costs might have a place in the calculation of costs in ACC compensation appeals generally although flexibility
67 Dickson-Johansen v Accident Compensation Corporation, above n 15, at [14]; referring to s 3 of the Accident Compensation Act 2001.
should be retained where costs were sought by advocates.68 He said the Court was “ill-suited to determining what might be reasonable costs in a particular instance having regard to the economics of private legal practice. Any such attempt would impose a significant burden on judicial resources should every decision on costs require the careful consideration of this Court”.69 He was also satisfied that the tariff approach in that case, on which the Corporation based its offering of $3,500 for costs,70 required some adjustment.
[79] In that case it was suggested that the use of a scale of costs assisted the Court in that it provided some objective assistance in assessing costs. Otherwise each case required a discrete assessment as to what was reasonable in relation to the skill of the advocate and the assistance provided.
[80] While Dickson-Johansen related to the costs award before it and legal representation, the comments of the Judge and counsel were more wide ranging. In particular:
(a)The comments of counsel for the appellant seeking the award of costs said that “if a robust approach to costs is not undertaken, ACC – deliberately or unwittingly – externalises the financial burden of flawed decision-making processes onto claimants and the wider community” so obscuring the true cost for administering the scheme.
(b)That the conventional starting point for the determination of costs in the ACC jurisdiction had been the tariff approach.71 No higher award than the tariff72 would be made even if the party incurred legal expenses considerably greater than the range normally awarded unless there was something exceptional or unusual that warranted a higher award.73
68 At [18].
69 At [15].
70 At [18].
71 Dickson-Johansen v Accident Compensation Corporation, above n 15, at [12]; citing Judge Barber in P v Accident Compensation Corporation, above n 41.
72 In the range of $2,500 which might rise to $3,000 if there was more extensive evidence or submissions “which were warranted”.
73 Dickson- Johansen v Accident Compensation Corporation, above n 15, at [12].
[81] It is clear that the District Court Rules relating to costs, including the scale of costs, generally will apply where a lawyer represents a successful party. Section 151 of the AC Act 2001 provides that ACC appeals are to be dealt with “in accordance” with the District Court Rules. The District Court Rules set out general principles as to costs in all proceedings and provide a scale that is designed to deal with costs in the case of parties who are legally represented.
[82] The research referred to in the independent review into the Accident Compensation Dispute Resolution Processes (Independent Review)74 found that 60 per cent of claimants were not represented by a lawyer in the District Court appeals despite the “complicated process of litigation”. The report referred to the small pool of lawyers whose resulting depth of experience gave them some expertise in the jurisdiction.75 The “vast majority” of claimants did not qualify for legal aid but were “not well off enough to afford a lawyer unaided”.76 On the other hand, the Corporation was well funded and represented by lawyers in all legal matters, including ACC appeals in the District Court.77
[83] The report commented on the variable quality of advocacy provided by non- lawyer ACC advocates. The advocates are essentially unregulated.78 There was no occupational regulator overseeing advocates such as there was in relation for instance, to immigration advisors.79 Nevertheless, the report went on to say that there were some highly competent advocates but there were also some unsettling anecdotes about unscrupulous advocates.80
[84] The review report concluded: “putting this issue aside, the use of good advocates to help claimants at a review hearing or District Court appeal is, on the
74 Miriam R Dean Independent Review of the Acclaim Otago (Inc) July 2015 Report into Accident Compensation Dispute Resolution Processes (Hīkina Whakatutuki | Ministry of Business, Innovation and Employment, May 2016) [“Independent Review”].
75 At 52.
76 At 52.
77 Independent Review, above n 78, at 52.78 At 53.
79 At 54.
80 At 54.
whole, a much-needed resource, given that few lawyers are available to represent claimants”.81
[85] Despite the variable quality of the advocacy services provided by non-lawyer representatives, it appears that good advocates should be encouraged in view of the problems that ACC claimants have obtaining legal assistance.82 In a similar vein Judge Powell in Dickson-Johansen commented that allowing legal costs to be awarded according to scale might encourage or at least not deter lawyers from acting for ACC claimants on appeal.
[86] Reference to the existing District Court Rules and a scale would provide the Judge with an objective framework to assess the level of assistance of a representative by providing as a starting point a daily rate based on the categories and an appropriate time estimate based on the bands. That assessment is likely to reflect the experience and expertise of the advocate as well. In addition, if the advocate has been of no assistance or has hindered the appeal, the Judge may decline or decrease costs as appropriate.
[87] The application of the District Court Rules to advocate’s costs does not diminish the importance of either the indemnity principle nor the principle that only actual and reasonable costs in relation to the proceedings before the Court are claimable. These principles are in fact incorporated in the District Court Rules and present schedules. For instance, in the general principles as to costs at r 14.2(f) reference is made to the indemnity principle in the following terms:
(f)An award of costs should not exceed the costs incurred by the party claiming the costs.
[88] In the usual course an applicant for costs would provide a schedule setting each of the steps and the bands. That will give the Judge a starting point to enable a check to be made against the prescribed categories and bands. The Judge exercising the discretion can then make such adjustments as appropriate.
81 At 54.
82 At 54.
[89] It must also be borne in mind that almost invariably costs will only be awarded to a non-lawyer representative only where the Corporation is unsuccessful. I consider the Corporation’s concern that the use of the District Court Rules and scale will encourage unscrupulous non-lawyer representatives is overstated. The Judge has various tools available with which to deal with any clear abuses. On the other hand, if the predictability of costs in appropriate cases attracts advocates who assist their party to properly present an appeal, that is likely to serve access to justice.
[90] Having said that, my view is that the scale provides a guideline only. The scale of daily rates is set for lawyers. It recognises the fact that lawyers are assumed to have a level of expertise and competence in the law, understand their ethical obligations, in particular their obligations to the Court as officers of the Court, and are regulated by Te Kāhui Ture o Aotearoa | New Zealand Law Society. The full rates would generally not be appropriate for non-lawyer advocates
[91] Non-lawyer advocates will vary in their expertise and experience. The Judge should not have to go into detail in each case analysing expertise and experience and then move on to consider the assistance, which has or has not been provided. Instead a Judge should be entitled to start with a percentage based on the scale costs. If the Judge has been assisted by the non-lawyer representative in a straightforward case, it would, as a guideline, generally be appropriate to set a daily rate set at 50 per cent of the daily lawyer rate based on category 1. Under the District Court Rules, category 1 relates to “proceedings of a straightforward nature able to be conducted by counsel considered junior”.83
[92] That is of course subject to the indemnity principle. The production of a bill of costs and confirmation by the advocate/party that the fees have been or will be incurred will provide the starting point for that consideration. Conditional fee agreements may be recognised as they are for lawyers. However, if the fees are not incurred, no award is appropriate. The Court in Goh v Accident Compensation Corporation,84 had no difficulty on the evidence rejecting a claim on the basis that the fees were not properly incurred for representation.
83 District Court Rules 2014, r 14.3(1).
84 Goh v Accident Compensation Corporation [2014] NZACC (DC). See below at [102]–[103].
[93] The Judge hearing a substantive appeal will be well placed to make an assessment when settling costs, as to whether the non-lawyer advocate did assist the Court. For instance, in this case the Judge commented favourably on the assistance given by Mr Carey Junior.85
[94] The use of the time allocation based on bands would assist the Judge by providing a rule of thumb as to the time properly incurred for various steps on the appeal. Rule 14.15 provides guidance for the Court in defining “reasonable time” for the purposes of various steps using the banded time allocations as a reference but time must be assessed for a particular step if no analogy to the scheduled steps can be drawn.86
[95] Turning to consider some other factors that may be relevant to consider when assessing an award of costs to a successful appellant represented by a non-lawyer advocate, the following non-exhaustive list based on the District Court Rules provides some guidance. Particularly relevant are:
(a)Costs are at the discretion of the Court.87
(b)The indemnity principle.88
(c)The appropriate daily recovery rates should be a percentage of the daily rate for lawyers. Non-lawyer advocates who assist the Court would usually be awarded a daily rate of 50 per cent.89
(d)Reasonable times can be allocated using the appropriate band.90
(e)Increased and indemnity costs are provided for.91
85 Substantive Appeal Decision, above n 12, at [24].
86 District Court Rules 2014, r 14.15.
87 District Court Rules 2014, r 14.1.
88 Rule 14.2(f).
89 Rule 14.4. Categorisation of proceedings would still depend on the nature of the proceedings, pursuant to r 14.3.
90 Rule 14.5.
91 Rule 14.6.
(f)The Court could refuse or reject costs where it is justified by the behaviour of an advocate who contributed unnecessarily to the time or expense of the proceedings.92
[96] Other factors put forward by counsel can be readily fitted into the above general principles. For instance:
(a)The level of qualification and skill of the advocate in ACC law would be a factor to the extent that was evident. The Judge should not be required to scrutinise the qualifications and experience of the non- lawyer representative. If a level of assistance was provided, the appropriate daily rate percentage for the non-lawyer advocate would be 50 per cent of the scheduled daily rate.
(b)The extent to which that person has expertise that has been brought to bear in the appeal will be reflected in the percentage of daily rate applied and largely based on the assistance provided to the Court by the advocate.
(c)The extent to which that person facilitated prompt and efficient disposal of the appeal will be reflected both by the percentage applied and the daily rate applied. The Judge may consider this as a matter which goes to the refusal or reduction of costs under r 14.7.
(d)The (invariably greater) reasonable costs of a lawyer (in that ordinarily costs in respect of a non-lawyer undertaking legal work would properly be less than those of a lawyer) would be reflected by the fact a non lawyer would generally receive a percentage of the daily rate.
(e)The complexity of the appeal and volume of evidence required would likely be considered in relation to the selection of the appropriate time band. Complexity may also be reflected in the percentage of the daily rate or the category selected.
92 Rule 14.7.
(f)The reasonable and/or actual duration of the hearing will be reflected in the time allocation band and the calculation of hearing time based on actual hearing time.
(g)The amount of work reasonably involved in the appeal hearing will be reflected in the time allocation.
[97] This approach allows the Judge some guidance in assessing costs. If the Court were required to assess the expertise of each individual advocate and how that expertise was brought to bear in each appeal, it would be a time consuming and difficult exercise for the Judge.
[98] Putting in place a set tariff of costs, as was the previous approach, is unsatisfactory today. Not least because it requires adjustment for inflation.93 The tariff also had little flexibility and was intended for both legal and non-legal representatives. Considerations of access to justice are more acute today than when the set fee regime was established. In addition, the research indicates there are competent ACC advocates who should be encouraged.
[99] The employment relations jurisdiction has adopted a scale of costs for matters in the Employment Court. Mr McBride submits that the representatives appearing in the Employment Court are less likely to be non-lawyers and there was a tradition of more professional non-lawyer representation. Those factors are reflected by the cost guidance schedules incorporating the High Court daily rates, not a percentage of the District Court rates as contemplated here.
[100] Research has confirmed the complexity of the ACC jurisdiction and that representation is important to claimants. A claimant cannot obtain more than the statutory entitlement under the Accident Compensation regime even if successful, therefore a successful claimant should not be left out of pocket at the conclusion of the appeal process in which a non-legal advocate has provided assistance. Such an outcome would be antithetical to the purpose of the AC Act 2000, which is:94
93 The daily rates are adjusted from time to time.
94 Dickson-Johansen v Accident Compensation Corporation, above n 15, at [14]; citing s 3 of the Accident Compensation Act 2001.
to enhance the public good and reinforce the social contract represented by the
… scheme by providing for a fair and sustainable scheme for managing personal injury … minimising both the overall incidents of the injury in the community and the impact of injury on the community (including economic, social, and personal costs) … this was to be done through among other things.
[101] The issues raised by the Corporation can be accommodated by the use of judicial discretion in the application of the District Court Rules in the circumstances of any particular case.
[102] In Campbell,95 Judge Ongley referred to Peeters96 where the appellant had been unrepresented, but he appeared at the hearing with family members. Costs for family member representations were disallowed. Similarly, in Goh v Accident Compensation Corporation,97 Judge Powell declined costs claimed in relation to a Mr Murphy who had been present at the review hearing and had sought costs as a representative. The Judge commented that while Mr Murphy said he had been charging Ms Goh for his services98 there were no records of payment and as far as Mr Murphy could recall there was only one invoice in writing which was dated after the review hearing had taken place.99 The Court concluded that “the reality was that where Mr Murphy assisted Ms Goh, it was in the course of an entirely informal arrangement which at no stage gave rise to any legal relationship or requirement for bills to get paid”.100
[103] The Judge who heard the substantive appeal will be in a good position to assess whether a family member has acted as a true representative or merely been there as a support person. That assessment was made in Goh.101
[104] In addition, Mr McBride expressed concern that some advocates with an “axe to grind” may delay matters rather than assist.
95 Campbell v Accident Compensation Corporation, above n 17, at [17].
96 Peeters v Accident Compensation Corporation [2006] NZACC 95.
97 Goh v Accident Compensation Corporation, above n 84.
98 At [21].
99 Goh v Accident Compensation Corporation, above n 84, at [21].
100 At [23].
101 At [23].
[105] That issue can be considered by the Judge who hears the appeal and who will be well placed to assess the situation when assessing costs. Similar issues no doubt fall to be decided by the Employment Court.
[106] Nevertheless, flexibility must be retained, particularly given the likely range of abilities that ACC advocates will have and the assistance they provide. Nevertheless, the District Court Rules and schedules (including the scales) would assist the Judge as a starting point for the assessment of awards of costs in ACC appeals involving non-lawyer representatives or advocates in the District Court.
Did the District Court decision fail to provide any adequate reasons for the decision made?102
[107] As is apparent, I have concluded that the appeal must succeed. Errors of law in the costs decision have been established as follows:
(a)The District Court decision failed to properly address and/or decide issues of law determining any availability of an award of costs.
(b)There was an absence of any adequate reasons for the application of the scale of costs in the case of a non-lawyer representative.
(c)In the ordinary course a court is not required to give reasons for costs orders where it is simply applying the fundamental principle that costs follow the event and where the costs awarded “are within the normal range applicable to that Court”.103 However, when something is “out of the ordinary” an explanation “which may be brief, should be given”.104 It was not in this case.
(d)In this case a substantial award of costs to a family member was made based on a scale of costs. This was not standard or ordinary. The award
102 Leave Decision, above n 2, at [3].
103 Manukau Golf Club Inc v Shoye Venture Ltd [2012] NZSC 109, [2013] 1 NZLR 305 at [16].
104 Mansfield Drycleaners Ltd v Quinny’s Drycleaning (Dentice Drycleaning Upper Hutt) Ltd [2002] 16 PRNZ 662 (CA) at [27]. In Mansfield Drycleaners, the Court of Appeal warned that if the Court did not give reasons for a departure from the regime “it will expose their [award] to close appellate scrutiny”.
departed from the existing set costs regime and longstanding practice in the case of non-lawyer representatives. In those circumstances, reasons were properly required and were not given.
Disposal
[108] The errors made in the District Court decision were material. Therefore, I propose setting aside the award of costs under r 20.20 of the High Court Rules and making the decision as to costs.
[109]The Court on appeal has wide powers as set out in the High Court Rules:
20.19 Powers of court on appeal
(1)After hearing an appeal, the court may do any 1 or more of the following:
(a)make any decision it thinks should have been made:
(b)direct the decision-maker—
(i)to rehear the proceedings concerned; or
(ii)to consider or determine (whether for the first time or again) any matters the court directs; or
(iii)to enter judgment for any party to the proceedings the court directs:
(c)make any order the court thinks just, including any order as to costs.
[110] Mr McBride submitted that this Court should not fix costs but rather remit the matter back for determination by the District Court. This was on the basis that any costs award would be precedential and there was a lack of evidence before the Court, for instance by way of reliable evidence as to time properly spent by Mr Carey Junior as an advocate.
[111] On the other hand, Ms Aldred submitted that this Court has as much information before it as the District Court had to make a cost decision. There would also be further costs incurred by all parties by remitting the matter back. Ms Aldred suggested it was appropriate for this Court to make an order for costs.
[112] Ms Aldred submitted that in this case Mr Damien Carey had at all stages represented his father in the appeal. He filed submissions and memoranda and spoke on his father’s behalf in the appeal as well as corresponding with ACC in relation to the appeal.
[113] I am satisfied that the costs were actually incurred here. While their payment was contingent, this was not the type of informal arrangement such as that referred to in Goh v Accident Compensation Corporation. In addition, while Mr Damien Carey was a family member, it is clear that he devoted considerable time and resources to the representation of his father. The District Court Judge acknowledged Mr Damien Carey’s contribution when the Judge said “the brief has been diligently prepared … the appellant and his son have gone to considerable efforts to locate and produce appropriate documents … the appellant and his son have striven to provide the Court accurate evidence relating to what has occurred”.105 The Judge went on to say that Mr Carey Junior presented “comprehensive submissions to the Court”.106
[114] Mr McBride said in this case the bill of costs proffered by Mr Damien Carey was clearly not able to be relied on as a representation of costs that had been reasonably incurred. The bill had obviously been prepared after the hearing and for the purposes of a costs claim. Mr McBride submitted that such self-serving ex-post facto documents required detailed scrutiny by the Court. For instance, Mr Carey’s itemised invoice of 27 October 2019 included such entries as “travel to Blenheim to discuss appeal” at a unit (hourly) price of $700”, “return to Auckland” at a unit (hourly) price of $500, “discussion with Prof McBride” (apparently unrelated to the appeal) of $500 and similar items. These were time or unit entries not disbursements claimed for travel. Mr McBride said the travel to Blenheim was apparently incurred so that Mr Damien Carey could update his father on the case. I agree that these particular costs were not properly incurred in the appeal.
[115] Mr McBride submitted that the costs needed to be in relation to a particular proceeding rather than associated or unrelated costs. The need to ensure that the costs are properly incurred in respect of the particular appeal was noted in the District
105 Substantive Appeal Decision, above n 12, at [24].
106 At [95].
Court in P v Accident Compensation Corporation.107 Mr McBride also pointed to Kahukiwa v Westpac Banking Corp108 where it was stressed that the costs of the proceeding referred to the “actual proceeding” before the Court and did not extend to the preliminary advice, advising on alternative proceedings or involvement in settlement negotiations. Mr McBride said that this was particularly important here as an appeal to the District Court is by rehearing on the same evidence as was before the review hearing. He said under s 148 of the AC Act 2001 the review stage costs are paid as a matter of course. It was important therefore costs were not claimed in the appeal which had actually been incurred at the review stage.
[116] In this case the District Court Judge did view Mr Carey Junior’s invoice. He accepted Mr Carey Junior had assisted as a representative. He rejected the alternative claim put forward based on a category 3 daily rate but instead awarded costs calculated on the steps taken at a category 2 daily rate, a total of $13,179.
[117] The Judge had referred to the necessity for an “assessment as to whether the costs claimed had been incurred”.109 The Judge also referred to the general principles as to costs under the District Court Rules, which included that an award of costs “should not exceed the costs incurred by the party claiming the costs” and should normally be two-thirds of the daily rate for the appeal.110 The Judge had carefully considered the time spent and he allocated time bands to various steps . It is apparent that the Judge accepted that time upon which his costs award was based was reasonable and had actually been spent on the matter. Given the Judge’s references to the assistance provided by Mr Carey Junior in the substantive appeal111 it is apparent the Judge was satisfied that an award recognising that time was justified.112
[118] Mr McBride says it was up to Mr Carey Junior to file an amended bill of costs so the Court had before it an itemised bill showing the time entries which were “properly incurred” and “actual and reasonable”. However, there was an itemised bill before the Courts, which provided information for the Judge; the Judge had heard
107 P v Accident Compensation Corporation, above n 41.
108 Kahukiwa v Westpac Banking Corp HC Wellington CP418/98, 17 December 1999.
109 Costs Decision, above n 1, at [9].
110 At [5]; referring to r 14.2 of the District Court Rules 2014.
111 Costs Decision, above n 1, at [112].
112 At [15].
the substantive appeal and was in a good position to determine what the extent of attendances and what costs might have been “properly incurred”; and he was satisfied that at least a part of the time upon which the costs invoiced were based was “actual and reasonable” as he made an award of costs. The fact that the fee to be charged was contingent on an award of costs does not prevent the Court from awarding costs.
Costs Decision
[119] I have the information before me that the District Court had, as well as the benefit of the Judge’s observations in the substantive appeal judgment as to the assistance provided by Mr Damien Carey. The Judge made no comment that would indicate Mr Carey Junior had done anything to justify a refusal of costs. I am satisfied he was in fact representing his father albeit on a contingency arrangement. I am also satisfied that the Judge found that the time upon which he had based his award was time properly spent and represented actual and reasonable time spent. I am able to rely on that finding. I am therefore able to determine the appropriate quantum in this case.
[120] Accordingly, I consider an award based on the District Court schedule of daily rates based on 50 per cent of the category 1 rate is appropriate. This reflects that Mr Carey Junior was of reasonable assistance to the Court in a straightforward appeal that was successful.
[121] The time allocation bands were selected by the Judge based on the steps taken. The Judge was in the best position to make these allocations having heard the substantive appeal. In any event, a review of the substantive appeal decision indicates that it would have involved a normal to higher level of time given the period over which the claim stretched. Although some of the time spent in preparation of the appeal would have duplicated time spent on the review, a reconsideration of that material would have been necessary for the appeal. This was an appeal that would have involved above normal preparation time. This was reflected in the Judge’s allocation of band B and C time allocations, which provided an objective assessment of time allocations in those circumstances.
[122] Mr McBride indicated there had been little or no work to be done in relation to the preparation of the bundle for hearing. The Judge allocated one day for this. Mr McBride said the bundle mainly comprised the Corporation’s file, which was merely transmitted to the District Court to be used on the appeal. I therefore consider an adjustment is necessary in relation to the allocation of time for the preparation of the bundle for hearing and instead of the one day allocation made for step 9.13 at band C, an allocation of band A (0.25 of a day) is to be substituted.
[123] With that adjustment, based on the time allocations used by the Judge, which I accept as appropriate were:
(a)commencement of appeal (step 20) 0.5 of a day (band B);
(b)case management (step 23) 0.4 of a day (band C);
(c)preparation of case on appeal (step 24) 1 day (band C);
(d)preparation of bundle for hearing (step 9.13) 0.25 of a day (band A); and
(e)appearance (step 25) 1 day, comprising four quarter days.
[124] Therefore, the total time allocation is 6.15 days at 50 per cent of the category 1 daily rate of $1,910 the result is $5,873.25. Accordingly, I substitute the Judge’s costs award of $13,179 for the sum of $5,873.25 for costs.
[125] There was no dispute as to the disbursements which were awarded in the sum of $1,552.80. That being the case, I confirm that award.
[126] Accordingly, I set aside the costs award made in the District Court and substitute the above award for costs and disbursements on the appeal.
Costs
[127] The costs of counsel assisting the Court is to be paid from public funds in the usual way.113
[128] Counsel indicated that no issues as to costs arise in these proceedings. However, if I am wrong any application for costs should be made by memorandum filed within seven days of the date of this judgment, any response within a further seven days and any reply within a further three days.
Grice J
Solicitors:
McBride Davenport James, Wellington, for the Appellant.
113 Senior Courts Act 2016, s 178; and Nuku v District Court at Auckland [2016] NZHC 2237 at [33].
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