B v A
[2020] NZHC 765
•21 April 2020
NOTE: PURSUANT TO S 35A OF THE PROPERTY (RELATIONSHIPS) ACT 1976, ANY REPORT OF THIS PROCEEDING MUST COMPLY WITH SS 11B,
11C AND 11D OF THE FAMILY COURT ACT 1980. FOR FURTHER INFORMATION, PLEASE SEE
https://www.justice.govt.nz/family/about/restriction-on-publishing-judgments/
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2019-404-002384
[2020] NZHC 765
UNDER THE Property (Relationships) Act 1976 IN THE MATTER OF
an appeal from a decision of the Family Court at Auckland on 25 September 2019
BETWEEN
B
Appellant
AND
A
Respondent
Hearing: On the papers Counsel:
B Snedden and J Gandy for Appellant B D Hayes for Respondent
Judgment:
21 April 2020
JUDGMENT OF WYLIE J [COSTS]
This judgment was delivered by Justice Wylie On 21 April 2020 at 10.00am
Pursuant to r 11.5 of the High Court Rules Registrar/Deputy Registrar
Date:…………………………
Solicitors/counsel:
Thomas and Co (J Gandy)/B Snedden, Auckland Kidd Legal/B D Hayes, Auckland
B v A [2020] NZHC 765 [21 April 2020]
Introduction
[1] I refer to my judgment dated 20 March 2020.1 I stayed the Family Court’s decision2 as jointly requested by the parties pending the hearing of the appeal and cross appeal, granted Mrs B’s application to adduce further evidence for the appeal hearing, granted Mr A leave to file further evidence in reply (which was not opposed by Mrs
B) and declined Mr A’s application for an order under r 9.34 of the High Court Rules 2016. I held that Mrs B as the successful party was entitled to her reasonable costs and disbursements, and expressed the preliminary view that costs should be fixed on a 2B basis. I put in place a timetable for the filing of submissions if there was any dispute as to costs.
[2] I have now received those submissions together with further information and reply submissions I directed should be filed on behalf of Mr A.
[3] In his initial submissions for Mrs B, Mr Snedden sought costs on a 2B basis in the sum of $6,094.50. He observed that Mr A had applied for legal aid but that his application had not at that time been determined.
[4]Mr Hayes in the memorandum filed for Mr A, accepted that the sum of
$6,094.50 would normally be awarded in favour of Mrs B applying 2B scale costs but he advised that Mr A had been granted legal aid on 7 April 2020. He referred to s 45(2) of the Legal Services Act 2011 (the Act) and submitted that his client has immunity from a costs award. He further argued that that immunity is not affected by the timing of the grant because the grant relates to costs incurred in relation to the appeal from the Family Court’s decision and because there are no exceptional circumstances which justify an award of costs against Mr A.
[5] Mr Snedden then filed further submissions as directed by me dealing with the fact that legal aid had been granted. He noted that the grant of legal aid was for “[r]elationship [p]roperty” and that the activities to be undertaken by counsel were itemised as “[p]reparation for [a]ppeal” and “[h]earing time [a]ppeal”. He accepted
1 B v A [2020] NZHC 580.
2 A v B [2019] NZFC 7726.
that the grant covered both the substantive appeal and the interlocutory matters the subject of my decision. He referred however to s 45(3) of the Act and argued that there were exceptional circumstances justifying an award of costs because Mr A acted unreasonably. In the alternative, he sought an order pursuant to s 45(5) specifying the costs that would have been awarded but for the grant of legal aid.
Analysis
Relevantly, s 45 of the Act provides as follows;
45 Liability of aided person for costs
(1)If an aided person receives legal aid for civil proceedings, that person’s liability under an order for costs made against him or her with respect to the proceedings must not exceed an amount (if any) that is reasonable for the aided person to pay having regard to all the circumstances, including the means of all the parties and their conduct in connection with the dispute.
(2)No order for costs may be made against an aided person in a civil proceeding unless the court is satisfied that there are exceptional circumstances.
(3)In determining whether there are exceptional circumstances under subsection (2), the court may take account of, but is not limited to, the following conduct by the aided person:
(a)any conduct that causes the other party to incur unnecessary cost:
(b)any failure to comply with the procedural rules and orders of the court:
(c)any misleading or deceitful conduct:
(d)any unreasonable pursuit of 1 or more issues on which the aided person fails:
(e)any unreasonable refusal to negotiate a settlement or participate in alternative dispute resolution:
(f)any other conduct that abuses the processes of the court.
…
(5) If, because of this section, no order for costs is made against the aided person, an order may be made specifying what order for costs would have been made against that person with respect to the proceedings if this section had not affected that person’s liability.
[7] The rationale behind the predecessor section (in substantially similar terms) was discussed by the Court of Appeal in Laverty v Para Franchising Ltd where McGrath J noted that the provision facilitates access to legal aid by restricting the amount of costs orders that the Courts may make against legally aided persons.3 It was noted that the effect of the section is to reduce, although not to remove, the risks of an adverse costs order against a person of limited means – “[w]ithout such protection the potential for such a costs order would deter persons of limited means from exercising their right of access to the courts, even with the support of legal aid.”4
[8] Here, Mr Hayes signalled to Mr Snedden that Mr A would be applying for legal aid on 15 November 2019 or thereabouts. The application was not made until 5 March 2020. There is however no suggestion that Mr A was responsible for the delay. The hearing before me was on 17 March 2020 and I gave my decision on 20 March 2020. On 31 March 2020, the Legal Aid Commissioner sought further detail of the requested grant. The further information requested was provided promptly and legal aid was granted on 7 April 2020. I have set out above the terms of the grant. It does not disclose any limitations or relevant conditions on the grant made and I agree with counsel that the grant extended to both the substantive appeal and the interlocutory applications.
Does the timing of the grant affect Mr A’s claim for immunity from costs under s 45(2) of the Act ?
[10] In Gitmans v Alexander5 and Simpson v Elliott,6 both in this Court, there were grants of aid after it had been determined that the liable party should pay costs, albeit that the quantum of the costs payable had not been fixed. It was held in both cases that the liable party had to pay costs; they were not legally aided at the time they were held liable to pay costs and therefore they could not take advantage of the immunity afforded by s 45(2) of the Act. The same position has been reached in the District Court.7
3 Laverty v Para Franchising Ltd [2006] 1 NZLR 650 (CA).
4 At [19].
5 Gitmans v Alexander (2003) 16 PRNZ 653 (HC) at [12].
6 Simpson v Elliott HC Auckland CP54-SD99, 21 August 2001 at [5].
7 MacDougall Builders Ltd v Swinburne [2017] NZDC 19595.
[11] The rationale for the statutory immunity was considered more recently in AA v LA.8 In this case Mander J had not held the unsuccessful party liable for costs. Rather, he had expressed the preliminary view that the unsuccessful party should be required to pay a percentage of the successful party’s costs, inviting counsel to file memoranda if they wished to be heard on the issue. Counsel did file memoranda and the issue of costs came back before the Judge. The unsuccessful party had received a grant of legal aid before the hearing in respect of which costs were sought. The successful party was contending that s 45(2) applied only to costs incurred after legal aid was granted. Mander J expressed the view that legal aid grants which apply retrospectively can provide s 45(2) immunity in relation to prior costs where no costs order has already been made.9 He went on to observe that the principle lying behind s 45 is that those who are unable to pay for their own legal services, as evidenced by a grant of legal aid, should ordinarily be excused from paying the costs of the other party and that the immunity should attach to the costs for which legal aid is provided, not the costs incurred in the period of time before legal aid has been approved.10
[12] I do not consider that there is any inconsistency in these various decisions. Nor do I consider that AA v LA is authority for the proposition that it does not matter that the unsuccessful party was granted legal aid after the interlocutory application hearing because the grant was for the whole proceeding. Mander J’s analysis expressly recognised that the s 45(2) immunity can only apply where no costs order has been made. This is consistent with the prior authorities I have noted above and with other cases referred to by the Judge in his judgment.11
[13] It is also consistent with the Act. Section 45(2) affords immunity against costs to “an aided person”. Pursuant to s 4, an aided person is a person who is granted legal aid. A person only becomes an aided person once a grant is made. There is nothing in s 45 to suggest that once a grant is made, immunity is conferred retrospectively. Rather, when a grant is made in civil proceedings, there is then an obligation to notify
8 AA v LA [2017] NZHC 646.
9 At [17].
10 At [19].
11 Carter v Western Viaduct Marine Ltd (2003) 16 PRNZ 1034 (HC) at [23] to [25]; Drummond v Townsend [2011] NZCA 185, [2011] 2 NZLR 567 (CA) at [20].
every other party and the Registrar of the relevant court.12 The obligation to notify arises on the grant of legal aid – not the date of application. Various decisions as to the conduct of proceedings will be based on whether the other party is legally aided. As has been observed by Judge Spear in the District Court,13 a party to civil proceedings might conceivably spend considerable resources pursuing a claim against a person believed not to be legally aided only to find at some later stage that the other party has protection from costs by the operation of s 45(2). I agree with the Judge that if the intention of the legislature in respect of s 45(2) was for the immunity to apply retrospectively, either from the commencement of the proceedings or the time of application for the grant of legal aid, it would have been a simple matter to have so specified.14 The legislature has not so specified and to construe s 45(2) as having such retrospective effect could well create injustice for a successful party who has conducted his or her proceedings assuming that the other party was not legally aided.
[14] In the present case, I held that Mrs B was entitled to her reasonable costs and disbursements on 20 March 2020. Mr A was not then an aided person. Having made that order, I became functus officio in relation to the issue of liability for costs. I expressed the preliminary view that costs should be fixed on a 2B basis in the expectation that counsel would be able, with that indication, to agree the quantum of costs. They were unable to do so and memoranda were filed. The filing of those memoranda permitted me to fix the quantum of costs payable – not to undo the order as to liability I had already made.
[15] For the reasons I have set out, I do not consider that s 45(2) confers a retrospective immunity for costs. There is no dispute as to the amount payable on a 2B basis and there is no dispute that 2B is the appropriate basis on which to fix costs. Accordingly, I make a costs order in favour of Mrs B in the sum of $6,094.50.
[16] In case I am wrong in my view that s 45(2) does not apply, I record my view that there were exceptional circumstances sufficient to invoke s 45(3) of the Act and to permit the making of a costs order. To amount to exceptional circumstances there
12 Legal Services Act 2011, s 24.
13 MacDougall Builders Ltd v Swinburne, above n 7, at [22].
14 At [23].
must be something “quite out of the ordinary”.15 For example, if an aided person has failed to accept a Calderbank offer and indulged in conduct which can properly be described as gross and obstinate, exceptional circumstances can be found.16 If a party pursues a wholly unarguable point, exceptional circumstances may be found.17
[17] Here Mr A opposed Mrs B’s entirely meritorious application to file very limited further evidence. The reason for that application was clear and she did not oppose him filing an affidavit in reply. He initially indicated that he would consent. He then resiled from that position without explanation other than to say that he had taken a second opinion. In my view the opposition was unfounded and misconceived from the outset. The outcome was or should have been obvious. Further, Mr A advanced his own application under r 9.43 notwithstanding that he was the successful party before the Family Court. He did so because he wanted to upset a factual finding made by the Family Court Judge which was at best peripheral and in any event of no relevance to the outcome before the Family Court. His application was made despite clear Supreme Court authority which made the arguments advanced untenable.18 In my view both s 45(3)(a) and (d) were engaged. I would have made the costs order in any event, although I would first have made enquiry into what amount it would have been reasonable for Mr A to pay having regard to all the circumstances, including both Mr A’s and Mrs B’s means and their conduct, as required by s 45(1).
[18] For the reasons I have set out, I make an order for costs in Mrs B’s favour and against Mr A in the sum of $6,094.50.
Wylie J
15 Laverty v Para Franchising Ltd, above n 3 at [31].
16 Johns v Johns HC Auckland CIV-2000-404-5101, 23 August 2007.
17 Smyth v Wadland [2009] NZCA 189, (2009) 19 PRNZ 361 at [9].
18 Arbuthnot v Chief Executive of the Department of Work and Income [2007] NZSC 13, [2008] 1 NZLR 13.
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