Green v Regan

[2017] NZHC 1916

NOTE: PURSUANT TO S 139 OF THE CARE OF CHILDREN ACT 2004, ANY REPORT OF THIS PROCEEDING MUST COMPLY WITH SS 11B TO

11D OF THE FAMILY COURTS ACT 1980.

THIS JUDGMENT HAS BEEN ANONYMISED AND MAY BE PUBLISHED IN THIS FORM.

IN THE HIGH COURT OF NEW ZEALAND WHANGAREI REGISTRY

CIV-2016-488-000132 [2017] NZHC 1916

BETWEEN

[MS GREEN]

Appellant

AND

[MR REGAN] First Respondent

ATTORNEY-GENERAL Second Respondent

Hearing:	27 July 2017
Appearances:	S M Henderson and C J L Martin for Appellant No appearance for the First Respondent D Harris and M Majeed for the Second Respondent
Judgment:	11 August 2017

JUDGMENT OF KATZ J

This judgment was delivered by me on 11 August 2017 at 4:00pm

Pursuant to Rule 11.5 High Court Rules

Registrar/Deputy Registrar

Solicitors:           Henderson Reeves Connell Rishworth Lawyers, Whangarei

Crown Law, Wellington

GREEN v REGAN [2017] NZHC 1916 [11 August 2017]

Introduction

[1]      Ms Green and her former partner Mr Regan have been engaged in protracted proceedings in the Family Court.1    Following a nine-day hearing of parenting applications under the Care of Children Act 2004 (“Act”), Judge S M R Lindsay made a costs contribution order under s 135A.2  As a result, Ms Green and Mr Regan are each required to contribute one-third of certain costs incurred by the Crown in relation to the proceedings.  Ms Green’s one-third share of the costs is $11,007.92. She appeals the costs contribution order.

[2]      Mr Regan elected not to take part in the appeal.   As the costs ordered are payable to the Crown, the Attorney-General was joined to the proceedings as second respondent in order to defend the costs contribution order on behalf of the Crown.

[3]      Ms Green’s primary ground of appeal is that there has been a breach of natural justice.   In particular, Ms Green submits that the making of the costs contribution order was wrong in law because the process followed by the Judge denied her the opportunity to be heard.  I will consider the natural justice ground of appeal first, and will only address Ms Green’s two alternative grounds (which focus on the substantive merits of the decision under appeal) if the need arises.

The statutory framework

[4]      Section 135A of the Act requires the parties to refund the Crown, in equal shares, a fixed proportion of the costs and expenses paid to the lawyer appointed to represent the child (“Lawyer for Child”) and to the specialist report writers.   The required proportion is fixed by regulation at two-thirds in total, which means that each  party  must  pay  one-third  of  the  costs.3    The  court  must  make  a  costs contribution order under s 135A unless:

(a)       such an order would cause “serious hardship” to the party or to a dependent child of the party;4 or

1      To protect the identity of the children who are the subject of the proceedings, pseudonyms have been used for the names of the parties.

2 [Names redacted] [2016] NZFC 7175 at [288].

3      Family Courts (Prescribed Proportion of Professionals’ Costs) Regulations 2014, reg 4.

4      Section 135A(2).

(b)in the circumstances of the case, it would be inappropriate for the party to pay a one-third share of the costs.5

[5]      The  Act  does  not  provide  an  exhaustive  definition  of  serious  hardship. However, s 135A(5) provides some guidance as to the types of financial difficulties that might result in a finding of serious hardship.

[6]      Section 135A was inserted into the Act as part of a set of broader family justice reforms which took effect from 31 March 2014.6    Prior to then it was not mandatory for the court to order a party to contribute to the Crown’s costs for Lawyer for Child and for specialist report writers.  Although the court could order a party to contribute to these fees and expenses, such orders were discretionary and relatively uncommon.

The process leading up to the making of the s 135A order

[7]      The hearing regarding the care of the parties’ children commenced on 16 May

2016 and continued until 24 May 2016.   It was then adjourned, part-heard, before resuming on 17 August 2016.

[8]      On 26 May 2016, shortly after the hearing was adjourned part-heard, the

Judge issued a Chambers’ Minute stating:

The cost of AVL is most likely to become an issue to the parties as this cost should be borne 3 ways.  Ms [redacted] is currently trying to obtain a quote for the cost of the AVL.  Do counsel still require Ms [redacted]?

[9]      Mr  Henderson  responded  to  that  query  on  behalf  of  Ms  Green,  by memorandum dated 31 May 2016.  On the issue of AVL costs he stated that:

2.However,  as  regards  cost contribution,  counsel  advises that  as  a beneficiary [Ms Green] has no capacity to make payments towards AVL expenses. A signed statement of her financial position is attached.

3.[Ms Green’s parents] paid [Ms Green’s] legal bills on the hearing to date. They  have  informed  counsel  they  are  unable  to  make  any further  payments.  A signed  statement  of  their  financial  position could be provided if the Court thinks necessary.  Counsel, however,

5      Section 135A(4).

6      Care of Children Amendment Act (No 2) 2013, s 30.

respectfully submits that there is already evidence before the Court which would tend to support that the parents are under quite significant financial stress at present, given their purchase of the farm on which [Ms Green] lives and consequent $600,000 mortgage.

4.        Counsel is currently acting pro bono and anticipates that [Ms Green]

will soon apply again for legal aid.

[10]     The annexed statement of financial position shows that Ms Green had $500 in her bank account, a motor vehicle worth approximately $15,000, and credit card debt of $21,000 (being repaid at $500 per month).  Her income was derived from a solo parent benefit of $358 per week and a Working for Families supplement of $157 per week.  Her statement of financial position shows a modest deficit of expenses over income.

[11]     On 24 August 2016 the Judge issued a further Chambers’ Minute, in which

she stated as follows:

At hearing [Ms Green] privately retained counsel.

By memorandum dated 31 May 2016 counsel for [Ms Green] explained an application for legal aid would be submitted to the LSA.

At  the  opening  of  the  resumed  hearing  on  the  18th  August  2016

Mr Henderson advised the Court an application for legal aid had been filed and a decision would be known in 7 days.  I queried when the application

had been filed given the court and counsel were on notice of a pending application back in May 2016.  Mr Henderson said he would make enquiries

and the Court would be advised by email that day, or before the close of court the following day.

I am unaware of any advice (over last week’s hearing or pending conclusion of the hearing) from Henderson Reeves of advice confirming the timing of the application and a decision on the application for legal aid.

I am advised by the Registry Ms Patterson has raised the issue with counsel for [Ms Green] and advice has been given the application has been filed however a decision on the application is not yet available.

The issue squarely before the Court is the matter of a costs contribution to Crown costs but beyond that both parties will be alive to the risk of a Costs award following on from the decision of the Court.

There is no reason for delay on this point.  This morning the case manager contacted the Legal Services Agency to enquire as to when a decision would be pending.

The advice received from a staff member at Legal Services Agency appears to be no application for a grant of legal aid has been filed.

What is the position please?  The Court has been advised an application has been made so I would appreciate confirmation from counsel as to the date of filing of the application and any advice from Legal Services as to time frame for a decision. A response from counsel would be appreciated today by 4pm.

Counsel for [Mr Regan] and Lawyer for Child also to advised. (Emphasis added)

[12]     Mr  Henderson  responded  on  the  same  day,  confirming  that  although

Ms Green was in the process of applying for legal aid, she was not yet legally aided.

[13]   Just over a week later, on 2 September 2016, the Judge delivered a comprehensive judgment on parenting issues.7    She made orders as to contact arrangements.   She also provided for a review in February 2017 and ordered a further specialist report, pursuant to s 133 of the Act, for the purposes of that review. A final hearing would then be held in order to review the parenting arrangements and make any final orders required. At the conclusion of her judgment, the Judge stated:

Costs contribution

[287]    Finally, costs between the parties are likely to be an issue but shall be determined at the conclusion of the proceedings.

[288]    Both parties privately retained Counsel at hearing.   [Mr Regan] is employed. [Ms Green] had the financial backing of her parents for this litigation. The maternal grandparents own a house in Auckland and also the property [Ms Green] resides in.  They have plans in 2016 to liquidate a residential asset. The Crown costs are significant. I see no reason a contribution of costs towards the costs of lawyer for child and the s 133 report writer should not be borne by both parties.  I direct the parties each meet a third share for the costs of the s 133 report and the costs of lawyer for child specified (for the period May 2016 up until today’s date).

[14]     At the appeal hearing Mr Henderson provided some further clarification as to Ms Green’s legal aid position.  He advised that Ms Green was in receipt of legal aid in the period leading up to the May 2016 hearing, but not for the hearing itself. Mr Henderson’s law firm was not willing to undertake the May hearing on a legally aided basis.  Ms Green, with financial assistance from her parents, therefore decided to retain the firm privately.  Ms Green’s legal fees for the May 2016 hearing were paid in part by her parents and in part by a donation from a third-party benefactor. Mr  Henderson  advised  that,  after  the  hearing  was  adjourned  part-heard  on

24 May 2016, he agreed to act on a legally aided basis going forwards.   Due to

7      Above n 2.

various administrative delays (including delays within Mr Henderson’s law firm), it was not until 4 October 2016 that Ms Green obtained a grant of legal aid.  That grant operated retrospectively, however, to cover the August hearing dates.  It also covered the ongoing conduct of the parenting proceedings in the Family Court.

Was there a breach of natural justice?

[15]     Ms Harris, on behalf of the Attorney-General, submitted that there was no breach of natural justice in relation to the making of the costs contribution order.  In particular,  she  submitted that  the Judge’s  Chambers  Minute  of 24 August  2016 adequately alerted Ms Green to the fact that the Court was then considering making a costs contribution order.  The Judge expressly asked whether Ms Green was legally aided.  Ms Harris submitted that counsel would have been aware that the information regarding legal aid was required because there is a rebuttable presumption, under s 45(2) of the Legal Services Act 2011, that a costs contribution order will not be made against a legally aided person.  The Judge’s Chambers Minute should therefore have prompted Ms Green to seek a dispensation from the requirement to contribute to Crown costs on “serious hardship” grounds, particularly given that she was not legally  aided  at  the  time  and  a  costs  contribution  order  was  therefore  a  real possibility.

[16]     Ms Harris also noted that the Judge had significant information available to her  that  was  relevant  to  the  costs  contribution  issue,  including  a  statement  of Ms Green’s financial position.

[17]     Mr  Henderson,  on  the  other  hand,  submitted  that  the  Judge’s  Chambers Minutes of 26 May 2016 and 24 August 2016 (considered together or separately) did not meet the requirements of natural justice.  Although the 24 August 2016 Minute identified that the Court was considering the issue of costs contribution, no input was sought from the parties on that issue.   The Minute simply sought an update on Ms Green’s legal aid position.  That was one relevant consideration, but not the only one.   The parties were not afforded an opportunity to provide input on any other issues that might have been relevant to whether a costs contribution order would cause serious hardship, or whether there were other reasons that might make it inappropriate to require Ms Green to pay a one-third share of the Crown’s costs.

[18]     Mr Henderson further submitted that if the Court intended to base its ruling on an assumption that Ms Green’s parents would provide the money to meet the costs contribution order, Ms Green should have been explicitly alerted to that proposition and given an opportunity to address it.   She could have then made submissions  on  the  topic,  and  also  possibly  have  filed  evidence  regarding  her parents’ financial situation and willingness to contribute.

[19]    Counsel referred me to several Family Court decisions relating to costs contribution  orders  under  s 135A.    Mr  Henderson  submitted  that  the  procedure followed in those cases provides helpful guidance as to the appropriate procedure to be followed prior to making an order under s 135A.  Ms Harris acknowledged that the procedure followed in those cases could be seen as “best practice”, but submitted that  the  requirements  of  natural  justice  did  not  require  that  such  a  process  be followed in every case.  In all the circumstances of this particular case, Ms Harris submitted that the requirements of natural justice had been met.

[20]     In P v C the Registrar notified each of the parties in writing of the obligation to contribute to the Crown’s costs in accordance with s 135A.   The parties were invited to file submissions, should they wish to do so, addressing whether they should be exempted from that requirement.  The parties did file such submissions, following which Judge R J Russell delivered a decision on the papers.  His Honour concluded that the serious hardship test had been met and ordered both the applicant

and respondent to contribute the minimum sum of $1, as permitted by s 135A(2).8

[21]     A similar process was followed in A v A.9    Judge D Flatley summarised the procedure followed in that case as follows:

The process

[9]       The registrar for the Dunedin Family Court was directed to issue standard  directions  to  the  parties  as  to  the  filing  of  a  memorandum containing submissions relevant to the determination of a cost contribution. On 16 December 2014, [Mr A] and [Mrs A] were forwarded the memorandum and covering letter which specifically advised of the statutory requirement of the Court to consider reimbursement of the prescribed proportion amounts paid by the Crown by way of Court order and also that the Court may decline to make an order.

8      P v C [2015] NZFC 1318 at [21]-[23] and [27]-[29].

9      A v A [2015] NZFC 2368 at [28]-[32].

[10]      The parties were advised of the amount paid by the Crown and the need to file submissions, should they wish to do so, within 21 days. [Mr and Mrs A] have filed submissions.

[11]      The matter has been referred to me in chambers for determination.

[22]     Having reviewed the parties’ submissions, the Judge concluded that although serious hardship had not been established it was nevertheless inappropriate to require Mrs A to  make  a  costs  contribution,  because  the  proceedings  were  essentially pointless.  Mrs A had been forced to incur legal costs, as well as potential liability to contribute to the costs incurred by Lawyer for Child in response to proceedings that were ill-founded.   The Judge concluded that it would be inappropriate to require

Mrs A to make a costs contribution in such circumstances.10

[23]     Judge R J Russell followed a similar process in B v S.  His Judgment records that:11

[6]       The  Registrar  has  notified  each  of  the  parties  in  writing  of  the obligation to pay this sum.  They were asked to file submissions, should they wish to do so, addressing whether they should be exempted from this requirement.  Only [Ms B] and [Ms L] have filed a submission through their counsel, Ms Dupuy.

[7]       The question of what contribution each party is to make has been referred to me in chambers for determination.

[24]     In that case his Honour was satisfied that as the applicants were in receipt of a WINZ benefit and had limited income, requiring each of them to pay an equal share of the prescribed portion would result in their inability to meet minimum living expenses according to normal community standards for themselves and, importantly, for the child.  Serious hardship was therefore established, and the Judge ordered each

of them to contribute the minimum sum of $1.12

[25]     The specific requirements of natural justice are context-specific.13    Cooke P

in Daganayasi v Minister of Immigration characterised the enquiry as one based on

10     Pursuant to s 135A(4) of the Act.

11     B v S [2015] NZFC 1330.

12     At [24]-[26].

13     See Webster v Auckland Harbour Board [1987] 2 NZLR 129 (CA) at 132; Dotcom v United States of America [2014] NZSC 24, [2014] 2 NZLR 355 at [120]; Drew v Attorney-General [2002] 1 NZLR 58 (CA) at [67]; and Lyttelton v Police [2016] NZHC 22, [2016] NZAR 493 at [35].

what fairness requires in the particular case.14   In any case, however, a fundamental requirement of natural justice is that a person should have an opportunity to be heard before a decision is made affecting their rights.15     McGrath J said in Dotcom v United States of America that the “question is what form of procedure is necessary to achieve justice without frustrating the apparent purpose of the legislation”.16    As well, Elias J (as she then was) observed in Ali v Deportation Review Tribunal that:17

Fundamental to the principles of natural justice is the requirement that where the circumstances of decision making require that someone affected by it be given an opportunity to be heard, that person must have reasonable opportunity to present his case and reasonable notice of the case he has to meet.

[26]     Neither the Act, nor any regulations or rules of Court, sets out a specific procedure  that  must  be  followed  prior  to  making  a  costs  contribution  order. However, the process that was followed in the three Family Court cases I have referred to above accords with the requirements of natural justice and, in my view, constitutes “best practice” guidance as to the appropriate procedure to follow prior to making an order under s 135A.

[27]     Obviously, there may be cases where a less formal process will suffice to meet the requirements of natural justice. At a minimum, however, the parties need to be given an opportunity to address whether:

(a)       the  making  of  a  costs  contribution  order  would  cause  “serious hardship” to a party or dependent child of that party; and

(b)whether, in the particular circumstances of the case, there are other reasons why it would be inappropriate to require a party to pay a

one-third share of the relevant costs.

14     Daganayasi v Minister of Immigration [1980] 2 NZLR 130 (CA) at 141.

15     See Furnell v Whangarei High Schools Board [1973] 2 NZLR 705 (PC) at 720 and 728; and

Stininato v Auckland Boxing Association (Inc) [1978] 1 NZLR 1 (CA) at 28.

16 At [120]. See also Wyeth (NZ) Ltd v Ancare New Zealand Ltd [2010] NZSC 46, [2010] 3 NZLR

569 at [40].

17     Ali v Deportation Review Tribunal [1997] NZAR 208 (HC) at 220.

[28]     It is arguable that the combined effect of the two Minutes issued in this case should have alerted Ms Green to the fact that a costs contribution order was under consideration.  As well, it is arguable that it should have prompted the filing of a memorandum addressing why Ms Green should be exempted from that requirement.

[29]     Overall, however, I am not satisfied that the procedure followed in this case was sufficient to meet the requirements of natural justice.  The only specific input sought from counsel, in the 24 August 2016 Minute, was regarding Ms Green’s legal aid status.   A response was sought by 4.00 pm that day (which would have been insufficient time for a more comprehensive submission).  The requested information was  provided.    No  opportunity  was  provided  then  or  later  for  the  filing  of submissions on whether Ms Green should be exempted from making a costs contribution order on the “serious hardship” ground or otherwise.   It was also not entirely clear when a decision on costs contribution issues would be made.   One possible interpretation of the 24 August 2016 Minute was that (in the event that Ms Green was not legally aided) a decision on a costs contribution order would be made following delivery her substantive judgment, rather than contemporaneously with it.

[30]     As Ms Harris noted, the Judge may well have believed that she already had all the information (apart from that relating to Ms Green’s legal aid status) necessary to make a decision on the costs contribution issue.  She had the benefit of a statement of financial position, and had also presided over a lengthy hearing that had traversed a number of matters relevant to an assessment of Ms Green’s means.  Nevertheless, natural justice required that Ms Green be afforded the opportunity to address whether there were any other matters she wished to draw to the Court’s attention, before a final decision was made.

[31]     In my view, the “best practice” in terms of the procedure to be followed prior to making an order under s 135A is that set out in the Family Court decisions I have referred to above.  I refer, in particular, to the process described in A v A, as set out at [20] above.

[32]     Given my conclusion that there has been a breach of natural justice, the appropriate remedy is to quash the costs contribution order and remit the matter to the Family Court to reconsider the issue.  It is accordingly not necessary to consider the two alternative grounds of appeal, which focus on the substantive merits of the Judge’s decision.

Result

[33]     The appeal is allowed.

[34]     The costs contribution order is quashed and the matter is remitted to the Family Court to reconsider its decision on whether a costs contribution order should be made against Ms Green.18     Prior to making that decision Ms Green is to be provided with an opportunity to address:

(a)      whether such an order would cause “serious hardship” to her or her children; and

(b)whether there are any other reasons, in the circumstances of the case, why it would be inappropriate for her to pay a one-third share of the Crown’s costs.

[35]     If the costs of this appeal cannot be agreed between counsel, then leave is reserved to the appellant to file a memorandum on costs by 25 August 2017.  Any

response from the second respondent is to be filed by 8 September 2017.

Katz J

18     For the avoidance of doubt, there is no reason why the trial Judge should not undertake the reconsideration.   Indeed, given her familiarity with the subject matter, she is probably best placed to do so.