P v Oranga Tamariki Ministry for Children
[2018] NZHC 2165
•22 August 2018
NOTE: PURSUANT TO S 437A OF THE ORANGA TAMARIKI ACT 1989, ANY REPORT OF THIS PROCEEDING MUST COMPLY WITH SS 11B, 11C AND 11D OF THE FAMILY COURT ACT 1980. FOR FURTHER INFORMATION, PLEASE SEE
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE
CIV-2018-485-250
[2018] NZHC 2165
IN THE MATTER OF The Oranga Tamariki Act 1989 BETWEEN
P AND B
Appellants
AND
ORANGA TAMARIKI – MINISTRY FOR CHILDREN
Respondent
Hearing: 10 August 2018 Appearances:
N Levy for Appellants
N Wills and M Majeed for Respondent
Judgment:
22 August 2018
JUDGMENT OF GRICE J
(Appeal against award of costs)
[1] This is an appeal against a costs decision of the Family Court made on 16 March 2018.1 The costs related to proceedings concerning the care and protection of two young children heard over some five days in May 2017.2 The application for costs was made by the children’s parents, who had successfully defended the proceedings. The Judge records in his costs judgment:
1 Chief Executive of the Ministry of Vulnerable Children Oranga Tamariki v [P] [2018] NZFC 1894 [Costs decision].
2 Chief Executive of the Ministry of Vulnerable Children Oranga Tamariki v [P] [2018] NZFC 3842 [Substantive decision].
P AND B v ORANGA TAMARIKI – MINISTRY FOR CHILDREN [2018] NZHC 2165 [22 August 2018]
(a)The proceedings were brought by Oranga Tamariki;
(b)The parents were successful;
(c)The parents were legally aided. They paid about $5,000 personally in legal fees before being granted legal aid;
(d)The parents had a debt to repay to legal services of $9,420;3
(e)There was no criticism of Oranga Tamariki in bringing the proceedings; and
(f)The grant of legal aid was for a total sum of $31,361. The difference between that amount and $9,420 (the debt referred to above) may well have been written off.4
[2] The Judge carefully considered whether costs should be granted at all in the circumstances of the case. The Family Court has a discretion to determine costs. He noted the relevant provisions.5
[3] The Judge said that bearing in mind the overall question of fairness, while Oranga Tamariki had no choice but to bring the proceedings, the parents were entitled to an award of costs. He said that because the proceedings had left the parents out of pocket, which in turn impacted on the children, it was appropriate to award costs in their favour in light of the best interests and welfare of the children.6
[4] The Judge noted that the parents sought costs on a 2B scale basis.7 He ordered costs on a 2B basis, but he then specified the amount of costs awarded as $14,420, so:8
3 Costs decision, above n 1, at [4].
4 At [5].
5 The Family Court Rules 2002 and s 203 of the Oranga Tamariki Act 1989. Rule 207 of the Family Court Rules provides a framework which enables the court to consider costs. At [13], [14] and [15].
6 At [23].
7 At [18].
8 At [24].
… that the parents’ debt to the Legal Services board is extinguished and that they would be in a position to repay, if not all, at least the majority of, their debt to respective members of the family.
Grounds of appeal
[5]The Notice of Appeal sets out the ground of appeal as follows:
… that the Judge erred in law in concluding that the appellants could not obtain costs from the respondent that exceeded the amount of their debt to legal aid and their costs paid privately.
[6] It became obvious when the matter was called before me that the issue was that the Judge appeared to have relied on the fact that the Commissioner of Legal Services would recover from the parents only the lesser amount of $9,420 rather than the total sum paid by legal aid of $31,361. However, under s 21 of the Legal Services Act 2011 the Commissioner could recover the full $31,361 if there were sufficient monies recovered in the proceeding (including through an award of costs). Following the delivery of the costs decision the Commissioner took the full amount of the costs award of $14,220 not just the intended $9,420.
[7]The Judge concluded the parents would only need to repay $9,420 to legal aid:
[4] It now appears (paragraph 10 of Ms Levy’s submissions of 27 November 2017) that the parents’ debt to legal aid amounts to $9,420. If the parents were granted that sum it would be paid to legal aid and that would extinguish any debt that the parents would have to legal aid. It would not extinguish their out-of-pocket expenses for fees that they have paid privately. The submission (paragraph 5 of Mr Leavy’s original submission) is that the loans from family to the parents are approximately $5,000.
[8] It is apparent that the Judge relied on the parents’ debt to legal aid being $9,420. He assumed that awarding the parents total costs of $14,420 would enable them to repay the legal aid debt as well as repay the family members who had advanced them the $5,000 they had paid personally toward legal fees.9
[9] As legal aid has taken the full $14,420 costs award, the parents do not have sufficient funds to repay the $5,000 debt incurred by them personally for legal fees so the Judge’s expressed intention has been frustrated.
9 At [24].
The issues
[10]The issues here are:
(a)Did the Judge make an error which gives rise to a ground of appeal?
(b)If so, does that error make the decision susceptible to relief on appeal?
(c)If so, what is the appropriate relief?
This appeal
[11] This appeal is brought under s 341 of the Oranga Tamariki Act 1989. This allows for appeals against decisions of the Family Court. In Bradbury the Court of Appeal held that an award of costs is a judicial discretion and therefore:10
… the award will not be upset unless contrary to principle as by adopting a wrong approach or disregarding a material factor, or wholly wrong…
[12] When exercising the powers under s 341, s 13(1) of the Oranga Tamariki Act 1989 requires that the Court must have regard to the welfare and interests of the children as the first and paramount consideration.
Submissions
[13]Oranga Tamariki argues that:
(a)The Judge must be taken to have been aware of the statutory framework making the parents susceptible to having to repay the full amount of
$31,315 to the Commissioner;
(b)The Judge made his determination as to costs taking into account all the factors of the case.
10 Bradbury v Westpac Banking Corporation [2009] 3NZ LR 400 at [32] citing Lewis v Cotton [2001] 2 NZLR 21 (CA) with approval.
[14] Ms Wills for Oranga Tamariki says that the Judge made no factual error. She says that counsel for the parents had told the Judge that the debt to legal aid requiring repayment was $9,420. Therefore, she says there are no errors made by the Judge, legal or otherwise. In addition, she says the Judge did not have any misunderstanding as to the legal aid scheme, but rather followed the correct approach to costs.
[15] Ms Wills said the Judge made a factual finding that the amount the parents would have to repay Legal Aid was $9,420. This may have been on the basis of the written submissions made to him or because he misunderstood the legal aid recovery scheme and had not realised the Commissioner could recover up to the amount of actual fees paid by legal aid. Regardless however, she submitted, it was not open to go behind his finding.
[16] Oranga Tamariki also submitted that if the appellants’ award did take into account the full amount of the relevant fees and disbursements paid by legal aid they could gain a windfall if the Commissioner subsequently writes off that full amount. He has a discretion to do so.
[17] As a further point, Oranga Tamariki notes that when considering the interests of the children in awarding costs, it should not be confined to the interests of these children but also of other children who may suffer if Oranga Tamariki is ordered to pay costs in litigation. Ms Wills referred to the Court’s cautious approach exercised when awarding costs against the Ministry in these types of cases.11 She pointed out that Oranga Tamariki had acted appropriately here. As the Court said in Roth:12
… costs only ought to be awarded against the Ministry if it is perceived that the Ministry has not carried out its duty reasonably and objectively.
[18] I note that this approach does not appear to have been considered in Q v Chief Executive of Ministry of Social Development where a substantial award of costs was made against the Chief Executive without reference to the caution referred to in Roth.13
11 Chief Executive of the Ministry of Social Development v Roth [2015] NZFC 3696 at [7].
12 At [7] – [9].
13 Q v Chief Executive of Ministry of Social Development [2014] NZHC 311.
[19] Oranga Tamariki also argues that what was actually paid by legal aid is irrelevant as between Oranga Tamariki and the parents for the purposes of determining the costs.
The legal aid scheme
[20] The present scheme is in the Legal Services Act 2011. A legally aided person prima facie must (with some exceptions) pay to the Commissioner a repayment determined in accordance with s 21 of the Act.14 Section 21 sets out how the repayment will be calculated using two reference points:
(a)the proceeds of the proceeding, which is defined in section 4 to include costs awarded or payable; and
(b)a prescribed amount, which is unrelated to the issues or sums involved in the proceedings. This is calculated in accordance with schedules based on income and capital, and the Legal Services Regulations 2011.
[21] In addition to the payment of the prescribed amount (payments by instalments must commence immediately upon the grant of aid), there is an automatic charge in favour of Legal Services for the proceeds of the proceedings (including costs awarded) under s 36 of the Act
[22] Legal aid is a loan and not a gift. As Gallen J said in Bates v Legal Services Board:15
The demands on legal aid funds constantly exceed what is available … every charged call over from which the appellant was exempted was a dollar less for other legal aid applicants, …
New evidence
[23] An application was made for me to receive evidence concerning information received from the Legal Services Commissioner in relation to the repayment due to the Commissioner. I did not consider this necessary or desirable. The Legal Services
14 Legal Services Act 2011, s 18(2).
15 Bates v Legal Services Board [1999] NZAK 91 (HC) at [7].
Act, relevant to the issues I need to consider, sets out the repayment provisions. In reaching this decision I note Doogue J’s comments that the Court on appeal should only consider the matter on the evidence which was before the lower court. This was adopted in Zimmerman v Director of Proceedings.16
[24] Accordingly, the application for the further evidence to be adduced is dismissed.
Did the Judge make an error in relation to the amount to be paid to the Commissioner?
[25] In this case, the statutory framework of the Act has given rise to an amount owing by the parents equal to the amount that legal aid paid out for their legal fees and disbursements. Therefore, the parents will have to pay that amount, unless the Commissioner waives it, out of their award of costs. The Judge did not appear to take that into account when reaching his conclusion as to an appropriate quantum of costs payable to them.
[26] Oranga Tamariki submits that it was the fault of the parents that the Judge was under the impression they would need to pay only $9,420 to legal aid. That is not entirely clear. Submissions were made to the effect that the parents’ debt was $9,420, as the Judge noted.17 However, in written submissions to the Judge counsel for the parents did refer to the automatic charge over a costs award in favour of legal aid. It appears that Oranga Tamariki there submitted that the parents should apply to have the debt written off.
[27] It is not clear from the decision why the Judge then concluded that the parents would only have to pay the $9,420. However, it is clear that he did so and it was erroneous. In my view the Judge did rely on the fact that the parents obligations to legal aid would be extinguished by the payment of $9,420 in reaching his conclusion as to quantum. It is clear from the judgment that the Judge was attempting to ensure that the parents not only paid their legal aid obligations but had $5,000 left to repay
16 Television New Zealand Limited v Southland Fuel Injection Limited AP298/94, 16 March 1998 at 6; Zimmerman v Director of Proceedings HC WN CIV-2006-485-761, 29 May 2007.
17 Costs decision, above n 1, at [4].
family members for their initial debt. The Judge was contemplating awarding costs on a 2B scale and the reason he capped the actual award at $14,220 could only have been that he concluded that amount would clear both debts.
[28]Counsel has advised me that a 2B costs award would amount to approximately
$34,056.40 in this case. The actual costs, including for the purposes of this calculation: $5,000 personal expenditure and $31,361 legal aid expenditure amounts to $36,361. The Judge correctly noted that an award of costs should not exceed the parents actual costs.18 Including the amount paid in legal fees by legal aid, the parents’ actual costs would exceed an award made on a 2B basis.
[29] The Judge reached his conclusion on the quantum of costs relying on the assumption that the parents would be required to pay only the prescribed amount. The Legal Services Commissioner has not waived full payment although he retains a discretion to do so.19
[30] Therefore, I am of the view that the Judge made an error. The reason for his making that error is not relevant here. In fact, the decision does not disclose the reason he reached his conclusion that the parents would need only repay $9,420 to the Commission. In the circumstances, the Judge has adopted a wrong approach and disregarded a material factor by failing to consider the recovery provisions of the Act. Therefore, the appellants are entitled to succeed on their appeal.
[31] I now turn to the other submissions made by Oranga Tamariki. First, the parents are not obtaining a “windfall” by the Judge taking into account the full amount likely to be taken by the Commissioner. If the Commissioner indicates he will waive further repayment, which he apparently has not done to date, that will be a matter for the Judge to take into account in general terms on the best information available when costs are being assessed. The statutory scheme is unlikely to allow a “windfall” in any event.
18 District Court Rules 2014, r 14.2(f).
19 Legal Services Act 2011, s 42.
[32] A further point made by Ms Wills was the interests of the children may also be a point in favour of the Chief Executive as well as the children here. This is advanced on the basis that if Oranga Tamariki have to pay costs it leaves less money for it to undertake its statutory responsibilities for children generally. The requirement to consider the interests of the children was expressly noted by the Judge. He specifically noted that the factor favoured the parents. That issue and the Chief Executive’s submission goes to a reconsideration of the costs award.
[33] Finally, Oranga Tamariki says the actual amount payable in fees by the Commission is not relevant to an award of costs.
[34] In Kawhia case the Master proceeded on the basis that the costs paid by the legally aided person to legal aid were to be treated as that person’s actual costs for the purpose of those proceedings. The terms of the grant which had been made under the previous legislation, the Legal Services Act 2000, were not before the Court and therefore the Judge made this assumption.
[35]I prefer the view expressed in Body Corporate No 207715 v McNish:20
[4] No order for costs can be made against a legally aided person unless the Court is satisfied that there are exceptional circumstances.21 A legally aided party who succeeds in litigation, however, is entitled to costs. The fact that a legally aided person may have been charged at rates less than those contemplated by Schedule 2 to the High Court Rules (as must have been the case here) does not justify a reduction in the costs awarded to that party, provided that the costs award does not exceed the actual costs incurred.22 As a general rule a successful legally aided party is entitled to the full sum of the legal aid grant, provided this is the same or less than the appropriate costs award calculated on a scale basis. Ronald Young J summarised the position in Taunoa v Attorney-General as follows:23
[45] … It is accepted principle that the actual cost incurred by a successful party are not by themselves relevant in fixing costs unless indemnity costs are sought … Thus what costs the party has actually incurred is not the starting point. The starting point is to identify the appropriate band and category. Once this is done, any reduction for partial success can be factored in. It is only then that Rule 14.2(f) comes
20 Body Corporate No 207715 v McNish [2016] NZHC 475 at [4].
21 Legal Services Act 2011, s 45(2).
22 Rule 14.2(f); Kawhia Offshore Services Ltd v Rutherford HC Hamilton CP 61/99, 10 July 2002 and see Rudman v Way HC Auckland CIV-2008-404-2893, 17 September 2008 at [7] and [11]; P v Minister of Immigration (1999) 13 PRNZ 370 (HC) at 371.
23 Taunoa v Attorney-General (2004) 8 HRNZ 53 (HC).
into play. Is the proposed costs award greater than actually incurred? If the answer is yes, then the amount actually incurred will be the amount of costs awarded. That is the position here.
(emphasis added)
[36] Therefore, the full amount of the legal aid payment being $31,361 here may be taken into account as if it were actual costs incurred by the parents taking into account any waiver by the Commissioner.24
[37] That error was material in that the Judge overlooked that the Commissioner was entitled to take the full amount expended on the parents’ legal fees and disbursements for from the award of costs.
[38]I now turn to consider the appropriate relief on appeal.
Appropriate relief on appeal
[39] This Court does have jurisdiction to determine costs in the lower court on appeal. However, the matter of whether it is now appropriate for the determination to take place depends on the circumstances. As Panckhurst J put it:25
[9] … Determining the better course will depend on the circumstances. Particularly where a lower Court hearing has involved unusual features of which the lower Court judge is more aware, it may be appropriate for that judge to fix or review costs in light of the outcome on appeal.
[40] In the circumstances of this case it is not appropriate that I substitute my decision for that of the Judge. I therefore remit it back to the Family Court for rehearing. The reason I do this is that given the nature of the case and the Judge’s view that it was appropriate to make an award of costs against the Chief Executive in the circumstances. In addition, the case was difficult, it involved a specialist jurisdiction and required a hearing over some days. The Judge is best placed to reconsider the issue of costs and weigh up the relevant considerations.
24 This is always subject to the requirement that the parents do not receive more in costs than they are required to pay.
25 Q v Chief Executive of Ministry of Social Development, above n 13, at [9].
[41] Despite the authority cited by Oranga Tamariki about the caution to be exercised in making an award against the Chief Executive, the Judge exercised his discretion to do so. He weighed up the pros and cons in relation to the award of costs against the Chief Executive and he carefully considered what the appropriate amount should be.
[42] Many of the matters canvassed before me on appeal went to the factors the Judge should take into account in assessing costs. That would include the evidence concerning the breakdown of $5,000 debt said to be owed by the parents for the payment of early stage legal fees as well as the stance legal aid will take concerning the recovery of the fees from any award. In the circumstances, the Judge may require further evidence in relation to the costs application.
Conclusion
[43] I allow the appeal. The Judge erred in failing to take account of the statutory provisions of the Legal Services Act 2011 which required (subject to a discretion to waiver) the parents to repay to the Commissioner out of an award of costs the amount actually incurred by the Commissioner in legal fees and disbursements.
[44] The appeal is allowed and the matter of costs is remitted back to the Family Court for reconsideration.
Costs
[45] The parents sought costs on a 2B basis for this appeal. The usual rule is that costs follow the event. However, as I have indicated this relates to a specialist jurisdiction with particular rules including the requirement to consider the the interests of the children and their welfare. Counsel have indicated given the special issues they wish to file submissions on costs. Accordingly, submissions on costs are to be filed and served:
(a)By the appellants on or before 31 August 2018.
(b)By the respondents on or before 7 September 2018.
(c)The appellants may file a response (if any) on or before 12 September 2018.
Grice J
Solicitors:
Belvedere Law, Hobsonville, Auckland
Crown Law Office, Wellington for Respondent
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