Costs for litigants-in-person
The Rules Committee is seeking comment from members of the legal profession, those who regularly use employed counsel to represent their organisation in court, and other court users on potential changes to the High Court Rules 2016 and District Court Rules 2014. These changes might alter the ability of litigants-in-person who successfully bring or defend a claim to obtain an award of costs.
Costs for litigants-in-person (PDF, 225 KB)
Costs are an amount awarded by a court to the party that has succeeded in litigation in addition to any damages or relief that party receives. The costs model currently used in New Zealand assumes that the parties to litigation have engaged at least one lawyer to represent them. For this reason, a "primary rule" exists preventing self-represented litigants (litigants-in-person) from obtaining a costs award.
At the same time, exceptions to this rule remain. These favour lawyers who represent themselves in court, and litigants who employ internal counsel, as opposed to an external barrister or solicitor. These exceptions exist because, historically, the courts accepted that, in these cases, the lawyer-in-person or the party represented by in-house counsel had engaged a lawyer. As that was the situation the costs rules were meant to cover, it was reasoned, an award of costs should be made.
The current state of the law is set out in greater detail in the Committee's consultation paper (PDF, 225 KB).
The Supreme Court in McGuire v Secretary for Justice has criticised the “primary rule” and accepted that these two exceptions – the “lawyer in person” and “employed lawyer” exceptions – may well be considered indefensible and unfair. However, the majority of the Court did think it appropriate for the courts to reform the law. The High Court of Australia has recently abolished the “lawyer in person” exception, finding it to be anomalous and indefensible.
The Supreme Court in McGuire suggested that it would be appropriate for the Rules Committee to review the continuing appropriateness of the primary rule and the exceptions to it. Having carefully considered the decision in McGuire, the Committee has decided a review of the costs regime as it applies to litigants-in-person is necessary.
This process is intentionally being made to coincide with the Committee’s ongoing work on improving access to civil justice, given that the current costs regime may be seen as a barrier to access to civil justice.
The Committee is aware that any reform in this area involves navigating a range of principled and practical concerns regarding the purpose and operation of the costs regime.
In particular, the Committee is sensitive to commentary that any system of awarding costs to litigants-in-person may result in the award of costs becoming inexpeditious and unpredictable.
For this reason, the Committee has identified that it needs to consult with the legal profession and other court users as to what objectives a reformed costs regime should prioritise before putting forward any specific proposals for reform.
The Committee believes that doing so will both help build support for any changes made, and also allow for any practical issues to be identified and resolved in advance of the new costs regime coming into operation.
In particular, the Committee is aware these reforms may particularly affect those organisations that primarily rely on employed lawyers to represent them in court. The Committee’s impression is that this would primarily affect central and local government but wants to hear from any private entities that would be heavily impacted by this change.
To aid submitters, the Committee has ‘bundled’ what it sees as being the relevant considerations into a series of four questions:
1. Should the concept of “costs” be expanded beyond allowing partial recovery of amounts paid for legal services?
2. If question one is answered “yes”, how should the costs of litigants-in-person be determined?
3. If question one is answered “no”:
a. should the concept of “costs” be further narrowed, so that “costs” must be out-of-pocket expenses; and
b. if so, should an exception nonetheless be made for employed lawyers and, if so, on what basis should their costs be determined?
Put another way, these questions ask:
- should the primary rule preventing litigants-in-person from obtaining an award of costs be abrogated and, if so, how should lay-litigants’ costs be measured?
- if the primary rule is not abrogated, should the exception for lawyers-in-person be removed?
- should the exception for employed counsel be maintained and, if so, what would the justification for that be, and how should employed lawyers’ costs be measured?
The Committee's consultation paper sets in greater detail the considerations it sees each of these questions as raising and directs submitters to relevant judgments and commentary to assist them in formulating a response.
The Committee invites submissions and comments addressing any or all of these questions and the points raised under each. The Committee would particularly welcome suggestions as to how, if the primarily rule was abrogated, the costs of litigants-in-person can be justly but expeditiously determined.
The Committee is also very much interested in receiving submissions addressing related points and questions not identified in this paper. Identifying these is vital to ensuring any future regime is fit-for-purpose.
Submissions or comments should be sent to Sebastian Hartley, Clerk to the Rules Committee no later than 5:00 pm on 2 September 2020 using the below details:
Clerk to the Rules Committee
c/- Auckland High Court
PO Box 60