LEE SMYTH V ROYSTON WILLIAM WADLAND CA CA398/2007

LEE SMYTH V ROYSTON WILLIAM WADLAND CA CA398/2007 18 May 2009IN THE COURT OF APPEAL OF NEW ZEALAND CA398/2007 [2009] NZCA 189BETWEEN LEE SMYTH Appellant AND ROYSTON WILLIAM WADLAND Respondent Court: Arnold, Potter and Harrison JJ Counsel: J D Noble for Appellant M K Macnab for Respondent Judgment: 18 May 2009 at 10.30 amJUDGMENT OF THE COURT : COSTS Had the appellant not been legally aided we would have awarded costs against him for a standard appeal on a band A basis, plus usual disbursements. As he was legally aided, we order him to pay $500 by way of costs to the respondent. REASONS OF THE COURT(Given by Arnold J)Introduction[1] In our substantive decision on this appeal, we allowed for the possibility that the respondent might wish to argue that there are exceptional circumstances in thiscase sufficient to justify an award of costs against the appellant even though he was legally aided: [2008] NZCA 578 at [55]. [2] The respondent's counsel, Ms Macnab, has filed a memorandum seeking an award of costs against the appellant. The appellant opposes that application.Background[3] The relevant statutory provisions are ss 40 and 41 of the Legal Services Act 2000. They provide:40 Liability of aided persons 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. (4) Any order for costs made against the aided person must specify the amount that the person would have been ordered to pay if this section had not affected that person's liability.(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. (6) If an order for costs is made against a next friend or guardian ad litem of an aided person who is a minor or is mentally disordered, then– (a) that next friend or guardian ad litem has the benefit of this section; and (b) the means of the next friend or guardian ad litem are taken as being the means of the aided person.41 Costs of successful opponent of aided person(1) This section applies if an order is made under section 40 that specifies that an aided person would have incurred a liability, or a greater liability, for costs if that section had not affected his or her liability. (2) If this section applies, the party to the proceedings who is prejudiced by the operation of section 40 (in this section the applicant) may apply to the Agency in the prescribed manner for payment by the Agency of some or all of the difference between the costs (if any) actually awarded to that party against the aided person and those to which that party would have been entitled if section 40 had not affected the aided person's liability. (3) In considering any such application, the Agency must have regard to the following matters: (a) the conduct of the parties to the proceedings: (b) the court's findings under section 40(2): (c) the hardship that would be caused to the applicant if the costs were not paid by the Agency. (4) For the purposes of subsection (3)(c), the Agency may require any person to furnish information on the financial circumstances and needs of the applicant. (5) If, having regard to the matters specified in subsection (3) and to any information received under subsection (4), and to all relevant circumstances, the Agency considers that any payment should be made by the Agency to the applicant, it may determine accordingly and must make the payment. (6) The Agency may recover any payment made under this section from the aided person as a debt due to the Agency, unless the payment relates to an order made under section 40(5).(7) The Agency may make payment under this section to a lawyer who is not a listed provider under this Act.[4] For present purposes three important points emerge from these provisions: (a) An order for costs may be made against an aided person in a civil proceeding only where the Court is satisfied that there are exceptional circumstances (s 40(2)). (b) Section 40(3) lists a number of (non-exhaustive) factors that the Court may take into account in determining whether there are exceptional circumstances. (c) In fixing the amount which an aided person must pay, the Court must have regard to his or her means (s 40(1)). [5] Ms Macnab submitted that there were five exceptional circumstances justifying an award in the present case. For convenience, we summarise them in the following three points: (a) The appeal was essentially an appeal against factual findings made by the Judge, some of which could not sensibly be contested. (b) The appellant's conduct during the events that gave rise to the proceedings was reprehensible, and this has carried on after the decisions of the High Court and of this Court. (c) Ms Macnab says that she wrote to the Legal Services Agency saying that the appeal was unmeritorious and should not be supported by way of a grant of legal aid, but her warning was ignored. [6] Mr Noble for the appellant filed a memorandum in opposition, together with an affidavit from the appellant as to his means. Although he submitted that some of the grounds of appeal did raise legal issues, Mr Noble conceded that much of the appeal was based on the premise that Frater J had drawn incorrect inferences in her fact-finding. He submitted that the appellant did not unreasonably pursue any issuesand submitted that this Court's focus should be on the appellant's conduct during the appeal, rather than on his conduct more broadly. Mr Noble submitted that the appellant's conduct of the appeal was appropriate. Further, he argued that the respondent had effectively obtained a windfall as a result of the appellant's endeavours. [7] As to the appellant's means, Mr Noble simply relied on the appellant's affidavit. It reads:1. I am in receipt of an invalid's benefit. My medical condition has not improved and I expect to be on an invalid's benefit for the foreseeable future. I receive $430.00 plus $59.00 family assistance per week from Work and Income New Zealand and my weekly expenditure matches my income. 2. I share the care of my four children with their respective mothers. 3. I have no assets other than my family chattels and an 18 year old car. I have no way of paying a costs order. If I were ordered to pay costs I would likely file for bankruptcy as I could not afford to pay any costs order as to do so would put in serious jeopardy the standard [of] living of both myself and my four children who as it is already have a lower standard of living than I would wish for them to have.Discussion[8] We have no doubt that there are exceptional circumstances within the meaning of s 40(2) in the present case. [9] As our substantive judgment makes plain, we consider that the appellant's conduct during the course of events that led to the litigation was reprehensible and that the appellant's proceedings against the respondent were without merit, as Frater J found. It follows from this that the appeal was without merit, focussing as it did on factual findings which could not sensibly be challenged. [10] We acknowledge that many appeals fail. Most, however, raise a point or points that are legitimately arguable. But this appeal did not raise such a point. Rather, it was wholly unarguable. Putting it in the language of s 40(3), we consider that the appellant's pursuit of the appeal was unreasonable, and that, because of hisunreasonable decision to pursue it, the respondent was forced to incur costs unnecessarily. [11] Having determined that there are exceptional circumstances, we must consider the appellant's means. As will be apparent, the appellant's affidavit is brief and short on detail. To that extent it is both unhelpful and unsatisfactory. Having said that, however, it is clear that the appellant is a person of limited means. [12] Had the appellant not been in receipt of legal aid we would have awarded costs against him for a standard appeal on a band A basis, together with usual disbursements. Costs for a standard appeal on a band A basis would have amounted to $6,400, comprising four days at $1,600 per day (three days for preparation and one day for the hearing). [13] However, in light of the appellant's limited means, we order that he pay $500 by way of costs. [14] Given that this appeal was wholly without merit, we are surprised that the appellant was granted legal aid to pursue it. We understand that that the respondent may apply to the Legal Services Agency under s 41(2) for payment of the difference between what we have ordered the appellant to pay and what we would otherwise have awarded. If such an application is made, we hope that it receives favourable consideration.Solicitors: Boyle Mathieson, Auckland, for Appellant Richard Wood, Auckland, for Respondent