P AND B v ORANGA TAMARIKI – MINISTRY FOR CHILDREN [2018] NZHC 2165

P AND B 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, 11CAND 11D OF THE FAMILY COURT ACT 1980. FOR FURTHERINFORMATION, PLEASE SEEhttps://www.justice.govt.nz/family/about/restriction-on-publishing-judgments/IN THE HIGH COURT OF NEW ZEALANDWELLINGTON REGISTRYI TE KŌTI MATUA O AOTEAROATE WHANGANUI-A-TARA ROHECIV-2018-485-250[2018] NZHC 2165IN THE MATTER OF The Oranga Tamariki Act 1989BETWEEN P AND BAppellantsAND ORANGA TAMARIKI – MINISTRY FORCHILDRENRespondentHearing: 10 August 2018Appearances: N Levy for AppellantsN Wills and M Majeed for RespondentJudgment: 22 August 2018JUDGMENT OF GRICE J(Appeal against award of costs)[1] This is an appeal against a costs decision of the Family Court made on16 March 2018.1 The costs related to proceedings concerning the care and protectionof two young children heard over some five days in May 2017.2 The application forcosts was made by the children's parents, who had successfully defended theproceedings. 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].(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 inlegal 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 differencebetween that amount and $9,420 (the debt referred to above) may wellhave been written off.4[2] The Judge carefully considered whether costs should be granted at all in thecircumstances of the case. The Family Court has a discretion to determine costs. Henoted the relevant provisions.5[3] The Judge said that bearing in mind the overall question of fairness, whileOranga Tamariki had no choice but to bring the proceedings, the parents were entitledto an award of costs. He said that because the proceedings had left the parents out ofpocket, which in turn impacted on the children, it was appropriate to award costs intheir 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 orderedcosts on a 2B basis, but he then specified the amount of costs awarded as $14,420, so:83 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 FamilyCourt 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 thatthey would be in a position to repay, if not all, at least the majority of, theirdebt 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 notobtain costs from the respondent that exceeded the amount of their debt tolegal aid and their costs paid privately.[6] It became obvious when the matter was called before me that the issue was thatthe Judge appeared to have relied on the fact that the Commissioner of Legal Serviceswould recover from the parents only the lesser amount of $9,420 rather than the totalsum paid by legal aid of $31,361. However, under s 21 of the Legal Services Act 2011the Commissioner could recover the full $31,361 if there were sufficient moniesrecovered in the proceeding (including through an award of costs). Following thedelivery of the costs decision the Commissioner took the full amount of the costsaward 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 of27 November 2017) that the parents' debt to legal aid amounts to $9,420. Ifthe parents were granted that sum it would be paid to legal aid and that wouldextinguish any debt that the parents would have to legal aid. It would notextinguish their out-of-pocket expenses for fees that they have paid privately.The submission (paragraph 5 of Mr Leavy's original submission) is that theloans 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 torepay the legal aid debt as well as repay the family members who had advanced themthe $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 havesufficient funds to repay the $5,000 debt incurred by them personally for legal fees sothe 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. Thisallows for appeals against decisions of the Family Court. In Bradbury the Court ofAppeal 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 awrong approach or disregarding a material factor, or wholly wrong[12] When exercising the powers under s 341, s 13(1) of the Oranga Tamariki Act1989 requires that the Court must have regard to the welfare and interests of thechildren 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 frameworkmaking 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 allthe 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. Shesays that counsel for the parents had told the Judge that the debt to legal aid requiringrepayment 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 misunderstandingas 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 parentswould have to repay Legal Aid was $9,420. This may have been on the basis of thewritten submissions made to him or because he misunderstood the legal aid recoveryscheme and had not realised the Commissioner could recover up to the amount ofactual fees paid by legal aid. Regardless however, she submitted, it was not open togo behind his finding.[16] Oranga Tamariki also submitted that if the appellants' award did take intoaccount the full amount of the relevant fees and disbursements paid by legal aid theycould 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 interestsof the children in awarding costs, it should not be confined to the interests of thesechildren but also of other children who may suffer if Oranga Tamariki is ordered topay costs in litigation. Ms Wills referred to the Court's cautious approach exercisedwhen awarding costs against the Ministry in these types of cases.11 She pointed outthat 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 thatthe 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 ChiefExecutive of Ministry of Social Development where a substantial award of costs wasmade against the Chief Executive without reference to the caution referred to in Roth.1311 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 isirrelevant as between Oranga Tamariki and the parents for the purposes of determiningthe costs.The legal aid scheme[20] The present scheme is in the Legal Services Act 2011. A legally aided personprima facie must (with some exceptions) pay to the Commissioner a repaymentdetermined in accordance with s 21 of the Act.14 Section 21 sets out how therepayment will be calculated using two reference points:(a) the proceeds of the proceeding, which is defined in section 4 to includecosts awarded or payable; and(b) a prescribed amount, which is unrelated to the issues or sums involvedin the proceedings. This is calculated in accordance with schedulesbased on income and capital, and the Legal Services Regulations 2011.[21] In addition to the payment of the prescribed amount (payments by instalmentsmust commence immediately upon the grant of aid), there is an automatic charge infavour 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 ServicesBoard:15The demands on legal aid funds constantly exceed what is available everycharged call over from which the appellant was exempted was a dollar less forother legal aid applicants, New evidence[23] An application was made for me to receive evidence concerning informationreceived from the Legal Services Commissioner in relation to the repayment due tothe Commissioner. I did not consider this necessary or desirable. The Legal Services14 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. Inreaching this decision I note Doogue J's comments that the Court on appeal shouldonly consider the matter on the evidence which was before the lower court. This wasadopted in Zimmerman v Director of Proceedings.16[24] Accordingly, the application for the further evidence to be adduced isdismissed.Did the Judge make an error in relation to the amount to be paid to theCommissioner?[25] In this case, the statutory framework of the Act has given rise to an amountowing by the parents equal to the amount that legal aid paid out for their legal fees anddisbursements. Therefore, the parents will have to pay that amount, unless theCommissioner waives it, out of their award of costs. The Judge did not appear to takethat into account when reaching his conclusion as to an appropriate quantum of costspayable to them.[26] Oranga Tamariki submits that it was the fault of the parents that the Judge wasunder the impression they would need to pay only $9,420 to legal aid. That is notentirely 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 theparents did refer to the automatic charge over a costs award in favour of legal aid. Itappears that Oranga Tamariki there submitted that the parents should apply to have thedebt written off.[27] It is not clear from the decision why the Judge then concluded that the parentswould only have to pay the $9,420. However, it is clear that he did so and it waserroneous. In my view the Judge did rely on the fact that the parents obligations tolegal aid would be extinguished by the payment of $9,420 in reaching his conclusionas to quantum. It is clear from the judgment that the Judge was attempting to ensurethat the parents not only paid their legal aid obligations but had $5,000 left to repay16 Television New Zealand Limited v Southland Fuel Injection Limited AP298/94, 16 March 1998 at6; 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 costson a 2B scale and the reason he capped the actual award at $14,220 could only havebeen 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 thiscalculation: $5,000 personal expenditure and $31,361 legal aid expenditure amountsto $36,361. The Judge correctly noted that an award of costs should not exceed theparents 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 theassumption that the parents would be required to pay only the prescribed amount. TheLegal Services Commissioner has not waived full payment although he retains adiscretion to do so.19[30] Therefore, I am of the view that the Judge made an error. The reason for hismaking that error is not relevant here. In fact, the decision does not disclose the reasonhe reached his conclusion that the parents would need only repay $9,420 to theCommission. In the circumstances, the Judge has adopted a wrong approach anddisregarded 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, theparents are not obtaining a "windfall" by the Judge taking into account the full amountlikely to be taken by the Commissioner. If the Commissioner indicates he will waivefurther repayment, which he apparently has not done to date, that will be a matter forthe Judge to take into account in general terms on the best information available whencosts are being assessed. The statutory scheme is unlikely to allow a "windfall" in anyevent.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 bea point in favour of the Chief Executive as well as the children here. This is advancedon the basis that if Oranga Tamariki have to pay costs it leaves less money for it toundertake its statutory responsibilities for children generally. The requirement toconsider the interests of the children was expressly noted by the Judge. He specificallynoted that the factor favoured the parents. That issue and the Chief Executive'ssubmission goes to a reconsideration of the costs award.[33] Finally, Oranga Tamariki says the actual amount payable in fees by theCommission is not relevant to an award of costs.[34] In Kawhia case the Master proceeded on the basis that the costs paid by thelegally aided person to legal aid were to be treated as that person's actual costs for thepurpose of those proceedings. The terms of the grant which had been made under theprevious legislation, the Legal Services Act 2000, were not before the Court andtherefore 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 unlessthe Court is satisfied that there are exceptional circumstances.21 A legallyaided party who succeeds in litigation, however, is entitled to costs. The factthat a legally aided person may have been charged at rates less than thosecontemplated by Schedule 2 to the High Court Rules (as must have been thecase 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 Asa general rule a successful legally aided party is entitled to the full sum ofthe legal aid grant, provided this is the same or less than the appropriatecosts award calculated on a scale basis. Ronald Young J summarised theposition in Taunoa v Attorney-General as follows:23[45] It is accepted principle that the actual cost incurred by asuccessful party are not by themselves relevant in fixing costs unlessindemnity costs are sought Thus what costs the party has actuallyincurred is not the starting point. The starting point is to identify theappropriate band and category. Once this is done, any reduction forpartial success can be factored in. It is only then that Rule 14.2(f) comes20 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 2002and see Rudman v Way HC Auckland CIV-2008-404-2893, 17 September 2008 at [7] and [11]; Pv 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? Ifthe answer is yes, then the amount actually incurred will be the amountof costs awarded. That is the position here.(emphasis added)[36] Therefore, the full amount of the legal aid payment being $31,361 here may betaken into account as if it were actual costs incurred by the parents taking into accountany waiver by the Commissioner.24[37] That error was material in that the Judge overlooked that the Commissionerwas entitled to take the full amount expended on the parents' legal fees anddisbursements 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 onappeal. However, the matter of whether it is now appropriate for the determination totake 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 ofwhich the lower Court judge is more aware, it may be appropriate for thatjudge 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 mydecision for that of the Judge. I therefore remit it back to the Family Court forrehearing. The reason I do this is that given the nature of the case and the Judge'sview that it was appropriate to make an award of costs against the Chief Executive inthe circumstances. In addition, the case was difficult, it involved a specialistjurisdiction and required a hearing over some days. The Judge is best placed toreconsider 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 theyare 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 beexercised in making an award against the Chief Executive, the Judge exercised hisdiscretion to do so. He weighed up the pros and cons in relation to the award of costsagainst the Chief Executive and he carefully considered what the appropriate amountshould be.[42] Many of the matters canvassed before me on appeal went to the factors theJudge should take into account in assessing costs. That would include the evidenceconcerning the breakdown of $5,000 debt said to be owed by the parents for thepayment of early stage legal fees as well as the stance legal aid will take concerningthe recovery of the fees from any award. In the circumstances, the Judge may requirefurther evidence in relation to the costs application.Conclusion[43] I allow the appeal. The Judge erred in failing to take account of the statutoryprovisions of the Legal Services Act 2011 which required (subject to a discretion towaiver) the parents to repay to the Commissioner out of an award of costs the amountactually incurred by the Commissioner in legal fees and disbursements.[44] The appeal is allowed and the matter of costs is remitted back to the FamilyCourt for reconsideration.Costs[45] The parents sought costs on a 2B basis for this appeal. The usual rule is thatcosts follow the event. However, as I have indicated this relates to a specialistjurisdiction with particular rules including the requirement to consider the the interestsof the children and their welfare. Counsel have indicated given the special issues theywish to file submissions on costs. Accordingly, submissions on costs are to be filedand 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 September2018._________________Grice JSolicitors:Belvedere Law, Hobsonville, AucklandCrown Law Office, Wellington for Respondent