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Getting an award for costs against a legally aided opponent, by Eugene Duhovnikoff BA/LLB

Section 45 of the Legal Services Act 2011 (“Act”) provides, relevantly, that the liability of a legally aided person for costs is as follows:

(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.

 

According to the case law on this matter:

1. The range of exceptional circumstances is not confined to cases where the legally-aided party’s conduct during the course of a litigation is somewhat disapproved by the Court. There is a possibility that a legally-aided party[1]:

i) is quite wealthy; or

ii) might succeed against one of multiple parties and thus be in a position to be able to meet or pass on an award of costs.

 

 

2. There is no fixed test which determines the term “exceptional circumstances” in relation to costs claims against litigants on legal aid.[2]

 

3. In some cases the exceptional circumstances could include cases where the Court believes that :[3]

i) the claim to be wholly without merit;

ii) the claim appeared to be grossly exaggerated, particularly if a reasonable offer had been made and rejected; and

iii) the legally aided person is in fact found to have substantial private means.

 

4. Where a legally aided litigant has shown the exceptional disregard for orders and directions made by the Court costs will be awarded against it.[4]

 

5. The exceptional circumstances to exist where there had been reprehensible conduct by the legally aided litigant during the course of events that led to the litigation and the proceedings lacked any merit.[5]

 

 


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[1]Laver v Para Franchising Ltd [2006] 1 NZLR 650 (CA).

[2] Murphy v Murphy [2013] NZHC 2145 at [15]. [3] Caldwell v Gaze Burt (1994) 7 PRNZ 491 (HC).

[4] Johns v Johns HC Auckland CIV-2000-404-5101, 23 August 2007.

[5] Smyth v Wadland [2009] NZCA 189.

Reeves/Duhovnikoff & Associates Ltd. 2017

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