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Strauss, Josef --- "Losing in Court for free? Protective costs orders as a measure for improving access to justice in New Zealand" [2023] UOtaLawTD 29

Last Updated: 13 April 2024

Losing in Court for Free?

Protective Costs Orders as a Measure for Improving Access to Justice in New Zealand

Josef Strauss

A dissertation submitted in partial fulfilment of the degree of Bachelor of Laws (with Honours) at the University of Otago – Te Whare Wānanga o Otāgo.

October 2023

Acknowledgements

First and foremost, thank you to Dr Bridgette Toy-Cronin for your guidance and support, and for the opportunity to research a topic I am passionate about. I am so grateful for your thoughtful suggestions and comments.

To my friends and flatmates, thank you for always being there for me, and for reminding me about what matters. And, of course, for the never-ending laughs and antics.

A special mention to Caleb, my honours brother. Thank you for everything.

Finally, to my family. Thank you Dad, Freddie, and Gary, for your love and care from day one. And to the wisest person I know, my Mum. Thank you for inspiring me every day.

Table of Contents

Introduction

In October 2022, the High Court of New Zealand granted two academics the right to bring a case to court with the guarantee that no award of costs would be made against them if they lost.¹ This exceptional measure is called a protective costs order (PCO), and was the first of its kind to be granted in New Zealand for the purpose of enhancing access to justice for those who bring cases in the public interest.

PCOs have the potential to make significant contributions to access to justice in New Zealand. Internationally, proceedings supported by PCOs have led to a full-scale government consultation on corruption,² facilitated indigenous land complaints,³ challenged asylum claim processes,⁴ vindicated disability discrimination claims,⁵ and even advanced a nuclear disarmament campaign.⁶ Designed appropriately, PCOs can enable individuals to bring important public interest claims before the courts that would otherwise have been withdrawn due to the risk of an adverse costs award. PCOs therefore serve an undeniably worthy purpose in upholding rights to justice: without meaningful access to justice through the courts, rights would only exist on paper.⁷

With PCOs currently in a stage of infancy in New Zealand, it is timely to explore whether and how PCOs can be an effective measure for improving access to justice. I aim to answer this question by evaluating New Zealand’s current approach to PCOs, and comparing it to regimes from other jurisdictions. Having examined a number of potential challenges and issues relating to PCOs, I recommend several changes that could be made to the current test for PCOs in New Zealand. Further, I propose New Zealand follow the example of the United Kingdom, Canada,

¹ Gordon v Attorney-General (No 2) [2022] NZHC 2801.

² R (on the application of Corner House Research) v Secretary of State for Trade and Industry [2005] EWCA Civ 192, [2005] 1 WLR 2600; Richard Stein and Jamie Beagent “Protective Costs Orders” (2005) 10 JR 206 at

214.

³ British Columbia (Minister of Forests) v Okanagan Indian Band [2003] 3 SCR 371; Hagwilget Indian Band v Canada (Minister of Indian Affairs and Northern Development) 2008 FC 574; For further indigenous claims, see discussion in Chapter 3, page 30.

⁴ R (Refugee Legal Centre) v Secretary of State for the Home Department [2004] EWCA Civ 1296.

⁵ Haraksin v Murrays Australia Ltd [2010] FCA 1133; Corcoran v Virgin Blue Airlines [2008] FCA 864; King v Jetstar Airways Pty Ltd [2012] FCA 412.

⁶ Campaign for Nuclear Disarmament v Prime Minister and others [2002] EWHC 277.

⁷ Susan Glazebrook “The Rule of Law: Guiding Principle or Catchphrase?” [2021] WkoLawRw 2; (2021) 29 Wai L Rev 2 at 14.

and Australia by codifying PCOs into legislation, with a model for how this could be achieved (Chapter 5). This way, PCOs can be accessible, predictable, and meaningfully contribute to enhancing access to justice in New Zealand.

CHAPTER ONE

Access to Justice and the New Zealand Context

It is first necessary to explain why access to justice is important, and the value in public interest cases making it to Court. A review of these questions underscores the importance of this research and the wider access to justice objective underpinning PCOs. I also outline New Zealand’s costs regime, representing what a litigant ordinarily must deal with when they lose a case. Finally, I consider the support available for accessing the courts under New Zealand’s legal aid regime. This contextual overview demonstrates the important niche that PCOs occupy: catering to the large segment of claimants who do not meet the strict legal aid eligibility criteria, and who cannot afford to bear the risk of an adverse costs award in civil litigation.

I Why Is Access to Justice Important?

Embedded in this dissertation is the assumption that PCOs ideally facilitate “access to justice”: an important objective in society that we rightly aim for. However, this normative concept of access to justice is often promoted with little explanation about why it is important. To Supreme Court Chief Justice Helen Winkelmann, access to justice represents:⁸

the critical underpinning of the rule of law in our society: the notion that all, the good, the bad, the weak, the powerful, exist under and are bound by the law. That condition cannot exist without access to courts.

The ability to enforce the rule of law through the courts in this way guards against very undesirable outcomes. Powerful parties in society – including the state itself – cannot act with impunity.⁹ Instead, accessible dispute mechanisms give the law its teeth, ensuring that every individual, no matter their status, acts with the knowledge that their actions can be tangibly challenged and punished.¹⁰ Correspondingly, accessible justice ensures individuals can expect

⁸ Helen Winkelmann “Access to Justice - Who Needs Lawyers” [2014] OtaLawRw 2; (2014) 13 Otago LR 229 at 231.

⁹ New Zealand Law Society Access to Justice Stocktake of Initiatives Research Report (December 2020) at 9. ¹⁰ Tom Bingham The Rule of Law (Penguin, London, 2011) at 8; Jeremy Waldron “The Rule of Law” (22 June 2016) The Stanford Encyclopedia of Philosophy <www.plato.stanford.edu>.

to have their civil rights vindicated, and breaches of those rights compensated, in a fair and neutral manner.¹¹ This is widely recognised as a fundamental right,¹² and for good reason: as Glazebrook J puts it, “rights would only exist on paper without access to justice”.¹³

Beyond its inherent importance, accessible justice also serves to prevent the public disorder and violence that might ensue if people felt their only recourse was to take the law into their own hands.¹⁴ Further, given decisions of the courts are public and have precedential impact on the law itself, access to justice allows the law to meaningfully develop and respond to relevant events and changes in society.¹⁵ In the context of public interest litigation, these considerations are increasingly important, given proceedings in this area tend to directly or indirectly affect the community at large, rather than just the litigant alone. Additionally, many claims in the public interest challenge the legality of government action, a key constitutional protection to the function of democracy.¹⁶ Through facilitating adjudication of these broader issues, even where there are substantial disparities in power between parties, access to justice in public interest litigation plays an undeniably important role in society.

Equally, it is worth highlighting that access to justice as a concept is far broader than improving access to the courts and making justice more affordable, as Winkelmann CJ acknowledges.¹⁷ For example, Lord Neuberger identifies components such as a competent and impartial judiciary, properly administered courts, a competent and honest legal profession, an effective procedure for getting a case before the courts, an effective legal process, and effective execution.¹⁸ While the aspects of access to justice explored in this dissertation primarily focus on improving access to the courts, it is important not to overlook the other matters captured by

¹¹ Rules Committee Improving Access to Civil Justice (November 2022) at 5.

¹² Universal Declaration of Human Rights GA Res 217A (1948), art 10; New Zealand Bill of Rights Act 1990, s 27; Rules Committee, above n 11, at 5; Lai v Chamberlains [2006] NZSC 70, [2007] 2 NZLR 7 at [1], per Elias CJ.

¹³ Glazebrook, above n 7, at 14.

¹⁴ Stephen Kós “Civil Justice: Haves, Have-nots and What to Do About Them” (Address at the Arbitrators’ & Mediators’ Institute of New Zealand and International Academy of Mediators Conference, Queenstown, March 2016) at 2; Winkelmann, above n 8, at 231.

¹⁵ Law Commission Delivering Justice for All – A Vision for New Zealand Courts and Tribunals (NZLC R85,

2004) at 3; Bingham, above n 10, at 38.

¹⁶ Legislative Design Advisory Committee Legislation Guidelines (September 2021) at 26.

¹⁷ Winkelmann, above n 8, at 231.

¹⁸ Lord Neuberger Justice in an Age of Austerity (Tom Sargant Memorial Lecture, 15 October 2013); See also Deborah Rhode “Access to Justice” 69 Fordham Law Review 1785 at 1815, for an alternative conception of access to justice focusing on non-lawyer and out-of-court solutions.

this concept. PCOs, and access to the courts generally, are but one aspect of the broader access to justice objective, and thus should not be pursued in isolation.¹⁹

II Why Do We Want Public Interest Cases to Make It to Court?

Beyond the theoretical importance of access to justice in public interest litigation, there is also considerable value to society in the effect and outcomes of public interest cases making it to court. In New Zealand, proceedings brought in the public interest have: led to the vindication of prisoner voting rights;²⁰ incorporated the principles of the Treaty of Waitangi into law;²¹ allowed damages to be awarded under the New Zealand Bill of Rights Act 1990;²² prevented unilateral suspension of laws by a Prime Minister;²³ the list goes on.²⁴ PCOs have supported similarly valuable public interest litigation in other jurisdictions.²⁵ While not all public interest cases are so significant, the transformative impacts emerging from these examples evidence the contribution public interest litigation can make to society. Accordingly, as was recognised by the New Zealand High Court in Gordon v Attorney-General (No 2), the ability of claimants to bring cases that are sufficiently in the public interest should not be determined by their ability to pay costs.²⁶

The value in public interest cases making it to court demonstrates that PCOs serve a worthy purpose: in their contributions to access to justice, and the tangible impacts that emerge from the cases they support. Importantly, however, access to the courts must be limited. As Galanter summarises:²⁷

¹⁹ For discussion on systemic access to justice barriers in New Zealand, see New Zealand Bar Association

Working Group Into Access to Justice (August 2018); New Zealand Law Society, above n 9; Winkelmann, above n 8.

²⁰ Attorney-General v Taylor [2018] NZSC 104; See Ministry of Justice “Prisoner voting rights to be restored ahead of the 2020 General Election” (press release, 23 November 2019).

²¹ New Zealand Maori Council v Attorney-General [1987] 1 NZLR 641; See also Ellis v R [2022] NZSC 114.

²² Simpson v Attorney General [1994] NZCA 287; [1994] 3 NZLR 667.

²³ Fitzgerald v Muldoon and Others [1976] 2 NZLR 615.

²⁴ For more examples, see Sam Bookman “Providing Oxygen for the Flames? The State of Public Interest Litigation in New Zealand” (2013) 25 NZULR 442.

²⁵ For examples, see Introduction, page 1.

²⁶ Gordon v Attorney-General (No 2), above n 1, at [19].

²⁷ Marc Galanter “Access to Justice in a World of Expanding Social Capability” (2010) 37(1) Fordham Urban Law Journal 115 at 126.

In a world of expanding capabilities and rising expectations, where claims of injustice proliferate, we cannot avoid the necessity of rationing justice. Justice is not free. It uses up resources – money, organization, and not least, the limited supply of attention.

Accordingly, while PCOs undoubtedly serve an important purpose, they must be calibrated with this reality in mind: justice must be rationed. Having explained the underlying rationale for PCOs, the following section examines New Zealand’s costs regime, demonstrating what a litigant is ordinarily faced with when considering taking a case to court.

III The Usual Outcome to a Proceeding – New Zealand's Costs Regime

The power exercised by the courts over costs plays an important role in the overall objective of doing justice between parties to a case, and facilitating access to justice.²⁸ Whether a party can recover its costs, and how much it recovers, can have a significant bearing on whether claims are brought, defended, or settled outside of court.²⁹

The starting point for understanding New Zealand’s costs regime is Part 14 of the High Court Rules 2016. Costs rules in other New Zealand courts and tribunals have typically developed by reference to it.³⁰ It is therefore useful to outline the High Court Rules and the relevant principles that apply to public interest cases.

A The High Court Rules 2016

Ultimately, all matters relating to costs under the High Court Rules are at the discretion of the Court.³¹ That wide discretion is what led Palmer J in Gordon v Attorney-General to consider

²⁸ Rachael Schmidt-McCleave “Costs” in Peter Blanchard (ed) Civil Remedies in New Zealand (2nd ed,

Brookers, Wellington, 2011) 763 at [21.1]; David Bullock and Tim Mullins The Law of Costs in New Zealand

(LexisNexis, Wellington, 2022) at xi.

²⁹ Shane Campbell “Reviewing costs in public interest litigation” [2015] NZLJ 246 at 265; New Zealand Law Society, above n 9, at 11; The Civil Liberties Trust “Litigating the Public Interest: Report of the Working Group on Facilitating Public Interest Litigation” (London, July 2006) at 12; Bullock and Mullins, above n 28, at xi; Shami Chakrabarti, Julia Stephens and Caoilfhionn Gallagher “Whose Cost the Public Interest?” (2003) Public Law 697 at 698.

³⁰ Bullock and Mullins, above n 28, at xi.

³¹ High Court Rules 2016, r 14.1.

the possibility of PCOs being available in public interest cases.³² The detailed rules contained in Part 14 therefore operate as presumptions, not entitlements, which are subject ultimately to the interests of justice demanded by each case.³³

In New Zealand, most cases generally follow the principle that a successful party ought to recover around two thirds of its reasonable costs incurred at each procedural step of the proceeding.³⁴ These reasonable costs are calculated through a system of categorisation and banding.³⁵ Firstly, three categories of daily rates are set by the Rules Committee to represent a broad estimate of two-thirds of the daily legal fees charged by a New Zealand Practitioner. The category a case is assigned to depends on the complexity of the proceeding. As at October 2023, the daily rate in category 1 (a straightforward proceeding) is set at $1,590.³⁶ Category 2 (a proceeding of average complexity) is set at $2,390, and Category 3 (a complex proceeding) is set at $3,530.³⁷ The categorisation a proceeding receives therefore has a significant impact on the final costs calculation.

At the conclusion of proceedings, the daily rate is applied by the Court to each step of the proceedings according to a scale of time bands.³⁸ Each of the three bands represent an allocation of days considered reasonable for each step of the proceeding.³⁹ Once this is determined, the number of days allocated for each step is multiplied by the selected daily rate to calculate the total costs claimable in a case. For example, the procedural step of preparing written submissions can be allocated 0.5 days under band A (where a small amount of time is considered reasonable), 1.5 days under band B (where a normal amount of time is considered reasonable) or 3 days under band C (where a comparatively large amount of time is considered reasonable).⁴⁰ Therefore, in a category 2 proceeding, if preparing written submissions takes a normal amount of time (band B), the claimable costs for this procedural step will amount to

$3,585, being the daily rate ($2,390) multiplied by 1.5 days. This approach of categorisation

³² Gordon v Attorney-General [2022] NZHC 2143 at [10].

³³ Andrew Beck (ed) McGechan on Procedure (online ed, Thomson Reuters) at [HR14.1]; Bullock and Mullins, above n 28, at 8; High Court Rules, r 14.1(2).

³⁴ Schmidt-McCleave, above n 28, at [21.2.1]; High Court Rules, r 14.2(1)(d).

³⁵ High Court Rules, 14.4; Bullock and Mullins, above n 28, at 26.

³⁶ High Court Rules, 14.3 and sch 2.

³⁷ High Court Rules, 14.3 and sch 2.

³⁸ High Court Rules, r 14.5.

³⁹ High Court Rules, r 14.5.

and banding seeks to achieve as much certainty as possible for litigants.⁴¹ However, regimes of this design have been criticised as slow to respond to periods of inflation, and inaccurate in reflecting real litigation costs.⁴² To illustrate the bands system, an extract of the time allocation schedule is reproduced below:⁴³

Extract of High Court Rules 2016, Schedule 3 – Time Allocations

Beyond this general scale band approach, parties can also apply for increased or indemnity costs.⁴⁴ Rule 14.6(3)(a) enables the court to grant greater costs than the scale allows where the actual costs reasonably incurred during a particular step (or the proceeding as a whole) would substantially exceed the time allocated under band C. Increased costs may also be ordered where the losing party acted unreasonably during the proceeding.⁴⁵ Indemnity costs, representing the full amount of costs incurred by the winning party, are ordered in the rarer circumstance of the party behaving either “badly or very unreasonably”.⁴⁶

Depending on the unique circumstances of each case, losing will therefore generally see a claimant responsible for around two thirds of the reasonable costs incurred by the winning party. Table 1 is an example of a costs claim by a successful defendant after a civil trial. While a costs award is less than actual costs charged, it is a substantial sum and a significant access

⁴¹ Schmidt-McCleave, above n 28, at [21.2.1].

⁴² Martelli McKegg Wells & Cormack v Commbank International NV [1996] NZCA 464; (1996) 10 PRNZ 153 (CA) at 155 per Gault J; Robert Fisher “The New High Court Costs Regime” (December 1999) 532 Lawtalk 7 at 7-8.

⁴³ High Court Rules, sch 3.

⁴⁴ High Court Rules, r 14.6.

⁴⁵ Bradbury v Westpac Banking Corporation [2009] NZCA 234, [2009] 3 NZLR 400 at [27].

⁴⁶ Bradbury v Westpac Banking Corporation, above n 45.

to justice barrier for those who do not possess ample financial resources to spend on civil litigation.⁴⁷

Table 1: Costs Claim by Defendant After a Civil Trial48

Example costs claim by a successful defendant that went to trial for two weeks, in category 2 with most steps at a normal amount of time

Category 2: $2,390

⁴⁷ Rules Committee, above n 11, at 6; Chris Tollefson “Costs in Public Interest Litigation: Recent Developments and Future Directions” (2008) 35 Advoc Q 181 at 181.

⁴⁸ Taken from Bullock and Mullins, above n 28, at 140.

B Costs in Public Interest Cases

Litigants pursuing a case in the public interest may be able to reduce or avoid an adverse costs order if they can show that the proceeding concerned a matter of public interest, and they acted reasonably in the conduct of the proceeding.⁴⁹ This provision shares the rationale of PCOs in that it recognises the suppressive effect costs awards have been identified to have on public interest cases being brought to court.⁵⁰ However, the extent to which this provision encourages public interest cases being brought is limited.

As a discretionary provision, it offers little certainty to a party from the outset that it will protect them if they lose their case. Further, there is scarce precedent clarifying precisely what the defining characteristics of a “public interest” case are, and to what extent a case needs to be in the public interest in order to benefit from the rule.⁵¹ This vague standard creates further uncertainty for litigants to know whether their claim will be deemed insufficiently in the public interest to justify a reduction in costs. Such concerns are especially relevant for individuals or organisations whose private interests in pursuing a case may overlap with the public interest concerned.

The public interest provision is also problematic because the amount of discount (if any) is not considered until the end of proceedings. This means individuals considering bringing a case have limited ability to predict whether and to what extent they can benefit from the provision. For example, in Aotearoa Water Action Inc v Canterbury Regional Council,⁵² costs against the public interest group claimant were discounted only 10 percent due to the High Court finding that the group advanced a “bold” interpretive argument and made several other arguments that were meritless.⁵³ However, that case won on appeal at the Court of Appeal⁵⁴ and was granted leave to appeal to the Supreme Court in late 2022.⁵⁵

⁴⁹ High Court Rules, r 14.7(e).

⁵⁰ Bullock and Mullins, above n 28, at 93.

⁵¹ See discussion in Chapter 5, page 44.

⁵² A case concerning the granting of consents to two international water bottling companies to extract a total of

8.8 billion litres of water annually.

⁵³ Aotearoa Water Action Inc v Canterbury Regional Council [2021] NZHC 48 at [55]- [60].

⁵⁴ Aotearoa Water Action Inc v Canterbury Regional Council [2022] NZCA 325.

⁵⁵ Cloud Ocean Water Limited v Aotearoa Water Action Incorporated [2022] NZSC 133.

Parties in contentious public interest cases therefore face uncertainty in their expectations over costs. Given the expensive and time-consuming nature of litigation, even a reduced costs award may represent a significant financial burden to a moderately resourced public interest litigant. However, it is these finely balanced and complex claims, who cannot predictably rely on r 14.7(e), that arguably should be encouraged to make it to court.

IV Legal Aid in New Zealand

To understand the financial reality of taking a case to court in New Zealand requires an assessment of the legal aid regime. The Ministry of Justice defines legal aid as “government funding to pay for legal help for people who cannot afford a lawyer”.⁵⁶ Governed by the Legal Services Act 2011, legal aid in New Zealand operates as a loan rather than a grant.⁵⁷ However, in some circumstances the obligation to repay all or part of this loan can be waived.⁵⁸ Further, legal aid is available only to natural persons or “trustee corporations”.⁵⁹ Therefore, privately incorporated public interest groups and other organisations wishing to pursue a case in the public interest will generally not qualify for legal aid. This makes PCOs one of the few avenues these groups can look to assist with overcoming the financial barriers to litigation.

Unlike PCOs, legal aid is targeted toward the payment of the recipient’s own legal costs, rather than the costs of the opposing party. However, a recipient of legal aid can only have costs awarded against them in exceptional circumstances,⁶⁰ limited to an amount (if any) that is reasonable for them to pay in the circumstances.⁶¹ This means that PCOs are primarily relevant for enhancing access to justice for those who do not meet the strict financial hardship thresholds for legal aid, or are excluded by other criteria. Accordingly, an overview of when one falls shy of the legal aid criteria is necessary to understand the sort of individual claimant for which PCOs are relevant: those whose income is not low enough to qualify for legal aid, but who lack sufficient means to pursue a claim in court due to the risk of an adverse costs order.

⁵⁶ Ministry of Justice “Legal Aid” (9 February 2023) Justice.govt.nz <https://www.justice.govt.nz>.

⁵⁷ Ministry of Justice, above n 56.

⁵⁸ Legal Services Act 2011, s 42.

⁵⁹ Legal Services Act, s 10(1); A trustee corporation is defined under s 2 of the Administration Act 1969 as “a Public Trust or the Māori Trustee or any trustee company”.

⁶⁰ See Legal Services Act, s 45(3).

⁶¹ Legal Services Act, s 45.

To be eligible for legal aid in civil proceedings, an applicant’s income⁶² must not exceed a specified threshold.⁶³ This varies depending on the applicant’s number of dependents, and whether they have a partner.⁶⁴ The Ministry of Justice found in 2021 that only 8 percent of New Zealanders were eligible for legal aid, and that a full time worker earning the minimum wage was too wealthy for the civil legal aid thresholds.⁶⁵ These concerns have led commentators in New Zealand and Australia to identify “the missing middle” – the significant proportion of the population who are too wealthy to qualify for legal aid, yet are unable to afford legal fees.⁶⁶

Despite subsequent increases to eligibility thresholds for legal aid, the problems faced by the “missing middle” are likely to persist.⁶⁷ Threshold increases were relatively small,⁶⁸ meaning a large portion of New Zealanders remain ineligible for legal aid, and lack sufficient financial means to spend on costly civil litigation. Therefore, PCOs – most relevant to this “missing middle” and privately incorporated organisations – occupy an often overlooked yet critical segment of New Zealand’s legal system.

Having outlined the access to justice rationale for PCOs, New Zealand’s costs framework, and the legal aid regime, the following chapter discusses the relevant background to PCOs being recognised in New Zealand.

⁶² Defined as the person’s total gross income during the 12 months immediately before the application for legal

aid: Legal Services Act, s 2.

⁶³ Legal Services Regulations 2011, reg 5.

⁶⁴ Legal Services Regulations, reg 5.

⁶⁵ Farah Hancock “Minimum wage earners, pensioners no longer qualify for legal aid” Radio NZ (online ed, New Zealand, 14 October 2021); Ministry of Justice Regulatory Impact Statement: Legal Aid Eligibility (May 2016) at 4.

⁶⁶ See New Zealand Law Society, above n 9, at 9; Australian Productivity Commission Access to Justice Arrangements Inquiry Report (5 September 2014) at 20; Kayla Stewart and Bridgette Toy-Cronin The New Zealand Legal Services Mapping Project: Finding Free and Low-Cost Legal Services (University of Otago Legal Issues Centre, May 2018) at 11.

⁶⁷ Derek Cheng “Improving access to justice for poor: What Budget 2022 will do” NZ Herald (online ed, New Zealand, 26 May 2022).

⁶⁸ For example, the threshold for single applicants without dependents increased from $23,820 to $27,393, and from $37,772 to $44,205 for partnered applicants without dependents: Legal Services Regulations, reg 5.

CHAPTER TWO

New Zealand’s First Protective Costs Order

This chapter provides an overview of Environmental Defence Society Inc v New Zealand King Salmon (Environmental Defence Society) and Gordon v Attorney-General, the two cases leading to New Zealand’s first PCO in a public interest context.⁶⁹ This explains the test as it currently stands for obtaining a PCO, as well as several questions that remain unanswered in New Zealand.

I Laying the Foundations: Environmental Defence Society Inc v New Zealand King Salmon

The Supreme Court’s costs decision in Environmental Defence Society is the first instance in New Zealand of PCOs being discussed judicially.⁷⁰ This discussion laid the foundations for the High Court’s decision to recognise jurisdiction for PCOs in Gordon v Attorney-General.⁷¹

Environmental Defence Society was a landmark environmental case concerning a decision to allow salmon farming in eight locations in the Marlborough Sounds.⁷² The two claimants in the proceeding were environmental advocacy organisations. One claimant succeeded on appeal, and the other was unsuccessful.⁷³ This prompted the Court to consider the principles governing costs for successful and unsuccessful public interest litigants.⁷⁴ One subject the Court drew on was jurisprudence surrounding PCOs granted in the United Kingdom, Australia and Canada.⁷⁵ The Court noted the similarity between a decision to grant a PCO and the decision not to order costs against a public interest litigant at the conclusion of a proceeding:

⁶⁹ Environmental Defence Society Inc v New Zealand King Salmon [2014] NZSC 167, (2014) 25 PRNZ 637;

Gordon v Attorney-General, above n 32.

⁷⁰ Note there are previous instances of PCO-like orders being granted in trusts litigation, where the claimant is indemnified by the trust at issue from any costs award at the beginning of the proceeding: McCallum v McCallum [2021] NZCA 237; Re Beddoe [1892] UKLawRpCh 180; [1893] 1 Ch 547 (CA).

⁷¹ Gordon v Attorney-General, above n 32.

⁷² Environmental Defence Society, above n 69, at [1]-[3].

⁷³ At [1]-[3].

⁷⁴ At [16].

⁷⁵ At [17].

“a view that the risk of costs will otherwise impede access to justice and the representation of the public interest”.⁷⁶

The Court then discussed the principles on which the Courts of England and Wales will grant a PCO under R (on the application of Corner House Research) v Secretary of State for Trade and Industry (Corner House).⁷⁷ After outlining those principles, the Court stated:⁷⁸

It is true that protective costs orders arise only in the extreme case that a public interest point which ought to be heard is likely not to be ventilated if a party without any personal stake is at risk of an undetermined exposure to costs.

As PCOs were not directly at issue, the Court did not expressly declare their availability in New Zealand. However, as was identified in Gordon v Attorney-General, this consideration laid meaningful ground for recognising jurisdiction for PCOs.⁷⁹

II Recognising Jurisdiction: Gordon v Attorney-General

In August 2022, nearly eight years after the decision in Environmental Defence Society, Palmer J in Gordon v Attorney-General recognised the court’s inherent jurisdiction to make PCOs.⁸⁰ Given its importance to the question posed in this dissertation, the following discussion outlines the facts of the case, Palmer J’s finding of jurisdiction, the circumstances leading to the PCO, and the resulting “test” for PCOs in New Zealand that this created.

The proceedings involved two academics who challenged and sought declarations about the interpretation of provisions of the Mental Health (Compulsory Assessment and Treatment) Act 1992. Their provisions concerned the ability to administer compulsory treatment to people with mental disorders, the consent to medical treatment required of children under 16, advance directives, and compulsory community treatment orders.⁸¹ In the event that the interpretive

⁷⁶ At [18].

⁷⁷ At [19]; R (on the application of Corner House Research) v Secretary of State for Trade and Industry, above n 2.

⁷⁸ At [21].

⁷⁹ Gordon v Attorney-General, above n 32, at [5].

⁸⁰ Gordon v Attorney-General, above n 32, at [10].

⁸¹ Gordon v Attorney-General, above n 32, at [1].

declarations sought were not made, the applicants also sought a declaration of inconsistency with the New Zealand Bill of Rights Act 1990.⁸²

In advance of the substantive hearings, the plaintiffs applied for a PCO. This prompted Palmer J to examine the discussion on PCOs in Environmental Defence Society. In his analysis, Palmer J considered the discussion “effectively recognised the potential availability of protective costs orders in New Zealand”.⁸³ Citing the Court’s broad discretion under r 14.1(1) of the High Court Rules 2016 (that all matters are at the discretion of the court if they relate to costs) he concluded: “I accept, as do the parties, that the jurisdiction of the Court under the Rules, and the Court’s inherent jurisdiction, extends to the ability to make protective costs orders.”⁸⁴

Following his finding, Palmer J drew the following relevant factors for granting a PCO from

Environmental Defence Society and Corner House:⁸⁵

(a) While not fatal to an application, does the claimant have a private interest in the outcome of the case?

(b) Will the claimant have to discontinue the proceedings without such an order?

(c) Are the issues of general public importance and resolution of them in the public interest?

(d) Is it fair and just to make the order, having regard to the financial resources of all parties?

(e) Are those acting for the claimant doing so on a pro bono basis?

These factors are the closest approximation to a test for PCOs in New Zealand. However, Palmer J was not persuaded that the circumstances of the case were “of such an extreme nature” as to qualify for a PCO.⁸⁶ He acknowledged the claimant did not have a direct private interest at stake, and counsel was acting pro bono, but agreed with the Crown submission that the public interest in the case was somewhat diminished by the ongoing reform process of the Mental Health Act, which would address many of the concerns raised in the litigation.⁸⁷ Further, it was

⁸² At [1].

⁸³ At [5].

⁸⁴ At [10].

⁸⁵ At [11].

⁸⁶ At [12].

⁸⁷ At [8]-[12].

unclear that the proceedings would not be pursued without a PCO, as the applicant only stated that they “may not be in a position to proceed”.⁸⁸

The Crown did not disagree on normative grounds that PCOs were available, instead arguing on the substance that the necessary requirements were not met. This is of interest because in its legal representation of the wider Executive, the Crown will often be the party defending public interest cases where PCOs may be relevant.

III Granting the Protective Costs Order: Gordon v Attorney-General (No 2)

In Gordon v Attorney-General (No 2), Palmer J rescinded his initial decision in Gordon v Attorney-General, choosing to grant New Zealand’s first PCO in a public interest context.⁸⁹ The primary reasons for this were new information presented to the Court and the decision of the Human Rights Commission to intervene in the proceedings.

First, since Palmer J’s initial decision, the two plaintiffs provided affidavits clarifying their ability to pursue the proceeding without a PCO. Associate Professor Newton stated he “cannot bear any award of costs alone, estimated as up to $25,000, which places the proceeding in jeopardy”.⁹⁰ Associate Professor Gordon stated she “does not think it is fair to her family to be funding the proceeding above and beyond the time she is committing as an applicant”, and “is not prepared to proceed in circumstances where she is at risk of an undetermined exposure to costs”.⁹¹ On this basis, Palmer J was satisfied that the proceedings would not be pursued without a PCO.⁹²

Second, following Palmer J’s initial decision refusing a PCO, the Human Rights Commission was granted permission to intervene in the proceedings.⁹³ This was on the basis that the proceedings raised “human rights issues of general principle and wide importance”, and that “the outcome may affect persons not represented in the proceeding”.⁹⁴ Relevant human rights

⁸⁸ At [13]-[15].

⁸⁹ Gordon v Attorney-General (No 2), above n 1, at [25].

⁹⁰ At [7].

⁹¹ At [7].

⁹² At [14].

⁹³ Gordon v Attorney-General HC Wellington CIV-2022-485-202, 22 September 2022, per Grice J.

⁹⁴ At [5].

principles included the right to refuse medical treatment,⁹⁵ the right to be free from discrimination,⁹⁶ the right not to be arbitrarily arrested or detained,⁹⁷ and contemporary human rights implications regarding when a mental health patient is fit to be released.⁹⁸ This development weighed in favour of the plaintiff’s application, with Palmer J noting the rights concerned were “important rights”, and that the intervention by the Commission provided an “additional level of assurance that these are serious human rights proceedings”.⁹⁹

Also relevant to Palmer J’s decision was the recognition that while the legislation at issue was undergoing a current law reform exercise, “such exercises can be lengthy” and thus the rights in question “remain important in the meantime”.¹⁰⁰ Further, those directly affected by mental health law are “unlikely to be in positions to take proceedings”.¹⁰¹ Finally, it was clearer to Palmer J that the plaintiffs lacked a material private interest in the outcome of the proceedings. In his view, the plaintiffs were acting “in the interest of the public and to vindicate human rights of those affected by current mental health law”.¹⁰² While he recognised that the absence of a private interest is not necessarily required for a PCO, Palmer J considered this to be a “significant factor which goes to the bona fides of the plaintiffs acting in the public interest”, and that a court is likely to be more sceptical of an application in which a plaintiff stands to benefit personally, particularly financially.¹⁰³

The Court went on to briefly discuss cost-capping orders, as in the United Kingdom it has been considered that “as a matter of fairness to the defendant, it might be appropriate to impose, as a condition, a limitation on costs, should the claimant prove to be successful”.¹⁰⁴ However, as the plaintiffs did not seek costs in their statement of claim, Palmer J was not required to rule on whether the respondents’ costs should be capped. Provided the plaintiffs affirmed they would not seek costs if they were successful, and given counsel was acting pro bono, it was held that “a full protective costs order is appropriate”.¹⁰⁵ It is of note here that this PCO (which

⁹⁵ New Zealand Bill of Rights Act 1990, s 11.

⁹⁶ New Zealand Bill of Rights Act, s 19.

⁹⁷ New Zealand Bill of Rights Act, s 22.

⁹⁸ Gordon v Attorney-General (No 2), above n 1, at [9].

⁹⁹ At [15].

¹⁰⁰ At [16].

¹⁰¹ At [16].

¹⁰² At [17].

¹⁰³ At [17].

¹⁰⁴ At [21]-[24]; Environmental Defence Society, above n 69, at [19].

¹⁰⁵ At [24].

lacks a corresponding cost cap) appears conditional on the plaintiffs not seeking costs if they are successful. This leaves open the question of when it is appropriate to allow the recipient of a PCO the opportunity to seek uncapped costs against the respondent in the event that the recipient of the PCO wins.

Also of note from this decision are statements made by Palmer J regarding access to justice generally. Palmer J recognised access to justice as a “foundational right in our system of justice”, and that measures to deter frivolous and vexatious cases increase overall access to justice.¹⁰⁶ The costs regime thus “attempts to face litigants with the effects of taking losing positions in litigation”.¹⁰⁷ However, “the outcome of litigation is often uncertain”. Therefore, in Palmer J’s view:¹⁰⁸

The ability of a plaintiff to bring proceedings that are in the public interest, about serious human rights issues, with competent counsel, for no personal benefit, should not be determined by their ability to pay costs.

Accordingly, the PCO enabled the case to proceed to a substantive hearing in 2023, where the Court closely examined the consistency of the Mental Health Act with New Zealand’s human rights framework.¹⁰⁹ Cull J ultimately declined to make the declarations sought.¹¹⁰ However, she acknowledged the case involved “important legal questions which the Court should address”, and that the Court “should not shy from its constitutional function of declaring the law”.¹¹¹ Despite failing in substance, therefore, the proceedings made a valuable contribution which would not have been possible without a PCO.

This case sets the only factual matrix for a successful PCO application in New Zealand. In many respects, it represents a strong application, given the Human Rights Commission’s intervention, counsel acting pro bono, the lack of private interest, and the plaintiffs not seeking costs against the respondent – all factors not strictly required of a PCO, but acting persuasively

¹⁰⁶ At [19].

¹⁰⁷ At [19].

¹⁰⁸ At [19].

¹⁰⁹ Gordon v Attorney-General [2023] NZHC 2332, [2023] NZFLR 190.

¹¹⁰ Primarily on the basis that the issues concerned had become the subject of current reform: See [237].

¹¹¹ At [216].

in its favour. Therefore, questions remain as to how a borderline case will interact with the test established in Gordon v Attorney-General.

CHAPTER THREE

Protective Costs Orders in Other Jurisdictions

The treatment of PCOs in overseas jurisdictions provides useful lessons for New Zealand. This chapter examines how PCOs have been applied in the United Kingdom, Canada and Australia, illustrating the types of scenarios to which PCOs apply, as well as the differences in approaches across jurisdictions. Further, as Gordon v Attorney-General (No 2) represents a stronger application for a PCO, this allows for an analysis of the more contentious points and concerns which have arisen in borderline cases.

I United Kingdom

The United Kingdom has the most developed jurisprudence regarding PCOs, and now a comprehensive legislative regime governing them. It is therefore useful to examine the common law test, particularly given Palmer J relied heavily on it in Gordon v Attorney- General.¹¹² It is also helpful to analyse the regime for PCOs under the Criminal Justice and Courts Act 2015 (UK) to show how PCOs could be codified in New Zealand.

A The Corner House Principles

The common law test for PCOs came from the English Court of Appeal’s 2005 decision in Corner House.¹¹³ This remained the leading authority – though a number of its principles were altered in subsequent decisions – until the introduction of the legislative regime.

The Corner House decision was an application for judicial review brought by a non-profit organisation involved in advocacy work relating to corruption, alleging various wrongs by a government agency. The Court granted a PCO subject to the condition that any costs the applicant could recover if it succeeded would be capped at a defined level.¹¹⁴ In doing so, the

¹¹² Gordon v Attorney-General, above n 32, at [11].

¹¹³ Corner House, above n 2.

¹¹⁴ At [147].

Court settled on the following guiding principles when considering the application for a PCO:¹¹⁵

(1) A protective costs order may be made at any stage of the proceedings, on such conditions as the court thinks fit, provided that the court is satisfied that:

(i) the issues raised are of general public importance;

(ii) the public interest requires that those issues should be resolved;

(iii) the applicant has no private interest in the outcome of the case;

(iv) having regard to the financial resources of the applicant and the respondent(s) and to the amount of costs that are likely to be involved it is fair and just to make the order; and

(v) if the order is not made the applicant will probably discontinue the proceedings and will be acting reasonably in so doing.

(2) If those acting for the applicant are doing so pro bono this will be likely to enhance the merits of the application for a protective costs order.

(3) It is for the court, in its discretion, to decide whether it is fair and just to make the order in the light of the considerations set out above.

These principles largely mirror the test adopted in Gordon v Attorney-General, albeit in a different order.¹¹⁶ They are intended to operate as flexible guidelines, rather than hard and fast rules, recognising the inherent judicial discretion over costs.¹¹⁷ There are valuable lessons to be learnt from Corner House for New Zealand.

The Court expressed a clear view on when it is appropriate to cap the costs recoverable when the recipient of a PCO succeeds in the litigation. This question was left open in Gordon v Attorney-General (No 2) due to the applicants’ indication that they would not seek costs if they succeeded.¹¹⁸ In Corner House, it was held that as a “balancing factor”, if an applicant indicates they will seek costs if they win, those costs must be capped at a “reasonably modest amount”.¹¹⁹ Specifically, the cap should be restricted to solicitors’ fees and a fee for a single advocate of

¹¹⁵ At [72].

¹¹⁶ Gordon v Attorney-General, above n 32, at [11]; See Chapter 2, page 15.

¹¹⁷ R (Compton) v Wiltshire Primary Care Trust [2008] EWCA Civ 749 at [46]; Goodson v HM Coroner for Bedfordshire and Luton EWCA Civ 1172 [2006] CP Rep 6 at [14].

¹¹⁸ Gordon v Attorney-General (No 2), above n 1, at [24].

¹¹⁹ At [76].

junior counsel status that is “no more than modest”.¹²⁰ Thus it is the English view that in exchange for a full PCO, applicants cannot then seek an undetermined amount of costs if they succeed in the litigation. Instead, applicants can only expect to recover a modest portion of their own costs from the losing party.

Also of note from Corner House is the Court’s discussion on the range of different forms a PCO may take. The Court emphasised PCOs can take “a number of different forms”, and that the choice over this is “an important aspect of the discretion exercised by the judge”.¹²¹ The gold-standard, full PCO granted in Gordon v Attorney-General (No 2), therefore, need not be the only option available to litigants.¹²² Rather, as was recognised in Corner House, there can be diluted forms of a PCO which may be more accessible. For example, the Court noted the case of R v The Prime Minister ex p CND, where a PCO was made allowing the claimants to have their reasonable costs reimbursed in full if they won, but capped their own liability at

£25,000 if they lost.¹²³ This was later affirmed in R (Compton) v Wiltshire Primary Care Trust

(Compton), where it was held that a range of orders of varying strength ought to be available depending on the degree to which the applicant has satisfied the Corner House guidelines, rather than an “all or nothing” approach.¹²⁴

As a matter of procedure, the Court addressed the practical application process, and the appropriate outcome when applications are denied. This is of note because the Gordon judgments do not make any recommendations regarding these matters. As to procedure, the Court in Corner House reasoned that applications are to be initially decided on the papers, with the option for parties to reconsider that decision at a hearing.¹²⁵ Applicants are to bear the costs of the party defending the application if their application is denied, which is intended as a financial disincentive to those considering a PCO application.¹²⁶ While the costs of such an interlocutory application may be modest in comparison to the wider costs of litigation, this point is worth noting. Given prospective applicants will often be in a vulnerable financial

¹²⁰ At [76].

¹²¹ At [75].

¹²² Gordon v Attorney-General (No 2), above n 1.

¹²³ At [49] and [75], citing R v The Prime Minister ex p CND [2002] EWHC 2712.

¹²⁴ R (Compton) v Wiltshire Primary Care Trust, above n 117, at [87].

¹²⁵ At [79].

¹²⁶ At [78].

situation, it has been commented that the risk of added costs may create an additional access to justice barrier.¹²⁷

A final point of note from Corner House is that the Court not only provided guiding principles for granting a PCO, but also suggested that such principles be formally codified.¹²⁸ This suggestion was eventually taken up in 2015, illustrating that both the judiciary and legislature in this jurisdiction found it preferable for PCOs to be governed by legislation, rather than remain a creature of the common law.

B Other Relevant Developments

Useful insight into PCOs, including modifications of certain aspects of the Corner House principles, appear in other cases preceding the legislative regime. These provide further illustration of contentious issues, and inspiration for how these could be dealt with in New Zealand, including on relaxing the “no private interest” requirement, restricting the orders to judicial review, removing the principle of exceptionality, and clarifying whether orders carry over to appeals.

1. Relaxing the “No Private Interest” Requirement

The requirement that the applicant have no private interest in the outcome of the case (the third Corner House principle), has been relaxed significantly. Though the Court in Gordon v Attorney-General adopted a relaxed requirement regarding private interest, the United Kingdom case law shows why this is important and the risks to be avoided when applying the test in New Zealand.¹²⁹

In the case of Goodson v HM Coroner for Bedfordshire and Luton (Goodson), an application for a PCO was declined on the basis that a claimant challenging a coronial inquiry into her father’s death had a private interest in the outcome of the case.¹³⁰ This result attracted criticism,

¹²⁷ Stein and Beagent, above n 2, at 211-212.

¹²⁸ At [81].

¹²⁹ Gordon v Attorney-General, above n 32, at [11].

¹³⁰ Goodson, above n 117, at [28].

with several commentators arguing that individuals bringing a judicial review claim will almost invariably have some form of private interest in the outcome of the case, making the factor arbitrarily restrictive.¹³¹ That criticism was also advanced in judicial circles,¹³² seeing the factor revised, such that the existence of a private interest would no longer prohibit an application.¹³³ Equally, therefore, there is a need in New Zealand for PCOs to be designed such that outcomes like Goodson are uniformly avoided.

2. Restricting Protective Costs Orders to Judicial Review

A question not considered in Gordon v Attorney-General is whether PCOs in New Zealand are restricted to judicial review proceedings, such that they can only be ordered against those exercising a statutory power of decision.¹³⁴ In June 2023, the Auckland High Court denied an application for a PCO in a private family law dispute, finding the Gordon factors were not satisfied, but not discussing whether they were restricted to judicial review proceedings.¹³⁵ In contrast, the approach of the English Courts has been to expressly restrict PCOs to judicial review.¹³⁶

3. No Principle of Exceptionality

Of particular interest to the New Zealand context is the view expressed by the English Court of Appeal in Re (Buglife - The Invertebrate Conservation Trust) v Thurrock Thames Gateway Development Corporation (Buglife) that “there is no principle of exceptionality which imposes additional criteria to those set out in Corner House.¹³⁷ Rather, exceptionality is viewed as a “prediction as to the effect of applying the principles”.¹³⁸ In this sense, Palmer J’s emphasis in

¹³¹ Ben Jaffey “Protective Costs Orders in Judicial Review” (2006) 11 JR 171 at 175; Tollefson, above n 47, at

200; Stein and Beagent, above n 2, at 213.

¹³² The Civil Liberties Trust, above n 29, at [77]-[85] (Chaired by Kay LJ); See also Wilkinson v Kitzinger

[2006] EWHC 835 at [54].

¹³³ Compton, above n 117, at [23]; Austin v Miller Argent (South Wales) Limited [2014] EWCA Civ 1012 at [44].

¹³⁴ Gordon v Attorney-General, above n 32.

¹³⁵ Leonetti v Rainwater [2023] NZHC 1524 at [14].

¹³⁶ Eweida v British Airways PLC [2009] EWCA Civ 1025 at [38]; See Chapter 5, page 47, for whether PCOs should be restricted to judicial review in New Zealand.

¹³⁷ Re (Buglife - The Invertebrate Conservation Trust) v Thurrock Thames Gateway Development Corporation

[2008] EWCA Civ 1209 at [18].

¹³⁸ Compton, above n 117, at [24].

Gordon v Attorney-General on a case needing to be of a sufficiently “extreme nature” to qualify for a PCO (beyond satisfying the requirements alone) is open to criticism.¹³⁹

4. Protective Costs Orders Must Be Reapplied for on Appeal

A final relevant detail of the English common law approach, also left open in Gordon v Attorney-General, is whether PCOs carry over to appeals.¹⁴⁰ The Court in Compton held that they do not, meaning the prospective appellant will need to again satisfy the Corner House principles when applying for permission to appeal.¹⁴¹ As an example of this in practice, the Court in Buglife granted an identical order to that granted in the lower court, finding nothing had changed the appellant’s satisfaction of the Corner House guidelines.¹⁴²

C A Legislative Regime: The Criminal Justice and Courts Act 2015

As suggested by the Court in Corner House, the Criminal Justice and Courts Act 2015 (“the Act”) created a legislative regime for PCOs, providing a potential model from which New Zealand could draw inspiration.¹⁴³

The political context in which it was enacted is important to note. The conservative coalition Government of 2010–2015 promoted a number of reforms to judicial review premised on a narrative that the cost of defending judicial review claims had been diverting scarce public resources away from public bodies.¹⁴⁴ In a Policy Impact Assessment Report published during the Act’s consultation process, the Government stated judicial review applications had “more than doubled in the past 10 years”.¹⁴⁵ Accordingly, a policy objective to “reduce the incidence of weak judicial reviews and to support the quicker resolution of judicial reviews by providing

¹³⁹ See Gordon v Attorney-General, above n 32, at [12].

¹⁴⁰ Gordon v Attorney-General, above n 32.

¹⁴¹ Compton, above n 117, at [32].

¹⁴² Buglife, above n 137, at [40].

¹⁴³ At [81].

¹⁴⁴ Joe Tomlinson and Alison Pickup “Reforming Judicial Review Costs Rules in an Age of Austerity” in Andrew Higgins (ed) The Civil Procedure Rules (Oxford University Press, Oxford, 2020) 205 at 206. See also Alex Mills “Reforms to Judicial Review in the Criminal Justice and Courts Act 2015: Promoting Efficiency or Weakening the Rule of Law?” (paper presented to Judicial Review in a Changing Society conference, Hong Kong, April 2014) at 2.

¹⁴⁵ Ministry of Justice (UK) Reforms to Judicial Review: Policy Impact Assessment (January 2014) at 1.

better balanced financial incentives” was identified.¹⁴⁶ One of a number of options proposed was to “restrict the use of protective costs orders”.¹⁴⁷ Accordingly, though the provisions that emerged are a valuable resource for the purposes of this discussion, their more restrictive elements should be understood in light of this political context.

In short, the provisions are structured by creating three mandatory requirements for a costs capping order (s 88) and five mandatory considerations the Court must have regard to when considering making a PCO (s 89). This approach is prudent because it prioritises and separates the critical elements required of a PCO from other considerations which perhaps ought to be applied more flexibly. In contrast, the highly flexible Corner House guidelines, none of which were ranked by importance, may be prone to being conflated and applied unpredictably.¹⁴⁸

The provisions replace “protective costs order” with the term “cost capping order”, reinforcing the English common law position that PCOs can only be granted when they have a corresponding cap on costs recoverable if the applicant succeeds. Importantly, however, s 89(2) removes any discretion for a judge to decide otherwise.

1. Mandatory Requirements Under s 88

Section 88(6) specifies three mandatory requirements that must be satisfied for the court to make a costs capping order. These include that:

(a) the proceedings are public interest proceedings;

(b) in the absence of the order, the applicant for judicial review would withdraw the application for judicial review or cease to participate in the proceedings; and

(c) it would be reasonable for the applicant for judicial review to do so.

¹⁴⁶ Ministry of Justice (UK), above n 145, at 1.

¹⁴⁷ Ministry of Justice (UK), above n 145, at 1.

¹⁴⁸ This view was expressed by the UK Government: Ministry of Justice (UK) Judicial Review: Proposals for Further Reform (September 2013) at 41-42.

This list incorporates the first¹⁴⁹ and fifth¹⁵⁰ principles of the Corner House test, splitting the fifth principle into two separate elements. Notably, s 88(6)(a) creates the term “public interest proceedings”, which is further defined in s 88(7), stating that proceedings are “public interest proceedings” only if:

(a) an issue that is the subject of the proceedings is of general public importance;

(b) the public interest requires the issue to be resolved; and

(c) the proceedings are likely to provide an appropriate means of resolving it.

The legislative scheme also sets out three mandatory considerations the court must have regard to when determining whether proceedings are public interest proceedings (s 88(8)):

(a) the number of people likely to be directly affected if relief is granted to the applicant for judicial review;

(b) how significant the effect on those people is likely to be; and

(c) whether the proceedings involve consideration of a point of law of general public importance.

This appears to create a more rigid, formulaic test for determining whether proceedings are sufficiently in the public interest than what existed at common law. In Compton, the Court of Appeal considered that “it is impossible to define what amounts to an issue of general public importance”.¹⁵¹ Therefore, “the question of importance must be left to the evaluation of the judge without restrictive rules as to what is important and what is general”.¹⁵² Smith LJ commented further that “a case may raise issues of general public importance even though only a small group of people will be directly affected by the decision”.¹⁵³ For example, the Court in R (Litvinenko) v. Secretary of State for the Home Department (Litvinenko) found a failure to launch a public enquiry into the suspicious death of the claimant’s husband satisfied this requirement even though the claim only directly affected one family.¹⁵⁴

¹⁴⁹ Principle (i) requires that “the issues raised are of general public importance”.

¹⁵⁰ Principle (v) states that “if the order is not made the applicant will probably discontinue the proceedings and will be acting reasonably in so doing

¹⁵¹ Compton, above n 117, at [77] as affirmed in Buglife, above n 137, at [18].

¹⁵² Compton, above n 117, at [77].

¹⁵³ Compton, above n 117, at [77].

¹⁵⁴ R (Litvinenko) v. Secretary of State for the Home Department [2013] EWHC 3135 (Admin) at [15].

In contrast, the mandatory considerations in s 88(8) appear to suggest a different view for what constitutes “general public importance”. By requiring judges to explicitly consider both the number of people directly affected if relief is granted, and the significance of that effect, the preference of the public interest test is shifted to claims which directly affect larger groups in society, rather than individual claims whose connection with the public interest is more general, such as in Litvinenko.¹⁵⁵ Adding additional hurdles are the conjunctive requirements in s 88(7), which not only require “general public importance”, but also that the public interest requires the issue to be resolved, and that the proceedings are likely to provide an appropriate means of resolving it. Consequently, the standard required to satisfy this key requirement for a costs capping order is stricter in the United Kingdom legislation.

2. Mandatory Considerations Under s 89

Additional to s 89(1) are five mandatory considerations the court must have regard to when considering whether to make a PCO. These are:

(a) the financial resources of the parties to the proceedings, including the financial resources of any person who provides, or may provide, financial support to the parties;

(b) the extent to which the applicant for the order is likely to benefit if relief is granted to the applicant for judicial review;

(c) the extent to which any person who has provided, or may provide, the applicant with financial support is likely to benefit if relief is granted to the applicant for judicial review;

(d) whether legal representatives for the applicant for the order are acting free of charge; and

(e) whether the applicant for the order is an appropriate person to represent the interests of other persons or the public interest generally.

Requirements (a), (b) and (d) are drawn from Corner House, while (c) and (e) are newly introduced. The “private interest” factor from Corner House is reframed under (b) to require an analysis of the extent to which the applicant is likely to benefit if they succeed in the

¹⁵⁵ David Lock and Alistair Mills “Protective Costs Orders and Costs Capping Orders: The New Law” [2016]

JR 154 at 156; Litvinenko, above n 154.

proceeding, rather than merely identifying the existence of a private interest. Framed in this way, the provision responds better to the concern that an applicant for judicial review will almost always have some form of “private interest” in the case.¹⁵⁶

Additionally, consideration (a) encourages the Court to consider not just the financial resources of the parties (as was the case in Corner House), but also the resources of any person who provides or may provide financial support to the parties. This expansion is intended to prevent individuals with resources from using an impecunious litigant (such as a newly created company) to obtain a costs capping order.¹⁵⁷ As the Civil Procedure (Amendment No. 2) Rules 2016 (UK) also require an applicant to provide a summary of their financial resources, this offers a considerably more rigorous approach to assessing applicants’ finances than what took place in Gordon v Attorney-General (No 2).¹⁵⁸ There, a key detail persuading Palmer J to grant a PCO was the applicants’ revising their original affidavits from stating they “may not be in a position to proceed”,¹⁵⁹ to that they definitely could not bear any award of costs, and that in Professor Gordon’s view, it would not be “fair to her family to be funding the proceeding”.¹⁶⁰

Finally, s 89(1)(e) introduces an entirely new consideration, asking whether an applicant is an appropriate person to represent the interests of other persons or the public interest generally. There has been little judicial or academic consideration of the parameters of this requirement. In one of the few judgments directly addressing it, the Court merely relies on the fact that the claimants’ satisfied the public importance test to satisfy the consideration.¹⁶¹ In other decisions granting a PCO, the consideration is left untouched.¹⁶² This makes its usefulness questionable.

On the whole, this legislative regime provides a valuable model for how PCOs could be codified. Though it does restrict the accessibility of orders, many of its elements arguably offer a more balanced approach than Gordon v Attorney-General.¹⁶³

¹⁵⁶ See for example Jaffey, above n 131, at 175; Tollefson, above n 47, at 200; See Chapter 4, page 37.

¹⁵⁷ Lock and Mills, above n 155, at 156.

¹⁵⁸ Civil Procedure (Amendment No. 2) Rules 2016 (UK), r 46.17(1)(b)(ii); Gordon v Attorney-General (No 2), above n 1.

¹⁵⁹ Gordon v Attorney-General, above n 32, at [13]-[15].

¹⁶⁰ Gordon v Attorney-General (No 2), above n 1, at [7].

¹⁶¹ Good Law Project v Secretary of State for Health and Social Care [2021] EWHC 997 at [24]

¹⁶² See for example Professor Stephen Hawking v The Secretary of State for Health and Social Care [2018] EWHC 989 (Admin) at [22]; Good Law Project Ltd v Minister for the Cabinet Office [2021] EWHC 1083 at [35].

¹⁶³ Gordon v Attorney-General, above n 32, at [11].

II Canada

There are many lessons to be drawn from the application of PCOs in Canada. In particular, Canada’s extreme form of PCO (“advance costs orders”), the common law approach, and two examples of codified PCOs (Nova Scotia and Newfoundland), provide an additional model from which New Zealand can draw inspiration.

A Advance Costs Orders

In British Columbia (Minister of Forests) v Okanagan Indian Band (Okanagan), the Supreme Court of Canada took the remarkable step of recognising “advance costs orders”.¹⁶⁴ Advance costs orders not only immunise an applicant from an adverse cost award, but also require the opposing party to fund the applicant’s own legal expenses over the course of the proceeding. The order was granted in an indigenous land claim to four First Nations tribes experiencing significant financial hardship, which were unable to afford their own legal expenses to proceed to trial. To obtain the order, the tribes needed to satisfy three requirements.¹⁶⁵ First, the party must be unable to pay for the litigation, and no other realistic option exists for bringing the issue to trial. Second, the claim must be prima facie meritorious, and third, the issues raised must be of public importance and have not been resolved in previous cases. While commentators note the requirements are very strict,¹⁶⁶ successful applications have been made in several other indigenous law cases.¹⁶⁷

These orders are highly relevant to New Zealand, given its own indigenous context and rapidly growing Māori jurisprudence. For example, one could envision a future constitutional claim by

¹⁶⁴ Okanagan, above n 3, at [40]

¹⁶⁵ At [40].

¹⁶⁶ Martin Twigg “Costs Immunity: Banishing the ‘Bane’ of Costs from Public Interest Litigation” (2013) 1 Dal LJ 193 at 214; Chris Tollefson “Costs and the Public Interest Litigant: Okanagan Indian Band and Beyond” (2006) 19 CJALP 39 at 43.

¹⁶⁷ See for example Daniels v Canada (Minister of Indian Affairs and Northern Development) 2011 FC 230; Hagwilget Indian Band v Canada (Minister of Indian Affairs and Northern Development, above n 3; Keewatin v Ontario (Minister of Natural Resources) [2006] CPC 258 (ONCJ). A large compilation of further successful applications is set out in Rex v Dish Network L.L.C 2011 BCSC 1105 at [47].

poorly resourced iwi or hapū which might also satisfy the Okanagan requirements.¹⁶⁸ However, it is unlikely the New Zealand common law would allow judicial recognition of advance costs orders, given the English Court of Appeal’s finding in Corner House that its similarly broad costs jurisdiction would not extend this far.¹⁶⁹

B Common Law Test in Ontario

In Ontario, PCOs are recognised by the Courts but are not legislated for. In Farlow v Hospital for Sick Children, the Ontario Superior Court of Justice adopted a similar, yet slightly simplified, test to that in Gordon v Attorney-General.¹⁷⁰ It begins with the starting point that a PCO is exceptional, followed by other factors including “whether the applicant's financial circumstances are such that the applicant would probably not proceed absent such an order; the extent to which the public has an interest in the issues being litigated; and the potential impact of such an award on the other parties”.¹⁷¹ Notably, there is no reference to whether the applicant has a private interest in the case, or whether their representation is pro bono, as there is in Gordon v Attorney-General and Corner House.¹⁷² Further, it has been definitively ruled that orders cannot be made against private parties, even if the private party is defending a claim alongside a public body and is very well resourced.¹⁷³

C Codification in Nova Scotia and Newfoundland

There are two examples of PCOs being incorporated into legislation in Canada. In Nova Scotia, the Civil Procedure Rules affirm the ability of litigants to apply for a PCO, but do not state any requirements, leaving this for the Courts to determine and apply.¹⁷⁴ In contrast, the Newfoundland and Labrador Civil Procedure Rules contain a more detailed account, requiring a specific form of application, an affidavit and supporting documents, as well as the satisfaction

¹⁶⁸ Okanagan, above n 3.

¹⁶⁹ Corner House, above n 2, at [77].

¹⁷⁰ Farlow v Hospital for Sick Children [2009] CPC 100 (ONSC) at [93].

¹⁷¹ At [94].

¹⁷² Gordon v Attorney-General, above n 32, at [11]; Corner House, above n 2, at [72].

¹⁷³ Lockridge v Ontario (Director, Ministry of the Environment) 2012 ONSC 2316. The private party in this case was Suncor Energy Inc., a large energy company.

¹⁷⁴ Civil Procedure Rules NS 2009, r 77.04.

of three requirements:¹⁷⁵ (1) the party must be unable to afford to pay an award of costs; (2) the risk of an award of costs must prevent the party from advancing a non-frivolous and non- vexatious claim or defence; and (3) the Court must be satisfied that the order would be in the best interests of justice.¹⁷⁶

In substance, these rules add nothing more than what has already been discussed. What they do provide is an example of codification but with a significantly greater degree of judicial discretion and flexibility than is seen in the United Kingdom. Additionally, unlike the United Kingdom, neither Canada’s common law or legislation require that a PCO be balanced with a reciprocal costs cap limited at a modest amount.

III Australia

PCOs are widely recognised in Australia, with the Federal Government,¹⁷⁷ New South Wales,¹⁷⁸ Victoria,¹⁷⁹ and Queensland¹⁸⁰ each having introduced legislation affirming PCOs. On a review of the authorities, most orders granted in Australia are weaker in effect, limiting the applicant’s costs liability rather than immunising them entirely.¹⁸¹ There are two approaches to codifying PCOs in Australia as well as some relevant substantive developments across states, which I discuss in turn.

A Legislative Approaches

The Federal and New South Wales legislation both affirm the existence of PCOs (usually referred to as “maximum costs orders”), but leave it to the courts to determine which relevant factors to take into account.¹⁸² This preserves a greater degree of judicial discretion than the

¹⁷⁵ Rules of Supreme Court NL 1986, r 7.20.

¹⁷⁶ Rules of Supreme Court NL 1986, r 7.20(3).

¹⁷⁷ Federal Court Rules 2011 (Cth), r 40.51.

¹⁷⁸ Uniform Civil Procedure Rules 2005 (NSW), r 42.4.

¹⁷⁹ Civil Procedure Act 2010 (Vic), s 65C(2A).

¹⁸⁰ Judicial Review Act 1991 (Qld), s 49.

¹⁸¹ See for example Corcoran v Virgin Blue Airlines, above n 5; Aitken & Others v State of Victoria [2013] VSCA 28; Bare v Small & Others [2013] VSCA 204; See also Gina Wilson “Protective costs orders - what are they and when might they arise?” (18 September 2014) Maddocks <https://www.maddocks.com.au>.

¹⁸² Eliza Ginnivan “Public Interest Litigation: Mitigating Adverse Costs Order Risk” in Precedent (Sydney, September 2016) 22 at 23; Federal Court Rules 2011 (Cth), r 40.51.

prescriptive approach adopted in the United Kingdom. In contrast, Victoria and Queensland have expressly codified into legislation the factors taken into account when considering a PCO application.¹⁸³ The form of these factors largely follows the approach set out by the Federal Court.¹⁸⁴

Factors identified by the Federal Court include the damages sought to be recovered, the complexity of the case, whether the applicant’s claims are reasonably arguable, whether a party would otherwise be forced to abandon a proceeding if a PCO was not made, whether there is a public interest element to the case, and the costs likely to be incurred in the proceedings.¹⁸⁵ Notably, as is the case in Canada, there is no reference to whether the claimant’s counsel are acting pro bono.

B Other Relevant Developments

1. Mechanisms to Retain the Court’s Control

The Federal and New South Wales legislation each add a thoughtful mechanism that does not appear in the Gordon v Attorney-General test,¹⁸⁶ or the United Kingdom and Canadian approaches.¹⁸⁷ The mechanism provides that a PCO will not include any amount a party is ordered to pay because they failed to comply with the Rules, sought leave to amend pleadings or particulars, sought an extension of time for complying with a court order, or failed to conduct the proceeding in a manner to facilitate a just resolution as quickly, inexpensively and efficiently as possible, causing another party to incur costs.¹⁸⁸ This mechanism is also represented in varying ways in the Victoria and Queensland legislation.¹⁸⁹ Importantly, these provisions preserve the court’s ability to demand efficiency and exert control over the litigation, by retaining the risk of added costs liability for a recipient of a PCO.

¹⁸³ Civil Procedure Act 2010 (Vic), s 65C(2A); Judicial Review Act 1991 (Qld), s 49.

¹⁸⁴ Ginnivan, above n 182, at 23; Federal Court Rules 2011 (Cth), r 40.51.

¹⁸⁵ McKay Super Solutions Pty Ltd (Trustee) v Bellamy's Australia Ltd (No 2) (2019) 135 ACSR 278 [2019] FCA 215 at [74]; Corcoran v Virgin Blue Airlines, above n 5, at [6].

¹⁸⁶ Gordon v Attorney-General, above n 32, at [11].

¹⁸⁷ Federal Court Rules 2011 (Cth), r 40.51(1); Uniform Civil Procedure Rules 2005 (NSW), r 42.4(1).

¹⁸⁸ Federal Court Rules 2011 (Cth), r 40.51(2); Uniform Civil Procedure Rules 2005 (NSW), r 42.4(2).

¹⁸⁹ Civil Procedure Act 2010 (Vic), s 65C(2A)(h), framed as an optional consideration when deciding to make a PCO; Judicial Review Act 1991 (Qld), s 49(3), framed as a power to revoke or vary the PCO due to the conduct of the applicant.

2. Disagreement Over Who benefits

There is some disagreement across Australia regarding who benefits from a PCO. In the Federal Court, PCOs must apply in favour of both parties.¹⁹⁰ In other words, if an applicant is immunised entirely (or partially) from paying costs, so too will the defendant. This accords closer to the United Kingdom’s approach of mandating a cost cap to balance against a PCO. In contrast, the New South Wales courts allow orders which apply only for the benefit of the applicant.¹⁹¹ The existence of disagreement on this point suggests careful consideration is required on the principles governing cost capping.

3. Orders Not Restricted to Judicial Review

In a departure from the United Kingdom, the Federal Court of Australia considered it appropriate to allow a diluted form of PCO against a private party. In a discrimination claim by two disabled claimants against Virgin Blue Airlines, the Court limited the two applicants’ costs to $15,000 and $30,000 respectively, representing the amount they were allocated under legal aid.¹⁹² While the orders are relatively weak in degree (with the Airline’s costs also capped at this amount), the move is significant because it departs from the robust position in the United Kingdom and Canada that PCOs, no matter how weak, can only be granted in judicial review proceedings.

The considerable difference in view internationally and even within Australia and Canada about how to navigate regimes for PCOs evidences their complexity. This comparative analysis has shown there are numerous legitimate, yet competing, ways to approach PCOs. Views on this may differ from person to person – and perhaps even from judge to judge. The following chapter builds on this discussion by examining relevant challenges and issues pertaining to PCOs in New Zealand.

¹⁹⁰ Hanisch v Strive Pty Ltd [1997] FCA 303; (1997) 74 FCR 384 at 389; restated in Shurat Hadin, Israel Law Centre v Lynch

[2014] FCA 413 at [10].

¹⁹¹ Caroona Coal Action Group Inc v Coal Mines Australia Pty Ltd and Minister for Mineral Resources [2009] NSWLEC 165 at [29].

¹⁹² Corcoran v Virgin Blue Airlines, above n 5, at [62].

CHAPTER FOUR

Examining Potential Challenges and Issues

The experience of PCOs in overseas jurisdictions raises a number of potential challenges and issues relevant to PCOs in New Zealand. These relate to consistently applying the definition of “public interest”, the “private interest” requirement, evidence of financial impecuniosity, and the pro bono requirement. They also concern the exclusion of self-represented litigants, opening the floodgates, and retaining the court’s control. An analysis of these challenges highlights risks to be avoided when applying PCOs, and forms the basis for the reforms proposed in Chapter 5.

I Consistently Applying the Definition of “Public Interest”

Whether a claim is sufficiently in the public interest lies at the heart of a decision to grant a PCO. A notable challenge, however, is the difficulty that lies in defining the public interest. This is explained succinctly by Shane Campbell, who writes: “a public interest case is like an elephant: it is difficult to define but you know what it is when you see it”.¹⁹³

Sharing this view was a 2006 Working Group on facilitating public interest litigation in the United Kingdom, chaired by Kay LJ.¹⁹⁴ The group, made up of senior practitioners, government officials and relevant experts, said:¹⁹⁵

Doubts were expressed as to whether it was appropriate to seek to define a public interest case in the context of an application for a PCO. To do so would be over-prescriptive. The circumstances in which a case might legitimately be considered to be in the public interest were too varied for helpful definition.

¹⁹³ Campbell, above n 29, at 246.

¹⁹⁴ The Civil Liberties Trust, above n 29.

¹⁹⁵ At [75].

This reality prompted the group to recommend the criterion adopted in the English common law,¹⁹⁶ and now in New Zealand,¹⁹⁷ defining a public interest case as one where the issues raised are of general public importance, and the public interest requires that those issues be resolved.¹⁹⁸ In its circularity, this definition recognises the inherent difficulty associated with defining the public interest – it requires one to make subjective moral judgements that will invariably differ from person to person. While the English legislative approach is to place emphasis on the number of people directly affected by the proceedings,¹⁹⁹ this sits awkwardly with cases like Litvinenko, which only directly affected one family, yet was legitimately deemed to be of general public importance.²⁰⁰

Importantly, judicial minds may differ significantly on these subjective judgements. For example, Buxton LJ disagreed with the majority in Compton that the closure of a local hospital was sufficiently in the public interest to award a PCO.²⁰¹ In the Canadian case of Farlow v Hospital for Sick Children, Herman J considered the claimants’ challenge to the suspicious death of their child in medical care “may well be of interest to the public”, but was not sufficiently in the public interest to justify a PCO, as the matter only directly affected the claimants.²⁰² In contrast, the applicant in Litvinenko, whose claim also had no direct effect on the public, satisfied this same criteria.²⁰³

This illustrates the highly subjective inquiry demanded of judges in assessing the public interest. As is evident from these examples, no one set of criteria can perfectly capture every case deserving of a PCO. Therefore, judges and policymakers ought to be conscious of its inherent complexity as a concept, and the risk that it will be applied inconsistently, causing injustice. Further, care must be taken not to introduce further complexity, as this will only drive up litigation costs in an area that necessarily requires affordability.

Equally, courts also must be cautious of proceedings lacking legal substance being brought under the guise that they are in the “public interest”. As was recognised by the Court of Appeal

¹⁹⁶ See Compton, above n 117, at [18].

¹⁹⁷ Gordon v Attorney-General, above n 32, at [11].

¹⁹⁸ The Civil Liberties Trust, above n 29, at [2].

¹⁹⁹ Criminal Justice and Courts Act 2015 (UK), s 88(8); See discussion in Chapter 3, pages 27-28.

²⁰⁰ Litvinenko, above n 154, at [15].

²⁰¹ Compton, above n 117, at [23]; Austin v Miller Argent (South Wales) Limited, above n 133, at [62].

²⁰² Farlow v Hospital for Sick Children, above n 170, at [100].

²⁰³ Litvinenko, above n 154, at [15].

in New Zealand Democratic Party for Social Credit Inc v Minister for Land Information, arguments that lack merit “cannot be shielded by the cloak of public interest; it being axiomatic that it can never be in the public interest to place unmeritorious arguments before the courts''.²⁰⁴

II The “Private Interest” Requirement

Much debate has concerned the “no private interest” requirement.²⁰⁵ In the United Kingdom, the element was widely criticised²⁰⁶ after the Court in Goodson rejected an application due to the claimants’ personal interest in the outcome of their father’s coronial inquiry.²⁰⁷ While New Zealand has consequently adopted a relaxed approach that specifies a private interest is not necessarily fatal to an application, care must be taken in the design of the element so that outcomes like Goodson can be consistently avoided.

Going further, there is scope to question the principled basis for the “private interest” requirement. Kay LJ’s 2006 working group identified that the origins of the requirement arguably come from the identities of the early applicants for PCOs.²⁰⁸ Each applicant in the first six leading cases was a campaigning voluntary organisation that clearly did not stand to benefit privately from their claims.²⁰⁹ They “no doubt emphasised their altruistic intentions, as they believed these would sway the courts hearing their applications”.²¹⁰ As time went on, however, “somehow the lack of a private interest had developed from a factor that might be relevant, to a requirement”.²¹¹ Now that the element has since been returned to this relaxed position, this arguably suggests a need for it to be reframed so that its principled foundations are better calibrated. This way, the risk of unprincipled outcomes such as Goodson can be minimised.

²⁰⁴ New Zealand Democratic Party for Social Credit Inc v Minister for Land Information [2021] NZCA 599 at

[85]

²⁰⁵ See discussion in Chapter 3, pages 23-24.

²⁰⁶ See Jaffey, above n 131, at 175; Tollefson, above n 47, at 200; Stein and Beagent, above n 2, at 213; The Civil Liberties Trust, above n 29, at [77]-[85]; Public Interest Law Alliance “Public Interest Litigation: The Costs Barrier & Protective Costs Orders Report” (Dublin, October 2010) at 15. See also Wilkinson v Kitzinger, above n 132, at [54].

²⁰⁷ Goodson, above n 117, at [28].

²⁰⁸ The Civil Liberties Trust, above n 29, at [78].

²⁰⁹ At [78].

²¹⁰ At [78].

²¹¹ At [78].

III Evidence of Financial Impecuniosity

One issue with the approach in Gordon v Attorney-General is that the evidence it requires of financial impecuniosity is arguably not rigorous enough. In Gordon v Attorney-General (No 2), a key detail persuading Palmer J to grant a PCO was the applicants revising their original affidavits from stating they “may not be in a position to proceed”²¹² to that they definitely could not bear any award of costs, and that in Professor Gordon’s view, it would not be “fair to her family to be funding the proceeding”.²¹³ While this may have been a just outcome in the circumstances, there needs to be more robust evidential requirements of applicants’ finances. This ensures PCOs are not unnecessarily granted, and that the court can be fully informed when balancing the relevant factors against the applicants’ impecuniosity. Chapter 5 proposes a measure for assessing financial evidence informed by experience in the United Kingdom and Canada.

IV The Pro Bono Factor

A number of commentators have criticised the pro bono factor for PCOs, which asks “are those acting for the claimant doing so on a pro bono basis?”²¹⁴ The thrust of the criticism is that this factor may create an inappropriate expectation that public interest litigants obtain pro bono representation, and correspondingly, that lawyers who wish to make use of PCOs are pressured to act pro bono. The United Kingdom Supreme Court has cautioned against allowing expectations of pro bono representation to develop in law, arguing that this risks making the businesses of public law specialists “financially unsustainable”.²¹⁵

Equally, on the client side, it has been argued that this may make it unreasonably difficult to find lawyers of the appropriate expertise within the tight time frames of many public interest cases.²¹⁶ This risks introducing an additional barrier to access to justice for public interest litigants. Accordingly, care must be taken to ensure tacit expectations of pro bono

²¹² Gordon v Attorney-General, above n 32, at [13]-[15].

²¹³ Gordon v Attorney-General (No 2), above n 1, at [7].

²¹⁴ Lock and Mills, above n 155; Stein and Beagent, above n 2; Jaffey, above n 131.

²¹⁵ Re appeals by Governing Body of Jewish Free School [2009] UKSC 1, [2009] 1 WLR 2353 at [25].

²¹⁶ Lock and Mills, above n 155, at 160; Stein and Beagent, above n 2, at 212; Jaffey, above n 131, at 172.

representation are avoided, and that this factor can only ever weigh favourably on an application.

V Exclusion of Self-Represented Litigants

In Gordon v Attorney-General (No 2), Palmer J made a reference to the fact that the applicants were bringing proceedings with “competent counsel”. ²¹⁷ In his view, “the ability of a plaintiff to bring proceedings that are in the public interest, about serious human rights issues, with competent counsel, for no personal benefit, should not be determined by their ability to pay costs”.²¹⁸ Statements of a similar effect were also made in Corner House, suggesting the judiciary may be inclined (consciously or subconsciously) to exclude PCOs from being granted to self-represented litigants.²¹⁹

This inclination must be avoided. Under the Lawyers and Conveyancers Act 2006, any person is entitled to represent themselves.²²⁰ Further, it is widely understood that unrepresented litigants operate at a significant disadvantage.²²¹ Accordingly, if the right to self-represent is to be taken seriously, care must be taken to avoid subtly designing the test for PCOs to be less accessible to self-represented litigants. Caution is needed to not undermine the principled foundations of PCOs and of this important right.

VI Opening the Floodgates

A further challenge with respect to PCOs is that making them too accessible will “open the floodgates” to unmeritorious applications, placing strain on the court’s resources and the finite supply of justice.²²² Given the majority of those defending PCOs are likely to be public

²¹⁷ Gordon v Attorney-General (No 2), above n 1, at [19].

²¹⁸ Gordon v Attorney-General (No 2), above n 1, at [19].

²¹⁹ Corner House, above n 2 at [76].

²²⁰ Lawyers and Conveyancers Act 2006, s 27(1).

²²¹ Re G J Mannix [1984] 1 NZLR 309 (CA) at 312 per Cooke J: “Every Judge knows that a litigant in person is not the most effective advocate for himself – from lack partly of knowledge of the law, partly at times from perspective”; See also Winkelmann, above n 8, at 238.

²²² This concern was expressed by the UK Government: Ministry of Justice (UK), above n 148, at 41-42; See discussion in Chapter 3, page 26; Galanter, above n 27, at 126.

agencies, there is also the concern that this will create unnecessary expense to the taxpayer.²²³ Indeed, the only case addressing PCOs since Gordon v Attorney-General (No 2) involved an unmeritorious application for a PCO in relation to a private family court matter.²²⁴ Therefore, while the requirements for PCOs are already restrictive, care must be taken to avoid relaxing them to such an extent that the courts become inundated with vexatious applications.

VII Retaining the Court’s Control

A final relevant challenge is the potential that recipients of PCOs, now immune from the threat of paying the opposition’s legal fees, may be more inclined to behave unreasonably and needlessly prolong proceedings. This concern has been expressed by Sir Stephen Kós, who suggested in 2017 that PCOs be conditional on applicants complying with court directions during the course of the proceeding.²²⁵ Recognising this issue, mechanisms for the court to retain this important lever of control are also found in the Canadian²²⁶ and Australian²²⁷ legislative approaches to PCOs.²²⁸

The experience of overseas jurisdictions has raised several challenges and issues relevant to PCOs in New Zealand. The following chapter addresses how reform of New Zealand’s current approach to PCOs can respond to such challenges.

²²³ See discussion in Chapter 3, pages 25-26.

²²⁴ Leonetti v Rainwater, above n 135.

²²⁵ Stephen Kós, “Public Participation in Environmental Adjudication: Some Further Reflections” (Opening Address at the Environment Adjudication Symposium, 11 April 2017) at 7.

²²⁶ Civil Procedure Rules NS 2009, r 77.04(4).

²²⁷ Federal Court Rules 2011 (Cth), r 40.51(1); Uniform Civil Procedure Rules 2005 (NSW), r 42.4(2).

²²⁸ See discussion in Chapter 3, page 33.

CHAPTER FIVE

Reforming Protective Costs Orders in New Zealand

Having considered the English, Canadian, and Australian legislative approaches, and the numerous challenges and issues affecting PCOs, this final chapter argues that New Zealand ought to reform PCOs by codifying them into legislation. Additionally, it recommends a number of amendments that could be made based on the factors from Gordon v Attorney- General, which strike a better balance at enhancing access to justice.²²⁹

I The Case for Legislating

It is a fundamental principle of access to justice and the rule of law that law should be clear and predictable.²³⁰ These characteristics foster economic development, allow individuals to organise their behaviours effectively, lower the costs involved in administering justice, and ensure equality in the application of law across society.²³¹ However, there is a risk in New Zealand that these principles will not be adequately expressed if PCOs are to remain a creature of the common law.

The comparative analysis in Chapter 3 has shown a considerable degree of variation in approaches to PCOs across and within jurisdictions.²³² This variation is unsurprising: it reflects the extent to which complex issues and considerations arise from the application of PCOs. And such variation is not confined to jurisdictional differences. When PCOs are applied in the common law, disagreement can be seen among judges over how the elements of PCOs should be designed, and which cases are deserving of them.²³³

²²⁹ Gordon v Attorney-General, above n 32, at [11].

²³⁰ Bingham, above n 10, at 38; Legislative Design Advisory Committee, above n 16, at 23; Neuberger, above n 18; Ronan Cormacain “Legislation, legislative drafting and the rule of law” in The Theory and Practice of Legislation (5th ed, Routledge, Stockholm, 2017) 115 at 116.

²³¹ Bingham, above n 10, at 83; Guillermo O'Donnell “Why the Rule of Law Matters” (2004) 15 J Democracy 32 at 39.

²³² See competing approaches within Canada (Chapter 3, pages 31-32), and within Australia (pages 32-34).

²³³ For examples, see Chapter 4, pages 35-37.

In the United Kingdom, this contributed to unpredictable and unprincipled development of the law on PCOs.²³⁴ The result, as identified in Jackson LJ’s report on civil litigation costs, was that PCOs at common law became “complex and expensive to obtain”.²³⁵ Similarly, in Canada, Perell J found “a review of the case law does reveal erratic and unpredictable results”.²³⁶

This unpredictability and lack of clarity hinders access to justice. It makes it harder for individuals to know whether they will be granted a PCO, and consequently increases costs required to obtain one. This is particularly problematic given the founding purpose of a PCO is to limit exposure to legal costs.²³⁷ Recognising this concern, Jackson LJ’s report stressed that “any mechanism to protect claimants against adverse costs should be simple”.²³⁸ Therefore, codifying their core elements and considerations is an effective way to maximise this simplicity and predictability. The financially vulnerable applicants applying for PCOs simply cannot afford to pursue complex litigation over the finer, ambiguous elements of PCOs, of which their form continuously changes in vague and indeterminate ways as each leading case emerges.

Beyond maximising affordability, clarity and predictability, codification of PCOs also enhances access to justice by increasing their visibility. For laypeople and self-represented litigants, it is difficult to comprehend a novel test for PCOs requiring sophisticated legal analysis and reconciliation of dense case law. In contrast, when codified, the public at large can see clearly what is required to obtain a PCO, and safely depend on those requirements. The law being accessible and comprehensible in this way is a key aspect of access to justice.²³⁹ Accordingly, codification ensures that the most worthy public interest claims stand a greater chance of making it to court, a result which undoubtedly enhances the access to justice objective underpinning PCOs.

²³⁴ See discussion in Chapter 3, pages 23-24. See also criticisms from Guy Opperman, Mathew Gullick and

Caroline Stone “Corner House Revisited: The Law Governing Protective Costs Orders” (2009) 14 JR 43 at 43; Jaffey, above n 131; Stein and Beagent, above n 2.

²³⁵ Ministry of Justice (UK) Review of Civil Litigation Costs: Final Report (December 2009) (Chaired by Jackson LJ) at 304.

²³⁶ Incredible Electronics Inc v Canada (Attorney-General) [2006] 80 OR (3d) 723 (ONSC) at [74].

²³⁷ Environmental Defence Society, above n 69, at [21].

²³⁸ Ministry of Justice (UK), above n 235, at 304.

²³⁹ Cormacain, above n 230, at 116; Bingham, above n 10, at 38.

Perhaps recognising these concerns, the United Kingdom, Canada, and Australia have each decided to incorporate PCOs into legislation in some way.²⁴⁰ Drawing from these examples, New Zealand ought to follow suit.

II Recommended Changes

The following discussion suggests a number of changes to the existing Gordon test that could be reflected in a legislative regime for PCOs in New Zealand. These are to define “public interest” generally, and eight other recommendations designed to ensure the regime strikes the right balance in enhancing access to justice. To conclude, I sketch a proposal for how this could be drafted in legislation.

A Define Public Interest Generally

The first recommendation relates to how the gateway “public interest” requirement ought to be defined. I suggest the appropriate approach is to adopt the existing requirement in Gordon v Attorney-General, which asks “are the issues of general public importance and resolution of them in the public interest?”²⁴¹ This approach is to prioritise a general definition as opposed to a prescriptive one – aligning with the Canadian and Australian approaches, and departing from that seen in the United Kingdom.²⁴² There are a number of good reasons why this is the preferred approach.

I have detailed the inherent difficulty and subjectivity involved in deciding whether a case is in the public interest.²⁴³ This demonstrates that any effort to prescribe concrete legislative requirements arguably risks being too rigid to capture each case deserving of being categorised as in the public interest. Recognising this challenge was the Australian Law Reform Commission, and Kay LJ’s 2006 working group on public interest litigation.²⁴⁴ Each report

²⁴⁰ See Chapter 3, pages 25-33.

²⁴¹ Gordon v Attorney-General, above n 32, at [11].

²⁴² See Chapter 3, pages 25-33.

²⁴³ See Chapter 4, pages 35-36.

²⁴⁴ Australian Law Reform Commission “Costs Shifting — Who Pays for Litigation” (ALRC R75, 1995); The Civil Liberties Trust, above n 29.

acknowledged the lack of clear definition of public interest and recommended a broad definition mirroring what is now adopted in Gordon v Attorney-General.²⁴⁵

Further, the English courts have already qualified their prescriptive legislative approach to defining the “public interest”, despite its seemingly non-exhaustive design.²⁴⁶ The Court of Appeal found that when determining the public interest, the court is not precluded from taking into account the interests of those who are indirectly affected, even though the legislation only permits consideration of those directly affected.²⁴⁷ Therefore, while on paper the English legislative requirements are prescriptive, the approach appears reduced in substance back to a general definition. This illustrates the elusive quality of the “public interest” concept that makes it difficult to set out a descriptive definition for it.

Indeed, the New Zealand courts seem to appreciate this reality. The test for determining whether costs should be reduced or avoided on public interest grounds is also approached in a general manner, requiring proceedings to “concern a matter of genuine public interest” and be of “general public importance beyond the interests of the particular unsuccessful litigant”.²⁴⁸ This recognises that there can be no one-size-fits-all definition.²⁴⁹ The legislation should reflect this reality, and allow the courts to conduct the contextual public interest inquiry that they already routinely undertake at the conclusion of proceedings, and are thus well equipped for.

Finite time, resources and attention requires access to justice to be limited in a principled manner in order to further its objectives.²⁵⁰ Defining the public interest generally allows the courts to carefully and incrementally calibrate the standard required for a case to be sufficiently in the public interest to justify a PCO. The courts retain the control to temper PCOs to be sufficiently accessible, but not so much that they undermine the costs regime and the resources of those defending them. In addition, necessary exceptions and qualifications can be carved out when the interests of justice require, that might otherwise be obstructed by a prescriptive approach.

²⁴⁵ Australian Law Reform Commission, above n 244, at [13.2]; The Civil Liberties Trust, above n 29, at 28.

²⁴⁶ Criminal Justice and Courts Act 2015 (UK), s 88(7) and (8); See Chapter 3, pages 25-28.

²⁴⁷ R (on the application of Beety) v Nursing and Midwifery Council [2017] EWHC 3579 (Admin) at [19].

²⁴⁸ Summarised in Taylor v District Court at North Shore HC Auckland CIV-2009-404-2350, 13 October 2010 at [9]: “the proceeding must concern a matter of genuine public interest, have merit and be of general public importance beyond the interests of the particular unsuccessful litigant”.

²⁴⁹ Campbell, above n 29, at 246.

²⁵⁰ Galanter, above n 27, at 126; See discussion in Chapter 1, pages 5-6.

B Reframe the Private Interest Factor

The private interest factor asks, “[w]hile not fatal to an application, does the claimant have a private interest in the outcome of the case?”²⁵¹ I have questioned whether this framing best achieves the objective of preventing parties from tactically applying for PCOs in order to further their personal interests, rather than the public interest.²⁵² Perhaps recognising the need to reframe the factor, the United Kingdom legislation makes no reference to private interests, instead considering the extent the applicant is likely to benefit from the proceeding.²⁵³ I suggest an appropriate way of satisfying this factor’s objective is to reframe it to require consideration of “the nature of the claimant’s interest” in pursuing the proceedings. This best ensures outcomes such as Goodson – where the existence of a private interest arbitrarily prevented the granting of a PCO – can be consistently avoided.²⁵⁴

Reframed in this way, the court is not encouraged to identify the existence of a private interest as counting against an application, but rather to analyse the interests and motivations of the applicant in pursuing the proceeding as a whole. This shift in focus to the nature of the claimant’s interest better reflects the reality, as argued by many commentators, that in most cases there can be some form of private interest identified in one way or another.²⁵⁵ Further, it provides clearer encouragement for the court to assess whether the PCO is being applied for primarily in the public interest, or tactically for personal benefit. Where a private or economic interest does exist in a case, the extent of such interest can be weighed against the strength of the public interest, influencing whether the court should accept the application, and if so, whether a strong or weak order should be granted.²⁵⁶ By reducing the risk of PCOs being refused on arbitrary bases, reframing the “private interest” factor enhances the contribution PCOs can make to improving access to justice.

²⁵¹ Gordon v Attorney-General, above n 32, at [11].

²⁵² See Chapter 4, page 37; For discussion of this objective, see Public interest Law Alliance, above n 206, at 16.

²⁵³ Criminal Justice and Courts Act 2015 (UK), s 89(1)(c).

²⁵⁴ Goodson, above n 117.

²⁵⁵ Jaffey, above n 131, at 175; Tollefson, above n 47, at 200; Stein and Beagent, above n 2, at 213; The Civil Liberties Trust, above n 29, at 29.

²⁵⁶ The Civil Liberties Trust, above n 29, at 29-30.

C Require a Summary of Finances

One challenge for the Gordon v Attorney-General test is that it does not require sufficient evidence of an applicant’s finances for the court to be fully informed when deciding whether to grant a PCO.²⁵⁷ I recommend the solution adopted in England²⁵⁸ and Canada,²⁵⁹ which is to expressly require the applicant to supply the court with a summary of its finances. Although this requirement may impose additional costs on applicants, on balance it is appropriate because it ensures PCOs are granted only when necessary to enable access to justice.

The English Civil Procedure Rules go further, enabling the court to order additional financial information from individuals who “may” provide financial support to the claimant.²⁶⁰ This measure is designed to prevent wealthy individuals/companies from obtaining PCOs by setting up a poorly resourced company in order to feign impecuniosity.²⁶¹ This measure is unnecessary in New Zealand, as a contextual appraisal of the applicant and their finances will likely be sufficient for the court to identify such attempts. However, if attempts at exploiting impecunious litigants are identified, this additional power could be considered in future.

D Require Withdrawal to Be Reasonable

The English legislation requires that an applicant who is claiming it will withdraw its claim without a PCO would be acting reasonably if it did withdraw.²⁶² This should be incorporated into New Zealand’s approach, which currently only asks that the claimant would in fact withdraw from the proceedings without a PCO – not that it be reasonable to do so.²⁶³ By expressly introducing a reasonableness inquiry, the court can nuance PCOs so that they do not require an applicant be bankrupted in order to be eligible for a PCO. Instead, the court can conduct a contextual assessment of the position of the applicant, and determine whether someone taking their claim should be expected to exhaust all their resources in order to pursue it. For example, standards of reasonable withdrawal may be more lenient for individuals than

²⁵⁷ See discussion in Chapter 4, page 38.

²⁵⁸ Civil Procedure Rules 1998 (UK), r 46.17.1(b).

²⁵⁹ Rules of Supreme Court NL 1986, r 7.20.

²⁶⁰ Civil Procedure Rules 1998 (UK), r 46.18.

²⁶¹ Lock and Mills, above n 155, at 158.

²⁶² Criminal Justice and Courts Act 2015 (UK), s 89(1)(c).

²⁶³ Gordon v Attorney-General, above n 32, at [11].

they are for advocacy groups or companies, recognising that the availability of access to justice may vary depending on the type of litigant.²⁶⁴

On the other hand, this requirement also ensures that applicants who say they will withdraw their claim without a PCO due to their financial impecuniosity have arrived at this judgement justifiably. This encourages the courts to grant PCOs only when necessary, recognising the unavoidable need to limit access to justice.²⁶⁵

E Avoid Restricting Protective Costs Orders to Judicial Review

A question raised in this analysis is whether PCOs should be restricted to applications for judicial review. In other words, should orders only be granted against individuals exercising a statutory power of decision?²⁶⁶ While the English approach is to restrict PCOs in this way, Canada and Australia do not go this far. For instance, a limited form of PCO was ordered in a discrimination claim against a private airline by the Federal Court of Australia in Corcoran v Virgin Blue Airlines.²⁶⁷

The current approach in New Zealand leaves open the possibility of PCOs being awarded in proceedings that do not involve judicial review. In setting out the test, Palmer J in Gordon v Attorney-General makes no indication that orders are restricted to judicial review.²⁶⁸ Further, in a family law proceeding in June 2023, Powell J declined a PCO on the basis that its requirements were not met – not on the basis that the orders were restricted to judicial review.²⁶⁹

It is unnecessary to restrict PCOs to judicial review proceedings in New Zealand. PCOs permit differential treatment between parties to reflect a financial imbalance between their positions, and typically the fact that the applicant’s interest in the litigation is broader than the defendant’s.²⁷⁰ Corcoran v Virgin Blue Airlines illustrates that cases of this nature are not

²⁶⁴ New Zealand Law Society, above n 9, at 10.

²⁶⁵ Galanter, above n 27, at 126; See discussion in Chapter 1, pages 5-6.

²⁶⁶ Judicial Review Procedure Act 2016, s 4.

²⁶⁷ Corcoran v Virgin Blue Airlines, above n 5, at [62].

²⁶⁸ Gordon v Attorney-General, above n 32.

²⁶⁹ Leonetti v Rainwater, above n 135, at [14].

²⁷⁰ Opperman, Gullick and Stone, above n 234, at 51.

exclusive to judicial review.²⁷¹ Additionally, the position private parties would be placed in when defending a PCO is not new. It is analogous to the common situation of defending a legally aided claimant, where recovery of costs is rare.²⁷²

Therefore, in the exceptional case where a claim against a private party is sufficiently in the public interest to justify a PCO, and there is a significant financial disparity (such as in Corcoran v Virgin Blue Airlines), there is no reason that the claimant should be denied access to justice because their case is not a judicial review claim. Otherwise, a PCO could be awarded against a poorly resourced trust board exercising a statutory power of decision, but not against a large airline company, for example. By requiring judges to consider the financial resources of both parties, and the interests of justice (as is currently required by Gordon v Attorney- General), a regime for PCOs can avoid unjustly disadvantaging private parties.²⁷³ Further, it could be left to the courts to determine additional special circumstances required for a PCO to be ordered in such proceedings.

F Leave Advance Costs Orders on the Table

The advance costs orders seen in Canada are a considerably more radical form of PCO, requiring one party to pay the legal costs of the other in advance of the proceedings.²⁷⁴ New Zealand could consider this measure in future, given it is arguably similar in direction to the current security for costs regime.²⁷⁵ However, given the particularly exceptional nature of advance costs orders, and the unique questions raised by them, they would require further research. This research could explore whether advance costs orders could be demanded under Treaty of Waitangi principles in an indigenous rights case; whether such orders are economically feasible; and how the requirements could be expressed and designed.

²⁷¹ Corcoran v Virgin Blue Airlines, above n 5.

²⁷² Legal Services Act, s 45; Opperman, Gullick and Stone, above n 234, at 51.

²⁷³ Gordon v Attorney-General, above n 32, at [11].

²⁷⁴ See Chapter 3, page 30.

²⁷⁵ Security for costs allows the court to order a sum of money to be paid to the court in advance of the proceeding, where there is reason to believe that a plaintiff will be unable to pay the costs of the defendant if the plaintiff is unsuccessful in the plaintiff’s proceeding: High Court Rules, r 5.45.

G Remove the Pro Bono Factor

I have detailed a number of criticisms of the pro bono factor, which asks “are those acting for the claimant doing so on a pro bono basis?”.²⁷⁶ The expectation that this creates – that lawyers should be acting pro bono – suggests that this factor should be left out of a regime for PCOs. Indeed, the factor is not found in the regimes for PCOs in Canada and Australia.²⁷⁷

If applicants’ counsel are acting pro bono, it is open for them to emphasise this to the court, and no doubt they will. Even when absent from the legislative regime, acting pro bono will still enhance the strength of their application, by adding legitimacy to the public interest motivation behind their claim. In this way, the regime can strike the appropriate balance of rewarding pro bono representation, whilst not setting an expectation that ultimately harms access to justice.

H Introduce Mechanism to Retain the Court’s Control

When a PCO is granted, it is necessary that the courts retain control over proceedings, and parties are disincentivised from unreasonably exploiting their costs immunity to prolong proceedings and drive up the other party’s costs.²⁷⁸ Measures designed to do so are found in the Canadian²⁷⁹ and Australian²⁸⁰ legislation, and should be reflected in a regime in New Zealand. The Canadian approach is to preserve the power of the courts to award costs for abuse of process and contempt of court.²⁸¹ However, this would arguably still permit a party to subtly exploit their costs immunity, because the threshold required to contravene such rules is high.²⁸²

1. suggest a provision that enables the court to order costs against the holder of a PCO for unreasonable behaviour that unnecessarily prolongs the proceeding and causes another party to incur costs, as is seen in the Federal Court Rules and New South Wales Civil Procedure

²⁷⁶ See Chapter 4, page 38; Gordon v Attorney-General, above n 32, at [11].

²⁷⁷ See Chapter 3, pages 25-33.

²⁷⁸ See discussion in Chapter 4, page 40.

²⁷⁹ Civil Procedure Rules NS 2009, r 77.04(4).

²⁸⁰ Federal Court Rules 2011, r 40.51(1); Uniform Civil Procedure Rules 2005 (NSW), r 42.4(2); Civil Procedure Act 2010 (Vic), s 65C(2A)(h); Judicial Review Act 1991 (Qld), s 49(3).

²⁸¹ Civil Procedure Rules NS 2009, r 77.04(4).

²⁸² See Civil Procedure Rules NS 2009, r 88 and 89.

Rules.²⁸³ This preserves the power of the court to exert control over the proceedings in the same way that the risk of an adverse costs order does in ordinary cases.²⁸⁴

I Cost Capping: Prefer, but Do Not Require

A question left open in Gordon v Attorney-General (No 2) is whether, as a matter of fairness, the recipient of a PCO should always be limited in the amount of costs they can obtain from the other party if they succeed in the proceeding.²⁸⁵ I suggest that this should be the preferred scenario. However, as is the case in Canada and New South Wales, it should not necessarily be required.²⁸⁶

First, New Zealand’s costs regime generally only permits recovery of around two-thirds of a party’s reasonable (not actual) costs.²⁸⁷ This contrasts with the United Kingdom, where costs awards are closer to the actual figure. Because costs in New Zealand are already capped in this way, allowing a recipient of a PCO to proceed without a costs cap is a much less radical move than it might be in jurisdictions such as the United Kingdom.

Second, there is the concern that in imposing cost caps, further difficulty is created for claimants in obtaining sufficiently senior representation willing to act on a contingency basis.²⁸⁸ This potential access to justice barrier has been identified in Kay LJ’s 2006 working group, as well as a 2008 working group on ensuring access to environmental justice in England and Wales.²⁸⁹ It has also been acknowledged judicially in Australia.²⁹⁰ In practice, it has been argued that costs caps are “almost inevitably” paid for by reducing fees recovered by the claimant’s lawyers.²⁹¹

²⁸³ Federal Court Rules 2011, r 40.51(1); Uniform Civil Procedure Rules 2005 (NSW), r 42.4(2).

²⁸⁴ Taylor v Roper [2019] NZHC 16 at [6]- [7].

²⁸⁵ Gordon v Attorney-General (No 2), above n 1, at [24]; See Chapter 2, pages 17-18.

²⁸⁶ See Chapter 3, pages 31-34.

²⁸⁷ See Chapter 1, page 7; High Court Rules, r 14.2(1)(d).

²⁸⁸ Stein and Beagent, above n 2, at 212.

²⁸⁹ The Civil Liberties Trust, above n 29, at 31; Working Group on Access to Environmental Justice “Ensuring access to environmental justice in England and Wales” (London, May 2008) at 40-41.

²⁹⁰ Caroona Coal Action Group Inc v Coal Mines Australia Pty Ltd and Minister for Mineral Resources, above n 191, at [29].

²⁹¹ Working Group on Access to Environmental Justice, above n 289, at 41; Caroona Coal Action Group Inc v Coal Mines Australia Pty Ltd and Minister for Mineral Resources, above n 191, at [29].

Contingency arrangements are restricted in New Zealand to only allow recovery of a normal fee and premium compensating the lawyer for accepting the arrangement, meaning this problem is less pronounced than in the United Kingdom and Australia.²⁹² However, contingency arrangements remain available, and are only prohibited in criminal, immigration and family law proceedings.²⁹³ Therefore, the concern remains that automatically capping the costs of applicants introduces an unnecessary expectation that falls on their lawyers. This runs contrary to the need for PCOs to be accessible pursuant to their access to justice underpinning. Accordingly, a costs cap should be preferred but not automatically imposed on the recipient of a PCO. Perhaps where a claim is particularly meritorious on its face and the wrongs at issue are egregious, an applicant can obtain a PCO without a corresponding cap on the costs it can recover from the other party if it succeeds.

III A Draft Legislative Approach for New Zealand

Having recommended several changes to incorporate into a potential framework for PCOs, I sketch how these changes could be reflected in legislation to enhance the contribution PCOs make to improving access to justice. The draft draws from the United Kingdom’s approach of separating mandatory requirements and mandatory considerations.²⁹⁴ Mandatory requirements clearly express the core requirements for a PCO, while mandatory considerations compel the court to consider a certain matter, but preserve greater judicial discretion to decide either way. This is preferred to the approach in Gordon v Attorney-General, which views all factors together without ranking their importance.²⁹⁵

It is envisioned that a wide range of PCOs of varying strength could be obtained under this regime, based on the extent to which they satisfy the requirements and interact with the considerations, as is suggested by the Court of Appeal of England and Wales in Compton.²⁹⁶ For example, weak PCOs may simply cap the costs that can be awarded against the applicant

²⁹² Lawyers and Conveyancers Act, ss 333-335.

²⁹³ Adina Thorn and Rohan Havelock “Litigation Funding in New Zealand” (17 December 2019) Lexology

<www.lexology.com>; Lawyers and Conveyancers Act, s 335.

²⁹⁴ See Criminal Justice and Courts Act 2015 (UK), ss 88-89; See discussion in Chapter 3, page 26-29.

²⁹⁵ Gordon v Attorney-General, above n 32, at [11]; This approach in the equivalent common law test was criticised by the UK Government: Ministry of Justice (UK), above n 148, at 41-42.

²⁹⁶ Compton, above n 117, at [87].

at a defined level, such as in Corcoran v Virgin Blue Airlines.²⁹⁷ PCOs in this weak form could be commonplace, and allow parties to efficiently conduct public interest litigation in close alignment with their available resources. At the middle range, a PCO could specify that neither side be liable for the other’s costs. Finally, the strongest form of PCO could immunise the applicant from costs (except for orders made for unreasonable conduct), with no corresponding cap on the costs that they can recover from the other party. This spectrum approach could broaden the range of litigants for whom PCOs can facilitate access to justice.²⁹⁸ The draft capturing these matters is set out below:

Protective costs orders

(1) The court may make a protective costs order only if it is satisfied that—

(a) the proceedings are of general public importance and resolution of them in the public interest; and

(b) in the absence of the order, the claimant would have to discontinue proceedings; and

(c) it would be reasonable for the claimant to do so.

(2) In determining whether to grant a protective costs order, the court must have regard to the following matters:

(a) the nature of the interest the claimant has in pursuing the proceedings;

(b) whether it is fair and just to make the order, having regard to the financial resources of all parties.

(3) The court may, at its discretion, order the recipient of a protective costs order to pay any costs incurred as a result of unreasonable conduct that has contributed unnecessarily to the time or expense of the proceeding.²⁹⁹

(4) In applying for a protective costs order, the claimant must supply the court with a summary of its finances.

(5) A protective costs order may:

(a) guarantee no order of costs will be awarded against the claimant in the proceedings; or

²⁹⁷ Corcoran v Virgin Blue Airlines, above n 5.

²⁹⁸ Compton, above n 117, at [87].

²⁹⁹ Drafting this subsection would potentially require further exposition. See for example the five listed circumstances under High Court Rules r 14.6(3)(b) that can justify an order of increased costs.

(b) cap the amount of costs that may be awarded against the claimant in the proceedings.

(6) The court may, at its discretion, cap the amount of costs the recipient of a protective costs order may claim from the other party in the proceedings.³⁰⁰

This draft provides a starting point for a legislative regime in New Zealand by drawing together analysis of New Zealand’s case law and international experience. A number of matters remain that deserve further consideration, including the procedural processes governing applications; principles surrounding when costs should be capped, and by how much; and the ability to review, vary or revoke a PCO. Other matters to consider in developing a legislative regime include how “unreasonable conduct” is defined; the special circumstances required for a PCO to be ordered against a private party; and who bears the cost for a failed application. Further, if legislative intervention does occur, broad consultation with relevant agencies, practitioners, and the public should take place.³⁰¹

³⁰⁰ Alternatively, this could be framed as a rebuttable presumption, to reflect that imposing a cost-cap is the

preferred scenario, as a matter of fairness to the defendant.

³⁰¹ Legislative Design Advisory Committee, above n 16, at 120.

Conclusion

PCOs can be an effective measure for improving access to justice in New Zealand if adapted appropriately and codified into legislation. The costs regime and strict legal aid framework currently leave a large segment of people deprived of access to the courts. This is a problem because of the inherent importance of access to justice, and the societal value of cases in the public interest making it to court. Without meaningful access to justice, the powerful can act with impunity, threatening the fundamental right that civil rights be vindicated, and breaches of them compensated, in a fair and neutral manner. Further, when cases in the public interest make it to court, they can have far-reaching impacts which resonate across society and the law. In its contribution to these objectives, PCOs serve an undoubtedly worthy purpose.

For all their advantages, however, an analysis of the use of PCOs in the United Kingdom, Canada and Australia highlights their many challenges and complexities. This reality has led to elements of PCOs being modified incrementally and unpredictably as new cases emerge, introducing further costs to an area where affordability is most needed. New Zealand should, therefore, follow the jurisdictions considered by codifying PCOs into legislation, and make a number of amendments to the elements set out in Gordon v Attorney-General.³⁰² This will not only enhance the affordability and predictability of obtaining PCOs, but make them visible and comprehensible to the public – a result which meaningfully improves access to justice in New Zealand.

Importantly, PCOs are not the only answer to solving access to justice issues in New Zealand. They are but one aspect of the broader access to justice objective, and thus should not be pursued in isolation. With the right balance struck, however, PCOs of a range of forms can be an attainable option for potential litigants discouraged from accessing justice due to the threat of an adverse cost award.

³⁰² Gordon v Attorney-General, above n 32, at [11].

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I Press Releases

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