Attraction in Court costs rules changes
Proposals by the High Court Rules Committee to uplift judgment enforcement costs have merit, according to the New Zealand Law Society.
However, in comments to the Committee on its proposals on time allocation and daily recovery rates, the Law Society says any presumption of a 50% uplift should be rebuttable to allow for the fact that there may be genuine issues raised by the debtor.
“Lawyers have generally experienced a marked difficulty in the enforcement of judgments in the current economic climate,” the Law Society’s submission says. “A regime which sees judgment creditors adequately reimbursed for the often significant costs of enforcement, coupled with a healthy disincentive to judgment debtors, has a distinct measure of attraction.”
The Society says it is pleased to note that the Rules Committee has accepted the need for a more realistic approach to the costs of preparation for hearings, and it particularly endorses the revised scale of costs for appeals and interlocutory hearings.
While it says that it agrees in principle with the proposal that rates should be increased to reflect changes in the producer price index, it notes that there is an issue around GST.
“While costs awards are GST-neutral, the practical effect of the recent GST increase is to increase the cost of legal services to an unregistered person by 2.5%. The net return that an award of costs provides is therefore eroded in this situation,” the Law Society says.
“It seems that where the object of the costs regime is to reimburse a successful litigant, it is artificial to ignore the economic effect that a GST increase has on actual legal fees when the scale costs are GST-neutral in nature.”