The Supreme Court has held that the Court of Appeal’s decision that lawyers who appear in person are not entitled to costs if successful was wrongly decided.
In McGuire v Secretary for Justice [2018] NZSC 116 (28 November 2018) the Supreme Court has ended practising lawyer Jeremy McGuire’s moves to challenge a 2013 decision by the Secretary for Justice to decline his application for approval to provide legal aid services.
During the subsequent actions the issue of whether self-represented lawyers were entitled to costs emerged through a 2017 Court of Appeal decision.
The High Court proceedings
In 2016 Mr McGuire commenced judicial review proceedings in the High Court against the decision of the Secretary for Justice. He represented himself.
Mr McGuire was successful in the High Court (McGuire v Secretary for Justice [2017] NZHC 365), but Cull J did not award him costs. He appealed on that point, as the usual practice at the time of the hearing was to award costs to lawyers who had successfully sued or defended in person.
The Secretary cross-appealed on the substantive issue.
The appropriateness of the lawyer in person exception
In the interim the Court of Appeal decided a costs-related decision Joint Action Funding v Eichelbaum [2017] NZCA 249. The Court of Appeal held that lawyers who appear in person are not entitled to costs if successful.
Prior to Joint Action the ‘primary rule’ was that self-represented litigants were not entitled to costs if successful, with the exceptions of self-represented lawyers and employed lawyers (who are acting for their employer).
The appropriateness of the exception was questioned by the High Court of Australia in Cachia v Hanes [1994] HCA 14, (1994) 179 CLR 403. This was a case where the litigant in person was not a lawyer. The primary rule was upheld, but reservations were expressed about the lawyer in person exception, although the court considered that any review should not be carried out by the courts.
The Joint Action case
At issue in Joint Action was an award of costs in favour of a barrister sole who had acted in person in the High Court. On appeal to the Court of Appeal it was argued that the lawyer in person exception should not be maintained in the light of Cachia. The Court allowed the appeal on the basis that the lawyer in person exception was inconsistent with the current costs regime in the High Court Rules. This was on the basis that under the current costs rules, cost may only be awarded to reimburse a party for legal fees actually incurred.
The Supreme Court’s decision
In any event, Mr McGuire’s claim for costs fell away as the Secretary’s cross-appeal was successful.
The Supreme Court granted Mr McGuire leave to appeal from the Court of Appeal's decision (McGuire v Secretary for Justice [2018] NZCA 37) on these issues:
- Whether the Court of Appeal was correct to strike out Mr McGuire’s claim in respect of the 2013 decision, and;
- Whether Joint Action Funding was correctly decided.
The New Zealand Law Society and the New Zealand Bar Association appeared as interveners and the Solicitor-General appeared for the Secretary.
The Law Society did not seek to maintain the self-represented lawyer exception but did support the employed lawyer rule. The Solicitor-General considered that Joint Action was correctly decided.
The Supreme Court (Elias CJ, William Young, Glazebrook and O’Regan JJ) considered that the reasoning in Joint Action was incomplete. The current costs regime in the High Court Rules did not override the primary rule, the lawyer in person exception or the employed lawyer rule. However, if there was to be reform to the law as it stood before Joint Action, this could and should be done by the Parliament or the Rules Committee following appropriate consultation.
The Supreme Court dismissed the appeal and held that Joint Action Funding was incorrectly decided.
Ellen France J agreed with the conclusion of the other members on the court that if there is to be reform of the law before the decision of Joint Action, that reform should be undertaken following a process allowing for consultation on the approach to be taken.
However, Ellen France J considered the primary rule exception to self-represented lawyers was irrational. Why should a self-represented solicitor who brings a proceeding be treated differently from, for example a self-represented accountant?
History
The primary rule and the lawyer in person exception was first authoritatively stated in The London Scottish Benefit Society v Chorley (1884) 13 QBD 872 (CA). This was adopted in New Zealand in Hanna v Ranger (1912) 31 NZLR 159 (SC) at 160. The High Court applied the lawyer exception in Guss v Veenhuizen (No 2) (1976) 136 CLR 47.
In January 2000 a new High Court costs regime came into effect and soon afterwards the Rules Committee decided to address the continuing appropriateness of the primary rule. This included a review of the lawyer in person rule. But, in April 2002 it was decided that if changes were to be made it was appropriate for those to be effected by legislation.
The current versions of the District Court Rules 2014 (rule 14.17) and the Family Court Rules 2002 (rule 86) provide specifically for award of costs to a lawyer in person.