Tonga v Accident Compensation Corporation

• Jurisdiction: New Zealand
• Judge: Simon France J
• Judgment Date: 05 May 2022
• Neutral Citation: [2022] NZHC 934
• Docket Number: CIV-2021-485-656
• Court: High Court

IN THE MATTER of an appeal under s 162 of the Accident Compensation Act 2001

Between

Sosia Tonga

Appellant

and

Accident Compensation Corporation

First Respondent

Alliance Group Limited

Second Respondent

[2022] NZHC 934

Simon France J

CIV-2021-485-656

IN THE HIGH COURT OF NEW ZEALAND

WELLINGTON REGISTRY

I TE KŌTI MATUA O AOTEAROA

TE WHANGANUI-A-TARA ROHE

Civil Procedure — appeal against a decision which upheld a finding the appellant was not entitled to an award of costs because his legal costs were paid for by a third party — Accident Compensation Act 2001

Counsel:

A C Beck for Appellant

No appearance for First Respondent

H A Evans for Second Respondent

The appeal was allowed. T was entitled to costs.

JUDGMENT OF Simon France J

Introduction

1 The context of this appeal is the review process under the Accident Compensation Act 2001 (the Act) and in particular the costs regime that applies to it. Section 148(2)(b) of that Act provides:

(2) Whether or not there is a hearing, the reviewer-

…

(b) may award the applicant costs and expenses, if the reviewer does not make a review decision in favour of the applicant but considers that the applicant acted reasonably in applying for the review:

2 Mr Tonga was an unsuccessful review applicant. 1 He was legally represented. It is common ground an award of costs would normally be made under subs (2)(b). However, his legal representation was provided and paid for by his union. This meant that no award of costs was made on the basis that Mr Tonga personally had no responsibility to pay his counsel. The District Court upheld the decision not to make a costs award but granted leave to appeal on the following question: 2

Whether a claimant on review, who has no liability to pay his or her own costs because they are met by a third party, is entitled to costs under s 148 of the Act and the 2002 regulations.

3 There are two respondents. The second respondent has the carriage of appeal. It is Mr Tonga's employer and is an accredited employer under Pt 6 of the Act. It accordingly stands in the shoes of the Corporation for Mr Tonga's claim. The Corporation abides the decision and does not wish to be heard. Its memorandum to that effect seeks to make clear the second respondent is not acting on the Corporation's behalf in terms of the arguments being advanced.

Facts

4 The facts of Mr Tonga's injury claim are not relevant to the appeal. Mr Tonga's claim was declined, as was his review of that decision. The reviewer declined to make an award of costs. The reviewer had earlier clarified with Mr Tonga's counsel that Mr Tonga had not been invoiced, the union (which was meeting the costs of legal representation) had not charged Mr Tonga anything, and the only direct costs to Mr Tonga were his union membership fees. The reviewer concluded Mr Tonga had no costs liability and so there could not be an award of representation costs.

5 Mr Tonga appealed to the District Court which overturned the reviewer as regards the cause of Mr Tonga's condition, with the consequence he was entitled to cover. However, the District Court upheld the reviewer as regards the decision not to award costs.

6 There is no evidence as to the legal arrangements between Mr Tonga and the union. This judgment proceeds, however, on the assumption that an award of costs would be passed on to the union which funded the legal representation.

Decision under appeal and authorities it relies on

7 Section 148 provides in full:

148 Costs on review

• (1) The Corporation is responsible for meeting all the costs incurred by a reviewer in conducting a review.

• (2) Whether or not there is a hearing, the reviewer-

  • (a) must award the applicant costs and expenses, if the reviewer makes a review decision fully or partly in favour of the applicant:

  • (b) may award the applicant costs and expenses, if the reviewer does not make a review decision in favour of the applicant but considers that the applicant acted reasonably in applying for the review:

  • (c) may award any other person costs and expenses, if the reviewer makes a review decision in favour of the person.

• (3) If a review application is made and the Corporation revises its decision fully or partly in favour of the applicant for review before a review is heard, whether before or after a reviewer is appointed and whether or not a review hearing has been scheduled, the Corporation must award costs and expenses on the same basis as a reviewer would under subsection (2)(a),

• (4) The award of costs and expenses under this section must be in accordance with regulations made for the purpose.

• (5) If any costs and expenses are awarded against the Corporation under this section, the Corporation is liable to pay them within 28 days of the decision to award them.

8 The decision under appeal applies a consistent line of authority that an applicant such as Mr Tonga who is represented by a lawyer provided by a third party cannot obtain an award of costs. The initial decisions 3 were given at a time when the relevant regulation referred to “costs paid or payable by the applicant to his or her

representative”. 4 The new regulations enacted in conjunction with the Accident Compensation Act no longer contained that phrase. 5

9 Notwithstanding this change in language, in Campbell v ACC Judge Ongley held the previous approach still applied. 6 The key reason remained that in order to receive an award of costs, a party must in some way be at least potentially liable to pay their lawyer's costs. In Campbell the claimant's legal representation was provided by the Accident Injury Support Trust (the Trust) which is a charitable body assisting ACC claimants. The arrangements concerning legal representation seem identical to those applying to Mr Tonga (an expectation of reimbursement where costs recovered). 7

10 In Campbell Judge Ongley observed that it was likely that the costs situation could be different if the Trust varied in some way not identified the structure of its arrangement with the ACC applicant it was assisting. 8 The comment appears to flow from the Court's analysis of two High Court decisions.

11 R v Rada Corp Ltd involved a claim for costs by defendants who had been acquitted of charges under the Securities Act 1978. 9 There was a dearth of evidence concerning the detail, but it seems some defendants were supported by insurance policies which would meet all or most of the costs of their legal representation. The Crown submitted that because of this there could be no entitlement to an award.

12 Hindered by the lack of evidence of the detail of the arrangements, Barker J in general terms adopted English authority which had held these insurance arrangements did not preclude an award except when: 10

it has been agreed that the client shall in no circumstances be liable for the costs.

If there was not potential liability, the arrangement necessarily failed to meet the test of “costs incurred by him”.

13 In Long v R, 11 the defendant and now cost claimant was a doctor who had been unsuccessfully prosecuted. Dr Long's legal expenses had been met by the Medical Protection Society Ltd. Membership of the Society was by subscription and if it chose to do so, the Society indemnified a member such as Dr Long for his legal costs in the situation in which Dr Long found himself. The arrangement was that: 12

It is expected that Dr Long would repay the society any contribution towards the cost of his defence arising out of any order the Court may make.

Hammond J adopted Rada Corp, and observed of his case there was no evidence of any agreement of the type noted by Barker J as precluding an award. 13 A costs award was made in circumstances that appear the same as those of Mr Tonga.

14 The Campbell decision, affirming as it did previous authority to the same effect, has consistently been applied. I am advised the issue has not been considered in this Court.

Submissions

15 Mr Beck submits there is nothing in the wording of s 148 that prevents an award under either subs (2)(a) or (b) to an applicant whose representation is provided by a third party such as a union. It is submitted an award of costs would be consistent with the Act's purposes which seek to place all costs on the respondent (at least to the extent of the scale):

• (a) the Corporation always meets the reviewer's costs;

• (b) if an applicant is successful there must be an award of costs in their favour;

• (c) even if an applicant is unsuccessful, there can be an award unless the review was unreasonable. I am advised by both counsel that awards are usually made.

16 Mr Beck emphasises that here there is legal representation provided and paid for. Normal litigation costs have been incurred in support of Mr Tonga's claim, and an invoice for those costs have been generated. That a third party pays the invoice should not be seen as requiring an outcome inconsistent with the policy of the Act.

17 Mr Beck submits there are a number of recent costs decisions in other jurisdictions (criminal law, employment law, ordinary civil litigation) which are supportive of Mr Tonga's position. 14

18 Mr Evans submitted the existing approach is correct because Mr Tonga has no liability to pay the legal costs, and the actual cost bearer is not a party to the proceeding. Mr Evans addressed the possibility of the union being “any other person” under s 148(2)(c) but that was not the basis on which the appeal is advanced. The focus is on an award to the applicant under either subs (2)(a) or (2)(b).

19 Concerning the recent decisions, it is submitted none involve a third party such as the present case combined with a complete absence of any chance that the applicant will meet any of the legal costs incurred on his behalf. The Act is submitted to be its own scheme to which authorities from other jurisdictions have lessened or little relevance. A consistent...