S V I HC HAM CIV 2009-419-139 [2009] NZHC 1103 (21 August 2009)

 PURSUANT TO SECTION 139 OF THE CARE OF CHILDREN ACT 2004
ANY REPORT OF THIS PROCEEDING MUST COMPLY WITH SECTIONS
          11B-11D
OF THE FAMILY COURTS ACT 1980


IN THE HIGH COURT OF NEW ZEALAND
HAMILTON REGISTRY
                                             
                             CIV 2009-419-139



                BETWEEN                        S
                              
                Appellant

                AND                            I
                                               Respondents


Hearing:        18 August 2009

Counsel:        W G C Templeton for Appellant
                R P Lewis for Respondents

Judgment:
      21 August 2009


                               JUDGMENT OF HEATH J


 This judgment was delivered by me on 21 August 2009
at 2.30pm pursuant to Rule 11.5 of the High
                                          Court Rules


                            
    Registrar/Deputy Registrar




Solicitors:
Rodney Lewis Law, PO Box 491, Hamilton
Stafford Klassen, PO Box 29185, Epsom, Auckland
Counsel:
W G C Templeton, PO Box 5444, Wellesley Street, Auckland


S V I HC HAM CIV 2009-419-139 21 August 2009

             
                        Contents
The appeal                                                          [1]
Background             
                                            [2]
The substantive judgment is appealed                                [10]
Submissions
on appeal                                               [37]
The judgment on costs                                              
[43]
Analysis                                                            [47]
Result                                            
                 [77]



The appeal


[1]     Ms S appeals against an order for costs made by Judge Cocurullo, in the
Family Court,
following care of children proceedings. The order was made on the
basis that, if she had not been legally aided, an award of $85,000
would have been
made against her. The Judge declined to make an order for costs against Ms S
personally.


Background


[2]     Ms
S and Mr T have one child, a daughter (M) now aged 7 years. Mr and
Mrs I are M's maternal grandparents, though Mr I is Ms S's step-father.
For a
number of years, there have been proceedings in the Family Court relating to M's
care.


[3]     Immediately after M was born,
she lived in the care of her parents. But the
parents' relationship ended one month later. Allegations of domestic violence (since
recanted) were made against Mr T, who is many years older than Ms S. Ms S moved
to Hamilton with her daughter, to be close to her
mother and step-father.


[4]     In mid 2003, Ms S suffered a traumatic and life-changing event. She was
diagnosed with a benign
brain tumour and, on medical advice, underwent surgery.
Something went wrong during the operation and she lost her sight. While she
was in
hospital, Mr and Mrs I cared for M. They continued to do so when Ms S was
discharged from hospital.

[5]    The Family Court
has had an involvement in M's life since early 2004. At
that stage, Ms S obtained a custody order and supervised access was reserved
to
Mr T. Since then, the Court has regularly resolved applications made by Ms S, Mr T
or Mr and Mrs I. Each party seems to have become
entrenched in positions they
have taken.


[6]    After a hearing lasting 11 days in May and June 2008, the Family Court, in a
judgment
given on 11 September 2008, varied an earlier order that had placed M
under the guardianship of that Court. An interim order was
made to the same effect,
on the basis that it would enure for one year and that Mr and Mrs I would act as the
Court's agents. All
previous parenting orders were discharged and fresh orders
made, including orders prescribing the terms and extent of contact that
both Ms S
and Mr T could have with their child.


[7]    Subsequently, the Family Court Judge ruled on costs. Mr and Mrs I sought
costs against both Ms S and Mr T. While Ms S was in receipt of legal aid, Mr T
represented himself at the hearing.


[8] Having considered written submissions, the Judge decided that,
had Ms S not
been legally aided, he would have ordered her to pay to Mr and Mrs I the sum of
$85,000. However, he did not consider
it was appropriate for costs to be ordered
against her personally. No order for costs was made against Mr T, on the basis that
he
was an undischarged bankrupt.


[9]    The judgment on costs was delivered on 15 December 2008. The orders
made were premised on
findings of fact set out in the substantive judgment.


The substantive judgment is appealed


[10]   Subsequent to the costs judgment
in the Family Court, this Court heard and
determined Ms S's appeal from the substantive decision.


[11]   Judgment on that appeal
was delivered on 23 December 2008, by Keane J:
MHT v JC and SMI (High Court Hamilton, CIV 2008-419-1409, 23 December

2008). The
Judge disagreed with a number of the Family Court Judge's findings of
fact and evaluative judgments. Subsequently, Keane J ruled
that costs should lie
where they fell for the High Court appeal. Expressly, he made it clear that nothing
he said in that decision
was intended to influence the Judge who heard the present
appeal: MHT v JC and SMI (High Court Hamilton, CIV 2008-419-1409, 8 May
2009).


[12]      Usually, an appeal against an order for costs will be treated as an appeal
against the exercise of a discretion.
That being so, this Court would only interfere if
the Judge had erred in principle, taken into account irrelevant considerations,
failed
to take account of relevant considerations or was plainly wrong: see May v May
[1982]]  1 NZFLR 165 (CA) and Blackstone v Blackstone  [2008] NZCA 312 at para
 [8].


[13]      However, I need to consider whether it is viable to approach the appeal on
that basis, having regard to the findings
made by Keane J in allowing Ms S's appeal
from the substantive judgment.


[14]      In his judgment of 11 September 2008, Judge
Cocurullo varied the existing
order placing M under that Court's guardianship. The term of the order was limited
to 12 months. Mr
and Mrs Innes were appointed as the Court's agents.


[15]      Mr and Mrs I were given day-to-day care of May. Ms S was granted
contact
with her daughter each Saturday, between 10am and 6pm.             Mr T, because of
allegations of prior abusive behaviour,
was permitted contact with M only once per
month, on a supervised basis. The Family Court also ordered that M not be removed
from
New Zealand, except by Court order.


[16]      On appeal to the High Court, Keane J upheld the Family Court guardianship
order but
varied its term, so that it was to enure pending further order of that Court.
He removed Mr and Mrs I as the agents of the Court
and left it to the Family Court
to determine whom the agent should be, indicating the need for an independent
person.

[17]   While
removing Mr and Mrs I as agents of the Court, Keane J confirmed that
they would have day-to-day care of M. Some adjustments were
made to the contact
orders, in favour of Ms S. She was allowed to exercise contact from 10am each
Saturday, but including an overnight
stay. Ms S is now required to return M to Mr
and Mrs I's care at 4pm each Sunday. No changes were made to contact orders
affecting
Mr T. The Judge reinstated counselling orders that had been discharged.


[18]   An important background fact involved M's removal
from New Zealand to
England by her mother in 2007. A central issue on the substantive appeal, identified
as such by Keane J, was
the need to determine what inferences could be drawn from
the conduct of Ms S and her parents following M's removal in March 2007.


[19]   At the time Ms S took M to England, interim orders for shared care of M
were in place, as between Ms S (on the one hand)
and Mr and Mrs I (on the other).
Those orders were made in March 2007 and owed much to what Keane J termed a
"serious altercation"
between Ms S and her step-father in January 2006, involving a
degree of physical violence. After those orders were made, a tension
remained about
whether and, if so, when Ms S should be able to assume greater responsibility for the
care of her child. The situation
was complicated by Mr T's decision to move to
Hamilton to enjoy greater contact with M.          The family dynamics were plainly
difficult for all to manage. While this turmoil was unfolding, Ms S was still trying to
rebuild her life, having gone blind in mid
2003.


[20]   Mr I travelled to England to procure M's return to New Zealand.
Proceedings were initiated in England under the Hague
Convention on the Civil
Aspects of International Child Abduction. Subsequently, arrangements were agreed
for M to be brought back
to New Zealand. That was done by way of a consent order
made in the (English) Court of Appeal, based on mutual undertakings by Ms
S and
Mr I. One of the undertakings was that Mr and Mrs I would not issue any without
notice applications relating to M's care in
New Zealand. A term of the orders was
that each party would bear their own costs.


[21]   There was an exchange of correspondence
between English solicitors
instructed by Ms S and Mr and Mrs I respectively, just before Ms S was due to

return to New Zealand
with M. I do not go into detail; that is set out in Keane J's
judgment. In short, the exchange of correspondence, on one view, evidenced
an
arrangement to vary the travel arrangements, so that Ms S could return to New
Zealand, slightly later than originally planned,
with M.


[22]     While Ms S and M were in transit to New Zealand, Mr and Mrs I (contrary to
the undertaking they had given to the
English Court of Appeal) made a without
notice application to the Family Court to resume care of M. In seeking orders on a
without notice basis, Mr and Mrs I told Judge Riddell that Ms S had abducted
M
contrary to existing Court orders (undisputed) and that she had not abided by the
terms of the English Court of Appeal's decision
of 15 May 2007 (disputed), so that
the Court could not have confidence that Ms S would respect further orders of the
Court.


[23]
    On the basis of what she had been told, Judge Riddell placed M under the
guardianship of the Family Court, and appointed Mr and
Mrs I as the Court's agents.
Ms S was told of this when she and M arrived back in New Zealand, the following
day.


[24]     The
application to the Family Court was sufficiently concerning to the
London solicitors instructed to act for Ms S that they raised
the issue with
Thorpe LJ, the Judge who made the orders in the English Court of Appeal. Using
protocols in place under the Hague
Convention, the complaint was referred to the
Principal Family Court Judge of our Family Court. He advised the English Court
that
there were two reasons underpinning the orders made on 25 May 2007: one was
Ms S's breach of her own undertaking and the other was
that the family situation in
Hamilton was volatile and the Court considered that M's welfare and best interests
might have been compromised
if an order were not made.


[25]     Keane J did not criticise Judge Riddell for making those orders, based on
what she had been
told. But, he did not "share [Judge Cocurullo's] confidence that
the interim orders [that he] made could be justified, when set against
the
undertakings Mr and Mrs [I] had given" or that "they were called for to safeguard
[M's] immediate welfare and best interests":
at para [122]. Keane J considered that

Mr and Mrs I had breached their undertaking not to make any without notice
application,
in relation to M's welfare and care.


[26]     Having taken that view of Mr and Mrs I's conduct, Keane J, nevertheless,
confirmed
the Family Court Judge's decision to regard Mr and Mrs I as, for the
present time, the "best equipped to give [M] the stability she
needs": at para [144].
But, he considered that the Judge "went beyond the evidence, in fact contrary to it,
when, to bring about
finality, he invested Mr and Mrs [I] with overriding
responsibility" for implementing the Court's guardianship order: at para [145].


[27]     Keane J did not regard Mr and Mrs I as "neutral brokers" and had cause for
concern, both as to certain practices of Mr
I and to the way in which they had gone
about making a without notice application to the Family Court given their
undertakings to
the English Court. For those reasons, he thought that the order
appointing Mr and Mrs I them as agents of the Court could not be
justified: at para
[146].


[28]     Alternatively, Keane J considered that Judge Cocurullo had left Mr and Mrs I
"with an impossible
task". Having found that the relationship between Mr and Mrs I
(on the one hand) and Ms S and Mr T (on the other) was `so dysfunctional
that
counselling was unlikely to help", the Judge asked rhetorically: "How could they be
expected to be any more successful in settling
sensible, and hopefully increasing,
levels of contact [with Ms S and Mr T]?" Keane J considered that the contact orders
made "gave
[Ms S] little cause for hope" and "did not set in place a secure neutral
means by which she might increasingly assume her proper
part in [M's] care": at
para [147]. A counselling order was reinstated.


[29]     As I read Keane J's judgment there were, at least,
four other aspects of the
Family Court judgment that concerned him.


[30]     First, it was clear that Judge Riddell's orders were
premised on an
expectation that they would be reviewed promptly.         No complete review was
undertaken until the May 2008 hearing
in the Family Court, one year later. That is a

contextual issue to which I return later in considering some of the observations
made
by the Family Court Judge in his costs judgment.


[31]   Second, Keane J considered that Judge Cocurullo had not, in making
credibility findings, given sufficient weight
to the devastating effect of the event that
led to Ms S's blindness. While recognising that the Judge had acknowledged the
courage
and resource behind her rehabilitation, Keane J questioned his assessment
that Ms S had fallen back on her disability to excuse her
acts.


[32]   Both Judge Cocurullo and Keane J had the advantage of a report on the
effects of blindness on family dynamics from
Mr Clive Lansink. However, Keane J
concluded that the Judge had not properly focussed on Ms S's future prospects of
caring for M,
as opposed to her historical behaviour that had occurred in the shadow
of the surgical mishap.


[33]   Keane J quoted from Mr Lansink's
report:

       [127] As to [Ms S], whom Mr Lansink had deliberately not met, but about
       whom he had read extensively (I gather
he had access to the affidavit
       evidence), he said this:

               The sudden onset of total blindness is undoubtedly
a major life
               changing experience. When it happened to [Ms S], it clearly meant
               that she went through
a significant period of utter helplessness. She
               would have been totally dependent on others for her every need and
               she would have taken some time to establish her new identity as a
               blind mother.

               But
the fact that somehow she found the inner strength to turn her
               life around I think sheds light on her true inner character.
...
               Considering her slow start after her operation, she has gathered a lot
               of supports around her,
has her own home, is cooking again, learning
               to get around safely, learning to use a computer again and is
      
        asserting her role as [M's] mother. Sighted people reading this
               should pause to reflect on the immense courage
a person shows,
               when, for the first time as a blind person, they cook on their own or
               walk down the
street on their own, particularly if the person has only
               recently lost their sight.

               It is clear that
the Court is forced to assess issues that have been and
               are being raised concerning [Ms S's] character. Much is written
...
               that casts [Ms S] in a negative light. I would ask the Court that in
               reaching conclusions concerning
[Ms S's] character, it gives
               considerable weight to that inner-most determination to succeed that
               she
now seems to be showing ... She could simply have given up;

               there are others who have. But it seems there is something
in J that is
               driving her to press on against considerable odds, something that just
               may have been dormant
in her character until unleashed by recent
               events.

[34]   Keane J continued:

       [128] In speaking of [Ms S's]
success in rehabilitating herself the Judge did
       acknowledge her courage and resource. He did not, it seems to me, recognise
       sufficiently at what cost when he said that [Ms S] fell back on her disability
       to excuse herself. He did not see that
in the years after [Ms S] lost her sight,
       so critical to the assessment he made of her, she was still recovering from a
 
     devastating event. Speaking not just about [Ms S] but generally, Mr Lansink
       said this:

               The sudden and
unexpected onset of total blindness ... is regarded as
               one of the most challenging and debilitating situations a person
may
               ever face. It can often lead to depression and family break-ups.
               Generally there is a period in
which almost all dignity is lost,
               because the person has no effective means to perform even menial
              
every day tasks. Friends, even apparently good friends, can be so
               embarrassed that they stay away and friendships can be lost. New
               social
interactions may occur which are not always desirable, simply
               because the person is searching for their new identity
as a blind
               person.

[35]   Third, the Judge took a different view of the cogency of sexual abuse
allegations that
had been made against Mr Innes. Judge Cocurullo found that there
was no foundation for those allegations. Keane J's view is summarised
in two parts
of his judgment:

       [49] The Judge noted that both [Ms S and Mr T] had until then been
       equivocal in their
complaints that [Mr I] had been sexually abusive, though
       on 14 May 2007 [Mr T] had notified Child, Youth and Family that [Mr
I]
       was a possible abuser. [Mr T], the Judge found, still believed that whether
       [M] had been abused would not be resolved
until she was able to speak for
       herself.

       [50] The Judge accepted the evidence of [Mr I] that [M] might have seen

      him shaving after a shower with a towel around his waist; that when he read
       to [M] at night he was normally fully clothed
but occasionally after a shower
       he might have worn a skivvy top and boxer shorts and have had a towel
       around his waist.
The Judge accepted that he did not sleep with [M] but, to
       read to her, got into her bed and might have fallen asleep.

  
    [51] The Judge saw nothing abnormal in this, nothing sinister, nor anything
       troubling about [M] occasionally getting into
bed with [Mr and Mrs I].
       Sexual abuse allegations, in themselves, the Judge said, could be abusive.
       They could lead
to a child being interviewed unnecessarily, and extensively,
       heightening without cause such a prospect in the child's mind.

       ...

       [146] [One of the Judge's findings] assumes also, unsustainably on the
       evidence, that [Mr and Mrs I]
had been and remained neutral brokers. The
       `unsavoury incident' in January 2006, as the Judge described it, shows that
  
    they had never been so and could never have been expected to be. The
       practice [Mr I] had, and unapologetically, of getting
into bed with [M], at the
       least raised some question about his judgment. Their application without
       notice for interim
primary care on 25 May 2007 does seem to me to have
       been in real tension with their undertakings.

[36]   Fourth, Keane J
does not appear to have regarded Ms S's recantation of early
allegations of domestic violence as particularly significant.


Submissions
on appeal


[37]   Mr Templeton, for Ms S, submits that I must consider Mr and Mrs I's costs
application afresh because of the change
in circumstances. He submits that, the
underlying foundation for the judgment having been irreparably damaged, there is no
rational
basis on which Judge Cocurullo's decision can be addressed on ordinary
appellate principles.


[38]   Mr Templeton submits that the
proper approach to costs is that which found
favour in Keane J's own costs judgment, namely to consider whether an order was
justified
and, if so, in what amount in light of the nature of the proceeding before the
Court and the undesirability of making orders that
create a disincentive for parties to
use the Court's processes appropriately for the purpose of promoting a child's
welfare and best
interests.


[39]   Mr Lewis, in contrast, submitted that I ought not readily to go behind relevant
findings of fact made by the
Family Court Judge. In particular, he referred to
findings that Ms S had been untruthful, was in breach of a number of Family Court
orders and had made false allegations of sexual abuse against Mr I. He submitted
that such findings were sufficient to meet the "exceptional
circumstances" threshold
of s 40 of the Legal Services Act 2000 and that there was nothing in Keane J's
judgment that undermined
them.

[40]   In addition, Mr Lewis submitted that there was nothing to gainsay
Judge Cocurullo's view that only 35% of the substantive hearing dealt with issues
raised
reasonably. Mr Lewis emphasised the stark difference between issues raised
out of a genuine concern about care arrangements and those
pursued in an
irresponsible manner, primarily for the benefit of a particular party. He submitted
that Ms S's approach fell into
the latter category.


[41]   In particular, Mr Lewis submitted that the findings made by Keane J in
relation to the recanting of
domestic violence allegations by Ms S and the difficulties
caused to her by her blindness were insufficient to go behind the particular
findings
made by Judge Cocurullo on those issues.


[42]   I expressed some concern, during the course of argument, on the quantum
of
costs ordered and whether, in truth, they were referable to what occurred at the
Family Court hearing in mid 2008. I indicated
that if quantification became a
determinative point I would seek further submissions from counsel as to the actual
quantum in issue.
For present purposes, the amount sought is discussed in paras [45]
and [46] below.


The judgment on costs


[43]   Some insight
into Judge Cocurullo's decision on costs can be gained from the
following findings, all set out in the costs judgment. The Judge
said:

       [18] [Ms S's] conduct was quite out of the ordinary. It included significant
       and extensive untruthful evidence.
It included repetitive irresponsible and
       unreasonable positions taken on a significant number of issues which
       substantially
increased the hearing time and prolonged the proceeding.

       ...

       [20] [Ms S] spiriting [M] from New Zealand saw a significant
breach of a
       Court order. That significantly elevated all that was involved in this
       proceeding. It all put [Mr and Mrs
I] to the task of endeavouring to find [M]
       and to bring about proceedings for her return to New Zealand.

       [21] [Ms
S] did cause [Mr and Mrs I] to incur significant unnecessary costs,
       did engage in misleading conduct, unreasonably pursued
issues which she
       failed upon and engaged in conduct that amounted to an abuse of the courts
       processes.

       [23]
Further, I reject the contention, if it is made as such, that there has been
       no finding of [Ms S] brining proceedings in an
unreasonable way. Much of
       [Ms S's] proceedings were not justified and were unreasonable. Paragraphs
       198 and 199 of
the [substantive] decision illustrate same. In addition:

               (a) there was overwhelming evidence upon which to reject
[Ms S's]
                   belated recanting of the `relationship' violence and

               (b) similarly the evidence was abundantly
clear and strong of
                   [Ms S's] breaches of court orders ­ against her denials and/or
                   endeavours
to justify same

               (c) the making, continuing, and at times, recanting of sexual abuse
                   allegations
were spurious in the extreme. Such were at times
                   pursued when either or both of [Ms S and Mr T] thought there
                   was benefit to them personally in doing so.

       [24] [Ms S] submits that most of the criticism was directed
at [Mr T]. That
       is not so. [Mr T] did pursue matters irresponsibly and unreasonably and his
       part in the sexual abuse
allegations together with his denials of violence are
       examples of same. ...

       [25] [Both Ms S and Mr T] significantly
and unreasonably protracted this
       litigation. Often they acted unreasonably and with an apparent sense of
       entitlement
to do so, instead of properly and in robust fashion, raising
       genuine and reasonable positions for determination.

[44]   In
applying the law to his findings, the Judge held:

       [30] It is accepted that both respondents' are of limited means. The
 
     applicants accept such a reality. But for the respondents' lack of
       means/financial status, I would have made a costs award against each of
       them.

       [31]
Having considered all relevant factors and in finding exceptional
       circumstances accordingly:

               (a) I determine
that costs would have been ordered to be paid by the
                   first respondent Ms S to the applicants Mr and Mrs I in the
sum
                   of $85,000.00 but given the relevant parts of section 40 of the
                   [Legal Services] Act, it
would not be appropriate to order costs
                   against her personally

               (b) I order that had the first
respondent Ms S not been in receipt of
                   legal aid, I would have ordered her to pay to the applicants' Mr
     
             and Mrs I the sum of $85,000.00

               (c) Given that the second respondent Mr T is an undischarged
      
            bankrupt with no means to pay, no order for costs is made
                   against him

               (d) Given the
first respondent's position, the applicants' section 71
                   [Care of Children Act] request for reimbursement is declined.

[45]   Mr and Mrs I's claim for costs was based on solicitor/client costs totalling
$154,143.66.    During the course of argument
it became clear that the sum of
$154,000 was the total costs incurred by Mr and Mrs I, from inception of the
proceeding. No parameters
appear to have been drawn around the application for
costs. It does not seem to have been limited to the hearing in mid 2008.


[46]
  The award of $85,000 made by Judge Cocurullo is not supported (in the
judgment) by any explanation as to its calculation. At para
[4] of the costs judgment
the Family Court Judge refers to the figure of $154,143.66 as the amount advised as
Mr and Mrs I's legal
costs. He also indicates that Ms S's legal aid costs were
approximately $51,400; whether that is for the totality of the proceedings
or for
preparation and attendances at the 2008 hearing, is not clear. The next reference to
quantum is in para [31](f) of the judgment
where the amount of $85,000 is
mentioned. In his submissions, Mr Lewis had calculated costs on alternative bases,
following the scales
set out in the District Courts Act 1992: 2B ($79,104), 2C
($113,536), 3B ($117,420) and 3C ($168,530). I suspect that the Judge fixed
the
quantum of the award by reference to a midpoint between 2B and 2C costs, though
there is nothing in the judgment to that effect.


Analysis


[47]   In my view, it would be artificial (indeed, I think it would be unfair to the
Family Court Judge) to determine
costs in the Family Court without reference to the
findings made by Keane J on appeal and the variations to the orders that he made.
At the least, the extended hours of contact granted in favour of Ms S demonstrated
that there was some merit in the views she was
espousing. Accordingly, I undertake
the costs assessment afresh.


[48]   The first issue is what approach should be taken to the
assessment of costs in
the Family Court. Different views have been expressed on that topic, both in this
Court and the Family Court.


[49]   The starting point is the wide discretion reposed in the Family Court, by
s 142(1) of the Care of Children Act 2004:


      142 Costs

       (1) In any proceedings under this Act, the Court may make any order as to
       costs it thinks fit.

 
     ...

[50]   Against that statutory backdrop r 207 of the Family Court Rules 2002 imports
certain provisions of the District
Court Rules 1992 relating to costs. Rule 207 and
r 45 of the District Court Rules, to which r 207 refers, state:

       207 District
Courts Rules 1992 apply

       The following rules of the district Courts Rules 1992 apply, so far as
       applicable and with
all necessary modifications, to proceedings in a Court:

                (a) rule 45, except subclause (2)(c) (Court's overriding
discretion,
                    etc):

                (b) rule 54 (enforcement of order for costs):

                (c) rules 55 to 60 (taxation of costs inter partes, that
is, the
                    ascertainment or fixing by the Registrar of the amount of any
                    costs or disbursements
or the head under which costs should be
                    allowed):

                (d) rule 61 to 64 (security for costs)

 
     45 Costs at discretion of Court

       (1) All matters relating to the costs of and incidental to a proceeding or a
      
step in a proceeding are at the discretion of the Court.

       (2) Rules 46 to 47G apply subject to subclause (1).

       (3)
this rule is subject to the provisions of any Act.

[51]   The reference to r 45(2)(c) in r 207 is clearly an error. I take the view
that r
45(1) and (3) applies to Family Court proceedings but that r 45(2) does not. That
construction is consistent with the principle
expressed in s 142 of the Care of
Children Act.


[52]   That interpretation is supported by the injunction in r 207 that the adopted
costs provisions apply "so far as applicable and with all necessary modifications" to
proceedings in the Family Court. In the context
of care of children proceedings, that
must mean that the breadth of the s 142 discretion assumes primacy.

[53]    In R v S  [2004] NZFLR 2007, a Full Court of this Court (Priestley J and
myself) dealt with an appeal from an international relocation decision in the Family
Court. In the context of that appeal, an order for costs in the Family Court was under
attack. After reviewing the relevant decisions
to that time (see paras [59]-[62]), I
said:

        [63] In my view, it is wrong in principle to make an adverse order for costs
        against a parent who advances a genuine and responsible argument in what
        he or she regards as the best interests
of the child. If costs orders are made
        in those circumstances they may operate as a disincentive for such
        arguments
to be put to the Court. As the Family Court, in guardianship
        proceedings, exercises an inquisitorial jurisdiction it is important
that all
        relevant arguments be put before the Court. As to the nature of the
        inquisitorial jurisdiction, I refer
to P v K [[2003] 2 NZLR 787 (HC)] at 815-
        818 per Priestley J. In particular, I draw attention to the authorities collected
        in paras [148] and [149] at 815-816.

        [64] Further, I am of the view that, particularly in a case where the Judge
        does not appear to have made any determinations of credibility as between
        the parents and where the case might properly
be said to be finely balanced,
        it is wrong, as a matter of principle, for costs automatically to follow the
        event
in such proceedings. In this particular case, I note that the Judge did
        not refer expressly to the concession made by R before
the hearing which
        removed the need to spend much energy and resources on issues involving
        the child's involvement
in R's religion. That is a factor which ought to have
        been taken into account on the question of costs in this case, but
was not.

Priestley J agreed with those observations: see para [72].


[54]    I also endorse Judge Callinicos' remarks in AS v JM
(Costs)  [2004] NZFLR
57. After referring to the principles expressed in R v S, he said:

        [17] While there may be some difference in philosophy as
to whether a more
        civilly oriented approach is taken to costs matters in the Family jurisdiction,
        there remains a
constant thread through the decisions when the Court is
        considering a party who has been unreasonable. All the decisions
make it
        clear that where a party has acted unreasonably, prolonged the proceedings,
        or has been the recipient of
adverse credibility findings then they cannot
        expect to escape close attention when the Court exercises its discretion on
        costs issues.

[55]    The only costs order made in the Family Court was made under s 40 of the
Legal Services Act 2000 invoked.
Section 40 provides:

       40 Liability of aided person for costs

       (1) If an aided person receives legal aid for civil
proceedings, that person's
       liability under an order for costs made against him or her with respect to the
       proceedings
must not exceed an amount (if any) that is reasonable for the
       aided person to pay having regard to all the circumstances,
including the
       means of all the parties and their conduct in connection with the dispute.

       (2) No order for costs may
be made against an aided person in a civil
       proceeding unless the court is satisfied that there are exceptional
       circumstances.

       (3) In determining whether there are exceptional circumstances under
       subsection (2), the court may take account of,
but is not limited to, the
       following conduct by the aided person:

               (a) any conduct that causes the other party
to incur unnecessary cost:

               (b) any failure to comply with the procedural rules and orders of the
               court:

               (c) any misleading or deceitful conduct:

               (d) any unreasonable pursuit of 1 or more issues on which
the aided
               person fails:

               (e) any unreasonable refusal to negotiate a settlement or participate
   
           in alternative dispute resolution:

               (f) any other conduct that abuses the processes of the court.

   
   (4) Any order for costs made against the aided person must specify the
       amount that the person would have been ordered to
pay if this section had
       not affected that person's liability.

       (5) If, because of this section, no order for costs
is made against the aided
       person, an order may be made specifying what order for costs would have
       been made against
that person with respect to the proceedings if this section
       had not affected that person's liability.

       (6) If an order
for costs is made against a next friend or guardian ad litem of
       an aided person who is a minor or is mentally disordered,
then--

               (a) that next friend or guardian ad litem has the benefit of this
               section; and

          
    (b) the means of the next friend or guardian ad litem are taken as
               being the means of the aided person.

[56]
  An order under s 40(5) is relevant to the Legal Services Agency's functions
under s 41. Section 41 provides:

       41 Costs of
successful opponent of aided person

       (1) This section applies if an order is made under section 40 that specifies
      
that an aided person would have incurred a liability, or a greater liability, for
       costs if that section had not affected his
or her liability.

       (2) If this section applies, the party to the proceedings who is prejudiced by
       the operation of
section 40 (in this section the applicant) may apply to the
       Agency in the prescribed manner for payment by the Agency of some
or all
       of the difference between the costs (if any) actually awarded to that party
       against the aided person and those
to which that party would have been
       entitled if section 40 had not affected the aided person's liability.

       (3) In considering any such application, the Agency must have regard to the
       following matters:

               (a) the conduct of the parties to the proceedings:

               (b) the court's findings
under section 40(2):

               (c) the hardship that would be caused to the applicant if the costs
               were not
paid by the Agency.

       (4) For the purposes of subsection (3)(c), the Agency may require any
       person to furnish information
on the financial circumstances and needs of the
       applicant.

       (5) If, having regard to the matters specified in subsection
(3) and to any
       information received under subsection (4), and to all relevant circumstances,
       the Agency considers that
any payment should be made by the Agency to the
       applicant, it may determine accordingly and must make the payment.

     
 (6) The Agency may recover any payment made under this section from the
       aided person as a debt due to the Agency, unless
the payment relates to an
       order made under section 40(5).

       (7) The Agency may make a payment under this section to
a lawyer who is
       not a listed provider under this Act. (my emphasis)

[57]   The scheme of ss 40 and 41 operates in this way:


       a)      The primary rule is that no order for costs may be made against an
               aided person unless the Court
is satisfied that "exceptional
               circumstances" exist: s 40(2).             In determining whether such
           
   circumstances exist, the Court has regard to criteria set out in s 40(3).
               Those criteria all go to the aided person's
conduct in the litigation for
               which legal aid has been granted.


       b)      If exceptional circumstances are
established, the Court may make an
               order for costs against the aided person: s 40(1). However, that order

     
        must not exceed an amount that is reasonable for the aided person to
              pay, having regard to all circumstances.
In exercising that discretion,
              the Court is obliged to take account of the means of all parties and
              their
conduct in connection with the dispute.


       c)     If an order for costs were made against an aided person, the Court
     
        must also specify the amount that that person would have been
              ordered to pay if the ability to award costs
had not been limited by s
              40: s 40(4). This amount will, inevitably, be higher than an order
              made against
an aided person because the limited means required to
              obtain a grant of legal aid will militate against an award of
the size
              that might otherwise be justified.


       d)     If no order for costs is made against the aided person
because his or
              her ability to pay does not permit, the Court may make an order
              specifying what costs
would have been ordered if s 40 had not
              affected the aided person's liability for costs: s 40(5). Reading s 40(2)

             and (5) together means that "exceptional circumstances" must still
              exist for s 40(5) to bite.


     
 e)     The effect of a s 40(5) order is to trigger the provisions of s 41 of the
              Legal Services Act, so that the Agency
may be requested to make a
              payment of the sum that would otherwise have been ordered: s 41(2).
              There
is no obligation for the Agency to pay; its decision is based on
              criteria set out in s 41(3). Those criteria are the
conduct of the parties,
              the Court's findings under s 40(2) and the hardship that would be
              caused to the
applicant for costs, if the Agency did not meet that
              liability.


[58]   In Laverty v Para Franchising Ltd  [2006] 1 NZLR 650 (CA), the Court of
Appeal emphasised that, to qualify as "exceptional circumstances", it was necessary
for them to be "quite out
of the ordinary": at para [31], applying Awa v Independent
News Ltd (No 2)  [1996] 2 NZLR 184 (HC) at 186.

[59]   I tend to think that, if the facts as found by Judge Cocurullo were to remain
relevant, some justification
existed to make an order under s 40(5).       The real
question is whether an order is justified based on those findings that remain
after
Keane J's appeal judgment.


[60]   There is much repetition in both Judge Cocurullo's substantive and costs
judgments. I have
endeavoured to distil the factors which, cumulatively, persuaded
the Judge that "exceptional circumstances" existed, for the purposes
of s 40. I
discern those circumstances to be:


       a)     The Judge's finding that Ms S was repeatedly untruthful when giving
              evidence.   Three specific examples were given: recanting of her
              original allegations of violent behaviour
by Mr T, her preparatory
              steps to "spirit" M out of New Zealand and her contention that M was
              taken to
English for a holiday.


       b)     The Judge's finding that M breached Court orders deliberately. He
              identified
Ms S's travel to the United Kingdom, with M, failing to
              yield up her United Kingdom passport when required and not
              returning M to New Zealand as ordered by the Court of Appeal.


       c)     The Judge's view that Ms S made unfounded
allegations of sexual
              abuse against Mr I.


       d)     The Judge's view that the Court needed to protect M from
Ms S's and
              Mr T's "unsatisfactory emotional parenting".


       e)     The Judge's assessment that there was a real
risk that Ms S would
              remove M from New Zealand in an endeavour to sever M's
              relationship with her maternal
grandparents.


       f)     The Judge's view that Ms S failed to raise genuine and reasonable
              issues for the Court's
consideration.

[61]    I have reviewed the substantive judgment of September 2008 and the
summary of relevant findings in the costs
judgment. There is a reoccurring theme;
namely, an adverse impression of the way in which Ms S conducted herself and her
case that
seems to have originated from the Judge's unfavourable view of her
undoubted breach of the shared parenting orders when she took
M to the United
Kingdom and her subsequent conduct.


[62]    My overall impression is that the Judge allowed his findings on that
issue to
permeate credibility findings on others and has led inexorably to a conclusion that
Ms S acted unreasonably. Although those
events occurred before the 2008 hearing,
it is plain from the Court of Appeal's judgment in Laverty v Para Franchising Ltd
that whether
"exceptional circumstances" exist should not be answered by reference
only to the way in which the specific litigation was conducted:
see para [24].


[63]    A number of the more critical findings of Ms S's conduct are ameliorated or,
in some cases, removed by Keane
J's findings. Other criticisms remain valid. I
focus on those issues which I consider, from my reading of Judge Cocurullo's
judgments,
to be the primary sources for the inference of unreasonable conduct that
he drew to find that the "exceptional circumstances" threshold
had been passed.


[64]    First, the Judge was entitled to give considerable weight to the flagrant
breach of the parenting order
in force at the time M was taken to England. I consider
that the Judge was also justified in regarding Ms S's explanations for her
actions as
untruthful. The inference that Ms S removed M from New Zealand with an intent
that she not be subject to her maternal
grandparents' care is inescapable.


[65]    However, that intentional act can be seen as mitigated by personal
circumstances acting
on Ms S at the time she took M to England. She left not long
after an incident in January 2007 involving a degree of violence to
which Keane J
referred as an "unsavoury" incident. In addition, she was still adjusting, in a material
way, to the blindness that
had afflicted her since the brain tumour operation in mid
2003.

[66]   As Keane J held (at para [129]) Ms S "was far from immune from confusion
and depression and
anger": see also the extracts from Mr Lansink's report set out at
para [33] above. Mr Lansink's report was prepared around the time
of Ms S's
departure for the United Kingdom with M. He stressed the considerable steps taken
by her to overcome her disability. Nevertheless,
some weight must be given to those
circumstances in assessing Ms S's true culpability for removing M from the
jurisdiction.


[67]
  I deliberately put the issue in terms of assessing culpability. Ms S's disability
does not excuse or justify her action. It provides
a context in which the steps she
took can be understood more sympathetically than might otherwise be the case.


[68]   Second, there
is the question of Ms S's conduct while in England and in
making arrangements to travel back to New Zealand. The Judge was critical
of her
failure to surrender a United Kingdom passport and in changing the travel dates.


[69]   Those issues were reviewed extensively
by Keane J, who reached a quite
different conclusion than Judge Cocurullo.       It is clear that Ms S did not act
immediately to
return M. It was necessary for litigation to go to the Court of Appeal
before consent orders were ultimately made. But, from that
time, I do not consider
that Ms S's behaviour can be regarded with disapprobation.


[70]   Although Ms S did not surrender her United
Kingdom passport, it seems
clear from the evidence that she did not have it with her when she arrived in New
Zealand and the passport
was subsequently cancelled as a result of actions taken, at
the request of her counsel, by the British High Commission in Wellington.
Cancellation was effected electronically because the passport was in the physical
possession of Ms S's father in the United Kingdom.


[71]   The travel arrangements have already been discussed. The High Court Judge
was clear that Ms S could not be regarded as having
breached the order deliberately
and, indeed, that an accommodation had been reached between the solicitors acting
for her and Mr
I to support revised return travel. In contrast, Keane J held, Mr and

Mrs I took steps in New Zealand to obtain without notice
orders while Ms S was in
transit, in breach of the undertaking given to the Court of Appeal.


[72]   Third, the without notice application
resulted in a change of the status quo, so
far as M's care was concerned. As Keane J observed, it ought to have been reviewed
promptly.
As it happened, no substantive review was undertaken until mid 2008.
The way in which all parties approached the hearing, at that
time, was no doubt
influenced by the considerable emotions generated by the conflict that developed
after Ms S took M to England
and returned her to New Zealand.


[73]   Fourth, I refer to Keane J's findings in relation to Mr I's conduct with M.
While supporting
Judge Cocurullo's view that no sexual abuse occurred, he cast
doubt on Mr I's judgment in that regard. Keane J referred to Mr I's
(unapologetic)
practice "of getting into bed with [M]" as, at least, raising "some question" about his
judgment": see para [146].
Those findings suggest there was (at least) some basis
for the allegations, even though they have been found to be untrue.


[74]
  While recognising that those aspects of Keane J's judgment do not answer all
points raised by Judge Cocurullo in his costs judgment,
they do cast doubt on the
weight to be given to a number of the factors on which he relied. Forming my own
judgment, I am not persuaded
that "exceptional circumstances" of the type envisaged
by s 40 of the Legal Services Act existed. Hence, there was no jurisdiction
to make
an order under s 40(5).


[75]   In short, I consider that the hearing before Judge Cocurullo was laced with
emotion and
tension. It is likely that all parties said things they may now regret. It
is not surprising, in the context of events involving
the care of a young girl during
which the mother has been afflicted by unexpected blindness, that emotion will
cloud judgment. Nor is it surprising
that a person may be in denial of events which,
objectively assessed, must be true.


[76]   This was the first occasion on which
a full hearing was possible after the
events of March to May 2007. I cannot be confident that all of the findings made by
the Family
Court Judge against Ms S would have been made if the core facts on

which Keane J relied had been used as the basis for Judge Cocurullo's
costs
decision.


Result


[77]     The appeal is allowed. The costs orders made in the Family Court are set
aside. There will be
no order for costs in that Court.


[78]     I make no order for costs on appeal.




                                          
              __________________________
                                                                         P R Heath J

Delivered
at 2.30pm on 21 August 2009