Hanover, re [2015] NZHC 1945 (17 August 2015)

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NOTE: PURSUANT TO S 139 OF THE CARE OF CHILDREN ACT 2004, ANY REPORT OF THIS PROCEEDING MUST COMPLY WITH SS 11B TO

UNDER	The Care of Children Act 2004
IN THE MATTER OF	Applications in relation to the children _{Gillian and Tom Hanover}

Hearing:	2-6, 9-13, and 18 March and 13 April 2015. Further submissions received on 8 May 2015
Appearances:	S Heney for Mr and Mrs Saunders G Webster for Ms Evans G A Cole for Ms Alder P E Main for Mr Wilton L J Kearns for the children G M Cameron, counsel to assist A J Pollett for CEO of Child Youth and Family Service Mr Hanover in person
_Judgment:	_{17 August 2015}

Dr Blackwell under the COCA s 135A ..................................................................[4] Ms Alder ...............................................................................................................[47] Ms Evans ..............................................................................................................[53] Mr Hanover ..........................................................................................................[56] The Saunders ........................................................................................................[63] Mr Wilton .............................................................................................................[65]

MSD .....................................................................................................................[68] MSD’s own costs ..................................................................................................[72] Ms Alder ...............................................................................................................[78] Mr Hanover ..........................................................................................................[91] Result....................................................................................................................[94]

[1] This costs judgment follows the decision issued last week in these proceedings and is to be read in conjunction with it.¹For that reason I do not propose to set out any of the very complex background again here. The pseudonyms used in this judgment are the same as those set out at [5] of the earlier decision. And, as in that decision, I deal with the issues here on the basis of the circumstances as they were known to be at the conclusion of the hearings before me and not in light

(a) what orders the Court should make under s 135A of the Care of Children Act 2004 (the COCA) in relation to the contributions required of the parties to the costs of counsel for the children, Ms Kearns, and of the psychologist, Dr Blackwell. Particular issues in that regard are whether:

(i) orders can or should be made against Ms Alder or Ms Evans, because they are legally aided;

(iii) an order can or should be made against Mr Hanover, because he is an undischarged bankrupt;

Mr Hanover made by Mr and Mrs Saunders and MSD. [3] I consider the issues in turn.

[4] Ms Kearns was appointed as lawyer for the children under s 7 of the COCA. Dr Blackwell was appointed to provide an updating psychological report about Gillian and Tom pursuant to s 133 of the COCA.

[5] Sections 131 and 135 of the Act make respective provision for the payment of the fees and expenses of counsel for the children and for a s 133 appointee out of public money appropriated by Parliament for that purpose. As at April 2015, the combined total amount paid out under these sections for Ms Kearns and Dr Blackwell is $37,319.²

[6] Sections 131 and 135 also stipulate that, when such fees and expenses have been paid, the Court “must” make orders under s 135A. In general terms, s 135A requires the Court to order that the parties are to reimburse to the Crown in equal shares the “prescribed proportion” of the amount paid out by the Crown, unless it declines to do so in accordance with that section. The term “prescribed proportion” is defined to mean the proportion that is prescribed in regulations made under the Act, and is presently set at two thirds of the total amount paid by the Crown. Thus, in the present case, the prescribed proportion is $24,879.72.

[7] On the assumption that the relevant “parties” in the present case are Ms Alder, Mr Hanover, Mr and Mrs Saunders (jointly), Ms Evans and Mr Wilton, that would prima facie require each of them to contribute approximately $5000.

[9] Accordingly MSD is not required to contribute to the costs of counsel for the children in the present case. Oddly, there is no equivalent exception under s 135, which suggests that MSD (if properly regarded as a “party”) could be required to contribute to Dr Blackwell’s costs.

... in respect of an appointment under section 130, where a lawyer has been appointed under that section to provide to the court independent advice on any complex legal issue.

[11] This exception is why Mr Cameron’s fees and expenses are not required to be

(1) An order referred to in section 131(4) or 135(2) must require the parties to reimburse to the Crown the prescribed proportion of the amount paid by the Crown,—

(a) under section 131(1)(b), in respect of the fees and expenses of a lawyer appointed under section 7 or 130:

(b) under section 135(1)(b), in respect of a report requested under section 133.

(2) Despite subsection (1), the court may decline to make an order against a party if satisfied that the order would cause serious hardship to the party or to a dependent child of the party.

(3) Each party against whom an order is made under subsection (1) must pay an equal share of the prescribed proportion.

(4) Despite subsection (3), if the court is satisfied that, in view of the circumstances of the case, including the conduct of any party, it would be inappropriate to require a party to pay the amount payable in accordance with that subsection, the court may substitute, for that party, a different amount not exceeding the prescribed proportion.

dependent child, in relation to a party, means a child whose day-to- day care is substantially the responsibility of the party

prescribed proportion means the proportion that is prescribed by regulations made under section 147 for the purposes of this section

serious hardship, in relation to a party or a dependent child of a party,—

(i) the party's inability to meet minimum living expenses according to normal community standards; or

(ii) the cost of medical treatment for an illness or injury of the party or a dependent child of the party; or

(iii) a serious illness suffered by the party or by a dependent child of the party; or

(i) the social activities and entertainment of the party or those of a dependent child of the party may be limited; or

(ii) the party is unable to afford goods or services that are expensive or of a high quality or standard according to normal community standards.

[13] It may be observed that the presumption of equal sharing under s 135A(3) can be displaced in two ways. Under subs (2) the Court may decline to make an order against a party if satisfied that the order would cause serious hardship to the

party or to a dependent child of the party, as defined in subs (5). And subs (4) confers a discretion on the Court to order that a different amount is payable by a particular party if the circumstances warrant. Somewhat less clear is whether that subsection permits the Court to reduce a party’s contribution to zero.

[14] Before turning to consider the particular issues at hand it is relevant to say something about the legislative history of s 135A and the present form of ss 131 and

(a) section 131 had provided that the fees and expenses incurred by counsel for the child were payable out of public money appropriated by Parliament for the purpose; but that the Court could (“if it thinks proper”) order a party to the proceedings to refund to the Crown a specified portion of the amount so paid; and

(b) section 135 had provided that fees and expenses incurred by a s 133 report writer were payable by any party or parties to the proceedings the Court orders or, if the Court so decides, are payable out of public money appropriated by Parliament for the purpose.

[17] Change first rode onto the horizon in the form of the Legal Assistance (Sustainability) Amendment Bill which was introduced into Parliament in 2011. In her first reading speech, the then Minister of Justice described the first two parts of the Bill in the following way:

Part 1 of the bill will strengthen the legal aid eligibility test by tightening the merits tests for family cases, reducing the discretion to grant legal aid to people whose income and assets are above the financial eligibility thresholds, ensuring that people who can afford to pay for their criminal defence do so, and removing the requirement to index financial eligibility thresholds to movements in the consumer price index. The bill will increase the contributions received from legally aided people and better incentivise

the repayment of legal aid by introducing a $100 user charge for most family and civil cases, and charging interest on outstanding legal aid debts. ...

Part 2 of the bill will make changes to lawyer for the child and youth advocate schemes to ensure that there is greater consistency across Government-funded legal assistance schemes. The changes include extending the quality framework for legal aid providers to child and youth advocates, and requiring parties to contribute to the costs of the lawyer for the child services. Extending the quality framework will ensure that lawyers providing lawyer for the child and youth advocate services maintain and continue to provide high-quality legal services. It will ensure consistency between the Government-funded legal aid, lawyer for the child, and youth advocate schemes. Requiring parties to contribute to the cost of lawyer for the child services will help ensure that the services continue to be available and are financially sustainable into the future. This change is expected to recover approximately $15 million of the cost of providing these services over the 4-year Budget forecast period. The bill also makes small changes to the Legal Services Act 2011 to improve its operation and address issues that have arisen during its implementation.

[18] And later, in her third reading speech in relation to what had, by then, been separated out to become the Care of Children Amendment Bill the Hon Judith Collins said:

While the Legal Services Amendment Bill makes changes to the legal aid framework, its supporting bills focus on sharing between the State and private parties the costs of court-appointed lawyers for children. By default the court will order the relevant parties to refund the Crown two-thirds of the cost of lawyer for child. The court has discretion to lower the proportion a party pays or waive it entirely if it would cause serious hardship to that party or their dependent child. The majority of these orders will be made under the Care of Children Act, which requires the court to promote the welfare and best interests of the child.

[19] That bill received the Royal Assent on 15 July 2013. It contained new provisions which (as now) required the Court to order that the parties contribute to the fees and expenses of counsel or the child except in cases of “serious hardship” or where some adjustment to the default share was deemed appropriate.

[20] Notably, the new definition of serious hardship in what was shortly to become s 135A of the COCA was almost identical to the definition contained in s 42

of the Legal Services Act 2011.⁴Section 42 sets out the circumstances in which the Legal Services Commissioner may decide (whether at the time that legal aid is granted, or afterwards) not to recover any debt due to the Commissioner under a grant of legal aid.⁵Such a debt becomes due as a result of the operation of the cost recovery provisions contained in the Act.⁶But the signal point is that “serious hardship” (as defined) is clearly not expected to be present in relation to all grants of legal aid.

[21] Just as the “legal assistance” legislation was wending its way through the House, so too was the Family Court Proceedings Reform Bill. That Bill eventually led (inter alia) to a much larger rewrite/amendment of the COCA which took shape in the Care of Children Amendment Act 2013 (No 2). It was that legislation that included the amendment to s 135 (mandating the recovery of the fees and expenses of s 133 report writers) and s 135A in its present form.

[23] The first question that falls to be considered in the present case is whether orders can or should be made against Ms Evans or Ms Alder given that they were in receipt of legal aid. The issue was expressed in the following way by the Family Court in Hume v Hume:⁷

[11] Section 45(2) Legal Services Act 2011 (the LSA) provides that no order for costs can be made against an aided person in a civil proceeding unless the Court is satisfied that there are exceptional circumstances. In

⁴The principal difference between the two definitions is that the COCA definition mirrors the concern in s 135A(2) with “serious hardship to the party or to a dependent child of the party”, whereas s 42 of the LSA is concerned only with serious hardship to the aided person.

⁵The circumstances specified in s 42 are where: (a) the enforcement of the debt would cause

serious hardship to the aided person: (b) the cost to the Commissioner of enforcing the debt is likely to exceed the amount of the debt that is likely to be repaid: (c) the Commissioner considers that it would be just and equitable not to recover the debt.

⁶Section 18 of the LSA provides (inter alia) that a grant of legal aid may be subject to a condition that the aided person must pay to the Commissioner an interim repayment of a specified amount

determined in accordance with s 20 and that every grant of legal aid is subject to the condition that the aided person must pay to the Commissioner a repayment determined in accordance with s 21.

⁷Hume v Hume [2014] NZFC 9331. The question has only arisen since the amendments to the

COCA (which included the enactment of s 135A) that came into force in March 2014.

Payne v Payne Fisher J determined that ordering a party to Family Court proceedings to reimburse the costs incurred by the Crown for appointing lawyer for the children is an “order for costs” for the purpose of s 86 Legal Services Act 1991, the predecessor to s 45 of the LSA.

[12] Thus, prima facie I cannot make an order for costs (which clearly includes a contribution towards the costs of lawyer for the child) given that Mr Hume is in receipt of civil legal aid.

[13] However, s 135A of the Act provides that the Court must require the parties to reimburse the Crown for the prescribed portion of the amount paid by it in relation to the costs of lawyer for the child unless the Court is satisfied that the grounds of extreme hardship have been established. There is therefore a tension between s 135A of the Act and s 45(2) of the LSA. In recognition of that tension His Honour Judge Somerville has referred that issue to the High Court by way of a case stated for the opinion of the High Court on a question of law namely, “Can the Family Court make an order under s 135A against a party who has been granted legal aid?” [FC Christchurch FAM-2010-009-002916, case stated Re Pomeroy, 14 October

[14] In my view it can. If Parliament had intended that s 135A of the Act would be subject to s 45(2) of the LSA, then it would have included that in the drafting of s 135A. In relation to a grant of legal aid there is the ability for the Crown to require a party to pay back the grant of legal aid, either by way of a secured debt against realty, or by way of regular instalments out of income received. There is a clear intent by Parliament that parties to proceedings under the Act must contribute towards the costs of Court- appointed lawyer for the children, unless to do so creates serious hardship to that party or a dependent child; the latter consideration is entirely appropriate because any decisions made are subject to s 4 of the Act which requires the welfare and best interests of children to be a paramount consideration.

[15] Thus in my view s 135A takes priority over s 45(2) of the LSA. The reality however is that most applicants for civil legal aid will no doubt satisfy the test of serious hardship set out in s 135A(5) of the Act. The difficulty in this case is that Mr Hume has filed no submissions, and in the absence of any evidence that the making of an order would cause serious hardship to either Mr Hume or either of the children, I am required by s 135A of the Act to make an order requiring Mr Hume to pay an equal share of the prescribed portion.

[25] In the present case, Ms Cole submitted on behalf of Ms Alder that I should await the determination of the case stated in Pomeroy before making a decision on this issue.⁸Alluring as that suggestion may be, I have decided that I should not wait.

_{I say that in part because it is important that the parties know where
they stand}

⁸My understanding is that the Pomeroy appeal is scheduled for hearing on a date in September.

sooner rather than later but also because aspects of the question and its answer may be better understood in the context of the present, rather difficult, “real life” scenario.

(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:

(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:

(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.

⁹An earlier iteration of s 45 (which was, in turn based on s 40 of the Legal Services Act 2000)

was the subject of the Court of Appeal’s decision in Laverty v Para Franchising Ltd [2006]

1 NZLR 650. Although Ms Cole submitted that this decision remains the “leading case” on the

(a) costs may only be ordered against a person in receipt of civil legal aid in exceptional circumstances (as inclusively defined): subs (2);

(b) even where exceptional circumstances exist, any costs order made must be “reasonable” having regard to “all the circumstances, including the means of all the parties and their conduct in connection with the dispute”: subs (1);

(c) if a costs order is made against the aided person, then it must specify the amount that person would have been ordered to pay if s 45 had not affected his or her liability: subs (4). This will presumably be the difference between what is “reasonable” in terms of subs (1) and the amount of the scale, increased or indemnity costs order that would

[28] Relevant to this last point is that, when an order under s 45 is made which indicates that, but for the operation of that section, an aided person would have incurred a greater liability for costs, s 46 applies. That section provides:

(1) This section applies if an order is made under section 45 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 45 (in this section, the applicant) may apply to the Commissioner in the prescribed manner for payment by the Commissioner 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 45 had not affected the aided person's liability.

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

liability of legally aided persons to pay costs, the changes made to s 45 mean that I am unable to accept that and I do not consider the decision further.

¹⁰Although that seems to beg the question of why which of those that happens to be appropriate is

(4) For the purposes of subsection (3)(c), the Commissioner 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 Commissioner considers that any payment should be made by the Commissioner to the applicant, the Commissioner may determine accordingly and must make the payment.

(6) The Commissioner may recover any payment made under this section from the aided person as a debt due to the Commissioner, unless the payment relates to an order made under section 45(5).

(7) The Commissioner may make a payment under this section to a lawyer who is not a provider under this Act.

[29] Section 46 thus provides that any party who is prejudiced by the operation of s 45 may apply to the Legal Services Commissioner for payment 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 s 45 had not affected the aided person's liability.

[30] The section goes on to specify what matters the Commissioner is required to take into account when considering such an application (including the aided person’s conduct and any hardship) and gives him or her the discretion to make “any payment” which may then be recovered from the aided person as a debt due to the Commissioner, unless the relevant order was made under s 45(5).¹¹In theory at least, the Commissioner may decide to reimburse the disadvantaged party even where that money cannot be recovered directly from the aided party.¹²

[31] In any event, and as noted by Judge Coyle in Hume,¹³Fisher J determined in

Payne v Payne¹⁴that an order made in Guardianship Act proceedings requiring a party to reimburse the costs incurred by the Crown for appointing lawyer for the

children was an “order for costs” for the purpose of s 86 Legal Services Act 1991, a predecessor to s 45 of the LSA.

[32] Notably, the Court at that time had a broad discretion under the relevant sections of the Guardianship Act (ss 29A and 30) and also under s 86 of the Legal Services Act. The effect of the Payne decision was that the Court could (and did in that case) exercise its Guardianship Act discretion not to make an order requiring the legally aided party to contribute to the fees and expenses of appointees under that Act.

[34] I have spent some considerable time attempting to reconcile s 135A of the COCA and s 45 of the LSA on the basis that, as Payne would suggest, an order for contribution under s 135A is an “order for costs” in terms of s 45.¹⁵Such reconciliation is certainly possible where either:

(b) there is “serious hardship” within the s 135A definition, which gives the Court a discretion not to make an order under that section.

[35] But where there are neither exceptional circumstances nor serious hardship then, as the Family Court has recognised, there is a potential problem.¹⁶Section 45 prohibits the making of an order for costs against a legally aided party while s 135A

¹⁵Obviously the analysis is concerned with a scenario where one of the parties to COCA proceedings in which counsel for the children has been appointed (or where a report under s 133 has been ordered) is legally aided.

¹⁶The fact that a party is in receipt of legal aid does not mean that he would inevitably meet the “serious hardship” threshold. As noted at [20] above, the LSA itself draws a distinction between cases involving “serious hardship” and other civil legal aid cases; see for example the Commissioner’s discretion to refrain from enforcing a repayment debt under s 42.

[36] In my view, there are two possible ways of resolving the issue. Unhappily, however, they lead to opposite outcomes.

[37] The first possibility is either to disagree with Payne or to hold that, in light of the now changed legislative context, the decision does not remain good law. In other words, to hold that an “order for costs” under s 45 does not include an order for contribution under s 135A.

[38] This interpretation is attractive as it seems to me to do no real damage to the words of either s 135A or s 45. Neither s 135A, nor ss 131 and 135, actually uses the word “costs”. Rather, the “costs” to which such a s 135A order relates are monies which have been paid by the Crown under ss 131 or 135 as a result of a direction made by the Court either that counsel for the child be appointed or a s 133 report prepared. They are undeniably different in nature from party and party costs that, ordinarily, follow the event.

[39] The first option also derives some support from the legislative history to which I have referred earlier. In particular, given that s 135A has its origins in a bill that also effected changes to the legal aid regime (and the LSA) it might be expected that any potential conflict between them would have been considered and resolved. And in the context of amendments whose overarching goal appears to have been to increase cost recovery from legally aided persons (subject to exceptions under both statutes in cases of “serious hardship”) it would be paradoxical if s 45 (which was not amended as part of the reforms) stood in the way of an order under 135A. This is, perhaps, a condign case for an application of the interpretive principle which requires that the provisions of the more general statute (the LSA) should, if necessary, yield to those of a particular one (the COCA) also points in the same

[40] The best (and possibly only) argument against the first option derives from s 142 of the COCA. Section 142 is entitled “Costs” and provides:

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

(2) An order under this section may be made either in addition to, or instead of, an order under section 71 or section 87 or section 121.

[41] Notably s 142(3) was enacted at the same time as s 135A. Its purpose appears to be to underline that the Court’s general discretion as to costs does not extend to the orders required to be made under s 135A by ss 131 and 135. Despite the fact that none of those sections refer to orders for contribution as “costs” orders, the clear inference is that an order made pursuant to them is an “order as to costs” in terms of s 142(1).

[42] The second possibility is to interpret s 135A(4) as permitting the court to order that, in circumstances where a party is legally aided (and neither exceptional circumstances nor serious hardship exist), the amount otherwise payable by that party is to be substituted with a “different amount”, namely zero, on the grounds that the operation of s 45 means that it is “inappropriate” for him to pay an equal share (or, indeed, anything).

(a) it does not sit especially easily with the wording of s 135A(4) (zero would not ordinarily be regarded as an “amount”);

(b) it means that any recipient of legal aid will be treated as if serious hardship would flow from the making of an order under s 135A when (as the provisions of the LSA suggest) that is not necessarily the case;

[44] On balance, therefore, I consider that the first option is to be preferred. Accordingly, the words “order for costs” in s 45 do not include an order for contribution made in accordance with ss 131, 135 and 135A of the COCA. Thus the Court is required to order even a legally aided party to pay an equal share of the “prescribed proportion” under s 135A unless:

(a) that party establishes serious hardship (in which case the Court has a discretion as to whether to make an order); or

(b) due to some other “circumstances of the case” it is appropriate to order that the party shoulder some greater or lesser share of the prescribed proportion.

[45] And while the fact that a party is in receipt of legal aid can be expected to have some bearing on the existence of “serious hardship” that fact will not be determinative.

[46] I turn now to consider the positions of each of the parties in the present case.

[47] The two issues that potentially require determination in relation to Ms Alder are:

(a) whether requiring her to contribute an equal share under s 135A would cause serious hardship to her or her dependent children; and, if not -

(b) whether there are any other circumstances which mean that requiring her to contribute an equal share would be inappropriate.

[48] In terms of “serious hardship” a useful starting point is the advice I have received that Ms Alder is not presently required to repay any of the legal aid she has received to the Commissioner. There is, perhaps, a presumption of serious hardship.

[49] Ms Alder has also sworn an affidavit in support of her hardship claim. In it, she says (and I accept) that:

(a) she has the full time care of three teenage girls, including one who is autistic;

(d) deductions are made from her WINZ benefits on account of an historic debt owed to WINZ and also for child support that is paid for Gillian and Tom;

(f) she is on the verge of bankruptcy (as a result of her involvement in the tenancy litigation to which I refer in my earlier judgment) and the bankruptcy notices disclose a present judgment debt of approximately

(h) she has been experiencing health issues which led to her recent hospitalisation and has caused her to incur some extra costs; and

(i) although she has previously undertaken some part-time secretarial work she has not been able to do so more recently.

[50] The only matters raised in her affidavit about which I have some reservation are her statements that she receives no financial assistance from Mr Hanover and that her rent is $500 per week. The reasons for those reservations should be clear from my earlier decision. In my view it is possible that Mr Hanover contributes to her accommodation costs or, indeed, that they are in fact wholly met, or otherwise arranged, by him.

[51] In my earlier judgment I expressed concern about this aspect of Ms Alder’s evidence at the hearing and drew inferences against her as a result. My conclusions in that respect were also reflected in the order made under s 141 of the COCA

preventing her from making further applications in relation to Gillian and Tom without leave. It may also be that this aspect of my judgment also results in some further inquiry into her living arrangements by MSD.

[52] Notwithstanding these matters, however, the evidence given by Ms Alder as to her means and, in particular, her pending bankruptcy, satisfies me that requiring her to contribute under s 135A would cause serious hardship if not to her, to her dependent children. As other Courts have said on earlier occasions, they were, and remain, the innocent parties in all of this. Accordingly I decline to make a contribution order against her under s 135A.

[53] The issues in relation to Ms Evans are the same as those relating to Ms Alder, namely:

(a) whether requiring her to contribute an equal share under s 135A would cause serious hardship to her or her dependent children; and, if not -

(b) whether there are any other circumstances which mean that requiring her to contribute an equal share would be inappropriate.

[54] As with Ms Alder, the starting point is that Ms Evans, too, is not required to make repayments of the legal aid she has received. Her further evidence (which I also accept) is that:

(a) she has recently been through the no asset procedure under the Insolvency Act as a result of debts that Mr York incurred during their relationship;

(b) she has no assets to speak of, apart from a $5,000 car which she had to obtain the Official Assignee’s permission to purchase;

$800 per week which is insufficient to cover her living expenses, which are modest;

(e) she receives an accommodation supplement from WINZ; (f) she has two very young dependent children; and

(g) an order under s 135A would compromise her ability to provide the necessities for her children and would impede or preclude contact with Gillian and Tom (which requires her to drive some distance).

[55] In all of the above circumstances, I consider that requiring Ms Evans to contribute under s 135A would cause her and her dependent children to suffer serious hardship. Accordingly I decline to make an order under s 135A against her.

[56] In my earlier judgment I held that, notwithstanding the absence of any substantive application made by Mr Hanover (other than his recusal application made at the end of the hearing) he was clearly a “party” to the proceedings. He is thus prima facie liable under s 135A. He is not in receipt of legal aid. But he is

¹⁸It seems clear that his bankruptcy did not preclude his participation in these proceedings and his right to participate in them did not vest in the Official Assignee. Although the juridical basis for this has not been explored before me, I doubt that his right (as a biological parent) to participate in COCA proceedings involving his children constitutes property and so it does not vest in the Assignee. To the extent that such a right might, nonetheless, be classed as “property” it would doubtless be viewed as falling within the exception made in relation to causes of action of a “personal” nature in Heath v Tang [1993] 4 All ER 694 (CA).

¹⁹Mr Hanover filed a notice of opposition to the Saunders’ application for costs in which he

[57] It seems that Mr Hanover was adjudicated bankrupt nearly three years ago, on 21 September 2012.²⁰The three year period after which he would be automatically discharged does not, however, run from that date. Rather, it runs from the date of his filing a statement of financial affairs: s 290 Insolvency Act 2006 (the IA). Notwithstanding that filing such a statement is mandatory, it is unclear whether Mr Hanover has done this (and, if so, when).²¹I therefore proceed on the assumption that his bankrupt status will continue for the immediate future.

[58] Other provisions in the IA make it clear that a debt incurred by Mr Hanover after his adjudication is not a debt that is provable in his bankruptcy, as defined in s 232, and thus it is not a debt from which he would be released upon discharge.²²It seems to me that it cannot therefore be said either that Mr Hanover’s bankruptcy means that a s 135A contribution order cannot be made against him or that such an order would be completely inutile.

[59] To the extent that any s 135A debt cannot be enforced whilst Mr Hanover remains bankrupt (a matter on which I express no view) it would, of course, be impossible for Mr Hanover to say that it will immediately cause him serious hardship. But I proceed on the assumption either that the debt might be enforced prior to discharge or that he will soon be discharged. It is therefore necessary to consider the question of hardship.²³

[60] It must be said that beyond the undisputed fact of his bankruptcy, the evidence about Mr Hanover’s means was murky. For example, the evidence at the hearing very strongly suggested that, notwithstanding that he is formally insolvent, he held directorships and was involved in running a gym. And through other entities, it seems, he has recently entered into leases of at least two relatively high

²¹_{Mr Hanover was very vague about the details of his
bankruptcy when he gave his evidence.}

²²Section 232(1) of the IA provides that a provable debt is a debt or liability that the bankrupt owes either at the time of adjudication or after adjudication but before discharge, by reason of an

obligation incurred by the bankrupt before adjudication. See also the discussion in Re Auckland

²³Except to the extent that Mr Hanover is, in reality, living with Ms Alder and his three daughters (which I consider is quite possible, but which he also denies) he has no dependent children, so the question of serious hardship caused to others does not arise.

[61] I acknowledge that Mr Hanover consistently denied the reality of these matters, and maintained that he had no income, was not in receipt of a benefit and was dependent on the kindness of (almost) strangers for food and board. But for the reasons given in my earlier judgment I am unable to place any real store in what he says. On the current state of the evidence I am not satisfied that making an order under s 135A would cause his serious hardship. On the contrary, I consider that an order requiring him to contribute in the default (equal share) amount should be made.

[62] Accordingly, and in all the very unusual circumstances of this case, I order that Mr Hanover is to pay $4,975 towards the fees and expenses that have been met by the Crown under ss 131 and 135.

[63] The Saunders were not eligible for legal aid and, while they are, nonetheless, of modest means, with limited income, they did not seek a serious hardship exemption. Rather, they ask for a dispensation under s 135A(4) on the grounds that the circumstances in which they found themselves at the end of 2014 obliged them to make an application for parenting orders in relation to the Gillian and Tom. More particularly:

(b) Ms Alder had made an application for a parenting order which was causing the children great distress and which the Saunders believed was not in the children’s best interests;

(e) although the children were not placed in their custody pursuant to an order made under the Children, Young Persons, and Their Families Act 1989 (in which case they would have been exempt from contributing to Ms Kearns’ costs by virtue of s 131(5)(b)(ii))²⁴their position is directly analogous. The policy which underlies s 131(5)(b)(ii) favours an exemption being granted.

[64] I agree with Ms Heney’s submissions. Accordingly, and for all the reasons just articulated I am satisfied that it would be appropriate in the circumstances that the amount that would otherwise be payable by the Saunders under s 135A(3) is reduced to a nominal amount under s 135A(4), namely $100.

[65] Mr Wilton was not, as I understand it, in receipt of legal aid. Although, as an applicant for contact with Gillian and Tom, he is, in my view properly regarded as a “party”, he was nonetheless very much a bit player. Moreover Dr Blackwell’s report had little bearing on his application.

[66] On that other hand, the “cultural contact” orders eventually made in his favour by the Court reflected precisely a suggestion that had been made by Ms Kearns some considerable time before the hearing. Had they been taken up then, there can be little doubt that hearing time and cost would have been saved.

[67] Accordingly, although it would in my view be quite unjust to require Mr Wilton to pay the full amount of his equal share I consider that he should be required to make a modest contribution. I therefore propose to make an order under s 135A(4) that the amount of his contribution is to be $1,000.

withdrawal by Ms Alder of her application (which had been supported by Mr Hanover) at the end of the eighth day of the hearing, and the subsequent orders made granting the Saunders’ application. The circumstances leading to these events are discussed in depth in my earlier judgment.

[69] I record at the outset that it is not disputed that MSD has reimbursed the Saunders’ legal costs in relation to the proceedings. As at 12 April 2015 their actual costs comprised:

[70] Only 2B costs are, however, sought. I am not, however, presently aware of quantum in that respect.

[71] As well, MSD has incurred its own costs in the proceedings as a result of its role as the Court’s agent (in respect of the Court’s guardianship of Gillian and Tom), but also as a result of the legal representation provided for its social workers, pursuant to s 132 of the COCA.

[72] I confess to being somewhat troubled by the proposition that MSD in this agency/guardianship role should be able to recover its costs in relation to the litigation involving Gillian and Tom from the parties. I have, however, found it difficult to articulate any more specific concern other than that it feels wrong in principle to seek costs in relation to the exercise of what is, effectively, still the Court’s “ultimate right of supervision over all infants” and its duty “to take care of

_{those who are not able to take care of themselves”.}²⁵_{Although I accept that the}

Court’s parens patriae jurisdiction has now largely been codified in the COCA those historical underpinnings seem to me potentially to have some bearing on the matter.

[73] I acknowledge that there are provisions in the COCA that suggest that the Ministry, is or can be, a “party” to proceedings under the Act, although I confess to having reservations about that, particularly in the agency context. Moreover, regarding it is a “party” might lead to the illogical conclusion that the Ministry should be required to contribute to Dr Blackwell’s costs, for the reasons given at [9] above.

[74] Be all that as it may, I accept that any historical reservations about awarding costs to the Crown rarely surface in the civil litigation landscape in the 21^stcentury. I also accept that there are fiscal imperatives on all Crown agencies to which the Courts should not be blind. And, I suppose, an application for non-party costs might be possible.

[75] But even on the assumption that a costs’ award in favour of MSD could be made, I would nonetheless decline to make an order in favour of the Ministry here. That is principally because there seems to be no doubt that the Ministry’s initial placement of the children in Ms Evans’ care was unlawful. That unlawful act has set in train a sequence of events that have proved to be problematic for the children and to the detriment of Ms Alder and Mr Hanover. So although I consider that the way in which Ms Alder and Mr Hanover have conducted themselves in the present matter is seriously wanting I do not consider that requiring them to meet the costs of the Ministry is appropriate, in the wider historical circumstances of this case.

[76] As far as the application for costs by the Saunders is concerned, however, I consider that Ms Alder (and possibly Mr Hanover) should, in the ordinary course, be required to make a contribution. As well as the ordinary rule that costs should follow the event, the Saunders have been put to considerable expense in supporting their own application and in defending that of Ms Alder in circumstances where I

have found that important aspects of her position (and that of Mr Hanover) were founded on deception and lies.²⁶

[77] As is ever the case in these proceedings, however, the matter is not quite so straightforward.

[78] The first question that falls to be considered is whether the default prohibition on an order of costs (properly so-called) being made against Ms Alder as a legally aided person is displaced by “exceptional circumstances” here. In her case, there is no need to go beyond the examples of such circumstances given in paragraphs (a), (c) and (f) of s 45(2) of the LSA.²⁷

[79] As far as s 45(2)(a) (unnecessary costs) is concerned, Ms Cole made the point that Ms Alder’s application (and any wasted costs arising as a result of it) was only made necessary by the conduct of Ms Evans. But I regard that as a makeweight argument.

[80] First, it is quite apparent that Ms Alder was (despite Priestley J’s entreaty to the contrary) intent on continuing to seek the return to her of Gillian and Tom through litigation in one form or another. Ms Evans’ mistakes merely afforded her an alternative route.

[81] Secondly, and although Ms Evans has undoubtedly made some poor life choices which, in at least an indirect way, led to the current round of proceedings, I consider that her decision to leave Gillian and Tom with her parents in late 2014 was prompted at least in part by the considerable stress placed on her by the threat of ongoing litigation by Ms Alder and the constant oversight of her personal and family life by the Court and the Ministry. Any submission that those are stressors that simply come with the particular territory that is these children and should, on that

²⁶I expressly record that I take no account in this judgment of more recent events, which have suggested that the Saunders may have been less than forthcoming about certain relevant matters. The ramifications of those events are being dealt with separately from this judgment.

[82] Moreover the one overriding point is that the evidence has always been that the children have, notwithstanding the traumas of the last two years, thrived under her care and in the care of her parents.

[83] I also reject Ms Cole’s submission that Ms Alder “only” discontinued her parenting order application because she became ill. Although I do not, and cannot, dispute that she was unwell and, indeed, was admitted to hospital just at the moment things began to unravel for her, there was nothing to stop her advising the Court that she wished to return to Court to answer the matters that had arisen when she was well enough or authorising Ms Cole to make closing submissions on the basis of the evidence (which had been completed). I have no doubt that she well understood that, once her falsification of the lease became apparent to the Court, the prospect of her application succeeding had all but disappeared.

[84] In those, and all the other circumstances I have set out in my earlier judgment, the misleading or deceitful conduct and abuse of process grounds (s 45(3)(c) and (f)) speak for themselves. There is, in my view, no impediment to the Court making a costs order against Ms Alder.

[85] But a finding of exceptional circumstances under s 45(2) is not the end of the matter. I have set out my view of the combined effect of the remaining relevant parts of s 45 and of s 46 above. To reiterate, however:

(a) any costs order made must be “reasonable” having regard to “all the circumstances, including the means of all the parties and their conduct in connection with the dispute”: subs (1);

(b) if a costs order is made against the aided person, then it must specify the amount that person would have been ordered to pay if s 45 had not affected his or her liability: subs (4).

(c) once an order under s 45(4) is made the Saunders may apply to the Legal Services Commissioner for payment of some or all of the difference between the costs that Ms Alder is ordered to pay them and

those to which they would have been entitled if s 45 had not affected her liability.

(a) her conduct in the proceeding (which was such that an order under s 141 of the COCA has now been made against her) and the extent to which it exacerbated the Saunders’ costs (which is considerable); and

(b) her own financial position and the fact that she has not been required to contribute to the costs of Ms Kearns and Dr Blackwell on the grounds that it would cause her dependent children serious hardship.

[87] There is also the point that s 46 provides other means by which the Saunders can seek to recover any shortfall, if less than 2B costs are ordered. Moreover, pursuit of the s 46 route would require the Legal Services Commissioner to have a close look at Ms Alder’s case which, in my view, would be appropriate here.

[88] As I have said I regard it as generally irrelevant that the Saunders’ costs have

[89] The upshot of all this is that, had it not been for the operation of s 45, I would have ordered Ms Alder to pay the Saunders’ 2B costs. In light of the matters to which I have just referred, however, I do not consider that such an amount would be “reasonable". Rather, I make an order that she pay costs to them in the sum of

$1000. I have arrived at this sum principally by weighing the need to mark her conduct (which I consider would warrant a higher award) against my previous finding of serious hardship and, in particular, the potential adverse effects on her dependent children.

[90] As I have said, it is now open to the Saunders to apply to the Commissioner for the difference between that sum and whatever their 2B costs would be.

[91] As far as Mr Hanover is concerned, the first potential impediment is his bankruptcy. But I have discussed this above and concluded that it is not insurmountable.

[92] The second impediment is that, while Mr Hanover was plainly a party, and thus prima facie liable to contribute under s 135A, he did not himself make any substantive application and nor did he ever file a formal notice of opposition to the Saunders’ application (although he most certainly did oppose it).

[93] Although I have commented in my earlier judgment that these omissions appear to form part of a deliberate strategy on his part to avoid the reach of the Court, I am reluctant to make a costs award against a person who took no formal steps in the proceedings.²⁸Accordingly I decline to make a further order against him here.

(a) The prescribed proportion of the fees and expenses paid by the Crown to counsel for the children and Dr Blackwell is $24,879.72;

(b) Pursuant to s 135A(1) Mr Hanover is to reimburse to the Crown his equal share of that prescribed proportion, namely $4,975;

Ms Alder on the grounds that to make such an order would cause serious hardship to her dependent children;

²⁸On reflection, the better course would probably have been to make his participation in the proceeding contingent on the filing of formal notices, although it seems he has not previously been required to do so.

(d) Pursuant to s 135A(2) no reimbursement order is made against Ms Evans on the grounds that to make such an order would cause serious hardship to her and her dependent children;

(e) Pursuant to s 135A(4) the Saunders are to reimburse the Crown in the substituted amount of $100; and

(f) Pursuant to s 135A(4) Mr Wilton is to reimburse the Crown in the substituted amount of $1,000.

[95] As far as the applications by MSD and the Saunders for party and party costs are concerned:

(a) The application by MSD for costs against Ms Alder and Mr Hanover is declined;

(c) But for the operation of s 45 of the LSA, Ms Alder would have been required to pay party and party costs to the Saunders on a 2B basis;

(e) The Saunders are invited to apply to the Legal Services Commissioner under s 46 of the LSA seeking reimbursement of the difference between their 2B costs and the $1000 award I have made.

[96] I mention that I have carefully considered the submission that Mr Hanover’s future participation in this matter should be made contingent on his payment of the costs I have ordered above.²⁹Ms Kearns referred me to some Family Court precedent for that. In the end, I do not consider that such an order is appropriate

_{here. But I leave open the possibility that an order for security for
costs might be}

entertained in future, if further applications were made and the present debt remains unpaid.

[97] And lastly, I record that, notwithstanding the use of pseudonyms in this judgment, any Orders sealed as a result of its contents must contain the proper names of the parties, including any aliases or alternative names that they have acknowledged using.

High Court of New Zealand Decisions

Hanover, re [2015] NZHC 1945 (17 August 2015)