13 October 2004

Fees Deterring Court Use

A New Zealand Law Society survey has shown that the massive increases in court fees imposed in the last three years are deterring people from taking cases to court.

NZLS President Chris Darlow referred to the survey results this morning when he appeared before Parliament’s Regulations Review Committee. The increases have been imposed by regulation, and the Society and NZ Bar Association have made a joint submission asking the committee to recommend that the relevant regulations be disallowed because the fees are impeding access to justice.

Appearing on behalf of the NZ Law Society, Sir Geoffrey Palmer noted that when the Regulations Review Committee had looked at the same issue in 2002, it found there was insufficient evidence to determine if the increased fees were impeding access to justice.

However, the evidence now showed that they were and, further, that they had been determined through a methodology that “was faulty, wrongly applied and which had produced an arbitrary result”. This justified the committee using its powers to recommend that Parliament strike down the regulations authorising the fee increases, he said.

Chris Darlow pointed out that the increases in civil court fees imposed in 2001 ranged from 76% to 650% while this year saw increases of a further 18% to 1,592%.

“The cumulative increases are massive – 900% for filing the documents to commence proceedings in the High Court.

“Because we regarded the issue with such gravity, we took special steps to gather as much relevant material as possible to put in front of the committee,” he said. This included a survey of law society members as to the effect of the fees and commissioning an independent economist to analyse how government officials had calculated the costs used as the basis for setting the fees. That analysis had shown a model that “suffered from erroneous assumptions and a lack of transparency” with results that were “arbitrary and insupportable on any rational basis” while the survey demonstrated strongly the deterrent effect that the increases were having on use of the court system. “Nearly half of the clients of lawyers surveyed looked for alternatives to using the courts because of the fees. The survey also strongly suggests that the further increases in 2004 will make that deterrent effect worse,” Chris Darlow told the committee.

He said that in his experience the fees were proving a disincentive to small business owners and ‘mums and dads’.

“For example, courts will not allow a High Court judge to walk into the courtroom in a trial which will last just five days without the claimant putting $13,000 on the table up front. “It’s all very well to say the registrar has a discretion to waive the fee but waivers are not available in practice to people who, say, own or have a reasonable equity in their home.

“And it’s all very well to blame lawyers for charging high fees but members [of the committee] may be surprised to find out how often lawyers ‘carry’ clients on a conditional delayed payment or reduced fee basis.”

Chris Darlow said that while high fees did not worry the wealthy or those on legal aid, they were having a big impact on the large numbers in between those two groups. Instead of people going to court, they were opting for arbitration and while this could be more efficient for the client, it meant that the decisions, being private, did not add to the body of law under which members of the wider public had to regulate their affairs.

“The long term effects on the rule of law by these moves will be quite serious,” he told the committee. NZ Bar Association Vice-President Robert Dobson QC said the fees were being set at a level to recover 50% of costs on the presumption that litigants personally derived 50% of the benefit of going to court. However, there was no justification for this presumption.

Rather, it was in the interests of a civilised society to have an authoritative third party dispute resolution process available to its citizens. Courts, he said, should be a fundamental government service levied against general taxes and were not amenable to ‘user pays'.

In addition, to the presumption as to private benefit being wrong, the basis for calculating the costs was “wrong, unreliable and arbitrary”.

“Even if some principled basis for partial recovery of costs could be found, the projections of costs thus far used are quite inadequate and deprive the regulations of any credibility,” Robert Dobson said.

ENDS

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