The Rules are Changing: Costs Awards for Lay Litigants

The Rules Committee Te Komiti Mō Ngā Tikanga Kooti (the Committee) has decided to allow self-represented litigants, ‘lay litigants,’ to claim costs if their litigation succeeds. The change is the first in a series of reforms aimed at improving access to justice by reducing costs and other barriers.

The Committee has formally approved these proposed changes to the District Court Rules 2014, High Court Rules 2016, and Court of Appeal (Civil) Rules 2005.

Removal of the prohibition against costs awards for lay litigants is to take effect from 1 September 2024.

However, the Committee considered that awarding costs on the same basis as represented parties was inappropriate. As stated by the Committee’s Chair, the Hon Justice Cooke:

“Costs awards are usually regarded as a contribution to actual legal expenditure, so there needed to be some pragmatic adjustment if costs were awarded to litigants-in-person.”

The Committee will therefore create a new daily recovery rate set below the lowest current daily recovery rate prescribed by the Rules. This new rate will be $500 a day and will apply in the Family Court, District Court, High Court, and Court of Appeal. Costs for lay litigants in the Supreme Court is left to the Court’s discretion, but it may consider the changes made by the Committee.

The new rate is the result of extensive consultation over the last five years with Aotearoa’s legal community. Such reform corresponds to the rising number of self-represented litigants in New Zealand’s courtrooms. The Supreme Court in McGuire v Secretary for Justice [2018] NZSC 116 also criticised the rule excluding successful lay litigants from obtaining costs, while victorious practicing lawyers and represented parties could enjoy costs, stating that such rule only inhibits judicial access. 

The Committee sought to “strike a balance that is fair and reasonable” to introduce an award proportionate to the time, costs and effort put in by lay litigants. The Committee did not believe that an award of costs would encourage vexatious or unmeritorious lay litigants, as these claimants are still liable to costs should they not succeed.

The amendments apply to steps taken in proceedings on or after 1 September 2024.

This is an interesting development in the regime relating to costs in New Zealand. The effect it will have on the volume of litigation remains to be seen.

Article written by Bayley Kalach and Farzana Nizam