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Accident Compensation Cases

New Zealand Register of Acupuncturists Inc v Attorney-General (HC, 14/02/06)

Judgment Text

Ronald Young J
The plaintiff discontinued these proceedings. After doing so it sought costs. The first defendant opposed to making a costs in favour of the plaintiff and said to the contrary the defendants should have costs. Both parties filed extensive submissions in support of their claim for costs. 
These proceedings sought judicial review of a decision of the Minister for Accident Compensation to promote the making of regulations giving members of another acupuncturist organisation the facility to claim Accident Compensation subsidies. The statement of claim as amended claimed that there were three reviewable errors. Firstly that there was no power to do what proposed by the Regulations. Secondly, the statutory consultation process had not been properly carried out. And finally, a number of relevant factors had not been considered before the decision to regulate was made. The parties filed and served affidavits and inspection and discovery was undertaken and further particulars sought and complied with. A fixture had been obtained for hearing. In June 2005, cabinet decided not to further the proposal to make regulations but to include a provision to similar effect into a bill amending the Injury Prevention, Rehabilitation and Compensation Act 2001. 
Eventually, in July 2005 the plaintiff and second defendant were advised of the decision not to proceed with making the regulations and of the decision to use an amendment of the bill to promote statutory amendments to the same effect as the regulations. The plaintiff, therefore, discontinued its proceedings. The plaintiff says that the abandonment of the proposal to make regulations illustrates and acknowledge the strength of its claim and thus it seeks costs. The first defendant opposes any order for costs that ordinarily the plaintiff would pay costs on abandoning proceedings. It is impossible now to accurately assess the merits of the competing contentions of the parties. 
The presumption upon discontinuance is (see Rule 476C) that the plaintiff will pay the costs of the defendant. Obviously this presumption may be rebutted. Two situations have been identified whether the presumption may be rebutted: 
“In the exceptional case where the merits are clear” see Oggi Advertising Limited v McKenzie (1998) 12 PRNZ. 
“If the circumstances render it just and equitable that the presumption should not apply” see North Shore CC v Local Government Commission (1995) 9 PRNZ 182
Clearly the conduct of the parties is relevant and it can be helpful to propose the question: did the plaintiff act reasonably in bringing the claim, and did the defendant act reasonably in defending it. And it can be helpful to consider the policy rationale behind the costs presumption that a plaintiff discontinuing should pay costs. 
The rationale behind the presumption appear to be: 
In a civil case the plaintiff bears the onus of establishing a claim and until the claim is proven and the plaintiff establishes that the defendant has acted in some way contrary to law the risk and thus the costs of the proceedings should generally remain with the plaintiff. 
Discontinuance by a plaintiff is generally a reflection of likely defeat but there may be other motives in particular cases. 
The plaintiff should pay because it has elected a course of action which has caused the defendant costs which it now chooses no longer to pursue. In deciding not to pursue it, it should reimburse the defendant for its loss. 
Here, the plaintiff's claim has only been rendered nugatory by an intervening event caused by the first defendant. In the circumstances, discontinuance was the only practical and appropriate option available to the plaintiff. Considering the rationale for the costs presumption mentioned above only (i) applies in such a situation. That is the plaintiff has not established its claim. As to the second rationale in such circumstances as these it is not possible to say that the plaintiff's claim was unlikely or likely to succeed. Given the state of the proceedings this factor is therefore neutral. Dealing with the third consideration mentioned above, the intervening event which rendered the plaintiff's proceedings nugatory was not known at the time the proceedings were issued and could not have been known. Thus it cannot be said that by choosing to bring a claim and then electing to proceed with it the plaintiff has unfairly forced the defendant to incur wasted legal fees. In this case I keep in mind that the discontinuance was forced upon the plaintiff by events outside of its control. The presumption under Rule 476C therefore could be seen to be weaker in such circumstances based as it is in part on strength of plaintiff's case. 
On the other hand, the defendant has not done anything in my view objectionable. It has decided, as it is entitled to, to legislate to resolve the particular issue. I cannot see that it takes any fault or blame for deciding to initially promulgate regulations and then decide by introducing a Bill to cover the very same issue. 
In those circumstances, therefore, given that this is an unusual case involving discontinuance I do not see that the ordinary presumption in Rule 467 should apply and I do not consider that the plaintiff should have a costs award made against it. On the other hand, I do not see that the defendant has acted objectionably at all and there is no reason in my view to take what would be a highly unusual step of awarding costs in favour of a plaintiff who has discontinued proceedings. 
In these circumstances, therefore, I make no order as to costs. 

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