Many Kiwis just can't afford to fight rip-offs and sue companies, Justice Minister says

Friday, 31 January 2020

Justice Minister Andrew Little accepts that civil lawsuits must be made easier.

Justice Minister Andrew Little says there's a civil justice gap because too many ordinary Kiwis can't afford to sue people and companies which have ripped them off.

'A rip-off is a rip-off whether you are rich or poor, and that is an injustice, and it is not good that some people are able to afford to assert their legal rights, and others can't afford to,' Little says.

'The courts have got to be there for anybody of any means, well-heeled, or people on low incomes.'

Little acknowledges that is currently not the case for civil claims that only the courts can deal with unless they are for more than $100,000, under which lawyers' fees, extraordinarily long waits for hearings, and High Court fees make seeking civil justice uneconomic.

Over the decades New Zealand has built a system of quasi-court disputes schemes to prevent people having to turn to the courts, including the Banking Ombudsman, the Motor Vehicles Disputes Tribunal, the Tenancy Tribunal and the Disputes Tribunal.

Justice Minister Andrew Little says there's a civil justice gap because too many ordinary Kiwis can't afford to sue people and companies which have ripped them off.

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Chief Justice Helen Winkelmann is a champion of more inclusive access to civil justice.

But, Little says: 'If you've got a civil claim that can only be dealt with in the courts … it's not economic to take it unless it's worth more than $100,000.'

Even for larger claims, the cost of litigation favoured deep-pocketed individuals and companies when contending against ordinary people.

'I meet a lot of lawyers and certainly judges who say, look, it's okay for the big corporates, and some of the medium-sized businesses,' Little says.

'They can afford it … but for your average punter who gets dealt to in a building contract for a residential home (that) doesn't go well, the Masterbuild guarantee isn't secure, or doesn't work or there isn't one at all – for them to get justice, it's extraordinarily difficult, and extraordinarily expensive, and that's were we need to find some response that means that people can get justice.'

Chief Justice Helen Winkelmann, the highest judge in the land, has taken a lead in the call for greater access to civil legal justice, and questioned whether New Zealand viewed the civil courts as being a democratic institution, or regarded them as a luxury service for which users should pay.

Speaking late last month in Australia Winkelmann said: 'I can say with confidence that over the course of my career as a lawyer and a judge, I have seen the cost of litigation move out of the reach of those in a middle-income bracket.'

Lawyer Adina Thorn favours the courts adopting an 'inquisitorial' model for civil lawsuits over money claims worth $500,000 or less.

Little acknowledges the Government has focused its reforms on criminal and family law, but says: 'When we think about justice, we often think about the police, and prosecutions, and crime, but actually, if just through a transaction you've entered into, a consumer transaction, or some sort of commercial thing, and you've been ripped off, that's injustice too.

'It's not good enough to say it's a private problem only.'

'There will come a time very soon where moving up the priority list there will be this question about access to justice, and in particular, access to justice in civil cases.'

There were no specific proposals yet, Little said, but some of the ideas being talked about were radical – with suggestions New Zealand could adopt more of a 'hybrid' model of civil justice where judges were able to adopt an inquisitorial approach to lower-value cases, retaining the adversarial style for higher-value cases.

A report prepared for the Court of New Zealand's Rules Committee, which is consulting on how to increase access to civil justice, recommended this hybrid model.

litigation lawyer Adina Thorn lawyer says the rule of civil law requires people to be able to have their legal claims settled quickly and economically.

'I tell people who come to me with problems for $60,000, $70,000 or $80,000 not to sue. There's too much risk.'

Those cases should be being heard in the District Court, but Otago University's Legal Issues Centre's Wheels of Justice report noted how few cases were being taken there, with lawyers blaming a lack of civil expertise at the court, and the costs.

Thorn says that even if people win their lower value claims, they are unlikely to get more than two-thirds of their legal costs awarded to them.

She says for any claim under $500,000, an inquisitorial process is needed.

An inquisitorial system, with its greater role for judges, could also limit opportunities for moneyed defendants to instruct their lawyers to drag things out in a bid to drive up costs, and wear down less-wealthy claimants, Thorn says.

'It's horrific, really horrific. The big defendants are all in this game of attrition. It's beat up the little person, and hope they don't get to trial.

'It's never put that way. They put out that there are genuine reasons behind what they are doing, but the agenda is delay and run up costs.'

Michelle van der Veer, who is fighting for her own civil justice against an architect, who late last year was found by the Registered Architects Board to have failed her, says delay, defer, deny is an open secret in New Zealand.

'Central to the issues facing our justice system, is the lack of access everyday Kiwis have to it. The cost to not only access, but to even participate in the justice process is prohibitive to most of us.

Businesswoman Michelle van der Veer wants to alert New Zealanders to the 'delay, defer, deny' tactics promoted by insurance companies.

'Our case is a great example currently playing out. A small deck replacement, the costs and losses to this little family is well into seven figures, so far. Our case is not a complicated one and illustrates very well how insurance companies work to 'orchestrate' their preferred legal outcomes through a deliberate, well-considered business strategy commonly known as 'delay, defer, deny', a highly lucrative obstruction of Justice.

'The longer litigation drags on, the more they can charge the insurer at circa $600 an hour. How long can the average Kiwi on $25 to $55 an hour fund this lengthy legal tease having already suffered the significant loss that bought them here in the first place?'

'This is a manipulation of our justice system that goes well beyond a robust defence,' she says.

It's a point made by businessman Evan Christian who successfully fought insurer IAG after a fire at his Auckland home.

Christian says he was fortunate his wealth allowed him to hire scientists to evaluate NZI's post-fire remediations, and lawyers to stand up to the insurer, though lawyering up against an insurer is not easy.

Lesley Wheatley is a litigant in a case against powerful multi-national company James Hardie. She turns up in person to every interlocatory hearing to show the judge and lawyers there are real people being affected by the case.

'You find most of the best QCs are all working for the insurers,' he says.

Van der Veer does not believe that the fault lies entirely with the court. Stronger insurance law – including ensuring all claims assessors were independent of insurance companies – could prevent many civil disputes from arising.

'The balance of power has moved the big companies like the insurers to take on more risks because the chances of anybody doing anything about it are so low,' Thorn says.

'People need to go to the streets here,' she says. 'There are too many people falling through the cracks.'

Class action lawsuits, in which groups of similarly-wronged people sue together, had helped lift access to civil justice, she says, but more reform is needed.

The Wheels of Justice report concluded the voices of ordinary litigants were not being heard loudly enough. Some countries like Canada, Australia, and the United Kingdom, which has just attempted to measure unmet civil legal need, had invested in research, but New Zealand had not.

Lesley Wheatley, who is one of the building owners suing James Hardie through a class action law suit taken by Thorn over allegations it sold defective exterior panelling that resulted in weathertightness failures, says she has made a point of coming to every hearing.

'If we don't sit there and show them this is real, if the passenger seats are empty on this train of stupidity, then nobody sees anybody is being affected,' she says.

She's not sure if it's working.

'It's got to be three years, and it's not even got to the first hearing, because of all the to-ing and fro-ing. It's all delaying BS,' she says.

Van der Veer believes it is an open secret how awful litigating is, and that everyone knows someone who's been involved in civil litigation.

The Ministry of Justice used to survey the public on perceptions of the courts, but stopped in 2006, a year in which 59 per cent of people surveyed believed that courts could not provide services without unnecessary delay.

Among people who had experience of the courts, that figure rose to 65 per cent.