In Thavarag, Grice J concisely set out the issue as follows:

“[5] The [legally aided] appellant submits that costs should be awarded on a 2B basis, despite the fact that such an award would exceed actual costs incurred. This submission is made on the basis that if the courts were inclined to award scale costs to legally aided recipients then more practitioners would be able to provide legal aid services to the public as it would encourage legal aid lawyers to offer a ‘quasi-contingency fee arrangement’ to those who cannot afford legal services at a private charge out rate. This would increase access to justice. If the court were only to award the appellant his actual legal aid costs, which amount to $5761.51 as opposed to those calculated on a 2B basis of $13,623 the incentive to act for impecunious clients on legal aid is taken away. If 2B costs were awarded the appellant’s counsel could seek from the Commissioner a conditional ‘top up’ payment.

“…

“[7] In my view this Court must apply the principles which apply to costs as set out in the High Court rules. While the court retains a discretion, it must be exercised on a principled basis. There may be some wider objectives which may be served by the court awarding costs on another basis, but in my view they are not appropriate considerations here. The costs regime is designed so that an award of costs is calculated according to principles which are well established. They are designed to promote justice, certainty and expedition and relate to the proceedings before the court. They are not intended to provide incentives to promote wider objectives.

“[8] In those circumstances I consider an appropriate award of costs in this case is an amount reflecting the actual costs, which is less than category 2B costs. This is in accordance with well-established principles relating to the award of costs."

The outcome was that “[c]osts of $5,761.51 are awarded against the respondent in favour of the appellant” (at [9]). So in Thavarag, just as in UKX, the aided person received an award of costs equal to their actual legal aid costs — which award, incidentally, counts as “proceeds of proceedings” under the Legal Services Act 2011 and is automatically subject to a charge in favour of the Commissioner to meet any legal aid debt due — but the court resisted the use of costs as a stepping stone into the fray of legal aid top-ups.

All this against the background of the “Authorised payments (top-ups)” policy/guidance in the Legal Aid Services: Grants Handbook (available at <www.justice.govt.nz>), which lists the following as one type of circumstance that may lead the Commissioner to authorise a top-up payment:

“[A] court has awarded costs in favour of the client in excess of the total cost of the grant, and the provider has sought permission to retain the difference – the ‘top up’ may be considered on the basis that it is the court’s award in recognition of the clear merit of the case.”

As in 2022, then, it seems that in 2023 the Commissioner and the courts are on opposite sides of a gaping divide as far as legal aid top-ups and costs are concerned.

For discussion of Thavarag, UKX and other cases on point, see Legal Services at [LA105.03] on Westlaw New Zealand.