Birchfield v Birchfield [2026] NZCA 477 is an interesting decision commenting on the limits of costs arising from Judicial Settlement Conferences.

The High Court ordered $22,848.67 in wasted costs against a party following an unsuccessful Judicial Settlement Conference (JSC). Essentially, the Judge considered that the party had failed to engage meaningfully in the process by refusing to shift from his pre-JSC position.

Some key points:

Without prejudice protection is paramount and conduct “in the room” at a JSC will be protected and cannot be used to support a subsequent costs award. External conduct, such as failing to attend a JSC or comply with directions, may be different.

A refusal to change positions is not necessarily bad faith conduct and a JSC can still be valuable without settlement – it can test positions, provide a reality check, and narrow the issues for trial.
Using privileged negotiations to impose costs creates a natural justice problem because privilege may prevent the affected party from arguing against costs.

The Court of Appeal overturned that decision and many litigators and clients will be relieved that costs implications will not arise if they do not make a counteroffer in the room. There are many good reasons why a party may not change their position during a JSC. Importantly, without prejudice protection is fundamental to candid settlement discussions. And while an immovable or entrenched position can sometimes make a mediation or JSC frustrating, costs are not necessarily the right tool to police the quality of a party’s negotiations.

You can read a full copy of the decision here.