British American Tobacco (New Zealand) Ltd v Legal Services Agency CA40/05 [2005] NZCA 380; [2006] 1 NZLR 675; (2005) 18 PRNZ 138 (4 October 2005)

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IN THE COURT OF APPEAL OF NEW ZEALAND

_CA40/05

BETWEEN BRITISH AMERICAN TOBACCO (NEW ZEALAND) LIMITED AND WD & HO WILLS (NEW ZEALAND) LIMITED Appellants

AND THE LEGAL SERVICES AGENCY First Respondent

AND BRANDON HAMIORA PARAIKI POU AND KASEY HERENA APORO WAIRAU POU

Second Respondents

Hearing: 1 September 2005

Court: Glazebrook, Hammond, William Young, O'Regan and Robertson JJ Counsel: M R Camp QC and I J Thain for Appellants

G D S Taylor and R M Taylor for First Respondent

D B Collins QC and J Herschell for Second Respondents

Judgment: 4 October 2005

_{JUDGMENT OF THE COURT}

A The appeal is dismissed.

B The appellants are ordered (jointly and severally) to pay a total of

$12,000 by way of costs, $6,000 to the first respondent and $6,000 to the second respondents together, in each case, with usual disbursements.

REASONS

_{(Given by William Young J)}

BRITISH AMERICAN TOBACCO (NZ) LTD & ANOR V THE LEGAL SERVICES AGENCY & ANOR CA40/05 4 October 2005

Table of Contents

_{Para No}

Introduction [1] Factual background [3] The legislative scheme [10] The basis upon which the LSA decided to continue legal aid [14] Overview of the appeal

The relevance of our decision in Pou and Another v [16]

British American Tobacco (New Zealand) Ltd and

Another CA199/05 4 October 2005

The standing of the tobacco companies to challenge the [19]

decision of the LSA

The primary arguments of the tobacco companies [21]

Our approach to the appeal [22] Are Brandon and Kasey Pou concerned in the proceedings [27] in a representative, fiduciary, or official capacity?

If Brandon and Kasey Pou are concerned in the proceedings [32]

in a representative capacity can the proviso to s 10(3) apply?

If s 10(3) would have precluded an original grant of legal aid [40]

to Brandon and Kasey Pou, does this preclude a decision to continue legal aid in favour of them?

Result [45]

Introduction

[1] British American Tobacco (New Zealand) Ltd and WD & HO Wills (New Zealand) Ltd (“the tobacco companies”) appeal against the decision of Gendall J dismissing their application for judicial review of the decision of the Legal Services Agency (“the LSA”) to continue in favour of Brandon and Kasey Pou a grant of legal aid previously made to their late mother, Janice Pou.

[2] The grant of legal aid was in respect of the proceedings some aspects of which are the subject of our judgment in Pou and Another v British American Tobacco (New Zealand) Ltd and Another CA199/04 4 October 2005 which we are delivering contemporaneously with this judgment.

Factual background

[3] Janice Pou obtained legal aid for proceedings which she commenced against the tobacco companies in June 2002. At that time she was dying of lung cancer.

The basis of her claim against the tobacco companies was that they had negligently produced or sold the cigarettes that had caused her lung cancer.

[4] She died in September 2002 and was survived by her two children, Brandon and Kasey Pou, who are her executors. They are also, for practical purposes, her sole beneficiaries.

[5] The tobacco companies have maintained a keen interest in the willingness of the LSA to fund the litigation. They unsuccessfully sought to persuade the LSA not to grant legal aid to Janice Pou. After she died, they have maintained the position that the original legal aid terminated with her death and ought not to be continued in favour of Brandon and Kasey Pou.

[6] After receiving numerous submissions from the parties and some vacillation, the LSA eventually came down in favour of Brandon and Kasey Pou as to whether legal aid ought to be continued. They key decisions in this respect were made on

24 April and 20 August 2003. We will discuss the reasoning of the LSA later in this judgment, after we have set out the relevant legislative provisions.

[7] On 20 September 2003 Brandon and Kasey Pou were substituted, in their capacities as executors of Janice Pou, as plaintiffs in the claim against the tobacco companies. Subsequently they amended the proceedings against the tobacco companies by adding personal claims under the Deaths by Accidents Compensation Act 1952 (“the 1952 Act”).

[8] The tobacco companies applied to strike out the claims under the 1952 Act. This application was successful. Harrison J held that the personal claims which Brandon and Kasey Pou wished to advance under the 1952 Act were not available. Accordingly, when the application for review was decided by Gendall J, the only extant claim was by Brandon and Kasey Pou on behalf of the estate of Janice Pou – a claim which they were prosecuting in their capacities as her executors.

[9] We have now allowed an appeal against Harrison J’s judgment (see Pou and

Another v British American Tobacco (New Zealand) Ltd and Another CA199/04

4 October 2005) but, as is apparent from our judgment in that case, Brandon and Kasey Pou face significant difficulties in pursuing claims under the 1952 Act and, if they succeed, the damages likely to be awarded will be limited.

The legislative scheme

[10] The Legal Services Act 2000 (“the Act”) does not make express provision as to what happens when a legally aided person dies.

[11] The sections which are relevant are:

9 When legal aid may be granted: civil matters

(1) The Agency must, subject to this section and sections 10 and

11, grant legal aid to an applicant in respect of proceedings to which section 7 applies (civil proceedings) if—

(a) the applicant is—

(i) a natural person, whether resident in New Zealand or not; or

(ii) a trustee corporation (as defined in section 2(1) of the Administration Act 1969) that applies for legal aid in connection with proceedings in which it is concerned in a representative, fiduciary, or official capacity; and

(b) the applicant's disposable income does not exceed the amount prescribed in regulations made under this Act or such greater amount as the Agency may in any special circumstances approve.

10 Other situations where legal aid refused or limited: civil matters

...

(3) The Agency must refuse to grant legal aid to an applicant who applies for legal aid in connection with a civil proceeding in which he or she is concerned in a representative, fiduciary, or official capacity, unless it appears to the Agency that,—

(a) if proceedings were brought, the court would be likely to order that the cost of the proceedings be paid out of any property, estate, or fund; and

(b) if that happened, the property, estate, or fund would be diminished or extinguished by the order and any person beneficially interested would suffer hardship as a result.

...

24 Application for amendment to grant of legal aid

(1) An application for amendment to a grant of legal aid -

(a) must be made by either the aided person or the lead provider; and

(b) must be made in the prescribed manner to the Agency; and

(c) may be made at any time before the matter to which the application or grant relates is finally disposed of by the relevant body.

(2) Following an application for amendment to a grant of legal aid, the Agency may, subject to section 27, confirm the grant, or may amend it in any manner consistent with this Act and any regulations made under it.

...

26 Withdrawal of, or amendment to, grant of legal aid: civil matters

(1) The Agency must withdraw legal aid granted in respect of a civil matter in any of the following circumstances:

...

(2) In relation to a civil matter, the Agency may withdraw legal aid from, or amend a grant of legal aid to, an aided person in any of the following circumstances:

(a) the aided person is no longer a person who would be entitled to that grant of legal aid, by virtue of any of the provisions of sections 9, 10, or 11:

...

[12] Relevant to the way in which s 10(3) is intended to operate is cl 6 of the

First Schedule for the Act:

6 Resources of representative, fiduciary, etc

If an applicant for legal aid is concerned in the matter only in a representative, fiduciary, or official capacity,—

(a) the applicant's personal resources must not be taken into account when assessing disposable income or disposable capital; but

(b) the Agency may have regard to the value of the property or estate, or the amount of the fund, out of which the applicant is entitled

to be indemnified, and to the resources of the persons (if any) who are beneficially interested.

[13] Section 10(3) and cl 6 use language which, in part, is derived from the legislation which governs entitlement to legal aid in England and Wales. The evolution of this legislation is discussed in R v Legal Aid Committee No 9 (North Eastern) Legal Aid Area ex parte Foxhill Flats (Leeds) Ltd [1970] 2 QB 152. The decision of the Court in that case was that the English scheme, as it then stood, did not permit legal aid committees to ignore the personal financial resources of executors who were suing (or defending) on behalf of an estate. There are significant differences in language between the current provisions of our Act and the regulations considered in that case. These differences reveal a statutory intention that applications for legal aid in such circumstances be addressed on a “look through basis”, ie by reference to the assets of the estate and the financial positions of those beneficially interested in the outcome of the relevant litigation.

The basis upon which the LSA decided to continue legal aid

[14] In its decision letter of 24 April 2003, the LSA concluded that the original grant of aid was unexceptional and that when Mrs Pou died her rights in the proceeding survived pursuant to s 3 of the Law Reform Act 1936. It then said:

3. Section 26(2)(a) [Legal Services Act] 2000 permits the Agency to “amend a grant of legal aid” to aid a person where “the aided person is no longer a person who would be entitled to that grant of legal aid”.

4. The Executors of Mrs Pou [sic] estate are accordingly now able to apply for an amendment of grant to them in accordance with s 26(2)(a) LSA 2000 in order to enable them to continue the proceedings, if they so wish.

5. Clause 6, Schedule 1 LSA 2000 provides that where an applicant for legal aid is concerned in the matter only in a “representative ... or official capacity”, then that person’s personal resources are not taken into account but “the Agency may have regard to the value of the ... estate ... out of which the applicant is entitled to be indemnified and to the resources of the person’s ... who are beneficially interested”. It would follow that upon receipt of such an application for amendment, then the usual assessment of financial criteria would then be made.

[15] Brandon and Kasey Pou completed declarations as to their financial circumstances which were submitted to the LSA. On 20 August 2003 the LSA formally decided to continue legal aid subject to payment of an initial contribution of

$5,500.

Overview of the appeal

The relevance of our decision in Pou and Another v British American Tobacco (New

Zealand) Ltd and Another CA199/04 4 October 2005

[16] The effect our decision reinstating the claims of Brandon and Kasey Pou under the 1952 Act is that each of them has a personal claim against the tobacco companies which arguably provide adequate pegs upon which to hang grants of legal aid. However, we do not see the result of the other appeal as necessarily decisive either as to the outcome of this appeal or the broader question whether they should have legal aid to prosecute the underlying litigation.

[17] The grant of legal aid to Janice Pou did not extend to claims under the 1952

Act and thus such claims might be thought to be strictly irrelevant to whether it was appropriate for the original grant of legal aid to be continued. In any event, the claims under the 1952 Act are limited in scope and, if the case is otherwise successful, will in all probability be extinguished by the necessity to allow for recoveries made by the estate in its claim. It might be an abuse of process to pursue such tenuous and limited claims for the primary and perhaps collateral purpose of maintaining a grant of legal aid. As well, on a cost benefit analysis of the litigation, the very limited prospects of material recovery under the 1952 Act may tell against a continuation of legal aid.

[18] For this reason we propose to address the case on the basis that the primary and perhaps only viable claim against the tobacco companies is vested in the estate.

The standing of the tobacco companies to challenge the decision of the LSA

[19] A slightly awkward aspect of this case is the extent to which the tobacco companies have become involved in the decision of the LSA to fund litigation against them. Their standing to do so and, indeed, to challenge the relevant decisions made by the LSA are not in issue on this appeal. Likewise they were not in issue before Gendall J. On this point Gendall J noted at [19] of his judgment:

... But Mr Taylor [counsel for the LSA] accepted, as did counsel for the Pou children, that there is no challenge to the standing of the tobacco companies to bring this judicial review application. Although the cynical might believe their aim is to scuttle the proceedings, the interest that gives them standing is their entitlement to costs against a non-legally aided plaintiff if that person failed in an action against them and such interest is affected by a grant of aid to an opponent. ...

Gendall J also referred to two Australian decisions which support that proposition:

Tectran Corporation Pty Ltd v Legal Aid Commission of New South Wales (1986)

7 NSWLR 340; Kevin R Whelpton & Associates (Aust) Pty Ltd v Attorney-General

(1987) 72 ALR 679.

[20] Relevant to standing may be the limited nature of the challenge advanced by the tobacco companies. If the arguments advanced by the tobacco companies are truly knockout points, it stands to reason that they are entitled to raise those arguments against the LSA, see for instance R v Manchester Legal Aid Committee, ex parte R A Brand & Co Ltd [1952] 2 QB 413 and R v Legal Aid Committee No 9 (North Eastern) Legal Aid Area ex parte Foxhill Flats (Leeds) Ltd, supra.

The primary arguments of the tobacco companies

[21] At least in this Court the tobacco companies do not seek to engage with the evaluative exercises which either were or may have been involved in the decision making processes of the LSA. Rather they maintain that s 10(3) is fatal to the continuation of the grant of legal aid. They also raise a subsidiary issue which was expressed in the written argument in this way:

A subsidiary issue is ... whether, if the Agency had correctly applied s 10(3) it would necessarily have still made the same decision to grant legal aid. The appellant says that is not the case and therefore this appeal should be allowed, leaving the Agency to reconsider the matter on the correct basis.

Our approach to the appeal

[22] One of the problems for the tobacco companies on this appeal, and indeed, for us, is that the LSA did not spell out in detail the view it took of s 10(3). All that can be said with confidence is that the LSA concluded that this subsection did not preclude continuation of the grant of legal aid.

[23] There are a number of possible bases upon which the LSA might have reached this conclusion:

(a) Section 10(3) does not apply because Brandon and Kasey Pou are not concerned in the proceedings in a representative capacity;

(b) Brandon and Kasey Pou are concerned in the proceedings in a representative capacity but the proviso to s 10(3) applies; or

(c) Section 10(3) would have precluded an original grant of legal aid to Brandon and Kasey Pou, but, because s 26(2) is expressed in discretionary terms, this did not preclude a decision to continue legal aid in favour of them.

[24] We propose to discuss the case primarily in terms of three possibilities just identified, and thus by reference to the following questions:

(a) Are Brandon and Kasey Pou concerned in the proceedings in a representative, fiduciary or official capacity?

(b) If Brandon and Kasey Pou are concerned in the proceedings in a representative capacity can the proviso to s 10(3) apply?

(c) If s 10(3) would have precluded an original grant of legal aid to Brandon and Kasey Pou, does this preclude a decision to continue legal aid in favour of them?

[25] If any of these questions is answered in a way which favours the continuation of legal aid, it cannot be predicated, with confidence, that the LSA made a mistake of law. If so, it would appear to follow that the tobacco companies have failed to establish a mistake of law on the part of the LSA. For the sake of completeness, we note that if all questions can be answered in a way which favours the continuation of the grant of legal aid, then it would appear to follow that the LSA did not make a mistake of law.

[26] We are conscious that this is perhaps not an entirely satisfactory way to resolve the issues raised by the case. But, in the absence of an explicit statement from the LSA as to the basis upon which it decided to continue the grant of legal aid, we see no other alternative way of approaching this appeal.

Are Brandon and Kasey Pou concerned in the proceedings in a representative, fiduciary, or official capacity?

[27] The phrase “representative, fiduciary, or official capacity” in s 10(3) is borrowed from corresponding English legislation which was considered in R v Chester Legal Aid Office ex parte Floods of Queensferry Ltd [1998] 1 WLR

1496. In that case, Millett LJ suggested (at 1501) that the phrase should be construed as:

... a compendious expression which is not susceptible of close analysis or divisible into its component parts.

He saw (also at 1501) the phrase as applying where the applicant for legal aid was:

... concerned to obtain legal aid in order to act not on its own behalf but on behalf of another.

The judgment of Hobhouse LJ in the same case is to like effect.

[28] Obviously there is a sense in which Brandon and Kasey Pou are concerned in the proceedings in a representative, fiduciary, or official capacity; they are suing as executors and thus as representing the estate. On the other hand, the entire beneficial interest in the estate is held by them. In saying this, we think it right to ignore two minor bequests of specific chattels. So for practical purposes, they are representing themselves.

[29] In his judgment, Gendall J would appear to have concluded that Brandon and

Kasey Pou were not within s 10(3):

[43] Secondly, and crucially, the Pou children are exercising a right vested in their mother, which survived her death and could be pursued for the benefit of her estate. They, of course, are not acting in an official capacity. Nor, are they fiduciaries of themselves. Although they are, in one sense, concerned in a “representative” capacity because they are executors or trustees, they are representative only of the property of the deceased. That is what “estate” means. But they are not representing any other person. I consider it is implicit in the legal aid scheme, that “represent” means to represent some other person or group.

[44] Section 10(3) does not use the word “only”. But it is apparent from cl 6 of the First Schedule that resources of a “representative, fiduciary, etc” must not be taken into account, but the value of an estate may, as may the resources of a beneficiary, where “an application for legal aid is concerned in the matter only as a representative”. So if an applicant is a beneficiary, as well as a representative, his/her personal resources have to be taken into account. That accords with common sense as the proceedings are designed to benefit him/her, not simply others.

[45] I am of the opinion that the proper interpretation of s10(3), viewed in the context of the Act as a whole and its purposes, is that executors or other “representatives” have to be solely, or only concerned in such a capacity, before the s10(3) denial of aid, or restriction, applies. That approach accords with the view of the Court of Appeal expressed by Blanchard J in Glancy v Legal Services Agency [2003] NZCA 298; (2003) 17 PRNZ 168 (CA) at para [32]:

Section 10(3) requires refusal of legal aid to a trustee corporation or another applicant in a representative, fiduciary or official capacity unless the case falls within the exceptions cumulatively stated in (a) and (b). But, to the extent that an applicant has a personal claim, as we have held the appellants do, and is otherwise qualified in terms of s9, legal aid is not denied by s10(3), which is directed only to representative claims or to the portion of a claim which is representative. (emphasis added)

[46] In the present case the Pou children have aid first as claimants under the Deaths by Accidents Compensation Act, and secondly in Mrs Pou’s proceedings because they are “concerned” in a dual capacity. They are executors representing the legal entity known as “the estate” (i.e. its

property) and also in the capacity of representing the only beneficiaries, who are in fact themselves. So they have a personal claim. They are concerned as to their eventual entitlement as the sole beneficiaries. I consider that “representative” means representation of some other person, body or agency, who would take the benefit of, or detrimental consequences, of the outcome of the proceedings. Where the person seeking legal aid is involved in a dual capacity, one of which is personal to them (which I am satisfied is the case here), then s10(3) does not apply. Otherwise a person who, in their own right may be entitled to legal aid so as to be represented in Court, would be deprived because, in another legal capacity, he/she should happen to “represent” his/her own beneficial interests. That, frankly, would make a nonsense of the legal aid scheme and purposes of the Act.

[30] As is apparent, we do not see the personal claims under the 1952 Act as a critical factor in terms of the appeal. This aside, we broadly agree with Gendall J’s approach. In part this is because we have difficulty with the view that Brandon and Kasey Pou’s representation of themselves engages s 10(3). As well, we see r 77 of the High Court Rules as relevant:

77 Trustees, executors, and administrators

Trustees, executors, and administrators may sue and be sued on behalf of or as representing the property or estate of which they are trustees or representatives without joining any of the persons beneficially interested in the trust or estate, and shall be considered as representing such persons in the proceeding; but the Court may, at any stage, order any of such persons to be made parties to the proceeding, either in addition to or in lieu of the trustees, executors, or administrators.

It would be open to Brandon and Kasey Pou to have themselves joined as plaintiffs in their personal capacities in place of themselves as executors. Alternatively, they could be made parties to the proceedings in their personal capacities. In either case, they would be entitled to seek legal aid on a basis which did not engage s 10(3). This highlights the artificiality of the argument for the tobacco companies.

[31] In light of this consideration, we conclude that Brandon and Kasey Pou are not “concerned” in the proceedings “in a representative, fiduciary, or official capacity”. This means that the proceedings are not subject to s 10(3).

If Brandon and Kasey Pou are concerned in the proceedings in a representative capacity can the proviso to s 10(3) apply?

[32] If, contrary to the opinion we have just expressed, Brandon and Kasey Pou are concerned in the proceedings in a representative capacity, then the question arises whether the case is potentially within the proviso to s 10(3). This applies if:

[I]t appears to the Agency that,—

(a) if proceedings were brought, the court would be likely to order that the cost of the proceedings be paid out of any property, estate, or fund; and

(b) if that happened, the property, estate, or fund would be diminished or extinguished by the order and any person beneficially interested would suffer hardship as a result.

[33] This language of the proviso is ambiguous. It might be treated as applying only to proceedings in which it is customary for the costs of all the parties to be paid from the relevant estate or fund (eg family protection proceedings). Alternatively, it can be construed as applicable where the costs of the executors or trustees in prosecuting or defending proceedings would be met from the estate or fund. If the latter approach is right, the present case would appear to be potentially within the proviso (a point to which we will revert shortly).

[34] In his judgment Gendall J inclined towards the second construction:

[38] Counsel for the tobacco companies contended that s10(3) prevents aid being granted, and subs (a) only applies where it is likely that the costs of the entire proceedings would be ordered to be paid out of the estate. That is sometimes the case in Family Protection, Testamentary Promises and Trustee Act proceedings. But I do not think the interpretation need necessarily be so restricted. In most other situations it would only be when an estate is a defendant that the Court might, or would be likely to, order costs against, and to be paid out of, it. If the estate is meagre, then a beneficiary might suffer hardship. It might be the case that, where executors are plaintiffs who fail, a Court would be likely to award costs against them as executors and it would then be a matter for them to obtain reimbursement and be indemnified from the property (“the estate”) they hold. The Court may not be making an order that costs be paid out of the estate, so strictly s10(3)(a) may not apply, but the practical effect is that such would follow. But the test is what “appears to the Agency” might be the case.

[39] Clearly executors can obtain legal aid. Clause 6 of the First Schedule makes that clear. The executor's personal resources are not taken into account, but the size of the estate may be regarded because the executor may be indemnified from it. If the estate is meagre a grant of aid is more likely,

otherwise beneficiaries may suffer hardship. But if a person is also concerned with the proceedings in a personal capacity then obviously personal resources may be taken into account. That is what occurred in this case.

[40] So, there is no absolute prohibition from the granting of aid to an executor of an estate. Section 10(3) prohibits aid unless the circumstances in (a) and (b) (as the Agency views it to “appear”), are likely to arise in the future. In the present case the Agency may have considered that such future events were likely. There is merit in the submission of Mr Taylor that the Court ought not interfere in a discretionary judgment such as that if it occurred. I would not be disposed to question, as a matter of law, the discretion of the Agency in reaching a view that subs (3)(a) and (b) may apply.

[35] We agree with the provisional view expressed by Gendall J.

[36] His approach is consistent with the terms of cl 6 of the First Schedule to the Act. It also makes good sense. Where a representative action is brought, the financial resources which might be thought to be primarily relevant are not those of the executors or trustees but rather those who stand to gain (or lose) depending on the outcome of the case. Further, in the context of the Act, the expression “cost of the proceedings” might fairly be thought to refer primarily to the cost of the proceedings from the point of view of the legally aided person. Where the Act addresses costs in the sense of orders for costs on an inter partes basis, the word used is “costs”, see for instance ss 40 and 41.

[37] We accept that the language used in s 10(3)(b) is slightly awkward, at least in the circumstances of this case. As we understand it, there are no significant assets in the estate of Janice Pou other than the claim against the tobacco companies. So it might be argued that such diminution of the estate as would be effected by an order that the cost of the proceeding be met from the estate could not, in itself, cause hardship to the beneficiaries. To put this another way, if there is no estate, it might be difficult to see how diminution of it could cause hardship.

[38] We do not see this as a controlling consideration given the scheme and purpose of the Act as a whole. In the absence of legal aid, the consequence of the estate having no assets is that if the estate claim is to be prosecuted, it will have to be funded by Brandon and Kasey Pou. Depending on their financial circumstances, this could fairly be regarded as involving hardship.

[39] In the present circumstances we think that even if the case is within s 10(3), a conclusion that the proviso applies would be well open to the LSA.

If s 10(3) would have precluded an original grant of legal aid to Brandon and

Kasey Pou, does this preclude a decision to continue legal aid in favour of them?

[40] Gendall J was against the tobacco companies on this point too:

[32] ... Some sense has to be made of the word “may” in s26(2) contrasted with the word “must” in s26(1). The circumstances of an already aided person dying or ceasing to be eligible will vary widely and the legislature has deliberately, it seems, left to the Agency a discretion to withdraw or amend the grant of aid in such circumstances. Otherwise, a strict application of the entitlement to aid under s9 being to a natural person or trustee corporation could, in some circumstances, result in injustice and denial to a person or his personal representatives of access to the Courts, either as plaintiff or defendant.

[41] We agree.

[42] Section 26(2)(a), which is the section under which the tobacco companies say the LSA should act, is expressed in discretionary rather than mandatory terms. Given the different language used in s 26(1), we can see no escape from the conclusion that the withdrawal of legal aid on the s 26(2)(a) ground is truly discretionary.

[43] In this case, there would appear to be ample grounds upon which the LSA might exercise its discretion in favour of Brandon and Kasey Pou. First, they are the executors of Janice Pou and might therefore be thought to have stepped naturally into her shoes. Secondly, there is no suggestion that their own resources are such as to make a continuation of legal aid inappropriate.

[44] We have already referred to the possibility of Brandon and Kasey Pou being substituted as plaintiffs in their personal capacities (under r 77). If we are right in that respect, but they are nonetheless to be regarded as suing in a representative capacity until such substitution order is made or they are added as parties, then there is a further ground upon which the LSA might exercise its discretion in their favour: namely that they could easily quit themselves of the representative status which, on the hypothesis now being advanced, has led to the s 10(3) problem.

Result

[45] We are broadly in agreement, therefore, with the approach taken by Gendall J and are of the view that the tobacco companies have not established that there was an error of law on the part of the LSA in continuing the grant of legal aid in respect of the underlying proceedings.

[46] Accordingly:

(a) The appeal is dismissed.

(b) The appellants are ordered (jointly and severally) to pay a total of

$12,000 by way of costs, $6,000 to the first respondent and $6,000 to the second respondents together, in each case, with usual disbursements.

Solicitors:

Phillips Fox, Wellington for Appellants

Bartlett Partners, Wellington for First Respondent

French Burt Partners, Invercargill for Second Respondents