JMM v Legal Services Agency [2012] NZCA 573; [2013] 1 NZLR 517; (2012) 21 PRNZ 190 (10 December 2012)

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ORDER PROHIBITING PUBLICATION OF THE NAMES, ADDRESSES OR IDENTIFYING PARTICULARS OF THE APPELLANTS (AND THE RESPONDENT LAM IN THE CROSS-APPEAL).

THE ORDER OF THE HIGH COURT SUPPRESSING THE NAMES, ADDRESSES AND IDENTIFYING PARTICULARS OF THE APPELLANTS AND LAM ALSO REMAINS IN FORCE.

Counsel: S M Cooper and A T S Benton for Appellants (and the Respondents in the cross-appeal)

F M R Cooke QC and F M Gush for Respondent (and the Appellant in the cross-appeal)

JMM, GLS, SJL, MSB, DAW AND BDR V LEGAL SERVICES AGENCY COA CA453/2011 [10 December

A The applications for leave to file further evidence on appeal are granted. B The appeal is dismissed.

D The questions of law as modified in [29] are answered as set out in [36] to

E Order prohibiting publication of the names and addresses or identifying particulars of the appellants (and the respondent LAM in the cross-appeal) is granted. A similar order made in the High Court remains in place.

Questions of interpretation [1] Some further background [7] The High Court appeals [14] Further evidence on appeal [19] Current status of litigants’ claims [21] Leave to appeal - questions of law [26] Issues on appeal [29] The questions of law [29] The factual questions [31] First issue - role of the Agency on withdrawal [36] The statutory provisions [36] Meaning of “prospects of success” [43] Prospects of success - our views [48] Relevant considerations [55] Required approach - our analysis [61] Level of analysis by Agency [69] Approach to analysis - our views [75] Second issue - reasons for withdrawal of grant [77] Third issue - reconsideration [85]

Fourth issue - reviews under Part 3 [92] Manifestly unreasonable [97] Manifestly unreasonable - our views [99] Wrong in law [100] Wrong in law - our views [103] Fifth issue - Panel’s power to consider additional information [113] Our analysis [116] Result [120]

[1] At the heart of these appeals is the interpretation of some key provisions of the Legal Services Act 2000 (the Act). The appeals arise because Dobson J, who heard the case in the High Court,¹granted leave for the parties to argue a number of questions of law in this Court.²For the first time, this Court is asked to consider some of the fundamental concepts governing the withdrawal of a grant of legal aid to

those who cannot afford to pay for the legal services required to enable them to resolve their disputes.

[2] The case involves two appeals arising out of Dobson J’s judgment which in turn had considered appeals by litigants whose legal aid for the conduct of historic abuse cases had been withdrawn by the then Legal Services Agency (the Agency). In each case the litigants had applied to have the decision of the Agency reviewed by the Legal Aid Review Panel (the Panel) before bringing an appeal to the High Court on certain questions of law. The High Court found that errors had been made by the Agency or the Panel or both. Some of the cases were referred back to the Agency for reconsideration, while in other cases the High Court found that, despite errors having been made, the decisions to withdraw legal aid should be upheld.

[3] There are seven litigants involved in the appeals. In the first appeal six appellants seek to challenge various aspects of the High Court judgment. The

²JMM v Legal Services Agency HC Wellington CIV-2010-485-1306, 1 July 2012 [leave decision].

[4] Counsel agree that the appeal has significance beyond the litigants themselves. The legal services for which aid was granted to the litigants involved legal claims arising from their treatment in social welfare and psychiatric institutions.³At one stage in excess of 1,000 such cases were filed in the High Court. Some of those were withdrawn, others were the subject of Court decisions, while in others settlements were reached. At the time when the Agency made the

decision to withdraw legal aid from the litigants there were approximately 490 cases that were considered to be eligible for possible withdrawal.

[5] Because of the sheer volume of cases, the withdrawal process took place over a considerable period of time, commencing in 2008. But at about the same time, Judges dealing with historic abuse cases were making observations suggesting that the continued pursuit of those cases by means of civil litigation in the courts needed reconsideration.⁴This led to the emergence of alternative dispute resolution (ADR) processes for both the social welfare cases and the psychiatric hospital cases. ADR has resulted in further settlements in large numbers.⁵Although legal aid had been withdrawn for the appellants, the Agency made grants of legal aid available to them for the ADR processes. The same is the case for the bulk of other litigants who were engaged in attempts at settlement through ADR. The Agency has suspended the process of determining whether to withdraw legal aid to those litigants pending the final outcome of the settlement processes.

[6] Although the questions of law arise under the 2000 Act, Parliament has now enacted the Legal Services Act 2011 (the 2011 Act). The role of the Agency has been replaced by a Legal Services Commissioner (the Commissioner) who has taken over the conduct of these appeals. The role of the Panel has now been assumed by a

_{Legal Aid Tribunal (the Tribunal). Most of the statutory provisions
under the Act}

³The appellants’ claims broadly comprise claims against the Ministry of Social Development or the Department of Social Welfare and claims arising from alleged conduct in psychiatric hospitals against the Crown Health Financing Agency or the Ministry of Health.

⁴For example J v Crown Health Financing Agency HC Wellington CIV-2000-485-876,

8 February 2008 at [622] and Crown Health Financing Agency v P [2008] NZCA 362, [2009]

2 NZLR 149 at [278]. Dobson J made similar observations: High Court judgment, above n 1, at

⁵We have been advised that approximately 330 of the total psychiatric hospital claims settled pursuant to the Crown Health Financing Agency settlement process, and around 90 of the total Department of Social Welfare claims have now been settled.

dealing with the grant and withdrawal of civil legal aid are in similar terms under the

[7] The law firm representing the appellants is Cooper Legal. It has acted for over 600 clients who are alleged to have suffered abuse while they were children under the care of the State or in the care of various church agencies or while they were patients in State psychiatric hospitals. Some clients have claims in more than one category. Generally the type of abuse alleged includes physical, sexual and psychological abuse, threats of physical and sexual abuse, as well as punishments such as unmodified electroconvulsive therapy and painful injections. The litigants vary in age from 18 to 80. The claims cover the period from the 1950s down to the present time, although the majority of the claims are for abuse during the 1970s and

1980s. Most of these litigants are, or have been, legally aided. Some 40 per cent of the litigants are prison inmates, while the remainder are beneficiaries or low income earners. A significant number remain under psychiatric or medical care.

[8] When litigants (including the appellants) first embarked on civil litigation against State agencies involving alleged historic abuse, virtually all who sought it, and were qualified to receive it, were granted legal aid. This was so even though in some cases very little information was available to the Agency about the detailed circumstances concerning the individual claims.

[9] But in early 2008 the Agency decided to reconsider the availability of legal aid. This arose after delivery of the judgments following High Court trials in J v Crown Health Financing Agency,⁶K v Crown Health Financing Agency⁷and

the two claims in White v Attorney-General.⁸Each of these claims had failed, and

on a number of grounds. The Agency first raised its concerns generally with the two law firms (including Cooper Legal) representing the majority of the legally aided

⁷_{K v Crown Health Financing Agency HC Wellington
CIV-2005-485-2678, 16 November 2007.}

⁸White v Attorney-General HC Wellington CIV-1999-485-85, 28 November 2007. The appeals were later dismissed in this Court and leave to appeal to the Supreme Court was refused: see White v Attorney-General [2010] NZCA 139; W v Attorney-General [2010] NZSC 69.

litigants. The Agency considered that various issues arising from the unsuccessful claims were relevant to the continued availability of legal aid for historic abuse cases. Particular concerns included the effect of the Limitation Act defence, difficulties with proof of causation, the Accident Compensation Corporation bar and the limited level of likely recovery.

[10] The Agency then commenced the formal process of proposing the withdrawal of legal aid for various litigants by requesting the solicitors acting to provide submissions in relation to each of the files. The appellants’ law firm provided the requested information to the Agency. Documentation and correspondence concerning the files of the appellants shows that the submissions of the law firm and the Agency file were then considered by one or more solicitors used as “specialist advisers” to the Agency. The specialist advisers were tasked with recommending to a grants officer either the withdrawal or continuation of legal aid in each case. If the Agency made a decision to withdraw legal aid both the relevant appellant and his or her legal adviser were advised in writing of the decision.

[11] Some of the appellants then applied under s 29 of the Act to have the decision reconsidered by the Agency. Where applications for reconsideration were made the file was referred to a new specialist adviser for reconsideration and a further opportunity was provided to the legal advisers to make submissions. The specialist adviser then prepared a recommendation on the question of reconsideration. The Agency made a decision and the relevant appellant and their legal adviser were advised of the outcome.

[12] In all cases the appellants exercised their right to have the decision (either the original decision by the Agency or the reconsideration decision) reviewed by the Panel. For such reviews, submissions were provided by the appellants through their legal advisers. The Agency also made submissions followed by replies from the appellants. The Panel then made its decision which, in the case of each of the appellants, was to uphold the decision withdrawing legal aid. It was the Panel’s decisions that were further appealed to the High Court.

[13] During the time the above decisions, reconsiderations and reviews were taking place, further historic abuse cases were heard and determined by the High Court. Two judgments involved plaintiffs who had failed at an interlocutory stage and were unable to progress their cases.⁹Moreover, two further cases went to trial in the High Court and failed.¹⁰As noted above, the High Court decisions in White were unsuccessfully appealed to this Court,¹¹and leave to appeal was declined by the

_{Supreme Court.}¹²_{Where these decisions were
available to the Agency or the Panel}

at the time when withdrawal applications were being considered, they were taken into account in the decision making process.

[14] The appellants were all successful in establishing in the High Court that errors had been made by the Agency or the Panel (or both). Despite the findings of one or more errors of law in each case, however, Dobson J considered that no relief was warranted in three of the cases.¹³In the first of these cases the Judge found that, despite the error by the Panel, the outcome of any reconsideration would be a “foregone conclusion”.¹⁴The Judge’s reasoning in the second case gives a flavour of his approach to relief:

[195] Accordingly, the only error of law made out affected the adequacy of the opportunity afforded to MSB to make his best case with the Panel, but I can be satisfied that this error could not affect the outcome either before the Panel, or the Agency. If I were to direct the Agency to reconsider, I am satisfied that the Agency’s decision would be the same as its original decisions, and that the Agency could arrive at the same outcome entirely lawfully. In those circumstances, there is no point in prolonging MSB’s expectations that aid might be reinstated, and I determine the appeal by acknowledging that there has been an error of law by the Panel, but not overturning its decision. There is to be no reconsideration by either the Panel or the Agency.

⁹Hurring v Attorney-General HC Wellington CIV-2006-405-1281, 6 October 2008 and Ashton v

¹⁰P v Attorney-General HC Wellington CIV-2006-485-874, 16 June 2010 and AB v

[15] The errors of law found by Dobson J in the cases of each appellant are summarised in the Schedule 1 at the end of this judgment. The schedule also gives the outcome (and references) in all cases. We have also included in Schedule 1, for completeness, the same information for LAM because the Agency has included this case in the cross-appeal against the Judge’s decision to direct the Agency to reconsider the withdrawal of legal aid.

[16] The approach to analysis followed by Dobson J relied in part on his own decision in Legal Services Agency v R.¹⁵That judgment concerned 16 appeals brought by the Agency against Panel decisions, all of which had reversed decisions by the Agency to withdraw legal aid from the litigants concerned. The Judge described the essence of his decision as follows:¹⁶

... the Agency could not reconsider groups of cases on the generalised proposition that because the claimants in the decided cases had failed, then so must other claimants whose entitlement to legal aid was being reconsidered. Instead, the Agency was required to give objective and reasoned consideration to the circumstances of each claimant on an individual basis. To the extent that failure by the claimants in the decided cases was the reason for reconsideration, then the Agency had to consider the relevant deficiencies of the claimants in the decided cases, and compare those to the nature of the evidence potentially available to other claimants, on the same points.

[17] Dobson J also relied on a judgment of Wild J in Legal Services Agency v W. ¹⁷

The essence of the decision in W focussed on the importance of psychiatric evidence that is likely to be critical to the Court’s assessment of whether a claimant can make out the exceptions to the limitation defence that may be available if the claimant suffered a relevant disability, or in cases of sexual abuse, where the availability of an entitlement to claim was not reasonably discoverable. In reconsiderations of grants of legal aid where this issue was relevant to a re-evaluation of the prospects of success, Wild J suggested a careful analysis of psychiatric reports. He proposed five questions that be raised in relation to the content of such reports that the Agency could use to test whether such evidence might avail the claimant.

¹⁵Legal Services Agency v R (2009) 20 PRNZ 423 (HC). This is the case referred to by Dobson J

¹⁷_{Legal Services Agency v W HC Wellington
CIV-2009-485-2191, 21 April 2010.}

[18] The Agency challenges the Judge’s reliance on the decisions in Legal Services Agency v R and in Legal Services Agency v W. We return to this issue later. The Agency also contends that no relief should have been granted and that, like in the cases of GLS, MSB and BDR, the appeals ought to have been dismissed.

[19] Counsel for the appellants applied for leave to adduce further evidence on appeal. The appellants provided an affidavit of Natalie Margaret Griffiths essentially containing updating evidence that was not available at the time of the High Court hearing. The Agency consented to the application on the basis that the Court also received an affidavit of David MacDonald Howden. This too contained information concerning recent developments about the litigation and the ADR processes. This was not opposed by the appellants.

[20] The further evidence will assist the Court in dealing with the appeals. We grant both applications for leave to file further evidence.

[21] Counsel for the appellants supplied us with a helpful schedule summarising the current status of the claims. This is annexed to the judgment as Schedule 2. Of the seven cases involved in the present appeal two appellants (SJL and BDR) have completely resolved their cases. Another (LAM) has settled the psychiatric hospital case and is in the process of settling the Department of Social Welfare (DSW) case. Assuming the remaining LAM settlement is implemented, that leaves only four appellants (JMM, GLS, MSB and DAW) with live claims. In each case these appellants have settled their psychiatric hospital claims and are actively engaged in the ADR process for the remaining DSW claims. Each of these appellants has received a specific grant of aid to facilitate his or her participation in ADR processes.

[22] There remains the possibility that the appellants’ DSW claims may not be settled through the ADR process. Each appellant has claims on foot in the High Court although these are not being advanced actively at the present time. We asked

counsel for the parties what would be the position in the future regarding the possible grant of legal aid, should the appellants or other claimants with unresolved psychiatric hospital or DSW claims wish to press their cases in the High Court. The situation is complicated by the fact that the Act has now been superseded by the 2011

Act. It seems that any fresh application for legal aid, or request for reconsideration by the Agency would be dealt with under the provisions of the 2011 Act.¹⁹

[23] Counsel for the parties were invited to provide further information regarding fresh applications for legal aid under the 2011 Act. There have been preliminary discussions between representatives of the Commissioner and Cooper Legal. The focus of such discussions involves the potential for further processes, in addition to existing ADR processes, that could be funded by legal aid on the basis that such further processes could assist the ongoing settlement processes. For example, in the case of claimants who have not initially reached a settlement, or who are in the process of achieving a settlement but disputes over facts or quantum of compensation have arisen, the Commissioner has indicated a willingness to consider an amendment to the grant for the purposes of providing additional ADR funding for processes designed to assist the settlement process generally. The Commissioner has stated that each application will be considered on its own facts and merits depending on what is proposed, what is considered likely to be achieved and the implications for other cases. Counsel for the appellants makes the obvious point that the proposal for legal aid funding of such further processes does not involve a commitment: the Commissioner has merely indicated a willingness to consider such funding.

[24] The Commissioner has also commented on the prospect of further litigation funding. The contemplation is that applications for continued litigation funding will be considered by the Commissioner under the 2011 Act. Relevant factors will include the nature of any settlement offer already made, any information becoming available during the settlement process and the required assessment of prospects of

_{success. Counsel for the Commissioner has intimated that this may
involve either}

¹⁹Any application for an amendment to an existing grant is covered by s 136 of the Legal Services Act 2011, which provides: “Legal aid granted under the Legal Services Act 1991 is not affected by the repeal of that Act; but ... after the commencement of this Act, this Act applies to that aid as if it had been granted under this Act.” Any fresh applications for aid will be covered by the general provisions of the Act: see ss 10, 14, and 16.

recommencement of the withdrawal of the legal aid process or the assessment of a further application for legal aid by the particular litigant. Counsel for the appellants has observed that if this proposal goes ahead a number of the issues raised by this appeal, including the meaning of “sufficient prospects of success”, would still be relevant.

[25] Finally, counsel for the Commissioner referred to the settlement procedure in relation to claims against the Ministry of Health or the Crown Health Financing Agency (CHFA). The offers from CHFA already made did not deal with new Ministry of Health related claimants and the CHFA has now been disestablished. Accordingly, for these claimants the Commissioner is in the process of approving interim grants of legal aid for the purpose of interviewing clients, uplifting records and communications with the Ministry of Health. It is expected that there will be an extension of the settlement process to include these claimants. However, the process has only just begun and will be reviewed once the position concerning the settlement of these new claims becomes clearer.

[26] Both the appellants and the Agency applied to the High Court for leave to appeal to this Court. The appellants purported to advance some eleven challenges to the High Court judgment. But, as Dobson J pointed out,²⁰these were framed as grounds of appeal rather than questions of law arising out of the judgment. The Agency sought leave to appeal on three questions of law. The first related to the interpretation of ss 9(4)(d) and 26(2)(a) of the Act. The second point related to the

scope of the duty of the Agency to give reasons under s 27(2)(b). The third point concerned the material able to be considered on review by the Panel.

[27] The outcome of the leave application was that the appellants were granted leave to argue the following two questions on appeal:²¹

(a) Did the High Court err in applying a test as to the prospects of success for the purposes of s 9(4)(d)(i) of the Legal Services Act

(b) Did the High Court err in the cases of JMM, GLS, MSB and DAW in concluding that it was open for the Agency to make the decision to withdraw legal aid in accordance with ss 26(2)(a) and 9(4)(d) of the Act given:

(i) the extent of the psychiatric reports and/or evidence in relation to the applicant for aid;

[28] The Agency was granted leave to appeal the following three questions of law:²²

(a) Whether the High Court erred in holding that the [Agency] committed an error of law, or made a manifestly unreasonable decision, when it failed to engage in a case specific analysis of the kind identified by the Court before deciding to withdraw legal aid in accordance with ss 26(2)(a) and 9(4)(d) of the [Act], and whether the [Agency] had failed to conduct the required level of analysis in the cases where the Court has allowed the appeal and ordered the [Agency] to reconsider its decision;

(b) Whether in light of the [Agency’s] duty to give reasons for its decision under s 27(2)(b) of the Act, the High Court erred by proceeding on the basis that the level and intensity of the case specific analysis conducted by the [Agency] is set out in the letter communicating the [Agency’s] decision; and

(c) Was the High Court right in finding that the Panel erred in assessing the Agency’s withdrawal decision in relation to grants for historic abuse claims on the basis of the analysis of the case provided in the Agency’s submissions to it relating to the individual cases, rather than confining it to the analysis described in the letter withdrawing aid?

[29] The central question arising on appeal is the correct approach for the Agency and the Panel to follow when dealing with the determination of the withdrawal of a

grant of legal aid under s 26 of the Act. During the hearing, it became evident that the questions on appeal could be reduced to the following five issues:

(a) Where the withdrawal of a grant is on the basis that the aided person is no longer a person who would be entitled to that grant of legal aid by virtue of the provisions of s 9 of the Act,²³what is the meaning and application of the relevant provision of s 9(4) of the Act? With a consequential issue: what is the meaning of the phrase “prospects of success” in s 9(4)(d)(i)?

(b) What is the nature and scope of the requirement of the Agency in s 27(3)(b) to give the aided person and the lead provider (legal adviser) “reasons for the withdrawal”?

(c) Where the Agency has made a decision to withdraw a grant of legal aid under s 26 of the Act, what is the scope for an aided person to apply to the Agency for a reconsideration of the decision under s 29 if aggrieved by such decision?

(d) Where an aided person seeks to review the Agency’s decision to withdraw the grant of aid, what is the scope of the grounds for review under s 54(1) of the Act?

(e) In the context of the review process what material may the Panel consider arising from the powers under s 55A and s 56 of the Act when it determines the review?

[30] We are satisfied that these issues succinctly encapsulate the critical aspects of the questions of law for which leave to appeal was granted. They are broadly consistent with the issues helpfully identified by counsel in their joint list of issues. We prefer to approach the appeal on this basis because we consider that a

_{determination of the issues so identified will be relevant to the work
and operation of}

both the Commissioner and the Tribunal in future cases.²⁴Such determination may also become relevant in the litigation claims of the present appellants, if the outcome of the ADR process for the remaining DSW claims is that no settlements are achieved.

[31] We have considered whether we should embark, in the case of the four appellants with outstanding DSW claims, upon a reconsideration of the availability in any particular case of grounds for challenging the decision of either the Agency or the Panel. We have decided that it is not appropriate to undertake such an exercise. This Court should not become involved in factual appeals when its jurisdiction is

[32] There are other reasons for this approach. First, the four appellants with live DSW claims are still engaged in the ADR process. The claims may be resolved. If they are not able to be resolved this is not likely to become apparent until some time into the future. By then circumstances will undoubtedly have changed. Second, we doubt the practical utility of embarking upon a detailed reconsideration of the individual cases at this stage. As is clear from Schedule 2, many of the psychiatric reports were prepared some time ago. It is likely to be premature for the Agency to be making an assessment of whether legal aid should be withdrawn in advance of knowing whether the particular claim is to be settled. Third, although legal aid was withdrawn for all appellants, three of the appellants (together with LAM) have secured, as a result of the High Court appeal, relief requiring their case to be remitted to the Agency for reconsideration. They therefore have the ability, if and when appropriate, to take the matter back to the Agency for reassessment.

[33] Following the completion of the ADR process, there is likely to be a significantly reduced volume of cases that the litigants will wish to pursue in the

²⁴The provisions of the 2011 Act are similar to those which we have had to consider: see ss 30 (withdrawal of legal aid for civil matters), 10, 11, 12 (circumstances in which aid may be granted), 31 (notification of withdrawal), 51 (reconsideration), and 52 (grounds for review).

²⁵Legal Services Act 2000, s 60. The second of the two questions on which the appellants were given leave to appeal raises issues that are purely factual in nature: see the question referred to at [27](b) above.

High Court. This will give rise to different litigation considerations. The Commissioner has advised the Court that any fresh application for aid by the appellants in the future will be considered as described at [24] and [25] above.

[34] Finally, although four of the appellants had their grant of legal aid withdrawn by the Agency, they have nevertheless received a grant of legal aid to enable their legal adviser to provide them with legal services for the ADR processes in which they have since become engaged. In practical terms, legal aid for the litigation process was effectively suspended rather than completely withdrawn.

[35] Accordingly, we will now address the issues identified at [29](a) to (e) above. We will not consider any other leave question, given that the issues raised are purely factual in nature. We appreciate that dealing with the legal issues for determination in isolation from a particular factual context can create its own difficulties.

[36] To provide some context to the role of the Agency we refer first to the purpose of the Act, which is relevantly described in s 3 as to “promote access to justice by ... providing a legal aid scheme that assists people who have insufficient means to pay for legal services to nonetheless have access to them”. Legal aid is available for a wide variety of civil matters as described in detail in s 7 of the Act, including civil proceedings in the High Court. There is no doubt that the appellants’ proceedings concerning alleged historic abuse fall within the scheme of the Act.

[37] The term “legal services” is broadly defined in the Act to mean legal advice

(a) in relation to legal aid, means legal advice and representation; and includes assistance–

(iii) in arriving at or giving effect to any out-of-court settlement that avoids or brings to an end any proceedings.

[38] This definition is broad enough to cover the grant of legal aid to the appellants and other litigants and to cover legal advice given in connection with ADR processes. The civil matters in respect of which such legal services are provided will arise in the context of civil proceedings within s 7.

[39] The broad role of the Agency is prescribed by the statutory description of its functions. These are, inter alia, “to administer schemes in as consistent, accountable, inexpensive, and efficient a manner as is consistent with the purpose of this Act”.²⁷

[40] The Agency withdrew legal aid from the appellants under s 26(2) of the Act. In so doing it was exercising a discretionary power available to the Agency in a range of circumstances.²⁸The specific circumstance relied upon by the Agency for withdrawing aid from the appellants was s 26(2)(a) which provides:

(2) In relation to a civil matter, the Agency may at any time 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 ...

[41] Of the available grounds for withdrawal, the Agency relied on s 9(4)(d)(i) of the Act. To put this provision in context we set out the whole of s 9(3) and (4):

(3) The Agency must refuse to grant legal aid if the applicant has not shown that the applicant has reasonable grounds for taking or defending the proceedings or being a party to the proceedings.

²⁸These include, for example, situations where the relevant proceedings have been disposed of (s 26(2)(b)) and where the Agency is satisfied that the aided person has required the proceedings to be conducted unreasonably (s 26(2)(c)).

(4) The Agency may refuse to grant legal aid to an applicant in any of the following circumstances:

(a) the Agency is unable to obtain full information concerning the applicant’s financial affairs because of the default or failure of the applicant:

(b) in the opinion of the Agency, the prescribed repayment amount will exceed the likely cost of the proceedings for which legal aid is sought:

(c) the applicant is not resident in New Zealand and the Agency considers that the proceedings might reasonably be brought in a jurisdiction other than New Zealand:

(ii) the grant of legal aid is not justified, having regard to the nature of the proceedings and the applicant’s interest in them (financial or otherwise), in relation to the likely cost of the proceedings; or

(iii) for any other cause where it appears unreasonable or undesirable that the applicant should receive legal aid in the particular circumstances of the case:

(e) in the case of an appeal (whether or not in respect of proceedings in which the applicant has received legal aid), the Agency considers that for any reason the grant of legal aid or further legal aid is not justified.

[42] Accordingly, a fundamental question for determination in the context of the withdrawal of legal aid for the appellants is the Agency’s assessment of the “prospects of success” under s 9(4)(d)(i) and whether those prospects are “not sufficient to justify the grant of legal aid”. We therefore consider the meaning of the term prospects of success and the factors relevant to assessing such prospects before addressing the wider issue of the level of analysis required to be undertaken by the Agency when dealing with a withdrawal of aid case.

[43] The positions of the parties on this point were not diametrically opposed. Rather, counsel sought to emphasise the different considerations at play in the context of a withdrawal determination by the Agency or on review by the Panel.

[44] For the appellants, Ms Cooper accepted that the concept of prospects of success referred to achieving a successful outcome. But it was not a question of determining who will lose or who will win: that would be too narrow an approach. Part of the analysis included weighing the likely cost against the likely benefits. The benefits need not necessarily be financial; vindication of a point of principle could be sufficient. Ms Cooper saw some merit in assessing the prospects of success by asking what action a reasonable self-funded individual in the aided person’s position would take in the circumstances, as discussed in Timmins v Legal Aid Review

Panel.²⁹At the same time, however, Ms Cooper pointed to difficulties in the

application for such approach. She emphasised the need for a specific analysis of the litigant’s case, relying on observations of Dobson J in Legal Services Agency v R³⁰as follows:

[121] Although it is applying a suggested test for continuation of legal aid in a slightly different context, I would not expect a reasonable self-funded litigant to discontinue such proceedings if his adviser’s analysis did no more than avert to a consistent series of failures in other historic abuse cases. Such a notional litigant would reasonably expect an analysis of why failures in those cases rendered the prospects in his or her own case materially worse than they had previously been perceived.

[45] Ms Cooper also referred to the analysis of prospects of success in Legal Services Agency v Hosseini,³¹as well as the analysis undertaken by Wild J in Legal Services Agency v W.³²Ms Cooper also cited various examples from Commonwealth

_{jurisdictions dealing with measurement of prospects of
success.}³³_{While these}

authorities are useful on a comparative basis, their authority is significantly diminished because of the different statutory contexts in which they arose.

[46] For the Agency, Mr Cooke QC referred to the differences in wording between s 9(3) and s 9(4) of the Act. He then referred to the decision of Williams J in Gummer v Legal Services Board,³⁴analysing the differences in the tests of “reasonable grounds for taking the proceedings” and “prospects of success are not sufficient to justify the grant of legal aid”.³⁵

[47] Mr Cooke also endorsed the approach of Wild J in the Timmins case but he noted that when the Agency was assessing prospects of success under s 9(4)(d)(i), no standard is set for how good the prospects of success must be. Thus the decisions required would frequently be difficult. But he added that Parliament had entrusted such decisions to the Agency to make as part of a balancing exercise.

[48] There is a distinction between the tests in s 9(3) (“not showing that the applicant has reasonable grounds for taking or defending the proceedings”) and s 9(4)(d)(i) (“the applicant’s prospects of success are not sufficient to justify the grant”). We agree with the parties that the tests are different. We see merit in the approach of Williams J in Gummer v Legal Services Board when he said:³⁶

... the test under [s 9(3)] is more stringent than that under [s 9(4)]: the former mandatorily requires applications to be declined unless applicants show ‘reasonable grounds’ for bringing or defending proceedings whilst that under [s 9(4)(d)(i)] gives a discretion to decline aid if the ‘prospects of success are not sufficient’ to justify a grant from the public purse. Applications which fail the [s 9(3)] test must therefore necessarily fail the [s 9(4)] test. So, in one sense, the [s 9(4)] test could be regarded as subsumed in that under [s 9(3)] ... By way of analogy, it would appear that the Legislation debars the expenditure of public money in supporting claims or defences which are so unmeritorious as to be unlikely to survive striking out applications whilst the test under [s 9(4)] is less strict and requires those charged with the granting of aid in relation to claims brought or defended on

reasonable grounds to exercise their discretion in assessing whether the prospects of success are sufficient to commit public money to them.

[49] The focus of this appeal is on the withdrawal of a grant of legal aid. As we have seen, the Agency may withdraw legal aid if the aided person is “no longer a person who would be entitled to that grant of legal aid” under, inter alia, s 9. This requires consideration of the then prospects of success (as described in s 9(4)(d)(i)) of the litigation for which aid was granted.

[50] The approach to be taken to the term “prospects of success” was described by

[33] ‘Prospects of success’, in my view, refers to the prospects of achieving a successful outcome. Those prospects need to be assessed in a pragmatic way and, somewhat obviously, in the circumstances of the particular case. After all, no two cases are the same. The assessment invited by the words in s 9(4)(d)(i), “sufficient to justify the grant of aid”, involves weighing the likely benefits against the likely costs. Whilst the benefits in some cases will be measurable mainly, and perhaps even wholly, in dollar terms, in other situations that will not be so. Examples might include obtaining an injunction restraining the destruction of an area of native bush, or the closing of a road or access track or some other facility, or a judgment upholding the reputation of a person or a product (even if unaccompanied by significant damages), or vindicating some important point of principle.

[34] Because assessing “prospects of success” may involve assessing non-pecuniary benefits, the assessment for a particular plaintiff or claimant can obviously be difficult.

[35] I agree with Mr Taylor’s suggestion that inquiring what a person funding him or herself would do may be helpful. The question might be framed thus: What, if any, legal action would the applicant (assuming they were a reasonable individual) take in the circumstances if paying their own legal costs?

[51] We consider that the words “prospects of success” should speak for themselves. As we will discuss later, various considerations may be relevant to the evaluation of the phrase in a particular case. The reasonable private litigant approach may assist in this evaluative exercise but it is really part of the policy rationale and not a test. It is certainly not a test to be applied in a rigid manner.

[52] We do not consider that Priestley J in Legal Services Agency v Hosseini was purporting to lay down a different test. Rather, Hosseini is an example of a case where the consequences to the individual (including the possibility of persecution

should the applicants be returned to Iran) were so serious that even a slim chance of success was deemed to be sufficient to justify the continuation of legal aid.

[53] Furthermore, we see force in Mr Cooke’s argument that Parliament provided for the Agency to make these decisions – and on an evaluative basis. This is clear from the use of the word “sufficient” in s 9(4)(d)(i). Legal aid may be withdrawn if the aided person’s “prospects of success are not sufficient to justify the grant of legal aid”. The word “sufficient” must be given some meaning in this context. We consider that it underscores the need for the Agency to make an overall assessment by standing back and looking at the litigation prospects in the round.

[54] Accordingly when the Panel (now the Tribunal) and the Courts are called upon to review decisions by the Agency, a formalistic approach must be avoided. We consider it would be wrong for the Agency to be required to meet a series of specific tests or respond to particular questions other than the statutory question as to whether the applicant’s prospects of success are not sufficient to justify the grant of legal aid. The considerations relevant to any particular case are likely to be highly fact-dependent.

[55] In this context Ms Cooper submitted that the relevant considerations included the following:

The desirability of “sufficient prospects of success” being interpreted within the overarching framework of “access to justice”.

The fact that “sufficient prospects of success” should take into account the nature of the dispute and/or the legally aided person given that most legally aided persons are likely to be vulnerable and/or under disability of some sort. This should include consideration of the principle of equality of arms and whether the injustice at issue is one for which the State may be responsible.

Legal aid should be granted or continued where the prospects of success are not “totally hopeless” or where the prospects are “so slim”/“so low” that legal aid is not justified.

Whether there are “sufficient” prospects of success should acknowledge the importance of “public interest” or “novel” cases – particularly in developing areas of law and/or in human rights cases.

The concept of “prospects of success” must be assessed on the basis of information available at the time the decision is made. For example, where information is available which suggests the claim might settle

[56] In summary, Ms Cooper submitted that when assessing “sufficient prospects of success” the Agency should be required to take into account the principle of “access to justice”. This is to be seen as a corollary of the right to have the courts hear the claimant’s case under s 27(3) of the New Zealand Bill of Rights Act 1990

person, particularly where the applicant is particularly vulnerable and where there is a need to protect against the coercive powers of the State. Finally, she submitted it was essential that New Zealand fulfils its international obligations with respect to maintaining legal aid unless the claim is a hopeless one.³⁸

[57] For the Agency, Mr Cooke agreed with a number of the propositions advanced by Ms Cooper. For example, Mr Cooke agreed that the term “sufficient prospects of success” should properly take into account the nature of the dispute, and he accepted that the Agency should assess sufficient prospects of success on the basis of information available at the time the decision is made. Mr Cooke also

_{agreed that the importance of the case (for example, whether it raised
public interest}

³⁷Counsel cited Airey v Ireland [1979] ECHR 3; (1979) 2 EHRR 305 (ECHR) at 24–26 as well as Morael v France (Communication No 207/1986) (unreported), 28 July 1989 at 9.3, in which the European Commission of Human Rights held, with reference to Article 14.1 of the International Covenant on Civil and Political Rights, that the principle of equality of arms must also be observed in a civil setting.

³⁸Kyiv Declaration on the Right to Legal Aid (declaration adopted at the Conference on the Protection and Promotion of Human Rights through Provision of Legal Services: Best Practices from Africa, Asia and Eastern Europe, Kyiv, Ukraine, March 2007).

or novel questions in a developing area of law or in a human rights case) could be relevant depending on all the circumstances of the case. The same would be the case where legal aid funding was being sought by an applicant raising similar factual and/or legal issues to those being determined in other cases. However, Mr Cooke did not accept that either the vulnerability of the claimant or the principle of equality of arms (where the claim is against the State) had any relevance. Furthermore, he strongly disagreed with the concept that legal aid should be granted for, and continued in, any case except where the prospects of success are “totally hopeless”. Such an approach was contrary to that set down in the notion of the reasonable private litigant discussed in Timmins.

[58] With respect to the notion that the Act should be interpreted against the overarching principle of access to justice, Mr Cooke emphasised that the Act must be interpreted on conventional interpretation principles. One aspect of the purpose provision in s 3 should not overwhelm interpretation to the exclusion of other contextual material. Mr Cooke submitted that there was no international law obligation requiring legal aid to be granted and continued unless the claims were hopeless. He submitted that the appellants’ arguments confuse international law obligations to provide criminal legal aid as part of the fair trial guarantee in the NZBORA and civil legal aid for civil proceedings. The two systems needed to be separately considered.

[59] Mr Cooke accepted that there is a recognised principle of access to the courts more conventionally acknowledged as a common law principle but arguably also implicit in some of the international law obligations. But the access to justice principle cannot be interpreted as requiring the State to fund all civil claims sought to be brought by impecunious persons unless the claim is hopeless. Mr Cooke cited

necessary to address each case (there involving a challenge to the parole system) in

terms of New Zealand’s domestic law and in particular the parole legislation and

[60] Further, Mr Cooke challenged the applicability of s 27 of NZBORA. He submitted that the only relevant provision in the context of civil legal aid decisions is s 27(3). But that cannot give the appellants a right to obtain and maintain civil legal aid funding except when their case is a hopeless one.

[61] Where, as in the present case, reliance is placed on s 9(4)(d)(i), the Agency must assess the sufficiency of the prospects of success in the light of the circumstances then pertaining and the stage the proceeding has reached. In some cases, sufficient material may be available in order to properly assess those prospects. However, in other cases, further investigations may be necessary before a determination of the prospects of success may properly be made. This might include, for example, the need for further discovery, medical reports or matters of that nature.

[62] When the merits of the claim are being considered, this would include an assessment of the then available evidence, the relevant state of the law, the proposed causes of action and any likely defences. There may have been developments in the law since the initial grant of aid that require consideration. This was a particularly relevant factor in the present cases where claims in similar circumstances had failed and significant legal issues had been determined at appellate level.

[63] We agree that there will be a range of relevant considerations to be considered when assessing the sufficiency of the prospects of success of a claimant for legal aid. This is not to suggest an exhaustive list of considerations must be identified and applied in every case. The statute deliberately avoids any listing of relevant factors. We consider that the Agency must treat each case on its merits. Each decision, be it to withdraw aid or continue the grant, is likely to turn on the particular facts of each case. The question is whether the aided person is no longer a person who would be entitled to the grant by virtue of any of the provisions of ss 9,

[64] One consideration is likely to be the cost of bringing the claim compared with the potential benefits. Where damages and/or other financial benefits are sought, it will be necessary to assess the prospects of achieving a successful financial outcome in order to determine whether they are sufficient to justify proceeding. A re-assessment of the costs and benefits, including the costs incurred to date and those likely to be incurred in the future, will ordinarily be essential. Part of the analysis could include an assessment of the likelihood or otherwise of an out-of-court settlement rather than proceeding to trial. In that respect, any settlement offers will be relevant.

[65] Non-monetary outcomes, and similar types of relief sought, may also need to be assessed as a relevant consideration depending on the nature of the case. In this context, we agree that the novelty of the claim, its precedent effects and whether it is a new or developing area of the law may need to be considered.

[66] The Agency can be expected to approach its decision making with no predetermination either way. We do not consider it is appropriate to treat the aided person as having a presumptive right to the continuation of legal aid. While the withdrawal of the grant may affect the ability of an aided person to access justice in a particular case, the Agency must ask, and determine, the questions we have identified arising from the statutory scheme. Access to justice considerations are relevant but not determinative.

[67] Neither do we consider that the appellants’ case is enhanced by reference to principles of international law. We agree with Mr Cooke’s submissions that there is no international law obligation requiring legal aid to be maintained unless the claim is hopeless. This case turns on New Zealand’s domestic law and in particular the interpretation of the relevant provisions of the Act in the light of its purposes and context. Any international obligations in the context of civil legal aid are met through the enactment of the Act and, more recently, the 2011 Act. The international decisions cited by counsel for the appellants do not assist the appellants because of their different legislative context.

[68] Finally, we are satisfied that the provisions of s 27(3) of NZBORA do not assist the appellants. The right of a claimant to bring civil proceedings against the Crown referred to in s 27(3) remains unaffected by the provisions of the Act. What that subsection does not deal with is a claimant’s right to a grant or continuation of legal aid. That question is dealt with by the applicable statutory provisions of the specific legislative instrument governing grants of legal aid for legal services for civil claims.

[69] Having considered the meaning and application of the sufficiency of “prospects of success”, we now turn to consider the level of analysis that the Agency is required to undertake when dealing with a withdrawal of aid case. Counsel for the Agency accepted that before legal aid may be withdrawn the Agency must conduct an analysis of the individual facts and circumstances of the case of the aided party as compared with, say, other unsuccessful claims.

[70] Mr Cooke referred to the approach taken by Dobson J in Legal Services Agency v R when the Judge held that there had not been a sufficient case specific analysis of the applicant’s case in the light of the outcome of the unsuccessful cases. Dobson J then stated, correctly in our view:⁴¹

As with all of the decided cases, a reasoned, objective reconsideration would need to recognise the fact-specific context of the judgments, and analyse the extent of similarities and differences before reaching any view on the relative likelihood of those outcomes representing a reliable guide to the outcome in [the applicant’s] case.

[71] Mr Cooke also referred to the case of Legal Services Agency v W where Wild J was required to address one of the key issues arising in these historic abuse cases namely, whether the claimant could overcome the limitation defence difficulties by showing that they suffered from a disability that effectively prevented them bringing the claim. The Judge identified five questions which he considered

_{would need to be answered in relation to the expert
psychiatric/psychological}

evidence which had been provided by the claimant in connection with his disability. The Judge identified the questions relevant to that particular evidence as follows:⁴²

(a) Did [the expert] explain his understanding of the legal test for “under a disability”, or otherwise demonstrate that he had a proper understanding?

(b) Throughout the claimed period, was W suffering from a recognised mental illness or disorder?

(c) Did the PTSD [Post Traumatic Stress Disorder] suffered by W disable him from instructing a lawyer and commencing a proceeding for the whole period?

(d) Does [the expert] reconcile his opinion that W suffered continuously under a disability, with W’s ability to carry on with life in the interim?

(e) Does [the expert] explain what was the “trigger” which enabled W to make the connection between the sexual abuse he suffered in the navy in 1984 and the PTSD diagnosed in 2004?

[47] ... this type of analysis was not carried out by either the LSA or the LARP. It is the sort of scrutiny that is required. Had it carried it out, I do not consider that the LSA could reasonably have assessed W’s prospects of success in overcoming the limitation defence as so low that the continuation of legal aid was not justified.

[73] Mr Cooke submitted that Wild J’s five questions took the intensity of the required analysis even further than had Dobson J in Legal Services Agency v R. He contended that this level of individual analysis went too far. He submitted that the correct assessment both for the Panel on review and for the Court was whether the decision of the Agency to withdraw legal aid was reasonably open: there was no requirement for a comprehensive or detailed level of analysis of each of the issues arising in any particular case. The key policy reason supporting the submissions is that Parliament had made it clear that the decision on whether the continued availability of legal aid was justified was one for the Agency to make. As such its opinions were to be respected.

[74] Mr Cooke further submitted that in the context of the historic abuse cases the cumulative effect of the obstacles needed to be overcome was such that it was not

necessary to conduct an intensive analysis of each of the underlying issues before recognising that particular claims would be most unlikely to succeed.

[75] We agree that the Agency, before refusing to grant legal aid or in determining to withdraw legal aid, must make an individual assessment of each litigant and whether or not their prospects of success are sufficient to justify the grant of legal aid. This is essentially an evaluative exercise whereby the Agency must properly exercise its power to refuse to grant legal aid under s 9(4)(d) or to withdraw legal aid at a later point under s 26 of the Act. Such an assessment must not be on a formulaic basis. However that would not preclude the Agency adopting a common form of approach or analysis, so long as the individual case of the claimant was separately addressed.

[76] Assessment of a particular case or a specific type of evidence by reference to a detailed list of questions such as that used in Legal Services Agency v W may have the benefit of providing guidance to claimants depending on the circumstances of the case. But we agree with Mr Cooke that such an approach ought not be considered to be mandatory or be inflexibly applied. We note that Dobson J in the High Court held that, while the five questions proposed by Wild J in Legal Services Agency v W could be appropriate in certain cases, that did not mean that the Agency is compelled to continue with legal aid in every case until a litigant obtains a psychiatric report that

appropriately addresses each of the five questions.⁴³We agree with this observation.

A formulaic approach is not appropriate. The evaluative task of the Agency will be informed by the types of relevant considerations discussed at [63]–[68] above.

[77] The statutory requirement for the Agency to provide reasons for the withdrawal of a grant arises under s 27 of the Act. The section applies where the

_{Agency proposes to withdraw a grant of legal aid under s 26 in such a
way that the}

aided person is likely to be detrimentally affected. A grant of legal aid must not be withdrawn until the aided person and the lead provider have been given notice of intention to withdraw the grant. Further, there is a requirement that the aided person be given a reasonable opportunity to make submissions on why the grant should not be withdrawn in the manner indicated in the notice. The Agency is then to consider any submission by or on behalf of the aided person. Where a grant of legal aid is to

(3) If a grant is withdrawn, the Agency must immediately notify the aided person and the lead provider of—

(a) the date on which the withdrawal takes effect, which must be a date on or after the date on which the Agency reasonably believes the aided person will receive the notice; and

[78] We heard submissions from the parties as to the level of detail to be provided in the letter of notification. The wording of s 27(3)(b) is silent as to the extent of the detail required to be given by the Agency. This is to be contrasted with the provision dealing with determinations by the Panel. Once a Panel has determined a review under s 57 of the Act it must notify the parties of the determination and every

determination “must be accompanied by a brief summary of the reasons for it”.⁴⁵

[79] Where the Agency notifies an aided person of its decision on the withdrawal of a grant under s 27(3) we consider that the Agency should set out in the notification the essence of the reasons for its decision. Typically this will involve setting out the broad reasons describing why the grant of aid has been withdrawn. Sufficient detail should be provided to enable the aided person to decide whether to exercise the statutory rights to challenge the decision either by means of a

reconsideration⁴⁶or through a review by a Panel.⁴⁷However, the written notification

is not required to meet the level of detail of a judicial judgment or formal legal opinion.

[80] The reasons should normally provide sufficient information to show the aided person and the lead provider that the Agency has given individual consideration to the aided person’s case. It will also explain which of the statutory provisions is relied upon by the Agency as the basis for withdrawing aid. For example, if aid was being withdrawn under s 26(2)(a), the reasons given ought to state under which of sections 9, 10 or 11 the aided person is considered no longer to be a person entitled to the grant of legal aid. On the other hand, provision of extensive amounts of information and minute reasoning would not be consistent with the function of the

Agency to administer schemes that are inexpensive and efficient.⁴⁸It is true that

such schemes must also be consistent and accountable. We are satisfied that the level of reasoning we have suggested would meet these requirements.

[81] The level of detail required is also informed by the fact that, if an aided person seeks a review by a Panel, the team assigned to conduct the review may call for and consider all information held by the Agency relating to the decision and to any reconsideration by the Agency of the decision.⁴⁹It follows from the presence of these powers that any outline of reasons for a withdrawal under s 27(3)(b) of the Act would not need to be to the same level of detail.

[82] Where the Agency is dealing with a withdrawal of aid it must focus on the relevant statutory test. Section 26(1) lists the circumstances in which the Agency must withdraw legal aid granted in respect of a civil matter. Any reasons would need to spell out which of the circumstances in that subsection apply to the case in point, and why. Similarly, where the Agency has exercised its discretionary power under s 26(2) it must explain in its reasons which of the applicable circumstances provided for in that subsection are relevant to the aided person’s claim. In other words, which of the applicable subparagraphs have formed the basis of the withdrawal may well affect the level of explanation offered in the reasons. For example, if the Agency was satisfied that the proceedings in respect of which legal aid was granted had been

disposed of,⁵⁰then very brief reasons would be needed. On the other hand, if

intentionally or negligently made untrue statement about the person’s resources

[83] Where the case in point deals with issues common to other cases being considered by the Agency, we see no reason why a standard format or common form of notification letter should not be used by the Agency. The critical point is that the notification should make clear that the individual case of the aided person has been separately considered. Other reasons could include why it is similar to other cases and the basis upon which such similarity is founded. Depending upon the circumstances of the particular case any similarity may be able to be briefly stated. We see no reason why similar language cannot be used by the Agency. For example, taking an illustration from the present appeal, where the claims are barred as a result of the ACC bar any notification letter would likely be in similar, and inevitably brief and concise, language.

[84] In summary, the reasons may be broadly stated, but the level of detail is likely to turn on the basis relied upon by the Agency to ground withdrawal of legal aid in a particular case. The reasons for the withdrawal should be set out in sufficient detail to enable the litigant to decide whether to exercise either reconsideration or review rights as a means of challenging the decision. Standard format notifications or common form letters may be appropriate in cases such as the present where many of the relevant considerations are likely to be common. But it is critical nevertheless that the Agency addresses itself to the individual case and demonstrates that it has done so in its reasons.

[85] Where an aided person or an applicant for legal aid is aggrieved by a decision of the Agency affecting the person, they may apply to the Agency for a reconsideration of the decision.⁵¹This provision applies to an aided person whose aid has been withdrawn under s 27 of the Act. The notification of withdrawal sent

_{by the Agency will inform the aided person of the right to seek a
reconsideration.}⁵²

(2) When the Agency receives an application for a reconsideration, the decision must be reconsidered by a person other than the person who made the original decision, and the person doing the reconsideration may take into account any new or additional information supplied by the person applying for the reconsideration.

(3) The Agency may decline to reconsider a decision if the Agency has already reconsidered that decision or a decision relating to substantially the same issue.

[87] Where a reconsideration is sought the statute makes it clear that an aided person (who has had aid withdrawn) may provide new or additional information which may be taken into account by the Agency in determining the reconsideration. Typically such new or additional information will be provided by the aided person or by his or her lead provider.

[88] In the case of a withdrawal of aid, the power to have the Agency reconsider a decision may be particularly apt in a situation where new or additional information relevant to the decision has become available in the period between notification of intention to withdraw the grant⁵³and notification of withdrawal of the grant.⁵⁴We see the reconsideration process as being available to the aided person to obtain a prompt or efficient reconsideration of the withdrawal decision.

[89] Reconsideration is plainly a process of lesser formality and complexity than review by a Panel as provided for in pt 3 of the Act. Information provided by an aided person may be relevant to such review process. Again, this is evident from the powers of the Panel to call for information or a written report by the Agency relating

[90] The statutory power of reconsideration in s 29 of the Act contains no further detail than that set out in subss (2) and (3) quoted at [86] above. This underscores the lack of formality and complexity that is likely to attend the reconsideration process by the Agency. The legislature would have been aware of the potential for

_{abuse because it granted the Agency power to decline to reconsider a
decision if the}

Agency has already carried out a reconsideration of that decision or a decision relating to substantially the same issue.⁵⁶

[91] In summary, in the context of a withdrawal of legal aid, we see the scope of the reconsideration power in s 29 in the normal course to be limited to situations in which new or additional information has come to light after the original decision has been made. This provides a relatively informal opportunity for the aided person to draw such new or additional information to the attention of the Agency in the hope that it might lead to a different decision. Provision of such new or additional information may or may not be accompanied by submissions from the lead provider on behalf of the aided person, depending upon all the circumstances in which the reconsideration is sought.

[92] Part 3 of the Act provides for reviews of decisions of the Agency to be determined by the Panel. The operative provision is s 54(1), which provides:

An aided person or an applicant for legal aid may apply to the Review Panel for a review of a decision of the Agency referred to in subsection (2) on the grounds that the decision is –

[93] A decision of the Agency includes an original decision, for example to decline a grant of legal aid or to withdraw aid, and a decision on a reconsideration under s 29.⁵⁷Any review by the Panel of a decision of the Agency must be

[94] The powers of the Panel on the determination of a review are described in s 57(2):

The Review Panel may determine a review by confirming, modifying, or reversing the decision under review.

[95] Instead of determining a review the Panel may give a direction to the Agency that it must reconsider all or any part of the decision. In these circumstances the following provisions apply:

(2) If the Review Panel directs the Agency to reconsider a decision, the Panel must give reasons for the direction, and may set out the matters that the Agency must take into account in its reconsideration.

(3) If the Agency receives a direction to reconsider, it must reconsider the decision, taking into account the reasons for the direction and any matters set out by the Review Panel.

[96] The fourth issue requires consideration of the circumstances in which the Panel, on a review, may find that a decision is either manifestly unreasonable or wrong in law. We deal with each in turn.

[97] Both counsel referred to the decision of O’Regan J in Legal Services Agency v Tana.⁵⁹Mr Cooke submitted that the approach in that case demonstrated that it was for the Agency to make the call on questions that can involve different reasonable alternatives. In that sense manifestly unreasonable sets a high threshold for intervention by the Panel. Thus in Tana, O’Regan J stated:

[23] This is a different statutory formulation from the “plainly wrong” formation often used in relation to appeals from the exercise of a discretion, where the appeal body focuses on whether a decision is correct or incorrect, and has to form the view it is not only incorrect but plainly so. In this case the focus is not on whether the decision is incorrect, but whether it is unreasonable, and the legislature has stipulated that the Panel should intervene only where the decision is not only unreasonable, but is clearly and unmistakably unreasonable.

[24] That formulation rules out completely an approach on the part of the Panel that it considers matters afresh and substitutes its own view. It also rules out the approach taken by the Panel in this case, that “manifestly unreasonable” simply means unreasonable on the face of the papers presented to the Panel. As Mr Taylor said, that approach fails to recognise that the statutory test requires not only a finding that the Agency’s decision is unreasonable, but that it is manifestly so. It is only when the degree of

[25] That means the Panel is required to exercise a considerable degree of restraint in determining review applications based on the “manifestly unreasonable” ground. It is clear from a review of the statutory history ... that the legislature has deliberately imposed a high threshold for intervention by the Panel. That implies that the legislature intended there should be a degree of tolerance about decisions of the Agency which would not be appropriate where there was a full right of appeal, on the basis the Agency was exercising a discretion.

[98] Mr Cooke referred us to High Court decisions following the observations of O’Regan J.⁶⁰He also referred to the judgment of Doogue J in Legal Services Agency v G in which the term “manifestly” was used in a sense interchangeably with terms such as “plainly”, “clearly”, “evidently”, “obviously” and “unmistakably”.⁶¹

He therefore submitted that the manifestly unreasonable test contemplated that a decision will only be overturned when it was not reasonably open to the Agency.

[99] We agree with the approach of O’Regan J on the nature of the manifestly unreasonable test. We also agree with Mr Cooke’s submission that it is necessary for the Panel on an application for review to exercise restraint before intervening to reverse a decision of the Agency on this ground.

[100] Mr Cooke further submitted that, consistent with the high threshold required for holding a decision manifestly unreasonable, the Panel should apply a narrow approach to the wrong in law ground under s 54(1)(b). Thus Mr Cooke contended that wrong in law does not encompass broad grounds of judicial review but instead is limited to situations where the Agency misinterpreted or misapplied either the law

_{primarily directed to the underlying litigation in issue or the
provisions of the Act.}

⁶⁰Gibson v Legal Services Agency HC Auckland CIV-2006-404-999, 28 November 2008 and

[101] Mr Cooke submitted that the broad scope of the Panel’s powers to determine a review under s 57(2) or direct reconsideration under s 58 indicated that the legislature intended the Panel to focus on the merits of the decision under review. Accordingly the role of the Panel is not to carry out a judicial review type analysis but instead to determine the substantive merits of each decision that comes before it. Thus importing the traditional judicial review grounds into the Panel’s power under pt 3 was not appropriate. In summary, Mr Cooke submitted that the proper approach for the Panel is to examine the merits of each decision of the Agency as if it were carrying out an appeal, but only to intervene to reverse or modify the decision where it was satisfied that the decision was either “manifestly unreasonable” or involved a misinterpretation of the relevant law.

[102] Ms Cooper rejected this narrow approach to wrong in law. She submitted that any material error of law was sufficient to enable the Panel to intervene to correct an Agency decision on a review under s 54. It was not necessary to define the boundaries of “wrong in law” in a strict manner. Ms Cooper relied upon the

dicta of Randerson J in Legal Services Agency v Fainu.⁶²She submitted that the

high threshold referred to by O’Regan J in Tana only applied to the manifestly

... I am reluctant to impose undue refinement on the approach of the Review Panel under s 54. It has to deal with many and varied circumstances and has a very substantial workload. ... However, it is obvious as a matter of construction that the Legislature has drawn a distinction between the two grounds for review contained in s 54(3). A decision may be “wrong in law” for a variety of reasons. It is undesirable to suggest any exhaustive list but a decision may be wrong if it derives from an incorrect application or interpretation of the statute; or if it is wrong in principle; or if the decision- maker has failed to take into account some relevant matter; or has taken account of an irrelevant matter; or if it depends upon findings which are unsupported by the evidence.

There may be other grounds upon which the decision may be wrong in law but this short recitation of possible grounds shows that the legislature must have meant that the “manifestly unreasonable” ground was something different from a decision which was “wrong in law” on all or any of those grounds.

[104] We observe that the grounds listed by Randerson J - error of law, ignoring relevant considerations, taking into account irrelevant considerations, and error of fact - are commonly grouped together in judicial review jurisprudence under the heading of “illegality”.⁶⁴

[105] The interpretation of “wrong in law” established in Fainu has been followed in a number of subsequent High Court cases. For example, in Legal Services Agency v Brown Miller J held that it was open to the Panel to conclude that the Agency erred in law by discounting the non-financial interest of the appellant for the purposes of the “prospects of success” test on the basis that he had already obtained a remedy.⁶⁵In that case Miller J also considered the relationship between “wrong in

The legislature must have meant different things by “manifestly unreasonable” and “wrong in law”. ... However, it does not follow that the two are mutually exclusive. I see no reason why an egregious error of law may not also be described as manifestly unreasonable.

[106] In Legal Services Agency v McDonald-Wright,⁶⁷Clifford J upheld a finding of the Panel that the Agency had erred in law by interpreting the provisions relating to legal representation to mean that representation was only required when “there were legal questions that only legal counsel would be able to address”.⁶⁸Further, in Legal Services Agency v Sweeney⁶⁹Williams J upheld a finding of the Panel that the Agency’s decision was wrong in law because it constituted an improper fettering of

_{the Agency’s discretion. The Agency had relied too heavily
on the “Services}

⁶⁴See Philip A Joseph Constitutional & Administrative Law in New Zealand (3rd ed, Brookers, Wellington, 2007) at [22.1]. See also Council of Civil Service Unions v Minister for Civil Service [1985] AC 374 (HL) at 410.

Practice Manual” and had neglected to consider wider factors or take a “holistic”

[107] In each of these cases the Court directly or indirectly referred to, and applied, the Fainu test for “wrong in law”.

[108] The Fainu test has also been applied in a number of the decisions of the newly formed Legal Aid Tribunal.⁷⁰In BD (Historic Abuse) v Legal Services Agency,⁷¹the Tribunal held that the Agency’s decision was wrong in law because it failed to give substantive consideration to applications made by the legal aid provider to amend the maximum grant of legal aid. In AM (Historic Abuse) v Legal

_{Services Agency,}⁷²_{the Tribunal held that
the Agency erred in refusing payment of an}

invoice on the basis that it exceeded the maximum grant. In BN (Criminal) v Legal Services Commissioner,⁷³the Tribunal held that the Commissioner was wrong in law in failing to exercise his discretion properly to value a legal aid applicant’s potential interest as a discretionary beneficiary under a trust and in requiring the applicant to consent to a land charge over the trust asset.

[109] We have examined the legislative history of s 54 which does not provide any insights into the purpose of that section. The precursor to the 2000 Act was the Legal Services Act 1991. The equivalent first instance appeal under that Act was from the District Subcommittees to the Legal Aid Review Authority. Section 132 of the Legal Services Act 1991 specified that such a review was to be carried out “as if the decision of the District Subcommittee had been made in the exercise of a discretion”. Accordingly the concepts of “wrong in law” and “manifestly unreasonable” were not relevant to cases determined under this legislation.

[110] Given that the legislature has identified two possible grounds of review – manifestly unreasonable and wrong in law – there is an issue as to how particular types of challenges to Panel decisions might be characterised. Mr Cooke argued that

_{relevant/irrelevant considerations ought to be treated in this context
as coming within}

⁷⁰_{The Legal Aid Tribunal replaced the Legal Aid Review Panel
from 1 July 2011.}

⁷¹_{BD (Historic Abuse) v Legal Services Agency [2011]
NZLAT 21, [2012] NZAR 377.}

⁷²_{AM (Historic Abuse) v Legal Services Agency [2011]
NZLAT 36, [2012] NZAR 95.}

the manifestly unreasonable limb. Mr Cooke relied on the statement of Lord Greene MR in Associated Provincial Picture Houses Ltd v Wednesbury where he said that a person entrusted with a discretion must direct him or herself properly in law:⁷⁴

He must call his own attention to the matters which he is bound to consider. He must exclude from his consideration matters which are irrelevant. ... If he does not obey those rules, he may ... be ... said, to be acting “unreasonably”.

[111] If this approach were to be followed certain errors might be said to come within the first category and be required to be shown to be manifestly unreasonable. For present purposes we do not need to resolve this question. We are content to refer to the formulation of “wrong in law” adopted by Randerson J in Fainu. The types of errors there described as being within the wrong in law category test correspond reasonably closely with the established grounds of review. Nevertheless we agree with Mr Cooke’s submission that in cases such as the present a key focus of a Panel on review will be on ascertaining whether there has been an error of law concerning the causes of action or defences in the litigation for which the claimant is seeking aid. Additionally, errors of interpretation or application of the Act by the Agency would require to be corrected on review.

[112] We are reluctant to endorse the development of detailed rules or criteria to be applied by the Panel on review. There is much to be said for simplifying the task of the Panel, given that it is required to consider the decisions of the Agency in areas that require evaluation and judgment. We accept that some degree of tolerance should be afforded to decisions of the Agency, bearing in mind the additional role given to the Agency by Parliament in difficult matters of judgment. Such an approach is in our view consistent with the statutory requirement that the review of an Agency decision by the Panel “must be conducted on the papers and with all

[113] This issue arose out of the conclusion by Dobson J that the Panel erred in assessing the Agency’s decisions in relation to grants for historic abuse claims on the basis of the analysis provided in the Agency’s submissions concerning individual cases, rather than confining its assessment to the analysis described in the letter withdrawing aid.

[114] The Commissioner expressed concern in relation to the High Court’s findings that the extent of the Agency’s consideration of a case must be assumed to be no greater than that described in the formal letter written by the Agency setting out its decision to withdraw aid and that the Panel erred in allowing the Agency to develop or expand on its analysis in submissions to the Panel. Mr Cooke submitted that Dobson J erred in finding that the Panel committed an error of law in allowing the Agency to go beyond its factual analysis in the original letter and in finding that the extent of the Agency’s consideration is to be taken only from the content of the

[115] Mr Cooke submitted that such an approach is inconsistent with the provisions of the Act and was unworkable in terms of administering the provisions of the Act. He referred to the statutory requirements for providing reasons of the withdrawal decision in s 27(3)(b) as discussed at [77] above. If the letter, unlike a judgment or formal legal opinion, were only required succinctly to set out the reasons for the decision, it would be wholly inappropriate to confine the Panel to such material. Moreover, such an approach was inconsistent with the information gathering powers of the Panel as set out in ss 55A, 56(3) and 56(4) of the Act.

[116] The statutory provisions permit the Panel to gather information from a range of sources. One is the Agency itself. Section 55A relevantly provides:

(a) may require the Agency or any person to provide any information relating to the decision or the application for review; ...

(3) A team assigned to a review may require the Agency to provide either or both of the following:

(a) all information held by the Agency relating to the decision and to any reconsideration by the Agency of the decision:

(b) a written report setting out the considerations to which the Agency had regard in coming to its decision or when reconsidering it.

(4) A team assigned to a review may receive and obtain from any person any submission, statement, document, information, or matter that may, in its opinion, assist it to deal effectively with the review before it.

[118] We have already found that the Agency, when notifying an aided person of the withdrawal of aid, need only set out the essence of the reasons and provide the aided person with a broad understanding of why legal aid has been withdrawn sufficient to enable the aided person to decide whether to exercise a statutory right to challenge.

[119] Having established what the written notification must contain in order to comply with s 27(3)(b) of the Act, we consider that Dobson J erred by restricting the Panel to consideration of the contents of the withdrawal letter. Such an approach is inconsistent with the provisions of ss 55A and 56(3) and 56(4) of the Act. In our view neither the statute nor any other principle of law requires that the material to be considered by the Panel upon a review should be limited to the content of the letter.

[120] For the reasons given above the appeal by the six appellants is dismissed. For the same reasons the appeal by the Legal Services Agency in respect of cases of the litigants determined in the High Court is also dismissed.

[121] The questions of law as modified in [29] above are answered in the manner set out in [36] to [119] of this judgment.

[122] There will be an order prohibiting publication of the names and addresses or identifying particulars of the appellants (and the respondent LAM in the cross-appeal). A similar order made in the High Court is to remain in place out of an abundance of caution.

CASE	ERRORS	JUDGMENT REFERENCE	OUTCOME
JMM	1. Insufficient case specific analysis by Agency 2. Panel treated Agency’s submissions as reasons for original decision 3. Panel wrongly assumed report would be unhelpful	[72]–[76] [77]–[81] [67]–[71]	Remitted to Agency See [83]–[84], [290]
GLS	Panel conducted the analysis suggested by Wild J in Legal Services Agency v W without parties having opportunity to make submissions	[90]	Appeal dismissed. See [106]–[107]
LAM	Psychiatric report prepared in relation to LAM was not before the Agency. Neither was the full psychiatric report available to the Panel	[108], [117]	Remitted to Agency [137]–[138]
SJL	1. Insufficient case specific analysis by Agency 2. Panel conducted the analysis suggested in the case of W without parties having opportunity to make submissions 3. Panel treated submissions as reasons for decisions	[141], [161]–[162] [143], [163] [144], [151]–[154]	Remitted to Agency. See [164], [291] [293]
MSB	Panel conducted the analysis suggested in the case of W without parties having opportunity to make submissions	[171]	Appeal dismissed. See [194]–[195], [291], [294]
DAW	Panel treated submissions as reasons for original decision	[203]–[210]	Remitted to Agency. See [226]–[227], [295], [297]
BDR	1. Insufficient case specific analysis by Agency 2. Agency only dealt with disability, not reasonable discoverability 3. Panel treated submissions as reasons for original decision	[249]–[251] [230]–[236], [254] [237]–[242]	Appeal dismissed. See [256]–[257], [295], [297]

CASE	REPORT AND EVIDENCE STATUS	CASE STATUS – DSW	CASE STATUS – PSYCHIATRIC HOSPITAL
JMM	No psychiatric report, no plaintiff affidavit	ADR funding. Claim still filed	N/A
GLS	Psychiatric report (2005) and affidavit, plaintiff affidavit	ADR funding. Claim still filed	Settled and discontinued 2 May 2012
LAM	Psychiatric report (2003) and affidavit, plaintiff affidavit	Settling	Settled and discontinued 21 April 2012
SJL	Psychiatric report (2003) and affidavit, plaintiff affidavit	N/A	Settled and discontinued 18 June 2012
MSB	Psychiatric report (2006) and affidavit, plaintiff affidavit	ADR funding. Claim still filed	Settled and discontinued 18 June 2012
DAW	Psychiatric report (2006) and affidavit, plaintiff affidavit	ADR funding. Claim still filed	Settled and discontinued 28 May 2012
BDR	Psychiatric report (2006) and affidavit, plaintiff affidavit	Settled 20 September 2011	N/A

Court of Appeal of New Zealand

JMM v Legal Services Agency [2012] NZCA 573; [2013] 1 NZLR 517; (2012) 21 PRNZ 190 (10 December 2012)