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High Court of New Zealand Decisions |
IN THE HIGH COURT OF NEW ZEALAND
AUCKLAND REGISTRY
CIV 2009-404-1230
UNDER The Legal Services Act 2000
IN THE MATTER OF an appeal against
the decision of the Legal
Aid Review Panel, Auckland and dated 9
February 2009
BETWEEN LEGAL SERVICES AGENCY
Appellant
AND AMANDA JANE PICKARD AND TROY
ALLEN PICKARD-TAYLOR
Respondent
Hearing: 18 June 2009
Counsel:
G D S Taylor for Appellant
M Lloyd for Respondent
Judgment: 3 July 2009
RESERVED JUDGMENT
OF RONALD YOUNG J
Introduction
[1] Mrs Pickard and her son Troy ("the Pickards") have issued proceedings in the
High Court
at Wellington alleging that, as a result of the faulty installation of a faulty
gas heater their heath has suffered significantly
from carbon monoxide and methane
poisoning. The claim was initiated against the installer of the heater and the supplier
of the heater
("the defendants"). They applied for and were granted legal aid when
the proceedings began in 2001.
[2] The case was due for
trial in September 2008. Just prior to trial an offer of
settlement was made by the defendants. The Pickards did not accept the offer.
The
LEGAL SERVICES AGENCY V AMANDA JANE PICKARD AND TROY ALLEN PICKARD-TAYLOR HC
AK CIV 2009-404-1230 3 July 2009
Legal Services
Agency ("the Agency") then advised the Pickards they were
considering withdrawing aid, citing s 26(2)(c) of the Legal Services Act
2000 ("the
Act"), and gave them an opportunity to respond to the proposed withdrawal. The
Pickards objected to the limited time for
response, however they responded to the
Agency's reasoning.
[3] On 18 September 2008 the Agency then amended the aid grant allowing
twenty-five hours payment for legal services for settlement negotiations but refusing
to fund the trial. The letters from the Agency
to the Pickards read:
Having regard to costs, benefits and the risks of going to trial, we think that a
reasonable
self-funding person would accept the settlement offer. In our
view, it is unreasonable for the aided person to require the
proceedings to
continue.
Accordingly, the grant of aid is to be withdrawn under s 26(2)(c) of the
Legal Services
Act 2000.
[4] The Pickards applied for a review of that decision. The Legal Aid Review
Panel ("the Panel") concluded that the
decision to withdraw aid for the trial was
manifestly unreasonable and wrong in law. They reinstated the grant. Pivotal to the
Panel's
reasoning was whether the respondents in this case were given adequate time
to consider the settlement offer and adequate time to
respond to the proposal to
withdraw aid.
This appeal
[5] The Agency brings this appeal on the basis that the Panel erred in
law. The
main challenges are to:
a) the Panel's conclusions regarding the time given to consider the offer
of settlement and the proposed withdrawal of aid as based on factual
and legal errors;
b)
the Panel's definition of reasonable/unreasonable in the context of
s 26(2) of the Act;
c) the Panel
substituting its assessment of what was
reasonable/unreasonable for that of the Agency.
The statutory framework
[6] Section 26(2) of the Act specifies a variety or circumstances where civil legal
aid may be withdrawn
or amended. This may occur at any time following the
granting of aid. Section 26(2) provides:
26 Withdrawal of, or amendment
to, grant of legal aid: civil
matters
...
(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:
(b) the Agency is satisfied that the proceedings in
respect of
which legal aid was granted have been disposed of:
(c) the Agency is satisfied
that the aided person has required the
proceedings to be conducted unreasonably so as to incur an
unjustifiable expense to the Agency, or has required
unreasonably that the proceedings be continued:
(d) the Agency considers that the aided person no longer has
reasonable grounds for taking,
defending, or being a party to
the proceedings, or that it is unreasonable or undesirable in
the particular circumstances for the person to continue to
receive legal aid:
(e)
the Agency is satisfied that the aided person has, in relation
to any application by that person relating
to legal aid,--
(i) intentionally or negligently made an untrue statement about
that person's
resources, or has failed to disclose any material
fact concerning them, whether the statement was made or
the failure occurred before or after the aid was granted; or
(ii) intentionally contravened
or failed to comply in any respect
with this Act or with regulations made under this Act:
(f)
the aided person requests that the grant of legal aid be
withdrawn.
[7] Section 27 sets out the procedure
which the Agency must follow when it
makes a decision to withdraw aid under s 26. Section 27 provides:
27 Withdrawal
of grant
(1) This section applies when the Agency proposes (other than with the
agreement, or at the request,
of the aided person) to withdraw a grant
of legal aid, under section 25 or section 26, in such a way that the
aided person is likely to be detrimentally affected.
(2) A grant of legal aid must not be withdrawn until--
(a) notice of intention to withdraw the grant has been given to
the aided person and the
lead provider; and
(b) the aided person has been given a reasonable opportunity
under
the notice to make submissions on why the grant
should not be withdrawn in the manner indicated; and
(c) the Agency has considered any submission by or on behalf
of the aided person.
(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
(b)
the reasons for the withdrawal; and
(c) the aided person's rights to seek a reconsideration under
section 29 and a review under section 54.
[8] The Act provides means by which those who are dissatisfied with
certain
decisions of the Agency relating to legal aid may apply for a review of that decision
by the Panel. Pursuant to s 54, the
decisions that may be reviewed are those that
affect the applicant for review, and must relate to the matters set out in the
exhaustive list in s 54(2)(a)-(i). Pursuant to s 54(2)(f), "the withdrawal
of, or
amendment to, a grant of legal aid' is a reviewable decision. The application for
review must be on the grounds that the Agency's
decision in respect of which the
application is brought was "manifestly unreasonable" or "wrong in law" (s 54(1)).
[9] The Panel
may determine a review by "confirming, modifying, or reversing
the decision under review" (s 57(2)) or, instead, may direct the Agency
to reconsider
all or part of the decision, and may set out the matters the Agency must take into
account in its reconsideration
(s 58).
[10] The rights of the applicant or the Agency in relation to the withdrawal,
amendment or grant of legal aid do not
end with the Panel. If the Agency or an
applicant considers the Panel's determination wrong in law they may appeal to the
High Court
on a question of law pursuant to s 59 of the Act which provides:
59 Appeal on question of law
If the Agency
or an applicant considers that the Review Panel's
determination is wrong in law, the Agency or the applicant (as the case
may
be) may appeal to the High Court on the question of law, and the appeal
must be dealt with in accordance with the
rules of court.
The Panel's decision
[11] I will return to individual grounds of challenge later in this judgment.
[12]
In this case it is necessary to analyse the approach of the Panel and identify
the reasons for its decision before returning to
the appeal grounds.
[13] In its decision of 9 February 2009, the Panel said:
[46] The issues before the Panel are
essential twofold:
(a) Did the Agency give the Applicants a reasonable opportunity to
make submissions
in response to its withdrawal notices?
(b) Was the Agency's decision not to fund the matter going to trial
because the Applicants did not accept the settlement offer of
12 September 2008 manifestly unreasonable, wrong
in law, or both?
[14] In relation to the first issue, the Panel concluded that the Agency had not
given the Pickards sufficient
time to respond to the withdrawal notice contrary to
s 27(2)(b) of the Act. This conclusion seems to be based on the following:
a) This was a complex case. The Pickards only had from
16 September 2008 to mid-day on
18 September 2008 to respond to
the withdrawal notice. This was insufficient time especially given the
Pickards' disabilities;
b) the Agency was wrong to claim the tight timeframe was driven by the
settlement offer which had expired on 16 September 2008 at
4.00 p.m.;
c) the Agency's
decision was based on a misunderstanding that the trial
was due to proceed on 22 September 2008.
[15] I record
at the outset that this analysis of the issues misconstrues the Panel's
function. The only grounds of appeal from a decision of the
Agency to the Panel is
that the decision is manifestly unreasonable or wrong in law (s 54(1)). The only
decision in this case, which
can be reviewed, is the decision to withdraw aid
(s 54(2)(f)). Issue (a) has its focus on the time for response rather than the grounds
of withdrawal of aid. However I return to these issues at [24][40].
[16] The Panel then turned to consider, in particular, the
Agency's decision not to
fund the matter going to trial based on, it said, the second limb of s 26(2)(c) that
the legally aided
person had unreasonably required the proceedings be continued.
[17] It said:
[60] The Panel finds that the Agency
may only rely on the second limb of
section 26(2)(c) of the Act where it is satisfied that the legally aided person's
actions fall beyond the limits of what is reasonable. In other words, the
Agency must be satisfied that the legally aided person's conduct is conduct
that no reasonable person
would subscribe to. The Agency's assessment
must recognise the possibility that two reasonable people may view the same
matter differently, albeit within the limits of reason.
[61] As the Panel has noted, its interpretation is consistent
with everyday
linguistic meaning and usage. It is also consistent with the principle that
legally aided persons are
reasonable for the conduct of their litigation while
the Agency is responsible for administering legal aid. It is not for
the
Agency to intervene in decisions as to how litigation should be conducted,
except in (it is hoped) rare situations
where an aided person makes a decision
outside the limits of reason.
[18] The Panel observed that the only basis upon which
the Agency concluded the
Pickards actions were unreasonable was their rejection of the settlement offer.
However, the Panel considered
that the rejection of the offer was reasonable given
the Pickards wanted to obtain all expert evidence before they considered the
offer
and had been unable to do so before the offer had expired.
[19] Further, the Panel observed that Simon France J's comments
regarding a
settlement conference being suitable only after all the defendants' briefs were
exchanged supported the view that it
was reasonable of the Pickards to reject the
settlement offer.
[20] The Panel said the Agency was manifestly unreasonable and
wrong in law to
use my comments, made in my decision not to strike out these proceedings,
(CIV 2003-091-143, 16 December 2005) when
I said that the Pickards' case was not
clearly strong, as supporting the decision to withdraw aid.
[21] The Panel said the Agency
could not have reached the conclusion that the
offer should have been accepted by the Pickards given it had not undertaken a
"detailed
and robust calculation" itself of the possible quantum of damages nor
obtained such an analysis from the Pickards' counsel or its
own specialist advisor.
[22] Finally, the Panel said:
[67] The Panel finds the Agency's decision of 22 September 2008
to
amend the grants of aid so as not to fund the proceedings of trial was
manifestly unreasonable and wrong in law.
[23] Essentially, the Panel concluded the Pickards did not have enough time to
consider the offer of settlement, and it could
not therefore have been unreasonable
for the Pickards to have rejected the offer at that time. The Panel reasoned that if it
was
not unreasonable for the Pickards to reject the offer at that time, they cannot
have required unreasonably that the proceedings be
continued. The rejection of the
offer was reasonable and they had insufficient time to respond to the proposal to
withdraw aid. As
a result the decision to withdraw aid was manifestly unreasonable
and wrong in law.
General Discussion
[24] Before considering
the individual grounds of appeal I deal with the overall
approach by the Panel to this appeal. The conclusion in [67] of the Panel's
decision
(see [22]) was, in my view, based on errors of fact and law.
[25] Turning first to the errors of fact.
Expiry date
of settlement offer
[26] As to the opportunity to respond to the offer of settlement, the offer was
made on 12 September 2008
and due to expire at 4.00 p.m., 16 September 2008.
The Pickards advised their counsel that they would not receive a copy of a report
from a Dr Perry ("the Perry Report"), who was providing specialist advice to them,
before the expiry of the offer. Counsel for the
Pickards, therefore, arranged with the
defendants to extend the response time to the offer to mid-day the following day,
17 September
2008. The Panel mistakenly thought the offer of settlement had
expired at 4.00 p.m. the day before. The extension of time to respond
was to ensure
that the Perry Report (or at least a summary of it) would be received by the Pickards
and that they had time to consult with their counsel about the report before
responding to the offer. The Perry Report was received by counsel for the Pickards
prior to mid-day 17 September.
[27] It was
the Pickards who identified what further information (the Perry
Report) they required before they could adequately consider the offer.
The time for
accepting the offer was extended to enable the Pickards to consider the report and
discuss it with their counsel. The
Panel said:
[63] However, as already noted, the settlement offer was made on
12 September 2008 and it expired
at 4:00 pm on 16 September 2008. A
weekend occupied two days of that period. Taking into account the
complexity of
the case, the issues it involved and the importance that expert
evidence played in it, the Applicants did not have a reasonable
opportunity
to consider the offer and in particular to obtain the advice of their experts in
relation to it. In that
circumstance, it cannot have been unreasonable for the
Applicants not to accept the offer at the time. If it was not unreasonable
not
to accept the offer at that time, they cannot have required unreasonably that
the proceedings be continued, as
the Agency claimed.
[28] This offer was made ten days before trial. The Pickards would by then have
been well aware of the strengths
and weaknesses of their own case. A lower offer
had been made earlier in the year when they were also required to assess its merit.
The Pickards identified what information they needed before considering the offer.
They were provided with this information before
expiry of the offer.
Possibility of adjournment
[29] Subsequent to being advised of the offer of settlement, the Agency sought
counsel for the Pickards' opinion on the offer. Counsel advised they considered the
offer was a good one and in their view it should
be accepted. The Agency then
referred this opinion to their independent assessor. He advised that he agreed with
counsel's opinion
that the offer should be accepted.
[30] With that background the Agency gave notice to the Pickards of its intention
to withdraw
aid, given their refusal to accept the offer, and invited response. The
notice required the response by 18 September 2008. At this
time the trial had a
fixture to commence on Monday, 22 September 2008. Although there was a
possibility of an adjournment
on 22 September 2008 that decision was in the hands
of the trial Judge on 22 September 2008. The Panel took the view that
an
adjournment of the trial was virtually inevitable. It said at [56]:
Moreover the Agency proceeded on a critical misunderstanding
that the trial
was ready to proceed on 22 September 2008. That was not the case, as the
defendants had not provided
their briefs of evidence, and the Applicants
were still awaiting the full report from the United States expert.
[31] However
apart from the legal aid question counsel for the Pickards, the
Pickards and the defendants were ready and keen to proceed with the
trial on
22 September. Although the defendants had not filed their briefs counsel for the
Pickards knew their content. They had received
the defendants' expert witness'
reports on which their briefs would be based. The decision whether to grant an
adjournment was for
the trial Judge. Until the adjournment had been granted all
parties, including the Agency had to proceed on the basis that the
trial would
proceed, otherwise the Agency could have found itself in the position, on
22 September, of having given further time
for the Pickards to respond to the
proposed withdrawal but having an application for adjournment refused, and thus
having to fund
the trial. Withdrawal of aid mid trial would have been problematic.
[32] On 22 September, when the trial was due to commence,
it was adjourned by
the Judge until the following day to see if the legal aid issue could be resolved. This
one day adjournment supports the proposition
that, if legal aid could be sorted out,
the trial would have proceeded that week. In my view, therefore, the Panel was
wrong to conclude
the Agency had made an error of fact in approaching the
withdrawal response time as if the trial was to proceed on 22 September.
I consider
this was the only rational basis for the Agency to proceed.
Errors of law
[33] The Panel, by making these errors
of fact and by failing to ask the correct
questions fell into error of law.
[34] As indicated above, under s 54 a review must
be on the grounds that the
Agency's decision in respect of which the application is brought was "manifestly
unreasonable" or "wrong
in law". The jurisdiction of the Panel on review under s 54
was discussed recently by Venning J in Gibson v Legal Services Agency
HC AK
CIV-2006-404-000999 28 November 2008. Referring to the decision of O'Regan J
in Legal Services Agency v Tana HC WHA AP2602,
9 December 2002, Venning J
said:
[17] Next, the jurisdiction of the Review Panel in relation to the decision
of the Agency is itself limited....The Review Panel's role is not to determine
whether the Agency's decision was correct,
but rather, whether the decision
was wrong in law or manifestly unreasonable. It is a much narrower
jurisdiction
than that of an appeal from the exercise of discretion, which
would include whether the decision was plainly wrong: Legal
Services
Agency v A (2003) 17 PRNZ 443. In Legal Services Agency v Tana HC
WHA AP2602, 9 December 2002, O'Regan J noted that:
[22] ... The use of the
term "manifestly unreasonable" requires not only
that the decision is found to be unreasonable, but that the Panel forms
the view that the decision is so clearly unreasonable that the intervention
of the Panel is called for.
And later:
[25] ... 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.
[35] In the present proceedings, the Panel's decision involved it concluding that:
a) the Pickards had insufficient time to respond to the withdrawal notice
contrary to s 27(2)(b) of the Act;
and
b) if it was not unreasonable not to accept the offer at that time, they
cannot have required unreasonably
that the proceedings be continued.
[36] It is clear that these findings were pivotal to the Panel's ultimate conclusion
that
the Agency's decision was "manifestly unreasonable and wrong in law".
However in reaching these conclusions the Panel made fundamental
errors of law.
[37] Firstly, s 54 sets out the decisions of the Agency, which may be reviewed.
Relevant to these proceedings
is s 54(2)(f), which provides that the Agency's
decision relating to "the withdrawal of, or amendment to, a grant of legal aid' may
be reviewed by the Panel. A decision under s 27(2)(b) as to whether the Agency
provided the respondents with a reasonable opportunity
under the notice to make
submissions on why the grant should not be withdrawn in the manner indicated, is
not listed under s 54.
It is not therefore a matter which is directly reviewable by the
Panel. Clearly, it is foreseeable that a finding that insufficient
opportunity was given
could be a factor for the Panel to take into account in assessing whether the ultimate
decision to withdraw
aid was "manifestly unreasonable". However the Panel's
finding at [52] indicates that this is not the way the Panel
approached the issue in
these proceedings. The Panel recorded:
The Panel agrees with the Applicants' submission, that ...
they did not have a
reasonable opportunity under the withdrawal notice.
[38] Effectively therefore the Panel substituted
their view of what amounted to a
"reasonable opportunity" under s 27(2)(b).
[39] In any event, as it turned out, the Pickards
did provide a full response to the
proposal by the Agency to withdraw aid. Counsel for the Pickards suggested those
factors identified
in [44] could have been raised if further time had been given for a
response. Give my view of the relevance of those factors however
(at [49]) this
would not have aided the Pickards.
[40] Secondly, the same error is evident in the Panel's approach to s 26(2)(c).
Essentially, the Panel's approach was to redecide the question of withdrawal of aid,
as if empowered to conduct a form of re-hearing
of the Agency's decision. The Panel
essentially substituted its view of what was reasonable/unreasonable in terms of
s 26(2)(c) for
the Agency to withdraw the grant of aid. I do not need to repeat what I
said at [15] and again at [34], to demonstrate that the Panel
was not empowered to
proceed in this way. Pursuant to s 54, it was only if the Panel was of the view that
the Agency's ultimate decision
to withdraw aid was manifestly unreasonable or
wrong in law that the review should have been allowed.
Additional Factors supporting
conclusion of "manifestly unreasonable"
[41] In Legal Services Agency v Anderson HC WN CIV-2008-404-5206,
4 December 2008,
Clifford J considered the role of the High Court on an appeal
pursuant to s 59. After reviewing the relevant statutory provisions, he noted at [44]:
Section
59 specifies that the appeal is to be dealt with in accordance with the rules of
the Court. As such, the Court's powers on
appeal are as set out in r 718A [now Rule
20.18] of the High Court Rules. These powers include making any decision(s) this
Court thinks the Panel should have made or directing the Panel to rehear the
proceedings or (re)consider or (re)determine
any matters the Court directs.
[42] Although in those proceedings it was not required, Clifford J went on to
record at [47] that
"were I to consider and decide whether the Agency had acting
manifestly unreasonably, which I think in terms of r 718A I could...".
[43] I agree with Clifford J's approach. It is appropriate therefore to consider that
the respondents say there were other grounds
upon which the Panel's conclusion can
be supported and, the appellant submits, other grounds upon which the Panel's
decision can
be impeached. Firstly, the respondents' grounds.
[44] The respondents submit that the Agency failed to consider that having funded
the appeal at the time to the tune of $120,000 to trial, further funding of only
$30,000 for the trial in the circumstances of the
case was no more than a modest
further risk. The respondents say that when considering whether an additional
$30,000 was "impossible
to justify" in accordance with s 26(2)(c), the following
should be borne in mind:
a) as well as the pecuniary aspect
it was appropriate the Agency take
into account that after seven years the respondents were entitled to
their day in Court, and the "closure" a trial would give, particularly
for the respondents;
b) the
Agency had a charge over the Pickards house and therefore some
security for trial expenses;
c) the fact
that a $350,000 offer was made indicated that some success at
trial was probable at least covering legal expenses;
d) once it was known the Pickards were not funded for trial they would
be forced to settle, however, the
defendants would be less interested in
doing so.
e) the Panel said that it was concerned about the adequacy
of the
Agency's assessment of the offer and its conclusion that the Pickards
should accept it. The Panel
said in particular that it was concerned
that there was no indication of a detailed and robust calculation by the
Agency or its specialist advisers of the damages a court might be
likely to award. The respondents submit
that what the Panel was
saying was that the Agency had inadequate grounds for concluding
that the
respondents would not realise more than the amount of the
settlement offer were the matter to go to trial.
[45]
The respondents say without this information and without taking this material
into account, the decision to withdraw aid was flawed
and manifestly unreasonable.
[46] The Agency was obviously well aware of the legal costs to date. It had
obtained an estimate
of costs for trial from counsel for the Pickards. They, therefore,
must have been aware of the trial cost relative to the legal fees
already expended.
They were also aware there was a charge over Mrs Pickard's house. It was a charge
after all that they had required
be obtained. They were also aware of the $350,000
offer. What motivated the offer by the defendants and what it might mean for the
chances of success at trial could not be speculated about.
[47] The Agency had obtained an opinion from Pickard's counsel and
from their
own assessor as to the offer of settlement. The respondents claim that before the
Agency could have reached a view on
the reasonableness of the offer they should
have had a robust calculation of the damages claim and reasons why the offer should
be accepted. This was not necessary. The Agency
had already reviewed the
Pickards' lawyer's opinion by referring the opinion to their own assessor. He agreed
with their assessment.
No further assessment or check was reasonably required. The
Agency had no independent skill to assess the correctness of the assessment
of the
offer beyond referring the assessment to its independent assessor. There is nothing
to suggest the Pickards' counsel were
asked for a "robust and detailed" assessment
of the offer.
[48] In this case, counsel's assessment of the offer was a few days
before trial
when preparation had been done and evidence on damages for the plaintiff no doubt
briefed. Counsel would be well informed
as to the value of any offer of settlement.
[49] The respondents' submissions seem to suggest that these matters should be
borne
in mind in considering whether the Agency was wrong to conclude that the
additional $30,000 was not "unjustified expense" in accordance
with s 26(2)(c). The
correct approach as I have outlined is whether any of these matters could have
established the Agency's decision
was "manifestly unreasonable". None of the
matters, therefore, in my view, raised by the respondents now, in addition to those
factors
raised by the Panel, could have established the Agency's decision to
withdraw aid was manifestly unreasonable in the circumstances.
[50] The Panel, therefore, made errors of fact on which, in part, it based its
decision as well as errors of law in its interpretation
of the correct approach to the
Agency's decision to withdraw aid.
Specific Appeal Grounds
[51] I consider each appeal ground
in the order identified by the appellant in its
submissions.
Ground 2(a) and (b)
2. ...
(a) The
definition of "unreasonable" as used in s 26(2)(c) of the
Act the Panel adopted in para 58, namely not "within
the
limits of reason, or what is reasonable" was incorrect.
Whereas in its statutory
context "unreasonable" takes its
colour from the phrase in s 26(2)(c) "so as to incur an
unjustifiable expense to the Agency" and means something
the Appellant should not be expected to have to
pay for, or,
something a reasonable self-funded litigant would, on the
balance of probabilities,
not do.
(b) The Panel substituted its view for that of the Appellant on
whether the Respondents'
decision to reject the settlement
offer was reasonable, and failed to ask itself the legally
correct question of whether the Appellant's decision to
amend the grants of aid to the Respondents
by not providing
for aid for their proceeding to go to trial but increasing the
grant
to seek settlement was manifestly unreasonable.
[52] This particular ground of appeal relates to s 26(2)(c) of the Act and the
meaning of "unreasonableness" in the context of that section. The appellant's case is
that firstly, the Panel applied an erroneous
definition of unreasonable and secondly
that it essentially substituted its view for the Agency's view and failed to ask itself
the correct question when considering whether the decision of the Agency was
manifestly unreasonable.
[53] The Panel said:
[58] The statutory basis of the decision not to fund the matter to trial was
that the Applicants had required
unreasonably that the proceedings
be continued: see the second limb of section 26(2)(c) of the Act.
"Unreasonably"
in that provision is not a term of art and should take
its ordinary meaning. The Concise Oxford Dictionary (7th ed)
defines unreasonable to mean "Not reasonable; going beyond the
limits of what is reasonable". In turn, it defines
reasonable to mean
"In accordance with reason, not absurd; within the limits of reason
... ".
[59] The reference to "the limits of what is reasonable" and "the limits of
reason" in the dictionary definitions
highlights the fact that, in many
circumstances, what is reasonable spans a range of possible action or
inaction. In many cases, it is possible that two people who share the
same powers of reasoning and who are apprised
of the same
information may come to different conclusions, both of which are
reasonable.
[60]
The Panel finds that the Agency may only rely on the second limb of
section 26(2)(c) of the Act where it is satisfied
that the legally aided
person's actions fall beyond the limits of what is reasonable. In
other words,
the Agency must be satisfied that the legally aided
person's conduct is conduct that no reasonable person would
subscribe to. The Agency's assessment must recognise the
possibility that two reasonable people may view
the same matter
differently, albeit within the limits of reason.
[61] As the Panel has noted, its interpretation
is consistent with everyday
linguistic meaning and usage. It is also consistent with the principle
that
legally aided persons are responsible for the conduct of their
litigation while the Agency is responsible for administering
legal
aid. It is not for the Agency to intervene in decisions as to how
litigation should be conducted,
except in (it is hoped) rare situations
where an aided person makes a decision outside the limits of reason.
[54]
As indicated, the appellant's first concern relates to the correct interpretation
of s 26(2)(c). As I understand it, the appellant's
concern is that the Panel, when
considering whether or not the respondents were behaving "unreasonably" under the
second limb of
s 26(2)(c), did not consider "unreasonably" in the context of
unjustified expense". Had the Panel considered it in the context of
unjustified
expense" it would have come to the same conclusion as the Agency did, namely that
the respondents were requiring "unreasonably"
that the proceedings be continued.
[55] It is clear that both parties proceeded on the basis that the Agency's decision
to withdraw
aid was in reliance on the `second limb' of s 26(2)(c) ("The Agency is
satisfied that the aided person ... has required unreasonably
that the proceedings be
continued") rather than the first limb ("The Agency is satisfied that the aided person
has required the proceedings
to be conducted unreasonably so as to incur an
unjustifiable expense"). If there are two distinct limbs of s 26(2)(c) then on a literal
reading of the letters sent to both the Pickards on 18th September it does appear that
the Agency relied on the "second limb". The
letters read:
Having regard to costs, benefits and the risks of going to trial, we think that a
reasonable self-funding
person would accept the settlement offer. In our view, it is
unreasonable for the aided person to require the proceedings
to continue.
Accordingly the grant of aid is to be withdrawn under s 26(2)(c) of the Legal
Services Act 2000.
[56]
The letter does not therefore expressly refer to the "first limb" of s 26(2)(c) as
being the ground on which the Agency was withdrawing
aid.
[57] I have no difficulty in accepting that on a plain reading, s 26(2)(c) provides
two alternative grounds for the Agency
to elect to withdraw or amend civil legal aid.
First, if it is satisfied that the aided person has required the proceedings to be
conducted unreasonably so as to incur an unjustifiable expense to the Agency.
Secondly, if it is satisfied that the aided person has required unreasonably
that the
proceedings be continued.
[58] However although s 26(2)(c) identifies two `alternative grounds', as a matter
of practical
application there would clearly be overlap between the two. It may well
be the case that a conclusion that a person requiring that
the proceedings be
continued would be unreasonable (and therefore contrary to the second limb of
s 26(2)(c)), because continuation
would involve the incurrence of an unjustifiable
expense. While there may well be other situations, not involving the incurring of
"unjustifiable expense" which could support a finding that to require the
continuation of proceedings would be "unreasonable", I
would imagine that a finding
of unreasonableness because of fiscal concerns would be the most common situation.
[59] To put it
another way, the two limbs are to provide for the fact that it may be
possible for proceedings to be conducted unreasonably but not
for unjustified
expense to be incurred and it may be that an unjustified expense has been incurred
but not because the aided person
has required the proceedings to be conducted
unreasonably. The more usual situation however will be that the Agency will be
able
to make its decision whether or not to withdraw aid in reliance on either or both
limbs and the same considerations would be relevant
to either or both limbs. This I
think is the case in the present proceedings ultimately, the Agency was of the view
that it was
unreasonable for the respondents to require the proceedings to be
continued; it was `unreasonable' because the respondents had refused
a settlement
offer which their own lawyers had recommended accepting and where an
independent assessor had agreed with the analysis.
The fact that, in all of the
circumstances, further expenditure on the trial could be described as "unjustifiable
expense" merely
added strength to the conclusion that the respondents conduct was
`unreasonable' in terms of the second limb of s 26(2)(c).
[60]
In any event view, even though the Panel clearly approached the matter on
the assumption that the Agency was relying solely on
the "second limb" of
s 26(2)(c), (see para [58] of the decision), I am not sure assumption is necessarily
correct. As indicated,
the Agency's exact words were:
Having regard to costs, benefits and the risks of going to trial, we think that a
reasonable self-funding person would accept the settlement offer. In our view, it is
unreasonable for the aided person to
require the proceedings to continue.
[61] Clearly therefore, questions of cost were at the forefront of the Agency's
decision.
This would seem to be a clear example of a situation in which the Agency
could have approached its decision of whether to withdraw
aid relying on either of
the limbs of s 26(2)(c).
Having reached this conclusion (that in these proceedings the Agency could
[62]
have relied on either of the two limbs of s 26(2)(c)), I record that I agree with the
appellant that the key to interpreting
the first limb of s 26(2)(c) relates to the
incurring of an unjustifiable expense. The question, therefore, is not initially on
unreasonableness but on the alleged unjustifiable expense said to be incurred.
Section 26(2) is concerned with the circumstances
under which aid may be
withdrawn. Subsections (c) and (d) are essentially concerned with the Agency's
continuing obligation to pay
for legal services when in the circumstances of the case
it cannot be justified. And so in ss (c) there must be unjustifiable expense,
or
unreasonableness in requiring the proceedings to continue. In ss (d) the first part
specifically relates to the absence of reasonable
grounds for carrying on the
proceedings and the second part to circumstances that make it unreasonable or
undesirable for continued
access to aid. Some overlap between the circumstances
covered by the sub-sections is probable.
[63] I record therefore that although it is not determinative in this appeal,
the test
in the first limb of ss (c) requires the Agency to decide if unjustifiable expenses are
being incurred, and then whether
the aided person is unreasonably requiring the
proceedings to be conducted resulting in this unjustifiable expense.
[64] In respect
of the second of the appellants' first two grounds of appeal
identified above, I have already concluded (at [40]) that I agree with
the appellants
that the Panel's approach was erroneous. The Panel's function in reviewing the
Agency's actions under s 26(2)(c) and
(d), is not to reassess the Agency's decision
and decide whether the Panel thinks the proceedings are being conducted reasonably
or unreasonably or whether the expense is or is not unjustifiably incurred. Nor is it
the Panel's function to assess this on a "reasonable
person" basis. It's function, by
way of review of the Agency's decision to withdraw aid, is to decide if the Agency's
conclusion
as to withdrawal of aid (or perhaps the refusal to withdraw aid) based on
the Agency's assessment of the s 26(2)(c) factors was manifestly
unreasonable. As
ss (c) identifies, the Agency must be "satisfied" the conditions apply. This requires
the Agency to make an assessment.
If the Panel concludes that the Agency's
"satisfaction" under s 26(2)(c), based on the evidence before it, is a conclusion that
could
not sensibly be reached then it is likely to be a manifestly unreasonable
decision. I note ss (d) is in similar terms requiring as
it does a conclusion from the
Agency that the Agency "considers" a certain state of affairs to be in existence. It is
also for the
Agency to assess reasonable or unreasonableness and on review for the
Panel to assess whether, on the facts it was manifestly unreasonable
for the Agency
to reach the conclusion it did.
[65] In my view, this is determinative in this appeal. After all, the pivotal
reason
for withdrawal of aid was that the Pickards had received and rejected an offer of
settlement, which their own lawyers had
recommended accepting and where an
independent assessor had agreed with the analysis. Given that position, the Panel
could not have
concluded that it was manifestly unreasonable for the Agency to
withdraw aid.
Appeal ground 2(d)
2 ...
(d) The Panel's holding that the Appellant's decision was
manifestly unreasonable and wrong
in law because, as it
held in para 66, there was "no indication in the papers before
the Panel of a detailed and robust calculation by the
[Appellant], or its specialist advisers, of
the damages a court
might be likely to award, only general statements about the
size of awards that New Zealand's courts tend to make".
Whereas:
...
[66]
I have already dealt with this matter: [47][48]. Essentially, I agree with the
appellant's assessment.
Appeal ground 1(a)(i) and
(ii)
1. ...
(a)(i) The time allowed to respond to a notice of intention to
withdraw aid given under s 27(2) of the Act is not a
reviewable decision under s 54(1) and (2) of the
Act.
(a)(ii) The Panel failed to determine whether any error by the
Appellant as to the
time allowed for making submissions
was material in rendering the decision itself to amend grants
of aid manifestly unreasonable or wrong in law.
[67] The appellant's point is that the period allowed for submissions
in response
to the withdrawal of aid cannot itself be susceptible to review as being manifestly
unreasonable. The appellant accepts,
in my view correctly, that if indeed inadequate
time was given for a response to advice of withdrawal of aid then that would be
relevant in considering whether the decision
to withdraw aid is manifestly
unreasonable. However, whether the time was adequate for a response is not itself
susceptible to review
(see s 54(2) Legal Services Act 2000). As I have indicated
above (at [37]), I agree with the appellant's assessment. In any event,
it is not
entirely clear from the Panel's decision that this was their approach. I have,
however, already observed that
the Panel erred factually and in law in its approach to
the time given to respond to the proposed withdrawal: [26][39].
Grounds
1(b) and (c)
1. ...
(b) The Panel substituted its view for that of the Appellant on
what was a reasonable opportunity to make submissions in
terms of s 27(2) of the Act.
(c) The Panel misconstrued s 27(2) of the Act in para 54 when
saying that "the [Appellant's] time
frame gave them [the
particular persons] very little opportunity to seek advice and
prepare a fully-informed response". Whereas what is a
reasonable opportunity depends on the particular
circumstances and my involve not being afforded one or
both of those factors.
[68]
Section 27(2)(c) of the Act provides that the Agency must allow a reasonable
opportunity to the aided person to respond to a proposed
withdrawal of aid. The
Panel proceeded to analyse whether the time given was in its assessment
"reasonable" in terms of s 27(2).
[69] The question for the Panel was, however, whether in the circumstances the
time given was so inadequate that the Agency's
decision to withdraw aid was
manifestly unreasonable. This is a parallel point with ground 1(a). As I have
previously
observed, the review by the Panel of the Agency's decision is not a
re-hearing but a review on narrow grounds: [34].
[70] In
any event, for reasons given, the Panel made factual errors upon which its
decision as to reasonableness of response time was based:
[26][32].
Ground 1(d)
1 ...
(d) The Panel erred in law in terms of the second manifestation
of error of law in Edwards v Bairstow [1955] UKHL 3; [1956] AC 14 (HL),
35 per Lord Radcliffe in each of:
...
[71] I have already dealt with this
ground: [26][32]
Ground 2(c)
2. ...
(c) The Panel's holding in para 65 that it was "both manifestly
unreasonable and wrong in law of the Agency to use"
Ronald Young J's statement in his
judgment dismissing an
application to strike out the Respondents' proceeding that
"there
were `significant impediments to a successful claim'"
"as part of the reasoning for its decision". Whereas:
...
[72] During a judgment given on an application for a strike out of the substantive
proceedings I said:
[32] It is, of course, extremely difficult to judge merit at this preliminary
stage. However, based on the information
I currently have I accept there is
some strength to the defendants' argument that this will be a very difficult
case
for the plaintiffs to establish. While the High Court would not be bound
by disciplinary proceedings conducted before the
Gas Fitters and Plumbers'
Board, it does appear on the fact of it that the essential complaints by the
plaintiffs about
the first defendant's actions were considered and the Board
reached a conclusion that the first defendant had properly carried
out his
function by competently installing the gas heater. There is some evidence of
neurological deficit with regard
to both plaintiffs, but it is notoriously
difficult to establish causality. There is comprehensive medical evidence
from the defendants that there is a low probability of likelihood of health
problems being due to the carbon monoxide poisoning.
My conclusions are
therefore that this is not a clearly strong case by the plaintiffs.
[73] In communicating the reasons
for its decision, the Agency referred to my
strike out decision and this particular paragraph. The defendants still intended to
raise
the ACC point, as they are entitled to, at trial. The Agency then referred to the
fact my decision was given in the context of
a strike out and before expert evidence
was not available. It then noted:
We incidentally also note the Judges comments ...
[74] The Agency was entitled to refer to my observations regarding causation in
the way they did. The Agency illustrated it understood
the context of the reference
in my judgment. The reference did have some relevance to the Agency's assessment
of the strength of
the Pickards' case. The Agency illustrated, however, they
understood the limitations of my observation. It is clear from the
way in which their
observations were introduced with the words "We incidentally" that this was not a
pivotal factor in their decision
but simply an incidental matter.
[75] The Panel, however, said:
It was both manifestly unreasonable and wrong in law
of the Agency to use
it as part of the reasoning for its decision of 22 September 2008.
[76] The "it" was the reference
to my view about causation.
[77] Again, the Panel did not ask itself the correct question. The decision to
withdraw aid is susceptible
to an analysis of being manifestly unreasonable or an
error of law, not the reference in my judgment. It is clear from the Agency's
decision that this matter was incidental to their conclusion. The Agency, were,
however, entitled to have regard to the observation
in the limited way they identified.
It was, therefore, an error of law for the Panel to conclude the Agency took into
account an
irrelevant matter and it was an error of law to apply the manifest
unreasonableness test in the way that it did here.
[78] For
the reasons given, therefore, I am satisfied the decision of the Panel
which contained errors of fact and errors of law must be set
aside. The appeal is
allowed. The decision of the Panel quashed and the decision of the Agency
reinstated.
Costs
[79] As I understand it the
respondents were legally aided in this appeal and
therefore no question of costs arises.
___________________________
Ronald
Young J
Solicitors:
P J Ryder-Lewis, Bartlett Partners, PO Box 10, Wellington, email: prl@btlaw.co.nz
M Lloyd, Barrister, PO Box
2569, Shortland Street, Auckland, email: michaelloyd@clear.net.nz
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