WEAL V LEGAL SERVICES COMMISSIONER HC WN CIV-2012-485-002602

WEAL V LEGAL SERVICES COMMISSIONER HC WN CIV-2012-485-002602 [12 April 2013]IN THE HIGH COURT OF NEW ZEALANDWELLINGTON REGISTRYCIV-2012-485-002602[2013] NZHC 744IN THE MATTER OF an appeal under s 59 of the Legal ServicesAct 2011BETWEEN DOUGLAS JAMES WEALAppellantAND LEGAL SERVICES COMMISSIONERRespondentHearing: 10 April 2013Counsel: A C Beck for AppellantR Groot for RespondentJudgment: 12 April 2013In accordance with r 11.5 I direct the Registrar to endorse this judgment with the delivery time of 4.45pm on the 12th day of April 2013.RESERVED JUDGMENT OF COLLINS JIntroduction[1] The issues raised in this proceeding can be distilled to the following questions:(1) Did the Legal Aid Tribunal (Tribunal) make an error of law when it concluded a grant of legal aid could only be calculated by reference to a particular "standard hourly rate" fixed in a policy relied upon bythe Legal Services Commissioner (Commissioner)?(2) If so, should Mr Weal's appeal be allowed?Context[2] The questions posed in paragraph [1] arise in the context of an appeal by Mr Weal from a decision of the Tribunal. In its decision the Tribunal confirmed theCommissioner's determination that Mr Weal's lawyer would be paid legal aid calculated on the basis of an hourly rate of $124 (exclusive of GST) for a hearing that is to be conducted before an ACC reviewer.[3] Mr Weal's appeal is brought under s 59 of the Legal Services Act 2011 (theAct). His appeal is therefore confined to a question of law.[4] It appears to be accepted that the hearing before the ACC reviewer is unusual because of the case's procedural history and because of the complex nature of thehearing.Procedural history[5] Mr Weal's case has had a protracted history. In summary:(1) On 13 December 2004 Mr Weal was granted ACC cover in relation to a tropical disease he contracted on a trip to Fiji in April 2003. ACC revoked cover on 11 October 2006.(2) Mr Weal applied to have ACC's decision reviewed by an ACCreviewer. Because of an administrative oversight his application was not processed within the statutory timeframes and accordingly Mr Weal's application for a review was "deemed" to be allowed. ACC appealed the "deemed" decision to the District Court.(3) Mr Weal then lodged an application for judicial review in the HighCourt against the District Court's decision to hear the appeal in theabsence of an ACC review decision. That application was dismissed on 29 September 2011.1(4) When the matter was returned to the District Court, Judge Beattie directed by consent that the case be remitted to an ACC reviewer for hearing. That ruling was made on 1 December 2011.(5) The directions order of Judge Beattie makes it clear that the hearing before the ACC reviewer is being conducted in that forum in order topreserve Mr Weal's appeal options. The hearing could just as easily have taken place in the District Court.Complexity of hearing before the ACC reviewer[6] The Crown Solicitor in Timaru has been appointed to be the ACC reviewer.Another Crown Solicitor's office will represent ACC at the hearing. The hearingbefore the ACC reviewer is scheduled to take two days and will involve a number of witnesses. ACC review hearings normally take one to two hours and are often determined without evidence being called.[7] In this case the standard legal aid hourly rate for a District Court hearingwould have been $134 (exclusive of GST). That is the hourly rate which Mr Weal'slawyer says should be paid when appearing before the ACC reviewer in this case. However, the Commissioner says that in this instance the complexities of the case have been catered for by an allocation of 30 hours to prepare for and conduct the hearing. This represents an increase of 12 hours above what would normally be approved by the Commissioner in relation to this case.21 Weal v Accident Compensation Corporation HC Wellington CIV-2011-485-912, 29 September 2011.2 The Commissioner calculates the time that is allocated in relation to a grant of legal aid on the basis of a formula of 1.5 hours for every hour of hearing time. Refer paragraph [18] below.The legislative framework[8] Section 23(1) of the Act provides that a grant of legal aid may specify the maximum that is authorised by the grant.[9] Section 23(2) of the Act says:A maximum grant may be expressed in any way. For example, it may refer to a total dollar amount, or a maximum number of hours, or a period within which the aid must be provided, or any combination of these or any other specifications.[10] Parliament has used the word "may" in s 23(1) and (2) of the Act as an auxiliary verb. The language of s 23(1) and (2) of the Act has been carefully chosen so as to permit the Commissioner, in appropriate circumstances, to change the maximum grant in an individual case from that which might ordinarily apply.3[11] It is also clear the language of s 23(1) and (2) of the Act does not expressly provide that a maximum grant is to be set by reference to an hourly rate.4 However,an hourly rate would be encompassed within the words "any other specifications" ins 23(2) of the Act.Relevant policies[12] The Ministry of Justice has produced a "Provider Grants Manual" and issued policies which explain how maximum grants are set. These policies are an essential mechanism to cope with the vast number of claims for legal aid that are made each year. It would be unrealistic to think that the Commissioner could properly discharge his functions under the Act without recourse to policies and guidelines which, if adhered to, will produce unimpeachable outcomes in the vast majority of cases.3 Criminal Bar Association of New Zealand Inc v Attorney-General [2012] NZHC 1572 at [38], [102] and [105].4 Cf s 66 Legal Services Act 2000.[13] Invariably, the maximum grant under s 23(2) of the Act is calculated by multiplying the number of hours allocated for a particular type of case, with the"standard rate of pay". In this case the standard rate of pay is set in a policydocument called "Family or Civil Fee Rates".[14] The "Family or Civil Fee Rates" identifies four categories of fora, ranging from tribunals (forum 1) through to the Court of Appeal/Supreme Court (forum 4). Three levels of standard hourly rates are set in relation to each category of fora. Thus, 12 categories of standard hourly rates are prescribed. The standard hourly rates are set by reference to the experience of a legal aid provider. Level 1 is the least experienced category of lawyers. Level 3 is the most experienced category of lawyers. Level 1 lawyers conducting hearings in a category one forum are eligible to be paid a grant of legal aid calculated on the basis of a maximum hourly rate of $92 (exclusive of GST). Level 3 lawyers conducting a hearing in a category four forum are eligible to be paid a maximum grant based upon an hourly rate of $159 (exclusive of GST).[15] In the present case, Mr Weal's senior lawyer is Mr Beck who is a veryexperienced barrister. He is classed as a level 3 lawyer. However, because the hearing is to take place in a category one forum the grant of legal aid has been calculated by reference to a standard rate of $124 per hour. If the hearing were conducted in the District Court (forum 2) a standard hourly rate of $134 would be used to calculate the legal aid grant.Commissioner's decision[16] Mr Weal applied for legal aid on 29 March 2012. On 15 June 2012 a specialist advisor recommended that the complexities of the hearing be addressed through an allocation of 30 hours and the approval of a second counsel when setting the maximum grant.[17] On 21 June 2012 the Ministry of Justice, writing on behalf of theCommissioner wrote to Mr Weal's solicitor and explained:We have considered your request to be paid at the District Court rate. Although the matter is complex, that is by no means unusual for ACC reviews. The essential nature and process of the review is [as] we understand the same as any review.On 27 June 2012 Mr Beck sought a reconsideration of the Commissioner's decisionnot to calculate the grant by reference to the District Court standard hourly rate.[18] On 30 July 2012 the Ministry of Justice, again writing on behalf of theCommissioner, wrote to Mr Weal's solicitor, saying:The Ministry Standard Guideline Rates for preparation is usually 1.5 preparation for each hour of hearing time. In this case the starting point would be 18 hours for a two day hearing. However, in recognition of the complex nature of the [ACC] review the Ministry has applied a grant of 30 hours preparation....The extra 12 hours preparation takes into account the complexity, the need for oral evidence and cross-examination. If this grant is inadequate amendment may be sought if necessary.[19] On 1 August 2012 Mr Weal applied to the Tribunal for it to review the decision of the Commissioner not to apply the standard District Court hourly rate to Mr Weal's review before the ACC reviewer.Commissioner's submission to the Tribunal[20] In his submissions to the Tribunal the Commissioner said:There is no policy to say that the standard hourly guideline rates can be departed from in any given case ...The present operation of the Legal Aid Scheme is that factors such as complexity can impact on the amount of time needed by counsel to work on the case, and this may be reflected in the amount of hours allowed under the grant. There is nothing in the current policies or guidelines to say that rather than more hours being granted, a higher guideline rate should be granted.... the Legal Aid Scheme would be unworkable if hourly rates were variable. If one takes ACC cases as an example, at issue is an ACC decision, which is frequently based on technical or medical evidence or complicated causation factors. The question is almost invariably the same at review as in the District Court on appeal although legal issues would naturally be more deeply explored in the District Court. Cases can vary in length and complexity and hence amendments may be sought for additional hours....The only basis for review would be that the decision of the Commissioner not to pay a higher rate was manifestly unreasonable. To come to such a view would involve a judgment about what is a reasonable hourly rate for legal work on legal aid. Some would say that legal aid rates are too low but others might think they are too high. It is not a function of the Tribunal to evaluate the reasonableness of the hourly rate. ... it is therefore not open for the Tribunal to find manifest unreasonableness.Tribunal's decision[21] The Tribunal correctly reasoned that the Commissioner is entitled to have policies provided they leave room for the exercise of statutory discretion in appropriate cases.5[22] The Tribunal also recognised that the standard hourly rate is fixed by reference to the forum where the case is to be heard and the lawyer's level ofexperience and that:6The Commissioner varies the maximum grant as a result of complexity, only through the hours granted or the number of providers allowed.[23] Furthermore, the Tribunal stated that by applying standard hourly rates in thiscase the Commissioner clearly "fettered" the statutory discretion conferred upon the Commissioner by s 23 of the Act.7[24] However, the Tribunal also ruled that in this case the Commissioner'sfettering of his statutory discretion was not unlawful because:8(1) allowing a variable rate would be "utterly unworkable" and wouldlead to the "breakdown of the civil legal aid scheme".(2) the decision was not manifestly unreasonable or wrong.95 Re Weal [2012] NZLAT 97 at [33], relying upon Legal Services Agency v Minchington [2003] 1NZLR 263 (HC) at [16], Legal Services Agency v Fainu (2002) 17 PRNZ 433 at [40]-[42], LegalServices Agency v KGR HC Wellington CIV-2009-404-3399, 6 August 2009 at [148]-[149].6 Re Douglas Weal [2012] NZLAT 97 at [37].7 At [37].8 At [39].Did the Tribunal make an error of law?[25] I am concerned about the Tribunal's reliance on the concept of a lawful fettering of discretion.[26] A policy can legitimately assist a decision-maker when exercising a statutory discretion but a policy cannot prevail over or usurp the power conferred upon a decision-maker by a statute or regulation.10 I do not think that public law principlesallow a policy to "fetter" a statutory power of discretion. I cannot see how there can be a "lawful" fettering of a statutory power of discretion. If a statutory decision- maker has allowed a policy to fetter their statutory discretion then the decision- maker has failed to discharge its statutory duties and powers.11[27] Although it is not relevant to the determination of the appeal, I also have serious doubts about the Tribunal's conclusion that the criminal legal aid system would collapse if variable hourly rates could apply to cases conducted in the same forum by lawyers on the same legal aid level. My reasons for not wishing to alignmyself with the Tribunal's reasoning on this point are:(1) The present case illustrates that an assessment can be made about the complexity of individual cases. That is why 30 hours has been allocated by the Commissioner for the preparation and conduct of thehearing by Mr Weal's lawyers. If it is possible to make an assessment of this nature without the civil legal aid system collapsing, it is difficult to see why a similar assessment cannot be made about hourly rates.(2) After the Tribunal's decision was released Mr Beck wrote to theMinistry of Justice seeking information about hourly rates for legal9 At [46].10 See Westhaven Shellfish Ltd v Chief Executive of the Ministry of Fisheries [2002] 2 NZLR 158 at [39], [45] and [48] and Lawton v Commissioner of Inland Revenue [2003] 2 NZLR 48 (CA) at[30]-[31].11 Practical Shooting Institute (NZ) Inc v Commissioner of Police [1992] 1 NZLR 709 at 719where Tipping J stated that "rigid policy is really the antithesis of the exercise of discretion".aid providers. On 25 January 2013 a Deputy Secretary of Justice wrote to Mr Beck and advised him that:(i) The Legal Services Commission has not entered into any agreement to pay a legal aid provider more than the standard hourly rate for the provision of legal services under the Act.(ii) Under the Legal Services Act 2000 a higher hourly rate was approved by the Legal Services Agency general manager on eight occasions.Higher hourly rates were authorised under s 66 of the Legal Services Act 2000. Section 105 of the Act is the same as s 66 of the Legal Services Act 2000. In this case the Commissioner has explained that he has yet to authorise a payment of a higher hourly rate under s 105 of the Act. This statement by the Commissioner is consistent with my analysis that the Act allows higher hourly rates to be applied in appropriate circumstances.[28] The Tribunal misinterpreted the law when it concluded that the policies reliedupon by the Commissioner constituted a "lawful" fettering of statutory discretion.Under normal circumstances this would result in the appeal being allowed.[29] However, while I am satisfied the Tribunal made an error of law in its decision, I am not satisfied the Commissioner in fact allowed his discretion to be fettered in the way suggested by the Tribunal. It is apparent from the letter of 21 June 2012 sent by the Ministry of Justice on behalf of the Commissioner that consideration was given to increasing the hourly rate that would be used to calculate the maximum grant of legal aid in this case, but that a conscious decision was made not to apply a higher hourly rate in calculating the legal aid grant.[30] Accordingly, it appears to me that the Commissioner has in fact exercised his discretion and turned his mind to consider whether or not this is a case to which theDistrict Court standard hourly rates should be applied when calculating the maximum legal aid grant.Conclusion[31] I am therefore driven to the conclusion that the appeal must be dismissed.Costs[32] If any issue as to costs arise counsel are given leave to file memoranda within 10 working days.____________________D B Collins JSolicitors:Peter Sara, Dunedin for AppellantCrown Law Office, Wellington for Respondent