LEGAL SERVICES AGENCY V AMANDA JANE PICKARD AND TROY ALLEN PICKARD-TAYLOR HC AK CIV 2009-404-1230

LEGAL SERVICES AGENCY V AMANDA JANE PICKARD AND TROY ALLEN PICKARD-TAYLOR HC AK CIV 2009-404-1230 3 July 2009IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY CIV 2009-404-1230UNDER 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 2009RESERVED 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. TheLegal 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 Accordingly, the grant of aid is to be withdrawn under s 26(2)(c) of the Legal Services Act 2000.[4] The Pickards applied for a review of that decision.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 reconsiderall 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 lawIf 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 tothe 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 notto 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 allparties, 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 AP26–02, 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 AP26–02, 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 formsthe 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 concludingthat 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 haveestablished 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 itselfthe 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 18 th 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).[62] Having reached this conclusion (that in these proceedings the Agency could 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 onunreasonableness 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 thePanel 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 manifestlyunreasonable. 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 [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 thefact 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 JSolicitors: 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