LEGAL SERVICES AGENCY V MEYRICK HC HAM CIV 2006-419-1706

LEGAL SERVICES AGENCY V MEYRICK HC HAM CIV 2006-419-1706 19 April 2007IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY CIV 2006-419-1706UNDER the District Courts Act 1947 IN THE MATTER OF an appeal from a decision of the District Court at Huntly dated 1 November 2006 BETWEEN LEGAL SERVICES AGENCY Appellant AND MICHAEL BRIAN MEYRICK Respondent Hearing: 16 April 2007 Appearances: G Taylor for the appellant Respondent in person Judgment: 19 April 2007JUDGMENT OF STEVENS JThis judgment was delivered by me on Thursday, 19 April 2007, at 11am pursuant to r 540(4) of the High Court Rules. Registrar/Deputy RegistrarSolicitors/Counsel: Bartlett Partners, PO Box 10852, Wellington G Taylor, PO Box 5294, Wellington M Meyrick, PO Box 130, HuntlyIntroduction[1] This is an appeal by the Legal Services Agency (the Agency) against a decision of Judge Tompkins given in the District Court at Huntly dismissing an application by the Agency to strike out claims by Mr Meyrick for breach of contract or to enter summary judgment in the Agency's favour. The decision is contained in a carefully reasoned reserved judgment dated 1 November 2006. [2] The case concerns the meaning and scope of provisions of a contract for services between the Agency and Mr Meyrick regarding the undertaking and supply of certain legal services to legal aid clients in the capacity of a "listed provider". A critical aspect of the case relates to the ability of the Agency, outside the provisions of the contract, to exercise its statutory power of suspension under s 73 of the Legal Services Act 2000 (the 2000 Act), which applied at the relevant time. [3] This appeal will not determine conclusively the legal issue between the parties, namely whether the Agency was justified in taking steps in August 2004 to suspend Mr Meyrick's legal aid listing approvals. Rather, the appeal will decide whether the case is to continue in the District Court as a claim for breach of contract, or perhaps proceed by way of an application in the High Court for judicial review of the Agency's decision to suspend Mr Meyrick's listing approvals.Factual background[4] Mr Meyrick was a listed provider of legal aid services including criminal and family law cases. He and the Agency became parties to a written contract for services on 3 March 2003. On 2 February 2004, Mr Meyrick was charged with attempting to defeat the course of justice and 31 charges of possessing objectionable publications under the Films Videos and Publications Classification Act 1993. The Agency later became aware of the charges and on 30 June 2004 wrote to Mr Meyrick advising that it was "considering suspension of some or all of your listings as provider [p]ursuant to section 73 of the [2000] Act". The letter invited Mr Meyrick to provide written submissions to a Suspension Consideration Panel (thePanel) on the materials that the Panel was proposing to consider in connection with the issue of possible suspension. [5] On 30 July 2004, the Panel considered the information placed before it, including detailed written submissions from Mr Meyrick. On 2 August 2004, the Panel decided that all Mr Meyrick's approvals as a listed provider should be suspended under s 73(1)(d) of the 2000 Act. By letter of 20 August 2004, Mr Meyrick was informed of the decision and the fact that the suspension would take effect from 3 September 2004. His right to seek a review of the decision was noted. [6] Mr Meyrick sought a review and a specially convened Suspension Review Panel considered the matter afresh and decided on 5 November 2004 that "the Panel was correct in terms of suspending all of the approvals in Mr Meyrick's listing under s 73(1)(d)". By then, Mr Meyrick had on 20 October 2004 been convicted of attempting to defeat the course of justice. The Suspension Review Panel confirmed the original decision and noted in its written decision that "all of the approvals in Mr Meyrick's listing will remain suspended". It also decided that this suspension should continue indefinitely. Having reached this view, the written decision of the Suspension Review Panel concluded:and Mr Meyrick's Contract for Services should be terminated in accordance with clause 10.2. The Agency will give Mr Meyrick the requisite notice and outline the consequences of contractual termination.[7] On 15 November 2004, Mr Meyrick voluntarily returned his practising certificate to his local district Law Society. [8] Subsequently, Mr Meyrick successfully appealed against the conviction for attempting to pervert the course of justice. On 16 September 2005, Mr Meyrick had his practising certificate returned to him. But by this time, he had been convicted of four of the charges of possession of objectionable publications. On 23 September 2005 Mr Meyrick wrote to the Agency and sought to have it "reinstate the listings". The Agency refused to reinstate the listings and Mr Meyrick was informed that he would need to re-apply to the Agency for approvals as a listed provider. An appeal against conviction on the possession of objectionable publication charges was heardin the High Court in November 2005. A decision on the appeal has not yet been delivered. [9] In early 2006, Mr Meyrick sued the Agency in the District Court for alleged breach of his contract with the Agency. Two causes of action were pleaded. The pleading in the statement of claim is not felicitously drafted. It is somewhat prolix and rather unfocussed. But the gist of the first cause of action seems to be that the Agency committed a breach of contract by "cancelling the plaintiff's listings" (paragraph 21) and that this occurred in August 2004 when the Agency "wrote to the plaintiff unilaterally cancelling the contract it had with the plaintiff in all listing categories as of 3 September 2004" (paragraph 23). It was alleged that such cancellation caused the plaintiff to suffer a loss of $15,825.45, being lost income from clients who wished to use him as counsel between 3 September 2004 and 15 November 2004, the date upon which he surrendered his practising certificate. Thus, Mr Meyrick sought in the prayer for relief on the first cause of action general damages of $15,825.45, exemplary damages of $50,000, costs and "an order requiring the defendant to write to all the plaintiff's clients explaining that the plaintiff is able to represent them should they choose to use his services". [10] The second cause of action pleaded, in summary, that the Agency, in refusing to reinstate the plaintiff as a listed provider, breached the contract it had with the plaintiff. Such a breach is said to have caused Mr Meyrick to suffer an unparticularised loss of $31,650.09. It seems that such loss related to a period after Mr Meyrick received back his practising certificate. Only general damages and costs were sought for this second cause of action.Outcome of strike out application[11] With respect to the first cause of action, Judge Tompkins concluded that, on the material then before the Court, "there is at the very least an arguable case that what occurred here was a repudiation of the contract by the Agency". In elaboration of such approach, he identified a potential failure by the Agency to perform its contractual obligations as follows:[69] In the circumstances of this case, both parties to the contract had been performing it up until the events occurred which triggered the process which led to the suspension of the listings. In that sense, then, the actions of the Agency were a clear and unequivocal indication to Mr Meyrick that, even if he continued to perform legal services for his assigned clients and render bills to the Agency for payment, he would not be paid. He was explicitly told, as well, that he would not receive any future assignments to act for legal aid clients.[12] Judge Tompkins went on to hold that Mr Meyrick retained his right to seek damages for his loss which, in the circumstances of this case, would probably be based upon an "expectation interest" or loss of the bargain. Even the loss claimed in respect of the second cause of action could be included within such expectation interest, so that Mr Meyrick might claim "all losses which have been reasonably foreseeably caused by the initial repudiation (if proved) of the contract". Hence, the Judge directed that the pleading of the first cause of action should not be struck out, but directed that it be amended to include the loss claimed in the second cause of action. [13] In reaching this conclusion, the Judge considered whether a single event, such as the suspension of Mr Meyrick's approvals as a listed provider, might give rise to contemporaneous but different causes of action under the common law of civil obligations and public law. He referred to a "dichotomy", said to have been raised in argument by the Agency, between forcing a claimant to elect to pursue his or her claim either in public law or in civil law. Judge Tompkins noted at [85] that in this case there was "the added factor of the existence of an express written contract, which unequivocally puts Mr Meyrick's claim into the category of a claim seeking to enforce his private law rights". He then stated:[86] Why then should Mr Meyrick, who alleges that the contract between himself and the defendant has been breached, be precluded from seeking to vindicate his private law rights, even though the alleged breach was caused by the exercise of a statutory power of decision which would, if established, also give him an enforceable right to judicial review of that exercise of the power of statutory decision, but in a different forum? With respect, I cannot see why he should be so precluded. There is, in my view, no reason why the same event (the suspension of listings pursuant to the statutory power of decision in section 73(1)(d) cannot, in circumstances where the relationship between the parties is governed both by a statute and by an express contract, give rise both to a claim for judicial review of the exercise of the statutory power of decision, and a claim that the consequence of the exercise of the statutory power of decision was a breach of the contract between the parties.[14] With respect to the second cause of action, Judge Tompkins agreed with the Agency's submission that, irrespective of any alleged termination of the contract for services, if Mr Meyrick wished to be reinstated as a listed provider he would need to undertake the statutory re-application process as set out in the 2000 Act. For that reason, the Judge held that the second cause of action, which claimed that the failure of the Agency to reinstate Mr Meyrick was a breach of contract, was misconceived and could not possibly succeed at law. [15] It appears that Judge Tompkins struck out the second cause of action. He concluded that that claim "cannot succeed as a standalone claim". But as noted, he held that the losses said to have been incurred after the return of the practising certificate could be claimed as part of the first cause of action. [16] Mr Meyrick confirmed that he had so far taken no steps to amend the pleading of the first cause of action. Neither had he cross-appealed against the striking out of the second cause of action. Hence, this appeal relates only to the first cause of action in the statement of claim.Grounds of appeal[17] For the Agency, Mr Taylor submitted that the appeal centred on the following question: Where the Agency uses a contractual framework to exercise its statutory function to license lawyers engaged as providers for legal aid work, can the Agency act pursuant to a statutory provision where the applicable contract does not cover the field of the statutory power? [18] The notice of appeal stated the grounds of appeal as follows:The District Court Judge erred in holding that the Respondent had a choice of proceeding for breach of contract or in judicial review, whereas the only breach of contract raised was that of cl 9.2.2 of the Respondent's provider contract, but the Appellant's decision was taken under s 73(1)(d) and never purported to act in terms of cl 9.2.2. Since the contract could not limit the power of the Appellant under s 73(1)(d), the only available basis for a proceeding was judicial review.[19] Mr Taylor submitted that the ground might be slightly reframed for the purpose of the argument by adding after the first reference to s 73(1)(d) the words "on a basis not provided for in the provider contract". Applying the ground of appeal thus stated to the facts of the case, gave rise to certain questions: a) Do the provisions of cl 9 of the Agency's provider contract exhaust the grounds for suspending approvals in a provider's listing in s 73(1) of the 2000 Act? b) If the answer to (1) is "no", is the Agency precluded by the provisions of the provider contract (by cl 9 or otherwise) from exercising the statutory power to suspend a listing? c) Does the exercise of the statutory power to suspend pursuant to s 73(1) of the 2000 Act, in circumstances where the provider contract does not deal with the issue, give rise to a civil claim for breach of contract? [20] Mr Taylor argued both in his helpful written submissions and orally at the hearing, that the answer to all three questions should be "no". At the hearing, he added a further reformulation by submitting that, even if the answer to question (a) or (b) was "yes", then that is not necessarily the end of the matter. That is because both s 73(1) and cl 9 of the contract for services each involve the exercise of a statutory discretion concerning possible suspension of a listed provider. The only way in which the exercise or purported exercise of such discretion, be it statutory or contractual, could be challenged was in a judicial review proceeding in the High Court where all aspects of the decision-making process might be examined under Part 7 of the High Court Rules, either with or without a civil claim. [21] The remedy for Mr Meyrick, if he wished to pursue the matter further, would therefore be to bring an application for judicial review of the exercise of a statutory power of decision under the Judicature Amendment Act 1972. If that were successful, it might give rise, depending upon the basis upon which such success was achieved, to a claim in tort. In any event, Mr Taylor submitted that the claims foralleged breach of contract filed in the District Court should be struck out. It is fair to indicate that the grounds of appeal presented in the High Court were much more focussed than when the application was argued in the District Court.The statutory scheme[22] The 2000 Act established a new statutory licensing system for the delivery of state funded legal aid for persons appearing in the Court in New Zealand who cannot afford to retain their own lawyers. The provision of legal aid itself began for criminal cases in legislation in 1954: see the Offenders Legal Aid Act 1954 and the Offenders Legal Aid Regulations 1956. The statutory scheme is now contained in Part 4 of the 2000 Act in ss 65-79. A key concept of the legislation is that of "listed provider", which term is defined in s 4 as follows:Listed provider, in relation to the provision of particular services under a scheme, means a natural person who is listed as approved to provide those services.[23] In order to provide legal services, a listed provider must be approved to provide those services. Hence, s 69(1) of the 2000 Act provides:A person may not provide legal services under a scheme [meaning the Legal Aid scheme, the Duty Solicitor scheme, the Police Detention Legal Assistance scheme, or another approved scheme] unless he or she is listed as approved to provide those services.[24] Pursuant to s 71 of the 2000 Act, the Agency is required to develop and adopt listing criteria for the purpose of determining "when a person may be approved to provide specified legal services". The Agency developed and adopted such listing criteria, which became effective from 17 February 2003. Among other matters, there are four general listing criteria which provide:1. Applicant lawyers wishing to be listed as a provider of legal services under the Legal Aid, Duty Solicitor and/or Police Detention Legal Assistance Schemes must hold a current practising certificate issued by a District Law Society. 2. Applicant lawyers will not have had their practising certificate suspended, nor have been struck off, nor declared bankrupt at any time over the previous five years. (The Agency may waive this criterionwhere it judges the circumstances documented will not impact on the practitioner's fitness to practise as a legal aid provider.) 3. Applicant lawyers will not have a criminal conviction where the nature of that conviction might adversely affect the relationship with aided persons, or the integrity and credibility of the legal aid schemes. 4. Applicant lawyers will have no history of upheld complaints sufficient in aggregate to either be a risk to the integrity of the Agency's Schemes or contravene the Agency's Service Standards.[25] Moreover, the legislation establishes in s 72 a process by which a person must apply for listing as a listed provider, or seek an amendment to the approvals in his or her listing. There is a review process provided for in relation to the rejection of applications for approval as a listed provider. [26] Section 73 of the 2000 Act deals with the suspension of a person's listing approvals. It is common ground that the amendments to this section, subsequent to the events relevant to this case, have no bearing on the issues for determination. The section relevantly provides:73 Suspension of listing (1) The Agency may suspend any 1 or more of the approvals in a person's listing on any of the following grounds: (a) the person has been convicted of an offence under section 111 or section 112: (b) the Agency is satisfied that the approval was effected by mistake: (c) the person, in relation to 1 or more approvals, does not meet the listing criteria for that approval, whether those criteria were adopted before or after the approval was given: (d) the person is not providing the service for which he or she is approved to a standard that is acceptable to the Agency. (2) The effect of a suspension of approval is that the person ceases to be approved to provide the relevant service, and the Agency is not obliged to pay for any such services provided after the date on which the suspension takes effect. (3) A suspension takes effect on the date given in a written notice to the person subject to the suspension, which must be a date on or after the date on which the Agency reasonably considers the person will receive the notice.(4) The written notice must specify the grounds for the suspension. (5) A person who receives a notice of suspension may seek a review of that decision by the Agency, and is entitled to make submissions and be heard at any such review. (6) If a review is requested, the Agency must conduct the review as soon as practicable and make a final decision.[27] The other sections in Part 4 of the 2000 Act deal with various aspects of the statutory scheme applicable to listed providers. But again they have no bearing on the issues before the Court.The contract for services[28] The first contract between Mr Meyrick and the Agency was entered into in January 2001. It was in quite different terms to the one in issue in this case and was to be in place for only two years. Hence, the first contract came to an end in February 2003 and was replaced by a substantially different contract. [29] The second contract for services between the Agency and Mr Meyrick as a listed provider came into effect in March 2003. The legal services which Mr Meyrick was approved to provide were set out in Schedule A and involve litigation experience level 2 in the categories of family, criminal (proceedings category) duty solicitor, Police detention legal assistance and civil (general). The legal services which a listed provider is approved to provide are determined by the Agency against the listing criteria developed and adapted by the Agency under s 71 of the 2000 Act, and referred to in [24] above. [30] The contract for services is for a term of five years unless it is terminated earlier by either party pursuant to cl 10 of the contract. That clause provides:10.1 The Listed Provider may terminate this Contract for any reason upon one (1) calendar month's notice in writing to the Agency. A Listed Provider has an obligation to complete cases where possible or facilitate the transfer of the file/s to another Listed Provider who has the necessary capacity. 10.2 The Agency may terminate this Contract upon one (1) calendar month's notice in writing to the Listed Provider where all of the ListedProvider's approvals contained in Schedule A have been suspended by the Agency under clause 9.2.2.[31] The Listed Provider is required to comply with a range of general obligations set out in cl 4. One such obligation (cl 4.1) is to comply with all applicable statutory obligations and all relevant professional obligations. The obligations of the Agency are set out in cl 7 and include ensuring that all decisions on grant applications, payment of claims, complaints and correspondence to the Agency are actioned in a timely manner. Relevant to the question of amendment to, or suspension of, the listing approvals, cl 7.3 provides:7.3 If the Agency amends or suspends any or all of the approvals contained in Schedule A pursuant to clause 9, it shall, if the Listed Provider requests a review of that decision, conduct the review in accordance with section 73 of the Act. The Agency will ensure the review is carried out by a person who did not make the original decision.[32] In terms of compliance with the Listing Criteria and Service Standards, cl 9 of the contract is important and provides:9.1 At any time during the currency of this Contract the Agency may assess the Listed Provider's compliance with the Listing Criteria for the approvals contained in Schedule A and/or his/her performance against the applicable Service Standards. The Agency will consult with the Listed Provider in the process of this assessment. Where the Agency amends or introduces new Listing Criteria in an area of law in which the Listed Provider holds an approval to act as a Lead Provider, the Agency will consider the experience and competence of the Listed Provider and will advice whether he/she will be required to comply with the amended or new Listing Criteria. 9.2 Upon completion of such assessment the Agency may: 9.2.1 amend the approvals contained in Schedule A and any conditions attaching to those approvals; and/or 9.2.2 suspend any or all of the approvals contained in Schedule A; and/or 9.2.3 terminate this Contract in accordance with clause 10.2 9.3 The Agency may also exercise its powers under clause 9.2 if it is satisfied that: 9.3.1 the Listed Provider has been convicted of an offence under section 111 or 112 of the Act; or 9.3.2 the Listed Provider has been convicted of an offence under any other legislation that affects the Listed Provider's fitness to provide Legal Services under this Contract; or 9.3.3 any one or more of the Listed Provider's approvals contained in Schedule A was effected by mistake.9.4 The Agency may exercise its powers under clause 9.2.1 and/or 9.2.2, or revoke any approval contained in Schedule A, or any condition attaching to that approval, if a Scheme is amended with the consequence that any of the approvals contained in Schedule A, or any conditions attaching to those approvals, must be amended, suspended, or revoked. If the Agency exercises its powers under this clause 9.4 it must do so upon a minimum of three (3) calendar months notice to the Listed Provider. 9.5 If the Agency suspends any or all of the approvals contained in Schedule A the Listed Provider ceases to be approved to supply the relevant Legal Services, and the Agency is not obliged to pay for any such Legal Services supplied after the date on which the suspension takes effect.[33] With respect to the termination provisions (cl 10) and the compliance provisions (cl 9), neither makes express reference to s 73 of the 2000 Act. The only explicit reference to s 73 is in cl 7.3 cited above at [31]. The compliance provisions of cl 9.1 enable the Agency to assess the listed provider's compliance with the approvals in Schedule A and his or her performance against the applicable Service Standards. This is a defined term in the contract, but it is common ground that no "Service Standards" have been published by the Agency. Clause 9.1 covers in part the grounds for suspension provided for in s 73(1)(c). [34] The assessment process is elaborated on in the five subclauses of cl 9. Clause 9.2.2 provides for suspension of any or all of the approvals "upon the completion of such assessment", a reference to the assessment process referred to in cl 9.1. The powers in cl 9.2 may also be exercised by the Agency, if it is satisfied that any of the circumstances in 9.3.1, 9.3.2 or 9.3.3 apply. It is noted that cl 9.3.1 is similar to the wording in s 73(1)(a) of the 2000 Act, and cl 9.3.3 is similar to the wording in s 73(1)(b). There is no comparative provision in the 2000 Act to cl 9.3.2. Finally, in relation to cl 9.5, s 73(2) of the 2000 Act is to similar effect. It can readily be seen that a notable omission from cl 9 (either by design or by accident) is the ground for suspension provided for in s 73(1)(d). [35] Two further clauses of the contract for services should be noted, namely, cl 13 and cl 18.1. These provide as follows:13 Entire Agreement13.1 Subject to clause 4.2, this Contract and any Letter of Grant, constitutes the full agreement between the parties concerning the Legal Services to be supplied by the Listed Provider. 18 Authorisation and Acknowledgement 18.1 The Listed Provider hereby authorises the Agency to collect or disclose personal information about himself or herself from the New Zealand Law Society, District Law Society or any other organisation responsible for regulating the Listed Provider, for any purpose relating to the Agency's obligations under sections 69 to 73 of the Act.Legal principles: striking out[36] The law on striking out pleadings is well settled. It is common ground that the principles are conveniently summarised in Attorney-General v Prince & Gardner[1998] 1 NZLR 262 (CA) at 267:A striking-out application proceeds on the assumption that the facts pleaded in the statement of claim are true. That is so even although they are not or may not be admitted. It is well settled that before the Court may strike out proceedings the causes of action must be so clearly untenable that they cannot possibly succeed (R Lucas & Son (Nelson Mail) Ltd v O'Brien [1978] 2 NZLR 289 at pp 294 – 295; Takaro Properties Ltd (in receivership) v Rowling [1978] 2 NZLR 314 at pp 316 – 317); the jurisdiction is one to be exercised sparingly, and only in a clear case where the Court is satisfied it has the requisite material (Gartside v Sheffield, Young & Ellis [1983] NZLR 37 at p 45; Electricity Corporation Ltd v Geotherm Energy Ltd[1992] 2 NZLR 641); but the fact that applications to strike out raise difficult questions of law, and require extensive argument does not exclude jurisdiction (Gartside v Sheffield, Young & Ellis).[37] On the question of when affidavit evidence may be considered by the Court, the law is outlined in Attorney-General v McVeagh [1995] 1 NZLR 558 (CA) at 566:The Court is entitled to receive affidavit evidence on a striking-out application, and will do so in a proper case. It will not attempt to resolve genuinely disputed issues of fact and therefore will generally limit evidence to that which is undisputed. Normally it will not consider evidence inconsistent with the pleading, for a striking-out application is dealt with on the footing that the pleaded facts can be proved; see Electricity Corporation Ltd v Geotherm Energy Ltd [1992] 2 NZLR 641, 645-646, Southern Ocean Trawlers Ltd v Director-General of Agriculture and Fisheries [1993] 2 NZLR 53 at pp 62-63, per Cooke P. But there may be a case where an essential factual allegation is so demonstrably contrary to indisputable fact that the matter ought not to be allowed to proceed further.[38] In the District Court, the power to strike out a pleading is contained in r 209 of the District Court Rules 1992. The power is discretionary. The purpose of theRule is conveniently summarised in LexisNexis District Courts Practice (Civil) at DCR209.4:The purpose of R 209 is twofold; first to provide a procedure by which the Court may put an end to litigation which must fail, even if all of the facts are construed in favour of the plaintiff; or litigation which is "otherwise an abuse of the process of the Court"; and second to ensure that allegations in a statement of claim, or in a statement of defence are genuine and are not baseless allegations which are simply frivolous and/or vexatious in nature.[39] The Agency filed a comprehensive affidavit from one of its managers describing the factual background and referring to some 29 documentary exhibits. As in the District Court, none of the factual material and none of the documentary exhibits was contested by Mr Meyrick. This means that, in terms of dealing with the issues to be decided, the Court has not only the material in the pleadings in the District Court (statement of claim and statement of defence), but also the undisputed evidence in the affidavit and the documents.Legal principles: summary judgment[40] The principles applicable to an application by a defendant for summary judgment are equally well settled. Defendant's summary judgment jurisdiction in the District Court is governed by r 152(2) of the District Court Rules. Summary judgment will not be appropriate where it is possible for the plaintiff to amend the claim to remedy any defects relied upon by the defendant: see Westpac Banking Corporation v MM Kembla New Zealand Ltd [2001] 2 NZLR 298 (CA). Moreover, the robust approach used in relation to plaintiff's summary judgment concerning disputes of fact applies to defendant's summary judgment: see Attorney-General v Jones (2001) 15 PRNZ 347 (CA). Any evidence relied on by the defendant has to be in the nature of a "king-hit": see Jones v Attorney-General [2004] 1 NZLR 433 (PC). [41] The defendant must show that all of the plaintiff's causes of action will fail. Hence, such an application is similar in nature to an application for striking out. Whilst the same restrictions on evidence do not apply, it will still be difficult for a defendant to succeed with summary judgment where there is a material dispute of fact: see Ferrymead Tavern Ltd v Christchurch Press Ltd (1999) 13 PRNZ 616.Where a claim is found to be untenable as a matter of law, it will generally be appropriate to strike it out: see Bernard v Space 2000 Ltd (2001) 15 PRNZ 338 (CA). [42] Incidentally, the wording of r 152(2) shows that the Court has a discretion to give judgment against a plaintiff if the defendant satisfies the Court that none of the causes of action can succeed. The principles applicable to the exercise of such discretion for a defendant's application are summarised in Brookers District Courts Procedure at DR152.08:In an application by the defendant, the discretion is likely to be exercised similarly [to a plaintiff's summary judgment]. If the defendant has passed the threshold of establishing that no cause of action can succeed, it is difficult to see how the proceeding can be allowed to continue.Submissions of the appellant[43] For the Agency, Mr Taylor referred to the convenient summary of facts in paragraphs [34] to [51] of the judgment under appeal. Mr Taylor particularly emphasised the approach taken by the Panel when it met on 30 July 2004 to consider whether one or more of Mr Meyrick's approvals in his listings should be suspended under s 73 of the 2000 Act. Such consideration was made in the light of the charges then faced by Mr Meyrick, namely, one charge under s 117(e) of the Crimes Act 1961 of attempting to defeat the course of justice and 31 charges of possession of objectionable material under s 140(1)(b) of the Films, Videos and Publications Classification Act 1993. [44] Mr Taylor referred to the Panel decision dated 2 August 2004 noting that it relied for its jurisdiction on s 73(1)(d) of the 2000 Act and carefully considered the meaning of the word "standard" in that section. The Panel then stated:The Agency is unaware of any upheld complaints about Mr Meyrick that have been dealt with by the District Law Society, nor has there been a criminal conviction. The Panel were of the view that the overall tenor of the general listing criteria, read as a whole, was that the integrity and credibility of legal aid schemes should not be compromised or prejudiced in any way. The Panel considered that there will be cases where the nature and/or seriousness of the charges brought against a practitioner will be such as tocompromise the integrity and credibility of the legal aid scheme even where those charges have not yet been determined by the Courts.[45] With respect to the Panel's consideration of the issue, Mr Taylor also referred to two particular paragraphs of the decision as follows:The Panel is aware that it was not its role to establish Mr Meyrick's innocence or guilt with respect to the charges. In the opinion of the Panel, given the nature and gravity of the charges, and given the Agency's responsibility to ensure that the credibility and integrity of the legal aid schemes is preserved and enhanced and in turn to ensure the public's continued confidence in the service provided, the issue was whether the Agency could continue to assign Mr Meyrick to cases involving legally aided people? The Panel was of the view that there were significant issues of public interest that needed to be determined, as well as Mr Meyrick's own interests. The Panel concluded that the fact of Mr Meyrick having been charged with the offences outlined in the charges he faces may affect the relationship between him as a provider and the aided person but will affect the integrity and credibility of legal aid schemes. Taking this into account and in view of the seriousness of the charges and the responsibility of the Agency to ensure that the provision of legal aid services continues to be viewed with confidence, the Panel was of the view that so long as the charges against Mr Meyrick remained, he could not be regarded as providing a service to an accepted standard as required by section 73(1)(d). Furthermore, the Panel considered that by continuing to refer legally aided people to Mr Meyrick the Agency prejudiced and compromised the integrity of the legal aid schemes and diminished the trust which people should be able to have in providers listed by the Agency[46] Mr Taylor next relied upon the Agency's letter to Mr Meyrick dated 20 August 2004 as confirming that the Panel's decision to suspend the listings approvals was taken under s 73(1)(d) of the 2000 Act. Mr Meyrick was advised that the suspension was to take effect from 3 September 2004. He was also advised of his right to invoke a review of the Panel's decision. Mr Taylor agreed that the effect of the suspension under s 73(2) of the 2000 Act is that Mr Meyrick "cease[d] to be approved to provide the relevant service". Mr Taylor argued that such a statutory effect is operative outside the provisions of the contract for services. Moreover, s 69(1) would apply, also outside the contract, to prevent Mr Meyrick providing services as a listed provider. [47] A key submission for the Agency was that, when action in relation to suspension of a listed provider is taken under a statutory power (s 73(1)(d)), this could not be a breach of contract where the applicable contract did not deal with thattype of suspension or provide for such action to be taken. That leads on to the submission on the first question noted in [19] above, whether cl 9 of the provider contract exhausted the grounds for suspension of a listed provider. [48] Mr Taylor referred to the detailed provisions of cl 9 and compared them with the terms of s 73(1) of the 2000 Act. Such a comparison showed that there was a mismatch between the statutory and the contractual provisions in several respects. For example, the s 73(1)(d) power appears nowhere in cl 9. Further, the content of s 73(1)(c) is only partly covered in cl 9.1. The assessment by the Agency to determine a listed provider's compliance with the Listing Criteria and their performance against any Service Standards is essentially an historical analysis of a given situation. This is to be compared with a situation (as here) where an event external to the conduct by the listed provider of proceedings on legal aid creates a claimed breach of standards. In such a case, a lengthy process and an historical review of past cases would normally be inapt. On the basis of such analysis, Mr Taylor submitted that the provisions of cl 9 clearly do not exhaust the grounds for suspension of a listed provider's listing approvals. [49] Moving then to the second question, Mr Taylor submitted that, if the answer to the first question is "no", the Agency is not precluded by the provisions of the provider contract from exercising the statutory power in s 73(1)(d) to suspend a provider's listings. He submitted that such a power exists for the public interest and the protection of persons requiring the services of a listed provider. Mr Taylor referred to authority in support of the proposition that a public authority cannot disable itself by contract from exercising all or part of its power conferred in the public interest: see Halsbury's Laws of England (4 ed re-issue) para 33. The principles are summarised as follows:Public bodies cannot disable themselves by deed, grant or contract from fulfilling their obligations to exercise their powers and duties for public purposes; and an agreement or undertaking which purports to impose or would have the effect of imposing such a fetter is void. One consequence of the general rule is that contracts and covenants entered into by the Crown are subject to an implied term reserving to the Crown its overriding powers exercisable for the public good.[50] A similar statement of the law is contained in Laws of New Zealand, Administrative Law, para 44. It is there stated:Fettering discretion by contract or representation. Public bodies must not renounce a part of their statutory birthright. Public bodies that are entrusted with powers to be exercised for public purposes cannot divest themselves of their powers. This rule prevents public bodies from entering contracts that are incompatible with the exercise of those powers. Unlike private citizens, statutory bodies may have public responsibilities that limit their capacity to enter contracts. The Crown cannot, by entering contracts, fetter the exercise of executive power in matters that concern the welfare of the State.[51] Mr Taylor also acknowledged that the wording of cl 18.1 of the contract for services tended to support the proposition that the Agency's statutory obligations under ss 69-73 of the 2000 Act were preserved and were available to be used by the Agency where necessary. Moreover, the entire agreement clause in 13.1 was limited in effect and did not prevent the Agency from exercising the statutory power in s 73(1)(d) where appropriate. [52] Therefore, Mr Taylor submitted that if the contract for services does not cover the full scope of the statutory field outlined in s 73(1) of the 2000 Act, then to limit the Agency in its suspension powers to the area covered by the contract would have the effect of disabling it from ensuring that the public interest purpose of s 73 was carried into effect. This would be contrary to the will of Parliament in enacting legislation designed to protect the public interest, and legal aid recipients in particular. Mr Taylor further submitted that the two cases referred to by Judge Tompkins in paragraphs [88] and [89] (Lumber Specialties Ltd v Hodgson [2000] 2 NZLR 3476 and West Coast Regional Council v Attorney-General CA 253/95 10 June 1997) were not directly relevant to the issues for determination. [53] Mr Taylor then cited the case of Petrocorp Exploration Ltd v Minister of Energy [1991] 1 NZLR 641 (PC) as illustrative. In that case a Minister had a statutory regulatory power over all petroleum exploration and mining. The Minister also had power under the same legislation to enter into contracts for exploration and mining. The case held that the Minister of Energy, under the Petroleum Act, is cast in a dual role to carry out on the one hand statutory functions and on the other commercial functions. There were different considerations applicable dependingupon which function the Minister was carrying out. But Mr Taylor accepted thatPetrocorp differs from the present case because the Agency is acting in a regulatory function, both in exercising powers under the 2000 Act and also in entering into contracts with listed providers. However, he submitted that the case supports the Agency's position rather than diminishing it, because the different functions, regulatory and contractual, underscored the public interest character of the powers of suspension in s 73(1). He submitted that the regulatory functions could not be restricted by contract. That was particularly so where the contractual provisions only covered part of the statutory matrix for possible suspension of listed providers. [54] In summary, Mr Taylor submitted that if cl 9 did not exhaust the grounds in s 73(1) of the 2000 Act, it should not be construed to limit action under the statutory powers of s 73(1) itself to the circumstances set out in cl 9. A consequence of deciding otherwise would be to put the contract for services at risk of being declared invalid, as occurred in Ski Enterprises Ltd v Tongariro National Park Board [1964] NZLR 884. [55] Finally, Mr Taylor submitted that if the answer to the first two questions is "no", then the answer to the third question is also "no". Hence, he submitted that in the present circumstances, where the basis of suspension arose outside the areas covered by cl 9, and where the Agency plainly sought to act under s 73(1)(d) of the 2000 Act, the appropriate remedy was an application for judicial review.Mr Meyrick's submissions[56] Mr Meyrick appeared for himself and presented succinct written submissions and responded orally at the hearing to the written submissions of Mr Taylor. [57] Mr Meyrick's written synopsis might conveniently be reproduced:5. But the gist of this appeal is this a) there existed a contract between the Legal Services Agency and me ("the contract"). The contract set out the listings under which I was able to provide services to clients under the legal aid scheme (schedule A).b) the contract also contained a provision enabling the LSA to suspend the listings listed in schedule A. c) the Legal Services Agency ("the Agency") suspended and then cancelled these listings preventing me from acting for clients who rely on legal aid. d) The Agency says in doing this it did not breach the contract for it did not purport to act in terms of the contract but rather it acted in accordance with powers provided in s 73(d) LSA. 6. The ability of the Agency to suspend the listings is set out in clause 9.2.2 of the contract. The justifications which enable the Agency to suspend listings under clause 9.2.2 are set out in clause 9.1. 17. But there is a contract and the Agency has admitted repudiating the contract. But apart from this, if the Agency purported to act in accordance with s 73 LSA, its actions also had the effect of breaching the contract. It does not matter if the Agency breached the contract deliberately or inadvertently. I suggest it is settled law that repudiation of a contract is actionable. 18. The issue is justification. If the Agency was justified in suspending and/or cancelling the listings then any proceeding brought by me to review the decision would fail. If the Agency was not justified then review proceedings would succeed. 19. The Agency has the same defence in the action for breach of contract and if its decisions were justified its defence will succeed. 20. But these are trial issues.[58] At the hearing, Mr Meyrick fairly acknowledged that the current pleading in the statement of claim did not particularise the alleged breach by the Agency when it exercised the statutory power under s 73(1)(d) of the 2000 Act. But Mr Meyrick contended that the Agency had misinterpreted the scope of its discretionary power under the subsection, possibly took into account irrelevant matters and failed to take into account relevant matters. [59] Having so articulated his concerns, which I accept are genuinely held, Mr Meyrick was really forced to accept that such grounds of challenge were quintessentially of the judicial review kind. Having reached that point, Mr Meyrick expressed concern at the cost and complexity, and potential legal difficulty, in pursuing an application for judicial review. He said that was why he chose to file a contract claim in the District Court.Discussion[60] It is convenient first to refer back to the statement of claim and consider what was pleaded, measured against what in fact occurred. Second, reference will be made to the submissions made regarding the nature and scope of the provisions of the contract for services, as compared with the statutory powers of suspension in s 73 of the 2000 Act. This will be followed by an analysis to determine whether the remaining contract cause of action in the statement of claim can survive. Finally, I offer some tentative concluding observations about any challenge to the exercise of the Agency's statutory powers by way of judicial review. [61] With respect to the statement of claim, the effective part of the pleading of the alleged breach of contract is based on three paragraphs:12. On August 15, 2004 the defendant wrote to the plaintiff stating that it was taking unilateral action to cancel all of the plaintiff's listings. It cancelled all the plaintiff's listings effective as from September 3, 2004. 13. The defendant relied on section 73(1)(d) Legal Services Act 2000 for its authority to cancel the plaintiff's listings [s 73(1)(d) is quoted in full]. First Cause of Action – Breach of Contract 21. In cancelling the plaintiff's listings the defendant breached the contract it had with the plaintiff and caused him to suffer a loss.[62] The pleading purports to provide "details of the breach", but these are largely a repeat of some 17 earlier paragraphs and a description of what occurred in August and September 2004 once the Agency had made its decision and "cancelled the plaintiff's listings". There is no pleading of any clause of the contract for services which were said to have been breached, nor any pleading as to the propriety or otherwise of the actions of the Agency. Mr Meyrick accepted this at the hearing. [63] In terms of what in fact occurred when the Agency considered the possible suspension of approvals, it is clear from the Panel's decision and the correspondence from the Agency to Mr Meyrick on 20 August 2004, that the Agency was not exercising any contractual provisions when it decided to suspend Mr Meyrick's approvals as a listed provider. The Agency did not even purport to rely upon anycontractual provision. It expressly stated that it was exercising its statutory power under s 73(1)(d) of the 2000 Act. [64] Was it permitted to do so? First, there was nothing in the contract for services to prevent it from doing so. Significantly, when cl 9.3 provides that the Agency may also exercise its powers under cl 9.2.2 if it is satisfied as to the existence of any one of the situations provided for in 9.3.1, 9.3.2 or 9.3.3, it does not say "and in no other case". The reason is obvious: to have done so would have been to fetter its regulatory powers, particularly under s 73(1)(d) which was not mirrored in the contract for services. Second, cl 18.1 authorised the Agency to collect or disclose personal information about the listed provider "for any purpose relating to the Agency's obligations under sections 69 to 73 of the [2000] Act". Third, there is no equivalent provision in cl 9 of the contract for services which covers the entirety of s 73(1)(c) or, as noted, the same or similar ground to that covered by s 73(1)(d) of the 2000 Act. [65] Accordingly, I agree that with Mr Taylor's submission that the provisions of cl 9 do not exhaust or cover the field of the grounds for suspension in s 73(1) of the 2000 Act. The terms of the entire agreement clause in cl 13.1 cannot assist Mr Meyrick because it is limited in its scope to the legal services to be supplied by the Listed Provider. [66] The next point is whether the Agency is restricted to using the suspension provisions of cl 9 of the contract for services. Here again, I accept the submission of Mr Taylor that the statutory power of suspension exists for the public interest and to protect the users of the services of legal aid listed providers. It is trite law that public authority cannot disable itself by contract from exercising its statutory powers conferred upon it in the public interest. I consider that, in entering into the contract for services, the Agency did not do so in the circumstances of this case. Again, the terms of cl 18.1 are indicative that it did not do so. In fact, the reverse is apparent from the wording of that clause. [67] Where it has been found that the contractual provisions of cl 9 do not cover the field of s 73(1) of the 2000 Act, room is left outside the scope of the contract forthe operation of the statutory powers of suspension, at least those in s 73(1)(d). Moreover, I consider that cl 9 should not be interpreted in such a way as to limit the ability of the Agency to exercise suspension powers only in the circumstances set out in cl 9 itself. Hence, the answer to the second question in [19] above is "no". [68] Once the Agency had decided to suspend Mr Meyrick's approvals as a listed provider pursuant to s 73(1)(d) of the 2000 Act, the question arose as to the effect of a suspension of approval. In my judgment, the answer is contained in s 73(2) of the 2000 Act, which provides:The effect of a suspension of approval is that the person ceases to be approved to provide the relevant service, and the Agency is not obliged to pay for any such services provided after the date on which the suspension takes effect.[69] In other words, the listed provider (here Mr Meyrick) from the date upon which the suspension takes effect "ceases to be approved to provide the relevant service". This is an effect mandated by the statute itself and has nothing to do with the contract for services. Furthermore, by virtue of s 69(1) of the 2000 Act, Mr Meyrick could not provide legal services under a legal aid scheme because he was not approved to provide any such services. Accordingly, as from 3 September 2004 Mr Meyrick was prevented from providing, and being paid by the Agency for, any legal aid services. This arose from the combined operation of the suspension by the Agency of his listing approvals under s 73(1)(d), the provisions of s 73(2) as to the effect of such suspension, and the bar on his providing legal services in s 69(1). [70] It follows that it cannot be said that the Agency took "unilateral action to cancel the plaintiff's listings". The Agency's action was based solely upon its statutory powers and was not reliant upon, or referable to, any contractual powers. Even the effect of the suspension was not dependent upon any contractual provision: it arose, as noted above, separately from the contract under the statutory provision. That is what caused Mr Meyrick not to be approved to provide legal aid services. It follows that any claims based on alleged breaches of contract must fail. I therefore consider that the two causes of action in the statement of claim should be struck out.[71] This is a decision that was open to the District Court to make when the application to strike out was heard by Judge Tompkins. The High Court has power under s 76(1)(a) of the District Courts Act 1947 to make any decision it thinks should have been made in the District Court. [72] Before concluding this part of the judgment I record that, to the extent that discretionary factors are relevant, there is in my view no good reason why both the contract claims should not be struck out. If anything, the circumstances of this case point the other way. This is because, as contended for by Mr Taylor, the most appropriate way to have challenged the action taken by the Agency in August 2004 to suspend Mr Meyrick's approvals as a listed provider would have been by an application for judicial review in the High Court. [73] Finally, it is pertinent to observe that, given that the Agency was no doubt exercising a statutory power of decision, any challenge to the manner in which that power was exercised would be made by way of an application for judicial review under the Judicature Amendment Act 1972. Whether Mr Meyrick would wish to pursue such an application is entirely a matter for him. He would, of course, be limited to the traditional grounds of review challenge and could not approach the matter by way of a general appeal. In this context, it is noted that under the 2000 Act there was, by virtue of s 73(5), the ability to seek a review of the decision of the Agency. Mr Meyrick in fact exercised such a right of review. The Suspension Review Panel, on which a senior and experienced Queen's Counsel (Mr P McKenzie QC) served, decided that the Panel was correct in suspending all of Mr Meyrick's listing approvals under s 73(1)(d) of the 2000 Act. [74] Despite the fact that the grounds of challenge identified in paragraph [58] above could potentially be argued in an application for judicial review, even if one or more of such grounds were successfully made out, any relief would be discretionary. This is a factor that Mr Meyrick will need to consider before embarking upon further complex and time-consuming litigation.Result[75] For the reasons set out above, the appeal is allowed. The result is that the two causes of action in the statement of claim filed by Mr Meyrick in the District Court at Huntly should be struck out.Costs[76] The Agency through its counsel informed the Court that it did not seek costs either on the appeal or the hearing in the District Court. I consider that to be an appropriate stance in all the circumstances of the case. Accordingly, there will be no order as to costs. _________________________ Stevens J