GIBSON V LEGAL SERVICES AGENCY HC AK CIV 2006-404-000999

GIBSON V LEGAL SERVICES AGENCY HC AK CIV 2006-404-000999 28 November 2008IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY CIV 2006-404-000999UNDER the Legal Services Act 2000 BETWEEN NEVILLE JAMES GIBSON Appellant AND LEGAL SERVICES AGENCY Respondent Hearing: 13 November 2008 Appearances: Appellant in Person G D S Taylor for Respondent Judgment: 28 November 2008 at 3.00 p.m.JUDGMENT OF VENNING JThis judgment was delivered by me on 28 November 2008 at 3.00 pm, pursuant to Rule 540(4) of the High Court Rules. Registrar/Deputy Registrar DateSolicitors: Bartlett Partners, Wellington Copy to: G D S Taylor, Wellington N J Gibson, AucklandBackground[1] Mr Gibson is no stranger to litigation and the Courts. His former solicitors successfully obtained a judgment in his favour in the sum of $1.6 million. When the solicitors sued for the balance of their fees in 2002 Mr Gibson counterclaimed for $6.5 million. He alleged a conflict of interest by the solicitors and a breach of the duty to advise him at an early stage of his right to apply for legal aid. The trial was allocated a hearing in July 2005. In April 2005 Mr Gibson applied for a grant of legal aid. The application was considered on a number of occasions by the Legal Services Agency. In a final decision dated 23 August 2006 the Agency refused aid, primarily on the grounds there were insufficient prospects of success and that Mr Gibson should have accepted a settlement offer prior to trial. That decision was taken on review by Mr Gibson to the Legal Aid Review Panel. In a decision delivered on 2 February 2007 the Review Panel confirmed the Agency's decision. [2] Mr Gibson appeals from the decision of the Review Panel. Although the appeal was filed on 28 February 2007, it was not able to be heard until November 2008. There have been a number of protracted interlocutory arguments on the file. The file on this appeal now contains five full boxes of documentation.Statutory framework for determination of legal aid applications[3] The statutory background to the consideration of applications for legal aid under the Legal Services Act 2000 ("the Act") was considered by Wild J inConvenor, Legal Aid Review Panel v Legal Services Agency (2007) 18 PRNZ 488. I gratefully adopt the summary from that case as follows:[6] The coming into force of the 2000 Act removed legal aid decision- making from the legal profession and the Courts to the Agency. The new decision-makers were and are public servants, few if any legally qualified. They lack the legal knowledge, and the experience of legal practice, which the former decision-makers had. [7] The Agency filled this gap in its institutional legal knowledge and experience by appointing Specialist Advisers. Three of these are internalSpecialist Advisers (ISAs) on the Agency's staff, and about 30 are external Specialist Advisers (ESAs), drawn from the practising legal profession throughout New Zealand. [8] These ISAs and ESAs have no statutory recognition, but their role is outlined in Part 17 — Specialist Advisers, of the Agency's Service Practice Manual. ... ... [19] Section 54 entitles a person dissatisfied with the Agency's decision on a legal aid application to apply to the LARP [Legal Aid Review Panel] for a review. The review application must be grounded on the Agency's decision being manifestly unreasonable or wrong in law. [20] In reviewing the Agency's decisions the LARP forms a review team of one, two or three members including one lawyer: s55A(1)(b) and (2). [21] LARP may determine a review "by confirming, modifying, or reversing the decision under review" (s57(2)) or, instead, may direct the Agency to reconsider all or part of the decision, and may set out the matters the Agency must take into account in its reconsideration: s58.[4] I add that in addition to the right to apply for a review, an applicant for aid can first apply for a reconsideration of the decision: s 29 of the Act.Rights of appeal to the Court[5] The rights of the applicant or the Agency in relation to the grant of legal aid do not end with the Review Panel. If either the Agency or an applicant considers the Review Panel's determination wrong in law they may appeal to the High Court on a question of law: s 59. [6] Section 60 of the Act also incorporates the provisions of ss 144 to 144B of the Summary Proceedings Act 1957 relating to appeals to the Court of Appeal and Supreme Court.The process followed in this case[7] The Agency initially declined the application for aid on 17 June 2005. Mr Gibson sought a reconsideration of that decision. Before the decision could be reconsidered, the substantive trial took place. On 24 August 2005 Ronald Young Jdelivered judgment dismissing Mr Gibson's claims and entering judgment for his former solicitors. [8] On 1 November 2005 the Agency confirmed its previous decision to decline aid. Mr Gibson then applied to the Review Panel for review of that decision. In a short decision of 31 July 2006 the Review Panel referred the matter back to the Agency for further reconsideration because, in contravention of s 29(2) of the Act, the reconsideration had been by the same person who had made the initial decision. [9] On 23 August 2006 the Agency issued its reconsidered decision. It upheld its previous decision to refuse aid. Mr Gibson then made a further application for review to the Review Panel. [10] In its decision delivered on 2 February 2007, the Review Panel correctly identified that its task was to decide whether the Agency's decision was wrong in law or manifestly unreasonable. The Review Panel noted that:• the Agency was required to reach its own conclusions on the merits rather than rely on the professional opinions Mr Gibson had obtained;• the Agency had referred the matter to two specialist advisers;• the Agency had given careful consideration to the case and identified difficulties in relation to loss;• the Agency took into account that Mr Gibson had rejected a substantial settlement offer;• the Agency had taken into account all the arguments presented to it; and• the Agency's decision was not altered by or affected by the decision of Ronald Young J rejecting Mr Gibson's substantive claim against the solicitors.[11] The Review Panel concluded that Mr Gibson had not shown the Agency took irrelevant matters into account or failed to take relevant matters into account. In the Review Panel's opinion the Agency had made a fair assessment on the material before it and took into account the specific matters as earlier directed by the Review Panel when remitting the matter back. It had not made any error of law. [12] The Review Panel also concluded that the decision had not been shown to be manifestly unreasonable. For those reasons it confirmed the decision of the Agency. [13] Mr Gibson appeals to this court on the basis the Review Panel's decision was wrong in law.The appeal points[14] Mr Gibson raised a number of points in his amended submission filed on 23 October: a) Mr Gibson had met the Timmins' test in Timmins v Legal Aid Review Panel [2004] 1 NZLR 708 and it was manifestly unreasonable and/or wrong for the Agency to have relied on the Timmins' test to decline aid; b) It was manifestly unreasonable and/or an error at law that two untrained legal personnel of the Agency who were not specialist advisers made the decision in this case; c) It was manifestly unreasonable and/or wrong at law for the Agency to rely on its earlier decisions of 7 June, 17 June and 1 November without first providing the Review Panel with the fundamental documents on review; d) It was manifestly unreasonable and/or wrong at law for the Agency to withhold its specialist adviser reports;e) It was manifestly unreasonable and/or wrong at law that the Agency engaged as a specialist adviser a former employee of the solicitors' firm that Mr Gibson was in litigation with; f) It was manifestly unreasonable and/or wrong at law that the Agency dismissed out of hand Mr Gibson's second amended points on appeal; g) The Review Panel was wrong in law in determining that the appellant must show the two critical conclusions reached by the Agency, namely the merit of Mr Gibson's case was insufficient to justify a grant of the magnitude sought and that Mr Gibson should have accepted the offer of settlement before trial were wrong; h) The Review Panel was wrong at law to conclude that it was not manifestly unreasonable and/or wrong at law for the Agency to conclude in its various decisions the appellant's case was weak; i) In identifying at para 34 of its determination that it had given careful consideration to the appellant's case and identified significant difficulties in relation to Mr Gibson's ability to prove loss the Review Panel fell into an error of law; j) The Review Panel made an error of law by failing to take into account the Agency's decision about the significance of the rejection of the settlement offer was manifestly unreasonable and/or wrong at law; k) In identifying at para 36 of its determination that in coming to its conclusion the Agency had taken into account all relevant arguments the Review Panel erred at law by failing to take into account relevant matters involving the specialists' reports; l) The Review Panel made an error of law by failing to call for the full legal aid files before making a determination that it had been shown the Agency took irrelevant matters into account;m) The Review Panel made an error of law by failing to have the full legal aid file before determining the way in which the Agency approached the matter was appropriate; n) In identifying at para 39 of its determination that the Agency's decision had not been shown to be manifestly unreasonable the Review Panel made an error of law; o) There was an error of law on the part of the Review Panel in confirming the Agency's decision to decline aid; p) The Review Panel had failed to take account of a relevant matter, namely that it was manifestly unreasonable and/or wrong at law for the Agency to fail to give reasons in declining a grant of legal aid on the reconsideration decision of 23 August 2006; q) It was an error of law on the part of the Review Panel to fail to take into account a relevant matter and it was plainly wrong at law to uphold the Agency's decision to decline aid when the application met the threshold tests under ss 9(3) and 9(4) of the Act; r) The reasons provided by the Review Panel in its determination in upholding the Agency's decision to decline aid were insufficient; s) The Agency's weighing of the factors relevant to reconsideration of the application for aid was facile, inadequate and wrong; and t) The Review Panel was wrong at law to have breached s 56(5) of the Legal Services Act in the conduct of the review. [15] During the course of submissions and discussion Mr Gibson accepted that he would not or could not pursue all of the points taken. The plainly unarguable points were those at (d) (the Agency did not withhold the reports, they were not requested); (e) (Mr Zindel's former employment was disclosed and was simply not relevant); (f) (Mr Gibson's appeal was not dismissed out of hand); (r) and (s) (full andappropriate reasons were given); (t) (the review was conducted on the papers and any delays were largely caused by Mr Gibson). [16] As is apparent from the above recitation of Mr Gibson's points on appeal, there was also a fair degree of repetition amongst the various points: (c), (d), (k), (l) and (m) for example. Also, a large number of the points (a), (b), (g), (h), (i), (j) and (q) fall into the error that Mr Taylor identified, namely that they were effectively a challenge to the correctness of the decision of the Agency in the first place, that is not a matter this Court can engage in on appeal from the decision of the Review Panel. As has been stated by this Court before, any errors of law must be found in the decision of the Review Panel. This is not an opportunity for a challenge to the decision of the Agency declining aid in the first place: F v Medical Practitioners Disciplinary Tribunal HC AK AP21-SW01 5 December 2001 Laurenson J. [17] Next, the jurisdiction of the Review Panel in relation to the decision of the Agency is itself limited: (n) and (o). 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. InLegal 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 forms the view that the decision is so clearly unreasonable that the intervention of the Panel is called for.And later:[25] ... the legislature has deliberately imposed a high threshold for intervention by the Panel. That implies that the legislature intended there should be a degree of tolerance about decisions of the Agency which would not be appropriate where there was a full right of appeal, on the basis the Agency was exercising a discretion.[18] Nor can there be any criticism as referred to at (b) that the decision in this case was made by the grants officers. That is their statutory role. Only thoseofficers of the Agency who hold a delegation to make grants decisions can lawfully make such grant decisions: Crown Entities Act 2004 ss 73 – 76. The specialist advisers in this case did not hold that delegated authority. [19] Next, there is no substance in Mr Gibson's criticism at (p) that the Agency's decision of 23 August 2006 was in some way defective because it referred back to earlier decisions and sought to rely on the reasoning in them. The decision of 23 August 2006 by the Agency was a brief two page decision but it incorporated the reasoning set out in more detail in the earlier letters of 17 June and 11 November 2005. In addition it adequately summarised the reasons for rejecting the application for reconsideration of the decision to decline aid. [20] The issue for this Court is whether the Review Panel's decision was wrong at law. Despite the numerous matters that Mr Gibson referred to there is only one issue in relation to the Review Panel's decision which properly raises a matter for this Court's consideration. [21] There were seven specialist reports available to the Agency when it made its decision. The Review Panel did not call for and so did not have any of those specialist reports before it when it reviewed the decision of the Agency. The question is whether in those circumstances the Review Panel erred at law by failing to take into account relevant considerations.Decision – failure to take into account relevant consideration[22] The Review Panel was aware there were specialist reports in this case. The Review Panel acknowledged the existence of the reports although it mistakenly seems to have considered only two advisers had provided reports. It referred at part of its decision to:[33] In this case, the Agency referred the matter to two specialist advisers before making a decision.[23] In fact there was a third adviser. In total, seven reports were prepared by specialist advisers in this case. The seven reports from the three independent advisers were, in summary, to the following effect: a) In his first report of 28 April 2005 Mr Diamond recommended an initial grant of 200 hours to enable the preparation of briefs and bundle before trial; b) In his second report of 1 June 2005, Mr Diamond reconsidered the position in light of further information provided to the Agency by the opposing solicitors. Mr Diamond was not persuaded the prospects of success were sufficient to justify the large grant sought. But he invited a further response from Mr Gibson's advisers before a final decision was made on aid; c) Following receipt of that further information, on 17 June 2005 Mr Diamond recommended that legal aid not be granted; d) A second opinion was sought from a Mr Howden. On 29 June 2005, Mr Howden delivered the first of his three reports. Mr Howden accepted there were reasonable prospects of success in establishing negligence but acknowledged a major issue for Mr Gibsons's claim would be proof of loss. He also noted a significant settlement offer had been made to Mr Gibson. He recommended no final decision be made and a further response be required from Mr Gibson's solicitor; e) On 5 September 2005, Mr Howden recorded that the response from Mr Gibson's solicitor had satisfied him and recommended that the legal aid grant should be confirmed. At that stage the Agency took steps to advance the recommendation, but (despite Mr Gibson's submissions to the contrary) a decision to formally grant legal aid was never made;f) On 4 October 2005, Mr Howden reconsidered the matter in light of the delivery of Young J's decision. Mr Howden concluded that the decision aid be granted should be confirmed, but that the level of aid should be limited; and g) A further opinion was sought from another specialist adviser, Mr Zindel. In his report of 27 October 2005 Mr Zindel recommended that legal aid be declined. He concluded that Mr Gibson's case was not only unattractive but also a non starter and that even a limited aid of grant should not be made or, in his words, "the door would be widened by the Review Panel". [24] Specialist reports by their very nature will often contained detailed advice on the legal issues and recommendations. They will be relevant to the Agency's decision and as such, prima facie will be relevant to a Review Panel's consideration of whether the Agency's decision was manifestly unreasonable. As Wild J observed in the Convenor Legal Aid Review Panel case at paras [47] and [48]:[47] Let me take an hypothetical example. X applies for legal aid. She is eligible and has a meritorious claim. The GO, [Grants Officer] misconceiving the proposed claim, considers it groundless, but does seek advice from an ISA [Independent Specialist Adviser] who correctly advises that the claim has excellent prospects of success. The GO nevertheless declines the application. X applies to the LARP [Review Panel] for a review. The LARP's request for the ISA's report to the GO is declined on the grounds that legal advice privilege attaches to it. [48] It would be highly relevant to the LARP's review to know what the ISA's advice to the GO was, and to know that the GO departed from that advice. Indeed, a legitimate view is that the LARP could not do its job properly without that information. It would not have a complete view of the Agency's decision-making process. That is the view taken by the LARP here. It has deferred completing its review of the Agency's decisions relating to Ms T, pending the outcome of this case, and the making available to the LARP of the ISA reports which the LARP hopes will result from this case. (emphasis added)[25] In a case such as Mr Gibson's, where the claim was for a substantial sum of money involving difficult issues of law the importance of the specialist reports assumed even more significance. If the reports of the specialist advisers had recommended the grant of aid that would have been a relevant consideration for theReview Panel when determining whether the Agency's decision was manifestly unreasonable or not. Put another way, how could the Review Panel determine whether the Agency's decision was manifestly unreasonable in the absence of that material information? The Review Panel could not conclude, as it did, that the Agency made a fair assessment on the material before it, when the Review Panel did not have a particularly relevant part of that material before it. [26] The seven specialist advisers' reports were before the Agency when it made its decision to decline legal aid in this case. Given the complex background to this case the Review Panel could not properly have reached a decision on whether the Agency's decision was wrong in law, or, more relevantly manifestly unreasonable without considering the specialist reports that were before the Agency when it made that decision. The reports were a fundamental and important part of the ultimate decision by the Agency to decline the application for aid. [27] As Wild J observed in his example in Convenor Legal Aid Review Panel case it would be highly relevant to the Review Panel's review of the Agency's decision to know what the specialist adviser's report disclosed to the grants officer. A legitimate view might be that the Review Panel could not do its job properly without that information. Where, as here, there were a number of legal issues impacting on the strength of Mr Gibson's case (as the Agency acknowledged in its reasons for decision) including:• the obligation of solicitors to advise regarding the eligibility of legal aid;• responsibility for the delay in applying for legal aid; and• the assessment of quantum the reason for requiring and considering the specialist reports was even greater. This was not a straightforward case. It was a potentially large claim with major issues as to causation and quantum. The seriousness of Mr Gibson's claim must be acknowledged. The solicitors firm had made an offer of $400,000 to settle.[28] The Review Panel apparently considered the fact that specialist adviser reports were obtained as a material matter as it referred to them. But having noted there were reports, it did not seek to obtain copies of them from the Agency. [29] The Act provides a process for the Review Panel to ensure that it has all the material information before it. [30] Either the convenor of the Review Panel (under s 55A(1)(a)) or the Review Panel itself (under s 56(3)) may require the Agency to provide information held by the Agency relating to the decision and to any reconsideration by the Agency of the decision. The Review Panel was thus entitled to require from the Agency the specialist reports the Agency had before it when it made its decision: Convenor Legal Aid Review Panel v Legal Services Agency (2007) 18 PRNZ 488. [31] As O'Regan J noted in Tana at [13]:... It is equally clear that [the Review Panel] has the power to request relevant information and, in a situation where it is going to make findings that a decision is manifestly unreasonable because no reasons were given (as happened in this case), the Panel ought first to satisfy itself that it has all the relevant correspondence in which reasons may have been given.By analogy if the Review Panel was going to conclude that the decision was not manifestly unreasonable it could only do so on the basis that it had the relevant information that was available to the Agency when it made its decision. The Review Panel was alert to the requirement that it was for it to determine the relevance of the material the Agency had, not the Agency. But to do that requires that the Review Panel has all information the Agency had. On 25 January 2006 the Convenor issued a minute in which he recorded:... [Mr Gibson] makes a valid point when he submits that the Agency should send its whole file to the panel. ... Broadly speaking the Agency is required to provide the Panel without exception with a copy of every document that has passed between the applicant and his list of providers, and the Agency, and vice versa (up to the date of the decision subject to the review). It is for the Panel, not the Agency, to assess whether documents are relevant. The Agency ought not, therefore, take time to view the documents and make a decision on whether any needs to be copied to the Panel to assist in understanding the Review. Every document without exception passing between the applicant or his listed provider and the Agency and vice versa must be supplied.[32] The Agency seems to have taken the request literally and provided documents passing between Mr Gibson and the Agency but not the specialist reports. The Review Panel did not pursue the matter of the specialist reports. [33] Mr Taylor properly accepted that whether the Review Panel was under an obligation to consider the specialist adviser reports raised a "real issue" but submitted that even if the reports should have been obtained, there could be no error of law in the Review Panel failing to consider the specialist adviser reports in any event. He noted that only the grants officers, not the specialist advisers, could make the decision. That submission is strictly correct, but it does not answer the question whether the Agency's decision made by the grants officers was manifestly unreasonable because it did not take into account or deal with the recommendations of the specialist advisers. The purpose of employing specialist advisers was to provide further information to the grants officers on matters outside their expertise to improve the quality of the decision. [34] Next, Mr Taylor referred to the following passage from CREEDNZ Inc v Governor-General [1981] 1 NZLR 172 (CA) at 183:It is not enough that a consideration is one that may properly be taken into account, nor even that it is one which many people, including the Court itself, would have taken into account if they had to make the decision.to support his submission that the Review Panel could do its job properly without reference to the reports as the specialist adviser framework had no statutory authority or framework. [35] But as Cooke J also noted immediately after:But it is safe to say that the more general and the more obviously important the consideration, the readier the Court must be to hold that Parliament must have meant it to be taken into account.[36] In the case of reviews by the Review Panel, Parliament has not prescribed what is to be taken into account, but it has provided a process to enable the Review Panel to obtain whatever information it considers necessary to enable it to conduct its review in the circumstances of the review before it. In this case the specialistreports fall into the category of obviously important material for the grants officers. The failure of the Review Panel to require them and to have the reports when considering whether the Agency's decision was manifestly unreasonable or wrong in law was a serious omission. [37] Mr Taylor then submitted that, as the reports taken as whole either supported the decision of the Agency or were equivocal, they could not have been material to the decision. As a matter of principle that is not necessarily so. Again by way of hypothetical example there may be reports from three specialist advisers, two recommending against the grant of aid, one recommending the grant of aid. If the two recommending against the grant are one paragraph reports without proper reasoning but the third one recommending aid is a fully reasoned decision then that may be particularly relevant to the decision. Numbers are not determinative. The position in the present case is not so clear in any event. Balanced against Mr Zindel's forthright rejection were the two reports of Mr Howden recommending aid be granted, albeit one recommended aid on a limited basis. Mr Taylor may ultimately be correct, and the specialist reports may not make a difference to the decision of the Review Panel, but that is not the test this Court is to apply under s 59. The test is whether the Review Panel made an error of law. [38] I am driven to the conclusion that in the circumstances of this case the failure of the Review Panel to call for and have the specialist advisers' reports before it was an error of law. The Review Panel failed to have regard to relevant considerations when making its decision to uphold the Agency's decision. [39] In light of that conclusion the appeal must be allowed and it is not necessary to consider the other points raised by Mr Gibson, which for the brief reasons set out, were generally without merit.What is the appropriate order?[40] Rule 718A of the Rules enables this Court:• to make any decision(s) it thinks should have been made;• direct the decision-maker to: – rehear; – consider or determine any matters the Court directs; – enter judgment for any party;• to make such further order or orders as it thinks fit. [41] Having found the Review Panel erred at law and the appeal must be allowed, the issue then is what is the appropriate relief. Mr Gibson submitted that this Court should set aside the decisions of the Review Panel and the Agency and grant aid. But I am not satisfied that it is appropriate for this Court to do that. [42] The appeal to this Court from the decision of the Review Panel is on a question of law. Section 59 does not contemplate a full review of the Review Panel's decision by this Court. Rather this Court's jurisdiction is limited to determining whether the Review Panel made an error of law or not. Having found it did so by failing to have regard to relevant considerations it is not for this Court to then seek to determine what decision the Review Panel would have reached after considering the specialist advisers' reports in light of all the other material before it. It is for the Review Panel to consider the effect of the specialist reports in all of the circumstances of this case and in light of that other material.Result[43] The appeal is allowed. The decision of the Review Panel dated 2 February 2007 is set aside. [44] I direct the Convenor to convene a review panel to review the Agency's decision of 23 August 2006. In carrying out that review the Review Panel is to have regard to, in addition to the material the previous Review Panel had available to it, the specialist advisers' reports that were available to the Agency. It is ultimately adecision for the Convenor, but it may be preferable for a fresh review panel to be constituted for the review.Costs[45] As Mr Gibson represents himself there is no order for costs. __________________________ Venning J