SCHMIDT v LEGAL SERVICES COMMISSIONER [2022] NZCA 363

SCHMIDT v LEGAL SERVICES COMMISSIONER [2022] NZCA 363 [8 August 2022]IN THE COURT OF APPEAL OF NEW ZEALANDI TE KŌTI PĪRA O AOTEAROACA129/2022[2022] NZCA 363BETWEEN TAYLOR JADE SCHMIDTApplicantAND LEGAL SERVICES COMMISSIONERRespondentCourt: Clifford and Katz JJCounsel: A J Woodhouse for ApplicantL M Hansen for RespondentJudgment:(On the papers)8 August 2022 at 11.30 amJUDGMENT OF THE COURTA The application for leave to appeal is declined.B There is no order as to costs.____________________________________________________________________REASONS OF THE COURT(Given by Clifford J)Introduction[1] This is an application by Taylor Schmidt for leave to appeal a decision ofGrice J in the High Court at Wellington.11 Schmidt v The Legal Services Commissioner [2022] NZHC 200 [Grice J decision].Background[2] There is an extensive background to this application but, for our purposes, thefollowing summary is sufficient.[3] Ms Schmidt and her former partner Anthony Schmidt commenced proceedingsin 2011 in the High Court against Ebada Property Investments Ltd and Brian Garrity.In general terms they alleged breach of equitable obligations in connection with thesale of properties said by the Schmidts to be held by Ebada and Mr Garrity on trust forthem. The events in question dated back to 2005 and 2006. An application for legalaid was made by the Schmidts in 2012. In 2017 legal aid was granted and a hearingbefore Venning J then took place. The Schmidts based their claim on five causes ofaction: breach of express trust; breach of institutional constructive trust; knowingassistance/knowing receipt; breach of fiduciary duty; and undue influence. After aseven-day hearing, Venning J dismissed all the claims the Schmidts had made.[4] In doing so Venning J described the core of the dispute in the following way:2[1] Anthony Schmidt and Brian Garrity were formerly good friends.In 2005 and 2006 trusts associated with Mr Schmidt and his partner,Taylor Schmidt, transferred properties at Kaiaua Road and Bell Road toEbada Property Investments Limited (Ebada), a company owned andcontrolled by Mr Garrity. The properties were subsequently sold to thirdparties. Ebada sold Bell Road and the mortgagee sold Kaiaua Road.[2] Mr and Ms Schmidt say that Ebada held the properties on trust anddealt with them in breach of trust. Ebada and Mr Garrity deny there wasany trust.[5] Central to the Judge's decision were his credibility findings. These may befound at [84] to [111] of the decision. The following two paragraphs summarisethe Judge's assessment:[84] Unfortunately, I found Mr Schmidt, Ms Schmidt, and Mr Garrity allto be unsatisfactory and unreliable witnesses to a greater or lesser degree.[110] While not a ringing endorsement of Mr Garrity, I did not find him tobe as evasive and untruthful when giving evidence on the major issues inthe case as Mr and Ms Schmidt. On the important issues where there is a2 Schmidt v Ebada Property Investments Ltd [2019] NZHC 3548 [Venning J decision].direct conflict, namely the basis upon which the properties were transferred toEbada, I prefer Mr Garrity's evidence to that of Mr and Ms Schmidt, primarilyon the logic of the case and the contemporaneous documents which supporthis evidence. [6] Ms Schmidt filed an appeal in this Court against that decision and applied forlegal aid in early 2020. On 27 October 2020 the respondent, the Legal ServicesCommissioner, declined that application on the basis Ms Schmidt's prospects ofsuccess were not sufficient to justify the grant of civil legal aid. That decision wasconfirmed following reconsideration on 21 December 2020 and 17 February 2021.Ms Schmidt then applied to the Legal Aid Tribunal for a review of those decisions.The Tribunal dismissed that application, confirming the earlier assessments thatMs Schmidt's prospects of success in this Court were not sufficient to justify a grantof legal aid.3[7] Ms Schmidt then unsuccessfully appealed that decision of the Tribunal to theHigh Court. In the High Court she said the Tribunal erred:(a) in not finding the Commissioner had erred in relying on the Judge'sfinding that an alleged deed of trust had been fabricated in reaching hisconclusions as to the prospects of success on appeal; and(b) in failing to engage in the detail of Ms Schmidt's arguments tothe Commissioner and the Tribunal.[8] Ms Schmidt requires leave to bring an appeal against Grice J's decision as itwould be a second appeal on a question of law. As such, this Court must not giveleave to bring this second appeal unless we are satisfied that:4(a) the appeal involves a matter of general or public importance; or(b) a miscarriage of justice may have occurred, or may occur unless theappeal is heard.3 Schmidt v Legal Services Commissioner [2021] NZLAT 010 [Tribunal decision].4 Legal Services Act 2011, s 60; and Criminal Procedure Act 2011, s 303(2).AnalysisThis application[9] In his decision of 27 October 2020 declining legal aid the Commissioner relied,not only on Venning J's unchallenged adverse credibility findings as regardsMr Schmidt, but also on a focused analysis of the Judge's reasoning of the other factorswhich led to his conclusions in each of the causes of actions.[10] In challenging the decisions of the Commissioner and the Tribunal, and in nowseeking leave to appeal that of Grice J, Ms Schmidt in essence says the error all havemade is to place too much emphasis on those unchallenged findings, and in particular,that the alleged deed of trust was a fabrication. That is particularly so as Ms Schmidtin her substantive appeal against Venning J's decision does not challenge the Judge'sdismissal of the breach of express trust claim. That proposition of over-reliance hastherefore been considered and rejected by the Commissioner in its reconsiderations of21 December 2020 and 17 February 2021, by the Tribunal in its determination of29 June 2021 and again by Grice J in her decision of 17 February 2022.[11] In these circumstances, the following observations of Fisher J, as referred toby Grice J, merit repetition. Commenting on the approach to error of law appealsunder the Legal Services Act 1991 the Judge observed: 5The difficulty as I see it is that it is so easy for appeals of this sort ostensiblybrought on a question of law to slide into what is in substance an appeal onthe merits. Expressions for example such as "excessive weight" being givento some particular considerations are in my view a clear indication that one ishere talking about value judgments rather than questions of law. Further, itcannot be denied that it is open to a Legal Services Subcommittee to withdrawaid on various grounds, including the view that "the aided person no longerhas reasonable grounds for taking or being a party to the proceedings."Further in applying that broad criterion the subcommittee can of course referback to the primary criteria for granting aid in the first place pursuant to s 34. These are very broad grounds and, in what was admittedly a very brief setof reasons for decision, I do not think it possible to convert what seems to meto have been a value judgment open to the Authority into some error of law.It is not essential for a decision maker to articulate every possible legalconsideration in reasons for decisions. Conversely, the fact that a decisionmaker has not set out every possible legal consideration does not mean or evenhint at an error of law on the part of the Authority.5 Singh v Legal Aid Review Authority [1997] NZAR 414 (HC) at 416–417.[12] That noted, we proceed on the basis Ms Schmidt's challenge to the decision ofGrice J may properly be characterised as raising questions of law.The Tribunal's decision[13] Ms Schmidt's challenge to the Commissioner's decision proceeded, as theTribunal itself correctly recorded, on the basis of the following principles:6[17] The grounds for reviewing a decision of the Commissioner are set outin s 52(1) of the Legal Services Act 2011 (Act):An aided person or an applicant for legal aid may apply to theTribunal for a review of the Commissioner's reconsiderationof a decision referred to in subsection (2) on the grounds thatit is—(a) manifestly unreasonable; or(b) wrong in law.[18] A decision is manifestly unreasonable where "it is shown, clearly andunmistakably, that the decision made by the [Commissioner] went beyondwhat was reasonable or was irrational or logically flawed". The thresholdfor intervention by the Tribunal is a high one and it is necessary for theTribunal to exercise restraint.[19] A decision may be wrong in law "if it derives from an incorrectapplication or interpretation of the statute; or if it is wrong in principle; or ifthe decision-maker has failed to take into account some relevant matter; or hastaken account of an irrelevant matter; or if it depends upon findings which areunsupported by the evidence".[14] On the question of the "prospects of success" the Tribunal noted it wasaxiomatic that where an applicant seeks legal aid for an appeal, a judicialdetermination will already exist. So that determination was relevant when consideringwhether legal aid for an appeal is justified. As Wylie J said in Legal Services Agencyv A, "some account [may] be taken of the merits of the decision" under appeal.7At the same time the Tribunal recognised legal aid was being sought for an appealagainst that decision, so the outcome of the decision under appeal was not necessarilydeterminative of the appeal's merits. What was required was an assessment ofthe appeal's prospects as best as possible on the evidence available.86 Tribunal decision, above n 3 (footnotes omitted).7 Legal Services Agency v A (2008) 19 PRNZ 1 (HC) at [42].8 Tribunal decision, above n 3, at [29].[15] The Tribunal dismissed the challenge to the Commissioner's reliance onVenning J's credibility findings. The Tribunal reasoned the fabricated deed of trustwas a central document. Whilst Ms Schmidt sought to compartmentalisethe credibility findings, and argue they were irrelevant to the remaining causes ofaction, that was not tenable given the credibility findings were so firm and sowidespread. The fabrication of this central document would "taint" the remainingcauses of action. The Commissioner had not erred in recognising that reality.9[16] The Tribunal then analysed the Commissioner's decision as regards prospectsof success for the challenges to the Judge's adverse findings on the remaining causesof action. Having done so the Tribunal concluded:[50] My impression from the detailed submissions put forward on behalfof the applicant is that although she could put forward arguments on appeal,many are rooted in the minutiae of emails and documents. It was submittedon numerous occasions that Venning J overlooked (or failed to give sufficientweight to) particular words or phrases in emails. Of course, the fact theapplicant can put forward arguments is not synonymous with them having anyparticular prospects of success. For the reasons I have given, I do not considerthere is sufficient prospects of success to justify a grant of legal aid forthe appeal. The Commissioner did not err in law in so concluding. Nor washis decision manifestly unreasonable.Appeal to the High Court[17] Ms Schmidt's as of right appeal against the Tribunal's decision tothe High Court proceeded under s 59 of the Legal Services Act 2011, which provides:59 Appeal on question of lawIf the Commissioner or an applicant considers that the Tribunal'sdetermination is wrong in law, the Commissioner or the applicant (as the casemay be) may appeal to the High Court on the question of law, and the appealmust be dealt with in accordance with the rules of court.Such an appeal is by way of rehearing, and the Court may make any decision it thinksshould have been made or direct a rehearing, a reconsideration or determination of anymatters the Court directs, or enter judgment for any party, or make any order the Courtthinks just.109 At [34].10 High Court Rules 2016, rr 20.18–20.19.[18] Grice J accurately summarised the significance of the assessment of "prospectsof success" for a grant of legal aid on appeal, the process to be followed and the natureof the assessment involved.11 In doing so she referred to the following relevantobservations of this Court in JMM v Legal Services Agency:12[84] In summary, the reasons may be broadly stated, but the level of detailis likely to turn on the basis relied upon by the Agency to ground withdrawalof legal aid in a particular case. The reasons for the withdrawal should be setout in sufficient detail to enable the litigant to decide whether to exercise eitherreconsideration or review rights as a means of challenging the decision.Standard format notifications or common form letters may be appropriate incases such as the present where many of the relevant considerations are likelyto be common. But it is critical nevertheless that the Agency addresses itselfto the individual case and demonstrates that it has done so in its reasons.[19] As noted, the points of law Ms Schmidt argued in the High Court were similar,if not in effect the same, as those she had argued before the Tribunal. That is:(a) the Tribunal had erred in law in the way it relied on the credibilityfindings, as regards the express trust claim to assess prospects ofsuccess as regards the appealed elements of the decision; and(b) the Tribunal failed to engage sufficiently on those matters with theactual arguments Ms Schmidt wished to make on appeal.[20] The Judge carefully assessed those assertions, including in a detailed analysisof the assertion of the "failure to engage" challenge as regards each challenged ruling,before concluding:(a) As regards the primary challenge:13[117] The appellant applies an artificial and unduly narrowinterpretation on the Judge's words referring to hisconclusions being based "primarily on the logic of the caseand the contemporaneous documents". As the Court ofAppeal has noted, when looking at the "prospects of success",the approach is to make an overall assessment by standingback and looking at the litigation prospects in the round.The factual findings in the High Court in this case are11 Grice J decision, above n 1, at [17]–[24].12 JMM v Legal Services Agency [2012] NZCA 573, [2013] 1 NZLR 517.13 Grice J decision, above n 1 (footnotes omitted).dependent on findings of credibility, value judgments andevaluation of the evidence overall. This is a case where thetrial Judge had the benefit of seeing and hearing the witnessesand was in a better position to make an overall assessment ofthe evidence as a whole than an appellate Court. The Tribunalmade no error in its consideration of the credibility commentsmade by the Commissioner.(b) As regards the Tribunal's alleged failure to engage with Ms Schmidt'sarguments:[125] The Tribunal was not required to engage with everypoint raised by [counsel for Ms Schmidt] in his submissionsto the Commissioner and the Tribunal. The Tribunal graspedthe essence of the submissions. The Judge had made anassessment based on the credibility findings andthe documents which he said supported the logic ofthe transactions as a whole. That is the point made bythe Tribunal. [Those] submissions might have been detailed;however, they were matters that had been before the Judgeand considered. There was no requirement for the Tribunal toengage in the detail. In fact to do so would not have been inkeeping with its function.Our assessment[21] Against that background, we are, by a considerable margin, satisfied the testfor leave is not met in this case.[22] The appeal itself involves no matter of general or public importance. What isinvolved is an intensely fact-specific dispute relating to circumstances and transactionsthat occurred many years ago.[23] Nor do we consider a miscarriage of justice may have occurred or may occurif Ms Schmidt's appeal against Venning J's judgment is not — in the absence of legalaid funding — heard. The proceeding before Venning J was itself funded by legal aid.The original assessment of Ms Schmidt's prospects of success in the appeal ofVenning J's decision made by the Commissioner was confirmed by the Tribunal asbeing neither manifestly unreasonable, nor wrong in law. In that context Ms Schmidt's"failure to engage" challenge was fundamentally misplaced.[24] The Tribunal's decision was itself upheld by Grice J as not involving those —in effect — same errors of law. It is those errors of law on which Ms Schmidt now, ineffect, seeks to base an appeal to this Court.[25] As for the form of that decision, s 55(4) of the Legal Services Act requiresthe Tribunal to conduct its review on the papers, with all reasonable speed.Section 56(2) requires the Tribunal's determination to be accompanied by "a briefsummary of the reasons for it".[26] More generally, and not surprisingly, the arguments made on Ms Schmidt'sbehalf before Grice J were similar to those which had been made before the Tribunal.Added emphasis was, however, placed on Venning J's observation that he hadpreferred Mr Garrity's evidence "primarily on the logic of the case and thecontemporaneous documents which support his evidence".14 That, it was submitted,reinforced Ms Schmidt's point as to the limited relevance of the finding of the forgeryof the alleged trust deed. We note, however, that observation was with reference to"the basis upon which the properties were transferred to Ebada".15 That "basis" wasthe core of the dispute. Therefore the Judge's observation is of significance not onlyto the finding of forgery, but directly or indirectly to all the causes of action.[27] On that basis, we see no error in Grice J's decision and the conclusions that shereached, in particular as regards the two errors of law asserted by Ms Schmidt.Result[28] The application for leave to appeal is declined.[29] There is no order as to costs.Solicitors:Woodhouse Law, Auckland for ApplicantMinistry of Justice, Wellington for Respondent14 Venning J decision, above n 2, at [110].15 At [110].