SCHMIDT v THE LEGAL SERVICES COMMISSIONER [2022] NZHC 200

SCHMIDT v THE LEGAL SERVICES COMMISSIONER [2022] NZHC 200 [17 February 2022]IN THE HIGH COURT OF NEW ZEALANDWELLINGTON REGISTRYI TE KŌTI MATUA O AOTEAROATE WHANGANUI-A-TARA ROHECIV-2021-485-000398[2022] NZHC 200BETWEEN TAYLOR JADE SCHMIDTAppellantAND THE LEGAL SERVICESCOMMISSIONERRespondentHearing: 2 December 2021Appearances: N Levy QC, A Jeremich and A Woodhouse (VMR) for theAppellantL Hansen for the RespondentJudgment: 17 February 2022JUDGMENT OF GRICE J(Appeal)ContentsBackground to civil claim [4]Procedural history [6]Appeal on question of law [13]Appeals from the Legal Aid Tribunal [13]The requirements of decision making by the Commissioner under the Act [17]The approach to review by the Tribunal [25]Grounds of appeal [28]High Court decision [33]The Legal Aid Tribunal decision [84]The Tribunal's assessment [86]Analysis [93]Issue 1: The tainting of the Commissioner's decision by the finding that the deedof trust had been fabricated [94]Issue 2: Failure to engage in the detail of the appellant's submission to theCommissioner and the Tribunal [122]Overall analysis [144]Costs [148][1] This is an appeal from a decision of the Legal Aid Tribunal, dated 29 June 2021(the Tribunal decision).1 The decision was a review by the Tribunal in which it upheldthe refusal by the Commissioner to grant legal aid to the appellant to fund an appealto the Court of Appeal against a decision of the High Court (the High Court decision).2[2] The High Court had dismissed the claims of the appellant and Mr Schmidt (theSchmidts) that the defendants held various property for their interests on trust orsubject to obligations formulated on a number of alternative bases.[3] The civil proceedings had been issued by Ms Schmidt and her former partner(Mr Schmidt) against a Mr Garrity and his company, Ebada Property Investments Ltd(Ebada).Background to civil claim[4] Mr Schmidt and Mr Garrity were good friends. During difficult financial timesbetween 2005 and 2006, trusts associated with the Schmidts transferred two properties(one on Kaiaua Road and one on Bell Road) to Ebada. Ultimately, Ebada soldBell Road, and a mortgagee sold Kaiaua Road to third parties.[5] The Schmidts said the properties were held on trust for their benefit byMr Garrity's company, Ebada, and Mr Garrity and Ebada dealt with them in breach oftrust or other obligations. Mr Garrity and Ebada deny there was any trust or suchobligations.Procedural history[6] An application for legal aid was first made in 2012. In 2017, legal aid wasgranted for the appellant to be represented at a seven-day hearing in the High Court,before Venning J.[7] The Schmidts brought five claims:1 Re Schmidt [2021] NZLAT 10 [Tribunal decision].2 Schmidt v Ebada Property Investments Ltd [2019] NZHC 3548 [High Court decision].(a) intentional breach of express trust;(b) breach of institutional constructive trust;(c) knowing assistance/knowing receipt of intentional breach of trust;(d) breach of fiduciary duty; and(e) undue influence.[8] The Schmidts produced a deed of trust to support the first cause of action basedon an express trust. The Judge found the deed to be "a fiction and a document createdsolely for the purposes of this hearing".3[9] On 20 December 2019, Venning J dismissed all causes of action.4 His Honournoted the following in relation to the evidence before him:[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 in thecase as Mr and Ms Schmidt. On the important issues where there is a directconflict, 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.[10] In early 2020, the appellant filed an appeal against the High Court decision andsought a grant of legal aid.[11] The Legal Aid Tribunal decision sets out the legal aid application process fromthat point:[8] By letter dated 8 May 2020, the Commissioner requested informationand advice on the grounds and merits of an appeal. On 17 August 2020, theapplicant's legal aid provider, Woodhouse Law, gave detailed prospects ofsuccess advice to the Commissioner.[9] On 27 October 2020, the Commissioner declined to grant legal aid onthe basis that the prospects of the appeal succeeding were insufficient to justifya grant.3 At [135].4 High Court decision, above n 2.[10] The applicant sought reconsideration of that decision on 24 November2020. On 21 December 2020 the Commissioner again declined legal aid,citing the same grounds.[11] On 27 January 2021, a second application for reconsideration wasmade, in reliance on a recent High Court decision, Morrison v AutumnalInvestments Ltd.5 In that case, there was an agreement to buy back propertieswhich had been transferred and held on trust and Wylie J held that aninstitutional constructive trust existed.[12] On 17 February, the Commissioner declined the applicant's secondreconsideration. As noted, it is this decision which is at issue before me onthis review application.[12] On 29 June 2021, the Tribunal confirmed the decision of the Commissioner.The Tribunal decision is appealed to this Court.Appeal on question of lawAppeals from the Legal Aid Tribunal[13] Section 59 of the Legal Services Act 2011 restricts appeals from Tribunaldecisions to questions of law: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.[14] The appeal is by way of rehearing, and the Court may make any decision itthinks should have been made or direct a rehearing, a reconsideration or determinationof any matters the Court directs, or enter judgment for any party, or make any orderthe Court thinks just.6[15] In Singh v Legal Aid Review Authority (decided under the Legal Services Act1991 (LSA 1991)), Fisher J described the approach on an appeal on an error of law:7The 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 given5 Morrison v Autumnal Investments Ltd [2020] NZHC 3189.6 High Court Rules 2016, r 20.19(1).7 Singh v Legal Aid Review Authority [1997] NZAR 414 (HC) at 416–417.to 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.That includes the consideration pursuant to s 34(3)(e)(ii), "that having regardto the nature of the proceedings and the applicant's interest in them (financialor otherwise) in relation to the likely cost of the proceedings, the grant of aidis not justified." These are very broad grounds and, in what was admittedly avery brief set of reasons for decision, I do not think it possible to convert whatseems to me to have been a value judgment open to the Authority into someerror of law. It is not essential for a decision-maker to articulate every possiblelegal consideration in reasons for decisions. Conversely, the fact that adecision maker has not set out every possible legal consideration does notmean or even hint at an error of law on the part of the Authority.[16] The focus of the inquiry is on whether the Tribunal's decision was wrong inlaw or manifestly unreasonable, not whether the Commissioner's decision is correct.8For example, in Gibson v Legal Services Agency, the Panel (now the Tribunal underthe LSA 1999) failed to call for specialist advisor reports that had been provided to theAgency (now the Commissioner), which was held to be an error of law.9 The ReviewPanel had "failed to have regard to relevant considerations when making its decisionto uphold the Agency's decision."10The requirements of decision making by the Commissioner under the Act[17] Section 10(4)(e) of the Legal Services Act 2011 says:(4) The Commissioner may refuse to grant legal aid to an applicant in anyof the following circumstances:(e) in the case of an appeal (whether or not in respect ofproceedings in which the applicant has received legal aid), theCommissioner considers that for any reason the grant of legalaid or further legal aid is not justified.8 See Legal Services Agency v Sweeney (2005) 17 PRNZ 767 (HC) at [19]; and Legal ServicesAgency v Brown (2005) 17 PRNZ 523 (HC) at [30].9 Gibson v Legal Services Agency HC Auckland CIV-2006-404-999, 28 November 2008.10 At [38].[18] Central to this consideration is the "prospects of success". Wild J made thefollowing comments about the meaning of "prospects of success" in Timmins v LegalAid Review Panel.11 He said:[33] "Prospects of success", in my view, refers to the prospects ofachieving a successful outcome. Those prospects need to be assessed in apragmatic way and, somewhat obviously, in the circumstances of theparticular case. After all, no two cases are the same. The assessment invitedby the words in s 9(4)(d)(i), "sufficient to justify the grant of aid", involvesweighing the likely benefits against the likely costs. Whilst the benefits insome cases will be measurable mainly, and perhaps even wholly, in dollarterms, in other situations that will not be so. Examples might include obtainingan injunction restraining the destruction of an area of native bush, or theclosing of a road or access track or some other facility, or a judgmentupholding the reputation of a person or a product (even if unaccompanied bysignificant damages), or vindicating some important point of principle.[34] Because assessing "prospects of success" may involve assessing non-pecuniary benefits, the assessment for a particular plaintiff or claimant canobviously be difficult.[19] The Court of Appeal in JMM v Legal Services Agency (Meredith (JMM)) notedthose comments and said:12[53] Furthermore, we see force in Mr Cooke's argument that Parliamentprovided for the Agency to make these decisions – and on an evaluative basis.This is clear from the use of the word "sufficient" in s 9(4)(d)(i). Legal aidmay be withdrawn if the aided person's "prospects of success are not sufficientto justify the grant of legal aid". The word "sufficient" must be given somemeaning in this context. We consider that it underscores the need for theAgency to make an overall assessment by standing back and looking at thelitigation prospects in the round.[54] Accordingly when the Panel (now the Tribunal) and the Courts arecalled upon to review decisions by the Agency, a formalistic approach mustbe avoided. We consider it would be wrong for the Agency to be required tomeet a series of specific tests or respond to particular questions other than thestatutory question as to whether the applicant's prospects of success are notsufficient to justify the grant of legal aid. The considerations relevant to anyparticular case are likely to be highly fact-dependent.[20] The Court of Appeal also said in relation to the continuation of aid:[61] the Agency must assess the sufficiency of the prospects of successin the light of the circumstances then pertaining and the stage the proceedinghas reached. 11 Timmins v Legal Aid Review Panel [2004] 1 NZLR 708 (HC).12 JMM v Legal Services Agency [2012] NZCA 573, [2013] 1 NZLR 517 [Meredith (JMM)].[62] When the merits of the claim are being considered, this would includean assessment of the then available evidence, the relevant state of the law, theproposed causes of action and any likely defences. There may have beendevelopments in the law since the initial grant of aid that requireconsideration. This was a particularly relevant factor in the present caseswhere claims in similar circumstances had failed and significant legal issueshad been determined at appellate level.[63] We agree that there will be a range of relevant considerations to beconsidered when assessing the sufficiency of the prospects of success of aclaimant for legal aid. This is not to suggest an exhaustive list ofconsiderations must be identified and applied in every case. The statutedeliberately avoids any listing of relevant factors. We consider that the Agencymust treat each case on its merits. Each decision, be it to withdraw aid orcontinue the grant, is likely to turn on the particular facts of each case. Thequestion is whether the aided person is no longer a person who would beentitled to the grant by virtue of any of the provisions of ss 9, 10 or 11.[64] One consideration is likely to be the cost of bringing the claimcompared with the potential benefits. Where damages and/or other financialbenefits are sought, it will be necessary to assess the prospects of achieving asuccessful financial outcome in order to determine whether they are sufficientto justify proceeding. A re-assessment of the costs and benefits, including thecosts incurred to date and those likely to be incurred in the future, willordinarily be essential. Part of the analysis could include an assessment of thelikelihood or otherwise of an out-of-court settlement rather than proceeding totrial. In that respect, any settlement offers will be relevant.[66] The Agency can be expected to approach its decision making with nopredetermination either way. We do not consider it is appropriate to treat theaided person as having a presumptive right to the continuation of legal aid.While the withdrawal of the grant may affect the ability of an aided person toaccess justice in a particular case, the Agency must ask, and determine, thequestions we have identified arising from the statutory scheme. Access tojustice considerations are relevant but not determinative.[21] The Court of Appeal went on to say that the assessment must not be on a"formulaic basis".13 Each case must be assessed individually.[22] The issue before the Court of Appeal in Meredith (JMM) was whether aidshould have been withdrawn. The Court said:(a) The aided person must be given a reasonable opportunity to makesubmissions.1413 At [75].14 At [77].(b) The Agency must notify the parties of the determination and everydetermination "must be accompanied by a brief summary of reasons forit".15(c) The reasons should normally provide "sufficient information to showthe aided person and the lead provider that the Agency has givenindividual consideration to the aided person's case On the otherhand, provision of extensive amounts of information in minutereasoning would not be consistent with the function of the Agency toadminister schemes that are inexpensive and efficient."16(d) The level of detail required in the decision is "informed by the fact that,if an aided person seeks a review by a Panel, the team assigned toconduct the review may call for and consider all information held bythe Agency relating to the decision and to any reconsideration by theAgency of the decision."17(e) In relation to a withdrawal of aid, the Agency must provide reasons thatspell out which of the relevant statutory circumstances apply and whythe Agency has exercised its discretionary power to withdraw aid. Itmust explain in its reasons which of the applicable circumstancesprovided are relevant to the aided person's claim.18[23] The Court of Appeal summarised the extent of the reasons required in adecision withdrawing aid as follows:[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 in15 At [78], referring to s 57(3) of the then Legal Services Act 2000, now s 56 of the Legal ServicesAct 2011.16 At [80], referring to s 92(a) of the Legal Services Act 2000. This is now reflected in the purposeof the Legal Services Act 2011, being to deliver legal services to "people of insufficient means"in "the most effective and efficient manner": s 3.17 At [81].18 At [82].cases 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.[24] The Court of Appeal noted that reconsideration of a decision was "plainly" aprocess of "lesser formality and complexity than review by a Panel".19The approach to review by the Tribunal[25] The grounds for review by the Tribunal under s 52 of the present Legal ServicesAct 2011 are:2052 Grounds for review(1) An aided person or an applicant for legal aid may apply to the Tribunalfor a review of the Commissioner's reconsideration of a decisionreferred to in subsection (2) on the grounds that it is—(a) manifestly unreasonable; or(b) wrong in law.[26] In Meredith (JMM) the Court of Appeal agreed with the approach taken byO'Regan J in Legal Services Agency v Tana on the nature of the manifestlyunreasonable test,21 as follows:22[97] Thus in Tana, O'Regan J stated:[23] This is a different statutory formulation from the "plainlywrong" formation often used in relation to appeals from the exerciseof a discretion, where the appeal body focuses on whether a decisionis correct or incorrect, and has to form the view it is not only incorrectbut plainly so. In this case the focus is not on whether the decision isincorrect, but whether it is unreasonable, and the legislature hasstipulated that the Panel should intervene only where the decision isnot only unreasonable, but is clearly and unmistakably unreasonable.[24] That formulation rules out completely an approach on the partof the Panel that it considers matters afresh and substitutes its ownview. It also rules out the approach taken by the Panel in this case, that"manifestly unreasonable" simply means unreasonable on the face ofthe papers presented to the Panel. As Mr Taylor said, that approachfails to recognise that the statutory test requires not only a finding thatthe Agency's decision is unreasonable, but that it is manifestly so. Itis only when the degree of unreasonableness has reached a clear and19 At [89].20 This corresponds to the right of review to the Panel under the Legal Services Act 1991.21 Legal Services Agency v Tana HC Whangārei AP26/02, 9 December 2002.22 Meredith (JMM), above n 12, at [97]–[99].unmistakable level (or to use the statutory term "manifest"), that thePanel is permitted to intervene.[25] That means the Panel is required to exercise a considerabledegree of restraint in determining review applications based on the"manifestly unreasonable" ground. It is clear from a review of thestatutory history that the legislature has deliberately imposed ahigh threshold for intervention by the Panel. That implies that thelegislature intended there should be a degree of tolerance aboutdecisions of the Agency which would not be appropriate where therewas a full right of appeal, on the basis the Agency was exercising adiscretion.[98] Manifestly unreasonable – our views[99] We agree with the approach of O'Regan J on the nature of themanifestly unreasonable test. We also agree with Mr Cooke's submission thatit is necessary for the Panel on an application for review to exercise restraintbefore intervening to reverse a decision of the Agency on this ground.[27] The Court of Appeal said "wrong in law" corresponded reasonably closely withthe established grounds of review.23 It said it was reluctant to endorse the developmentof "detailed rules or criteria" to be applied by the Panel on review.24 A degree oftolerance would be afforded to the decisions of the Agency, bearing in mind the rolegiven to the Agency by Parliament in difficult matters of judgment.25 That approachwas consistent with the statutory interpretation that the decision by the Panel must beconducted on the papers with all reasonable speed.26Grounds of appeal[28] The appeal was filed in the Court of Appeal in early 2020. Ms Schmidt did notappeal against the High Court's "no express trust" finding but appeals the balance ofthe judgment.27[29] Two matters raised in the grounds of appeal are not now pursued. They are:23 At [111].24 At [112].25 At [112].26 At [112] referring to s 56(5) of the Legal Services Act 2000, now s 55(4) of the 2011 Act.27 Tribunal decision, above n 1, at [31].(a) That the Tribunal made an error of law because an anonymouscomplaint was made to the Commissioner about the appellant's grantof aid.28 Ms Levy QC, for the appellant, said the appellant accepted theCommissioner's advice that the decision maker was unaware of theanonymised letter. The appellant is still pursuing a Privacy Act requestfor a copy of the anonymised letter in unredacted form.(b) Ms Levy also did not pursue the ground based on new law applying asa result of the High Court decision in Morrison v Autumnal InvestmentsLtd. 29 That case was simply an example of the High Court recognisingthe application of an institutional constructive trust in circumstanceswhere the evidence of its existence was credible and accepted.30[30] The appeal grounds are in two main areas, namely that:(a) The Tribunal erred in law by generally relying on the findings in thatpart of the judgment relating to the express trust that the deed had beenfabricated beyond the express trust claim. The Commissioner'sreliance on the credibility findings undermining the applicant's casetainted his decision.31 The Commissioner's finding that the "credibilityfindings were so firm and widespread" overlooked the fact that therewere also credibility findings against Mr Garrity.32 In submissions,Ms Schmidt emphasised that the Tribunal should have found theCommissioner had erred by placing weight on the finding that theplaintiff had fabricated the deed of trust.(b) The Commissioner and the Tribunal failed to engage in the appellant'sdetailed submissions and references to various pieces of evidenceadduced during the trial which she said gave evidential support to herclaims, particularly as to:28 At [54].29 Morrison, above n 5.30 Tribunal decision, above n 1, at [46].31 At [34].32 At [34].(i) Whether a fiduciary relationship had arisen;(ii) Whether a constructive trust had arisen. In that regard, theappellant drew an analogy with the Lankow v Rose type of trust,which had been referred to in argument before the Judge but didnot feature in the substantive decision.[31] The appellant said there had been a failure by the Commissioner and, in turn,the Tribunal to engage with the appellant's alternative version of the facts, whichwould have provided an arguable claim based on Morrison.33 There Wylie J chose adifferent "and more apposite" way of stating the test.34 The alternative version wasbased on a finding that there existed an understanding that the appellants' interestsagreed to "selling but to buy back later". That would give rise, on the appellant'sargument, to the Garrity's interests holding the relevant properties on trust for theplaintiffs.[32] It is necessary to review the High Court decision against which the plaintiff isappealing.High Court decision[33] The High Court decision set out the background,35 noting the pleaded claimsas above:36(a) Intentional breach of an express trust arising out of the defendant'sdealing in relation to the Kaiaua Road and Bell Road properties. Thesehave been transferred by the plaintiffs to Ebada, Mr Garrity's company.(b) In the alternative, breach of an institutional constructive trust.(c) Claim against Mr Garrity personally, alleging knowing receipt of thefunds from the intentional breach of trust by Ebada.33 Morrison, above n 5.34 Submissions for the appellant (4 November 2021) at [41].35 High Court decision, above n 2, at [1]–[14].36 At [23]–[27].(d) Breach of fiduciary duty by Mr Garrity.(e) Undue influence against Mr Garrity.[34] The Judge said in relation to the transaction on the Kaiaua Road property:(a) The Schmidts had become under increasing financial pressure, due totheir mortgage commitments on the property and the costs of defendingcriminal charges, on which they were ultimately convicted and serveda two-year jail sentence.37 The Schmidts say they agreed thatMr Garrity should incorporate a corporate trustee to hold the propertieson trust for the Schmidts' trust. Ebada and Mr Garrity denied there wasany such agreement, saying that Mr Schmidt raised the possibility ofpurchasing the Kaiaua Road property from the Schmidts as a means ofresolving their financial difficulties in a way that would enableMr Schmidt's father, Mr Wanoa, to remain on the property paying rent.The Judge noted that was a principal factual issue for determination inthe case.38(b) Mr Garrity (or his nominee) purchased the Kaiaua Road property for$290,000. The consideration was a deed of forgiveness of debt of$130,000.39 This records that the Schmidts were indebted to the Garrityinterests in that sum. It was accepted by all parties that the forgivenessof debt executed by them was a sham. Ebada (the Garrity company)paid the balance of the purchase price and Mr Garrity was a personalguarantor of the financed funds raised against Kaiaua Road of$175,000.40(c) Mr Taia, a solicitor from the legal firm Russell McVeagh, and a friendof Mr Garrity, acted for Mr and Mrs Schmidt on the sale. He visited37 At [36]–[38].38 At [40].39 At [50].40 At [52].Mr and Mrs Schmidt, apparently in the company of Mr Garrity, inprison to have the transfer signed.41(d) Mr Schmidt's father, Mr Wanoa, remained in possession of KaiauaRoad and paid rent to Ebada from the date of settlement in December2005 until July 2008. The rental payments were then made to theSchmidts' Trust, rather than to Ebada or Mr Garrity, despite theprovision in the agreement for sale and purchase for the rent to be paidto Mr Garrity's interests.42 Mr Garrity borrowed an additional$101,500 by way of mortgage on the security of the Kaiaua Roadproperty.[35] In relation to the Bell Road property the Judge said:43(a) Transit New Zealand acquired land from the Bell Road property inJanuary 2006. Interim compensation of $235,046.05 was paid. TheANZ Bank as mortgagee was putting pressure on the Schmidts forpayment. Mr Garrity negotiated with the bank to allow 10 per cent ofthat compensation to be retained by the Schmidts with the balancegoing to the ANZ. A further payment by Transit New Zealand, ofapproximately $20,000, also went to the benefit of the Schmidts.Further compensation paid later was paid to the Schmidts' interests.(b) In June 2006, various notices demanding payment of unpaid rates andother bills in relation to Bell Road were received by the Schmidts.(c) The Schmidts were released from jail on 30 August 2006 and returnedto the Bell Road property. A mortgage sale notice was issued in relationto the Bell Road property.4441 At [51].42 At [54] and [70].43 At [56]–[64].44 At [61].(d) Between August and November 2006, Mr Schmidt and Mr Garrity hadfurther discussions regarding the possible sale of Bell Road to Ebadaand there was an exchange of agreements for sale and purchase.45(e) On 22 November 2006, an agreement for sale and purchase of the BellRoad property to Mr Garrity or his nominee was completed. It recordeda purchase price of $495,000 and stated a deposit of $295,000 was paidas remuneration.(f) The parties again accept that the $295,000 had not been paid, so theeffective consideration for the purchase was $200,000.46 Again thiswas to persuade the bank to finance the purchase. This was borrowedfrom Westpac, with Mr Garrity personally guaranteeing the borrowing.The settlement took place on 24 November 2006. Mr Taia again actedfor the Schmidts.[36] Subsequent events were described in the judgment as follows:47(a) Ebada and Mr Garrity came under financial pressure in late 2007 andinto 2008.(b) During 2008, there were discussions instigated by Mr Schmidt aboutthe prospect of buying Kaiaua Road and Bell Road back. He said hehad been seeking finance to purchase the properties back and intendedto subdivide Bell Road.48(c) In July 2008, the Schmidts stopped paying rent on Bell Road. At thesame time, the rental payments by Mr Wanoa for Kaiaua Road werebeing directed to the Schmidts' interests, rather than to Mr Garrity. Thisincreased financial pressure on Ebada and Mr Garrity.4945 At [62].46 At [63].47 At [67]–[77].48 At [69].49 At [70].(d) In September and October 2008, Mr Schmidt continued to pursue thetransfer of the properties back to him. He wanted to use the propertiesas security to borrow money and invest in new business ventures.(e) Mr Garrity did not accept the deals Mr Schmidt proposed and, inresponse, demanded payment of the outstanding rent on Kaiaua Road.50(f) By October 2008, the parties had fallen out, although Mr Garritycontinued to ask for the rent to be paid and they continued to discussthe figures required to discharge the mortgages over Kaiaua Road andBell Road.(g) In late November 2008, Mr Garrity sold the Bell Road property to aneighbour, Mr Hair, without telling Mr Schmidt.(h) The parties continued to deal with each other. Mr Schmidt pursued thetransfer of the Kaiaua Road property to a company owned by him,Alumuni Trustees Services Ltd.(i) By July 2009, Mr Garrity advised Mr Schmidt that if the matter couldnot be resolved, he would list the property for sale.51(j) Without the rental income on Kaiaua Road, Ebada was unable to meetits mortgage repayments. The Kaiaua Road property was sold atmortgagee sale in August 2011. The initial statement of claim wasissued about that time.[37] The Judge recorded the principal evidential contest was between Mr Schmidt(and Ms Schmidt to a lesser degree) on the one hand, and Mr Garrity on the other.52He said that the direct conflict between the evidence of the Schmidts and Mr Garrity50 At [71].51 At [74].52 At [80].was on the central issue in this case, which was "the nature of the transactions in issue,the transfer of the Kaiaua Road and Bell Road properties to Ebada".53[38] The Judge contrasted the cases:(a) The Schmidts' case was that Mr Garrity agreed to hold the propertieson trust for the Schmidt interests and incorporated Ebada to do so onthe basis of an express agreement that Ebada was a trustee for theSchmidt interests.54(b) Ebada and the Garrity interests' case was that the transactions wereoutright sales with agreements (because of the friendship betweenMr Garrity and Mr Schmidt) to rent back by the Schmidts, in the caseof Bell Road, and by Mr Schmidt's father, Mr Wanoa, of theKaiaua Road property as well as the Schmidts sharing in theTransit New Zealand compensation.55 Mr Garrity said that he hadagreed that, if in the future the Schmidts were in a position to do so,Ebada and Mr Garrity would deal with them in relation to the purchasealthough there was no commitment to do so, nor to do so at anyparticular price.56[39] In order to support their case, the Schmidts had produced a declaration of trustdocument purporting to be between Ebada and Excel Trust which they say Mr Garrityprepared and the parties signed on 12 December 2005. This expressly recorded thatEbada was to hold the properties on trust for the Schmidt interests. Mr Garrity deniedthat the document was created either by him or the Schmidts and said that it wasfabricated. He said the unexecuted copy of the declaration of trust document that theSchmidts had produced in Court was created by them for the purposes of bolsteringtheir claims.57 The Judge then went on to make credibility findings that the Schmidts53 At [80].54 At [81].55 At [82].56 At [82].57 At [83].and Mr Garrity were all "unsatisfactory and unreliable witnesses to a greater or lesserdegree."58[40] The Judge found that Mr Schmidt:59(a) was evasive under cross-examination;(b) struggled to answer simple questions directly, and in fact was incapableof answering direct questions; and(c) sought to deny the obvious, even the simplest things such as whetherhe had received an email.[41] The Judge also found that Mr Schmidt had:60(a) denied he used names which were recorded on his birth certificate;(b) refused to accept at the time of the transactions he was in financialdifficulties which it was clear that he was; and(c) insisted on being taken to documents rather than answer questionswhich he must have good personal knowledge of.[42] His Honour did not accept that Mr Schmidt had no knowledge of the effect ofthe trust documents.61 The Judge said he was an "intelligent and relativelysophisticated man, at least in terms of general business experience."62 The Judgereferred to a number of investment properties which the Schmidts had owned. He saidMr Schmidt had a good grasp of court processes and documentation, referring to anumber of previous legal proceedings in which he had been involved. In particular, inone proceeding a Judge had observed that Mr Schmidt's written submissions and oral58 At [84].59 At [85].60 At [85].61 At [86].62 At [86].argument revealed "a confidence, a familiarity with the law and an ability to focus onrelevant matters which are unusual in a lay person".63[43] His Honour said Mr Schmidt had used a number of different names or aliasesand was prepared to falsify records and create new identities for different purposeswhenever it suited him.64 Mr Schmidt was also prepared to say what he considerednecessary to answer the banks' and IRD's enquiries or to put them off.65[44] The Judge also noted that Mr Schmidt was repaired to create false documentsand sign them when it suited his purposes (as was Mr Garrity). The Judge gaveinstances of Mr Schmidt doing this, including creating: a false agreement for sale andpurchase of a boat; a false tenancy agreement to be sent to the IRD to meet a query; afalse statement with a bill to increase the compensation from Transit New Zealand;and a false tenancy agreement with his former partner.66[45] The Judge said of more concern was that Mr Schmidt was prepared to doctoror create documents to advance his case in these proceedings. For instance, he hadomitted relevant paragraphs from emails produced in affidavits sworn by the Schmidtswhich the Schmidts "apparently" considered would not assist their case.67Mr Schmidt's explanation for the omitted paragraphs was not convincing.68[46] In relation to Ms Schmidt, the Judge found her more direct in her answers butsaid they were obviously influenced by self-interest and she had limited personalknowledge of the events in issue.69[47] The Judge also noted that aspects of Mr Garrity's evidence wereunsatisfactory.70 In particular, he had misled the Tenancy Tribunal on matters relatingto the tenancy at Kaiaua Road; acknowledged that he had not provided the full pictureto Mr Taia (the Schmidts' lawyer) when outlining the terms of the sale and purchase63 At [86], referring to Schmidt v Hair HC Auckland CIV-2010-404-6804, 3 May 2011 at [54].64 At [87].65 At [88].66 At [89].67 At [90].68 At [95].69 At [98]–[99].70 At [102].agreement of Kaiaua Road; claimed privilege against self-incrimination when beingcross-examined about his dealings with the IRD and information he had given to thebroker and Westpac Bank when seeking a loan; misled the Department of Correctionsin relation to registering himself as a lawyer to facilitate visiting Mr and Ms Schmidt;and did not inform his own lawyer, Mr Hansen, of the correct details of theKaiaua Road transaction.71[48] However, the Judge said the issue in relation to the IRD was relatively minorand that registering as a lawyer with the Department of Corrections was forMr Garrity's convenience so he could see Mr Schmidt more readily.72 The Judgefound of more moment that Mr Garrity was a party to the creation and execution ofdocuments which did not disclose the correct position, for instance the agreements forsale and purchase of Kaiaua Road and Bell Road, which gave misleading impressionsas to the price actually paid for the properties.73[49] The Judge said Mr Garrity was prepared to have documents witnessed at a dateafter they had been executed.74 However, he concluded:[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 in thecase as Mr and Ms Schmidt. On the important issues where there is a directconflict, 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. I also prefer Mr Garrity's evidence to both Mr and Ms Schmidton the issue of whether he uplifted a box with the trust documents and recordsfrom the Schmidts in October 2005. I accept that did not happen.[50] The Judge went on to dismiss the first cause of action, breach of express trust.He found the Schmidts' evidence as to how Mr Garrity came to create the express trustdocument to be "incredible".75 He did not accept the Schmidts' version of events andfound:7671 At [102]–[103].72 At [104].73 At [105].74 At [106].75 At [132].76 At [134]. There is no reliable or credible evidence that such a document ever existedor that Ebada executed a document recording that it agreed to be a corporatetrustee for the Schmidt family interests.[51] His Honour also said that there was no reason for the creation of anindependent corporate trustee in the form of Ebada when the Schmidts already had acorporate trustee holding the property.77[52] The Judge found, on the balance of probabilities, he preferred Mr Garrity'sevidence that the express trust document was "a fiction and a document created solelyfor the purpose of this hearing".78 As Mr Garrity said in cross-examination, inresponse to the proposition that there was no reason for the Schmidts to make up thetrust document:79If you are trying to construct a case after the fact there's plenty of reason to doso.[53] The Judge found there was no express trust established quite apart from thefact that the trust document was fabricated. He said:80 the transactions themselves do not support the Schmidts' case. The salesin both cases were described in the agreements for sale and purchase as salesto Mr Garrity (or his nominee). There is no reference to a trust in any of therelevant accompanying documentation [54] The Judge went on to note Ebada's name, Ebada Property Investments Ltd,while a minor point, did not suggest it was formed as a corporate trustee company.That it was a property investment company was consistent with Mr Garrity's evidencethat he had purchased the properties as investments.81[55] Venning J rejected evidence of an express trust based on an agreement.82 Hedismissed Mr Schmidt's version of the background to the transactions. In particular,the Judge noted that there was no need for agreements for sale and purchase to beprepared if the transaction was to enable an independent corporate trustee to hold the77 At [129].78 At [135].79 At [135].80 At [136].81 At [137].82 At [138].property. He said there was no reason for the replacement borrowing, nor wouldMr Garrity have had to make himself personally liable for the financed borrowing.83The transactions, being the sales of Kaiaua Road and Bell Road, were a year apart,which was consistent with Mr Schmidt reluctantly selling the properties in responseto particular financial pressures on his interests at the relevant times.84[56] The Judge acknowledged that the major factor in favour of the Schmidts' casewas that the agreements for sale and purchase were at less than market value.85 Therewas no $130,000 debt to be written off in relation to Kaiaua Road and there had beenno deposit of $295,000 actually paid, nor any work performed by Mr Garrity to thatvalue in relation to Bell Road.86 However, the Judge said there were a number of otherbenefits to the Schmidts in the sales to the Garrity interests. These included thatMr Garrity allowed Mr Schmidt's father to stay at the Kaiaua road property, andsubsequently on the transfer of the Bell Road property, he agreed to the Schmidtsretaining possession of that property. He also agreed that any future compensationfrom Transit New Zealand for Bell Road would go to the Schmidts and they wouldkeep the benefit of lease income from the neighbour of the Bell Road property.87[57] A further factor the Judge found relevant was that Mr Garrity was himselffinancially stretched and needed the rental income to keep the mortgage repaymentsup.88 In addition, the Judge said there was good reason for Mr Schmidt, who wasbeing investigated by the IRD, to want the sale price recorded in the agreements forsale and purchase to be at market value, which is why a fictional forgiveness of debtand the "payment for fees" fiction were employed in relation to the Kaiaua Road andthe Bell Road purchase prices respectively.89[58] In conclusion, the Judge accepted Mr Garrity's evidence that he was "preparedto purchase Kaiaua Road (and later Bell Road) but only at the right price."90 He might83 At [144].84 At [145].85 At [150].86 At [150].87 At [151].88 At [152].89 At [153].90 At [154].have taken advantage of the financial pressure on the Schmidts to obtain a significantdiscount but that did not change the nature of the transactions, which he concludedwere outright sales.91[59] In summary the Judge therefore found the evidence did not support theexistence of an express trust as the Schmidts had claimed so the first cause of actionwas not made out.92[60] On the second cause of action, a breach of institutional constructive trust, theJudge noted the plaintiff's claim was "effectively that Mr Garrity has committed afraud on the Schmidts, so that Ebada obtained the properties by fraud."93 Citing Equityand Trusts in New Zealand, he noted that an institutional constructive trust would arisein circumstances including where:94– a fiduciary makes an improper profit;– an intended transfer of property is invalid because of defectiveformalities;– a person makes an unconscientious assertion of ownership in respectof property to which another has contributed;– there is an agreement for mutual wills but after the death of one partythe other revokes their will or acts inconsistently with the agreement;– a vendor enters a contract to sell land;– a property has been obtained by fraud;[61] The Judge noted that if an institutional constructive trust had been established,it arose at the moment of transfer:95 but as noted, the plaintiffs failed to establish that the transfers wereanything but outright sales. There was no fraud. The plaintiffs cannotestablish that Mr Garrity agreed Ebada would hold the properties on trust.[62] The Judge went on to say, having reviewed a number of the authorities:91 At [154].92 At [155].93 At [159].94 At [158], citing Andrew Butler (ed) Equity and Trusts in New Zealand (2nd ed, Thomson Reuters,Wellington, 2009) at [13.2.1].95 At [159].[163] The difficulty for the plaintiffs with the argument for an institutionalconstructive trust is that, for the reasons given, above the plaintiffs fail tosatisfy the Court that the general discussion and understanding relied on bythe plaintiffs to support the institutional constructive trust ever occurred.[164] There was no agreement as there was in Holt. At its highest point itcould be said there was a general understanding, but no more than that, if, inthe future, Mr Schmidt was in a position to repurchase the propertiesMr Garrity would deal with him. There was nothing more detailed than thepossibility of Mr Schmidt being able to purchase it back.[165] Mr Schmidt agreed to transfer the properties to Mr Garrity (Ebada).He knew the properties were to be transferred for less than their market price.He agreed to do so because of the other benefits to him from the transaction.[63] His Honour found the arrangement between the parties was well short ofacknowledging a trust96 and noted that the loose arrangement regarding the possibilityof the Schmidts repurchasing the properties was not definite and it was "anunenforceable understanding between two people who at that stage were friends."97[64] The Judge referred to the "high point" for the plaintiffs as an email containinga draft communication to Transit New Zealand's property group referring to the"property" being "under a new corporate trustee, Ebada Property Investments Limited(Ebada)".98 Mr Garrity said he wasn't sure that the email was ever finally settled andsent.99 The Judge found that passing reference to Ebada was not particularlysignificant given the overwhelming balance of the other evidence against it.100 TheJudge said if Ebada was holding the properties as trustee, he would have expected itwould have been raised in the numerous communications between the parties in 2008,a time when the relationship was deteriorating.101 Neither was it sought to terminatewhat was alleged — that Ebada was trustee.102[65] The Judge concluded that:[175] Taking the evidence overall, and despite the unsatisfactory nature ofthe documents and the way all parties acted, the plaintiffs fail to satisfy theCourt that there was an agreement between the vendor of the propertyrepresented by Mr and Ms Schmidt and Mr Garrity, that Ebada would hold the96 At [168].97 At [170].98 At [171].99 At [171].100 At [172].101 At [172].102 At [172].properties on trust. Rather, the agreement was that Kaiaua Road and Bell Roadwould be sold to Ebada. In both cases that enabled the mortgages to be cleared,Mr Schmidt's father, Mr Wanoa, (and the Schmidts) to remain in possessionof the properties and, in the future, for the Schmidts to potentially have anopportunity to purchase the properties back.[176] The evidence does not support a declaration that an institutionalconstructive trust arose.[66] In relation to the third cause of action, knowing assistance/knowing receipt ofintentional breach of trust, given the failure to make out a breach of trust, that causeof action could not succeed.103[67] As to the fourth cause of action, a breach of fiduciary duty, the Judge foundthat no fiduciary duty existed. The claim was that Mr Garrity was in a relationship ofspecial trust and confidence with Mr and Ms Schmidt. This was pleaded as being onthe basis of the relationship as:104(a) Mr Garrity was their long-term friend;(b) Mr Garrity provided legal services to them and acted as their lawyer;and(c) the plaintiffs were in a vulnerable position facing criminal prosecutionand under financial pressure.[68] The Judge noted the two principal situations in which a fiduciary duty wouldarise. The first was whether the relationship was of a kind which, by its very nature,was recognised as being inherently fiduciary, such as a solicitor/client relationship.105The other was where, on an examination of the particular aspects of the relationship,the relationship should be classed as fiduciary. The Judge also noted that not everybreach of duty by a fiduciary would be a breach of fiduciary duty.106103 At [177].104 At [178].105 At [179].106 At [179].[69] The Judge noted that while Mr Garrity was a lawyer, he was not acting asMr and Ms Schmidts' lawyer. He was an in-house counsel for ASB and unable toprovide legal services for anyone other than his employer.107 While he told the prisonauthorities he was the Schmidts' lawyer, he had no role in the defence of their criminalcharge or in relation to the sale of Kaiaua Road other than as purchaser.108 Nor did heact as the Schmidts' lawyer in relation to the agreements for sale and purchase. Theywere independently represented by Mr Taia and Mr Garrity took advice from aseparate lawyer.109[70] The only legal advice that the Schmidts said that Mr Garrity provided was thatthey should transfer Kaiaua Road and Bell Road to an independent trustee. The Judgehad already also rejected the Schmidts' contention that Mr Garrity had given themsuch advice.110 The Judge rejected that Mr Garrity was acting as such in the assistancehe gave the Schmidts in making payments on their behalf. He did not render any fees.The Judge contrasted that with a bill that the Schmidts' lawyer, Mr Darby, hadrendered for approximately $20,000 which included services in relation toTransit New Zealand.111[71] The Judge therefore rejected any lawyer/client relationship between Mr Garrityand the Schmidts.112 He also found there was no other basis for classifying therelationship between Mr Garrity and the Schmidts as fiduciary. There was noagreement, express or implied, to the effect that the fiduciary would act on behalf ofthe other party and put their interests before his own.113[72] The Judge also noted that caution was necessary before imposing a fiduciaryduty on parties to a contract. He referred to the Supreme Court comments to this effectin Paper Reclaim Ltd v Aotearoa International Ltd.114107 At [182].108 At [183].109 At [184].110 At [185].111 At [186].112 At [194]–[195].113 At [196].114 At [197], citing Paper Reclaim Ltd v Aotearoa International Ltd [2007] NZSC 26, [2007] 3 NZLR169.[73] His Honour further noted that while the Schmidts had argued they werevulnerable at the time of the transactions, which could be an important factor in afiduciary relationship, this of itself was not sufficient to create the relationship.115Generally, it must co-exist with elements of reliance, confidence or trust where oneparty had undertaken to act in the interests of another. Venning J found at the timeMr Garrity entered the agreements for sale and purchase, he had not undertaken to actin the interests of the Schmidts.116 Therefore, the cause of action for breach offiduciary duty failed.117[74] The Judge determined that the undue influence claim also failed. Firstly, hehad rejected the proposition that Mr Garrity had provided legal advice or legal servicesto Mr and Ms Schmidt.118 Neither was the fact that he was qualified as a lawyerrelevant to Mr Garrity's purchase of Kaiaua Road and Bell Road. He was not in legalpractice and he was pursuing his own interests as a property investor when hepurchased those properties.119[75] Secondly, the Judge found that the Schmidts had not established any actualundue influence in relation to the two transactions. In particular:(a) Mr Garrity was not acting as their solicitor.120(b) The particular vulnerability they claimed, namely that they faced acriminal prosecution and their financial position made them vulnerableto advantage being taken of them, was not established. By the time ofthe Bell Road sale, Mr and Ms Schmidt had been released from prisonand would have been under financial pressure.121(c) As to the sale at an undervalue due to the sham $130,000 deed offorgiveness in the case of Kaiaua Road, and the write-off of $295,000115 At [198].116 At [198].117 At [199].118 At [203].119 At [204].120 At [207].121 At [207].for services in the case of Bell Road, the Judge accepted that thoughthe price actually paid for the properties was an unusual featurenevertheless the Court would not enquire into the adequacy ofconsideration.122 In any event, even if there was an inequality ofbargaining power, that was not of itself sufficient to establish undueinfluence.123(d) The fact that Mr Garrity was a friend and a qualified lawyer did notgive him any particular position of dominance or ascendency over theSchmidts.124(e) Mr Schmidt was an experienced property owner and businessman andwas "intelligent and canny and able to achieve or get what he wanted.He well understood legal processes".125(f) The Judge also noted Mr Schmidt was a strong character and wouldhave backed himself to ultimately solve his financial issues to gethimself into a position where he would have been able to buy theproperties back from Mr Garrity on advantageous terms.126[76] The Judge said that Mr Garrity undoubtedly took advantage of the fact theSchmidts were under financial pressure to strike the deal for the purchase of theproperties at reduced rates.127 However, Mr Garrity was only prepared to buy at asignificant discount and he was financially stressed as well. The Judge found the salesalso suited the Schmidts because of the financial pressure they were under, the factMr Schmidt wanted his father to remain in the Kaiaua Road property paying rent andthat the Schmidts could occupy Bell Road. The Judge noted Mr Schmidt's characterwas such that he would want to be seen as in control and looking after the family. Hewould not want to lose his father's respect, which would have been the result if theproperty had been sold and his father had to move out. The loose understanding was122 At [209].123 At [209]–[210].124 At [211].125 At [213].126 At [214].127 At [212].that if the Schmidts were to find their financial position improved in the future,Mr Garrity would deal with them and consider transferring the properties back.128[77] Finally, the Judge noted that it was relevant that the Schmidts were representedby Mr Taia in relation to both sales, an independent solicitor in a recognised firm, whohad obligations to the Schmidts.129 This was regardless of the point made by theSchmidts that Mr Garrity would have been with Mr Taia at the prison when theSchmidts signed the documents relating to the sale of Kaiaua Road. He noted theSchmidts attended Mr Taia on their own in relation to the sale of Bell Road. As theJudge said, "[t]hey had the opportunity to discuss their situation in full with him then.Nothing changed".130[78] The Judge concluded that while the Schmidts were undoubtedly under pressureto sell, when considered in context, including Mr Schmidt's role in the agreements andthe benefits to him and his family, it could not be said the transaction could only beexplained on the basis Mr Garrity exercised undue influence.131[79] Therefore, all causes of action failed.[80] In a costs judgment which followed, the Judge noted that:132(a) The starting point was that the defendants were successful, and theywere entitled to costs against both plaintiffs.133(b) The proceedings were "not hopeless. The proceedings failed as theplaintiffs were unable to prove their case but as the Court observedthere were arguments that could be made for the plaintiffs."134[81] The Judge also noted:128 At [212].129 At [215].130 At [215].131 At [216].132 Schmidt v Ebada Property Investments Ltd [2020] NZHC 757 [Costs judgment].133 At [4].134 At [14].[18] Standing back and looking at the matter overall, the principal factorwhich supports an award of increased costs, if not indemnity costs, is the factthe plaintiffs created a false document for the purpose of advancing theirclaim. I do not consider the other factors to be sufficient in this case. However,against that factor is the fact that the Court also found Mr Garrity's evidenceto be unsatisfactory in a number of respects, and that he also was criticised forcreating documents which did not correctly record the position. I considerMr Garrity's own conduct amounts to a good reason which justifies the Courtrefusing an order for increased or indemnity costs in this case.[82] I have gone through the High Court decision in some detail because it was the"prospects of success" on appeal of that judgment that the Commissioner wasconsidering. Therefore the likely merits are relevant to the Tribunal's review, ifindirectly.[83] As Wylie J said in Legal Services Agency v A, it is appropriate to considerwhether the arguments to be advanced on appeal are "technical and devoid ofsubstantive merit".135The Legal Aid Tribunal decision[84] The Legal Aid Tribunal (the Tribunal) characterised the appellant's case asfollows: that the Commissioner usurped the role of the Court of Appeal, because theappellant "need not prove she will win the appeal but must simply demonstrate theappeal has sufficient merit to justify funding".136 In particular, the appellant said thatthe Commissioner erred by relying on strong adverse credibility findings against theSchmidts.[85] I now turn to consider the Tribunal decision.The Tribunal's assessment[86] The Tribunal considered the credibility findings. It found that theCommissioner did not err when considering Venning J's adverse credibility findingsin relation to Mr Schmidt in the first cause of action. The first cause of action (expresstrust) was not the subject of the substantive appeal. However, the Tribunal took the135 Legal Services Agency v A (2008) 19 PRNZ 1 (HC) at [42], quoted by the Tribunal in the Tribunaldecision, above n 1, at [27].136 Tribunal decision, above n 1, at [13].view that the Judge's findings were "so firm (and so widespread)", including thatMr Schmidt omitted key email evidence and fabricated a deed that was central to theclaim that the two properties were held on trust by Ebada, that the credibility finding"undermines the thrust of the applicant's case, that the properties were transferred tobe held on trust for her, whether express or otherwise".137[87] Secondly, as to the institutional trust and knowing assistance/receipt claim, theTribunal found that the Commissioner did not err in his consideration. The Judge hadfound that passages of emails had been deliberately omitted by the appellant. He saidhad there been a trustee relationship, this would either have been raised or there wouldhave been appropriate "contemporaneous comment in any of the various emailcommunications".138The Commissioner had considered Venning J's finding there wasno evidence that Mr Garrity and Ebada agreed to hold the properties on trust, but foundthat the transfers of properties were "outright sales".139 The Tribunal said it did notconsider the prospects of the Court of Appeal reaching a different view to Venning Jas "particularly strong".140[88] The Tribunal said that the appellant on review before the Tribunal sought "todissect the text of many individual emails", which, given the preponderance ofevidence, was "not conducive to good prospects sufficient for an appellate grant oflegal aid".141[89] Thirdly, in relation to the claim for breach of fiduciary duty, the Tribunalreiterated the reasons why there was no basis to argue Mr Garrity acted as theappellant's and Mr Schmidt's lawyer. To the extent the appellant intended to submiton appeal that fiduciary duties can arise in a variety of circumstances, and that giventhe special trust and confidence bestowed on Mr Garrity such as access to their bankaccount and privity to information such as property valuations, the Tribunal notedVenning J had considered in general terms whether the relationship had been a137 At [34]. The Tribunal referred to the causes of action at [5].138 At [38].139 At [37].140 At [38].141 At [39].fiduciary one. In any event, the Tribunal said the new submissions on this point didnot modify the position "in any material way". 142[90] Fourthly, in relation to the new High Court decision of Morrison, the Tribunalsaid it did not provide a material change in circumstances and was insufficient tojustify a further reconsideration.143 The case recognised an institutional constructivetrust where the evidence in support of that was credible.144 The Commissioner did notrely on s 51(6), which entitles the Commissioner to decline reconsidering a decision"if the Commissioner has already reconsidered that decision or a decision relating tosubstantially the same issue." In the Tribunal's opinion, the Commissioner had beenentitled to do so.145[91] The Tribunal said that the appellant's arguments on appeal were mainly "rootedin the minutiae of emails and documents", which was "not synonymous with themhaving any particular prospects of success".146 The Tribunal concluded that there werenot sufficient prospects of success to justify a grant of legal aid for the appeal, and theCommissioner did not err in law nor was his decision manifestly unreasonable.147[92] In its final remarks, the Tribunal found the comments of Venning J in the costsjudgment (such as that the appellant's case was "not hopeless") did not support therebeing sufficient prospects of appellate success.148 The specific comments that theappellant says the Commissioner made without a proper evidential basis werereasonable comments to make and he was entitled to draw such inferences.149Analysis[93] I now turn to the two main issues on appeal identified earlier.142 At [44].143 At [49].144 At [46].145 At [48]–[49], citing principles related to s 51(6) from the Legal Aid Tribunal decision in DY(Historic Abuse) [2012] NZLAT 089 at [43].146 Tribunal decision, above n 1, at [50].147 At [50].148 At [51].149 At [53].Issue 1: The tainting of the Commissioner's decision by the finding that the deed oftrust had been fabricated[94] Ms Levy submitted that the Tribunal had wrongly "approved the reality" of theCommissioner's view that the findings were a fabrication in respect of the deed of trustand so tainted the remaining causes of action".150[95] The appellant says this was not a finding made by Venning J who had, afterrejecting the deed as a contemporary document, chosen to follow "the logic of the caseand the contemporaneous documents" approach.151 The appellant argued that theSchmidts by their attempt to boost genuine claims with fabricated evidence do notforgo the right to a consideration of the remaining evidence when the falsity isuncovered. Given the Judge's reluctance to accept Mr Garrity's evidence, except tothe extent that his evidence was consistent with the documents, the "tainting finding"and its adoption by the Tribunal was wrong in law.[96] On the other hand, Ms Hansen for the respondent said that the case must belooked at as a whole. The trial Judge made clear credibility findings, which wereunlikely to be upset on appeal. What was required was to look at the substance of thematter and the substantive decision overall.[97] There is no doubt that the Judge made clear credibility findings. That is notdisputed by the appellant. However, the appellant pointed out that the Judge also madecredibility findings against Mr Garrity. In the circumstances, the contemporaneousdocumentation becomes a touchstone. The appellant says the Judge recognised thatbut did not take proper account of the contemporaneous evidence, which wouldsupport the appellant's appeal.[98] If the Judge had taken that into account, the appellant says, it would support aconstructive trust being established rather than a transfer of ownership outright. In thesubmissions to the Commissioner, Mr Woodhouse, acting for Ms Schmidt, pointed toa number of emails. For instance, in reference to an email dated 13 March 2008,150 Submissions for the appellant (4 November 2021) at [12].151 High Court decision, above n 2, at [110].Mr Woodhouse says "[t]here are several passages to be analysed, in particular, the useof language" by Mr Garrity, who said: 152I will hold the properties for another couple of months until the end of May sorry to put this pressure on you bro, but holding these properties has donenothing for me.[99] As is apparent, that passage is not inconsistent with the Judge's findings as toMr Garrity's giving the Schmidts the opportunity to make an offer to purchase theproperties.[100] Ms Levy in her submissions pointed to the admission by Mr Garrity that it wasnot "fair" that he retained all the proceeds when the properties were sold. She reliedon an exchange in the cross-examination of Mr Garrity as follows:153Q. And the sale price was 700,000 wasn't it?A. I think you're looking at this comment in isolation. I think there's alot that's going on around the periphery of this.Q. Well, we're not worried about the comment anymore, Mr Garrity. Thepoint I'm going to make to you is that you did sell Bell Road toMr Hair for 700,000, didn't you?A. Yes.Q. And you had bought it off the Schmidts or from the Schmidt TrusteeLimited or Ebada had for 200,000?A. Yes.Q. And the difference between those two figures, Mr Garrity, is 500,000,isn't it?A. Yes.Q. And the fair share that you have given back to the Schmidts to date isnothing, isn't it?A. Nothing.Q. Nothing.A. Yes.Q. That's correct, isn't it?152 Letter from Woodhouse Law to Ministry of Justice, Legal Aid (24 November 2020) at [51(a)].153 Notes of evidence at 341.A. Yes.Q. It doesn't sound like a very fair share to me, Mr Garrity, does thatsound like a fair share to you?A. Is that your question?Q. Yes, it is.A. Well, when you look, when you isolate it down to that issue, it doesn'tseem fair, no.[101] In the context of the questions being asked in cross-examination, Mr Garrity'sresponse in cross-examination to the question of whether it was fair that he soldproperty for $700,000 when he had bought it for $200,000 was qualified by the factthat Mr Garrity pointed out that this was only on the basis of the dollar purchase price.He was not saying that the sale of the property by the Schmidts to Mr Garrity was notfair per se because there were other factors which influenced the deal. Venning Jreferred to those factors in his judgment. They included that Mr Garrity had only beenprepared to buy the property at a significant discount, as he was financially stresseddue to his other investments and his matrimonial split. The sale also benefitted theSchmidts by addressing the immediate financial pressure they were under from themortgagee, the BNZ. In addition, "importantly" the deed enabled Mr Schmidt's fatherto remain on the Kaiaua property.154 The Schmidts were also able to remain inpossession of the Bell Road property. The Judge noted that the price paid for theproperty was "an unusual feature of sale";155 that the Kaiaua Road property was worth$290,000 and Mr Garrity purchased it for $160,000; and that Bell Road was worth$495,000 and Mr Garrity purchased it for $200,000.156 Nevertheless, his Honour saidthat it was for the parties to determine the appropriateness or otherwise of theconsideration for it in the circumstances. That is not an error.[102] Ms Levy indicated that while there were some credibility findings the Judgehad made which were open to challenge, the appeal was not a credibility challenge butrather a challenge based on the fact the Judge purported to make his findings (otherthan the express trust finding) on the "logic of the case" and "contemporaneous"154 High Court decision, above n 2, at [212].155 At [209].156 At [209].documents.157 The appellant argued that this was not a case of the Judge being in abetter position to make factual findings because he had seen and heard the witnessesbut, rather, it was open to the appellate court to examine the documents whichsupported the appellants' constructive trust argument.[103] While the Judge did rely on contemporaneous documents and the "logic of thecase", he also made firm credibility findings against, in particular, Mr Schmidt, whichsupported the Judge's findings on all the causes of action. In particular:(a) The credibility findings made at the beginning of the judgment werenot limited to the express trust argument. Having made a finding ofsuch a serious nature — the fabrication of a document to support theclaim before the Court — the credibility of the appellants on all claimswas compromised. It is unrealistic to say that finding could only havean effect on the first cause of action.(b) On the "important issues" where there was a direct conflict, namely thebasis upon which the properties were transferred to Ebada,Mr Garrity's evidence was preferred over that of Mr and Ms Schmidt"primarily on the logic of the case and the contemporaneous documentswhich support his evidence."158 However, that comment confirms thatthe Schmidts' credibility was lacking on the important issues, whichwas confirmed by his analysis of the documentary evidence. The Judgeacknowledged that there was evidence which could support theSchmidts' arguments. However, as the Judge said, it was the evidenceas a whole which determined the case.159[104] The second cause of action (breach of institutional constructive trust) did notrely upon the declaration of trust as the first cause of action did.160 Nevertheless, the157 At [110].158 At [110].159 At [175].160 At [156] on breach of institutional constructive trust, as being in reliance on the express trustdeclaration. However, counsel advised that during the hearing in the High Court, the pleading hadbeen amended (if only in a de facto manner) to delete the reference in the second cause of actionto reliance on the declaration of trust document, and this was accepted by the Judge.Judge concluded that the Schmidts had failed to satisfy the Court that the "generaldiscussion and understanding relied on by [them] to support the institutionalconstructive trust ever occurred."161 His Honour was referring to his credibilityfindings, which must have included consideration of the fabricated document as wellas his analysis of the logic and his evaluation of the documents and explanations ofthe parties.[105] The Judge was aware of the unsatisfactory nature of the documents but, as hesaid, he took "the evidence overall" into account when he concluded that the Schmidtshad failed to satisfy the Court that there was an agreement or understanding that Ebadawould hold the properties on trust.162 He expressly found that Mr Schmidt had agreedto transfer the properties to Mr Garrity, even though he knew they would be at lessthan their market value and agreed to do so because of the other benefits to him fromthe transaction.163 This was a finding based on the Judge's assessment of evidenceand the weight he placed on the various documents. But that is not to say that therewere not contemporaneous documents and emails that might be interpreted to supportthe appellant's version.[106] Regardless of how the appellants now formulate their constructive trustargument, the findings as to fact of the Court must first be overcome before theconstructive trust argument can succeed.[107] In reformulating the constructive trust argument, the appellant pointed to therecent judgment of Wylie J in Morrison.164 In the submissions to the Commissionerin the second reconsideration application,165 Mr Woodhouse cited comments ofWylie J from Morrison as follows:[141] While Autumnal is the registered proprietor, its title remainssusceptible to an in personam claim if there has been unconscionableconduct.166 A registered proprietor can be subject to claims arising out of hisor her personal conduct (in personam claims) and whether the conduct161 At [163].162 At [175].163 At [165].164 Morrison, above n 5.165 Letter from Woodhouse Law to Ministry of Justice, Legal Aid, regarding second reconsiderationapplication (27 January 2021) at [13].166 Regal Castings Ltd v Lightbody [2008] NZSC 87, [2009] 2 NZLR 433.occurred before or after registration. Registered proprietors can be requiredto hold their estate or interest and to deal with it, so as to give effect toobligations with which they have burdened themselves at law or in equity solong as enforcement of those claims is not inconsistent with the objective ofthe Torrens land registration system.167 A constructive trust will be recognisedwhere it would be a fraud for the legal owner to assert beneficial ownership.168Where property is conveyed in consideration of an oral promise by thetransferee that the transferor will retain a beneficial interest in the property,and where retraction of the promise amounts to a fraud upon the transferor,then the transferee will be held a constructive trustee for the benefit of thetransferor of either the whole property or of the relevant interest. The key tosuch cases lies in the question whether the transferor would have parted withthe property but for the oral undertaking of the transferee. If that question isanswered in the negative, then renunciation of the promise or disavowal of thecommon intention will operate in equity as a fraud on the transferor and entitlethe transferor to the appropriate remedy. The circumstances must show thatreliance on the legal title in situations of this kind amounts to a fraud upon theplaintiff.169 The constructive trust arises because of the fraudulent denial ofthe common intention or oral promise, even where there was no perfectedagreement or declaration of trust.170[142] The three key elements to establish an institutional constructive trust,in the circumstances which have arisen in this case, are first, an oralundertaking or promise, secondly, that Mr Morrison as trustee of the Trust,was induced by the oral undertaking or promise given by Mr O'Reilly to partwith the properties, and thirdly, that Mr Morrison, as trustee of the Trust,would not have so acted, but for the oral undertaking or promise.[108] Wylie J found that there had been an oral undertaking or promise made by thedefendants which induced the plaintiffs to part with the properties, and that theplaintiffs would not have so acted but for the oral undertaking or promise.171[109] Ms Levy also indicated that it was open to the Court to formulate the case usinga Lankow v Rose argument.172 That is a constructive trust based on an "intention".This follows a four-step inquiry requiring contribution and assessing whether therewas a "reasonable expectation" of a beneficial interest. Ms Levy said this was raisedin submissions following the hearing, although it does not appear to have beenexpressly pleaded, nor was it separately dealt with in the High Court decision.167 Duncan v McDonald [1997] 3 NZLR 669 (CA) at 683.168 Avondale Printers & Stationers Ltd v Haggie [1979] 2 NZLR 124 (SC) at 145.169 At 163; and see Bannister v Bannister [1948] 2 All ER 133 (CA); and Mahon v The Station atWaitiri Ltd [2017] NZCA 387, (2017) 18 NZCPR 760 at [47].170 Laboyrie (as trustees of the Galway Trust) v Mills (as executor of the estate of Mills) [2020] NZHC700.171 Morrison, above n 5, at [142].172 Lankow v Rose [1995] 1 NZLR 277 (CA).[110] Ms Levy forwarded to the Court copies of those submissions (which were notbefore the Tribunal, so were not included in the Case on Appeal). Ms Levy indicatedthat the Schmidts had not addressed that argument in their written submissions, butMr Woodhouse indicated that he had on behalf of the Schmidts addressed it in oralsubmissions in closing at the trial.[111] As summarised by Tipping J, the four requirements of such a trust are that theclaimant must show:173(a) Some contributions, direct or indirect, to the property in question.(b) They had an expectation of an interest in the asset.(c) Their expectation was reasonable in the circumstances.(d) The defendant should reasonably expect to allow the claimant aninterest. The question is not whether the defendant was willing to allowan interest or expected to have done so, but whether they shouldreasonably expect to do so.[112] The thrust of the Lankow v Rose submissions made on behalf of Mr Garrity inthe High Court was that the contribution must "manifestly exceed" the benefits thecontributor has received and, in this case, there was no such contribution, either by thereduction of the purchase price of the properties, nor by the plaintiffs paying rent andoutgoings on the properties.[113] The Judge expressly considered that the sales were at a significant pricediscount, but he also found there were benefits that accrued to the Schmidts in orderfor that to occur. In any event, the findings of the Judge that there was an outright saleundermine any argument that the Schmidts could have had an expectation of aninterest. Any expectation of an interest would not be reasonable.173 At 295.[114] Therefore, the factual findings at trial could not support any argument of aconstructive trust, whether by virtue of an understanding or agreement that theproperty be held on trust or an undertaking to hold the property on trust or acontribution giving rise to a reasonable expectation as in the Lankow v Roseformulation.[115] A substantial difficulty for the appellant on appeal is that the findings as tocredibility permeate the decision. In addition, the Judge reviewed thecontemporaneous documentary evidence and he found on his analysis it supported thecredibility findings against the Schmidts. It was for the Judge to accept or reject therelevant evidence, evaluate it and place such weight on it as he considered appropriate.[116] The Tribunal did not err in its rejection of the submission that the credibilityfindings made by the Commissioner were flawed because the Commissioner hadplaced weight on the credibility effect of the fabricated declaration of trust documents.The Tribunal made no error in stating:174 Whilst the applicant seeks to compartmentalise these findings and arguethey are irrelevant to the remaining causes of action, I do not consider that istenable on an appeal given the credibility findings are so firm (and sowidespread). The fabrication of this central document will taint the remainingcauses of action. The finding undermines the thrust of the applicant's case,that the properties were transferred to be held on trust for her, whether expressor otherwise. The Commissioner did not err in recognising this reality.[117] The appellant applies an artificial and unduly narrow interpretation on theJudge's words referring to his conclusions being based "primarily on the logic of thecase and the contemporaneous documents".175 As the Court of Appeal has noted, whenlooking at the "prospects of success", the approach is to make an overall assessmentby standing back and looking at the litigation prospects in the round.176 The factualfindings in the High Court in this case are dependent on findings of credibility, valuejudgments and evaluation of the evidence overall. This is a case where the trial Judgehad the benefit of seeing and hearing the witnesses and was in a better position to makean overall assessment of the evidence as a whole than an appellate Court. The Tribunal174 Tribunal decision, above n 1, at [34].175 High Court decision, above n 2, at [110].176 (Meredith) JMM, above n 12, at [53].made no error in its consideration of the credibility comments made by theCommissioner.[118] Nor did the Tribunal make any error in its conclusions on the constructive trustargument. In order to succeed in any formulation of the constructive trust argument,the appellant had to establish either an agreement to hold the relevant property on trust,an undertaking to hold the property in trust or a contribution giving rise to a Lankowv Rose type trust (even if this was before the Court). None of those were establishedon the facts.[119] The Tribunal made a realistic assessment when it said the appellant on reviewwas seeking to "dissect the text of many individual emails" but that doing so was "notconducive to establishing good prospects sufficient for an appellant grant of legal aid.As the Judge noted, it is the preponderance of the evidence, as well as the thrust andlogic of the case that are important."177[120] The Tribunal also pointed out, the Judge had made his findings "after seeingand hearing the protagonist", and that "at its 'highest point' it could be said there wasa general understanding, but no more than that, if, in the future, [Mr S] was in aposition to repurchase the properties, [Mr G] would deal with him".178 Overall, thereis nothing that has been pointed to which cogently suggests Mr G misrepresented tothe applicant that he would hold the properties on trust, followed by a later denial."179The Tribunal also noted that Morrison was merely an illustration of an institutionalconstructive trust in circumstances where evidence of its existence was credible andaccepted.180 The appellant has not pursued this appeal on the basis of the Tribunal'srejection of a reconsideration based on Morrison.[121] The Tribunal did not specifically consider the Lankow v Rose argument thatwas made before this Court. However, based on the factual findings of the High Courta Lankow v Rose argument would not have any chance of success. In any event, it isnot clear whether that argument was pursued by the appellant as a standalone claim at177 Tribunal decision, above n 1, at [39].178 At [40].179 At [40].180 At [46].trial. Although referred to by Mr Garrity's lawyer in his High Court submissions, itwas not mentioned by Venning J in the judgment. It does not appear to have been partof the submissions made to the Commissioner or the Tribunal, nor was it mentionedin the notice of appeal.181Issue 2: Failure to engage in the detail of the appellant's submission to theCommissioner and the Tribunal[122] Ms Levy pointed out that, compared to the voluminous submissions ofMs Schmidt provided by Mr Woodhouse to the Commissioner and the Tribunal, boththe Commissioner's decisions and that of the Tribunal were short. For instance,Mr Woodhouse's submissions providing further information to the Tribunal in supportof the first application for legal aid182 on appeal amounted to 31 pages. The secondreconsideration application amounted to 18 pages183 and the submissions in support ofthe application for review were 30 pages long.184[123] Ms Levy points out that the Commissioner's first decision, dated 27 October2020, was only a page and a half long.185 Ms Hansen explained that its brevity wasbecause the full reasons were not included in that decision for some reason. However,the decision of 21 December 2020 was eight pages and the second reconsiderationdecision, which referred to the Morrison judgment was three pages long.[124] The Tribunal decision was succinct; however, it covered all the relevant points.It said the applicant sought to compartmentalise fine points. In particular, it noted thatVenning J concluded that no constructive trust existed because the transfers of theproperties were "outright sales" and there was no agreement that the properties wereto be held on trust.186 The Tribunal recorded the challenge to the Judge's assessmentwas based on emails, when it said:[38] The appeal seeks to challenge the Judge's assessment of the wordingof an email on 13 March 2018 in which Mr G referred to "holding" theproperties. The applicant submits the use of this word is consistent with the181 Notice of appeal (27 July 2021).182 Letter from Woodhouse Legal to Ministry of Justice, Legal Aid (17 August 2020).183 Letter from Woodhouse Legal to Ministry of Justice, Legal Aid (24 October 2020).184 Submissions in support of application for review (17 March 2021).185 Letter from Ministry of Justice, Legal Aid to Woodhouse Legal (27 October 2020).186 Tribunal decision, above n 1, at [37].properties being "held on trust" (rather than ownership). However, I do notconsider the prospects of the Court of Appeal reaching a different view toVenning J are particularly strong. The Judge found passages of the email hadbeen deliberately omitted by the applicant, and the omissions supported Mr Gand E Ltd's case. Perhaps more importantly, there was other correspondencewhich was consistent with Mr G owning the properties, such as him referringto the applicant and Mr S being in a position to "purchase [them] back" fromhim. Further, as the Judge commented, if Mr S believed E Ltd was holdingthe properties as trustee, he would have expected him to have raised it in 2008when Mr S's relationship with Mr G was deteriorating. There was, however,no contemporaneous comment in any of the various email communicationsthat E Ltd held the properties on trust, nor did Mr S seek to terminate E Ltd astrustee at any time.[39] Although the applicant on review seeks to dissect the text of manyindividual emails in a similar fashion, doing so is not conducive to establishinggood prospects sufficient for an appellant grant of legal aid. As the Judgenoted, it is the preponderance of the evidence, as well as the thrust and logicof the case that is important.[125] The Tribunal was not required to engage with every point raised byMr Woodhouse in his submissions to the Commissioner and the Tribunal. TheTribunal grasped the essence of the submissions. The Judge had made an assessmentbased on the credibility findings and the documents which he said supported the logicof the transactions as a whole. That is the point made by the Tribunal. The Woodhousesubmissions might have been detailed; however, they were matters that had beenbefore the Judge and considered. There was no requirement for the Tribunal to engagein the detail. In fact to do so would not have been in keeping with its function.[126] The arguments that the appellant sought to raise in support of the fiduciaryrelationship were, as the Tribunal noted, the same that had been pursued at trial. In theTribunal's assessment they did not modify the position in any material way. It madeno error of law in that conclusion.[127] The Tribunal correctly 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 for theappeal. The Commissioner did not err in law in so concluding. Nor was hisdecision manifestly unreasonable.[128] The Tribunal went on to note the comments in the subsequent costs decisionabout the fact the case "could have gone either way" and that Mr Schmidt's case "wasnot hopeless" did not support there being sufficient prospects of appellate success.187[129] The Tribunal also dealt with the other criticisms made by the appellant aboutthe Commissioner's comments as follows:188[52] Second, the applicant submits the Commissioner on two occasionsdrew conclusions without any evidential basis, demonstrated by thesecomments:(a) "We believe the reason [the applicant and Mr S] created thedeed was because they recognised their claim could notsucceed without a pivotal document, and so they forged one";and(b) "We believe, given [Mr S's] property and investor experience,he would have ensured there would be formal documents inplace which clearly showed the transfer of the properties to [ELtd] was on the basis they were being held on trust by [E Ltd].No such documents exist".[53] I consider these were reasonable comments to make, and theCommissioner was entitled to draw these inferences, consistent with this taskin assessing the appeal's prospects of success. In any event, when read as awhole, I do not consider the Commissioner placed any degree of weight onthese matters.[130] The Tribunal made no error of law in reaching that conclusion. The commentscomplained of were justified in terms of the High Court decision findings and in anyevent they were not matters significant to the overall conclusion of the Commissioner.[131] A further matter raised by the appellant was that the Commissioner failed toengage with the legal opinions provided by Professor Peart and Ms Levy and that theCommissioner failed to provide funds for a second legal opinion.[132] There was no need for either the Commissioner or the Tribunal to specificallydeal with the opinions of Professor Peart and Ms Levy.187 At [51].188 At [52]–[53].[133] Professor Peart's opinion was provided to Mr Woodhouse over the phone,based on the facts provided to her. According to Mr Woodhouse, Professor Peart: considered that it is conceivable that another Judge (or Judges of the Courtof Appeal) will come to the opposite conclusion to that of Venning J, and thatthe properties were not sold outright to Mr Garrity but instead were transferredin circumstances where there is an arrangement of trust between the parties.Professor Peart's opinion appears to have been based on an understanding of the factsput forward by Mr Woodhouse which were also put forward to the Tribunal. Apartfrom being in very general terms the legal analysis was dependent on the Judge'sfactual findings being set aside. Similarly, Ms Levy's opinion was brief.[134] The views in the two opinions were dealt with by the Tribunal, although not byreference to the respective legal opinions.189[135] In relation to the complaint that the Commissioner failed to fund a second legalopinion, Ms Hansen indicated that it was exceptional for the Commissioner to fundsuch an opinion. There was no detailed argument before me about why this was anexceptional case, nor was there any detailed argument based on that ground. Thenotice of appeal formulation of that ground is:[14] That the Tribunal erred in law in failing to consider the Appellant'ssubmissions that the Respondent was manifestly unreasonable in failing totake advantage of the offer made by Queen's Counsel, Nicolette Levy QC, toreview the Appellant's case and provide an opinion to the Respondent on theAppellant's prospects of success [136] Without evidence, or at least detailed submissions on this point, this cannot betaken further.[137] The applicant, in its submissions in reply, characterised the failure of theCommissioner to accept the offer of "a QC to review a complex case such as this" as"again giv[ing] rise to concerns of pre-determination."190 It went on to say that the189 Given the brevity of the comments in relation to Professor Peart's views, conveyed toMr Woodhouse by phone, I do not consider it can be characterised as a legal opinion in thecircumstances.190 Submissions on behalf of the applicant in reply (4 May 2021) at [23].approach flew in the face of "standard procedure" and must be regarded as manifestlyunreasonable or wrong at law.191[138] If the issue was one of predetermination by the Commissioner it was not arguedas such before me. There is no basis for such an argument. I dismiss that ground ofappeal.[139] I have analysed the appeal around the two main issues. However, under theseissues the appellant ran numerous grounds of appeal which I now deal with. Turningto the detailed grounds of appeal:(a) Ground 1 that the decision is wrong in law: I have concluded that theTribunal decision is not wrong in law.(b) Ground 2 that the Tribunal erred when framing the essential questionwas to assess the appellant's prospects of success in her appeal, whenits role is to determine whether the Commissioner's decision was eithermanifestly or unreasonable or wrong in law: Both the Commissionerand the Tribunal are required to assess the appellant's prospects ofsuccess at some level. They both did so. The Tribunal made no errorin that regard.(c) Ground 3, relating to the credibility findings: The Tribunal made noerror in its finding that the Commissioner properly took into accountthe credibility findings, including the effect of the fabrication of thedeclaration of trust deed, in his assessment of all the causes of action.This did not amount to taking into account an irrelevant matter. TheTribunal made no error.(d) Grounds 4, 5, 7 and 12: Failure to consider evidence.(i) The fourth ground was that the Tribunal erred in law whendetermining that the Commissioner had not erred, by holding191 At [23].that "there was no evidence that Mr G and E Ltd agreed to holdthe properties on trust".192 To this, the appellant says that hersubmissions on review showed detailed evidence supporting theproposition that the properties were held on trust.(ii) The fifth ground is that the Tribunal erred in stating there wasno contemporaneous email correspondence that "E Ltd held theproperties on trust",193 when the appellant's submissions filedon the review application referred to such communications.(iii) The seventh ground is that the Tribunal erred in stating nothingthat had been pointed to had suggested that "Mr Gmisrepresented to the applicant that he would hold theproperties on trust followed by a later denial".194 The appellantsays the Tribunal misstated a test that was "definitive and toonarrow" for when an institutional constructive trust may arise,and that the appellant had referred to the supporting evidence.(iv) The twelfth ground is that the Tribunal erred in accepting thatthe Commissioner was entitled to draw inferences relating towhy the deed was forged and that Mr Schmidt would haveensured there were formal documents. The appellant said thiswas without an evidential basis and that the Tribunal was inerror to say that the Commissioner had placed no weight on suchmatters, when in the Commissioner's first consideration, thereason as to why the deed was forged, he said it was a"fundamental problem".(v) These are all matters of detailed evidence. I have specificallydealt with some of these grounds. However, in general terms theJudge made findings based on what evidence (including the192 Tribunal decision, above n 1, at [37].193 At [38].194 At [40].parties' testimony) he accepted and had placed on the evidencesuch weight as he considered appropriate. The real thrust of theappeal challenges that evaluation and analysis by that Judge.(vi) The Tribunal was not in error in accepting the Commissioner'sdetermination that the Commissioner had properly consideredthe prospects of success and that the fact the applicant could putforward arguments was "not synonymous with them having anyparticular prospects of success".195 The challenge is to thefactual findings in the judgment. The Tribunal made no error infinding that the Commissioner did not err in law in thatconclusion, nor was his decision manifestly unreasonable.196(e) Grounds 6, 10, & 11: Misconstruing/failing to consider counsel'ssubmissions.(i) The sixth ground is that the Tribunal misconstrued theappellant's submissions by stating the appellant sought todissect emails rather than focus on the submission that thepreponderance of the evidence, which was in fact the appellant'spoint. By "dissecting" the emails, the appellant wasdemonstrating an alternative "thrust and logic" of the case tothat adopted by Venning J. The appellant submits that theappeal to the Court of Appeal will be by way of rehearing, wherethat Court will come to its own views of the facts, and thereforethat Court will be in exactly the same position as Venning J tomake findings.(ii) The tenth ground is that the Tribunal misconstrued theappellant's submission that it was "rooted in the minutiae ofemails and documents" and that the appellant having argumentswas not synonymous with any particular prospects of success.195 At [50].196 At [50].Additionally, that the Tribunal failed to determine that theCommissioner's decision was wrong at law by failing toconsider those arguments.(iii) The eleventh ground is that the Tribunal erred in failing toconsider that the Commissioner erred when he selectively choseaspects of the costs decision to support the decision to declinelegal aid, and when categorically stating that "[Mr S beingunable prove their case] will not change in the Court of Appeal".The appellant says the Tribunal is substituting its decision as tohow the Court of Appeal would determine the appeal:(iv) As is apparent the findings of the trial Judge were largely basedon credibility supported by an evaluation and analysis of thedocumentary evidence. The appellate Court in this case willhave a disadvantage in not seeing and hearing the evidence.This is not a case where the determinations can be based on ananalysis of the documents alone.[140] It is correct that assessing what the Court of Appeal might decide is not the roleof the Tribunal. However, the Tribunal's function is to review the Commissioner'sdecision, which is directly related to the "prospects of success" of the appeal. In thecosts judgment Venning J made comments that the proceedings were not hopeless andthe claims were arguable.197 However, that adds nothing to the arguments on appeal.The costs comments were made in the context of an application by the defendants forincreased or indemnity costs. The Judge's view that the case was arguable at firstinstance so would not attract a costs uplift does not add anything to the likely prospectson appeal.[141] The eighth ground is that the Tribunal failed to consider the appellant'ssubmission that the Commissioner was wrong in law by failing to consider thatVenning J had misapplied the legal test for when a fiduciary relationship would arise.The appellant submits that a fiduciary duty can arise where trust and confidence is197 Costs judgment, above n 132, at [14].reposed in a person — in this case, by the Schmidts in Mr Garrity. The ninth groundis that the Tribunal erred when determining that Mr Garrity's handling of sums ofmoney and having access to the Schmidt's bank account was immaterial to thefiduciary relationship. The respondent points out in submissions that this ground isentirely dependent on whether evidence supports the claim. The evidence is notavailable as the viva voce evidence of the Schmidts undermined this argument. TheTribunal made no error in not engaging with these grounds in detail.[142] Ground 15 related to unfair process but is now abandoned as a ground forappeal.[143] The thirteenth ground relates to failing to consider the appellant's submissionthat the Commissioner had no regard to the views conveyed by Professor Peart andMs Levy on the prospects of success. The fourteenth ground is that the Tribunal failedto find it manifestly unreasonable that the Commissioner failed to take advantage ofMs Levy's offer to review the appellant's case and provide an opinion. I have dealtwith those grounds above.Overall analysis[144] The Tribunal did engage with the appellant's alternative view, although not inthe detail that the appellant considered was appropriate. The Tribunal was not requiredto do so. It gave succinct but sufficient reasons for its determination on review.Nothing more was required.[145] As is apparent, despite the numerous grounds of appeal and detail over theclaimed errors of law they broadly fell into the two areas that I have analysed above.[146] The appellant has not established any error of law made by the Tribunal.[147] All grounds of appeal are dismissed.Costs[148] Counsel advised me that no orders as to costs were sought as Ms Schmidt islegally aided and the Commissioner is funding this appeal in any event.Grice JSolicitors:Nicolette Levy Queens Counsel, WellingtonLisa Hansen Barrister, Wellington