C v Legal Services Agency HC Wellington Ap327/99

[2001] NZHC 355

IN THE HIGH COURT OF NEW ZEALAND
WELLINGTON REGISTRY AP327/99

UNDER the Legal Services Act 1991 s 136

IN THE MATTER of an appeal by [MCB] against a decision of the Legal Aid Review
Authority confirming a charge on compensation recovered

BETWEEN MCB of [C], Beneficiary
Appellant

AND THE LEGAL SERVICES AGENCY being a Body Corporate instituted under section 91 of the Legal Services Act 2000
Respondent

Hearing: 7 May 2001

Counsel: R G Glover for Appellant
G D S Taylor for Respondent

Judgment: 10 May 2001

JUDGMENT OF CHISHOLM J

Solicitors: Glover Sewell, Christchurch for Appellant
Bartlett Partners, Wellington for Respondent (Counsel: GDS Taylor)

[1] This is an appeal pursuant to s 136 of the Legal Services Act 1991 against a decision of the Legal Aid Review Authority dismissing an appeal from a decision of the Canterbury District Legal Services Subcommittee. In terms of that section this appeal is confined to points of law.

Background

[2] In 1997 the appellant was arrested for shoplifting, and taken in an intoxicated condition to the [C] Central Police Station where she was placed in a cell. She alleges that during the early hours of the following morning several police officers forcibly removed a cigarette lighter which she had placed in her vagina as a protest against her treatment. Later an apology was conveyed to her by a senior member of the police force.

[3] Proceedings were issued against the Attorney-General. The appellant was impecunious and legal aid was granted. Later this was extended to enable a psychiatric report to be obtained. A settlement was achieved before trial on the condition that the terms of settlement were to remain confidential.

[4 When the plaintiff’s solicitors reported to the Legal Aid Unit they advised that they were unable to disclose the sum involved although they did indicate that it was not a large amount. They also advised that they were holding $5,000 in their trust account to cover any charge that might be imposed in respect of total costs which amounted to $4,791.04. In support of their request for an exemption from any charge they said:

“a lone woman was effectively sexually violated by digital penetration by police officers acting in the execution of her [sic] duty. She was also assaulted and had many of her other rights seriously violated, which ought to have been out of the question in that environment. To say that she was traumatised by the experience is an understatement. I enclose a copy of Dr Brinded’s report, which may assist you to see why I am asking that the relatively modest sum of compensation awarded to her be not now removed by way of charge.”

The Subcommittee responded by advising that details of the settlement had to be received by the Subcommittee before anything else happened which prompted the plaintiff’s solicitors to write again reiterating that the confidentiality stipulation precluded disclosure.

[5] In due course the Subcommittee determined that there was to be a charge in the sum of $4,000. The appellant appealed to the Authority. A report provided by the Subcommittee to the Authority stated:

“Ms [B] was granted legal aid for a civil claim against the New Zealand Police relating to Battery, Breach of Section 21 & 23(5) New Zealand Bill of Rights Act 1990 and International covenant on Civil and Political Rights Article 10(1), Invasion of bodily integrity, Breach of Statutory Duty Section 57A(1) Police Act 1958, Pain and Humiliation, Nervous Shock.

In signing the application form she acknowledged that a Charge may apply over property or proceeds recovered as a result of the proceedings. Her solicitors were advised again by letter of 11 June 1998 that a charge would apply over settlement proceedings. At that stage no bills were received for payment, but total remuneration had been set down at $2500.00

A settlement was reached in April. Part of the settlement was strict confidentiality as to the terms. We were advised by Mr Glover, solicitor of the legally aided person, that sufficient funds to cover the entire bill as submitted had been retained in their trust account.

The Subcommittee determined that a full charge was to apply because no circumstances were disclosed as to the settlement and the financial position of the legally aided person which justified exemption.

The circumstances of the claim do not govern whether exemption from charge is appropriate. The fact the Police were the Defendant is also highly irrelevant.”

Subsequently the Solicitor-General authorised disclosure of the settlement sum to the Subcommittee and Authority. While the amount has also been disclosed to this Court I refrain from mentioning it on account of the suppression order that I have made.

[6] The Authority’s decision is brief. Having touched on the history of the matter and to the primary argument advanced by each side the decision continued:

“The Court in Bates had noted that a grant of legal aid was considered to be by way of a loan to assist persons who are otherwise unable to take proceedings and that on completion the legally aided person could be liable to repay the loan out of any funds recovered as a result of the proceedings.

We agree with Ms Taylor’s submission that a similar situation arises in this case. We consider that the Subcommittee took a sympathetic view of the appellant’s position and that there were no circumstances which took it outside the ordinary run of similar cases. We consider that it was just and equitable to impose the charge of $4,000.”

It is claimed by the appellant that this decision gave rise to four grounds of appeal which focus on the last two paragraphs contained in the Authority’s report and the above paragraphs of the Authority’s decision. Each ground of appeal will now be considered.

First Ground of Appeal

[7] It is claimed that the Authority erred by completely failing to advert to the Subcommittee’s first stated reason for refusing an exemption, namely:

“. . . a full charge was to apply because no circumstances were disclosed as to the settlement and the financial position of the legally aided person which justified exemption.”

Mr Glover’s point was that to the extent that the Subcommittee had complete information as to the appellant’s financial situation this line of reasoning was inaccurate and the Authority should have picked up on that point.

[3] In my opinion this ground does not have merit. It seems to me that the Subcommittee was recording two matters: first, that details of the settlement had not been disclosed, and, secondly, that in the absence of that information it did not have a comprehensive picture of the appellant’s financial situation. Both those observations were perfectly accurate. In my view Mr Glover is attempting to read too much into the Subcommittee’s report.

Second Ground Of Appeal

[9] This ground of appeal focuses on the next component of the Subcommittee’s reasoning:

“The circumstances of the claim do not govern whether exemption from charge is appropriate. The fact the police were the defendant is also highly irrelevant.”

Mr Glover’s complaint is that the Authority should have identified that the Subcommittee’s approach was wrong in law to the extent that it ignored the personal circumstances of the appellant. He noted that in its own decision (45/93; 16 February 1993, Wellington) the Authority had stressed that the personal circumstances of an appellant are “very relevant” in considering whether it would be just and equitable to grant an exemption.

[10] While Mr Taylor acknowledged that personal circumstances are relevant to the discretion conferred by s 45(4), he claimed that this issue had not been reflected in any of the submissions before the Subcommittee or Authority and was now out of bounds. He argued that at those earlier stages the appellant had concentrated on entirely different issues.

[11] Section 45(4), which governs the discretion to grant an exemption, provides:

“A District Subcommittee may grant an exemption under this section only if, having regard to the value or nature of the property and to all other relevant circumstances, it is of the opinion that it would be just and equitable to do so.”

In Bates v Legal Services Board [1999] NZAR 91 at p 95 the Full Court noted that the exemption falls within a relatively narrow scope, that a charge is the norm, and that an exemption is the exception. It also observed that that the words “just and equitable” are to be construed against the payment/refund regime imposed by the Legal Services Regulations. I agree with all those observations and keep them in mind when determining this ground of appeal.

[12] There can be no doubt that in this case the appellant’s personal circumstances were included in the statutory expression “all other relevant circumstances”. In other words, they were to be taken into account when determining whether it would be just and equitable for an exemption to be granted on this occasion. On the face of the reasons given by the Subcommittee for its decision the appellant’s personal circumstances were not taken into account by the Subcommittee. Highly relevant information was contained in the psychiatric report. That report drew attention to her situation as a victim of child abuse and of rape on two occasions later in life (one of which was extremely violent); her cognitive problems due to brain damage; and her inability to work over the last ten years. There is no indication that the Subcommittee turned its mind to this report or to the highly relevant information contained in it and this constitutes an error of law (Mendelssohn v Centrepoint Community Growth Trust [1999] 2 NZLR 88 (CA) at p98) which affected the validity of the Subcommittee’s exercise of discretion pursuant to s 45(4).

[13] The appellant was entitled to expect that this error would be rectified by the Authority. Instead the Authority approached the matter on the basis that the Subcommittee had taken a “sympathetic view” of the appellant’s position and that there were no circumstances which took it outside the “ordinary run” of similar cases. Obviously it also erred in law by overlooking the deficiency in the approach taken by the Subcommittee. In all the circumstances it was not sufficient for the Authority to approach the appeal to it on the basis that the matter was governed by Bates v Legal Services Board. As I read that decision the issue of failing to take personal circumstances into account did not arise on that occasion. Consequently Bates is distinguishable.

[14] In arriving at that conclusion I have not overlooked Mr Taylor’s submission to the effect that the failure to raise the personal circumstances issue ruled it out of consideration at this stage. In my opinion the appellant’s personal circumstances were before the Subcommittee from the outset. Indeed, the Subcommittee granted aid for the psychiatric report to be obtained to enable the appellant’s present condition and future prospects to be assessed. Moreover, the appellant’s solicitors specifically directed the committee’s attention to the psychiatric report and her traumatised condition. They were not under any obligation to go further and explain to the Subcommittee how it should discharge its statutory responsibilities. It follows that the personal circumstances issue was also before the Authority (which had the Subcommittee’s complete file) and should have been addressed by it.

Third Ground Of Appeal

[15] The third ground of appeal focuses on the “just and equitable” component of s 45(4). By the time the appeal was considered by the Authority it was aware of the terms of the settlement. Mr Glover contended that under those circumstances the Authority was under a duty to consider that information rather than simply ignore it.

[16] In response Mr Taylor argued that the appellant was effectively the author of her own misfortune. Initially she declined to provide the information. Once it was provided the Subcommittee had made its decision and the Authority was only required to consider the exercise of the Subcommittee’s discretion. He encouraged the Court to adopt a principled approach. In any event, he said, the value of the property is a mandatory consideration under s 45(4) and in the absence of that information the Subcommittee could not grant a valid exemption.

[17] With the benefit of hindsight it would have been much simpler if the solicitors for the plaintiff had approached the Solicitor-General at an earlier stage. But it is easier to be wise afterwards. This Court must deal with the situation as it actually developed. The nub of the matter is that the Subcommittee did not have the information but the Authority did.

[18] Section 132 defines the role of the Authority when considering an appeal from the decision of a Subcommittee:

“132. Powers of Authority on appeal- (1) The Authority shall hear and determine every appeal against a decision of a District Subcommittee as if the District Subcommittee had been made in the exercise of a discretion.

(2) On any appeal to the Authority against the decision of a Subcommittee, the Authority shall have all the powers of a District Subcommittee, and may confirm, modify or reverse the decision appealed against.

. . .”

Usually an appeal will be determined on the basis of the information before the Subcommittee. In this case, however, the Authority was seized of information vital to the proper exercise of the s 45(4) discretion which was not before the Subcommittee. If the “just and equitable” foundation of the discretion was to be honoured I do not think that the Authority was entitled to ignore the information (as appears to have been the case here) To my mind the statutory regime was wide enough to enable the authority to assess the matter having regard to the additional information available to it. If it was not prepared to adopt that approach then it certainly had the power under s 133 to refer the matter back to the Subcommittee for reconsideration. In the unusual circumstances of this case failure to follow either of those courses constituted a further error of law.

Fourth Ground Of Appeal

[19] To a large extent this ground of appeal revolves around whether Bates v Legal Services Board was correctly applied by the Authority. For reasons already expressed I am satisfied that this criticism has some merit, but this ground does not really add anything to the earlier grounds of appeal and does not require further consideration.

Remedy

[20] Counsel have sensibly agreed that if the appeal succeeds three possible solutions might need to be considered:

(a) Refer the matter back to the Authority for reconsideration.

(b) Refer the matter back to the Legal Aid Agency.

(c) Determination by this Court.

Several factors prompted them to raise the second and third possibilities: first, the Authority will cease to exist next month; secondly; the small amount of the charge involved compared with the considerable expenditure incurred to date in resolving the charge issue; thirdly, the risk of a further treadmill arising if the matter is referred back; and, fourthly, the personal circumstances of the appellant which have been explained by Mr Glover and do not require repeating.

[21] This appeal has succeeded. Errors of law have arisen at both the Subcommittee and Authority levels. In the normal course of events reference back to the Authority would be appropriate. But in the unusual circumstances that prevail here I believe it to be desirable for this Court to make a final decision and that it is competent to do so by virtue of Rule 718A of the High Court Rules. When all factors (including the size of the settlement) are taken into account I am of the opinion that it would be just and equitable to wholly exempt the proceeds of settlement from the charge.

Outcome

[22] The appeal is allowed. The decisions of the Subcommittee and Authority are reversed and the charge is cancelled. It is not clear to me whether the appellant is legally aided in relation to this appeal. I assume that this is the situation and that no issues arise. However, I take the precaution of reserving leave for either party to apply further.