Criminal Bar Association of New Zealand Inc v Attorney-General
[2013] NZCA 176
•24 May 2013
| IN THE COURT OF APPEAL OF NEW ZEALAND |
| CA606/2012 [2013] NZCA 176 |
| BETWEEN THE CRIMINAL BAR ASSOCIATION OF NEW ZEALAND INCORPORATED |
| AND THE ATTORNEY-GENERAL |
| AND STUART WHITE |
| Hearing: 25 October 2012 |
| Court: Randerson, Stevens and Wild JJ |
| Counsel: R E Harrison QC, G M Illingworth QC and K H Cook for Appellant |
| Judgment: 24 May 2013 at 11 am |
JUDGMENT OF THE COURT
AThe appeal is allowed, to the extent that we hold:
(a)The Secretary for Justice acted unlawfully in implementing the Criminal Fixed Fee and Complex Cases Policy, in that it is inconsistent with the Legal Services Commissioner’s independent functions under the Legal Services Act 2011.
(b)The Criminal Fixed Fee and Complex Cases Policy and Procedures is also unlawful, in that it unreasonably fetters the discretions imposed in the Legal Services Commissioner by ss 16, 23 and 28 of the Legal Services Act 2011.
BWe make declarations accordingly.
CAny decision on further relief is reserved, for application by way of memorandum if sought.
DThe appeal is otherwise dismissed.
EThe costs of the appeal are reserved.
____________________________________________________________________
REASONS OF THE COURT
(Given by Wild J)
Table of Contents
| Para No | |
| Introduction | [1] |
| Background | |
| Concern over the rising cost of legal aid | [7] |
| Government initiates a fundamental review of legal aid | [8] |
| Bazley Report | [9] |
| Cabinet decisions following the Bazley Report | [14] |
| Cabinet approves the fixed fee regime and high cost case management | [21] |
| Development and implementation of the Fixed Fee Policy | [23] |
| The 2011 Act | [30] |
| The questions on appeal | [38] |
| Question 1: Is the purpose of cost-cutting which supported the introduction of the 2011 Act a proper purpose of that Act? | |
| Relevant provisions | [39] |
| The Judge’s view | [40] |
| Appellant’s argument | [42] |
| Respondents’ response | [45] |
| Our views and decision | [51] |
| Question 2: Is the Fixed Fee Policy inconsistent with the 2011 Act, in particular the Commissioner’s independent functions under the Act? | |
| The Fixed Fee Policy | [64] |
| The Judge’s reasoning | [76] |
| Respondents’ response | [86] |
| Our views and decision | [87] |
| Question 3: Does the Fixed Fee Policy unreasonably fetter the Commissioner’s discretion under the 2011 Act? | |
| The Judge’s reasoning | [105] |
| Appellant’s argument | [115] |
| Respondents’ response | [117] |
| Our views and decision | [118] |
| Question 4: Was the delegation of the Secretary’s powers under the 2011 Act to Mr White when he was also the Commissioner a valid exercise of the Secretary’s powers of delegation? | |
| Appellant’s argument | [127] |
| Our views and decision | [131] |
| Consideration of the remaining questions | [135] |
| Question 5: Is the Fixed Fee Policy unreasonable? | |
| Unreasonableness | [136] |
| The Judge’s view | [137] |
| Appellant’s argument | [143] |
| Respondents’ response | [149] |
| Our views and decision | [152] |
| Question 6: Is the Fixed Fee Policy unlawful, in that the Secretary when developing the Policy failed to take into account rights under the New Zealand Bill of Rights Act 1990 (BORA)? | |
| The Judge’s view | [157] |
| The opposing arguments | [159] |
| Our views and decision | [161] |
| Question 7: Was the Secretary’s decision to implement the Fixed Fee Policy unlawful, in that it gave effect to the 10 per cent reduction in fees directed by Cabinet? | |
| The argument in the High Court | [170] |
| The Judge’s view | [171] |
| Appellant’s argument | [175] |
| Respondents’ response | [180] |
| Our views and decision | [185] |
| Result | [204] |
Introduction
In March 2012, the Government introduced a new framework for criminal legal aid. It comprises fixed fees with an ability to seek amendment of those fees for complex cases. The new fees cut the remuneration of lawyers providing criminal legal aid services by an average 10 per cent.
The appellant, the Criminal Bar Association, represents lawyers practising criminal law in New Zealand. Most of its members are involved in criminal legal aid work. The appellant is understandably concerned at the cut in remuneration, particularly as remuneration rates for criminal legal aid work have been increased only once since 1996. That was in 2008, an 8.5 per cent increase.
The appellant applied to the High Court for judicial review of several of the key decisions involved in the new fees framework. First, it challenged the delegation of powers by the Secretary for Justice (the Secretary) to the second respondent, Mr Stuart White. The new fixed fees ‘regime’ was developed and implemented by Mr White, exercising those delegated powers. Second, it challenged Mr White’s decision, also exercising those delegated powers, to introduce the fixed fees ‘regime’. Third, it challenged the ‘regime’ itself. Fourth, it challenged the policy applying to complex cases – the policy for amendment of the fixed fee. The ‘regime’ and ‘policy’ are incorporated in the Criminal Fixed Fee and Complex Cases Policy and Procedures, promulgated with amendments in June 2012. In this judgment, we will refer to this as the Fixed Fee Policy, or simply the Policy.
The appellant’s judicial review application was heard by Simon France J. In a judgment he delivered on 31 August 2012, the Judge dismissed all of the appellant’s challenges.[1]
[1]Criminal Bar Association of New Zealand Incorporated v The Attorney-General [2012] NZHC 1572 [High Court judgment].
The appellant appeals against the whole of Simon France J’s judgment, pursuing on appeal all but one of the challenges the Judge dismissed.[2]
[2] The challenge not pursued related to inadequate consultation.
In [38] below we set out the seven questions which this appeal requires us to answer. They are best understood if we first provide some background.
Background
Concern over the rising cost of legal aid
In March 2007 Government decisions expanding the eligibility for legal aid were implemented. The resulting increase in legal aid expenditure was greater than anticipated. For the year ended March 2010 it was $172 million, a 55 per cent increase on the $111 million cost for the March 2007 year. Criminal legal aid accounted for 45 per cent of the expenditure — $78 million in the March 2010 year.[3]
Government initiates a fundamental review of legal aid
[3]These figures are given in: Affidavit of Stuart Douglas White in opposition to the interlocutory application for interim relief (2 March 2012) at [50]. Further detail about the increase in legal aid costs is included in the Minister’s paper from which we have quoted in [16]–[20] below.
Government considered that it could not sustain that rising level of expenditure. In March 2009 Cabinet agreed with the recommendation of the Minister of Justice that a fundamental review of the legal aid system be undertaken. Cabinet agreed also with the terms of reference recommended by the Minister. These included:[4]
[4]Cabinet Domestic Policy Committee Minute “Fundamental Review of Legal Aid System” (25 March 2009) DOM Min (09) 4/1 at Appendix.
1.The purpose of this review is to take a first principles approach to reviewing New Zealand’s legal aid system to ensure it:
· delivers legal services to those who need them most
· manages costs effectively and is sustainable
·complements efforts to maintain and improve the effective operation of the justice system, especially the court system
·is consistent with principles of natural justice and New Zealand’s international obligations
·is based on objectives of fairness, efficiency, effectiveness, and quality
· provides value for money
· is simple and low cost to administer.
2.The review must align with Government priorities and take into account the projected fiscal environment of future years. In this respect, a key focus is on developing alternative approaches to manage or reduce costs. Existing models of public and private service provision (including other forms of social assistance) should be considered.
Bazley Report
Dame Margaret Bazley was appointed to chair the review. She submitted her final report and recommendations in November 2009. The report is entitled “Transforming the Legal Aid System” (the Bazley Report).[5]
[5]Margaret Bazley, Chairperson of Legal Aid Review Transforming the Legal Aid System: Final Report and Recommendations (Ministry of Justice, Wellington, November 2009) [Bazley Report].
Amongst the failings of the then current legal aid system identified in the Bazley Report were the inflexible procurement provisions in the Legal Services Act 2000 (the 2000 Act) which prevented the Legal Services Agency (the LSA) procuring services in the most efficient way possible.[6]
[6] At [56].
The Bazley Report expressed the view that the existing funding on a “fee for service” basis did not encourage lawyers to be efficient or innovative, including by resolving a case in the most effective way, was open to abuse, and carried significant administration costs.[7]
[7] At [414]–[416].
The recommendations in the Bazley Report included:[8]
(a)a mix of publicly and privately provided services; and
(b)greater flexibility in the procurement of legal services: the funding model that ensured best value for taxpayers’ money should be used.
[8] Recommendations 68 and 73.
The section of the Bazley Report headed ‘Procurement of Legal Aid Services’ included this paragraph:[9]
In general, I consider that fee for service should be avoided, in favour of other funding models such as bulk funding or fixed fee. Where work volumes permit, I see advantages in bulk funding law firms or groupings of lawyers to provide specified legal services.
Cabinet decisions following the Bazley Report
[9] At [418].
On 14 December 2009 Cabinet invited the Minister for Justice to report to Budget ministers by 30 November 2010:[10]
… with options (including reprioritisation options) to establish a sustainable and affordable baseline for legal aid and community law centres, for consideration in Budget 2011.
[10]Cabinet Minute “Budget 2010: Allocation of the Operating Allowance” (14 December 2009) CAB Min (09) 44/28 at [27].
On 17 December 2009 Cabinet considered the recommendations in the Bazley Report, and made some initial decisions. These included the main decisions to alter the legal aid framework, for example disestablishing the LSA and the Legal Aid Review Panel; transferring responsibility for the administration of the legal aid scheme to the Chief Executive of the Ministry of Justice, and establishing the office of Legal Services Commissioner, with three specified independent functions. The Cabinet Minute includes:[11]
Financial implications
34[Cabinet] invited the Minister of Justice to report to DOM [Cabinet Domestic Policy Committee] by 31 March 2010 on the cost of the proposed changes, with the view to managing the costs from within existing baselines.
[11]Cabinet Minute “Legal Aid Review: Findings and Recommendations” (17 December 2009) CAB Min (09) 45/6B.
In response to Cabinet’s 14 December 2009 invitation ([14] above), the Minister reported to Cabinet on 8 December 2010.[12] The Executive Summary in this report included:
2.Expenditure on legal aid has grown substantially in the past decade, and the rate of growth has accelerated since 2007/08. On 22 December 2009, Cabinet agreed that I would develop a sustainable and affordable baseline for legal aid, in consultation with Budget Ministers [CAB Min (09) 44/28].[13]
…
5.These proposals will reduce forecast legal aid expenditure by $138 million from 2013/14 onwards. They provide an important first step in better managing legal aid expenditure by working within the current design and scope of legal aid. However, there will still be a gap totalling $264 million between forecast expenditure and available baselines (over five years, including 2010/11).
6.Meeting the remaining funding gap requires more extensive changes, which need to be assessed in light of a closer examination of the purpose of legal aid and its relationship to other parts of the justice system. …
[12]Minister of Justice to Cabinet Domestic Policy Committee “Managing the cost of legal assistance in the justice sector” (8 December 2010) [Minister’s Paper].
[13]The date of the relevant Cabinet Minute is 14, not 22, December 2009 – it is correctly given in [14] above.
The Minister’s paper also includes this section:
Legal aid budget
12.Figure 2 sets out expenditure on legal aid since 1998/99 (excluding administration costs). Spending was stable at around $80 million until 2004/05, but rose steadily from then. In particular, expenditure rose from $101 million in 2006/07 to $152 million in 2009/10.
13.The expenditure increase was primarily due to policy decisions to increase eligibility and provide remuneration. However, roughly a third of the growth is due to non-policy factors (e.g. pressure on the Legal Services Agency to use its discretion more generously, increases in the amounts claimed by legal aid providers, and increases in the number and length of court cases).
14.Legal aid funding was demand-driven until Budget 2010 when a decision was made to manage within a fixed limit (equal to 2007/08 expenditure). The gap between the baseline for legal aid and forecast expenditure is rising (set out in Table 3). In response, on 22 December 2009 Cabinet agreed that I would report to Budget Ministers on a sustainable and affordable baseline for legal aid [CAB Min (09) 44/28].
Table 3:Forecast and baseline legal aid expenditure ($ million)
| 2009/10 | 2010/11 | 2011/12 | 2012/13 | 2013/14 | 2014/15 | |
| Legal aid forecast | 166 | 180 | 189 | 198 | 207 | |
| Baseline | 156 | 132 | 102 | 101 | 101 | 101 |
| Difference | 34 | 78 | 87 | 97 | 106 |
Under the heading ‘Price per grant’, the Minister outlined his proposal for fixed fees for “high-volume activities”, primarily criminal summary cases, and agreeing a price for services in advance for high cost cases. The paper then contains these paragraphs:
52.I propose that the new rates be set to manage the price per grant so that it has a lower overall cost than 2010/11. Legal aid providers commonly assert that 20-30% of their time is spent in administrative tasks associated with the legal aid system, primarily relating to claiming and invoicing for fee for service grants. These costs will reduce under a fixed fee regime, because set rates will be paid and the level of work required in administering claims will reduce substantially.
53.Further, the increase in the price per grant over the past decade is in large part due to an increase in the number of hours worked, and it is expected a reduction could be achieved whilst still providing high quality legal advice.
The paper included tables demonstrating how and when the savings necessary to contain legal aid expenditure within the agreed base line would be achieved. An example is the following table (we have included only the two lines in this table which are relevant to this appeal):
Table 7: Savings from proposals to reduce the price per grant ($ millions, negatives indicate a cost)
| Operating | Capital | |||||
| 2011/12 | 2012/13 | 2013/14 | 2014/15 | Total | Total | |
| Fixed fee | 3.0 | 11.0 | 11.8 | 11.1 | 37.0 | (0.7) |
| High cost cases | 2.3 | 4.1 | 4.7 | 4.6 | 15.6 | (0.3) |
The operating and capital costings were explained in paragraph 56 of the paper thus:
56.The costings include implementation costs of $1.7 million (operating) and $4.3 million (capital). These costs are associated with the establishment of the Public Defence Service, the analysis required to price fixed fee, and the system changes necessary to introduce the new purchase regime. The capital costs are indicative because of the reform process already underway and the implementation of a new IT system.
The Minister recommended that Cabinet agree to:[14]
[14] Minister’s Paper, above n 12, at [129].
… a two stage process to establish a sustainable and affordable baseline with:
2.1changes to the current legal aid system to save $138 million over four years; and
2.2further work by November 2011 to address the remaining funding gap by reviewing the purpose of legal aid and associated cost drivers, predominantly in the Family Court.
…
… establish a new purchase approach that will:
13.1establish fixed fees for cases that have more standard cost structures, with prices set to reduce the cost per grant;
13.2establish high cost case management for the most expensive cases, with prices set to reduce the cost per grant;
13.3reduce fee-for-service payments for remaining cases, so that payments are comparable with rates in the new purchase regime.
Cabinet approves the fixed fee regime and high cost case management
On 7 February 2011 Cabinet approved the recommendations the Minister had made in his December 2010 paper.[15] In particular, Cabinet:
(a)approved the expansion of the Public Defence Service so that it dealt with 50 per cent of criminal cases in the centres where it was to operate;[16] and
(b)agreed to establish a new purchase approach that will:[17]
14.1establish fixed fees for cases that have more standard cost structures, with prices set to reduce the cost per grant;
14.2establish high cost case management for the most expensive cases, with prices set to reduce the cost per grant;
14.3reduce fee-for-service payments for remaining cases, so that payments are comparable with rates in the new purchase regime.
[15]Cabinet Minute “Managing the Cost of Legal Assistance in the Justice Sector” (7 February 2011) CAB Min (11) 3/6.
[16] At [11]–[12].
[17] At [14].
The 7 February 2011 Cabinet Minute also records Cabinet agreeing, as part of the Budget 2011 process, to fund the $34.13 million shortfall in legal aid funding in 2010/11.[18] Cabinet noted that the changes it had approved produce a reduction totalling $129.4 million in forecast operating expenditure on legal aid for the three years 2012/13–2014/15.[19]
Development and implementation of the Fixed Fee Policy
[18] At [23]–[24].
[19] At [26].
Soon after Cabinet’s approval in February 2011, a team comprising LSA and Ministry of Justice staff and a private consultancy was set up to develop a fixed fee regime for criminal legal aid. This team was headed by Mr White who, at the time, was General Manager of the LSA. On 21 June 2011 the Secretary delegated to Mr White his statutory functions under the Legal Services Act 2011 (the 2011 Act). That Act had been introduced on 4 August 2010, enacted on 6 April 2011 and was to come into force on 1 July 2011. On 24 June 2011, Mr White was appointed as the first Legal Services Commissioner (the Commissioner) – the new position established by s 70 of the 2011 Act.
From the time the 2011 Act came into force Mr White’s involvement in developing the fixed fees regime was in his capacity as the Acting Deputy Secretary Legal Services of the Ministry of Justice. That was the capacity in which Mr White consulted on the proposed fixed fee regime during September, October and November 2011, including with the appellant. Mr White deposed:[20]
… In December 2011, the final framework of the fixed fees policy was decided by me, as Acting Deputy Secretary under the authority delegated by the Secretary for Justice.
Mr White also deposed that he had not made any decisions relating to grants of legal aid in his capacity as the Commissioner since the introduction of the Policy.[21]
[20]Affidavit of Stuart Douglas White in Opposition to Application for Judicial Review (2 May 2012) at [14].
[21] At [17] of the same affidavit.
Mr White also stated that, as Acting Deputy Secretary, he was responsible for the implementation of the fixed fees framework.[22]
[22]Respondents’ Answers to Interrogatories (signed by Mr White on 5 April 2012), answer to Question 3.4.
From the outset, the development work on the fixed fee framework was based on two “givens”:
(a)it would be a fixed fee system; and
(b)it would need to achieve a 10 per cent saving in the average cost per grant.
The proposed framework was put out for consultation on 22 July 2011. The fixed fee model and overall savings of 10 per cent were non-negotiables. The consultation focused on the appropriateness of the fixed fees allocated to various steps and types of legal proceeding/application. The submissions resulted in adjustments, though the upward adjustments needed to be offset to achieve the required overall savings of 10 per cent.
The new Fixed Fee Policy came into effect on 5 March 2012. We have set out, in [69]–[75] below, those parts of the Policy relevant to this appeal.
The evidence before Simon France J established these points about the working of the new framework:
(a)Pursuant to regulations made under the 2011 Act, approximately the same number of lawyers as under the previous scheme have been approved for each category of criminal legal aid work.
(b)As at 18 May 2012, of the 10,025 applications for criminal legal aid approved under the new scheme, 7,523 had been allocated to private lawyers, 7,455 as fixed fee cases. The balance had been allocated to the Public Defence Service.
The 2011 Act
As we have mentioned, the 2011 Act came into force on 1 July 2011.
The 2011 Act:
(a)repealed the Legal Services Act 2000;
(b)disestablished the LSA, transferring the administration of publicly funded legal services to the Ministry of Justice and providing that the Secretary would be responsible for establishing and delivering those services;
(c)established the office of the Legal Services Commissioner to be responsible for the granting of legal aid;
(d)did not dictate a particular legal aid model;
(e)introduced a new quality assurance and performance management system for those providing publicly funded legal services; and
(f)made administrative changes.
The functions of the Secretary and the Commissioner respectively are set out in Part 3 of the 2011 Act in these important sections:
Part 3 — Administration of legal services system
Subpart 1 — Functions of Secretary for Justice and Legal Services Commissioner
Secretary for Justice
68 Functions of Secretary for Justice
(1) The functions of the Secretary under this Act are—
(a)to establish, maintain, and purchase high-quality legal services in accordance with this Act:
(b)to perform any functions that are conferred or imposed on the Secretary by or under this Act:
(c)to perform any other functions relating to legal services that are conferred or imposed on the Secretary by or under any other Act.
(2)For the purposes of performing his or her functions, the Secretary may—
(a)assess and determine the need for legal services by people with insufficient means; and
(b)specify legal services to which subpart 2 applies; and
(c)determine the method or methods for the delivery of legal services; and
(d)determine the allocation of legal services—
(i)on the basis of the method or methods of delivery that the Secretary considers appropriate for the type of legal service to be provided; or
(ii)in any other manner that the Secretary considers appropriate; and
(e)subject to this Act, disestablish any legal services established under this Act; and
(f)deliver any legal services established under this Act; and
(g)undertake or fund law-related research and education; and
(h)exercise any other power conferred on the Secretary by this Act or any other enactment.
69 Methods of delivery of legal services
Without limiting section 68(2)(c), the methods of delivery of legal services may include—
(a)making arrangements, subject to the Lawyers and Conveyancers Act 2006, for the services of non-lawyers to be made available:
(b)entering into agreements with individual lawyers, groups of lawyers, or law firms for the provision of legal services:
(c)employing salaried lawyers to provide legal services:
(d)entering into contracts with community law centres to provide community legal services.
Legal Services Commissioner
70 Legal Services Commissioner
(1)A person must be appointed under the State Sector Act 1988 to hold office as Legal Services Commissioner.
(2)The person to be appointed Commissioner must be an existing employee of the Ministry or be appointed an employee of the Ministry when appointed Commissioner.
(3)The Commissioner must, except to the extent that section 71(2) applies, act under the direction of the Minister and the Secretary.
71 Functions of Commissioner
(1) The Commissioner has the following functions:
(a)to grant legal aid in accordance with this Act and the regulations:
(b)to determine legal aid repayments where legal aid is granted:
(c)to assign a provider of legal aid services or specified legal services to an aided person:
(d)in relation to salaried lawyers,—
(i)to decide the allocation of cases among salaried lawyers:
(ii)to oversee the conduct of legal proceedings conducted by salaried lawyers:
(iii)to manage the performance of salaried lawyers:
(e)to carry out any other function conferred on the Commissioner by the Minister, by the Secretary, or by or under this Act or any other enactment.
(2)The Commissioner must act independently when performing any function stated in subsection (1)(a) to (d).
Section 72 enables the Commissioner to delegate his functions under the 2011 Act. It is pursuant to such delegation that grants officers make decisions on applications for criminal legal aid.
The main functions conferred or imposed on the Secretary by the 2011 Act can be summarised thus:
ss 74–79 – establishment and operation of a quality assurance system for providers of legal aid services;
ss 91–92 – audit of providers of legal aid services;
ss 94–96 – contracting with community law centres for the purchase of community legal services;
ss 97–100 – receiving and paying claims for payment for legal aid services, once those claims are approved by the Commissioner; and
ss 101–103 – enforcement – dealing with payments to a provider being investigated by the performance review committee, and taking action after considering the committee’s advice, including by modifying or cancelling a provider’s approval.
The Commissioner’s independent functions under the Act all relate to the granting of legal aid, including managing the performance of the (salaried) Public Defence Service lawyers who are employed by the Secretary. Although those are independent statutory functions, Mr White described them as “[sitting] within the broader framework in which the Secretary for Justice determines the method of delivery of legal services”.[23]
[23]Affidavit of Stuart Douglas White in Opposition to the Interlocutory Application for Interim Relief (2 March 2012) at [22].
With respect to criminal legal aid, the Commissioner’s independent functions under the 2011 Act can be grouped as follows:
ss 8 and 14–23 – all aspects of granting, or declining to grant, legal aid for criminal matters;
ss 25, 26, 28–29, 31–32 – dealing with legal aid after it is granted, including amendment to or withdrawal of the grant;
ss 33–44 – enforcing conditions of the grant of legal aid. This encompasses recovering payments due, enforcing charges over property, charging interest on unpaid legal aid debts and writing off amounts payable;
ss 51–59 – dealing with applications for reconsideration of the Commissioner’s decision, providing information to the Legal Aid Tribunal if review of the Commissioner’s reconsideration is sought, reconsidering if directed by the Tribunal, and appealing to the High Court if the Commissioner considers the Tribunal’s determination is wrong in law;
ss 89–90 – examining claims made by providers of legal aid services if they appear excessive, and examining a claim if requested by an aided person; and
s 99 – approving, deferring or declining claims for payment made by a provider.
These powers, particularly those in ss 8 and 14–23, are consistent with the Commissioner’s s 71(1)(a) function “to grant legal aid in accordance with this Act and the Regulations”. That function is to be performed by the Commissioner acting independently: s 71(2).
The Commissioner also has some functions under the Miscellaneous and Transitional Provisions in the 2011 Act eg s 108 Disclosure of information.
The questions on appeal
We consider the appeal can best be determined by answering seven questions. These questions do not correspond to the four issues Simon France J addressed in his judgment. The seven questions result from our separating some of the arguments the appellant put to us. We consider they capture the appellant’s arguments on appeal in the most orderly way. The seven questions are:
Question 1: Is the purpose of cost-cutting which supported the introduction of the 2011 Act a proper purpose of that Act?
Question 2: Is the Fixed Fee Policy consistent with the 2011 Act, in particular the Commissioner’s independent functions under the Act?
Question 3: Does the Fixed Fee Policy unreasonably fetter the Commissioner’s discretion under the 2011 Act?
Question 4: Was the delegation of the Secretary’s powers under the 2011 Act to Mr White when he was also the Commissioner a valid exercise of the Secretary’s powers of delegation?
Question 5: Is the Fixed Fee Policy unreasonable?
Question 6: Is the Fixed Fee Policy unlawful, in that the Secretary when developing the Policy failed to take into account rights under the New Zealand Bill of Rights Act 1990 (BORA)?
Question 7: Was the Secretary’s decision to implement the Fixed Fee Policy unlawful, in that it gave effect to the 10 per cent reduction in fees directed by Cabinet?
Question 1: Is the purpose of cost-cutting which supported the introduction of the 2011 Act a proper purpose of that Act?
Relevant provisions
This argument hinges on two provisions in the 2011 Act. First, s 3 which provides:
3 Purpose of Act
The purpose of this Act is to promote access to justice by establishing a system that—
(a) provides legal services to people of insufficient means; and
(b) delivers those services in the most effective and efficient manner.
Secondly, s 68(1)(a) which provides:
68 Functions of Secretary for Justice
(1) The functions of the Secretary under this Act are—
(a)to establish, maintain, and purchase high-quality legal services in accordance with this Act:
…
The Judge’s view
Simon France J expressed himself to be in general agreement with the respondents, that it is permissible under s 3 to have regard to the overall cost of the scheme. To have as a purpose the reduction of the existing overall cost is not necessarily inconsistent with a statutory purpose of high-quality legal services. There is nothing to say conceptually that one cannot achieve the same or a better outcome for the same or less money.[24]
[24] High Court judgment, above n 1, at [79].
The Judge also considered that efficiency properly incorporates considerations of cost. He explained:[25]
… Part of the rationale for transferring legal aid back to a government department was to assist with control of costs, and it would be very unlikely that a law would be passed that then makes it an irrelevant consideration. One only needs to state the proposition to immediately doubt its correctness. In her report Dame Margaret Bazley spoke of the need to have regard to “responsible expenditure of public monies”. Whilst it is true the Report was interested in the quality of services, it also had things to say about cost.
(Footnote omitted.)
Appellant’s argument
[25] At [80].
For the appellant, Mr Harrison QC first points out that there is no mention in either s 3 or s 68(1)(a) of the expense of providing the “high-quality legal services”, let alone any reference to cutting the cost of those services. The appellant then argues that Simon France J was wrong to infer a statutory purpose of cost-cutting from s 3(b), because “efficient” is not synonymous with “economical”. It contends that the legislature, had it intended the 2011 Act to be a vehicle for cost-cutting, would have said so. Mr Harrison stresses that in s 3(b) it is the delivery of legal services – not their funding – which is to be achieved in the most effective and efficient manner. He draws attention to s 88 which empowers the Ministry to carry out quality assurance checks on providers of legal aid services “to ensure that the services are delivered in an effective and efficient manner”.
The appellant seeks support for this argument by contrasting the 2011 Act with the repealed 2000 Act. Under the latter, one of the functions of the LSA was “to administer schemes in as consistent, accountable, inexpensive and efficient a manner as is consistent with the purpose of this Act” (appellant’s emphasis).[26] Section 68(1)(a) is the comparable provision in the 2011 Act. It is one of the Secretary’s functions.
[26] Legal Services Act 2000, s 92(a).
The appellant argues that cost-cutting is thus not a purpose of the 2011 Act. Indeed, insofar as it detracts from, or is pursued without regard to, the provision of “high-quality legal services”, it runs contrary to the purpose of the 2011 Act and the first of the Secretary’s statutory functions. The appellant also contends that the purpose of cost-cutting has compromised, and overwhelmed, the Secretary’s s 68(1)(a) function.
Respondents’ response
The respondents essentially rely on the reasoning of Simon France J. They submit that the 2011 Act has its genesis in the recommendations in the Bazley Report, and argue that procuring high-quality legal services and cost-cutting are not alternatives. The 2011 Act confers on the Secretary broadly expressed powers to determine the methods of delivery of legal services. The respondents point particularly to the s 3 purpose of promoting access to justice through the legal services to be provided under the Act.
The respondents draw attention to the provisions in the 2011 Act which contemplate, or at least do not proscribe, fixed fees or a payment system other than the previous fee for service based on an hourly rate. The concept of a maximum grant is first referred to in s 16(2)(c), in the context of the Commissioner’s powers on a grant of legal aid. The relevant part of s 16 provides:
16Decision on application for legal aid
(1)On an application for legal aid, the Commissioner may, in respect of the whole or any part of the proceedings or appeal,—
(a) grant legal aid to the applicant; or
(b)grant legal aid on an interim basis until a decision is made under paragraph (a) or (d); or
(c)request further information from the applicant or the proposed lead provider, or both; or
(d) decline the application.
(2)When granting legal aid under subsection (1)(a) or (b), the Commissioner—
(a)must specify the conditions, as described in section 18, attaching to the grant; and
(b) must identify the lead provider; and
(c) may specify a maximum grant.
…
The next relevant provision is s 23 which provides:
23 Maximum grant
(1)A grant of legal aid may specify a maximum grant, which is the amount of legal aid that is authorised under the grant.
(2)A maximum grant may be expressed in any way. For example, it may refer to a total dollar amount, or a maximum number of hours, or a period within which the aid must be provided, or any combination of these or any other specifications.
…
Then there is s 28. The pertinent parts are:
28 Application for amendment to grant of legal aid
(1) An application for an amendment to a grant of legal aid—
(a) must be made by either the aided person or the provider; and
(b)must be made in the prescribed manner to the Commissioner; and
…
…
(3)Following an application for amendment to a grant of legal aid, the Commissioner may confirm the grant or amend it in a manner consistent with this Act and any regulations.
…
A further provision is s 99 which is in that subpart of the 2011 Act dealing with payment for legal aid work. Section 99(3) enables the Commissioner to defer payment of a claim which appears excessive “in light of the Secretary’s standard rates for payment …”.
Finally, the respondents rely on that part of the judgment where Simon France J expressed the view that the appellant had overstated the differences between the old and new systems. These were the Judge’s main points:
(a)Both systems had/have caps on expenditure that could not be exceeded without approval. Thus, under the old system, “there was a type of fixed fee, namely the [applicable] hourly rate x the guideline hours”.[27]
(b)The current fixed fees “represent the average claim over the last year for all legal aid grants for that type of proceeding”, less 10 per cent.[28]
(c)The ability to seek a review remains under the present system, albeit restricted to specific situations.[29]
Our views and decision
[27] High Court judgment, above n 1, at [34].
[28] At [35].
[29] At [36].
This argument is essentially an improper purpose argument: cost-cutting is not a proper purpose of the 2011 Act. Insofar as the Fixed Fee Policy purports to be made under the 2011 Act, the appellant contends it has been made for improper purposes.
Somewhat obviously, we agree with both parties that the purpose of the 2011 Act is that stated in s 3. The parties differ as to what is encompassed by the wording of s 3, or as to what those words mean. The interpretation task is succinctly summarised in this Court’s recent judgment in SMW Consortium (Golden Bay) Ltd v The Chief Executive of the Ministry of Fisheries:[30]
… in interpreting the relevant provisions of the Act, we ascertain their meaning from their text and in light of their purpose.[31] In determining purpose we have regard to both the immediate and general legislative context, as well as the social, commercial and other objectives of the Act.[32] We also recognise that the legislation should be interpreted in a realistic and practical way in order to make it work.[33]
[30]SMW Consortium (Golden Bay) Ltd v The Chief Executive of the Ministry of Fisheries [2013] NZCA 95 at [23].
[31] Interpretation Act 1999, s 5.
[32]Commerce Commission v Fonterra Co-operative Group Ltd [2007] NZSC 36, [2007] 3 NZLR 767 at [22].
[33]Northland Milk Vendors Association Inc v Northern Milk Ltd [1988] 1 NZLR 530 (CA); and JF Burrows and RI Carter Statute Law in New Zealand (4th ed, LexisNexis, Wellington, 2009) at 205.
The leading authority in this country on the improper purposes doctrine is the Supreme Court’s decision in Unison Networks Limited.[34] Delivering the Court’s judgment, McGrath J said:[35]
A statutory power is subject to limits even if it is conferred in unqualified terms. Parliament must have intended that a broadly framed discretion should always be exercised to promote the policy and objects of the Act. These are ascertained from reading the Act as a whole. The exercise of the power will be invalid if the decision maker “so uses his discretion as to thwart or run counter to the policy and objects of the Act”.[36] A power granted for a particular purpose must be used for that purpose but the pursuit of other purposes does not necessarily invalidate the exercise of public power. There will not be invalidity if the statutory purpose is being pursued and the statutory policy is not compromised by the other purpose.[37]
[34] Unison Networks Ltd v Commerce Commission [2007] NZSC 74, [2008] 1 NZLR 42.
[35] At [53].
[36]Padfield v Minister of Agriculture, Fisheries and Food [1968] AC 997 (HL) at 1030 per Lord Reid.
[37]Attorney-General v Ireland [2002] 2 NZLR 220 (CA) at [42]–[43] and Poananga v State Services Commission [1985] 2 NZLR 385 (CA) at 393–394.
In citing that passage, we have not overlooked the subsequent criticism of this Court’s decision in Attorney-General v Ireland[38] by Professor Joseph of Canterbury University. In an article on constitutional law, when dealing with the doctrine of improper purpose, the Professor offered these views:[39]
Ireland represents a wrong turn in the law, and should be overruled.
…
The Ireland ruling subverts Dicey’s first meaning of the rule of law, “government according to law”. Had Parliament wanted DOC to use the reserve as a regional administration centre, it would have said so in the Reserves Act 1977. But it had not done so.
…
The rulings in Ireland were excessive and unnecessary. The improper purpose doctrine has sufficient inbuilt flexibility, without the unprincipled latitude that Ireland accords.
…
The latitude which the Ireland ruling condones compromises the improper purposes doctrine. No public power can be exercised legitimately for an unauthorised purpose. Ireland held that public powers can be exercised for any purpose, as long as the ulterior purpose does not (a) thwart the attainment of the authorised purpose, or (b) frustrate the policy or objects of the Act. The objection this raises is fundamental: in Ireland Parliament had not authorised what the Court of Appeal upheld as a valid exercise of power. In Unison Networks Ltd v Commerce Commission [2007] NZSC 74, [2008] 1 NZLR 42 at [53], the Supreme Court affirmed Ireland but in a pro forma ruling that did not address the implications. The Court should feel no reluctance to revisit Ireland and look at the matter afresh.
[38] Attorney-General v Ireland, above n 37.
[39] Philip A Joseph “Constitutional Law” (2012) 3 NZ L Rev 515 at 533, 536–537.
Although the Supreme Court’s affirmation of Ireland may have been “pro forma”, affirm the decision it did. Any revisiting must accordingly be by the Supreme Court.
Simon France J noted the respondents’ reliance on the last two sentences of [53] in Unison Networks, and thus on Ireland.[40] There was not the same reliance in the arguments the respondents put to us. Further, for the reasons we are about to explain, we do not consider that the respondents need to rely on Ireland here. Accordingly – even if it were appropriate for us to do so – we need not express a view about the correctness of Ireland, in the light of Professor Joseph’s criticisms of it.
[40] High Court judgment, above n 1, at [74].
Our view is that “the most effective and efficient” delivery of legal services encompasses cost effectiveness and cost efficiency. In her report Dame Margaret Bazley wrote:[41]
At the same time, it should be open to the government to determine the level of legal services it can afford to provide its citizens, and establish policies and mechanisms to manage this expenditure. The government has a key stake in devising a legal aid system under which decisions about resources, priorities, and targeting produce the most desirable outcomes in a principled, transparent, and accountable way. Public expenditure principles of equity, efficiency, and effectiveness should guide the nature and extent of the public legal services on offer.
(Our emphasis.)
[41] Bazley Report, above n 5, at [130].
We agree with the words in that passage we have emphasised. That is, we agree that “efficiency and effectiveness” are principles when it comes to the expenditure of public monies. In short, the cost of legal services is an inseparable part of the effectiveness and efficiency of their delivery.
Conversely, we reject the proposition that a system which delivers legal services without regard to their cost could do so in “the most effective and efficient” manner. While we accept the appellant’s point that the effectiveness and efficiency of delivery is concerned with the quality of the services, it is also concerned with their cost. As we note in [11] above, one of the concerns expressed in the Bazley Report was that the existing “fee for service” basis of payment did not encourage lawyers to be efficient and effective.
We agree with the respondents that ss 23(2) and 99(3), particularly the first of those, reinforce that conclusion.
Further, the fact that s 68(1)(a) empowers the Secretary to “purchase high-quality legal services” (our emphasis) supports the view that Parliament was concerned with the cost of those services.
There is a further point. The appellant submits that the cost of legal aid services is demand driven. They cost the Government what they cost. We reject that argument. The evidence before the Judge established that taxpayer monies available to fund legal aid services are limited. As the appellant accepts, the primary purpose of the 2011 Act is to promote access to justice by providing legal services to people of insufficient means. That purpose cannot be achieved unless the costs of legal services are kept within the available funds. The fixed fee framework was intended to achieve that, and in that way it is commensurate with the primary purpose of the Act.
For the reasons we have explained, we do not accept that cost-cutting was not a proper purpose of the 2011 Act. Accordingly, we answer Question 1: ‘Yes, cost-cutting is a proper purpose of the 2011 Act’.
Question 2: Is the Fixed Fee Policy consistent with the 2011 Act, in particular the Commissioner’s independent functions under the Act?
The Fixed Fee Policy
This question focuses on how, and by whom, the Policy was implemented. The nub of the appellant’s argument on this question is that the Policy is inconsistent with the Commissioner’s independent function of granting legal aid, and with his discretion, when doing so, to specify a maximum grant. That function and discretion are in ss 16(1)(a) and (2)(c) and 23(1).[42]
[42] Both set out in [46]–[47] above.
A description of the Policy is therefore a necessary precursor to consideration of this second question. Section 14 of the 2011 Act provides for an application for a grant of legal aid. In terms of s 71(1)(a), it is a function of the Commissioner to grant legal aid in accordance with the Act, and therefore to determine applications. In doing so, the Commissioner must act independently: s 71(2).
Under the Policy, if legal aid is granted, a lawyer is allocated and the proceeding is divided into one of four proceedings categories (PCs):
(a)PC1, being judge alone cases;
(b)PC2, being jury trials where the highest maximum penalty is 10 years;
(c)PC3, being jury trials where there is a finite maximum penalty greater than 10 years; and
(d)PC4, being jury trials where the maximum penalty is life imprisonment, or the Crown has indicated it will seek preventive detention.
Appointment of a lawyer for PC 1 and 2 cases is on the rotational basis unsuccessfully challenged in Clark v The Registrar of the Manukau District Court.[43] A lawyer of choice is available for PC 3 and 4 cases.
[43] Clark v The Registrar of the Manukau District Court [2012] NZCA 193, (2012) 9 HRNZ 498.
Remuneration is initially by way of fixed fee, save for cases being managed under the High Cost Case framework. That encompasses a small group of serious offences. It is not in issue on this appeal. A fixed fee case involves the payment of a base fixed fee which covers taking instructions, preparation for the case and conduct of the case. An additional fixed fee is available for specified application eg opposed applications for bail and name suppression.
It is sufficient to set out the schedule of fixed fees applicable to category 1 – judge alone – cases. Which of the three different levels of fee (A, B and C) applies depends on the highest maximum penalty attaching to any of the charges. This schedule is included at the end of this judgment.
The rules dealing with an application to amend a grant of legal aid are set out in different parts of the Policy. The Rules restrict amendment to a small percentage of cases, and only where the case is “particularly complex”. The first reference is in the Background section, where there is this description:
2.3 What are complex cases?
Particularly complex cases, where the fixed fees payable are shown to be completely inadequate for a particular activity, may be managed as complex cases. Complex cases involve payment outside of the fixed fee schedules. Complex cases are expected to comprise approximately 4.5% of all criminal cases.
A case will be managed as a complex case when an amendment is approved. The amendment must meet specific criteria and, if approved, the applicable fixed fee will be replaced by a new maximum grant.
Section 6 of the Policy deals with ‘Amendment to grant (complex cases)’. The section starts with this introductory paragraph:
In situations where a criminal case is unusually complex, either overall or in some particular aspect, an amendment to the fixed fee grant may be sought. An approved amendment on a fixed fee case results in the case being managed as a ‘complex’ case and may prompt consideration of transfer for management under the high cost case framework.
After describing the process for requesting an amendment to a fixed fee or complex case, the Policy states that an amendment may relate to:
·a base fixed fee
·an additional fixed fee
·any disbursement that requires prior approval, or
·an estimate.
The Policy then elaborates on the first of these four items in these terms:
A new maximum grant will be set where a provider demonstrates that the case is particularly complex and that the base fixed fee is completely inadequate in reflecting the work involved in completing activities covered by the base fixed fee. If an amendment request relating to activities covered by the base fixed fee is approved, the base fixed fee will not be paid. Instead, the maximum grant will be administered on the basis of the provider’s hourly rate.
For a summary proceeding … the maximum grant may be amended if the case is characterised by two or more of the following:
·disclosure index more than three pages long and more than 100 full pages of disclosure;
·more than 60 pages of disclosure and more than half of this text transcription, photocopied hand-written material, or interviews on DVD;
·more than five charges to be defended, especially where these are serious and there are complexities such as some warrants not issued locally;
·significant new points of law to be researched;
·co-accused defendants;
·five or more witnesses, regardless of whether they are to appear or be read;
·three or more prosecution interviews with the defendant or with a witness;
·defended hearing set down for more than a full day.
The criteria for an indictable proceeding (a similar set) and for appeal and parole proceedings are then set out, followed by these paragraphs:[44]
For all cases the following situations may result in an amendment to the maximum grant being approved:
·highly vulnerable defendant or complainants, such as children;
·defendant subject to treatment orders (serious mental health problems or a serious intellectual disability);
·defendant with significant barriers to communication throughout preparation, including those that require an interpreter/translator (eg, significant sensory impairment or English as a second language requiring an interpreter/translator).
For all types of proceedings, the presence of these factors may result in additional work having to be carried out on the case, such that the base fixed fee is rendered completely inadequate and payment on an hourly basis is warranted.
[44]The wording we quote is from the June 2012 version of the Policy. In June 2012, in response to issues identified by providers and Ministry staff, the Policy wording was amended slightly.
There follows a paragraph dealing with additional fixed fees. This also requires the provider to demonstrate why “the activity is particularly complex and that the fixed fee amount is completely inadequate in reflecting the work involved in completing the activity”. The Policy then contains this note:
Note: a request to amend the maximum grant may also be approved where a provider can demonstrate that certain activities are necessary to the conduct of a matter, but that these are not adequately covered by any of the available fixed fees.
The Judge’s reasoning
Simon France J did not accept that the Policy is inconsistent with ss 16(2)(c) and 23 of the 2011 Act. In particular, he saw no reason to read down s 23(2), as requiring only time based systems. As we have noted,[45] the Judge pointed out that there was, under the previous system, “a type of fixed fee, namely the hourly rate times the guideline hours”.[46] So, although there were three different hourly rates depending on the lawyer’s classification, it was still a capped payment. Because the fixed fees were based on the average claim over the last year for all legal aid grants for that type of proceeding, the Judge considered that the differences between the previous and current schemes “are not as significant as being claimed”.[47] While accepting that the review provision (s 90) could not apply where there was a fixed fee, Simon France J pointed out that it did apply to refusals to amend and to claims in complex and high cost cases.
[45] At [50] above.
[46] High Court judgment, above n 1, at [34].
[47] At [35].
Simon France J then turned to “the more difficult issue”, whether it was/is the Secretary or the Commissioner who should set the payment rates. The Judge accepted that the appellant’s argument had merit, in particular because it is the Commissioner who is to determine a maximum grant (s 23). However, for four reasons, the Judge considered that the 2011 Act permitted the Policy to be determined by the Secretary.
First, although the reality is that for the bulk of cases the fixed fee is fixed by default, the point remains that the Commissioner “has the capacity to fix a different maximum grant if circumstances warrant”.[48]
[48] At [38].
Second, the text of the 2011 Act is not entirely consistent on this point. Section 90 (giving an aided person the right to request the Commissioner to review the cost of services) can be contrasted with s 99 (which provides that the Commissioner may defer payment of a claim if it “appears … to be excessive in light of the Secretary’s standard rates for payment …”).[49] There is no reason to read the emphasised words as not including fixed fees.[50]
[49] Legal Services Act 2011, s 99(3)(a). Simon France J’s emphasis.
[50] At [39]–[40].
Third, the regulation-making power in s 114 contemplates limits on the Commissioner’s discretion in relation to maximum grants.[51] It provides that the Governor-General may make regulations:
(b)prescribing a method or methods for calculating what maximum grant, if any, should be set under a grant of legal aid …
[51] At [41].
Fourth:[52]
Finally, regard must be had to the economic realities. Moving legal aid to the Ministry of Justice was motivated in part by a desire to change fiscal accountability. It does that because the Secretary is subject to obligations under the State Sector Act 1988 and Public Finance Act 1989 to ensure that expenditure is lawful and within appropriation. Once one accepts that the Commissioner does not have an open cheque book, and that it is not wholly a demand driven system, then the expectation must be that the Secretary would have a role in setting the fees, otherwise he cannot discharge these fiscal responsibility duties. The statutory expression in s 99 of the “Secretary’s standard rates for payment” is consistent with the fiscal responsibility obligations imposed on the Secretary.
Appellant’s argument
[52] At [42].
The appellant submits that the Secretary’s function under the Act in relation to the delivery of legal services is a ‘macro’ function, intended to give scope for innovation in the delivery of legal services in response to the Bazley Report. The Policy is not open to the Secretary to implement, because it is not a “purchase” within the Secretary’s s 68(1)(a) function.[53] The power to grant legal aid in an individual case belongs solely to the Commissioner exercising his power independently. It is for the Commissioner alone, under ss 16(2)(c) and 23(1),[54] to decide whether to specify a maximum grant for any given application for legal aid.
[53] Section 68(1)(a) is set out in [39] above.
[54] Set out in [46]–[47] above.
The appellant argues that the Policy effectively removes the Commissioner’s discretion both as to whether or not to specify a maximum grant and, if so, its level. Instead the Policy effectively prescribes the relevant fixed fee as the maximum grant. Thus, from the outset, the Policy is inconsistent with and contrary to the scheme of the 2011 Act. That is because the Secretary’s implementation of the Policy removes in a wholesale fashion the Commissioner’s discretion to make a maximum grant of legal aid. Because every grant is subject to a fixed fee (with the exception of high cost and complex cases), no one currently exercises the s 16(2)(c) and/or s 23(1) discretion.
Further, the Policy also abrogates the right afforded by s 28(1) to both the grantee and the assigned provider to apply for amendment to the grant of legal aid.
The appellant accepted that the Secretary could have promulgated guidelines, as existed under the previous Act. But the Policy introduced what Mr Harrison, in his oral submissions, termed an “immutable fixed fee system with a very high threshold for amendment”.
Respondents’ response
The respondents’ response on this question is summarised in [45]–[50]. The respondents also relied on the reasoning of Simon France J summarised at [78]–[81].
Our views and decision
We refer in [110] below to the statistics available to Simon France J. Based on those statistics, a fixed fee(s) has applied to 99.6 per cent of grants of legal aid. That fee was fixed by the Policy promulgated by the Secretary.
Thus, the fixed fee in all but 0.4 per cent of grants was also effectively a maximum grant. Yet the discretion to specify a maximum grant pursuant to ss 16(2)(c) and (23)(1) of the Act resides with the Commissioner, not the Secretary. Further, and importantly, that discretion is one which the Commissioner must exercise independently: s 71(2). As Mr Harrison points out, the consequence of the Policy is that no one exercised, or even considered exercising, the ss 16(2)(c) and 23(1) powers for 99.6 per cent of the grants of legal aid.
This was all but accepted by Mr White who deposed:[55]
Fixed fees as ‘maximum grant’
118.Under the fixed fees regime, a maximum grant for each grant of legal aid will be fixed as it is now. The maximum grant will be based on the fees set out in the applicable schedule. Which schedule is applicable is determined by the maximum penalty for the offence.
119.The fixed fee is a form of maximum grant. The Commissioner has the discretion to decide which of those schedules should apply as a maximum grant to a particular legal aid application.
(Our emphasis.)
[55]Affidavit of Stuart Douglas White in Opposition to the Interlocutory Application for Interim Relief (2 March 2012).
Effectively, the Policy involves the Secretary dictating to the Commissioner how the Commissioner should exercise his independent discretionary power in ss 16(2)(c) and 23(1) of the 2011 Act. We accept the appellant’s submission that this is inconsistent with the 2011 Act. It is also contrary to the administrative law principle of dictation, the relevant aspects of which are well summarised in Matthew Smith New Zealand Judicial Review Handbook as follows:[56]
Where a person or body has been specifically nominated to make a decision then (subject to principles of delegation …) the nominated decision-maker must exercise the discretion they have in a real and genuine manner. This means that the discretion is not to be abdicated to another. It also means that the nominated decision-maker must not act under the dictation of anyone else. … It is, however, important to note that these principles do not prevent nominated decision-makers from adopting a suggestion or a submission made to them, provided, that is, that their adoption of the suggestion or the submission is part of a real and a genuine exercise of their discretion, rather than some mechanical “going through the motions”.
[56]Matthew Smith New Zealand Judicial Review Handbook (Thomson Reuters, Wellington, 2011) at 593. The classic authority is Roncarelli v Duplessis [1959] SCR 121 at 157. Lavender (H) & Son Ltd v Minister of Housing and Local Government [1970] 1 WLR 1231 (QB) is a good example of how the issues of dictation and fettering can be intertwined. New Zealand authorities include: Hamilton City Council v Waikato Electricity Authority [1994] 1 NZLR 741 (HC) at 762; New Era Energy Inc v Electricity Commission [2010] NZRMA 63 (HC) at [74]; BNZ Investments Ltd v Commissioner of Inland Revenue (2007) 23 NZTC 21,078 (HC) at [28].
As Mr Smith points out in the passage just cited, it would be permissible for the Secretary to make suggestions to the Commissioner as to the exercise of his s 16(2)(c) power, and perhaps to issue guidelines. As noted, the appellant accepted that guidelines, similar to those that existed under the 2000 Act, would be unobjectionable. But by the Policy the Secretary has stepped over the line from permissible suggestion or guidance to impermissible dictation. In implementing the Policy the Secretary has acted unlawfully.
The independence of the Commissioner in deciding on individual applications for legal aid is an important feature of the 2011 Act. The Secretary is a Government official, and as such is generally subject to the control of the Minister of Justice and, more widely, the Government of the day. The prosecution of crime is an important Crown function for which the Solicitor-General takes responsibility as an independent law officer of the Crown. A former Solicitor-General has described this as “a convention, built on the perception that it is undesirable for there to be even an appearance of political decision-making in relation to public prosecutions”.[57] It is equally important that the grant of legal aid to those accused of crime be controlled by an independent person, as the 2011 Act provides.
[57]John McGrath “Principles for Sharing Law Office Power: The Role of the New Zealand Solicitor-General” (1998) 18 NZULR 197 at 207.
Prior to the passing of the 2011 Act the LSA, a Crown entity, was charged with the function of administering legal aid.[58] The Cabinet Manual states:[59] “A decision to assign a government activity or function to a Crown entity indicates that the function should be carried out at “arm’s length” from the government”. Bringing the LSA’s functions within the Ministry of Justice removed the “arm’s length” element from the relationship between the Government and the legal aid system. The creation of the new statutory office of Commissioner was a response to that.
[58]Legal Services Act 2000, s 92. More precisely, from January 2005 until its disestablishment the LSA was a Crown agent pursuant to s 7 of the Crown Entities Act 2004. Under s 103 of the Crown Entities Act, Crown agents must give effect to Government policy when directed to by the relevant Minister. Under s 113 Ministers cannot direct a Crown entity in relation to a statutorily independent function. Any Ministerial directions under the Act can only be made after consultation with the Crown entity, and must be gazetted and tabled in the House of Representatives as soon as practicable after the direction is made (s 115).
[59] Cabinet Office Cabinet Manual 2008 at [3.28].
We have set out above in [32]–[37] the respective statutory functions of the Secretary and the Commissioner relating to criminal legal aid. Those provisions allocate to the Commissioner the function of determining applications for legal aid, including specifying any maximum grant, and then administering the grant through to and including approval of payment to the provider. The 2011 Act requires the Commissioner to perform those functions independently.
The importance of the Commissioner acting independently from the Secretary in relation to the grant of criminal legal aid was acknowledged by the Minister of Education, when moving the first reading of the Legal Services Bill on behalf of the Minister of Justice:[60]
… The bill disestablishes the Legal Services Agency and makes the Secretary for Justice responsible for administering the legal aid system. The bill also establishes the Legal Services Commissioner as an independent statutory officer within the Ministry of Justice to ensure independent decision-making in the granting of legal aid and the managing of cases in the Public Defence Service.
[60] (24 August 2010) 666 NZPD 13509.
Nevertheless, the Justice spokesmen for opposition parties expressed concern about the scheme of the Bill, in particular the folding back into the Ministry of Justice of the functions of the LSA and the Legal Aid Review Panel (LARP).
Reporting to the House, the Justice and Electoral Committee said this:[61]
Independence
We heard concerns expressed about bringing legal aid services under the responsibility of a Government department, and in particular that decisions could be subject to political interference, thus limiting the independence of the criminal bar. We are satisfied that the new statutory officer created by the bill, the Legal Services Commissioner, would retain the necessary degree of independence. Functions that require independence, such as granting decisions, are defined in the bill as independent decisions of the Commissioner. It is important that while the Commissioner would be accountable to the Secretary for Justice, the Secretary should not be able to interfere in the Commissioner’s performance of his or her independent functions as set out in the bill. There are a number of instances of a similar structure having been used successfully within the public service, such as the Registrar of Companies and the Director of Public Health.
(Our emphasis.)
[61] Justice and Electoral Committee Legal Services Bill (15 December 2010) at 6–7.
Concerns about the independence of the legal aid system again featured in the committee stage of the consideration of the Legal Services Bill, and in its second and third readings. In moving the third reading the Minister of Justice said:[62]
… Submitters were concerned that the transfer of the legal aid system to the Ministry of Justice may reduce the level of independence in the legal aid system. We thought about this carefully in the policy design, and I am pleased that the committee agreed that the position of the Legal Services Commissioner will guarantee that independence. …
[62] (6 April 2011) 671 NZPD 17772.
Outlining his party’s continued opposition to the bill on its third reading, Mr Locke MP referred to the importance of preserving:[63]
… the necessary independence that a legal services body requires. Putting in a supposedly independent statutory officer, the Legal Services Commissioner, will not necessarily solve that problem.
He added:[64]
The report back from the select committee says: “It is important that while the Commissioner would be accountable to the Secretary for Justice, the Secretary should not be able to interfere in the Commissioner’s performance of his or her independent functions as set out in the bill.” That is all very well, but, as we have found in other areas, when an officer is reporting to someone above them in the hierarchy their responses are a bit conditioned by the responses of the higher-up officer. That issue was raised as part of the debate on the bill that merged Archives New Zealand and the National Library and put them under the Department of Internal Affairs. Even though there is an independent Chief Archivist, the Chief Archivist has to report to the head of the Department of Internal Affairs. A similar situation will constrain the real independence of the Legal Services Commissioner, particularly when monetary matters are involved, as they are with legal services and as they are in the case of the Chief Archivist and the Department of Internal Affairs. Budgets can be restricted and so on, so we do not think there is sufficient independence in the system.
(Again, our emphasis.)
[63] At 17778.
[64] At 17778.
We do not accept the respondents’ proposition that the Secretary has power to set maximum grants under s 68 of the 2011 Act. First, we agree with the appellant’s argument that the Secretary’s function under s 68(1)(a) “to establish, maintain, and purchase high-quality legal services in accordance with the Act” is intended to be a ‘macro’ level function. This is reinforced by the Secretary’s broad power under s 68(2)(c) to determine the method(s) of delivery of legal services. We see this as directed toward the type of arrangement described in s 69, for example providing for services to be provided by the Public Defence Service or bulk funding.[65]
[65] Section 69 is set above in [32].
Secondly, the Secretary’s functions under s 68(1)(a) must be exercised “in accordance with this Act”. That entails reading s 68 in the light of the specific power vested in the Commissioner to fix maximum grants in individual cases under ss 16 and 23, functions which the Commissioner must exercise independently.
Viewed in that light, the 2011 Act cannot sensibly be interpreted as empowering both the Secretary and the Commissioner to fix maximum grants. Rather, the Secretary’s functions are to be construed as excluding the power to fix maximum grants in individual cases.
We do not consider the reasons given by the Judge for his conclusion that the Secretary could fix maximum grants withstand analysis.[66] The Judge accepted the reality that for most cases the fixed fee operated by default. His view was that this was regularised by the Commissioner’s “capacity to fix a different maximum grant if circumstances warrant”.[67] For the reasons we have explained, we do not accept that this is consistent with the scheme of the 2011 Act. The Judge also relied on the reference in s 99 to “the Secretary’s standard rates for payment ...”. This oblique reference is in subpart 4 of the 2011 Act, which contains the provisions dealing with payment for legal aid work. We do not consider it can be construed as showing that Parliament intended the Secretary to have power to fix maximum grants, given the overall statutory scheme. And, if the Secretary were to have such a power, there would be no need for the Governor-General, by Order in Council, to have the power under s 114(1)(b) to make regulations:
prescribing a method or methods for calculating what maximum grant, if any, should be set under a grant of legal aid in respect of [criminal] proceedings …[68]
[66] These reasons are set out above at [78]–[81].
[67] High Court judgment, above n 1, at [38].
[68]We deliberately do not consider whether the Policy could lawfully have been promulgated in the form of Regulations pursuant to s 114(1)(b). That is because we did not hear argument on that. We merely observe that it is a nice question, given the Commissioner’s independent functions under ss 14, 23 and 28 of the 2011 Act.
It follows that we consider that the Secretary acted unlawfully in implementing the Fixed Fee Policy, in that it is inconsistent with the Commissioner’s independent functions under the 2011 Act. By developing and implementing the Policy the Secretary has dictated to the Commissioner how he is to exercise his independent functions. Accordingly, we answer Question 2: ‘No, the Fixed Fee Policy is not consistent with the 2011 Act and is not consistent with the Commissioner’s independent functions under the 2011 Act’.
Question 3: Does the Fixed Fee Policy unreasonably fetter the Commissioner’s discretion under the 2011 Act?
The Judge’s reasoning
Simon France J began by identifying the appellant’s two, overlapping challenges. First, that the fixed prices scheme is overly prescriptive in terms of what level of control may be imposed on a discretion by the fixing of predetermined rules. Second, that the high threshold set by the Secretary before a fixed fee may be departed from has improperly usurped the Commissioner’s independence.
Dealing with the first of those arguments, the Judge accepted the reality that, once the Commissioner has decided to grant legal aid, any case which does not obviously fall into the high cost category will be allocated to the fixed fee category. He did not find that initial allocation incompatible with s 16(2). The statement in s 16(2)(c) that the Commissioner “may specify a maximum grant”, means that he need not always do so. The alternative payment methods of complex cases and high cost cases remain available, as does the Commissioner’s ability to amend the size of any additional fees.
Further, the Judge considered that the sheer number of legal aid applications is such that one would expect a relatively fixed set of rules. He observed:[69]
It is not realistic to read the Act as mandating a case by case individualised assessment when the number of applications is at this level.
(Footnote omitted.)
[69] At [104].
Simon France J then turned to consider the rules governing the approval of an application to amend a maximum grant. He set out the rules in much the same way as we have set them out in [70]–[75].
Having done that, the Judge offered this summary of the Policy:
[111] … First, identify what it is about the case that potentially means it requires a different funding method. These will be:
(a)two or more of the characteristics identified for summary and indictable cases; or
(b)the presence of certain characteristics about people involved in the proceedings such as vulnerability, or mental health issues.
[112] Then, show that given these features, the fee is completely inadequate. Alternatively, show that the case requires certain activities or services to be done that are not covered by the fixed fee scheme.
The Judge then noted the appellant’s submission as to “the impossibly onerous nature of the tests”, particularly the second stage – whether the fee is “completely inadequate” – supported by the available statistics: only 0.4 per cent or 40 of the 10,000 applications had been transferred to the complex case category. Given the anticipated 4.5 per cent,[70] the appellant put it to the Judge that those numbers reinforced that the tests are too severe, that the Commissioner in reality has no discretion, and the statutory scheme is being subverted.[71]
[70]The 4.5 per cent is in section 2.3 of the Fixed Fee Policy set out in [70] above: “Complex cases are expected to comprise approximately 4.5% of all criminal cases”.
[71] At [113]–[115].
The Judge did not accept these arguments. In general agreement with the respondents’ argument, he considered it “far too early to use the figures”. He pointed out that they showed that about half the initial amendment applications were approved, but observed “the reality is that these figures mean nothing”.[72]
[72] At [115].
As for the overall test for moving a case out of the fixed fee category, the Judge accepted that “completely inadequate” is a forbidding expression.[73] But he considered it is “only words”, and how the test is applied by the Commissioner is a different matter. Again, the Judge obviously considered it was too early to make a judgment:[74]
… [i]t is a matter of assessing these things, at least for a while, on an individual case basis. Perhaps at some point in the future it can be assessed whether some pattern has emerged, but it is not for the Court to anticipate incorrect decisions by the Commissioner. …
[73] At [117].
[74] At [118].
Nor at this stage did the Judge accept that “there is insufficient flexibility such that the … Commissioner will consider himself unable to provide what he considers the necessary level of funding”.[75]
[75] At [120].
Simon France J concluded this part of his decision with these suggestions for immediate improvement in the fixed fee scheme:[76]
(a)the inclusion of an exceptional circumstances discretion;
(b)the Commissioner making clearer the criteria or factors that will make the fixed fee “completely inadequate” for the case; and
(c)more assistance to lawyers as to how the Commissioner will approach the “completely inadequate” aspect of the test.
Appellant’s argument
[76] At [121].
The appellant contends that the Policy, particularly the rules governing amendment to grant (complex cases), unlawfully fetters the Commissioner’s discretion. The “particularly complex” and “completely inadequate” test sets too high a threshold. The Policy removes the Commissioner’s ability to make a maximum grant of his own determination, is unclear, contrary to the purpose and objects of the Act, and abrogates the unfettered right of providers to apply for an amendment to the grant.
The appellant argues that Simon France J was wrong to hold that it needed to demonstrate the consequences of this harsh test by presenting individual cases and fact situations. Although the consequences are relevant to the relief to be granted, they are not relevant for the purposes of identifying a breach. And the only relief sought by the appellant is a declaration that the Policy is unlawful.
Respondents’ response
The respondents submit that policy constraints on discretion can be lawful. The test for considering whether a policy unlawfully constrains discretion is that the authority must always be willing to listen to anyone with something new to say.[77] While the policy might well state a strong presumption against exercising the discretion, the policy cannot deny the power which the law has conferred.[78] Though the fixed fees are to apply to the vast majority of grants of legal aid, there remains a genuine opportunity for the Commissioner to consider the unusual or exceptional cases, by amending the grant and transferring it to the high cost or complex case category. Furthermore, the Policy is no different than the guidelines under the 2000 Act. Overall, the respondents submit that the Policy allows the Commissioner sufficient flexibility to amend grants, while at the same time ensuring consistency and fairness in approach.
Our views and decision
[77] British Oxygen Co Ltd v Minister of Technology [1971] AC 610 (HL).
[78]Westhaven Shellfish Ltd v Chief Executive of Ministry of Fisheries [2002] 2 NZLR 158 (CA) at [45] and [48].
The law relating to the fettering of a statutory discretion is accurately and well summarised in Taylor’s Judicial Review: A New Zealand Perspective.[79] When a statute confers a discretion on a particular person, it cannot be altered by means other than statutory amendment. The adoption of policy guidance might be administratively convenient for a decision maker, and can advance rule of law values such as consistency and certainty in decision making. However, a policy which guides the exercise of a discretion will inevitably fetter that discretion to some extent. If that policy guidance crosses the line between legally acceptable limits on the exercise of discretion and those which are not legally acceptable, it “fetters” the discretion and is unlawful.
[79]GDS Taylor Judicial Review: A New Zealand Perspective (2nd ed, LexisNexis, Wellington, 2010) at 770.
The type of discretion fettering alleged by the appellant comes within Taylor’s classification “overriding policy”. As Taylor points out, addressing overriding policy,[80] reliance on policy is not unlawful, but blind following of policy is. Each case must therefore be decided on its own merits, and it should be open to the person exercising the discretion to find that the policy does not apply in a particular case. If a policy is so phrased to admit of no exceptions, it is unlawful. Any policy must be based on factors and purposes relevant to the power, and must not be unreasonable. Acting pursuant to an overriding policy can also be viewed as a failure to consider relevant factors, for example the merits of the particular case.
[80] At 775.
The first element of the Policy is the fixed fee (or, to be precise, the schedules setting out various fixed fees). Given the practicalities of operating the legal aid system – the sheer number of legal aid applications – there is no reason why the Commissioner exercising his own powers independently could not establish fixed fees for categories of cases, provided there is an appropriate mechanism(s) for departing from those fixed fees. We agree with Simon France J in these respects.[81]
[81] We are referring to the passage cited above at [107].
The problem with the current Policy is the combination of a fixed fee for almost every grant of legal aid combined with the lack of any effective room for the Commissioner (or his delegate) to amend the grant, even where the Commissioner considers an amendment is appropriate. We are referring to what Mr Harrison termed in his submissions the “unusually complex and completely inadequate test for an amendment to the grant”. In the absence of at least two of the factors mentioned in the Policy, or a particularly vulnerable complainant, and proof that the fixed fee will be “completely inadequate in reflecting the cost of completing the activity”, the Commissioner has no discretion to move the case out of the fixed fee category. We consider that test sets a threshold so high that it constitutes an unacceptable limit on the exercise by the Commissioner of his discretion.
The respondents submit that none of the BORA rights referred to by the appellant is directly limited by the Policy, as it affects neither a defendant’s eligibility for legal aid (s 24(f)), nor any of a defendant’s procedural rights (s 24(c) and (d); s 25(e), (f) and (h)). The respondents submit that once a defendant receives effective representation, the ss 24 and 25 rights will usually be satisfied. The respondents rely here on observations to that end by the Privy Council in McLean v Buchanan,[98] though in the context of the fair trial rights under art 6 of the Convention for the Protection of Human Rights and Fundamental Freedoms, as scheduled to the Human Rights Act 1998 of the United Kingdom. The respondents contend that the only way in which the fixed fee framework could limit these rights would be through setting remuneration rates so low that legal aid providers are unable or unwilling to comply with their professional and ethical obligations. However, the Ministry of Justice was satisfied that this would not be the case given:
(a)fee levels were set at the average existing grant (excluding very low-cost cases and those assumed to be complex), less 10 per cent;
(b)the fixed fee framework was expected to save providers substantial administrative time and cost, enabling them to undertake more cases; and
(c)complex and high cost cases would be remunerated outside the fixed fee framework.
Our views and decision
[98] McLean v Buchanan [2001] 1 WLR 2425 (PC) at [30].
As Mr Harrison made clear, this is a challenge to the Policy on the ground that the Secretary formulated it without regard to defendants’ BORA rights. We do not agree with that criticism. In [16] to [20] above we refer to various parts of the Minister’s 8 December 2010 paper to Cabinet, recommending the Policy. That paper refers expressly to s 24(f) of the BORA.[99] Later in the paper there is this section:
Human rights
118.The proposals contained in this paper appear to be consistent with the New Zealand Bill of Rights Act 1990 and the Human Rights Act 1993. However, the proposals raise two issues of limits on the rights and freedoms affirmed by the Bill of Rights Act.
119.First, the proposals raise an issue with section 24(f) of the Bill of Rights Act that affirms the right of everyone who is charged with an offence to receive legal assistance without cost if the interests of justice so require and the person does not have sufficient means to provide for that assistance. The right to legal assistance is not relevant to family and civil cases as they do not involve someone who is charged with an offence. The proposals do not affect the jurisdiction of the court to order provision of legal aid where justice requires nor do they unreasonably limit the ability of an accused to seek a review of the decision not to grant legal aid. Parliament is also entitled to some latitude to set reasonable means thresholds.
120.Second, some may argue that the proposals raise an issue of discrimination under section 19(1) of the Bill of Rights Act. However, the recipients of legal aid reflect the underlying gender and racial profiles of the justice system and individual financial means. Men and Maori are over-represented in the criminal justice system. Women are over-represented in disputes at the Family Court and men are over-represented in the civil justice system. The disproportionate effect of the proposals on gender and racial groups flows directly from those separate groups’ involvement in the justice system and not from the proposals themselves.
121.I consider that the proposals do not limit sections 19(1) or 24(f), and if there were found to be a limit, it would be justified in a free and democratic society. A final view as to whether the proposals are consistent with the Bill of Rights Act will be possible once the legislation has been drafted.
122.The alternative proposal to impose a user charge of $200 for criminal legal aid could impose a limitation on the right to receive legal assistance affirmed in section 24(f), by depriving a person of the ability to provide an adequate defence at trial. However, the design of the user charge (e.g. by tailoring payments to an individual’s ability to pay) could mitigate its impact.
[99] Minister’s Paper, above n 12, at [35].
In the affidavit he affirmed on 2 May 2012, Mr White dealt with the ongoing review of the fixed fee framework. He stated:
64.I want to emphasise that the genuine approach we took to consultation is reflected in the adjustments to the rates where there were particular concerns. We did, within the financial constraints we had, attempt to address those areas where those who responded had particular concerns – on the basis of access to justice, equality of arms and the potential impacts on quality of legal representation. …
While Mr Harrison accepted that this was a reference to the Ministry considering BORA rights, he made the point that none of these considerations is addressed in the decision itself.[100]
[100]With the sole exception of the recording of submitters’ concerns in the “Overview” section of the document “Criminal Legal Aid Fixed Fees: Summary of submissions, response and final decisions” (Ministry of Justice, Wellington, December 2011) at 6.
So, while Mr Harrison is correct in submitting that BORA rights are not mentioned in the decision to introduce a fixed fee policy,[101] or in the Fixed Fee Policy itself, it is clear that those who formulated the Policy were alive to the rights guaranteed in the BORA, and considered whether the Policy infringed those rights.
[101] Cabinet’s decision on 7 February 2011 to do that is set out in [21] above.
Although Mr Harrison complains it misses the nub of this challenge, the Judge found there was no evidence that the Policy had breached any defendant’s BORA rights. In Clark v Registrar of the Manukau District Court this Court had to decide whether legally-aided defendants in criminal proceedings are entitled to choose the counsel assigned to represent them.[102] In holding that they were not, the Court observed:[103]
… the state assumes a positive obligation under s 24(f) to fund legal assistance for those charged with an offence if the interests of justice so require and the person does not have sufficient means to provide for that assistance. It is for the state to determine the means by which it will meet that obligation. The courts will be reluctant to interfere with the policies adopted in the absence of clear evidence that the purpose of the right is not being fulfilled.
[102] Clark v Registrar of the Manukau District Court, above n 43.
[103] At [94].
That observation supports the Judge’s “wait and see” approach.
Although there appears not to have been any case in this country where the impugned Policy has led to difficulties in court, there have been in Australia. One of those cases was the ruling of Forrest J on 18 February 2013 in MK v Victoria Legal Aid.[104]The applicant was one of two people facing two counts of murder. While counsel was funded for the duration of the trial, the instructing solicitor was not.[105] The prosecution and co-accused had instructing solicitors funded for the whole trial. Cut-throat defences were a possibility. The Judge stated “This is a two-person case”.[106] On the basis that there was an inequality of arms, and that he was “unable to ensure that MK will receive a fair trial in the current circumstances”, Forrest J temporarily stayed the trial “until such time as those circumstances materially change”.[107]
[104] MK v Victoria Legal Aid [2013] VSC 49.
[105]Under Victoria Legal Aid’s amended guidelines an instructing solicitor would only be funded for two half days, subject to exceptions not applicable to MK’s trial.
[106] At [46].
[107] At [46].
If any inadequacies in criminal legal aid are sufficiently great to lead to an unfair trial, that will need to be addressed on a case specific basis.
For the reasons we have set out, we consider Simon France J was correct to hold that the Secretary did not fail to take into account BORA rights when developing the Policy. Accordingly, we answer Question 6: ‘When developing the Fixed Fee Policy the Secretary did not fail to take into account rights under the BORA, so the policy is not unlawful for that reason’.
Question 7: Was the Secretary’s decision to implement the Fixed Fee Policy unlawful, in that it gave effect to the 10 per cent reduction in fees directed by Cabinet?
The argument in the High Court
In the High Court the appellant challenged the lawfulness of the Secretary’s decision on the basis that the Secretary had treated Cabinet’s decision explicitly requiring the introduction of the fixed fee framework and (arguably) implicitly requiring overall savings of 10 per cent[108] as binding. In the consultation on the new fixed fee framework, these ‘requirements’ had therefore been treated by the Secretary as non-negotiables. The consultation focused on the fixed fee amounts allocated to the various steps in a criminal proceeding. The appellant contended that the Secretary, in performing his functions under the 2011 Act, “is an independent statutory functionary and decision maker … not subject to external direction either governmental or ministerial”.[109] In particular, the appellant asserted that the Secretary is not obliged to implement Government policy.
The Judge’s view
[108]At [48] of the High Court judgment Simon France J noted that the paper regarding the funding of legal aid that went to Cabinet for approval showed projected savings modelled on a 10 per cent reduction in average cost per grant. However, he stated that that figure was never separately identified and the Cabinet decision never expressly refers to, nor mandates, a 10 per cent reduction. It was argued for the respondents that the paper effectively requires a 10 per cent reduction in the average cost per grant because that is the only way that the costings set out in the paper could be adhered to.
[109]High Court judgment, above n 1, at [55], quoting from the appellant’s submissions to the High Court.
Simon France J disagreed. He found nothing in the 2011 Act to support the proposition that the Secretary must operate independently in undertaking his functions under the 2011 Act.[110] Those parts of the 2011 Act that do deal with independence relate to the Commissioner and are explained by the Commissioner’s dual role: some parts of his functions are to be carried out independently, others under direction. Looking outside the 2011 Act, the Judge noted that ss 32 and 33 of the State Sector Act 1988 oblige the Chief Executive of a Department to implement “the policies of the Government” and stipulate the only area in which the Chief Executive has a duty to act independently (decisions on individual employees). The Judge referred to this Court’s consideration of those provisions in Archives and Records Association of New Zealand v Blakeley.[111] After referring to s 32 this Court stated:[112]
The responsibility of the chief executive to the Minister for the carrying out of the functions and duties of the department, for its general conduct, and for the efficient, effective and economical management of its activities has limits. It cannot, for instance, involve either the Minister or the chief executive interfering with powers conferred on specified officers with the purpose that those officers exercise the powers autonomously and independently.
[110] At [57].
[111]Archives and Records Association of New Zealand v Blakeley [2000] 1 NZLR 607 (CA).
[112] At [22].
Given that what is in issue is the establishment of a legal aid system that must meet New Zealand’s international and domestic obligations, but which involves annual expenditure for criminal legal aid alone of $78 million, Simon France J observed:[113]
… it would be surprising if the establishment of the scheme was to be undertaken by the Secretary for Justice autonomously and independent of Government policy.
[113] High Court judgment, above n 1, at [60].
The Judge noted the requirement that the Commissioner operate independently in exercising certain functions separated out from those of the Secretary. In his view, that is an obvious sign that the Secretary is not required to act independently in exercising his statutory functions.[114] The Judge referred particularly to the function of establishing a legal aid system which delivers high-quality legal services in accordance with the Act, including the general purposes of providing legal services to people of insufficient means in the most effective and efficient manner. Whilst in doing that the Secretary must recognise the independent statutory functions of the Commissioner and allow them to be performed, “lying behind the Secretary’s power is the control of the Minister and more generally of Cabinet especially as exercised through budgetary decisions”.[115]
[114] At [63].
[115] At [65]. The passage the Judge cited is from Archives, above n 111, at [31].
Following from the Judge’s finding that the Act does not, and did not intend to, require the Secretary to act independently of Government policy, he found that the claims of illegality based on the Cabinet decisions had to fail.[116]
Appellant’s argument
[116] At [70].
In this Court, the appellant’s first line of argument is that the Cabinet Minute and Ministerial Paper do not direct that the introduction of fixed fees be accompanied by a 10 per cent cut in provider remuneration. The appellant submits that the Cabinet Minute does not even identify this objective.
The appellant’s second line of argument relates to the effect of any Cabinet decision. If Cabinet did decide certain things were to happen, the appellant questions to what extent that imposes a duty on any individual or state entity. It asserts that the Cabinet decision could only have (administratively) bound the Minister and perhaps by extension, the Ministry. It did not, and could not, bind the LSA.[117]
[117]The Cabinet Minute was two months before the enactment of the 2011 Act. Therefore, when the Minute was issued, the 2000 Act still applied and the LSA still existed.
In order to be valid, Mr White’s decision to implement the Policy had to have been the outcome of a lawful exercise of the s 68(1)(a) function. The appellant submits that the High Court judgment makes no finding as to whether Mr White ever independently addressed his mind to, far less decided in accordance with, his s 68(1)(a) function. The Judge, in the appellant’s contention, accepted these matters were addressed purely and simply by way of implementation of the Cabinet decision.[118]
[118] Citing the High Court judgment, above n 1, at [50], [51], [55], [60], [67] and [70].
The appellant submits that it is a constitutional fundamental that where a statutory duty, function or power is conferred on an individual person or body (a conferee), the conferee must personally, and independently, perform the duty, function or exercise of power. Neither of the two exceptions to this proposition applies here: where the power has been lawfully delegated; where a power to direct is expressly conferred by statute on some other person or body. Where there is no statutory power to direct, there is no inherent governmental entitlement to direct conferees. The critical point is that the s 68(1)(a) function has been conferred on the Secretary, not on Cabinet. The 2011 Act makes no allowance for the Cabinet or the Minister to direct the Secretary. The s 68(1)(a) function can be contrasted with s 70(3) in that respect. There is no legal source for the claimed power of Cabinet to direct, nor for the Secretary’s purported duty to obey.
The appellant’s primary position is thus that Mr White erred in fact and in law in treating the Cabinet Minute as binding on him. Even if it were to be viewed as a relevant consideration, or as reflecting Government policy, acting on it without exercising independent judgment would still be impermissible. To hold otherwise, as Simon France J effectively did, is to treat the Cabinet decision as (unlawfully) abrogating s 68(1)(a).
Respondents’ response
The respondents contend that Mr White, in implementing the Policy, was implementing Government policy as he was constitutionally required to do. The respondents suggest the appellant confuses the political neutrality of the Public Service with its independence.
The respondents support the Judge’s analysis, drawing on what this Court said in Archives.[119] The legal powers of executive government are exercised by those with power to act, but in practice all significant decisions or actions taken by the executive are first collectively agreed by Cabinet.[120] Once Cabinet ministers have agreed to a policy initiative, the relevant chief executives, along with their ministries or departments, are responsible to the appropriate ministers for carrying out the functions of the ministry or department “including those imposed by the Act or by the policies of the Government”,[121] and the efficient, effective and economical management of the activities of the department.[122]
[119] Above, n 111.
[120] Cabinet Office Cabinet Manual 2008 at [5.3].
[121] State Sector Act 1998, s 32(a).
[122] State Sector Act 1988, ss 32(a) and (b), 34(2); Public Finance Act 1989, s 34.
Cabinet decided to implement the package of criminal legal aid recommendations that had been put to it, including the fixed fee regime. Accordingly, Mr White was obliged to give effect to that policy decision, and there is no requirement in the 2011 Act for him to act independently of Government. As Simon France J correctly held “the normal responsibilities between Chief Executive and Minister apply”.[123] The Policy was determined by Mr White in furtherance of the Cabinet decision.
[123] High Court judgment, above n 1, at [67].
Although the 2011 Act does not confer express power to implement a fixed fee framework (or, for that matter, any other method) for purchasing legal services, express power is not necessary. In the absence of inconsistent law there is no impediment to the formation and execution of such a policy. Accordingly, Mr White was required to implement the Government’s decision to introduce a fixed fee framework, subject to his statutory obligations under the 2011 Act. Contrary to the appellant’s assertion, Mr White satisfied himself that the Policy met those obligations. For example, referring to the 10 per cent reduction in the context of consultation with the legal profession on the proposed fixed fee framework, Mr White deposed:[124]
Thus, the 10% reduction was “set in stone” but only to the extent of the consultation on the immediate proposals. If it had become clear that the policy framework could not actually deliver what the Act requires in terms of establishing, maintaining and purchasing high-quality legal services, officials would have been bound to report that back to Ministers.
[124]Affidavit of Stuart Douglas White in Opposition to Application for Judicial Review (2 May 2012) at [28].
Further, Mr White was not prohibited from having regard to a reduction in Government funding for legal aid when deciding how to purchase legal services under the 2011 Act. Cost considerations and high-quality legal services are not mutually exclusive objectives. Finally, the Crown reiterated its submission that legal aid funding is not and cannot be “demand-driven”. Within its BORA obligations, the Government is entitled to place reasonable limits on funding.
Our views and decision
We revert to the appellant’s first line of argument, that in approving the fixed fee framework Cabinet did not direct Mr White that it must be accompanied by a 10 per cent cut in provider remuneration.
The appellant is correct in submitting that Cabinet does not, anywhere in the process we have chronicled above in [8] to [22], expressly approve a 10 per cent cut in provider remuneration. The respondents accept this.
The focus of Cabinet’s decisions is the Justice votes, and in particular the need to constrain expenditure on legal aid to the existing (as at December 2009) base line. Cabinet was not so much concerned with the detail of how the Minister achieved that, although in February 2011 it did expressly agree to the Minister establishing a new purchase approach involving a fixed fee framework and case management for the most expensive cases, in all cases “with prices set to reduce the cost per grant”. When doing that, Cabinet noted that the changes it was approving would produce a reduction totalling $129.4 million in the forecast operating expenditure on legal aid for the next three years.
We consider it is sufficient that Cabinet approved a new purchase system that involved reduced prices (payments would be a better word), and that Cabinet approved the reduction in legal aid expenditure that required the 10 per cent cut in provider remuneration. We do not accept the appellant’s submission that Cabinet needed expressly to approve the 10 per cent cut. Accordingly, we do not accept the appellant’s first line of argument.
We turn to the appellant’s second line of argument, its submission that Mr White erred in fact and in law in treating the Cabinet decision of 7 February 2011 as binding on him.
Before we consider this, we record that we have not overlooked the appellant’s point that the LSA was still in existence, and that the 2011 Act was neither enacted nor in force, at the time of that decision. The appellant’s argument was that the Cabinet decision “did not and could not on its face bind the LSA”. We do not consider that submission is correct. But, even if it is, it leads nowhere. That is because the LSA’s short involvement was in beginning work on developing a new legal aid framework. This work was still in progress when the 2011 Act came into force, disestablishing the LSA.
Was Mr White bound by the Cabinet decision? More strictly, was the Secretary for Justice, whose delegated functions under the 2011 Act Mr White was exercising, bound by the Cabinet decision? The nub of this question is whether the Secretary (or Mr White as his delegate) was bound to implement the 10 per cent cut in provider remuneration.
The starting point is the holding we have already made: that Cabinet did direct the 10 per cent cut, or at least it directed a reduction in expenditure that could only be achieved by making that cut.
As the Cabinet Manual provides, “Cabinet is the central decision-making body of executive Government”.[125] Amongst the items listed in the Cabinet Manual for Cabinet decision-making are:[126]
(a) significant policy issues;
(b) controversial matters [and]
(c)proposals that affect the government’s financial position, or important financial commitments
…
[125] Cabinet Office Cabinet Manual 2008 at [5.2].
[126] At [5.12].
The significant reduction in spending on legal aid that Cabinet decided was required came within each of these three items.
As Simon France J noted, s 32 of the State Sector Act charges the chief executive of a department – and thus Mr White – with responsibility to the Minister for:
(a)the carrying out of the functions and duties of the department (including those imposed by Act or by the policies of the Government); and
…
(d)the efficient, effective, and economical management of the activities of the department.
There is also s 34 of the Public Finance Act 1989:
34 Responsibilities of departmental chief executives: financial management
The chief executive of a department—
(a)is responsible to the responsible Minister for the financial management and financial performance of the department; and
(b)must comply with any lawful financial actions required by the Minister or the responsible Minister.
Our view is that each of those two provisions, and certainly the two in combination, obliged Mr White to implement Cabinet’s decision.
We agree with the Judge that this Court’s decision in Archives supports that conclusion.[127] In that case an association representing users of the National Archives challenged a reorganisation by the Secretary for Internal Affairs. It involved the Chief Archivist reporting to a general manager rather than directly to the Secretary. The Court was required to determine the limits of the Secretary’s powers, as opposed to those of the Chief Archivist. In the course of doing that, the Court referred to both s 32 of the State Sector Act and s 34 of the Public Finance Act.[128] Particularly pertinent to this appeal is this passage in the judgment in Archives, which was delivered by Keith J for a Court comprising Richardson P, Gault, Keith, Blanchard and Tipping JJ:[129]
The legislation presents a balance: the Chief Archivist has important particular powers of a professional character, only some of which are limited by express provisions. The Secretary has related responsibilities concerning the efficient, effective and economical management of the National Archives as an aspect of the administration of the Department for the whole of which he is responsible. The related powers of the Secretary, conferred by ss 4 and 6, must be capable, especially given the wording of s 6, of having an impact or influence on the powers and functions of the Chief Archivist. Lying behind the Secretary’s power is the control of the Minister and more generally of Cabinet especially as exercised through budgetary decisions. But that impact or influence cannot extend to nullifying or substantially impairing the Chief Archivist’s core professional functions of giving instructions about the preservation of records, appraising and requiring archives for deposit, transferring and returning them, making provision for their destruction and facilitating public access. It is against that conclusion about the relative powers of the Chief Archivist and Secretary that we now turn to consider the facts.
(Our emphasis.)
[127] Archives, above n 111.
[128] At the time, the equivalent of the current s 34 of the Public Finance Act was s 33.
[129] At [31].
We agree with Simon France J that the Cabinet decision did not cut across an exercise by Mr White of his s 68(1)(a) function:
To establish, maintain and purchase high-quality legal services in accordance with this Act.
What Cabinet’s decision did do was require Mr White to discharge that function within budgetary restraints. Cabinet did direct the establishment of a new purchase approach which involved “fixed fees for cases that have more standard cost structures, with prices set to reduce the cost per grant”. It was Mr White (and his Ministry team) who, in developing the fixed fees framework and setting the fixed fees, applied a 10 per cent reduction in provider remuneration to achieve the budgetary constraints imposed by Cabinet.
In Archives this Court made it clear that the responsibility of the Chief Executive to the Minister under s 32 of the State Sector Act has limits. The Court observed:[130]
It cannot, for instance, involve either the Minister or the Chief Executive interfering with powers conferred on specified officers with the purpose that those officers exercise the powers autonomously and independently.
To similar effect is the penultimate sentence in [31] in Archives cited in [198] above.
[130] At [22].
We summarise. Cabinet’s decision effectively, though certainly not explicitly, required the Secretary (in other words, Mr White) when “[establishing the] fixed fees for cases that have more standard cost structures”, to cut provider remuneration by 10 per cent. That did not unlawfully impinge on the s 68(1)(a) function which the Secretary had delegated to Mr White, and was properly treated by Mr White as binding on him.
Consequently, had the Secretary (Mr White) been able lawfully to implement the Policy, the fact that it gave effect to the Cabinet decision requiring the 10 per cent reduction did not render the Policy unlawful. But, of course, we have held that the Secretary’s implementation of the Policy was unlawful for two reasons. We accordingly answer Question 7: ‘The Secretary’s decision to implement the Fixed Fee Policy was not made unlawful because it gave effect to the 10 per cent reduction in provider remuneration’.
Result
We have held that the Secretary acted unlawfully in implementing the Policy, in that it is inconsistent with the Commissioner’s independent functions under the 2011 Act. That is because, by the Policy, the Secretary dictates to the Commissioner how he is to exercise his independent functions.
We have held that the Policy is also unlawful, in that it unreasonably fetters the discretions imposed in the Commissioner by ss 16, 23 and 28 of the 2011 Act.
We make declarations accordingly.
We allow the appeal to that extent, but otherwise dismiss it.
The appellant did not make submissions to us on relief. Its written submissions indicated that counsel would address orally on that aspect, but counsel did not do that. Accordingly, we reserve our decision on the grant of any further relief. Either party may apply (by memorandum) if further relief is sought.
As requested by counsel,[131] we reserve the costs of the appeal.
[131]In the case of counsel for the appellant, in their post-hearing memorandum to the Court of 5 November 2012. In the case of counsel for the respondents, in their emailed advice to the Court on 16 November.
Solicitors:
Richard Wood, Auckland for Appellant
Crown Law Office, Wellington for Respondents
| Base Fixed Fees | ||||
| Disposed at Defended Hearing [summary charge] | ||||
| Activity | A | B | C | Tasks covered by Fixed Fee |
| All activities up to completion of Defended Hearing (including sentencing) | $480 | $550 | $580 | For: · Taking instructions, attending the client |
| · Receiving and reviewing disclosure (may include preparation of disclosure package – ie, disclosure by defendant) | ||||
| · Identifying legal and factual issues | ||||
| · Undertaking research | ||||
| · Engaging in charge resolution/negotiation | ||||
| · Attending to unopposed bail, name suppression, variation, interlocutories etc | ||||
| · Attending Registrar’s/Judge’s List Court/Status Hearing | ||||
| · Entering plea | ||||
| · Preparing for hearing – cross examination, briefing witnesses, submissions | ||||
| · Preparing for sentencing hearing (when matter adjourned to another day for sentence) | ||||
| · Obtaining pre‑sentencing reports | ||||
| · Preparing and delivering sentencing submissions | ||||
| · Receiving verdict/sentence | ||||
| · Attending defended hearing and sentencing (up to and including 1.5 hours) | ||||
| · Any agent fees | ||||
| · Reporting to client. | ||||
| Defended Hearing / Sentencing Hearing – Additional Hearing Time | $48 | For: · Where hearing time for all defended/sentencing hearing attendances exceeds 1.5 hours · Any agent fees. | ||
| Additional fixed fees | ||||
| Applications for Bail, Name Suppression, Media Coverage, Electronic Bail Monitoring | ||||
| Activity | A | B | C | Tasks covered by Fixed Fee |
| Opposed application[s] for Bail, Name Suppression | $225 | For: · Taking instructions, attending the client | ||
| Electronic Bail Monitoring | $225 | · Receiving and reviewing disclosure | ||
| Opposed application[s] for Media Coverage | $225 | · Identifying legal and factual issues | ||
| · Preparing application | ||||
| · Liaising with other agencies and family, whanau – for bail applications | ||||
| · Attending hearing/s | ||||
| · Receiving decision | ||||
| · Any agent fees | ||||
| · Reporting to client | ||||
| Note, fee covers all hearing time. | ||||
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