Criminal Bar Association of New Zealand Inc v Attorney-General

[2012] NZHC 1572

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

CIV 2012-404-00992 [2012] NZHC 1572

UNDER  the Legal Services Act 2011 and the Judicature Amendment Act 1972, the Declaratory Judgments Act 1908 and/or Parts 18 and 30 of the High Court Rules

IN THE MATTER OF     certain actions and proposed actions of the New Zealand Cabinet, the Minister of Justice, the Ministry of Justice, the Secretary for Justice and the Legal Services Commissioner, including past, proposed

and purported exercises of statutory power under the Legal Services Act 2011 by the Secretary for Justice and the Legal Services Commissioner

BETWEEN  CRIMINAL BAR ASSOCIATION OF NEW ZEALAND INCORPORATED Plaintiff

ANDTHE ATTORNEY-GENERAL First Defendant

ANDSTUART WHITE Second Defendant

Hearing:         21 May 2012

Counsel:         R E Harrison QC, G M Illingworth QC and K H Cooke for Plaintiffs

K L Clark QC, T Warburton and P D Marshall for Defendants

Judgment:      31 August 2012

JUDGMENT OF SIMON FRANCE J

CRIMINAL BAR ASSOCIATION OF NEW ZEALAND INCORPORATED V THE ATTORNEY-GENERAL HC WN CIV 2012-404-00992 [31 August 2012]

Introduction

[1]      The method by which lawyers have been paid for providing legal aid services to those charged with criminal offending has changed several times over the years. Initially, the Offenders Legal Aid Act 1954 placed the responsibility for deciding if there would be a grant of aid with the Court.  Under that scheme, the Law Society approved the lawyers who could do such work, and the rate of payment was set out

in a schedule to the Act.1

[2]      More recently there was the Legal Services Act 1991, which was an attempt to control costs by a move towards introducing fixed amounts for some services. That process was under the control of the Legal Services Board.  Then, the Legal Services Act 2000 placed all decision making in the hands of a newly created Legal Services Agency. That scheme introduced the concept of a maximum grant, whereby lawyers were allocated to an hourly rate reflective of their experience, and guideline hours were prescribed for various types of proceeding.  A claim could not exceed the guideline hours unless an amendment to a grant was sought and approved.

[3]      In 2009, seemingly in response to concerns over the increasing cost of legal aid and over the quality of work being provided by some legal aid lawyers, the government of the day commissioned Dame Margaret Bazley to review the system. Her report attracted much publicity.  There can be no doubt that many aspects of the latest   legal   aid   statute,   the   Legal   Services   Act 2011   (“the   Act”),   reflect recommendations made in the Report.

[4]      One of the features of the new Act is the abolition of the Legal Services Agency, and the transfer of responsibility for administering legal aid to the Secretary for Justice (“the Secretary”).2   Section 68 of the Act requires the Secretary:

to establish, maintain, and purchase high-quality legal services in accordance with this Act.

1      Fuller summaries of the history of legal aid legislation may be found in Legal Services Agency v Haslam (2007) 18 PRNZ 469 (HC). See also Afakasi v Registrar of Manakau District Court HC Auckland CIV-2010-404-8071, 27 May 2011 (Ellis J) and Clark, Afakasi and Vaenuku v Legal Services Agency [2012] NZCA 193.

2      Who is also the Chief Executive of the Ministry of Justice.

[5]      The Secretary’s decisions pursuant to this statutory function, and the new scheme he has implemented for how criminal legal aid work will be paid, are the focus of these proceedings.   Particularly challenged is the decision to introduce a schedule of fixed fees.  It is anticipated that 95 per cent of criminal legal aid cases will now be remunerated by payment of a predetermined fixed fee.

[6]      The plaintiff is an organisation to which many providers of criminal aid work belong.  It brings these judicial review proceedings and seeks an order quashing the new payment system as being inconsistent with the relevant statutory scheme and therefore unlawful.  There are various strands to the challenge, but the case can be captured by four inquiries.

[7]      First, was it permissible for the Secretary for Justice to introduce a fixed fee payment system for providers of criminal legal aid?  This challenge is, in part, based on  various  provisions  within  the  Legal  Services Act 2011  which  are  said  to  be incompatible with such a system.   Primarily, however, the focus is on the newly created office of Legal Services Commissioner.   That person is charged with responsibility for determining whether someone obtains a grant of aid, and, it is said, determining  how  much  that  grant  is  for.     The  Act  expressly  provides  for independence in these decisions, and it is said a fixed fee scheme improperly interferes with the Commissioner’s independent statutory function.

[8]      Second, if fixed fees are permissible, were the reasons behind the Secretary’s decision to implement such a scheme lawful?  Here it is contended that the Secretary wrongly considered himself bound by prior Cabinet decisions to introduce a fixed fee system.   This is said to be unlawful because the Secretary is required to act independently of government policy when carrying out this statutory function.

[9]      Further, in addition to considering himself obligated to introduce a fixed fee system, the Secretary also considered that the same Cabinet decisions required him to achieve ten per cent savings.  It is contended in relation to this that, for the same reasons as advanced in relation to the fixed fee model, the Secretary was wrong to consider himself bound to follow Cabinet’s direction.  Further, it is submitted that in any  event  the  Cabinet  decision  did  not  require  a  ten per cent  saving,  and  the

Secretary has therefore misdirected himself, and undertaken the whole exercise on an incorrect premise.  Finally, it is submitted that it was impermissible for the Secretary to have regard at all to budgetary constraints because they are incompatible with the statutory purposes.

[10]     The third question, if fixed fees are permissible and have been introduced for lawful reasons, is whether the process followed by the Secretary was lawful.  Here, the focus is on whether there was adequate consultation, and whether it was lawful for the Secretary to delegate his functions to the same person who was appointed the Legal Services Commissioner.   The contention here is that placing both functions with the same person impermissibly undermined the plain statutory aim of separation of functions.

[11]     The fourth question focuses on whether the particular scheme that has been introduced, if conceptually permissible, is a lawful exercise of the Secretary’s statutory function.   It is alleged that the scheme impermissibly fetters the Commissioner in carrying out his independent functions in that it does not allow sufficient scope to depart from the fixed fee in appropriate cases.  Further, it is said that the scheme is reviewably unreasonable – it cannot promote the statutory purposes, it is premised on flawed theories that the cost savings to the practitioner will offset the ten per cent cuts to an already inadequate remuneration rate, it is premised on a flawed theory that there will be occasions of overpayment whereas in reality all cases are already “unders”, and its long term effects will be to bring about the demise of the independent criminal bar.

How a lawyer is now paid for criminal legal aid work

[12]     The new criminal legal aid system is a combination of statutory provisions, and the regime introduced by the Secretary.  It begins, as one would expect, with an accused person applying for a grant of aid.  Section 71(1)(a) of the Act prescribes that it is the task of the Legal Services Commissioner to decide the application.  In

doing so, he3 must act independently from the Secretary.

3      The already two incumbents have both been male.

[13]     If aid is granted, a lawyer will be allocated.  Proceedings are divided into four categories:

(a)       PC1, being Judge alone cases;

(b)PC2,  being  jury  trials  where  the  highest  maximum  penalty  is ten years;

(c)      PC3, being jury trials where there is a finite maximum penalty greater than ten years;

(d)PC4,   being   jury   trials   where   the   maximum   penalty   is   life imprisonment, or the Crown has indicated it will seek preventive detention.

For the categories 1 and 2, a lawyer will be appointed on a rotation basis.4     For categories 3 and 4, lawyer of choice is available.

[14]     Remuneration will initially always be by way of fixed fee, except for a small group of serious offences that always fall into what is known as the high cost category, and concerning which fixed fees do not apply.  For fixed fee cases, there are two fixed fees payable –

(a)      the base fixed fee which covers taking instructions, trial preparation and defending the charge; and potentially

(b)specific additional fees applicable to certain applications, where such applications have been made – e.g. bail, name suppression, and other interlocutory applications.   Also, additional hearing time is payable

where the attendances exceed a stated number of hours.

4      The rotation policy was the subject of an unsuccessful challenge in Clark, Afakasi and Vaenuku v Legal Services Agency [2012] NZCA 193.

[15]     Set out below is an example of a fixed fee schedule.   It is the schedule applicable to category one cases, which are Judge alone cases.  Because the range of matters which may be presided over by a Judge is broad, there are three different levels of fee within category one (A, B and C below):5

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

5      Which of A, B and C applies depends upon the highest maximum penalty attaching to any of the charges.

Defended Hearing / Sentencing Hearing  – Additional  Hearing Time

$48

per half hour

Preparing for sentencing hearing (when matter adjourned to another day for sentence)

Obtaining pre-sentencing reports

Preparing and delivering sentencing submissions

Receiving verdict/sentence

Attendingdefended hearing and sentencing (up to and including

1.5 hours)

Any agent fees

Reporting to client. 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

$225Identifying 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.

[16]     There are two situations where a fixed fee will not be the payment method. They are:

(a)      complex cases (modelled to amount to 4.5 per cent of all criminal cases, but not limited in number or overall cost by the scheme itself); and

(b)high cost cases (expected to amount to 0.5 per cent of all cases, but again not restricted to that level by the scheme).

[17]     Complex cases.   Where an application for payment other than by the base fixed fee is successful, the case is transferred to the complex cases category.  It will be necessary at  a later  point  to set  out in  more detail  some  of the criteria for classification as a complex case.  For now it can be said that first it is necessary for the particular case to exhibit certain features – e.g., more than five accused, more than 200 pages of disclosure etc.  Second, if the case has such features, it must also be determined that the applicable fixed fee is “completely inadequate”.  Once a case is allocated to the complex case category, a different maximum grant will be set, calculated by reference to an hourly rate.

[18]     High cost cases.  High cost cases are identified by one of two methods.  First, there is a list of offences.  If an accused is charged with one of those offences, his or her grant will automatically be managed as a high cost case, as will the grant of any co-accused,  whatever  their  charges.     Alternatively,  there  are  general  criteria

identified which may indicate high cost is the appropriate category.  The two main general  criteria are an  anticipated  cost  of more than $30,000,  or intense public interest.

Issue one – Does the Legal Services Act 2011 allow the Secretary to introduce a fixed fees regime?

[19]     The starting point for this issue is to consider the respective roles given to the

Secretary on the one hand, and the Legal Services Commissioner on the other.

[20]     By virtue of ss 68 and 69 of the Act, the Secretary is tasked with maintaining the system of legal aid. As part of that function the Secretary may:

(a)       assess  and  determine  the  need  for  legal  services  by  people  with insufficient means;

(b)      determine the method or methods for the delivery of legal services; (c)           determine the allocation of legal services;

(d)contract with individual lawyers, groups of lawyers, or law firms to provide these services;

(e)       employ salaried lawyers to provide these services;

(f)       monitor the performance of legal aid providers, including approving who may be a legal aid lawyer, and for what work; and

(g)institute quality assurance requirements and conduct audits to assess compliance with practice standards and guidelines.

[21]     These are very much framework tasks – set up the systems, hire or contract lawyers to provide them, and monitor that they are doing the task properly.  What is not covered within these tasks is dealing with individual cases, because that is where the Legal Services Commissioner comes in.  The Legal Services Commissioner is a

new  office  created  by  the Act.    This  person’s  task  is  to  consider  and  manage individual applications, and to allocate lawyers to cases where an application for aid has been successful.   Importantly, s 71(2) of the Act says that the Commissioner must  act  independently  when  performing  this  function.     The  Commissioner otherwise is required to be an employee of the Ministry and, other than as regards this function of managing individual applications for aid, is required to act under the direction of the Secretary and Minister.

[22]    The desire for independence in the Commissioner’s task of determining individual applications is explained by the Select Committee: 6

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. (emphasis added)

[23]     The primary argument advanced by the plaintiff for why the fixed fee system is impermissible is the proposition that it interferes with this independent function of the Commissioner.  The plaintiff points first to a combination of ss 23 and 16(2)(c) of the Act.  Section 23 introduces the concept of a maximum grant:

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.

(3)       When determining a maximum grant, the Commissioner may take into account any delay on the part of the applicant in applying for

legal aid and the reason for the delay.

6      Legal Services Bill 2010 (189–2) (Report of Justice and Electoral Committee) at 6.

[24]     Section 16(2)(c) confirms that it is the Commissioner who may specify a maximum grant. The plaintiff takes two points from this:

(a)       the existence of a maximum grant is discretionary; (b)           it is the Commissioner who decides this.

[25]     From this it is contended that the scheme as introduced is inconsistent with both points.  In effect, for at least 95 per cent of cases, a maximum grant (namely, the fixed fee) is specified by default, and it is the Secretary who is doing this, not the Commissioner.

[26]     This submission was buttressed by the proposition that legal aid is demand driven and not circumscribed by annual appropriations.  So the budgetary constraints imposed by the Public Finance Act 1989 on Chief Executives are said not to apply. Rather,  it  is  submitted  that  legal  aid  spending  is  authorised  by  a  permanent legislative authority which means that it costs what it costs and no annual appropriation is needed.  Reliance for this proposition is placed on s 100 of the Act which directs the Secretary, without discretion, to  pay a claim approved by the Commissioner.

[27]     However, an obligation to pay an individual account cannot be translated into the proposition that the prior commitment to acquire the services that led to that account is unrestrained.  A permanent legislative authority is a rare thing, reserved generally for protection from political interference the salaries of office holders whose  independence  from  government  is  a  vital  cog  in  our  system.    McGee

describes a permanent legislative authority in these terms:7

Sometimes the same statute provides, in separate sections, both the legal authority  for  the  activity  and  for  the  appropriation.     This  type  of appropriation is known as “permanent legislative authority” ...

7      D McGee Parliamentary Practice in New Zealand (3rd ed, Dunmore Publishing, Wellington

2005) at 453 and 456.

In respect of some matters, the Act which provides for carrying on the activity goes on itself to authorise an appropriation for the purpose of that activity for an indefinite period.

[28]     Examples of activities or positions that are the subject of such authorities are the judiciary, Members of Parliament, the Ombudsmen and the Controller and Auditor-General.  Section 5 of Schedule 3 of the Public Audit Act 2001 provides an example:

The Auditor-General and Deputy Auditor-General are each to be paid out of the Crown Bank Account, without further appropriation than this section,

(a)      a salary at such rate as the Remuneration Authority from time to time determines ... (emphasis added)

[29]     No such provision applies to the funding of legal aid and s 100 of the Act is certainly not such a provision.  There is little one can say other than no permanent legislative authority exists in relation to it, and the funding is in by way of an annual appropriation, now to be found as part of Vote Justice.  That means, amongst other things, that the Chief Executive is obligated to ensure spending comes within it.

[30]     Other provisions within the Act were also relied upon by the plaintiff as being inconsistent with a fixed fee –

(a)      section 90 enables an aided person to ask the Commissioner to review an account to assess if more time is being claimed than has been actually spent.  This is said to contemplate that payment will be on a time spent basis.  It also arguably tells against the idea of overs and unders, since overs are challengeable;

(b)section 9 contemplates regulations in which a prescribed maximum grant is identified for certain offences also prescribed by the regulations.  The significance of this is said to be that since s 9 talks of a prescribed maximum grant, this leaves no general scope for the scheme to use fixed fees outside the scope of s 9; and

(c)      section 52 which provides that the Legal Aid Tribunal may review the Commissioner’s decision in relation to a maximum grant of aid, thereby emphasising who the decision maker is to be.

[31]     Finally,  reliance  is  placed  on  the  decision  in  Legal  Services  Agency  v Haslam.8   Although that decision arose in the context of a individual’s challenge to the adequacy of his grant of aid under the preceding Act, it is noted the relevant statutory provisions are little changed.  Concerning these, Asher J concluded:

The Agency must, therefore, pay a practitioner for sufficient time to properly prepare the defence, whatever the nature or gravity of the charge.

[32]     I note the context of the comment was on whether the seriousness of a charge affected a lawyer’s obligations  in terms of how much effort to put into it, and whether the Agency could differentiate on this basis.

[33]     I consider first the issue of whether predetermined fixed fees are possible, and then turn to whether the Secretary is permitted to set them.   In my view the proposition  that  payment  must  only  be  on  an  hourly  rate  basis  is  not  correct. Section 23(2) of the Act says that:

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.  (emphasis added)

[34]     I see no reason to read this down and require only time based systems.  I also consider the differences between the old system and the new are over-stated.  Under the previous model, the maximum grant was an hourly rate capped by guideline hours.   Although called guidelines, they were limits that could not be exceeded without approval, and the evidence filed on this review is that practitioners often exceeded the guideline but did not claim. Accordingly, there was a type of fixed fee, namely the hourly rate times the guideline hours.  It is true there were three different hourly  rates  depending  on  the  lawyer’s  classification,  but  it  was  still  a  capped

payment.

8      Legal Services Agency v Haslam (2007) 18 PRNZ 469 (HC) at [35].

[35]     The point is further illustrated by reference to the method chosen here to identify the fixed fees.   Essentially they represent the average claim over the last year  for  all  legal  aid  grants  for  that  type  of  proceeding.9      To  that  extent  the differences  are  not  as  significant  as  being  claimed.    The  Act  contemplates  a maximum grant may be expressed in total dollars, and I see little reason to hold otherwise.

[36]     It is the case that a fixed fee reduces the capacity of a grantee to seek review under s 90, but it is to go too far to suggest that this review power should dictate the method of calculating payment.  The provision still has a purpose as it still applies to refusals to amend, and to the claims in complex and high cost cases.

[37]     The more difficult issue is whether the Secretary or the Commissioner should set those rates.  There is merit in the plaintiff’s argument, and it cannot be denied that the Act speaks of the Commissioner setting a maximum grant.   However, I consider that what the Secretary has done is permitted.

[38]     First, it is arguable that the Commissioner still plays a role in all maximum grants.  For the bulk of cases he does so by applying the fixed fee, rather than by transferring the case to another category.  While he does not set the quantum of the fee, he does “decide” if the fixed fee will be the maximum grant.  However, I accept that this should not be overstated.  The reality is that the fixed fee is set by default, and absent  an amendment application, the Commissioner is unlikely to  actually consider whether it should apply.  But the point remains that he has the capacity to fix a different maximum grant if circumstances warrant.

[39]     Second, the text of the Act is not entirely consistent on this point.   As a contrast to the statutory language argument based on the claimant’s review right in s 90, consider s 99 which places the task of assessing a claim on the Commissioner.

The grounds for deferring a claim include:

9      Less ten per cent, a point to be returned to.

the claim or part of the claim appears to the Commissioner to be excessive in

l i ght  of  t he  Secr etar y’s  standar d  r at es  f or  payment  or the  Commissioner’s experience with comparable claims; or

an aided person has requested examination (my emphasis).

[40]     So  this  provision  expressly provides  that  the  Secretary will  set  rates  for payment.  I see no reason to read that as not including fixed fees.

[41]     Further, the Act contemplates that limits may exist on the Commissioner’s discretion in relation to maximum grants.   Section 114 of the Act says 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 ...

[42]     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.

[43]     Accordingly,  whilst  I accept there are some indicia pointing towards the Commissioner being the one to set the rates, the wider picture indicates that that function has correctly been carried out by the Secretary.

Issue two – If fixed fees are permissible, were the reasons why the Secretary adopted a fixed fee model lawful?

[44]     It is necessary to begin with further facts.

[45]     As might be expected, following the Bazley Report, the Ministry undertook work  on  a  new  scheme.    Some  immediate  responses,  essentially  in  line  with Dame Margaret Bazley’s    recommendations,    were    agreed    by    Cabinet    in December 2009, at which time the Minister of Justice was also invited to report to Budget Ministers by the end of November 2010

with options including reprioritisation options to establish a sustainable and affordable   baseline   for   legal   aid   and   community   law   centres,   for consideration in Budget 2011.

[46]     This was duly done in accordance with  government procedures on these matters.   Papers and proposals were prepared, and these were considered by the applicable committees before being referred to Cabinet.

[47]     There are two events that occurred in this period that should be noted.  First, on 4 August 2010 the Government introduced into Parliament the Legal Services Bill 2010.  It reflected various recommendations from the Bazley Report including transferring administration of legal aid to the Ministry of Justice, disestablishing the Legal Service Agency, creating the office of the Legal Services Commissioner, and introducing quality assurance systems.  Second, in February 2011, Cabinet agreed to the proposals advanced under the name of the Minister of Justice concerning the funding of legal aid.  These arose from the December 2009 direction to the Minister to prepare proposals concerning the approved baseline for legal aid funding.   In particular, it was agreed that the Public Defender Service would be expanded, and that there would be introduced a system of fixed fees which would apply to the vast majority of legal aid work.

[48]     The paper that went to Cabinet for approval projected the savings that would be achieved if the proposals contained within it were adopted.  Various tables were included which noted how and where the savings would be achieved, so that the total spend on legal aid would come into line with the agreed baseline.  For the purposes of this case it can be noted that:

(a)       the projected savings were modelled on a ten per cent reduction in the average cost per grant;

(b)      this    figure    of    ten per    cent    was    never    separately    identified.

Accordingly, although the tables and the paper are modelled on that basis, and although the figures put to Cabinet could only be achieved by pursuing that percentage reduction, the Cabinet decision and paper did not itself refer expressly to ten per cent, nor expressly mandate a ten per cent reduction.

[49]     The Legal Services Act came into force on 1 July 2011.   Prior to that, the Legal Services Agency, headed by Mr White, had begun work on a new system. However,  as  previously  noted,  immediately  prior  the  Act  coming  into  force Mr White  was  both  appointed  Legal  Services  Commissioner,  and  delegated  the Secretary’s functions under the Act.

[50]     The Act itself does not dictate a particular legal aid model, and while work continued on a new framework, legal aid providers continued to be approved and paid under the old scheme, now run by the Ministry, and administered by the Legal Services Commissioner.   Planning for the new model took as fixed starting points that it would consist of a fixed fees system, and that it would need to achieve a ten per cent saving in the average cost per grant.

[51]     The consultation that was undertaken was done on that basis.  In other words a fixed fee model, and overall savings of ten per cent, were non-negotiables.  The primary focus of the consultation was on whether the fixed fee amounts allocated to various steps and proceedings were correct, or should be adjusted.  It was made clear that any adjustments would necessitate off-setting adjustments to other fees so that the total spend remained the same, but within those limits, input was sought.  And given.   Several changes were made to reflect the submissions.   Also, as will be discussed, recalculation of the averages was done.

[52]     The fixed fee regime was implemented on 5 March 2012.  In anticipation of that, the Ministry had requested all lawyers who wished to be legal aid providers to re-apply  by  31 December 2011.    A key  facet  of  the  government  case  in  these proceedings are the numbers of lawyers now available subsequent to that reapplication process.  In broad terms the Secretary has today available to him, for

each  category of  legal  aid  work,  the  same  number  of  lawyers  he  had  prior  to

31 December 2011.    These  lawyers  have  been  approved  for  each  category  in accordance with new Regulations that identify the work qualifications needed for that level of certification.  So the profile of the group is essentially unchanged.

[53]     To illustrate, in the year preceding 31 December 2011, 954 individual lawyers did more than one legal aid case.  As at 31 December 2011, the number who had sought approval to work under the new fixed fee scheme was 940; this has now risen to 1029.10

[54]     In terms of allocation of work to those lawyers, as at 18 May 2012, 10,025 applications for legal aid had been approved under the new scheme, with 7524 cases allocated to private lawyers, and the rest to the Public Defender Service.   Of the

7524 allocated to private lawyers, 7455 were approved as fixed fee cases.

[55]     Against that factual background, I turn to the plaintiff’s challenge.  The focus is on the Secretary’s decision to implement the cabinet decisions.   The following extract from the plaintiff’s written submission captures the essence of its argument:

Put  shortly,  therefore,  the  Secretary  for  Justice,  when  performing  his functions and exercising his powers under the 2011 Act, is an independent statutory  functionary  and decision-maker.    He  is  not  subject  to  external direction either Governmental or Ministerial; or indeed to “self-direction” by his  own  hand,  wearing  his  “Departmental  Chief  Executive”  hat.     In particular, contrary to the submission made in Clark para 58, the 2011 Act imposes no obligation on him to perform his functions “within the Ministry’s appropriations”.

In that regard it is instructive to contrast ss 68 and 70 of the 2011 Act.  The Act confers (subject to significant exceptions) an express power on the Minister (and also the Secretary) to give binding directions to the Legal Services Commissioner.  By contrast, s 68 confers no such power in relation to the Secretary.  By virtue of s 68(1) all functions to be performed by the Secretary for Justice in relation to the 2011 Act are required to be “conferred or imposed” on him or her by legislation, nor by either Cabinet or the Minister.

10     In fairness, it should be noted that the pre-31 December 2011 figure of 954 was limited to lawyers who did more than one case. The total number of lawyers doing a case would no doubt be higher.

[56]     There is of course no issue that the Secretary must act within the limits of the power conferred by statute, and consistent with its purposes.  The proposition being advanced by the plaintiff is that the Legal Services Act 2011 requires the Secretary, when carrying out his s 68 function, to act independently.   In particular, he is not obligated to implement government policy.

[57]     There is little in the statutory language to support this proposition.  I do not accept the submission that something can be made of the fact that other parts of the Act expressly deal with independence. This happens in relation to the Commissioner who has a dual role.  Some parts of his functions are to be carried out independently, and some under direction.  The need to address it expressly is explained by this dual role.

[58]     Moving outside the Legal Services Act 2011, ss 32 and 33 of the State Sector Act 1988 establish that a chief executive of a Department is obligated to implement policy unless a statute says otherwise:

32       Principal responsibilities

The chief executive of a Department shall be responsible to the appropriate 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

(b)       The tendering of advice to the appropriate Minister and other

Ministers of the Crown; and

(c)       The general conduct of the Department; and

(d)       The efficient, effective, and economical management of the activities of the Department.

33       Duty to act independently

Notwithstanding anything in section 32 of this Act,… in matters relating to decisions on individual employees (whether matters relating to the appointment, promotion, demotion, transfer, disciplining, or the cessation of the employment of any employee, or other  matters), the  chief executive of a  Department  shall not be responsible to the appropriate Minister but shall act independently.

[59]     Section 32   was   considered   in   Archives   and   Records   Association   of New Zealand v Blakeley.11   The judgment of a Court consisting of Richardson P, and Gault, Blanchard and Tipping JJ, was written by Keith J.  Sir Kenneth observed:

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.

[60]     Within this passage one finds an expression of the norm, and an identification of  circumstance  of  departure,  the  latter  being  when  it  is  the  intention  of  the instrument conferring the power that the recipient of the power exercises it autonomously and independently.  When one considers that what is in issue here 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 dollars,12  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.

[61]     Factors identified in the Archives judgment as relevant to determining the autonomy or otherwise of a statutory function include the character of the power, the nature of the body that is to exercise the power (i.e. whether a separate legal entity), the terms of appointment and tenure of the decision maker, the description of their power, the procedures they are to follow, and the provisions for challenging their decisions.

[62]     Many of these inquiries do not fit when the inquiry is into a broad function such as establishing a legal aid system.  For example, it is obviously inapt to talk of provisions for challenging the decision.   That is an inquiry much more suited to individual decision making.   However, some of the Archives criteria can be considered.   Section 68 is a broadly worded  function circumscribed only by an

equally broad and undefined aim – high-quality legal services.  It is to be carried out by the Chief Executive, a person subject to what Keith J refers to as:13

the standard situation of full responsibility between official, chief executive and Minister.

[63]     The very fact that individual decisions were separated out, and given to a different office holder who is required to act independently, is an obvious sign, in my view, that the same does not apply to the Secretary when carrying out his functions.

[64]     In Archives, the issue was the relationship between the Secretary for Internal Affairs and the Chief Archivist.  The position of Chief Archivist was established by s 6 of the Archives Act 1957 which required the office holder to be an employee of the  Department  of  Internal  Affairs,  and  be  under  the  general  direction  of  the Secretary for Internal Affairs.  The dispute involved where the balance lay between that general responsibility to the Secretary, and the independent performance of the Chief Activist’s  core professional  responsibilities.   After reviewing the  statutory

provisions Keith J concluded:14

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 powers 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 the 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.

[65]     Similar observations apply here.   The Chief Executive is responsible for establishing a legal aid system which delivers high-quality legal services in accordance with the Act, including the general purposes of delivering aid to those

who have insufficient means in a manner which is the most effective and efficient. In doing so there must be recognition of the independent statutory functions of the Legal Services  Commissioner and  the system  must  allow those  functions  to  be performed.  But also, to repeat a sentence from the above passage:

Lying behind the Secretary’s power is the control of the Minister and more

generally of Cabinet especially as exercised though budgetary decisions.

[66]     The other cases relied on by the plaintiff were Curtis v Minister of Defence, Tyler v Attorney-General and Ankers v Attorney-General.15   The latter two involved different  situations.     In  Ankers,  the  Director-General  of  Social  Welfare  was authorised by the Social Security Act 1964 to pay special benefits.   Analysed in terms of the criteria identified by Keith J, and without needing to divert into the detail of that legislation, one’s instinct is immediately to accord such a function an

appreciable  measure  of  independence.     No  doubt  in  recognition  of  this,  the legislation empowered the Minister to issue general (rather than case specific) directions, and the case turned on the proper scope of such directions. A very similar issue was involved in Tyler, and I have not found these cases helpful in terms of the present situation.   Curtis is conceptually closer as it involved consideration of a broader power, namely the Minister’s ability to disband the air combat force capability of the Royal New Zealand Air Force.  Again, however, the case turned on the interpretation of the particular Act and whether that legislation required an armed Air Force.  What the judgment does reinforce, however, is that all such exercises of power are constrained by, and must be exercised in accordance with, the statute which authorises the activity.

[67]     Bringing these threads together, when one has regard to the fact that legal aid is subject to normal budgetary constraints effected by the standard appropriation process, and also has regard to the broad language of s 68, I have no doubt that it was the Secretary’s task to establish the legal aid system, and that that task included the ability to control expenditure and set fees.  Further, the normal responsibilities between Chief Executive and Minister apply.  The Act did not intend to, and does

not,  require  the  Secretary  to  act  independently  of  government  policy.    Nor,  to

15     Curtis v Minister of Defence [2002] 2 NZLR 744 (CA); Tyler v Attorney-General [2000] 1

NZLR 211 (CA); and Ankers v Attorney-General [1995] 2 NZLR 595 (HC).

respond to another submission, do I consider it matters that the government policy was set prior to the Act coming into force.  The comparison the plaintiff draws with Fitzgerald v Muldoon is not valid.16  Although here the decision was prior to the new Act coming into force, the challenged policy was not put into place until after that time.    So  too,  the  delegations  and  appointment  of  Mr White  as  Legal  Services Commissioner only took effect from when the Act came into force.  There is no rule against making decisions in preparation for the Act coming into force, and nothing was done that purports to suspend legislation.

[68]     This conclusion that the Secretary is not independent of government policy flows readily from the various statutory provisions that have been considered.  It is, however, reinforced by reference to the relevant background material, and in particular  Dame Margaret Bazley’s  report.    The  Legal  Services  Agency  which existed under the previous Act was a Crown agent.  The Crown Entities Act 2004 stated that Crown agents such as the Legal Services Agency are required to give effect to government policy when directed to by the responsible Minister.   When considering  whether  this  was  an  appropriate  model  for  the  legal  aid  system,

Dame Margaret had written:17

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.

While decisions on individuals’ access to legal aid need to be – and to be seen as – free from political influence, there is no readily apparent reason to operate the entire legal aid system at arm’s length from the government. That level of independence can be achieved in a form that requires less infrastructure and fewer overheads than a Crown agent.

[69]     One can  see in  this  passage the model  that  has  emerged.   The level  of independence necessary for decisions on individuals’ access to legal aid has been

achieved by creating the office of Legal Services Commissioner, and by expressly

16     Fitzgerald v Muldoon [1996] 2 NZLR 615.

17     At [130] and [131].

mandating independence in those functions.  Otherwise, however, the system is not independent from government, and the overall control has been brought back into a government department.  The independence inherent in an agency set up under the Crown  Entities Act 2004  has  been  abandoned.    Thus,  whilst  one can  reach  the position I have come to by consideration only of the text of this statute, and of related governance legislation, the published background to the changes reinforces that plain meaning and effect.

[70]     Since the Secretary is properly required to implement government policy, the claims of illegality based on the Cabinet decisions must fail.  I record, however, that I do not agree that the Secretary misunderstood the effect of the Cabinet Minutes in relation to requiring a ten per cent cut.   Regard must be had to the whole policy making process, starting with a request to the Minister to report on an amended baseline.   The Cabinet paper, including the projected savings, is not to be read in isolation.  There is, in my view, no doubt that the defendant’s evidence is correct, and the ten per cent savings were required.

[71]     The second major limb to this challenge is the proposition that the Secretary had   regard   to   irrelevant   considerations,   namely   cost-cutting.      The   plaintiff emphasises that the sole statutory purpose is that found in s 68(1), namely:

to procure and maintain high-quality legal services.

[72]     It  is  submitted  that  a  policy  which  is  motivated  by  a  desire  to  achieve ten per cent savings is inherently inconsistent with the terms in which the power has been conferred.   In the present case the obvious inconsistency is said to be exacerbated by the reality that the existing system was already underfunded.  In the preceding 15 years the rates had only increased 8.5 per cent, a figure several times below the amount by which the Consumer Price Index had risen.  The reality is that the system cannot deliver high-quality legal services, and that is submitted to be plain from these facts.

[73]     There is no dispute as to the applicable law in terms of “improper motives”,

and the following passage relied on by Dr Harrison QC is helpful:18

[Even] 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”.  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.

[74]     There is material here that assists both parties.  The plaintiff emphasises the need to promote the Act’s policies.   The defendants note that the pursuit of other purposes does not invalidate if the statutory purpose is not compromised.

[75]     A point of dispute between the parties is the relevance to this issue of s 3 of the Act, which provides that the purpose of the Act:

is to promote access to justice by establishing a system that:

(a)       provides legal assistance to people of insufficient means; and

(b)       delivers those services in the most effective and efficient manner.

[76]     The defendants draw support for the Secretary pursuing a secondary focus of cost-cutting from the statutory purpose of efficiency.  The plaintiff submits that this is incorrect.

[77]     Under  the  Legal  Services  Act 2000,  the  primary  function  of  the  Legal

Services Agency was to administer the legal aid schemes in:19

as  consistent,  accountable,  inexpensive  and  efficient  a  manner  as  is consistent with the purpose of this Act.

[78]     The plaintiff notes the absence of an equivalent provision in the present legislation and submits the concept of inexpensive cannot be read back in to the present Act by misconstruing “efficient” in the general purposes provision.  It says

efficient  means  efficient  and  not  inexpensive.    It  also  emphasises  that  the only

18     Unison Networks Ltd v Commerce Commission [2007] NZSC 74; [2008] 1 NZLR 42 at [53].

19     Legal Services Act 2000, s 92(a).

expressed purpose is to acquire high-quality legal services, and that a prime driver of Dame Margaret’s inquiry was concerns over quality. When these matters are brought together  it  is  submitted  to  be  plain  that  a  motive  of  reducing  existing  cost  by ten per cent is not only irrelevant, it is directly inconsistent with the actual statutory purposes.

[79]     I am in general agreement with the defendants that it is permissible 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.

[80]     I also consider that s 3 of the Act is not to be ignored, and that efficiency properly incorporates considerations of costs.  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”.20     Whilst it is true the Report was

interested in the quality of services, it also had things to say about cost.

[81]     The third topic to be considered until this section is the New Zealand Bill of Rights Act 1990.  The proposition advanced is the scheme is so poorly funded that defendants will be denied their rights under s 24 of that Act.  In particular, it is said that  their  rights  to  receive  legal  assistance  without  cost  (s 24(f)),  and  to  have adequate facilities to present a defence (s 24(d)) will inevitably be compromised.  In Abdula v R the link between s 24 rights and “the overarching right of a person

charged to a fair trial” (s 25(a)) was highlighted.21

20 At [10] of the Report. Further, the quote at [68] above discusses these concepts within the context of public expenditure. Efficient is defined in the New Zealand Oxford Dictionary as “productive with minimum waste”, a concept not inconsistent with considerations of expenditure.

21     Abdula v R [2011] NZSC 130, [2012] 1 NZLR 534 at [22].

[82]     The plaintiff also relies on the decision of Asher J in Legal Services Agency v Haslam  where the  obligations  are  expressed  as  being to  fund  the lawyer  for  a “sufficient time to properly prepare the defence”.22

[83]     The difficulty that one encounters in proceedings such as the present is that they do not involve, as in Haslam, a particular case.  There are no facts to consider, and no individual decisions in relation to those facts to assess.  So one is left at this very early stage to review the scheme as a whole and determine if it is generally capable of delivering a defendant his or her rights under the New Zealand Bill of Rights Act 1990.   Presently I consider that inquiry can only be answered in the affirmative.  The factors I now identify equally show, in terms of the Unison test, that it cannot be said the secondary purpose has undermined the s 68(1)(a) purpose:

(a)      Regulations  prescribing the levels of experience needed by lawyers in order to do legal aid work on  different types  of cases have been passed;

(b)lawyers with that nominated degree of experience have been asked to contract to provide legal services under this legal aid scheme promulgated by the Secretary;

(c)      the  promulgated  scheme  includes  quality  assurance  requirements, auditing requirements, and identified remuneration rates;

(d)the promulgated scheme also occurs within the context that those who agree to undertake this work know are obligated, by statute and by

their professional ethics, to fulfil their obligations to their clients;

22     Legal Services Agency v Haslam (2007) 18 PRNZ 469 (HC) at [35].

(e)      pursuant to his request for lawyers, the Secretary has received what he considers sufficient applicants to do each category of work, and the numbers he has obtained are broadly similar to those he had available under the old scheme; and

(f)      within the scheme, there is scope for the Commissioner to adopt a payment method other than the fixed fee.   The Commissioner’s decision not to do so in a particular case is subject to review first by the Commissioner, and then by a Legal Aid Tribunal.

[84]     Against that list of factors I do not accept the proposition that the scheme does not have regard to the New Zealand Bill of Rights Act 1990, and cannot deliver a defendant his or her rights.   Beyond that it is not possible to comment.   The challenge needs particular cases, and specific facts.   Inevitably there will arise individual cases where the funding is shown to be inadequate.  If there are too many of those it may well indicate a systemic problem, but at this point that is not a conclusion I could reach.

[85]     Accordingly, I consider the second broad challenge, which has focussed on the factors taken into account when implementing the scheme, fails.

Issue three – Did the Secretary follow a proper process?

[86]     Two issues arise here.  First, was the Secretary required to consult in relation to fixed fees and the intended ten per cent saving?  Second, was it impermissible to delegate his functions to Mr Stuart White, who was also the person appointed Legal Services Commissioner?

[87]     The challenge concerning consultation is narrow in its ambit.   There is no general complaint about the consultation that occurred.  The focus is solely on the issue of whether that consultation should have included the two matters of fixed government policy – a fixed fee system and ten per cent savings.

[88]   The Act does not impose any statutory obligation to consult.   Good administration no doubt nevertheless required it, and it happened.  I do not consider the Secretary was obligated to include as part of that “voluntary” consideration process the two matters concerning which he regarded himself as having no choice. As it happens, the plaintiff nevertheless addressed the topics, but obviously those submissions did not lead to any change on these two points.

[89]     The authorities to which I was referred discuss the extent of a consultation obligation in circumstances where the statute imposes a duty to consult.23    I do not consider there is any statutory duty here; plainly there is no express duty but nor is one to be implied into  the text of the statute.   The Select Committee Report24 specifically commented on the absence of such a duty, it being left to the Ministry to consult as appropriate.   This is, in my view, consistent with the reality that the Ministry, and the Secretary, are not acting independent of government policy.   I conclude there was no consultation breach.

[90]     The second issue is the dual role of Mr White.  The plaintiff’s argument is that Parliament carefully segregated the functions of the Legal Services Commissioner  from  those  of  the  Secretary.    It  is  submitted  that  by  appointing Mr White the Legal Services Commissioner, and at the same time delegating to him many of the Secretary’s functions, the statutory scheme is undermined.  It is said it is not rationally possible for a person to switch between these independent functions, and the policy controlled administrative ones.  Parliament carefully divided the roles, and it is undermining the scheme to combine them.

[91]     I do not agree.  The statute requires the Commissioner to be an employee of the Ministry, and it requires the Commissioner to act under the direction of the Secretary and the Minister other than in the conduct of the independent functions. Therefore putting to one side the delegations received from the Secretary, the Act itself contemplates that the Commissioner will have a dual role that necessitates both

acting under direction and acting independently.

23     Wellington International Airport Ltd v Air New Zealand [1993] 1 NZLR 671 (CA).

24     Legal Services Bill 2010 (189–2) (Report of Justice and Electoral Committee) at 6.

[92]     This is not an unusual concept, and there are many office holders who have such dual functions.  The Commissioner of Police and the Solicitor-General are but two that spring readily to mind.   If the Act contemplates that the Commissioner might have tasks that require him to act under the direction of the Secretary, I can see no logical reason why the Secretary cannot delegate some of his functions.

[93]     In saying this I do not suggest it was expected, from the statutory scheme, that the same person would both implement the scheme and take independent decisions under it, but I do not consider the Act prohibits it.

[126]   The second thread from the evidence is frustration with aspects of the new scheme.  This runs from the unnecessary complexity involved in people reapplying to  do  work  they  have  done  for  many  years  without  complaint,  through  to  the inaptness of many of the forms.  Judicial review is an unlikely forum for this type of complaint, but the broader purpose is to challenge the defendants’ proposition that the fixed fee system will bring about administrative savings.33

[127]   The third theme to be noted concerns the fixed fee concept.  Many say it is premised on flawed reasoning.   First, the idea that cases are uniform is illusory. Variations in even the most basic of case can arise unexpectedly.  Whilst the essential subject matter may be the same, the circumstances and communication skills of accused people vary markedly.  Even the amount of time involved in the process of seeking aid can vary wildly depending upon the accused’s circumstances, access to information and the lawyer’s access to the accused.  Second, it is said that using the

existing level of claims as a base for fixing the current fees was flawed because the

32     The defendant properly points out that almost all deponents did in fact reapply for approval.

33     I was reminded during the hearing that the scheme was in its early days, and an early review of its processes is planned. I of course accept the Secretary and Commissioner are committed to this, and so indicate that there is much material in these affidavits that merits consideration and response.

existing claims already did not capture the true cost.   Many deponents say they exceeded the guideline hours under the old scheme but did not claim, or seek a variation.  Few ventured to quantify this, but for those who did, the figure seemed generally to be 10–20 per cent more time than claimed.34

[128]   I address first the alleged reasoning flaw which focuses on the concept of overs and unders.  It is submitted there will be no overs, so the concept fails from the start.  There will be no overs because the data used to calculate the fee was flawed, as showed by the evidence.  Second, the data was processed to obtain an average but that average was immediately cut by ten per cent, so with that most of the overs will be gone anyway.

[129]   Further in relation to the data used to calculate the averages, evidence was filed at the hearing of email exchanges involving Mr White, the second defendant. The  emails  were  capable  of  carrying  the  inference  that  Mr White  doubted  the reliability of the data.  Mr White was given leave to reply, and I accept his evidence that such an inference is not correct.   I record that generally the evidence filed in relation to the data did not cause me to doubt its legitimacy as a source of calculating the fixed fee.

[130]   The statements  by the  deponents  that  the claims  previously filed do  not reflect actual time expended is not capable of response.  The claims filed are what they are.  There was a system in place to seek variation; if people did not use that,35 the Ministry cannot be criticised for using the actual claims that were made.  There is no sensible basis on which to adjust them to reflect this concern.

[131]   I accept that the decision to reduce the average by ten per cent will reduce the number of overs.   However, there was no evidence filed as to the extent of this effect.   Further, the process was not one way.  As a result of the consultation, the

Ministry  accepted  that  some  low  claims  might  be  affecting  the  averages.    It,

34     The defendants note that although most or all of these deponents query a fixed fee system, the

plaintiff ’s own survey showed 41 per cent of lawyers were not opposed.

35     I acknowledge that this may have been in anticipation of it being declined.

therefore, removed these from the figures, and did a recalculation.   This saw the average increase between four per cent and eight per cent depending on the category.

[132]   The issue at this point is not the adequacy of the fee but the method by which it was set.  I do not accept it was an irrational method; nor has it been shown that there will not be overs.   Indeed it seems inevitable there must be some given that

85 per cent of claims are likely to be PC1, and of these 40 per cent may attract an immediate guilty plea.   The possibility of an over in this sort of scenario must be high.  The concept of averaging means there should be overs.  How many there will be has been affected by the ten per cent cut one way, and the deletion of law scores the other way.  It cannot be said at this point that the outcome is that there will be none.

[133]   The other unreasonableness challenge is that the scheme is not capable of delivering on the statutory purpose of high-quality legal services.   It is, therefore, unlawful because it subverts that purpose.

[134]   I begin by setting out the nine factors on which Mr Illingworth QC relied:

(a)      the scheme is premised on a false assumption that an appropriation was needed to fund legal aid;

(b)the scheme is premised on a false assumption that Cabinet required a ten per cent cut in funding levels;

(c)      the scheme ignores the thrust of the Bazley Report which is a focus on improvement in provider standards;

(d)there is a flaw in the reasoning.  It was considered that the position of providers would be improved by a reduction in the amount of administration required.  This reduction was argued to compensate for reduced rates.   However, the rates were already demonstrably inadequate, being that the 1996 rates increased since then by only

8.5 per cent,  a figure significantly less than the equivalent  cost of

living increases.   Further, the administration time (allegedly) being saved was already unpaid work, so it cannot offset  a decrease in funding;

(e)      the regime is flawed because it ignores the statutory discretion given to the Commissioner to fix a maximum grant, or not;

(f)      an overs and unders regime is inconsistent with the statute, and is flawed because it ignores practitioners who do not regularly do criminal aid work.   The scheme will drive out senior counsel and senior practitioners who undertake only a selection of legal aid work, but whose presence is necessary for the achievement of high-quality legal services;

(g)the scheme improperly fetters the Commissioner because the tests for when he may move a case from the fixed fee category are too strict;

(h)the evidence of practitioners is that the scheme does not provide an economic return for work.  The defendants have not met this evidence with any evidence to the contrary;

(i)the overs and unders reasoning is flawed when it is considered that the starting point was the average under the old system, but that average was then immediately cut by ten per cent.  Given the evidence that the fees previously did not cover all the work done, the ten per cent cut is likely to absorb most if not all of the unders.

[135]   Of these I have already addressed (a), (b), (d), (e), (g) and (i).   Given the reasoning   underpinning   my   conclusions   on   those   topics,   I   do   not   accept Mr Illingworth’s submission that they might still cumulatively assist the plaintiff in buttressing  up  this  broader  challenge.    The  reasons  why  I  have  rejected  the challenges means these grounds do not provide support here.

[136]   To the contrary, I consider the rejection of two of the grounds significantly undermines this head of challenge.  The plaintiff’s case was very much underpinned by the ideas that the only goal the Secretary was permitted to have regard to was to purchase high-quality legal services, and that in doing so he was basically free of fiscal   constraint.     The   centrality  of   these  propositions   was   highlighted   by Mr Illingworth’s opening submission on reasonableness.  He submitted the starting point was that under the previous scheme criminal legal aid lawyers were poorly paid.  Since 1989 there had only been an 8.5 per cent increase in rates.  This being so, it necessarily followed that a new scheme which further reduced remuneration could logically not improve the quality of the legal services, and for that reason alone, must be contrary to the statutory purpose.

[137]   I have already discussed why I do not consider that the factors the Secretary may have regard to are so narrow.  And, of course, even on the plaintiff ’s view of s 68 of the Act, the statutory function is not to enhance the quality; it is to acquire high-quality services, and presumably even within that description there is a range of levels.   So logically, a cut in payment does not necessarily mean that the label of high-quality is lost.

[138]   However, this is to skirt around what must be the fundamental answer to this challenge.   I do not accept that it is the role of the Court on a judicial review to determine if lawyers are being paid enough for the legal aid work they do.  It is not in my view a legal question.   It would be a legal issue if the rates being offered meant that lawyers of the necessary quality were not available to do the work.  But that is not the case; indeed at this point the opposite is true.

[139]   Once it is accepted that appropriately qualified lawyers are contracting to provide these services, I accept the defendants’ proposition that this then becomes a matter of policy.  It is not justiciable.  I can observe, as I have, that the rates certainly mean those who predominantly do this are poorly paid compared with lawyers doing other work. But it is certainly not for the Court to venture an opinion on what level of pay they should be getting.

[140] I refer without repeating to the factors noted at [84] above. These in my view provide a complete answer to the justiciable component of this challenge. I do not consider it can be said the scheme is incapable of delivering high-quality legal services, nor is it incapable of providing accused persons with the degree of assistance they are entitled to. That being so, the claim must be and is dismissed.

Conclusion

[141]   For the reasons given, all claims are dismissed.  In summary, I consider the statutory task of procuring high-quality legal aid services rested with the Secretary for Justice.   In carrying out this task he was not required to act independently of government policy.  He was entitled to set the overall rates, and the way he has done so  has  not  improperly  interfered  with  the  independent  functions  of  the  Legal Services Commissioner.   The Secretary was required to establish  a scheme that delivered high-quality legal services, and it is not possible to say that the scheme he has introduced is incapable of doing that.  In particular, the Secretary has available to him, following a tendering process, appropriately qualified and experienced lawyers who have made themselves available to do the work.  This means it cannot be said on a class basis, as opposed to considering the circumstances of any particular case, that accused persons will not receive the level of assistance our law entitles them to. Finally, against that background, I do not consider whether the lawyers are being paid enough for this work is a justiciable question that a Court should address.

[142]   If any issue as to costs arises, memoranda may be filed.

Simon France J

Solicitors:

R E Harrison QC, Auckland, email:  [email protected]

G M Illingworth QC, Auckland, email:  [email protected]
K H Cook, Barrister, Christchurch, email:  [email protected]

K L Clark QC, Wellington, email:  [email protected]

T Warburton, Crown Law, Wellington, email:  [email protected]
P D Marshall, Crown Law, Wellington, email:  [email protected]