Mailley v Legal Services Commissioner
[2024] NZHC 2316
•19 August 2024
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE
CIV-2023-485-000605
[2024] NZHC 2316
UNDER the Legal Services Act 2011 IN THE MATTER OF
an appeal under the Legal Services Act 2011
BETWEEN
MARTIN MAILLEY
Appellant
AND
LEGAL SERVICES COMMISSIONER
Respondent
CIV-2024-485-000158 UNDER
the Legal Services Act 2011
IN THE MATTER OF
an appeal under the Legal Services Act 2011
BETWEEN
MARTIN MAILLEY
Appellant
AND
LEGAL SERVICES COMMISSIONER
Respondent
Hearing: (On the papers) Counsel:
Appellant in person
L M Hansen for Respondent
Judgment:
19 August 2024
JUDGMENT OF LA HOOD J
MAILLEY v LEGAL SERVICES COMMISSIONER [2024] NZHC 2316 [19 August 2024]
Introduction and summary
[1] Martin Mailley brings two appeals against decisions of the Legal Aid Tribunal (the Tribunal). The first appeal is against the Tribunal’s decision to uphold the Commissioner’s first decision not to write off Mr Mailley’s legal aid debt. The second appeal is against the Tribunal’s decision to strike out Mr Mailley’s application for review of the Commissioner’s second decision not to write off his legal aid debt on alternative grounds.
[2] For the reasons that follow, I conclude that the Tribunal made no error of law in its interpretation of the relevant provisions. In the absence of a payment arrangement between Mr Mailley and the Commissioner under s 34(3), the principles of timely recovery under s 34(4)–(5) do not apply directly and in any event are not invariable rules. Further, the definition of “overdue amount” under s 41A of the Act, for the purpose of deduction notices (the method by which the Commissioner seeks to recover Mr Mailley’s debt) ousts the application of the Limitation Act. Nor was it manifestly unreasonable for the Tribunal to uphold the Commissioner’s decision not to write off the debt in circumstances where Mr Mailley has not been prejudiced by the delay.
[3] In respect of the second appeal, I conclude that the Tribunal did not err in law in declining to substantively determine the further grounds of review Mr Mailley raised. In any case, I have considered the alternative grounds Mr Mailley raised in the second review and concluded that they do not establish an error of law in either of the Tribunal’s decisions.
Background
[4] On 9 January 2015, Mr Mailley was granted legal aid to pursue an appeal to the Court of Appeal against a decision to extradite him to Australia.1 Legal aid of
$8,293.25 was paid to Mr Mailley’s lawyer, and the repayment obligation on Mr Mailley was set at $2,860.
[5] By letter dated 29 February 2016, the Legal Aid Commissioner (the Commissioner) advised Mr Mailley he was required to repay $2,860. Unsuccessful attempts were made to contact Mr Mailley to recover the debt in 2016, including through a debt collection agency. Mr Mailley’s extradition to Australia hampered those attempts at recovery.
[6] On 6 April 2021, Mr Mailley wrote to the Legal Aid grants team “requesting the files and costings” of the proceedings, namely the cost of his lawyer. Having received no response, Mr Mailley followed up on 14 April 2021 stating that the “request is Urgent please inform me!”. By letters dated 21 April 2021 and 12 July 2021, Legal Aid Services staff provided Mr Mailley copies of his legal file under the Privacy Act 2020.
[7] On 30 May 2023, a Legal Aid Services debt officer sent Mr Mailley a statement of debt of $3,673.72 comprising the principal debt of $2,860 plus interest of $813.72. Mr Mailley responded that day, stating “I’m not aware of this debt as I am a pensioner... Please indicate what this was for and when?”. The debt officer responded on 30 May 2023 informing Mr Mailley that the debt was associated with the legal services provided to him for his Court of Appeal proceeding.
1 Mr Mailley is a New Zealand citizen who was a resident in Australia. In 2005 he was charged with fraud in Queensland relating to offences between 1999 and 2002. He was granted bail but fled to New Zealand before he could face trial. In 2008, Mr Mailley was arrested in New Zealand. Extradition was sought and was granted by the District Court after a four-day hearing completed in September 2009. The decision to extradite was appealed and there followed a complex series of legal actions, including two appeals to the Court of Appeal, and fee complaints against Mr Mailley’s various lawyers. The end point of these actions was the Court of Appeal upholding the decision to extradite him; see Mailley v District Court at North Shore [2016] NZCA 83. Mr Mailley was returned to Queensland, was convicted, and has subsequently returned to New Zealand.
The Tribunal decisions
The first decision
[8] On 6 June 2023, Mr Mailley applied for the debt to be written off under s 43(1)(c) of the Legal Services Act 2011 (the Act).2 By letter dated 12 June 2023, the Commissioner responded to Mr Mailley’s application, declining to write off the principal debt, but informing him that the interest would be written off (being $813.72). The Commissioner noted its record of Mr Mailley contacting the grants team in 2021 and apologised for the delay in recovering the debt.
[9] Mr Mailley sought a reconsideration of the Commissioner’s decision to write off the interest but not the principal debt, under s 51 of the the Act, which the Commissioner declined on 5 July 2023. Mr Mailley then applied to the Tribunal for a review of the Commissioner’s reconsideration of the decision under s 52 of the Act. Section 52 provides:
52 Grounds for review
(1)An aided person or an applicant for legal aid may apply to the Tribunal for a review of the Commissioner’s reconsideration of a decision referred to in subsection (2) on the grounds that it is—
(a)manifestly unreasonable; or
(b)wrong in law.
…
[10] On 13 September 2023, the Tribunal confirmed the Commissioner’s decision, concluding that the decision not to write off the debt was not manifestly unreasonable or wrong in law (the first decision).3 The issues raised before the Tribunal were:4
(a)Does the age of the debt, and alleged inactivity of the Commissioner, mean that the debt should not be recoverable?
(b)Has the Commissioner’s failure to keep Mr Mailley informed prejudiced his position?
2 Under s 43(1)(c) of the Legal Services Act 2011, the Commissioner may write off all or any part of any debt payable to the Commissioner by an aided person if the Commissioner considered considers that it would be just and equitable to do so.
3 Mailley v Legal Services Commissioner [2023] NZLAT 007 [The first decision].
4 At [9].
(c)Was the Commissioner’s decision to decline aid manifestly unreasonable or wrong in law?
[11] Mr Mailley argued that the debt should be written off on the basis that the six- year limitation period under the Limitation Act 2010 applied; or that s 34 of the Act allows five years for the Commissioner to organise repayment and it failed to do so; and that the Commissioner failed to keep Mr Mailley informed meaning he was unaware of his right to seek re-examination of the costs of the services provided under s 90 of the Act.
[12] The Commissioner argued that: Mr Mailley had been advised of his obligations to repay the debt in 2015 and 2016; and attempts were made by the Commissioner to contact Mr Mailley in 2016; the Limitation Act did not apply to the debt; and that Mr Mailley had not been disadvantaged by the age of the debt as the Commissioner wrote off the interest.
[13]The Tribunal concluded that the age of the debt did not assist Mr Mailley:
[13] ... due to the effect of s 34(5) which gives the Commissioner the discretion as to how the timeframes are to be applied. Subsection 4 establishes non-mandatory principles to which the Commissioner has to have regard. The Commissioner wrote-off the interest and in doing so gave effect to those principles.
[14] On the issue of whether the Commissioner failed to keep Mr Mailley informed contrary to the requirements under s 26 of the Act, the Tribunal concluded:
[16] I cannot accept that Mr Mailley was not kept informed or that he was deprived of his ability to challenge the fees charged by his barrister. While sparse, the correspondence from the Commissioner met the requirements of s 26. The letter of 29 February 2016 advised Mr Mailley that he can have his barrister’s fee claim examined, should he wish.
[17] Furthermore, I note correspondence between the Commissioner and Mr Mailley in April 2021 in which he requested a copy of his legal aid file. The file documents provided include details of the invoicing, correspondence between Mr Mailley’s barrister and the Commissioner about invoicing, and the grant schedule. I also note that Mr Mailley made fee complaints to the New Zealand Law Society about several of the lawyers who represented him. The outcome of one of these complaints was judicially reviewed in the High Court. Mr Mailley was aware of his rights with regard to lawyers and their fees.
[18] Even had there been a breach of the duty to inform, such a breach would not have prejudiced Mr Mailley’s position. The fees charged by Mr Mailley’s barrister to the Commissioner total $8,343.25, of which $2,860 was Mr Mailley’s prescribed repayment amount. These fees were for a Court of Appeal matter carried out by a senior KC who has since been elevated to the bench of the High Court. The hours claimed are reasonable for a matter of this importance and complexity, and only a part of the total fees is recoverable from Mr Mailley.
[19] I find there was no breach of the Commissioner’s duty to keep Mr Mailley informed, nor was there any prejudice to his position had the duty been breached.
[15] The Tribunal concluded, after examining the material available, that the Commissioner’s decision not to write off the debt was not manifestly unreasonable or wrong in law.5
The second decision
[16] Mr Mailley applied for a second time to the Commissioner seeking a write-off of his debt. Mr Mailley argued that the cost of enforcement would “greatly exceed” the amount of repayment given that the Commissioner had instructed a barrister to represent her in the High Court appeal of the first decision, justifying a write-off under s 43(1)(b).
[17] On 8 November 2023, the Commissioner declined the application to write off the debt on the basis that the reasons raised did not justify a write-off. Mr Mailley sought a reconsideration of this decision, which the Commissioner declined on 17 November 2023. Mr Mailley applied to the Tribunal for a review under s 52 of the Act primarily on the basis that:
(a)the Commissioner failed to communicate with him about the Debt and misled the Tribunal about that failure; and
(b)the Commissioner’s cost of recovering the debt (including legal fees incurred from defending the first appeal) would exceed the value of the debt.
5 At [23].
[18] Mr Mailley also raised issues of his health status (making it manifestly unreasonable to collect the debt) and that the Commissioner acted with bad faith and malice and applied a policy which unlawfully discriminated against him on the basis of his status as a beneficiary.
[19] The Tribunal struck out Mr Mailley’s application (the second decision).6 The Tribunal held that the allegation of failure to communicate had substantively been considered in the first decision raising an issue estoppel.7 The cost of enforcement ground was held to be an abuse of process, as Mr Mailley could not use his own appeal as a circumstance justifying a write-off of his debt under s 43(1)(b).8 The further issues raised were either held to be an abuse of process (in the case of his health status and discrimination allegation) or raised an issue estoppel (in the case of the bad faith allegation).9
This appeal
[20] Mr Mailley appeals against the first and second decisions of the Tribunal under s 59 of the Act on a question of law. In respect of the first decision, Mr Mailley submits that the Tribunal misapplied the statute and authoritative case law in determining that the Commissioner had not been manifestly unreasonable or wrong in law in declining to write off his debt. Mr Mailley primarily argues that: the delay in the Commissioner’s attempts to recover the debt make it inequitable, unjust, and dishonest to enforce the debt (justifying a write-off under s 43(1)(c)); that the Limitation Act precludes recovery due to the delay; or that s 34(4) requires recovery to occur within five years of the debt arising.
[21] In respect of the second decision, Mr Mailley submits that the Tribunal erred in striking out his review application, denying him access to justice. Mr Mailley challenges the second decision primarily on the grounds that the Tribunal should not have struck out his application because: s 43(1)(b) provides a clear basis for the Commissioner to write off the debt as the cost of the Commissioner defending the first
6 Mailley v Legal Services Commissioner [3023] NZLAT 015 [The second decision].
7 At [25].
8 At [26]–[27].
9 At [28]–[37].
appeal will exceed the value of the debt; the Commissioner failed to have proper regard to Mr Mailley’s age and health status; and the Commissioner applied a discriminatory policy by declining to write off the debt on the basis that Mr Mailley is a beneficiary.
[22] The Commissioner says that the Tribunal made no error of law in either decision. The Commissioner submits that there was no statutory impediment to the debt being pursued, notwithstanding the delay, and the Tribunal made no error of law in concluding that the Commissioner’s decision to decline to write off the debt was not manifestly unreasonable. The Commissioner similarly submits that the Tribunal did not err in determining that the arguments raised in the second Tribunal process were either an abuse of process or raised an issue estoppel. The Commissioner submits that the cost of the Commissioner defending Mr Mailley’s own appeal is not a relevant consideration under s 43(1)(b); and there is no evidence that the Commissioner’s decision or reconsideration decision was based on a discriminatory policy.
Approach on appeal
[23]As noted, this is an appeal under s 59 of the Act, which provides:
59 Appeal on question of law
If the Commissioner or an applicant considers that the Tribunal’s determination is wrong in law, the Commissioner or the applicant (as the case may be) may appeal to the High Court on the question of law, and the appeal must be dealt with in accordance with the rules of court.
[24] The focus of the appeal is whether the Tribunal’s decision was wrong in law, not whether the Commissioner’s decision under review was correct.10
[25] In Brown v R the Court of Appeal described the appropriate approach to appeals on a question of law:11
[16] “Questions of law” in the context of s 296(2) [of the Criminal Procedure Act 2011] must raise one or more of the three standard errors classified by modern authorities as creating a question of law:
10 Schmidt v Legal Services Commissioner [2022] NZHC 200 at [16].
11 Brown v R [2015] NZCA 325.
(a)a misdirection of law apparent in the decision (what Fisher J called “a conventional legal question on unchallenged facts”):12
(b)oversight of a relevant matter, or consideration of an irrelevant matter;13 or
(c)a factual finding unsupported by any evidence, or an omission to draw an inference of fact which is the only one reasonably possible on the evidence.14
The legislative scheme
[26] The Act provides the framework under which the Commissioner may recover amounts payable in respect of a legal aid grant.15 Section 34 provides:
34 Amounts payable in respect of grant are debts due to Commissioner
(1) An amount payable to the Commissioner as a condition of a grant of legal aid (whether as an interim repayment or a repayment) and any other amount payable to the Commissioner in respect of the grant may be recovered in any court or tribunal of competent jurisdiction as a debt due to the Commissioner.
[Repealed]
(3)The Commissioner may, by agreement with the aided person, make whatever arrangements (including any adjustments to those arrangements) that the Commissioner considers appropriate for the payment by the aided person of any amount payable under a grant of legal aid, or any other debt payable to the Commissioner by the aided person.
(4)In making any arrangements under subsection (3), the Commissioner must have regard to the following principles:
(a)any debt that is to be paid from the aided person’s income should be paid by the aided person within 5 years from when the debt arises:
(b)any debt that is to be paid from the aided person’s income and capital should be paid by the aided person within 7 years from when the debt arises.
12 Auckland City Council v Wotherspoon [1990] 1 NZLR 76 (HC) at 86.
13 Bryson v Three Foot Six Ltd [2005] NZSC 34, [2005] 3 NZLR 721 at [25]; Vodafone New Zealand Ltd v Telecom New Zealand Ltd [2011] NZSC 138, [202] 3 NZLR 153 at [51].
14 Bryson v Three Foot Six Ltd, above n 13, at [26]; Vodafone New Zealand Ltd v Telecom New Zealand Ltd, above n 13, at [52].
15 Counsel for the Commissioner provided submissions that carefully tracked the history of the relevant provisions in predecessor legislation, but there was nothing in that history, or the Parliamentary materials for the Act, that assisted with the interpretation of the current provisions.
(5)Despite subsection (4), the Commissioner may, after having regard to the principles in that subsection, make whatever arrangements the Commissioner considers appropriate in the circumstances.
[27] The Commissioner has a duty to inform an aided person of the conditions of their legal aid grant pursuant to s 26.
[28]The overall purpose of the Act is:
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.
[29] The purpose requires a balance between ensuring access to justice by providing legal services to people with insufficient means while also ensuring those services are delivered in the most effective and efficient way. The striking of that balance includes providing for repayment of a proscribed amount recoverable as a debt unless the Commissioner either decides not to recover it or writes it off under ss 42 and 43. Those sections provide:
42Commissioner may decide not to recover debt in certain circumstances
(1)The Commissioner may decide not to recover any debt due to the Commissioner under a grant of legal aid if—
(a)the enforcement of the debt would cause serious hardship to the aided person:
(b)the cost to the Commissioner of enforcing the debt is likely to exceed the amount of the debt that is likely to be repaid:
(c)the Commissioner considers that it would be just and equitable not to recover the debt.
(2)The Commissioner may make a decision under subsection (1) at the time that legal aid is granted, or at any time after it is granted.
(3)If the Commissioner decides not to recover a debt,—
(a)the debt must be treated as being written off for the purposes of section 43; and
(b)section 43(2) to (5) apply accordingly.
(4)In subsection (1), serious hardship means significant financial difficulties that arise because of—
(a)the aided person's inability to meet minimum living expenses according to normal community standards; or
(b)the cost of medical treatment of an illness or injury of the aided person or the aided person's dependant; or
(c)a serious illness suffered by the aided person or the aided person’s dependant.
43Commissioner may write off amounts payable
(1)The Commissioner may write off all or any part of any repayment, interim repayment, ... or any other debt payable to the Commissioner by an aided person in any of the following circumstances:
(a)the enforcement of the debt would, in the opinion of the Commissioner, cause serious hardship to the aided person:
(b)the cost to the Commissioner of enforcing the debt is likely to exceed the amount of the debt that is likely to be repaid:
(c)the Commissioner considers that it would be just and equitable to write off the debt.
(2)When a debt has been written off under this section, the Commissioner must give notice to the debtor of the write-off.
(3)When a debt is written off under this section, the debtor is, from the date of the write-off, no longer liable to pay the debt.
(4)If, despite the write-off, a debtor repays some or all of a written-off debt, the Commissioner must return the amount that was written off.
(5)The write-off of a debt does not affect the Commissioner’s obligation to pay any person who provided legal services under the relevant grant of legal aid.
(6)In subsection (1), serious hardship has the meaning given in section 42(4).
Assessment of arguments and decision
First appeal
Was there any error in the Tribunal’s interpretation of the Act?
[30] Mr Mailley argues that the five-year repayment principle under s 34(4)(a) should be a decisive factor in the Commissioner’s assessment of whether the debt
should be written off under s 43(1)(c) (on the basis it would be just and equitable to write off the debt).
[31] Section 34(1) clearly states that an amount payable to the Commissioner as a condition of a grant of legal aid may be recovered “in any court or tribunal of competent jurisdiction as a debt due to the Commissioner”. Section 34(4)(a) provides that when making arrangements for payment with the aided person (under s 34(3)) the Commissioner must have regard to the principle that any debt should be paid from the aided person’s income within five years from when the debt arises. However, s 34(5) makes it clear that the principles in s 34(4) are not binding and that the Commissioner may, after having regard to them, make “whatever arrangements the Commissioner considers appropriate in the circumstances”.
[32] I accept Mr Mailley’s submission that any arrangement entered into under s 34(3) must be made “by agreement with the aided person”. I also accept his submission that this means the principles the Commissioner must have regard to when making those arrangements, contained in s 34(4)–(5), have no direct application in this case because no such agreement has been reached between the Commissioner and Mr Mailley. However, it does not assist Mr Mailley to point out that the principles in s 34(4)–(5) have no direct application. Given the five-year repayment principle applies only to payment arrangements made under s 34(3), it is difficult to see how it could be a decisive factor in the Commissioner’s assessment of whether Mr Mailley’s debt (for which there was no payment arrangement) should be written off under s 43(1)(c).
[33] Mr Mailley points out, I think correctly, that s 35 is the provision that applies when no agreement has been reached with the aided person for repayment of the debt. That provision gives the Commissioner the power to “require an aided person to commence or recommence payment of a debt” where certain procedural steps have been taken to notify the aided person and give them an opportunity to be heard.16 Again, it does not assist Mr Mailley that s 35 is the applicable section when that section does not refer to the principles in s 34(4). I do not think this means the principles in
16 Legal Services Act 2011, s 35(1)(b) and subs (4).
s 34(4) are an irrelevant consideration but the statutory scheme does not support them being a determinative or dominant one.
[34] The other relevant statutory provision is the definition of overdue amount in s 41A of the Act, which provides:
overdue amount means an amount that has become due and payable to the Commissioner and that remains unpaid; and includes—
(a)any part of an amount of that kind; and
(b)an amount of that kind that may not be recovered by civil action in a court of law because of the Limitation Act 2010.
[35] The Tribunal’s decision noted that recovery under the Act is controlled by ss 41A–43.17 The definitions in s 41A apply to the statutory provisions allowing deduction of overdue amounts from a third party through “deduction notices”.18 This appears to be the only recovery mechanism under the Act. As already noted, however, s 34(1) allows a debt to be enforced in any court or tribunal of competent jurisdiction. It therefore appears the limitation defence to a money claim contained in s 11 of the Limitation Act applies to any attempt at recovery outside the deduction notice recovery mechanism in the Act. That is because there is no prohibition on the application of the Limitation Act for general enforcement of the debt in the same way that there is for recovery via deduction notices (due to paragraph (b) of the definition of “overdue amount” in s 41A). As the parties have not addressed this point directly, and it is of little relevance because the proposed recovery here is via deduction notices, I consider it no further.
[36] I consider that the ouster of the Limitation Act for recovery under the Act is legislative recognition of what Cooper J said in Nicholson v Legal Services Agency,19 which has been summarised by the Tribunal as:20
Legal aid is a loan, with the cost of legal services being a debt owed to the Commissioner. The repayment of the debt is the norm.
17 The first decision, above n 3, at [11].
18 Sections 41B-41J.
19 Nicholson v Legal Services Agency HC Auckland CIV-2008-404-880, 30 June 2008 at [28]–[30].
20 See Re YE (Civil) [2020] NZLAT 21 at [18]; Re YD (Criminal) [2020] NZLAT 18 at [22]; and Re RU (Criminal) [2018] NZLAT 27 at [18].
[37] There is nothing in the Act that provides a statutory prohibition on, or indeed clear statutory guidance for, recovery of the debt under the Act (from income) outside the five-year period referred to in s 34(4). The statutory guidance for the exercise of the discretion to write off the debt under s 43(1) (mirrored in s 42(1)) does not suggest recovery within a five-year period should be a decisive or dominant considertion.
[38] It follows that I do not consider that the Tribunal was “wrong in law” in confirming the Commissioner’s decision and upholding its interpretation of the relevant statutory provisions. The Tribunal was right to conclude that there is no statutory prohibition on, or statutory direction preventing, recovery of the debt and it is within the Commissioner’s discretion to do so.
Was the decision manifestly unreasonable?
[39] The remaining issue is whether, there being no error in the Tribunal’s interpretation of the Act, on a question of law appeal it is appropriate for me to consider whether the Tribunal was wrong to find that the decision of the Commissioner was not “manifestly unreasonable” under s 52(1)(a) of the Act. In other words, despite already finding the decision was not “wrong in law” can it nevertheless be considered wrong in law if it was “manifestly unreasonable”.
[40] In JMM v Legal Services Agency,21 the Court of Appeal discussed the concepts of “manifestly unreasonable” and “wrong in law” in the equivalent provision of the Legal Services Act 2000. The Court of Appeal adopted O’Regan J’s formulation of “manifestly unreasonable” in Legal Services Agency v Tana:22
[97] Both counsel referred to the decision of O’Regan J in Legal Services Agency v Tana. Mr Cooke submitted that the approach in that case demonstrated that it was for the Agency to make the call on questions that can involve different reasonable alternatives. In that sense manifestly unreasonable sets a high threshold for intervention by the Panel. Thus in Tana, O’Regan J stated:
[23] This is a different statutory formulation from the “plainly wrong” formation often used in relation to appeals from the exercise of a discretion, where the appeal body focuses on whether a decision is correct or incorrect, and has to form the view it is not only incorrect
21 JMM v Legal Services Agency [2012] NZCA 573, [2013] 1 NZLR 517 at [97]–[112].
22 At [97] and [99] citing Legal Services Agency v Tana HC Whangarei AP26/02, 9 December 2002.
but plainly so. In this case the focus is not on whether the decision is incorrect, but whether it is unreasonable, and the legislature has stipulated that the Panel should intervene only where the decision is not only unreasonable, but is clearly and unmistakably unreasonable.
[24] That formulation rules out completely an approach on the part of the Panel that it considers matters afresh and substitutes its own view. It also rules out the approach taken by the Panel in this case, that “manifestly unreasonable” simply means unreasonable on the face of the papers presented to the Panel. As Mr Taylor said, that approach fails to recognise that the statutory test requires not only a finding that the Agency’s decision is unreasonable, but that it is manifestly so. It is only when the degree of unreasonableness has reached a clear and unmistakable level (or to use the statutory term “manifest”), that the Panel is permitted to intervene.
[25] That means the Panel is required to exercise a considerable degree of restraint in determining review applications based on the “manifestly unreasonable” ground. It is clear from a review of the statutory history … that the legislature has deliberately imposed a high threshold for intervention by the Panel. That implies that the legislature intended there should be a degree of tolerance about decisions of the Agency which would not be appropriate where there was a full right of appeal, on the basis the Agency was exercising a discretion.
…
[99] We agree with the approach of O’Regan J on the nature of the manifestly unreasonable test. We also agree with Mr Cooke’s submission that it is necessary for the Panel on an application for review to exercise restraint before intervening to reverse a decision of the Agency on this ground.
[41]The Court cited with apparent approval a decision of Miller J:23
[105] The interpretation of “wrong in law” established in Fainu has been followed in a number of subsequent High Court cases. For example, in Legal Services Agency v Brown Miller J held that it was open to the Panel to conclude that the Agency erred in law by discounting the non-financial interest of the appellant for the purposes of the “prospects of success” test on the basis that he had already obtained a remedy. In that case Miller J also considered the relationship between “wrong in law” and “manifestly unreasonable” under s 54, holding:
The legislature must have meant different things by “manifestly unreasonable” and “wrong in law”................................ However, it does not follow that
the two are mutually exclusive. I see no reason why an egregious error of law may not also be described as manifestly unreasonable.
(footnotes omitted)
23 At [105] citing Legal Services Agency v Brown (2005) 17 PRNZ 523 (HC).
[42] The Court also approved Randerson J’s formulation of “wrong in law” in Legal Services Agency v Fainu:24
[103] A convenient starting point is the case of Fainu. There Randerson J considered the meaning of “wrong in law” reasoning:
... I am reluctant to impose undue refinement on the approach of the Review Panel under s 54. It has to deal with many and varied circumstances and has a very substantial workload However, it is
obvious as a matter of construction that the Legislature has drawn a distinction between the two grounds for review contained in s 54(3). A decision may be “wrong in law” for a variety of reasons. It is undesirable to suggest any exhaustive list but a decision may be wrong if it derives from an incorrect application or interpretation of the statute; or if it is wrong in principle; or if the decision-maker has failed to take into account some relevant matter; or has taken account of an irrelevant matter; or if it depends upon findings which are unsupported by the evidence.
There may be other grounds upon which the decision may be wrong in law but this short recitation of possible grounds shows that the legislature must have meant that the “manifestly unreasonable” ground was something different from a decision which was “wrong in law” on all or any of those grounds.
(Emphasis added)
[43]The Court of Appeal concluded:
[111] … We are content to refer to the formulation of “wrong in law” adopted by Randerson J in Fainu. The types of errors there described as being within the wrong in law category test correspond reasonably closely with the established grounds of review. Nevertheless we agree with Mr Cooke’s submission that in cases such as the present a key focus of a Panel on review will be on ascertaining whether there has been an error of law concerning the causes of action or defences in the litigation for which the claimant is seeking aid. Additionally, errors of interpretation or application of the Act by the Agency would require to be corrected on review.
[112] We are reluctant to endorse the development of detailed rules or criteria to be applied by the Panel on review. There is much to be said for simplifying the task of the Panel, given that it is required to consider the decisions of the Agency in areas that require evaluation and judgment. We accept that some degree of tolerance should be afforded to decisions of the Agency, bearing in mind the additional role given to the Agency by Parliament in difficult matters of judgment. Such an approach is in our view consistent with the statutory requirement that the review of an Agency decision by the Panel “must be conducted on the papers and with all reasonable speed”.25
24 At [103] citing Legal Services Agency v Fainu (2000) 17 PRNZ 435 (HC) at [27].
25 Associated Provincial Picture Houses Ltd v Wednesbury [1948] 1 KB 223 (CA) at 229.
[44] Although these statements of principle indicate that an egregious error of law may also be described as manifestly unreasonable, it is not clear that they support the reverse proposition, namely that a manifestly unreasonable decision is necessarily wrong in law. However, the concept of manifestly unreasonable is essentially equivalent to the Wednesbury formulation of unreasonableness in judicial review, a finding of which renders a decision unlawful.26 Given the Court of Appeal’s statement in JMM v Legal Services Agency that the Fainu test corresponds reasonably closely with established grounds of judicial review, I am prepared to assume that a manifestly unreasonable decision will necessarily be wrong in law.
[45] In essence, Mr Mailley submits that the complete failure of the Commissioner to take recovery action in respect of the debt was an inexcusable and incompetent error, the consequences of which should not be visited upon him. Although he was extradited after his failed challenge to the extradition proceedings in 2016, resulting in the difficulties the Commissioner had in contacting him by telephone and through the debt collection agency it had engaged, he has maintained the same email address since 2016. Mr Mailley submits there is simply no excuse for the Commissioner to have made no attempt to contact him for a period of more than seven years. And the decision to continue with recovery action in these circumstances has been made in bad faith.
[46] I accept Mr Mailley’s submission that the Commissioner’s failure to take any enforcement steps for a seven-year period is unsatisfactory in circumstances where the Commissioner had his email address, and replied to his Privacy Act request for copies of material from his files in 2021 but took no action at that time. However, I do not accept Mr Mailley’s assertion that I can infer bad faith from this. It seems clear that after the Commissioner’s efforts to make contact directly and through a debt collection agency in 2016, which understandably failed due to Mr Mailley’s extradition, no further steps were taken. Although that failure is not satisfactorily explained, it is unfortunately not unheard of for such errors to occur in public service organisations.
26 Wednesbury unreasonableness refers to the case of Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1948] 1 KB 223 (CA) where the Court said that a decision was reviewable on the ground that it is so unreasonable that no reasonable decision maker, properly apprised of the facts, could have made it.
[47] The Commissioner submits that there has been no representation to Mr Mailley that he would not have to pay the debt and he was informed in writing that he would have to do so when his case concluded. That correspondence included confirmation the final repayment amount was $2,860, notified him that interest would be charged if the debt remains unpaid six months after the conclusion of the case, and warned him that a failure to make repayments could result in a deduction notice to recover the unpaid debt and stated that he needed to contact the debt management group within 28 working days to make a payment arrangement.
[48] The Commissioner submits that Mr Mailley is not prejudiced by the delay as the interest has been written off. She further submits that although it may be a principle that it is desirable for debts to be repaid out of income within five years, s 34(5) makes it clear this is not an absolute rule. And as Mr Mailley does not assert any inability to pay the debt, in all the circumstances it was not manifestly unreasonable for the Commissioner to not write off the debt.27 The Commissioner also notes Mr Mailley failed to make any attempts or arrangements to repay his debt upon his return to New Zealand in 2017 despite being directed to do so in writing at the end of his case. Moreover, the sum paid in legal aid was approximately three times the amount of the repayment and the repayment sum itself is relatively modest.
[49] As already noted, the statutory scheme expressly envisages recovery under the Act for a longer period than would be possible if the Limitation Act applied. While there is a principle that repayments from income should be made within a five-year period, that is not an invariable rule and cannot be elevated to a statutory prohibition or direction. It was not an error of law for the Commissioner and Tribunal to determine that there is nothing in the Act that prohibits the Commissioner from recovering the debt despite the length of the delay.
[50] Therefore, the question for me is whether it was “clearly and unmistakably unreasonable” for the Tribunal to uphold the Commissioner’s conclusion that it would not be unjust and inequitable to write off the debt in the circumstances. A “considerable degree of restraint” is required in assessing this issue and there is a high
27 Section 43(1)(c).
threshold for intervention.28 In all the circumstances, I consider that high threshold has not been met given the Act expressly provides for recovery under the Act outside the usual time limits applicable for recovery of a debt, Mr Mailley has not yet been subject to any repayment from his income, the interest incurred has been written off, and there is no suggestion that Mr Mailley cannot afford to pay the debt or is in a worse position to pay the debt than he was in 2016.
Second appeal
[51] Given my conclusions on the first appeal, Mr Mailley’s second appeal can be dealt with shortly.
[52] Mr Mailley challenges the Tribunal’s conclusion that his second application for review did not need to be dealt with on the merits because he was estopped from raising essentially the same issues raised on the first review and/or it was an abuse of process. I consider that the Tribunal did not err in law in declining to substantively determine the further grounds of review Mr Mailley raised, as at that point, the Tribunal had already determined his substantive challenge to the decision of the Commissioner not to write off the debt, in respect of which an appeal had been filed in the High Court. The Tribunal was likely functus officio and therefore unable to take further action in relation to the matter (which it had determined and which had progressed to appeal).29 However, even if I am wrong about this, there can be no prejudice to Mr Mailley because I will address the substantive merits of the further grounds he sought to raise on the second review.
[53] Mr Mailley effectively raises two new grounds of appeal against the Commissioner’s decision not to write off his debt, that I have not dealt with under the first appeal. The proper course would have been for Mr Mailley to amend his notice of appeal against the first decision to incorporate these new grounds. Despite this omission, bearing in mind that Mr Mailley is a self-represented litigant, and because I
28 JMM v Legal Services Agency, above n 21, at [97] citing Legal Services Agency v Tana, above n 22, at [25].
29 See for example, West v West [2019] NZCA 225 at [13]: where a judgment is the subject of appeal the trial court becomes functus officio.
see no prejudice to either party in dealing with the grounds raised (as they were fully argued on appeal), I consider them in the context of the first appeal.
The alternative grounds for challenging the first decision
[54] The first ground is that the Commissioner failed to have regard to Mr Mailley’s age and health status. While Mr Mailley is now 72 years of age, this alone cannot make it manifestly unreasonable not to write off the debt. The Tribunal noted in the second decision that there is no evidence of Mr Mailley’s health status.30 I agree there is no medical evidence about his health status that could make a failure to write off the debt on this basis manifestly unreasonable.
[55] The second ground raised, is that the Commissioner unlawfully discriminated against Mr Mailley based on his age, beneficiary status, or employment status. I consider this ground is also unsustainable for essentially the same reasons as the Tribunal set out in its second decision. Those reasons were:31
[31] This ground is based on Mr Mailley’s interpretation of the Excerpt which is derived from a data matching spreadsheet. The relevant passages states “if no response from PT and cust is not receiving MSD payments, Action W[rite]O[ff] under C[ost] o[f] E[nforcement]”. He says that this is evidence of a policy to not write off debts under s 43(1)(b) when the aided person is in receipt of an MSD benefit.
[32] It may be argued that if such a policy exists it is discrimination against Mr Mailley on the basis of his age, beneficiary status, and employment status. Such a policy would potentially breach rights set out in the Human Rights Act 1993, and the New Zealand Bill of Rights Act 1990. As such, any decision made by the Commissioner based on that policy would be wrong in law and unreasonable.
…
[35] The Excerpt is a quote from a timeline prepared by the Commissioner as a background document to submissions. As such, it is shorn of content. There is no evidence that the excerpt shows the application of a wider policy. If the Excerpt records the particular decision-making process for the Commissioner’s decision of 8 November 2023, but is not part of a wider policy, it would appear to be no more than the legitimate exercise of the Commissioner’s discretionary powers under ss 42–43 of the Act. The onus is on Mr Mailley to provide evidence to prove the Excerpt is part of a wider policy, but he has not done so.
30 Re Mailley [2023] NZLAT 015 at [28] [Second decision].
31 Above n 15.
[36] Moreover, the Excerpt is dated 30 May 2023, and appears to be part of the Commissioner’s process in making the first decision. There is no evidence that it formed part of the Commissioner’s process in reaching the second decision. The Tribunal’s jurisdiction for this application is to consider the second decision only. The jurisdiction to consider the first decision was extinguished when the Determination was issued.
[56] I accept the Commissioner’s submission that the excerpt has assumed unjustified significance and does not establish a wider discriminatory policy not to write off debt for people receiving MSD benefits. It was a record of a summary of actions with possible future consequences as at 30 May 2023 that formed part of the process of making the first write-off decision. The proposed write-off was to occur if there was no response from Mr Mailley and he was not receiving MSD payments. However, as Mr Mailley replied on 30 May 2023 and submitted a write-off application on 6 June 2023, the note was superseded. In any event, there is nothing in the Commissioner’s reasons for either write-off decision to suggest that Mr Mailley’s receipt of a benefit triggered a policy which meant the debt could not be written off. His receipt of a benefit was not mentioned in either decision as a relevant, let alone controlling, factor. I therefore see no basis on which to disturb the Tribunal’s decisions on this ground.
Cost of enforcement
[57] Mr Mailley’s remaining challenge to the Tribunal’s second decision is that the Tribunal erred in law by striking out Mr Mailley’s argument that the Commissioner failed to consider that the cost of enforcing the debt by way of defending this appeal is “likely to exceed the amount of the debt that is likely to be repaid”, providing a basis for a write-off under s 43(1)(b). The Tribunal noted that this ground was not a matter considered in its first decision (as it was then yet to be appealed), and decided to strike it out as an abuse of process.
[58] I accept the Commissioner’s submission that on the plain words of the section and in light of the purpose of the Act, Mr Mailley’s argument cannot succeed. The first point is that s 43(1)(b) gives the Commissioner a discretion to write off the debt if enforcing it is likely to exceed the amount of the debt likely to be repaid. But there is no requirement for the Commissioner to do so; it is simply one of three bases upon which the Commissioner may exercise her discretion.
[59] I also accept the Commissioner’s submission that enforcing a debt by, for example, requiring repayments pursuant to s 35 or seeking deductions under s 41B, is different to defending an appeal against a decision of the Tribunal. They are different statutory processes. However, I would not preclude the possibility that the term “enforcing the debt” could include defending an appeal to the High Court that is part of the enforcement process. In arguing against such an interpretation, the Commissioner is potentially depriving herself of the ability, in different circumstances, to determine that defending an appeal is simply not cost-effective and the debt should instead be written off. But that is not a decision the Commissioner has made in this case. I see no basis on which the Tribunal could have interfered with the exercise of the Commissioner’s discretion. It could not be manifestly unreasonable or wrong in law for the Commissioner to decide that the issues raised by this appeal should be determined by the High Court despite the costs involved in doing so. Therefore, this ground is incapable of amounting to an appealable error.
Conclusion
[60] For these reasons, Mr Mailley has not persuaded me that the Tribunal erred by making a decision that was either wrong in law or manifestly unreasonable.
[61]The appeal is therefore dismissed.
La Hood J
Solicitors:
Legal Services, Ministry of Justice, Wellington
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