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Keene v Legal Complaints Review Officer [2019] NZCA 559 (14 November 2019)

Last Updated: 19 November 2019

JUDGMENT OF THE COURT

1. The appeal is allowed.
2. The order of the High Court setting aside the determination of the Legal Complaints Review Officer in relation to r 13.5.3 is set aside.

100. There is no order as to costs.

____________________________________________________________________

REASONS OF THE COURT

(Given by Goddard J)
Table of contents

Para no

Introduction and summary

[1] Mr Keene, the appellant, is a barrister. He was instructed to represent the second respondents in connection with a civil dispute. The rules governing practice by barristers sole meant that he could not accept direct instructions from the second respondents.^[1] Rather, the second respondents instructed their solicitor, Mr Derek Cutting, to act for them in connection with the dispute and Mr Cutting in turn instructed Mr Keene as their barrister.
[2] The second respondents became dissatisfied with Mr Keene’s performance as their barrister, and terminated his retainer. The second respondents had been paying Mr Keene’s fees by instalments. But at the date his retainer came to an end there was an amount unpaid in respect of the fees he had invoiced. The second respondents made it clear in their correspondence with Mr Keene that they were unhappy with the services he had provided and with the fees he had charged, and that they did not accept that they should have to pay the amounts invoiced by him.
[3] The issues before the Court on this appeal arise out of the recovery proceedings that were taken in respect of Mr Keene’s outstanding fees. The orthodox view is that barristers cannot sue to recover their fees; rather, their fees can be included as a disbursement in the instructing solicitor’s bill, and recovery proceedings can be brought by the solicitor as plaintiff.^[2] So proceedings were issued against the second respondents by Mr Cutting, in which he claimed the outstanding fees payable to Mr Keene (fee recovery proceedings). Although Mr Cutting was the named plaintiff, he had no personal economic stake in the outcome of the fee recovery proceedings: from a practical perspective, the proceedings were brought for the benefit of (and at the expense of) Mr Keene. Mr Keene decided to act as counsel in those proceedings, to avoid the cost of paying another barrister to do the work involved.
[4] The second respondents made a number of complaints about Mr Keene’s conduct to the New Zealand Law Society (NZLS). A Standards Committee of the NZLS made a determination to take no further action in relation to a number of those complaints. But it found that by acting as counsel in the fee recovery proceedings Mr Keene had breached certain rules in the Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules 2008 (Rules) relating to the way in which lawyers conduct litigation. The Standards Committee made a determination under s 152 of the Lawyers and Conveyancers Act 2006 (Act) that this amounted to unsatisfactory conduct on the part of Mr Keene.^[3] The relevant rules were:^[4]

• (a) Rule 13.5, which requires a lawyer engaged in litigation for a client to maintain his or her independence; and
• (b) Rule 13.5.3, which provides that a lawyer must not act in a proceeding if the conduct or advice of that lawyer is in issue in the matter before the court. Rule 13.5.3 does not apply where the lawyer is acting for themselves.

[5] Mr Keene sought a review of these findings by the Legal Complaints Review Officer (LCRO). The LCRO upheld the finding of the Standards Committee in relation to r 13.5, but reversed the finding of unsatisfactory conduct based on a contravention of r 13.5.3.^[5]
[6] Mr Keene then applied to the High Court for judicial review of the LCRO determination in relation to r 13.5. That application was successful: the LCRO finding of unsatisfactory conduct in respect of r 13.5 was set aside. But the second respondents argued, and Downs J accepted, that there had been a contravention of r 13.5.3. The High Court set aside the LCRO determination in relation to r 13.5.3, and restored the Standards Committee’s finding of unsatisfactory conduct based on a breach of that rule.^[6]
[7] Mr Keene now appeals from that High Court decision.
[8] We have concluded that the High Court erred in setting aside the LCRO determination in relation to r 13.5.3, and restoring the Standards Committee finding of unsatisfactory conduct based on a breach of that rule. The appeal is allowed.
[9] In order to explain why we consider that the High Court should not have set aside the LCRO determination in relation to r 13.5.3, it is necessary to set out the background to the protracted complaint process in a little more detail. Before we do so, however, we set out the legal framework under which the complaints against Mr Keene were made and determined.

The legal framework for the complaints

[10] Lawyers who provide legal services to clients must comply with the obligations set out in the Act and in the Rules. The Act also establishes processes for receiving and determining complaints about the conduct of lawyers, including complaints that lawyers have breached the Rules.^[7]

Rules in relation to independence of lawyers

[11] Section 4 of the Act provides that one of the fundamental obligations of a lawyer is to be independent in providing regulated services to clients. That fundamental obligation is reflected in a number of provisions of the Rules. Chapter 5 of the Rules is headed “Independence”. Rule 5 provides:

5. A lawyer must be independent and free from compromising influences or loyalties when providing services to his or her clients.

[12] Chapter 5 goes on to deal with conflicting interests and duties, and certain other matters that compromise the independence of a lawyer acting for a client.
[13] Chapter 13 is headed “Lawyers as officers of court”. The focus of the provisions of chapter 13 is on the obligations owed to the court by a lawyer acting in litigation. The Rules identify some key elements of that duty, and how it relates to the obligation of the lawyer to their client. Rule 13 provides:

13. The overriding duty of a lawyer acting in litigation is to the court concerned. Subject to this, the lawyer has a duty to act in the best interests of his or her client without regard for the personal interests of the lawyer.

[14] Rule 13.5 appears under the sub-heading “Independence in litigation”. It provides:

13.5 A lawyer engaged in litigation for a client must maintain his or her independence at all times.

13.5.1 A lawyer must not act in a proceeding if the lawyer may be required to give evidence of a contentious nature (whether in person or by affidavit) in the matter.

13.5.2 If, after a lawyer has commenced acting in a proceeding, it becomes apparent that the lawyer or a member of the lawyer’s practice is to give evidence of a contentious nature, the lawyer must immediately inform the court and, unless the court directs otherwise, cease acting.

13.5.3 A lawyer must not act in a proceeding if the conduct or advice of the lawyer or of another member of the lawyer’s practice is in issue in the matter before the court. This rule does not apply where the lawyer is acting for himself or herself, or for the member of the practice whose actions are in issue.

13.5.4 A lawyer must not make submissions or express views to a court on any material evidence or material issue in a case in terms that convey or appear to convey the lawyer’s personal opinion on the merits of that evidence or issue.

[15] Rule 13.5 does not apply to a lawyer representing themselves in litigation. So for example a lawyer who practises as a barrister and solicitor can bring proceedings against a former client seeking to recover unpaid fees. That lawyer can act for themselves in those proceedings. No concern arises about independence so far as a client is concerned: there is no separate client. And the court does not expect the lawyer to be independent in the manner required by r 13.5. The court understands that the lawyer’s personal interests are engaged, and adjusts its expectations accordingly.
[16] However the orthodox view is that a lawyer who practises as a barrister sole cannot sue for their own fees.^[8] In Atkinson v Pengelly Tipping J summarised the position as follows:^[9]

Throughout my time in the profession I have never heard it seriously suggested that barristers sole either have or should have the right to sue their instructing solicitors or their lay clients for their fees. While the English rule that they cannot do so might be thought in some quarters to be commercially anomalous, the rule is of considerable antiquity and can fairly be said to be a fundamental feature of the relationship between a barrister and his clients, both lay and professional. It is now firmly established by the Law Practitioners Act 1982 that a solicitor may include counsel’s fees as a disbursement in his bill to the lay client. If the bill is not paid the solicitor may sue for and recover the whole bill including counsel’s fees ...

[17] In Lai v Chamberlains, the Supreme Court explained the origin of this approach to the relationship between barristers and those who instruct them:^[10]

[98] In medieval times, barristers, as we now know them, were liable for negligence and, so it seems, were able to take action to recover their fees. During the sixteenth century there was a revival of interest in many facets of life in ancient Greece and Rome. Included in this renaissance was the study of Roman law. It was a well-established tenet of Roman law that advocates had no contractual right to sue for their fees. In that respect they had no contract with their clients and what they received for their services was in the nature of an honorarium.

[99] The importation of this Roman law approach into the English common law resulted in the medieval view being overtaken by the view that as there was no contract between barrister and lay client, or between barrister and instructing solicitor for that matter, there was no basis for any action for breach of any duty to take care. Until the twentieth century there was no recognised general cause of action for negligence, outside contract, in relation to services rendered by a professional person. The absence of any contractual basis for a claim against a barrister, and the corresponding inability of a barrister to sue for outstanding fees, was generally seen as the basis upon which barristers’ so-called immunity was based.

(Footnotes omitted.)

[18] The rule that a barrister cannot sue to recover their fee has been criticised as anomalous, in particular following the 2015 amendments to the Rules that modified the intervention rule to permit barristers to accept instructions direct from clients in certain circumstances.^[11] But that is not an issue we are concerned with on this appeal.

Framework for complaints

[19] Any person can complain to the NZLS about the conduct of a lawyer, whether or not they were the lawyer’s client at the relevant time.^[12] A complaint must be referred to the relevant Lawyers Standards Committee.^[13] The Standards Committee

can decide to take a range of steps in relation to a complaint, including inquiring into it;^[14] directing the parties to explore a resolution of the complaint by negotiation, conciliation or mediation;^[15] or deciding to take no action on the complaint.^[16]
[20] Section 138 identifies a wide range of factors that may lead to a decision to take no (further) action on a complaint. It provides:

138 Decision to take no action on complaint

(1) A Standards Committee may, in its discretion, decide to take no action or, as the case may require, no further action, on any complaint if, in the opinion of the Standards Committee,—

(a) the length of time that has elapsed between the date when the subject matter of the complaint arose and the date when the complaint was made is such that an investigation of the complaint is no longer practicable or desirable; or

(b) the subject matter of the complaint is trivial; or

(c) the complaint is frivolous or vexatious or is not made in good faith; or

(d) the person alleged to be aggrieved does not desire that action be taken or, as the case may be, continued; or

(e) the complainant does not have sufficient personal interest in the subject matter of the complaint; or

(f) there is in all the circumstances an adequate remedy or right of appeal, other than the right to petition the House of Representatives or to make a complaint to an Ombudsman, that it would be reasonable for the person aggrieved to exercise.

(2) Despite anything in subsection (1), a Standards Committee may, in its discretion, decide not to take any further action on a complaint if, in the course of the investigation of the complaint, it appears to the Standards Committee that, having regard to all the circumstances of the case, any further action is unnecessary or inappropriate.

[21] If the Standards Committee proceeds to inquire into a complaint and conduct a hearing in relation to a complaint, it has the power to make one or more of the determinations described in s 152(2):

152. Power of Standards Committee to determine complaint or matter

...

(2) The determinations that the Standards Committee may make are as follows:

(a) a determination that the complaint or matter, or any issue involved in the complaint or matter, be considered by the Disciplinary Tribunal:

(b) a determination that there has been unsatisfactory conduct on the part of—

(i) a practitioner or former practitioner; or

(ii) an incorporated firm or former incorporated firm; or

(iii) an employee or former employee of a practitioner or incorporated firm:

(c) a determination that the Standards Committee take no further action with regard to the complaint or matter or any issue involved in the complaint or matter.

[22] Section 152(3) provides that nothing in s 152 limits the power of a Standards Committee to make a decision under s 138 with regard to a complaint.
[23] Section 12 defines the term “unsatisfactory conduct” to include conduct consisting of a contravention of the Act, or of any regulations or rules made under the Act that apply to the lawyer (not being a contravention that amounts to misconduct under s 7). Thus where a Standards Committee considers that there has been a breach of the Rules, it is open to the Committee to make a finding of unsatisfactory conduct under s 152(2)(b). However that is not an inevitable outcome — in a particular case a Standards Committee may consider that although there is evidence of conduct that may amount to a breach, the appropriate determination is to take no further action.^[17] Put another way, not every breach of the Rules will warrant disciplinary action. The Standards Committee must exercise judgement about the appropriate determination to make having regard to a number of factors, including the factors identified in s 138.
[24] The Act provides that certain people, including the complainant and the lawyer who is the subject of the complaint, are entitled to apply for a review by the LCRO of a determination by a Standards Committee.^[18] A review by the LCRO is:^[19]

... neither a judicial review nor an appeal. Those seeking review of a Committee determination are entitled to a review based on the LCRO’s own opinion rather than on deference to the view of the Committee. A review by the LCRO is informal, inquisitorial and robust. It involves the LCRO coming to his or her own view of the fairness of the substance and process of a Committee’s determination.

[25] The LCRO can direct a Standards Committee to reconsider a decision,^[20] or determine the complaint themselves under s 211, which provides:

211 Powers exercisable on review

(1) The Legal Complaints Review Officer may, on a review under section 193, do any 1 or more of the following things:

(a) confirm, modify, or reverse any decision of a Standards Committee, including any determination, requirement, or order made, or direction given, by the Standards Committee (or by any person on its behalf or with its authority):

(b) exercise any of the powers that could have been exercised by the Standards Committee in the proceedings in which the decision was made or the powers were exercised or could have been exercised.

(2) Section 189 applies, with all necessary modifications, to any order made or power exercised under this section by the Legal Complaints Review Officer as if that order had been made or that power had been exercised by a Standards Committee.

(3) Nothing in this section limits section 209, section 210, section 212, or section 215.

[26] The LCRO is required to exercise their own judgement about the appropriate determination to make in respect of a complaint, having regard to all relevant circumstances.

Background to these proceedings

Mr Keene’s retainer

[27] In 2007 Mr Keene was instructed by Mr Cutting to act for Mr Lau, Ms Qiu and their son Jesse Liu in connection with an assault on Mr Liu that took place at the school he was attending. The professional relationship deteriorated: the second respondents became concerned about delay in resolving the dispute and legal costs, among other matters. On 19 December 2008 the second respondents wrote to Mr Keene to terminate his retainer. Their letter made it clear they considered his fees unreasonable.

Mr Keene seeks payment of outstanding fees

[28] Mr Keene wrote to the second respondents on a number of occasions seeking payment of the fees he had invoiced. The fees remained unpaid.
[29] The fee recovery proceedings were filed on 24 March 2009. The statement of claim named Mr Cutting as plaintiff and the second respondents as defendants. It claimed an amount representing the balance of Mr Keene’s unpaid fee: a little over $15,000. The claim identified Mr Cutting as the solicitor on the record, acting on his own behalf, and named Mr Keene as counsel. The claim referred to the anticipated complaint to the Auckland District Law Society about Mr Keene’s services and fees, and asserted there was no reasonable basis for it. The claim recorded that the second respondents had paid all Mr Cutting’s bills for services provided by him: the claim related solely to Mr Keene’s fees as their barrister.

The second respondents’ first complaint to NZLS

[30] The second respondents made a complaint to the NZLS on 14 April 2009. The complaint alleged that Mr Keene’s services were unsatisfactory and his fees unreasonable. The complaint about Mr Keene’s fees meant that the claim for recovery of those fees could not be pursued until the complaint had been finally determined.^[21]
[31] On 21 December 2009 a costs assessor recommended that Mr Keene’s bills of costs were fair and reasonable in all the circumstances. On 18 February 2010 an NZLS Standards Committee advised it would take no further action on the second respondents’ complaints about Mr Keene’s fees (among other matters). The second respondents appealed to the LCRO. On 1 October 2010, the LCRO confirmed the Standards Committee’s finding.^[22]

Mr Keene seeks judgment by default

[32] On 14 October 2010 Mr Keene wrote to the Registrar of the District Court seeking judgment by default on the basis the claim had been served on 2 April 2009 and the second respondents had not taken steps to defend it. A default judgment was issued on 18 October 2010.^[23]
[33] On 15 November 2010 the second respondents (who at this stage were representing themselves) applied to set aside the default judgment. Their application said, among other things, that the claim was “highly disputed”.
[34] Mr Keene filed a notice of opposition to the application, and an affidavit sworn by him attaching correspondence between himself and the second respondents. The second respondents then filed an application for an order that Mr Keene “cease acting in the ... proceedings”. Their application said Mr Keene had been their lawyer and they wished to “clarify facts”. It described the proceedings as “contentious”. The application referred to rr 13.5 and rr 13.5.1–13.5.4 of the Rules. Mr Keene filed a notice of opposition to that application, saying that he and Mr Cutting were both in effect acting for themselves, not for a client, to recover fees owing by former clients. The fact that they are lawyers “is really incidental. They are in the same position as litigants in person”. Mr Keene subsequently filed a further affidavit sworn by him attaching the report of the Law Society costs assessor and a copy of his 14 October 2010 letter to the District Court Registrar.
[35] The applications by the second respondents to set aside the default judgment and to preclude Mr Keene from acting in the proceedings were heard together on 20 January 2011. Judge M E Sharp issued a direction on 19 January 2011 saying that there was no reason why Mr Keene could not appear as counsel and witness as he was in effect acting for himself, and the evidence he was giving was not of a contentious nature. The Judge reiterated these points in her judgment delivered orally on 20 January 2011.^[24] She dismissed the application to set aside the default judgment.^[25]

The second respondents appeal the default judgment to the High Court

[36] The second respondents appealed to the High Court in relation to the dismissal of the application to set aside the default judgment, and the refusal to make an order preventing Mr Keene from acting as counsel.
[37] On 27 June 2011 Mr Keene filed submissions in the High Court. He said the second respondents’ complaint in relation to fees had been dismissed by the Law Society, and there was no basis to preclude him from acting. He also submitted that r 13.5.3 did not preclude his appearance as he was “acting for himself”. Mr Keene appeared as counsel at the hearing of the appeal in the High Court on 6 July 2011.
[38] Williams J allowed the appeal on the basis that the period enabling default judgment to be entered had not expired.^[26] The Judge expressed the view that the combined effect of Atkinson v Pengelly and r 13.5.3 was that Mr Keene ought not to have appeared as counsel in either the District Court or the High Court:^[27]

[16] The question under this heading is whether Mr Keene was allowed to appear on this proceeding either in the District Court or this Court. I think the combined effect of Atkinson v Pengelly and r 13.5.3 of the Rules of Conduct and Client Care (RCCC) is that Mr Keene should not have been allowed to appear in either court. Pengelly stands for the intervention rule that precludes a barrister from suing for his or her own fees. There are, I accept, moves afoot to abolish that rule. I neither express nor have an opinion in that debate but until abolition occurs, Pengelly remains good law.

[17] Mr Keene is not of course in breach of that rule in this proceeding because he is technically appearing for Mr Cutting not for himself, even though the fee Mr Cutting sues for is entirely Mr Keene’s. That is not the problem.

[18] Rule 13.5.3 of the RCCC provides as follows:

A lawyer must not act in a proceeding if the conduct or advice of the lawyer or of another member of the lawyer’s practice is in issue in the matter before the court. This rule does not apply where the lawyer is acting for himself or herself, or for the member of the practice whose actions are in issue.

[19] The first proposition is that Mr Keene’s conduct is squarely in issue in this appeal — both as to the quality of the work he did when instructed, and as to the fact that he appeared in the District Court to procure the default judgment and in this Court to defend it. Mr Keene says his conduct is not at issue because his fee for work has been upheld “finally and conclusively” by the LCRO. He argued it is no longer open to the appellants to contest the substance of his work or the bill itself. I do not think that submission can be correct technically because it will always be open to this Court to correct errors of law committed by entities exercising statutory powers. In this case, the appellants argue that Mr Keene’s performance fell below the standard required by the Lawyers and Conveyancers Act. They say for example that he withheld documents from them and told them he had not. Whatever their rights and wrongs, they are clearly allegations relating Mr Keene’s conduct.

[20] Even if the foregoing is wrong, it is clear in my view that by appearing in support of the application for default judgment, and for the respondent in this appeal, in circumstances where his appearance is specifically objected to, as a ground of opposition and appeal, Mr Keene engaged in conduct now at issue in this appeal in accordance with the first sentence in r 13.5.3. In short, I am clear that appearing in support of this proceeding amounts to “conduct ... in the matter before the court” and it is obviously in issue.

[21] Mr Keene argued that while that might be the case in terms of the strict wording of the rule, its spirit is not engaged. I am not quite sure I understand the point being made, but in any event the words appear to me to be reasonably clear, and must be applied.

[22] Mr Keene is therefore caught by the primary rule in [r] 13.5.3 unless he can fit within its exception. That is only, as Judge Sharp correctly noted, if he is acting for himself. Judge Sharp said he effectively was. The problem with that conclusion is that it offends the rule in Pengelly. Mr Keene is not allowed to act for himself so cannot, in my view, bring himself within the exception to this rule.

[23] I am not sure whether that problem is enough on its own to allow the appeal. I need not express an opinion on that given my conclusion on later matters. But it must be relevant in my overall assessment of the appeal.

(Footnotes omitted.)

[39] Mr Keene (on behalf of Mr Cutting) sought leave to appeal to the Court of Appeal from the 2011 High Court decision on a number of questions of law concerning the ability of Mr Keene to act as counsel in the proceedings. Leave was declined by Williams J on the basis that the primary ground on which the appeal from the District Court decision had been allowed related to the calculation of the period for entry of judgment by default. So, the Judge said, the issues that Mr Keene sought to raise “do not challenge the determinative factor in my decision”.^[28]
[40] Mr Keene subsequently applied to the District Court for leave to continue to appear as counsel on Mr Cutting’s claim in relation to Mr Keene’s fee. Leave was declined.^[29] An appeal to the High Court was unsuccessful.^[30]

The second respondents’ second complaint to NZLS

[41] On 22 May 2012 the second respondents made a further complaint to the NZLS about Mr Keene. This complaint included a contention that Mr Keene should not have acted as counsel in the fee recovery proceedings.
[42] As noted above, the Standards Committee made a finding of unsatisfactory conduct under s 152 in relation to breaches of rr 13.5 and 13.5.3. The Standards Committee considered that Mr Keene had breached rr 13.5 and 13.5.3 by appearing as counsel in the District Court and High Court in the fee recovery proceedings:^[31]

71. The Committee took note of what had taken place in court in terms of Mr Keene appearing in the matter, reflected in the comments/directions/minutes of the various Judges involved in the various proceedings. The Committee concluded that, whatever the final outcome was in court regarding the issues, seen overall Mr Keene should have known that it was inappropriate that he continued to act as counsel in the matter, particularly once the proceedings reached the High Court where an appearance in person was required.
72. The Committee considered that it was unsatisfactory for Mr Keene to try to rely on very technical arguments to get around what appeared on the face of it to be inappropriate in the circumstances.

Outcome

73. On the basis of its deliberations, the Committee considered that Mr Keene had contravened rr 13.5 and 13.5.3 of the RCCC. Accordingly, in respect of this aspect of the complaint, the Committee made a determination that there had been unsatisfactory conduct on the part of Mr Keene in terms of s 12(c) of the Act, pursuant to s 152(2)(b) of the Act.

[43] The Standards Committee upheld some additional complaints against Mr Keene, and rejected a number of other complaints.
[44] Both Mr Keene and the second respondents sought a review by the LCRO of the Standards Committee decision. As noted above, the LCRO upheld the r 13.5 determination, but reversed the r 13.5.3 finding.^[32] The LCRO decision is described in more detail below.

Outcome of fee recovery proceedings

[45] The claim for Mr Keene’s fee was largely successful in the District Court. The District Court Judge reduced the fee from $15,125.82 to $10,500. The second respondents appealed to the High Court. That appeal was dismissed.^[33]

The LCRO decision

[46] The LCRO found that Mr Keene had breached r 13.5 because he had appeared as counsel for Mr Cutting, and Mr Cutting’s action was for the balance of Mr Keene’s fee:^[34]

[30] It is fundamental to the proper conduct of litigation that counsel acting is as independent and free from personal interests as possible. Although Mr Keene was acting for Mr Cutting, the objective of the litigation was to recover Mr Keene’s fee from the complainants. Mr Keene therefore cannot say he acted without regard to his personal interests. The fact that he had a personal interest in the litigation, undermined what should have been a more or less unassailable presumption of independence on the part of counsel.

[47] The LCRO then went on to consider whether Mr Keene had breached r 13.5.3.
[48] The LCRO noted that Mr Keene:^[35]

... was not acting for himself. He was acting for Mr Cutting, albeit in furtherance of his own personal interests. Mr Keene therefore could not avail himself of the exception to r 13.5.3.

[49] On that basis, the key question that the LCRO needed to determine was whether Mr Keene’s conduct was in issue in the matter before the Court.
[50] The LCRO focused on Mr Keene’s involvement as counsel in the period leading up to, and at, the hearing of the appeal in the High Court in 2011. She considered it was not clear Mr Keene’s conduct was in issue at that stage of the proceedings. Her conclusions in relation to r 13.5.3 were as follows:

[53] It is not entirely clear from the materials available on review that r 13.5.3 was engaged before the appeal, or that any conduct on Mr Keene’s part after the appeal was determined contravened r 13.5.3, when conduct of Mr Cutting’s proceeding was handed to other counsel.

[54] While there certainly were problems with Mr Keene acting, I am not persuaded that his conduct warrants a determination of unsatisfactory conduct based on a contravention of r 13.5.3. That determination is reversed.

[51] The LCRO went on to deal with a number of other issues raised by the second respondents’ complaints, and by the review applications before her. She summarised her findings as follows:

[97] After carefully considering all of the materials available on review, and having heard from the parties, there is a basis for a determination that there has been unsatisfactory conduct on the part of Mr Keene for a contravention of r 13.5. Mr Keene acted for Mr Cutting in litigation in which Mr Keene had a personal interest, he is unable to demonstrate that he began from a neutral position, and therefore cannot show that he maintained his independence in that litigation.

[98] A disciplinary response to the balance of the complainants’ complaints is not necessary or appropriate.

Application for judicial review of LCRO decision

[52] Mr Keene applied to the High Court for judicial review of the decision of the LCRO in relation to r 13.5, on the basis that the LCRO had erred in law in finding that there had been a breach of r 13.5.
[53] The second respondents did not make a formal application for judicial review of the LCRO decision in relation to r 13.5.3. That issue was not raised in the pleadings they filed in relation to the application for judicial review. But shortly before the hearing of the judicial review proceedings they filed submissions which challenged the correctness of that aspect of the LCRO’s decision. Downs J issued a Minute indicating that he was willing to hear the challenge to the r 13.5.3 decision. In effect, the Judge proceeded as if the second respondents had applied for judicial review in relation to that aspect of the LCRO decision.^[36]

High Court decision

[54] Mr Keene’s judicial review application was successful. The Judge found that Mr Keene had not breached r 13.5 merely by acting in proceedings in which recovery of his fees was sought.^[37] The LCRO had erred in law by proceeding on the basis that the mere fact that Mr Keene had a financial interest in the outcome of the litigation meant that he had breached r 13.5.^[38]
[55] The Judge then turned to the argument in relation to r 13.5.3. The Judge held that the LCRO had erred in law because in the wider context of the litigation, Mr Keene’s advice and conduct were in issue.^[39] The basis on which the second respondents sought to oppose the claim was that Mr Keene’s services had been unsatisfactory and his fee excessive.^[40] It was artificial and inappropriate to focus solely on the application to set aside the default judgment, ignoring the wider context of the litigation.^[41]
[56] Counsel for Mr Keene submitted that if the Judge considered that the LCRO had erred in law in relation to r 13.5.3, that issue should be remitted to the LCRO. The Judge did not accept that argument:

[51] Mr Illingworth submitted if I reached this conclusion, I should remit the r 13.5.3 determination to the review officer. Remission is common in judicial review, but not invariable. Delay and cost enter the mix. Substitution of the Court’s view for that of the decision maker is permissible when the outcome could not truly be in doubt.

[52] I decline to remit. No further evidence could be adduced. The case is old. Remission would cause yet more delay, and place additional pressure on an apparently overburdened Legal Complaints Review Officer. Related litigation is now seemingly over ... Most significantly, the facts disclose obvious infraction of r 13.5.3. Mr Keene should not have appeared on the claim because his conduct was in issue from the outset. And by the time of the appeal to Williams J, that conduct was central. The High Court said so back in 2011.

(Footnotes omitted.)

[57] The Judge quashed the determinations of the LCRO in relation to both r 13.5 and r 13.5.3.^[42] The result was that the determination of the Standards Committee in relation to r 13.5.3 was restored, as was the Standards Committee’s unsatisfactory conduct determination based on a breach of that rule, and the fine and costs order imposed by that Standards Committee.^[43]

The parties before the Court on this appeal

[58] Mr Keene appealed to this Court in relation to the High Court decision to quash the LCRO determination in relation to r 13.5.3, and restore the Standards Committee’s finding of unsatisfactory conduct and consequential orders.
[59] The LCRO, who was named as first respondent, abided the decision of this Court and took no part in the proceedings.
[60] The second respondents did not wish to take an active role in the appeal before this Court. The Court excused them from participating in the appeal. However they sought, and were granted, permission to file brief written submissions.
[61] The NZLS, which appeared as an intervener in the High Court, was granted intervener status in this appeal and was directed by the Court to act in a contradictor role. We record our gratitude to the NZLS for its assistance.

Mr Keene’s submissions on appeal

[62] Mr Keene’s written submissions had as their main focus an argument that r 13.5.3 did not apply to his conduct up to and including the time of his appearance before the High Court in connection with the setting aside of the default judgment, because his conduct was not in issue. He argued that the issues raised by the application to set aside the default judgment were technical issues relating to the timeframe for seeking default judgment, and whether the District Court could revisit the reasonableness of his fees in circumstances where those fees had been upheld by the costs assessor. Mr Keene accepted that his conduct would be in issue if the default judgment was set aside, and if it was open to the District Court to consider the second respondent’s defence to the claim for his fees. But, he argued, that issue was not live in the circumstances in which he appeared as counsel. In particular, it was not live in the proceedings in the District Court and High Court in relation to setting aside the default judgment.
[63] In the alternative, Mr Keene argued that if he did breach r 13.5.3 it was unfair for the Standards Committee and the High Court to make a finding of unsatisfactory conduct in circumstances where a District Court Judge and the LCRO had interpreted and applied r 13.5.3 in the same way that he did at the relevant time and had accepted that the rule did not prevent him from appearing at the relevant hearings. So, he submitted, the finding of unsatisfactory conduct should be set aside.
[64] In oral argument, in response to questions from the Court, Mr Keene also advanced the argument that had been accepted by the District Court to the effect that r 13.5.3 did not apply because the mischief at which the rule is aimed was not engaged. The second respondents were not the relevant “client” as he was no longer acting for them at the time of the fee recovery proceedings. His “client” as a matter of form was Mr Cutting, his instructing solicitor and the named plaintiff in the proceeding. But the “in-substance” client was Mr Keene himself. No concerns arose about Mr Keene’s independence vis-á-vis Mr Cutting. And in circumstances where it was transparent to the Court that the proceedings were for the purpose of recovering his fee, there was also no concern about independence vis-á-vis the Court: Mr Keene was in exactly the same position, so far as the Court was concerned, as a barrister and solicitor bringing proceedings to recover their own fee.

Second respondents’ submissions on appeal

[65] The written submissions filed by the second respondents referred to a number of affidavits filed by Mr Keene in the fee recovery proceedings, and emphasised that his “conduct was in issue from the outset and throughout”. Their submissions set out extensive criticisms of Mr Keene’s conduct. They concluded by submitting that the High Court decision was correct, and the appeal should be dismissed.

NZLS’ submissions as intervener

[66] The NZLS’ written submissions argued that the High Court decision was correct, and that the High Court approach of assessing Mr Keene’s conduct in the context of the proceeding as a whole was appropriate.
[67] The NZLS submitted that this was a case where Mr Keene knew the second respondents took issue with his performance, and on that basis disputed his fee. They had told Mr Keene they were going to complain about him. When Mr Keene then acted in proceedings to recover his fee, he did so knowing that they were proceedings where — rightly or wrongly — his conduct was in issue. That is the type of structural conflict r 13.5.3 exists to prohibit.
[68] The NZLS submitted that the extent of the breach warranted a finding of unsatisfactory conduct.
[69] In his oral submissions Mr Hodge emphasised that the purpose of chapter 13 of the Rules is primarily to ensure the independence of a lawyer vis-á-vis the court. Mr Hodge accepted that a barrister and solicitor can sue for their own fee, and that it is clear that in those circumstances the rule is not engaged because it does not apply where the lawyer is acting for himself or herself. Mr Hodge also accepted that in this case, as a matter of substance Mr Keene was acting for himself. But, he submitted, because of the intervention rule Mr Keene was unable to bring proceedings to recover his own fee: so the plaintiff was Mr Cutting. As a matter of form, Mr Keene was acting as a barrister instructed by his client and instructing solicitor Mr Cutting. That in turn meant that Mr Cutting was exposed to an order for costs, and potentially also to criticism by the court for the conduct of the litigation. He was dependent on Mr Keene as counsel to relay to him events in connection with the proceeding, and any observations the court might make in the course of hearings. So, Mr Hodge argued, Mr Cutting’s interests were engaged.
[70] Mr Hodge did however accept that so far as the court is concerned, in circumstances where it is transparent that a barrister is acting in proceedings to recover their own fee there is no distinction of substance from the scenario where a barrister and solicitor sues in person for their own fee, and represents themselves.

Analysis

Was Mr Keene acting for himself in the fee recovery proceedings?

[71] The Rules are concerned with the ethical obligations of lawyers. It is important, in that context, to focus on substance rather than form.
[72] The second respondents were at one stage clients of Mr Keene. But they were no longer his clients at the time the fee recovery proceedings were filed. So far as the fee recovery proceedings are concerned, it is quite clear that the purpose of r 13.5.3 is not to protect the interests of the second respondents.
[73] If Mr Keene had been free to bring proceedings to recover his own fee, he could have acted for himself and r 13.5.3 would not have applied. Rule 13.5.3 must be read in light of r 13.5, which is concerned with a lawyer engaged in litigation for a client. And r 13.5.3 expressly provides that it does not apply “where the lawyer is acting for himself or herself”.
[74] On the orthodox approach, as noted above, Mr Keene could not sue for his own fee. Rather, the only way that his fee could be recovered from the second respondents was for his instructing solicitor, Mr Cutting, to bring proceedings seeking to recover that fee. That approach was adopted in this case. So Mr Keene had an instructing solicitor, Mr Cutting. But in substance the proceedings were being brought for the benefit of Mr Keene.
[75] In the normal scenario where a client instructs a solicitor, and that solicitor instructs a barrister to act for the client, the obligations of the barrister to “the client” under the Rules are owed to the person who has instructed the solicitor, and through the solicitor, the barrister. They are not owed to the instructing solicitor. As a matter of form, Mr Cutting was Mr Keene’s client in the fee recovery proceedings as well as being his instructing solicitor because the fee recovery proceedings were brought with Mr Cutting named as plaintiff. But in this case the arrangements between Mr Cutting and Mr Keene meant that Mr Cutting’s interests were not directly engaged.^[44] Rather, the benefit of the proceedings would accrue to Mr Keene, and the cost burden of the proceedings also fell on him.
[76] We recognise the theoretical possibility of Mr Cutting being exposed to a costs award, or criticism, in relation to the conduct of the proceedings. But this risk seems remote, and one that Mr Cutting was well placed to understand and manage.
[77] Our approach to the interpretation of r 13.5.3 must be informed by the nature of the Rules, which as noted above are ethical rules that require a focus on substance rather than form, and by the purpose of r 13.5.3 read in context.^[45] We do not consider that the mischief at which r 13.5.3 is directed was present here, in circumstances where:

• (a) There was no client who was looking to Mr Keene to act independently of his own interests, whose reasonable expectations of independence were disappointed because Mr Keene’s conduct was in issue. Mr Keene was the “in-substance” client. Mr Cutting was the client as a matter of form, but he knew that the proceedings were brought for Mr Keene’s personal benefit in circumstances where their mutual former client had raised concerns about the fees. There is no suggestion that his interests were compromised by Mr Keene acting in these circumstances.
• (b) The position vis-á-vis the Court was also transparent. The Court knew Mr Keene was acting as counsel in order to recover his own fee, and he could not be expected to be completely independent in those circumstances. The Court was able to adjust its expectation of independence in this context in precisely the same way that it would if he were a barrister and solicitor suing a former client for payment of outstanding fees.

[78] Adopting a purposive and contextual approach to the interpretation of r 13.5.3, we consider that the better view is that on the facts of this case Mr Keene was “acting for himself”. Form should not distract from substance.
[79] It follows that there was no breach of r 13.5.3 in this case, as the rule did not apply.

Was Mr Keene’s conduct in issue in the matter before the Court?

[80] We consider that Mr Keene’s conduct was in issue in these proceedings at the latest when the second respondents applied to set aside the default judgment against them. It was a necessary element of that application that they had a genuine defence that they wished to pursue. That defence turned on the conduct of Mr Keene when he was acting for them.
[81] Mr Keene says that because he chose not to argue that there was no defence to the claim, if it was open to the Court to go behind the decision of the Standards Committee, his conduct was not in issue in the context of the application to set aside the default judgment.
[82] We prefer the submission of Mr Hodge that the question cannot be approached this narrowly. The conduct of a lawyer is not necessarily in issue in proceedings merely because the proceedings seek recovery of the lawyer’s fee. But where the defendant is actively seeking to pursue a defence based on the conduct of the lawyer, the conduct of the lawyer is in issue in the proceeding as a whole. From that point onwards, if r 13.5.3 applies (i.e. if the lawyer is not acting for themselves) the lawyer cannot continue to act. It is irrelevant that a particular procedural step does not directly raise the issue of the lawyer’s conduct: the lawyer’s independence is compromised in relation to the proceeding as a whole.
[83] We therefore agree with Downs J’s view that Mr Keene’s conduct was in issue at a time when he continued to act as counsel in the litigation. But as we have found that r 13.5.3 did not apply in the circumstances of this case, there was no breach of the rule.

Relief granted in the High Court

[84] If we had taken a different view on the proper approach to r 13.5.3, and had found that the rule properly interpreted did apply to Mr Keene’s conduct as counsel in the fee recovery proceedings, we would nonetheless have allowed the appeal. We consider that the relief granted in the High Court, setting aside the LCRO decision and restoring the Standards Committee finding of unsatisfactory conduct and consequential orders, was not appropriate in these judicial review proceedings.^[46]
[85] It did not necessarily follow from the Judge’s finding that there had been a breach of r 13.5.3 that the Standards Committee was right to make an unsatisfactory conduct determination and impose a fine. There were a number of other factors that it was necessary for the Standards Committee and the LCRO to consider. It was open to the LCRO to decide not to make a finding of unsatisfactory conduct.
[86] This was a case where the complaint was pursued by complainants whose interests were not within the scope of the protection that the rule is intended to provide to existing clients (here, Mr Cutting) and the court. There was no suggestion of any concern on the part of the relevant client, Mr Cutting. The position was entirely transparent vis-á-vis the court. These factors were relevant to an assessment of the appropriate determination to be made in respect of the complaint, even if they did not establish that there was no breach of r 13.5.3.
[87] Moreover Mr Keene’s view that he was able to act in the proceedings was reasonably open to him, even if it was wrong. His view that the rule did not apply because he was in substance acting for himself was accepted by Judge Sharp before whom he appeared. We also consider it is correct. Even if both we and the Judge are wrong, the view can hardly be dismissed as untenable.
[88] Mr Keene’s view that his conduct was not in issue in the proceedings up to and including the time of the hearings to set aside the default judgment, though we have not accepted it, also was not untenable. It was accepted as correct by the LCRO in her decision.
[89] So Mr Keene was proceeding on the basis of an understanding of the Rules that was genuinely held and that was reasonably open to him. That is another important factor that needed to be weighed before reaching a view on the appropriate disposition of the complaint.
[90] Thus the High Court erred in proceeding from a conclusion that the LCRO had erred in law in her interpretation of r 13.5.3 to a finding that the LCRO decision should be set aside, and the Standards Committee restored. It was open to the LCRO, properly directing herself on the law, to reach the view that a disciplinary response was not warranted in this case even if the rule may have been breached. Indeed that is how we read her decision, at least in part. The LCRO did not make a definitive finding that there had been no breach of r 13.5.3 by Mr Keene at any stage of the fee recovery proceedings. Rather, she proceeded on the basis that:

• (a) it was “not entirely clear” that r 13.5.3 was engaged before the appeal to the High Court in relation to the setting aside of the default judgment, or that any conduct on Mr Keene’s part after the appeal was determined contravened the rule;^[47] and
• (b) she was not persuaded that his conduct warranted a determination of unsatisfactory conduct based on a contravention of r 13.5.3.^[48]

[91] It would have been open to the LCRO to reach the same result even if her interpretation of r 13.5.3 had been the same as that of the Judge. Contrary to the view expressed by the Judge, this was not a case where the outcome “could not truly be in doubt”.^[49]
[92] We agree with the Judge that it would be unsatisfactory to prolong this complaint process, which originated in events that occurred almost 10 years ago. But in those circumstances it seems to us that the appropriate course would have been to decline relief. This was not a case where there was only one possible outcome if the matter was referred back to the LCRO, and was considered on the basis of the approach to r 13.5.3 preferred by the High Court. The factors identified at [86]–[89] above could well have resulted in a finding that a disciplinary response was not warranted, and that no further action should be taken in respect of the r 13.5.3 complaint. Thus even if we had reached a different view in relation to the interpretation of r 13.5.3, we would have allowed the appeal and set aside the decision of the High Court quashing the LCRO determination in relation to r 13.5.3. Having regard to all the circumstances of this case, and in particular the amount of time that has elapsed, we consider that the appropriate response in these judicial review proceedings would have been to decline relief.

Result

[93] The appeal is allowed.
[94] The order of the High Court setting aside the LCRO determination in relation to r 13.5.3 is set aside.
[95] An order for costs is not appropriate in this case. Mr Keene represented himself. The NZLS sought an order under s 178(2)(b) of the Senior Courts Act 2016 that its costs be paid from public funds. However, we consider that this was a case in which it was appropriate for the NZLS to appear and assist the Court, in the same way that the Commerce Commission appears to assist the court in appeals from its decisions. The appearance was an integral aspect of the performance of the NZLS’ regulatory functions. We do not consider that an order for payment of the costs of the NZLS out of public funds would be appropriate.

Solicitors:
Meredith Connell, Auckland for Intervener

^[1] This prohibition, known as the “intervention rule”, has subsequently been partially relaxed: see Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules 2008, ch 14 and in particular rr 14.4–14.12.

^[2] Atkinson v Pengelly [1995] NZHC 807; [1995] 3 NZLR 104 (HC).

^[3] Determination by Auckland Standards Committee 3 5936, 20 August 2013.

^[4] The Standards Committee also dealt with a number of other complaints that are not relevant for present purposes.

^[5] Keene v Liu LCRO 276/2013, 23 November 2017 [LCRO decision].

^[6] Keene v Legal Complaints Review Officer [2018] NZHC 1869, [2018] NZAR 1361 [High Court decision].

^[7] Lawyers and Conveyancers Act 2006, pt 7.

^[8] Atkinson v Pengelly, above n 2.

^[9] At 111.

^[10] Lai v Chamberlains [2006] NZSC 70, [2007] 2 NZLR 7.

^[11] See Lawyers and Conveyancers (Lawyers: Conduct and Client Care) Rules, chapter 14, and in particular rr 14.5–14.12. For criticism of the prohibition on barristers suing for their own fees see Duncan Webb, Kathryn Dalziel and Kerry Cook Ethics, Professional Responsibility and the Lawyer (3rd ed, LexisNexis, Wellington, 2016) at 417; Andrew Beck “Litigation section” [2014] NZLJ 257 at 260; Matthew Palmer (ed) Professional Responsibility in New Zealand (online ed, LexisNexis) at [230,035.5]; and Richard Scragg The Ethical Lawyer: Legal Ethics and Professional Responsibility (Thomson Reuters, Wellington, 2018) at [14.3].

^[12] Lawyers and Conveyancers Act, s 132.

^[13]  Section 135. 

^[14] Section 137.

^[15] Section 143.

^[16] Section 138.

^[17] See for example DO v Law Firm ABC & Body Corporate LCRO 10/2018, 30 August 2019.

^[18] Lawyers and Conveyancers Act, ss 193 and 194.

^[19] Deliu v Connell [2016] NZHC 361, [2016] NZAR 475 at [2].

^[20] Lawyers and Conveyancers Act, s 209(1)(a).

^[21] Lawyers and Conveyancers Act, s 161.

^[22] Liu v Keene LCRO 44/2010, 1 October 2010.

^[23] Cutting v Liu DC Auckland CIV-2009-004-678, 18 October 2010.

^[24] Cutting v Liu DC Auckland CIV-2009-004-678, 20 January 2011.

^[25] At [26].

^[26] Liu v Cutting [2011] NZHC 912; (2011) 20 PRNZ 806 (HC).

^[27] Atkinson v Pengelly, above n 2.

^[28] Liu v Cutting HC Auckland CIV-2011-404-695, 6 October 2011 at [4].

^[29] Cutting v Liu DC Auckland CIV-2009-004-678, 1 November 2013.

^[30] Cutting v Liu [2014] NZHC 1063, [2014] 3 NZLR 224.

^[31] Determination by Auckland Standards Committee 3, above n 3.

^[32] LCRO decision, above n 5, at [111].

^[33] Liu v Cutting [2018] NZHC 33.

^[34] LCRO decision, above n 5.

^[35] At [35].

^[36] High Court decision, above n 6, at [2] and n 4.

^[37] At [37].

^[38] At [37].

^[39] At [42].

^[40] At [44].

^[41] At [39]–[49].

^[42] At [53].

^[43] At [53].

^[44] Mr Cutting had an ethical obligation to seek to recover Mr Keene’s fee: McGuire v New Zealand Law Society [2019] NZHC 2748. But he had no economic stake in the proceedings.

^[45] Interpretation Act 1999, s 5(1); and Commerce Commission v Fonterra Co-operative Group Ltd [2007] NZSC 36, [2007] 3 NZLR 767 at [22].

^[46] See High Court decision, above n 6, at [51]–[52], set out at [56] above.

^[47] LCRO decision, above n 5, at [53].

^[48] At [54]. See also [98].

^[49] High Court decision, above n 6, at [51].