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Court of Appeal of New Zealand |
Last Updated: 12 December 2011
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IN THE COURT OF APPEAL OF NEW ZEALAND
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CA244/00
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BETWEEN
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ROBERT J ERWOOD
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Appellant
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AND
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GLASGOW HARLEY
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Respondent
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Hearing:
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11 June 2001
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Coram:
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Elias CJ
Blanchard J McGrath J |
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Appearances:
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D L Mathieson QC for the Appellant
L J Taylor and E Steer for the Respondent |
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Judgment:
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27 September 2001
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JUDGMENT OF THE COURT DELIVERED BY McGRATH
J
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Table of Contents |
Paragraph Number
Introduction [1]
The appellant’s claim for recovery of losses [4]
The respondent’s summary judgment for costs [9]
Issues and submissions on appeal [18]
Did the appellant “appear”? [25]
Miscarriage of justice and arguable defences [38]
Miscarriage of justice:
Irregular conduct of proceeding [50]
Introduction
[1] This appeal concerns a proceeding in which a firm of solicitors claims fees for litigation services provided to a client by the firm and a barrister instructed as counsel. The result of the litigation was highly disappointing to the client. He unsuccessfully opposed an application for summary judgment raising defences going to both liability and quantum and then applied to a High Court Judge to have that judgment set aside.
[2] The High Court Judge was aware that the Council of a District Law Society was to undertake a revision of the barrister’s bill of costs under the Law Practitioners Act 1982, at the direction of the Judge who had heard the substantive claim. The costs revision process under that Act determines the fair and reasonable costs for services provided by law practitioners to their clients. The High Court Judge decided the costs revision procedure for the barrister’s fee should be allowed to run its course before payment of the fee was required. Accordingly he upheld the summary judgment as to liability but set it aside as to quantum. He also adjourned the application until the outcome of the costs revision was known.
[3] The client, however, wishes questions of liability for costs and quantum to go to trial in the High Court where his defences can be tried. The question in this appeal is whether the summary judgment should be set aside in its entirety to allow this to be done.
The appellant’s claim for recovery of losses
[4] The appellant, Mr Erwood, then known as Robert McDonald, brought a proceeding against FAI (NZ) General Insurance Co Ltd (FAI) as first defendant and the New Zealand Law Society (the Law Society) as second defendant to recover money which the appellant had lost as a result of the collapse of a firm of solicitors known as Renshaw Edwards. Earlier, judgment had been obtained by the appellant against former partners of Renshaw Edwards, but they were declared bankrupt and the judgment sum remained unpaid. FAI was Renshaw Edward’s professional indemnity insurer and was sued by Mr Erwood under s9 of the Law Reform Act 1936. The Law Society was sued as administrator of the Solicitors Fidelity Guarantee Fund.
[5] The respondent, Glasgow Harley, acted as solicitors for the appellant in the litigation and Mrs Raylee Harley as counsel for the appellant.
[6] In the High Court the appellant’s claim against FAI was dismissed but he obtained judgment against the Law Society for $212,843 plus interest. (CP507/98, Auckland, 11 December 1997, Giles J). In a subsequent judgment the High Court ordered the appellant to pay costs to FAI of $115,606 and to the Law Society of $30,000. (CP507/98 Auckland, 19 February 1998, Giles J). The latter award of costs was made because the Law Society prior to commencement of trial, had made an offer of $450,000 to settle the case which the appellant rejected. The total amount of the two costs orders, together with costs of $250,570 subsequently charged to the appellant by his counsel and solicitors far exceeded the amount originally lost by the appellant.
[7] For completeness we refer to two subsequent developments in this litigation (in neither of which the respondent or Mrs Harley represented the appellant). First the appellant did not appeal against dismissal of the claim against FAI but did appeal against the amount awarded in his favour against the Law Society. This Court increased that amount and varied the award of interest in the appellant’s favour. (McDonald v NZ Law Society CA33/98 7 December 1999).
[8] The second development was that, following delivery of the High Court’s principal judgment on 11 December 1997, and its subsequent judgment as to costs on 19 February 1998, the appellant applied to the High Court to be indemnified for the costs he had incurred, by Mrs Harley and the respondent as his former solicitors and counsel. The High Court had previously held that Mrs Harley had not discharged her obligations, either to her client or to the Court. On 24 September 1998 Giles J ordered both Mrs Harley and the respondent, jointly and severally, to indemnify the appellant for the costs payable to FAI to the extent of $65,000. Giles J also referred Mrs Harley’s bill of costs charged to the appellant to the Wellington District Law Society for revision ([1999] 1 NZLR 585). That decision was affirmed on appeal ([1999] 3 NZLR 545 (CA)). It was however subsequently overturned by the Privy Council (Appeal No. 9/2000 and 50/2000 10 April 2001). The Privy Council held that the High Court had wrongly taken into account matters relating to the conduct of the proceedings by Mrs Harley and the respondent prior to the trial. It had effectively penalised them for their conduct of the proceedings generally, that is both prior to and at the trial. Although the Court of Appeal recognised the Judge had gone into certain matters not properly before him, the Privy Council concluded that, in upholding the High Court’s decision the Court of Appeal had failed to apply its own judgment on the facts. In that respect the Privy Council was of the view that the Court of Appeal was wrong to hold Mrs Harley in serious dereliction of her duty to the High Court and to make the same finding against the respondent concerning their conduct of the litigation as solicitors for the appellant.
The respondent’s summary judgment for costs
[9] Independently of those developments the respondent sought, and on 25 February 1999, obtained summary judgment in the High Court against the appellant for its legal fees and disbursements in the earlier High Court proceedings, along with those charged by Mrs Harley as counsel. The appellant was present in Court on that day and had sought to have the summary judgment hearing adjourned. His application was refused by Master Venning who, unfortunately, had not been advised that the bill of costs had been referred for revision under s146(1) of the Law Practitioners Act 1982. The Master entered summary judgment for $189,408.20 together with costs of $2,000 and disbursements of $619.38. Later the Master gave written reasons for his decision. In these he observed that the essence of summary judgment procedure is to provide a speedy means by which a plaintiff can obtain judgment against a defendant who has no arguable defence. The appellant, in his view, had failed to show he had an arguable defence to the respondent’s claim for costs.
[10] The appellant then applied under R143 of the High Court Rules to have the judgment set aside. The basis of such an application must be that there was no appearance by a defendant on the application for summary judgment and that a miscarriage of justice had or may have resulted. On 28 July 1999 the application was heard by Gallen J. The appellant did not appear but Mr P J Radich was appointed as counsel to assist the Court with regard to the appellant’s interests and he advanced arguments which supported it. The respondent was represented by Mr Taylor, who opposed the application. In the course of delivering an oral judgment on the application Gallen J said:
Mr Taylor, for the respondent to the application, opposed those orders and made it plain that the reason why the respondent had taken the action it had was to protect the position from their point of view.
After some discussion counsel for the respondent indicated that his client was prepared to consent to an order in the following terms:
His Honour held that what he described as “the proposal put forward by Mr Taylor” was appropriate and he made an order in those terms, that is setting aside the judgment only as to quantum. Enforcement action initiated by the respondent to recover costs was stayed pending further application to the Court.
[11] The appellant next applied under R264 for a review by the High Court of Gallen J’s order. The matter came before McGechan J on 10 November 1999. The review procedure was available on the literal terms of R264, the order being one made on an interlocutory application. McGechan J however considered the R264 procedure to be inappropriate to revisit the considered decision of a High Court judge reached after hearing argument from both parties. The correct course was to appeal. The R264 application was adjourned with leave to apply further if necessary.
[12] The appellant then applied to this Court for special leave to appeal out of time against Gallen J’s order to the extent it did not set aside the summary judgment as to liability. Such leave was given by this Court on the basis of the Court’s recognition of the appellant’s particular personal difficulties: the appellant submits that he is schizophrenic (Erwood v Glasgow Harley CA303/99, 7 September 2000). In this way the appeal against Gallen J’s order of 27 July 1999 is now before this Court.
Costs revision order
[13] As already indicated, Giles J, acting under s146(1) of the Law Practitioners Act 1982 (the Act), referred Mrs Harley’s bill of costs to the Wellington District Law Society (the District Society) for costs revision. The bill submitted for revision by Mrs Harley was for a total sum of $244,457.68 of which $192,000 was for fees. The respondents had submitted a bill of costs for $14,000 which was not subject of cost revision. A costs revision committee of the District Society conducted a hearing between 21 and 23 February 2000. The appellant and Mrs Harley were both represented by counsel and Mrs Harley attended the hearing. The committee delivered its fully reasoned written decision on 2 June 2000.
[14] In its decision the costs revision committee concluded that its responsibilities required that it determine the terms of the retainer of Mrs Harley according to the evidence given and submissions made to it. In the committee’s view no principle of estoppel arising from the earlier litigation precluded relevant evidence on these matters from being given. The committee should determine the terms of the contract, including whether there was a contingency fee element. It would not, however, make findings concerning contractual validity or enforceability. Ultimately it would decide the fair and reasonable fee payable in all the circumstances by the appellant to Mrs Harley.
[15] The committee found that Mrs Harley had originally accepted instructions, from a different firm of solicitors, on the basis that they would only be required to meet her fee “from the funds that are eventually received from either the Fidelity Fund or the Insurance Company.” It was not however a term of the agreement that she would not be paid unless the claim was successful. The original terms were set out in a letter of 10 June 1993 and although there was subsequent correspondence between Mrs Harley and the appellant the committee was satisfied there was no departure from the original terms.
[16] The committee concluded that the contract of engagement of Mrs Harley contained terms that she would carry out the work competently and give advice that would reflect sound judgment. There would be a reasonable relationship between the work carried out and the fees charged. An important question was whether negligent conduct of the proceedings against FAI and the Law Society disentitled Mrs Harley to payment of the reasonable fee otherwise payable. After taking into account the findings of the High Court and Court of Appeal (its decision being reached before the decision of the Privy Council) the committee found that there was no basis on the evidence before it on which the committee could make the findings of negligence and incompetence against Mrs Harley that had been made by the New Zealand courts. Indeed, prior to the receipt of the Law Society’s offer of settlement on 8 October 1997, nothing about the conduct of the litigation disentitled Mrs Harley to payment of the reasonable fee as agreed. In the committee’s view the work done to that point had been competently, usefully, necessarily and beneficially done. It had secured a significant change in the Law Society’s position on the eve of trial as the late offer of settlement was substantial. However the committee also concluded that her handling of the brief thereafter by Mrs Harley was such that it should result in a reduction of her fee from $192,000 to $137,000 together with GST, witnesses expenses and disbursements.
[17] Accordingly the committee determined the total sum payable to comprise fees of $137,000, GST thereon of $17,125, witnesses expenses of $4,552.50 and disbursements of $23,905.18, less payments made on the appellant’s behalf to Glasgow Harley of $2,351.41. The secretary of the District Society was instructed to certify the bill, pursuant to s154(1) of the Act, accordingly.
Issues and submissions on appeal
[18] The first issue in this appeal arises from the requirement of R143 that the party against whom summary judgment was entered, who seeks to have it set aside or varied, did not appear at the hearing of the application for judgment. The question is accordingly whether or not the appellant appeared at the hearing by Master Venning of the application for summary judgment on 25 February 1999. Mr Mathieson QC contended for the appellant that he did not appear within the terms of R143. He said the appellant was a person functioning under the disability of schizophrenia who had been unable to secure legal representation to oppose the application for summary judgment on the day. He had appeared only to seek an adjournment and, once that was refused, without reasons, the appellant took no overt step to appear on the application itself. Mr Taylor for the respondent submitted that the appellant did appear before the Master on the application. Prior to the hearing he had filed a notice of opposition to the application and an affidavit in support. He also had filed an application to strike out the respondent’s claim. The appellant appeared in person when the list was called on the morning of the hearing and at the time allocated for the matter that afternoon. However Mr Taylor accepted that at the hearing before Gallen J the respondent had acknowledged that the High Court had jurisdiction to proceed under R143. That is recorded in Gallen J’s judgment.
[19] The second issue in the appeal is whether, in terms of R143, it was demonstrated before Gallen J that in all the circumstances there was or may have been a miscarriage of justice as a result of the Master’s decision to enter judgment against the appellant. Mr Mathieson argued that defences were available to the appellant which had not been properly assessed either by the Master (because the appellant was unrepresented) or by Gallen J (who had adopted a pragmatic solution, following discussion with counsel but without consent on behalf of the appellant).
[20] Such defences were said to include the excessive and unreasonable nature of the fees charged by Mrs Harley and her negligent conduct of the case as counsel. There was an arguable question whether Mrs Harley had failed to advise the appellant properly in relation to the late offer of settlement by the Law Society, and whether she rejected that offer without instructions to do so. Mr Mathieson also submitted there was an arguable defence based on an unsatisfied contingency in the contract of retainer which went to the contractual entitlement of Mrs Harley to receive a fee at all.
[21] Mr Taylor replied to the contention that defences were available by pointing to findings of the Privy Council in relation to the continuing assertion that Mrs Harley was negligent or in dereliction of duty. In relation to the assertion that her fee was excessive and unreasonable he relied on the findings of the costs revision committee. The committee had also addressed and rejected the submission there was an “unsatisfied contingency”. Mr Taylor also emphasised that the respondent’s bill had not been referred for revision at any stage. The costs revision committee’s decision had since been reviewed and substantially upheld by the Registrar.
[22] Mr Mathieson also submitted that certain aspects of the way in which the respondent had conducted its application for summary judgment supported the conclusion there was a miscarriage of justice. We see this as a third issue in the case and one which also goes to the residual discretion under R143. The criticisms were, first, that it had been improper for the respondent to apply for summary judgment while the costs order concerned was awaiting revision as directed by the High Court. Secondly, it had also been improper to fail to advise the Master that Mrs Harley’s bill was being revised when the question came up at the hearing on 25 February 1999. Thirdly, Mr Mathieson submitted that a letter from the respondent to Mr Radich contained a representation that the respondent would seek summary judgment only as to liability but had not so confined its application. For these reasons there had been material irregularities in obtaining summary judgment and a miscarriage of justice which in the interests of justice and policy should be set aside. In passing we mention that since the hearing the appellant has suggested, in a note to the Registrar, that a letter sent to his new solicitors on 13 November 1998 contained an undertaking that the respondent would take no further steps concerning their fees until appeals had been heard. However as the letter concerned plainly gives no such undertaking or assurance we do not address it further.
[23] Mr Taylor responded to Mr Mathieson by arguing that in the absence of a Court order restraining a practitioner from taking action to recover costs while a costs revision was pending there was no bar in the Act to doing so. That was the legal position. The question of the propriety of so acting might be a question of professional conduct and for the District Law Society. It did not however provide a basis for the Court to penalise the respondent for bringing the summary judgment proceeding. In fact a complaint had been made and investigated and the District Law Society concerned had resolved to take no action against the respondent.
[24] Mr Taylor accepted that the Master had not been advised at the hearing that the High Court had ordered revision of the costs of Mrs Harley. However the situation was drawn to the attention of the Master by the appellant later in the day. More importantly the entire circumstances were before Gallen J who saw the justice of the matter overall being met by his order that summary judgment be set aside as to quantum pending determination of Mrs Harley's entitlement by the costs revision process. While Gallen J did indicate at the hearing his view that the letter to Mr Radich was misleading in suggesting that summary judgment might be sought only as to liability, any resulting injustice was clearly met by His Honour’s decision.
Decision
Did the appellant “appear”?
[25] Rule 143 of the High Court Rules provides as follows:
Setting aside judgment - Any judgment given against a party who does not appear at the hearing of an application for judgment under rule 136 or rule 137 may be set aside or varied by the Court on such terms as it thinks fit if it appears to the Court that there has been or may have been a miscarriage of justice.
[26] Prior to 25 February 1999 the appellant had filed a notice of opposition and a supporting affidavit he had made. It incorporated a copy of a letter to the respondent from Mr Radich, whom Mr Erwood had consulted. Mr Radich had sought more time to make inquiries, take proper instructions and file appropriate documents of opposition. He described Mr Erwood as a person to whom it was very difficult to provide legal services on account of “mental discombobulation” and a natural inclination to deviate from usual behaviour. A brief and recent letter from a Blenheim medical practitioner was also attached. It described Mr Erwood as having chronic schizophrenia and as not medically fit to attend a court case. The respondent had earlier filed affidavits in support of its application for summary judgment and later a further affidavit in response to that of the appellant.
[27] On 25 February the appellant appeared before the Master first when the list was called over and later in the day at the time allotted to hear the application. He sought an adjournment of the application which the Master refused. The Master then entered summary judgment, in the terms we have earlier outlined.
[28] Mr Mathieson relied on Rothwell v Mawhinney [1998] 2 NZLR 87 and Stainton v King House Removals (Southland) Ltd (1999) 13 PRNZ 202 in support of his submission that the appellant did not “appear” on the application for summary judgment on 25 February. He argued that the appellant had applied for an adjournment and his appearance was associated only with that ancillary application, not the summary judgment itself. In Rothwell v Mawhinney Williams J drew a distinction between applications for summary judgment on the one hand and applications for adjournment of the hearing of the summary judgment application, or for leave to file documents of opposition out of time and to be heard at the hearing on the other. The latter were separate interlocutory applications. Appearances on hearings of them were not to be treated as appearances on the principal application in terms of the rules.
[29] Williams J went on to hold that to have appeared on a summary judgment application under R143 (or R165 of the District Court Rules which is expressed in substantially the same terms):
a party must have appeared to such an extent that the Court which entered summary judgment had an effective opportunity, at the hearing of the application for summary judgment, to assess whether that party had an arguable defence available.
If the party had not appeared “to that extent” the right to apply to have judgment set aside under the respective rules had not been lost.
[30] The decision in Rothwell v Mawhinney was based, in part, on the earlier High Court decision in Mangarata Construction Ltd v Cavendish Executive Homes Ltd (1995) 8 PRNZ 648. Blanchard J in that case dismissed an appeal against the setting aside of summary judgment by the District Court under R165. Counsel who had originally appeared to oppose the application for summary judgment had obtained an adjournment in order to file a notice of opposition and supporting affidavit from the defendant. They had not been filed by the date of the adjourned hearing. A request for a further adjournment was refused and summary judgment was then entered by the District Court. An application to set aside followed.
[31] The view taken by the District Court in Mangarata Construction, upheld by Blanchard J, was that counsel had no right in those circumstances to be heard on the summary judgment application without leave (which had not been given). There was in fact no documentary basis for opposition. In those circumstances, although counsel had been physically present in Court, judgment had been given without an appearance for the defendant for the purpose of representing him at that hearing. It followed that it was open under R165 to the defendant to apply to set aside the summary judgment.
[32] Likewise in Stainton v King House Removals (Southland) Ltd the personal defendant did not provide sufficient information to enable his solicitor to file a notice of opposition until the day before the hearing of the summary judgment application. There was no supporting affidavit. The defence was that it was a company that was the party liable. On the date of hearing applications for leave to validate the filing out of time of the notice of opposition, and to file an affidavit in support were refused. The District Court Judge then entered summary judgment. Subsequently a different judge refused to set aside that judgment.
[33] A Full Court of the High Court, comprising Hansen and Panckhurst JJ, agreed that when leave to appear and be heard was required by a defendant facing an application for summary judgment, and it had been refused, the defendant did not appear when judgment against him was then given. The High Court generally endorsed the reasoning in Rothwell v Mawhinney.
[34] Rule 141 of the High Court Rules stipulates that if documents of opposition are not filed within the stipulated time a party will not be heard in opposition without leave of the Court. In our view it follows that there is no appearance by a defendant when summary judgment is given if leave to appear and be heard was required under R141 but had been refused. As Mangarata Construction demonstrates, the capacity to apply to set aside the summary judgment under R143 in consequence arises. In these circumstances the distinction between appearing on the summary judgment application and for a lesser ancillary purpose is important. To this extent we also agree with what was said in Rothwell v Mawhinney and Stainton v King House Removals.
[35] Where however we depart from those two decisions is in their formulation or endorsement of the proposition that for a party to have appeared under R143 (or R165) it must have done so to such an extent that the Court entering judgment had been able to assess whether or not an arguable defence was available. This approach puts a gloss on the language of R143 that requires an assessment of the quality and scope of submissions in opposition which neither the language of R143, nor the purpose of the summary judgment procedure, supports. To follow it would frustrate that purpose of the summary judgment procedure which is concerned with providing a speedy means by which a plaintiff can obtain judgment against a defendant who proffers no arguable defence.
[36] In the present case the appellant filed a notice of opposition and an affidavit in support. He was entitled to and did appear on the day before the Master at the time scheduled for the hearing of the application. In our view he must be taken to have appeared and that is not negated by his disabilities. These did not impede him from expressing his opposition to summary judgment in his documents and supporting his position at the hearing.
[37] However, in the present case, Mr Taylor conceded at the hearing before Gallen J on the R143 application that there had been no appearance by Mr Erwood on the application for summary judgment. He confirmed that the respondent stood by that concession in this Court, as it did not want the question of whether the appellant appeared at the hearing of the summary judgment application to be the basis of this Court’s decision. We consider the reality of the position to be that both parties assumed without precise inquiry the factual position to be such that there was no appearance by the appellant and that there was accordingly jurisdiction to hear the R143 application. We deal with the case accordingly on the basis that the appellant did not appear before Master Venning and was able to apply to set aside summary judgment.
Miscarriage of justice and arguable defences
[38] We turn to the question of whether, in terms of R143, there has or may have been a miscarriage of justice as a result of the High Court judgment. The effect of Gallen J’s order was to fix the appellant with liability to pay the costs charged by the respondent and Mrs Harley, but to leave open the question of quantum. That aspect of the application for summary judgment was then adjourned until the statutory costs revision process is complete. Insofar as the respondent’s claim is for the firm’s own fees its bill is not of course subject to revision at all. Gallen J does not appear to have regarded it as necessary to address that factor in the order or his judgment. He did however appear to regard the final outcome of the costs revision process, that is after rights of appeal had been exhausted, as finally determining the extent of the appellant’s liability for Mrs Harley’s costs because, under s154 of the Law Practitioners Act 1982, the outcome is final and conclusive as to the amount due.
[39] It is implicit in the oral judgment of Gallen J that he regarded the costs revision process as able to take into account the various contentions advanced by Mr Radich in the appellant’s interests in support of his claim that he did not owe the amount claimed for fees. The R143 application was fully argued by Mr Radich prior to the interchange between the Judge and both counsel over a possible pragmatic solution. Mr Radich had contended that the costs revision process was not appropriate for determining contractual issues of liability for fees but the Judge made it clear he did not agree. Likewise the Judge did not accept that summary judgment should be set aside as to both liability and quantum. The Judge’s decision to order that the judgment as to quantum be set aside, pending final outcome of the costs revision process, was plainly based on his view that justice could be done and was best done on the issue of costs payable to Mrs Harley by following that process.
[40] Mr Mathieson’s first submission is that the Judge, like the Master before him, has not assessed available defences to the claims of the respondent and Mrs Harley for costs and has excluded the possibility of raising such defences at a trial. Normally it will be sufficient for a party able to apply to set aside summary judgment to demonstrate there is a defence to the claim. In this case however the Judge has effectively decided that the undoubted issues should be left to the statutory revision process.
[41] Part VIII of the Law Practitioners Act sets out a regime for revision of bills of costs for work done by legal practitioners. A bill of costs is defined to mean “a bill rendered by a legal practitioner to his client” (s139). The provisions of Part VIII apply notwithstanding the terms of any agreement made between the practitioner and the client as to the amount or manner of payment for costs for services (s142(1)). To that extent contractual rights are overridden. However the terms of any such agreement may be taken into account in proceedings under the Act for revision of a bill of costs. The end and purpose of the revision process is to determine whether the costs charged are reasonable (s142(2)). The statutory scheme has been characterised as one of consumer protection with an underlying policy of ensuring that charges for legal services are fair and reasonable, irrespective of the terms of contractual relationships entered into with the legal practitioner: (Cortez Investments Ltd v Olphert & Collins [1984] 2 NZLR 434, 437 per Woodhouse P).
[42] A party chargeable with a bill of costs may refer it to a District Law Society for revision and that will commence the process. However a revision can also be initiated by an order of the High Court or District Court made on the application of the legal practitioner or party chargeable (ss145 and 146). That is what happened in the present case. It follows that under the Act participation in the statutory process is not entirely voluntary.
[43] A District Council has the same power as the Council of the Law Society to appoint standing or special committees, and to delegate its functions to such committees (ss15(4) and 29). It may accordingly delegate its functions in the costs revision process as was done in this case. The Act provides that the Secretary of the District Law Society shall certify what is found to be due in respect of the bill. That certificate or, as the case may be, an order of the Registrar on appeal or of the Court on review “shall be final and conclusive as to the amount due”.
[44] There is a provision for a right of appeal to the Registrar of the High Court for the District by parties to the process dissatisfied with a District Council decision (s148). A party dissatisfied with the Registrar’s decision may apply to the High Court to review the Registrar’s decision (s149).
[45] It is against this statutory context that we must address the appellant’s contention that unless the summary judgment as to liability is set aside there is or will be a miscarriage of justice. Because the terms of agreements between legal practitioners and clients may be taken into account in determining whether costs are fair and reasonable, the Act necessarily contemplates that in the course of hearing the parties, which the Council is required to do, it will determine the terms of any contract and have regard to such terms. It also contemplates an overall assessment of the fee that is fair and reasonable having regard to any such contractual arrangement and to all the circumstances as they emerge from the hearing.
[46] This provides the answer to the complaint of the appellant in the present case that there was a failure to have regard to the defences available to the claim for costs by Mrs Harley. We deal first with the defence that there was a contingency to Mrs Harley’s contractual entitlement to a fee which was never satisfied. It was open to the appellant to raise that question in the revision process. If the appellant were successful in establishing that a contingency to the entitlement of Mrs Harley to be paid fees had not been satisfied, that would plainly indicate the quantum of a fair and reasonable fee was nil. The defence that Mrs Harley’s fee was excessive and unreasonable also, obviously, was capable of being accommodated by the revision process. So in our view was the defence of negligent conduct of the case by Mrs Harley insofar as it was relevant to the fair and reasonable fee she should be paid for her services in the litigation. We are not persuaded any issue arises in relation to the respondent’s fee for its own services. It is unnecessary for us in this judgment to address wider questions of issue estoppel raised by counsel, first, on account of determination of the Privy Council and, secondly, in relation to criticism of findings in the costs revision process.
[47] We of course are considering the position as it was before Gallen J and have not had regard to the subsequent decision of the costs revision committee or the Registrar on appeal. That process continues. The Registrar’s decision is at present
the subject of an application for review by the High Court under s149 of the Act. There is a possibility of a further appeal. However it is in that proceeding that issues in relation to the actual operation of the revision process in this case will be addressed.
[48] Gallen J could have simply set aside the summary judgment in its entirety and restrained the respondent from proceeding with its action for recovery of the bill of costs until the costs revision process, including appeals, had been completed. There was power to do that under s155(2) of the Law Practitioners Act as the bill of costs had been referred for revision by the High Court and the statute must be read as permitting orders restraining recovery to be made subsequent to the original order of referral by the Court. The alternative approach, taken by the Judge, was to enter summary judgment for liability adjourning the issue of quantum until the Law Practitioners Act process was complete. In general the former approach will be preferable, as it avoids any suggestion the Court is foreclosing the scope of challenge to the bill of costs under the Law Practitioners Act. In principle summary judgment should not be entered on liability, under Rule 137 of the High Court Rules, where there is a risk of findings after a trial on quantum which are inconsistent with holding there was no defence to the claim. However, in the present case, we are satisfied that no injustice can result. The process under the Law Practitioners Act is sufficiently flexible to address such circumstances and the appellant is further protected by rights of appeal and review.
[49] Gallen J rightly saw the costs revision process as both the just and the appropriate mechanism for determining the quantum of costs payable to Mrs Harley in this difficult case. Importantly it is implicit in his oral judgment that a revision under the statutory process could adequately address as issues of quantum the matters put before him as defences to the claim. In those unusual circumstances it is not sufficient for the appellant to show that there may be defences to the claim for summary judgment in order to have the judgment set aside because no miscarriage of justice arises in allowing all questions to be addressed in the statutory process. Parliament has recognised that, when an issue of legal fees arises, the yardstick of a fair and reasonable fee is desirably determined in the first instance by the body elected as representative of the legal profession in the district, or a committee it appoints, which is subject to appellate supervision by the Registrar of the High Court. The exercise of the statutory powers may thereafter be reviewed, if either party desires, by the High Court itself but it is not the statutory decision maker. Ultimately the outcome of the process, in this case, will also be addressed if desired by the High Court in the context of a resumed hearing of the application for summary judgment as to quantum. This process sufficiently meets the interests of justice in relation to the appellant’s complaints.
Miscarriage of Justice: Irregular conduct of proceeding
[50] We are also of the view that the appellant’s criticisms of the manner in which the respondent conducted its proceeding for summary judgment do not warrant the conclusion that the outcome is a miscarriage of justice or otherwise warrants the setting aside of summary judgment as to liability. The respondent has opened itself up to criticism on each of the matters raised by Mr Mathieson and nothing in this judgment should be read as condonation of the way it proceeded. However the Judge was entitled to conclude that, whether considered separately or together, none of the matters raised, disqualify the respondent, or Mrs Harley, from entitlement to payment of an appropriate fee. We consider this conclusion is implicit in Gallen J’s judgment and that in reaching it he was right. For the avoidance of doubt, we indicate that we have taken into account the appellant’s disabilities in reaching this decision on this point.
Conclusion
[51] It follows that in our view, although the matter might have been handled differently, the appellant has not shown that the decision of Gallen J to uphold the entry of summary judgment as to liability, but to set it aside as to quantum, resulted or may have resulted in a miscarriage of justice. There is accordingly no basis in terms of Rule 143 for setting the entire summary judgment aside.
[52] The appeal is accordingly dismissed. The respondent is entitled to costs of
$2500 together with disbursements which will be fixed by the Registrar in the absence of agreement.
Solicitors
Mackay & Gilkison, Wellington, for Appellant
Rudd
Watts & Stone, Wellington, for Respondent
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URL: http://www.nzlii.org/nz/cases/NZCA/2001/306.html