Auckland District Law Society v B [2001] NZCA 384; (2001) 15 PRNZ 730 (17 December 2001)

Last Updated: 10 December 2011

IN THE COURT OF APPEAL OF NEW ZEALAND

CA151/00

	BETWEEN	AUCKLAND DISTRICT LAW SOCIETY
		First Appellant

	AND	G J JUDD
		Second Appellant

	AND	B & ORS
		First Respondents

	AND	RUSSELL McVEAGH McKENZIE BARTLEET & CO
		Second Respondent

Hearing:	10 December 2001
Coram:	Gault J Keith J
Appearances:	R E Harrison QC for the First Appellant R J Craddock QC and B R Latimour for the Respondents D L Mathieson QC for F W M McElrea
Judgment:	17 December 2001

JUDGMENT OF THE COURT DELIVERED BY KEITH J

[1] The respondents, Russell McVeagh McKenzie Bartleet and Co (Russell McVeagh) and present and former partners of that law firm, apply for conditional leave to appeal to the Privy Council against a decision of this Court given on 16 October 2001. They also seek orders recalling part of the judgment and suspending the execution of the judgment pending the disposition of the appeal.
[2] The proceedings raise the question whether the respondents’ claim to legal professional privilege prevails over a claim by the Auckland District Law Society (the Society) to requisition documents for the purpose of investigating complaints under the Law Practitioners Act 1982. The Court by a majority held there was no privilege in relation to the inquiry being undertaken by the Society’s complaints committee and no impediment to its power to requisition the documents (para [130]). The Society was accordingly entitled to declarations for the production of the requisitioned documents (para [133]).

Background

[3] Between 1996 and 1998 the Society received a number of complaints alleging professional misconduct against Russell McVeagh and some of its partners and former partners. The Society wrote to Russell McVeagh in March 1997 in relation to the complaints made by Mr McElrea (a former partner of the firm) alleging misconduct by Mr Carran, who by then had ceased to be a partner. The letter referred only to that complaint and did not mention the two other complaints made by that time. Russell McVeagh in reply assured the Society of its willingness to assist and cooperate in the Society’s investigation of Mr Carran. It agreed to provide Mr Ennor, as counsel advising the relevant complaints committee, with certain documents (the Ennor documents) subject to stated restrictions on their use. In mid May 1998 Mr Judd QC was appointed counsel for the Society. He received Mr Ennor’s files, including the documents provided by Russell McVeagh.
[4] The respondents brought proceedings in the High Court claiming that the actions of Mr Judd and the Society breached the terms of Russell McVeagh’s original agreement with Mr Ennor. The Society rejected the contention that it had breached the agreement, arguing that it held the documents concerned under its powers to compel production under the Law Practitioners Act. By counterclaim, it sought a declaration that Russell McVeagh was required to produce the documents under the agreement, under the Society’s powers conferred by the Law Practitioners Act, because any privilege had been waived, or because it was in the public interest to require production.
[5] Paterson J in the High Court held that Russell McVeagh need not have provided the documents as they were subject to legal privilege and thereby protected from the compulsory production requirements of the Law Practitioners Act. The Judge held that the Society could retain the documents only to provide information for the purpose of the complaint by Mr McElrea against Mr Carran. As indicated, the Society succeeded in this Court in its appeal against that judgment.

Application for conditional leave to appeal

[6] The Society does not oppose the application for conditional leave to appeal made under R 2(b) of the 1910 Privy Council Rules provided that appropriate conditions are set out and met. We accordingly grant conditional leave and turn to the conditions.
[7] The parties agree to the standard conditions, that is that

(a) within three months from 17 December 2001 the respondents enter into good and sufficient security to the satisfaction of the Court in the sum of $2,000;

(b) within the same period the respondents take the necessary steps to prepare the record and to despatch it to England.

The three months includes the Christmas/New Year vacation period.

[8] The Society sought further conditions. The first was that the respondent would undertake to seek and accept the earliest available two day fixture in the Privy Council. The respondents have already made informal inquiries with the Privy Council Registrar about the earliest possible dates and Mr Craddock QC stressed their wish to expedite the matter. This is not a matter which should be the subject of conditions.
[9] The second was that the respondents would undertake not to raise in any existing or subsequent proceeding or forum any objection or complaint based on delay or lapse of time arising out of the pursuit of the appeal to the Privy Council. Any such objections would of course be for the relevant court or tribunal to assess, and no doubt the fact that it was the respondents that brought the appeal could be relevant in that assessment. Much would depend on all the circumstances. Again we see no basis for imposing a condition relating to this matter.
[10] The third proposed additional condition was about the content of the Record for the appeal. The Society can of course have included in the Record being prepared by the respondents those further documents it considers necessary. The respondents may in the usual way indicate those documents whose inclusion they consider unnecessary. No condition is required in respect of this matter.
[11] Finally, the Society sought a condition that it would be at liberty in the Privy Council to uphold the majority judgment on grounds featured in its notice of grounds of appeal and written submissions to this Court. The parties in a settlement agreement concluded before the High Court hearing agreed that each would be entitled to one appeal only. Mr Craddock accepted that the Society would have that freedom to support the judgment on other grounds : for one thing that would not involve the Society cross appealing. The way in which an appeal is to be argued in the Privy Council is a matter for their Lordships. It is not a matter which can appropriately be the subject of conditions imposed by this Court.
[12] It follows that the only conditions on the grant of leave are the standard ones set out in para [7] above.

Application for recall of part of judgment

[13] The respondents seek the recall of paras [124]-[129] of the majority judgment, concerning waiver of privilege, on the grounds that it is not clear whether the finding in that part of the judgment is that privilege was waived as against the Society in relation to the investigative process under s101 of the Law Practitioners Act or for all purposes under the Act. Further, the respondents say, it is important to the parties that the finding about the extent of the waiver is clear. The Society opposed the application for recall in the terms sought by the respondents. The decision, said Mr Harrison QC, was perfectly clear : privilege was waived in relation to any use by the Society for the purposes of exercising its powers under the 1982 Act (para [129]). And, were the Court to clarify the judgment, it should also make it clear that the conclusions on waiver are not obiter and bind the respondents.
[14] The relevant part of the judgment is prefaced by the comment that “in case ... the question should become relevant we will indicate why we have reservations about the High Court’s finding there was no waiver of any privilege in relation to investigations generally under the 1982 Act once the documents were handed to Mr Ennor” (para [127]). Under the heading Outcome of the appeal, the judgment, having stated the essence of the finding about the impact of the Act on privilege (para [130]; see para [2] above), continued in this way:

It is accordingly unnecessary to determine in this proceeding wider questions raised in the appeal including the full scope of the arrangement of 7 April 1997 [in terms of which the documents were handed to Mr Ennor; see [3] above] (para [131]).

[15] Those passages make it clear that the three Judges were not making a finding on the question whether the arrangement and associated actions involved a waiver.
[16] On the other question raised by the recall application – the scope of the statements – the three Judges have discussed the matter and their understanding was stated in the course of the hearing of the application. Their concern in the passages under examination was solely with the investigative stage. That is what these proceedings are about. Any possible broader reading of the passages in paras [127] and [129] cannot be sustained when the passages are read in context.
[17] Since the clarification recorded in this judgment meets the concerns of the parties about lack of clarity, the application for recall is formally dismissed.

Application for suspension of execution pending appeal

[18] The respondents apply for an order suspending execution of the judgment of the Court, pending the appeal, on the broad grounds that it is just that such suspension be granted and that it is necessary to prevent any appeal being rendered nugatory. They invoke R 6 of the 1910 Rules:

6. Where the Judgment appealed from requires the Appellant to pay money or perform a duty, the Court shall have power, when granting leave to appeal, either to direct that the said Judgment shall be carried into execution or that the execution thereof shall be suspended pending the Appeal, as to the Court shall seem just.

...

[19] The respondents seek a suspension of the judgment, until the determination of the Privy Council, to the following effect:

(a) That the respondents not be required to give to the Law Society privileged documents which have been requisitioned (judgment at [133]).

(b) That those individual practitioners still under investigation not be obliged, if required by the ADLS under s101(3)(d) or (3), to produce privileged documents or give any privileged information in relation to such documents.

(c) That the ADLS not access or use any of the Schedule A [Ennor] documents.

[20] Paragraph (c) was added in response to the Society’s written submission that it was under no duty or restriction arising out of the High Court judgment as regards the use of the Ennor documents. The Society also contends the judgment in this case is not a judgment capable of being “carried into execution”, at any rate as regards the Ennor documents.
[21] The original Ennor documents have remained in the custody of Mr Judd QC as an agent of the society and former counsel for the complaints committee, and present counsel for the Society have retained their copies. The documents have not in fact been disclosed to the Society or the committee. Summaries of and extracts from those documents have however been included in reports prepared for the committee and it has been able to consider and dispose of approximately 80% of the 178 complaints without resolving to lay a single charge. Thirty-nine complaints remain outstanding against 13 practitioners.
[22] Mr Craddock invoked the well established proposition that

When a party is appealing, exercising his undoubted right of appeal, this Court ought to see that the appeal, if successful, is not nugatory. Cotton LJ in Wilson v Church (No 2) (1879) 12 CLD 454, 458.

That passage was quoted for instance in Attorney-General (Hong Kong) v Reid (No 2) [1992] 2 NZLR 394, 396, where this Court also said that

It is well settled that the Court has jurisdiction ... to make an order preserving the rights claimed by the unsuccessful [litigant] pending an appeal to the Privy Council.

The Court based that jurisdiction on its inherent power, not being limited by the terms of R6 even when read widely in accordance with Savill v Chase Holdings (Wellington) Ltd [1989] 1 NZLR 257, 317.

[23] We were also referred to cases about disputed obligations to produce documents where release in accordance with the judgment under appeal would render the right of appeal nugatory in whole or in part (The King v Merchants’ Association of New Zealand (Inc) (1912) 32 NZLR 173, 174-175, and Dow Chemical Co v Ishihara Sangyo Kaisha (1986) 1 TCLR 332, 334-335).
[24] The overall search is for what is just between the parties. More specifically, (1) will the right of appeal be rendered fully or partly nugatory in the absence of a stay? (2) On the other hand, will the successful party be injuriously affected by a stay? And (3) will the appellant prosecute the appeal in good faith? We are in no doubt about the final matter.
[25] The respondents contend that their appeal will be rendered nugatory because if the appeal succeeds:

(a) the Society will have used privileged information which it had no right to requisition and which ought not have been disclosed; the practitioners were not only not compellable; they were not permitted to provide the information;

(b) practitioners will have been required to participate in an investigation conducted by reference to lengthy and complex privileged maters which they would otherwise not have been required or indeed permitted to disclose or discuss; a partner in Russell McVeagh deposed to what he saw as the great extent of the relevant documentation (including over 500 Eastlight folders of written material);

(c) The Society will have had disclosed to it privileged information in breach of the right to privilege of parties who are not before the Court and who have, when requested, refused to waive as against the Society their rights of privilege in the information.

On that final point we stress that the information disclosed under s101 is confined to the subject matter of the inquiry –the allegation of particular professional misconduct and has to be reasonably necessary for the purpose of the inquiry. Further, the information is disclosed to the Society for that purpose and no other.

[26] Next, the respondents say, if there is no stay and the appeal succeeds the Society, the complaints committee will have had regard to material which it was not lawfully entitled to consider and there is a substantial risk that the committee would as a result be disqualified from completing its task.
[27] The Society in response points to the different categories of information in issue –

• the documents which are already available to the Society, including some of the key Ennor documents; although they were the subject of the first requisition, the Society and committee accordingly have no present need to requisition them or have the requisition complied with;
• documents which are the subject of a second requisition, additional to those already held by the Society;
• the Society or committee may wish to requisition further documents from those practitioners who still have complaints pending against them.

[28] The Society contends that there is a strong public interest in its delegate, the complaints committee, being allowed to get on with and complete “as soon as practicable” its statutory duty of inquiry into the complaints and the own motion investigations before it. The parties have accepted in the settlement agreement mentioned earlier the need for the expeditious disposal of the outstanding complaints. Further, it is concerned that complaints of unfairness based on lapse of time are being raised by Russell McVeagh. Those difficulties are accentuated the longer the delay imposed on the committee in completing the balance of its inquiries.
[29] The Executive Director of the Society deposes that the previous history of the investigation, taken with the complaints of delay made in fresh legal proceedings against the Society,

make it imperative in the public interest that the Society/[the Committee] be at liberty to proceed with its current investigations and to have recourse to the “Ennor documents” for that purpose without having to await the decision of the Privy Council. In effect, because it is now being accused of delay by the present respondents, the Society has no alternative but to oppose the application for suspension of execution of judgment, and at the same time to seek the imposition of conditions in relation to the conditional appeal application with a view to having the Privy Council appeal disposed of as expeditiously as possible.

[30] In particular, according to the Society, the respondents’ contentions about the extent of the material in issue exaggerates what is at stake, at least so far as the Ennor documents are concerned. Next

Whether or not, if there is no stay and the appeal succeeds, there could be a successful challenge to any decision by [the Committee] to lay charges against individual practitioners on the basis that access was had to materials which strictly ought not to have been considered is not a matter on which this Court can properly pronounce at this stage. The Society does not accept that [the Committee] cannot examine in the course of its inquiry material and information which ultimately may or may not be admissible in support of a charge, if laid. Investigating/prosecuting agencies do that all the time and reach perfectly valid conclusions as to whether or not charges should properly be laid. It will be for [the Committee], convened as it is by a retired (but still sitting) High Court Judge, to assess its position in that regard and proceed as it sees fit.

[31] That last submission is a surprising one. For one thing, the present question is not about the admissibility of information in support of a charge if laid, but rather whether the information can be obtained in support of the investigation. But, as the submission indicates, it is not for the Court at this stage to rule on it. We would record in this context and in relation to the respondents’ submissions about the possible disqualification of the complaints committee were their appeal to succeed (no stay having been granted) that the earlier settlement agreement controlled the use by the Society and the committee of certain reports and documents. That agreement, the nature and organisation of the Society and the fact that the committee has already once been reconstituted all indicate that it is possible to introduce some safeguards after the event even if a stay or a full stay has not been granted.
[32] The overall test is justice between the parties, bearing in mind here as well the wider public interest in complaints against law practitioners being investigated in accordance with the law and with due expedition.
[33] The just result, we conclude, is that the respondents should have a stay against further documents being requisitioned under the second requisition of 8 September 1998 or under any further requisition. The Society and committee may however continue to make use for the purpose of the investigation under s101 of the Act of the papers already available to them. That will enable them to make further progress on the remaining complaints; and as indicated there do appear to be safeguards available to protect the respondents’ rights in respect of those documents if their appeal succeeds.
[34] The respondents will not be required, pending the disposition of the appeal, to work through further documents in response to requisitions. On that matter we would however stress again the particular narrow focus of a s101 inquiry : it concerns specific alleged misconduct by the practitioner; it is not a fishing expedition.
[35] There will accordingly be a stay in the terms indicated in para [33].
[36] In the circumstances, we make no order as to costs on any of the applications.

Solicitors
Glaister Ennor, Auckland for the Appellants
Bell Gully, Auckland for the Respondents.