Filmer v Jamieson Castles (a firm) [2006] NZCA 32; [2006] NZAR 444 (16 March 2006)

Last Updated: 28 December 2011

IN THE COURT OF APPEAL OF NEW ZEALAND

CA35/05

BETWEEN ALAN MILWARD FILMER AND JOHANN JACOB LUYT
Appellants

AND JAMIESON CASTLES (A FIRM)
Respondent

Hearing: 6 March 2006

Court: Hammond, O'Regan and Robertson JJ

Counsel: D C E Smith for Appellants
M A Tapsell for Respondent

Judgment: 16 March 2006

JUDGMENT OF THE COURT

A. The appeal is dismissed.

2. The respondent will have costs of $6,000, together with usual disbursements.
   

REASONS
(Given by Hammond J)

Introduction

[1] This is an appeal against a decision of Allan J delivered on 11 February 2005 in CIV-2004-404-4874 dismissing an originating application under s 149 of the Law Practitioners Act 1982, to review the decision of a Registrar in relation to a fee complaint.
[2] The appellants sought in the High Court, and now seek in this Court, an order reversing the decision of the Registrar so that they can seek a rehearing before the Registrar.
There was no challenge to this Court entertaining the present appeal under s 66 of the Judicature Act 1908. The same course was taken in Kirk v Vallant Hooker & Partners [2000] 2 NZLR 156.

Background

[4] The appellants, Messrs Filmer and Luyt, were shareholders and directors in a company called Vusion International Limited. It designed, produced and manufactured advertising signage and displays.
Mr Filmer and Mr Luyt entered into an agreement with a Mr Witton, whereby he acquired a 20% interest in the shares of Vusion, for a sum of $500,000. Mr Witton also became a director of the company.
[6] Apart from the transactions attendant upon the acquisition of that interest, there was also a consultancy agreement entered into between the company and Mr Witton.
[7] The appellants and Mr Witton fell out during 2001. Mr Witton then endeavoured to take an assignment of the first debenture held by the Bank of New Zealand over Vusion; and endeavoured to procure the sale to him of the company assets. Demands were made upon Vusion both by the Bank of New Zealand and by Mr Witton (for consultancy fees). The appellants took the view that no fees were owed, based on an alleged agreement made by all the directors to forego consultancy fee entitlements whilst money was owing to third party lenders.
[8] It was in the context of this very distinct threat to “their” company, and cash flow problems in the company, that the appellants consulted the respondent, an Auckland law firm.
[9] The instructions to the firm were that Mr Luyt and Mr Filmer wished to protect their position arising from this conflict within Vusion, given Mr Witton’s attempts to acquire the company for himself.
[10] Disputes of that character can, notoriously, become expensive. In this case, legal fees of over $200,000 were incurred by the appellants with respect to various elements of the disputes which had arisen.
[11] The appellants were dissatisfied with the level of the respondent’s charges. They applied to the Auckland District Law Society for a revision of certain of the accounts which had been rendered, pursuant to s 145 of the Law Practitioners Act 1982.
[12] Those bill of costs which were the subject of revision totalled $158,974.10, arising out of 15 separate invoices. The Law Society costs reviewers reduced certain of the invoices, with the result that some $4,711.50 (inclusive of GST) was deducted from the total charges. This left a balance after revision of $154,262.60.
[13] The appellants were not satisfied with that outcome. They appealed to the Registrar, pursuant to s 148 of the Act.
[14] The Registrar, Mr G A Mortimer, exercised his undoubted discretion under s 148(3) of the Act by permitting counsel to attend at the appeal hearing and to assist him (he having been appointed for that purpose by the New Zealand Law Society).
[15] In the result, by a written decision dated 26 August 2004 the Registrar declined to interfere with the sums arrived at by the costs reviser. The appeal was dismissed.
[16] The appellants were not satisfied with this outcome. They applied for a “review” of the Registrar’s decision by the High Court.
[17] Allan J declined to interfere with the decision of the Registrar, and hence the revised costs order stood. Several grounds of concern were raised before the High Court Judge.
[18] We record that the appeal is confined to issues relating to the procedure before the Registrar: we were not asked to, and did not, address the merits of the appellant’s complaint about the bills rendered by the respondent.

The grounds of appeal

1. Introduction

[19] The appellants contend that there has been a breach of natural justice, in two distinct respects. First, that the Registrar failed to give the appellants an adequate opportunity to be heard, and thereby erred or committed a breach of natural justice. Secondly, a complaint is raised that counsel assisting the Registrar under s 148(3) of the Act ought not to assist the Registrar on the merits of the appeal, at all; or alternatively, unless the views expressed by that counsel assisting are made known to counsel for the parties, and such counsel afforded an opportunity to comment to the Registrar on those views. We will take each of these two aspects separately.

2. An adequate opportunity to be heard

[20] There never has been, and is not now, an allegation of a denial of a right to a hearing. The Registrar plainly appreciated that the character of the proceeding before him was an appeal de novo and that the parties were entitled to adduce evidence and make submissions based on that evidence. The Registrar was clearly mindful of the sort of procedures which had been suggested by Barker ACJ in Gallagher v Dobson [1993] 3 NZLR 611, and indeed explicitly referred to them, and, in general, followed them.
[21] The actual hearing of the appeal to the Registrar took place on 12 May 2004. Counsel assisting took an active role in the hearing, generally by asking questions of witnesses and counsel. Both the appellants were cross-examined by then counsel for the law firm; two of the partners in the firm were cross-examined by counsel for the appellants.
[22] Mr O’Callahan appeared before the Registrar as counsel for the appellant. The source of the present difficulty arose during his cross-examination of Mr Castles. Mr O’Callahan was endeavouring to elicit what Mr Castles had actually done in the way of attendances, and why it was necessary for him to spend the time he did in order to achieve the tasks he did achieve. All of that went directly to the reasonableness of the fees charged, and was entirely appropriate.
[23] At some point towards the end of that cross-examination, counsel assisting stopped Mr O’Callahan and suggested that he should make specific criticisms in relation to time attendances recorded by Mr Castles. It is said that he suggested three alternatives to Mr O’Callahan. The first was that Mr O’Callahan continue the cross-examination of Mr Castles in much the same manner as he had been conducting; a second alternative was for the hearing to be adjourned, and for Mr O’Callahan to prepare a memorandum containing his criticisms of actual recorded attendance to which the firm could then reply (with further cross-examination if necessary); the third option was that the hearing be re-convened on another day, and that specific criticisms of actual attendances be put to Mr Castles, on cross-examination. Counsel assisting made it clear enough that he was not enthusiastic about the first option.
[24] It seems the parties agreed on the second option. Memoranda by the appellants and the respondent were then lodged with the Registrar. Mr O’Callahan’s memorandum in reply to the respondent’s memorandum, dated 30 June 2004, concluded with the words: “The appellants have no further submissions or cross-examination on this subject.”
[25] The submission for the appellants is that the agreed procedure was that the memoranda which had been submitted were in lieu of cross-examination, “and should have been considered on this basis”. This is of some importance because the Registrar came to the view that he could not make certain findings against the respondent, because some matters related thereto were not put to the respondent’s representatives, in cross-examination. It is submitted that Allan J’s finding that the appellants bore the onus of reconvening the hearing for further cross-examination is incorrect. Or, to put it another way, that the Registrar treated the memoranda as having no force, without further cross-examination, and that thereby the appellants have effectively been denied the opportunity to be heard on the points raised in the memoranda.
[26] Allan J responded to these concerns on what amounts to two bases. First, he considered that it was apparent on the face of the record (the Registrar said so) that he had taken these memoranda into account; and secondly, and in any event, whatever rights Mr O’Callahan’s clients had to cross-examination, or further cross-examination, had been expressly waived.
[27] In our view, this appeal point fails both at the outset, and more generally.
[28] First, it fails on the facts. The proposition that there was an agreement to treat these memoranda as cross-examination flies in the face of the evidence of the witnesses on behalf of the appellant and the respondent, the findings of the Registrar, and for that matter of the High Court Judge. There was no basis for the Registrar to treat memoranda as cross-examination, and the memoranda do not have that appearance. As Mr Tapsell concisely put it, “it was not evidence”. The only person who says it “was” evidence is Mr O’Callahan. But that is based on his perception. It is simply not open to this Court, on appeal, to substitute a different view of the memoranda from that taken (on the facts) by the High Court Judge.
[29] Secondly, whatever the character of the memoranda were, on 30 June 2004 Mr O’Callahan expressly declined to advance anything further. Unsurprisingly, in those circumstances, the Registrar decided to proceed to a determination.
[30] Thirdly, standing back and asking the important question in a natural justice context, “were the appellants given a reasonable opportunity to be heard?” the answer must be in the affirmative. It was not suggested before us that the Registrar ought not to have come to the view he did without requiring cross-examination on the matters which now concern the appellants. The Registrar could reasonably, and plainly did, take the view that the parties had placed in front of him all that they wished to do, and that he could therefore safely proceed to a determination.

3. Breach of natural justice by inappropriate delegation

It is common ground that the Registrar was assisted by counsel. Ms Smith invited the Court to infer that the Registrar’s decision-making power was wholly or partially assisted by counsel assisting, on the merits. She said, “A suspicion or inference that this has occurred is sufficient to invalidate the decision on the ground of breach of natural justice.”
[32] As an alternative, Ms Smith said that a proceeding can only advance in this manner if whatever counsel’s advice to the Registrar was, is disclosed to the parties for their comment.
[33] Ms Smith invited us to lay down “clear guidelines” for future cases.
[34] The first difficulty these propositions face, is an evidential one. Allan J noted that he had been asked to draw precisely the inference urged on this Court, against the Registrar. He said:

In order to accede to the urgings of Mr Carter [then counsel], I must find, without any direct evidence on the point, that a very experienced Registrar, with the assistance of very experienced senior counsel, has simply failed to discharge his responsibilities under s 148 by entirely abdicating his decision-making obligations to [counsel assisting].

In short, there was a judicial holding of fact in the High Court that no such inference as was sought to be drawn, could be drawn. It would be wrong for this Court, on appeal, to interfere in such a holding, save on the clearest evidence and if the Judge was plainly wrong.

[35] The appellants always faced the difficulty that there is no direct evidence, as the Judge himself noted, as to what precisely passed between counsel assisting and the Registrar, and who did exactly what. It may be that in a case alleging improper delegation, on an application for judicial review where there was affidavit evidence and if necessary cross-examination, that a reviewing court might be able to conclude that something untoward had occurred. But it really will not do, simply to advance an argument that it “must have been so”, as Ms Smith at one stage said before us.
[36] Once this point is reached, the second point of appeal is also without foundation. For what might need to be disclosed to the parties, necessarily turns on what in fact had transpired between counsel assisting and the Registrar.
[37] That said, it is inappropriate to endeavour to lay down any hard and fast rules in this area. The Act specifically authorises the engagement of counsel to assist the Registrar. If it was being suggested that there must be a bright line under which counsel assisting should cease any interaction with the Registrar once the hearing proper is concluded - thereby leaving the Registrar entirely to his or her own devices - we do not agree. Patently, the actual decision must be that of the Registrar and not that of counsel. A Registrar might indicate a clear view as to what the outcome ought to be and should be able to articulate, in general, why that view has been taken. The Registrar might however wish to have assistance on how particular matters might best be articulated, but wish to test that with the assistance of counsel. A Registrar might even go as far as saying, “these are my general reasons for saying that the outcome should be thus and so, would you please prepare a draft for me to consider.” For a Registrar not to have that kind of assistance is, with respect, unwise and in any event, in our view it is contemplated by the Act. But whether a particular set of circumstances crosses the line to actual and inappropriate delegation of the decision-making function is necessarily going to be context specific, and almost inevitably peculiar to the facts of a particular case.
[38] In the result, this appeal point also fails.

Conclusion

[39] Accordingly, the appeal is dismissed.
[40] The respondent will have costs of $6,000, together with usual disbursements.

Solicitors:
Carter & Partners, Auckland for Appellants