Strack v Grey [2016] NZHC 1981 (25 August 2016)

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UNDER	the Contractual Remedies Act 1979
IN THE MATTER	of an agreement for sale and purchase of real estate dated 24 February 2014 between Matthew Francis Strack, Tracey Leigh Strack and WMC Trustee Limited as vendors and David Harvey Grey as purchaser
BETWEEN	MATTHEW FRANCIS STRACK, TRACEY LEIGH STRACK AND WMC TRUSTEE LIMITED Plaintiffs
AND	DAVID HARVEY GREY Defendant

Hearing:	23 August 2016
Appearances:	D R Tobin for Plaintiffs L A Andersen for Defendant
_Judgment:	_{25 August 2016}

[1] This is a claim for breach of contract in relation to the sale, by the plaintiffs, to the defendant of a residential property in Dunedin.

[2] At the time of the transaction the plaintiff trustees were represented by Wilkinson Rodgers, Solicitors, of Dunedin. The defendant applied for an order restraining that firm from acting on the ground that they were obliged not to act by virtue of r 13.5 of the Lawyers and Conveyancers Act (Lawyers: Conduct and Client

[3] This application, and others, were set down to be heard by me today. It was unnecessary for the application to be heard, because in the meantime the plaintiffs had instructed other solicitors to act for them on this case, and in any event the solicitor who acted for the defendant had left the firm for which she worked at the time of the transaction, and joined Wilkinson Rodgers.

[5] Mr Andersen says that costs should be awarded to the defendant because the application had the effect of Wilkinson Rodgers no longer acting, and that it should have been clear to the lawyer concerned that he could not act as soon as issues were raised about cancellation of the contract, because it should have been apparent to him that he “may be required to give evidence of a contentious nature” in terms of r 13.5.1.

[6] Mr Tobin says that the lawyer concerned considered the application of r 13.5 and, when the issue was raised with him, advised that the matter would remain under review and that the lawyer would cease acting only if and when it became appropriate for him to do so. Mr Tobin says that the defendant maintains that the lawyer could not act because it was he who cancelled the contract on behalf of the plaintiffs and that this issue is central to the case. As a result the defendant is saying that the lawyer cannot act in relation to this case, but Mr Tobin says this is not the position. Rather, at no point prior to Wilkinson Rodgers (by then, I gather, Wilkinson Adams) ceasing to act had a position been reached where the lawyer concerned “may be required to give evidence of a contentious nature”. The plaintiffs had not decided to call him, and if the defendant called him he could refuse to give evidence on the basis of privilege.

[7] In response Mr Andersen emphasises that r 13.5.1 speaks of a position where a lawyer “may be required” to give evidence and that the Court must consider not only what the plaintiffs put in issue but also the issues raised by the defendant. He points out that the lawyer concerned cancelled the contract at a point prior to his client having confirmed finance pursuant to it, itself a point in issue.

[8] The point that would have been in issue on this application is not quite as narrow as the application of r 13.5. Had the application fallen to be decided, it would also have been necessary to consider the principles to be applied by the Court in relation to parties being represented by counsel. The starting-point for consideration of the issue is the Court of Appeal judgment in Black v Taylor. In this

The High Court has an inherent jurisdiction to control its own processes except as limited by statute. As an incident of that inherent jurisdiction it determines which persons should be permitted to appear before it as advocates. In determining what categories of person may appear it does so in accordance with established usage and with what is required in the public interest for the efficient and effective administration of justice (3(1) Halsbury’s Laws of England (4^thed) para 396).

An associated consideration is the fundamental concern that justice should not only be done but should manifestly and undoubtedly be seen to be done...

The integrity of our system of justice depends on its meeting those standards. The assessment of the appearance of justice turns on how the conduct in question – here [counsel’s] wish to be able to act as a counsel for the defendants against [a family member] – would appear to those reasonable members of the community knowing of that background.

In making that assessment the court will also give due weight to the public interest that a litigant should not be deprived of his or her choice of counsel without good cause. The right to the choice of one’s counsel is an important value. But it is not an absolute.

[9] Richardson J went on to discuss the then current rule in the Code of Ethics governing the conduct of barristers and solicitors relating to acting against a former client, then discussed cases where courts had considered the due administration of justice. In conclusion Richardson J said:²

Disqualification will ordinarily be the appropriate remedy where the integrity of the judicial process would be impaired by counsel’s adversarial representation of one party against the other. The decision to disqualify is not dependent on any finding of culpable conduct on the lawyer’s part. Disqualification is not imposed as a punishment for misconduct. Rather it is a protection for the parties and for the wider interests of justice. The legitimacy of judicial decisions depends in large part on the observance of

the standards of procedural justice. Where the integrity of the judicial process is perceived to be at risk from the proposed or continuing representation by counsel on behalf of one party, disqualification is the obvious and in some cases the only effective remedy although considerations of delay, inconvenience and expense arising from a change in representation may be important in determining in particular cases whether the interests of justice truly demand disqualification.

[10] Having reviewed the material placed before me on this case, in the context of costs, I am not satisfied that by the time the application was made a point had been reached where the lawyer concerned should have ceased to act. I do not think that at that point disqualification would have been the result in terms of the principles in Black v Taylor, and I do not think that in terms of r 13.5 it could be said, then, that the lawyer concerned may be required to give evidence of a contentious nature. Certainly, that prospect could not be ruled out, but care must be taken not to interpret r 13.5.1 in such a way that a lawyer may not act as soon as a client becomes a party to litigation in respect of a transaction on which he or she has acted. Further scrutiny of the issues is required in order to make a proper determination that the lawyer may in fact be required to give evidence of a contentious nature.

[11] In this respect I note that r 13.5.2, which applies once a lawyer has commenced acting in a proceeding, is confined to the circumstance where it is apparent that a lawyer (or a member of his practice) is to give evidence of a contentious nature – which is a position with a significantly greater degree of certainty. In my view, these rules only sit together if the question of whether a lawyer may be required to give evidence, in r 13.5.1, is assessed by reference to whether it is apparent that this may be the case. Put another way, an assessment has to be made on whether the solicitor may be required to give evidence. To reach a conclusion on this a degree of analysis of the issues is required, which in many cases can only follow exchange of pleadings, and careful assessment of the evidence to be called. In light of the principles enunciated in Black v Taylor, this is not a decision that can be made until careful analysis has been undertaken.

[12] I acknowledge that there are good reasons for a decision to be taken on the application of r 13.5 at an early point, not only to ensure that the rule is not breached, but also to ensure that there is no interruption or delay in the smooth conduct of the proceeding by a change of solicitor. But it must be remembered that the Court is

required to give due weight to the public interest that a litigant should not be deprived of his or her choice of counsel without good cause.

[13] For the reasons given I think that the application was premature. In the end the issue was put out of contention by the solicitor acting at the relevant time for the defendant joining the firm which acted for the plaintiffs, so it is not possible to predict the point at which it would have been necessary (if at all) for that firm to cease to act and, in particular, whether that point may have been reached by the time the matter was to be argued some five months after the application was filed.

[14] I award costs to the plaintiffs on this application on a 2B basis together with such disbursements as may have been incurred in respect of it, fixed if necessary by

High Court of New Zealand Decisions

Strack v Grey [2016] NZHC 1981 (25 August 2016)