H v S [2016] NZHC 409 (14 March 2016)

Last Updated: 12 April 2016

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2013-404-002404 [2016] NZHC 409

BETWEEN	H AND H First Plaintiffs XYZ LIMITED Second Plaintiff
AND	S First Defendant S and others as trustees of the T TRUST Second Defendants

Hearing:	5 February 2016
Counsel:	C Meechan QC for Plaintiffs J Katz QC for Defendants
Judgment:	14 March 2016

JUDGMENT OF ASHER J (relating to counsel who may appear)

This judgment was delivered by me on Monday, 14 March 2016 at 3 pm pursuant to r 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Solicitors/Counsel:

Davenports Harbour Lawyers, Auckland. Lowndes, Auckland.

C Meechan QC, Auckland. J Katz QC, Auckland.

H v S [2016] NZHC 409 [14 March 2016]

Introduction

[1] In this judgment I must determine whether senior counsel for the plaintiffs may continue to act as counsel for the plaintiffs. Ms Davenport QC acts as the senior barrister for the plaintiffs Mr H and Mrs H, and a company they control, XYZ Ltd (collectively referred to as Mr and Mrs H or the Hs). They bring proceedings against their former solicitor Mr S and S Ltd, a trustee company that he controlled. Mr and Mrs S and the company were trustees of the T Trust, which was involved in business dealings with Mr and Mrs H. For the purposes of this judgment I will refer to the defendants collectively as Mr S and the Trust.

[2] In a third amended statement of claim, of 126 paragraphs, Mr and Mrs H allege that Mr S as their solicitor induced them to enter into various investments and a joint venture agreement to their detriment. They allege Mr S breached fiduciary duties arising from his duty as a solicitor and as a joint venturer, as well as alleging breach of the Fair Trading Act and breach of confidence. Damages in the amount of

$1,585,500 are sought, alongside other relief.

[3] In a statement of defence, of 223 paragraphs, Mr S denies the allegations of breach of duty. There are affirmative defences and a counterclaim filed. Amongst the matters raised in defence and in support of the counterclaim, it is alleged that the funds that the Hs invested in the joint venture were acquired illegally, and for that reason cannot be recovered. The illegality is said to arise in the manner in which the initial shares forming the investment were obtained and sold in Country A.

[4] The proceedings have been hard fought. The plaintiffs applied to strike out parts of the defendants’ statement of defence and counterclaim which alleged illegality. In a reserved judgment of 2 April 2015, Associate Judge Smith dismissed that strike out application.¹ The defendants subsequently registered a caveat against the Hs’ property, claiming an equitable lien arising out of the trustees’ right of recourse to the trust assets to discharge liabilities incurred, and to recoup expenses

paid as a trustee. There was an alternative constructive trust claim. Following a

contested application under s 145A of the Land Transfer Act 1952, it was ordered that the caveats lapse.²

[5] A defended interim injunction hearing, seeking to restrain Mr S from disclosing details of the Hs’ affairs to various authorities, was also heard before me on 31 August 2015. That hearing was by consent adjourned part-heard as a conditional settlement had been reached.

[6] This is the fourth contested application heard in this court before the substantive proceeding is heard. The Hs seek an order that senior counsel for the Hs, Kathryn Davenport QC, may appropriately retain the brief to act as their counsel in the conduct of these proceedings. It is stated in the application that such an order is required in the interests of justice because the defendant has asserted conduct on the part of Ms Davenport that disentitles her to maintain the brief. This assertion is not accepted by the Hs.

[7] Mr S and the Trust assert in their notice of opposition that the application is premature and cannot be properly or appropriately determined until the parties have had discovery. However, it is also asserted that Ms Davenport has provided evidence to the Court in relation to matters of fact directly in issue in the proceedings, and which will be relevant matters for determination at the substantive trial. It is submitted that Ms Davenport cannot be both counsel and witness in the proceeding. It is also asserted that following discovery and inspection, and prior to the substantive trial, the defendants “will apply” to the Court for leave, should leave be necessary, to call Ms Davenport as a witness.

Ms Davenport’s evidence

[8] The background issue of relevance is whether, when Mrs H and her associated entities purchased the Country A shares that were the source of the Hs’ New Zealand investments, she was effectively buying them for Mr H who had loaned her the money through a Country B corporation, Acorp, and that the transaction was therefore illegal in Country A.

[9] Mr S and the Trust have submitted that they would seek to call Ms Davenport to question her on statements she made in a letter attached to a joint affidavit of the Hs dated 24 October 2013, that was filed in support of the Hs’ application to strike out. That affidavit contained this statement by the Hs at para 7:

We have consistently denied any illegality to Mr [S] in a number of letters. Annexed to and marked with the letter “C” are copies of some of the correspondence sent to the defendants lawyers relating to these claims ...

[10] The two letters that were attached were a letter of 17 April 2013, from Ms Davenport on behalf of the Hs to Mr S and the Trust’s counsel John Katz QC, and a letter from the Hs’ solicitors Davenports (Ms Davenport’s instructing solicitors) dated 3 May 2013. Both letters asserted that there was no illegality in the share transactions.

[11] It is Ms Davenport’s letter of 17 April 2013 that is of particular significance. The defendants’ assertion that they will wish to call Ms Davenport as a witness is based on what she said in this letter.

[12] Ms Davenport’s letter is in response to a letter from Mr Katz addressing matters of substance, which I am informed by both counsel was marked with words to the effect of “counsel to counsel only – not to be shown to clients”.

[13] In her letter Ms Davenport states that she does not accept any restrictions on her communicating with her clients. She pointed to the Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules 2008 and stated that she was obliged to disclose all information to her clients, and that she had no duty with respect to “counsel to counsel” communications. I agree with her position. Counsel cannot unilaterally impose a duty on opposing counsel not to disclose to their client relevant information that is imparted to them.

[14] Ms Davenport then went on to state that her clients “expressly deny any illegality” in relation to the relevant transactions, and that the actual transactions that were allegedly illegal were different from those envisaged by Mr S. In the crucial paragraph focused on by Mr S and the Trust she stated:

In particular, Mr [H] refutes the allegation that he instructed Mr [S] that he owned the [Intco] funds. The documents which I have seen clearly show that a [Country B] corporation ([Acorp]) loaned the money to Mrs [H] (via her [Pcorp] company) and that [Pcorp] paid interest on this loan to [Acorp] in [Country B]. Mrs [H]’s sister was also involved.

(emphasis added)

[15] There is also a descriptive summary at the end of the letter of 17 April 2013 which purports to be a summary of key events which occurred between 2002 and

2006, and includes the statement:

[Mrs H’s sister] then made two loans to Mrs [H] which are repayable in

2026 – 62.8 million [currency] in September 2006 and 67 million [currency]

in November 2006.

[16] The essence of Mr S and the Trust’s objection to Ms Davenport’s ongoing

involvement as counsel was set out in para 27 of the S/Trust submissions:

The defendants are not prepared to disclose their tactical approach and the cross examination that is proposed at trial. They are not required to. But they do contend as they have before this Court on previous occasions that the

17 April 2013 letter will be very much in issue at trial. Similarly, so will be the subsequent explanations, the affidavits of 15 September and 1 October

2015 and the exhibits thereto. So, the Kate Davenport QC letter of 17 April

2013 will be the subject of cross examination. That cross examination will be directed to the [Hs] to the extent it can be, assuming that Ms Davenport QC does not herself give evidence for the plaintiffs. That evidence is both necessary and material.

[17] Mr Katz in elaborating on the defendants’ position submitted that the issues arising in relation to Ms Davenport’s assertions in her letter were as to what documents she saw, in what language they were in, when they had been translated for her, when they had been received and how, and when she first saw them. Only she could answer these questions. He made it clear that if she did not give evidence, Mr S and the Trust would seek to call her.

[18] In response to the suggestion that all information as to what Ms Davenport saw and understood in the course of her briefing was privileged, Mr Katz responded that the statement in the letter, when coupled with the reference to the letters in the joint affidavit of 24 October 2013, could be seen as a waiver of privilege.

[19] In addition Mr S, in his lengthy affidavit responding to this application, refers to the statements in Ms Davenport’s letter of 17 April 2013 and the date when Ms Davenport received certain documents from her client and states at para 16:

It is further clear that there will be a need to put to the [Hs] their counsel’s letter, their affidavits as discussed above, and the attachments to those affidavits. I also believe that relevant questions as to the knowledge of documents existing, the source of documents and their provenance, questions asked regarding documents, will all need to be put directly to Ms Davenport QC. They are questions that can only be answered by Ms Davenport QC and not by her clients, the [Hs].

[20] This was not the first time that the issue of Ms Davenport’s position had been raised by Mr S. On 12 September 2014 Mr S sent an email directly to Ms Davenport stating:

To the extent that those documents confirm that your assurances were untrue/made recklessly and designed to obstruct/pervert/delay my filing obligations, I will be reporting you to the Law Society and will be seeking the highest penalty. I will also report you to the relevant authorities here and overseas for wittingly enabling the [Hs] in their unlawful activity for obstruction of justice for enabling the process of tax evasion, both historic and ongoing in [Country B] and New Zealand to remain undetected and unreported through your misleading assurances of legality.

Least you should misinterpret this to be a “threat to report” and least you should (again threaten to complain to the Law Society in a continued effort to shut me up to protect y our clients), let me be clear that this is not a threat, but a statement of intent. Once the [Country A] documents are available independently translated and reviewed, a final assessment of your culpability will be made and appropriate steps taken against both of you.

The jurisdiction to remove counsel

[21] The High Court has an inherent jurisdiction to control its own processes, except as limited by statute, and that jurisdiction extends to regulating the conduct of lawyers who appear before it.³ As was stated by Richardson J in Black v Taylor as part of that jurisdiction the Court is able to determine which persons should be

_{permitted to appear before it as advocates.}⁴ _{He observed:}⁵

³ _{New Zealand Law Society v Deliu [2014] NZHC 2467, [2015] 2 NZLR 224 at [8]–[15].}

⁴ _{Black v Taylor [1993] 3 NZLR 403 (CA).}

⁵ Black v Taylor, above n 4, at 408, citing Halsbury’s Laws of England (4^th ed, reissue, 1998)

vol 3(1) Barristers at [396].

In determining what categories of person may appear [the Court] does so in accordance with established usage and with what is required in the public interests for the efficient and effective administration of justice.

[22] Within that jurisdiction the Court has the power to debar counsel or solicitors from acting where that is necessary for justice to be done or to be seen to be done. This includes the power to direct a lawyer not to appear, when the fair and efficient operation of the Court process could be impeded because of the knowledge of past or

present actions of that lawyer.⁶ In exercising that jurisdiction the Court must

preserve confidence in the sound function and fairness of the Court process. Disputes must be resolved by the Courts in a plainly fair, open and even-handed way.

[23] That jurisdiction is not to be exercised lightly. A litigant should not be deprived of his or her choice of counsel without good cause. The right of a litigant to choose counsel is a basic right which the Court will only exercise in a clear case, where it is satisfied that the actual or apparent fairness of the Court process requires it.

[24] Sections 94(e) and 95 of the Lawyers and Conveyancers Act 2006 placed an obligation on the New Zealand Law Society to have rules of professional conduct and client care. The duties of lawyers (but not the Court’s jurisdiction over them), are set out in the Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules 2008 (the Rules). Section 107(1) provides:

107 Effect of practice rules

(1) The practice rules of the New Zealand Law Society are binding on all lawyers and former lawyers, whether or not they are members of the New Zealand Law Society, and on all incorporated law firms and former incorporated law firms, but are not binding on other persons.

[25] These rules were drafted by the New Zealand Law Society and approved by the Minister of Justice.⁷ Section 100(2)(a) required consultation with lawyers or

_{conveyancers. While under s 107(1) of the Lawyers and Conveyancers Act 2006}

⁶ Black v Taylor, above n 4, at 409; Accent Management Ltd v Commissioner of Inland Revenue [2013] NZCA 155, [2013] 3 NZLR 374 at [31]; Beggs v Attorney-General [2006] 2 NZLR 129 (HC) at [20].

⁷ In accordance with the Lawyers and Conveyancers Act, Part 6, s 94 and as noted in the Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules 2008, preface.

they are binding on lawyers, they do not purport to set out or limit the Court’s control over lawyers.⁸ There are no penalty provisions in the Lawyers and Conveyancers Act relating to the conduct of those qualified to be lawyers.⁹

Supervision and enforcement of the rules set out in the Act is left to the disciplinary procedures created by the Act and the Courts.¹⁰ Section 95 and the preface to the Rules provides that the Rules are “a reference point for discipline”.

[26] The express duties placed on practitioners by s 107(1) and the Rules of Conduct and Client Care are not, therefore, to be treated like offence provisions in a criminal statute, but rather as a combination of guidelines and minimum standards, which have the imprimatur of the profession and the Minister of Justice.¹¹ They are relevant to a Court in its assessment of whether a lawyer is fulfilling that lawyer’s duty to the Court. It was stated by Richardson J in Black v Taylor (in relation to the

Rules of Professional Conduct for Barristers and Solicitors that the profession applied at the time) that:¹²

... an ethical code of this kind expresses the profession’s own collective

judgment as to the standards to be expected of practitioners.

That observation applies to the present rules.

Counsel as witness

[27] The jurisdiction to remove counsel who clearly have a role in the case as a witness was recognised by the Court of Appeal in Hutchinson v Davis, where it was held that a practitioner could not be allowed to act in the dual capacities of counsel and witness.¹³ In R v Lui the Court of Appeal held that when factual matters of some

_{real significance in the case are put before an appellate Court, the normal practice}

⁸ New Zealand Law Society v Deliu, above n 3, at [13]–[15] and [27]–[29] and Lawyers and

_{Conveyancers Act 2006, s 270.}

9. See Lawyers and Conveyancers Act, s 46: penalties are only specified in relation to people providing conveyancing or legal services without adequate authority.

¹⁰ _{Lawyers and Conveyancers Act, ss 65, 67, 94, 95, and 121 onwards.}

11. See the discussion in Duncan Webb Ethics, Professional Responsibility and the Lawyer (2^nd ed, LexisNexis, Wellington, 2006) at [4.2.4].

¹² Black v Taylor, above n 4, at 409. See also Beggs v Attorney-General, above n 6, at [18]. That

ethical code consisted of rules made by the Council under s 17 of the Law Practitioners Act

1982. The present Rules are made by the Council of the New Zealand Law Society, and approved by the relevant Minister under s 100 of the Lawyers and Conveyancers Act, following the process outlined in ss 100 – 107 of the Act.

¹³ Hutchinson v Davis [1940] NZLR 490 (CA) at 491 and 516.

should be that counsel who made the affidavit or report should not appear to argue the case.¹⁴

[28] The blanket prohibition on appearing in dual roles does not extend to a lawyer who is able to give evidence for a client but chooses not to do so.¹⁵ However, if counsel who could give evidence elects to continue as counsel, they must be careful to avoid the character of a witness, and must be careful to avoid conveying or indicating a version of events reflective of that counsel’s actual knowledge.¹⁶

[29] The Court has jurisdiction to remove counsel who elects not to give evidence but who the Court considers to be a necessary witness for the client.¹⁷ The jurisdiction extends to restraining counsel who are required as a witness for the opposing party.¹⁸

[30] Rules 13.5.1, 13.5.2 and 13.5.4 of the Client Care and Conduct Rules provide:

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.

...

13.5.4 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.

[31] These rules are under the heading of “Independence in litigation”. It can be assumed that the reason for the prohibition in r 13.5 on lawyers being both counsel in court and witness in respect of contentious evidence is that in such circumstances

_{the lawyer is giving a personal view and an oath, contrary to the requirement in}

¹⁴ _{R v Lui [1989] 1 NZLR 496 (CA) at 500.}

¹⁵ _{Beggs v Attorney-General, above n 6, at 137.}

¹⁶ _{Hutchinson v Davis, above n 13, at 506; and Beggs v Attorney-General, above n 6, at [50]–[51].}

¹⁷ _{Beggs v Attorney-General, above n 6, at [30].}

¹⁸ Beggs v Attorney-General, above n 6, at [32]–[34].

r 13.5.4 and the need to retain objectivity. A lawyer’s independence will be compromised if they give evidence in support, or opposition, to their client’s interests. A lawyer who gives evidence on a contentious issue and who is, or can be expected to be, committed to the veracity and correctness of that evidence, may well not have that independence. A lawyer steps outside of the role of an officer of the

Court when that lawyer becomes a witness.¹⁹

[32] Further, the knowledge of counsel that they may be a witness may interfere with counsel’s ability to independently advise the client. As Miller J pointed out in Beggs v Attorney-General there is a risk if counsel is an important potential witness that counsel may prejudice the client’s case by not giving evidence, so as to maintain the position of counsel.²⁰

[33] If counsel is acting as a witness and has some personal knowledge of the case, this may be seen as raising public policy concerns of a conflict of interest. This gives rise to “fundamental concerns” that justice must not only be done, but be seen to be done.²¹ The issue before me is not about disciplining counsel. Any decision to disqualify is not dependent on a finding of misconduct; it turns on whether the integrity of the Court process and the maintaining of actual and perceived standards of procedural justice require the lawyer to stand down.

[34] It must be recognised that before they appear in a court case, counsel will inevitably have seen the relevant documents, talked to their clients, probably talked to witnesses, and will have formed all sorts of views about the case. The fact that counsel has done this or indeed made a written or oral statement about the case, does not compromise their independence. Counsel cannot be called as witnesses just because they know their client’s case and have participated in these sorts of interchanges. Indeed, to do so would be to compromise their role in fully understanding their client’s case and acting as their advocate. For this reason all communications received, compiled or prepared for the dominant purpose of

_{preparing for a proceeding are privileged.}²²

¹⁹ _{Lawyers and Conveyancers (Lawyers: Conduct and Client Care) Rules 2008, r 2.1.}

²⁰ _{Beggs v Attorney-General, above n 6, at [26] and [30].}

²¹ _{Black v Taylor, above n 4, at 408; Abse v Smith [1986] 1 QB 536 at 546.}

²² Evidence Act 2006, s 56.

[35] Inevitably when counsel makes a supportive statement about the client’s case, the background will be privileged communications, and the fact that a general statement is made such as “my client has a strong case”, or “the document must be interpreted in this way ...” does not mean that privilege is waived in respect of the documents underpinning that view, or that counsel can be called by the opposing party as a witness. Counsel are regarded as capable of carrying such confidential information, and advocating a view about it, without compromising their independence. There is no implication in such comments that counsel has any personal involvement in the facts as they arose, to advocate such a viewpoint.

[36] Finally, before turning to the specific factual issue, it must be recorded that allegations of conduct disqualifying a lawyer from acting as counsel should not be made lightly. I respectfully note McKay J’s observation in Black v Taylor:²³

For such applications to be brought without proper grounds merely as a weapon to discomfort the opposite party by adding to the length and cost of litigation would be a serious abuse of process. It would be highly improper for any solicitor or barrister to be a knowing party to such an abuse. I would expect any Court to be on its guard against the misuse of its process in this way.

Ms Davenport’s letter

[37] I do not consider this application for Ms Davenport to be able to retain the brief to have been premature. Mr S has made his position in relation to Ms Davenport quite clear on two occasions. If he is right, the case will begin, Ms Davenport’s position as a potential witness will be raised, and part-way through the hearing Ms Davenport could be ordered to cease to act. This result would probably lead to the trial being adjourned, which would be very costly and frustrating for the parties. The Hs were quite right to bring this application, so as to get the ability of counsel to appear determined well before trial.

[38] In para 7 of Ms Davenport’s letter of 17 April 2013, she stated that documents which she had seen clearly showed a loan by Acorp to Mrs H, via a

_{company Pcorp.}²⁴ _{Thus she asserted:}

²³ _{Black v Taylor, above n 4, at 420.}

²⁴ Set out at [13].

(a) She had seen loan documents. (b) They involved certain parties.

[39] There is no contention from either party over the fact that there was a loan by Acorp via the Pcorp company to Mrs H, as Ms Davenport stated. This loan provided the funds, sourced from Country B, that enabled her to purchase the contested Country A shares. This is indeed the assertion of Mr S and is the basis of why he says the share purchase was illegal.

[40] There is therefore nothing contentious about what Ms Davenport says. Nor, for that matter, is it surprising for counsel to comment that they have seen documents and that those documents say certain things that it is fairly anticipated cannot be in contention. This is the sort of thing that counsel, when they are discussing a case with each other, might be expected to say. As I have stated, counsel do not waive privilege when they express general positions on behalf of their clients (in contrast to

where they rely on the contents of a privileged document in Court).²⁵

[41] The summary at the end of Ms Davenport’s letter which is headed “Purchase and sale of [Intco] ([Intco]) shares: 2002 – 2006” sets out a narrative of the purchase of the Intco shares and events following the purchase of those shares. It contains no personal assertions on the part of Ms Davenport. It is a narrative set out from the Hs perspective. Ms Davenport could not have been a party to any of the events that she describes, as they all took place prior to her involvement with the file. Nor does she claim that she had any involvement. Thus, while the content of the narrative that she sets out might be contentious, her role and anything she might say in evidence about the narrative, given that she is the barrister for the Hs and acting on their instructions, cannot be contentious. She is, and was in the letter, speaking as the Hs’ lawyer.

[42] Ms Davenport states that there is no intention on the part of the Hs that she should be called as a witness. To this Mr S responds that he will subpoena

²⁵ See discussion of the requirements for waiving privilege in Houghton v Saunders (2009)

[2009] NZHC 878; 19 PRNZ 476 (HC) at [55]; McGuire v Wellington Standards Committee (No 1) [2014] NZHC

1159.

Ms Davenport for the defendants. However, a witness may only give evidence on matters of relevance to a trial. A Court can refuse to issue a witness summons, or revoke a summons, or refuse to hear evidence, if the proposed evidence is irrelevant.²⁶

[43] Given the above analysis, there is no relevant evidence that Ms Davenport could give and the defendants would therefore not succeed on any application to call her as a witness. In those circumstances it is clear that Ms Davenport, as matters presently stand before the Court, will not be called on to give any evidence and certainly could not be called to give any contentious evidence.

[44] Mr Katz argued that issues relating to the loan to Mrs H by her sister, and other dealings after the purchase and sale of the Country A shares, would be relevant to the allegation of illegality. That may be so, but those later dealings also took place long before Ms Davenport became counsel, and she had nothing to do with them. None of her comments about those events went beyond what would be expected from an advocate for a party.

[45] Mr Katz also referred to the statement in Vector Gas Ltd v Bay of Plenty Energy Ltd about the risks of counsel losing objectivity and of acting as a witness if they are personally involved in a proceeding.²⁷ However, in that case counsel had been involved in negotiating and recording an interim agreement of considerable relevance to the proceeding. Ms Davenport had no involvement in the drafting of the relevant agreements in this case. The letter does not demonstrate any

involvement in the relevant facts of the case at a personal level.

[46] Mr Katz also relied on the decision of Hutchinson v Davis where a practitioner was not allowed to act in the dual capacities of counsel and witness, where the practitioner had put questions in cross-examination to a witness, calculated to convey to a jury by suggestion that this was evidence he himself could

_give.²⁸ _{However, there is no similar risk here as Ms Davenport cannot imply that she}

²⁶ See the test set out in Re Golightly [1974] 2 NZLR 297 (SC); Siemer v Stiassny

_{CA55/06/CA150/66, 22 December 2006 at [6], and the Evidence Act 2006, s 7.}

²⁷ _{Vector Gas Ltd v Bay of Plenty Energy Ltd [2010] NZSC 5, [2010] 2 NZLR 444 at [146]–[149].}

²⁸ Hutchinson v Davis, above n 13.

has any firsthand knowledge of the disputed factual matters about the purchase of the shares and the loans.

[47] Mr Katz raised the possibility of Ms Davenport during the trial becoming aware, from what she had seen and been told about the documents, of the fact that misleading evidence was being given by her clients to the Court. I see nothing in this point. That is a risk that counsel always run when a trial proceeds, and a witness departs from the brief of evidence. That risk is not a basis for disqualifying counsel.

[48] For this reason Mr and Mrs H’s application for an order that Ms Davenport may appear as counsel must succeed.

[49] I refer briefly to the wisdom of counsel sending letters to opposing counsel or other persons, touching on matters of substance to the litigation. Rule 14.15.2 of the Conduct and Client Care Rules provides that correspondence between parties on matters relating to litigation should “normally” be carried out between the instructing lawyers. This rule is in the part of the Rules that relates specifically to barristers. The commentary on the previous r 11.1 under the Rules of Professional Conduct for Barristers and Solicitors stated that counsel could on appropriate occasions correspond with other counsel “... but the risk will be that the correspondence may become relevant to the litigation, thus placing counsel in an embarrassing

position”.²⁹

[50] Ms Davenport’s letter ran the risk of placing her in just such an embarrassing position, although I recognise it was sent as a response to a letter from opposing counsel which also covered substantive matters expressed to be on a “counsel to counsel” basis. As these rules indicate, counsel should be very cautious about corresponding on controversial issues with opposing counsel. In this instance Ms Davenport has not breached any rule or acted unethically in sending the letter,

_{and the case shows only the potential dangers of doing so.}

29. Rules of Professional Conduct for Barristers and Solicitors (7th ed, New Zealand Law Society, Wellington, 2004).

Conclusion

[51] There have been no words or actions by Ms Davenport which have resulted in her becoming a potential witness of evidence of a contentious nature, or indeed any evidence of relevance.

[52] The Hs are accordingly entitled to an order that Ms Davenport may retain the brief.

Costs

[53] The Hs have succeeded in obtaining the order they sought. For the reasons I have given, I consider the opposition of the defendants to the application, and their objection to Ms Davenport appearing as counsel, to have been unjustified. The defendants’ objection to Ms Davenport acting fell within the increased costs r 14.6 of

“taking or pursuing an unnecessary step or an argument that lacks merit”.³⁰

Inevitably and correctly the objection was taken seriously by the plaintiffs. As I have said, they had no choice but to have the issue determined by the Court. They should not have had to do so.

[54] These sorts of allegations should be made with care and circumspection. I do not find that this allegation fell within that worst type of category referred to in Black v Taylor, of a deliberate abuse of process. If it did I would order indemnity costs. However, it was a meritless objection that should not have been made. I propose increasing scale costs by 50 per cent.

[55] Accordingly the defendants will pay the plaintiffs costs of this application on a 2B basis with increased costs amounting to a further 50 per cent, together with all reasonable disbursements.

...................................

_{Asher J}

³⁰ High Court Rules, r 14.5(3)(b)(ii).