EA v Rennie Cox Lawyers [2017] NZHC 5 (13 January 2017)

Last Updated: 27 March 2017

THIS IS A REDACTED VERSION OF THE ORIGINAL JUDGMENT. THE REDACTIONS HAVE BEEN MADE TO ENSURE COMPLIANCE WITH SUPPRESSION ORDERS IN OTHER PROCEEDINGS AND THE CONFIDENTIALITY OF THE COMPLAINTS PROCEDURE

_{OF THE NEW ZEALAND LAW SOCIETY.}

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2016-404-1122 [2017] NZHC 5

BETWEEN	EA Appellant
AND	RENNIE COX LAWYERS Respondents

Hearing:	2 August and 25 November 2016
Appearances:	R J Hollyman and A J Steel for Appellant E St John for Respondent
Judgment:	13 January 2017

JUDGMENT OF LANG J

_{[on appeal against refusal to set aside judgment obtained by default]}

This judgment was delivered by me on 13 January 2017 at 2.30 pm, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

_{Date...............}

EA v RENNIE COX LAWYERS [2017] NZHC 5 [13 January 2017]

[1] This appeal relates to a claim for recovery of fees rendered for professional services by an Auckland barrister, Mr M. The respondent, the law firm Rennie Cox Lawyers (Rennie Cox), instructed Mr M to act on behalf of the appellant, EA, in respect of a variety of proceedings between May 2009 and November 2011.

[2] On 21 August 2015, Rennie Cox obtained judgment by default against EA in the District Court at Auckland for the sum of $109,097.60 together with costs and interest. The amount for which judgment was entered represented outstanding fees Mr M had rendered to EA between June and November 2011.

[3] EA applied to have the judgment by default set aside, but Judge Gibson dismissed the application in a judgment delivered on 29 April 2016.¹ In a subsequent judgment delivered on 31 May 2016, the Judge awarded increased costs in favour of Rennie Cox because he considered she had advanced an argument that lacked merit.²

[4] EA appeals against both of the Judge’s decisions. Rennie Cox cross-appeals in respect of interlocutory orders initially made by Judge Hinton on 19 January 2016 granting EA suppression of her name and identifying particulars. Judge Gibson confirmed in his substantive decision that these were to remain in effect.³

Background

[5] The proceedings in respect of which Rennie Cox engaged Mr M arose out of the various proceedings. Rennie Cox engaged Mr M to act on behalf of EA in respect of some, but not all, of the proceedings.

[6] Mr M rendered invoices in respect of his attendances on a monthly basis. EA

paid these without complaint up until early June 2011. Between June and November

2011 Mr M rendered six further invoices in respect of fees totalling $105,014.86. EA did not pay these invoices and began to query the amount of the invoices in

_{October 2011. Discussions between Mr M and EA resulted in one of the invoices}

¹ _{Rennie Cox Lawyers v EA [2016] NZDC 7359}

² _{Rennie Cox Lawyers v EA [2016] NZDC 9587.}

³ Above n 1, at [34].

being reduced by the sum of $6210. Thereafter Mr M would make no further concession, and required Rennie Cox to take steps to recover the fees.

[7] On 30 March 2012 Rennie Cox issued proceedings against EA in the District Court to recover outstanding fees in the sum of $95,738.51 together with interest and costs. The proceedings were served on EA on 3 April 2012. The procedural rules then in force in the District Court required EA to file her response to Rennie Cox’s claim no later than 18 May 2012.⁴ If she took no steps to defend the claim within 90 days from the date of service, Rennie Cox would be entitled to obtain judgment against her by default.⁵

[8] On 9 May 2012, EA complained to the New Zealand Law Society (the Law Society) about Mr M’s fees. This had the effect of preventing further steps being taken in relation to the proceedings in the District Court until the Law Society had determined the complaint.⁶

[9] The Law Society appointed a costs assessor to investigate EA’s complaint. At the conclusion of his investigation the costs assessor produced a lengthy report in which he reached the following conclusions.

[10] The costs assessor recommended that the Law Society should uphold all but one of the invoices rendered by Mr M. He recommended that an invoice rendered on 10 October 2011 should be reduced by the sum of $200.

[11] A Standards Committee of the Auckland branch of the Law Society considered the costs assessor’s report and issued a decision in respect of EA’s complaint. The Committee’s conclusion on the issue of whether Mr M’s fees were

_{reasonable was as follows:}

⁴ _{District Courts Rules 2009, r 2.12.}

⁵ _{Rules 2.39A and 2.39.1.}

⁶ Lawyers and Conveyancers Act 2006, s 161(1).

[12] EA did not accept the Law Society’s decision. She required the decision to be reviewed by the Legal Complaints Review Officer (the LCRO). The LCRO issued a decision confirming the Law Society’s decision in all respects.

[13] By this stage the delay that had occurred meant that Rennie Cox required an extension of time to take further steps in the recovery proceeding in the District Court.⁷ On 16 June 2015 Mr Werry, a barrister instructed by Rennie Cox in respect of the debt recovery proceeding, applied on a without notice basis for an extension of time within which to apply for judgment against EA by default. Rennie Cox also applied for a declaration confirming that the 2009 rules applied to the proceeding.

[14] On 21 August 2015 Judge G M Harrison issued a Minute in which he granted these applications and also entered judgment against EA by default. The default judgment included interest calculated in accordance with the Judicature Act 1908 and costs.

Relevant principles

[15] Rule 12.34 of the District Courts Rules 2009 (the 2009 rules) empowered the District Court to set aside a judgment “if it appears to the court that there had been, or may have been, a miscarriage of justice”. Although the District Courts Rules

2014 had come into force by the time Judge Harrison entered judgment against EA, the transitional provisions of the new rules provided that the 2009 rules were to continue to apply to the proceeding.

[16] Mr Hollyman argues on EA’s behalf that Judge Gibson ought to have set the default judgment aside because Rennie Cox obtained it in an irregular manner. Relying on cases such as O’Shannesssy v Dasun Hair Designers Ltd, he contends that EA was entitled as of right to have the judgment set aside for that reason.⁸

[17] The traditional view was that a defendant against whom a default judgment had been irregularly obtained was entitled as of right to have the judgment set aside.

In Korochine 15 Ltd v R P Charans Investments Ltd Hammond J expressed this concept as follows:⁹

... a default judgment is, of course, a relatively Draconian creature. But there are provisions in our rules of procedure to mitigate the harsh effects of such a judgment.

In the first place, if a default judgment is not entered strictly in accordance with the rules of Court, it is then said to be irregular. If a judgment is irregular then, as a general proposition, a defendant may have it set aside as of right, regardless of a defence on the merits. The Latin tag (regrettably) still sometimes resorted to is ex debito justitiae. For a default judgment to be “regular” it must be in conformity with the rules, and be for the relief to which the plaintiff is entitled on the pleadings. The judgment entered must follow the relief claimed. Failure to comply with the rules can cover a wide variety of circumstances. For instance, a judgment signed too soon (Anlaby v Praetorius [1988] 20 QBD 764) or perhaps for too great a sum of money (Hughes v Justin [1894] 1 QB 667) would be irregular. And improper service of the proceedings will lead to a setting aside (Thomas Bishop Ltd v Helmville Ltd [1972] 2 WLR 149).

[18] The position now appears to have altered because in some cases the courts have been prepared to exercise their discretion in favour of permitting a judgment to stand even where it was not obtained strictly in accordance with the rules of procedure.

[19] Gendall J surveyed the authorities in Arnott v Artisan Holdings Ltd.¹⁰ His Honour concluded that “a wide and common sense approach” was required in this context. Examples of when a judgment will be set aside include situations where a proceeding has not been served on the defendant or where judgment has been entered prior to the expiration of the time permitted for the filing of a statement of defence. His Honour also observed:

It is not easy to reconcile the conflicting views or approaches if in fact they be different ... The answer may well lie in the degree of irregularity on the face of the judgment and in the manner in which it was obtained. When judgment is entered or obtained in a way which is not within any of the rules so that a plaintiff has no right at all to obtain it then it is irregularly obtained within the distinction made by Greig J in O’Shannessy. ... The setting aside, or varying of, a judgment ... arises if there may have been a miscarriage of justice which usually arises where the degree of irregularity, whether as to process or resulting judgment is substantial.

[20] To similar effect, Asher J noted in Madsen-Ries v Thompson:¹¹

There is a body of law indicating that when a default judgment is irregularly obtained the defendant is entitled to ex debito justitiae to set it aside. The rigidity of this approach is not supported by the breadth of the current rule, or the objective of the Rules to achieve the just, speedy and inexpensive determination of proceedings. No absolute rule that all irregular judgments be set aside is required, and such rule could on occasion just delay an inevitable judgment. I respectfully agree with the observation of Hammond J in Korochine 15 Ltd v R P Charans Investments Ltd, that the Court retains an overall discretion. Issues of relevance will include the degree of irregularity, the strength of the claim and whether there may have been a miscarriage of justice.

[21] In Fetherston v Bank of New Zealand a bank obtained judgment by default in circumstances where the proceeding had not been personally served on the defendant as required by the rules.¹² The defendant had become aware of the proceeding from documents he found affixed to his gate. This alerted him to the fact that he had 30 days within which to defend the proceeding. The defendant had then made enquiries with an officer of the bank about the claim. This Court upheld the exercise of the trial Judge’s discretion in favour of the bank to permit the judgment to stand notwithstanding the existence of the irregularity.

Was the judgment irregularly obtained?

[22] Mr Hollyman relies on several factors in support of his submission that Rennie Cox obtained the judgment in an irregular manner. They can be summarised as follows:

1. It was not appropriate for Rennie Cox to apply for an extension of time on a without notice basis.

2. The claim was for an unliquidated sum.

3. The memorandum filed in support of the application misled Judge

Harrison regarding the true position.

Was it appropriate for Rennie Cox to apply for an extension of time on a without notice basis?

[23] EA points out that Rennie Cox was well aware that she disputed the amount of Mr M’s fees. On 1 May 2015 her solicitors wrote to Rennie Cox confirming that fact. Her solicitors also advised Rennie Cox that EA did not accept the Law Society’s decision, and was “considering her options”. Furthermore, EA’s solicitors had advised Rennie Cox that she had claims against Mr M arising out of his failure to properly itemise his monthly accounts. Given those circumstances EA contends that Rennie Cox ought to have filed their application on notice so that she could have an opportunity to contest it.

[24] The Judge rejected this argument on the basis that the granting of an extension of time was an interlocutory order that became effectively spent once Judge Harrison entered judgment in favour of Rennie Cox. The Judge relied on Hyde Holdings Ltd v Sorenson as authority for that proposition.¹³

[25] I respectively disagree with this aspect of the Judge’s decision because the decision to grant the extension of time was inextricably linked to the entry of the default judgment. The position may have been different if Judge Harrison had granted the application for extension and directed that EA be notified of that decision so that she had a further opportunity to defend the proceeding if she wished to do so. Instead the Judge entered judgment against EA immediately after granting the extension. I do not consider the principles referred to in Ryde assist in the present context.

[26] I consider, however, that Rennie Cox was entitled to proceed on a without notice basis because EA had taken no steps to defend the claim by the time Rennie Cox filed its application. Importantly, EA’s solicitors had concluded their letter to Rennie Cox’s barrister on 1 May 2015 with the following request:

Please confirm that you will discontinue your claim or that the matter will be left in abeyance and pursued only on notice to us.

[27] Rennie Cox responded to this request on 5 May 2015 as follows:

5. Finally, we record that the claim will not be discontinued, nor will it be pursued only on notice to you.

[28] I consider Rennie Cox’s response was unequivocal. It provided EA with the clearest possible advice that Rennie Cox would not discontinue the District Court proceeding, and that it would not pursue the proceeding only on notice to EA. At that point EA ought to have taken steps to protect her position by filing an extension of time within which to respond to Rennie Cox’s claim. In failing to do so, she left herself vulnerable to what subsequently occurred.

[29] Rennie Cox waited for six weeks before filing its application. During that period EA did nothing. For these reasons I do not consider it was inappropriate for Rennie Cox to file the application on a without notice basis.

Was the claim for a liquidated sum?

[30] Rule 12.24 of the District Court Rules 2009 permitted a plaintiff to obtain judgment by default in respect of a claim for a liquidated sum where the defendant failed to file a response within the prescribed time. EA’s argument under this head is that Rennie Cox knew EA disputed the amount that Mr M was claiming. Mr Hollyman submits that this meant the claim was not for a liquidated sum, and Rennie Cox was therefore not entitled to obtain judgment by default.

[31] Judge Gibson rejected this argument in the following passage of his substantive decision:¹⁴

[17] The other matter raised as an irregularity in the plaintiff’s proceeding is the obtaining of a judgment by default on the basis the outstanding fees constituted a liquidated demand. There was no definition of that term in the

2009 Rules. Nevertheless the widely applied definition from the Encyclopaedia of the Laws of England (2^nd Edition), Sweet & Maxwell, London, 1908, Volume 8 at 338, was cited in Paterson v Wellington Free Kindergarten Association Inc (supra) at 989 where McCarthy J said:

In order to come within the definition “liquidated demand” a

claim on a contract must:

(a) state the amount demanded; or

(b) so express that the ascertainment of the amount is a mere matter of calculation; and

(c) give sufficient particulars of the contract to disclose its nature.

It is the nature of the contract on which the claim is based, as well as the fact that a specific sum is claimed, which brings the claim, or fails to bring it, within the definition.

[18] The contract between the defendant and the plaintiff was one for the provision of legal services. The amount owed was clearly so expressed. It did not require to be calculated as the amount demanded was clear in its terms. The second limb of the definition accepted by the Court of Appeal is also met in that sufficient particulars were given in the bills of cost themselves so as to disclose the nature of the contract on which the claim was based.

[19] The defendant’s argument is that it was an unliquidated sum as it was unclear as to how the fee had been calculated and in any event was disputed by the defendant. The fact that the fee was disputed, notwithstanding the exhaustive inquiry conducted by the Law Society, and in particular the Costs Assessor, at the defendant’s instigation does not change a liquidated demand into an unliquidated demand as the defendant seems to suggest. The fees were a sum certain. The Law Society had found them to be fair and reasonable. The case relied on by the defendant, Callis v Ward McCulloch (1993) 7 PRNZ 175 is not on all fours with this situation. There a judgment had been sealed on the basis it was a liquidated demand although the plaintiff’s claim against the defendant was one for professional negligence and as an alternative, breach of fiduciary duty. The liquidated demand procedure under the former Rule 460 of the High Court Rules did not require a judgment to be entered by the determination of a Judge. The procedure was essentially pro forma as if a statement of defence had not been filed within the time specified by the Rules, judgment could be sealed by the Registrar. The claim itself was plainly an unliquidated claim and the amount owing the plaintiff was uncertain unless and until the Court determined the appropriate damages in respect of the alternative causes of action. Here the claim is for a sum certain.

[32] I agree with this reasoning. The amount claimed in each invoice was clearly stated. The fact that EA disputed her liability in respect of the amounts claimed did not alter that fact. Like the Judge, I consider that the claim was for a series of liquidated amounts so that the default judgment procedure was potentially available.

[33] Counsel now agree, however, that a claim for interest under the Judicature Act 1908 is not a claim for a liquidated sum. For that reason the default judgment procedure was not available in respect of this aspect of Rennie Cox’s claim. The

appeal must therefore be allowed to the extent that the judgment awarded Rennie

Cox interest on the judgment sum.

Did the memorandum filed in support of the application fail to advise Judge

Harrison of the true position?

[34] This issue arises in two ways. First, the memorandum that Mr Werry filed in support of the application contained incorrect advice regarding the effect of the conclusion reached by the Law Society. Secondly, EA contends that Mr Werry breached his obligation to provide the Judge with full details of the communications between Rennie Cox and EA’s solicitors after the decision of the LCRO had been delivered.

Incorrect advice regarding the effect of the Law Society’s decision

[35] Section 161(3) of the Lawyers and Conveyancers Act 2006 (LCA) provides:

161 Stay of proceedings for recovery of costs

...

(3) The certificate of the Standards Committee or, as the case may be, the decision of the Legal Complaints Review Officer on a review of the determination is final and conclusive as to the amount due.

[36] Mr Werry’s memorandum contained the following advice regarding the effect of the Law Society’s decision:

13. There is nothing left to dispute – the certificate of the Standards Committee or decision of LCRO is “final and conclusive as to the amount due”. Section 161(3) of the Act.

[37] Rennie Cox now acknowledges that this advice was incorrect. The Law Society did not provide a certificate under s 161(3) of the LCA. Rather, it elected under s 138(2) of the LCA to take no further action in relation to the complaint. Had the Law Society issued a certificate under s 161(3), EA would have no means of disputing Mr M’s fees. In the absence of such a certificate, however, she could still dispute Mr M’s right to recover the fees. The memorandum was therefore incorrect in a material respect. Furthermore, the Judge may well have relied upon Mr Werry’s assurance in deciding to grant the application and to enter judgment against EA.

[38] Judge Gibson did not address this issue in his substantive decision. In his subsequent costs decision he said that this was because he considered it to be irrelevant to the issues he was required to decide. Furthermore, the Judge relied upon EA’s decision to run this untenable argument as justifying an increased award of costs in respect of the application to set aside the default judgment.

[39] I respectfully take a different view. It is well established that counsel who files an application on a without notice basis has a duty to ensure that he or she provides correct factual advice to the Judge who decides the application.¹⁵ I consider the provision of incorrect factual advice in this way meant that Rennie Cox obtained the judgment in an irregular manner.

Failure to provide details of communications with EA’s solicitors

[40] Mr Hollyman submits that Mr Werry should also have provided Judge Harrison with details of the communications that had taken place between Rennie Cox and EA’s counsel following delivery of the LCRO’s decision. Instead Mr Werry advised the Judge as follows:

12. The Defendant has taken no steps in this proceeding. It should be noted at this point that while the provisions of the Act prevent a practitioner from proceeding with a claim for his/her bill of costs, the Act does not prevent the defendant from serving her response to the notice of claim. Furthermore, since the decision of the LCRO confirming the Standards Committee’s decision the defendant has not applied for an extension of time to file a response.

[41] Arguments run both ways on this issue. Rennie Cox had made it clear to EA’s counsel on 5 May 2012 that it intended to continue with the proceeding and that it would not do so only on notice to EA. It then effectively gave EA six weeks to take steps to protect her position. She did not take up that opportunity. It can be argued that in failing to do so EA lost the right to participate in the proceeding.

[42] On the other hand, EA effectively stayed the proceeding by lodging her complaint with the Law Society. She did so at a time when she was still entitled to

_{file a response to Rennie Cox’s claim. The claim was then deemed to have been}

¹⁵ Haddon v New Zealand Insurance Co Ltd [1958] NZLR 704 (SC); United People’s Organisation

(Worldwide) Inc v Rakino Farms Ltd (No 1) [1964] NZLR 737(SC).

abandoned because no steps were taken in it by either party whilst the complaint was being determined by the Law Society and the LCRO. It can therefore be argued that EA had as much right as Rennie Cox to provide input into the issue of whether Rennie Cox should be granted an extension of time within which to obtain judgment against her.

[43] In this area I consider a cautious approach is warranted. The matters contained in Mr Werry’s memorandum conveyed the impression that EA had taken no steps to dispute the claim since delivery of the LCRO’s decision. That was correct so far as the proceeding itself was concerned. It did not reflect the entire position, however, because of the letter that EA’s barrister had written to Rennie Cox on 1 May 2016.

[44] As I have already concluded, Rennie Cox was entitled to proceed on a without notice basis because EA had taken no steps to defend the proceeding. In doing so, however, it was required to place before the Judge all of the factual material that might be relevant to his decision. In failing to disclose the correspondence that occurred on 1 and 5 May 2016 I consider that Mr Werry omitted to advise the Judge of issues that may have been material to his decision. These related to EA continuing to dispute the quantum of the invoices and her claim in respect of losses allegedly suffered because of the manner in which Mr M compiled his time records and invoices.

[45] For that reason I consider the judgment was irregularly obtained in this respect as well.

Exercise of the discretion

[46] It is now necessary to consider whether I should exercise my discretion to permit the judgment to stand notwithstanding the irregularities I have found to exist. The object of that exercise must be to determine whether a miscarriage of justice has or may have occurred in terms of r 12.34 of the District Courts Rules 2009.

The nature and effect of the irregularity

[47] As the authorities referred to earlier confirm, the nature and effect of the irregularity is important in this context. Where the irregularity effectively prevents a defendant from defending a proceeding in accordance with the procedural rules, the judgment is likely to be set aside because a miscarriage of justice has occurred. In the present case the irregularity did not have that effect. EA was served with the recovery proceeding and instructed her counsel to halt it by lodging a complaint with the Law Society. Once the Law Society complaint was at an end EA took no steps to defend the proceeding for a further six weeks after being advised that Rennie Cox would not discontinue it and would not proceed only on notice to her. For those reasons the irregularity in the present case did not deprive EA of her right to defend the claim in accordance with the prescribed procedure.

[48] Furthermore, the outcome may well have been the same even if counsel for Rennie Cox had explained the position fully in his memorandum to Judge Harrison. Copies of the decisions of both the Law Society and the LCRO were annexed to that memorandum, and the Judge would have seen from these that both bodies considered Mr M’s fees to be reasonable even though no certificate was issued. The Judge may also have taken the view that EA had already had sufficient opportunity to take steps to protect her position in the recovery proceeding, and that Rennie Cox was entitled to obtain judgment given her failure to do so.

The proposed response to the claim

[49] I also bear in mind the fact that EA’s proposed response to Rennie Cox’s claim proceeds on two bases. First, EA continues to challenge the reasonableness of Mr M’s fees. Secondly, she maintains she has a counterclaim against Mr M arising out of his failure to keep records and to itemise his invoices in a manner that clearly set out the nature of the work he had carried out.

The challenge to the reasonableness of Mr M’s fees

[50] The question of whether or not Mr M’s fees were reasonable was one of the most important issues raised in EA’s complaint to the Law Society. She provided a

significant quantity of material to the costs assessor in respect of that issue, as did Mr M. The costs assessor then produced a comprehensive report after having considered all of the material provided by both parties. His conclusion was that Mr M’s fees were reasonable and that, with one minor exception, each of the invoices should be upheld.

[51] The Standards Committee then considered the costs assessor’s report and issued its own detailed decision adopting the costs assessor’s recommendations. Not satisfied with this, EA required the Standards Committee’s decision to be reviewed by the LCRO. The LCRO agreed with the findings of the Standards Committee. No fewer than three separate bodies have therefore concluded that Mr M’s fees were reasonable. Each of those bodies has specialist expertise in assessing the reasonableness of legal fees charged by law practitioners.

[52] I consider that the reasonableness of Mr M’s fees has now been the subject of adequate scrutiny by specialist bodies. There would be no miscarriage of justice in requiring that issue to now be regarded as having been settled notwithstanding the fact that the Law Society did not issue a certificate in respect of the fees.

The claim against Mr M in respect of EA’s inability to obtain an award of indemnity

costs

[53] This issue arises because the presiding Judge initially awarded EA indemnity costs in respect of the various proceedings . The presiding Judge later changed this to an award of increased costs because EA advised her that Mr M’s time records and invoices did not disclose which of his attendances fell within the scope of the order for indemnity costs.

[54] EA claims that the award of increased costs amounted to approximately

$48,000 whereas the amount she ought to have been able to recover from on an indemnity basis was substantially greater. She seeks to recover the difference between the two amounts from Mr M.

[55] Judge Gibson rejected this proposed ground of defence because he was not satisfied that EA could not have obtained an order for indemnity costs if she had

placed all available material, including the costs assessor’s report, before the presiding Judge at the time she made her decision. Judge Gibson also observed that the counterclaim was not in any event available when Judge Harrison entered judgment against EA because the presiding Judge did not determine the issue of costs in the proceedings until after Judge Harrison had entered judgment against EA in the District Court.

[56] I consider there is significant uncertainty about the viability of this claim because it is likely to depend to a large extent on EA’s ability to prove that she could have enforced an award of indemnity costs. There is no evidence regarding the issue of whether EA has taken steps to enforce the award of increased costs made by the presiding Judge and, if so, whether those efforts have been successful. If EA has been unable to enforce payment of that award she is likely to find it difficult to persuade a court that the outcome would have been different if she had obtained an award of indemnity costs.

[57] Furthermore, the claim is against Mr M and not Rennie Cox. There is nothing to prevent EA from advancing the claim in a new proceeding filed against Mr M in the District Court. She can then apply for a stay of execution of the present judgment based on the existence of the new proceeding. An application for stay will permit the District Court to examine the merits of the proposed claim in far greater detail than this Court can do on the information currently available.

Conclusion

[58] For these reasons I propose to exercise my discretion not to set the judgment aside notwithstanding the irregularity that has occurred.

The cross appeal in relation to the suppression orders

[59] Judge Hinton made orders suppressing EA’s name and identifying particulars from publication in order to ensure the continued effectiveness of suppression orders made in other litigation. Judge Gibson confirmed that those orders needed to remain in force in order to protect the suppression orders made in those proceedings.

[60] Mr St John advised me that Rennie Cox is concerned that the suppression orders may prevent it from sealing and enforcing the default judgment. I do not consider that concern to be justified because I do not consider there would be any impediment to Rennie Cox sealing the judgment in EA’s full name. If there is, the issue can be taken up with a Judge of the District Court.

[61] If Rennie Cox then seeks to enforce the judgment by bankruptcy proceedings filed in this Court, I do not see that the use of EA’s name will breach any suppression orders that might presently exist. If EA is concerned about that prospect she can ask this Court to rule on the matter.

[62] I therefore do not consider the grounds advanced by Mr St John justify this Court setting aside suppression orders that have obviously been made for good reason.

Costs in the District Court

[63] As I have already recorded, Judge Gibson awarded Rennie Cox increased costs on the basis that EA had pursued an argument that was devoid of merit. This was her argument relating to the erroneous advice given by Mr Werry to Judge Harrison regarding the effect of the Law Society’s decision.

[64] For the reasons I have already given I consider this issue to have been one of the most important issues in the case. It was properly pursued by EA and should not have resulted in an award of increased costs being made against her.

[65] Given the irregularities surrounding Mr Werry’s memorandum, I do not consider Rennie Cox should be entitled to costs in respect of either the default judgment or the application to set it aside. Costs should lie where they fall in respect of the proceedings in the District Court.

Result

[66] The appeal is allowed to the extent that the default judgment is varied to exclude interest. In all other respects it is to remain unaltered.

[67] The cross-appeal is dismissed.

[68] The costs orders made by Judge Harrison and Judge Gibson are set aside. There will be no order for costs in respect of the applications determined by the District Court.

Costs on the appeal

[69] Both parties have succeeded to some extent on the appeal. Although it can be argued that Rennie Cox achieved a greater degree of overall success, that argument is countered by the fact that EA succeeded in persuading me that the default judgment had been obtained irregularly. Rennie Cox has only succeeded in preserving the judgment because I have exercised my discretion in its favour and against EA. For that reason my tentative view is that the honours are evenly shared and costs should lie where they fall. Should the parties take a different view, their counsel should file concise memoranda dealing with the issue of costs and I will determine it on the papers.

The future

[70] At the conclusion of the hearing I endeavoured to persuade the parties through their counsel that they should take whatever steps they can to resolve this dispute as quickly as possible. The amount in issue is not large. The quantum of the judgment will now be reduced to the sum of $95,738.51.

[71] Furthermore, EA has always maintained that Mr M owes her the sum of approximately $21,000 in respect of work she performed for him in respect of unrelated matters. The Judge rightly rejected this as a ground of defence because it was a claim against Mr M personally when he was not a party to the claim brought by Rennie Cox. There was therefore no mutuality of parties, meaning that EA could not advance a defence based on set-off. Mr M has never, however, disputed that he should give EA a credit for the work that she carried out for him. In practical terms, therefore, the amount now in dispute is approximately $74,000.

[72] Both parties must already have invested considerable sums in this litigation. The amount in issue does not warrant further sums being expended on continued litigation at any level. Both parties need to resolve the impasse now so that they can move on to other more productive ventures. I therefore urge them again to do what

_{they can to bring this long running dispute to an end as soon as they can.}

Lang J

Solicitors:

Paul Friedlander, Auckland

Counsel:

R J Hollyman, Auckland

E St John, Auckland