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High Court of New Zealand Decisions |
Last Updated: 13 September 2018
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IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY
I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE
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CIV-2013-409-001333
[2018] NZHC 2392 |
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BETWEEN
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DEREK RICKY BLIGH
Plaintiff
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AND
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EARTHQUAKE COMMISSION
First Defendant
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AND
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IAG NEW ZEALAND LIMITED
Second Defendant
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Hearing:
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15 May 2018
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Appearances:
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P J Napier for the Applicant, Grant Shand R J Lynn for the
Plaintiff/Respondent
No appearance for the First Defendant/Respondent P M Smith for the Second
Defendant/Respondent
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Judgment:
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11 September 2018
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JUDGMENT OF NATION J ON REVIEW AS TO COSTS
[1] Derek Bligh (Mr Bligh) sued the defendants (EQC and IAG) in relation to damage to his house allegedly sustained in the Darfield earthquake of 4 September 2010. His claims were to have been the subject of a trial commencing on Monday 31 October 2016.
[2] Claims Resolution Service Limited (CRSL), a litigation funder, had been funding Mr Bligh’s proceedings. The legal firm of Grant Shand had been representing Mr Bligh. The principal of the firm was and is the lawyer Grant Shand (Mr Shand).
BLIGH v EARTHQUAKE COMMISSION [2018] NZHC 2392 [11 September 2018]
[3] Shortly before the trial was due to begin, CRSL cancelled its contract with Mr Bligh. As a consequence, Grant Shand ceased representing Mr Bligh. At the scheduled commencement of the trial on 31 October 2016, Mr Ferguson, the Grant Shand counsel representing Mr Bligh, sought and was granted leave to withdraw. Mr Bligh did not appear in Court at that time. The Court entered judgment by default against him.1
[4] Mr Bligh was subsequently able to have the judgment set aside.2
[5] In a judgment of 12 February 2018, Associate Judge Osborne ordered:3
(a) Mr Bligh and CRSL to pay to EQC its reasonable solicitor/client costs and disbursements incurred in relation to this proceeding in the period 28-31 October 2016;
(b) As between Mr Bligh and CRSL, the costs awarded to EQC at (a) shall be borne 33.3 per cent and 66.7 per cent respectively;
(c) Mr Bligh, CRSL and Grant Shand to pay to IAG:
(i) its reasonable solicitor/client costs and disbursements incurred in relation to this proceeding in the period 28-31 October 2016; and
(ii) a sum representing 25 per cent of its reasonable solicitor/client costs and disbursements of preparation for the 31 October 2016 hearing to be fixed by the Registrar;
(d) As between Mr Bligh, CRSL and Grant Shand, the costs awarded to IAG at (c) shall be borne 20 per cent, 40 per cent and 40 per cent respectively;
(e) CRSL and Grant Shand each to indemnify Mr Bligh in a sum equivalent to 40 per cent of the total sum Mr Bligh is required to pay to EQC and IAG pursuant to the costs judgment in Bligh v Earthquake Commission;4
1 Bligh v Earthquake Commission [2016] NZHC 2619.
2 Bligh v Earthquake Commission [2017] NZHC 995.
3 Bligh v Earthquake Commission [2017] NZHC 3179.
[6] Grant Shand has applied for a review of the Associate Judge’s decision. The application for review is opposed by Mr Bligh and IAG.
The relevant law on review
[7] No issue was taken with the submission by counsel for Grant Shand that the applicant bears the burden of persuading the Court that the Associate Judge’s decision was wrong. My task is to make my own assessment as to whether that decision was wrong.6
[8] Counsel also accepted that, to the extent the Associate Judge was exercising a discretion, Grant Shand must persuade the Court that the Associate Judge made an error of law, failed to take into account a relevant factor, took into account an irrelevant factor or was plainly wrong.
Associate Judge Osborne’s decision
[9] The Associate Judge found there were wasted costs in relation to the four days leading up to and including the first scheduled day of trial.
[10] The Associate Judge found that, given the situation which confronted Mr Bligh at the start of trial on 31 October 2016, he would have obtained an adjournment for trial (albeit on conditions) had the appropriate application been made. That was also the situation on Friday 28 October 2016. He found that, by that time:7
Mr Bligh had been successful in having the default judgment set aside, in doing so, he had obtained an indulgence in circumstances where EQC/IAG had not contributed to Mr Bligh’s original default.
5 Bligh v Earthquake Commission, above n 1.
7 Bligh v Earthquake Commission, above n 3, at [29].
... it must have been obvious to those involved on Mr Bligh’s side (apart from Mr Bligh) that the trial was unlikely to be able to proceed. Mr Bligh had that week refused to accept Grant Shand’s advice as to settlement. CRSL had the right to cancel the funding contract if Mr Bligh did not “cooperate” with CRSL and its advisers and give CRSL instructions which allowed CRSL to act in Mr Bligh’s best interests.
[11] Associate Judge Osborne found that matters had developed to a point on Friday morning 28 October 2016 when the need for an adjournment of the commencement of the trial (to enable Mr Bligh to obtain alternative representation) was inevitable. Even with further negotiation, those acting for Mr Bligh were unlikely to achieve such an increase in the defendants’ settlement offer as to persuade Mr Bligh not to go to trial.
[12] EQC and IAG were left in the ensuing period, unaware of what was going on between CRSL, Grant Shand and Mr Bligh, to prepare on the basis the trial was to begin on the coming Monday morning.
[13] Associate Judge Osborne considered that none of the attendances in that intense period of preparation were likely to be of continuing value with the adjourned trial set to take place some 18 months after originally scheduled. He thus found that the attendances for EQC and IAG of 28 to 31 October 2016 were all wasted. That particular determination was not challenged on review.
[14] Associate Judge Osborne carefully set out the legal basis on which a Court might make a costs order against a party’s solicitor, in a way which no party takes issue with on this review: 8
- [53] It is within the inherent jurisdiction of this Court to make a costs order against a party’s solicitor.
[54] The basis on which the Court intervenes is that the solicitors conduct has tended to defeat justice in the very cause in which they were engaged professionally.
...
[56] The jurisdiction is at once compensatory (in that the Court directs its attention to costs that would not have been incurred but for the solicitors’ failure to fulfil a duty to the Court) and punitive (to punish the offending
practitioner, not the parties, for a failure of duty).9 The focus of the Court’s enquiry is on whether there has been a breach of duty to the Court, not whether there has been a breach of the rules of professional conduct.10
[15] There must have been a serious breach of duty to the Court, “a simple mistake or oversight or a mere error of judgment will not, of itself, be sufficiently serious to fall into that category ...”. Epithets such as “a serious dereliction of duty” and “gross negligence” have been considered appropriate. Where negligence or incompetence is alleged, the conduct must be put into its proper context.11
[16] Associate Judge Osborne also cited the statement from the Privy Council in
Harley v McDonald:12
As a general rule, allegations of breach of duty relating to the conduct of the case by a barrister or solicitor with a view to the making of a costs order should be confined strictly to questions which are apt for summary disposal by the Court. Failures to appear, conduct which leads to an otherwise avoidable step in the proceedings or the prolongation of a hearing by gross repetition or extreme slowness in the presentation of evidence or argument are typical examples. The factual basis for the exercise of the jurisdiction in such circumstances is likely to be found in facts which are within judicial knowledge because the relevant events took place in Court or are facts that can easily be verified. Wasting the time of the Court or an abuse of its processes which results in excessive or unnecessary cost to litigants can thus be dealt with summarily on agreed facts or after a brief enquiry if the facts are not all agreed.
And from the Court of Appeal in Westpac New Zealand Limited v Fonua:13
We observe that it will normally be only when serious wrongdoing appears on the face of the record or where the solicitor chooses to waive privilege that the Court can investigate whether a costs order against a solicitor is practicable.
[17] Associate Judge Osborne noted that Mr Bligh had waived privilege. Detailed evidence had been given by Mr Bligh, Mr Shand and Mr Ferguson. Mr Ferguson was the solicitor from Grant Shand who had carriage of the litigation at the relevant time.
10 Bligh v Earthquake Commission, above n 3, citing Harley v McDonald, above n 8, at [51].
11 Harley v McDonald, above n 8, at [55].
12 Bligh v Earthquake Commission, above n 3, at [58], citing Harley v McDonald, above n 8, at [50].
13 Westpac NZ Limited v Fonua [2010] NZCA 471 at [35].
[18] Associate Judge Osborne carefully set out the factual background to the determinations he had to make in paras [76] to [128](m) of his judgment. Largely, there was no issue with what he recorded. In para [74] of his judgment, the Associate Judge said his decision was based on what happened between 31 October 2016 and 1 November 2016. The reference to those dates would appear to have been a slip. He went on to say “everything that is relevant occurred in a limited period in October 2016” and detailed what occurred in October.
[19] Against that narrative, Associate Judge Osborne discussed the apportionment of responsibility between CRSL, Grant Shand and Mr Bligh as follows:
Discussion – apportionment of responsibility between CRSL, Grant Shand and Mr Bligh
[121] Under Mr Bligh’s funding contract, the responsibility for managing and prosecuting his claim lay with CRSL. The responsibility for legally presenting the claim lay with Grant Shand.
[122] It would have been evident to legally experienced people well before the weekend of 29 – 30 October 2016 that a number of problems could confront Mr Bligh as the trial date arrived. Mr Bligh’s bullish view of his prospects was reinforced up until a very late point by the equally bullish view taken by Mr Staples of CRSL. There was a great likelihood that, if Mr Staples’s view were to be changed near trial, then Mr Bligh would not be persuaded to accept that view. The prospect of cancellation of the funding contract was not raised with Mr Bligh until the last working day before trial.
[123] Both CRSL and Grant Shand failed at a sufficiently early point to address the possibility that either CRSL or Grant Shand (or both) might withdraw from involvement. Mr Bligh was not on notice, until too late, of the possible need for an adjournment while fresh counsel became involved. The responsibility for that substantially lies with CRSL and Grant Shand. Both had the responsibility to guard Mr Bligh’s best interests and to do so in a timely way, having regard to the pressure he would be under as a litigant coming to trial and to his particular personal health issues.
[124] For his part, Mr Bligh, after the event of the cancellation of CRSL’s funding contract and the withdrawal of Mr Ferguson, contributed in some degree to the extent of wasted costs through his absence from Court over the entire day on 31 October 2016. In the stress of the situation that day, there is explanation for his non-attendance but he had, through Mr Ferguson’s clear direction to come to Court, the opportunity to at least reduce the extent of wasted costs that ensued.
[125] It is appropriate to apportion responsibility, as between themselves, as 40 per cent to CRSL, 40 per cent to Grant Shand and 20 per cent to Mr Bligh.
[126] Their combined conduct led to the defendants’ incurring wasted costs in the 29 – 31 October 2016 period. It also resulted, when the trial was
subsequently not able to be rescheduled for 16 months, in IAG’s wasted costs of earlier preparation.
[127] To the extent that Mr Bligh has costs thrown away through the aborted trial, CRSL and Grant Shand bear, as between themselves, the same degree (40 per cent each) of responsibility.
Application of principles to facts
EQC and IAG claim against Mr Bligh
[128] As between Mr Bligh and the defendants, Mr Bligh must accept a liability for the wasted costs occasioned by the aborted trial (whether or not CRSL and/or Grant Shand also have responsibility).
[129] I have found that the wasted attendances for both IAG and EQC were those of 28 – 31 October 2016 (inclusive). I have also found it is just that the parties who caused the wasted costs be ordered to pay the actually wasted costs (not a scale award).
[130] The awards I make for the 28 – 31 October 2016 wasted costs (for both EQC and IAG) will therefore be in relation to the actual costs incurred. Similarly, the order I make in favour of IAG for the earlier preparation will be calculated by reference to the actual incurred costs. Leave will be reserved to the liable parties to have the reasonableness of the relevant fees on a solicitor/client basis determined by the Court if there is disagreement between the parties.
[20] Associate Judge Osborne found that CRSL’s liability for costs to IAG was co- extensive with Mr Bligh’s.
[21] Referring to the principles to be considered, as set out in Harley v McDonald, the Associate Judge said:
[138] I have found the conduct on the part of Grant Shand cannot be classified as a simple mistake, oversight or a mere error of judgment. There was a serious dereliction of the duty owed to the Court to guard against there being an adjournment (or, worse still, the risk of a default judgment followed by setting aside and a new trial date) in circumstances where there was sufficient time to avoid a last-minute adjournment or abandonment of trial with all the costs implications and impact on Court resources.
[139] As Between Grant Shand and the defendants, Grant Shand’s liability is co-extensive with Mr Bligh’s.
[140] I have found that Grant Shand’s responsibility, as between himself and Mr Bligh, was equal to that of CRSL (40 per cent of the responsibility).
[22] As to Mr Bligh’s claims against CRSL and Grant Shand, Associate Judge Osborne decided:
[145] The Privy Council in Harley v McDonald, in the passage quoted at
[58] above, recognised that it would only be in cases where the facts are clearly before the Court or immediately and easily verifiable that a Court would contemplate a costs order in favour of the client against their own lawyer. The Privy Council noted that conduct of the case outside the courtroom is unlikely to be of that character. This summary jurisdiction is not intended to be the vehicle for adjudicating on the negligence issues as between client and solicitor. Such is the appropriate domain of a distinct negligence proceeding.
[146] I am satisfied that this unusual case falls within the limited class of case in which the summary jurisdiction is appropriate. Although the events of October 2016 require a relatively lengthy narration, they are clearly before the Court. Such differences as exist in the evidence of the parties do not preclude conclusions as to the clear degree of responsibility of CRSL and Grant Shand in the circumstances which gave rise to the events on 31 October 2016.
[147] The combined conduct of CRSL and Grant Shand in contributing to the events of 31 October 2016 impacted on Mr Bligh no less than it impacted on the defendants in favour of whom wasted costs orders will now be made. It is just that CRSL and Grant Shand contribute to Mr Bligh’s thrown-away costs in the same proportion as they contribute to the defendants’, with Mr Bligh left to bear his own degree of responsibility (which I have found to be 20 per cent).
[148] The sums thrown away by Mr Bligh are the payment he must make on the costs award for the setting aside judgment and the actual and reasonable fees he incurred in instructing his new solicitor to apply for and obtain the setting aside order. On the evidence he has not established other wasted costs.
Submissions for Grant Shand
[23] For Grant Shand, Mr Napier submitted the applicant’s essential position was that the Judge was wrong to categorise the actions or omissions of Grant Shand as:
... a serious dereliction of the duty owed to the Court to guard against there being an adjournment (or, worse still the risk of a default judgment followed by setting aside and a new trial date).
[24] Mr Napier argued that there was no feasible action Grant Shand could have taken which would have averted the need for an adjournment and that, as recorded in the judgment, Grant Shand acted diligently in preparing the case for trial while also trying to settle the proceedings until its retainer was terminated. He submitted that Grant Shand was not in a position to second-guess the termination of its retainer or to communicate that to the other parties. Mr Napier argued that, if that submission was not accepted, then such a failure could not be categorised as gross negligence or a breach of a duty to the Court sufficient to permit the Court to make an order for costs.
[25] He submitted, without referring to authority, that counsel does not have a duty to guard against there being an adjournment so, if Grant Shand’s default in this case was its failure to seek an adjournment, that would not be a basis for an award of costs against it as solicitors. He submitted, if there was such a duty, any breach of that duty was not so serious as to justify an award of costs.
[26] Mr Napier also submitted the factual basis for any award was not so clear as to be easily verifiable, thus permitting an award of costs by way of summary disposal in the manner that is essential for there to be an award of costs against a solicitor.
[27] In the alternative to those submissions, Mr Napier submitted that the quantum of the award was too high.
[28] I note that a further memorandum was provided by counsel for Grant Shand after the matter had concluded but before delivery of this judgment. That memorandum refers to a recent decision of Gordon J in Tian v Zhang.14 The circumstances of that case meant the judgment was of little relevance in this review and I did not consider it further.
Submissions for IAG
[29] For IAG, Mr Smith supported the decision as being properly arrived at, following detailed analysis and argument. Mr Smith said the focus had to be on the period 28 to 31 October 2016. Mr Smith highlighted various matters that had occurred between 5 October 2016 and 27 October 2016, Grant Shand’s inability to persuade Mr Bligh to settle by 27 October 2016 and the fact that, despite this, Mr Ferguson confirmed he was continuing to prepare for trial.
[30] Mr Smith submitted Grant Shand knew before the weekend of 29 to 30 October 2016 that it was very likely funding would be withdrawn if settlement was not reached, that there would accordingly be no prospect of Mr Bligh having Mr Ferguson represent him at Court and that an adjournment of the trial would have to be sought. He submitted Grant Shand had been in breach of its obligations in not giving notice to
14 Tian v Zhang [2018] NZHC 1701.
other parties of the issues or the possible need to seek an adjournment. He submitted, because of this and because Grant Shand did nothing to assist in Mr Bligh obtaining alternative counsel, there was no time for new counsel to come up to brief or to seek an adjournment earlier so as to avoid the parties having to prepare for the trial over the weekend.
[31] Mr Smith supported the decision on the basis there was no error in the judgment and Grant Shand’s conduct involved a serious dereliction of a duty to the Court.
Submissions for Mr Bligh
[32] In his submissions for Mr Bligh, Mr Lynn supported the judgment of the Associate Judge as “a well structured analysis of the law and facts”. He supported the Associate Judge’s conclusion that there had been a serious dereliction of the duty owed to the Court to guard against there being an adjournment “or, worse still, the risk of a default judgment followed by setting aside and a new trial date”.15 He said there were two things Grant Shand could have done, either have Mr Ferguson continue to appear as counsel or have Mr Ferguson ask for an adjournment.
[33] Mr Lynn suggested the Associate Judge’s decision was based on the fact Grant Shand was still preparing for trial (and allowed the other parties and Court to continue to prepare for trial) beyond the point when it was clear the trial would neither go ahead, nor would it settle. He argued that, by the morning of 28 October 2016, Grant Shand had all the information it needed to determine there was no option but to adjourn to allow Mr Bligh time to explore his options for alternative representation.
[34] Mr Lynn said the findings the Associate Judge made as to when Mr Bligh was told of the termination of the retainer were open to him but acknowledged the position as to that was not absolutely clear. He submitted however that, if there was a mistake over the conclusion he reached in this regard, it was of no significance because the Judge’s ultimate conclusions were based on Grant Shand’s failure to act as was required on 28 October 2018 to ensure an adjournment.
15 Bligh v Earthquake Commission, above n 3, at [138].
[35] Mr Lynn submitted that Grant Shand’s failure to take steps to obtain an adjournment on 28 October 2016, when it was clear an adjournment was necessary, could be categorised as falling within the broad category of failure to comply with the duty to conduct cases efficiently and expeditiously.
[36] Mr Lynn also submitted lawyers have a duty to the Court to ensure that adjournments are not unnecessarily brought about, as referred to in academic writing such as Ipp J’s 1998 article on lawyers’ duties to the Court.16 He submitted that the underlying facts necessary for the Judge to make the findings he did were sufficiently clear, easily verifiable and capable of summary disposal, because of the common ground between the parties over the facts and the affidavits filed by both Mr Shand and Mr Ferguson. Mr Lynn concluded by saying the Judge’s decision could be justified because of the breach of Grant Shand’s duty to the Court to guard against there being an adjournment.
The basis of my assessment
[37] Associate Judge Osborne said in his decision that he was not addressing in any detail the standard of the professional work undertaken for Mr Bligh in the initial preparation of his claim, the instructing of experts, formulation of pleadings, the setting down for trial or the briefing of evidence, and was not making any determination as to whether Mr Bligh’s claim was “hopeless”. He noted that it was not possible for him to make a substantive determination of “hopelessness” because he was considering the issue of costs when the substantive case had not yet been decided. The claim for wasted costs arose because of events which led to the trial not proceeding on its scheduled date, with it still to be heard some 16 months later.
[38] When I heard the application for review, I had presided over the rescheduled trial but had not yet delivered my judgment. It was not however suggested by any party that the outcome of the substantive hearing might be relevant to the decision I would have to make on this review.
16 D A Ipp “Lawyers Duties to the Court” (1998) 114 LQR 63 at [98].
[39] Associate Judge Osborne held that everything relevant occurred in a limited period in October 2016 and he was not required to make an assessment of a claim yet to be substantively heard.
[40] I have also considered the correctness of Associate Judge Osborne’s decision against all the evidence that was available to him at the time. The conclusions I arrived at as to the merits of Mr Bligh’s claim, as detailed in my judgment of 16 August 2018, were thus of no relevance to the assessment I had to make on this application for review.
[41] Like Associate Judge Osborne, I base my decision essentially on what occurred during October 2016. I nevertheless set out some of the early background because it explains why Mr Staples’ involvement in the days just prior to the scheduled trial was significant. The background also explains how Grant Shand came to find itself in the situation it had to face in the week just prior to trial. What happened in the proceedings through to October 2016 is also relevant in considering whether realistically Grant Shand could have expected to obtain an adjournment had an application for an adjournment been made a few days before the trial was due to begin.
The litigation background
[42] The most serious earthquake, as far as Mr Bligh’s house was concerned, was the Darfield earthquake of 4 September 2010.
[43] EQC declined Mr Bligh’s claim on 3 March 2011. IAG followed similarly soon after that.
[44] In 2012, Mr Bligh met with Mr Brian Staples. On 28 November 2012, Mr Bligh signed a service agreement with CRSL. CRSL was engaged to give advice about the merits of his insurance claim, resolution strategy and claim settlement in exchange for an initial fee of $750. CRSL was also to take on the prosecution of Mr Bligh’s claim on a no win, no pay basis for 10 per cent of the final settlement if successful. Mr Bligh was responsible for costs, including legal, quantity surveyor, independent reports and assessment costs, up to $10,000. Such costs above that were to be borne by CRSL.
[45] The shares in CRSL were held by the Staples Group Ltd. Mr Brian Staples was the director of CRSL. CRSL was an advocacy service and litigation funder primarily for homeowners wishing to bring claims against EQC or insurers on claims arising out of the Canterbury earthquake sequence in 2010 and 2011.
[46] At his first meeting with Mr Staples, Mr Bligh was told Grant Shand would be the solicitors taking the case. Earthquake Services, associated with Mr Staples, inspected his property and provided a report dated 22 January 2013. Included in the executive summary of the report was a reference to Mr Staples’ 20 years’ experience as a loss adjustor and insurance factual investigator in Australia. The report referred to an inspection of the property carried out by two “damage assessors”. Neither of them was an engineer. The report included the page set out below:
[47] On 7 February 2013, Mr Bligh signed an agreement with CRSL to act for him in respect of any damage or loss relating to his property. It mirrored the earlier service agreement. The agreement provided for CRSL to take on the prosecution of the claim on a no win, no pay basis and an entitlement to 10 per cent of the final settlement already referred to. CRSL was entitled to terminate the agreement if Mr Bligh rejected CRSL’s advice.
[48] Grant Shand filed a claim against EQC and IAG on 23 July 2013 for the alleged rebuild costs of Mr Bligh’s house at $963,000.
[49] On 29 October 2013, consistent with the protocols for the prosecution of earthquake claims in the High Court, a Judge directed that the parties’ experts were to complete a joint review of the property on or before 29 January 2014 and to provide a report to the Court on or before 12 February 2014. The Court directed the experts to record the nature and extent of earthquake damage to the house and, in particular, to consider the nature and extent of any pre-existing damage to the house and the degree to which that damage had been exacerbated (if at all) by the earthquake of September 2010.
[50] On 17 September 2014, the Court recorded its concern that the report provided for Mr Bligh did not appear to be from people who were suitably qualified to provide the report or to be engaged as expert witnesses in the High Court.
[51] On 11 November 2014, Wylie J in the High Court noted an engineer’s report had been filed for Mr Bligh. EQC/IAG had advised they disagreed with that report.
[52] On 12 December 2014, Grant Shand filed an amended statement of claim based on repair, rather than rebuild, costs of $596,244.
[53] On 11 June 2015, the Court noted delays in Mr Bligh’s engineer doing what was required of him for a joint report to be submitted to the Court. The Court directed that, if his comments on the draft joint report prepared by the experts for EQC/IAG were not received by 5.00 pm on 12 June 2015, the proceedings would be stayed, that is, Mr Bligh would not be able to continue with the proceedings.
[54] On 8 December 2015, the Court noted advice from counsel for all parties that the proceedings were ready for hearing. The Court directed the matter was to proceed to a hearing for seven days on 31 October 2016 and timetabled directions for the parties to serve briefs of evidence for the hearing.
[55] In a minute of 5 August 2016, Nicholas Davidson J noted Mr Bligh had been in default in serving witness statements and the concerns of EQC/IAG that those delays meant they and their experts would have insufficient time to be ready for trial on 31 October 2016. The timetable was amended. Mr Bligh’s reply briefs were to be served by 21 September 2016.
[56] On 12 September 2016, there was an unsuccessful settlement conference (it is reasonable to assume that, with that conference, Mr Bligh was well aware of the basis on which his claim was being resisted by both EQC and IAG).
[57] Until late September 2016, a solicitor within Grant Shand’s office, Mr Morriss, had the conduct of Mr Bligh’s claim. During September 2016, Mr Morriss continued to prepare for trial.
The events of October 2016
[58] On 5 October 2016, Mr Morriss drafted an email for another solicitor at Grant Shand, Andrew Ferguson, who was to have primary conduct with the file to and at trial. The email explained weaknesses in the case, the prospect that, if Mr Bligh lost, EQC and IAG would be seeking costs of over $100,000 or even $200,000, and suggested that if EQC/IAG were to offer no more than the sum of $31,000 already offered, Mr Bligh should accept the offer. There were communications between Mr Morriss and Mr Ferguson about this but the email was not sent to Mr Bligh.
[59] On 5 October 2016, Mr Bligh sent to his advisers an email attaching photographs of his property from the 1980’s. Mr Morriss forwarded these to Mr Ferguson and Mr Shand. He noted the photographs showed some work being done to replace a wooden beam that had been on top of the ground floor walls of his house, supporting the first floor brick walls. Mr Morriss said the photographs provided by Mr Bligh were consistent with the EQC engineer’s theory as to what had caused
damage to the brick walls of the house prior to the earthquake so that the damage to the walls would not have been caused by the earthquake.
[60] On 7 October 2016, Mr Ferguson and Mr Morriss had a long conversation with Mr Bligh about the points in Mr Morriss’ email. Mr Ferguson said Mr Bligh gave them instructions to negotiate based on the shotcrete solution, a repair solution which had recently been proposed by an expert retained for Mr Bligh. Mr Morriss also talked about a hypothetical situation if EQC and IAG were to pay $150,000 plus a contribution for some accommodation. The only instruction Mr Ferguson recorded was to negotiate on the basis of the shotcrete solution. Mr Morriss made a file note which recorded that Mr Bligh would “reluctantly accept” a payment of $150,000 plus possibly some accommodation.
[61] In his affidavit, Mr Bligh denied that he had given the lawyers such an instruction. Mr Ferguson was adamant that he had.
[62] Grant Shand’s office started obtaining details and costings of the shotcrete solution.
[63] Associate Judge Osborne was critical of inadequate recording of the instructions by the Grant Shand solicitors and of a failure to convey their concerns as to the weaknesses in his case in writing to Mr Bligh. I note however that, if there were failings in this regard, they did not involve a breach of the lawyer’s duty to the Court. Nor were they a reason for Grant Shand ultimately withdrawing as Mr Bligh’s lawyers.
[64] After a telephone conference with counsel on 10 October 2016, Nicholas Davidson J noted that “this trial will proceed on 31 October 2016. The parties are continuing to discuss settlement but the fixture is, on balance, expected to proceed.”
[65] On 12 October 2016, Mr Morriss emailed Mr Dwyer of CRSL explaining the shotcrete repair proposal and noting the cost to remediate the property would be about
$150,000. Mr Dwyer was a lawyer who, since 3 October 2016, had been the general manager of CRSL.
[66] On 20 October 2016, Mr Ferguson received from EQC and IAG a joint offer at a figure well below the $150,000 mark. Mr Ferguson discussed with Mr Dwyer the possibility of getting Mr Bligh to agree to a counter-offer still much below the
$150,000 mark but considered it would be better for CRSL to seek Mr Bligh’s instructions on that figure rather than for Mr Bligh to hear further from Grant Shand’s office. Mr Ferguson nonetheless spoke to Mr Bligh’s son, Hayden Bligh, to explain that he had doubts as to Mr Bligh’s prospects of success at trial.
[67] On 20 October 2016, Mr Dwyer spoke to Mr Bligh about a possible counter- offer. Mr Bligh instructed him that he did not want to settle as he viewed the claim as being over-cap.
[68] On 21 October 2016, the Court issued a further minute following a telephone conference with counsel referring to various issues that had arisen with regard to the evidence that had either been served recently or was still to be provided. The expectation from all counsel was that the proceedings would be going to trial.
[69] On 22 October 2016, Mr Ferguson wrote a detailed email to Mr Staples and Mr Dwyer setting out difficulties with the case. Mr Ferguson said he was not confident earthquake damage could be proved. He referred to Mr Bligh’s costs exposure on an unsuccessful claim at around $240,000 and asked for confirmation that Mr Staples would pay EQC and IAG’s costs if the claim was unsuccessful.
[70] In response, Mr Staples indicated in an email of 22 October 2016 that he was very disappointed with the way Grant Shand was dealing with the claim, and that he considered a report from Mr Kearney, a new engineer that was assisting Mr Bligh, “was good” and EQC’s engineer was “rubbish”. He also said that Mr Bligh would negotiate but what was being offered was nothing but a joke.
[71] On Tuesday 25 October 2016, Mr Dwyer told Mr Staples that Mr Staples and Mr Bligh had taken a position at odds with the lawyer and the experts. Mr Bligh was settling in for a court battle. Mr Dwyer then said that there would be a substantial liability to CRSL for costs if Mr Bligh lost on the “no win, no cost” basis of their contract with Mr Bligh. He said the only way CRSL could avoid that cost would be
if they terminated CRSL’s agreement with Mr Bligh on the basis that he was not following CRSL’s recommendation to settle.
[72] On 26 October 2016, Mr Staples indicated he would be willing to talk to Mr Bligh “next week” (that is the first week of the trial), to “talk him down from the tree if that is what is needed”.
[73] On Thursday 27 October 2016, Mr Ferguson, Mr Morriss and one of Mr Bligh’s experts, Mr Csiba, went to look at Mr Bligh’s property. Mr Ferguson said he had conversations with Mr Bligh about proving damage, about strategy and about costs outcomes if Mr Bligh was unsuccessful. Mr Bligh’s response was to place costs liability on CRSL. Mr Bligh stated that at the meeting Mr Ferguson told him, in person for the first time, he thought Mr Bligh had a weak case and should settle. Mr Ferguson noted that he had explained to Mr Bligh that $100,000 would be “a good outcome”. He also explained to Mr Bligh costs risks and that, if Mr Bligh lost, costs would be over $200,000. Mr Ferguson said Mr Bligh’s response was that it was Mr Staples who would be up for costs.
[74] Given the evidence from Mr Ferguson as to the discussions the lawyers had with Mr Bligh around the settlement conference and on 7 October 2016, it is unlikely it was only on 27 October 2016 that Mr Ferguson had told Mr Bligh for the first time he thought Mr Bligh had a weak case and should settle.
[75] At 5.22 pm that afternoon, Mr Ferguson emailed Mr Bligh setting out fresh offers from EQC and IAG. Mr Ferguson recorded that Mr Bligh had previously instructed Grant Shand to offer $150,000. He recommended Mr Bligh to accept
$150,000 or less. He also told Mr Bligh of his potential liability for costs of $240,000.
[76] Mr Bligh responded by email on Thursday 27 October 2018 at 7.46 pm. He began his email by saying that he had time to reflect the conversation he had with Mr Ferguson and thanked Mr Ferguson, Mr Morriss and Mr Csiba for coming out to his house that day. He indicated firmly that he would not accept an offer of $150,000 and was wanting a settlement for “many many times that amount”.
[77] When Mr Staples received a copy of Mr Bligh’s email, he forwarded it to Mr Dwyer and said “I think this is an opportunity for us to bow out with Ricky [Mr Bligh]. If Andrew [Ferguson] could get [$150,000], Ricky should accept.”
[78] On Thursday 27 October 2016 at close to 9.00 pm, EQC and IAG emailed another offer to Grant Shand. It was emailed immediately through to Mr Bligh. At
9.36 pm, Mr Bligh emailed back indicating, in no uncertain terms, that he would not accept that offer.
[79] At 7.13 am on 28 October 2016, Mr Bligh emailed Mr Ferguson indicating he considered he had no exposure to costs because his contract with EQS (a reference to Earthquake Services, a company closely associated with Mr Staples and CRSL) was no win, no pay. He said he was sure Mr Staples was confident [Mr Ferguson] would win and said he could not see why his case was so difficult when it was obvious to him that the other side were prepared to lie and perjure themselves.
[80] On the morning of Friday 28 October 2016, Mr Ferguson emailed Mr Dwyer and Mr Staples. He advised them that he believed EQC/IAG would offer more to settle the claim. Mr Dwyer then emailed Mr Bligh. He made it clear that CRSL agreed with the advice Mr Ferguson was giving Mr Bligh. He warned Mr Bligh that, if he did not want to settle, CRSL would terminate their agreement.
[81] Mr Ferguson attended a final pre-trial conference on Friday 28 October 2016 at 2.15 pm with Clark J. On Friday, he filed and served a synopsis of his opening submissions.
[82] On Friday 28 October 2018 at 2.39 pm, Mr Staples emailed Mr Bligh. He endorsed Mr Dwyer’s email. He said “we don’t believe you will win what you think you will. I simply cannot support a case that winning is doubtful.”
[83] On Saturday 29 October 2016, Mr Bligh made efforts to contact lawyers who might assist him if Grant Shand stopped acting. He was unsuccessful.
[84] Mr Ferguson said that his settlement negotiations with the EQC/IAG’s solicitors continued on 29 and 30 October 2016. Mr Bligh’s engineer also had telephone discussions with EQC’s engineer but Mr Ferguson received an email at 8.02 pm on a Sunday evening advising the experts could not agree on a repair scope which might have led to a settlement.
[85] Mr Ferguson said he believed there might have been one final opportunity to settle the case on 31 October 2016 following the site visit set down for 8.30 am. He said, on the morning of 31 October 2016, EQC/IAG’s solicitors were still interested in talking about a settlement. Mr Ferguson spoke to Mr Bligh in a final attempt to ask him to come down to an amount which might have been accepted by EQC/IAG. Mr Bligh refused to lower his settlement expectation.
[86] On the morning of the trial, Clark J conducted a site visit in the company of counsel. Mr Bligh was in a car near the property. During that time, Mr Staples telephoned Mr Bligh. Mr Staples tried to persuade him to settle as Mr Dwyer had urged in his 28 October 2016 email. Mr Bligh said he did not wish to negotiate and wished to proceed. Mr Staples told him that, if he did not negotiate, CRSL would withdraw funding. Mr Staples said that during the conversation he told Mr Bligh there was nothing more he could do to assist Mr Bligh as the funding contract was cancelled. Mr Staples said, following that conversation with Mr Bligh, he confirmed the cancellation to Mr Ferguson.
[87] Mr Ferguson said in his affidavit that, before he was told of the cancellation of the agreement, he told Mr Bligh that he was going to Court to begin preparing for the hearing. He also told Mr Bligh to be present at Court at 11.00 am and that they planned for Mr Bligh to give his evidence first. Mr Ferguson said Mr Bligh told him he would let the engineer, Mr Kearney, into the property and would then meet the lawyers at Court at 11.00 am.
[88] It was after that conversation, around 9.45 am, Mr Ferguson, and thus Grant Shand, was advised by CRSL for the first time that the funding contract was cancelled.
[89] Associate Judge Osborne referred to Mr Bligh’s evidence as to what happened after 10.00 am, as set out in the affidavit Mr Bligh filed in support of his application to set aside the default judgment and as recorded in a judgment of Matthews AJ setting aside that judgment. Mr Bligh had said in his affidavit that, as Mr Ferguson was leaving, Mr Ferguson told Mr Bligh he should be at Court at 11.00 am, and Mr Bligh thought that Mr Ferguson told him that he had to withdraw as counsel but he was not sure. Mr Bligh said he was upset and confused about what exactly was to happen but he waited at the property to let in his engineering expert, Mr Kearney.
[90] Mr Bligh was still at the home at 11.49 am when he received a call from Mr Ferguson and two minutes later a call from Mr Morriss. Mr Bligh said that he thought Mr Ferguson told him he had withdrawn because CRSL had withdrawn its funding. He also said that Mr Ferguson might have explained this to him earlier in the day but this was the first time he really understood the funding had been withdrawn, Mr Ferguson would abandon his representation and the trial would not proceed. Mr Bligh said Mr Ferguson went on to advise that it was important for him to get to Court as soon as possible and that he had to either contact the Court or go there.
[91] Associate Judge Osborne said that it was:
Mr Bligh’s evidence that he was not informed by Mr Ferguson (or anyone else on behalf of Grant Shand) that the firm was ceasing to act for him until the call which Mr Bligh specifically records as occurring at 11.49 am. Mr Ferguson does not challenge that evidence. I find the call to have been made, with the content as relayed by Mr Bligh, at 11.49 am.
[92] The hearing began in Court shortly before 11.30 am. Associate Judge Osborne found that, at that stage, the retainer between Grant Shand and Mr Bligh remained on foot. He found that Mr Bligh had not been told in clear terms what might occur if he was not at Court at 11.00 am. He was not told that Mr Ferguson intended to seek leave to withdraw.
[93] Associate Judge Osborne then referred to Clark J’s judgment as to what occurred in Court that morning.
[94] In her judgment, Clark J said:17
[2] In accordance with a pre-trial direction given by Davidson J on 10 October 2016 I met with all counsel at Mr Bligh’s home at 8:30am on 31 October 2016 for the purpose of a site visit. When I arrived counsel were engaged in settlement discussions.
[3] On returning to the court following the site visit I was advised that plaintiff’s counsel wished to address me in chambers concerning a recent development. The matter was called shortly before 11:30am and Mr Ferguson advised that the plaintiff’s litigation funder had terminated his agreement with Mr Bligh on the basis of Mr Bligh’s “non-cooperation”. Consequently Mr Bligh has no ability to pay his legal advisers and in the absence of any agreement about payment Mr Ferguson sought leave to withdraw.
[4] In response to my concern and queries about Mr Bligh, Mr Ferguson confirmed he had advised Mr Bligh:
(a) that he, Mr Ferguson, would be making an application to the Court for leave to withdraw;
(b) that Mr Bligh should be in attendance;
(c) that Mr Bligh had been advised of the consequences of the withdrawal of funding; and
(d) in response to Mr Bligh saying he wished to arrange legal aid, that it was unlikely he could do that in the time available before the hearing was due to commence and that Mr Bligh should come and speak to the Court about it but it appeared he had chosen not to do so.
[5] My further exchanges with Mr Ferguson were to satisfy myself that the application to withdraw was not attributable to a breakdown in the relationship which might be reparable [sic].
[6] I viewed as inevitable the grant of Mr Ferguson’s application for leave to withdraw there being no basis upon which Mr Ferguson could be required to commit to completion of a seven-day trial18 spread over a fortnight.19 Before formally granting the application I heard from Mr Wood and Mr Smith, counsel for the first and second defendants.
[7] Counsel had only become aware of the withdrawal of funding and of Mr Ferguson’s intended application to withdraw at 11:00am. In circumstances where Mr Bligh had not even turned up, notwithstanding that he had been advised by his counsel to do so, counsel sought judgment dismissing the proceeding. There had been significant wasted costs and serious inconvenience and expense for witnesses including experts.
17 Bligh v The Earthquake Commission, above n 1.
18 Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules 2008, r 4.2.1.
[95] The Associate Judge said the importance of appearing in Court was subsequently explained to Mr Bligh by Mr Ferguson at 11.49 am but Mr Bligh, “feeling quite shocked”, took time to “recover” and arrived at Court only later in the day after the Judge had left.
[96] Mr Napier submitted for Grant Shand that the conclusions Associate Judge Osborne came to, that Mr Bligh had not been told in clear terms what might occur if he was not at Court at 11.00 am and was not told that Mr Ferguson intended to seek leave to withdraw, were findings that he was not entitled to make by way of summary disposal of an issue, as was required if an order was to be made for non-party costs. Mr Bligh’s evidence, as recorded by the Judge, was that he thought Mr Ferguson had told him, when leaving the property, that he had to withdraw as counsel but he was not sure of this.
[97] Mr Napier acknowledged that Mr Ferguson had not said in an affidavit that he had told Mr Bligh that he would be withdrawing as counsel when leaving the property but consistent with his having done so was the fact that, after the hearing had been adjourned and before judgment had been entered, Mr Ferguson called Mr Bligh and explained that the Court had granted his application to withdraw as solicitor, told Mr Bligh that the trial had been adjourned and the defendants had applied for judgment. Mr Napier said the lack of further or precise evidence from Mr Ferguson could be explained by the fact that, in his application for non-party costs of 13 June 2017, Mr Bligh had not complained that he was unaware that Grant Shand would be withdrawing as counsel when CRSL withdrew their funding.
[98] In the bundle of documents the Associate Judge had to consider on the costs application were the affidavits filed on the application to set aside the default judgment. There was no affidavit filed from any solicitor with Grant Shand with regard to that application, no doubt because privilege had not been waived at that stage. However, attached to Mr Bligh’s affidavit filed in support of his application to
set aside the judgment was a letter to Mr Bligh’s solicitor from Keegan Alexander, a firm then acting for Grant Shand. It commented on the affidavit Mr Bligh had initially filed in support of his application to set aside the judgment. That letter conveyed Grant Shand’s position that:
On the day of the hearing, the funder informed that it was not prepared to pay for the trial. The funder had indicated that it may make this decision a few days before this and it [Grant Shand] had been endeavouring to clarify the funder’s position.
... It discussed the funder’s decision with Mr Bligh and informed that it could not run the case without being paid, that as Mr Bligh was not in a position to pay it, it would have to withdraw and Mr Bligh should come to Court as it was unable to continue acting for him.
Mr Ferguson, who conveyed the above information to Mr Bligh, informs that he believed that Mr Bligh understood this.
[99] In his affidavit, Mr Bligh commented in response to that letter that:
It may be true that Mr Ferguson said this, but I can’t confirm that it is as I was very overwhelmed and confused at the time and do not remember exactly what Mr Ferguson told me about having to withdraw, when he did so, and whether or not he explained the consequences of him withdrawing to me.
[100] He also said in that affidavit that:
By Saturday 29 October 2016, it had become evident to me that Grant Shand might not represent me at the hearing of 31 October 2016. No decision had been at that time but I was very concerned about this.
Consistent with that evidence and his being aware that Grant Shand might withdraw as counsel if CRSL cancelled their agreement was the fact that on Saturday he tried to arrange alternative counsel.
[101] When he appeared at Court at the beginning of the scheduled trial, Mr Ferguson told the Judge he had said to Mr Bligh he would be seeking leave to withdraw.
[102] With all that evidence before him, I do not consider Associate Judge Osborne could properly have concluded on a summary basis that, when Mr Ferguson went to Court on 31 October 2016 at 11.00 am, Grant Shand had still been retained by Mr Bligh as his lawyers and believed that Mr Ferguson would be representing him as his counsel.
[103] That error was not however material to the basis on which the Associate Judge found that Grant Shand should be liable for costs.
[104] Associate Judge Osborne found that Grant Shand was at fault because it failed to recognise that, if Mr Staples’ attitude changed, a number of problems could then confront Mr Bligh as the trial date arrived. He found that Grant Shand failed to address sufficiently early the possibility that either Grant Shand or CRSL, or both, might withdraw from involvement and thus failed to take appropriate steps to avoid the need for an adjournment of the trial or the entry of a default judgment.
[105] Both Mr Lynn for Mr Bligh and Mr Smith for IAG supported Associate Judge Osborne’s decision on the basis that, by 28 October 2016, Grant Shand should have determined that it had no option but to seek an adjournment to allow Mr Bligh time to explore his options for alternative representation.
Analysis
[106] I accept that counsel have a duty to the Court to avoid the unnecessary adjournment of trials and the wastage of Court time and resources through either misconduct or serious personal default.20 The threshold for a default of a solicitor to be so serious as to render that solicitor personally responsible for costs, as spelt out in Harley, is high.21
[107] There was however no dispute that CRSL only cancelled the funding agreement on the Monday morning just prior to the start of the trial. Associate Judge Osborne acknowledged that, until Wednesday 26 October 2016, both Mr Bligh and Mr Staples were “bullish” about Mr Bligh’s prospects of success and were expecting the case to proceed. Mr Ferguson was acting in accordance with those instructions.
20 Harvey v Taste Tease Ltd HC Rotorua, CP 219/88; Kamo Sports & Dive Ltd v Harrison Sports (Kamo) Ltd (1993) 7 PRNZ 321 (HC); Arthur Cordery Cordery’s Law Relating to Solicitors (8th ed, Butterworths, London, 1988) at ch 5.
21 Deliu v Chief Executive of the Ministry of Social Development [2012] NZCA 406 (CA) at [41].
[108] Although there was the potential for him to withdraw, Mr Ferguson continued to prepare for the trial and was ready to proceed as counsel if he had to on 31 October 2016. He had filed opening submissions on 28 October 2016, served a brief of evidence in the weekend, attended the site inspection on the morning of 31 October 2016 and, prior to being told of Mr Staples’ cancellation of the agreement, told Mr Bligh he was going to Court to get ready for the trial. In this regard, he was doing what could reasonably be expected of him as counsel to avoid either an adjournment of the trial or the entering of a default judgment.
[109] Associate Judge Osborne found that, despite the fact Grant Shand, and Mr Ferguson in particular, were still preparing for the trial, they should have told both EQC and IAG of the likely issues that could arise with CRSL and the potential for the trial not proceeding on 31 October 2016. The Judge held that, through failing to do this, Grant Shand contributed to EQC/IAG’s counsel working unnecessarily on intensive preparation over 28 to 31 October 2016, so as to be responsible, along with CRSL and Mr Bligh, for wasted costs over those days.
[110] I have to find the Associate Judge was wrong to come to that conclusion. Firstly, it is clear that Mr Ferguson genuinely believed it would be in Mr Bligh’s interests to settle, despite the firmness of Mr Bligh’s views. As well as preparing for the hearing, Mr Ferguson continued to make efforts to obtain an increased offer from EQC and IAG knowing that both Mr Dwyer and Mr Staples were also seeking to persuade Mr Bligh to accept Mr Ferguson’s advice to settle.
[111] Mr Ferguson was copied into an email from Mr Staples to Mr Bligh at 2.39 pm on 28 October 2016. In that email, Mr Staples endorsed the position Mr Dwyer had adopted for CRSL with Mr Bligh. He emailed:
I just tried calling you but no answer. I am still out of the country. I endorse Bill’s [Dwyer] email to you. We don’t believe you will win what you think you will. I simply cannot support a case that winning is doubtful.
As Bill has stated, we will wave [sic] our fee and our own costs. Also I will waive any third party costs that are not recoverable from EQC and the insurer.
Once we cancel the contract you are fully exposed. Please give instructions to Andrew to start negotiating a deal.
[112] At 6.29 pm on Saturday 29 October 2016, Mr Ferguson emailed Mr Bligh saying EQC and IAG had renewed what appeared to be their same most recent settlement offer (the figure had been redacted from the communications which were before the Court). Mr Bligh responded “No and I see you and them in Court Monday morning”.
[113] Mr Staples tried to persuade Mr Bligh to settle on the morning of 31 October 2016 during the site visit.
[114] Had Mr Ferguson told EQC/IAG lawyers on the Thursday night or the Friday that there was a risk a litigation funding agreement would be terminated and Grant Shand would be seeking to withdraw as counsel, any prospect of getting EQC and IAG to increase their settlement offer would have diminished. They might well have been emboldened to withdraw the offers already made.
[115] Grant Shand and Mr Ferguson could not have assumed that, if they had told EQC and IAG of their potential withdrawal, it would necessarily have caused EQC and IAG to stop preparation for the trial. It was not inevitable that the Court would have allowed Grant Shand to withdraw as Mr Bligh’s solicitors at such a late stage.
[116] It is unlikely EQC and IAG would have agreed to an adjournment of the trial in the last week of October 2016 when there was only a possibility that the funding arrangement, which enabled Grant Shand to represent Mr Bligh, might be cancelled, but that had not actually happened.
[117] There had already been considerable delay in getting the proceedings to the point of trial. EQC/IAG and Mr Bligh’s lawyers, and their respective experts, had already completed much of the intense preparation required for a full trial. The Court’s time had been made available for the hearing of the proceedings, meaning the Court time allocated for the trial was not available to other litigants.
[118] That is borne out by what occurred on 31 October 2016. Although Clark J gave Grant Shand leave to withdraw as Mr Bligh’s solicitors at the start of the trial on 31 October 2016, she did not enter judgment until 2 November 2016. By that time, the
Court had received a memorandum from Mr Lynn, the new solicitor Mr Bligh had instructed during the afternoon of 31 October 2016. Mr Lynn had, by memorandum, asked for the proceedings to be adjourned for another early fixture. He told the Judge Mr Bligh was not well. In response, EQC and IAG both opposed any adjournment of the proceedings.
[119] Neither the Grant Shand lawyers nor EQC/IAG counsel could have assumed that the trial would inevitably be adjourned on the basis Mr Bligh would be unrepresented if a request for adjournment was to be made on either 28 October or 31 October 2016.
[120] Nor could Grant Shand realistically have done anything to ensure that, if it did withdraw as Mr Bligh’s solicitors, another counsel would be available to represent Mr Bligh at the trial on 31 October 2016. No counsel would have been able or willing to prepare for a seven day trial within the time available. It would have been very difficult to find counsel willing to assume responsibility for the trial given likely issues over whether they would be paid for all the work they would have to do and what were apparent difficulties with Mr Bligh’s case.
[121] Over those days, the Grant Shand solicitors had no option but to make sure they were ready to proceed to trial on the Monday. This is what they did. I thus consider that, between 27 and 31 October 2016, there was nothing about the way they conducted themselves which put them in breach of their duty to the Court to avoid an unnecessary adjournment of the trial.
[122] Significantly, it is not clear how any failure on the part of Grant Shand to advise Mr Bligh or the EQC/IAG lawyers earlier than it did as to the risks of cancellation and withdrawal would have avoided all the work which was being done by EQC and IAG in preparing for the trial.
[123] The Grant Shand solicitors sought leave to withdraw as counsel at the commencement of the trial. Mr Bligh had wanted them to continue representing him. Mr Ferguson had been ready to proceed. Had they not sought leave to withdraw, the trial would have started and there would have been no wasted costs.
[124] Their application for leave to withdraw as counsel however led to the abandonment of the trial only because Clark J granted them leave to withdraw. She held they were entitled to withdraw, having regard to the provisions in r 4.2.1 of the Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules 2008. That rule referred to the right of a lawyer to terminate a retainer because of the inability or failure of the client to pay a fee on the agreed basis. Referring to the rule, Her Honour considered it appropriate to give Grant Shand leave to withdraw given it was faced with a seven day trial spread over a fortnight.
[125] Another Judge might have refused the Grant Shand lawyers leave to withdraw in these circumstances. Clark J herself had reservations about allowing a solicitor to withdraw in circumstances where that application was made because of the termination of a funding arrangement. Rule 4.2.1 said there could be good cause to terminate a retainer because of inability to pay a fee on an agreed basis, but this was only after a lawyer had sought to terminate a retainer “after giving reasonable notice”. Rule 4.2.1 was also subject to r 4.2.3 which states a lawyer must not:
... terminate a retainer or withdraw from proceedings on the ground that the client has failed to make arrangements satisfactory to the lawyer for payment of the lawyer’s costs, unless the lawyer has—
(a) had due regard to his or her fiduciary duties to the client concerned; and
(b) given the client reasonable notice to enable the client to make alternative arrangements for representation.
[126] The fact remains that the Judge did give the Grant Shand lawyers leave to withdraw. Had they not been given such leave to withdraw, they would have been able to proceed with the trial. It is hard to see how their withdrawal as counsel could be seen as being in breach of a duty they owed to the Court when it was the Court that gave them leave to withdraw. I thus cannot find that, in seeking leave to withdraw, their conduct was such a serious dereliction of duty or so serious as to require an order to be made against Grant Shand for costs.
[127] Judgment was not entered for EQC/IAG immediately after the Grant Shand lawyers were given leave to withdraw. EQC/IAG asked for judgment against Mr Bligh under r 10.8. This entitles a defendant to judgment when a defendant appears at Court to defend a claim but there is no appearance by the plaintiff. Clark J adjourned the
morning’s hearing and said that r 10.8 might not apply in a case where funding had been withdrawn. She said she could hear argument on the point but would ultimately reserve her position and then issue a minute or judgment recording her conclusion.
[128] Clark J’s judgment then records:
[13] In the course of finalising this judgment I received a memorandum filed on behalf of the plaintiff. Mr Bligh has instructed a new solicitor, Grant Cameron of GCA Lawyers. The thrust of the memorandum, signed by Mr Lynn of GCA Lawyers, is to seek an adjournment of the proceeding and also an urgent fixture given the plaintiff’s serious ill health. He is suffering from terminal cancer. Mr Lynn advises that it is not possible to inform the Court at this stage when the plaintiff may be in a position to reconvene the hearing. A case management conference is requested.
[14] Mr Lynn’s memorandum proceeds on the basis of instructions from Mr Bligh including an explanation as to why he was not in Court when counsel sought leave to withdraw. Because it is an important point, and the explanation is at odds with the explanation given by Mr Ferguson, I set out the relevant paragraph of Mr Lynn’s memorandum which was emailed to the registry on the evening of 31 October.
In the time available the Plaintiff has briefly explained:
The Plaintiff was not in Court when this [withdrawal of counsel] occurred. He had been lead to believe through his Counsel that he should remain at the property to which these proceedings relate to meet an engineer. This appears to have been a result of a break down in communications between the Plaintiff and Counsel and no disrespect to the Court was intended.
[15] Mr Ferguson has responded to correct one factual aspect of the memorandum. As it is the correction of a key fact I set out Mr Ferguson’s response in full.
On 31 October 2016 counsel for the plaintiff advised the plaintiff that he had to attend the Court for the hearing. He was specifically advised not to wait to meet with the engineer who was looking at the property that morning.
After counsel for the plaintiff was informed that the funder had cancelled its contract with the plaintiff, counsel told the plaintiff again not to wait for the engineer but go to the Court for the hearing.
[16] I accept Mr Ferguson’s account, as I did when he provided it. I accept also that Mr Bligh meant no disrespect to the Court but the fact remains he failed to appear. And the decision not to appear was made in the face of his counsel’s advice.
[17] It seems to me that an attempt is now made by Mr Bligh to offer an explanation for his non-appearance which suggests a misunderstanding of the type which sometimes leads a court to stand a matter down while inquiries are made and to adjourn the trial.
[18] A joint memorandum from counsel for the defendants records the defendants’ continued opposition to adjournment.
[19] I do not consider an adjournment of the trial is warranted in the circumstances of this case. A court faced with an application for adjournment must take account of the interests of other litigants as well as the public interest in achieving the most efficient use of court resources. The proceeding has been afoot since 2013. The defendants are entitled to certainty and to judgment under r 10.8. Any miscarriage of justice thought to arise from that course may be addressed by an application to set this judgment aside.
[129] Clark J’s judgment of 2 November 2016 concluded with orders confirming Mr Ferguson was given leave to withdraw, EQC/IAG were entitled to judgment and Mr Bligh’s proceedings were dismissed. As is apparent from Clark J’s judgment, it cannot be said that it was inevitable that, with Grant Shand’s withdrawal as counsel, judgment would be given for EQC/IAG against Mr Bligh. The proceedings could have been adjourned. It was because of Mr Bligh’s non-appearance at Court, the history of the proceedings and the way in which the Court wanted to take account of the interests of other litigants as well as the public interest in achieving the most efficient use of Court resources that an adjournment was refused.
[130] Judgment was entered for EQC/IAG because the defendants had appeared for the trial and Mr Bligh, as plaintiff, had not. As the Associate Judge found, Mr Ferguson had told Mr Bligh at the time of the site inspection that Mr Bligh must be at Court at 11.00 am.
[131] Grant Shand’s termination of its retainer and withdrawal as counsel at the beginning of the trial led to judgment being given against Mr Bligh but it was not the reason for that happening, nor was it the reason why an adjournment of the proceedings was refused at that stage.
[132] For all these reasons, I find that Grant Shand’s withdrawal as solicitors, approved by the trial Judge, was not such a dereliction of the duty it had to the Court that it justified Grant Shand being liable for costs Mr Bligh incurred in having the default judgment set aside.
[133] Having reached that view, I need not consider Mr Napier’s alternative submission that the costs awarded were too high. That submission was made primarily because the costs were for a proportion of actual costs incurred and thus on an indemnity basis. I note, however, that CRSL remain liable for a 40 per cent share of the costs Mr Bligh has been ordered to pay. CRSL remain liable for 40 per cent of the costs Mr Bligh incurred with his new solicitors for the extensive work they did on Mr Bligh’s successful application to have the original judgment set aside. CRSL may also have a liability for all costs which Mr Bligh had to pay because of their “no win, no pay” funding agreement with Mr Bligh. I am not determining any issue as to that here.
Conclusion
[134] Accordingly, on review, I quash the various orders which the Associate Judge made requiring Grant Shand to pay costs in these proceedings to Mr Bligh, EQC and IAG.
[135] In all the circumstances, I consider costs on the application for review should remain where they fall.
Solicitors:
GCA Lawyers, Christchurch Chapman Tripp, Wellington Duncan Cotterill, Auckland Keegan Alexander, Auckland.
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URL: http://www.nzlii.org/nz/cases/NZHC/2018/2392.html