Birnie v Outward Limited
[2024] NZHC 1197
•14 May 2024
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE
CIV-2020-485-759
[2024] NZHC 1197
BETWEEN WILLIAM GEORGE PORTER BIRNIE
First Plaintiff
CHARLES GILBERT PEARCE
Second PlaintiffAND
OUTWARD LIMITED
First Defendant
PRICEMAKER LIMITED
Second DefendantROB DACRE ROGERS
Third Defendant
PLAYMAKER LABS LIMITED
Fourth Defendant
Hearing: 13 May 2024 (Judge’s Chambers List) Counsel:
R J Latton for Plaintiffs
T G H Smith for the First, Second and Fourth Defendants No appearance for Third Defendant
Judgment:
14 May 2024
JUDGMENT OF RADICH J
[1] The solicitor on the record for the first, second and fourth defendants, Mr Gascoigne of Mallett Partners, has applied for an order under r 5.41 of the High Court Rules 2016 declaring that he has ceased to be the solicitor on the record for those parties. Leave is sought, also, for Mr Smith, as counsel for the first, second and fourth defendants, to withdraw.
BIRNIE v OUTWARD LTD [2024] NZHC 1197 [14 May 2024]
[2] The orders are sought on the grounds that Mr Gascoigne’s firm, Mallett Partners, and Mr Smith have terminated their respective retainers with the first, second and fourth defendants under r 4.2.1(b) of the Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules 2008 (the Conduct and Client Care Rules) due to the non-payment of fees dating back over nine months.
[3] The application is not opposed by the plaintiffs. The third defendant is not represented but Mr Smith spoke with him before the hearing yesterday morning and he does not oppose the application. Nevertheless, a lawyer, whether a barrister and solicitor or a barrister sole, does not have an absolute, independent right to withdraw once they have committed to a retainer and the Court does need to have regard to issues relating to the administration of justice.
Background
[4] Mr Smith was engaged by the first and second defendants as counsel in February 2021. Bell Gully were his instructing solicitors. In October 2023, Bell Gully withdrew from the proceedings as a result of non-payment of their fees and at that point Mallett Partners were engaged by the first, second and fourth defendants to act on the basis that Mr Smith would continue to be instructed. It is understood that Bell Gully’s fees remain unpaid.
[5] In breach of the terms of engagement of both Mallett Partners and of Mr Smith, Mr Smith’s invoices dating back to August 2023 have not been paid and Mallett Partners’ invoices dating back to November 2023 have not been paid.
[6] The ongoing unpaid invoices have been the subject of concern and repeated unsuccessful attempts on the part of Mallett Partners and Mr Smith to have the invoices, and future cost arrangements, addressed. Despite the invoices being outstanding, Mr Smith and Mallett Partners continued to represent the first, second and fourth defendants, including in opposing, successfully, an application for summary judgment against them by the plaintiffs.1 However, in April this year, they had reached a point at which matters needed to be resolved urgently if they were to
1 Birnie v Outward Ltd [2023] NZHC 3008.
continue to act. On 17 April, Mallett Partners wrote to Mr Dowell, the sole director of the first, second and fourth defendants advising that payment of the outstanding fees of the firm and of counsel needed to be resolved urgently if they were to continue to act.
[7] The 17 April letter informed Mr Dowell further costs that would be incurred, made it clear that Mr Dowell needed to be in touch with them about ongoing arrangements and explained that, otherwise, consideration would need to be given to the respective professional obligations of Mallett Partners and of Mr Smith, including the prospect of terminating the retainer and applying to withdraw from the proceedings. Assistance to find another lawyer was offered.
[8] On 30 April 2024, not having heard in response, Mallett Partners wrote to the first, second and fourth defendants and advised that they and Mr Smith each formally terminated their retainers. They provided draft copies of the interlocutory application to withdraw and the affidavit and memorandum in support.
[9] Mr Smith advised during the hearing of the application that he had spoken to Mr Dowell that morning. It was, it is understood, apparent from that call that the first, second and fourth defendants were not in a position to be able to pay Mallett Partners or Mr Smith for past or future work. Mr Dowell was aware of the hearing of the application this morning but was not able to make a proposal that would assist.2
[10] Mr Smith indicated that he had, in addition, spoken to the third defendant on the morning of the hearing yesterday. He, also, was aware that the application was being heard.
[11] Mr Smith, I accept, has endeavoured purposefully to meet his professional obligations by providing, through Mallett Partners, the first, second and fourth defendants with ongoing extensions of time within which to pay, through looking for alternative solutions and through continuing to undertake substantial work in the hope
2 Mr Smith advised that Mr Dowell had, in addition, authorised the provision of the affidavit and memorandum of counsel, both of 2 May 2024, to the plaintiff. Mr Smith will provide copies to Mr Latton.
that a solution could be found. I accept that the filing of this application comes only after considerable thought on his part over an extended period of time.
Relevant provisions
[12] Under s 4 of the Lawyers and Conveyancers Act 2006, lawyers must comply with a number of fundamental obligations. One of them is to protect the interests of their clients, but subject to their overriding duties as an officer of the High Court.
[13] Solicitors who wish to withdraw may seek leave to do so in the circumstances described in r 5.41 of the High Court Rules. Under that rule, the solicitor on the record for a party who has ceased to act for a party may apply to the Court for an order declaring that the solicitor has ceased to act.3 There is no provision that deals directly with the withdrawal of counsel. But, as a matter of practice, counsel seek the leave of the Court to withdraw and their applications are considered under the Court’s inherent jurisdiction.4
[14] In considering the exercise of that jurisdiction, as with an application under r 5.41, an assessment is needed of where the interests of justice lie. That, in turn, requires the Court to consider:
(a)whether there is good cause to allow solicitors or counsel to withdraw; and
(b)the extent to which there may be prejudice to all parties in a proceeding.
Good cause to withdraw
[15]Rule 4 of the Conduct and Client Care Rules provides:
A lawyer as a professional person must be available to the public and must not, without good cause, refuse to accept instructions from any client or
3 Under r 5.41(2) of the High Court Rules 2016 it is not necessary to make an application if the party has effected a change of solicitor under r 5.40 or if the party has filed and served a notice saying that the party intends to act in person, provides a new address for service and an affidavit verifying service of the notice.
4 Burgess v Monk [2017] NZHC 2618 at [2].
prospective client for services within the reserved areas of work that are within the lawyer’s fields of practice.
[16] Rule 4.2 provides that a lawyer who has been retained by a client must complete the regulated services required by the client under the retainer unless:
(a)the lawyer is discharged from the engagement by the client; or
(b)the lawyer and the client have agreed that the lawyer is no longer to act for the client; or
(c)the lawyer terminates the retainer for good cause and after giving reasonable notice to the client specifying the grounds for termination.
[17] Rule 4.2.1 sets out what amounts to “good cause” for terminating a retainer under r 4.2(c). Under the rule, “good cause” includes the inability or failure of the client to pay a fee on the agreed basis.
[18] Here, the retainers have been terminated for good cause and after giving reasonable notice to the client specifying the grounds for termination.
Extent of prejudice
[19] Generally, the extent of prejudice is assessed by reference to the options that are available should leave to withdraw be granted and the effect of those options on other parties. The Court needs to have regard also to the interests of the public in finality of litigation and in the need for justice to be seen to be done.5
[20] In this case, there is just over a month until the four-day fixture in the proceeding begins.
[21] Under the timetable orders in place for the proceeding, the defendants’ evidence was due to be filed and served on 6 May. Reply evidence is due on 20 May. While Mr Smith had undertaken work on the defendants’ evidence, considerable further work would be required before briefs can be filed.
5 At [49].
[22] However, procedural mechanisms remain available in the proceeding. Mr Rogers, it is understood, will continue to represent himself. Mr Smith advised that, from speaking with him yesterday morning, he has not prepared evidence for the proceeding.
[23] Alternative representation could be arranged for the other defendants or, if steps are not taken, the proceeding can be dealt with on a formal proof basis.
[24] In all of the circumstances, this is not a situation like that alluded to by Dobson J in Bron v Attorney-General where the Court might not be prepared to relieve a solicitor or counsel of obligations to the Court until further steps have been taken.6 And the circumstances do not any way reflect those in Burgess v Monk where Heath J declined to allow counsel to withdraw. In that case, the application to withdraw was made on the 19th day of a trial which would go on for several further weeks and there was no sufficient cause to allow counsel to withdraw.7
[25] The circumstances here are such that it would not in my view be appropriate to require Mallett Partners or Mr Smith to continue to act in the lead-up to trial on an unfunded basis.
[26]Accordingly, it is appropriate for the application to be granted.
Orders
[27]I make orders:
(a)declaring that Oliver Colin Gascoigne has ceased to be the solicitor on the record for the first, second and fourth defendants;
(b)granting Timothy Guy Hanmer Smith leave to withdraw as counsel for the first, second and fourth defendants;
6 Bron v Attorney-General (2009) 20 PRNZ 460 at [10]. Ultimately, in that case, further steps were not required of the solicitors but the case was dealt with through an adjournment (while legal aid matters were being addressed) which was seen to be preferable to allowing the solicitor to withdraw.
7 Burgess v Monk, above n 4, at [50] and [62].
(c)that the address for service for the first, second and fourth defendants is now:
(i)at the following email address: [ ] or
(ii)at the registered offices of the first, second and fourth defendants being, in each case, Level 2, 29 Waterloo Road, Lower Hutt.
(d)that the proceeding is to be called in the Judge’s Chambers List on 10 June 2024 for any directions as to the trial of the proceeding – the date for which is maintained.
Radich J
Solicitors:
Palmer Macauley, Kerikeri for Plaintiffs
Mallett Partners, Wellington for First, Second and Fourth Defendants
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