Burgess v Malley and Co
[2014] NZHC 746
•14 April 2014
IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY
CIV2013-409-001575 [2014] NZHC 746
BETWEEN GARY OWEN BURGESS
Applicant
AND
MALLEY AND CO Respondent
CIV 2013-409-001385
BETWEEN GARY OWEN BURGESS Plaintiff
Hearing: 26 March 2014
Additional submissions: 31 March 2014
Appearances:
G O Burgess (In Person)
M R Cowan and J Eckford for Respondent and Third DefendantJudgment:
14 April 2014
JUDGMENT OF WHATA J
[1] Mr Burgess has a longstanding dispute with Malley and Co. He says that they mishandled his legal affairs. Two complaints (subject to these proceedings) were made to the Law Society in January 2010 and January 2012. The Standards Committee did not uphold the complaints. Mr Burgess’ reviews to the Legal Complaints Review Office (LCRO) also failed. While this complaint process unfolded, Malley and Co commenced summary judgment proceedings in the District Court claiming outstanding fees. Mr Burgess counterclaimed and sought default judgment when (he says) a defence was not filed to his counterclaim. The initial summary judgment proceedings lapsed and the Court also refused to enter judgment
on the counterclaim in 2011. A second application was made. Ultimately, the re-filed
BURGESS v MALLEY AND CO [2014] NZHC 746 [14 April 2014]
application for summary judgment and the existing application for default judgment were declined by the District Court in 2013.
[2] Mr Burgess now comes to this Court, first seeking to review two decisions of the Legal Complaints Review Office and various steps taken by the District Court, and second, appealing the decision of the District Court not to enter judgment on his counterclaim. Malley and Co have also cross appealed on the refusal to grant summary judgment.
[3] At a judicial telephone conference last year, it was resolved that the proceedings could be consolidated and that:
Security of $1,990 shall be paid by Mr Burgess by 31 January.
[4] Subsequent to this, Mr Burgess sought a recall of the order as to security for costs and then an extension of time to lodge the security. Malley and Co now seeks security for costs in relation to the judicial review proceedings in the sum of $65,000 or such sum as I think appropriate.
[5] I propose to deal with each application in turn.
Recall/Extension of time to pay security
[6] Mr Burgess proffered the sum payable on my previous order for security at the hearing of these applications. Subject to costs on the application for extension of time to pay the security, Malley and Co did not seek to contest the grant of an extension. I will resolve the costs on the application below.
[7] For completeness I note that Mr Burgess initially sought to resist the order for security on the basis that Malley and Co were cross appellants. But it cannot be seriously suggested that there is any risk to Mr Burgess that he will not recover costs in the event he is successful and awarded costs. There is then no proper basis to require security from Malley and Co.
The claim by Malley and Co for additional security for costs
[8] Malley and Co, as respondent in the judicial review proceedings, seeks security for costs on the following grounds:
(a) The respondent has reason to believe that the appellant will be unable to pay the costs of the respondent if he is unsuccessful in these proceedings;
(b)The sum ordered to be paid by the Court on 22 November 2013 by way of security for costs pursuant to Schedule 6 of the High Court Rules remains unpaid and in any event is insufficient to cover the costs of the proceedings;
(c) The appellant’s prospects of success in the appeal/judicial review are
minimal; and
(d)The appellant has misled the Court in affidavit and memorandum to the Court as to his financial position.
[9] Mr Burgess accepts that he is impecunious (though he indicated to Court that he has the sum of $5,000 available to him). However, he identifies two broad reasons why he should not be required to provide additional security, namely:
(a) Security should not be granted where the cause of a plaintiff’s
impecuniosity is the actions of the defendant; 1 and
(b) Mr Burgess’ cases on appeal and review are strong.
Cause of impecuniosity
[10] As to the cause of Mr Burgess’ impecuniosity, he claims that:
1 Citing Weld Street Takeaways and Fisheries Ltd v Westpac Banking Corporation [1986] 1 NZLR
741 (HC).
56.My failure to pay the mortgage payments has not lead to me being impecunious, on the contrary, it was the firm’s actions in failing to obtain the vesting of the relationship property in me in a timely manner, and arranging with my ex-wife’s lawyers, the indefinite deferment of the vesting of my share of the property, that left me impecunious.
57.The firm’s actions in deferring vesting of my separate property, led to my inability to meet the mortgage payments, or to cut my losses and sell the property, or borrow against what should have been my equity, when there was a drought and a crop failure.
58.The firm, by it’s (sic) actions and inactions, deprived me of legal and equitable control, of what the Family Court ordered was to be my separate property, and retained that property as relationship property.
59.There is no doubt that I was impecunious when I retained E Tait of Malley and Co to obtain for me my share of the relationship property. I was impecunious as a result of my ex-wife’s refusal to distribute the relationship property.
[11] In reality, the above stated reasons for Mr Burgess’ impecuniosity underpin Mr Burgess’ central complaint in both sets of proceedings. I am not in a position to resolve their merits. The information available to me is largely assertion and without the full context. In this regard it needs to be recalled that the wider frame for this complaint includes a very lengthy litigation history, including an appeal to the
Supreme Court.2 In any event, the extent to which Mr Tait and therefore Malley and
Co is responsible (if at all) for Mr Burgess’ financial circumstances is unclear and
not capable of resolution at this stage.
Strength of proceedings
LCRO decisions
[12] Similarly the suggestion that the judicial review proceedings are strong is a matter of conjecture at this time. The statement of claim comprises (at least) 109 allegations and three causes of action claiming among other things, breach of natural justice, irrationality or ultra vires and misappraisal of facts.
[13] Unfortunately the pleadings at various places simply allege factual error not ordinarily amenable to judicial review. There are then allegations of combined
2 Burgess v Beaven [2012] NZSC 71, [2013] 1 NZLR 129.
factual and legal error that are equally not amenable to judicial review. Nevertheless when asked, Mr Burgess submitted that his strongest points involved error of law, namely that the LCRO did not apply the correct legal standards for the purpose of assessing the impugned conduct and the fees charged. He referred in particular to paragraphs [46], [53], [54], and [58] of the statement of claim. They allege:
46.The Legal Complaints Review Office has misdirected himself in law, as to the duty of the lawyer to gain informed instructions after appraising the facts and providing correct advice to the client, instead, the Legal Complaints Review Office reversed the burden, requiring the client to appraise for themselves, the facts, the law, practice and procedure and to direct the lawyers actions, in effect through formal orders. The Legal Complaints Review Office has made this same error as regards the overall performance of the engagement, the handling of matters and lack of analysis and advice at the commencement of the engagement, and as regards implimenting (sic) Judge Strettel’s (sic) second judgement (or the consent order issue).
…
53.In particular, the Legal Complaints Review Office has disregarded the duty in law for the lawyer to give advice to the client as to the effect and implications of the agreement, and that the lawyers role is limited to giving that advice, and signing the certificate required by s21F of the Property Relationships Act 1976.
54.That duty is conferred both by the statutory provisions of the Property Relationships Act, part 6, but also by the fiduciary and contractual duties owed by a lawyer to his client.
…
58.At [109] Legal Complaints Review Office conclusion is irrational, he has not considered what other advice could or would have been given by a competent lawyer who was aware of the history and antagonism between the parties, and the repeated refusals of my ex- wife to transfer my share of the relationship property to me, when my ex-wife refused to transfer the title for the payment of the
$36,250 required in terms of Judge Strettel’s (sic) decision, nor has the Legal Complaints Review Office had regard to the application of the clean break principle in relationship property. Further the Legal Complaints Review Office had no regard to the issue raised by me that all that was required to obtain title in my name, was a vesting order of the Family Court.
[14] These pleadings do not refer to the specific parts of the decisions challenged but Mr Burgess referred to the following in submissions:
(a) In relation to his allegations at [46]:3
[73] Mr Burgess’ complaint is two-fold:-
(i) That Mr Tait did not provide him with considered and formal advice as to the strategy to follow to achieve Mr Burgess’ objectives; and
(ii) That Mr Tait did not comprehend that the evidence referred to by Hansen J and Judge Strettell was not required, and that in fact the law was such as that Ms Beaven should have been required to provide evidence in support of her claim for unequal sharing.
[74] When considering the first point, the lack of Mr Tait’s file is perhaps relevant. However, Mr Tait did not dispute that he did not provide the formal advice that Mr Burgess suggests he should have. Instead, he points to the circumstances in which he was instructed, being immediately prior to his going on leave, and with the date for the second Family Court hearing already scheduled. His focus on his return from leave was to review the Family Court file, and to prepare for the hearing.
…
[78] I do not consider that the lack of formal advice as to the strategy to be adopted renders Mr Tait’s conduct unsatisfactory. Mr Burgess had demonstrated his ability by his earlier efforts on his own behalf. In addition, the die was cast to a large extent, when Mr Tait was presented with a request to represent Mr Burgess at the second Family Court hearing for which a date had already been scheduled.
(b) In relation to his allegations at [53], [54] and [58]:4
[17] The terms of the agreement negotiated between Mr Tait and Ms Beaven’s counsel (Ms Corry) were recorded in a memorandum and this was sent by Mr Tait to Mr Burgess. The covering letter was brief and did not provide any comment on the terms. In addition, although the document was sent by letter dated 5 September 2008, it was not received by Mr Burgess by mail, and he first saw the document when he received it by fax mid afternoon on Monday
8 September.
[18] Mr Burgess responded by fax within approximately 70 minutes, noting that the amount to be advanced by the bank was
$165,000 and not $140,000 as recorded in the memorandum. He also made the following comment:
3 Burgess v Tait LCRO 203/2010, 9 March 2012.
4 Burgess v Tait LCRO 203/2010, 9 March 2012.
“I am uneasy about Point 7. This seems overkill as her interest is only in the sum to be held in the Trust account. In terms of Strettell’s decision she does not appear to have a beneficial interest in the property itself only a debt from me to her. If you think this is a reasonable clause go ahead and sign, otherwise contact me”.
…
[97] I do however accept that his complaint was that he was not properly advised as to the implications of the agreement.
[98] I put to one side the fact that he received the agreement by fax only a short while before it was required to be completed. As noted, there had been ongoing correspondence and negotiations in which he had been involved for approximately one month prior to this, and the consent memorandum as finally sent to him incorporated all of the terms that had been included in that correspondence.
[99] The question is whether, in recommending this course of action, Mr Tait’s conduct fell short of the standard of competence and diligence that a member of the public is entitled to expect of a reasonably competent lawyer.
[15] Mr Burgess also contends that there is no paragraph at which the Officer analyses what advice a competent and diligent lawyer would have been given in those circumstances.
[16] Malley and Co submit that the paragraphs of the decision cited by Mr Burgess either do not contain reviewable findings or if they do, are correct on their face and when the decision is read as a whole. However, the central issue raised by Mr Burgess is whether Mr Tait was required to give legal advice about the impugned transaction and failed to do so. Whether he was required to do so is of course a matter that can only be resolved on full examination of the facts. But I am prepared to proceed on the basis that this issue is a legitimate matter to be examined on judicial review.
Review of District Court decision
[17] I am also prepared to acknowledge that, on the available evidence, the challenge to the District Court’s decision to permit Malley and Co to defend the counterclaim appears to have some prima facie merit. In short, Mr Burgess pleads (among other things) that the Judge erred by granting an extension of time to file a
reply to his counterclaim and then without reasons. It appears from the judgment that the reply was filed out of time, and leave was granted to file out of time without reasons. Ms Cowan says that, in fact, Malley and Co replied to the counterclaim, just not in the usual form. She could not however point to the evidence supporting this basic contention.
[18] For completeness, I am not going to dwell on the contentions by Malley and Co that Mr Burgess has misled the Court. It is a distraction from the primary issue, namely whether or not security should in fact be ordered in light of Mr Burgess’ acceptance that he is impecunious.
Resolution
[19] As Ms Cowan noted in her submissions, there should not be any dispensation from security for costs except in exceptional circumstances.5 But, as she also submitted, the balancing of the interests of the parties is the overriding consideration.6 Having done so, I have come to the view that an additional award of as security for costs is warranted for the following reasons:
(a) Malley and Co have successfully defended the complaints at two levels and ordinarily might expect security for costs in relation to an impecunious litigant, more so given Mr Burgess’ litigation history; and
(b)Mr Burgess does have some funds, and this is a case where I think the interests of justice demand that he demonstrate his commitment to the proceedings by way of an additional payment into Court for the purposes of security.
[20] As to quantum, I consider that the sum of $65,000 proposed by Malley and Co to be excessive. First, the first cause of action in the review proceedings significantly mirrors the appeal proceedings for which security has already been
provided. Second, while the judicial review pleadings are prolix and in parts
5 Bernard v Space 2000 Ltd (2001) 15 PRNZ 138 (HC).
6 A S McLachlan Ltd v MEL Network Ltd (2002) 16 PRNZ 747 (CA).
misdirected, they are capable of being appropriately circumscribed to key issues of law as discussed above. Third, once the review proceedings are properly focused, the proceedings should be able to be dealt with efficiently.
[21] Furthermore, I am not content to allow a properly focussed challenge to the legality of either the conduct of the District Court or the LCRO to be defeated by an award of security in this case. This Court has the responsibility for the oversight of both the District Court and the conduct of solicitors. While Mr Burgess has largely failed in the tribunals below, the testing of whether the correct legal thresholds and procedural standards have been applied are legitimate (if as yet unsubstantiated) concerns.
[22] Accordingly I propose to impose an additional order for security but finalise the issue of quantum pending the outcome of the issues conference for this matter which is set down for 6 May 2014 at 2.15 pm. If the issues can be circumscribed to the central issues noted at [13]-[16] above, then a relatively modest additional sum of security will be warranted (in the order of $3,000-$4,000). If however the issues are unfocussed and wide ranging, then a higher sum of security may be required.
Outcome
[23] There will be an additional order for security of costs, but the quantum of the order will be finalised on the outcome of the issues conference.
[24] As to costs on the applications before me, the respondents were partially successful in relation to all applications (though the application for extension was not contested given the payment into Court). I therefore award costs to the respondent on the application for extension and the application for further security on a 2B basis, discounted by 20% to reflect:
(a) The grant of the extension was an indulgence and the respondents were forced, legitimately, to respond to the application for extension and the previous application for recall;
(b)Malley and Co’s application for security on the review proceedings should have been made at the outset when dealing with case management and, in any event, it did not succeed on the terms sought.
[25] To avoid a further merry-go-round of litigation, the costs order will lie in
Court pending the resolution of the proceedings in this Court.
Solicitors:
Preston Russell Law, Invercargill
Parker Cowan, Queenstown
Clark Boyce, Christchurch
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