Busch v Henderson Reeves Connell Rishworth Lawyers Limited
[2013] NZHC 1189
•23 May 2013
IN THE HIGH COURT OF NEW ZEALAND WHANGAREI REGISTRY
CIV 2012-488-454 [2013] NZHC 1189
BETWEEN PATRICIA ELAINE BUSCH Appellant
ANDHENDERSON REEVES CONNELL RISHWORTH LAWYERS LIMITED Respondent
Hearing: 30 April 2013
Appearances: Appellant in person
J A Browne for respondent
Judgment: 23 May 2013
JUDGMENT OF ALLAN J
Solicitors/party:
P E Busch, Cambridge, [email protected]
Henderson Reeves, Whangarei
BUSCH V HENDERSON REEVES CONNELL RISHWORTH HC WHA CIV 2012-488-454 [23 May 2013]
Introduction
[1] The appellant, Mrs Busch, is the mother of Mr Craig Busch, the so-called Lion Man. He formerly ran the Zion Wildlife Gardens, located at Grays Road, Kamo, Whangarei. The park itself was run by Zion Wildlife Gardens Ltd on land owned by Country Developments Ltd. All the staff were employed by Zion Wildlife Services Ltd.
[2] The Zion Wildlife Park is officially classified as a zoo. In order for the park to operate lawfully there must be a licensed operator, who must be an individual licensed by the Ministry of Agriculture and Fisheries. A corporate entity may not be a licensed operator.
[3] The park ran into financial difficulties. Mrs Busch bailed out her son by advancing several million dollars to the companies. She took shareholdings in two companies and became the sole director of all of them. To secure repayment of her loans she took a power of attorney over Mr Busch’s shareholding. The effective result was that Mrs Busch took sole control of the whole operation. But Mr Busch remained on the staff for a period as the licensed operator.
[4] Subsequently Mr Busch fell out with both his mother and a number of other persons involved in the operation of the venture. He also separated from his partner. A great deal of litigation ensured.
[5] The companies were represented in Auckland by Gilbert Walker who attended to various civil cases. An employment dispute arose with Mr Busch. Ms Holley acted on instructions from the companies in the early stages. Later Mr Tony Drake was briefed as counsel of that case.
[6] In September 2008, Mrs Busch instructed the respondent to act. Mr Henderson of that firm accepted instructions and confirmed Mr Drake’s brief, instructed by the respondent, to act in Auckland on employment matters. Thereafter
the respondent acted on a variety of matters, rendering invoices to Mrs Busch for the work concerned. Some of the invoices included Mr Drake’s fees as a disbursement. The invoices were paid from time to time, either by Mrs Busch or by one of the companies controlled by her.
[7] Ultimately the companies ran out of cash, and payments to the respondent stopped. After a long period of negotiation, the respondent issued proceedings in the District Court against Mrs Busch in order to recover its outstanding fees and disbursements.
[8] The case was heard by Judge McElrea in the Whangarei District Court on
15 June 2012. Mrs Busch appeared on her own behalf, supported by a McKenzie Friend. Mr Henderson and Mr Drake gave evidence for the respondent by way of affidavit, upon which each was cross-examined by Mrs Busch. She elected not to give evidence.
[9] The issue at trial was whether the respondent’s client was Mrs Busch or alternatively, one or more of the companies she controlled.
[10] In an oral judgment, Judge McElrea held that:
There is … absolutely no doubt, let alone a doubt on the balance of probabilities … about the identity of the client.
He held that Mrs Busch was liable to the respondent for the amount claimed.[1]
[1] Henderson Reeves v Busch DC Whangarei CIV-2010-088-698 at [19].
[11] Quantum was not in issue. The Judge accordingly entered judgment for
$149,795.13, together with costs of $9,377.50 and disbursements of $2,146.49.
[12] Mrs Busch now appeals against that judgment. She argues that the Judge was
wrong to hold that she was the respondent’s client, and not one or more of the
companies.
Discussion
[13] In holding in favour of the respondent, Judge McElrea relied upon several factors for his conclusion that:2
… the client was at all times Patricia Busch even though at times the firm or the barrister were representing various companies in which she had a strong personal interest.
[14] The factors listed by the Judge were:
(a) she signed two contracts of engagement with the respondent in her name alone;
(b)the contents of various letters and e-mails from the respondent that suggested that the firm was acting for her;
(c) Mrs Busch’s name appeared in bills of costs rendered by Mr Drake and the respondent as the client, and she never disputed the fact that she was the client until after proceedings were commenced. During a long period of negotiation over the fees, there was no suggestion that the companies were the client and not her;
(d)during those negotiations Mrs Busch proposed that the fees be paid from the proceeds of sale of a farm she owned;
(e) by way of inference, Mrs Busch must have realised that the respondent would have required her personal guarantee “ …if there was the slightest suggestion that the companies and not her were the client. This is because the companies were in a precarious financial position and indeed all three of them are now either struck off or in liquidation.
[15] Mrs Busch was self-represented at the hearing of the appeal. She wanted legal counsel but could not afford representation. Legal aid had been refused.
2 At [16].
Nevertheless she coped well with a difficult task, plainly understanding the central issues and keeping her argument focused on them. The difficulty for her of course, is that she did not give evidence in the District Court and that a great deal of what was said by the respondent’s witnesses in that Court stands unchallenged.
[16] But because there is a significant quantity of relevant documentary material, it is possible on appeal to review the issues and to consider afresh the question of whether the respondent has made out its case. It is convenient to do that by reference to the matters upon which Judge McElrea relied in the District Court.
[17] The first (and most cogent) of those factors is a contract of engagement dated
2 September 2008. It is common ground that that was the date upon which Mrs Busch attended at the offices of the respondent in order to give instructions to the firm. Mr Henderson’s evidence was that this document, partly in printed form and partly the subject of handwritten insertions, is the respondent’s normal way of recording the terms of its relationship with its clients.
[18] The form was filled in by a legal executive employed by the respondent. The client’s name is that of the appellant. She has signed in her own name without any reference to a company. There is no suggestion in the form that she was acting as agent for some other legal entity.
[19] Mr Henderson’s evidence was that when Mrs Busch first made contact with the firm, some mention was made of the need for a protection order. That was assumed to have arisen in a normal domestic situation, and so he personally was not involved with Mrs Busch at the outset, but it quickly became apparent that the context had a complex commercial flavour, requiring senior input, so that he was called in to confer with Mrs Busch.
[20] Some months later, in January 2009, Mrs Busch asked the firm to act for her in the context of relationship property proceedings between Mr Busch and his partner, specifically to protect Mrs Busch’s interests. The firm sought to have Mrs Busch sign a further contract of engagement but she replied to the effect that it was not necessary because she had already signed an earlier form.
[21] As Judge McElrea held, the fact that Mrs Busch signed a contract of engagement in her own name, without any reference to a company, provides very considerable support for the respondent’s claim that it was dealing with Mrs Busch in her own right.
[22] The Judge referred in his oral judgment to “various letters and e-mails referred to in the evidence”. A particularly important document, in my view, is a letter written by Mr Henderson to Mrs Busch on 18 September 2008, just a fortnight or so after he had received initial instructions. By then, Mrs Busch and her son had fallen out. The letter commenced by reviewing the role being played by Gilbert Walker in the field of civil litigation, and by Ms Holley in respect of employment matters. Mr Henderson noted that Gilbert Walker had reached a position at which they were ready to take action against Craig Busch on behalf of three of the companies.
[23] Mr Henderson then continued:
We do not think we should take over the work currently contemplated by Gilbert Walker and Laurene Holly (sic). To do this may see duplication of the work already undertaken by these lawyers. These solicitors are extremely capable and have the necessary skills and expertise to deal with the issues.
It is important that you have a solicitor acting for you in your personal capacity. You have expressed a desire to use a local law firm so that you have quick and easy access to legal services. We understand that you have become frustrated with the progress that has been made with the other lawyers to date. One of the major advantages you have over Craig is that there are so many causes of action that can be brought against him. If you do not maximise the effect of litigation by bringing all these claims against him at the same time you will certainly face a long drawn our process which may ultimately fail – perhaps by exhausting you. Coordinated action should have the effect of overwhelming him and force him to either seek resolution or give up.
With this in mind our suggestion is that we act on your behalf to advise you in respect of the claims that you can bring in your own personal capacity against Craig. We also see our most useful role as being the co-ordinator of actions by the other solicitors to ensure a cohesive attack is made against Craig on all causes of action at the same time if he refuses to meet and reach agreements required by you.
But we must first obtain a licence from MAF so that you are able to continue to run the wildlife park and keep the cats if Craig is removed from the
operation. This step needs to be taken and the co-operation of MAF secured before any other actions are taken against Craig.
Engagement of Henderson Reeves Connell Rishworth
In the remainder of letter we will set out the terms on which we will provide our services to you.
Services to be provided
You have asked us to act on behalf of you in relation to the personal actions that you can bring against Craig including the following:
(a) Communicate with MAF and assist you with your application to obtain a licence to keep the wildlife;
(b) Communicate with Gilbert Walker and Laurene Holly to organise and co-ordinate a cohesive attack on Craig to maximise the effect of the litigation;
(c) Advise and act for you in relation to the claims you can bring personally against Craig to recover debts owing to you;
(d) Application for the Protection Order against Craig;
(e) Formulate and carry out a strategy to bring a united action against
Craig beginning once he refuses to meet and agree; and
(f) At all times be available and responsive to your needs.
[24] Mrs Busch’s argument is that she never intended to assume personal liability to the respondent, and that her instructions were at all times conveyed to the firm on behalf of her companies (she is not specific about which company or companies).
[25] In my view, the terms of this letter to Mrs Busch make it plain that the respondent saw itself as acting for her and not for any of the companies. Section 9 of the letter, under the heading “Services to be provided” is confined entirely to matters involving Mrs Busch personally, as distinct from the companies. The letter supports Mr Henderson’s evidence that the respondent considered itself as acting for Mrs Busch, while Gilbert Walker acted for the companies and counsel (Ms Holley and then Mr Drake) were acting for the companies in respect of employment disputes in respect of Mr Busch.
[26] Payments on account of fees were made to the respondent from time to time, either by Mrs Busch or more frequently by companies she controlled. She also organised payments direct to Mr Drake who had been formally instructed by the
respondent in a meeting between him and Mr Henderson on 22 September 2008. There was evidence that payments were made from whichever entity was in funds at the time.
[27] As Judge McElrea found, nothing turns on the source of the payment. The fact that the payment of a debt may be made by a third party does not alter the contractual relationship between debtor and creditor.
[28] By March 2009, payments were falling behind. A number of documents were produced in evidence in which Mrs Busch promised to take steps to regularise the position. There was never any suggestion from her that she was wrongly being held liable for the debts of the companies. During the long period of negotiation lasting many months, the focus was entirely on identifying assets from which the outstanding debts could be paid. Only when the proceeding commenced was it suggested for the first time that Mrs Busch was not liable to the respondent.
[29] Mrs Busch argues that her intention was to transfer the litigation work for the companies away from Gilbert Walker, and to have it done from Whangarei by the respondent. But that is contrary to Mr Henderson’s evidence, to the advice the respondent gave her in its letter of 18 September 2008, and to the evidence that Gilbert Walker did continue to act for the companies in various civil cases for many months.
[30] The work carried out by the respondent was very much focused on Mrs Busch’s own interests. For a considerable period she was a party to the employment dispute before the Employment Relations Authority. Her interests were also directly affected in the Court proceedings between her son and his partner. Mrs Busch says that the respondent ought to have realised from the outset that she was instructing the respondent on behalf of the companies (she does not say which). The difficulty is that the documents are against her, and having given no evidence in the District Court, she cannot point to any sworn evidence with which to rebut the thrust of the respondent’s case.
[31] It is to be borne in mind that Mrs Busch had advanced a very substantial sum (in excess of $2 million) to the companies. While it was in her interests that the companies should do well, it was equally important that she receive separate advice in her capacity as owner and controller of the companies so as to ensure the ultimate repayment of the sums she had invested in them. The Judge held that the respondent’s role was to look after her personal legal affairs, with a view to ensuring that her interests (that might be similar to but were not identical with the interests of the companies) were protected. Likewise, Mr Drake considered that his client was Mrs Busch and her interests.
[32] In my view there was ample material upon which the Judge could base that finding.
[33] In summary, I consider the Judge’s decision to have been inevitable. The documents supported the respondent’s case. Mrs Busch was in need of separate advice. She did not claim that she was not the respondent’s client until after this proceeding was issued. Moreover, she gave no evidence in the proceeding and so was not in a position to rebut the detail of the respondent’s claim against her.
Result
[34] For the foregoing reasons I consider that Judge McElrea was correct to hold that the respondent had established its claim in the District Court. Nothing advanced on appeal suggests that he was wrong to uphold the respondent’s claim.
[35] The appeal is accordingly dismissed. There will be an order for costs in favour of the respondent calculated on a Band 2B basis, together with reasonable disbursements to be fixed by the Registrar if necessary.
C J Allan J
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