EA v Rennie Cox Lawyers

[2017] NZHC 770

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2016-404-1122 [2017] NZHC 770

BETWEEN

EA

Applicant

AND

RENNIE COX LAWYERS Respondent

Hearing:	On the papers
Appearances:	R J Hollyman for Applicant E J Werry for Respondent
Judgment:	26 April 2017

JUDGMENT OF LANG J

[on application for leave to appeal to Court of Appeal]

This judgment was delivered by me on 26 April 2017 at 3.30 pm, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date……………

EA v RENNIE COX LAWYERS [2017] NZHC 770 [26 April 2017]

[1]      On 13 January 2017, I delivered a judgment in which I dismissed an appeal by EA against a refusal by Judge Gibson to set aside a default judgment that Rennie Cox had irregularly obtained in the District Court.1   EA now seeks leave to appeal to the Court of Appeal against aspects of my judgment.

[2]      Rennie Cox abides the Court’s decision, and has not made submissions in relation to the application for leave.

Relevant principles

[3]      The principles to be applied in considering an application for leave to appeal to the Court of Appeal are well established.

[4]      Although the Senior Courts Act 2016 came into force on 1 March 2017, the present application is still governed by s 67  of the Judicature Act 1908.  Section 67 provides as follows:

67       No appeal on appeals from inferior Courts without leave

The determination of the [High Court] on appeals from inferior Courts shall be final unless leave to appeal from the same to the Court of Appeal is given [by the High Court or, where such leave is refused by that Court, then by the Court of Appeal].”

[5]      In applying s 67 the Court is bound to take into account a series of well- established principles. These were considered in detail by the Court of Appeal in Waller v Hider and Snee v Snee.2

[6]      In Waller v Hider the Court confirmed that the proposed appeal must raise a question of law or fact that is capable of bona fide and serious argument and that the case must involve some interest, public or private, of sufficient importance to outweigh the cost and delay of a further appeal.3    Blanchard J, who delivered the

decision of the Court in Waller v Hider, also made reference to the earlier decision of

1      EA v Rennie Cox [2017] NZHC 5.

2      Waller v Hider [1998] 1 NZLR 412; Snee v Snee (1999) 13 PRNZ 609.

3      At 412.

the Court in Cuff v Broadlands Finance Ltd,4 where the Court had remarked that, in the end, the guiding principle must be the requirements of justice.5

[7]      Blanchard J described the function of the Court of Appeal in determining a second appeal as follows:6

“Upon a second appeal this Court is not engaged in the general correction of error. Its primary function is then to clarify the law and to determine whether it has been properly construed and applied by the Court below. It is not every alleged error of law that is of such importance, either generally or to the parties, as to justify further pursuit of litigation which has already been twice considered and ruled upon by a Court.”

[8]      These principles were repeated by the Court of Appealin Snee.7

[9]      In order to obtain leave to appeal, the appellant must therefore establish that the proposed appeal raises a question of law or fact capable of bona fide serious argument. It must also establish that the case involves a matter of private or public interest of sufficient importance to outweigh the cost and the delay involved in a further appeal.

Background

[10]     The appeal arose out of a proceeding in the District Court in which Rennie Cox sought to recover from EA the payment of fees allegedly owing to a barrister Rennie Cox had instructed on EA’s behalf.  Rennie Cox obtained judgment against EA by default after she ultimately failed to take steps to defend the claim.

[11]     When the claim was initially filed, EA lodged a complaint with the Law Society in respect of numerous issues.  The Law Society appointed a Lay Assessor to investigate the complaints.  The Lay Assessor, a Standards Committee of the Law Society and the Legal Complaints Review Officer all concluded the barrister’s fees were reasonable, and declined to take any further action in relation to them.  Rennie

Cox obtained judgment against EA when she failed to take steps to defend the

4      Cuff v Broadlands Finance Ltd [1987] 2 NZLR 343 at 346-347.

5      Waller v Hider, above n 2, at 413.

6      At 413.

7      At 612-613.

District Court proceeding after the outcome of the Law Society investigation was known.

Summary of relevant issues decided in the judgment

[12]     I found that the default judgment procedure was available to Rennie Cox because the barrister’s fees were liquidated amounts.  I also found that Rennie Cox was entitled to proceed on a without notice basis because EA had not entered an appearance in the proceeding.  However, I upheld EA’s argument that Rennie Cox obtained  the  judgment  irregularly because  it  provided  the Judge who  heard the application with incomplete and misleading information in a memorandum filed in support of an application for an extension of time within which to continue the proceeding and obtain judgment.

[13]     I then exercised my discretion against setting the judgment aside for two reasons.  First, I considered that the issue of the reasonableness of the barrister’s fees should now be regarded as settled given the extent to which it has already been examined, and that no  miscarriage of justice would result  if that was the case. Secondly, EA can pursue any counterclaim that she wishes to bring against the barrister by means of a new proceeding issued directly against the barrister in the District Court.

Proposed grounds of appeal

[14]     As summarised in the submissions filed by Mr Hollyman on EA’s behalf, EA wishes to raise the following interrelated questions for clarification by the Court of Appeal:

(a)       The effect of improperly obtained retrospective extensions of time on consequential default judgments.

(b)       The  status  of  the  general  rule  that  irregularly  obtained  default judgments ought to be set aside as of right.

(c)       The nature and extent of any residual discretion to uphold irregularly obtained default judgments, and the circumstances in which such discretion might be exercised.

(d)      The correctness of the  Court’s reconciliation  of conflicting High

Court decisions (as recognised in  Arnott v Artisan Holdings  Ltd

[1998] 12 PRNZ 205 (HC) at 211) that have departed from the general rule without further consideration by the Court of Appeal.

(e)       The degree to which the Court is entitled to make a final assessment of defences and counterclaims on applications to set aside irregularly obtained judgments, having regard to the dicta in  Russell v Cox [1983] NZLR 654 (CA) at 660 (that it would ordinarily be sufficient to show that a defence existed and that the strength or weakness of that defence might well be immaterial).

(f)       Whether any such discretion can be properly exercised in favour of lawyers who irregularly obtain ex parte judgments for their fees, by positively misinforming the Court as to the outcome of the Society’s decisions and omitting to inform the Court of the client’s position (about which the lawyers knew).

(g)      Whether invoices rendered pursuant to lawyers’ fee agreements specifying work to be hilled on a discretionary basis are properly to be considered “liquidated damages”.

[15]     Mr Hollyman points out that the Court of Appeal has not considered the principles relating to irregularly obtained default judgments since it decided Russell v Cox in 1983.8   Subsequent decisions of the High Court confirming that the courts retain a discretion not to set aside irregularly obtained judgments have not yet been the subject of consideration by the Court of Appeal.

[16]     Mr Hollyman also submits there is a serious question to be argued regarding the degree to which a Court is entitled to make a final assessment of defences and counterclaims on an interlocutory application to set aside an irregularly obtained judgment. Again, the Court of Appeal has not considered that issue since Russell.

[17]     Next, Mr Hollyman points out that there is at present no guidance from the Court of Appeal on whether invoices rendered pursuant to a lawyer’s fee agreement are properly to be considered liquidated sums.

[18]     Mr Hollyman submits that all of these issues are clearly capable of serious argument, and that it would be appropriate for the Court of Appeal to consider and clarify the position.   He also submits that each of the issues raises a matter of

considerable  public  importance.    Furthermore,  the  outcome  of  the  appeal  has

8      Russell v Cox (1983) NZLR 654.

significant consequences for EA.   She has effectively been deprived of her opportunity to challenge the reasonableness of the barrister’s fee.

Decision

[19]     I accept that the questions set out at [14](b), (c) and (d) above raise questions of significant public interest, and that recent High Court decisions have not necessarily been in full alignment.  I also accept Mr Hollyman’s submission that the Court of Appeal has not considered these issues since 1983.   For those reasons I agree that it is appropriate for those issues to be considered by the Court of Appeal.

[20]     I do not consider that the remaining issues raise questions of public or private interest to the extent that they warrant leave.   Clarification of those issues by the Court of Appeal is not required.   They are discrete issues that have no relevance beyond the confines of the present case.   Furthermore, the sums involved are relatively small.

Result

[21]     I grant EA leave to appeal to the Court of Appeal on the questions set out at

[14](b)(c) and (d) of this judgment.

Lang J

Solicitors:

Paul Friedlander, Auckland

Counsel:

R J Hollyman, Auckland
E St John, Auckland