Fee v Rennell HC Auckland CIV 2010-404-005853

[2011] NZHC 234

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV 2010-404-005853

BETWEEN  JONES FEE Appellant

ANDJOHN ALFRED RENNELL AND PENELOPE JANE RENNELL Respondents

Hearing:         24 February and 2 March 2011

Counsel:         M Muir for Appellant

K F Gould for Respondents

Judgment:      22 March 2011 at 12:00 PM

JUDGMENT OF FOGARTY J

[1]      At an undefended hearing on 11 May 2010 in the District Court (Judge Sharp) judgment was entered based on admission in the sum of $136,872.30 together with interest and costs against the appellant.

[2]      The appellant then successfully applied to have the judgment set aside.  This was done by Judge Wilson QC on 11 August.  It was on the grounds that there had been no notice to the address of service of the hearing date, 11 May.

[3]      The reason why the Judge found this is contained in paragraph [28] of his judgment which reads:

[28]     Mr  Gould  submitted  that  the  judgment  had  not  been  regularly obtained by the plaintiffs because notice of the hearing was not served on Mr and Mrs Rennells at their specified address for service.   Notice of the hearing was sent correctly to the solicitors acting but not to the nominated address for service.  Accordingly Mr and Mrs Rennells are entitled to have this judgment set aside. Judgment is set aside accordingly.

[4]      It is necessary to explain the second sentence.

JONES FEE V JOHN ALFRED RENNELL AND PENELOPE JANE RENNELL HC AK CIV 2010-404-005853

22 March 2011

[5]      The new District Court form No. 3 provides:

Section 1:  Defendant’s details

...

1C      Defendant’s address for service

...     Rennells  Jewellers  and  Engravers,  115  Main  Highway,  Ellerslie, Auckland 1051

...

1F

Name of defendant’’s lawyer

Name:  Roger D. Cann

Firm:    Wilson McKay

...

Contact details of defendant’s lawyer for serving forms

Street address:   Wilson McKay House, 1A St. Vincent Avenue, Remuera, Auckland

[6]      The solicitors for the applicants for the judgment had sent notice of the date of hearing to Rennells Jewellers, 15 Main Highway, Ellerslie, instead of 115 Main Highway. They had also sent notice of the date of hearing to Wilson McKay House.

[7]      Essentially Judge Wilson ignored that notice to Wilson McKay and accepted the argument that there had not been notice of hearing because of a misaddress to Rennells Jewellers and Engravers.

[8]      Mr Muir’s clients, Jones Fee, have appealed the judgment of Judge Wilson. Mr Muir put up a sophisticated argument seeking to draw a distinction between the function of cl 1C and the function of cl 1F.     I do not think they have separate functions.     Both  provide  a  mechanism  whereby  the  defendants  can  receive documents relating to the claim and including notices of hearing.

[9]      There is a problem with this form in that it does not address the fact that a defendant  can  effectively  provide  two  addresses  for  service.    It  is  a  source  of

confusion.  The problem has been identified by the Rules Committee.  I anticipate that in due course the form will be amended.  In the meantime, the fact of the matter is that the Mr and Mrs Rennell’s lawyers did get notice for the hearing on 11 May.

[10]     Once a defendant’s lawyer receives a notice of a hearing the Court proceeds on the usual basis that the lawyer will advise the client and that the party has notice of the hearing.

[11]     I am satisfied that the hearing of 11 May was on notice in that strict sense.

[12]     In this Court I have admitted an affidavit of Mr Cann where he explains that at that time neither he nor his firm were representing the Rennells in these proceedings and in accordance with a standing instruction his office had redirected the notice to Mr and Mrs Rennells.  It is possible, he observes in his affidavit, that it was redirected to No. 15 Main Highway, continuing the same mistake.

[13]     Mr Gould told me from the floor of the Court that he would be able to provide an affidavit that his clients did not in fact have notice of the hearing of

11 May.

[14]     Mr Muir replied that nonetheless the High Court should proceed on the basis that the judgment in the District Court was regularly obtained.  Although he did not spell it out, implicit in his argument was that once notice has been served on the lawyer’s office, being one of the addresses provided by the defendants for service of forms, then a failure by the lawyer to communicate adequately with the client cannot be heard in Court as a basis for arguing that a judgment was irregularly obtained where the client or their lawyer did not turn up to the hearing.

[15]     I think that must be right.  I regard the judgment as regularly obtained.

[16]     That being the case, it is necessary to consider whether Mr and Mrs Rennell or Mrs Rennell separately have a serious argument against the merit of the judgment. See Russell v Cox [1983] NZLR 654, 659. The judgment was for unpaid fees and expenses for legal services provided by Jones Fee to Mr and Mrs Rennell. In civil

litigation in the District Court Jones Fee had been acting for both Mr and Mrs Rennell.  They had obtained a judgment for Mr and Mrs Rennell as defendants by way of counterclaim for $250,000 plus interest while the plaintiff had obtained a judgment against them of about $90,000 plus interest.  Both parties then intended to go on appeal.  Jones Fee had not been paid their fees for their services at the trial.

[17]     Mr and Mrs Rennell wanted Jones Fee to conduct the appeal.  Jones Fee were prepared to do so on the basis that Mr and Mrs Rennell admitted liability.   Jones Fee wrote to Wilson McKay, Mr Cann, by email recording a conversation in which Mr Cann had indicated that the Rennells were prepared to accept the quantum of the claim and admit liability and attaching an admission of claim for their signature. Rennells’ solicitors replied advising Jones Fee:

Further to our telephone conversation of 3rd April we now enclose a written acknowledgement signed by Mr Rennell in which he accepts the terms you have proposed.  ...

[18]     While the admission of liability was extracted under some pressure there is no basis for suggesting that there was any duress or other abuse on behalf of Jones Fee.    They had  incurred  significant  costs  including  paying  expenses  of  experts retained for their clients, in the order of $70,000.   They were prepared to continue to act on credit but they wanted some finality as to their fee.  Mr and Mrs Rennell were represented at the time of the request by a separate solicitor, Mr Cann.

[19]     There can be no doubt that Mr Rennell admitted the quantum.  The issue is raised in these proceedings as to whether or not Mrs Rennell did.  She argues that in fact she never instructed Jones Fee.

[20]     The  proposition  that  Mrs  Rennell  did  not  instruct  Jones  Fee  cannot  be sustained.    Jones  Fee  were  acting  for  both  her  and  her  husband  in  protracted litigation involving not only defence to a claim but also a counterclaim.  To suggest that they were not acting for Mrs Rennell, that they did not have instructions from her, would be to suggest that as officers of the Court they were not correctly advising the Court as to who they represented.   I do not think that Mrs Rennell has any prospects of success in arguing that Jones Fee were not acting on her behalf.  She had every opportunity in the course of protracted litigation to protest to the Court, as

a party, that the lawyers appearing, apparently for her, were not actually instructed by her.

[21]     The next argument is that the admission of liability was only signed  by

Mr Rennell and therefore she had not admitted liability.

[22]     Mr Muir argued  vigorously that  that proposition was  confounded by the context.  Mr Cann of Wilson McKay was in receipt of correspondence which made it utterly plain that Jones Fee were seeking an admission of liability as to quantum by both Mr and Mrs Rennell.  In the circumstances he was proffering the signature of Mr Rennell as meeting that request.   I am satisfied that at the very least Wilson McKay were inviting the inference that Mr Rennell was signing on behalf of both Mr and Mrs Rennell.  If they did not have instructions from Mrs Rennell to agree, they should have carefully qualified their reply.  They did not.   I am satisfied that were this issue as to liability against Mr and Mrs Rennell to be argued that neither of them would have any basis to go behind the admission of Mr Rennell on behalf of both of them.

[23]     I  conclude  that  Mr  and  Mrs  Rennell  have  no  argument  to  set  aside Mr Rennell’s admission of liability on behalf of both of them.  For these reasons the appeal is allowed and the judgment is reinstated.

Solicitors:

Jones Fee, Auckland, for Appellant

Wilson McKay, Auckland, for Respondents