Gates v District Court at Hamilton HC Hamilton M102/01

[2001] NZHC 991

IN THE HIGH COURT OF NEW ZEALAND
HAMILTON REGISTRY M102/01

BETWEEN CROSSLEY RAYMOND GATES
Applicant

AND THE DISTRICT COURT AT HAMILTON
First Respondent

AND HAMILTON CITY COUNCIL
Second Respondent

Hearing: 10 October 2001

Counsel: R Asher QC for Applicant
No appearance for First Respondent
G Stanish Amicus Curiae

Judgment: 19 October 2001

RESERVED JUDGMENT OF MORRIS J

Solicitors:
Raynor Asher QC, PO Box 4338, Auckland for Applicant
Crown Law Office, PO Box 5012, Wellington for Second Respondent

[1] Mr Gates, a solicitor, applies to review a decision of District Court Judge Wolff made at a pre-trial conference in February this year. The Judge ruled Mr Gates was not a person entitled under Rule 38 of the District Court Rules to file proceedings, namely a statement of defence, on behalf of Waikato Pump Services Limited (WPSL) which is the defendant in proceeding NP44/00 issued by the Hamilton City Council out of the Hamilton District court. Mr Gates seeks an order quashing the Judge’s decision or alternatively an order setting it aside and a declaration that he is a person entitled to file the statement of defence to which I have referred.

Background

[2] Mr Gates was admitted to the bar in 1979. He has practised as a barrister and solicitor ever since. He holds the necessary practising certificate. In 1983 he commenced employment with New Zealand Insurance Limited (NZI) as an in-house barrister and solicitor. He has remained with NZI in such a position ever since. In 1984 he met all the statutory and Law Society requirements of a solicitor wishing to practise on his own account. He has been so certified by the Auckland District Law Society virtually since 1984. Both the Auckland District Law Society and the New Zealand Law Society have at all times known he was an employee of NZI. Neither has ever expressed any concern or reservation about this situation.

[3] New Zealand Insurance is a large commercial insurer. As such it regularly becomes involved in litigation. Mr Gates is employed to consider such litigation. He has appeared as solicitor on the record in many hundreds of cases and has appeared as counsel in both High Court and District Court proceedings. In such proceedings NZI has been the indemnifier of one of the parties named. His expertise in matters such as the drafting of pleadings is not challenged.

[4] In NP44/00 the Hamilton City Council issued the proceedings against WPSL to repair damage to boilers owned by the City Council. The indemnifier of WPSL is the NZI. WPSL approached NZI seeking indemnity. NZI entered into correspondence with WPSL. Statements were obtained from witnesses. The claim was considered by Mr Gates. He prepared and filed a statement of defence on behalf of WPSL. As in most cases an excess is payable under the policy by WPSL. The amount is $500.00. It is Mr Gates’ practice to take into account an insured’s responsibility for any excess and to give advice to the insured in respect of it. He takes the view when a question of excess or recovery of uninsured losses arises he is acting as solicitor for the insured in respect of such excess or losses.

[5] The proceedings MP44/00 came before Judge Rea on 11 October 2000. In a minute he noted:

“I note that the Solicitor purportedly filing the Statement of Defence gives an address for service as the offices of New Zealand Insurance Ltd in Auckland. If the Solicitor referred to in the Statement of Defence is an employee of New Zealand Insurance Ltd, then on the face of it it would seem that the Statement of Defence had been filed in contravention of Rule 38 District Courts Rules 1992.”

[6] On 8 December the matter came before Judge RLB Spear. He issued a minute to the same effect as that issued by Judge Rea on 11 October. Memoranda by both the parties were filed. This was followed by a short telephone conversation with Judge RP Wolff. He issued a minute on the matter on 21 February in which he stated:

“1 The Court rules that Mr Gates does not have authority to file documents on behalf of the defendant. The reasons for that were not expanded at the pre-trial conference, but are now delivered as part of this ruling.

. . .

Reasons for Order No 1

Mr Gates is the senior solicitor employed by the NZI Insurance Company and has extensive experience in practice and in civil and insurance work in particular. He would clearly be qualified to be a solicitor in sole practice if he chose to practice in that way. He has not, however, made that choice and is working as an employee of the insurance company.

The defendant in this case is a business who has New Zealand Insurance as its insurer. That company has exercised its rights of subrogation in order to defend the claim that is now brought against it. This is not only practical, but usual and appropriate.

Two earlier Judges who have, for one reason or another, now ceased involvement with the file have raised concern about whether or not Mr Gates qualifies as a person entitled to file proceedings under Rule 38.

Clearly this is an important issue from Mr Gates’ point of view, and for a number of other legal practitioners who choose to be employed in a way similar to his style of employment.

The material provided reveals that both the New Zealand Law Society and the Auckland District Law Society are satisfied that Mr Gates complies with s 55 of the Legal Practitioners Act. It is clear that if he chose to practice on his own account he could do so. The simple point in this case is, however, that he does not practice on his own account and therefore does not comply with any of the pre-requisite conditions that allow him to file documents for the defendant in this case, as set out in Rule 38. It is for that reason I indicated at the telephone conference that I would so rule.

To ensure the practical disposition of this case, however, Mr Gates has agreed that another solicitor should be appointed. This is without prejudice to his right to appeal the present ruling and seek a declarity judgment which may resolve this matter, not only for him, but for a number of other practitioners.”

[7] It is Mr Gates’ contention Judge Wolff has erred in concluding he, Mr Gates, was not allowed to file documents for a party in terms of R 38 of the District Court Rules. He contends the Judge made an error in law in reaching such conclusion and further as a matter of law a person in his position does qualify under R 38 to file documents.

[8] Rule 38 provides:

“Authority to file documents-

No solicitor shall file any documents on behalf of any party unless the solicitor is either-

(a) A solicitor who is in practice on his or her own account or as a principal in a firm of solicitors; or

(b) A Crown counsel employed in the Crown Law Office; or

(c) Where the party is the Public Trustee,-

(i) A person of a kind described in paragraph (a) or paragraph (b); or

(ii) The Office Solicitor (as defined in section 2 of the Public Trust Office Act 1957); or

(d) Where the party is a Department (as defined in section 2 of the Public Finance Act 1989),-

(i) A person of a kind described in paragraph (a) or paragraph (b); or

(ii) The solicitor who is employed by that party as its Office Solicitor or principal legal adviser; or

(e) Where the party is a corporation-

(i) A person of a kind described in paragraph (a) or paragraph (b); or

(ii) The solicitor who is employed by that party as its principal legal adviser.”

[9] It follows that in these proceedings where the defendant is a corporation Mr Gates may file documents on its behalf if he is:

(a) A solicitor who is in practice on his own account or as a principal in a firm of solicitors; or

(b) A Crown counsel employed in the Crown Law Office; or

(c) The solicitor employed by that company as its principal legal adviser.

The issue which I must determine is whether Mr Gates is in practice on his own account.

[10] The Hamilton City Council has not been a party to the hearing before me. It did not raise the R 38 issue before the District Court. It was excused from attendance at the hearing before me. I have had the assistance of Mr Stanish, who was appointed Amicus Curiae. I am grateful for the help he has given me.

[11] Mr Asher’s submissions on behalf of Mr Gates can be summarised as follows:

[a] Mr Gates is practising on his own account on every occasion when he conducts litigation on the part of a person or company other than NZI. Mr Asher accepts when he does legal work for NZI he is doing such work as an employee.

[b] The Rules of Professional Conduct for barristers and solicitors, 6th edition 200 provide at page 4:

“Many practitioners are not in private practice either as barristers or solicitors. They practise their profession in salaried employment in commerce, the state service or elsewhere. Some of these practitioners, although salaried, have a right, by agreement with the employer, to conduct a private practice as well. To the extent that an employed practitioner conducts a private practice, that practitioner is bound by the provisions of the Solicitors’ Trust Account Regulations 1998, the Solicitors Trust Account Rules 1996 and other obligations in the same way as any other private practitioner. No matter which brand of legal work the salaried practitioner engages, and whether or not private practice is combined with the salaried occupation, the contents of this publication apply to every practitioner.” [Emphasis added].

Mr Gates is therefore a practitioner in a company, who on the occasions when he acts for insureds, is conducting a private practice.

[c] When he drafts proceedings and files proceedings or defends proceedings on behalf of a party other than NZI, Mr Gates must be regarded as acting for the party. If he is negligent in any aspect of his work he would be personally liable as a solicitor to the insured. He is therefore practising on his own account: Nicholson & Ors v Icepak Coolstores Ltd [1997] 3 NZLR 475.

[d] In proceedings such as NP 44/00 he has obligations to the insured over and above and in addition to any he owes to NZI;

[e] An insured in the position of WPSL is entitled to give instructions to Mr Gates;

[f] While the address for service given by Mr Gates is at NZI and although Mr Gates is employed by NZI, he has taken on professional obligations and duties towards the insured and is taking a step in the proceeding for the insured.

[12] For the foregoing reasons Mr Asher submits as a matter of fact and law Mr Gates is practising as a solicitor in practice on his own account at the time he files proceedings for an insured or appears or becomes involved in the same way as a solicitor does. He submits his actions, responsibilities and obligations are no less than a solicitor in private practice.

[13] Mr Asher further submits Rule 4 of the District Court Rules supports his contention. Rule 4 provides:

“4. Construction-

These rules shall be so construed as to secure the just, speedy, and inexpensive determination of any proceeding or interlocutory application.”

He submits if Mr Gates is unable to file documents then clearly insurance companies will have to instruct solicitors in private practice. This would mean in every case when insurance companies exercise their rights of subrogation a more unduly burdensome and costly process will have to be undertaken. Such he submits is clearly contrary to the provisions of Rule 4 and I should therefore adopt an interpretation of R 38 to comply with the aim and purpose of Rule 4.

[14] He further submits the situation for which I am required to rule was not envisaged at the time R 38 was passed. I accept this rule came into force in October 1991. It seems clear it was passed to ensure that documents were prepared by those with adequate experience (discussed at some length by Andrew Beck in “Documents in the High Court” [1992] NZLJ 16).

Judgment

[15] I find I am unable to accept Mr Asher’s submissions. The indicia, which include correspondence by Mr Gates on letterhead of NZI, signed correspondence as company solicitor, his address for service as NZI are all at odds with the concept of him conducting practice on his own account. Nor does he practise at separate premises. Nor as I understand it does he bill clients. There are therefore none of the indicia which one would expect when one considers a normal client and solicitor relationship.

[16] As I see it is straightforward enough: namely, while the applicant is acting in the name of the insured, he is in reality acting for the insurer and looking after its interests. Even when he receives instructions in relation to an insured’s interest, he still acts for the insurer and at all times is an employee of it. I do not accept, because Mr Gates has the qualifications to practise on his own account, even with the other factors stressed by Mr Asher, he thereby satisfies the provisions of R 38. Had the Rule intended this to be the position it would have said so. There is a vast difference between having the right to practise on one’s own account and in fact doing so. This difference must be given effect to. I therefore consider the District Court Judge’s conclusion was correct. The application is dismissed.

[17] I will hear the parties further on costs if this is necessary.