Liu v Cutting HC Auckland CIV 2007-404
[2011] NZHC 912
•14 July 2011
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2011-404-000695
BETWEEN YICHUAN (JESSIE) LIU KIN TO (STEVEN) LAU
ANDDINAH QIU Appellants
ANDDEREK EDWIN CUTTING Respondent
Hearing: 6 July 2011
Counsel: Appellants in Person
G A Keene for Respondent
Judgment: 14 July 2011
JUDGMENT OF WILLIAMS J
In accordance with r 11.5, I direct the Registrar to endorse this judgment with the delivery time of 2:30pm on the 14th July 2011.
YICHUAN (JESSIE) LIU V DEREK EDWIN CUTTING HC AK CIV-2011-404-000695 14 July 2011
[1] Mr Liu was assaulted at school. His parents sued the school. Mr Keene was the barrister. Mr Liu’s parents – Mr Lau and Ms Qiu – became unhappy with Mr Keene’s performance and terminated his services. By that stage Mr Keene had outstanding fees of approximately $15,000. Approximately $20,000 had already been billed and paid for. The appellants would not pay the $15,000 outstanding. Mr Keene’s instructing solicitor – Mr Cutting – filed a claim in the District Court on behalf of Mr Keene seeking judgment for the outstanding fees.
[2] From this point on the timeline becomes important because one of the issues in this appeal is whether the 30 days required by the District Court Rules 1992 had elapsed before default judgment against the appellants was entered in the District
Court. I set the dates out in columns accordingly as the story progresses.
24/3/09 Statement of Claim filed 2/4/09 Mr Lau and Ms Qiu served 8/4/09 Mr Liu served
[3] The appellants responded by complaining to the New Zealand Law Society
(NZLS) about both the fee and other aspects of Mr Keene’s performance. NZLS
formally notified Mr Keene of the complaint.
14/4/09 Appellants lodge complaint with NZLS 24/4/09 NZLS notifies Mr Keene of complaint
[4] The complaint triggered s 161 of the Lawyers and Conveyancers Act 2006. The plaintiff’s proceeding could not be “proceeded with until after the complaint has been finally disposed of”.
[5] The costs assessor appointed by the NZLS Standards Committee No. 3, David Towle, Barrister issued a report dated 21 December 2009 upholding Mr Keene’s fee “by a small margin”. The Standards Committee resolved on
23 February 2010 to take no further action. The appellants applied to the Legal
Complaints Review Officer (LCRO) under s 193 of the Act for reconsideration. By decision dated 1 October 2010 the LCRO confirmed the decision of the Standards Committee. It is not clear when that decision was received by the appellants, but on Mr Keene’s copy of the decision (attachment M to Mr Keene’s affidavit) he received it on 5 October 2010. I note also that Mr Liu is an addressee on that letter but Mr Lau and Ms Qiu are not.
[6] With the LCRO decision now in hand, Mr Keene recommenced the recovery proceeding. On 14 October 2010 he applied for judgment by default, and on 18
October judgment was entered.
1/10/10 Date of NZLS decision to dismiss appellant’s complaint 5/10/10 Mr Keene receives LCRO decision 14/10/10 Respondent applies for judgment by default 18/10/10 Judgement entered by default
[7] On 15 November 2010 the appellants applied to set aside that judgment. According to r 473 of the District Court Rules, judgment may be set aside on any terms the court thinks fit if it appears there has been or may have been “a miscarriage of justice”.
[8] By judgment dated 20 January 2011, Her Honour Judge Sharp dismissed the application. Her Honour found that the 30 day period for filing a defence had elapsed. By calculating the number of days either side of the statutory stay period from service of the proceedings on the 2nd and 8th of April 2009 to default judgment on 18 April 2010, Her Honour found that there had been a clear 39 days in respect of Mr Lau and Ms Qiu, and 33 days in respect of Mr Liu.
[9] On the substantive issues, Her Honour found that the fee claimed had been affirmed by the LCRO and that she could not revisit that issue. She ultimately concluded therefore that it was not in the interests of justice to vacate the default judgment.
[10] The appellants now appeal. Their submissions and grounds were spread across at least three closely typed documents, but I would reduce the matters advanced to the following:
(a) 30 days had not elapsed before default judgment;
(b)Mr Keene could not appear as counsel in this case because he had put an affidavit in containing controversial material; he was in any event conflicted; and his appearance at court was in breach of the intervention rule;
(c) Mr Keene did not competently carry out his task as counsel;
(d)Mr Keene had filed his submissions two and a half months late on this appeal and late as well in the District Court. I was for that reason invited to refuse to read the submissions before me.
[11] For his part Mr Keene argued that the issue of his fee and performance had been reviewed twice now and that in accordance with s 161(3) of the Lawyers and Conveyancers Act, that determination is “final and conclusive”.
[12] Mr Keene also argued that Her Honour’s calculation of the 30 days required before a default judgment can be entered was sound and that there had been no technical breach of the relevant procedural requirements.
Analysis
[13] In my mind Mr Keene has a number of procedural difficulties in resisting this appeal. They relate to:
(a) whether he could appear as a barrister either in the District Court or this court in support of his proceeding;
(b)whether Her Honour Judge Sharp had evidence that the procedural requirements for LCRO “reporting” its decision in terms of ss 161 and
213 of the Lawyers and Conveyancers Act had been met;
(c) whether the 30 day requirement could be stopped and restarted in the way contended for by Mr Keene.
[14] I will deal with the issues in that order.
Rules of conduct and intervention
[15] I note at the outset that Mr Keene sought a brief overnight adjournment to consider this particular heading before filing written submissions, because, he said he had not realised that this might be an issue. I granted him that indulgence in the face of opposition from the appellants. I received Mr Keene’s submissions and Mr Liu’s brief reply the next day.
[16] The question under this heading is whether Mr Keene was allowed to appear on this proceeding either in the District Court or this court. I think the combined effect of Atkinson v Pengelly1 and r 13.5.3 of the Rules of Conduct and Client Care (RCCC) is that Mr Keene should not have been allowed to appear in either court. Pengelly stands for the intervention rule that precludes a barrister from suing for his or her own fees. There are, I accept, moves afoot to abolish that rule. I neither
express nor have an opinion in that debate but until abolition occurs, Pengelly
remains good law.
[17] Mr Keene is not of course in breach of that rule in this proceeding because he is technically appearing for Mr Cutting not for himself, even though the fee Mr Cutting sues for is entirely Mr Keene’s. That is not the problem.
[18] Rule 13.5.3 of the RCCC provides as follows:
A lawyer must not act in a proceeding if the conduct or advice of the lawyer
or of another member of the lawyer’s practice is in issue in the matter before
1 [1995] 3 NZLR 104 (HC).
the court. This rule does not apply where the lawyer is acting for himself or herself, or for the member of the practice whose actions are in issue.
[19] The first proposition is that Mr Keene’s conduct is squarely in issue in this appeal – both as to the quality of the work he did when instructed, and as to the fact that he appeared in the District Court to procure the default judgment and in this court to defend it. Mr Keene says his conduct is not at issue because his fee for work has been upheld “finally and conclusively” by the LCRO. He argued it is no longer open to the appellants to contest the substance of his work or the bill itself. I do not think that submission can be correct technically because it will always be open to this court to correct errors of law committed by entities exercising statutory powers. In this case, the appellants argue that Mr Keene’s performance fell below the standard required by the Lawyers and Conveyancers Act. They say for example that he withheld documents from them and told them he had not. Whatever their rights and wrongs, they are clearly allegations relating Mr Keene’s conduct.
[20] Even if the foregoing is wrong, it is clear in my view that by appearing in support of the application for default judgment, and for the respondent in this appeal, in circumstances where his appearance is specifically objected to, as a ground of opposition and appeal, Mr Keene engaged in conduct now at issue in this appeal in accordance with the first sentence in r 13.5.3. In short, I am clear that appearing in support of this proceeding amounts to “conduct … in the matter before the court” and it is obviously in issue.
[21] Mr Keene argued that while that might be the case in terms of the strict wording of the rule, its spirit is not engaged. I am not quite sure I understand the point being made, but in any event the words appear to me to be reasonably clear, and must be applied.
[22] Mr Keene is therefore caught by the primary rule in 13.5.3 unless he can fit within its exception. That is only, as Judge Sharp correctly noted, if he is acting for himself. Judge Sharp said he effectively was. The problem with that conclusion is that it offends the rule in Pengelly. Mr Keene is not allowed to act for himself so cannot, in my view, bring himself within the exception to this rule.
[23] I am not sure whether that problem is enough on its own to allow the appeal. I need not express an opinion on that given my conclusion on later matters. But it must be relevant in my overall assessment of the appeal.
Was the review “reported”?
[24] Judge Sharp found that the LCRO had “rendered”2 and “published”3 its decision on 1 October. I note that the term “published” reflects the phrase used in Mr Keene’s affidavit4 in opposition to the appellants’ original application to set aside the default judgment. Neither phrase reflects, as I have indicated, the statutory language in ss 161 and 213. That language does not seem to have been brought to the attention of the learned Judge. Section 213 says the LCRO “must report” the outcome of each review to the relevant Standards Committee, the applicant and various affected parties including the individual complained against. This provision
is carried back to s 161. It will be recalled that s 161 is the provision that effects a stay of any proceedings for recovery of costs while the review is being carried out. The stay remains in place until the complaint has been “finally disposed of”. This term is defined for our purposes in s 161(4)(b). It means when the LCRO has “reported” the outcome of the review to the complainant, the practitioner, and the Standards Committee.
[25] There is no direct evidence as to when the outcome of the review was reported to the three complainants.
[26] I take the term “report” in ss 161 and 213 to mean communicate to or advise. I do not consider it is enough to take the date of the covering letter of the review decision – that is 1 October 2010 – and treat that as the report date. “Report” implies in my view that whatever is reported has in fact been seen or heard by the intended recipient. The purpose of the provision is not served if it does not require that the
complainants must actually receive the decision. According to Mr Keene’s evidence
2 At [6].
3 At [12].
4 At [13].
he received the report on 5 October. At least insofar as he is concerned therefore, the report date was the 5th.
[27] The review covering letter is also addressed to Mr Liu but I have no idea when he might have received it, and therefore on Judge Sharp’s reasoning, when the clock should have restarted. The other two appellants, Mr Lau and Ms Qiu are not addressees at all. Again, I do not know whether they received it at the same time as Mr Liu or at some later time. I do not know whether the three appellants cohabitate.
[28] And even if I am wrong, and “report” only requires that the decision was sent, there is no evidence of the date on which the decision was sent to the appellants.
[29] Thus, apart from the date in relation to Mr Keene (it being both irrelevant to this appeal and later than the date adopted by Judge Sharp), there is no evidence as to when the stay expired.
[30] It seems to me that information is important given that the 30 day period is a gateway requirement.
[31] Even if I accepted that Mr Liu received the review on 5 October, the 30 day period for him at least, had not expired by the date of the default judgment.
[32] I find that the learned Judge could not, on the evidence before her, have concluded that the 30 day requirement had been met in the case of each of the appellants.
Could the 30 day period stop and restart?
[33] There is a second question about when the stay period is to commence in accordance with the wording of s 161(1). The relevant part of the subsection provides:
If, under s 141, a Standards Committee gives notice to a practitioner … that it has received a complaint under s 132(2) about the amount of a bill of costs rendered by that practitioner … no proceedings for the recovery of the
amount of the bill may be commenced or proceeded with until after the complaint has been finally disposed of.
[34] Is the stay to commence at the date upon which the Standards Committee receives the complaint, or the date of notice to the practitioner? I presume that it must be the date of notice to the practitioner since its purpose is to stay the hand of that practitioner. After all, the practitioner will at least need to know he or she should take no further steps.
[35] Having said that, is it contemplated that the 30 day clock can be stopped and then restarted after completion of the review? I do not think so. The subsection says proceedings cannot be commenced or proceeded with during a review. It does not say “commenced or continued” a phrase, in my view, more apt to allow the clock to stop and start. Although, it is strictly speaking unnecessary for me to reach a view on this, I tend to think that the 30 day period should start afresh once the review is completed. That is, the claim cannot proceed at all until after the review. Apart from being consistent with the phrase “proceeded with”, that interpretation seems to me a fairer one. For example, the time between making the complaint to NZLS, and NZLS notifying the practitioner, triggering the stay, is outside the appellants’ control. On different facts, complainants may be left with only a day or no time at all to file a defence following the NZLS decision.
[36] In the end, this is simply a default judgment procedure and the Act and rules ought to be interpreted in a way that allows the appellants proper time after the LCRO has completed his or her work to take steps if they wish to.
[37] The appeal is allowed and the default judgment is set aside. The appellants will have 30 days in which to file and serve a defence to the proceeding.
[38] There will be no costs award since the appellants appeared on their own account. This is, if I may say so, a case which cries out to be settled on some amicable basis in which both sides compromise. I invite the parties to explore that
possibility.
Williams J
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