Liu v Cutting HC Auckland CIV-2011-404-000695

[2011] NZHC 1623

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:      6 October 2011

JUDGMENT OF WILLIAMS J

In accordance with r 11.5, I direct the Registrar to endorse this judgment with the delivery time of 12.00pm on the 6th October 2011.

YICHUAN (JESSIE) LIU V DEREK EDWIN CUTTING HC AK CIV-2011-404-000695 6 October 2011

[1]      On 14 July 2011 I allowed an appeal by Mr Liu, Mr Lau and Ms Qiu against the District Court’s refusal to set aside a default judgment in favour of Mr Cutting. Mr Cutting had  taken  proceedings  to  recover the fee of Mr Keene,  a  barrister. Mr Keene represented Mr Cutting throughout.  On 17 August 2011, Mr Keene filed an application for leave to appeal to the Court of Appeal, six days out of time.

[2]      The test for whether leave to appeal should be granted is whether the appeal:[1]

[1] Waller v Hider [1998] 1 NZLR 412 (CA).

(a)      will raise a question of law or fact capable of bona fide and serious argument; and

(b)will involve some interest, public or private, of sufficient importance to outweigh the cost and delay of a further appeal.

[3]      Counsel for Mr Keene, Mr Illingworth QC, argued that the appeal would raise three questions that would meet the test above. Those questions are:

(a) Where a solicitor sues a former client in the District Court for a fee and where, under the Lawyers and Conveyancers Act 2006 the Legal Complaints Review Officer makes a final determination as to the reasonableness of the fee, do the District Court, or the High Court on appeal from the District Court, have jurisdiction to inquire into the same issue?

(b)In a situation of that kind, if the former client complains about the conduct of a barrister whose fee the solicitor is seeking to recover, is the barrister precluded from appearing as counsel in the proceedings in circumstances where the same complaint has been finally determined under the Act?

(c)      Where a practitioner sues a former client for fees, and the former client complains to the New Zealand Law Society concerning the

reasonableness of the fee, how does the automatic stay of proceedings

required by s 161(1) of the Act operate with regard to the computation of time for the filing of a statement of defence by the former client?

[4]      I accept that those questions are capable of bona fide and serious argument, however the problem for Mr Keene is that they do not challenge the determinative factor in my decision.

[5] The primary ground on which the appeal was allowed was that there was no direct evidence as to when the bar on proceedings in s 161 of the Lawyers and Conveyancers Act 2006 ended. Without that evidence, it was not possible to determine when the time for filing a statement of defence had expired such that default judgment could be entered against the appellants. Under s 161, the statutory bar on proceedings ended when the outcome of the review was “reported” to the three complainants. I said:

[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  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.

[6]      Accordingly, I concluded that the learned Judge could not, on the evidence before her, have concluded, even on her method of computing time, that the 30 day requirement had been met in the case of each of the appellants.

[7]      After I raised this issue with him, Mr Illingworth QC belatedly challenged that finding on the basis that it was open to the learned Judge to infer that the appellants received the LCRO decision in the normal course of post within a few days of the date of the covering letter.  That cannot be so. There is, as I have said, no evidence at all of when Mr Lau and Ms Qiu received the report, or even when it was sent to them.   In respect of Mr Liu, assuming he received it at the same time as Mr Keene – that is on 5 October – the 30 day period had still not elapsed by the default judgment date.   The point is simply not capable of serious and bona fide argument.

[8]      While  I  accept  that  there  may  be  a  serious  question  as  to  whether  the appellants can successfully defend the claim for Mr Keene’s fee, that should be taken up in a strike out application or at a substantive hearing in the District Court.  An applicant is entitled to have a default judgment set aside where it has been irregularly obtained.

[9]      Leave to appeal, and the associated extension of time, is refused accordingly.

Williams J