McGuire v Wellington Standards Committee (No 1)
[2014] NZHC 1159
•28 May 2014
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
CIV-2014-485-2454 [2014] NZHC 1159
UNDER the Judicature Amendment Act 1972 BETWEEN
JEREMY JAMES McGUIRE Applicant
AND
WELLINGTON STANDARDS COMMITTEE (NO 1)
First Respondent
THE LAWYERS AND CONVEYANCERS DISCIPLINARY TRIBUNAL
Second Respondent
Hearing: 27 May 2014 Counsel:
Plaintiff in person
T J Mackenzie for DefendantJudgment:
28 May 2014
INTERIM JUDGMENT OF THE HON JUSTICE KÓS (Waiver of privilege)
[1] Mr McGuire is a solicitor. The Lawyers and Conveyancers Disciplinary Tribunal1 has found him guilty of unsatisfactory conduct in connection with a fee arrangement made with a legally-aided client. The finding was hardly surprising. Mr McGuire had pleaded guilty. Notwithstanding, he applies for judicial review.
[2] Mr McGuire had in fact been charged with two counts of misconduct. But at the Tribunal hearing he pleaded guilty instead to a single charge of unsatisfactory conduct. The misconduct charges were withdrawn. He now says that the bringing of
that substitute charge, and the determination made on his own plea, are unlawful.
1 Herein the Tribunal.
[3] This interim judgment is concerned simply with the issue of whether Mr McGuire has, by his pleadings and affidavit evidence, waived privilege over communications with his counsel at the hearing. And, if so, whether the first respondent committee, which has carriage of the defence of this proceeding, may adduce evidence in response from those counsel.
[4] The manner in which Mr McGuire pleads his case appears to put in issue his understanding of the Tribunal’s process. In affidavit evidence he describes certain conversations with his counsel during the hearing. The committee says that Mr McGuire has thus waived legal professional privilege in the communications he had with his counsel. It applies for “orders” – in effect declarations – that there has been such waiver, and that any affidavit evidence given in the proceeding by Mr McGuire’s former counsel would be admissible.
[5] Has privilege been waived? What orders should this Court make?
Background
[6] In 2008 a client of Mr McGuire laid a complaint against him with the Law Society. She had retained him to represent her in proceedings concerning her grandmother’s estate. Those proceedings were settled at a judicial settlement conference. The client was legally aided. But she also entered two contingency fee arrangements, and a fixed fee arrangement, with Mr McGuire. After the complaint was made. Mr McGuire issued proceedings to recover sums under those arrangements. A District Court Judge issued a stay of those proceedings.
[7] Mr McGuire was then charged with two counts of misconduct.2 One was for rendering an invoice, allegedly in breach of s 66 of the Legal Services Act 2000. The second was for commencing proceedings against the client to recover costs after having received a complaint, in breach of s 161 of the Lawyers and Conveyancers
Act 2006.
2 Lawyers and Conveyancers Act 2006, s 7.
[8] On the first day of the hearing before the Tribunal, on 19 October 2011, it became apparent that the s 66 charge could not succeed. That provision is not breached unless a lawyer has received payment. The Tribunal refused leave to amend the charge. Senior counsel appearing for Mr McGuire3 then proposed an alternative course to resolve the remaining charge. Mr McGuire would accept some of the allegations and undertake a mentoring and supervision programme.
Discussions took place between Mr McGuire’s counsel and the prosecutor overnight. It is a singular feature of the first day of the hearing that Mr McGuire attended very little of it. Because of stress, he preferred to wait outside and leave matters to counsel.
[9] The following morning, on 20 October 2011, Mr McGuire came before the Tribunal. He pleaded guilty to an amended charge of unsatisfactory conduct by commencing recovery proceedings in breach of s 161. The misconduct charges were withdrawn. The Tribunal formally recorded the guilty plea on 25 October 2011. It reserved its decision on penalty and costs pending satisfactory completion by Mr McGuire of an agreed 18-month mentoring programme under a senior practitioner.
[10] On 3 October 2013, after considering Mr McGuire’s performance under mentoring, the Tribunal imposed a sanction of formal censure. And it made a costs order of $14,700.
[11] No appeal against that decision has been laid. Instead, on 7 March 2014, Mr McGuire filed an application for judicial review of the actions of both the standards committee and the Tribunal.
[12] On 20 May 2014 he filed an amended statement of claim. The first cause of action challenges a determination made by the committee in April 2009. It need not concern us further. The second cause of action challenges the institution of the unsatisfactory conduct charge on 20 October 2011. Paragraph 51 of the amended
statement of claim reads:
3 He was represented by Queen’s Counsel and by junior counsel.
51.The laying of the new charge was invalid and in breach of the rules of natural justice.
In argument, however, Mr McGuire explained that the challenge is really based upon two arguments concerning vires and delay. Breach of natural justice forms no part of the second cause of action. The amended statement of claim will need to be repleaded to reflect that concession.
[13] The third cause of action is what matters here. It seeks review of the decisions of the Tribunal on 20 October 2011 and 3 October 2013. So far as is relevant, paragraphs 67 and 68 read:
67.The lengthy delay in the determination of the disciplinary proceeding was unreasonable and in breach of the applicant’s legitimate expectation of a determination within a reasonable time.
68.The failure by the disciplinary tribunal to adjourn the disciplinary proceedings before the applicant pleaded guilty to the unexpected and purportedly valid unsatisfactory conduct charge denied the applicant with the opportunity and time to carefully consider his position and provide proper and measured instructions to his counsel as provided by regulation 24(2)(a) of the disciplinary regulations.
Relief sought includes a declaration that the decision of 3 October 2013 is invalid, and an order setting it aside.
[14] Paragraph 67 is reasonably clear on its face. It asserts a legitimate expectation as to process duration. That will, if it remains pleaded thus, call for inquiry into the information conveyed to Mr McGuire. A live question, given Mr McGuire’s absence from the room on day1, is whether advice from the Tribunal to his counsel, was advice to him. One would rather have thought that it was.
[15] But paragraph 68 is less clear. It is, on its face, an allegation of breach of natural justice by the Tribunal. Mr McGuire advises that the case being made by paragraph 68 is that he was unable, because of the Tribunal’s process, to make an informed decision to plead guilty to the substituted unsatisfactory conduct charge. Mr McGuire also made clear that he is not suggesting that the Tribunal should have been aware that his counsel was acting without instruction, or that Mr McGuire was
not making an informed choice when pleading guilty. Nor does he criticise his counsel. He says they were doing their best to help him after late instruction.
[16] I have to say that it is difficult to apprehend how a disciplinary tribunal, without reason to suspect that a clear election to plead guilty was not the product of an informed choice, could be said to have breached natural justice. After all, Mr McGuire was represented by Queen’s Counsel and by junior counsel, and an overnight adjournment had preceded the entry of the plea. That paradox, however, will be for the trial Judge to resolve.
[17] Mr McGuire has filed two affidavits in support of his application for review. The latter is filed in substitution for the former. The former reveals more of the content of communications between himself and his senior counsel. But Mr Mackenzie (for the committee) sensibly accepts that what matters is the second, substituted affidavit. His submissions focused on that document. So far as is relevant, it contains these passages:
49. After the hearing had been adjourned that day I immediately drove back to Palmerston North. Mr [X] QC4 rang me while I was getting petrol in Palmerston North. He asked me if I could suggest any local practitioners who could supervise me if I voluntarily agreed to informal supervision. I remember we talked about [Mr Y]’s5 suitability…
…
53 As far as I am aware Ms Rice6 instructed Mr Sainsbury7 about matters during this time. Mr [X] QC told me he did not have any contact with members of the standards committee.
…
57 I am pretty disappointed with this decision. It was cited as one of the reasons why I was not given a legal aid contract under the new legal aid regime. I had to wait years before I could even apply because of the delays over finishing off the disciplinary proceedings. I actually asked Mr [X] QC and Ms [Z]8 to contact the disciplinary tribunal to ask that this matter be resumed so I could get it over with. As I say, it was impeding my application for a legal aid contract.
…
4 Mr McGuire’s senior counsel.
5 The proposed mentor-supervisor.
6 The Law Society’s standards officer.
7 The prosecutor.
8 Mr McGuire’s junior counsel.
65 I am not worried about what happened in the past except insofar as it may affect my future. For example, I have no intention of ever allowing myself to be exposed to any form of disciplinary proceedings in future. I told Mr [X] QC that I would rather cease practising of my own choice rather than go through this nightmare again.
Has Mr McGuire waived privilege?
Submissions
[18] For the Committee, Mr Mackenzie submits that issues at trial will include:
(a) Whether in pleading guilty, Mr McGuire knew this meant he accepted the charge and that a hearing to prove the charge would not therefore be required before a penalty could issue
(b) Whether Mr McGuire knew he was pleading guilty and why?
(c) Whether Mr McGuire required an adjournment before that occurred? (d) Whether Mr McGuire knew why the lengthy adjournment then
occurred?
[19] Mr Mackenzie then referred to the passages of pleadings and affidavit evidence quoted above. He submitted that these amount to a waiver of privilege. It would be inconsistent with a parallel claim of privilege for Mr McGuire to be able to advance negative stances on the four issues identified. The claim therefore raises issues that cannot be decided without the conduct, advice and actions of his counsel being considered. Mr Mackenzie submitted that the Court must be entitled to hear, from counsel, as to the extent of Mr McGuire’s knowledge of the first day’s proceedings, the proposal considered overnight, his understanding of what a guilty plea entailed, his understanding of the amended charge, and his understanding of the lengthy adjournment mooted and adopted.
[20] In opposition Mr McGuire submitted that legal professional privilege is of fundamental importance. He denies he has put communications between himself and his counsel in issue. In particular, in the amended statement of claim and
substitute affidavit. If he had waived privilege, that was accidental. He would seek leave to be able to rectify that promptly.
Analysis
[21] Section 65 of the Evidence Act 2006 provides (so far as relevant):
65 Waiver
(1) A person who has a privilege conferred by any of sections 54 to 60 and 64 may waive that privilege either expressly or impliedly.
(2) A person who has a privilege waives the privilege if that person, or anyone with the authority of that person, voluntarily produces or discloses, or consents to the production or disclosure of, any significant part of the privileged communication, information, opinion, or document in circumstances that are inconsistent with a claim of confidentiality.
(3) A person who has a privilege waives the privilege if the person—
(a) acts so as to put the privileged communication, information, opinion, or document in issue in a proceeding; or
(b) institutes a civil proceeding against a person who is in possession of the privileged communication, information, opinion, or document the effect of which is to put the privileged matter in issue in the proceeding.
(4) A person who has a privilege in respect of a communication, information, opinion, or document that has been disclosed to another person does not waive the privilege if the disclosure occurred involuntarily or mistakenly or otherwise without the consent of the person who has the privilege.
[22] In most cases disclosure of confidential, privileged material means that the material disclosed loses its privilege. That is axiomatic. Privilege depends upon confidentiality. Material disclosed (e.g. in an affidavit or pleading) is no longer confidential. Ergo, nor is it privileged. An exception of course exists where s 65(4) applies, or there is another effective limitation on loss of confidence.9
[23] It also follows from s 65(2) that if a “significant part” of the privileged
information is disclosed, the balance of that material is susceptible to being required
9 Confidentiality (and therefore privilege) may not be not lost where material is disclosed to a third party in confidence, without prejudice to the privilege. See the discussion (and cases cited) in Matthews & Malek Disclosure (4th ed, Sweet & Maxwell, London, 2012) at [16.10].
to be disclosed. That may be a simple enough question in the context of documentary material. The unqualified disclosure of part of a document may (although not always) command disclosure of the balance. But what about a chain of communication between client and counsel? It does not follow from the unqualified disclosure of part of the chain of communication that the entirety of communication between client and counsel, from the day of their first acquaintance, must be produced. The same consideration applies under s 65(3)(a), where the holder of privilege has put the privileged communication “in issue”. However in Shannon v Shannon the Court of Appeal made the important observation that the effect of s
65(3)(a) is narrower than it might seem:10
The paragraph talks about putting the privileged communication in issue. This is not the same thing as putting a matter in issue which cannot fairly be assessed without reference to the relevant legal advice.
[24] In this case, there is no question that the particular communications quoted or summarised, to the extent disclosed, are no longer privileged. They have lost their quality of confidence. The real question in this case, and in others like it, is the extent to which further disclosure must be made in consequence.
[25] Section 65 has received little attention at Court of Appeal level. The two leading Court of Appeal cases are Ophthalmological Society of New Zealand Inc v Commerce Commission11 and Shannon v Shannon.12 Although preceding the Evidence Act 2006, Shannon discusses the text of the Law Commission’s draft evidence code which, verbatim, is the foundation of s 65. As the Law Commission made clear at the time, its draft was simply intended to codify the existing common law.13 Both authorities remain relevant today. In Ophthalmological Society the
Court of Appeal said:14
... it is the Court’s objective judgment as to the consistency of the conduct with maintaining the privilege which must be assessed in all the circumstances. That requires close analysis of the particular context: what is the issue in relation to the privilege; how does the evidence relate to that
10 Shannon v Shannon [2005] 3 NZLR 757 (CA), at [47].
11 Ophthalmological Society of New Zealand Inc v Commerce Commission [2003] 2 NZLR 145 (CA).
12 Shannon v Shannon [2005] 3 NZLR 757 (CA).
13 Law Commission Evidence (NZLC R55, vol 1, 1999), at [316].
14 At [30].
issue; and is there inconsistency that could lead to injustice if the privilege is upheld. The weight to be given to fairness in the Court’s exercise of judgment will differ according to the circumstances including the character of the privilege it is said has been waived which, as in this case it is litigation privilege.
[26] Bearing in mind the codification objective underlying s 65, it is important to bear in mind Lord Millett’s observation in B v Auckland District Law Society that “[t]he question is not whether privilege has been waived but whether it has been lost”.15 That qualification reflects both the contextual nature of the analysis required, and the broad jurisdiction of the Court to determine the necessity for an order for production, or for the admission of particular evidence. It also follows that
I find unappealing any resort to metaphorical analysis along the lines of unbagged cats being forever free, or rung bells being incapable of being unrung. To give Mr Mackenzie his due, he did not suggest them here. He accepted, quite properly, that the mere fact of disclosure of privileged material did not mean, ipso facto, that other parties had a right to production or admission of associated undisclosed material. The exercise is far more nuanced than that.
[27] The following points are, I think, relevant to consideration of the extent to which other parties are entitled to reach when there has been a partial waiver of privilege. The issue will normally apply in an application for further and better discovery. Or it may arise where pre-emptive orders are sought for the admission of proposed evidence. The first question concerns relevance. How is the further material relevant to matters truly in issue in the proceeding? That requires a robust assessment of the pleadings, and what evidence legitimately may be admitted on the issues in the case. The fact of disclosure of privileged material often seems to distract otherwise concentrated minds. The material (and yet-undisclosed further material) is often quite irrelevant to what really is in issue. The second question concerns consequence. Assuming relevance, what injustice may arise if the remaining privilege is preserved, and the further material is not produced or adduced? Only by weighing those two questions in the entire context of the proceeding can the Court decide whether it is necessary in the interests of justice to direct that further material be produced, and be admissible at trial. Because only if it
is necessary to avoid real injustice should privilege beyond what has already been
15 B v Auckland District Law Society [2004] 1 NZLR 326 (PC), at [68].
disclosed be held to have been waived. And then, the extent of production or admission will be restricted to what is necessary adequately to ameliorate that injustice.
[28] In this case the issues may or may not be those identified by Mr Mackenzie at [18]. The need for proper particularisation of paragraphs 67 and 68 means it is premature to form a final view. It is for that reason that this is an interim judgment only.
[29] Paragraph 67 of the amended statement of claim puts in issue Mr McGuire’s legitimate expectation as to prompt determination by the Tribunal. If it remains in its current form at trial, it may perhaps put in issue what he was advised by counsel. Taking a robust view, however, that is not necessarily the case. On a plea of legitimate expectation, why would the Court discriminate between Mr McGuire and his counsel? Communications from the Tribunal to Mr X QC cannot be disregarded. Whatever Mr McGuire may have been led to expect personally must be subject to modification by communication from the Tribunal (and the prosecutor) to Mr X QC. Particularly when Mr McGuire chose to absent himself, voluntarily, from the
hearing.16 On that analysis, the relevance of what Mr X QC did or did not tell him
is unclear. At present I accept that such communications may possibly be relevant. But I am not yet satisfied that a case has been made out that production or admission of these communications is necessary to avoid injustice. In any event, repleading or particularisation may alter the position materially.
[30] Paragraph 68 of the amended statement of claim creates, as currently drafted, a stronger case for production and admission of further material. This seeks to make the case that Mr McGuire was unable to make an informed decision to plead guilty to the substituted charge. In his original affidavit Mr McGuire had sworn that he did not know that Mr X QC would, on day 1, propose this course by way of resolution. He also says that a letter from Mr X QC to his insurer confirms that. The letter, which is exhibited, in fact does no such thing. In his substitute affidavit these
paragraphs have been deleted. Instead he swears:
16 R v Secretary of State for the Home Department, ex parte Al-Mehdawi [1990] 1 AC 876 (HL).
48. I was outside when Mr [X QC] spoke to the Tribunal ...
The implication remains one of ignorance of what had transpired. That is reinforced by the next paragraph of the affidavit, quoted at [17] above. And by paragraphs 50 and 51, which imply he only became aware of the proposed substitute charge when the hearing resumed on day 2, and had time only to skim read it before pleading guilty.
[31] If that pleading remains in its present form, the information Mr McGuire held, including from his counsel, may conceivably be relevant. But the point noted at [16] remains. That is, regardless of what Mr McGuire knew, how the Tribunal could be said to have breached natural justice when it had no evident reason to suspect that his election to plead guilty was an uninformed choice. Particularly given the negotiation process, overnight adjournment, the entry of plea and the absence of prompt protest thereafter. These are profound hurdles in the way of success on this plea.
[32] All that can be said on the natural justice plea at this stage is that, if paragraph 68 remains as it is, the committee has a reasonable basis to assert both relevance and injustice if it cannot answer that pleading, and the evidence offered in support of it, by reference to what Mr McGuire was informed by his counsel. In that case, privilege in those communications may, for that purpose, be lost.
Where to now?
[33] Mr McGuire has advised that he is taking advice from new senior counsel, with particular experience in the field of judicial review. I commend that course of action. In the circumstances, therefore, I think it is proper to give Mr McGuire the opportunity to take advice in light of this judgment.
[34] Paragraphs 67 and 68 must at least be particularised properly. Moreover, if their current substance is maintained, there is a real prospect that privilege will be lost in some of the communications between Mr McGuire and his counsel. Particularly in the case of paragraph 68.
[35] I will give Mr McGuire 14 days to take advice and to replead. He is to file and serve a second amended statement of claim no later than 10 June 2014.
[36] Within 7 days of service of that pleading, the respondents are to advise whether this application is still pursued. Brief written submissions may be filed at the same time. Mr McGuire will have 7 days to respond, similarly. I will then determine the application on the papers.
[37] For the avoidance of doubt, none of this precludes an application to the trial
Judge to admit affidavit evidence from Mr X QC, or Ms Z.
[38] Costs are reserved. I will deal with them if the present application is renewed. Otherwise, they will be determined by the trial Judge in due course.
Stephen Kós J
To: Plaintiff
Solicitor:
Wynn Williams, Christchurch for First Respondent
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