McVeagh v Auckland District Law Society HC Auckland M1534-Sd01

[2001] NZHC 1113

IN THE HIGH COURT OF NEW ZEALAND
AUCKLAND REGISTRY M1534-SD01

IN THE MATTER of the Judicature Amendment Act 1972, the Law Practitioners Act 1982, the New Zealand Bill of Rights Act 1990 and the Declaratory Judgments Act 1908

BETWEEN RUSSELL McVEAGH
First Plaintiff

AND B & ORS
Second Plaintiffs

AND AUCKLAND DISTRICT LAW SOCIETY
Defendant

Date: 26 October 2001

Date of judgment 16 November 2001

Counsel: R J Craddock QC and A L Ringwood for plaintiffs
J R Billington QC for defendant

JUDGMENT OF O’REGAN J

Solicitors:
Bell Gully, PO Box 4199 Auckland for plaintiffs
M J Chapman, Auckland District Law Society, PO Box 58, Auckland for defendant

Introduction

[1] Russell McVeagh and the second plaintiffs have commenced proceedings against the Auckland District Law Society (ADLS) relating to the conduct of the investigation by a complaints committee of the ADLS into various complaints made against Russell McVeagh and the second plaintiffs. Those complaints arose out of legal proceedings in relation to the failure of three special partnerships formed for the purpose of bloodstock investment in the 1980s. This is the third separate proceeding in regard to the same subject matter. The first was B & Ors v ADLS & Anor (M1539-SD99) which has been the subject of an appeal to the Court of Appeal. Judgment was given in favour of the ADLS on 16 October 2001 (CA151/00). The second was ADLS v Russell McVeagh & Ors (M 1603AS-00).

[2] Russell McVeagh and the second plaintiffs made an ex parte application at the time of filing these proceedings for interim orders that:

[a] Documents on the Court file shall not be inspected by any non-party to this proceeding; and

[b] The names of the second plaintiffs shall, for the purposes of any Court records, list or otherwise, be referred to only by the initial of the first-named second plaintiff’s surname, and others, ie “B & Ors”.

[3] Paterson J made the ex parte orders on an interim basis. However, counsel for the ADLS had indicated it opposed the granting of the orders and Paterson J ruled that the ex parte application would be treated as an inter partes application. It is that application which is the subject of this judgment.

Plaintiffs’ arguments

[4] The issue which I must determine is whether the orders sought by Russell McVeagh and the second defendants should be made in relation to this proceeding.

[5] In support of the application, counsel for the plaintiffs argued that:

[a] Similar orders have been made in B & Ors v ADLS & Anor in both the High Court and the Court of Appeal, and in ADLS v Russell McVeagh & Ors. He argued that the same considerations applied in this case, and a refusal to make similar orders would mean the orders made in the other cases would be rendered ineffective;

[b] The ADLS Complaints Committee has undertaken an investigation process in relation to the complaints which is confidential, in accordance with the ADLS’s normal practice for such complaints. If the orders sought by the plaintiffs are not made, the protection of that confidentiality would be lost;

[c] If the complaints were to proceed to a prosecution, the New Zealand Law Practitioners Disciplinary Tribunal has a discretion to order permanent name suppression and the failure to make the orders sought would mean that discretion would no longer be available;

[d] The interests of justice is a paramount issue. The damage in terms of reputation and additional stress for the second plaintiffs caused by not making the orders sought would be disproportionate to any benefit arising from revealing their names.

ADLS’s arguments

[6] Counsel for the ADLS opposed the making of the orders on the following grounds:

[a] The existence of the orders would prevent the ADLS from reporting to its 3,300 members about the proceedings, given the very serious allegations which are made in the statement of claim. These include misuse of information subject to legal privilege, delay in resolving the complaints, bias, acting unfairly, breach of natural justice, and breach of its obligations under the Law Practitioners Act 1982. The ADLS believes it is important that members of the ADLS are briefed as to the nature of the proceedings. The fact that damages from the ADLS are sought by Russell McVeagh and the second plaintiffs accentuates that need, given that the members of the ADLS ultimately would be liable for payment of those damages, through some form of special levy on members. The costs of conducting the proceedings may also necessitate such a special levy. The ADLS is also concerned that if it reports to its members when confidentiality orders are in place, unlawful publication could then occur and ADLS could be accused of being responsible for that publication;

[b] The fact that orders were made in the earlier proceedings is irrelevant, because those proceedings were merely seeking the Court’s guidance as to issues relating to legal professional privilege and similar matters. Counsel did however acknowledge during the course of the hearing that B & Ors v ADLS & Anor originally involved allegations which had some similarities to those contained in the statement of claim in
this proceeding but which were resolved by a settlement;

[c] The plaintiffs have chosen to commence these proceedings making serious allegations, and raising issues of confidence in the ADLS’s complaints investigation process. Having commenced proceedings of that kind with a significant public interest component, the plaintiffs should be required to submit to the normal processes of litigation, including publication of the nature of the proceedings and the parties involved;

[d] If the orders are made there will be a risk that the Court will be perceived as giving favourable treatment to members of the legal profession. Counsel said that the ADLS had been criticised for seeking orders of the kind sought by the plaintiffs in this case in earlier proceedings;

[e] Cases relating to name suppression in criminal proceedings indicate the clear public interest in openness of the Court processes. The same principles should apply to these proceedings, even though they are civil rather than criminal.

The ADLS’s complaints process is confidential

[7] The ADLS has conducted the investigation of the complaints against the second plaintiffs on a confidential basis. That is consistent with a long standing practice which is based on the premise that there is some unfairness to a practitioner in revealing his or her name before an investigation has established whether there is any basis for the complaint and for the matter to be taken to a disciplinary tribunal. It is also consistent with the scheme of the provisions in the Law Practitioners Act dealing with complaints. The ADLS seems to have adopted the approach in the earlier litigation involving the plaintiffs that orders of the kind sought in this case were necessary to ensure that the confidentiality of the complaints process was preserved, and that the second plaintiffs continued to benefit from that confidentiality. In essence, therefore, the ADLS is now seeking effectively to negate the confidentiality of its own process (and the confidentiality orders in the earlier proceedings) by opposing the making of orders in this case.

[8] Counsel for the ADLS said its change of position was prompted by the seriousness of these proceedings from the point of view of the ADLS and its members. However, it should be noted that there were also contentious allegations in B & Ors v ADLS & Anor at the time that the ADLS consented to the Court making orders to the same effect as those sought in this case.

[9] I accept that there is some strength in the arguments made by the plaintiffs that if the application for the orders is declined, then the confidentiality of the ADLS process and the orders in the other cases will be negated. On the assumption that there are justifiable reasons for conducting the complaint process on a confidential basis, as recognised in relation to the earlier litigation between these parties, there needs to be a good reason to depart from it in this case.

[10] The plaintiffs argued that it is not sufficient reason to depart from the earlier position that the plaintiffs are now challenging the ADLS’s Complaints Committee’s processes in Court. Counsel for the plaintiffs cited L v Canterbury District Law Society [1999] 1 NZLR 467 in support of that contention. That case concerned a lawyer who had been the subject of adverse findings by the New Zealand Law Practitioners Disciplinary Tribunal and ordered not to practise on his own account in 1990. He applied to the Tribunal for revocation of that order in 1997. The Tribunal decided not to set aside its order and also refused to order suppression of publication of the lawyer’s name (which had not been published after the earlier order).

[11] The lawyer appealed to the High Court and a Full Court turned down his appeal, except insofar as it related to name suppression. The reason was that the Court found that to allow his name to be published would, in effect, negate the suppression order made earlier and penalise the lawyer for applying for removal of the restriction on practice. The Court found this would be unfair to him.

[12] Counsel for the plaintiffs argued that very similar considerations applied here, because declining to make the orders sought would negate the orders in earlier litigation and the confidentiality of the ADLS’s own process, and it could be seen as penalising the plaintiffs for challenging the ADLS in these proceedings. I accept that there are some similarities with the situation in the L case.

[13] The plaintiff also argued that the orders should be made to preserve the ability of the New Zealand Law Society Disciplinary Tribunal to suppress names later if any of the complaints should go that far. I do not think that factor would, of itself, outweigh the normal presumption that litigation is conducted in public.

Interests of justice

[14] The plaintiffs cited two decisions of the House of Lords in support of the proposition that the fundamental concern in deciding whether any form of suppression should occur is the concern to do justice (Scott v Scott [1913] AC 417 and Attorney General v Leveller Magazine Limited [1979] AC 440). I accept those cases are authority for that proposition but the facts in both are so far removed from the present case that they do not provide guidance as to where the interests of justice lie here. The English decisions referred to above were approved by the Court of Appeal in BCNZ v Attorney General [1982] 1 NZLR 120 at 130-131.

[15] The plaintiffs argued that justice requires the suppression order because the reputational damage and additional stress for the second plaintiffs caused by not making the orders would be disproportionate to any benefit from revealing their names. While that may be so, equally, the plaintiffs have commenced this litigation in circumstances where there was no certainty that orders of the kind being sought would be made. They have chosen to challenge the ADLS and its Complaints Committee in a very aggressive and uncompromising way. The allegations they make are extremely serious. It should be noted that the allegations relating to the use of privileged material pre-date the recent decision of the Court of Appeal which has now upheld the ADLS’s position. Counsel for the plaintiffs indicated that leave would be sought to appeal against that decision to the Privy Council. Unless such an appeal is pursued and is successful, the plaintiffs will need to remove some of the allegations made in their statement of claim.

ADLS needs to report to its members

[16] The ADLS argued strongly that it must be permitted to report to its 3,300 members about the proceedings. I accept that, given the serious nature of the allegations, members of the ADLS are entitled to know the nature of the allegations and the remedies sought, so they are in a position to understand their potential financial exposure and the nature of the allegations made against their elected office holders and committee members appointed by those office holders.

[17] The affidavit from the President of the ADLS, Mr Darlow, referred to his desire to report the following matters to members:

[a] That the proceedings have been commenced against the ADLS and by whom. In my view there is nothing in the proposed orders which would prevent reporting as to the fact of the proceedings, but obviously the order would require that the description of the parties who commenced the proceedings is confined to a reference to Russell McVeagh and to individual, unnamed practitioners against whom complaints have been made;

[b] The orders and relief sought and the pleadings and general grounds relied upon in support of the claim. Again, it seems to me there is nothing in the orders to prevent the ADLS from reporting on those matters so long as it is careful not to name or otherwise identify any of the second plaintiffs;

[c] The factual background to the proceedings, including the fact that there have been other proceedings arising out of the complaints against the plaintiffs. Again, it seems to me this could be done at least in a general way without naming or identifying the second plaintiffs;

[d] While there has been media publication of the earlier proceedings, the confidentiality orders have prevented the Council from communicating meaningfully with its members. Mr Darlow points out that the Court of Appeal’s recent judgment was not restricted from publication and that the Court of Appeal removed the suppression orders. However, the suppression orders were removed only in respect of one individual against whom complaints had been made, and a former partner of Russell McVeagh who effectively was a complainant himself. The Court of Appeal continued the suppression of the names of the second plaintiffs. There appears to be no reason why the general nature of the earlier proceedings could not be covered in any report to members of the ADLS, particularly those proceedings which were the subject of the recent Court of Appeal judgment, which is a public document;

[e] In all proceedings the ADLS has taken advice from, and has been represented by, senior counsel. Obviously there is nothing to stop the ADLS from saying this;

[f] The proceedings raised the possibility of a special levy having to be imposed on members to meet the cost and any damages awarded. Again, if that possibility exists, I can see no reason why the orders sought by the plaintiffs would prevent a report presenting a statement to that effect.

[18] Counsel for the plaintiffs conceded in submissions that the orders sought would not inhibit the Society from reporting to its members in detail about the existence and nature of the proceeding. For the reasons I have already given I accept that submission and therefore do not accept that there is any weight in the ADLS’s argument that the making of the orders sought prevent it from reporting meaningfully to its members. I accept any reporting will be inhibited by not being able to name the second plaintiffs, but I do not accept this substantially detracts from the nature of the reporting which the ADLS can provide to its members about the nature of the proceedings and the potential liabilities faced by the ADLS and, indirectly, its membership.

[19] Mr Darlow expressed concern in his affidavit that if he reported to members of the ADLS when confidentiality orders (albeit limited) were in place, unlawful publication could take place and ADLS could be accused of being responsible for that publication. As I said during the hearing, it would be unreasonable to impose on ADLS any responsibility for the action of any one of its members in publishing the contents of a report to members. In view of that, any report to ADLS members should be treated in the same way as any other communication by the ADLS to its members. There is nothing in the proposed orders which requires the ADLS to seek to impose on its members any abnormal confidentiality requirement.

Public Interest

[20] The other arguments advanced by the ADLS were based on public interest, rather than concern as to its own interest. Counsel argued that if the orders are made there will be a risk that the Court will be seen to give favourable treatment to lawyers. He referred to the fact that the ADLS had been criticised for seeking similar orders in the earlier proceedings. If the orders are made, the major purpose will be to protect the confidentiality which the ADLS has attached to its complaints procedure. In the absence of any change to the policy of confidentiality in respect of complaints I do not think it can be said that the orders sought in this case involve favourable treatment for lawyers. Rather, it would amount to allowing an exception to the general principle of publicity of the Court’s processes in respect of parties subject to a procedure which itself is confidential, where that very procedure is the subject of the litigation.

[21] Counsel for the Law Society also referred to cases relating to name suppression in criminal proceedings, particularly the recent decision of the full Court in Abbott v Wallace (AP51/01 New Plymouth Registry, Salmon and Potter JJ, 23 October 2001). Counsel particularly emphasised that the Court found that the presumption in favour of open reporting in relation to criminal proceedings was not outweighed where there was said to be a real risk to the applicant and his family. However, that case involved a public officer in the course of his public duties in a public street and therefore differs considerably from this one. Nevertheless, it indicated that the Court will not lightly interfere with the normal openness of Court proceedings. The difficulty of applying that analogy here, however, is that the investigation process to which the second plaintiffs are subject is confidential, not public. The reason it is confidential is that the ADLS under its normal practice and in accordance with the scheme of the Law Practitioners Act, has made it so. That puts this case into quite a different category from one involving criminal proceedings relating to the act of a public official.

Conclusion

[22] In all the circumstances, I accept the plaintiffs’ submission that the order should be made as sought, consistent with the steps taken in the other proceedings. If this does prevent the ADLS from reporting meaningfully to its members, then I reserve leave for it to apply further for such orders as it considers necessary to allow it to report to its members in a meaningful way. However, as already indicated, I doubt that such orders are needed.

[23] I therefore order that until further order of the Court:

[a] Documents on the Court file shall not be inspected by any non-party to this proceeding; and

[b] The names of the second plaintiffs shall, for the purposes of any Court records, list or otherwise, be referred to only by the initial of the first named second plaintiff’s surname and others (ie “B & Ors”).