Pratley v Courteney
[2020] NZHC 1636
•9 July 2020
IN THE HIGH COURT OF NEW ZEALAND MASTERTON REGISTRY
I TE KŌTI MATUA O AOTEAROA WHAKAORIORI ROHE
CIV-2019-435-19
[2020] NZHC 1636
UNDER the Trustee Act 1956 and Part 18 of the High Court Rules BETWEEN
LANCE HOWARD PRATLEY
Plaintiff/Respondent
AND
STEVEN COURTENEY
Defendant/Applicant
Hearing: 24 June 2020 Counsel:
R J B Fowler QC for plaintiff/respondent P W Michalik for defendant/applicant
Judgment:
9 July 2020
RESERVED JUDGMENT OF DOBSON J
[Defendant’s application to dismiss proceeding]
[1] This proceeding involves a claim by the plaintiff (Mr Pratley) to recover the unpaid balance of invoices for fees and disbursements incurred in undertaking work as a solicitor.
[2] In October 2015, the Court appointed Mr Pratley to be executor and trustee of the estate of Joan Ayleen Courteney in substitution for the defendant’s (Mr Courteney’s) brother, who had originally obtained probate as executor of their mother’s estate. At the time, the estate was facing a claim in the District Court for reimbursement of expenses incurred by Mr Courteney in undertaking care for Mr Courteney’s father. Mr Pratley took steps on behalf of the estate to defend Mr Courteney’s claim in the District Court, but was unsuccessful in doing so.
PRATLEY v COURTENEY [2020] NZHC 1636 [9 July 2020]
[3] Subsequently, in December 2017, in the course of proceedings brought by Mr Courteney in this Court under the Family Protection Act 1955, the Court disallowed Mr Pratley’s entitlement to recover from the estate the costs that had been incurred in unsuccessfully defending the District Court proceedings.1 Also in the family protection proceedings, orders were made by consent discharging Mr Pratley as an executor and trustee in the estate, and substituting Mr Courteney in that office.
[4] Subsequent to vacating the office of executor and trustee of the estate, Mr Pratley pursued an appeal to the Court of Appeal against the High Court judgment that had disallowed his entitlement to claim the costs he had incurred in his capacity as executor in defending Mr Courteney’s District Court proceedings. The appeal was allowed, confirming Mr Pratley’s entitlement to indemnity for costs incurred in discharging his obligations as executor and trustee of the estate.2
[5] In these proceedings, Mr Pratley now seeks to recover two categories of costs. First, the balance of costs incurred up to 21 December 2017 when he ceased to act as executor and trustee, which totalled $34,598, less a payment made in June 2019 by Mr Courteney of $5,893.95 comprising the scale costs and court fees to which Mr Pratley would have been entitled for the High Court proceeding, had his position been vindicated in the December 2017 judgment.
[6] Mr Pratley also seeks the amount of $50,634.69, for the costs and disbursements he has incurred in steps taken since he ceased acting as executor and trustee of the estate, to establish his entitlement to an indemnity for all costs and expenses reasonably incurred in the work he undertook as executor and trustee. The gross amount of those costs has been reduced by a payment by Mr Courteney of
$17,780, being the award of party and party costs ordered against Mr Courteney for Mr Pratley’s success in the Court of Appeal, leaving an unpaid balance of $32,854.69. Mr Pratley seeks that balance on the ground that the costs were only incurred in order to confirm his right to indemnity and recover the monies he was owed under that indemnity and for no other reason.3
1 Courteney v Pratley [2017] NZHC 3285.
2 Pratley v Courteney [2018] NZCA 436.
3 Statement of claim, 16 December 2019 at [12].
[7] On 18 December 2019, two days after the proceedings were filed (and before they had been served), Mr Courteney made a complaint to the New Zealand Law Society against Mr Pratley, contending that Mr Pratley’s charges were excessive and that he had charged for work that was not carried out for the benefit of the estate but in his own interests.
[8] On 16 January 2020, the complaints service of the New Zealand Law Society gave formal notice of Mr Courteney’s complaint to Mr Pratley. Thereafter Mr Courteney applied for dismissal of this proceeding on the basis that s 161 of the Lawyers and Conveyancers Act 2006 (the Act) barred any proceeding for recovery of a lawyer’s fees and disbursements whilst they were the subject of an unresolved complaint.
Section 161(1) of the Act provides as follows:
Stay of proceedings for recovery of costs
(1) If, under section 141, a Standards Committee gives notice to a practitioner or former practitioner or an incorporated firm or former incorporated firm that it has received a complaint under section 132(2) about the amount of a bill of costs rendered by that practitioner or former practitioner or incorporated firm or former incorporated firm, 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.
…
[10] There is settled authority that s 161 does not preclude pursuit of proceedings by solicitors seeking to make out a defendant’s liability for a bill of costs, but that respect for the Law Society jurisdiction to review quantum precludes any aspect of such proceeding addressing the quantum of what may be recoverable.
[11] The limits on the scope of s 161 were considered by Stevens J in Simpson Grierson v Gilmour, in the following terms:4
[65] I accept that any such determination should not trench on the jurisdiction and powers of the Standards Committee. Normally, the focus of the inquiry into the complaint will be on the reasonableness or otherwise of a
4 Simpson Grierson v Gilmour (2009) 19 PRNZ 865, citing Erwood v Glasgow Harley [2002] 1 NZLR 251 (CA).
bill of costs. It may be that other issues arise indirectly, for example, with regard to the scope and terms of a contract of retainer. This possibility was contemplated by the Court of Appeal in Erwood at [45]. Therefore, where such an issue could arise, a Court should be careful to ensure that nothing it did in the course of a judicial proceeding should cut across the jurisdiction and powers of the Standards Committee. But the existence or otherwise of a contract of retainer will usually be an entirely different issue. I agree with the submissions on behalf of the plaintiff that the issue of liability is a matter which is appropriate for the courts to decide, particularly where in a given case it can do so without in any way prejudicing the role of the Standards Committee or causing an injustice to the defendant. Whether there was a risk of prejudice or injustice would depend entirely on the facts of a given case. I note that this was a factor which weighed with the Court of Appeal in Erwood: see [48].
[66] The purpose of s 161(1) also provides assistance in its interpretation. Its purpose is to prevent a party such as a practitioner taking any steps in relation to the recovery of the amount of a bill that might prejudice any of the issues that will be determined by a Standards Committee in the context of a complaint about the amount of a bill of costs. This is not an inflexible rule; much may depend upon the circumstances of the particular case. There may be situations where some steps can be taken preliminary to the recovery of the amount of the bill that will not in any way prejudice the issues to be determined by a Standards Committee.
[12] Here, Mr Michalik argues that no material distinction can be drawn between liability and quantum – the only prayers for relief are for judgment for the quantified sums of those parts of each category of bills of costs that remain unpaid. From Mr Courteney’s perspective, Mr Michalik argues that there is nothing for the Court to determine until the Law Society makes a determination on his complaint. The terms of his complaint appear to extend to both the entitlement of Mr Pratley to charge for certain categories of work and the reasonableness of the charge incurred for undertaking such work. Mr Michalik’s instructions are that if the Law Society complaints process determines a further fee is payable, then Mr Courteney will pay it.
[13] Mr Fowler QC objected that Mr Michalik’s characterisation of the dispute conceals a question of law that is important to Mr Pratley’s case and necessarily should be determined by the Court, without intruding on the scope of the Law Society’s jurisdiction to consider Mr Courteney’s complaint. That issue is whether the extent of indemnity Mr Pratley has for costs incurred in relation to his conduct as executor and trustee of the estate extends to all costs reasonably incurred in establishing the scope of the indemnity, including (should there be any material difference) costs of that character incurred after Mr Pratley ceased being the trustee and executor of the estate.
[14] That issue does raise a question of law, the answer to which is required for Mr Pratley to establish the estate’s liability to pay whatever extent of the outstanding fee notes are deemed by the Law Society to be reasonable charges.
[15] However, the legal issue of whether such an indemnity can extend to fees incurred in the circumstances that pertain here should not intrude into the factual aspects of the issue as to whether Mr Pratley should have taken the initiatives he did which incurred those costs, and whether the extent of the charges he now seeks to recover are determined by the Law Society to be reasonable.
[16] It follows that in somewhat different circumstances from those involved in Simpson Grierson, there is an issue of law as to whether the estate is liable for costs of the types sought to be recovered in Mr Pratley’s claim. The stay required by s 161 of the Act does not preclude that issue, which goes to liability only, from being advanced. It can, and if necessary should, be argued as an issue of law. The scope of such argument ought to respect the Law Society’s jurisdiction so that, at least until the complaint is determined, all issues going to the reasonableness of the steps taken and the extent of charges for them is a matter for the Law Society.
[17] In the meantime, the application for stay of the proceeding is dismissed. I agree with Mr Fowler’s suggestion that all issues as to costs on the present application should be adjourned pending ultimate determination of this proceeding.
Dobson J
Solicitors:
Lance Pratley, Wellington for plaintiff
WCM Legal Limited, Carterton for defendant
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