Sharma v Foster-Bohm
[2022] NZHC 2871
•3 November 2022
IN THE HIGH COURT OF NEW ZEALAND NELSON REGISTRY
I TE KŌTI MATUA O AOTEAROA WHAKATŪ ROHE
CIV-2021-442-53
[2022] NZHC 2871
UNDER the District Courts Act 2016 IN THE MATTER OF
an appeal pursuant to Section 124 of the District Courts Act 2016
BETWEEN
ANJELA SHARMA
Appellant
AND
GAIL FOSTER-BOHM AND ANDREW CORBIN
Respondents
Hearing: 8 June 2022 Appearances:
L A Andersen KC and S Gaskell for the Appellant J Moss for the Respondents
Judgment:
3 November 2022
JUDGMENT OF PALMER J
Counsel/Solicitors:
L A Andersen KC, Dunedin
J Moss, Barrister, Christchurch Patient & Williams, Christchurch
SHARMA v FOSTER-BOHM [2022] NZHC 2871 [3 November 2022]
Summary
[1] In 2015 and 2016, Ms Gail Foster-Bohm and Mr Andrew Corbin, the respondents, brought a personal grievance against IHC New Zealand Inc (IHC). Ms Foster-Bohm and Mr Corbin subsequently sued their lawyer, the appellant Ms Anjela Sharma, for negligence in representing them. She sued them for non- payment of legal fees. The District Court found in favour of Ms Foster-Bohm and Mr Corbin.1 Ms Sharma appeals on six grounds.
[2] First, the District Court did not err in holding that the employment claim was statute-barred. Second, the Court was entitled to consider the evidence of Mr Stephen Zindel. Third, the Court was correct not to admit a letter by former Chief Judge Colgan as evidence but to allow it to be used in cross-examination. Fourth, I agree that Ms Sharma was negligent in failing to lodge the personal grievance in time, in failing to advise Ms Foster-Bohm and Mr Corbin to seek independent advice and in failing to apply for an extension once she realised the situation. Fifth, I find no fault in the Judge’s approach to assessing damages. Finally, I do not consider the Court erred in declining to order Mr Corbin and Ms Foster-Bohm to pay for negligently- rendered work. I dismiss the appeal.
What happened?
The employment dispute
[3] In 2015, Ms Foster-Bohm and Mr Corbin were employees of IHC in Nelson. In June 2015, they engaged Ms Sharma, an employment lawyer, to advise and represent them in relation to a proposed restructuring by IHC. After they objected to a proposed restructuring, their positions appear to have been targeted by the restructuring. They received a letter from IHC, dated 4 August 2015, that gave them four weeks’ notice of termination of their employment, ending on 4 September 2015. On 5 August 2015, Mr Corbin emailed Ms Sharma to say that they had been allowed “to take our notice period (4 weeks) in lieu with our last day being this Friday”. They raised the question of when to act on their claim for unjustified dismissal.
1 Foster-Bohm and Corbin v Sharma [2021] NZDC 20189 [District Court Decision].
[4] On 6 August 2015, Ms Foster-Bohm and Mr Corbin received a letter confirming that their employment was terminated with payment in lieu of notice and they would finish on Friday 7 August 2015. Mr Corbin attempted to send the letter to Ms Sharma from his work email which, he did not know, had been dis-established by IHC. Ms Sharma did not receive it then. It was amongst documents they provided her on 10 November 2015, but it was not drawn to her attention. On 10 August 2015, Mr Corbin emailed Ms Sharma to ask about next steps. In the first line of that email Mr Corbin said: “Last Friday was our last day at IHC and we are now looking at our next steps for making a claim of unjustified dismissal by way of redundancy.”
[5] On 23 October 2015, Ms Sharma met with Ms Foster-Bohm and Mr Corbin, who say they reiterated that their employment had ended on 7 August 2015, asked how that affected the 90-day period, and asked Ms Sharma to err on the side of caution in calculating it. They also say they discussed the 6 August 2015 letter with Ms Sharma who asked for a copy. Ms Sharma’s evidence was that there was no mention of the 6 August 2015 letter at that meeting, nor was it contained in the documentation Ms Foster-Bohn and Mr Corbin had brought with them.
[6] On 25 November 2015, Ms Sharma raised personal grievances for unjustified dismissal and for unjustified disadvantage from the consultation process regarding the proposed restructuring. There was no mention of the error in calculating the termination date. In her submissions, Ms Sharma accepted the correct termination date was 7 August 2015 and attempted to argue the personal grievance had been raised within 90 days. IHC objected that the grievances were raised out of time and refused to attend mediation.
[7] The Employment Relations Authority (the Authority) agreed that the claim for unjustified dismissal was out of time but considered the claim for unjustified disadvantage was not.2 The Authority found that the 90-day period began on 6 August 2015.3 It placed weight on telephone calls of 17 July 2015 and the meeting of 4 August 2015 in finding that Mr Corbin and Ms Foster-Bohm had raised their grievances
2 Corbin & Foster-Bohm v IHC [2016] NZERA 181 [The Authority’s Decision].
3 At [13]–[14].
related to unjustified action causing disadvantage within the 90-day period.4 At that stage, it was still possible that both claimants could have been redeployed within IHC. The Authority did not consider it possible to raise a grievance ahead of the complained event occurring.5 As a result, a grievance for unjustified dismissal could not be raised prior to the notice of termination had been given. Because the claimants had not raised the issue with IHC following their formal notice of dismissal within the 90-day period, the Authority found that claim failed.6
[8] On 28 April 2017, Ms Sharma proposed that Ms Foster-Bohm and Mr Corbin attend mediation of the unjustified disadvantage claim without her. The relationship subsequently broke down. When mediation did proceed, Ms Foster-Bohm and Mr Corbin were represented by Zindels Barristers and Solicitors. There is evidence they did not intend to go past mediation.7 But no agreement was reached, because IHC considered the claim was out of time. Ms Foster-Bohm and Mr Corbin did not pursue it further.
The District Court proceedings
[9] Ms Foster-Bohm and Mr Corbin sued Ms Sharma for professional negligence, breach of contract and breach of a fiduciary duty. Their claims centred on Ms Sharma not advising them on, or meeting, the time limits for filing the personal grievance. Ms Sharma also advised them that unjustified dismissal was not their strongest ground. They later received advice to the contrary. Ms Sharma responded that she had proceeded on the basis that the 90 days to raise a grievance for unjustified dismissal would commence on Friday 4 September 2015 and the grievance could not be raised before then, since they would still be employed. She counterclaimed for unpaid fees.
[10] Four days before the hearing in the District Court, the defendant filed an amended bundle of documents that included a letter from former Chief Judge Colgan of the Employment Court that suggested Ms Foster-Bohm and Mr Corbin may have
4 At [17] and [23]–[24].
5 At [34].
6 At [39].
7 Notes of Evidence (NOE) 31/6–9.
expected to receive no more than $10,000 and $15,000 respectively. Judge J A Farish ruled that the letter was not expert evidence and was not admissible.8 She allowed Mr Steven Zindel to give evidence as an expert, despite him having acted for Ms Foster-Bohm and Mr Corbin at the mediation, and he was cross-examined on the former Chief Judge’s letter.9 His evidence was that Ms Sharma could have applied under s 115(b) of the Act to extend the time limit on the ground that she had “unreasonably failed to ensure the grievance was raised within the required time”.
The District Court judgment
[11] On 13 October 2021, Judge Farish found in favour of Ms Foster-Bohm and Mr Corbin. She held:
(a)Preferring the evidence of Ms Foster-Bohm and Mr Corbin, Ms Sharma was made aware an error had been made about the time limit in January 2016.10 But instead of raising s 115(d) or advising they needed independent legal advice, she “boxed on” and they lost the ability to raise unjustified dismissal.
(b)Ms Sharma’s failure to raise the personal grievance within the relevant time frame was negligent.11 They had explicitly told her on 5 August that they agreed to be paid in lieu of notice. She acquiesced to their view of when the employment relationship would end.12 But she was clearly put on alert to research the consequences of the waiver of the notice period on the 90-day period. She unreasonably failed to ensure the personal grievance was raised within the required timeframe.13 She also failed to apply for an extension of time which it is distinctly possible would have been granted.14 And she failed to advise them to seek independent legal advice on becoming aware they may have a
8 The Authority’s Decision, above n 2, at [29].
9 At [31].
10 At [102].
11 At [104].
12 At [108].
13 At [111].
14 At [111]–[112].
claim against her.15 If she had done so, it is likely they would have been advised to apply for leave to raise the grievance out of time. Ms Sharma’s long lapses of communication were also unprofessional, and she failed to inform Ms Foster-Bohm and Mr Corbin that she did not have professional indemnity insurance, as she was required to do.16
(c)Ms Sharma breached her duties to Ms Foster-Bohm and Mr Corbin. Their total claim of $50,000 was realistic. They had a 75 per cent chance of successfully settling with IHC, resulting in a figure of
$37,500 plus interest and costs. Mr Corbin was awarded $20,000 and Ms Foster-Bohm $17,500 (recognising differences in their lengths of employment).
(d)Ms Foster-Bohm and Mr Corbin validly cancelled their contract of retainer with Ms Sharma. The justice in the case means they should not be required to pay her for the negligent legal services rendered.17
[12] Ms Sharma appeals under s 124 of the District Courts Act 2016, by way of rehearing.18 She has the onus of satisfying me that the District Court judgment was wrong.19 If my opinion is different from the conclusion of the court below, then the appeal must be allowed.20 So, if an error of law affects decision so materially that it leads to a different conclusion, an appeal will be upheld.
[13] Mr Andersen KC, for Ms Sharma, submits that there are six errors of law in the District Court decision, which I treat in turn. He seeks that the appeal be allowed, the judgment of the District Court as to liability and costs be set aside and judgment be entered for Ms Sharma on both claims and for costs in this Court and the District Court. Mr Moss, for Ms Foster-Bohm and Mr Corbin, submits the District Court made no errors of fact or law that warrant the judgment being overturned.
15 At [113].
16 At [115]–[116].
17 At [134].
18 Austin, Nichols & Co Inc v Stichting Lodestar [2008] 2 NZLR 141 (SC).
19 At [4].
20 At [16].
Issue 1: Was the claim statute-barred?
[14] Mr Andersen submits that the unjustified dismissal claim was not statute-barred. It was filed within 90 days of when Ms Foster-Bohm and Mr Corbin would have finished work if they had been required to work their four weeks’ notice period instead of being paid in lieu. He submits the Authority’s decision that it was out of time is not correct. It relies on two other Authority decisions which drew an artificial distinction between payment in lieu of notice and payment for the period of notice.21 The Employment Court held otherwise in Farmer Motor Group Ltd v McKenzie, which was endorsed by the Court of Appeal in Ioan v Scott Technology NZ Ltd.22 Mr Andersen acknowledges this argument was not made in the District Court.
[15] Mr Moss submits that this argument is contrary to the argument run by Ms Sharma in the District Court and should be struck out. In any event, the Authority’s decision was correct. The cases referred to by Mr Andersen are distinguishable.
[16] The argument was not pleaded, though it was raised in the notice of appeal. That a point was not raised at first instance is not always fatal to an appeal.23 However, that is only the case “if the pleadings and the evidence leave it open to be taken”.24 In this case, the argument was not pleaded and is entirely inconsistent with what was pleaded in the District Court. In her statement of defence, Ms Sharma accepted that it “transpired to later be the case” that the plaintiffs’ employment was terminated by IHC, effective from 7 August 2015 on the grounds of redundancy and that the Authority had determined the grievance for unjustified dismissal was not raised within the 90-day timeframe. Therefore, Mr Andersen should have sought leave to reverse that pleaded admission in this Court.25 But, in any case, his argument fails on the merits, as I explain below.
[17] The letter of termination was clear as to the date of termination. Ms Foster-Bohm and Mr Corbin accepted that, personally and in their position before
21 Poverty Bay Electric Power Board v Atkinson [1992] 3 ERNZ 413; and Gibson v GFW Agri-Products Ltd [1994] 2 ERNZ 309.
22 Ioan v Scott Technology NZ Ltd [2019] NZCA 386, (2019) 17 NZELR 255, citing Farmer Motor Group Ltd v McKenzie [2017] NZEmpC 98 at [29].
23 Savill v Chase Holdings (Wellington) Ltd [1989] 1 NZLR 257 (PC) at 307.
24 At 307.
25 McCollum v Thompson [2017] NZCA 269, [2017] NZAR 1106 at [46]–[56].
the Authority. The Authority noted that it was never disputed that “Mr Corbin and Ms Foster-Bohm’s last day of work was on 7 August 2015”.26 That was at the request of Mr Corbin and Ms Foster-Bohm. Ultimately, when an employment relationship comes to an end is a mixed question of law and fact.27 Here, it is entirely clear that the parties to an employment contract came to an agreement that this employment relationship would be end on 7 August 2015.
[18] Mr Andersen cites the Authority’s identification in Andersen v Kourawhero Management Ltd of “a line of cases” that treat the date of termination of employment, where payment is made in lieu of notice, as the date of expiry of the notice of the purposes of the 90-day period for raising a personal grievance.28 But those cases are not relevant here:
(a)The Court in Andersen v Kourawhero Management Ltd considered a hypothetical scenario in which Mr Andersen had been given a notice of termination and found, in those circumstances, the employment relationship may have continued through to the end of that notice.29 However, notice had not been given in his case and, in any event, in the hypothetical scenario considered by the court, Mr Andersen would not have agreed to terminate the relationship early, as Mr Corbin and Ms Foster-Bohm have here.
(b)Farmer Motor Group Ltd and Ioan v Scott Technology NZ Ltd both concerned the relationship between a notice of termination and the 90-day trial period under s 67A of the Employment Relations Act 2000, not the 90-day period for raising a personal grievance.30 The Court had to decide whether notice had been given for the purpose of that legislation when the employee was not required to work out that notice period. It did not need to decide when that employment relationship
26 The Authority’s Decision, above n 2, at [9].
27 GFW Agri-Products Ltd v Gibson [1995] 2 ERNZ 323 (CA) at 8.
28 Andersen v Kourawhero Management Ltd NZERA Auckland AA 142/09 515041, 5 May 2009 at [22].
29 At [22]–[23].
30 Ioan v Scott Technology NZ Ltd, above n 22; and Farmer Motor Group Ltd v McKenzie, above n 22.
came to an end, just whether legal notice had been given. It does not stand for authority that the 90-day period for raising personal grievances starts after a notice period that is not provided but paid out. That would be entirely artificial.
(c)Para Fanchising Ltd v Whyte was a constructive dismissal case where the employee had given two weeks’ notice of his departure.31 The Court considered whether the 90-day period began on the day the employee gave notice or on the day the notice expired. It decided the period began on expiry because all parties were on notice that the employment relationship would endure for that two weeks and there was no agreement to the contrary.
[19] Here, the 90-day rule commenced on 6 August 2015. That, no doubt, is why Ms Sharma accepted in her submission to the Authority, on behalf of Ms Foster-Bohm and Mr Corbin, that the 90 days had expired before the employment claim was filed. The employment claim was statute-barred.
Issue 2: Should the Court have accepted the evidence of Mr Zindel?
[20] Mr Andersen submits the District Court should not have accepted the evidence of Mr Zindel because he represented Ms Foster-Bohm and Mr Corbin in the mediation. It would be quite wrong for a lawyer who discusses issuing proceedings against a client’s former lawyer to give opinion evidence at trial. Accordingly, he faced a conflict which should have precluded him from being accepted as an expert. He was not sufficiently independent. In Mr Andersen’s submission, Mr Zindel appears to have had at least some involvement in the decision to sue Ms Sharma. Mr Andersen particularly criticises Mr Zindel’s opinion that a personal grievance founded on unjustified dismissal was likely to be more profitable than one based on unjustified disadvantage. He suggests that is misleading in that it gives insufficient credit for the unjustified disadvantage claim. And if s 115(b) was available to Ms Sharma, she could not have brought that claim because her clients would have necessarily required new representation.
31 Para Franchising Ltd v Whyte [2002] 2 ERNZ 120 at [1].
[21] Mr Moss submits the Judge was correct to allow the evidence of Mr Zindel. Her finding, after hearing Mr Zindel’s evidence, that she had “no difficulty in finding that he was a suitable expert witness” should be the end of the matter.32 Further, there is no evidence to support the allegation that Mr Zindel had any involvement with the respondent’s decision to sue Ms Sharma. In fact, Mr Zindel’s affidavit evidence is that he did not act for the plaintiffs in relation to this proceeding except as an agent in a case management conference in 2018.
[22] In Lisiate v R, the Court of Appeal held that expert evidence is not inadmissible simply because the expert is “associated” with one of the parties “without any other indication that professional impartiality will not be maintained”.33 In Prattley Enterprises Ltd v Vero Insurance New Zealand Ltd, the Court of Appeal stated:34
[99] It is necessary to distinguish impartiality – the primary objective of the Code – from independence. An expert witness need not be independent of the party to whom the expert is briefed. Any potential conflict of interest is ordinarily treated as a matter of weight. That is so because independence goes to the relationship between the expert and the party engaging the witness, while impartiality is a behavioural quality, signifying an attitude of neutrality as between the parties. An expert witness who lacks independence may nonetheless have impartiality.
[23] The Court held that the evidence of an expert witness who fails to comply with the duty of impartiality is presumptively inadmissible under s 26(2) of the Evidence Act 2006 and is also likely to lack reliability. But it held:35
Trial judges enjoy substantial leeway in the exercise of their s 26 discretion to admit non-compliant evidence. The discretion extends to evidence that is less than impartial. … It is sometimes possible to compensate through the combination of an opposing expert and cross-examination for a partial failure to meet the Code’s exacting standard.
[24] Applying those principles here, I consider the District Court was entitled to consider the evidence of Mr Zindel. Mr Zindel was plainly an expert. He was cross-examined for over an hour in the course of a two-day hearing. In assessing Mr Zindel’s evidence, the Judge was aware of his position as the subsequent lawyer
32 District Court Decision, above n Error! Bookmark not defined., at [34].
33 Lisiate v R [2013] NZCA 129, (2013) 26 CRNZ 292 at [55], citing Smith v Attorney-General
[2010] NZCA 258 at [40].
34 Prattley Enterprises Ltd v Vero Insurance New Zealand Ltd [2016] NZCA 67, [2016] 2 NZLR 750, [2016] 2 NZLR 750 (footnotes omitted).
35 At [100].
for the respondent. She was satisfied he was sufficiently independent.36 Mr Zindel declared the extent of his role in these proceedings in the affidavit he submitted to the District Court. Any submission dependent on an implicit allegation that Mr Zindel had perjured himself in these proceedings or was otherwise acting dishonestly, would require far more robust evidence than is available here.37 Mr Zindel’s subsequent position was relevant to the weight the Judge placed on the evidence. I do not consider she was wrong in the weight she accorded the evidence.
Issue 3: Should Chief Judge Colgan’s statement have been admitted?
[25] Mr Andersen submits former Chief Judge Colgan’s statement should have been admitted as evidence as to its contents once it was admitted for the purposes of cross-examination. The former Chief Judge is an expert who was not available as a witness. By finding that the former Chief Judge was an unavailable witness, the trial Judge was acknowledging that the evidence was subject to s 18 of the Evidence Act 2006 and was, therefore, admissible under that section. Or if it was not admissible, it could not be the subject of cross-examination. It was either admissible or it was not. It is not admissible for some purposes and not for others.
[26] Mr Moss submits the former Chief Judge’s letter did not purport to be expert evidence, Mr Colgan had not agreed to comply with the Expert Witness Code of Conduct, the letter was written 18 months before the District Court hearing and no explanation was provided as to why he was not called as a witness. The Judge did not make a finding that the former Chief Judge was an unavailable witness for the purposes of the hearsay provisions of the Evidence Act. Accordingly, the letter was not admissible. Alternatively, if it was admissible, the weight given it would have been very low and it would not have made a difference to the findings.
[27] The letter was not the evidence of an expert witness. The former Chief Judge is no doubt expert. But he did not appear as a witness and did not agree to comply with the Code of Conduct. Under s 26(2) of the Evidence Act 2006, the evidence of an expert who does not comply with the relevant rules of court may only be given with
36 District Court Decision, above n Error! Bookmark not defined., at [31].
37 Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules 2008, r 13.8.
the permission of the Judge. The Judge did not give that permission. So the evidence was not admissible or admitted. But that does not mean it could not be the subject of cross-examination. Section 90 of the Evidence Act allows for documents, that have not been excluded under ss 28, 29 or 30 of that Act, to be used in questioning a witness. The Chief Judge’s opinion could, therefore, be inadmissible for failing to comply with s 26 of the Evidence Act, but nonetheless could be used in cross-examination. I do not consider the Judge erred in deciding that to be appropriate here.
Issue 4: Was Ms Sharma negligent?
[28] Mr Andersen submits that, even if the unjustified dismissal claim was statute-barred, the failure to provide her with the letter of 6 August 2015 meant she could not know that. On the information she was initially provided with, she was exactly right. Nothing in the emails of 5 or 10 August 2015 say anything other than that the termination was on notice. They did not say that Ms Foster-Bohm and Mr Corbin had finished work. Accordingly, she was not negligent.
[29] Mr Moss submits the Judge was correct in finding Ms Sharma was negligent. On 23 October 2015, it was raised with Ms Sharma what the last day of employment was and she was told to err on the side of caution. A reasonably competent practitioner with the information available to her would have taken the conservative approach and raised a personal grievance by 7 November 2015. The Judge was also correct to find that Ms Sharma should have applied for an extension of time.
[30] I consider the Judge’s finding that Ms Sharma was negligent was open to her. I would have found the same. There was enough in the emails of 5 and 10 August 2015, and the meeting of 23 October 2015, and the instruction to err on the side of caution, for a reasonable practitioner to take the straightforward step of filing a personal grievance before 7 November 2015. Ms Sharma said that if she had known about the 6 August letter, she would have lodged a personal grievance earlier.
[31] Further, under cross-examination, Ms Sharma accepted that she would have realised at the time the existence of the letter became known to her that one of two things must have happened: either she missed the letter of 6 August 2015 or Ms Foster-Bohm and Mr Corbin had failed to give it to her. Therefore, she would have
known there was some chance that her clients might have a claim against her. On that basis Ms Sharma should have advised her clients to seek independent legal advice. Had she done so, Ms Foster-Bohm and Mr Corbin would likely have been advised to apply for an extension. She failed to do that or to apply for an extension herself, as the Judge said.38 Her failure to do so was negligent.
Issue 5: Did Ms Foster-Bohm and Mr Corbin suffer loss?
[32] Mr Andersen submits Ms Foster-Bohm and Mr Corbin did not suffer any loss because the claim for unjustified dismissal did not add anything to the claim for unjustified disadvantage. Everything they complained of had occurred on or before 4 August 2015 so the only remedy not available to them because of the Authority’s decision were losses directly attributable to the dismissal. There is no practical distinction between the claims because Ms Foster-Bohm and Mr Corbin both had new employment so could not claim any specific losses associated with the loss of employment as opposed to the disestablishment of their positions. Because they only ever intended to go to mediation, a settlement depended on IHC being prepared to settle and there is no evidence it was willing to do so. There is no principled reason why they would be any more successful in mediating a claim for unjustified dismissal than for unjustified disadvantage.
[33] Mr Moss submits the Judge was correct in assessing the damages for loss of a chance, weighing up all relevant factors. A claim of unjustified dismissal is the crux of employment law resulting in compensation for loss of wages. Whereas unjustified disadvantage is a half-way house which is claimed when you continue to be employed and yields lesser payments. Ms Sharma sought to rely on an unreliable out of date letter of opinion rather than call her own expert. The Judge was not required to assess what Ms Foster-Bohm and Mr Corbin might have received at mediation of the unjustified disadvantage claim alone because this was already known – nothing. It was simply not cost effective for them to take the unjustified disadvantage claim to a hearing.
38 District Court Decision, above n Error! Bookmark not defined., at [111]–[112].
[34] The problem for Ms Sharma with this ground of appeal is that she offered no evidence about the damages available through a claim of unjustified disadvantage alone. The Judge was justified in assessing damages on the basis of loss of a chance. She examined comparable cases, Mr Zindel’s evidence and took her own view of the strength of the claim.39 There does not need to have been evidence of IHC’s willingness to settle in the counter-factual. I find no fault in the Judge’s approach.
Issue 6: Was Ms Sharma entitled to be paid?
[35] Mr Andersen submits Ms Sharma is entitled to be paid for the work she did because the contract was not cancelled. There was no pleading of cancellation and no notice of cancellation under the Contract and Commercial Law Act 2017 (CCLA). The termination of Ms Sharma’s instructions was not a cancellation because the retainer was contractually entitled to be terminated at any time. Even if there was a cancellation, the fees sought by Ms Sharma relate to work performed prior to termination. So payment was not obviated by s 42 of the CCLA. And the Court has a discretion under s 43 to order the fees paid if it is just and practicable to do so. That discretion was exercised on the incorrect basis that Ms Sharma was negligent. Any argument based on common law should have been the subject of a cross-appeal.
[36] Mr Moss submits the fees were incurred in relation to the negligent legal services provided by Ms Sharma in breach of her retainer. She failed to perform the retainer in accordance with the contractual terms. As a result of the breach, Ms Foster-Bohm and Mr Corbin derived no benefit from the legal services provided and accordingly they cancelled the contract. Section 42 relieves them of the obligation to pay the legal fees in respect of them. The Court was correct in exercising its discretion under s 43.
[37] I do not consider the Judge erred in finding the contract was cancelled on 12 May 2017. Mr Corbin and Ms Foster-Bohm made their intentions clear in their communications. It is also quite clear from the factors the Judge considered that she was applying ss 43 and 45 of the CCLA. And, given my findings as to Ms Sharma’s
39 At [121].
negligence, Mr Andersen’s submission that the Judge erred in applying s 43 on that basis must also fail.
[38]Section 42(1) of the CCLA provides that when a contract is cancelled:
(a)to the extent that the contract remains unperformed at the time of the cancellation, no party is obliged or entitled to perform it further:
(b)to the extent that the contract has been performed at the time of cancellation, no party is, by reason only of the cancellation, divested of any property transferred or money paid under the contract.
[39] Ms Sharma was not paid by Mr Corbin or Ms Foster-Bohm in respect of the services she provided. Therefore, s 42(1)(b) is of no assistance to her. Section 42(1) applies. I do not consider the Judge erred in declining to order Mr Corbin and Ms Foster-Bohm to pay for negligently rendered work under s 43.
Result
[40] I dismiss the appeal. I award the respondents costs on a 2B basis and reasonable disbursements.
Palmer J
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