Stephens Lawyers Ltd v Criffel Deer Limited

[2023] NZHC 2240

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE

CIV-2023-485-189

[2023] NZHC 2240

BETWEEN

STEPHENS LAWYERS LTD

Plaintiff

AND

CRIFFEL DEER LIMITED

First Defendant

AND

PRIME COMMERCIAL LIMITED

Second Defendant

AND

MICHAEL ROBERT GARNHAM

Third Defendant

Hearing:

9 August 2023

Appearances:

M F McClelland KC for Plaintiff

A D Goble for defendants (in relation to adjournment application only)

Judgment:

18 August 2023

JUDGMENT OF ASSOCIATE JUDGE PAULSEN

This judgment was delivered by me on 18 August 2023 at 2.30 pm pursuant to Rule 11.5 of the High Court Rules

Registrar/Deputy Registrar Date:

STEPHENS LAWYERS LTD v CRIFFEL DEER LIMITED [2023] NZHC 2240 [18 August 2023]

Introduction

[1]    The plaintiff carries on business as barristers and solicitors. Its sole director and shareholder is Michael Stephens, a lawyer at Wellington. The third defendant, Michael Garnham, is also a practising lawyer, and the first and second defendants are companies of which he is a director and shareholder.

[2]    The defendants brought proceedings against ANZ Bank New Zealand Ltd in the High Court at Wellington.1 Initially Mr Garnham was the solicitor on the record (as well as being a party) and instructed counsel to conduct the litigation, but from 29 April 2022 Mr Stephens was retained as the solicitor on the record and the instructing solicitor to counsel.

[3]    The plaintiff is seeking summary judgment as to liability only for counsel’s fees incurred in the proceedings. The defendants have opposed the plaintiff’s application for summary judgment, although the grounds advanced include some that go only to the issue of quantum.2

[4] The defendants have also (albeit very belatedly and after the issue of this proceeding) complained to the Law Society to have counsel’s fees subject to costs revision. The defendants’ position is that under s 161(1) of the Lawyers and Conveyancers Act 2006 (the Act) the plaintiff is unable to proceed with its application for summary judgment until the complaint has been finally disposed of.

[5]    Further, in a memorandum filed by Mr Garnham (representing all defendants), dated 28 June 2023, it is asserted Mr Stephens accepted appointment as the solicitor on the record in the ANZ Bank proceeding on the basis he had no responsibility or indemnity obligation in relation to the instruction of counsel, and that obligation would continue in relation to Mr Garnham but not to the first and second defendants.

[6]    The issue that arises is whether the defendants have an arguable defence to the plaintiff’s claim for summary judgment as to liability because:

1      Criffel Deer Ltd v ANZ Bank New Zealand Ltd HC Wellington CIV-2021-485-384.

2      The defendants have also filed a counterclaim but have not raised that as a ground for opposing summary judgment in their notice of opposition or in Mr Garnham’s affidavit.

(a)s 161(1) of the Act is a bar to the plaintiff obtaining summary judgment as to liability whilst the defendants’ complaint to the Law Society is unresolved; and

(b)the plaintiff has no responsibility or indemnity obligation in respect to counsel’s fees.

A preliminary issue

[7]    Mr Garnham  has been representing himself and the other defendants.   On    8 August 2023, Mr Garnham emailed the court seeking an adjournment of the hearing. I issued a minute that I would deal with any such application at the hearing, but that Mr Garnham should be prepared to proceed in the event the application was refused.

[8]    Mr  Garnham  did  not  appear  at  the  hearing.  Mr  Goble  appeared   on   Mr Garnham’s instructions and advised me he had been instructed very shortly before the hearing. Mr Goble applied for an adjournment on the grounds that Mr Garnham’s wife had suffered a medical emergency, and because Mr Garnham had only the previous day been able to access the plaintiff’s reply evidence and submissions.       I refused the adjournment application, indicated briefly my main reasons for doing so and said I would give further reasons in this judgment.

[9]    Under r 7.42 High Court Rules 2016, the hearing of an application may, from time to time, be adjourned on any terms the Judge thinks just. The Court has a wide discretion in determining whether to grant an adjournment. It must balance the parties’ competing interests, and have regard also to the interests of other parties in cases waiting in the queue for a hearing and the public interest in achieving the most efficient use of the Court’s resources.

[10]   It is, of course, regrettable Mr Garnham’s wife is ill, but this is not a recent development. From correspondence on the file it appears she has been ill for some time. While Mr Goble was instructed there was a medical emergency, there is no evidence before me of that and Mr Goble had no details of it.

[11]   Despite his wife’s health issues, Mr Garnham has chosen to represent himself and the other defendants rather than instructing counsel. It is not reasonable to expect the Court or the plaintiff to be inconvenienced by failure to comply with timetable directions or last-minute requests for adjournments when he could have made other arrangements.

[12]   Next, the plaintiff sent its reply evidence and submissions to Mr Garnham via a Dropbox link on 26 July 2023. I understand the parties have previously exchanged documents electronically. It  was  only  six  days  later,  on  1  August  2023,  that  Mr Garnham complained to the plaintiff the documents would overwhelm his home printer. He did not then claim he could not access the documents, as he now does.

[13]   While I take Mr Garnham’s assertion that the number of documents would overwhelm his home printer at face value, he is an experienced lawyer who runs a law office and has staff. He must have facilities to print documents himself or have someone else do that for him. There was simply no excuse for him to do nothing about printing out the documents and wait  until hardcopies were delivered  to him on       7 August 2023. This is particularly the case since the Court had timetabled the filing of the defendants’ submissions by 2 August 2023, which never occurred.

[14]   It was submitted that Mr Garnham was requesting only a short adjournment. That presupposes that the Court can easily provide a further hearing in the very near future and overlooks that judicial resources are precious and would be wasted if the hearing did not proceed.

[15]   Finally, the fees in  issue  have  been  outstanding  for  a  very  long  time.  Mr Garnham did not raise any concerns as to the reasonableness of them promptly, nor has he been cooperative in resolving any genuine concerns he may have about them. He did not raise any dispute with counsel about their fees until after the claim against ANZ Bank had been struck out. Despite then saying he would pay what he considered reasonable, he did not do so. He then delayed, until after the issue of this proceeding, referring the matter to the Law Society despite requests he do so months earlier. It is no coincidence, in my view, that the complaint was only made on the day

of the first case management conference. By that date some of the fees had been outstanding for almost 15 months.

[16]   Weighing up all these matters, the interests of justice did not favour granting an adjournment of the hearing and it was refused.

The facts

[17]   In about May 2021, Mr Garnham sought advice from Richard Fowler KC in relation to the bringing of proceedings on behalf of himself and the other defendants against ANZ Bank, claiming $34,566,575.

[18]   Shortly thereafter the defendants, through Mr Garnham, engaged Mark Robertson, a barrister, to provide legal services and information technology support in relation to the anticipated proceedings.

[19]   A statement of claim commencing the proceeding was filed in the High Court at Wellington on 3 August 2021.

[20]   Between May and December 2021 Mr Fowler and Mr Robertson provided legal services to the defendants as instructed by Mr Garnham, and both Mr Fowler and Mr Robertson rendered invoices for services provided which were paid.

[21]   On 15 December 2021, ANZ Bank filed its defence to the claim, as well as interlocutory applications to strike out the proceeding and for summary judgment.

[22]   In around February 2022, Mr Fowler ceased to act for the defendants. The defendants, through Mr Garnham as the then instructing solicitor, engaged further barristers, Craig Stevens and Tiho Mijatov, to act  for  the defendants  along  with Mr Robertson (counsel).

[23]   Between February and May 2022 counsel were engaged in preparing the opposition to ANZ Bank’s interlocutory applications and for the hearing.

[24]   On 28 April 2022, Mr Stevens suggested Mr Garnham should not remain as the solicitor on the record. Mr Garnham accepted that, and Mr Stephens agreed to replace him.

[25]   On 29 April 2022, a notice of change of representation and address for service was filed and Mr Stephens became the solicitor on the record for the defendants.

[26]   The application by ANZ Bank for strike out and summary judgment was heard before Churchman J on 3 and 4 May 2022. Significant costs were incurred in the lead- up to, and in respect of, the hearing in which all three counsel were involved for the defendants.

[27]   Between February and June 2022, counsel rendered invoices for their respective legal services as follows:

Table

Invoice Date	Robertson (incl GST)	Stevens (incl GST)	T Mijatov (incl GST)
25 Feb 2022	$10,005.00 (paid)
30 March 2022	$45,540.00 (part paid)
31 March 2022	$11,730.00 (paid)
01 April 2022	$88,450.00 (unpaid)
30 April	$25,530.00 (unpaid)
01 May 2022	$25,156.27 (unpaid)
02 May 2022	$28,980.00 (unpaid)
30 May 2022	$13,483.76 (unpaid)	$15,525.00 (unpaid)
07 June 2022	$27,255.00 (unpaid)

Totals (incl GST)	$127,090.00	$74,520.00	$90,045.00
Amounts paid by the defendants	$0.00	$21,735.00	$20,000.00
The amounts due and outstanding	$127,090.00	$52,785.00	$70,045.00

[28]   Between  May  and  July  2022,  counsel   made   numerous   demands   on Mr Garnham for payment, but no payments were made. Mr Garnham did, however, send an email to the three counsel, on 3 June 2022, referring to cashflow issues but promising to make payments from 20 June 2022.

[29]   On 29 July 2022, Churchman J delivered judgment striking out all of the defendants’ causes of action against ANZ Bank on the ground they were time-barred.3

[30]   On 8 August 2022, Mr Garnham met with counsel and, for the first time, expressed concern about counsel’s fees which he said were too high. At that stage he did not take issue with any aspect of the work that had been undertaken.

[31]   On 23 August 2022, counsel each terminated their retainers and, on 30 August 2022, Churchman J granted them leave to withdraw due to the defendants’ failure to pay the outstanding fees.4

[32]   On 27 September 2022, counsel requested that the plaintiff make demand on the defendants for their unpaid fees and take any necessary enforcement action in respect of them. This did not happen immediately while the plaintiff took advice on its obligations from a barrister, Christopher Griggs.

[33]   On 13 December 2022, counsel sought a ruling from the New Zealand Law Society as to the reasonableness of their fees but, on 19 December 2022, the Law

3      Criffel Deer Ltd v ANZ Bank New Zealand Ltd [2022] NZHC 1851, [2022] NZCCLR 8 at [65].

4      Criffel Deer Ltd v ANZ Bank New Zealand Ltd [2022] NZHC 2175.

Society declined jurisdiction because it had not received any complaint about counsel’s fees from any of the defendants.

[34]   It was suggested that Mr Garnham should make his own complaint to the Law Society but, on 16 January 2023, Mr Garnham wrote to Mr Stephens indicating that he understood “an aggrieved client” had two years from invoicing to bring a complaint, and neither he nor the other defendants would be “bullied” into making their own complaint to Law Society at that time.

[35]   On 27 January 2023, the plaintiff issued a demand upon the first defendant (but emailed also to Mr Garnham) for payment of counsel’s fees totalling $249,920 and attaching a tax invoice in respect of those fees. The defendants made no payment in response to that demand.

[36]   On 18 April 2023, the plaintiff commenced this proceeding. It was set down for first call on 27 June 2023. There was no appearance on behalf of the defendants. Mr Garnham, acting for all defendants, filed a memorandum on 28 June 2023 stating the defendants had now submitted a complaint and request for cost revision to the New Zealand Law Society as follows:

In view of the complaint and reference for costs revision having been made by the Defendants to the Professional Standards Officer of the New Zealand Law Society, it would seem trite to suggest that any further timetabling in relation to this application is both unnecessary and undesirable until the complaint and costs reference to the Society have been finally determined, at which point if needed, the Society’s determination could be put before the Court.

[37]In the same memorandum, Mr Garnham also advised:

Mr Stephens then accepted appointment as Solicitor of Record, that on the basis that he would not have any responsibility or indemnity obligations in relation to instruction of Counsel. That obligation would continue in relation to the Third Defendant, but not the First and Second Defendants.

[38]   On 11 July 2023, the Law Society gave notice of the complaint under s 141 of the Act.

Summary judgment principles

[39]   The plaintiff’s application for summary judgment is made under r 12.2(1) of the High Court Rules, which reads as follows:

12.2Judgment when there is no defence or when no cause of action can succeed

(1)The court may give judgment against a defendant if the plaintiff satisfies the court that the defendant has no defence to a cause of action in the statement of claim or to a particular part of any such cause of action.

[40]   Also relevant is r 12.3, which provides the Court may give judgment on the issue of liability and direct trial on the issue of amount. It reads as follows:

12.3Summary judgment on liability

The court may give judgment on the issue of liability, and direct a trial of the issue of amount (at the time and place it thinks just), if the party applying for summary judgment satisfies the court that the only issue to be tried is one about the amount claimed.

[41]   The principles that apply to summary judgment applications are well-known and are summarised by Associate Judge Osborne in Mount Grey Downs Ltd v Pinot Properties Ltd as follows:5

(a)Commonsense, flexibility and a sense of justice are required.

(b)The onus is on the plaintiff seeking summary judgment to show that there is no arguable defence. The Court must be left without any real doubt or uncertainty on the matter.

(c)The Court will not hesitate to decide questions of law where appropriate.

(d)The Court will not attempt to resolve genuine conflicts of evidence or to assess the credibility of statements in affidavits.

(e)In determining whether there is a genuine and relevant conflict of facts, the Court is entitled to examine and reject spurious defences or plainly contrived factual conflicts. It is not required to accept uncritically every statement put before it, however equivocal, imprecise, inconsistent with undisputed contemporary documents or other statements, or inherently improbable.

5      Mount Grey Downs Ltd v Pinot Properties Ltd [2018] NZHC 3094 at [12].

(f)In assessing a defence the Court will look for appropriate particulars and a reasonable level of detailed substantiation – the defendant is under an obligation to lay a proper foundation for the defence in the affidavits filed in support of the Notice of Opposition.

(g)In weighing these matters, the Court will take a robust approach and enter judgment even where there may be differences on certain factual matters if the lack of a tenable defence is plain on the material before the Court.

(h)The need for judicial caution in summary judgment applications has to be balanced with the appropriateness of a robust and realistic judicial attitude when that is called for by the particular facts of the case. Where a last-minute, unsubstantiated defence is raised and an adjournment would be required, a robust approach may be required for the protection of the integrity of the summary judgment process.

(i)Once the Court is satisfied that there is no defence, the Court retains a discretion to refuse summary judgment but does so in the context of the general purpose of the High Court Rules which provide for the just, speedy and inexpensive determination of proceedings.

(footnotes omitted)

Issue 1 – s 161(1) of the Lawyers and Conveyancers Act

[42]   The issue is whether the defendants’ complaint and request for cost revision in respect to counsel’s fees operates as a stay of this proceeding until the complaint has been finally disposed of.

[43]   Sections 132(2), 141, and 161(1) of the Act are relevant to this issue, and I set them out below.

[44]Section 132 provides:

132 Complaints about practitioners, incorporated firms, and their employees

…

(2)Any person who is chargeable with a bill of costs, whether it has been paid or not, may complain to the appropriate complaints service about the amount of any bill of costs rendered by a practitioner or former practitioner or an incorporated firm or former incorporated firm (being a bill of costs that meets the criteria specified in the rules governing the operation of the Standards Committee that has the function of dealing with the complaint).

…

[45]Section 141 provides:

141    Notice to person to whom complaint or inquiry relates

The Standards Committee—

(a)must send particulars of the complaint or matter to the person to whom the complaint or inquiry relates, and invite that person to make a written explanation in relation to the complaint or matter:

(b)may require the person complained against to appear before it to make an explanation in relation to the complaint or matter:

(c)may, by written notice served on the person complained against, request that specified information be supplied to the Standards Committee in writing.

[46]Section 161(1) provides:

161    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.

…

[47]   The plaintiff argues the defendants’ complaint does not prevent it obtaining summary judgment as to liability, because that does not interfere with the role of the Standards Committee of the Law Society in determining the reasonableness of counsel’s fees. It referred to several authorities supporting that contention.6

[48]   In Pratley v Courteney, the plaintiff sought to recover fees and disbursements incurred in undertaking work when acting as a solicitor in connection with the administration of an estate. Some of the fees were incurred after he ceased acting as an executor and trustee, but to establish his entitlement to an indemnity for the work undertaken in that capacity.7 Shortly after the plaintiff filed his proceeding, the

6      Simpson Grierson v Gilmour (2009) 19 PRNZ 865 (HC), at [64]–[65]; Pratley v Courteney [2020] NZHC 1636 at [10]; and Tonise v Woodroffe Law Partnership [2020] NZHC 1926.

7      Pratley v Courteney, above n 6.

defendant made a complaint to the Law Society contending the charges were excessive and work had been carried out in the plaintiff’s own interests. The defendant applied for a stay of the proceeding relying upon s 161(1) of the Act. His application was unsuccessful and was dismissed.

[49]Dobson J noted that:

[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.

[50]   He referred to Simpson Grierson v Gilmour, where Stevens J had set out the limits on the scope of s 161 as follows:8

[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 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.

8      Simpson Grierson v Gilmour, above n 6.

[51]   Relevantly, counsel for the defendant in Pratley argued that there was nothing for the Court to determine until the Law Society made a determination on his complaint.9 While the terms of his complaint appeared to extend to both the entitlement of the solicitor to charge for certain categories of work and the reasonableness of the charges for the work, the defendant’s position was said to be that if the Law Society complaints process determined a further fee was payable he would pay it.

[52]   The plaintiff’s counsel argued there was an issue as to the extent of indemnity the plaintiff enjoyed and whether this extended to all costs reasonably incurred in establishing the scope of the indemnity, including costs incurred after the plaintiff ceased to be a trustee and executor of the estate.

[53]Dobson J accepted the plaintiff’s argument. He found:

[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.

[54]   Applied to this case, the plaintiff argues that an issue has been raised as to whether all defendants, or just Mr Garnham, are liable for counsel’s fees. Quite reasonably, given the history of this matter and the lengthy delays that have ready occurred, the plaintiff wants that issue to be determined now so it is not a further matter to be resolved once the Law Society has issued its determination. The plaintiff contends, and I accept, that it is a matter which goes to the defendants’ liability only and can be decided without impinging on the role of the Law Society as to the reasonableness of counsel’s charges.

9      Pratley v Courteney, above n 6.

[55]   It follows that I find the defendants cannot resist summary judgment as to liability on the basis that s 161(1) operates as a stay of the proceeding until the defendants’ complaint is finally resolved.

Issue 2 – Must counsel look to Mr Garnham for payment of their fees?

[56]   As I understand it, Mr Garnham contends that, as Mr Stephens was to have no personal responsibility for counsel’s fees, the plaintiff has no right to sue for recovery of the fees and must look solely to him (but not the other defendants) for payment. This is not raised in the notice of opposition as a defence to the summary judgment application. To the limited extent Mr Garnham raises the issue in his affidavit, he says without further elaboration:

Mr Stephens had only agreed to accept appointment on the basis that he had no responsibility for Counsel’s fees, as identified in the email from Mr Stevens confirming his appointment.

[57]   The argument appears to be solely based on an email dated 28 April 2022 from Mr Stevens, who had suggested Mr Garnham should be replaced as solicitor on the record, to Mr Stephens, who was to replace him. The email concerned the appointment of Mr Stephens as instructing solicitor and stated:

Mike (copied in) has instructed me that you are happy to be the solicitor on the record for his litigation against the ANZ. I am counsel. Mike is a party so it isn’t a good look that his firm also remains the solicitor on the record. I do not look to your firm for payment of our fees but instead to Mike or his trust.

[58]   It is surprising to me that Mr Garnham would advance a defence on this basis, which raises issues about the observance of his professional and ethical obligations. He is a senior lawyer and an officer of the Court. He can be taken to know that if in his professional capacity he instructs counsel, he has an obligation to pay counsel’s fees in full unless the fees are promptly disputed through proper professional channels.10 He has accepted on several occasions that counsel are entitled to payment of at least some part of such fees as are outstanding, yet has paid nothing towards them. He should have promptly referred any dispute as to what, if anything further, was owing to the Law Society but did not do so. Mr Garnham’s ethical obligations

10 Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules 2008, r 10.12.

aside, I do not accept the matter he raises provides him with an arguable defence to the summary judgment application.

[59]   The facts of this case are similar to those in Mason v Robertson, which was an appeal from the entry of summary judgment in a claim by an instructing solicitor in respect of counsel’s fees.11 Several arguments were advanced, including that counsel had absolved the instructing solicitor from liability in respect of counsel’s fees and that counsel’s invoices had been sent direct to the client. In those circumstances it was suggested it was reasonably arguable that the instructing solicitor could not sue the client in respect of counsel’s fees. Downs J rejected that argument.

[60]   First, he found that it would be odd if the client had a defence to a claim for recovery of counsel’s fees simply because they had been invoiced directly, when there would be no defence if the client had been invoiced indirectly. To uphold such a distinction would “triumph form over substance".12

[61]   More directly relevant to this case, Downs J also rejected the argument that an instructing solicitor’s express absolution from responsibility for payment of counsel’s fees affected “the client’s obligation to pay them, or the solicitor’s ability to seek their payment”.13 He said:

[33]… The [Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules 2008] impose an ethical obligation on an instructing solicitor to pay the barrister’s fees. The rules also provide the barrister and the solicitor may agree to the contrary. If they do, the solicitor is released from her or his ethical obligation to pay the barrister’s fees. However, such a release does not preclude the solicitor from seeking payment from the client; nor afford the client a defence to payment should the solicitor elect to do so.

[34]In short, X’s release from an ethical obligation to Y in relation to Z is not a legal impediment to X pursuing Z on Y’s behalf. Any other conclusion would mean a barrister could not obtain relief in these circumstances, even though they had diligently done everything asked of them by the client, for the client’s advantage. That would be unjust.

11     Mason v Robertson [2019] NZHC 2989.

12     At [30]–[31], citing New Zealand Tamil Society Inc v Kiely Thompson Caisley [2011] NZAR 722 (HC), at [12].

13     At [33], citing Findlay v Webb Morice & Partners High Court Auckland AP82-SW99,

6 September 1999.

[62]   I agree with Downs  J’s  assessment  of  the  law,  and  there  is  nothing  in Mr Stevens’ email of 28 April 2022 to suggest that counsel were not only absolving Mr Stephens from personal liability for their fees but also from an instructing solicitor’s obligation to use reasonable endeavours to ensure the fees were paid.14 That would have been quite an extraordinary thing to do in circumstances where it is a longstanding rule that a barrister may not sue his or her client for recovery of fees.

[63]   Further, to the extent that Mr Stevens says in his email that he would be looking to Mr Garnham and his trusts for payment, that is inconsistent with an assertion that Mr Garnham alone was responsible for payment of counsel’s fees. Counsel understood that Mr Garnham was a director and shareholder of the defendant companies and that some of the shares were held in his family trusts. They also knew that Criffel held substantial assets.

[64]   Not only that, Mr Garnham never suggested prior to 28 June 2023, when he filed his memorandum in this proceeding, that only he would be liable for counsel’s fees, and in fact all counsel had been paid something towards their fees by the defendants. Counsel’s fees that were actually paid in the ANZ Bank proceeding were paid by Criffel or one of Mr Garnham’s family trusts or related companies.

[65]   Also, on 3 June 2022, Mr Garnham informed counsel that Criffel’s cashflow had been affected due to delays in deer kills. He said that a significant sum the company would ordinarily receive had not been, and that had “flowed through not surprisingly to our/Criffel cashflows – and your accounts”. He promised to “flow” funds to each counsel at least once, if not twice, from about 20 June 2022. That did not happen, but the fact that Mr Garnham was anticipating payment to be made by Criffel is inconsistent with his position it was not responsible for counsel’s fees.

[66]   I therefore reject the argument that the three counsel must look to Mr Garnham (and only him) for payment of their fees. However, there is one qualification I make to that. The plaintiff was retained in respect of the ANZ Bank litigation on 28 April 2022, and Mr Stephens personally accepted appointment as the solicitor on the record from 29 April 2022. Up until that date, Mr Garnham was their instructing solicitor

14 Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules 2008, r 10.12.2.

and was responsible for payment of counsel’s fees. I do not see how it can be that the plaintiff can also now sue to recover fees rendered before it was retained. As far as Mr Garnham has failed to pay such fees, his obligation to do so is a matter that can be enforced through disciplinary proceedings. Despite what Mr McClelland said about the matter, I am unable to find that the defendants do not have an arguable defence in respect to fees rendered prior to 28 April 2022.

Result

[67]   The plaintiff has satisfied me it is entitled to summary judgment as to the liability of each of the defendants for payment of counsel’s fees the subject of this claim and rendered after 28 April 2022. For the avoidance of doubt, nothing in this judgment is concerned with the quantum of such fees payable by the defendants, which is a matter to be determined by the Law Society.

[68]   I direct that the case be adjourned to a telephone conference with an Associate Judge in three months to review progress of the defendants’ complaint. However, if the parties are agreed, the proceeding could be stayed pending the Law Society’s decision and I invite them to request that by memorandum.

[69]   In relation to costs, if the plaintiff seeks costs at this stage it should file a memorandum within 14 days. The defendants shall have 14 days to reply. Memoranda shall be no longer than five pages. I will determine costs on the papers.

O G Paulsen Associate Judge

Solicitors and Counsel:

Solicitor acting – Michael Stephens (Counsel: M McClelland KC), Wellington Mike Garnham Barristers & Solicitors, Wellington