Webster v Jagger
[2021] NZHC 1146
•25 May 2021
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2019-404-001754
[2021] NZHC 1146
IN THE MATTER of the enforcement of a written fee agreement BETWEEN
STUART JOHN WEBSTER
Plaintiff
AND
CATHERINE ELLEN JAGGER
Defendant
Hearing: 7 December 2020 Appearances:
L J Blomfield for the Plaintiff G C Jenkin for the Defendant
Judgment:
25 May 2021
JUDGMENT OF ASSOCIATE JUDGE GARDINER
This judgment was delivered by me on 25 May 2021 at 11.30 a.m. pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar Date.......................................
Solicitors:
Morgan Coakle, Auckland Bruce Dell Law, Auckland
G C Jenkin, Auckland
WEBSTER v JAGGER [2021] NZHC 1146 [25 May 2021]
Introduction
[1] The plaintiff, Stuart John Webster applies for summary judgment of his claim against the defendant, Catherine Ellen Jagger for a debt owing under a written fee agreement. The written fee agreement governed professional legal services Mr Webster provided to Ms Jagger in California to secure her entitlement to an interest in her former husband’s retirement plan.
[2] Ms Jagger opposes the application on the basis that the fees charged by Mr Webster were excessive, exceeded the estimate he gave, and that he acted outside the scope of his retainer.
[3] The issue for determination is: does Ms Jagger have no defence to Mr Webster’s claim to the unpaid fees and disbursements? That is, is there no real question to be tried?
Background
[4] Mr Webster is an attorney licensed to practice law in California, United States of America. He is a member of the California State Bar. Mr Webster, who studied law in New Zealand and practised here for many years before moving to California, also holds a New Zealand practising certificate.
[5] Ms Jagger is a funeral director who lives in Auckland. She was married to an American, Allan Jagger. They separated in June 1994 and a divorce was granted in October 1997.
[6] When the divorce was granted, it was noted in the Court order that Ms Jagger was entitled to an interest in Mr Jagger’s retirement plan from the Orange County Employees’ Retirement System (OCERS). To secure payment of her interest directly from the OCERS she would need to obtain what is known as a Domestic Relations Order (DRO).
[7] In 2007 or 2008, Ms Jagger instructed a lawyer in Auckland to make enquiries with the OCERS regarding settlement of her interest in the plan. The OCERS advised
that, upon Mr Jagger’s retirement, Ms Jagger’s interest in the plan would accumulate for her benefit until a DRO was finalised and approved by the OCERS and confirmed by the Superior Court of California.
[8] Due to serious illness, Ms Jagger did not take any steps to obtain a DRO until 2018. The OCERS did not contact Ms Jagger during this period. It transpired that Mr Jagger had in fact retired on 20 January 2008.
[9] In September 2018, Ms Jagger engaged Mr Webster to advance matters with the OCERS and obtain a DRO. The terms of Mr Webster’s engagement were contained in a written fee agreement signed by Ms Jagger and dated 23 September 2018 (the Fee Agreement).
The Fee Agreement
[10] Clause 2 of the Fee Agreement set out the scope of Mr Webster’s services and his duties:
2. SCOPE OF SERVICES AND ATTORNEY'S DUTIES
Client hires Attorney to provide legal services in the following matter:
2.1 Liaise with OCERS concerning current benefit entitlements;
2.2 Prepare and file final DRO with Orange County Superior Court;
2.3 Liaise with former husband and/or his attorney;
2.4 Attend to service of proceedings on former husband;
2.5 Appear in support of final DRO including all incidental appearances;
2.5 Negotiate with OCERS concerning lump sum benefit payments;
2.5 Report to you.
Attorney will provide those legal services reasonably required to represent Client. Attorney will take reasonable steps to keep Client informed of progress and to respond to Client’s inquiries. This Agreement does not cover litigation services of any kind, whether in court, arbitration, administrative hearings, or government agency hearings. A separate written agreement for these services or services in any other matter not described above will be required.
[11] Clauses 4–7 governed the payment of a deposit, fees, billing practices, costs and other charges and bills:
4. DEPOSIT
Unless waived under paragraph l(b), Client agrees to pay Attorney an initial deposit of USD$1500.00…The hourly charges and costs will be charged against the Deposit. The initial Deposit, as well as any future deposit, will be held in Attorney's Client Trust Account. Client authorizes Attorney to use that deposit to pay the fees and other charges. Client acknowledges that the deposit is not an estimate of total fees and costs to be charged by Attorney, but merely an advance.
Client agrees that Attorney’s right to recover fees and costs (whether from the Deposit or any subsequent deposit held in Attorney’s Client Trust Account) or otherwise becomes fixed five working days after the date a bill is sent to Client. Client authorizes Attorney to withdraw the funds, from Attorney’s Client Trust Account to pay Attorney’s fees and costs six working days after the date a bill is sent to Client. If Attorney receives a written objection from Client within six working days of sending the bill, Attorney’s right to recover the amount that is identified in the objection will be deemed to be disputed, and Attorney will not withdraw the disputed fees and/or costs from the Client Trust Account until the dispute is resolved. If Attorney receives an objection from Client more than six working days after the date the bill is sent and after the funds have been withdrawn, Attorney shall not be required to redeposit the disputed fees and/or costs into the Client Trust Account during the pendency of the dispute...
5. LEGAL FEES AND BILLING PRACTICES
Client agrees to pay the by the hour at Attorney’s rates as set forth below for all time spent on Client's matter by Attorney and Attorney's legal personnel. Current hourly rates for legal personnel are as follows:
Stu Webster (Principal) USD$480
...
6. COSTS AND OTHER CHARGES
(a)…Client agrees to pay for all costs, disbursements and expenses in addition to the hourly fees.
…
(d) Attorney will obtain Client’s consent before incurring any costs in excess if USD$500.
7. BILLS
Attorney will send Client periodic bills for fees and costs incurred. Each bill will be payable within five working days of its mailing date…Client agrees to promptly review all bills rendered by Attorney and to promptly communicate any objections, questions, or concerns about their contents.
Fee estimates
[12] On 3 January 2019, Mr Webster emailed Ms Jagger explaining that his best estimate of legal costs was USD 15,000 – USD 18,000 (less the USD 1,500 deposit) if there was to be a straightforward settlement.
[13] He updated Ms Jagger via email on 28 January 2019, outlining estimated costs attached to her options going forward. He estimated that if she chose to pursue the matter in court, the total costs would be in the range of USD 26,000 – USD 30,000 plus disbursements, and another USD 10,000 – USD 20,000 if there was an appeal. And he estimated that if she chose to pursue a negotiation with her former husband, the total costs would be in the range of USD 25,000 – USD 27,000 plus disbursements.
Services performed
[14] Between 19 September 2018 to 19 July 2019 Mr Webster carried out the legal services. The outcome was that on 17 June 2019 the OCERS Board resolved to pay Ms Jagger a lump sum of USD 79,324.77, together with monthly entitlements of USD 648.40, according to a final order of the DRO Orange County Superior Court. The lump sum payment was transferred to her bank account on 17 July 2019. Ms Jagger requested that the monthly payments be held in an interest-bearing deposit until OCERS could determine how to make those payments by bank-to-bank transfer to a New Zealand bank account, or Ms Jagger opened a US bank account in Hawaii.
Payments made
[15] Ms Jagger, or a third party on her behalf, made the following payments pursuant to the Fee Agreement:
Date of payment Amount Description1 1 October 2018
USD 1500
Deposit
8 November 2018
USD 375
First fees invoice: filing fee, service fee and other
disbursements related to
1 Summarised, not quoted.
the Superior Court
proceedings
20 March 2019
USD 25,000
Second fees invoice.
[16] Ms Jagger’s friend, Paula Marie Sheahan paid the second fees invoice, as a “lender”. Ms Sheahan told Mr Webster that she was happy to pay the invoice on the basis that Ms Jagger would repay her once Ms Jagger’s lump sum entitlement from OCERS was paid out.
[17] Mr Webster also invoiced Ms Jagger on 17 June 2019 for the following charges (the Statement of Account):
Date of invoice Amount Description2 17 June 2019
USD 18,010
Third fees invoice: appearance in court;
drafting; correspondence; reviewing options;
advising on strategy; reporting.
17 June 2019
USD 763.67
Expenses invoice: parking at court; mileage claims for flights; filing fees; service fees; and postal
charges.
The aftermath
[18] Ms Jagger did not pay the sums specified in the Statement of Account, nor did she dispute them within the five days specified in cl 4 of the Fee Agreement.
[19] On 3 July 2019, Mr Webster made demand for payment of the outstanding invoice in a telephone conversation.
[20] On 13 July 2019, Mr Webster emailed Ms Jagger, asking her to sign and return an irrevocable letter of authority to settle the Statement of Account from the proceeds of the lump sum payment by OCERS.
2 Summarised, not quoted.
[21]By email dated 19 July 2019, Ms Jagger disputed the fee level:
Stu
I remain very angry and disappointed in you. On top of everything else you are expecting me to pay for all your extra “effort” without actually finishing the job. I now still have to get OCERS to set up bank to bank transfers for the future or open an account in Hawaii because cheques are not an option which you knew. Therefore because you estimated that the bill would be no more than $30k and you have already had $25k… my offer to you is a further $5k in full and final settlement…
Catherine
[22] By email dated 21 July 2019, Mr Webster rejected her settlement offer, attaching a Notice of Clients’ Right to Fee Arbitration form. This Notice informed Ms Jagger of her right under ss 6200–6206 of the California Business and Professions Code to request fee arbitration.3 It also informed her that her right to fee arbitration would expire if she did not file a written application for the arbitration with the Bar Association within 30 days from receipt of the notice. Further, that Mr Webster had the right to file a lawsuit against her if she gave up her right to mandatory fee arbitration. He concluded that in the absence of full payment from her, he would commence debt recovery action in the Auckland High Court.
[23] On 21 August 2019, Ms Jagger’s right to mandatory fee arbitration through the California State Bar expired.
[24] On 23 August 2019, Mr Webster filed a statement of claim and an interlocutory application for summary judgment against Ms Jagger in the Auckland High Court. He seeks judgment against Ms Jagger in the sum of USD 18,773.67, interest thereon pursuant to s 10 of the Interest on Money Claims Act 2016, and costs.
[25] Mr Webster outlined his reasons for initiating summary judgment proceedings in the New Zealand High Court by affidavit:4
3 Mr Webster deposes that the California State Bar does not have a universal system for resolving fee disputes. Rather, fee disputes can be resolved in court subject only to Mandatory Fee Arbitration processes made available through the various bar associations, the membership of which is voluntary.
4 Affirmed 11 October 2019.
11.1I had the option of enforcing the judgment either in California (where… “OCERS” is domiciled) or in New Zealand directly against the Defendant who is domiciled there.
11.2In contrast to most of the Commonwealth countries, the United States does not have a formal arrangement with New Zealand concerning the reciprocal enforcement of judgments.
11.3If a judgment of the California courts is required to be enforced in New Zealand, that judgment would need to form part of a New Zealand High Court Summary Judgment proceeding against the Defendant.
11.4Knowing that enforcement against the Defendant in New Zealand was going to have to involve High Court summary judgment proceedings in any event, by commencing in that jurisdiction in the first instance, the Defendant (and the Courts) have been saved the expense and demand on resources in having the matter litigated in California first.
11.5If judgment is obtained in this Court, the option remains for me to register the High Court judgment in the California Superior Court and take enforcement action there, including but not limited to garnishee proceedings against the Defendant’s monthly entitlement payable by OCERS for the balance of the Defendant’s life.
11.6I do not believe the New Zealand District Court has jurisdiction that would be recognized by the US courts. The matter would have to be removed to the High Court first for an order to be sealed and then filed as part of the enforcement process in California.
11.7For these reasons the matter should remain and be litigated in the New Zealand High Court.
[26] Ms Jagger filed her notice of opposition in the Auckland High Court on 9 October 2019. That same day she made a formal complaint about Mr Webster to the Lawyers Complaints Service (LCS) of the New Zealand Law Society (NZLS). In her notice of opposition Ms Jagger sought a stay or dismissal of the application pending determination of her complaint to the NZLS. In her complaint to the LCS, Ms Jagger alleged that Mr Webster failed to follow her instructions, exceeded his fee estimate, undertook work outside the scope of his retainer and failed to charge a fair and reasonable fee.
[27] Mr Webster’s application for summary judgment was originally set down for first call on 18 December 2019. The fixture was adjourned repeatedly to allow the LCS to finish considering Ms Jagger’s complaint and for the period in which Mr Webster might apply to review the LCS’s decision to lapse.
[28] On 7 August 2020, the Auckland Standards Committee No 4 gave notice of its decision “to take no further action on the complaint pursuant to s 138(2) of the [Lawyers and Conveyancers Act 2006] namely that, having regard to all the circumstances, any further action would be inappropriate.” The Committee’s reasons, particularly in relation to the transnational nature of the matter, are relevant to this application:5
The unique features of Ms Jagger’s Complaint
16.The simple fact that Ms Jagger was entitled to make a complaint does not automatically mean that a New Zealand-based Standards Committee, constituted under the [Lawyers and Conveyancers Act 2006], is necessarily the appropriate forum to address the concerns she has raised. It must be emphasised that Ms Jagger’s complaint presents a number of unique features. While Ms Jagger is herself domiciled in New Zealand, the matter in respect of which she instructed Mr Webster relates to California law, specifically obtaining a DRO in the Superior Court of California. It is common ground that Mr Webster undertook that work in California, where he is an attorney licensed by the State Bar. In California, the conduct of attorneys is regulated by the State Bar.
Does the Act provide any guidance?
17.The Act does not address whether, and if so, in what circumstances, a Standards Committee will be the appropriate forum to address a client’s concerns about legal services provided in an overseas jurisdiction where the lawyer is licensed to practise (subject to regulatory oversight) in that jurisdiction, but also holds a New Zealand practising certificate…
…
Conclusion
48.The Standards Committee accepted that Mr Webster held a hybrid status, to the extent that he is an attorney in California and a solicitor in New Zealand…
49.The legal services related exclusively to California law. They required appearances by Mr Webster in the Superior Court of California. Mr Webster was at all times acting in his capacity as an attorney in California. The work Mr Webster undertook was subject to regulation by the State Bar. Ms Jagger was plainly aware of this because Ms Sheahan made it clear in an email to Mr Webster that Ms Jagger was considering making a complaint to the State Bar.
5 New Zealand Law Society Lawyers Complaints Service, Notice of Decision by Auckland Standards Committee 4, No 19773, 7 August 2020.
50.The Standards Committee was satisfied, in all the circumstances, that the legal services Mr Webster provided to Ms Jagger were not what Parliament intended to regulate with the passage of the Act. It shared the view expressed by Mr Webster that the work he undertook in California was “already satisfactorily regulated by domestic rules of professional conduct.”
…
52.The Standards Committee noted Ms Jagger’s advice that she has made a complaint about Mr Webster to the State Bar. That was the appropriate course of action for Ms Jagger to take. It will be for the State Bar, and not a New Zealand-based Standards Committee, to address the concerns Ms Jagger has about Mr Webster’s conduct. Any further action by the Standards Committee would be inappropriate.
(bold emphasis added)
[29] Neither Ms Jagger nor Mr Webster applied for a review to the Legal Standards Review Officer of the Auckland Standards Committee decision within 30 working days of the decision.
[30] As described by the Auckland Standards Committee, Ms Jagger also made a complaint about Mr Webster to the State Bar of California. By letter dated
8 January 2020, the State Bar of California Complaint Review Unit informed Ms Jagger that it was closing her complaint:
Under the laws of California, the facts as you have alleged them would not be grounds for disciplinary action. It is misconduct for an attorney to intentionally, recklessly, or repeatedly fail to provide competent legal services to her client. Although you are not satisfied with the manner in which Mr Webster handled your case, there are insufficient specific facts to support the conclusion that he violated this rule.
Jurisdiction and relevant law
[31] There is no dispute about whether this Court has jurisdiction to determine Mr Webster’s claim. This Court’s jurisdiction over a defendant in an action in personam accrues where the documents by which the proceeding is commenced are properly served.6 Ms Jagger was validly served in Auckland on 10 September 2019.7
6 David Goddard Laws of New Zealand Conflict of Laws: Jurisdiction and Foreign Judgments (online ed) at [6]; Carberry Exports (NZ) Ltd v Krazzy Price Discount Ltd (1985) 1 PRNZ 279 (HC) at 280.
7 Affidavit of Patrick John Henshall sworn 10 September 2019.
Accordingly the High Court of New Zealand has jurisdiction over Mr Webster’s proceeding and application for summary judgment.
[32] As to the law governing the Fee Agreement, Mr Webster and Ms Jagger did not expressly choose a system of law as the proper law of the Fee Agreement. Consequently, this Court must determine the proper law by examining the Fee Agreement and surrounding circumstances. Borrowing President Cooke’s words, I must ask “what is the system of law with which the transaction has the closest and most real connection”?8 The following relevant factors inform my answer:9 the place where the contract was made; the place where the contract was to be performed; the nature and location of the subject-matter of the contract; the currency in which payment was to be made; the place of the parties’ residence or business; and the terminology of the contract.
[33] In my opinion, the system of law with which the Fee Agreement has the closest and most real connection is California law. As the Auckland Standards Committee expressed, the Fee Agreement concerned the provision of legal services relating exclusively to California law, requiring appearances by Mr Webster in the Superior Court of California. Mr Webster was to act solely in a capacity as an attorney in California subject to regulation by the State Bar of California.10 The initial deposit due under the Fee Agreement, Mr Webster’s hourly rate and other costs are all expressed in USD.11
[34] Both parties agree that the Fee Agreement is governed by California law. In his affidavit dated 11 October 2019, Mr Webster affirms:12
The Fee Agreement between the Defendant and I … is clearly entered into in the US and is governed by US law. The Defendant needed a licensed California attorney to become involved in extant proceedings in the Orange County Superior Court between her and her former husband. It would have been impossible for me to assist her and obtain a binding Domestic Relations Order if I were not so licensed. The Fee Agreement makes reference to
8 McConnell Dowell v Lloyd’s Syndicate 396 [1988] 2 NZLR 257 (CA) at 273.
9 M Pawson Laws of New Zealand Conflict of Laws: Choice of Law (online ed) at [118];
10 Clauses 5, 9, 10 and 12 of the Fee Agreement refer to the Rules of Professional Conduct of the State Bar of California.
11 Club Mediteranee New Zealand v Wendell [1989] 1 NZLR 216 (CA) at 218.
12 At [3].
provisions of the Rules of Conduct of the State Bar of California…and relates to work to be exclusively undertaken within California.
[35] Ms Jagger agrees. Mr Jenkin, counsel for Ms Jagger in this application, records in his written submissions: “it is not really in dispute that the proper law of the fee agreement is the law of the US State of California.”13
[36] Despite the parties agreeing that the proper law of contract in question is California law, the submissions of both parties engage with laws of New Zealand. Moreover, neither has provided evidence as to applicable California law. In the absence of evidence of foreign law, I will simply apply any relevant New Zealand law.14
Legal principles concerning summary judgment
[37]Rule 12.2(1) of the High Court Rules 2016 provides:
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.
[38] The principles relevant to Mr Webster’s application for summary judgment are well-known and are not in dispute:15
[26] The principles are well settled. The question on a summary judgment application is whether the defendant has no defence to the claim; that is, that there is no real question to be tried: Pemberton v Chappell [1987] 1 NZLR 1 at 3 (CA). The Court must be left without any real doubt or uncertainty. The onus is on the plaintiff, but where its evidence is sufficient to show there is no defence, the defendant will have to respond if the application is to be defeated: MacLean v Stewart (1997) 11 PRNZ 66 (CA). The Court will not normally resolve material conflicts of evidence or assess the credibility of deponents. But it need not accept uncritically evidence that is inherently lacking in credibility, as for example where the evidence is inconsistent with undisputed contemporary documents or other statements by the same deponent or is inherently improbable: Eng Mee Yong v Letchumanan [1980] AC 331 at 341 (PC). In the end the Court’s assessment of the evidence is a matter of
13 Submissions by counsel for the defendant in opposition to summary judgment application, dated 27 November 2020 at [13].
14 Elizabeth McDonald and Scott Optican (eds) Mahoney on Evidence – Act & Analysis (4th ed, Thomson Reuters, Wellington, 2018) at EV144.05, citing Law Commission Evidence Code and Commentary (NZLC R55 vol 2, 1999) at 257.
15 Krukziener v Hanover Finance Ltd [2008] NZCA 187, [2010] NZAR 307.
judgment. The Court may take a robust and realistic approach where the facts warrant it: Bilbie Dymock Corp Ltd v Patel (1987) 1 PRNZ 84 (CA).
[27] Under r 141A the defendant need not file a statement of defence. The onus remains on the plaintiff, and summary judgment will be denied if on the hearing of the application it appears that there is an issue worthy of trial.
Ms Jagger’s defence
[39] Ms Jagger opposes the application for summary judgment on the following grounds:16
(a)The quantum of Mr Webster’s 17 June 2019 fees invoice (for USD 18,010) is grossly excessive. Ms Jagger says that the vast bulk of the legal work was, or should have been, completed by 11 March 2019 when Mr Webster rendered his second fees invoice. She says that beyond 11 March 2019 her instructions to Mr Webster were to: avoid attending the hearing scheduled for 10 April 2019 if possible, or at least to limit his involvement to a mere appearance; cease communicating with the OCERS and the parties regarding the dispute between Mr Jagger and OCERS; and to appear at the OCERS board meeting as a witness only. Any time recorded and charged in the 17 June 2019 fee invoice beyond those instructions is outside the scope of the retainer. Ms Jagger says that Mr Webster wasted time by becoming unnecessarily and/or overly involved in the dispute between the OCERS and Mr Jagger, which had little or no relevance to Ms Jagger. He did not in fact “review options” or “advise and recommend on strategy” because the way forward was straightforward. If he did draft an application for a further hearing and a supporting declaration, it was never filed, and so the time spent doing that was wasted. If he did liaise with Mr Jagger’s counsel and OCERS staff, it was for no beneficial purpose. Further, the fee agreement expressly excludes “litigation services”, and so any time charged in the 17 June 2019 invoice for litigation services is outside the scope of the agreement.
16 Notice of opposition; application for summary judgment of 9 October 2019.
(b)The total fees and expenses rendered by Mr Webster of USD 45,738.67 exceeded Mr Webster’s high estimate in his email of 28 January 2019 by 52.5 per cent (and the low estimate by 75 per cent), and therefore Mr Webster has engaged in misleading and deceptive conduct in trade contrary to s 9 of the Fair Trading Act 1986, breached the Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules 2018, and breached his fiduciary duty.
(c)Mr Webster failed to follow Ms Jagger’s instructions: he did not pursue a claim for interest and costs against Mr Jagger and/or the OCERS, nor did he explain why this was not possible. This is said to give rise to a counterclaim for the lost opportunity to obtain relief.
(d)Mr Webster also failed to pursue disclosure of the OCERS file regarding Mr Jagger’s pension claim. It is said that had Mr Webster possessed the files, his attendances would have been much simplified and the cost to Ms Jagger correspondingly reduced.
(e)The time bar on which Mr Webster relies in the Fee Agreement is unenforceable by virtue of s 43 of the Consumer Guarantees Act 1993.
(f)Ms Jagger is entitled to a refund by way of counterclaim or set-off for the part of the 11 March 2019 invoice which relates to “litigation services” as these were excluded from the scope of work in cl 2 of the Fee Agreement.
Discussion
Time beyond 11 March 2019
[40] In my view there is no question that the work undertaken by Mr Webster between 11 March 2019 and 17 June 2019 benefitted Ms Jagger and was undertaken pursuant to her instructions. I have three main reasons.
[41] First, the work was within the scope of what Ms Jagger engaged Mr Webster to do, according to the Fee Agreement. The narration to the 17 June 2019 invoice was:
Appear before Judge Waltz (Orange County Superior Court at Lamoreaux, Justice Center) on 10 April 2019; draft and submit supplementary Letter Brief; follow up with Channels and OCERS; liaise with Adina Bercaru (OCERS Member Services Manager), Suzanne Jenike (Assistant CEO, External Operations) and Stephen Delaney (CEO), Dawn Matsuo / Adina Bercaru; review options; review revised actuarial support; advise and recommend on strategy; draft further application for hearing (against OCERS) and supporting declaration based on your instructions; appear on your behalf at OCERS Board Meeting on 17 June 2019; report to you.
[42] These attendances were within the scope of what Ms Jagger explicitly engaged Mr Webster to do at the outset, which included: liaising with OCERS concerning Ms Jagger’s entitlements; filing a final DRO with the Orange County Superior Court and appearing in support; liaising with Mr Jagger and/or his attorney; and negotiating with OCERS concerning lump sum benefit payments.17 The ultimate objective of course was to obtain a final DRO from the Court requiring the OCERS to pay Ms Jagger her entitlement; and for the OCERS to make the lump sum payment and arrange to make the monthly payments. The actual attendances were all consistent with that ultimate objective (except for the drafting of the further application, discussed below).
[43] As to the suggestion that any time recorded for “litigation services” either in the 11 March 2019 invoice or the 17 June 2019 invoice is irrecoverable as being outside the scope of the agreed legal services, this cannot seriously be maintained. Mr Webster was engaged to, amongst other things, prepare and file a final DRO with the Orange County Superior Court, and appear in the Court and make submissions. Plainly the exclusion for litigation services in the Fee Agreement at cl 2 is an error, as Mr Webster maintains. The engagement was, in the main, for litigation and litigation related services.
[44] Second, these attendances undoubtedly benefitted Ms Jagger. It is evident from the contemporaneous documents that Mr Jagger was objecting to the orders presented to him by the Court. Further, the OCERS had concerns about the
17 Fee Agreement, cl 2.
“administrability” of the draft DRO. Without Mr Webster’s further court appearance and the second letter Brief; and without his engagement with Mr Jagger’s counsel and the OCERS about their objections, the Court might not have made the final DRO on the terms Ms Jagger sought, and the OCERS Board almost certainly would not have resolved to pay Ms Jagger by consent.
[45]Mr Webster states in his evidence:18
…there were matters involving procedural and administrative steps that were vital to the defendant obtaining any payment at all. Without active participation, the Defendant would have been… exposed to the prospect that the Court might follow the uncontested arguments of Allan Jagger’s attorney or OCERS’ staff attorney and receive an entitlement that was disadvantageous to her interests or worse still not receive her entitlement at all because of an impasse over administrability…
I sincerely believe, and I do not say this lightly, that if I had done what Paula Sheahan says I should have done and take no further steps, that the Defendant would still be waiting for OCERs to make the lump sum payment.
[46] Mr Webster also engaged with the OCERS to verify that the proposed lump sum and monthly amounts reconciled with his calculations of her entitlement; and to arrange for the lump sum to be paid by electronic transfer, contrary to their usual practice. Again, this work benefitted Ms Jagger as Mr Webster identified a discrepancy in the calculations, which he had remedied in Ms Jagger’s favour. In his email of 12 June 2019, he reported:
If the Board approves the staff recommendation next Monday, you will receive on 1st July a lump sum of USD$79,324.77 and a monthly sum of USD$648.41 commencing with a first payment on 1st July 2019…
You will see from yesterday’s email exchange that I could not reconcile the figure contained in the Actuarial Report with the earlier January calculations and my expectation that the figures for both lump sum and monthly benefits should have been more. Thankfully that has been corrected in your favour and explained in the covering email.
To that extent, we have finally achieved what we set out to do which is to get OCERS to pay the arrears and commence paying you your monthly entitlement.
(emphasis added)
18 Affidavit affirmed 11 October 2019 at [47]–[48].
[47] Ultimately, the lump sum payment was made by electronic transfer, as Ms Jagger wanted.
[48] Third, Mr Webster kept Ms Jagger informed of what he was doing and proposing to do; and Ms Jagger never objected or asked him to stop. On 4 March 2019 Mr Webster forwarded to Ms Jagger an email he had sent to the OCERS’ internal lawyers, recording that a ruling from the judge was expected over the following week. In response, Ms Jagger said:
Appreciate you keeping me informed with the emails between parties. In my opinion you seem to be the only one doing anything to move this case forward, so thank you.
[49] On 10 March 2019, before rendering the second invoice, he informed her his current chargeable time was USD 29,664 plus costs (less the USD 1,500 on account and already invoiced). He indicated that he would invoice Ms Jagger USD 25,000 presently and that he would:
…wait for OCERS to pay [Ms Jagger] before asking for the remainder of the chargeable time accrued (less the $1500 you paid in 2018), together with the time inputs and costs between now and then, on the proviso that if by 8 July, payment has still not been made, then [he] reserve[d] the right to ask again for a fee payment that would be in line with the work [he] ha[d] completed.
[50] On 11 March 2019, Ms Sheahan emailed Mr Webster and Ms Jagger saying that she was very happy with the work Mr Webster had done, and that she was happy to pay Mr Webster’s 11 March 2019 invoice on the basis that Ms Jagger would repay her once the lump sum was received from OCERS. In my assessment it was clear that Mr Webster was instructed to continue to engage with the OCERS to secure the Board’s approval of the desired payment option.
[51] When Mr Webster informed Ms Jagger that he had been advised by the assistant CEO of the OCERS that Ms Jagger’s option for payment would be presented to the OCERS Board via the consent agenda on 17 June 2017, Ms Sheahan replied:19
Hi Stu. Thanks for everything. It does look like it[’]s going through by consent, and I think it would be best to say that you see no need to speak at
19 Affidavit of Stuart John Webster affirmed 22 August 2019, annexure M.
the meeting but will be there to witness it all going through, in the unlikely event that anything needs to be clarified. Best regards, Paula Sheahan
[52] As for the time spent drafting the application for a mandatory order against the OCERS, this was done on the express instruction of Ms Jagger and Mr Sheahan.20 Ms Sheahan also said that she would cover Mr Webster’s costs up to and including the June meeting if he made the further application to the Court. In a follow-up email dated 7 June 2019, Ms Sheahan emailed Mr Webster saying she hoped that he had filed the further application to the Court. She said, regarding costs since the March invoice, that if Mr Webster would like to send an account for his time and attendances including the further application to the Court and the forthcoming board meeting, she and Ms Jagger would arrange a further payment because of his costs.
[53] For these reasons I reject the grounds of opposition advanced by Ms Jagger in relation to the 17 June 2019 invoice.
Fees beyond estimate, breach of Fair Trading Act 1986, Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules 2008 and breach of fiduciary duty
[54] Ms Jagger contends that by exceeding the fee estimate, Mr Webster engaged in misleading and deceptive conduct in trade contrary to s 9 of the Fair Trading Act 1986, breached the Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules 2018, and breached his fiduciary duty
[55] The fee estimate in question was contained in an email from Mr Webster to Ms Jagger on 28 January 2019:
However, the situation we are now in has been complicated by the passage of time and the change in personal circumstances of both you and Allan.
We are unavoidably required to take additional steps to get to the position we need to be in to receive the benefits you are entitled to.
When I emailed you on 3rd January, my best estimate on the basis of a straightforward stipulated settlement was $15k to $18k (less the $1500 paid on account).
Since then there have been two hearings in Orange County Superior Court. To date the chargeable time is $21,744. Disbursements for filing fees, mileage
20 Email dated 17 May 2019.
and parking yet to be reimbursed, amount to $249.95. I’m happy to provide you with a copy of the time entries and disbursement details to date on request.
The additional time needed to file submissions and rebuttal and appear at a hearing on 4th March puts the total time estimate at a range of between $26k
- $30k.
To summarise, my best guess as to costs for each stage (depending on the option you choose from here and what instructions you give me) are as follows:
…
2. If you choose Option A (i.e. get the Court to decide) the estimate of total costs to include preparation of a letter brief and rebuttal and attend a hearing on 4 March (if required) would be in the range of $26k-$30k plus disbursements (less the $1,500 already paid on account).
…
I’m sorry that this exercise has not been as straightforward as it might have been had Allan been more cooperative but Allan's decision to go with the Unmodified Option and the intervening years of inaction (on both sides) has impacted on the options available and the costs associated with each.
[56] A preliminary point is that all the fees were charged in accordance with the Fee Agreement. It was not a fixed or capped fee arrangement. Under the Fee Agreement, Ms Jagger agreed to pay “the by the hour at Attorney’s rates as set forth below for all time spent on Client's matter by Attorney…”21
[57] In New Zealand, the Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules 2008 requires that a lawyer not charge more than a fee that is “fair and reasonable for the services provided, having regard to the interests of both client and lawyer and having regard also to the factors set out in rule 9.1.”22 One of those factors is any fee estimate given by the lawyer.23
[58] Ms Jagger contends that these rules apply to the services Mr Webster provided her under the Fee Agreement. Mr Webster contends that they do not; and that only the Rules of Professional Conduct of the State Bar of California apply.
21 Clause 5.
22 Rule 9.
23 Rule 9.1(j). See also r 9.4.
[59] The New Zealand Law Society was required to develop the Conduct and Client Care Rules by s 95 of the Lawyers and Conveyancers Act 2006. Importantly for our purposes, s 107 of the Lawyers and Conveyancers Act 2006 states that the practice rules are binding on all lawyers and former lawyers, whether or not they are members of the New Zealand Law Society, and on all incorporated law firms and former incorporated law firms but are not binding on other persons. Section 6 sets out the meaning of “lawyer” in the Act, by reference to the meaning of barrister, solicitor and High Court:
lawyer means a person who holds a current practising certificate as a barrister or as a barrister and solicitor.
barrister means a person enrolled as a barrister and solicitor of the High Court under or by virtue of this Act and practising as a barrister…
solicitor means a person enrolled as a barrister and solicitor of the High Court, under, or by virtue of, this Act and practising as a solicitor…
High Court means the High Court of New Zealand…
[60] The Auckland Standards Committee concluded that the legal services Mr Webster provided Ms Jagger were subject to regulation by the California State Bar and were not what the Parliament of New Zealand intended to regulate with the Lawyers and Conveyancers Act.24 I agree with that conclusion. I would add that the definition of “lawyer”, on whom the Rules are binding, is a person who holds a current practising certificate issued by the New Zealand Law Society as a barrister or barrister and solicitor.25 A “barrister” or “solicitor”, is a person enrolled as a barrister and solicitor of the High Court of New Zealand and practising as a barrister or solicitor. My interpretation is that the Client Care Rules are only binding on barristers and solicitors of the High Court of New Zealand when they are practising as such pursuant to a practising certificate issued by the New Zealand Law Society.
[61] In carrying out the agreed services for Ms Jagger, Mr Webster was acting solely in his capacity as an attorney in California, subject to regulation by the State Bar of California. The Fee Agreement refers to the Rules of Professional Conduct of the
24 See [28].
25 Lawyers and Conveyancers Act 2006, s 6.
State Bar of California.26 The New Zealand Client Care Rules are not binding on Mr Webster in relation to the services he provided Ms Jagger.
[62] Even if the New Zealand Conduct and Client Care Rules were binding on Mr Webster, I do not consider that Mr Webster’s charges were more than a fair and reasonable fee for the services he provided, considering the estimate given by him on 28 January 2019. This estimate was given at a stage where there was still considerable work to be done and uncertainty about what would be required to achieve the desired outcome. In my assessment it represents a genuine attempt by Mr Webster to estimate the cost to Ms Jagger of the various options discussed. It goes without saying that it can be difficult to predict legal costs, particularly in contentious matters, as they depend significantly on the actions taken by the other parties. The reasons for the increase above the estimate have been explained by Mr Webster and are reasonable in the circumstances. These included the opposition from Mr Jagger and the need to overcome the OCERS’ concerns about administrability.
[63] Mr Webster was quite open with Ms Jagger, keeping her informed by email of all material developments. On 10 March 2019, he clearly signalled that there would be additional costs and time inputs. From then, he regularly updated her on the steps he was taking to secure the final DRO, the OCERS Board resolution and a lump sum payment to her bank account. Ms Jagger appears to have been willing to permit him to continue to work on her behalf, only raising concern with the costs once he had achieved the outcome and she had received the lump sum payment.27
[64] For the same reasons, there are no grounds for holding that Mr Webster breached his fiduciary duty to disclose all information to Ms Jagger and not to mislead her.
[65] In terms of the Fair Trading Act 1986, Mr Webster’s legal services do not fall within the ambit of the Act. Those services were provided in California, relating to proceedings in the Superior Court of California by a service provider who was always
26 Clauses 5, 9, 10 and 12 of the Fee Agreement.
27 Email of 3 July 2019.
a resident of the United States and acting in his capacity as a licensed member of the California State Bar, pursuant to a fee agreement governed by California law.
[66]Section 3 of the Fair Trading Act 1986 provides:
3 Application of Act to conduct outside New Zealand
(1)This Act extends to the engaging in conduct outside New Zealand by any person resident or carrying on business in New Zealand to the extent that such conduct relates to the supply of goods or services, or the granting of interests in land, within New Zealand.
[67] The Act does not extend to conduct outside New Zealand by an individual, Mr Webster, who is not resident or carrying on business in New Zealand, and where the conduct does not relate to services supplied within New Zealand.
Failure to pursue disclosure of OCERS files
[68] In her affidavit, Ms Sheahan says that she urged Mr Webster to obtain a copy of the OCERS file at the beginning of the engagement. She does not produce any evidence to corroborate this assertion. Mr Webster disputes that he was instructed to obtain general discovery against OCERS. He says that he has no record or recollection of any phone discussion or correspondence with Ms Sheahan until March 2019, when she paid the March 2019 invoice on Ms Jagger’s behalf.
[69] The relevance of this issue is that Ms Jagger maintains that had Mr Webster pursued disclosure of the OCERS files at the outset as instructed, the process would have been simplified and less expensive for her. However, Mr Webster states:
35. The objective from the outset was to re-open proceedings against Allan Jagger and proceed by way of stipulation (US terminology for "consent"). A copy of a draft DRO was already available including a letter from Mr Lantzer stating that the OCERS Board had approved the form and content. Even when proceedings were served on Allan Jagger and OCERS, the attorney then acting for Allan Jagger (a Mr Edmondson) said that his client would cooperate and stipulate to the DRO as approved in 1998. Annexed marked "G" is a true copy of an email from Mr Edmondson dated 3 December 2018 confirming that fact. There was no suggestion at that point that there was any pushback from either Allan Jagger or OCERS.
36. It's only when Mr Edmondson handed matters off to Mr Channels that an objection was made to the form of the DRO and a contested court hearing ensued.
37. Up to that point, there seemed to be no need to ask for general discovery. In fact, if applied for it was likely to be reciprocated and cause the defendant unnecessary additional legal costs particularly given that the Defendant was struggling to find key documents amongst her own papers.
38. Added to that, in my discussions with OCERS, the Staff Attorney (Dawn Matsuo) resisted attempts by me to obtain information around what benefits were being paid to Allan Jagger and the date they commenced, citing privacy reasons that she said were clearly set out on the OCERS website.
39. When matters became contentious, I added to the Letter Brief dated 8th February 2019 (copy annexed marked "H", final paragraph) that if an Order was not made consistent with the one drafted in 1998 that I would be asking the Court to make a discovery order against OCERS:
"Depending on which order this Court makes, if OCERS requires to be heard on March 4th, 2019 concerning issues of administrability, it is Counsel's submission that OCERS should be directed by the Court to discover all relevant documents including correspondence and draft DRO's bearing on the issues currently before the Court, irrespective of privacy concerns."
40. As it happened, that was not required, and it is mere speculation on Paula Sheahan's part that the Defendant's production of a signed copy of the DRO was definitive in getting OCERS to consent to the administrability of the DRO before the Court. It certainly helped the Defendant's cause but by that point the Judge had already made an order [i]n favour of the Defendant and it was simply the issue of administrability that was outstanding at the time it was produced. To say that it would have saved costs if produced earlier is speculative because Allan Jagger was already contesting the wording of that document and I would still have had to argue the matter before the Judge based on the merits. The Defendant should have produced it to me at the outset of the proceedings.
41. The irony is in the fact that the Defendant had, all along, been in possession of a copy of the DRO signed by OCERS. I had asked the Defendant in emails dated 17 and 18 September, 20, 22 and 30 October 2018, 3 and 4 January, 8 February and 2 April 2019 and in numerous telephone discussions throughout that time, to search her records and provide all documents related to her family court case in California. It was only when her friend Paula Sheahan called at her house and they went through boxes of material together that the document was unearthed. The Defendant has to bear a significant part of the blame for not producing a key document that was in her possession all the time.
[70] There is no evidence that Mr Webster was instructed to obtain discovery of the OCERS files. He had reasons for not doing so, which he has explained. Mr Lantzer’s email of 15 March 2008 indicates that the DRO, apparently previously approved by OCERS, would need to be revised, resubmitted to OCERS, signed by all the parties
and submitted to Court.28 So, considerable work and negotiation would still need to follow. In my view it is far from clear that had Mr Webster obtained discovery of the OCERS files it would have materially changed the course of events and the overall cost to Ms Jagger. In fact, requiring full discovery from the OCERS might have increased costs, as discovery usually does. In any case, Ms Jagger cannot realistically attribute responsibility to Mr Webster for failing to secure the documents when she was in possession of them herself the whole time.
Interest and costs
[71] Ms Jagger says that she has a counterclaim arising out of Mr Webster’s failure to pursue a claim for interest and costs against Mr Jagger and/or the OCERS, as she instructed; or provide a proper explanation as to why that was not possible. She claims relief for the lost opportunity.
[72] There are several problems with this proposition. First, a counterclaim is not in fact itself a ground for defence of a summary judgment application.29 Second, the purported counterclaim is a long way from made out on the facts.
[73] Ms Jagger maintains that she specifically instructed Mr Webster to pursue interest and costs on 17 September 2018 and 17 May 2019. In fact, the initial email from Ms Jagger and Ms Sheahan to Mr Webster dated 16 September 2018 reads: “There may also be a costs award available against Allan Jagger because he has not been cooperative and failed to notify Catherine when he retired”. This statement is part of a long email to Mr Webster explaining the background and asking if he would be prepared to act for her.
[74]Mr Webster explains:
25. In an email dated 30 October 2018, before proceedings were filed, I advised the Defendant "I don't see any justification for claiming costs at this point, your former husband didn't actively hide the fact that he'd retired. His greatest sin was one of omission" (paragraph 6). Annexed marked "B" is a true copy of that email.
28 Affidavit of Paula Marie Sheahan sworn 9 October 2019, annexure H.
29 Roberts Family Investments Ltd v Total Fitness Centre (Wellington) Ltd [1989] 1 NZLR 15 (HC) at 20–21.
26. I also advised the Defendant in a 15 January 2019 email (a true copy of which is annexed marked "C") that:
" ... any attempt to extract costs from Allan is likely to…receive pushback and delay. In California, seeking costs from a party is vastly different to the position in New Zealand. I don't believe you have the legal grounds to establish a costs award against either Allan or OCERS (or both) based on the criteria set out in Family Code 2030 and 2032[.] In particular, the Court would question why ten years elapsed before Allan's retirement when nothing happened to bring an order before the Court. In addition, the money that you will be receiving from OCERS means that you have the ability to pay your own costs. At best, if the Court ordered Allan to pay your costs ahead of time, it would almost certainly say that he would be reimbursed from the amount you would be receiving from OCERS. I've looked at the criteria where the Court can award costs as a "sanction" for bad behaviour and although Allan could have been more helpful or supportive, it does not reach the level of conduct by making false statements or wilfully obstructing resolution of the case that the Court would need to establish as grounds for that kind of costs order."
27. I was concerned that any application for costs would likely harden the attitudes of the parties and cause further delay in obtaining the Defendant's entitlement. This is what I advised the Defendant on many occasions. I have no knowledge whether or not she passed that on to Paula Sheahan. My focus was on reporting to the Defendant and taking instructions direct from her.
[75] In response to Mr Webster’s email of 15 January 2019, on 16 January 2019, Ms Jagger instructed Mr Webster not to pursue costs, saying:
I won’t be pursuing Court costs after re-reading your email dated 16 January and referencing Family Code 2030 and 2032.
Kind regards
Catherine Jagger
[76]Two months later, on 16 March 2019, Ms Sheahan emailed Mr Webster:
Hi Stuart. I have discussed this with [Ms Jagger] who may want to add something…
… I would like you to go back to Walter [Channels, counsel for Mr Jagger] and Dawn [Matsuo, of OCERS] and convey this message:
…4. Please warn them that…if they go to the Court on April 10 with any request for clarification, adjournment for further argument or anything other than a draft DRO in administrable form, you are instructed to ask for costs…
[77]Mr Webster wrote back on 18 March 2019:
…What I don’t want to do is engage in a dialogue with Channels/ Matsuo because (1) I do not believe that they will change their entrenched positions and (2) by going back to them threatening costs and interest it will only provoke Channels to lodge an appeal…to preserve his formal options and provide leverage.
[78] Then on 27 April 2019, when Mr Jagger was obstructing progress and the OCERS was raising issues about the administrability of the order, Ms Sheahan, writing from herself and Ms Jagger, asked Mr Webster to put on record that Ms Jagger reserved her right to file an application for costs against Mr Jagger and the OCERS.
[79] My assessment is that Mr Webster made a professional judgment that Ms Jagger did not have a compelling case for costs against the OCERS. He explained his opinion to Ms Jagger and she accepted his opinion and instructed him not to pursue costs. He had sound reasons for not acceding to Ms Sheahan’s subsequent “instructions” to threaten the OCERS with costs.
[80] In any event, Mr Webster has given evidence that as a matter of law, Ms Jagger is not barred from pursuing costs, and can still apply under the California Family Code 2030 and 2032. If that is correct, she has not suffered any loss.
[81] In terms of interest, on 4 January 2019, Mr Webster emailed Ms Jagger, recommending that she abandon her claim for interest:30
You will recall that our claim in court includes interest on all of the unpaid sums to which you were notionally eligible through to the date of payment. The claim for interest is strongly opposed by OCERS. Their attorney tells me that the relevant governing statute does not permit OCERS to make any payment over and above the bare entitlement. I happen to disagree and have told her so. In my view you were entitled to the money... OCERS is not convinced. They are so strongly opposed … that I am told OCERS will appeal any order "to the highest level" that awards you interest in addition to the lump sum amount.… [W]e need to keep this in perspective. The amount of interest is likely to be less than 2.5% on whatever option you choose on an accumulating basis…
…It is for you to make the call but it looks as though pursuing the interest claim would rapidly become uneconomical and may well delay payment of the amounts to which you are already entitled exclusive of interest. On that basis I would be (reluctantly) recommending that you abandon that part of your claim.
30 Affidavit of Paula Marie Sheahan sworn 9 October 2019, annexure C.
(emphasis added)
[82]He again emailed on 9 January 2019:31
…This then leaves the question over interest. Please note that I’m convinced that the merits are on your side and have already strongly argued the point with the OCERS’ staff attorney. I would be more than happy to argue that again in Court but need to caution you on what may be a pyrrhic victory (viz. the cost of arguing the point outweighs the monetary benefit.)
When we have the figures back from OCERS’ Staff Attorney and you have spoken with your financial advisor, I will go back…setting out the election you will have made, attaching a new draft DRO reflecting the election made and asking for all the parties to stipulate to that, but (only if you instruct me to do so) reserving the right to have the interest argument set down for hearing as a discrete issue without affecting your entitlement to receive the lump sum
…
If you choose to have me argue the interest issue (notwithstanding how long that might taken including exhausting appeal rights) then it’s only fair to ask that you settle my fee to date and deposit a sum on account to cover the argument over interest…
(emphasis added)
[83]Ms Jagger instructed Mr Webster not to pursue interest on 16 January 2019:
Hi Stu
Please proceed with option 4.
I am not going to purs[u]e interest, as OCERS ha[s] deeper pockets than I.
[84] However, as mentioned above at [76], Ms Sheahan then emailed Mr Webster on 16 March 2019. She asked him to convey to OCERS, inter alia, that if OCERS made any request for anything other than a draft DRO in administrable form on 10 April, he was instructed to revisit the question of interest. She also told him to indicate that if OCERS indicated there would be an appeal, he was to inform OCERS that there would be a cross-appeal seeking interest. As quoted at [77], Mr Webster wrote back on 18 March 2019, explaining why threatening the pursuit of interest would not be a sensible strategy. There is no evidence that Ms Jagger followed up on Ms Sheahan’s 16 March email to instruct him that she had changed her 16 January position.
31 Affidavit of Paula Marie Sheahan sworn 9 October 2019, annexure D.
[85] It is plain from this exchange that Mr Webster did originally claim interest against OCERS, but that in the face of the strong opposition from the OCERS, he sought Ms Jagger’s instructions as to whether she wanted to pursue this claim. She advised him that she did not. Ms Sheahan’s email of 16 March 2019 did not amount to an instruction from Ms Jagger to the contrary.
[86]For all the above reasons I reject this ground of defence.
Consumer Guarantees Act 1993
[87] Ms Jagger relies on s 43(4) of the Consumer Guarantees Act 1993 to say that to the extent Mr Webster relies on cl 4 of the Fee Agreement to prevent Ms Jagger from raising a defence, it is an unlawful attempt to contract out of the Consumer Guarantees Act 1993, and therefore an offence under s 13(i) of the Fair Trading Act 1986.
[88] I do not accept that cl 4 of the Fee Agreement precludes Ms Jagger from disputing the invoice in question. Clause 4 says that the attorney’s hourly charges and costs will be charged against the deposits made by the client and held in the attorney’s client trust account. The client authorises the attorney to use that deposit to pay the fees and other charges and agrees that the attorney’s right to recover fees and costs (whether from the deposit or any subsequent deposit held in the attorney’s client trust account) or otherwise becomes fixed five working days after the date the bill is sent to the client. But the clause goes on:
If Attorney receives a written objection from Client within six working days of sending the bill, Attorney’s right to recover the amount that is identified in the objection will be deemed to be disputed, and Attorney will not withdraw the disputed fees and/or costs from the Client Trust Account until the dispute is resolved. If Attorney receives an objection from Client more than six working days after the date the bill is sent and after the funds have been withdrawn, Attorney shall not be required to redeposit the disputed fees and/or costs into the Client Trust Account during the pendency of the dispute.
(emphasis added)
[89] In my view this clause does not prevent a client from raising a dispute about an invoice after five working days, it simply means that in that event, if an attorney has already withdrawn funds to pay that invoice, the attorney is not required to
re-deposit the funds into the trust account while the dispute is resolved (as they are if the objection is raised within five working days). Indeed, the clause specifically anticipates disputes being made more than six working days after the date the bill is sent.
[90] The fact that a client can refer a dispute to mandatory fee arbitration for up to 30 working days reinforces this conclusion. The five working days Ms Jagger had to dispute the invoice of 17 June 2019 under the Fee Agreement had long elapsed by the time Mr Webster gave her notice of her right to apply for fee arbitration with the California State Bar Association on 21 July 2019. In the end, Ms Jagger had until 21 August 2019 to dispute the invoice of 17 June 2019 through fee arbitration in California.
[91] Further, I do not accept that she is precluded from defending this application for summary judgment because of cl 4. I have however concluded that none of her grounds of opposition are made out.
[92]That disposes of this issue.
Result
[93] I am satisfied that Ms Jagger does not have a defence to Mr Webster’s claim, and that judgment should be entered against Ms Jagger. I order that Ms Jagger pay to Mr Webster:
(a) USD 18,773.67;
(b)interest pursuant to s 10 of the Interest on Money Claims Act 2016, at the rate specified in s 12 of the Act, from 24 June 2019 until the judgment sum is paid in full; and
(c)costs.
[94] If the parties cannot agree on the quantum of costs, Mr Webster is to file a memorandum of not more than four pages within 20 working days and Ms Jagger 10 working days thereafter.
Associate Judge Gardiner
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