Wynn Williams & Co v Kain HC Christchurch CIV-2010-409-002772
[2011] NZHC 1069
•6 September 2011
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IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY
CIV-2010-409-002772
BETWEEN WYNN WILLIAMS & CO Plaintiff
ANDGEORGE CHARLES KAIN First Defendant
ANDGEORGE MICHAEL KAIN Second Defendant
ANDGEORGE THOMAS CARLTON KAIN Third Defendant
ANDGEORGE HARRY KAIN Fourth Defendant
ANDGEORGINA KAIN Fifth Defendant
Hearing: 1 and 5 July 2011
Appearances: G Nation for Plaintiff
O G Paulsen and K McMullen for Defendants
Judgment: 6 September 2011
RESERVED JUDGMENT OF HON JUSTICE FRENCH
Introduction
[1] Christchurch law firm Wynn Williams & Co contends that the Kains owe it legal fees under a success fee agreement. The firm seeks summary judgment.
[2] The Kains oppose summary judgment.
WYNN WILLIAMS & CO V KAIN HC CHCH CIV-2010-409-002772 6 September 2011
[3] The key issues for determination are:
(i)Does a certificate issued under s 161(2) of the Lawyers and Conveyancers Act 2006 prevent the Kains from defending the claim?
(ii) When was the success fee agreement entered into? (iii) Was the success fee agreement unlawful?
(iv)Do the Kains have an arguable set-off or counterclaim in negligence?
(v)Was the success fee arrangement a consumer credit contract under the Credit Contracts and Consumer Finance Act 2003 and therefore unenforceable because initial disclosure has not been made?
(vi)Should the Court decline summary judgment in the exercise of its residual discretion due to the existence of as yet unresolved judicial review proceedings?
Factual background
[4] The defendants, whom I shall call the Kains, are all beneficiaries of various trusts with substantial holdings in the North Island. The first and third defendants, Charles and Tom Kain, were trustees of some of the trusts.
[5] In the late 1990s the Kains became involved in a complex and protracted dispute with the other trustees over the administration of the trusts.
[6] Proceedings were issued in the High Court.
[7] Wynn Williams represented Charles and Tom Kain at the hearing in their capacity as trustees.
[8] The High Court delivered its decision in December 2004.1 The decision was appealed and cross-appealed to the Court of Appeal.
[9] Charles and Tom Kain instructed Wynn Williams to act for them in the Court of Appeal, again in their capacity as trustees.
[10] The outcome of the appeal was not favourable to the Kains,2 and in May
2007 the Kains decided to appeal to the Supreme Court. This time they asked Wynn
Williams to represent all of them personally.
[11] As at May 2007, Wynn Williams was still owed fees of $89,693.97 for the work that had already been done on behalf of Charles and Tom Kain. The Kains‘ financial position was ―extremely stretched‖,3 and before embarking on any further work, Wynn Williams was concerned to protect its position. It was also aware the Kains were in direct discussions with senior counsel whom the Kains wanted to be involved in the proceedings as well as a firm of Auckland solicitors.
[12] Negotiations then took place over the terms of the retainer for the proposed
Supreme Court appeal.
[13] On 18 June 2007 Mr Ormsby of Wynn Williams, who had appeared in the High Court and Court of Appeal for Charles and Tom Kain, sent the following two emails:
Date 18 June 2007 12:16:31 PM
Dear Kain Plaintiffs and Kain Trustees,
In light of our discussion with Michael this morning. We will agree:
1) $25,000.00 base fee (to be paid immediately) with success fees of
$150,000.00 for the first point, $75,000 for the second point, $50,000.00 for each point thereafter;
2) The GST liability payable by us on the success fee is to be paid by you to us immediately on judgment. Kain Plaintiffs to be personally liable. Success Fees guaranteed jointly and severally by the Plaintiffs and the balance to be paid within two years of the date of judgment. Interest to
1 Kain v Hutton HC Christchurch M198/00, 3 December 2004.
2 Kain v Hutton [2007] 3 NZLR 349.
3 Submissions by Georgina Kain to the Law Society, Bundle of documents, page 168.
apply at 10% per annum compounding monthly. Security for this is to be given over the Plaintiffs interests in the trusts.
3) All sums in this agreement are plus GST. Plaintiffs will meet all disbursements and out of pocket expenses including in advance airfares, filing fees, and accomodation. [sic]
4) From our discussion today, we will be involved on all points that are appealed. Although Gilbert Walker can take the lead on some points if you wish.
5) In respect of the $87,000.00 approximately outstanding. You will pay
$10,000.00 immediately off this debt. You will also immediately pay
$10,000.00 towards us procuring further payment from the Public Trust. Once the $10,000.00 is used we are not obliged to continue to pursue
payment from the Public Trust without funds. You will support our claim for payment from the Trusts. In this respect your father will also support
payment. The debt will be guaranteed jointly and severally to be paid within
18 months. Interest will apply at 10% per annum compounding monthly. Underlying liability of Tom, Charles, and G T Kain for this debt is not
affected but also not admitted by them by virtue of this agreement alone.
Again security for this debt is to be given over the Plaintiffs interests in the trusts.
6) We have the right to stop work if the agreement is breached by you.
7) You must not raise any new points.
8) Tom or Michael Kain must be appointed to give us instructions for the group.
9) If other counsel withdraw and lead counsel is from Wynn Williams an additional $25,000.00 is payable.
10) Payment of any sums due under this agreement is to be accelerated if payment is received from the Public Trust.
11) You acknowledge that we have been compromised by your delay and so we are expected to do what is reasonable in the circumstances.
12) I will appear as counsel in support of lead counsel in the Supreme Court. Please signify agreement to these terms by return email and to sign a formal
agreement tomorrow.
Date 18 June 2007 12:20:16 PM
Further to this email, we must also be solicitors on the record.
[14] Michael Kain replied the same day on behalf of all the Kains:
Dear Jared,
…
Apart from the above clarifications we agree to this agreement. Sincerely Mick Kain on behalf of [the Kains].
[15] To which Mr Ormsby responded on 18 June at 1.12 p.m.:
Thank you Michael. We will now get on with the appeal and contact the other solicitors. We look forward to seeing you all tomorrow.
[16] It is this exchange of emails which Wynn Williams says constitutes the agreement which it seeks to enforce in this proceeding.
[17] For their part, the Kains say there was an agreement in principle, but it was not binding until a formal document was signed, which never happened.
[18] The application for leave to appeal to the Supreme Court was heard in November 2007. The Court granted the Kains leave to appeal on two of the five points argued.4
[19] The substantive appeal was set down for hearing on 10 June 2008.
[20] On 5 June 2008 Mr Ormsby sent the Kains an electronic copy of a retainer agreement for signature. His accompanying email said the document (which was in the form of a letter of engagement) ―records in one document the agreement reached last year‖, and went on to state that Wynn Williams needed a signed copy back by the following day so they could continue to prepare for the hearing.
[21] The opening paragraph of the letter of engagement states:5
You have asked us, and we have agreed, to act for you in the matter described below. We have already agreed the terms upon which we will act for you. The purpose of this letter is to further record the terms of your engagement of us.
4 Kain v Hutton [2007] NZSC 92.
5 Bundle of documents, page 231.
[22] Michael and Georgina Kain faxed back a signed copy of the letter of engagement, but on the basis that their acceptance was subject to the response from Charles and Tom Kain.
[23] The response from Charles and Tom was to return the letter to Wynn Williams with several deletions and amendments. Mr Ormsby advised that he was only prepared to accept two of the changes. He then issued an ultimatum that unless the retainer with the two acceptable changes was signed by all the Kains and returned immediately, Wynn Williams would both withdraw its instructions to counsel and itself withdraw from the appeal, which by this time was due to be heard
the following day.6
[24] Michael Kain replied:7
Dear Jared,
We note that in your email of 5 June 08 in clause 1 you state that you have already agreed the terms upon which you will act for us. We feel that there are some additional clauses regarding the detail of our agreement contained in your 5 June 08 email which require some discussion and we are happy to partake in that discussion. You will appreciate the short notice to us concerning these points.
In the meantime we will submit signed copies of the 18 June 07 agreement.
…
Yours sincerely Mick Kain.
[25] There were further communications, and then later that evening Mr Ormsby agreed to proceed with the hearing on the basis that the terms of the emails of 18
June 2007 applied to the retainer. Each of the Kains then signed a copy of the 18
June 2007 email and forwarded it to Wynn Williams.
[26] The Supreme Court delivered its decision on 7 August 2008.8
[27] The Kains were successful on one of their points of appeal. It concerned the conduct of the trustees of one of the trusts (known as the Mangaheia Trust) in
6 Email from Mr Ormsby dated 9 June 2008, Bundle of documents, page 183.
7 Email from Mick Kain dated 9 June 2008, Bundle of documents, page 180.
8 Kain v Hutton [2008] 3 NZLR 589.
resettling trust property in a new trust for the benefit of a Mrs Couper. The trustees had done this in purported exercise of a power of advancement under s 41 of the Trustee Act 1956. The Supreme Court held that the purported resettlement could only have been achieved by appointment rather than advancement, and was accordingly ineffective. Unlike the Court of Appeal, the Supreme Court was not willing to validate the trustees‘ actions on the grounds they could have achieved what they wanted anyway by exercising powers of appointment, which they did in fact possess under the trust deed.
[28] The effect of the Supreme Court decision was that the trust property was returned to the Mangaheia Trust and vested in the Public Trust, which had by that time replaced the old trustees.
[29] Following delivery of the judgment, Wynn Williams issued an invoice dated
8 August 2008 for the success fee of $150,000. Under the terms of the June 2007 email, the fee itself was only payable within two years of the Supreme Court judgment, but the GST was payable immediately.
[30] It was also a term of the June 2007 email that the Kains would pay Wynn
Williams all the fees that were outstanding as at June 2007, by making payment of
$10,000 immediately and paying the balance over 18 months with agreed interest plus certain other costs and disbursements.
[31] As at December 2008, the balance however had not been paid, and accordingly Wynn Williams issued summary judgment proceedings for recovery.
[32] The Kains filed a notice of opposition on the basis they were making a complaint about the costs to the New Zealand Law Society. The effect of the complaint was to stay the summary judgment proceedings.
[33] The complaint was duly submitted to the Law Society in February 2009.
[34] In December 2009 the Kains paid the full amount for which summary judgment was sought, on the basis that Wynn Williams undertook to refund any
amount which the Standards Committee of the Law Society found to be unjustified or invalid.
[35] The summary judgment proceedings did not include any claim for recovery of the fees related to the Supreme Court appeal because the base fee of $25,000 had already been paid and, as I have mentioned, the success fee together with any accrued interest was only payable under the email on 8 August 2010.
[36] On 4 February 2010 the Standards Committee dismissed the complaint.9
[37] Dissatisfied with that outcome, the Kains applied for a review of the
Standards Committee decision by the Legal Complaints Review Officer.
[38] The Legal Complaints Review Officer upheld the decision of the Standards Committee, and on 3 December 2010 the Law Society issued a certificate under s 161 of the Lawyers and Conveyancers Act 2006 certifying that the amount due to Wynn Williams in respect of its bill of costs dated 8 August 2008 was a fee of
$150,000 plus GST, plus interest as agreed between the parties, plus expenses.
[39] The same day the certificate was issued, Wynn Williams filed the current proceedings.
[40] The current application for summary judgment seeks judgment in the sum of
$150,000 together with interest at 10 per cent per annum compounded monthly from
8 August 2008 to date of payment.
[41] As well as opposing the application for summary judgment, the Kains have filed judicial review proceedings seeking review of the decision of the Legal Complaints Review Officer. Those proceedings have not yet been heard.
The competing cases
[42] In order to obtain summary judgment, Wynn Williams must satisfy me the
Kains have no arguable defence to the claim.
[43] The Kains say they have arguable defences on five grounds:
(a) The success fee arrangement is unenforceable, having been obtained in June 2008 as a result of duress, Mr Ormsby‘s threat to withdraw on the eve of the Supreme Court hearing amounting to improper pressure.
(b)Wynn Williams did not comply with the requirements of the Lawyers and Conveyancers Act 2006 relating to contingency fee agreements. The agreement was in any event unlawful as contrary to public policy.
(c) The success fee arrangement was a consumer credit contract under the Credit Contracts and Consumer Finance Act 2003 and was unenforceable due to non-compliance with that Act‘s disclosure requirements, or ought to be re-opened as oppressive.
(d)The Kains have a set-off/counterclaim against Wynn Williams arising from Wynn Williams‘ negligent failure to advise that even if successful, the appeal to the Supreme Court might provide no benefit to them.
(e) The Court should exercise its residual discretion to refuse summary judgment pending the determination of the judicial review proceedings which could result in the matter being referred back to the Legal Complaints Review Officer.
[44] For its part, Wynn Williams argues that none of these defences are tenable and in any event the certificate issued by the Law Society prevents the Kains from raising any defence, including defences not considered by the Law Society.
Discussion
[45] Logically, the first question to be determined before considering the merits of any of the proposed defences is whether Wynn Williams is correct in what it says about the legal effect of a certificate issued under s 161. If the submission is correct, I need go no further. If, however, it is wrong, then I need to go on to consider a second preliminary question, which is when was the success fee agreement entered into. Was it June 2007 (as Wynn Williams claims) or was it June 2008 (as the Kains argue)?
[46] Turning, then, to the first question.
What is the legal effect of the certificate issued under s 161(2) of the Lawyers and Conveyancers Act 2006?
[47] In order to explain this issue, it is necessary for me to traverse in greater detail the facts relating to the complaint made by the Kains to the Law Society.
[48] The complaint was made under the Lawyers and Conveyancers Act.
[49] It alleged inter alia that all the fees Wynn Williams had charged from 2004 onwards, including the success fee, were grossly excessive, that the success fee agreement had been obtained under duress and in breach of the requirements of the Client Care Rules,10 and that Wynn Williams had failed to advise the Kains until after the Supreme Court hearing that the benefit of any judgment could be negated by the Public Trust.
[50] This last allegation was a reference to the fact that although the Mangaheia Station shares were now returned to the trust as the result of the Supreme Court decision, the Public Trust had indicated it was contemplating redistributing the property to Mrs Couper anyway by exercising its powers of appointment.
[51] Under the trust, the Kains were the default beneficiaries as to capital on the date of distribution, defined as 30 June 2050. Their interests were thus contingent
interests, contingent on the trustees not appointing capital otherwise prior to that date.
[52] Following receipt of the complaint, the Standards Committee of the New Zealand Law Society decided it would hear three of the complaints. Of the three which the committee resolved to investigate, only two are relevant for present
purposes, namely:
An allegation of unsatisfactory conduct arising from excessive billing
in the fee note dated 8 August 2008.
The entering into of a contingency fee arrangement between the Kains
and Wynn Williams which led to the 8 August 2008 fee note.
[53] The committee was not prepared to investigate the complaints relating to the reasonableness of the other fees. Unlike the invoice for the success fee, these pre- dated the commencement of the Lawyers and Conveyancers Act on 1 August 2008. This meant the Standards Committee did not have jurisdiction to investigate them unless a question of professional standards arose, which the committee was satisfied did not.
[54] It is common ground that in investigating a complaint about the quantum of the success fee, the committee was treating the complaint as a complaint made under s 132(2) of the Lawyers and Conveyancers Act, which states:
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).
[55] The allegations about the contingency fee agreement (unlawful/obtained by duress) were of necessity complaints of professional misconduct under the former Law Practitioners Act 1982, because the agreement itself (unlike the fee note) pre- dated the enactment of the Lawyers and Conveyancers Act.
[56] As regards the complaint that Wynn Williams had failed to advise the Kains about the implications of a favourable result in the Supreme Court, the Standards Committee found there was no substance to that allegation, and accordingly decided not to investigate it, relying on its powers under s 138(2) of the Lawyers and Conveyancers Act.
[57] In relation to those complaints which the committee did decide to investigate, it ruled that Wynn Williams should not be judged by client care rules not in force at the time of the agreement; the success fee agreement was both lawful and fair to the Kains, and that even if the arrangement itself was inappropriate (which the committee said it was not), the amount invoiced on 8 August 2008 would still have been within the range of a fair and reasonable fee for the work done. In the view of the committee, a fee of the order charged was justified because of the complexity of the issues, the urgency, the value of the issues at stake and the importance to the Kains.
[58] After the decision was upheld by the Legal Complaints Review Officer, the Law Society issued a certificate under s 161(2) of the Lawyers and Conveyancers Act, certifying:11
Re: DETERMINATION OF STANDARDS COMMITTEE 1 – Files 701/09 and 703/09 – Georgina Kain and Others against Jeff Kenny and Jared Ormsby of Wynn Williams and Co. Bill of costs dated 8th August 2008.
Duly authorised to do so in its name I hereby certify that the Standards Committee 1 determined pursuant to section 161 of the Lawyers and Conveyancers Act 2006 that the amount due to Wynn Williams and Co from Georgina Kain and Others in respect of the bill described above is as follows:
Bill dated 8/08/2008 – FEE $150,000.00 plus GST, plus interest as agreed between the parties, plus expenses.
MALCOLM ELLIS
LEGAL STANDARDS OFFICER
3 December 2010
[59] Section 161 itself relevantly states:
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.
(2) Where a Standards Committee makes a final determination on a complaint made under section 132(2), it must certify the amount that is found by it to be due to or from the practitioner or former practitioner or incorporated firm or former incorporated firm in respect of the bill and under the determination.
(3) The certificate of the Standards Committee or, as the case may be, the decision of the Legal Complaints Review Officer on a review of the determination is final and conclusive as to the amount due.
(4) For the purposes of this section, a complaint is finally disposed of—
(a) if—
(i) the Standards Committee has made a final determination on the complaint or has, under section
138, decided to take no action, or, as the case may require, no further action on the complaint; and
(ii) the complainant has not, within the time allowed, applied to the Legal Complaints Review Officer for a review of the determination or decision; or
(b) if the Legal Complaints Review Officer has conducted a review of the determination or decision made by the Standards Committee on the complaint and has reported the outcome of the review to—
(i) the complainant; and
(ii) the practitioner or former practitioner or incorporated firm or former incorporated firm; and
(iii) the Standards Committee.
[60] There is very little authority on s 161, presumably because the Act only came into force two years ago.
[61] One of the few cases that has considered s 161 is Simpson Grierson v Gilmour.12 In that case, Stevens J held that a stay under s 161 did not preclude the ordinary courts on a summary judgment application from enquiring into matters of liability (the existence or otherwise of a retainer) as opposed to matters of quantum.
[62] Mr Nation argued that Simpson Grierson was distinguishable because it was only dealing with the situation of a stay pending an investigation. It did not address the position that applies once the Standards Committee has actually issued its decision. The case was therefore not authority for the proposition that the Standards Committee is unable to make binding determinations on liability.
[63] In support of his argument that the decision of the Standards Committee is final and conclusive as to both quantum and liability, Mr Nation relied on the wording of s 161 and s 132(2), which as I have mentioned is the section under which the Kains‘ complaint was treated as having been made. Section 132(2) talks of a person chargeable with a bill of costs, while s 161 says the determination of the Standards Committee is final and conclusive as to the amount due. Mr Nation contended that Parliament‘s use of those words ‗chargeable‘ and ‗due‘ meant that a certificate‘s conclusiveness was not limited to quantum, but must extend to any issues of liability as well.
[64] He further submitted that this was supported not only by the wording of the relevant statutory provisions, but also by policy considerations. Under s 161, proceedings for recovery of the costs are stayed pending the Standards Committee determination. That, he submitted, was a clear indication Parliament intended solicitor/client disputes over fees to be processed through the specialist body. It would be contrary to that policy, a waste of resources and grossly unfair if once the determination was given and the stay lifted, a solicitor was then required to re- litigate the whole matter, this time through the ordinary courts.
[65] As will be readily apparent, there is some force in Mr Nation‘s arguments.
12 Simpson Grierson v Gilmour (2009) 19 PRNZ 865.
[66] However, after much deliberation, I have decided that s 161 does not preclude me from enquiring into the defences raised by the Kains other than those pertaining to the reasonableness of the success fee.
[67] The consequences of Mr Nation‘s interpretation are potentially far-reaching and draconian. It would mean, for example, that the Court would be precluded from enquiring into matters which were never before the Standards Committee – such as the credit contracts argument in this case – and matters which a Standards Committee decides not to investigate – such as the negligence set-off/counterclaim in this case.
[68] In my view, if Parliament had intended to deprive litigants of their fundamental rights in such a wholesale way, it would have used much clearer and more explicit language.
[69] A certificate under s 161 is expressly limited to the determination of a complaint under s 132(2), and a complaint under s 132(2) is expressly defined as a complaint ―about the amount of any bill of costs‖. The right to make a complaint about other matters such as the lawyers‘ conduct or their standard of service is provided by a different provision, namely s 132(1). As for the reference to the word
‗chargeable‘ in s 132(2), in my view that does not really take matters any further. The phrase ―any person chargeable with a bill of costs‖ is simply a description of who it is that has the right to make a complaint under s 132(2). In order to determine whether a particular complainant has standing under s 132(2), the Standards Committee may have to determine if they are a person chargeable, ie liable, but it does not necessarily follow that the jurisdiction to make that determination is an exclusive one or that the committee‘s finding on that issue is binding.
[70] I accept that the distinction between quantum and liability is not always clear cut. For example, the reason the amount of a fee is being disputed may be because the client claims the lawyer was negligent. Under s 156(1)(e) of the Lawyers and Conveyancers Act, the Standards Committee has the power to order the practitioner to reduce their fees if the committee determines the practitioner is guilty of unsatisfactory conduct, which can include negligence. My interpretation of the
legislative scheme, however, is that such a determination would not be the subject of a s 161 certificate.
[71] The interpretation I favour is also consistent with the fact that while the Standards Committee undoubtedly has specialist expertise in relation to issues of quantum, the same is not true in relation to liability issues.
[72] I am further reinforced in this conclusion by consideration of the fact that the procedures prescribed for dealing with complaints to the Standards Committee are not appropriate for determining questions of civil liability. As Mr Paulsen points out, determinations are usually made on the papers with parties not having the benefit of advice, legal representation, disclosure of documents or powers of cross- examination.13
[73] I acknowledge the concern that drawing a distinction between quantum and liability has the potential to work unfairly to the disadvantage of lawyers and encourage spurious defences. But it is a lesser injustice than the one that would result from preventing genuine defences being raised. Further, if the defences are truly spurious then the summary judgment application will be granted and appropriate costs awarded. The Court will also always, of course, have the benefit of the reasoning of the Standards Committee.
Was the success fee agreement entered into on 18 June 2007 or 9 June 2008?
[74] The date on which the success fee arrangement was entered into is important for two reasons.
[75] First, if a binding success fee agreement had already been concluded before
Mr Ormsby issued his ultimatum in June 2008, then a defence of duress is not arguable.
13 See Lawyers and Conveyancers Act 2006, s 142. At least two other High Court judgments appear to have assumed the existence of a quantum/liability distinction: McGuire v Sheridan HC Wellington CIV-2009-485-001901, 15 April 2010; Gilbert Walker v Scott HC Auckland CIV-
2008-404-008353, 8 April 2010.
[76] Secondly, as Mr Paulsen conceded, it would also not be arguable there had been oppression for the purposes of an application to re-open the contract under the Credit Contracts and Consumer Finance Act.
[77] In support of his argument that no binding fee agreement was concluded in June 2007, Mr Paulsen referred me to a number of authorities which have held that where parties in negotiation state they intend to contract by a formal signed document, the inference is that no binding agreement comes into existence until that is done.14 The agreement at issue in this case concerned a complex and unique fee arrangement and so, Mr Paulsen argues, there was all the more reason for it to be formalised as was stated would be done at the conclusion of Mr Ormsby‘s email
(―Please signify agreement to these terms by return email and to sign a formal agreement tomorrow‖).
[78] Mr Paulsen also raised the following points:
(a) The June 2007 email had been preceded by a significant number of communications, which meant there was a real possibility of confusion and misunderstanding.
(b) The language of the email was the language of offer, not agreement.
(c) There is no satisfactory explanation for the failure to prepare a formal written agreement in 2007.
(d)After 18 June 2007 there were still essential matters requiring agreement, as evidenced by later emails.
(e) Wynn Williams did not issue an invoice for the base fee of $25,000 until 14 August 2007, and even then the bill made no reference to a
success fee arrangement.
14 Carruthers v Whitaker [1975] 2 NZLR 667 at 671-672; Verissimo v Walker [2006] 1 NZLR 760.
(f) If a concluded agreement had come into existence in June 2007, why was Mr Ormsby so insistent on obtaining a signed agreement in 2008? His affidavit is silent on that point other than saying he wanted to further secure Wynn Williams‘ position.
(g) The fact the 2008 document contained additional terms to those in the
2007 email.
[79] While there is a dispute as to when the agreement was entered into, I am satisfied it is nevertheless an issue that is amenable to determination in the summary judgment context.
[80] I have carefully considered all of Mr Paulsen‘s submissions, but I have come
to a clear view that the agreement was definitely made in June 2007.
[81] I am satisfied that notwithstanding the concluding words of Mr Ormsby‘s email, the parties clearly intended to be bound and regarded themselves as being bound notwithstanding the absence of a formal document. The agreement was not subject to contract. It was simply a term that a formal contract would be signed, but the fact this did not happen did not entitle either party to avoid their obligations under the agreement that had been reached.
[82] While the email may have been expressed in a future tense and in the language of an offer, it was an offer that was accepted when Michael Kain replied on behalf of all of the Kains. There is no suggestion Michael did not have authority.
[83] It is correct that Michael Kain‘s acceptance sought clarification on three of the clauses. In particular, he wanted clarification that Mr Stephen Kós QC would lead on some points, that the Kains‘ father would not be required to provide a guarantee, and that the funds received from the Public Trust would be allocated a certain way. Mr Ormsby‘s reply – ―Thank you Michael. We will now get on with the appeal and contact the other solicitors. We look forward to seeing you all tomorrow.‖ – in my view must amount to consent on those three requests. I acknowledge that, after the reply, there was ongoing dialogue about the respective
roles of the various legal representatives, something which Mr Paulsen says was important given the formula for calculating the success fee. However, the email exchanges confirm this was appropriately agreed to be a matter to be resolved between the legal representatives themselves, an arrangement which could not in my judgment constitute grounds for arguing uncertainty of contract. Similarly, the fact the Kains were later critical about the extent to which Wynn Williams was involving Gilbert Walker is not on any proper analysis evidence capable of negating the existence of a contract.
[84] Further, and importantly, both the Kains and Wynn Williams conducted themselves on the basis they had reached agreement. There were no further negotiations over any other topics. Wynn Williams did the work for the leave application and the appeal, as well as extending credit for the outstanding fees and the success fee. For their part, the Kains took the benefit of the period of credit and made the initial payments of $25,000 and $10,000 required of them under the terms of the email. Contrary to Mr Paulsen‘s submission, the fact the Kains paid the
$25,000 before they received an invoice is in my view strongly supportive of Wynn Williams‘ argument rather than the other way round. It shows the Kains considered they had a pre-existing obligation to pay it. Significantly, when Mr Tom Kain sent an email on 8 August 2007 advising that the cheques for the $25,000 and the $10,000 were in the post, he specifically expressed ―regret they [cheques] have taken so long‖. That expression of regret followed an email from Mr Ormsby complaining that the funds had not yet been received despite it being ―agreed well over a month ago that these funds would be provided immediately upon agreement being reached‖. Significantly, too, when the previous summary judgment application was settled, the Kains paid an amount of interest calculated from June 2007. It must also be relevant that the Kains made no complaint when they received the invoice for the success fee in August 2008. No complaint was in fact ever made until the first summary judgment proceedings were issued.
[85] Moreover, at no stage until now did the Kains ever actually deny that a contract had come into existence in 2007. Even when they made their complaint to the Law Society in February 2009, the complaint of duress was in relation to the circumstances surrounding the 2007 agreement. The complaint expressly states:
The parties entered into a conditional fee agreement on 18 June 2007.
[86] In coming to this conclusion, I have not of course overlooked Mr Ormsby‘s conduct in 2008 and what I agree amounted to an attempt to introduce some additional terms. However, what matters from a contractual point of view is that this was resisted by the Kains and ultimately resolved by reaffirmation of the 2007 agreement.
[87] As a result of this finding, it is not necessary for me to consider the duress argument. Nor is it necessary for me to consider the argument based on alleged oppressive conduct under the Credit Contracts and Consumer Finance Act.
Is it arguable the success fee agreement was unlawful?
[88] The Lawyers and Conveyancers Act came into force on 1 August 2008. Accordingly, the success fee agreement of 18 June 2007 is governed by the law as it existed prior to 1 August 2008.
[89] This, in my view, means that a contingency fee was permissible, but only so long as the practitioner was doing no more than deferring their reasonable fee and was not seeking to share in the proceeds of the litigation. If it involved a sharing of the spoils, then it was champertous and unlawful.15
[90] The amount of the fee that became payable under the agreement as a result of success on one point in the Supreme Court was $150,000, which together with the initial ―base fee‖ of $25,000 makes a total payment of $175,000.
[91] The Standards Committee has determined that such a fee was fair and reasonable and not disproportionate for all the work done by Wynn Williams.
[92] That determination has been upheld on review, and accordingly by virtue of s 161 the determination is final and conclusive as to the amount due.
15 This was the approach taken by the Standards Committee, and is supported by the Rules of Professional Conduct for Barristers and Solicitors in force at the relevant time (r 3.01), Mills v Rogers (1899) 18 NZLR 291; Sievwright v Ward [1935] NZLR 43.
[93] Mr Paulsen attempted to draw a distinction between reasonableness and lawfulness, arguing that the Standards Committee never considered the Kains‘ complaint of unlawfulness.16 However, in my view, the argument is misconceived. The committee did consider lawfulness, and made express findings.17 The committee also correctly directed itself in terms of the applicable legal principles
under which lawfulness and reasonableness were inextricably connected.
[94] I should add that had I been required to consider the matter independently, I would have come to the same conclusion on this issue as the Standards Committee, for the same reasons, both as regards the actual fee and the fee that was potentially chargeable under the formula in the success fee agreement.
[95] For completeness, I should record that I also agree with the Standards Committee that non-compliance with the procedural requirements of the Client Care Rules relating to contingency fee agreements is irrelevant because those rules were not in force at the time the agreement was entered into. Contrary to a written submission made by Mr Paulsen, the fact the rules were in force at the time the invoice was issued cannot, as a matter of principle, alter that conclusion.
Do the Kains have an arguable set-off or counterclaim in negligence?
[96] There is a conflict in the affidavit evidence about the advice which Wynn Williams gave regarding the possibility that even if the Kains were to succeed in the Supreme Court, the Public Trust might choose to redistribute to Mrs Couper under the powers in the trust deed.
[97] This has in fact now happened. Last July, the Public Trust executed two deeds, one bringing forward the date of distribution to 9 July 2010 and the other
exercising the power of appointment in Mrs Couper‘s favour.
16 This same argument also appears to be one of the grounds for judicial review in the separate judicial review proceeding.
17 Standards Committee Determination, above, n 9, at [21], [27] and [28].
[98] In his affidavit, Michael Kain deposes that on 18 June 2007 he had a meeting with Mr Ormsby and also another Wynn Williams lawyer working on the case, a Mr Kenny:18
9.There was some discussion at this meeting about the specific grounds of appeal and in relation to the Mangaheia Station shares Mr Kenny and Mr Ormsby advised me that in the event that the Supreme Court reversed the Court of Appeal decision the shares would revest in the trustee of the old Mangaheia Trust. They said there was no prospect that the trustee would subsequently defeat the effect of the judgment by distributing the shares to Annette Elizabeth Couper. They said that would be unlawful and “the Judge would not tolerate such an action”.
10.It was on this basis and in reliance on the advice of Mr Kenny and Mr Ormsby that the decision to proceed with the appeal to the Supreme Court and instruct Wynn Williams was made.
11. Apart from the limited advice referred to in paragraph 9 the defendants received nothing from Wynn Williams as to the risks of the appeal, what the likely outcome of a successful appeal would be or what risks were associated with an unsuccessful appeal. As far as I am aware there was no risk analysis undertaken by Wynn Williams for the defendant in relation to the appeal at all.
[99] I accept that if the advice was given in such absolute and categorical terms then it was arguably negligent, giving rise to a claim arising out of the same transaction for damages which would exceed the amount of the judgment sought by Wynn Williams. The damages would be all legal costs incurred on the appeal, including counsel‘s fees, on the basis that it had it not been for the negligent advice, the Kains would never have proceeded with the appeal.
[100] For their part, Messrs Ormsby and Kenny have a different story. Mr Kenny says:19
41.As Mick Kain acknowledges in paragraph 9 of his affidavit, there was discussion about what the effect of a successful appeal to the Supreme Court might involve. Essentially they were seeking the return of Mangaheia Station to the Mangaheia Trust so that it would then be held by the Public Trust under the terms of the Trust Deed.
42. From my dealings with Tom Kain, Charles Kain, and Georgina Kain
I know they had an intimate knowledge of the facts of the case and
18 Affidavit of George Michael Kain in Opposition to Application for Summary Judgment, 19
January 2011.
19 Affidavit of Jeffrey Bernard Kenny, 16 February 2011.
were aware that the Mangaheia Trust was a discretionary Trust. They had attended the High Court and Court of Appeal hearings, had read the judgements, and had debated them with us on many occasions. They knew that the aim of the appeal in relation to the Mangaheia Trust was to put Mangaheia Station back into the hands of the trustee (which was by that stage the Public Trust as new trustee) and let the trustee decide what to do.
43.On a number of occasions I discussed with them what might happen if the Public Trust obtained Mangaheia Station as trustee. I recall them asking me this at least twice in Tom Kain‘s office. I said that it was possible that the Public Trust might (following a legally correct procedure) distribute Mangaheia Station to or for the benefit of someone other than the Kains (such as Tom Couper‘s wife Annette Couper) but I thought that this was unlikely. I recall saying that whilst it was possible it would be a ―brave trustee‖ who would do this.
44.I was of this view because of the terms and overall structure of the Mangaheia Trust, the fact that Annette Couper had already been well provided for, and the fact that the Kains (and their children) had not, relatively speaking, been as well provided for as others from other trusts.
45.However I considered a risk factor was the Kains‘ own conduct and the risk that they might alienate the Public Trust. Therefore I stressed how important it was that the Kains act appropriately in their dealings with the Public Trust. I was very clear about this as from my previous dealings with them I had on many occasions observed how others were ―put offside‖ by the way some of the Kains dealt with them.
[101] Mr Ormsby says:20
59.There was a risk that even if the Kains succeeded in the Supreme Court and assets were returned to the Mangaheia Trust, the trustee could use the power of appointment provided for in the Trust Deed to appoint substantial assets to Annette Couper or another object of the power of appointment.
60.Throughout the litigation when Mr Kenny and I discussed this type of risk we also said that if the Public Trust acted in such a way as to deprive them completely from benefitting from the substantial assets held in the trusts which were established to benefit them then it was possible that the exercise of its discretion would be open to challenge but that was an issue that would have to be looked at if it occurred. The situation we were dealing with was one where substantial assets had been removed from trusts of which they were beneficiaries in such a way that they no longer had any prospect of benefitting from the assets.
61.In relation to the Supreme Court appeal we discussed with the Kains that there was always going to be a risk that even if the Appeal was successful, they would not end up benefiting from the return of the assets to the Mangaheia Trust. That was why it was so important the Kains accept responsibility personally for our fees and that we not have to rely on some security over their entitlement from the Trust.
62.The Kains, particularly Charles Kain, Tom Kain and Georgina Kain had an intense involvement with all the litigation, and often asked us to consider all sorts of issues and points that might be raised. In the discussions we had with them about the possibility of an appeal to the Supreme Court, they were fully aware of the judgment which had been given by the Court of Appeal. They were aware that part of the reason why the Court of Appeal had found against them was that the Court had held that although the trustees of the Mangaheia Trust may have exercised the power of advancement invalidly, the Court had held the trustees could have achieved the same objective by exercising their power of appointment.
[102] Mr Paulsen points to the absence of any file note and says there is a clear factual dispute which cannot be resolved on this application.
[103] I accept that in a summary judgment proceeding the Court will not normally resolve material conflicts of evidence or assess the credibility of deponents. However, it is also well established that the Court need not uncritically accept 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. As was said by the Court of Appeal in
Krukziener:21
In the end the Court‘s assessment of the evidence is a matter of judgment.
The Court may take a robust and realistic approach where the facts warrant
it…
[104] In my view, this is one of those cases where a robust and realistic approach is warranted.
[105] I am satisfied that the claims of negligence are not tenable, being inconsistent with previous statements made by the Kains and, in all the circumstances, inherently implausible.
[106] I say that for the following reasons:
(i)In correspondence and submissions to the Law Society, the Kains stated that the possibility of the Public Trust distributing to Mrs Couper was ―not raised by any of our lawyers until immediately after the Supreme Court hearing‖. Prior to the Supreme Court hearing ―we did not receive any advice in this regard‖. This is completely at odds with what the Kains are purporting to say now. According to their evidence now, the topic was raised and discussed well before the hearing.
(ii)By the time of the Supreme Court hearing, the Kains had been engaged in litigation over the trusts for several years. As is confirmed by the contemporaneous documentation, they took a very keen interest in the litigation and were actively involved. They were sophisticated, determined and tenacious litigants, obviously passionate about the rightness of their cause. They had made their own arrangements to engage Queen‘s Counsel in the High Court and the Supreme Court. They had even gone to the extra expense of having another firm of lawyers involved in the appeal to the Supreme Court, as well as Wynn Williams. There is also no dispute the family members who were giving the instructions to Wynn Williams had an intimate knowledge of the facts of the case, attended the various hearings, read the judgments including the Court of Appeal judgment, and had debated the judgments with the lawyers on several occasions. One of their number, Tom Kain, is a lawyer. It is inconceivable in those circumstances that they did not appreciate the existence of the risk. It was self- evident, and no matter how bullish Wynn Williams might have been, it is not plausible the Kains would have regarded Wynn Williams as giving a cast iron guarantee as to what the Public Trust might or might not do in the future.
(iii)One might ask then, why, if the Kains appreciated there was a risk, would they have proceeded with an expensive appeal? However, the clear aim of the appeal was to restore the property to the trust, which importantly was by then under the control of an independent trustee, making it all the more unlikely there would be any second attempt to exclude the Kains. If, however, the worst did happen, their legal advice was they would have an excellent case. Mr Paulsen told me from the bar that in fact the Kains do intend to challenge the Public Trust‘s actions, relying apparently on a deed of arrangement entered into in June 1997. There is no evidence that this deed was discussed by the parties to this proceeding prior to the Supreme Court appeal. However, for present purposes, what matters is that it makes sense for the Kains to have proceeded with the appeal notwithstanding the existence of a risk. Had they not proceeded with the appeal, they would not of course be in a position to mount any challenge now. Leaving matters as they stood at the Court of Appeal stage would have destroyed any chance they ever had of recovering the property. According to the judgment of Panckhurst J, the assets of the Mangaheia Trust are worth some $3.4m.
[107] Wynn Williams has satisfied me, notwithstanding the high threshold required of a summary judgment application, that the negligence claim is not tenable.
Is the success fee agreement a consumer credit contract, and so unenforceable for non-compliance with disclosure requirements?
[108] The Credit Contracts and Consumer Finance Act draws a distinction between a credit contract and a consumer credit contract. The distinction is important, because some provisions of the Act (including the disclosure requirements) apply only to consumer credit contracts.
[109] ―Credit contract‖ is defined as a contract under which credit is or may be provided,22 the phrase ―provided credit under a contract‖ in turn being defined as granting a right to another person to a) defer payment of a debt; or b) incur a debt and defer its payment; or c) purchase property or services and defer payment for that purchase in whole or in part‖.23
[110] As for ―consumer credit contract‖, that is defined by s 11(1) in the following
terms:
(1) A credit contract is a consumer credit contract if—
(a) the debtor is a natural person; and
(b) the debtor enters into the contract primarily for personal, domestic, or household purposes; and
(c) 1 or more of the following applies:
(i) interest charges are or may be payable under the contract:
(ii) credit fees are or may be payable under the contract: (iii) a security interest is or may be taken under the
contract; and
(d) when the contract is entered into, 1 or more of the following applies:
(i) the creditor, or one of the creditors, carries on a business of providing credit (whether or not the business is the creditor's only business or the creditor's principal business):
(ii) the creditor, or one of the creditors, makes a practice of providing credit in the course of a business carried on by the creditor:
(iii) the creditor, or one of the creditors, makes a practice of entering into credit contracts in the creditor's own name as creditor on behalf of, or as trustee or nominee for, any other person:
(iv) the contract results from an introduction of one party to another party by a paid adviser or broker.
22 Credit Contracts and Consumer Finance Act 2003, s 7.
23 Credit Contracts and Consumer Finance Act 2003, s 6.
[111] Applying those definitions to the facts of this case, Mr Nation acknowledged that the success fee agreement was a credit contract as defined, but argued that it was not a consumer credit contract.
[112] Section 17 of the Credit Contracts and Consumer Finance Act requires a creditor under a consumer credit contract to disclose certain specified information to every debtor under the contract by giving a written disclosure notice before the contract is made, or within five working days of it being made. Under s 99, a creditor who fails to make initial disclosure may not enforce the contract until disclosure is made.
[113] There is no evidence of Wynn Williams ever providing the Kains with any disclosure notice under the Credit Contracts and Consumer Finance Act. It follows that if the success fee agreement was a consumer credit contract for the purposes of the Act, then it is not enforceable and summary judgment must be declined.
[114] In arguing that the agreement was not a consumer credit contract, Mr Nation relied primarily on the wording of the statutory definition of consumer credit contract.24 In particular, Mr Nation submitted that the Kains had not entered into the contract for personal purposes, and that Wynn Williams was not in the practice of providing credit.
[115] If required to make a finding, my view would be that in entering into the agreement, the Kains were clearly seeking to protect their personal interests as beneficiaries. As a matter of principle, the fact they acted in concert would not alter the characterisation of their purpose as personal.
[116] The issue of whether Wynn Williams makes a practice of providing credit in the course of its business is more problematic.
[117] While the success fee agreement itself was unique, the evidence shows that
the firm‘s normal practice is to issue invoices stating that the fees are payable in 14
24 See the definition contained at Credit Contracts and Consumer Finance Act 2003, s 11.
days. The client‘s account is however debited with the costs due on the invoice
when the invoice is raised.
[118] As mentioned above, the Act defines what is meant by ‗providing credit‘ in
very wide terms:
6 Meaning of credit
In this Act, unless the context otherwise requires, credit is provided under a contract if a right is granted by a person to another person to—
(a) defer payment of a debt; or
(b) incur a debt and defer its payment; or
(c) purchase property or services and defer payment for that purchase
(in whole or in part).
[119] One possible analysis is to say that the debt arises on the issue of the invoice, and therefore allowing the client 14 days in which to pay amounts to a deferral of payment under s 6(a). Or that for the purposes of s 6(c), there is a purchase of legal services at the time the retainer is made or the legal services supplied, and payment has been deferred.25 If correct, that would mean Wynn Williams does make a practice of providing credit for the purposes of the Act.
[120] An alternative construction is that providing credit on the deferment of a debt does not mean a unilateral indulgence, but rather a mutually agreed, ie contractual, deferment of the time for payment that would otherwise be applicable.26 Allowing the client 14 days is a unilateral indulgence and therefore Wynn Williams is not in the practice of providing credit.
[121] I favour the latter interpretation.
[122] However, it is unnecessary for me to reach any concluded view on this issue because there is a much more fundamental reason as to why the Act does not afford
the Kains an arguable defence.
25 See B Bevan, Consumer Credit (LexisNexis, Wellington, 2005), Chapter 3. This would have what some might consider the rather surprising result that credit is granted every time a tradesman does not require payment on an invoice until the 20th of the following month, unless the contract comes within the exceptions created by s 15(a).
26 See R M Goode, Consumer Credit Law (Butterworths, London, 1989) at 108-109.
[123] In my view, because contracts for the payment of legal fees are regulated by a specific legislative regime, Parliament could never have intended that such contracts would also be within the purview of the Credit Contracts and Consumer Finance Act. This conclusion is reinforced by a consideration of the purposes of the Credit Contracts and Consumer Finance Act,27 as well as general practice and understanding and the absurd consequences that would otherwise result.
[124] The fee agreement in this case was entered into at a time when the Law Practitioners Act 1982 was in force. Under the then Rules of Professional Conduct for Barristers and Solicitors, a practitioner was entitled to charge a client no more than a fee which was fair and reasonable for the work done having regard to the interests of both client and practitioner.28 The Rules also stated that a practitioner was required ―to bear in mind at all times the provisions of Part VIII of the Law Practitioners Act‖,29 Part VIII being a ―comprehensive procedure‖30 under which a client could seek to revise a bill of costs rendered by their lawyer.
[125] In Cortez Investments Ltd v Olphert & Collins,31 the Court of Appeal stated:
Part VIII of the Law Practitioners Act is a commendable example of legislative consumer protection promoted by the profession itself. The broad policy underlying it is to ensure that legal charges will be fair and reasonable and whether or not the client has become committed in terms of some contractual arrangement.
[126] The position has now been further strengthened by the Lawyers and Conveyancers Act which, through the mechanism of the Client Care Rules, requires lawyers to provide cost information to the client prior to commencing work under the retainer.32
[127] As was accepted at the hearing, it is relatively common for lawyers to stipulate that invoices are payable in 14 days rather than immediately, and that
interest at a certain percentage over the firm‘s bank rate may be charged for late
27 See Credit Contracts and Consumer Finance Act 2003, s 3.
28 Rules of Professional Conduct for Barristers and Solicitors, r 3.01.
29 Rules of Professional Conduct for Barristers and Solicitors, r 3.01, commentary at paragraph 2.
30 D Webb, Ethics, Professional Responsibility and the Lawyer (LexisNexis, Wellington, 2006) at
389.
31 Cortez Investments Ltd v Olphert & Collins [1984] 2 NZLR 434 at 439.
32 Lawyers and Conveyancers Act 2006 (Lawyers: Conduct and Client Care) Rules 2008, r 3.4.
payment. These would be matters detailed in standard letters of engagement. Yet, this is the first time it appears to have ever been suggested that lawyers should also be issuing disclosure notices under the Credit Contracts and Consumer Finance Act advising the client inter alia of a cooling-off period and the right to cancel.
[128] The inappropriateness of applying the disclosure requirements to contracts for the provision of legal services is further highlighted by consideration of the prescribed contents of the disclosure notice, which are plainly concerned with a very different type of contract.33
[129] I acknowledge that s 15 of the Credit Contracts and Consumer Finance Act lists certain contracts which are not consumer credit contracts and that contracts for the provision of legal services or payment of legal fees is not on the list. However, while that is certainly a factor to be taken into account, it is in my assessment outweighed by the other considerations I have mentioned.
[130] My finding is that the success fee agreement was not a consumer credit contract for the purposes of the Credit Contracts and Consumer Finance Act. Wynn Williams‘ failure to issue a disclosure notice under that Act cannot therefore be an arguable defence to the claim.
Should summary judgment be declined on the basis of the Court’s residual
discretion?
[131] It is well established that even if the Court is satisfied a defendant has no defence, the Court has a residual discretion and may still decline to grant summary judgment.
[132] As I have mentioned, the Kains have issued judicial review proceedings seeking to overturn the decision of the Legal Complaints Review Officer.
[133] Mr Paulsen accepts that the judicial review proceedings do not amount to a counterclaim or set-off, but submits that even if I find the Kains have no arguable
33 This is so even taking into account the provision that disclosure only need be of as much of the key information set out in schedule 1 as is applicable to the particular contract: Credit Contracts and Consumer Finance Act 2003, s 17(1).
defence, it would be unjust to enter judgment while there is still a possibility of the
Standards Committee‘s decision being reversed.
[134] In support of that argument he referred me to the decision of Herring.34 In Herring, the Court of Appeal confirmed that ―a concern that all matters relevantly of dispute should be determined together‖ is a basis for exercising the residual discretion.
[135] However, I am not persuaded that this case is an appropriate case for the exercise of the residual discretion. I have come to that view for the following reasons:
(i) The Kains‘ case for judicial review is not, in my assessment, a
strong one.35
(ii) The work done by Wynn Williams for the Kains in 2007 and
2008 was significant work.
(iii)Wynn Williams has already been stood out of its money for a long period of time.
(iv)The entering of summary judgment will not prevent the Kains from continuing with the judicial review proceedings if that is their wish.
(v)There is no realistic prospect of Wynn Williams failing to repay the money in the unlikely event that the Standards Committee decision were to be reversed. Apart from anything else, under the Lawyers and Conveyancers Act, Messrs Ormsby and Kenny would be required to comply with any decision of the Legal Complaints Review Officer as part of
their right to continue in legal practice.
34 Herring v Herring [2011] 2 NZLR 433 (CA).
35 While the Legal Complaints Review Officer may have erred in finding the Lawyers and Conveyancers Act 2006 did not apply to the 8 August 2008 fee note, she did nevertheless consider the reasonableness of the fees and any error did not materially affect the outcome.
[136] In my view, the overall justice clearly favours the granting of summary judgment.
Outcome
[137] The summary judgment application is accordingly granted.
[138] Judgment is entered against each of the defendants in the sum of $150,000 together with interest on the judgment sum at 10 per cent per annum, compounded monthly from 8 August 2008 to the date of this judgment.
[139] Wynn Williams also sought post-judgment interest at the contractual rate. However, because of the doctrine of merger and the absence of any specific clause allowing for this in the success fee agreement, it is questionable whether the Court has jurisdiction.36 Counsel have not had an opportunity to be heard on this issue and accordingly leave is reserved for any submissions to be made should counsel have a different view.
[140] As regards costs and disbursements, my expectation is that counsel will be able to reach agreement. If, however, an formal award is required then Mr Nation is to file submissions, with any reply submissions within five working days thereafter.
Solicitors:
Wynn Williams & Co, Christchurch
Cavell Leitch Law, Christchurch
36 See the authorities discussed in FM Custodians Ltd v Patullo HC Christchurch CIV-2010-409-
000684, 4 June 2010.
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