NEW ZEALAND TAMIL SOCIETY INC V KIELY THOMPSON CAISLEY HC AK CIV-2011-404-0000160

NEW ZEALAND TAMIL SOCIETY INC V KIELY THOMPSON CAISLEY HC AK CIV-2011-404-0000160 11 November 2011IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYCIV-2011-404-0000160BETWEEN THE NEW ZEALAND TAMIL SOCIETYINCORPORATEDAppellantAND KIELY THOMPSON CAISLEYFirst RespondentAND CHARUKESI RAJAKUMARSecond RespondentAND RANGANATHAN AKULAThird RespondentAND VICKI GNANAKUMARFourth RespondentAND MALINI SIVANANTHANFifth RespondentAND THARMALINGHAM THARMAKUMARSixth RespondentAND NIRMALAN SIVANANTHANSeventh RespondentAND G L NGANAKUMAREighth RespondentAND NATHAN SAMINATHANNinth RespondentAND YHOGESWARAN INTHIRANTenth RespondentAND PATHMANATHAN ARVINTHANEleventh RespondentHearing: 5 October 2011Appearances: C S Henry for AppellantM K MacNab for First RespondentG B Presland for Second to Twelfth RespondentsJudgment: 11 November 2011 at 4:30 PMJUDGMENT OF COURTNEY J[1] A firm of solicitors, Kiely Thompson Caisley (KTC), sued the New ZealandTamil Society Incorporated for unpaid barrister's fees. In the District Court KTCsucceeded in respect of fees rendered prior to 22 August 2007 but failed in respect of fees rendered after that date.1 On the Society's appeal in respect of the fees prior to 22 August 2007 and KTC's cross-appeal in respect of the later fees, I held that KTC was entitled to recover the whole amount of the fees.2 The Society has applied for leave to appeal my decision and for an order staying execution of the District Court judgment.[2] The barrister whose fees are the subject of the proceeding was Mr Gilchrist. He was engaged in early 2007 by five of the six members of the Society's ExecutiveCommittee in relation to an internal dispute between two factions within the Society. The five represented one faction. On their instructions Mr Gilchrist arranged for proceedings to be commenced by the Society against certain of its members. Soon afterwards a newly elected Executive Committee confirmed that decision. In August 2007 this Court made orders regarding the ongoing financial management of the Society, including requiring both factions to agree on expenditure. By late 2007 the members of the Executive Committee had resigned en masse and been replaced b y members of the opposing faction, at which point Mr Gilchrist ceased acting. The Society maintained that the members of the Executive Committee responsible for engaging Mr Gilchrist were not authorised to do so and the Society was, therefore ,not liable to meet his fees. I upheld the District Court Judge's decision that the fivemembers of the original Executive Committee were entitled to engage Mr Gilchrist and that Mr Gilchrist was entitled to rely on their apparent authority to do so.1 Kiely Thompson Caisley v New Zealand Tamil Society Incorporated DC Auckland CIV-2009-004- 000868, 2 December 2010.2 The New Zealand Tamil Society Inc v Kiely Thompson Caisley HC Auckland CIV-2011-404-000160, 6 September 2011.[3] Mr Henry, for the Society, framed a number of questions that he said arose from my judgment and which justify a second appeal. Not all appear to involve actual error in my judgment. The questions can be summarised as:(a) The internal management rule did not apply to the decisions to engage Mr Gilchrist and to maintain those instructions;3(b) Mr Gilchrist was put on inquiry as to the potential lack of authority and was therefore not entitled to rely on the rule in Turquand's case;4(c) The orders made by Randerson J and Baragwanath J requiring the approval of both factions of the Society for future expenditure had theresult of terminating Mr Gilchrist's instructions;5(d) Whether counsel can properly assert legal professional privilege against a party who was effectively his client in a proceeding; and(e) Whether an adverse inference should or may be drawn from a party'sfailure to answer interrogatories and to make itself available for cross- examination.[4] In the interests of finality the circumstances in which a party is entitled to a second appeal are limited. The appeal must raise some question of fact or law that is capable of bona fide and serious argument in a case involving some interest (public or private) that is sufficiently important to outweigh the cost and delay of a further appeal.6 I do not consider that any of the errors asserted or issues raised by the Society satisfy these criteria.Application of the internal management rule3 [33].4 [37].5 [47].6 Waller v Hider [1981] 1 NZLR 412 (CA); Payne v Attorney-General (2005) 17 PRNZ 723 (CA).[5] I concluded that the District Court Judge's application of the the internalmanagement rule explained in Barrett v Te Runanga O Ngati Pu Inc7 was correct.Under Article 8.6 of the Society's rules the quorum for a meeting of the ExecutiveCommittee was a simple majority of the members. In the circumstances, the exclusion of the sixth member of the Executive Committee, Mr Kathiravel, may have been irregular but it could not be said to have been illegal. Nor could it realistically be said that Mr Kathiravel's presence would have altered the outcome.8I do not consider it to be seriously arguable that the internal management rule did not apply in this case.The rule in Turquand's case[6] Both Judge Gittos and I considered that, even assuming there had been a lack of authority resulting from some irregularity on the part of the Executive Committee members who engaged Mr Gilchrist, Mr Gilchrist himself was entitled to assume (as he did) that the majority was authorised to engage him.[7] The rule in Turquand's case, in relation to companies and other incorporated entities, is that a person dealing with such an entity is entitled to assume that acts done within the constitution and powers of the entity have been properly and duly performed and are not bound to inquire whether acts of internal management have been satisfied.9 A person who is on notice of the irregularities cannot take the benefit of the rule.[8] Mr Henry does not assert any error in my statement of the law relating to the rule in Turquand's case. He identifies the issue to be determined on appeal as being"whether uncontested facts apparent from the evidence should have put Mr Gilchrist on inquiry". It is for the Judge to assess whether on the evidence a person was onnotice as to a possible lack of authority. In both the District Court and in this Court the assessment was that Mr Gilchrist was not put on inquiry. Against these7 Barrett v Te Runanga O Ngati Pu Inc [2002] NZAR 296 (HC).8 Cf Khan v Ahmed [2008] NZAR 686 (HC).9 Royal British Bank v Turquand (1856) 6 E&B 327, explained in Morris v Kansen [1946] AC 459 at474-475.concurrent findings, no question arises that is either seriously arguable or of sufficient importance to justify a second appeal.Conflicting decisions regarding effect of previous orders[9] Mr Henry submitted that it was "incontestable that the judgments of theDistrict Court and the High Court are in conflict on the question of the impact and effect of an Order made in the High Court by Randerson J in 2007". He identified as the proposed issue on appeal that "the conflict of approach taken by the two courtsshould be clarified by the Court of Appeal, as the issue of the reach and consequence of a High Court order must be a question of fundamental importance".[10] It is true that I took a different view of the effect of the orders made by Randerson J and Baragwanath J from that taken by Judge Gittos. That is hardly an unusual outcome on an appeal and could not, in itself, justify a further appeal. Thereis no issue as to the "reach and consequence of a higher court order". WhatMr Henry really complains about is my interpretation of the particular orders that were made in this case. That does not justify a second appeal.Implications of Mr Gilchrist's assertion of legal professional privilege[11] Mr Henry was critical of a statement by Mr Gilchrist during the original proceedings brought by the Society regarding the existence of legal professional privilege as between the Executive Committee and the other factions of the Society. In cross-examination in the District Court Mr Gilchrist conceded that "privilege"was the wrong word to use in the context and the better word would have been"confidentiality". I did not regard this issue as one requiring specific consideration and did not refer to it in my decision. Mr Henry, however, has articulated the issue arising as:The Court of Appeal will be asked to say whether it is reasonable and/or acceptable for a law practitioner of 24 years to assert "legal professional privilege" against a party, in relation to a matter, and at the same timedemand fees from the party acting in the matter, claiming that the party is his client. It is of considerable public importance that this issue receive clarification, as it should be clear to members of the public what is the exactnature of the agency relationship that exists between them and law practitioners claiming to act on their behalf.[12] It is, in fact, of no moment in this case whether the position taken by Mr Gilchrist in his letter was either reasonable or acceptable. Even if it was an unreasonable position to take, that would not have affected the issues that were determinative, namely the authority of those engaging Mr Gilchrist and his knowledge.[13] Nor do I consider it to be a matter of public importance. The nature of the relationship that exists between barristers, solicitors, and clients and the nature of legal professional privilege is well settled. It does not require clarification from the Court of Appeal. This matter does not raise any issue that would justify a second appeal.Failure to answer interrogatories[14] The Society complains that KTC did not answer interrogatories and failed to call any of its partners or staff to give evidence. The issue said to arise is "whether an adverse inference should or may be drawn from a party's failure, without a validor any excuse, to answer interrogatories when those interrogatories, if answered truthfully, would rebound to the detriment of that party and the party subsequently fails to make it available for cross-examination".[15] I can see from the agreed bundle of documents10 that the Society served a notice on KTC to answer interrogatories in December 2009. The agreed bundle does not seem to contain any answers to interrogatories. Ms MacNab, for KTC, rejected the claim that KTC had not answered the interrogatories but did not provide any reference to answers given. In the circumstances I cannot reach a conclusion as to whether answers were ever given. Had this been significant I would have enquired further of counsel. However it is not significant. If the Society was dissatisfied with the response to its interrogatories it should have raised that matter prior to the District Court trial.10 Volume 1, p299.[16] As regards the complaint regarding KTC's failure to call evidence from anyof its partners or staff, Ms MacNab correctly submitted that KTC was only required to adduce evidence from the witnesses needed to conduct its case. The identity of those witnesses was known to the Society for many months beforehand and the Society had the opportunity to subpoena other witnesses had it wished additional evidence to be called.Result[17] None of the issues the Society wishes to raise are either seriously arguable or justify the cost and delay of a second appeal.____________________P Courtney J