RENNIE COX LAWYERS v EA [2020] NZCA 348

RENNIE COX LAWYERS v EA [2020] NZCA 348 [14 August 2020]NOTE: LOWER COURT ORDERS PROHIBITING PUBLICATION OF THENAME AND IDENTIFYING PARTICULARS OF THE RESPONDENT ANDTHE BARRISTER REMAINS IN FORCE. SEE [2019] NZHC 3191.IN THE COURT OF APPEAL OF NEW ZEALANDI TE KŌTI PĪRA O AOTEAROACA302/2020[2020] NZCA 348BETWEEN RENNIE COX LAWYERSApplicantAND EARespondentHearing: 3 August 2020Court: Brown, Gilbert and Collins JJCounsel: S P Bryers for ApplicantR J Hollyman QC and A J Steel for RespondentJudgment: 14 August 2020 at 9.30 amJUDGMENT OF THE COURTThe application for leave to bring a second appeal is granted.____________________________________________________________________REASONS OF THE COURT(Given by Gilbert J)Introduction[1] This is an application for leave to bring a second appeal. It arises in the contextof a claim by the applicant, Rennie Cox Lawyers (Rennie Cox), for recovery ofbarrister's fees invoiced to the respondent during the period from June toNovember 2011 in the sum of $95,738. The respondent's name has been suppressedin the underlying proceedings in which the fees were incurred. We will accordinglyrefer to the respondent as "EA", consistent with earlier judgments in this proceeding.Background[2] Rennie Cox issued proceedings in the District Court for recovery ofthe barrister's fees in March 2012 (the 2012 proceedings). The 2012 proceedings weregoverned by the (now repealed) District Courts Rules 2009 (DCR). After EA wasserved with the notice of claim under r 2.10 of the DCR, she complained about the feesto the New Zealand Law Society.1 That was in May 2012. This had the effect ofstaying the 2012 proceedings until the complaint was finally disposed of.2The complaint was finally determined on 23 February 2015, but theStandards Committee did not certify the amount due to be paid to the practitioner.The statutory stay was lifted at that time. This meant that the time periods prescribedby the DCR for progressing the proceedings recommenced.[3] EA's solicitors advised Rennie Cox in May 2015 that EA disputed liability forthe amount claimed on behalf of the barrister and the basis for that dispute.EA's solicitors asked to be advised if any further steps were to be taken.[4] Because no further steps were taken, the 2012 proceedings came to an end andwere treated as having been discontinued on or about 19 May 2015 by operation ofr 2.39.4 of the DCR.3 Rennie Cox could have issued fresh proceedings at that stagebut did not do so.4[5] Rather than engaging with EA's solicitors on the substance of the dispute, orissuing fresh proceedings, Rennie Cox applied on 16 June 2015, without notice to EA,for judgment by default under r 2.39 and an extension of time to make that applicationrelying on r 1.18 of the DCR. This rule is important in the present context because,unusually, it permits an extension of time being granted after the proceedings are1 Lawyers and Conveyancers Act 2006, s 132(2).2 Section 161(1).3 See EA v Rennie Cox Lawyers [2018] NZCA 33, [2018] 3 NZLR 202 at [35].4 District Courts Rules 2009, rr 2.39.4 and 2.17.5.deemed to have been discontinued and are treated as having come to an end. This rulerelevantly reads:1.18 Extending and shortening time1.18.1 The court may, in its discretion, extend or shorten the time allowed bythese rules, or fixed by any order, for doing any act or taking anyproceeding or any step in a proceeding, on such terms (if any) as thecourt thinks fit in the interests of justice.1.18.2 The court may order an extension of time although the application forthe extension is not made until after the expiration of the time allowedor fixed.1.18.2A To avoid doubt, a proceeding does not come to an end just becausethe time allowed by rule 2.10, 2.14, 2.17, 2.39A, 2.47, or 3.40 or anyother rule for taking any action in that proceeding expires, if that timeis later extended under rule 1.18.2.[6] In making the ex parte application for an extension of time and for defaultjudgment, the barrister then acting for Rennie Cox (not Mr Bryers) did not advisethe District Court of the correspondence with EA's solicitors in May 2015 and hemisled the Court by stating incorrectly that the outstanding fees could no longer bedisputed following the Law Society process.[7] Judge G M Harrison granted an extension of time and entered defaultjudgment against EA on 21 August 2015. EA applied to have the judgment set asidebut this was declined by Judge Gibson on 29 April 2016.5 Judge Gibson subsequentlyawarded increased costs to Rennie Cox.6 EA appealed to the High Court. The appealwas allowed in part by Lang J on 13 January 2017.7 The default judgment was variedto exclude interest and the costs orders made by Judge Harrison and Judge Gibsonwere set aside. The appeal was otherwise dismissed. On 26 April 2017, Lang J grantedleave for a second appeal.85 Rennie Cox Lawyers v EA [2016] NZDC 7359.6 Rennie Cox Lawyers v EA [2016] NZDC 9587.7 EA v Rennie Cox Lawyers [2017] NZHC 5.8 EA v Rennie Cox Lawyers [2017] NZHC 770.[8] This Court allowed the appeal on 5 March 2018 finding that the judgment hadbeen irregularly obtained and should not have been entered on the Court record.9This Court concluded by saying:[47] For the reasons given, the judgment was irregularly obtained.[Rennie Cox] was not entitled to judgment by default without notice to [EA]and without proving its claim. The judgment was procured bymisrepresentation and through an inexcusable lack of disclosure. Had theCourt not been misled, the judgment would not have been entered. It cannotbe allowed to stand. To find otherwise would be to reward [Rennie Cox] forthe improper conduct of its counsel and deprive [EA] of her right to defendthe claim on its merits. We are satisfied that the wrongful entry of judgmenthas resulted in a miscarriage of justice and the only proper course is to setthe judgment aside.[9] Rennie Cox promptly applied to the District Court on 23 March 2018 fordirections for the future conduct of the 2012 proceedings. On 1 November 2018,Judge Harrison granted Rennie Cox's application for an extension of time for EA tofile a response to the claim and he made other timetable directions as sought byRennie Cox.10 The Judge considered it was appropriate to extend time having regardto the following four matters:11(i) EA has never filed a response to the claim nor any form of defence,and yet she clearly disputes the amount claimed.(ii) The standards committee dismissed EA's complaints in its decision of14 February 2014 which was confirmed by the decision of the LCROin a decision of 23 February 2015.(iii) The provisions of the Lawyers and Conveyancers Act 2006 prohibited[Rennie Cox] from proceeding with the claim until the complaintsprocedure had been finalised.(iv) [Rennie Cox] is entitled to a proper hearing on the merits of the claim.[10] EA appealed to the High Court against these orders. In a judgment deliveredon 6 December 2019, Palmer J allowed the appeal and quashed the timetable orders.12The Judge considered that three of the four considerations taken into account inthe District Court were "dubious" — (i), (ii) and (iv) above — and the last was also"conclusory and assumes the answer to the question in issue".139 EA v Rennie Cox Lawyers, above n 3.10 Rennie Cox Lawyers v EA [2018] NZDC 21916 [District Court judgment].11 At [29].12 EA v Rennie Cox Lawyers [2019] NZHC 3191 [High Court judgment].13 At [23].[11] Palmer J considered that the March 2018 application for directions was, ineffect, an application to revive the 2012 proceedings and that the limitation period hadexpired before that application was made. The Judge considered this was a highlyrelevant consideration.14 Given this and other relevant context, including the improperapplication for judgment by default on an ex parte basis without proper disclosure andthe lack of any explanation for the delay, the Judge did not consider the interests ofjustice favoured granting an extension of time. Nor did the Judge consider there werespecial circumstances, as required, that could justify an extension of time beinggranted.15 The Judge concluded by saying:16But no substantive explanation of the delay was provided. And the effect ofthe application is to evade the purpose of the strict deadlines in the rules andthe purpose of the limitation period prohibiting new proceedings of this age.A procedural extension of time under the District Court Rules cannot beallowed to revive a proceeding in those circumstances. It is now too far outof time under both the rules and the Limitation Act 2010. Rennie Cox blewtheir chance to have the deadline extended, in 2015. The interests of justicedo not require they get another one.[12] Palmer J declined Rennie Cox's subsequent application for leave to bringa second appeal to this Court.17[13] On 17 March 2020, after the hearing of the leave application in the High Courtbut before judgment on that application, Rennie Cox commenced fresh proceedings inthe District Court for recovery of the fees (the 2020 proceedings). Rennie Coxcontends that these new proceedings were brought within time under theLimitation Act 2010 because, it says, the limitation period was suspended during thecurrency of the statutory stay under s 161 of the Lawyers and Conveyancers Act 2006.EA strongly disagrees with that contention.Grounds of proposed appeal[14] Rennie Cox now applies to this Court for leave to bring a second appeal againstthe decision on the application to extend time for taking procedural steps in the 2012proceedings. The grounds of the proposed appeal are:14 At [24].15 At [25]–[26].16 At [26].17 EA v Rennie Cox Lawyers [2020] NZHC 958 [Leave judgment].(a) In terms of s 161(1) of the Lawyers and Conveyancers Act, Rennie Coxwas unable to take any further steps in the 2012 proceedings between16 May 2012 and 23 February 2015. Rennie Cox seeks to argue onappeal that the limitation period under the Limitation Act was likewisesuspended during that period.(b) EA is estopped from relying on the Limitation Act because she obtainedan order for costs in the related relationship property proceedings basedin part on the work carried out by the barrister. Rennie Cox seeks toargue that by relying on the barrister's work to obtain the order for costsEA impliedly acknowledged the debt.(c) The High Court erred in interpreting this Court's judgment18 asmeaning that the 2012 proceedings had come to an end or were deemedto have been discontinued.(d) Alternatively, if the 2012 proceedings had come to an end or weredeemed to have been discontinued and an extension of time wasnecessary to permit EA to file a defence, the High Court erred in findingthat it was in the interests of justice to decline to grant that extension.Leave for a second appeal[15] Because this is an application for leave to appeal a decision in proceedingscommenced prior to 1 March 2017, the relevant leave provision is s 67 ofthe Judicature Act 1908. The test is well-established. Leave may be granted fora second appeal only where the proposed appeal raises some question of law or factcapable of bona fide and serious argument in a case involving some public or privateinterest of such importance as to outweigh the cost and delay of a further appeal.1918 EA v Rennie Cox Lawyers, above n 3.19 Waller v Hider [1998] 1 NZLR 412 (CA) at 413; and Cuff v Broadlands Finance Ltd [1987]2 NZLR 343 (CA) at 346–347.Proposed appeal ground (a) — limitation[16] Judge Harrison was uncertain whether the Limitation Act would preclude freshproceedings being issued.20 However, he appeared to take this potential problem intoaccount as a reason for granting an application for an extension of time in the 2012proceedings.21 Palmer J considered this was plainly wrong.22 Assuming the 2012proceedings had come to an end and were deemed to have been discontinued byoperation of the DCR in May 2015 (and had not subsequently been revived),an application made in 2018 for a retrospective extension of time to revive thatdiscontinued proceeding could not properly be granted to overcome the expiry ofthe limitation period in 2017.23 In oral argument before us, Mr Bryers, forRennie Cox, did not appear to contest this as a matter of principle. Rather, he arguedthat the limitation period did not expire in 2017 (contending that the limitation periodwas extended for the duration of the stay relying on Bell v Gosden24) and accordinglythe 2020 proceedings were brought within time.[17] We do not consider this proposed ground of appeal meets the high thresholdfor the grant of leave for a second appeal for the following reasons.[18] EA did not plead in response to Rennie Cox's application for an extension oftime that such orders could not be made because the limitation period had expired.As a result, the District Court did not address this issue directly. This Court would notnormally grant leave for a second appeal on an issue that had not been pleaded ordetermined at first instance unless this was required in the interests of justice.[19] If Mr Bryers is correct about the limitation period having been extended, thenthe 2020 proceedings were brought within time. In that case, whether the 2012proceedings could be revived (assuming they needed to be) is of little practicalconsequence. On the other hand, if Mr Bryers is wrong on the limitation point, then,as Palmer J observed, that factor could not justify orders being made in 2018 to revive20 District Court judgment, above n 10, at [11].21 At [29].22 High Court judgment, above n 12, at [23].23 Assuming the stay did not suspend time running, the limitation period would have expiredprogressively from July to December 2017, being six years after the monthly invoices became duefor payment.24 Bell v Gosden [1950] 1 All ER 266 (CA).the 2012 proceedings after the limitation period had expired (again assumingthe proceedings needed to be revived). Thus, the critical issue for present purposes isnot the limitation issue but rather whether the 2012 proceedings came to an end inMay 2015 and had not been revived prior to the making of the timetable orders inNovember 2018.[20] If the 2012 proceedings are not allowed to proceed (either because leave isdeclined, or the substantive appeal is dismissed), the limitation issue will be pleadedand determined in the 2020 proceedings. We do not consider it would be appropriateto grant leave for a second appeal in the 2012 proceedings to determine an issue thatis critical to the 2020 proceedings, but which has not yet been pleaded or consideredin that context. The 2020 proceedings are not before us.[21] We wish to emphasise that nothing in this judgment should be taken asan endorsement of Mr Bryers' contention that the limitation period was extended forthe period of the stay. In the circumstances, it is appropriate that we refrain fromexpressing a view about that.Proposed appeal ground (b) — estoppel[22] This proposed ground does not raise any issue of general or public importance.It is entirely fact-specific. Moreover, like the previous ground, it has yet to be pleadedor considered at first instance. It can be addressed in the context of the 2020proceedings, assuming the principal limitation issue cannot otherwise be overcome.Proposed appeal ground (c) — interpretation error[23] We do not consider this proposed ground raises any question of general orpublic importance. Whether it raises an issue of sufficient private importance to justifythe grant of leave for a second appeal is most conveniently considered under the nextground.Proposed appeal ground (d) — error in assessment of interests of justice[24] The 2012 proceedings came to an end by operation of the DCR in May 2015.The High Court judgment proceeds on the basis that the proceedings remained at anend until the timetable orders were made in November 2018 and Rennie Cox had givenno explanation for the intervening delay. However, this does not take account of themany steps that were taken in those proceedings by both parties after time wasextended under r 1.18 following Rennie Cox's application in June 2015 resulting in atleast seven judgments prior to the March 2018 application being filed.25[25] As the attached chronology shows, there has been no material delay by theparties and the explanation for it is a matter of court record. The proceedings remainedon foot throughout this period after the initial extension of time was granted andthe default judgment entered. It may also be worth noting that after judgment wasentered in August 2015, Rennie Cox was not at liberty to issue new proceedingsbecause the cause of action had merged in the judgment. That remained the positionuntil March 2018 when the judgment was set aside.[26] The High Court judgment, in effect, summarily struck out the proceedingsafter the parties had been actively pursuing resolution of them, without pause, forsix years from 2012 to 2018, no doubt at considerable cost to both sides. The resultof the High Court judgment is that Rennie Cox is deprived of the opportunity to haveits claim determined on its merits (subject to the 2020 proceedings being brought intime). In setting aside the default judgment in March 2018, this Court was concernedthat EA would otherwise be deprived of her right to defend the claim on its merits.26This Court did not anticipate that the effect of setting aside the default judgment wouldbe to deprive both parties of their right to have their dispute determined by the courton its merits.[27] It is regrettable that the grant of leave for a second appeal will inevitably resultin further cost and delay. However, this must be balanced against the amountthe parties have already invested in the dispute over a period of six years inthe expectation that the claim would be determined by the court. The courts will notlightly deny parties their right of access to the courts to resolve genuine disputes, asthis one is. In all the circumstances, we consider the proposed appeal raises an issue25 The six judgments referred to in [7]–[8] and further directions made by Judge Hinton on19 January 2016 granting name suppression: RC v EA District Court North Shore CIV-2012-044-491, 19 January 2016 [Directions of Judge Hinton].26 EA v Rennie Cox Lawyers, above n 3, at [47].of sufficient public and private importance as to outweigh the cost and delay ofa further appeal.Result[28] The application for leave to bring a second appeal is granted.Solicitors:Rennie Cox Lawyers, Auckland for ApplicantFriedlander & Co Ltd, Auckland for RespondentChronologyJune to November 2011 Invoices rendered29 March 2012 2012 proceedings filed11 May 2012 EA complains to NZLS4 October 2013 Costs assessor's report to Standards Committee14 February 2014 Standards Committee decides to take no action23 February 2015 Legal complaints review officer confirmsdecision of Standards Committee1 May 2015 EA's solicitors correspond with Rennie Cox5 May 2015 Rennie Cox responds19 May 201527 Proceedings end by operation of DCR (subjectto an order under r 1.18)16 June 2015 Rennie Cox applies for an extension of timeunder r 1.18 and for judgment by default21 August 2015 Extension of time granted and judgment enteredby default by Judge Harrison29 April 2016 Judge Gibson declines EA's application to setthe default judgment aside13 January 2017 Lang J varies the judgment but declines to set itaside26 April 2017 Lang J grants leave for a second appeal5 March 2018 This Court allows the appeal and sets the defaultjudgment aside23 March 2018 Rennie Cox applies to the District Court fordirections1 November 2018 Judge Harrison makes timetable orders6 December 2019 Palmer J allows EA's appeal and quashes the orders27 Judge Harrison calculated the date to be 26 May 2015. The difference is immaterial.