THE NEW ZEALAND TAMIL SOCIETY INC V KIELY THOMPSON CAISLEY HC AK CIV-2011-404-000160

THE NEW ZEALAND TAMIL SOCIETY INC V KIELY THOMPSON CAISLEY HC AK CIV-2011-404- 000160 6 September 2011IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYCIV-2011-404-000160BETWEEN 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 GNANAKUMAREighth RespondentAND NATHAN SAMINATHANNinth RespondentAND YHOGESWARAN INTHIRANTenth RespondentAND PATHMANATHAN ARVINTHANEleventh RespondentAppearances: C S Henry for AppellantM K MacNab for First RespondentG B Presland for Seventh and Eleventh RespondentsJudgment: 6 September 2011 at 5:00 PMJUDGMENT OF COURTNEY JThis judgment was delivered by Justice Courtneyon 6 September 2011 at 5:00 pmpursuant to R 11.5 of the High Court RulesRegistrar / Deputy RegistrarDate:Counsel: C S Henry, P O Box 616, Orewa 0946Email: chenry.barrister@xtra.co.nzM MacNab, Email: moira.macnab@clear.net.nzG S Presland, Email: greg.presland@mylawyer.co.nzIntroduction[1] In 2007 the New Zealand Tamil Society Inc (the Society) commenced proceedings against certain of its members. The proceedings arose from a bitter internal disagreement as to whether the Society's funds should be spent locally or whether they could be used to support Tamil interests overseas. The Society was represented by Mr Gilchrist as counsel. Mr Kiely of the firm Kiely Thompson Caisley (KTC) was the solicitor on the record but Mr Kiely's engagement wasarranged by Mr Gilchrist and he had no direct contact with the Society.[2] Mr Gilchrist continued to act for the Society until December 2007 when the entire Executive Committee from whom he had previously taken instructions resigned. He filed a memorandum advising the Court that he no longer had instructions and in February 2009 was given leave to withdraw. After control of theSociety's affairs passed from the members of the Executive Committee who had instigated the proceedings to the other faction of the members the Society refused to pay Mr Gilchrist's fees outstanding fees.[3] In District Court proceedings KTC sought to recover Mr Gilchrist'soutstanding fees from the Society and the Society sought indemnity from the members who had engaged Mr Gilchrist. Judge Gittos held that the Society was liable for costs incurred up to 22 August 2007 ($41,445.40) but not the fees rendered after that date (19,605.38).1 The date of 22 August 2007 was significant because on that date Baragwanath J had made orders affecting the Society's future financial management, including that expenditure could only be incurred with the prior approval of a committee comprising two nominees each from the plaintiff and defendants, and approval for Mr Gilchrist's fees had never been given. Judge Gittos also dismissed the Society's claim for indemnity against the third parties.[4] The Society has appealed the judgment, alleging various errors by the Judge. Its position can be summarised as follows:(a) KTC cannot sue for the fees because s 140 of the Law Practitioners Act 1982 (then in force) is not satisfied. In particular, the Society was1 DC Auckland CIV-2009-004-000868, 2 December 2010.not the client, the fees are not payable by KTC, the work was not doneon KTC's instructions and the work was not done in relation to the Society's affairs (this last point overlaps with the next issue). The Judge was therefore wrong to find that KTC was engaged by the Executive Committee of the Society to act for the Society;(b) If members of the Executive Committee did engage KTC they did so without authority and Mr Gilchrist was not entitled to rely on their apparent authority. The Judge was therefore wrong to find that thevalidity of the Executive Committee's decisions could not beimpugned and that Mr Gilchrist was entitled to rely on the rule inTurquand's case; and(c) If members of the Executive Committee did engage KTC without authority they are liable to indemnify the Society to the extent that it is liable for the fees and the Judge was wrong to find that the Executive Committee was not liable.[5] KTC has cross-appealed the Judge's decision rejecting its claims for the fees rendered after 22 August 2007. The various grounds of cross-appeal as they were argued can be summarised as being that the Judge:(a) Wrongly interpreted Baragwanath J's orders as having the effect of terminating the previous valid instructions given by the Society;(b) Wrongly held that Mr Gilchrist was not entitled to rely on the rule inTurqaund's case in respect of work undertaken after 22 August 2007;(c) Failed to consider KTC's alternative claim brought on a quantum meruit basis.[6] The principles that apply to a general appeal of this kind are those set out inthe Supreme Court's decision in Austin, Nichols & Co Inc v Stichting Lodestar.2 It is for the appellants on the appeal and cross-appeal respectively to demonstrate that the2 Austin, Nichols & Co Inc v Stichting Lodestar [2007] NZSC 103; [2008] 2 NZLR 141.decision of the District Court is wrong. If I am satisfied as to that, it falls to this Court to undertake a fresh assessment of the issues.Does KTC meet the requirements of s 140 Law Practitioners Act 1982?The issues[7] A barrister cannot sue for his or her fee.3 However, pursuant to s 140 of the Law Practitioners Act 1982, which applied at the relevant time4 the barrister'sinstructing solicitor may sue for the fee:A solicitor may sue for and recover from the party chargeable any fees paid or payable by the solicitor to a barrister for work done or to be done on theinstructions of the solicitor in relation to the client's affairs, if those fees areshown as a disbursement in a bill of costs rendered by the solicitor to the party chargeable.[8] The Society asserts that the prerequisites contained in s 140 are not satisfied and KTC is therefore precluded from suing. First, the Society must be "the party chargeable" for the fees and it maintains that, as there was no contract of retainer between it so it is not the party chargeable. KTC rejects this argument and says that there was a contract of retainer arranged by Mr Gilchrist.[9] Secondly, the fees must be either "paid or payable by the solicitor to the barrister". The Society says that KTC was not liable to pay the fees and therefore cannot sue. KTC submits that, because it had a professional responsibility to pay the fees, they were "payable" by it for the purposes of s 140.[10] Thirdly, the work must have been done "on the instructions of the solicitor".The Society says that there was no evidence of KTC instructing Mr Gilchrist to undertake any of the work he did but KTC submits that the nature of the relationship meant that it did so in a general way and that is sufficient.[11] Fourthly, the work has to be "in relation to the client's affairs". The Society maintains that the instructions given to Mr Gilchrist were not authorised. This is because the meeting at which the decision to engage Mr Gilchrist was made was invalid as proper notice of the meeting was not given to certain members of the3 Lai v Chamberlain [2006] NZSC 70 at [15] citing Thornhill v Evans (1742) 2 Atk 330 at 332.4 This Act was repealed as of 1 August 2008 by s 349 Lawyers and Conveyancers Act 2006.Society. KTC maintains that the decision is to be treated as valid because it is one that would inevitably have been made even if the requisite notice had been given.[12] Finally, the fees must be "shown as a disbursement in a bill of costs renderedby the solicitor". The Society contends generally that this condition was not fulfilled. That is correct; invoices were rendered directly to the Society and copies sent to KTC. However, I do not consider that this alone would preclude KTC from suing for the fees and do not consider this point further.Was there a contract of retainer?[13] The first issue is whether there was a contract of retainer between the Society and KTC. The evidence as it was accepted by the Judge was that in early 2007 all but one of the members of the Executive Committee of the Society consulted Mr Gilchrist directly regarding an internal division between the Society's members.[14] The Judge heard evidence about that meeting from Mr Gilchrist and from three of the Executive Committee members present, Mrs Rajakumar, Mr Tharmakumar and Mr Sunthararajan. Mr Gilchrist's evidence, which wasconfirmed by the three other witnesses, was that he explained to the members of the Committee present that an instructing solicitor was required and, upon being told that the Committee did not have a solicitor in mind, suggested Mr Kiely of KTC. He was instructed by the members of the Committee to take the steps necessary to engage Mr Kiely on their behalf. Mr Gilchrist gave evidence that he telephoned Mr Kiely about the matter and in late April 2007 followed the telephone call up with a letter.[15] Mr Gilchrist and the Committee members were cross-examined at somelength about this meeting and about Mr Gilchrist's communications with Mr Kiely. The Judge accepted their evidence and found that KTC was engaged as solicitor, albeit through the agency of Mr Gilchrist:[20] although no evidence was given directly by Mr Kiely, it is idle tosuppose that he, or the plaintiff firm, would have undertaken these responsibilities unless satisfied that they had proper instructions to do so. That such instructions were seen in fact to have come through the agency of the barrister concerned is undeniable, yet that is not in itself improper. The solicitors themselves have evidently felt confident to act upon instructions so derived. That there was a proper basis for them to do so is demonstrated bythe evidence of Mr Gilchrist and of Mrs Rajakumar, Mr Tharmakumar and Mr Sunthararajan [23] this evidence satisfies me on the balance of probabilities that the plaintiff firm was in fact engaged by the committee headed by Mrs Rajakumar to act as solicitor for the defendant society, such arrangement having been contracted through the agency of Mr Gilchrist.[16] Mr Henry, for the Society, submitted that the evidence did not support this finding. He pointed to the fact that there was no evidence given from any member of KTC, that KTC had no contact or communication with the Society and that there was no evidence of terms on which KTC might act for the Society.[17] Mr Henry relied on the requirement of sufficient certainty as to terms to establish a binding contract, citing Scammell v Ouston,5 Judge v Crown Leisure Ltd6and Wellington City Council v Body Corporate 51702 (Wellington).7 He also pointedto Mr Gilchrist's evidence in relation to the terms on which he maintained theSociety, through the actions of the Committee, had entered into a contract of retainer with KTC. These terms were "that counsel would charge a fair and proper fee for alllegal attendances that were undertaken on the defendant's behalf at their expressrequest with payment to be made on the 20th of the month following invoice". In later evidence Mr Gilchrist said that there was no discussion about being paid by the 20th of the month following. There was also evidence from Mrs Rajakumar that shedid not know what Mr Gilchrist's hourly rate was.[18] In my judgment, the evidence relied on by the Judge did support a finding that the members of the Society who consulted Mr Gilchrist were told that they required a solicitor and accordingly instructed Mr Gilchrist to arrange for KTC to assume that role, which he did. There was evidence from Mr Gilchrist that he would have discussed his hourly rate and the fact of oversight by the Law Society ofcounsel's fees in the event of a dispute meant that there was a mechanism fordetermining what a fair and proper fee would have been. In any event, given the clear intention to contract, the lack of specific agreement on matters such as the hourly rate or the time for payment would not preclude a contract of retainer being concluded. In Electricity Corporation of New Zealand Ltd v Fletcher Challenge5 Scammell and Nephew Ltd v Ouston [1941] 1 AC 251.6 Judge v Crown Leisure Ltd [2005] EWCA Civ 571 at [23].7 Wellington City Council v Body Corporate 51702 (Wellington) [2002] 3 NZLR 486 (CA).Energy Ltd, Blanchard J, delivering the decision on behalf of the Court of Appeal, said:8[58] The Court has an entirely neutral approach when determining whether the parties intended to enter a contract. Having decided that theyhad that intention, however, the Court's attitude will change. It will then do its best to give effect to its intention and, if at all possible, to uphold thecontract despite any omissions or ambiguities We agree with the way inwhich Anderson J expressed the position in Anaconda Nickel Ltd v Tarmoola Australia Pty Ltd (2000) 22 WAR 101 at pp132-133:I think it is fair to say, speaking very generally, that where the parties intended to make a final and binding contract the approach of the courts to questions of uncertainty and incompleteness is rather different from the approach that is taken when the uncertainty or incompleteness goes to contractual intention. Where the parties intended to make an immediately binding contract, and believe they have done so, the courts will strive to uphold it despite the omission of terms of lack of clarity; see Trustees Executors & Agency Co Ltd v Peters (1960) 102 CLR 537; Upper Hunter County District Council v Australian Chilling & Freezing Co Ltd (1968) 118 CLR 429; Meehan v Jones (1982) 149 CLR 571 [19] I am therefore satisfied that the evidence justified the Judge's finding that acontract of retainer existed between the Society and KTC.Are Mr Gilchrist's fees "paid or payable" by KTC?[20] Mr Henry argued that, even if a contract of retainer existed KTC could only sue for the fees if it had either paid the fees (which it had not) or if the fees werepayable by it. Mr Henry relied on KTC's admission that its internal accounts did notrecord any amount payable to Mr Gilchrist in relation to the Society's affairs and thefact that KTC had never openly stated that it was liable to Mr Gilchrist for the fees.[21] Ms MacNab, for KTC, relied on KTC's professional obligations imposed bythe then Rules of Professional Conduct under which an instructing solicitor was personally responsible for payment of the barrister's fee unless there was an agreement to the contrary. Rule 6.8 of the Rules of Professional Conduct for Barristers and Solicitors (6th edition, 2000) required that:A practitioner who instructs another practitioner in the role of counsel or in any other capacity in any matter shall, unless agreement to the contrary is8 Electricity Corporation of New Zealand Ltd v Fletcher Challenge Energy Ltd [2002] 2 NZLR 433 at[58].reached, become responsible personally for the prompt and full payment of the fee of the instructive practitioner.[22] That obligation is carried through into the current r 10.7 of the Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules 2008.[23] Solicitors who engage barristers and barristers who accept such instructions frequently make no express arrangements regarding payment because both parties know that the solicitor has a professional obligation to meet the barrister's fees. Inthe absence of any express arrangement to the contrary a barrister can expect that the solicitor will take steps to ensure that the fee is paid. The fact that the barrister does not press for payment until the solicitor has obtained the funds from the client does not alter this position.[24] I note that in Findlay v Webb Morice & Partners, an argument that the instructing solicitor had no obligation to the barrister and was therefore precludedfrom suing for the barrister's fees was rejected, even though the barrister and thesolicitor had agreed between themselves that the solicitor would not be responsiblefor payment of the barrister's fee.9Was the work done on KTC's instructions?[25] Mr Henry further argued that the work for which the fees were rendered was not done on the instructions of KTC. The general thrust of this argument was that,on Mr Gilchrist's evidence, he acted at the direction of the members of the Society who had engaged him and that he did not make any statement that would suggest he took his instructions from KTC. Mr Henry rejected the fact of Mr Kiely being the solicitor on the record as being sufficient to satisfy the requirement in s 140 that the work in relation to which a solicitor may sue for barrister's fees is work done "on the instructions" of the solicitor.[26] Mr Henry centred his argument on a narrow interpretation of what the phrase"on the instructions" means. But in the context of the relationship between aninstructing solicitor and a barrister the "instructions" that are given vary markedly.In some cases the instructing solicitor may be closely involved with the barrister's9 Findlay v Webb Morice & Partners HC Auckland AP82 SW99, 6 September 1999.work and provide very specific instructions. But it is equally common to find an instructing solicitor taking a lesser role. In those cases it is permissible for the barrister to have most or even all of the contact with the client regarding the litigation. Section 140 does not require that each specific piece of work undertaken by the barrister should have been the subject of instruction by the instructing solicitor.Were the members of the Executive Committee who engaged Mr Gilchrist authorised to do so?[27] The first letter purporting to authorise Mr Gilchrist to act was signed by only five of the Society's six-person Executive Committee. This was not significant in itself. But Mr Henry argued that the work Mr Gilchrist undertook was not authorised by the Society because the meeting of the Executive Committee at which the decision to write the letter was taken was invalid, and therefore Mr Gilchrist'swork was not undertaken in relation to the Society's affairs.[28] The meeting, held on 22 March 2007, was attended by the five members of the Executive Committee who later signed the letter. The sixth member, the committee secretary, Mr Kathiravel, was not present. This was because (being a member of the opposing faction) he had not been give notice of the meeting. At the subsequent Annual General Meeting on 28 April 2007, from which Mr Kathiravel and two other members of the Society were also excluded, a fresh committee was elected and resolved to instruct Mr Gilchrist in writing to continue acting for the Society. Mr Henry argued that that meeting, too, was invalid.[29] The Judge dealt with the argument as follows:[24] Mr Henry contends that the proceedings of the meeting areinvalid given that Mr Kathiravel was not notified of or present at the meeting. He further argues that the other committee members breached the principles of natural justice by denying Mr Kathiravel the opportunity to be heard about their concerns over his behaviour and their proposal to take legal advice as to these concerns.[25] With respect to that the plaintiff's position is that since the advicethat the committee was seeking had to do in large measure with actions with the President and remaining committee members believed Mr Kathiravel to be taking against the interests of the Society, it is idle to expect or require that his concurrence in the actions of the committee to seek legal adviceconcerning these matters should be required. The rules of the committee do not require that resolutions of the management committee be unanimous inorder to be binding. To the contrary, Article 8.6 of the Society's rulesprovides:The quorum for the meeting of the Executive Committee shall be a majority of the members of the committee.And further, in Article 8.8:The Executive Committee shall determine and regulate its own procedure at meetings.[26] In terms of the rules of the Society the Committee have power to direct the affairs of the Society by a majority decision. It has done so. Mr Kathiravel's dissenting presence would not have altered the outcome.[27] Similarly after the Annual General Meeting of 28 April 2007 the President and the entire committee elected by that meeting gave Mr Gilchrist instructions in writing to continue to act for the Society. Mr Henry, for the defendant, submits that the meeting was invalid, and election of the new Executive Committee at that meeting was likewise invalid, because Mr Kathiravel and two other members were excluded from the meeting.Again arguments about Mr Kathiravel's eligibility to attend do not need tobe explored, since from a pragmatic standpoint the evidence was quite clear that the outcome of the Annual General Meeting was entirely determined by postal votes, which were the majority of the votes cast. Even if Mr Kathiravel had been wrongly excluded from the meeting as is contended, the democratic outcome is not seen to have been thereby adversely impacted upon, and the validity of the election of the Management Committee determined by that meeting cannot be impugned.[30] Mr Henry submitted that the Judge confused the situation of a committee member not receiving notice of a meeting with a committee decision supported by a majority. He dismissed the relevance of Article 8.8 on the basis that if the meeting was invalid because it was not properly called then the Executive Committee had not in fact been convened and was not in a position to regulate its own procedure.[31] Mr Henry submitted that, for a meeting to be valid, all persons entitled to attend must be given proper notice of it. He relied on Khan v Ahmed,10 Young v Ladies Imperial Club,11 Campbell v Higgins12 and Lee v Lee's Benevolent Association of Canada.13 These cases are, of course, correct, as far as they go. However, in none of the cases is the rule known as the internal management rule,10 Khan v Ahmed [2008] NZAR 686 (HC) at [26] – [29].11 Young v Ladies Imperial Club [1920] 2 KB 523.12 Campbell v Higgins (1957) 3 FLR 317 at 327.13 Lee v Lee's Benevolent Association of Canada [2003] BCSC 1150.considered. It is likely that there were good reasons for this; for example, on the facts apparent on the face of the Khan v Ahmed judgment, it is unlikely that the rule would have applied.[32] The rule was explained by Chambers J in Barrett v Te Rununga O Ngati Pu Inc:14[27] The internal management rule which originated in company law, applies to incorporated societies: see Finnigan v New Zealand Rugby Football Union Inc [1985] 2 NZLR 159 at 172 and Turner v Pickering[1976] 1 NZLR 129 at 141. For cases in which the rule has been applied to societies in New Zealand, see Humphries v Auckland Tailoresses' etcIndustrial Union of Workers [1950] NZLR 380 at 387 and Swan v MasseyUniversity Students' Association [1972] NZLR 985 at 988-989. The internal management rule provides that no complaint may be brought in respect of an irregularity in the governance of a society where that irregularity could be cured by a simple majority of members. It represents an extension of the (common law) rule in Foss v Harbottle (1843) 2 HARE 461 which maintains that the proper complainant in an action for a wrong done to the company is the company itself. Irregularities which are ultra vires the corporation or which could be validly sanctioned only by special resolution or the like are outside the rule since in both cases the irregularity cannot be cured by a simple majority. Irregularities which constitute a fraud on the minority are an exception to the rule: see Prudential Assurance v Newman Industries (No 2) [1982] CH 204 at 210.[28] The reason for the internal management rule is obvious:If something has been done irregularly which the majority of thecompany are entitled to do regularly there can be no use in havinglitigation about it, the ultimate end of which is only that a meeting has to be called, and then ultimately the majority gets its wishes (MacDougall v Gardiner (1875) 1 ChD 13 (CA) at 25). The rule might also be explained on the basis that, in the absence of agreement to the contrary the members may be assumed to have agreed that the viewpoint of the majority will prevail in matters of internal governance. This explanation would be consistent with the idea that the relationship between members of a society is of a contractual nature (Abbott v Sullivan [1952] 1 KB 189 at 205) unless it is clear that no legal relations of any sort were intended between members: see Turner v Pickering (supra) at 141.[33] I consider that the Judge's approach on the issue of notice was correct. Nodoubt the failure to give Mr Kathiravel notice of the meetings was irregular. But it is also clear from the evidence that, even if Mr Kathiravel had been present, the majority decision would have been the same. As a result, it is not open to the14 Barrett v Te Rununga O Ngati Pu Inc [2002] NZAR 296 (HC).Society now to assert that the meeting was invalid, nor to argue that the committee members instructing Mr Gilchrist lacked authority.[34] The Judge considered that, in any event, Mr Gilchrist was unaffected by any lack of authority resulting from irregularity in decision to engage him by virtue of the rule in Turquand's case:[28] As between the Society and the plaintiff it cannot be realistically suggested that in the foregoing circumstances Mr Gilchrist should have been required to look behind the ostensible authority of the committee members who authorised him to act on behalf of the Society. He was clearly entitled to rely upon the so-called rule of indoor management (the rule in Turquand'scase) which has been considered, and where appropriate, applied in numerous cases involving incorporated societies in New Zealand, includingParininihi Ki Waitotara Block v Viking Mineral Company Ltd [1983] NZLR 406 and Broadlands Finance Ltd v Gisborne Aero Club Inc (in liquidation)[1975] 2 NZLR 496 cited by counsel by the plaintiff and Barrett v Te Rununga O Ngä Tipu Inc (unreported HC Hamilton CP52/00, 27 November 2001) cited by counsel for the third parties, where a helpful decision of the rule by Chambers J appears at para [27].[35] The rule in Turquand's case, drawn from the decision in Royal British Bank v Turquand,15 was explained by Lord Simonds in Morris v Kanssen:16The so-called rule in Turquand's case is, I think, correctly stated inHalsbury's Laws of England, 2nd ed, vol V, at p423:But persons contracting with a company and dealing in good faith may assume that acts within its constitution and powers have been properly and duly performed and are not bound to enquire whetheracts of internal management have been regular One of the fundamental maxims of the law is the maxim "omnia praesmuntur ritesa esse acta". It has many applications. In the law ofagency it is illustrated by the doctrine of ostensible authority. In the law relating to corporations its application is very similar. The wheels of business will not go smoothly round unless it may be assumed that that is in order which appears to be in order. But the maxim has its proper limits. An ostensible agent cannot bind his principal to that which the principal cannot lawfully do. The directors or acting directors or other officers of the company cannot bind it to a transaction which is ultra vires. Nor is this the only limit to its application. It is a rule designed for the protection of those who are entitled to assume, just because they cannot know, that the person with whom they deal has the authority which he claims. This is clearly shown by the fact that the rule cannot be invoked if the condition is no longer satisfied, that is, if he who would invoke it is put upon his enquiry.15 Royal British Bank v Turquand (1856) 6 E&B 327.16 Morris v Kanssen [1946] AC 459 at 474-475.He cannot presume in his own favour that things are rightly done if enquiry that he ought to make would tell him that they were wrongly done.[36] Mr Henry did not accept that the rule in Turquand's case applied in the present circumstances. He submitted that Mr Gilchrist had been put on enquiry as to whether the five members of the Executive Committee who came to see him were authorised to engage him on behalf of the Society. This had been the subject of cross-examination at trial:Q: I'm suggesting to you that you're aware that there was an internaldispute in the society?A: That's what the whole proceedings were about and those who nowrun the executive, not all of them but were effectively the defendants in High Court proceedings so I understand why they feel somewhat aggrieved that the organisation proceeded against them. At the end of the litigation because of what happened they turned up running the show and I can understand why they were up with the play.Q: And you took instructions from one of those factions?A: No I took instructions from what I understood to be the executive committee of the body that asked me to act for them and initially I saw five of a six-person executive who had direct complaints aboutthe sixth member so it was obvious why the sixth member wasn'tthere and a short time after my engagement there was an election an a new executive committee was elected albeit with some commonality between the two and all seven members of that new executive instructed me to act. I therefore thought, understood, believed that I was acting for the incorporated body through its duly elected executive.[37] I consider that Mr Gilchrist was entitled to view matters exactly as he did; it was obvious that there was dissension within the Society and that one Executive Committee did not agree with the remaining five. But Mr Gilchrist was entitled to expect that the majority was authorised to engage him and, for the reasons already discussed, it was.Are the members of the Executive Committee who engaged Mr Gilchrist liable to indemnify the Society?[38] On the basis that the members of the Executive Committee who engaged Mr Gilchrist had acted without authority the Society sought to be indemnified by those members to the extent of any liability it had to pay KTC. The Judge dealt with that issue as follows:[37] I turn to consider the position in relation to the third parties. On the facts as I find them to be there is no basis upon which the third parties or any of them should be required to indemnify the defendant society in respect to any of the costs incurred up to 22 August 2007 which I find the defendant society to be liable to pay. In my view the original management committee and the committee elected at the Annual General Meeting of 23 April (both under the presidency of Mrs Rajakumar) both acted properly within the constitutional arrangements of the defendant Society and bona fide in its best interests as they perceived them to be at the material times.[39] The Society maintained that, if the District Court Judge had been correct in finding it liable to KTC, then the respondents should nevertheless indemnify it.[40] In circumstances where, by virtue of the internal management rule, there can be no complaint about an irregularity in the conduct of the business of an incorporated society there is no basis on which to suggest that those responsible for the irregularity should indemnify the Society for costs incurred. Neither Mr Henry nor Mr Presland, for the respondents, referred me to any authority on this point. In the circumstances as the Judge found them (and with which I agree) there is no basis on which the Society could expect to be indemnified.KTC's cross-appeal – can KTC recover the fees rendered after 22 August 2007?The effect of the orders made by Baragwanath J[41] The Judge held that KTC could not recover fees rendered by Mr Gilchrist after 22 August 2007, that being the date on which Baragwanath J made the orders that required the approval of both factions of the Society for future expenditure. These orders had their origins in consent orders made by Randerson J on 23 July 2007. The Society (through the Executive Committee elected in April 2007) had applied for orders that the defendants not hold a Special General Meeting to resolve management issues and allow the Society access to its bank account, which had been frozen as a result of the disputes. Among the orders made by consent were the following:The present Executive Committee elected in April this year is to be responsible for the management of the Society until 31 August 2007 or such later date as may be ordered by the Court upon application.In the interim period so specified, no assets of the Society are to be disposed pending the further order of the court, other than the payment of usual trade creditors.[42] On 22 August 2007 Baragwanath J made further orders. In his minute the Judge recorded that:Counsel Mr Gilchrist for the plaintiff and Mr Henry for the defendants have advised me that they have authority to authorise the Court to make orders in terms of the typed draft which I will initial for the purposes of identification.[43] The orders were:All NZTS bank accounts are to be operated only on two signatures one being that of a nominee of the plaintiffs and the other being that of a nominee ofthe defendants. It is agreed that the plaintiffs' nominees are: L Gnanakumar and T Tharmakumar and the defendants' nominees are: K Kathiravel and DrS Basanthan All NZTS expenditure must have the approval prior to being incurred of a committee comprising two nominees each from the plaintiff and defendants.It is agreed that the plaintiffs' nominees are L Gnanakumar and T Tharmakumar and the defendants' nominees are S Sunrarajan and A Thevarajan.Any expenditure incurred post 22 August 2007 not approved by the committee referred to in para (d) above will require the approval of themembership at a general meeting [44] Mr Gilchrist continued to take instructions from the secretary of the Executive Committee until he received advice in December 2007 that the entire Executive Committee had resigned. He also rendered fees that related to communications with the banks, advice regarding the Verification Committee, advice regarding a complaint to the Law Society, corresponding with Mr Henry who acted for the other faction, communications with Mr Henry regarding alterations and variations to be sought to the court orders, attending telephone conferences with the High Court and reporting.[45] Judge Gittos considered that, knowing of the orders, Mr Gilchrist could not properly have thought that Executive Committee had authority to incur further legal costs after 22 August:[34] ... unfortunately the settlement reflected in the orders of 22 August 2007 did not put an end to the need of both parties for further legalassistance as Mr Gilchrist's evidence relates. It is plain, however, that fromthat point on the plaintiff could no longer properly have held the view that the incumbent Committee had the power to bind the Society in respect toongoing costs. The express provisions of the Court's orders obtained by thevery litigation which the plaintiff had been engaged to initiate made thatclear to all concerned. That order serves both to implicitly recognise the power of the incumbent Committee to bind the Society in respect to costs incurred prior to that date, and to circumscribe its authority to do so thereafter. There could be no room for the application of the internal management rule after 22 August 2007.[35] Had the plaintiff firm and Mr Gilchrist had their own interests to the forefront of their minds, rather than those of their clients, then no doubt some specific agreement payment of the ongoing costs by the Society would then have been sought from the court-appointed Committee and if such agreement was not forthcoming then they may perhaps have seen fit to canvass the members of the sitting Committee for personal commitment to meet such costs. As it is, the evidence indicates that Mr Gilchrist continued pragmatically to serve the interests of resolution of the dispute. It seems that neither he nor any member of the plaintiff firm, nor Mrs Rajakumar and the members of her Committee, turned their minds to the prospect that the Society could no longer be regarded as liable for such ongoing costs without the agreement of the court-appointed Committee or ratification by the membership in general meeting.[46] Ms MacNab submitted that the Judge wrongly interpreted the orders made by Randerson and Baragwanath JJ as having the effect of terminating the previously valid instructions of the Society on 22 August 2007. She suggested that, given thecircumstances in which the orders were made, (namely the obvious need for ongoinglegal work to advance and complete the proceedings and the fact that Mr Henry, whoacted for the other faction, continued to recognise Mr Gilchrist as acting for theSociety and to negotiate consent orders with him), it was obvious that neither theCourt nor the parties intended ongoing legal costs to fall within the scope of theorders.[47] I agree that Baragwanath J's orders did not have the effect of terminating Mr Gilchrist's instructions. It was inherent in the Court's management of the case that the proceedings were ongoing and that both parties expected that they would continue to be represented. But even if fresh instructions had been required, it is clear that such instructions were given, for Mr Gilchrist undertook further work with the knowledge of all concerned.Was Mr Gilchrist entitled to rely on the rule in Turquand's case?[48] It is evident from contemporaneous documents that agreement could not be reached on some accounts and that Mr Gilchrist had been advised of this and asked to take action. But there is no indication that there was any difficulty regardingMr Gilchrist's fees. In a memorandum for the Court of 15 November 2007, Mr Gilchrist referred to the problems in getting agreement to pay accounts without making any mention of his own fees rendered between August and November 2007:There are difficulties with the payment of routine accounts for the plaintiff organisation. The plaintiff has submitted cheques (and invoices) to the defendants. These include payments for rental and rates. The defendants have indicated that they will not sign those cheques until they get full financial information about the plaintiff organisation. Given that the accounts have been frozen, can only be actioned by signatures from both factions, and the bank account details have been separately available to the defendants, it appears that this is an action that is preventing the Society from functioning. The plaintiff is concerned about the unreasonable pressure that this is putting on them.And later:A commonsense and practical solution needs to be made for the approval of"routine" expenses. The plaintiff wants routine bills paid promptly. Thedefendants have been advised of all expenditure. They have access to the accounts and the account statements. They know there is sufficient money to meet the cheques that they are asked to sign. The non-payment of rent and rates puts the plaintiff organisation at risk of defaulting on its obligations causing damage to the plaintiff. The plaintiff believes that they are being putthrough unnecessary "hoops" with regard to the payment of routine expensesso as to negatively impact on the plaintiff organisation.(emphasis added)[49] Although Mr Gilchrist clearly knew that there were real problems in getting some bills paid there was no indication that those problems extended to his fees. I am satisfied that if any internal dispute over Mr Gilchrist's fees had been made known to him he would have commented on it in the same way as the bills for rent and rates. But there is no evidence of any issue being raised either by members of the Executive Committee or by Mr Henry, who was in direct communication with Mr Gilchrist.[50] The rule in Turquand's case applied in this situation and I do not consider that the mere fact the orders existed was sufficient to put Mr Gilchrist on notice to enquire whether the Society had approved his undertaking legal work for the Society. I therefore consider that the Judge erred in finding that Mr Gilchrist was not entitled to believe that approval for his ongoing engagement had been given.Quantum meruit[51] The alternative raised by KTC was that it should be entitled to succeed on a quantum meruit basis (it was not suggested that Mr Gilchrist himself could have brought such a claim. The Judge did not deal with the quantum meruit argument.[52] A quantum meruit claim, once based on an implied contract but generally now regarded as a restitutionary claim founded on unjust enrichment, provides a means for recovering the value of services in the absence of a contract that would support a claim for payment. Without resolving the difficulties that arise as a result of treating the claim solely as one based on unjust enrichment rather than implied contract, the Court of Appeal said in Morning Star (St Lukes Garden Apartments) Ltd v Canam Construction Ltd:17[50] We will not attempt to resolve the doctrinal dispute here. It is sufficient to say that there is general agreement that a plaintiff will be able to establish a quantum meruit claim where the defendant asks the plaintiff to provide certain services, or freely accepts services provided by the plaintiff, in circumstances where the defendant knows (or ought to know) that the plaintiff expects to be reimbursed for those services, irrespective of whether there is an actual benefit to the defendant.[53] It is plain that the Society (both the Executive Committee and the other faction) knew that Mr Gilchrist was continuing to undertake legal work for the Society and it is also clear that that work was required to be done. There is, however, a barrier to the application of quantum meruit in the present context, namely the rule (already discussed) that a barrister cannot sue directly for his fee. The only mechanism for the recovery of a barrister's fee at the time was s 140 of the Law Practitioners Act 1982. As discussed, the circumstances to which that section applies are narrow and specific; significantly, it is the solicitor who must claim. But there is no basis on which the solicitor, not having provided the services in issue, could claim in quantum meruit.17 Morning Star (St Lukes Garden Apartments) Ltd v Canam Construction Ltd CA90/05, 8 August2006.Result[54] The appeal is dismissed. The cross-appeal is allowed and judgment entered for the respondent for $19,605.38 together with interest at 5% from the date of the invoices.[55] Counsel may file memoranda on costs; by the respondents on the appeal and the respondent on the cross-appeal by 16 September 2011, in reply by 23 September 2011 and any response to the reply by 30 September 2011.____________________P Courtney J