Moeau v Ngametua [1992] CKCA 6; CA 09.1985 (2 July 1992)

IN THE COURT OF APPEAL OF THE COOK ISLANDS
HELD AT AUCKLAND
C.A.9/85
P.C. 1/88

BETWEEN

METUA MOEAU
APPELLANT

AND

NGAMETUA and TAIMAU
RESPONDENTS

Coram: McMullin JA (Presiding)
Speight JA
Barker JA

Counsel: W.D. Baragwanath Q.C. for respondent in support
J.A. Farmer Q.C. for appellant to oppose

Hearing: 23 April 1992
Judgment: 2 July 1992

JUDGMENT OF THE COURT DELIVERED BY BARKER JA

On 26 July 1992, this Court (Roper, Quilliam and O’Regan JJA) gave judgment in favour of the present respondents who had appealed from an order of Speight CJ made on 20 November 1985. The order of Speight CJ, made pursuant to s.390A of the Cook Islands Act 1915, adopted a report made by Dillon J under S.309A(3) of that Act concerning title to certain land known as Te Arakura Section 83A and B.1, 2 and 3 Arorangi. The Rarotongan Hotel is partially situated on the land in question.

In a judgment dated 1 March 1989, this Court (McCArthy, Roper and Quilliam JJA) gave conditional leave to the present appellant to appeal to the Judicial Committee of the Privy Council. The reasons for judgment recorded that (a) security for appeal was fixed at $100 to be entered within 3 months; and (b) the parties had agreed that there was no need for any larger sum. By consent on 31^st January 1991, final leave to appeal was given by this Court. The Order granting final leave to appeal was sealed; it is not clear whether the order granting conditional leave was sealed.

In accordance with the conditions recorded in the judgment giving conditional leave, the record was completed and dispatched to London, where it is now held by the appellant’s agents ready for filing at the offices of the Judicial Committee. The record has not there been filed to date.

The present application before this Court, brought by the present respondents, seeks an order reviewing the consent order for security for costs upon the grounds that the respondents never agreed to the making of such an order; an alternative application is that security for costs be fixed at $2,000; i.e. maximum amount permitted, fixed by R.5(a) of the 1910 New Zealand Privy Council Rules which are applied to the Cook Islands by S.2 of the Privy Council (Judicial Committee) Act 1984. The appellant has an alternative application to freeze the sum of $90,000 which is being held in a trust account as the proceeds of the rent from the land in dispute.

The real issue concerns an arrangement entered into by the respondent’s then counsel, Mr. V.A.K.T. Ingram, with the solicitors for the appellants that the costs of both parties before the Judicial Committee would be paid out of the accumulated rents, regardless of the outcome of the appeal, this alleged arrangement was the basis on which the costs of both parties were paid on the appeal to this Court and for fixing a nominal sum as security for the subsequent appeal. The costs of preparation of the record and dispatch to London have already been paid from this source.

The respondents assert that Mr. Ingram (who was acting as counsel not as solicitor) did not have their authority to enter into any arrangement whereby the costs of both parties on the Privy Council appeal would be met out of the rents; they claim that by virtue of the decision of this Court, these funds are theirs and that if the appellant wants to appeal further he should pay for this out of his own resources.

Affidavits were filed on behalf of the respondents and other indicating that Mr. Ingram did not have their authority to enter into the agreement. Mr. Ingram has filed an affidavit to the contrary effect. That affidavit was received shortly before the hearing in Auckland. The respondents who live in Rarotonga had no practical opportunity of replying to it. There is no suggestion that the appellant or his lawyers knew of any limitation on Mr. Ingram’s authority to make the arrangement.

Counsel for the respondents sought an adjournment of the hearing of the applications to enable affidavits to be filed in reply to Mr. Ingram’s affidavit and, if necessary, for the issue to whether he had the necessary authority be resolved as a question of fact by this Court.

If the matter fell to be determined on the basis of whether Mr. Ingram had authority in fact, then there would have to be a further hearing, possibly with cross-examination on his affidavit. However, with the agreement of both counsel we heard argument as to Mr. Ingram’s arrangement, whether or not he had authority to make it from his clients, was within the implied authority of counsel and whether the Court should interfere. If it were, then there would be no necessity to conduct a hearing within counsel’s authority to determine the facts. Such a hearing would have to take place in the Cook Islands because of the number of local deponents who would have difficulty in coming to New Zealand. There would inevitably be delay and considerable expense in arranging such a hearing and assembling a Court. We note that the appeal is ready to be set down for hearing before the Judicial Committee. Presumably a reasonably early fixture can there be obtained.

The law on the implied authority of counsel is summarized in 3 Halsbury (4 the Ed) 517-521 thus-

"(518) Implied authority of Counsel. Apart from such express authority as is conferred by his instructions, a barrister is ordinarily instructed on the implied understanding that he is to have complete control over the way in which the case is conducted. Unless and until his instructions are withdrawn, counsel has, with regard to all matters that properly related to the conduct of the case, unlimited authority to do whatever he considers best for the interests of his clients. This authority extends to all matters relating to the action, including the calling and cross-examination of witness, challenging a juror, deciding what points to take, choosing which of two inconsistent defences to put forward, and even to agreeing to a compromise of the action, or to a verdict, order or judgment.

The implied authority of counsel to agree a compromise is limited, however, to the issues in the action, and a compromise affecting collateral matters will not bind the client unless he expressly assents."

The situation where counsel had compromised in excess of express authority is covered by Para 520-

"Compromise in excess of authority. Questions of difficulty have risen where the authority of counsel to compromise a case has been expressly limited by the client, and counsel has entered into an agreement or consented to an order or judgment in spite of the dissent of the client, or on terms differing from those which the client authorized.

If the limitation of authority is communicated to the other side, consent by counsel which exceeds the limits of his authority will be of no effect. The position is more uncertain where the authority of counsel is limited, but the limitation is unknown to the other side, who enter into the compromise believing that the opponent’s counsel has the ordinary unlimited authority. Counsel has an apparent or ostensible authority, at least as wide as his implied authority, to compromise an action; and in some cases, where the matter is within the apparent authority of counsel, the Courts have refused to inquire whether there is any limitation, when it was not communicated to the other side, and have refused to set aside a compromise entered into by counsel.

The true rule seems to be, however, that in such case the court has power to interfere; that it is not prevented by the agreement of counsel from setting aside the compromise; that it is a matter for the discretion of the court; and that when, in particular circumstances of the case, grave injustice would be done by allowing the compromise to stand, the compromise may be set aside, even though the limitation of counsel’s authority was unknown to the other side. It may be, however, that the court will not interfere on this ground if the compromise has been embodied in an order of the court which has been perfected."

The Court will be slow to interfere and should view applications to do so with extreme caution. See Marsden v Marsden [1972] 2 ALL ER 1162, 1165 Per Watkins J. The learned Judge in that case approved the above quotation from the previous addition of Halsbury which was not materially different from that quoted above.

There is a distinction between cases such as the present where there was no express veto by the client to a course of conduct and cases where there was. There is a further distinction where the lack of or limit to counsel’s authority was not communicated to other side which entered into an arrangement in good faith.

In Neale v Gordon Lennox [1902] UKLawRpAC 38; [1902] AC 465, the House of Lords held that counsel had no authority to refer an action to arbitration against the wishes of the client or upon terms different from those specifically authorized by the client. Lord Brampton at page 472 summarized the situation thus -

"I have rarely heard anything more preposterous to my mind than the notion that a suitor can imposed no effective veto upon a course proposed to be taken by his or her counsel which rightly or wrongly in his or her judgment will operate most prejudicially to his or her interests in an action and possibly to the ruin of his or her character."

Lord Brompton’s comments were adopted by the New Zealand Court of Appeal in Waitemata City v MacKenzie [1988] NZCA 142; [1988] 2 NZLR 242, 249. The Court accepted, following Neale v Gordon Lennox (supra), that whilst there are obvious reasons for upholding the inviolability of sealed consent order, the Court retains an inherent jurisdiction to do so where the order was obtained without authority or as a result of a mistake where the interests of justice so require.

In the present case there is no suggestion of any specific instructions which had been ignored by Mr. Ingram. At best for the respondents all that can be said is that he has no authority to make the costs agreement. Nor was any limit on his authority communicated to the appellant which entered into the arrangement in good faith. On the strength of the arrangement, the appellant has printed the record and instructed London agents in readiness for an early hearing of the appeal.

Accordingly, in the exercise of our discretion, we decline to do so. We consider that an arrangement as suggested concerning the costs of the Privy Council appeal was within the normal authority of counsel and therefore binding on the respondents. We note that, although the respondents are said to be in poor circumstance, if they succeed on the appeal, they will be confirmed in an important right which will enure to their advantage for a long time; moreover, the issues is of some public importance in the cook Islands. Of course we are unable to express any view on the conflicting affidavits as to the true extent of Mr. Ingram’s authority. It is not necessary to do so. The appeal is ready to be heard in London and the hearing should not be delayed any further.

The respondents’ applications to vary the order for security for costs is therefore dismissed. It should not be necessary to make a formal order freezing the funds which must continue to be held by the stakeholders. Liberty to counsel to apply by memo is reserved in case such an order is necessary. We noted some argument as to the validity of meetings of the landowners. It is unnecessary to refer to these, because a freezing order can be made under the Court’s general powers to preserve subject-matter.

We make no order as to the costs of the present application; we invite the parties to co-operate in obtaining an early hearing before their Lordships.

BARKER JA

Solicitors: Clarkes, Rarotonga, for appellant
M.C. Mitchell, Rarotonga, for respondents