News
When lawyers become witnesses
First published in NZLawyer on 20 March 2009.
Rules that prevent a lawyer from acting in proceedings where they are also giving evidence, as in the Waiouru medals case, have been given a wider application by recent changes to the Conduct and Client Care Rules.
The already high profile Waiouru medals trial may come to be as memorable for its cast of witnesses as for the original crime. Reportedly, the Crown is seeking to call TV3 journalists John Campbell and Carol Hirschfield as witnesses. Also on the Crown's witness list is Chris Comeskey, the lawyer who helped negotiate the return of the medals and who intended to represent one of the defendants. Unfortunately for Mr Comeskey, the intention of the Crown to call him as a witness has lead to the court ruling that he must not act on the case.
The new rules
So what happens when a lawyer wishes to act on a matter when he or she may be a witness in the same case? Recent changes to the Conduct and Client Care Rules have expanded the restrictions on lawyers in such circumstances. While few litigators will find themselves in situations as unique as negotiating for the return of stolen medals, the scope of the changes creates potential pitfalls of which all firms acting in litigation should be mindful. Failure to pay heed to the changes could result in a firm being compelled to cease acting, potentially at great expense to its client.
The Lawyers: Conduct and Client Care Rules 2008 state:
- 13.5.1 A lawyer must not act in a proceeding if the lawyer may be required to give evidence of a contentious nature (whether in person or by affidavit) in the matter.
- 13.5.2 If, after a lawyer has commenced acting in a proceeding, it become's apparent that the lawyer or a member of the lawyer's practice is to give evidence of a contentious nature, the lawyer must immediately inform the court and, unless the court directs otherwise, cease acting.
It is immediately apparent that the new rules are broader in scope than those they replace. Previously the restrictions applied only to those who were to appear as counsel in a proceeding and only where that lawyer was himself to give evidence. However, the new rules now apply to anyone who acts on a proceeding, even if they are not appearing as counsel, and also apply in cases where it is another member of the practice that is to give evidence.
What this means for lawyers
For many firms the implications are potentially significant. While most cases should not involve a lawyer having to give significant contentious evidence (if at all), the danger for firms is most likely to arise when acting for long standing clients. If the dispute involves a deal gone bad, it is entirely possible that a lawyer who was involved in discussions or negotiations with the other party may be called upon to give evidence. Even though this lawyer may work in a different department from that running the litigation, the firm could still find itself disqualified. Yet, it is that same history and involvement in the matter that will often make the firm the preferred choice for clients. Smaller firms may be unable to continue acting on longstanding matters in which they have been involved, even though they have instructed an independent barrister to appear in the proceedings.
Potential pitfalls for clients
The concern relates not only to the potential for lost business. If the issue is not identified early, a client may be disadvantaged by the requirement to seek new lawyers late in the proceedings. The costs of doing so could be sought by a disgruntled client on the grounds that the original lawyers should have identified the issue earlier.
What underpins the rules is the principle that a lawyer must be independent in any matter on which they act. There is an inevitable conflict between the lawyer's duty to his or her client and the role of a witness, who owes no duty to either party but only to the court. As a result, a lawyer's obligations to his client may be compromised by the duties the same lawyer faces as a witness. The rule against a lawyer acting as a witness therefore protects the lawyer against not only the appearance of a conflict, but the very real possibility of one.
Progress so far
Since the new rules came into effect, there have been two cases that have considered the expanded restrictions and which give an indication of how the courts will approach the issue.
The first case Pioneer Insurance Company Limited v Anderson & Anor (22 October 2008, CIV 2007-441-882, HC Napier, Gendall AJ) looked at whether a firm should be disqualified from acting because one of its solicitors, who was not acting on the matter in any capacity, would be giving evidence on her dealings (which included a series of conversations) with the defendant. Mindful of Rule 13.5, the plaintiffs applied to the court for an order that their lawyers be allowed to continue to act.
Hearing the application, Associate Judge Gendall considered the approach taken by the courts in previous cases when it was held that a litigant should not be deprived of his or her choice of lawyer without good cause. It was therefore an important factor that the plaintiff, who made the application, would suffer considerable prejudice if it had to seek new lawyers. Meanwhile the defendants did not object to the plaintiffs' solicitors continuing to act and there did not appear to be any serious prejudice to them. It was also noted that the lawyer who was to give evidence, would have left the firm by the time of trial. Considering these various factors, the associate judge was prepared to exercise his discretion to allow the plaintiffs' solicitors to continue to act.
Conversely in the case of Greenmount Manufacturing Limited v Southbourne Investments Limited (11 November 2008, CIV 2005-404-6675, HC Auckland, Doogue AJ) the court held that a lawyer could no longer act on the proceedings, even though counsel from the independent bar had been instructed to act and appear on the matter. The case involved a partner in a firm of solicitors who had acted on the underlying conveyancing transaction (which was now the focus of the dispute) and who was now the solicitor on the record. Given the involvement of independent counsel, the lawyer would most likely have been able to continue acting under the old rules. However, the associate judge held that the new rules created a presumption that he should not act, although the court did retain a discretion. Where this case differed from Pioneer is that the lawyer was actively involved in the proceedings, as solicitor on record, while his evidence would be at the heart of the dispute. The judge found that in such circumstances there could be no scope for the solicitor to continue acting, despite the significant inconvenience and expense to his clients. Such prejudice, while not trivial, could not justify an exemption.
These cases show the new rules have brought about a real change. Greenmount shows that the courts will give effect to that change, even in cases where a lawyer would previously have been allowed to continue acting. However, it is also clear that the courts retain a discretion about whether or not a lawyer may continue to act. The decision in Pioneer provides reassurance that where the apparent breach of the rules is slight or inconsequential, the courts will allow firms to remain on the record. As a result, all lawyers involved in litigation should be conscious of the potential issues so they can identify them as early as possible. If an issue does arise, firms should immediately advise their clients of the fact and the need to apply to the court for permission to continue acting. Doing so could avoid the inconvenience and cost of being disqualified later in the proceedings, benefiting both the client and the firm.
