Anderson v De Marco
[2020] NZHC 837
•18 March 2020
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE
CIV-2018-485-622
[2020] NZHC 837
BETWEEN NORMAN HUGH ANDERSON and REBECCA ALICE CARRASCO
PlaintiffsAND
EUGENE JOHN DE MARCO
Defendant
Hearing: 18 March 2020 Appearances:
S Dalzell and B Lambert for plaintiffs/respondents G Shand for defendant/respondent
Judgment:
18 March 2020
Reasons:
29 April 2020
REASONS FOR JUDGMENT OF ASSOCIATE JUDGE JOHNSTON
Introduction
[1] This is an interlocutory application by the defendant, Mr Eugene De Marco, for orders:
(a)For leave to apply after the close of pleadings date;
(b)For particular discovery;
(c)For leave to administer interrogatories;
(d)Joining third parties;
ANDERSON v DE MARCO [2020] NZHC 837 [29 April 2020]
(e)Debarring the plaintiffs’ solicitors from acting further in the proceeding; and
(f)Suspending the current pre-trial timetabling orders.
[2] All applications are opposed by the plaintiffs, Mr Norman Anderson and Ms Rebecca Carrasco.
[3] At the conclusion of the hearing on 18 March 2020 I delivered a short oral judgment granting Mr De Marco leave to apply, making certain directions in relation to discovery and dismissing Mr De Marco’s other applications.
[4] I indicated that I would give my reasons in writing, and I now do so. However, since the hearing, the country has been in lockdown as a result of the Covid-19 pandemic. As a result, aspects of my judgment, if not the entire judgment may have been rendered academic. I will of course reserve leave to the parties to seek clarification as necessary.
Background
[5]The background to the proceeding is straightforward.
[6] By written agreement dated 22 December 2017, Mr De Marco agreed to sell and Mr Anderson and Ms Carrasco agreed to purchase the former’s property at 13 Fortification Road, Karaka Bay, Wellington. Mr Anderson and Ms Carrasco paid a deposit of $120,000 (that being 10 per cent of the $1.2 million purchase price). The contract was subsequently confirmed. Prior to settlement, Mr Anderson and Ms Carrasco purported to cancel the contract on the basis of alleged pre-contractual misrepresentations and breaches of warranty. Mr De Marco subsequently purported to cancel the contract himself for repudiation. Mr Anderson and Ms Carrasco now sue to recover the deposit and consequential damages. Mr De Marco denies any allegation of misrepresentation or breach of warranty and is defending the claim. He counterclaims seeking a declaration that his purported cancellation was effective and seeks damages in the amount of the deposit.
Proceeding
[7] Mr Anderson and Ms Carrasco commenced their proceeding in August 2018. Mr De Marco entered his defence and counterclaimed in September 2018. The plaintiffs replied to the affirmative defences pleaded by Mr De Marco and entered a defence to his counterclaim in October 2018.
[8] The proceeding then followed an orthodox path with both parties providing discovery and taking other interlocutory steps. There was a round of amended pleadings in late 2019. On 20 November 2019 there was a final case management teleconference, at which the proceeding was set down for hearing and pre-trial directions made.
[9] In the meantime, the Crown had charged Mr De Marco with serious criminal fraud (entirely unconnected with the matters in issue in this case) which had led to a trial before Clark J and a jury in late 2019, at the conclusion of which Mr De Marco was convicted. On 5 December 2019 Clark J sentenced him to a period of imprisonment. He is currently serving his sentence. Understandably, over this time Mr De Marco was focussed on the criminal proceeding and this held up the progress of this civil proceeding. I record that the setting of this matter down for trial and the timetabling orders sought by the plaintiffs were opposed by Mr De Marco during the course of the 20 November 2019 teleconference on the grounds that it was difficult for him to give his solicitors proper instructions or for them to be able to prepare adequately for trial. The view I took was that the plaintiffs were entitled to proceed with their case, that Mr De Marco had had ample opportunity to instruct his solicitors in relation to this matter and on that basis I set the matter down. Finally, I record that, shortly before that teleconference, Mr De Marco had terminated the retainer of his original solicitors in this proceeding and engaged his current solicitors. They were faced with coming to grips with the case and seemingly reached different views as to the way in which the defence should be run.
[10] Neither the setting down of this matter over Mr De Marco’ opposition, nor anything in this judgment, should be taken as a criticism of Mr De Marco’s current solicitors or counsel.
Leave
[11] Mr De Marco needed leave to make this application, because the close of pleadings date has come and gone.
[12] On the basis that Mr De Marco should at least be entitled to an opportunity to argue the matter, I granted leave.
Discovery
[13] Since they were instructed in the matter, Mr De Marco’s current solicitors have identified certain categories of documentation which they say should have but have not been discovered by the plaintiffs. These were set out in the first schedule to the interlocutory application and I record this in full:
Conveyancing file(s) of Michael Hay and Paul Surridge in relation to the purchase of 13 Fortification Road, including time and trust account records.
All documents about the application for finance to purchase 13 Fortification Road including:
1 Finance application(s);
2 Loan offers(s);
3 Mortgages;
4 Bank statements showing available funds;
5 Trust account statement showing available funds.
Email or letter that accompanies any of the following reports/estimate provided 31 May 2018:
1BPL estimate 3 May 2011;
2CHI report 7 June 2011.
Unredacted invoices of Michael Hay and Dan Parker & Associates for work done on 13 Fortification Road.
[14] To take the first category of documentation as an example, Mr De Marco identifies that the plaintiffs originally instructed Mr Paul Surridge in relation to the sale and purchase transaction though subsequently Mr Michael Hay acted for them in the matter. As Mr Shand says, there is no discovery of Mr Surridge’s file, though
Mr Hay’s file has been discovered. There is an explanation for this. Although Mr Anderson and Ms Carrasco originally identified Mr Surridge as their solicitor on the sale and purchase agreement itself, Mr Surridge passed the matter on to Mr Hay who dealt with all aspects of the conveyancing. Accordingly, Mr Surridge did not have a file.
[15] In any event, I am satisfied that Mr Anderson and Ms Carrasco’s solicitors, Parker & Associates, are conscious of their clients’ responsibilities in relation to discovery and in the end all the Court can do is direct them to review their clients’ discovery having regard to the particular categories of documents identified by Mr De Marco in his schedule and, if, in the course of that review, it appears that any documentation which is relevant and discoverable has not already been discovered, arrange for a supplementary affidavit of documents to be sworn, filed and served.
[16] I directed that they do so within 10 working days of the date on which I delivered judgment, 18 March 2020.
Interrogatories
[17] In the second schedule to his application, Mr De Marco sets out the interrogatories he wishes to administer and I set these out in full:
NH Anderson & RA Carrasco
1.In relation to the agreement to purchase the property did you ever apply for finance
2.If the answer to 1 is yes:
(1)When did you apply for finance?
(2)To whom did you apply for finance?
(3)How much finance did you apply for?
(4)What was the decision on the application?
3.As at 31 May 2018 did you have cleared funds available to complete settlement of the purchase of the property?
4.If the answer to 4 yes:
(1)Where were the funds held?
(2)How much did you have as cleared funds?
5.As at 31 May 2018 had you taken any steps to quantify any remedial work you say is required to the property?
6.If the answer to 5 is yes:
(1)What steps had you taken?
(2)What was the remedial work cost quantum?
7In relation to the BPL estimate 3 May 2011, a copy attached to the original notice and marked “C”:
(1)How did you become aware of the estimate?
(2)How did you first acquire a copy of the estimate?
8In relation to the copy email 12 May 2108, attached to the original notice and marked “D” from Hugh Anderson to Mike Newman:
(1)Who raised the issues of water ingress and Black Mould with the property at 13 Fortification Road?
(2)How did the person (1) raise the issues of water ingress and Black Mould with the property at 13 Fortification Road?
9On what date did you decide to cancel the agreement to purchase the property at issue?
10In relation to the CHI report 7 June 2011, a copy attached to the original notice and marked “E”:
(1)How did you become aware of the report?
(2)How did you first acquire a copy of the report?
11Did Peter Jackson, and/or anyone on behalf of Mr Jackson and/or Wingnut Films ever communicate with you about your agreement to purchase the property?
12If the answer to 11 is yes, in relation to each communication:
(1)Who communicated with you?
(2)How did the person in (1) communicate with you?
(3)When did the person in (1) communicate with you?
(4)Was the communication written, or oral?
(5)If oral was it by telephone or in person?
(6)If written what was the relevant writing?
(7)What was the content of the communication?
[18] Mr De Marco has already administered a considerable number of interrogatories and these have been answered. The interrogatories he now wishes to administer are therefore supplementary.
[19] Mr Anderson and Ms Carrasco’s answers to the first tranche of interrogatories were unusual in one respect. In answer to a number, they provided a formal answer (for example that the interrogatory was not a proper one) but then went on to expand and provide an answer, purportedly on a without prejudice basis.
[20] As Mr Dalzell acknowledged during the course of the hearing, answering interrogatories on a without prejudice basis is an oxymoron. The whole point of interrogatories is that the formal exchange of question and answer can be introduced as evidence by the interlocutor and if so introduced forms part of the evidence at trial.
[21] In any event, Mr Anderson and Ms Carrasco accept that the current answers to interrogatories (inclusive of those expressed to be given without prejudice) are available to Mr De Marco to put in as evidence.
[22] That said, I declined Mr de Marc’s application to administer further interrogatories. First, pleadings have closed; there is a trial date; the parties need to focus on preparation for trial; and the administering of further interrogatories at this stage would simply operate as a distraction. Second, on analysis, even putting aside proposed interrogatories 1-4 which raise the without prejudice question, the proposed interrogatories appear to me to be of peripheral relevance only and not going to the heart of the issues for trial. Finally, it is open to the defendant to cross examine on the matters in question should it turn out that they are of more relevance in the case than I currently perceive.
Joinder
[23] As already said, this proceeding was commenced in August 2018. Mr De Marco now comes to the Court, after the close of pleadings date, a matter of weeks prior to trial, when the parties are approaching the point where they have to deal with pre-trial steps, and seeks an order for the joinder of his own building inspector and real estate agent who he says are the parties principally responsible for any
misrepresentations that may have been made (if indeed the Court concludes that any misrepresentations were made). In the course of his submissions Mr Shand said that the parties Mr De Marco now seeks to join are the parties who are really responsible for any breach. That may or may not be so.
[24] I declined this component of Mr De Marco’s application. Mr De Marco has had over 18 months to join these parties. It must have been obvious to Mr De Marco and his (former) advisers from the start that the building inspector and the real estate agent were at the heart of this case. A cursory reading of the statement of claim makes that blindingly obvious.
[25] It is simply unacceptable for Mr De Marco to come to the Court at the eleventh hour and seek an order joining these two other parties and to say in the course of doing so that they need to be involved so that all issues are before the Court.
[26] It is quite correct that, in civil litigation, ideally, the Court has before it all parties involved in the case including parties against whom a defendant may have a third party claim. The dangers of proceeding on any other basis include the prospect of further litigation and the possibility of conflicting outcomes. However, such matters are largely in the hands of the parties in the sense that it is for a defendant to make the necessary judgments as to who he, she or it may wish to join.
[27] The joinder of two additional parties in this case would undoubtedly mean that the matter could not go to trial as scheduled. Those parties would need to be given the opportunity to engage solicitors, brief witnesses, obtain discovery and the like. The view I take is that it would be doing a severe injustice to the plaintiffs to make an order joining these parties which would delay the resolution of the proceedings for at least a year in my judgment.
[28] It is of course always open to Mr De Marco to pursue claims against those parties, but he will have to do so in separate proceedings.
The debarring of the plaintiffs’ current solicitors
[29] I can see no merit whatsoever in Mr De Marco’s application for an order debarring Parker & Associates from acting for the plaintiffs in this case.
[30]His application is founded on two propositions:
(a)First, that they themselves have a stake in the case because they advised the plaintiffs in relation to the cancellation of the contract (and wrote on their behalf cancelling the contract). Therefore, it is asserted, in this proceeding, they would be defending their own advice;
(b)Second, it is said that Ms Lambert has sworn substantive affidavits during the interlocutory stages of this proceeding and that she, and accordingly the firm, cannot act in the matter.
[31] It is of course well settled that the Court, in the exercise of its inherent jurisdiction, will debar solicitors from acting in proceedings if their involvement would be contrary to the interests of justice. If for example the solicitors have a conflict of interest, then the Court will exercise this discretion.
[32] The code of professional conduct (now contained in the Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care Rules) 2008 articulates this in r 13.5 which provides:
Independence in litigation
13.5A lawyer engaged in litigation for a client must maintain his or her independence at all times.
13.5.1A 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.
13.5.2If, after a lawyer has commenced acting in a proceeding, it becomes 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.
13.5.3A lawyer must not act in a proceeding if the conduct or advice of the lawyer or of another member of the lawyer’s practice is in issue in the matter before the court. This rule does not apply where the lawyer is acting for himself or herself, or for the member of the practice whose actions are in issue.
13.5.4A lawyer must not make submissions or express views to a court on any material evidence or material issue in a case in terms that convey or appear to convey the lawyer’s personal opinion on the merits of that evidence or issue.
[33] However, the Court adopts a pragmatic approach in such matters. Ideally, solicitors and counsel have no involvement in litigation prior to its commencement. However, the reality is that it is commonplace for solicitors to advise on steps which subsequently form part of the background to litigation and yet to act for the parties in that litigation.
[34] It is only where there is an identifiable and particular conflict of interest between solicitor and client, or the solicitor’s actions come into particular focus in the litigation that the Court will interfere in a party’s right to engage solicitors of his, her or its choosing by debarring those solicitors from acting in the matter. Generally it does so only where it becomes evident to the Court that by reason of their position those solicitors are unable to bring the necessary degree of objectivity and independence to the matter that the Court is entitled to expect.
[35] In this case, Mr De Marco presumes that Parker & Associates advised Mr Anderson and Ms Carrasco that they had grounds to cancel the contract.
[36] Whilst that may not be an unreasonable presumption, clients generally being prepared to take advice, it is no more than that. For all the Court knows, and should ever know, Parker & Associates may have advised Mr Anderson and Ms Carrasco that there were no grounds at all for the termination of the contract, but then been instructed by them to cancel it anyway.
[37]That is all that needs to be said to deal with the first limb of the challenge.
[38] As to the second, it is an everyday occurrence for a junior solicitor within a firm to swear affidavits putting in relevant documentation or outlining in an objective
way what steps have occurred as between the parties for the purposes of interlocutory proceedings. On analysis it appears to me that that is all Ms Lambert’s affidavits have done.
[39] I am far from convinced that there is any proper foundation for Mr De Marco’s challenge to Parker & Associates’ entitlement to act for Mr Anderson and Ms Carrasco in this proceeding and I decline his application for such an order.
[40] Whilst I am not prepared to reach any concluded views about this, it appears to me that this component of the application, more than any other, suggests that this is a strategic application designed essentially to derail the proceeding going to trial as scheduled. I say no more than that at this stage.
Suspension of timetable
[41] It follows from what I have already said that I am not prepared to suspend the current timetable.
[42] The only order I have made that will affect that timetable is to order the plaintiffs’ solicitors to review the adequacy of discovery and if necessary file a supplementary affidavit of documents. Mr Dalzell tells me that that will not be a burden that will make any difference to the timetable.
Conclusion
[43] I have already given my summary of conclusion in the introductory section of this judgment and I will not repeat it.
[44] What I will say is that in my view this matter should go to trial as scheduled and the Court’s expectation is that both parties will comply with the current timetable.
Costs
[45] The defendant’s application has been largely unsuccessful, and I have expressed some views as to the merits of aspects of it.
[46] I reserve costs as I have not heard from counsel in relation to these. It may well be that in the particular circumstances of this case Mr Anderson and Ms Carrasco wish to focus their efforts on preparation for trial and leave the trial judge to deal with costs in connection with this application along with costs in the substantive trial. If, however, the parties prefer to deal with costs at this stage, and counsel are unable to agree, the parties may come back to me by memorandum for that purpose in the usual way.
Associate Judge Johnston
Solicitors:
Parker & Associates, Wellington for plaintiffs Grant Shand, Auckland for defendant
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