Becker v Anderson HC Auckland CIV-2010-488-0420
[2011] NZHC 1282
•18 October 2011
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2010-488-0420
BETWEEN WILFRIED BECKER SILVIA BECKER Plaintiffs
ANDMAURICE CHARLES ANDERSON First Defendant
ANDROGER BELL, ANDREW GOLIGHTLY, WAYNE MCKEAN, STUART SPICER, STEVE WONG PARTNERS INT HE FIRM OF WEBB ROSS JOHNSON Second Defendants
Hearing: 17 October 2011
Counsel: RH Jerram for Plaintiffs
SM Corban for Second Defendants
Judgment: 18 October 2011 at 4:00 PM
JUDGMENT OF ASSOCIATE JUDGE ABBOTT
This judgment was delivered by me on 18 October 2011 at 4.00 p.m., pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Date: ………………………….
Solicitors: Bogers Scott Shortland Lawyers, P O Box 946, Hamilton for Plaintiffs
Hesketh Henry, P O Box 92093, Auckland for Defendants
WILFRIED BECKER V MAURICE CHARLES ANDERSON HC AK CIV-2010-488-0420 18 October 2011
[1] The second defendant’s application for summary judgment against the plaintiffs was listed for a defended hearing today. At the start of the hearing, counsel indicated that there were several preliminary matters to address, including two interlocutory applications, one relating to the form of the summary judgment application and the other to evidence.
[2] After hearing counsel on the preliminary matters, it became apparent that the application for summary judgment could not proceed fairly today. The Court instead dealt with the preliminary applications, as set out in this judgment. This judgment sets out the reasons for the orders made, and confirmation of those orders.
Background
[3] This proceeding arises out of loans made by the plaintiffs to the first defendant’s wife, Carol Anderson, between December 1998 and October 1999. The plaintiffs instructed the second defendants’ legal firm to act for them in recovery of the loans after Mrs Anderson failed to repay as agreed. Mr DM Grindle, now a partner but then a solicitor in the employ of the second defendants, took the instructions and wrote a letter of demand to Mrs Anderson.
[4] Mrs Anderson, as settlor and trustee of a family trust, had previously instructed another partner in the second defendant, Mr Golightly, on transactions for the trust. She approached Mr Golightly after receiving the letter of demand. Mr Golightly informed her that the second defendants could not act for her, but agreed to relay a settlement offer. Mr Golightly sent Mr Grindle a memorandum containing Mrs Anderson’s settlement offer and noting that the firm had a potential conflict of interest if the matter continued.
[5] Mr Grindle referred the settlement offer to the plaintiffs, and told them that the second defendants had a potential conflict of interest and would not be able to act for either the plaintiffs or Mrs Anderson if the matter did not continue. The second defendants now say that both Mr Golightly and Mr Grindle were being excessively
cautious, and that there was in fact no conflict at that time because Mr Golightly had declined to act for Mrs Anderson on the matter.
[6] The plaintiffs declined Mrs Anderson’s proposal. The second defendants passed that information to Mrs Anderson. She then instructed another firm of solicitors to act for her. The second defendants then referred the plaintiffs to a barrister.
[7] The barrister met the plaintiffs. He subsequently advised, through the second defendants, that the plaintiffs’ best course was to try to settle the matter by agreement. The plaintiffs then instructed the second defendants to continue to act for them.
[8] Subsequently, after an exchange of settlement offers, the plaintiffs agreed to accept an immediate part-payment, and for the balance to be paid within five years and to carry interest at an agreed rate in the meantime.
[9] Mrs Anderson made the agreed payment in reduction of principal and interest payments for approximately a year, but was then adjudicated bankrupt.
[10] The plaintiffs issued this proceeding in July 2010, alleging a single cause of action, namely that the second defendants were negligent in failing to withdraw as solicitors for both parties after forming the view that they were affected by a conflict of interest, and failing to ensure that both parties had proper independent advice. They allege that had they received independent advice, they would not have accepted the settlement arrangement, and would have pursued other remedies.
[11] The second defendants have filed a statement of defence denying that there was, in fact, a conflict of interest and contending that even if there was, it does not give rise to any liability on the second defendants’ part as the plaintiffs received independent advice from the barrister.
[12] The defendants sought further particulars of the claim. This led to the plaintiffs filing an amended statement of claim dated 10 March 2011. It continued to
plead a single cause of action against the second defendants, but included reference to particulars previously provided, and also added four paragraphs pleading a failure to act in accordance with instructions.
[13] The second defendant filed a defence to that amended claim and, at a case management conference on 24 May 2011, sought and were given leave to apply for summary judgment. That application was given its first call on 4 August 2011, by which time the plaintiffs had filed a notice of opposition, and the second defendants had filed an affidavit in reply. A defended fixture was allocated for today. The plaintiffs had indicated a wish to file further affidavits. The Court directed that any application to file further affidavits could be considered at the start of the hearing.
[14] As a result of filing of synopses and argument, the second defendants realised that the plaintiffs were treating the allegations of failing to following instructions as a separate cause of action rather than an aspect of the cause of action arising out of the conflict of interest, and filed an amended application for summary judgment.
Amended application for summary judgment
[15] The defendants initially sought summary judgment on the grounds that they did not have a conflict of interest, and that the plaintiffs had obtained separate and independent legal advice. In the amended application, for which counsel orally sought leave at the start of the hearing, the second defendants seek to advance the additional grounds that they had followed the plaintiffs’ instructions to conclude a settlement with Mrs Anderson and that they had no liability for the losses that the plaintiffs have suffered. Both grounds were addressed in the second defendants’ synopsis of argument.
[16] The plaintiffs opposed the amendment. They say that it is an attempt to “shore up” a fatal flaw in the second defendants’ case after the point had been made in their synopsis of argument that they had not shown that one of the causes of action could succeed, as required by r 12.2(2) of the High Court Rules.
[17] The Court has a discretion to amend an application for summary judgment.[1]
The ultimate question is whether the justice of the case requires amendment, and that, in turn, involves considerations of any prejudice to the other parties.
[1] Cegami Investments Ltd v AMP Financial Corp (NZ) Ltd [1990] 2 NZLR 308 (CA).
[18] The difficulty in this case arises from the fact that the plaintiffs are advancing the claim that the second defendants failed to follow instructions as a separate cause of action to the claim for breach of duty in continuing to act and without insisting on independent legal advice. Distinct matters ought to be stated separately,[2] with specific pleading of relief separately for each cause of action.[3] That has not
happened in this case. Counsel for the second defendants informed me that they had prepared their argument to address all causes of action. Unfortunately, because that was not stated expressly in the original application, counsel for the plaintiffs says that they did not appreciate that this was so. The plaintiffs’ argument anticipated that any issue over instructions was directed only to the second defendants’ stated grounds of conflict of interest and lack of independent advice.
[2] Rule 5.17(1).
[3] Rule 5.27(2).
[19] In many cases, it should still have been possible for counsel for the plaintiffs to have dealt with the changing grounds of argument in the two or three days available before the hearing. However, counsel informs me that he became aware of the issue too late to take proper instructions from the plaintiffs and, in any event, too late to obtain evidence to support two aspects of the plaintiffs’ pleading, namely that the second defendants were instructed to seek provision of proper security and charging orders against bank accounts.
[20] Counsel for the second defendants was prepared to proceed on the basis that the plaintiffs were alleging that these instructions were given, but counsel for the plaintiffs contended that they would still be prejudiced if they were unable to give evidence specifically on these points. (It is common ground that discovery has been completed and there are no contemporaneous documents which bear directly on
these matters.)
[21] The Court has to be satisfied that it is able to do justice between the parties on the application before it. If I declined leave to amend, the plaintiffs’ claim for breach of instructions would go unanswered, and that would be a complete answer to the second defendants’ application. On the other hand, if I granted leave, I would have to be satisfied that the plaintiffs would not be prejudiced by proceeding without allowing them opportunity to respond to the added grounds. Balancing these interests, I concluded that the application should be granted, but that the plaintiffs should be given a fair opportunity to respond to the application in its final form.
Application for leave to file further affidavits.
[22] The plaintiffs have applied for leave to file an affidavit, sworn on
20 September 2011, referring to what they say are new matters raised in the affidavit of Mr Grindle filed earlier in reply. They say that Mr Grindle’s reply affidavit raised three new matters, but also omitted (as had the original affidavit) a relevant file note made by Mr Grindle at the time of taking instructions.
[23] The second defendants say that none of the three matters raised by the plaintiffs were new, and counsel took me to the matters in the plaintiffs’ affidavit to which Mr Grindle was replying.
[24] Counsel also challenged the plaintiffs’ argument that the further evidence should be allowed for completeness (saying that, apart from issues over the second defendants’ instructions, all other issues were raised clearly at the outset) and, in particular, challenged the plaintiffs’ wish to give further evidence on matters relating to conflict of interest.
[25] Counsel for the second defendants informed me that their case will remain that the evidence of Mr Grindle should be preferred because it is supported by such contemporary documentation as exists, and the converse applies to the evidence of the plaintiffs (there is no such documentation to support it). It will be a matter for hearing on the substantive application whether or not the Court can determine that question summarily bearing in mind the well-known principle that the Court will not usually attempt to determine disputes of fact or assess credibility. However, if the
second defendants do wish to pursue the application, it will be important to know all of the conflicting contentions and to have all relevant documents before the Court. On that basis, rather than because new matters were raised in reply, I propose allowing both the further affidavit by the plaintiffs, and two short further replies by Mr Grindle.
Further matter
[26] There is a page missing from exhibit A to the reply affidavit of Mr Grindle sworn on 8 July 2011 (the second page of a three-page letter). It was inadvertently omitted in the preparation of that affidavit. I grant leave to the second defendants to include the missing page in the affidavit as part of the bundle of relevant pleadings for the adjourned application. If there is any particular significance to the missing page, the second defendants should arrange for a resworn copy of the affidavit to be filed.
Decision
[27] The second defendants are granted leave to file an amended application for summary judgment. Before they do so, however, the plaintiffs are to file and serve a further amended statement of claim pleading distinct causes of action against the second defendants separately, so that there can be no further confusion.
[28] I give the following directions to deal with these amendments and adjourn the present application for summary judgment accordingly:
(a) The plaintiffs are to file and serve their amended statement of claim by 7 November 2011.
(b)The second defendants are to file and serve an amended statement of defence and either a memorandum confirming that they rely on the amended application and evidence already filed or (if the amended statement of claim raises any new matters) an amended application for
summary judgment and affidavits addressing matters arising out of the new pleading by 28 November 2011.
(c) The plaintiffs are to file and serve their notice of opposition to the amended application, together with any further affidavits in support (but further evidence to be confined strictly to evidence relating to their instructions to the second defendants as to provision of proper security and charging orders) by 5 December 2011.
(d)The second defendants are to file and serve any affidavits, again strictly in reply to any further evidence as to instructions, by 12
December 2011.
(e) The application for summary judgment is adjourned to 10.00 a.m. on
16 February 2012 for a defended hearing (half a day to be allowed).
(f) The second defendants are to file and serve an amended synopsis of argument and an updated bundle of relevant pleadings by 2 February
2012.
(g)The plaintiffs are to file and serve an amended synopsis of argument by 9 February 2012.
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Associate Judge Abbott
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