Frost & Sutcliffe v Tuiara - [2003] NZCA 277

IN THE COURT OF APPEAL OF NEW ZEALAND
CA104/03
BETWEENFROST & SUTCLIFFE

Appellant

ANDTURUA TUIARA AND MEREAINA TUIARA

Respondents

Hearing:10 November 2003

Coram:Gault P
Tipping J
McGrath J
Appearances: M G Ring and M O Robertson for Appellant

P Moodley for Respondents

Judgment:27 November 2003

JUDGMENT OF THE COURT DELIVERED BY TIPPING J

[1] The principal issue in this appeal from the judgment of Baragwanath J, reported at [2003] 2 NZLR 833, concerns the Judge’s conclusion that the duty of care owed in tort by the appellant solicitors to the respondents was wider in scope than the duty which they owed in contract. The respondents (Mr and Mrs Tuiara) entered into a transaction as a result of which they lost their house. They sued the appellant solicitors claiming that Mr Douglas Sutcliffe, who handled the transaction on their behalf, had failed to discharge his professional responsibilities properly.
[2] Three causes of action were pleaded; the tort of negligence; breach of contract and breach of fiduciary duty. The Judge found there was no breach of contract and no breach of fiduciary duty. He found, however, that Mr Sutcliffe had been negligent and his firm was liable to the Tuiaras in tort. He came to that conclusion notwithstanding the fact that the breach of contract and tort causes of action, as pleaded, were exactly co-extensive in both the duties of care alleged and the particulars of breach. We will revert to that aspect after setting out the background circumstances. As the case is reported below we will describe the relevant facts only to the extent necessary to consider the issues raised by the appeal.
[3] In March 1999 the Tuiaras entered into back to back agreements with a company called Richmond Thornby Holdings Ltd (RTH) for whom their nephew John Noble worked. The overall arrangement was proposed by him. The first of the two contemporaneous agreements involved the Tuiaras selling their house to RTH. The second agreement involved RTH selling the house back to them in six weeks time for $8,000 less. RTH was to pay them the difference of $8,000 upfront as a deposit on the first agreement. The appellant firm was known by the Tuiaras to be acting also for RTH in the transaction. Mr Douglas Sutcliffe was to act for the Tuiaras, and his brother, Mr Terence Sutcliffe, who normally acted for RTH, was to do so on this occasion. As the Tuiaras knew would happen, RTH mortgaged the property to its bank before the date on which the property was due to be transferred back to the Tuiaras. RTH then went into liquidation and could not procure a release of the mortgage. The Tuiaras could not therefore regain title and lost their home with nothing but the original $8,000 to show for the transaction. Their case at trial was that Mr Douglas Sutcliffe had actively encouraged them to enter into the transaction. The Judge rejected that proposition, observing that, on the contrary, Mr Sutcliffe had “made significant…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Frost & Sutcliffe v Tuiara

Details

AGLC: Frost & Sutcliffe v Tuiara [2003] NZCA 277
Case: [2003] NZCA 277
Decision Date: 27 November 2003

CaseChat Overview and Summary

Frost & Sutcliffe appealed against a decision of Baragwanath J who found that they were liable to the Tuiaras in tort for negligence. The Tuiaras, who were the respondents in the appeal, had lost their house in a transaction handled by Frost & Sutcliffe. The Tuiaras sued Frost & Sutcliffe for negligence, breach of contract, and breach of fiduciary duty. The Judge found that there was no breach of contract and no breach of fiduciary duty, but there was a breach of duty of care in tort. The appeal was against the finding of negligence. The central issue before the Court of Appeal was whether the duty of care owed in tort by Frost & Sutcliffe was wider in scope than the duty owed in contract. The Court of Appeal found that the Judge's approach to the tort cause of action was erroneous. The Judge's view that the tort duty was wider in scope than the contractual duty was not supported by the relevant legal principles. The Court of Appeal found that in conventional circumstances, the two causes of action would usually be concurrent and co-extensive. The Court of Appeal also found that the Judge's reasoning that more detailed reasons should have been given for the advice not to proceed with the transaction was flawed. The Court of Appeal concluded that there was nothing more which Mr. Sutcliffe ought reasonably to have done. The appeal was allowed, and the judgment of the High Court was set aside. The consequential orders made by the High Court were also set aside. Judgment was directed to be entered in the High Court for Frost & Sutcliffe. Any consequential matters, including costs in the High Court, were to be dealt with there in the absence of agreement. The Court reserved the question of costs in the Court of Appeal, being unsure of whether there were any constraining factors. If agreement could not be reached, memoranda could be filed.

Orders