Gilding v De Boer HC Whangarei CIV-2010-488-000054
[2011] NZHC 699
•1 July 2011
IN THE HIGH COURT OF NEW ZEALAND WHANGAREI REGISTRY
CIV-2010-488-000054
BETWEEN JOHN GILDING Plaintiff
ANDGERDA DE BOER First Respondent
ANDM AND G DE BOER FARMS LIMITED Second Respondent
Hearing: 18 October 2010
Counsel: M O Robertson and H M Twomey for the Plaintiff
E J Taia for the First and Second Respondents
Judgment: 1 July 2011
JUDGMENT OF DUFFY J
This judgment was delivered by Justice Duffy on 1 July 2011 at 4.00 pm, pursuant to
r 11.5 of the High Court Rules
Registrar/Deputy Registrar
Date:
Solicitors: Sheiff Angland, PO Box 2180 (DX CP19036), Shortland Street, Auckland 1140 for the Plaintiff
Law North Limited, Private Bag 1001 (DX AA21001), Kerikeri 0245 for the
First and Second Respondents
GILDING v DE BOER and ANOR HC WHA CIV-2010-488-000054 1 July 2011
Introduction
[1] This is an appeal against a decision of the District Court finding the appellant, John Gilding, negligent in his provision of legal services to the respondents. A counter-offer for the sale and purchase of land owned by the second respondent, de Boer Farms Limited (de Boer Farms) wrongly included the title of another block of land that the company owned and did not intend to sell. The purchaser accepted the counter-offer with the result that de Boer Farms was obliged to sell land that it had not intended to sell. Mr Gilding was the company’s solicitor and he had helped to prepare the counter-offer, including amending the title references recorded on it. The District Court found that Mr Gilding was negligent in not detecting his mistaken inclusion of the wrong title in the counter-offer before matters had proceeded to the point where the company was legally bound by the terms of the counter-offer. The appeal is opposed.
[2] De Boer Farms is a registered company. At the time Mr Gilding was engaged, the directors of de Boer farms were Meindert de Boer and his wife, Gerda de Boer. Meindert de Boer died before the proceeding was heard in the District Court. His evidence was taken in advance of the hearing as his death was expected. Since his death, Gerda de Boer has been the sole director of the company.
[3] The sale of the land occurred at a time when Mr and Mrs de Boer were at a vulnerable time in their lives. They were elderly. For approximately 10 years they had run a dairy farming operation in Northland through de Boer Farms. Mr de Boer’s age and infirmity, as well as ill-health due to terminal cancer, had necessitated their retirement from dairy farming. This meant that the dairy farming operation was up for sale. Mrs de Boer was under the stress that understandably comes with having to face such major changes in life.
[4] They had consulted Mr Gilding in circumstances where he saw and altered a counter-offer for the sale of what the de Boers say was their dairy farm. They contend that the inclusion of the title of a separate block of land in the counter-offer was a mistake by Mr Gilding. He contends that he included the additional title, having checked first with the de Boers and that there was no mistake. He also
contends that the purchase price that de Boer Farms received under the counter-offer represented fair value of all the land that was sold and so they have suffered no loss.
[5] The appeal involves challenges to key factual findings made in the District Court and raises issues regarding the standard of care that a solicitor should observe when dealing with clients like Mr and Mrs de Boer, as well as how the loss claimed for should be assessed.
Background
[6] To understand how there could possibly be confusion over which property was to be sold under a counter-offer, it is necessary to have some background knowledge of de Boer Farms’ ownership of the subject land. These matters are not disputed.
[7] De Boer Farms had begun its dairy farming venture in the subject locality in
1997 when it purchased approximately 62ha. Then in 1998 it purchased approximately 57ha from another vendor. For reasons associated with that vendor’s wish to subdivide off and retain a 1ha lot, which in turn created access problems to the remainder of the original 57ha block, de Boer Farms had the title of the new land it was buying amalgamated with the land it had purchased in 1997. The amalgamation meant that a new title issued for what was now approximately 119ha. This block of land was referred to by the de Boers and by the District Court in its judgment as the “de Boers farm”. I shall refer to it as the dairy farm.
[8] In 2005 de Boer Farms purchased another two lots. The two lots had separate titles but common ownership. The de Boers referred to the two lots as “Rocky Nook”. This reference was also applied by the District Court in its judgment. The western lot was 3410m2 and the eastern lot was 5533m2. There was a house on the western lot.
[9] The fenceline on the western section did not follow the legal boundary. The legal boundary was too close to the house on the western lot for the de Boers’ liking. They also discovered that the water tanks used by the house were in fact located on
land on the title of the dairy farm. They had plans to sell the western lot and to build a new house on the eastern lot. They wanted to realign the boundaries of the western lot to fit with the existing fenceline (the fenceline realignment). They also wanted to realign the boundaries between the eastern lot and the dairy farm block to bring the water tanks onto the title of the eastern lot (the water tank realignment). This was because they wanted to use those tanks for water supply to the house that they were thinking of building on the eastern lot. Part of these plans included their realisation that one day they might sell the dairy farm and retire to live in a new house on the eastern lot. This lot came to be known by them and by the District Court in its judgment as “the lifestyle block”. I shall refer to it as the eastern lot.
[10] To achieve the boundary changes, the de Boers instructed Williams and King, surveyors, and Mr Gilding as solicitor. As the legal owner of all relevant parcels of land was de Boer Farms, the company was Mr Gilding’s client, but this was in circumstances where the directing minds and will of the company was founded in its directors, Mr and Mrs de Boer.
[11] The fenceline realignment was approved by the local territorial authority, and new titles were issued in August 2006. The result was that the western lot became slightly bigger in size; it was now 5690m2. Whereas originally both the eastern and the western lots had been known as Rocky Nook, this term was now applied only to the western lot. I shall continue to refer to it as the western lot. The eastern lot was reduced in size to 3243m2.
[12] The work on the water tank realignment to allow for the water tanks to be included on the title of the eastern lot (the lifestyle block) continued until February 2007. The changes this caused included the removal of 293m2 of land from the title of the dairy farm and its addition to the title of the eastern lot, and the issue of new titles to reflect these changes. The result was that as at February 2007, de Boer Farms owned three parcels of land, each with their own title:
(a) 118.8087ha being the dairy farm which comprised land the company had first acquired in 1997 and 1998, minus 293m2. This was now legally described as lot 2 DP 364927 CT 263530;
(b)1:5690m2 being the western lot with a slight increase in size which was now legally described as lot 1 DP 361770 CT 251317; and
(c) 3536m2 being the eastern lot with a slight increase in size now legally described as lot 1 DP 364927 CT 263529.
[13] During the time the de Boers were engaged in achieving the boundary realignment, they were also facing the prospect of Mr de Boer having to retire from dairy farming and the sale of the dairy farm due to his age and ill health. In 2006 he was diagnosed with terminal cancer, and so he knew he did not have long to live.
Sale of land
[14] In May 2007 a neighbour and old friend of the de Boers, George Hull, expressed interest in buying the dairy farm. He and Mr de Boer walked around the farm. They discussed the provision of vendor finance. Later the de Boers received a handwritten sale and purchase agreement for the sale of the dairy farm. The agreement had been prepared by Mr Hull’s daughter-in-law, Michelle Hull. The purchaser was the Hull family trust. Ms Hull had identified the property for sale by reference to its postal address and historic legal descriptions. The postal address was recorded as 72, State Highway 1, Okaihau, which was the address for the dairy farm.
[15] When the de Boers took the sale and purchase agreement to Mr Gilding, they had not legally bound de Boer Farms to any sale. Since they were selling a dairy farm as a working venture, they also needed to sell the company’s shares in Fonterra. Those shares governed the terms on which a dairy farm can supply milk to Fonterra. The sale was, therefore, more complex than an ordinary sale of rural land. I consider that the fact the de Boers sought legal advice before they committed de Boer Farms to the sale of the dairy farm shows that they wanted the sale to be conducted in a way which best protected the company’s legal interests, which in this case were analogous with their own interests. When the de Boers saw Mr Gilding, some alterations were made to the sale and purchase agreement which had the effect of turning it into a counter-offer. Those alterations included: altering the GST rating from zero to plus GST; and the Fonterra shares were to be valued at 1 June 2007 and
not at 23 May 2007 (this meant that the benefit of the 2006/2007 season payment went to the de Boers, which was worth approximately $84,000 to them). The vendor finance was retained and was to be secured by a first mortgage to them and not by a second mortgage as offered by the Hull family trust
[16] Mr Gilding also altered the legal description of the property to be sold. He did this by crossing out the deposited plan references that Ms Hull had used and inserted the title references for the dairy farm and for the eastern lot. He also inserted the areas of both parcels of land. Ms Hull had not identified the area of the land for sale. Since these changes are in Mr Gilding’s handwriting, there is no doubt that he made them. There is also no doubt that they had the effect of including the eastern lot as part of the property being offered for sale. Once the Hull’s accepted the offer, which they did, and the conveyance of the sale properties was executed, which it was, de Boer Farms lost its ownership of the eastern lot.
How did the eastern lot come to be sold?
[17] How the eastern lot came to be sold was strongly disputed. There was conflicting evidence from each opposing party which went beyond how the alteration occurred. Mr Gilding’s evidence was that at a meeting on 18 May 2007, he only made the alteration to the legal descriptions of the property to be sold after he had shown Mrs de Boer the titles and had her identify which of them related to the sale property. He said he did this because he was unsure sure about which property was to be sold. The de Boers’ evidence was that none of this happened, and that Mr Gilding had altered the legal descriptions in the sale and purchase agreement some time later in June 2007 without first consulting them.
[18] The District Court found that the de Boers never intended to sell the eastern lot; they were unaware that the changes made by Mr Gilding had the effect of including the eastern lot in the sale and purchase agreement; and that changes that resulted in the eastern lot being sold were the result of Mr Gilding’s negligence: see [75] of the judgment:
When the de Boers went into Mr Gilding’s office on the day that the
amendments were made, (whichever day that was), they were selling the
farm. After they left the office, they had made a binding offer to sell the farm plus their lifestyle block without any knowledge or understanding that they had done so and for no additional consideration. They were none the wiser.
Timing of the alteration
[19] The District Court was faced with conflicting evidence about how the fateful alteration occurred and when it occurred. I consider there was ample evidence before the District Court to support its conclusion that the alteration had occurred through Mr Gilding’s negligence. Reasons for this are set out below.
[20] As to when the alteration occurred, the District Court preferred Mr Gilding’s evidence that this happened on 18 May 2007. This finding is not surprising because the documentary evidence that subsequently became available from the purchasers and their legal advisers as part of the discovery process showed that the purchasers had copies of the agreement with the altered legal descriptions as early as 18 May
2007. So the de Boers’ accountant and the purchaser’s legal advisers received a copy by fax on 24 May 2007.
[21] Owing to Mr de Boer’s illness, he gave his evidence in advance of the hearing. At that time, the discovery process had not revealed the copies of the agreement which made it plain that the alteration had to have happened on 18 May
2007. Consequently, Mr de Boer never had an opportunity to consider and to respond to the documentary evidence which showed the de Boers were mistaken about when the alterations had occurred. At the hearing, Mrs de Boer maintained that the alterations must have occurred in June 2007, even in the face of documentary evidence showing this was most improbable.
[22] However, I consider that the District Court was right to conclude that the question of when Mr Gilding altered the legal descriptions in the sale and purchase agreement was immaterial to the question of whether Mr Gilding had done so negligently. Rather than to treat the de Boers’ mistake about the timing of critical events as something that was fatal to proof of their claim, the District Court saw this confusion as something that demonstrated their vulnerability and reliance on
Mr Gilding to ensure that the interests of de Boer Farms, and therefore their interests, were protected: see [56] of the judgment:
I find that any confusion by the de Boers of dates and sequence during this process is consistent with them relying entirely on Mr Gilding. It also demonstrates how vulnerable they were and their need for their lawyer to help them through the detail to protect their interests in the sale of their most valuable asset.
[23] The confusion that the de Boers were in over the sequence and timing of events can be inferentially attributed to their age and the stress they would each have been suffering as a result of Mr de Boer’s terminal illness and the treatment he was receiving for it. They were an elderly couple. At the time, Mr de Boer was undergoing chemotherapy and his doctors had advised him that his life expectancy was to September 2007. I am satisfied, therefore, that there was an evidential foundation from which the District Court could infer that the de Boers would have been stressed, confused and distracted by Mr de Boer’s illness and his imminently approaching death.
[24] The evidence shows that they must have seen Mr Gilding in May 2007 and they also saw him on two occasions in June 2007. The first was to sign forms to allow the transfer to proceed electronically. The second was to execute a deed of priority of mortgage in connection with the vendor finance they were advancing. Thus, the occasion of the June meetings may explain their mistaken belief that the alteration to the legal description in the sale and purchase agreement occurred in June and not in May.
[25] Courts are familiar with distinguishing between credibility and reliability of witnesses. It is understood that a witness can be honest but mistaken about his or her account of events. It is also understood that a Court may accept part of a witness’ evidence as reliable and reject other parts as unreliable. Provided there is an honest explanation for the mistake, it need not undermine the witness’ reliability or credibility in relation to other aspects of his or her evidence.
[26] When it came to how the alteration had occurred, the District Court did not
expressly reject Mr Gilding’s version of events. Rather, the District Court found that
even if his account was accepted, it showed him to have breached the duty of care which he owed to de Boer Farms and to the de Boers. I consider that this was a conclusion which was open to the District Court. The District Court’s assessment of this aspect of Mr Gilding’s evidence is at [74(a)-(j)]. I will deal with each reason given in [74] in turn.
[27] The District Court found (at [74(a)]) that the old title references on the initial offer (the sale and purchase agreement as drafted by Ms Hull) were to the dairy farm. In fact, the references that Ms Hull used were taken from rates notices that Mr de Boer had given to Mr Hull; those references were to the deposited plan and lot numbers, rather than certificate of title references. However, the import is the same. The references Ms Hull used were: “Lot 2 DP 195134” and “Lot 1 DP 197686 BLK IX”. Those are references to the two blocks that were amalgamated to form the dairy farm lot in 1999 as described in [7] above. Those references describe the land included in the title for the dairy farm as it was in 1999 following the amalgamation described in [7] herein. A copy of certificate of title NA124B/42 issued on 2 July
1999 shows it is for 118.8333ha more or less contained in Lot 2 DP 195134 and Lot
1 DP 197686. Thus, the clear intent on the part of the Hull family trust was to acquire the dairy farm. This is confirmed by the fact the postal address of the dairy farm was also included in the sale and purchase agreement.
[28] Furthermore, as someone who had been involved in the fenceline and particularly the water tank realignment, Mr Gilding would have realised that the historic references used by Ms Hull referred to an area of land of 118.8ha which equated to the dairy farm. The later boundary realignments had the effect of slightly
reducing the size of the dairy farm by 293m2 (see [12] herein), but this meant that the
size went from 118.8333ha to 118.8087ha. A reduction of this magnitude is not likely to be noticed by anyone, unless the description of each area is placed side by side. Anyone who knew that the dairy farm was approximately 118.8 ha would have understood the deposited plan references used by Ms Hull to refer to the dairy farm only. On this basis alone, I can see no reason why Mr Gilding did not simply substitute the new single title reference for the 118.8ha lot.
[29] In this regard I reject the expert evidence of Robert Eades. Mr Eades is a solicitor who is experienced in conveyancing. He gave expert evidence for Mr Gilding. Part of Mr Eades’ evidence was that the references Lot 2 DP 195134 and Lot 1 DP 197686 no longer existed after the water tank realignment between the dairy farm and the eastern lot. Mr Eades opined:
Instead, the property was now mainly contained in certificate of title 263530 but with part of that land (as a consequence of the boundary adjustment) being contained in certificate of title 263529 [which is the title of the eastern lot].
[30] Mr Eades’ view, therefore, was that it was not correct to think of Lot 2
DP 195134 and Lot DP 197686 as being replaced by CT 263530. This is technically correct, but I consider that it neglects the reality that there was substantially little difference between the area of the dairy farm before and after the boundary realignment. What Mr Eades fails to make clear is that the part of land he refers to as now forming part of CT 263530 is no more than the 293m2 that was taken from the dairy farm and added to the eastern lot: see [12] herein. A reduction in size of
293m2 still left the overall size of the dairy farm at 118.8ha. It is only if the area
description moves beyond the first decimal point that a comparison of the area as it is described in Lot 2 DP 195134 and Lot 1 DP 197686 with the area described in CT 263530, reveals a difference. In such circumstances, it is overly refined to say that it is incorrect to suggest that a reference to Lot 2 DP 195134 and Lot 1
DP 197686 was no longer capable of being understood as referring to the land that was described in CT 263529. I consider that most people would have understood that the land contained in Lot 2 DP 195134 and Lot 1 DP 197686 was substantially the same as the land to be found in CT 263529.
[31] This leads me to the conclusion that before a further title for another lot was added to the sale and purchase agreement (which is what Mr Gilding did), I would have expected there to be some conversation between the de Boers and Mr Gilding about why another property was being added to the agreement, and the purpose of doing so. No one has said that a conversation to this effect occurred. But without any such conversation, it is hard to see how there could have been a reasonable basis for Mr Gilding adding the certificate of title reference of the eastern lot.
How the alteration occurred
[32] The District Court found (at [74(b)]) that the alteration of the legal description in the sale and purchase agreement was at Mr Gilding’s suggestion. He suggested it because he knew about the boundary realignment and the consequential issue of the new certificate of title. I consider that had Mr Gilding left the legal description as it was, the presence of the postal address and the references to the old deposited plans would have led any reasonable person with knowledge of the legal descriptions (both historic and current) to conclude that it was the dairy farm only that was for sale. Thus, the original description provided sufficient certainty of what was being sold. Having suggested that the legal description should be updated by him, it was for Mr Gilding to insert references that correctly represented what was being sold.
[33] The District Court found (at [74(c)]) that, if Mr Gilding’s evidence was accepted, what occurred after he had identified the wrong legal description on the agreement was that he gave copies of the current titles to Mrs de Boer and asked her to confirm which property or properties were for sale. Mrs de Boer disputed that this had occurred. The District Court did not determine which of the disputed evidence it preferred. Instead, the District Court went on to find that even if Mr Gilding had done what he said he did, this had to mean that he did not give Mrs de Boer the title that related to the property described in the agreement. This was because the titles he gave to her were for other properties as well as the dairy farm, including the eastern lot. In short, the District Court was querying why any practitioner would muddy the water by introducing the prospect of other land being sold, when the agreement in front of him made it clear that what was for sale was a 118.8ha dairy farm. The District Court found that up until this point, Mr Gilding had received no instructions that anything other than the dairy farm was up for sale.
[34] I consider that given Mr Gilding had before him a sale and purchase agreement for land comprising 118.8ha and the only block of land of that size, or anything like it, was the dairy farm, there was nothing to make him think that the eastern lot was for sale as well. To introduce other certificates of title was simply to create the possibility of confusion. This is especially so given that after the new
titles had issued, in February 2007, both the eastern lot and the dairy farm were contained in the one deposited plan. The dairy farm was shown as Lot 2 DP 364927 and the eastern lot was shown as Lot 1 DP 364927. Thus, anyone looking at the drawing of the deposited plan annexed to the certificate of title for either property would have seen the same plan. This would have made for greater confusion if the difference between each title was not carefully explained.
[35] It is difficult to see why a solicitor who was dealing with clients like the de Boers would simply hand over copies of various certificates of title for every property owned by his client, and leave it to the client to identify the appropriate title(s) noted on the agreement. By client, I mean de Boer Farms as the legal owner of the property and Mrs de Boer as one of the directors of de Boer Farms. I consider that more care and attention than this was required of Mr Gilding.
[36] The District Court found (at [74(d)]) that the correct legal description of the dairy farm should have been known to Mr Gilding because he was the de Boers’ solicitor and because the information was readily available from LINZ. This is obvious. It is not as if Mr Gilding was acting for the de Boers for the first time, and did not know of the various properties owned by de Boer Farms. He was involved in the boundary realignments both in relation to the change to the boundary between the western and eastern lot (the fenceline realignment), and the later alteration between the eastern and dairy farm boundaries (the water tank realignment). These had all occurred within twelve months of the meeting on 18 May 2007. He could therefore be expected to have some working knowledge of the changes. He certainly knew enough to recognise that the deposited plan references used by Ms Hull were historic.
[37] The District Court found (at [74(e)]) that there was one title for the dairy farm, not two, and that Mr Gilding was responsible for including the second property in the sale. This finding is consistent with the evidence.
[38] The District Court observed that Ms Hull realised there was an additional property included in the sale once she received a copy of the by now signed counter- offer. The District Court found that Mr Gilding had failed to realise this (at [74(f)]).
[39] The District Court found (at [74(g)]) that it was not enough for Mr Gilding to leave it to Mrs de Boer to identify from the copies of titles he had given her which title(s) related to the property to be sold. The District Court found that Mr Gilding should have explained to the de Boers the effect of the changes to the agreement and what it meant in terms of what they were selling. I consider that the implication to be drawn from this finding is that the District Court concluded that whatever Mr Gilding may have said or done at the meeting on 18 May 2007 by way of explanation was insufficient to discharge his obligations to the de Boers and to de Boer Farms. I consider that this was an available conclusion for the District Court to reach. It had found that the de Boers did not intend to sell the eastern lot and that they were unaware it had been sold until it was brought to their attention in July 2007, when they were required to move their chattels from that land. It follows from this that when Mr Gilding had seen them on 18 May 2007, he cannot have properly explained to them the effect of the alterations he made at that time to the sale and purchase agreement.
[40] The District Court does not deal with Mr Gilding’s evidence that during the meeting when Mrs de Boer had the copies of the titles, she said to him, “this little one” and “this big one”, and then turned to Mr de Boer to say, “these are what we are selling”, and Mr de Boer shrugged. The District Court noted that the de Boers “vehemently dispute that this ever occurred”. Given the conflict in this evidence, the District Court should have expressly made a finding as to which evidence it preferred here. However, I consider that by implication, the finding that Mr Gilding should have explained to the de Boers the effect of the inclusion of the two titles on the agreement means that the District Court rejected Mr Gilding’s evidence that Mrs de Boer told him the property to be sold was one little one and one big one. Had the District Court found Mrs de Boer did say this, there would have been no need for Mr Gilding to explain what was to be sold.
[41] The District Court found (at [74(h)]) that Mr Gilding took no steps to satisfy himself of Mr de Boer’s understanding of what he was signing. For example, Mr Gilding did not read out the changes to his visually impaired client, nor did he take any extra care to ensure Mr de Boer understood the effect of the changes.
[42] The property to be sold was owned by a company that had two directors. I consider that Mr Gilding was required to ensure that both directors, each of whom were present before him, understood the legal effect of the document that they were signing. There is no evidence to suggest that Mr Gilding ever spent sufficient time with Mr de Boer to ensure that he understood that the alterations to the legal description meant that the eastern lot had been added to the agreement. I consider that a reasonable solicitor who adhered to and observed standard practices would have satisfied himself that Mr de Boer understood the effect of all the alterations to the sale and purchase agreement.
[43] The District Court was influenced in reaching its view that Mr Gilding’s alteration had mistakenly included the eastern lot in the sale by Mr Gilding’s earlier conduct (at [74(j)]). This is understandable, and I consider that the inferences the District Court drew from this earlier conduct were proper inferences for it to draw. Earlier in 2007, as a step towards selling the dairy farm, the de Boers engaged a real estate agent, Claude Shepherd. The agent was given a map of the dairy farm with the boundaries clearly marked on it. Both the de Boers and the agent understood that it was the dairy farm block that was under offer. In early May 2007 there was an offer to purchase from an interested party (referred to in the District Court judgment as the “Cressys”). They ultimately abandoned pursuing the purchase.
[44] What is significant about the dealings the de Boers had with the Cressys is that the agent prepared a counter-offer from the de Boers to go to the Cressys. In doing so, the agent contacted Mr Gilding. The agent said that that the title references he recorded in the counter-offer were given to him by Mr Gilding. Though Mr Shepherd and the de Boers were clear that only the dairy farm (the 118ha block) was for sale, the title references recorded on the counter-offer included the eastern lot. This was not discovered until the proceeding had commenced. At the time the counter-offer went to the Cressys, neither the de Boers, nor Mr Shepherd realised that the eastern lot was included in that counter-offer. Thus, the inclusion of the lifestyle block title on the counter-offer to the Cressys is a piece of circumstantial evidence to support the inference that Mr Gilding was confused in early May 2007 about which titles related to which block of land owned by de Boer Farms.
[45] The findings the District Court made in [74] of its judgment provide sufficient reason for the conclusion it reached at [75] of the judgment that the mistaken inclusion of the eastern lot in the sale to the Hull family trust was the fault of Mr Gilding, and that the de Boers knew nothing about it until July 2007 when they were told to remove their property from the eastern lot.
[46] In later parts of the judgment, the District Court re-visited the facts of what occurred on 18 May 2007 at [123]-[127] of the judgment. There is nothing in those paragraphs that is at odds with the earlier findings in [74]-[75]. In [102]-[105], the District Court discussed the evidence of the parties relating to a later meeting on
12 June 2007 when the de Boers visited Mr Gilding for the purpose of completing the Authority and Instruction form for an electronic transaction. Then at [112]- [115], the District Court considered evidence relating to a further meeting the de Boers had with Mr Gilding on 27 June 2007 for the execution of the mortgage deed of priority. And at [116]-[121], the District Court considered the evidence of a meeting that took place between the de Boers, their daughter and Mr Gilding on
2 July 2007 to discuss how it came to be that the eastern lot was sold with the dairy farm. There is nothing in any of those parts of the judgment that is at odds with the earlier findings the District Court made at [74]-[75] of its judgment. I have considered the discussion and reasoning set out in the later paragraphs. I consider that the views expressed therein by the District Court were views that were open to it to reach.
[47] Any assessment of evidence is necessarily affected by impressions formed of the witnesses as they give their evidence. I consider that the District Court was better placed than I am to assess the witnesses in this proceeding. However, even were I to set that aside, I have no trouble accepting the views of the evidence that the District Court reached.
Further supporting evidence
[48] Furthermore, there is other evidence which I consider supports the District Court’s view of events. The conduct of the de Boers throughout the relevant period is consistent with persons who did not intend to sell the eastern lot. First, in
their dealings with the Cressys and with the real estate agent, Mr Shepherd, the de Boers were intent on selling only the dairy farm. The impression they gave George Hull must have been that it was only the dairy farm being sold as this is the land which Ms Hull described in the sale and purchase agreement that she prepared. It also fits with her evidence that she saw the inclusion of the eastern lot as a “sweetener”, that is, something that was added to the original offer that was contained in the sale and purchase agreement.
[49] Secondly, at the time the de Boers were taking steps to sell the dairy farm, they were pursuing an application to the local territorial authority for a building consent to erect a shed on the eastern lot. They are hardly likely to have taken these steps if they were open to selling the eastern lot as well.
[50] Thirdly, the counter-offer the de Boers made to the Hull family trust included an alteration to the valuation date for the Fonterra shares. Upon receiving an offer, the natural inclination of a vendor in making a counter-offer is to attempt to alter the terms so as to gain some increased benefit over the proposed purchaser’s offer. The shares were not independently valued. However, working on the basis of the values which Ms Hull attributed to them, the effect of that alteration in date meant that the shares were worth approximately $84,000 less to the Hull family trust, meaning that the transaction as a whole would have been more beneficial to the de Boers. To then include the eastern lot in the counter-offer is difficult to reconcile with the change in valuation date. The value of the eastern lot in 2007 was roughly approximate to the
$84,000 difference in the value of the Fonterra shares. The inclusion of the eastern lot thus negates the benefit accruing to the de Boers from the change in the share valuation date, and indeed, negates the very notion of a counter-offer.
[51] Ms Hull gave evidence for Mr Gilding. She said in evidence that she saw the inclusion of the eastern lot as a “sweetener” to make up for the reduced value of the Fonterra shares for the purchaser. I do not accept that it can be seen in this way. Whilst an offeror negotiating a contract may consider it wise to offer a “sweetener” to accompany a term that is to the offerer’s financial advantage (and to the offeree’s disadvantage), it is uncommon for the “sweetener” effectively to unravel the very same financial advantage that the offeror has sought to secure for himself.
[52] Nor do I consider that Ms Hull can be viewed as an independent witness capable of giving objective evidence on the topic of the terms of the sale. The purchase was by the Hull family trust, and George Hull’s intention was to buy the dairy farm for his son, who is Ms Hull’s husband. George Hull and Mr de Boer had been neighbours and friends for a long time (Mr de Boer said for 50 years), and they had had dealings in land in the past. It was the previous dealings and the trust the de Boers had in George Hull that caused them to enter into negotiations with them and allow in $1.2m as vendor finance to the Hull family trust. George Hull did not give evidence. Ms Hull gave evidence for Mr Gilding. The Hulls benefited from the purchase. That Ms Hull viewed what occurred as an intentional sale of both the dairy farm and the eastern lot, is understandable. Unless she did that, she had to acknowledge that the Hull family trust was prepared to see the de Boers, who were old neighbours and friends of George Hull, held to a sale which had the mistaken inclusion of a block of land that the de Boers did not want to sell and on which they had planned to build their retirement home. Given this choice, it is understandable that Ms Hull might prefer to view the sale of the eastern lot as a “sweetener” that was an intentional part of the counter-offer. To like effect is Ms Hull’s evidence that Mr de Boer was responsible for the confusion over what land was to be sold in the first place, because he was the person who gave George Hull the rates notices with the old deposited plan references, which Ms Hull then used in the sale and purchase agreement that she prepared. Looked at objectively, it is hard to see how this action could make Mr de Boer responsible for the confusion which later resulted. However, to blame Mr de Boer in this way might help to remove any moral responsibility that the purchasers might otherwise feel for what has occurred.
[53] Fourthly, after the sale went through, the de Boers acted as if it was only the dairy farm that was to be sold. It was their failure to remove their possessions from the eastern lot that prompted the Hulls to request the de Boers to do this. When first expressly confronted with the idea that the eastern lot had also been sold, the de Boers initially rejected this, and then they said there had been a mistake. They went to see Mr Gilding with their daughter the very same day they were told to move their chattels from the eastern lot. They acted like people who had no idea the eastern lot had been sold.
[54] Lastly, there is evidence of aspects of Mr Gilding’s practice that supports the District Court’s finding that the de Boers did not intend to include the eastern lot. Whilst it may seem hard to understand how a solicitor could make the mistake of including the wrong certificate of title in a sale and purchase agreement, in this case Mr Gilding had already done so when he gave the details of the titles to Mr Shepherd during the negotiations with the Cressys. The de Boers were not involved in this discussion so no fault can be attributed to them here, further negating Ms Hull’s evidence in [52] above. I take these as somewhat indicative of poor and careless practice by Mr Gilding, though I accept that they alone would not be sufficient to warrant this conclusion: see Lie Hendri Rusli v Wong Tan & Molly Lim (a Firm) [2004] 4 SLR 594.
[55] In addition, when it came to preparing the documents for the vendor finance, Mr Gilding overlooked preparing a loan document. This meant that the interest rate de Boer Farms could claim when the Hull family trust was late in making some of the loan payments was a lower rate set out in the mortgage document than the going rate that was usually stipulated in loan agreements. Whilst the registration of the mortgage security on the property’s title meant that the vendor finance was secure, the way in which the loan documentation was arranged was not in accordance with general standards.
[56] Another example of Mr Gilding’s slipshod and careless practice is his failure to keep file notes or other records of all his meetings with the de Boers, and his failure to keep time records. Such practices are inconsistent with practices adopted by solicitors who conform to accepted standards. This does not prove Mr Gilding was careless and fell short of accepted standards with the de Boers. But it does lend weight to this conclusion.
[57] These examples of mistakes on Mr Gilding’s part evidence a propensity on his part for acting carelessly when providing legal services to his clients. Seen in this way, the likelihood of him entering the wrong title reference when changing the legal descriptions in the counter-offer to the Hull family trust becomes more probable than not.
Was Mr Gilding negligent?
[58] Mr Gilding accepts that he owed de Boer Farms a duty of care. He accepts that he was obliged to do what the reasonably competent practitioner would do, having regard to standards normally adopted in his profession. He contends that his actions meet the required standard of care.
Standard of care
[59] The District Court considered that the standard of care to be followed when dealing with clients such as the de Boers, was that to be followed when dealing with elderly and infirm clients. This meant the solicitor was under a duty to ensure that the clients knew what was being sold and that the contract for sale covered that situation: see [127] of the District Court judgment. The District Court also considered that Mr Gilding would have been aware of the de Boers’ circumstances, having worked for them over the previous 12 months dealing with the boundary realignments. This caused the District Court to conclude:
In my view he (Mr Gilding) was responsible for ensuring that the contract and amendments signed by them covered the precise areas that they were selling to the purchaser. This situation was not covered by the defendant and I find it no defence to put forward that he was relying on the hurried and confused advice of Mrs de Boer.
[60] I consider it was open to the District Court to reach this conclusion. Furthermore, I agree with it. The facts all point to the de Boers not intending to sell the eastern lot. Other than Mr Gilding’s account of Mrs de Boer confirming for him it was the “big block” and the “little block” that were to be sold, there is nothing to suggest the two blocks were to be sold. All the other evidence is to the contrary. In such circumstances, I find it hard to accept that Mrs de Boer would have ever said anything like that to Mr Gilding. However, I am in no position to make credibility findings against Mr Gilding. I remain of the view I expressed earlier that the logical inference to be drawn by the District Court’s finding of negligence and from the totality of the evidence is that it implicitly rejected this aspect of Mr Gilding’s evidence. Since he had kept no file notes or other records of the instructions he
received on 18 May 2007, it was open to the District Court to treat his evidence in this regard as unreliable.
[61] Mr Gilding has argued in this appeal that there was no evidence to suggest that Mrs de Boer was confused, and that he should have taken extra care when dealing with the de Boers. However, the District Court Judge had the benefit of seeing Mrs de Boer give evidence. The insistence of the de Boers that the meeting when the mistaken alteration occurred was in June 2007 is an example of their confusion. In May 2007 they knew that Mr de Boer was terminally ill. He was undergoing treatment for cancer. They were elderly. He would have been distressed by his circumstances, as would his wife. I consider that there was sufficient evidence available to the District Court for it to infer that the de Boers were vulnerable and required particularly careful attention from Mr Gilding.
Mr Vaughan’s evidence
[62] Expert evidence was given for the de Boers by Owen Vaughan, a solicitor, with conveyancing practice, of many years experience. Mr Vaughan’s evidence was that a practitioner dealing with the sale of a farm property would want to obtain detailed instructions from the client as to the proposed terms of sale. Mr Vaughan opined that there are many aspects of a farm sale which must be discussed, and that it is often in the context of a detailed discussion with a client that a practitioner learns of information that is extremely relevant, or becomes aware that the client does not really comprehend the terms of the agreement. In such discussions, Mr Vaughan says, the practitioner may also become aware that the terms of the agreement which has been prepared by a third party do not reflect the intentions of the client. Mr Vaughan considered that in the context of the offer in this particular case, a competent practitioner would want to identity the purchaser for his clients (the de Boers had believed they were selling to George Hull), and to identify carefully for them the property being sold.
[63] Mr Vaughan noted that Mr Gilding was aware of the various boundary adjustments that had taken place and opined that extreme care would be needed to identify exactly what was being sold. He said that a practitioner should be vigilant
in obtaining the client’s instructions and must be satisfied that the agreement accurately reflected those instructions. Regarding the steps that needed to be taken, his view was that when a client is elderly or presents as being uncertain or confused, then a practitioner needs to exercise greater care to ensure that the property being sold is correctly recorded. Mr Vaughan also considered that greater care would need to be exercised where the client owns several properties, comprised in several titles, some of which were being sold and some of which were not. If any changes were made, and particularly if further titles were to be included in a sale, a practitioner would need to be absolutely certain that such additions were correct. He also considered that a practitioner should explain the content of documents to be signed to a client and give them a copy for their records. In this case, the de Boers did not get a copy of the sale and purchase agreement until much later after the error was discovered.
[64] Mr Vaughan considered that a practitioner would make reasonably detailed file notes of all attendances in connection with a file, and where a practitioner needed to exercise particular care to clarify something this would be recorded in detail.
[65] In the case of alterations being made to a sale and purchase agreement, his view was that a practitioner should explain what changes had been made to the agreement and why they were being made. When it came to a practitioner acting for a vendor who was providing vendor finance, he considered that the practitioner should have prepared the security documentation prior to settlement and submitted it to the purchaser’s solicitor for execution by the purchaser. He said the practitioner would want to sight a copy of the executed documentation prior to settlement and put in place the process whereby the mortgage was to be registered. He said the practitioner would also want to ensure that various other incidental matters were attended to prior to settlement, such as ensuring that the buildings on the property were insured.
[66] His view was that the versions of the agreement that he had seen were deficient in that they did not provide for a penalty rate. In the absence of a specified
penalty rate, a rate that would be considered to be the prevailing penalty rate at the time should have been inserted into the mortgage.
Mr Eades’ evidence
[67] Mr Gilding called expert evidence from Robert Eades, who is also a conveyancing solicitor of vast experience. In setting out the standard followed by a competent practitioner, Mr Eades agreed that a practitioner acting for a vendor must ensure, so far as the circumstances make it possible, that the agreement executed by the vendor records, in all its aspects, the contract into which the client believes he, or she, is entering, and particularly, the practitioner must see that the property being sold is correctly and unambiguously described.
[68] Mr Eades was of the view that account needed to be taken of the work that Mr Gilding had done on the subdivision and boundary realignment, and that he was aware that the de Boers, through their company, owned a number of adjoining properties. Mr Eades also said that where a client uses their own terminology to refer to property, such as “the old house”, “the top section”, and the like, a practitioner must ensure that he, or she, understands what the client means.
[69] Mr Eades considered that Mr Gilding had to ensure that the property described in the contract was “the farm” as the de Boers understood it, and was consistent with what he knew.
[70] Mr Eades’ view was based on the Court accepting Mr Gilding’s evidence of what had taken place on 18 May 2007. Mr Eades considered that Mr Gilding had complied with the appropriate standard if, in accordance with his evidence, he had done as follows:
(a) Taken out the subdivision file and identified the new titles and that the title references in the agreement were no longer current;
(b)Explained to the de Boers that the legal descriptions in the agreement related to old titles before the subdivision and boundary adjustments, and that those titles no longer existed;
(c) Ensured that the de Boers understood what was being sold by placing the titles in front of them and asking them to identify exactly what properties they were selling; and
(d)Relied on Mrs de Boer picking out the titles, examining both titles, and in a fairly short space of time saying, “this big one”, and later, “this little one”.
[71] Mr Eades considered it was sufficient for Mr Gilding to seek confirmation of what was to be sold by querying with Mrs de Boer if both sections (the big one and the little one) were being sold, and if Mrs de Boer had responded, yes, and her husband had shrugged his shoulders, that was enough.
[72] Mr Eades considered that on Mr Gilding producing the new titles, the de Boers would have seen that the representation of deposited plan 264927 which appeared on the titles, and it specifically showed both the farm property and the lifestyle block which Mrs de Boer would have seen as “the big one” and “the little one”. Mr Eades’ view was that if Mr Gilding’s version of the meeting was accepted, then he would have done what the competent practitioner should have done.
[73] Mr Eades took into account the age of the de Boers, and the ill health and poor eyesight of Mr de Boer, but he considered that, even taking into account their age and capacities, Mr Gilding had done what was necessary.
[74] However, Mr Eades says nothing about the failure of Mr de Boer to participate at the meeting of 18 May 2007 by doing anything more than being present and simply shrugging his shoulders when Mrs de Boer is said to have turned to him to ask him to confirm what properties were being sold. I consider that when it came to obtaining instructions from Mrs de Boer, Mr Gilding fell short of the standards that Mr Eades has outlined. Since Mr de Boer was one of the directors of
de Boer Farms, I consider it was incumbent on Mr Gilding to ensure, for himself, that Mr de Boer fully understood the effect of the alterations to the sale and purchase agreement, including specifically advising Mr de Boer that the eastern lot was to be sold.
[75] Mr Eades also concluded that the de Boers were not inexperienced in property transactions, they had entered into the negotiations themselves and crystallised the elements of the transaction without involving an agent or their lawyer to draft the agreement. Mr Eades considered they were alert enough to realise that the original agreement tendered by the Hulls did not correctly reflect the deal they believed they had arranged with George Hull. He concluded that a practitioner could have expected them to know that there were two titles recorded, although there was only one for the farm property.
[76] In short, Mr Eades considered that looked at overall, Mr Gilding had met the standard of a competent practitioner throughout and this was achieved through him:
(a) Showing the de Boers the new titles for the land apparently included in the agreement;
(b)Obtaining their assurance that both of the properties shown in those titles would pass;
(c) Amending the agreement appropriately; and
(d)Giving the agreement to the de Boers, who had a further opportunity of considering them before returning them to Mr Hull.
[77] One factor which might explain why the de Boers were not concerned about the inclusion of two legal descriptions in the sale and purchase agreement is that the agreement, as prepared by Ms Hull, had included two legal descriptions. This was because the dairy farm land had historically been contained in two deposited plans; thus, the substitution of two references to deposited plans with two certificate of title references may not have seemed out of place to the de Boers. Furthermore, there is
evidence that Mrs de Boer believed that the dairy farm had two certificates of title. In July 2007 when the de Boers were told by Mr Gilding that the eastern lot had been sold, Mrs de Boer said there were four titles, two of which the de Boers were selling and two of which they were retaining. This is correct insofar as historically the dairy farm had at one time been in two titles. The 118.8ha was made up of an original purchase of 62ha and a subsequent purchase of 57ha. Until the titles for the two blocks were amalgamated, there would have been two titles: see [7] herein. Consequently, Mrs de Boer’s belief that there were four titles, although incorrect, is understandable when the history of the de Boers’ land purchases is understood. There having been two original blocks, plus there being the western and eastern lots could lead a layperson to believe there were four titles.
Conclusion on breach of duty of care
[78] The District Court found that the weight of evidence showed that the de Boers did not want to sell the eastern lot; that even so it ended up being entered on the sale and purchase agreement in circumstances where the de Boers did not learn of this until the eastern lot had already been conveyed to the Hull family trust. The person who had inserted the eastern lot’s title reference in the agreement was Mr Gilding. As the de Boers’ solicitor, he should have made sure that he knew what land they wanted to sell and that it was correctly identified in the sale and purchase agreement. Hence, the logical conclusion from all this was that the eastern lot had been carelessly entered in the agreement by Mr Gilding, who had breached the duty and standard of care expected of him. I consider that there was ample evidence before the District Court to warrant it reaching this conclusion. The arguments Mr Gilding has raised in the appeal cannot overcome the weight of this evidence and the detrimental impact it has on Mr Gilding’s defence.
Loss
[79] Mr Gilding argues that de Boer Farms has failed to prove it suffered any loss. In this regard, Mr Gilding argues that the valuation evidence produced by de Boer Farms relates to the wrong date. Mr Gilding says that the date for ascertaining loss was May 2007, when the negligent act was said to have occurred.
In the present case, for reasons that are unexplained, the valuation evidence de Boer Farms relies on values the eastern lot as at 2008. Furthermore, Mr Gilding argues that it was essentially for de Boer Farms to provide valuation evidence on the value of the dairy farm, as well as the eastern lot as at May 2007. Mr Gilding says that this is the only way that a Court can be sure that de Boer Farms has suffered loss, as it is essential for it to prove that the $2.1 million it received for the sale of the dairy farm, the eastern lot, and the Fonterra shares does not represent a true market value for all of that property.
[80] De Boer Farms argues that it is sufficient that it produce evidence of the value of the eastern lot, that being the land it did not want to sell. Having lost this land, de Boer Farms argues that it should receive damages to compensate it for the value of the lost land.
[81] A registered valuer, Malcolm McBain, gave evidence that in July 2008 the eastern lot was worth $90,000. The District Court found that Mr McBain’s evidence was not “seriously challenged” by Mr Gilding.
[82] Regarding the issue of the property’s value at the time of loss (being May 2007), the District Court considered that Mr McBain had dealt with this adequately in cross-examination. At [128] of the judgment, the District Court refers to the issue of value at 1997 to 1998. This is clearly an error. The eastern lot was not even owned by de Boer Farms from 1997 to 1998. The District Court must have meant 2007 to 2008.
[83] The cross-examination of Mr McBain establishes that the property market was more buoyant in September 2007 than in July 2008, which was the date of his valuation. It is also clear from the cross-examination of Mr McBain that at the time he prepared his valuation, values had plateaued, particularly for vacant sites. There is nothing in the cross-examination of Mr McBain that would suggest that the value of the eastern lot in May 2007 was substantially lower than the valuation he attributed to it in July 2008.
[84] There was no expert valuation evidence produced by Mr Gilding. Mr Gilding argued before me that the willingness of the Hull family trustees to pay the price they paid for the dairy farm, the eastern lot and the Fonterra shares was evidence of an arms-length market sale between a willing seller and a willing buyer that established the total value of that property. That being the case, it could not be said that the eastern lot had a value of $90,000. The argument being presumably that if it did have such a value, that would have been reflected in a higher purchase price than what was paid. But this argument entails accepting that everyone knew the eastern lot had intentionally been included in the counter-offer de Boer Farms made to the Hull family trust. However, this is contrary to the evidence.
[85] The view I have reached is that the eastern lot was entered on the counter- offer by mistake. It can perhaps be inferred that the Hull family trustees realised the counter-offer then received was providing then with a bargain that did not reflect true market value of all the items of property contained in the counter-offer. Looked at in this way, the acceptance of the counter-offer cannot be treated as evidence of an arms-length objective market sale between a willing buyer and a willing seller that would detract from Mr McBain’s evidence.
[86] It is not clear to me whether the argument about the purchase price reflecting the outcome of the market value of the eastern lot was run before the District Court. As the District Court Judge had an opportunity to view Ms Hull, he would have been in a better position than I am to form an assessment of Ms Hull and whether it would be appropriate to view her as a participant in a willing buyer, willing seller transaction, or as a person associated with a purchaser prepared to capitalise on a vendor’s error. Furthermore, the Court did not hear evidence from the Hull family trustees, who are the persons legally responsible for making the decision to accept the counter-offer. Thus, the Court cannot determine if the trustees’ acceptance of the counter-offer truly represents, from their perspective, a sale between a willing seller and a willing buyer. Not enough is known about the trustees of the Hull family trust to reach any conclusion about how they saw the sale. I have already found that the inclusion of the eastern lot in the counter-offer was not known by the de Boers, so they cannot be viewed as willing sellers to an arms-length transaction.
[87] Mr Gilding has not produced expert valuation evidence. Insofar as he seeks to contradict the plaintiff’s valuation evidence by pointing to evidence of his own, I consider he carries an evidential onus to establish that the evidence he relies on is reliable. Because I have not had the benefit of assessing Ms Hull, or any other persons associated with the Hull family trust, particularly the trustees responsible for accepting the counter-offer, I am not prepared to reach any conclusions about their response to the counter-offer. It follows that Mr Gilding has failed to establish that the evidence he invites the Court to rely on for the purpose of ascertaining the value of the sale is, in fact, reliable.
[88] I am satisfied with the evidence of Mr McBain. That evidence establishes that the value of the eastern lot in May 2007 is likely to have been $90,000 inclusive of GST (if any).
Approach to damages
[89] The amended statement of claim alleges professional negligence against Mr Gilding in his performance as the solicitor instructed by de Boer Farms and the de Boers to provide them with legal services for the sale of the dairy farm. The amended statement of claim also alleges that Mr Gilding owed duties of care when acting in the sale of the dairy farm, which he has breached. As framed, the claim may be both a tort alleging professional negligence or, in the alternative, a possible contractual claim for breaches of professional duty either expressly or impliedly incorporated in any retainer. Given that the claim was approached as a question of professional negligence in the District Court and that no arguments were addressed to the scope of Mr Gilding’s retainer, I regard it as based principally in tort.
[90] The general rule in tort is that compensatory damages are to be awarded in the amount required to put the plaintiff back into the position, or as near as money can, that he or she would have been in had the wrong not occurred: see AG v Geothermal Produce (NZ) Limited [1987] 2 NZLR 348 (CA) at 359.
[91] By contrast, a variety of measures may be adopted in contractual damages depending upon the outcome of the breach and the actions taken by the parties.
Different contractual scenarios can produce different results and contractual damages may play various roles: in restoring what the party expected from the contract, compensating them for steps taken in reliance on a contract, or more unusually restoring some undeserved benefit: see Newmans Tours Ltd v Ranier Investments Ltd [1992] 2 NZLR 68 (HC) at 86. It may be the case that the calculation of damages is different in contract and tort because the nature of the wrong complained of is different. But here, I consider the nature of the wrong is the same.
[92] Furthermore, the modern approach is to take a flexible approach to the assessment of damages. In McElroy Milne v Commercial Electronics Limited [1993]
1 NZLR 39 (CA) at 41, Cooke P stated:
There is no such thing as a rule, as to the legal measure of damages, applicable to all cases; and ... the ultimate question as to compensatory damages is whether the particular damage claimed is sufficiently linked to the breach of the particular duty to merit recovery in all the circumstances.
Later, in Ti Leaf Productions Limited v Baikie (2001) 7 NZBLC 103, 464 (CA), Gault J said:
There must be room for respectable argument that with the general trend towards a rationalisation of remedies and the greater analysis of underlying principle, there no longer is need to adhere to a single approach to the award of damages for contract breaches.
[93] Viewed through the rubric of contract, where a solicitor has been engaged on retainer to provide services for a client and is under a contractual duty to perform those services with due professional care and diligence, the client’s expectation is that they will do so. The de Boers expected that the solicitor would perform his services competently and verify that the transaction applied only to the dairy farm; they expected to retain the eastern lot. The objective of an award of damages is to place the client in the position they expected to be in, had the services been competently performed. Unfortunately, it is not possible here to order the return of the eastern lot, but damages may be awarded to compensate for the breach.
[94] From the perspective of the tort of negligence, if Mr Gilding had discharged the duties of care he owed to de Boer Farms and not acted negligently,
de Boer Farms would still have ownership of the eastern lot. They should be compensated for the loss of that land by damages recognising its value.
[95] Looked at in either contract or tort, the outcome is the same, namely, had Mr Gilding acted competently and in accordance with accepted standards for solicitors, de Boer Farms would not have lost the eastern lot. In the present case, de Boer Farms is seeking monetary compensation for the loss of its real property. I consider that obtaining an award of damages that seeks to provide de Boer Farms with a monetary equivalent of the value of the eastern lot is the appropriate measure of damages, whether the claim is viewed as one in contract or in tort
[96] In general, the time for assessing the loss starts at the time of the injury, and ends when the resultant losses are no longer suffered. In accordance with the general rule, therefore, the expectation would be that the assessment of de Boer Farms’ loss would be the value of the land at the time it lost the land through Mr Gilding’s negligence. This would mean the land value as at May 2007.
[97] In the present case, the valuation evidence attributes a value to the eastern lot as at 2008. Mr Gilding argues that this is the wrong time to assess the value of the loss and, accordingly, de Boer Farms’ case should fail for failure to prove loss appropriately. I consider this is an overly technical approach to take to the calculation of loss. It has been established for some time now that determining the time of assessment of loss is not to be approached in a mechanistic way through the application of rigid formulae. Citing Stirling v Poulgrain [1980] 2 NZLR 402 (CA) at 424, Dodd Properties (Kent) Limited v Canterbury CC [1980] 1 WLR 433, and Dominion Mosaics & Tile Company Limited v Trafalgar Trucking Company Limited [1990] 2 All ER 246 (CA), the authors of Civil Remedies in New Zealand at 2.4.1 state: “The choice of which date to use is flexible and is determined by the reasonableness of the result”.
[98] In particular, in Stirling v Poulgrain the Court of Appeal said, at 424:
The general rule that damages are assessed as at the date of the breach yields to the court’s power in the interests of justice to fix such other date as may be appropriate in all the circumstances.
[99] In the present case, the only evidence of value I have is at 2008. I accept there will be occasions when the evidence will show a considerable variation in value between one year and another, such that the choice of time of assessment of damage will have a critical impact on the quantum of the damages awarded. But here, the evidence strongly suggests that there would have been little, if any, difference in the value of the eastern lot in 2007 and in 2008. This is certainly the impression the District Court gained of the evidence, and I concur with that view. I consider, therefore, that the evidence in this case is such that nothing turns on whether the damages are assessed as at May 2007 or July 2008. As the only evidence to prove loss is the valuation as at July 2008, and as there is unlikely to have been any variation in value between May 2007 and July 2008, I consider that it is in the interests of justice to adopt Mr McBain’s value of $90,000 inclusive of GST (if any). Consequently, I see nothing wrong with the District Court choosing to rely on the valuation evidence given by Mr McBain to determine the quantum of damage to be awarded to de Boer Farms.
[100] It follows that de Boer Farms has proved its loss. It was, therefore, entitled to the judgment the District Court awarded in its favour.
Contributory negligence
The District Court Judge found that the de Boers were not “guilty of contributory negligence”. He considered their physical condition and their lack of knowledge of what was in fact happening precluded that ground of defence. I consider that finding was open to the District Court Judge to reach. I see no reason to depart from it. The District Court found that the duty of care which Mr Gilding had breached arose from his retainer as solicitor for de Boer Farms. The District Court Judge was correct to find at [129] of his judgment that the plaintiff to whom judgment should be given was de Boer Farms. It was the legal owner of the eastern lot, which it lost through Mr Gilding’s negligence.
Result
[101] Mr Gilding has failed to make out any of the grounds in his appeal. The appeal is dismissed. The parties have leave to file memoranda as to costs.
Duffy J
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