Gillibrand v Swanepoel
[2017] NZHC 1209
•6 June 2017
IN THE HIGH COURT OF NEW ZEALAND WHANGAREI REGISTRY
CIV-2014-488-129 [2017] NZHC 1209
BETWEEN CHRISTIAN JOHN GILLIBRAND AND
MARY CAECILIA GILLIBRAND AS TRUSTEES OF THE CHRIS AND MARY GILLIBRAND FAMILY TRUST First Plaintiffs
CHRISTIAN JOHN GILLIBRAND Second Plaintiff
AND
GEORGE PETER SWANEPOEL First Defendant
ANDREW PETER HOLGATE Second Defendant
CHRISITAN JOHN GILLIBRAND AND MARY CAECILIA GILLIBRAND
Third Parties
Hearing: 29 February, 1, 2, 3, 4, 7 and 8 March 2016 and written
submissions 13 and 17 March 2016
Appearances:
C T Patterson and H P Holland for the First and Second
Plaintiffs and Third Parties
H M Twomey and S M Watson for the First Defendant
Second Defendant in personJudgment:
6 June 2017
JUDGMENT OF WOODHOUSE J
This judgment was delivered by me on 6 June 2017 at 4:00 p.m. pursuant to r 11.5 of the High Court Rules 1985.
Registrar/Deputy Registrar
……………………………………
Solicitors / Counsel:
Mr C T Patterson, Barrister, Auckland
Ms H Twomey, Robertsons, Solicitors, AucklandMr A Holgate, Barrister, Whangarei
GILLIBRAND AND GILLIBRAND AS TRUSTEES OF THE CHRIS AND MARY GILLIBRAND FAMILY TRUST v SWANEPOEL & ANOR [2017] NZHC 1209 [6 June 2017]
CONTENTS
Para No.
Introduction [1]
The factual background [9]
2003 to Gordon Gillibrand’s death in April 2011 [12]
Gordon Gillibrand’s death to the removal application:
April 2011 to August 2012 [25]
The first opposition and first affidavit [39] Mr Holgate instructed as counsel: November 2012 [45] Change of position: the mistreatment allegations [50] The second opposition: May 2013 [57] Bupa objections [60] The third opposition and Mr Gillibrand’s second affidavit [62] The third affidavit [65] The Bupa debt proceeding [68] Mr Holgate’s disclosure to media [69] Bupa’s further objection and evidence in reply [73] The Gillibrands’ statement to Campbell Live [78] The removal decision [80] The costs decision: November 2013 [83] Following the costs decision [86]
Summary of claims: duty and breach [90]
Summary of claims: losses
Special damages for increased payments to Bupa and legal fees:
the overpayment claim [104]
Other claims [106]
Decision on Mr Gillibrand’s claim [107]
Mr Swanepoel’s defence to the trustees’ claims [113] Duty [114] Breach [115] Causation and loss: the overpayment claim [117] Defence to other claims [119]
Mr Holgate’s defence to the trustees’ claim and his cross-claims [120]
Evaluation: (1) were duties of care owed by the defendants to the trustees?
Mr Swanepoel [125]
Mr Holgate [136]
Evaluation: (2) was there breach of duty? [138] Credibility [140] Breach of duty: relevant legal principles
(1) The standard of care [153]
(2) Acting on client’s instructions [156] (3) Standard of care for advice on risk [159] (4) Acting on counsel’s advice [161]
The trust debt issue: was there breach by Mr Swanepoel? [168] The trust debt issue: was there breach by Mr Holgate? [180] The mistreatment allegations: was there breach by Mr Holgate?
(1) Introduction [182]
(2) Mistreatment allegations not grounds to oppose removal [184] (3) Absence of evidence to support mistreatment allegations [190] (4) Mr Holgate’s lack of reasonable judgment and objectivity [197] (5) Mr Holgate’s affirmative defences [201] (6) Conclusion on Mr Holgate’s negligence [207]
The mistreatment allegations: was there breach by Mr Swanepoel? [208]
Conclusion [230]
Evaluation: (3) causation and quantification of loss on the
overpayment claim [231]
Interest paid to Bupa and Webb Ross [235] Mr Henderson’s costs as executor [238] Legal costs on Mr Henderson’s claim [239] Bupa’s legal costs and disbursements [240]
Evaluation: (4) the plaintiffs’ claims for wasted costs and general damages Wasted costs [245] General damages [250]
Evaluation: (5) Mr Holgate’s cross-claims [259] Costs [267] Result [268]
Introduction
[1] The first plaintiffs, Christian and Mary Gillibrand, sue as trustees of the Chris and Mary Gillibrand Family Trust (the trust). The second plaintiff, Christian Gillibrand, sues in his personal capacity. The plaintiffs claim that the first defendant, George Swanepoel, and the second defendant, Andrew Holgate, are liable to them for breach of duties of care owed to the plaintiffs when acting as a solicitor and a barrister respectively.
[2] The plaintiffs claim that Mr Swanepoel is liable to them for losses incurred as a result of breach of duties of care owed to them when acting in respect of the following:
(a) From 2009 to April 2015 on a claim by Bupa Care Services Ltd (Bupa) for resthome fees incurred by Christian Gillibrand’s father, Gordon Gillibrand, up to the date of Gordon Gillibrand’s death in April 2011. The claim was initially made against Gordon Gillibrand and then against his estate.
(b)An application by Bupa, made in December 2012, to remove Christian Gillibrand as sole executor of his father’s estate because of alleged conflicts of interest.
[3] I will, for convenience, refer to Christian Gillibrand as “Mr Gillibrand” and to his father as “Gordon Gillibrand”.
[4] Against Mr Holgate the plaintiffs claim that they suffered losses as a result of breaches of duties of care owed to them when Mr Holgate acted as counsel, on instructions from Mr Swanepoel, in respect of Bupa’s application to remove Mr Gillibrand as executor and then on proceedings issued by Bupa to recover the debt for resthome fees.
[5] There were protracted negotiations with Bupa, and then proceedings by Bupa, in its efforts to recover the fees and interest and, at a later stage, legal costs. There were two issues central to resolution of Bupa’s claim for the resthome fees.
One was whether a debt owed by the trust to Gordon Gillibrand had been forgiven. This was central because, if no debt was owed by the trust to the estate, the estate was insolvent. The second issue was whether Bupa had been negligent in its care of Gordon Gillibrand and, if so, whether this provided legal grounds for resisting Bupa’s application to remove Mr Gillibrand as executor and Bupa’s claim for the resthome fees and other costs.
[6] Bupa’s application to remove Mr Gillibrand as executor of the estate was on the grounds that there was a conflict between, on the one hand, his personal interests as the sole beneficiary of the estate and as one of the trustees and beneficiaries of the trust which had an apparent debt to the estate, and on the other his obligation to recover the debt apparently owed by the trust to the estate in order to pay estate debts.
[7] Matters relating to Gordon Gillibrand’s estate were eventually brought to an end following two court hearings. In August 2013, on Bupa’s application to remove Mr Gillibrand as executor, an order was made removing him. In November 2013, in that proceeding, there was a further order that he pay Bupa’s costs, with part of those costs being on an indemnity basis. Bupa’s total claim for outstanding resthome fees, with interest, and for costs, was settled by payment of $150,000 by the estate to Bupa. When Gordon Gillibrand died the debt for resthome fees was approximately
$45,000. The funds to pay Bupa had come from the trust in partial satisfaction of the trust’s debt to Gordon Gillibrand. In addition, the estate paid interest on legal fees that had been incurred by Gordon Gillibrand, and almost $23,000 in fees incurred in the administration of the estate by the new executor, Stuart Henderson, a Whangarei solicitor. These sums were also paid from funds recovered by the estate from the trust.
[8] The claims of the first and second plaintiffs are in the alternative, with the primary claim being that of the first plaintiffs as trustees. The trust contends that the alleged negligence of each of the defendants has caused loss because that negligence resulted in the trust paying to the estate more than what would have been required
had there been no negligence.1 A question whether the claims of the plaintiffs are in contract or in tort is discussed below. In this proceeding it is unnecessary to consider any differences between a claim in contract and one in tort. The essential basis for Mr Gillibrand’s claim in his personal capacity is founded on the fact that he is the sole beneficiary under his father’s will and that, as a consequence of the alleged negligence of the defendants, his entitlement as beneficiary has been diminished because the estate paid more than would have been required if there had been no negligence.
The factual background
[9] There was a large number of facts in issue. Many of these were on matters which I have concluded are not relevant. In general, I do not intend to record these matters or my reasons for concluding that they are not relevant because it would add unnecessarily to the length of this judgment.
[10] The factual narrative that follows records many statements of fact where, again, there was conflicting evidence. Some of the important conflicts of evidence are identified and, where necessary, with reasons for my particular finding of fact, but I have not considered it necessary to go into the detail in respect of all matters of this nature.
[11] Although there are the separate claims of Mr and Mrs Gillibrand as trustees and of Mr Gillibrand in his personal capacity, I will generally refer to them collectively as “the plaintiffs”, or as “Mr and Mrs Gillibrand”, unless a clear distinction between the capacities in which they have brought these claims is necessary.
2003 to Gordon Gillibrand’s death in April 2011
[12] Mr Gillibrand is the only child of Gordon and Freda Gillibrand. Mrs Freda
Gillibrand died in 2000. In 2003 Gordon Gillibrand suffered a stroke. He required
24 hour care and support and in May 2003 was admitted to a resthome owned and operated by Bupa. Gordon Gillibrand granted a power of attorney to his son.
1 I will use the word “negligence” to refer to a breach of a duty of care owed in contract or in tort.
[13] Gordon Gillibrand owned a farm. In December 2003 he sold the farm to the trust for $505,000 and advanced the total purchase price to the trust as a loan. The principal sum was payable on demand, with a proviso that demand could not be made within seven years of the date of the advance. I will refer to this as “the trust debt”.
[14] Until November 2004 Gordon Gillibrand paid the resthome fees but, it appears, from that date he had no funds under his control to continue the payments. From November 2004 until around the middle of 2008 the resthome fees were paid by the trust. The sums paid by the trust were credited as repayments of the trust debt. A total of $150,000 was paid.
[15] From around the middle of 2008, or at least by 2009, the trust had no material assets, other than the farm, to make further repayments to Gordon Gillibrand and enable continued payment of resthome fees. In addition, the personal financial circumstances of Mr and Mrs Gillibrand meant that it would have been difficult for them personally to make any payments that could be used to meet the resthome fees (whether indirectly by loans through the trust or directly to Bupa). The trustees were also reluctant to borrow in order to make payments to meet the resthome fees. Mr Gillibrand’s evidence was that in 2009 their “financial situation became very difficult”. This was made materially worse in March 2012 when Mrs Gillibrand was seriously injured in a car accident.
[16] Mr and Mrs Gillibrand first spoke to Mr Swanepoel about the problem with the resthome fees in December 2009. At that date Mr Swanepoel was already acting for the trust in relation to a lease over the farm. Mr Swanepoel gave them some preliminary advice, with options. The option the plaintiffs were keen on pursuing was to investigate whether Gordon Gillibrand could obtain a WINZ subsidy.
[17] Up to that date the solicitors generally acting for the Gillibrands were solicitors in Dargaville, Hammonds. The Gillibrands gave authorities to Mr Swanepoel for him to uplift their personal files, the trust files, and Gordon Gillibrand’s files from Hammonds.
[18] A formal letter of engagement was sent by Mr Swanepoel to Mr Gillibrand in February 2010, and was signed and returned by Mr Gillibrand in April 2010. It was addressed to “Chris Gillibrand”. The subject matter of the letter of engagement is “resthome subsidy – Mr Gillibrand senior”. There is nothing else in the letter of engagement which records the scope of the instructions or indicates who Mr Swanepoel was acting for.
[19] Mr Swanepoel described his legal practice as “a general practice, which was suitable for Whangarei”. He said:
The main part of my practice comprised conveyancing, trust, family and employment law. I also practiced some commercial law, in particular drafting leases and agreements for sale and purchase of businesses. In the context of some family law matters, some of the employment files and some minor commercial matters, I appeared in court on occasion but I did not consider litigation to be the main thrust of my practice, preferring to resolve disputes by negotiation or mediation. I generally briefed a specialist barrister on larger, complex or serious litigation as I did not consider litigation to be my area of expertise.
[20] I accept Mr Swanepoel’s description of the general nature of his practice, and notwithstanding contentions for the plaintiffs that Mr Swanepoel had a reasonable amount of relevant litigation experience.
[21] Up to February 2010 Bupa had been in communication with Mr Gillibrand, from time to time, seeking payment of the outstanding fees or alternative proposals to deal satisfactorily with the matter. On 12 February 2010 Bupa’s resthome manager, having earlier obtained a medical assessment of Gordon Gillibrand’s mental competence, obtained from Gordon Gillibrand a signed revocation of the power of attorney in favour of his son. This was followed with preliminary advice from Bupa, to Mr Swanepoel, that the Public Trust Office was to be engaged to advise Gordon Gillibrand and that there was a possibility that Gordon Gillibrand might have to be evicted from the resthome. However, in March 2010 a Whangarei solicitor, Stuart Spicer of Webb Ross, was instructed to act for Gordon Gillibrand, and in particular to provide advice as to how the resthome fees could be paid.
[22] From March 2010 there was a number of written communications between
Mr Spicer and Mr Swanepoel, and Mr Spicer and Mr Gillibrand personally. Mr
Spicer also had a meeting with Mr Gillibrand and Mr Swanepoel to discuss means by which Bupa’s fees could be paid, including further repayment of the trust debt. The liability of the trust to Gordon Gillibrand was a matter into which Mr Spicer enquired in some detail. Mr Spicer sought financial information relating to the trust from Mr and Mrs Gillibrand. In due course Mr Spicer was provided with a copy of the financial statements for the trust for the year ended 31 March 2010. These recorded the trust debt at $355,000; a balance derived from the original loan to the trust of $505,000 less repayments made by the trust of $150,000 to enable Gordon Gillibrand’s liability to Bupa to be met.
[23] Through to April 2011 different proposals were put forward, both by or on behalf of Mr and Mrs Gillibrand, and by Mr Spicer on behalf of Gordon Gillibrand, with the ultimate objective of providing Gordon Gillibrand with assured capacity to pay the resthome fees. The alternatives do not need to be outlined, other than the final offer made before Gordon Gillibrand died, by Mr Swanepoel on instructions from Mr and Mrs Gillibrand.
[24] The final offer is recorded in a letter of 8 April 2011 from Mr Swanepoel to Bupa. This letter was in response to a letter from Bupa directly to Mr Gillibrand demanding payment of the total of the Bupa debt. Mr Swanepoel had a meeting with Mr and Mrs Gillibrand at the beginning of April 2011, drafted a letter to Bupa, and obtained the authority of the Gillibrands to send the letter. The letter, so far as relevant, contains the following:
I refer to your letter dated 28 March 2011, which my clients have handed to
me …
What my clients propose is the follows:
1.They accept that there is a debt owing back to Mr Gillibrand Senior by the Chris and Mary Gillibrand Family Trust of $355,000.00, as a result of the purchase of the family farm from him some time ago.
2.To assist with the obtaining of assistance from WINZ my clients, on behalf of the trust are now in a position to transfer to Gordon a property situated at Waihue Road, Waihue … which currently has a capital value of $365,000 …
3.It is then envisaged that a charge can be obtained over that property in favour of WINZ from Gordon which will then secure the payments to you of the outstanding amounts.
Gordon Gillibrand’s death to the removal application: April 2011 to August 2012
[25] Gordon Gillibrand died on 15 April 2011.
[26] The proposal in Mr Swanepoel’s letter to Bupa of 8 April 2011 had not been accepted before Gordon Gillibrand died, and it was not modified following his death to become an arrangement between the trust and Gordon Gillibrand’s estate.
[27] Following Gordon Gillibrand’s death Mr Swanepoel was instructed to act for Mr Gillibrand as executor of Gordon Gillibrand’s estate. Mr Swanepoel sent Mr Gillibrand a letter of engagement, which Mr Gillibrand signed. This was expressly directed to instructions from Mr Gillibrand to Mr Swanepoel “to act in the matter of your late father’s estate”. The letter is addressed to “Estate of G J Gillibrand, C/o Mr Chris Gillibrand”. The subject matter is “Claim by Bupa Care Services New Zealand Limited”.
[28] The estate had only two debts; or at least only two referred to in the evidence and only two of any relevance. One was the debt to Bupa which, on Gordon Gillibrand’s death, was just under $45,000, a sum which included interest on the fees. The other debt was $8,174.50 owed to Webb Ross for Mr Spicer’s services up to the date of Gordon Gillibrand’s death. The only apparent asset of the estate available to pay the Bupa and Web Ross debts was the trust debt.
[29] Probate of Gordon Gillibrand’s will was granted in July 2011. Between that date and August 2012, when Bupa filed its application to remove Mr Gillibrand as executor, no progress was made in resolving issues relating to the Bupa debt, notwithstanding steps to that end taken by Mr Swanepoel on behalf of the Gillibrands, in accordance with instructions I am satisfied he got from them. It is necessary to refer only to a relatively small number of matters referred to in the evidence in relation to this period.
[30] In September 2011, accountants acting on instructions from Mr and Mrs
Gillibrand for the trust produced the financial statements for the year ended 31
March 2011. These again recorded the trust debt at $355,000. The Gillibrands did
not provide Mr Swanepoel with copies of these financial statements, or even refer to them, until a considerable time after they were produced.
[31] There was an email from Mr Swanepoel to Bupa on 21 December 2011. Bupa had enquired whether the offer made in Mr Swanepoel’s letter of 8 April 2011 was still on the table. Having taken instructions from Mr Gillibrand, Mr Swanepoel sent an email to Bupa’s representative, with a copy to Mrs Gillibrand, as follows:
… I have Spoken to Chris and looked at the letter attached which was a proposal put forward by clients to try and assist with obtaining a loan or subsidy to pay Gordon’s accounts. The offer in the letter was never acknowledged or accepted by Bupa. Nor was it approved by all the trustees of the family trust as it was purely a proposal. Obviously once Gordon passed away it no longer applied and it was for Chris as executor to make a decision on. In my discussion with Chris he is still very upset about the way Darryl [Bupa’s manager at Gordon Gillibrand’s resthome] went about terminating his power of attorney and the stress he put Gordon under as a result for which Chris has had no acceptance of any wrong or apology.
He has approached the other trustees of the trust2 but they are correctly pleading the statute of limitations apply and they have an obligation to the beneficiaries of the trust to protect the trust assets …
…
The bank accounts [of the estate] have rendered no funds and we are holding nothing in trust so the estate is bankrupt. It is my recommendation that Chris administers the estate pursuant to Part 17 of the Administration Act 1969.
[32] This was the first indication to Bupa, by or on behalf of Mr and Mrs Gillibrand, that there was some issue as to whether the trust debt was still recoverable. I accept Mr Swanepoel’s evidence as to the instructions he received from Mr Gillibrand which resulted in that email. Mr Swanepoel said:
I discussed [Bupa’s enquiry about the 8 April 2011 offer] with Chris, including the fact that now he was in [a] position to put the property on the market, sell it and pay the Bupa Debt. Chris was adamant that he did not want to do that and maintained that there was no way to finance payment of the Bupa Debt at that time. In accordance with his instructions I raised the Insolvency Arguments.
[33] It is convenient to record at this point that there was criticism in submissions for the plaintiffs of the legal arguments advanced in that email and which Mr
2 There was a third trustee, Mrs Gillibrand’s brother. He resigned as a trustee in November 2013.
There was no evidence from him in this proceeding.
Swanepoel acknowledged were arguments he advanced. The arguments can be challenged. And the reference to the Administration Act was wrong; it should have been a reference to the Insolvency Act. But these submissions for the plaintiffs do not point to any breach by Mr Swanepoel of any duty of care he owed to the plaintiffs. He was complying with his instructions in seeking to construct arguments to support Mr Gillibrand’s primary objective, which was to avoid having to sell the farm.
[34] On 30 January 2012 Bupa’s solicitors, Gibson Sheat, wrote to Mr Gillibrand as executor. Amongst other things, they challenged the propositions in Mr Swanepoel’s email of 21 December and said that, in their view, the trust debt was owing, and referred to Mr Gillibrand’s duty as executor to collect the assets of the estate and pay all debts. Mr Swanepoel took instructions from Mr and Mrs Gillibrand. He was at the same time acting for the trust on a new bank loan that had been obtained for a new house. Mr Swanepoel recommended to Mr and Mrs Gillibrand that they use part of the proceeds of the loan to repay the Bupa debt. He also advised them that failure to pay the estate’s liabilities at that stage could only lead to further costs being incurred. Mr and Mrs Gillibrand were determined that all of the available funds should be put towards the new house. Also at this time, during February 2012, they told Mr Swanepoel for the first time that the trust debt had been forgiven by Gordon Gillibrand. I accept Mr Swanepoel’s evidence. His evidence included a statement that he “was amazed this was not raised on the numerous occasions earlier when the [trust debt] had been discussed and in particular when Gordon was alive so that steps could have been taken to obtain the necessary confirmation”.
[35] Having taken instructions from Mr and Mrs Gillibrand on these matters, Mr Swanepoel prepared a draft of a response to Gibson Sheat’s letter to Mr Gillibrand. The draft was approved by Mr and Mrs Gillibrand. The final version sent by Mr Swanepoel to Gibson Sheat on 2 March 2012. Matters of relevance are:
(a) Mr Gillibrand was “fully aware that there is a debt between Bupa and
his father’s estate”.
(b)There was a challenge to Gibson Sheat’s interpretation of Mr Swanepoel’s letter to Bupa of 8 April 2011 as an acknowledgement that the trust was indebted to Gordon Gillibrand in a sum of $355,000. Contentions advanced by Mr Swanepoel in support of this position were that the 8 April 2011 letter referred to the need for a resolution of the trustees, and that the proposal for the trust to transfer the Waihue Road property to Gordon Gillibrand was made by Mr Gillibrand simply to assist Gordon Gillibrand “purely out of love for his father
… not because he believed any debt was owed”.
(c) Further arguments were advanced to the effect that there was no debt owed by the trust to the estate and reference to a need for the trustees to act unanimously. It was stated that the trustees of the trust refused to recognise a debt to the estate and believed that the acknowledgement of debt had expired, and they had been advised to take independent legal advice in that regard.
(d) Mr Gillibrand’s view, as executor, was that the estate was insolvent.
[36] Mr Swanepoel’s evidence was that, although he drafted the letter, the contention that the estate was insolvent was not based on his advice to the Gillibrands, and that, contrary to the plaintiffs’ contentions, he did not advise them that the trust was not indebted to the estate for the trust debt. He said that for these reasons he expressly recorded in the letter that the proposition that the estate was insolvent was “the view of Mr Gillibrand” and noted his advice to the trustees to take independent legal advice. I accept Mr Swanepoel’s evidence in this regard.
[37] In March 2012 the Gillibrands were involved in a motor vehicle accident and Mrs Gillibrand was seriously injured. Mrs Gillibrand was incapacitated for an extended period. This added materially to the financial difficulties of the Gillibrands.
[38] In August 2012 Bupa filed its application to remove Mr Gillibrand as executor because of a conflict of interest. Mr Gillibrand provided a signed letter of
engagement to Mr Swanepoel for Mr Swanepoel to act on the removal application. A notice of opposition and an affidavit of Mr Gillibrand in support of the opposition were filed in October 2012. I will refer to the opposition as “the first opposition” and to the affidavit as “the first affidavit”.
The first opposition and first affidavit
[39] The relevant content of the first opposition was that the estate had no funds to pay the Bupa debt and that Mr Gillibrand, as executor, had an absolute discretion to postpone the sale and conversion of any real and personal property of the estate. Although the document was in form an opposition to the removal application, the opposition did not contain an assertion that there was no conflict.
[40] The absence of any direct challenge was taken further in the first affidavit.
Mr Gillibrand’s first affidavit included the following:
(a) It was his understanding and agreement with his father that demand for the trust debt would never to be made.
(b)He had approached the trustees of the trust with regard to the Bupa debt and “they reminded me of the promise that the debt was not to be called up”.
(c) His relationship with Bupa had been “an unhappy one” and he believed that Bupa in large measure was responsible “for the situation that they find themselves in”.
(d)In January/February 2010 the Gillibrands were having some financial difficulties, but wished to work out a compromise arrangement for the balance of the Bupa debt. Unbeknown to Mr Gillibrand, in February
2010 the Bupa manager “forced” Gordon Gillibrand to sign a revocation of the power of attorney in favour of Mr Gillibrand. This destroyed Mr Gillibrand’s ability to help his father.
(e) He said:
It is not that I do not recognise Bupa’s debt owed by my father’s estate (although I do challenge the interest component), but that I find myself in a serious quandary and accordingly seek the Court’s directions with regard to the quandary that I find myself in.
The nature of the quandary was itemised, but in essence it was a proposition that the estate had no liquid assets and there had been an “undertaking” from Gordon Gillibrand “as claimed by the trustees” that demand for the trust debt was not to be made and this caused difficulties for Mr Gillibrand in his capacity as executor. This was compounded by the fact that the Gillibrands had no available financial resources of their own to meet the debt. And there were no funds in the estate “to fight any legal battle against Bupa or the trust”.
(f) Mr Gillibrand said that in consequence he “approached the Court for guidance on how he should proceed”.
[41] The conclusion to Mr Gillibrand’s affidavit, recorded in sub-paragraph (f) above, was consistent with Mr Swanepoel’s evidence that he considered the best approach, in substance, was to seek directions from the Court.
[42] There was a directions conference on the removal application on 10 October
2012 before Heath J. Mr Swanepoel attended with Mr Gillibrand. The Judge’s
minute of the conference recorded the following:
[3] Mr Gillibrand, because he holds positions as a trustee on both sides of the fence, finds himself in a difficult and conflicted situation. As I indicated to counsel this morning, the case seems to me to be one that calls out for the appointment of someone independent to investigate whether a debt is payable by the trustees of the Family Trust to the estate and, if so, whether anything material can be recovered.
[43] Mr Swanepoel, in his evidence, said that the Judge spoke directly to Mr Gillibrand and asked him whether he would step down as an executor and that Mr Gillibrand said that he would not. The Judge then said he was going to adjourn the conference to give Mr Swanepoel an opportunity to have a discussion with Mr Gillibrand on the possibility of appointing the Public Trust. The adjournment is noted in the minute. Mr Swanepoel said that he did have a discussion with Mr
Gillibrand who then agreed to stand down and to the appointment of the Public Trust. Mr Gillibrand’s agreement was conveyed to the Judge. The matter was adjourned because counsel for Bupa had not been able to obtain full instructions. There was a further conference on 4 December 2012 when, essentially by consent, an order was made appointing the Public Trust as an additional and independent trustee of the estate. This appointment was for the limited purpose of investigating whether the trust debt was payable to the estate and, if so, whether “anything material can be recovered”.
[44] The Public Trust, following enquiries, reported to the Court as required on 1
March 2013. The conclusions were that, from the information available to the Public Trust, the trust debt was owed to Gordon Gillibrand’s estate and the trust had sufficient assets to pay the debt.
Mr Holgate instructed as counsel: November 2012
[45] Mr Holgate was first involved in this matter as an agent for Mr Swanepoel when Mr Swanepoel was on leave for approximately two weeks in October- November 2012. When Mr Swanepoel returned he was advised that the Gillibrands wanted Mr Holgate to act as counsel. In a formal sense, Mr Holgate was engaged as counsel, on instructions from Mr Swanepoel, from November 2012. Mr Swanepoel continued as solicitor on the record for the removal application.
[46] Mr Gillibrand said that Mr Holgate was instructed in October 2012 and, more particularly, that this occurred without any consultation with him and Mrs Gillibrand. The impression that Mr and Mrs Gillibrand sought to convey was that, although they did not object to Mr Holgate’s acting as counsel, his involvement as counsel was something effectively foisted on them, and from that point everything was run by Mr Holgate in conjunction with Mr Swanepoel. I do not accept those contentions. My conclusions are that Mr and Mrs Gillibrand were enthusiastic to have Mr Holgate act as counsel. On Mr Swanepoel’s return in November, he was told by Mr Gillibrand, and by Mr Holgate, that Mr Gillibrand wanted Mr Holgate to act on the removal application. Mr Swanepoel also became aware that without any reference to Mr Swanepoel, Mr and Mrs Gillibrand had instructed Mr Holgate on a claim arising out
of their motor vehicle accident. Mr Swanepoel said that it was apparent that Mr and Mrs Gillibrand and Mr Holgate “had developed a strong rapport”. I am satisfied that they had, and that that remained the position at least until the delivery of the decision on the removal application in August 2013, and possibly up to the costs decision which followed in November 2013.
[47] There is a memorandum from Mr Holgate to Mr Swanepoel dated 5
November 2012, when Mr Swanepoel was still overseas, relating to a meeting with the Gillibrands. Notwithstanding contrary evidence from Mr and Mrs Gillibrand, I am satisfied that there was a meeting on or about that date. I am also satisfied that the memorandum accurately recorded the advice given by Mr Holgate to Mr and Mrs Gillibrand. The relevant matters were, in summary:
(a) The question of Mr Gillibrand’s conflict of interest as executor was
discussed and Mr Gillibrand was of the view that he was conflicted.
(b)Given the conflict, Mr Holgate recommended that Mr Gillibrand offer to stand down as executor with the Public Trust to be appointed.
(c) The proposal to stand down with appointment of the Public Trust was subject to satisfactory arrangements being made in respect of costs for any litigation that might follow.
[48] On 15 March 2013 Mr Holgate wrote to Gibson Sheat proposing that Mr Gillibrand step aside as executor, that the Public Trust administer the estate, and that costs were to be agreed once the litigation was concluded.
[49] Gibson Sheat sought clarification as to who would indemnify the Public Trust for its own costs in administering the estate. Mr Holgate’s response to Gibson Sheat included the following:
That blood-sucking client of yours let this particular genie out of the bottle, and having done so, will have to front indemnification, if any is required.
Change of position: the mistreatment allegations
[50] That decidedly unprofessional and intemperate description of Gibson Sheat’s client heralded three things of consequence: a significant change in the advice Mr Holgate gave to the plaintiffs; a new position adopted by the plaintiffs on whether there was a debt owed by the estate to Bupa and on whether Mr Gillibrand should stand because of a conflict; a resistance by Mr Gillibrand to stand down because of a conflict of interest; and a general approach by Mr Holgate which lacked reasonable judgment and objectivity.
[51] The new position adopted by the plaintiffs was that Bupa had failed to provide proper care to Gordon Gillibrand in the period leading up to his death and that this provided a complete defence to Bupa’s claim for the Bupa debt and grounds to oppose the removal application. I will refer to this as “the mistreatment allegations”.
[52] The genesis of the mistreatment allegations was advice to Mr Swanepoel from Mr and Mrs Gillibrand, sometime before he went overseas in October 2012, that they had been informed by a number of people that Gordon Gillibrand had been badly treated by Bupa. Mr and Mrs Gillibrand contended that it was Mr Swanepoel who had first raised the possibility of what became the mistreatment allegations following a discussion Mr Swanepoel had had with another client of his, Frank Nola. I am satisfied that the genesis of the allegations was advice from Mr and Mrs Gillibrand to Mr Swanepoel. I also accept Mr Swanepoel’s evidence on this matter as follows:
I did not take the claims by Chris and Mary very seriously as I knew that they were both very upset with what they perceived as Bupa pressuring Gordon to revoke the [power of attorney from Gordon to Chris] and making unreasonable demands for payment of the Bupa Debt, and tended to latch on to anything that they believed would make Bupa look bad.
[53] Following that initial advice from Mr and Mrs Gillibrand, Mr Nola came to see Mr Swanepoel on an unrelated matter. Mr Nola saw Gordon Gillibrand’s name on a file and mentioned that, the night before Gordon Gillibrand died, Mr Nola had been visiting an aunt of his at the resthome. Mr Nola said he had seen Gordon Gillibrand sitting by an open window in some distress and Mr Nola had spoken to a
nurse, but his concerns had been dismissed. Mr Swanepoel said that, although he did not consider that this evidence from Mr Nola was relevant to opposition to the removal application, he asked Mr Nola if he would be willing to provide an affidavit. This was because Mr Swanepoel thought the information might assist Mr Gillibrand in negotiating a settlement with Bupa.
[54] Most of the events to be recorded from this point were in 2013. For that reason, from this point, where a date is recorded, I have omitted the year if it is 2013.
[55] The first advice to a third party of the mistreatment allegations had been in a letter from Mr Holgate to the Public Trust in February. The letter records, in fairly categorical terms, allegations of mistreatment or failure to provide proper care, with a statement that, “on the face of the evidence available”, there were serious failings by Bupa. There was no evidence to support the serious allegations that were made. A draft of the letter included a sentence as follows:
While the conditions in which Mr Gillibrand died may have been appropriate in Auschwitz, I have little doubt on viewing the emerging evidence that [Bupa] was culpable in Law.
[56] Mr Holgate, in accordance with a standing arrangement he had with Mr Swanepoel, asked Mr Swanepoel’s secretary to type the draft. Mr Swanepoel’s secretary showed the draft to Mr Swanepoel because she was concerned by the Auschwitz reference. Mr Swanepoel then spoke to Mr Holgate, “remonstrated with him”, as Mr Swanepoel put it, and required the statement to be removed. The draft had in the meantime been approved by the Gillibrands. Mr Holgate, when the final version went to the Public Trust, sent a copy to the Gillibrands with a comment:
Older and wiser minds have prevailed and I moderated my comments – the Auschwitz comparison while suited to my dark humour would cause more trouble than we want or need.
The second opposition: May 2013
[57] On 23 May an amended notice of opposition to the removal application was filed and served (the second opposition). The second opposition introduced the mistreatment allegations and these were at the forefront of the opposition from that point. These new grounds of opposition, compared with what went before, were
central to a subsequent decision of Heath J in the removal proceeding ordering Mr
Gillibrand to pay indemnity costs to Bupa for all costs incurred from 23 May.
[58] The second opposition was filed without any reference to Mr Swanepoel. Mr Swanepoel’s evidence, which I accept, was that he did not recall seeing the second opposition, or a third opposition referred to below, until around 11 July.
[59] The mistreatment allegations were very specific, as follows:
(a) It was alleged that Gordon Gillibrand died due to Bupa’s negligence,
with particulars in that regard including the following:
· Gordon Gillibrand “had chronic bronchitis or quite possibly
cardio-pulmonary obstructive disease”.
· Gordon Gillibrand was placed at a wide open window when the cold air coming in exacerbated his condition and increased the distress that he was in and when he could not move himself.
· Bupa failed to monitor Gordon Gillibrand and had it done so his death could have been averted.
(b)It was alleged, in the alternative, that if Gordon Gillibrand was terminally ill Bupa’s negligence brought his death forward and shortened his life such that there was a “causal link between Bupa’s conduct and the death of” Gordon Gillibrand.
(c) There was an alternative defence that Bupa was precluded from recovering its fees because it came to Court without clean hands.
(d)There was a third alternative contention that Bupa was precluded from recovering its fees because its treatment of Gordon Gillibrand “was inhuman [sic] and degrading treatment and/or punishment”. This included a particular that Gordon Gillibrand “was effectively left to
drown on the mucous [sic] in his lungs, alternatively left in great
distress with callous disregard to the distress that he was in”.
(e) In respect of the mistreatment allegations, the opposition concluded:
In all the circumstances Bupa seeks reward from [Gordon Gillibrand’s] estate for killing him. This is both an absurd claim and a clear instance of trying to take advantage of its own wrong-doing.
(f) The second opposition also recorded that there was an issue whether the trust debt had been forgiven, with a positive statement that “there is evidence to show that the debt has been forgiven”. It may be noted here that no evidence was ever produced that the debt had been forgiven other than the generalised contentions of Mr and Mrs Gillibrand to that effect.
Bupa objections
[60] Gibson Sheat wrote to Mr Holgate on 30 May. There were two main points in the letter. The first was to the essential effect that the grounds of opposition did not provide grounds for opposing the removal order sought. The reasons for and the extent of Mr Gillibrand’s conflict were set out in detail. The second point concerned the nature of the mistreatment allegations. Reference was made, in particular, to the allegation that “… in all the circumstances Bupa seeks reward from the deceased’s estate for killing him …”. Gibson Sheat said that the allegations in the second opposition “amount to imputations of a criminal nature and could not be more serious”. They then referred to the professional duty of lawyers to ensure that there were proper grounds for making such allegations. Case authority was cited,
including a quotation of observations of Lord Reid in Rondel v Worsley3 and the
New Zealand Court of Appeal in Gazley v Wellington District Law Society,4 citing the passages from Rondel v Worsley.
[61] Gibson Sheat’s letter recorded, at the end of it, that it was copied to Mr
Swanepoel. Mr Swanepoel said he did not recall seeing it at the time.
3 Rondel v Worsley [1969] 1 AC 191 (HL) at 227 and 231.
4 Gazley v Wellington District Law Society [1976] 1 NZLR 452 (CA) at 453.
The third opposition and Mr Gillibrand’s second affidavit
[62] On 10 June a further amended opposition to the removal application was filed (the third opposition) with a further affidavit from Mr Gillibrand (the second affidavit). These documents were prepared and filed without reference to Mr Swanepoel. When these documents were filed and served there had been no response from Mr Holgate to the letter of 30 May from Gibson Sheet. The third opposition maintained the mistreatment allegations in terms similar to the second opposition, including the following:
· Bupa was culpable for causing Gordon’s death.
· Bupa failed to monitor Gordon when he was in significant distress, and had it done, the death could have been averted.
· On being warned of Gordon’s plight Bupa and its staff showed contumelious disregard for Gordon’s rights and circumstances by refusing point blank to take any steps at all.
· The Deceased was effectively left to drown on the fluid in his lungs, alternatively left in great distress with callous disregard to his plight.
· In all the circumstances Bupa seeks reward from the Deceased’s estate
for killing him.
[63] The second affidavit of Mr Gillibrand, sworn on 7 June, the date of the third opposition, was an affidavit in support of an application that Bupa make discovery of all of Gordon Gillibrand’s medical records held by Bupa and in support of the opposition to the removal application. The discovery application was made on the grounds that the documents sought were relevant to the removal application and also relevant to an intended application for declaratory orders relating to Bupa’s treatment of Gordon Gillibrand. In support of the application, Mr Gillibrand produced a statement of Mr Nola which had been prepared in the form of an affidavit by Mr Swanepoel but had not been sworn. This affidavit did not contain any evidence in support of the serious allegations in the opposition.
[64] Mr Gillibrand said that he had been given no opportunity to read the affidavit and effectively disclaimed any knowledge of its content. I do not accept that evidence. This aspect of Mr Gillibrand’s evidence is discussed more fully below, when considering questions of credibility.
The third affidavit
[65] There is a third affidavit of Mr Gillibrand dated 21 June. Mr Gillibrand did not refer to this affidavit in his brief of evidence, but confirmed in cross-examination that he had read this affidavit. This affidavit was prepared following directions from Heath J for any further affidavit evidence to be filed for the hearing of the removal application in the event that settlement was not reached, and settlement was not reached. Mr Gillibrand provided a factual narrative of his own observations when he visited his father on 14 April 2011, the day before he died. There was no evidence from Mr Gillibrand in this relatively short narrative bearing on the quality of the care provided by Bupa staff and Mr Gillibrand concluded his summary by saying:
In retrospect I do not know whether Dad’s doctor had been to see him by that point or not.
This was at the end of the day after Mr Gillibrand had finished work. Mr Gillibrand was advised at around midday the following day that his father had died.
[66] He concluded this part of his affidavit by saying:
To sum up, I had always understood that Dad was supposed to be cared for by Bupa and instead I find that his final days were certainly not his best days. It will be argued at the hearing of this Application that the care provided came nowhere near being good enough.
[67] Towards the beginning of the affidavit there is a paragraph which records, in part:
4 This affidavit is intended to cover the following points:
4.1The fact that no conflict has arisen in respect of the different hats I wear as trustee, administrator and beneficiary.
4.2The fact that the debt which is pivotal to Bupa’s right to be in this Court in this application have not been established [sic], and there are reasonable grounds to repudiate that claim.
The Bupa debt proceeding
[68] On 27 June Bupa filed a claim against Mr Gillibrand, as executor of the estate, seeking judgment under the resthome contract for $51,759.57, together with
interest pursuant to the contract and costs (the Bupa debt proceeding). A defence was filed. This included the mistreatment allegations generally as advanced in the second and third oppositions. The statement of defence was consistent with a draft first sent to, and approved by, Mr and Mrs Gillibrand.
Mr Holgate’s disclosure to media
[69] The Bupa debt proceeding was served on 28 June. That evening, at 7:03 pm, Mr Holgate sent an email to the court reporter for the Northern Advocate newspaper. The Northern Advocate is the main newspaper circulating in Whangarei and the wider district. Mr Holgate sent copies of the Bupa debt proceeding documents, the third opposition, the draft statement of claim for the declaratory orders (and therefore a document that had not been filed), and the affidavits that had been filed for the Gillibrands. Mr Holgate provided a link to two website news reports of alleged negligence of Bupa in the United Kingdom.
[70] Mr Holgate added a number of comments which he said were “just to clear things up for” the court reporter. Two matters of particular relevance are the following:
Chris and the estate have refuted [Bupa’s claim for fees] saying that Bupa caused Gordon to die in absolutely inhumane and distressing circumstances and they forfeited the right to payment of anything because of their wrong- doing – the evidence is very bluntly stated in affidavits – Mr Nola’s [affidavit] shows that there were even reprisals by Bupa against him because he came forward to give evidence about the case.
Mr Holgate referred to a copy of the letter of 30 May from Gibson Sheat, which was
attached to Mr Gillibrand’s third affidavit. Mr Holgate said to the court reporter:
… We exhibit a letter where Bupa’s solicitor says that we are making a serious allegation of wrong-doing – as you can see from the evidence we have filed, we are pulling no punches about the fact that we can produce evidence on oath to back it up.
[71] On 5 July the Northern Advocate published an article which included quotation of Mr Gillibrand’s allegation that Bupa sought reward from the estate for killing Gordon Gillibrand. The article was also published on the New Zealand Herald website.
[72] Mr Holgate did not have any discussion with Mr Swanepoel about the possibility of providing information to the Northern Advocate and Mr Swanepoel had no knowledge of this before the article was published. The initiative for this action was Mr Holgate’s. He discussed this with Mr and Mrs Gillibrand beforehand and, on the basis of Mr Holgate’s advice, they agreed. Mr Gillibrand said in his brief of evidence that he “now realised there should have been no involvement of the media while the issues were before the Court”. I record here that Mr and Mrs Gillibrand cannot be criticised for authorising this action on the advice of Mr Holgate.
Bupa’s further objection and evidence in reply
[73] On 8 July Gibson Sheat sent an email to Mr Holgate and Mr Swanepoel. This attached a copy of the article published on the New Zealand Herald website on
5 July. They noted that there had been no response to their letter of 30 May and that the newspaper article repeated the allegations notwithstanding the points made for Bupa about an absence of evidence. They asked whether Mr Holgate and Mr Swanepoel were aware that Mr Gillibrand had approached the media before the article was published. Mr Swanepoel did not reply. Mr Holgate’s response was quite misleading. He said:
I don’t get the Northern Advocate or Herald but was told about this article by
a client.
Mr Holgate then set out, in combative terms, what he considered was justification for continuing with the mistreatment allegations.
[74] On 11 July there was a further letter by email from Gibson Sheat to Mr Holgate and to Mr Swanepoel. Although Mr Swanepoel said he did not recall seeing either of the 8 July emails, he did not suggest that he did not see the 11 July letter. Gibson Sheat again referred to the 30 May letter and noted that there had been no response, but that the third opposition and some affidavits had subsequently been filed. Gibson Sheat then set out, in substantially more detail than in their 30 May letter, why the allegations should not have been put before the Court and why the purported evidence in support of the allegations did not permit the making of seven specific allegations of fact contained in the third opposition.
[75] I agree with the opinions expressed by Gibson Sheat.
[76] On 11 July Bupa filed two affidavits responding to the mistreatment allegations. These affidavits support the position taken for Bupa in Gibson Sheat’s letters of 30 May and 11 July. They positively establish, when weighed with the evidence from and for Mr Gillibrand filed up to that point, that there was no mistreatment, or negligence, by Bupa.
[77] Following Gibson Sheat’s 11 July letter and service of the two Bupa affidavits, nothing was done to withdraw or modify the mistreatment allegations. Mr Swanepoel and Mr Holgate responded to Gibson Sheat. Both defended the steps taken in the removal proceeding, of which Bupa complained, and contended that the allegations were properly put before the Court. Mr Holgate’s response can only be described as aggressive. It also included a threat of a claim for full indemnity costs in the event that Mr Gillibrand succeeded in the proceedings.
The Gillibrands’ statement to Campbell Live
[78] On 29 July Mrs Gillibrand sent an email to the television programme Campbell Live. There was a lengthy statement from Mr Gillibrand attached to the email. The statement is headed:
RESTHOME KILLED MY FATHER!!!!!
“BUPA MISTREATED MY FATHER WHILE THEY WERE RESPONSIBLE FOR HIS CARE, IN MORE WAYS THAN ONE!!!!! (YOU NAME IT THEY DID IT)
“THEY KILLED HIM”
BUPAS TREATMENT TOWARDS MY FATHER WAS INHUMAN, DEGRADING AND OR PUNISHMENT, MORE PARTICULARLY!!
WHY???
FOR BEING IN DEBT TO (KAURI COAST RESTHOME) BUPA CARE SERVICES!!
Towards the end of the statement there was the following: “We have affidavits to
support this case!!”.
[79] Mr Holgate was not consulted before Mrs Gillibrand sent this document to Campbell Live. Immediately after it was sent Mrs Gillibrand sent a copy to Mr Holgate. She said, in reference to Bupa: “Hopefully it will get up their noses big time, it’s about time someone made their life hell!!!”. Mrs Gillibrand then sent a copy to Mr Swanepoel with a note: “Thought I would send this to you to read as well!” On 30 July Mr Holgate sent an email to Mrs Gillibrand in which he said, amongst other things:
At this stage I think we have needled Bupa enough, and if there is any further publicity so be it, but maybe let’s soften it a bit so that we aren’t accused of doing ourselves out of a jury trial because the jurors will all be biased from reading the newspaper.
The removal decision
[80] Justice Heath’s decision on the removal application, other than on costs, was
delivered on 14 August.5 The most material part of the judgment is the following:
[21] In my view, Bupa has made out a case for removal because:
(a) A removal order is required to ensure that the estate is properly administered. An executor is required to execute the terms of the Will. The late Mr Gillibrand’s Will requires all debts of the estate to be paid before distributions are made to beneficiaries.
(b) An independent and impartial mind must be applied in assessing whether a debt is validly claimed. Decision-making should not be clouded either by emotional or (personal) financial considerations.
(c) Mr Gillibrand’s ability to bring an independent mind to the question whether the debt is valid is questionable, to say the least. He has strongly held views (not presently substantiated in any meaningful way) about the impact of Bupa’s care on his father, believing it was causative of death. He also has financial interests to protect; both as sole beneficiary of the estate and the trustee (and beneficiary) of a Trust, a debt from which is the only source from which money could be recovered to pay Bupa.
(d) In any event, even if the Bupa claim were permitted to proceed to trial, with Mr Gillibrand defending it on behalf of the estate, a successful claim would undoubtedly require Mr Gillibrand to retire as personal representative, given that he would need to sue himself to recover any debt owed by the Trust. Questions have also been raised about whether that debt was forgiven by Mr Gillibrand senior. They too require independent consideration.
5 Bupa Care Services NZ Ltd v Gillibrand [2013] NZHC 2086, [2013] 3 NZLR 701 (footnotes omitted).
[81] Stuart Henderson, a solicitor in the Whangarei firm of Henderson Reeves Connell Rishworth Lawyers Ltd (Henderson Reeves), was appointed executor in place of Mr Gillibrand. The Judge said:
[25] I have no doubt that Mr Henderson will take proper steps to determine whether there is any basis for the estate to challenge the Bupa debt, on the basis of an unliquidated equitable set-off or counterclaim [based on the mistreatment allegations]. If the debt were accepted, Mr Henderson could also determine what steps to take to get any remaining assets to meet the liability.
[82] Costs were reserved with directions for submissions on costs.
The costs decision: November 2013
[83] The decision on the costs application was delivered on 20 November.6 The Judge briefly outlined the background to his substantive decision, and then set out in some detail the earlier procedural history, and in particular the content of the three oppositions and directions and observations the Judge himself had made in earlier minutes. He then noted that Bupa had originally sought indemnity costs against Mr Holgate and Mr Swanepoel as well as Mr Gillibrand. The claim against the lawyers for indemnity costs had been withdrawn by Bupa for pragmatic reasons – mainly to avoid delay because of the need for independent representation. The Judge nevertheless noted, in respect of the fact that there had earlier been the claims against the lawyers:
[21] As the question of conduct of the lawyers is before their professional body, I do not propose to comment further on that aspect. Nevertheless, given the nature of the costs order which I shall be making, it will be for the lawyers to reflect on who should bear the burden of them, having regard to the nature of advice given and instructions received. In the absence of evidence to the contrary, I proceed on the basis that Mr Gillibrand expressly instructed his solicitor and counsel to make the allegations in issue.
[84] The Judge concluded that Mr Gillibrand should pay indemnity costs to Bupa for all steps in the proceedings from the filing of the second opposition on 23 May, with costs prior to that date being on a standard 2B basis. The principal reasons for
this conclusion were as follows:
6 Bupa Care Services NZ Ltd v Gillibrand [2013] NZHC 3067.
[22] Up to the time of the letter of 15 March 2013, sensible steps appear to have been taken to resolving the litigation. While Mr Gillibrand disputed the need for him to step aside as executor, he was doing so on conventional grounds.7 When agreement was not reached in terms of the letter of 15
March 2013, the situation was greatly inflamed by the allegations made by Mr Gillibrand of Bupa’s conduct. While I accept that Mr Gillibrand honestly believed that what he was saying was true, there was no plausible narrative on which those allegations could properly rest.8
…
[26] I am satisfied that the allegations made by Mr Gillibrand from the date on which the second notice of opposition was filed on 23 May 2013 justify either increased or indemnity costs. The allegations were based (initially) on speculation and (later) on relatively flimsy evidence. The furthest the evidence of Mr Nola could go was to raise some questions about the standard of care that Mr Gillibrand snr received on the final day of his life. The evidence went nowhere near creating a foundation for the serious allegation that the standard of Bupa's care had caused Mr Gillibrand snr’s death. The nature of that allegation necessarily required Bupa to respond and, in doing so, to incur costs far in excess of those that one would ordinarily expect to enforce a debt of just over $50,000.
[27] Further, the allegations in relation to Bupa’s care were never relevant to the application to remove Mr Gillibrand as an executor. The question was always whether Mr Gillibrand was sufficiently independent and impartial to carry out his duties as an executor, in identifying debts to be paid and ensuring assets of the estate were realised to meet them. The focus, as the solicitors for Bupa pointed out to Mr Holgate in their letter of 30 May 2013,9 was on Mr Gillibrand’s ability to fulfil that function. The proceeding was not designed to determine whether any debt was owed by the estate to Bupa.10
In those circumstances, the serious allegations raised to support an alleged counterclaim simply evidenced the state of hostility that had developed between Mr Gillibrand and Bupa. From Mr Gillibrand’s perspective, that was a negative factor on the removal application.
…
[30] Once Mr Gillibrand accepted that (in the absence of a successful set- off or counterclaim) Bupa’s debt was payable, and a state of hostility was accepted as existing between himself and Bupa, any defence to the removal application that was based on the possibility of raising a set-off or counterclaim on the grounds that Bupa acted in a manner that was causative of Mr Gillibrand snr's death was “hopeless”, in the sense used in Bradbury v Westpac Banking Corporation.11 In my view, this brings the case squarely within the category of cases that demand imposition of indemnity costs for
7 Bupa Care Services NZ Ltd v Gillibrand, above n 6, at [11].
8 Bupa Care Services NZ Ltd v Gillibrand, above n 5, at [2].
9 Bupa Care Services NZ Ltd v Gillibrand, above n 6, at [17].
10 Bupa Care Services NZ Ltd v Gillibrand, above n 6, at [21], set out at Bupa Care Services NZ Ltd v Gillibrand, above n 6, at [6]. See also, Bupa Care Services NZ Ltd v Gillibrand, above n 6, at [17].
11 Bradbury v Westpac Banking Corporation [2009] NZCA 234, [2009] 3 NZLR 400.
making serious unsubstantiated allegations that put the reputation of the other party in issue.12
[31] Given the way in which the litigation was conducted up to 23 May
2013,13 I consider that Bupa should have costs on a 2B basis, together with reasonable disbursements, to that date, with indemnity costs thereafter.
[85] The Judge concluded with the following in respect of Mr Henderson’s costs:
[35] Mr Henderson, the present executor, abided the decision of the Court on costs. There may be an issue as to whether Mr Gillibrand, having regard to the nature of his conduct, should be entitled to an indemnity out of the estate for the costs that have been ordered. That issue should be discussed between Mr Henderson and Mr Gillibrand’s advisers in the first instance.
Following the costs decision
[86] Following the costs decision Mr Henderson, for Gordon Gillibrand’s estate, made demand on the trust for a payment of $200,000. This was a rounded amount calculated by Mr Henderson as the sum required to settle the total debt then due to Bupa, including the costs award, the debt to Webb Ross, and Mr Henderson’s costs and expenses as executor.
[87] The trust had, in the meantime, entered into an agreement to sell a subdivided section of the farm that had been acquired from Gordon Gillibrand. Mr Swanepoel acted for the trust on the sale. Settlement occurred on 29 August 2013. I am satisfied, having weighed a good deal of conflicting evidence, that this is the first date on which the trust, or the Gillibrands personally, were both willing and able to pay any sum of consequence to the estate in further repayment of the trust debt. It is the proceeds of sale of the farm section that were subsequently used to meet the estate’s liability to Bupa and to meet the two other liabilities.
[88] Mr Swanepoel acted for the trust and Mr Gillibrand in negotiating settlement of Bupa’s claim in a sum of $150,000. On 17 December the trust paid $150,000 to the estate of Gordon Gillibrand which was in turn paid in full settlement of Bupa’s
claims.
12 Bradbury v Westpac Banking Corporation, above n 11.
13 Being the date on which the second notice of opposition was filed, see Bupa Care Services NZ Ltd v Gillibrand, above n 6, at [16].
[89] Mr Swanepoel ceased acting for the plaintiffs soon after that settlement was effected. In April 2014, after proceedings were issued by Mr Henderson, as executor, against the trustees for the remaining debts, a further sum of $32,385 was paid by the trust to Gordon Gillibrand’s estate to pay the debt to Webb Ross and for Mr Henderson’s fees and expenses as executor.
Summary of claims: duty and breach
[90] Fifty-nine alleged breaches of duty by Mr Swanepoel and fifty-two by Mr Holgate were itemised in the plaintiff’s closing submissions. Ms Twomey, for Mr Swanepoel, objected to the plaintiffs’ seeking to rely on allegations which had not been pleaded, or otherwise properly notified in sufficient time to avoid prejudice to Mr Swanepoel. Reference was made, in particular, to allegations of breach put to Mr Swanepoel for the first time in the course of cross-examination. I infer from Mr Holgate’s submissions that there was a similar objection from him to a multiplicity of unpleaded claims.
[91] These objections were upheld. The relevant statement of claim is the amended statement of claim filed on 8 July 2015, as further amended on the oral application of Mr Patterson, for the plaintiffs, at the commencement of the hearing. There was no opposition to that application. The defence evidence, documentary as well as briefs of evidence, was prepared on the basis of the amended statement of claim and the plaintiffs’ briefs. Apart from the minor amendments at the commencement of the hearing, the plaintiffs did not at any point apply for leave to make further amendments. The amended statement of claim is a 34 page document with detailed and very specific allegations. I was satisfied that there were no good grounds to permit the plaintiffs to expand their allegations to include the very large number of additional allegations of breach in the closing submissions.
[92] The plaintiffs pleaded two alternative claims against Mr Swanepoel. The only difference between the claims is one of quantum; a difference of just under
$15,000 claimed for one type of loss. This is explained later.
[93] It was alleged against Mr Swanepoel that, in respect of issues arising on
Bupa’s claims against Gordon Gillibrand, and then against his estate, for the
resthome fees, and on the subsequent removal application, Mr Swanepoel owed duties of care to Mr and Mrs Gillibrand as trustees of the trust or, alternatively, to Mr Gillibrand personally in respect of his interest as sole beneficiary of the estate and his potential liability as executor.
[94] Against Mr Holgate it was alleged that he owed duties of care to the trustees and Mr Gillibrand personally when he was instructed in December 2012 to act as counsel for Mr Gillibrand, as executor, on the removal application.
[95] The amended statement of claim has eleven separate pleadings of negligence against Mr Swanepoel. Some of these contain multiple and distinct instances of alleged negligence. The relevant claims are summarised below. In broadest terms, it was alleged that advice given by Mr Swanepoel was wrong, or inadequate, and that he failed to give advice he should have given.
[96] There are seven separate pleadings of negligence against Mr Holgate, some of which also contain multiple instances of alleged negligence relating to advice that was given and advice which it is contended should have been given.
[97] There is a reasonably substantial number of topics in respect of which it is alleged the defendants breached duties of care. But I am satisfied that there are only two main topics requiring attention and a third topic which is an element of both of the main topics – the conflict of interest issue.
[98] The first topic concerns alleged negligence on the question whether the trust’s debt to Gordon Gillibrand had been forgiven by him, or was still recoverable by him, and, following his death, by his estate. I will refer to this as the trust debt issue. The essence of the contentions against Mr Swanepoel were that:
(a) Before Gordon Gillibrand died, Mr Swanepoel negligently advised that it was arguable that the debt had been forgiven and, therefore, the trust did not have to make any payment. It was contended that, but for this advice, the trust would have paid the resthome fees and the
amount paid by the trust would have been substantially less than the amount finally paid, in substance, by the trust.
(b)After Gordon Gillibrand died Mr Swanepoel negligently advised the plaintiffs that the trust debt was not recoverable by the estate, the estate was insolvent, and this in turn provided good grounds for opposing the removal application and for the estate to resist the claim for the Bupa debt.
[99] Against Mr Holgate, in respect of the trust debt issue, it was alleged that Mr Holgate was negligent in failing to advise the plaintiffs that Mr Swanepoel’s advice that the trust had no liability to the estate for the trust debt was incorrect, with related contentions as to advice that should have been given.
[100] The second main topic concerns the opposition to the removal application in reliance on the mistreatment allegations. From this point I will use the expression “the mistreatment allegations” to refer to this main topic as well as to the subject matter of the allegations.
[101] The main thrust of the negligence claims against both Mr Swanepoel and Mr Holgate in respect of the mistreatment allegations was broadly the same: that the plaintiffs should not have been advised that they could rely on the mistreatment allegations as grounds to oppose the removal application and to resist the Bupa debt claim. There are five distinct pleadings, each with several allegations of negligence. The pleadings of most relevance are those relating to the second and third oppositions. These pleadings, in summary, are as follows:
(a) In respect of the second opposition:
(i)Mr Holgate did not seek the plaintiffs’ instructions regarding the change in strategy reflected in the second opposition or before filing the second opposition, he failed to explain to the plaintiffs the risks of making such allegations, and he did not
obtain the plaintiffs’ informed consent to raising such
allegations.
(ii)Mr Swanepoel failed to advise the plaintiffs of Mr Holgate’s intention to change strategy and file the amended opposition, and he failed to advise the plaintiffs against pleading such allegations.
(b) In respect of the third opposition:
(i)Against Mr Holgate: there was no evidential basis for the allegations Mr Holgate made in the third opposition, he failed to explain to the plaintiffs the risks of making the allegations, and he did not obtain the plaintiffs’ informed consent to raise the allegations.
(ii)Mr Swanepoel failed to advise the plaintiffs of Mr Holgate’s intention to change strategy and file the amended opposition, and failed to advise the plaintiffs against pleading such allegations.
(c) In respect of the mistreatment allegations generally, and against Mr Swanepoel and Mr Holgate, they failed to advise the plaintiffs that the mistreatment allegations did not provide grounds to oppose the removal application.
[102] As earlier noted, there are numbers of additional allegations of negligence which concern other topics, or which might be thought not to fit into one of the two topics I have outlined. For the avoidance of doubt I record that I have reviewed these other allegations and I am satisfied that they do not provide any reasonably arguable grounds for establishing liability on the part of Mr Swanepoel or Mr Holgate. I will comment briefly on one of these other topics, but otherwise I do not consider it necessary to discuss the other topics or allegations.
[103] As indicated in the factual narrative, a matter of particular concern to Mr Gillibrand, supported by Mrs Gillibrand, was the fact that the power of attorney from Gordon Gillibrand to his son had been revoked. Mr Gillibrand considered that the Bupa manager had acted improperly in the steps that he had taken, or instigated, which resulted in the revocation of the power of attorney and the instruction of Mr Spicer. Mr Swanepoel was consulted in that regard, and it was alleged that Mr Swanepoel was negligent in failing to act appropriately. I was not persuaded by the evidence that there was any negligence on the part of Mr Swanepoel. In addition, and perhaps the decisive reason for not spending time on this topic, even if it is assumed that there was some negligence, is that there was no evidence indicating how the alleged negligence caused any loss, or could have caused any loss, to the trustees or to Mr Gillibrand personally. It is conclusions of that nature which satisfied me that the other topics, which I have not identified, do not need to be discussed. I am satisfied that the two topic analysis will adequately address the relevant contentions.
Summary of claims: losses
Special damages for increased payments to Bupa and legal fees: the overpayment claim
[104] The principal claim of loss is that the alleged negligence of Mr Swanepoel and Mr Holgate resulted in the estate paying Bupa, in interest and legal costs, more than it would have had there been no negligence, and in the estate incurring liabilities to lawyers that it would not have incurred had there been no negligence. It is further claimed that, in consequence, the trust suffered a loss by paying to the estate more than it would have otherwise been required to pay had there been no negligence. I will refer to this as the overpayment claim. The quantification is summarised in the following table.
PAYMENTS MADE:
A To Bupa – to settle 150,000.00 B To Webb Ross – fees and interest 9,566.88 C Mr Henderson’s costs as executor 22,818.19 D Total paid by trust for estate to pay A, B and C 182,385.07 E Legal costs on Mr Henderson’s claim 1,000.00 F Total paid by trust $183,385.07
BASE DEBT: amount that would have been paid but for negligence
First alternative - would have paid no later than July 2012
Second alternative - would have paid no later than March 2013
G Bupa 40,191.04 55,000.00
H Webb Ross “no more than” 8,000.00 8,000.00
I Total $48,191.04 $63,000.00
QUANTIFICATION OF ALTERNATIVE CLAIMS AGAINST MR SWANEPOEL:
Quantum on first alternative
Quantum on second alternative
Total F 183,385.07 183,385.07
Less Base Total I 48,191.04 63,000.00
Claim by trust: $135,194.03 $120,385.07
Less E 1,000.00 1,000.00
Claim by Mr Gillibrand: $134,194.03 $119,385.07
[105] The quantum of the claims by the trust and Mr Gillibrand against Mr Holgate are as recorded under the second alternative only.
Other claims
[106] There are two other categories of loss or damages. One is a claim for wasted legal costs for fees paid to Mr Swanepoel and Mr Holgate. The other is a claim for general damages of $30,000 each for Mr Gillibrand and Mrs Gillibrand “as compensation for stress and anxiety”. These claims do not require further explanation at this stage.
Decision on Mr Gillibrand’s claim
[107] It is appropriate to record at this point, and before outlining the defence cases for Mr Swanepoel and Mr Holgate, my conclusion that Mr Gillibrand’s personal claim as a beneficiary has not been made out on the case as presented by the plaintiffs. The essence of the reason for that conclusion is that, on the case advanced by the plaintiffs as a group, including Mr Gillibrand in respect of his personal claim, there was never going to be any money in the estate for payment to Mr Gillibrand as a beneficiary.
[108] The factual narrative establishes clearly that the plaintiffs as a group, including Mr Gillibrand in respect of any notional interest he had as a beneficiary, were determined to ensure if at all possible that no money would go from the trust to the estate and that if, at the end of the day, it was established that the estate had debts which it had to pay, the sum that would go from the trust to the estate would be no more than the sum required to pay those debts.
[109] On the basis of that analysis the loss claimed to have been sustained by Mr Gillibrand as a beneficiary is illusory. Mr Gillibrand himself has given no evidence that he intended that some money would go from the trust into the estate in order for him to receive a payment as a beneficiary.
[110] This conclusion means that, if it is assumed that Mr Swanepoel and Mr Holgate owed duties of care to Mr Gillibrand as a beneficiary, and that Mr Swanepoel and Mr Gillibrand breached their duties of care in that regard, their negligence did not cause any loss to Mr Gillibrand as a beneficiary. What the plaintiffs advance as a “loss” in respect of the alternative claim by Mr Gillibrand is in respect of a theoretical surplus in the estate, but one which was never going to be there in fact.
[111] There are other reasons why Mr Gillibrand’s claim would in any event be dismissed. The claims of negligence by Mr Gillibrand personally against Mr Swanepoel are the same as the claims of negligence by the trustees against Mr Swanepoel. For reasons I come to, I have found that Mr Swanepoel did owe a duty of care to the trustees but was not negligent. In respect of Mr Holgate the claims of
negligence by the trustees and by Mr Gillibrand personally are again the same. I have found that Mr Holgate also owed a duty of care to the trustees and was negligent. The primary claim is that of the trust. For this separate reason it is unnecessary to consider Mr Gillibrand’s personal claim which was presented as a claim made in the alternative only in the event that the Court found that a duty of care was not owed to the trustees.
[112] Given these conclusions, in the remainder of this judgment, it will be unnecessary to refer further to matters relevant to Mr Gillibrand’s personal claim as a beneficiary.
Mr Swanepoel’s defence to the trustees’ claims
[113] Mr Swanepoel denied liability for negligence in all respects: as to duty, breach, causation, and the quantum of the loss claimed. His contentions are outlined in the following paragraphs.
Duty
[114] Mr Swanepoel contended that he did not owe a duty of care to Mr and Mrs Gillibrand as trustees. He contended that, as a matter of fact, he was not at any time, before or after Gordon Gillibrand’s death, acting for the trust in respect of the matters in issue, and that he did not otherwise owe a duty of care to the trustees in respect of those matters.
Breach
[115] Mr Swanepoel contended that, if he did owe a duty of care, there was no negligence in the advice he gave, either before Gordon Gillibrand died or following his death. Mr Swanepoel contended that he gave appropriate advice on all matters of consequence including, in particular, the trust debt issue and the mistreatment allegations, and acted on the Gillibrands’ instructions informed, where required, by competent advice from him. He said that he did not at any time assure the plaintiffs that the trust debt was not recoverable by the estate, and that he gave appropriate advice on risk in respect of the contentions advanced on the removal application, the
Bupa debt claim, the mistreatment allegations, and the related issue of a conflict of interest.
[116] Mr Swanepoel further contended that, from the time Mr Holgate was instructed, he sought both advice from Mr Holgate, and assurances from Mr Holgate, in respect of the advice Mr Holgate was giving to Mr and Mrs Gillibrand, and acted properly in accordance with the advice and assurances he got. In consequence, Mr Swanepoel said there was no negligence by him. The legal principles in that regard, and in respect of a lawyer’s obligation to act in accordance with instructions given by the client, are discussed when evaluating the question whether there was a breach of duty by Mr Swanepoel.
Causation and loss: the overpayment claim
[117] Mr Swanepoel contended that the trust suffered no loss. The proposition was that the trust always had a debt of $350,000 which, in the end, was owed to the estate. The payments that were made were pursuant to that liability and by making the payment the trust did not incur any loss. Ms Twomey put it on the basis that the trust’s net asset position did not change.
Mr Henderson’s costs as executor
[238] Another element of the overpayment claim is the sum of just under $23,000 paid to Henderson Reeves for Mr Henderson’s costs. In my opinion this is not an expense which is attributable to any negligence of Mr Holgate. The plaintiffs’
contention of relevance in this context is that, had Mr Holgate given the appropriate advice, Mr Henderson, or some other executor in place of Mr Gillibrand, would have been appointed. The only difference on the plaintiffs’ contention, compared with what actually occurred, is that the appointment would have happened earlier. But that does not demonstrate that Mr Henderson’s costs as executor were a loss to the estate, and therefore to the trust, caused by Mr Holgate’s negligence. Costs of a new executor appointed earlier in time would still have been incurred. The plaintiffs have not established that those costs would have been less than the costs actually incurred with Mr Henderson.
Legal costs on Mr Henderson’s claim
[239] This is the claimed loss of $1,000. The statement of claim records this as “approximately $1,000 in legal fees incurred in settling” a claim issued by Mr Henderson in March 2014 against Mr and Mrs Gillibrand and John Michael Parker as trustees of the trust. The precise sum appears to have been $1,038. Mr Parker was the third trustee who, as earlier noted, had resigned in November 2013. He had nevertheless been recorded as one of the three trustees in the deed recording the settlement with Bupa. Mr Gillibrand’s evidence is that this was a sum paid to Mr Parker’s lawyers for reviewing the proceedings. There is no basis upon which Mr Holgate can have liability for this sum.
Bupa’s legal costs and disbursements
[240] What remains is that part of the total of $150,000 paid to Bupa in settlement which was for legal costs and disbursements recovered by Bupa in the removal proceeding and in the debt proceeding. As recorded in the factual narrative, on the costs application in the removal proceeding, Heath J made an order that Mr Gillibrand pay Bupa’s costs on a 2B basis up to 23 May 2013, being the date of filing of the second notice of opposition, and costs on an indemnity basis from that date. Central to the reasons for the Judge’s findings were that, up to Mr Holgate’s letter to Gibson Sheat of 15 March 2013 (the letter referring to Bupa as “that blood sucking client of yours”), sensible steps appear to have been taken to resolving the litigation, but this changed, in terms of the pleadings, when the mistreatment allegations were introduced in the second opposition.
[241] Given the reasons for my conclusion that Mr Holgate was negligent in the advice he gave to Mr and Mrs Gillibrand, and in the steps he took, in respect of the mistreatment allegations, I am satisfied that Mr Holgate is liable to the first plaintiffs for the indemnity costs awarded to Bupa, but not for other costs recovered by Bupa either on the removal application or in the Bupa debt proceeding.
[242] The documents put in evidence do not appear to include one with a precise figure for the indemnity costs from 23 May 2013. I am nevertheless satisfied that the appropriate sum can be calculated by deducting from the total settlement payment to Bupa of $150,000 the sums included in that payment for which Mr Holgate is not liable: those are the Bupa resthome fees and interest, costs on a 2B basis on the removal application up to 23 May 2013, and the costs on the Bupa debt
proceeding. The figures, rounded up or down to the nearest dollar, are as follows:
Resthome fees 40,191 38 Interest on resthome fees to 12/11/13 13,385 39 Interest for a further month to settlement at 10% per annum on $40,191 335 53,911 Bupa costs on a 2B basis to 23/5/13 26,169 40 Scale costs on Bupa debt proceeding 5,970 $86,050
[243] The total from the preceding table of $86,050, deducted from the settlement sum of $150,000, leaves $63,950.
[244] Mr Holgate is liable to the first plaintiffs for that sum of $63,950. This is subject to assessment of his cross-claims, which I will consider after assessing the
plaintiffs’ claims for wasted costs and general damages.
38 Document V3A/T5.
39 Ibid.
40 Document V3/T38: schedule “Costs scenario 2” annexed to Bupa memorandum dated 20
September 2013. This includes some costs uplifted by 50%. These have been scaled back to 2B
costs.
Evaluation: (4) the plaintiffs’ claims for wasted costs and general damages
Wasted costs
[245] There is a claim pleaded as “a sum to be quantified prior to trial in respect of
the wasted legal costs in relation to Mr Swanepoel’s and Mr Holgate’s fees”.
[246] This claim cannot succeed against Mr Swanepoel given my conclusion that he did not act negligently in the legal services he provided to the plaintiffs.
[247] As against Mr Holgate, a claim for wasted costs would require consideration if there was adequate evidence, including relevant dates and particulars, of Mr Holgate’s invoices for fees, and any expenses, and adequate evidence of payment by the trust. However there is no such evidence. In fact, no sum was quantified even in a general sense before trial, nor was a sum quantified as against Mr Holgate (or Mr Swanepoel) with adequate particulars put in evidence before the plaintiffs closed their case. The only evidence is in Mr Gillibrand’s brief of evidence, summarising the payments made at the conclusion of his brief. The summary commences: “The amount we paid out was therefore”. One of the items is recorded simply as: “Mr Swanepoel & Mr Holgate $16,939.50”.
[248] The Court will usually do its best to make some allowance where there may be an understandable difficulty in providing adequate information, but that does not apply in this instance. There is no reasonable basis for determining how much of that total sum relates to Mr Swanepoel’s fees and how much relates to Mr Holgate’s fees and then how much of Mr Holgate’s fees was for the period before he was negligent in relation to the mistreatment allegations. A broad brush approach, appropriate in some cases, is not appropriate here. For example, on the face of Mr Gillibrand’s evidence, this is the total paid over the whole of the period covered by this proceeding, which is effectively from late 2009 to the end of 2013. Mr Swanepoel’s costs over that period may have been substantially more than Mr Holgate’s. It may be that whatever the portion of the total of $16,939.50 relates to fees charged by Mr Holgate, that portion could be for fees charged for the period before the mistreatment allegations were introduced. That possibility finds some
support in evidence from Mr Swanepoel that payment of fees by Mr and Mrs
Gillibrand was on a “drip feed basis”.
[249] This is a case where some allowance for wasted costs cannot properly be made, given the onus on the plaintiffs to prove their claim in its material parts. The claim for wasted costs is dismissed.
General damages
[250] The third claim is for general damages of $30,000 each for Mr Gillibrand and
Mrs Gillibrand, “as compensation for stress and anxiety”.
[251] The claim is against Mr Swanepoel as well as Mr Gillibrand. As with the claim for wasted costs, this claim cannot succeed against Mr Swanepoel.
[252] As a matter of law, general damages could be recoverable by Mr Gillibrand and by Mrs Gillibrand against Mr Holgate for stress and anxiety proved to have been suffered by them as a consequence of Mr Holgate’s negligence, and notwithstanding the fact that they sue as trustees of a trust.41
[253] The stress and anxiety for which the compensation is sought must, in the first place, be stress and anxiety caused by the breach of duty owed by the defendant. However, a large part of the evidence of both Mr Gillibrand and Mrs Gillibrand relating to stress and anxiety suffered by them was unrelated to the adverse result of the proceedings with Bupa attributable to Mr Holgate’s negligence. A reasonably substantial number of the matters referred to by Mr and Mrs Gillibrand as causing stress and anxiety had nothing to do with Mr Holgate (or Mr Swanepoel).
[254] This may be seen in the conclusion to Mr Gillibrand’s brief of evidence, under a heading “Effect on me”, which followed a summary of the amounts paid in
settlement of the proceedings. Mr Gillibrand said:
41 O’Hagan v Body Corporate 189855 [Byron Avenue] [2010] NZCA 65, [2010] 3 NZLR 445 at
[50]-[52].
150.After years of worry about Gordon, these legal difficulties were horrendous. I had relied on my mother and father if I had a problem. Both of those supports for me had gone when Gordon had his stoke in 2003.
151.When the care costs issues became difficult in 2009, I knew I couldn’t deal with this on my own so instructed Mr Swanepoel to sort it out. That is how I have dealt with problems throughout my life. If the problem is too much for me, I seek appropriate help. That would often be from my parents in days gone by.
152. Bupa were putting constant pressure on me and I was concerned
about keeping my father in Bupa’s care.
153. This issue was an enormous worry to me and I was relying on Mr
Swanepoel, and later Mr Holgate, to sort it out.
154.In 2012, after the car accident, I needed help even more urgently, instead I only had continued problems. I couldn’t deal with everything. I was prescribed antidepressants. I had counselling a couple of times.
155.The extra financial pressure has changed our lives. Our business is barely surviving. The problems started in 2009 and continue now.
[255] There were other matters which either Mr Gillibrand or Mrs Gillibrand, or both of them, acknowledged had caused stress and anxiety, including the following: the financial difficulties from 2009; their concerns that, if they could not pay the Bupa debt, Gordon Gillibrand would be evicted from the resthome; the trust’s ongoing dispute with a tenant at the farm; difficulties they faced in selling the farm which they attributed to the tenant’s actions; land subsidence and associated damage to their house and a subsequent dispute with the EQC and Vero regarding insurance; their bank’s refusal to lend them any money as a result of EQC “writing off” the property and the bank subsequently taking the money paid out by the insurers; the ongoing effects of the car accident in March 2012, including to Mr Gillibrand’s mental health as well as the serious injuries suffered by Mrs Gillibrand; a back injury suffered by Mr Gillibrand which required him to go on ACC for eight months in or about 2013; a dispute with their accountant; and the stresses associated with building a new house on the farm property.
[256] In other cases in recent years where sums of around $30,000 have been awarded for general damages, the plaintiffs’ evidence of stress and anxiety, or other adverse consequences, has been able to be linked reasonably directly to the
negligence of the defendant and, in addition, those adverse consequences have been assessed as reasonably severe to severe. The evidence of Mr and Mrs Gillibrand, however, is directed to an accumulation of pressures over a lengthy period of time, most of which is not attributable to a legal fault on the part of Mr Holgate. Mr and Mrs Gillibrand have, in addition, sought the sums of $30,000 each in respect of all of the negligence that they alleged against both of the defendants, and most of which has not been established.
[257] Another consideration is that, for reasons already touched on, I am satisfied there were actions by Mr and Mrs Gillibrand related to the mistreatment allegations which contributed to their stress and anxiety, but for which Mr Holgate cannot properly be held responsible in an assessment of general damages. There are two aspects to this. One is that I am satisfied Mr and Mrs Gillibrand did encourage Mr Holgate to think that they would be able to get good evidence to support the mistreatment allegations. The actions of Mr and Mrs Gillibrand do not relieve Mr Holgate of liability for the negligence I have found against him, but it does bear on the assessment of an appropriate sum, if any, to be allowed for general damages. The second point is that I consider it is safe to conclude that Mr and Mrs Gillibrand created stress and anxiety for themselves by the independent steps they took to seek to publicise the mistreatment allegations, with the statement sent to the Campbell Live programme being the most telling instance. In my judgment, from the evidence as a whole, Mr and Mrs Gillibrand had over time, and quite possibly because of the significant financial difficulties they were under for reasons unrelated to the Bupa claim, developed a deep antipathy towards Bupa which was not attributable in any way to anything Mr Holgate did, but which in the end added significantly to their stress.
[258] Taking those considerations into account I am satisfied that, although Mr and Mrs Gillibrand have established that there should be some compensation for stress and anxiety, it can only be a small portion of the amount claimed. The award is in a sum of $5,000 each.
Evaluation: (5) Mr Holgate’s cross-claims
[259] This heading is used to refer to Mr Holgate’s contributory negligence defence, his counterclaim against Mr and Mrs Gillibrand, and his third party claim against Mr and Mrs Gillibrand. These cross-claims are conveniently dealt with together because, in broad terms, the underpinning of each is the same – a failure by Mr and Mrs Gillibrand to provide evidence in support of the mistreatment allegations.
[260] Mr Holgate contended that there was contributory negligence on the part of Mr and Mrs Gillibrand by failing to provide evidence to prove the forgiveness of the trust debt and failed to provide contact details of witnesses to support the mistreatment allegations. The first aspect, relating to the trust debt, does not require consideration. Because the second aspect is also central to Mr Holgate’s counterclaim and third party claim it can be considered as part of the assessment of those claims.
[261] The counterclaim against Mr and Mrs Gillibrand is founded expressly on a contention that there was a contract between Mr Holgate and Mr and Mrs Gillibrand. One term of that contract was said to be an obligation owed by Mr and Mrs Gillibrand to Mr Holgate to provide, or assist in providing, evidence that would provide proof of the mistreatment allegations, either by obtaining the evidence themselves, or by giving Mr Holgate contact details for witnesses. Mr Holgate claimed that Mr and Mrs Gillibrand breached that contractual obligation owed to him and that as a result four things happened: (1) Mr Gillibrand, on the removal application, “was penalised in respect of costs”; (2) the Court was critical of Mr Holgate and Mr Swanepoel for acting without enough evidence; (3) Bupa complained to the New Zealand Law Society “about the case advocated on behalf of the Gillibrands resulting in the censure of Mr Holgate”; and (4) this resulted in
material adverse consequences for Mr Holgate personally.42 There is a claim for
damages in a sum of $60,000.
42 The adverse consequences pleaded by Mr Holgate are particularised and evidence in support was provided. It is unnecessary to summarise this evidence.
[262] The third party claim was that if, contrary to Mr Holgate’s contentions, he was found liable to the trust, then any such liability was attributable to the negligence of Mr and Mrs Gillibrand. The omissions said to constitute the negligence were again a failure to provide, or provide leads to, the evidence which would prove the mistreatment allegations. In his closing submissions Mr Holgate said that, because he was arguing that Mr and Mrs Gillibrand as trustees had not established a claim against him, the third party claim, which was against Mr and Mrs Gillibrand in their personal capacities, was not being “explored further now”. It was unclear whether Mr Holgate contemplated that he could explore it further at a later date. He cannot; this claim is to be determined now. In any event, because the substance of this third party claim is essentially the same as that of the counterclaim, and the contributory negligence defence, Mr Holgate’s submissions in support of the counterclaim and contributory negligence defence, and relevant evidence, are equally applicable. My conclusions which follow apply to all three claims.
[263] I do not agree with Mr Holgate’s contention that Mr and Mrs Gillibrand were under a legal duty to him, in tort or in contract, in respect of the provision of evidence. I accept that, as a matter of fact, Mr and Mrs Gillibrand said that they would take some steps to obtain evidence, or names of witnesses. I also consider it is likely that Mr and Mrs Gillibrand expressed some confidence to Mr Holgate that they would be able to find witnesses to support the allegations. But their failure to achieve what they indicated that they would, or might, be able to achieve did not give rise to any right enforceable by Mr Holgate against them in contract, or in tort, and whether against Mr and Mrs Gillibrand as trustees, or against them in their personal capacities. The simple fact of the matter is that the evidence was not provided. What this gave rise to was not a cause of action available to Mr Holgate against Mr and Mrs Gillibrand, but a duty resting on Mr Holgate, as the lawyer directly responsible for the removal proceeding, and a lawyer owing a duty of care to the trustees, to advise the plaintiffs accordingly, and he did not do so.
[264] There is a separate reason why Mr Holgate’s cross-claims cannot succeed. As already discussed, and as also found by Heath J, the mistreatment allegations never provided grounds to oppose the removal application irrespective of the quality
of the evidence said to support those allegations. As I have already held, Mr Holgate was also negligent in that regard.
[265] There is a final consideration. The adverse consequences suffered by Mr Holgate for which he claims damages in contract on the counterclaim would have to have been shown to have been adverse consequences which either followed naturally from the breach said to have occurred, or which were within the reasonable contemplation of the Gillibrands and of Mr Holgate. Neither of those essential elements of the claim in contract were established.
[266] The contributory negligence claim, the counterclaim, and the third party claim, are dismissed.
Costs
[267] All parties requested that questions of costs be reserved pending delivery of the substantive judgment. That is appropriate. There are directions in the results section which follows.
Result
[268] There is judgment for the first plaintiffs against the second defendant for
$63,950 for special damages together with interest on that sum pursuant to the
Judicature Act 1908 from 17 December 2013 to the date of this judgment.
[269] There is judgment for each of the first plaintiffs against the second defendant for $5,000 for general damages.
[270] All other claims of the first plaintiffs and all claims of the second plaintiff against the second defendant are dismissed.
[271] All claims of the first and second plaintiffs against the first defendant are dismissed.
[272] The second defendant’s counterclaim and third party claim are dismissed.
[273] Costs are reserved with the following directions:
(a) Any application for costs is to be made by memorandum to be filed and served by 30 June 2017.
(b) Any submissions in opposition are to be filed and served by 28 July
2017.
(c) Without leave, submissions are not to exceed 10 pages, plus any necessary annexures.
(d)A decision will be made on the papers unless I conclude a hearing is necessary and appropriate.
Woodhouse J
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