Kasupene v Van Beurden
[2017] NZHC 1106
•25 May 2017
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV 2016-404-893 [2017] NZHC 1106
BETWEEN MORGAN KASUPENE AND MAYA
GAUDIN Plaintiffs
AND
CHRISTINE VAN BEURDEN AND
SHIRLEY OʼSULLIVANDefendants
Hearing: 17 May 2017 Counsel:
M Kasupene and M Gaudin, in person, Plaintiffs
H McKee for DefendantsJudgment:
25 May 2017
JUDGMENT OF HEATH J
This judgment was delivered by me on 25 May 2017 at 4.45pm pursuant to
Rule 11.5 of the High Court Rules
Registrar/Deputy Registrar
Solicitors:
Glaister Ennor, Auckland
Copy to:M Kasupene and M Gaudin, Plaintiffs
KASUPENE AND GAUDIN v VAN BEURDEN AND OʼSULLIVAN [2017] NZHC 1106 [25 May 2017]
The proceeding
[1] Mr Morgan Kasupene and his daughter, Ms Maya Gaudin, have brought proceedings in this Court against a legal secretary and legal executive employed by Glaister Ennor, Solicitors, Auckland. They assert a right to recover losses that they allege have been suffered by them as a result of (what they say was) an imprudent sale of a property at 9 Pikitea Road, Mangere Bridge.
[2] The Mangere Bridge property was owned by Mr Kasupene’s late mother, Mrs Rosalina Kasupene. It was sold at auction on 12 September 2015. Arrangements for the auction were undertaken by one of Mr Kasupene’s siblings, Ms Linda Stephenson. At the relevant time, she held an enduring power of attorney to act on her mother’s behalf in relation to property matters generally. Sadly, Mrs Kasupene died on 25 September 2015. Settlement of the sale was completed on the instructions of the executrix of her estate. The executrix was another of her children, Ms Aneti Utatao.
[3] No proceedings have been brought against either Ms Stephenson or Ms Utatao. Mr Kasupene’s complaint is directed to the conduct of Ms Shirley O’Sullivan (the legal executive who acted on the sale of the property and distribution of the estate) and her secretary, Ms Christine van Beurden. In reality, they each acted at all times within the scope of their authorities as employees of Glaister Ennor. Should the claim go to trial, that firm would need to be substituted as the defendant. For convenience, I refer to the defendants collectively as Glaister Ennor, unless the context requires identification of one or both of them.
[4] Glaister Ennor seek leave to apply out of time for summary judgment against Mr Kasupene and Ms Gaudin. If leave were granted, summary judgment is sought on the grounds that no tenable claim has been made out. If either of those applications were unsuccessful, an order for security for costs is sought, as well as an order striking out Ms Gaudin as a party to the proceeding. As she was not a beneficiary under the Will, it is said that she has no standing to bring a claim in any event.
[5] Mr Kasupene and Ms Gaudin oppose the applications. They both appeared in person at the hearing. Mr Kasupene, who spoke both for himself and his daughter, provided some helpful supplementary information that has assisted my understanding of the issues. Ms McKee, for Glaister Ennor, did not object to my receiving that information. Nothing was said that caused surprise to her.
The facts
[6] My summary of relevant facts is based on allegations that Mr Kasupene and Ms Gaudin would need to prove at trial should their claims be allowed to proceed. With one exception,1 I assume that their allegations are capable of being proved. I emphasise that Glaister Ennor do not necessarily accept the correctness of all of the allegations of fact to which I shall refer.
[7] The late Mrs Kasupene executed her last Will on 24 September 1980. Although Mr Kasupene has asserted that a later Will might have existed, probate of the 1980 Will has been granted in favour of Ms Utatao. There is no foundation for any assertion that a later Will existed which could affect the rights of Mr Kasupene and his daughter. In my view, this allegation is not one that should be assumed as correct for the purposes of determining any summary judgment application. The
allegation is contradicted by an order of the High Court granting probate.2 That is
sufficient to put this allegation to one side.
[8] Mrs Kasupene signed a power of attorney in relation to property rights on 8
August 2011. Glaister Ennor acted for her at that time. It was granted in favour of her daughter, Ms Stephenson. The power of attorney was given under s 94A(2) of the Protection of Personal and Property Rights Act 1988, in the form required by that statute.
[9] The power of attorney contained provisions that required Ms Stephenson to consult with Glaister Ennor before dealing with any property belonging to Mrs
Kasupene. Clauses 5 and 6 provided:
1 See para [7] below.
2 Generally, see Eng Mee Yong v Letchumanan [1980] AC 331 (PC) at 341. In the summary judgment context, see also Krukziener v Hanover Finance Ltd [2010] NZAR 307 (CA) at para [26].
Conditions and restrictions on attorney’s power
5.The authority of my attorney is subject to the following conditions and restrictions:
My attorneys should consult with Glaister Ennor, Solicitors, Auckland as far as far as is practicable.
Attorney to consult with others
6.When acting on my behalf in relation to my property affairs, my attorney must consult, as far as is practicable, with the following persons in addition to myself in relation to the matters specified:
My attorneys should consult with Glaister Ennor, Solicitors, Auckland as far as is practicable.
[10] In 2013, Ms Stephenson met with Ms O’Sullivan in relation to her intention to sell the Pikitea Road property. Much later, Ms Stephenson contacted Ray White Real Estate. On or about 20 August 2015, she obtained a draft auction agreement which she sent to Glaister Ennor for their consideration.
[11] On 10 September 2015, two days before the scheduled auction, Mr Kasupene sent an email to Glaister Ennor asking for a copy of any agreement for sale and purchase. He offered some criticism of Ms Stephenson’s role. The following day, Ms O’Sullivan responded, advising that Mrs Kasupene had executed a power of attorney in favour of Ms Stephenson. The purpose of that communication was to make it clear to Mr Kasupene that Ms Stephenson was legally entitled to sell the property. No legal steps were taken by Mr Kasupene to prevent the auction from continuing.
[12] An auction was held on 12 September 2015. The property was knocked down for $815,000.
[13] Mrs Kasupene passed away on 25 September 2015. Probate of her Will was granted in favour of Ms Utatao on 13 October 2015. She executed documents relating to transmission and transfer of the Pikitea Road property on the following day.
[14] The sale of the Pikitea Road property was settled on 23 October 2015. The purchaser took title to the property on that date. The net proceeds of sale were paid to the executrix, on behalf of the estate of the late Mrs Kasupene.
[15] An interim distribution to residual beneficiaries of the estate was made on 12
November 2015. A final distribution was made on 22 April 2016, following a letter that Ms O’Sullivan sent to beneficiaries on 19 April 2016. Although one of the letters was addressed to Mr Kasupene, there is no evidence that he received it. For present purposes, I proceed on the assumption (most favourable to him) that he did not.
[16] Clause 4 of the Will required distribution of the net proceeds of the estate to each of Mrs Kasupene’s seven children in equal shares. If one or more of her children had predeceased her, that child’s share was to go to his or her own child or children (equally among themselves) as opposed to being shared among the living siblings. The distributions were made in accordance with the terms of cl 4.
The case against Glaister Ennor
[17] Even though Mrs Kasupene was alive at the time that the property was sold at auction, Mr Kasupene and Ms Gaudin assert that Glaister Ennor owed a duty of care to them to ensure that Ms Stephenson consulted with beneficiaries of the estate before it was sold. Mr Kasupene is of the view that the property was sold at an under-value. While he accepts that he received a distribution from the estate that included the sale proceeds, Mr Kasupene asserts that he lost the chance of receiving further funds. By way of illustration, if (hypothetically) the market value had been
$1 million more than the sale price, Mr Kasupene would have been entitled to a one- seventh share in that sum, about $143,000.
[18] Although Ms Gaudin joins in her father’s claim, she has no standing. Under cl 4 of the Will, she was not entitled to receive any funds from the estate. While distributions were made to some of her cousins, the money they received reflected what would otherwise have been paid to their parent. All distributions due to Mr Kasupene were paid to him as a surviving child. At the very least, Ms Gaudin must be struck out as a plaintiff.
[19] Somewhat surprisingly, the allegation is that the legal executive and her secretary are personally responsible for that claimed loss. While Ms Stephenson was directed, by the power of attorney, to consult with Glaister Ennor,3 there was no express obligation on Glaister Ennor to consult with beneficiaries before the property was sold, or to ensure that Ms Stephenson did. Ms Stephenson did consult with Glaister Ennor.
[20] There is no evidence (or pleading) that Ms Stephenson took steps to defeat the interests of her siblings as beneficiaries under the Will. The property was sold at auction. As a result, presumptively it sold at market price. Further, all proceeds of sale were distributed to beneficiaries. There is no basis to suggest that Ms Stephenson siphoned off any proceeds for her own benefit. To be fair to Mr Kasupene, he does not make any allegation of that type.
Analysis
(a) Leave to apply for summary judgment out of time
[21] A defendant may bring an application for summary judgment in his or her favour on the grounds that there is no valid claim. Rule 12.2(2) of the High Court Rules provides:
12.2 Judgment when there is no defence or when no cause of action can succeed
…
(2) The court may give judgment against a plaintiff if the defendant satisfies the court that none of the causes of action in the plaintiff’s statement of claim can succeed.
[22] Rule 12.4(3) places a time limit on the ability of a defendant to seek summary judgment. It provides:
12.4 Interlocutory application for summary judgment
…
3 See para [9] above.
(3) An application by a defendant may be made either at the time the statement of defence is served on the plaintiff, or later with the leave of the court.
….
[23] I am satisfied that it was necessary for Glaister Ennor to obtain additional documents from non parties before a decision could be made whether to seek summary judgment. That being so, I exercise my discretion to extend the time for filing and serving an application for summary judgment.
(b) Should summary judgment be granted?
[24] To obtain judgment against Mr Kasupene and Ms Gaudin at this stage, Glaister Ennor must satisfy me that none of the causes of action on which Mr Kasupene and Ms Gaudin rely can succeed.4 The issue on the summary judgment application is whether there is a tenable claim against Glaister Ennor for breach of the alleged duty of care owed to Mr Kasupene as a beneficiary under his late mother’s Will.5
[25] I start by considering the circumstances in which a solicitor may owe a duty of care to a beneficiary of an estate for whom he or she does not act. The high-water mark in New Zealand is the decision of the Court of Appeal in Gartside v Sheffield Young & Ellis.6 In that case, the Court considered the circumstances in which a solicitor may owe a duty of care to a beneficiary of an estate. The solicitor had accepted instructions to prepare a Will for a client but had failed to use due diligence
to prepare and present the Will for execution within a reasonable time. The client subsequently died. A beneficiary who would have received property under the terms of the unexecuted Will sued the solicitors to recover the amount in issue. The Court of Appeal held that the statement of claim was sufficient to disclose a cause of action
in negligence against the solicitor and ought not to be struck out.7
4 High Court Rules, r 12.2(2), set out at para [21] above.
5 See para [17] above for a summary of the nature of the duty alleged. As I have indicated (see para [18] above) that Ms Gaudin lacks standing to sue, I make no further reference to her in this context.
6 Gartside v Sheffield, Young & Ellis [1983] NZLR 37 (CA).
7 Ibid, at 43 (Cooke J), 46 (Richardson J) and 52 (McMullin J).
[26] Mr Kasupene’s claim is more remote. It does not involve the preparation of a new Will. Rather, it focuses on the obligation of a solicitor who is acting on behalf of a person who holds a power of attorney for a living person. That document provides the authority for the attorney to sell (or otherwise deal with) the grantor’s property during his or her lifetime.
[27] The type of duty that Mr Kasupene asserts ignores the fact that a will-maker might (in these circumstances) decide to change his or her Will after the sale but before death. However, for present purposes, I proceed on the basis of Mr Kasupene’s allegation that his mother lacked the capacity to change her Will between the date on which the auction was held and her death.
[28] Ms McKee referred me to a decision of the Court of Appeal of England and Wales in Clarke v Bruce Lance & Co (a firm).8 In that case, a client executed a Will that had been prepared by the solicitors. Under that Will, a property used as a service station was devised to a beneficiary. Before his death, the testator granted a lease of that service station to a third party for a term of 21 years. In the period before his death, the testator gave instructions to the same solicitors to prepare a
variation of the lease to include a term that the lessee could opt to purchase the service station at a fixed price after his, or his wife, died. By the time the testator died, the value of the service station had increased substantially. The beneficiary sued the solicitors claiming that they breached duties owed both to the testator and himself to advise that the fixed price option was uncommercial. The Court of Appeal allowed an appeal. It held that the proceeding should be struck out for not disclosing a cause of action.
[29] Delivering the judgment of the Court, Balcombe LJ, after discussing relevant authorities said:9
The question we have to decide is whether, on the facts as alleged in the amended statement of claim, a duty of care could have arisen between the defendant solicitors and the plaintiff. We accept that there may be circumstances in which a solicitor owes a duty of care to a person other than his client: see eg Wilson v Bloomfield (1979) 123 SJ 860 (an arguable case that a vendor's solicitors owed a duty of care to a purchaser in answering
8 Clarke v Bruce Lance & Co (a firm) [1988] 1 All ER 364 (CA).
requisitions on title). For the purposes of this appeal we are prepared to assume that a solicitor instructed to prepare a will owes a duty of care to a beneficiary under the proposed will indeed counsel for the defendant solicitors did not seek to argue the contrary. (This is not to suggest that we question in any way the correctness of the decision of Megarry V-C in Ross v Caunters (a firm) [1979] 3 All ER 580, [1980] Ch 297 and of the Court of Appeal of New Zealand in Gartside v Sheffield Young & Ellis [1983] NZLR
37; it is just that the point is unnecessary for our decision in this case.) But the duty of care alleged in this case is far wider than that found to exist in Ross v Caunters and accepted as arguable in Gartside’s case. In both those cases solicitors had been instructed to prepare a will. In Ross v Caunters they failed to warn the testator that the will should not be witnessed by the spouse of a beneficiary: when this happened the gift to the beneficiary was void under s 15 of the Wills Act 1837. The solicitors admitted they had been negligent but contended that they owed a duty of care to the testator alone (who, and whose estate, had suffered no damage) and not to the disappointed beneficiary. Megarry V-C rejected this contention. …
[30] I consider that the type of duty of care alleged by Mr Kasupene is novel in character. The approach to be taken when such duties are considered on an application to strike out or summary judgment was discussed by the Supreme Court in Couch v Attorney-General (on appeal from Hobson v Attorney-General).10 The approach is captured in the plurality judgment of Blanchard, Tipping and McGrath JJ. Delivering that judgment, Tipping J said:
[78] It is appropriate to refer briefly to the basis upon which New Zealand courts have hitherto decided whether a duty of care is owed in a situation not covered by previous authority. Neither side contended that the established approach should be revisited by this Court. In short, whether a duty of care is owed has been determined on the basis of whether it is fair, just and reasonable to impose it. Proximity and policy are the two headings under which the courts have determined that ultimate question. The leading case is South Pacific Manufacturing Co Ltd v New Zealand Security Consultants & Investigations Ltd. That case was followed in Attorney-General v Carter, where the Court of Appeal said:
“Whether it is fair, just and reasonable to hold that a duty of care is owed by defendant to plaintiff in a situation not covered by authority is conventionally addressed in terms of proximity and policy: see for example Price Waterhouse v Kwan [[2000] 3 NZLR 39] at p 41 para [6], and of course South Pacific Manufacturing Co Ltd v New Zealand Security Consultants & Investigations Ltd [1992] 2 NZLR
282. Generally speaking, proximity is concerned with the nature of the relationship between the parties whereas policy is concerned
with the wider legal and other issues involved in deciding for or
against a duty of care.”
10 Couch v Attorney-General (on appeal from Hobson v Attorney-General) [2008] 3 NZLR 725 (SC).
[79] The most recent decision of the Court of Appeal on this subject is Rolls- Royce New Zealand Ltd v Carter Holt Harvey Ltd, in which the Court adopted the same approach and listed a number of factors which it considered may be found helpful in considering the proximity and policy issues. If proximity is found to exist it is necessary to examine what influence wider policy considerations may have on whether it is appropriate to impose a duty of care. As the point was not argued we do not propose to discuss whether establishing proximity gives rise to any presumption of a duty of care.
[80] The law has traditionally been cautious about imposing a duty of care in cases of omission as opposed to commission; in cases where a public authority is performing a role for the benefit of the community as a whole; and in cases where it is the actions of a third party rather than those of the defendant that are the immediate cause of the loss or harm suffered by the plaintiff. All three dimensions feature in the present case, but it is the third which is the most significant on the issue of proximity.
(footnotes omitted)
[31] In my view, particularly in circumstances where Mrs Kasupene was alive at the time that the auction took place, there was no proximate relationship between Glaister Ennor and Mr Kasupene that justifies imposition of a duty of care in the form alleged.11 I do not consider that any question of legal competence affects that conclusion; a person’s circumstances may change, in that regard. Also, for reasons that follow, policy considerations militate the existence of such a duty.
[32] I am satisfied that no tenable cause of action exists against Glaister Ennor. They carried out instructions for a living person who held a valid power of attorney to act on behalf of another. The attorney consulted with Glaister Ennor as required by the power of attorney.12 The grantor of the power of attorney did not require any wider consultation than that. The attorney was authorised to sell.
[33] Further, the property was sold at auction. There is nothing to suggest that the sale price attained at auction was not market value. The purpose of an auction is to test the market to obtain the best possible price.
[34] All steps taken by the solicitors in conjunction with the executrix to arrange
for distribution of the proceeds of realisation of the late Mrs Kasupene’s property
11 See para [27] above.
complied with cl 4 of the Will. The whole of the sale proceeds were brought to account in distributing the property.
[35] In those circumstances, I am satisfied that there are no policy reasons that would justify the imposition of a duty of care of the type alleged. By analogy with the situation that pertained in Clarke,13 I am satisfied that summary judgment should be entered in favour of Glaister Ennor.
(c) Security for costs
[36] In light of my decision on the summary judgment application, I do not need to address the application for security for costs. It will be dismissed on the basis that it does not require determination.
(d) Application to remove Ms Gaudin as a party
[37] I have already indicated that Ms Gaudin has no standing to bring this claim. As the claim is to end as a result of my decision to enter summary judgment in favour of Glaister Ennor, no order is required on the application to remove Ms Gaudin as a party. I make it clear that an order to that effect would have been made had the proceeding been allowed to go to trial.
Costs
[38] Ms McKee seeks costs on behalf of Glaister Ennor. During the course of the hearing, I inquired as to whether I should treat Glaister Ennor as a litigant in person. They have not instructed counsel from outside the firm to act on the application. Ms McKee submitted that Glaister Ennor was entitled to the benefit of an exception to the rule that self represented litigants can only recover disbursements.
[39] This issue was considered by the Court of Appeal in Brownie Wills v
Shrimpton.14 Delivering the judgment of Gault J and himself, in the context of a
13 Clarke v Bruce Lance & Co (a firm) [1988] 1 All ER 364 (CA) at 367–368, set out at para [29]
above.
14 Brownie Wills v Shrimpton [1998] 2 NZLR 320 (CA).
claim involving a firm of solicitors, Blanchard J expressed the practice in these terms:15
Costs
Brownie Wills was represented in the High Court and in this Court by an associate of the firm, Mr Hair. The long-established rule is that, as an exception to the general rule denying costs to a litigant in person, a practising barrister and solicitor who brings or defends a proceeding in person or by a partner or employee of the firm is entitled to the same costs as when acting on behalf of a client. So the lawyer litigant may have the same costs as if another lawyer had been instructed but cannot, of course, charge for consulting, instructing, or attending upon him or herself: London Scottish Benefit Society v Chorley (1884) 13 QBD 872. In New Zealand the exception is discussed or referred to in Hanna v Ranger (1912) 31 NZLR
159, Lysnar v National Bank of New Zealand Ltd (No 2) [1935] NZLR 557 and Re Collier (A Bankrupt) [1996] 2 NZLR 438.
The High Court of Australia has cast some doubt on this exception (Cachia v Haynes (1994) 179 CLR 403 at p 412) but, not having been asked to reconsider the question, we do not depart from the practice of allowing costs to a solicitor/litigant.
The appellant is allowed costs of $5000 for Mr Hair's work on the appeal together with reasonable disbursements, including any travel and accommodation costs. In the High Court there was an award of scale costs to the plaintiff. That will now be reversed and scale costs will be payable to the defendant together with any reasonable disbursements as fixed by the Registrar of that Court.
[40] The decision in Brownie Wills was given before the current costs regime came into force. The present regime was discussed in the judgment of the Court of Appeal in Bradbury v Westpac Banking Corporation.16 Delivering the Court’s judgment, Baragwanath J said:
[9] Departure from the scale entails a fundamental shift from the currently conventional New Zealand approach to costs. Our presumptive “2/3 of what the Rules Committee sets as reasonable” sits between the customary United States approach, that no party and party costs are awarded, and that in England and Australia (and formerly in New Zealand), where a form of indemnity costs is the norm. There is an important question as to how readily, or reluctantly, a court should depart from the scale.
…
[11] Also of importance is the principle of the rule of law that it be administered consistently and in a manner which allows people to be guided by knowledge of the law’s content (Finnis, Natural Law and Natural Rights
15 Ibid, at 327. Tipping J joined in this aspect of the plurality judgment.
(1980), pp 270 – 271). Those considerations are of particular force where the claim is for the opponent’s legal advisers’ indemnity costs which, of their nature, are unpredictable.
…
[27] The distinction among our three broad approaches – standard scale costs, increased costs and indemnity costs – may be summarised broadly:
(a) standard scale applies by default where cause is not shown to depart from it;
(b) increased costs may be ordered where there is failure by the paying party to act reasonably; and
(c) indemnity costs may be ordered where that party has behaved either badly or very unreasonably.
[41] In my view, to meet the need for consistency in application of the costs rules, it is appropriate to award costs in favour of Glaister Ennor on their successful application for summary judgment. Ordinarily, they would be awarded on a 2B basis. However, the standard scale adopted by the High Court Rules envisages recovery of two-thirds of the likely actual costs incurred by a party.17 That amount, of course, includes a profit margin which is not present in a case where a solicitor within a firm undertakes litigation on the firm’s behalf. Accordingly, in my view, some adjustment must be made to any award of costs to reflect that fact.
[42] In the exercise of my broad discretion as to costs, I order that Mr Kasupene pay costs on a 1B basis, together with reasonable disbursements, to Glaister Ennor on their successful applications. As the security for costs application was intertwined with other steps taken on that should be included within the costs ordered. All costs and disbursements shall be fixed by the Registrar. No order for costs is made against Ms Gaudin. Her involvement in the proceeding was brought about under the influence of her father.
[43] I make it clear that I am dealing with this issue on a broad basis as I have not heard from counsel on the question whether there should be any general change from the practice to which Blanchard J referred in Brownie Wills.18 Given the nature of
this case, I do not consider it is appropriate to defer determination pending further
17 Ibid, at para [9], set out at para [40] above.
submissions. As a result, the approach I have taken is open to be revisited in any future case, as a matter of principle.
Result
[44] For those reasons:
(a) Leave is granted for Glaister Ennor to file an application for summary judgment.
(b)Summary judgment is granted in favour of Glaister Ennor, meaning that the proceeding is at an end.
(c) Because it is unnecessary for them to be determined, the applications for security for costs and removal of Ms Gaudin from the proceeding are dismissed.
(d)Costs are awarded in favour of Glaister Ennor against Mr Kasupene only. They are awarded on a 1B basis together with disbursements,
both to be fixed by the Registrar.19
P R Heath J
Delivered at 4.45pm on 25 May 2017
19 As to the scope of the costs, see para [42] above.