Lee v Gao
[2012] NZCA 57
•2 March 2012
| IN THE COURT OF APPEAL OF NEW ZEALAND |
| CA730/2011 [2012] NZCA 57 |
| BETWEEN YOON LEE |
| AND ZHI HONG GAO AND LIN GE |
| AND JOHN CARTER, BRENT O'CALLAGHAN AND TIMOTHY UPTON SLACK |
| Hearing: 7 February 2012 |
| Court: Glazebrook, Wild and White JJ |
| Counsel: Applicant in person |
| Judgment: 2 March 2012 at 3.30 pm |
JUDGMENT OF THE COURT
AThe application for leave to bring a second appeal to this Court is dismissed.
BThe applicant is to pay the costs of each of the first and second respondents for a standard application on a band A basis with usual disbursements.
____________________________________________________________________
REASONS OF THE COURT
(Given by Wild J)
This application
Mr Lee applies, under s 67 of the Judicature Act 1908, for leave to appeal a judgment of Peters J delivered in the High Court at Auckland on 19 May 2011.[1] Leave is required because the judgment of Peters J was on appeal from a decision of Judge Gittos given in the Auckland District Court on 14 May 2010.[2]
[1] Lee v Gao HC Auckland CIV-2010-404-3599, 19 May 2011.
[2] Gao v Lee DC Auckland CIV-2007-004-2591, 14 May 2010.
Mr Lee is a solicitor. He acted for the first respondents, Ms Gao and Mr Ge (we will refer simply to Ms Gao), upon their purchase of a residential section in Auckland from Pro Rata Investments (Pro Rata). The second respondents are the partners of the firm of solicitors which acted for Pro Rata in the sale transaction. We will call them Carters.
Factual background
This litigation concerns agreements for the sale and purchase of Lot 8 in a subdivision at Stanmore Bay in Auckland. The developer, Carrera Developments Ltd and R & D Enterprises Ltd, sold three lots to Pro Rata, including Lot 8 for $267,500. By agreement dated 16 July 2005, Pro Rata on-sold Lot 8 to the Ms Gao for $275,000 with a 10 per cent deposit payable on signing, a further 50 per cent on 10 August 2005, and the balance upon settlement on 10 October 2005. The agreement was in the form approved by the Real Estate Institute of New Zealand and Auckland District Law Society (7th edition (2)). It contained a handwritten term:
Conditional upon the Vendor’s solicitor approving the form of the contract within 3 working days.
Ms Gao’s evidence was that this clause was inserted by the land agent after he agreed to her suggestion “shouldn’t we get this approved by a lawyer?”
Having signed the agreement Ms Gao sent it to Mr Lee and instructed him to act for them on the purchase. Mr Lee had acted for Ms Gao on previous property transactions.
When Pro Rata failed to settle its purchase of Lot 8 from Carrera, Carrera cancelled the agreement and later sold Lot 8 to a third party. The two deposits (totalling $165,000) that Ms Gao had paid to Pro Rata were lost because Pro Rata could not repay them: it had used them to meet other obligations and subsequently went into liquidation.
Ms Gao sued Mr Lee in the Auckland District Court for damages for negligence. In a judgment delivered on 14 May 2010 Judge Gittos awarded Ms Gao $165,000 damages against Mr Lee. He held that the deposits had been lost through Mr Lee’s negligence, initially in not advising Ms Gao that the agreement could be avoided on the basis of requisition in respect of encumbrances on the title, but then compounded by Mr Lee’s failure adequately to safeguard Ms Gao’s interests before disbursing the second deposit to Carters.
All other claims in the District Court proceeding (by Ms Gao against Carters directly, and by Mr Lee counterclaiming against Ms Gao for contributory negligence and cross-claiming against Carters) failed.
The basis for Mr Lee’s claim against Carters was that one of its solicitors, a Mr Ikinepule, had given Mr Lee an oral undertaking in terms that would have effectively protected the deposit monies for Ms Gao. Judge Gittos found that that undertaking had not been given.
Mr Lee appealed. Peters J heard the appeal on 16 September 2010, and gave judgment on 19 May 2011. Before the appeal hearing, Priestley J had (on 18 August 2010) granted an application by Mr Lee to adduce new evidence in support of his appeal.
Peters J noted this,[3] but considered that the new evidence added nothing to the evidence that had been before the District Court, and declined to interfere with Judge Gittos’ finding that Mr Ikinepule had not given the undertaking alleged by Mr Lee.
High Court judgment
[3] At [32].
Broadly, Peters J:
(a)Held Mr Lee was negligent to write to Carters on 20 July 2005 declaring the agreement unconditional without first obtaining Ms Gao’s instructions, because that deprived Ms Gao of the chance to avoid the agreement if Pro Rata failed to make it unconditional in terms of clause 14.
(b)Held that Judge Gittos had sufficiently considered the terms of Mr Lee’s retainer from Ms Gao, and in particular agreed that it extended to matters (particularly checking the title position) which may have caused or contributed to Ms Gao’s losses.
(c)Agreed with the Judge that Mr Lee had breached his duty of care to Ms Gao.
(d)Disagreed with the Judge that Mr Lee’s negligence had caused the loss of the first deposit (paid by Ms Gao before they instructed Mr Lee).
(e)Took a different approach to quantum in respect of the second deposit. On a broad assessment, considered there were even chances that, but for Mr Lee’s negligence, Ms Gao would have achieved an outcome that avoided the loss of the second deposit. Therefore held that Mr Lee was liable to pay Ms Gao damages equivalent to half the amount of that deposit.
(f)Set aside the District Court’s judgment and substituted judgment against Mr Lee in favour of Ms Gao in the sum of $68,750.
High Court’s refusal of leave for a second appeal
In a judgment on 4 October 2011,[4] Asher J declined an application by Mr Lee for leave to appeal against the judgment of Peters J, and for a stay of that judgment pending appeal. Asher J held that the application failed the Snee v Snee[5] test for leave for a second appeal. The Judge disposed of particular points raised by Mr Lee — and again raised on the present application — as follows:
(a)Mr Lee was unable to point to any aspect of the new evidence that had any particular relevance to the crucial findings of fact as to Mr Lee’s duty when he discovered Pro Rata did not have title to Lot 8, or as to whether Carters had given the oral undertaking Mr Lee alleged.
(b)No error of reasoning had been demonstrated to him in Peters J’s “orthodox approach” to the assessment of damages on the basis of loss of chance.
(c)It was not now open to Mr Lee to allege that Ms Gao had failed to mitigate their losses.
(d)It was untenable for Mr Lee to contend that Pro Rata held Lot 8 as constructive trustee because it was contrary to clause 2.4 of the agreement (Carters no longer a stakeholder once the agreement became unconditional).
(e)The assignment of contractual rights by Pro Rata took place after the deposit had been paid to it and was irrelevant to liability and damages in this proceeding.
(f)Whether Carters had breached the Fair Trading Act 1986 was a matter of fact not involving any issue of public importance.
(g)The allegations of dishonest assistance/breach of trust wrongly assumed that Carters owed some sort of duty to Ms Gao.
Mr Lee’s submissions to us
[4] Lee v Gao HC Auckland CIV-2010-404-3599, 4 October 2011.
[5] Snee v Snee (1999) 3 PRNZ 609 (CA).
Mr Lee’s submissions to us were, unsurprisingly, largely a reiteration of what he had put to Asher J. They comprise largely a description of the new evidence admitted by Priestley J. We have not found the submissions easy to follow, but address what we discern as the main points.
First, Mr Lee submits that Peters J erred in upholding the District Court Judge’s finding that no oral undertaking was given by Carters to Mr Lee. Judge Gittos’ finding was based upon the evidence of witnesses who gave evidence before him. Unsurprisingly, Peters J saw no basis to depart from that finding. Given the concurrent findings of the two Courts below, this proposed appeal point is nothing short of hopeless.
The finding Mr Lee seeks to challenge is powerfully supported by two facts, as recorded by Peters J:[6]
(a)Mr Lee’s letter of 10 August 2005 to Carters did not record the oral undertaking he alleged had been given to him earlier that day. Indeed, it made no reference to it whatsoever.
(b)An undertaking was mentioned in a letter addressed to Mr Lee and dated 11 August 2005 that was discovered to Mr Lee by Carters, pursuant to its discovery obligations under the District Court Rules. This letter was marked “not sent”. Significantly, Mr Lee only raised the alleged undertaking after obtaining discovery of this letter.
[6] At [29]–[30].
Secondly, Mr Lee submits Peters J erred in holding that the new evidence admitted by Priestley J related only to the issue of the undertaking. He contended that was contrary to Priestley J’s decision, which had noted that the new evidence was relevant to any causes of action “riding independently of the alleged undertaking”.[7] Mr Lee contends Peters J failed to consider the new evidence in relation to his causes of action based on the Fair Trading Act, dishonest assistance and breach of trust.
[7] Lee v Gao HC Auckland CIV-2010-404-3599, 18 August 2010 at [14].
This is not an accurate contention. Peters J said this:
[53] As against Carters, Mr Lee alleged that the Judge erred in finding that Carters had not given the alleged oral undertaking or that, for other reasons, Carters held the money on trust. I have already dealt with the undertaking point. I am satisfied that there is no other basis on which Carters could be liable to account for the funds. They could not be bound by the terms of Mr Lee’s letter of 10 August 2005, as it was received after the funds had reached their trust account.
We agree with Asher J that the new evidence does not assist Mr Lee in relation to his allegation that Carters breached s 9 of the Fair Trading Act. We also agree with Asher J that Mr Lee’s dishonest assistance and breach of trust causes of action were based upon the incorrect assumption that Carters owed some sort of duty to Ms Gao. It was Mr Lee who had the obligation to protect Ms Gao’s interests in a competent and professional way. The Judges below were correct in regarding, as misconceived, Mr Lee’s attempts, under various guises, to impose a similar duty on Carters. In the absence of any undertaking, Carters’ obligations were to Pro Rata only.
Thirdly, Mr Lee submitted that, by 20 October 2005, Pro Rata was a constructive trustee of Ms Gao’s deposits (or at least of their second deposit) because Ms Gao were ready, willing and able to settle. By releasing the deposit to Pro Rata, Carters dishonestly assisted Pro Rata in breach of trust. In agreement with Asher J, we have already dismissed this point as based upon an incorrect assumption. It is an untenable argument.
Mr Lee’s last point was that Peters J ought not to have awarded damages on a loss of chance basis, because Ms Gao argued their case in the High Court on an all or nothing basis and failed. This argument, as we understand it, is that Peters J, having decided that Judge Gittos had awarded damages on the wrong basis, should have substituted a nil award. We entirely reject that, as essentially did Asher J. It could perhaps be argued that the award of $165,000 damages made against Mr Lee in the District Court was correct. Peters J did not think so, and substituted an award of $68,750, on the loss of chance basis outlined in her judgment. That award was, of course, substantially more favourable to Mr Lee than the District Court’s award. But, on the basis of the findings of fact accepted by both Courts below, on no basis could it be argued that Ms Gao should not be awarded any damages.
Asher J described the damages approach adopted by Peters J as “an orthodox approach to damages in the circumstances”. We agree that the Judge’s decision to award damages at 50 per cent was a matter of judgment applying established principles, and that Mr Lee has not demonstrated any error of reasoning.
Summary
We do not consider that Mr Lee’s proposed points, either singly or in combination, come anywhere near meeting the well established test for a second appeal to this Court. Although Mr Lee sought to persuade us otherwise, the judgment of Peters J, and the underlying conveyancing transaction, do not give rise to any question of law or fact capable of genuine and serious argument on second appeal, and nor does the case involve any issue of sufficient interest to outweigh the costs and delays inherent in a second appeal.
As we have pointed out, the agreement in issue was dated 16 July 2005. Litigation has been going on virtually ever since, with one judgment in the District Court and three in the High Court. We are firmly of the view that the case should go no further.
Result
We decline Mr Lee’s application for leave to bring a second appeal to this Court.
The first and second respondents were separately represented. Mr Lee is to pay the costs of each respondent for a standard application on a band A basis with usual disbursements.
Solicitors:
Hesketh Henry, Auckland for First Respondent
McElroys, Auckland for Second Respondents
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