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McKay v Sandman

McKay v Sandman

Case [2018] NZCA 103 20 April 2018

Breach of Fiduciary Duty

Trusts & Equity

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IN THE COURT OF APPEAL OF NEW ZEALAND

CA500/2017
[2018] NZCA 103

BETWEEN	COLIN CHARLES MCKAY, ROGER DAVID CANN AND DAVID JOHN CLARK Appellants
AND	MARK ROBERT SANDMAN Respondent

Hearing:	28 February 2018
Court:	Brown, Brewer and Collins JJ
Counsel:	P J L Hunt and A P Colgan for Appellants R M Dillon for Respondent
Judgment:	20 April 2018 at 10.30 am

JUDGMENT OF THE COURT

AThe appeal is allowed.
BSummary judgment is granted to the appellants on the cause of action against them.
CThe respondent must pay the appellants costs for a standard appeal on a band A basis and usual disbursements.

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Table of Contents

Para No.

Introduction  [1]
Relevant background  [6]
The pleading against the Firm  [11]
The High Court judgment  [15]
Dishonest assistance  [21]
Summary judgment appeal  [28]

Approach on appeal  [29]
Evidence  [32]
First component: a trust or fiduciary duty  [38]
Second component: breach of fiduciary duty  [43]
Third and fourth components: dishonest assistance  [48]

Ms Paul’s evidence [50]
Discussion [66]

The pleaded case  [69]
Mr Sandman’s argument  [78]
Conclusion  [92]

Result [94]

REASONS OF THE COURT

(Given by Brown J)

Introduction

Mrs Sandman’s 2005 will provided that her residual estate was to be transferred to her surviving children, Mark (Mr Sandman) and Victoria (Vicky), in equal shares. In December 2010 Mrs Sandman executed a new will which provided that, in the event that either of her children pre-deceased her, the share of her residual estate which that child would have received was to be distributed among various persons instead of to the surviving child.
Vicky died in 2011. Mrs Sandman died in 2013. The appellants are the partners in the law firm, Wilson McKay (the Firm), which obtained probate. Mr McKay and Mr Giboney were appointed executors.
Mr Sandman’s proceeding seeks a recall of the probate of the 2010 will, challenging Mrs Sandman’s testamentary capacity, claiming that she did not have knowledge of the contents and effects of the 2010 will and alleging undue influence on the part of Vicky and Mr Giboney. He seeks a grant of probate of the 2005 will under which he would inherit the entire residual estate.
The present appeal is solely concerned with Mr Sandman’s claim in the same proceeding against the Firm, who were responsible for the drafting and the execution of the 2010 will. Mr Sandman alleges accessory liability on the part of the Firm in dishonestly assisting the alleged conduct of Vicky and Mr Giboney.
The Firm’s applications for summary judgment and to strike-out the claim for lack of a cause of action against it were declined by Associate Judge Christiansen.[1] The Firm appeals from the declining of the summary judgment application. The proceeding having commenced prior to 1 March 2017, in view of this Court’s decision in Sutcliffe v Tarr,[2] the Firm filed in the High Court an application for review of the declining of its strike-out application. That application was then transferred to this Court pursuant to s 64 of the Judicature…

Grounds of appeal

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

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

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

Consideration

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

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

Continue reading McKay v Sandman

Details

AGLC: McKay v Sandman [2018] NZCA 103
Case: [2018] NZCA 103
Decision Date: 20 April 2018 at 10.30 am

CaseChat Overview and Summary

The Court of Appeal of New Zealand heard an appeal by the appellants, the law firm Wilson McKay, against the decision of the Associate Judge of the High Court who declined to grant summary judgment on a claim brought by Mark Sandman against the Firm. Mr Sandman alleged that the Firm dishonestly assisted his sister, Vicky, and his brother-in-law, Mr Giboney, in breaching their fiduciary duties to his mother, Mrs Sandman, in relation to her will. The Firm denied the allegations and sought summary judgment, arguing that Mr Sandman's claim disclosed no reasonably arguable cause of action. The Associate Judge declined to grant summary judgment and the Firm appealed to the Court of Appeal.

The Court of Appeal reviewed the principles of the cause of action for dishonest assistance, which requires the existence of a trust or fiduciary duty, a breach of that duty, participation by a third party in the breach, and dishonesty on the part of the third party. The Court found that the Firm had not satisfied the burden of proof required for summary judgment in relation to the breach of fiduciary duty and the dishonesty components of the cause of action. The Court accepted the evidence of Ms Paul, a senior associate at the Firm, who provided a detailed account of the Firm's conduct in relation to Mrs Sandman's will. The Court concluded that, based on the evidence, the Firm had acted honestly and there was no basis for the allegation of dishonest assistance. The appeal was allowed, and summary judgment was granted to the Firm on Mr Sandman's claim against it.

Orders