Note Primosso Holdings Ltd v Alpers
[2005] NZCA 440
•26 July 2005
2 NZLR
Primosso Holdings Ltd v Alpers (Note)
455
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NOTE
Primosso Holdings Ltd v Alpers
Court of Appeal Wellington CA 152/04
6, 26 July 2005
William Young, O’Regan and Robertson JJ
Negligence – Duty of care – Lenders’ claims against borrowers’ solicitors –
Novel circumstances – Proceeding struck out – Application for review – Whether duty of care arguable.
Appeal
This was an appeal by Weston Ward & Lascelles Ltd, a firm of barristers and solicitors, from the judgment of Chisholm J (reported at [2004] 3 NZLR 521)
refusing an application by the firm to strike out a cause of action in negligence taken against it by Primosso Holdings Ltd. Primosso had lent money to clients of the firm who subsequently became unable to repay the loans, the loans having been facilitated by the firm of solicitors, and the firm allegedly having known of matters which made the clients not good borrowers.
T C Weston QC and R S Cunliffe for Weston Ward & Lascelles.
S W Hughes for Primosso.
The judgment of the Court was delivered by
ANDERSON P.
[6] When Mr Weston QC, for the appellants, rose to present his submissions on
this appeal, it quickly became obvious that all three members of the Bench had considerable difficulty with the concept of a duty of care of the kind accepted as arguable by Chisholm J. If in fact what the respondents wished to allege was that Mr Ambler knew of the falsity of the directors’ certificates, it would be distinctly arguable that he was a party to the directors’ fraudulent
representations. But that would be a claim against him in deceit, not negligence.
To characterise dishonest complicity in the tort of deceit as a breach of a duty
of care not to give dishonest resistance to a deceiver is convoluted and unnecessary.
[7] If what the respondents wished to allege was that honest but careless
assistance to a deceiver is capable of founding an action in negligence, then this would be a radical extension of the law of negligence. We remark that, in a solicitor/client context, the proposition would have to be as follows: a solicitor acting for a client in a transaction has a duty of care to another party, for whom the solicitor does not act, to take reasonable steps to be satisfied that the client
is not using the solicitor to facilitate the deceit of such other party. Such a rule would require every solicitor, when receiving instructions to act in any transaction, to assume that the client might be acting deceitfully and to take reasonable steps to ascertain whether or not that was the case. And, of course, the duty would not just apply to solicitors, but also to any person acting as an
456
Court of Appeal
[2006]
agent for any other person in any transaction – accountants, bankers, insurers, stockbrokers or any other manifestation of an agent. Such an extension has, in our preliminary view, considerable conceptual and practical difficulties. But we did not hear any argument in respect of such a radical extension of the law of
negligence and we make no further comment upon it. 5
Mr Weston indicated that he had been at pains in the two earlier hearings
to make the point that either the respondents had to allege actual knowledge of the fraud and bring the claim in deceit or they had to abandon the claim. We indicated to Mr Weston that it might be preferable in the circumstances for
Ms Hughes, for the respondents, to address first. He could then reply. 10 [9] When we called on Ms Hughes she advised that, in light of the preliminary exchange between us and Mr Weston, she would consent to the appeal being allowed and the statement of claim being struck out, provided that
she could replead in deceit. Although she had previously disclaimed the possibility of fraud on Mr Ambler’s part, she now considered that she did have 15 sufficient evidence on the basis of which she could assert that he did have knowledge that the directors’ certificates were false.
As a consequence, we allow the appeal and strike out the amended statement of claim. We are deferring the effect of that latter order for 21 days,
so that Ms Hughes has the opportunity in the meantime to file a fresh statement 20 of claim, presumably including causes of action in deceit. Any new statement
of claim should not include causes of action in negligence. We express no view as to whether such new causes of action may run into difficulties under R 187(3)(a) of the High Court Rules.
Appeal allowed. 25
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