Samuel v Annan Law - [2014] NZHC 128

IN THE HIGH COURT OF NEW ZEALAND TAURANGA REGISTRY

CIV2012-470-000404 [2014] NZHC 128

BETWEEN
WILLIAM REESE SAMUEL AND JUNE

MARGARET SAMUEL (discontinued) First Plaintiffs

R PLUS J HOLDINGS LIMITED (discontinued)

Second Plaintiff

AND

ANNAN LAW Defendant

MACALISTER MAZENGARB Third Party

Hearing: 9 -11 December 2013

Appearances:

A Challis and K Harkess for Defendant
A Darroch and A Sheriff for Third Party

Judgment:

12 February 2014 at 1pm

(RESERVED) JUDGMENT OF ANDREWS J [Defendant's claim against third party]

This judgment is delivered by me on 12 February 2014 at 1pm pursuant to r 11.5 of the High Court Rules.

..................................................... Registrar / Deputy Registrar

Solicitors:
McElroys, Auckland
Duncan Cotterill, Wellington

SAMUEL AND SAMUEL (discontinued) v ANNAN LAW & ANOR [2014] NZHC 128 [12 February 2014]

Introduction

[1] In June 2006 Mr and Mrs Samuel entered into a “Blue Chip” joint venture investment, by entering into an unconditional agreement to purchase an apartment in Auckland. The investment failed when Blue Chip collapsed, and Mr and Mrs Samuel suffered a substantial financial loss.

[2] In the course of their entering into the investment, two law firms acted for Mr and Mrs Samuel: Macalister Mazengarb (Wellington) and Annan Law (Tauranga). Annan Law acted for Mr and Mrs Samuel when they settled the purchase agreement.

[3] Mr and Mrs Samuel brought proceedings against Annan Law for breach of the contract of retainer and in negligence, seeking special damages plus general damages, interest, and costs. Annan Law issued a third party proceeding against Macalister Mazengarb, seeking contribution under s 17 of the Law Reform Act 1936.

[4] Mr and Mrs Samuel’s claim against Annan Law was settled in October 2013, by a payment of $512,500. Annan Law now seeks contribution from Macalister Mazengarb up to that sum. The parties have agreed that $512,500 represents Mr and Mrs Samuel’s loss.

Factual background

[5] On 6 June 2006, Mr and Mrs Samuel signed an agreement for sale and purchase of the apartment, together with a joint venture addendum agreement and a disclosure acknowledgement letter. They did not seek any legal advice before signing the documents. In common with many other Blue Chip investors, Mr and Mrs Samuel were retired, and were “asset rich and cash poor”, in that they owned their own home, free of any mortgage, but their only income was a pension. They hoped (and were so advised by their Blue Chip agent) that the Blue Chip investment would enable them to obtain additional income by “releasing” the equity in their home.

[6] The Blue Chip agent directed them to Annan Law, as Annan Law had acted on earlier Blue Chip transactions. However, Mr Samuel told the agent he and Mrs

Samuel had their own lawyer in Wellington, Mr Buxton at Macalister Mazengarb. Notwithstanding that, the agent sent the signed documents to Annan Law. The result was that when Annan Law received the documents from Blue Chip on 9 June 2006, the firm did not have instructions from Mr and Mrs Samuel.

[7] Mr Samuel and…

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 Samuel v Annan Law

Details

AGLC: Samuel v Annan Law [2014] NZHC 128
Case: [2014] NZHC 128
Decision Date: 12 February 2014 at 1pm

CaseChat Overview and Summary

In the case of Samuel v Annan Law, Mr and Mrs Samuel invested in a failed Blue Chip joint venture, leading to substantial financial loss. They initially sought advice from Annan Law but ultimately signed documents through Macalister Mazengarb. After suffering losses, Mr and Mrs Samuel sued Annan Law for breach of retainer and negligence. Annan Law then sought contribution from Macalister Mazengarb under the Law Reform Act 1936.

The central legal issue was whether Macalister Mazengarb breached its duty to advise Mr and Mrs Samuel against the investment and, if so, whether that breach caused their loss. The court found that a prudent solicitor would have raised the possibility of cancelling the agreement, and Mr Buxton had enough information to advise against proceeding. The court concluded that Mr Buxton's failure to communicate this constituted a breach of duty.

The court further found that the breach caused Mr and Mrs Samuel's loss, as they would have sought to cancel the agreement had they been advised to do so. The transfer of the file to Annan Law did not break the chain of causation. The court apportioned liability equally between Macalister Mazengarb and Annan Law, as each had an equal opportunity to advise the Samuels to cancel the investment.

The final order was that Macalister Mazengarb must contribute 50% of the loss, including interest. If the parties cannot agree on costs, they must file memoranda within a specified timeframe.

Orders