Tauranga Law v Appleton - [2015] NZSC 3

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IN THE SUPREME COURT OF NEW ZEALAND

SC 108/2013
[2015] NZSC 3

BETWEEN

TAURANGA LAW
Appellant

AND

JOHN APPLETON AND NATALIE MARIE RYAN AS TRUSTEES OF THE APPLETON FAMILY TRUST
First Respondent

JOHN APPLETON
Second Respondent

Hearing:	1 July 2014
Court:	Elias CJ, McGrath, William Young, Glazebrook and Arnold JJ
Counsel:	M G Ring QC and P J Napier for Appellant D W Grove for First and Second Respondents
Judgment:	19 February 2015

JUDGMENT OF THE COURT

AThe appeal is allowed.

BThe respondents are to pay the appellant costs of $25,000 plus reasonable disbursements (to be set by the Registrar if necessary).

CThe costs order made in the Court of Appeal is set aside and any costs order in the High Court is reinstated. If costs cannot be agreed for the Court of Appeal, costs should be set by that Court in the light of this judgment.

____________________________________________________________________

REASONS

(Given by Elias CJ)

It has been held in the High Court and the Court of Appeal that Tauranga Law, a firm of solicitors, breached duties of care owed to Mr Appleton and his family trust for whom it acted in the purchase of a residential investment property still to be developed from a company in the Blue Chip group. When the Blue Chip group collapsed, the deposit of $90,468.75 paid to Blue Chip was lost.
Despite finding that Tauranga Law was in breach of duties of care to advise Mr Appleton about the risks in the transaction, Allan J in the High Court found that the negligence was not causative of loss of the deposit because Mr Appleton would have proceeded with the transaction irrespective of proper advice. Important in that finding was the fact that Mr Appleton was content to proceed and for the deposit to be paid notwithstanding the advice he had received from Tauranga Law. Although the Judge held the advice given to be inadequate and in breach of duty, he considered that, despite its inadequacies, it “would have given most investors reason to pause”.[1]
[1]Appleton v Tauranga Law HC Tauranga CIV-2010-070-385, 12 December 2011 (Allan J) at [62].
In the Court of Appeal the determination that the negligence had not caused loss of the deposit was overturned.[2] The Court of Appeal thought that the errors in the advice given were more serious than they had been treated in the High Court. Reassessing the evidence bearing on causation in that light, the Court considered that the High Court had been wrong to dismiss Mr Appleton’s evidence that, had he understood that his deposit was not secured in a trust account, he would have done his best to extricate himself from the agreement.[3] The evidence suggested he could readily have obtained release from the agreement without payment of the deposit or penalty either through exercising a statutory right to withdraw available for two weeks after the agreement was entered into or by refusing to pay the…

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 Tauranga Law v Appleton

Details

AGLC: Tauranga Law v Appleton [2015] NZSC 3
Case: [2015] NZSC 3
Decision Date: 19 February 2015

CaseChat Overview and Summary

In Tauranga Law v Appleton, the Supreme Court of New Zealand considered whether a firm of solicitors had breached their duty of care to a client in relation to an investment property transaction. Tauranga Law had been engaged to act for Mr Appleton and his family trust in the purchase of a residential investment property from a company in the Blue Chip group. Despite finding that Tauranga Law had breached duties of care owed to Mr Appleton, the Court of Appeal had found that the negligence was causative of loss of the deposit. The appeal was allowed by the Supreme Court, which found that the negligence was not causative of loss. The Court held that the evidence suggested Mr Appleton would have proceeded with the transaction irrespective of proper advice. The Supreme Court found that the advice given by Tauranga Law, although inadequate in some respects, would have given most investors reason to pause and was sufficient to discharge the duty of care owed to Mr Appleton. The Court held that Mr Appleton’s confidence in the investment, and his belief that the deposit was being held in a trust account, meant that the advice was immaterial to him. The Supreme Court found that the breach of duty was not causative of the loss suffered by Mr Appleton and his family trust.

Orders