Taylor v Wynn Williams
[2017] NZHC 1558
•6 July 2017
IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY
CIV-2016-409-000853 [2017] NZHC 1558
BETWEEN DAVID JOHN TAYLOR
Plaintiff/Applicant
DAVID JOHN TAYLOR and ALISON TAYLOR as trustees of the DJ Taylor Family Trust
Second Applicant
AND
WYNN WILLIAMS Respondent
Hearing: 4 July 2017 Appearances:
D Fraundorfer and M Beech for Applicants
F B Barton and R M Barton for RespondentJudgment:
6 July 2017
JUDGMENT OF ASSOCIATE JUDGE MATTHEWS
Introduction
[1] Mr and Mrs Taylor, and the trustees of the DJ Taylor Family Trust (the Taylors) were represented by Wynn Williams, solicitors, in proceedings they brought against the Bank of New Zealand and the receivers of a family company owned by the Taylors, Cabellos Holdings Limited (Cabellos). The claim failed, with judgment being entered for both the bank and the receivers.
[2] In the present proceedings the Taylors allege Wynn Williams owed them a duty of care to advise and represent them with reasonable skill and care, and that Wynn Williams breached this duty. As particulars of breach of duty, in the single cause of action, the Taylors say first that expert evidence should have been called from an expert forensic accountant or business analyst, an expert valuer, and an
expert receiver, but the Taylors were not advised to do so, and Wynn Williams
TAYLOR v WYNN WILLIAMS [2017] NZHC 1558 [6 July 2017]
decided in the course of the proceeding not to do so. Secondly, the Taylors say that the proceeding should have also been brought against a Mr Paul Hibbs who was the controlling shareholder of a company called Cameron Gladstone Commercial Limited which owned shares in Cabellos and which in due course became the buyer of Cabellos from the receivers.
[3] Thirdly the Taylors say that Wynn Williams advised them not to appeal the judgment of this Court, and failed to do so within the time prescribed for an appeal to be lodged.
[4] Wynn Williams applies to strike out the proceeding on the basis that it is barred by the provisions of the Limitation Act 1950. This provides that an action founded on tort shall not be brought after the expiration of six years from the date on which the cause of action accrued.
Key dates
[5] The trial of the proceeding concluded on 27 August 2010. Judgment was entered on 14 December 2010. This proceeding was issued on 5 September 2016. Thus a period of six years prior to that date falls between the end of the trial and the date judgment was issued.
[6] Advice in relation to the appeal is said to have been given on 21 January
2011, within six years of the date this proceeding was commenced. Mr Barton says that Wynn Williams accepts that this part of the cause of action is not out of time.
Principles to be applied on an application to strike out
[7] Rule 15.1 of the High Court Rules provides:
Dismissing or staying all or part of proceeding
(1) The court may strike out all or part of a pleading if it –
(a) discloses no reasonably arguable cause of action, defence, or case appropriate to the nature of the pleading; or
(b) is likely to cause prejudice or delay; or
(c) is frivolous or vexatious; or
(d) is otherwise an abuse of the process of the court.
(2) If the court strikes out a statement of claim or a counterclaim under subclause (1), it may by the same or a subsequent order dismiss the proceeding or the counterclaim.
(3) Instead of striking out all or part of a pleading under subclause (1), the court may stay all or part of the proceeding on such conditions as are considered just.
(4) This rule does not affect the court’s inherent jurisdiction.
[8] When considering an application to strike out, pleaded facts whether admitted or not are assumed to be true.1 It is inappropriate to strike out a claim summarily unless the Court can be certain that it cannot succeed.2
[9] Where it is alleged that a proceeding, or a specific cause of action within it, is statute-barred the Court is to approach the matter in accordance with the principles in Matai Industries Ltd v Jensen,3 and Murray v Morel & Co Ltd.4 In Murray v Morel
& Co Ltd Tipping J said:
[33] I consider the proper approach, based essentially on Matai, is that in order to succeed in striking out a cause of action as statute-barred, the defendant must satisfy the court that the plaintiff’s cause of action is so clearly statute-barred that the plaintiff’s claim can properly be regarded as frivolous, vexatious or an abuse of process. If the defendant demonstrates that the plaintiff’s proceeding was commenced after the period allowed for the particular cause of action by the Limitation Act, the defendant will be entitled to an order striking out that cause of action unless the plaintiff shows that there is an arguable case for an extension or postponement which would bring the claim back within time.
The issues
[10] In relation to advice given in respect of the proceeding, and steps taken during the trial, the issue before the Court is whether these aspects of the cause of action accrued when the case closed on 27 August 2010, or when the judgment was
entered on 14 December 2010. I refer to this as the trial issue.
1 Attorney-General v Prince [1998] 1 NZLR 262 at 267.
2 Couch v Attorney-General [2008] NZSC 45, [2008] 3 NZLR 725 at [33].
3 Matai Industries Ltd v Jensen[1989] 1 NZLR 525 (HC) at 532.
4 Murray v Morel & Co Ltd [2007] NZSC 27, [2007] 3 NZLR 721.
[11] So far as the pleading relates to an appeal against the High Court judgment, this plainly falls within the limitation period, and no issue was taken by Mr Barton with that pleading, on this basis.
The trial issue
[12] Mr Barton, for Wynn Williams, says that all the allegations in relation to advice given to Mr Taylor, and all the allegations in relation to decisions made in the course of conducting the proceedings occurred before the close of the trial on
27 August. Relying on Davys Burton v Thom, Mr Barton accepts that a cause of action in negligence arises not on breach of a duty of care, but when a plaintiff first sustains loss attributable to that breach.5 The question to be decided by the Court is when recoverable loss, attributable to the negligent actions alleged, is first suffered. This arises as soon as a plaintiff who relies on the advice is “financially worse off” even if quantification is difficult and its measure in a particular case may ultimately depend on future contingencies.6 Mr Barton notes that a plaintiff may be made financially worse off in a number of ways, one of which is diminution in the value of an asset.7 He says that here, the Taylors’ asset was their right to recover loss in the events which had occurred, and the value of that right was diminished on close of the trial on 27 August because that was the point by which the value of that asset had necessarily diminished.
[13] In Davys Burton v Thom, Mr Thom sued his former solicitors for negligence in the preparation of an agreement under the Property (Relationships) Act. An agreement which did not comply with the Act was signed and almost simultaneously Mr Thom married. Mr Thom had intended that the agreement would protect him from the provisions of that Act which provide for equal asset sharing. The Chief Justice said:
The immediate effect of their negligent advice is that Mr Thom did not achieve his object in securing that protection. The Matrimonial Property Act regime attached immediately upon his marriage, which was effectively contemporaneous with the agreement. While the eventual impact of the Matrimonial Property Act regime depended on future eventualities, the
5 Davys Burton v Thom [2008] NZSC 65 at [15], per Elias CJ.
6 At [15] and [16].
7 At [17].
application of the Act was not contingent. Its attachment brought about the result the agreement was designed to exclude. That is the harm occasioned by their negligence.
[14] Applying that proposition to the present case Mr Barton argues that the value of the Taylors’ rights was diminished as soon as the case closed even though the extent of the diminution in value of those rights was not known until judgment was entered. Because of the negligence alleged, he says there was an inevitability about the outcome of the case. The Taylors’ asset, the rights which they sought to establish, was fatally flawed as at the end of the trial. He says that is the date when the damage occurred even though exact quantification did not take place until later.
[15] Mr Barton also says that a cause of action in contract would have run from the date of breach which would not have been later than the end of the trial. He notes that Lord Nicholls said in Nykredit Mortgage Bank PLC v Edward Erdman Group Ltd,8 that it is desirable that the disparity between the limitation periods for parallel causes of action should be smaller rather than greater. This was described as a powerful policy argument by the Court of Appeal in Davys Burton v Thom.9
[16] Mr Fraundorfer for the Taylors says that the Taylors did not suffer a loss at any point prior to the judgment which found against them and thereby diminished the value of their alleged rights. I agree with this submission. Until judgment was delivered, the effect on the asserted rights of the Taylors was not fixed. The rights could have been upheld, or they could have been rejected. Until rejected, there was no diminution in their value, so no loss suffered by the Taylors.
[17] Mr Fraundorfer also says that at any time after the close of the case but before the issue of the judgment, an application could have been made on behalf of the Taylors under s 98 of the Evidence Act 2006 for leave of the judge to present further evidence. He notes that permission for this course to be taken may be
granted in a case of the present kind at any time until judgment is delivered.10
8 Nykredit Mortgage Bank PLC v Edward Erdman Group Ltd (No 2) [1998] All ER 305.
9 Davys Burton v Thom [2007] NZCA 215.
10 Section 98(1), (2) and (5).
[18] Mr Barton counters this argument by saying that a failure to apply for leave to call additional evidence is not pleaded as a particular of the negligence alleged against Wynn Williams and that it is now too late for such a pleading to be added as it would be out of time. He also says that it is very unlikely that such an application would be successful, as it would relate to the presentation of expert evidence which could and, on the pleadings, should have been given earlier in the trial, and granting leave would amount to unfairness which could not be cured by an adjournment or by costs, in terms of s 98(2).
[19] In this respect Mr Barton referred to Lindsay v Noble Investments Ltd,11 where the Court referred, with approval, to a summary of the principles to be applied by the Court under s 98 which is contained in McGechan on Procedure.12 There, by reference to a number of cases, it is recorded that the discretion to allow admission of further evidence after the closing of a case should be exercised sparingly and leave should only be given in exceptional circumstances. The failure to call evidence at the proper time must be adequately explained, the justice of the case must require the admission of the additional evidence, and leave will be refused if the evidence would have been available had due diligence been exercised. An important factor may be the distinction between a failure to tender evidence and an election not to call evidence.
[20] I accept that had an application to call evidence been made to Panckhurst J after the closing of the case, the likelihood of it succeeding would probably have been slight. It is clear on the evidence that there had been discussions between the Taylors and Wynn Williams about the calling of evidence in the categories relied on by the Taylors so it is difficult to see a basis on which an application could succeed. However, I do not have any evidence, nor would I expect to receive any evidence on an application of this kind, on why a decision was made not to call such evidence earlier, let alone whether the failure to do so is adequately explained. Those, and the other factors referred to, are for consideration on an application for leave to adduce further evidence. However limited the prospect of success may be, the prospect still
existed. That is the position established on the present application. Section 98 is
11 Lindsay v Noble Investments Ltd [2014] NZHC 799.
12 Looseleaf edition, Brookers, at HR10.10.07.
statutory recognition of the possibility of evidence being adduced at any time prior to the issue of judgment. At any time during the period between closure and judgment, leave could have been sought and might have been granted. Subject to satisfying the Court of the criteria in s 98 the prospect of evidence in the case being reopened remained. Whilst the presently pleaded breaches of duty all occurred before the closure of evidence, it cannot be said that the Taylors suffered a loss by diminution in the value of their rights until the chance to pursue those rights was finally ended by the issue of judgment.
[21] Mr Barton observes that the pleading does not allege, as a particular of negligence, the failure to make an application under s 98, and he says that a pleading to that effect would now be out of time. Mr Fraundorfer says this would be a further particular of a single allegation of negligence in the sole cause of action.
[22] The test for determining whether a cause of action is fresh is set out in
Transpower New Zealand Ltd v Todd Energy Ltd:13
(a) A cause of action is a factual situation the existence of which entitles one person to obtain a legal remedy against another (Letang v Cooper [1965] 1 QB 232 at 242 – 243 (CA) per Diplock LJ);
(b) Only material facts are taken into account and the selection of those facts “is made at the highest level of abstraction” (Paragon Finance plc v D B Thakerar & Co (a firm) [1999] 1 All ER 400 at 405 (CA) per Millett LJ);
(c) The test of whether an amended pleading is “fresh” is whether it is something “essentially different” (Chilcott v Goss) [1995] 1 NZLR
263 at 273 (CA) citing Smith v Wilkins & Davies Construction Co
Ltd [1958] NZLR 958 at 961 (SC) per McCarthy J). Whether there is such a change is a question of degree. The change in character could be brought about by alterations in matters of law, or of fact, or both; and
(d) A plaintiff will not be permitted, after the period of limitations has run, to set up a new case “varying so substantially” from the previous pleadings that it would involve investigation of factual or legal matters, or both, “different from what have already been raised and of which no fair warning has been given” (Chilcott at 273 noting that this test from Harris v Raggatt [1965] VR 779 at 785 (SC) per Sholl J was adopted in Gabites v Australasian T & G Mutual Life Assurance Society Ltd [1968] NZLR 1145 at 1151 (CA)).”
13 Transpower New Zealand Ltd v Todd Energy Ltd [2007] NZCA 302.
[23] In Commerce Commission v Visy Board Pty Ltd, the Court of Appeal elaborated on these principles:14
A similar approach has been taken in two later cases where it was argued that an amendment to a statement of claim inserting new facts amounted to the introduction of a new cause of action. The theme running through all three cases is that in order for an amendment to amount to a new cause of action there must be a change to the legal basis for the claim. That can, in theory, occur through the addition of new facts, but only if the facts added are so fundamental that they change the essence of the case against the defendant. If the basic legal claims made are the same and they are simply backed up by the addition or substitution of a new fact, that is unlikely to amount to a new cause of action.
(emphasis added)
[24] Applying these principles, the addition of a further particular alleging negligence by failing to make an application for leave under s 98 would be permitted. It would not be an allegation which is essentially different from the other allegations. It would not constitute a change to the legal basis of the claim made against Wynn Williams.
Outcome
[25] I find that the cause of action against Wynn Williams accrued when judgment was issued by the Court on 14 December 2010. As a consequence this proceeding is not time barred under the provisions of the Limitation Act 1950, as it was filed within six years of that date.
[26] The application to strike out this proceeding is dismissed.
[27] Counsel did not make submissions on costs. I am not aware of any reason why costs should not follow the event, and be awarded on a 2B basis. If counsel are
unable to agree on costs, memoranda may be filed within 10 working days.
J G Matthews
Associate Judge
14 Commerce Commission v Visy Board Pty Ltd [2012] NZCA 383 at [146].
Solicitors:
Holland Beckett Lawyers, Tauranga
Anderson Lloyd, Dunedin
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