Todd (MacAlister Todd) v Hillary HC Auckland CIV 2005-412-000294
[2007] NZHC 1854
•15 June 2007
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV 2005-412-000294
BETWEEN G M TODD & OTHERS (MACALISTER TODD)
Plaintiffs and First Counterclaim
Defendants
AND G J HILLARY
Defendant and Counterclaim Plaintiff
ANDA P DUNCAN & OTHERS (CORBAN REVELL)
Second Counterclaim Defendants/First
Third Party
Hearing: 21-23 May 2007
Appearances: Mr M Parker for Todd and Others
Mr G Hillary in person
Mr M Gilbert for Duncan & Others
Judgment: 15 June 2007 at 2.00 p.m.
JUDGMENT OF VENNING J
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Solicitors: Gilbert Walker, Auckland
M E Parker, Queenstown
Copy to: M Phillips, Auckland
G Hillary, Christchurch
TODD & OTHERS (MACALISTER TODD) V G J HILLARY AND ANOR HC AK CIV 2005-412-000294 15
June 2007
Introduction
[1] The plaintiffs (Macalister Todd) initiated this proceeding by suing the defendant Mr Hillary in the District Court at Alexandra to recover legal fees of
$18,516. Mr Hillary responded by counterclaiming against Macalister Todd and the second counterclaim defendants, (Corban Revell) alleging negligence against both firms of solicitors. He seeks in total approximately $16 million in damages.
Background
[2] The background lies in the matrimonial property dispute between Mr Hillary and his wife Ms Itagaki.
[3] Mr Hillary and Ms Itagaki married in Japan in 1989. The same year they purchased a property at 9 Brisbane Street, Queenstown. The purchase was funded in part by a loan from Ms Itagaki’s father. The balance was borrowed from the BNZ.
[4] Mr Hillary and Ms Itagaki separated in 1997. Although separated, in about April of 1998 they purchased an adjoining property at 12 Park Street. At the time Mr Hillary intended to develop the property to provide retirement accommodation. The bank required the equity in the Brisbane Street property as security.
[5] By May 1999 Ms Itagaki had instructed Ms de Luen of Corban Revell in relation to the separation and matrimonial property issues.
[6] On or about 9 December 1999 Corban Revell filed an application for orders for determination of matrimonial property in the Family Court at Alexandra.
[7] Mr Hillary did not file a response. On 3 March 2000 Corban Revell filed an application for an order for examination. The application was granted on 10 March
2000. On 3 July 2000 Mr Hillary completed an affidavit of assets and liabilities and
a further affidavit in response. The case was allocated a fixture for 13 February
2001.
[8] At the substantive hearing before Judge Blaikie, the principal issue between the parties was whether the second property purchased, Park Street, was matrimonial property. There were also other issues concerning the debt owing to Ms Itagaki’s father, rental and mortgage payments.
[9] Mr Hillary represented himself. Both Ms Itagaki and Mr Hillary gave evidence. Ms de Luen presented written submissions on behalf of Ms Itagaki. At the conclusion of the hearing Judge Blaikie gave Mr Hillary 14 days to file written submissions in response. He also gave counsel for Ms Itagaki a further 14 days to reply.
[10] Mr Hillary instructed Ms Clarke of Macalister Todd at Alexandra to file written submissions on his behalf. They were filed on 28 February 2001. Corban Revell filed reply submissions on behalf of Ms Itagaki on 15 March 2001.
[11] Judge Blaikie later delivered a reserved decision on 18 June 2001. In a brief decision, the Judge concluded that Park Street was matrimonial property. He noted that shares in Mr Hillary’s name were accepted as matrimonial property as was the rental claimed by Ms Itagaki in relation to the former matrimonial home. Further, given that Park Street was matrimonial property the Judge said that rental in relation to that property (less a deduction for mortgage payments) should also be brought into account as matrimonial property. The Judge then noted the agreement between the parties as to the value of chattels, the company and stock. Judge Blaikie also noted that both parties appeared to acknowledge the debt to Ms Itagaki’s father. He accepted Ms Itagaki’s submissions as to the debt and directed that the debt be paid and be taken into account when “the calculations and final distribution of matrimonial property is made”. Judge Blaikie then referred to counsel’s submission as to Mr Hillary’s lack of co-operation. He directed counsel to file a memorandum setting out a breakdown between legal costs and actual disbursements incurred and then concluded by stating:
… counsel for the wife is requested to lodge a draft order reflecting the matters contained and determined in this judgment. She may wish to consult with the counsel who has filed submissions on behalf of the husband before filing the draft order. The draft in any event is to be filed within 14 days.
[12] Ms de Luen did not consult with counsel who had filed the submissions on behalf of Mr Hillary. Nor did she consult with Mr Hillary. On 5 July 2001 she filed a draft matrimonial property order together with a memorandum as to costs.
[13] The draft matrimonial property order dealt with the issues referred to by the Judge and calculated that a one-half share of matrimonial property was $253,488.03. The figure was based on agreed values for Brisbane Street of $295,000 and Park Street of $620,000. In addition counsel sought costs. The draft order then went on to provide, at orders 9-14, for implementation. The implementation orders provided for orders for the sale of Brisbane Street and Park Street to issue and lie in Court with leave reserved to Ms Itagaki to apply on 24 hours notice for their release if settlement was not effected by 1 September 2001.
[14] The draft order and costs memorandum were referred to Judge Blaikie by the
Registrar. Judge Blaikie noted the file:
Solicitors’ costs fixed in the sum of $5,000. Agency costs and disbursement costs ordered as sought.
[15] The Registrar then apparently communicated with counsel for Ms Itagaki and sealed an original order based on the draft presented to the Court, with some amendments to dates. The order for costs confirmed by Judge Blaikie and all other orders, including the orders for implementation were incorporated. The order was sealed on 30 August 2001. It required Mr Hillary to pay the amount due to Ms Itagaki by 19 October 2001. In default the order required Mr Hillary to pay interest at 11%. Orders for sale were also made for both properties, to lie in Court.
[16] On or about 8 October 2001 Mr Hillary listed the Brisbane Street property with Bayleys Realty and the Park Street property with Locations Realty. Park Street was listed on condition there was to be a proposed boundary adjustment of approximately 300 m².
[17] On 11 October 2001 Corban Revell wrote to Mr Hillary. They referred to the order and said that if he did not pay by 19 October 2001 they would apply for the orders for sale to be released.
[18] Mr Hillary did not seek legal advice at the time. He responded personally on
19 October 2001 to advise that:
… both properties have already been placed on the market and are actively being advertised. …
One of the properties is on the market at well under the agreed valuation just to get a sale. …
Other than a feeling of worth, having the courts sell the properties will not speed up the sale as all that can be done is being done and as mentioned earlier, I would expect to have an offer by Tuesday on at least one property.
[19] On 24 October 2001, without further notice to Mr Hillary, Corban Revell applied for the orders for sale to be released by the Registrar of the District Court at Alexandra. The orders were released and served on Mr Hillary on 26 October 2001.
[20] Mr Hillary then instructed Macalister Todd at Queenstown to act on his behalf. He saw Mr Phillips and Ms Vidal of that firm. His first attendance was on or about 2 November 2001. In the absence of Ms de Luen on leave, Ms Vidal spoke to Mr Goodwin of Corban Revell. On 8 November 2001 Ms Vidal wrote to Mr Goodwin on Mr Hillary’s instructions. The letter confirmed that both properties were presently listed with real estate agents for sale and had been since 8 October
2001. The letter went on to note:
We understand from Mr Hillary that negotiations are presently underway with a potential buyer for one of the properties.
As discussed we would be obliged if you could indicate whether or not you wish, in the interim until Ms de Luen returns, to proceed with the forced sale, or whether the properties can remain with the current real estate agents to try and effect sale that way. (With the result that the best possible price is obtained for the properties, rather than there being a fire sale).
The letter then went on to record Mr Hillary’s instructions that the matrimonial property order appeared to be drafted on the basis Mr Hillary would pay a specified sum of money to settle rather than having to proceed to a forced sale and the order did not take account of the costs of sale. Ms Vidal also noted that:
Our client has also indicated that when the calculations were carried out in respect of the settlement sum, interest relating to a second mortgage was overlooked and not included.
A copy of a bank statement Mr Hillary had provided was attached.
[21] Mr Goodwin granted an extension of time until 14 November to allow counsel to confer and for Corban Revell to take further instructions from Ms Itagaki.
[22] By 12 November Ms de Luen had returned to work and taken instructions from Ms Itagaki. She confirmed that her instructions were to proceed to enforce the sale of the properties by the Court orders.
[23] On 12 November 2001 Mr Hillary entered a sale and purchase agreement in respect of the Brisbane Street property at a price of $370,000.00. The purchaser was Henry Norcross or nominee. Mr Hillary completed the agreement on behalf of both himself and Ms Itagaki. Corban Revell subsequently arranged for Ms Itagaki to countersign the agreement. The sale of Brisbane Street was due for settlement on 21
December 2001.
[24] On 13 November, Macalister Todd wrote to Corban Revell to advise:
There has been little interest in the Park Street property at the original list price of $550,000, and so it has been reduced to $495,000.
It seems at the time Mr Hillary had not told Macalister Todd that he had entered the agreement for sale of Brisbane Street.
[25] On 15 November Macalister Todd wrote again to Corban Revell to advise that Mr Hillary proposed that the Park Street property be dual listed with Bayleys and with Locations. The letter also noted that the whole property had not been listed, as there was a purchaser interested in the balance of the site. A subdivision would be required.
[26] Subsequently, Corban Revell instructed the agent of the terms of the orders. Shortly thereafter, the agent presented an offer to Corban Revell directly for the sale of the entire Park Street property at a price of $630,000. Settlement was due 30
working days after the contract became unconditional. The contract was conditional upon due diligence. The purchaser was P Ramsay or nominee. On 22 November
2001 Corban Revell faxed a copy of the agreement to Macalister Todd for signature by Mr Hillary. Mr Hillary refused to sign the agreement.
[27] In the meantime, Mr Hillary had instructed Anderson Lloyd Caudwell to act for him on the sale of Brisbane Street. On 23 November 2001 Anderson Lloyd Caudwell wrote to Corban Revell to advise that Mr Hillary expected to have sufficient funds from that sale of Brisbane Street to pay Ms Itagaki her entitlement under the matrimonial property order.
[28] Despite that, Mr Hillary remained concerned at the sale of Park Street. He arranged for his partner and a business associate to present a back-up offer on 12
Park Street at a price of $680,000. The offer was conditional upon the existing agreement not being confirmed and a valuation being obtained that was satisfactory to the purchaser.
[29] Ms Itagaki did not accept the back-up offer. On 4 December 2001 Corban Revell wrote to the Registrar of the Alexandra District Court requesting the Registrar to co-sign the sale and purchase agreement for Park Street with Mr Ramsay or nominee so the sale could proceed. The solicitors also sought, ex parte, a warrant to enforce the order to vacate the properties. The Registrar forwarded the letter and the ex parte application to Judge Blaikie together with an internal memorandum: The memorandum read:
Ex parte application for warrant to enforce order for your direction please. There are, on the correspondence section of file, copies of correspondence
between Ms de Luen and Ms Vidal, who has had recent instructions from the
Respondent concerning the enforcement process.
In addition, counsel for the Applicant has today faxed Sale and Purchase Agreement document seeking this be signed by Registrar as Respondent has refused to do so – I am not sure of my authority to do this - for your direction on this also please.
Judge Blaikie considered the documents and then minuted the file:
1. Ex parte application granted.
2.I am prepared to treat the letter as an application. Order made giving Registrar power to execute agreement and transfer.
[30] The Registrar subsequently sealed an order and released a warrant to enforce the order to vacate.
[31] By 11 December 2001 Macalister Todd’s inquiries suggested that Corban Revell considered they could complete the agreement for the sale of Park Street. Ms Vidal wrote to Corban Revell asking what authority was relied on. Corban Revell advised by reply of 12 December 2001 that the agreement had been co-signed by the Registrar of the Court and that Judge Blaikie had authorised the Registrar to sign the transfer.
[32] On 14 December 2001 Corban Revell then advised Anderson Lloyd Caudwell that the back-up offer for Park Street had not been accepted and that the earlier offer at $630,000 appeared likely to settle. On the same day Macalister Todd filed a memorandum with the Court seeking clarification as to the basis on which the Court had executed the sale and purchase agreement for Park Street. The memorandum stated:
… the writer asks the Court the basis upon which it agreed to the execution of the sale and purchase agreement as she has been instructed to do so by her client who is obviously distraught about the situation given the settlement offer provided to Ms de Luen and the fact that the sale and purchase agreement on the second property was not necessary to achieve settlement.
…
[33] No response was received. On 20 December 2001 both Corban Revell and Macalister Todd again wrote to the Court. Corban Revell sought a copy of the memorandum that Ms Vidal had filed, which had by then come to their attention. Ms Vidal asked the Registrar to advise as a matter of urgency whether or not the Judge had had the opportunity to consider the matters raised in her memorandum. The Registrar referred the file to Judge Blaikie who, on 21 December 2001 minuted the file:
Please advise counsel that the original directions and orders remain.
Corban Revell then settled the sale of Park Street on 24 December 2001. The nominated purchaser was associated with Norcross interests. The Brisbane Street
sale, although delayed, was subsequently settled on 15 January 2002, again the purchaser was Norcross.
[34] The debt owing to the BNZ was repaid from the settlement proceeds. The sum of $82,352 representing the debt to Ms Itagaki’s father was also paid. But because of the issues that had arisen during the sale process, Corban Revell advised Anderson Lloyd that it would seek the Court’s approval of an adjusted settlement statement before disbursing the balance funds from the sale of the properties. In the interim, payments of $129,151.90 plus interest to each of Mr Hillary and Ms Itagaki were made.
[35] From March 2002 Mr Bowers took over the file at Macalister Todd. On Mr Hillary’s instructions Mr Bowers took steps to question the calculations set out in the matrimonial property order, to pursue the adjustment for the additional mortgage payments made on the revolving credit facility and to have the enforcement costs leading up to the sale of Park Street property, the real estate agent commission, GST and costs of sale taken into account on the final distribution. He also made application to the Court to review the circumstances in which the original sealed order and the later enforcement orders were made.
[36] In or about late 2002 or the early part of 2003 the Inland Revenue advised Macalister Todd that because of the GST debt they proposed to freeze Mr Hillary’s trust account. At that stage an issue arose as to Macalister Todd’s continued representation of Mr Hillary. Macalister Todd was relying on the funds held in Corban Revell’s trust account as security for payment for the fees charged to Mr Hillary during 2002. In February 2003, Mr Bowers advised Mr Hillary that the partners of the firm had decided not to represent him further until his outstanding fees were paid. Mr Hillary did not pay the fees. Mr Hillary then represented himself in the proceedings.
[37] The matter came before Judge Inglis QC in the Family Court on 11 July
2003. In a judgment delivered on 25 July, Judge Inglis set aside the sealed order dated 30 August 2001 together with the subsequent orders and directions relating to
the enforcement of those orders. The Judge was highly critical of the actions of counsel for Ms Itagaki, Ms de Luen of Corban Revell. He directed a further hearing.
[38] Subsequently, the matter came before Judge O’Dwyer on 14 October 2003 and 30 March 2004. Judge O’Dwyer noted that the GST debt had been paid from the proceeds of sale and only a balance of approximately $50,000 was left. She directed that a sum sufficient to make the total payment to Mr Hillary up to the
$240,075 (being Mr Hillary’s entitlement following the original hearing - less the additional costs payable to Ms Itagaki) was to be paid to Mr Hillary. The balance was to be paid to Ms Itagaki.
[39] Ms Itagaki appealed against the decision of Judge O’Dwyer. On appeal Fogarty J effectively affirmed the judgment of Judge O’Dwyer in principle but noted that the original decision of Judge Blaikie anticipated that Mr Hillary would retain the properties rather than be paid out a monetary sum.
[40] In the meantime, Macalister Todd had issued these proceedings against Mr
Hillary in the District Court at Alexandra on 28 November 2003.
Other proceedings/parties
[41] During the course of these proceedings Mr Hillary joined as a second defendant and third party the Attorney-General sued on behalf of the Ministry of Justice. The claim against the Attorney-General was struck out on 21 November
2005 by Associate Judge Christiansen. The Associate Judge struck out the claim as disclosing no reasonable cause of action, primarily because of s 6(5) of the Crown Proceedings Act 1950.
[42] As a consequence of the further decisions in the Family Court Ms Itagaki received less than she would have under the terms of the original sealed order. She took separate proceedings against Corban Revell in CIV 2005-404-4569. Those proceedings have largely been resolved subject to one remaining issue which is Ms Itagaki’s claim for the difference between the amount paid to her by Mr Hillary
and the judgment sum (including interest). That issue stands adjourned to follow the outcome of this substantive proceeding.
[43] Also, a stay was granted in relation to implementation of the judgment of Fogarty J in CIV 2005-412-366 pending further order of the Court in these proceedings. In the course of a telephone conference prior to this trial Mr Hillary confirmed his consent to the lifting of the stay and a consent order was made on the following terms:
The stay in CIV 2005-412-366 will be lifted upon the expiry of the appeal period following delivery of the substantive decision in CIV 2005-412-294, or earlier agreement between the parties in that proceeding as to settlement, with such settlement being confirmed in writing to the Court.
Representation/preliminary matters
[44] Mr Hillary has represented himself in these proceedings. He has drawn his own pleadings and presented his own case at Court. While Mr Hillary is quite entitled to represent himself, he has not assisted himself in the way he presented the case. This Court is not the first to comment on that aspect of this unfortunate saga. Judge Blaikie recorded it, as did Judge Inglis. Judge O’Dwyer also made similar comments.
[45] At the outset of the hearing I advised Mr Hillary the way the case would be conducted and the procedure to be followed. Mr Hillary was extended considerable latitude in terms of the way he presented his case to the Court. He presented his case by a mixture of submissions and evidence. During his evidence he expanded significantly on answers to counsel’s questions. That was effectively treated as his re-examination. During the course of his cross-examination of Ms de Luen, Ms Vidal and Mr Bowers, Mr Hillary had to be reminded and advised what was permissible and what was not.
[46] Mr Hillary gave evidence himself. He also called Ms de Luen. Mr Parker called Ms Vidal and Mr Bowers on behalf of Macalister Todd. Mr Gilbert did not call any evidence. Nor did he cross-examine.
[47] Mr Hillary had also issued witness summonses to a real estate agent and a principal of the purchaser of the Brisbane Street and Park Street properties (the Norcross interests). They did not attend Court. Mr Hillary did not tender allowances and travel expenses from Queenstown to Auckland to the witnesses when serving them with their summonses, so the Court was not in a position to consider the issue of a warrant to arrest: s 56A Judicature Act 1908. I did consider whether the hearing should be adjourned to enable Mr Hillary to address that issue, but as Mr Hillary’s purpose for having the witnesses here was to challenge the bona fides of the purchaser of the properties, and thereby challenge the sales as fraudulent, which is not in issue on the pleadings, I chose not to further delay this proceeding by an unnecessary adjournment.
[48] In the course of his evidence Mr Hillary said that the purchasers, real estate agents Bayleys and Corban Revell were “aware that the property was obtained under dubious circumstances. This was confirmed with the decision of Judge Inglis QC”. There is no evidentiary basis for that assertion by Mr Hillary. There was no such finding by Judge Inglis QC. The Judge could not have made such a finding as none of the purchasers, real estate agents or Corban Revell were parties to the proceeding before him and none of them gave evidence.
[49] On a number of occasions during the hearing Mr Hillary suggested the Court should set aside the transfers of Park Street and Brisbane Street to the Norcross interests. As I attempted to explain to Mr Hillary, there is no jurisdiction for the Court to do that in these proceedings. Obviously if that matter was to be pursued then the purchaser would have to be joined as a party (as opposed to being called as a witness) and a separate claim brought against it.
[50] After the completion of the hearing Mr Hillary sought leave to re-open the case and present further evidence. That application was declined in a minute of 7
June 2007, although further documents that Mr Hillary wanted the Court to refer to were accepted as an addition to the bundle of documents.
[51] Against that rather convoluted background Mr Hillary’s claims against Macalister Todd and the solicitors acting for Ms Itagaki through the course of the proceedings, Corban Revell, fall to be considered.
The claim against Macalister Todd
[52] In his pleading against Macalister Todd Mr Hillary alleges Macalister Todd owed him a duty of care and was negligent in:
1. That they failed to have incorrect arithmetic corrected in orders sealed without consent by the Alexandra District Court in its Family jurisdiction.
2.That they failed to take reasonable steps to prevent the foreseeable and predictable actions of Corban Revell from implementing orders that were invalid, inappropriately obtained, wrongly sealed and did not reflect the decision of Judge E.O.K. Blaikie.
3.That they failed to file two affidavits dated the 26th November 2001 along with the purchase and sale agreement from Takeichi and/or nominee.
4.That they failed to advise the court of the true state of affairs in the memorandum dated the 14th December 2001.
5.That they failed to have the matter brought to the attention of the High Court, immediately they became aware that Corban Revell, with the apparent co-operation of the Family Court, appeared to have circumvented legislation and procedure and placed my assets and reputation at risk.
[53] Macalister Todd accept they owed a duty of care to Mr Hillary.
[54] While the duty is acknowledged the issue is the extent of the duty. The classic statement is that of Oliver J in Midland Bank Trust Co Ltd v Hett, Stubbs & Kemp (a firm) [1979] Ch 384 at 403:
… the court must beware of imposing on solicitors, or on professional men in other spheres, duties which go beyond the scope of what they are requested and undertake to do. It may be that a particularly meticulous and conscientious practitioner would, in his client’s general interests, take it on himself to pursue a line of enquiry beyond the strict limits comprehended by his instructions. But that is not the test. The test is what the reasonably competent practitioner would do having regard to the standards normally adopted in his profession, and cases such as Duchess of Argyll v Beuselinck [1972] 2 Lloyd’s Rep 172; Griffiths v Evans [1953] 1 WLR 1424 and Hall v
Meyrick [1957] 2 QB 455 demonstrate that the duty is directly related to the confines of the retainer.
[55] The Court of Appeal confirmed generally the same principles in Gilbert v Shanahan [1998] 3 NZLR 528 and more recently the High Court in Bindon v Bishop [2003] 2 NZLR 136 has confirmed at [21] that establishing the terms of the retainer is “an intensely factual inquiry”.
[56] Both Ms Vidal and Mr Bowers gave evidence as to the extent of the retainer and Mr Hillary’s instructions to them. Their evidence was at variance with Mr Hillary’s submissions as to the extent of the duty owed to him by Macalister Todd.
[57] Mr Hillary defined the scope of the duty by referring to a number of ways he said Macalister Todd breached the duty.
That Macalister Todd failed to have the incorrect arithmetic in the sealed orders corrected
[58] A solicitor is under no duty to achieve a particular result for a client. Mr Hillary’s first allegation is equivalent to saying “the solicitor failed to win my case” and so must be negligent. The duty owed by a solicitor to a client is to take the steps a reasonably competent solicitor would have taken in the circumstances to achieve the end desired by the client. A solicitor does not underwrite a client’s success in litigation or commercial activity.
[59] As noted, Macalister Todd were not instructed by Mr Hillary in relation to the matters of which he now complains until early November 2001. By early November the time for compliance with the Court orders had expired, as had the time for appeal. Mr Hillary had been served with the orders for sale of both properties. Both properties were on the market. Mr Hillary had himself listed them with two separate real estate agencies.
[60] If Mr Hillary was in a position to have borrowed further to pay out the judgment sum without selling either the Brisbane Street or Park Street properties, he did not communicate that to Ms Itagaki and her solicitors after the judgment was
sealed and served on him. There is no evidence that he sought to settle the judgment sum before putting the properties on the market.
[61] The evidence satisfies me that the reason Mr Hillary did not seek to settle is that he was primarily concerned that the draft orders did not credit him with the interest on the revolving credit facilities that he had paid in addition to the fixed mortgage repayments. His focus was on achieving a credit for those before making any settlement to Ms Itagaki. He was not initially concerned at the issue of the debt to Ms Itagaki’s father as the exchange rate had moved in his favour. In his own evidence Mr Hillary said “without an execution of transfer and correction of the arithmetic we didn’t intend to make settlement at that time”.
[62] Ms Vidal said that in early November 2001 Mr Hillary’s instructions were that he wished to be able to sell one of the properties to settle the matrimonial property award made by the Court in favour of Ms Itagaki. Mr Hillary also wanted to adjust the judgment amount due to Ms Itagaki by bringing into account the interest he had paid on the revolving credit facilities. Ms Vidal wrote to Corban Revell on 8 November to obtain an extension of time to avoid a forced sale of the properties and to enable counsel to discuss the matter further. Ms Vidal also raised the obvious point that the order specified a particular dollar sum for payment to Ms Itagaki which did not take into account any costs of sale. Finally the letter advised that the calculations in the order overlooked interest payments relating to the second mortgage. A copy of the bank letter provided by Mr Hillary setting out the interest was included with the letter. Macalister Todd thus raised the issue of the arithmetic with Corban Revell at that time.
[63] A brief extension of time was granted. But after taking instructions Ms de Luen responded that Mr Hillary had had months to either facilitate a sale of the properties by agreement or to raise the finance but had not taken any steps until the last minute. Ms de Luen said that in the circumstances Ms Itagaki had no faith in Mr Hillary proactively marketing the properties and confirmed that they wished to proceed with the orders for sale and required Mr Hillary to vacate the property. She also said that:
In respect to the interest your client has raised this in Court and out of Court on a number of occasions and it was specifically dismissed by Judge Blaikie. Therefore our client is not prepared to discuss it further and only wishes to have the matter resolved as soon as possible.
As Ms Vidal said it was obvious from the response that Corban Revell and Ms Itagaki were not prepared to leave the matter of sale to Mr Hillary. Nor was Ms Itagaki going to move on the interest or arithmetic issue.
[64] The options that Mr Hillary had were laid out for him by Macalister Todd. They were either to settle without seeking to adjust the payments due to Ms Itagaki or to take the matter further by application to the High Court. Ms Vidal confirmed in her evidence, which I accept, that Mr Hillary was advised of his option to take the matter further by going to the High Court but that he did not wish to do so. As early as 7 November Ms Vidal identified in an internal fax that a stay pending appeal/review was a goal. But Mr Hillary would not agree with court proceedings.
[65] Ms Vidal was firm when cross-examined by Mr Hillary that she and Mr
Phillips discussed with Mr Hillary:
the risk to you without taking High Court proceedings to file either injunctions or an appeal against the Family Court decision … in that Ms de Luen on behalf of her client Ms Itagaki would proceed to seek to enforce the orders for sale.
And later:
I was concerned that the best course of action for you was actually High Court proceedings and I asked you to attend a meeting earlier on with Kevin Phillips as I wanted you to receive the information in a way that is loud and clear if you like as Kevin Phillips often is in his discussions with clients that the High Court option was one that would take the risk away but there were risks with the negotiated option that you were wanting to proceed with. And as best I could I tried to take steps for you in regard to the process of sale that was taking place. But the Court was clear in its direction about what was to occur. …
[66] However, despite that advice, Mr Hillary still considered that he could retain control of the process and reach a compromise and commercial settlement with Ms Itagaki by her agreeing to sell Park Street to his partner. He thought that ultimately she would see sense – which in Mr Hillary’s view was to see matters his way, and
agree to sell 12 Park Street to his then partner and business associate. When cross- examined Mr Hillary agreed:
Having heard from Ms Vidal and with the assistance of Mr Phillips you elected to continue to find a negotiated solution?….. I elected to try and buy the property.
Later, in cross-examining Ms Vidal Mr Hillary said:
… the reason for not taking it to the High Court to prevent the sale was because it would delay the development …
Mr Hillary was mistaken in the view that Ms Itagaki would agree as the subsequent events showed. The underlying problem for Mr Hillary with this approach was that Ms Itagaki refused to sign the back-up offer his partner presented for the Park Street property. It never became a back-up contract. On the other hand, Corban Revell had the Registrar co-sign the first agreement for the sale of Park Street.
[67] Mr Hillary’s view of matters influenced and informed the instructions he gave to Macalister Todd and Ms Vidal. Mr Hillary effectively limited the role Macalister Todd was to have. He did not accept the advice he was given by Macalister Todd as to the steps he could take to stop the sale process by taking the matter to the High Court. He acknowledged as much in evidence.
[68] Given Corban Revell’s attitude on behalf of Ms Itagaki then, without returning to Court, which Mr Hillary did not wish to do at that stage, Macalister Todd were not in a strong position to achieve a correction in the arithmetic in the sealed order in late November and December 2001 before the properties settled. Mr Hillary agreed with Ms Vidal when she said in evidence:
I think it would be fair to say that proceedings had reached the stage where there was a very entrenched position and that negotiation wasn’t able to be successful and that Ms Itagaki was wanting to proceed through her solicitors it would seem with enforcement of court orders …
[69] Also, Macalister Todd and Ms Vidal were not kept fully advised by Mr Hillary of developments. For example, Mr Hillary did not tell them he had accepted the offer for Brisbane Street. In fact, Corban Revell advised Macalister Todd of that by a fax dated 16 November 2001. Mr Hillary signed the agreement for
the sale of Brisbane Street without reference to Macalister Todd and instructed a separate firm of solicitors, Anderson Lloyd Caudwell, to represent him in relation to the sale.
[70] As to the settlement of the matrimonial judgment, Mr Hillary was advised by Ms Vidal in a fax of 20 November 2001 that the only way the matter could be resolved was if the payment from the settlement of Brisbane Street was paid in full settlement of matrimonial property. The fax advice confirmed:
The action of paying the money owing pursuant to the first order together with interest amounts to “settling” the dispute, if you want to reopen the matter and litigate it in the High Court, then you cannot both paying [sic] the settlement figure, so that you are no longer incurring interest, and then seek repayment of the expenses that you want.
The additional difficulty with the situation that you are in is that Shona will continue to seek to sell all of the properties until such time as a High Court orders that she desist, and at this stage you would not get a High Court hearing until next year, and in any event you would need to file papers immediately.
In reality you [sic] best available option is to see if you can get the unconditional offer on the property, refinance and pay out the sum pursuant to the order and then take control back over the remaining property.
[71] That was a fair summary of the position facing Mr Hillary in late November
2001. Events then rather overtook Mr Hillary and the issue of the arithmetic was sidelined by the sales. Corban Revell took the steps referred to, to enforce the sale of Park Street as well as Brisbane Street. Corban Revell took those steps without reference to Macalister Todd, at least until after the agreement had been co-signed by the Registrar.
[72] Macalister Todd were also partly kept out of the loop by Mr Hillary instructing Anderson Lloyd Caudwell to settle the sale of Brisbane Street. That firm dealt direct with Corban Revell regarding the details and mechanics of settlement of the properties, and in part the matrimonial property judgment. When issues arose about the settlement, Mr Hillary did not assist by contacting Corban Revell direct and telling them that “both his lawyers” would be unavailable for the next two days and he would deal direct with settlement. That reflected Mr Hillary’s approach to this matter. He was reluctant to involve solicitors and to take advice.
[73] Once the properties had sold and the net funds were held by Corban Revell, Macalister Todd, through Mr Bowers, continued to act on Mr Hillary’s behalf during
2002 to address, inter alia, the issue of the incorrect arithmetic in the initial orders. Mr Bowers obtained an order from Judge Blaikie permitting him to listen to the taped evidence of the hearing and then made application to the Court to have the earlier orders revisited, particularly the calculation of the interest payments made under the mortgage revolving credit facility and the issue of commission and GST which had subsequently arisen following the sale of the Park Street property in particular. Mr Bowers attended Mr Hillary on a number of occasions during 2002. He completed and filed affidavits and a number of memoranda with the Court to address those issues. Mr Bowers and Macalister Todd pursued the matter through the Family Court on Mr Hillary’s instructions. Mr Hillary was kept informed of progress and approved Macalister Todd’s actions. I note for example that he responded with an email to Mr Phillips on 16 April 2002 confirming:
Thanks for the email, you have a good understanding of the issues. …
[74] A hearing was scheduled in the District Court for 29 May 2002. The hearing was adjourned at the time to enable Mr Bowers to consider the tapes of the initial hearing. Mr Bowers reported to Mr Hillary by letter of 31 May 2002. Correspondence between Macalister Todd and Mr Hillary and Macalister Todd’s attendances on Mr Hillary’s behalf continued throughout the course of 2002.
[75] It was not until towards the end of 2002 that any issue arose between Mr Hillary and Macalister Todd. In late 2002 Mr Hillary raised the issue of two affidavits that Ms Vidal had prepared but not filed. He said that was contrary to his instructions. Mr Phillips responded by letter of 18 November 2002:
… However, as far as this firm is concerned, you will see that Ms Vidal’s response to your query concerning the affidavits is that she was instructed by you to hold the affidavits on our file and refrain from filing them.
You will appreciate that we are not able to comment on the matter beyond that. As already said to you, if you are aggrieved by the circumstances and feel you have a legitimate complaint against this firm, we are required to advise you to seek independent advice. If that occurs, we will be unable to act for you in this matter. …
[76] Even after that Mr Hillary continued to communicate by way of email with suggestions to Mr Bowers as to the matters that were being pursued on his behalf. It was only in February 2003 that the relationship was brought to an end because Mr Hillary had not paid his account.
[77] Although Macalister Todd terminated their relationship with Mr Hillary in February 2003, ultimately the proceedings that Macalister Todd had put in train in the Family Court on behalf of Mr Hillary to inter alia, review the arithmetic led to the review of the matter before Judge Inglis and the subsequent decisions of Judge O’Dwyer and Fogarty J, which were in Mr Hillary’s favour.
[78] The evidence does not support Mr Hillary’s allegation of a breach based on the failure of Macalister Todd to have the incorrect arithmetic corrected. The firm took all reasonable steps, in light of the constraints placed on them by Mr Hillary, to have the incorrect arithmetic corrected.
Failure to take steps to prevent the foreseeable and “predictable actions” of Corban Revell from implementing orders that were invalid and inappropriately obtained, wrongly sealed and did not reflect the decision of Judge Blaikie
[79] As noted, by the time Macalister Todd were instructed in November 2001 Mr Hillary was in default of orders of the Court which on the face of it provided for the sale of both Brisbane Street and Park Street properties. Mr Hillary’s first instructions to Macalister Todd were that the properties, including Park Street were to be sold. That was confirmed by Ms Vidal in a letter to Corban Revell of 26
November 2001.
[80] When Macalister Todd learnt that, without advising either them or Mr Hillary, Ms Itagaki and Corban Revell had purported to enter an agreement for the sale of Park Street Ms Vidal wrote to both the agent and Corban Revell on 4
December 2001 noting that the Court order on its face did not authorise either counsel to effect the sale of the property. Macalister Todd asked on what authority Corban Revell considered they were able to effect the sale of Park Street and how it was that they proposed to transfer the property. Corban Revell did not reply directly,
but instead wrote to the Court asking the Registrar to co-sign the agreement. The letter was not copied to Macalister Todd. When Macalister Todd became aware of the further steps that had been taken on Ms Itagaki’s behalf, Ms Vidal wrote a detailed and carefully worded memorandum to the Court on 14 December seeking an answer as to how the Registrar had come to co-sign the agreement for the sale of Park Street property. No response was received from the Court. Ms Vidal pursued the matter with the Registrar. She sent a fax to the Court on 20 December 2001 to follow the matter up. She received a response from the Registrar that:
I confirm Judge Blaikie’s direction in response to the memorandum of counsel for respondent as follows:
“Please advise counsel that the original directions and orders remain”.
[81] That minute from the Judge was clearly a reference to the orders he had made on 4 December 2001 authorising the Registrar to execute the agreement and granting a warrant to enforce the order to vacate.
[82] Quite apart from the fact the actions of Corban Revell were hardly predictable, the steps taken by Macalister Todd on the information they had at the relevant time were reasonable. Mr Hillary accepted that he had been given advice that the only way to address the matter was to take it to the High Court but he was not prepared to do so. In addition to the evidence already referred to, Mr Hillary also said:
To buy my own property would be quicker than an appeal to a decision in my favour.
That is further evidence of Mr Hillary’s attitude and the position he took. In the circumstances Macalister Todd could only seek to settle the matrimonial judgment, by correspondence, on the basis of the sale of Brisbane Street, but they were not in a position to stop Corban Revell selling the Park Street property, given Mr Hillary’s refusal to take the matter to the High Court. Mr Hillary’s position was affected because he did not accept advice and did not keep Macalister Todd fully advised of the position.
[83] Nor is there anything in the related allegation that Macalister Todd were in breach of their duty of care in that they “failed to advise the Court of the true state of affairs” in the memorandum of 14 December 2001. Mr Hillary complains the offer for $680,000 was not attached to the memorandum. But the issue was the challenge to the authority for the Registrar co-signing the agreement for $630,000. The memorandum attached copies of the relevant correspondence that had passed between Ms Vidal and Ms de Luen at the time. The memorandum advised the Court of the position as it was understood by Ms Vidal on the basis of Mr Hillary’s instructions and the correspondence from Corban Revell at the time. When Ms Vidal did not receive a response, she followed the matter up appropriately, only to be told the orders stood. There was no breach of duty here.
That Macalister Todd failed to file two affidavits dated 26 November 2001
[84] During late November 2001, Ms Vidal prepared and had affidavits sworn by Mr Hillary and by his then partner Ms Takeichi. Mr Hillary said the affidavits were to “allow my partner and me to purchase the property and continue with the development”. He says that he instructed Macalister Todd to file them.
[85] There is a clear conflict of evidence between Ms Vidal and Mr Hillary on this point. Ms Vidal said that Mr Hillary instructed her the affidavits were not to be filed at the time they were sworn because Mr Hillary wished to directly pursue the back- up offer his partner had made for the purchase of the Park Street property with Ms Itagaki. Ms Vidal’s evidence was that Mr Hillary was confident the back-up offer would be accepted because it was higher. That is consistent with Mr Hillary’s concession during the course of submissions that he still considered that ultimately Ms Itagaki would understand and agree to the commercial reality of the matter and settle.
[86] I accept Ms Vidal’s evidence. Mr Hillary at times gave evidence that suited him but was proved to be wrong. For example he said that he had given Ms Itagaki
$40,000 in response to a question as to the steps he had taken between Judge Blaikie’s decision in June 2001 and October 2001. Under cross-examination it emerged he had not given her $40,000. Some years earlier in 1998 she had a credit
card with a limit of $40,000. Mr Hillary had some difficulty accepting the distinction between the two. Against that, Ms Vidal is a competent and careful practitioner, experienced in family law matters. The careful way she drafted the memorandum challenging orders made by Judge Blaikie, a very experienced Family Court Judge, reflects her experience and judgment. She impressed as a thoughtful and careful witness. I accept her evidence that she had started to draft an application to go with the affidavits but was instructed not to file the application and affidavits. The draft application has been produced. The draft application was incomplete. Ms Vidal did not complete it following Mr Hillary’s instruction the affidavits were not to be filed at the time. Mr Hillary said that the purpose of the affidavits was to have the Court direct the acceptance of the back-up offer. But the draft application and affidavits proceed on the basis the offer for $630,000 is operative and seek compensation for the GST and costs on the sale. They were intended to have the Court:
Consider the facts outlined and require the plaintiff to pay the GST and commission on the sale of Park Street.
[87] It would not have taken Ms Vidal more than a half hour to complete the draft application and file it together with the affidavits. I accept that the reason the application was not completed and filed with the supporting affidavits was as a result of Mr Hillary’s instructions not to file them at that time. A solicitor of Ms Vidal’s experience would not have overlooked such a basic matter. Further, Mr Hillary would undoubtedly have followed the matter up if his instructions were not followed. I also note that Ms Vidal said in response to a question from Mr Hillary that:
Other issues that were discussed included your concerns about the calculation of GST interest and matters of that like and you were wanting to try and negotiate essentially an amended settlement figure but you weren’t wanting to do that by way of proceedings but rather by way of negotiating with Corban Revell.
Mr Hillary observed in response:
I would have to agree with what you have just said.
In summary I find that Mr Hillary instructed Macalister Todd to hold the affidavits that he and his partner had completed on 26 November. There is no breach as alleged.
Macalister Todd failed to have the matter brought to the attention of the High Court immediately they became aware that Corban Revell … appeared to have circumvented legislation and procedure and placed my assets and reputation at risk
[88] Ms Vidal’s evidence is that Mr Hillary was advised that the best and most effective option was to take the matter to the High Court, but that he expressly declined to pursue the matter to the High Court. While in correspondence with Corban Revell Ms Vidal threatened to take the matter to the High Court. That was a negotiating stance she took with Ms Itagaki’s solicitors. Ultimately, Mr Hillary would not agree to taking such action. The evidence is clear that Mr Hillary did not want to take the matter to the High Court.
[89] While Macalister Todd undoubtedly owed Mr Hillary a duty of care, they did not breach that duty in any of the ways alleged by Mr Hillary, or for that matter, in any other way.
The claim against Corban Revell
[90] Mr Hillary alleges Corban Revell owed him a duty of care and was negligent in:
1.That they obtained and had sealed orders that did not reflect the decision of the Judge E.O.K. Blaikie.
2.That they failed to advise the Court that they were not orders of consent.
3.That they made an ex-parte application that failed to give full and frank disclosure.
4.That they failed to provide an execution of transfer to facilitate settlement.
5.That they allowed a Judicial Officer to treat a letter as an application, knowing that the application should have been made on notice and that critical information had been withheld.
6.That they failed to serve court orders defeating my right to appeal or review.
Does Corban Revell owe a duty of care to the plaintiff Mr Hillary?
[91] Mr Hillary relied heavily upon the adverse comments that Judge Inglis QC had made about the actions of Corban Revell in his decision setting aside the previous orders of the Court to support his claim against Corban Revell.
[92] Judge Inglis QC did make a number of critical comments about the actions of Corban Revell during the course of his judgment. The Judge was particularly critical of Ms de Luen’s actions. He criticised her failure to consult with Mr Hillary on the draft order before furnishing it for sealing. I note here that the wording used by Judge Blaikie was not directory. It was “is requested” and “she may wish”. Next, the Judge concluded the draft order significantly deviated from the terms of Judge Blaikie’s judgment in a number of ways, the most serious of which were the orders for implementation. Judge Inglis QC concluded that the implementation provisions were gratuitously, without Mr Hillary’s knowledge and certainly without prior judicial authorisation, “slipped into the sealed order” by Corban Revell.
[93] Judge Inglis QC opined that it was:
impossible to understand what valid reason there could have been for the applicant’s urgent insistence on the sale of the Park Street property when her entitlement under the judgment had been satisfied – or, even on the best view of the applicant’s position, very substantially satisfied – by the sale of the Brisbane Street property.
[94] His Honour then went on to criticise the actions of Ms de Luen in seeking ex parte assistance from the Court to enable the sale of Park Street, in particular:
[52] It is with regret and concern that I have to record that a prominent feature of the applicant’s post-judgment dealings with the Court has been a conspicuous disregard of basic principles of natural justice in pursuing what were apparently believed to be the applicant’s interests. …
[53] It is a fundamental and elementary principle of law that no order may be made prejudicially affecting the rights of any person unless and until that person has been given formal notice that the order is sought and a reasonable opportunity to be heard in opposition. That is the fundamental principle. Only limited exceptions are permitted. That is why orders made ex parte have been described as anomalies in our system of justice, a fundamental denial of that natural justice on which our system of civil litigation depends: see, for instance, Ansah v Ansah [1977] Fam 138 (CA), at 142, 143 (Ormrod L J); Martin v Ryan [1990] 2 NZLR 209, 229 (Fisher J), the leading New Zealand case on the subject in which the issue is comprehensively examined. …
[54] If any impression is developed within the legal profession that these essential and basic principles need not be taken seriously in Family Court litigation, or that the Family Court is a “fun Court” because of what is perceived as a relaxed attitude to procedural niceties … then it is high time for any such impressions to be decisively dispelled. …
…
[58] Returning to the circumstances of the present case, there is a difference between the principles relating to ex parte applications and those which apply to any other situation in which a party seeking a particular remedy or a particular advantage gains access to the ear of the Court behind the opposing party’s back. The difference is that ex parte applications are limited to a particular procedure within a limited range of situations and any order made is an interim order open to immediate review. But any other attempt to gain access to the ear of the Court for a client’s advantage behind the opposing party’s back is not only unacceptable and improper but inimical to any developed system of justice.
[95] Corban Revell were not a party to the proceedings before Judge Inglis QC and did not have an opportunity to respond to the criticisms. It must also be noted that despite the criticism the Judge quite properly said:
Nothing I have said is to be taken as any suggestion that either the respondent or the applicant may have any cause of action against [Corban Revell] in civil proceedings.
[96] Corban Revell are a party to these proceedings. I have had the opportunity to observe Ms de Luen and the other witnesses in this case give evidence. Having that advantage I am able to make a number of factual findings based on that evidence.
[97] First, Corban Revell and Ms de Luen were no doubt influenced in the approach they took to this matter on behalf of their client by Mr Hillary’s obstructive attitude. Mr Hillary was not co-operative during the course of the matrimonial property proceedings. I acknowledge Mr Hillary’s explanation for that, which Judge
Inglis QC adopted, namely that Ms Itagaki was not co-operating with the divorce proceedings. But it is apparent that Mr Hillary’s failure to respond to Ms Itagaki’s desire to finalise matrimonial property and to comply with directions during the course of matrimonial property proceedings influenced the way Ms de Luen subsequently acted on behalf of Ms Itagaki. In this regard Judge Blaikie was in a much better position to assess Mr Hillary’s lack of co-operation than Judge Inglis QC. Judge Blaikie accepted that counsel for Ms Itagaki had experienced difficulty in obtaining full and relevant information in affidavit form from Mr Hillary and that:
Extensive intervention by the Court was necessary during these pre-hearing conferences to explain the details which were quite properly sought on behalf of the wife.
Judge Blaikie went on to agree that costs should be awarded in favour of Ms Itagaki having regard to the way in which Mr Hillary had conducted the case. I do not suggest that Mr Hillary’s obstructive behaviour excuses Ms de Luen’s actions, but it goes some way to understanding why she and Ms Itagaki acted in the way they did.
[98] When the time for settlement had passed Mr Hillary did intend to sell one or both properties. I do not accept his evidence that he only placed the properties on the market with real estate agents to “test the market”. It is contrary to the letter he wrote at the time. Also, in the submissions filed after the hearing before Judge Blaikie, Mr Hillary acknowledged that if Park Street was matrimonial property, both properties would have to be sold. Mr Hillary had a number of business ventures in mind. First a retirement centre, then a backpackers. By mid October Mr Hillary’s intention to develop the properties into a backpackers had lapsed or at least was no longer a prime objective. It was likely both properties would be needed for the venture. Mr Hillary was committed to the sale of Brisbane Street at least. Mr Hillary wanted to control the sale process of the two properties and felt he was able to do so as he was the person on the ground in Queenstown whereas Ms Itagaki was either in Auckland or overseas and her solicitors were in Auckland. He considered that he had authority and ability to deal direct with agents without any intervention by or on behalf of Ms Itagaki. Mr Hillary signed the agreement for sale of Brisbane
Street without reference to his solicitors Macalister Todd. He went so far as to purport to sign it on Ms Itagaki’s behalf.
[99] Once the agreement for sale of Brisbane Street had been concluded and confirmed as accepted by Ms Itagaki, the proceeds of the sale of that property could have been used to pay out Ms Itagaki’s entitlement under the matrimonial property proceedings. Mr Hillary could have reached an accommodation with the bank in relation to his outstanding indebtedness. There was no practical need for Corban Revell to pursue a sale of the Park Street property on Ms Itagaki’s behalf. The letter from BNZ to Mr Hillary of 23 November 2001 confirms the bank would have been willing to accept Park Street as sufficient security for his indebtedness.
[100] Although there was no need for Park Street property to be sold, against the background of Mr Hillary’s obstructive behaviour during the course of the matrimonial property proceedings Ms de Luen, on behalf of Ms Itagaki, pursued the sale of the Park Street property as well as the Brisbane Street property. I accept that in doing so Ms de Luen considered she was acting in Ms Itagaki’s best interests but as events have turned out, that was not the case. I also accept that her actions in seeking to have Mr Hillary removed and to have the Registrar co-sign the agreement in relation to the sale of Park Street without reference to Mr Hillary can be criticised. However, it has to be said that her actions were sanctioned by Judge Blaikie when he accepted her letter of 4 December as an informal application and authorised the Registrar to co-sign both the agreement and the transfer (which had not been sought) and also by granting a warrant to vacate the properties on an ex parte basis rather than requiring any further hearing or submissions from Mr Hillary.
[101] However, even accepting that there was no need for Corban Revell to enforce the sale of Park Street to achieve a settlement for their client, and that Ms de Luen’s actions to achieve that can be criticised, the primary issue remains whether Corban Revell as solicitors acting for Ms Itagaki owed Mr Hillary a duty of care in the circumstances of this case.
[102] The basic proposition is that a solicitor engaged in litigation on behalf of a client does not owe a duty to his client’s opponent. It was stated by Lord Donaldson MR in Al-Kandari v J R Brown & Co (firm) [1988] 1 QB 665 at 672:
A solicitor acting for a party who is engaged in “hostile” litigation owes a duty to his client and to the court, but he does not normally owe any duty to his client’s opponent: Business Computers International Ltd v Registrar of Companies [1987] 3 WLR 1134. This is not to say that, if the solicitor is guilty of professional misconduct and someone other than his client is damnified thereby, that person is without a remedy, for the court exercises a supervisory jurisdiction over solicitors as officers of the court and, in an appropriate case, will order the solicitor to pay compensation: Myers v Elman [1940] AC 282. …
I would go rather further and say that, in the context of “hostile” litigation, public policy will usually require that a solicitor be protected from a claim in negligence by his client’s opponent, since such claims could be used as a basis for endless re-litigation of disputes: Rondel v Worsley [1969] 1 AC
191.
[103] In the same case, Bingham LJ put it this way at 675:
In the ordinary course of adversarial litigation a solicitor does not owe a duty of care to his client’s adversary. The theory underlying such litigation is that justice is best done if each party, separately and independently advised, attempts within the limits of the law and propriety and good practice to achieve the best result for himself that he reasonably can without regard to the interests of the other party. The duty of the solicitor, within the same limits, is to assist his client in that endeavour, although the wise solicitor may often advise that the best result will involve an element of compromise or give and take or horse trading. Ordinarily, however, in contested civil litigation, a solicitor’s proper concern is to do what is best for his client without regard to the interests of his opponent.
[104] In the Al-Kandari decision the English Court of Appeal held that in fact the solicitors did owe a duty to the other party because the solicitors had stepped outside their role as solicitors acting just for their client and had accepted responsibilities towards both their client and Ms Al-Kandari in undertaking to hold her husband’s passport in their control. In so doing they assumed a duty to the plaintiff, Ms Al- Kandari.
[105] In the case of Business Computers International Ltd v Registrar of Companies & Others [1988] Ch 229 Scott J declined to find a solicitor owed a duty of care to a proposed defendant when issuing proceedings at 239-240:
The plaintiff and the defendant, … are antagonists. The plaintiff … is seeking a legal remedy in an adversarial system. The system stipulates the rules and requirements that must be observed by the two parties. … If an order is obtained without the prescribed rules or regulations having been observed, the order may be discharged or set aside, sometimes by an application at first instance, sometimes on appeal. The prosecution of the action … is subject throughout its career from institution to final judgment to judicial control. … The proposition that a duty of care is owed by one litigant to another and can be superimposed on the checks and safeguards that the legal system itself provides is, to my mind, conceptually odd. … The injured party’s remedy is to have the order set aside.
[106] In the course of that judgment, Scott J referred to a passage of Sir John Donaldson MR, as he was, in the decision of Orchard v South Eastern Electricity Board [1987] QB 565. In the Orchard decision the Master of the Rolls criticised and declined to follow an obiter passage of Lord Denning in Kelly v London Transport Executive [1982] 1 WLR 1055 in which Lord Denning suggested that the solicitors of a legally aided party may owe a tortious duty of care to the other party. In Kelly Lord Denning said at 1065:
They owe a duty to the Court which has to try the case. They owe a duty to the other side who have to fight it and pay all the costs of doing so. If they fail in their duty, I have no doubt that the Court can call them to account and make them pay the costs of the other side. They will not be able to escape on the ground that it was work done by them in the course of litigation. They cannot claim the immunity given to them by Rondel v Worsley [1969]
1 AC 191. That only avails them in regard to their own client. They have no immunity if they fail to have regard to their duty to the Court and to the other side.
[107] As Sir Donaldson MR observed in Orchard v South Eastern Electricity Board those comments were obiter dicta and were not supported by other members of the Court of Appeal in Kelly. Further, while expressed as a duty they only go so far as, and are directed at, the potential liability of a solicitor for the other party’s costs. They are not directed at other damages that may flow from the consequences of steps taken in the course of litigation.
[108] In the case of Myers v Elman [1940] 1 AC 282 referred to by Lord Donaldson MR in Al-Kandari, the House of Lords considered the position of a solicitor who had been guilty of misconduct in allowing inadequate affidavits and documents to be filed and served by his clients. Their Lordships upheld an order that the solicitor was to pay a contribution towards the other party’s costs. But there was
no suggestion that the solicitor owed a duty of care to the other party, rather their Lordships emphasised that the order was made consequent upon the duty the solicitor owed to the Court.
[109] The circumstances in which a solicitor may owe duties to a party other than his or her own client were also considered in the case of Connolly-Martin v Davis [1999] Lloyds Rep 790. In Connolly-Martin the Court of Appeal noted that the cases where a solicitor had been held to owe a duty were limited in nature, before concluding:
None of these … decisions, … go anywhere near establishing a proposition that counsel for one party may in the absence of circumstances evidencing a voluntary assumption of responsibility to that other party owe a legally enforceable duty of care to that other party.
[110] In Customs & Excise Commissioners v Barclays Bank plc [2004] 1 WLR
2027 Colman J at first instance dismissed a claim by the commissioners against the bank. The commissioners had obtained freezing orders relating to the bank’s customers’ accounts. The bank overlooked the orders and permitted payments from out of the accounts. Colman J reviewed the authorities then summarised the position as:
[72] The effect of these authorities is, in my judgment, that, absent an assumption of responsibility by an adverse party’s legal representative, application of the threefold methodology does not in any circumstances give rise to a duty of care to the opposite party in civil proceedings. Similarly, an adverse party owes no duty of care to the opposing party in civil proceedings unless there is an assumption of responsibility. If there is such an assumption of responsibility there may be sufficiently enhanced proximity to give rise to a duty of care. In this context, the authorities are clearly using assumption of responsibility not in its sense of deemed or imposed responsibility, but rather in its narrower connotation of words or conduct which “cross the line” and bring home to the opposing party that the other party accepts the risk of negligence as to the information or service provided.
[111] The Customs and Excise Commissioners successfully appealed the decision of Colman J to the Court of Appeal. The matter then came before the House of Lords in Customs & Excise Commissioners v Barclays Bank plc [2007] 1 AC 181. Lord Bingham rejected the arguments that were accepted by the Court of Appeal citing amongst his reasons for doing so:
[18] … it cannot be suggested that the customer owes a duty to the party which obtains an order, since they are opposing parties in litigation and no duty is owed by a litigating party to its opponent: Digital Equipment Corpn v Darkcrest Ltd [1984] Ch 512; Business Computers International Ltd v Registrar of Companies [1988] Ch 229; Al-Kandari v J R Brown & Co [1988] QB 665. It would be a strange and anomalous outcome if an action in negligence lay against a notified party who allowed the horse to escape from the stable but not against the owner who rode it out.
[19] … I know of no instance in which a non-consensual court order, without more, has been held to give rise to a duty of care owed to the party obtaining the order, and one would have to ask whether a similar duty is owed by the subject of a search order, or a Norwich Pharmacal [1974] AC
133 order, or a witness summons, in any case where economic loss is a foreseeable consequence of breach. It would seem that the commissioner’s
argument involves a radical innovation.
[112] The cases in the United Kingdom and New Zealand where a solicitor has been held to owe a duty to a party other than his client are relatively limited as were noted by the Court of Appeal in Connolly-Martin v Davis. The examples given are of:
• The imposition of an obligation where the court orders a solicitor who has carriage of an order of the court and fails to comply with the duty (imposed by a rule of court) to lodge a request for the investment of money in court at the Chancery pay office to compensate for loss: Batten v Wedgewood Coal and Iron Company (1886) 31 Ch D 346.
• A solicitor who undertakes to hold his client’s passport to the order of the court in the context of a court order permitting his client access to children on his undertaking he would surrender his passport to a solicitor becomes an independent custodian of the passport and assumes obligations towards the opposing party: Al-Kandari v JR Brown.
• A prosecuting solicitor who voluntarily assumes a responsibility to inform a Magistrates’ Court that offences committed by a defendant have been taken into consideration by the Crown Court when sentencing that defendant owes a duty of care to the defendant to discharge that responsibility: Welsh v Chief Constable of the Merseyside Police [1993] 1 All ER 692.
• The duty on a solicitor given instructions for the drawing of a will for execution may extend to an intended beneficiary: White v Jones [1995] 2 AC 207.
• A solicitor providing a certificate to a moneylending company that an instrument by way of security over his client is fully binding on his client and there are no other charges assumes a responsibility to the moneylender when giving such a certificate: Allied Finance and Investments Ltd v Haddow & Co [1983] NZLR
22 (CA).
• A solicitor who signs a certificate for the purpose of giving validity to an agreement contracting out of the provisions of the Matrimonial Property Act owes a duty of care to the other party to the agreement when signing the certificate as no conflict of interest could arise. The other party is within the solicitor’s contemplation and could reasonably rely on and act upon the assurance the certificate conveyed: Connell v Odlum [1993] 2 NZLR 257 (CA).
[113] Thomas J gave the leading judgment in Connell v Odlum. He stressed that the solicitor owed a duty because, in effect, he stepped outside his role as his client’s solicitor and accepted, with the act of certification, a direct responsibility to the other party to the agreement. He said at 270 the solicitor had:
… undertaken a duty which is "separate and different" from their professional duty to their client and one which they must contemplate will be relied upon by the other party to the agreement.
[114] In the present case, Mr Hillary says Corban Revell owed him a duty in sealing the orders following Judge Blaikie’s decision and in subsequently enforcing them. In taking those actions and throughout, Corban Revell were acting on behalf of their client Ms Itagaki and were promoting her interests, against Mr Hillary’s interests. At no stage did Corban Revell assume any responsibility towards Mr Hillary. There was no stepping outside their role of acting in Mrs Itagaki’s interests against those of Mr Hillary. The steps that Corban Revell took following conclusion of the hearing before Judge Blaikie in drafting the order and all subsequent steps towards execution were taken for the benefit of Ms Itagaki albeit that they may not have ultimately achieved the best outcome for her. The solicitors did not assume a duty of care or a responsibility towards Mr Hillary by their actions which were for
the benefit of Ms Itagaki at all times. At no stage did Corban Revell step outside their role as Ms Itagaki’s solicitors and place themselves in the position of acting to protect Mr Hillary’s interests. At no time did they assume a separate and different obligation towards Mr Hillary. That would have been quite apparent from the actions they took throughout.
[115] Corban Revell owed a duty to Ms Itagaki. To the extent her position has been disadvantaged by the negligent actions of Corban Revell she has a remedy. But it does not follow Corban Revell owed Mr Hillary a duty.
[116] Mr Hillary referred to Judge Inglis QC’s criticism of the action taken to obtain the ex parte orders. In Digital Equipment Corporation v Darkcrest Ltd [1984] 1 Ch 512 the plaintiffs obtained an Anton Piller order against the defendants for alleged infringement of copyright and passing-off. The defendants sought to discharge the order alleging, inter alia, that the plaintiffs had obtained the order relying on misleading evidence. The defendants also counterclaimed alleging abuse of process, negligence and trespass. In the course of upholding the decision to strike out the claims, including the claim in negligence, Falconer J considered the obligations owed by a party seeking an ex parte order at 524:
The duty owed by a plaintiff seeking an ex parte order is to place before the court all material facts and matters; but it is a duty – and an absolute one – to the court and not to any party who may be affected by any order which the court makes. But, even if, contrary to my view, in a case such as the present the first of Lord Wilberforce’s questions is to be answered in the affirmative, under the second question the prima facie duty of care arising from an affirmative answer to the first question must be negatived for the reasons that I have already indicated, and that a court is master of its own procedure and, in particular in Anton Piller orders, retains total control of proceedings in the ways that I have indicated, providing a defendant affected by the order with full protection in the event that it should turn out that the order should not have been made.
(emphasis added)
[117] If, as Judge Inglis QC clearly considered the position to be, Ms de Luen and Corban Revell were in breach of their professional obligations to the Court particularly in seeking the orders ex parte, at the most they may be subject to sanction by the Law Society or possibly, a claim for the legal costs of having the orders improperly obtained reviewed or set aside. Ms de Luen’s actions do not,
however, provide a justiciable basis for the imposition of a duty of care in Mr
Hillary’s favour.
[118] Mr Hillary’s remedy was to apply to set aside the orders (which he subsequently achieved) and to the extent possible, obtain redress from Ms Itagaki. Again, Mr Hillary has achieved that. To the extent that has been at Ms Itagaki’s expense, it is then for her to pursue whatever remedies she may have against Corban Revell.
[119] I conclude Corban Revell owed no duty of care to Mr Hillary.
Assuming a duty was owed, was the duty breached?
[120] For the sake of completeness I briefly refer to the breaches of the duty alleged by Mr Hillary.
[121] First, Mr Hillary says Corban Revell obtained and sealed orders that did not reflect the decision of Judge Blaikie. In his evidence Mr Hillary referred to the following matters as not being properly reflected in the order sealed by Corban Revell:
• The mortgage debt;
• Mr Itagaki’s debt;
• net rents received;
• combined mortgage payments.
[122] Mr Hillary said the total mortgage debt at the hearing date, 13 February 2001, was $441,344, not the $416,329 noted in the order.
[123] In support Mr Hillary refers to and relies on a statement of account obtained from the BNZ which confirms that as at 28 February the current account, mortgage
account and housing loan total $441,344. However, that statement post-dated the hearing. It was not available to counsel or the Court at the hearing. The evidence from the hearing and on which Corban Revell were entitled to rely when preparing the draft order was a letter dated 19 December 2000 from the BNZ to Corban Revell which confirmed that the total of the three loans was $416,329. The letter was produced through Mr Hillary at the hearing. That was the evidence.
[124] Next Mr Hillary says that the figure for the loan to Ms Itagaki’s father was incorrectly recorded at $82,352. Mr Hillary said in his evidence before this Court:
The debt was confirmed in Court at $70,588 being 6,000 yen at .85.
[125] But that is not correct. That was not the evidence. During the course of the evidence, in response to questions from the Judge both Ms Itagaki and Mr Hillary agreed that of an original advance of 10 million approximately 4 million yen had been repaid. There was no direct evidence of the conversion rate given at the hearing. The only evidence before the Court as to an exchange rate seems to be Ms Itagaki’s evidence in an affidavit sworn on 13 November 2000. She said the exchange rate at that time had moved to .42. On that basis, the debt of 6 million yen would have been significantly in excess of $NZ100,000. The only New Zealand dollar figure referred to for the debt was $NZ82,352. Even though that figure was incorrect, it was in Mr Hillary’s favour. As Mr Gilbert submitted, that may explain why Mr Hillary did not raise any issue concerning the debt in the letter sent on his instructions by Macalister Todd to Corban Revell on 8 November 2001 when other issues about the calculations in the order were raised.
[126] Mr Hillary then raised an issue as to the net rents for the Brisbane Street and Park Street properties. In evidence before this Court Mr Hillary said that Brisbane Street was his residence and was not tenanted and that in relation to Park Street the Court was advised there could be no evidence of rent as the entire site was to be developed. However, the transcript from the hearing before Judge Blaikie records the following exchange between Mr Hillary and Ms de Luen:
You receive between $500.00 a week for the rental on Brisbane Street if it’s fully rented and a further $400.00 per week fully rented on Park Street, is
that correct? ….. I receive approximately the same amount of money as I’m paying in mortgage repayments from both those properties, yes.
You told the Court earlier that the Brisbane Street property has five bedrooms, is that correct? ….. There is a three bedroom house and a two bedroom unit that we’ve converted from a garage to generate some surplus income.
Those rooms can be rented out individually for between $80.00 to $100.00 each? ….. Those rooms are rented out, not individually, at an average income of between $80.00 and $100.00 a week, that’s correct.
The same goes for Park Street, it’s a four bedroom house, is that right? ….. That’s correct.
Those rooms too can be rented out? ….. The house is rented out, yes, and it averages out at $80.00 to $100.00 per room.
Per week? ….. Per week.
[127] As Mr Gilbert submitted the Judge, and Corban Revell for that matter, were entitled to accept that a total of $900 rent per week was earned from both Brisbane Street and Park Street. In his judgment Judge Blaikie recorded:
In the final submissions filed on behalf of the husband it is noted that the shares are accepted as being matrimonial property and the rental claimed by the wife in relation to the former matrimonial home is also matrimonial property. It is also apparent from the submissions that in the event of the Court finding that Park Street consists of matrimonial property, then the rental in relation to Park Street less a deduction of mortgage payments should be brought into account as being matrimonial property available for division between the parties.
[128] Again, as Mr Gilbert observed, the calculation on that basis for a maximum period of 136 weeks for 9 Brisbane Street in particular was favourable to Mr Hillary because the Judge accepted that the parties separated in 1997 but the period of 136 weeks prior to the hearing in February 2001 would only take the matter back to June
1998. Also, Mr Hillary did not instruct Macalister Todd to raise this matter in the letter written on his behalf on 8 November.
[129] Next, Mr Hillary referred to the mortgage payments. The letter from the BNZ produced through Mr Hillary confirmed that on the 091 loan account $965.37 was paid fortnightly. Mr Hillary said in evidence before this Court that the figure varied between $481.82 and $482.68 a week. The difference between those figures and the figure advised by the bank manager in the letter of 19 December 2000 is
de minimus. Mr Hillary’s point about the mortgage payments however is that no allowance was taken for the other two revolving credit accounts, namely the overdrawn current account - 00 and, more importantly, the other current account –
010 which had a limit of $205,000 and which had an overdrawn balance on 19
December 2000 of $197,694. Both were revolving credit accounts. Interest would also have been charged on those accounts. Mr Hillary is right in that the interest paid on those loans was not taken into account. It should have been. But the difficulty for the Court was that there was limited evidence before it as to the actual interest charged on those accounts or paid by Mr Hillary. Mr Hillary said it was approximately $756 or $773 a week excluding the overdraft, but accepted he did not have any verification of that. It was not for Ms Itagaki or Corban Revell to produce confirmation of that sum. The onus was on Mr Hillary to provide the evidence, as he sought the deduction. Mr Hillary did note towards the end of the evidence that the letter of 19 December 2000 referred to revolving credit accounts and that the interest on that had not been taken into account. Judge Blaikie then gave Mr Hillary the opportunity to file submissions. The submissions filed on Mr Hillary’s behalf submitted that account should be taken to “include the interest payments … in respect of the revolving credit account and overdraft facility which the BNZ letter of
19 December 2000 did not disclose”. But there was apparently no further attempt by Mr Hillary to quantify the amount. It was a matter within his power at that time. Mr Hillary was the author of his own misfortune on this point in that he had, for his own reasons, failed to respond in a timely fashion with affidavits as to his financial position during the course of the proceedings. He then represented himself at the hearing and failed to put relevant information before the Court.
[130] Mr Hillary produced a letter from the BNZ in these proceedings to confirm that he paid a total of $46,066 in interest on the two accounts in question between 1
April 1988 and 31 July 2001, but the letter is dated 7 November 2001. It was not before Judge Blaikie and could not have been available to Corban Revell when the order was sealed on 30 August 2001.
[131] Finally, the principal objection that Mr Hillary took to the actions of Corban Revell was in relation to the implementation orders. While I acknowledge the criticism of Judge Inglis QC of the inclusion of those orders in the draft, the
following points are relevant to this issue. First, the submissions for Ms Itagaki sought implementation orders of the type ultimately sealed. Next, in the submissions filed for Mr Hillary following the hearing it was conceded that:
12.1 Resolution
If it is found that Park Street is separate property, the Respondent proposes to purchase the Applicant’s share in Brisbane Street at the agreed value. To fund that purchase the Respondent requires 60 days and is prepared to pay interest at 5% on that sum if it cannot be funded within that time. If he cannot fund the purchase by 1 October 2001 then the property will go on the open market and be sold forthwith. It is noted that this will incur considerably greater costs in terms of real estate agents commission and advertising which both parties will have to share in.
12.2 If it is found that Park Street is matrimonial property then it is accepted that both properties must be sold on the open market. It is submitted however that leave be granted for the Respondent to provide evidence of development costs including design and planning costs, which in addition to the costs of sale and repayment of the mortgage, shall be deducted and refunded to the Respondent before the proceeds are shared equally between the parties.
[132] Mr Hillary acknowledged the properties would have to be sold and sought 60 days to pay out Ms Itagaki. The Judge delivered his decision on 18 June confirming Park Street was matrimonial property. The order finally sealed was dated 30 August. That gave Mr Hillary until 19 October 2001 to settle (50 days from the date the order was sealed). Failing settlement the order provided for sale of both Brisbane Street and Park Street. Mr Hillary conceded that if Park Street was found to be matrimonial property (as it was by Judge Blaikie), then it would have to be sold. The order also provided for interest at the rate of 11 percent rather than five percent as sought by Mr Hillary. Again, as Judge Inglis QC noted the rate was higher than rates fixed in other cases, but the judicature rate for interest was still 11 percent at the time.
[133] In summary, the orders presented for sealing by Corban Revell were not inconsistent with the evidence and submissions before Judge Blaikie and Judge Blaikie’s decision. Judge Blaikie’s decision contemplated that counsel for Ms Itagaki would have to set out a number of calculations to achieve the result he intended. The draft, including the orders for implementation was referred to Judge
Blaikie before it was sealed. The Judge raised no issue with the draft. He did not direct that it be referred to Mr Hillary.
[134] Further, there is an issue as to causation here. If Judge Inglis QC is correct and the orders for sale ought not to have been included (despite the applicant requesting them and Mr Hillary acknowledging that both properties would have to be sold if the judgment was not settled within 60 days), then it is inevitable, given the past history to the dealings between the parties that when settlement was not forthcoming orders for sale would have been sought and granted. It is also apparent that Mr Hillary did not intend to settle the judgment until he could be compensated for the interest on the revolving credit accounts, and as he could not achieve that, inevitably enforced sales would have followed.
Failure to advise that the orders were not by consent
[135] Next, Mr Hillary says Corban Revell were in breach of a duty in that they failed to advise the Court that the orders were not by consent. But there is no suggestion the orders were by consent. The orders followed a contested hearing. The order presented for sealing does not suggest that it was by consent. The orders are on the face of it, orders following the judgment of Judge Blaikie at the contested hearing.
The ex parte application
[136] Mr Hillary submits the duty owed to him was breached by Corban Revell in making the ex parte application and failing to make a full and frank disclosure. Mr Hillary did not give direct evidence about this issue or address it in the witness statement that he read to the Court. But in the course of cross-examination of Ms de Luen he did task her with the conflict between the evidence of Ms Kopu, a Corban Revell employee and Constable Horne. Ms Kopu’s affidavit was sworn on 3
December 2001 in support of the ex parte application for a warrant for an order requiring Mr Hillary to vacate the properties. Ms Kopu said inter alia:
On the 23rd of November 2001 it was arranged for the Queenstown Police to attend the property and have the respondent removed. The respondent refused on the grounds that the police were without a warrant. The Police require a warrant to enforce the orders.
[137] Against that, Constable Horne has sworn an affidavit on 1 April 2003 in which he said inter alia, that although he went to the address:
It was not for the purpose of evicting anyone as I had no copy of a warrant, but to ascertain who lived there and to see the property for myself.
[138] Neither Ms Kopu nor the constable were called to give evidence. It is not possible for this Court to determine whether there was an attempt to mislead the Court or simply a difference between the witnesses as to interpretation of the communication passing between them with the passage of time bearing in mind that Constable Horn made his affidavit some 17 months after the events. There is insufficient evidence of a breach by way of incomplete disclosure by Ms Kopu.
[139] Further, for the reasons given earlier, if there was a breach in seeking the orders ex parte it was a breach of the duty Corban Revell owed to the Court, not to Mr Hillary.
[140] Finally, and in any event there is no evidence of loss flowing from any such breach, as there is no evidence Mr Hillary was evicted pursuant to the order that was obtained ex parte. As Mr Gilbert correctly submitted there is no causal nexus between the order for possession obtained on the basis of the ex parte application and the losses claimed by Mr Hillary.
[141] In closing submissions, Mr Hillary also criticised the actions of Corban Revell in asking the Registrar to sign the documentation. However, that request was by letter to the Registrar. In the letter Corban Revell said:
Orders for sale of the matrimonial property were made in August this year and sealed on the 19th October 2001. The property at Brisbane Street has a contract for sale on it which both parties have signed. The Park Street property has a contract on it which our client has signed, however, Mr Hillary refuses to sign it. The purchaser is prepared to proceed with the contract if you, as the Registrar, would agree to co-sign the Agreement. We understand this would enable a sale to proceed.
We enclose a copy of the Sale and Purchase Agreement and would ask you to co-sign the Agreement so that the Orders for Sale may proceed.
[142] The letter attached the agreement for sale and purchase. The letter summarised the stage that the dealings between the parties had reached, at least from Ms Itagaki’s point of view. The Registrar could have required a more formal approach. Instead he referred the matter to Judge Blaikie for direction. Again Judge Blaikie could have required a formal application together with an affidavit. But the Judge was prepared to treat the letter as an application. Indeed Judge Blaikie went further than the letter requested and made a direction authorising the Registrar to sign both the agreement and transfer.
[143] Mr Hillary also made something of the fact the sale was not by public auction and referred to s 89 of the District Courts Act 1947. That is a red herring. Section
89 applies to the sale of goods by a bailiff, not to the sale of land.
Failing to provide an execution of transfer to facilitate settlement
[144] Mr Hillary referred on a number of different occasions to Corban Revell’s refusal to provide a transfer. However, as Mr Gilbert submitted, there was no duty on Corban Revell to produce a transfer for settlement until Mr Hillary was in a position to pay the sum required to settle the matrimonial property proceedings. While Mr Hillary could have been in a position to do so on settlement of the sale of Brisbane Street, unfortunately that settlement was delayed and ultimately only took place after the sale of Park Street had been settled.
[145] At no stage did Mr Hillary tender the sum required to settle the matrimonial property proceedings. In any event, any such duty to provide a transfer lay on Ms Itagaki, not her solicitors. If Mr Hillary was, at any time, in a position to settle, he could have obtained orders from the Court requiring Ms Itagaki to provide a transfer.
Allowing Judge Blaikie to treat Corban Revell’s letter as an application knowing it should have been done on notice and withholding critical information
[146] There is no duty on a solicitor not to allow a Judge to treat a letter as an application. It was up to Judge Blaikie whether he was prepared to accept the letter as an informal application. As noted, the Judge was prepared to accept the letter as an application and to deal with it on that basis. If the Judge was not satisfied that was appropriate he could have called for a formal application with a detailed affidavit in support. He chose not to do so. There was no duty on Corban Revell.
Failing to serve Court orders thus defeating Mr Hillary’s right to appeal or have orders reviewed
[147] Mr Hillary did not give any direct evidence in support of this allegation. It seems to refer to the amended orders that were issued by the Court in 2002 or perhaps 2003. However, as Mr Gilbert submitted, by this date both properties had been sold so that there can be no causal nexus with any loss claimed by Mr Hillary.
Damages
[148] As against both Macalister Todd and Corban Revell Mr Hillary claims:
• a sum to correct the mathematical errors in the original orders; and
• a monthly rental of $108,333.33 plus GST plus Opex, CPI adjusted from 1 April
2002 to date, which calculates out at in excess of $7.5 million. This is claimed on the assumption Mr Hillary would have earned this sum from the backpacker lodge he intended to develop on the property; and
• the capital value of a purpose built backpacker lodge with a current solid lease of
$1.38 million plus Opex bi-annual rent review. On a price earnings ratio of 5 this would equate to approximately $6.9 million, or on Mr Hillary’s submissions as much as $13 million; and
• loss of the opportunity to buy a property at 21 Olliviers Road, Christchurch plus
$1,500 per week from 15 February 2002 ($414,000) or in the alternative, approximately $1.267 million; and
• loss of the opportunity to purchase a property at 16 Avery Place, Monks Spur -
$900,000; and
• loss of the opportunity to purchase 92 Station Road - $322,000.
Causation and remoteness
[149] If there was a duty, and it was breached, then the losses that Mr Hillary claims he has suffered cannot be sustained in any event. Either there is no connection between the losses he claims and the actions of the defendants or the damages are too remote, or there is no or insufficient evidence.
The mathematical errors
[150] The errors in the original judgment have, to the extent possible, been addressed by the subsequent judgments of Judge O’Dwyer. Ms Itagaki has borne the brunt of that.
The monthly rental of $108,333 plus GST plus OPEX
[151] There is no evidence to support such a claim. It is based on a lease made in May 2004 for a backpackers development by another party on a different site in Queenstown. Mr Hillary agreed to sell Brisbane Street. There is no evidence he could have developed a backpackers on the balance site, let alone what it might have returned.
The capital value of a purpose built backpacker lodge
[152] The same point applies, and again, no probative evidence was produced.
Loss of the opportunity to buy 21 Olliviers Road, Christchurch
[153] Mr Hillary entered a conditional back-up contract to purchase Olliviers road on 22 January 2002. Mr Hillary needed the funds from the sale of the Queenstown properties to settle it. The funds were not available (other than the interim payment referred to). But as noted, Macalister Todd were not instructed in relation to the sales, Anderson Lloyd Caudwell were. Further, Mr Hillary was negotiating direct with Corban Revell during early January 2002. There is no causative link between Macalister Todd’s actions and the loss of opportunity to buy Olliviers Road.
Loss of opportunity re Avery Place and Station Road [154] No probative evidence was led on these issues. The Macalister Todd claim for fees
[155] Mr Bowers gave evidence of the work that Macalister Todd had carried out for Mr Hillary and the accounts rendered. The balance owing is $18,516.10. Mr Hillary did not directly challenge the quantum, save for one matter to which I will return, but suggested that Macalister Todd accepted some responsibility for not sorting out the problems with Corban Revell and that Macalister Todd carried out the work during 2002 on the understanding they would not charge. I do not accept that. I accept Mr Bower’s evidence there was no such agreement. Macalister Todd regularly reported to Mr Hillary in the usual way. They rendered accounts to him in the usual way throughout 2002. While they did not take steps during 2002 to collect the accounts which remained unpaid Mr Bowers explained that they believed they would be paid from the funds held by Corban Revell when matters were finally resolved. It was only after the IRD froze Mr Hillary’s trust account that Macalister Todd became concerned and demanded payment.
[156] Macalister Todd carried out the work they did for Mr Hillary on his instructions. The work was for Mr Hillary’s benefit, not for anyone else’s. Mr Hillary is liable to the firm for the fees incurred.
[157] The only challenge to the quantum by Mr Hillary was as to the cost for Mr Bower’s time spent listening to the tapes of the hearing before Judge Blaikie. Mr Bowers was prepared to accept that he could have sought a transcript from the Court which would have been provided free of charge. In the circumstances, and as acknowledged by Mr Bowers, that may have been an unnecessary cost.
[158] Mr Bowers accepted his charge out rate was about $250. I reduce the fee charged by Macalister Todd by the five hours charged for listening to the tapes. Apart from that, the accounts stand. Judgment for Macalister Todd against Mr Hillary in the sum of $17,109.85.
Result
(1)Judgment for Macalister Todd, the first counterclaim defendant against Mr Hillary the counterclaim plaintiff on the counterclaim.
(2)Judgment for Corban Revell, the second counterclaim defendant against Mr Hillary, the counterclaim plaintiff on the counterclaim.
(3) Judgment for the plaintiff, Macalister Todd against the defendant Mr
Hillary in the sum of $17,109.85.
Costs
[159] Costs are reserved. The counterclaim defendants are to file submissions by
29 June. Mr Hillary is to file submissions in reply by 13 July. I will then fix costs on the basis of the submissions.
Venning J
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