Coombe v Jenkison

• Jurisdiction: New Zealand
• Judge: Palmer J
• Judgment Date: 03 December 2020
• Neutral Citation: [2020] NZHC 3178
• Court: High Court
• Docket Number: CIV-2019-419-73
• Date: 03 December 2020

Between

Anthony Brian Coombe and Murray Kaid Mclean as trustees and executors of the Estate of the late Ian Alexander McClean

Plaintiffs

and

John Elliot Soper Jenkison, Peter Ward Thomas Baker, Brenda J Flay and Hayley M Green

Defendents

[2020] NZHC 3178

Palmer J

CIV-2019-419-73

IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY

I TE KŌTI MATUA O AOTEAROA KIRIKIRIROA ROHE

Law Practitioners, Limitation, Statutory Interpretation — application for summary judgment or for strike out of a claim in negligence in the drafting of a will — determination of a late knowledge date under the Limitation Act 2014 for a solicitor's negligent advice — Limitation Act 1980 (UK)

Appearances:

N R Williams and S B C O'Connor for the plaintiffs

P M Fee and V S Wethey for the defendants

JUDGMENT OF Palmer J

This judgment was delivered by me on Thursday 3 December 2020 at 11.00am. Pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Summary

1 Purnell Jenkison Oliver (PJO) is a law firm in Thames, Coromandel. A member of the firm drafted a will for Mr Ian McClean which contained a significant error. Three of his surviving family members obtained $1 million (collectively) from the estate because of that. Mr Anthony Coombe and Mr Murray McLean, the executors of Mr McClean's estate, now sue PJO for negligence. PJO applies to strike out the suit, or for summary judgment, on the basis the suit is out of time under the Limitation Act 2010 (the Act). At this stage of the proceedings, I do not consider the late knowledge date under s 14 means the suit is out of time. Neither can I rule out the possibility a limitation defence might be estopped, depending on facts proven at trial. I dismiss the application.

What happened?

The relevant facts

2 The late Mr Bruce Oliver of PJO drafted a will for Mr McClean, a farmer, which was executed on 28 February 2013. Mr McClean died on 4 April 2013. His estate was worth over $6.5 million. Probate was granted, and the executors appointed, on 3 May 2013. Clause 9 of the will purported to leave the residue of the estate in the Ian McClean Trust “for the benefit of the local and wider community and needy persons (including my nieces and nephews) in the Hauraki Plains/Hauraki/ Coromandel area” and noted it “may pay my sister's [Muriel Turner's] care and hospital bills”. The trustees were instructed to “invest my estate's capital wisely and distribute each year's income to suitable successful applicants”.

3 On 2 May 2014, the solicitors for Ms Muriel Turner at Patterson Hopkins sent the trustees a letter suggesting cl 9 was “almost completely devoid of meaning” and suggesting it might be ineffective. The trustees sought advice from PJO. 1 On 8 May 2014 PJO advised that Ms Turner may well pursue claims even if advised her position had little merit. 2

4 On 30 May 2014, PJO instructed Greg Kelly Law to provide a legal opinion regarding the potential claim by Ms Turner including, among other things, whether cl 9 established a valid trust. 3 On 1 August 2014, PJO wrote a one-page letter to the trustees with “good news” that “in a nutshell GKL have reached the view that intestacy is unlikely to occur in this case” and they should apply to the High Court for approval of a charitable scheme. 4 PJO responded to Patterson Hopkins accordingly.

5 Mr Kelly's opinion dated 18 August 2014 was that cl 9 “creates a difficulty” but he suggested it could be saved if the High Court were to approve a scheme under s 32 of the Charitable Trusts Act 1957, to give effect to the general charitable intention. 5 He recommended the trustees apply to the High Court for approval of a scheme; otherwise, if cl 9 were held to be invalid, there would potentially be a resulting intestacy. The evidence of one of the executors is that they received this letter on 2 September 2014. 6

6 There is evidence that the trustees instructed an application to be made to the High Court but it did not proceed. 7 There is nothing before me to indicate why it did not proceed. Mrs Fee, for the defendants, submits that it is a matter for trial. In any case, on 2 August 2016, Ms Muriel Turner and her children issued proceedings challenging the will. On 15 March 2018, in the Hamilton High Court, Whata J issued judgment holding that cl 9 sought to establish an imperfect trust and validated the trust gift to the charitable purposes only, under s 61B of the Charitable Trusts Act 1957, subject to some provision being made for the plaintiffs. 8 In September 2018, the trustees paid Muriel Turner and her children a settlement of $1 million and legal costs.

The proceeding

7 In a proceeding filed on 21 March 2019, the trustees now seek to recover the losses from PJO in this suit for negligence, breach of the Consumer Guarantees Act 1993 and breach of the Fair Trading Act 1986 ( FTA). PJO applies to strike out all

three causes of action, or for summary judgment, because they are time barred under s 11 of the Act and s 43A of the FTA. The trustees oppose the application

8 At the hearing on 1 September 2020 Mrs Fee, for the defendants, sought leave to file an affidavit providing factual context of when PJO ceased acting for the plaintiffs. She submitted the documents exhibited were uncontentious. Mr Williams, for the plaintiffs, objected on the basis any reply evidence was due on 10 July 2020 according to the agreed timetable and he had not had time to take instructions on the matter. I indicated I would decide once I had heard counsel's oral submissions. Having considered the matter, I do not consider the affidavit would make a difference to my reasoning or decision. I do not grant leave for it to be filed.

9 Also at the hearing, Mrs Fee did not address the plaintiffs' position on estoppel

(reflected in their notice of opposition and written submissions) in her written or oral submissions but said she would deal with it in reply. In reply, she handed up further written submissions and authorities on the point. Accordingly, I gave leave to Mr Williams to respond in writing. In doing so, Mr Williams objected that the reply submissions tabled at the hearing were out of time. He invited me to disregard them. Mrs Fee submits that is wholly inappropriate because he did not object at the hearing. Given that Mrs Fee had prepared written submissions and further authorities, it would have been better for her to have addressed them during her oral submissions rather than springing them on Mr Williams in reply. But I consider the opportunity I provided Mr Williams to reply in writing cured any unfairness arising from that. I deal with the submissions on their merits.

Relevant law

Strike-out

10 Under r 15.1 of the High Court Rules 2016 (the Rules) the Court may strike out a pleading if it discloses no reasonably arguable cause of action or is frivolous, vexatious or otherwise an abuse of process. In summary: 9

• (a) the facts pleaded are assumed to be true;

• (b) the causes of action must be so untenable I must be certain they cannot possibly succeed;

• (c) the jurisdiction is to be exercised sparingly and only in a clear case;

• (d) the jurisdiction is not excluded by the need to decide difficult questions of law; and

• (e) particular care is required in areas where the law is confused or developing.

11 As the Supreme Court said in Murray v Morel & Co Ltd, a cause of action can be struck out on the basis of a limitation defence if the Court is satisfied the causes of action “are so clearly statute-barred that the plaintiff's claim can properly be regarded as frivolous, vexatious or an abuse of process”. 10 Otherwise, as Mallon J said in Scott v ANZ Bank NZ Ltd, “[i]t is not usually desirable to decide limitation points at a preliminary stage without full consideration of the evidence”. 11

Summary judgment

12 Rule 12.2(2) of the Rules provides that the Court “may give judgment against a plaintiff if the defendant satisfies the court that none of the causes of action in the plaintiff's statement of claim can succeed”. Affidavit evidence can be the basis for an application for summary judgment, but the Court need not accept uncritically evidence that is inherently lacking in credibility. 12 An issue of law can be determined on a summary judgment application but a novel issue or developing area of law may require the context of evidence at trial. 13

Limitation Act 2010

13 In Davys Burton v Thom, before enactment of the Act, the Supreme Court held a cause of action in negligence does not exist until there is both an act or omission breaching a duty of care and loss or injury to the plaintiff caused by that. 14 Loss is not suffered if it is contingent on the occurrence of a future uncertain event but reduction in the value of an asset is actual damage. 15 The Court held the plaintiff suffered loss when the solicitor there negligently prepared a pre-nuptial agreement that was not legally enforceable, because the plaintiff thereby immediately obtained a damaged asset. 16

14 The purpose of the Act as set out in s 3, “is to encourage claimants to make claims for monetary or other relief without undue delay by providing defendants with defences to stale claims”. Section 11(1) provides for a defence to money claims if the defendant proves the claim is filed after the claim's “primary period” of six years from the date of the act or omission on which the claim is based. Section 11(3) applies instead if the claim is made after its primary period but the claim is filed at least three years after the claim's “late knowledge date” under s 14 (if there is one). The plaintiffs here rely on the “late knowledge” date. Section s 14 of the Act provides:

14 Late knowledge date (when claimant has late knowledge) defined

• (1) A claim's late knowledge date is the date (after the close of the start date of the claim's primary period) on which the claimant gained knowledge (or, if...