Erwood v Holmes

• Jurisdiction: New Zealand
• Judge: Downs J
• Judgment Date: 20 August 2019
• Neutral Citation: [2019] NZHC 2049
• Docket Number: CIV-2004-404-007211
• Court: High Court
• Date: 20 August 2019

[2019] NZHC 2049

IN THE HIGH COURT OF NEW ZEALAND

AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA

TĀMAKI MAKAURAU ROHE

CIV-2004-404-007211

Between

Robert Erwood

Plaintiff

and

John Robin Holmes

First Defendant

Anthony David Banbrook

Second Defendant

Graeme Edward Minchin

Third Defendant

Appearances:

Plaintiff in person

JM Keating and RJ Bingham for First Defendant Third Defendant in person

Family, Law Practitioners — duties of litigation guardians — High Court Rules

Claim by Erwood (“E”) against his solicitor Holmes (“H”), his barrister Banbrook (“B”) for negligence and his former litigation guardian Minchin (“M”) for breach of his duties. E had lost money when the law firm Renshaw Edwards collapsed in 1992 and had sued repeatedly since then to recover his losses. He had sued the New Zealand Law Society and an insurer. He had also sued his lawyer and her firm, Glasgow Harley, in negligence and argued that the firm should have sought appointment of a litigation guardian for him. E's suit was settled with the help of M. E now sued M and B alleging they had settled without his authority. E contended he had not actually needed a litigation guardian which his advisors had known and M had failed to provide a letter from a doctor to the Judge at the settlement conference which stated he had no evidence of an active mental disorder. M had written to B, asking he be removed as litigation guardian which B had failed to do. H had served office space with B who often reverse-briefed H when he needed a solicitor which he had done for the Glasgow Harley claim. Pursuant to r4.38 HCR (powers of litigation guardian) litigation guardian may do anything in a case the incapacitated person could do if they were not incapacitated. That broad power attracted a duty to act in the litigant's best interests, and independently. Those duties were fiduciary, or analogous to fiduciary ones. Under r4.35(2)(b)(ii) HCR a litigation guardian may not have interests adverse to the litigant.

The issues were: whether a litigation guardian owed duties and if yes, whether M had breached those duties and whether H had breached his duty to E by not acting on the doctor's letter.

The Court held M had not breached his duties as E's litigation guardian. M had acted independently and in E's best interests, throughout. At no time had M preferred his interests to E's. M had instructed B to make an application to the Court to be removed. M had been entitled to assume B would make that application, and promptly. B's failure to do so was not referable to M. The contention M had breached his obligations by participating in the settlement conference, agreeing to settlement, and not facilitating E's presence, overlooked the fact that M was still E's litigation guardian. Consequently, M was required to act independently until he was released from that role. That conclusion was consistent with the HCR's which permitted a litigation guardian to do anything the incapacitated person could do if she or he were not incapacitated

It was arguable M should have told the Judge of the letter given M's duty to the Court as a barrister and solicitor. M had an “absolute duty of honesty to the court” as its officer. However, settlement would have occurred if the letter had been raised. Any breach of M's obligations as a litigation guardian had not caused E loss. E had used his mental health in a manipulative way to advantage himself in litigation there was no real prospect the doctors' letter would have been given the credence it might otherwise have attracted in the hands of another litigant.

H's role had been passive and administrative. He had not taken instructions from E until after the settlement. H could not have acted on the doctor's letter as he had not known about it.

E's causes of action were dismissed.

JUDGMENT OF Downs J

This judgment was delivered by me on Tuesday, 20 August 2019 at 4 pm pursuant to r 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Solicitors/Counsel:

Kennedys Law, Auckland.

GE Minchin, Auckland.

Copy to: Plaintiff

Table of Contents

An unsatisfactory case	[1]
Important events	[7]
The judgment of Ronald Young J	[29]
The claim against Mr Minchin	[38]
Duties of litigation guardians	[40]
Did Mr Minchin breach his duties?	[57]
The claim against Mr Holmes	[77]
Did Mr Holmes fail to protect Mr Erwood's interests in relation to Dr Wettasinghe's letter?	[82]
Did Mr Holmes wrongly deduct fees?	[91]
Trial	[105]
Orders	[115]
Costs	[116]
Postscript	[117]

An unsatisfactory case

1 Mr Robert Erwood lost a lot of money when Renshaw Edwards, a law firm, collapsed in 1992. Mr Erwood has sued repeatedly since then to recover his losses. He sued the New Zealand Law Society 1 and an insurer. Failure against the latter outweighed success against the former. Mr Erwood then sued the lawyers who had acted for him, Mrs Raylee Harley and her firm, Glasgow Harley. Mr Erwood alleged negligence. Among other things, Mr Erwood argued Mrs Harley should have sought appointment of a litigation guardian for him. Put broadly, a litigation guardian represents a party in litigation when that party does not have capacity to make decisions. The litigation guardian makes those decisions for the party, and in doing so, binds them. In a sense, the litigation guardian becomes the party. Mr Erwood suffers, or at least suffered, a mental illness.

2 In 2003, Mr Erwood's suit against Mrs Harley and Glasgow Harley settled with the help of a litigation guardian. Mr Erwood now sues that litigation guardian and the lawyers who had been acting for him. Mr Erwood alleges they settled without his authority. Mr Erwood contends he did not actually need a litigation guardian and his advisors knew this. Mr Erwood relies on a short letter from a psychiatrist written

seven weeks before settlement, and a judgment of Ronald Young J in a related case in which the Judge did not appoint a litigation guardian. 2 Mr Erwood wanted a litigation guardian in that case and argued the absence of one vitiated orders against him

3 As may be gleaned from this introduction, little about this case is satisfactory. Mr Erwood filed this claim 22 December 2004. 3 Few contemporaneous documents survive, apart from court records. Memory of events is faint. Or spent. A host of judgments encircles relevant events. For example, in 2006, the Court of Appeal declined Mr Erwood's application to re-open settlement because it “smacks of abuse of the Court's processes”. 4

4 The former litigation guardian represents himself. So too Mr Erwood, albeit he has considerable forensic experience. The psychiatrist who wrote the letter is now 82. His evidence was to be taken remotely through closed-circuit television, but he was not told about arrangements. 5 By agreement, his evidence was then read. 6 No other medical or psychiatric evidence was adduced. The primary defendant, Mr Tony Banbrook, is “missing”. So too his file. Mr Banbrook was a barrister but has since been struck off.

5 Mr Erwood's claim against Mr Banbrook is not before me. Mr Banbrook did not file a statement of defence, so, this part of the claim is being determined through formal proof by another Judge. However, reference to Mr Banbrook is unavoidable; he played a central role.

6 Mr Erwood cross-examined extensively on the assumption credibility is in issue. But with Mr Banbook gone, this is not a case about credibility.

Important events

7 It is unnecessary to rehearse Mr Erwood's suit against NZLS and the insurer in the wake of Renshaw Edwards' collapse. This litigation took a decade and reached the Privy Council. Related history is recounted by Lord Hope of Craighead in Harley v McDonald, 7 as Mr Erwood was then known. From here, relevant events begin 20 May 2002 when Mr Erwood filed his negligence claim against Mrs Harley and Glasgow Harley. I call this the Glasgow Harley claim.

8 Mr Banbrook prepared and acted for Mr Erwood on the Glasgow Harley claim. An important aspect of the claim concerned Mr Erwood's mental health. As observed, Mrs Harley and her firm were said to have been negligent in not seeking the appointment of a litigation guardian given Mr Erwood's mental health.

9 Mr Banbrook prepared an application for the appointment of a litigation guardian in relation to the Glasgow Harley claim. The application said Mr Erwood was “mentally disordered” in terms of s 2 of the Mental Health (Compulsory Assessment and Treatment) Act 1992. That section reads:

Mental disorder, in relation to any person, means an abnormal state of mind (whether of a continuous or an intermittent nature), characterised by delusions, or by disorders of mood or perception or volition or cognition, of such a degree that it—

• (a) Poses a serious danger to the health or safety of that person or of others; or

• (b) Seriously diminishes the capacity of that person to take care of himself or herself;—

and mentally disordered, in relation to any such person, has a corresponding meaning.

10 The application was supported by affidavits from Dr Roy Knill and Mr Graeme Minchin. No version of Mr Minchin's affidavit remains available. That

in relation to Dr Knill is a copy of a draft. 8 The application was filed 20 May, the same day as the claim. Harrison J granted it the next day. 9

11 The Judge made Mr Minchin Mr Erwood's litigation guardian. Mr Minchin was a junior barrister and solicitor; he was admitted to the Bar in 2000. Mr Erwood met Mr Minchin through Mr Minchin's involvement in a community law centre. Mr Minchin said Mr Erwood “would often claim that he was unable to cope, and … would raise his mental issues”. Mr Erwood asked for Mr Minchin's help with the Glasgow Harley claim. Mr Minchin agreed to help. That help was unpaid.

12 In the first half of 2003, Mr Erwood tried to circumvent Mr Minchin's...