Mark Robert Sandman v Colin Charles McKay, Roger David Cann and David John Clark (as partners of Wilson McKay)

JurisdictionNew Zealand
CourtSupreme Court
JudgeGlazebrook,O'Regan,Ellen France,Arnold JJ,Glazebrook J,Elias CJ
Judgment Date16 April 2019
Neutral Citation[2019] NZSC 41
Date16 April 2019
Docket NumberSC 35/2018

[2019] NZSC 41

IN THE SUPREME COURT OF NEW ZEALAND

I TE KŌTI MANA NUI

Court:

Elias CJ, Glazebrook, O'Regan, Ellen France and Arnold JJ

SC 35/2018

Between
Mark Robert Sandman
Appellant
and
Colin Charles McKay, Roger David Cann and David John Clark (as partners of Wilson McKay)
Respondents
Counsel:

R M Dillon for Appellant

P J L Hunt and J Heard for Respondents

Equity, Family, Law Practitioners — will — dishonest assistance — accessory liability

There was nothing to suggest to the solicitor that she could not rely on the doctor's certificate nor was there was anything in the terms of the 2010 will itself to raise doubts as to capacity. Where the instructions were to prepare a will in circumstances where there might later be issues raised about capacity, the lawyer should carefully document the advice given, the steps taken. It would be prudent for a solicitor to suggest that a medical certificate be obtained. It was arguable that once those steps had been taken it would not be up to the solicitorto decide whether a client had testamentary capacity. The solicitor had followed all of those steps. There could not be any argument that Wilson McKay had strongly suspected ES was incompetent and had deliberately decided not to inquire in case that inquiry resulted in actual knowledge.

A claim for breach of duties directly owed to ES by Wilson McKay would not depend on accessory or secondary liability. Nor would it require proof of dishonesty. Want of care or breach of fiduciary obligations owed directly by the firm to ES as its client would be sufficient for liability for loss. Such a claim could have been brought on behalf of the estate by S as someone materially affected. Even if the direct claim against Wilson McKayon the basis of breach of duties owed to ES had not been excluded by the CA, it could not have supported the claim for damages put forward in the statement of claim for the loss to S of his interest under the 2005 will. Such loss could only have been claimed on the basis of breach of duties owed by the firm to S himself.

Liability for knowing assistance by a stranger to a trust or relationship of confidence in breaches by the trustee or fiduciary was fault-based (not acting as an honest person would in the circumstances). Dishonesty, in the sense used in the accessory liability cases, was objectively assessed, but on the facts known to the person assisting. It was arguable that a solicitor who formed the view that a client lacked capacity or was being unduly influenced would be obliged to withdraw from acting and that it would be a breach of the duties owed by the solicitor to the client for the solicitor to participate in the transaction. There was no occasion to expand the ability to recover from accessories for those who were not beneficiaries of a trust or fiduciary duty breached by the trustees or fiduciaries primarily responsible.

Matters of ES' cognitive impairment, the reasons for the departure from her previous testamentary intentions, family strain, and dependence on V and G were matters which could not have been resolved on summary assessment. The Court would have allowed the appeal against entry of summary judgment.

S could claim against Wilson McKay for accessory liability only if he was a beneficiary under a trust or in respect of a fiduciary obligation owed to him by V or G. Wilson McKay was correct that S' potential expectation as a beneficiary under the 2005 will had not qualified him to bring the accessory claim against it. The court would have struck out the claim for accessory liability.

The appeal was dismissed.

  • A The appeal is dismissed.

  • B Costs of $25,000 plus usual disbursements are awarded to the respondents.

JUDGMENT OF THE COURT
REASONS

Para No.

Glazebrook, O'Regan, Ellen France and Arnold JJ

[1]

Elias CJ

[104]

Glazebrook, O'Regan, Ellen France AND Arnold JJ

(Given by Glazebrook J)

TABLE OF CONTENTS

Para No.

Introduction

[1]

Background

[3]

The proceedings

[35]

Statement of claim

[42]

Court of Appeal decision

[46]

Mr Sandman's submissions

[57]

The firm's submissions

[63]

Evidence

[69]

Summary judgment

[71]

Strike-out

[98]

Result and costs

[102]

Introduction
1

The appellant, Mr Mark Sandman, is the only surviving child of Elizabeth Nancy Sandman, who died on 30 October 2013. Mrs Sandman's other child, Victoria Sandman (Vicky), died in March 2011.

2

This appeal concerns whether the Court of Appeal was correct to make an order for summary judgment in favour of the respondent firm, Wilson McKay (the firm). 1 The claim by Mr Sandman is that the firm knowingly assisted in a breach of trust and/or fiduciary duty by Vicky and Mr Giboney. Mr Giboney was one of Mrs Sandman's executors and trustees under a will executed on 2 December 2010 (the 2010 will).

Background
3

Under the 2010 will the apartment Mr Sandman occupied was bequeathed to him and there were also a number of minor bequests. The residuary estate was to be divided equally between Mr Sandman and Vicky. In the event either of her children predeceased her, that child's share of the residuary estate was to be divided in specified

percentages among various relatives and friends 2 and would not go to the surviving child
4

Under an earlier will executed in 2005 (the 2005 will), Mr Sandman was bequeathed the apartment and Vicky was left $200,000. Vicky was also bequeathed some specific items, such as jewellery and art. The residuary estate was to be divided equally between Mr Sandman and Vicky. If one of her children predeceased her, the whole residuary estate would (absent grandchildren) 3 go to the surviving child.

5

After Mrs Sandman's death, the firm obtained probate of the 2010 will and acted in the administration of the estate. Mr Sandman had lodged a caveat against the grant of probate just after Mrs Sandman' death. This had been withdrawn after he was sent a copy of the will in early November. Mr Sandman confirmed in writing on 13 November 2013 that he was “happy with the will”.

6

On 10 December 2013 Mr Sandman consented in writing to the distribution of the estate within six months of the grant of probate and he also indemnified the executors for any loss arising from the early distribution. 4 Mr Sandman's share of the residuary estate amounted to approximately $440,000. 5 Final distribution of the estate was made by the end of 2014.

7

The firm had acted as Mrs Sandman's solicitors from 2007. At that time she sold her home and moved to a retirement village (the Village). As required before Mrs Sandman entered the Village, she executed two enduring powers of attorney in favour of Vicky. The one relating to property became immediately operable. The one relating to personal care and welfare became operable only when Mrs Sandman became mentally incapable.

8

Mrs Sandman met with Ms Paul, a solicitor from the firm, on 3 February 2010. Ms Paul's letter of 4 February 2010 records that Mrs Sandman was considering

changing the 2005 will but had decided to leave it in place for the meantime. The letter records that Mrs Sandman had been concerned that the 2005 will was not fair to Vicky in light of the continuing support provided to Mr Sandman. As the letter notes, Vicky did not wish Mrs Sandman to change her will and Mrs Sandman decided not to do so at that stage:

We note you are concerned that due to the fact you have been and will continue to support Mark, who is unemployed that Vicki is disadvantaged by your Will. As you are aware, Vicki at your request was present at this meeting [and] she did not want you to alter your Will in her favour based on current circumstances. We note that you have been experiencing medical problems and have attended a number of Doctors and ongoing investigations and tests are being carried out. As you have a valid Will that is acceptable in the circumstances, particularly to your daughter Vicki, until your health issues are identified and resolved you will not alter your existing Will.

9

On 4 February 2010 Mrs Sandman was referred to Auckland hospital by her general practitioner, Dr Jane Buckley, for anxiety and depression. Dr Buckley said Mrs Sandman was now very dependent on Vicky but was still living independently. It was noted that Mrs Sandman was becoming increasingly reclusive and had become more confused when on holiday with Vicky (apparently in December 2009). Dr Buckley said that Mrs Sandman had become increasingly forgetful and fearful. On 19 March 2010, a consultant psychiatrist reported that there were no immediate safety concerns but there was “mild cognitive impairment”.

10

In July 2010 Mrs Sandman had a fall and broke her femur. Consent to the resulting operation was given by Vicky on Mrs Sandman's behalf, due to, as stated in medical notes, Mrs Sandman's “mild dementia”. After the operation Mrs Sandman suffered from post-operative delirium which was slow to resolve. 6

11

On her return to the Village, Mrs Sandman was placed in the hospital wing of the Village to recuperate. Mrs Sandman, however, wished to return to her unit. According to Ms Paul's affidavit filed in these proceedings, she provided advice to Vicky about Mrs Sandman's rights in this regard in a telephone call on 31 August 2010, followed up by a letter on 1 September 2010 recording her advice.

12

A gerontology nurse specialist, Ann Pidgeon, was instructed by the Village doctor to assess whether a return to independent living was possible. Her report of 21 September said that Mrs Sandman's “MMSE today [16 September] was 19/30; losing points in orientation, short term recall, and copying of design.” 7 It was said that Mrs Sandman had become “institutionalised” and would need time “to adjust to some self reliance”. It was said further:

Mrs Sandman mobilises with a stroller frame, she needs encouragement to walk...

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6 cases
  • Scott v ANZ Bank New Zealand Ltd
    • New Zealand
    • High Court
    • 5 May 2020
    ...considered the cause of action could also arise when a third party assisted a breach of a fiduciary duty. On appeal in Sandman v McKay [2019] NZSC 41 at [46], [100] and [126] the Supreme Court noted these elements were taken from Royal Brunei Airlines Sdn v Tan [1995] 2 AC 378 (PC) and it ......
  • Parkinson v O'Brien on Behalf of General Dynamics Corporation Ltd
    • New Zealand
    • Court of Appeal
    • 12 July 2021
    ...Court judgment, above n 2, at [63]. 31 High Court judgment, above n 2, at [62]. 32 At [61]. 33 At [103]. 34 At [69]. 35 Sandman v McKay [2019] NZSC 41, [2019] 1 NZLR 519 at [126], n 36 High Court judgment, above n 2, at [74]. 37 At [77]. 38 At [42(b)] above. 39 Companies Act, s 165(2)(b). ......
  • O'Brien v Parkinson v Ors
    • New Zealand
    • High Court
    • 14 July 2020
    ...Gendall AJ, 18 April 2005 at [27]. 11 Parkinson v O'Brien, above n 1. 12 McKay v Sandman [2018] NZCA 103 at [22]. 13 Sandman v McKay [2019] NZSC 41 at 14 Sandman v McKay, above n 13, at [163]. 15 Property Law Act 2007, s 347(1). 16 Property Law Act 2007, s 346(2). 17 Nobilo v Nobilo, abov......
  • Parkinson v O’brien on Behalf of General Dynamics Corporation Limited
    • New Zealand
    • Court of Appeal
    • 12 July 2021
    ...that participation in breach of fiduciary duty is a sufficient foundation for 32 33 34 35 At [61]. At [103]. At [69]. Sandman v McKay [2019] NZSC 41, [2019] 1 NZLR 519 at [126], n a claim of dishonest assistance. That was an appropriate course in the context of a s 165 application. [70] In ......
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