Neil Stuart Johnston v Christopher Frederick Schurr

• Jurisdiction: New Zealand
• Judge: William Young J
• Judgment Date: 12 June 2015
• Neutral Citation: [2015] NZSC 82
• Docket Number: SC 61/2012
• Court: Supreme Court
• Date: 12 June 2015

Between

Neil Stuart Johnston

Appellant

and

Christopher Frederick Schurr

First Respondent

Deem & Shearer

Second Respondent

[2015] NZSC 82

Court:

Elias CJ, McGrath, William Young, Glazebrook and O'Regan JJ

SC 61/2012

IN THE SUPREME COURT OF NEW ZEALAND

Appeal against decisions of the High Court (HC) and the Court of Appeal (CA) that the first respondent did not breach statutory duties imposed on him under the Protection of Personal and Property Rights Act 1988 (PPPRA) and that the second defendant firm of solicitors had not been acting for the appellant and thus did not owe him a duty of care — appellant had been finalising an agreement as to the division of relationship property when he had an accident — first respondent was appointed as the manager of his property (including a farm) under the PPPRA but the Court excluded relationship property from the manager's powers — appellant unexpectedly recovered in 2003 and in 2004 he settled with his then wife at a higher amount as by then the farm had appreciated in value — sought damages against the first and second respondents for the difference between the cost to him of the settlement which he eventually reached and the corresponding cost he would have incurred under the settlement proposed before his accident — whether the basis of the first respondent's liability (if any) for a lack of diligence or care was under s49 PPPRA (Liability of manager) or under tort for breach of a statutory duty or negligence — whether the manager had been under a duty to settle the relationship property agreement — whether the contract of retainer with the second respondent had been terminated following the accident — whether the second respondents were liable in negligence for not pursuing a settlement.

Counsel:

C R Carruthers QC, E J Hudson and J S Cooper for Appellant

R J B Fowler QC and P J Mooney for First Respondent

J M Morrison and N Levy for Second Respondent

JUDGMENT OF THE COURT

• A The appeal is allowed in part. The judgments of the High Court and Court of Appeal in relation to the insurance issue are set aside. The question whether Mr Schurr is liable to the appellant in respect of the surrender of the insurance policies is to be determined in the High Court.

• B In all other respects the appeal is dismissed.

• C In respect of the appeal to this Court, the appellant is to pay costs to Mr Schurr and Deem & Shearer in the sums of $15,000 and $25,000 respectively together with reasonable disbursements to be fixed by the Registrar.

• D The orders for costs made in the High Court and Court of Appeal are affirmed.

REASONS

(Given by William Young J)

Table of Contents

	Para No
The statutory scheme	[6]
The basis upon which the claim against Mr Schurr should be assessed	[18]
The basis upon which the case was presented	[18]
A preliminary comment	[20]
A little legal history	[22]
The supervisory jurisdiction of the High Court	[24]
The basis upon which we propose to deal with the case	[29]
Claims in tort	[32]
The factual background to the relationship property claims	[35]
The relationship property claim against Mr Schurr	[60]
The claim	[60]
The High Court judgment	[61]
The Court of Appeal judgment	[64]
Our assessment	[69]
The relationship property claim against Deem & Shearer	[86]
The claim	[86]
The High Court judgment	[87]
The Court of Appeal judgment	[88]
Our assessment	[91]
The insurance issue	[100]
Disposition	[108]

1 On 6 January 1999 Neil Johnston, the appellant in this appeal, suffered serious brain injuries in a motorcycle crash. In August 1999, the Family Court appointed Christopher Schurr as the manager of his property under the Protection of Personal and Property Rights Act 1988 (“the PPPR Act”). The appointment was made on an interim basis initially and lapsed in November 1999. It was, however, subsequently renewed on a number of occasions. Eventually the appellant recovered his capacity to manage his affairs and Mr Schurr was discharged as his manager in December 2003.

2 The present litigation is addressed to two aspects of the way in which the appellant's affairs were looked after while Mr Schurr was his manager:

• (a) The first concerns the non-finalisation of a relationship property agreement with the appellant's estranged wife Christine Johnston. Shortly before the accident, the appellant (represented by his solicitors, Deem & Shearer) and Mrs Johnston had reached informal agreement on the division of their relationship property. The appellant's accident and his resulting incapacity meant that a formal agreement was not able to be executed. Although there was an offer made in October 1999 on behalf of Mrs Johnston to divide relationship property, a relationship property agreement was not finalised while Mr Schurr was the appellant's manager and when the appellant and Mrs Johnston finally reached a settlement (in 2004), this was on a basis which was less favourable to the appellant than the settlements which had been proposed just before his accident and in October 1999. 1 The appellant maintains that Mr Schurr, as his manager, and Deem & Shearer, as his solicitors, were at fault in not finalising a settlement of relationship property. He seeks damages against both for the difference between what he would have had to pay under settlements proposed in December 1998 and October 1999 and what he did pay under the settlement ultimately reached.

• (b) The second issue concerns the actions of Mr Schurr in cancelling a number of life insurance policies which the appellant held.

3 The appellant's claim for damages against Mr Schurr and Deem & Shearer was heard by Duffy J. The claim against Mr Schurr was argued on the basis that he had been in breach of his statutory duties under the PPPR Act. Duffy J held that the Act did not impose statutory duties capable of giving rise to a claim in damages and she therefore dismissed the claims against Mr Schurr. 2 She further held that after the accident Deem & Shearer had not been acting for the appellant and thus did not owe him a duty of care. 3 So the claim against Deem & Shearer was also dismissed.

4 The appellant appealed unsuccessfully to the Court of Appeal. 4 That Court declined to amend the statement of claim so as to include a claim in negligence against Mr Schurr 5 and otherwise upheld the conclusions of Duffy J.

5 We will discuss the case under the following headings

• (a) the statutory scheme;

• (b) the basis upon which the claim against Mr Schurr should be assessed;

• (c) the factual background to the relationship property claims;

• (d) the relationship property claim against Mr Schurr;

• (e) the relationship property claim against Deem & Shearer; and

• (f) the insurance issue.

The statutory scheme

6 The purpose of the PPPR Act is to: 6

… provide for the protection and promotion of the personal and property rights of persons who are not fully able to manage their own affairs[.]

7 It does so by, inter alia, conferring on the Family Court jurisdiction to appoint managers in respect of the property of such persons.

8 Section 28 provides:

28 Primary objectives of court in exercise of jurisdiction under this Part

The primary objectives of a court on an application for the exercise of its jurisdiction under this Part of this Act shall be as follows:

• (a) To make the least restrictive intervention possible in the management of the affairs of the person in respect of whom the application is made in relation to his or her property, having regard to the degree of that person's lack of competence:

• (b) To enable or encourage that person to exercise and develop such competence as he or she has to manage his or her own affairs in relation to his or her property to the greatest extent possible.

9 Under ss 29 and 31, a judge who is of the view that lack of competence has been established in respect of the subject person may appoint a manager (or managers) in respect of some or all of that person's property. The first schedule to the Act provides a default list of powers which may be conferred on managers. When appointing a manager the Court may exclude some of the powers on the list and may also confer additional powers. 7 The manager has “all such rights and powers as the court may confer on the manager in the property order, subject to any restrictions specified by the court in the order”. 8

10 Under s 35, property affected by an order does not vest in the manager, but the manager may possess and manage it and the subject person is incapable of exercising personally any power that the Court has vested in the manager over such property. 9 The subject person retains the legal capacity to exercise powers not vested in the manager, and to manage property not subject to the order. 10

11 Section 36 provides:

36 Functions and duties of manager

• (1) In managing any property under this Act, the first and paramount consideration of a manager shall be to use the property in the promotion and protection of the best interests of the person for whom the manager is acting, while seeking at all times to encourage that person to develop and exercise such competence as that person has to manage his or her own affairs in relation to his or her property.

• (2) Without limiting the generality of subsection (1) of this section, so far as is practicable in the circumstances and to encourage the person for whom the manager is acting to develop and exercise such competence as that person has to manage his or her own affairs in relation to his or her property, the manager may allow that person to have control of and deal with any part of the property.

12 Section 37 provides:

37 Security for performance of manager's duties

• (1) A court may, if it thinks fit, require...