Lee v Gao HC Auckland CIV-2010-404-003599 [2011] NZHC 1621 (4 October 2011)

Last Updated: 22 November 2011

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

_{CIV-2010-404-003599}

BETWEEN YOON LEE Appellant

AND ZHI HONG GAO AND LIN GE First Respondents

AND JOHN CARTER, BRENT O'CALLAGHAN AND TIMOTHY UPTON SLACK

Second Respondents

Hearing: 29 September 2011

Counsel: Appellant in person

P McPherson for First Respondent

A Challis and K Robinson for Second Respondents

Judgment: 4 October 2011

_{LEAVE JUDGMENT OF ASHER J}

This judgment was delivered by me on Tuesday, 4 October 2011 at 3pm pursuant to r 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Solicitors/Counsel:

Y Lee, PO Box 33718, Takapuna, Auckland. Email: [e-mail]

Hesketh Henry, DX CP24017, Auckland. Email: [e-mail]

McElroys, DX CP20526, Auckland. Email: [e-mail]

LEE V GAO AND GE HC AK CIV-2010-404-003599 4 October 2011

Introduction

[1] Yoon Lee seeks leave to appeal to the Court of Appeal a judgment of Peters J

dated 19 May 2011, and a stay of that judgment.

[2] Peters J had determined an appeal from a judgment of Judge Gittos in the District Court at Auckland. In that first judgment Judge Gittos had upheld the claims of Zhi Gao and Lin Ge against Mr Lee, their former solicitor. The claim arose out of a conveyancing transaction where Ms Gao and her husband Mr Ge had entered into an agreement for sale and purchase to acquire a property. They had paid very significant deposits amounting to over 50 per cent prior to settlement. Ultimately the vendor, who was not on the title, was unable to settle. They lost their deposit. The Judge held that Mr Lee had acted negligently in paying over the deposit monies without adequately advising Ms Gao and Mr Ge. He found against Mr Lee’s counterclaim for contributory negligence. He also found that Mr Lee’s cross-claim against the solicitors Carter & Partners, who acted for the vendor and who had allegedly given an undertaking, failed.

[3] On appeal Peters J broadly upheld the decision of Judge Gittos. However she allowed the appeal insofar as Judge Gittos had given judgment for Ms Gao and Mr Ge’s full claim in damages. Peters J agreed with the submissions for Mr Lee that the claim should be seen as a loss of a chance claim, and awarded 50 per cent of the amount claimed. Ultimately she determined that Mr Lee was liable to pay Ms Gao and Mr Ge half of the amount of the second deposit, being the sum of $68,750. The appeal against the judgment in respect of Carter & Partners failed.

[4] Leave is required for a second appeal.[1] The principles applicable to the granting of leave to bring a second appeal are settled and not in contention between the parties. The Court of Appeal stated in Snee v Snee:[2]

To summarise, for leave to be granted pursuant to s67, the appeal must raise some question of law or fact capable of bona fide and serious argument in a case involving some interest, public or private, of sufficient importance to outweigh the cost, both to the court system and to the parties, and the delay

involved in the further appeal. Upon a second appeal this Court is not engaged in the general correction of error. Its primary function is then to clarify the law and to determine whether it has been properly construed and applied by the Court below. It is not every alleged error of law that is of such importance, either generally or to the parties, as to justify further pursuit of litigation which has already been twice considered and ruled upon by a Court.

Overview

[5] Mr Lee in extensive submissions canvassed many criticisms of the judgment. I will deal briefly with these points seriatim.

[6] However, I say at the outset that I see no basis on which to allow leave to appeal. The appeal does not raise questions of law or fact capable of bona fide and serious argument, and the case does not involve some interest, public or private, of sufficient importance to outweigh the cost and the delay involved in the further appeal.

[7] The first critical finding of Judge Gittos and Peters J was that Mr Lee was negligent in paying over the very significant second deposit when he knew that the vendor was not on the title. There were options open to Ms Gao and Mr Ge. These are referred to by Peters J.[3] They could have alleged misrepresentation as to title by the vendor. They could have refused to pay the second deposit on the basis that the vendor did not have title, and sought a compromise whereby they were given some sort of security or undertaking before the money was paid over. Mr Lee did not tell Ms Gao and Mr Ge of these options. He did not advise his clients of the problem.

He did not try and find a way out for them, of a commercially dangerous situation.

[8] It is correct as Mr Lee says that once Mr Lee had taken it upon himself to declare the agreement unconditional, the deposit was bound to be paid. However, there was expert evidence that a competent lawyer would have done more to assist Ms Gao and Mr Ge before paying over the deposit. Peters J, and Judge Gittos, were

_{able to rely on this evidence.}

[9] Further, the appeal in this regard gives rise to no question of sufficient importance to outweigh the cost and delay of a further appeal.

[10] The second central conclusion of Judge Gittos, upheld by Peters J, was that as a matter of fact no undertaking was given by Carter & Partners. This decision was based on an analysis of detailed evidence. There was ample evidence to support the conclusion. This included the important fact that Mr Lee made no immediate complaint of breach of undertaking. This ground gives rise to no question capable of bona fide and serious argument, and no point of importance.

[11] I will now deal briefly with the other points raised by Mr Lee.

Particular points

New evidence not aired fully

[12] New evidence was heard on the appeal. Mr Lee has been unable to point to any aspect of that evidence that had any particular relevance to the crucial findings of fact as to Mr Lee’s duty when he discovered that the vendor had no title, or whether the undertaking was given. It does not assist in relation to allegations of misleading conduct and misrepresentation in breach of s 9 of the Fair Trading Act

1986.

Breach of undertaking / misrepresentation

[13] It was alleged that Carter & Partners had undertaken to hold the second deposit on behalf of Ms Gao and Mr Ge until settlement and the firm had represented to Mr Lee that the vendor had finance to meet its obligations to purchase the property. As I have already observed, it was found as a matter of fact that no undertaking was given. As to the finance, there were statements made by Carter & Partners that the vendor was arranging finance to complete the purchase. In fact those statements were true. Arrangements were being made but unfortunately these arrangements were not ultimately completed and the finance was not provided. There was no misrepresentation.

[14] The decision of Peters J to consider damages on the basis of loss of chance was responsive to the alternative submission of Mr Lee’s counsel on the appeal, and constituted an orthodox approach to damages in the circumstances. The decision of

50 per cent in the end had to be a matter of judgment. No error of reasoning has been shown. No question of public importance arises.

Mitigation of loss

[15] This appears to not have been a mitigation of loss defence pleaded by Mr Lee, or argued at the previous hearings. For that reason alone it cannot be raised now. It can be observed that the suggestion that Ms Gao and Mr Ge should have sued the defaulting vendor for specific performance has difficulties given that the vendor was insolvent and could not settle.

Conveyancing / scope of retainer

[16] It is suggested that the vendor was holding the property as constructive trustee and that Carter & Partners had an obligation to hold the second deposit. To the contrary, in terms of cl 2 of the agreement, once the agreement was unconditional the deposit was no longer held by Carter & Partners as stakeholder.

The assignment of contractual rights

[17] The assignment by the vendor took place after the deposit had been paid and is irrelevant to the assessment of liability or damages.

Fair Trading Act

[18] The question of whether Carter and Partners made any misrepresentations under the Fair Trading Act was a matter of fact, and no question of public importance arises.

[19] This argument as with others appears to assume that there was some sort of duty owed by Carter & Partners to Mr Gao and Ms Ge. There was not.

Stay

[20] I have not been able to discern any basis upon which it could be suggested that a stay is required. Any appeal will not be rendered nugatory if Mr Lee has to pay the judgment sum. He has not suggested he cannot pay that sum. There was no suggestion that if he does pay it, that it could not be paid back by either of the respondents. The plaintiff is entitled to the benefits of establishing the claim.

Result

[21] The application for leave to appeal is declined.

[22] The application for a stay of execution is declined.

Costs

[23] There has been some suggestion that costs above the scale should be awarded against Mr Lee on this hearing. I am not prepared to make any such order. Mr Lee was entitled to seek leave. Now that he has failed, there is nothing out of the ordinary which would warrant a costs order other than in accordance with the scale.

[24] Costs on this application are therefore ordered against Mr Lee in favour of the respondents on a 2B basis.

...................................

Asher J

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[1] _{Judicature Act 1908, s 67.}
[2] Snee v Snee [1999] NZCA 252; (1999) 13 PRNZ 609 (CA) at [22].

[3] At [62]–[65].