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Pickering v Straubel [2012] NZHC 695 (5 April 2012)

Last Updated: 4 May 2012


IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

CIV-2011-409-000463 [2012] NZHC 695

BETWEEN JANICE HELENA PICKERING Plaintiff

AND PAUL COLIN MAX STRAUBEL First Defendant

AND GEOFFREY JOHN HATTON SHARP Second Defendant

Hearing: 21 March 2012

Appearances: A J Nolan for Plaintiff

M R Cowan for First Defendant

H M Twomey and W Robertson for Second Defendant

Judgment: 5 April 2012

JUDGMENT OF ASSOCIATE JUDGE MATTHEWS

[1] In 2005 the plaintiff, to whom I shall refer as Mrs Pickering, was engaged in litigation in the High Court with her daughter concerning, amongst other matters, the estate of her late mother, of which she, the first defendant (Mr Straubel) and one other person were the trustees. On 22 March 2005 Mrs Pickering and her daughter engaged in a mediation run by the second defendant (Mr Sharp) who is a barrister and professional mediator. Mr Straubel attended part of the mediation, though was not a party to it. Before the mediation commenced, a mediation agreement was signed by Mrs Pickering, her daughter, and Mr Sharp. At the end of the mediation Mrs Pickering and her daughter agreed to resolve certain issues and signed an agreement recording them. Thereafter, Mrs Pickering has sought to resile from the matters to which she then agreed.

[2] In this proceeding she claims that Mr Straubel owed to her a fiduciary duty as executor and trustee of the will, imposing upon him obligations to act in accordance

JANICE HELENA PICKERING V PAUL COLIN MAX STRAUBEL HC CHCH CIV-2011-409-000463 [5

April 2012]

with the trusts established under the will, to objectively assess and consult in respect of any claims against the estate, and not to act in conflict with his duties to the plaintiff. It is said that Mr Straubel breached his duties to Mrs Pickering in a number of ways, before and at the mediation. She claims losses in the form of legal fees for her subsequent involvement in litigation based on the agreement reached at the mediation, and damages for stress.

[3] In a second cause of action Mrs Pickering alleges negligence against Mr Straubel based on an alleged duty of care to her. She pleads identical obligations to those alleged in relation to Mr Straubel’s alleged fiduciary duty, and breaches in terms identical to those alleged as breaches of his fiduciary duty. The same losses are claimed.

[4] The cause of action against Mr Sharp is based on alleged breach of the mediation agreement in nine respects. The same damages are claimed.

[5] Each of the defendants has applied to strike out the causes of action against him. These were argued on 21 March in chambers. The second defendant has also applied for summary judgment against the plaintiff. This application was argued in court.

Limitation Act issue

[6] This proceeding was filed on 23 March 2011. It is common ground between the plaintiff and each of the defendants that the cause of action relied on in this proceeding arose on 22 March 2005. In March 2011 Mrs Pickering, representing herself, had a statement of claim and notice of proceeding ready to file in the Christchurch High Court, being the registry of the court closest to the place of the residence of the first defendant. At that time, the Christchurch registry of the court was closed to the public as a consequence of the earthquake in Christchurch on

22 February that year. Documents for filing in the Christchurch registry were required to be filed in the Wellington registry of the court.

[7] Mrs Pickering filed a brief affidavit in March 2012. She stated that on

18 March 2011 she was aware that the High Court Registry was in the red zone of Christchurch City and that she was therefore unable to physically go to the registry. She telephoned instead and the call was answered by Wellington High Court staff. She asked where the documents were to be filed and the advice she says she was given is that they were to be filed in Wellington, and she was given a postal address.

[8] Mrs Pickering stated that she needed to file with the documents an affidavit as to the correct registry of the High Court. She did not say whether she was advised to that effect by the staff member of the Wellington Registry to whom she spoke or whether she made that decision herself. Either way, it was plainly wrong. The Wellington Registry was merely receiving documents physically, for Christchurch. However, it seems Mrs Pickering prepared an affidavit which was sworn by her on Sunday, 20 March. She then said in her affidavit:

I courier posted the Notice of Proceedings, Statement of Claim and the Affidavit in support of the correct registry of the High Court to the Registrar of the Wellington High Court on the 21st March.

It appears that these documents were received by the Wellington High Court

Registry on the 23rd March.

[9] Mrs Pickering did not produce any receipt or other documentation from a courier service. However, for present purposes, I take her statement as accurate.

[10] It is common ground between the parties that the documents were received for filing on 23 March. It is also common ground that they were therefore one day out of time in terms of s 4(1) of the Limitation Act 1950, if that subsection applies.

Procedural dispute

[11] Notwithstanding the fact that both of the applications to strike out the proceeding and the application for summary judgment expressly relied on the expiration of time for filing these proceedings in accordance with the Limitation Act

1950, and express reference was made to this ground in the notice of opposition filed by Mrs Pickering on 1 December 2011 (apparently in person), the affidavit she swore in support on 23 November 2011 (which on its cover sheet refers to a name of

a former counsel) made no mention whatever of this issue. It seems that around that time or shortly after, Mrs Pickering engaged Mr Nolan to represent her. On

15 March, just six days before the fixture for the strike out and summary judgment applications, Mr Nolan filed a notice of interlocutory application seeking an order extending the time in which to file the proceedings, setting out a number of points by way of factual material, and relying on r 1.18 of the High Court Rules and s 82 of the Canterbury Earthquake Recovery Act 2011 (CERA) as grounds for the application.

[12] Neither r 1.18 of the High Court Rules nor s 82 of CERA was referred to in the notice of opposition originally filed by Mrs Pickering.

[13] Not surprisingly, this late change of position by Mrs Pickering was met with a trenchant protest by counsel for the first and second defendants who had, quite correctly and in accordance with timetabling directions, prepared their cases for argument on 21 March (a date set by the Court in October 2011) on the basis of the material then before the Court. In a telephone conference convened to air the issue of whether the application could be heard, I ruled that this issue would be argued at the commencement of the fixture. I indicated to counsel that ordinarily, if the interests of justice required, a point raised late in the piece could be argued, with objection to that course (even well-founded as in this case) being met by an adjournment and costs orders.

[14] The additional issues raised by Mr Nolan under the High Court Rules and s 82 of CERA should more appropriately have been raised by way of an amended notice of opposition to the applications to strike out. The defendants’ counsel did not take this point, and in the end accepted that the new issues raised by Mr Nolan could be argued at the fixture, rather than seeking an adjournment.

[15] Further, in argument it became common ground between counsel that no reliance could be placed on r 1.18, given the decision in Pritnam Kaur v S Russell & Sons.1 Therefore the issue on this aspect of this case is whether the Court may, and

if so whether it should, make an order under s 82 of CERA in this case.

1 Pritnam Kaur v S Russell & Sons [1973] QB 336 (CA).

Arguments presented on Section 82

[16] Section 82 provides:

82 Power of courts to extend or shorten time

(1) In relation to any proceeding before it, a court may, in its discretion, extend or shorten the time appointed by rules of court or other enactment, or fixed by any court order, for doing any act or taking any step on such terms (if any) as the court thinks just if satisfied that it is necessary to do so because of circumstances relating to any Christchurch earthquakes.

(2) The court must take into account the need for a timely recovery of greater Christchurch.

(3) In this section, court includes a tribunal.

[17] This section has been applied by the Environment Court in one case, but not in circumstances resembling the present; nor is there any guidance to be obtained from the judgment on how a court might approach application of the section to circumstances such as the present. It has not been applied or considered in any other case.

[18] It is necessary to decide whether s 82 does, as a matter of law, allow this Court to extend the time for filing a proceeding beyond the limitation period provided in the Limitation Act 1950. This requires consideration of two issues:

(a) Whether s 82 may be given retrospective effect to apply to events prior to it coming into force.

(b) If so, whether s 82 may be applied to override the provisions of s 4

Limitation Act 1950.

[19] I deal with these issues in that order.

(a) s 82 : retrospective effect?

[20] The Canterbury Earthquake Recovery Act 2011 was expressed to come into force on the day after the date on which it received Royal Assent (s 2). Assent was given on 18 April 2011. Section 82 only assists the plaintiff if it has retrospective effect, as the time for the plaintiff to file her proceedings expired four weeks before

the Act commenced. This point was not identified in oral argument so I invited counsel to file written submissions.

[21] Section 7 of the Interpretation Act 1999 provides that an enactment does not have retrospective effect. This only applies if the context of the enactment does not require a different interpretation (s 4). These provisions reflect common law presumptions that statutes are always speaking, and against retrospectivity: Art Deco Society (Auckland) Inc v Auckland City Council.2

[22] Mr Nolan submitted that the context of CERA requires a different approach. He referred to Todd Pohokura Ltd v Shell Exploration NZ Ltd.3 The Court cited with approval passages from J F Burrows Statute Law in New Zealand (3rd ed Wellington, LexusNexis 2003) at 404 that Parliament is able to legislate retrospectively, expressly and impliedly, retrospective effect being given if it is Parliament’s clear

intention that that be the case. Section 7 establishes only a presumption that an enactment is not retrospective. The Court in Todd adopted a passage from P Langan and P Maxwell Maxwell on the Interpretation of Statutes (12th ed London, Sweet and Maxwell, 1969) at 218 also cited by Burrows (at 407):

The rule [against retrospective construction] has been applied chiefly in cases in which the statute in question, if it operated retrospectively, would prejudicially affect vested rights or the legality of past transactions, or impair contracts, or would impose new duties or attach new disabilities in respect of past transactions. The presumption ... has no application to enactments which affect only the procedure and practice of the Courts. No person has a vested right in any course of procedure, but only the right of prosecution or defence in the manner prescribed for the time being.

The exception to the presumption against retrospective effect was also recognised in

Yew Bon Tew v Kenderaan Bas Mara.4 In this case Lord Brightman said:

Whether a statute has a retrospective effect cannot in all cases safely be decided by classifying the statute as procedural or substantive ... Their Lordships consider that the proper approach to the construction of the Act of

1974 is not to decide what label to apply to it, procedural or otherwise, but to see whether the statute, if applied retrospectively to a particular type of case, would impair existing rights and obligations.5

2 Art Deco Society (Auckland) Inc v Auckland City Council [2005] NZHC 413; [2006] NZRMA 49 (HC).

3 Todd Pohokura Ltd v Shell Exploration NZ Ltd [2008] NZHC 1190; (2008) 18 PRNZ 1026 at [84].

4 Yew Bon Tew v Kenderaan Bas Mara [1982] 3 WLR 1026 (PC).

[23] Against that background Mr Nolan made two submissions. First, he submitted that the context in which CERA was passed, the aftermath of the catastrophic earthquakes in Christchurch, requires the Court to take a more liberal approach to interpretation of the Act than the strict presumption against retrospectivity might suggest. He pointed out that the Act was passed as soon as reasonably possible after the earthquake on 22 February 2011 and must be taken to be intended to cover the interim period. As he put it:

It is contended that Parliament intended for CERA address all events that were caused by the Christchurch Earthquake. On that basis, I submit that s 7 of the Act does not apply and s 82 of CERA can be given a retrospective effect to deal with events affected by the earthquake which however occurred prior to CERA coming into effect.

[24] I do not accept that submission. The Act specifically provided that it would come into effect on the day after it received Royal Assent. Parliament clearly turned its mind to the date on which its provisions would have effect. It was open to Parliament to provide that it came into effect on an earlier date, but it did not do so.

[25] Secondly, Mr Nolan submitted that s 4 is a procedural provision so comes within the exception to the presumption against retrospective effect.

[26] Both counsel for the defendants emphasised the distinction recognised by the courts between effects on procedural matters, and effects on substantive rights, the point noted in the passage from Maxwell on the Interpretation of Statutes, and Yew Bon Tew above. In Crown Health Financing Agency v P,6 the Court referred to Yew Bon Tew (above) and an earlier New Zealand case, Davies v Public Trustee.7 In

Davies the (then) Supreme Court had held that time bars are procedural. This differed from the decision of the Privy Council in Yew Bon Tew. At paragraph [12] in Crown Health, Glazebrook J said:

Although it is uncertain whether Yew Bon Tew, being an appeal from another jurisdiction, is directly binding on this Court (see R v Chilton [2006] 2

NZLR 341 at [112]-[113]), it is a later decision of (at least) highly persuasive authority. To the extent, therefore, that Davies held, contrary to the

reasoning in Yew Bon Tew, that time bars are procedural and cannot give rise to any accrued right or immunity once the time bar has expired, I would

overrule it. To the extent that the reasoning in Davies relied on the wording of the new provision at issue in that case, however, it may well have been correctly decided.

[27] In Accolade Auto Hire Ltd v Aeromax Ltd,8 the Court considered legislation reducing an appeal period from three months to 28 days. It found that it would be “unfair and unjust to deprive the appellants of the right they had acquired. The new rules show no intent to retrospectively revoke that right.”9 Thus the right of appeal was seen as a substantive right not amenable to retrospective alteration.

[28] Counsel for the second defendant drew my attention to the following passage from Yew Bon Tew at 1033:

In their Lordships’ view, an accrued right to plead a time bar, which is acquired after the lapse of the statutory period, is in every sense a right, even though it arises under an act which is procedural. It is a right which is not to be taken away by conferring on the statute a retrospective operation, unless such a construction is unavoidable. Their Lordships see no compelling reason for concluding that the respondents acquired no “right” when the period prescribed in the Ordinance of 1948 expired, merely because the Ordinance of 1948 and the Act of 1974 are procedural in character. The plain purpose of the Act of 1974, read with the Ordinance of 1948, was to give and not to deprive; it was to give a potential defendant, who was not on June 13, 1974 possessed of an accrued limitation defence, a right to plead such a defence at the expiration of the new statutory period. The purpose was not to deprive a potential defendant of a limitation defence which he already possessed. The briefest consideration will expose the injustice of the contrary view. When a period of limitation has expired, a potential defendant should be able to assume that he is no longer at risk from a stale claim. He should be able to part with his papers if they exist and discard any proofs of witnesses which have been taken; discharge his solicitor if he has been retained; and order his affairs on the basis that his potential liability has gone. That is the whole purpose of the limitation defence.

[29] In my opinion retrospective effect cannot be given to CERA to extend time for filing of proceedings under the Limitation Act 1950. To do so would be to deprive each of the defendants in this case of their right to assume that, as Lord Brightman put it, they are no longer at risk from a stale claim. A limitation period in the Limitation Act 1950 is not a procedural time limitation. It enshrines this substantive right. I therefore decline to give CERA retrospective application to override the provisions of the Limitation Act 1950.

(b) Section 82 and Section 4

[30] Given my decision on retrospective application of CERA it is not necessary to determine this issue, but I record my views lest I should be wrong on the first point.

[31] I make the following observations about s 82. First, this is a proceeding before the Court, in terms of the opening clause of ss (1). Secondly, the Limitation Act 1950 is within the category “other enactment”. Those two factors may at first observation point to s 82(1) being available to the Court to extend the time for issue of this proceeding if the Court is satisfied that it is necessary to do so because of circumstances relating to the February earthquake in Christchurch. However, there is a significant contra indication. This results from the power given to the Court being to “extend or shorten the time appointed by rules of court or other enactment

... for doing any act or taking any step ...”.

[32] Section 4(1) of the Limitation Act 1950 provides:

4 Limitation of actions of contract and tort, and certain other actions

(1) Except as otherwise provided in this Act or in subpart 3 of Part 2 of the Prisoners’ and Victims’ Claims Act 2005, the following actions shall not be brought after the expiration of 6 years from the date on which the cause of action accrued, that is to say, -

(a) Actions founded on simple contract or on tort: (b) Actions to enforce a recognisance:

(c) Actions to enforce an award, where the submission is not by a deed:

(d) Actions to recover any sum recoverable by virtue of any enactment, other than a penalty or forfeiture or sum by way of penalty or forfeiture.

[33] For s 82(1) to apply, the Court must be satisfied that s4(1) is within the meaning of the phrase “the time appointed by [an] enactment” for taking the step of filing proceedings. Read literally, s 4(1) does not appoint a time for filing proceedings. Rather, it sets a time after which proceedings cannot be brought. On a literal reading of s 82, therefore, it would not apply to permit an extension of the limitation period set out in s 4.

[34] All counsel enjoined me to have regard to the purposes of the Act, counsel for the plaintiff taking a broad approach to its purpose and counsel for the defendants taking a narrower approach. Section 3 of CERA states:

3 Purposes

The purposes of this Act are –

(a) to provide appropriate measures to ensure that greater Christchurch and the councils and their communities respond to, and recover from, the impacts of the Canterbury earthquakes:

(b) to enable community participation in the planning of the recovery of affected communities without impeding a focused, timely, and expedited recovery:

(c) to provide for the Minister and CERA to ensure that recovery: (d) to enable a focused, timely, and expedited recovery:

(e) to enable information to be gathered about any land, structure, or infrastructure affected by the Canterbury earthquakes:

(f) to facilitate, co-ordinate, and direct the planning, rebuilding, and recovery of affected communities, including the repair and rebuilding of land, infrastructure, and other property:

(g) to restore the social, economic, cultural, and environmental well-being of greater Christchurch communities:

(h) to provide adequate statutory power for the purposes stated in paragraphs (a) to (g):

(i) to repeal and replace the Canterbury Response and Recovery Act 2010.

[35] Ms Twomey submitted that if reliance can be placed on any aspect of the various purposes of the Act, it would be the purpose stated in sub-paragraph (a). She submitted, however, that all the purposes are directed at actions aimed at the recovery of Christchurch and its communities from the impacts of the various earthquakes that have affected the city. This is reflected, she submitted, in s 82(2) by which the Court (presumably in considering s 82(1)) is directed to take into account “the need for a timely recovery of greater Christchurch”. “Recovery” is defined to include restoration and enhancement. In determining whether or not to extend time for issuing this proceeding, the Court simply cannot with any relevance at all take into account this factor, as it is directed to do.

Conclusion on Section 82

[36] I conclude that s 82 of CERA does not empower the Court to extend the limitation periods set out in the Limitation Act 1950 for the following reasons. First, in my view the phrase “doing any act or taking any step” in relation to any proceeding does not include the step of commencing that proceeding. This is because the power to extend time for doing any act or taking any step is only given in relation to a proceeding which is already before the Court and can therefore only apply to acts or steps to be taken after the initial act of filing the proceeding.

[37] Secondly, and alternatively, reference to the stated purposes of CERA does not point to CERA being available for the purpose of extending time for filing proceedings under the Limitation Act 1950. In my opinion, the closest any of the purposes come to this is the reference in paragraph “(a)” to “providing appropriate measures to ensure that greater Christchurch and the councils and their communities respond to ... the impacts of the Canterbury earthquakes”. Even then, it is stretching the words “respond to”, and I derive little assistance from it. A stronger indication in my view is the inclusion of the direction in s 82(2), as discussed above, [35]. Read as a whole the purposes of the Act are forward looking, focused on restoration of Christchurch as an operating city and the far reaching provisions of the legislation are directed at bringing that about. In the course of ensuring that can occur smoothly, fairly and efficiently it is foreseen that times appointed by rules of court or statutes, or already fixed by court orders, for taking steps in a proceeding may need to be changed. Plainly that is part of a set of machinery provisions which are necessary to ensure the broad purposes of the Act are met.

[38] However, in my opinion it cannot be inferred from any of the purposes of the Act that it was intended that a court could extend the time for filing proceedings beyond those set out in the Limitation Act 1950. Once proceedings are validly filed in terms of the laws of limitation, the times for taking steps in those proceedings may be altered by the Court if it is “necessary to do so because of circumstances relating to any Christchurch earthquakes”.

[39] In submissions filed at my request in respect of the commencement date of CERA, Mr Nolan also made a submission that the limitation period for the plaintiffs’ first cause of action against Mr Straubel had not expired, as it was governed by s

4(9) not s 4(1). This issue was not raised in the notice of opposition to strike out the proceeding, nor in his application for an extension of time. It was not argued at the fixture and was not the subject of my request for further submissions which resulted in the written submissions received in relation to whether the CERA Act had retrospective effect. In all respects, it was unduly late. However, given the decision I have made in relation to this cause of action, [40] to [48] below, it is unnecessary for this point to be considered further.

First defendant: strike out of first cause of action (breach of fiduciary duty)

[40] It was common ground that on an application to strike out, the principles to be applied by the Court are those set out in Attorney-General v Prince:10

(a) Pleaded facts, whether or not admitted are assumed to be true. This does not extend to pleaded allegations which are entirely speculative and without foundation;

(b) The cause of action must be clearly untenable. In Couch v Attorney- General (2008) NZSC 45, Elias CJ and Anderson J at paragraph 33 found: “It is inappropriate to strike out a claim summarily unless the Court can be certain that it cannot succeed”;

(c) The jurisdiction is to be exercised sparingly and only in clear cases.

This reflects the Court’s reluctance to terminate a claim or defence short of trial;

(d) The jurisdiction is not excluded by the need to decide difficult questions of law, requiring extensive argument;

(e) The Court should be particularly slow to strike out a claim in any developing area of law and perhaps particularly where a duty of care

is alleged in a new situation. This was endorsed in the Couch case;

10 Attorney-General v Prince [1998] 1 NZLR 262.

(f) There is considerable authority that the developments in negligence need to be based on proved rather than hypothetical facts.

[41] The first cause of action against Mr Straubel, as pleaded in the amended statement of claim, is in these terms:


6. First Cause of Action against First Defendant – Breach of Fiduciary

Duty

The Plaintiff repeats the foregoing and further says:

6.1 As Executor/Trustee under the Will and as a professional trustee the First Defendant owed a fiduciary duty to the Plaintiff, which duty imposed on the First Defendant obligations including:

(a) To act in accordance with the Trusts established under the

Will; and

(b) In performing his duties pursuant to the Trusts established under the Will, to objectively assess and consult in respect of any claims against the Estate;

(c) Not to act in conflict with his duties to the Plaintiff.

6.2 The First Defendant breached his duties to the Plaintiff:

Particulars

(a) By failing to consult with the Plaintiff as co-trustee and the Estate’s other co-trustee, Mr Kimber, thereby preventing the trustees from properly assessing and dealing with the potential claims that were threatened by Susan; and

(b) By participating in discussions with Susan and/or her legal advisers prior to the mediation against the interests of the Plaintiff as beneficiary under the Will; and

(c) By chairing the mediation without the prior knowledge of, or without prior consultation with, the Plaintiff; and

(d) When chairing the mediation, proposing a settlement that:

(i) Did not take into account the Plaintiff’s position in any potential Law Reform (Testamentary Promises) Act Claim; and

(ii) Was inconsistent with the clear entitlement to the

Plaintiff under the Will Trusts; and

(iii) Purported to commit the Executors to a position that provided a disproportionate benefit to Susan at the expense of the Plaintiff; and

(iv) Appears to be in contradiction to the advice he received as Trustee on 16 February 2005 as particularised in paragraph 2.10 above.

6.3 As a result of the breaches of fiduciary duty pleaded in the previous paragraph, the First Defendant has caused the Plaintiff loss.

Particulars

(a) Legal fees incurred post-mediation including all fees incurred in respect of the summary judgment proceeding, in respect of the purported settlement negotiations seeking to settle the summary judgment proceeding, and in seeking advice generally in order to extricate the Plaintiff from the disputes arising from the unsatisfactory conduct and outcome of the mediation and filing of proceedings to set aside the Settlement Agreement;

(b) Damages for the significant and ongoing stress caused by the legal proceedings resulting from the unsatisfactory conduct in the mediation of the First Defendant.

[42] In support of this cause of action Mr Nolan relied on Liggett v Kensington:11

Generally it is appropriate to look for circumstances in which one person has undertaken to act in the interests of another or conversely one has communicated an expectation that another will act to protect or promote his or her interests. There are elements of reliance, confidence or trust between them often arising out of an imbalance in strength or vulnerability in relation to the exercise of rights, powers or the use of information affecting their interests.

[43] Mr Nolan submitted that Mr Straubel was acting as solicitor for the estate, was aware of the claims by Mrs Pickering’s daughter both under the Family Protection Act 1955 and Law Reform (Testamentary Promises) Act 1949, and had an obligation to Mrs Pickering, his co-trustee, who was also the principal beneficiary under the will, to advise her and protect her interests. Rather than doing this, Mr Nolan said, he took a role advocating a settlement with Mrs Pickering’s daughter which not only substantially took away Mrs Pickering’s entitlement under the will of her late mother but also affected her right to use the half interest in a property at Cashmere which she already owned (this being the subject of the settlement agreement).

[44] The following further facts, however, are relevant to whether a fiduciary duty was owed in the circumstances. First, Mrs Pickering engaged her own solicitor and attended the mediation with him and was therefore able to take advice from him at any time. Secondly, I find on the affidavit evidence before me that Mr Straubel was

not present throughout the mediation, rather attending for only part of it. He was there to assist with information about the estate as he was the estate’s solicitor. Whilst there is conflicting evidence about whether he took over the role of chairing the mediation, even if he did, there is no evidence that the mediator was not present undertaking his role. Thirdly, Mr Straubel’s client was the estate, and he was there as its solicitor.

[45] In submissions Ms Cowan for the first defendant referred to Brownie Wills v Shrimpton,12 where the Court of Appeal found that a solicitor had not assumed any responsibility to a director for whom he did not act, and that the director could not expect that the solicitor would look after his interests without giving an indication of such expectations. She submitted, and I accept, that the same applies here.

[46] I find that in the circumstances outlined Mr Straubel did not have a fiduciary duty to Mrs Pickering. He did not assume responsibility to Mrs Pickering, nor could she expect that he would look after her interests when that was the role of her own solicitor and Mr Straubel’s duty was to the estate. To say he also had a fiduciary duty to a co-trustee who was separately represented and had interests quite different from those of the estate is untenable.

[47] Secondly, and in case I should be wrong in that view, even if Mr Straubel did act as particularised in paragraph 6.2 of the amended statement of claim, as I accept for present purposes, in my view that conduct does not amount to a breach of any fiduciary duty he may have owed to Mrs Pickering. The actions that are said to have taken place related to litigation which was proceeding to a mediation. The estate was not a party, and one trustee was not present, so it was not going to be bound by what occurred. The purpose of a mediation is to promote and discuss in an orderly and constructive way possible settlement of existing litigation. This necessarily and properly involves proposing various ways in which settlement might be achieved, and given that mediation is an accepted process for achieving compromise of entrenched positions it is inevitable that proposals put forward by those participating, be they the parties, the mediator or others present with their consent, as Mr Straubel was, will differ from mere statements of the legal position. Thus all the conduct

pleaded in sub-paragraphs (b), (c) and (d) amount to Mr Straubel doing no more than preparing to assist with, and participating in, the mediation in an active way, and nothing in the steps enumerated can be seen as outside the ambit of active debate at a mediation. The conduct pleaded in paragraph (a) is vague. The litigation was between Mrs Pickering and her daughter, Susan. If Mrs Pickering is intending to allege failure to act properly as a trustee, that is a quite different cause of action and is not able to be inferred from the pleading in question.

[48] For these reasons the first cause action against Mr Straubel is struck out.

First defendant: strike out of second cause of action (negligence)

[49] The second cause of action pleaded against Mr Straubel is in these terms:


7. Second Cause of Action against First Defendant – Negligence


The Plaintiff repeats the foregoing and further says:

7.1 The First Defendant owed the Plaintiff a duty of care at all times discharges obligations as Executor/Trustee under Dorothy’s Will to the standard of a reasonable and competent professional trustee in the position of the First Defendant.

7.2 The First Defendant in particular owed the duties as pleaded at paragraph 6.1 above.

7.3 The First Defendant breached his duties as pleaded at paragraph

6.2 above.

7.4 As a result of the breaches of duty pleaded in the previous paragraph, the First Defendant has caused the Plaintiff loss as pleaded at pargraph 6.3 above.

[50] Counsel for the first defendant relied on r 15.1 of the High Court Rules:

15.1 Dismissing or staying all or part of proceeding

(1) The court may strike out all or part of a pleading if it –

(a) discloses no reasonably arguable cause of action, defence, or case appropriate to the nature of the pleading; or

(b) is likely to cause prejudice or delay; or

(c) is frivolous or vexatious; or


(d) is otherwise an abuse of the process of the court.

(2) If the court strikes out a statement of claim or a counterclaim under subclause (1), it may by the same or a subsequent order dismiss the proceeding or the counterclaim.

(3) Instead of striking out all or part of a pleading under subclause (1), the court may stay all or part of the proceeding on such conditions as are considered just.

(4) This rule does not affect the court’s inherent jurisdiction.

[51] In preparation for the mediation, Mr Sharp forwarded to the parties a standard form of mediation agreement which he uses in his practice. Mrs Pickering attended the mediation with her solicitor, Mr Crerar. He was present throughout. Mrs Pickering’s daughter and her solicitor were also present throughout. The mediation agreement was signed at the commencement of the mediation. The parties are recorded as Mrs Pickering and her daughter. The estate of Mrs Pickering’s mother was not a party to the mediation. With the consent of the parties and the mediator Mr Straubel attended for part of the mediation, accompanied by another solicitor from his firm, Mrs Robertson, when issues relating to estate assets were under discussion. So far as can be estimated from information given by Mr Straubel, they were present for between two and three hours overall, though Mr Straubel says in his affidavit that he sat in on the mediation itself at different stages as required, and was not therefore present throughout a period of that duration. The mediation itself lasted from around 9.30 am until late afternoon/early evening.

[52] Although in certain circumstances a solicitor can owe a duty of care to a person who is not his or her client,13 this is seldom the case. Where that person is represented by her own solicitor in respect of the matter in question, and has not made it known to the solicitor that any degree of reliance is to be placed on his advice, as here, no duty of care is owed. This is the position in this case. Counsel for the plaintiff did not refer me to any authority supporting the assumption of a duty

of care by Mr Straubel to Mrs Pickering in the circumstances alleged.

[53] Even if a duty of care was imposed, and breached, a further determining fact is that Mrs Pickering made a decision to enter an agreement at the conclusion of the

mediation, with her solicitor present for advice. This is the agreement which she

13 Gartside v Sheffield, Young & Ellis [1983] NZCA 37; [1983] NZLR 37 (CA), White v Jones [1995] 2 AC 207.

now maintains she should not have entered. The loss she says she has suffered was caused by her decision to enter the agreement, not by any of the conduct of Mr Straubel of which she complains.

[54] The second cause of action against Mr Straubel cannot succeed. It is struck out.

Application for summary judgment by the second defendant

[55] It is necessary to deal with this only briefly. The onus is on Mr Sharp to satisfy the Court that the cause of action against him, which is in contract, cannot succeed. Given the findings I have made in relation to limitation, it is plainly the position that summary judgment must be entered for him.

[56] However, in case I am wrong in that conclusion, I will briefly deal with the other grounds advanced by counsel.

[57] The clear wording of the contract between the plaintiff and the defendant is that the defendant will use his best endeavours to resolve the dispute by undertaking certain fairly broadly phrased steps. The same obligation is imposed upon each party to the mediation. Where Mrs Pickering expresses the view that Mr Sharp’s obligation was not to use best endeavours, as submitted by her counsel, but to go further than this, that submission cannot be sustained.

[58] I accept the submission of counsel for Mr Sharp that the parties’ duties are described in the agreement in a way which allows for the mediation to be conducted as the parties may decide, during the course of the mediation. I agree with counsel that flexibility of approach and conduct of a mediation is a feature of the process which is frequently undertaken. An instructive passage on this is in the judgment of

Harrison J in Haines v Carter:14

[Mr Haines] assumes that the mediator’s role is something that has existence outside the Agreement between the parties. That is not so. The mediator has the powers and will undertake the process to which the parties agree. In this sense every mediation is different. There is no overarching concept of “the

14 Haines v Carter HC Auckland CIV-2003-404-4570, 25 May 2006 at [31].

mediation process”. It is open for the parties to agree that mediators can receive and disseminate confidential information or alternatively receive and retrain confidential information. It is for the parties to determine the process to which they agree and resolve any disputes. [Mr Judd] is correct when he says that when a mediator is acting as a mediator there is little room for fiduciary obligations. Mediation is simply the agreed process and the analysis which assumes that mediation exists outside of the parties’ agreement is wrong. The entire process in which Mr Lendrum was engaged was the mediation process agreed by these parties.

[59] Whilst the reference in this passage to fiduciary obligations has no direct relevance to the present claim in contract, the learned Judge’s description of a mediation is apt in this case, and the more so when the parties are represented by their own solicitors who can advise them at any time in relation to the process as it unfolds.

[60] Clauses 4 and 5 of the mediation agreement required the mediator to be neutral and impartial and not to give legal or other professional advice, impose an outcome on any party or make any decision for any party. Clause 6 allowed the mediator to meet with the parties jointly and/or separately as he may determine. The restrictions on the mediator’s conduct in cl 5, and the statement of the standards of professionalism required of him by cl 4, are necessary to ensure that the role of the mediator will be even-handedly undertaken between the parties to the mediation. Within those parameters, cl 6 enables him to move between the parties separately, if the particular dynamics of the mediation lead him to consider that that is the best way, at that point, to carry out the duties which he has under the agreement. These clauses must be seen, however, in the context of the description of a mediation by Harrison J. There is no set process. All the matters of which Mrs Pickering now complains were matters which could have been raised by her, had she wished to do so, when the mediation was underway. There is no evidence she or her solicitor did so.

[61] It is also relevant that at the end of the mediation she did in fact reach agreement with her daughter and conclude an agreement on the issues which had been referred to mediation. She did so voluntarily, and under independent advice. Mr Sharp has satisfied me that the claim for breach of the mediation agreement

cannot succeed. For this alternative reason, therefore, I enter judgment for the second defendant.

Outcome

[62] The first cause of action against the first defendant is struck out as it does not disclose a reasonably arguable cause of action, pursuant to r 15.1 of the High Court Rules 2008.

[63] The second cause of action against the first defendant is struck out as it is time-barred by the provisions of s 4(1) of the Limitation Act 1950.

[64] The cause of action against the second defendant is struck out as it is time- barred under s 4(1) of the Limitation Act 1950.

[65] Summary judgment is entered for the second defendant against the plaintiff in respect of the cause of action against the second defendant, pursuant to r 12.2 of the High Court Rules.

[66] Each of the defendants is entitled to costs on a 2B basis on the application each made to strike out the claim, plus disbursements. The second defendant is entitled to costs on his application for summary judgment, on a 2B basis, plus disbursements. There is not to be any duplication of assessment. If costs cannot be

agreed, memoranda may be filed within 15 working days.

J G Matthews

Associate Judge

Solicitors:

Anthony J Nolan, PO Box 1268, Hamilton. Email: ajntrust@xtra.co.nz

Michael E Parker, PO Box 1052, Queenstown. Email: maree.cowan@michaelparker.co.nz m@michaelparker.co.nz

Robertsons, PO Box 2068, Shortland St, Auckland. Email: htwomey@robertsonslaw.co.nz


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