SHARMA v FOSTER-BOHM [2023] NZCA 509

SHARMA v FOSTER-BOHM [2023] NZCA 509 [20 October 2023]IN THE COURT OF APPEAL OF NEW ZEALANDI TE KŌTI PĪRA O AOTEAROACA210/2023[2023] NZCA 509BETWEEN ANJELA SHARMAApplicantAND GAIL FOSTER-BOHM and ANDREWCORBINRespondentsCourt: Miller and Mallon JJCounsel: L A Andersen KC for AppellantJ Moss for RespondentsJudgment:(On the papers)20 October 2023 at 2.30 pmJUDGMENT OF THE COURTA The application for leave to appeal is declined.B The applicant must pay the respondents' costs for a standard application ona band A basis, together with usual disbursements.____________________________________________________________________REASONS OF THE COURT(Given by Mallon J)Introduction[1] Gail Foster-Bohm and Andrew Corbin were employees of IHC New ZealandInc (IHC). Their employment was terminated as part of a restructuring. They engagedAnjela Sharma, a lawyer, to assist them in a making a claim for unjustifiable dismissal.By the time Ms Sharma raised their personal grievances, IHC was able to resist themas having been made outside the 90-day statutory timeframe for doing so.1[2] Ms Foster-Bohm and Mr Corbin brought a claim against Ms Sharma allegingnegligence, breach of contract and breach of fiduciary duty. They were successful inthe District Court and Ms Sharma was ordered to pay damages of $37,500plus interest.2 Ms Sharma's appeal to the High Court was dismissed.3 An applicationfor leave to appeal to this Court was also declined by the High Court.4 Ms Sharmanow seeks leave from this Court to bring a second appeal.5Test for leave[3] The well-established test for leave to bring a second appeal to this Court is asfollows:6[4] The proposed appeal must raise some question of law or factcapable of bona fide and serious argument, in a case involving some interest,public or private, of sufficient importance to outweigh the cost and delay ofthe further appeal. On a second appeal this Court is not engaged in the generalcorrection of error. Its primary function is to clarify the law and to determinewhether it has been properly construed and applied by the Court below. It isnot every alleged error of law that is of such importance, either generally orto the parties, as to justify further pursuit of litigation which has already beentwice considered and ruled upon by a court.BackgroundDistrict Court[4] In the District Court, the evidence was that Ms Foster-Bohm and Mr Corbinwere initially given four weeks' notice that their employment was terminated by aletter dated 4 August 2015. At a meeting with IHC on 4 August 2015 they agreed theywould be paid in lieu of notice. On 5 August 2015 Mr Corbin advised Ms Sharma byemail that they had been allowed "to take our notice period (four weeks) in lieu with1 Employment Relations Act 2000, ss 103(a) and 114.2 Foster-Bohm v Sharma [2021] NZDC 20189 [District Court judgment] at [135].3 Sharma v Foster-Bohm [2022] NZHC 2871, (2022) 19 NZELR 376 [High Court judgment].4 Sharma v Foster-Bohm [2023] NZHC 552.5 Senior Courts Act 2016, s 60.6 Butch Pet Foods Ltd v Mac Motors Ltd [2018] NZCA 276, (2018) 24 PRNZ 500 citing Cuff vBroadlands Finance Ltd [1987] 2 NZLR 343 (CA) at 346–347; and Waller v Hider [1998] 1 NZLR412 (CA) at 413 (footnotes omitted).our last day being this Friday".7 They asked when their claim for unjustifiabledismissal should be made.8[5] Ms Foster-Bohm and Mr Corbin received a further letter dated 6 August 2015advising that their employment was terminated with payment in lieu of notice and theywould finish on Friday 7 August 2015.9 Mr Corbin attempted to send this letter toMs Sharma but was unsuccessful because his work email, unbeknownst to him, hadbeen disestablished by then.10 On 10 August 2015, Mr Corbin emailed Ms Sharma toask about next steps. The email commenced by stating "[l]ast Friday was our last dayat IHC and we are now looking at our next step for making a claim of unjustifieddismissal by way of redundancy".11[6] Mr Corbin and Ms Foster-Bohm met with Ms Sharma on 23 October 2015 toorganise next steps.12 This date was arranged to meet Ms Sharma's schedule.13 Theirevidence was that they reiterated to Ms Sharma at this meeting that their employmentended on 7 August 2015 and asked about the 90-day period to make their claim.14They said that Ms Sharma was unsure and so they asked her to err on the side ofcaution.15 On 10 November 2015 they provided documents to Ms Sharma. Thisincluded the 6 August 2015 letter. Ms Sharma disputed receiving the letter or said itwas not drawn to her attention.16 However, Judge Farish preferred the evidence ofMr Corbin and Ms Foster-Bohm.17[7] Ms Sharma raised the personal grievances with IHC on 25 November 2015.18IHC objected on the basis that it was raised outside the 90-day period that ran from7 August 2015.19 In January 2016 Ms Sharma was made aware of this problem.20 On7 District Court judgment, above n 2, at [101(c)]. The District Court judgment says the email wassent on 5 December but this appears to be a typographical error.8 At [101(c)].9 At [97].10 At [21].11 At [101].12 At [22].13 At [22].14 At [22].15 At [22].16 At [16] and [55].17 At [98].18 At [4].19 At [5].20 At [102].6 October 2016 the Employment Relations Authority determined that a claim forunjustifiable dismissal was not actionable as it was outside the 90-day period.21Matters were referred to mediation but no agreement was reached because IHCmaintained the claim was out of time.[8] Having received no compensation from IHC, Mr Corbin and Ms Foster-Bohmbrought a claim for negligence, breach of contract and breach of a fiduciary dutyagainst Ms Sharma. The District Court held that Ms Sharma owed a duty of care toact competently and in a timely way under her retainer and in negligence.22[9] The Judge found the duty was breached because Ms Sharma had beenspecifically told that Mr Corbin and Ms Foster-Bohm had agreed to be paid in lieu ofnotice.23 She claimed to have accepted what Mr Corbin had told her about when the90-day period would start,24 but it was her obligation to investigate the issue.25 Thelegal position was well known,26 but if Ms Sharma remained uncertain, then she oughtto have assumed that it started from their final day of employment and lodged theclaim on that basis.27 These were basic research and risk management steps to beexpected of a competent lawyer.28[10] Further, the Judge found that, once it became apparent that the claim had beenraised outside the 90-day period, Ms Sharma ought to have applied for an extensionof time to raise the claim on the basis that the mistake was hers rather than her clients.29The Judge considered it was distinctly possible that an extension would have beengranted as there were many examples of extensions being granted in analogoussituations.30 The Judge considered that failing to pursue this obvious remedy wasnegligent.31 Moreover, the Judge considered that Ms Sharma ought to have advised21 Corbin v IHC New Zealand Inc [2016] NZERA Christchurch 181.22 District Court judgment, above n 2, at [103]. The District Court Judge referred to "the terms ofthe retainer and the duty to take reasonable care". In context, the Judge was referring to a duty ofcare owed in contract and in negligence.23 At [104]–[116].24 At [105].25 At [108].26 At [109].27 At [110].28 At [110].29 At [111].30 At [111]–[112].31 At [113].Mr Corbin and Ms Foster-Bohm that they might have a claim against her and to seekindependent advice. Had she done so, the Judge considered it was likely thatMr Corbin and Ms Foster-Bohm would have been advised to apply for an extensionto make their claim out of time.32[11] The Judge then assessed what Mr Corbin and Ms Foster-Bohm had lost fromMs Sharma's negligence on the basis of the likely settlement they would have receivedfrom IHC if she had not breached her duties.33 In making this assessment, the Judgerelied on expert evidence from Mr Zindel. He was the lawyer who acted for Mr Corbinand Ms Foster-Bohm in the mediation that was unsuccessful because IHC was able torely on the claim being made too late.34 He gave evidence as to the settlement rangehe would have recommended to IHC if he had been acting for it in a mediation whereIHC could not rely on the claim being made too late.35 The Judge tested that evidenceagainst case law.36 The Judge also considered the apparent strengths of the claim andIHC's likely attitude to it.37 This led her to conclude that they had a 75 per cent chanceof recovering their full claim of $50,000, that is a total sum of $35,000 (a sum withthe range that Mr Zindel provided in his evidence).38 The Judge divided this betweenMr Corbin ($20,000) and Ms Foster-Bohm ($17,500) based on their respective lengthsof employment.39[12] Lastly, the Judge considered Ms Sharma's claim for legal fees charged prior toMr Corbin and Ms Foster-Bohm cancelling the contract of retainer on 12 May 2017.40The Judge determined that the work Ms Sharma carried out for them was substantiallywasted because it was carried out negligently.41 The Judge therefore determined thatthey were not required to pay for that work.4232 At [113].33 At [117]–[130].34 Referred to above at [7].35 District Court judgment, above n 2, at [123].36 At [124]–[126].37 At [127]–[128].38 At [129].39 At [130].40 At [134].41 At [133].42 At [134].High Court[13] It was argued for Ms Sharma on appeal that the claim for unjustified dismissalwas not in fact statute-barred because the 90-day period commenced at the end of thefour-week period they would have been required to work if they had not been paidin lieu. Palmer J rejected this, noting it had not been pleaded, but in any case theargument failed on its merits.43 The cases relied on upon by Ms Sharma did notsupport the point on the facts of the case.44[14] It was also argued for Ms Sharma that the Judge was wrong to acceptMr Zindel's evidence. This was because it was said that he was not sufficientlyindependent to give expert evidence when he had acted for Ms Foster-Bohm andMr Corbin in the mediation and appeared to have some involvement in the decision tosue Ms Sharma. Palmer J rejected this argument.45 He noted that Mr Zindel wasplainly an expert.46 Mr Zindel's prior involvement in the case, which had beendisclosed to the Court, was relevant to the weight Judge Farish might give to it, butwas not disqualifying.47 Palmer J was not satisfied that Judge Farish was wrong in herapproach to this evidence.48[15] It was also argued that a letter written by the former Chief Judge of theEmployment Court should have been admitted as evidence once it was admitted forthe purposes of cross examination. This was rejected by Palmer J and is not one ofthe grounds for a second appeal so we discuss it no further.49[16] It was next argued that Ms Sharma was not negligent based on the informationshe knew. Palmer J considered Judge Farish was correct to find negligence.50 On theinformation Ms Sharma accepted she had received, she ought to have taken thestraightforward step of making the claim within 90 days of 7 August 2015.51 Further,43 High Court judgment, above n 3, at [16].44 At [18].45 At [20]–[24].46 At [24].47 At [24].48 At [24].49 At [25]–[27].50 At [28]–[31].51 At [30].Palmer J agreed with Judge Farish that Ms Sharma ought to have advisedMs Foster-Bohm and Mr Corbin to seek independent legal advice and, if she had doneso, they would likely have been advised to apply for an extension.52[17] It was next argued that Ms Foster-Bohm and Mr Corbin did not suffer any lossbecause their claim for unjustifiable dismissal (which was out of time) did not addanything to the claim for unjustifiable disadvantage (which was not out of time).Palmer J rejected this claim because Ms Sharma offered no evidence as to the damagesthat might have been available on such a claim.53[18] Lastly, it was argued that Ms Sharma was entitled to be paid for her workbecause the contract was not cancelled. Further, even if it was cancelled, Judge Farishwas wrong to find that Ms Sharma was not entitled to payment for her work up to thepoint of the cancellation. Palmer J rejected this argument.54 He agreed withJudge Farish that Mr Corbin and Ms Foster-Bohm had made their intentions clear thatthe contract was at an end.55 He considered that s 42 of the Contract and CommercialLaw Act 2017 (the CCL Act) did not assist Ms Sharma.56 He considered it was opento the Judge under ss 43 and 45 of the CCL Act to decline to order Mr Corbin andMs Foster-Bohm to pay for the negligently performed work.57Assessment[19] Ms Sharma seeks to raise the same arguments that were raised and rejected inthe High Court, if granted leave for a second appeal, except she does not pursue thepoint about the letter written by the former Chief Judge. She says: the Judge waswrong that her pleading accepted the personal grievance claim was lodged out of time;Ms Sharma was correct that the claim was not out of time; there was no proper basisfor the finding that she was negligent; Mr Zindel could not be an expert because hewas not impartial having acted as an advocate for Ms Foster-Bohm and Mr Corbin;Ms Foster-Bohm and Mr Corbin did not prove that could not have recovered the same52 At [31].53 At [32]–[34].54 At [35]–[39].55 At [37].56 At [39].57 At [39].sum from a claim for unjustified disadvantage; and Ms Sharma's right to payment hadaccrued and was not abrogated by s 42(1) of the CCL Act.[20] Ms Sharma says that leave is justified because of the serious consequences toher of being held to be negligent. She also says that there is a public interest in anauthoritative decision on: the date of termination when an employee does not work thenotice period; whether a person who acts as an advocate may be an expert witness forthat party; and whether s 42(1) of the CCL Act prevents a lawyer from recovering feesfor work done prior to cancellation of the contract.[21] As to Ms Sharma's breach of duty, we are satisfied that leave should not begranted. The pleading point is of no moment if it is not seriously arguable thatMs Sharma acted with reasonable care and we consider it is not. Quite apart fromwhether it is seriously arguable that the 90-day period had not elapsed when thepersonal grievance claims were made, the lack of reasonable care was the reason whyMr Corbin and Ms Foster-Bohm were unsuccessful in achieving a settlement withIHC. Faced with IHC's reliance on the expiration of the 90-day period, a reasonablycompetent lawyer would have applied for an extension of time on the basis that it washer error that caused the claim to be out of time, or advised Mr Corbin andMs Foster-Bohm to instruct another lawyer to make that application on their behalf.In that event, Mr Corbin and Ms Foster-Bohm would likely have been able to continuewith their claim.[22] As to loss, we are also satisfied that leave should not be granted. It is notseriously arguable that the District Court Judge assessed loss in a manner that was notopen to her. Mr Zindel's evidence was cross-checked against cases and the Judge'sown assessment of the strength of Mr Corbin and Ms Foster-Bohm's claim forunjustifiable dismissal.58 Ms Sharma did not adduce admissible evidence that a claimfor unjustifiable disadvantage would have resulted in a successful settlement of thesame quantum and we are satisfied that Ms Sharma's claim for her legal fees for workperformed negligently was properly denied.58 District Court judgment, above n 2, at [121]–[129].Result[23] The application for leave to appeal is declined.[24] The applicant must pay the respondents' costs for a standard application on aband A basis, together with usual disbursements.Solicitors:Anjela Sharma, Nelson for ApplicantPatient & Williams, Christchurch for Respondents