CULVERDEN RETIREMENT VILLAGE LIMITED V MCLUCKIE HC AK CIV 2007-404-000750

CULVERDEN RETIREMENT VILLAGE LIMITED V MCLUCKIE HC AK CIV 2007-404-000750 26 September 2007IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY CIV 2007-404-000750UNDER the District Courts Act 1947 BETWEEN CULVERDEN RETIREMENT VILLAGE LIMITED Appellant AND JOYCE LESLIE MCLUCKIE Respondent Hearing: 24 September 2007 Appearances: A G Rowe and M Brugeyroux for Appellant E Telle and D Dufty for Respondent Judgment: 26 September 2007 at 10:00 a.m.JUDGMENT OF WOODHOUSE J7KLVMXGJPHQWZDVGHOLYHUHGE\PHRQ6HSWHPEHUDWDPSXUVXDQWWR5XOH  RI WKH+LJK&RXUW5XOHV 5HJLVWUDU'HSXW\5HJLVWUDU 'DWH«««««Solicitors: Wells & Co, Auckland McVeagh Fleming, Onehunga[1] This is an appeal from a decision of Judge Roderick Joyce QC dated 18 January 2007. In a reserved judgment on an interlocutory application by the appellant (Culverden), the learned Judge refused an order for inspection of documents for which privilege was claimed by the defendant (Mrs McLuckie). [2] The documents in question were, or related to, communications between the respondent's son, Paul McLuckie (Mr McLuckie), and solicitors, Holmden Horrocks, who took steps on behalf of Mrs McLuckie on instructions from Mr McLuckie. Mr McLuckie says he had his mother's authority to give instructions to Holmden Horrocks on her behalf in respect of the matters at issue. [3] The principal contention for Culverden before Judge Joyce was that Mr McLuckie was not Mrs McLuckie's agent in his dealings with Holmden Horrocks and therefore the communications attracted no privilege. [4] There was a further argument relating to the validity of an enduring power of attorney granted by Mrs McLuckie to Mr McLuckie and his sister on 17 June 2002. This was part way through the period during which the communications took place – 19 April to 4 July 2002.Background facts[5] In 1992 Mrs McLuckie sold her home and bought a unit in a retirement village owned by Culverden. Holmden Horrocks, on instructions from Mr McLuckie, acted for Mrs McLuckie on the sale of her home and the purchase of the unit at the village. Mrs McLuckie was then aged 76. [6] In November 1997 Mrs McLuckie received from Culverden a proposed deed involving variations to the arrangements with Culverden in respect of the unit. Again Holmden Horrocks acted for Mrs McLuckie on instructions from Mr McLuckie through to execution of the deed by Mrs McLuckie in June 1998. Onthis occasion there were also some direct communications from Mr McLuckie to Culverden's solicitors, Wells and Co. [7] In early 2002 Mrs McLuckie had an accident which affected her mobility. Mr McLuckie and his sister, Mrs Whitehead, say that a decision was then made, following discussions with their mother, that her unit at Culverden should be sold. A unit owner was entitled to give notice to Culverden of the unit owner's wish to sell her unit. Culverden had an option to buy the unit if the option was exercised within 30 days of receipt of the notice. This led to the communications between Mr McLuckie and Holmden Horrocks in respect of which privilege was claimed. On 19 June 2002 Mr McLuckie contacted Holmden Horrocks who sent a notice to Culverden on the same day. Culverden claims it did not receive the notice and that it subsequently and validly exercised its option to buy the unit. In September 2002 Culverden issued proceedings seeking specific performance. [8] In the District Court the parties agreed that the Judge should inspect the documents in question. He said:[7] Essentially they comprise communications between Mr McLuckie and the defendant's then solicitors, Holmden Horrocks, concerning the issues in contention as regards whether or not the plaintiff has pre-emptive rights. [8] In some cases draft communications have been submitted by the solicitors to Mr McLuckie for consideration. In others advice has been given and comment pertinent to the rights of the parties made. [9] What is plain from the material is that the course and content of it demonstrates that, in de facto terms anyway, Mr McLuckie was walking in his mother's shoes as defendant and obtaining legal advice and assistance accordingly. And that brings me to the plaintiff's arguments.Was Mr McLuckie Mrs McLuckie's authorised representative?[9] This question was argued in the District Court, and before me, by reference to the common law on agency. The point at issue is now governed by ss 53-67 of the Evidence Act 2006 dealing with privilege. Section 51(4) provides:A reference in this subpart to a communication made or received by a person or an act carried out by a person includes a reference to a communicationmade or received or an act carried out by an authorised representative of that person on that person's behalf.[10] Whether there is a difference between an agent at common law and an authorised representative does not require determination on the facts of this case. [11] On the question whether Mr McLuckie was Mrs McLuckie's authorised representative the learned Judge said this:[11] It was claimed that the defendant never gave her son authority to instruct her solicitor on her behalf. Consequently there was no valid agency created between the defendant and her son. Accordingly the communications between the solicitors and the son could not be protected by privilege. [12] It can be accepted (leaving aside later to be mentioned attorney appointment issues) that there was no formal agency relationship created between the defendant and her son. [13] What is clear, however, is that he had managed her affairs over a number of years and, as a solicitor with knowledge on the subject confirms, the son was concerned about protecting her position and acting in her best interests. [14] This view was also supported by Mrs Whitehead's affidavit at para 8: I was often present when my mother and Paul (McLuckie) were discussing her affairs. She never disagreed with him about anything to do with the management of her affairs. From the point in time at which my mother decided to purchase a unit at the Village, my mother asked Paul to take care of her affairs in particular where they involved lawyers on her behalf. My mother completely relied on Paul to do that for her, had total faith in his ability to manage her affairs and totally trusted him. Paul always acted in my mother's best interests.[15] It is apparent (particularly from the sister's affidavit) that the defendant had expected her son to be her representative/agent in respect of dealings with her lawyer. [16] And, as an observation which might well be said simply to reflect the self-evident, what has occurred in this particular case as regards the son managing his mother's affairs is surely no different from what commonly occurs in other close and supportive families, as this one seems clearly to be. [17] In my view the focus should be on the probable intent of the purported principal. Did the defendant intend that her son be her representative/agent to seek, and when seeking, advice from her solicitors? The evidence appears clearly to indicate so.[12] The evidence before the Judge was in a number of affidavits on which there was no cross-examination. This has some bearing on the extent to which his decision may be subject to review on appeal. However, I have no doubt that the learned Judge was correct in his conclusion that Mr McLuckie was authorised by his mother to deal with Holmden Horrocks on her behalf in respect of the matters in question. [13] Other and unchallenged evidence reinforces the conclusion of the Judge. There is evidence from Mr McLuckie and from Mr Bruno Gin, the responsible partner at Holmden Horrocks, of the manner in which the transactions in 1992 and 1998 were dealt with. The essence of this is that all necessary communications with Holmden Horrocks (initial instructions through to completion) were from or with Mr McLuckie. Mrs McLuckie's authority to her son was confirmed by her execution of documents prepared on the direct instructions of her son. The circumstances relating to the transaction from 19 April 2002, as described by Mr Gin as well as Mr McLuckie, are the same. [14] I note that there is no evidence from Mrs McLuckie because, by the time these matters came before the Court, in 2006, Mrs McLuckie was aged 90 and not able to give evidence because of infirmity. The delay between issue of the proceedings by Culverden in 2002 and the interlocutory argument on inspection of documents which did not happen until December 2006, arose from inaction by Culverden as plaintiff. On an earlier interlocutory application Culverden was given leave to continue with its claim. [15] It was argued for Culverden that in the 1992 and 1998 transactions Mr McLuckie was not her agent for the purposes of solicitor/client communications with Holmden Horrocks. Somewhat surprisingly, this argument was advanced in the face of correspondence in late 1997 and early 1998 directly between Mr McLuckie and Culverden's solicitor in which the solicitors implicitly recognise that Mr McLuckie was representing his mother. The essence of this argument was that, because the conveyancing documents in 1992 and the deed of modification in 1998 were executed by Mrs McLuckie herself, and not by Mr McLuckie, he could not be an agent. Whether this might have relevance in determining whether a person is anagent in some cases, in my judgment it has none in this case. Indeed, it lends weight to the evidence of Mr McLuckie and his sister, Mrs Whitehead, that their mother appointed Mr McLuckie her agent because her execution of the documents confirms her authority for her son to act on her behalf. [16] It was also argued for Culverden that even if Mr McLuckie was his mother's authorised representative for the transactions in 1992 and 1998 that was not the case in 2002. This was based on a single sentence in a lengthy affidavit of Mr McLuckie. This affidavit was not dealing with the privilege issue and whether he had authority from his mother. It was an affidavit in opposition to the application brought by Culverden in 2006 for leave to take further steps in the proceedings and for associated directions as to representation of Mrs McLuckie and as to the future conduct of the proceeding. In this affidavit Mr McLuckie referred to his mother's hospitalisation in January 2002 and the discussion he and his sister had with their mother as to whether she should return to Culverden. Mr McLuckie then said:Accordingly I discussed the issue with my mother of notifying Culverden of my mother's intention to dispose of the unit and she agreed to do so. (Affidavit sworn 26 July 2006, para 41.1)[17] It was submitted for Culverden that this meant that Mrs McLuckie on this occasion told her son that she would instruct the lawyers and otherwise handle all relevant matters herself. I do not agree. This sentence standing alone in my opinion means only that Mrs McLuckie agreed that notice should be given to Culverden. In the light of all the other evidence, including from Mrs Whitehead and Mr Gin, what this also meant is that this would be handled in the same way as all other legal affairs had been handled – through Mr McLuckie. Also, there is a later affidavit of Mr McLuckie's in which he was dealing directly with the privilege argument. In this he said (before the present argument for Culverden was raised):In or about early 2002 my mother had an accident which seriously affected her mobility. It soon became clear that she had to move out of the village. So as with all my mother's legal dealings with Culverden my mother asked me to make all necessary legal arrangements for her to leave the village. She was basically immobile at the time and completely relied on my sister and I to make all necessary arrangements for her. I therefore once again instructed Holmden Horrocks as I had always done in the past to put Culverden on notice pursuant to the deed that my mother had vacated her unit.(Affidavit sworn 5 December 2006, para 11)[18] Mr Rowe for Culverden argued that two passages from that part of the judgment set out above [para 11] indicate that the Judge misdirected himself. The first was His Honour's statement that "It can be accepted ... that there was no formal agency" (para [12] of the judgment). Second is the statement "In my view the focus should be on the probable intent of the purported principle" (para [17]). In my opinion neither of these passages, when read in the context of the entire judgment, indicate that the Judge was in error. [19] I was referred to numbers of authorities on aspects of the law of agency. It is unnecessary to refer to these. The question here is a straightforward one of fact – did Mrs McLuckie give her son authority to act on her behalf in dealing with Holmden Horrocks? [20] Mr Rowe also referred to Wheeler v Le Marchant (1881) 17 Ch D 675 and C- C Bottlers Limited v Lion Nathan Limited [1993] 2 NZLR 445. I respectfully agree with the essential points to be drawn from those cases, on the present issue, with the summary by Judge Joyce as follows:[19] In Wheeler Cotton LJ observed at 681 that communications between the representatives of a client and his legal advisers were privileged provided the representative was employed as an agent on the part of the client to obtain the legal advice of the solicitor. [20] However, he continued, communications were not protected by privilege in the situation where the representative was employed on behalf of the client to do certain work, but that work was not communicating with the solicitors to obtain legal advice.The argument for Culverden was that this case comes within the second situation, but that is clearly not so on the evidence.Was the "agency" revoked by subsequent incapacity?[21] The appellant argued that, if Mr McLuckie did initially have authority from his mother to deal on her behalf with Holmden Horrocks in 2002, the authority came to an end through subsequent mental incapacity.[22] In this regard Mr Rowe accepted that the onus was on his client to establish that on some date Mrs McLuckie had become mentally incapacitated to an extent which would have resulted in revocation of the authority as a matter of law. It is not clear whether this point was argued in the District Court. I am satisfied that the appellant has not met the onus on it. The reasons are conveniently dealt with under the next heading.Validity of enduring power of attorney[23] By deed dated 17 June 2002 Mrs McLuckie granted an enduring power of attorney to Mr McLuckie and Mrs Whitehead. The appellant contends that the power of attorney is ineffective because Mrs McLuckie lacked the mental capacity to understand what she was doing. The learned Judge said he was satisfied, on the evidence available to him, that Mrs McLuckie knew what she was doing when she signed the document. [24] In the light of the learned Judge's findings on the primary issue of agency, with which I agree, and my finding that the agency was not revoked, the question as to whether or not there was a valid power of attorney cannot alter the result on the interlocutory application upholding the claim to privilege. However, as the matter was dealt with in the District Court judgment and argued before me I will deal with the question. [25] The contention that Mrs McLuckie did not have the requisite mental capacity to understand what she was doing when she executed the power of attorney was, of course, the contention of Culverden, the opponent of Mrs McLuckie in the proceeding as opposed, for example, to a personal representative. Culverden produced no medical evidence going to the question of mental capacity. In that regard I note that the appellant applied to this Court on 11 September 2007 for leave to adduce medical evidence as to Mrs McLuckie's capacity from early February 2002 until 17 April 2002. This was an application made two weeks before the scheduled date of this appeal, nine months after the hearing in the District Court, five years after the proceedings were issued and well over five years after the date of the events in question. The question was fully argued before Andrews J on 18September. On the question as to whether the evidence, being medical notes, was cogent and material on the appeal, Her Honour held:[24] I cannot conclude that the records would enable a Judge on appeal to make any conclusion as to capacity. That would require, in my view, an analysis by someone suitably qualified in that respect.[26] For the same reason Her Honour held that the evidence sought to be adduced would not have led to a different result had it been before the District Court Judge. [27] As to the evidence before him, the District Court Judge said:[44] In the present case there was no such [medical] examination. Nor was there, or is there, any evidence by medical expert witnesses from either side as to the defendant's mental capacity in June 2002. [45] Nevertheless Mr Naran, the proprietor and manager of the rest home where the defendant by then resided, has testified in his affidavit at para 8 that he strongly believed that when the defendant executed the power she understood exactly what she was signing, and why she was signing it. [46] He went on to say (at para 9) that, having looked after elderly people with dementia and mental illnesses for 16 years, he believed his assessment of the defendant was an accurate one. [47] Obviously, of course, his self-assessment (which is what the latter statement amounts to) is irrelevant, but there is no reason to doubt that which is conveyed by what he has said of his experience, namely, that he would be distinctly better versed than most people – in fact perhaps quite singularly so – in making an "educated," albeit lay, assessment. [48] Indeed his was in my view (having regard to all the affidavits) the best (for present purposes) evidence on that topic. Although Mr Naran is not (makes no claims to be) a medical expert I find, for those purposes, his evidence to be compelling. The opposing evidence for the plaintiff has not proved relevantly destructive either of that or of the evidence of the son and daughter. [49] The evidence with which I am impressed, being that just now identified, favours the conclusion (for – I reiterate - the present purpose) that the defendant knew what she was doing when she signed. And that she signed is consistent with the claim that her son was "in her shoes" for the matters that matter here. [50] On the other hand, and taken as a whole, the affidavit evidence for the plaintiff (including that filed after the hearing with my leave) has left me with the picture of a litigant working too hard altogether to make its case. I have been left with the sense that the end advantage it seeks has caused it to, as it were, over-egg the omelette.[28] In my judgment His Honour was justified in coming to the conclusion he did.[29] The principal evidence pointed to by the appellant in support of the argument that Mrs McLuckie lacked capacity on 17 June 2007, is a paragraph in a letter dated 21 June 2002 from her solicitors, Holmden Horrocks, to Culverden's solicitors, Wells and Co. The Holmden Horrocks letter was replying to a letter from Wells and Co of 18 June 2002. In the 18 June letter Wells and Co stated, amongst other things, that the day before Culverden had served a notice of exercise of option on Mrs McLuckie. In the 21 June letter in reply Holmden Horrocks took issue with a number of matters, protested at the lodging of a caveat by Culverden against title to Mrs McLuckie's unit at Culverden and said, in the final paragraph:Lastly, you and your client are requested to direct all correspondence, contacts etc to the writer. We are instructed that our client suffers from dementia and it is totally inappropriate for your client to be visiting her and, we are instructed, having her sign documents. Any such signature, as you will appreciate, is inappropriate and not binding.There was no argument from Mr McLuckie and his sister that their mother, even before this date, was not displaying early signs of dementia. Although the District Court Judge does not refer to the statement in the Holmden Horrocks' letter of 21 June 2002, in my judgment he was entitled to regard it as a statement similar to the direct evidence he had from Mr McLuckie and Mrs Whitehead that their mother was displaying only early stages of dementia. This, in the light of all of their evidence, and with this evidence then weighed with that from Mr Naran, meant that at least on the balance of probabilities that there was not evidence that Mrs McLuckie's power of attorney was invalid through lack of mental capacity. [30] In the light of this evidence as to Mrs McLuckie's mental capacity when she signed the power of attorney the appellant did not satisfy the onus on it of establishing that the authority granted by Mrs McLuckie to her son to look after her legal affairs had come to an end. [31] Moreover, any question that might arise as to Mrs McLuckie's mental capacity from and after 17 June 2002, has no relevance on the question of privilege claimed for documents from that date in the light of a concession by Mr Rowe for Culverden in the course of his submissions; that is that from 17 June 2002 the documents would be protected by litigation privilege.Conclusion[32] The appeal is dismissed. [33] The respondent is entitled to costs on a 2B basis. __________________________ Woodhouse J