THOMPSON v TURNER HOPKINS [2018] NZCA 197

THOMPSON v TURNER HOPKINS [2018] NZCA 197 [18 June 2018]IN THE COURT OF APPEAL OF NEW ZEALANDI TE KŌTI PĪRA O AOTEAROACA204/2017[2018] NZCA 197BETWEEN IAN ALLEN THOMPSONAppellantAND TURNER HOPKINSRespondentHearing: 20 February 2018 (further submissions received 5 March 2018)Court: Asher, Clifford and Williams JJCounsel: W A McCartney for AppellantS A Grant for RespondentJudgment: 18 June 2018 at 11 amJUDGMENT OF THE COURTA The appeal is allowed.B The summary judgment in favour of the respondent is set aside.C There is no order as to costs.____________________________________________________________________REASONS OF THE COURT(Given by Asher J)Table of ContentsPara NoIntroductionKey factsThe pleaded cause of action — breach of statutory dutyThe tort of breach of statutory dutyCertificates under the ActThe terms of the sectionSanctions and compensation provisions in the ActTo whom are ss 164 and 164A directed?ConclusionMr Thompson's further claimShould this Court consider the proposed new cause ofaction?The negligence claimFurther defences in support of summary judgmentDid the Building Contract clearly allow DDC to register themortgages?Can Turner Hopkins be liable?Did Mr Thompson cause his own loss?ConclusionGeneral conclusionResultCosts[1][2][14][14][17][26][30][35][41][43][45][49][59][61][67][68][69][70][72][73]Introduction[1] Sections 164 and 164A of the Land Transfer Act 1952 (the Act) set out theprocess of certification of instruments that are being registered. At issue in this appealis whether those sections create a statutory duty: that is, does the giving of a falsecertificate found a private law, strict liability, cause of action. The law firm that gavethe allegedly false certificate is the respondent, Turner Hopkins, who acted for acontractor repairing a leaky townhouse block in Auckland. The appellant and plaintiffin the proceedings is Ian Thompson, who was the owner of two townhouses and amember of the block's Body Corporate. Associate Judge Doogue grantedTurner Hopkins' defendant summary judgment application, thereby bringingMr Thompson's claim against Turner Hopkins for breach of statutory duty to an end.1Importantly, as will become apparent later in this judgment, during the appealMr Thompson proposed a further cause of action against Turner Hopkins based onnegligence.1 Thompson v DD Construction Ltd [2017] NZHC 516.Key facts[2] The claim against Turner Hopkins was one of a number of causes of actionbrought against multiple defendants by Mr Thompson arising from repairs carried outto an eight-unit townhouse block in Grey Lynn. Mr Thompson was the owner of twoof the unit titles. They proved to be leaky. DD Construction Ltd (DDC) wascontracted by the Body Corporate to carry out the remedial work on a time andmaterials basis. As the work progressed there were disputes between theBody Corporate and Mr Thompson on the one side, and DDC on the other.The Body Corporate and Mr Thompson issued proceedings against DDC and the soledirector of DDC, Darryl Montgomery, alleging misleading and deceptive conduct bythem in relation to the cost of the repairs. In essence, they say they incurred lossesbecause the remedial work ended up costing more than DCC had said it would.They also claimed against Turner Hopkins.[3] Turner Hopkins acted for DDC in dealings with the Body Corporate andMr Thompson. Clause 19.5 of the Building Contract between the Body Corporate andDDC (the Building Contract) provided:19.5 In consideration of the Builder entering into this Contract the Ownerirrevocably grants to and agrees to execute in favour of the Builder:a) A registrable all obligations mortgage (Memorandum ofMortgage RGL 2011/4200, or the most current AucklandDistrict Law Society all obligations Memorandum, which isregistered at the various land registries of Land InformationNew Zealand) over all of the Owner's estate and interest inthe Property (the "Mortgage") to secure payment of theBuilder's invoices and any other sums payable to the Builderpursuant to this Contract; andb) An unconditional irrevocable power of attorney in favour ofthe Builder to execute the Mortgage on the Owner's behalf,whether or not the Builder has made demand on the Owner todo so.[4] When the remedial work ran both over time and over budget,individual owners ended up paying DDC's invoices when due. Mr Thompsonultimately refused to pay the last four invoices issued by DDC, which had a combinedvalue of $20,014.62. On 13 April 2015 Mr Thompson's solicitors wrote to TurnerHopkins raising concerns about the cost of the work. On 24 April 2015, relying oncl 19.5 one of the partners of Turner Hopkins, Mr Stirling, registered a mortgageagainst each of Mr Thompson's unit titles to secure the unpaid amount.[5] Crucially in relation to the claim against Turner Hopkins, on the documentsregistered with the Land Registry Office, Mr Stirling certified in accordance with theform prescribed2 that he had authority from both DCC and the mortgagor,Mr Thompson, to register the mortgages.[6] Mr Thompson's statement of claim asserts that neither Mr Stirling nor anyoneelse had his authority to lodge the mortgage instruments and Mr Stirling's certificationwas false because:(a) The Building Contract was between DDC and the Body Corporate, notbetween DDC and Mr Thompson.(b) The Body Corporate had agreed in the Building Contract to execute amortgage over property that was not either of Mr Thompson'sunit titles.(c) The Body Corporate had no authority to agree to mortgageMr Thompson's units.(d) The Body Corporate had not executed a mortgage over the propertydescribed in the Building Contract, or any other property.(e) The Body Corporate had agreed to execute a power of attorney infavour of DDC to execute a mortgage on the Body Corporate's behalf,but the Body Corporate had not executed any such power of attorney.(f) Mr Thompson never agreed that his properties could be mortgaged byDDC.2 Land Transfer Regulations 2002, reg 12.(g) There is no memorandum in writing, signed by Mr Thompson thatwould satisfy s 25 of the Property Law Act 2007.[7] The actual cause of action against Turner Hopkins was concisely expressed.We set it out in full:58. Sixth cause of action: [Mr Thompson] against [Turner Hopkins]— breach of statutory duty59. Stirling's certification that he held [Mr Thompson's] authority toregister the mortgages was false and a breach of his statutoryobligation to give a correct certification pursuant to s 164A LandTransfer Act 1952.60. The third defendant, Turner Hopkins, is liable for Stirling's acts andomissions.61. As a result of the breach of statutory duty the [Mr Thompson] hassuffered the losses set out in paragraph 55 hereof.62. Wherefore [Mr Thompson] claims against [Turner Hopkins]:(a) Judgment for $22,595.07(b) Costs(c) Interest[8] Where a defendant applies for summary judgment, a defendant has to showthat the plaintiff cannot succeed. Most of Associate Judge Doogue's judgment wasconcerned with the causes of action against DDC and Mr Montgomery. He declinedtheir defendant applications for summary judgment.[9] He dealt with the claim of breach of statutory duty against Turner Hopkins inshort fashion. He relied on the case of X (Minors) v Bedfordshire County Council,quoting the principles set out by Lord Browne-Wilkinson.3 He concluded:[53] The certificate is provided to the registrar. It is intended to provideassurance to the registrar that there is a proper cause for lodging the instrumentwhich will, on acceptance by the registrar, affect the legal title of which theregister is the defining document. The certificate is at least implicitly providedonly to the registrar. There is no requirement that any other person, such asthe proprietor of the title affected, receive a copy of the certificate. This wouldindicate in my view that the procedure of giving such certificates is not3 X (Minors) v Bedfordshire County Council [1995] 2 AC 633 (HL) at 731.designed to provide information or reassurance to many other parties, again,such as the proprietor of the title.[10] He considered, therefore, that the proposed cause of action againstTurner Hopkins was not viable or arguable and ordered that judgment be entered forthe firm. He did not go on to consider whether it was arguable on the facts thatMr Stirling had authority to lodge the mortgage.[11] Mr McCartney for Mr Thompson submitted that it was clear that theBuilding Contract did not authorise DDC to register the mortgages, and was not aproper basis for Mr Stirling's certificate. Ms Grant for Turner Hopkins contested this,and sought to support the judgment on the further grounds that, on the facts,Mr Stirling had proper authority to certify, and other matters that we refer to later.[12] The initial issue to be determined in this appeal is whetherAssociate Judge Doogue was right to conclude that the certification requirements ins 164A of the Act do not create a statutory duty, that is the giving of a false certificatedoes not found a private law cause of action. Mr McCartney argued that an intentionto create a such a duty can be gathered from the provisions and structure of the Act.The requirements of the cause of action of breach of statutory duty were clearly madeout, and the Judge's assessment that such a claim could not succeed was incorrect.Ms Grant argued to the contrary that there was nothing in the Act to suggest thatParliament intended to create a duty actionable in private law. Any duty under s 164Awas owed to the Registrar-General of Land (the Registrar) only, and a cause of actionbased on breach of statutory duty could not succeed.[13] We note at the outset that in respect of the cause of action in question there isno allegation of negligence or fraud. This is a claim based on what has been calledbreach of statutory duty simpliciter.44 At 731.The pleaded cause of action — breach of statutory dutyThe tort of breach of statutory duty[14] In early times in England a breach of any statutory provision could give rise toa claim for damages. All the plaintiff had to prove was loss consequent upon thebreach. If that were the position today, following the proliferation of closelyprescriptive statutes, the common law would have a different shape. A turning pointwas reached, and in the leading 1877 decision of Atkinson v Newcastle and GatesheadWaterworks Co, it was held that an action for damages does not automatically lie fora breach of every statute.5 Instead the courts will examine whether a statutoryintention can be discerned in the relevant provision to confer a civil right of action forits breach. It is a matter of construction of the section in its statutory context.Without such a discernible intention a breach of statutory duty does not by itself giverise to any private law cause of action.6 The House of Lords put it this way inCutler v Wandsworth Stadium Ltd:7The only rule which in all circumstances is valid is that the answer mustdepend on a consideration of the whole Act and the circumstances, includingthe pre-existing law, in which it was enacted.[15] Therefore the Court must consider the provisions of the Act, applying the usualpurposive interpretation.8 Was it the intention of Parliament that there should be aprivate law remedy for a breach of ss 164 and 164A? The difficulty with this is, asLord Diplock put it in Boyle v Kodak Ltd: "The statutes say nothing about civilremedies for breaches of their provisions. The judgments of the courts say all."9[16] While some sections will indeed provide for civil remedies, that is not the usualsituation. Most statutory provisions that place an obligation on a person to dosomething, here to give a correct certificate, say nothing about the private lawconsequences of breach. A court will not lightly assume a legislative intention to5 Atkinson v Newcastle and Gateshead Waterworks Co (1877) 2 Ex D 441 (CA).6 See the discussion in Stephen Todd "Breach of Statutory Duty" in Stephen Todd (ed) The Law ofTorts in New Zealand (7th ed, Thomson Reuters, Wellington, 2016) 451 at 453–456.7 Cutler v Wandsworth Stadium Ltd [1949] AC 398 (HL) at 407 per Lord Simonds.8 Gorringe v Calderdale Metropolitan Borough Council [2004] UKHL 15, [2004] 1 WLR 1057 at1059.9 Boyle v Kodak Ltd [1969] 1 WLR 661 (HL) at 672.create a right to sue for damages for a breach of the statute in the absence of wordsthat are clearly of that effect. It is, after all, very easy for the legislature to spell outthe consequences of a breach, and indeed as we will set out, this is done in relation tothe duty to certify.Certificates under the Act[17] When a Torrens system of registration of title was created in New Zealand bythe Land Transfer Act 1870 it became the state's obligation to guarantee title throughthe register. It was necessary for the Registrar, who was responsible for the registerof titles, to have the benefit of a reliable and prescribed system for the presentation ofdocuments for registration. As part of that process, s 112 of theLand Transfer Act 1870 provided that all instruments dealing with land must beentered with a certificate signed by the applicant that the instrument was correct forthe purposes of that Act. Prior to 2002, that certificate was simply to state: "Certifiedcorrect for the purposes of the Land Transfer Act 1952".10[18] In relation to the purpose of this and later permutations of this section, thestatement in the text by E C Adams, The Land Transfer Act 1952, has been quoted inNew Zealand cases:11The certificate of correctness probably is a guarantee that the Registrar mayaccept an instrument at its face value, ie, that the person signing the certificateis aware of the antecedent circumstances which culminated in the executionof the instrument The Registrar only sees what actually appears in theinstrument, hence it seemed necessary to have the dealing vouched for.In other words, the Registrar places a trust in the solicitor or broker, and whena person certifies an instrument, only reasonably close contact with the factswhich culminate in the execution of that instrument would appear to dischargethat trust [19] The successor to the original s 112 is now s 164 of the 1952 Act, whichprovides:10 Land Transfer Regulations 1966, sch 3.11 EC Adams The Land Transfer Act 1952 (2nd ed, Butterworths, Wellington, 1971) at 382. See forexample Registrar-General of Land v Marsh [1995] 2 NZLR 189 (HC) at 200; and Burmeister vO'Brien [2010] 2 NZLR 395 (HC) at [209].164 Correctness of instrument to be certified(1) No Registrar shall receive any application for bringing land under thisAct, or any instrument purporting to deal with or affect any estate orinterest under the provisions hereof, unless there is endorsed thereona certificate that the same is correct for the purposes of this Act, signedby the applicant or party claiming under or in respect of theinstrument, or by a practitioner employed by that applicant or party:provided that where any instrument has not been certified as correctunder the foregoing provisions of this subsection any other personwho is a party to the instrument or claims any interest thereunder orin respect thereof or his legal personal representative may apply to theHigh Court for authority to certify that the instrument is correct forthe purposes of this Act, and the court may order accordingly if it issatisfied that it is just and expedient that the authority be granted; and,upon production of a sealed copy of the order, the Registrar mayregister the instrument if it is certified as correct for the purposes ofthis Act by the person so authorised.(2) A corporation may authorise any person to certify on its behalf.(3) Every person who falsely or negligently certifies to the correctness ofany such application or other instrument commits an offence, and isliable on conviction before a District Court Judge to a fine notexceeding $100.[20] It is clear in the context of the Torrens system, and the importance of theregister, that the purpose of the certificate was and is to assure the Registrar that theinstrument is bona fide and genuine and ought to be registered.12[21] Provision was made for the electronic automation of the land titles system inNew Zealand in the Land Transfer (Automation) Amendment Act 1998. This waslargely re-enacted by the Land Transfer (Computer Registers andElectronic Lodgement) Amendment Act 2002 (the Amendment Act).Electronic instruments generally replace paper instruments. Electronic instrumentsare no longer executed by the party, such as a transferor or mortgagor, granting therelevant interest in land. Rather such instruments are created in what are described inthe Amendment Act as "electronic workspace facilities", from where they areelectronically lodged for registration. Section 164A was inserted into the Act, by theAmendment Act, to provide for certification under the new electronic regime:12 At 382.164A Certification(1) Every instrument to which this subsection applies must contain acertification that complies with subsection (3).(2) Subsection (1) applies to—(a) electronic instruments; and(b) paper instruments of a class specified for the purpose byregulations made under this Act.(3) Certifications must specify that—(a) the person giving the certification has authority to act for theparty specified in regulations in relation to that class ofinstrument and that party has legal capacity to give suchauthority;[13] and(b) the person giving the certification has taken reasonable stepsto confirm the identity of the person who gave the authorityto act; and(c) the instrument complies with any statutory requirementsspecified by the Registrar for that class of instrument; and(d) the person giving the certification has evidence showing thetruth of the certifications in paragraphs (a) to (c) and that theevidence will be retained for the period prescribed for thepurpose by regulations made under this Act.(4) Regulations made under this Act may prescribe the form ofcertifications under this section.(Emphasis and footnote added.)[22] When an instrument is certified in accordance with the Act, that instrumentthen has the same effect as a deed executed by the relevant party or parties.14Further, the instrument must be regarded for the purposes of every enactment and ruleof law as if it had been made in writing and duly executed by the relevant parties.15Any person who gives a certification must retain evidence showing the truth of thecertification for 10 years from the date on which the instruments to which thecertification relates is lodged for registration.16 Given that it is the Registrar who hasthe obligation to maintain the register under s 33 of the Act, it could be expected that13 For mortgages, see Land Transfer Regulations 2002, reg 11.14 Land Transfer Act 1952, s 164E(1).15 Section 164E(3).16 Section 164C(3) and (4). See also Land Transfer Regulations 2002, reg 14.such a system be set up to ensure that the Registrar gets accurate information that canbe relied upon, and in respect of which there are consequences should it prove to beinaccurate.[23] It can be seen that with the move to electronic registration, the provisions forregistration became more prescribed, with an explicit requirement to certify authorityto act for the party specified. It is required that there be confirmation of the identityand legal capacity of that party, compliance with the statutory requirements for thatclass of instrument and evidence of the truth of the certifications. Section 164A doestherefore require a more detailed certificate than that which was required under the1870 Act. The form of certification is set out in reg 12 of the Land TransferRegulations 2002.[24] When registering the mortgages against Mr Thompson's unit titles, Mr Stirlingfiled a certificate following the prescribed form which contained the followingstatements:Mortgagor CertificationsI certify that I have the authority to act for the Mortgagor and that the partyhas the legal capacity to authorise me to lodge this instrument.I certify that I have the authority to act for the Mortgagee and that the partyhas the legal capacity to authorise me to lodge this instrument.I certify that I have taken reasonable steps to confirm the identity of the personwho gave me authority to lodge this instrument.I certify that any statutory provisions specified by the Registrar for this classof instrument have been complied with or do not apply.I certify that I hold evidence showing the truth of the certifications I havegiven and will retain that evidence for the prescribed period.[25] We turn to consider whether the giving of such a certificate can, if it isinaccurate, give rise to a private law claim for breach of statutory duty.The terms of the section[26] In the original 1870 Act at s 112 there was a statement that any person whofalsely or negligently certified to the correctness of an application or other instrumentwould incur a penalty not exceeding 50 pounds. It was then stated:Provided always that such penalty shall not prevent the person who may havesustained any damage or loss in consequence of error or mistake in any suchcertified instrument or any duplicate thereof from recovering damages againstthe person who shall have certified the same.[27] A proviso to that effect continued in the Land Transfer Act 1915. However theproviso was dropped from the Act in 1952. It was stated in the explanatory note tos 164(3):17In clause 164(3) the existing provisions of section 175(3) of the LandTransfer Act 1915 preserving the civil remedies of persons affected by a falseor negligent certificate as to the correctness of an instrument have beenomitted, as being already covered by section 355 of the Crimes Act 1908.[28] Thus the proviso that preserved civil remedies was deliberately omitted.Section 355 of the Crimes Act 1908, which is referred to, created no civil liability initself, but simply preserved civil remedies when the act or omission also amounted toa criminal offence. This indicates that the intention of the proviso had not been tocreate any new liability, but rather to preserve existing remedies.[29] Given that the proviso and s 355 created no remedy themselves, but ratherpreserved existing civil remedies when there was also an offence, it is a matter then ofgoing back to the words of ss 164 and 164A and the purpose of the Act to decidewhether a private law duty exists.Sanctions and compensation provisions in the Act[30] Section 164(3) states that every person who falsely or negligently certifies tothe correctness of any such application or other instrument commits an offence, and isliable on conviction before a District Court Judge to a fine not exceeding $100. Thereis also provision at s 225(1)(d) for imprisonment for a term not exceeding three years17 Land Transfer Bill 1953 (89-1) (explanatory note) at i.or a fine not exceeding $1,000 where a person knowingly or recklessly gives acertificate under s 164A that contains an incorrect particular, and up to four years'imprisonment under s 226(h) for a person who gives a fraudulent certificate unders 164A.[31] Where a statute does not expressly provide for any penalty or remedy forbreach, there is a greater likelihood that it may be intended that there be a civildamages remedy. In Morton v Eltham Borough it was held that where there was a bareduty to supply and continue to supply gas, and no provision for enforcement, adamages action was available.18 Conversely if the statute sets out penalties andremedies, as the Act does, this is some indication that no damages action is intended.19The existence of specific provisions dealing with the consequences of a breach tendsto point away from the availability of a private law action, as the legislature has turnedits mind to the consequences of breach, and set out penalties, but has not created acivil remedy.20[32] In addition to provision for penalties there are compensation provisions inss 172–181 of the Act. Under s 172(a), a claim may be brought by Mr Thompsonagainst the Registrar for his loss or damage arising from a mistake by the Registrar.Arguably, the registration of an instrument lacking authority is still a mistake by theRegistrar notwithstanding that the mistake is induced by an incorrect certification thatthe Registrar was entitled to rely on under the Act. Section 172(b) also allows forclaims for compensation by anyone who is deprived of an interest in the land as aresult of a mistake in registration and who is barred from bringing an action forpossession or other action for the recovery of that land by the Act. The claims areagainst the Crown, not against practitioners who certify. Further s 175 enables theCrown to recover the amount of compensation paid to persons who have suffered lossas a result of fraudulent behaviour or misrepresentations from the party responsiblefor that behaviour. There is an express provision in s 175(1A) for the Crown to recovercompensation from practitioners where their negligence has caused loss.18 Morton v Eltham Borough [1961] NZLR 1 (SC) at 4–5. See also Harris v LombardNew Zealand Ltd [1974] 2 NZLR 161 (SC) at 168–171.19 X (Minors) v Bedfordshire County Council, above n 3, at 731.20 Select 2000 Ltd v ENZA Ltd [2002] 2 NZLR 367 (CA) at [55].[33] This express regime for penalties and compensation, and recovery ofcompensation paid by the Crown from wrongdoers, is inconsistent withMr McCartney's submission that Parliament intended to, in addition to this regime,create a strict liability private law right of action against persons who file erroneouscertificates. The inclusion of the criminal sanctions and the provisions forcompensation indicate that the Act is self-contained in relation to the consequences ofincorrect certification, and a no-fault civil remedy should not be added to the remediesavailable.[34] Under s 243(1) neither the Registrar nor any delegate of the Registrar ispersonally liable for any act done or omitted in the performance of a duty underthe Act. Mr McCartney relied on this provision as indicating a duty, as Parliament hasexpressly delineated who is immune from private law claims and has not includedpersons who provide certification. In our view, Parliament has done no more thanprovide protection for employees and office holders under the Act.To whom are ss 164 and 164A directed?[35] As we have set out, the purpose of a certificate is to assure the Registrar thatthe instrument being registered is bona fide and genuine. It is seen as a guarantee thatthe Registrar can accept an instrument at its face value. The Registrar is entitled toassume that the person signing the certificate is aware of the circumstances which haveled to the execution of the instrument.[36] The Registrar places trust in the certifying practitioner that everything is inorder. This can be seen from the words in s 164A(3)(c), which requires certificationthat the instrument complies with any statutory requirements specified by theRegistrar, and the Registrar's right in s 164B to revoke a person's right to give acertification under s 164A at any time in the event of fraud, certification that ismaterially incorrect or where there has been a failure to comply with any requirementunder s 164B(2)(c). The Registrar also has the right under s 164B(4) to reinstate aperson's right to give certifications. It is the Registrar who may specify requirementsthat must be met to satisfy the evidence retention obligation and who may require aperson who has given a certification to produce evidence or provide a statement.21 Inthe form of certification in reg 12 of the Land Transfer Regulations there is a referenceto the statutory provisions "specified by the Registrar" in respect of Māori land.[37] The general tenor of the words of s 164A of the Act indicates a certificate isgiven to the Registrar to provide an assurance to the Registrar that the instrument isgenuine and compliant with the requirements of the Act. There is no requirement thatany other person, such as the registered proprietor, receive a copy of the certificate.This suggests that ss 164 and 164A are directed at protecting the Registrar, not thirdparties such as Mr Thompson.[38] All these factors indicate that the procedure of giving certificates is notdesigned to provide information or reassurance to the public at large or indeed anysection of the public, but is designed to give reassurance to the Registrar.[39] We also accept Ms Grant's submission that it is difficult to ascertain how asolicitor's duty to proprietors in relation to certification should be defined, if it exists.If it is strict liability, an honest but reasonable mistake would give rise to a claim aspleaded. There is nothing to indicate that Parliament intend such severe consequencesfor an innocent error. The Torrens system as created does not achieve protection forregistered proprietors by enacting sanctions so that lawyers and conveyancers arestrictly liable to registered proprietors for errors. It achieves protection for registeredproprietors by creating the best system possible to assist the Registrar in maintainingan accurate register.[40] It must also be asked, who can bring a claim for a failure to provide an accuratecertification? Is it any member of the public? Does it have to be by a party to thetransaction? What about the holder of an equitable interest that has not beenregistered, and who loses priority as a consequence of the registration? Thisuncertainty points away from Parliament intending that innocent conduct should beactionable by all those who are affected by erroneous registrations.21 Land Transfer Act, s 164C(2).Conclusion[41] Lawyers have a professional duty when they certify to have reasonable groundsto believe the matter certified is correct, and to take appropriate steps to ensure theaccuracy of that which is certified.22 But in the context of the Act the goal of theseobligations is the protection of the register, not parties to the transaction such asMr Thompson. There is no indication of a legislative intention that there be a causeof action available to third parties if there is a breach. Sanctions are provided for underthe penalty provisions of the Act.[42] Thus, ultimately for the same reason concisely summarised byAssociate Judge Doogue, we agree that the cause of action based on breach ofstatutory duty is certain to fail against Turner Hopkins.Mr Thompson's further claim[43] In the course of his oral submissions Mr McCartney submitted as a furtherargument that there is also an available claim in negligence against Turner Hopkins.He argued that the entry of summary judgment would, through the doctrine of issueestoppel, prevent such a claim from being made, thus doing an injustice.[44] We gave Mr Thompson leave to file a further submission on this proposed newcause of action, and a draft amended statement of claim showing the new cause ofaction, which he has done. Ms Grant opposed the introduction of a new proposedpleading. She has filed submissions in reply.Should this Court consider the proposed new cause of action?[45] We must now assess whether the proposed new cause of action should beconsidered on this appeal. We are mindful of the fact that a negligence cause of actionwas not before Associate Judge Doogue, and indeed not before this Court until thelatter stages of the hearing of the appeal. However, last-minute applications to amendin the context of both strike-out applications and summary judgment applications arenot uncommon. The pre-emptory nature of the summary judgment process and the22 Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules 2008, rr 2.5 and 2.6.severe consequences of judgment terminating a claim prompt the courts to be generousin such matters.[46] Thus in Westpac Banking Corp v M M Kembla New Zealand Ltd it was notedthat courts do not strike out pleadings where a defect can be cured by amendmentwhich the party is willing to make.23 It was said:24Similarly, the residual discretion of the Court under [r 12.2 of the High CourtRules 2016] to refuse summary judgment would be properly invoked to avoidthe oppression which would otherwise result if an application by a defendantfor summary judgment would preempt a plaintiff exercising the right to amendthe pleadings in terms of [r 7.77]. Indeed, use of the discretion to enableamendment is arguably more necessary in the interests of justice in the caseof summary judgment than in the case of strike-out because summaryjudgment results in issue estoppel.[47] It is hard on a defendant seeking summary judgment to have to face a very lateaddition to pleadings, involving as it does a new basis for claim. However when aparty to proceeding chooses a truncated process such as strike-out or summaryjudgment it places the opposing party in a situation where it does not have the usualtime and opportunity to develop a case as it would if the case went to trial.The prospect of amendment, even a very late amendment, must always be a possibledevelopment that can arise as a consequence of the chosen truncated process. If anamendment is required to allow the other party to better formulate its claim or defenceit will generally be allowed. To prevent parties in the lead up to trial from airing allissues, or to require it to start again, runs against the just, speedy and inexpensiveresolution of disputes.25 Delay and cost to the party seeking to strike out a summaryjudgment can be reflected to some extent by costs orders, but in the end if a partychoses the shortened procedure, it must endure all the consequences.[48] We conclude that it is open to us to allow the appeal with the effect thatsummary judgment is refused, on the ground that an amendment to the statement ofclaim which is now proposed might raise a cause of action that could possibly succeed.We go on to consider the question of whether the new negligence pleading couldsucceed.23 Westpac Banking Corp v M M Kembla New Zealand Ltd [2001] 2 NZLR 298 (CA).24 At [66].25 High Court Rules 2016, r 1.2.The negligence claim[49] The key paragraph in the new pleading asserts that by reason of giving thecertification on behalf of the mortgagor Mr Thompson, and by operation ofs 164A(3)(a) of the Act and regs 11 and 12 of the Land Transfer Regulations,Mr Stirling was in fact acting for Mr Thompson when certifying and accordingly oweda duty of care to ensure that he did not register mortgages on the titles withoutMr Thompson's authority.[50] In assessing whether Turner Hopkins through Mr Stirling owed a duty of careto Mr Thompson, it must be recognised immediately that Mr Thompson was not theclient of Mr Stirling or Turner Hopkins. Turner Hopkins' client was DDC and DDC'sinterests were entirely opposed to those of Mr Thompson. Mr Thompson was on theother side of the transaction, and when he refused to pay DDC's invoices, was on theother side of the dispute. As Ms Grant submitted, DDC's interest was in gettingmortgages registered on Mr Thompson's properties as quickly as possible.[51] The fact that Turner Hopkins was on the other side of the transaction and wasnot acting for Mr Thompson does not mean that it is impossible for the firm to oweMr Thompson a duty of care. In certain cases it has been held that there is a duty owedby a solicitor to someone other than the solicitor's own client, who is on the other sideof the transaction or proceeding. An example is the case of Allied Finance andInvestments Ltd v Haddow & Co.26 There, a solicitor acting for the buyer of a yachtcertified to a lender advancing moneys on the security of the yacht that the securityinstrument was fully binding on the buyer. This Court held that the solicitor'scertificate was an exercise of professional expertise.27 A certificate had been given onwhich reliance by the other party was to be contemplated. The proximity of therelationship was sufficiently close for a duty of care to arise.[52] In Gartside v Sheffield, Young & Ellis a solicitor had accepted instructions toprepare a will for a client, and was held to owe a duty to exercise reasonable care inrespect of a beneficiary under the proposed will to carry out the instructions with due26 Allied Finance and Investments Ltd v Haddow & Co [1983] NZLR 22 (CA).27 At 25.diligence and present the will for execution within a reasonable time.28 In Connell vOdlum it was held that it was arguable that a duty was owed by a wife's solicitor to ahusband in certifying an agreement under the Matrimonial Property Act 1976.29 Inthese cases a concept can be discerned that when a solicitor assumes responsibility toperform a professional service for another in addition to the solicitor's own client, thatrelationship can be sufficient to give rise to a duty on the part of the person providingthe services to the non-client party. The professional advisor must exercise skill andcare.30 It may not be necessary for the plaintiffs to show reliance.31[53] However there have been cases to the contrary, holding that a solicitor owedno duty to persons who are not the solicitor's client.32 In the end the issue of whethera duty of care arises is intensively fact-specific.33 Elias CJ inCouch v Attorney-General stated that, where a novel duty of care was alleged,"[p]articular care is required in areas where the law is confused or developing." 34[54] In our view, this is a case where such particular care must be applied. Therehas been some recent alteration to the statutory regime following the advent ofelectronic registration. The original version of what is now s 164 did not set outmatters that had to be specified in the certification, save that the instrument was correctfor the purposes of the Act and signed by the applicant or party claiming under or inrespect of the instrument. As we have set out, s 164A covers a wider range of specifictopics. Mr McCartney, in support of his argument that there may be a duty of care,submitted that the new electronic regime was intended to be significantly moreonerous on practitioners than that pre-2002. He submitted that a solicitor must betaken to be aware of the duty being assumed when certification takes place, and that itextends to all the parties for whom he or she purports to certify.28 Gartside v Sheffield, Young & Ellis [1983] NZLR 37 (CA) at 43.29 Connell v Odlum [1993] 2 NZLR 257 (CA) at 271–272.30 Henderson v Merrett Syndicates Ltd [1995] 2 AC 145 (HL); and White v Jones [1995] 2 AC 207(HL).31 White v Jones, above n 30, at 221–222.32 Brownie Wills v Shrimpton [1998] 2 NZLR 320 (CA); and Burmeister v O'Brien, above n 11.33 In Burmeister v O'Brien, above n 11, which was a solicitor certificate case, the Court held that noduty of care was owed by the solicitor who signed the certificate to the non-client owner of theland. There was a full hearing, and a close analysis of the relationship. The certification in thatcase was in 2001 when the pre-electronic regime applied.34 Couch v Attorney-General [2008] NZSC 45, [2008] 3 NZLR 725 at [33].[55] He relies on an article, Australasian Torrens Automation, Its Integrity, and theThree Proof Requirements.35 The authors argue that the new certification process is farmore prescriptive than before, and a far greater responsibility is placed on solicitors inthe certification process to make up for the lesser active policing by registry staff. Thisis now a necessary incident of electronic registration. The article emphasises that theRegistrar relies on certification and indemnification by the practitioner that the dealingis appropriate for registration.36[56] On the other hand Ms Grant points out that in 2010 the Law Commission in itsreport, A New Land Transfer Act, stated:37A solicitor lodging a document for electronic registration does not assume agreater role than under the old paper system and is not acting as an agent ofthe Registrar.[57] The ambit of the solicitor's role and any change to that since 2002 is not amatter that is suited to a summary decision. We have found that the purpose of thecertification process is the protection of the register, not third parties. However, whilethat may work against a finding of proximity in the context of a duty of care, that issuecan only be authoritatively determined in the context of a full hearing, where therelevant facts are traversed, and the lawyer's role is considered in its full factualcontext. A determination might involve expert evidence.38 We go no further than toobserve that the existence of a duty of care is arguable.[58] We conclude therefore that the new cause of action in negligence, unlike thestatutory duty cause of action, is not certain to fail. Therefore, Turner Hopkins shouldnot get summary judgment.Further defence in support of summary judgment[59] Leave was granted to Turner Hopkins to support the judgment on othergrounds. These were:35 Rod Thomas, Rouhshi Low and Lynden Griggs "Australasian Torrens Automation, Its Integrity,and the Three Proof Requirements" [2013] 2 NZ L Rev 227.36 At 241.37 Law Commission A New Land Transfer Act (NZLC R116, 2010) at [4.6].38 Expert evidence was called in Burmeister v O'Brien, above n 11.(a) the Building Contract allowed registration of the mortgages as carriedout by DDC and Mr Stirling, so it is not arguable that he did not haveauthority;(b) the statutory provisions relating to certifications of authority to registerdocuments bind solicitors and not firms, so Turner Hopkins cannot beliable; and(c) it was Mr Thompson's actions in not paying the contractual amounts inaccordance with the contractual process that gave rise to theregistration of the mortgages, so that any losses do not flow fromTurner Hopkin's acts or omissions.[60] If these points put forward by the respondent are unarguably correct, then theclaim must fail and the appeal should be dismissed. We can deal with these parts ofthe appeal quite shortly, as they involve questions of fact and contextual contractualinterpretation which, in our view, are clearly not suited to summary judgment.Did the Building Contract clearly allow DDC to register the mortgages?[61] This submission turns on an interpretation of the Building Contract and thesurrounding facts. We have set out cl 19.5 of the Building Contract above at [3].Clause 19.7 provided further:19.7 The rights to perform all acts and do all things under all or any of theterms and provisions contained or implied in the mortgage orconferred by statute, may (without any obligation whatsoever) beperformed and done by the Builder in the capacity of attorneypursuant to clause 19.5.We note that no formal power of attorney was executed in accordance with cl 19.5(b).[62] In our view it is arguable that cl 19.5 of the Building Contract provides for theowner as defined (the Body Corporate), and the Body Corporate only, to provide amortgage. Mr Thompson was not the Body Corporate. He was an owner of two units.Mr Thompson had signed the Building Contract, but only as one person out of two,presumably both being representatives of the Body Corporate. There is no indicationthat he signed in his personal capacity. On the face of cl 19.5 it does not apply to anyparticular units, but only "the Owner's estate and interest in the Property", that is theBody Corporate's property. There was no evidence indicating that the Body Corporatehad authority to mortgage Mr Thompson's units. It is arguable therefore that cl 19.5gave no authority to DDC or its lawyers Turner Hopkins, or their partners oremployees, to register a mortgage against Mr Thompson's units.[63] It is true that this created a somewhat anomalous situation, as the land theBody Corporate owned was unlikely to be saleable of itself. However the issue ofwhat the Body Corporate owned, and the background commercial situation, arematters of fact, to be determined at a hearing. It is certainly arguable that theBuilding Contract on its face gave no rights to DDC or its agents to execute a mortgageover Mr Thompson's unit titles.[64] Further, there is no evidence that the Body Corporate executed any power ofattorney. It is arguable whether or not this was required, and again the backgroundfacts may be relevant. There may also be force in the submission put forward on behalfof Mr Thompson that he never signed any memorandum in writing sufficient for thepurposes of s 25 of the Property Law Act.[65] It may also be relevant in the interpretation exercise that cl 19.6 of the BuildingContract gave DDC the ability to register a caveat against the title in respect of DDC'sinterest as mortgagee. This may lend support to the argument for Mr Thompson thatthere was no authority conferred by the contract to unilaterally register a mortgage, asdistinct from lodging a caveat.[66] We do not see any need to go through Ms Grant's further submissions in detail.The threshold that has to be crossed by Mr Thompson is not a high one, and there is asufficient question mark over whether cl 19.5 applies to Mr Thompson's unit titles topersuade us that this aspect of the claim is arguable.Can Turner Hopkins be liable?[67] Ms Grant submitted that the duty to certify accurately is personal to thesolicitor who certifies. This could be a strong point if the cause of action was a breachof statutory duty. However that is not now the issue. The cause of action we havefound to be arguable is based in negligence. The ordinary principles of vicariousliability are likely to apply and it is not unarguable that Turner Hopkins could be liablefor any negligence by Mr Stirling as a partner.Did Mr Thompson cause his own loss?[68] As to the final argument that Mr Thompson caused his own loss, that turns ona finding that Mr Thompson was at fault in not paying the invoiced amounts.The allegations of fault on the part of DDC seem to be an arguable answer to thisassertion. Therefore, summary judgment on this basis would be inappropriate.Conclusion on the other defences[69] We conclude therefore that the further defences and arguments referred to inthe notice of intention to support the judgment on other grounds do not show the claimas certain to fail.General conclusion[70] We are not satisfied that the proposed negligence cause of action cannotsucceed. Under r 12.2 of the High Court Rules a defendant must satisfy the court thatnone of the causes of action in the plaintiff's statement of claim can succeed beforesummary judgment will be entered. We find that one cause of action might succeed.[71] We therefore allow the appeal. We grant Mr Thompson leave to file the draftamended pleading attached to the further submissions of 23 February 2018.Result[72] The appeal is allowed, and the judgment of Associate Judge Doogue, insofaras it grants summary judgment in favour of Turner Hopkins, is set aside.Mr Thompson's claim in negligence against Turner Hopkins must be resolved at trial.Costs[73] Both parties have provided submissions on costs. Ordinarily, costs follow theevent. In this Court Turner Hopkins has failed, but only because of Mr Thompson'slast-minute proposed amendment to the pleadings to add a cause of action, as we haveoutlined. But for that very late development, the appeal would have failed.From Turner Hopkin's perspective, it might have taken a different procedural path ifnegligence had been pleaded earlier. For these reasons we do not think it appropriatethat Mr Thompson, although ultimately successful, should have any costs in this Court.[74] However we are not prepared to go as far as Ms Grant asks, and award costsin favour of Turner Hopkins despite the appeal being allowed. This is becauseMr Thompson has in the end succeeded in the appeal and because, as we havementioned, last-minute amendments are always a possibility when the shortcut of astrike-out or summary judgment application is pursued by a party. Turner Hopkinstook the risk of such late additions. Accordingly, there is no order as to costs in thisCourt.[75] We have not been asked to revisit the High Court order reserving costs in thatCourt. High Court costs should be determined by that Court.Solicitors:Pidgeon Law, Auckland for AppellantJones Law, Auckland for Respondent