PREMIER LEGAL FINANCE LIMITED PARTNERSHIP v MORRISON KENT [2022] NZHC 1798

PREMIER LEGAL FINANCE LIMITED PARTNERSHIP v MORRISON KENT [2022] NZHC 1798 [26 July2022]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYI TE KŌTI MATUA O AOTEAROATĀMAKI MAKAURAU ROHECIV-2021-404-001620[2022] NZHC 1798BETWEEN PREMIER LEGAL FINANCE LIMITEDPARTNERSHIPPlaintiffAND MORRISON KENTDefendantHearing: 20 May 2022Further submissions received: 27 May, 3, 21 and 30 June 2022Appearances: D W Grove for PlaintiffA L Holloway and M A Karlsen for DefendantJudgment: 26 July 2022JUDGMENT OF ASSOCIATE JUDGE P J ANDREWThis judgment was delivered by Associate Judge Andrewon 26 July 2022 at 12 noonpursuant to r 11.5 of the High Court RulesRegistrar / Deputy RegistrarDate ..Introduction[1] Premier Legal Finance Limited Partnership,1 sues the defendant MorrisonKent, solicitors, in negligence. Premier claims to have acquired the cause of actionfrom a Mr Ensom pursuant to a general security agreement.2 Mr Ensom was MorrisonKent's client and the party to whom the alleged duties of care were owed.[2] Mr Ensom is bankrupt. He was adjudicated bankrupt prior to the assignmentof the GSA on which Premier relies. The original parties to the GSA were BridgewestFinance (New Zealand) Ltd3 and Mr Ensom. Premier took assignment of the GSAfrom Bridgewest.[3] Premier says that Morrison Kent owed and breached duties of care toMr Ensom in relation to a failed property development on Great North Road, GreyLynn, Auckland, involving Mr Ensom's company, MR8 Construction Ltd. DowntownHouse (No 2) Ltd4 financed the development and Mr Ensom guaranteed the lending.The alleged losses are said to be 40 per cent of the judgment award in DowntownHouse (No 2) Ltd v Ensom,5 and Mr Ensom's costs associated with variousproceedings, including the Downtown House litigation. It was that litigation that ledto Mr Ensom's bankruptcy.[4] Morrison Kent seeks orders striking out Premier's claim and/or for defendantsummary judgment. Morrison Kent says that Premier has no standing and submitsthat Premier's rights can be no better than Mr Ensom's, and Mr Ensom has no causeof action against Morrison Kent because any such right vested in the Official Assigneeupon his bankruptcy. Although this right was then disclaimed (rendering it bonavacantia), it has not yet been re-vested in Mr Ensom. Morrison Kent thereforesubmitted that it is an abuse of process for Premier to bring these proceedings. Thecorrect process is for Premier, in Mr Ensom's name, to seek vesting orders (as itappears to have done or has required Mr Ensom to do pursuant to its powers under the1 Premier.2 GSA.3 Bridgewest.4 Downtown House.5 Downtown House (No 2) Ltd v Ensom [2019] NZHC 724.GSA) because the assignment of a bare cause of action is an abuse of process andcannot succeed.[5] The critical issue I must determine is whether it is reasonably arguable thatPremier has standing to sue. That is to be answered by addressing the followingquestions:(a) Was Mr Ensom's cause of action against Morrison Kent vested in theOfficial Assignee upon his bankruptcy?(b) Are the proceedings an abuse of process because there has been anassignment of a bare cause of action that is prohibited by law?(c) Under the terms of the GSA must the proceedings be brought in thename of Mr Ensom?[6] A further issue arises (not a standing issue); is there an arguable case of abreach of a duty of care, and was loss caused by that breach?Factual background[7] Premier is a financier and carries on business as an investment company.[8] Mr Ensom was previously a company director and investor.[9] Morrison Kent acted as solicitors for Mr Ensom and associated entities invarious property investments undertaken with Mr Samuel MacDonald.[10] On 23 February 2016, Mr Ensom emailed Morrison Kent a signed sale andpurchase agreement for the Grey Lynn property between the trustees of the StanleyTrust as vendor and MR8 Construction Ltd as purchaser.[11] On 13 January 2017, Mr Ensom signed a waiver of independent legal advice,addressed to Morrison Kent and Downtown House. A second waiver of independentlegal advice was signed by Mr Ensom on the same day. Mr Ensom also executed aloan agreement, a general security deed between Pomegranate Recording Ltd (asguarantor) and Downtown House (as secured party), and an all obligations guaranteeand indemnity between Mr Ensom (as guarantor) and Downtown House.[12] On 4 April 2019, Downtown House obtained summary judgment againstMr Ensom for monies owed up until May 2018 (being $1,842,651.74) under theguarantee.[13] On 27 February 2020, Mr Ensom was adjudicated bankrupt.[14] In March 2022, the Official Assignee disclaimed any litigation rightsMr Ensom may have to sue Morrison Kent.[15] The Crown subsequently advised it would not oppose but would abide by theCourt's decision on any application by Mr Ensom to revest litigation rights againstMorrison Kent in him.[16] Mr Ensom has issued proceedings in this Court seeking an order vesting thelitigation rights in him. Morrison Kent opposes that application.6Draft amended statement of claim of May 20227[17] The subject of the strike out/summary judgment application is the draftamended statement of claim of May 2022. The key allegations in the draft amendedstatement of claim include:(a) Between 2011 and 2019, Mr Ensom provided instructions to MorrisonKent in relation to various property investments he was undertaking inpartnership with Mr MacDonald.(b) It was specifically explained to Morrison Kent that all of the previousinvestments proceeded on the basis that in relation to each of theinvestments, Mr Ensom and Mr MacDonald would be 60/40 per centequity shareholders.6 See CIV-2022-404-000472.7 I directed that the plaintiff was to file an amended draft statement of claim in response to issuesraised in the hearing.(c) This meant that after payment of costs and expenses, Mr Ensom wasentitled to 60 per cent of the net profits and Mr MacDonald was entitledto 40 per cent of the net profits. If the investment led to a loss, thelosses and costs would be shared as to liability of 60 per cent forMr Ensom and 40 per cent for Mr MacDonald.(d) Morrison Kent owed Mr Ensom and entities associated with him a dutyto exercise reasonable care and skill, which it breached in the followingrespects:(i) Morrison Kent did not provide advice to PomegranateRecording Ltd and Mr Ensom in relation to the risks associatedwith the arrangements entered into with Mr MacDonald.(ii) Failed to recommend and prepare a formal "joint venture"agreement or "partnership" agreement between Mr Ensom andMr MacDonald so as to record the fact that Mr MacDonald waspersonally liable to Mr Ensom for 40 per cent of all costs,expenses and losses.(iii) Failed to discuss and highlight that the lender was related toMr MacDonald and that the transaction was inherently risky tohim without it being properly recorded in writing.(e) Had Mr Ensom received competent legal advice, a binding writtencontract would have been entered into with Mr MacDonald so that hewas contractually obliged to pay 40 per cent of all costs, expenses andlosses of the development.(f) As a result of the negligence of Morrison Kent, Mr Ensom has sufferedas a loss the amount of the judgment obtained by Downtown House fordamages, being the amount Mr MacDonald should have paid toMr Ensom for the costs and losses of the development.The GSA and its assignment[18] On 22 May 2018, Mr Ensom, the trustees of the Fishbowl Trust, the trustees ofthe Rawene Trust and MR8 Construction Ltd, granted and executed a GSA in favourof Bridgewest in relation to a (partially executed) loan agreement between thoseentities, with Bridgewest as lender.[19] Clause 12.1 of the GSA reads:12.1 Powers on enforcement: Pursuant to cl 11(c) if an Event of Defaultoccurs and is continuing the Secured Party may, in the relevantDebtor's name or in its own name, do anything and exercise any rightwhich any Debtor or its directors could do or exercise in relation tothe Secured Property including the power to:(j) Actions: Bring, take, defend, compromise, arrange, submitto arbitration, mediation or conciliation and discontinue orsettle any accounts, claims, proceedings, questions or disputeswhich may arise in connection with the Secured Property, thebusiness of any Debtor or its premises or in any way relatingto this Deed or the Secured Obligations and for any suchpurpose, use the name of any Debtor.[20] Clause 12.2 of the GSA reads:12.2 Powers generally: In exercising any of the rights conferred upon theSecured Party under clause 12.1, the Secured Party may generally door cause to be done such acts and things in relation to the business andproperty of any Debtor or the Secured Property as the Secured Partymight do or cause to be done if the Secured Party had absoluteownership thereof and carried on the business for the Secured Party'sown benefit without being answerable for any loss or damage whichmay happen thereby.[21] Under cl 17.1 of the GSA, any security interests created are not affected by adebtor's insolvency and the secured party continues to have the same rights againstthe debtor or such other person who holds the debtor's rights.[22] Clause 19 entitled Power of Attorney reads:19.1 Appointment of Secured Party: Each Debtor irrevocably appoints(by way of security) the Secured Party, any Receiver and every Officerof the Secured Party severally to be its attorney (with full power toappoint substitutes and to sub-delegate) to, on its behalf and in itsname or otherwise, and at such time and in such manner as theattorney may think fit:a. Take Action: do anything which that Debtor may be obligedto do or ought to do under this Deed and which that Debtorfails to do; andb. Exercise Powers: generally carry into effect, complete orfacilitate the exercise or purported exercise of all or any of therights, powers or discretions conferred on the Secured Party(or any Officer of the Secured Party) under this Deed.[23] By way of deed of assignment, the 2018 GSA was assigned from Bridgewestto Premier on 25 November 2020. Premier says that in consideration for taking theassignment of the GSA, it paid Bridgewest the full sum outstanding to the assignor,including principal interest, penalty interest and costs totalling $3,253,454.54.Relevant legal principlesStrike out[24] Rule 15.1 of the High Court Rules 2016 provides that the Court may strike outall or part of a pleading if it:(a) discloses no reasonably arguable cause of action, defence, or caseappropriate 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.[25] The relevant principles are well established.8 Pleaded facts, whether or notadmitted, are assumed to be true. This does not, however, extend to pleadedallegations which are entirely speculative and without foundation. The cause of actionor defence must be clearly untenable.8 Attorney-General v Prince [1998] 1 NZLR 262 (CA) at 267; Couch v Attorney-General [2008]NZSC 45, [2008] 3 NZLR 725 at [33].[26] Abuse of process is a broad category and captures all other instances of misuseof the court's process that are not otherwise specified in r 15.1(1). It includesproceedings that have been brought with an improper motive or are an attempt toobtain a collateral benefit.9[27] Policy considerations relevant to determining whether to strike out a claim asan abuse of process include:10(a) The courts should generally exercise their jurisdiction on mattersproperly brought before them;(b) It is important to preserve freedom of access to the courts;(c) The courts need to be vigilant that abuse of process claims are notadvanced other than in clear and appropriate cases, and are not broughtfor tactical reasons;(d) The courts should be alert to the misuse of its processes and be preparedto exercise the strike-out jurisdiction where the interests of justicedemand it.[28] The improper purpose need not be the sole purpose, as long as it is thepredominant purpose. The onus is on the party alleging abuse of process to show thatthe proceeding was brought for an improper purpose. It is a heavy onus.11Summary judgment[29] Rule 12.2(2) of the High Court Rules provides that the court may givejudgment against a plaintiff if the defendant satisfies the court that none of the causesof action in the plaintiff's statement of claim can succeed.9 Commissioner of Inland Revenue v Chesterfields Preschools Ltd [2013] NZCA 53 at [89].10 Andrew Beck and others McGechan on Procedure (online looseleaf ed, Thomson Reuters) at[HR15.1.05(3)] citing Williams v Spautz (1992) 174 CLR 509 (HCA) at 519.11 McGechan on Procedure, above n 10, at [HR15.1.05(4)].Assignment of a cause of action[30] In Waterhouse v Contractors Bonding Ltd,12 Glazebrook J held:Assignments of bare causes of action in tort and other personal actions are,with certain exceptions, not permitted in New Zealand. The rule had itsorigins in the torts of maintenance and champerty but now seems to have anindependent existence of its own.[31] Todd on Torts13 states that the assignment of a right to sue for breach of contractmay validly be made where the assignee has a genuine commercial interest in thesubject matter of the proceedings. The same principle has been recognised as applyingin the case of a right of action in tort.Analysis and decision[32] Premier initially contended that it had taken assignment of Mr Ensom's causeof action, that it had a genuine commercial interest in the subject matter of theproceedings and that there was therefore no prohibited assignment of a bare cause ofaction. The focus of the submissions and arguments at the hearing were on the issueof whether Premier had a genuine and sufficient commercial interest rendering theassignment a valid one.[33] In written submissions filed subsequent to the hearing, Premier has taken adifferent position. Premier now says that it is not taking an assignment of Mr Ensom'sright to litigate; it is merely exercising its rights to litigate as provided for in the GSA.It contends that clauses 12.1 and 12.2 of the GSA do not vest Mr Ensom's rights ofaction to the secured party. Rather, those clauses give the secured party, here Premier,a right to bring an action in Mr Ensom's name "or in its own name".[34] Premier further contends that the central issue remains whether it has a"genuine commercial interest" in the subject matter of the proceedings which it seeksto pursue on the debtor's behalf.12 Waterhouse v Contractors Bonding [2013] NZSC 89, [2014] 1 NZLR 91 at [57].13 Stephen Todd (ed) Todd on Torts (8th ed, Thomson Reuters, Wellington, 2019) at [23.12].[35] Morrison Kent agrees that any right of action of Mr Ensom has not beenassigned to or vested in Premier. It also agrees that there has been no assignment ofMr Ensom's rights to litigate.[36] Morrison Kent relies on s 101 of the Insolvency Act 2006. It says that onadjudication all of Mr Ensom's property, including rights of litigation/causes in action,vested in the Official Assignee and any rights in the property of Mr Ensom wereextinguished. Morrison Kent further argues:(a) Clause 2 of the GSA creates a security interest, defined by s 17 of thePersonal Property Securities Act 1999, and includes a charge over"Other Property". Clause 2 does not refer to an assignment and doesnot purport to effect an assignment of a cause of action;(b) In turn, cl 12 which deals with "enforcement" provides for a range ofcircumstances. In relation to some secured property, the secured partywould be able to act in its own name. In other cases, it will not. Clause12 simply provides the machinery and is subordinate to cl 2, which doesnot effect an assignment of a cause in action;(c) It is accepted that pursuant to the powers under cl 12 and the associatedpowers of attorney (cl 19 of the GSA), Premier may be able to requireMr Ensom to take certain actions or have an enforceable interest againstMr Ensom in the proceeds of any claim that Mr Ensom may have (butthat is a fundamentally different matter to this claim);(d) The named plaintiff does make a difference. It is of fundamentalimportance, consistent with the rules of natural justice, that thedefendant only faces claims from parties who have legal standing.[37] I now turn to address each of the three issues. Those issues and the centralissue of standing fall to be determined in the context of a strike out/defendant summaryjudgment application. The threshold is whether there is a reasonably arguable case.Issue (a) – Was Mr Ensom's cause of action vested in the Official Assignee?[38] It is not in dispute that there has been a default under the GSA. In that event,Premier is entitled as the secured party to take action in either Mr Ensom's name or inits own name and to exercise any right which Mr Ensom could do or exercise inrelation to the secured property (cl 12.1 of the GSA). That includes, as cl 12.1(j)expressly provides, the bringing of legal proceedings.[39] As Premier submits, bankruptcy law operates to preserve the favoured positionof secured creditors. The position is described in Heath & Whale on Insolvency asfollows:14Bankruptcy law operates to preserve the favoured position of securedcreditors. Property that is subject to a security does not pass to the OfficialAssignee unencumbered, although of course, the Official Assignee takes overthe rights and equities in respect of such property The Official Assigneetherefore takes over such property subject to the security.[40] "Secured property" is described extremely broadly under the GSA. Thatsupports Premier's submission that the right to bring an action in Mr Ensom's name isprotected by their position as a secured party. "Secured property" is defined to include"personal property" and "other property" where "other property" means: all of the debtor's present and future interests in, and all of the debtor'spresent and future rights in relation to, any real property and any otherproperty to which the PPSA does not apply.15[41] Section 243 of the Insolvency Act 2006 provides clear support for Premier'sposition. It reads:Secured creditor's options in relation to property subject to charge(1) A secured creditor may –(a) realise property subject to a charge, if entitled to do so(Option 1); or(b) value the property subject to the charge and prove in thebankruptcy as an unsecured creditor for the balance due (ifany) after deducting the amount of the valuation (Option 2);or14 Paul Heath and Michael Whale (eds) Heath & Whale on Insolvency (looseleaf ed, LexisNexis,Wellington) at [4.35].15 The Personal Property Securities Act 1999 does not apply to a "transfer of a right to damages intort" (s 23(e)(vii)).(c) surrender the charge to the Assignee for the general benefit ofthe creditors and prove in the bankruptcy as an unsecuredcreditor for the whole debt (Option 3).(2) Despite subsection (1), a secured creditor may exercise Option 1whether or not the creditor has exercised Option 2.[42] I also note that cl 17.1 of the GSA provides that the security interest granted isnot affected by a debtor's insolvency and that the secured party continues to have thesame rights against the debtor or such other person who holds the debtor's rights.[43] I find that it is reasonably arguable that the security interests at issue, namelyMr Ensom's cause of action, did not vest in the Official Assignee. It is reasonablyarguable that, consistent with the statutory bankruptcy regime, Premier as the securedcreditor can exercise its rights over Mr Ensom's (the bankrupt's) propertyindependently of and in priority to the Official Assignee's rights over the property. Itis reasonably arguable that Premier is exercising option 1 under s 243. Option 1 isdescribed by Heath & Whale as follows:16First, the secured creditor may realise the security, in the sense of takingwhatever steps are appropriate to enforce the security, and thereby stayingoutside of the bankruptcy, or they may prove in the bankruptcy for anyshortfall.[44] The position is the same in England. In Lazari Properties 2 Ltd v New LookRetailers Ltd, it was held:17Secured creditors are entitled to rely on their security outside of bankruptcyor liquidation (and the assets of the debtor subject to security have been treatedas excluded from the bankruptcy estate).Issue (b) – Are the proceedings an abuse of process?[45] Having concluded that the cause of action did not vest in the Official Assignee,I reject the Morrison Kent submission that the proceedings are an abuse of processbecause they subvert the statutory insolvency regime. They arguably do not.16 Heath and Whale, above n Error! Bookmark not defined., at [4.68].17 Lazari Properties 2 Ltd v New Look Retailers Ltd [2021] EWHC 1209 (Ch) at [113]. See alsoCotterell v Price [1960] 3 All ER 315.[46] I now turn to address whether the proceedings are an abuse of process becausethey involve the assignment of a bare cause of action.[47] Many of the recent New Zealand cases involving assignments of bare causesof action have involved litigation funding arrangements. This is not strictly a litigationfunding case, although it does have some similarities with the Supreme Court decisionPricewaterhouseCoopers v Walker.18 That case involved both a litigation fundingarrangement and an assignment under a general security agreement.[48] The parties here are agreed there has been no assignment of the cause of action.However, regardless, it is necessary to address whether the arrangements entered intoare an abuse of process because they are contrary to public policy and the still extanttorts of maintenance and champerty. Here, proceedings are brought by a third partyto the legal relationship at issue (i.e. the relationship between Morrison Kent and MrEnsom) and where that third party's interests are purely financial ones. In substanceand in the broader sense, there is an assignment of a cause of action because Premierhas acquired the cause of action from somebody else and it cannot be disputed thatthere is an assignment from Bridgewest to Premier. The issue thus arises as to whetherthere has been a prohibited trafficking in litigation.[49] The test to be applied is not in dispute: does Premier have a genuinecommercial interest in the subject matter of the proceedings which it seeks to pursueon Mr Ensom's behalf?[50] The starting point is that a GSA that allows a secured creditor to pursue thedebtor's claims against third parties to recover money owing to the secured party isrecognised as a genuine commercial transaction. In PricewaterhouseCoopers vWalker, it was held:19The assignment of debt secured by a GSA can be an uncontroversialcommercial transaction, even where the GSA provides, as the Allied GSA didin the present case, for the secured party to be able to pursue claims of thedebtor in order to recover money owing to the secured party in the event thatenforcement of the security becomes necessary. The assignment of the AlliedGSA from Hanover to Allied was a commercial transaction of this kind.18 PricewaterhouseCoopers v Walker [2017] NZSC 151, [2018] 1 NZLR 735.19 PricewaterhouseCoopers v Walker, above n 18, at [78].[51] In PricewaterhouseCoopers v Walker, the Supreme Court referred to thefollowing summary of the law by Lord Roskill in Trendtex Trading Corporation vCredit Suisse:20The Court should look at the totality of the transaction. If the assignment isof a property right or interest and the cause of action is ancillary to that rightor interest, or if the assignee has a genuine commercial interest in taking theassignment and in enforcing it for its own benefit, I see no reason why theassignment should be struck down as an assignment of a bare cause of actionor as savouring of maintenance.[52] The Court also noted that Camdex International Ltd v Bank of Zambia21 (whichfollowed Trendtex) is authority for the proposition that:22 assignment of a debt even in circumstances where it is foreseen thatlitigation will be necessary in order to recover the debt is not problematic.[53] The Court further noted that the factoring of debts is a common form ofcommercial financing and that the assignment of distressed debt is also not unusual.[54] In adopting those principles, I find that it is reasonably arguable that Premierdoes have a genuine commercial interest in the subject matter of these proceedings.Premier has expressly pleaded that in consideration for taking assignment of the GSAfrom Bridgewest, it paid the assignor (Bridgewest) the full sum outstanding under theGSA, including principal interest, penalty interest and costs totalling $3,253,457.54.In a strike out context, factual allegations in a statement of claim are, of course,presumed to be correct. It is reasonably arguable that Premier, having paid the fullsum due to Bridgewest, is now simply enforcing their security interest in the chose ofaction as expressly provided for in the GSA and with a view to recovering the secureddebt. It is reasonably arguable that there is no breach of the public policy reasonsbehind the torts of champerty and maintenance. It is reasonably arguable that there isno prohibited assignment of a bare cause of action.[55] In First City Corporation Ltd v Downsview Nominees Ltd,23 the seconddebenture holder of the company, FCC Ltd, assigned the company's indebtedness to20 Trendtex Trading Corporation v Credit Suisse [1982] AC 679 (HL) at 703.21 Camdex International Ltd v Bank of Zambia, [1998] QB 22 (CA) at 39.22 PricewaterhouseCoopers v Walker, above n 18, at [78].23 First City Corporation Ltd v Downsview Nominees Ltd [1989] 3 NZLR 710 (HC).FCF Ltd after the company went into receivership and where FCF Ltd were lookingto seek damages in negligence from the receiver for their conduct of the receivership.Gault J held that in considering whether there was a sufficient commercial interest thatthe actions in tort were ancillary to the assignment of the debenture itself, and theassignee was not buying merely in order to get a cause of action. Rather, it was buyingproperty and a cause of action as incidental thereto. His Honour further held that theactions in tort were subsidiary matters, assigned with the debenture so that the assigneecould protect the property it had received. There was thus a genuine commercialinterest by the debenture holder in protecting the value of the security.[56] On the facts here, it is reasonably arguable that Premier did not pay Bridgewestthe entire amount outstanding under the GSA merely to get a cause of action but wasrather buying all of the security interests with the cause of action being incidentalthereto. That is clearly arguable from the price paid.[57] Morrison Kent placed some reliance on the Queensland decision WorkCoverQueensland v Amaca Pty Ltd,24 and in particular the following dicta:25Plainly, a commercial interest in exploiting an assigned right, even if to recoupan amount paid in exchange for the assignment, would not, of itself, suffice.A commercial interest merely of that kind would tend to taint the assignmentas savouring of maintenance or as champertous.[58] WorkCover Queensland was an insurance case, concerning an individual whoassigned his causes of action for damages for personal injuries allegedly caused byAmaca Pty Ltd's negligence to WorkCover, a third party, five days before his death.[59] However, I find that that case provides no real support of Morrison Kent'sposition. Here, Premier is arguably trying to recover debt, rather than money that theyhad spent on acquiring the right to litigate. Furthermore, in WorkCover Queensland,the Court ultimately found that WorkCover did have a genuine commercial interest inthe assignment at the time it occurred. The interest it had was in recoupment, fully orpartially, of the amount it had paid out to its former client, Mr Rourke, by way ofstatutory compensation.24 WorkCover Queensland v Amaca Pty Ltd [2012] QCA 240.25 WorkCover Queensland v Amaca Pty Ltd, above 24, at [65].[60] In my minute of 10 June 2022, I invited submissions from the parties on theissue of whether it was relevant that the GSA was entered into by Mr Ensom aftersummary judgment had been entered against him on 4 April 2019. It was thosesummary judgment proceedings which led to his bankruptcy.[61] In response to that question, Morrison Kent submitted that the timing of theGSA is relevant insofar as it conclusively demonstrates that Premier has no genuinecommercial interest in the subject matter of the proceeding.[62] There may be some merit to that submission, but I am in no position to resolveit at this summary stage. I cannot conclude that the timing of the GSA conclusivelydemonstrates a lack of genuine commercial interest. This is a trial issue. I also notethat there are no proceedings by the Official Assignee to set aside the GSA.[63] I note Morrison Kent's submission that Bridgewest and Downtown House areunrelated. It may be that Bridgewest had no interest (commercial or otherwise) in theloan arrangements with Downtown House when the lending arrangements wereentered into in 2019. Again however, that does not mean that at this summary stage Icould properly conclude that there is no genuine commercial interest by Premier in thesubject matter of the proceedings. I reject Morrison Kent's submission that theassignee must "have skin in the game that was played at the time the cause of actionarose". Trendtex makes clear that the Court must look at the totality of thetransaction.26[64] Morrison Kent further submitted that there are clear policy reasons whyMorrison Kent should face Mr Ensom directly. These are said to include issuesregarding discovery and security for costs; essentially fair trial issues. However, whilethe issue of a fair trial must undoubtedly be part of any abuse of process determination,there is no basis for concluding at this summary stage that those factors meet the highthreshold of an abuse of process. There are procedures available under the High CourtRules to address the concerns Morrison Kent might have about discovery and securityfor costs.26 Trendtex Trading Corporation v Credit Suisse, above n 20.[65] I find that the proceedings are not an abuse of process.Issue (c) – Under the GSA must the proceedings be brought in the name of Mr Ensom?[66] Morrison Kent submitted that cl 12.1(j) provides a power of "action" to "bring any proceedings which may arise in connection with the Secured Property[or] the business of the Debtor and for any such purpose use the name of anyDebtor". It contends that cl 12.1(j) of the GSA expressly contemplates that a securedparty will need to use a debtor's name to bring proceedings in relation to securedproperty (as is necessary without a valid assignment).[67] However, that submission overlooks the very clear and broad wording of cl12.1 and 12.2 (Powers Generally). Clause 12.1 expressly states that the secured partymay either in the debtor's name "or in its own name" do anything and exercise anyright including the right to bring proceedings under subclause (j). Read together withthe very broad powers conferred by cl 12.2, I find that it is reasonably arguable underthe terms of the GSA (i.e. the source of Premier's rights to sue) that it can bringproceedings in its own name and is not required to use the name of Mr Ensom.[68] I reject Morrison Kent's submission that the power of attorney provision in theGSA, namely cl 19, is the only way for Premier to assert its rights and confirms theposition that the claim always has and still does sit with Mr Ensom. In reading theGSA as a whole, there is arguably no basis for reaching that conclusion.[69] As noted above, Morrison Kent also submitted that cl 12 provides for a rangeof circumstances and that in relation to some secured property the secured party is ableto act in its own name. They say that in other cases it will not. It is further argued thatcl 12 simply provides the machinery and is subordinate to cl 2, which does not effectan assignment of a cause in action.[70] I agree that cl 12 provides for a range of circumstances. I also accept that inprinciple there are differences between real property, a mortgage interest and a chosein action. However, as already noted, the terms of the relevant clauses are very broad.Insofar as enforcement action is taken in the name of the security holder, the wordingof the relevant GSA terms does not distinguish between different types of securedproperty.[71] I conclude that it is reasonably arguable that under the terms of the GSA,Premier can bring the proceedings in its own name. Morrison Kent has not establishedthat the only tenable interpretation of the GSA is that Premier must bring theproceedings in the name of Mr Ensom.Principal issue – Standing[72] I conclude that Premier has standing to bring the proceedings. The cause ofaction has not vested in the Official Assignee, the proceedings are not an abuse ofprocess and under the terms of the GSA, Premier may bring the proceedings in its ownname.Final issue – Is it reasonably arguable that there was a breach of the duty of carealleged and that loss was caused by that breach?[73] Morrison Kent submits that Premier's cause of action against it cannot succeedbecause it discharged its general duty to advise Mr Ensom to seek independent legaladvice. Morrison Kent relies upon the two undisputed waivers of independent legaladvice that Mr Ensom signed on 13 January 2017 in respect of the guarantee. Thosewaivers record that Morrison Kent: acted for Pomegranate Recording Ltd; explainedbroadly the nature of the loan documents; advised Mr Ensom to obtain independentlegal advice; and that Mr Ensom understood the nature of the documents and declinedto seek independent advice.[74] Morrison Kent relies upon the well-settled case law that a solicitor may act incircumstances where interests may conflict so long as informed consent is obtained.In determining whether a solicitor has obtained informed consent, the precise natureof the services required by the parties is essential. Morrison Kent relies on the decisionClark Boyce v Mouat27 for the following proposition: where there is no contractualduty on a solicitor to advise the claimant on the wisdom of entering into a transaction,27 Clark Boyce v Mouat [1993] 3 NZLR 641 (PC).s/he cannot claim that the solicitor nevertheless owed a fiduciary duty to give theadvice.[75] In response, Premier contends that the standard waivers of independent advicerelate solely to the finance documentation and guarantee provided by Mr Ensom. Itsays that these waivers have no bearing upon the negligence asserted in theproceedings and could not do so. Premier further contends that it will be a matter ofexpert evidence at trial whether, given the "inherent unusual features and high risksMr Ensom was undertaking without a contract with Mr MacDonald", a waiver ofindependent advice would be sufficient.[76] There may well be merit to Morrison Kent's submission. Again, however, thisis a trial issue. I note also that Morrison Kent contends that it did not act for Mr Ensombut, rather, for the company, Pomegranate Recording Ltd. There are a range ofdisputed factual issues relating to the critical matter of whether there has been a breachof the alleged duty of care. I am not in a position to resolve them.[77] Morrison Kent further contends that there is no probative evidence thatMr Ensom has suffered any loss beyond his undisputed liability arising from theDowntown House litigation. It says that it has squarely put loss at issue. It says thatthis Court has already found that Mr Ensom would have had liability to DowntownHouse over and above the value of any third-party claim against Mr MacDonald.Therefore, even if there was a joint venture arrangement Mr Ensom, it is argued, stillhad 60 per cent liability for the judgment debt.[78] Morrison Kent further say that there is no evidence that Mr Ensom wasbankrupted because of an inability to pay 40 per cent of the outstanding debt owed toDowntown House (as opposed to an inability to pay the 60 per cent Morrison Kentunderstands that Mr Ensom did not dispute liability for).[79] In response, Premier contends that Morrison Kent misunderstands the basis ofits claim. Premier asserts that should competent advice have been provided toMr Ensom, there would have been a contractual obligation upon Mr MacDonald topay 40 per cent of the actual losses. That obligation is said to be not contingent uponany specific payment by Mr Ensom or his associated entities.[80] Premier further alleges that if an appropriate contract was not entered intobetween Mr Ensom and Mr MacDonald, the investment would not have proceededand Mr Ensom would not have suffered any losses at all.[81] Again, this issue, namely whether there was any loss flowing from the allegedbreach, may well present a formidable hurdle for Premier. However, these are all trialissues. There are significant disputed matters of fact, where causation and loss in thesesolicitor negligence cases are often highly fact specific.[82] For these reasons, I conclude that Morrison Kent has not established that thereis no tenable claim of breach of duty of care and/or loss caused by that breach.Result[83] The application by Morrison Kent for summary judgment and/or strike out isdismissed. It is reasonably arguable that Premier has standing to bring theproceedings. It is also reasonably arguable that there was a breach of Morrison Kent'sduty of care and loss caused by that breach.[84] As to costs, having succeeded, I am of the view that Premier is entitled to costsand on a 2B basis. If the parties cannot agree on costs, then memoranda (no more thanthree pages) are to be filed and served within 14 days.__________________________Associate Judge P J Andrew