CLEARY v EWART & EWART [2018] NZSC 28

CLEARY v EWART & EWART [2018] NZSC 28 [12 April 2018]IN THE SUPREME COURT OF NEW ZEALANDI TE KŌTI MANA NUISC 9/2018[2018] NZSC 28BETWEEN WILLIAM GEORGE GRAHAMCAMERON CLEARYApplicantAND EWART & EWARTRespondentCourt: Elias CJ, William Young and O'Regan JJCounsel: L Herzog for ApplicantP M Fee for RespondentJudgment: 12 April 2018JUDGMENT OF THE COURTA The application for leave to appeal is dismissed.B The applicant is to pay costs of $2,500 to the respondent.____________________________________________________________________REASONS[1] The applicant applies for leave to appeal against a decision of the Court ofAppeal,1 upholding a decision of the High Court dismissing his claim against therespondent.2 The application is advanced on the basis that the Court of Appeal madeerrors which are of such a substantial character that a miscarriage of justice will occurif leave is not granted.31 Cleary v Ewart & Ewart [2017] NZCA 620 (Clifford, Dobson and Collins JJ) [Cleary (CA)].2 Cleary v Ewart & Ewart [2017] NZHC 39 (Edwards J) [Cleary (HC)].3 Senior Courts Act 2016, s 74(2)(b); Supreme Court Act 2003, s 13(2)(b).[2] The applicant had instructed the principal of the respondent law firm,Mr Ewart, to document a verbal agreement between the applicant and a representativeof Vunabaka Bays Fiji Limited (the company) under which the company would paythe applicant USD 440,000 to cancel an agreement between the company and theapplicant relating to a section in the company's development in Fiji. The applicantand the company appeared to be under the impression that the applicant had an optionto purchase a section in the development under the agreement, but it transpired thatthe agreement in fact provided that the company had an option to require the applicantto buy the section. On discovering this, Mr Ewart was concerned that if the companymade payment to the applicant to cancel the agreement in circumstances where itconferred no rights on the applicant, this could give rise to tax problems, including theincurring of gift duty.[3] Mr Ewart discussed these concerns with the applicant and the applicant's taxadviser. It seems no one at the meeting realised there were no gift duty implicationsarising from the transaction. Even if they did, they were also concerned about otherpotential tax consequences, but the precise nature of these concerns is unclear.Following that discussion, Mr Ewart approached the solicitor for the companysuggesting that the company exercise the option and that the cancellation arrangementthen take place in circumstances where the applicant would be foregoing substantiverights in exchange for the USD 440,000 payment. Once alerted to the true nature ofthe agreement the company decided not to proceed with the arrangement, but insteadagreed to refund the deposit paid by the applicant of USD 165,000. The applicantclaimed that as a result he lost the chance to receive the USD 440,000 that the companyhad been prepared to pay.[4] Both the High Court and the Court of Appeal found that Mr Ewart had not beennegligent in the circumstances and also found that, even if he had been negligent, thatnegligence would not have been causative of loss.4 These concurrent findings werebased on essentially the same reasoning.54 Cleary (HC), above n 2, at [69] and [83]; Cleary (CA), above n 1, at [48] and [51]–[53].5 The applicant also brought a second cause of action for breach of fiduciary duty. This wasdismissed in the High Court for the same reasons as the negligence claim and was not pursued inthe Court of Appeal: see Cleary (HC), above n 2, at [84]; and Cleary (CA), above n 1, at [30].[5] The applicant emphasises Mr Ewart's error in relation to the risk of theincurring of gift duty, and argues that if Mr Ewart had simply documented thearrangement as initially instructed and presented the agreement to the company, therewas a chance the company would have signed the agreement and paid theUSD 440,000. He says he lost this chance as a result of Mr Ewart's negligence.[6] As the applicant acknowledges, the miscarriage ground in civil appeals appliesonly in cases of a sufficiently apparent error of such a substantial character that itwould be repugnant to justice to allow it to go uncorrected in the particular case.6 Inthe present case, there may be some room for debate about the conclusion thatMr Ewart was not negligent in the circumstances, but a contrary view to that reachedby the Courts below would require this Court to take a different view of facts on whichthere have been concurrent findings in the Courts below. In any event, we do notconsider that there is anything in the material before the Court that shows sufficientdoubt about the correctness of the conclusion reached by the Courts below as to theabsence of causation to justify the granting of leave.[7] We therefore decline leave to appeal.[8] We award costs of $2,500 to the respondent.Solicitors:Smith & Partners, Auckland for ApplicantFee Langstone, Auckland for Respondent6 Junior Farms Ltd v Hampton Securities Ltd (in liq) [2006] NZSC 60, (2006) 18 PRNZ 369 at [5].