New Zealand Supreme Court

Stay application, interlocutory applications, interlocutory CA decision

Wooton v Wooton [2020] NZSC 117 (29 October 2020)

Unsuccessful stay application – W in person sought stay of proceedings pending determination of her application for leave to appeal to SC - Sought leave to appeal to CA against HC decision on certain interlocutory applications she made - Applied to CA under r 12(3)(a) Court of Appeal (Civil) Rules 2005 for order staying HC proceedings between her and her former husband pending determination of her application for leave to appeal – CA Judge declined application – She applied to SC for leave to appeal against CA Judge’s decision - Sought stay pending application for leave being determined – Stay application under r 30 Supreme Court Rules 2004 – SC said leave to appeal could be granted if SC satisfied matter of general or public importance arose or substantial miscarriage of justice might occur unless appeal heard – As proposed appeal against an interlocutory CA decision SC would also need to be satisfied that was in interests of justice to hear and determine appeal before proceeding concluded - On material before SC it assessed likelihood of criteria being met as low - If SC granted, practical effect would be CA decision refusing stay would be reversed - No basis to question essential reasoning for CA decision - Application dismissed.

Contract, guarantee, guarantor liability, Property Law Act

Brougham v Regan and ors [2020] NZSC 118 (30 October 2020)

Successful appeal from CA – B and D in a relationship - Agreed to purchase a business together and set up a company for that purpose - D arranged for W Trust to lend the company the $50,000 it needed to purchase the business - D a trustee and Trust and beneficiary at the time – D and B to guarantee $25,000 each - B signed loan agreement as both a director of the company and as guarantor - D signed only as a director - Agreement did not specify obligations of those who signed the agreement as guarantors - Instead, said before money advanced, any person named as guarantor had to sign separate written guarantee - No written guarantee ever prepared or signed by B - $50,000 was advanced to the company same day loan agreement signed - B and D’s relationship ended and company liquidated - Trust trustees attempted enforce guarantee against B - Unsuccessful in both DC and HC - CA allowed appeal and said B liable as a guarantor for $50,000 together with interest – SC granted B leave to appeal - Approved question was whether CA correct to allow the trustees’ appeal – SC unanimously allowed appeal - Primary issue whether agreement met s 27(2) Property Law Act 2007 requirements - Section 27(2) required contract of guarantee to be in writing and signed by guarantor - Although B signed agreement as guarantor, agreement did not provide that he agreed to answer for company’s debt, default or liability – SC said agreement did not satisfy the “in writing” requirement in s 27(2) - B not liable as guarantor – Said even if s 27(2) requirements were satisfied, guarantee not likely to be enforceable - General rule was where guarantee named multiple guarantors, not effective unless all guarantors signed - . Here, agreement named both B and D, yet only B signed as a guarantor – SC also rejected trustees’ argument that B estopped from resiling from his obligations as loan guarantor – SC said to prevent B from denying guarantee validity would defeat s 27(2)’s consumer protection purpose – SC said trustees not entitled specific performance order requiring B to sign a written guarantee that accorded with the agreement - Although agreement contemplated that a written guarantee would be signed before the $50,000 was advanced, trustees waived requirement - No commitment from B to sign written guarantee under which specific performance order could be made – Appeal allowed.

Supreme Court of Canada

Class action, threshold for allowing to go forward

Dejardins Financial Services Firm v Asselin [2020] SCC 30 (30 October 2020)

Partially successful appeal from Quebec CA - Desjardins Financial Services (DFS) sold mutual funds and helped people with financial planning – A talked to DFS financial planner - Financial planner recommended he buy some investments - He bought them - Investments “capital-guaranteed,” - Representative gave A documents saying investments would make money and were not risky - Earned nothing, but got original investment back – A said only found out later that investments were risky – Also said they were managed in a risky manner - Said he would not have bought them if he knew risks – Said DFS should have told its financial planners about risk, so they could tell their clients – A launched class action lawsuit – Said DFS directly responsible for him not making money he expected - Was because it did not properly instruct its financial planners and other representatives – Said DFS indirectly responsible for representatives passing on bad information - Said DFS management responsible because it created and managed the investments - Motion judge said class action could not go forward - CA said it could – SC majority mostly agreed with CA - Said threshold for authorising class actions in Quebec a low one - Motion judge went beyond making sure the class action not frivolous - Majority did not decide about A’s claim merits - Said he could have his day in court – Among other things, agreed with A that DFS had a “duty to inform” people about the risks - Majority said trial judge might eventually hold it responsible directly (for not giving its representatives the information) and indirectly (through the representatives acting on its behalf) - Part of class action asking for “punitive damages” would not go forward – Appeal partially allowed.

United Kingdom Supreme Court

Property ownership - question of profit

Stoffel and Co v Grondona [2020] UKSC 42 (30 October 2020)

Unsuccessful appeal from CA – G had a business relationship with M - About July 2002, M purchased a 125-year lease of a flat (property) - Shortly afterwards, he borrowed £45,000 - Legal charge over the property secured the loan (BMS charge) - In October 2002, G bought property from M, partly with mortgage advance of £76,475 from Birmingham Midshires (BM) - Plan was that charge over the property would be security – G entered into the charge on 31 October 2002 - G procured the mortgage advance by fraud - Trial judge said fraud purpose was to raise capital for M from a high street lender, which he would not otherwise have been able to obtain – G and M previously entered into an agreement which confirmed M would be responsible for the mortgage payments – Stoffel & Co solicitors (S) acted for G, M and BM on the transaction - S negligently failed to register forms transferring the property from M to G and releasing the BMS, and BM charges - This meant that M remained the property’s registered owner, subject to the BMS charge - subsequently received further advances from BMS based on that charge – In 2006, G defaulted on payments under the BM charge - BM brought proceedings against her - G, in turn, sought damages from S - S admitted that failure to register the forms with the Land Registry constituted negligence or a breach of retainer - However, they said were entitled to rely on illegality defence, because G had only instructed them to further the illegal mortgage fraud - Trial judge said illegality defence did not bar G’s claim – CA dismissed S’s appeal - S appealed to SC – SC unanimously dismissed S’s appeal - Said illegality defence did not bar G’s claim – Among other things, SC said previous case set out a new policy-based approach to illegality defence at common law - In that case, majority said when illegality tainted a claim, court should ask itself whether enforcing claim would lead to inconsistency damaging to the integrity of the legal system - In making assessment, court should consider: (a) underlying purpose of the illegality in question, and whether purpose would be enhanced by denying the claim; (b) any other relevant public policy on which denying claim may have an impact; and (c) whether denying claim would be a proportionate response to the illegality – balancing policy considerations at stages (a) and (b) indicated here that illegality defence should not bar G’s claim - Consequently, no need to consider proportionality, but SC did - Would not be proportionate to deny G’s claim because conceptually was entirely separate from the mortgage fraud - Enforcing the claim would not allow G to profit from her wrongdoing - In any case, court’s focus should be on need to avoid inconsistency that was damaging to the integrity of the legal system - Whether claimant will profit from the illegality remained a relevant consideration, but was no longer the true focus of the court’s inquiry – Appeal allowed.

Sentencing, Mental Health Act

Henderson (A Protected Party by her Litigation Friend, the Official Solicitor) v Dorset Healthcare University NHS Foundation Trust [2020] UKSC 43 (30 October 2020)

H suffered from paranoid schizophrenia or schizoaffective disorder - In August 2010, was under Southbourne community mental health team care – Dorset Healthcare (DH) managed the team - About 13 August 2010, Ms Henderson’s condition began to deteriorate- On 25 August 2010, she stabbed her mother to death while experiencing a serious psychotic episode – H convicted of manslaughter through diminished responsibility - In her criminal trial, Judge said no suggestion H bore significant responsibility for what she had done - Sentenced her to hospital and unlimited restriction orders under Mental Health Act 1983 - Remained in hospital and not expected to be released for some time – H brought negligence claim against DH, for damages for personal injury and other loss and damage - DH admitted liability - Negligent failure to return H to hospital when her psychiatric condition deteriorated - Accepted if it had, H’s mother would not have been killed - However, said H’s claim barred for illegality, because the damages she claimed resulted from: (i) sentence criminal court imposed on her; and/or (ii) her own criminal act of manslaughter – In a 2009 case, HL said similar claims to H’s were not recoverable - Recoverability ordered to be tried as preliminary issue – HC ruled for DH and CA dismissed H’s appeal – Both HC and CA said facts of H’s claim materially identical to 2009 case which was binding upon them – H appealed to SC - Appeal raised whether 2009 case could be distinguished and, if not, whether it should be departed from, particularly in light of more recent SC decision concerning illegality – SC unanimously dismissed H’s appeal, saying illegality defence barred her claim against DH – 2009 case could not be distinguished – Regarding later case, among other things, SC said, concerned common law rather than statutory illegality – 2009 decision indicated proper approach to common law illegality defence across civil law generally - Principles identified in 2009 case derived from pre-existing case law - Earlier decisions on illegality defence still had precedent value - Appeal dismissed.