A law
firm was not liable for client losses when it did exactly what the client Harry
Memelink requested in a convoluted property purchase intended to sort out a
business dispute.
Wellington businessman Mr
Memelink reached agreement with business associate John Hoyte in 2003 that his refinancing
of their company John Hoyte and Associates Ltd would be secured in part by a
mortgage in his favour over the Hoyte family home in Pakuranga, Auckland, owned
jointly by Mr Hoyte and Cecile Anne Mathews.
The Court of Appeal was told Mr Memelink was forced to step in when the
Pakuranga property was threatened with a mortgagee sale by Mr Hoyte’s bank. He struck a deal with Mr Hoyte. The property would be sold to interests
associated with Mr Memelink for $570,000, but he did not have to pay Mr Hoyte
or Ms Williams any cash. Mr Memelink
agreed pay off the outstanding bank mortgage with the balance due written off
against his financial claim against Mr Hoyte.
Mr Memelink’s lawyers, Collins and May Law, were asked to handle the
legal side and were told not to worry about the intricacies of the underlying
business arrangement. Evidence was given
that Mr Hoyte and Ms Williams continued to live in the Pakuranga property after
the sale with rent payable at $480 per week.
No rent was ever paid. They
claimed a right to lifetime occupancy at no cost. A court order was needed to remove them. In 2012 High Court litigation, Ms Mathews got
a court ruling against Mr Memelink for $155,715 arguing she had never agreed to
a sale of her half share of the Pakuranga property. Mr Memelink sued his lawyers for this amount,
claiming they were negligent in not sorting out this issue at the time of the
2003 purchase. The Court of Appeal ruled
his lawyers were not liable. They had
done as instructed. Even if they had
been negligent, they did not cause any loss to Mr Memelink, the Court
ruled. In the 2012 High Court litigation
Mr Memelink failed to produce a document in his possession which contradicted
Ms Williams evidence in court. Signed by
Ms Williams in May 2004, the document agreed to her half share in the Pakuranga
home being used as security for the Hoyte business refinancing.
Collins
and May Law v. Memelink & Renshaw – Court of Appeal (23.11.17)
18.007