IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE	
CIV-2004-404-7211
[2019] NZHC 2963	

BETWEEN	ROBERT ERWOOD
Plaintiff	
AND	JOHN ROBIN HOLMES
First Defendant

ANTHONY DAVID BANBROOK
Second Defendant

GRAEME EDWARD MINCHIN
Third Defendant	

Hearing:	19 June 2019	
Appearances:	The plaintiff in person
No appearance by the second defendant	
Judgment:	14 November 2019	

JUDGMENT OF PALMER J

The judgment was delivered by me on 14 November 2019 at 11.00am.
Pursuant to Rule 11.5 of the High Court Rule.

……………………………… Registrar/Deputy Registrar

Parties/Solicitors:
Plaintiff in person
Kennedys Law, Auckland
Second and third defendants in person

ERWOOD v HOLMES [2019] NZHC 2963 [14 November 2019]

Summary

[1]	Mr Robert Erwood sues Mr Anthony Banbrook who represented him in a suit against other former lawyers of Mr Erwood in 2003. He alleges Mr Banbrook breached duties of care in tort, fiduciary duties and contract. He alleges Mr Banbrook did not act on instructions to apply to have a litigation guardian for Mr Erwood removed before the litigation guardian agreed to settlement on Mr Erwood’s behalf. On the basis of a hearing by way of formal proof, I consider Mr Banbrook breached duties of care and fiduciary duties to Mr Erwood. But I do not consider Mr Erwood has established that caused him loss or caused Mr Banbrook to gain a profit. Neither do I consider Mr Erwood’s cause of action regarding fees has been established. I dismiss the application for judgment by default by way of formal proof.

What happened?

Renshaw Edwards and Harley proceedings

[2]	Mr Erwood sued the New Zealand Law Society and the professional indemnifiers of Renshaw Edwards, a law firm, when it collapsed and he lost money in 1992 (the Renshaw Edwards proceeding). His success against the Law Society was more than offset in financial terms by his loss against the indemnifier and legal costs.1

[3]	Mr Erwood then sued the lawyers who acted for him: Mrs Raylee Harley, and her  instructing  solicitors,  the  firm  Glasgow  Harley  (the   Harley  proceeding). Mr Erwood alleged, among other things, they had breached their duties by: failing to have him psychiatrically assessed when it was apparent that was required; failing to apply for a litigation guardian; and failing to communicate to him settlement offers from the Law Society.2

Mr Erwood’s lawyers and litigation guardian in the Harley proceeding

[4]	In this proceeding, Mr Erwood sues his lawyers in the Harley proceeding who sued his lawyers in  the  Renshaw  Edwards  proceeding.  Perhaps  unsurprisingly, Mr Erwood now represents himself.

1	Harley v McDonald [2002] 1 NZLR 1 (PC).
2	Statement of claim, 20 Mary 2002, Exhibit “I” to affidavit of Robert Erwood, 21 March 2019.

[5]	Mr  Erwood’s  evidence  is  that  in  late  2001  he  consulted   a  barrister,  Mr Banbrook  “concerning  certain  civil   proceedings”.3   Mr  Erwood   engaged   Mr Banbrook for the Renshaw Edwards proceeding and then again for the Harley proceeding.4 Mr Erwood alleges Mr Banbrook refused to act for him, at least in the Harley proceeding,  unless and until a litigation guardian was  appointed, because  Mr Banbrook said Mr Erwood lacked capacity to instruct counsel. Mr Erwood says he told Mr Banbrook he would not be responsible for any legal costs and Mr Banbrook would need to apply for legal aid or agree to act on the condition that he would only receive a fee if, and to the extent that, the court awarded costs.5

[6]	At some point between November and May 2002, Mr Banbrook reverse briefed Mr John Holmes, an Auckland solicitor in the Harley proceeding.6 Mr Erwood’s evidence is that he did not authorise the reverse brief.7 On 20 May 2002, Mr Holmes filed the notice of proceeding and statement of claim against the lawyers who acted for Mr Erwood in the Renshaw Edwards proceeding.8 On the same day, he filed an interlocutory application seeking the appointment of Mr Graeme Minchin, an Auckland barrister, as a litigation guardian for and on behalf of Mr Erwood. The grounds included that Mr Erwood was “mentally disordered” within the meaning of s 2 of the Mental Health (Compulsory Assessment and Treatment) Act 1992.9 It was supported by affidavits by Mr Minchin and Dr Roy Knill. The without notice application was granted by Harrison J on 21 May 2002.

[7]	In another proceeding underway at the same time (the fees proceeding), Glasgow Harley were suing Mr Erwood for not paying their fees for representing him in the Renshaw Edwards proceeding. In the fees proceeding, Mr Erwood was defending himself on the basis that, in 1999 when the fees proceeding issued, he was mentally disordered and should have had a litigation guardian. He filed an affidavit

3	Affidavit of Robert Erwood, 14 June 2019, at 1; see also affidavit of John Holmes, 10 March 2005, exhibit “F” to affidavit of Robert Erwood, 21 March 2019.
4	Affidavit of John Holmes, 10 March 2005, exhibit “F” to affidavit of Robert Erwood, affirmed 21 March 2019, at [1].
5	Affidavit of Robert Erwood, 14 June 2019, at 1.
6	Affidavit of John Holmes, 10 March 2005, exhibit “F” to affidavit of Robert Erwood, affirmed 21 March 2019, at [1].
7	Affidavit of Robert Erwood, 14 June 2019, at 1.
8	Affidavit of Robert Erwood, 14 June 2019 exhibits “C” and “D”.
9	Affidavit of Robert Erwood, 14 June 2019, exhibit “B”.

by Dr Knill to similar effect as that in the Harley proceeding. On 30 May 2002, nine days after Harrison J’s appointment of a litigation guardian for Mr Erwood in the Harley proceeding, Ronald Young J declined to appoint a litigation guardian for him in the fees proceeding, saying:10
There is no evidence which establishes that in 1999 when these proceedings began that Mr Erwood was mentally disordered. Nor is there today such clear evidence. There is evidence of a mentally fragile man who has used his mental illness at times in a highly manipulative way to advantage himself in litigation. There is evidence that his mental fragility has been well publicised by him to counsel, Judges and others. It is significant that at no time during the course of the last decade has anyone applied to commit Mr Erwood under the Mental Health (Compulsory Assessment and Treatment) Act 1992.

[8]	On 4 November 2002, in the Harley proceeding, Mrs Harley applied to rescind the order appointing Mr Minchin as litigation guardian. She submitted there was insufficient evidence before the Court to demonstrate Mr Erwood was mentally disordered and highlighted Ronald Young J’s finding to the contrary in the related proceeding. In a minute of 3 September 2003, Harrison J adjourned the hearing of this matter until after the settlement conference.

Moves towards settlement of the Harley proceeding

[9]	In March  2003,  in  the  Harley  proceeding,  Mr  Banbrook  advised  that  Mr Minchin in his capacity as guardian ad litem was willing to consider resolving the dispute other than by trial.11 Harrison J noted Mr Minchin’s obligation of independence as a litigation guardian, based on a premise of Mr Erwood’s incapacity.12

[10]	Shortly after that, Mr Erwood began personally filing documents with the Court. In a minute of 9 May 2003, Harrison J stated Mr Erwood “has no right to be heard personally on any applications in this proceeding given the  appointment of  Mr Graeme Minchin as guardian ad litem”. Mr Erwood continued to file documents, including a memorandum “for Judicial Conference”. In a minute dated 20 June 2003, Harrison J directed the registry to return the documents to Mr Erwood and reject any

10	Glasgow Harley v Erwood HC Nelson CP22/98, 30 May 2002 at [29].
11	Erwood v Glasgow Harley HC Auckland CP179-SD02, 17 March 2003 at [28].
12	At [30].

further documents for as long as Mr Minchin remained Mr Erwood’s guardian. In a minute of 3 September 2003, preparing for a judicial settlement conference, Harrison J noted:13
I record Mr Banbrook’s unconditional assurances that, first, he receives all instructions directly from Mr Graeme Minchin in the latter’s capacity as guardian ad litem and, second, Mr Minchin has absolute authority to negotiate and settle the terms of any agreement. Counsel envisage that attendance at the conference would be limited to counsel for each party together with the parties themselves … Mr Minchin will participate for the plaintiff; Mr Erwood will not be present unless all parties agree.

The litigation guardian

[11]	On 14 October 2003, Mr Erwood attended an interview with Dr Leelaratna Wettasinghe, a specialist psychiatrist and the Clinical Director of Psychiatry for the Nelson Marlborough District Health Board. The interview was at Mr Erwood’s request. Dr Wettasinghe wrote to Mr Minchin the following day by letter:14
I am writing this letter at the request of Mr Erwood.

I interviewed Mr Erwood on 14 October 2003 at Kawai Street Outpatient Clinic at his request and spent nearly an hour discussing his needs and also assessing him. Mr Erwood is well known to me, and during the above interview I found no evidence of an active mental disorder in him at present, that would impair his ability to make decisions relating to his welfare. His current mental state is such that he is capable of making decisions in relation to legal matters and instruct a counsel of his choice in court proceedings.

I find that Mr Erwood currently does not come under rule 82(b) of the High Court Rules.

Mr Erwood considers that he no longer requires a guardian ad litem and clinically I have no reason to oppose this. Accordingly, I support his assertion that he no longer requires a guardian ad litem in relation to his current litigation.

[12]	In an affidavit of 20 May 2019, Dr Wettasinghe confirms he “had the report faxed to” Mr Minchin.   Mr Erwood’s evidence  is that he supplied the report to     Mr Banbrook, Mr Holmes and Mr Minchin “and put them on notice”.15 He says he rang them “to apply to the court to remove the guardian forthwith”. He gives no dates

13	Minute of Harrison J, 3 September 2003.
14	Letter Dr Wettasinghe to Mr Minchin, 15 October 2003, exhibit “B1” to affidavit of Robert Erwood, 21 March 2019.
15	Affidavit of Mr Erwood, 14 June 2019, at 3.

for these events. He also says he told Mr Minchin to arrange for another lawyer to take the case and that Mr Minchin agreed to do this.16 He gives no date for this either.

[13]	Mr Minchin received the letter, or facsimile, from Dr Wettasinghe.17 He wrote to Mr Erwood that he had also received “messages relating to your requests for me to retire as your guardian including threats of reporting me to the law society”. He confirmed that,  on  the  basis  of  Dr  Wettasinghe’s  opinion,  he  had  instructed  Mr Banbrook to apply for his removal as litigation guardian.

Settlement of the Harley proceeding

[14]	Mr Banbrook did not apply to remove Mr Minchin as litigation guardian.

[15]	The parties proceeded to a judicial settlement conference, held on 25 November 2003. During the trial of Mr  Erwood’s claim  against  Mr Holmes and  Mr Minchin, Mr Minchin gave evidence that he was “completely unprepared and surprised” and “out of his depth” when he appreciated the settlement conference was happening.18

[16]	Mr Erwood relies on an affidavit of Mr Timothy Harley, a partner in Glasgow Harley, who was present at the settlement conference.19 Mr Harley says the defendants sought, and Mr Banbrook and Mr Minchin gave, repeated assurances that Mr Minchin had all of the necessary authority to reach settlement and that Mr Banbrook had given Mr Minchin advice as to the reasonableness of the settlement itself.20 Mr Harley says Mr Banbrook and Mr Minchin “also referred to Mr Erwood’s then current mental condition, asserting that Mr Minchin and Mr Banbrook were entitled to rely on the views expressed by Drs Knill and Cumming as justifying Mr Minchin’s continuation as guardian ad litem and their firmly held belief that Mr Erwood continued to be unable to understand matters sufficiently to properly instruct Counsel”.21

16	Affidavit of Robert Erwood, 14 June 2019, at 4(A) (the first of two pages marked “4(A)”).
17	Letter Mr Minchin to Mr Erwood, 30 October 2003, exhibit “C” to affidavit of Robert Erwood, 21 March 2019.
18	Erwood v Holmes [2019] NZHC 2049 at [21].
19	Affidavit of Timothy Harley, 14 June 2006, exhibit “G” to affidavit of Robert Erwood, 21 March 2019.
20	At [9]–[10].
21	At [10].

[17]	This evidence was disputed in the trial before Downs J who held:22

“[i]t is unnecessary to resolve the admissibility of these affidavits. I assume Mr Banbrook and Mr Minchin represented, at least implicitly, they had authority to settle the claim.”

[18]	I assume the same.

[19]	The parties settled at the conference. Glasgow Harley and Mrs Harley agreed to pay Mr Erwood $45,000 and waive adverse costs and outstanding fees totalling
$151,646.50 and Mr Minchin agreed, for Mr Erwood, to pay outstanding fees and costs of $93,905.36. Frater J made corresponding consent orders that day, which were sealed on 27 November 2003.23 On the same day, Frater J issued a minute confirming the settlement was “appropriate in all the circumstances”.24

The aftermath

[20]	Mr Erwood’s evidence is that, following the settlement conference:25

Mr Holmes told [Mr Erwood] that the proposed terms included provision for Mrs Harley & Glasgow Harley to forgive $245,000 of [Mr Erwood’s] claimed indebtedness to her, and in further telephone conversations with [Mr Banbrook] he told [Mr Erwood] that the agreed terms included provision for all [Mr Erwood’s] debts to the Harley parties were forgiven.

[21]	On 1 December 2003, Mr Erwood filed an application to set aside the consent orders. By minute dated 9 December 2003, Harrison J observed the proceeding had come to an end on 25 November 2003, there was nothing further for determination, referred to his Minute of 20 June 2003 (regarding Mr Erwood’s right to file documents), and directed that the Registry return the documents filed by Mr Erwood.

[22]	On 12 January 2004, Mr Minchin applied for orders: discharging him in his role as litigation guardian; permitting Mr Erwood to represent himself or be represented by counsel; and recalling and setting aside the consent order made at  the

22	Erwood v Holmes, above n 18, at [21] and footnote 11.
23	Order Made By The Court, 25 November 2003, sealed 27 November 2003, exhibit “J” to affidavit of Robert Erwood, 21 March 2019.
24	Minute of Frater J, 27 November 2003.
25	Statement of claim, undated, exhibit “A” to affidavit of Robert Erwood, 21 March 2019, at [21].

25 November 2003 settlement conference.26 On 16 February 2004, Mr Banbrook appeared in order to argue the application. In a minute following the hearing, Frater J recorded Mr Banbrook sought an order discharging Mr Minchin as litigation guardian on the basis:

…either that [Mr Erwood] is no longer a mentally disordered person and that he was not mentally disordered at the time the consent order was made and did not consent to the order, or that the litigation guardian is functus, the proceedings in respect of which he was appointed having been resolved.

[23]	Mr Banbrook also sought an order “dismissing” the aspects of the application that would allow Mr Erwood to represent himself or to recall and set aside the consent orders. Frater J decided:27
[5]	In my view, with the resolution of the proceedings, it is appropriate to discharge the appointment of Mr Minchin as litigation guardian, and I make that order accordingly.

[6]	In the circumstances, it is not necessary for me to determine one way or another whether Mr Erwood is currently mentally disordered in terms of the Mental Health (Compulsory Assessment and Treatment) Act 1992 or whether he was at the time of the settlement conference.

[7]	In addition, I dismiss the application:

(i)	to permit the plaintiff to be represented by himself or his counsel; and

(ii)		recalling and setting aside the consent order made on 25 November 2003.

[24]	On 20 February 2004, Mr Holmes wrote to Mr Erwood advising him he had received the settlement sum  of $45,000 from Glasgow  Harley and Mrs  Harley.28  Mr Holmes was aware that Frater J had dismissed the application to set aside the consent orders. He enclosed in the letter bills of costs and a statement. Mr Erwood instructed Mr Holmes to return the funds to Glasgow Harley and Mrs Harley.29 He still wished to set aside the consent order. Mr Holmes replied by letter that it would be inappropriate to return the settlement funds. Mr Holmes sent Mr Erwood a cheque

26	Minute of Frater J, 16 February 2004, exhibit “D” to affidavit of Robert Erwood, 21 March 2019, at [1].
27	Minute of Frater J, 16 February 2004.
28	Affidavit of John Holmes, 10 March 2005, exhibit “F” to affidavit of Robert Erwood, 21 March 2019, at [4]–[5].
29	At [6].

for $13,444.58, being the $45,000 minus fees and disbursements. Mr Erwood would not accept it. Mr Holmes banked the cheque in his trust account. The evidence before Downs J indicated that Mr Banbrook’s fee and disbursements amounted to $29,894.50 in relation to Mr Banbrook’s work in the Renshaw Edwards proceeding.30

[25]	In late 2005, Mr Erwood instructed new solicitors, who filed an application to recall and set aside the settlement orders. The basis of the application was apparently that Mr Minchin’s appointment of the litigation guardian ought to have terminated prior to the settlement conference.31 The Registrar rejected the application. On 15 December 2005, Harrison J dismissed Mr Erwood’s application to review the registrar’s decision.32 He found: Mr Erwood was mentally disordered on 21 May 2002 when he made the order appointing Mr Minchin as guardian ad litem; Mr Erwood did not challenge the validity of that appointment; a guardian ad litem could not retire without the leave of the Court; and the Court granted Mr Minchin such leave in 2004, after the consent orders were made.33

[26]	The Court of Appeal declined Mr Erwood’s application for special leave to appeal out of time.34 O’Regan J, for the Court, said it was unnecessary to make findings about the merits of the appeal.35 He said:

[32] … we agree with the respondents that the repeated attempts at re- opening litigation which was settled and subject to consent orders 3 years ago smacks of abuse of the Court’s processes. In those circumstances we can see no proper basis for the Court granting an indulgence to the applicant to continue litigation of that nature. Having regard to the whole history of this litigation, we are not satisfied that the interest of justice would be served by the granting of the indulgence, and in those circumstances we are not prepared to extend the time for the filing of the proposed appeal.

This proceeding

[27]	This proceeding  was  filed  by  Mr  Erwood  in  November  2004  against  Mr Holmes. In February 2006, Mr Banbrook was joined as second defendant. The proceeding was stayed in August 2006, pending determination of related proceedings

30	Erwood v Holmes, above n 18, at [92].
31	Erwood v Glasgow Harley (2006) 18 PRNZ 329 (CA) at [3].
32	Erwood v Glasgow Harley HC Auckland CIV-2002-404-1663, 15 December 2005.
33	At [12], [15].
34	Erwood v Glasgow Harley (2006) 18 PRNZ 329 (CA).
35	At [27].

in the Court of Appeal. In May 2011, Mr Graeme Minchin was joined as third defendant. In April 2012, the proceeding was stayed again due to Mr Erwood’s bankruptcy. In March 2017, Associate Judge Doogue declined to appoint a litigation guardian for Mr Erwood and declined to appoint a counsel to assist the court.36 There were further reviews or applications with similar results in 2017, 2018 and 2019. 37 In September 2018, Associate Judge Sargisson declined to strike out Mr Erwood’s claim against Mr Holmes.38

[28]	The proceeding was finally set down for trial in August 2019. Mr Holmes and Mr Minchin opposed Mr Erwood’s claims. The proceeding against them was tried before Downs J after various unsuccessful attempts by Mr Erwood to adjourn it. In Downs J’s judgment of 20 August 2019, Mr Erwood was unsuccessful.39 Downs J found:

(a)	Mr Minchin did not breach his duties to Mr Erwood as Mr Erwood’s litigation guardian. He acted independently and in Mr Erwood’s best interests  at  the  settlement  conference.40  He  was  not  obliged  to  Mr Erwood to raise Dr Wettasinghe’s letter with Frater J at the conference, though it is arguable he should have told her in terms of his duty to the Court.41 In any event, it is all but certain settlement would have occurred if the letter had been raised with Frater J or another Judge.42

(b)	Mr Holmes did not learn of Dr Wettasinghe’s letter until well after settlement, so could not act on it and, if he had, history would remain unchanged.43 Neither did Mr Holmes breach obligations to Mr Erwood in relation to fees.

36 Erwood v Holmes [2017] NZHC 556.
37  Erwood v Holmes [2017] NZHC 1278 (Moore J); Erwood v Holmes [2017] NZHC 2999 (Brewer J); Minute of Associate Judge Doogue, 31 October 2017; Minute of Associate Judge Andrew, 3 December 2018; Erwood v Holmes [2019] NZHC 1302 (Venning J).
38 Erwood v Holmes [2018] NZHC 2367 at [53].
39 Erwood v Holmes, above n 18, 2049.
40	At [67].
41	At [68].
42	At [69].
43	At [87]–[89].

[29]	Mr Banbrook had taken no steps in the proceeding since at least August 2017.44 Mr Banbrook’s name was struck off the roll of barristers and solicitors on 2 November 2017, after the New Zealand Lawyers and Conveyancers Disciplinary Tribunal found him guilty of five charges of misconduct between 2013 and 2017.45 Mr Erwood applied for judgment by default against Mr Banbrook. This is the judgment for that.

[30]	It may be that I could rely in this judgment on the evidential findings of Downs
J. In my account of the facts above, I mention a few of them as context. That was a trial of the same proceeding as this one so s 50(1) of the Evidence Act 2006 does not seem to apply here, given the definition of “proceeding” in s 4 and the purpose of the section.46 Mr Erwood had the opportunity to test the evidence presented there so there seems little risk of unfairness. Mr Banbrook did not have that opportunity but that is because Mr Banbrook has declined the opportunity to take any steps in this proceeding since March 2017. But, in any case, Downs J’s evidential findings are not material to my decision. Evidence before him is relevant to my decision on the dispute over fees, but the same conclusion applies whether I rely on the evidence before Downs J or on the lack of evidence before me to substantiate Mr Erwood’s claim.

[31]	Mr Erwood sues Mr Banbrook for five causes of action (as well the other two defendants, though only Mr Holmes and Mr Banbrook for the first and third causes of action):

(a)	$955,000 plus interest, fees and costs for negligence in:

(i)	reverse briefing Mr Holmes without consent of Mr Erwood or litigation guardian;

(ii)	failing to take steps to remove Mr Minchin as litigation guardian after  being  instructed  to  do  so  by  Mr  Minchin  and  by  Mr Erwood;

44 Minute of Lang J, 30 August 2017, at [1].
45 Auckland Standards Committees 3 and 4 v Banbrook [2017] NZLCDT 35.
46 Dorbu v The Lawyers and Conveyancers Disciplinary Tribunal HC Auckland  CIV-2009-404- 7381, 11 May 2011 at [21], as quoted in Elisabeth McDonald and Scott Optican (eds) Mahoney on Evidence: Act & Analysis (Thomson Reuters, Wellington, 2018) at [EV50.01].

(iii)	failing to take steps to enable Mr Erwood to attend the settlement conference;

(iv)	failing to disclose to the Court prior to the settlement conference that Mr Erwood was mentally competent to instruct counsel and to make a decision at the settlement conference;

(v)	misleading the Court as to Mr Erwood’s capacity generally;

(vi)	proceeding with the settlement conference contrary to instructions and to Mr Erwood’s expressed wishes; and

(vii)	failing to exercise due skill and care in drafting and framing the terms of  the  settlement,  and  in  consenting  on  behalf  of  Mr Erwood to those terms.

(b)	$955,000 plus interest, fees and costs for breach of an implied term in their contract, to act responsibly, in accordance with law,  with reasonable skill and care and in Mr Erwood’s best interests.

(c)	declaration and refund for wrongful deduction of his fees from the
$45,000 paid into Mr Holmes’ trust account in purported settlement.

(d)	$955,000 plus interest, fees and costs for breach of fiduciary duties to act in good faith and for the benefit of Mr Erwood by entering into the settlement agreement and not applying to discharge Mr Minchin as litigation guardian.

(e)	alternatively, $93,905.36 plus interest, costs, fees of $150,000 for agreeing to the settlement knowing that it would be unfairly prejudicial to Mr Erwood by exposing him to liability to Mrs Harley for payment of her fees.

Law of formal proof

[32]	Rule 15.9 of the High Court Rules 2016, relevantly provides:

15.9	Formal proof for other claims

(1) This rule applies if, or to the extent that, the defendant does not file a statement of defence within the number of working days required by the notice of proceeding, and the plaintiff seeks judgment by default for other than a liquidated demand.

…

(4)	The plaintiff must, before or at the formal proof hearing, file affidavit evidence establishing, to a Judge’s satisfaction, each cause of action relied on and, if damages are sought, providing sufficient information to enable the Judge to calculate and fix the damages.

(5)	If the Judge before or at the formal proof hearing considers that any deponent of an affidavit filed under subclause (4) should attend to give additional evidence, the Judge may direct accordingly and adjourn the hearing for that purpose.

[33]	As with all High Court rules, the objective of r 15.9 is to achieve just, speedy and inexpensive determination of the proceedings.47 The level at which I have to satisfy myself regarding Mr Erwood’s evidence is much the same as it would be if the proceeding had gone to trial.48 Affidavit evidence for formal proof should not include evidence the court could not receive if objection was raised by the defendant.49

Is Mr Banbrook liable to Mr Erwood for not acting on instructions?

[34]	I consider Mr Erwood has established that Mr Banbrook breached a duty of care in tort and a fiduciary duty,  to Mr Erwood, in not following instructions by    Mr Minchin to remove Mr Minchin as litigation guardian.50 I am satisfied the instruction was given, before the settlement conference. It was not followed. It should have been. Other breaches of duties of care and fiduciary duties are part and parcel of that breach: misleading the Court as to Mr Erwood’s capacity; framing the terms of

47	Kim v Cho [2016] NZHC 1771, [2016] NZAR 1134 at [5].
48	Ferreira v Stockinger [2015] NZHC 2916 at [35].
49	Stephens v Cribb [1991] 4 PRNZ 337 (CA)
50 See Matthew Smith, “Barristers Sole”, Ian Millard QC, “Fiduciary Duties of Lawyers” and  Jonathan Scragg “Professional Liablity and Insurance Issues” in Matthew Palmer (ed) Professional Responsibility in New Zealand (online ed, LexisNexis) at [150,404], [270,010] and [290,010].

the settlement and consenting to the terms of settlement. I do not have sufficient evidence to make a positive finding that Mr Erwood was mentally competent at the time, which is necessary for me to find Mr Banbrook breached a duty to inform the court he was, though I consider Mr Banbrook’s duty to the Court required him to disclose to the Court Dr Wettasinghe’s letter.

[35]	However, I do not consider Mr Erwood has established any such breach of duty caused him loss or caused Mr Banbrook to profit. Under r 94 of the High Court Rules in force at the time, for Mr Erwood to have resumed control of the Harley proceeding, a court would have had to have removed Mr Minchin as litigation guardian. I am not persuaded, on the balance of probabilities, the Court would necessarily have removed Mr Minchin as guardian ad litem. Courts did not do so when they had the opportunity:

(a)	In December 2003, Mr Erwood applied to set aside the consent orders and Harrison J declined to do so.

(b)	In February 2004, Frater J considered a further application and supporting evidence. She discharged Mr Minchin as litigation guardian but she dismissed the application that Mr Erwood represent himself and the application to recall and set aside the consent orders.

(c)	In December 2005, Harrison J again dismissed Mr Erwood’s application to set aside the settlement orders on the basis Mr Minchin’s appointment should have terminated before the settlement conference. The Court of Appeal declined leave to appeal that.

(d)	These courts were all in a better position then, than I am now, to assess the merits of such applications.

[36]	Consequently, it also does not follow that Mr Banbrook breached a duty failing to enable Mr Erwood to attend the settlement conference.

[37]	Furthermore, even if Mr Minchin had been removed as litigation guardian, it is simply speculative to say that Mr Erwood would have obtained a better outcome to

the Harley proceeding for Mr Erwood than Mr Minchin did. He may well have obtained a worse result. I am not persuaded Mr Banbrook’s breaches of his duties of care or fiduciary duties caused any loss to Mr Erwood, let alone the loss he alleges, or caused Mr Banbrook to gain profit.

[38]	Neither do  I consider there is  anything to the allegation of negligence  by  Mr Banbrook  in  reverse  briefing  Mr  Holmes  without  getting  the  consent  of  Mr Erwood or a litigation guardian. There is nothing to suggest they would have objected or that it led to any loss.

[39]	I do not consider Mr Erwood has a valid cause of action in contract against Mr Banbrook in relation to implied duties. It is not clear to me whether Mr Erwood had a contract directly with Mr Banbrook, a barrister, at a time before the intervention rule had been relaxed. But if he did, recovering on it would suffer from the same problem of causation that applies to the duty of care in tort and fiduciary duty.       Mr Erwood has not established that breach of a duty of care, a contract or fiduciary duties caused him any loss or Mr Banbrook to gain profit, let alone loss justifying damages of $955,000.

[40]	Finally, on this topic of the litigation guardian and settlement, I do not consider Mr Erwood’s fifth cause of action adds anything to the others. It appears to be simply another consequence flowing from the breaches Mr Erwood otherwise alleges.

Is Mr Banbrook liable to repay fees to Mr Erwood?

[41]	There is no independent documentary evidence of the fee arrangement between Mr Erwood and Mr Banbrook. The evidence before Downs J in this proceeding is that the fee was in relation to the Renshaw Edwards proceeding. On its own, Mr Erwood’s evidence does not make it clear that the agreement he says was entered into was in relation to that proceeding. Furthermore, as Downs J found, contingency fees were not common in the early 2000s.51 The timing of Mr Banbrook’s invoice supports the conclusion that Mr Banbrook agreed not to render a fee until Mr Erwood had money to pay it.

51	Erwood v Holmes, above n 18, at [98], [100].

[42]	Downs J also noted that this proceeding is not the first time Mr Erwood has claimed he negotiated a contingency fee.52 The Court of Appeal rejected Mr Erwood’s argument that he had negotiated one with Glasgow Harley. Finally, it was Mr Holmes who  deducted  Mr  Banbrook’s  fees,  having  paid  them  to  Mr  Banbrook,  not  Mr Banbrook himself. I do not consider Mr Erwood has established his claim against Mr Banbrook in relation to fees.

Result

[43]	I dismiss the application for judgment by default, by way of formal proof.

Palmer J

52	At footnote 64.