03.12.2014

Jensen v Rameka [2014] NZHC 1720

In 2003 the law firm Jensen Waymouth assisted Mrs Rameka in making a Will.  In November 2005, when Mrs Rameka was seriously ill in hospital, a second Will was prepared by the firm and Mrs Rameka’s de facto partner attended to its execution.  After Mrs Rameka died, probate was granted in respect of the second Will, but it was later declared to be invalid because Mrs Rameka’s testamentary capacity had not been established.  The invalidity of the second Will meant the prior, first Will, would have had effect, but Jensen Waymouth had destroyed the first Will and all records of the instructions from which it had been prepared.  In 2011 a claim was brought against the firm by a beneficiary under the first Will for $30,000 in exemplary damages (compensatory damages were not sought).

In the District Court, the firm conceded it owed a duty of care to the plaintiff not to destroy the first Will which it had breached, but submitted the circumstances were such that exemplary damages were not appropriate.  Although no case where exemplary damages had been awarded in a claim for legal professional negligence was identified by either counsel or the Court, the Judge awarded exemplary damages of $30,000.  The firm appealed against the award of exemplary damages and the quantum.

The High Court, following the reasoning in Couch v Attorney-General [2010] 3 NZLR 149 (SC) and Bottrill v A [2003] 2 NZLR 721 (PC), considered the issue was whether the firm’s actions met the test of subjective recklessness.  It confirmed the lower Court’s findings that the firm had a policy requiring express instructions before destroying a prior Will; no such prior instructions had been obtained; they were aware a prior Will could have effect if a subsequent Will was invalid; and it was “inconceivable” the firm was unaware of the potential prejudice in the event the first Will was destroyed.  The Court upheld the award of exemplary damages.

The level of damages was reduced by the Court from $30,000 to $23,000, based on principles identified by the Court of Appeal (McDermott v Wallace [2005] 3 NZLR 661 (CA)), consistent with precedent.  While awards of exemplary damages are relatively few in number and limited in quantum in New Zealand, they often fall in the $20,000 to $25,000 range, with the high watermark being around $100,000.  Those at the higher end are typically sexual abuse cases.

The case is of interest insofar as it reinforces the conservative view the New Zealand courts take towards awards of exemplary damages.  But perhaps more significantly the judgment makes it clear the door is open for exemplary damages claims against solicitors and other professionals for breach of professional duty.

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