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‘Negligent’ lawyer sued by clients, fails in bid for final appeal

3 Nov 2023

| Author: Anna Longdill

Senior Courts Act 2016, s 60 – leave to bring second appeal – Court of Appeal – negligence, breach of contract and breach of fiduciary duty – District Court findings against lawyer upheld by High Court

Sharma v Foster-Bohm [2023] NZCA 509.

 

Anjela Sharma is a lawyer. She was engaged by Gail Foster-Bohm and Andrew Corbin to help them make a claim for unjustifiable dismissal after their employment at IHC New Zealand Inc was terminated as part of restructuring in August 2015.

The clients were originally given four weeks’ notice that their employment would be terminated, but instead they agreed to be paid. They advised Sharma by email that their last day was Friday, 7 August 2015 and asked when their claim for unjustifiable dismissal should be made. At a subsequent meeting on 23 October 2015, the clients reiterated to Sharma their employment had ended on 7 August 2015 and asked about the 90-day period to make their claim.

Sharma raised their personal grievances with IHC on 25 November 2015. IHC objected on the basis that they had been raised outside the 90-day period that ran from 7 August 2015.

On 6 October 2016, the Employment Relations Authority determined that the claims for unjustified dismissal were not actionable as they were outside the 90-day period. Matters were referred to mediation, but no agreement was reached.

The clients cancelled the contract of retainer with Sharma and brought a claim for negligence, breach of contract and breach of a fiduciary duty against her in the District Court.

The District Court held that Sharma had a duty of care to act competently and in a timely way under her retainer and  in neglience. This duty was breached as Sharma had been specifically told that the clients had agreed to be paid in lieu of notice. Further, Sharma ought to have applied for an extension of time to raise the claim on the basis it was her mistake rather than her clients’.  She should also have advised the clients that they might have a claim against her and to seek independent advice.

The judge awarded damages of $20,000 to Corbin and $17,500 to Foster-Bohm, relying on expert evidence from another lawyer, Mr Zindel, as to the settlement range he would have recommended to IHC if he had been acting for it.

Sharma’s claim for unpaid legal fees was dismissed, the judge determining that the work she carried out was substantially wasted because it was carried out negligently.

Sharma unsuccessfully appealed to the High Court. As to liability, she argued the claims were not statute-barred, the District Court was wrong to find her negligent based on the information she knew, and wrongly accepted Mr Zindel’s evidence. She also challenged the award of damages, arguing the clients had not suffered any loss. Finally, Sharma argued she was entitled to be paid for her legal work. The High Court rejected all these arguments and subsequently declined an application by Sharma for leave to appeal to the Court of Appeal.

Sharma applied to the Court of Appeal for leave to bring a second appeal, seeking to raise the same arguments that were rejected by the High Court.  She argued that leave was justified because of the serious consequences to her of being held to be negligent and that there is a public interest in an authoritative decision on the matters raised in the High Court.

 

Applicable principles: Senior Courts Act 2016, s 60 – application for leave to bring a second appeal – question of law or fact capable of bona fide and serious argument – whether question of sufficient public or private importance is raised to outweigh the cost and delay of a further appeal.

 

Held: Sharma’s application for leave to appeal is declined.

It is not seriously arguable that Sharma acted with reasonable care. It is also not seriously arguable that the District Court judge assessed loss in a manner that was not open to her. Sharma’s claim for her legal fees for work performed negligently was properly denied.

 

Sharma v Foster-Bohm [2023] NZCA 509.

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