A Queenstown law practice is the loser from a verdict believed to be a legal first.
Preston Russell Law is to pay $105,000 after a judgment in the High Court, Auckland, earlier this month.
Justice Paul Heath ruled the law firm, acting for former Arrowtown couple Angela and Scott Peters, fluffed a complicated Auckland house purchase in May 2009.
When the Peters subsequently split two years later, they went to court to sort out whether $800,000 of finance from Angela’s parents’ family trust was a relationship debt or a gift.
The case was settled out of court last December, with Scott conced-ing it was a relationship debt. Scott and his parents, trustees of their son’s trust, then turned their sights on Preston Russell.
The Peters’ lawyer argued that if the Queenstown firm had complied with its duty of care, no dispute between the estranged couple would have arisen and legal costs wouldn’t have been incurred.
The case was an exception to the rule legal costs can’t be recovered as damages, Justice Heath decided.
Awarding Scott and his parents $55,000 for “wasted legal costs”, Justice Heath said Preston Russell should have clarified financing arrangements with them before settling the property purchase.
The Peters should also have been told to get independent legal advice, he said.
Preston Russell was also ordered to pay Scott’s parents $50,000 for negligence causing “anxiety and stress” because they became personally liable for the $800,000 and had to sell their home.
Preston Russell partner Russell Mawhinney, a Queenstown district councillor, was the firm’s only witness – he and legal assistant Cassie Brunt handled the house purchase.
Mawhinney refused comment, referring Mountain Scene to Preston Russell managing partner Warwick Cambridge.
Cambridge says: “Preston Russell is disappointed with this judgment but after carefully working through the issues along with our insurers and their advisors, we’ve decided not to appeal.”
Cambridge says his firm is “treating this issue, as we would treat any complaint, extremely seriously”, adding that policies and procedures are being reviewed.
Justice Heath’s award for wasted legal costs will set lawyers’ tongues wagging – NBR Online reports the Peters’ lawyer claiming it’s unprecedented.
Preston Russell’s decision not to appeal also means the ground-breaking verdict will stand as a precedent to be cited in future court cases.