Negligent Delay in Estate Planning

Abstract

Stirling v. Miller & Poulgrain [1980] 2 NZLR 402 (SC) involved a firm of solicitors that negligently delayed the conveyancing for a property being transferred into a family trust. As a result, the price paid by the trust was $90,000 was more than it would have been had the conveyancing been completed promptly. Mahon J found that the trust should be awarded damages of $2000 and that Mrs Stirling, the client, should be awarded damages of $24,400. This note criticises the quantification of damages on the basis that Mahon J refers to the overall object of the transaction - to reduce the amount of estate and gift duties payable – but does not calculate damages on this basis.

On appeal, (reported after the Supreme Court Judgment, [1980] 2 NZLR 402 (CA)), the Court of Appeal over-turned Mahon J and found that the trust was not entitled to any damages since the trust was not in substance worse off as the whole price was to be gifted to it over time. The Court calculated Mrs Stirling’s damages at $8,500 only, the amount that she would have to pay in gift duties on the extra $90,000 if she structured the transaction efficiently.

Keywords: Damages, loss, quantification of damages, tort, negligence, estate duty, gift duty, substance, form

JEL Classification: K11