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Class Action against Grant Shand & CRS will proceed

In a judgment issued on 18 December 2020 the Court of Appeal confirmed that the High Court class action led by Karlie Smith, will proceed. (Karlie Margaret Smith v Claims Resolution Services & Grant Shand Barristers & Solicitors. CIV 2018- 409-643).


Background

The High Court

In 2018 Karlie Smith applied to the High Court for an order that she be appointed the representative of a class action to be brought against Claims Resolution Services Ltd [CRS] (a company owned and operated by Christchurch businessman, Bryan Staples), and Grant Shand Solicitors (a law firm working in concert with CRS). The High Court class action proceedings allege that both CRS and Grant Shand breached fiduciary duties owed to Karlie while providing her with services because those parties had failed to disclose the existence of an unlawful joint venture between them, various conflicts of interest that existed, or how those parties would benefit from the arrangements. Also, the proceedings allege that in those circumstances the contracts between her and CRS/Shand were unconscionable and void.


Justice Gendall granted Karlie Smith leave to bring her claims on a representative basis i.e. that she would represent not only herself, but “all persons who, like her, engaged CRS and were represented by Shand Solicitors to help resolve their claims”.1

Justice Gendall made other procedural rulings in Karlie Smith’s favour but declined her request to have the advertising of the representative action to be placed on CRS’ Facebook page. Both parties then appealed the High Court decision.


The Court of Appeal

CRS and Grant Shand sought to overturn the High Court decision that Karlie Smith should be the representative of a class and that the case could proceed on a representative basis. They argued that each person’s case was different and that there was insufficient commonality of interest to justify the case proceeding as a representative action.


The Court of Appeal dismissed CRS and Grant Shand’s appeals, saying among other things:


[32] In our view, the decision of the High Court granting Ms Smith leave to bring this proceeding on a representative basis in an orthodox application of those principles. At the hear of those principles are three essential factors:


a. A commonality of interest in the subject matters, as to both fact and law, of the proceeding;

b. Access to justice;

c. Litigation efficiency and judicial economy.


[35] in those circumstances, the existence of a common interest in issues of law and fact is, in our view, virtually self-evident.


The Court of Appeal then allowed Karlie Smith’s appeal on the question of whether any court issued notices to prospective class members, should be advertised on the CRS Facebook page. The Court of Appeal noted that in declining Karlie’s application on this point in the High Court, Justice Gendall thought it unlikely that “disgruntled clients would be checking the websites or Facebook pages of the businesses in question”.


However, the Court of Appeal took quite a different view and noted evidence showing “the CRS Facebook page is being used to advance its interest in this litigation.” The Court went on to say, “We accept the submission for the respondent that CRS’s post clearly show that it believes it is able to reach potential plaintiffs through the page. We also accept that it is appropriate to use the Facebook page to publish the Court-approved opt-in notice to provide a summary of the action alongside the understandably more partisan commentary offered by CRS itself.”


This means that unless CRS/Shand chooses to seek leave to appeal the Court of Appeal decision, the Karlie Smith class action will now proceed in the High Court in coming weeks. Further, CRS will be obliged to publish the court-approved opt-in notice on its Facebook page. Plainly the court notice to prospective class action members will be a dispassionate and truthful statement as to the position with this class action and the options available to prospective class members, something that will no doubt stand in stark contrast to some statements already made about the action on that page.


To view the judgment, please view the document below...

1
.25 Judgment of the Court dated 18 Dece
Download 25 JUDGMENT OF THE COURT DATED 18 DECE • 244KB

Inquiries to: Grant Cameron, 0274 323 066, or grant@gcalawyers.com


1 Court of Appeal judgment paragraph [3].

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