Bank of New Zealand v New Zealand Guardian Trust Co Ltd: 1999

New Zealand Court of Appeal – Gault J said: ‘Recent cases show a trend in favour of analysis by reference to the scope of the duty, and enquire as to the risks against which there was a duty to protect the plaintiff. In South Australia Asset Management Corporation v York Montague Ltd [[1996] UKHL 10; 1997] AC 191 the House of Lords approached in this way a case of breach of a contractual duty of care while noting that the concurrent duty in tort was of the same scope. In the speech of Lord Hoffmann, with whom the other members agreed, it was said that the real question in such a case is the kind of loss in respect of which the duty is owed. To some extent this is merely to restate the question asking what losses is it reasonable that the law should require the wrongdoer to compensate, but it is a helpful analytical approach as illustrated in the instructive treatment in Todd, The Law of Torts (2ed 1997) para 20.3.’
Tipping J observed that while historically the law has tended to place emphasis on the legal characterisation of the relationship between the parties in delineating the remedies available for breach of an obligation, the nature of the duty which has been breached can often be more important, when considering issues of causation and remoteness, than the classification or historical source of the obligation. He identified three broad categories of breach by a trustee. First, there are breaches of duty leading directly to damage or to loss of trust property. Secondly, there are breaches involving an element of infidelity. Thirdly, there are breaches involving a lack of appropriate skill and care. He continued: ‘In the first kind of case the allegation is that a breach of duty by a trustee has directly caused loss of or damage to the trust property. The relief sought by the beneficiary is usually in such circumstances of a restitutionary kind. The trustee is asked to restore the trust estate, either in specie or by value. The policy of the law in these circumstances is generally to hold the trustee responsible if, but for the breach, the loss or damage would not have occurred. This approach is designed to encourage trustees to observe to the full their duties in relation to trust property by imposing on them a stringent concept of causation [ie a test by which a ‘but for’ connection is sufficient]. Questions of foreseeability and remoteness do not come into such an assessment.’
Gault J, Tipping J
[1999] 1 NZLR 664
England and Wales
Cited by:

  • Cited – AIB Group (UK) Plc v Mark Redler and Co Solicitors SC 5-Nov-2014
    Bank not to recover more than its losses
    The court was asked as to the remedy available to the appellant bank against the respondent, a firm of solicitors, for breach of the solicitors’ custodial duties in respect of money entrusted to them for the purpose of completing a loan which was to . .
    [2014] UKSC 58, [2014] 3 WLR 1367, [2014] WLR(D) 466, UKSC 2013/0052, [2015] AC 1503

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Updated: 07 December 2020; Ref: scu.554201