Class action against earthquake advocate and lawyer stumbles

A class action against a lawyer and commission-charging earthquake advocate appears to have hit a brick wall.

The 2019 representative action was taken against Christchurch company Claims Resolution Service (CRS)and Grant Shand Barristers and Solicitors.

In a decision released in late December 2021, the High Court in Christchurch has refused an application to substitute the class action’s representative plaintiff – class actions must be led by a single representative of the group – and has revoked the action’s representative status.

Christchurch house owner Karlie Smith began the action in August 2018 alleging Shand and Claims Resolution Service, directed by Bryan Staples, were not entitled to commissions, fees and expenses because the contract with her was unconscionable and duties owed to her had been breached.

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In February 2019 the High Court allowed the action to continue as a class action because, around the same time, a number of former Staples’ clients were defending proceedings by CRS trying to recover money owed.

The class action received a major blow in 2021 when the High Court rejected a case brought by Christchurch homeowner Lucia Pfisterer against CRS and Shand on similar grounds to Smith. Pfisterer has appealed the decision and is waiting for a hearing date.

Spooked by the ruling, Smith informed her lawyer Grant Cameron of GCA Lawyers that she no longer wanted to be the representative plaintiff meaning Cameron had to find another representative. He found a willing couple but their agreement was conditional on Pfisterer winning her appeal.

Associate Judge Owen Paulsen said that left the court in the unsatisfactory position where it was asked to substitute the plaintiff knowing “the chances are good they will later withdraw their consent to acting that capacity”.

“There is no suggestion there is anyone else from the represented group willing to take their place should that occur.

Lawyers supporting the substitution argued the 23 parties wanting to join the representative action would lose the forensic and efficiency advantages of a class action, reducing their access to justice, if the substitution was denied.

CRS argued the proceeding had been promoted in a “blaze of publicity” that was highly critical of CRS and Staples. The potential group said to be ready to become part of the action was initially estimated to be 178-strong, a figure that had influenced the High Court and Court of Appeal in allowing the representative action. The group had reduced to 23 and some of those would not qualify.

The company also said the substitution would cause it significant prejudice due to delays.

Staples said he had suffered damage to his reputation and spent about $600,000 on legal fees defending the action. He was owed about $500,000 by seven clients who were not required to pay while the proceeding continued.

Associate Judge Paulsen said the delays would defer for a long time the ability of CRS and Shand to restore their reputations and the financial consequences for CRS could be severe.

“In my view the interests of justice weigh heavily against granting the substitution order.

“…the matter simply comes down to this; [the couple] are not in a position to be substituted as plaintiffs given the highly conditional nature of their application.”

The judge revoked the representation order granted in 2019 but ordered all parties who satisfied the group criteria and who had given valid and timely notice to opt-in to the class action to be joined as plaintiffs to Smith’s action.

Smith would have to seek the court’s leave to discontinue the proceedings, he said. He awarded CRS and Shand costs on the substitution action.