The Samuels in 2012 brought action against Annan Law, a Tauranga firm which did legal work on their Blue Chip transaction.
Although this claim was settled in October last year for $512,500, the following month Annan Law argued that another law firm which had earlier advised the Samuels should contribute to this sum.
The High Court in February decided this firm, Wellington's Macalister Mazengarb, was liable for 50 per cent of the $512,500.
Macalister Mazengarb then challenged this ruling to the Court of Appeal and this week was partly successful.
Annan Law, according to the Court of Appeal's decision, was recommended to the Samuels by Blue Chip, which it had a relationship with.
The firm wrote to the couple and included a flyer introducing Annan's "Blue Chip team" that would manage the transaction.
The Samuels did not respond to Annan Law and instead got in touch with Macalister Mazengarb lawyer Robin Buxton, who had acted for the couple in the past.
Buxton raised possible concerns about the Blue Chip transaction and wrote to the property group seeking clarification on some of them.
Blue Chip's reply left him with "substantial reservations" and when Buxton was due to leave the country on a pre-planned trip he sent his correspondence with the property group to Annan Law, assuming the firm would act for the Samuels after this.
According to William Samuel, Philip Annan told him that the investment was a good idea and that it was Blue Chip which was taking the risk.
The High Court found that a prudent solicitor in Buxton's position should have raised the prospect of trying to cancel the Blue Chip contract.
Because both solicitors - from Annan Law and Macalister Mazengarb - had an equal opportunity to free the client from the investment, the High Court said they should be equally liable for the loss.
While dismissing the Wellington lawyers challenge over whether they were liable at all, the Court of Appeal this week said that it would be "unjust and inequitable to see the requirement for contributions from the firms to as being anything like equal".
"A first significant difference between the two practitioners is that Mr Buxton recognised a range of significant causes for concern in the documents that were provided to him. Although the restrained terms in which he recorded such concerns in his letter to the Samuels have been found to be inadequate to put them on notice, that preliminary advice may well have been sufficient to warn off a more commercially experienced client," said Justice Robert Dobson of the Court of Appeal.
"In contrast there is no evidence that Mr Annan assessed any aspect of the transaction that the Samuels had committed themselves to in a critical way. His response to their enquiry as to whether it was a good deal for them was encouraging and apparently without reservation. He was given notice of the material concerns that had been raised by Mr Buxton, first with the Samuels and secondly with Blue Chip itself. However, there is no suggestion that he followed up on any of those concerns. In short, Mr Buxton missed complying with his professional responsibilities by a relatively narrow margin, whereas Mr Annan missed by a very wide margin," the judge said.
Instead of apportioning liability equally between the two law firms, the Court of Appeal ruled Macalister Mazengarb is liable to 20 per cent of the $512,500 and Annan Law 80 per cent of it.
The Wellington firm was also awarded costs.
Read the full decision here:
