As Bannister v Sirrom Enterprises Pty Ltd - [2016] SASCFC 153

SUPREME COURT OF SOUTH AUSTRALIA
(Full Court)
AS BANNISTER & ORS v SIRROM ENTERPRISES PTY LTD
[2016] SASCFC 153
Judgment of The Full Court
(The Honourable Chief Justice Kourakis, The Honourable Justice Peek and The Honourable Justice Stanley)
22 December 2016
PROFESSIONS AND TRADES - LAWYERS - DUTIES AND LIABILITIES - SOLICITOR AND CLIENT - GENERALLY
PROFESSIONS AND TRADES - LAWYERS - DUTIES AND LIABILITIES - SOLICITOR AND CLIENT - RETAINER - EXTENT OF RETAINER
PROFESSIONS AND TRADES - LAWYERS - DUTIES AND LIABILITIES - SOLICITOR AND CLIENT - NEGLIGENCE
Appeal against a decision of a Judge of the District Court.
The appellant is a firm of solicitors trading as Minter Ellison (Minters). They appeal a judgment given against them in an action for professional liability. The respondent is a company controlled by Mr Morris. Mr Morris engaged the appellant to conduct due diligence on a proposed investment in a building business owned by Mr Manson.
Minters prepared the necessary documents to give effect to Mr Morris’ agreement with Mr Manson. While drawing those documents, Minters were told that Mr Manson would procure the licence necessary for the new company to operate lawfully. It was known that Mr Manson held a personal building licence. The agreement between Mr Morris and Mr Manson was due for completion on 5 December 2007. Mr Morris made a number of payments to Mr Manson prior to, at, and after completion of the agreement.
On completion day, it was discovered that the necessary licence had not been procured. The licence that Mr Manson held personally was not appropriate for the work that the business was to undertake. The relevant employees at Minters advised Mr Morris to delay completion. Irrespective, Mr Morris instructed them to proceed. The business failed. The business never acquired the correct licence.
At trial, the respondent claimed that Minters’ retainer extended to enquiring into Mr Morris’ personal licence. It was also argued that if the respondent had found that the licence was not appropriate then it would not have paid nor contracted with Mr Morris.
The trial Judge found that Mr Morris instructed Minters not to enquire into the builders licence prior to completion date, and so there was no duty to do so. Mr Morris’ payments to Mr Manson prior to completion were made to secure the agreement. The Judge also found that on completion day Minters ought to have advised Mr Morris to ‘abort’ the transaction. Accordingly, Minters were liable for the payments made on completion day. The Judge found that the payments made after completion day were made because Mr Morris did not take steps to attain a licence for the company. Minters were not liable for those payments.
Generally, the appellant appeals against that judgment on the ground that they fulfilled the duty owed to Mr Morris on completion day. The respondent cross appeals on the grounds that Minters owed a duty to investigate the personal licence prior to completion and that the pre and post completion payments…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2016] SASCFC 153
Decision Date: 22 December 2016

CaseChat Overview and Summary

The Full Court of the Supreme Court of South Australia considered an appeal and cross-appeal concerning a claim brought by Sirrom Enterprises Pty Ltd against its former solicitors, Bannister and others. Sirrom alleged negligence and breach of retainer, seeking damages for lost opportunity and "Hungerford damages" arising from the conduct of its solicitors in relation to certain financial transactions.

The central legal issues before the Full Court were whether the primary judge erred in rejecting Sirrom's claim for damages representing a lost opportunity, and whether the evidence sufficiently established a causal link between the alleged negligence of the solicitors and any quantifiable loss suffered by Sirrom. The court was required to determine the extent of the retainer and whether the solicitors' actions fell below the standard of care expected of a reasonably competent solicitor.

The Full Court, in allowing the appeal and dismissing the cross-appeal, found that the primary judge had correctly rejected Sirrom's claim for lost opportunity and Hungerford damages. The court reasoned that Sirrom's lending and investment activities were so intertwined that the evidence presented failed to demonstrate a clear connection between any specific borrowing costs and the payments made by Sirrom to third parties, Manson and SPS. Consequently, the necessary causal link to establish a claim for damages was absent. The judgment of the District Court was set aside, and Sirrom's action was dismissed with costs.

Orders

Orders of the court

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Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

The Judge was correct to reject Sirrom’s claim for lost opportunity and Hungerford damages. There was simply no evidence of a lost opportunity. Sirrom’s lending and investments were so intermingled that the evidence failed to establish a connection between any particular borrowing cost and Sirrom’s payments to Manson and SPS. Conclusion I would allow the appeal and dismiss the cross-appeal. I would set aside the judgment of the District Court. I would order instead that Sirrom’s action be dismissed with costs. PEEK J: I would allow the appeal and dismiss the cross-appeal. I agree with the reasons of the Chief Justice. STANLEY J: I agree.Annexure A: Chronology of Payments Made by Cross-Appellant

Ratio Decidendi

Legal Principle Established

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