Astley v AusTrust Ltd

Case [1999] HCA 6


HIGH COURT OF AUSTRALIA

GLEESON CJ,
McHUGH, GUMMOW, HAYNE AND CALLINAN JJ

MICHAEL ASTLEY, DEAN CLAYTON,
STEPHEN GERLACH, JOHN T GREGERSON,
JOHN H MELVILLE, JEAN MATYSEK,
JERRY McQUADE, ANNE ROBINSON,
ROSS L PROUD, NICHOLAS J T SWAN,
NIGEL W WINTER and JOHN C TUCKER  APPELLANTS

AND

AUSTRUST LIMITED  RESPONDENT

Astley v Austrust Limited (A65-1997) [1999] HCA 6
4 March 1999

ORDER

Appeal dismissed with costs.

On appeal from the Supreme Court of South Australia

Representation:

D M J Bennett QC with B F Beazley for the appellants (instructed by Daenke O'Donovan)

F S McAlary QC with G B Colyer for the respondent (instructed by Griffins)

Notice:  This copy of the Court’s Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports.

CATCHWORDS

Astley & Ors v Austrust Limited

Negligence – Contributory negligence – Concurrent liability in contract and tort – Whether award of damages for breach of contract may be reduced under apportionment legislation – Wrongs Act 1936 (SA), s 27A.

Negligence – Contributory negligence – When available – Whether solicitor's client guilty of contributory negligence – Failure to take proper care of own interests – Defendant's duty to take reasonable care in contract and tort – Plaintiff's loss the very kind protected by defendant's duty.

Contracts – Solicitor and client – Whether duty to exercise reasonable care and skill should be implied as a term.

Contracts – Defences – Contributory negligence not available.

Words and phrases – "Fault".

Wrongs Act 1936 (SA), s 27A.

  1. GLEESON CJ, McHUGH, GUMMOW AND HAYNE JJ.   Two important questions arise for determination in this appeal.  The first is whether a plaintiff can be guilty of contributory negligence where the defendant has contractually agreed to protect the plaintiff from the very loss or damage which the plaintiff has suffered as the result of the defendant's breach of duty.  The second is whether an award of damages for breach of contract may be reduced under apportionment of liability legislation, such as s 27A of the Wrongs Act 1936 (SA), because of contributory negligence on the part of the plaintiff where the defendant is liable concurrently in tort and contract for breach of a duty of care.

  2. The appeal is brought against an order of the Full Court of the Supreme Court of South Australia.  That order set aside the finding of a trial judge in the Supreme Court who had held that the respondent had been guilty of contributory negligence in failing to protect its property and that the damages it was entitled to in actions for breach of contract and negligence should be reduced by 50 per cent.  In our opinion, the Full Court erred in finding that the respondent was not guilty of contributory negligence.  However, the respondent sued in contract as well as in tort.  It was entitled to recover for the whole of the damage that it suffered because damages awarded pursuant to a claim in contract cannot be reduced by reason of conduct that…

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AGLC
Astley v AusTrust Ltd [1999] HCA 6
Case
[1999] HCA 6
Decision Date

CaseChat Overview and Summary

The High Court of Australia considered an appeal by solicitors against Austrust Limited, a trustee company. The dispute arose from legal advice provided by the solicitors to Austrust concerning its decision to act as trustee for a trading trust established to operate a piggery. The solicitors contended that Austrust was guilty of contributory negligence, while Austrust argued that even if it were, its contributory negligence could not be used to reduce damages awarded for the solicitors' breach of contract.

The central legal issues before the High Court were whether the *Wrongs Act 1936* (SA) permitted the reduction of damages for breach of contract on the grounds of the plaintiff's contributory negligence, and if so, whether Austrust's conduct amounted to contributory negligence in the context of the solicitor-client relationship. The court also considered whether a duty to exercise reasonable care and skill should be implied as a term in a solicitor's retainer.

The High Court held that contributory negligence, as a defence to reduce damages, is not available in an action for breach of contract. The court reasoned that the statutory provisions for apportionment of blame in cases of contributory negligence apply only to actions in tort, not contract. Therefore, even if Austrust had failed to take proper care of its own interests, this could not operate to reduce the damages recoverable for the solicitors' breach of their contractual duty to exercise reasonable care and skill.

The appeal was dismissed with costs.

Orders

Orders of the court

Appeal dismissed with costs.

Background

Background to the litigation

Pursuant to the grant of special leave, the solicitors now appeal to this Court. They contend that the Full Court erred in finding that Austrust was not guilty of contributory negligence. By a notice of contention, Austrust submits that, even if it was guilty of contributory negligence, the solicitors were in breach of the implied term of the retainer to take reasonable care in giving legal advice and that Austrust's contributory negligence cannot be used to reduce the damages resulting from the breach of contract.The factual background The first appellant, Astley, was the senior partner of the solicitors. That firm had acted for Austrust for many years. Astley was the member of the firm principally concerned with the advice given to Austrust in this matter. Austrust has carried on the business of a trustee company since 1910[4] - originally under the name Elder's Trustee and Executor Company Limited and, since 1990, under the name Austrust Limited. The company was formerly associated with the pastoral group Elder Smith and Company Limited. The chairman of the board of Austrust was an experienced chartered accountant in private practice. The general manager had a background in commercial finance. Austrust had on its staff a number of trust officers who attended to its ordinary affairs, which included acting as trustee of deceased estates, of settlements, of protected estates, of persons who were under disability, and similar activities referred to in the judgments below as "conventional" trusts. Austrust also employed a qualified legal practitioner as a member of its staff. During the events in question, he ceased to be an employee and became a consultant to Austrust. But the trial judge and the Full Court regarded his role in the present case as immaterial.[4]Elder's Executor Company's Act 1910 (SA) conferred power on the company to act as a trustee company. In 1983, Austrust decided to enter into a new field of activity - acting as a trustee of trading trusts. Consequently, it decided to accept appointment as trustee of a proposed trust which was to be set up to establish a piggery on land in New South Wales. The proposal involved the purchase of land and the borrowing of a substantial sum for that purpose. The establishment of the trust extended over a lengthy period. The history of the trust began in July 1982 when QFP Properties Pty Ltd ("QFP") was appointed as trustee of the "GGI Pig Trust", a trust promoted by members of the O'Dea family. In August 1982, QFP acquired land near Young in New South Wales from the O'Deas. This land was to become the Golden Grove Piggery. In April 1983, one of the O'Deas discussed with an officer of Austrust the possibility of Austrust becoming trustee of the GGI Pig Trust. In May 1983, one of the O'Deas entered into negotiations with the Reeves' interests for the purchase of another property near Tenterfield in New South Wales. Mr Reeves told Mr O'Dea that the property was valued at $1 million. Later that month, the general manager of Austrust informed Mr O'Dea that it was prepared to act as trustee of the pig trust. In June, Mr O'Dea acquired an option to purchase the Tenterfield property.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

HUGH, GUMMOW AND HAYNE JJ

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Ratio Decidendi

Legal Principle Established

Established by: HUGH, GUMMOW AND HAYNE JJ

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