Badenach & Anor v Calvert
[2016] HCATrans 44
[2016] HCATrans 044
IN THE HIGH COURT OF AUSTRALIA
Office of the Registry
Hobart No H12 of 2015
B e t w e e n -
ROBERT BADENACH
First Appellant
MURDOCH CLARKE SOLICITORS (A FIRM)
Second Appellant
and
ROGER WAYNE CALVERT
Respondent
FRENCH CJ
KIEFEL J
GAGELER J
KEANE J
GORDON J
TRANSCRIPT OF PROCEEDINGS
AT HOBART ON WEDNESDAY, 2 MARCH 2016, AT 10.16 AM
Copyright in the High Court of Australia
MR J. RUSKIN, QC: May it please the Court, I appear with MR S.B. McELWAINE, SC for both appellants. (instructed by Shaun McElwaine Barrister & Solicitor)
MR K.N. WILSON, QC: May it please the Court, I appear with MR S.S. MONKS for the respondent. (instructed by Shine Lawyers)
FRENCH CJ: Yes, Mr Ruskin.
MR RUSKIN: Your Honour, may we ask if you have had the opportunity to read the outline of propositions.
FRENCH CJ: No. Just take a seat for a moment, Mr Ruskin. Yes, thank you, Mr Ruskin.
MR RUSKIN: Thank you, your Honour. If the Court pleases, this appeal raises three main issues. They are these: one, did the Full Court err in the way in which it formulated the duty of care owed by the appellant’s solicitors to the testator in the circumstances of this case; two, did the Full Court err in transposing, as a co‑extensive duty to the beneficiary, who was the respondent, the duty of care which it formulated as owed to the testator; and, three, did the Full Court err in the way it considered the question of causation and found causation to be made out.
The critical issues are perhaps two. They are really: one, did the beneficiary have owed to him the duty which the Full Court said he was owed; and, two, causation. I say that because we are critical of the way in which the testator’s duty was formulated but, even if the duty formulated was that or close to it or some brand of it, it did not allow for transposing that duty to the beneficiary for reasons which we will develop very shortly.
Can we start with the extended duty to the testator. We say that is extended from Hill v Van Erp. Hill v Van Erp was a case about a duty of care to the testator to effect the testamentary intention in the context of formalities attendant upon the will because that was a case in which, as the Court knows, the will was invalid because of the witnessing provisions and in those circumstances in various ways the judges expressed the duty as a duty to effectuate the intentions of the testator or to take reasonable care to do so, but it must be seen in the context of a case about formalities.
The difference here is that, in its various incarnations, this is a duty formulated by the Full Court which asks or requires the testator to take reasonable care to engage in rearranging the assets of the testator inter vivos in order to overcome the effect of the testator family maintenance legislation. So in that sense it is quite different to the will which the solicitor has control over and we will come to that shortly. But in Hill v Van Erp there was no doubt that the solicitor had control over effectuating the testator’s intentions because they were clear and all he had to do was to get the formalities right.
This is a different case where he has to, on the formulated duty, engage in quite detailed and sensitive advice about what the testator may or may not want to do, somehow then owed to the beneficiary. Centrally, what we say in criticism of the way the Full Court formulated the duty was that it conflated the duty and the breach. It looked backwards in time to what happened and extracted the duty from that in a way that has been the subject of criticism in various cases and put various ways.
In our submissions, rather than trouble your Honours to go to the case of CAL – CAL was the case, your Honours, where the barman gave back the keys to the drunken motorcyclist and he hit a tree and did he have a duty of care to hold back the keys and so forth. There was a very complicated duty that was said to evolve and be placed upon the publican. What we said in the submissions and what we have taken from the case of CAL is the quotation from Justice Hayne, at paragraph 32 of the outline of submissions, which says this:
Because the duty relied on in this Court was framed so specifically, it merged the separate inquiries about duty of care and breach of duty. The merger that resulted carried with it the vice of retrospective over‑specificity of breach . . . the duty alleged was framed by reference to the particular breach that was alleged and thus by reference to the course of the events that had happened. Because the breach assigned was not framed prospectively the duty, too, was framed retrospectively, by too specific reference to what had happened.
While we are on CAL there is another formulation of that vice and I wondered if I could ask the Court to be kind enough to look at paragraph 37 ‑ ‑ ‑
FRENCH CJ: Can you give us the page reference in the CLRs, please.
MR RUSKIN: Page 406 of the report and it is the fourth authority. When your Honours find that, you will see it is under the little heading “Narrow formulation of duty.” What is said here is:
The second reason for rejecting the duty of care found by the Full Court majority, or any qualified version of it, lies in the following circumstances. The formation of the duty of care propounded on behalf of the Board and Mrs Scott is narrow. It selects a particular chain of circumstances leading towards Mr Scott’s death and contends that there was a duty to take care to prevent that chain of circumstances from occurring by preventing Mr Scott from riding the motorcycle. The formulation obscures difficulties in recognising the duty.
In Kuhl, the third authority, there is a passage at paragraph 19 of very similar structure in which it says it obscures the – makes assumptions about the relationship between the parties if you undertake this exercise, which may not be warranted. Now, here, in their various incarnations that is what the Court of Appeal, we respectfully say, did so that at appeal book 251, Justice Tennent, at paragraph 21, says:
the duty of care owed by the respondents to the testator was much more extensive than that which the learned trial judge set out. The first respondent owed a duty of care to the testator to, not only enquire of him whether he had any children, but also to advise him why that enquiry was being made, the potential for a TFM claim, the impact that could have on his expressed wishes, and of possible steps he could consider to avoid that impact.
That was the chain that happened in this case, that is to say, they did not ask about the child, there was a TFM, money was lost and those are all the things that should have been to avoid it.
GAGELER J: Mr Ruskin, is there any precise finding about the scope of the retainer?
MR RUSKIN: No, there was not. One of the problems with the duty we want to develop is exactly that, your Honour, and that is that the duty was to draw up a will and it was a pretty simple will. He wanted to give the money to the respondent beneficiary. What the agreement was beyond that was never spelt out.
KIEFEL J: The retainer would have to include, would it not, advice necessary, given the circumstances of the particular testator?
MR RUSKIN: Yes.
KIEFEL J: That might extend – do you deny that might extend to inquiring about his family and recognising those to whom duties might be owed under TFM legislation? Where do you say the boundaries of the retainer stop – at that point about asking about his family and advising that, if he is told that there is a daughter that the testator family maintenance legislation might have an effect?
MR RUSKIN: Yes, that is how we say it. We say that the duty probably should include advice reasonably necessary to discharge the retainer. That really becomes a factual question of what the parties reasonably expected. It is an evolving relationship and the problem with fastening on the duty in the way the Full Court did was to make assumptions that the testator would want to know and be advised about all the matters that the Full Court said he should have been.
Why we say that is that it makes assumptions that, having been asked “Do you have a member of the family?” - “Yes, I have a daughter”, it might trigger the question or the response, “Well, there is legislation called testator family maintenance legislation and that means in certain circumstances a claim can be made”. Where it goes from there will depend on what reasonably the facts might demonstrate the testator would have wanted to know because if you impose this duty that requires this level of advice, you are going beyond what you can forecast the testator would have insisted on and it raises quite complicated questions about costs and dimension.
That can be illustrated in perhaps three ways – three problems. First of all, beyond what, Justice Kiefel, you said about asking whether there is a child and that there is legislation, do we assume or must we assume as the duty seems to that the testator would have wanted to explore that and receive advice and it must be informed advice, which I will come to in a moment.
FRENCH CJ: That is to say, what is the implied scope of the retainer?
MR RUSKIN: Yes, your Honour. The second matter is he has to now be confronted with is he going to pay for it, paying for a will that is going to cost $300 or $400, and now he wants to get proper, full advice about how to avoid the TFM legislation, if that is the next step, then he has to be given advice about the legislation, about its purpose, about its mischief – what it is trying to avoid – and he has to get advice in this case about consequences if you seek to avoid it, how you might avoid it, will you engage in joint tenancy, will there be tax consequences – and that is referred to by the Chief Justice – and will there be GST consequences?
I said he needed to have informed advice. If he goes further and he asks what a member of the family can do - they can bring an application. Will it succeed? Give me something I can make a proper judgment about. The solicitor would say, in this case, “Well, I do not know; I have not the slightest idea. We need to find out.” He will then give some detailed advice, presumably, about what is behind the legislation and how there is a two‑stage process, how you have to first show the need and then you look at what the just and wise testator would do.
KIEFEL J: But at heart, at base, the solicitor and the client would both need to know the circumstances of the daughter.
MR RUSKIN: Maybe you could get - he might say, “I have not got the slightest idea. If your daughter - if the person is married to a rich stockbroker or a rich barrister that might be one thing but if she is not that might be another thing, but we will get a cheap investigator to look into all this at some vast hourly rate and then I can give you informed advice.” It is not much good having a duty to do this if it does not incorporate the need to take these steps further.
This is another way of saying that when you are imposing a duty of care on the testator it has to be a duty that works in practice, not a duty that works theoretically. One of our respectful criticisms of our friend is that they seem to suggest that you could segment this duty – you could just ask these questions and then if the testator wants to take it further you could then have a different duty or revise the duty or revise the arrangement. That, we would respectfully say, is quite impractical.
There is a conference going on, there is a fee paid, and the advice needs to be given so that, at heart, we say that the chain of retrospective reasoning that created this duty did not adequately deal with the practical problems of the duty itself which would have depended on the nature of the retainer and what was then going to happen.
GORDON J: Just so that I am clear, Mr Ruskin, is your position that the retainer here reflecting the duty is a duty to give effect to the testator’s testamentary intention?
MR RUSKIN: Within the context of ‑ ‑ ‑
GORDON J: I have not quite finished.
MR RUSKIN: I do apologise.
GORDON J: That is right. So what is the context - with precision? Here it is the context, to pick up Justice Kiefel’s question, advice about the existence of the TFM legislation and the consequences of it.
MR RUSKIN: Yes. What it might involve is – you have to take reasonable care to effectuate his intentions within the formalities and give advice reasonably related to the scope of the retainer and to ask whether, when he says “I’m going to give it to X,” who is not a relative – to ask whether there is a relative is not unreasonable and then to speak something of the TFM legislation is not unreasonable either. But to make it as precise and as specific as the Full Court said is then to go down the journey that I have sought here to develop. It depends on what the testator wants, it depends on money and it depends on whether he can even give the informed consent, Justice Gordon, beyond that articulation.
GORDON J: The only other factual question I have is: is the position that the only evidence we have of what the retainer is are the file notes, which are admitted, in the book of documents?
MR RUSKIN: Yes, your Honour. The exercise of deciding whether the formulation of the duty fell into error because of the chain of retrospective reasoning and the impracticality of it and that it was not based in factual findings gives rise to the error in the duty to the testator. We then say a fortiori it gives rise to the transposed duty because if it is correct to say that if you retrospectively set up a duty that leads to error in the duty to the individual, how much greater is it when you are transposing it to the beneficiary, who is not the client?
I mentioned to the Court the case of Kuhl and the passage at paragraph 19. Kuhl is authority No 3 and paragraph 19 is at page 370. It is really just the two lines in the middle of paragraph 19. It says, looking at Koehler v Cerebos:
“to begin the inquiry by focusing only upon questions of breach of duty invites error. It invites error because the assumption that is made about the content of the duty of care may fail to take fundamental aspects of the relationship between the parties into account.”
You see that is particularly relevant when you come to the question of transposing to the beneficiary. The duty to the beneficiary, as found in Hill v Van Erp, was prefaced on the requirement of coincidence of interest – that is said by Chief Justice Brennan at page 167, by Justice Gaudron at 199 and 200, by Justice Dawson at 187 and by Justice Gummow at 236. It is a critical finding to make the duty work in Hill v Van Erp and, for example, as has been so recognised in a case which the parties have included called Vagg, which is a decision of the Court of Appeal in New South Wales, at paragraph 48 Justice of Appeal Justice Tobias notes that.
Of course, there was a coincidence of interest in Hill v Van Erp because there was an absolute equal interest in the testator having the will effective and the beneficiary literally being the beneficiary of the effective will. So the incidents were completely coincident.
The next matter is that the duty to the beneficiary was prefaced on the basis that there would be no conflict between the interests of the testator and the interests of the beneficiary. That makes obvious sense because you cannot have the solicitor trying to help one or help the other and being in that terrible situation. I want to invite the Court, if I could, to ‑ ‑ ‑
KIEFEL J: I suppose another way of viewing Hill v Van Erp is that giving effect to the intention and the coincidence of that interest can be explained because it arises from the retainer itself.
MR RUSKIN: Yes, your Honour, indeed. In Hill v Van Erp there was a dissenting judgment by Justice McHugh - if the Court would be kind enough to look at authority 1 and look at page 212. His Honour dissented but one of the reasons he dissented, we would respectfully say, presciently recognised what might happen just in a case like this. At 212 is his Honour’s dissent - or that part of it which I take the Court to. His Honour says there should not be a duty and his Honour explains what might happen. So about halfway down does the Court see the words “Moreover, if the solicitor”?
Moreover, if the solicitor owes a duty of care to the beneficiary, it would seem to follow that the solicitor has an affirmative duty to warn or advise the beneficiary as well as the testator in cases like the present. If the solicitor owes a duty to the beneficiary, he or she must do all that is reasonable to protect the interests of the beneficiary and there must be some situations at least where reasonable care requires the solicitor to warn or advise the beneficiary. But the history of the law of negligence points against such an obligation.
While the Court has that, would the Court be kind enough to look at page 234 where Justice Gummow speaks of what the interest of the beneficiary is in all this. If the Court would look at page 234, about halfway down again, the Court will see that paragraph:
Not only the foreseeability of harm to Mrs Van Erp as specific legatee and devisee but a complex of other factors combine to summon into existence a duty of care owed by Mrs Hill to Mrs Van Erp to ensure execution of the will in such a manner as not to attract the invalidating operation of s 15 of the Act. These matters include the extent to which the engagement of Mrs Hill by the testatrix plainly was designed to enhance the economic position of Mrs Van Erp as a particular individual, the control exercised (as a practical matter) ‑ ‑ ‑
What that is saying there is that the interest, which has to be coincident, is the interest in the beneficiary and having his or her economic position maintained in accordance with the will. That is where a problem arises in respect to, first of all, potential conflict. We start by saying that conflict – you cannot be a bit conflicted, like other things that happen in the anatomy. You cannot be a little bit conflicted. You are either conflicted or you are not. You could even be potentially conflicted and you are in trouble. You cannot say, “I acted for both parties, but I was pretty careful – I managed to settle the case. It was a very good settlement, so who is whingeing?” Well, if there is a conflict or the perception of a conflict, you should not be acting.
Now, one of the difficulties of this transposed duty is that it seems to be prefaced on the notion that all the solicitor does is recite some soft option – perhaps I should put it as the “vanilla option” where all the solicitor does is say to the testator, “Here are your options; you decide”. In practice – and we are talking about practicality – the solicitor does a lot more than that if he is earning his money in giving advice. He gives advice. He says, “Of course you decide, but I am going to suggest – I am going to advise you to take this action or take that action”, and that happens regularly.
The importance of that is that this duty constrains what he says and how he says it and there is a lot of subtlety in that. Some of this emerged from the transcript, when the expert was cross‑examined by Mr McElwaine. That appears in the court book at 95 and 96. But there are just a couple of questions that really give rise to the sort of problem which happens in real life. So if the Court would just look at only two passages, at page 95, about line 35. This is very obvious, so you really did not need the expert to say it, but he said it:
Now, is it in view a matter for the solicitor in this discussion to urge the client to take a particular course of action in consequent upon the advice which is given?...........I think - I think a solicitor should urge clients to do certain things in a number of circumstances, yes.
Then, going over the next page, there is a disagreement, then an agreement, at line 15:
So it may well be open to the solicitor to say, ‘I think that in discharge of your moral obligation you should make a provision in favour of your daughter”, would that be competent advice by a solicitor?......No, I don’t agree with that.
You might not have given it, but what’s wrong with an ordinary and competent solicitor saying that to a client? Nothing, is that right?......I don’t find it offensive or anything, no.
So he was really saying, “I might not do it, but it is okay”.
And there’s nothing imprudent about that either, is there?......No, as long as the solicitor’s not giving it in an overpowering way that he makes the client feel belittled ‑ ‑ ‑
FRENCH CJ: Well this has little to do, has it, with either scope of retainer or duty?
MR RUSKIN: Well, it comes this way, though, your Honour. If you are asking the solicitor to give advice to the testator, it is how he gives the advice and what he is permitted to do in giving the advice. Why we quoted that was that when he comes to talk about the issues that Justice Kiefel has raised he says, “Have you got a daughter, have you got a child?” “Yes, I’ve got a daughter.” “Well, there’s this TFM legislation.” Now, under this duty, he then has to talk about the options – that is the content of the duty.
“This is how it works and this is what you can do.” The problem immediately arises. When he says, “This is what you can do” he can even say, “This is what you should do” or “This is what you should give thought to doing”, there is a problem because as soon as he says, “You might think it’s really appropriate for you to give a bequest to your daughter now because you have not done this for so many years, you haven’t looked after her, that’s what you can do or you can include her in the will”, that is not in the interests of the beneficiary because if he takes that up, the beneficiary economic interests are not advanced.
FRENCH CJ: So what is the logical sequence of the analysis we are applying? We start with the contract, as it were, or we call it the retainer and the scope of the retainer, and do we find in the retainer in the ordinary case an implied duty expressed at a level of generality which can encompass a variety of circumstances, and what we are looking to here is the application of that implied duty which defines the scope of the retainer to a particular fact?
MR RUSKIN: Then we have to see, your Honour, whether it can be transposed to the beneficiary.
FRENCH CJ: Yes, that is the next step, but the foundation has to be the relationship between the solicitor and the testator, does it not?
MR RUSKIN: It does, your Honour, and we started off by saying that so depends on the factual stratum and whether he is going to pay for it and what he wants to know and what he does not want to know. Even if we go that far and we say indeed he wants to know about the TFM and he wants to know what his options are and he wants some detail we then come to the problem where, in giving that advice, there is a situation in which the solicitor is conflicted because whatever advice he gives and he emphasises if he does that has the potential to be not advancing, as Justice Gummow would have it, the economic interests of the beneficiary, he is going to get less and considerably so.
FRENCH CJ: If the duty is at a general level to provide advice and to do the things that would enable the testator to give effect to testamentary intentions, this is a case where you would be saying your intentions cannot be reflected or given effect through what you wish to have in a will; you have to do something extraneous by rearranging your estate.
MR RUSKIN: Indeed, you do, and then –
KEANE J: So in a sense, he is obliged to challenge his instructions. If his instructions are to draw a will and he cannot accept those instructions, he cannot accept that retainer; he has to ask for a different retainer.
MR RUSKIN: Yes, or he has to say, “I can but I now have to give you a warning that it may not work.”
KEANE J: Because you have a moral obligation recognised, albeit imperfectly, by the law.
MR RUSKIN: Yes, and, “I’m going to tell you all about that now. You might well think that you should take that on board and now we have to do the will differently”. So he has to now out‑argue his own client into doing something different and, in doing that, he cannot possibly be advancing the interests of the beneficiary because if the client, depending how he says it and depending what weight he gives it, the beneficiary’s share is being whittled away.
Really, if he owes this transposed duty and he has to advance the beneficiary’s interests, he might be in this terribly unenviable position where he almost has to say to the testator, “Look, you’d better act like an unwise and unjust testator because that way, by doing this joint tenancy, we’ll get the beneficiary all the money.” “But I don’t want to act like that.” “Well, just a minute; I’m concerned about the economic interests of the beneficiary.” “But just a minute; whose client are you acting for?” and there will be a fight or there could be a fight. Of course, there could be further problems.
To follow up what your Honour Justice Keane said, say the testator said, “I’ll go down this joint tenancy track, which you’ve talked to me about, but what are the consequences, what are the costs and all that; I can or I can’t pay it.” Even if you got over that hurdle, what happens about the beneficiary? How does the solicitor deal with the beneficiary because the risk to the beneficiary is that, if he just signs over the property to joint tenancy, that is okay, but what if the beneficiary dies suddenly?
Now, here, because the facts look nice, we know that the testator was older and he was ill, he had a terminal illness, so perhaps the chances of early death were of course not nearly as great but you cannot have a duty that just works if there is a terminal illness.
If you just change the facts slightly, what if the testator and the beneficiary are roughly the same age and the testator is determined to leave out the member of the family by the joint tenancy, but the beneficiary does not want to because he says, “There’s a risk to me” - how do you sort all that out? Does this transposed duty require the solicitor to give advice to the beneficiary or tell them to settle it up? What does he do? What we say is that the practicalities of this outside what is a simple will do not work. Two things have flowed from this: one, the interests of beneficiary and testator are not coincident; two, there is conflict or potential conflict, either of which militates against the duty which is not the duty forecast in Hill v Van Erp.
The final point on this aspect is what I said was the issue of control. I wanted to just again ask the Court to look at two short passages in Hill because when we raised this in our submissions, one of our friend’s criticisms was when Justice Gaudron talked about control as underpinning the duty that the solicitor had, her Honour was really talking about proximity. We say that is not quite right. If the Court has Hill there and would be good enough to look at page 198, this is what Justice Gaudron says about three‑quarters down that page, starting with the expression or the line “The relationship”. If the Court has that:
The relationship in this case as between Ms Hill and Mrs Van Erp is not one that is characterised either by the assumption of responsibility or reliance. Rather, what is significant is that Ms Hill was in a position of control over the testamentary wishes of her client and, thus, in a position to control whether Mrs Van Erp –
the beneficiary –
would have the right which the testatrix clearly intended her to have –
that is, to have the matter administered in accordance with the will. Just stopping there, that is exactly the point that the solicitor here does not have. He does not have control to make sure the beneficiary got what the testator wanted, unless they re‑jiggle this and it is nothing like the control you have when you just get them to sign the will properly. Going on to the next line:
The importance of control as a factor in proximity –
and it is –
and also as a factor governing the content of the duty –
So it is not control just contextual to proximity and Justice McHugh at 212, in that passage that I already took the Court to, looks at – in the next paragraph, three‑quarters of the way down:
Parallel with and derived from the principle that an action for negligence required an invasion of some legal right . . . Absent a special relationship between the plaintiff and defendant – ordinarily arising from contract, the control of person or property or an assumption of responsibility . . . the common law imposed no affirmative duty on a person to protect another.
Justice Gummow at 234 refers to control as an important factor. In that case, and if the Court would be good enough to look at 234 about halfway down, with the passage beginning “Not only the foreseeability”:
These matters include the extent to which the engagement of Mrs Hill by the testatrix plainly was designed to enhance the economic position –
and I have taken the Court to that:
as a particular individual, the control exercise (as a practical matter) over the realisation by the testatrix of her testamentary intentions –
Now, of course he does in Hill v Van Erp because the solicitor gets it signed properly but not in this case because there are so many different matters that need to be discussed and talked through. May we then move to the next matter which is, is the duty coherent with the legislation of – but can I just interrupt by saying, with the Court’s assistance, I made the point about conflict as militating against the duty of the beneficiary. The learned judges in the Full Court never considered this by resort to reasons. There was statement that there was no problem.
Can I give the Court the paragraph numbers - Justice Tennent, paragraph 22 at appeal book 251, her Honour says, “there can be no reason” – those are her words; Justice Porter at paragraphs 78 and 82, appeal book 265 and 266 and Justice Estcourt at paragraph 155 at appeal book 279 to 280 - they just say there is no problem but it does not deal with it at all.
Going to public policy, and the Court does deal with that, the submission was made that this is incoherent with the legislation and Justice Porter at 73, 77 and 82, which is appeal book 264 and 266 and Justice Estcourt at 156, which is appeal book 280, and the trial judge, Chief Justice Blow, said when you looked at the case of Barns that said, in effect, there was no public policy reason obiter, that a deed could not do the trick, so therefore, why is there any incoherence or public policy rule against a duty?
Barns was a very different case. Barns was about was the deed valid to mean that the bequest came via deed not via will, so that it was not part of the estate, so that the TFM did not reach it and the court said no, the deed was not valid to do this, it is part of the estate, TFM applies. In the course of that, the Chief Justice, in the passage that the judges looked at, said that it is perfectly open for an individual to make a deed if it had the effect that they wanted because all it did was deprive the legislation of work to do; on that argument, if it worked, it was not part of the estate and that is it.
Our point is that there is a very big difference between what an individual may want to do and what the law would impose upon a solicitor as a legal duty and the legal duty, as we have discussed just a moment earlier, becomes a duty to advise him how to be an unwise and unjust solicitor, that is, how to get around doing what the law finds as the fulcrum of giving money to the deserving applicant.
Now, we say that is incoherent because in practice it would be very difficult or it could be very troubling for the solicitor to give a lecture on the TFM and all the kinds of moral obligations that Vigolo and those cases talked of on the one hand and then, out of the other side of his mouth, say, ‘But don’t worry about it; we can get around it – easy,” and he has to do it on this duty. How does he say it and how does he weigh it? The way it is said to be able to be done here is it is just a vanilla option but it is not; it is a very serious matter that he has to raise.
In that context, could I just give three short examples about inconsistency and incoherence and how the Court looks at it. The first, of course, is Sullivan v Moody. Sullivan was the case where the doctors give a report. It is about the welfare of children and they say something defamatory about the fathers because they say they may have abused the children. So did the doctors have a duty of care? This alleged duty is inconsistent. It runs absolutely head on with the law of defamation because the law of defamation has a “you‑beaut” defence called qualified privilege, which is only overcome by malice and malice is dishonesty of purpose or recklessness but certainly not negligent and negligent in the defence works like a charm.
So how can you have that inconsistency? That is an example of a head‑on collision of inconsistency. The other aspect in Sullivan was can this duty work in a practical way when your job is to have paramountcy with the children, how are you then meant to have a duty of care to be careful and weigh it up in that way?
Tame is the next case. Tame was the case where the investigating policeman gets it wrong about the traffic offence and the lady has a breakdown. At 57 of that case, the Court finds there was incoherence because the Court said in investigating you have to be frank and honest and get the job done and that is inconsistent with having imposed on you a duty to be careful in doing this.
The third example is CAL and there was much incoherence in CAL because if you put a duty of care on the publican to make sure the driver does not get his keys back, even though he has been swearing at him and demanding them and will not let him ring his wife, the incoherence works like this. You are meant to keep the pub peaceful. You are meant to make sure there are not riots and violence but you are about to take on the violent man. You are meant to obey the law of bailment but you will not give him his keys back.
I mention this because one of the expressions used in CAL is – and we put this in the submission – if it is not incoherent or inconsistent it sits very uneasily with, so that when you look at this question of incoherence and inconsistency it can be head on, it can be uncomfortable, it can be impractical, it can put the person in an extremely difficult position. All those matters militate against the duty, which is this case.
Another way of putting it is – and we have quoted this from New South Wales v Fahy at 250 in the judgment of Justice Crennan, where there are “conflicting responsibilities” this militates against the duty. So we say it is incoherent, we would say it puts the solicitor in a very difficult position, which he should not have imposed upon him with respect to a non‑client.
FRENCH CJ: So incoherence here is inconsistency with the policy of the TFM legislation? Is it as simple as that?
MR RUSKIN: Yes. It is that the foundation of the TFM legislation is that the court will award inter alia when the amount which the just and wise testator should have given and that is a moral duty. That is spelt out in Justice Evans’ judgment in this actual case. He goes through that in quite some detail.
FRENCH CJ: It is adequate provision for proper maintenance and support.
MR RUSKIN: Yes, indeed.
FRENCH CJ: That is the statutory term?
MR RUSKIN: That is the statutory term and then you look at whether he is a just and – then in order to quantify it you say what would the just and wise testator have given? So that there is a policy in the law, although as an individual you can get rid of it in your lifetime – you can – first of all, you cannot contract out of that. You cannot get someone to sign up because it is so important - we know that from Lieberman – but there is a policy behind this which the law would expect that a testator would be just and wise, but this duty ‑ ‑ ‑
FRENCH CJ: But the law does not extend to the creation of a notional estate?
MR RUSKIN: No, it does not. So therefore you can, as an individual, get around it by just giving it away, but that is a different matter, we say, to the duty on the solicitor. So, your Honours, with respect to inconsistency and incoherence, the same principles apply to the public policy incoherence. There are about three of them, we say, in this case. First of all, the duty is inconsistent with the requirement in the solicitor not to act for two clients where there is a conflict. You cannot do that and that is what this duty inevitably gives rise to. Secondly, it is incoherent with the TFM legislation policy – that is the second aspect. Thirdly, it is incoherent with legal professional privilege.
We put that really two ways. The first way is that if he has this in this context, where he has to be giving advice about how you rearrange things and how you weigh up the TFM obligations and it goes further, we say, as a matter of practice, he needs to give some advice to the beneficiary about changing to joint tenancy.
So he has to talk to the beneficiary and how does he do that without disclosing what he has been talking to the testator about? The testator might let him do it, but he might not. He might say, “I want to transfer one property here. I want to give the other to the daughter because I think I have to, and that’s just between ourselves. Now go and talk to the beneficiary and make him fix it.” So the beneficiary writes, “So why can’t I get both? Let’s have a talk about this.” “Well, I can’t talk.” That is the first way it is incoherent with privilege.
The second way is really a practical matter of how you defend yourself in a case where it said you did not say enough to the testator about advice. If you did not do any of that, you can only tell what you told the testator by disclosing the privileged advice you gave. So it is incoherent in that sense.
GORDON J: Before you leave that analysis, am I to take it that you then do not adopt what Chief Justice Blow puts – I think it is 29 – where he seems to suggest that the duty is owed to a testator or even a beneficiary, he says, in respect of the steps that might be taken to frustrate a TFM claim by depleting or extinguishing the testator’s estate?
MR RUSKIN: Yes. We say that is not a duty owed to either, particularly the beneficiary for the reasons that I have sought to explain, and with the testator that is incoherent with the policy of the TFM legislation and it makes assumptions about the relationship and the extent of the retainer which we just do not know.
GORDON J: So just so I am clear, is it the position that you, as I understand it, adopt Chief Justice Blow’s analysis up to that point and in a sense before that paragraph and then stop - that is, there is a retainer to prepare a will according to the testamentary intentions, you are to prepare it and I think Chief Justice Blow describes it as a duty to inquire as to the existence of other family members who may bring an action?
MR RUSKIN: Yes.
GORDON J: And that is it?
MR RUSKIN: Yes.
GAGELER J: Does it follow that you accept there was a breach of duty in this case?
MR RUSKIN: No, because that assumes the duty is the beneficiary and there was no breach because it is true he did not ask about the daughter but the critical thing was what he had to do to give rise to damage and that implies he had to give advice about all these matters that are transposed to the beneficiary. He may owe that to the testator but he does not owe it to the beneficiary.
GORDON J: The consequence of that submission is in a sense what was addressed in Hill v Van Erp, what the English Court of Appeal looked at in the Carr Case and that is that you have a lacuna, you have a duty which you I identify, you have a breach, but you have no one who is entitled to claim the damage as a result of it.
MR RUSKIN: Yes. Well there are powerful reasons why you should be very careful about when you extend a duty of solicitor beyond his own client. That is really what is at the heart of this case and we say that in asking him to take all these options – which are to now advise about which way he should jump on the TFM legislation ‑ ‑ ‑
GORDON J: I do not know that that is the point that either Justice Gageler or I are putting to you. I thought you had accepted that the duty extended to a duty to make inquiries about possible claims under the TFM legislation and the effects that flow from it. That is different from giving advice about steps.
MR RUSKIN: Yes.
GORDON J: So the question is, if you have that duty and a breach then there is a breach and a lacuna because no one has a right to claim as a result of it. There may be no damage but that is a separate ‑ ‑ ‑
MR RUSKIN: Yes. Well, we say that you must be very careful in containing the duty that goes beyond the client and Hill v Van Erp was very careful to say that, even in the example where you meant to ask about the daughter and certainly something you should ask the testator but why is it owed to the beneficiary? We are getting into the area of control. It is all about can he control the result for the beneficiary in these circumstances and he cannot.
Now, causation is the last aspect. The question here was: was there a loss on the balance of probabilities? This is a case which is governed by the Civil Liability Act. It has to be but for causation. So you have to show that but for the negligence you would be in a better position, we say, than you are and that principle derives from, we say, Sellars and Tabet v Gett. The way the Full Court looked at this was to say that, just to go back ‑ ‑ ‑
FRENCH CJ: So when you say that principle derived, the principle derives from section 13(1)(a), does it not?
MR RUSKIN: Yes. Yes, thank you, your Honour.
GAGELER J: Does any part of your argument rely on 13(1)(b), the scope of liability?
MR RUSKIN: I do not think it does, your Honour. I will just check that. Can I come back to that in one minute, your Honour?
GAGELER J: Yes.
MR RUSKIN: So when you look at the case of – how section 13 has been looked at, for example, in another context, and we looked at Adeels - Adeels was the case where you have a security guard outside and people are injured by some maniac and you would say, well, it is possible – one possible hypothesis if you had had the security guard, which you negligently did not, would have avoided the damage and 43 or thereabouts, Justice Hayne says no, you must show that it would have, on the probabilities, avoided the damage, or part of it.
Sellars was the case concerning misrepresentation and breach of contract and in that case the Court looked at the question of the loss of commercial opportunity, and if I could just take the Court to a couple of passages of Sellars, the critical thing in Sellars was that the plaintiff lost the opportunity but the Court found on the probabilities the contract which was the segue to the opportunity would have been entered into.
So it was not a question of saying possibly would have entered the contract and therefore possibly would have got the commercial opportunity. So we have the probability of him being better off because he had got the contract and the rest was to be assessed according to the chart - in a Malec kind of a way. Just to help the Court with Sellars, that is at 17.
FRENCH CJ: Well, in that case the plaintiff was diverted from proceeding with one contract by misleadingly based offers made in relation to what they thought was going to be another.
MR RUSKIN: Yes.
FRENCH CJ: I think the contract from which they were diverted was itself subject to some contingencies, including regulatory approvals.
MR RUSKIN: Yes, but they were on the probabilities in a better position because they had the - because your Honour found - the Court found that on the probabilities the contract would have been entered into. So that was the probability stage, and then you evaluate the other aspect. There are some passages from the Court, but we looked at what Justice Brennan said and some of what he said appears in Tabet v Gett. May we ask the Court to look at page 364? At the top of the page there is a passage:
As a matter of common experience, opportunities to acquire commercial benefits are frequently valuable in themselves, not only when they will probably fructify . . . when they offer a substantial prospect –
The next paragraph says this:
However, a causal relationship between the loss of such an opportunity and the defendant's contravening or tortious conduct must be proved before any issue of assessment of the amount of the loss arises.
Jumping from the quote:
Although the loss of a valuable opportunity and the assessment of its amount are concepts that can be logically separated, in practice, it will usually be the same body of evidence that tends to establish both the existence of a loss and the amount to be recovered. That evidence may establish the loss of a valuable opportunity more clearly than the value of the opportunity lost. The court approaches the determination of these issues in different ways, as discussed later in this judgment.
Then, going to 367, in the middle of the page, does the Court see:
But what is the standard of proof in cases where the issue of causation depends on competing hypotheses? There is no reason why the balance of probabilities should not be the standard of proof required to establish both causation and the existence of a loss, though that standard is inappropriate to the assessment of the amount –
There is a quote from Bennett –
I respectfully agree. Unless it can be predicated of an hypothesis in favour of causation of a loss that it is more probable than competing hypotheses denying causation, it cannot be said that the plaintiff has satisfied the court that the conduct of the defendant caused the loss. Where a loss is alleged to be a lost opportunity to acquire a benefit, a plaintiff who bears the onus of proving that a loss was caused by the conduct of the defendant discharges that onus by establishing a chain of causation that continues up to the point when there is a substantial prospect of acquiring the benefit sought by the plaintiff. Up to that point, the plaintiff must establish both the historical facts and any necessary hypothesis on the balance of probabilities.
Then just the beginning of the next paragraph:
Although the issue of a loss caused . . . must be established on the balance of probabilities, hypotheses and possibilities the fulfilment of which cannot be proved must be evaluated to determine the amount -
That is carried forward with Malec v Hutton which is referred to in many cases where you have a loss but you cannot be precise about what would have happened, having proved the loss on the balance of probabilities, so you, if I may make it into a verb, you Malec it; you work out to what extent was it likely or possible, and if he would have been a foreman, he might not have been a foreman, and that is how you do it with respect to the damages.
Now, in this area the Court of Appeal in Queensland and the Supreme Court in Queensland in the same case looked at how you deal in a will case in this particular area and I want to take the Court to that, if I may, as we do this. Would the Court be good enough to look at Smeaton, No 6? I will give the Court the page. So if the Court would be kind enough to look at page 7, number [24].
Now, what happened here was the obverse of this case. The testator wanted to give the money to the children, but it was in joint tenancy, and all that is needed in that situation is to make it tenants in common by signing a document. It is very simple. But the solicitor was negligent, so it was said, in that he did not advise about that document. So it is a bit analogous to getting the formalities wrong. Easy to be done; no conflict, nothing. But he did not do it.
The question arose was there damage, that is, had he said to the testator, “You need to dismantle the joint to the tenants in common”, would he have done it? It is at paragraph [24] on page 7 that the court looked at this. Perhaps I will go to page 6 under “Causation”. At [22]:
Whilst accepting that his advice and actions were negligent –
So there was no fight that he should have effectuated this formality –
the defendant nevertheless submitted that he was not liable to the plaintiffs because if Mr Smeaton had been given the correct advice, it would not have altered his course –
That is just a factual question. Paragraph [23]:
The onus of proving that the admitted negligence of the solicitor caused the loss suffered by the beneficiaries lies on the plaintiffs. They must show, on the balance of probabilities, that had Mr Smeaton been given the correct advice, he would have taken the further steps necessary –
in this case –
to sever the joint tenancy, in particular, that he would have given or caused to be given to Joanne Smeaton, a copy of the transfers which he had executed. Unless that matter can be proved then the plaintiffs’ loss was not caused by the defendant’s negligence and therefore the defendant would not be liable for that loss.
[24] As both counsel submitted, this is not an appropriate case in which to value the loss of chance, in the sense referred to in Malec v JC Hutton Pty Ltd, that Mr Smeaton would have made a different decision if properly advised.
So, quoting Justice Pincus:
“The foundation of the Malec doctrine is the distinction between the proof of liability and proof of damages -
So what the court there ‑ ‑ ‑
FRENCH CJ: The judgment you have been reading from is that of Justice Atkinson at first instance?
MR RUSKIN: That is so, your Honour.
FRENCH CJ: Yes.
MR RUSKIN: We do have - without inviting the Court now to look at it could – would I be permitted to hand the Court, because I do not know – you have probably got it. That is the Full Court decision, the Court of Appeal ‑ ‑ ‑
FRENCH CJ: Yes, the Court of Appeal decision.
MR RUSKIN: It is really a factual case, but it does not say other than that the judge dealt with this issue correctly, that is to say, the judge determined that the correct test for loss was the balance of probabilities and in fact in that case the facts worked in favour of the plaintiff.
GORDON J: But here, as I understood the way you put your submissions, putting aside whether that is the correct test or not, we do not have the factual findings by the trial judge here to ascertain what would happen. At the moment all we have is hypotheticals and possibilities.
MR RUSKIN: Yes, that is absolutely so, Justice Gordon, and Chief Justice Blow looked at – dismissed the case because there were competing hypotheses of a most speculative kind which ranged from, “I’d better do something for my daughter and do it now and get her in” or “I might give her a bequest” or “I might do nothing” or “I might do the joint tenancy”. He just had nothing to deal with.
Indeed, you have to analyse that aspect by reference to the – if the formulated duty was correct, then the solicitor would have talked to him about the TFM and given certain emphases to moral obligations and he was a very ill man and should he make peace and all the things we are meant to do when the terminus comes. Who knows, some people might remain bad all their life, but some people become good. How would you ever know?
FRENCH CJ: That is not a solicitor’s role. That is the confessor’s role, is it not?
MR RUSKIN: That is so, your Honour, and that is why we say speculative, with a capital S, and so we say that the application by the court of a doctrine from Allied Maples where you can – Allied Maples is an English case which has not been followed here, we would submit, and certainly was not followed in Smeaton. In Allied Maples you have the situation where the hypothesis depends on the conduct of a third party. Well, you can put a different test. You can say would there have been a substantial chance that the third party would have done something? Well, we say that is not applied here but, even if you did, was there a substantial chance he would have put the case - he would have given himself a greater benefit?
FRENCH CJ: If the scope of the retainer and the associated duty, say a contractual duty to the testator, involved drawing attention to the TFM, it is hard to imagine, is it not, it is just stopping at saying there is a thing called the TFM which makes this kind of provision in relation to family members adequate provision, et cetera. Would you accept that the duty might have gone so far as to incorporate advice as to just options which were open - take your chances with the TFM; rearrange your estate; make a bequest?
MR RUSKIN: I would accept that if it went to talking about what a TFM can do, that is, the claim can be made, it might be - yes, you might give a series of options and it depends how you say them.
FRENCH CJ: I suppose it is up to you.
MR RUSKIN: Yes, up to you, and you may – that may be one way you do it. But you may be more forceful. You may ‑ ‑ ‑
FRENCH CJ: Well, the question we are talking about is duty here. It is not a question of how forceful you are or whether you would perform it with moral considerations, is it?
MR RUSKIN: Yes, it is – but if the duty requires you to give advice, you must incorporate how you give it and when we are looking at what might have happened in this case, if the formulated duty involved talking about your options, there were many of them and we certainly accept that if you go that far, then the way Chief Justice Blow looked at it, there were many. There were - as your Honour says, do nothing. He might have had that great philosophy that some of us have - when in doubt, do nothing.
He may not want to meet up with his daughter because he has neglected her for all these years, so he says, “I wash my hands, let everyone take their chance”. So that might have happened. Then he might have given a bequest in the will or he might have tried to settle it or he might have done lots of things, and there was just nothing that took the hypothesis other than equally competing, and that is really what we say about causation. So, your Honours, unless we can help at this stage, those are our submissions.
GAGELER J: Can I just ask, perhaps by way of summary of your submissions, as I understand it, your submissions proceed on an acceptance of the finding of the trial judge that the solicitor breached the duty in contract and in tort to the testator. Is that correct?
MR RUSKIN: Well, I really want to say that there was a duty. It seems that in giving advice that reasonably responded to the retainer, it would not be unreasonable for the solicitor have asked about the existence of children or family members, and he did not.
GAGELER J: The first part of your argument about the absence of a duty of care to the beneficiary is based on the next step that might possibly have occurred. In taking the next step and following up that question you say that there would be potential conflicts that would arise and there would be a public policy consideration that would mitigate against the duty that would then be owed to the testator being transposed to a duty to the beneficiary. Is that the way it goes? It is at that next stage of the retainer that you say never eventuated?
MR RUSKIN: That is right and it is only, if you accept all the next stage, that you could get to damage before you even consider the speculative nature of it.
GAGELER J: All right, thank you.
MR RUSKIN: Thank you very much.
FRENCH CJ: Thank you, Mr Ruskin. Yes, Mr Wilson. Maybe just take a seat for a moment, Mr Wilson. We will have a quick look at your outline. Yes, thank you, Mr Wilson.
MR WILSON: Thank you, your Honours. Could I start by perhaps responding to some of the queries that were raised particularly by your Honours Justices Gageler and Gordon? There was no evidence of the retainer. It was accepted that the retainer was to prepare a will which left the estate to the respondent.
The second matter is that this matter should be looked at in the context that there was admittedly no advice and no inquiry. Until the matter reached this Court, the position of the appellants was that their duty was limited to the ratio of Hill v Van Erp, i.e. prepare a will that is formally valid. Now it seems that we have moved beyond that to a concession that, in carrying out the retainer and the correlative duty of care which the solicitor owed to his client, there was a duty to do more than simply complete the document.
We submitted below, and we repeat that submission, that that duty was relevantly to do three things, and we have set those out in the outline of oral propositions at paragraph 3, and some of these have already been touched upon. The first is to make an inquiry as to members of the testator’s family and coupled with that, assuming that the testator says, “I’ve got a daughter but I haven’t seen her for X number of years”, an inquiry as to why no provision has been made for her. I submit that can hardly be controversial.
GAGELER J: I think that might be conceded.
MR WILSON: Then the next step – I am doing this incrementally. The next step is, upon being told that there is a daughter and being instructed to make a will which leaves the entire estate to the respondent, in this case, we say that there is a duty on the solicitor to advise the client that there exists a piece of legislation – the Testator’s Family Maintenance Act – and to explain the operation of that legislation and to explain that, if the daughter were to make a claim, she being an eligible applicant under the legislation, that that may have an effect on his testamentary intention, and then incrementally from there, depending upon the outcome of the inquiries that are made and the advice that is given, to give the testator advice as to how he can achieve his testamentary intention.
The case below never got beyond those propositions and did not get to the stage of asserting that the solicitor should persuade, urge, compel, recommend – however one puts it – to his client to adopt one course or another. It was that the solicitor should tell the client what the issues are and what problems he may confront in achieving his testamentary intention.
That picks up then what Justice Keane raised earlier. If that retainer was carried out, it may lead to a second retainer, that is, a retainer to prepare documents that achieve the creation of a joint tenancy as opposed to a tenancy in common, and in that retainer issues might arise which give rise to the sort of problems that our learned friend has referred to such as what happens if Mr Calvert does not agree, et cetera.
That is not the duty that was debated either at first instance or on appeal. That inquiry stopped at the point to which I have referred, and it is the respondent’s case that by failing to give any advice and failing to make any inquiry, the testator lost the opportunity of acting differently. If one confines the inquiry, as we respectfully submit one ought, to whether the retainer and duty to the testator was in the terms that I have outlined, then in accordance with the reasoning in Hill v Van Erp, there is no difficulty in concluding, as each of the members of the Full Court did, that there is no conflict between the position of the respondent and the position of the testator.
KIEFEL J: Mr Wilson, you rely upon loss of opportunity, do you, because once you reach 3.3 one does not know what the testator’s testamentary intention could be at that point.
MR WILSON: Just by way of some background - your Honour may have picked this up in the documents – the case at first instance was run on an all or nothing basis and that partly explains why his Honour the Chief Justice decided adversely to the respondent, because he could not be satisfied on the balance of probabilities that the testator would have acted in a particular way. The way that the case was put in the Court of Appeal by way of alternative and which was accepted by the Court of Appeal is that the damage which you suffered proved on the balance of probabilities is the loss of the opportunity to act differently.
One then moves to the assessment stage and says some of the points that were raised by my learned friends. Would the testator have said, “Leave it to chance, leave it as it is”? Would the testator have said, “You’re right, I didn’t know about this piece of legislation, I want to leave a bequest to my daughter”? Would the testator have said, “I want you to tell me how I get around this piece of legislation so that I can achieve my testamentary intention”?
FRENCH CJ: When we talk about loss of opportunity, we are normally talking about that in context of assessment of damage in the nature of the loss that is suffered, so that one is really talking here about the loss of chance to the beneficiary. I am not sure it is apposite to talk about loss of opportunity to the testator.
MR WILSON: I am sorry, your Honour is quite right.
KIEFEL J: The loss of chance for the beneficiary is that the testator might have taken a particular path ‑ ‑ ‑
MR WILSON: Would have acted or could have acted differently.
KIEFEL J: ‑ ‑ ‑ because we are not talking about the testator’s economic interests at all.
MR WILSON: No, and that aspect of the matter has not been decided.
KIEFEL J: It sounds awfully like a loss of a chance of a better outcome, except it is not a medical one, as in Tabet v Gett.
MR WILSON: It is not a medical one.
KIEFEL J: It is a testamentary outcome.
MR WILSON: But in terms of the analysis one asks whether – I am moving ahead a bit here – but one asks whether this respondent has proved on the balance of probabilities that he has lost the chance of the testator acting differently. We submit that was open to the court to find and each of the members of the court had no difficulty in reaching that conclusion. If that finding is made, one then moves to the assessment process and one notes that, if a finding had been made that on the balance of probabilities a court was satisfied that the testator would have taken advice and would have created joint tenancies, thereby subverting the claim that came under the Testator’s Family Maintenance Act, the respondent would get 100 per cent of his damages, if that is the way the matter is analysed.
So, in terms of then of the way in which the court considered the duty, our learned friend has taken you to the reasons of Justice Tennent. The matter, for completeness, was also considered in the reasons of Justice Porter and in the reasons of Justice Estcourt. Could we take you first, please, to Justice Porter at paragraph 69 which is in appeal book at page 263, and at paragraph 70 his Honour makes the point that I was earlier expressing to your Honours:
The client’s choice should be a fully informed one. The outcomes may be quite different, depending on what, if anything, is done by the testator.
At paragraph 78 his Honour then dealt with the next question in the analysis, which is the question of the duty of care to the beneficiary and the need for the coincidence of interests, and concludes at the end of paragraph 76 ‑ ‑ ‑
GORDON J: Paragraph 76 or 78?
MR WILSON: I am sorry, 78, with reference to the three cases – four cases referred to there, two of which involve the failure to – all of which involve the failure to sever a joint tenancy but one of which was decided on the basis that the estate had the claim and, therefore, the beneficiary could not bring a claim and one on the basis that the testator’s instructions were, in fact, to leave the property as a joint tenancy with a notation in the will of an intention that when she died that the executor should deal with the property in a certain way.
GAGELER J: Do you accept the proposition of law that is attributed in paragraph 78 to Thompson v Canik, that is that any duty owed to a beneficiary cannot conflict with that owed to the testator? Will you deal with the propositions put against you that there was a conflict once you get to your paragraph 3.3 component of the duty?
MR WILSON: We, with respect, submit there is no conflict at that stage. A conflict may and only may arise if the solicitor having given that advice is then given instructions by the client “I want to act this way, I want to create joint tenancies” and the solicitor follows that advice, transmits the documents or tells the respondent, in this case, that the documents are coming and the respondent says no, I do not agree to that. A conflict would then arise. But that is at a much later stage in the inquiry.
KEANE J: Looking at paragraph 78 where his Honour refers to the need for a coincidence of interest and refers to Hill v Van Erp, is it correct to say that there is a coincidence of interest here between the testator and the beneficiary, given that the testator has a moral obligation or may have, depending on what the evidence is, what emerges, may have a moral obligation to someone else whereas there is no question that the beneficiary does not?
MR WILSON: We would submit that there is a coincidence of interest insofar as both testator and the beneficiary – they were interested in the beneficiary receiving the benefit of the estate, that is, the testator’s express instructions to the solicitor recorded in the file note “All my estate to go to Roger Calvert”.
KEANE J: That is on the assumption – I mean, the assumption that has been made in your client’s favour in the whole of this case is that the testator did not know of the TFM Act but making that assumption in your client’s favour the situation then is that your client’s case is that the instructions that were given, “I want to have a will leaving my estate to Mr Calvert”, that the solicitor should not have accepted and acted on those instructions but should have raised the possibility that the TFM legislation might affect the giving effect to those instructions.
MR WILSON: We do not accept the proposition that the solicitor should not have acted on those instructions but could I answer an anterior question first? We do not know what the testator knew. What we know is that the solicitor did not advise him about the Testator’s Family Maintenance Act. Coming back to the second part of your Honour’s question, the solicitor was not obliged to say no, I will not accept your instructions. What he was obliged to do was to say I will accept your instructions and here is a will which I have drawn based on those instructions but you must realise this.
Having taken instructions and made the inquiries which, we say, should have been made, the solicitor would have been appraised of the fact that there was a daughter who was an eligible applicant. “I will prepare this will for you on this basis and the will is perfectly valid in form but you should be aware of this fact and the operation of this statute and I should give you the opportunity of reflecting as to whether you want to continue with a will in that form, whether you wish to reconsider and give a bequest to the daughter or whether you wish to instruct me to take some other action to achieve what you want to achieve”.
KEANE J: At that point, it is clear from that sort of discussion that we are talking about obligations that are not pursuing the same interests in the testator and in the beneficiary because the very discussion that is occurring is reflecting the potential – reflecting the actual moral obligation and the potential legal implementation of that obligation which affects the testator.
MR WILSON: And affects the beneficiary.
KEANE J: Well, it may have consequential effects on the beneficiary but one thing, I think, is certain, is it not, that it is absolutely none of the beneficiary’s interest to hear about any of this. It has nothing to do with the beneficiary. This is all about the testator having the undivided attention of the solicitor.
MR WILSON: That really comes back to the point that I made at the outset which is one has to consider where the retainer and duty start and finish, not, as it were, keep it going to the point that your Honour Justice Keane is talking about. We say that the inquiry stops and there is a failure to make any inquiry or give any advice because that is when the opportunity is lost. What happens thereafter can be relevant to the assessment of the chance and it is not the retainer that was breached or the duty that was breached. Have I answered your Honour’s ‑ ‑ ‑
KEANE J: Thank you.
MR WILSON: Could I then just by way of completeness, go to Justice Estcourt’s reasons starting at paragraph 111 at appeal book 273. Then could I take your Honours to paragraphs 116 and 117 on the next page? It is evident from paragraphs 118 and 119 that his Honour was aware of the requirement not to conflate duty and breach but we respectfully submit that by formulating the duty in the way that I have taken your Honours to in each of the three judgments that vice has not occurred.
KIEFEL J: The step that you take though once you get to 3.3 is to fasten it, as you have said, on loss of chance and that is to acknowledge that the respondent’s case is that the loss of chance is itself the damage. You avoid causation altogether by fastening on the loss of chance as damage itself.
MR WILSON: We do not avoid causation in this sense. We accept that section 13(1)(a) applies and if one applies the “but for” test one says but for the solicitor’s failure to make inquiries and give advice has the beneficiary lost something of value, the chance of the testator acting differently. Then one moves to the assessment of chance.
KIEFEL J: As damage?
MR WILSON: That is the Allied Maples process of reasoning.
KIEFEL J: How does that square with what was said in Tabet v Gett, Allied Maples?
MR WILSON: Tabet v Gett, it was a different analysis in that the question which was being looked at there was whether the opportunity to obtain a better medical outcome was something that had to be proved on balance or as the assessment of a chance. The Court concluded that it was the former and not the latter. We do not cavil with the proposition here that we must establish causation on the balance of probabilities and section 13 mandates that course.
Perhaps it is in the characterisation of what the damage is is the matter that is the distinction between the cases and we say that the Sellars v Adelaide Petroleum analysis of ascertaining whether the loss of a chance is something of value is one that ought to be applied in this case, taking into account what their Lordships said in the Allied Maple Case.
Could I just briefly touch on the public policy argument? I am not sure how much I need to say about that, but it seems to be common ground that a testator could during his or her lifetime lawfully dispose of the entirety of their estate and not contravene the legislation. We have set out in our written submissions some of the history to the statutes and some of the discussion about whether or not notional estate provisions should be included. The fact of the matter is that in Tasmania there is no notional estate provision. There is nothing unlawful in a testator disposing of their estate before death.
The question that then arises is, if the testator – and this I appreciate is beyond the three‑step process that I have referred to in paragraph 3 – but if after the solicitor has fulfilled his duty the testator says, “Thank you for that. I’ve now decided I want to go down this course. I want to create joint tenancies and I want to make sure that my daughter gets nothing”, ought a solicitor not be under a duty to give advice to the client as to how to achieve that purpose because of the fact that it runs counter to the perceived policy in the testator’s family maintenance legislation that the testator will act as a wise and just testator?
We respectfully submit that one only has to ask that question to see the answer. If the answer to that is no, the solicitor should not be under a duty, then why should a solicitor be permitted to advise people about their tax affairs, their real estate affairs, their marital affairs or any other matter in which statutes intrude into the arrangement of those affairs on the happening of certain events. We respectfully submit that there is nothing that would support a conclusion that public policy precludes the duty being owed.
GAGELER J: To the client?
MR WILSON: Either to the client or to the beneficiary, because the duty to the beneficiary must be co‑existent with the duty to the testator. If the solicitor is entitled to give advice to the client as to how to – my words – avoid the operation of the statute, why should he not be under a co‑existing duty to the beneficiary? How can one logically split those obligations?
Your Honours, the other matter that I wanted to attend to was in respect of causation, which I have touched upon. Your Honours have in our bundle the decision of Allied Maples Group Ltd v Simmons & Simmons. Could I give your Honours references in that case? I think it is case 1 in our bundle.
Could I take your Honours first to the judgment of Lord Justice Stuart‑Smith at page 1609 and to point H on the page and invite your Honours to read to the top to about line B on page 1610? Could
I also tell your Honours without necessarily requiring your Honours to read them in court but to same effect are at page 1611, A to C; 1614, C to D; 1618, G to H; and the discussion by Lord Justice Millett at pages 1622 to 1623, point D.
Can I tell your Honours that the reasoning in Allied Maples has been applied by two appellate courts in this country. The first is in the decision of the New South Wales Court of Appeal in Feletti v Kontoulas [2000] NSWCA 59, and the second is in the Court of Appeal in Western Australia in Watts v Turpin (1999) 21 WAR 402.
FRENCH CJ: A point of departure is always section 14, is it not, of the Civil Liability Act?
MR WILSON: Unless there is anything further, those are the submissions. I did not propose to address everything that is in writing.
FRENCH CJ: Thank you, Mr Wilson. Yes, Mr Ruskin.
MR RUSKIN: Just three short matters. The first is, we respectfully say that there is not a stop start duty or segmented duty – sorry, segmented retainer which changes when you go to various stages, and the discussion with Justice Keane exposed that. As soon as the discussion starts about TFM or the daughter, there is no interest by the beneficiary in that. It is not in his interests and his interests are not advanced. As soon as the solicitor, if he is required to, says an option is to do right by your daughter, the interests are not coincident right from the start. The second matter is with respect to ‑ ‑ ‑
FRENCH CJ: That is, I suppose in a sense, because discussion about the TFM is a matter of defining what the testator will intend. In other words, in a sense it is anterior to the question of what are the testamentary intentions if the testamentary intentions are what he proposes to do with his will.
MR RUSKIN: Yes, but however it is said, it is not going to do the beneficiary any good, not at all. The second matter was the alleged analogy between ‑ ‑ ‑
KEANE J: Well, the beneficiary certainly cannot have an interest in the outcome of that advice.
MR RUSKIN: No, he cannot. The second matter was the alleged analogy between tax real estate, minimisation obligations and those sorts of things, and the moral obligation in the TFM Act. There is no adequate analogy there. The allowance to minimise your – you do not have a moral
obligation that judges whether you can minimise your tax or not, but you certainly have a moral obligation rooted in the TFM Act.
The last matter really was in respect to causation and just to remind the Court of the passages in Tabet v Gett, because we say this runs head on into Tabet v Gett and if I could just give the Court the pages or paragraphs - Tabet v Gett at 585, at paragraph 136. This is from your Honour Justice Kiefel:
Different standards apply to proof of damage from those that are involved in the assessment of damages. Sellars v Adelaide Petroleum NL confirms that the general standard of proof is to be maintained with respect to the issue of causation and whether the plaintiff has suffered loss or damage.
Then in relation to the assessment you go to Malec, and the conclusion is the one at 152 of that judgment:
The requirement of causation is not overcome by redefining the mere possibility that such damage as did occur might not eventuate, as a chance and then saying that it is lost when the damage actually occurs. Such a claim could only succeed if the standard of proof were lowered, which would require a fundamental change to the law of negligence.
Those are the only other matters.
FRENCH CJ: Yes, thank you, Mr Ruskin. The Court will reserve its decision. The Court adjourns until 10 o’clock tomorrow morning.
AT 12.09 PM THE MATTER WAS ADJOURNED
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