Ballantyne v Boylan - [2013] SASC 177

SUPREME COURT OF SOUTH AUSTRALIA
(Civil)
BALLANTYNE & ANOR v BOYLAN & ANOR
[2013] SASC 177
Judgment of The Honourable Justice Anderson
14 November 2013
PROCEDURE - SUPREME COURT PROCEDURE - SOUTH AUSTRALIA - PROCEDURE UNDER RULES OF COURT - SUMMARY JUDGMENT
PROFESSIONS AND TRADES - LAWYERS - DUTIES AND LIABILITIES - LIABILITY FOR COSTS OF PROCEEDINGS
RECOVERY OF COSTS AS DAMAGES IN SUBSEQUENT ACTION
Application by first defendant to strike out claim against him for damages and other relief. The plaintiffs seek to claim costs of prior proceedings from the defendant, alleging negligence and breach of duty on behalf of the defendants. The first defendant seeks to strike out or permanently stay the claim on the basis both the parties and issues in each action are identical. The plaintiffs allege the parties are represented in different capacities in the two actions, and the issues differ.
Held: Application refused. The parties are appearing in different capacities in the current action and the issues in question are not the same.
Gray v Sirtex Medical Ltd (2011) 276 ALR 267, applied.
Ballantyne v Ballantyne & Ors [2010] SASC 273; Anderson v Bowles (1951) 84 CLR 310; Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589, discussed.

BALLANTYNE & ANOR v BOYLAN & ANOR
[2013] SASC 177
Civil

ANDERSON J.
Introduction
In this application the first defendant seeks an order to strike out the claim brought by the plaintiffs for damages and other relief relating to the costs of prior Supreme Court proceedings.
The plaintiffs, Mr Lee Ballantyne (“Lee”) and Mr Robert Scott Ballantyne (“Scott”), have brought an action against two solicitors, Mr Paul Boylan and Ms Marion Kitto, alleging the two defendants were negligent and breached their duties in the course of preparing estate planning documentation for the family of the plaintiffs. The plaintiffs were previously involved in an action regarding the interpretation of certain deeds and the effect of those deeds on family estates and assets. This action was decided by White J: see Ballantyne v Ballantyne & Ors [2010] SASC 273. His Honour gave reasons for his order on costs. He specifically rejected an argument by the first and second defendants that the sixth defendant (Mr Boylan) should pay the whole or part of the costs of the plaintiff or the first five defendants. His Honour, after considering Mr Boylan’s application for costs, made no order. It was ordered that the plaintiff and first five defendants recover their costs on a solicitor/client basis from the trust.
The plaintiffs, as trustees of the fund, are now seeking to recover the costs of $336,000 from the defendants in this action.
Background
The action arises as a result of a previous dispute between the Ballantyne family members as to the present ownership of farming land near Gladstone. In that action, the first and second defendants (the first and second plaintiffs in this action) contended certain land was held by the Robert Peter Ballantyne Family Trust (“the Trust”) of which they were trustees. Their four siblings contended some of the land was vested in Lee, some in Scott and the remainder formed part of their mother’s estate, to be distributed in accordance with her will.
Mr Boylan’s firm prepared the Deed of Settlement establishing the Trust and a later Deed Poll intended to vest property owned by the Trust. He was named as the sixth defendant in the action, as a large part of the proceedings concerned a dispute about the validity of the Deed Poll. It was alleged by Lee and Scott Ballantyne that the Deed Poll did not contain certain words when executed by Mr Boylan and the parents, Robert and Valmai Ballantyne, on 13 April 1999. They submitted it was later altered so as to introduce certain words into a clause without re-execution of the Deed or under the amendment powers contained in the deed. If the Deed Poll was found to be invalid, all property to which it referred would remain an asset of the Trust controlled by Lee and Scott.
Mr Boylan, the sixth defendant, adopted a position of neutrality concerning the issue of validity of the Deed Poll, and he withdrew from further participation in the trial as Lee and Scott gave an undertaking that there would not be an allegation in the trial the Deed was altered by him or someone at his firm.
White J concluded that the relevant clause (clause 6.1), did not contain the disputed words when executed by the parents and these words were added at some point after, and therefore those words could not be relied upon to establish the validity of the Deed Poll of 13 April 1999. However, His Honour found for other reasons that the clause nevertheless authorised the vesting of Trust assets in the beneficiaries.
The present action
Lee and Scott, now as the plaintiffs in this matter, have commenced action against Mr Boylan and Ms Kitto, to recover the costs of the previous action by way of damages.
The plaintiffs allege that Mr Boylan, or someone employed by him, removed the page from the Deed and replaced it with an amended page. They allege that both defendants have breached their duties in a number of ways, including failing to advise that control of the land could be passed to the trustees, preparing the Deed Poll without advising the trustees of potential capital gains tax consequences and causing the plaintiffs to incur considerable costs defending the first action, in addition to capital gains tax liabilities. The plaintiffs allege the defendants further failed to impart certain information about the Trust and Deed Poll, and failed to give adequate advice in regards to actions to be taken for the Trust. In short, they are suing for the professional negligence of the solicitors.
Interlocutory application
Mr Blight, counsel for Mr Boylan, has brought an application (FDN 12) for the plaintiff’s claim to be struck out, or in the alternative, that there be a stay of proceedings in so far as they are brought against him in relation to the costs of the first proceedings.
Mr Blight submits that the pleaded allegation that it was Mr Boylan or a person employed by him who amended the Deed, arises out of the same, or, alternatively, substantially the same, facts as those determined in the prior proceedings. Mr Blight submits that the plaintiffs elected not to pursue the allegation in the previous trial and thus cannot do so now. Mr Doyle SC for the plaintiffs submits that the parties in this matter are not acting in the same capacity as in the first action.
The general principle in “Anderson”
Mr Blight submits that costs cannot be recovered in an action for damages brought by the plaintiff from whom they were withheld in an original proceeding. He relies on the decision in Anderson v Bowles (1951) 84 CLR 310 at 323. The principle emerging from Anderson is that a party cannot recover by way of damages against the same party in later proceedings costs not awarded in the earlier proceedings.
Mr Blight submits in the circumstances presently before the Court the Anderson principle should be applied as the costs were expressly withheld by the plaintiffs when they applied to recover their costs from the first defendant in the previous action. He submits that the plaintiff should be viewed as being the “same party” in this proceeding as in the previous action before White J. He submits that the plaintiffs were acting in their capacity as both beneficiary and trustee in the previous action, and noted that in White J’s costs ruling, His Honour accepted they were defending the action in their capacity as both. He further submits that the first defendant is also the same party in the previous action and in this action.
Mr Blight says that the parties’ application before the court and the issues that were raised on costs are virtually the same as in this current action. Mr Blight submits that the plaintiff’s submissions on the costs application invited the court to make specific findings as to Mr Boylan’s conduct as a solicitor, including in regards to costs incurred by the Trust and actions taken in regards to the Trust. Mr Blight says this demonstrates the similar or identical nature of the issues before White J then and the issues in this present action.
Mr Blight asserts the plaintiffs initially implicitly claimed that it was Mr Boylan who amended the deed in their earlier application for costs and are now simply alleging this explicitly.
Mr Doyle SC submits the Anderson principle does not apply in these circumstances as the parties involved in the initial action are not appearing in the same capacity in this action and therefore the proposition in Gray v Sirtex Medical Ltd (2011 276 ALR 267 applies. This proposition is that the rule in Anderson does not preclude a party seeking costs from the primary proceedings in subsequent proceedings against a third party. He submits in the initial proceedings the plaintiffs were joined as defendants in their capacity as beneficiaries, and are now suing in their capacities as trustees, and further that the first defendant was joined in his capacity as settlor of the trust fund, not the solicitor of the former trustees as he is in this present action. Put simply, Mr Doyle’s submission is that this is not a case of successive sets of proceedings between the same parties because of the different capacities of the parties. He submits that the same principle as with third parties should apply where the parties are involved in different capacities.
Mr Doyle emphasised Mr Boylan took no active part in the previous proceedings, as contrasted with the present proceedings where the claim against Mr Boylan includes the period he was initially retained by the former trustees, and includes broader allegations as to whether there was a competent structure present to fulfil the trustee’s instructions.
Mr Doyle submits the issue of whether Mr Boylan owed the former trustees certain duties as their solicitor, and whether those duties were breached, was not in issue in the previous action. It is now the focus of this action.
Anshun principle and estoppel
The second ground argued by Mr Blight is that the plaintiffs are estopped from bringing a claim for costs in accordance with the principles in Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589,597,602. Mr Blight submits the Anshun principle applies here as it was unreasonable for the plaintiffs not to assert and rely upon the allegation that it was the first defendant who amended the deed, in the first action. Mr Blight additionally submits this action arises out of the same matters of fact such that there is a significant overlap between the two actions. He submits the greater the overlap between the facts underlying each claim, the greater the chance it was unreasonable not to raise the matter in the initial action. Mr Blight submits there is no proper explanation as to why the issue was not raised in the earlier proceedings.
In the alternative to the claim for an Anshun estoppel, Mr Blight submits the claim is an abuse of process by re-litigation. While admitting this has a heavy onus, Mr Blight asserts this action attempts to re-litigate issues that were determined in the initial action, including the disputed words of the Deed and costs that resulted from the initial action. While Mr Blight notes the issues are extended and built upon in the current action, there is a “risk” of potential conflicting findings against White J’s decision. Mr Blight submits this action would be a further investigation of the matters considered (and decided upon) in the first action.
In regards to the estoppel and abuse of process assertions, Mr Doyle repeats his submission that the parties appear in two different capacities in the two sets of proceedings. He submits the issues to be litigated in this present action were largely not relevant to the earlier proceedings, in that it was not relevant to determine whether Mr Boylan owed and breached a general duty of care to the former trustees. Mr Doyle further submitted that even if the earlier proceedings could have been expanded to include such issues, it was not an abuse of process for the plaintiffs in the present action to choose not to litigate them. He submitted there was, in fact, good reason not to raise those issues, given they would complicate the previous proceedings and would involve a number of parties not necessary to the matters in dispute in those proceedings. Additionally, Mr Doyle submitted the issues in the present proceedings were hypothetical, depending on how the issues in the prior proceedings were determined. He asserts there is no risk of re-litigation, and therefore no abuse of process.
Conclusion
In my view the submissions made by Mr Doyle on both limbs of Mr Blight’s argument are correct. The rule in Anderson only operates where there are successive sets of proceedings involving the same parties. I consider that this is not such a case because the parties are appearing in quite different capacities in this matter. Mr Boylan was joined in the previous proceeding in his capacity as the settlor of the Trust. The plaintiffs in that action were joined as beneficiaries of the trust. They are now suing in their capacities as trustees while Mr Boylan is defending himself in his capacity as a solicitor.
Clearly, different issues arise out of the respective duties and obligations of a settlor on the one hand and solicitor on the other. Questions of professional negligence amongst other issues now arise for the first time. In my view this is an exception to the Anderson rule, in that the changed capacities of the parties bring it within the Gray v Sirtex exception for third parties.
In relation to the submission of Mr Blight regarding the Anshun principle, the court said in Ashun at [61]:
... there are a variety of circumstances, some referred to in the earlier cases, why a party may justifiably refrain from litigating an issue in one proceeding yet wish to litigate the issue in other proceedings, e.g. expense, importance of the particular issue, motives extraneous to the action litigation, to mention but a few.
In my view, it was not unreasonable to not include the issues in the present action in the previous action. As Mr Doyle submitted, such inclusion would have unnecessarily complicated those proceedings and involved a number of parties who would not otherwise be included in that action. The action would have become more complicated an expensive and justified the plaintiffs from refraining from litigating these issues in the previous proceedings.
It is my view that there is not, in this case, any breach of the general rule requiring finality in litigation. The application to strike out or stay these proceedings by the first defendant is dismissed. I will hear the parties as to the future conduct of the matter to trial.