Cade Pty Ltd v Simmons

[2000] HCATrans 113

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Adelaide  No A47 of 1998

B e t w e e n -

CADE PTY LTD

Applicant

and

THOMSON SIMMONS and SHEAHAN SIMS

Respondents

Application for special leave to appeal

GLEESON CJ
CALLINAN J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON FRIDAY, 24 MARCH 2000, AT 12.41 PM

Copyright in the High Court of Australia

MR C.J. KOURAKIS, QC:   If the Court pleases, I appear with my learned friend, MR A.L. TOKLEY, for the applicant. (instructed by Janet E Howell & Assoc)

MR T.R  ANDERSON, QC:   If the Court pleases, I appear for the first respondent, Thomson Simmons. (instructed by Rowell Forrest & Co)

MR J.E. LUNN:   If the Court pleases, I appear for the second respondent. (instructed by Minter Ellison)

GLEESON CJ:   Yes, Mr Kourakis.

MR KOURAKIS:   If the Court pleases, the special leave point in this case is the extent to which lost opportunity can be claimed as an item or head of compensable damage in the circumstances where there is no particular contract which is identified, pursuant to which the commercial opportunity arose.  Rather, in this case, what was claimed was damage to business caused by negligent advice which disrupted the business generally.  The question, accordingly, was whether it was permissible to simply claim a lost opportunity to profit, which would otherwise have existed but for the negligent advice; or whether it was necessary to prove, on the balance, as a past hypothetical fact, if you like, that there would, in fact, have been a loss quantified at a particular amount.

If the Court pleases, can I take your Honours to the passages in the judgment of the learned trial judge, the Chief Justice, appearing firstly at the foot of page 56 of the application book to show how the Chief Justice dealt with the claim by the company and for losses arising from the distraction of its managing director.  Your Honours will recall that certain advice was given by solicitors and accountants at a difficult time in the company’s life which led to the managing director, Figallo, devoting time to resolving a dispute with a fellow shareholder director in circumstances where he was not advised of the particular beneficial rights he held as director and shareholder.

GLEESON CJ:   Mr Kourakis, we see the trial judge, on the top of page 57 down to line 23, making his findings about this matter.

MR KOURAKIS:   Yes.

GLEESON CJ:   What I wanted to ask you was this:  was the way he addressed the issue consistent with the way it was argued before him?

MR KOURAKIS:   If you Honour pleases, that is difficult to know.  Can I say this:  a claim for lost opportunity was not expressed in those terms in the pleadings.

GLEESON CJ:   Well, most of the trial judges, in their reasons for judgment, respond to arguments that are put to them by counsel.

MR KOURAKIS:   Your Honour, what was claimed was compensation for the loss of Figallo’s time by reason of the distraction, and it was that head that the learned Chief Justice was considering.  But, more importantly, your Honour, at the very foot of page 56 a procedural ruling of his Honour is there set out which was to the effect that the question of the assessment of quantum had, in fact, been deferred and so, accordingly, the only question that the Chief Justice had to consider was whether there was a loss at all, and not a question of quantification.

GLEESON CJ:   What I was interested to know was whether he addressed that question in the same way as it was argued before him.  Because we do not find him referring to loss of a chance.  I wondered if that was because nobody argued loss of a chance in front of him.

MR KOURAKIS:   Your Honour, he dealt with loss of a chance with respect to the director’s loss itself, that is Mr Figallo’s.  Again, although that loss was not expressed on the pleadings in terms of lost opportunity.

GLEESON CJ:   What I am trying to ascertain is whether the claim on behalf of Accom was put on the basis of loss of a chance.

MR KOURAKIS:   Not expressly.

GLEESON CJ:   Thank you.

MR KOURAKIS:   On appeal, the loss was put as lost opportunity and it was not suggested there that the appellant was shut out from putting the claim on that basis, and arguing it on that basis, by reason of the way in which the trial proceeded.  So, accordingly, on appeal, the cases of Sellars and Amann were dealt with, the appellant’s outline on appeal to the Full Court expressly raised the question of lost opportunity.  The respondents, on appeal before the Full Court, simply argued that, even applying those cases, no loss was established, and so ‑ ‑ ‑

GLEESON CJ:   However, I think we now know the explanation for the way in which Chief Justice Doyle expressed his reason for judgment.

MR KOURAKIS:   And I will take your Honours in a moment to the discussion of this matter in the Full Court, brief as it was.  But can I stay, at page 57, if the Court pleases and take your Honours to the finding in the first paragraph:

that if proper advice had been given, the amount of time spent by Figallo dealing with the various aspects of the falling out with Cheetham and Accom’s cash flow problems would have been less, but not a lot less.

Putting aside the difficulty in quantifying the amount of time, which I will come to in a moment, that is a finding that there has been a particular loss, that is, the loss of a managing director’s time and, in this particular case, the learned Chief Justice had earlier found that that was particularly valuable time.  The success of the company from its inception being due to the skill and drive of this man Figallo.

Your Honours, I pause there simply to make this submission:  the time of a skilled managing director, in my submission, is a commercial benefit in itself.  A competitor, for example, would pay for it.  Similarly, there is an analogy with the provisions which allow employers to recoup damages for personal injury, caused negligently, to their employee.  And, in that context, in my submission, the finding then, at the top of page 57, in itself, is a finding of an opportunity lost by the employer company of its employees’ time.

CALLINAN J:   Is it your complaint that because quantum was not an issue, you did not present evidence of the kind that would have been an answer, for example, to what his Honour said at page 57 about line 7:

It is impossible, I find, to determine how much less time Figallo would have applied in dealing with outside investors.

Is that your real point?

MR KOURAKIS:   Yes.  It was specifically envisaged that after that ruling was made at a time during the course of the trial, that if some loss was found, there would be a subsequent hearing at ‑ ‑ ‑

CALLINAN J:   But did you go to his Honour before judgment was entered in relation to that matter?

MR KOURAKIS:   No.  That matter was only going to be dealt with after the delivery of this judgment, if some loss was found.  The effect of his Honour’s findings ‑ ‑ ‑

CALLINAN J:   No, but did you go back to try to point out to his Honour that, perhaps, there had been an oversight by his Honour on the question of the deferral of an assessment of quantum, that is, before judgment was entered?

MR KOURAKIS:   No, what we did instead was claim that the plaintiff company had been denied natural justice by the learned Chief Justice moving to that finding in the absence of the other evidence.  The Court of Appeal dealt with that by, in effect, saying, “Well, look there was not that denial”.  All that his Honour was, in fact, saying, at 57, is that there was no loss at all – and you always had to prove at least some loss before you moved to that position.  But with ‑ ‑ ‑

CALLINAN J:   Could you have gone back before his Honour before judgment was entered?

MR KOURAKIS:   That may have been possible.  In my submission, certainly the applicant ought not suffer any prejudice by reason of its choice to proceed on the natural justice appeal to the Full Court.  But, with respect, your Honour Justice Callinan has raised, in my respectful submission, a real problem with the passage and that is, that the difficulties of proof and finding that his Honour there adverts to, are really difficulties that only needed to have been faced at that later stage.

Moreover, there is a more fundamental difficulty which arises from the decision of this Court in Chappel v Hart, and that is that if the distraction is, prima facie, the result of the very negligence claimed, then the evidentiary burden shifts to the defendants to show that, although, some time might still have been wasted even had Figallo received proper advice, to show just how much time would, nonetheless, have been wasted.  So, with respect, that passage suffers those two defects, as well as, in my submission, ignoring the general responsibility of courts to proceed to assess damages as best they can, notwithstanding, the difficulties.

In my submission, accordingly, the ultimate conclusion made by the learned trial judge there, that there was no loss suffered, in fact, is a conclusion which is contrary to his primary finding of fact, at the very top of the page, that there was, indeed, some time wasted as a result of the negligent advice.  All that remained after that finding was a quantification of the amount which may, nonetheless, have proved difficult but, in our submission, was possible.  Returning to the special ‑ ‑ ‑

CALLINAN J:   If I could just draw your attention to what was said in the Full Court by Justice Duggan, I think, at page 130, line 7.  After referring to the passages that you have drawn our attention to, there appears this:

In my view the effect of the trial Judge’s finding is that no loss had been established in relation to this aspect –

that is the way in which those passages were read in the Full Court.

MR KOURAKIS:   Yes.

CALLINAN J:   Well, they are capable of being read that way, are they not?

MR KOURAKIS:   If your Honour pleases, there is no doubt that the learned Chief Justice expressed as a conclusion, that he found that no loss had been suffered.

CALLINAN J:   And the company did have all sorts of problems, did it not, at the time?

MR KOURAKIS:   If your Honour pleases, those questions really explain how the question of lost opportunity, and why it arises in this case.  There was a finding of fact that he had lost time.  There was a difficulty in proving that that, on the balance as a matter of past fact, would have resulted in a certain loss.  But the mere loss of time in a one-person company with the skills of Figallo, represented a lost commercial opportunity and, accordingly, it would therefore become permissible to attempt to value that opportunity by an assessment and balancing of the contingencies, which is what the learned Chief Justice did not do in this case.

The Full Court’s answer to the submission, when it was more expressly made on the basis of their decisions of this Court in Sellars and Amann appears at page 119 of the application book similarly seems to simply assume none, despite the reference to Sellars, and the argument based on Sellars, that the plaintiff company must lose if it could not establish on the balance of probabilities that it would, in fact, have benefited to a sum identified, or ‑ ‑ ‑

GLEESON CJ:   Where is this?

MR KOURAKIS:   Page 119, the very foot of the page under the subheading, the “Plaintiff’s arguments”.

GLEESON CJ:   Right.

MR KOURAKIS:   Your Honours will see there, references to Sellars and Malec.  Those references reflect the way in which the case was put on appeal.  Nonetheless, the conclusion of his Honour Justice Williams, with whom the other justices agreed on this point, simply seems to be that despite those submissions based on lost opportunity, the plaintiff still had to prove, on balance, that if the proper advice had been given there would, as a matter of probability, have been more profit or more earnings.  Whereas the plaintiff’s case, of course, was that all it had to prove was that the negligent advice had caused the waste of time of its managing director which, in itself, represented a commercial opportunity which could then be valued, taking into account against the company, the very problems that your Honour Justice Callinan adverted to a moment ago, when your Honour said that the company had problems, in any event.

But, with respect, can I also attempt to turn that around somewhat, because it is an argument put by the respondents.  The company, although successful over many years, at this particular time was in difficulty because some large contracts had gone bad and payments had not been received.  But that rather makes the point about the value of the opportunity that was lost when the director’s time was wasted because of the negligent advice.

CALLINAN J:   What is a court to do if the conclusion is, for example, that the chance is worth no more than about 5 or 10 per cent, say?

MR KOURAKIS:   Your Honours, Malec v Hutton, another decision, say that 1 per cent certainly must be ignored and there might be some doubt about 5 per cent.  But in this case, the primary findings are that this man, Figallo, had been successful over many years and was skilled in his work.  The second primary finding:  he was certainly distracted, albeit at a difficult time for the company.  It might have been difficult to assess value but that was a question that, nonetheless, ought to have awaited the further evidence that would be called pursuant to the procedural ruling.  If the Court pleases.

GLEESON CJ:   Thank you, Mr Kourakis.  We do not need to hear you, Mr Anderson, or Mr Lunn.

The Court is of the view that there is insufficient reason to doubt the conclusion arrived at by the Full Court of the Supreme Court of South Australia to warrant a grant of special leave.  The application is refused.

Can you resist an order for costs?

MR KOURAKIS:   No, your Honour.

GLEESON CJ:   The applicant must pay the respondent’s costs of the application.

Call the next matter, please.

AT 12.56 PM THE MATTER WAS CONCLUDED