Calvert v Badenach
[2015] TASFC 8
•24 July 2015
[2015] TASFC 8
COURT: SUPREME COURT OF TASMANIA (FULL COURT)
CITATION: Calvert v Badenach [2015] TASFC 8
PARTIES: CALVERT, Roger Wayne
v
BADENACH, Robert
MURDOCH CLARKE SOLICITORS (a firm)
FILE NO: 1062/2014
JUDGMENT
APPEALED FROM: Calvert v Badenach [2014] TASSC 61
DELIVERED ON: 24 July 2015
DELIVERED AT: Hobart
HEARING DATE: 20 April 2015
JUDGMENT OF: Tennent, Porter and Estcourt JJ
CATCHWORDS:
Professions and Trades – Lawyers – Duties and liabilities – Solicitors' duties to other persons – Beneficiaries – Duty to a testator to give proper effect to testator's intentions – Duty extends to advice about family provision claims for persons not provided for and means available to minimise risk of claim – Means may include dealing with assets before death – Corresponding duty to a nominated beneficiary.
Hill v Van Erp (1997) 188 CLR 159, applied.
Doolan v Renkon (2011) 21 Tas R 156, considered.
Aust Dig Professions and Trades [1181]
Torts – Negligence – Essentials of action for negligence – Duty of care – Affecting particular professions or occupations – Lawyers – Duty of care to a testator to give proper effect to testator's intentions – Duty extends to advice about family provision claims for persons not provided for – Testator and nominated beneficiary held properties as tenants in common – Breach of duty to nominated beneficiary in failing to advise testator as to means available to minimise risk of claim – Means included creation of joint tenancies or transfer of testator's interests to beneficiary before death.
Hill v Van Erp (1997) 188 CLR 159, applied.
Doolan v Renkon (2011) 21 Tas R 156, considered.
Aust Dig Torts [28]
Appeal and New Trial – Appeal - practice and procedure – Powers of court – Assessment of damages – Action in negligence – Appellant unsuccessful at trial on issue of factual causation – Duty and breach not decided by trial judge – Appeal successful on duty and breach – Trial judge did not assess damages – Claim for damages for loss of opportunity put on basis that negligence direct and immediate cause of whole of the loss claimed – Assessment of damages remitted – Appellant able to have damages assessed on basis of value of lost opportunity.
Barnes v Forty Two International Pty Ltd [2014] FCAFC 152, distinguished.
Appeal and New Trial [261]
REPRESENTATION:
Counsel:
Appellant: K N Wilson SC
Respondents: S B McElwaine SC
Solicitors:
Appellant: Shine Lawyers
Respondents: Shaun McElwaine + Associates
Judgment Number: [2015] TASFC 8
Number of paragraphs: 159
Serial No 8/2015
File No 1062/2014
ROGER WAYNE CALVERT v ROBERT BADENACH,
MURDOCH CLARKE SOLICITORS (a firm)
REASONS FOR JUDGMENT FULL COURT
TENNENT J
PORTER J
ESTCOURT J
24 July 2015
Orders of the Court
The appeal is allowed.
The judgment for the respondents dated 24 November 2014 is set aside.
Judgment be entered for the appellant against the respondents for damages to be assessed.
The assessment of damages be remitted to a single judge other than the trial judge.
Serial No 8/2015
File No 1062/2014
ROGER WAYNE CALVERT v ROBERT BADENACH,
MURDOCH CLARKE SOLICITORS (a firm)
REASONS FOR JUDGMENT FULL COURT
TENNENT J
24 July 2015
In March 2009, the first respondent prepared a will for Jeffrey Doddridge ("the testator"). The testator was then terminally ill. His instructions were brief. All his estate was to pass to the appellant. The first respondent prepared a will to give effect to those instructions, and it was executed. The testator died in September 2009. The second respondent, the firm of solicitors in which the first respondent was a partner, had acted for the testator over a number of years, and, in fact, in 1984 had prepared two wills for him. Each was drawn largely to give effect to the same instructions as those in 2009, save that in the will first in time in 1984, there was also a bequest of $10,000 to a long estranged daughter. That same bequest did not appear in the will second in time in 1984.
At the time the 2009 will was prepared, and at the date of death, the testator had a half interest in two pieces of real estate. Both had been purchased jointly with the appellant. The two men held the titles as tenants in common. Probate of the will was granted early in 2010. The testator's estate for the purpose of probate included the testator's half share in each of the properties held with the appellant. Shortly after probate was granted, the estranged daughter, Patrice Doddridge, made an application pursuant to the Testators Family Maintenance Act 1912 ("the TFM Act") for provision out of the estate of the testator. She was successful, and a significant award was made to her. The net value of the estate which the appellant had expected to receive was, as a consequence, reduced by the amount of the award and various amounts of costs.
The appellant commenced an action against the respondents. In that action, the appellant contended that the respondents, when taking instructions from the testator about the will and then drawing it, owed the appellant a duty of care to ensure that the testator's instructions were given effect to; that is, to ensure that the appellant in fact did receive the whole of the estate which existed when the will was drawn.
The action proceeded to trial before Blow CJ. It failed. His Honour did not make a finding as to whether a duty existed as pleaded. Instead, he concluded that it was unnecessary to do so because, on the facts as found, no causation of loss could have been established. The appellant now appeals that decision.
Grounds of appeal
The grounds of the appeal are as follows:
"1The learned trial judge erred in law and in fact in failing to find that the defendant solicitors owed and breached a duty of care to the plaintiff.
2The learned trial judge erred in fact and in law in failing to consider, as he ought to have, the plaintiff's claim as one for the loss of an opportunity, and failed to assess the chance of the testator acting as the plaintiff contended, had the solicitors not breached their duty.
3The learned trial judge failed to give adequate and proper reasons for his conclusions that:
ahe was not satisfied on the balance of probabilities that a conversation about the testator's daughter and a possible TFM claim would have triggered an enquiry by the testator about ways of protecting the plaintiff's position (Reasons [25]);
bhe was not satisfied that the solicitor owed the testator, let alone the plaintiff, a duty to provide advice about creating joint tenancies in the absence of such an enquiry (Reasons [25]);
che was not satisfied that had the solicitor discharged his duty to the testator, the testator would have joined with the plaintiff in creating joint tenancies in place of the tenancies in common, or taken any other steps to deplete his estate and frustrate a possible claim under the TFM Act (Reasons [33]).
4Having found that the respondent solicitors owed a duty of care to the testator in the making of his will, and in making some enquiries as to the existence of his adult daughter, and in taking instructions in relation to a possible claim under the TFM Act, and that the solicitors had breached that duty, the learned trial judge erred in failing to consider:
awhether the solicitors owed a duty of care to the plaintiff (Reasons [33], cf Reasons [6]);
b the content of that duty of care (Reasons [6]);
c whether the solicitors had breached that duty of care.
5The learned trial judge erred in failing to make any findings as to damages, in circumstances where the plaintiff's cause of action was for a loss of opportunity, and the action was not a matter to be decided solely on the balance of probabilities.
6In so failing as asserted in grounds 3, 4 and 5 hereof, the learned trial judge failed to take proper account of the failure of the first defendant to give evidence, and the inferences that could properly be drawn from such failure."
The appellant's case at trial
The duty of care particularised in the appellant's statement of claim appeared at par 7 of that document. It was as follows:
"By reason of the matters aforesaid, the first defendant and the second defendant owed a duty of care to the plaintiff, as the named beneficiary under the Will, to give effect to the deceased's testamentary wishes.
Particulars
The deceased's wishes were that the plaintiff receive his whole estate upon the deceased's death, as recorded in the Will. …"
In par 14 of the statement of claim, the appellant asserted that the respondents had acted negligently and breached their duty of care by failing to advise the testator of:
"a the possibility or likelihood that Ms Doddridge would bring a claim for provision from the deceased's estate upon his death pursuant to the provisions of the Act, or as such other law that may be applicable at the time; and
b the options available to the deceased to arrange his affairs so as to reduce or completely extinguish his estate upon his death, so as to avoid any claim being brought upon his death which would disturb his testamentary wishes."
Particulars of what it was said the testator could have done to achieve those ends had he been so advised were provided.
The loss and damage asserted to have been suffered by the appellant was outlined in par 17 of his statement of claim. That was asserted to be the amount paid to Ms Doddridge as a result of her successful claim against the estate by way of an award, interest and costs (a total of $345,000) and what the appellant paid in respect of his own legal costs amounting to "not less than $90,000". The appellant's claim was said to be for damages, interest pursuant to statute and costs.
An issue at the forefront of the hearing of this appeal was the nature of the appellant's case at trial, assuming a duty of care was found to exist. Counsel for the appellant submitted that the case was always one for the loss of an opportunity which needed to be valued and not for a loss directly suffered by the appellant as a consequence of any breach of duty found. However, the pleadings contained no reference to such a claim, and the appellant's case at trial was not specifically pursued on that basis. That was notwithstanding that the appellant's trial counsel referred to the claim being for loss of opportunity at least four times during her opening address, and then again briefly at the end of her closing address. Despite those references, no submissions were made by counsel for the respondents about such a case, and the trial judge made no reference to it either. The case was pursued, in effect, on an all or nothing basis.
The respondents' case at trial
In essence, the respondents denied any duty of care was owed by them to the appellant, denied any breach of duty if one was found to exist, and denied any loss had been suffered by the appellant in any event.
The decision of the learned Chief Justice
At [6] of his reasons, Blow CJ accepted that there was no doubt that a testator's solicitor could owe a duty of care to an intended beneficiary. His Honour identified that the issue in this case was how far that duty could extend. His Honour went on at [7]–[9]:
"7 The extent of a solicitor's duty to a client depends on the scope of the solicitor's retainer. In this case there is no evidence that the solicitor was engaged to advise in relation to estate planning or other collateral matters. The solicitor did not give evidence. His file notes relating to the 2009 will were tendered by consent. It is clear that he accepted instructions to prepare a will by which the testator left the whole of his estate to the plaintiff if he survived him, or to the plaintiff's children in equal shares if he predeceased him. He also gave instructions that he wanted to die at home, and instructions as to the leasing of the two properties.
8 The plaintiff contends that the solicitor owed a duty to him as an intended beneficiary which required him to make enquiries of the testator, ascertain that he had a daughter, advise as to the possibility of her making a claim under the TFM Act, and advise as to measures that could be taken to place assets out of her reach in the event that a TFM claim was made. None of the reported cases about a testator's duty to an intended beneficiary go that far. None of them deal with the situation that existed in this case.
9 It is clear that, when a solicitor is instructed to act on the making of a will, that solicitor will owe an intended beneficiary a duty to take reasonable care to give effect to the client's testamentary wishes. Hill v Van Erp (above) is an example of such a case. Another example is Ross v Caunters [1980] Ch 297. In that case a firm of solicitors prepared a will for a testator and sent it to him for execution without warning him that it should not be witnessed by the spouse of a beneficiary. The will was so witnessed. As a result, the gift to the beneficiary was void. The English Court of Appeal held that the solicitors owed the beneficiary a duty of care, and were liable for damages for its breach."
His Honour then canvassed a number of authorities dealing with situations where a duty of care was asserted to be owed by a solicitor to an intended beneficiary. None involved the same situation as in the present case. His Honour then said at [16]–[17] of his reasons:
"16 If a solicitor has a duty to advise about or procure the severance of a joint tenancy for the purpose of giving effect to a testator's testamentary wishes, and breaches that duty, with the result that the joint tenancy is not severed and the property passes to the surviving joint tenant, the disappointed beneficiaries will have the same claim as the executors. In that situation, no duty of care is owed by the solicitor to the beneficiaries who would have received the property in question under the testator's will because the executors can claim damages for the benefit of the estate: White v Jones (above) at 268. However this case concerns a very different situation. It is not alleged that the solicitor was negligent in failing to recommend the severance of a joint tenancy. It is alleged that he was negligent in failing to advise that joint tenancies could be created. If joint tenancies had been created, as the plaintiff suggests they should have been, then, upon the death of the testator, his estate would no longer have included the land. If the solicitor breached a duty to advise as to the creation of a joint tenancy, and if that breach of duty resulted in the testator taking a course of action that he would not otherwise have taken, the result must be that the estate is larger than it otherwise would have been, because it still includes half interests in the relevant properties. This is not a case in which it can be asserted that negligence has resulted in a loss to the estate.
17 This review of the cases about solicitors' duties to beneficiaries brings me back to the point I made earlier. As far as I am aware, a court has not previously had to decide whether a testator's solicitor's duty to a beneficiary extends so far as to require the giving of advice as to the depletion of the testator's estate."
His Honour accepted at [25] of his reasons that the first respondent owed the testator a duty of care. He said:
"25 The solicitor had been retained by the testator to prepare his will. The solicitor knew that the testator was elderly, and that he wished to give the whole of his estate to a man who was not a relative. In those circumstances, I accept that he owed his client a duty to enquire as to the existence of any family members who could make a claim under the TFM Act, with a view to the testator's reasons for making no provision for them possibly being included in the will. There is no evidence that the client had engaged the solicitor to provide advice as to anything other than the making of the will. I infer that, if the solicitor had enquired about family members as he should have done, then the testator would have disclosed the existence of his daughter, and the solicitor would have advised as to the risk of successful proceedings under the TFM Act. The testator might or might not then have enquired whether there was anything that could be done to protect the plaintiff against that risk. Any such enquiry would have widened the scope of the solicitor's retainer. If such an enquiry had been made, it would have been the solicitor's duty to advise the testator that, if the plaintiff was agreeable, it could be arranged that he and the plaintiff could hold their two properties as joint tenants, with the consequence that, provided the testator died first, they would pass to the plaintiff and not be available to satisfy a claim under the TFM Act. But I am not satisfied on the balance of probabilities that a conversation about the daughter and a possible TFM claim by her would have triggered an enquiry by the testator about ways of protecting the plaintiff's position. And I am not satisfied that the solicitor owed the testator, let alone the plaintiff, a duty to provide advice about creating joint tenancies in the absence of such an enquiry."
His Honour went on at [32] to consider possible subjects for any discussion which might have taken place between the testator and the first respondent. He said:
"If there had been a discussion between the solicitor and the testator as to the possible creation of joint tenancies, the taxation consequences should have been discussed. There is a possibility that the solicitor might not have been able to provide immediate tax advice. There is a possibility that the testator might not have wanted to spend money getting advice about possible tax consequences. In fact there are all sorts of possibilities. The testator might have wanted to defer making a will so that he could make enquiries about his daughter's financial circumstances. He might have known nothing about her financial position. A discussion might have prompted him to consider making financial provision for her in his will. Another possibility is that, having been advised of the risk of a successful claim under the TFM Act, he might have decided to leave his daughter nothing, to hope that she would not make a claim, and to leave it to the plaintiff to negotiate a sensible settlement, or to require her to proceed to trial, if she did. One can only speculate as to what might have been said, and what might have been decided."
His Honour then said at [33]:
"For the reasons stated above, my conclusions are as follows:
• I accept that the solicitor owed the testator a duty to take instructions in relation to a possible claim under the TFM Act, and that he breached that duty.
• I am not satisfied on the balance of probabilities that, had the solicitor discharged his duty to the testator, the testator would have joined with the plaintiff in creating joint tenancies in place of the tenancies in common, or taken any other steps to deplete his estate and frustrate a possible claim under the TFM Act.
• I therefore need not decide whether the solicitor owed the plaintiff, as an intended beneficiary, any duty to advise as to the risk of a claim being made under the TFM Act or the steps that could be taken to reduce or extinguish his estate in order to avoid the consequences of such a claim."
Discussion
Counsel for the appellant submitted that, to succeed on this appeal, the appellant needed to confront two findings. These were those his Honour made at [25] and [33] where he determined that he was not satisfied on the balance of probabilities that:
· a conversation between the first respondent and the testator about the daughter and a possible TFM claim by her would have triggered an enquiry by the testator about ways to protect the appellant's position, and
· had the solicitor discharged his duty to the testator, the testator would have joined with the appellant in creating joint tenancies in place of the tenancies in common, or taken any other steps to deplete his estate and frustrate a possible claim under the TFM Act.
What underpinned those findings was the nature and extent of the duty which the learned trial judge found the respondents owed to the testator. The learned trial judge confined the ambit of the duty to the testator at [25] where he said:
"I accept that he owed his client a duty to enquire as to the existence of any family members who could make a claim under the TFM Act, with a view to the testator's reasons for making no provision for them possibly being included in the will. … I infer that, if the solicitor had enquired about family members as he should have done, then the testator would have disclosed the existence of his daughter, and the solicitor would have advised as to the risk of successful proceedings under the TFM Act."
Counsel for the appellant submitted that a duty was owed by the first respondent to the testator, not only to make enquiries about the existence of family members who might make a TFM claim and the reasons for omitting such family members from a will, but also, given the instructions to the first respondent and the knowledge the first respondent had of the affairs of the testator and the appellant, to advise how to give effect to the instructions given relating to the will. The duty to the appellant was to provide that proper advice to the testator. The duty to the testator and the appellant was not to ensure certain steps were taken, but to give the advice to the testator about the existence of those steps. In effect, insofar as the extent of the advice the respondents had a duty to give to the testator, the learned trial judge confined the duty of the respondents to the testator too narrowly.
The learned trial judge, in my view, did confine the ambit of that duty unnecessarily. In Doolan v Renkon Pty Ltd (2011) 21 Tas R 156, the Full Court in a joint judgment considered the scope of the duty of care owed by a solicitor to a client. At [29], their Honours said:
"In an action against a solicitor for professional negligence, prima facie, the plaintiff may sue in either contract or tort, or both: Astley v Austrust Ltd (1999) 197 CLR 1 at 20."
Their Honours then went on to discuss the extent of a solicitor's duty of care in tort and whether such a duty could ever extend further than the contractual duty of care. At [34], the Court noted that because of the state of the law concerning a solicitor's duty in tort, it was desirable to consider the scope of any contractual duty of care in isolation. At [36]–[39], the Court said:
"36 There are a number of reported cases that support the proposition that the scope of a solicitor's duty of care depends, to some extent, on the nature of the client. In Carradine Properties Ltd v D J Freeman & Co (1982) 126 SJ 157, Donaldson LJ said the following:
' ... the precise scope of that duty will depend inter alia upon the extent to which the client appears to need advice. An inexperienced client will need and be entitled to expect a solicitor to take a much broader view of the scope of his retainer and his duties than will be the case with an experienced client.'
37 Those words do not appear verbatim in the report of the case in the Solicitors' Journal, which gives only a summary of the judgment. However they were quoted with approval by Peter Gibson LJ, with whom Hobhouse and Leggatt LJJ agreed, in National Home Loans Corporation v Giffen Couch & Archer [1998] 1 WLR 207 at 213.
38 In the Supreme Court of British Columbia, in Ormindale Holdings Ltd v Ray, Wolfe, Connel, Lightbody & Reynolds (1980) 116 DLR (3d) 346 at 357, Taylor J, said:
'While a lawyer might have to warn on consequences unknown to his client which may flow from acceptance of his advice if it proves to be wrong, he is not, I think, normally required to warn experienced business clients of the possibility that the opinion, although firmly held, may not in fact prevail. That follows inevitably from the fact that it is, as these plaintiffs must have known, a matter of professional judgment.'
39 Mullighan J referred to this line of authority when considering the scope of a legal firm's duty of care in Austrust Pty Ltd v Astley [1993] SASC 3969; (1993) 60 SASR 354 at 372. In that case a trustee company was suing the members of a firm of solicitors. After referring to the parties' contentions as to the scope of the firm's retainer, and the extent to which it required the firm to provide the client with advice, his Honour said:
'In considering these matters, it is appropriate to have regard to the experience and expertise of the plaintiff and what action it took independently of the defendants. These matters are also of importance in determining the nature and extent of the duty of care and whether Mr Astley was in breach of it. ... The plaintiff had considerable experience as a trustee and in administering trusts in accordance with the instruments creating them.'
His Honour went on to make findings as to the competence and experience of the plaintiff's staff."
What can be distilled from the discussion in Renkon is that, in determining the scope of a solicitor's duty of care to a client in contract, some regard should be paid to the particular client and, what I might describe as, the dynamics between the client and the solicitor. In the present case, the first respondent was a very experienced practitioner. He was dealing with an elderly and terminally ill man who had been his client for a number of years. During the course of that relationship, the respondents had acted in various transactions for the testator. There is no suggestion the testator had any legal training or particular knowledge about the potential for TFM claims. Further, the testator's instructions were that he wished to leave the entirety of his estate to someone to whom he was not related by blood. That had been his consistent instructions over 25 years. The testator's estate as at 2009 when his wishes were last expressed included interests in two properties. It is reasonable to infer that the testator's intention was that the appellant have the entirety of his interest in those properties and his estate generally, not that estate less any amount which might need to be paid to a successful TFM claimant.
Against that background, in my view, 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. It did not need to extend to ensuring any such advice was accepted and acted upon.
That duty to the testator was one owed in contract and tort. The appellant was, of course, not in any contractual relationship with the respondents. Any duty of care to the appellant could only be owed in tort. As the learned trial judge found at [6] of his reasons, such a duty can exist. The issue he raised was how far that duty extended. There can be no basis for suggesting that any duty owed by a testator's solicitor to an intended beneficiary in tort should be something less than a contractual duty owed by a solicitor to that testator. When regard is had to the nature of the duty as I have outlined it in the previous paragraph, there can be no reason to suggest that, in that context, the interests of the testator in this case and the appellant were not effectively the same.
It must follow that I accept that the respondents not only had a duty to the appellant to advise the testator in the manner I have identified, but that they breached that duty. Grounds 1 and 4 of the notice of appeal should therefore succeed. In terms of whether this appeal generally should succeed or not, the above finding is enough to dispose of that question.
Ground 2 however asserts that, "the learned trial judge erred in fact and in law in failing to consider, as he ought to have, the plaintiff's claim as one for the loss of an opportunity, and failed to assess the chance of the testator acting as the plaintiff contended, had the solicitors not breached their duty." Ground 5 asserts that, "the learned trial judge erred in failing to make any findings as to damages, in circumstances where the plaintiff's cause of action was for a loss of opportunity, and the action was not a matter to be decided solely on the balance of probabilities." There is no doubt having regard to the learned trial judge's reasons that he did not do either of the things referred to in those grounds. However, that was as a consequence of his failure to find a duty existed and had been breached, and the way in which the trial before him was run.
The question therefore remains, had the learned trial judge made a finding there was a duty and that duty had been breached, ought he to have considered that the appellant's claim was one for the loss of an opportunity and assessed damages on that basis?
As I said at [9] of these reasons, it was submitted by counsel for the appellant that, were it to be established that the respondents owed the appellant a duty of care and had breached it, the appellant's claim was one for the loss of an opportunity. The case before the learned trial judge was not however run on that basis and, because his Honour made the findings he did, he did not ever reach the position of having to consider the consequences of a breach of duty. There is no dispute on this appeal that the loss of opportunity issue was not pleaded at trial. There is also no dispute that the learned trial judge did not have submissions as to the approach he should take to assessment of damages for the loss of an opportunity. Counsel for the appellant submitted that, notwithstanding that the case was not formally pleaded on the basis of the loss of an opportunity, this Court was not precluded from accepting that the case should have been determined on that basis. Counsel for the respondents however submitted that the appellant was bound by his case at trial, and could not now raise the issue.
It cannot be said that, despite the pleadings, the respondents were not on notice as to what the appellant's claim was. In substance, the appellant claimed the respondents had been negligent in their advice to the testator, and that, as a consequence of that negligent advice, the appellant had suffered a loss. While the appellant's pleadings referred to that loss being a particular amount, it could be said that whatever the amount of any loss was or however it was assessed, the underlying claim was a loss as a result of negligent advice. The issue of loss of an opportunity or loss of a chance was not wholly ignored. When the appellant's trial counsel opened the case for the appellant, she said at the outset:
"… this is a case about the scope of a solicitor's duty to advise when they're taking instructions for a will and the lost opportunity that arises if that advice isn't properly given."
Counsel referred to the concept of "loss of opportunity" twice more in her opening in the context of the testator having lost the opportunity to arrange his affairs as a result of inadequate advice. She then dealt with the extension of the duty of care to the appellant, and submitted that the interests of the testator and the appellant coincided. Counsel's written outline of facts and contentions however made no mention of the issue of loss of opportunity. At par 42 of that outline, counsel said:
"The plaintiff claims the difference between the value of assets he would have received upon the client's death but for the defendants' negligence less the amount that he received from the estate."
In her closing address, the appellant's trial counsel said:
"The whole problem with this is that there was an opportunity that was lost and had they been able to take up that opportunity there would be nothing in the estate. The only person who's affected by this is Mr Calvert."
Counsel further said:
"In terms of the issue of causation the – in a case like this which is one of lost opportunity… ."
However counsel, while again referring to a lost opportunity near the end of her closing address in the context of damages did not do so on the basis that there needed to be any assessment of the value of a lost opportunity, but on the basis that damages as claimed in the statement of claim flowed directly from the loss of opportunity. Counsel for the respondents did not address the issue at all, and, of course, neither did the learned trial judge, basically because nobody asked him to do so.
Counsel for the respondents submitted, as I have said, that the appellant cannot now contend that his claim is one for loss of opportunity. He submitted that:
"The appellant did not plead a claim for damages for economic loss based on a lost opportunity. The appellant did not particularise his claim for loss other than for the entire detriment said to have been suffered by the negligence. The appellant is bound by the conduct of the case at trial. Specifically it is not now open for the appellant to contend that his claim was one for a lost opportunity: Barnes v Forty Two International Pty Ltd [2014] FCAFC 152 at [78-84] per Beach J, Siopis & Flick JJ, concurring."
In Barnes, the case at trial involved claims for alleged breaches of contract, breaches of statutory duties and misleading and deceptive conduct. The trial judge dismissed all claims save a claim for breach of an implied term of a share purchase agreement and a claim for misleading and deceptive conduct. At [57] Beach J summarised how the proceedings before the trial judge had been undertaken. He then said:
"But in its closing written submissions (and for the first time), BlueFreeway advanced an alternative formulation of the counterfactual. It said that it was entitled to an award of damages in respect of Barnes' and Hawksley's misleading or deceptive conduct for the loss of the opportunity or chance to negotiate an alternative form of exit agreement with Barnes and Hawksley 'with all cards on the table' and, in particular, with full knowledge of their involvement in financing the licence fee."
The trial judge in that case made an award based on that loss of opportunity submission. The court of appeal concluded that he was in error in doing so. At [30] Beach J said:
"30 In summary, his Honour's judgment awarding damages of $3,062,406.93 to BlueFreeway should be set aside. The amount and basis for the damages award based on a lost opportunity, which was common to both the cause of action for breach of an implied term of the share purchase agreement and the cause of action for misleading or deceptive conduct, was neither pleaded nor opened. Further, the case was not conducted by BlueFreeway on that basis, and appears to have arisen as an afterthought during closing written submissions and oral closing addresses. As his Honour did not find in favour of BlueFreeway on its pleaded case on damages, in such circumstances, his Honour should have dismissed the proceedings, rather than finding for BlueFreeway on an alternative damages basis that was neither pleaded nor run at trial."
Beach J concluded at [119]–[122]:
"119 A fundamental requirement for the fair trial of allegations of contravention of law requires 'the party making those allegations [in this case BlueFreeway] to identify the case which it seeks to make and to do that clearly and distinctly' (Forrest v Australian Securities and Investments Commission [2012] HCA 39; (2012) 247 CLR 486 at [25] per French CJ, Gummow, Hayne and Kiefel JJ). BlueFreeway failed to do this in relation to its alternative causation and damages case.
120 Further, it was necessary to plead the necessary material facts to establish the causal relationship between the misleading or deceptive conduct and the loss. BlueFreeway failed to do this in relation to its alternative scenario. As French J (as he then was) said in Bond Corporation Pty Ltd v Thiess Contractors Pty Ltd [1987] FCA 84; (1987) 14 FCR 215 at 222:
... facts and circumstances should be set out leading to a reasonable inference that the conduct and the damage stood to each other in the relation of cause and effect.
His Honour also referred to what Toohey J had said in James v Australia and New Zealand Banking Group Ltd (1985) ATPR 40-504 at 46,034, that the Bank was 'entitled to know with some certainty what [was] being claimed and the basis of the claim'. The necessity to plead a causal link between the contravention and the damage was also referred to by Goldberg J in Mitanis v Pioneer Concrete (Vic) Pty Ltd [1997] FCA 1040; (1997) ATPR 41-591 at 44, 153-4. BlueFreeway did not comply with any such precepts.
121 Further, 'if a plaintiff has suffered damage of a kind which is not the necessary and immediate consequence of the wrongful act, he must warn the defendant in the pleadings that the compensation claimed will extend to this damage' (Perestrello E Companhia Limitada v United Paint Co Ltd [1969] 1 WLR 570 at 579 per Lord Donovan delivering the judgment of the Court). This was not done by BlueFreeway. Moreover, 'if the claim is one which cannot with justice be sprung upon the defendants at the trial it requires to be pleaded so that the nature of that claim is disclosed' (at 580). Again, this was not done by BlueFreeway. Further, as Lord Donovan went on to say:
What amounts to a sufficient averment for this purpose will depend on the facts of the particular case, but a mere statement that the plaintiff claims 'damages' is not sufficient to let in evidence of a particular kind of loss which is not a necessary consequence of the wrongful act and of which the defendant is entitled to fair warning.
122 Not only were the appellants 'entitled' to a pleading by BlueFreeway identifying the head of loss as 'loss of opportunity', but they were also entitled to have that head of damage properly particularised (see, for example, David Benson Nominees Pty Ltd v Dicksons Ltd [2005] SASC 97 at [39]-[40] per Besanko J). None of this was done by BlueFreeway. For his Honour to permit BlueFreeway late in the day to put its case based upon the alternative scenario produced an unsatisfactory and inherently unfair state of affairs so far as the appellants were concerned. Pleadings serve 'to ensure the basic requirement of procedural fairness that a party should have the opportunity of meeting the case against him ...' (Banque Commerciale SA (En Liqn) v Akhil Holdings Ltd (1990) 169 CLR 279 at 286 per Mason CJ and Gaudron J). BlueFreeway's further amended statement of claim did not ensure that basic requirement in relation to its alternative scenario. To ensure this basic requirement of procedural fairness, BlueFreeway should have been confined to its pleaded case that did not include this alternative scenario. This was not a case 'in which the parties [had] deliberately chosen some different basis for the determination of their respective rights and liabilities' (at 287 per Mason CJ and Gaudron J). How the trial was conducted provides no support for such an inference."
While in isolation, when reading the above conclusion and some earlier comments, it might appear Beach J was espousing matters of principle which should apply without qualification in every case, if regard is had to his reasons in full, it is apparent that his conclusions were very much framed in the context of the facts of that case, and in particular the way it was conducted.
The present case is one in which, in my view, the appellant's claim should always have been considered as one for loss of an opportunity. It was not pleaded as such and when the issue, albeit obliquely, was raised by counsel for the appellant in her opening and closing, nobody else addressed it. On the hearing of the appeal, the response by counsel for the respondents to that situation was that it was not up to him to show the appellant how to run his case at trial, or point out deficiencies in his pleadings. While the appellant did not specifically plead his claim on the basis of the loss of an opportunity, the respondents could not have been unaware of that type of claim given counsel's opening address. The appellant's pleadings were not necessarily inconsistent with a claim for loss of an opportunity, and I am of the view the lack of specificity in the pleadings is not fatal to the appellant's present position. The appellant should be entitled to have damages assessed on the basis of the loss of an opportunity.
Outcome
The findings above lead me to conclude that grounds 1, 2, 4 and 5 of the notice of appeal have been made out. It is unnecessary in the circumstances to deal specifically with grounds 3 and 6. I would quash the judgment in favour of the respondents and order that judgment be entered for the appellant against the respondents for damages to be assessed. It is not appropriate in my view for this Court to deal with that issue. Because of my conclusion that this case is one which involves an assessment of damages for the loss of an opportunity, and the way in which the trial was conducted, it may be that the parties may wish to adduce further evidence to address the valuation of the loss. Since the findings of the trial judge were made in the context of a trial run on a different basis, and there may be a perception that his Honour has already formed a view, I would also order that the assessment of damages be remitted to a single judge other than the trial judge.
File No 1062/2014
ROGER WAYNE CALVERT v ROBERT BADENACH,
MURDOCH CLARKE SOLICITORS (a firm)
REASONS FOR JUDGMENT FULL COURT
PORTER J
24 July 2015
Introduction
This is an appeal from a decision of Blow CJ dismissing the appellant's action for damages: [2014] TASSC 61. I have read the reasons for judgment of both Tennent and Estcourt JJ. I would also allow the appeal, set aside the judgment and enter judgment for the appellant against the respondents for damages to be assessed. However, as it will appear, to one degree or another I take a different view about the manner of resolving the appeal. For reasons which I will later explain, the assessment should be remitted to a judge other than the trial judge.
The trial judge's outline of the facts, parts of his Honour's reasons, and the grounds of appeal are set out elsewhere, but it is convenient if I note what I see to be the essential facts and repeat the grounds of appeal. The first respondent, Robert Badenach, is a legal practitioner. At all material times he was a partner in the second respondent firm, Murdoch Clarke Solicitors (the firm). In February or March 2009 Mr Badenach took instructions from Jeffrey Doddridge about a will, his third prepared by the firm, and drafted that will for him. It was signed on 29 March 2009. Under that will, Mr Doddridge left the whole of his estate to the appellant. The appellant is the son of Mr Doddridge's long-term partner, with whom he established a relationship in 1975, following his separation from his wife in 1973. Mr Doddridge died on 1 September 2009.
The assets of the estate were valued at about $640,000. Of that amount, $530,000 was attributable to the testator's interests in two properties which he owned with the appellant as tenants in common in equal shares. There were also three investments which totalled about $100,000. The testator had a daughter, Patrice Doddridge, who had been named as a beneficiary in the first will but not the second. After the testator's death, Ms Doddridge successfully made a claim under the Testators Family Maintenance Act 1912 (the TFM Act). She was awarded the sum of $200,000 along with interest and costs totalling about $175,000.
Neither Mr Badenach nor anybody else from the firm gave evidence at the trial of the present action. The respondents' position in the trial and on this appeal was that there was no evidence that the testator had mentioned his daughter to Mr Badenach when giving instructions for the 2009 will. It was at least implicitly accepted that Mr Badenach did not ask the testator about family members or discuss potential claims under the Act. Of particular relevance to this appeal are the following matters:
· The respondents admit that Mr Badenach and the firm acted for Mr Doddridge and the appellant in the purchase and registration of the two properties in their names as tenants in common in equal shares.
· The respondents admit that they knew or ought to have known that at the time of preparing the 2009 will, Mr Doddridge was terminally ill and had a short life expectancy, that he held his shares in the two properties as tenants in common with the appellant, and that he wanted the appellant to have the whole of his estate upon death.
· Although there was no evidence that Mr Badenach knew of the daughter's existence in March 2009, the respondents accept that the firm, which of course included Mr Badenach, is fixed with imputed knowledge. The testator made provision for Ms Doddridge by way of a legacy of $10,000 in a will made in 1984, but no provision in a will made about five months later. Both wills were still held by the firm in March 2009.
The grounds of appeal
The grounds are in the following terms:
"1The learned trial judge erred in law and in fact in failing to find that the defendant solicitors owed and breached a duty of care to the plaintiff.
2The learned trial judge erred in fact and in law in failing to consider, as he ought to have, the plaintiff's claim as one for the loss of an opportunity, and failed to assess the chance of the testator acting as the plaintiff contended, had the solicitors not breached their duty.
3The learned trial judge failed to give adequate and proper reasons for his conclusions that:
ahe was not satisfied on the balance of probabilities that a conversation about the testator's daughter and a possible TFM claim would have triggered an enquiry by the testator about ways of protecting the plaintiff's position (Reasons [25]);
bhe was not satisfied that the solicitor owed the testator, let alone the plaintiff, a duty to provide advice about creating joint tenancies in the absence of such an enquiry (Reasons [25]);
che was not satisfied that had the solicitor discharged his duty to the testator, the testator would have joined with the plaintiff in creating joint tenancies in place of the tenancies in common, or taken any other steps to deplete his estate and frustrate a possible claim under the TFM Act (Reasons [33]).
4Having found that the respondent solicitors owed a duty of care to the testator in the making of his will, and in making some enquiries as to the existence of his adult daughter, and in taking instructions in relation to a possible claim under the TFM Act, and that the solicitors had breached that duty, the learned trial judge erred in failing to consider:
awhether the solicitors owed a duty of care to the plaintiff (Reasons [33], cf Reasons [6]);
b the content of that duty of care (Reasons [6]);
c whether the solicitors had breached that duty of care.
5The learned trial judge erred in failing to make any findings as to damages, in circumstances where the plaintiff's cause of action was for a loss of opportunity, and the action was not a matter to be decided solely on the balance of probabilities.
6In so failing as asserted in grounds 3, 4 and 5 hereof, the learned trial judge failed to take proper account of the failure of the first defendant to give evidence, and the inferences that could properly be drawn from such failure."
The appellant pleaded that the respondents breached that duty by failing to advise the testator of the possibility or likelihood of a claim under the Act, and the options available to the testator to arrange his affairs so as to reduce or completely extinguish his estate upon his death "so as to avoid any claim being brought upon his death which would disturb his testamentary wishes". Two options are particularised; the creation of joint tenancies, or making inter vivos gifts to the appellant.
The approach to the appeal
In his statement of claim, the appellant alleged that the respondents owed a duty of care to the appellant as the named beneficiary to give effect to the deceased's testamentary wishes. The appellant's argument was, and remains, that the duty, so framed, extended to providing advice to the testator about the possibility of a claim under the Act, and the options which were available to remove or reduce the risk of a successful claim. In his reasons the trial judge did not decide the questions of the existence of a duty of care to the appellant, or breach of that duty if it existed.
In par [25] of his reasons, his Honour accepted that Mr Badenach owed the testator a duty to enquire about family members who could make a claim with a view to the reasons for making no provision possibly being included in the will. His Honour also accepted that if the testator made such an enquiry, it would have been the solicitor's duty to advise that, if the appellant was agreeable, it could be arranged that the testator and the appellant could hold their two properties as joint tenants, "with the consequence that, provided the testator died first, they would pass to the plaintiff and not be available to satisfy a claim under the Act." His Honour went on to say that he was not satisfied on the balance of probabilities that a conversation about the daughter and the possible TFM Act claim by her would have triggered an enquiry by the testator about ways of protecting the appellant's position.
A little at odds with those statements is that in his conclusions at par [33], the trial judge accepted that Mr Badenach "owed the testator a duty to take instructions in relation to a possible claim under the Act", and that he breached that duty. However, his Honour decided the case adversely to the appellant on the basis that the appellant had failed to establish on the balance of probabilities that, had the solicitor discharged his duty, the testator would have joined with the appellant in creating joint tenancies in place of the tenancies in common, or taken any other steps to deplete his estate and frustrate a possible claim under the Act. His Honour said that he therefore need not decide whether the solicitor owed the appellant, as an intended beneficiary, any duty to advise as to the risk of a claim being made under the TFM Act, or the steps that could be taken to reduce or extinguish his estate in order to avoid the consequences of such a claim.
With respect, I am not entirely clear about what the trial judge meant by expressing the further duty in that way. In any event, his Honour expressly said that he did not find it necessary to consider whether the respondents owed to the appellant a duty of care. It follows that the reason the appellant failed was that even assuming a duty of care to the appellant as alleged, he failed to establish the causative link between breach and the creation of joint tenancies. Of course, as I have shown, the creation of joint tenancies was one of two options, the failure to advise about which was alleged to be a breach of duty.
The appellant asserts that it was "necessary" for the trial judge to make a finding as to whether a duty of care was owed by the respondents to the appellant. This is the basis of ground 1 (in part) and ground 4 a. The respondents support the outcome in their favour, but contend that the trial judge was wrong about the existence and scope of the solicitor's duty to the testator. The respondents also argue that if the duty was owed to the testator, it does not follow that the duty was owed to the appellant.
This is an appeal by way of rehearing. The appellant needs to show an error on the part of the trial judge: Allesch v Maunz (2000) 203 CLR 172 at 180 [22]; Bahonko v Sterjov [2008] FCAFC 30 at [3]. In the first place, the error as to duty can only be the error in failing to decide the question. Although the appellant asserted that there had been a need for the trial judge to resolve the question of the duty to the appellant, all arguments on both sides about duty went straight to the substantive issues. That may have been an implied concession on the respondents' part, but it is not clear.
In Langmaid v Dobsons Vegetable Machinery Pty Ltd [2014] TASFC 6, the court held that the trial judge had not erred by resolving the case on the issue of causation, without making findings about duty and breach. Relying on statements made by Gummow, Hayne and Crennan JJ in Amaca Pty Ltd v Booth (2011) 246 CLR 36 at 60 [64], the court's view was that there was nothing impermissible in a trial judge making findings of fact first, and considering the legal consequences of those findings to the extent necessary, after those findings had been made; that is, in first making findings of fact about whether there is a causal connection between conduct around which breaches of duty are alleged, and damage, and then going on to consider the legal consequences of those findings to the extent necessary. See the judgment of Blow CJ at [13] and my judgment (with which Pearce J agreed) at [49]. In that paragraph, I went on to say that this would be particularly so where there is no real argument about the existence of the pleaded duties and about breaches of those duties.
In this case, to the extent that it might be necessary, I take the view that having regard to the fact that there were fundamental issues as to the scope of the duty owed to the testator, and the existence of a relevant duty owed to the beneficiary, the trial judge was wrong not to decide the ultimate questions of duty and breach. In that sense, grounds 1 and 4 succeed. In any event, I take the view that the appellant should succeed in relation to the existence of the duty of care to the appellant and its breach, as well as the issue of causation.
A duty of care?
It is uncontroversial that a solicitor preparing a will has a duty to intended beneficiaries to give proper effect to the testator's intentions: Hill v Van Erp (1997) 188 CLR 159; Queensland Art Gallery Board of Trustees v Henderson Trout [2000] QCA 93 per Pincus JA at [2], Thomas JA at [29–31]; Vagg v McPhee (2013) 85 NSWLR 154 per Basten JA at 156 [9]–[10]; Howe v Fischer [2014] NSWCA 286 per Barrett JA at [22].
The issue in this case is the scope and content of that duty. The question is whether the recognised duty goes beyond attention to those formal features of the will, including its timely preparation and execution, which will give legal effect to the testator's wishes. As Tobias JA said in Vagg v McPhee at 165 [52], Hill v Van Erp "does not fully answer the question of how far the duty extends in relation to instructions given regarding the assets of an estate." The points to be decided are whether the solicitor was under a duty to advise the testator about the ramifications of not making provision for family members and what options were available to the testator about a possible claim under the Act, and whether that duty should extend to a nominated beneficiary.
There are a number of cases which deal with a solicitor's duty to a testator client in relation to dealing with assets before death but in light of their instructions for the will, and the question of a duty to a beneficiary. Most of these were noted by the trial judge in this case. The first is Carr-Glynn v Frearsons (A Firm) [1999] Ch 326, which established the groundwork for later cases.
The facts were that the testator and her nephew jointly owned property as joint tenants. In the will, the testator left to her niece her share in that property. She died without having severed the joint tenancy. The niece succeeded in a claim based on a breach of duty to ensure that the testator was properly advised of the need to sever the joint tenancy in order for the devise in the will to take effect. The solicitor did not know whether there was a joint tenancy or not, but enquiries were not completed before the will was signed. The Court of Appeal held that the solicitor's duty to take care to ensure that effect was given to testamentary intentions included a duty to an intended beneficiary to ensure that the beneficiary received what the testator intended him to receive. The solicitor was negligent in failing to advise that the joint tenancy, if that was the case, could be simply severed. It was also held that the beneficiary could succeed as any action by the estate would be of no advantage to her. That was because a benefit to the estate would fall into residue in which she had no interest under the will.
The leading judgment was that of Chadwick LJ, with whom Thorpe and Butler-Sloss LJ agreed. At 335, his Lordship noted that the lack of care on the part of the solicitor was by failing to ensure that the asset fell into the estate, not in failing to effect the valid testamentary disposition of an asset which did not form part of the estate. At 335-336, his Lordship continued:
"It is essential to have in mind that, in the circumstances of the present case, the need to take care to ensure that the asset fell into the estate was integral to the carrying into effect of the testatrix's intention that her share in the property 'Homelands' should pass to the plaintiff under her will. It was because the testatrix was making an alteration to the provisions in clause 2(b) of the 1983 will - under which her share in that property had been devised to her co-owner - that the need for severance arose. This is not a case in which the solicitors were instructed to advise in relation to an inter vivos transaction which was independent of the will-making process. On a proper analysis, the service of a notice of severance was part of the will-making process. The plaintiff was as much an intended beneficiary of the severance as she was of the new clause 2(b) in the 1989 will. To refuse to treat the plaintiff as an intended beneficiary who (as the solicitors could reasonably foresee) might, as a result of their negligence in carrying the testatrix's testamentary instructions, be deprived of the legacy which she was intended to enjoy on the ground that the negligence lay in failing to get in the asset rather than to provide for its disposition would, in my view, properly be regarded as bizarre."
In Smeaton v Pattison [2002] QSC 431, the testator's instructions were for a will leaving his half interests in certain joint tenancies to his children. The solicitor failed to advise that to sever a joint tenancy, a transfer had to be served on the other joint tenant. Advice was given about severance but it was wrong advice, and the steps outlined were not capable of achieving severance. Atkinson J found the solicitor liable and awarded damages. Her Honour relied on the following parts of the judgment of Brennan CJ in Hill v Van Erp at 167, 170:
"Most testators seek the assistance of a solicitor to make their intentions effective. The very purpose of a testator's retaining of a solicitor is to ensure that the testator's instructions to make a testamentary gift to a beneficiary results in the beneficiary's taking that gift on the death of the testator. There is no reason to refrain from imposing on a solicitor who is contractually bound to the testator to perform with reasonable care the work for which he has been retained a duty of care in tort to those who may foreseeably be damaged by carelessness in performing the work.
...
By accepting the testator's retainer, the solicitor enters upon the task of effecting compliance with the formalities necessary to transfer property from a testator on death to an intended beneficiary; it is foreseeable that, if reasonable care is not exercised in performing the task, the intended beneficiary will not take the property; the solicitor fails to exercise reasonable care whereby the formalities are not complied with; and the intended beneficiary thereby loses the property."
The decision in Smeaton was affirmed on appeal, [2003] QCA 341, although causation was the primary issue. The basis of the suggested scope of the duty did not receive much attention, either at first instance or on appeal.
In Miller v Cooney [2004] NSWCA 380, the testator and her husband owned properties as joint tenants. She made provision for gifts of the properties to family members, but those gifts failed because the property was passed to the husband by survivorship on her death. An action by the beneficiaries failed on the basis that the solicitor was not liable because he did not know that the client was not the absolute owner of the properties, and had no reason to suspect otherwise. The existence of the duty of care to the testator seems, by reference to Carr-Glynn, to have been assumed: see pars [24] and [34]-[35].
For the former proposition see CES v Super Clinics (Australia) Pty Ltd (1995) 38 NSWLR 47 at [56E] and [56G], per Kirby ACJ.
As to the latter proposition, McLure J said in Olympic Holdings v Lochel [2004] WASC 61 [121]– [123]:
"121 A plaintiff is entitled to damages for loss of any foreseeable chance or opportunity of benefit that can be causally linked to the breach. Recovery extends to the loss of a chance which was not promised (as in this case) but which would nevertheless have been created by performance of the contract: Commonwealth of Australia v Amann Aviation Pty Ltd [1991] HCA 54; (1991) 174 CLR 64 at 91 – 92, 102, 118 – 120; Sellars v Adelaide Petroleum NL [1994] HCA 4; (1994) 179 CLR 332 at 349.
122 Damages for loss of a chance are recoverable if the loss is foreseeable as a probable result of the breach and are assessed by reference to the prospects of success. In this case the plaintiff's claim for the loss of a chance of earning a profit. A loss of a chance is compensable even if its realisation is unlikely, on the balance of probabilities. As stated by the High Court, unless the chance is so low as to be regarded as speculative – say less than one per cent – or so high as to be practically certain – say over 99 per cent – the court will take that chance into account in assessing the damages: Malec v J C Hutton Pty Ltd [1990] HCA 20; (1990) 169 CLR 638.
123 However, before reaching that stage it is necessary for the plaintiff to establish, on the balance of probabilities, the existence of the chance. There is authority to the effect that where realisation of the chance depends on a plaintiff's own decision to take it up, the plaintiffs must also establish on the balance of probabilities that it would have been taken up: G W Sinclair & Co Pty Ltd v Cocks [2001] VSCA 47." (Emphasis added.)
That formulation of the relevant principles has been cited with apparent approval by this Court in Doolan v Renkon Pty Ltd (above), at [61].
The position is the same whether the claim is in contract or in tort. In Sellars v Adelaide Petroleum NL (1994) 179 CLR 332, Mason CJ, Dawson, Toohey and Gaudron JJ said, at 355:
"Notwithstanding the observations of this Court in Norwest, we consider that acceptance of the principle enunciated in Malec requires that damages for deprivation of a commercial opportunity, whether the deprivation occurred by reason of breach of contract, tort or contravention of s 52(1), should be ascertained by reference to the court's assessment of the prospects of success of that opportunity had it been pursued.
…
On the other hand, the general standard of proof in civil actions will ordinarily govern the issue of causation and the issue whether the applicant has sustained loss or damage. Hence the applicant must prove on the balance of probabilities that he or she has sustained some loss or damage. However, in a case such as the present, the applicant shows some loss or damage would be sustained by demonstrating that the contravening conduct caused the loss of a commercial opportunity which had some value (not being a negligible value), the value being ascertained by reference to the degree of probabilities or possibilities."
Geoff Masel, in an article entitled "Damages in Tort for Loss of Chance" (1995) 3 Torts Law Journal 1, explained that "… the causation issue was that of establishing that the breach of duty caused a loss of chance. The evaluation issue evaluated that chance and awarded compensation even if there was a less than 50% chance of the advantage being gained".
Thus, in a case such as the present, it matters not, in my view, that the appellant's claim for damages was not pleaded or particularised as a claim for damages for loss of chance, or that the correct principles for assessing damage were not fully or properly articulated at trial. Correctly understood, it was always a loss of chance case and could never have been anything other than a loss of chance case.
I am more than satisfied on the balance of probabilities that the respondents' negligence caused the appellant a loss of a chance that the testator might have taken steps to protect the two properties from the reach of any claim under the TFM Act.
In a case such as the present there is no requirement to show that a plaintiff would have taken up the opportunity lost. This is not a case such as G W Sinclair & Co Pty Ltd v Cocks (above) where it was said that a second question was whether the plaintiffs would have accepted an offer if made, because only if the evidence could support such a conclusion could the plaintiffs have been properly found to have been deprived of the chance. The relevant chance in the present case is the appellant's chance of a better outcome under the will. The relevant chance is not the opportunity lost by the testator to consider what steps he might take, if any, had he received proper advice.
The only requirement in the present case is that the appellant proves on the balance of probabilities that his chance of a better outcome under the will actually existed. He did that by proving that there were means by which the properties could have been protected from any claim under the TFM Act, and by proving that the testator should have been, but was not made aware of, the existence of such means. The question of the prospect of whether the testator would have taken up any of those means if properly advised is one for assessment in evaluating the appellant's lost chance.
The loss of chance had value, far beyond negligible, and the appellant was entitled to have that loss assessed as his damage.
Kiefel J in Tabet v Gett (2010) 240 CLR 537 explained the process as follows:
"136 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 (1994) 179 CLR 332 at 355 per Mason CJ, Dawson, Toohey and Gaudron JJ; at 367 per Brennan J. In relation to the assessment of damages, as was said in Malec v J C Hutton Pty Ltd, 'the hypothetical may be conjectured' (1990) 169 CLR 638 at 643 per Deane, Gaudron and McHugh JJ. The court may adjust its award to reflect the degree of probability of a loss eventuating. This follows from the requirement that the courts must do the best they can in estimating damages; mere difficulty in that regard is not permitted to render an award uncertain or impossible The Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64 at 83 per Mason CJ and Dawson J, citing Fink v Fink (1946) 74 CLR 127 at 143.
137 Thus in the case of the loss of a commercial opportunity, the plaintiff must first establish the fact of the loss, for example by reference to the fact that it had a commercial interest of value which is no longer available to be pursued because of the defendant's negligence. The damages assessed of that loss, the estimation of its value, reflect the chance, often expressed in a percentage, that the opportunity would have been pursued to a successful outcome. The award is proportionate in that sense." (Emphasis added.)
It will be obvious from what I have written that I am of the view that in the ordinary course of this case the appellant's action should have succeeded and his damages been assessed. For completeness I should say that as the appellant's damages were obviously not assessed at trial on the basis of a loss of chance, it is not appropriate that I should attempt to assess the value of the appellant's loss on the basis of the evidence and argument below which proceeded in disregard of the correct approach to damages.
The conclusion that I have reached is after a consideration and rejection of the careful submissions to the contrary of counsel for the respondents, Mr McElwaine SC. I will deal now with those submissions to the extent that I have not already.
The respondents' submissions
In his written submissions Mr McElwaine notes the appellant contends error by Blow CJ in failing to consider and assess the appellant's claim as one "for the loss of an opportunity". He argues that the appellant did not plead a claim for damages for economic loss based on a lost opportunity, and did not particularise his claim for loss, other than for the entire detriment said to have been suffered by the negligence. He contends that the appellant is bound by the conduct of the case at trial. Specifically he argues that it is not now open for the appellant to contend that his claim was one for a lost opportunity, and he cites in support of that submission Barnes v Forty Two International Pty Ltd [2014] FCAFC 152 at [78]‐[84] per Beach J, Siopis and Flick JJ, concurring.
In that case Beach J said:
"80 His Honour at [527] said that '[t]here is nothing in the pleadings which is inconsistent with damages being assessed on the basis of a lost opportunity'. That was said in the context of the misleading or deceptive conduct case, which will be dealt with shortly; moreover, I would disagree with his Honour's observation in that context in any event. But in the context of the damages pleas in relation to the implied term case, this test of 'no inconsistency' is inapposite. A party is not permitted to run a case as it likes so long as there is no inconsistency with the expressly pleaded case. Rather, a party asserting a damages claim must properly plead and particularise its damages claim and the relevant heads of damage.
81 His Honour at [527] also said 'there was no requirement for the applicants to specify in their pleadings the precise basis upon which the damages should be assessed'. But here one is dealing with a situation where not even the head of damage of 'loss of opportunity' is even identified. Moreover, the expression 'the precise basis' is pregnant with possibilities. The relevant principle should rather be expressed in terms that are discussed below at [119] in addressing the relevant authorities."
I accept, with respect that those statements in the context of the claims in that case were entirely correct, but they were contextual and I apprehend no exposition of a rule of universal application in what was said by Beach J.
It will be obvious from what I have written already that I regard the appellant's case at trial as quite clearly one of loss of chance. I do not understand how counsel could have regarded it as otherwise. Notwithstanding that however, in the present context it is, in my view, also correct to say that there was no requirement for the appellant to specify in his pleadings the precise basis upon which the damages should be assessed. Moreover, in the present context I regard a test of "no inconsistency" as apposite, and there is nothing in the pleadings which is inconsistent with damages being assessed on the basis of a lost opportunity.
Mr McElwaine contends that the present case stands apart from the duty of care owed to a beneficiary as accepted in Hill v Van Erp (above). The ratio of that decision, he says, is that a retainer to draw a will, designed to confer a benefit of a named beneficiary, is a basis for an independent duty of care in tort owed by the solicitor to the beneficiary (assuming no conflict of interest) to ensure that a will is competently drawn, technically executed and valid on its face. He says that no subsequent decision in Australia has taken the duty further.
Mr McElwaine argues that the appellant's case depends upon acceptance of the novel proposition that the duty of care, limited by the retainer in this case, obliged the respondents to give advice to the testator "for the ultimate purpose of advantaging the appellant and disadvantaging Patrice Doddridge". Such duty he argues finds no support in any binding or persuasive authority.
Mr McElwaine then submits that, for a number of reasons, the duty of care asserted by the appellant is contrary to principle. The duty of care pleaded by the appellant in his statement of claim was a duty "to give effect to the deceased's testamentary wishes". That is the way in which I have characterised the duty thrown up by the case. That characterisation of the relevant duty was in preference to Blow CJ's formulation as one to provide advice to "circumvent the provisions of the TFM Act" or "advice as to the depletion of the estate".
I see nothing controversial in the basal duty pleaded by the appellant, once his claim is recognised as being one solely for damages for the loss of a chance and once it is divorced from the duty as characterised by the respondents, namely a duty to provide advice to implement actual measures to circumvent legislation, or to somehow improperly remove or reduce the rights of others. To my mind the duty postulated by the appellant does not offend principle, policy or the need for coherence of the law. Once these notions fall away, then I am unable to see any reason why the appellant's claim is not squarely embraced by the principle to be derived from Hill v Van Erp, as expressed for example at 167-168 by Brennan CJ and at 181-182 by Dawson J.
I should add in particular, as to the respondents' submission that the asserted duty intersects with the overriding policy of the TFM Act and offends coherence with the Act's statutory scheme, that I reject the argument, and respectfully adopt Blow CJ's analysis of Barns v Barns (2001) 80 SASR 331 at [26]–[28] of his Honour's reasons, and his conclusion at [29] that it must follow that there is no public policy reason why a testator's solicitor should not owe a testator, or even a beneficiary, a duty, when appropriate, to advise as to steps that may be taken to frustrate a TFM claim by depleting or extinguishing the testator's estate.
Finally, by way of contention, counsel for the respondents in his written submissions argued the following:
"8.1 His Honour rejected a submission of the respondents to the effect that the estate, and not the appellant, suffered loss upon the making of the orders by Evans J. Whilst it is certainly true that the estate was larger than it might otherwise have been, had Mr Doddridge instructed that steps be taken to put his estate beyond the reach of a TFM Act claim, it does not follow, with respect, that in the events which did happen in this case, it is the appellant who suffered loss upon the making of the orders by Evans J.
8.2 The success of a claim, brought by a person entitled to do so, results in the making of an order for provision 'out of the estate of a deceased person'. The proceeding is brought against the persons who hold the grant of probate. The order, by reason of section 9 'shall specify' the amount and nature of the provision, the manner in which it shall be made, how and by whom the burden of such provision shall be borne and any conditions, restrictions or limitations imposed by the Court. The burden of satisfying the order falls ratably upon the whole of the estate of the deceased person.
8.3 In this case Evans J made an order for provision out of the estate in the sum of $200,000. The order binds each respondent named in that proceeding: the executors.
8.4 It was only upon the making of the order that the estate suffered a loss. Had Mr Doddridge given instructions to create a joint tenancy, or to otherwise reduce the estate, then depending upon the content of his instruction, no provision might have been made in favour of Patrice Doddridge. Or a substantially smaller provision might have been made having regard to the size of the estate.
8.5 Additionally the estate suffered two costs orders.
8.6 Accordingly it is the executors of the estate who suffered loss in the event that the respondents had and failed to discharge the asserted duty of care owed to Mr Doddridge: Hill – v - Van Erp at 165, 168, 221 & 235 and Carr – Glynn v - Frearsons (1999) Ch 326 at 333, 335-336.
8.7 The appellant's claim was misconceived from the outset: he did not suffer loss by reason of the matters contended in his action." (Footnotes omitted.)
Whatever those submissions may demonstrate, for the reasons I have already set out, any such loss or losses suffered by the executors of the testator's estate is not the same as any loss that could have been suffered by the appellant. The appellant's loss is a different loss. The appellant's damage comprises the value of the chance he lost of a better outcome under the will had the testator been properly advised.
Outcome
In my view, grounds 1, 2, 4 and 5 of the notice of appeal succeed and the judgment in favour of the respondents should be set aside and replaced with an order that there be judgment for the appellant against the respondents for damages to be assessed. I respectfully agree with Tennent and Porter JJ that the interests of justice require the assessment to be carried by a different judge. I would order that the assessment of damages be remitted for determination by a single judge other than Blow CJ.
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