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Carey v Freehills

Carey v Freehills

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FEDERAL COURT OF AUSTRALIA

Carey v Freehills [2013] FCA 954

Citation: Carey v Freehills [2013] FCA 954

Parties: NORMAN PHILLIP CAREY & ORS (ACCORDING TO ATTACHED SCHEDULE); FREEHILLS and AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION

File number: VID 485 of 2008

Judge: KENNY J

Date of judgment: 20 September 2013

Catchwords:
NEGLIGENCE – Solicitor negligence – Duty of Care - Implied retainer alleged between solicitor and sole and effective controller of corporate structure – Status as ‘sole and effective controller’ of corporate structure in establishing duty of care independent of retainer – Novel category of duty – Duty of care to majority and third party shareholders of client company - Multifactorial approach applied – No duty of care found.

NEGLIGENCE – Solicitor negligence – Alleged breach of duty of care – Statements of law made by solicitor - Advice and advocacy on behalf of client– Duty to warn - No breach of duty found.

NEGLIGENCE – Causation – Interaction of s 5C(1)(a) of the Civil Liability Act 2002 (WA) and common law test – ‘but for’ test – Not appropriate case to otherwise attribute causal link - No causal link established.

NEGLIGENCE – Loss and Damage - Claim for damages where damage suffered characterised as lost opportunity to float Company – Capacity of shareholder to claim loss shared by company – Capacity of ‘sole and effective controller’ to claim loss shared by company – Whether loss was loss of company - Rule against shareholder claims for mere reflective loss of Company.

MISLEADING OR DECEPTIVE CONDUCT – Alleged loss suffered by non-client as a result of misrepresenations of law and fact by solicitor – No reliance on alleged misrepresentations – Not applicable case for liability absent reliance – Claim not made out.

CORPORATIONS – Corporate collapse - Shareholder claim for damages where damage suffered characterised as lost opportunity to float Company – Capacity of shareholder to claim loss shared by company – Whether loss was loss of company - Rule against shareholder claims for mere reflective loss of Company.

Legislation: Managed Investments Act 1998 (Cth)
Financial Services Reform Act2001 (Cth)
Trade Practices Act 1974 (Cth)
Fair Trading Act 1987 (WA)
Trade Practices Amendment (Australian Consumer Law) Act (No 2) 2010 (Cth)
Consumer and Competition Act 2010 (Cth)
Civil Liability Act 2002 (WA)
Wrongs Act 1958 (Vic)
Civil Liability Act 2002 (NSW)

Cases cited:

Emu Brewery Mezzanine Ltd (In Liq) v Australian Securities and Investments Commission [2006] WASCA 105
Jones v Dunkel (1959) 101 CLR 298
Financial Industry Complaints Ltd v Deakin Financial Services Pty Ltd (2006) 157 FCR 229
Australian Securities and Investments Commission v Ann Street Mezzanine Pty Ltd (2005) 56 ACSR 340
PeterBodum A/S & Ors v DKSH Australia Pty Ltd (2011) 280 ALR 639
Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191
Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Ltd (1978) 140 CLR 216 Wardley Australia Ltd v Western Australia (1992) 175 CLR 514
Henville v Walker

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2013] FCA 954
Decision Date

CaseChat Overview and Summary

The Federal Court of Australia dismissed the cross-claim brought by Norman Phillip Carey and others against Freehills, a law firm, and the Australian Securities and Investments Commission (ASIC). The cross-claimants alleged that the law firm was negligent and engaged in misleading and deceptive conduct, which resulted in the loss of the opportunity to float the Westpoint Group and the loss of value of their shareholding in the companies comprising the Westpoint Group. The court found that the cross-claimants failed to establish the essential elements of their claims, including duty of care, reliance, and causation. Kenny J concluded that the claims against Freehills were dismissed, and if the parties did not submit written submissions on costs within 10 days of the delivery of judgment, the cross-claimants would be ordered to pay the first cross-respondent's costs of and incidental to the cross-claim.

Orders