JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL
CITATION: CARMODY & ORS -v- PRIESTLEY & MORRIS PERTH PTY LTD & ANOR [2005] WASC 120
CORAM: HASLUCK J
HEARD: 23, 24 & 29 MARCH 2005
DELIVERED : 15 JUNE 2005
FILE NO/S: CIV 2105 of 2003
BETWEEN: MAUREEN ELIZABETH CARMODY
First Plaintiff
MAUCARMOD PTY LTD (ACN 008 812 556)
M CARMODY HOLDINGS PTY LTD (ACN 008 688 935)
Second PlaintiffsMICHAEL FRANCIS CARMODY
DAVID JOHN CARMODY
PETER GERARD CARMODY
STEPHEN ANTHONY CARMODY
Third PlaintiffsAND
PRIESTLEY & MORRIS PERTH PTY LTD (ACN 056 660 407)
First DefendantMARK HENRY RANDALL
Second Defendant
Catchwords:
Professions and trades - Accountants - Professional negligence - Nature of retainer in determining scope of duty of care - Effect of circumstances in determining scope of duty of care - Advice sought by telephone concerning purchase of property by trustee company - Whether sufficient information provided - Whether accountant obliged to draw on previous knowledge of client's affairs - Whether accountant obliged to proffer advice about adverse tax implication being a matter not raised with him expressly - Accountant held liable for breach of duty of care
Legislation:
Income Tax Assessment Act 1936 (Cth) s 44, s 95A, s 97, s 109D, s 251M
Result:
Judgment for plaintiffs
Category: A
Representation:
Counsel:
First Plaintiff : Mr K J Martin QC & Ms C H Thompson
Second Plaintiffs : Mr K J Martin QC & Ms C H Thompson
Third Plaintiffs : Mr K J Martin QC & Ms C H Thompson
First Defendant : Mr L A Tsaknis
Second Defendant : Mr L A Tsaknis
Solicitors:
First Plaintiff : McCallum Donovan Sweeney
Second Plaintiffs : McCallum Donovan Sweeney
Third Plaintiffs : McCallum Donovan Sweeney
First Defendant : Allens Arthur Robinson
Second Defendant : Allens Arthur Robinson
Case(s) referred to in judgment(s):
Astley v Austrust Ltd (1999) 197 CLR 1
Commonwealth of Australia v Verwayen (1990) 170 CLR 394
Dalleagles Pty Ltd v Australian Securities Commission (1991) 4 WAR 325
Finamore v Slater & Gordon (1994) 11 WAR 250
Hall Chadwick Corporation Finance (WA) Pty Ltd v Axiom Properties Ltd [2002] WASC 179
Hawkins v Clayton (1988) 164 CLR 539
Heydon v NRMA Ltd (2000) 51 NSWLR 1
Leotta v Public Transport Commission (NSW) (1976) 50 ALJR 666
Midland Bank Trust Co Ltd v Hett Stubbs & Kemp (a firm) [1979] Ch 384
Mohr & Mohr v Cleaver & Cleaver [1986] WAR 67
Pech v Tilgals (1994) 28 ATR 197
Rogers v Whitaker (1992) 175 CLR 479
State of Queensland v JL Holdings Pty Ltd (1997) 189 CLR 146
Tip Top Dry Cleaners Pty Ltd v Mackintosh (1998) 98 ATC 4346
Tony Sadler Pty Ltd v McLeod Nominees Pty Ltd (1994) 13 WAR 323
Voli v Inglewood Shire Council (1963) 110 CLR 74
Waimond Pty Ltd v Byrne (1989) 18 NSWLR 642
Case(s) also cited:
Bell v Vahexi Pty Ltd (1998) 99 ATC 4055; (1998) 40 ATR 459
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- Case
- [2005] WASC 120
- Decision Date
CaseChat Overview and Summary
The legal issues before the court included determining the nature of the retainer between the parties and how it influenced the scope of the duty of care. The court also needed to consider whether the accountants were required to provide information based on their prior knowledge of Carmody's affairs and whether they were obliged to advise on adverse tax implications that were not specifically brought to their attention by Carmody. Furthermore, the court had to assess whether the accountants breached their duty of care and, if so, whether this breach caused the loss suffered by Carmody.
The court found that the accountants were liable for breach of duty of care. The court held that the accountants owed a duty of care to Carmody based on the nature of their retainer and the circumstances of the advice given. The court concluded that the accountants should have drawn on their previous knowledge of Carmody's affairs and provided advice on the adverse tax implications, even though these matters were not expressly raised by Carmody. The court found that the accountants' failure to do so constituted a breach of their duty of care, which directly caused the loss suffered by Carmody.
The final orders of the court were not explicitly stated in the provided text, but it can be inferred that the court would likely order the defendants to compensate the plaintiff for the losses suffered due to the negligent advice provided.
Orders
Orders of the court
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Background
Background to the litigation
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Evidence
Evidence Before The Court
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Decision
Reasons for decision
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Ratio Decidendi
Legal Principle Established
Put shortly, it is in the public interest that litigation is disposed of efficiently, and with a view to maximising the economical use of judicial and administrative resources, bearing in mind that it is notorious that parties incur expenses in litigation which are not recoverable by way of party and party costs: Hall Chadwick Corporation Finance (WA) Pty Ltd v Axiom Properties Ltd [2002] WASC 179 per Pullin J at par 28 and par 29. When I apply these principles to the proposed amendment in the circumstances of the present case I must begin by noting that, to my mind, this is not simply a situation in which the moving party sought to bring its pleading into conformity with evidence that emerged during the course of the trial. To my mind, this was a situation in which the defendants were seeking to raise an entirely new plea or line of argument which, as the minute dated 29 March 2005 clearly recognises, has to be pleaded specifically as an affirmative case so that the other party is not taken by surprise. It seems to me that it raised a significant matter which would oblige the opposing party to undertake a fresh and rather extensive round of factual enquiries in order to address the plea. I feel obliged to give weight also to the fact that the defendants' proposed nullity plea is a matter which could have been identified as a prospective issue if the existing pleadings had been subjected to a very close analysis prior to the commencement of the trial. This should not be construed as a criticism of defence counsel because it is in the nature of the trial process that the implications of the pleadings only become fully apparent as the evidence emerges. However, now that I am faced with the application to amend, the decided cases oblige me to take account of the factor I have just mentioned in determining whether, in the case management era, the proposed amendment should be allowed. I accept that the proposed amendment is a matter of some importance because it emerges from my earlier findings that the plaintiffs have satisfied me that there was a negligent breach of the duty of care and thus it is necessary that there be a sufficient causative connection between the breach and the loss complained of. At the end of the day, I have come to the conclusion that the proposed amendment should not be allowed. It comes late and raises an entirely new issue. The application could have been made prior to the commencement of the trial. Considerable delay, cost and inconvenience will arise if the amendment is allowed because I do consider that it will be necessary to allow the plaintiffs an adjournment in order to consider their position and, if necessary, to adduce further evidence bearing upon the circumstances in which the controversial distribution was made. Further, in circumstances in which the tax office has made and acted upon what appears to be a binding assessment, I cannot see that the outcome of the present case is likely to turn upon the plea in respect of which the amendment is sought.