Cassis v Kalfus - [2001] NSWCA 460

No judgment structure available for this case.

CITATION: Cassis & Anor. v. Kalfus [2001] NSWCA 460

FILE NUMBER(S): CA 40343/01

HEARING DATE(S): 20 and 21 November 2001

JUDGMENT DATE:
11 December 2001

PARTIES :

Sami Alfred Cassis and Gisele Cassis - appellants
Marcel Isadore Kalfus - respondent

JUDGMENT OF: Powell JA at 1; Heydon JA at 9; Hodgson JA at 10

LOWER COURT JURISDICTION : Supreme Court

LOWER COURT
FILE NUMBER(S) : CLD 20589/96

LOWER COURT
JUDICIAL OFFICER : Dowd J

COUNSEL: Mr. P. Roberts SC with Mr. M. Minehan (A)
Mr. G. Lindsay SC with Mr. A. Ridley (R)

SOLICITORS: LMG Solicitors, Darlinghurst for appellants
Mallesons Stephen Jaques, Sydney for respondent

CATCHWORDS: COURTS AND JUDGES - Judgments - Duty to give reasons - Delay in giving judgment - Application during trial to raise limitation defence - Not decided until over 12 months after judgment reserved - Primary judge then calls for further submissions - Whether trial miscarried - LIMITATION OF ACTIONS - Tort - When damage suffered - Whether loss of secure employment was itself damage, when no loss of income occurred for four years. D.

LEGISLATION CITED: Limitation Act 1969 (NSW) ss.23, 55, 60G.

CASES CITED:
Knox v. Gye (1871-1872) LR 5 HL 671-674
Cohen v. Cohen (1929) 42 CLR 91, 99-101
Forster v. Outred [1982] 1 WLR 86
Wardley Australia Ltd. v. Western Australia (1992) 175 CLR 514
Sellars v. Adelaide Petroleum (1994) 179 CLR 332
Brunsden v. Humphrey (1884) 14 QBD 141
Marlborough Harbour Board v. Chartered Travel Co. Ltd. (1989) 18 NSWLR 223
Avenhouse v. Hornsby Shire Council (1988) 44 NSWLR 1
Williams v. Minister, Aboriginal Land Rights Act 1983 (1994) 35 NSWLR 497
Hawkins v. Clayton (1988) 164 CLR 539 at 589

DECISION: See end of judgment

IN THE SUPREME COURT
OF NEW SOUTH WALES
COURT OF APPEAL

CA 40343/01
CLD 20589/96

POWELL JA
HEYDON JA
HODGSON JA

CASSIS & ANOR. V. KALFUS

Headnote

The circumstances

In February 1989 the first appellant and the respondent solicitor entered into a joint venture to run IGC, a company established by them, and to share the profits of both IGC and the respondent’s legal practice. IGC was viable in the first three years but began to decline in early 1993, and ultimately collapsed.

The first appellant claimed that, in negotiations preceding entry into the joint venture, the respondent had misrepresented the true value of his practice, and that in drawing up the joint venture agreement the respondent had failed to properly document certain terms.

On entering the joint venture, the first appellant ceased working as the managing director of his former employer’s company, and in mid-1989, he mortgaged his house (the “Leeton Avenue property”) to provide security for debts of the joint venture business. In 1993, this mortgage was refinanced and new mortgages were given over the property.

During the course of the joint venture, the respondent acted as the appellants’ solicitor. In about mid-1989, the appellants requested the respondent to arrange for the transfer of the Leeton Avenue property from the first appellant to the first appellant and second appellant as joint tenants. The respondent did not register the transfer.

The course of the proceedings

In June 1996 the appellants filed a statement of claim. On behalf of the first appellant, it alleged breaches by the respondent of his duties as solicitor and also breaches of his fiduciary duties as joint venturer. Damage, including loss of salary, moneys payable on the collapse of IGC, and consequent psychological injuries, was claimed in respect of all the breaches of duty. On behalf of the second appellant, the statement of claim alleged failure by the respondent to carry through the transfer of the Leeton Avenue property, with loss of the value of the house, and consequent psychological injury claimed as damage.

The hearing ran for 6 days, concluding on 1st March 2000. During the proceedings an application for an amendment to raise a defence under the Limitation Act was made but not decided.

The primary judge gave his decision on 18th December 2000, finding that the respondent had breached his duties as solicitor and joint venturer. He did not rule on the Limitation Act defence, but requested further submissions from the appellants inter alia on whether the amendment should be allowed, how the Limitation Act affected the personal injury claim, and how the damage might be divided up between the various breaches. Submissions were received but added little to what had already been put, and on 27th April 2001, the judge held that the appellants’ claims were statute-barred.

a) The question of when the first appellant relevantly first suffered damage was a mixed question of fact and law which was not addressed in the reasons of the primary judge.
b) [Obiter] The primary judge failed to rule early enough on whether an amendment to include the Limitation Act defence should be permitted.
c) [Obiter] The judgment of 18th December 2001 contained no findings as to what damage was suffered, or what damage, if any, was caused by what breaches of duty. The opportunities offered to the appellants to make further submissions on these matters came too late.

a) It was not clearly shown that any damage occurred at the time of entry into the joint venture. Neither the giving up of secure employment, the lack of proper documentation of the joint venture, the lack of backing of a substantial legal practice, nor the mortgaging of the house, of itself constituted damage. In circumstances where no actual loss of money or property had been shown, to prove that damage was relevantly suffered before mid-1990, a global comparison was required. If it had been shown that the true value of what the first appellant obtained in early 1989, assessed at that time, was less than the true value of what the first appellant gave up, assessed at that time, then this would have been such a loss.
b) [Obiter] Subject to s.60G of the Limitation Act, the claim for psychological injury would be barred if the claim for commercial loss was barred, because the personal injury itself was alleged to have been occasioned through the commercial loss. However, an action claiming personal injuries occasioned by commercial loss, if otherwise maintainable, might fall within s.60G as a cause of action founded on breach of duty from damages for personal injury.
c) [Obiter] The primary judge was correct in not considering whether there were any particular causes of action arising after mid-1990 in circumstances where no claim on that basis had been formulated with any clarity by the first appellant .
The gravamen of second appellant’s complaint was that, not only was there no attempt to remove the original mortgage from her half-interest, but also that her half- interest was further burdened by later transactions and mortgages.

***********

IN THE SUPREME COURT
OF NEW SOUTH WALES
COURT OF APPEAL

CA 40343/01

CLD 20589/96

POWELL JA

HEYDON JA

HODGSON JA

CASSIS & ANOR. V. KALFUS

Judgment

1 POWELL JA: I have read in draft the Judgment which has been prepared by Hodgson JA.

2 Since I am of the view that, in the light of the events recounted by his Honour, the trial is to be regarded as having miscarried, I agree with the orders which he has proposed for the disposition of the appeal.

3 Had it not been for the comments made by Hodgson JA in paragraph 81 of his Judgment as to the decision in Williams v. The Minister and as to the view expressed by Deane J in Hawkins v. Clayton, I would not have considered that anything further was called for on my part. However, in the light of those comments and of the likelihood that those questions will, or may, need to be considered on any rehearing, I think it desirable to make the following observations.

4 I take Hodgson JA’s reference to the decision in Williams v. The Minister as intended to be a reference to the following part of the Judgment of Kirby P in that case:

The structure of the Limitation Act 1969 makes it clear that the ancient principles of Equity have been preserved. Unlike certain Provinces of Canada, and other jurisdictions, the equitable claims are not as such, subject to the direct application of the limitation statute. Thus, s 23 of the Limitation Act provides:

Sections 14 … do not apply, except so far as they may be applied by analogy, to a cause of action for specific performance of a contract or for an injunction

for other equitable relief

. (Emphasis added.)

Section 14 is the general provision in the Limitation Act which relevantly provides:

(1) An action on any of the following causes of action is not maintainable if brought after the expiration of a limitation period …

…

(b) A cause of action founded on tort, including a cause of action for damages for breach of statutory duty …

It is therefore clear that the scheme of the Limitation Act does not apply, in its own terms, to a cause of action for equitable relief. It only applies by analogy. It is in this way that the Act has preserved the practice of the Chancery courts: see Hovenden v. Lord Annesley (1806) 2 Sch & Lef 607 at 630; John Runyate, Limitation of Actions in Equity, London (1932) Stevens. This does not mean that an equitable cause of action pays no regard to gross delay. The terms of s. 23 of the Limitation Act would contradict such an assertion. Although historically, statutes of limitations did not apply to equitable claims, the courts of equity developed their own limitation defences, most importantly by the defence of laches: see Lindsay Petroleum Co v. Hurd (1874) LR 5 PC 221 at 239f; Erlanger v. New Sombrero Phosphate Co (1878) 3 App Cas 1218. But it is a mistake of law to assume that an equitable claim, based on an equitable cause of action, not for damages but for equitable compensation, is to be dealt with under s.60G of the Limitation Act. It is not. It raises separate and different questions. Nor can the application of the Act ‘by analogy’ lead to the automatic application of s 60G to such a claim. Analogous application of the statute does not necessarily mean exact application of its terms. The considerations that may be relevant to a defence of laches will be different from (or not exactly the same as) the considerations relevant to the application of the Act.

5 This being so, I think it appropriate to include, here, the following passages from the speech of Lord Westbury in Knox v. Gye ((1871-1872) LR 5 HL 671-674):

Upon this bill the Plaintiff prays, with reference to this particular point, ‘That an account may be taken by and under the decree and direction’ of the Court, ‘of what is due and owing to the Plaintiff from the Defendant in respect of the Plaintiff’s share of the sum of £12,000 brought into and left in the concern by Mr. Thistlethwayte, as hereinbefore mentioned (including the whole of the judgment debt recovered, or which might, but for the wilful default of the Defendant, have been recovered from Hughes), and the interest thereof and the profits of the partnership; and that what shall appear on taking the same account to be due from the Defendant may be decreed to be paid by him to the Plaintiff.’ From this and from other portions of the bill it is clear that the account sought is an account of the estate of the partnership as it existed at the time of the dissolution, and of the property and receipts by Mr. Gye subsequent to the dissolution of the partnership. The bill is, therefore, in effect, an action by the Appellant, as executor of the deceased partner, against the surviving partner for an account of the share of the deceased partner in the partnership between him and the Respondent, which terminated by the death of Mr. Thistlethwayte, in December, 1854. An action might have been brought for this account by the Appellant against the Respondent at Common Law, but in a case like the present a Court of Equity assumes and exercises concurrent jurisdiction with the Courts of Law, and this bill is brought by virtue of such concurrent jurisdiction.

By the Statute of Limitations (21 Jac. 1, c.16), it is enacted that all actions of account and upon the case (with an exception which has been since repealed) shall be commenced and sued within six years next after the cause of such action or suit, and not after. This enactment is, in effect, repeated in the 9th section of the 19 & 20 Vict. c.97 (passed in 1856), with this additional provision, namely, that ‘no claim in respect of a matter which arose more than six years before the commencement of such action or suit shall be enforceable by action or suit by reason only of some other matter or claim comprised in the same account having arisen within six years next before the commencement of such action or suit’. I deem this provision most material, and therefore I will call your Lordships’ particular attention to it. It forbids any claim in respect of a matter which arose more than six years before the action.

In the case that we are considering, the matter, namely, the dissolution of the partnership, and, consequently, the possession of the partnership property by the surviving partner, did arise more than six years before the commencement of this suit. The provision forbids that any action of account the cause of which arose more than six years before suit shall be considered as liable to be sued upon after such six years ‘by reason only of some other matter or claim comprised in the same account having arisen within six years next before the commencement of such action or suit.’ The Appellant here relies upon the claim against Hughes having been received and realized within six years before the commencement of such action or suit. The question is, was that claim against Hughes, that debt due to the partnership; a thing comprised in the same account? An account of the partnership estate would unquestionably comprise that claim, and the statute was directed, as we all know, against the erroneous notion that an account which had been barred by the lapse of six years after the last entry in the account might be considered as opened and revived by the receipt of a subsequent sum of money more than six years after the date of the last entry. It removes that notion, provided the receipt after the six years is the receipt of an item comprised in the original account. The word ‘comprised’ I construe as equivalent to ‘that would have been comprehended’ in; that is, that would have been an item in the account demanded.

…

That a Court of Equity will not, after the lapse of six years without acknowledgment, decree an account between a surviving partner and the estate of a deceased partner has been long settled by various decisions. The rule, of course, must be the same where the parties are reversed, and the representative of the deceased partner is the Plaintiff. The general principle was laid down as early as the case of

Lockey v. Lockey

, where it was held that where a Court of Equity assumes a concurrent jurisdiction with Courts of Law no account will be given after the legal limit of six years, if the statute be pleaded. If it could be doubted whether the executor of a deceased partner can, at Common Law, have an action of account against the surviving partner, the result will still be the same, because a Court of Equity, in affording such a remedy and giving such an account, would act by analogy to the Statute of Limitations. For where the remedy in Equity is correspondent to the remedy at Law, and the latter is subject to a limit in point of time by the Statute of Limitations, a Court of Equity acts by analogy to the statute, and imposes on the remedy it affords the same limitation. This is the meaning of the common phrase, that a Court of Equity acts by analogy to the Statute of Limitations, the meaning being, that where the suit in Equity corresponds with an action at Law which is included in the orders of the statute, a Court of Equity adopts the enactment of the statute as its own rule of procedure. But if any proceeding in Equity be included within the words of the statute, there a Court of Equity, like a Court of Law, acts in obedience to the statute. I have no doubt, therefore, of the Statute of Limitations being a bar to the whole of the relief sought by the Appellant as executor of Thistlethwayte.

Your Lordships will no doubt recollect that in the observations I have made with regard to the adoption of the statute by a Court of Equity, I refer to those well-known expressions of Lord Redesdale, in which he distinguishes between the cases where a Court of Equity acts in analogy to the statute, and where it acts in obedience to the statute. Where a Court of Equity frames its remedy upon the basis of the Common Law, and supplements the Common Law by extending the remedy to parties who cannot have an action at Common Law, there the Court of Equity acts in analogy to the statute; that is, it adopts the statute as the rule of procedure regulating the remedy it affords.

6 To these passages might be added a reference to the following passages in the Judgment of Dixon J (as he then was) in Cohen v. Cohen:

There remains the question whether the plaintiff is precluded by lapse of time from recovering in respect of (i.) the German marks collected by the defendant from Halle, (ii.) the proceeds of the sale of her furniture (£123) and (iii.) the £80 unaccounted for out of £120 paid to him by the insurer of her pearls.

I assume that in some way the law which in England results from 21 Jac. I. C. 16, Lord Tenterden’s Act (9 Geo. IV. C. 14) and sec. 9 of the Mercantile Law Amendment Act (19 & 20 Vic. c. 97) is in force in relation to an action heard in this Court. If it had not been for the doubts expressed in

Lady Carrington Steamship Co. v. Commonwealth

, I should have supposed that secs. 79 and 80 of the Judiciary Act 1903-1927 operated in such a way that a suit in this Court heard in Victoria was affected by secs. 79 and 85 of the Victorian Supreme Court At 1915, which enacts this law for Victoria, as well as by sec. 57(2) of the same Act (see per Isaacs J. in

Federated Sawmill &c. Association v. Alexander)

. Upon the assumption made the first question which arises is whether these three causes of action are of such a nature that they may be barred directly by, or else by analogy to, these provisions. In at least two of these three instances the defendant was accountable in equity for what he had received on the plaintiff’s behalf. The Statute of Limitations, by its terms, does not operate directly upon equitable remedies. (see also, for Victoria, sec. 79(2) of the Supreme Court Act 1915.) But such remedies are barred in Courts of equity by analogy to the statute. The analogy is found in the case of constructive trusts, where the equity is fastened upon the trustee not because he intended to become the fiduciary of property but because of the character of his dealings and in spite of his intention to take the property for himself. But Courts of equity have refused to see any analogy when a person, intending to act in a capacity which is fiduciary, has received, as and for the beneficial property of another, something which he is to hold, apply or account for specifically for his benefit. Such a person is either an express trustee, or, if that name does not in strictness belong to him, he stands in the same position as a direct or express trustee (see

Soar v. Ashwell

). In

Burdick v. Garrick

attorneys under power who were authorised to sell the principal’s property and invest the proceeds set up the statute in vain. Giffard L.J. said: - ‘There was a very special power of attorney, under which the agents were authorized to receive and invest, to buy real estate, and otherwise to deal with the property; but under no circumstances could the money be called theirs; under no circumstances had they the least right to apply the money to their own use, or to keep it otherwise than to a distinct and separate account; throughout the whole of the time that this agency lasted the money was the money of’ the principal ‘ and not in any sense theirs. Under these circumstances, I have no hesitation in saying that there was, in the plainest possible terms, a direct trust created … . I do not hesitate to say that where the duty of persons is to receive property, and to hold it for another, and to keep it until it is called for, they cannot discharge themselves from that trust by appealing to the lapse of time.’ The last sentence is often quoted, and in

Lyell v. Kennedy

Lord Macnaghten said he thought it was a sound proposition. ‘I do not think,’ he continued, ‘it can make any difference what the nature of the property may be, whether it is a lump sum, or collected in the shape of rents accruing from time to time … Nor do I think it can make any difference whether the duty arises from contract or is connected with some previous request, or whether it is self-imposed and undertaken without any authority whatever. If it be established that the duty has in fact been undertaken and that property has been received by a person assuming to act in a fiduciary character, the same consequences must, I think, in every case follow.’ In

Henry v. Hammond

Channell J., after referring to these authorities, says: - ‘We must apply that principle to a case where the property is a sum of money. It is clear that if the terms upon which the person receives the money are that he is bound to keep it separate, either in a bank or elsewhere, and to hand that money so dept as a separate fund to the person entitled to it, then he is a trustee of that money and must hand it over to the person who is his cestui que trust. If, on the other hand, he is not bound to keep the money separate, but is entitled to mix it with his own money with it as he pleases, and when called upon to hand over an equivalent sum of money, then, in my opinion, he is not a trustee .. but a mere debtor. All the authorities seem to me to be consistent with that statement of the law.’ The application of these principles to the three causes of action now in question appears to depend upon making the correct inferences of fact.

7 I take Hodgson JA’s reference to “the view expressed by Deane J’ in Hawkins v. Clayton to be a reference to the following passage:

It is however, unnecessary to pursue these problems involved in the firm’s defence based on the Limitation Act. There is a more general answer to that defence. Its basis is to be found in the circumstance that, in the present case, the negligent failure of the firm to inform Mr. Hawkins of the existence and contents of the testatrix’s last will not only caused the damage which was sustained by him in the capacity of executor of the testatrix’s estate but also effectively concealed from him for so long as he remained unaware of the contents of the will, the existence of the cause of action in negligence against the firm.

8 The status to be accorded to the exception to the general rule as to the commencement of limitation periods suggested by Deane J in these passages, is, to say the least, unclear, if only because although in Hawkins v. Clayton each of Brennan J and Gaudron J concurred in the order proposed by his Honour, neither agreed with the basis upon which his Honour founded his Judgment, and each of them proceeded upon the basis that no cause of action accrued to Mr. Hawkins until he assumed the office of executor.

9 HEYDON JA: I agree with the orders proposed by Hodgson JA. On the understanding that nothing in his reasons for those orders is to bind the trial judge at the second trial in relation to any matter of fact or law relevant to the rights of the parties arising out of the allegations in the pleadings, I agree with the reasons advanced by Hodgson JA for those orders, except for those stated in the second-sixth sentences of [81]. The proposition there attributed to Williams v Minister, Aboriginal Land Rights Act 1983 (1994) 35 NSWLR 497 is supported by Kirby P, but it is far from clear that it is supported by Priestley JA in view of the tentative and cautious mode in which he expressed the basis of his concurrence with the orders proposed by Kirby P. It was not supported by Powell JA.

10 HODGSON JA: On 18th December 2000, Dowd J delivered a judgment in proceedings brought by the appellants Sami and Gisele Cassis against the respondent Marcel Kalfus. At that stage, his Honour made no orders apart from granting liberty to the parties to approach his Associate to re-list the matter for resolution of various issues.

11 On 27th April 2001, Dowd J delivered a further judgment, and made orders granting leave to the respondent to file and serve a Defence to the Fourth Amended Statement of Claim, including a defence under the Limitation Act 1969, and granting leave to the appellants to particularise such claims and damages following therefrom as were not barred by that Act. His Honour reserved costs.

12 On 17th May 2001, the appellants filed a Notice of Appeal from the two judgments to which I have referred, and on 29th May 2001, the respondent filed a Notice of Motion to strike out that appeal.

13 On 22nd June 2001, Dowd J delivered a further judgment, and gave judgment in favour of the respondent on the appellants’ claim, and ordered the appellants to pay the respondent’s costs of the proceedings.

14 On 5th July 2001, the appellants filed an Amended Notice of Appeal, seeking orders setting aside the judgment of 27th April 2001 and the orders of 22nd June 2001, and seeking judgment for the appellants with damages to be assessed. We are now dealing with that Amended Notice of Appeal.

CIRCUMSTANCES

15 The first appellant was born in Egypt on 15th October 1936. He married the second appellant in 1967, and they moved to France in 1969. Between 1970 and 1981, the first appellant worked as a scientist or engineer in France for Chaffoteaux et Maury (C&M), at that time the world’s largest manufacturer of instant gas hot water heaters.

16 The appellants migrated to Australia in 1981, and in 1982 the first appellant began doing work for C&M in Australia. The first appellant located the respondent in the Yellow Pages, and engaged him as a solicitor to undertake legal work to establish an Australian subsidiary of C&M, called Chaffoteaux et Maury (Australia) Pty. Limited (CMA). The first appellant became the managing director of CMA, and the respondent subsequently acted in various matters as solicitor for the first appellant and for CMA, and was also an alternate director of CMA.

17 The business of CMA expanded, and its turnover increased from $425,824.00 in 1983 to $1,986,985.00 in 1988, by which time the first appellant was on a salary package of about $100,000.00 per annum.

18 In 1984, the respondent acted for the appellants on the purchase of an apartment at 69 Coogee Bay Road, Coogee. This apartment was sold in 1986, and in that year the respondent acted on the instructions of the first appellant in the purchase of a house at 3 Leeton Avenue, Coogee in the first appellant’s name. This purchase was financed in part by a loan from the Advance Bank, secured by mortgage over the property.

19 In 1988, it was agreed between the first appellant and the respondent that they would enter negotiations with C&M to acquire the business of CMA. In November 1988, the respondent established a company International Gas Corporation Pty. Limited (IGC) to carry on that business, and the first appellant and the respondent became directors and shareholders of that company.

20 On 23rd January 1989, the respondent executed a document on the letterhead of his legal practice, in the following terms:

Re: Legal Practice of MARCEL KALFUS & CO
This letter is by way of confirmation of the agreements reached between ourselves concerning International Gas Corporation Pty Limited and the above legal practice.

I hereby confirm and acknowledge that you shall from 1st February, 1989, be entitled to an one half share of the net profits of the above legal practice. In determining net profits there shall be deducted from the gross fees received in any tax year or trading period, all operating expenses including wages, rent, equipment leasing charges and bank interest and other charges and income tax.

I hereby further confirm that the net profit from the legal practice and from International Gas Corporation Pty Limited (IGC) and all other related companies or businesses operated by us jointly, are to be pooled or aggregated and then shared by us on an equal basis.

I also confirm that you shall be entitled during an annual period of operation of IGC and related entities to draw the sum of $100,000 as an annual salary as managing director of the company.

Similarly, I shall be entitled to draw the sum of $100,000 as from the gross fees received by Marcel Kalfus & Co on account of my share of such profits.

Our respective advance drawings against profits may exceed the sum of $100,000 but in the absence of express agreement between ourselves the same shall not in any year exceed the total of the permissible advance on drawings by 25% ie in the first year such advance drawings must not exceed $125,000. We may by agreement, at any time vary the amount of advance drawings in any year. All amounts paid by way of advance drawings shall be debited to the account of share of profits of yourself and myself respectively. If the amount of advance drawings of either of us in any accounting period exceeds a half share of the net profit of IGC (and its related entities) and the legal practice, then such excess will be debited against such person's account for share of profits in the ensuing year.

I trust this letter provides you with the comfort you desire concerning our new and exciting venture.

21 On 27th February 1989, there was a handwritten agreement made between C&M on the one hand and the first appellant and the respondent on the other, whereby C&M agreed to sell its shares in CMA to the first appellant and the respondent for a little over $A1 million, subject to adjustments. This amount was to be paid over a two year period. Subsequently, IGC entered into a distribution agreement with C&M for a period of two years.

22 It appears that IGC commenced trading in about March 1989. In order to raise working capital, it arranged for an overdraft facility of $200,000.00 with Banque Nationale de Paris (BNP). The first appellant and the respondent were guarantors of that facility, and their obligations were secured by mortgages. In the case of the first appellant, this was a mortgage dated 6th July 1989 over the Leeton Avenue property, subsequent to the mortgage or mortgages to the Advance Bank. This mortgage was registered on 8th September 1989. In the case of the respondent, the security was a third mortgage over his house property at Double Bay.

23 In about mid-1989, the appellants requested the respondent to arrange for the transfer of the Leeton Avenue property to the first appellant and the second appellant as joint tenants, and a transfer to achieve this was signed and dated 7th August 1989. It appears that the respondent did not thereafter take any steps to have this transfer registered.

24 It appears that IGC traded satisfactorily for the first three years, and the debt to C&M incurred in association with the acquisition of the business was fully repaid within that time. It appears also that the first appellant drew a substantial salary, not dissimilar in the substantial benefit which he obtained from it from the salary package which he previously had with CMA.

25 It appears that in about late 1990, the respondent told the first appellant that he was having financial difficulty in his practice, and he sent the first appellant a letter from his bank, the Commonwealth Bank of Australia, showing something over $350,000.00 owing to that bank.

26 On 12th February 1991, a shareholders deed was entered into between the first appellant, the respondent and IGC, conferring mutual rights of first refusal in relation to each of the shareholder’s shares in IGC.

27 In September 1991, the National Australia Bank (NAB) replaced BNP as IGC’s financier. At that time, it advanced $70,000.00 to pay out the loan from the Advance Bank secured on the Leeton Avenue property, and it also advanced $100,000.00 to pay out BNP and granted an overdraft facility for a further $150,000.00. NAB took a first mortgage over the Leeton Avenue property as security, and a third mortgage over the respondent’s Double Bay property. The respondent acted in these proceedings as solicitor for IGC and the first appellant.

28 At this time, it appears that the first appellant realised that he was more exposed to loss from this arrangement than the respondent, because of the lesser equity in the Double Bay property that went towards the NAB security, as compared with his equity in the Leeton Avenue property. At the first appellant’s request, on 24th September 1991, the respondent signed a letter addressed to the first appellant promising to indemnify him for fifty percent of any personal losses in respect of liability to the NAB.

29 In January 1992, C&M advised that it proposed to take away its agency from IGC, and on 9th April 1992, C&M gave notice that the “distribution contract” would terminate on 31st December 1992.

30 As a result of this termination, IGC’s business declined. It had cash problems in 1993.

31 On 12th December 1993, the respondent signed a letter addressed to the first appellant promising to indemnify the first appellant for fifty percent of his personal liability to third party creditors.

32 On 23rd December 1993, NAB was paid out from the proceeds of new mortgages granted over the Leeton Avenue property. There was a first mortgage in relation to $280,000.00 obtained through a solicitor Mr. White, and a second mortgage for $40,000.00 obtained through a mortgage broker Mr. Vesaro. The borrower in respect of both of these loans was the first appellant, not IGC or the respondent. The respondent provided no security, only a personal guarantee. He charged legal fees of about $6,000.00 to the first appellant for acting in these transactions.

33 IGC made the repayments under the mortgage, and by reason of this and the declining business of IGC, the first appellant was now receiving little remuneration.

34 In mid-1994, in order to obtain further capital for the business, agreements were made with one Robert Roden. A new company International Gas Appliances Pty. Ltd. (IGA) was formed to acquire the assets of IGC for about $45,000.00. $220,000.00 was advanced by Mr. Roden to IGA, and repayment was secured by a charge over the assets of IGA and guaranteed to the extent of fifty percent by the first appellant. Agreements to this effect were executed on 1st July 1994. The result of this was to leave IGC with no assets, but with liabilities in the order of $52,500.00. These were paid by the first appellant. In addition, the first appellant still had the liabilities under the White and Vesaro mortgages.

35 From July 1994 onwards, IGA suffered substantial trading losses, and on 6th April 1995, Mr. Roden gave notice requiring the first appellant to pay $106,250.00 pursuant to his guarantee. On 17th November 1995, Mr. Roden obtained judgment in the Supreme Court against the first appellant for this amount, plus interest and costs.

36 On 8th August 1994, the Vesaro mortgage was discharged from the $45,000.00 paid to IGC by IGA for the acquisition of its assets.

37 In March 1995, the Leeton Avenue property was sold to the appellant’s son, Rami Cassis, for $450,000.00. At settlement, about $288,000.00 was paid to discharge the White mortgage. The respondent acted as a solicitor on this transaction and was paid legal fees. The first appellant assigned to the second appellant his entitlement to the balance of the purchase money, with the result that the second appellant became entitled to about $162,000.00. After the sale, the appellants continued to reside at the property.

THE COURSE OF THE PROCEEDINGS

38 These proceedings were commenced by Statement of Claim on 12th June 1996. Prior to the hearing, there were two amendments made to the Statement of Claim, the third version being filed on or about 3rd September 1999.

39 The hearing before Dowd J commenced on 21st February 2000. The case as opened for the appellants apparently diverged somewhat from the Third Statement of Claim, and the appellants were directed to file a Fourth Amended Statement of Claim. This was in fact filed in Court on 24th February 2000.

40 This Statement of Claim alleged first, on behalf of the first appellant, breaches of duties by the respondent as the first appellant’s solicitor over the period 1988 to 1995, and also breaches of fiduciary duties owed by the first appellant to the respondent as a joint venturer over the same period. The Statement of Claim then claimed damages for all these breaches of duty, comprising principally the loss of salary from 1st July 1993 to 15th October 2001 amounting to about $450,000.00, moneys payable on the collapse of IGC amounting to something over half a million dollars, and damages for consequent psychological injuries. On behalf of the second appellant, the Statement of Claim alleged failure by the respondent to carry through the transfer to her of her half interest in the Leeton Avenue property, resulting in the loss of the property valued at $450,000.00; and also claimed damages for consequent psychological injuries.

41 On the second day of the hearing, 22nd February 2000, the respondent applied to add a defence under the Limitation Act 1969 and also a defence of laches. This application was opposed.

42 On 28th February 2000, the respondent sought leave to file an Amended Defence, including those additional grounds. Again this was objected to, although in the course of argument Senior Counsel for the appellants said that he “can’t say there is any prejudice”. The primary judge granted leave to file the Defence, but subject to the qualification that the allowance of the new defences under the Limitation Act and of laches would be subject to further argument and consideration.

43 On 1st March 2000, after a six day hearing concluding with oral submissions, the primary judge reserved his decision, making provision for further written submissions to be provided. There were written submissions from the appellant served on 6th March, submissions from the respondent served on 9th March, submissions in reply from the appellant served 13th March, and final submissions from the respondent served on 14th March.

44 The primary judge gave a judgment on 18th December 2000. This judgment summarised the appellants’ claims and the defence, and summarised the evidence that had been given in the case. It then went on to deal with issues for determination under the headings “The Existence of the Joint Venture”, “The First Plaintiff’s Claim Arising from the Solicitor/Client Relationship”, “The First Plaintiff’s Claim for Breach of Fiduciary Duty”, “Breach of the Legal Profession Act 1987”, and “Limitation Act 1969”.

45 On the first matter, the existence of the joint venture, the primary judge made the following finding:

I find that a joint venture agreement existed which was partly evidenced in writing, partly by conduct and partly by oral agreement between the first plaintiff and the defendant.

46 In relation to the second matter, the first plaintiff’s claim arising from the solicitor/client relationship, the primary judge made the following finding:

Although there is no evidence, it is clear that during the course of the joint venture, the defendant failed to advise the first plaintiff as to the risks in securing the debts over the premises at 3 Leeton Avenue, Coogee; that he failed to explain the need for a document establishing the joint venture, and the remedies which the first plaintiff might have against him in terms of the arrangement; that he failed to advise the first plaintiff that the defendant viewed the entering into of the sale of the IGC equipment and business as putting an end to his liability to contribute to the IGC loss and putting it into the defendant’s liabilities under the joint venture.

The ramifications of failing to explain the legal effects of the joint venture could well have resulted in the joint venture not proceeding in the form it took, although it may have proceeded on another basis.

The defence offered by the defendant that the first plaintiff made his own decision in relation to commercial matters is no answer to the defendant’s obligation to the first plaintiff as the solicitor acting in the various transactions for the first plaintiff. This is no defence.

I find the defendant breached his duty as solicitor to the plaintiff in each of the circumstances in paragraph 240 above [the first paragraph quoted].

47 In relation to the third matter, the first plaintiff’s claim for breach of fiduciary duty, the primary judge made the following findings:

Notwithstanding the tendency of the first plaintiff to ‘tailor his evidence’ to suit his case and to constantly emphasise the points as suited to his case, I nonetheless accept his evidence that the defendant represented that he was in receipt of some $200,000 from his practice and that the practice was worth some $500,000. The defendant was an unimpressive witness.

The evidence to which the defendant eventually agreed was that he had represented at one point that his practice was worth $450,000. As a matter of common sense, it is hard to see that if he represented that he was making as little as he was in fact earning, that is something in the order of $70,000 before or after tax, that the first plaintiff would have been attracted to pool the income of the gas sales business and the solicitor’s practice.
…

The primary focus are a failure to reduce to written form the term of the joint venture agreement of which it disadvantaged the first plaintiff. The defendant induced the first plaintiff to enter into a financial arrangement from which the defendant stood to benefit without bearing a risk commensurate with that of the first plaintiff; he failed to disclose his true financial position to the first plaintiff and failed to contribute any funds to the joint venture despite promising to do so as admitted in his own evidence.

The defendant was also a party to the first plaintiff entering into financial arrangements with his various mortgagees where the first plaintiff assumed a disproportionately unequal risk in each of the three mortgages, BNP, NAB and the White and Vesaro mortgages. The defendant was a party to the first plaintiff assuming the liabilities of the joint ventures.

The defendant also failed to honour the agreement evidenced by the documents given in 1991 and 1993, he failed to fully disclose or record his liabilities under the joint venture agreement. The defendant also failed to advise the first plaintiff of his views of the joint venture property.

I find that the defendant breached his fiduciary duty to the first plaintiff which he owed as a joint venturer as set out in the preceding paragraphs.

48 In relation to the fourth matter, concerning the Legal Profession Act, the primary judge set out the relevant subsection of s.119 of that Act, as follows:

119. Receipts not to be shared by solicitor and unqualified person

1) It is professional misconduct for a solicitor to share with another person the receipts of a business of the kind usually conducted by a solicitor unless:

a) the other person holds a current practising certificate issued by the Law Society Council; or

b) the Law Society Council has first given its consent.

49 His Honour made the following finding:

If the legislature had intended to prohibit the sharing of profits it would have done so, and would not have provided a procedure whereby permission may be obtained. I reject the submission that the joint venture was thereby illegal.

50 In relation to the Limitation Act 1969, the primary judge stated that he had not had submissions from the appellants as to whether the amendment to add a defence under the Limitation Act ought to occur. He said that he wished to hear from Counsel as to the way in which the Limitation Act affected the personal injury claim and the way in which the Act ought to be applied in relation to equitable relief. He also expressed concern that the appellants’ Counsel, in his closing oral address, had limited the claim to a claim arising out of the formation of the original joint venture agreement, and treated the damages as indivisible. In case some of the claims might be statute barred, the primary judge said that he wished to have submissions as to how damages might be divided.

51 On 8th February 2001, the appellants provided some further submissions, which did not add in any significant way to the submissions provided at the close of the hearing. The respondent provided further submissions on 1st March 2001, and there was a short hearing on 2nd March 2001.

52 On 27th April 2001, the primary judge gave a judgment on the Limitation Act question. The primary judge noted the appellants’ argument that the defences under the Limitation Act had no merit, and noted the appellant’s reliance on Wardley Australia Limited v. Western Australia (1992) 175 CLR 514. He continued:

Clearly in these proceedings, the first plaintiff’s case is that he suffered damages immediately on the coming into effect of the contract, and thus his cause of action in contract and tort takes effect from February 1989.

It is necessary therefore to look at the limitation defences, to the actions in contract, tort and arising out of breach of fiduciary duty.

The claim in contract clearly envisages and seeks compensation for loss of the former employment when the first plaintiff entered into the joint venture. This was actual damage not contingent or prospective. His loss of employment with his former employer with CMA crystallises the cause of action in contract. In any event, an action in contract runs from the breach regardless of when the damage occurs ( inter alia ), although the time of the breach of contract is not always easy to determine: see Sheldon v McBeth (1993) Aust Torts Reports 81-209. In these proceedings, the actual breach alleged was, inter alia, the failure to properly advise the first plaintiff in 1989.

The Statute of Limitations , in contract, being six years, the claim in respect of the joint venture agreement is therefore barred.

Similarly, the action brought in tort against the defendant, which sounds in damages, it being specifically claimed from the date of the breach, the action having been in respect of negligent advice and failure to disclose relevant facts concerning the joint venture given in 1989, is similarly barred, damages being an element of the tort, there being several events giving rise to damage or detriment to the first plaintiff in 1989.

I have been referred to and take into account a decision of the Court of Appeal in Scarcella v Lettice (2000) NSWCA 289, which reaffirms that time commences to run when damage occurs, even though the plaintiff may not be aware of it.

Notwithstanding that I have asked Counsel for the first plaintiff to specify damages arising out of subsequent breaches as pleaded and claimed by the first plaintiff, Senior Counsel for the first plaintiff has declined to do so on the basis that the

defences do not arise and his assertion that there is no statute of limitations for breach of fiduciary duty.

53 The primary judge then considered the claim for equitable compensation, and referred to Maguire v. Makronis (1997) 198 CLR 449, s.23 of the Limitation Act 1969, Knox v. Gye (1872) LR 5HL 686 at 674, and Cia de Seguris Imperio v. Heath (REBX) Limited I WLR 112. He then continued:

Although the manner of determination of damages may differ for equitable compensation, and although other equitable remedies may be available, the plaintiffs claims are, in effect, analogous to claims for damages at law, and are based on the same underpinning facts.

By the application of analogy therefore and s23 of the Limitation Act 1969, the first plaintiff is barred by the same argument as applies to the action in contract and tort in his action for breach of fiduciary duty for breaches occurring outside the limitation period.

The claim for aggravated damages for personal injury and exemplary damages, therefore are similarly statute barred.

In the second plaintiff’s claim, there was clearly a relationship established of solicitor and client between the second plaintiff and the defendant, in relation to the transfer of her house. Clearly however, any action in contract or in negligence, or breach of other duty, arose in 1989 at the time of the failure to proceed with the stamping and lodgement of the transfer, and the obtaining of the mortgagee’s consent for registration of the transfer. However, in any event detriment was suffered by the second plaintiff when the property was encumbered in 1989. This brings the cause of action beyond the Limitation Act 1969 limitation period, and therefore the defendant has a good defence to the action of the second plaintiff, in the pleading of the Limitation Act 1969.

Accordingly, on the basis that the defendant has a good defence, and for the other reasons that I have set out above, in applying JL Holdings v State of Queensland , the defendant should have leave to file the Defence to the Fourth Amended Statement of Claim to include the defence under the Limitation Act .

For the reasons I have set out above, the second plaintiff is therefore statute barred and the first plaintiff is statute barred for those causes of action beyond the six year period provided by the Limitation Act 1969.

Notwithstanding my invitation in the judgment of 18 December 2000 for the parties to set out each breach of duty respectively caused in the various activities carried out by the defendant, some of which are subsequent to the limitation period, I consider that the defeat of that part of the first plaintiff’s claim by the defence of the Statute of Limitations 1969 should not prevent the first plaintiff from particularising such damages as he may seek to argue, that he has suffered from the breach of the defendants’ solicitors retainer, or the failure to advise that he should obtain independent advice, or any negligence advice that may have been tendered, subsequent to the Limitation Act period.

I will allow a further period of twenty-eight days for such claim to be articulated. I will then determine any issues which may then arise.

54 The first plaintiff did not take up the invitation contained in the last of those paragraphs, and in the result the primary judge gave the judgments in favour of the respondent to which I referred at the beginning of this judgment.

ISSUES ON APPEAL

55 The grounds of appeal set out in the Amended Notice of Appeal filed on 5th July 2001 were as follows:

1. The Plaintiffs were denied procedural fairness in the conduct of the proceedings before Dowd J. in that:
(a) undue and unnecessary delay occurred in delivering judgment(s);
(b) his Honour failed to determine all necessary matters in one judgment or at all;
(c) his Honour called for further submissions 10 months after the hearing had taken place in circumstances in which further submissions were neither necessary nor appropriate;
(d the delay and calling for additional submissions permitted the Defendant to raise or further raise (erroneous) matters 12 months after the completion of the hearing;
(e) in holding that the First Plaintiff’s claims were time barred his Honour adopted, as the basis for his reasoning, submissions made by the Defendant on 1 March 2001, 12 months after the completion of the hearing, which contained erroneous matters.

2. Delay in determining the limitation issues and in giving judgment.

2A. His Honour erred in granting leave to the Defendant to amend his defence to raise limitation issues.

3.His Honour erred in holding that the First Plaintiff’s claim against the Defendant for negligence as a solicitor was barred by the Limitation Act 1969 (NSW).

4. His Honour erred in holding that the First Plaintiff’s claim against the Defendant as joint venturer was barred by the Limitation Act 1969 (NSW).

5. His Honour erred in holding that the First Plaintiff’s claim against the Defendant as a fiduciary was barred "for breaches occurring outside the limitation period".

6. His Honour erred in holding that the Second Plaintiff’s claim against the Defendant was barred by the Limitation Act 1969 (NSW).

7. In holding that the First and Second Plaintiffs’ claims were time barred, his Honour failed to make necessary findings of fact, inter alia, in relation to causation of damage.

8. His Honour failed to provide any or any proper reasons for holding that the First and Second Plaintiffs' claims were time barred.

9. In his judgment of 27 Apri1 2001, his Honour:
(a) misunderstood the nature of the First Plaintiff’s case;
(b) misunderstood the nature of the Second Plaintiff’s case;
(c) misunderstood the evidence that had been given;
(d) misunderstood the law in relation to time limitations;

10. His Honour misstated the First Plaintiff’s case in paragraph 18 of his Honour's judgment (of 27 April 2001) where it is said that it was the First Plaintiff’s case that he suffered damage immediately on the coming into effect of "the contract" (presumably a reference to the joint venture agreement); and in paragraph 22 of the judgment of 27 April 2001 where it is said that damages were "specifically claimed from the date of the breach" (presumably a reference to 1989).

11. His Honour erred (paragraph 20 judgment 27 April 2001) in finding that the First Plaintiff’s "loss of employment with his former employer" constituted damage, when in no sense did the First Plaintiff lose his employment and when the evidence was that he suffered no diminution in income immediately after the buyout.

12. His Honour erred in finding that the Second Plaintiff suffered damage immediately upon executing the transfer (in August 1989) when no damage of any kind was suffered by her at that time.

13. In the "judgment" of 18 December 2000, his Honour erred in holding that the arrangement entered into in regard to the sharing of profits in the Defendant's legal practice was not illegal and not prohibited by s.119 of the Legal Profession Act 1987.

56 The orders sought were as follows:

1. The judgment of his Honour Justice Dowd of 27 April 2001 and orders of 22 June 2001 be set aside and judgment entered for the Appellants with damages to be assessed.

2. The matter be remitted to a Judge of the Supreme Court (other than Dowd J) for assessment of damages.

3. In the alternative to Order 2 hereof, the Court of Appeal assess damages.

4. The Respondent be ordered to pay the costs of this Appeal and of the proceedings below on an indemnity basis.

57 The respondent filed a Notice of Contention, to the effect that the orders should be affirmed on the following grounds:

1. On the evidence of the Appellants themselves and objective facts before the Court, there was no basis upon which the Trial Judge could properly have found that the Respondent had owed or breached any relevant duty to the Appellants, that they had suffered damage to them by such a breach, or that the damages claimed by them were otherwise than too remote (or, in law, unable) to be held to his account.

2. The Trial Judge erred in holding that there was a presumption operative against the Respondent, and in favour of the First Appellant, arising from the fact that the Respondent was a solicitor.

3. The Trial Judge erred in holding that, despite an absence of evidence, the Respondent should be held to have failed to fulfil obligations he had to the First Appellant as a solicitor.

4. The Trial Judge erred in holding that the Respondent had breached fiduciary duties owed by him to the First Appellant as a joint venturer.

58 I propose to deal in turn with the following broad issues:

59 I note that Ground 2A in the Amended Notice of Appeal was abandoned at the hearing. In the light of the concession made by Senior Counsel for the appellants on 28th February 2000 that he could not claim any prejudice (whether this was in fact the case or not), this ground of appeal had no chance of succeeding.

PROCEDURAL FAIRNESS AND DEFICIENCY OF REASONS

60 As contended by Mr. Roberts SC for the appellants, it is clear that paragraph 18 of the judgment of 27th April 2001, asserting that “the first plaintiff’s case is that he suffered damages immediately on the coming into effect of the contract”, did misstate the first appellant’s claim. The damage referred to in the Statement of Claim is all damage occurring from about 1993 onwards. It is correct that the first appellant claimed that, at about the time of entry into the joint venture in early 1989, he did leave secure employment; but whether or not this amounts to damage in the relevant sense is not an easy question. In my opinion, as will appear from my discussion of the second issue, the question of when the first appellant relevantly first suffered damage from the breaches alleged against the respondent is a mixed question of fact and law of some difficulty, which was not addressed at all in the reasons of the primary judge. In my opinion, this means that there would have to be a new trial, unless the result arrived at by the primary judge is plainly correct, or the orders which he made were inevitable having regard to the matters in the respondent’s Notice of Contention; and as will be seen, neither of these alternatives is made good.

61 Accordingly, there is no necessity to consider in detail the other aspects of alleged lack of procedural fairness, delay and deficiency of reasons. However, I think it is appropriate to comment briefly on two aspects.

62 Firstly, in my opinion the proceedings at first instance have miscarried in part because of the primary judge’s failure to rule on 28th February 2000 on whether an amendment to include the Limitation Act defence should be permitted. One result of this is that it appears that no consideration was given at the time as to whether the appellants would wish to put on any reply to such a defence, such as a reply of fraudulent concealment under s.55(1)(b) of the Limitation Act. The appellants have sought to rely on that matter in this appeal, and understandably the respondent has objected to that on the basis that the case has been heard without the allegation of fraud required for such a pleading having been made.

63 Secondly, problems have arisen from the delay in giving judgment, and particularly from the form in which the first judgment of 18th December 2000 was given. That judgment contained very few findings of primary fact, and made findings of breaches of duty only in the most generalised terms and on the basis of very sketchy reasons. It made no findings as to what damage was suffered, or, very importantly in this case, what damage, if any, was caused by what breaches of duty. This in turn meant that the opportunities offered to the appellants in the judgment of 18th December 2000 to make further submissions concerning personal injuries, equitable relief, and how damage may be divided, were justifiably regarded by the appellants as coming too late. In my opinion, either such opportunity should have been given at the very latest shortly after the conclusion of the hearing, or else the primary judge should have done his best to decide the case on the material which he had. A fortiori, the further opportunity offered in the judgment of 27th April 2001 was far too late.

LIMITATION DEFENCE TO FIRST APPELLANT’S CLAIM

64 As noted earlier, the first appellant’s specification of damage did not include damage occurring prior to 1993.

65 In order to make out his case, the first appellant had the onus of proving some damage as alleged, and of proving that it was caused by breaches of duty established in the case. To make out his defence based on the Limitation Act in respect of the claim in tort, the respondent had the onus of proving that damage was in fact suffered from the relevant breach or breaches prior to the middle of 1990. He could do this either by showing that, if the first appellant suffered the damage claimed by the first appellant, then this must have involved damage suffered prior to mid-1990; or alternatively by proving that the first appellant did in fact suffer damage from the relevant breach or breaches prior to mid-1990.

66 Mr. Lindsay SC for the respondent submitted that the respondent did do this. He submitted that the first appellant always put his case on the basis that the whole of the loss was caused by entry into the joint venture in about early 1989, and made no attempt to separate out later damage caused by later breaches. In particular, he submitted, the first appellant claimed that in about early 1989 he entered into a disadvantageous joint venture, and gave up secure employment. This necessarily involved loss or damage, particularly where on the first appellant’s case the joint venture had no settled terms, was induced by misrepresentation, was liable to be set aside, and did not have the backing of a substantial legal practice as the respondent allegedly had represented. Mr. Lindsay also submitted that by early 1989 the first appellant’s house had been mortgaged to secure the debts of the business.

67 In my opinion, there is force in these submissions, but they are far from conclusive; and for reasons I will give, I am not satisfied that the primary judge’s conclusion on the limitation defence was correct.

68 It is true that the first appellant’s case for damages depended upon an assertion that he would not have entered into the joint venture at all but for various breaches of duty by the respondent; but that does not show that entry into the joint venture was at the time of its occurrence a loss sounding in damages. If it had been shown that the true value of what the first appellant obtained in early 1989, assessed as at that time, was less than the true value of what the first appellant gave up, assessed at that time, then this would be such a loss: but that question was not addressed by the evidence and not considered by the primary judge; and in my opinion the available material is insufficient for this Court to address the question and come to any conclusion on it. In all probability, it would require an assessment of competing commercial chances, viewed as at early 1989.

69 It would appear that the joint venture may have been of less value to the first appellant than it would have been if it had been properly documented, if there had been the backing of a substantial legal practice, and if the respondent had negotiated a more secure distribution agreement; and these matters would be directly relevant to a cause of action based on contract or a cause of action which in some other way made the respondent liable for respects in which what the first appellant obtained did not measure up to what he would have obtained if the respondent had fulfilled his commitments. However, they are less directly relevant to the tort measure of damages which, on the way the first appellant put his case, required an overall comparison between the first appellant’s situation if he had not entered into the venture at all, with his situation which actually arose when he did enter into the venture.

70 On the question whether giving up secure employment was itself a loss or damage, I note first that it was not shown that the real benefits received by the first appellant from the new arrangement were less than the benefits from the secure employment, prior to about 1993. In those circumstances, I think the question of whether giving up secure employment amounted to loss or damage depends upon the type of general comparison to which I have referred previously.

71 The mortgaging of the first appellant’s house to give security for debts of the business could be a relevant loss or detriment: see Forster v. Outred & Co [1982] 1 WLR 86, discussed but not disapproved by the High Court of Australia in Wardley Australia Limited v. Western Australia (1992) 175 CLR 514. However, this was not relied on before Dowd J; and even if it had been, in my opinion the better view is that this too would need to be taken into account in an overall comparison of the type to which I have referred, rather than considered in isolation. As I will attempt to show, I think this follows from an analysis of Wardley and Forster, particularly having regard to principles discussed in Sellars v. Adelaide Petroleum (1994) 179 CLR 332.

72 I accept that, if one can point to an actual loss of money or property, or a non-receipt of money or property, or damage to property, or to some physical or psychological injury, it is not possible to say that no loss or damage has occurred simply because of the possibility that the plaintiff has obtained some countervailing advantage. But it is at least strongly arguable, as a matter of mixed fact and law, that nothing like this occurred in this case until about 1993; so that the defendant’s claim that, if the plaintiffs suffered damage at all from breaches of duty occurring around the time of entry into the joint venture agreement, it must have involved loss or damage suffered at that time, must depend upon a global comparison of the type to which I have referred. As mentioned earlier, that global comparison was not undertaken below, and the material does not enable this Court to undertake it.

73 It remains on this question to state briefly how I see the above propositions resulting from the decisions in Wardley and Forster and Sellars.

74 Wardley established that a person granting an indemnity, under which he or she is obliged to make a payment when the loss of the party to be indemnified is ascertained and quantified, suffers no actual loss until this contingency is fulfilled; so that a cause of action for purely economic loss, dependent upon damage being caused by the granting of the indemnity, does not arise until that contingency occurs. However, during the discussion of this question at 175 CLR 527-533, the majority of the High Court did not disapprove of Forster v. Outred, where it was held that a plaintiff suffered actual loss, not merely prospective loss, when, on negligent advice from her solicitors, she executed a mortgage over her property to secure debts of her son. Their Honours explained this case by reference to the immediate effect of the mortgage on the value of the plaintiff’s property, which had previously been free from encumbrances.

75 Sellars decided that loss or damage may be established by demonstrating the loss of a commercial opportunity which had some value, not being a negligible value, this value being ascertained by reference to degrees of probabilities or possibilities: see 179 CLR at 355.

76 Thus it would seem that, if one can characterise an economic disadvantage suffered by a plaintiff as involving the loss of a commercial opportunity which has some value, then that will be enough to constitute actual damage and to complete a cause of action (Sellars). However, if the economic disadvantage is no more than a contingency for future loss, then, unless and until the contingency occurs, there is no damage and no cause of action (Wardley). If one has a mortgage encumbering a property which was previously unencumbered, in isolation, then the effect of the mortgage on the value of the property will constitute immediate loss (Forster). However, if that encumbrance is part of an overall arrangement with some benefits as well as burdens, then in my opinion the matter has to be approached applying the principles derived from Sellars and Wardley.

77 My views on this principal question means that it is not absolutely necessary for me to deal with other matters arising in relation to this issue; but I will do so briefly.

78 First, there is the question whether different considerations apply to the first appellant’s claim for psychological injury. There is authority that there are distinct causes of action for personal injuries and property damage arising out of the same negligent act of a defendant: see Brunsden v. Humphrey (1884) 14 QBD 141, Marlborough Harbour Board v. Chartered Travel Co. Limited (1989) 18 NSWLR 223. However, I do not think that would apply in a case such as the present, where it is alleged that the personal injury itself was occasioned through the commercial loss: cf Avenhouse v. Hornsby Shire Council (1988) 44 NSWLR 1. That is, there is in this case no allegation of a duty to protect or preserve the first appellant from mental or physical injury: the duties alleged are essentially to protect the first appellant from commercial harm. Accordingly, subject to what I say next, the claim for psychological injury would be barred if the claim for commercial loss is barred.

79 There is however the question of whether, in relation to this part of the first appellant’s claim, an extension might have been sought under Schedule 5 and s.60G of the Limitation Act. It seems to me arguable that an action claiming personal injuries occasioned by commercial loss, if otherwise maintainable, may fall within s.60G as a cause of action founded on breach of duty for damages for personal injury. No application under s.60G was in fact made in this case. Such an application should have been made or foreshadowed, at the latest, on 28th February 2000; but the failure to make such application can reasonably be regarded as in part due to the respondent’s belated application to add the Limitation Act defence.

80 Much the same comments apply in relation to the first appellant’s attempt to rely on fraudulent concealment. If this was to be relied on, notice of this should have been given, at the latest, on 28th February 2000; but again, one may reasonably regard the failure to do so as caused in part by the respondent’s belated application to rely on the Limitation Act.

81 In relation to the application of the Limitation Act to a cause of action for damages or compensation for breach of fiduciary duty, it would appear that s.23 means that the six year limitation period does not apply, except by analogy. Williams v. Minister, Aboriginal Land Rights Act 1983 (1994) 35 NSWLR 497 could be seen as authority for at least the proposition that the six year limitation should not automatically be applied to such a claim, and that it is necessary to consider factors relevant to the aptness of the analogy. One matter that might be relevant here is that the extension provided by s.55 of the Limitation Act for fraudulent concealment would not directly apply to such a claim, because in relation to such a claim there is no “limitation period fixed by or under this Act” within the meaning of s.55(1): it might be that considerations relating to the appropriateness of applying the six year limitation by analogy would include matters which would go to fraudulent concealment of a claim to which the Limitation Act does apply. If that were so, then the absence of a reply might not be fatal to reliance on facts amounting to fraudulent concealment in relation to the equitable claims. The view of Deane J in Hawkins v. Clayton (1988) 164 CLR 539 at 589 might also have some bearing on this question. Although I am far from satisfied that it would not be appropriate to apply a six year period by analogy, I do not think this issue was adequately addressed by the primary judge.

82 Finally on this topic, there was a submission by the first appellant that the primary judge should have considered whether there were causes of action arising after mid-1990 due to breaches occurring after that date or breaches in respect of which damage first occurred after that date. In my opinion, it would have been a denial of natural justice to the respondent in this case to have made a finding against the respondent on any such basis, in circumstances where a claim on that basis had not been formulated with any clarity by the first appellant. A plaintiff must put a claim in some reasonably clear way before a court can give effect to it, because otherwise the defendant cannot adequately respond to it and a court would deny the defendant natural justice if it gave effect to such a claim. It is not enough to include in a global claim for damages some items of damage that might be held referable to particular breaches occurring within the limitation period. In my opinion, the circumstance that the allegations of breach of duty in this case included allegations of breaches in relation to the White and Vesaro mortgages and the Roden transaction, and the list of damage included items relating to those transactions, did not amount to a sufficiently clear formulation of a distinct claim arising within the limitation period.

83 However, I note that the primary judge did feel that the conduct of the case made it appropriate that the first appellant be given an opportunity to clarify such a claim; but he did so at a time and in circumstances where the first appellant could reasonably feel that to do so would result in further unacceptable delay. The limitation question was argued at the hearing and in written submissions shortly thereafter, so in my opinion the invitation should have been given, if at all, at that time and not in December 2000 and/or April 2001. Thus, the failure to consider distinct claims arising since mid-1990, although it may not of itself have justified a new trial, does add some weight to the need for a new trial.

LIMITATION DEFENCE TO THE SECOND APPELLANT’S CLAIM

84 Although this claim is not clearly pleaded in this way, I think it should be understood as alleging a continuing breach. In my opinion also, on a fair construction of the Statement of Claim, the second appellant accepted that the duty on the respondent to effect a transfer of her interest was not something that could have prevented the charge in favour of BNP arising. The gravamen of the complaint is that, not only was there no attempt to remove that charge from the second appellant’s half interest, but also that half interest was further burdened later on by transactions with the NAB and in connection with the White and Vesaro mortgages. Viewed in that way, the second appellant’s claim was in my opinion plainly not statute barred.

85 However, the value of that claim was vastly less than alleged by the second appellant. The Statement of Claim apparently put the value at $450,000.00, equating it with the loss of the house. The written submissions put it at around $288,000.00, namely the difference between the value of the house and the $162,000.00 which the second appellant received from the sale proceeds of the house. In my opinion, at the very highest the second appellant’s claim would be for one-half the value of the house ($225,000.00) less one-half the $70,000.00 or thereabouts still owing from the finance used to obtain the house, less the $162,000.00 which the second appellant actually received, giving a figure of $28,000.00. Indeed, the claim would probably be less than this: the evidence did not show any realistic chance of getting rid of the BNP’s $200,000.00 charge, so that this $200,000.00 plus the first appellant’s share of the $70,000.00 (235,000.00 in all) also had to come out of the property. $225,000.00 of this would come from the first appellant’s share, leaving $10,000.00 to come from the second appellant’s share, reducing her claim to about $18,000.00.

LEGAL PROFESSION ACT SECTION 119

86 The primary judge’s decision on this question has little bearing on the result of the case, either on this appeal or on any re-trial. I think it would be best not to enter into this question in this judgment.

NOTICE OF CONTENTION

87 Oral submissions did not deal with the Notice of Contention. I would take the view that the findings made by the primary judge as to breaches of the respondent’s duties were in a form insufficiently precise to be the basis for any assessment of damages, and that there is a real question as to whether they were adequately supported by reasons. However, I think it is clear that it is not possible for this Court to say that the material before the primary judge could not justify appropriate findings of breaches of duty of the type alleged in the Statement of Claim.

RELIEF ON APPEAL

88 The appellants’ Amended Notice of Appeal sought orders that judgment be entered for the appellants with damages to be assessed, that the matter be remitted to a judge of the Supreme Court other than the primary judge for assessment of damages, and in the alternative, that the Court of Appeal assess damages. No order for a new trial was sought. In my opinion, it is plain beyond any argument that it would not be appropriate for judgment to be entered for the appellants for damages to be assessed. In my opinion, the appeal succeeds essentially on grounds related to deficiencies in the reasons and in the process, and not because I am to any degree satisfied that the appellants are entitled to a judgment. Furthermore, as just noted, the findings of breach of duty made by the primary judge were totally inadequate to support a judgment for the appellants for damages to be assessed; and in any event, there was no finding as to causation of damage.

89 Although this has not been sought by the appellants, in my opinion the appropriate order is for a new trial on all issues before a judge other than the primary judge. There should in my opinion be further orders with a view to ensuring that the trial does not miscarry again. A large factor in causing the trial to miscarry has been the lack of precision in the appellants’ pleading. It is not acceptable to plead a series of breaches occurring over many years, and then to make a global pleading of damage caused by all the breaches. While it may be appropriate to bring a claim arising out of an ongoing relationship, involving a number of breaches occurring over many years, and while it could be productive of complexity and repetition to require each individual breach to be explicitly linked to allegations of damage caused by that breach, a pleading should enable definition, in a way fair to both parties, of issues concerning breach, causation and quantum of damage in relation to each cause of action relied on. It may be possible to group causes of action where the damage involved in each of them are substantially the same, so long as this can be done without obscuring issues of causation and quantum of damages arising in relation to each of them. The pleading in this case was grossly inadequate in this regard, and in my opinion would be liable to be struck out. I propose to order that the appellants, within 28 days, serve a fresh draft Statement of Claim which does appropriately raise issues concerning causation and quantum of damages in relation to each substantially distinct cause of action relied on.

COSTS

90 The miscarriage of these proceedings was in part the result of the inadequate Statement of Claim. It was also in part the result of the limitation defence being raised after the commencement of the hearing. The respondent has made no attempt before us to argue that this was truly justified by the extent of the change made between the third and fourth versions of the Statement of Claim. In my opinion, it is appropriate to leave the costs of the first trial in the discretion of the judge who hears the new trial.

91 Turning to the costs of the appeal, it would seem that the respondent is entitled to some costs. The appeal was incompetent when first brought, and the motion to strike it out was justified. Once final orders had been made below, the respondent sensibly took the approach that the appeal should be dealt with on its merits, but costs had been incurred in the meantime.

92 Some costs were incurred by reason of inclusion of the hopeless Ground 2A. Neither before the primary judge nor in written submissions was there any significant attempt by the appellants to deal explicitly with the respondent’s contention that the loss of secure employment and the entry into the unsatisfactory joint venture were themselves losses which completed the cause of action. The Amended Notice of Appeal did not even seek the only form of relief which could possibly have been granted, and which has been granted, namely a new trial.

93 In all the circumstances, in my opinion the appropriate order is that each party pay its own costs of the appeal, with the respondent having a certificate under the Suitors Fund Act if otherwise entitled.

ORDERS

94 Accordingly, the orders I propose are:

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Citations

Cassis v Kalfus [2001] NSWCA 460

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CITATION:	Cassis & Anor. v. Kalfus [2001] NSWCA 460
FILE NUMBER(S):	CA 40343/01
HEARING DATE(S):	20 and 21 November 2001
JUDGMENT DATE:	11 December 2001
PARTIES :	Sami Alfred Cassis and Gisele Cassis - appellants Marcel Isadore Kalfus - respondent
JUDGMENT OF:	Powell JA at 1; Heydon JA at 9; Hodgson JA at 10

LOWER COURT JURISDICTION :	Supreme Court
LOWER COURT FILE NUMBER(S) :	CLD 20589/96
LOWER COURT JUDICIAL OFFICER :	Dowd J

COUNSEL:	Mr. P. Roberts SC with Mr. M. Minehan (A) Mr. G. Lindsay SC with Mr. A. Ridley (R)
SOLICITORS:	LMG Solicitors, Darlinghurst for appellants Mallesons Stephen Jaques, Sydney for respondent
CATCHWORDS:	COURTS AND JUDGES - Judgments - Duty to give reasons - Delay in giving judgment - Application during trial to raise limitation defence - Not decided until over 12 months after judgment reserved - Primary judge then calls for further submissions - Whether trial miscarried - LIMITATION OF ACTIONS - Tort - When damage suffered - Whether loss of secure employment was itself damage, when no loss of income occurred for four years. D.
LEGISLATION CITED:	Limitation Act 1969 (NSW) ss.23, 55, 60G.
CASES CITED:	Knox v. Gye (1871-1872) LR 5 HL 671-674 Cohen v. Cohen (1929) 42 CLR 91, 99-101 Forster v. Outred [1982] 1 WLR 86 Wardley Australia Ltd. v. Western Australia (1992) 175 CLR 514 Sellars v. Adelaide Petroleum (1994) 179 CLR 332 Brunsden v. Humphrey (1884) 14 QBD 141 Marlborough Harbour Board v. Chartered Travel Co. Ltd. (1989) 18 NSWLR 223 Avenhouse v. Hornsby Shire Council (1988) 44 NSWLR 1 Williams v. Minister, Aboriginal Land Rights Act 1983 (1994) 35 NSWLR 497 Hawkins v. Clayton (1988) 164 CLR 539 at 589
DECISION:	See end of judgment