Christie v Purves

Case [2007] NSWCA 182

NEW SOUTH WALES COURT OF APPEAL

CITATION:      Christie v Purves & 2 Ors [2007]  NSWCA 182

FILE NUMBER(S):
40305/06

HEARING DATE(S):            17/07/07, 20/07/07

EX TEMPORE DATE:        20 July 2007

PARTIES:
Terence Joseph Christie (Appellant)
Nigel Charles Purves (First Respondent)
Peter Frederick Freeman (Second Respondent)
Anthony Chiriloo (Third Respondent)

JUDGMENT OF:      Beazley JA Ipp JA Campbell JA   

LOWER COURT JURISDICTION: District Court

LOWER COURT FILE NUMBER(S):        DC 2100/03

LOWER COURT JUDICIAL OFFICER:     Hungerford ADCJ

LOWER COURT DATE OF DECISION:    08/05/06

COUNSEL:
S T White SC/S R Meehan (Appellant)
No Appearance (First Respondent)
G Curtin (Second & Third Respondents)

SOLICITORS:
Harris Freidman Hyde Page (Appellant)
Henry Davis York (Second & Third Respondents)

CATCHWORDS:
LIMITATION OF ACTIONS – period of limitation – action in tort for pure economic loss – (i) loss of an entitlement to a stream of income – (ii) loss of a potential entitlement to income tax reduction – (iii) infringement of an interest in keeping one’s professional affairs and business records in proper form – appellant alleged that the first respondent (a) gave him negligent taxation advice; and (b) engaged in misleading or deceptive conduct, as a result of which the appellant suffered damage – whether the appellant’s actions in negligence and misleading or deceptive conduct were statute barred by s 14 of the Limitation Act 1969 (NSW) and s 68 of the Fair Trading Act 1987 (NSW) – general principles relating to limitation of actions in negligence and misleading or deceptive conduct for pure economic loss – time commences when the cause of action accrues – cause of action accrues when the plaintiff first suffers any actual, measurable damage (although, time may run before the damage is discovered, or could, on reasonable inquiry, have been discovered, by the party allegedly wronged) – cause of action accrues even if some of the plaintiff’s damages are prospective – as regards the appellant’s claim for loss of income, loss was suffered immediately upon his appointment as a judge of the District Court of New South Wales on 8 September 1993 – as regards the appellant’s claim arising from his failure to obtain reductions in the income tax payable to him during each of the financial years 1991, 1992 and 1993, loss was suffered at the end of each of those years – as regards the appellant’s claim based on the confusion and disorder in his taxation records, loss was suffered when an independent review of those records was required by another accountant. D

LEGISLATION CITED:
Fair Trading Act 1987 (NSW), ss 42, 68
Income Tax Assessment Act 1936 (Cth), s 17
Limitation Act 1969 (NSW), s 14
Limitation Act 1985 (ACT), s 11
Trade Practices Act 1974 (Cth), s 82

CASES CITED:
Cartledge v E Jopling & Sons Limited [1963] AC 758
Cheney & Wilson v Duncan (2001) 34 MVR 28
Commonwealth v Cornwell (2007) 234 ALR 148
Darley Main Colliery Company v Mitchell (1886) 11 App Cas 127
Hawkins v Clayton (1988) 164 CLR 539
Law Society v Sephton &…

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Details
AGLC
Christie v Purves [2007] NSWCA 182
Case
[2007] NSWCA 182
Decision Date

CaseChat Overview and Summary

The appeal concerned a dispute between Mr Christie and the respondents, partners in an accounting firm, regarding taxation advice and the management of Mr Christie's financial affairs. Mr Christie alleged that the first respondent provided negligent taxation advice and engaged in misleading or deceptive conduct, resulting in financial damage. The central issue before the Court of Appeal of New South Wales was whether Mr Christie's claims were statute-barred under section 14 of the *Limitation Act 1969* (NSW) and section 68 of the *Fair Trading Act 1987* (NSW).

The court was required to determine when Mr Christie's causes of action accrued for the purposes of the relevant limitation periods. Specifically, it needed to ascertain the point at which he suffered actual, measurable damage in relation to his claims for loss of income, loss of potential income tax reductions, and the infringement of his interest in maintaining orderly professional affairs and business records. The court also considered whether the damage, even if prospective, commenced the limitation period.

The court applied the general principle that a cause of action accrues when the plaintiff first suffers any actual, measurable damage, even if that damage is prospective and not yet discovered. In this instance, the court found that the loss of income was suffered immediately upon Mr Christie's appointment as a judge on 8 September 1993. The loss arising from the failure to obtain income tax reductions was deemed to have been suffered at the end of each relevant financial year (1991, 1992, and 1993). The damage relating to the confusion and disorder in his taxation records was considered to have occurred when an independent review of those records became necessary. The court upheld the trial judge's assessment that the costs associated with reviewing Mr Christie's financial affairs were merely an increase in the loss suffered from the initial accrual date.

The appeal was dismissed, with the Court of Appeal affirming the trial judge's findings and ordering that Mr Christie pay the costs of the appeal.

Orders

Orders of the court

Appeal dismissed with costs.

Background

Background to the litigation

His Honour held that the cause of action in regard to the costs of reviewing Mr Christie’s financial affairs (quantified by reference to Mr Mercer’s fees) “accrued when the primary action in negligence first accrued on 8 September 1993”. His Honour said:“This is because the loss or damage occasioned by Mr Mercer’s fees was merely a growth or increase in any loss suffered by [Mr Christie] from that date.”The facts The respondents were partners in the accounting firm of Wilkie Teape & Company. In January 1982, on the advice of Mr Purves, Bretfind was incorporated as the trustee of the T J Christie Family Trust and the T J Christie Family Superannuation Benefits Fund was established. The Family Trust was a “service trust” that provided Mr Christie with services and equipment for his practice as a barrister in consideration for the payment by him of management fees. From 1 July 1989 until 1996, Wilkie Teape prepared Mr Christie’s tax returns and the tax returns for the Family Trust and the Superannuation Benefits Fund. In addition, from time to time, Mr Purves gave tax advice to Mr Christie. As the judge found:“Wilkie Teape through [Mr Purves] at all relevant times conducted and managed the whole of [Mr Christie’s] taxation and superannuation affairs and [Mr Christie] so relied on him to do so.” In late 1992 or early 1993, an inquiry was made of Mr Christie as to whether he would accept an appointment to the District Court bench. He responded:“Not at the moment but in due course I could be interested.”About two weeks later, the then Chief Judge of the District Court made a similar inquiry of Mr Christie who reiterated his earlier position. In mid-1993 another approach was made to Mr Christie, but once more he declined. Shortly thereafter, he was again asked whether he would accept an appointment and he again gave a negative reply. In late August 1993, a further approach was made to Mr Christie. This time he considered the proposition seriously. He asked Mr Purves for his advice. Mr Purves informed him:“It will certainly take you a good while to put in for superannuation the sort of money you will receive from a judicial pension.”Mr Purves did not mention any inaccuracies in Mr Christie’s taxation returns for the four financial years from 1989 to 1992 or any potential liability, arising out of those inaccuracies, on the part of Mr Christie to pay additional income tax. On 8 September 1993, Mr Christie accepted the appointment and was sworn in as a judge of the District Court. Mr Christie’s taxable income as recorded in the initial tax returns lodged by Mr Purves for each of the four financial years 1989 to 1992 was $229,664, $296,429, $377,749 and $491,748, respectively. Mr Christie said that he was influenced by various factors to accept the appointment. He said that although the judicial salary of $137,771 was significantly below the income he was then earning as a barrister, he believed he was financially secure and had little debt. Apart from the family home at Mosman, which secured a bank overdraft, Mr Christie owned (with his wife) unencumbered holiday properties at Boomerang Beach and Thredbo. He had an amount of $190,000 invested in superannuation. He expected that, after he was appointed as a judge, he would receive more than $500,000 as fees for work he had performed as a barrister in 1992 and 1993. He was then aged almost 51 years and he knew he would qualify for a judicial pension after ten years’ service. He was concerned that his continued rejection of offers of appointment might result in no further offers being made to him. Finally, he had no dependant children.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

While there is force in the argument Mr Christie advanced in this respect, the trial judge had an advantage over this Court in making the assessment that he did and I am not persuaded that he erred.Conclusion I propose that the appeal be dismissed with costs. BEAZLEY JA: I agree. CAMPBELL JA: I agree. BEAZLEY JA: The orders of the Court are those proposed by Ipp JA. I thank counsel for their assistance.

Ratio Decidendi

Legal Principle Established

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