Christopher Russell v Wisewould Mahony Lawyers
[2018] VSCA 125
•16 May 2018
SUPREME COURT OF VICTORIA
COURT OF APPEAL
S APCI 2018 0005
| CHRISTOPHER RUSSELL | Applicant |
| V | |
| WISEWOULD MAHONY LAWYERS | Respondent |
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| JUDGES: | McLEISH, NIALL and HARGRAVE JJA |
| WHERE HELD: | MELBOURNE |
| DATE OF HEARING: | 27 April 2018 |
| DATE OF JUDGMENT: | 16 May 2018 |
| MEDIUM NEUTRAL CITATION: | [2018] VSCA 125 |
| JUDGMENT APPEALED FROM: | Russell v Wisewould Mahony (a firm) (Ruling No 1) (Unreported, County Court of Victoria, Judge Saccardo, 20 December 2017) |
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PRACTICE AND PROCEDURE – Summary judgment – Appeal – Claim respondent gave negligent advice on appeal prospects from damages award in earlier proceeding –Whether trial judge erred in finding claim had no real prospects of success – Whether judge in earlier proceeding denied applicant procedural fairness – Whether judge in earlier proceeding awarded damages on basis inconsistent with applicant’s case – Leave to appeal refused.
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| APPEARANCES: | Counsel | Solicitors |
| For the Applicant | In person | -- |
| For the Respondent | Mr C G Juebner | Colin Biggers & Paisley |
McLEISH JA
NIALL JA
HARGRAVE JA:
Introduction
In 2010, the applicant succeeded before Judge Anderson in the County Court in a negligence action brought against his financial adviser (‘first proceeding’).[1] He was awarded damages. Unhappy with the quantum of damages, he sought legal advice and was advised by his solicitors, Wisewould Mahony, that there were no reasonable prosects of a successful appeal from the order for damages. He did not bring an appeal.
[1]Christopher Russell v GWM Adviser Services Ltd [2010] VCC 1619 (‘Reasons of Judge Anderson’).
In 2016, the applicant sued Wisewould Mahony in the County Court alleging that the advice about appeal prospects was negligent (‘second proceeding’).[2] On 20 December 2017, Judge Saccardo allowed an application for summary judgment brought by Wisewould Mahony on the basis that there was no real prospect of the applicant’s claim succeeding. It is from that order that the applicant seeks leave to appeal.
[2]Christopher Russell v Wisewould Mahony (a firm) [2017] VCC 1934 (‘Reasons of Judge Saccardo’).
In the first proceeding, the applicant succeeded in a claim that his financial adviser, GWM Adviser Services Ltd (‘GWM’), had given him negligent advice that he should commute a government pension and invest the proceeds into a fund that would produce an allocated pension.
The damages were claimed on the basis that he should be paid a sum that represented the price of purchasing an annuity that would produce an income commensurate to that which he would have received under the government pension less (a) the balance standing to his credit in the fund that was created when he commuted his government pension; and (b) the sums withdrawn from that fund that exceeded the amounts that he would have received under the government pension.
The applicant relied on quotes from two providers to establish the price of purchasing a replacement annuity. One product was substantially more expensive than the other. Judge Anderson indicated that he could see no reason on the evidence to prefer the more expensive of the two. On the issue of the commission payable for the purchase of the annuity, his Honour suggested, and the parties agreed, that the $9,000 commission should be compromised and that there should be a deduction of $4,500 from the purchase price.
In the result, Judge Anderson gave judgment for the applicant in the sum of $546,998. This award represented the purchase price of the replacement annuity ($795,375), less $170,740 for the amount standing to his credit in the fund, $72,835 for the amount of his excess withdrawals, and $4,500 for the compromised commission.[3]
[3]We note that $795,375 less the deductions of $170,740 and $72,835 and the compromised commission of $4,500 equals $547,300. There is a discrepancy of some $300 between this figure and the damages awarded by Judge Anderson. The discrepancy appears to have arisen because the applicant’s counsel identified the sum total of the deductions to be $243,875, when it was in fact $243,575. The discrepancy is not material.
In the second proceeding, the applicant alleged that Wisewould Mahony’s advice that there were no prospects of a successful appeal against the damages award was negligent. He sought relief in the form of damages. In order to establish loss, he would need to establish that, but for the advice, he would have brought a successful appeal and the quantum of damages would have been increased. The applicant contended that Judge Anderson was wrong to calculate damages on the basis of the cheaper annuity and to deduct the amounts representing the excess withdrawals and the commission payment, and that these errors would have been reversed on appeal.
The test for summary judgment is a stringent one. It must be shown that the proceeding has no real prospect of success, in the sense that a claim or defence has only a ‘fanciful’ prospect of success.[4] Judge Saccardo held that this test was satisfied. His Honour found that there was no prospect that the Court of Appeal would have allowed an appeal from Judge Anderson’s orders on the basis that:
[4]Lysaght Building Solutions Pty Ltd v Blanalko Pty Ltd (2011) 42 VR 27, 40 [35]; Civil Procedure Act 2010 s 63(1) (‘Civil Procedure Act’).
(a) at trial, the applicant’s counsel had conceded that there should be a deduction in respect of excess withdrawals that the applicant had made and that the evidence established that amount was $72,835.[5] That concession was made in written closing submissions, in oral final submissions, and in submissions to the judge after the publication of reasons;
(b) there was no pleaded case, and no probative evidence, that would allow a conclusion that the excess withdrawals were to meet medical expenses incurred due to the negligence of GWM;[6] and
(c) the deduction of $4,500 from the purchase price reflected an agreed position as to the cost of obtaining a replacement annuity.[7]
[5]Reasons of Judge Saccardo [6], [22]–[27].
[6]Ibid [28].
[7]Ibid [39]–[40].
The application for leave to appeal
On the application for leave to appeal, the applicant advanced two proposed grounds of appeal. It was said that Judge Saccardo erred:
(a) by failing to consider that the assessment of damages was appellable because Judge Anderson did not provide the applicant with details of relevant, adverse information which may affect the decision to be made and give him an opportunity to respond; and
(b) by failing to consider that there were prospects on appeal because the assessment of damages was not consistent with the entire manner in which he advanced his claim against GWM.
For the reasons that follow, there was no error in the decision of Judge Saccardo. There was no real prospect of a successful appeal against the award of damages made by Judge Anderson and therefore no real prospect of success in the applicant’s negligence action against Wisewould Mahony.
The first proceeding
Having regard to the proposed grounds of appeal, it is necessary to set out in some detail the course of the first proceeding.
Background
The applicant is a retired teacher. In 1991, he retired from teaching due to ill health and became entitled to a Government Superannuation Office (‘GSO’) pension for life at an indexed rate.[8] In 2001, he was advised by GWM to commute his GSO pension and invest the lump sum in an MLC Masterkey Allocated Pension Product (‘MLC product’).[9] As things transpired, he would have been better off retaining the defined benefit of his GSO pension rather than commuting the pension and investing the proceeds.[10]
[8]Reasons of Judge Anderson [1].
[9]Ibid [2]–[4], [20]–[34].
[10]See ibid [5].
In 2007, he instructed solicitors to commence a proceeding in the County Court alleging that the advice from GWM was negligent and seeking damages. To that end, the initial solicitors filed a writ on behalf of the applicant claiming damages. However, the initial solicitors did not arrange for the writ to be served within the time permitted for service.
In 2009, another firm of solicitors made an application on the applicant’s behalf to extend the time to serve the writ, but that application was refused.[11] Subsequently, the applicant instructed the respondent, Wisewould Mahony, to appeal that refusal to this Court. The Court granted leave to appeal, the time for service of the writ was enlarged, the writ was served, and a trial of the action was held in the County Court in 2010.[12] Had the Court refused to extend the time for service of the writ, the claims against GWM would have been statute-barred and the applicant would have been unable to commence a new proceeding.
[11]Christopher Russell v GVM Adviser Services Ltd [2009] VCC 743.
[12]Christopher Russell v GWM Adviser Services Ltd (Unreported, Victorian Court of Appeal, 18 June 2010).
As it featured in the applicant’s submissions on the present application, it is desirable to make brief reference to the decision of the Court of Appeal. As part of the factual matrix, the Court of Appeal noted that the initial solicitors had advised the applicant in February 2007 that he had no claim against GWM in respect of its advice because no loss had crystallized. That assessment was based, in part, on the initial solicitors’ observation that the amount that the applicant had received from the MLC product by way of redemption of his initial investment exceeded the amount he would have received from the GSO pension.[13] The Court of Appeal noted that this observation ‘seems to ignore the fact that the applicant was not financially ahead, because he had been using up his capital, in order to pay interest on borrowings and to live.’[14]
[13]The MLC product had been acquired from the capital sum realised when the applicant commuted his GSO pension.
[14]Christopher Russell v GWM Adviser Services Ltd (Unreported, Victorian Court of Appeal, 18 June 2010) [51].
The applicant’s claim against GWM and the reasons of Judge Anderson
In his statement of claim in the first proceeding, the applicant alleged that he had been advised by GWM to commute his pension for $452,000 and invest in the MLC product which would produce a weekly income that was more than adequate to meet his ongoing expenses, together with capital growth. The applicant alleged that he acted on that advice and suffered loss and damage as a consequence. In relation to loss, he pleaded that his income was lower than if he had retained his GSO pension, his capital had been reduced, and his funds (both capital and income) would be exhausted at age 64.
The proceeding came on for hearing before Judge Anderson on 1 November 2010. Wisewould Mahony acted for the applicant in the proceeding and he was represented by counsel.
The applicant gave evidence at the trial and also adduced expert evidence from Professor Wesley McMaster, who provided a number of reports and was cross-examined. GWM did not call any witnesses.
In Professor McMaster’s report of 17 October 2010, which was the most recent of the reports tendered at the trial, he provided a consolidated opinion on questions of both liability and the quantum of damages. In relation to quantum, Professor McMaster expressed the opinion that the only financial product that would deliver the same benefit as the GSO pension was a lifetime annuity indexed to CPI with no residual capital value. He attached to his report a quote for an annuity from CommInsure in the sum of $1,000,000.
Professor McMaster opined that there were three components of loss: (a) the loss from a negatively geared investment; (b) the loss of income, calculated as the amount of income the applicant would have received had he retained the GSO pension less the income he actually received from the MLC product; and (c) the cost of restoring his future income, calculated as the cost of purchasing a lifetime annuity to provide income that he would have received had he retained the GSO pension less the capital value of the MLC product.
The reference to the loss from the negatively geared investment was not referred to in argument and can be put to one side. In relation to the loss of income, Professor McMaster calculated that, as at October 2010, the applicant would have received the sum of $318,228 from the GSO pension had it been retained. He identified that the applicant had taken $287,931 from the MLC account, yielding a difference of $30,297 which represented lost income.
In relation to the cost of restoring the applicant’s future income, Professor McMaster referred to the purchase of the annuity from CommInsure at the price of $1,000,000 less $170,740, being the amount standing to the applicant’s credit in the MLC account.
Thus the applicant’s case as expressed in his pleading and in the evidence of Professor McMaster was that:
(a) the only financial product that would deliver the same benefit as the GSO pension would be a lifetime annuity indexed to CPI with no residual capital value; and
(b) his loss should be measured by three components: the cost of acquiring a new annuity, the credit balance of his MLC account, and the difference between what he had taken from the MLC account and what he would have received under the GSO pension.
The applicant’s counsel provided final submissions in writing after the conclusion of evidence and before commencing oral address. The submissions were consistent with the approach taken in the applicant’s pleaded case and the evidence of Professor McMaster. In the submissions, counsel wrote:
Mr Russell has lost a risk free, secure, administration and worry free pension indexed to the CPI for life. The only product available in the market place which will replace this loss is a lifetime annuity, similarly indexed to the CPI.
This is not a matter for a ‘theoretical’ calculation of loss. Mr Russell has lost a benefit which has unique and valuable features: further there is a market into which Mr Russell may go to replace the thing he has lost.
The Plaintiff accepts that the cost of a lifetime annuity should be reduced by the amount standing to the credit of the allocated pension account, and further reduced by amounts withdrawn from that account in excess of amounts the Plaintiff would have received had he remained on the GSO Pension. The amount currently standing to the credit of the account is $170,740. The amounts which would have been from the GSO Pension total $318,228, and Mr Russell has withdrawn $391,063 from the allocated pension.
In his final oral address, counsel returned to the topic, stating that:
Your Honour has evidence of the cost of a lifetime annuity, it appears there is going to be further evidence of the cost of a lifetime annuity, and we accept that it should be reduced by the amount standing to the credit of the allocated pension amount, that’s money available to Mr Russell stemming from his original GSO pension which he can use to put towards the allocated — of a lifetime annuity.
I have provided some references to the amount currently standing to that account, $170,740. References to the amount which would have been withdrawn from the GSO pension. The reason for the second is there is also the fact that Mr Russell it appears, largely in fighting this case, has made withdrawals in excess of what the GSO pension would have allowed him to make. Those amounts are set out in Exhibit P2 which [y]our Honour will recall leads to a grand total of $391,063.
Professor McMaster has calculated the amounts which would have been paid under the GSO pension, that’s at paragraph 14.3.1 of Professor McMaster’s report, $318,228. We accept that the net between what would have been available on the GSO and what has in fact been withdrawn should also reduce the amount of Mr Russell’s damages, it should also come off the cost of the lifetime annuity.
It is notable that counsel expressly relied on Professor McMaster’s evidence to establish the amount that would have been paid under the GSO pension, but referred to other evidence (Ex P2) to establish the amount that the applicant had withdrawn from the MLC account.
On 7 December 2010, following a four day trial, Judge Anderson published his reasons for judgment. His Honour set out the four issues that needed to be determined on the claim as follows:
(a) Was GWM’s advice negligent or misleading and deceptive?
(b) Was the chain of causation broken by financial advice which the applicant had received in February 2007 from a Ms Jenkin?
(c) Was the applicant entitled to damages equivalent to the current cost of purchasing an annuity which would return to the applicant the same income as he would have been entitled to receive under the GSO pension?
(d) What allowances should be made as to the amount standing to the credit of the applicant in his MLC account, amounts withdrawn in excess of sums he would have received had he retained the GSO pension, and any contributory negligence?[15]
[15]Reasons of Judge Anderson [10].
On the issue of liability, Judge Anderson found that, given the applicant’s position at the time he received the advice from GWM, a reasonably competent financial adviser would have advised the applicant to retain his GSO pension.[16] His Honour concluded that GWM’s advice was negligent, and there had been no break in causation and no contributory negligence.[17]
[16]Ibid [56]–[58].
[17]Ibid [62(b)], [63].
Judge Anderson then addressed the question of damages, observing that the applicant should be entitled to an award of damages equivalent to the cost of purchasing a pension giving a return equivalent to that of the GSO pension with CPI adjustments.[18] His Honour went on to observe that it would be appropriate to reduce that amount in two respects: the amount standing to the applicant’s credit in the MLC account and the amounts withdrawn from that account in excess of the sum that the applicant would have received had he retained the GSO pension.[19]
[18]Ibid [59]–[60], [65(a)].
[19]Ibid [65(b)].
The judge said:
In my view, the following factors should apply in the assessment of Mr Russell’s damages:
a.Mr Russell did not at any time have the financial means to retrieve the situation by purchasing an annuity equivalent to his GSO pension. He was not capable financially of mitigating his loss in this way and I do not consider that his inability to do so should bar the remedy he seeks;
b.although there was a ‘switch’ of funds, there is no evidence that this had any financial effect on the capital of the allocated pension compared to the position, if the switch had not occurred. The investments to which Mr Russell switched, on advice from Ms Jenkin, were slightly more conservative investments, although capital losses were also experienced;
c.substantial capital sums were withdrawn by Mr Russell. Modest withdrawals were made for the dental treatment and the white noise generator. As for the withdrawals for the legal costs of the present proceedings, it is appropriate for these amounts to be taken into account, as the submissions by plaintiff’s counsel conceded. It is my view that Mr Russell had no option other than to take those steps in order to be able to proceed with his action. The result of this proceeding demonstrates that he was justified in doing so.[20]
[20]Ibid [62].
The reasons for judgment also record that the judge would seek further submissions from the parties ‘after they have had time to investigate the cost of a replacement annuity.’[21]
[21]Ibid [66].
The calculation of damages
Immediately following publication of reasons, Judge Anderson heard argument on the question of costs and the calculation of damages. Both the applicant and GWM were represented by their trial counsel. The applicant was not present in court.
The calculation of damages had been the subject of evidence at the trial, including from Professor McMaster, and had been raised by Judge Anderson with the parties in the final address. Between the time judgment was reserved and delivered, the parties had sought to supplement the evidence at trial and had obtained further quotes for purchasing an appropriate replacement annuity.
The applicant’s counsel submitted that there were two matters that would ‘require the Court’s assistance’ in relation to the quantification of damages. The first was the identity of the annuity, with a choice between a CommInsure product and a less expensive Challenger product. Professor McMaster had referred to the $1,000,000 CommInsure product in his report of 17 October 2010, but counsel for GWM submitted that the Challenger product was ‘perfectly appropriate’. The applicant’s counsel submitted that this issue was unlikely to be resolved between the parties. The second matter was that each party had obtained a quote from Challenger for the same annuity product.[22] The quote obtained by GWM was $9,000 cheaper because it did not include a commission payment.
[22]GWM also submitted another Challenger quote at a slightly lower amount based on different indexation periods. It is not necessary to refer further to this quote.
His Honour dealt with costs and then stood the matter down to deal with the question of damages until later that day.
On resuming the hearing, the judge was informed that there remained a number of matters in dispute, including the question of which annuity product should be adopted as the measure of loss, the cost of the relevant annuity, and how the commission would be taken into account. As will be seen, counsel did not identify any issue with respect to the deductions on account of the credit balance in the MLC account and the excess withdrawals.
In response to an observation from the judge that he had expected the parties to go away and obtain relevant quotes for an annuity, the applicant’s counsel replied that this had already occurred and that the CommInsure was the appropriate product. Given the disparity in cost between the two annuities, the judge indicated that there would need to be evidence if he were to calculate damages on the basis of the CommInsure annuity. His Honour indicated that it seemed that it was not something that could be dealt with that day. The applicant’s counsel then submitted that there was not going to be evidence that the Challenger annuity was not ‘capitally adequate’ to meet the liability of the annuity over the applicant’s life, but that he would not obtain instructions to consent to the Challenger quote.
That submission lead to the following exchange between the judge and the applicant’s counsel:
HIS HONOUR: Well at least there is – look if the evidence is as has been presented to date, then it would be very difficult for me to go past the Challenger quote, unless there is evidence for example, that it didn’t take into account certain matters that it should have taken into account, that CommInsure quote does, or that there is some question of the reliability of the product because of the financial capacity of the organisation.
Now unless you are going to present evidence of that sort then it seems to me that – and you are asking me to rely on the evidence that I have already heard, then I think the amount of damages that your client will get will reflect the Challenger quote.
COUNSEL: If the Court pleases. I can’t take it any further in terms of the evidence.
HIS HONOUR: Well as I said I imagined that you would want to and if you don’t want to, then it seems to me there is only one logical conclusion.
COUNSEL: In that case, [y]our Honour, we are left with Challenger quotations.
Once the CommInsure product was removed from consideration, that left the annuity issued by Challenger. The applicant and GWM each relied on quotes from Challenger for the purchase of an annuity that would yield an annual payment of $39,821, being the amount that the applicant said he would have received under the GSO pension. The applicant relied on a quote for $795,375, while GWM relied on a quote for $786,371 for the same annuity. The difference of approximately $9,000 was explained on the basis that this amount was the commission that GWM would be entitled to if it purchased the annuity from Challenger.
The applicant’s counsel raised the issue of the commission before addressing the deductions to be made on account of the credit balance and the excess withdrawals. Counsel submitted on the deductions:
For the offset, if I can call it that, I provided some figures in my closing submissions in relation to the investment account and the super withdrawals if I can call them that, the excessive withdrawals which Mr Russell had made over the amounts he would have been paid. Those figures were, the amount currently standing to the credit of the account was $170,740 and the amount of the excess withdrawals was $72,835. The total of those two, I will save your Honour the arithmetic is $243,875 and that is what the plaintiff says should be deducted off whatever costs of the annuity [y]our Honour finds is appropriate.
There was then discussion between the judge and counsel as to whether the form of order should provide for GWM to acquire the annuity on behalf of the applicant but taking into account the commission and the agreed deductions. In the course of that discussion, the judge queried how the deductions were to be dealt with if GWM were to acquire the annuity. In that context, his Honour said:
HIS HONOUR: … you see the difficulty is, what I don’t understand is, how the $72,000 is to be taken into account. What I imagine is going to happen is that Mr Russell will purchase a slightly different annuity, taking into account the $72,000 he has already spent. Is that what is likely to happen?
COUNSEL:I am not sure, [y]our Honour. He may do that, he may borrow against his property. Up until this morning I don’t think he has thought it through.
As things transpired, the parties did not agree on a form of order that would provide for GWM to purchase the annuity.
At that point, the only remaining issue as to the quantification of damages related to the commission of $9,000. Judge Anderson suggested that if the parties agreed to split the difference, the Court could enter judgment for an amount calculated as follows: the sum of $795,375 (being the cost of the Challenger annuity) less $4,500 and less the deductions of $243,875 (being the amount the applicant’s counsel had submitted reflected the credit balance in the MLC account and the excess withdrawals).
The applicant’s counsel requested that the matter be put off to another day to allow the applicant to consider how he wished to proceed. Counsel for GWM invited the judge to proceed to judgment on the basis of the evidence before him. The judge observed that to put the matter off for another day would only incur more costs and agreed to stand the matter down for a short time to allow the applicant to give his instructions.
After a short adjournment, the applicant’s counsel said:
Thank you, [y]our Honour. We’ve agreed on a figure, and we’ve agreed on a figure on the basis of we split the difference. When one takes off the $243,000 odd, that figure is $546,998.05.
We note that, during that adjournment, counsel spoke with the applicant and obtained express instructions to agree to the course suggested by Judge Anderson. The applicant agreed that the purchase price for the annuity would be $795,375 less $4,500.
His Honour pronounced judgment for the applicant for $546,998 and made an order for costs in his favour.
The second proceeding
Shortly after the trial in December 2010, the applicant instructed Wisewould Mahony that he was unable to obtain a lifetime annuity with the amount of damages awarded by Judge Anderson, and requested advice as to whether the assessment of damages was appellable. Wisewould Mahony advised the applicant that it did not consider that there were grounds to appeal the assessment of damages.
In October 2016, the applicant issued a proceeding against Wisewould Mahony. He claimed damages on the basis that it had failed to advise him that the assessment of damages was appellable. Wisewould Mahony applied for summary judgment.
Judge Saccardo’s ruling on the application for summary judgment
Before Judge Saccardo, the applicant alleged three errors in Judge Anderson’s assessment of damages which he contended would have been corrected on appeal had he not received the advice that there were no prospects of a successful appeal. It was said that Judge Anderson had erred in:
(a) deducting the amount of $72,835, which the applicant said related to expenses incurred for medical treatment for conditions caused by GWM’s negligent financial advice and was therefore recoverable as damages;
(b) failing to award damages in the sum of $30,297 for loss of income from the date the applicant’s GSO pension was commuted (being the amount identified by Professor McMaster); and
(c) making an allowance for the commission by deducting the amount of $4,500.[23]
[23]Reasons of Judge Saccardo [9].
In order to succeed in his claim against Wisewould Mahony, the applicant would have to establish that the advice on appeal prospects was given, that it was negligent, that it was not covered by advocate’s immunity, and that he suffered loss. He could only establish that he had suffered loss if he could show that he could have succeeded in an appeal and persuaded this Court to increase the damages award in one or more of three respects: the reversal of the deduction of $72,835, the reversal of the deduction of $4,500, or the addition of the sum of $30,297.
After referring to the high test demanded in a summary judgment application,[24] Judge Saccardo referred to two other relevant strands of authority. First, the judge observed that parties are bound by the conduct of their counsel in the running of litigation.[25] Second, his Honour noted that, in an appeal, leave would not be granted to raise a new ground that had not been raised at trial if the point could have been met with evidence below.[26]
[24]Ibid [2].
[25]Ibid [15A], citing Smits v Roach (2006) 227 CLR 423.
[26]Ibid [15B], citing Water Board v Moustakas (1988) 180 CLR 491.
His Honour then considered the three alleged errors. In relation to the deduction of $72,835, the judge noted that the applicant had made no claim in the first proceeding for medical expenses, and that he had given no probative evidence that medical or like expenses were incurred by him in treatment of any condition caused or aggravated by the negligent financial advice.[27] Further, the applicant’s trial counsel had conceded that the amount was deductible. The applicant submitted that Judge Anderson should have ignored these concessions, identified the relevant evidence for himself, and assessed damages on the basis of that evidence.[28] Judge Saccardo concluded that the applicant was bound to fail on any appeal brought on the basis that Judge Anderson should have gone behind the concession and declined to make the deduction on the basis that the withdrawals were for medical expenses (even though that had not been claimed or proved at trial).[29]
[27]Ibid [28].
[28]Ibid [22]–[26].
[29]Ibid [28]–[29].
The second alleged error related to the deduction for excess withdrawals from the MLC account. The applicant referred to Professor McMaster’s calculation that the applicant had withdrawn $30,297 less than would have been available to him had he retained the GSO pension and that this amount should be added to the damages award.[30] The judge found that, given the way the case had been run and the concessions from counsel, there was no prospect of overturning the damages award on that basis.[31]
[30]Ibid [30].
[31]Ibid [31]–[38].
The same reasoning was adopted in relation to the deduction of $4,500 in respect of the commission.[32]
[32]Ibid [39]–[43].
In the result, Judge Saccardo concluded that the applicant’s action against Wisewould Mahony had no real prospect of success because there was no real prospect of a successful appeal from the judgment of Judge Anderson. His Honour entered summary judgment for Wisewould Mahony.[33]
[33]Ibid [50].
The proposed grounds of appeal considered
In our view, there is no prospect that the applicant could succeed on either of the two proposed appeal grounds. By those two grounds, the applicant seeks to contend that Judge Anderson erred in:
(a) failing to provide the applicant with details of relevant, adverse information which may affect the decision to be made and give him an opportunity to respond; and
(b) assessing damages in a way that was not consistent with the entire manner in which he advanced his claim against GWM.
Proposed ground 1: procedural fairness
The applicant’s submissions
Although the applicant was unrepresented before us, he provided clear and helpful submissions on the application for leave to appeal.
By way of general submission, the applicant submitted that:
the question at issue, in the present application, concerns whether his Honour, Judge Anderson, was free to act on the concessions made by [the plaintiff’s counsel] without making any finding in relation to whether the higher total income received by the plaintiff on the allocated pension was a benefit enjoyed by him which mitigated the loss of his GSO pension, rather than that damages should be reduced solely by the capital value of the allocated pension because the plaintiff had acted on the advice of GWM to reduce his income in order to maximise the growth of his investments.
The applicant submitted that there was a denial of procedural fairness in a number of respects.
First, he was not given an opportunity to address whether GWM would obtain the annuity on his behalf or whether he would receive an award of damages to enable him to purchase the annuity.
Second, and relatedly, he was not told of the consequences that would follow in the event that there were any deductions from the capital cost of acquiring a replacement annuity and, in particular, whether these deductions would have the practical effect of preventing him from purchasing an annuity that would provide an income that was commensurate with his GSO pension.
Third, although the applicant knew that the amount standing to his credit in the MLC account would be applied to reduce the amount of damages, he did not know that the judge was intending to assess that amount at $170,740.
The applicant further submitted that the judge relied on adverse information which was not provided to him for comment and, in particular, that he was not given an opportunity to respond to the following matters:
(a) that the judge would assess damages by reference to the cost of a Challenger annuity rather than a CommInsure annuity, regardless of the consequent inability of the applicant to replace the loss of the GSO pension;
(b) that the judge did not know whether the Challenger and CommInsure annuities were comparable products;
(c) that the full cost of the commission to obtain a Challenger annuity was not included in the applicant’s capital restoration costs;
(d) that it was unknown whether a financial intermediary would be required to obtain an annuity from Challenger;
(e) that the judge was unaware of the current value of the MLC account as at 7 December 2010 and did not know how much to deduct from the award of damages; and
(f) that the judge was unaware of the actual amount that would be available to the applicant to purchase the replacement annuity after deductions were made.
The applicant’s submissions were thus put at a global level, namely, that the decision to order an award of damages rather than to order GWM to acquire an annuity on the applicant’s behalf involved a denial of procedural fairness and, more specifically, that there was a denial of procedural fairness in relation to the judge preferring the Challenger annuity and making the deductions.
Analysis of ground 1
There are four misconceptions that underpin the applicant’s submissions.
The first misconception concerns the role of the judge. The judge’s task was to determine, in accordance with law, the case that had been presented by the parties in the context of adversarial litigation. The judge was required to afford the parties procedural fairness and to give them the opportunity of presenting their case by way of evidence and argument.[34] However, he was not obliged to ensure that either party took the best advantage of that opportunity.[35]
[34]See, eg, Cameron v Cole (1944) 68 CLR 571, 589 (Rich J); Commissioner of Police (NSW) v Tanos (1958) 98 CLR 383, 395–6 (Dixon CJ and Webb J); Taylor v Taylor (1979) 143 CLR 1, 4–5 (Gibbs J), 15–6 (Mason J), 20 (Murphy J), 22 (Aickin J); Re JRL; Ex parte CJL (1986) 161 CLR 342, 350 (Mason J); Allesch v Maunz (2000) 203 CLR 172, 184–5 [35] (Kirby J); Condon v Pompano Pty Ltd (2013) 252 CLR 38, 99–100 [156]–[157] (Hayne, Crennan, Kiefel and Bell JJ), 110 [194] (Gageler J).
[35]See Whitehorn v The Queen (1983) 152 CLR 657, 682 (Dawson J). See also, in the context of unrepresented litigants, Dietrich v The Queen (1992) 177 CLR 292, 302 (Mason CJ and McHugh J); Malouf v Malouf [2006] NSWCA 83 [94] (Mason P, with whom McColl and Bryson JJA agreed); Trukulja v Markovic [2015] VSCA 298 [41].
Moreover, the judge was not required to look behind the cases as presented by the parties to see if the claim could be determined in a more advantageous way for one or other of the parties. Such a course would result in a denial of procedural fairness to the other party and would be inconsistent with the proper role of the judge.[36]
[36]See International Finance Trust Co Ltd v New South Wales Crime Commission (2009) 240 CLR 319, 381 [146] (Heydon J); S D v The Queen (2013) 39 VR 487, 496 [37]–[39]; Condon v Pompano Pty Ltd (2013) 252 CLR 38, 100 [157] (Hayne, Crennan, Kiefel and Bell JJ).
Under the Civil Procedure Act 2010, parties to litigation are obliged to use their best endeavours to resolve a dispute by agreement.[37] Parties are also obliged to resolve by agreement any issues in dispute that can be resolved that way and narrow the scope of the remaining issues.[38] It would be inconsistent with those obligations if parties were not bound by the concessions and agreements that they reach in the course of running litigation or if judges had an obligation to test each concession to see whether it is in the best interests of the party making the concession. The reasons for that conclusion are obvious and flow from the terms of the Civil Procedure Act. In many cases, a judge will be poorly placed to second guess or go behind concessions and agreements that are reached in the running of a trial.
[37]Civil Procedure Act s 22.
[38]Ibid s 23.
It was the judge’s role to assess damages having regard to evidence and submissions on the applicant’s loss. It would have been wrong for the judge to quantify damages merely by reference to the cost of purchasing a replacement annuity. That course would have over-compensated the applicant because it would not have taken into account benefits that were derived by the applicant when he commuted the GSO pension. This was not a case where the applicant’s income was obliterated: rather, it was replaced by a less valuable alternative. Such a course would also have been inconsistent with the applicant’s claim for damages and the evidence that he adduced in support of it.
The second misconception concerns the role of counsel. The applicant retained counsel to present his case on his behalf. The opportunity that the judge gave to counsel for both parties to present argument was an opportunity given to the parties. The adversarial system of litigation operates on the basis that a client is generally bound by the conduct of his or her counsel in the running of the case, and that counsel has a wide discretion as to the manner in which proceedings are to be conducted. As the High Court observed in Smits v Roach:
If it were otherwise, any judgment in a civil case would be at risk of being set aside on the ground that counsel had acted in excess of authority, and the appellate process would be one of endless re-litigation of contested issues.[39]
[39]Smits v Roach (2006) 227 CLR 423, 441 (Gleeson CJ, Heydon and Crennan JJ).
The applicant referred to Parker v Wish DesignsPty Ltd, an appeal from a trial judge’s assessment of damages for past and future economic loss.[40] The plaintiff in that case submitted that the New South Wales Court of Appeal ought to assess damages on a different basis to the trial judge. In dismissing the appeal, the Court of Appeal held that it was not open to the plaintiff to invite the Court to assess damages on a basis that had not been advanced on the case run at trial.[41] The Court noted that the approach adopted by the trial judge was consistent with the plaintiff’s claim at trial, and that the plaintiff had not sought to challenge the trial judge’s failure to assess damages on the basis advanced on appeal.[42]
[40]Parker v Wish Designs Pty Ltd [2014] NSWCA 401.
[41]Ibid [53] (Emmett JA), [62] (Tobias JA).
[42]Ibid [53] (Emmett JA), [65] (Tobias JA).
The applicant submitted that his position was distinguishable from that of the plaintiff in Parker because:
(d) on the expert evidence before Judge Anderson, his Honour was not entitled to apply the deductions; and
(e) the applicant had sought to challenge Judge Anderson’s finding that those deductions should be applied.
The reasoning of the Court of Appeal in Parker is of no assistance to the applicant. Judge Anderson found that deductions should be applied having regard to the evidence and submissions put to him, including concessions made by the applicant’s counsel. Any attempt by the applicant to challenge his Honour’s findings in that regard on appeal has no prospect of success.
The third misconception is that procedural fairness gave the applicant a substantive entitlement to a replacement annuity. Procedural fairness is concerned with process, not substantive outcome.[43] Although couched in terms of procedural fairness, the applicant asserted an expectation that he would end up with an annuity that would produce an income commensurate with that which he would have enjoyed under the GSO pension and that, when that expectation was disappointed, there was a denial of procedural fairness.
[43]Re Minister for Immigration and Multicultural and Indigenous Affairs; Ex parte Lam (2003) 214 CLR 1, 34 [105] (McHugh and Gummow JJ), 48 [148] (Callinan J).
The object of an award of damages in tort is, generally speaking, to restore the plaintiff to the position in which he or she would have been placed if the wrongful act had not been committed. In a case of negligent misstatement, the wrongdoer is liable for the damage flowing directly from his or her wrongful act, although the plaintiff’s damages will be limited to that which was reasonably foreseeable.[44]
[44]South Australia v Johnson (1982) 42 ALR 161, 169–70.
Here, the applicant brought a claim in respect of pecuniary loss that he suffered as a result of allegedly negligent advice given to him by his financial advisors. He sought relief in the form of damages. Accordingly, if his claim was made out (as Judge Anderson found it was), he was entitled to the award of a sum of money that would restore him to the position in which he would have been placed had the negligent advice not been given.
In the circumstances, and as found by Judge Anderson, that loss translated to the cost of an annuity that would in the future produce a comparable income for life, but it was also necessary to account for two matters. First, the amount of money standing to the applicant’s credit in his MLC account and second, the income that he had received from the MLC product. If the amount he received was less than the income that he would have received under his GSO pension, then this difference would have been a compensable loss that would have been brought to account by an increase in damages over and above the cost of the replacement annuity. This was the approach taken by Professor McMaster in his report which suggested that the shortfall was $30,297. On the other hand, if the evidence demonstrated that the applicant had received and spent more than he would have under the GSO pension, his loss would have had to be correspondingly reduced.
The value of the applicant’s loss was thus to be determined by three factors: the cost of a replacement annuity, the credit balance in the MLC account, and whether he had spent more or less than he would have received under the GSO pension. His pleadings and evidence and the submissions made on his behalf were all directed to those matters. The fact that his expectation was not realised does not demonstrate that there was a denial of procedural fairness.
The fourth and final misconception relates to the applicant’s reliance on Kioa v West.[45] That case stands for the general proposition that as an aspect of procedural fairness, a decision maker is obliged to give a person affected by a decision the opportunity to comment on credible, relevant and adverse information in the possession of the decision maker.[46] The matters set out in [64] above were not of that character. The judge was not obliged to disclose his thinking processes nor identify gaps in the evidence, if any, in circumstances where the parties were represented and had been given every opportunity to present evidence in support of their pleaded cases.
[45](1985) 159 CLR 550.
[46]Ibid 628–9 (Brennan J); Applicant VEAL of 2002 v Minister for Immigration and Multicultural and Indigenous Affairs (2005) 225 CLR 88, 95–6.
We turn then to the more specific complaints made by the applicant.
The choice of the relevant replacement annuity
The central thrust of this complaint is that the applicant was denied procedural fairness because the judge rejected the CommInsure annuity as the basis for calculating the cost of the replacement annuity.
This argument could not succeed when regard is had to the course of the hearing before Judge Anderson.
The judge heard submissions on which annuity should be used to calculate damages and indicated his provisional view that, on the evidence, there was no basis to prefer the more expensive CommInsure product. Although his Honour foreshadowed giving the applicant more time to obtain such evidence, the applicant’s counsel submitted that such evidence would not be forthcoming. The applicant knew that the matter was in issue and it would have been obvious that there was no likelihood of GWM agreeing to the more expensive product. The applicant had every reasonable opportunity to adduce evidence and advance submissions on that issue. There was no denial of procedural fairness.
The amount standing to the applicant’s credit in the MLC account
The applicant ran his case on the basis that he would need to account for the amount standing to his credit in the MLC account. It featured in the evidence of Professor McMaster and was the subject of submissions.
In his oral submissions on the application for leave to appeal, the applicant accepted that he understood before Judge Anderson that there was to be a deduction in respect of the amount standing to his credit. His point was a narrower one: he did not know the judge would act on the figure adduced at trial rather than an updated figure.
On the day of judgment, the applicant’s counsel advised the judge that the amount of $170,740 should be deducted. The judge was told that this figure reflected the evidence of the balance of the MLC account as at the date of the trial in November, some few weeks before judgment. Counsel for GWM submitted that an updated figure should be obtained, to which the applicant’s counsel responded that it was better to use the evidence at trial and that it was unlikely to vary much ‘for good or ill’. The applicant’s counsel having invited the judge to proceed on the basis that the amount to be taken into account was $170,740, there was no denial of procedural fairness for the judge to deduct that amount from the award.
The amount withdrawn from the MLC account
It was also part of the applicant’s case that the amounts that the applicant had withdrawn and spent from his MLC account should be taken into account in determining loss. It was recognised by the applicant at the trial that he had received some benefits as a result of the investments that he made on the advice of GWM and that these needed to be brought to account in the assessment of damages. Indeed, the applicant led evidence on those matters and his counsel addressed them both in written and oral submissions.
The applicant adduced evidence from Professor McMaster as to the amount that he would have been paid under the GSO pension during the relevant period. It will be recalled that Professor McMaster estimated that there was a difference of $30,297 between the amount the applicant would have received from the GSO pension and the amount he had withdrawn from the MLC account. That evidence is the basis for the claim that the applicant would now seek to make for that amount.
Despite Professor McMaster’s evidence, the applicant’s counsel submitted in closing submissions, both in writing and orally, that the evidence established that the applicant had withdrawn $72,835 more than he would have received under the GSO pension and that this amount should be deducted from the award.
In the result, the applicant’s counsel accepted that the two items were properly deductible, evidence was adduced as to their amount, and the applicant’s counsel submitted to the judge that they should be deducted in the combined amount of $243,875 (comprising the credit balance of $170,740 and excess withdrawals of $72,835).[47]
[47]See above n 3.
In those circumstances, it is not arguable that Judge Anderson denied the applicant procedural fairness in relation to the deduction for the withdrawals.
Treatment of the commission payable
The issue of the commission went to the cost of the replacement annuity. The evidence before Judge Anderson established that GWM could acquire the Challenger annuity for some $9,000 less by foregoing its commission. The parties disagreed as to how the commission should have been taken into account, and Judge Anderson raised the possibility of a compromise.
The parties agreed that an allowance of $4,500 would be made in the calculation of damages. The applicant was not present, but the matter was stood down to allow the applicant’s counsel to obtain instructions.
On the hearing of the application for leave to appeal, the applicant informed the Court that he was present during the hearing of his proceeding before Judge Anderson but was not present in court on the day judgment was delivered. The principle that a party is bound by the conduct of his or her counsel does not depend on whether the client is present when counsel appears on his or her behalf. The capacity of counsel to bind their client is not diminished by the physical absence of the client. As it happens, the applicant was consulted by telephone and gave instructions to agree to the compromise. This serves to underscore that there was no lack of fairness in relation to the deduction for the commission payment.
Given the obligations imposed on parties by the Civil Procedure Act and the relatively small amount involved (as a proportion of the purchase cost of the annuity), the course adopted by the parties was a sensible one. It was not imposed by the judge on the parties, but was rather raised with them as a way through the impasse. There was no denial of procedural fairness.
Conclusion on ground 1
It follows that proposed appeal ground 1 has no prospect of success.
Proposed ground 2: the deduction for excess withdrawals
The second proposed ground concerns the deduction that Judge Anderson made in the sum of $72,835 and which was described by the applicant’s counsel as an ‘offset’ to account for excess withdrawals.
As formulated in the application for leave to appeal, ground 2 contends that Judge Anderson decided the damages claim on a basis that was inconsistent with the case presented by the applicant. In substance, this is a contention that there was a denial of procedural fairness. What has already been said in relation to proposed ground 1 is enough to dispose of this ground.
In the applicant’s oral submissions on the application for leave to appeal, which were also recorded in written form and handed to the Court, the ground was reformulated so as to contend that Judge Anderson was not entitled to act on the concessions made by the applicant’s counsel in relation to the deduction of $72,835 in light of the totality of the evidence.
In summary, the applicant contended that Judge Anderson was obliged to assess the loss occasioned by the negligent financial advice and that, when regard was had to the totality of the evidence, the applicant’s income from the MLC product was less than he would have received under his GSO pension. It was submitted that the applicant should have been compensated for that loss.
The applicant has attributed a different character to the $72,835 over time. Judge Saccardo understood the applicant’s case as being that these withdrawals were spent on medical and like expenses to treat a condition that was caused or aggravated by the negligent advice of GWM.[48] Judge Saccardo concluded that the amounts were not recoverable on that basis because there was no pleaded case or probative evidence to support such a claim, and such a claim would be inconsistent with the concession before Judge Anderson that they were deductible.[49]
[48]Reasons of Judge Saccardo [9].
[49]Ibid [28]–[29].
Before us, the applicant submitted that there was evidence before Judge Anderson that the $72,835 represented withdrawals of capital that he was required to make because his income from the MLC product was less than the GSO pension and inadequate for his needs. As such, he submitted that the evidence established that they were in fact part of the loss that was recoverable.
It is not necessary for us to characterise the withdrawals of $72,835 in order to decide for ourselves whether that amount was properly deducted.
It was a feature of the applicant’s case before Judge Anderson that the income earned from the MLC product was to be taken into account in the calculation of loss. The calculation of loss is a question of fact and is to be based on the evidence and the agreement or concessions of the parties. The course of the hearing makes it abundantly clear that the applicant had a full opportunity to present his case by means of evidence and submissions.
The applicant’s counsel submitted that the sum of $72,835 reflected an amount in excess of that which the applicant would have received under the GSO pension and was therefore to be deducted. The written submissions referred to an exhibit that was in evidence. There was a clear factual basis for the concession that $72,835 had been withdrawn from the accounts over and above that which Professor McMaster estimated would have been available under the GSO pension. We do not understand the applicant to dispute that money was withdrawn in that amount; rather he submits Judge Anderson should have gone behind the concession and examined whether the withdrawals ought properly be characterised as evidence of loss.
There was no occasion for the judge to go behind the submissions and concessions of the applicant’s counsel. They accorded with the pleaded case and referred to the evidence. The submissions were logical and reasonable. The judge was entitled to act on those submissions and the applicant was bound by them.
There was no unfairness, no departure from the case as presented, and no legal error on the part of Judge Anderson in assessing damages on the basis of the concession that the amount of $72,835 should come off the purchase price of the annuity in order to properly reflect the applicant’s loss.
It follows that proposed appeal ground 2 has no prospect of success.
Conclusion
Any appeal from Judge Anderson on the grounds advanced before Judge Saccardo and on those advanced before us would have had no prospects of success. On that basis, his Honour did not err in giving summary judgment on the claim.
For these reasons, leave to appeal must be refused.
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