David Anthony Ward Walters and Ors T/As Elringtons; v Graham Ronald Kemp
[2014] ACTSC 100
•23 May 2014
DAVID ANTHONY WARD WALTERS & ORS T/AS ELRINGTONS
v GRAHAM RONALD KEMP
[2014] ACTSC 100 (23 May 2014)
PRACTICE AND PROCEDURE – application for strike out – application to strike out Reply to Counter-Claim alleging proportionate liability in negligence and breaches of fiduciary duty and contract – where conduct by proposed concurrent wrongdoer precedes enactment of Ch 7A Civil Law (Wrongs) Act 2002 (ACT) – where cause of action in negligence not complete until after enactment – whether Ch 7A has retrospective effect – whether defence so obviously untenable respondents should not be able to take it to hearing
Civil Law (Wrongs) Act2002 (ACT), s 107B, 107F, 107G; Pt 2.5; Ch 7A
Development Act 1993 (SA), s 72
Legislation Act2001 (ACT), ss 82, 84; Ch 9
Limitations Act 1985 (ACT), s 11
Court Procedures Rules 2006 (ACT), r 425
Carr v Finance Corp of Australia Ltd (1982) 150 CLR 139
General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125
Glenmont Investments Pty Ltd v O’Loughlin(No 2) (2000) 79 SASR 185
Maxwell v Murphy (1957) 96 CLR 261
No. SC 228 of 2011
Judge: Burns J
Supreme Court of the ACT
Date: 23 May 2014
IN THE SUPREME COURT OF THE )
) No. SC 228 of 2011
AUSTRALIAN CAPITAL TERRITORY )
BETWEEN: DAVID ANTHONY WARD WALTERS & ORS T/AS ELRINGTONS
Plaintiffs / Respondent
AND: GRAHAM RONALD KEMP
Defendant / Applicant
ORDER
Judge: Burns J
Date: 23 May 2014
Place: Canberra
THE COURT ORDERS THAT:
The application dated 27 August 2013 is dismissed.
Costs will be reserved.
This is an application by the defendant/counterclaimant (who for convenience I will refer to as the defendant) to strike out a portion of the plaintiffs’ Answer to Further Amended Defence and Counterclaim. In order to deal with the application it is necessary to set out the history of the proceedings.
Between October 2000 and December 2004, the plaintiffs, a firm of solicitors, were retained by the defendant to provide him with legal services. The defendant is, and at all relevant times was, a licensed builder involved in building projects in the ACT. The plaintiffs provided the defendant with advice and representation in two building disputes. The first was a dispute with Mrs O’Brien (the O’Brien dispute) which effectively resulted in a judgment against the defendant in the Magistrates Court. The second dispute was with Dennis and Margaret Wilde (the Wilde dispute) which was settled by the defendant out of court following further legal advice obtained from counsel. In October 2004 and January 2005, the plaintiffs provided the defendant with invoices for work performed on his behalf totalling $46,038.40. Between February 2005 and June 2007, the defendant paid a total of $33,156.40 in reduction of these invoices. He thereafter became dissatisfied with the work of the plaintiffs on his behalf and refused to pay the balance of $12,882.00.
On about 4 June 2009, the plaintiffs commenced proceedings in the Magistrates Court to recover the outstanding balance of the invoices, together with costs and interest. On 12 August 2009, the defendant filed a defence to the plaintiffs’ claim and also a counterclaim which:
(a)Admitted the amount of $12,882.00 to be correctly pleaded;
(b)But denied liability, on the basis of:
(i)a set off of $8,800.00 which the defendant claimed to be owing to him for building services provided to David Chen, a solicitor and one of the plaintiffs (the building services claim); and
(ii)a counterclaim that the plaintiff negligently provided legal services to him in about February 2007 in relation to the Wilde dispute, causing him to suffer loss and damage for which he claimed damages (the Wilde claim).
On 31 March 2011, the defendant lodged an Amended Defence and Counterclaim in the Magistrates Court. The amended pleading added to the existing building services claim and the Wilde claim a further claim (the O’Brien claim) by which the defendant alleged professional negligence by the plaintiff in the provision of the legal services the subject of the plaintiffs’ debt claim. The negligence alleged against the plaintiffs related to advice that the plaintiffs gave the defendant concerning termination of the building agreement with Mrs O’Brien (the termination advice), advice given to the defendant concerning the conduct of the O’Brien dispute, and failure to advise during or after giving the advice in the O’Brien dispute that the defendant should seek independent advice on that issue, which is pleaded to be a breach of the fiduciary duty owed by the plaintiffs to the defendant (the negligent failure to advise). The defendant further pleads that on 30 September 2008 the Magistrates Court gave judgment for Mrs O’Brien in the amount of $38,892.00 plus costs (the O’Brien judgment), and that:
(a)Between the date of the O’Brien dispute advice in January 2002 and the O’Brien judgment in September 2008 the defendant incurred legal costs of approximately $143,000.00 for legal services provided by the plaintiff in regard to the O’Brien dispute (the O’Brien costs); and
(b)The O’Brien judgment and the O’Brien costs were incurred by the defendant as a result of the negligent failure to advise whereby the defendant suffered loss and damage.
The defendant claimed damages, interest, costs and loss of business profits.
On 10 June 2011, Master Harper made orders in chambers by consent that the proceedings be transferred to this court. On 6 October 2011, the defendant filed a Further Amended Defence and Counterclaim which added a claim for aggravated damages, and extensive particulars for his claim for loss of business profits.
On 2 December 2011, Master Harper made orders that the defendant file and serve replies to the plaintiffs’ request for particulars by 5 December 2011 and that the plaintiffs file and serve a reply to the Amended Defence, and a Defence to the Counterclaim, by 30 January 2012.
By letter dated 20 February 2012, the plaintiffs’ solicitors gave notice to the defendant’s solicitors pursuant to s 107G of the Civil Law (Wrongs) Act2002 (ACT) (the Wrongs Act) that the plaintiff will rely on a defence of proportionate liability to the counterclaim.
On 21 February 2012, the plaintiff filed a Reply to the defendant’s Further Amended Defence and Counterclaim. That reply pleaded in paragraph 42 that Mr Christopher Whitelaw, counsel briefed to advise and to appear for the defendant in the O’Brien dispute, was a concurrent wrongdoer pursuant to Ch 7A of the Wrongs Act. Furthermore, the reply pleaded that any losses found to be caused by the plaintiff, as claimed in paragraphs 29B and 30 of the Counterclaim, should be apportioned with Mr Whitelaw. Paragraph 29B of the Counterclaim provides particulars of the claim for aggravated damages based upon the alleged negligent failure to advise. Paragraph 30 of the Counterclaim provides that the defendant claims damages, aggravated damages, interests and costs and loss of business profits with respect to his claims.
Particulars of the plaintiffs’ concurrent wrongdoer defence are provided at paragraph 42, including that:
(a)Mr Whitelaw was briefed as counsel in the O’Brien dispute in January 2002 and that he owed to the defendant a fiduciary duty in relation to the provision of legal services; and
(b)If the whole of the O’Brien claim is not barred by operation of s 11 of the Limitations Act 1985 (ACT), the concurrent wrongdoer, Mr Whitelaw, is liable to the defendant in regard to the matters pleaded against the plaintiff:
(i)including any damages for loss and damage suffered by the defendant by the O’Brien judgment in 2008 and the O’Brien costs for the period between January 2002 and 30 September 2008; and
(ii)any losses in relation to matters pleaded by the defendant concerning the O’Brien claim.
The defendant has now applied to have paragraph 42 of the plaintiffs’ reply struck out. The grounds upon which the defendant seeks these orders are found in a letter dated 27 July 2013 from the defendant’s solicitors to the plaintiffs’ solicitors. Essentially, the defendant argues that any negligence by Mr Whitelaw causative of the defendant’s losses preceded the commencement of Ch 7A of the Wrongs Act and is not subject to its provisions. The defendant argues that prior to the commencement of Ch 7A he had a substantive right to recover 100% of his losses from the plaintiffs (or against Mr Whitelaw if he chose to sue him). To hold that the provisions of Ch 7A applied to his claim against the plaintiffs would be to give the provisions retrospective effect, and would deprive him of a valuable right. He submits that this would be contrary to the provisions of s 84 of the Legislation Act2001 (ACT) (the Legislation Act):
84Saving of operation of repealed and amended laws
(1)The repeal or amendment of a law does not –
(a)revive anything not in force or existing when the repeal or amendment takes effect; or
(b)affect the previous operation of the law or anything done, begun or suffered under the law; or
(c)affect an existing right, privilege or liability acquired, accrued or incurred under the law.
(2)An investigation, proceeding or remedy in relation to an existing right, privilege or liability under the law may be started, exercised, continued or completed, and the right, privilege, or liability may be enforced and any penalty imposed, as if the repeal or amendment had not happened.
(3)Without limiting subsections (1) and (2), the repeal or amendment of a law does not affect –
(a)the proof of anything that has happened; or
(b)any right, privilege or liability saved by the law.
(4)This section does not limit any other provision of this chapter and is in addition to any provision of the law by which the repeal or amendment is made.
(5)This section is a determinative provision.
(6)In this section:
liability includes liability to penalty for an offence against the law.
penalty includes punishment and forfeiture.
privilege includes immunity.
right includes capacity, interest, status and title.
The plaintiffs argue that it is inappropriate to strike out paragraph 42 of the reply at this time as the plaintiffs’ concurrent wrongdoer defence raises questions of fact to be determined at trial prior to the court applying the provisions in Ch 7A of the Wrongs Act. The plaintiffs submit that in deciding whether the defendant’s O’Brien claim is an apportionable claim the court will need to determine on the basis of evidence at trial:
(a)The nature of the interest which comprises the defendant’s claim, ie whether it is a claim for economic loss;
(b)When the relevant cause of action accrued;
(c)Whether the plaintiff and Mr Whitelaw are s 107D concurrent wrongdoers;
(d)The s 107F apportionment, if any, between the concurrent wrongdoers.
With respect to the defendant’s argument that for Ch 7A to apply it must be taken to have retrospective effect, the plaintiff provides for answers:
(a)Until the court makes findings of fact on issues which are clearly contested on the pleadings, any issue of consideration of retrospectivity of Ch 7A cannot be determined;
(b)No right as asserted by the defendant to recover 100% of his losses as against whichever defendant he chose existed prior to 2008 on the defendant’s pleaded case; or alternatively the defendant properly chose not to engage the processes of the court in regard to the O’Brien claim until March 2011;
(c)The application of conventional principles of statutory construction to the words of s 107B of the Wrongs Act suggest that the section applies to any cause of action no matter when it occurred. In that regard the plaintiffs point to the opinion of the authors of Butterworth’s loose-leaf Civil Liability Australia that the terms of s 107B suggest that it applies to any cause of action no matter when it arose;
(d)The defendant’s submission that s 84 of the Legislation Act is applicable fails to consider the “law” by which that provision is engaged.
In any event, the plaintiffs say, it appears that the defendant’s pleaded case is that his cause of action in negligence against the plaintiffs was not complete until 2008. If this is found at trial, the claim against the plaintiff in negligence arises well after the commencement of Ch 7A.
LEGAL PRINCIPLES APPLICABLE TO A STRIKEOUT APPLICATION
This application is governed by the provisions of r 425 of the Court Procedures Rules 2006 (ACT), which provide:
425Pleadings – striking out
(1)The court may, at any stage of a proceeding, order that a pleading or part of a pleading be struck out if the pleading –
(a)discloses no reasonable cause of action or defence appropriate to the nature of the pleading; or
(b)may tend to prejudice, embarrass or delay the fair trial of the proceeding; or
(c) is frivolous, scandalous, unnecessary or vexatious; or
(d)is otherwise an abuse of the process of the court.
(2) The court may receive evidence on the hearing of an application for an order under this rule.
(3) If the court makes an order under this rule, it may also make any other order it considers appropriate, including, for example –
(a)if the court makes an order under subrule (1) (a) – an order staying or dismissing the proceeding or entering judgment; and
(b)an order about the future conduct of the proceeding.
The principles governing such applications are well settled. In General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 Barwick CJ said at 129:
The test to be applied has been variously expressed; “so obviously untenable that it cannot possibly succeed”; “manifestly groundless”; “so manifestly faulty that it does not admit of argument”; “discloses a case which the Court is satisfied cannot succeed”; “under no possibility can there be a good cause of action”; “be manifested that to allow them” (the pleadings) “to stand would involve useless expense”.
At times the test has been put so high as saying that the case must be so plain and obvious that the court can say at once that the statement of claim, even if proved, cannot succeed; or “so manifest on the view of the pleadings, merely reading through them, that is a case that does not admit of reasonable argument”; “so to speak apparent at a glance”.
CONSIDERATION
I have difficulty in seeing how the provisions of s 84 of the Legislation Act are engaged in the circumstances of these proceedings. I accept that the insertion of the provisions of Ch 7A into the Wrongs Act constituted an amendment of the Wrongs Act and that it is arguable that the amendments have the capacity to affect existing rights, privileges and liabilities. The provisions of s 84, however, are only engaged (relevantly for present purpose) where the existing right, privilege or liability was acquired, accrued or incurred under the law which is amended. Section 82 of the Legislation Act provides that for the purposes of Ch 9, in which s 84 is found, the word “law” means an Act or statutory instrument. Whilst the Wrongs Act contains provisions in Pt 2.5 concerning proceedings against and contributions between wrongdoers, these provisions do not form the basis of any right as asserted by the defendant. If the defendant has such a right, its source is the common law.
The fact that the provisions of s 84 of the Legislation Act do not apply is not fatal to the defendant’s application. The common law has developed principles of statutory interpretation to similar, if not identical, effect to those expressed in s 84. In Maxwell v Murphy (1957) 96 CLR 261 Dixon CJ summarised the position as follows at 267:
The general rule of the common law is that a statute changing the law ought not, unless the intention appears with reasonable certainty, to be understood as applying to facts or events that have already occurred in such a way as to confer or impose or otherwise affect rights or liabilities which the law had defined by reference to the past events.
In applying the common law principles, courts have traditionally taken a broad view of what constitutes rights or liabilities. In Carr v Finance Corp of Australia Ltd (1982) 150 CLR 139, Mason, Murphy and Wilson JJ in a joint judgment said at 151:
The common law presumption against imputing to the legislature an intention to interfere retrospectively with rights which have already accrued does not call for a narrow conception of a right. If it were otherwise, the essential justice of the rule would be eroded.
The defendant relied upon a decision of the Full Court of the Supreme Court of South Australia in Glenmont Investments Pty Ltd v O’Loughlin(No 2) (2000) 79 SASR 185, which considered the provisions of the Development Act 1993 (SA), s 72 of which provided:
72–Negation of joint and several liability in certain cases
(1) If –
(a)building work is defective; and
(b)the defect or defects arise from the wrongful acts or defaults of two or more persons
(c)those persons would, apart from this section, be jointly and severally liable for damage or loss resulting from the defective work;
(d)an action is brought against any one or more of those persons to recover damages for that damage or loss,
the court may only give judgment against a defendant, or each defendant, for such amount as may be just and equitable having regard to the extent to which the act or default of that defendant contributed to the damage or loss.
With respect to this provision, which came into effect after Glenmont’s cause of action had accrued, the Full Court said at [72]–[75]:
Before s 72 came into force, Glenmont had an entitlement to judgement against any tortfeasor jointly and severally liable for the loss it suffered when the enclosure was demolished. That entitlement was to a judgment for the full amount of the loss suffered. The position as between the defendants was to be adjusted by the making of contribution orders under the Wrongs Act 1936 (SA) s 25.
In our opinion, to apply s 72 to Glenmont’s claim against Mr O’Loughlin would be to alter a right of Glenmont and a liability of Mr O’Loughlin being a right and liability already brought into existence by events that had occurred prior to the coming into force of s 72. To do so would be to give s 72 a retrospective operation: see Coleman v Shell Co of Australia Ltd (1943) 45 SR (NSW) 27 at 31. In other words, to apply section 72 to the present case would be contrary to a general principle of construction described by Dixon CJ in Maxwell v Murphy (1957) 96 CLR 261...
As Dixon CJ himself said, the distinction that he drew is clear in principle, but difficult in its application. As we have already said, our view is that at the time when s 72 came into force, Glenmont had a right to a judgment, for the full amount of its loss, against any persons jointly and severally liable for that loss. To apply s 72 would be to deny that right and to substitute a lesser right. We do not consider that s 72 can be regarded as merely regulating the manner in which Glenmont’s right to damages is to be enforced, although we recognise that in a certain sense that is what it does. Nor would we regard the change effected by s 72 as merely a matter of practice and procedure as those terms are usually understood, although once again there is a procedural aspect to the provision because it affects the manner in which a judgment is entered.
Accordingly, we take the view that to apply s 72 to the present case would be to apply the law in a manner in which it is presumed that Parliament does not intend it to apply, unless there is some affirmative indication of such an intention. We can find no such indication of intention. We take the view that in expressing itself as it did, Parliament is to be taken as having intended to alter the law applicable to causes of action arising after the date of the enactment, and not to causes of action that had already arisen.
The above supports the proposition that s 107F of the Wrongs Act, which appears to be of a similar effect to s 72 of the Development Act 1993 (SA), should not be taken as applying to a cause of action which arose prior to the commencement of Ch 7A, which would apparently encompass the defendant’s causes of action in breach of contract and breach of fiduciary duty. It is, however, clear that the opinion expressed by the Full Court in Glenmont was obiter, and based upon findings of fact at first instance which were not the subject of challenge on appeal. Something may also turn upon the difference in drafting between s 72 of the South Australian Act, and the provisions of Ch 7A of the Wrongs Act in this Territory.
A matter of some significance in these proceedings, not touched upon in Glenmont, is how the provisions of Ch 7A will operate where only one of a number of related causes of action accrue after the commencement of proportionate liability legislation. Consideration of this issue may have implications in determining whether the provisions of Ch 7A are intended to apply only to causes of action accruing after the commencement of the provisions (as suggested in Glenmont) or whether they were intended to have broader application.
CONCLUSION
In my opinion, the defendant has not demonstrated to the required extent that the plaintiffs’ proportionate liability defence, even concerning the causes of action in breach of contract and breach of fiduciary duty, are so obviously untenable as to deprive the plaintiffs of the opportunity to take the defence to hearing. The application will be dismissed.
As the Court will be in a better position to determine the justice of any costs order after the issues in the proceedings have been resolved, costs will be reserved.
In any event, it is clear that the plaintiffs will be entitled to maintain their proportionate liability defence with respect to the plaintiffs’ cause of action in negligence, so that there is minimal advantage in terms of costs savings or avoiding unnecessary complexity by ruling on the defendant’s contention at this juncture, even if that could safely be done in the absence of finding of fact.
I certify that the preceding twenty six (26) numbered paragraphs are a true copy of the Reasons for Judgment herein of his Honour, Justice Burns.
Associate:
Date: 23 May 2014
Counsel for the Applicant: Mr R Clynes
Solicitor for the Applicant: Charles Filgate Giles & Associates
Counsel for the Respondents: Mr M Walsh
Solicitor for the Respondents: Boettcher Law
Date of Hearing: 31 January 2014
Date of Judgment: 23 May 2014
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