| JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA LOCATION : PERTH CITATION : ERRICHETTI NOMINEES PTY LTD -v- GODFREY VIRTUE & CO (a firm) [2005] WADC 40 CORAM : COMMISSIONER POWER HEARD : 7 FEBRUARY 2005 DELIVERED : 9 MARCH 2005 FILE NO/S : CIV 589 of 2002 BETWEEN : ERRICHETTI NOMINEES PTY LTD Plaintiff
AND
GODFREY VIRTUE & CO (a firm)
Defendant
ON APPEAL FROM:
For File No : CIV 589 of 2002 Jurisdiction : DISTRICT COURT OF WESTERN AUSTRALIA Coram : REGISTRAR KINGSLEY File No : CIV 589 of 2002 Catchwords: Practice and procedure - Professional negligence - Appeal and crossappeal from Registrar - Application for leave to amend defence - Turns on own facts - Appeal dismissed and crossappeal allowed
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Legislation:
Nil
Result: Appeal dismissed and crossappeal allowed Representation:
Counsel:
Plaintiff : Mr H R Robinson
Defendant : Mr J R B Ley
Solicitors:
Plaintiff : Haydn Robinson
Defendant : Pynt & Partners
Case(s) referred to in judgment(s):
Atkinson v Fitzwalter [1987] 1 All ER 483
Hazart Pty Ltd v Rademaker (1993) 11 WAR 26
Hooker Corporation Ltd v Commonwealth (1986) 65 ACTR 32
Sinclair v James [1894] 3 Ch 554
Case(s) also cited:
Nil
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1 COMMISSIONER POWER: This is an appeal by the plaintiff and a cross-appeal by the defendant against the decision of Registrar Kingsley made on 2 November 2004. The decision was made on an application by the defendant for leave to amend its defence in terms of a minute of proposed amended defence, which was annexed to its summons dated 13 September 2004. Leave was granted to amend the defence in terms of the minute, but subject to the deletion of par 2(c) and the references to "Wilerr" (being Wilerr Enterprises Pty Ltd) in par 15 of the minute.
2 By its notice of appeal dated 3 November 2004, the plaintiff contends that the order of Registrar Kingsley granting leave should be set aside and that the grant of leave should be subject to the deletion of pars 2(c), 7, 9, 10 and 17 from the minute. By its notice of cross-appeal dated 10 November 2004, the defendant contends that the same order should be set aside and that it should be granted leave to amend its defence in terms of the minute. 3 The appeal is brought under O 6, r 11 of the District Court Rules 1996 and is a complete review de novo, dealt with by way of an actual re-hearing (Hazart Pty Ltd v Rademaker (1993) 11 WAR 26). 4 In the course of the argument before me, the parties agreed that there would be no issue with par 17 of the minute on the basis that the defendant would, in respect of each of pars 17(a), 17(b) and 17(c), particularise each of the subparagraphs in par 15 to which reference is being made in each of those three subparagraphs. 5 Consequently, the contest between the parties can be distilled down to whether, and if so to what extent, the matters in pars 2(c), 7, 9 and 10 should be pleaded in any amended defence. 6 It is trite law that leave should not be granted to make a defective amendment (Hooker Corporation Ltd v Commonwealth (1986) 65 ACTR 32 at 38; Atkinson v Fitzwalter [1987] 1 All ER 483 at 490, 502). Nor should leave be granted to allow an amendment which does not disclose a good defence (Sinclair v James [1894] 3 Ch 554 at 557). 7 The defendant argued that pars 7, 9 and 10 of the minute are pleaded in response to par 5 of the statement of claim. 8 Paragraph 5 of the statement of claim alleges a breach of three implied terms, which are pleaded in pars 3(a), 3(b) and 3(c) of the statement of claim. The statement of claim alleges that these three terms were implied in the retainer between the plaintiff and the defendant,
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which is in turn pleaded in par 2(b) of the statement of claim. Relevantly, the plaintiff alleges that it was implied in the retainer that the defendant: (a) would exercise reasonable skill and care in providing all legal advice and representation to the plaintiff as the plaintiff’s solicitor in a claim against Simon Peter Fatharly and Paul John Dorosz Summers in Supreme Court Action No. CIV 1813 of 1997 ("the Action"); (b) would carry out the plaintiff's instructions; and (c) had the legal resources to provide that legal advice and representation and would continue to have those resources until either settlement of the Action or its determination at trial. 9 By par 3 of its defence, the defendant admits that it was an implied term of the retainer that it would exercise reasonable skill and care in carrying out the retainer and that it would carry out the plaintiff's reasonable and proper instructions in a diligent and timely manner. It otherwise does not admit the balance of the alleged implied terms. 10 The allegation in par 5 of the statement of claim that the defendant breached the implied terms pleaded in pars 3(a), 3(b) and 3(c) is particularised in pars 5(a) and 5(b). The particulars are essentially that the defendant advised the plaintiff that it was unable to continue to provide legal advice and representation to the plaintiff in relation to the Action, because it no longer had the capacity to do so. 11 Paragraph 6 of the statement of claim pleads that the consequence of that breach was that the plaintiff was required to enter into a new agreement with another firm of barristers and solicitors for the provision of that legal advice and representation in relation to the Action. 12 The loss and damage allegedly caused by the breach pleaded in par 5 of the statement of claim is particularised in par 12 of the statement of claim. It is alleged to be the fees and disbursements paid by the plaintiff to the defendant for the legal advice and representation which the latter purported, according to the former, to provide to the former under the retainer (see par 12(a) of the statement of claim). By par 10 of the statement of claim, the plaintiff alleges that the legal advice and representation provided by the defendant in relation to the Action were of no value to the plaintiff in that, in the period 20 May 1998 to 14 August 2000, those services neither assisted nor enabled the plaintiff to settle the Action or to have the Action determined at trial. The second head of loss
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and damage claimed is interest on the sum of $507,500, being the sum for which the Action was compromised in favour of the plaintiff, for the period of 2 years and 86 days (being the period between 20 May 1998 and 14 August 2000) for the loss of use of those monies in that period, namely, $68,070.72, calculated at the rate of 6 per cent interest per annum. 13 In other words, the advice by the defendant that it would be unable to continue to provide legal advice and representation in relation to the Action to the plaintiff, because it no longer had the capacity to do so, which in turn required the plaintiff to enter into a new retainer with another firm of barristers and solicitors to provide those services, is said to have caused the loss and damage pleaded in par 12 of the statement of claim. 14 The pleading on these aspects of the claim is not without some difficulties. It is not clear how that advice, which was allegedly given on or about 16 June 2000, could cause the legal advice and representation for the period 20 May 1998 up to on or about 15 February 2000 to be of no value to the plaintiff. All of that legal advice and representation would likely have been provided prior to the alleged breach on or about 16 June 2000. The consequence of the advice alleged in par 5 of the statement of claim, assuming it also to be the fact that no legal advice or representation in relation to the Action was provided by the defendant to the plaintiff on or after 16 June 2000, could only be that the plaintiff was required to retain another firm in place of the defendant, so that it could be legally advised and represented in the Action. Indeed, that is what par 6 of the statement of claim pleads. 15 The defendant argued that pars 7, 9 and 10 are pleaded in an attempt to meet these allegations in the statement of claim. It is clear from reading those paragraphs in the minute that they are directed at the breach alleged in par 5 of the statement of claim and no more. 16 The defendant admits that it advised the plaintiff that it was unable to continue to act for it in the Action in or about June 2000, but denies that it breached any of the implied terms pleaded in pars 3(a), 3(b) and 3(c) of the statement of claim or any other term of the retainer (see par 5 of the minute). 17 Paragraph 7 of the minute is pleaded in the alternative to par 5 of the minute. It is pleaded on the basis that the plea in par 5 of the minute may not be successful. In the event that there is a finding that the defendant
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breached the terms of the retainer, as alleged in par 5 of the statement of claim, and the plaintiff was obliged, as a result of that breach, to retain another firm in relation to the Action, the defendant advances two alternative defences. First, it pleads that the plaintiff suffered no loss or damage as a result of the breach alleged in par 5 of the statement of claim. Secondly, it pleads that any damages in respect of that breach are limited to the fees which would have been charged by a reasonably competent solicitor for reading into the defendant’s file in relation to the Action and familiarising himself or herself with the issues involved in that Action. 18 The first alternative pleaded in par 7 of the minute, namely, that the plaintiff suffered no loss or damage as a result of the breach alleged in par 5 of the statement of claim, is based on what is pleaded in pars 9 and 10 of the minute. The allegations in those paragraphs are, in essence, that any additional costs incurred by the plaintiff, as a result of having to retain another firm in place of the defendant, were costs incurred pursuant to an invalid and unenforceable costs agreement which the plaintiff was under no obligation to pay. 19 The remaining alternative pleaded in par 7 of the minute assumes that the legal advice and representation provided to the plaintiff in the Action was not without some value and pleads that the loss and damage caused by the advice, particularised in par 5 of the statement of claim, is simply those additional fees for work which would have to be done again by the firm retained in place of the defendant. In other words, the fees which would be incurred in doing the same work twice and unnecessary had there been no change of solicitors. 20 It is not the role of the Court on an application for leave to amend the defence to make an in-depth assessment of the prospects of success of the arguments raised by the proposed amendments. Whether the defences for which leave is sought will be or are successful is a matter for determination at trial. 21 Even making some allowance for the difficulties in the way in which the alleged breach in par 5 is pleaded, I would not regard the proposed amendments in pars 7, 9 and 10 to be defective or as not disclosing good defences. I deal with par 2(c) of the minute in my reasoning on the cross-appeal. 22 For all of these reasons, I would not uphold the appeal. 23 The defendant cross-appeals against the decision to delete par 2(c) and the references to "Wilerr" in par 15 of the minute.
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24 Paragraph 15 of the minute pleads to and denies the allegations in par 10 of the statement of claim. Paragraph 10 alleges breaches of the implied terms pleaded in pars 3(a), 3(b) and 3(d). I have already described the implied terms pleaded in pars 3(a) and 3(b) of the statement of claim. Paragraph 3(d) alleges that there was an implied term in the retainer that the defendant would charge the plaintiff only for legal advice and representation in the Action which was of value to the plaintiff in either settling the Action or determining the Action at trial.
25 Paragraph 10 of the statement of claim alleges that the legal advice and representation purportedly provided by the defendant were of no value to the plaintiff. The allegation is particularised. The particulars are that in the period 20 May 1998 to 14 August 2000, the services provided by the defendant neither assisted nor enabled the plaintiff to settle the Action or to have it determined at trial. 26 Paragraph 15 of the minute pleads that the defendant acted for the plaintiff in the Action during the period between about May 1998 and about June 2000 and took reasonable and necessary steps in it which both assisted and enabled the plaintiff to settle the Action and would have assisted and enabled the plaintiff to have the Action determined at trial Paragraphs 15(a)-(z) of the minute particularise those allegations in quite some detail. 27 Paragraphs 15(s)-(v) and (x)-(z) of the minute make reference to Wilerr, the Wilerr claim and the Wilerr Action (being the claim brought by Wilerr Enterprises Pty Ltd against Fatharly and Summers in Supreme Court Action No. CIV 1969 of 1997). These subparagraphs plead a course of dealings between the defendant and Freehills, the solicitors for Fatharly, Summers and the insurer of Fatharly and Summers, which course of dealings concerned both the Action and the Wilerr Action. It is evident from the pleadings that the claim by Wilerr against Fatharly and Summers had some similarities with the claim by the plaintiff against the same parties. It is alleged in these subparagraphs that the defendant and Freehills were, as a matter of fact, dealing with and negotiating on the Action and the Wilerr Action as though they were connected. According to the pleading, the dealings on one were affecting the dealings on the other and vice versa. 28 Paragraph 2(c) of the minute alleges that the defendant acted as the solicitors for Wilerr in the Wilerr Action during the same period that it acted as the solicitors for the plaintiff in the Action. The relevance of that
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plea is derived from the pleadings in pars 15(s)-(v) and (x)-(z) of the minute. 29 The allegation in par 11 of the statement of claim that the defendant did not provide legal advice and representation diligently or in a timely manner is denied in par 16 of the minute. Paragraph 17(c) pleads, in the alternative, that if the defendant did not provide those services to the plaintiff diligently or in a timely manner, as particularised in that paragraph, such delay between September and November 1999 was caused by the withdrawal of Fatharly, Summers and the insurer from settlement negotiations pending their receipt of the opinion pleaded in par 15(y) of the minute. The settlement negotiations being referred to there are, of course, the settlement negotiations being conducted between the defendant and Freehills and involving both the Action and the Wilerr Action. In drawing attention to this aspect of the pleadings, I am mindful that the Registrar granted leave to amend the defence by adding, among other things, par 17(c) of the minute. If his decision to delete all references to Wilerr does not extend to par 17(c) of the minute, as it may not, then it was an understandable oversight in the circumstances. 30 In any event, it is apparent that the purpose of pleading the course of dealings involving Wilerr and the Wilerr Action and the settlement negotiations on the Wilerr Action is to ensure that facts relevant determinations on to the plaintiff's allegations that the legal advice and representation provided by the defendant in relation to the Action were of no value to the plaintiff and were not provided diligently or in a timely manner are capable of being put before the Court for its consideration at trial. It may be that the pleas are not made out at trial and are not seen to meet the allegations in pars 10 and 11 of the statement of claim. However, they are matters properly determined at trial, rather than at this stage on the pleadings. 31 For these reasons, I do not regard the proposed addition of par 2(c) or the references to Wilerr, the Wilerr claim or the Wilerr Action in par 15 of the minute to be either defective or as not disclosing a good defence. 32 Consequently, I would uphold the cross-appeal. 33 Accordingly, the appeal is dismissed and the cross-appeal is allowed.
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