Gore v Montague Mining Pty Ltd

Case [2000] FCA 1214

FEDERAL COURT OF AUSTRALIA

Gore v Montague Mining Pty Ltd [2000] FCA 1214

NEGLIGENCE – CAUSATION – documentation of arrangements between mining tenement holders and mining entrepreneur – mining entrepreneur retained solicitor – solicitor failed to recommend insertion of assignment clause – other subsequent negligent advice – client did not give evidence whether such advice, if given, would have been accepted – other evidence that advice might not have been accepted – whether primary judge erred in finding that the solicitor’s negligence caused any loss.

Trade Practices Act1974 (Cth), s 52

Hall v Foong (1995) 65 SASR 281 followed
Sellars v Adelaide Petroleum NL (1994) 179 CLR 297 followed
Chappel v Hart (1998) 195 CLR 232 followed
Bennett v Minister of Community Welfare (1992) 176 CLR 408 referred to
WCW Pty Ltd v Bolster & Co (unreported, 6 January 1993) cited
Sykes v Midland Bank Executor and Trustee Co Ltd [1971] 1 QB 113 followed

Lillicrap v Nalder & Son [1993] 1 All ER 724 referred to

Hanflex Pty Ltd v N S Hope & Associates [1990] 2 Qd R 218 (Full Court) followed

PETER L GORE & ORS v MONTAGUE MINING PTY LTD

N 1494 OF 1999

HILL, CARR & SUNDBERG JJ
30 AUGUST 2000
PERTH (Heard in Sydney)

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

N 1494 OF 1999

On appeal from a Judge of the Federal Court of Australia

BETWEEN:

PETER L GORE & ORS TRADING AS CLAYTON UTZ
Appellants

AND:

MONTAGUE MINING PTY LIMITED
(ACN 074 592 902)
Respondent

JUDGES:

HILL, CARR & SUNDBERG JJ

DATE OF ORDER:

30 AUGUST 2000

WHERE MADE:

PERTH (Heard in Sydney)

THE COURT ORDERS THAT:

1.        The appeal be allowed.

2.        The cross-appeal be dismissed.

3.The judgment given on 22 December 1999 be set aside and in lieu thereof judgment be entered in favour of the respondent against the appellants in the sum of twenty dollars ($20.00) being nominal damages. 

4.The appellants pay the respondent’s costs at first instance of the negligence issue incurred up to and including 20 August 1998 and the respondent pay the appellants’ costs of that issue thereafter.

5.The respondent pay the appellants’ costs at first instance in respect of the issue of damages.

6.The respondent pay the appellants’ costs of the appeal and the cross-appeal.

Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.


IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

N 1494 OF 1999

BETWEEN:

PETER L GORE & ORS TRADING AS CLAYTON UTZ
Appellants

AND:

MONTAGUE MINING PTY LIMITED
(ACN 074 592 902)
Respondent

JUDGES:

HILL, CARR & SUNDBERG JJ

DATE:

30 AUGUST 2000

PLACE:

PERTH (Heard in Sydney)

REASONS FOR JUDGMENT

THE COURT:
Introduction

  1. In this matter the appellants appeal from a judgment of a judge of this Court, given on 22 December 1999, awarding damages of $616,200 in favour of the respondent against them for professional negligence.  The respondent cross-appeals on the basis that his…

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Gore v Montague Mining Pty Ltd [2000] FCA 1214
Case
[2000] FCA 1214
Decision Date

CaseChat Overview and Summary

In Gore v Montague Mining Pty Ltd, the appellants, practicing as solicitors under the name "Clayton Utz," were engaged by Montague Mining to advise on a joint venture in the Philippines. The dispute arose from claims of negligence and breach of contract by the appellants. The primary judge ruled in favor of Montague Mining on both counts and awarded damages, later adjusted due to an incorrect assumption. Montague Mining had offered to settle for more than the eventual award, leading to a disagreement over costs. The appellants appealed, arguing for a different costs order, specifically seeking indemnity costs for the respondent post-offer.

The legal issues before the court involved the assessment of damages for negligence, the proper allocation of costs post-settlement offer, and the implications of a Calderbank letter. The primary judge had ruled that the appellants were liable and set nominal damages, while also ordering the appellants to pay the majority of costs. The appellants contested the costs order, arguing that the primary judge's discretion had miscarried by not considering their settlement offer more favorably.

The court found that while there was insufficient evidence to prove that the appellants' negligence caused damages, the appeal was allowed on other grounds. The court determined that the primary judge's costs order was not manifestly unjust, though it considered the appellants' settlement offer a relevant factor. The court concluded that the costs orders should reflect a more equitable division, with the appellants paying costs up until the date of their offer and the respondent paying costs thereafter. The final orders included setting aside the previous judgment, awarding nominal damages, and adjusting the costs orders to reflect the court's findings.

Orders

Orders of the court

1. The appeal be allowed.

2. The cross-appeal be dismissed.

3. The judgment given on 22 December 1999 be set aside and in lieu thereof judgment be entered in favour of the respondent against the appellants in the sum of twenty dollars ($20.00) being nominal damages.

4. The appellants pay the respondent’s costs at first instance of the negligence issue incurred up to and including 20 August 1998 and the respondent pay the appellants’ costs of that issue thereafter.

5. The respondent pay the appellants’ costs at first instance in respect of the issue of damages.

6. The respondent pay the appellants’ costs of the appeal and the cross-appeal.

Note:

Background

Background to the litigation

There were three hearings before the learned primary judge. The first hearing was concerned with whether the appellants were liable to the respondent for negligence and breach of contract. On 23 October 1998 his Honour published reasons for his conclusion that the appellants were liable to the respondent in negligence. On 18 October 1999, the parties not having been able to reach agreement on quantum, a hearing took place to assess damages. On 5 November 1999 the primary judge published reasons for his decision that judgment should be entered in favour of the respondent against the appellants in the sum of $561,460. It became apparent that there had been an incorrect assumption by his Honour in respect of one factor in that calculation, which resulted in the appellants filing a notice of motion seeking variation of the orders made on 5 November 1999. On 22 December 1999, his Honour published reasons for his conclusion that there should be the adjustment sought by the appellants to the damages awarded. His Honour also had to resolve a dispute about costs. That dispute arose out of the fact that the appellants had, shortly before the hearing on liability, offered to settle the application for the sum of $600,000 plus costs. As his Honour found, that offer was worth more than the judgment awarded some two years later. In the reasons published on 22 December 1999 his Honour explained why he had decided to order the appellants to pay the respondent’s costs until 20 August 1998 (being a date a few days after the appellants made the offer) and declined the appellants’ motion that the respondent should pay its costs as from the date of that offer. In their appeal the appellants seek an order that the respondent pay their costs after 20 August 1998, to be taxed on an indemnity basis.Factual Background The appellants practise in partnership as solicitors under the name “Clayton Utz”. The respondent’s sole director and shareholder was a Mr Paul Montague Williams. Its paid-up capital was one dollar. Mr Williams used the respondent as his corporate vehicle for pursuing a gold mining prospect in the Philippines. The prospect was owned by a Mr Diotrepis Bautista, his wife and their company who have been referred to, collectively, as “the Filipino parties”. In September 1996, Mr Williams, on behalf of the respondent, engaged the appellants to act as its solicitors. He dealt with Mr Peter Gore, a partner in the Brisbane office of Clayton Utz. Mr Williams engaged the appellants to advise the respondent in relation to negotiations towards establishing a joint venture between the respondent and the Filipino parties. The retainer was later extended to transactions associated with that joint venture. On 20 November 1996, a memorandum of agreement (“the MOA”) between the Filipino parties and the respondent was signed. The appellants and a Philippines law firm retained by them on behalf of the respondent advised it almost from the outset of the negotiations of the MOA and, in particular, in relation to the drafting of that document.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

Furthermore, Mr Eckhof said that Spinifex would not have taken an indirect interest through the respondent, either by way of shares or by way of a contractual right to receive from the respondent a share of the product of the venture. Mr Eckhof was not cross-examined about the first of those alternatives, which was the one upon which the primary judge focussed. There was no finding by his Honour, contrary to Mr Eckhof’s evidence, that Spinifex would have agreed to take shares in the respondent as part of a renegotiation of what became the Spinifex Agreement. In our view, there was insufficient proof on the balance of probabilities that this aspect of Mr Gore’s negligence (if it was negligence) caused the respondent any damage.Conclusion For the foregoing reasons, in our view, the appeal should be allowed and the judgment set aside. There should be judgment for the respondent against the appellants for nominal damages. In Hanflex the sum was fixed at $10 as being comparable to the forty shillings awarded in 1971 in Sykes. As ten years have passed since the Full Court’s decision in Hanflex, there should be judgment for $20. There remains the question of costs. In Hanflex Demack J considered much the same question (at 229). The Full Court ordered that the plaintiff should have its costs of the trial at first instance in respect of the issue of negligence and the defendant should have his costs at first instance in respect of the issue of damages. The respondent was ordered to pay the costs of the appeal. The situation in the present case is further complicated by the fact that on 21 May 1999 the appellants sent a Calderbank letter to the respondent. That letter contained an offer to settle which was, so his Honour found, worth more than the judgment obtained. At first instance, by a notice of motion (filed on 11 November 1999) the appellants sought orders that they be required to pay the respondent’s costs on a party-and-party basis only up until 14 August 1998 and that the respondent pay their costs on a party-and-party basis after that date. On appeal, the appellants contended that if the judgment were not to be set aside, at least the costs order should be varied. This was because, so it was put, his Honour’s discretion had miscarried in that he had had regard to irrelevant and incorrect considerations. The appellants sought an order (if the appeal were otherwise dismissed) that the respondent pay the costs of the proceedings at first instance after 20 August 1998 and further, that those costs should be taxed on an indemnity basis. In our opinion, the facts do not disclose sufficiently unreasonable behaviour on the respondent’s part so as to justify any costs which it is to pay being taxed on an indemnity basis. However, we think that the appellants’ offer is a relevant consideration on the question of costs generally. In our opinion, taking an overall view of the litigation and its outcome, justice would be done if costs orders were made in the following terms:1.The appellants pay the respondent’s costs at first instance of the negligence issue incurred up to and including 20 August 1998, and the respondent pay the appellants’ costs of that issue thereafter.2.Respondent to pay the appellants’ costs at first instance in respect of the issue of damages.3. Respondent to pay the appellants’ costs of the appeal.

Ratio Decidendi

Legal Principle Established

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