Hawkins v Clayton

[1988] HCA 15

HIGH COURT OF AUSTRALIA

Mason C.J., Wilson, Brennan, Deane and Gaudron JJ.

HAWKINS v. CLAYTON

(1988) 164 CLR 539

8 April 1988

Negligence—Limitation of Actions

Negligence—Duty of care—Solicitor—Will held by solicitor—Failure to inform executor of death of testator and of contents—Whether duty to do so—Loss to estate caused by executor's ignorance of death—Measure of damages. Limitation of Actions—Tort—Accrual of cause of action—Running of time—Commencement—Breach by solicitor of duty of care to inform executor of testator's death—Loss to estate caused by executor's ignorance of death—Limitation Act 1969 (N.S.W.), s. 14(1).

Decisions

MASON C.J. AND WILSON J: We have had the advantage of reading the reasons for judgment prepared by Deane J. Although we have reached a different ultimate conclusion, the extensive discussion by his Honour of many aspects of the case relieves us from traversing much of the ground. We agree with the substance of all that his Honour has written, save with respect to the matter to which we now refer.

2. This matter is fundamental to the resolution of the case. Deane J. concludes that, in failing to take any positive steps to locate the executor, Mr Hawkins, during the period of more than six years after the death of the testatrix in circumstances where a few phone calls would have sufficed to locate him, the respondents failed to discharge the duty of care which it owed to him as the executor of her estate. His Honour finds the source of that duty of care to rest in the relationship of proximity existing between the respondents and the testatrix (and Mr Hawkins, in his capacity as executor) combined with the foreseeability of a risk of damage arising from a failure to take reasonable care.

3. It is clear that any relationship of proximity that exists in this case would not have arisen but for the professional relationship between the respondents and the testatrix. In determining the precise nature of the relationship giving rise to the alleged duty of care, we find it helpful to start with the contract under which the will was drawn and retained in the custody of the respondents. It is that contract which "indicate(s) the nature of the relationship that gives rise to the common law duty of care" (Central Trust Co. v. Rafuse (1986) 31 DLR (4th) 481, at p 521). Cf. Bowen v. Paramount Builders (1977) 1 NZLR 394, per Richmond P., at p 407. It was said by Windeyer J. in Voli v. Inglewood Shire Council (1963) 110 CLR 74, at p 85, in the context of ascertaining the duty of care which an architect owes to one who is a stranger to the contract between the architect and the building owner, that the contract "is not an irrelevant circumstance. It determines what was the task upon which (the architect) entered". So it is here. In the case of solicitors, the remarks of Oliver J. in Midland Bank v. Hett, Stubbs and Kemp (1979) Ch 384, at pp 402-403, are particularly pertinent:

"The extent of (a solicitor's duties to his client) depends upon the terms and limits of (the) retainer and any duty of care to be implied must be related to what he is instructed to do.

Now no doubt the duties owed by a solicitor to

his client are high, in the sense that he holds himself out as practising a highly skilled and exacting profession, but I think that the court must beware of imposing upon solicitors - or upon professional men in other spheres - duties which go beyond the scope of what they are requested and undertake to do."

4. The contractual terms upon which the will was left in the safe custody of the respondents were not expressed by the parties to the contract and remain to be inferred or imputed. As Deane J. observes, a number of terms can be readily inferred as a matter of actual intention. Either party could, during the life of the testatrix, bring the bailment of the will to an end by reasonable notice to the other party. If the will remained in the custody of the respondents when the testatrix died, they would maintain that custody until delivery to some person entitled to possession of it. Furthermore, the respondents were authorized, in the event of them having custody of the will after the death of the testatrix, to communicate its contents to any person having a legitimate interest in them. We agree with Deane J. that, so far as the actual intention of the parties is concerned, the contract goes no further than that.

5. If the respondents were under a contractual duty to take positive steps after the death of the testatrix to ensure that effect be given to her testamentary intentions, such an obligation must be implied as a matter of presumed or imputed intention. However, the implication of such a term is neither necessary for the reasonable or effective operation of the contract in the circumstances nor so obvious that it goes without saying. The problem which such an implied term would be seeking to redress - namely, the possibility that the existence of the will and the executor's appointment therein as executor would not be known to him at the time of the testatrix's death - could far more readily have been avoided by the testatrix taking the commonsense course of informing the executor of the existence of the will and where it was to be found. The instructions from the testatrix to the respondents did not encompass more than the preparation and execution of the will and the safe custody of it by the respondents. It is not suggested in the present case that the terms of the contract between the testatrix and the respondents were qualified or affected by any recognized professional practice.

6. Returning to the question of liability in tort, the relevant inquiry is whether the professional relationship of solicitor and client gave rise to a relationship of sufficient proximity founded upon an assumption of responsibility by the respondents and reliance thereon by the testatrix. The context within which that inquiry is made is a claim arising from a failure on the part of the respondents to act. In our opinion, the question must be answered in the negative.

7. The linchpin of the finding of Deane J. of liability is the conclusion that in accepting responsibility for custody of the testatrix's will after her death, the respondents effectively assumed the custodianship of the testatrix's testamentary intentions. As we have said, we do not think that the contractual relationship alone is sufficient to support such a conclusion. The absence of any contractual obligation to take positive steps after the death of the testatrix to facilitate the implementation of her testamentary intentions makes it difficult to find that the respondents assumed such a responsibility. We are unable to discern any other circumstance dehors the contractual relationship between the testatrix and the respondents which could be said to have so strengthened the professional relationship between them (and involving her executor) such as would import a common law duty of care on the part of the respondents to take positive steps to ensure that the existence and contents of the will were made known to the executor. We can see no basis for finding any assumption of responsibility such as is alleged. There may be circumstances in which the law may imply a voluntary undertaking to assume responsibility (see Hedley Byrne &Co. Ltd. v. Heller &Partners Ltd. (1964) AC 465, per Lord Devlin, at p 529) but in our opinion this is not such a case.

8. Nor is there any basis upon which it could be concluded that, if there were such an assumption of responsibility, either the testatrix or her executor relied on it. The testatrix did not give any instructions for the respondents to take positive steps. In 1973 she communicated with the respondents to mention the fact that she had severed her relationship with the executor and principal beneficiary named in the will, and to say that she intended to make a new will. A short time later the respondents reminded her that they were waiting for instructions. The testatrix replied that she was still thinking about the terms of a new will and would get in touch with the respondents in due course. That was the last occasion of any communication between them. She died on 18 January 1975. There is nothing in the evidence to explain why she did not carry out her expressed intenton to make a new will and there is simply no evidence to suggest that she was relying upon positive action by the respondents to communicate with her executor after her death.

9. The consequences for other cases that may flow from a different conclusion could be far-reaching. There is nothing particularly special about the circumstances of this case that would not be capable of application to every solicitor having the custody of a will. If the fact of the custody is to make the practitioner the custodian of the testator's testamentary intentions, it would seem to follow that he must take reasonable care to learn not only of the whereabouts of the executor but also of the death of the testator. The obligation that thus arises could extend over many years and prove onerous indeed. Further, is a solicitor to be held liable for inaction when the executor knows of both the whereabouts of the will and his appointment as executor, but is not aware of the testator's death? Where the named executor has predeceased the testator and there are no family members or beneficiaries of the testator within the jurisdiction, what must a solicitor do? How far and wide must he search? In our view, these matters are neither irrelevant nor fanciful. On the contrary, they accurately test the correctness of determining liability in the present case on a finding that the respondents assumed custody of the testatrix's testamentary intentions.

10. It was submitted for the appellant that the respondents came under a duty of care by reason of the actions undertaken by them following the death of the testatrix. Those actions included advising a nephew of the testatrix, Mr Ronald Lamb, in response to his request, of the contents of the will and taking steps, at his request, to secure payment out of the estate for funeral expenses. The respondents also answered inquiries made by relatives of the testatrix as to the contents of the will and, in the search for a later will, inspected documents and made inquiries. These actions were taken in the context of a belief by the respondents, later shown to be unfounded, that the executor had disappeared. They were taken on the instructions of Mr Lamb. Years later, after Mr Hardwick, the solicitor dealing with Mr Lamb and the matter generally, had retired and after the executor had been located by the respondents and had engaged new solicitors, the respondents rendered an account on the estate for the services rendered after the death of the testatrix.

11. The difficulty which the appellant faces in mounting this submission is to establish a link between this conduct of the respondents and a duty to take reasonable care by way of positive steps to locate the executor. The only action initiated by the respondents was taken in response to Mr Lamb's representations to them. In our opinion, their so-called intermeddling in the estate has no bearing on the existence or otherwise of the requisite relationship of proximity between the testatrix or her executor and the respondents sufficient to found the alleged duty.

12. Our conclusion then is that the respondents were not under any duty of care to Mr Hawkins, either in his capacity as executor of the will of the testatrix or as a beneficiary. The appeal should therefore be dismissed.

BRENNAN J: The material facts are set out in the judgment of Deane J. Those facts give rise to a number of questions. The first is: did Mr Hardwick send Mrs Brasier the original of her will on 27 September 1971 or did Messrs Clayton Utz &Company ("the solicitors") continue to hold it until after her death? I agree with Deane J. that the better view is that the solicitors continued to hold the original will until after Mrs Brasier's death, but I would mention the evidence which, in my view, cogently supports that finding. If the original will had been returned to Mrs Brasier the circumstances known to Mr Hardwick would have confirmed the presumption of its subsequent revocation. But when Mr Hawkins applied for a grant of probate of a copy of that will, Mr Hardwick and Mr Sullivan (another partner in the respondent firm) each swore an affidavit in support of the application. Mr Hardwick deposed that a photostat copy of the will (not the original) had been sent to Mrs Brasier and he annexed to his affidavit copies of two letters written by him, one dated 12 September 1978 the other dated 8 August 1979, referring, inter alia, to "the Will which we hold". Mr Sullivan's affidavit stated his belief that "the xerox copies of the aforesaid Will ... were made by the firm after the deceased's death". Those affidavits, made in 1981 in order to answer the question whether the instrument propounded for probate was a copy of the last will of the testatrix, have much greater weight than Mr Hardwick's uncertain contrary impression when he gave evidence at the trial of this action in 1984.

2. On that finding of fact, the next question is whether the solicitors were under a duty as custodian of the original will to take steps promptly to inform Mr Hawkins as executor or as beneficiary of the existence of the will. The plaintiff's statement of claim alleged that the solicitors owed Mr Hawkins a duty of care which the solicitors breached by acting "without expedition" and in failing "to take any or any proper or adequate measures to inform (Mr Hawkins) that he had been nominated as principal beneficiary and as executor of the will of the late Melinda Ellen Brasier". Yeldham J. found there was no relevant duty of care. In the Court of Appeal, the majority (Kirby P. and Glass J.A., McHugh J.A. dissenting) found it unnecessary to determine that question, holding that any claim arising from breach of such a duty was statute barred. As time commences to run under s.14(1)(b) of the Limitation Act 1969 (N.S.W.) from the date on which the cause of action first accrues to the plaintiff or to the person through whom the plaintiff claims and as that date depends on a precise understanding of the cause of action I must address the question whether the solicitors owed a duty to Mr Hawkins, the person through whom the plaintiff (his widow and executrix) claims.

3. In the Courts below the plaintiff pleaded two causes of action each of which required proof of a duty owing by the solicitors promptly to inform Mr Hawkins of the will: breach of contract and a tortious breach of duty. The contract which the plaintiff sought to establish was a contract between Mr Hawkins and the solicitors. The proposition that there was a contract creating such a duty seems to have been based chiefly on the suggestion that the solicitors had purported to act on behalf of Mr Hawkins and that Mr Hawkins had ratified their actions, the contract being inferred from the fact that Mr Hawkins met a demand for payment to the solicitors of costs incurred by them before they informed Mr Hawkins of the will. The costs included items relating to enquiries about Mr Hawkins and his whereabouts. It is not possible to infer from these circumstances that the solicitors made a contract with Mr Hawkins by which they undertook a duty of care in performing the professional services which they had performed before obtaining instructions from Mr Hawkins. However, Yeldham J. found that a different contract was made between Mr Hawkins and the solicitors. Mr Hawkins, for a brief period after being told of the will, had retained the solicitors to obtain probate for him. But a finding of that retainer does not advance the plaintiff's case. The retainer could not be construed as containing a term imposing retrospectively a duty of care on the solicitors or imposing on them a liability to compensate Mr Hawkins for their earlier failure to tell him of the will. Contract between Mr Hawkins and the solicitors may be put aside in considering whether there was any duty owed by the solicitors to Mr Hawkins to inform him of the existence of Mrs Brasier's will. The fact is that there was no relevant relationship of solicitor and client between the solicitors and Mr Hawkins.

4. Nor is there any evidence of a contract between the solicitors and the testatrix governing the solicitors' obligations to disclose the will to the nominated executor or beneficiaries after the death of the testatrix. Had there been such a contract, the benefit of the solicitors' promise would have passed on her death to her executor, assuming the beneficial interest in any such promise was not conferred on him when the promise was made: Marshall v. Broadhurst (1831) 1 C &J 403 (148 ER 1480). But it is unnecessary to consider the possibility that a contract between the solicitors and the testatrix was the source of a duty owed to Mr Hawkins to disclose the existence of the will after the death of the testatrix. No such contract was pleaded; no such contract was relied on in the Courts below.

5. The more substantial cause of action which was litigated in the Courts below was a claim in tort for damages for breach of a duty of care allegedly owing by the solicitors to Mr Hawkins. Though the duty for which the plaintiff contends may be described as a duty of care, that description is not adequate to bring out the nature of the duty which the plaintiff must establish. That is, a duty to act, a duty to disclose promptly to Mr Hawkins the existence of the will. It is not a duty to be careful in doing something which, in the absence of reasonable care, might foreseeably cause him loss. Nor is it a duty to be careful in giving him information in reliance on which he intends to act in connection with some matter of business. The duty for which the plaintiff necessarily contends is a duty to take some positive steps to find Mr Hawkins and inform him of the will, and to take those steps promptly. The relevant circumstances out of which such a duty - I shall call it a duty of disclosure - might arise are the solicitors' custody of the will after the death of the testatrix, the nature of the will and its contents, the purpose for which the solicitors accepted custody of the will and the foreseeable consequences of failure promptly to disclose the will to Mr Hawkins. To determine whether a duty of disclosure arises out of these circumstances, it is helpful to recall the character of a solicitor's custody of a client's will.

6. A solicitor to whom a testator entrusts the custody of his will is a bailee of the will during the lifetime of the testator. The solicitor is bound to deliver it to the testator at any time during his life - for the testator may wish to alter it - and the solicitor can claim no lien upon it: Balch v. Symes (1823) Turn &R 87, at p 92 (37 ER 1028, at p 1030). Upon the death of the testator, the bailment is at an end. Walter J. in In re Aebly's Will (1941) 29 NYS 2d 929, at pp 931-932; affirmed (1941) 31 NYS 2d 664, stated the change in the character of the custody in this way:

" The mere fact of death works important changes. There is no longer a bailor. The thing bailed is transformed from an ambulatory instrument into a muniment of title to property. The bailment, as such, is at an end. The persons entitled to the testator's property then have a right to demand production and probate, not of the ambulatory instrument that was bailed, but of the muniment of their title, and the custodian thereof is under a duty to comply with that demand, but that right and that duty are a new right and a new duty which arise by operation of law and spring from the State's jurisdiction over decedents' estates. They are not implied terms of the contract of bailment, and before such new duty can be said to exist knowledge or notice of the fact which gives rise to it, the fact of death, must be brought home to the person to be charged with it."

From the time when the ecclesiastical courts enjoyed exclusive jurisdiction in probate matters, the custodian of a will of a deceased testator has been compellable to produce it to the court. The law did not recognize a solicitor's lien affecting that obligation: Georges v. Georges (1811) 18 VesJun 294 (34 ER 328). In Lord v. Wormleighton (1822) Jac 580, at p 581 (37 ER 969) Lord Eldon L.C. said with reference to a solicitor who has made a will for his client:

" He engages to make an instrument effectual for the purposes of the testator, which it cannot be unless it is produced elsewhere. There is no pretence for any lien."

7. Since the Court of Probate Act 1857 (U.K.) (20 &21 Vict c77, s.26), the obligation to produce has been statutory: see the Wills, Probate and Administration Act 1898 (N.S.W.), s.150, which authorizes any person to make an application for an order that any testamentary writing be brought into the registry. Orders have been directed to an executor (In the Goods of Shepherd (1891) P 323, at p 326) and to a solicitor retained by a person claiming a right to have custody of the will: In the Estate of Harvey (1907) P 239. In the latter case, Sir Gorell Barnes P. (at p 240) explained why no claim of professional privilege is recognized: "The will does not belong to the client, but to the Court". It follows that a solicitor who has custody of a deceased testator's will does not hold it under any retainer he may have had from the testator and his custody under any retainer from a living person is subject to his obligation to bring it into the registry when ordered to do so. It may be that he is entitled to bring the will of a deceased testator into the registry without waiting for instructions from the executor (see s.30 of the Wills, Probate and Administration Act which is modelled on s.66 of the Court of Probate Act 1857 (U.K.)), but it is not necessary to consider that question in this case.

8. The successful concealment of a deceased testator's will precludes enjoyment of the interests in property created by the will. For that reason, the criminal law has proscribed the concealment of a will for any fraudulent purpose: see the Crimes Act 1900 (N.S.W.) s.135. The need for such an offence was perceived even in Roman times: see Sir James Stephen, A History of the Criminal Law of England (1883), vol.1, p 20 and, for later history, vol.3, p 148; s.22 of the Larceny Act 1829 (U.K.) (7 &8 Geo IV, c.29) and Russell on Crime, 12th ed., vol.2, pp 901-902. A testator who wishes to safeguard his executor against the possibility of concealment has a facility available to him under s.32 of the Wills, Probate and Administration Act. That section provides for the depositing of a will during the lifetime of a testator and casts on the registrar a duty on the testator's death to deliver the will to the executor named in it. That Act does not impose a corresponding duty on any other custodian of a will, so the question remains whether the law otherwise creates such a duty or at least a duty to take some steps to inform an executor of the existence of the will and the custody out of which he can secure its delivery.

9. Consider the usual purpose for which a testator entrusts custody of his will to his solicitor (or, for that matter, to some other custodian of wills). The usual purpose is for safekeeping both before and after death so that, after death, the will can be produced in order that it may be made effectual. That is the purpose for which, in the ordinary case, custody is accepted. But if the executor is ignorant of the will, he will not call for production of the will nor will he enter upon administration of the estate. If the custodian of the will has reasonable grounds for believing that the executor is ignorant of the will, it is foreseeable that non-disclosure of the will to the executor will result in the will not being produced and not being made effectual. Unless some duty of disclosure be imposed on the custodian and be discharged by him, the will would have to continue in the custodian's safekeeping indefinitely, and the purpose for which the custodian accepted custody would go unfulfilled. Some duty of disclosure must be imposed on the custodian. That is not to infer a contract or undertaking to disclose from acceptance of custody; it is merely to regard the acceptance of custody for the stated purpose as material to the existence of a duty. The duty of the custodian "is cast upon him by law, not because he made a contract, but because he entered upon the work", as Windeyer J. said of an architect in Voli v. Inglewood Shire Council (1963) 110 CLR 74, at p 85. It is the nature of the instrument which the custodian accepts for safekeeping which gives the relevant character to the work on which the custodian has entered.

10. After the death of a testator, the will is not the testator's instrument of title to his property. Ex hypothesi, the property is no longer his. Statute apart, the will of a deceased testator is an instrument which, subject to the executor's right to renounce the office of executor, creates in the executor the proprietary rights of the owner of the estate as from the death of the testator (Hollis v. Smith (1808) 10 East 293, at p 295 (103 ER 786, at p 787); Meyappa Chetty v. Supramanian Chetty (1916) 1 AC 603, at pp 608-609; Ryan v. Davies Bros. Ltd. (1921) 29 CLR 527, at p 536), albeit executors "are but ministers and dispensers of the goods of the dead": Pinchon's Case (1611) 9 CoRep 86b, at p 88b (77 ER 859, at p 863). It may be that by reason of s.61 of the Wills, Probate and Administration Act, the real and personal estate of a deceased testator is vested in the Public Trustee from the death of the deceased until probate; but s.44 provides that, upon a grant of probate to the executor, the real and personal estate of a testator becomes vested in the executor as from the death of the deceased. The vesting of legal title to the estate is one thing; knowledge of the title is another. Wherever the title to the estate may formally vest on the death of a testator, the executor needs to know of the will and its contents before he can accept the office and undertake administration of the estate in accordance with the will. Knowledge of the will and its contents by the executor is necessary to make the will effectual. If the custodian owed no duty to disclose the will to the executor, it would be legitimate for the custodian by silence to deny enjoyment of the estate to the person entitled to it. That result is inconsistent with the purpose for which custody was accepted. Some duty to disclose must exist, but it does not arise simply from foreseeability of loss if no disclosure takes place. The duty is a duty to act and such a duty needs more than foreseeability of loss to summon it into existence. I venture to recall what I said in Sutherland Shire Council v. Heyman (1985) 157 CLR 424, at p 479:

" Foreseeability of an injury that another is likely to suffer is insufficient to place me under a duty to him to act to prevent that injury. Some broader foundation than mere foreseeability must appear before a common law duty to act arises. There must also be either the undertaking of some task which leads another to rely on its being performed, or the ownership, occupation or use of land or chattels to found the duty: cf. Windeyer J. in Hargrave v. Goldman ((1963) 110 CLR 40, at p 66)."

In my opinion, a duty of disclosure arises from custody of the will after the death of the testator, the nature of the will and the purpose for which custody is accepted as well as from the foreseeable consequences of non-disclosure.

11. Analogous duties are not numerous, for the occasions are few when a person with an interest in property needs to be told of it in order to be able to enjoy it. In Hawkesley v. May (1956) 1 QB 304, Havers J. held that the trustees under a deed of settlement had a duty to inform a beneficiary, on his attaining his majority, that he had an interest in the capital and income of the funds of the trust. His Lordship accepted that he was bound by the rule in In re Lewis. Lewis v. Lewis (1904) 2 Ch 656 that, in the absence of a direction in the will, an executor owes no duty to inform a legatee of the terms of a legacy even though the executor takes a beneficial interest in the legacy in the event of the legatee's failure to satisfy a condition attached to the legacy - a rule which Havers J. said had "no attraction for me on the merits": p 322. However, his Lordship was able to distinguish between an interest taken under a public document (a will in Somerset House) and a private document (a trust deed). The ground of distinction may seem tenuous; another ground of distinction may be that an executor's duty is to distribute to legatees who are entitled rather than to assist them to satisfy conditions of entitlement. However that may be, the duty imposed in Hawkesley v. May is analogous to the duty of disclosure which, in my opinion, arose in the circumstances of this case. It may be that there is a broad principle, founded on general standards of honesty and fair dealing, that some duty of disclosure is imposed on one who holds the property of another or an instrument of title to the property of another as a bare custodian or trustee when the other does not know of his entitlement to the property and the holder has reason to believe that the other does not know of his entitlement. In appropriate circumstances, such a broad principle would support a duty of disclosure owed by the custodian of a deceased testator's will to a beneficiary when the nominated executor is dead or cannot be found or renounces the office of executor. That duty does not need to be considered in this case; in this case, the nominated executor accepted the office. An executor's assumption of office is inconsistent with any further duty of disclosure. Thereafter the duty of making the will effectual is his to discharge.

12. The law imposes the duty on the custodian of a deceased testator's will for the protection of the executor and, derivatively, for the protection of the beneficiaries. It is not a duty owed to the deceased testator. The damage suffered in consequence of a breach of the duty is not a loss of title to the assets in the estate nor a loss of the executor's right to possession of the assets. A breach of the duty does not infringe any proprietary or possessory rights vested in the executor by the will. The loss is a loss of the exercise or enjoyment of the rights of ownership by an executor who does not know of his entitlement. As such a loss increases with the passing of time, the duty to disclose is a duty to disclose promptly.

13. The extent of the duty to disclose promptly is not at large: it is limited by reference to the purpose of making the will effectual. If the executor knows of the will, its contents and its custody, further disclosure by the custodian is not needed. And when disclosure is required, the steps which need to be taken are those which are reasonable in the circumstances including the contents of the will, the custodian's knowledge and means of knowledge of the identity and location of the parties interested under the will and of their relationship with one another. The cost of extensive enquiries and the expected value of the estate are relevant considerations in determining what steps are reasonable. The cost of reasonable enquiries is a cost incurred to make the will effectual and, I should think, a testamentary expense which the executor would be authorized to pay out of the estate in due course: see Hurst v. Hurst (1886) 12 VLR 93, at p 99; and cf. In re Vincent. Rohde v. Palin (1909) 1 Ch 810. I would state the common law duty which a custodian of a deceased testator's will owes to the executor named in the will in this way: where the custodian has reason to believe that disclosure by him to the executor of the existence, contents or custody of the will is needed in order that the will may be made effectual, the custodian is under a duty promptly to take reasonable steps to find, and to disclose the material facts to, the executor.

14. Such a duty would seldom be onerous to discharge. In earlier times, the summoning of interested parties to a formal reading of the will was no doubt a means of discharging the solicitor's duty as custodian in many cases. Nowadays, the formality may be dispensed with but, if some other reasonable and available steps are not taken to make disclosure when disclosure is needed in order that the will may be made effectual, and the executor's exercise or enjoyment of his rights in respect of the estate is adversely affected thereby, the custodian may be liable in tort to the executor.

15. I am conscious that it has been said in recent judgments of this Court that the existence of a duty of care depends on whether the requisite relationship of proximity exists between a person who is said to owe the duty and a person to whom the duty is said to be owed and that I have not adopted that approach in determining whether a duty of disclosure exists in this case. The notion of proximity as I understand it is simply Lord Atkin's neighbourhood principle which depends on the reasonable foreseeability of loss. Others have understood the notion to subsume foreseeability within a wider concept underlying the wide variety of cases which may be gathered under the heading of "negligence". In deference to majority judgments in this Court, I would be constrained to enquire whether "the requisite relationship of proximity" existed if that phrase defined a legal criterion of such precision that it answered the question whether, in the present circumstances, a duty of care exists. I do not understand the wider concept of proximity to furnish a test for determining whether the particular facts of a case give rise to a duty of care. In San Sebastian Pty.Ltd. v. The Minister (1986) 162 CLR 340, at pp 367-369, I explained the difficulties I see in attempting to apply the wider concept of proximity to the facts of a particular case. Lacking the specificity of a precise proposition of law, the wider concept remains for me a Delphic criterion, claiming an infallible correspondence between the existence of the "relationship of proximity" and the existence of a duty of care, but not saying whether both exist in particular circumstances. When the existence of a duty in a new category of case is under consideration, the question for the court is whether there is some factor in addition to reasonable foreseeability of loss which is essential to the existence of the duty: see Jaensch v. Coffey (1984) 155 CLR 549, at pp 575-577. In many of the new categories of case in which a duty has been held to exist, reasonable foreseeability of loss has not been sufficient in itself to give rise to a duty to act or to abstain from acting in order to avoid the loss. In a case where a novel category of duty is proposed and the factors which determine its existence must be identified, the court may have regard to a variety of considerations: the nature of the activity which causes the loss, the nature of the loss, the relationship between the parties and contemporary community standards (especially where liability for breach of the proposed duty would be disproportionate to the risk which a person might reasonably be expected to bear as an incident of engaging in the particular activity if no limiting factor were identified). In Sutherland Shire Council v. Heyman (at p 481) I suggested that it is preferable for the law to develop new categories of negligence incrementally and by analogy with established categories, for the established categories provide firm evidence of the kinds of factors which condition the existence of the various categories of duties. It is one thing to speak in general terms about the considerations which affect the development of the law; it is another to define the law as developed. In a novel category of case, when it appears that the proposed duty depends on some factor additional to reasonable foreseeability of loss, the additional factor must be identified. In my opinion, the identification must be sufficiently precise to permit the tribunal of fact (whether judge or jury) to ascertain the existence of the relevant factor or factors: see San Sebastian Pty.Ltd. v. The Minister, at pp 367-368. Indeed, it is only by reference to factors so precisely identified that it is possible to define the nature and content of the proposed duty. And it is only by reference to the nature and content of a duty that it is possible to define the elements of the cause of action in tort for its breach. Having defined the duty of disclosure owed by the custodian of a deceased testator's will to the executor named in the will, it is necessary next to turn to the elements in the cause of action for its breach.

16. The elements which are essential to the existence of a cause of action for breach of a duty of disclosure owed to an executor include, of course, damage. The nature of the damage which a breach is apt to cause discloses other elements in the cause of action. The damage caused by breach of a duty of disclosure owed to an executor can flow only from his ignorance of the will or its contents or its custody. That ignorance prevents his assumption of the office of executor. It may be tautologous to say that the executor's ignorance of the will or its contents or its custody is an element in the cause of action founded on breach of the duty. After all, if the executor knows of the will, its contents and its custody, he cannot establish the necessary causal relationship linking a breach of the duty of disclosure and any loss occasioned by his failure to exercise or enjoy his rights in respect of the estate. Once the executor knows the material facts, no further failure to disclose on the part of the custodian can be productive of damage. The damage recoverable for breach of the duty of disclosure thus exhibits uniformly this feature: the damage caused by the breach of duty is generated by events occurring when the executor is ignorant of his title to the estate and before he has elected whether or not to renounce the office of executor. The damage recoverable for breach of the duty also exhibits uniformly a further feature: the damage is not caused by an infringement of the proprietary or possessory rights of the executor in respect of the assets in the estate. The executor's proprietary or possessory rights are unaffected, but they are not enjoyed or exercised. The cause of action arising from a breach of a duty of disclosure has a different origin from a cause of action arising from an infringement of the proprietary or possessory rights of the executor over the assets in the estate. It does not devolve on the executor as an asset in the estate of the testator. Nor does it arise out of the executor's administration of the estate. To the contrary, it arises out of his failure to enter upon the administration of the estate. Though the cause of action enures for the benefit of the estate, it is not complete when the estate suffers loss by reason of the nominated executor's failure to enter upon administration of the estate: he may renounce the office and never enter upon administration of the estate.

17. Although the title of an executor to the assets in the estate is derived from the will - I leave aside s.61 of the Wills, Probate and Administration Act as immaterial to the point under discussion - the proprietary and possessory rights derived from the will are not the source of the executor's cause of action for breach of a duty of disclosure. In the event of an effective renunciation of office by the person appointed as executor, the title to the estate - including the title to causes of action which survive the death of the testator - devolves as though that person had not been appointed as executor (Williams on Executors, 14th ed. (1960), vol.1, p 48). But the law of torts makes no provision for the divesting of a cause of action for damages for breach of duty. It would be absurd to postulate the vesting of a cause of action for damages for breach of a duty of discharge in a person who, though nominated as executor, is able to renounce and renounces the office. Until the person nominated as executor elects to accept the office or precludes himself from renouncing it - that is, until that person assumes the office of executor - it is uncertain whether he will be the one to suffer loss as executor. It is only on his assumption of the office of executor that his cause of action is complete. Only then can it be said that any damage to the estate caused by his failure to enter upon administration of the estate is in fact suffered by him as executor. A duty of disclosure, breach, ignorance of the will or its contents or custody, resultant failure to enter on the administration of the estate, resultant loss to the estate and assumption of office as executor must co-exist in order to establish the cause of action.

18. In this case, the only elements in doubt were the duty of disclosure and breach. For the reasons stated, the solicitors were under a duty of disclosure. The next question is whether they were in breach.

19. To establish breach, the plaintiff had to prove that there were reasonable steps which Mr Hardwick might have taken to find Mr Hawkins and which, if he had taken them, would have avoided the loss which Mr Hawkins suffered as executor. It is clear that any loss suffered by Mr Hawkins as executor could have been avoided if Mr Hardwick had consulted the telephone directory - which contained an entry under Mr Hawkins' name at all material times - and had telephoned him promptly after learning of Mrs Brasier's death. If evidence of the obvious were needed, the evidence of Mr Windeyer established that consultation of the telephone directory was a reasonable step to take. Had Mr Hawkins been informed of the will promptly, none of the items by reference to which the plaintiff seeks to quantify the loss claimed would have been suffered. The relevant items consist in the deterioration of a house property (the principal asset in the estate), the removal or destruction of furniture that was in the untended house, the loss of any rent which should have been paid by Mr Lamb (a nephew of the testatrix) in respect of his unauthorized occupancy of the house, the loss of income which might have been derived from the house and a penalty incurred for late lodgment of a return for death duty. These items occurred between January 1975 when the solicitors learnt of Mrs Brasier's death and March 1981 when they informed Mr Hawkins of the will. There is no reason to suppose that, if Mr Hawkins had been informed of the will promptly he would not have promptly accepted the office of executor, taken possession of the estate, occupied or let the house and made a death duty return in due time. When Mr Hawkins was informed of his unexpected windfall, that is what he proceeded to do though it was too late to avoid the penalty on the late return.

20. The breach of the solicitors' duty was not an absolute failure to take reasonable steps to inform Mr Hawkins of the will; in March 1981 such steps were taken and Mr Hawkins was informed. The solicitors' breach of duty consisted in a failure to take reasonable steps to inform Mr Hawkins promptly. The information given to Mr Hardwick no doubt diverted his attention from pursuing the search for Mr Hawkins through the telephone directory or other address lists available for public inspection. Though the diversion serves to explain the failure to inform Mr Hawkins of the will promptly, it provides no excuse.

21. The natural and foreseeable consequence of the solicitors' failure to inform Mr Hawkins of the will promptly was that, when Mr Hawkins accepted the office of executor and came into possession of the estate, he had lost the benefit of possession of the estate which he would have had as executor if the solicitors had informed him of the will. That loss must be distinguished from other and different losses which arose by infringement of the proprietary or possessory rights which devolved on Mr Hawkins as executor. The loss caused by the solicitors' breach of duty may be assessed by reference to, but is not, the rent which ought to have been paid by Mr Lamb for his unauthorized occupation of the house or the damage done to the house by unknown vandals or the loss of furniture occasioned by unknown persons who stole or broke the furniture. The executor may have causes of action against the persons responsible but he is not required to enforce them in exoneration of the solicitors' liability. What the plaintiff is entitled to recover from the solicitors is compensation for the loss flowing from the delay in Mr Hawkins' taking possession of the estate as executor. The period of his being out of possession by reason of the solicitors' breach of duty to inform him promptly commences from the time when, if they had performed their duty, he would have been informed of the will and would have been able to take possession of the estate; it terminates when he was able to take possession of the estate after being informed of the will. Neither date has been precisely found, though it is likely that the period commenced at some time in 1975 and ended in March 1981. No assessment has been made of the loss sustained by Mr Hawkins as executor in being out of possession during this period, nor has a formal finding been made that the penalty for late lodgment of the death duty return is a loss caused by the solicitors' breach of duty.

22. In the Court of Appeal the majority did not find it necessary to consider these questions. The majority did not find a breach of duty but, assuming in the plaintiff's favour that the solicitors were guilty of negligence, their Honours held that any cause of action in negligence was extinguished by operation of s.14(1)(b) and s.63 of the Limitation Act. In my opinion this Court should now find that there was a breach of duty and that it caused some loss. But that finding will prove a Pyrrhic victory for the plaintiff if the action is statute barred. That leads us to the final question.

23. The solicitors in their defence pleaded that the action was statute barred and in argument they rely on the Limitation Act as an ultimate defence if it should be found that they were otherwise liable for breach of duty. The submission made on their behalf is that the damage caused by any breach of duty on their part began in 1975 or, in any event, not later than six years before the action was commenced on 22 November 1982. By November 1976 at the latest, so the argument goes, the period of limitation had commenced to run so that the plaintiff's cause of action was extinguished by the time the solicitors told him of the will or within a relatively short time afterwards. Of course, the injustices occasioned by statutes of limitation have been seen in many cases (see, for example, Cartledge v. E. Jopling &Sons Ltd. (1963) AC 758 where time was held to run before the plaintiff discovered that he had contracted compensable pneumoconiosis) and have led to modification of the bar in personal injury cases: see Pt III Div.3 of the Limitation Act. Wilson J. in Kamloops v. Nielsen (1984) 2 SCR 2; (1984) 10 DLR (4th) 641 observed that "perhaps the most serious concern is the injustice of a law which statute-bars a claim before the plaintiff is even aware of its existence": p 40; p 685. It would not be surprising if the application of s.14(1)(b) of the Limitation Act to cases of economic loss sometimes worked an injustice. The Act may be pleaded by a defendant whether its operation will serve the ends of justice or not. This was not a case in which the plaintiff's claim depended on a contest between the contradictory recollections of opposing witnesses whose memories were likely to be dimmed by the passage of time; nor was it a case where a disputed claim had been allowed to lie dormant while the limitation period ran. It was a case in which the whole of the material evidence as to breach of duty came from the solicitors themselves and from their own documents. Yet, if the argument founded on the Limitation Act is right, the solicitors' breach of duty, persisted in throughout all or most of the limitation period, has successfully produced an exemption from their liability to compensate an executor for loss which their breach of duty caused. It is not an attractive argument. If the argument be right, there is an incentive for a solicitor whose breach of a duty imposed by law causes damage to an executor to conceal it from the executor until six years have passed, even though further damage may accrue from day to day so long as the concealment continues. The argument does not sit easily with the public perception, sedulously cultivated by professional societies, that the professional standards of solicitors assure substantial protection in the administration of the estates of deceased clients. The argument is no more attractive if it is advanced at the insistence of professional insurers. The terms of a policy which is apt to qualify the protection expected by the public are a matter of private contract or perhaps of negotiation by professional societies.

24. Whether the raising of the Limitation Act in a case like the present is regarded as appropriate or not, the issue raises questions which depend on the answer to a technical question: when does a cause of action in tort for breach of a duty to disclose first accrue? The majority of the Court of Appeal held that such a cause of action first accrues when damage occurs irrespective of the claimant's knowledge (per Kirby P.) or as soon as the wrongful act has caused some damage beyond what can be regarded as negligible (per Glass J.A.). There is no doubt that most causes of action for negligence first accrue when the plaintiff first suffers damage caused by the defendant's breach of duty. The ordinary rule is restated in Cartledge v. E. Jopling &Sons Ltd. in terms reproduced by Glass J.A. in the Court of Appeal. Difficulties in applying the rule have been encountered in England in cases where damage has occurred on land or defects have occurred in the construction of buildings, but there is no reason to doubt the applicability of the orthodox view: see the discussion in Sutherland Shire Council v. Heyman, at pp 489-494. There are some observations in State of South Australia v. Johnson (1982) 42 ALR 161 which suggest that time runs from discovery of damage rather than from the occurrence of damage, but those observations are to be accounted for by the conventional basis on which the parties chose to fight the case - a basis which precludes the judgment in that case from being treated as a rejection of established legal principle. This case, however, is not an ordinary case in which a plaintiff seeks damages for negligence. For reasons earlier stated damage is not temporally the last element of the cause of action to occur. Unlike the ordinary case, the last element to occur in a case of the present kind is the nominated executor's assumption of the office of executor. Until that occurs, the cause of action is not complete. For the purposes of s.14(1)(b) of the Limitation Act, "time runs from the accruer of the cause of action, but a cause of action does not accrue unless there be some one who can institute the action": Meyappa Chetty v. Supramanian Chetty, at p 610; and see Thomson v. Clanmorris (Lord) (1900) 1 Ch 718, at pp 728- 729. Until the nominated executor assumes the office of executor, the cause of action does not accrue and time does not begin to run. If a cause of action is itself an asset which devolves on the executor or arises from an infringement of the proprietary or possessory rights of an executor in respect of the estate, the executor's ignorance of his title would not prevent the time from running: cf. Knox v. Gye (1872) LR 5 HL 656. But where no action can be brought by the nominated executor until he assumes office, time runs only from that event. Time commenced to run in this case only from Mr Hawkins' assumption of the office in March 1981. The action was commenced within six years thereafter. The defence based on the Limitation Act fails.

25. The appeal must be allowed accordingly. There must be judgment for the plaintiff for damages to be assessed by the Supreme Court unless the parties can agree on an assessment.

DEANE J: The respondents were, at relevant times, members of a leading Sydney firm of solicitors ("the firm" or "the respondent solicitors"). They were sued in the Supreme Court of New South Wales by Mr. Claude Harold Hawkins who was named as executor and residuary beneficiary under the will of Mrs. Melinda Ellen Brasier ("the testatrix"). The action was for damages for an alleged failure to take reasonable steps to inform Mr. Hawkins of his interest under the will until some six years after the death of the testatrix. After the institution of proceedings, Mr. Hawkins died. The action was continued by the present appellant who is his widow and the executrix of his will and, by devolution, of the will of the testatrix. Neither side suggests that anything turns upon Mr. Hawkins' death and it will be convenient to use the phrase "the plaintiff" to refer indifferently to him and to Mrs. Hawkins in their successive roles as such.

2. The testatrix was a client of the firm. Her will was prepared for her by a senior partner, Mr. George Hardwick, who had acted for her over a period of some twenty years. It was executed in January 1970. It provided for a legacy of $200 to an adopted daughter of the testatrix and a bequest of all moneys standing to her credit in any bank account to a brother, Frederick Norman Lamb, if he should survive her. Otherwise, having appointed Mr. Hawkins as sole executor, it left to him the balance of the testatrix's estate. After the will had been executed by the testatrix, it was retained by the firm for safe keeping.

3. In August of the following year, the testatrix's brother, Mr. Lamb, died. On 18 September 1971, the testatrix wrote to Mr. Hardwick in the following terms:

"Would you kindly forward my Will to me, as I

wish to make another one, I lost my brother last

month, &it has upset things with me, trusting

this finds you quite well. Thanking you."

On 27 September 1971, the firm wrote in reply to the testatrix. According to the copy which remained in the firm's file and again omitting formal parts, that letter read as follows:

"Thank you for your letter of the 18th instant

and we enclose a photostat copy of the Will which you made.

We are indeed sorry to hear of the loss of

your brother and we look forward to receiving instructions from you as to your new Will."

It should be noted that the above letter indicates that the testatrix's request that her actual will be forwarded to her was not complied with. Instead, the letter states that what was enclosed was "a photostat copy of the Will". No further instructions were received from the testatrix by the firm at that time.

4. Mr. Hawkins was not related to the testatrix. For some years prior to the making of the testatrix's will, he had lived, with his family, as a "tenant" in her home in the Sydney suburb of Blakehurst. He continued to live there until August 1973 when, after a quarrel with the testatrix and at the testatrix's insistence, he and his family left. Thereafter, there was no contact between them. The evidence indicated that the testatrix had obtained Mr. Hawkins' agreement to act as her executor before she made the will in 1971 but that she had not informed him, either then or subsequently, that she intended to include him as a beneficiary.

5. Some time after her quarrel with Mr. Hawkins, the testatrix telephoned Mr. Hardwick. His account of this telephone conversation was as follows:

"Mrs. Brasier said that she had had a row with Mr. Hawkins and 'I have kicked him out'. I replied 'That is bad. Do you know where he is?' and she replied 'No. I don't know where he is and I don't want ever to see him again.' I said, 'You will have to make a fresh will' and she said, 'Yes, I realize that. I will think about it and let you know.'"

About a month after that conversation, Mr. Hardwick telephoned the testatrix. He reminded her that she should make a fresh will and that she had not given him instructions. She replied: "I am still thinking about the matter and I'll get in touch with you". There was no further relevant communication between the testatrix and the firm prior to the testatrix's death on 18 January 1975.

6. When, on 20 January 1975, the respondent solicitors were informed that the testatrix had died, they acted on the basis that they still held the testatrix's original will in their custody. After discussion with a nephew of the testatrix, they did a number of things in respect of which they were, more than six years later, to render a memorandum of professional costs on the basis that they had been acting for the estate. They obtained details of the testatrix's account with the Commonwealth Savings Bank of Australia and inspected the contents of a safe custody packet which the bank held. They authorized payment by the bank of the testatrix's funeral expenses. They communicated the contents of the will to the nephew. They initiated inquiries to ascertain whether the testatrix had made a subsequent will of which they were unaware. They wrote to another relative of the testatrix and to the solicitor acting for yet another advising that the particular relative, according to the will of the testatrix which "we hold", had no interest in her estate. They failed, however, to take any steps to locate Mr. Hawkins or to inform him that the testatrix had died and that, no doubt contrary to any reasonable expectation which he might have had, he remained her executor and was, apart from the legacy of $200 to the testatrix's adopted daughter, the sole beneficiary under what they believed to be her last will. It was not until March 1981, which was after Mr. Hardwick's retirement, that any positive attempt was made by the firm to impart that information to Mr. Hawkins. Then, when told for the first time of his interest under the testatrix's will, Mr. Hawkins immediately took steps to safeguard and administer her estate. In the meantime, the testatrix's house, which was the main asset in her estate, had been permitted to fall into a state of disrepair and, for a considerable period, to lie vacant. When a return was subsequently lodged with the Stamp Duties Office for death duty purposes, a substantial fine for late lodgment was imposed. As I followed the argument, it is not disputed that the estate sustained loss by reason of Mr. Hawkins' ignorance, in the period up until March 1981, of his appointment as the testatrix's executor and residuary beneficiary.

7. In May 1981, Mr. Hawkins instructed different solicitors to apply for a grant of probate of the will and to act on behalf of the estate. In early June 1981, a member of the firm, Mr. Sullivan, wished to forward the original will to the new solicitors. It could not be found. Subsequently, Mr. Hardwick and Mr. Sullivan each swore an affidavit to the effect that the testatrix's original will had been in the custody of the firm at the time of the testatrix's death but had subsequently been mislaid among the firm's papers and records. On the basis of those affidavits, probate was granted of a copy of the will to Mr. Hawkins as executor on 2 October 1981. The present proceedings were not instituted by Mr. Hawkins against the solicitors until 22 November 1982.

8. In the Supreme Court, the plaintiff's action was propounded as a claim both in contract and in tort. At first instance, little, if any, attention would appear to have been given in argument on behalf of the plaintiff to the distinction between a claim by Mr. Hawkins in his personal capacity and a claim by him as executor of the testatrix's estate. The claim in contract was apparently presented as a claim for damages for breach of a contract between the firm and Mr. Hawkins. The claim in tort was apparently presented as a claim for damages for breach of a common law duty of care which the firm had owed him personally as distinct from in his representative capacity as executor. The learned trial judge (Yeldham J.) dealt with the action on that basis. He dismissed it, holding that there had been no contract between the firm and Mr. Hawkins and that the firm had owed him no relevant duty of care. Accordingly, his Honour found it unnecessary to consider a defence, raised on behalf of the firm, that the action was not maintainable by reason of the Limitation Act 1969 (N.S.W.), s.14(1). An appeal by the plaintiff from his Honour's decision was dismissed by the New South Wales Court of Appeal (Kirby P. and Glass J.A.; McHugh J.A. dissenting). In the course of argument, we were informed by counsel that, before the Court of Appeal, "it was argued that the action was brought (by Mr. Hawkins) as executor also." This is confirmed by the judgment of Kirby P. which identifies as one of the questions "debated in the oral and written submissions of the parties" the question whether "there existed a duty of care, arising in contract or tort, owed by the respondents to (Mr. Hawkins) as executor of the estate of the testatrix." The majority of the Court of Appeal held that, even if the plaintiff would otherwise have had a good claim, it was statute barred. Their Honours dealt with the appeal on that basis and accordingly found it unnecessary to determine whether, but for the Limitation Act point, the plaintiff would have been entitled to succeed. McHugh J.A., in dissent, was of the view that the firm had been in breach of a duty of care which it owed to Mr. Hawkins under the law of negligence and that s.14(1) of the Limitation Act did not prevent the maintenance of the plaintiff's action for damages for breach of that duty.

9. In this Court, the plaintiff's case is again put on the basis that the action was brought by Mr. Hawkins in his capacity as executor as well as in his personal capacity. Reliance is placed not only on breach of an alleged contract between the firm and Mr. Hawkins but also on breach of an alleged contract between the firm and the testatrix. In so far as the action in tort is concerned, reliance is placed not only on breach of an alleged duty of care owed to Mr. Hawkins personally as a beneficiary but also on breach of an alleged duty of care owed to him as the testatrix's legal personal representative. The pleadings are wide enough to encompass an action on behalf of the testatrix's estate and senior counsel for the respondent solicitors has not suggested that his client would suffer any unfair detriment if the case is dealt with on the basis upon which it is now put, without seeking to identify precisely which arguments were and which arguments were not advanced in the courts below. In the absence of technical objection on behalf of the respondents or suggested detriment to them, that appears to be the appropriate course to adopt.

10. One matter which has been accorded an importance in argument in this Court which it does not appear to have attracted in the courts below is the question whether the testatrix's original will was in fact held by the firm at the time of her death. That is a question which has caused me some concern. It is convenient to turn to it at once.

11. Mr. Hardwick was called as a witness at the trial of the action. In the course of his evidence in chief, he was shown the copy of the letter which had been sent to the testatrix in September 1971 in response to her letter requesting that her will be sent to her. His evidence was as follows:

"Q. Just look at the letter. Are you able to say whether there was an enclosure with that letter sent to Mrs. Brasier? A. Yes, there would have been an enclosure.

Q. What was that enclosure? A. She said that she asked for the will to be sent to her. I would imagine I would have sent the will although the letter says 'enclosed a photostat copy'. I can't be precise at this point of time, but I think I would have probably have altered the original copy but I did not alter the carbon copy.

Q. By that you mean that you think, although you cannot be sure, that you sent the original will to her at that time? A. I would think so, yes."

12. This was apparently the first occasion after the testatrix's death on which it was suggested on behalf of the respondent solicitors that the original will had been returned to the testatrix with the letter of September 1971. The full significance of that suggestion would seem not to have been explored in argument in the courts below. If the original will had been returned to the testatrix, there was nothing at all in the circumstances to rebut the ordinary presumption of subsequent revocation (see, generally, Welch v. Phillips (1836) 1 Moo 299 (12 ER 828); McCauley v. McCauley (1910) 10 CLR 434, at pp 438-439, 446-447, 451-452). Indeed, the contents of the testatrix's letter of September 1971 and the circumstances surrounding the end of her association with Mr. Hawkins would have reinforced that already strong presumption. The letter makes plain that the testatrix intended to revoke the will. The subsequent dispute with Mr. Hawkins, the testatrix's action in ordering him and his family from her home and the testatrix's subsequent conversations with Mr. Hardwick leave little room for doubting that the will did not reflect her testamentary intentions at the time of her death. If that presumption of revocation properly arose and was not rebutted, the grant of probate of the copy of the will was a miscarriage of justice to the advantage of Mr. Hawkins and his estate at the cost of the testatrix's next-of-kin. Moreover, in so far as the present case is concerned, it could scarcely be seriously argued that a solicitor who had, at the request of a testatrix, returned to her an original will which she had indicated she intended to revoke and which was not in her possession or otherwise to be found when she died, was under an obligation, either to the testatrix or to those named in the presumably destroyed will, to act on the basis that the will remained unrevoked and unaltered as the last will of the testatrix.

13. In his reasons for judgment, Yeldham J. stated that he accepted the evidence of Mr. Hardwick "in its entirety". As the above extract from that evidence indicates, Mr. Hardwick had not said that he could actually remember altering the letter to the testatrix or forwarding to her the original will. All that he said was that he supposed that that is what he did. In the context of the manner in which the plaintiff's case was presented to him, Yeldham J. was of the view that the action must fail regardless of whether the will was or was not in the firm's custody at the time of the testatrix's death. In those circumstances, his Honour, having pointed out that it was "not clear whether the original will was in fact retained" by the firm, assumed, for the purposes of his judgment, "in favour of the plaintiff that it was so retained." In the Court of Appeal, Kirby P. and Glass J.A. proceeded on the basis of Yeldham J's assumption that the will was in the firm's custody at the time of the testatrix's death. McHugh J.A. thought that, having regard to Yeldham J's acceptance of Mr. Hardwick's evidence, it should be accepted that the will had been returned to the testatrix and a copy retained by the firm.

14. Examination of the material in evidence fully confirms Yeldham J's conclusion that it is unclear whether the original will had remained in the custody of the firm. The affidavits of Mr. Hardwick and Mr. Sullivan, on the basis of which probate was granted, were, as has been said, to the effect that it did. Nowhere however is there any statement by any one that he or she actually saw the will after the testatrix's death. The basis of Mr. Sullivan's belief that the will had remained in the custody of the firm appears to have been the statement in the letter to the testatrix that a photostat copy of the will, and not the original, was forwarded to her. Mr. Hardwick's oral evidence in chief was, as has been seen, to the effect that that statement was probably incorrect. In his affidavit, Mr. Sullivan indicated that, when he took over supervision of the matter in February 1981, the instruction cover contained xerox copies which he believed to have been "made by the firm after the (testatrix's) death." His belief in that regard would, however, seem to conflict with the statement in Mr. Hardwick's affidavit that, shortly after "the original instructions were received", he caused xerox copies of the will to be made and caused the will to be placed in a section of the strong room reserved for documents relating to his matters. Regardless of whether one treats the reference to "original instructions" in that statement as a reference to the original instructions to act on the preparation of the testatrix's will or as a reference to the instructions to return it to the testatrix, the inference would seem to be that the xerox copies in the instruction cover, to which Mr. Sullivan referred, were prepared, at the latest, some four years before the testatrix died. On the other hand, the available evidence in relation to this aspect of the case lay exclusively within the knowledge and control of the respondent solicitors who include Mr. Hardwick and Mr. Sullivan among their number. The affidavits of both Mr. Hardwick and Mr. Sullivan, on the basis of which probate was granted, and which were made more than two years closer to the events than the hearing of the action, were plainly to the effect that the will had remained in the custody of the firm at the time of the testatrix's death. Under cross examination, Mr. Hardwick said that he "would not know at this stage" whether his suggestion that he would have sent the original will to the testatrix was correct and that he "wouldn't know" whether the will had been retained and "lost in the (firm's) strong room". Mr. Sullivan's affidavit, which was received as an exhibit, remained unqualified by any subsequent evidence from him since he was not called as a witness. In all the circumstances, it appears to me that the inferences which should properly be drawn, at least for the purposes of the present proceedings against the respondent solicitors, are that, notwithstanding the request for its return which the testatrix had made more than three years before her death, the will continued to be held by the firm pursuant to the arrangement for its safe custody and that it was misplaced among other documents in the firm's strong room after the testatrix had died.

15. In so far as the plaintiff's case is based on the terms of an alleged contract between Mr. Hawkins and the firm, it can be shortly disposed of. There was no relevant contract between them. Indeed, there was no communication at all between Mr. Hawkins and the firm prior to the time when Mr. Hawkins was contacted and informed of his appointment as executor and interest as residuary beneficiary under the testatrix's will. On the other hand, and notwithstanding that the evidence is meagre, it is clear that there was a contract between the testatrix and the firm pursuant to which the firm acted professionally in relation to the preparation and execution of the will and, thereafter, in relation to its safe custody. There is no suggestion that the firm made or proposed to make a separate charge for the safe custody facility. However, nothing turns upon that. The provision of the safe custody facility was an incident of the overall contract involving drafting, and supervising the execution of, the will, for which the testatrix was liable to pay ordinary professional fees. Moreover, the provision by the firm of the safe custody facility could not, in any event, properly be seen as an act of disinterested benevolence. It has long been recognized that wills held in safe custody represent an aspect of the goodwill of a solicitor's practice in the sense that they represent a source of possible future professional work in relation to any subsequent codicil or new will and in relation to the administration of the client's estate after his or her death.

16. While the evidence does not disclose the content of any express discussion between the testatrix and Mr. Hardwick about the terms upon which the executed will remained in the firm's custody, it is not suggested that the effect of any such discussion was to negative or modify any contractual terms which would otherwise be inferred or implied in the circumstances disclosed by the evidence. Indeed, it would seem clear that the contractual terms upon which the executed will remained in the safe custody of the firm were left largely unarticulated by the parties and must be so inferred or implied if the agreement between them is to be given any relevant content. In these circumstances, it is necessary to identify two distinct stages in the ascertainment of relevant terms. Those stages may well overlap and it will often be unnecessary to distinguish between them in practice. The first stage is essentially one of inference of actual intention: what, if any, are the terms which can properly be inferred from all the circumstances as having been included in the contract as a matter of actual intention of the parties? The second stage is one of imputation: what, if any, are the terms which are, in all the circumstances, implied in the contract as a matter of presumed or imputed intention?

17. A number of the contractual terms relating to the custody of the will can be readily inferred as a matter of actual intention. One is that, as a matter of joint contractual intention, the testatrix and the firm could, during the life of the testatrix, each bring the bailment to an end by reasonable notice to the other party: the testatrix could require that her will be handed to her; the firm could require that she remove her will from its custody. It was obviously in the contemplation of both testatrix and the firm that the will might remain in the firm's custody at the time of the testatrix's death. That being so, another term which can be inferred, as a matter of actual intention of the parties, is that, in that event, the firm assumed continuing responsibility for the safe custody of the will until such time as it was handed over to some person, institution or authority to whom or to which the firm was entitled to entrust possession of it. Closer to the borderline between inference and imputation, a further term which can be inferred is that the firm was authorized, when the testatrix died, to communicate the contents of the will to any person with a legitimate interest in them, including any person named in the will as executor or a beneficiary. Once one passes beyond that stage to the question whether it was a term of the contract that the firm was, when the testatrix died, under an obligation to take any (and, if so, what) positive steps to locate some or all of the persons named in her will, one passes beyond the stage of inclusion of terms by reason of inferred actual intention. It simply cannot be inferred or assumed as a matter of actual fact that the testatrix ever directed her mind to that question or that, if she did, there was any actual joint intention of herself and Mr. Hardwick which can be expressed as a contractual term. The likelihood is that the testatrix was content to rely upon Mr. Hardwick as the custodian of her will without troubling herself about whether he was to be under a duty to take any, and if so what, positive steps to ensure that effect could be given to her testamentary intentions. If a term spelling out the obligations of the firm in that regard is to be included in the contract between the parties, it must be implied as a matter of presumed or imputed intention.

18. Care must be taken to avoid an automatic or rigid application of the ordinary cumulative criteria for determining whether a term should be implied in a written contract to a case where the contract is oral or partly oral or where it is apparent that the parties have never attempted to reduce their agreement to complete written form (cf. Hospital Products Ltd. v. United States Surgical Corporation (1984) 156 CLR 41, at p 121). The cases in which those criteria were laid down or accepted as the cumulative ingredients of an overall test were concerned with the question whether a term should be implied in a formal contract which was complete upon its face (see, in particular, B.P. Refinery (Westernport) Pty. Ltd. v. Hastings Shire Council (1977) 52 ALJR 20, at p 26; 16 ALR 363, at p 376; Secured Income Real Estate (Australia) Ltd. v. St. Martins Investments Pty. Ltd. (1979) 144 CLR 596; Codelfa Construction Pty. Ltd. v. State Rail Authority of N.S.W. (1982) 149 CLR 337). In such cases, the insertion of an additional term effectively involves an alteration to what the parties have formally accepted as the complete written record of the compact between them. As the judgment of Mason J. in Codelfa (at pp 345-347; Stephen and Wilson JJ. concurring with his Honour's comments on this aspect of the case) clearly indicates, the cumulative criteria formulated or accepted in such cases cannot be automatically applied to cases such as the present where the parties have not attempted to spell out all the terms of their contract but have left most or some of them to be inferred or implied. Where that is so, there is no question of effectively altering the terms in which the parties have seen fit to embody their agreement; the function of a court is, as Lord Wilberforce pointed out in Liverpool City Council v. Irwin (1977) AC 239, at p 254, "simply ... to establish what the contract is, the parties not having themselves fully stated the terms." In the performance of that function, considerations of what is "reasonable", "necessary to give business efficacy to the contract" and "so obvious that 'it goes without saying'" (B.P. Refinery (Westernport) Pty. Ltd., at p 26; The Moorcock (1889) 14 PD 64, at p 68; Shirlaw v. Southern Foundries (1926) Ltd. (1939) 2 KB 206, at p 227) may be of assistance in ascertaining the terms which should properly be implied in the contract between the parties. There will not, however, be the need or the justification for the law to refuse to imply any imputed term which does not clearly satisfy all such requirements. This is particularly so where, as here, the contract has passed from the executory stage and has been executed by one or both parties.

19. Irwin's Case differed from the present in that there was a formal written agreement between the parties. It was, however, apparent that that written agreement, which was a tenancy agreement, did not spell out all the terms of the contract. It spelt out the obligations of the tenant but was silent about those of the landlord. The speech of Lord Wilberforce, with which Lord Fraser of Tullybelton agreed, offers guidance about the test for determining whether a particular term should be implied in such a case. His Lordship, focussing upon "the nature" of the contract, formulated (at p 254) the relevant test in terms of what is necessary or required in the circumstances: "such obligation should be read into the contract as the nature of the contract itself implicitly requires, no more, no less". Subsequently, his Lordship referred (at pp 254-255) to the "necessity to have regard to the inherent nature of a contract and of the relationship thereby established" as having been "stated" in Lister v. Romford Ice and Cold Storage Co. Ltd. (1957) AC 555. Referring to that case, his Lordship said:

"That was a case between master and servant and of a search for an 'implied term.' Viscount Simonds, at p 579, makes a clear distinction between a search for an implied term such as might be necessary to give 'business efficacy' to the particular contract and a search, based on wider considerations, for such a term as the nature of the contract might call for, or as a legal incident of this kind of contract. If the search were for the former, he says, '... I should lose myself in the attempt to formulate it with the necessary precision.'" (p 576)

20. Quite apart from the difficulty to which Viscount Simonds referred in the above citation from Lister, there are sound reasons for resisting the temptation to attempt to formulate a precise mechanical test for determining what terms, if any, should be implied in a case where the parties have not sought to spell them out. Such a precise mechanical test would introduce an element of inflexibility which would be likely to lead to injustice in the circumstances of particular cases and would preclude proper observance of Lord Tomlin's sensible admonition "so to balance matters that without violation of essential principles the dealings of men may as far as possible be treated as effective and that the law may not incur the reproach of being the destroyer of bargains" (see Hillas &Co., Ltd. v. Arcos, Ltd. (1932) 43 Lloyd's LRep 359, at p 364). The most that can be said consistently with the need for some degree of flexibility is that, in a case where it is apparent that the parties have not attempted to spell out the full terms of their contract, a court should imply a term by reference to the imputed intention of the parties if, but only if, it can be seen that the implication of the particular term is necessary for the reasonable or effective operation of a contract of that nature in the circumstances of the case. That general statement of principle is subject to the qualification that a term may be implied in a contract by established mercantile usage or professional practice or by a past course of dealing between the parties.

21. In the present case, there was no finding in the courts below that there existed any settled professional practice defining what, if any, steps a solicitor in New South Wales is obliged to take to locate the executor or the beneficiaries under a will which is in his custody at the time of the testator's death. Nor is there any satisfactory evidence or other material before the Court upon which a finding of any such settled practice or of the effect of any relevant past dealing could properly be based. The only relevant evidence was that of a Sydney solicitor (Mr. Windeyer) who was, at the time he gave his evidence, the Chairman of the Insurance Claim Committee of the Law Society of New South Wales. Upon analysis, however, his evidence does no more than establish that he personally would, on learning of the death of a testator whose will he held, write to the executor and that, if he was unaware of the executor's address, he would look up the name in the telephone book. In a context where it is ordinarily in the interests of a solicitor's probate practice that the executor be located, that evidence is inadequate to base a finding of any general practice defining the professional obligations of a solicitor in the postulated circumstances. Indeed, I did not understand the contrary to have been argued by either side. That being so, the question whether there should be implied in the contract between the testatrix and the firm either a term imposing a specific obligation to locate the executor or beneficiaries under the testatrix's will or a term imposing some more general duty encompassing such an obligation falls to be answered by reference to whether it can be seen that the implication of such a term is necessary for the reasonable or effective operation of such a contract in the circumstances. The existence and content of any general duty of care under the law of negligence would seem, at least prima facie, to be relevant to any assessment of the need to imply such a contractual term. It is convenient to turn, at this stage, to consider whether the firm was under any such common law duty of care.

42. It is inevitable that a Statute of Limitations will, on occasion, lead to injustice in the special circumstances of particular cases. Such injustice, when it occurs, is an unavoidable cost of the benefits involved in ensuring that plaintiffs act promptly and that defendants are not subjected to the litigation of stale claims. The present case falls, however, in an anomalous category where the applicability of a limitation provision such as s.14(1) would invariably involve prima facie hardship and injustice and where any compensating public benefit, apart from protecting the courts from being required to determine issues of distant fact, is absent. If a wrongful action or breach of duty by one person not only causes unlawful injury to another but, while its effect remains, effectively precludes that other from bringing proceedings to recover the damage to which he is entitled, that other person is doubly injured. There can be no acceptable or even sensible justification of a law which provides that to sustain the second injury will preclude recovery of damages for the first. It would, for example, be a travesty of justice and common sense if the law provided that a cause of action lay for damages for false imprisonment but then went on to provide that that cause of action would be lost if the false imprisonment continued for six years after the cause of action first accrued. Likewise, it would be a travesty of justice and common sense if the law imposed a duty upon a solicitor to take positive steps to inform a third person of the contents of a document of which the solicitor was alone aware and then provided that any cause of action against the solicitor for damage caused by a negligent failure to perform that duty would be lost if the negligence continued for six years. It is arguable that the notion of unconscionable reliance upon the provisions of a Statute of Limitations which provides the foundation of the long-established equitable jurisdiction to grant relief in a case of concealment of a cause of action until after the limitation period has expired (cf. s.55(1) of the Limitation Act) should, by analogy, be extended to cover cases such as these where the wrongful act at the one time inflicts the injury and, while its effect remains, precludes the bringing of an action for damages. It seems to me, however, that the preferable approach is to recognize that it could not have been the legislative intent that the effect of provisions such as s.14(1) of the Limitation Act should be that a cause of action for a wrongful act should be barred by lapse of time during a period in which the wrongful act itself effectively precluded the bringing of proceedings. On that approach, the reference in s.14(1) of the Act to the cause of action first accruing should be construed as excluding any period during which the wrongful act itself effectively precluded the institution of proceedings.

43. In the present case, the negligent failure of the firm to notify Mr. Hawkins of the existence or contents of the testatrix's will effectively precluded the institution of the present proceedings against the firm until he was finally informed of his appointment as executor. The present proceedings were instituted within six years of that time. That being so the firm's defence based upon the Limitation Act fails.

44. The appeal should be allowed and the orders of the Court of Appeal should be set aside. Since the damage sustained by Mr. Hawkins in his capacity of executor of the testatrix's estate has not been quantified, it is not possible to make orders finally disposing of the case. The appropriate course would seem to be to stand the matter over, at this stage, to give the parties the opportunity to reach agreement on the amount of damages to be awarded. If agreement is not reached, it will be necessary to remit the case to the Supreme Court to enable the amount of damages sustained by the testatrix's estate to be ascertained.

GAUDRON J: The facts and circumstances giving rise to this appeal are set out in the judgment of Deane J. I need not repeat them. For the reasons given by his Honour, I agree that the questions raised on this appeal should be answered on the basis that Messrs Clayton Utz &Company ("the respondents") had custody of the original will of Mrs Melinda Ellen Brasier ("the testatrix") at the time of her death. I agree also, and for the reasons given by his Honour, that any damage sustained by reason of the matters complained of by the plaintiff ("the appellant") was sustained by her late husband, Mr Hawkins, in his capacity as legal personal representative of the estate of the testatrix.

2. The present action was instituted by Mr Hawkins in his capacity as executor of the estate of the testatrix as well as in his personal capacity and has been continued by his executrix. No objection is made to this Court treating the action as brought by Mr Hawkins in his representative capacity. Accordingly the questions which arise on this appeal may be confined to a consideration of whether any relevant duty of care was owed by the respondents to Mr Hawkins as executor of the estate of the testatrix, and if so, whether the resulting cause of action was barred by s.14(1) of the Limitation Act 1969 (N.S.W.) before the action was commenced on 22 November 1982.

3. In the development of the modern law of negligence the main focus has been on the ascertainment of a duty of care owed by one person to another by reason of a relationship of proximity between them, and the identification of the content of that duty. This development has recognized that an aspect of the duty of care that may arise in relation to another's person or property could involve the requirement that care be exercised in the provision of information. See, for example, Wyong Shire Council v. Shirt (1980) 146 CLR 40. It has also been recognized that a duty of care may arise in relation to a plaintiff's interest where interference with this interest results in economic loss alone, and such a duty may require the exercise of care in the provision of information. Hedley Byrne &Co. Ltd. v. Heller &Partners Ltd. (1964) AC 465; Mutual Life &Citizens' Assurance Co. Ltd. v. Evatt (1968) 122 CLR 556; Mutual Life &Citizens' Assurance Co. Ltd. v. Evatt (1970) 122 CLR 628; San Sebastian Pty. Ltd. v. The Minister (1986) 162 CLR 341. So too, where a duty of care is owed in relation to another's person or property the duty may require disclosure of information: see, for example, O'Connor v. Commissioner for Government Transport (1954) 100 CLR 225, at p 229. Where a duty of care is owed and the loss is purely economic, there is no reason in principle why a disclosure of information cannot be required to comply with this duty: see Sutherland Shire Council v. Heyman (1985) 157 CLR 424, per Deane J. at pp 503 and 505; Norwest Refrigeration Services Pty. Ltd. v. Bain Dawes (W.A.) Pty. Ltd. (1984) 157 CLR 149. Failure to disclose is simply an omission which, as was pointed out by Gibbs C.J. in Heyman (at pp 443-444), does not necessarily preclude the imposition of liability in negligence.

4. It is trite law that the existence of a duty owed by one person to another connotes a corresponding right in that other person. In Seale v. Perry and Anor. (1982) VR 193 Sir George Lush expressed this idea in the context of an action for negligence stating that "(a) duty, however, cannot exist by itself. To the duty seen as imposed on the defendant, there must be a correlative right in the plaintiff: for either to exist, both must be capable of being identified" (at p 200). Thus the duty to exercise care in the imparting of information imports a right in the recipient to receive such information as would be possessed or ascertained by persons in the position of the information giver in the exercise of reasonable skill or knowledge. So too, a duty to disclose or volunteer information imports a right in another to receive that information. At base the right which exists by reason of a duty of care in relation to the provision of information is the same whether it is an act or an omission which constitutes a breach of that duty.

5. However, there is a special problem when it is sought to recover damages for economic loss by reason of a failure to disclose or volunteer relevant information. That difficulty lies in the importance which has been ascribed to reliance as indicative of a relationship of proximity sufficient to give rise to a duty to exercise care in the giving of information where the damage suffered is economic loss. The problem was identified in the judgment of Gibbs C.J., Mason, Wilson and Dawson JJ. in San Sebastian, at p 355, where it was stated:

"The notion of proximity, because it limits the loss that would otherwise be recoverable if foreseeability were used as an exclusive criterion of the duty of care, is of vital importance when the plaintiff's claim is for pure economic loss. When the economic loss results from negligent misstatement, the element of reliance plays a prominent part in the ascertainment of a relationship of proximity between the plaintiff and the defendant, and therefore in the ascertainment of a duty of care. But when the economic loss results from a negligent act or omission outside the realm of negligent misstatement, the element of reliance may not be present. It is in this sphere that the absence of reliance as a factor creates an additional difficulty in deciding whether a sufficient relationship of proximity exists to enable a plaintiff to recover economic loss."

6. It may be that in a particular context failure to disclose some matter where other information is being imparted brings about a situation, foreseeable by the information giver, which amounts to the recipient treating that non-disclosure as a statement of some relevant fact. Shaddock &Associates Pty. Ltd. v. Parramatta City Council (No.1) (1981) 150 CLR 225 was such a case. In those circumstances reliance may be an appropriate and sufficient test of proximity. There may be other situations in which, although non-disclosure cannot in its context be regarded as equivalent to misstatement, the failure to disclose may give rise to a liability because of the reliance by the injured party upon care being taken to disclose all relevant information in circumstances where the other party ought to know of such reliance, whether or not that other party assumed a responsibility to impart all relevant information. Certainly that must be a possibility if assumption of responsibility and reliance are possible alternatives and not cumulative criteria for the relationship of proximity, as appears to have been accepted by Deane J. in Heyman (at p 498) and in the joint judgment in San Sebastian (at p 357).

7. Reliance and assumption of responsibility are not the sole or necessary determinants of proximity. In Heyman (at p 498) Deane J., in whose judgment in Jaensch v. Coffey (1984) 155 CLR 549 the requirement for proximity was forcefully re-asserted, stated that "(b)oth the identity and the relative importance of the factors which are determinative of an issue of proximity are likely to vary in different categories of case."

8. I apprehend that the present case is in a different category from the cases of economic loss referable to negligent misstatement or failure to disclose which have hitherto attracted the consideration of this Court. The economic loss sustained by Mr Hawkins was sustained in conjunction with and in consequence of the impairment of a legal right, viz. his right to exercise the powers of executor inhering in him as named executor of the will of the testatrix. The right was impaired because he did not know that the testatrix had died leaving in the custody of the respondents a will appointing him sole executor.

9. The law of tort already protects contractual rights from intentional interference: Lumley v. Gye (1853) 2 El &Bl 216; (118 ER 749). The torts of trespass, conversion, detinue and slander of title are intimately concerned with the protection of legal rights accruing by reason of ownership or possession of property. It seems to me that where the act or omission complained of amounts to an interference with or impairment of an existing right which is known or ought to be known to the person whose acts or omissions are called into question then the issue of proximity may be open to determination by reference to factors somewhat different from those applicable where economic loss is occasioned without infringement or impairment of an otherwise recognized right. Of course that determination must be undertaken in accordance with the processes of legal reasoning and not divorced from consideration of what is fair and reasonable or from considerations of public policy relevant to the requirement of proximity: (Heyman, per Deane J. at p 498; Stevens v. Brodribb Sawmilling Co. Pty. Ltd. (1986) 160 CLR 16, per Deane J. at p 52). However, it may be that the factors which I would regard as determinative of the issue of proximity in the present case are not materially different from those applicable where a duty is asserted in relation to the provision of information as the basis of an entitlement to recover damages for economic loss.

10. It is now accepted that liability for negligent misstatement causing economic loss involves application of the general principles of negligence: San Sebastian, in the joint judgment at pp 354-355; Heyman, per Deane J. at p 502; Cook v. Cook (1986) 162 CLR 376, at p 382. The basis of that liability is the rule expressed in Donoghue v. Stevenson (1932) AC 562, at p 580 that a person "must take reasonable care to avoid acts or omissions which (he) can reasonably foresee would be likely to injure (his) neighbour". If the statement of duty is transposed into a statement of right it constitutes an acknowledgment of a right not to be injured by or in consequence of the acts or omissions of one's neighbour in circumstances where the injury is reasonably foreseeable by that neighbour. It must be emphasized that it is the relationship of neighbour which is critical to the existence of a right not to be injured by or in consequence of the acts or omissions of another for reasonable foreseeability alone does not necessarily result in the imposition of a duty of care: Heyman, at pp 466-467 and 477-479; San Sebastian, at p 355; Cook v. Cook, at p 382. Whilst the relationship of neighbour remains constant as between the person who owes and the person who is owed a duty of care, the criterion of the existence of that relationship is necessarily different depending on whether it is identified from the perspective of the person against whom a duty of care is asserted or from the perspective of the person who asserts a right which has been infringed.

11. The Donoghue v. Stevenson test of neighbour (at p 580) - "persons who are so closely and directly affected by my act that I ought reasonably to have them in contemplation as being so affected when I am directing my mind to the acts or omissions which are called in question" - is formulated from the perspective of the person against whom a duty is asserted. Reliance, as a criterion of proximity, is a factor which is primarily relevant when the question of proximity is approached from the perspective of the injured party. However, reliance as a criterion of proximity viewed from the perspective of the injured party is by no means coextensive with the test of neighbour formulated in Donoghue v. Stevenson from the perspective of the person who owes a duty of care. A more approximate formulation, in the context of economic loss, may be that of a person whom the injured party might reasonably expect would have his interests and the likelihood of injury to those interests in contemplation when directing attention to the acts or omissions called in question.

12. In San Sebastian it was pointed out in the joint judgment that a request for information or advice is by no means essential to the existence of a duty to exercise care in the giving of information or advice. It was stated (at p 357):

"The maker of a statement may come under a duty to take care through a combination of circumstances or in various ways, in the absence of a request by the recipient. The author, though volunteering information or advice, may be known to possess, or profess to possess, skill and competence in the area which is the subject of the communication. He may warrant the correctness of what he says or assume responsibility for its correctness. He may invite the recipient to act on the basis of the information or advice, or intend to induce the recipient to act in a particular way. He may actually have an interest in the recipient so acting."

The circumstances there identified are capable of being analyzed in terms of reliance on the correctness of the information by the recipient, although as was recognized in a later passage the relevance of reliance is not constant in all of the identified situations. Thus it was stated (at p 358) that "(i)n cases where the defendant intends the statement to operate as a direct inducement to action, the reasonableness of the reliance will not be a critical factor, although in other cases the defendant's appreciation of the reasonableness of reliance will be relevant."

13. It seems to me that reliance, as a criterion of proximity, presented itself in cases concerned with the provision of information by reason that ensuing damage was consequential, not upon the provision of the information, but upon reliance on that information as the basis for action or inaction. See San Sebastian, at p 353. Although the duty of care has come to be expressed in terms of the exercise of care in the giving of information and the breach has come to be expressed in terms of negligent misstatement, the duty which is asserted is, in essence, a duty to exercise reasonable care to give reliable information, information on which the other might rely as the basis for making an informed decision. If the duty is so identified then it seems to me that the relevant factor of proximity in the circumstances identified in the passage quoted from San Sebastian may be stated in terms of reasonable expectation, a concept which is more readily applicable to omissions than is the concept of reliance. Thus a relationship of proximity may be constituted by the reasonable expectation of a person (including a reasonable expectation that would arise if he turned his mind to the subject) that the other person will provide relevant information or give reliable information, if that expectation is known or ought reasonably to be known by the person against whom the duty is asserted. Of course, the foreseeability of the risk of injury is necessarily relevant to a consideration of the reasonableness of expectation.

14. Whether or not reasonable expectation (including in that concept one which would arise if the injured party turned his mind to the matter) is a suitable criterion of proximity in all cases where a duty is asserted in relation to the provision of information, it is one which I would adopt as appropriate where the information is necessary for the exercise or enjoyment of a legal right and the person against whom the duty is asserted knows or ought to know of that right and the necessity for the information before the right can be exercised or enjoyed. In the postulated circumstances a person entitled to the right might, if he turned his mind to the matter, reasonably expect that another, knowing that he is in a position to control (whether by possession of information or possession of some physical object) the exercise or enjoyment of that right in circumstances such that loss may ensue if the right is not exercised or its enjoyment is impaired, would take reasonable steps to inform him of the fact of that possession, especially if the provision of that information involves no risk of prejudice to any right or other duty inhering in the person possessed of the information or object. A person thus in a position of control ought to know that such expectation would arise. Put in conventional terms, a person in that position of control ought to have the other in contemplation as one affected by his failure to disclose the information when directing his mind to failure to give that information.

15. In Shaddock, Stephen J. recognized as material to the duty of care there in issue that the information was exclusively within the knowledge of the council, stating (at p 243):

"Where, as in the present case, the supplier is the exclusive possessor of essential information concerning a matter of importance, such as the buying and selling of property, and, being a local government body, sets itself up as a centre from which, in a quite formalized fashion, this information is distributed to those who require it, it requires no holding out of special skill or competence in order to lead to the inference that care will be taken in furnishing that information."

So too, in determining whether a person has a duty to volunteer information exclusivity of possession of that information is a matter of great significance. Particularly is this so in determining whether a person is in a position to control the exercise or enjoyment of a right by withholding information. However, there may be situations in which exclusivity of information is not essential to the existence of a duty of care. It may be, for example, that the person against whom the duty is asserted knows or ought to know that the significance of information of which he is possessed will not be apparent to others possessed of the information. However, it is unnecessary to pursue this issue in the present case for the respondents had exclusive possession of the original will of the testatrix, and that possession was critical to the right of Mr Hawkins to obtain a grant of probate. To obtain a grant it was necessary for him to prove that the will remained unrevoked, including that it had not been destroyed by the testatrix animo revocandi. Normally that would be proved by production of the original will in its original form. Until it was so produced by the respondents or until they provided information sufficient to establish that they had possession of the original will in its original form at the date of death of the testatrix Mr Hawkins could not obtain a grant of probate.

16. The evidence is that after the respondents learned of the death of the testatrix they took steps to ascertain whether there had been a subsequent will. It seems that those inquiries were completed by the end of February 1975. At this time they must have known or ought to have known that Mr Hawkins was entitled to apply for probate of the will in their possession but that information as to their possession of the will was necessary before that step could be taken. Moreover they must have known that until he was so informed he would effectively be precluded from exercising any powers as executor, whether those powers derived from the will or from grant. The risk of financial loss if action was not taken to enable Mr Hawkins to exercise his powers as executor was real and foreseeable. The provision of the information that they had possession of the will involved no prejudice to any right or duty inhering in the respondents. Rather, it would have been an effectuation of what they conceived to have been their duty for Mr Hardwick gave evidence that he told Mr Lamb, a nephew of the testatrix, that he thought he (Mr Hardwick) should make inquiries, but refrained from so doing by reason of his belief that it would be a waste of time. A person in the position of Mr Hawkins might, if he turned his mind to the matter, reasonably expect that persons in the position of the respondents would take reasonable steps to inform him that they had possession of the will appointing him executor, and the respondents ought to have known that such expectation might arise. Accordingly, in my view, by the end of February 1975, when the respondents had failed to locate a subsequent will, they came under a duty of care to take reasonable steps to inform Mr Hawkins that they were in possession of the last will and testament of Mrs Brasier by which Mr Hawkins was appointed the sole executor of her estate. This they failed to do.

17. It remains to be considered whether the cause of action arising from the respondents' failure to take reasonable steps to inform Mr Hawkins of their possession of the will was barred by s.14(1) of the Limitation Act when action was commenced on 22 November 1982. That sub-section provides that a cause of action founded, inter alia, in tort "is not maintainable if brought after the expiration of a limitation period of six years running from the date on which the cause of action first accrues to the plaintiff or to a person through whom he claims".

18. As negligence is not actionable per se a cause of action only accrues when damage is suffered. It is clear that as early as 1975 the assets of the estate were being wasted, at least in the sense that the real estate was not being used to produce income. The respondents contend that the cause of action then accrued, and was thus barred by s.14(1) of the Limitation Act in 1981. In support of this contention they rely on the decision of the House of Lords in Pirelli General Cable Works Ltd. v. Oscar Faber &Partners (1983) 2 AC 1. On the other hand, the appellant contends that the cause of action accrued when the damage was discovered or discoverable and relies on the decision of the Supreme Court of Canada in Kamloops v. Nielsen (1984) 10 DLR (4th) 641; (1984) 2 SCR 2.

19. In Pirelli, the House of Lords expressly rejected statements in Sparham-Souter v. Town and Country Developments (Essex) Ltd. (1976) QB 858, (a case concerned with economic loss consequent upon latent defect in a building) that damage was sustained when the damage to the building was discovered or with reasonable diligence ought to have been discovered. Pirelli too was concerned with economic loss referable to a latent structural defect in a building. It was held that the cause of action accrued when the damage occurred to the building. It is interesting to note the precise manner in which it was put in the speech of Lord Fraser of Tullybelton, with whom all other members of the House agreed (at p 16):

"The plaintiff's cause of action will not accrue until damage occurs, which will commonly consist of cracks coming into existence as a result of the defect even though the cracks or the defect may be undiscovered and undiscoverable."

The passage makes it clear that the cause of action did not accrue merely by reason of the sustaining of economic loss, for in one sense that loss was sustained as soon as the defect came into existence: at that stage the owner had something inherently less valuable than he would have had but for the defect in the chimney. His Lordship did allow, however, that there might be cases "where the defect is so gross that the building is doomed from the start, and where the owner's cause of action will accrue as soon as it is built" (at p 16). In his Lordship's view, such cases would be exceptional. Save for the reference to a building "doomed from the start", Pirelli has nothing to say as to the time of accrual of a cause of action for economic loss which is sustained otherwise than in consequence of or in conjunction with physical damage to property. The brief reference to a building "doomed from the start" seems to have been intended to enable a plaintiff to bring action before physical damage actually occurred, as was allowed, for example, in Junior Books Ltd. v. Veitchi Ltd. (1983) 1 AC 520. Perhaps what his Lordship had in mind was that a cause of action in negligence for economic loss sustained in consequence of or in conjunction with a defect to property accrues when the property sustains damage, unless actual financial loss is sustained at an earlier time. The subsequent decision of the House of Lords in Ketteman v. Hansel Properties Ltd. (1987) 1 AC 189, in which it was claimed unsuccessfully that the buildings there in issue were doomed from the start, throws no further light on the question of accrual of a cause of action for economic loss sustained otherwise than in consequence of or in conjunction with physical damage to property.

20. In Kamloops (a case also concerned with latent defect in a building) Wilson J., speaking for the majority of the Supreme Court of Canada, preferred the discovered or discoverability test enunciated in Sparham-Souter on the basis that it was "much the lesser of two evils" (p 685 DLR; p 40 SCR). In Central Trust Co. v. Rafuse (1986) 31 DLR (4th) 481, a case concerned with "pure" economic loss, the Supreme Court of Canada adopted discovery or discoverability as the criterion for accrual of a cause of action for negligence involving economic loss whether that loss was "pure" economic loss or was sustained in consequence of or in conjunction with physical damage to property.

21. Notwithstanding the criticisms that may be and have been made of the Pirelli test (see, for example, Rossiter and Stone, "Latent Defects in Buildings: When Does the Cause of Action Arise?" (1985) 59 Australian Law Journal 606) the solution advanced in Kamloops and Central Trust Co. seems to have been based purely on policy considerations.

22. Considerations other than those enunciated in Pirelli and Kamloops are arguably relevant to the answer as to when a cause of action for negligence causing economic loss accrues. It may, for example, be relevant to consider the precise interest infringed by the negligent act or omission. In actions in negligence for economic loss it will almost always be necessary to identify the interest said to have been infringed to determine whether the risk of loss or injury to that interest was reasonably foreseeable and whether a sufficient relationship of proximity referable to that interest was present so as to establish a duty of care. If the interest infringed is the value of property, it may be appropriate to speak of a cause of action in negligence for economic loss sustained by reason of latent defect as accruing when the resultant physical damage is known or manifest, for as was explained by Deane J. in Heyman (at p 505) it is only then that the actual diminution in market value occurs. If, on the other hand, the interest infringed is the physical integrity of property then there is a certain logic in looking at the time when physical damage occurs, as was done in Pirelli. So too, if the interest infringed is an interest in recouping moneys advanced it may be appropriate to fix the time of accrual of the cause of action when recoupment becomes impossible rather than at the time when the antecedent right to recoup should have come into existence, for the actual loss is sustained only when recoupment becomes impossible. The discoverability test adopted in Central Trust Co. seems to have been premised on the assumption that the interest infringed was the possession of a right to recoupment rather than recoupment itself. See Schlosser, "Some Recent Developments in the Law of Limitation of Actions, Concurrent Liability and Pure Economic Loss" (1987) 25 Alberta Law Review 388, at p 390, where the point is made in relation to Central Trust Co. that as the "mortgagors" made repayments until 1977 (notwithstanding that the mortgage given in 1968 was void ab initio) no actual loss was sustained until 1977.

23. In Heyman, Deane J. pointed out (at p 502) that "the distinction between mere economic loss and ordinary physical loss or injury remains important in determining whether the requisite proximity of relationship exists in a particular case or category of case." It is a distinction which is equally important in determining when loss has occurred. Physical loss imports damage sustained by a physical object whether it be property or person. Economic loss, on the other hand, imports loss sustained by a juristic entity in relation to the assets or liabilities of that entity. The various and complex economic relationships which are a feature of present day economic organization suggest that loss may manifest itself in various forms, and it is for this reason that there may be occasions when it is necessary to identify precisely the interest which has been infringed.

24. It would be too simplistic to restrict analysis of economic loss merely to a consideration of reduced value or increased liability. However, a consideration of reduced value suffices in the present case, for the loss sustained by Mr Hawkins was the difference between the value of the assets of the estate when they came under his control as executor and the value they would then have enjoyed had he then held them in the same capacity and had they been properly managed from the time of the death of the testatrix.

25. Until the assets came under the actual control of Mr Hawkins they had sustained damage by deterioration and had been subject to waste, including that the real estate had not been put to income-producing use. But that was not the loss sustained by Mr Hawkins. The property was not then vested in him, notwithstanding that by s.44 of the Wills, Probate and Administration Act the grant of probate effected a vesting with retrospective effect. Nor had he suffered a loss of income. Indeed it may have been that had the real estate been under his control it would have been used for his personal occupation rather than for the production of income. What he suffered was a loss in the value of the assets referable to their not having been properly managed in the period prior to coming under his control. That loss was suffered by the executor only when the assets came under his actual control. At the earliest, that occurred when he was informed of the existence of the will in March 1981. Action was commenced within six years of that date.

26. The appeal should be allowed and the orders of the Court of Appeal of the New South Wales Supreme Court set aside. As damages have not been assessed, I agree with the course proposed by Deane J.

Orders

Appeal allowed with costs.

Order that the judgment of the Court of Appeal of New South Wales be set aside.

Adjourn the further determination of this appeal for 28 days to permit the parties if they be so advised to bring in minutes of an order to be made by consent disposing of the action in accordance with the judgment of this Court.

In default of the parties bringing in minutes of such an order within 28 days, order that in lieu of the judgment of the Court of Appeal -

1. the appeal to that Court be allowed with costs;

2. the judgment of Yeldham J. be set aside;

3. in lieu thereof judgment be entered for the plaintiff for damages to be assessed;

4. the action be remitted for determination by a judge of the Supreme Court; and

5. the defendants to pay the plaintiff's costs to be taxed.