Hedlund v Love and Ors trading as William Love and Nicol Lawyers
[2021] ACTSC 83
SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
Case Title: | Hedlund v Love & Ors trading as William Love & Nicol Lawyers |
Citation: | [2021] ACTSC 83 |
Hearing Date: | 30 April 2021 |
DecisionDate: | 7 May 2021 |
Before: | Robinson AJ |
Decision: | See [44] |
Catchwords: | PRACTICE AND PROCEDURE – PLEADINGS – Application to file an Amended Defence – proposed amendment made late in proceedings – whether prejudice to parties or other litigants due to use of court’s resources |
Legislation Cited: | Court Procedures Rules 2006 (ACT) rr 502, 507 |
Cases Cited: | Dougall v Melville [2017] NSWCA 309 Mannall v Howard [2019] ACTSC 112 |
Parties: | Jason Hedlund (Plaintiff) Mark Love, David Thomas Toole, John Stephen Wilson, Ian John Nicol t/as the partnership Williams Love & Nicol Lawyers (Defendant) |
Representation: | Counsel R Markham (Plaintiff) M Karam with S Gaussen (Defendant) |
| Solicitors Adero Law (Plaintiff) McInnes Wilson (Defendant) | |
File Number: | SC 392 of 2017 |
ROBINSON AJ:
Background
By the application before the Court, the defendants now seek to amend their defence.
The Originating Claim was filed on 6 October 2017 together with a
Statement of Claim. A defence was filed on 31 January 2019 and a reply filed on
19 February 2019.
Thereafter, discovery was given and evidence delivered. In April 2021, the parties resolved an issue concerning legal professional privilege which appears to be the last battle concerning documents.
The matter had been previously fixed for hearing but those dates have been vacated. A fresh hearing date of the week of 2 August 2021 has been substituted. Orders for the delivery of some evidence still remain outstanding.
The litigation
In order to place the proposed amendments into context, it will be necessary to set out some background material which can be largely paraphrased from the pleadings. One minor amendment was not opposed and I will allow it. It requires no commentary.
Jason Hedlund, the plaintiff, married Rebecca Wight in February 2002. They separated in 2007.
The parties negotiated to reach a financial agreement pursuant to
s 90C of the Family Law Act 1974 (Cth) (the Act). Upon compliance with the requirements of that section, there would come into existence a binding final determination of the rights and entitlements of each, to property and maintenance.
The parties apparently agreed upon an outcome as to property and maintenance.
Compliance with s 90C requires legal representatives to explain and advise on aspects of a proposed agreement and then certify these matters.
In 2007, Ms Wight received legal advice from a legal practitioner to the effect that she should not enter into the proposed agreement and, to that end, that legal practitioner refused to sign a statement as to the provision of independent legal advice for the purposes of s 90C.
About a month later, Ms Wight engaged another solicitor, Mark Love of the defendant firm, to advise her on the s 90C agreement.
The Statement of Claim alleges that, contrary to the statutory requirements of s 90, Mr Love did not advise his client as to the effect of the proposed s 90C agreement on her rights and did not advise his client of the advantages and disadvantages to her in making the proposed s 90C agreement.
If this allegation is correct, it would mean that any agreement was liable to be set aside at a future time.
Other necessary conditions of the section were fulfilled by both parties, and the Statement of Claim recites that, on 21 May 2007, a binding s 90C agreement [should have] come into operation pursuant to the Act.
The Statement of Claim alleges that the plaintiff performed his obligations arising from the terms of the s 90C agreement.
October 2011 proceedings
In October 2011, Ms Wight commenced proceedings seeking relief in the Federal Magistrates Court which included setting aside the s 90C agreement.
The 2011 proceedings appear to have made slow progress. By May 2016, the Statement of Claim recites that, in the course of a hearing before a judge of the Family Court of Australia, Mr Love conceded that, contrary to the express matters stated in Mr Love’s certificate for his client, he had not advised his client as to the effect of the proposed agreement on her rights and had not advised Ms Wright as to the advantages and disadvantages to her in making the proposed agreement.
The s 90C agreement eventually was set aside. Some of the chronology and incremental steps in the process by which this occurred are set out below in the proposed amendment. For the purposes of determining this application, it is not necessary to go any further into the detail.
The Statement of Claim pleads a duty of care owed by Ms Wight’s solicitor to the plaintiff in the above circumstances. It also pleads that the provision of the certificate, signed by Mr Love, contained incorrect representations whereby Mr Love engaged in conduct that was misleading or deceptive or likely to mislead or deceive in contravention of the Trade Practices Act 1974 (Cth) and the
Fair Trading Act 1992(ACT). Those allegations are contentious between the parties but, for the purposes of this application, I have assumed them to be tenable causes of action.
Proposed amendments
As referred to above, the plaintiff relies on two basic courses of action. Each cause of action requires proof of causation by the plaintiff. For both causes of action the process of reasoning to the result by the plaintiff is the same. The current defence filed on this issue by the defendants pleads the same process of negation of causation. The amendments proposed by the defendant also address the two basic causes of action in the same way. It is, therefore, only necessary to set out the proposed defence to the negligence claim to follow the parties’ submissions.
(In this judgment, for convenience only, I use the word “causation” loosely as being a word encompassing both causation and related matters to it.)
Proposed causation amendment
The Statement of Claim recites:
41. Mr Love’s negligence caused, within the meaning of the Wrongs Act s45, the harm to the plaintiff, including particular harm, being:
(a) economic loss which will be suffered by the plaintiff as a result of the loss of the opportunity for the earlier making of final orders by the Court under s79 of the Act, which will crystallise upon the making of final orders in Ms Wight’s 2011 Proceedings … ;
(b) economic loss represented by the legal fees incurred by the plaintiff in defending Ms Wight’s 2011 Proceedings, and also costs orders paid, that are liable to be paid, in those proceedings which monies have been paid, or that are liable to be paid, by the plaintiff …; and
(c) expenses incurred and opportunity costs arising or which will arise from money being paid away, or withheld, or which will be paid away or withheld …,
as Mr Love’s negligence was a necessary condition of the happening of the harm to the plaintiff and it is appropriate for the scope of Mr Love’s liability to extend to harm so caused to the plaintiff.
The existing defence recites in answer to the above:
23. The defendant denies the allegation pleaded in paragraph 41 of the Statement of Claim and says that any harm suffered by the plaintiff was caused by his own course of conduct towards Ms Wright from at least 2006 including physical and verbal assaults, intimidation and harassment.
This paragraph [23] of the defence must, however, be taken with other paragraphs of the existing defence to give a true picture of the case mounted against the
Statement of Claim. Paragraphs [28] to [31] are relevant in this respect. The general thrust of the defence is that the agreement would have been set aside in any event by reason of the plaintiff’s own course of conduct towards Ms Wight from 2006 onwards and that the defendant’s negligence was not an operative cause.
I interpolate here to record that paragraph [23] contains a vice in the pleading by using the word “including” thus leaving the plaintiff to be a hostage to fortune as to what other facts the defendant will bring into the case, not foreshadowed, at a later time. If asked to do so, I would have struck out that paragraph. The same applies to the existing paragraph [30] of the defence.
The defendant seeks to amend paragraph [23] as follows:
The defendant denies the allegation pleaded in paragraph 41 of the Statement of Claim and further says:
(a) in relation to the allegation pleaded in paragraph 41(b) of the Statement of Claim, that the plaintiff did not incur the legal fees as claimed; and
(b) that any harm suffered by the plaintiff was caused by:
(i) his own course of conduct towards Ms Wight from at least 2006 including physical and verbal assaults, intimidation and harassment:
(ii) the plaintiff’s decision to defend the 2011 proceedings to set aside the binding financial agreement;
(iii) the plaintiff’s decision to continue to defend the 2011 proceedings to set aside the binding financial agreement, in circumstances where he should have ceased defending the proceedings from various points in time, or any other date the Court considers appropriate, on completion of the hearing of the evidence; or
PARTICULARS
[Chronological list of 9 dates and occurrences, from 17 August 2012 to 16 May 2016, presumably to be read cumulatively, where it is alleged that information came into the possession of the plaintiff, relevant to a decision that the plaintiff should have made, to cease defending the proceedings, such as advice from his own lawyers, content of submissions from the opposing party and like matters.]
(c) in addition, or alternatively, the chain of causation was broken as a result of the matters pleaded in paragraph 23(b) herein.
Proposed s 11 Limitation Act 1985 (ACT) Amendment
In the existing defence there is no pleading of the Limitations Act (1985) ACT
(the Limitations Act).
The defendant now seeks to plead such a defence as follows:
Further and in the alternative, and in answer to the whole of the plaintiff’s claim, if the plaintiff did suffer any damage as a result of the defendant’s negligence, or misleading or deceptive conduct (which is denied), the cause of action arose on either 18 May 2007 or 21 May 2007. Consequently, given this proceeding was commenced on 6 October 2017, the plaintiff’s claim for damages is statute barred by s11 of the Limitations Act 1985 (ACT).
PARTICULARS
The financial agreement was signed by Ms Wight on 18 May 2007.
The financial agreement was signed by the plaintiff on 21 May 2007.
Law to be applied and contentions
Rules 502 and 507 of the Court Procedures Rules 2006 (ACT) contain the court’s power to give leave to a party to amend a pleading. There is a well-known body of jurisprudence around these rules. Further, although the rules enable the court to permit amendments necessary to do justice between the parties, it is also necessary to bring into account the effect on court resources and prejudice to other litigants waiting to be heard. In the ACT, the cases of Mannall v Howard [2019] ACTSC 112 and Owners Unit Plan 3550 v BCA Certifiers Australia Ltd [2021] ACTSC 3 are recent examples of the application of the rule to the amendment of pleadings.
In correspondence, the defendant advanced the “causation” amendments, on the basis that:
Paragraphs 23 and 28 – the limited proposed amendments, which do not differ in substance from the existing contentions in those paragraphs other than to provide a greater degree of specificity, are intended to make it plain that the defendants deny that any alleged negligence on their part, if established, was causative of any loss to the plaintiff because the plaintiff was ought to have been aware that it was unlikely that he would be able to successfully defend the [2011] proceedings both at the outset of those proceedings or at particular points in the course of those proceedings.
In correspondence, the defendant advanced the “Limitations Act” amendment, on the basis that:
Paragraph 32 (limitation) – the need for the amendment arises from the decision of the Victorian Court of Appeal in Orwin v Rickards [2020] VSCA 225, delivered in September 2020, around the same time when the parties began the lengthy (and still unresolved) process of resolving deficiencies with the plaintiff’s disclosure. It was obviously most efficient for all proposed amendments to be advised at the same time, as occurred here when you were provided with the draft amended defence on 5 March 2021 with the affidavit of Ms Hendry.
The inclusion of this defence raises a legal issue which does not give rise to the need to adduce any additional evidence …
The defendant’s further affidavit, dated 29 April 2021, explained that the defendant’s solicitor became aware of the trial court’s decision in Orwin v Rickards [2019] VSC 375 (delivered on 7 June 2019) but did not consider it was binding on the ACT Supreme Court and was, in any event, aware that the decision was subject to an appeal. The solicitor goes on to say she became aware of the
Victorian Court of Appeal’s decision shortly after judgment was delivered on 4 September 2020: Orwin v Rickards [2020] VSCA 225 (Orwin v Rickards). The deponent says “[t]he addition of the limitation defence was not an area of acute focus in these proceedings until after I became aware of the appellate decision”.
In correspondence, the plaintiff objected to the amendments on causation, on the ground that the proposed amendments, in fact, raised new issues. Those new issues would require both lay and expert evidence to be “recalibrated” and would require expenditure in the vicinity of $75,000 to $100,000.
In correspondence, the plaintiff objected to the amendments in relation to the Limitations Act, on the ground that the proposed amendment was not necessitated by the decision in Orwin v Rickards which did not make new law. The plaintiff objected on the ground that he will need to “recomplete” all economic loss evidence in the proceedings to ascertain by which date a property settlement in late 2008 became less advantageous to him than the property settlement conducted in 2019, this being said to be the relevant metric for loss.
The plaintiff’s affidavit evidence on this issue focused entirely on the cost of meeting the amendment.
Significantly, for present purposes, the plaintiff made no claim in that correspondence nor in affidavit evidence, to any prejudice from the decision of the defendant not to plead the limitations defence in the existing defence in January 2019 thus denying the plaintiff the opportunity of reconsidering his entire investment in the proceedings, as at January 2009, and determining whether to continue the proceedings at all against a pleaded limitations defence. The defendant first foreshadowed the
limitations defence on 20 April 2021.
Conclusion on “causation” amendments
Contrary to a submission made at the hearing of this application, the discretion whether to allow an amendment must be made having regard to the factors and circumstances prevailing at the time the application is made. The discretion is not exercised according to a formula and is not exercised in accordance with generalised propositions taken from decided cases divorced from direct application to the immediate facts. The start of the consideration begins with the proposition that it is now early May 2021. Would it be feasible to allow the amendments and then conduct the trial in August, or possibly at a later date, with minimal prejudice (in the proper sense of that word) to the parties or otherwise compensate for that prejudice, if possible, and also to pay due attention to the effect on Court resources and prejudice to other litigants waiting to be heard? It should not be forgotten that the Court’s power is to permit amendments when it is necessary to do justice between the parties.
(See Queensland v J L Holdings Pty Limited (1997) 189 CLR 146 at 153-155).
I have come to the conclusion that I should allow the amendments dealing with “causation”. First, the additional factual material included in the defence is relevant to defending the issue of causation. The additional facts and particulars proposed to be pleaded may have been allowed to be ventilated at the trial, in any event, without being pleaded or particularised. It is, however, appropriate that they be pleaded so that the plaintiff better knows the case he must meet. Further, some of those facts and particulars derive from documents recently disclosed by the plaintiff and the disclosure of those documents has presumably allowed reconsideration of the significance of other facts and circumstances already known to the defendants. I do not know the exact extent to which this occurred, but that extent is not directly relevant. There may be time and expense taken up by meeting the amendment, but this can be compensated by way of a costs order. There will be some delay also caused. I cannot see that there will be great prejudice from this delay. The plaintiff pursues a monetary remedy carrying interest. The existing hearing date of 2 August 2021 is sufficiently distant such that it can be pushed out slightly if necessary and so avoid wasted costs. The existing hearing date is sufficiently distant such that it can be utilised by other litigants.
Conclusion on s 11 Limitations Act amendment
For myself, I do not consider that Orwin v Rickards made any new law. There has been a long-standing controversy concerning what is sometimes referred to as an imperfect asset and the time at which that imperfection will cause the limitations period to run. It is to be traced back to, at least, Wardley Australia Ltd v Western Australia (1992) 175 CLR 514. Here the agreement was arguably imperfect in that it was liable to be set aside if contingencies were fulfilled. This was not a new revelation to the law in 2019. See, for example, Dougall v Melville [2017] NSWCA 309 at [68] et seq. There were two possibilities on the running of the limitation period before 2019 just as there are two possibilities after 2019. I should also say, in reference to affidavit evidence filed, that it is plainly true that a Victorian case will not “be binding” on an ACT Court but any decision of the Victorian Supreme Court, and more so, the Victorian Court of Appeal, which was directly on point, would be highly persuasive. I do not wish to suggest that the choice between the two alternatives, as to the legally correct analysis of the running of the limitations period, was straight forward. It was not and it has not been finally settled. That would not prevent it being pleaded as an arguable defence by a solicitor.
As was contended by the defendant, this amendment raises essentially a legal question. It may be that the plaintiff will need to consider the proper characterisation and metrics of his loss but that does not seem to be a difficult task and one which again can be compensated for by a costs order if it is necessary to obtain different evidence as to his loss.
One curious aspect of the application to amend was that s 11 of the Limitations Act was wholly relied upon to invoke defences against both the negligence claim and the trade practices claims. One claim, being under a federal statute and having its own limitation period.
In order to avoid a further round of applications to amend, I sought further submissions. As a consequence, the defendant reformulated its proposed amendment.
The plaintiff agreed with the efficacy of the proposed reformulation but did not agree that I should allow it. The plaintiff relied upon the facts “extreme delay”, no connection to the Orwin decision and the inference that inattention to legal principles from as early as January 2019 was at work.
I propose to allow that further amendment in the terms now sought on the basis that it was a legal error which can be corrected and where the intent of proposed paragraph [32] could be gleaned from its text.
Order
I make the following orders:
(a)Subject to the notation in (e) below, grant leave to the defendant to amend the defence, in accordance with Annexure SFH2-3 to the affidavit of Sarah Frances Hendry affirmed 20 April 2021 as varied and in accordance with paragraph [11] of the defendant’s further submissions dated 6 May 2021, on or before 13 May 2021.
(b)Grant leave to the plaintiff to file an amended reply on or before 20 May 2021 if so advised.
(c)Order that the defendant pay the costs thrown away by reason of the amendment.
(d)Order that the defendant pay the costs of the application.
(e)The Court notes that the leave granted to amend proposed paragraph [23] does not extend to the word “including” to the intent that that word is to be omitted from that paragraph.
(f)Grant leave to the parties to approach the Registrar for a new date to re-list the hearing, if that is considered necessary by the parties.
| I certify that the preceding forty-four [44] numbered paragraphs are a true copy of the Reasons for Judgment of his Honour Acting Justice Robinson. Associate: Date: |
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