Hind v Ronsel Investments Pty Ltd
[2022] VSC 785
•16 December 2022
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
PROFESSIONAL LIABILITY LIST
S ECI 2019 02152
| GREGORY ROY HIND | Plaintiff |
| v | |
| RONSEL INVESTMENTS PTY LTD | Defendant |
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JUDGE: | NIALL JA |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 24 November 2022 |
DATE OF JUDGMENT: | 16 December 2022 |
CASE MAY BE CITED AS: | Hind v Ronsel Investments Pty Ltd |
MEDIUM NEUTRAL CITATION: | [2022] VSC 785 |
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PRACTICE AND PROCEDURE – Application for extension of time to appeal associate judge’s decision to grant summary judgment – Whether negligence action brought against former solicitor out of time – Damage sustained when time limit for right of review expired – Cause of action complete even though further damage later sustained by plaintiff’s bankruptcy – Application for extension of time refused.
PRACTICE AND PROCEDURE – Application for extension of time to appeal associate judge’s decision to dismiss proceeding for want of prosecution – Whether plaintiff unlikely to formulate viable pleading – Inordinate and inexcusable delay on the part of the plaintiff – Failure to formulate viable pleading indicator of poor prospects of success – Proceeding not past first base – Application for extension of time refused.
Limitation of Actions Act 1958, s 27.
Wilson v Rigg (2002) 36 MVR 451; Doundoulakis v Antony Sdrinis & Co. [1989] VR 781, applied.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | In person | - |
| For the Defendant | Mr JA Tesarsch | Carter Newell Lawyers |
HIS HONOUR:
Introduction
These reasons deal with two appeals brought by Gregory Hind from decisions of an associate judge of the Court.
On 16 May 2019, Mr Hind commenced a proceeding in this Court by filing a writ endorsed with a statement of claim in which he alleged negligence against his former solicitor, Ronald Segal & Associates. The defendant is Ronsel Investments Pty Ltd (trading as Ronald Segal & Associates), a legal practice of which Mr Segal was the principal (‘law firm’). Mr Hind alleged the law firm had been negligent in acting for him in respect of a GST assessment and in respect of a default judgment obtained by the Deputy Commissioner of Taxation (‘Commissioner’) based on that assessment. Mr Hind filed an amended statement of claim on 5 August 2019.
Between December 2019 and February 2020, Mr Hind made multiple unsuccessful attempts at filing a further amended statement of claim. In these attempted further amended statements of claim Mr Hind made, for the first time, allegations of negligence with respect to the law firm’s conduct in relation to a claim against Mr Hind’s former solicitors Rigby Cooke Lawyers (‘Rigby Cooke’).
Mr Hind has sought to maintain, in the one proceeding, two distinct allegations of negligence:
(a) in respect of his GST liability and default judgment (‘the County Court Proceeding’); and
(b) in respect of a claim against Rigby Cooke (‘the Rigby Cooke Proceeding’).
By the first decision, reasons for which were given on 23 July 2020,[1] the associate judge granted summary judgment to the law firm in respect of the County Court proceeding. The basis for judgment was that the claim was statute barred under the Limitations of Actions Act 1958 (‘LAA’). The associate judge did not terminate the proceeding on the basis that Mr Hind had attempted to formulate a claim against the law firm but in respect of the Rigby Cooke allegations. The associate judge adjourned the matter to enable Mr Hind to plead out his negligence action in respect of the Rigby Cooke proceeding.
[1][2020] VSC 428 (‘Summary Judgment Reasons’).
The second appeal concerns an action brought by Mr Hind alleging negligence by the law firm in relation to proceedings against Rigby Cooke. The associate judge dismissed that proceeding on the basis of a want of prosecution. Her Honour gave reasons for that decision on 6 October 2021.[2]
[2][2021] VSC 646 (‘Want of Prosecution Reasons’).
The two appeals can be considered separately, although they both have their genesis in an unsuccessful property development undertaken by Mr Hind and his mother.
Summary Judgment appeal
In order to understand Mr Hind’s allegations of negligence against the law firm it is necessary to sketch in brief form some matters of history. In 2006, in partnership with his mother, Mr Hind proposed to develop an apartment complex (‘the development’). The partnership retained Rigby Cooke to act for them by providing advice in relation to the financing and construction of the development.
The Hinds had problems in financing the development and, near the end, funds were advanced by Owenlaw Mortgage Managers (‘OMM’) as mortgagee. It appears that the development ran into difficulty and OMM entered into possession. Some of the units were sold. Consequent upon the sale of the units, the Commissioner issued a GST assessment to Mr Hind in the amount of approximately $377,000.
The Commissioner commenced the County Court proceeding, being a proceeding in the County Court against Mr Hind seeking recovery of the GST debt based on the assessment. Mr Hind failed to file a defence, and, on 6 August 2010, a default judgment was obtained in favour of the Commissioner.
On 24 August 2010, Mr Hind applied to have the default judgment set aside.
On 27 September 2010, Mr Hind retained the law firm to act for him in the County Court proceeding. The law firm retained counsel, Mr Will Alstergren QC, to act for Mr Hind in the County Court proceeding.
On 4 October 2010, Mr Hind retained an accountant, Paul Raye of PR Accountants to undertake an analysis of his GST liability arising from the sale of the units. On 12 October 2010, Mr Raye emailed the law firm a letter addressed to Mr Hind in which he said the following:
Dear Greg,
Re: Review of GST Situation and Tax Audit
You have asked me to review your situation regarding GST payable as a result of the findings of a recent tax office audit into your property development.
…
On another point which may be helpful in your dealings with the ATO, we note that Div105 of the [A New Tax System (Goods and Services Tax) Act 1999 (Cth) (‘GST Act’)] may be relevant in your circumstances.
Division 105 of the GST Act governs the treatment of GST where a mortgagee in possession exercises its power of sale. The sale of the property by a mortgagee in possession is taxed for GST in the hands of the mortgagee. This is notwithstanding that ownership of the property passes from the mortgagor to the third party purchaser. The sale of property by a mortgagee in possession will be a taxable supply only if the sale of that property by the mortgagor would have been a taxable supply. That is, effectively the supply of the property is taxed in the hands of the mortgagee as if they were the mortgagor. Consequently, it may be that the ATO should have audited the mortgagee and applied any penalties for non, incorrect and late lodgement against the mortgagee. I will leave this matter with you for possible review by your legal representatives.
At the relevant time, the mortgagee in possession was OMM. OMM took control of the development in November 2006, and sold the 12 units in the development between September 2007 and March 2008 as mortgagee in possession.
The evidence before the associate judge included a document dated 13 October 2010, which on its face purports to be a fax sent by the law firm to Mr Hind, the cover sheet of which said:
Greg, give me a call once you receive all pages.
Herewith papers from Paul Raye.
I pause to note that Mr Hind says that he did not have a fax machine and did not receive Mr Raye’s letter of 12 October at that time.
In oral submissions, Mr Hind relied on a printout of an email sent from Mr Raye to the law firm and Mr Alstergren on 13 October 2010 at 5:46 pm. In the email, Mr Raye said:
Following further discussions with [Mr Hind], it transpires that the figures provided in his list are GST amounts and not the invoiced amounts paid.
This has increased his GST credits available to $161,692.
I have attached another revised spreadsheet.
At the bottom of the printout, the following handwritten notation appears:
P/I—Greg Hind.
Can’t swear yet.
Need Defence.
Will need to see New [increase in] GST credits
11:30 P/O—Will A.
Left urgent message on mobile phone.
The notation ‘P/I’ is obviously an abbreviation of ‘phone in’ and refers to an incoming telephone call. The evidence does not establish the identity of the author of the notation. Mr Hind assumes that it was an administrative employee of the law firm, and it is convenient to proceed on that basis.
Mr Hind submits that the annotation shows that the law firm knew he needed a defence with respect to the GST credits.
I note that on the following day, 14 October 2010, in an affidavit Mr Hind deposed to the amounts of the GST credits for which he claimed to be entitled, and which were set out in a spreadsheet prepared by Mr Raye which was annexed to the affidavit.
On 30 November 2010, Mr Raye wrote to Mr Hind saying that he did not believe that div 105 would be of any significant benefit to Mr Hind. Mr Raye explained that:
In our previous review we referred to a possible use of Division 105 of the GST Act which governs the treatment of GST where a mortgagee in possession exercises its power of sale. However, from documents since received, I note that the mortgagee in possession passed the responsibility of preparing BAS returns back to you in October 2007, once sales had commenced. Consequently, I now doubt that use of this Division is of any significant benefit to you.
On 6 December 2010, Mr Hind engaged the law firm to bring a negligence action against Rigby Cooke in relation to advice provided by Rigby Cooke about the financing of the development.
Mr Hind’s application to set aside the default judgment came on for hearing in the County Court on 7 April 2011. On that day, Mr Alstergren appeared for Mr Hind and an agreement was made between Mr Alstergren and the ATO by which it was agreed that the application to set aside the default judgment would be dismissed with the Commissioner agreeing not to execute the judgment until three months after the determination of the objection and only execute against the amount determined following completion of the objection.
On 6 May 2011, the Commissioner disallowed the objection. Pursuant to the provisions of the Taxation Administration Act 1997, Mr Hind had two options to challenge the objection decision. First he could have commenced a review in the Administrative Appeals Tribunal (‘AAT’). He had 60 days to take that course. The AAT has the power to extend the time if ‘satisfied that it is reasonable in all the circumstances to do so’.[3] Second, he could have commenced an appeal in the Federal Court within 60 days. There is no power in the Federal Court to extend the time.
[3]Administrative Appeals Tribunal Act 1975, s 29(7).
He took neither of those alternatives.
On 22 July 2014 Mr Hind was made bankrupt on the petition of the Commissioner.
The Statement of Claim
As noted, Mr Hind commenced his proceeding on 16 May 2019.
The associate judge summarised the statement of claim, which was drafted by Mr Hind without legal assistance, as follows:
(a) the law firm represented itself as having over 30 years’ experience in property law and taxation law;
(b) due to financing issues caused by Rigby Cooke, the partnership lost control of the development to OMM;
(c) at least nine of the contracts of sale for the units in the development did not contain the mortgagee’s signature, and were thus invalid;
(d) Mr Hind retained the law firm to act on Mr Hind’s behalf in relation to his dealings with the Commissioner;
(e) the law firm was aware of Mr Hind’s belief that the taxable supply attracting GST only arose by reason of OMM assuming control of the development, which would have enabled Mr Hind to rely upon div 105 of the GST Act as a defence to the Commissioner’s claim in the County Court proceeding;
(f) the law firm owed Mr Hind a duty of care to, among other things;
(i) properly review all statements and documents provided by Mr Hind with respect to OMM’s role in the sales of the units in the development;
(ii) advise Mr Hind of all avenues of appeal against the Commissioner’s determination with respect to the objection;
(iii) fully advise Mr Hind of any expert opinions regarding the claim by the Commissioner; and
(iv) obtain the opinion of a barrister with expertise in taxation law with regard to the question of the role of OMM in the development;
(g) the law firm breached its duty of care by, among other things, failing to:
(i) undertake due diligence, explain the impact of source documents and analyse their input to the taxable supply;
(ii) pursue a defence to the Commissioner’s claim in the County Court proceeding;
(iii) advise Mr Hind and the Court that Mr Hind had a ‘creditable’ defence by reason of div 105 of the GST Act;
(iv) advise Mr Hind that Mr Alstergren was not an expert in taxation law;
(v) advise the Commissioner that OMM unjustifiably refused to allow Mr Hind to remedy a loan default or refinance the loan; and
(vi) advise Mr Hind and the Commissioner that at least nine of the contracts of sale did not have the mortgagee’s signature;
(h) the law firm’s conduct resulted in Mr Hind being made bankrupt;
(i) by reason of the law firm’s failure to discharge its duty of care, Mr Hind has suffered substantial financial loss and damage and reputational harm; and
(j) Mr Hind is entitled to repayment of all monies received by the law firm, and losses suffered as a result of the consequent financial and reputational damage to him.[4]
[4]Summary Judgment Reasons, [24].
Mr Hind filed an amended statement of claim on 5 August 2019, which made some minor alterations but substantially repeated the allegations in the earlier statement of claim.
The law firm filed a defence containing amongst other things, a plea that the cause of action was statute barred.
The decision of the associate judge
By summons filed on 24 February 2020, the law firm sought summary judgment under ss 62 and 63 of the Civil Procedure Act 2010 and/or rr 22.16 and/or 23.01 of the Supreme Court (General Civil Procedure) Rules2015 (‘Rules’) on the basis that the claim was statute barred.
In determining whether the proceeding was out of time, the associate judge proceeded on the basis that Mr Hind could establish his claim in negligence. On that hypothesis, the law firm was negligent in allowing the default judgment to stand on the basis that Mr Hind had a good defence to the GST assessment by reason of div 105 applying so that the liability for GST rested with OMM as the mortgagee in possession rather than with Mr Hind.
In relation to the objection process, the associate judge proceeded on the basis that Mr Hind made two allegations with respect to the law firm’s handling of the objection process. First, the law firm failed to direct the Commissioner’s attention to the conduct of OMM as mortgagee in possession, and to request that OMM be audited by the ATO, which may have been successful in reducing or eliminating the tax debt. Secondly, Mr Hind alleges that the law firm failed to advise him of the limitation periods associated with challenging the Commissioner’s dismissal of the objection in the AAT. The associate judge was prepared to assume that the fault for the failure to challenge the assessment lay with the law firm, and that the prospect that any challenge would be fully or partially successful was more than negligible.
The associate judge cautioned against too readily granting summary judgment on the basis of a limitation period noting that judgment should not be entered if there was a possibility that facts might emerge that might be relevant to the limitation defence.
The associate judge held that s 5 of the LAA applies to Mr Hind’s claims against the law firm to provide a limitation period of six years,[5] subject to the possible operation of the postponement provision in s 27 of the LAA.
[5]Ibid [84].
The associate judge referred to the following statement of the Court of Appeal in Bodycorp Repairers Pty Ltd v Holding Redlich that:
A cause of action in negligence accrues when the plaintiff first suffers damage caused by the defendant’s breach of duty. In Australia, there is no overriding qualification to this requirement based upon when the claimant discovers the damage, or could with reasonable diligence have discovered the damage.[6]
[6][2018] VSCA 17, [131] (Whelan JA, Santamaria JA and T Forrest AJA) (citations omitted).
Before the associate judge, Mr Hind relied on s 27 of the LAA to submit that the limitation period had been postponed on the basis that the law firm had concealed matters from him. The associate judge set out the terms of s 27:
Postponement of limitation periods in case of fraud or mistake
Where, in the case of any action for which a period of limitation is prescribed by this Act—
(a) the action is based upon the fraud of the defendant or his agent or of any person through whom he claims or his agent; or
(b) the right of action is concealed by the fraud of any such person as aforesaid; or
(c) the action is for relief from the consequences of a mistake—
the period of limitation shall not begin to run until the plaintiff has discovered the fraud or the mistake, as the case may be, or could with reasonable diligence have discovered it:
Provided that nothing in this section shall enable any action to be brought to recover or enforce any charge against or set aside any transaction affecting any property which—
(i) in the case of fraud, has been purchased for valuable consideration by a person who was not a party to the fraud and did not at the time of the purchase know or have reason to believe that any fraud had been committed; or
(ii) in the case of mistake, has been purchased for valuable consideration, subsequently to the transaction in which the mistake was made by a person who did not know or have reason to believe that the mistake had been made.
Mr Hind had submitted that the law firm had concealed Mr Raye’s email of 12 October 2010 and did not advise him of the possibility that div 105 provided a defence to the Commissioner’s assessment. Mr Hind submitted that he was not given a copy of Mr Raye’s email at the time and was not aware of it until he came across it in his papers in February 2019.
The associate judge disposed of the s 27 point immediately. She held that there is no evidence or other material to support Mr Hind’s contention that the date from which the limitation period commences to run should be postponed to 23 February 2019, when Mr Hind says he discovered the Raye letter amongst his papers.[7] The associate judge held that despite Mr Hind’s protestations that he did not have access to fax facilities in October 2010, it was ‘almost certain’ that he received the Raye letter on or about 13 October 2010.[8]
[7]Summary Judgment Reasons, [84].
[8]Ibid [87].
The associate judge referred to evidence, including an affidavit of Mr Hind filed in the County Court on 14 October 2010 in support of its summons annexing a spreadsheet prepared by Mr Raye as to Mr Hind’s GST liability. The associate judge described Mr Hind’s assertions regarding when he first became aware of Mr Raye’s letter as ‘glaringly improbable’.[9] Put simply, the associate judge found that there was no evidence that Mr Hind was unaware that Mr Raye considered that div 105 might apply and no evidence that the law firm had concealed anything from him. In other words there was no factual basis for the allegation of concealment.
[9]Ibid [89].
I pause again to note that Mr Hind accepted before me that, at least by 30 November 2010, he had been provided with a copy of Mr Raye’s letter to him of 12 October 2010.
The associate judge then turned to the question of when Mr Hind suffered loss and damage as a result of the alleged negligence.
The associate judge summarised the salient facts as she saw them:
Here, the salient facts are as follows:
(a) sometime before August 2010, the Commissioner issued a notice of assessment with respect to the tax debt, and on 6 August 2010 obtained a default judgment in the County Court proceeding, which rendered Mr Hind immediately liable to pay the tax debt;
(b) on 7 April 2011, Mr Hind surrendered the right to defend the tax debt by entering into an agreement to strike out his application to set aside the default judgment. As such, his only avenue of redress was to pursue his objection, and, if dissatisfied with the Commissioner’s determination of the objection, challenge the determination in the AAT (or the Federal Court) within sixty days of the determination;
(c) while the evidence is ambiguous (noting that while Mr Hind has said that he did not challenge the Commissioner’s determination because he was ‘consumed’ by the Rigby Cooke proceeding, he also asserts that the law firm failed to advise him of the relevant limitation period), taking Mr Hind’s case at its highest and best, I will infer, for present purposes at least, that either the law firm failed to inform him of his rights of review, or advised him not to proceed with an application for review;
(d) Mr Hind’s case is that if the law firm had not been negligent, he would have successfully escaped liability for part or all of the tax debt, either by having the judgment in the County Court proceeding set aside, or by persuading the Commissioner to revise the assessment;
(e) Mr Hind’s inability to pay the tax debt, caused at least in part by his failure to recover a significant sum in the Rigby Cooke proceeding, caused him to become bankrupt; and
(f) based upon the further and better particulars filed by Mr Hind on 2 December 2019, and ignoring for present purposes his claims for personal injury and reputational harm, Mr Hind’s claim for loss and damage includes the following categories of economic loss:
(i) unspecified losses caused by Mr Hind’s bankruptcy and the forced sale of the family home, including legal fees and selling costs associated with the sale;
(ii) the payment of $260,000.00 on account of the tax debt; and
(iii) legal fees paid to the law firm for the County Court proceeding and the bankruptcy proceeding (which were fully paid in July 2011).[10]
[10]Ibid [92].
The associate judge concluded:
Accordingly, it is necessary to identify what economic interest of Mr Hind’s that is said to have been infringed by the law firm’s alleged negligence, when that economic interest was first materially impaired, and whether the date upon which his cause of action accrued is affected by either the orders made in the bankruptcy proceeding, or the law firm’s conduct of the Rigby Cooke proceeding.
There can be no doubt that Mr Hind’s economic interest, at the time he retained the law firm, was to eliminate or reduce his liability to the Commissioner on account of the tax debt. That was the express purpose of the retainer, and the amount paid to the ATO on account of the tax debt is a discrete head of loss and damage claimed by Mr Hind in the amended statement of claim. The lodgement of the objection and the application to set aside the default judgment were steps taken in pursuit of this economic interest. When the application to set aside the default judgment was struck out, the already slim prospects of setting aside the default judgment (given the conclusive evidence provisions of the [Taxation Administration Act 1953 (Cth) (‘TAA’)]) receded further. While theoretically there would be no procedural impairment to Mr Hind making a further application to set aside the default judgment, the prospects of success of such an application would be negligible, given that the Commissioner’s judgment was regularly obtained, and in circumstances where the application to set aside the judgment was struck out by consent when Mr Hind was represented by solicitors and counsel with the actual or ostensible authority to bind Mr Hind to the agreement with the Commissioner.
Accordingly, I agree that Mr Hind’s economic interest in eliminating or reducing his liability to the Commissioner was irrevocably impaired by reason of the making of the consent orders striking out the application on 7 April 2011. Indeed, the only basis that it could be said that the damage to Mr Hind’s economic interest caused by the consent orders made on 7 April 2011 was negligible is if one accepts the law firm’s (strongly arguable) contention that by reason of the conclusive evidence provisions of the TAA, the prospects of setting aside the default judgment were always negligible. However, it is not necessary for present purposes to reach a final view on that issue.
However, setting aside the default judgment was only one mechanism by which Mr Hind could achieve his goal of eliminating or reducing his liability to the Commissioner. The other avenue was the objection process. I understand Mr Hind’s allegations with respect to the law firm’s handling of the objection process, while a little confusing and ambiguous, to be twofold. First, the law firm failed to direct the Commissioner’s attention to the conduct of OMM, and to request that OMM be audited by the ATO, which may have been successful in reducing or eliminating the tax debt. Secondly, Mr Hind alleges that the law firm failed to advise him of the limitation periods associated with challenging the Commissioner’s dismissal of the objection in the AAT. While the evidence regarding the reason why Mr Hind failed to challenge the Commissioner’s determination is ambiguous, I am prepared to assume for present purposes that the fault for the failure to challenge the assessment lay with the law firm, and that the prospect that any challenge would be fully or partially successful was more than negligible.
As noted above, the objection was lodged with the Commissioner by Mr Raye on or about 12 December 2010, presumably (for present purposes) with some input from the law firm. Accordingly, any failure on the part of the law firm to include information about OMM’s role in the development occurred before 12 December 2010.[11]
[11]Ibid [95]–[99].
The associate judge noted that, theoretically, Mr Hind could have applied for an extension of time up until he was made bankrupt in 2014. The associate judge considered whether that meant he had not suffered loss or damage until he was made bankrupt and lost that opportunity.
The associate judge referred to a number of cases which hold that where a solicitor’s negligence causes a client to miss a time limit, the damage accrues at the point at which the time limit expires. Her Honour applied the principle articulated in those cases that ‘the cause of action is not complete until damage is sustained, but is then complete even though further damage is later sustained’.[12]
[12]Ibid [111], quoting Wilson v Rigg (2002) 36 MVR 451, 454 [21] (Giles JA); [2002] NSWCA 246 (‘Wilson’) (emphasis added).
Accordingly, her Honour held that Mr Hind’s cause of action accrued no later than 6 July 2011, being the expiry of the 60-day time limit to bring an application in the AAT for review on the merits of the Commissioner’s determination on 6 May 2011.[13] After 6 July 2011, Mr Hind was required to bring an application for an extension of time, the success of which was not a foregone conclusion, which meant the value of Mr Hind’s right of review was materially impaired.[14] The value of that right was further reduced, to nil, when Mr Hind became bankrupt on 22 July 2014, and thus no longer had standing to bring an application for review, but this does not alter the fact that damage was sustained on 6 July 2011.[15]
[13]Ibid [113].
[14]Ibid.
[15]Ibid.
The associate judge said that the law firm was entitled to summary judgment with respect to the negligence claim.[16] As already noted, her Honour held off making an order to that effect because she understood that, in addition to the negligence action against the law firm, Mr Hind also wished to maintain an action in the Rigby Cooke proceeding.[17]
[16]Ibid [121].
[17]Ibid [126].
On 6 October 2021 the associate judge made the following orders:
1. The defendant be granted summary judgment in respect of the claims which were the subject of the amended statement of claim filed on 5 August 2019.
2. The proceeding be dismissed for want of prosecution.
I note that order 1 made on 6 October 2021 relates to the County Court proceeding and order 2 relates to the Rigby Cooke proceeding.
The appeal
Mr Hind seeks to appeal the decision to grant summary judgment. An appeal lies to a judge of the Court from a decision of an associate judge of the Court. Such an appeal is an appeal on the identification of error. It is not a hearing de novo. Such an appeal must be brought within 14 days after the day the judgment or order of the associate judge was given or made, although the Court has the power to extend the time.[18]
[18]Rules, r 77.06.2.
On 29 December 2021 Mr Hind filed his first notice of appeal, purporting to appeal the determination of the associate judge made on 23 July 2020.
The law firm argued that the time for an appeal ran from the date of the publication of reasons. It relied on Town v Australian Telecommunications Commission[19] and Landsal Pty Ltd (In Liq) v REI Building Society.[20] If the time arose when the associate judge published her reasons with respect to summary judgment on 23 July 2020, the last date for Mr Hind to file his notice of appeal was 6 August 2020 and he is over 16 months out of time.
[19](1983) 47 ALR 137.
[20](1993) 41 FCR 421.
If I were to proceed on the basis more favourable to Mr Hind, the time arose when the order for summary judgment was formally made on 6 October 2021 and the last date for Mr Hind to file his notice of appeal was 20 October 2021. He is still 70 days out of time. Accordingly, regardless of the approach I take, Mr Hind is out of time and requires the Court to grant an extension.
The law firm opposes the granting of an extension of time on the basis that Mr Hind has failed to provide an adequate explanation for the delay, an extension would result in injustice to the law firm and the merits of the proceeding are so weak that an extension is not justified.
Explanation for delay
Mr Hind has not explained the delay. In his notice of appeal he said he is seeking an extension of time to file his appeal due to difficulties ‘interpreting the area of the Supreme Court’. He said he initially filed in the Court of Appeal believing that was the correct jurisdiction, and had attempts to file rejected on 5 November 2021, 19 November 2021, 22 November 2021, 5 December 2021, 14 December 2021 and 29 December 2021.
Prejudice
The law firm submits that the proceeding relates to events that took place between 2010 and 2014 (and as early as 2005 and 2006) and that it would suffer prejudice if an extension were granted. The law firm refers to the associate judge’s findings that they have suffered prejudice and will continue to do so by having to consider and respond to various iterations of the proposed pleading, and that their submissions were compelling that they would suffer specific prejudice given the nature of the issues raised by Mr Hind and the advanced age of material witnesses.[21] The law firm submits that time was of the essence to file an appeal.
[21]Want of Prosecution Reasons, [73].
The merits
Mr Hind contends that the associate judge was wrong to uphold the summary judgment application. He contends that either loss or damage did not arise, and therefore the cause of action did not accrue, until he was made bankrupt in 2014. Alternatively, he says that s 27 of the LAA applied because the law firm concealed the evidence of Mr Raye or alternatively there was a mistake.
I am unable to uphold either argument.
When the Commissioner issued the GST assessment, it created a debt in favour of the Commissioner. The assessment provided conclusive evidence of the amount owing subject to review or appeal under pt IV of the Income Tax Assessment Act 1997.[22] The assessment was issued before the law firm was retained and it was not caused by any act or omission of the law firm. Again, before the law firm became involved the Commissioner obtained a default judgment. By reason of the judgment the assessment merged in the orders of the Court, giving the Commissioner a right of enforcement.[23]
[22]Federal Commissioner of Taxation v Futuris Corporation Ltd (2008) 237 CLR 146; [2008] HCA 32
[23]Chamberlain v Deputy Commissioner of Taxation (1988) 164 CLR 502; [1988] HCA 21.
Faced with the default judgment (and underlying assessment), Mr Hind contends that the law firm was negligent in:
(a) not proceeding to have the default judgment set aside;
(b) failing to exercise reasonable care in the objection process before the Commissioner; and
(c) (perhaps) failing to take steps to review or appeal the objection within time.
He says in each case, the law firm failed to raise and pursue an argument based on div 105 to the effect that Mr Hind had no GST liability as the units were sold by the mortgagee in possession.
There was no error in the associate judge’s conclusion that s 27 could have no application. In the appeal Mr Hind relied on sub-ss 27(b) and (c). They provide that where the right of action is concealed by fraud or the action is for relief from the consequences of a mistake, the period of limitation shall not begin to run until the plaintiff has discovered the fraud or the mistake, as the case may be, or could with reasonable diligence have discovered it.
Before the associate judge, Mr Hind put his case on the basis that there was (or may have been) some concealment by the law firm. He said that s 27(b) applied because the right of action was concealed by the fraud of the law firm. There were two insuperable problems with that contention. First, fraud was not pleaded. Second, there was no basis in fact for an allegation of concealment and no prospect that facts would emerge to show concealment. The fact said to have been concealed was Mr Raye’s opinion that there may have been a defence under div 105 as suggested by him in his email to the law firm on 12 October 2010. The associate judge considered there was no factual basis for that contention because Mr Hind had the letter by mid-October.
In his affidavit filed on 14 October 2010, Mr Hind deposed to Mr Raye preparing a schedule of his GST liability. Mr Raye acted for him in the objection process. Mr Hind accepted that by no later than 30 November 2010 he had a copy of Mr Raye’s email. Mr Hind was plainly aware of the div 105 issue. There was no concealment.
On the appeal, Mr Hind relied on s 27 on a different basis. He said that s 27(d) applied because he was a victim of a mistake. That section does not avail Mr Hind. The action was not an action brought to recover for the consequences of a mistake.[24] Neither the pleading nor the facts can be shoehorned into such an action.
[24]David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353; [1992] HCA 48.
It follows that there was no error in the conclusion reached by the associate judge that s 27 could not apply to postpone the limitation period. There was no prospect that the relevant factual basis would change.
With s 27 out of the equation, the issue becomes whether the cause of action which Mr Hind seeks to maintain was complete before May 2013.
The principle is clear, as set out in the judgment of the Court of Appeal in Bodycorp cited above. A cause of action in negligence accrues when the plaintiff first suffers damage caused by the defendant’s breach of duty.
The issue is whether Mr Hind suffered loss or damage when the law firm failed to have the default judgment set aside, when it failed to advise Mr Hind to rely on div 105 in the objection or when it failed to advise Mr Hind to appeal or review the objection decision within time. If Mr Hind suffered loss and damage at any of these points as a result of the alleged negligence then he is out of time.
In my view the associate judge was correct to say that on the assumption that the failure of the law firm to advise Mr Hind to review or appeal on the basis of div 105, or to seek a taxation specialist before that time, was negligent, Mr Hind suffered loss at least by the time for review or appeal expired.
At the core of Mr Hind’s case is a contention that had the law firm raised div 105 he could have successfully overturned the default judgment and resisted the assessment. He said as a result of this he was made bankrupt.
Mr Hind was bound by the assessment unless he could have it reduced, first by way of an objection, and second, if that were unsuccessful, in an appeal or review. He says his solicitors denied him that opportunity. Mr Hind’s position was legally affected and his position altered to his prejudice by the failure to run the div 105 argument on the objection and the failure to lodge a review. Once the time expired, his right of appeal expired and at best he had an opportunity to bring an application in the AAT for an extension.
In Wilson, Giles JA (with whom Santow JA and Foster AJA agreed) said the following:
So far as the duty was tortious, the appellant's cause of action against the respondent accrued when he first suffered damage in consequence of the breach of duty. Damage is an element of a cause of action in tort for negligence, and the cause of action is not complete until damage is sustained but is then complete even though further damage is later sustained.[25]
[25]Wilson (2002) 36 MVR 451, 454 [21] (Giles JA); [2002] NSWCA 246 (citations omitted).
Giles JA went on to state the following:
In my opinion, the appellant’s submission does not sufficiently recognise that the suffering of damage is a matter of fact.
The appellant had a valuable asset, his cause of action against the SRA. When the respondent failed to bring proceedings by 1 July 1992, the value of the asset immediately diminished. It diminished because of the likelihood that the SRA would plead that he was not entitled to commence proceedings, and the likelihood that it would be necessary for the appellant to apply for leave under s 52(4) of the Motor Accidents Act and might not obtain leave. If the appellant were to assign his cause of action for valuable consideration, the consideration would be less for those reasons.
From what in fact happened, the only evidence on which an assessment could be made, there was a real likelihood that the SRA would plead that the appellant was not entitled to commence proceedings, and that the appellant would have to apply for leave under s 52(4) of the Motor Accidents Act and would not obtain leave. Sperling J found that the former was a virtual certainty and in effect that a grant of leave was not a certainty. As a matter of fact there was a diminution in the value of the appellant's asset, and it was more than negligible.
This was more than a risk or prospect of damage, or contingent damage. It was actual damage, albeit that by a successful application for leave the appellant could regain his pre-1 July 1992 position. Damage which is suffered but which might or might not be alleviated if some further event occurs is distinct from a risk or prospect of damage which might or might not be suffered or damage which will be suffered only if a contingency is fulfilled (as in cases such as Wardley Australia Ltd v Western Australia[[26]]).[27]
[26](1992) 175 CLR 514; [1992] HCA 55.
[27]Wilson (2002) 36 MVR 451, 455 [27]–[29] (Giles JA); [2002] NSWCA 246.
In the course of his reasons, Giles JA referred to the decision of Ormiston J (with whom McGarvie and Marks JJ agreed) in Doundoulakis v Antony Sdrinis & Co.[28] In Doundoulakis, Ormiston J said:
Upon proper consideration the distinction drawn in argument, relying upon [Vulic v Bilinsky],[[29]] between the appellant's right and remedy against his former employer, is irrelevant to the decision whether and when a cause of action arises against a solicitor who fails to commence proceedings within time on behalf of his client. The negligent destruction or impairment of either right or remedy can sound in damages. Merely because the statute bars the remedy and not the right must not obscure the fact that each is valuable.
…
It is the barring of the remedy which is critical in a case such as the present, corresponding as it does to the immunity which the defendant then acquires, albeit it is an immunity he may not choose to assert. Howsoever one characterises this conditional immunity and this conditional barring of the plaintiff’s remedy, the plaintiff is left with a remedy very different in quality from that which he had before the limitation period expired. In the context of the perennial argument as to procedural and substantive rights the following observation has been made and later followed in the High Court: ‘A cause of action which can be enforced is a very different thing to a cause of action the remedy for which is barred by lapse of time.’ per Williams J in Maxwell v Murphy[[30]], a passage cited with approval by Gibbs J (whose judgment was concurred in on this issue by Menzies, Windeyer and Walsh JJ) in Yrttiaho v Public Curator of Queensland[[31]].[32]
[28][1989] VR 781 (‘Doundoulakis’).
[29][1983] 2 NSWLR 472.
[30](1957) 96 CLR 261, 278 (Williams J); [1957] HCA 7.
[31](1971) 125 CLR 228, 241 (Gibbs J); [1971] HCA 29.
[32]Doundoulakis [1989] VR 781, 784–5 (Ormiston J).
In determining that Mr Hind’s cause of action accrued no later than 6 July 2011, when the time limit for his right to appeal or review the Commissioner’s objection decision expired, the associate judge had regard to and applied the principles in Wilson and Doundoulakis. In my view, the associate judge did so correctly.
The value of Mr Hind’s right to appeal or review the Commissioner’s objection decision was materially impaired from 6 July 2011, as from that time he was required to bring an application for an extension of time to do so, and the success of such an application was not a foregone conclusion.
It is true that, in practical terms, the position of Mr Hind was made significantly worse when he was made bankrupt. However, that was a consequence of the failure to remove the underlying debt. As stated above, a cause of action is complete when damage is sustained, ‘even though further damage is later sustained’.[33]
[33]Wilson (2002) 36 MVR 451, 454 [21] (Giles JA); [2002] NSWCA 246.
There is no arguable error in the associate judge giving summary judgment on the negligence claim.
Given that there is no prospect of overturning the decision of the associate judge, it would be futile to extend the time.
The application for an extension of time to appeal the order for summary judgment is refused.
The Rigby Cooke proceeding
On 6 October 2021, the associate judge dismissed the Rigby Cooke proceeding on the basis of a want of prosecution. On 7 January 2022 Mr Hind filed his second notice of appeal, purporting to appeal the orders made on 6 October 2021 insofar as they relate to the Rigby Cooke proceeding. The last date for Mr Hind to file his notice of appeal was 20 October 2021. He is 79 days out of time with respect to this appeal and requires the Court to grant an extension.
The law firm opposes the extension on the basis that there was no adequate explanation for delay, prejudice and because the merits do not warrant an extension.
After the associate judge disposed of the allegations concerning the GST liability, Mr Hind’s attention was directed towards formulating a claim in respect of the Rigby Cooke allegations. Between the 23 July 2020 decision and 6 October 2021, there were six court hearings and at least eight versions of a proposed pleading put forward by Mr Hind for consideration by the law firm and the Court, none of which satisfied the requirements of a proper pleading.
The associate judge dealt with each of the proposed pleadings. Her Honour provided detailed reasons identifying the flaws in each and explaining why each could not stand. The relevant events concerning the proposed pleadings and their consideration by the associate judge include the following:
(a) Mr Hind circulated a draft proposed pleading on 7 August 2020 (‘August 2020 pleading’). In an unpublished ruling dated 1 October 2020 (‘October 2020 ruling’), the associate judge gave detailed reasons identifying the flaws of the August 2020 pleading and provided detailed guidance to Mr Hind as to the required content of the pleading. In the October 2020 ruling the associate judge said:
What the draft statement of claim should include in relation to the negligence claim is as follows:
(a) a description of the parties and the scope and terms of the retainer of the defendant with respect to the Rigby Cooke proceeding;
(b) an allegation that the defendant owed Mr Hind a duty of care;
(c) a brief description of the partnership’s claims in the Rigby Cooke proceeding, and the estimated value of the Rigby Cooke proceeding;
(d) what the defendant should have done in their [sic] conduct of the Rigby Cooke proceeding, and failed to do;
(e) the actual outcome of the Rigby Cooke proceeding;
(f) how the defendant was responsible for the difference between the value of the Rigby Cooke proceeding and the financial return to Mr Hind from the Rigby Cooke proceeding; and
(g) whether there were other financial losses suffered by Mr Hind as a consequence of the defendant’s alleged negligence.
If Mr Hind’s allegation is that the defendant was negligent in failing to obtain evidence to support the partnership’s loss of profits claim (referred to by Mr Hind in shorthand as the ‘causation issue’), and that failure in effect caused the partnership to settle the Rigby Cooke proceeding too cheaply, then the draft statement of claim should say so.[34]
[34]Quoted in Hind v Ronsel Investments Pty Ltd (No 2) [2021] VSC 42, [10].
(b) Following the assistance provided by the associate judge on 1 October 2020, Mr Hind put forward a further proposed pleading later in October 2020 (‘October 2020 pleading’). At a hearing on 12 November 2020, the associate judge refused leave for Mr Hind to file and serve the October 2020 pleading and referred Mr Hind for pro bono legal assistance scheme operated by the Victorian Bar for assistance with preparing a further proposed pleading. In making orders to that effect, the associate judge relevantly recorded the following in ‘Other matters’:
A. The plaintiff should have a further opportunity to put forward a proposed further amended statement of claim … which pleads the facts required to establish a viable cause of action against the defendant with respect to its conduct of the Rigby Cooke proceeding with sufficient clarity to enable the defendant and the Court to know the case that the defendant has to meet at trial. The proceeding has not yet reached the stage where a conclusion can be made that the plaintiff is unable to put forward an acceptable pleading.
B. In the interests of certainty, I shall strike out the amended statement of claim filed 5 August 2019 in its entirety, with no right of reinstatement, but will refrain from entering judgment in favour of the defendant with respect to the plaintiff’s claims concerning the County Court proceeding until after the plaintiff’s current application has been finalised.
(c) Mr Hind did not wish to rely on a pleading prepared by Senior Counsel and prepared a further proposed pleading in January 2021 (‘January 2021 pleading’), which incorporated parts of the pleading prepared by Senior Counsel. In reasons delivered on 17 February 2021 the associate judge concluded that the January 2021 pleading was inadequate, stating as follows:
The problem in the current case is that the various iterations of the proposed amended statement of claim do not properly expose the case Mr Hind seeks to advance at trial. In order to do so, Mr Hind needs to nail his colours to the mast as to what he says is the law firm’s negligent conduct: the preparation of the case, or the advice to settle? If it is the former, then the latter is a necessary consequence of the law firm’s conduct, not negligent conduct of itself. Also, if Mr Hind intends to contend that the law firm failed to reach the necessary standard of care as required for a solicitor in the position of the law firm, he needs to specify with more precision what the law firm should have actually done to meet that standard. Currently, these allegations are expressed in far too general and conclusionary terms. Put simply, what should the law firm have done that it didn’t do?
Once that exercise is completed to a satisfactory standard, it may be difficult for the law firm to maintain any objection to the pleading going forward. I accept that the law firm contends that the evidence available incontrovertibly demonstrates that the predicament that Mr Hind found himself in was one of his own making, and that may well be the case. However, the current application is not a summary judgment application. At this stage at least, the question at hand is whether Mr Hind is able to put forward a properly formulated pleading which discloses a viable form of action.[35]
[35]Hind v Ronsel Investments Pty Ltd (No 2) [2021] VSC 42, [52]–[53].
(d) Mr Hind circulated two further proposed pleadings on 2 March 2021 and 11 April 2021 (‘April 2021 pleading’). On 1 July 2021 the associate judge delivered a third set of reasons explaining why the April 2021 pleading was defective and identifying means by which it could be rectified.[36] The associate judge refused an application by the law firm to dismiss the proceeding at that point, stating that the position was ‘finely balanced’.[37]
[36]Hind v Ronsel Investments Pty Ltd (No 3) [2021] VSC 385, [79]–[85].
[37]Ibid [99].
(e) Mr Hind circulated a further pleading in August 2021 (‘August 2021 pleading’). In the Want of Prosecution Reasons, the associate judge set out in some detail the August 2021 pleading and the law firm’s criticisms of it. Of the August 2021 pleading, the associate judge said:
Given the effective concession made by Mr Hind during the course of the hearing on 16 September 2021, it is not necessary to dwell upon the deficiencies in the October 2020 pleading in any great detail, save to say that I agree with the law firm’s submissions to the effect that the August 2021 pleading fails to comply with the guidance provided in the third reasons (and the second reasons and the October 2020 ruling). The August 2021 pleading remains defective as a pleading, in that it fails to specify the material facts necessary to make good a claim in negligence against the law firm, and is vague and confusing. Further, while this is, strictly speaking, not an application for summary judgment on the merits of Mr Hind’s claims, the documents exhibited to Mr Hind’s affidavit concerning the Rigby Cooke proceeding do show that Mr Hind would face considerable hurdles in establishing that the responsibility for what Mr Hind perceives to be an unsatisfactory outcome in the Rigby Cooke proceeding should be entirely sheeted home to the law firm’s conduct of the Rigby Cooke proceeding, as opposed to the underlying merits of the plaintiffs’ claims against Rigby Cooke. That being the case, it is imperative that Mr Hind precisely nail down what negligent acts or omissions of the law firm he relies upon to support his claim that the law firm’s negligent conduct caused him loss and damage.[38]
(f) In the result, the associate judge refused leave to file the August 2021 pleading.[39]
[38]Want of Prosecution Reasons, [52].
[39]Ibid [53].
Having refused leave to file the August 2021 pleading, the associate judge turned to the law firm’s application to dismiss the proceeding for want of prosecution on the basis of a failure to formulate a viable cause of action. The associate judge referred to the relevant principles, citing Cappelleri v Cappelleri[40] and Bishopsgate Insurance Australia Ltd (in liq) v Deloitte Haskins & Sells.[41] When considering whether there had been inordinate and inexcusable delay on the part of a plaintiff, ‘the Court should have regard to the period of time which had elapsed prior to the issue of the proceeding’.[42] Regard should also be had as to what has happened in the time since the commencement of the proceeding, including whether it has moved past ‘first base’.[43]
[40][2020] VSC 306 (‘Cappelleri’).
[41][1999] 3 VR 863.
[42]Want of Prosecution Reasons, [67].
[43]Ibid, quoting Cappelleri [2020] VSC 306, [44] (Derham AsJ).
The associate judge concluded that there had been inordinate and inexcusable delay on the part of Mr Hind in prosecuting his claims against the law firm. The associate judge found that this delay had been exacerbated by the time that had elapsed since Mr Hind’s entitlement to sue the law firm arose, and the likelihood of further delays occasioned by his inability to put forward a viable pleading.[44]
[44]Ibid [71].
The associate judge then addressed the question of prejudice. In relation to the prejudice to Mr Hind of the proceeding being dismissed, the associate judge noted that multiple failed attempts to produce a viable claim tend to suggest limited prospects of success, at best.[45] The associate judge also accepted the law firm’s submission that the fairness of any trial had been placed in real jeopardy by the delays to date, and were only going to deteriorate further.[46]
[45]Ibid [72], citing Stuart v Said (2021) 65 VR 50, 58 [32] (Maxwell P and McLeish JA); [2021] VSCA 226.
[46]Ibid [74].
The associate judge stated that having a properly pleaded statement of claim was vital given the complexities of the proceedings. The complexities included the proceedings turning upon what was said in oral conversations, and Mr Hind’s claim involving the assessment of a hypothetical scenario, being what profits would have been made (or losses avoided) from the development project had Rigby Cooke not provided negligent advice. Accordingly, the associate judge reached the following conclusion:
The prospects of such a pleading being prepared are slim to non-existent. If Mr Hind had brought his claims against the law firm within time, and had put forward an acceptable pleading within a reasonable period of time, the complexities referred to above would still need to be grappled with by the parties and the Court. However, as time goes on, that task only gets more and more difficult, and the prospects of there being a fair trial recede further. Given my lack of confidence in Mr Hind’s ability to prepare a viable pleading, the law firm should no longer be required to suffer the cost, inconvenience, and other prejudice associated with defending the incoherently formulated claims made against it.[47]
[47]Ibid [80].
I note that in his notices of appeal, Mr Hind does not complain of the associate judge’s refusal of leave to file the August 2021 pleading. Rather, Mr Hind seeks orders setting aside the dismissal of the proceeding for want of prosecution, and providing him another opportunity to file a further amended pleading.
In my view, the associate judge was correct to dismiss the proceeding for want of prosecution for the reasons that she gave. Specifically:
(a) there has been an inordinate and inexcusable delay on the part of Mr Hind in prosecuting his claims against the law firm. In reaching this conclusion I have had regard to the time that has elapsed since Mr Hind’s entitlement to sue arose; the likelihood of further delays in light of his persistent inability to put forward a viable pleading; and the proceedings having not proceeded past first base and having no realistic prospects of doing so;
(b) the prejudice to Mr Hind of the proceedings being dismissed is heavily reduced, given his failure to produce a viable claim indicates poor prospects of success, at best;
(c) the law firm has suffered prejudice by having to consider and respond to various iterations of the proposed pleading — including legal costs that may or may not be recoverable — and would continue to do so if these proceedings were allowed to continue; and
(d) the fairness of any trial has been placed in real jeopardy by the delays and would only deteriorate further if the proceedings were allowed to continue. Any trial would only commence in 2023 at best, meaning a significant period of time would have elapsed since the relevant events. This would pose a considerable challenge in any eventual trial given much of the dispute was likely to turn upon what was said in oral conversations. There was also a ‘case within a case’ in these proceedings, being the assessment of the hypothetical scenario of what profits would have been made (or losses avoided) from the development project had Rigby Cooke not provided negligent advice. Such complexity demands a properly pleaded statement of claim, which Mr Hind has failed to prepare.
Mr Hind also submits that the associate judge should have stayed the proceeding for want of prosecution and not dismissed it. In my view there was no error in dismissing the proceeding. I base this conclusion on the reasons set out above. In particular, having regard to Mr Hind’s multiple unsuccessful attempts at filing a proper pleading and the associate judge’s detailed consideration of them, proceedings had not proceeded past first base and had no realistic prospects of doing so.
The application for an extension of time to appeal the dismissal of the proceedings for want of prosecution is refused.
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