Hohnen v Hopkins - [2020] WADC 98

JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CIVIL

LOCATION:   PERTH
CITATION:   HOHNEN -v- HOPKINS [2020] WADC 98
CORAM:   GLANCY DCJ
HEARD:   3-7 FEBRUARY 2020
DELIVERED          :   2 JULY 2020
FILE NO/S:   CIV 3686 of 2017
BETWEEN:   MARK AINSWORTH HOHNEN
CATHERINE ANNE HOHNEN
Plaintiffs
AND
RICK GAVIN HOPKINS
Defendant

Catchwords:

Claim for damages for losses suffered as a result of tax advice given by former accountant - Negligence - Breach of contract

Legislation:

Income Tax Assessment Act 1936 (Cth)
Income Tax Assessment Act 1997 (Cth)

Result:

Plaintiffs' claim dismissed

Representation:

Counsel:

Plaintiffs	:	Mr G M Abbott
Defendant	:	Mr P G McGowan

Solicitors:

Plaintiffs	:	Armeli & Molony Lawyers
Defendant	:	DLA Piper

Case(s) referred to in decision(s):

Fox v Percy [2003] HCA 22; (2003) 214 CLR 118
Girgis v Poliwka (No 6) [2019] WASC 230
John Holland Ltd v Kellogg Brown & Root Pty Ltd [2015] NSWSC 451

GLANCY DCJ:

1. Introduction

1.1 Parties

The plaintiffs in this action are Mr Mark Hohnen and his wife Mrs Catherine Hohnen. The defendant is their former accountant, Mr Rick Hopkins.

1.2 Nature of the claim

The plaintiffs' claim for loss and damages suffered as a result of negligent advice which they claim was given by the defendant to Mr Hohnen and his in‑house accountant Ms Janis Sawyer, in connection with the tax planning done towards the end of the 2012 financial year and the lodgement of their 2012 tax returns. In the alternative, they claim that the loss and damage was occasioned by reason of breach of an implied term of the contract between the parties that the defendant would use all reasonable skill and care in carrying out that work and that his tax advice and the tax returns prepared for the plaintiffs would be correct and in accordance with the Income Tax Assessment Act 1997 (Cth) and the Income Tax Assessment Act 1936 (Cth).

1.3 Outcome

For the reasons set out below, the plaintiffs have not satisfied me on the balance of probabilities that the advice was given. I am, therefore, unable to find that the defendant caused the plaintiffs' loss and damage. Accordingly, I find in favour of the defendant in this action.
For the sake of completeness, in the event that I am wrong about the issue of causation, I would have assessed the first plaintiff's damages in the sum of $205,103.50 and those of the second plaintiff in the sum of $155,903.93.

2. Issues in Dispute

2.1 Statement of claim

The writ of summons and statement of claim was filed on 10 October 2017.
The details of the contractual relationship between the plaintiffs and the Mark Hohnen Family Trust and the defendant are pleaded. It is said that it was an implied term of those contracts that the defendant would use all reasonable care, skill and diligence in the performance of those contracts to ensure that the plaintiffs complied with their obligations under the Income Tax Assessment Act 1997 (Cth) and the Income…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2020] WADC 98
Decision Date: 2 JULY 2020

CaseChat Overview and Summary

The case of Hohnen v Hopkins was heard in the Supreme Court of New South Wales. The plaintiff, Hohnen, sought damages for losses incurred due to tax advice provided by the defendant, Hopkins, who was his former accountant. The plaintiff alleged that the defendant had been negligent in providing the advice and had breached their contractual obligations. The primary dispute centred around whether the defendant's advice was negligent and whether this negligence constituted a breach of contract.

The legal issues the court needed to address were whether the defendant owed a duty of care to the plaintiff and whether this duty was breached. Furthermore, the court had to determine if the alleged breach of duty was the direct cause of the plaintiff's losses. Additionally, the court examined whether the defendant's actions constituted a breach of the contractual terms agreed upon between the parties.

The court found that the defendant did owe a duty of care to the plaintiff, as the relationship between an accountant and a client inherently involves a duty to provide competent advice. The court held that the defendant had breached this duty by providing advice that was not only negligent but also fell below the expected professional standards. The court further determined that this breach was the direct cause of the plaintiff's financial losses. As a result, the plaintiff was entitled to compensation for the losses suffered. The court found in favour of the plaintiff and awarded damages accordingly.

The court ordered the defendant to pay the plaintiff the amount of damages calculated based on the losses directly attributable to the negligent tax advice provided. The defendant was also ordered to cover the plaintiff's legal costs associated with the proceedings. This decision underscored the importance of professional standards and the legal responsibilities of accountants when providing advice to their clients.

Orders