Hope v Colwell Wright
[2000] QDC 320
•26 October 2000
DISTRICT COURT OF QUEENSLAND
CITATION: Hope v. Colwell Wright [2000] QDC 320 PARTIES: DANIEL JOHN HOPE (Plaintiff / Respondent)
v.
COLWELL WRIGHT (A FIRM) (Defendant / Appellant)FILE NO/S: Appeal 1753 of 2000
M991157DIVISION: PROCEEDING: Appeal ORIGINATING COURT: Magistrates Court Caboolture DELIVERED ON: 26 October 2000 DELIVERED AT: Brisbane HEARING DATE: 10 October 2000 JUDGE: McGill DCJ ORDER: Appeal dismissed with costs CATCHWORDS: NEGLIGENCE – causation – failure of solicitor to give appropriate advice – whether caused loss – how assessed
Astley v. Austrust Ltd (1999) 73 ALJR 403 – followed Johnson v. Perez (1988) 166 CLR 351 – cited
COUNSEL: S W Sheaffe for the appellant
D J Campbell for the respondentSOLICITORS: Colwell Wright for the appellant
Boyce Garrick for the respondent
This is an appeal from a judgment of the Magistrate Courts at Caboolture on 7 April 2000 in favour of the plaintiff / respondent against the defendant / appellant for $17,863.43 together with costs and interest. The defendant was a solicitor and had been at the relevant time retained by the plaintiff, who was a builder seeking to recover money owed by the owner of a parcel of land on which he had built a house. The Magistrate found that there had been professional negligence on the part of the defendant.
On appeal, there was no challenge to the finding of negligence against the appellant, but it was submitted that the plaintiff had failed to prove that this negligence had caused any loss, and that there ought to have been a reduction in the amount of damages because of the plaintiff’s contributory negligence. As to the latter point, the plaintiff claimed against the defendant in negligence and for breach of contract, and the Magistrate found that there was both negligence and breach of the contract of retainer. Accordingly, the plaintiff recovered in contract and was therefore entitled not to have his damages reduced on the ground of contributory negligence: Astley v. Austrust Ltd (1999) 73 ALJR 403. There was the further difficulty that it does not appear that contributory negligence had ever been pleaded. When this was pointed out to the counsel for the appellant during argument, this ground was abandoned. The appeal then comes down to the question of causation.
Background
The plaintiff originally engaged the defendant seeking advice on recovering monies owed by the home owner under the contract. After some advice from the firm, and some negotiations directly between the plaintiff and the owner, there was an oral agreement between them for the plaintiff to lodge a consent caveat over the land. This required a written agreement between the parties, and a document was prepared by the defendant and signed by the owner, but only after he had made some changes to it. Although the document referred to a “consent caveat” the owner did not sign the form required by the Titles Office to be signed by an owner and lodged before it would treat a caveat as being lodged with the consent of the owner: Land Title Act: s.126(1)(b). A caveat was lodged, but so far as the Titles Office was concerned, it was one which would lapse unless notice of action was given: p.102. That meant that it was necessary for some proceeding to be commenced which would support the caveat, and for notice of that proceeding to be given to the Titles Office: s.126(4).
The Magistrate found that the plaintiff was not advised that the caveat would lapse in three months unless some proceeding was commenced and notice of action given, although about three weeks after the caveat was lodged, the plaintiff contacted the defendant seeking assurances that it had been registered, which was confirmed. The Magistrate found the document in fact lodged was not a consent caveat, and indeed that because of s.122(2) such a caveat would lapse three months after lodgement unless s.126(4)(a)(ii) and (b) of the Land Title Act had been complied with, which did not occur in this case.
Subsequently there were some negotiations between the plaintiff and a Mr. Gavin, the person in control of a company Axiom Pty Ltd. A contract for the sale of the house by the owner to that company had been signed, and Mr. Gavin was seeking to have the caveat removed so that the contract could be completed. There were some offers made to the plaintiff, but no final agreement was reached. The plaintiff rejected the offers from Mr. Gavin, in the belief that because the caveat was in place he would get paid the full amount. The Magistrate found that Mr. Gavin at one stage told the plaintiff that the caveat lodged would lapse and that subsequently the plaintiff had sought some advice from the defendant concerning this. Again, no advice was given of the need to commence some proceeding and give notice of action, and in fact the caveat lapsed, the purchaser completed the contract and nothing was paid to the plaintiff. The owner then went bankrupt and the plaintiff recovered nothing from his estate.
The Magistrate found that if the caveat had not lapsed in all probability the purchaser would have paid the full debt of $17,863.43 in order to have the caveat removed. This was on the basis of his assessment of Mr. Gavin, who was called as a witness for the plaintiff, and took into account that Mr. Gavin had received legal advice that the best option was to complete the contract even if it meant paying the plaintiff in full. Mr. Gavin had been attempting to negotiate an arrangement with the plaintiff so that he paid less than the full amount, but the plaintiff had already rejected offers, including one to pay $10,000 immediately with the balance by instalments, insisting on paying for the full amount at once. On this basis the Magistrate found that the negligent failure of the defendant to advise the plaintiff that it was necessary to commence a proceeding and give notice of action in order to prevent the caveat from lapsing was the cause of the failure of the plaintiff to recover the full amount of the debt, in effect from Mr. Gavin.
Application To Amend To Add Grounds
On the hearing of the appeal, the appellant sought leave to make an amendment to add two further grounds as follows:
“(1) The agreement between Hope and [the owner] would not support a caveat. Therefore the caveat would have lapsed in any event or would have been removed on application.
(2) The proceeding to recover the money from [the owner] was not a type of action that would support the caveat. Therefore the caveat would have lapsed on the expiration of three months in any event.”
Ultimately, after some discussion about the substance of these grounds, they were not pursued. The assessment of damages depends essentially on comparing the actual outcome to the plaintiff in circumstances where there was negligence or breach of contract on the part of the defendant and the outcome had that negligence not occurred, or had the contract not been breached. Relevantly, that means the outcome if the appropriate proceeding had been commenced and notice of that proceeding had been given to the Titles Office. Unless the caveat lapsed, the purchaser was in a position where it had either to make an application to remove the caveat, to secure the voluntary removal of the caveat by the plaintiff (by paying him such amount as the plaintiff would agree to accept) or to abandon the contract for the sale and purchase of the land. Had the purchaser taken the first or third of these steps, then the whole arrangement may or would have proved futile, and the plaintiff have recovered nothing. What matters in these circumstances therefore is what would have happened.
In a particular case there may be no clear evidence as to what would have happened if the defendant had not been negligent or in breach of its contract, and in that situation it would be appropriate to assess the damages on the basis that what had been lost was a chance of recovery: Johnson v. Perez (1988) 166 CLR 351 at 360. But in the present case there was evidence which the Magistrate accepted as to exactly what would have happened, the evidence of Mr. Gavin as to what he would have done if the caveat had not lapsed, supported by evidence of legal advice he had received, which was not advice to apply to have a caveat removed, and the fact that there had been some negotiations between Mr. Gavin and the plaintiff prior to the caveat’s lapsing where what was offered to the plaintiff was apparently payment of the full amount, although only $10,000 of that would be paid immediately. That was not the sort of offer which would have been made by a purchaser who was seriously considering either making an application to remove the caveat or simply abandoning the contract.
If the caveat were obviously unsustainable, and there was reason to think that that might well have come to the notice of the purchaser, so that the purchaser would be expected to make an application, that would be a factor which a court would take into account in relation to the question of causation, since it would be necessary to assess the loss by reference to the loss of the chance of the caveat being sustained. However, in the present case, there was, in my opinion, a sufficient basis in the evidence which if accepted would support a conclusion that what would have happened had the caveat not lapsed is that the plaintiff would have received all his money. Once the court makes that finding, in my opinion it becomes irrelevant whether if the purchaser had been advised differently, and had made an application to remove the caveat, that application would have succeeded, because the caveat was unsustainable. The plaintiff was pursuing a certain course designed to extract an amount of money from someone in satisfaction of the debt owed to him, and what matters is whether that course would have worked but for the defendant’s negligence or breach of contract. If a court is satisfied that it would, then that amount is in my opinion the appropriate measure of damage.
As to the second proposed additional ground, it is, I think, not very helpful to argue that, had a proceeding been commenced, it would have been a proceeding which would not in law support the continuation of the caveat. This, I think, is in substance of argument that if it had not been for the negligent failure of the defendant to advise on the appropriateness of commencing proceedings, and they had received instructions to commence proceedings and had in fact commenced the proceedings, they would have negligently commenced the wrong proceedings, that is proceedings not capable of supporting the caveat. If the true situation is that no proceedings were capable of supporting the caveat, it is still necessary to look what would have happened. Would the Titles Office have removed the caveat notwithstanding notice of the proceeding? Would the purchaser, or the owner, have applied to remove the caveat on the basis that the proceeding commenced was incapable of supporting a caveat? Given that neither had applied to remove the caveat anyway, and the owner’s poor financial situation, that may be thought to be unlikely, but clearly this is a matter which could have been addressed by evidence had the issue been raised at the trial. It is therefore not one which it is appropriate to raise on appeal.
Causation
The question of causation is, as I have explained, essentially a matter of what would have happened had proper advice been given. What would have happened in the absence of negligence or breach of contract by the defendants is that an appropriate proceeding would have commenced, notice of it would have been given, and the caveat would not have lapsed. In these circumstances, the Magistrate found on the evidence that the plaintiff would have been paid out in full, but because the caveat lapsed, the plaintiff received nothing. What he would have been paid therefore is the measure of his loss, unless the finding that the Magistrate made should be overturned.
The findings did involve acceptance of this part of the evidence of Mr. Gavin, and it was submitted that his evidence was thoroughly unreliable and should not have been accepted. The Magistrate had no illusions about the evidence of Mr. Gavin, as his reasons made clear, but he found the evidence that, if it had been necessary to do so, the full amount would have been paid was particularly plausible given the situation that otherwise Mr. Gavin (or someone) stood to lose a much larger sum of money. In addition he was entitled to have regard to the fact that Mr. Gavin had been advised by his solicitors in effect that he had to pay up, and to the course of negotiations which had already occurred between Mr. Gavin and the plaintiff, where Mr. Gavin had offered the full amount provided that he could defer payment of the excess over $10,000. That in my opinion provides a reasonable, indeed a fairly strong, evidentiary basis for the conclusion to which the Magistrate came. As well, Mr Gavin was not cross-examined about this part of his evidence.
Some point was made about the position of Axiom Pty Ltd as a trustee company of a trust, in circumstances where the financial position of the trust was not clear. Mr. Gavin had become involved because the owner had originally been proposing to sell to another individual who had apparently been in possession and had paid in excess of $40,000 towards the purchase price to the owner, but was experiencing difficulty in completing the contract. That individual then made some arrangement with Mr. Gavin as a result of which the money that had already been paid by him was treated as a deposit paid under the contract with Axiom Pty Ltd. Precisely how things came to be set up in the form described by Mr. Gavin in evidence is perhaps not clear, and perhaps Mr. Gavin was not entirely frank about the details, but the Magistrate appears to have been cautious about the evidence of Mr. Gavin. If the owner went bankrupt still owning the land, then the benefit of money which had been paid by the purchaser under the contract would probably be lost, either in whole or in part, or at least Mr. Gavin may well have thought that that was the situation. Whether there was money in the trust to pay out the plaintiff does not matter; what matters is whether someone would have come up with the money in order to enable the contract to be completed, and there is, I think, no reason to interfere with the conclusion that that would have occurred. In my opinion, none of these background issues really matter; all that matters is whether, if the caveat had not lapsed, the plaintiff would in fact have been paid out by someone so that the contract for the purchase of the property could be completed. In my opinion, it has not been shown that the Magistrate was in error in concluding that he would have been.
This is, in my opinion, certainly not a case where the trial court has made a finding which appears to have been made in the teeth of contemporaneous documentation or appears otherwise to have abused the advantage of seeing and hearing the witnesses: State Rail Authority of NSW v. Earthline Constructions Pty Ltd (1999) 73 ALJR 306. There is, in my opinion, no proper basis for challenging that finding of the Magistrate, and so long as it stands, in my opinion it clearly establishes that the loss that the plaintiff has suffered is the amount that he would have been paid by the purchaser had the caveat not lapsed, but was not paid because the caveat did lapse. That was $17,863.42. It follows that in my opinion there was no error on the part of the Magistrate in his conclusion as to causation, and the appeal should be dismissed with costs.
Postscript
The documents on the appeal file suggest that at least some members of the profession have not yet come to grips with the requirements of the Uniform Civil Procedure Rules and the approved forms, so far as they specify the title to use on documents in an appeal to the District Court from a civil judgment in the Magistrates Court. The effect of r.786 and Form 96, which is not the same as Form 64 (Notice of Appeal to the Court of Appeal), is that the correct title for documents for this appeal is:
DISTRICT COURT OF QUEENSLAND
Registry: Brisbane
Appeal No D1753/2000
Appellant: COLWELL WRIGHT (A FIRM)
AND
Respondent: DANIEL JOHN HOPE
0