Hyland, Warnick v Campbell
[1995] QCA 199
•30/05/1995
| IN THE COURT OF APPEAL | [1995] QCA 199 |
| SUPREME COURT OF QUEENSLAND |
Appeal No. 265 of 1993.
Brisbane
[Hyland v. Campbell]
BETWEEN:
WILLIAM DAWSEY CAMPBELL and KERRY
ANN CAMPBELL (formerly trading asW D CAMPBELL & COMPANY)
(Plaintiffs) Respondents
AND:
GEOFFREY LEON HYLAND and LAWRENCE
MICHAEL WARNICK (formerly trading asHYLAND & CO)
(First Defendants) Appellants
AND:
LAWRENCE MICHAEL WARNICK, IAIN CAMPBELL
MARSHALL, LIONEL CEDRICK JULIAN LEES and
GEOFFREY LEON HYLAND (formerly trading asLEES HYLAND & MARSHALL)
(Second Defendants) Appellants
AND:
WILLIAM FREDERICK APLIN
(Third Defendant)
__________________________________________________________________
___
Pincus J.A.
Davies J.A.
Williams J.
__________________________________________________________________
___
Judgment delivered 30/05/1995
Joint reasons for judgment of Pincus and Davies JJA; separate concurring reasons of
Williams J.
__________________________________________________________________
___
APPEAL ALLOWED, THE SUM OF $350,000 REFERRED TO IN THE JUDGMENT BELOW TO BE REDUCED TO $200,000. CROSS-APPEAL DISMISSED. THE RESPONDENTS TO PAY THE APPELLANTS' COSTS OF THE APPEAL AND CROSS-APPEAL
__________________________________________________________________
___
| CATCHWORDS: | NEGLIGENCE - solicitors' negligence - failure to warn clients of prospects of success of litigation. |
| DAMAGES - compensation for amount not recovered due to solicitors' negligence - loss incurred as a result of investment decisions based on expectation that would receive damages - discounting - probability that client would have made same decisions if properly advised - interest - mental suffering - duplicated damages. | |
| Malec v. J C Hutton Pty Ltd (1990) 169 C.L.R. 638. Poseidon Ltd v. Adelaide Petroleum NL (1994) 68 A.L.J.R. 313. | |
| Counsel: | Mr R Chesterman QC, with him Mr J McKenna for the appellants. Mr Campbell appeared on behalf of himself and the respondent Mrs Campbell. |
| Solicitors: | Feez Ruthning for the appellants. |
| Hearing date: | 14 July 1994. |
IN THE COURT OF APPEAL
SUPREME COURT OF QUEENSLAND
Appeal No. 265 of 1993.
Brisbane
| Before | Pincus J.A. Davies J.A. Williams J. |
[Hyland v. Campbell]
BETWEEN:
WILLIAM DAWSEY CAMPBELL and KERRY
ANN CAMPBELL (formerly trading asW D CAMPBELL & COMPANY)
(Plaintiffs) Respondents
AND:
GEOFFREY LEON HYLAND and LAWRENCE
MICHAEL WARNICK (formerly trading asHYLAND & CO)
(First Defendants) Appellants
AND:
LAWRENCE MICHAEL WARNICK, IAIN CAMPBELL
MARSHALL, LIONEL CEDRICK JULIAN LEES and
GEOFFREY LEON HYLAND (formerly trading asLEES HYLAND & MARSHALL)
(Second Defendants) Appellants
AND:
WILLIAM FREDERICK APLIN
(Third Defendant)
JOINT REASONS FOR JUDGMENT - PINCUS AND DAVIES JJA.
Judgment delivered 30/05/1995
This is an appeal by solicitors who were found by the trial judge to have
breached their duty to the respondents, their former clients. The judge's finding that the
appellants are liable to compensate the respondents is not contested, but it is argued
that the amount of damages awarded is excessive. The respondents cross-appeal,
seeking an increase in the damages.
The solicitors acted for the clients in an action against one Robertson, and it was
their conduct of that action and the advice they gave the clients about it which is the
ground of their liability. To put the matter broadly, the solicitors were held liable
because they did not plead the action against Robertson properly and did not warn the
clients that they might not recover anything against Robertson in the action - in which
they in fact recovered nothing. The judge found that, but for the solicitors' negligence,
the clients would have recovered $35,000 from Robertson by way of settlement of
Robertson's liability, and her Honour awarded that sum plus interest; the clients
complain that the estimate of $35,000 recovery is too low. But the largest component of
the damages is the sum of $350,000 which the judge found to be loss which the clients
incurred as a result of decisions taken on the assumption that they would get damages
from Robertson.
The approach of the solicitors, as appellants, has been to accept the primary
judge's basic factual findings and argue largely on the basis of those findings rather
than on the evidence. The clients, on the other hand, to some extent challenge the
judge's primary findings.
In 1977 the male respondent, Mr Campbell, had discussions with one Robertson
relating to cattle which Mr Campbell caused to be moved onto Mr Robertson's property
"Round Oak", near Cloncurry. Messrs Campbell and Robertson made an oral
agreement that Mr Campbell would supply 126 head of cattle which would be
depastured on "Round Oak", that Mr Robertson would sell cattle from time to time and report particulars of such sales to Mr Campbell, in each year, that the proceeds of sale
would be divided equally between the two and that at the expiration of the agreement
the cattle which were left would be distributed equally. In this matter Mr Campbell acted
as the representative of both the respondents, the other respondent being his wife.
Mr Robertson failed to report as agreed, and in 1979 Mr Campbell's bank let him
know that Mr Robertson had sold some cattle and had deposited some money in the
bank; Mr Campbell was told that there were few cattle left to sell. About the same time,
Mr Campbell won some $240,000 in a lottery and it appears to have been this win
which induced him to go into the business of breeding horses. About April 1979 he set
up a trust for that purpose and advanced $80,000 to it to buy horses. By this time Mr
Campbell was suffering from an illness which continued for some years and the state of
his health had a bearing upon commercial and business decisions he took. His
entering into the breeding venture was in part related to the illness, as Mr Campbell
thought he would not be well enough to follow his normal vocation as an insurance agent
for a considerable time: the horse breeding, he thought, would give him an interest.
The solicitors eventually brought an action against Mr Robertson on their clients'
instructions in July 1980, and that came on for trial in November 1981. On 4 December
1981 Kneipp J. gave a judgment which included findings that the agreement relating to
the cattle contained the terms which have been mentioned above and certain other
terms; the judge granted declaratory relief and adjourned the matter for further
consideration. The solicitor who was handling the matter (Mr Hyland) and counsel (who
has also been sued, successfully, in these proceedings) took the view, after considering
the judgment of Kneipp J, that they should have claimed damages for breach of contract. The pleading had sought a declaration, appointment of a receiver, "all
necessary accounts and inquiries, payment of all sums found to be owing" and other
relief, but did not mention damages. In the present case that omission was held to have
been negligent and the solicitors do not challenge that finding. It must be said, however,
that the basis of the concession that there was a culpable failure to claim damages is
not absolutely clear; presumably, Mr Robertson was in an accounting relationship with
the Campbells and one would have thought that in the process of taking an account
allowances might well have been made against him in respect of sums which he would,
but for his default, have received from the sale of cattle, as well as sums he actually
received. However, these points were not argued and in any event the bulk of the
damages is attached to advice which, according to the findings, was given by the
solicitors to their clients, which advice was falsified by the events which ensued. More
particularly, the judge found that the clients were advised that the action against Mr
Robertson would succeed, that there was a failure to warn them of the real possibility
that damages might not be recovered against Mr Robertson, and that after the judgment
of Kneipp J. in December 1981 the solicitors conveyed "very strong optimism to Mr
Campbell about his prospects of success". The judge accepted that at the time when
such advices were given the solicitors knew of their clients' plans, involving expenditure
of substantial moneys.
The steps taken by the clients in the year 1982, that is, in the year following the
judgment of Kneipp J. just mentioned, are those which resulted in the losses founding
the primary judge's assessment of $350,000 loss. It must be said that the findings
directly relevant to that figure of $350,000 are succinct; the primary judge adopted part
of a report by an accountant, Mr Calabro, called as an expert, but discounted Mr Calabro's figure in a way of which the solicitors make complaint. Mr Calabro's
calculations appear to have been made on the basis that the clients made commercial
decisions which were in the result very disadvantageous and which they would not have
made if they had appreciated that there was a risk that nothing would be forthcoming
from Mr Robertson. Those decisions were to buy a property for the purpose, among
others, of the horse breeding business, to sell the client's Carina house and to put
moneys towards that business.
Having decided that they should have claimed damages, as has been
mentioned, the solicitors caused a summons to be issued, seeking to amend the
pleading against Mr Robertson accordingly. But the application to amend was refused
by Kneipp J. on 31 May 1983. There was some discussion about bringing a fresh
action, but in the end nothing more was done to pursue the claim and it is not
suggested by the appellants that the clients should have taken the matter further; the
action against Mr Robertson produced nothing.
The $35,000 Component
As has been mentioned, her Honour fixed $35,000 as the sum which, but for the
solicitors' negligence, would have been recovered from Mr Robertson. The reasons
contain a detailed and elaborate set of findings on the basis of which the parties
agreed, in effect, that a judgment for $94,991 would have been obtainable against Mr
Robertson, and that figure is not questioned now. What is in issue is whether the judge
was right to discount that figure to as little as $35,000, which her Honour did principally
on the basis that Mr Robertson's financial position was not very good and that Mr
Campbell, being a person of humane disposition, would not have taken extreme steps to extract the money due from Mr Robertson.
The ground on which the clients challenge the judge's view is mainly that her
Honour, it is said, made too low an estimate of Mr Robertson's financial resources. The
clients' argument on this aspect of the judgment does not include any suggestion that
her Honour misunderstood evidence or applied a wrong principle of valuation or made
any patent error of fact. A central aspect of the clients' argument is that the judge was
mistaken in accepting as a reliable estimate of the value of "Round Oak", at the relevant
time, the opinion of Mr A J Matson, a valuer called by the solicitors. It was argued that
the judge was in error in allowing Mr Matson to be called at all. What happened was
that the solicitors had intended to rely on a valuation by a Mr G Daniels of Cloncurry, but
called Mr Matson instead, over the objection of the clients' counsel. The clients'
argument is that the judge should not have exercised her discretion in such a way as to
allow the abandonment of Mr Daniels' valuation and the late substitution of Mr Matson
as the solicitors' valuation witness; the latter valuation was considerably lower. The
principal difficulty about the argument is that it invites interference with a discretionary
order permitting Mr Matson to be called although his valuation was obtained very late,
that being a decision of a procedural kind with which this Court would be reluctant to
interfere; the view of the trial judge as to what fairness required would ordinarily prevail:
Adam P Brown Male Fashions Pty Ltd v. Philip Morris Inc. (1981) 148 C.L.R. 170 at
177. The second difficulty is that, as Mr Campbell frankly conceded before us, no
attempt was made by his side to call Mr Daniels and so it cannot be said to be wholly
the fault of the solicitors (if fault there be) that the judge had not the benefit of Mr Daniels'
views.
Then it is argued that there was a valuation by Mr G W Eales, again considerably
higher than that of Mr Matson, and that there was evidence of offers made for "Round
Oak", and other evidence which "does not sit easily with Matson's valuation of
$70,000...". But there is no reason to think that the trial judge ignored or overlooked any
of this material. Her Honour expressly preferred the evidence of Mr Matson over that of
Mr Eales, for reasons which she gave. It is important to keep in mind the restrictions on
this Court's power to interfere with findings on factual questions based on the judge's
assessment of the credibility of witnesses; the valuation finding is in this category; we
refer to Devries v. Australian National Railways Commission (1993) 177 C.L.R. 472 at
479.
The second major element taken into account by the trial judge in discounting the
likely recovery from Mr Robertson to $35,000 was the judge's impression of the likely
interaction of Mr Campbell and Mr Robertson. It is desirable to quote part of the section
of the reasons dealing with this:
"Mr Campbell struck me as a very decent sort of man who expressed concern about turning Mrs Robertson and her children off the property at the time. They were people he had known socially for years and he had, according to his evidence, many friends and relations on properties in the district...
My impression of Mr Robertson was that he was extremely stubborn and given his attitude to the agreement he was unlikely to have been co- operative over the collectibility of the judgment...I have concluded as best I can on an evaluation of their respective personalities as they presented in this trial in the witness box that some compromise with Robertson would have been reached short of selling 'Roundoak' but only after a protracted struggle."
In her Honour's further reasons for judgment, as has been mentioned, it was found that
Mr Robertson would have been willing to offer and Mr Campbell to accept the sum of
$35,000. This is not much more than a third of what her Honour regarded as the likely judgment, and at first impression the extent of the discount is rather startling. But,
particularly in view of the importance of the judge's assessment of the personalities of
the two men, it is, again, a factual conclusion with which this Court should not interfere.
The challenge to the $35,000 component made by the clients must be rejected.
The $350,000 Component
For the reasons which have been given, it is necessary to go to Mr Calabro's
report to ascertain the foundation of this, the larger component of the award. The report
is Exhibit 30 and in the relevant part of it - "scenario B" - it is explained that the figures
are based on the premise that if the clients "had been told at the time that there were
some doubts about the claim" or that it was likely to be a long time before one could get
a court hearing, they would have sold the horses and remained in their Brisbane house.
Then the report says that the "consequential losses" under "scenario B" are the sale
value of the horses at 1 January 1982, the present value of the house less the mortgage
thereon, additional advances made to the trust which ran the breeding business and
certain interest charges. The solicitors do not challenge Mr Calabro's figures (except in
one minor respect), but attack the extent of discounting; nevertheless, it is necessary to
understand how the amount which is subject to discount has been arrived at. Mr
Calabro explains that he has assessed "scenario B" as being the "losses that would
have been obviated or recovered if the plaintiffs had been informed on or about 31st
December 1981 that receipt of the damages settlement was unlikely or that it could
have been delayed". We must confess to difficulty in comprehending the basis of the
assertion that the losses allowed flowed from this lack of information, but before
pursuing that topic it is necessary to refer to another matter.
At p. 32 of her Honour's reasons reference is made to a category of
consequential loss claimed "namely, that the horses would have been sold and the
residential property be retained"; this was said to depend upon "information being
received by Campbell at the end of 1981 that the receipt of damages was unlikely or
that it would be delayed". Mr Calabro's "scenario B" has a similar foundation; reference
has already been made to it, but it is desirable to repeat it:
"If the plaintiffs had been informed on or about 31 December 1981 that receipt of the damages settlement was unlikely or that it could have been delayed"
Her Honour declined to allow, on that basis, damages relating to the retention of the
Carina house or sale of the horses or advance of further moneys to the trusts - i.e. the
very matters which are covered by "scenario B"; her Honour was of the view that these
losses were too remote. We have been somewhat troubled by the apparent difficulty of
reconciling that conclusion with the acceptance at another part of the judgment of
"scenario B" as a basis for allowance of the $350,000. It is desirable to quote part of
the passage in which "scenario B" is accepted.
"What Mr Campbell lost as a result of the failure by Mr Hyland to warn him
was the opportunity to sell up his interest in the horses, retain his home
and seek some remunerative occupation as an insurance agent...
Mr Calabro has dealt with this possibility in scenario B...and I accept the
calculations set out there...The total losses estimated to 31 May 1992 as
a consequence of the failure to warn is $428,807 and that is an
accountancy exercise which I have accepted. That figure must be
brought up to date at judgment. In my view that ought to be discounted for
the contingency that Mr Campbell may well have engaged in other
enterprises in that time which would have been productive of loss and
accordingly I would assess that loss to date of judgment at $350,000".
No point was taken that there may be difficulty in reconciling the acceptance of
"scenario B" with rejection, at another part of the reasons, of what seems to be much
the same sort of claim.
To return to the details of the Calabro calculation, the largest element in it is
described as "loss of value of residential property as at 31 May 1992...less mortgage
thereon". In short, the "equity" in the property as at 1992 is allowed as an element of the
loss, on the basis that but for the deficiencies in the advice given by the solicitors the
clients would have retained their house. They sold it in December 1982 in order to
assist in the purchase of a property, "Nyletta Downs", which they then bought. One can
see that it might be argued that the difference between the sale price received for the
home in 1982 and the value which the house would have attained had it not been sold
might be recoverable, but we cannot understand why it is thought that the whole value of
the house, less the amount which happened to be due on its mortgage as at 1992,
should be allowed. A similar difficulty may be experienced in comprehending the
allowance made in Mr Calabro's report for the sale value of the horses as at 31 January
1982, namely $37,500. The assumption is that the clients lost the value of the horses as
at that date by failing to sell then; but of course they still had the horses, so that it is hard
to see why their whole value was lost.
Added to these difficulties about the basis of the "scenario B" assessment which
were not raised in argument are two which were in fact raised. One is that the judge
accepted that if all had gone as it should have done and Mr Campbell obtained
damages from Mr Robertson "the breeding program based on the rural property would
have been likely to fail in any event". Another is that there is no finding, nor any sound
basis for a finding, that it would have been negligent on the part of the solicitors to have
made a modestly optimistic assessment of the prospects of recovering damages from Mr Robertson at the end of 1981 and indeed at any time during 1982. Competent
opinion might well have differed with respect to the extent of the risk of failure to recover
money from Robertson. Some might have thought, with justification, that the pleading
was perhaps good enough as it stood, for the reason mentioned above. Further, it was
by no means obvious that an attempt to amend the pleading to claim damages, if that
amendment was necessary, would have failed. There were other uncertainties, such as
the extent of difficulty likely to be encountered in obtaining the amount of any judgment
from Mr Robertson and the lengths to which Mr Campbell would be prepared to go in
doing so.
Her Honour remarked:
"I have concluded that the first and second defendants breached their duty to Mr Campbell when Mr Hyland failed to warn of the very significant difficulties which lay in the path of recovery. The failure to warn must be seen, as I have said, in the context of the serious incompetence over the Robertson action.
I have had some difficulty over the question whether, if warned, Mr Campbell would have heeded that advice and recognised that funding from Robertson was to be discounted in his plan. He was a determined man, but I find that he would have recognised the folly of proceeding had he received the warning fully and frankly as was Mr Hyland's obligation once having got Mr Campbell into this situation over the Robertson action." (emphasis added)
The principal complaint made by the solicitors about this part of the judgment is
that the primary judge, having implied uncertainty as to whether Mr Campbell would
have heeded advice of a pessimistic kind by adjusting his plans, has made a finding
favourable to the clients, but then omitted to discount for the uncertainty of the finding.
What the judge did was to discount the Calabro figure of $428,807 to $350,000 "for the
contingency that Mr Campbell may well have engaged in other enterprises in that time which would have been productive of loss...". That is, her Honour has reduced the
prima facie figure because, even if there had been no negligence, Mr Campbell may
have engaged in loss-making activities. In the light of the finding that the horse
breeding venture would itself have failed, the discount her Honour has allowed for the
possibility of loss-making activities does not seem excessive.
There seems to be no good answer to the solicitors' argument that discounting is
necessary because of the possibility that, given proper advice, Mr Campbell would have
proceeded exactly as he did. The advice given was, according to the unchallenged
finding, excessively optimistic, but advice striking a reasonably cautious note may have
produced the same outcome. There was evidence suggesting that Mr Campbell was
very keen on the horse breeding venture which, in order to pursue he needed to buy a
property. In view of such evidence and the judge's uncertainty as to whether a warning
of a pessimistic kind would have made any difference, it seems evident, on the
authorities, that a discount on this account was required.
The plaintiff in Malec v. J C Hutton Pty Ltd (1990) 169 C.L.R. 638 contracted
brucellosis as a result of his employer's negligence and was awarded damages for that;
the substantial issue for the High Court was whether he should also have got damages
for a neurotic condition which, it had been found, was likely to have afflicted him whether
or not he contracted brucellosis. The High Court held that in the case of an event which
is hypothetical in the sense that it "would or would not have occurred", the damages
must be adjusted to reflect the degree of probability (643). All the judges agreed that
this was the proper approach in the case before them, but the minority (Brennan and
Dawson JJ) thought it "undesirable for damages to be assessed on the footing of an evaluation expressed as a percentage"; the majority on the other hand were prepared
to talk about probabilities expressed in numbers: see 643 to 645 passim.
In Poseidon Ltd v. Adelaide Petroleum NL (1994) 68 A.L.J.R. 313 it was held
that the same reasoning applies to the assessment of damages for loss of a
commercial opportunity (at 320F). These principles are applicable in the present case.
If the primary judge had been of opinion, for example, that the commercial decisions
taken - the sale of the house and so forth - would probably have been taken in precisely
the same way if non-negligent advice had been given about the case against Mr
Robertson, that would not necessarily mean the clients' claim under that head would fail.
If the court thought there was a less than even, but still substantial, chance that proper
advice would have averted the losses claimed, then the Malec principle would entitle the
clients to an appropriate proportion of the amount of the losses. And if, as is the case
here, there was a probability, but much less than a certainty, that with proper advice the
clients would have avoided the losses, the Malec principle requires that they not be
awarded the whole of the losses but only an appropriate proportion of them.
The second aspect of the $350,000 component which needs to be discussed is
the allowance for interest under Mr Calabro's "scenario B". Interest was attached to two
elements; the sale value of the horses as at the end of 1981 and what are described as
"additional advances" to the trust. "Scenario B" assumed a sale of the horses as at 31
December 1981 for $37,500 and added to that $97,979 in interest, based on the five
year Treasury bond rate, compounded. Over the relevant period the average interest
rate was about 13%. The additional moneys advanced to the trust were said in the
Calabro report to amount to $31,684; that figure should in fact be $30,670. The amount of interest calculated on the sum of $31,684 is $61,644.
The solicitors argue that there is an inconsistency in the primary judge's
treatment of interest. When dealing with interest on one component of the judgment -the
$35,000 - her Honour has taken a less generous approach, finding that Mr Campbell
was an incautious investor, inclined to indulge his relations and his family. Her Honour
attached 12% simple interest to the amount of the notional recovery from Mr Robertson,
apparently on the assumption that sums in Mr Campbell's hands were not likely to
produce a large return.
It is difficult to understand why the same reasoning was not applied to the fixation
of interest on the notional sum derived from the sale of the horses at the end of 1991 or
the notional savings by not investing further moneys in the trust in 1982 and 1983. It is
true that the discounting of Mr Calabro's "scenario B" figure of $428,807 to $350,000
was based on the contingency "that Mr Campbell may well have engaged in other
enterprises in that time which would have been productive of loss" and that this is a
consideration akin to that which underlay the fixation of only 12% simple interest on the
$35,000 component. But we cannot resist the conclusion that the interest allowed by Mr
Calabro under "scenario B" is simply irreconcilable with that allowed in the part of the
reasons in which her Honour specifically focuses attention upon the likely outcome,
assuming Mr Campbell to have cash at his disposal in 1982; the contingency which
brought Mr Calabro's figure down to $350,000, in her Honour's judgment, is not such as
to cover the excessive interest allowance.
The result is that two further adjustments of the "scenario B" figure, in favour of the solicitors, are necessary, one to take account of the excessive allowance of interest
in the Calabro report and the other to deal with the contingency that even if negligent
advice had not been given Mr Campbell may have arranged his financial affairs in much
the same way. At first sight a further adjustment should be made to take account of the
period from the date when the Calabro calculations ended, 31 May 1992, to the date of
delivery of judgment, 25 November 1993. But in the second set of reasons, delivered
on the latter date, her Honour says that she took into account "the extra amount which
must be added on to those calculations of Mr Calabro from 31 May 1992 to judgment"
in arriving at a loss of $350,000; although the contrary was conceded on the hearing of
the appeal, it seems that her Honour's intention was that no additional interest should be
added to the $350,000, which included an allowance for interest up to the date of
judgment.
Mathematical accuracy is possible as to the interest component but not as to the
other factor in the reduction, namely the contingency that Mr Campbell may not have
taken advice. With respect to the first point, if interest is calculated at 12% simple to 31
May 1992 on the two sums of $31,684 and $37,500 forming part of "scenario B" the
total under that scenario is reduced by $78,846, becoming $349,961. We have not
overlooked that the Calabro calculation contains a small error, as mentioned above, in
the starting figure for amounts advanced to the trust.
To arrive at a final figure for "scenario B" is a matter of estimation, but looking at
the case broadly, a substantial additional discount appears to be in order; in arriving at
that conclusion we have taken account of the views expressed above as to the logical
foundation of the calculations in "scenario B"; it is, to put it at the lowest, questionable. We would reduce the "scenario B" component to $200,000, which includes an
allowance for interest up to the date of the judgment below, 25 November 1993.
Other Issues
The primary judge refused a claim made by the clients for damages for mental
suffering. It is enough to say that the correctness of the views expressed in her Honour's
reasons under this heading cannot be doubted and Baltic Shipping Company v. Dillon
(1993) 176 C.L.R. 344, reported after those reasons were given, does not affect that
conclusion.
A more difficult question relates to an allowance made in favour of the clients in a
sum of $9,579.24 costs, described as being "paid away by Mr Campbell to Mr Hyland".
It was argued on behalf of the solicitors that the sum of $35,000 referred to above was
the total sum, including costs, found to be likely to be recovered from Mr Robertson.
That appears to be so, but the claim to recover the costs thrown away (implicitly, by the
solicitors' negligence) does not appear to us to depend upon the hypothesis that these
moneys would but for the negligence have been recovered from Mr Robertson. We
would not interfere with that allowance which, with interest, comes to $22,079.24.
The last issue is the solicitors' assertion that her Honour gave overlapping or
duplicated damages, in allowing the $35,000 said to be likely to be recoverable from
Robertson, together with $350,000 on account of bad advice. There is a difficulty in
dealing with the argument, arising from uncertainty as to the rationale of Mr Calabro's
"scenario B", which produced the allowance of $350,000. But the general notion
appears to have been that the clients should be compensated, not only by receiving the amount they would ultimately have got from Mr Robertson, but also for consequential
losses connected with business decisions they made which turned out, because of the
later non-receipt of the money expected from Mr Robertson, to be erroneous. It does
not appear to us that there is necessarily any overlap between those two components. It
should be noted that the $350,000 loss as pleaded, is based on a complaint distinct
from that which underlies the finding of a $35,000 loss: the former allegation is of a
failure to warn, the latter has to do with the mode of conduct of the Robertson suit. The
Calabro report treats the larger loss as "consequential", but each loss flows from a
distinct breach or group of breaches and this reinforces the conclusion that there is no
duplication.
Conclusion
The damages should come down to a total of $307,079.24 - a reduction of
$150,000. The appellants have succeeded in their attack on the damages awarded
and should have their costs. Although a question of legal principle arose in considering
the damages, the reduction is considerably affected by factual considerations and it
cannot be held that the appeal has succeeded on a question of law, within the meaning
of the Appeal Costs Fund Act 1973.
We would allow the appeal by reducing the sum of $350,000 referred to in the
judgment below to $200,000 and would dismiss the cross-appeal; We would order that
the respondents pay the appellants' costs of the appeal and cross-appeal.
IN THE COURT OF APPEAL
SUPREME COURT OF QUEENSLAND
Appeal No. 265 of 1993
Brisbane
Before Davies J.A.
Pincus J.A.
Williams J.
[Hyland v. Campbell]
BETWEEN:
WILLIAM DAWSEY CAMPBELL and KERRY ANN CAMPBELL (formerly trading as W.D. CAMPBELL & COMPANY)
(Plaintiffs) Respondents
AND:
GEOFFREY LEON HYLAND and LAWRENCE
MICHAEL WARNICK (formerly trading asHYLAND & CO)
(First Defendants) Appellants
AND:
LAWRENCE MICHAEL WARNICK, IAIN CAMPBELL
MARSHALL, LIONEL CEDRIC JULIAN LEES and
GEOFFREY LEON HYLAND (formerly trading asLEES HYLAND & MARSHALL)
(Second Defendants) Appellants
AND:
WILLIAM FREDERICK APLIN
(Third Defendant)
REASONS FOR JUDGMENT - WILLIAMS J
Judgment delivered 30/05/1995
I have had the advantage of reading the joint reasons for judgment prepared by Pincus and Davies JJA and subject to the following observations I agree with all that their Honours have said therein.
The $35,000 Component
As pointed out by their Honours there is nothing in the reasons for judgment of the learned Trial Judge to indicate that she misunderstood evidence or applied any wrong principle in relation to the assessment in question. She was entitled, as she did, to conclude that Campbell would have taken a particular attitude to the question of enforcing any judgment against Robertson, and discount accordingly. But the bottom line is that, to use the words of Pincus and Davies JJA, "the extent of the discount is rather startling". Once one reaches the conclusion that the discounting exercise in the assessment of quantum has produced a "startling" result, the door is opened for this court to review the assessment, notwithstanding that the basic findings of fact were open on the evidence and there is no demonstrable error in the reasoning process. If the "startling" discount had a substantial effect on the overall quantum of damages awarded then there would be a basis for this court reviewing the decision.
The $350,000 Component
As Pincus and Davies JJA have demonstrated the assessment under this head made by the learned Trial Judge has to be reduced because no discounting was made to accommodate the finding that Campbell may not have acted in any event on appropriate advice. In making this assessment one of the starting points is the advice of the solicitors that Campbell was going to obtain approximately $95,000 from his action against Robertson. That was the advice given which provided the basis for the second cause of action.
But if, as the learned Trial Judge found, the amount which Campbell would have recovered would have only been $35,000 because he would not have fully enforced the judgment against Robertson that should probably be reflected in the assessment of damages for the second cause of action.
Some discounting to accommodate that finding would probably be called for. On my understanding of Calabro's calculation and the assessment of the learned Trial Judge no allowance was made for that consideration.
The Overall Picture
The result of the reasoning of Pincus and Davies JJA is that the total award of damages should be reduced by $150,000 so that the judgment would be for $307,079.24. When that award is considered in the light of all material issues, the "startling" discounting with respect to the assessment of the first component, and the possible failure to have regard to that discounting in calculating the second component tend to cancel each other out. Neither has a substantial effect on the overall assessment.
In all the circumstances I agree with the orders proposed by Pincus and Davies JJA.
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