Jadwan Pty Ltd v Rae & Partners (A firm) & Ors

[2020] HCATrans 184

[2020] HCATrans 184

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Hobart  No H1 of 2020

B e t w e e n -

JADWAN PTY LTD

Applicant

and

RAE & PARTNERS (A FIRM)

First Respondent

WILSON DOWD (A FIRM)

Second Respondent

TOOMEY MANING & CO (A FIRM)

Third Respondent

JANET KAY HOGAN (AS THE EXECUTRIX OF THE ESTATE OF THE LATE JOHN MICHAEL HOGAN)

Fourth Respondent

WORSLEY DARCY & ASSOCIATES

Fifth Respondent

Application for special leave to appeal

BELL J
KEANE J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON WEDNESDAY, 11 NOVEMBER 2020, AT 10.30 AM

Copyright in the High Court of Australia

____________________

MR B.W. WALKER, SC:   May it please the Court, I appear with my learned friends, MR M.R. PEARCE, SC and MR D.J. DELLER for the applicant.  (instructed by Keypoint Law)

MR J.T. GLEESON, SC:   May it please the Court, I appear with my learned friends, MR P.L. JACKSON, SC and MS K. CUTHBERTSON for the first, second and third respondents, and with MR S.B. McELWAINE, SC for the fifth respondent.  (instructed by Tremayne Fay Rheinberger and Shaun McElwaine + Associates)

BELL J:   Yes.  Thank you, Mr Gleeson.  Mr Gunson, I think perhaps you have your mute button on.  Mr Gunson, I think we have some difficulties with your audio, Mr Gunson.  Are you able to hear the Court?

MR C.J. GUNSON, SC:   Your Honour, I can, and it seems to have righted itself.  I appear for the fourth respondent.  (instructed by Lander and Rogers Lawyers)

BELL J:   Yes, thank you, Mr Gunson.  Now, Mr Walker, I think you require an extension of time. 

MR WALKER:   Yes, your Honour.

BELL J:   Yes, is there any opposition to that, Mr Gunson?

MR GUNSON:   No.

BELL J:   Yes, you have that leave, Mr Walker.  Yes.

MR WALKER:   Thank you, your Honours.  In a decision that this Court delivered after the preparation of this application, some of the matters that we would seek to raise, particularly the special leave questions that your Honours will see at page 401 of the application book, were touched upon.  They were touched upon in a way which, in our submission, leaves open this case being an appropriate vehicle a question of considerable importance beyond the interests of the parties to the particular case.  And that, in particular, is the manner of proof of that upon which, without any doubt, the legal burden lies upon a plaintiff or an applicant or claimant in a position such as our client. 

That is to prove causation in this case, in the particular sense of what the applicant would have done had its professional advisers not advised negligently.  Or, to put it another way, what would have been the response and with what financial consequences of the applicant to advice given with due care. 

The decision since this application was prepared – with which your Honours, of course, are familiar – is Berry v CCL [2020] HCA 27 – I do not need to take your Honours to it, of course, but to remind your Honours, in the plurality reasons of your Honours Justices Bell, Keane and Nettle, particularly paragraphs 35 and 36, there is, of course, an explanation of the ways in which the need to prove a hypothetical, brought about by the putative wrongdoing, may have an effect on what I am going to call “the approach to the manner of proof” of that essential element.

I do not need to canvass the possibilities that arise as a matter of principle, particularly as they were not, for reasons of the first instance determination in Berry, they were not critical to the outcome in that case.  But your Honours appreciate that at the heart of what we say about what we have called “an allowance or relaxation approach”, lies the important issue of principle as to whether what is sometimes called “the Armory v Delamirie presumption” but may, in fact, be a rather broader concept, goes beyond cases where the nature of the wrongdoing makes it impossible to prove a precise amount of damage suffered to cases – analogous to the present one, we say – in which the wrongdoing, by its very nature, thrusts the claimant into the difficult task of proving a past hypothetical.

Your Honours appreciate that the two special leave questions both address what I will call “manners of proof” or “manner of adjudication” of the necessary causal link.  The first element relevant in this case, of course, concerns the need to engage in a fully retrospective reconstruction of the events so as to find, on the balance of probabilities, what would have happened in the hypothetical case – that is, in the absence of wrongdoing.

Could I also remind your Honours concerning Berry, that in the concurring but differently expressed reasons of Justices Gageler and Edelman, particularly paragraphs 68 to 73, the same forensic issue of approach is analysed in terms of the shift of an evidential burden which, of course, again, does nothing to detract from the placement of the legal burden nor to weaken the standard of the balance of probabilities but can have the kind of signal effect that the English judges have noted.  I refer there, of course, to the authorities, Mount v Barker Austin, Sharif v Garret, in particular, that we have drawn to attention on application book page 407, in our paragraphs 35 and 36. 

To make it clear in anticipatory response, to make it clear, we are certainly not suggesting that this is a case where the Court should regard what we proffer as a question fit for special leave in any way partakes of moving the legal onus away from us, or altering the standard of proof from balance of probabilities.  Rather, what we respectfully suggest is raised by this case, it being a highly suitable vehicle for the purposes, is to examine what might be regarded as the converse of Briginshaw v Briginshaw, which, it is notorious, does nothing to alter the standard of proof.

There is not some anomalous halfway house between “on the balance of probabilities”, for example, and “beyond reasonable doubt”, but that rather, what the forensic occasioned for, in cases governed by Briginshaw v Briginshaw involve, what that shows is that there is, in order to discharge the burden of proof beyond reasonable doubt, more to be sought, by way of stringency, with particular evidence in support of particular kinds of allegations.  The converse, of course, is, in our submission, informed by familiar forensic considerations when the wrongdoer is, at the time when causation falls for adjudication, itself responsible for the position whereby the plaintiff has to address a hypothetical, a past hypothetical.

Now, they are familiar forensic considerations, they are relatively ancient.  Blatch v Archer, of course, comes to mind, but also, for the reasons we have suggested, by reference to Berry, so does Armory v Delamirie.  The New South Wales cases that your Honours of the plurality in Berry drew to attention, those are cases which, in our submission, indicate the significance, doctrinally, of this question.  And then we come, of course, to the question of how might it be said that this is a case which is an appropriate vehicle for the examination of those matters.

Can I take your Honours to page 326 of the application book to remind you that in paragraph 419 the nature of the claim as one of “lost opportunity” is spelled out as to what are called its “central premises” by their Honours, and you will see, in particular, the reference to steps (2) and (3), our emphasis in my address being on step (2), upon which critically we failed in the Full Court.  One sees there a reference to what is called “reasonable” that means non‑negligent advice, about the operation of the new legislation, the necessary step, the link to the events which produced the financial loss for which we sue being, of course, that we would need to have instructed our lawyers to seek relevant interlocutory relief.

BELL J:   Mr Walker, can I just interrupt you for one moment to direct your attention to sub‑paragraph (4) in paragraph 419 and inquire whether there was a finding that at least one resident would have been persuaded to remain at Derwent Court and be a resident there as at 30 September 1997 or what was the ‑ ‑ ‑

MR WALKER:   No, there is not that finding.  All of their Honours’ conclusions in the Full Court concerning what I will call the “dwindling number of residents” are posited on, indeed based upon, the actual experience where, of course, our client was influenced fatally for its business interests by the negligent advice and, in our submission, that lack of a finding concerning at least one resident on 30 September so as to satisfy the transitional provisions for the status of approval approved provider under the Aged Care Act do not stand in our way of this case being an appropriate vehicle. 

Once one sees that the hypothesis in question is that the urgent need to restrain administrative steps being pursued which would necessarily involve the relocation of residents, one necessarily sees that the hypothetical state of affairs is an entirely different approach from what actually occurred in relation to the relocation of residents.  That is why their Honours’ findings about the dwindling, increment by increment, of the numbers in residence towards the end of July is, in our submission, beside the point because before the end of July, about the 23rd, there should have been the receipt consideration of advice which would have led fairly quickly thereafter to steps being taken in court, steps being taken in court which, of course, would have involved as a premise the continuation of the trading of Derwent Court, and that, of course, necessarily involves, in light of the financial sanctions background, that there would have been more than one resident remaining.

What Justice Bell raises, with respect, is a significant part of what we submit is an illegitimate recourse in the Full Court’s reasoning about causation to matters which occurred at the relevant time, so late July, which were, in fact, matters brought about by the negligent advice, the failure to alert to the critical juncture presented as at 30 September for the 1 October commencement of the Aged Care Act, a critical matter as to which, in our submission, it then fell in considering the hypothetical case for the Court at every point to ask on the balance of probabilities had non‑negligent advice been given what would the applicant have done and with what financial consequence, if any?

Now, once one, in our submission, corrects for the reasons I am about to come to, the insufficiently comprehensive treatment of the facts by their Honours below concerning instructions to seek temporary restraint or injunction, then it follows, of course, in order to be consistent and coherent, as a matter of fact that the same is true with respect, say, to the relocation of residents.

KEANE J:   Mr Walker, does this mean that we would need to review the factual findings and to make a finding as a foundation for going forward that, notwithstanding the difficulties that your client’s business had had with compliance in the past and so forth, and in the absence of positive findings that your client’s business was viable and valuable, notwithstanding findings to the effect and perhaps findings to the contrary, we would have to make those findings ourselves in order for your client to succeed on the appeal?

MR WALKER:   Yes and no.  As to yes, of course it is true and we embrace inevitably that on the balance of probabilities, in order to obtain from this Court upon a successful appeal an order remitting it to the courts below for the assessment of damages, we would have to make good the proposition on the balance of probabilities that the lost opportunity either of trading on or selling the so‑called “dead licences” after 1 October, that that was a justified factual conclusion.

No in the sense that the same material, of course, informs the question of quantification and insofar as valuation of the opportunity is concerned, then some of the matters that Justice Keane has raised with me might be thought more properly to belong to the assessment stage.  But I note that my answer starts with yes.  There are, precisely as Justice Keane has raised with me, those matters that we cannot avoid if we are to obtain a useful outcome in our favour in this Court.  I accept that.

Now that, then, brings us to the questions concerning causation and the resort to the matters of evidence leading to findings of fact upon which the court below conceded.  Could I take your Honours to page 353, paragraphs 489, where there are some problematic expressions by their Honours.  We have in writing expressed some diffidence about how that paragraph should be read.  It may be that it is simply repeating the proposition that the question of breach must be examined prospectively only but, of course, the concerned paragraph 489, at least at its opening, is with questions of causation.

And an issue of causation, it is not clear how that relates to the issue which is said to be framed by reference, for example, to Firth v Sutton because that would appear to be about breach or negligence – that is, not what the client would have done but what the solicitor should have done ‑ and it may be, therefore, that the last sentence of 489 is not indicative of a really fundamental error of principle.

However, the proof, perhaps, of the pudding is in the eating and it is for those reasons that we have drawn to attention from application book 378 and following in their Honours’ paragraphs 550 to 562, that that is a litany of circumstances which are not in any real sense retrospective.  In particular, can I draw to attention in 556 the continued theme of error by their Honours taking into account in considering the balance of probabilities for the retrospective causation question conduct of an officer of our client a state of knowledge of an officer of our client.  Your Honours, I have had some…..in transmission.  I hope your Honours have been able to hear me.

BELL J:   Yes, we have, Mr Walker.

MR WALKER:   Thank you, your Honour.  At 556, that is a state of mind of our client’s officer, which of course was permitted to exist, if not created, by the negligent advice.  The hypothetical position would have had everyone making decisions on behalf of the company, well aware of this looming statutory juncture so critical to their commercial future and that, in our submission, is a significant error.

Could I then conclude by simply drawing to attention, as showing the failure properly retrospectively, to take into account what we know from evidence of actual conduct, the material that we have drawn to attention – application book 408, paragraphs 39, 40 and 41 – the fact is that when given advice to do so, there was instructions given for the seeking of an injunction and testing the causal significance of the negligent advice, when that advice was, as it were, contradicted, or overturned, or outweighed by one of the respondents – I am sorry, by Mr Porter – then the decision changed.

That, in our submission, makes a fortiori the proof upon which we bore the onus of the balance of probabilities of what we would have done had the advice consistently and carefully said, of course you need to seek an interlocutory restraint because it is to be borne in mind that there was no such urgency or critical juncture forming part of the advice which was actually given and acted on, initially, to commence interlocutory proceedings.

It is for those reasons, in our submission, that it is the case, the most telling piece of evidence being overlooked.  This is a case that provides a

relatively neat example of the proper approach to both of the special leave questions that we seek to raise.

BELL J:   Thank you, Mr Walker.

MR WALKER:   If it please your Honours.

BELL J:   Yes, Mr Gleeson.

MR GLEESON:   If your Honours were to return to paragraph 419 to identify the three aspects of causation that the applicant would need to succeed on – that is page 326.  As to step (2), the applicant would need to overturn concurrent findings of primary and ultimate fact.  As to step (3), the applicant would need to overturn a number of primary findings of fact, noting that the Full Court did not reach an ultimate conclusion on balance of convenience. 

To answer your Honour’s question on item (4), the applicant would need to overturn a finding of fact squarely against it, which is at paragraph 558, which was where the Court said, on page 389, they were:

not satisfied on the evidence that Jadwan would have persuaded any resident to remain at, or return to, Derwent Court: whether any resident would have done so is true speculation.

That, we submit, is a finding against the applicant on that critical third step.  If one asks, what is that finding based on, it is really based upon everything in the previous 20 or 30 paragraphs.  If I could just give perhaps two examples to show that that is so.  If your Honours look at the immediately preceding paragraph, 557, the first part of the paragraph is about whether they could:

have persuaded a resident to return –

That is irrelevant, because of the finding that to take the benefit of the provisions, you needed to keep people there, not get them back.  The critical bit is the second part:

Beyond the hearsay evidence about Mrs Jacobs –

it was irrelevant:

the circumstances of any particular resident were not explored by the evidence.  In the state of upheaval and turmoil that existed, there must be considerable doubt that relatives, and those responsible for the care of the dementia patients. would have permitted one or more patients to remain at, or to return to Derwent Court.

So, there is a clear finding which provides the basis for paragraph 558.  Another example is 555.  In other words, the court was not satisfied that the applicant would have been prepared to incur continuing losses in the hope that it could keep one person in the premises.  That is the first point I wanted to make.

The second point was the Court’s observations in Berry have, of course, nothing to do with this case. The passage at paragraph 35 to 36, which the plurality reserved, was the Full Court’s approach in Pitcher Partners to cases of deliberate wrongdoing.  Armory v Delamirie does not arise on this case, this is simply the case where there was negligence and one was exploring causation, and we submit that Badenach v Calvert has thoroughly said what the test is in the area, so there is no Berry issue which the Court would be called upon to consider.

One then asks, what would the Court be asked to do if there were a full appeal on this matter.  The Court would, in answer to your Honour Justice Keane, need to look at a vast amount of material, de novo, as it were, on appeal, to see whether the court reached a different conclusion.  It is illuminating that in the proposed notice of appeal, which is at page 400, ground 1, the applicant gives no indication of which primary findings of fact it seeks to overturn, it is simply causation at large.

So, in essence, the Court is being asked to redo the entire exercise.  Not only would there be a lot of documents, and I do not just say that in terrorem, if one looks at the witness evidence, for example, if your Honours could go to page 271, there were two witnesses called by Mr Walker’s client, Mrs and Ms Alexander.

So, they gave the sort of evidence in‑chief, although we were not the ultimate decision‑maker, Mr Alexander was, we would have given instructions for the injunction.  One sees in paragraph 307 very substantial concessions extracted from Mrs Alexander that, to keep the nursing home open, in the hope of one person being persuaded to stay, would in fact have involved, unsurprisingly, eight to 10 staff keeping the place fully occupied.  And over the page, at 309, Ms Alexander conceded that once you fell below 15 or nine residents, it was not commercially viable even to operate the home.  So, these are very substantial matters that would need to be reviewed, and all of them point against the real prospects of success on any of the matters.

Your Honours, perhaps only the final thing I need to say was Mr Walker framed two special leave points, they are on page 400 ‑ ‑ ‑ 

BELL J:   Page 401.

MR GLEESON:   Page 401.  The answer to the first point is that the Full Court did not give itself an instruction that it could not look at the material post the date of the breach.  And even this morning when Mr Walker referred to the paragraph that he was relying upon, which is 489, it is tolerably clear that at 489 the court was simply saying, in determining the content of reasonable advice, and reasonable care, one looks forward, not back, consistent with Vairy v Wyong Shire Council. 

BELL J:   I think Mr Walker might have accepted that – the force of his argument, as I understood it, is the failure in its analysis of the Full Court to look at the legal proceedings that were taken following Mr Porter’s advice. 

MR GLEESON:   Yes.  And our answer to that, your Honours, is in the 50 or so paragraphs where the Full Court gave its reasons, no doubt it said we regard the most weighty and persuasive material as the conduct at and around the date of the breach.  It was not shutting its eyes as a matter of law to the later material, and in doing so the Full Court acted consistently with the way the parties joined the central argument.

If I could just show your Honours that.  On page 301 at paragraph 355 and over to 359, that is where the Full Court summarised the submissions of the parties on causation, and you will see at 356 the essence of Jadwan’s case was in three points.  And so it was not a case saying the central point on causation is we were very litigious in the years afterwards and from that you can infer back.  The central case was these three points of conduct around the date of the breach, the first being the hypothetical evidence, the second being the instructions to give – to seek an injunction, the third being the surprise, and then you see the response to those at paragraphs 358 and 359, so we would submit it is tolerably clear that the weight of the Full Court’s analysis was addressing the issues which the parties had joined. 

As to the question Mr Walker raised I think briefly this morning, but, you know, our client did give some instructions to seek an injunction at the time so forget the litigious fervour after the event, should not the court have given more attention to that.  The court in fact did at paragraph 546, which was that the proceedings they were contemplating at the time, ADJR proceedings, carried little financial risk, they only carried the risk of costs if they lost.

The central difference with the hypothetical proceedings which are under consideration is that, had those proceedings been brought, they carried the risk not only of defeat but of the Commonwealth withdrawing

the offer to pay about $500,000 in redundancy costs, so that the Commonwealth was using a carrot and a stick.  It had given notice to terminate the licences but it was voluntarily agreeing to pay the redundancy costs to ease the way out for the applicant.

The Full Court at least was persuaded that one of the substantial reasons the applicant would not have sought the injunction was the cost would have been the loss of the $500,000 in redundancy and the value of the bed licences was no more than that.  And your Honours will see that, perhaps it is the last thing I need to go to, it is at page 352, paragraph 486 where there are concurrent findings of fact.

BELL J:   The value of the bed licences was roughly equivalent to the value of the redundancies that the Commonwealth was going to kick the can for.

MR GLEESON:   So the ultimate decision of the Full Court had many strands to it, but one of them was, in that difficult period of late July, had you decided to press the button the one thing that would have been certain was you lose the redundancies.  You are running the business at a loss.  Your chances of keeping someone are at best low, as the residents are rapidly exiting, and we are just not persuaded you have established your case.  May it please the Court.

BELL J:   Thank you.  Thank you, Mr Gunson, I do not think we need to hear from you.  Mr Walker, anything in reply?

MR WALKER:   Your Honours, briefly.  My learned friend has most recently taken you to how the Full Court expressed their dealing with an aspect of our argument in their paragraph 356 in application book 301.  That paragraph neither purports to be nor was a complete statement of how the matter was put in the court below where the transcript does show, as one might expect, that the considerable subsequent litigious action on the part of our client was, of course, called in aid in urging proof on the balance of probabilities that there would have been an interlocutory injunction sought had they been advised consistently and carefully to do so.

The second question concerns the matter of retaining, because the question of returning is utterly irrelevant, at least one resident.  It is to be borne in mind that this was a closure that was actually accomplished in a context of considerable consternation in defence of the accommodation continuing to be available, and Dr Timmins and his colleagues, to which reference is made by the Full Court in paragraph 346 at application book 298, is, in our submission, the very kind of evidence that would mean that this Court would not need to be undertaking, in effect, the task of a puisne judge or jury in raking through complex or copious evidence on

those matters.  They are matters upon which an appellate bench is in as good a position as a trial judge in assessing the balance of probabilities for the purposes of the question of causation.  May it please your Honours.

BELL J:   Thank you, Mr Walker.

We are not persuaded that the application raises any question of principle suitable for the grant of special leave.  Moreover, in our view, there are insufficient prospects that any appeal would succeed to warrant the grant of special leave.  Special leave is refused, with costs.

MR WALKER:   If it please the Court.

BELL J:   Adjourn the Court to 11.30 am.

AT 11.09 AM THE MATTER WAS CONCLUDED