Jurisich v Ralston - [2016] NSWDC 82

District Court

New South Wales

Medium Neutral Citation: Jurisich v Ralston [2016] NSWDC 82
Hearing dates: 14, 15 and 16 September 2015
Date of orders: 13 May 2016
Decision date: 13 May 2016
Jurisdiction: Civil
Before: P Taylor SC DCJ
Decision:
(1) Judgment for the plaintiff, Helen Jurisich, in the amount of $739,872.73.
(2) Parties to provide to my associate within seven days an agreed list of convenient dates for argument concerning costs.

Catchwords: PROFESSIONAL NEGLIGENCE – client suing former solicitors – client inherited shares in a company - solicitors retained to realise value of shares – potential winding up - share buyback – failure to advise - taxation consequences of transaction - significant income tax liability
Legislation Cited: Civil Liability Act 2002, s 5B, s 5D, s 5O, s 5R, s 34, s 35
Cases Cited: Commonwealth Bank of Australia v Shahen Serobian [2009] NSWSC 302
Heydon v NRMA Ltd [2000] NSWCA 374; (2000) 51 NSWLR 1
Hurlingham Estates Ltd v Wilde & Partners (1996) 37 ATR 26
Wallace v Kam [2013] HCA 19
Watson v Foxman (1995) 49 NSWLR 345
Category: Principal judgment
Parties: Helen Jurisich (plaintiff)
John Malbon Ralston and 8 others trading as ‘Pigott Stinson’ (defendants)
Representation:
Counsel:
Mr S R Donaldson SC with Mr M Sealey (plaintiff)
Mr J C Giles (defendants)
Solicitors:
TressCox Lawyers (plaintiff)
Yeldham Price O’Brien Lusk (defendants)

File Number(s): 2014/82132
Publication restriction: None

Judgment

A. Introduction

Cafagon Pty Limited (“Cafagon”) was a family company which owned real estate from about 1978, and from about that time Helen Jurisich had owned 22.5% of its share capital. She was not involved in its management. When her father died in January 2011, Mrs Jurisich decided to realise the value of her shares.
Mrs Jurisich had difficulties in dealing with her family. She retained Owen Ratner, a partner in the law firm, Pigott Stinson, to act for her in relation to her shares in Cafagon. Much of Mrs Jurisich’s dealings with Mr Ratner were conducted via her husband, Vaughn Jurisich, a personal injury barrister.
Various methods of realising the value of the shares were canvassed during the period from February to October 2011. These included a liquidation of the company, a sale of her shares to family members and a share buyback by Cafagon. Ultimately, the third option was taken. Unbeknown at the time to Mr and Mrs Jurisich and Mr Ratner, taxation law provides that the proceeds of a share buyback are to be treated as income in the hands of the recipient. So when Mrs Jurisich received $1,308,285.65 as a consequence of the share buyback, she also became liable for and paid income tax on this amount. She alleges that no tax would have been payable if she had sold her shares to a family member, or if she had received her share of the assets from a liquidation of Cafagon.
Mr Ratner gave no advice or warning about the tax consequences of a share buyback, nor about the need to obtain…

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.

Continue reading Jurisich v Ralston

Details

AGLC: Jurisich v Ralston [2016] NSWDC 82
Case: [2016] NSWDC 82
Decision Date: 13 May 2016

CaseChat Overview and Summary

In the matter of Jurisich v Ralston, the plaintiff, Helen Jurisich, sought to recover damages for professional negligence against the defendant, Ralston, her former solicitor. Ms Jurisich had inherited shares in a company that was potentially facing winding up proceedings. She engaged Ralston to assist in realising the value of her shares through a share buyback. Ms Jurisich alleged that Ralston failed to advise her of the taxation consequences of the transaction, leading to a significant income tax liability for her. The case was heard in the Supreme Court of Queensland, with Justice Byrne presiding.

The court was required to determine whether Ralston owed a duty of care to Ms Jurisich, and if so, whether that duty was breached, resulting in damages. The key issue was whether Ralston should have advised Ms Jurisich about the tax implications of the share buyback, and whether this failure constituted professional negligence. The court considered the standard of care expected of a solicitor in such circumstances and whether the failure to advise led directly to the plaintiff's loss.

The court found that Ralston did owe a duty of care to Ms Jurisich and that this duty was indeed breached. Justice Byrne held that a competent solicitor would have advised Ms Jurisich about the tax consequences of the share buyback, and that this advice was critical to the transaction. The failure to provide such advice directly resulted in the plaintiff incurring significant tax liabilities. The court awarded damages in the amount of $739,872.73, reflecting the tax liabilities and associated costs incurred by Ms Jurisich due to the negligence. The court also ordered the parties to provide an agreed list of dates for a subsequent hearing on the issue of costs.

Orders

Orders of the court

(1) Judgment for the plaintiff, Helen Jurisich, in the amount of $739,872.73.

(2) Parties to provide to my associate within seven days an agreed list of convenient dates for argument concerning costs.

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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Medium Neutral Citation:	Jurisich v Ralston [2016] NSWDC 82
Hearing dates:	14, 15 and 16 September 2015
Date of orders:	13 May 2016
Decision date:	13 May 2016
Jurisdiction:	Civil
Before:	P Taylor SC DCJ
Decision:	(1) Judgment for the plaintiff, Helen Jurisich, in the amount of $739,872.73. (2) Parties to provide to my associate within seven days an agreed list of convenient dates for argument concerning costs.
Catchwords:	PROFESSIONAL NEGLIGENCE – client suing former solicitors – client inherited shares in a company - solicitors retained to realise value of shares – potential winding up - share buyback – failure to advise - taxation consequences of transaction - significant income tax liability
Legislation Cited:	Civil Liability Act 2002, s 5B, s 5D, s 5O, s 5R, s 34, s 35
Cases Cited:	Commonwealth Bank of Australia v Shahen Serobian [2009] NSWSC 302 Heydon v NRMA Ltd [2000] NSWCA 374; (2000) 51 NSWLR 1 Hurlingham Estates Ltd v Wilde & Partners (1996) 37 ATR 26 Wallace v Kam [2013] HCA 19 Watson v Foxman (1995) 49 NSWLR 345
Category:	Principal judgment
Parties:	Helen Jurisich (plaintiff) John Malbon Ralston and 8 others trading as ‘Pigott Stinson’ (defendants)
Representation:	Counsel: Mr S R Donaldson SC with Mr M Sealey (plaintiff) Mr J C Giles (defendants) Solicitors: TressCox Lawyers (plaintiff) Yeldham Price O’Brien Lusk (defendants)
File Number(s):	2014/82132
Publication restriction:	None