Kemp v Tiirikainen (No 4)
[2022] ACTSC 43
SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
Case Title: | Kemp v Tiirikainen (No 4) |
Citation: | [2022] ACTSC 43 |
Hearing Date(s): | 11 March 2022 |
DecisionDate: | 11 March 2022 |
Before: | Elkaim J |
Decision: | See [28] |
Catchwords: | CIVIL LAW – PRACTICE AND PROCEDURE – Application for leave to adduce further evidence – interests of justice – prejudice to the first respondent |
Parties: | Graham Kemp (Applicant) Mark Tiirikainen and Ian Sutherland trading as S&T Lawyers (First Respondent) Charles Giles (Second Respondent) |
Representation: | Counsel D Hassall ( Applicant) D Thomas (First Respondent) |
| Solicitors Nelson & Hill Lawyers ( Applicant) McInnes Wilson Lawyers (First Respondent) | |
File Number(s): | SC 328 of 2018 |
Elkaim J
The matter before the Court today is an application in proceeding filed on 7 December 2021. It is supported by two affidavits of Mr Nathan Kuster, sworn on 7 December 2021 and 7 February 2022 respectively.
The first respondent relied on an affidavit of Mr John Hill, sworn on 28 February 2022.
The purpose of the application is to obtain leave for the plaintiff to rely on an expert report from Nexia Australia (‘Nexia’), a firm of forensic accountants. The report is dated 4 February 2021 (but presumably should be 2022) and endeavours to assess economic loss suffered by the plaintiff as a result of the negligence of the first respondent.
The plaintiff was a builder. The dispute between the current parties arose from proceedings in the Magistrates Court between the plaintiff and a Ms O’Brien concerning a building contract. The plaintiff’s solicitor was a Mr Chen who worked for a firm called Elringtons.
The proceedings did not go well for the plaintiff. Ultimately Elringtons sued the plaintiff for unpaid fees. In all the plaintiff paid Elringtons and the first respondent a total of $163,506 associated with the dispute between the plaintiff and Elringtons.
The Nexia report responds to a letter of instruction from the plaintiff’s solicitors, dated 27 January 2022. The letter is annexed to the report. Consistent with the questions asked, the Nexia report assesses the loss on different bases, producing a range of $251,855 up to $743,741.
There can be little complaint about the lower figure. It is simply a calculation of interest that would have been earned, applying ordinary deposit rates, on the $163,506. Although the first respondent objected to this calculation the argument really centred on the larger figure, and in particular the basis upon which it had been calculated.
As described in the Executive Summary, this basis was as follows:
For the purpose of calculating the Claimants’ losses I have prepared calculations based on the following assumptions specified by NHL:
·The Claimant, if not for the payment for legal services that turned out to be negligent work and thus wasted monies, would have used those amounts as working capital in his construction business and would have been able to finance building projects up to volume and amount of Fidelity Certificates approved under the Master Builders Fidelity Fund Scheme, and
·The Claimant has historically been able to realise a builders margin of 20% to 25% over the cost of materials, labour and other direct costs necessarily incurred in his construction activities.
I suggested to Dr Hassall, plaintiff’s counsel, that two immediate problems arose from the manner of calculation adopted by Nexia.
Firstly, the claim had never been particularised on the basis of the Nexia calculations. The loss particularised in the Amended Statement of Claim, filed on 18 June 2018, is to be found in [47], which states:
By reason of, arising from or resulting from the Disclosure as pleased in paragraph 18 above, which Disclosure:
(a)informed Elringtons of Counsel’s advice to the Plaintiff; and
(b)prejudiced and compromised the Plaintiff’s good prospects and the Opportunity of succeeding in the Elringtons Proceedings including the Plaintiff’s counter-claim against Elringtons,
the Plaintiff was deprived of and lost the opportunity as pleaded in paragraph 46A above and the Plaintiff suffered loss and damage by therefore not receiving by way of a Court award of damages or other compensation and legal costs (or alternatively, by way of an out-of-Court settlement) of $1,160,415.28 instead of the settlement sum of $292,500 received by the Plaintiff.
Secondly, I had previously asked the plaintiff’s representatives for a schedule describing the loss arising from each alleged breach of duty by the first respondent.
The schedule, styled as an Aide Memoire and dated 30 July 2021, describes each loss as either “the costs and disbursements paid to S & T Lawyers and to Charles Filgate Giles, wasted thereby” or, in one instance, the “Reduction of the plaintiff’s chances of successfully pursuing his counterclaim against EBA”.
The losses described in the Aide Memoire are under the heading “Specific Identifiable Loss”. I would have expected the loss now being quantified, or at least its basis, to have been included in the stated loss.
The plaintiff’s response to the above problem was that the Nexia report simply quantified the value of the “wasted” monies. I agree with that description but that does not solve the problem. The problem is that this manner of quantifying the loss is new.
The plaintiff submitted that the basis for the calculation was not new. He said that it had been previously described in an earlier expert’s report dated 2 August 2011 at [6.5], which states:
In the subsequent sections of this report, I have been instructed to undertake my calculations of the loss sustained by Mr Kemp based on an assumed rate of return/ interests of 20% before tax, compounded annually. I am instructed that this rate has been adopted from the applicable interest rate on unpaid contract payments as set out in the standard applicable Master Builders Contract.
It can readily be seen that the basis for calculation set out in the previous paragraph is very different to that adopted by Nexia.
In addition, the earlier report was not prepared for the current proceedings but rather for earlier proceedings which gave rise to the present litigation.
The plaintiff submitted that to deny the application would:
(a)be against the interests of justice;
(b)affect the ultimate results of the case; and
(c)contradict leave that had earlier been given to correct certain figures.
The plaintiff also submitted that no prejudice would flow from the grant of leave.
It is true that the interests of justice generally require that the whole of a dispute between the parties should be litigated. However this is a case that came on for hearing in April 2020 and has since been the subject of a meandering preparation generally due to actions, or lack of them, on behalf of the plaintiff.
The interests of justice also require a case to be brought on for hearing speedily and with regard to a defendant being able to meet the case.
Corrected figures, referred to by the plaintiff in an affidavit sworn by him on 22 July 2021, might certainly give rise to a need for some recalculation. But that does not permit the recalculation to be based on a previously, effectively unheard of (between the parties), basis.
As to prejudice, the first respondent will be prejudiced. Not only will it be put to the expense of obtaining a report to answer the Nexia report, but there will be a significant delay in the proceedings coming on for hearing. As I have said above, such a delay, especially against the background of this case, is not in the interests of justice.
I will therefore refuse the application.
There is however one more point to be made. The Nexia report contains a calculation, as mentioned above, of the loss based on the accrual of interest. The first respondent said it would not consent to even that part of the report being permissible.
If the plaintiff succeeds in establishing an entitlement to the return of the $163,506, he will be entitled to interest at ‘court rates’. I do not know whether this will produce a smaller or larger figure than that calculated by Nexia. The first respondent’s attitude however strikes me as somewhat unnecessarily obstructive.
The plaintiff accepted that, should he win or lose, he will be obliged to pay the first respondent’s costs. The respondent’s costs will no doubt include the preparation of the affidavit of Mr Hill and the detailed submissions of counsel. It would have sufficed for the first respondent to have approached the matter on the simple basis that the plaintiff was advancing a claim that had never been particularised. However because of the plaintiff’s concession I will make the proposed costs order.
I make the following orders:
(i)The application in proceedings filed on 7 December 2021 is dismissed.
(ii)The applicant is to pay the first respondent’s costs of the application.
(iii)The costs are not payable until the completion of the proceedings.
(iv)The matter is listed for mention on 18 March 2022 at 9:30am.
| I certify that the preceding twenty-eight [28] numbered paragraphs are a true copy of the Reasons for Judgment his Honour Justice Elkaim Associate: Date: 11 March 2022 |
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