Kent v Jacques
[2014] NSWSC 469
•24 April 2014
Supreme Court
New South Wales
Medium Neutral Citation: Kent v Jacques [2014] NSWSC 469 Hearing dates: 5 April 2013 Decision date: 24 April 2014 Jurisdiction: Common Law Before: Campbell J Decision: (1)Appeal allowed;
(2)Set aside the judgment and orders pronounced on the cross-claim in the Local Court on 18th October 2012 and instead order judgment for the cross-defendant on the cross-claim and order the defendant to pay the plaintiff's costs in relation to the claim and the cross-claim on the ordinary basis forthwith after they have been agreed or assessed;
(3)The defendant to pay the plaintiff's costs of the appeal on the ordinary basis forthwith after they have been agreed or assessed.
Catchwords: APPEAL - civil - local court - professional negligence - whether failure to join further potential defendants negligent - whether evidence to support such a finding Legislation Cited: Civil Liability Act 2002 (NSW), s 5D
Civil Procedure Act 2005 (NSW), ss 65, 100
Evidence Act 1995 (NSW), s 69
Local Court Act 2007 (NSW), s 39
Supreme Court Act 1970 (NSW), s 75ACases Cited: Brinn and Jarvis v Russell, Jones & Walker (a firm) [2003] PNLR 16; [2002] EWHC 2727
D'Orta-Ekenaike v Victoria Legal Aid and Anor [2005] HCA 12; (2005) 223 CLR 1;
Donnellan v Woodland [2012] NSWCA 433;
Fink v Fink (1946) 74 CLR 127;
Jacques v Forte Enterprises Pty Ltd [2012] NSWSC 1241;
Jacques v Kent (t/as Kent Attorneys) [2012] NSWSC 255;
State of New South Wales v Moss [2000] NSWCA 133; (2000) 54 NSWLR 536Category: Principal judgment Parties: Rodney Kent and Tim Orlizki trading as Kent Attorneys (Plaintiff)
Philip Jacques (Defendant)Representation: Counsel:
J T Gibson (Plaintiff)
D Lloyd (Defendant
Solicitors:
Kent Attorneys (Plaintiff)
Dominic Sisinni (Defendant)
File Number(s): 2012/350197
Judgment
This appeal has been through two hearings in the Local Court and a previous appeal to this Court. It is necessary to set out the factual background in detail.
Mr Kent is a solicitor. In July 2006 he was a partner in the firm of Norman Waterhouse and in that capacity accepted instructions to act for Mr Jacques in long running Local Court proceedings brought by Mr Jacques against two companies he had formerly been in partnership with to develop land on the northern beaches area of Sydney. Both companies were controlled by a Mr Senes. Over time Mr Kent acted for Mr Jacques in other matters.
Mr Senes persuaded Mr Jacques that the undeveloped land should be sold to yet another company. At the time, Mr Senes did not disclose, and Mr Jacques was otherwise unaware, that Mr Senes had an interest in the proposed purchaser. Mr Senes also discouraged Mr Jacques, who was somewhat disappointed at the proposed price, from following up opportunities for a more advantageous sale.
Mr Kent left Norman Waterhouse in September 2006 and commenced practising as a sole practitioner, later forming a partnership with Mr Orlizki. Mr Kent continued to handle Mr Jacques' litigation. The solicitor-client relationship soured in the latter part of 2008 over a dispute about fees due to the legal practice.
After termination of Mr Kent's retainer, Mr Jacques engaged other lawyers in January 2009. A conference was arranged with different counsel who advised that Mr Senes should be joined as a defendant in addition to the two companies. Notice was given to the existing defendants in February 2009, but the Notice of Motion seeking to join Mr Senes as an additional defendant was not filed until 3rd September 2009.
The motion came on for hearing before Macready AsJ, with the existing defendants' application for dismissal for want of prosecution, on 18th December 2009. His Honour dismissed the defendants' application and did not accede to the plaintiff's application to join Mr Senes as an additional defendant, rather his Honour granted leave for the plaintiff to make such a further application within 14 days. This leave was exercised on 23rd December 2009. Reflecting what is sometimes referred to as the indulgence rule, Mr Jacques' new motion sought not only joinder of Mr Senes, which required leave under s 65 Civil Procedure Act 2005 (NSW), but also expressed submission to an order for the defendants costs both of their earlier motion and of Mr Jacques motion of 3rd September 2009. The new motion was not heard until 29th June 2010. Leave was granted, and the costs orders made, accordingly.
Commencement of proceedings in the Local Court
In the meantime, on 22nd February 2010 Mr Kent commenced proceedings in the Local Court to recover his outstanding fees, which related not only to the claim for losses arising out of the sale of the land, but also other completed matters.
Mr Jacques defended the Local Court claim and cross-claimed for damages for professional negligence. The cross-claim was filed on 20th August 2010. Essentially his claim was that he wasted legal costs and incurred liability for costs payable to the defendants in the Supreme Court proceedings because he failed to amend the proceedings to add Mr Senes as a defendant sooner. Mr Jacques' claim is that the application seeking leave to join Mr Senes should have been made no later than by the hearing on 18th March 2008 of a summons in this Court to transfer the proceedings relating to the land losses to the Supreme Court. Had this been done then, Mr Jacques argued, the application would have been similarly successful without additional costs. To make this clear, Mr Jacques said that the costs he incurred with his new solicitors and counsel between January 2009 and June 2010 were unnecessary. Further, he would not have incurred a liability for the costs of the other defendants for the additional applications.
The first decision in the Local Court and the first appeal
The Local Court proceedings were first heard on 2nd February and 1st April 2011. Her Honour Magistrate Atkinson gave judgment on 8th of July 2011. Mr Kent was successful on both his claim for outstanding fees and the cross-claim.
Mr Jacques' appeal to this Court was heard on 7th March 2012. On 22nd March 2012, Harrison AsJ allowed the appeal in part. Her Honour set aside the decision of the learned Magistrate dismissing Mr Jacques cross-claim which was remitted to be re-determined according to law. Her Honour held that the learned Magistrate had misdirected herself in relation to the question of whether Mr Jacques had made good his cross-claim by deciding that the critical question informing a decision about whether Mr Kent was negligent in failing to join Mr Senes earlier was whether Mr Jacques would succeed in his claim against Mr Senes (as he ultimately did: Jacques v Forte Enterprises Pty Ltd [2012] NSWSC 1241 per Rein J). With respect this was a clear error of law as it suggested that the cental questions in relation to breach of duty in a claim of negligence are to be decided retrospectively not prospectively.
In the course of her judgment (Jacques v Kent (t/as Kent Attorneys) [2012] NSWSC 255) Harrison AsJ said the following at [43], and [46]-[48]:
Returning to the issue of whether the solicitor was negligent, for Mr Jacques to have succeeded it was necessary for him to prove that, as at the time the hearing of the summons to transfer the Forte proceedings to the Supreme Court on 18 March 2008, Kent Attorneys had sufficient information to advise Mr Jacques that a viable cause of action lay against Mr Senes and that he should be joined as a defendant.
...
The claim for negligence involved whether the solicitor breached his duty of care by not seeking to have Mr Senes joined as a defendant when the transfer application was heard in this court. The loss and damage claimed was for the legal costs incurred by Mr Jacques due to the necessity of him having to bring an additional notice of motion in this court. The Magistrate found the claim for negligence failed on the basis it was not known if Mr Jacques would ultimately be successful in his claim against Mr Senes. However, this is not the correct test. A solicitor has a duty of care to act with reasonable care, diligence and skill which is a duty in tort and which is also a implied term of the retainer: see Astley v Austrust Ltd [1999] HCA 6 ; (1999) 197 CLR 1. See also Stephen Walmsley et al, Professional Liability in Australia, 2nd ed, (2007) Lawbook Co at [3.110], [7.4.390]-[7.4.440] and [33.1.140].
The relevant standard of care is that of a qualified, competent and careful lawyer in the given circumstances in the practice of his or her profession: see Bannerman Brydone Folster & Co v Murray[1972] NZLR 411 at 430 per Woodhouse J; Hawkins v Clayton (1988) 164 CLR 539 at 580 per Deane J; Hanflex Pty Ltd v NS Hope & Associates [1990] 2 Qd R 218 at 266 per Demack; Twiddle v Bradley [1990] 2 Qd R 464 at 482 per Cooper J. See generally Ben Zipser, "Professionals and the Standard of Care" (1999) 7 Torts Law Journal 167.
The issue that should have been determined is whether Mr Kent acted with reasonable care, diligence and skill when giving advice as to whether Mr Senes should be joined as a defendant in the Forte proceedings at the time of the transfer proceedings. Whether Mr Kent was negligent depends on the state of Mr Kent's knowledge of the facts as at November 2008 (the date upon which his instructions were withdrawn), what was the advice given to Mr Kent in relation to Mr Senes (if any) and what were the instructions given by Mr Jacques in relation to joining Mr Senes.
Her Honour, as I have said, remitted the cross-claim for rehearing in the Local Court.
Harrison AsJ also referred to the following portion of the evidence given by Mr Kent under cross-examination and upon which Mr Jacques greatly relies (transcript at 47.15 - .28 and 48.19 - .41).
Q - If you believed, Mr Kent, that Mr Jacques had a good cause of action against Mr Senes, you should have told Mr Jacques to join Mr Senes as a defendant. Do you agreed with that?
A - If I formed that conclusion?
Q - Yes.
A - Quite clearly.
Q - The time to join him, the obvious time, I suggest to you, was when you were drafting the new pleading when the proceedings were being transferred to the Supreme Court in 2008.
A - Obviously, it's preferable to make one application rather than two. And particularly in a matter that's been around some ten years before I'd even got it.
...
Q - The information in para 3 was information that you could have uncovered prior to bringing the transfer application to the Supreme Court in the earlier part of 2008, correct?
A - I'd probably agree with that but I'm not a hundred per cent sure because it may have been - I'm not suggesting it was, but it may have been that between bringing the application and writing this letter - this letter I think was written after the application had been granted, so it may well have been that we sought - and I have no recollection, as part of answering this letter, further instructions to allow us to answer it. Or it may well have been that we did have that information back at the time of October 06.
Q - The proposition I'm putting to you is that even if you assume that you sought that information from Mr Jacques around the time of answering the letter, there is nothing to stop you from asking him about those matters and getting that information prior to the transfer application.
A - No, I'd agree with that. Mr - he was a director and - no, I'd agree with that.
Q - Finally Mr Kent, I just put to you formally that on a number of occasions, Mr Jacques raised with you whether Mr Senes should be included as a defendant. What do you say to that?
A - No, never. He was sent the document that we proposed to rely upon. At no stage did he come back to me and there's not one letter and there's certainly not any telephone or other discussions with him.
The second decision in the Local Court
The rehearing proceeded largely on the evidence taken in the first hearing. Judgment was given on 18th October 2012. By then, Mr Jacques had been successful in his claim in this Court against the corporate defendants and Mr Senes. In deciding the cross-claim in favour of Mr Jacques, and against Mr Kent, the learned Magistrate said at [20]-[26]:
Harrison AsJ has indicated that the issue of whether Mr Kent was negligent depends on the state of his knowledge of the facts as at November 2008 (i.e. the date upon which his instructions were withdrawn).
I am following the approach indicated by Her Honour's judgment, noting that Kent Attorneys submitted that the relevant date should be 18 March 2008 (i.e. the date on which the Supreme Court ordered that Mr Senes be joined to the Supreme Court proceedings).
At least by 17 October 2008, Mr Kent was aware of Mr Senes' interest in each of Forte Enterprises, Ahtram Nominees and Landmark. On that date, he responded to a request for further particulars of Mr Jacques' Further Amended Statement of Claim and noted that Up fit position as director and shareholder of all the above companies he funnelled information and facilitated the transfer of the partnership property to Landmark Forum Pty Ltd at a significantly discounted amount".
It is unlikely that Mr Kent only became aware of the information referred to in his letter on or immediately before 17 October 2008. Given that the letter would be clarifying the pleadings, it is reasonable to infer that he would have taken steps prior to that date to satisfy himself of the accuracy of the information contained in his letter.
As an experienced legal practitioner, Mr Kent should have been aware that Mr Senes' may have had a fiduciary duty in relation to Mr Jacques, which may have been breached; and that Mr Jacques may have had a claim against Mr Senes personally. Having acted for Mr Jacques since mid-2006, he knew that Mr Jacques was only making a claim against Forte Enterprises and that no claim was being made against Mr Senes personally.
I find on the balance of probabilities that Mr Kent did not act with reasonable care, diligence and skill when he failed to advise Mr Jacques of his potential rights against Mr Senes and to seek instructions as to whether an application should be made to join Mr Senes to the proceedings.
Kent Attorneys concede that they owed Mr Jacques a duty of care. Given my finding about Mr Kent's failure to act with reasonable care, diligence and skill, I find that the firm breached its duty of care to Mr Jacques. Mr Jacques suffered an injury as a result of that breach, namely, he was forced to incur additional costs to make a separate application to have Mr Senes joined in the proceedings. Accordingly, I find on the balance of probabilities that Kent Attorneys were negligent in that regard. (I note thatremoteness of damage, contributory negligence/ voluntary assumption of risk were not in issue.)
The reference to the letter of 17th October 2008 is a reference to particulars provided by Mr Kent to the defendants to the land losses claim in which he said:
Part of the res gestae is that Mr George Senes was a director and shareholder of both Fort Enterprises Pty Ltd and Ahtram Nominees Pty Ltd and also of Landmark Forum Pty Ltd. In his position as director and shareholder of all the abovementioned companies he funnelled information and facilitated the transfer of the partnership property to Landmark Forum Pty Ltd at a significantly discounted amount. This makes this [averment about Mr Senes' conduct] either "directly or indirectly" relevant in accordance with the provisions of s.55 of the Evidence Act 1995 (NSW).
Turning to damages, as Harrison AsJ accurately observed, "on any view the evidence on loss and damage is scant". It consisted only of a letter dated 9th June 2010 to Mr Jacques from his new solicitors. This letter was admitted, apparently, over the objection of Mr Kent. Magistrate Atkinson inferred from that letter that the total costs relating to the motion to join Mr Senes were around $18,000, not $48,500 claimed in the cross-claim. This approach accorded correctly with Harrison AsJ's observation (at [59]):
While the evidence on loss or damage is scant, if the solicitor is found to have been negligent an allowance should be made for the loss Mr Jacques suffered.
Magistrate Atkinson apportioned the legal costs between the motion for summary dismissal and the application to join Mr Senes on a ratio of 4 as to 6, allowing $11,250 for wasted costs. There was no direct evidence before her as to what were costs the defendants incurred for which Mr Jacques was liable. Her Honour inferred from the costs "wasted" by Mr Jacques that the costs of the opposing parties on the ordinary basis would approximate 75 per cent of the solicitor and client costs incurred by Mr Jacques. This equated to $8,437.50. Accordingly judgment was given on the cross-claim for the sum of $19,687.50 together with interest pursuant to s 100 Civil Procedure Act from 19 September 2012.
The issues on appeal
Mr Kent advances four grounds of appeal, each of which he says involves a question of law so his appeal lies as of right under s 39 Local Court Act 2007 (NSW). For abundant caution, leave is sought if any of the grounds involve a mixed question of fact and law. Ground 1 is that there was no evidence from which it could be inferred that Mr Kent had been negligent by failing to seek leave to sue Mr Senes personally at the time the proceedings were transferred to the Supreme Court; Ground 2 is that the letter from the new solicitor setting out the costs incurred in relation to the motion subsequently brought was wrongly admitted; Ground 3 and 4 go to the quantification of damages and are essentially that there is no evidence supporting the learned Magistrate's quantification of damages in the sum of $19,687.50.
By Notice of Motion filed on the 28th of March 2013, Mr Jacques sought leave to file a summons for leave to appeal out of time from the learned Magistrate's assessment of damages. He also sought leave to adduce additional evidence on the hearing of the appeal of the assessment of the costs actually payable to the corporate defendants. That assessment was made by Assessor Strathdee on 12th September 2011, nearly 12 months before the remitter hearing before the learned Magistrate. However, at the outset of the appeal that application was withdrawn, and abandoned, by Mr Jacques and need not be addressed further.
Disposition.
As the case in negligence involved a failure to decide to sue an additional defendant and the resulting loss is wasted costs, I raised with counsel whether the principle of advocates immunity outlined in D'Orta-Ekenaike v Victoria Legal Aid and Anor [2005] HCA 12; (2005) 223 CLR 1 applied. The matter had not been pleaded, or otherwise raised, before the learned Magistrate. A decision about who to sue is redolent of a decision affecting the conduct of a case in court. As the reasoning of Beazley JA (as the President then was) in Donnellan v Woodland [2012] NSWCA 433 demonstrates, generally, wasted costs claims are protected by the immunity. (see Donnellan at [232]; Basten and Barrett JJA agreeing with additional comments by each; Hoeben JA and Sackville AJA also agreeing). Accordingly I granted liberty to the plaintiff to file supplementary submissions if he wanted to ventilate the point before me with an equivalent opportunity for the defendant to resist it. In the event, the plaintiff did not wish to take up or advance the point. Accordingly, I am compelled to decide the case without reference to it.
The liability count
The plaintiff's essential argument was that it was not negligent to omit suing Mr Senes personally and, in any event, there was no evidence from which the learned Magistrate could infer that reasonable care on the part of a solicitor in the position of Mr Kent required that he advise his client to apply to join Mr Senes as a defendant to the land losses claim at the same time as the application was brought to transfer the proceedings to this Court. The second proposition was put with this degree of refinement because only then could it be said that wasted costs would not have been incurred. If reasonable care required such advice at any other time, necessarily, a separate application would be involved. Although questions of breach are decided prospectively, questions of causation must be decided retrospectively, and it is notable that the successful joinder of Mr Senes actually involved two applications and work spread over a period of 18 months.
Moreover, Mr Kent argued that her Honour misdirected herself by posing the central question going to negligence by reference to the judgment of Harrison AsJ at the second sentence of [48]. The learned Magistrate made clear that she was following this approach whilst "noting that Kent Attorneys submitted that the relevant date should be 18th March 2008". This, Mr Kent argued, was a significant misdirection.
The central finding of the learned Magistrate that Mr Kent was negligent "when he failed to advise Mr Jacques of his potential rights against Mr Senes and to seek instructions as to whether an application should be made to join Mr Senes in proceedings" impermissibly elided questions of scope of duty, breach, causation and loss which must be considered separately.
Mr Jacques argued that it could not be an error of law for the learned Magistrate to follow the "approach indicated" by Harrison AsJ. It was further argued that it was fundamental for a solicitor for a plaintiff to identify a defendant against whom satisfaction could be obtained in circumstances where the solicitor knew nothing about the financial viability of the companies, but believed Mr Senes to be a very wealthy man who owned a substantial amount of property (T.45.5). Reasonable care required Mr Senes be joined.
Decision
There is a real question about whether a solicitor's duty to exercise reasonable care extends to an obligation to investigate the existence of further potential defendants with deep pockets in every case. Such authority as there is suggests not.
In Brinn and Jarvis v Russell, Jones & Walker (a firm) [2003] PNLR 16; [2002] EWHC 2727 at [20] Gray J held that a firm of solicitors did not act negligently in failing to investigate the ability of the only defendant, a publisher of magazine, in an action for libel to meet an award of damages, or in failing to join as co-defendants in the action other persons including the editor of the magazine in which the libel was published, and the journalist who wrote the article. His Lordship held that there had been nothing to put the solicitors on notice as to the original defendant's impecuniosity. At [19] his Lordship said:
I consider that [Counsel for the Defendant] is right when he says that the issue whether a prudent solicitor should join individual defendants to a libel action against a publishing company depends on the circumstances of the particular case. There is no evidence that to do so is the routine or normal practice in this or other fields of practice. In respectful agreement with the approach approved by Oliver J in , (my emphasis)
At [22] his Lordship said:
To hold that [the solicitor] were in these circumstances guilty of negligence would in my opinion be to set the standard too high. As Oliver J said in Midland Bank:
"It may be that a particularly meticulous and conscientious practitioner would, in his client's general interest, take it upon himself to pursue a line of enquiry beyond the strict limits comprehended by his instructions. But that is not the test. The test is what the reasonably competent practitioner would do having regard to the standards normally adopted in his profession."
None of this, of course, detracts from the obligation of a legal practitioner to undertake proper investigations into the existence of a cause of action or defence to satisfy himself or herself that there is a proper basis for bringing, or defending, a case.
In my judgment, absent some reason to know that the corporate defendants, who after all were Mr Jacques partners in the land development venture, were not worthwhile defendants because they would be financially unable to satisfy any judgment, reasonable care did not require Mr Kent to, advise Mr Jacques of his potential rights against Mr Senes in his personal capacity, and to seek instructions as to whether an application should be made to join Mr Senes to the proceedings. On his own evidence Mr Kent was aware that the companies "had been longstanding and were still around at the time this litigation was contemplated". He did not assume that a plaintiff was "never going to recover" from a corporate defendant. That he believed Mr Senes to be wealthy with substantial property and knew of his involvement as a director of the defendant companies does not, in my view, in law, supply the requisite "reason to know" extending the content of the duty. Reasonable care is the requirement, not confidence of satisfaction of any judgment found.
Even if I am wrong about this statement of principle, there can be no case of actionable negligence against Mr Kent unless reasonable care required him to bring an application to join Mr Senes in conjunction with the application to transfer the proceedings to the Supreme Court so that additional costs would be avoided. In other words, the refinement to the question proposed by Mr Kent is in my judgment correct in this case. Only if the application to join Mr Senes was made concurrently with some other necessary application could it be said that the suggested negligence of Mr Kent was a necessary condition of the occurrence of the wasted costs for the purpose of s 5D Civil Liability Act 2002 (NSW). (The duty owed by a solicitor to a client is an established category recognised by the law of negligence and no real question of the scope of liability for the purpose of the attribution of legal responsibility arises). Because the learned Magistrate focused on what she regarded as the approach mandated by Harrison AsJ's decision she did not direct herself to the relevant question which was that the cut-off date for the consideration of whether a case in negligence had been made out was 18th of March 2008. Nor did her Honour make any finding relevant to that question.
The reference in the second sentence of [48] of Harrison AsJ's judgment to "November 2008" did not derogate from the identification of the issue by her Honour in the first sentence of [48]:
The issue that should have been determined is whether Mr Kent acted with reasonable care, diligence and skill when giving advice as to whether Mr Senes should be joined as a defendant in the Forte proceedings at the time of the transfer proceedings. (my emphasis).
(See also [43] per Harrison AsJ.)
Strictly speaking, it is correct to say that Mr Kent may have been in breach of his retainer at any time up until it was terminated in November 2008, depending upon his actual or constructive knowledge of the facts (what he knew or ought to have known). But in context Harrison AsJ's use of the word "negligent" refers to the bare question of breach and not to whether all of the essential elements of the tort of negligence have been made out. With respect, that is why her Honour, in the first sentence of [48] identified the issue that was required to be determined by reference to "the time of the transfer proceedings". The learned Magistrate misunderstood Harrison AsJ's approach and accordingly misdirected herself. Moreover, the order for remitter was quite general and unlimited. Harrison AsJ did not purport to confine the forensic inquiry the learned Magistrate was required to make.
The learned magistrate made no finding that reasonable care required Mr Kent to advise the joinder of Mr Senes personally in good time to have that application included in the summons for transfer (assuming that it could be). And this is a clear error of law by way of misdirection. At [21] of her judgment the learned Magistrate expressly eschewed that approach. She clearly found that by the time of the letter of 17th October 2008, Mr Kent was aware of Mr Senes part in the various companies and, by implication, he ought to have been aware a case could be made as to the breach of a fiduciary duty owed by him personally, as opposed to the duty owed by the companies he controlled which were partners of Mr Jacques. She also found that "it is reasonable to infer that he would have taken steps prior to" 17th October 2008 to satisfy himself of the accuracy of the information contained in his letter. She found that as Mr Kent had acted for Mr Jacques since mid 2006, he knew that no claim had been made against Mr Senes personally. But it remains that she made no finding as to when a reasonable practitioner in Mr Kent's position would have given the advice Mr Kent omitted to give. That is to say, she failed to make any finding as to when the breach of duty occurred and in the absence of such a clear finding on the balance of probabilities she could not be satisfied Mr Kent was guilty of actionable negligence for the reasons I have already expressed.
If, contrary to my earlier determination, reasonable care required advising Mr Jacques to join Mr Senes personally, there is no evidence that establishes that reasonable care could only be exercised by bringing an application for joinder concurrently with the transferred proceedings. I appreciate one should not approach these questions with the benefit of hindsight. However, the experience of the new lawyers demonstrates that the question was complex, time consuming and, in the end, required a two-step procedure. This strongly suggests the question was one about which professional minds may reasonably differ.
Nor does the evidence elicited in cross-examination extracted above, relied upon by Mr Jacques, support the necessary finding. The essential questions proceeded on the basis of contested and unproved assumptions. If Mr Kent believed that Mr Jacques had a good of action he would have told Mr Jacques to pursue it. It was not established that he had that belief. That there was nothing to stop Mr Kent from asking Mr Jacques questions to elicit the instructions reflected in his letter of 17th October 2008 prior to the transfer application did not establish either that he did so, or should have.
There is no evidence to support the finding of negligence made by the learned magistrate.
For these reasons I am satisfied that Mr Kent has made good Ground 1.
Grounds 2, 3 and 4 - the damages grounds
The only evidentiary basis for her Honour's assessment of the quantum of Mr Jacques loss was the letter dated 9th June 2010 from his new solicitor confirming the "expenses [which] have been incurred in relation to your matter". That letter was annexure "H" to an affidavit of Mr Jacques of 10th December 2010 (page 79) which was read at the first hearing. Mr Kent objected to its admission into evidence and the learned Magistrate deferred a ruling on its admissibility, but apparently did not return to it. In the second hearing these circumstances were drawn to her Honour's attention and the objection was reiterated. Mr Kent argued that there was no evidence upon which the quantification of the cross-claim could be based having regard to that letter's inadmissibility. Her Honour indicated "I'll re-do all of that", meaning she would deal with it.
Mr Kent argues that her Honour fell into error by:
(a) failing to rule upon the admissibility of the letter in advance of her decision; and
(b) in implicitly ruling against him, she was wrong.
In particular, Mr Kent argued that the letter's admission offended the hearsay rule; was not within the business records exception established by s 69 Evidence Act 1995 (NSW); it was not a properly qualified expert opinion relating to the wasted costs; and in any event had no probative value.
I think it may be accepted that her Honour, having heard the argument about the admissibility of Annexure "H" re-iterated at the second hearing, inferentially ruled in favour of its admissibility. She did not overlook the question. This involved no denial of procedural fairness because Mr Kent had a full opportunity to object, to advance the bases of his objection and to argue that in the absence of the letter there was no evidence as to quantum.
In my opinion, her Honour was correct to admit the letter. There was no serious question about its authenticity. Nor is it correct to categorise it as a form of expert evidence. The author was not assessing the wasted costs, rather he was making a representation of fact i.e. the amount of costs incurred of which he had actual direct knowledge, being the solicitor who had generated them. From the letter itself, one could infer that a solicitor in active practice wrote it, and the document contains a previous representation made in the course of his business. The author is a person who might reasonably be supposed to have had personal knowledge of the asserted facts. I am not satisfied that the representation was prepared for the purpose of conducting an Australian proceeding. Far from it. It was simply a statement provided by a solicitor to his client about the costs incurred and likely future costs. It was not in any sense created for use in evidence or otherwise advancing litigation.
In my judgment her Honour did not err in admitting the document into evidence.
Grounds 3 and 4 are that there is no evidence supporting the assessment of damages made by the learned Magistrate. I am not satisfied that these grounds are made out. Annexure "H" in my judgment provided a basis for the type of permissible inferential reasoning process that her Honour applied in quantifying the claim. Once her Honour accepted that loss had been incurred by way of wasted costs, it was incumbent upon her to do her best on the material available to her to assess that loss. In Fink v Fink (1946) 74 CLR 127 at 143 Dixon and McTiernan JJ said:
Where there has been an actual loss of some sort, the common law does not permit difficulties of estimating the loss in money to defeat the only remedy it provided for breach of contract, an award of damages.
(See also State of New South Wales v Moss [2000] NSWCA 133; (2000) 54 NSWLR 536 at 554 [72] and 559 [87] per Heydon JA (as he then was)).
Orders
There is nothing to be gained from a third hearing. The reasons I have given compel the lower court to find for the plaintiff. By dint of s 75A(10) Supreme Court Act 1970 (NSW). I make the following orders:
(1) Appeal allowed;
(2) Set aside the judgment and orders pronounced on the cross-claim in the Local Court on 18th October 2012 and instead order judgment for the cross-defendant on the cross-claim and order the defendant to pay the plaintiff's costs in relation to the claim and the cross-claim on the ordinary basis forthwith after they have been agreed or assessed;
(3) The defendant to pay the plaintiff's costs of the appeal on the ordinary basis forthwith after they have been agreed or assessed.
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Decision last updated: 24 April 2014
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