Lee v Lawfirst Pty Ltd
[2023] WASCA 59
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
TITLE OF COURT : THE COURT OF APPEAL (WA)
CITATION: LEE -v- LAWFIRST PTY LTD [2023] WASCA 59
CORAM: MURPHY JA
VAUGHAN JA
HEARD: 24 MARCH 2023
DELIVERED : 18 APRIL 2023
FILE NO/S: CACV 54 of 2022
BETWEEN: JEFFREY STEWART LEE
Second Appellant
AND
LAWFIRST PTY LTD
Respondent
ON APPEAL FROM:
Jurisdiction : SUPREME COURT OF WESTERN AUSTRALIA
Coram: MASTER SANDERSON
Citation: KINGSFIELD HOLDINGS PTY LTD -v- LAWFIRST PTY LTD [2022] WASC 161
File Number : CIV 2167 of 2021
Catchwords:
Practice and procedure - Appeal against interlocutory orders to strike out statement of claim - Claim for breach of contract, negligence and breach of fiduciary duty against former solicitors - Claim for loss or damage for personal injury to credit or reputation - Supervening bankruptcy - Bankruptcy Act 1966 (Cth) s 60(2), s 60(3), s 60(4), s 116(2)(g) - No election by trustee in bankruptcy - Whether appeal an action in respect of personal injury or wrong done to appellant within meaning of s 60(4) of Bankruptcy Act - Whether leave to appeal should be granted - Turns on own facts
Legislation:
Bankruptcy Act 1996 (Cth), s 58, s 60, s 116
Result:
Leave to appeal allowed in part
Category: B
Representation:
Counsel:
| Second Appellant | : | J S Lee |
| Respondent | : | S F Popperwell |
Solicitors:
| Second Appellant | : | Bayview Legal |
| Respondent | : | Popperwell & Co |
Case(s) referred to in decision(s):
Allmark v Mossensons (a firm) [2006] WASCA 127
Baltic Shipping Co v Dillon [1993] HCA 4; (1993) 176 CLR 344
Berryman v Zurich Australia Ltd [2016] WASC 196; (2016) 310 FLR 108
Bryant v Commonwealth Bank of Australia [1997] FCA 582; (1997) 75 FCR 545
Cook v Swinfen [1967] 1 WLR 457
Cox v Journeaux (No 2) [1935] HCA 48; (1935) 52 CLR 713
Cummings v Claremont Petroleum NL [1996] HCA 19; (1996) 185 CLR 124
Dey v Victorian Railways Commissioners [1949] HCA 1; (1949) 78 CLR 62
Dodds v Kennedy [2011] WASCA 32
D'Orta‑Ekenaike v Victoria Legal Aid [2005] HCA 12; (2005) 223 CLR 1
Duckworth v Water Corporation [2012] WASC 30; (2012) 261 FLR 185
Duvall v Godfrey Virtue & Co (a firm) [2001] WASCA 105
General Steel Industries Inc v Commissioner for Railways (NSW) [1964] HCA 69; (1964) 112 CLR 125
Groom v Crocker [1939] 1 KB 194
Hospitals Contribution Fund of Australia v Hunt (1982) 44 ALR 365
Kelbush Pty Ltd v Australia and New Zealand Banking Group Ltd [2016] WASCA 14; (2016) 49 WAR 374
Kingsfield Holdings Pty Ltd v Lawfirst Pty Ltd [2022] WASC 161
Kingsfield Holdings Pty Ltd v Rutherford [2016] WASC 117
Kingsfield Holdings Pty Ltd v Sullivan Commercial Pty Ltd [2021] WASC 289
Luck v Secretary of Services Australia [2022] FCAFC 195; (2022) 406 ALR 567
Manningel v Hewlett Phelps [1991] NSWCA 186
Moore v Scenic Tours Pty Ltd [2020] HCA 17; (2020) 286 CLR 326
Moss v Eaglestone [2011] NSWCA 404; (2011) 83 NSWLR 476
Rana v Musolino [2010] FCA 476
Re Lofthouse [2001] FCA 25; (2001) 107 FCR 151
Re Luck [2003] HCA 70; (2003) 78 ALJR 177
Rogers v Roche (No 1) [2016] QCA 340; [2017] 2 Qd R 306
Ruxley Electronics and Constructions Ltd v Forsyth [1996] AC 344
Waller v Waller [2009] WASCA 61
Wilson v United Counties Bank Ltd [1920] AC 102
JUDGMENT OF THE COURT:
This matter came to a hearing on 24 March 2023 to consider (1) the issue of making orders, if any, consequent upon the appellant becoming bankrupt, and (2) the application for leave to appeal.
The appeal in this matter was relevantly commenced by an amended appeal notice dated 1 June 2022 filed on behalf of the first appellant (Kingsfield) and the second appellant (Mr Lee). Mr Lee was the sole director and shareholder of Kingsfield. Kingsfield filed a notice discontinuing its appeal on 8 June 2022, leaving Mr Lee as the sole appellant.
The appeal is against interlocutory orders made by Master Sanderson on 11 May 2022 striking out certain paragraphs of the amended statement of claim filed by Mr Lee (and Kingsfield) in the primary proceedings against the respondent (Lawfirst). The master's orders, striking out the paragraphs of the statement of claim, were made pursuant to reasons published in Kingsfield Holdings Pty Ltd v Lawfirst Pty Ltd.[1]
[1] Kingsfield Holdings Pty Ltd v Lawfirst Pty Ltd [2022] WASC 161.
As the appeal is against interlocutory orders, leave is required,[2] without which the appeal is incompetent.[3]
[2] Section 60(1)(f) of the Supreme Court Act 1935 (WA); Re Luck [2003] HCA 70; (2003) 78 ALJR 177.
[3] Allmark v Mossensons (a firm) [2006] WASCA 127 [24].
On 4 July 2022, Mr Lee filed an appellant's case, and on 25 July 2022, Lawfirst filed a respondent's answer together with a notice of contention. On 15 August 2022, Mr Lee filed a reply to the notice of contention.
On 3 November 2022, a trustee in bankruptcy was appointed to the estate of Mr Lee, pursuant to a debtor's petition. The trustee of Mr Lee's estate was notified of this appeal and the primary proceedings by the solicitors for Lawfirst on 7 November 2022. The trustee was requested to provide a notice electing whether to prosecute or discontinue the primary proceedings and this appeal. The trustee did not respond. No election has been made for the purposes of s 60(2) and (3) of the Bankruptcy Act 1966 (Cth) (Bankruptcy Act).
For the reasons which follow leave to appeal should be refused other than in respect of a specific aspect of the appeal as identified in [65.1] below]. As to that aspect of the appeal, leave will be referred to the appeal hearing.
The primary proceedings and the master's decision under appeal - overview
In broad terms, the primary proceedings concern claims brought by Mr Lee (and Kingsfield) against Lawfirst, their former solicitors. In the primary proceedings, Mr Lee (relevantly) alleged that Lawfirst, in acting for him as plaintiff in certain defamation proceedings against a Mr Rutherford, had acted in breach of contract, negligently and in breach of fiduciary duty. In the defamation proceedings, it was alleged that Mr Rutherford, the director of a company which was a leaseholder of premises on Rottnest Island from the Rottnest Island Authority, had said, in January 2012, to Mr Duffield, the director of Sullivan Commercial Pty Ltd, which was the leasing agent for the Rottnest Island Authority, that a café operated by Kingsfield had been closed following a health inspection. The defamation proceedings were commenced originally by Mr Lee's then law firm, Avedon Lee, and were effectively taken over by Lawfirst, on Mr Lee's instructions, in about September 2015.
The defamation proceedings went to trial in November 2015 and were heard before Kenneth Martin J. The proceedings were dismissed on 11 April 2016 with an order for costs against Mr Lee (and Kingsfield). Kenneth Martin J found that whilst Mr Rutherford had uttered the words complained of, Mr Lee had failed to establish any of the alleged defamatory imputations. Kenneth Martin J also found that Mr Lee had not been identified as an object of the publication.[4]
[4] Kingsfield Holdings Pty Ltd v Rutherford [2016] WASC 117.
In the primary proceedings, Mr Lee alleged that he suffered loss and damage in consequence of the alleged defaults of Lawfirst in the conduct of the defamation proceedings. As set out in more detail below, Mr Lee alleged that his loss and damage comprised (1) his liability to pay Mr Rutherford's costs of the defamation actions in the sum of $160,000, (2) his liability, which he allegedly discharged, of paying costs to his own solicitors, Lawfirst, in the sum of approximately $260,000, and (3) unparticularised damage in respect of 'personal injury to credit and reputation'. Mr Lee also included a claim for exemplary damages.
In the primary proceedings, Lawfirst applied to strike out a number of paragraphs of the statement of claim against it. Master Sanderson upheld Lawfirst's strike‑out application, and ordered that numerous paragraphs of the statement of claim be struck out.
Pleadings and the relief sought in the primary proceedings against Lawfirst
The amended statement of claim filed in the primary proceedings by Mr Lee and Kingsfield (who will collectively, for convenience, be referred to as 'plaintiffs' in what follows) contained pleas which, in general terms, may be grouped into categories as pleas relating to:
1.the retainer of Lawfirst to act in the defamation proceedings;[5]
2.various alleged matters and disputes between various parties on Rottnest Island;[6]
3.other proceedings involving Mr Rutherford;[7]
4.certain events relating to, or considered by Mr Lee to be relevant to, the defamation proceedings, both when Mr Lee's firm was acting and subsequently when Lawfirst was acting;[8]
5.the filing of a witness statement and the leading of evidence at trial;[9]
6.the conduct of the defamation trial, including counsel's failure to object to a certain matter which allegedly 'severely damaged the credibility of [Kingsfield and Mr Lee]';[10]
7.the alleged breach of the implied terms of the retainer, and negligence by Lawfirst;[11] and
8.the alleged existence and breach of fiduciary duties owed by Lawfirst.[12]
[5] Amended statement of claim (SC) 1 - 10.
[6] SC 12, 15 - 16.
[7] SC 28 - 30.
[8] SC 31 - 66.
[9] SC 75 - 83A.
[10] SC 84 - 87.
[11] SC 89.1 - 89.13.
[12] SC 10A, 89A.
The pleas relating to the alleged breaches of retainer and duty themselves may broadly be categorised into pleas relating to:
1.alleged breaches to the effect that Lawfirst should have advised that the defamation proceedings had no real prospects of success, and should have accepted an offer by the defendant for the proceedings to be dismissed with no order as to costs;[13] and
2.other breaches in or in relation to the conduct of the proceedings.[14]
[13] SC 67, 89.1 - 89.5, 89.9, 89.12.
[14] SC 89.6 - 89.8, 89.10 - 89.11, 89.13.
In relation to the first category referred to in the preceding paragraph, the plaintiffs pleaded, in effect:
1.There were implied terms of the retainer, alternatively Lawfirst owed a duty, to act with reasonable care and skill, including in relation to the conduct of the defamation proceedings and any settlement negotiations.[15]
[15] SC 9 - 10.
2.On 5 November 2015, the plaintiffs received an offer of settlement by Mr Rutherford to the effect that the defamation proceedings be dismissed with no order as to costs. The offer was open for acceptance until 5.00 pm on 6 November 2015.[16]
3.Lawfirst provided no advice in respect of the offer, and the offer expired.[17]
4.Lawfirst, in breach of the implied term of the retainer and in breach of duty:
(a)was negligent in failing to advise that the plaintiffs' prospects in the defamation proceedings were poor and had no real prospect of success;[18]
(b)failed to advise the plaintiffs that their prospects of success were poor in the context of Mr Rutherford's settlement offer;[19]
(c)'caused [the plaintiffs] to be harmed in their credit, standing and repute by the entry of judgment against them';[20] and
(d)caused the plaintiffs to suffer loss and damage by causing them, through the absence of proper advice, to reject the settlement offer.[21]
5.Further or alternatively, Lawfirst breached its fiduciary duties in the above respects.[22]
[16] SC 67.
[17] SC 69 - 72.
[18] SC 89.1, 89.4, 89.5.
[19] SC 89.2, 89.4, 89.9
[20] SC 89.11
[21] SC 89.12
[22] SC 89A.
The plaintiffs next pleaded the following:
90.The Defamation Actions went to trial on 11, 12 and 20 November 2015 and the reasons for decision were delivered on 11 April 2016.
91.As part of the judgment Kenneth Martin J made orders (Costs Orders) for [Kingsfield and Mr Lee] to pay Mr Rutherford's costs of the Defamation Actions.
92.[Kingsfield and Mr Lee] paid approximately $160,000 to Mr Rutherford as agreed costs, pursuant to the Costs Orders made after trial. [Kingsfield and Mr Lee] paid [Lawfirst] approximately $260,000 in relation to the Defamation Actions.
93.The breach of the Implied Term and/or the breach of duty and/or the breach of fiduciary duty by [Lawfirst] caused [Kingsfield and Mr Lee] to suffer loss and damage.
Particulars of Loss and Damage
Liability incurred to [Lawfirst] $260,000 (approximately)
Costs paid to Mr Rutherford $160,000
Personal injury to credit and reputation to be assessed
And [Kingsfield and Mr Lee's] claim [against Lawfirst]:
1.Damages for breach of contract;
1A.Further or alternatively damages for breach of duty;
1BFurther or alternatively damages and/or equitable compensation for breach of fiduciary duty[.]
2.Exemplary damages. (underlining in original)
The strike-out application and the master's decision
In general terms, Lawfirst's application to strike out appeared directed principally to the paragraphs of the statement of claim other than those which alleged, in effect, that the plaintiffs suffered loss and damage by reason of breach of contract and/or negligence in Lawfirst failing to advise that the defamation proceedings had no real prospects of success, and by failing to advise them to accept the 'walkaway' offer of settlement.
In the strike‑out application, in broad terms Lawfirst contended, in effect, that the impugned pleas[23] (1) were embarrassing, and/or (2) failed to disclose reasonable causes of action in the case of the pleas of fiduciary duty, and/or (3) failed to disclose reasonable causes of action in relation to the conduct of the trial in light of the doctrine of advocate's immunity, and/or (4) were an abuse of process as a collateral attack on the findings in the defamation action and in other proceedings brought by Kingsfield and Mr Lee after the defamation proceedings, which had also failed, described as the 'Conspiracy action'.[24]
[23] See 'Defendant's outline Submissions on application for a stay alternatively to strike out' filed 11 February 2022; BB 44 - 56. 'Defendant's Supplementary Submissions on application for a stay alternatively to strike out' filed 22 March 2022; BB 79 ‑ 81.
[24] Kingsfield Holdings Pty Ltd v Sullivan Commercial Pty Ltd [2021] WASC 289.
The effect of the master's decision, in general terms, was to strike out the pleas in the categories referred to in points 2 ‑ 6 and 8 of [12] above, and the breach pleas in relation to the alleged breaches of the retainer and breaches of duty other than those referred to in point 4 of [14] above. This essentially left intact Mr Lee's claims against Lawfirst in respect of financial loss arising from the failure to advise that the defamation proceedings had no real prospects of success.
The master made the following orders:
1.The following in the Amended statement of claim be struck out:
a.paragraphs 6B, 6C, 6D, 10A, 10B, 12, 13, 15, 16, 28 to 66, 74 to 87, 89.3, 89.6, 89.7, 89.8, 89.10, 89.11, 89.13 and 89A;
b.the words:
i.'with an advice on evidence or provide them' in paragraph 72;
ii.'failed to provide an advice on evidence as referred to in Consolidated Practice Directions 2009 4.4.1.1. or' in sub-paragraph 89.1;
iii.'Personal injury to credit and reputation' in paragraph 93
c.paragraphs 1B and 2 of the prayer for relief.
2.The plaintiffs pay the defendant's costs of the application including reserved costs to be taxed if not agreed.
Provisions of the Bankruptcy Act and principles
Definitions - property and provable debt
Section 5(1) of the Bankruptcy Act includes the following definitions:
'property' means real or personal property of every description, whether situate in Australia or elsewhere, and includes any estate, interest or profit, whether present or future, vested or contingent, arising out of or incident to any such real or personal property.
'provable debt' means a debt or liability that is, under this Act, provable in bankruptcy.
…
'The property of the bankrupt', in relation to a bankrupt, means:
(a)except in subsections 58(3) and (4):
(i)the property divisible among the bankrupt's creditors; and
(ii)any rights and powers in relation to that property that would have been exercisable by the bankrupt if he or she had not become a bankrupt; and
(b)in subsections 58(3) and (4):
(i)the property, rights and powers referred to in paragraph (a) of this definition; and
(ii)any other property of the bankrupt.
Section 58 of the Bankruptcy Act
Section 58 provides, relevantly for present purposes:
(1)Subject to this Act, where a debtor becomes a bankrupt:
(a)the property of the bankrupt, not being after-acquired property, vests forthwith in the Official Trustee or, if, at the time when the debtor becomes a bankrupt, a registered trustee becomes the trustee of the estate of the bankrupt by virtue of section 156A, in that registered trustee[.]
Section 60 of the Bankruptcy Act
Section 60 of the Bankruptcy Act provides, relevantly:
(2)An action commenced by a person who subsequently becomes a bankrupt is, upon his or her becoming a bankrupt, stayed until the trustee makes election, in writing, to prosecute or discontinue the action.
(3)If the trustee does not make such an election within 28 days after notice of the action is served upon him or her by a defendant or other party to the action, he or she shall be deemed to have abandoned the action.
(4)Notwithstanding anything contained in this section, a bankrupt may continue, in his or her own name, an action commenced by him or her before he or she became a bankrupt in respect of:
(a)any personal injury or wrong done to the bankrupt, his or her spouse or de facto partner or a member of his or her family; or
(b)the death of his or her spouse or de facto partner or of a member of his or her family.
…
(4A)Notwithstanding paragraph (1)(b), this section does not empower the Court to stay any proceedings under a proceeds of crime law.
(5)In this section, action means any civil proceeding, whether at law or in equity.
An appeal is an 'action' within the meaning of s 60(5) of the Bankruptcy Act.[25]
Section 116 of the Bankruptcy Act
[25] Cummings v Claremont Petroleum NL [1996] HCA 19; (1996) 185 CLR 124, 130.
Section 116 of the Bankruptcy Act provides, relevantly:
(1)Subject to this Act:
(a)all property that belonged to, or was vested in, a bankrupt at the commencement of the bankruptcy, or has been acquired or is acquired by him or her, or has devolved or devolves on him or her, after the commencement of the bankruptcy and before his or her discharge; and
(b)the capacity to exercise, and to take proceedings for exercising all such powers in, over or in respect of property as might have been exercised by the bankrupt for his or her own benefit at the commencement of the bankruptcy or at any time after the commencement of the bankruptcy and before his or her discharge; …
…
is property divisible amongst the creditors of the bankrupt.
(2)Subsection (1) does not extend to the following property:
…
(g)any right of the bankrupt to recover damages or compensation:
(i)for personal injury or wrong done to the bankrupt, the spouse or de facto partner of the bankrupt or a member of the family of the bankrupt;
…
and any damages or compensation recovered by the bankrupt (whether before or after he or she became a bankrupt) in respect of such an injury or wrong or the death of such a person[.]
Principles
In Luck v Secretary of Services Australia,[26] the Full Court of the Federal Court endorsed the following observations of Gray J in Re Lofthouse:[27]
[18]Section 60 is an adjunct to the scheme of the [Bankruptcy] Act whereby the property of a bankrupt passes to the bankrupt's trustee consequent upon a sequestration order. By s 58 of the [Bankruptcy] Act, the property of a bankrupt vests forthwith in the Official Trustee or a trustee in bankruptcy when a debtor becomes a bankrupt. That section has the effect of vesting in the trustee in bankruptcy all rights of action in pending proceedings commenced by the bankrupt. …
[19]Section 60 is not the provision that vests the right of action in the trustee in bankruptcy. It has a different, and in some respects wider, role. It operates to stay pending proceedings unless the trustee elects to prosecute or discontinue them. It also provides the machinery for a defendant or other party to a pending proceeding to force the making of an election. It is directed towards the protection of the bankrupt's creditors, by preventing the unnecessary dissipation of the assets of the estate in fruitless litigation. In my view, s 60 also has the purpose of protecting a defendant or other party to a pending proceeding. A defendant or other party to a pending proceeding suffers an immediate detriment upon the plaintiff becoming a bankrupt. The detriment is that if the defendant or other party should be successful in the proceeding, and should obtain an order that the plaintiff pay the costs of the proceeding, the order will be effectively unenforceable because of the bankruptcy. The rationale behind s 60(2) and s 60(3) is therefore, at least in part, to protect those whom the bankrupt has been suing. ...
[20]In my view, s 60 has been enacted deliberately as a broad provision, so as to encompass any proceeding brought by a bankrupt before bankruptcy. The exceptions have been expressed quite narrowly. The intention is that, once a bankruptcy occurs, no further costs should be incurred in a proceeding unless the trustee in bankruptcy makes an election to continue the proceeding. If such an election is made, the trustee in bankruptcy will ordinarily become substituted as plaintiff in the pending proceeding, in the capacity of trustee in bankruptcy for the former plaintiff. The trustee in bankruptcy will thereby become liable for the costs of the proceeding in the event that it is unsuccessful and a costs order is made in favour of the defendant in the proceeding or some other party to it.
[26] Luck v Secretary of Services Australia [2022] FCAFC 195; (2022) 406 ALR 567 [44].
[27] Re Lofthouse [2001] FCA 25; (2001) 107 FCR 151 [18] ‑ [20].
In s 60(4), the words 'personal injury' and 'wrong' have the same connotation and derivation.[28]
[28] Duckworth v Water Corporation [2012] WASC 30; (2012) 261 FLR 185 [85].
The Full Court in Luck, with reference to s 60(4) of the Bankruptcy Act also observed:[29]
[29] Luck [48] - [49].
[48]Proceedings that have been held to be 'in respect of any personal injury or wrong done to the bankrupt' include:
(a)[Moss v Eaglestone [2011] NSWCA 404; (2011) 83 NSWLR 476], in which an action for professional negligence against a solicitor in relation to a failure to plead a case of defamation in earlier litigation was excluded from s 60(2) by the operation of s 60(4). Allsop P reviewed the legislative history and authorities relating to s 60(4), and concluded that it reflects a distinction of long standing between actions relating to rights to the person and rights concerning property. Only if the personal hurt or wrong is inseverable from a claim relating to property will it fall outside the scope of s 60(4);
(b)Sheehan v Brett-Young (No 3) [2016] VSC 39, where the Supreme Court of Victoria held that claims based on malicious prosecution and misfeasance in public office against the applicant were excluded from the operation of s 60(2) by s 60(4); and
(c)Fisher v Transport for NSW [2016] NSWSC 1888, where the Supreme Court of NSW concluded that an appeal on a question of law from an administrative tribunal was a proceeding in respect of a wrong done to a bankrupt under s 60(4), where the tribunal had affirmed a decision to cancel a licence on the ground that the applicant was not a fit and proper person on the basis of their character and behaviour. Justice McCallum reasoned, at [37]:
'If this was an action for damages for defamation arising from the publication of an imputation that Mr Fisher is not a fit and proper person to engage in his chosen occupation of a bus driver, the decision in Moss … would hold that the action fell within the exception in s 60(4) … It seems to me that, for coherence, the law should similarly regard an action seeking to impugn an administrative finding that Mr Fisher is not a fit and proper person to engage in the occupation of a bus driver to be an action "in respect of" a personal injury or wrong.'
[49]These authorities reveal that the exception applies to that narrow class of action where it relates to the 'personal' - the injury is one to the person, their character, or feelings.
Moss concerned a claim by a former client of a solicitor against the solicitor for negligence in failing to commence a defamation action. The former client sought damages from the solicitor for the loss of chance of succeeding in a claim for defamation against a publisher (Nationwide News Pty Ltd) in proceedings which had been conducted by the solicitor.[30] Allsop P (as his Honour then was) said:[31]
[64]Thus, when one comes to the words of s 60(4) and s 116(2)(g) it is to be recognised that the background and context are, through various Colonial and State, and later Commonwealth provisions, reflective of, and embodying, the notions within the common law of bankruptcy. That assists in appreciating that the distinction (in s 60(4) and s 116(2)(g)) between person and property is a substantive one. It was a distinction made by courts and judges of the highest authority who declared it to be unjust and harsh that the estate of the bankrupt and the participating creditors should be swelled and advantaged by a wrong to the person or reputation of the bankrupt.
[65]The terms of s 60(4) (and s 116(2)(g)) reflect that distinction of substance. The words 'action commenced by him or her … in respect of any personal injury or wrong done to [him or her]' require the substance of the matter to be examined. Assuming the underlying facts in the appellant's favour, if the solicitor had commenced the action for defamation against News, it would not have been stayed under s 60(2) and it would have enured for the appellant's benefit under s 116(2)(g). It was a wrong to his reputation. The product of an action to vindicate such a personal wrong did not under the common law, or s 116(2)(g), swell the bankrupt's estate divisible among creditors. It was personal vindication. What is different on the hypothesis that the direct claim has now been lost is that the bankrupt now has a claim for the loss of that chose in action (that would not have fallen into his estate). There is the interposition of a claim (in contract, or tort, or both) for negligence, separating the appellant from the underlying claim for defamation (which has been lost). There is no sound reason in logic or policy why that claim should now enure for the benefit of creditors, when the primary claim did not.
[30] Moss [1], [18].
[31] Moss [64] - [65].
In Cox v Journeaux (No 2), Dixon J said, with respect to a predecessor to s 60(4):[32]
The test appears to be whether the damages or part of them are to be estimated by immediate reference to pain felt by the bankrupt in respect of his mind, body or character and without reference to his rights of property (Wilson v United Counties Bank Ltd). (citation omitted)
[32] Cox v Journeaux (No 2) [1935] HCA 48; (1935) 52 CLR 713, 721.
The parties' arguments on the bankruptcy question
Mr Lee contends, in effect, that the appeal comes within the ambit of s 60(4) of the Bankruptcy Act, as it concerns a right 'for personal injury or wrong done to the bankrupt'. In relation to the legal principles, Mr Lee referred to various authorities, including Cox (No 2);[33] Berrymanv Zurich Australia Ltd;[34] and Moss.
[33] Cox (No 2) (721).
[34] Berrymanv Zurich Australia Ltd [2016] WASC 196; (2016) 310 FLR 108.
As to why, in the particular circumstances of this case, the appeal falls within s 60(4) of the Bankruptcy Act, Mr Lee submitted:
23.In these Proceedings [Mr Lee] contends that he lost the opportunity to settle the Defamation proceedings as a result of the professional negligence of [Lawfirst] and its breach of fiduciary duty.
…
29.These Proceedings involve a personal injury or wrong to [Mr Lee] and damages or compensation can be awarded on the lost opportunity to settle the Defamation proceedings but not solely by immediate reference to reputational harm. Further these Proceedings are 'without reference to rights of property' as required under the principle stated by the High Court in Cox v Journeaux (No 2) …
30.In summary it is submitted that these Proceedings fall within s 60(4) of the [Bankruptcy] Act. Further s 116(2)(g) of the [Bankruptcy] Act is applicable as the proceedings seek damages or compensation for personal injury or wrong done to [Mr Lee].
Lawfirst contends that in the primary proceedings, Mr Lee did not seek compensation for the lost chance to succeed in the defamation action. Rather, his claim, in respect of costs incurred to Lawfirst and costs payable to Mr Rutherford, was for wasted expenditure in bringing the defamation proceedings to trial, when the proceedings had no real prospects of success.
In relation to the additional claim for 'personal injury to credit and reputation', Lawfirst contends that the damage is properly characterised as consequential upon the damage allegedly inflicted on Mr Lee's property rights, ie, the infliction of the economic loss for prosecuting an action to trial which (allegedly) could not succeed. Lawfirst contends that, accordingly, the claim for damages for 'personal injury to credit and reputation' cannot be severed from the action as a whole. Reference was made to Manningel v Hewlett Phelps;[35] Rana v Musolino;[36] and Bryant v Commonwealth Bank of Australia.[37]
[35] Manningel v Hewlett Phelps[1991] NSWCA 186.
[36] Rana v Musolino [2010] FCA 476.
[37] Bryant v Commonwealth Bank of Australia [1997] FCA 582; (1997) 75 FCR 545.
Leave to appeal
In Kelbush Pty Ltd v Australia and New Zealand Banking Group Ltd,[38] Mitchell J (as his Honour then was) (Martin CJ & Buss JA relevantly agreeing) said:[39]
[80]… Generally, leave should not be granted unless the decision below is plainly wrong or is attended by sufficient doubt to justify the grant of leave and a substantial injustice would be done if it remains undisturbed[.]
[81]As Martin CJ noted in Waller,[40] the requirement for leave to appeal against an interlocutory decision is no mere technicality or procedural nicety. Rather it is a substantive restriction which advances the administration of justice by preventing procedural disputes distracting the court and the parties from the determination of contested substantive rights. I agree with the following observations made in Waller:
'The grant of leave to appeal from an interlocutory determination is therefore restricted to those exceptional cases in which the decision in question is not only plainly wrong or attended with sufficient doubt to justify the grant of leave, but also in which a substantial injustice would be done if the decision remains in place. It would defeat the purpose of the restriction upon interlocutory appeals if there were to be any departure from the strict satisfaction of these requirements.
In particular, the injustice that must be demonstrated must be properly characterised as 'substantial'. If every infraction of a party's procedural rights were to be regarded as a 'substantial injustice', this aspect of the requirements for the grant of leave would become meaningless, as virtually every erroneous interlocutory decision will involve an infraction of a party's procedural rights. Accordingly, the notion of 'substantial injustice' looks to the substantive rights of the party adversely affected by the order under review, and requires that party to demonstrate that the effect of the order will go beyond mere inconvenience and procedural disadvantage.'
(footnote omitted)
[38] Kelbush Pty Ltd v Australia and New Zealand Banking Group Ltd [2016] WASCA 14; (2016) 49 WAR 374.
[39] Kelbush [80] - [81].
[40] Waller v Waller [2009] WASCA 61 [9] ‑ [10].
Special restraint must be exercised when the interlocutory order under appeal, as here, is one concerning practice and procedure.[41]
[41] Dodds v Kennedy [2011] WASCA 32 [5].
Disposition
Mr Lee's claims
By this appeal, Mr Lee in his appellant's case essentially contends that the master erred in striking out paragraphs or parts of the amended statement of claim which were reasonably arguable or otherwise properly open to be pleaded or claimed. Although his appellant's case might be thought to be lacking somewhat in clarity, a consideration of the grounds of appeal read with the appellant's submissions indicates that by this appeal Mr Lee seeks to reinstate within the amended statement of claim (by having this court reverse the strike-out orders as reproduced at [19] above):
1.A claim for breach of contract, breach of a tortious duty of care and breach of fiduciary duty so far as Lawfirst entered into the retainer with Mr Lee when Lawfirst (1) was incapable of discharging the retainer with reasonable skill, care and diligence, and (2) thereby put its own interests before the interests of Mr Lee,[42] causing financial loss to Mr Lee,[43] for which he was entitled to recover damages and/or equitable compensation.[44]
2.A claim for exemplary damages.[45]
3.Damages for the head of loss described as 'personal injury to credit and reputation'.[46]
[42] Appellant's appeal submissions, pars 1, 4 ‑ 10, 15 - 16 (as to ground 1), pars 3, 5 (as to ground 2), par 1 (as to ground 3). See also hearing 24 March 2023, ts 6.
[43] Appellant's appeal submissions, pars 10, 17 - 19 (as to ground 1).
[44] Appellant's appeal submissions, pars 11 - 19 (as to ground 1), pars 1, 6 (as to ground 4).
[45] Appellant's appeal submissions, pars 2 - 5 (as to ground 4).
[46] Ground 3.1(b)(iii); appellant's appeal submissions, pars 13 - 19 (as to ground 3), par 2 (under ground 4).
In oral submissions Mr Lee confirmed with the court that the subject-matter of the appeal was that he was trying to 're-insert' these three matters back into his amended statement of claim so that they could be pursued at trial.[47]
Claims that Lawfirst entered into the retainer when it was incapable of discharging its terms
[47] Hearing 24 March 2023, ts 5 - 6.
In relation to the claims referred to in [36.1], Mr Lee submitted, in effect, that advocates' immunity had no application to such claims, in that they arose as a result of Lawfirst's conduct in accepting the retainer in the first place.[48]
[48] Appellant's appeal submissions, pars 3 - 5 (ground 2).
On a fair reading of the amended statement of claim, claims of the kind summarised in [36.1] above were not pleaded in the amended statement of claim. Although Mr Lee submitted that such claims were evident in particulars 89A.7 ‑ 89A.10,[49] those particulars did not purport to be particulars of any pleaded material facts to the effect that, upon entering the retainer, Lawfirst lacked the capacity to conduct the defamation proceedings with reasonable care and skill. Mr Lee also referred to the plea in par 73,[50] to the effect that Lawfirst's principal said that he should not have taken on the defamation proceedings. Whilst this might, arguably, be said to be evidence, as an admission, that Lawfirst had no capacity to discharge the retainer with reasonable care and skill when it was entered into, it is not the pleading of material facts of a claim of the kind referred to in [36.1] above. The most that can be said is that the master struck out various factual narrative pleas which might be consistent with a case of the kind referred to in [36.1] if it were pleaded.
[49] Hearing 24 March 2023, ts 7.
[50] Hearing 24 March 2023, ts 8. See also appellant's appeal submissions, par 5 (as to ground 1).
As this aspect of the claim Mr Lee wishes to propound was not commenced by Mr Lee before he became a bankrupt, s 60(4) of the Bankruptcy Act could have no potential application to it. More fundamentally, two things arise from the circumstance that the appeal is, in large part, grounded on a cause of action that was not part of Mr Lee's amended statement of claim:
1.The appeal is not required for Mr Lee to advance the matters in [36.1] above in the primary proceedings. Ignoring, for present purposes, Mr Lee's bankruptcy, the master's decision does not preclude Mr Lee seeking to advance that kind of claim by amending the statement of claim to include it (whether the claim is potentially barred by limitation or laches is a matter on which we express no conclusion). This is a significant factor against the grant of leave to appeal insofar as, in this respect, the decision under appeal has not adversely affected any substantive rights.
2.The appeal cannot succeed to the extent that this is the character of the appeal - the master cannot have erred by striking out a cause of action that was never pleaded (or narrative facts potentially going to a cause of action which was never pleaded).
There should, however, also be consideration of the impact of Mr Lee's bankruptcy on the posited claim that grounds this aspect of the appeal. Even if, properly construed, the amended statement of claim contained the claims in [36.1] above, the financial loss claimed by Mr Lee was, in substance, the difference between (1) having judgment entered against him after trial, ie, dismissal of his actions, plus costs awarded against him and his own costs of the proceedings, and (2) the judgment that he could and should have obtained by settlement before trial, being dismissal of his actions with no order as to costs and at a time when he had not incurred any material liability in respect of his own costs to Lawfirst.[51] The claims at common law and in equity for financial loss caused by the alleged defaults of Lawfirst in their engagement as his solicitors were claims in respect of the diminution of his assets. They were not claims in respect of any personal injury or wrong done to Mr Lee. To this extent, the appeal cannot be characterised as an action within the meaning of s 60(4) of the Bankruptcy Act.
[51] See amended statement of claim, pars 6B, 6C, 89A.10.
Mr Lee's reliance on the authority of Moss is, in our opinion, misplaced. In Moss, the former client's action was against his solicitors for damages for loss of a chance in succeeding in a defamation claim which his solicitors had failed to make. In this case, the substance of Mr Lee's pleaded complaint was that Lawfirst caused him loss by prosecuting the defamation proceedings to trial, when the proceedings had no real prospect of success, ie, there was no real prospect of establishing that he had been defamed in the first place.[52] Mr Lee's characterisation of the appeal as an action for, in effect, the lost opportunity to settle the defamation proceedings is only accurate to this extent: the lost opportunity to settle the defamation proceedings, on the pleadings, was a lost opportunity to have judgment entered against him with no order as to costs, at a time when his own costs were limited. The appeal cannot be characterised as an action seeking to vindicate a claim against his former solicitors for the loss of a chance to recover damages for defamation. The predicate for such a proposition is that his claims in defamation constituted valuable causes of action. That is not, and was not, Mr Lee's case against Lawfirst.
[52] This was accepted by Mr Lee in oral submissions: hearing 24 March 2023, ts 18.
Similarly, the decision of Rogers v Roche (No 1),[53] to which Mr Lee referred in his appellant's case, provides no analogy. Rogers concerned a pleading dispute in litigation between a client (as plaintiff) and his former solicitors (as defendants) in relation to a personal injury matter conducted on behalf of the client by his former solicitors. Amongst other things, the plaintiff client alleged (1) breach of fiduciary duty in the formation and continuance of his retainer,[54] and (2) alleged failures by the former solicitors in a statutory 'pre‑litigation regime'.[55] The Queensland Court of Appeal found that these particular claims (unlike others) were not precluded by advocates' immunity.[56] The plaintiff client alleged that as a result of the solicitors' defaults, he ultimately recovered only a small part of the (allegedly) true value of his claim for economic loss.[57] The claim against his solicitors was for the difference between the primary judgment and the (alleged) true value of his claim for economic loss.[58] It was, in Rogers, 'an aspect of all parts of the [plaintiff's] claim that he was deprived of a full opportunity of obtaining the entire amount of his economic loss by the wrongful conduct of [the solicitors]'.[59]
[53] Rogers v Roche (No 1) [2016] QCA 340; [2017] 2 Qd R 306.
[54] Rogers [40].
[55] Rogers [1], [56] - [60].
[56] Rogers [32] - [51], [56] - [60].
[57] Rogers [16] - [18], [28], [34].
[58] Rogers [16], [54].
[59] Rogers [50].
That is not the character of the proceeding below or this appeal. Mr Lee was not seeking to vindicate, via a derivative action against his solicitors, a personal right of action for defamation of character which had vested in him but recourse to which had been lost by the negligence of his solicitors.[60] Rather, the effect of the pleaded claim was to contend that he had no actionable case for defamation of character, and he should have been so advised. Mr Lee's appeal in respect of his claims for financial loss in relation to costs paid to the defendant and to his solicitors in the defamation proceedings, are deemed abandoned, pursuant to s 60(3) of the Bankruptcy Act.
Claim for exemplary damages
[60] Compare Moss [65].
Turning next to the claim for exemplary damages (see [36.2] above), this is the subject of ground 4. A claim for exemplary damages must be specifically pleaded together with the facts on which the party pleading it relies.[61] No material facts were pleaded.
[61] Order 20 r 9(3) of the Rules of the Supreme Court 1971 (WA).
As explained by Mr Lee in oral submissions,[62] his claim for exemplary damages was not in relation to negligence in the conduct of the defamation proceedings. Rather, it was on the basis that '[at] the beginning of the action [Lawfirst] didn't have the capacity to actually deal with the matter [and] they never informed [Mr Lee] of that and allowed [him] to continue on down that path'. Accordingly, this aspect of the appeal again, in substance, relates to claims of the kind referred to in [36.1] above. As indicated earlier in [39] ‑ [40] above, this cause of action was not pleaded.
[62] Hearing 24 March 2023, ts 4.
Accordingly, leave to appeal in this regard ought not be granted. This aspect of the master's decision is not attended with sufficient doubt to warrant the grant of leave, and, or alternatively, substantial injustice would not be occasioned if this aspect of the master's decision was left undisturbed.
Injury to credit and reputation
As to the third matter raised by the appeal, Mr Lee's pleaded head of loss for 'personal injury to credit and reputation' (see [36.3] above), this was the subject of one part of ground 3 of the appeal (ground 3.1b(iii)). Although not part of ground 4, Mr Lee's written submissions in relation to ground 4 also refer to the striking out of the claim for loss of credit and reputation.[63]
[63] Appellant's appeal submissions, par 2 (as to appeal ground 4).
There were two pleas which arguably appeared to be relevant to the pleaded claim for loss of credit and reputation, both of which were struck out by the master. First, Mr Lee pleaded that his counsel at trial failed to take an objection which 'severely damaged' his credibility (par 87 of the amended statement of claim). Secondly, Mr Lee, in his particulars of negligence and breach of the implied term to take reasonable care, alleged that '[Lawfirst] caused [Mr Lee] to be harmed in [his] credit standing or repute by the entry of judgment against [him]' (par 89.11 of the amended statement of claim).
Although this second plea appeared to be a plea of causation rather than breach, Mr Lee, at the hearing of this matter, submitted, in effect, that the plea was to be understood on the basis that Lawfirst's conduct in not advising him to settle resulted in judgment being entered against him and harming his credit, standing and reputation.[64] So understood, it would appear that Mr Lee's real complaint is that the master, having left intact Mr Lee's claims to recover the costs paid to the defendant and his solicitors in consequence of the alleged failure to advise him to settle on the basis that he had no real prospects of success, wrongly struck out Mr Lee's additional claim for the harm to his credit and reputation as a result of judgment being publicly entered against him. In this regard, it might be inferred that it is the public entry of judgment against him which Mr Lee contends resulted in this particular form of harm. That is because, on Mr Lee's case, had he been given the correct advice and accepted the offer by the defendant in the defamation proceedings, he still would have had judgment entered against him in the form of the formal dismissal of his action, but that it would have occurred without the publicity of a trial and the publication of reasons for judgment.
[64] Hearing 24 March 2023, ts 10.
The claim on the basis of the first plea referred to in [49] above may be shortly disposed of. Insofar as the claim for loss of credit and reputation is said to derive from the first of those pleas, the master's decision is not attended by any real doubt. Any negligent failure to object during the course of the trial is the subject of advocates' immunity.[65]
[65] D'Orta‑Ekenaike v Victoria Legal Aid [2005] HCA 12; (2005) 223 CLR 1.
The second plea, relating to both his common law claims, requires further consideration as to the nature of the injury to 'credit and reputation' claimed by Mr Lee.
Damages for injury to 'credit and reputation' were allowed in Wilson v United Counties Bank Ltd.[66] In that case, the bank of a trading customer agreed to supervise the financial side of his business whilst he was absent on military service, and to take all reasonable steps to maintain his credit and reputation. The bank breached the contract and, by its negligence, caused the bankruptcy of the customer. The customer and his trustee in bankruptcy brought an action against the bank. The court at first instance awarded £45,000 for loss occasioned to the trader's business, which was recoverable by the trustee in bankruptcy, and £7,500 for injury caused to the bankrupt's credit and reputation recoverable by the customer. The Court of Appeal overturned the first instance decision and ordered a new trial. An appeal to the House of Lords was allowed. The issues included whether injury to credit and reputation was a proper head of damage and, if so, whether the damages of £7,500 were recoverable by the customer personally.
[66] Wilson v United Counties Bank Ltd [1920] AC 102.
As to the former issue, it was held that it was a proper head of damage as the bank expressly undertook, for consideration, to sustain the credit of the customer. It was analogous to cases where a bank wrongly dishonours a cheque when a trader is in funds, where the inference is drawn that the breach is injurious to the credit of the trader without allegation or proof of special damage.[67] Lord Birkenhead expressly stated, however, that he did not lay down a rule of general law - he instead dealt with the 'exceptional language of an exceptional contract'.[68] As to the latter issue, it was held that the right of action was personal to the bankrupt and did not pass to the trustee in bankruptcy. Lord Birkenhead said, in effect, that this was because the damages were to be estimated by reference to the 'mind, or character' of the bankrupt and 'without immediate reference to his rights of property'.[69] Lord Atkinson's judgment was to similar effect.[70]
[67] Wilson (112), (120), (133 ‑ 134), (140).
[68] Wilson (112).
[69] Wilson (111); see also (120).
[70] Wilson (128 ‑ 132).
These observations in Wilson were cited by Dixon J in Cox (No 2) in the passage referred to in [29] above.[71]
[71] Cox (No 2) (721); Wilson (111), (128 - 133).
A claim for financial loss of this kind was awarded in Duvall v Godfrey Virtue & Co (a firm).[72] In that case, the client sued his solicitors for negligence and breach of the implied term to use reasonable care where the breach resulted in his home becoming the subject of a writ of fi fa. He successfully obtained damages for the financial loss he suffered 'as a result of injury to his credit worthiness and his reputation and personal credibility'.[73]
[72] Duvall v Godfrey Virtue & Co (a firm) [2001] WASCA 105.
[73] Duvall [13] - [16].
In Groom v Crocker,[74] Lord Greene, having referred to Wilson in relation to trading credit and reputation, observed that a breach of duty by a professional person, such as a solicitor, may lead to the client suffering 'mental suffering and social discredit', but said that damages for such injury are not available for breach of contract.[75] Since then, the law has developed to allow damages for injured feelings for breaches of at least certain types of contract, including for disappointment and distress caused by a breach of contract the object of which is to provide pleasure or relaxation.[76] The development of the law is discussed by Edelman J extra-judicially in McGregor on Damages.[77]
[74] Groom v Crocker [1939] 1 KB 194.
[75] Groom (204 - 206).
[76] Baltic Shipping Co v Dillon [1993] HCA 4; (1993) 176 CLR 344; Moore v Scenic Tours Pty Ltd [2020] HCA 17; (2020) 286 CLR 326 [43].
[77] Edelman J, McGregor on Damages (21st ed) [5‑023] ‑ [5‑036].
In the present matter, Mr Lee contended, in effect, that his claim for injury to his credit and reputation was not for specific financial loss, but rather was for non‑financial loss in respect of his personal credit and reputation.[78] Thus, in substance, the claim was one for a non‑pecuniary loss. Mr Lee relied on two cases: Cook v Swinfen[79] and Ruxley Electronics and Constructions Ltd v Forsyth.[80]
[78] Hearing 24 March 2023, ts 9 - 11.
[79] Cook v Swinfen [1967] 1 WLR 457.
[80] Ruxley Electronics and Constructions Ltd v Forsyth [1996] AC 344.
Cook was a case in which a wife consulted a solicitor who was negligent in attending to her divorce proceedings. Through his negligence, the divorce suit proceeded undefended and orders were made effectively on the basis that she had deserted the marriage. The solicitor's negligence included failing to take steps open to him which may have resulted in a more favourable outcome of the divorce suit for the wife, ie, on some basis other than her desertion. The trial judge, in the wife's action against her former solicitor, awarded damages of £200 for the loss of chance of a 'more favourable outcome' in the divorce suit. The Court of Appeal upheld that finding. Lord Denning said:[81]
The second item is the unfavourable outcome of the divorce suit. She lost when she might have won. What damages should be obtainable? That depends on what were the prospects of a successful outcome. The judge said that even if the case had been fought, the probabilities were that the husband would still have got a divorce on the ground of desertion. That may be true. But there was quite a chance that both might have got decrees; the husband on the ground of the wife's desertion; the wife on the ground of the husband's adultery. There was an outside possibility of the wife herself getting a decree. She is entitled to general damages for the loss of the chance of a more favourable outcome. For the simple reason that it does affect a person's standing to be found the guilty party [in divorce] instead of the innocent party. The judge assessed the damages on this loss at £200. That was essentially a matter for him. I do not think we should interfere with the figure of £200. (emphasis added)
[81] Cook (460).
In Ruxley, a contractor was engaged by a homeowner to construct a swimming pool in his garden to a specified diving depth. It was short by about 18 inches. The contractor failed to build it to the specified depth. The building owner sued for damages for the reinstatement of the pool to the correct depth and also for loss of amenity. The House of Lords held that the owner could not recover for the cost of reinstatement, which was out of all proportion to the benefit to be obtained. Relevantly for present purposes, the trial judge awarded £2,500 under the head of damage of loss of amenity. This was not disturbed on appeal to the House of Lords. In Ruxley, Lord Lloyd of Berwick (with whom the other law lords agreed) said:[82]
Addis v Gramophone Co Ltd [[1909] AC 488]] established the general rule that in claims for breach of contract, the plaintiff cannot recover damages for his injured feelings. But the rule, like most rules, is subject to exceptions. One of the well established exceptions is when the object of the contract is to afford pleasure, as, for example, where the plaintiff has booked a holiday with a tour operator. If the tour operator is in breach of contract by failing to provide what the contract called for, the plaintiff may recover damages for his disappointment: see Jarvis v Swans Tours Ltd [1973] QB 233 and Jackson v Horizon Holidays Ltd [1975] 1 WLR 1468.
This was, as I understand it, the principle which Judge Diamond applied in the present case. He took the view that the contract was one 'for the provision of a pleasurable amenity.' In the event, Mr Forsyth's pleasure was not so great as it would have been if the swimming pool had been 7 feet 6 inches deep. This was a view which the judge was entitled to take. If it involves a further inroad on the rule in Addis …, then so be it. But I prefer to regard it as a logical application or adaptation of the existing exception to a new situation.
[82] Ruxley (374).
Insofar as Mr Lee, by this appeal, seeks to contend that his claim for non‑financial loss in respect of harm to his credit and reputation is reasonably arguable for pleading purposes,[83] the appeal in that respect would come within s 60(4) of the Bankruptcy Act. If such a claim were reasonably arguable, the damages would, in our view, be estimated 'by immediate reference to pain felt by the bankrupt in respect of his mind … or character and without reference to his rights of property'.[84]
[83] General Steel Industries Inc v Commissioner for Railways (NSW) [1964] HCA 69; (1964) 112 CLR 125, 129; Dey v Victorian Railways Commissioners [1949] HCA 1; (1949) 78 CLR 62, 91 ‑ 92; Hospitals Contribution Fund of Australia v Hunt (1982) 44 ALR 365, 373 ‑ 374.
[84] Cox (No 2) (721); Wilson (111), (128 - 133).
As to whether the master's decision to strike out this aspect of the claim is attended with sufficient doubt to justify the grant of leave (ie, whether such a claim ought to have been held as being reasonably arguable), the point received scant attention at the hearing of this matter on 24 March 2023 and neither party engaged in any meaningful way with the issue. Nor was the point addressed in any meaningful way in the master's reasons for decision. The authorities are such that, in our view, the court would benefit from hearing fuller argument on the point before coming to a conclusion either way. Among other things there needs to be fuller consideration of the authorities as to recovery of damages for mental distress and social discredit and the application of those authorities to a contract for the provision of legal services of the kind created by Lawfirst's retainer to act for Mr Lee in the defamation proceedings. For this reason, we are of the view that the question of leave to appeal in respect of this aspect of the appeal should be referred to the hearing of the appeal.
The overall result is that, in relation to grounds 1 ‑ 4 of the appeal, other than in respect of the claim for non‑financial loss for harm to Mr Lee's credit and reputation, leave to appeal should be refused.
Ground 5 seeks to overturn the costs order made by the master and is consequential upon the success of the appeal otherwise.
Conclusion
For the foregoing reasons, the orders should be:
1.Leave to appeal in relation to grounds 1 ‑ 4 is refused, other than:
(a)in relation to ground 3.1(a) insofar as ground 3.1(a) alleges that the master wrongly struck out par 89.11 of the amended statement of claim; and
(b)in relation to ground 3.1(b)(iii) with respect to the striking out of the head of damage for 'personal injury to credit and reputation' in the particulars to par 93 of the amended statement of claim.
2.The question of leave to appeal in relation to the matters referred to in subpars (a) and (b) of order 1, and ground 5, is referred to the hearing of the appeal.
The parties should be heard on the question of costs. The parties should also be heard on whether the parties should be given leave to file supplementary submissions in the appeal to more fully address the matters identified in [62] above.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
IB
Research Associate to the Honourable Justice Murphy and the Honourable Justice Mazza
18 APRIL 2023
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