Leonard Cohen and Co (A Firm) v Richardson - [2004] WADC 188

JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CHAMBERS

LOCATION: PERTH

CITATION: LEONARD COHEN & CO (A FIRM) -v- RICHARDSON & ANOR [2004] WADC 188

CORAM: CHANEY DCJ

HEARD: 2 SEPTEMBER 2004

DELIVERED : 17 SEPTEMBER 2004

FILE NO/S: CIV 2520 of 2003

BETWEEN: LEONARD COHEN & CO (A FIRM)
Plaintiff
AND
PHILLIP RICHARDSON
BILL PALIGOROV
Defendants

Catchwords:

Summary judgment - Application of default by counterclaim - Jurisdiction of District Court - Counterclaim exceeds jurisdiction - No set off pleaded - Claim for damage for negligent advice - Lack of particulars to support allegation - Detailed response to allegation - Whether issue to be tried

Legislation:

Trade Practices Act 1976 (Cth) s 52, s 82, s 87

District Court of Western Australia Act 1969 s 50(1)(a), s 51, s 58(1)

Result:

Counterclaim dismissed

Representation:

Counsel:

Plaintiff: Mr A O Karstaedt
Defendants: Mr M S Crawford

Solicitors:

Plaintiff: Paiker & Overmeire
Defendants: Dennis & Co

Case(s) referred to in judgment(s):

Elna Australia Pty Ltd v International Computers (Australia) Pty Ltd (2) (1987) 16 FCR 410
Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87
Frith v Goldcoast Mineral Springs Pty Ltd (1983) 65 FLR 213
Gates v City Mutual Life Assurance Society Ltd (1986) 160 CLR 1
Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (1989) 89 ALR 539
Kizbeau Pty Ltd v W G & B Pty Ltd (1995) 184 CLR 281
Lockyer Investment Co Pty Ltd v Smallacombe (1994) 50 FCR 358
Marks v G I O Australia Holdings Ltd (1996) 63 FCR 304
Murcia & Associates (a firm) v Grey (2001) 25 WAR 209
Sharp and Others v Ramage and Another (1994) 12 WAR 325
Wardley Australia Ltd v State of Western Australia (Rothwells Loan Case) (1992) 175 CLR 514 at 534

Case(s) also cited:

Nil

CHANEY DCJ: In this action, the plaintiff sues for payment of the sum of $87,899.75, being counsel fees incurred by the plaintiff, a firm of solicitors, in respect to litigation in which the defendants were parties, and in respect of which the plaintiff acted for the defendants. The defendants have filed a defence which disputes the terms of the plaintiff's retainer pleaded by the plaintiff, asserts that the retainer is unenforceable as being illegal or contrary to public policy, denies the plaintiff's authority to brief counsel or incur fees of counsel, denies the counsel's fees were incurred, or the that the work allegedly represented by the fees was in fact undertaken by counsel, pleads part of the subject matter of this action is dealt with in another action and denies certain other allegations in the statement of claim.
By a separate document, the defendant filed a counterclaim. The counterclaim seeks damages for negligent advice in the amount $8,355,000 together with interest. There is no plea in the defence of a set off of the amount claimed in the counterclaim.
The plaintiff filed a chamber summons on 8 June 2004, and filed an amendment to that summons on 17 June 2004. The orders sought in the summons are:
1.The time for bridging this application be extended.
2.Summary judgment be entered against the defendant on the defendant's counterclaim.
3.In the alternative to 2, the defendants' counterclaim be struck out in its entirety on the ground that it is frivolous or vexatious under O 20 r 19(1)(b), or as an abuse of process of the court under O 20 r 19(d) of the Supreme Court Rules.
4.The defendants' counterclaim be dismissed.
5.Such further alternative relief as the court deems fit.
6.The defendants' pay the plaintiff's costs of this application on an indemnity basis.
These reasons deal with that application.

Jurisdiction

As observed above, the counterclaim seeks damages in the sum of $8,355,000. The damages claimed are for economic loss arising from an alleged breach of duty to advise. The counterclaim obviously exceeds the jurisdiction of this Court to hear and determine matters of this nature, which is limited to claims where the amount, value or damages sought to be recovered is not more than $250,000.
In their written submissions, neither party raised the issue of jurisdiction. When I raised the question at the hearing, neither party indicated a clear position on the matter. The fact that neither party raised jurisdiction as an issue does not dispense with the duty of a judge to satisfy him or herself that jurisdiction exists: (Murcia & Associates (a firm) v Grey (2001) 25 WAR 209 at 213).
Section 58(1) of the District Court of Western Australia Act 1969 provides:
"Where in an action before the Court any defence or counterclaim of the defendant involves matters beyond the jurisdiction of the Court, that defence or counterclaim does not affect the competence of the Court to dispose of the whole matter in controversy, so far as it relates to the demand of the plaintiff and the defence thereto, but no relief exceeding that which the Court has jurisdiction to administer shall, subject to section 51, be given to the defendant upon that counter claim."
Section 51 of the Act is not relevant for present purposes.
At mentioned above, the defence does not plead any set‑off of any amount found to be due on the counterclaim. The defence pleads separate and unrelated matters of defence from the matters pleaded in the counterclaim. In the absence of any plea of set‑off, the counterclaim does not "relate to the demand of the plaintiff and the defence thereto". It follows that the saving provision of s 58 does not, in this case, operate to enable the court to deal with this counterclaim.
Section 50(1)(a) confers jurisdiction on the District Court in all personal actions, other than personal injuries actions, where the amount, value or damages sought to be recovered is not more than $250,000. This is not such a claim. It follows that this Court does not have jurisdiction to hear and determine this counterclaim, and the counterclaim is liable to be struck out on that basis.
The question then arises as to whether I have the jurisdiction to entertain an application by the plaintiff, who is the defendant in the counterclaim, under O 16, or O 20 r 19 of the Supreme Court Rules. Given my conclusion that the controversy the subject of the counterclaim is outside the jurisdiction of the court, it seems to me that the appropriate course is for the counterclaim to be dismissed for want of jurisdiction on the part of the court, and the objections taken by the plaintiff do not then fall for consideration. However, given that the application was argued as a summary judgment, or alternatively a strike‑out application, it is appropriate that I make some observations as to the conclusions I would have reached on those arguments.

The counterclaim

The defendants plead that, "on (sic) or about September 1995" a Mr Kurland on behalf of the defendants engaged the plaintiff to represent the defendants in relation to an assessment of damages in the Supreme Court. The counterclaim pleads in par 2 that:
"The Defendants repeatedly instructed the Plaintiff to claim compensation on their behalf in terms of the Trade Practices Act 1974 for the loss of the Actus Franchise Operations against Actus Australia Pty Ltd and Others."
The instructions are particularised as being given on numerous occasions between 20 September 1995 and 2 September 1998 and it is said that the defendants: "repeatedly referred the Plaintiff to numerous legal precedents setting out the basis for and manner of doing so."
It is apparent from the affidavits filed in relation to the application that the assessment of damages arose from a decision of Justice Seaman in the Supreme Court delivered on 30 November 1994 which dealt with a hearing on the question of liability and found in favour of the defendants (who were named as second and third plaintiffs), and the first plaintiff in that action, a company Camila Pty Ltd, which was controlled by the second and third plaintiffs. Damages were then to be assessed.
The counterclaim then pleads in par 3 that:
"The Plaintiff obtained the advice of Counsel which the Plaintiff knew or should have known was inadequate, wrong and incorrect. The Plaintiff acting on the incorrect advice of Counsel failed and/or refused to use the correct and proper basis for the Assessment of Compensation."
There then follows what are said to be particulars of that allegation, although it is a little difficult to construe the particulars as being particulars of the material facts pleaded in par 3. In any event, the particulars read:
"The Plaintiff informed the Defendants that Barrister Brian Laurie (whom the Plaintiff had retained without the concurrence or agreement of the Defendants) had advised that there was no legal precedent or basis for assessing the compensation referred to in paragraph 2 above. Laurie advised the Plaintiff further that only 'Reliance Damages' could be obtained under the TPA and that the test for compensation under the TPA was Tortious only."
It is then pleaded in par 4 that:
"The Plaintiff advised the Defendants that no Assessment of Compensation arising out of the loss of the Actus Franchise Operations could be made in law particularly under the TPA."
The particulars of par 3 are then repeated as particulars of par 4.
Paragraph 5 of the counterclaim then pleads that "the plaintiff's advice was wrong, deficient, misleading and incorrect in law. The plaintiff omitted to base the assessment of compensation on the correct bases of law". There are particulars provided to that paragraph, namely that "the plaintiff failed to take into account that there were a number of Reported Cases and Legal Precedents upon which a proper assessment of compensation for the loss of the Actus Franchise operations could be based."
The counterclaim then pleads:
"6.The Plaintiff owed the Defendants a duty of care.
PARTICULARS
The Plaintiff:
6.1Would advise the Defendants appropriately considering all material aspects of the Assessment of Compensation; and
6.2Would advise the Defendants in regard to the creation, perfection and drafting of the Assessment for Compensation with due professional care and skill of an ordinary skilled solicitor who exercised and professed special expertise in the field of litigation and in the Assessment of Compensation under the TPA;
6.3Would conduct the Assessment of Compensation with the necessary professional are and skill of an ordinary skilled solicitor who exercised and professed special expertise in the field of litigation and in the Assessment of Compensation under the TPA;
6.4Would found the Assessment of Compensation on all the proper and correct bases of law.
7.In the circumstances set out in Paragraphs 1‑5 above or any of them the Plaintiff breached its duty of care to the Defendants by failing to give effect to the matters referred to in the particulars in paragraph 6 above by allowing a defective Claim for Compensation to proceed and by conducting the Assessment of Compensation incorrectly."
The counterclaim then pleads a cause of action in contract which sets up implied terms of the retainer with the plaintiff which are identical to the duty of care pleaded in par 6, pleads a breach of that contract in the same terms as the breach of duty of care pleaded in par 7 and then claims damages. The same damages are pleaded in relation to each of the tortious and contractual causes of action. It is pleaded that "the loss and damage amounted to the value of the loss of the Actus Franchise operation". That loss is said to be $8,355,000. The particulars of that loss are given in the following terms:
"(a)Schroders Merchant Bank compiled a report which stated that the Actus operations would have made a net operating profit before tax of $1,671,000 per annum.
(b)The amount of $8,355,000 was arrived at by multiplying $1,671,000 by a factor of 5 based on an expected 10% return."
It can thus be seen that the essential contention in the counterclaim is that the plaintiff "allowed a defective claim for compensation to proceed and conducted the assessment of compensation incorrectly."

The plaintiff's evidence

In support of the application for summary judgment, the plaintiff filed an affidavit of Melvyn Levitan, the solicitor who had the conduct of the defendants' matter. In that affidavit, he confirms that the plaintiff was initially instructed in September 1995 to act for the defendants in the Supreme Court proceedings. The affidavit annexes the reasons for decision of Seaman J delivered on 30 November 1994 on the question of liability. Obviously, the defendants had been represented by different solicitors at the hearing in relation to liability.
The affidavit then annexes reasons for decision of Acting Master Chapman in the Supreme Court dated 23 May 1996. Those reasons deal with an application by the defendants in this action, to amend the statement of claim in the Supreme Court action in relation to the claim for damages. It is clear from those reasons that the pleadings as they then stood contained no claim for damages by Mr Richardson and Mr Paligorov. The claim for damages was made, in the Supreme Court proceedings, by the company Camila Pty Ltd and consisted of a claim for expenses incurred in establishing a furniture franchise business in Australia, and a loss of profit which would have been derived by it by reason of the alleged wrongdoing and breaches of contract. The amendment sought before the Acting Master was to include a claim for damages by Camila Pty Ltd for "a loss of commercial opportunities which would have been derived by it by reason of the alleged wrongdoing and breaches of contract", and adding a claim for damages by the second and third named plaintiffs (the defendants' in this action) on the basis that they had "incurred a loss of profit, loss of assets, a loss of investments, a loss of income and a loss of commercial opportunities which would have been derived by them by reason of the alleged wrongdoing and breaches of contract".
The application to amend was opposed on a number of grounds. The learned Acting Master rejected most of the objections to the amendment. He did however, conclude that in relation to the proposed amended claims, they should be properly particularised. He thus declined leave to amend the pleading in terms of the minute that had been proposed, but gave the plaintiff's (in the Supreme Court proceedings), the opportunity to produce a further minute with proper particulars for further consideration.
That leave gave rise to a further minute of proposed amended statement of claim. Paragraph 29 of that minute read as follows:
"29.By reason of the foregoing the Plaintiffs have suffered loss and damage.
PARTICULARS
(a)1. The first named Plaintiff has incurred substantial expenses and liabilities therefor for the sole purpose of establishing a furniture franchise business in Australia which business has wholly failed. As a result of entering into the first agreement and the second agreement, the first named plaintiff has incurred total liabilities of $5,206,523.15, as itemised in Schedule A annexed hereto.
2.Further or alternatively, had representations (i) – (vi) and (viii) – (xii) pleaded in paragraph 11 been true, the first named Plaintiff would have had a turnover of $31,900,00,00, would have incurred expenses of $30,229,000.00 and would have achieved a pre‑net tax profit for the 1990 financial year of $1,671,000.00. Accordingly the value of the first named Plaintiff at the end of the 1990 financial year based on a pre‑tax return of 20% (that is a price earnings ratio of 5) equals $1,671,000.00 x 5 = $8,355,000.00. As those representations were not true, the first named Plaintiff failed financially and has a nil value. Therefore the damage suffered by the first named Plaintiff through the lost commercial opportunity is $8,355,000.00.
(b)As a result of incurring expenses in establishing a furniture franchise business and as a result of entering into the second agreement, the second named and third named Plaintiffs have suffered a loss of assets, have incurred liabilities and have suffered a loss of commercial opportunities."
There then follows a long list of different heads of damage said to have been suffered by the second and third plaintiffs (the defendants in this action), which together total damages of $10,168,044.80.
What can be seen from par 29, is that the loss or damage claimed by the defendants in the counterclaim in this action is the amount which was sought to be introduced in the claim for damages in the Supreme Court action as damage suffered by Camila Pty Ltd.
Mr Levitan's affidavit also annexes a copy of the outline of submissions filed in support of the application to amend the statement of claim to include the claims set out above. Those submissions argue, by reference to a number of cases, the proposition that whilst the normal measure of damages for a contravention of s 52 of the Trade Practices Act is the measure provided by tort, no justification exists for confining damages recoverable pursuant to s 82 and s 87 of the TPA by reference to common law tests. The submissions argue that the High Court had recognised, in Gates v City Mutual Life Assurance Society Ltd (1986) 160 CLR 1 that "the courts are not bound to make a definitive choice between the two measures of damages (contractual and tortious) so that one applies to all contraventions of the TPA to the exclusion of the other".
A file note produced by Mr Levitan records that he spoke to Mr Kurland on 14 August 1996 and that Mr Kurland acknowledged that he had received Mr Lauri's submission and "is happy with them".
Acting Master Chapman delivered his reasons for decision on the further application to amend in October 1996. His reasons disclose that the defendants accepted that the plea of loss in par 29(a)(1) pleads a loss potentially recoverable under a breach of s 52 of the Trade Practices Act, but argued that the loss claimed in par 29(a)(2) is a claim based on contractual loss and is not properly recoverable. The learned Acting Master cited the passage from Gates v City Mutual Life Assurance Society Ltd to which Mr Lauri's submission had drawn his attention concerning the applicable measure of damages. He concluded that those passages made it clear that damages applicable in contract may be open in particular cases but there would need to be circumstances of an exceptional nature before the tortious measure of damages would be inappropriate.
The learned Acting Master referred to Sharp and Others v Ramageand Another(1994) 12 WAR 325 at 332‑333 where Ipp J cited Wardley Australia Ltd v State of Western Australia (Rothwells Loan Case) (1992) 175 CLR 514 at 534, and also referred to Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (1989) 89 ALR 539 at 554‑555 where Lee J gave examples of cases where the tortious measure of damages would be inappropriate for a case involving misleading conduct.
The learned Master said:
"The plaintiff's position is that there is no hard and fast rule or that there is no definitive rule in terms of the appropriate measure of damages for breaches of s 52 of the Trade Practices Act or the equivalent State legislation. However, the plaintiffs accept that where the contravention consists of misleading and deceptive conduct the usual measure of damages will be the tortious measure but the plaintiffs do not accept that in a case of misleading and deceptive conduct the tortious measure should always be applied."
He referred to the submission of counsel that where representations are of a promissory nature, it is appropriate that the contractual measure of damages be applied. The learned Master accepted that "one cannot apply a hard and fast rule that damages in relation to a contravention of s 52 will always be tortious." However, he concluded that he was not persuaded that special circumstances exist in the matter before him, and on that basis he disallowed the amendment to include par 29(a)(2). He rejected other arguments against the inclusion of par 29(a)(2) of the pleading which had been mounted by the defendant in the Supreme Court action, and ruled that he would not have disallowed the amendment on the basis of those objections. It is clear therefore, that the sole basis upon the learned Master rejected the insertion of par 29(a)(2) was that he concluded that there were not special circumstances such as to permit a claim of that nature to be made in the particular case before him, notwithstanding that he accepted that, as a matter of law, the contractual measure of damages may sometimes be open in relation to a claim for damages under the Trade Practices Act.

Mr Levitan then deposes to the fact that the plaintiff ceased acting for the defendants in the Supreme Court proceedings prior to the completion of the proceedings, and was not acting for the defendants at the time that the issue of damages was finalised. At the hearing of this application I was provided with a copy of a transcript of a hearing in relation to the claim for damages before Murray J in the Supreme Court on 13 March 2000. At that hearing, senior counsel instructed by Mr Richardson and Mr Paligorov sought to adjourn the assessment of damages because of the liquidation of one of the defendants in the action, and in order to inspect a quantity of documents that had been, or were intended to be, produced on subpoena. The only mention of the damages claim in that transcript is a passage where senior counsel for Mr Richardson and Mr Paligorov says "the starting point for your Honour will be: where would the plaintiffs now have been had they not entered into this agreement with Actus Corporation and with the Singaporean companies. If that is the case, the starting point is: well, what was the worth to the plaintiffs of a company or the companies, that is, the four furniture stores, and what would have persisted from there in terms of profit since that time available for distribution to the plaintiffs?". It is apparent that, at that point, the claim for damages was being put on the basis of the tortious measure. The hearing was adjourned to enable inspection of documents to proceed and liaison with the liquidators with one of the defendants, and was initially adjourned to re‑commence the hearing two days later.

The defendant's affidavit

Mr Paligorov made an affidavit in answer to the application for summary judgment. It is replete with submissions, conclusions and lengthy quotations from sections of the Trade Practices Act and decided cases. Very little of the affidavit is in admissible form. It repeats the pleading in the counterclaim in relation to the duty of care, the contractual duty, and the alleged breaches and consequent loss, much of which amounts to conclusions of law. There is little in the affidavit of any value.
One matter of fact contained in par 29 of the affidavit is an assertion that when the matter came before Murray J, His Honour granted leave to amend the statement of claim "for the inclusion of s 82 and s 87 of the TPA and for the necessary material causal facts to be pleaded to establish the relationship between contravention and loss which the plaintiff had failed to do". It is then said that the matter was adjourned to enable the necessary amendments to be made, but by that time both the first defendant and Mr Paligorov had exhausted their resources and were compelled to discontinue proceedings by agreement with the other side. Nothing is disclosed as to the terms of the settlement. What is said in the affidavit is not consistent with what emerges from the transcript of the hearing before Murray J on 13 March 2000, but it may be that Mr Paligorov is referring to some further hearing of the matter. Counsel for the defendants relied upon the proposition that Murray J subsequently allowed an amendment to the statement of claim as suggesting that the complaints as to the plaintiff's failure to pursue a claim based on a contractual measure of damages is demonstrated. The unparticularised assertion in par 29 is insufficient to support that contention.
Mr Paligorov, in his affidavit, endeavours to give some substance to the plea that the plaintiff failed to take into account a number of reported cases and legal precedents. He said that "the plaintiff did not pay heed to, take notice of, or refer to the following highly relevant authorities when arguing the application to amend the statement of claim on 14 August and 16 September 1996 before the Acting Master". The authorities referred to are :
(a)Wardley Australia Ltd v Western Australia (1992) 175 CLR 514;
(b)Kizbeau Pty Ltd v W G & B Pty Ltd (1995) 184 CLR 281;
(c)Marks v G I O Australia Holdings Ltd (1996) 63 FCR 304.
It is true that none of those authorities was included on the list of authorities submitted to the learned Acting Master on the application to amend the statement of claim. As observed above, the learned Master made reference to Sharp v Ramage and the passage from the judgment of Ipp J in that case where Wardley is referred to. Wardley was, of course, a case dealing with a limitation point, not with a question as to the measure of damages applicable for contraventions of s 52 of the Trade Practices Act. Apart from the observations of Brennan J (at p 534) noting the observations in Gates that the normal measure of damages under s 82 is damages in tort rather than damages in contract, and the observation by Toohey J (at p 554) that "nothing said in Gates can be taken as an exhaustive statement of the measure of damages in an action under Part V of the" Trade Practices Act, Wardley does not appear to add anything to the judicial pronouncements as to the measure of damages in respect to breaches of Part V of the Trade Practices Act.
In Kizbeau, in a joint judgment of five members of the High Court, it was said that (at p 290):
"Actions based on s 52 are analogous to actions for torts. It follows that, in assessing damages under s 82 of the Act, the rules for assessing damages in tort, and not the rules for assessing damages in contract, are the appropriate guide in most, if not all, cases."
A number of authorities for that proposition are cited by the court, including Gates.
In the Federal Court decision at first instance in Mark v G I O Australia Holdings Ltd, which is the decision described by Mr Paligorov as "quite highly relevant" Einfeld J discussed Gates at p 331, His Honour referred to a submission that the court was not bound to award damages on a tortious basis, and cited Frith v Goldcoast Mineral Springs Pty Ltd (1983) 65 FLR 213 at 232‑233; Lockyer Investment Co Pty Ltd v Smallacombe (1994) 50 FCR 358; Elna Australia Pty Ltd v International Computers (Australia) Pty Ltd (2) (1987) 16 FCR 410. Both Frith and Elna Australia Pty Ltd were cases contained on the plaintiff's lists of authorities submitted to the Acting Master on the application for leave to appeal. His Honour also referred to a submission that the particular facts of the case in Marks were reason enough to depart from the general rule in Gates. He did not entirely accept those arguments, but concluded that the facts of the case before him differed from Gates "as it not the mere non‑attainment of a represented benefit" (at p 332). It is apparent that Marks v G I O Australia Holdings, in the decision at first instance, embodied no new point of principle. The approach taken by Einfield J was no different from the approach which the learned Acting Master concluded was possible as a matter of law, but which the learned Acting Master did not consider appropriate in the facts of the case before him.
In my opinion, there is no substance in the complaint, assuming it to be incorporated in the pleading in the counterclaim, that the failure to refer to the particular authorities set out in Mr Paligorov's affidavit is capable of supporting a finding of negligence on the part of the plaintiff in relation to the manner in which the application to amend was pursued.
Mr Paligorov also makes a complaint in his affidavit that the statement of claim was not drafted properly "so as to include claims under s 82 and s 87 of the Trade Practices Act, nor to provide or plead the necessary material facts to establish the causal relationship between the contraventions and (the) loss." That submission contained in the affidavit was repeated in the defendants' outline of submission. I do not understand it. The statement of claim claimed damages for a breach of s 52 of the Trade Practices Act. Section 82 is the section which creates the entitlement to damages. The fact that it was not specifically mentioned in the pleading does not derogate from the fact that the claim under s 82 was the very substance of the statement of claim. Declarations pursuant to s 87 were expressly claimed in the prayer for relief. An absence of material facts establishing a causal relationship played no part in the rejection of the pleading, so far as it concerned par 29(A)(2), which is the claim that the defendants now complain they were deprived of.
The allegation of negligence and breach of contractual duty in the counterclaim are based upon a complaint that the plaintiff "allowed a defective claim for compensation to proceed and conducted the assessment of compensation incorrectly".
The statement of claim in this action pleads that the defendants withdrew instructions from the plaintiff in February 1998. The defendants' defence denies that they withdrew instructions to the plaintiff, but pleads that the plaintiff informed the defendants it no longer wished to act for them. Paragraph 2 of the counterclaim pleads that instructions were given up till September 1998. It is clear from the pleadings that, for whatever reason, the plaintiff no longer acted for the defendant after September 1998 or possibly February 1998. As observed above, the matter continued at least until March 2000 when the assessment of damages came before Murray J. The conduct of the claim was presumably handled, at least for some of that two year period, by other solicitors and counsel. The reference to "conducting the assessment of compensation incorrectly", included in par 7 of the counterclaim, is vague. It cannot relate to the actual hearing of the assessment of damages, and the affidavit filed by the defendant does not identify precisely what is meant by the allegation. Similarly, the allegation that the plaintiff "allowed a defective claim for compensation to proceed" lacks clarity.
At the hearing, counsel for the defendants asserted that there are three things which the plaintiff should have done to avoid the breach of duty. They were:
(i)It should have ensured that reference was made to the three authorities mentioned when arguing the amendment applications before Acting Master Chapman,
(ii)It should have adequately pleaded material facts to establish a causal connection between the contravention and the loss, and
(iii)It should have advised as to the prospects of an appeal against Acting Master Chapman's decision.
I have dealt with the first of the contentions above, and concluded it is without substance. As to the second, the inability to pursue the claim for $8,355,000 did not fail by reason of any failure to plead material facts. It failed on a finding as to the applicable measure of damages.
There is nothing in the counterclaim as pleaded which complains of a failure to advise as to the prospects of an appeal. Indeed the counterclaim is completely silent as to any facts relating to the plaintiff's unsuccessful attempts to do precisely what the defendants say it did not do.
It is by no means apparent that the Acting Master's reasons were wrong. Even if they were, arguably, wrong and no appeal was instituted by reason of a negligent failure to advise (the foundation for which is not established in the defendants' evidence or submissions) the damages which would flow would be measured as a loss of a chance to pursue a particular basis for the damages claim, and the loss of the chance that that basis might ultimately be established on the evidence and upheld by the court. But the mere fact that the defendants had a report from a merchant bank containing an opinion as to the prospects for the profit of the business, and a calculation of the value of that prospect by reference to a particular rate of return, does not lead to the proposition that the resulting figure would represent the damages which the court would award.
Putting that to one side, however, the evidence adduced in relation to the summary judgment application demonstrates that the plaintiffs did endeavour to do precisely what the defendants complain they did not do. The defendants' evidence consists of nothing more than generalised complaints with inadequate particularity.
There was no issue at the hearing as to the principles to be applied to an application for summary judgment. It can be accepted that summary judgment should not be granted unless it is clear that there is no real question to be tried, and the power to order summary judgment should be exercised with great care. – Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87 at 89.
In my view, no real question for trial is identified by the counterclaim, and the affidavit of the defendants filed in answer to the summary judgment application. The detailed evidence of the plaintiff as to its attempts to do the very thing which the defendants complains it did not do, has not been met with any cogent response. The defendants' affidavit simply makes broad assertions and expresses conclusions without condescending to material facts.
In the circumstances, if I had jurisdiction to deal with the counterclaim, I would have granted judgment to the plaintiff on the counterclaim, and dismissed the counterclaim. It is not necessary to consider whether the counterclaim would also be liable to be struck out as frivolous or vexatious or an abuse of the process.

Conclusion

It follows that in my view the counterclaim should be struck out for want of jurisdiction of this Court to deal with it. Had there been jurisdiction, I would have granted summary judgment to the plaintiff on the counterclaim.