Loretta Craig v Anthony Johnson

[2020] NSWSC 430

Supreme Court

New South Wales

Medium Neutral Citation:	Loretta Craig & Ors v Anthony Johnson & Ors [2020] NSWSC 430
Hearing dates:	24 May 2018 & 03 April 2020
Date of orders:	22 April 2020
Decision date:	22 April 2020
Jurisdiction:	Common Law
Before:	Lonergan J
Decision:	(1) The Amended Notice of Motion filed on 24 May 2018 is dismissed. (2) The plaintiffs to pay the defendants’ costs of the Amended Notice of Motion.
Catchwords:	CIVIL PROCEDURE — professional negligence —separate determination of questions — application for an order for the assessment of the quantum of loss to be undertaken separately to all other issues in proceedings — application dismissed — risk of contrary findings where issues already determined are the subject of consideration at future proceedings
Legislation Cited:	Civil Liability Act 2002 (NSW) Civil Procedure Act 2005 (NSW) Uniform Civil Procedure Rules 2005 (NSW)
Cases Cited:	Badenach v Calvert (2016) 257 CLR 440; [2016] HCA 18 Heenan v Di Sisto (2008) Aust Torts Reports 81-941; [2008] NSWCA 25 Lake Maintenance (NSW) Pty Limited v Todd Hadley Pty Limited & Ors [2019] NSWSC 297 Mal Owen Consulting Pty Ltd v Ashcroft (2018) 97 NSWLR 1163; [2018] NSWCA 135 Southwell v Bennett [2010] NSWSC 1372 Street v Luna Park Sydney Pty Ltd [2007] NSWSC 697 Tabet v Gett (2010) 240 CLR 537; [2010] HCA 12 Tepko Pty Ltd v The Water Board [2001] HCA 19; (2001) 206 CLR 1
Category:	Procedural and other rulings
Parties:	Lorretta Kistmah Craig and Ors (Applicant) Anthony Francis Johnson and Ors (Respondent)
Representation:	Counsel: Mr M Elliott SC (Applicant) Mr I Archibald (Applicant) Mr D Lloyd (Respondent) Solicitors: Shine Lawyers (Applicant) Moray & Agnew (Respondent)
File Number(s):	2016/00328254
Publication restriction:	Nil

Judgment

1. In November 2016, the plaintiffs (“the Craigs”) commenced proceedings in the Professional Negligence List against the defendants, partners in the firm of solicitors, Johnson Winter Slattery Solicitors (“JWS”).

2. The claim is framed in breach of contract and negligence, breach of implied warranty and misleading and deceptive conduct. The Craigs claim that JWS failed to properly advise them in respect of an offer of settlement made to them in September 2013 in commercial proceedings in this Court. They say that the effect of the offer and the risks of failing to accept it were not properly explained. The Craigs went on to lose the case in November 2013 with a substantial costs order against them.

3. The Craigs filed an Amended Notice of Motion in May 2018, seeking:

“An order pursuant to UCPR 28.2 that the assessment of the quantum of loss be undertaken separately from and after the hearing and determination of all other issues in the proceedings.”

4. Senior counsel for the Craigs, Mr Elliott SC, argued that the determination of “all other issues” will dispose of a substantial part of the proceedings. If the Craigs are successful, there will be negotiation to settlement or a shorter trial on damages, probably with the assistance of a litigation funder. If the Craigs are unsuccessful, the proceedings are over without the need for a long hearing to assess damages.

5. JWS opposes the order. Counsel for JWS, Mr Lloyd, argued that the nature of the Craigs’ claim is one for lost opportunity and therefore as a matter of law, the question of quantum of damages substantially overlaps with the question of causation of damage. The Craigs will need to prove, as a necessary element of their case, that the opportunity lost was of some real value. This can only be done by the tender and exploration of evidence demonstrating the value of the chance lost. There is a risk of contrary findings where those issues, having been determined, may be required to be revisited, with analysis of what would be substantially the same material. There may well have been adverse credit findings that also affect this second stage and the assessment of evidence relating to it.

6. For the reasons that follow, I have decided that the order sought by the Craigs should not be made.

Factual background

7. The Craigs retained JWS between 2011 and 2013 to provide legal services in relation to an action in the Commercial List of this Court. The action was brought by the Craigs against Kia Silverbrook, (an inventor), his wife and some associated companies (“the Silverbrook Parties”).

8. In his judgment dated 15 November 2013, Sackar J described the dispute as one concerning the profits principally associated with one of Mr Silverbrook’s inventions known as Memjet technology. The Craigs had asserted that they were entitled to a share in the profits ultimately generated from Mr Silverbrook’s inventions, including profits generated from the Memjet technology.

9. The Craigs were funded for a time in that commercial litigation by a litigation funder. The funder had alleged that it was entitled to receive 80% of any proceeds arising out of or in connection with the Silverbrook commercial proceedings in accordance with a funding agreement. There was a dispute between the Craigs and the funder about this funding agreement and it was the subject of other proceedings in this court. Those proceedings were stayed until completion of the proceedings involving the Craigs and Silverbrooks. The rights of the Craigs in relation to the funder in those other proceedings have never been determined.

10. On 6 September 2013 an offer of settlement was communicated to JWS by the solicitor acting for the Silverbrook Parties at a time when the Craigs’ legal representatives were about to close their case.

11. The offer was expressed in the following terms:

“WITHOUT PREJUDICE SAVE AS TO COSTS

Dear Sirs

Craig and Ors -ats- Silverbrook and Ors - Matter 2010/333159

We are instructed to make the following offer to settle all matters between the parties relating to the above litigation.

We understand that part of your clients' claim is for 4.34% of our clients' approximate 15% of the Memjet Technology as defined in the Restructure Agreement (page 3684 of the Court Book).

Our clients are prepared to offer your clients, to settle all matters between them, inclusive of costs and any interest in SRPL, 3% of their share as set out in the Restructure Agreement which we believe is 15.0186%.

By virtue of the Restructure Agreement and the Founders Agreement, Silverbrook, Lee and Silverbrook Research Pty Ltd, are not permitted to transfer or grant any interest in the Memjet shares. We would therefore suggest that this be expressed in any deed as follows:

‘3% of any net proceeds actually received by Kia Silverbrook, Janette Lee and/or Silverbrook Research from any disposal of their Memjet shareholding. For this purpose, the "Memjet shares" means their direct or indirect share interests in Zamtec Limited, Milron Limited, Verifor Limited, Levon Limited, Vandini Limited, Delo Finance Limited, Kamath Limited, Hedblom Limited, Elberino Limited, Monaxis Limited, Corrizen Limited, Sodep Limited and/or Hanric Limited and or any holding company of any of those companies.’”

12. The letter of offer was forwarded to Ms Craig by the solicitor with conduct of the proceedings at JWS with an email that stated:

“Lorretta,

Please see the attached settlement offer from the defendants. This suggests that they are worried about how the evidence came out and where the case is headed - which is all good news.

As to the offer itself, and ignoring quantum and absence of costs being paid, there [are] a number of difficulties with it in terms of certainty - where is the sale process up to, will the technology in fact be sold, absence of security for payment or direct cash being paid, etc. We would need to firm all of these things up before going down this kind of path. There are also other issues concerning the receiver signing off on any acceptance, as you are aware.

In these circumstances, we recommend ignoring the offer and pushing on with closing the case. After the case is [closed] next week we can if you wish give consideration to entering into a dialogue about properly structured settlement terms and figures.

If you want to discuss, just let us know”.

13. A short time later that same evening, Ms Craig indicated by email her agreement with the proposed approach. There is a dispute as to whether a few days later Ms Craig requested the solicitor at JWS to discuss the matter further with her and what she was told, and whether there was another discussion with that same solicitor on 17 September 2013 and whether he gave her further advice about the offer at that time.

14. On 15 November 2013, the judgment of Sackar J was published, dismissing the Craigs’ proceedings entirely with an order that they pay the Silverbrook Parties’ costs.

Issues raised for determination in the proceedings - the pleadings

15. The current iteration of the claims made against JWS is the Further Amended Statement of Claim filed in December 2018. There is no issue that JWS were retained in the commercial proceedings and in that context had a duty to use reasonable care skill and diligence in the performance of its retainer.

16. The basis of the Craigs’ claims in the commercial proceedings is set out in short form in the Further Amended Statement of Claim:

“In the Proceedings, and through the summons and pleading referred to above, the plaintiffs' claims against the Silverbrook Parties included claims that:

(a) since 1992 there had existed a partnership or joint venture between the plaintiffs and the Silverbrook Parties in relation to the development and exploitation of technology;

(b) the 1992 partnership should be dissolved or wound up and the assets distributed equally between the parties;

(c) in the alternative to (a) and (b), and in relation to the Memjet Technology specifically, by reason of an agreement between the parties in 2000 (January 2000 Agreement), the plaintiffs were entitled to an order for the transfer to them of 4.34% of the total shares or interests in the Memjet Companies, with the whole of that transfer to be satisfied by the Silverbrook Parties out of their 15.0186% stake in the Memjet Companies (Memjet Claim).” [1]

1. Further Amended Statement of Claim, at [14H].

17. The Craigs assert that the offer made on 6 September 2013 should be interpreted as an offer to provide 3% of the total shares in Memjet to them by way of settlement, and was an offer capable of being accepted subject to further negotiations as to detail, and was, at the very least, an indication of willingness by the Silverbrook parties to settle the case for that kind of result. JWS contest this interpretation and allege the offer was incapable of acceptance, as indicated in their email to Ms Craig.

18. The factual bases of the claims against JWS contain a deal of complexity. The relief claimed is in effect damages for breach of retainer and negligence for the lost chance of a better outcome and damages for breach of contract pursuant to the Competition and Consumer Act 2010 (Cth), Sch 2 – Australian Consumer Law, s 236, as well as interest, costs, and interest on costs.

19. The pleading of the breach of retainer and breach of duty of care causes of action is factually dense and provides multiple assertions, some interdependent, as to what a reasonably competent solicitor in the position of JWS should have done[2] and what would have occurred if JWS had not breached its duty of care. [3]

    2. Further Amended Statement of Claim, at [41].

    3. Further Amended Statement of Claim, at [42].

20. In effect, the Craigs assert that if JWS had not breached its retainer and its duty of care, they would have accepted the offer of a 3% interest in the Memjet technology if that is what the offer was meant to convey. If the offer conveyed was only 3% of the 15% interest that the Silverbrook Parties owned, that would have been clarified and the Craigs would have instructed JWS to make a counter-offer for 3% of the total holdings, on particular terms (which would have involved the cooperation of other entities not party to the litigation) including that each party pay their own costs of the proceedings. Negotiations between the Craigs and the Silverbrook Parties would have ensued and, more likely than not, the proceedings would have been settled on terms more favourable to the Craigs than the result that in fact occurred.

21. Additionally, or in the alternative the Craigs allege that JWS misrepresented to them that it was not necessary or desirable to consider or discuss the offer and that the Craigs relied upon those representations to their detriment.

22. The Craigs allege that the loss and damage caused to them by the breach of retainer, and/or the negligence and/or the misreprentation(s) was that:

“(a)….. the plaintiffs would have held 3% of the shares in the Memjet Companies and would have been under no liability to the Silverbrook Parties for the costs of the Proceedings. In fact, the plaintiffs did not receive any shares in the Memiet Companies and became liable to pay the Silverbrook Parties' costs of the Proceedings.

(b) Alternatively….. the plaintiffs would have received a result more favourable to the plaintiffs than the result of the Proceedings and would not have had the liability to the Silverbrook Parties for the costs of the Proceedings. The plaintiffs lost the chance of this result.”[4]

4. Further Amended Statement of Claim, at [43].

23. JWS deny they breached their retainer or were negligent, and deny there was any misrepresentation. They also rely upon s 5O of the Civil Liability Act 2002 (NSW) and allege that the plaintiffs were contributorily negligent in failing to discuss the offer and not providing instructions to enter into a dialogue about settlement in response to the offer.

Separate Question - Principles

24. Pursuant to r 28.2 of the Uniform Civil Procedure Rules 2005 (NSW) the Court may order the separate determination of any question at any stage of the proceedings. Rule 28.2 provides:

The court may make orders for the decision of any question separately from any other question, whether before, at or after any trial or further trial in the proceedings.

25. Rule 28.1 defines a “question” as follows:

In this Part, question includes any question or issue in any proceedings, whether of fact or law or partly of fact and partly of law, and whether raised by pleadings, agreement of parties or otherwise.

26. A summary of the principles to be applied to the issue of whether separate questions should be determined was given by Hallen ASJ in Southwell v Bennett [2010] NSWSC 1372 at [15], and recently restated by Wilson J in Lake Maintenance (NSW) Pty Limited v Todd Hadley Pty Limited & Ors [2019] NSWSC 297:

“a. The rule speaks of "questions" and not "issues" and does not differentiate between questions of fact, or law, or partly of fact and partly of law;

b. The judicial determination of a "question" must involve a conclusive, or final, decision based on concrete and established, or agreed, facts, for the purpose of quelling a controversy between the parties: Bass v Permanent Trustee Co Ltd [1999] HCA 9; (1999) 198 CLR 334, at [45] and [51];

c. Whether such an order should be made is a matter for the Court's discretion, which discretion must be exercised judicially, but cannot otherwise be fettered: Dunstan v Simmie & Co Pty Ltd [1978] VicRp 62; [1978] VR 669, at 670; Idoport Pty Ltd v National Australia Bank Ltd [2000] NSWSC 1215 at [7];

d. As a general rule, the discretionary power to order separate determination of a question should be approached with caution: Perre v Apand Pty Ltd [1999] HCA 36; (1999) 198 CLR 180 at [436], per Callinan J; Tepko Pty Limited v The Water Board [2001] HCA 19; (2001) 206 CLR 1, at [168]-[170] per Kirby and Callinan JJ: Commonwealth Bank v Clune [2008] NSWSC 1125 at [6], per Johnson J; Bailey and Bailey v Director-General Department of Energy Climate Change and Water and Ors [2010] NSWSC 979 at [4] per Studdert AJ;

e. In exercising its discretion, the overriding purpose of the Civil Procedure Act 2005, namely the just, quick and cheap resolution of the real issues in the proceedings (s56) must be given effect;

f. Generally, all questions of fact and law should be determined at the one time.  If the Court is to depart from that position, the party seeking the separate determination of a question must satisfy the Court that it would be 'just and convenient' for that order to be made: Reading Australia Pty Ltd v Australian Mutual Provident Society [1999] FCA 718 at [8]- [9], see also Energy Australia v Australian Energy Limited [2001] FCA 1049;

g. Before a question is to be separately determined, it must be possible to clearly see that it will facilitate the quicker and cheaper resolution of the proceedings: Tallglen v Pay TV Pty Ltd at 142, per Giles CJ in Comm D; Parramatta Stadium Trust v Civil and Civic Pty Ltd; Century Medical v THLD (NSWSC, 27 August 1996, unreported);

h. Factors that tend to support the making of an order, include that the separate determination of the question may:

i. contribute to the saving of time and cost by substantially narrowing the issues for trial, or even lead to disposal of the proceedings: Tallglen v Pay TV Holdings; and

ii. contribute to the settlement of the litigation (CBS Productions Pty Ltd v O'Neill (1985) 1 NSWLR 602 per Kirby P at 607).

i. Whilst the decision is ultimately one for the Court to determine, it will have regard to the attitude of the parties: TVW Enterprises Limited v Duffy (Federal Court of Australia, 28 March 1985, unreported) Toohey J;

j. It is a relevant consideration to weigh the time likely to be taken in the hearing of a separate question and the availability of hearing dates for that purpose, against the time and expense of a substantive hearing and the length of time likely to elapse before such a hearing will take place: TVW Enterprises Limited v Duffy at pp 4-5; and

k. Each case will have its own dynamics that dictate the relative importance of various factors to be considered in exercising the discretion conferred.”

27. I am mindful of the many decisions of this and other courts that have observed that an interlocutory order for the separate determination of issues is an exceptional measure, distinct from the ordinary course taken of determining the issues in their totality: Street v Luna Park Sydney Pty Ltd [2007] NSWSC 697 at [5].

28. The parameters of argument raised by Mr Elliott and Mr Lloyd raise a concern of the kind noted by Kirby and Callinan JJ noted in Tepko Pty Ltd v The Water Board [2001] HCA 19; (2001) 206 CLR 1 at [168], that “…the benefits of a separate question order are often more chimerical than real. Common experience demonstrates that savings in time and expense are often illusory particularly when the parties have, as here, had the necessity of making for preparation and the factual matters relevant to one issue are relevant to others, and they all overlap."

Affidavit evidence

29. Affidavit evidence was tendered from Ms Craig, Mr Giles (the solicitor formerly acting for the Craigs in these proceedings) and a registered business valuer, Tim Herberden. Ms Craig deposed to her financial position and that she and her husband could not afford the expensive expert reports proposed. Mr Herberden estimated the cost of a report to value the equity in the Memjet associated companies was likely to be in excess of $150,000. Mr Herberden also stated that there needed to be a patent analysis “to ascertain the strength, protection and commercial risks associated with the patent portfolio underlying the Memjet technology”, and that would have to be undertaken by a patent attorney. He estimated that report would also be likely to cost in excess of $150,000. The basis for Mr Herberden’s opinions was various assumptions authored and provided by Ms Craig as to what would need to be investigated and valued.

30. Mr Giles deposed to his belief that the witnesses necessary for a hearing on liability are limited to Ms Craig, her husband, a representative of the defendants in the commercial proceedings, (either Mr Silverbrook, Ms Lee or their solicitor) and one expert solicitor in the field of commercial litigation. He estimated that for JWS the necessary witnesses are the solicitor who had conduct of the commercial list proceedings for the Craigs, as well Mr Johnson a partner from JWS, and an independent expert solicitor.

29. Mr Giles estimated - rather optimistically - that a hearing on the “liability issue” would take only 5 hearing days, but that a hearing on all issues would take 24 days.

30. Mr Giles also estimated that his professional costs of briefing the experts with the necessary information for their reports would be in the hundreds of thousands of dollars.

31. None of this evidence was tested by cross-examination.

32. JWS relied upon an affidavit of Peter Tredinnick, a partner at Moray and Agnew, who is an experienced commercial litigation solicitor. He noted his instructions that the commercial proceedings and their potential resolution was complicated by an agreement between the Craigs and a litigation funder and that the funder was entitled to receive 80% of any proceeds arising out of or in connection with the commercial proceedings.

33. On the question of likely hearing time if issues were divided, he offered the view based on his experience in matters of this nature that if there were separate issue hearings, it was likely that the duration of the matter, including allowing for any appeals on liability and therefore costs and the resources required by the court, would be increased significantly. He was unable to say with any precision by how long or by how much. They would not be reduced or minimised by dealing with the issues separately. There would be duplication of preparation by the lawyers for the parties, including multiple meetings with witnesses in order to prepare evidence for the separate hearings, potentially over a lengthy period, particularly if there is an appeal on liability before quantum is determined. It was likely to be necessary for subpoenas to be issued to recipients more than once, including foreign entities and people outside Australia and that there was a potential for there to be inconsistent findings on key issues as between the separate hearings, particularly if the judge hearing the liability issue does not conduct the quantum trial. He concluded it likely the overall hearing time the court would need to allocate to separate issues trials would be in excess of the time required for a trial on all issues together.

34. Mr Tredinnick was not cross-examined.

Submissions

37. Mr Elliott sought to persuade me that the necessary elements of the professional negligence case, and in particular “loss”, can be established by the fact that the Craigs lost their case and suffered a costs penalty. The Craigs do not need to prove what the value of the offer of settlement was in fact, or what the value of an alternative offer would have been. They only have to show that they lost the chance to settle the case and thus avoid the significant costs penalty. That case can be made out on the four witnesses proposed in Mr Giles’ affidavit. Once there is a verdict in their favour, the Craigs can secure litigation funding that will then finance the next stage of preparation, including the necessary and expensive business and patent valuations. If the Craigs’ case is unsuccessful on liability then the second stage will not be required and there will be a verdict for the defendants.

38. Mr Lloyd submitted that the situation in lost chance cases is just not that simple. Analysis of the necessary elements to make out a case in negligence for lost opportunity demonstrates that there is a significant overlap of causation and assessment of damages issues and evidence. It is difficult to see how the Craigs could discharge their onus of proof on the question of breach of duty of care, in the absence of adducing some evidence as to the value of the offer and the quantum of their claim. The Court will need to be satisfied that JWS failed to assess what was in their client’s best interests. This must include some assessment of the quantum of the offer they say should have been accepted. It is impossible to divide causation and contingency issues from assessment of damages issues. There would be a reliance on some of the same evidence that would go to both issues. This would create problems of potential inconsistent findings and repetition of evidence.

39. Reliance was placed on the comments of Giles JA in Heenan v Di Sisto (2008) Aust Torts Reports 81-941; [2008] NSWCA 25 at [28]-[33] where his Honour dealt with the interrelationship (under the heading “the respondents damages”) between causation - has the negligence or other wrong caused the loss of a chance - and the identification and valuing of that lost chance. Giles JA identified the crossover of issues that arose in that case in the context of other statements by other courts as to how those interrelated issues should be approached, at [32]:

“Whether the respondents would have instructed the appellant that the contracts should be made interdependent is just as much a past hypothetical event as whether Skyworld would have agreed. As Professor Fleming observed in “Probabilistic Causation in Tort Law: a Postscript” (1991) 70 Can Bar Rev 136 at 140, all causal inquiries involve might-have-beens, but the balance of probabilities has been applied to what the plaintiff would have done if properly advised by the defendant solicitor in, for example, Sykes v Midland Bank Executor & Trustee Co Ltd (1971) 1 QB 113; Allied Maples Group Ltd v Simmons & Simmons (1995) 1 WLR 1602; Hanflex Pty Ltd v NS Hope & Associates (1990) 2 Qd R 218; and Hall v Foong (1995) 65 SASR 281. See also Daniels v Anderson (1995) 37 NSWLR 438, an auditor’s negligence case in which, after a detailed consideration of Sellars v Adelaide Petroleum NL and other cases, this Court said at 530 that “the issue of causation should be approached upon the basis of proof upon the balance of probabilities with the qualification that an assessment of whether the chance which is said to have been lost had a value is to be made upon the possibilities or probabilities of the case” and for the issue of causation asked whether the directors would have acted to avert the loss if properly informed by the auditor.”

Mr Lloyd submitted that the overlap between causation, a “no-loss” defence and the quantification of damages in a case such as the one brought by the Craigs is obvious when regard is had to the pleadings and the authorities.

40. Reliance was also placed upon the statements of Basten JA in Mal Owen Consulting Pty Ltd v Ashcroft (2018) 97 NSWLR 1163; [2018] NSWCA 135 [17]-[19]. That was a case dealing with damages for lost commercial opportunity caused by a solicitor’s negligence, not, as is the case here - a claim for lost opportunity to settle the case on certain asserted bases. As stated by Basten JA, there is a necessary distinction between a claim in negligence - as distinct from breach of contract - and that is that proof of loss is an essential element of the cause of action:

“[17] That reasoning was affirmed in Tabet v Gett a case approving the refusal of this Court to allow damages for the loss of a chance of a better outcome in relation to a claim for personal injury resulting from medical negligence. In addressing the issue of principle, Gummow ACJ stated:

‘[47] It should be said immediately that the principles dealing with recovery of damages for breach of contract offer no appropriate analogy. The action for breach of contract lies upon the occurrence of breach, but that in negligence lies only if and when damage is sustained. This has significance for the application of limitation statutes. But it has the further and relevant importance identified by Brennan J in Sellars … This is that in a negligence action, unlike an action in contract, the existence and causation of compensable loss cannot be established by reference to breach of an antecedent promise to afford an opportunity.’

Kiefel J (with whom Hayne and Bell JJ and Crennan J agreed) adopted a similar view:

‘[23] It was recognised in Sellars v Adelaide Petroleum NL that a loss of the opportunity to obtain a commercial advantage or benefit is loss or damage for the purposes of s 82(1) of the Trade Practices Act 1974 (Cth), where the cause of action arose under s 52(1) of that Act. Previous decisions allowing for recovery had been based in contract, where the breach of the promise to provide the chance itself gave rise to the loss of that chance. But as Brennan J said, in cases under s 82(1), ‘as in cases of tort where damage is the gist of the action, a lost opportunity may or may not constitute compensable loss or damage’ and it must be proved in some other way.

[24] What cases in contract, such as The Commonwealth v Amann Aviation Pty Ltd and Sellars v Adelaide Petroleum NL, have in common is that the commercial interest lost may readily be seen to be of value itself. The same cannot be said of a chance of a better medical outcome or a person’s interest in it. Lord Hoffmann observed in Gregg v Scott that most cases where there has been recovery for loss of a chance have involved financial loss, where the chance itself can be regarded as an item of property. And in Sellars v Adelaide Petroleum NL Brennan J observed that, ‘[a]s a matter of common experience, opportunities to acquire commercial benefits are frequently valuable in themselves’. So long as an opportunity provides a substantial and not merely a speculative prospect of acquiring a benefit, it can be regarded as of value and therefore loss or damage.’

[18] There is nothing in Badenach v Calvert, on which the trial judge placed significance, inconsistent with this line of authority. Badenach involved a claim in negligence brought by the beneficiary under a will whose expectation had been significantly reduced by a family provision claim by the daughter of the testator by an earlier marriage, for whom no allowance had been made in the will. The beneficiary sued the testator’s solicitor. The claim was in negligence, not contract. Accordingly, as in Tabet, loss was an essential element of the cause of action. There was no reference in Badenach to claims for breach of a contract to provide a commercial opportunity.

[19] Once it is accepted that a claim lies for breach of a contract promising a commercial opportunity, the calculation of loss must be undertaken by an assessment of possibilities, in the manner recognised in Malec v J C Hutton Pty Ltd .That step was not taken in the present case.” (Footnotes omitted).

41. The potential overlap of evidence given the necessary elements to establish the cause of action in negligence is made more complicated by the requirements of ss 5B and 5E of the Civil Liability Act 2002 (NSW). There is a requirement that the party suing in negligence establish that negligence caused particular identified harm, that the risk of harm was not insignificant, and that the negligence was a necessary condition of the occurrence of the harm. This necessarily must commence with identification of what advice reasonable care required and this must involve adducing evidence of the value of the offer.

42. The same considerations apply to the alternative case that JWS should have advised that a counter-offer be made. The value of this hypothetical counter-offer will need to be supported by evidence. There is also overlap entailed in JWS’s “no-loss” defence. There is strong argument that these matters are in fact causation issues as well as issues going to “assessment of loss”.

43. In reply, Mr Elliott submitted that the harm was the loss of chance of settling the case and so avoiding the costs penalty. Assessment of the basis and value of that chance could easily be separated and undertaken after the determination of all other issues. The contract claim required no demonstration of particular loss; once breach of contract is shown, calculation of damages for breach of contract is very much a separate task.

Decision

44. There are fundamental differences between the parties as to how they say the negligence and breach of retainer cases must be approached by the trial judge and what evidence is relevant to what components of those causes of action.

45. To separate “assessment of the quantum of loss” for later determination pre-supposes a clear divisibility of the issue of “loss” from “all other issues in the proceedings”.

46. There is no such bright line.

47. The case pleaded in the Further Amended Statement of Claim is one that raises multiple interrelated issues of fact. The likelihood is that a great deal of the evidence to be led will have multiple roles in the determination of the many issues of fact.

48. In deciding whether to make the order sought, I must bear in mind what facilitates the just, quick and cheap determination of the issues in dispute. Division of the issues in the way proposed does not in my view accomplish this aim. It is more likely to delay and obfuscate issues than to bring forward and clarify the real issues. It also has a significant risk of delaying proper and complete preparation of the Craigs real case, thus delaying JWS’s right to make an informed assessment of all aspects of the case made against it. This is a substantial impediment to the proper exploration of settlement prospects.

49. Dividing away for later determination the issue of assessment of quantum of loss can give the appearance of permitting a delaying of the requirement to prepare evidence of loss, under the guise of it being material only going to the issue of “assessment of quantum of loss”. On one view this amounts to permission being given to the Craigs to postpone preparation of necessary “loss” components of their case in negligence for lost opportunity.

50. The order proposed in this application may well frustrate the trial judge’s decision making as to what evidence needs to be led on what issues and when.

51. It is in my view likely that a trial dealing with “all other issues” is likely to take a significant amount of hearing time and is very likely to be in excess of 15 days. I accept the common sense propositions contained in the affidavit material of Mr Tredinnick that I have set out in [35] of this judgment. I consider that there will be wasted and repeated costs and duplication of preparation time and court time if the case is divided in the way proposed.

52. I also consider there to be a real risk of divergent findings on key factual matters.

53. I am mindful of the position taken by Ms Craig in her affidavit that the proceedings will be “stultified” if she is required to obtain the expensive expert reports that are in her view necessary for the presentation of her case. The reality is litigation can be expensive. No evidence was led that as a matter of fact, if there is a decision in favour of the Craigs on “all other issues”, (even assuming such an approach could be taken, which for the reasons well-explained by Mr Lloyd, I doubt), a litigation funder will come to the rescue. Given there is unresolved litigation regarding the litigation funder the Craig’s used in the commercial proceedings, such an event may be thought to be unlikely.

54. More significantly though, it is not just and convenient to divide the proceedings in the manner proposed. To do so has the tendency to cause delay, prejudice, extra costs and effectively postpones the obligations of the Craigs to present all relevant aspects of the case they make and removes any realistic prospect of exploring settlement of proceedings before trial.

55. The application should be dismissed with costs.

Orders

1. The Amended Notice of Motion filed on 24 May 2018 is dismissed.

2. The plaintiffs are to pay the defendants’ costs of the Amended Notice of Motion.

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Endnotes

Decision last updated: 22 April 2020