Parker & Parker (A Firm) v Pavlinovich - [1999] WASC 132

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: PARKER & PARKER (A FIRM) -v- PAVLINOVICH [1999] WASC 132

CORAM: MASTER SANDERSON

HEARD: 11 AUGUST 1999

DELIVERED : 19 AUGUST 1999

FILE NO/S: CIV 1588 of 1998

BETWEEN: PARKER & PARKER (A FIRM)
Plaintiff
AND
MATTHEW MARINKO PAVLINOVICH
Defendant

Catchwords:

Practice and procedure - Application for leave to amend defence set-off and counterclaim - Turns on its own facts

Legislation:

Nil

Result:

Leave to amend refused

Representation:

Counsel:

Plaintiff: Ms C M F Crabb
Defendant: Mr B P Wheatley

Solicitors:

Plaintiff: Freehill Hollingdale & Page
Defendant: Murfett & Co

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

Bowdage v Harold Michelmore & Co (1962) 106 Sol Jo 512
Groom v Crocker [1939] 1 KB 194
March v Stramare (1991) 171 CLR 506
Pegrum v Fatharly (1996) 14 WAR 92
Temwood Holdings v Oliver, unreported; SCt of WA; Library No 980034; 4 February 1998
Yager v Fishman & Co [1944] 1 All ER 552

Case(s) also cited:

Christensen v Scott [1996] 1 NZLR 273
Dalleagles Pty Ltd v Australian Securities Commission (1991) 4 WAR 325
Hawkins v Clayton (1998) 62 ALJR 240
Stone James & Co v Investment Holdings Pty Ltd [1987] WAR 363
Watts v Public Trustee [1980] WAR 97

MASTER SANDERSON: This is the return of the defendant's chambers summons seeking leave to file and serve a further amended defence set‑off and counterclaim. On 4 May 1999 I made an order striking out par 24 to par 45 of the amended defence set‑off and counterclaim. I gave leave to the defendant to file and serve an amended defence set‑off and counterclaim within 14 days. Thus, the amended document should have been filed on or before 18 May 1999. In fact the minute of proposed further amended defence set‑off and counterclaim ("the minute") was annexed to the chamber summons seeking leave to amend dated 16 June 1999. The minute was filed over a month late. The explanation for this delay is contained in an affidavit of Robert Jeffery Black, sworn 9 July 1999. It has to be said that the explanation for the delay is not entirely convincing. It seems to be a combination of intra office confusion and delay due to other pressing matters. However, in the circumstances, I am satisfied that the explanation offered by the defendant is sufficient. Any delay which has been caused by the defendant's solicitors can, in all probability, be alleviated by the making of tight programming orders after this application has been dealt with.
The complaints made by the plaintiff relate to the defendant's counterclaim. The plaintiff is a firm of solicitors and its claim against the defendant is for unpaid fees. The defendant's counterclaim is based upon the alleged negligence of the plaintiff in relation to two matters where it was acting for the defendant. It is central to the defendant's counterclaim that he retained the plaintiff to act on his behalf. This retainer is pleaded in par 24 of the minute. It is in the following terms:
"In or about January 1995 the defendant instructed and retained the plaintiff who agreed to act as solicitors for the defendant to advise the defendant regarding the separation of the interests of Kaye Christine Blackburne ('Mrs Blackburne'), Stefo Nominees Pty Ltd and Scandanavian Investments Pty Ltd ('the Blackburne Parties') from Ocean West Pty Ltd, Haskin Pty Ltd, Darlek Pty Ltd, Brooklaw Corporation Pty Ltd and Kentlaw Pty Ltd ('the Pavlinovich Entities')."
The complaint made by the plaintiff is that this paragraph does not adequately describe the nature of the retainer between the plaintiff and the defendant. In my view, the complaint is well made. It is not clear from par 24 whether the retainer was express or implied. If it was express, then the material terms of the retainer agreement ought be set out and the defendant must plead the material facts and properly particularise those facts.
If the retainer is to be implied, the position is somewhat different. The nature of an implied retainer was considered in some detail by the Full Court in Pegrum v Fatharly (1996) 14 WAR 92. In that case, Ipp and Anderson JJ refer to Groom v Crocker [1939] 1 KB 194. Both of their Honours quote, with approval, what was said by Scott LJ (at 222):
"The relationship [of solicitor client] is normally started by a retainer, but the retainer will be presumed if the conduct of the two parties shows that the relationship of solicitor and client has in fact been established between them."
This, then, leads to the question of what must be pleaded if a retainer between a solicitor and client is to be implied? In his judgment, Anderson J set out the pleading of the retainer in the statement of claim in that case. His Honour made the point that, even taken together with particulars that were provided, it was unclear whether the retainer was express or implied. The plea of the retainer in that case is strikingly similar to the plea in this case (see 101). His Honour clearly disapproved of the way the retainer was pleaded.
In Temwood Holdings v Oliver, unreported; SCt of WA; Library No 980034; 4 February 1998 I dealt with an application to strike out a plea of implied retainer. The way in which the retainer had been pleaded was to plead that the solicitor had been consulted and had given certain advice. From those material facts a retainer could be implied. In approaching the matter this way I was adopting the views of Anderson J who said, in Pegrum v Fatharly, that proof of the retainer could be established by proof of the facts and circumstances sufficient to establish a tacit retainer. That, I think, is the way that an implied retainer should, or at least, can, be pleaded. Paragraph 24 of the present minute does not satisfy the test. In my view, the position is not helped by par 25. That paragraph deals with the duty that arises consequent upon the retainer being proved. It says nothing about the nature of the retainer itself.
In my view, the pleading is also inadequate in that it does not address the nature of the duty that arose consequent upon the retainer. Paragraph 25 says that there was an implied term in the retainer that the plaintiff would exercise all due care, skill and diligence in the giving of the advice. However, it is clear that the ambit of a solicitor's duty will depend on the terms of the retainer: see Yager v Fishman & Co [1944] 1 All ER 552 at 555; Bowdage v Harold Michelmore & Co (1962) 106 Sol Jo 512; Pegrum v Fatharly (supra), per Anderson J at 106. This, in turn, feeds into the complaints made by the plaintiff about par 26 of the minute. That paragraph pleads that the plaintiff was in breach of its duty to the defendant or acted negligently. It is difficult to see how the matters particularised therein could amount to a breach of duty. In my view it is necessary for the defendant to plead what duties arose consequent upon the retainer and how it is alleged the plaintiff breached these duties. Only then will the plaintiff know the case it has to meet.
The plaintiff also complains about par 27. This paragraph sets out the loss and damage the defendant has allegedly suffered as a consequence of the plaintiff's breach of duty or negligence. I have some difficulty seeing how the loss particularised could have been occasioned by a breach of duty as pleaded in par 26. What is missing is any material facts establishing causation. It is well settled that a party will be held responsible for the consequences which flow naturally from their actions: see March v Stramare (1991) 171 CLR 506. But causation must be pleaded and in this minute it is not pleaded.
In relation to par 28, the plaintiff complains that the defendant attempts to mount a cause of action based upon the plaintiff acting for parties other than the defendant. While the plea is that the plaintiff acted on the defendant's instructions for these third parties, the plaintiff says that the duty that was owed was owed to these third parties and not to the defendant. The plea is not without its difficulties. However, it may be that in some way the nature of the retainer agreement gave rise to a duty as between the plaintiff and the defendant. Until the terms of the retainer agreement are pleaded I would not be prepared to rule that par 28 cannot stand in its present form.
However, there are two further difficulties with the minute.
First, it is not apparent how any breach of duty to parties other than the defendant by the plaintiff gives rise to loss on the part of the defendant. In other words, once again, in relation to this second aspect of the counterclaim, causation is not established. The difficulty lies with par 36 through to par 39. As the matter stands at present, it appears that any loss and damage suffered by the defendant is attributable to parties other than the plaintiff. It may be that the allegation of negligence relates to the failure of the plaintiff to include certain terms in what is described in the pleading as the VDM Settlement Deed. If that is the case, then the pleading needs to make that clear and at present it does not do so.
The second difficulty relates to the plea of negligence in par 34 of the minute. Once again, unless the terms of the retainer are properly set out and the duties said to arise consequent upon that retainer, it is difficult to know whether or not the duties have been breached by the plaintiff or whether it has been negligent. As the present par 34 stands, it is entirely inadequate. It does not allow the plaintiff to know the case it has to meet.
In all the circumstances, I am not satisfied that the present minute is a proper pleading. I would be prepared to allow the defendant one further chance to put its house in order. However, this matter has now dragged on for some time. If the defendant cannot properly plead its case then perhaps it has no case to plead.
I would refuse leave to amend in terms of the further amended minute. I would grant leave to bring in a fresh minute within 14 days. The defendant ought pay the costs of this chamber summons, including the reserved costs.
Before making these orders, I will hear from the parties.