Patrick Jebb as trustee for Trafalgar West Investments Trust v Corrs Chambers Westgarth (A Firm) [No 2] - [2023] WASC 143

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION:   PATRICK JEBB as trustee for TRAFALGAR WEST INVESTMENTS TRUST -v- CORRS CHAMBERS WESTGARTH (A FIRM) [No 2] [2023] WASC 143
CORAM:   SOLOMON J
HEARD:   2 MAY 2023
DELIVERED          :   4 MAY 2023
PUBLISHED           :   4 MAY 2023
FILE NO/S:   CIV 2136 of 2020
BETWEEN:   PATRICK JEBB as trustee for TRAFALGAR WEST INVESTMENTS TRUST
Plaintiff

AND

CORRS CHAMBERS WESTGARTH (A FIRM)
Defendant

Catchwords:

Practice and procedure - Application for split trial - Whether quantification of loss can be separated from other issues - Whether split trial useful, economic and fair - Difficulty demarcating issues

Legislation:

Rules of the Supreme Court 1971 (WA) O 1 r 4B(f), O 32 r 4

Result:

Application dismissed
Matter added to the Commercially Managed Cases list

Category: B

Representation:

Counsel:

Plaintiff	:	Mr P Jebb
Defendant	:	Ms J Taylor SC & Mr B Tomasi

Solicitors:

Plaintiff	:	Jebb Legal
Defendant	:	McNally & Co

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

Dovuro Pty Ltd v Wilkins (2003) 215 CLR 317
Malec v JC Hutton Pty Ltd (1990) 169 CLR 638
Patrick Jebb as trustee for Trafalgar West Investments Trust v Corrs Chamber Westgarth (a firm) [2022] WASC 165
Sellars v Adelaide Petroleum NL (1994) 179 CLR 332

SOLOMON J:

On 10 May 2022, in Patrick Jebb as trustee for Trafalgar West Investments Trust v Corrs Chamber Westgarth (a firm) [2022] WASC 165, I published my reasons for refusing the plaintiff's application for an order pursuant to O 32 r 4 of the Rules of the Supreme Court 1971 (WA) (Reasons). The plaintiff argued in that application that certain issues in this matter should be determined separately from, and in advance of, other matters in the proceedings. These reasons should be read in conjunction with the Reasons and defined terms in the Reasons have been adopted here. In the Reasons I explained the background and provided an overview of the proceeding and the general principles. Those matters need not be repeated. These reasons relate to a further application of the plaintiff under O 32 r 4, albeit formulated differently.
The matter has not progressed in any substantial way since publication of the Reasons. On 9 May 2022 the plaintiff filed an amended statement of claim. Those amendments are not material to this application. No amended defence has been filed. My summary of the claim in the Reasons therefore remains applicable.
On 29 July 2022 the defendant's application for security for costs was argued before a registrar of this court. The application was unsuccessful. The Registrar produced unpublished reasons to which the plaintiff referred in his written submissions on this application. That appears to be the only matter of significance that has transpired in the matter since the publication of the Reasons.
In the Reasons I explained that in very broad terms, the claim raised four contested issues. Those issues were, and remain:
(a)the scope and content of the duties owed by the defendant to the former trustee;
(b)whether those duties were breached in the manner alleged by the plaintiff;
(c)whether the breaches caused the ultimate dismissal of COR 59 and thereby the losses alleged by the plaintiff; and
(d)the valuation or quantification of those losses, including the value of the loss of the opportunity to prosecute COR 59 or COR 77.
In the previous application, the plaintiff sought to have the first two issues, that is, the duty and breach issues, heard and determined in advance of the causation and the damages/quantum issues. In order to appreciate the difference in the application now advanced by the plaintiff, it is necessary to say a little more about the fourth issue; the quantum and valuation of the loss.
Paragraph 70 of the amended statement of claim is preceded by the heading 'Causation and loss'. The paragraph pleads the consequences of the defendant's alleged breach of duties. From sub‑paragraphs (a) to (h), the plaintiff pleads that those alleged breaches caused a chain of events which included the loss of $160,000 and significant other liabilities for costs, which had consequences that ultimately led to the dismissal of COR 59. Sub-paragraph (i) of paragraph 70 pleads that as a consequence of the chain of events the Trust lost the opportunity to prosecute and thereby be awarded damages from that proceeding, that is, COR 59, or substituted proceedings.
The present application seeks to defer only the issue of the quantum of damages for the loss of opportunity plead at paragraph 70(i) of the statement of claim. That is, all the issues of causation including the plaintiff's asserted counterfactuals will be determined at the first stage. The first stage will also determine the quantum of loss other than the loss of opportunity to prosecute COR 59, such as the loss of $160,000 in security. The first stage will also determine the issue of whether the defendant's alleged breach of duties caused the Trust to lose the opportunity to prosecute COR 59. It is only the assessment and quantification of the value of that opportunity that is to be deferred.
In his submissions in support of the application, the plaintiff raised five points. I summarise and comment on those points below.
First, the plaintiff pointed to his difficult financial circumstances. The plaintiff provided affidavit evidence of his predicament and explained that he is quite unable to prosecute the whole action at this stage due to the cost of its preparation. In particular, the plaintiff said he will be unable to fund the expert reports that will be required for the valuation of the claim in COR 59. In that context the plaintiff referred to O 1 r 4B(f), which provides that matters are to be managed and supervised in accordance with a system of positive case flow management with objects that include that the procedure applicable, and the costs of the procedure to the parties, are proportionate to the financial position of each party.
The object of proportionality embodied in O 1 r 4B requires the court, to the extent possible, to ensure that the procedures adopted in a case take account of the financial burden imposed upon the parties. It is not a requirement to craft the management of each case to ensure it is affordable to a party who is in a difficult financial position. Legal costs are a common and regrettable barrier to litigation. But those constraints cannot of themselves mandate the disaggregation of issues in a trial where that is not otherwise consistent with the efficient and just determination of the dispute.
Secondly, the plaintiff advanced a submission considered in the Reasons relating to the value of the lost claim in COR 59. As is well established, the plaintiff is not required to demonstrate that COR 59 would have been successful on the balance of probabilities. Rather, the plaintiff need only show that the claim had some value, or that its value was not negligible. The court will then assess the prospects of success and apply an appropriate discount commensurate with those prospects. The plaintiff contended that the defendant cannot deny the claim had some value because it was the law firm that prosecuted the action and therefore must have considered it had some reasonable prospect of success. The issue arises because if it were necessary to consider the merits of COR 59 to determine if it had any worth at all then that would need to be done at the proposed first stage, and that would undermine the demarcation otherwise achieved by deferring a consideration of the merits of COR 59 for the purpose of quantifying its value. In the first application the subject of the Reasons, the force of the plaintiff's submission was undermined by the fact that there may in any event have been no value to the lost opportunity for reasons that are independent of the substantive merits of COR 59. Under the present proposal it was submitted that any such issues, including causation, would be determined at the first stage. The value of the claim in COR 59 therefore presented a distinct and discrete enquiry which could be deferred to a later time.
The defendant did not accept that its prosecution and carriage of COR 59 necessarily carried with it a concession that it must have had some value. Senior counsel for the defendant accepted that the defendant must be assumed to have held the view at the time it was engaged that it believed the claim in COR 59 had reasonable prospects of success. But that view did not mean that had the claim in COR 59 continued and further matters come to light in the ordinary course of its prosecution, that the defendant would have continued to hold that view or that the view was, as a matter of fact, correct. The defendant therefore insists that some evaluation of the merits of COR 59 will be necessary at the first stage. The merits of the defendant's position will be a matter for adjudication but in my view the defendant is entitled to adopt that position. Plainly, that position has the real potential to undermine the demarcation of issues that is a necessary element for any proposal to disaggregate the issues in the trial.
Thirdly, the plaintiff contended that there would be no overlap in the issues between the two stages of the hearing but, even if there was some overlap, it would be marginal and was outweighed by the other factors weighing in favour of the plaintiff's proposal. I dealt with one aspect of the overlap in relation to the second submission of the plaintiff above and will return to the issue further on in these reasons.
Fourthly, the plaintiff contends that a determination at the first stage will either put an end to the proceedings (if the plaintiff is unsuccessful) or will enhance the prospects of settlement (if the plaintiff is successful) to one degree or another. It is well established that whether such a proposal will enhance the prospects of a settlement is a factor to be considered. Unsurprisingly, the plaintiff contended that the course he proposed would enhance the prospects of settlement, while the defendant contended it would not because the defendant would still not know the value of the claim being pressed. My view is that it may be too early to make an assessment of this issue, but I am inclined to the view that if the plaintiff were successful at the first stage it is likely to bring about a greater preparedness on the part of the defendant to consider a commercial settlement. However, on the whole, I consider this is a fairly neutral factor.
Fifthly, the plaintiff submitted that the position adopted by the defendant before the Registrar in its application for security for costs supported the proposal now advanced by the plaintiff. As I understood the submission, it was that the defendant argued before the Registrar in support of its application for security, that the plaintiff's case is weak. If that is so, then the most efficient course is to test the plaintiff's case at the first stage and, if the defendant is correct, it will put an end to the matter. It is a ubiquitous feature of litigation that the plaintiff contends it has a strong claim and the defendant asserts the case is weak. The plaintiff seeks to deploy the defendant's contention, which it obviously rejects, in support of its proposal. In my view that is not a sound basis upon which the application can be determined.
In his written submissions, the plaintiff referred to another aspect of the defendant's application for security before the Registrar. The plaintiff referred the unpublished reasons of the Registrar in respect of the application for security and the defendant's written submissions in support of that application. The plaintiff augmented those submissions orally at the hearing. The plaintiff referred to a submission made by the defendant before the Registrar that the plaintiff remained possessed of the cause of action, and its inability to prosecute it was merely the result of a practical impediment. The plaintiff appeared to characterise that as a concession that the defendant's duty could not extend to ensuring that the plaintiff remained practically able to prosecute its cause of action.
The plaintiff submitted that in light of those matters, the utility, economy and fairness of the course it proposed were beyond question. The plaintiff's submission appeared to be that it followed from the defendant's position, that the duties assumed by the defendant were independent of the complexities in assessing the value of COR 59. The determination of the issues of duty and causation are therefore amenable to an advanced and separate determination. I am not confident that I fully grasped the force of the plaintiff's submission. At any rate, in light of the matters discussed below, the issue does not weigh heavily in my consideration.
Turning to the merits of the application, as I observed in relation to the plaintiff's previous application, it has an initial attraction. Indeed, this reformulated proposal has more attraction than the previous application. The applicant's proposal would effectively separate the enquiry relating to the value of the lost claim from all other matters. That enquiry might reasonably be thought to be largely distinct from other matters to be determined in the proceedings. The other matters concern the content and scope of the defendant's duties to the plaintiff, whether those duties were breached and if so, whether that breach was the cause of the lost opportunity. Those matters will generally not require any substantive assessment of the merits of COR 59 or a quantification of its chances of success, less still an evaluation of the damages that hypothetically would have been payable had the action succeeded.
I am also less troubled under the present proposal about the concerns expressed in the High Court decision in Dovuro Pty Ltd v Wilkins[1] explained in the Reasons. Those concerns relate to the desirability or perhaps the necessity to know the extent of the consequences of the tort in order to assess the scope of the duty. That will often require an understanding of the extent or detail of the loss in order to assess and determine liability. The present proposal will require at the first stage, an assessment of all the counterfactuals contended for by the plaintiff and a fulsome exposition of the duties owed by the defendants in the context of those counterfactuals and in the knowledge of the agreements between the plaintiff, the defendant and the funder. The relationship between the plaintiff and the defendant and its legal consequences will be comprehensively examined in those enquires. As I have noted, the first stage will also involve an assessment and a determination as to whether the alleged breaches caused the plaintiff to lose the opportunity to prosecute successfully COR 59. In that context, in my view, there is a lesser concern that the valuation of the loss of opportunity will be necessary in order to determine the scope of the relevant duties.
[1] Dovuro Pty Ltd v Wilkins (2003) 215 CLR 317.
In addition, there would in my view be an obvious saving in time and resources if it were possible to defer the valuation of the claim in COR 59. The various estimates of trial lengths provided by the parties over the course of the matter are not particularly helpful. However, it is tolerably clear that each of the proposed first stage and, if necessary, the subsequent valuation of the loss of COR 59, will involve a reasonably lengthy and complex enquiry. There seems to me to be little doubt that deferring the valuation of COR 59 will mean that the trial will be significantly shorter than it would be if it included the valuation of COR 59. It will not be short; but it will nevertheless represent a saving in time and money. If the defendant is successful at the first stage as it contends it will be, then there will obviously be a significant saving of the parties' time and money, and the court's resources.
All of these matters weigh in favour of the plaintiff's application. However, on closer consideration there remains the real potential for an overlap of the issues and evidence that would undermine the discrete nature of the quantum/valuation issue. That prospect blurs the demarcation between the various issues.
I have already observed that the defendant's persistent denial that the claim in COR 59 had any value is likely to necessitate an evaluation of the claim in COR 59 at the first stage in order to determine whether the tort of negligence has been established at all.
In addition, it is now well established from cases such as Sellars v Adelaide Petroleum[2] and Malec v JC Hutton[3] that in a loss of opportunity case, a court is called upon to determine not what did happen, but what would have happened hypothetically. In that circumstance, the court will assess the degree of probability or prospects of success of the opportunity had it been pursued, and will then adjust the damages to reflect that degree of probability. The assessment of the prospects of success in this matter raises a range of enquiries that bear upon the hypothetical assessment of success. One is an assessment of the substantive merits of the claim itself. Another relates to a consideration of vicissitudes that might have impacted on the prospects of a successful prosecution of the claim, quite independently of its substantive merits. Yet another relates to the practical reality of recovering any award of damages. Moreover, these enquires are not necessarily discrete. There may be aspects of the vicissitudes that may have attended the prosecution of COR 59 that would have impacted upon an assessment of its substantive merits. Overall, it is not possible to be confident that the various elements that bear upon the hypothetical prospects of success can be disaggregated in a manner that lends itself to discrete enquiry and determination. It follows that there is a real potential for difficulty and inefficiency in seeking to quarantine an enquiry relating to the substantive merits of the claim in COR 59 from other issues that will necessarily arise at the proposed first stage.
[2] Sellars v Adelaide Petroleum NL (1994) 179 CLR 332.
[3] Malec v JC Hutton Pty Ltd (1990) 169 CLR 638.
In addition, senior counsel for the defendant submitted than in the assessment of the plaintiff's alleged hypothetical circumstance, it will be necessary for the court to draw inferences as to what the then existing litigation funder, or another hypothetical funder would have done in the various permutations of the counterfactuals. That exercise itself cannot be undertaken in isolation from a consideration of the substantive merits of the claim in COR 59 because that is a matter, to one degree or another, that a litigation funder is likely to have considered and evaluated. I accept senior counsel's submission that this presents a further difficulty in the plaintiff's proposal.
In all the circumstances, I am unable to conclude that the course proposed by plaintiff is one whose utility, economy and fairness is beyond question, and I decline to make the orders sought. That said, I remain concerned to consider some means by which the proceedings can be managed in the most just and efficient manner that is possible. A number of the concerns raised by the plaintiff may be able to be ameliorated by a more intensive management of the proceeding. To that end I propose to enter the matter into my Commercially Managed Cases list to enable the parties to explore with the court the future conduct of the matter.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
IS
Associate to the Honourable Justice Solomon
4 MAY 2023