Pool (a pseudonym) v Parkinson
[2022] ACTCA 54
SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
COURT OF APPEAL
Case Title: | Pool (a pseudonym) v Parkinson |
Citation: | [2022] ACTCA 54 |
Hearing Date: | 8 February 2022 |
DecisionDate: | 14 October 2022 |
Before: | Mossop J, Refshauge and McWilliam AJJ |
Decision: | 1. The appeal is dismissed with costs 2. The cross-appeal is dismissed with costs. |
Catchwords: | APPEAL – PROFESSIONAL NEGLIGENCE – Historical child sex abuse - claim of solicitor’s negligence arising from conduct in 2017 in not advising appellant to apply to set aside a deed of release or otherwise “reopen” proceedings – whether primary judge erred in concluding there was no breach of retainer, or no loss or damage caused – no appealable error demonstrated – appeal dismissed APPEAL – JURISDICTION, PRACTICE AND PROCEDURE – Costs – cross-appeal from an order that due to a finding of breach of retainer in 2010 (for which relief was statute-barred), the parties should pay their own costs – no appealable error demonstrated – cross-appeal dismissed |
Legislation Cited: | Civil Law (Wrongs) Act 2002 (ACT), s 35 Limitation Act 1985 (ACT), ss 11, 16B, 21C |
Cases Cited: | Avopiling Pty Ltd v Bosevski [2018] NSWCA 146; 98 NSWLR 171 Badenach v Calvert [2016] HCA 18; 257 CLR 440 Zhang v Ng [2021] NSWCA 1369 |
Texts Cited: | Royal Commission into Institutional Responses to Child Sexual Abuse, The Response of the Marist Brothers to Allegations of Child Sexual Abuse against Brothers Kostka Chute and Gregory Sutton November 2015 (Report of Case Study No 13, November 2015) |
Parties: | Peter Pool (a pseudonym) ( Appellant) Jason Dean Parkinson t/as Porter Lawyers ( Respondent) |
Representation: | Counsel P Walker SC and B Buckland ( Appellant) D Villa SC ( Respondent) |
| Solicitors Sneddon Hall & Gallop ( Appellant) McInnes Wilson Lawyers ( Respondent) | |
File Number: | ACTCA 27 of 2021 |
Decision under appeal: | Court/Tribunal: ACT Supreme Court Before: Elkaim J Date of Decision: 13 May 2021 Case Title: Pool (a pseudonym) v Trustees of the Marist Brothers Property Group & Anor (No 3) Citation: [2021] ACTSC 89 |
THE COURT:
Introduction
The appellant was a student at Marist College between 1980 and 1985. He was sexually abused by members of staff at the school. He consulted the respondent, a solicitor, in March 2008 with the intent of commencing proceedings against those running the school to compensate him for damages he suffered as a result of the abuse. The respondent commenced proceedings on the appellant’s behalf on 22 August 2008. There were 21 defendants which included the alleged abusers and those alleged to be legally responsible for their conduct (the Marist Defendants).
To prove his case, the appellant had to show that those defendants involved in the operation of the school knew or ought to have known of the risk presented to him by the Marist Brothers and the teacher who perpetrated the acts of sexual abuse. The Marist Defendants denied that they were responsible for the management of the school or that they were responsible for those who taught at the school. They denied any breach of duty of care or that any such breach caused damage to the appellant. They also pleaded a limitation defence based on ss 11 and/or 16B of the Limitation Act 1985 (ACT).
On 22 March 2010, as a result of a conference with the respondent on that day, the appellant decided to settle his claim against the Marist Defendants for the sum of $80,000 inclusive of costs. The settlement involved the execution of a deed of release (the 2010 Deed). The net benefit to the appellant was approximately $41,115.50, although this included reimbursement of $3577.96 for disbursements that he had already paid.
In November 2015 the Royal Commission into Institutional Responses to Child Sexual Abuse released its report Case Study No 13, The Response of the Marist Brothers to Allegations of Child Sexual Abuse against Brothers Kostka Chute and Gregory Sutton. That report indicated that Marist Brothers had known since the 1960s that Brother Chute (also known as Brother Kostka) had a history of perpetrating child sexual abuse. There were also concerns raised about Brother Sutton. Both Brothers were named as defendants in the claim.
In August 2016, as one of the responses to the recommendations of the Royal Commission, the Limitation Act was amended so as to remove any time limit on proceedings arising from the sexual abuse of a child.
The appellant contacted the respondent again in November 2016. In early December 2016, he was told by an employed solicitor of the respondent, Heather Ross, that there was nothing that could be done to improve the terms of the settlement. In February 2017, the same employed solicitor wrote to him indicating that there was a possibility of receiving further compensation from the Marist Defendants. This was explained to be on the basis that the Royal Commission had discovered that the Marist Defendants knew that Brother Kostka was a risk to children yet sought to force the appellant to prove that in the proceedings, which resulted in the appellant incurring additional legal costs. There was also a reference to the possibility that the case may have settled for less than otherwise would have been the case because of the inability to get hold of the documents to prove the Marist Defendants’ knowledge. There was some willingness on the part of the Marist Defendants to make a top-up payment. The subjective rationale of the Marist Defendants to do so was not disclosed by the evidence, although it somehow related to the findings of the Royal Commission. As a result of negotiations with the solicitors for the Marist Defendants, a further payment of $33,000 was received and the appellant received $27,500 from that settlement. The appellant contended that in 2017 he was not given proper advice in relation to the potential to have the 2010 Deed set aside.
The proceedings against the respondent were commenced in 2019. Initially they included claims against the Trustees of the Marist Brothers for abuse suffered by the appellant whilst at Marist College. However, those claims did not proceed.
The appellant claimed that the respondent had negligently advised him both in relation to the 2010 settlement and the 2017 settlement. He contended that as a result of these occasions of negligence, he was deprived of a better outcome, being the difference between what he received as a result of the settlements and the sum that he would have received at a hearing or mediation had he been properly advised. He also made a claim for psychological injury.
In relation to the 2010 settlement, he claimed that the respondent “improperly pressured” him to reach the settlement. That was said to arise from the manner in which the respondent dealt with the contents of a report by a Dr Lisa Brown, a consultant psychiatrist, who had prepared a report on behalf of the Marist Defendants. The appellant asserted that the respondent had said that the report was so harmful that he ought to settle the proceedings for the $80,000. That was said to be because the appellant had disclosed prior sexual abuse by a relative which he had not disclosed previously. The appellant contended that had the report been properly explained to him, he would not have settled his claim and would ultimately have received a greater sum if the claim had been pursued.
In relation to the 2017 settlement, he claimed that he had not received adequate advice about the potential to “reopen” the proceedings settled by the 2010 Deed.
The respondent denied any negligence. He also said that the claim relating to events in 2010 was barred by the Limitation Act.
A judge of the Supreme Court (the primary judge):
(a)found that the claim in relation to the 2010 settlement was statute-barred;
(b)made a contingent finding that had it not been statute-barred, he would have found that the respondent breached his duty to the appellant in the manner in which he dealt with the offer of settlement;
(c)made a contingent assessment of damages of $123,585;
(d)found that there was no breach of duty in relation to the dealings in 2017;
(e)was unable to carry out a contingent assessment of damages in relation to the events of 2017; and
(f)decided, notwithstanding that the appellant was unsuccessful, that because of the contingent finding in relation to the 2010 settlement that the respondent had breached his duty, each party was to pay its own costs of the proceedings.
See Pool (a pseudonym) v Trustees of the Marist Brothers Property Group & Anor (No 3) [2021] ACTSC 89 (Pool).
The appellant has appealed from the primary judge’s decision in relation to the dealings in 2017. The respondent has cross-appealed in relation to the costs order. Some understanding of the findings and reasoning of the primary judge is useful in order to understand the grounds raised in the appeal and cross-appeal.
Decision of the primary judge
The primary judge first dealt with the limitation argument in relation to the 2010 claim. His Honour considered the operation of s 21C of the Limitation Act. That removed any limitation period in relation to “a cause of action for the death or personal injury of a person” where “the cause of action substantially arises from sexual abuse to which the person was subjected when the person was a child”. His Honour concluded that, notwithstanding the allegation that the respondent’s conduct had aggravated his mental health condition, the case was not “a personal injury case”. Further, the primary judge did not consider that the cause of action “substantially arises from sexual abuse to which the person was subjected when the person was a child”: Pool at [40].
In relation to the application of s 11 of the Limitation Act, his Honour identified that it was an unequivocal part of the appellant’s case that he “spiralled into depression” immediately after the settlement in March 2010: at [47]. His Honour therefore concluded that the cause of action accrued at that time. As a consequence, the primary judge concluded that to the extent that the appellant asserted a breach of duty arising from the settlement of the proceedings in March 2010, the proceedings were statute-barred and must fail: Pool at [52].
The primary judge then set out the findings that his Honour would have made had there not been a time bar.
His Honour identified that the relevant principles applicable to a solicitor’s liability in a case of this type were set out in Badenach v Calvert [2016] HCA 18; 257 CLR 440 at [57]. His Honour found that the respondent did not exercise the degree of care and skill that was expected of him. That was because the respondent “effectively coerced the plaintiff into agreeing to the settlement on 22 March 2010”: Pool at [56]. The primary judge then set out the facts which he said supported that conclusion. In summary they were as follows:
(a)An email from the appellant on 21 May 2009 sent to Ms Donald, a solicitor employed by the respondent, identified a person by name and said “this was a man who exposed me to abuse in the early eighties”. His Honour concluded that this email “was of sufficient clarity to generate further investigation”. Despite the ambiguities in the email, his Honour said: “At the very least the email should have generated questions of the [appellant]”.
(b)Despite that, on 22 March 2010 the respondent “effectively ignored it, preferring instead to make a great deal of the report of Dr Brown that had been served by the Marist Brothers”.
(c)His Honour concluded that at the meeting it was “abundantly clear that Dr Brown’s report was at the core of his advice to the plaintiff that he should accept the offer of $80,000 inclusive of costs”.
(d)The respondent accepted in his evidence that victims of sexual abuse as children grow up to be vulnerable persons. Despite this, his Honour pointed to a number of circumstances surrounding the meeting on 22 March 2010. They were, in summary:
(i)The meeting was arranged to occur one day before the expiry of the offer.
(ii)The respondent did not suggest that the appellant consider the offer overnight or that he could ask the opposing solicitors for extra time.
(iii)He did not obtain particulars of the earlier abuse so that a further opinion from Dr Peter Klug (a forensic psychiatrist retained by the appellant) could be provided.
(iv)That occurred in a context in which the respondent would have encountered “in persons of fragile mental health, examples of inconsistencies in histories and matters later recalled”.
(v)His Honour found that the respondent “unquestionably” gave the appellant the impression that his case had been significantly weakened by Dr Brown’s report and that was a breach of his retainer and duty of care.
(vi)He did not properly analyse the report of Dr Brown so as to provide the appellant with a proper overview of its import.
(vii)Such an analysis would have revealed that the report was not nearly as detrimental to the plaintiff’s case as emphasised by the respondent.
(viii)His Honour had significant doubts about the reliability of the respondent’s evidence in relation to the meeting because there was no file note available and he was first asked to recall the events of March 2010 in late 2020. The primary judge preferred the evidence of the appellant and his wife.
(ix)The approach taken by the respondent meant that he “effectively abandoned the assessment of the case carried out by his employee, Mr Blain, some two months earlier”. That involved “a modest assessment of the value of the plaintiff’s claim” as $160,000 plus costs.
(x)Neither senior or junior counsel, who had been fairly closely involved in the matter, appeared to have been consulted about the appropriateness of the settlement.
(xi)His Honour had doubts that the respondent had received the report of Dr Brown and the Marist Defendants’ settlement offer at the same time, pointing to evidence that the report of Dr Brown had come somewhat earlier.
(xii)There was no reason that the plaintiff could not have been provided with a copy of Dr Brown’s report before the settlement date and the report was “not as bleak as made out by the [respondents]”.
His Honour then immediately turned to the assessment of damages. The appellant relied upon an advice by a barrister that assessed the range of damages in 2010 as between $317,050 and $376,770 plus costs. The respondent on the other hand accepted that the figures assessed in January 2010 by Mr Blain, an experienced personal injury solicitor employed by the respondent, of $160,000 plus costs, were reasonable.
Having identified the competing positions, His Honour said: “Noting again that Mr Blain’s assessment was ‘modest’, I think a reasonable approach would be to assess the plaintiff’s damages in 2010, had he proceeded to hearing, at $275,000 plus costs.” His Honour reduced that to $250,000 to take into account that a portion of the damages would have been attributed to solicitor and client costs. He then discounted the $250,000 to take account that the claim was for a loss of a chance and that there were risks involved in proceeding to hearing, “in particular bearing in mind the obstructive course being taken by Marist Brothers at the time as well as the law emanating from cases such as New South Wales v Lepore [2003] HCA 4; 212 CLR 511 and Trustees of the Roman Catholic Archdiocese of Sydney v Ellis [2007] NSWCA 117; 70 NSWLR 565”. He also referred to the chance that all or some of the perpetrators of abuse “might have been accepted over his evidence”. His Honour recognised (at [62]) that the appellant’s evidence was “subject to fluctuations as to the identity of the abusers”. While his Honour recognised that the discount “involves a degree of speculation”, he settled on a discount of 20 percent, bringing notional damages down to $200,000: Pool at [64].
His Honour then deducted the amount of $76,415, which was the amount paid to the plaintiff under the National Redress Scheme established after the Royal Commission. Although his Honour doubted the correctness of the concession, the plaintiff had conceded that this amount should be deducted. That meant that the resulting verdict in favour of the plaintiff arising from the 2010 breach of retainer would have been $123,585: Pool at [64].
His Honour indicated that he would not have allowed any additional damages arising from the plaintiff’s mental health condition following settlement of the case in 2010. The primary judge considered that any damages would have been precluded by s 35 of the Civil Law (Wrongs) Act 2002 (ACT), which limited damages for mental harm to cases which involved “a recognised psychiatric illness”. His Honour concluded that the reports of Dr William Knox, a consultant psychiatrist, did not involve “the identification of a recognised psychiatric illness arising from the plaintiff’s dealings with his former solicitor”: Pool at [68].
His Honour then turned to the 2017 claim.
The respondent had admitted that in 2017 he acted pursuant to the retainer made between the parties in 2008. That related to sexual assaults perpetrated by Brothers Kostka, Sutton, Jerome Hinkman, Coman Sykes and Mr Paul Lyons. His Honour noted that the deed of release signed on 2010 only related to Brothers Kostka, Sutton, Evans, McCabe and Mr Lyons. It therefore excluded Brothers Sykes and Hinkman.
His Honour noted that, unlike the position in some other jurisdictions, s 21C of the Limitation Act did not provide a process which permitted a grant of leave to set aside deeds of release that had been previously executed. Later in his Honour’s reasons he referred to an extract from a journal article which, his Honour said, identified the “inequity flowing from the ACT approach”: at [81].
The primary judge found (at [76]) that the ACT legislative approach combined with the scope of the retainer meant that any reopening of the case pursuant to the retainer was restricted to allegations against those persons falling within the scope of the retainer but not named in the 2010 Deed (that is, Brothers Sykes and Hinkman). The evidence was that the appellant was only able to identify those two Brothers as having been involved in his abuse in 2019, well after his dealings with the respondent in 2016 and 2017. As a consequence, his Honour concluded that there was no avenue available to the respondent to reopen the case within the bounds of the 2008 retainer: at [79].
His Honour identified that the submissions made on behalf of the appellant seemed to have been that because it was discovered that Marist Brothers had long-standing knowledge about past abuse by Brother Sutton, that would give rise to an opportunity to set aside a deed of release although “any legal basis, or legal mechanics, upon which such an action might have been undertaken” was not identified: at [80]. Further, there was nothing critical said about the negotiation of the costs settlement which led to the payment of the additional $33,000. His Honour concluded that no breach of the retainer had been established in relation to the respondent’s actions on behalf of the appellant in 2017: at [82].
His Honour then, in case he was wrong, recorded some findings of fact in relation to the chronology of events in 2016 and 2017. Having set out the chronology of the events, the primary judge found it “impossible to assess damages that would have flowed from a breach of the retainer in 2017”: at [98].
His Honour then turned to the question of costs. His Honour identified that normally costs would follow the event so that the appellant would pay the respondent’s costs of the proceedings. The primary judge stated that his preliminary view was that because the appellant succeeded in establishing a breach of the retainer by the respondent in 2010 “including my finding of the [respondent] having improperly and unnecessarily coerced the plaintiff into the settlement” that each party should pay its own costs of the proceedings other than in respect of previously made orders. However, and importantly for the cross-appeal here, his Honour invited further submissions on costs from the parties. The respondent did not take up the opportunity to make further submissions in relation to costs.
The orders that his Honour made and from which the appeal and cross-appeal are brought were as follows:
(i)Judgment for the second defendant on the plaintiff’s claim.
(ii)Subject to further order, and without prejudice to the order made on 27 April 2021, each party is to pay its own costs of the proceedings.
The grounds of appeal and cross-appeal
The appellant’s grounds of appeal are as follows:
(a)The learned primary judge erred in construing the words of s 21C of the Limitation Act 1985 (ACT) to exclude the appellant’s claim against the respondent.
(b)The learned primary judge erred in concluding that the respondent’s conduct in 2017 did not constitute a breach of retainer.
(c)The learned primary judge erred in concluding that the respondent’s conduct in 2017 did not cause the plaintiff any loss or damage.
(d)The learned primary judge erred in concluding that he could not assess what loss or damage was caused by the respondent’s conduct in 2017.
(e)The learned primary judge erred in failing to enter judgment against the respondent for breach of retainer arising from the respondent’s conduct in 2017.
Ground (a) was not pressed at the hearing. That had the consequence that there was no challenge by the appellant to the primary judge’s decision in relation to the events in 2010 and that the only challenge was in relation to the events in 2017. As will be apparent, each of the remaining grounds dealt with a separate element in challenging breach, causation and loss. The last ground of challenge was a catch-all or summary of the other complaints and its success rises or falls with that of the other three. The appellant must succeed on each of the other three grounds in order to succeed overall in overturning the judgment of the primary judge.
The respondent filed a Notice of Contention in response to the appeal. It asserted various errors relating to the factual basis for the contingent finding of negligence in relation to the 22 March 2010 settlement and the contingent assessment of damages.
The respondent also filed a cross-appeal relating to the primary judge’s costs order. The grounds of the cross-appeal were that, for the reasons identified in the Notice of Contention:
(a)[the primary judge] ought to have found that the [respondent] did not breach his duty of care to the [appellant] in 2009/2010;
(b)[the primary judge] ought to have found that any breach of duty by the [respondent] in 2009/2010 did not cause the [appellant] any loss or damage;
(c)[the primary judge] ought to have found that the value of the [appellant’s] chose in action against the Trustees of the Marist Brothers was nil or alternatively was less than the amount for which the [appellant] settled his claim for damages against the Trustees of the Marist Brothers.
Because of these errors it was contended that the primary judge erred in the exercise of his discretion in failing to order the appellant to pay the respondent’s costs of the proceedings below.
The consequence of the appellant abandoning Ground (a) of the appeal was that the primary judge’s ultimate finding that the claim was statute-barred (insofar as it arose from a breach of duty in the settlement of the proceedings in March 2010) remains undisturbed. As such, it has been largely unnecessary to separately consider below the errors raised in the Notice of Contention, because they addressed the finding of breach by the respondent in relation to the 2010 settlement. The matters raised in the Notice of Contention remained relevant only insofar as they were relevant to the arguments about costs in the cross‑appeal.
Submissions on appeal
The issue raised by the appellant in this court is whether the respondent failed to adequately advise the appellant of the possibility of setting aside the 2010 Deed and whether, because of this failure, the appellant lost the chance for a better negotiating position in settlement negotiations or the ability to reopen his claim against the Marist Defendants.
The appellant’s contention was that a solicitor in the respondent’s position acting with reasonable care and skill would have provided advice to the appellant regarding the possibility of setting the 2010 Deed aside for misrepresentation. Proper advice would have either canvassed the likelihood of setting the deed aside or would have identified the issue and sought instructions as to whether the appellant wanted the solicitor to seek further detailed advice from counsel. This, at the very least, would have given the appellant a far more powerful negotiating position with the Marist Defendants in relation to any further payment to the appellant and the opportunity to make an informed decision as to whether to apply to set aside the 2010 Deed. The appellant contended that this should have occurred before the appellant was advised to enter into a second deed in exchange for the $33,000 which granted a further release. The appellant contended that the appellant’s claim was much more valuable in 2017 than it had been in 2010 because of the amendments to the Limitation Act and the documents relating to knowledge on the part of the Marist Defendants that had been produced to the Royal Commission. Further, damages awards in such cases in 2017 were substantially greater than they were in 2010.
The respondent focused upon how the matter was presented to the primary judge at the trial. He submitted that:
(a)The retainer in 2017 was limited to the contents of the February 2017 letter and did not extend to a general duty to protect the appellant’s interests.
(b)There was no evidence before the primary judge that would have demonstrated the existence of a lie or relevant non-disclosure that could have given rise to the possibility of setting aside the 2010 Deed.
(c)There was no evidence given about what a reasonably competent solicitor would have done in the circumstances that existed in 2017. The respondent gave evidence that he considered there was no potential for reopening the 2010 Deed. Ms Ross’ evidence was consistent with that. No challenge was made to the evidence of those witnesses based upon something discovered by the Royal Commission.
(d)There was no evidence led from the appellant as to what instructions would have been given had he received from the respondent whatever advice it was asserted he should have received.
(e)Although there were some submissions based upon the prospect of damages being recovered at a hearing, there was no submission based upon the possible consensual resolution of the reopened proceeding. There was no evidence as to what approach the Marist Defendants would have taken to the setting aside of the 2010 Deed other than that which disclosed a “hard-nosed combative approach” demonstrated in relation to the 2008 proceedings.
(f)There was no evidence that there were legal practitioners willing and able to act for the appellant in proceedings to set aside the 2010 Deed.
(g)There were no submissions identifying the legal principles upon which it was said that the 2010 Deed might have been set aside or how those principles would apply to the facts said to constitute the nondisclosure.
(h)There was no evidence that would support a conclusion that, had the 2010 Deed been set aside, the appellant would have achieved an outcome net of costs better than he in fact achieved as a result of the combined effect of the 2010 settlement, the 2017 settlement and the National Redress Scheme.
(i)If damages were to be awarded, then deductions would need to be made to take into account the possibility of the application to set aside the 2010 Deed being unsuccessful, the risks associated with any contested hearing (particularly those faced by the appellant in presenting as a reliable witness) and the difference between solicitor and client and party and party costs. Once those deductions were made, it was not established that the appellant had suffered any loss.
Decision in relation to the appeal
The critical problem for the appellant is that the basis for “reopening” the 2010 Deed was not clearly established. In his Statement of Claim in the 2008 proceedings, the appellant alleged causally-related damage arising from a breach of duty of care on the part of the Trustees of the Marist Brothers. There were a number of particulars to that paragraph which related to knowledge of sexual misconduct by Brother Kostka and others associated with the school. In the defence filed by the Marist Defendants, the particulars of knowledge were expressly not traversed. The Defence filed in the 2008 proceedings made it clear that there was no traverse of the allegations because there was no requirement to plead to each particular of a breach of duty. In addition to the absence of any clear traversal of the allegation of knowledge, there was no evidence as to the adequacy or otherwise of the discovery provided by the Marist Defendants that might have provided a foundation for a claim that there had been deliberate nondisclosure of records relevant to knowledge.
Having regard to the evidence before the primary judge, his Honour did not err in reaching the conclusion that there was no breach of duty in relation to the 2017 settlement. There is little doubt that, in some circumstances, a situation like that which existed in 2017 in the present case could give rise to a claim for damages. It would be necessary for the claimant to prove:
(a)that there was some conduct on the part of the other party to the relevant deed which, as a matter of law, was a matter which might lead to the setting aside of the 2010 Deed;
(b)that a reasonably competent solicitor in the position of the defendant would, in the circumstances, have identified the factual and legal potential for that to occur and given some additional advice to the claimant;
(c)that, as a result of the hypothetical additional advice having been given, the claimant would have done something different to what the claimant in fact did; and
(d)that, as a result of not having done that different thing, the claimant lost a chance to achieve a better outcome, and that chance was a valuable one.
In the present case the appellant failed to prove each of these integers at first instance. Nor has it been established on appeal that the primary judge erred in reaching the conclusion that his Honour did. In order to explain why this is so, it is convenient to address each of the above matters sequentially.
(a) Legal basis for setting aside the 2010 Deed: The submissions of the appellant both before the primary judge and in this court failed to establish component (a). Whether or not there had been a positive misrepresentation by the Marist Defendants was contestable. The allegation of knowledge on their part was contained in particulars of the allegation of causally related damage flowing from breach of a nondelegable duty. The Defence of the Marist Defendants said expressly that “as the particulars of breach of duty are not matters for traverse, the defendants do not plead to each particular of breach”.
The denial of the material fact involved denial of the combined allegation that the damage to the appellant was caused by breaches of the duty of care owed by the Trustees. Because both breach and causation were pleaded in a single paragraph, the denial may have related to either or both of these components.
Even if there had been an express denial of knowledge, it seemed to have been assumed before the primary judge that the 2010 Deed might be set aside. However, that was never demonstrated by reference to authority or principle. On appeal, the authorities referred to were Harvey v Phillips (1956) 95 CLR 235 at 242-243 and Taheri v Vitek [2014] NSWCA 209; 87 NSWLR 403 at [71]-[77]. Taheri refers back to the restatement of the basis upon which a contract may be set aside for fraudulent misrepresentation by Wilson J in Gould v Vaggelas (1984) 157 CLR 215 at 236. There was no attempt made either at trial or on appeal to establish with any precision, by reference to the terms of the 2010 Deed or otherwise, the existence of a fraudulent misrepresentation which induced the appellant to enter that deed. The appellant did not identify it in his evidence. The respondent was not cross-examined on it. The primary judge was not referred to the cases now relied upon. The mere articulation, by reference to various findings of the Royal Commission, of a basis upon which it can be concluded that some or all of the Marist Defendants had relevant knowledge was not sufficient to establish a basis at law for setting aside the 2010 Deed.
(b) What a competent solicitor would have done: The appellant did not adduce any expert evidence as to what a reasonably competent solicitor in the circumstances of the respondent would have done in 2017. Thus, there was no evidence that a reasonably competent solicitor would have enquired into, or given any advice in relation to, the potential to set aside the 2010 Deed or obtain further advice in relation to that issue. The only evidence on the issue was given by the respondent and Ms Ross. Both indicated that they considered that the 2010 Deed remained binding. The primary judge asked about the circumstances in which other settlement deeds may have been set aside. The respondent explained that he had applied to have other deeds set aside for persons who had been unrepresented when the deed was entered into, but that he had never been able to set aside a deed that had been entered into by a person who was a client of his at the time of entry into the deed. There was therefore no evidentiary foundation to contradict the primary judge’s conclusion that there was no breach of duty in failing to advise on the possibility that the 2010 Deed could be set aside.
The absence of established error with regard to the primary judge’s finding that there was no breach is sufficient to dispose of the appeal, because any error with regard to the reasoning on causation or loss could not change the result for the appellant’s claim. It is therefore only necessary to address the other matters briefly, for completeness.
(c) What the appellant would have done: The appellant did not give evidence that had he received the absent advice (whatever that might have been), he would have acted differently. The highest the evidence could be taken was that the appellant said he would have gone through a hearing if he had to. It is possible that an inference might have been drawn that he would have accepted advice to seek to set aside the 2010 Deed if he was advised that there were good prospects of doing so, that there were solicitors who were prepared to act for him, and that it would be beneficial to him. However, as pointed out, the evidentiary foundation for the drawing of such an inference was somewhat lacking. If the content of the legal advice was anything other than in such an unequivocally positive form, the evidence did not disclose what the appellant would have done.
(d) Loss of a valuable chance: Damages in a case alleging negligence resulting in the loss of a chose in action involve the assessment of the value of the loss of a chance: Moss v Eaglestone [2011] NSWCA 404; 83 NSWLR 476 at [22], [25]. This was applied by his Honour, who quoted from it at length at [36] of the reasons at first instance. In order for there to be a “valuable” chance it would have been a chance that, having regard to all the contingencies, would have resulted in an outcome more favourable to the appellant than the outcome he in fact achieved, namely the aggregate sum achieved as a result of the 2010 settlement, the 2017 settlement and the National Redress Scheme. The assessment of the value of the chance would have depended upon:
(a)an assessment of the prospects of having the 2010 Deed set aside;
(b)whether or not solicitors would be prepared to act for the appellant in such proceedings;
(c)what the attitude of the Marist Defendants would have been to such an application;
(d)the unrecoverable costs incurred in such an application if it was successful and the risks associated with it being unsuccessful;
(e)what the attitude of the Marist Defendants would have been to settlement following any setting aside of the 2010 Deed;
(f)the risks associated with proceeding to a contested hearing;
(g)the prospects of enforcement against one or more of the Marist Defendants following a contested hearing leading to a judgment; and
(h)the extent of the difference between solicitor and client and party and party costs resulting from a contested hearing.
This exercise was not attempted before the primary judge or on appeal. It is far from certain that such an assessment would have resulted in a conclusion that any chance lost was a valuable one, in the sense indicated. Having regard to the absence of the other components that would need to be established, we respectfully agree with the finding of the primary judge (at [98]) that it was impossible to assess whether any valuable chance had been lost, let alone conclude that such a result was established on the balance of probabilities.
Accordingly, for the reasons given above, the appellant has not demonstrated that there was any error in the conclusion reached by the primary judge in relation to the 2017 settlement. The appeal must therefore be dismissed.
Submissions on cross-appeal
The respondent’s cross-appeal is directed to the costs order made by the primary judge. First, it involves challenging the findings made by the primary judge as to breach of duty in relation to the 2010 settlement. Second, although not expressly raised by the terms of the cross-appeal, the respondent in his written submissions sought to challenge the exercise of the trial judge’s discretion in any event.
So far as the first aspect of the respondent’s cross-appeal was concerned, the respondent submitted:
(a)the email from the appellant to a solicitor employed by the respondent dated 21 May 2009 did not constitute notice of abuse by a relative of the appellant prior to the abuse of the appellant at Marist College;
(b)it was open to the respondent to form the view that he did in relation to Dr Brown’s report, namely that it significantly weakened the appellant’s case;
(c)it was open to the respondent to form the view that the unusual nature of some of the allegations of abuse gave rise to potential credit issues at a contested hearing;
(d)there was no basis for a finding that the respondent had coerced the appellant into accepting the 2010 settlement and no basis for finding that a different settlement would have been available to the appellant;
(e)there was no sufficient basis for a finding that the appellant would not have entered the 2010 settlement if he had been properly advised or that he would have proceeded to a contested hearing; and
(f)the assessment undertaken by the primary judge did not adequately consider the appropriate counterfactual or provide a discount for the possibility of an unfavourable outcome of the hypothetical contested hearing or the costs differential between solicitor and client and party and party costs.
In relation to the exercise of discretion, the respondent submitted that the court should ordinarily award costs of the proceedings to the successful party without attempting to differentiate between the issues on which they succeeded and those on which they failed. Even if there was an appropriate basis to depart from the usual rule, he submitted that would not warrant depriving the respondent of his costs altogether but only a proportion of his costs.
The appellant contended that each of the challenged findings made by his Honour were open on the evidence. He submitted that it was the finding of breach of retainer and the manner in which it was breached that informed the exercise of the primary judge’s discretion. This was a relevant matter to which he was entitled to have regard and there was no error in the House v The King (1936) 55 CLR 499 sense.
Decision on cross-appeal
The primary judge dealt with the issue of costs on the basis that he formed a “preliminary view” about that issue. He had found that there had been a breach of the retainer and said that in those circumstances he considered that the appropriate order was that each party pay its own costs: Pool at [101]. He was not aware whether there were any other matters such as offers of compromise which might affect his decision on costs: Pool at [102]. He therefore invited further submissions on costs from the parties. The order that he made in relation to costs is set out at [29] above. There is no evidence that the respondent took any opportunity to make further submissions to his Honour or to put evidence before him of a Calderbank offer (which was included in the appeal book in the event that this Court saw fit to exercise its discretion on costs).
In circumstances where the primary judge has allowed an opportunity for a party to be further heard in relation to costs but that party has not taken up that opportunity, there is no reason why this court should entertain an appeal on the basis that the primary judge erred in a way that might have been addressed by further evidence or submissions.
A significant component of the respondent’s cross-appeal is based upon the assertion that the contingent findings of fact that the primary judge made about the respondent’s conduct in relation to the 2010 Deed were not correct. Notwithstanding the preliminary nature of the primary judge’s conclusions in relation to costs, any consideration of the question of costs would have taken place in light of those conclusions. Any further submissions made by the respondent to the primary judge on costs would not have provided an opportunity to the respondent to contend that those findings were wrong. Rather, those submissions would have provided an opportunity for him to contend that even in light of those findings, costs ought to have followed the event or the respondent ought only to have been deprived of a portion of his costs.
It is in that context that, even though the respondent did not seek to be further heard in relation to the primary judge’s preliminary view, it is open on this appeal to challenge some of the foundations for the primary judge’s order in relation to costs. However, where there is a mixed outcome in proceedings the question of apportionment of costs between issues on which the party who has overall been successful has succeeded, and those on which that party has failed, is very much a matter of discretion. It has been frequently stated that where such an exercise is appropriate, it will be carried out on a broad brush basis, and largely as a matter of impression and evaluation by the court: see for example, Avopiling Pty Ltd v Bosevski [2018] NSWCA 146; 98 NSWLR 171; at [172]; James v Surf Road Nominees Pty Ltd (No 2) [2005] NSWCA 296 at [36]; Roads and Traffic Authority v McGregor (No 2) [2005] NSWCA 453 at [19]; Bostik Australia Pty Ltd v Liddiard (No 2) [2009] NSWCA 304 at [38]; Macquarie International Health Clinic Pty Ltd v Sydney South West Area Health Service (No 2) [2011] NSWCA 171 at [22]. The “central and overriding principle” remains to do justice between the parties in each particular case: Zhang v Ng [2021] NSWCA 1369 per Ward CJ in Eq at [56]. That was the principle applied by the primary judge at [100].
Only some of the factual issues sought to be raised by the respondent were relevant to the way in which his Honour dealt with the question of costs. That is because the primary judge focused on his finding that the respondent had breached his duty to the appellant in the way he dealt with the entry into the 2010 Deed. The factual matters articulated above at [52](e) and (f) do not relate to that finding but instead relate to other aspects of the manner in which the primary judge dealt with his contingent assessment of damages. The quantum of damages was not a factor which his Honour referred to in reaching the preliminary view that he did. Insofar as there is an unarticulated possibility that some reliance might have been placed upon those issues by the primary judge, that is a matter which could have been, but was not, agitated by the respondent before the primary judge and he is not entitled to raise that on appeal.
That leaves the factual contentions at [52](a)-(d) above relating to the primary judge’s conclusion that there had been a breach of duty on the part of the respondent. They can be dealt with sequentially.
(a) 21 May 2009 email: The email dated 21 May 2009 was of significance because the appellant alleged and the respondent denied that the appellant gave the respondent notice that he had been sexually abused by a family member prior to that disclosure to Dr Brown. That was significant because if notice had been given earlier, it undermined the respondent’s basis for contending that the history given to Dr Brown was a revelation which weakened the appellant’s case and made it more important to accept the offer of settlement that was being considered at the 22 March 2010 meeting. The evidence of the respondent was that he had not read the 21 May 2009 email at the time but that he believed he had read it by the time the 2010 Deed was entered into. It was certainly open to the primary judge to treat the email the way that his Honour did, namely to recognise the inconsistencies in it but conclude that, having regard to its contents, “[a]t the very least the email should have generated questions of the plaintiff.”
(b) Dr Brown’s report: It was open to his Honour to conclude that Dr Brown’s report was not as adverse to the appellant’s case as it was presented to the appellant as being. That was particularly so in circumstances where the nature and consequences of the earlier abuse had not been explored other than by Dr Brown.
(c) Unusual nature of allegations: The respondent is correct to say that it was open to the primary judge to take into account the unusual nature of some of the allegations in assessing the significance of potential credit issues at any contested hearing. His Honour said: “I do not see any credit issue against the plaintiff arising if the matter had gone to trial. Every allegation was unusual. The plaintiff was disclosing the most perverse and unusual conduct of assorted paedophiles masquerading as religious teachers. The plaintiff was asked to be a ‘Christian soldier’ while he was being abused. Everything was unusual”: Pool at [56](f)(xi). Accepting that the respondent had specific reasons why he considered the allegations to be unusual and that this created a significant risk for the appellant in pursuing his claim, this opinion was not explained to the appellant in the conference at which he signed the 2010 Deed. That would tend to reinforce the primary judge’s conclusion that there was a breach of duty at that point even if the unusual nature of some of the claims subsequently undermine the primary judge’s contingent assessment of damages. It would reinforce the primary judge’s conclusion because it would indicate that the appellant was being recommended a settlement because of articulated reason A (the content of the Brown report) when in fact a substantial reason why the settlement was being recommended was because of unarticulated reason B (the various matters referred to in the respondent’s affidavit in the proceedings below dated 22 January 2021 at [88]-[90]).
(d) Coercion/Different settlement available: So far as the primary judge’s statement that the respondent “effectively coerced the plaintiff into agreeing to the settlement”, the basis for the conclusion is set out in the various paragraphs and subparagraphs at [56] of the judgment. Those matters taken together provide a foundation for that conclusion. They were based upon the primary judge’s conclusion, reached after having seen and heard the appellant and his wife and the respondent give oral evidence, that he preferred the evidence of the appellant and his wife in relation to what occurred at the 22 March 2010 meeting to that of the respondent: Pool at [56](f)(vii). Insofar as the respondent contends that there was no basis for finding that a different settlement would have been available to the appellant, that is a point of more substance but not one which is relevant to the primary judge’s consideration of the question of costs because his Honour did not make reference to it. Rather, his Honour simply referred to the appellant having been “coerced” into the settlement.
Insofar as the respondent sought to challenge the exercise of discretion based on the facts found by his Honour, those contentions are not open to the respondent on appeal having regard to the fact that he did not seek to be further heard before the primary judge in order to persuade the primary judge to depart from the preliminary view that he had reached.
Overall, while the point relied upon by his Honour would appear to be a slender basis for a departure from the usual rule in relation to costs, having regard to the width of the costs discretion, the respondent has not demonstrated a House v The King error that it is entitled to raise on this appeal. For those reasons, the cross-appeal will be dismissed.
Orders
As a consequence of the above reasons, the following orders are made:
1. The appeal is dismissed with costs.
2. The cross-appeal is dismissed with costs.
| I certify that the preceding sixty-seven [67] numbered paragraphs are a true copy of the Reasons for Judgment of the Court. Associate: Date: 14 October 2022 |
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