Price v Carabelas - [2009] SADC 9

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil)
PRICE v CARABELAS
[2009] SADC 9
Judgment of His Honour Judge Boylan
2 June 2009
CONTRACTS
Defendant engaged as plaintiff's solicitor for proceedings in the Family Court - whether defendant in breach of his contractual duties by:
1. Consenting to order without instructions; and
2. Failing to adduce evidence.
Held: Defendant acted on instructions. No breach of contractual duty.

TORTS - NEGLIGENCE
Defendant engaged as plaintiff's solicitor for proceedings in the Family Court - whether defendant was negligent by:
1. Consenting to order without instructions; and
2. Failing to adduce evidence.
Held: Defendant acted on instructions and was not negligent.

DAMAGES - GENERAL PRINCIPLES
Whether as a result of claimed breach of contractual duties and/or negligence plaintiff:
1. Lost the opportunity to purchAse former matrimonial home; and
2. Was deprived of the opportunity to benefit from its increase in value.
Held: Plaintiff could have purchased another house of equal value, thus acquiring the opportunity to profit from the general increase in house values.
Plaintiff's claim dismissed.
Astley v Austrust (1999) 197 CLR 1 at paras 44-48, applied.

PRICE v CARABELAS
[2009] SADC 9
A claim for damages for negligence by a solicitor

When Martin Price and his former wife separated, he engaged Mr George Carabelas, a solicitor, to act for him in proceedings in the Family Court. Mr Price claims that Mr Carabelas acted negligently and breached his contractual duties. He alleges that, without instructions, Mr Carabelas consented to a Family Court order that a land agent be allowed to decide the sale price of the former matrimonial home and that he failed to adduce evidence in the Family Court that Mr Price had the money to buy the house himself. Mr Price claims that, as a result, he failed to buy the house and so suffered financial loss by being deprived of the opportunity to benefit from its increase in value over time.
Mr Price’s claim fails. Mr Carabelas breached none of his duties. Even had he done so, Mr Price suffered no loss. He could have bought another house of equal value and so acquired the opportunity to profit from the increase in house prices.
Some undisputed facts
Mr and Mrs Price married in 1995 and remained together until 2000. They had two sons. They lived in a house which they had bought, shortly before their marriage, for about $234,000. After separation, they argued bitterly, especially about their boys and about property. While both had instructed solicitors, Mr Price and his former wife tried to resolve their differences themselves, usually without success. But, by March 2001 they had agreed upon one thing: to sell the house.
Mr Price instructed Mr Carabelas to apply to the Family Court for orders that the house be prepared for sale, sold by public auction, and that the proceeds of sale be used to pay expenses and debts owing by him and his former wife, including a debt to his father of $US27,880.00. Any surplus was to be invested pending final property settlement. Mr Carabelas filed the application on 17 April 2001 and it was listed for hearing on 5 June 2001. So that Mr Price could prepare it for sale, Mrs Price and the boys moved out of the house and Mr Price moved back in.
By 5 June, Mr and Mrs Price were again arguing about the children and could not settle that dispute between themselves, so, on that day, Mr Carabelas filed another application, this time seeking court orders about the children. Both applications came on for hearing on 5 June but the Court made no substantive orders on that day. Instead, Mrs Price was ordered to file a response to Mr Price’s applications. Accordingly, on 12 June 2001, she filed three documents: a response, a financial statement and an affidavit. In her response she sought various orders about the children and about property. One of the interim property orders she sought was this:
“That the said property [the former matrimonial home] be sold for an amount equal to or greater than $365,000 or such other lower sum as the agent may advise is appropriate (my underlining).
She also asked for an order that a Registrar of the Family court sign documents for the sale of the house if Mr Price refused to do so.
All applications were set for hearing on 3 July 2001.
Mr Carabelas sent to Mr Price only a copy of his wife’s affidavit. He did not send him her financial statement or, importantly, a copy of the interim property orders she was seeking.
Meanwhile, Mr and Mrs Price continued to try to resolve their differences. In the week or so before 3 July, they talked, but only about arrangements for the children. During those discussions Mr Price found out, for the first time, that there was to be a hearing on 3 July. Mr Carabelas had omitted to tell him about that. Mr Price rang Mr Carabelas who confirmed the hearing date. During that telephone call, Mr Price told Mr Carabelas that he and Mrs Price had resolved the issues about the children. Having been told that, Mr Carabelas said that there was no need for Mr Price to attend the hearing.
On 3 July 2001, the day of the hearing of the application, Mr Price was at his workplace. Mr Carabelas rang him from the Family Court to discuss the applications and orders sought. Eventually, Mr Carabelas consented to various orders, including the interim property orders sought by Mrs Price. The Court then ordered the parties to attend a conciliation conference on 11 September 2001.
Meanwhile Mr Price continued to live in the house and to work on it. He thought that it should fetch about $365,000 at auction.
The house was auctioned on 25 August 2001 and was passed in, the highest genuine bid having been $295,000. A few days later the land agent, Ms Huxley, suggested that the house should be marketed for $340,000 but Mr Price was not prepared to sell it at that price. He told Ms Huxley that if the house was to be sold for $340,000 he wanted to buy it himself. On 6 September 2001, Ms Huxley received a written offer from a third party for $330,000. Mrs Price signed the contract for that amount but Mr Price refused to do so. He still wanted to buy the house himself but was not prepared to sign a contract to that effect until the agency agreement with Ms Huxley’s firm expired on 4 October 2001. He believed that, by waiting until then, he could save the agent’s fees.
After the house had been passed in, Mr Price asked his father for help. His father agreed to finance a purchase at $330,000.
On 8 September 2001, Mr Price and Mr Carabelas met to prepare for the conciliation conference. Mr Price told Mr Carabelas that a third party had offered $330,000, that he thought the house was worth more, and that he was prepared to buy the house himself for that amount. Mr Price also gave instructions about his proposal to resolve the property dispute. That proposal included provision for repaying to his father the loan of some $US27,880.
The conciliation conference on 11 September 2001 failed. Mr Price’s settlement proposal was rejected and the matter was listed for trial. Mr Price continued to refuse to sign the contract for sale to the third party.
He next tried to settle his dispute with his wife by instructing Mr Carabelas to file in the Family Court an Offer of Settlement. That offer included a proposal that Mrs Price transfer her interest in the house to Mr Price. Mr Carabelas filed the offer on 9 October 2001.
The next day, 10 October 2001, Mrs Price took the initiative. She applied to the Family Court for an order that a Registrar sign, on Mr Price’s behalf, the contract for the sale of the house to the third party for $330,000. That is, she asked the court to enforce the interim orders to which Mr Carabelas had consented on 3 July 2001.
Murray J. heard Mrs Price’s application in the Family Court on 19 October 2001. Mr Price was present, represented by Mr Carabelas. Mr Tellis appeared for Mrs Price.
Mr Carabelas opposed the application, telling Her Honour that Mr Price was prepared to buy the house for $330,000. But he produced no evidence that Mr Price could raise that sum. Having noted that a third party had made a firm offer to purchase and that she had no evidence that Mr Price could raise the money, her Honour observed that “a bird in hand is worth two in the bush” and ordered that a Registrar sign the contract. In the face of that order, Mr Price relented. He signed the contract and the house was sold. The proceeds were placed into an interest bearing account pending final settlement of Mr and Mrs Price’s property dispute.
On 22 October 2001, Mr Price terminated Mr Carabelas’s instructions.
Mr Price’s complaint
Mr Price claims that by mid September his father was ready, willing and able either to lend his son $330,000 or to buy the house himself and, eventually, sell it back to his son. Had Mr Price acquired the house in either of those ways, he would have benefited from its increase in value over time. He claims that he lost that opportunity to benefit because Mr Carabelas failed to advise him of the need to get proof of his ability to finance the purchase, advised him no such proof was necessary, and failed to put such evidence before Murray J.
Whether or not Mr Carabelas was negligent depends upon the answers to the following two questions.
1.Did Mr Carabelas consent to orders on 3 July 2001 without having Mr Price’s instructions to do so?
2.Did Mr Price instruct Mr Carabelas, before 19 October 2001, that his father had agreed to finance the purchase of the house?
Before turning to those questions I say something about the witnesses and the evidence.
The Witnesses
Mr Price was unrepresented at trial. He was unsure about what evidence was relevant and what was not. That is understandable. He tendered a large number of documents including a quantity of financial records. Most of them are irrelevant. I make no criticism of Mr Price for tendering the documents. I mention them only to explain why it is that I have not referred to them. This case turns upon the evidence of Mr Price, of his father, of Mr Carabelas, on the contents of Mr Carabelas’s file and on a number of court documents.
Mr Price gave evidence. I do not think he was generally reliable. He is bitter about the result of his Family Court proceedings and convinced that Mr Carabelas failed him. That bitterness and that conviction have affected his reliability. He has had many years to pore over Mr Carabelas’s file and now draws from it inferences not supported by the facts. In my view he has reconstructed some events and some conversations. He does not have the clear memory – independent of the file and of other documents – which he professes to have.
Mr Price called other witnesses but I need mention only two of them: his father, Mr Richard Przybylski, who came from the United States to give evidence, and Mr Sanders, a valuer. Mr Pryzbylski was plainly honest and reliable. I accept his evidence.
Mr Sanders gave evidence about the value of the house but there is no dispute about its value at October and December 2001. I find that it was then worth $330,000. Mr Sanders also gave evidence that there were other houses available for purchase in October 2001 and that increases in the value of houses was the result of a rising market. I accept that evidence, which is common knowledge anyway.
Mr Carabelas, who was represented by counsel, gave evidence. He had no or very little recollection of events. That is to be expected. These events happened many years ago and Mr Price was but one of Mr Carabelas’s many clients. Mr Carabelas had to rely upon the contents of his file and upon his usual practices and procedures in running his office and his clients’ affairs. He was an honest witness.
1. Did Mr Carabelas consent to orders without instructions?
Mr Price claims that Mr Carabelas did not tell him on or before 3 July 2001 the terms of the orders his wife was seeking; that he did not tell him about those orders after the Family Court had made them; and that he, Mr Price, was still unaware of the orders when he went to the hearing before Murray J.
Mr Carabelas omitted to tell Mr Price that the Family Court had set the various applications for hearing on 3 July. Nothing turns on that, although his omission has made me careful about accepting Mr Carabelas’s evidence that he invariably confirmed instructions with his client. Nor is there any dispute that Mr Carabelas sent to Mr Price only Mrs Price’s affidavit and not her financial statement or a copy of the interim orders she was seeking. That is probably understandable as the only document about which Mr Carabelas would have needed instructions was the affidavit. There is no doubt, then, that Mr Price did not know the precise interim orders his wife was seeking before 3 July. The issue is whether, in the course of their telephone conversations on that day, Mr Carabelas told him the precise terms of these orders.
I think that particular question can be resolved by looking, first, at the state of Mr and Mrs Price’s dispute shortly before and on 3 July 2001 and, secondly, at Mr Carabelas’s records. Mr and Mrs Price had not, of course, resolved their property dispute. Far from it. But they had at least agreed on an interim measure – that the house be sold and the proceeds invested – and arrangements for its sale were under way. Mr Price had instructed a land agent on 2 July. The auction was weeks away and any suggestion that the house would not fetch about $365,000 had not entered Mr Price’s mind. For those reasons, the interim property orders were of little concern to him on 3 July 2001. His chief concern on that day were the orders to be made about the children. Eventually, he conceded in evidence that the interim property orders which were made generally reflected his instructions.
At some stage shortly before 3 July, as I have already said, Mr and Mrs Price had resolved the children’s issues between themselves and that is why Mr Price did not attend the hearing. All orders were to be by consent. But when Mr Carabelas was at the Family Court, he had reason to doubt whether Mr Price and his former wife had, in fact, agreed. Therefore, he rang Mr Price. There is a dispute about the number of calls. Mr Price said that there were two, the first a short one during which Mr Carabelas said that he could not believe the tactics of the other side and asked Mr Price what he had discussed with his wife about the children; the second telephone call, a longer one, 10 minutes later. Mr Carabelas noted in his file that there were three separate calls. I prefer and I accept Mr Carabelas’s evidence, although it does not matter whether there were two or three calls. What is clear is that, before consenting to orders, Mr Carabelas sought instructions. Neither of the two men could recall all that was said. Mr Price was, however, adamant that the sale of the house was not discussed. While that matter may not have been discussed in any detail, I do not accept that Mr Carabelas did not mention the interim property orders. The purpose of his calls was to ensure what Mr Price’s instructions to Mr Carabelas were. Mr Carabelas’s comment about the “other side’s tactics” demonstrates that he was alert to any changes of prior agreements made between the parties without the intervention of their solicitors.
Further, Mr Carabelas’s file entries support his case that he received instructions. On his note made on 3 July recording his three telephone attendances on Mr Price Mr Carabelas wrote:
“Confirm arrangements re sale of house are correct. Has no objection to order being made in the terms. Re contact. Agrees to.”
On 4 July 2001, Mr Carabelas wrote to Mr Price a letter which included this passage:
“We confirm that in the course of the hearing the writer telephoned you and obtained instructions with a view to dealing with interim orders that were sought by yourself and your wife.
In the end, we confirm that obtaining your specific instructions we asked the Court to make an order by consent.”
That letter suggests that Mr Carabelas sought instructions about all orders. I find that he did so.
Mr Price, as I understand his case, argued that two matters especially show that Mr Carabelas acted without instructions. Mr Price argues that Mr Carabelas did not send him a copy of the orders, as promised in Mr Carabelas’s letter of 4 July. That is true, but there is nothing sinister in that failure. It can take the Family Court two or three weeks to draw up such an order and post it to the parties or to their solicitors. Mr Carabelas was away for five weeks from about the end of July or early August. His, or his staff’s failure, to send copies of the orders to Mr Price was an oversight. There was no attempt to conceal the orders made. Next, Mr Price argued that he would never have consented to an order allowing the house to be sold for less than $365,000 or to an order giving an agent the right to recommend a lower amount. That argument would have force if, as at 3 July, it had occurred to Mr Price that the house would not fetch the price he was expecting. But as I have said, that was not the case. The interim property orders made on 3 July 2001 were, at the time, of little interest to Mr Price. They were, unlike the orders about the children, formalities. I find that Mr Carabelas told Mr Price on the telephone the precise terms of the interim property orders sought and received instructions to consent to them.
2. Did Mr Price instruct Mr Carabelas that his father had agreed to finance the purchase of the house?
Mr Price gave evidence that, on three separate occasions before the hearing before Murray J, he instructed Mr Carabelas that his father would put up the money for the purchase of the house. He said that he told Mr Carabelas that his father was prepared to lend him $330,000 but he did not tell Mr Carabelas any details of the proposed financial arrangements between him and his father. Mr Carabelas denies that he was told that Mr Przybylski would provide the $330,000. I prefer Mr Carabelas’s evidence. I have come to the conclusion that, at no time before the hearing before Murray J, did Mr Price tell Mr Carabelas of his father’s promise. I have reached that conclusion for four reasons:
(i)     Mr Price and his father never concluded any agreement about the terms upon which Mr Przybylski would finance his son;
(ii)    Mr Carabelas made no record of such instructions;
(iii)   even at the hearing before Murray J, when he had an opportunity to give or confirm such instructions, Mr Price did not do so; and
(iv)    Mr Price had good reason to be secretive about his father’s willingness to help him.
Mr Przybylski told me that, on 7 September 2000, he told his son that he would lend him $330,000 and that he could have that amount transferred to Australia within three to five working days. I accept that evidence. Therefore, before his conference with Mr Carabelas on 8 October 2001, Mr Price knew that his father would lend him money. But Mr Price and his father had not concluded any agreement about the loan. The effect of Mr Przybylski’s evidence is that he would have lent his son whatever money was necessary for his son’s purposes. The exact amount had not been agreed. The $330,000 was not a final figure. Indeed, when Mr Przybylski first made his offer Mr Price would not have known how much he needed. He was then still tying to negotiate a final settlement in which he would buy only his wife’s share of the house. To do that he would have needed less than $330,000. Had he eventually had to buy the house on the open market, he would have needed more than $330,000.00 as he would have had to pay stamp duty and other costs associated with the purchase of the house. Nor had the two men agreed on the “mechanics” of the loan. It seems that Mr Przybylski was intending to buy the house himself and, eventually, to sell it back to his son.

At their conference on 8 September 2001, Mr Price told Mr Carabelas about the failed auction and said that he was prepared to buy the property himself for $330,000. He also told Mr Carabelas that Mrs Price had said that she did not want him to have the house. He went on to instruct Mr Carabelas to offer to purchase the property for $330,000 after 4 October 2001 unless the agent came up with a better offer before then. That offer was to be part of an overall settlement. Mr Price then gave very detailed instructions about his proposal for such a settlement. That proposal included provision for repayment to his father of the loan of $US27,880. Mr Carabelas made notes of the conference. He made detailed notes of Mr Price’s proposal for settlement. There is no mention in those notes of Mr Przybylski having offered to fund the purchase of the house. The absence of any such note is very odd, especially in light of the note about the proposed repayment to Mr Przybylski. Had Mr Price told Mr Carabelas of his father’s offer, then I would have expected that Mr Carabelas would have made some inquiries about the provision for repayment of the loan for $US27,880. He would surely have asked whether, given the promised loan, the provision for repayment was still to be included in the proposal. Further, there is no suggestion from Mr Price that, at the conciliation conference on 11 September, there was any mention of his father’s financing the purchase of the house. Had he given Mr Carabelas the instructions, again, I would have expected that that would have been a matter debated at the conciliation conference. There is no suggestion that any mention was made of it.
On 11 October Mr Price and Mr Carabelas conferred again. There is no note by Mr Carabelas of Mr Przybylski’s offer.
That brings me to the hearing before Murray J on 19 October 2001. Mr Price tendered a transcript of the hearing. Some little time into the hearing, Mr Carabelas told her Honour that Mr Price was offering to buy the house for $330,000. A little later, her Honour said:
… So what I have to hear from Mr Carabelas now is whether the husband offers unconditionally to pay $330,000, and if he does then, I will order him to do so.
Shortly thereafter, after there had been some discussion about Mr Price’s offer, Mr Tellis, solicitor for Mrs Price, told Murray J that he did not have any indication whether or not Mr Price’s finance to purchase the house had been approved. He said:
We don’t know if he can obtain finance, we have not seen any evidence to that point. We have seen nothing really and this matter has been going on for some considerable time, your Honour. … We have nothing more – Mr Carabelas had had time, not only now, but previously, to provide confirmation as to whether finance has been approved. We may have the situation, your Honour, that this could fall through and then we would have …
There was further discussion and further submissions were made. Mr Price was present and must have heard Mr Tellis’s repeated and emphatic submission that there was no material before the court that finance was certain, but Mr Price made no effort, during the hearing, to instruct Mr Carabelas to tell the court of his father’s offer.
I have been mindful of the reluctance which any client may have to interrupt his counsel’s submissions during the course of a hearing before a judge. Many litigants would feel uncomfortable, to say the least, in doing so. But in this case Mr Price ventured to interrupt. It is apparent from the transcript that, during the course of submissions, Mr Price saw fit to instruct Mr Carabelas to tell her Honour that a property down the road from the former matrimonial home had sold for $426,000 only a week earlier. In circumstances such as those, where Mr Price was prepared to interrupt and give instructions, I would have expected him, especially given what her Honour and Mr Tellis had said, to have reminded Mr Carabelas forcefully of his father’s offer and to have instructed him to tell her Honour of the offer. He did not do so. His failure to do so persuades me that he had given no such instructions to Mr Carabelas and that he chose not to do so before Murray J.
That choice brings me back to my fourth reason for preferring Mr Carabelas’s evidence on this topic. The orders which Mrs Price sought on 19 October were interim orders only. Mr Price knew that if the house was sold, to him or to the third party, that that was not the end of the property dispute. There was still to be a trial and, in fact, there was a trial in which judgment was given about a year later. During negotiations the only mention that Mr Price had made of his father was in the context of the repayment of the loan. Had Mr Price purchased the house himself, or had his father done so, and the house increased in value between 19 October 2001 and trial, one does not know what account the trial judge would have taken of the increase in the value of the property. Mr Price may still well have been at risk of his wife’s receiving part of any such increase during that period. Further, as Mr Carabelas said in his evidence, if Mr Przybylski was going to finance the purchase, then it would not have been a good idea for Mr Price to have revealed to his former wife that he had a financial source available to him. Had Mr Price instructed Mr Carabelas about his father’s offer, I am confident that Mr Carabelas would have warned him of the risk. Not only has Mr Carabelas made no note of giving such a warning, Mr Price did not say that they had discussed that risk. Mr Price had good reason to hide the fact of his father’s offer, even from Mr Carabelas. On that topic Mr Price has not been candid. For that reason, too, I find that Mr Price did not instruct Mr Carabelas about his father’s offer. Accordingly, I reject Mr Price’s claims that he instructed Mr Carabelas about that offer and that, armed with those instructions, Mr Carabelas failed to put them to Murray J. It follows, of course, that Mr Carabelas could not have been expected to advise Mr Price to get proof of his ability to finance the purchase or to advise him that he did not need such proof.
Conclusion
Given my answers to the two questions which, to me, decide all issues in this case, I find that Mr Carabelas was not negligent. Mr Price pleaded other causes of action based on the same allegations, especially breach of contract. As a solicitor, Mr Carabelas’s duties to Mr Price were the same in tort as in contract.[1] He has not breached any duties that he owed to Mr Price.
[1] See Astley v Austrust (1999) 197 CLR 1 at paras 44-48
I add this: even if Mr Carabelas had, contrary to what I have found, breached his duties to his former client, Mr Price would still have no action. By the end of the trial Mr Price was pressing only one head of damage, namely, that by being unable to buy the house he lost the opportunity to profit by its increase in value. He had earlier abandoned the claim that he missed the opportunity of buying for $330,000 a house worth much more. But Mr Przybylski gave clear evidence that he was prepared, had he been asked, to lend his son $330,000 to buy any house. His offer was not in any way limited to a purchase of the former matrimonial home. In those circumstances, on his own case, Mr Price had available to him the wherewithal to buy another house for $330,000 thereby retaining his opportunities in the housing market. In those circumstances, even if Mr Carabelas had breached the duty he owed to Mr Price, there has been no loss and Mr Price’s claim must fail on that basis too.
There is no evidential basis for any of the other causes of action pleaded by Mr Price. I shall not discuss them further other than to say that I do not accept that, at their first conference, Mr Carabelas told Mr Price that he was an expert in Family Law. That finding is unnecessary given my principal findings of fact but I make it lest Mr Price be in any doubt about my view.
I dismiss Mr Price’s claims. There will be judgment for the defendant.