Pryor v Windsor

[1990] TASSC 123

Serial No B46/1990
List "B"

COURT:  SUPREME COURT OF TASMANIA

CITATION:              Pryor v Windsor [1990] TASSC 123; B46/1990

PARTIES:  PRYOR
  v
  WINDSOR

FILE NO/S:  MA43/1990

MA44/1990

DELIVERED ON:  9 August 1990
JUDGMENT OF:  Cox J

Judgment Number:  B46/1990
Number of paragraphs:  8

Serial No B46/1990
List "B"
File Nos M43/1990

M44/1990

PRYOR & ANOR v WINDSOR & ANOR

REASONS FOR JUDGMENT  COX J

9 August 1990

1. In these appeals and cross–appeal concerning the Master's refusal to strike out part of the defence and his orders relating to the discovery or non–discovery of documents claimed to be the subject of legal professional privilege, a crucial question is whether the defendants' plea in paragraph 17 of their defence that there was negligence by the plaintiffs and/or their solicitors contributing to the plaintiffs' loss is material. If it is not, then the documents claimed to be privileged are not relevant to any issue between the parties and need not be produced.

1. The plaintiffs are claiming damages for breach of contract and for negligence arising out of an agreement whereby the defendants as agents of the plaintiffs were engaged to sell a property situate and known as 22 Murray Street, Hobart. The plaintiffs allege that the property was subjected to a restrictive covenant which the defendants knew of and were under a duty to disclose to the purchaser who contracted to purchase the property on 25 September 1987. The plaintiffs further allege that the defendants failed to give notice of the restrictive covenant to the purchaser prior to the signing of the agreement and that as a result the purchaser subsequently rescinded the contract. The plaintiffs claim for a loss of $30,000.00 on resale of the property together with other items of loss and interest.

1. The defendants in an amended defence deny the material allegations in the statement of claim and allege in paragraphs 15 and 16 that the restrictive covenant was such that it did not prevent the purchaser from using the property for the purpose of investment and that the purchaser was not therefore entitled to rescind the agreement for sale. The defendants also pleaded in paragraph 17 as follows:

"In addition, or in the alternative, if the plaintiffs have suffered losses alleged, or at all (which is denied), then the defendants say that the plaintiffs and/or their legal advisers were negligent and thereby caused or contributed to the loss claimed in that:–

(i)the plaintiffs and/or their legal advisers accepted or acquiesced in their purported rescission of the agreement by the purchaser when in fact there were no grounds for the purchaser to so rescind;

(ii)the plaintiffs and/or their legal advisers failed to take any proceedings to enforce the agreement for sale;

(iii)the plaintiffs and/or their legal advisers failed, as an alternative to seeking specific performance of the contract, to repudiate the contract for breach and forfeit the deposit paid and resell the property."

1. The plaintiffs having sued in contract may recover damages without proof of specific loss. Once a breach of the contract is proved they are entitled to at least nominal damages. Their cause of action in contract will not be defeated only by virtue of there being no finding that their purchaser was entitled to and did rescind the contract of sale. If that is proved, then many of their pleaded losses may be more readily demonstrated, but if not, they may still, in addition to nominal damages, be entitled to more substantial damages flowing from any disadvantageous position in which they can prove they were put by the defendants. Thus the courses open to them and the actions they took in the dilemma they claim the defendants placed them seem to me to be relevant issues on any hearing. I cannot therefore accept their counsel's submission that in effect the purchasers either had the right to rescind or they did not, and that in consequence any negligence by the plaintiffs or their solicitors in failing to put that to the test by an action for specific performance or otherwise is totally irrelevant to any issue on the trial.

1. It is premature in my view to consider the question whether or not reliance may be placed by the defendants on the provisions of the Tortfeasors & Contributory Negligence Act 1954. There is still controversy as to whether that Act has application to actions in contract. The view that it does expressed by Crisp J in Queen's Bridge Motors & Engineering Co Pty Ltd v Edwards [1964] Tas SR 93 and reaffirmed in Smith v Buckley [1965] Tas SR 210 was doubted by Gillard J in Belous v Willetts [1970] VLR 45 but followed by Crawford J in Genders v Searle [1977] Tas SR 132. In any event, the plaintiffs plead that the defendants are liable in tort for negligence. Whether or not any negligence by the plaintiffs sought to be taken into account in respect of their duty to mitigate their loss or as a basis for proportionally reducing their damages under the lastmentioned Act is, in my view, a matter which it is more appropriate to consider at the end of the trial. The application of the plaintiffs to delete from paragraph 17 of the defence the references to their solicitors was, in my view, rightly dismissed by the Master.

1. The principal question now remaining is whether the plaintiffs are entitled to claim privilege in respect of the documents the subject of the defendants' application particularised as:

(a)       file note dated 28 October 1987;

(b)       file note dated 2 November 1987;

(c)       copy letter dated 18 November 1987;

(d)       file note dated 2 November 1987;

(e)       letter dated 7 December 1987;

(f)       solicitor's notes of research and conclusions in relation to the question of rescission.

1. The Master ordered the plaintiffs to produce items (a) to (e) but declined to order the production of item (f). The plaintiffs appeal the decision in respect of items (a) to (e); the defendants cross–appeal that in respect of item (f). The documents were produced to me. Having seen them, I am satisfied they came into existence for the purpose of seeking advice from or recording matters of a confidential nature relevant to the giving of advice by the plaintiffs' solicitor in respect of the dispute between the plaintiffs and the purchaser under the contract of sale. Some of them were regarded by the Master as merely recording matters of fact, but innocuous though they may be thought to be, they were prepared for the above purpose and only for that purpose, and in my view, are accordingly privileged (Grant v Downs (1976) 135 CLR 674). Though no proceedings had commenced between the plaintiffs and the purchaser, proceedings could be said to have been in reasonable contemplation. In Grant v Downs (supra) in their joint judgment Stephen, Mason and Murphy JJ said at p683:

"The fact that the document is brought into existence in anticipation of litigation is not sufficient, without more, to attract privilege; the document must be called into being for use in litigation or for advice and it is the extent to which this purpose is intended to be served by the preparation of the document that is in question."

1. As between plaintiffs and purchasers, I do not doubt they would be privileged and accordingly they are privileged as between the plaintiffs and the defendants in the present action (Bullock v Corry & Co [1877] 3 QBD 356 and Pearce v Foster [1885] 15 QBD 114). The appeal of the plaintiffs in respect of discovery is upheld and the cross–appeal of the defendants is dismissed.