R Lawyers v Mr Daily & Anor

[2025] HCATrans 042

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
Adelaide No A8 of 2025

B e t w e e n -
R LAWYERS
Appellant
and
MR DAILY
First Respondent
MS DAILY
Second Respondent

GAGELER CJ
GORDON J
EDELMAN J
JAGOT J
BEECH‑JONES J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON THURSDAY, 12 JUNE 2025, AT 9.59 AM

MR J.T. GLEESON, SC: May it please the Court, I appear with MR R.J. MAY for the appellant. (instructed by Barry Nilsson Lawyers)

MR A.L. TOKLEY, KC: May it please the Court, I appear with my learned friend MR A.S. HILLARY for the first respondent. (instructed by Charlton Rowley)

GAGELER CJ: Thank you, Mr Tokley. I note there is a submitting appearance for the second respondent. Mr Gleeson.

MR GLEESON: Your Honours, the issue of principle in the appeal can be stated at a level of some generality, but it will be necessary, then, to move to the particular context. Stated generally, the question is: when is loss or damage sustained so as to complete a cause of action in negligence when a solicitor acting for a client in documenting an agreement or other bilateral transaction, in breach of duty, leads the client to enter a defective document?

I can be more specific about a defective document: defective in the sense that it does not secure for the client the contractual rights or protections which the client was entitled to receive. In particular, rights or protections against future contingencies, which is our case. The other aspect of “defective” could be where the document imposes on the client liabilities that the client should not have suffered, and they could also be liabilities contingent upon a future event. In either case, our submission is that the loss or damage accrues on entry of that defective instrument rather than only if and when the contingency comes home.

GAGELER CJ: How do you apply it to a will?

MR GLEESON: A will does not come directly within the proposition I have formulated because it is not an agreement and it is not a bilateral transaction.

GAGELER CJ: No.

MR GLEESON: The reason I have ‑ ‑ ‑

GAGELER CJ: I know why you are doing it, but how would you apply it to a will?

MR GLEESON: Yes. So, with a will, the testator comes and gives instructions and says: I wish to confer these benefits on these people, and the will takes effect only if the person dies and it remains the last will and it is otherwise so. Then, one would first say: who is the plaintiff in that case? And the plaintiff might well be the disappointed non-beneficiary who has missed out altogether, or got less than they would have got, had the solicitor performed the duty.

So, immediately, we would be identifying that the relationship is between the solicitor and, if there is a duty of care, the class of potential beneficiaries. And so, at that stage, one would ascertain whether there is a duty owed to those persons, and that would provoke all those sorts of questions, and then, if there is a duty, one would be identifying the interest which the law recognises in respect to that duty, and – I am sorry your Honour, it is a fairly long-winded answer ‑ ‑ ‑

GAGELER CJ: No, no. I am appreciating it, thank you.

MR GLEESON: ‑ ‑ ‑ but it might get to the point where one says: well, the relevant interest that is protected is an interest which does not and cannot arise until death of the testator, because it is always within the ability of the testator to revoke the will or change the will, and if that were the case, one might say that loss is incapable of being suffered in that context prior to the death of the testator.

Where we immediately see the distinction from our case is that where the solicitor is documenting the agreement or other bilateral transaction, an essential aspect of the interest being protected is to obtain rights – in our case, valuable contractual rights – which can be exercised against the counterparty to the transaction, as and when required, without the counterparty having the ability to defeat the exercise of right.

So, one of the essential differences between the parties here, which I will perhaps come to immediately, is how the Family Law Act works, because the respondent says, and the courts below said, the property division aspects of a financial agreement ‑ ‑ ‑

BEECH-JONES J: Mr Gleeson, can I just ask you this. Does any part of your argument depend on the scope of the duty of the solicitor in this case? That is, was it just a duty to advise this agreement does not work, or was it a duty to secure an agreement that did work?

MR GLEESON: It was the latter. It was a duty, so far as reasonable care and skill could achieve, to secure a result, and the result – I will come to that under proposition 2, but the result that was intended was Mr Daily had an express set of instructions for what he wanted to achieve. They are perhaps seen most clearly from the ‑ ‑ ‑

BEECH-JONES J: I do not want to distract you from your argument, so if I am taking you out of order, please stop me and do it as you wish.

MR GLEESON: I will just complete the short answer. Yes, the duty was to secure, so far as due care and skill could achieve, an agreement which was immediately binding and would come into effect – overriding the provisions of section 79 – upon the marriage breakdown, without the wife having any ability unilaterally to defeat those rights.

GORDON J: When you come to it, are there findings to that effect? You might give those to us later.

MR GLEESON: Yes, I will come to that, your Honour. So, could I just deal now with the scheme of the Family Law Act, which is our proposition 1; and then the findings on the negligence, which is our proposition 2; and then what we identify as the two heads of loss which were suffered in 2005, which is our proposition 3; and then I will come more generally to the authorities.

EDELMAN J: The duty that you have just described, though, that is the contractual duty – to secure the result.

MR GLEESON: It was the concurrent duty. The negligence aspect of the duty was a duty to take reasonable care and skill to receive these instructions and document them in an agreement which would be binding and would survive any set‑aside challenge down the track. That is what negligence – the duty of care required the solicitor to seek to do.

GORDON J: Just so I am clear, I am sorry to go back to this, what was sought to be effective and overriding, you are going to come to, in the sense of what aspects of it you say are both contractual, duty of care, giving rise to breach?

MR GLEESON: Yes.

GORDON J: So, they are the three steps, at the moment, that need to be joined.

MR GLEESON: Yes. So, if your Honours would just bear with me for proposition 1, which is to review how Part VIIIA of the Act works, which provides the context of these agreements. In volume 2 of the authorities, at page 146, section 90B provides for what a financial agreement is. These are agreements entered in contemplation of marriage, there are equivalent provisions for during and after divorce agreements. But as to 90B, which is our case, the written agreement will become a financial agreement if it deals with any of the matters in subsection (2), and one of those matters, in (2)(a), is:

how, in the event of the breakdown of the marriage, all or any of the property or financial resources of either or both of the spouse parties at the time when the agreement is made, or at a later time . . . is to be dealt with –

Then subsection (3) indicates that the:

financial agreement . . . may also contain –

“ancillary” matters as well as:

other matters.

Then, under section 90G – I will come back to the role of 90DA – but under 90G, the:

financial agreement is binding . . . if, and only if –

it meets those conditions. And, importantly, under paragraph (1)(d), it is binding:

if and only if:
. . .
(d)the agreement has not been terminated and has not been set aside by a court.

So, we have a concept of a binding agreement which could be terminated or set aside by a court. Termination occurs under section 90J, and termination involves the consent of both parties. It is a regulated consent: it is either the entry of a new financial agreement, which satisfies the relevant conditions for a binding financial agreement; or it is a termination agreement, which satisfies its own conditions.

The effect of 90G, taken together with 90J, is that the agreement is immediately binding and will remain binding unless both parties have relevantly agreed to terminate it or the court sets it aside under section 90K. That is the reason why I say that what Mr Daily was entitled to, both in contract and in tort, was, so far as due care and skill could achieve, an agreement which was binding under 90G and which Ms Daily could not unilaterally escape from – she would need to obtain his consent to terminate under 90J or bring a set‑aside application under 90K. As to 90K, the relevant grounds on the present case for setting aside an agreement are, paragraph (1)(b):

the agreement is void, voidable or unenforceable –

That takes one to section 90KA, which applies the general law of, relevantly to this case, uncertainty. The other relevant provision is section 90K(1)(d):

material change in circumstances –

including the position of children, such that a party would “suffer hardship” if the agreement was not set aside. I will come back to how, on the facts, each of those grounds were made out in this case. So, that is the core architecture of it, a binding agreement ‑ ‑ ‑

EDELMAN J: The notion of a binding agreement is a little odd, though, is it not? Because the idea that you have an agreement that is binding until it is set aside by a court, and then the court can set it aside on the basis that the agreement is void, which is a preservation of the common law notions that the agreement was never binding in the first place, I do not think the word “binding” is intended to contradict the notion that it was never binding in the first place, is it?

MR GLEESON: Yes. That is probably correct, your Honour, that is probably correct because of the way 90KA works, but what I am seeking to emphasise is, in terms of the duty of a solicitor, the duty is to – certainly, in the area of certainty – use due care and skill to create an agreement which will survive the common law notions of uncertainty, and if you fail achieve that duty, what the court will be able to do is to exercise the power to set aside and, therefore, the position will be there was never an agreement at all, which is what happened in this case.

Can I then explain where 90DA fits into the structure. Section 90DA is a provision which was inserted in the 2005 amendments for the reasons that are explained, in volume 5, in the Hansard at pages 516 to 519 of the book. But, in summary, in 2005, a series of amendments were made to the Family Law Act and the Bankruptcy Act, inter alia, designed to deal with anti-avoidance measures. The concern with financial agreements was that people, perhaps in an intact marriage, who wanted to shift the assets of one spouse away from a creditor, could enter a financial agreement, purport to separate, therefore, shift the asset to the other spouse and then perhaps happily resume their relationship in due course.

Section 90DA was one of the means to reduce the risk of sham transactions by imposing the discipline that the financial agreement, although binding, would not be of force, in effect, in relation to its property division provisions until the separation declaration was made, and the separation declaration under subsection (4) required the spouse to affirm that there was:

no reasonable likelihood of cohabitation being resumed.

So, as you will see from the note beneath 90DA(1):

Before the separation declaration is made, the financial agreement will be of force and effect in relation to the other matters it deals with –

save for this matter, plus the matter in 90DB.

GORDON J: Does that mean that the reference to “other matters” is something distinct from that referred to in 90DB? The question is, what is the subset of those matters that are maintained, as distinct from those that are not maintained, under DB?

MR GLEESON: Anything in the agreement other than the division of property, or the particular matter in DB, takes full force and effect immediately – and I will show you, in a moment, in the financial agreement there are a large number of clauses of that character.

So, because of this anti‑avoidance purpose, the structure which the Act requires, if you wish to enter a BFA, is you can have provisions in it which take force and effect immediately, but to the extent, relevantly, you want to deal with the division of property, that will not be of force and effect until the latest separate declaration is made. Critically, if the solicitor performs the duty properly, you will have a binding agreement which will come into force, upon the separation declaration, without the other party having the ability to defeat that cause of action.

EDELMAN J: So, you read “no force or effect” as really meaning that it is unenforceable, rather than meaning that it has no existence until a separation declaration is made.

MR GLEESON: Yes. It is critical that it does have existence, as a legal right and obligation between the parties. It is one that then can be enforced when the separation declaration is made, and ‑ ‑ ‑

EDELMAN J: So, it operates like a limitation period, rather than like an invalid will.

MR GLEESON: Yes, and it has to do that, because the idea is that, in advance of the marriage, you are able to – if you wish, and you get independent advice – agree and bind yourself to a position where, should there be separation, then your agreed property division will trump section 79. If it did not work that way then, in 2018, when the relationship has broken down, Mr Daily goes to Ms Daily and says, would you like to agree to my proposal that I had in 2005, she is then free to say, no thanks.

So, as a structural provision, it has an evident purpose, and it has an evident effect. Where that leads you to in terms of the solicitor’s duty, both in contract and in tort, is to take reasonable care and skill to bring into existence a financial agreement which implements the client’s instructions and which, so far as is reasonably possible, will not be set aside under 90K, and which, therefore, the other spouse will be bound to submit to its effect upon separation occurring.

GAGELER CJ: What is the interest protected, to return to an earlier part of your submission?

MR GLEESON: The interest protected here is the due performance by the solicitor of the duty to achieve for the client a document which implements the client’s instructions, is binding, is enforceable as to part immediately and as to the balance on separation and which, so far as possible, will survive set‑aside. That is the long answer. The short answer to all that is the essential interest being protected is the client’s ability to insist upon the agreed property division in priority to the section 79 division that the client would otherwise face.

GORDON J: The difficulty I have with that is that the moment there is a division – both in the Act itself and in your submission – between those provisions, which I know you are going to take us to, which are not directed at that very issue. That is, the interest to insist upon agreed property division, and the non‑property division – I am going to use that as a shorthand for the other provisions.

In a sense, the interest is reflected by the statute, which says, in respect of the property division, it is not going to be binding until separation, recognising – and picking up something the Chief Justice put to you, and I know this is not a will case – that circumstances change, children come and go, they alter the agreements often, like you would do in a will, reflecting the fact that sometimes there are years between the first agreement and then the event required to bring about the crystallisation.

MR GLEESON: So, it is binding – the whole agreement is binding immediately; we are told that. The particular provision cannot be enforceable until the separation occurs. I have explained the reason why it takes that particular structure. So, the effect of it is that for a person like Mr Daily who, as I will show you in a moment, says: my position in 2005 is I require my solicitor to prepare an agreement which implements my division of property, which I have provisionally agreed with the wife. Perhaps I should just take your Honours to ‑ ‑ ‑

GORDON J: The reason why I ask that is this: if you are right and there is a breach, the actual loss does not crystallise until the event. In relation to the non‑property provisions, there is no loss, because it is binding in the way you describe, but the actual loss itself, being the inability to bind him to his preferred property division, cannot bite until the time at which there is separation.

MR GLEESON: Your Honour, that is our proposition that I will be coming to under 3, but in short ‑ ‑ ‑

GORDON J: Then I have taken you out of the order, and I am going to be quiet.

MR GLEESON: No, your Honour, it is part of what I am trying to get to, slowly. The reason there is loss in 2005 can be expressed in at least two different heads of loss. The first head of loss in 2005 is that Mr Daily incurs a repair cost – it can be described, the need to incur additional legal costs in order to prepare and obtain from Ms Daily, so far as possible, a binding agreement, one which does not have the defects of the current agreement. And that is a head of loss recognised in the cases.

GORDON J: With respect to property division.

MR GLEESON: Yes, because what he has actually got in 2005 is an agreement which does not achieve his proposed property division. The loss he suffers as a repair cost is the cost of paying a solicitor to prepare and obtain a different agreement, one which does in fact achieve his instructions and overcome the 90K problems in the agreement.

The second head of loss that we will be developing is that there is a difference in value between the value of the defective agreement which he has obtained and the best available binding agreement that could have been obtained on due performance of the retainer, together with consequential losses.

GAGELER CJ: In what sense is there is a difference in value? I mean, it is not transferable. It is not a realisable value, is it?

MR GLEESON: Well, the value of it lies in – the value of a properly drawn and binding agreement lies in the ability to make the decision to enter the marriage and then conduct one’s affairs across the whole marriage in the certainty that, if separation occurs, you will not face section 79 but instead you will face the financial provisions you have negotiated. That is the value in a properly drawn agreement.

In a defective agreement, its value is close to nil, because it is liable to be set aside by the court, it is liable to expose you to court costs, and so there is a difference in value in each case between a properly drawn agreement and a defective agreement.

BEECH-JONES J: Is the interest just being protected from orders under section 79? Is it that the ultimate interest we are talking about? And the difference – the value – is between what you might be subject under 79 to what you might have got under the agreement.

MR GLEESON: Well, that is a way of conceiving the ultimate interest, your Honour. The ultimate objective is, in the event of separation, which is a contingency, to have the property divided as per your agreement in preference to what is likely to be a less advantageous result under section 79.

BEECH-JONES J: Depending on who you are.

MR GLEESON: Sorry?

BEECH-JONES J: It may not be, for everyone, less advantageous.

MR GLEESON: Well, I am just about to show you the facts here.

BEECH-JONES J: It was for your client, yes.

GAGELER CJ: So, both of those ways of explaining the loss that you say occurred in 2005 treat the interest as being an interest in a thing, in having a thing at that time.

MR GLEESON: It is interest in a chose in action. It is a bundle of rights in 2005, what you were entitled to get upon due performance of the retainer was one bundle of rights, which can have a value attached to them; what you got under the retainer was a radically inferior bundle of rights. It is the difference in value between the two bundles, the one you were entitled to and the one you got.

Just to complete it, I will be expanding on proposition 3, but your Honours will see at the end of it we have included: or the loss of a chance of obtaining such an agreement. One of the curiosities of the present case is that the damages against the solicitors which are being pursued form two components. The first component – which has been awarded beyond challenge – is $38,000 for legal costs that Mr Daily incurred fighting the uncertainty claim which it is said but for the solicitor’s negligence he would not have to fight.

The big claim which is being pursued, which is in the order of $2 million, is a loss of opportunity claim where Mr Daily says, if the duty had been performed in 2005, what I would have been able to do would have been to seek to negotiate with Ms Daily a better BFA, one which was not liable to be set aside, particularly, on the hardship ground. He says what the solicitor should have done is tell him that unless you are providing some way for children in the BFA, there is then a risk that if you do have children, the provisions may be seen to work hardship on Ms Daily.

The opportunity I lost, he says, is the chance to seek to negotiate the better agreement with her, and then either she would have agreed to an alternative BFA – so, that is an alternative transaction case – and I lost that alternative BFA in 2005 or, he says, if Ms Daily would not have agreed to the amended BFA, he would never have entered the marriage and never had children, and that looks like a no‑transaction or no‑marriage case.

Now, that is the extant, very large case that lies behind this appeal. That is a loss of opportunity case. The opportunity, as they put it, was lost in 2005, that being the time when, prior to the marriage, Mr Daily says: I would have different things and therefore would have ended up many, many dollars better off. So, I will need to explore that with your Honours.

EDELMAN J: That does contradict the defective asset characterisation though, does it not?

MR GLEESON: No, what ‑ ‑ ‑

EDELMAN J: A defective asset characterisation might work for a contractual claim where the basis of the claim is: we did not get the asset that we were promised. But for the purposes of negligence, when one asks what happened, to what extent were you worse off, what loss did you suffer in 2005? Well, it may have been that the very next day, the parties would have entered into a proper agreement, and that is why, as I understand it, it is put as a loss of opportunity claim.

MR GLEESON: Put as a loss of opportunity claim in negligence?

EDELMAN J: Yes.

MR GLEESON: And that claim – so, your Honour’s question was: does that contradict the defective analysis aspect? We would submit not necessarily, but it would not matter, if it is a different analysis. That is a loss they say they suffered in 2005, and that loss was actual loss. It was measurable loss in 2005. It would have been measured by reference to the contingencies. But it is loss that was suffered sufficient for the cause of action to accrue in 2005. And your Honours will see, for example, from the core appeal book, in the Full Court’s judgment at paragraph 123, which is at page 159, the loss of opportunity claim which the court has remitted at paragraph 122 is a claim for compensatory:

damages for the lost opportunity to negotiate a BFA which made provision for the birth of a child or children.

So, when was that opportunity lost? It was lost in 2005, prior to the entry to the marriage, and in 123 the court says – which is correct – if that claim is permitted, you would have to, in valuing the lost opportunity, look at a series of contingencies.

EDELMAN J: Could it not have been entered into as a post‑nuptial agreement – after the marriage?

MR GLEESON: It could have, under the statute.

EDELMAN J: So, why is the opportunity lost at the point of marriage?

MR GLEESON: Because that is the way he has framed the opportunity. I need to take your Honours now, if I might, to the facts that I have been referring to. Could your Honours go to the appellant’s book of further materials, to page 83, which is the plea of negligence.

GORDON J: Sorry, what was that page, Mr Gleeson?

MR GLEESON: Page 83.

GORDON J: Thank you.

MR GLEESON: It relies upon:

the events in paragraph 50 . . . the failures of –

the solicitor:

in paragraph 45 –

and says that constitutes a:

breach of its concurrent duty of care –

and:

By reason of the negligence . . . the applicant has, or will, suffer loss and damage –

And it refers to what should be paragraph 50 – perhaps it should be 50‑50.3. So, if your Honours go to paragraph 45, while this is the plea of the breach of contract, this is also the plea of negligence, and perhaps you should understand that against this background I will take you to, paragraph 13, that is the contractual retainer, page 74, and the essential instruction was that each of them was to keep the assets which they brought into the marriage exclusively.

You will see that if your Honours cross‑refer to the BFA, which is in the respondent’s book of materials at page 17. They are the assets that the husband brought to the marriage: 404,000. They were to be preserved as his assets. The wife brought the Schedule B assets, a mere $32,000, and then Schedule C were the joint assets. The essence of the instructions, which was then recorded in clause 9 on page 8 was:

In the event of separation –

they would:

divide their assets –

such that the husband would keep the Schedule A assets, the wife keep the Schedule B assets, and:

The net matrimonial assets will be split equally between the parties.

So, the essential instruction to the solicitor was, you were to draft an agreement which brings about that division. Then, returning to paragraph 45, the breaches are: you did not tell me that the agreement would not achieve that division; at 45.4, you did not tell me that the deed was not enforceable because it “lacked certainty”; at 45.5, coming back to your Honour Justice Beech‑Jones’s question, this is a conduct breach, you did not amend the deed to make it:

more certain and capable of . . . enforcement –

Then, 45.6, you did not advise that:

the birth of a child –

could provide:

“a material change in circumstance” –

and lead to a hardship.

GAGELER CJ: Sorry, that is the breach of contract?

MR GLEESON: And that is what paragraph 51 tells us, they are the failures that are relied upon in negligence.

GAGELER CJ: I see.

MR GLEESON: Then, the plea goes on, in 46, if the husband had been told that the agreement would not achieve a division of assets that he had given instructions on or that the deed would be unenforceable as lacking certainty:

then the applicant would have insisted that the . . . Deed be amended to reflect his said instructions and re‑executed in compliance with the Act –

Paragraph 47:

If the first respondent –

the wife:

had refused to sign –

such an amended deed, the husband:

would not have:
47.1.married the first respondent;
47.2.had the children with the first respondent.

BEECH‑JONES J: The trial judge rejected both of those, did he not? If you look at page 159, in the Full Court, of the core appeal book, paragraph 120, they note that the trial judge did not accept those two links in the husband’s case.

GORDON J: That is why paragraph 48 in the plea goes on to identify what they actually found.

BEECH‑JONES J: I say that in puzzlement, Mr Gleeson, not to contradict anything you say, I just do not know where we go.

MR GLEESON: This is the puzzlement that the Full Court had with what the primary judge was doing. The Full Court is saying there are strands in the primary judge going in different directions, but where the Full Court lands at 121 and 122 is:

notwithstanding the quite specific findings in the March 2023 reasons . . . in the 2024 reasons the primary judge failed to grapple with the husband’s case that his compensatory damages claim included a claim for damages for the lost opportunity to negotiate a BFA –

Then, when they identify the contingencies in 123, what they have sent back is an evaluation of: what different BFA would the husband have been prepared to submit to in order to overcome the perceived difficulties? Would the wife have agreed to that BFA? Even if that had occurred, what was the prospect that it would nevertheless be set aside on hardship grounds? Because your Honours have seen the numbers are very uneven. Then, what additional sum would have been payable when one is comparing the amended BFA with orders under section 79?

BEECH‑JONES J: But what that remittal seems to be directed to is, exclusively, the hardship claim, leaving left out the certainty problem.

MR GLEESON: Your Honour is correct, because what – I am sorry.

BEECH‑JONES J: Question mark.

MR GLEESON: What has happened is that the court has – you perhaps need to see how these submissions were put below, they are put between pages 152 and 154, and the court has bolded the parts that it thinks are relevant, but using the numbering in the submissions, 69 of the submissions says the competent solicitor should have advised on these changes needed to the BFA. Paragraph 71 says:

it must be conceded that the Wife may have wished to negotiate around –

those terms, so he cannot claim with certainty that she would have accepted them. Paragraph 72 asserts:

it is the Husband’s pleaded case that unless the Wife agreed to terms acceptable to him there would have been no financial agreement and no marriage.

And the submission asserts that the primary judge has already found that. That paragraph is at page 22 of the core appeal book, it probably does not go as far as the submission says. And then it says, at 74:

the Husband must prove on the balance of probabilities that there was available to him an opportunity . . . of securing a better financial result than that which was delivered to him under the judgment of the Court.

The next sentence explains in part what your Honour Justice Beech‑Jones has raised:

It goes without saying that the Husband had the opportunity, with proper advice, to secure a financial agreement, if one was to be entered into, which was not void for uncertainty. That opportunity must be treated as a certainty.

So, on that breach limb, the case that has been put is: with due care and skill you could, as a matter of certainty, have achieved an agreement which would not be set aside for uncertainty and, for that reason, you get the whole of the $38,000 in damages, you do not apply a discount to them. So, that is that breach. But then it goes on to say:

consistent with the evidence, there are only two realistic possibilities open. Either the Husband would not have reached agreement with the Wife on a financial agreement and would not have entered the marriage or the Husband would have reached agreement with the Wife on the terms of a financial agreement consistent with his instructions . . . but including a sufficient provision for any child of the marriage . . . so that the agreement was not vulnerable to being set aside –

Now, as we read that case, which is what the Court has permitted to be remitted, it is a loss of opportunity prior to the marriage.

BEECH-JONES J: So, go back. On the assumption that the certainty could have been fixed up, the lost opportunity to come up with an agreement that would have addressed the hardship.

MR GLEESON: Yes.

BEECH-JONES J: I see.

MR GLEESON: With the husband saying: my position is I would have wanted this sorted out before I entered marriage, if the wife was prepared to agree to something, an amended agreement, that I could live with, even though that would require me to give something more, then we would have entered such an agreement, but if she would not have agreed with that, then I would not have married her and I would not have had children. You can see, then, over the page, when, at 77 of the submission and 78, the two limbs are then put forward, the first is:

If there had been no marriage and no property settlement, then the Husband would have been better off –

in this way, and that is a controversial set of propositions, but that is what is being put under the no marriage case. And then, paragraph 78:

If there had been a consensus . . . and that agreement had made appropriate provision for any –

children, and if it:

made provision for the division of assets in terms of the financial agreement in suit, then the financial result . . . would have been . . . $250,000.

There are all sorts of problems with that logic, but there it is. And then, paragraph 79, “swinging a broad axe”, your negligence made me worse off in the order of $991,000, which is the $250,000 already paid – that is what the original BFA contemplated – and the whole of the property settlement sum, so, that is, the whole of the amount ordered under section 79 is said to be part of the damages.

EDELMAN J: Why does that all arise at marriage?

MR GLEESON: Sorry?

EDELMAN J: Why does that all necessarily arise at marriage? Why does that loss crystallise at the time of marriage?

MR GLEESON: Because the opportunity is the opportunity to ‑ ‑ ‑

EDELMAN J: Even if you could get the identical agreement after marriage?

MR GLEESON: I may be missing your Honour’s question. What the husband’s case is saying is: before I was prepared to marry this woman and have children, I wanted the certainty that I had a BFA which, so far as due care and skill could produce, would ensure that I keep all my assets at the end of the marriage, whenever that occurs. What I lost, because of the solicitor’s negligence, was the chance to go back to the wife and say: I want you to sign a different BFA, one that overcomes the problems that have arisen from the solicitor’s negligence. And he was then saying: unless she were prepared to sign that amended BFA, I was not prepared to marry the woman, and I was certainly not prepared to have children. And so ‑ ‑ ‑

EDELMAN J: No, I appreciate that is the case, but is there not an element that is missing from that, which is that it would also need to be said that she would not have been prepared to enter an agreement after marriage and before children to the same effect, because otherwise there is still no loss that is suffered until the position becomes irreversible?

MR GLEESON: Well, we would submit the loss is suffered, because what has happened is, on one side of the ledger, if you look at what you have actually got in the real world, you have an agreement which is liable to be set aside by the court, and so that piece of paper you have, which appears to be a valuable piece of paper, is close to worthless. That is what you have.

You are comparing that with the position you would have been in, had the solicitor performed with due care and skill. And had the solicitor performed with due care and skill, what you would have had, at a minimum, is what is set out in paragraph 123, which is that this improved BFA would have been presented to the wife prior to marriage to give her the chance to try and agree to it and which, if agreed to, they could then happily proceed to the marriage with his financial concerns addressed.

Now, what your Honour has raised is really, with respect, another possible contingency: is it possible that the wife might have, after marriage, come to see the wisdom in an amended BFA? Now, it is not one of the contingencies that is there mentioned, it is not something that has been raised in any of the case to date. We would submit that if that even were raised, at the most, that might go to the quantification of the damage, but it does not detract from the fact that you have not received, at the date of the agreement, what you are entitled to receive from the solicitor with due care and skill.

GAGELER CJ: Mr Gleeson, you were taking us to the pleading earlier.

MR GLEESON: Yes.

GAGELER CJ: What do we take meaningfully from the pleading, for present purposes?

MR GLEESON: That the negligence case – and the causation of loss case, more particularly – is if you had performed with due care and skill, the position that I would have been in is that I would have been able to present to the wife, prior to marriage, an amended agreement which was not susceptible to being set aside on the grounds that the actual agreement was, and then she either would have signed the amended agreement, and so I would have been in a better position in and from 2005 or, if she refused to sign it, I would not have married her or had children and, therefore, I would not have been exposed to section 79 orders with her. So, the way he ‑ ‑ ‑

GAGELER CJ: That last part has been rejected, as I understand it. It is no longer in play, is it, as a result of what is recorded at the end of paragraph 120 of the Full Court?

MR GLEESON: Your Honours, I do not want to be heard to broaden the issues on a remitter, if there is a remitter, because that is not in our interest. There is at least an ambiguity in what the Full Court is doing, because the remitter is general but, if you read the bolding in the submissions in 78, as opposed to, say, 77, on page 154 – if you read that as informing what is happening at 120 to 123 of the judgment, if what the Full Court has said is, we are remitting solely the loss of the opportunity to present a better agreement to the wife and get her to agree to it – if that is all that has been remitted, then fine, that is a narrow escape of a remitter.

But we would still say: when was that opportunity lost? It was lost in 2005, on the way he seeks to present the case and has throughout, because he wanted that security when he entered the marriage, and so the damage – the lost opportunity – is in 2005.

JAGOT J: Why is it not simply that if someone happens to discover negligence in the preparation of the BFA before a separation declaration is made, then, if at that point they choose to make another BFA, they have incurred actual costs, so there is, in that case, loss which is actual loss – not this case, because it was not discovered – but that seems to answer a point you make in – I know I am jumping ahead – a point on the last page of your submissions that:

The logic –

of the respondent, or the courts below:

produces the perverse result that –

he could not recover the cost of repair. I am not sure that is right, because you have actually incurred a cost of obtaining alternative agreement – you have incurred loss at that point, but if you do not, you have not incurred loss, because 90DA tells you that the agreement “is of no force or effect until” the occurrence of the contingency. So, unless and until that point is reached, there is merely potential loss. What is wrong with that reasoning?

MR GLEESON: With respect, what is wrong with it, your Honour, is – I will need to come to the cases – that the correct analysis is to say, in negligence as well as contract: what were you entitled to get? And to identify the bundle of rights you are entitled to get, and to see what value they had at that date, and to compare that with what you actually got. And if there is a difference in value, then that is measurable loss at the date of the agreement.

JAGOT J: It is so contingent and imponderable at the date of agreement that there would be any provable loss at all. I mean, people change their mind, if and when they have children, all sorts of contingencies exist that would make it almost impossible to prove any loss at that point, had you sued at the earlier point in time, which I think the point the Court of Appeal made, they would just say, we have not proved actual loss, it is just the merest potential, as in: you are happily married, there is no evidence you are going to separate, therefore there is no loss. You could be defeated in all sorts of ways.

MR GLEESON: Your Honour, we would submit that all of those contingencies go to the valuation, not to the existence of the loss. Save for one, they are the same contingencies as paragraph 123 of the judgment.

JAGOT J: But they may operate – they are so contingent, do they not operate to make the value of any of this difference purely hypothetical, unless and until – at least under this statutory regime, maybe not for every contract, but at least under this one, given 90DA(1)?

MR GLEESON: I have explained what the purpose of 90DA(1) is, but in terms of the interest being protected, for a person entering a BFA prior to marriage, the interest being protected is to obtain a secure set of legal rights which will give you a certain outcome in the event that contingency occurs in the future and will therefore remove you from the imposition of a section 79 outcome. That is what the person is seeking achieve. That is what the person did not get.

So, when you were doing the valuation exercise at the date of the agreement, if it is possible, as we say it is, to identify that as a difference, the set of rights I was meant to get would have had this value for me, the set of rights I got were close to worthless, that is the loss I have suffered then and there, on that date: the difference between what I was entitled to receive with due care and skill and what I actually got.

GORDON J: Can I test that. You just said, in response to that question, that the interest protected is to secure a set of legal rights that give you a certain outcome. When you look at the pleading that is put against you, it was:

did not . . . further amend the . . . Deed such that the terms . . . were more certain and capable of specific performance; and –

then, secondly, failure to advise that birth of a child or separation was a material change in circumstance. The difficulty is that all of those things are always going to be uncertainties. How could anyone produce a deed that would, in effect, provide for certainty of the kind you are describing? Especially – put aside DA for the moment, because that is an argument separately from that consideration.

MR GLEESON: Your Honour, I keep trying to add the qualification “so far as due care and skill can achieve”. Of course a solicitor is not warranting that the deed will never be set aside. This solicitor repeatedly in correspondence said it may be set aside. So, you cannot achieve certainty for the client. What you can do, with due care and skill – and what has been found the solicitor did not do – is draft the agreement in a way which either avoids or minimises the risk of challenge on grounds of uncertainty and hardship. That is the breach that has been found against the solicitor.

BEECH‑JONES J: So, the difference is between a bad deed and a better deed, and that difference – how do you know whether that difference actually materialises into loss, forgetting its quantification, until those subsequent events unfold? The child – you see which child you have, such child may be disabled; how long you are together; who has acquired lots of assets in the meantime; all those various factors, in terms of whether that difference actually represents an actual loss.

MR GLEESON: That is, an agreement which is liable to be set aside because of those two defects is, I say, close to worthless. Its only value is as a piece of paper which can be presented, but it is exposed to challenge in court, it is going to be found to be of no value. So, that is close to worthless. What you are then comparing that with, and the thing that the person was paying money to get, was an agreement which, so far as due care and skill would achieve, would not be set aside for uncertainty and would not be set aside for hardship.

Now, the hardship ground is obviously very open‑ended and, even with due care and skill, it may still have been set aside for hardship, for the reasons your Honour has said. We accept that fully. And that is one of the contingencies that is in paragraph 123, and that is going to be highly relevant, if there is a remitter, to the assessment of the damages against the solicitors, because the solicitors will say: even if we had done our very best to provide for children, under your instructions, it may still have been that the disparity in this division is so great and the wife’s needs are so great in 2018 that the agreement would still have been set aside in any event.

And if that is right, the damages will be significantly reduced. So, I am accepting that is part of the contingencies. But at the stage of loss, it is more simply that you can identify there is a difference between what I received, which was close to a worthless piece of paper, and what I was entitled to get, which was a piece of paper which, with due care and skill, minimised the chance of it being set aside.

Now, your Honours in terms of proposition 2, can I just complete the references to the actual findings on the breach of duty. In the core appeal book, there are findings at page 79, paragraphs 412 to 415, of the breach of duty in respect to the failure to draft an agreement that was certain, and the particulars of the uncertainty are developed between pages 21 to 26 of the core appeal book.

GORDON J: Sorry, could I have that second reference, please?

MR GLEESON: Pages 21 to 26 of the core appeal book are the particulars of uncertainty, with the ultimate conclusion at page 26, paragraph 97. And then ‑ ‑ ‑

JAGOT J: Sorry, forgive my slowness. The bit on page 79 at 412 to 415 is the lack of advice – or am I on the wrong bit? That is not uncertainty, is it? Is that something else? That is the lack of advice by the wife, is it?

MR GLEESON: No ‑ ‑ ‑

JAGOT J: No, I am not ‑ ‑ ‑

BEECH‑JONES J: Is that not a lack of advice that it was uncertain?

MR GLEESON: Yes.

BEECH‑JONES J: Which is not quite the same as saying: failed to draft an agreement that was certain.

MR GLEESON: All of this language is very loose, your Honours.

BEECH‑JONES J: Right.

MR GLEESON: I referred to pages 21 to 26, which is the uncertainty which the judge found, and I did not want to go into the detail of it if I could avoid it, but it seems to be the drafting of recital K in particular which was said to generate uncertainty in understanding how the agreed division would operate in respect to increases in value of the property which had otherwise been quarantined to one spouse or the other, or income. So, that is as good as it is, that is the finding.

JAGOT J: So, nothing to do with lack of advice, is it?

MR GLEESON: No – it is both, really, your Honour.

JAGOT J: It is both.

MR GLEESON: I read it as: you drafted it badly, creating risks of it being set aside for uncertainty, and you should have told the husband that it had that risk.

BEECH‑JONES J: Did your client draft it, or was it drafted by the other side of your client?

MR GLEESON: The third version was drafted by the other side and came back.

BEECH‑JONES J: Right.

MR GLEESON: It had handwritten amendments on it, see paragraph 409. So, that is the first breach. The second breach, which you could be forgiven for missing in this judgment, but the Full Court detected it is in paragraph 403 on page 77, and that is the failure to raise the topic of the possible birth of children and to see what – and to say that that could represent a material change in circumstance, and then to seek instructions to obtain a better BFA which reduced the risk of that becoming a fatal problem.

GORDON J: So where is the finding of negligence there, please? Or breach, sorry.

MR GLEESON: In the primary judge, it is said to be paragraph 403, last sentence, and that is what the Full Court detected, even though it is not transparently clear. The Full Court detected that finding at page 151, where paragraph 403 is bolded, and the point is made at paragraph 104 of the Full Court and, in particular, at 108, the Full Court says:

it is the second sentence of [403] which is the critical finding by the primary judge.

BEECH-JONES J: So, the breach is not advising. The causation case then runs: well, if they had advice, then the next step would be, well, fix it up. Is that the kind of ‑ ‑ ‑

MR GLEESON: Yes.

BEECH-JONES J: Yes.

MR GLEESON: And “fix it up”, we would say, prior to marriage, and present it to the wife and see if she will agree with it or not, and therefore what the husband would have had is an agreement of real value, because it is an agreement which would not be liable to be set aside on hardship grounds in this respect. Your Honours, in the ‑ ‑ ‑

GORDON J: And that is limited to children, is it?

MR GLEESON: Yes, so you would have an agreement where you would then say, as far as due care and skill can do: if children come along, that is not going to generate a hardship case. That is the breach. That still leaves the possibility the hardship case might succeed anyway, in which event, the solicitors are not negligent and not responsible for that element of damage.

Your Honours, in the financial agreement, which is in the respondent’s book of further materials commencing at page 4, I just wanted to indicate that a number of the provisions are immediately binding, whereas the other provisions take effect on separation. So, there is a series of recitals. They are confirmed as accurate in clause 2, which we would understand is an immediately effective estoppel between the parties. Clause 6 would immediately terminate any prior agreements if there were such. Clause 8 is an immediately effective obligation on each party not to engage in transactions above a certain amount without consent.

GORDON J: Was that common ground, that it applied during the marriage?

MR GLEESON: We have made this submission in our written submissions, and it has not been responded to in the reply.

GORDON J: Thank you.

MR GLEESON: Clause 9 is the 90DA suspended provision.

GAGELER CJ: And it is the only provision that reflects the interest as you identified, is it not?

MR GLEESON: It is the core provision, your Honour. It is supplemented by, for example, 11, 12 and 13 – they all supplement it.

BEECH-JONES J: Mr Gleeson, when you say, for example, clause 8 was binding during the marriage, do you mean if the agreement was not void for uncertainty?

MR GLEESON: Yes.

BEECH‑JONES J: Yes.

MR GLEESON: I am just illustrating some of the things that a binding agreement not void for uncertainty would give, by way of a bundle of rights, to the client. This is what the client was entitled to. So, 15 would seem to come into effect immediately, 16 would seem to come into effect immediately, 17 is suspended, 21 to 26 appear to have immediate operation, 31 creates immediate obligations of confidentiality; likewise, 32.

So, what the client was entitled to, with due care and skill, was an agreement which was binding, immediately in force as to part, would come into force as to the balance on separation, and the client achieved something radically less than that.

Your Honours, in terms of the cases, could I go first to D.W. Moore, which is then discussed in Wardley. That is in volume 4, and we have given you the Weekly Law Reports version of it. The essential breach of the solicitors in that case was that they drafted a restraint of trade clause which took effect only if Mr Fenton ceased to be a shareholder, whereas their duty was to draft it to take effect if he ceased to be a director or an employee. That was the negligence.

In Lord Justice Neill’s judgment, at the top of page 277 of the Weekly Law Reports, he frames the question as a comparison between what the plaintiffs “were seeking to obtain” as compared with what they actually got, and he says in the next paragraph that:

the actual assessment of damages would –

of course, depend upon “the likely future” behaviour of Mr Fenton, but those imponderables did not prevent loss occurring. And so, the principle is expressed at 278G:

It is a question of fact in each case –

but:

the plaintiffs suffered damage –

if:

[they] did not get what [they] should have got.”

The rights under the actual agreements:

were demonstrably less valuable than they would have been had adequate restrictive covenants been –

drafted. And Lord Justice Bingham expresses the same point at page 279, letters G to H, and importantly, over on page 280, deals with the fact that if you are assessing the damages at an earlier date, you may come up with a different assessment of the contingencies, but that does not deny the fact of there being loss or damage. So, this proposition that if, by the solicitor’s negligence, you have got something less than you were entitled to receive leading to damage at that point in time comes through this case and comes through very strongly in Davys Burton v Thom, which is the New Zealand case which I was about to come to next.

GAGELER CJ: It might be a convenient moment, Mr Gleeson.

GLEESON J: If your Honour pleases.

GAGELER CJ: We will take the morning adjournment.

AT 11.13 AM SHORT ADJOURNMENT

UPON RESUMING AT 11.29 AM:

GAGELER CJ: Mr Gleeson.

MR GLEESON: Your Honours, in Davys Burton v Thom, which is in volume 4, at tab 10, under the New Zealand statute, which differs in some respect from ours, the negligence of the solicitor occurred in 1990, when the solicitor did not ensure that the wife received independent advice. The effect of that was that the agreement was liable not to achieve its purposes of contracting under the Act as it was described.

The particular issue arose because in 1993 – some three years after the agreement – the parties moved into what was previously the husband’s home and separate property. It became the marital home on that date, and because it became the marital home, it became subject to the sharing provisions of the New Zealand Act, albeit those were provisions which the court could depart from if it thought appropriate. Separation occurred in 1998. The agreement was held void in 1999 because of the failure to receive independent advice. The claim was commenced in 2002.

The court approached the matter, as can be seen from Chief Justice Elias’ judgment, particularly in paragraphs [17] and following, after a discussion of Wardley, on the basis – see paragraph [19] – that the present claim was not a Wardley‑type claim because it was:

based on the immediate consequences of the defendant solicitors not performing their duty.

There was reference to Lord Hoffmann in Sephton stating that:

“If the liability is for the difference between what the plaintiff got and what he would have got if the defendant had done what he was supposed to have done, it may be relatively easy, as Bingham LJ pointed out in D W Moore . . . to infer that the plaintiff has suffered some immediate damage, simply because he did not get what he should have got.”

So, in the Davys Burton Case, what the husband was entitled to was an agreement which, so far as due care and skill could achieve, would be binding and not set aside by the court, and would have the effect that if, in future, the parties moved into his home as matrimonial property, it would not be governed by the Act but would be governed by the agreement.

He did not get that, through the negligence of the solicitors, and that was regarded as damage occurring at the date of entry of the agreement. Your Honours see the proposition in paragraph [20], which we commend as a matter of principle, that:

where the plaintiff, through the negligence of the defendant, did not obtain the rights he should have obtained or had imposed on him liabilities or obligations that should not have been imposed.

Then damage can be seen to be suffered on entry of the agreement. Then there is a reference to Bell, D.W. Moore and a series of other English cases.

GORDON J: Does this New Zealand Act have the same kinds of provisions as 90DA and 90DB?

MR GLEESON: The short answer is no, your Honour, it operates differently to that, and the respondent relies upon that distinction. The best copy we have been able to find of the Act we have given to the Court. It is the 2002 reprint of the Act, when it had been renamed and renumbered as the Property (Relationships) Act 1976. I will not go through it, but the relevant provisions are all there.

We submit that is a distinction that does not differ in terms of principle, your Honour, because what happened under the New Zealand Act was, at the time of entry of the agreement, there was no immediate impact upon Mr Thom’s home. It would only have an impact upon his home if, in the future, he allowed it to become marital property, and yet all judges were unified that the damage occurred in 1990, not in 1993.

BEECH-JONES J: Just looking at that sentence of paragraph [20]:

did not obtain the rights he should have obtained or had imposed on him liabilities or obligations –

in this case, the obligations and liabilities of section 79, but you say the rights are the rights that he did not obtain on the entry into the agreement?

MR GLEESON: Yes, the rights he did not obtain on entry of the agreement was the right to avoid section 79 and supplant that with the agreed division of property under which he kept all his pre-marriage assets.

BEECH-JONES J: And those rights – how much does depend on what extent those rights are, in effect, contingent on what unfolds under the statutory scheme?

MR GLEESON: It does not depend on that because, as this case illustrates, at the date of the agreement, the home was not marital property and was not impacted by the agreement. It was only when a future contingent event occurred, which was allowing it to become the marital home, that it would have come under the effect of the Act, and did come under the effect of the Act, because of the negligence.

And that is the distinction that the Chief Justice refers to in paragraph [24]. We commend this approach of – this is really an interest base analysis; it is looking at what is:

the purpose of the contracting‑out agreement –

its purpose is:

to exclude the application of the Matrimonial Property Act –

to the property:

If not void for non-compliance, the agreement would have maintained the property as Mr Thom’s separate property, despite its future use as the family home, subject only to the ability of the Court to set it aside –

So, the right in the agreement, its purposive nature was to protect against a future event, which we would submit is relatively similar to ours ‑ ‑ ‑

GORDON J: It is really the next sentence and then this argument about “no effective symmetry”, because the ability to set it aside as unjust is a different provision, as we know, in our Family Law Act but there is no 90DA, DB not-enforceable kind of analysis, is there?

MR GLEESON: Your Honour, I will try not to keep repeating it, but with 90DB, our essential point is no better or worse than this: that although that defers the enforcement of the division until separation, the critical thing that the husband was entitled to achieve was, so far as due care and skill could achieve, a binding agreement that the wife could not unilaterally withdraw from leading up to separation, and that is what he did not get, because of the negligence of the solicitor. So, the parallel that we would see is that both Mr Thom and Mr Daily were seeking to protect against possible future contingencies.

In the case of Mr Thom, the contingency was his house becoming matrimonial property if they moved into it as a family, and what Mr Daily was seeking to protect against was the operation of section 79 if the relationship broke down. In each case, the loss was suffered when the agreement did not provide the protection against the contingency that it was meant to do with due care and skill. You see that about lines 25 to 30 on the page:

The immediate effect of the negligent advice is that Mr Thom did not achieve his object in securing that protection. The Matrimonial Property Act regime attached immediately upon his marriage . . . While the eventual impact . . . depended on future eventualities, the application of the Act was not contingent.

That is what happened here. The moment Mr Daily entered the marriage, the section 79 regime descended upon him, to take effect if there was separation. And the harm was suffered then, because he did not have the protection from section 79 and, as put in paragraph [25]:

he “did not get what he should have got”.

Now, coming back to one of your Honour Justice Jagot’s questions, [25] and [26] identified the two forms of measurable loss that we seek to map onto here. It is said in [25] that he:

had an immediate cause of action . . . to compensate him for the defective agreement. The valuation of his diminished package of rights may have been difficult to assess with precision –

until certain events occurred:

His measurable loss would have been subject to discount for future contingencies in the application of the Act . . . The difficulty of the exercise is not, however, unusual –

Then in [26] it is said that in and from 1990 he:

would have had an immediate claim for the costs of remedying the deficiencies in the agreement.

We read that as being not conditioned upon him knowing of deficiencies in the agreement, but of loss being suffered because an immediate claim could have been brought for the cost of remedy, and that is sufficient for it to constitute damage. Then, of course, in South Australia we have section 48, which allows for an extension of the limitation period if certain conditions are met.

But [26] identifies a series of remedial steps which could have been taken, which would have cost money, and that could property be seen as a measure of loss in 1990, and that is irrespective of whether he knew of the defect or irrespective of whether the home ever became marital property.

Then the reasons of the plurality were given by Justice Wilson. Again, there is a discussion of Wardley at paragraph [40] and following; at paragraph [42], a discussion of Lord Hoffmann in Sephton. The summary proposition is expressed at paragraph [46], particularly the last sentence:

A reduction in the value of an asset, whether tangible or intangible, constitutes actual damage and exists as soon as the asset becomes less valuable.

So, if your Honours were to accept that obtaining a defective financial agreement, which is liable to be set aside for uncertainty and vulnerable to being set aside for hardship because of its failure to provide for children, is a less valuable creature in 2005 than a binding financial agreement which does not suffer those infirmities, we would submit principle holds that loss was then suffered.

Your Honours will see in [48], when it comes to application of the principle, the Court pays attention to Mr Thom’s own pleading and evidence to confirm that loss was suffered at that time and Mr Thom, like Mr Daily here, said:

the “whole purpose” of the agreement . . . was to “protect” the house –

to guard against a property claim; the whole purpose was to ensure:

the house remained his separate property. The agreement failed to achieve this outcome . . . and loss, therefore, resulted . . . at that time.

That is, in 1990. Now, we would submit that is exactly what the position was with Mr Daily. The whole purpose, as communicated to the solicitor, was that that $404,000 that is in Schedule A of the agreement on page 17 of the RBFM was to be kept as his in the event of separation, and that is the outcome which the agreement did not achieve in 2005, and that is a form of measurable loss. You will see in paragraph [49], again, the two ways of measuring the loss are identified, which is the difference in value and the cost:

to obtain or attempt to obtain a valid agreement –

and difficulties in quantification go not to existence of loss, but only to measure. So, your Honours, given time, I will not take you orally through the third of the series of cases, which is Bell v Peter Browne, which is at tab 8, we have given you the ‑ ‑ ‑

EDELMAN J: Just before you move from Davys Burton, was there any consideration, anywhere in the Supreme Court, of the causation issue? Of whether or not the defective agreement could have been rectified at any subsequent point in time?

MR GLEESON: The consideration I took you to, and I will give you the references again, it is paragraph [49], but also it is paragraph [26], which is that because the defect may have been able to be remedied at and from the time of entry, that a head of loss or a measure of loss was the cost of doing the things necessary to seek to remedy it, and that confirms it is loss or damage on entry, as opposed to it being loss or damage at some later date.

GORDON J: Can I ask one last question. Is paragraph [50], in a sense, the only point at which they deal with the general considerations raised in Wardley, or things like those general considerations?

MR GLEESON: No, your Honour, the plurality had discussed Wardley at [40].

GORDON J: I meant specifically the things which are the last – on page 573 of Wardley, i.e., you have to value contingencies and the difficulties of doing that as being an example or an explanation as to why, in Wardley, the Court went and adopted a different approach.

MR GLEESON: I am not sure there is anything else I can refer your Honour to in this judgment. I will be coming to Wardley in just a moment.

GORDON J: Thank you.

MR GLEESON: So, Bell v Peter Browne, I was simply going to refer to the case, which is at tab 8, and give you pages 502 to 503 in Lord Justice Nicholls, which again identifies the two measures of damage; Lord Justice Beldam at page 510 and Lord Mustill at page 323.

Could I come to Wardley 175 CLR 514, your Honours. It is in volume 3, page 194. Now, one of the broad submissions I am going to make about Wardley is that the chain of cases I have taken you to, particularly the English cases, are explained and approved by the Court, but not extended to a different factual situation which is not our case. This was a different factual situation because, as seen at page 520, it was a claim for “misleading and deceptive conduct” where the State of Western Australia said that Wardley had provided it with misleading information which had caused it to give an indemnity to the NAB against a facility to Rothwells.

So, immediately, it is not a case where the defendant is under a duty in negligence to document a transaction for the State of Western Australia. It is not a case of a bilateral transaction, or an agreement – as the way I have described it at the outset – it is rather a case of Western Australia saying: I suffered loss because you infringed my interests by providing me with misleading information. That context of the case led, we submit, to the close analysis at the foot of page 524 of the indemnity that was given by the State, and it was an indemnity which:

created a liability –

only:

if and when the Bank’s relevant “net loss” was ascertained –

and the net loss could only be ascertained once one understood the total amount that the bank had recovered from Rothwells as the principal debtor. Within that context, at page 526, the Court’s approach was to seek guidance from the measure of damages in deceit, and therefore to look, has there been an alteration of position under the inducement, and then, has relevant prejudice flown from that alteration which can be recognised as actual loss or measurable loss?

So, our first submission would be that the entire issue being dealt within the case is a different issue, with a different interest being protected, and therefore it does not map neatly onto our case. At page 527, the heading gives the guide that this is:

The concept of loss or damage in the context of misrepresentations –

The Court makes the point that the interest infringed needs to be identified, there needs to be actual damage, but in the middle of that page, the Court says:

In many instances the disadvantageous character or effect of the agreement cannot be ascertained until some future date when its impact upon events as they unfold becomes known or apparent –

We do not challenge that proposition in the context it is uttered, which is a misrepresentation leading a person to enter an agreement which contains a wholly contingent liability. We submit the proposition does not speak to our case, where the disadvantage is not merely in how a transaction plays out but in a transaction not taking the form it should have taken, had due care and skill been exercised.

BEECH‑JONES J: If the duty had been just limited, say, in this case, to a failure to advise – a failure to advise that this agreement was uncertain – just that simple breach, with no corresponding duty to secure an agreement that was certain, we would be in this territory, would we not?

MR GLEESON: No, your Honour. One would have to look at how the duty, breach and damage was pleaded. So, if it was the breach is just you failed to advise me, you then need to know what they are pleading as their loss that flowed from that failure to advise.

And if, as per this case – as per the failure to advise aspect of this case – the loss was pleaded as being: I would then have, given proper advice, entered a different transaction, instructed you to draft a different transaction for me, and my loss is the difference between the actual transaction I am in, with its defective protections, and the one I would have ended up in, with its adequate protections – then we would not be in this territory.

What is important then is, at the foot of page 208, the Court discusses Forster v Outred, and that case is explained and approved at 529, point 5, as a case where:

the immediate effect of the execution of the mortgage –

under the negligent advice of the solicitors was to diminish:

the value of the plaintiff’s equity of redemption –

So, that emphasises that, in a case that is an advice case, one needs to look at what is it that is said to have flown to you from the negligent advice. In Forster v Outred, what is said is: I entered a mortgage I would not have entered, therefore I diminished the value of my property, therefore there is actual loss. So, that is Forster v Outred. Then, passing over Jobbins, can I come to 530 at point 5, where the Court says:

the English decisions have proceeded according to the view that, where the plaintiff is induced by a negligent misrepresentation to enter into a contract and the contract, as a result of the negligence, yields property or contractual rights of lesser value, the plaintiff first suffers financial loss on entry into the contract, notwithstanding that the full extent of the plaintiff’s financial loss may be incapable of ascertainment until some later date.

Footnote (69) takes us to, inter alia, D.W. Moore, Islander Trucking and Bell v Peter Browne. So, that is an identification of the line of cases that where the misrepresentation has led to property or contractual rights of lesser value than the person should have got, loss is suffered on entry of the agreement. And then what is critical is, on page 531, that the moving party was seeking to extend the principle in the English cases into territory beyond what they could properly sustain:

It has been contended that the principle underlying the English decisions extends to the point that a plaintiff sustains loss on entry into an agreement notwithstanding that the loss to which the plaintiff is subjected by the agreement is a loss upon a contingency . . . we doubt that the decisions travel so far . . . the decisions in cases which involve contingent loss were decisions which turned on the plaintiff sustaining measurable loss at an earlier time, quite apart from the contingent loss which threatened at a later date.

Footnote (71):

Forster v. Outred & Co. and D.W. Moore & Co. v. Ferrier illustrate the point.

So, the English decisions have been explained and approved so far as they stand for that proposition. Then there is a reference to Islander Trucking, with a detailed extract:

with reference to cases in which solicitors have brought into existence defective documents –

That is our case, and if I could just read the first part of what Justice Evans observed:

“The decision that damages are suffered at the time when the defective document is executed may, it appears, be put on one or both of two bases. The first is because the chose in action which the client acquires, or parts with, as a result of executing the document is regarded as a form of property which is held or acquired by the plaintiff and which is found to be devalued, that is to say worth either nothing or less than it would be worth if it was free from the defect which has resulted from the solicitor’s negligence.

We contend that that proposition in Islander Trucking is part of what the Court has accepted in Wardley, but what the Court has refused to do is to extend that proposition any further. And you can see that from the foot of that page, 531, where the Court returns to D.W. Moore and explains that:

Notwithstanding that the damage actually complained of was not suffered until much later and was dependent on two contingencies –

That is, first, that the gentleman would leave; second, he would set up in competition:

the Court of Appeal held that there was a cause of action for some measurable loss which occurred when the defective contract containing the unenforceable covenant was executed.

Then, in the next paragraph, the Court says if, however, you are to take the English decisions further, then it does not agree with them, and explains why that is. So, the Court then says:

In the result, we agree with the decision of von Doussa J. in S.W.F. Hoists –

and if your Honours look at the very last sentence in that last full paragraph on the page, the Court says S.W.F. Hoists is:

to be distinguished from the English insurance cases –

the second one being Islander Trucking, back to the previous page:

in that the policies of insurance in the Australian cases were worth what was paid for them.

So, in a case where, because of the breach of duty, what is received is a form of property of less value than it should have held, then, we submit, Wardley has approved the English cases, and loss and damage has been suffered at the date of the entry of that agreement. So, coming to 533 in the final paragraph, which is relied upon by the respondent, and this is it is unfair to expect people:

to commence proceedings before the contingency is fulfilled.

That proposition, we submit, should not be taken as the basis of the decision, it is merely what is said to be a reinforcement of the decision. And what the Court is saying in the last sentence is that:

These practical consequences –

are such that they:

outweigh the strength of the argument that the principle applicable to the cases in which the plaintiff acquires property (or a chose in action) –

that is our case:

should be extended to cases where an agreement –

merely:

subjects the plaintiff to a contingent loss.

So, if your Honours were ultimately persuaded that this is a case where, through the negligence, Mr Daily acquired a chose in action which was less valuable than that which he was entitled to receive, for the reasons I have given, then we submit Wardley affirms loss or damage has been suffered at the date of the agreement.

Your Honours also will be well familiar with the observations of Justice Brennan between 536 to 538 and to Justice Deane, particularly between 541 and 544. I would just say, on 544, Justice Deane does refer to the loss of the chance case and recognises, at about point 7:

Nor is it to deny that the loss of a mere chance of some future economic benefit may itself constitute loss or damage for the purpose of completing a common law cause of action.

Footnote: various cases. Now, without repeating what I said earlier in answer to your Honour Justice Edelman, we submit that as this case has been constructed and as it is supposedly remitted, the loss or damage now to be assessed is the loss of the chance in 2005, prior to the marriage, to obtain as better BFA, that is, 2005 damage, 2005 cause of action.

Your Honours, in terms of the later decisions of this Court, we would refer only to Cornwell 229 CLR 519, volume 3, tab 5 – a very different fact case, of course – and in particular refer to paragraphs 16 to 18, where the importance of identifying the interest is underlined and it is explained there why, in the majority judgment, there was no loss or damage at the earlier date. But importantly, at paragraph 38, the Court says:

The respondent also correctly emphasised that his was not a “transaction case” where property was sold or acquired at a disadvantageous price, or the opportunity was lost of the lucrative exploitation of contractual rights or of some other commercial opportunity.

So, the type of case we are dealing with, we submit, is one which was not being addressed in Cornwell.

GAGELER CJ: Is the “interest” a singular concept, or are you looking at the interest which underlies the claim that is actually being made? That is, I am looking at the language used at the end of paragraph 18:

This “entitlement” was his “interest” in the sense used in . . . Wardley.

If you take what you earlier described as the repair cost, for example, would that be the same interest as the interest which is pursued in the claim that is made here?

MR GLEESON: Yes, it is, because it is to say: you have put me in this position of a defective agreement, I should have been in the position of a far better agreement. Now, what is the disadvantage I have suffered from that? If there is a means, with some cost, to restore me to the position I should have been in, that is, that is a part of the loss or damage I have suffered. If it is not possible to do that, and so you have irremediably prejudiced me, by giving me a worthless agreement when I should have got a valuable one, then that is how the loss or damage has played out for me. So, they are two aspects of the interest and how it has caused harm to the person.

EDELMAN J: It does have the curious consequence that it is exactly the same interest for the purposes of a claim for breach of contract as for a claim for negligence in the of torts, although, for that same interest, there is a very different response in contract and in torts in terms of whether or not one looks initially to enforcing money terms or otherwise the performance that is promised, or, in torts compensating the extent to which you are worse off.

MR GLEESON: Your Honour, I agree at a high level of principle, but we are in one of those areas of concurrent duties where in most, but not every case, the measure of damages ends up being the same. Not every case, but if, in tort, you say I am putting you back in the position you should have been in but for the negligence, that inquiry, certainly as it is advanced in this case, is: what would have happened but for the negligence is the agreement would not have been void for uncertainty, so that challenge would never have been faced, I would never have incurred $38,000 in costs.

As to hardship, I would have had, or had a chance of, a differently‑worded agreement. Now, that looks like the contract measure of damages. But that is the case that is framed. And the reason that is so, particularly in solicitor‑type cases, is that performance of the duty is necessarily a forward‑looking exercise.

Could I just show your Honours where the position in the United Kingdom has reached, which is Axa Insurance v Akther & Derby, which is volume 4, tab 7 at page 250. This was a different fact situation to ours, but it was one where the solicitors for the after‑the‑event insurer were negligent in their vetting of claims in various respects and the insurers suffered losses, and the question was when damage accrued. There was detailed discussion of Wardley. The decision of the majority was that this was not a pure contingent liability as per Wardley, and measurable loss occurred as soon as the policies were entered.

In the judgment of Lady Arden, after a detailed discussion of the earlier cases such as Sephton, particularly between paragraphs 30 to 35, there is an important statement of principle. At paragraph 30, she refers to:

“the damaged asset rule” –

and at 31 says:

there are other situations where loss is suffered immediately.

Citing D.W. Moore. Over the page, after discussing Bell, says:

In these cases, there was a bilateral transaction under which the claimant should have received certain benefits but owing to the negligence of his professional adviser did not do so.

Lady Arden describes this as:

“the package of rights rule”.

We submit that is a useful way of understanding the case, and that is our case. The bilateral transaction, between the husband and wife, under which the husband should have received, as far as skill could achieve, protection against section 79, but due to negligence did not do so. Then, at paragraph 32 says that:

the damaged asset rule and the package of rights rule are . . . not . . . independent qualifications on . . . Sephton –

GAGELER CJ: Is that a typo?

MR GLEESON: Rather, the underlying concept is – and this is effectively Wardley:

there had to be measurable loss before time began to run . . . loss . . . additional to the incurring of a purely contingent liability.

So, that is the proposition of law which is effectively, we submit, the same in principle as under Wardley, and as with Wardley, it has affirmed the series of cases we rely upon, including D.W. Moore, and then the issue of dispute between the majority and the minority is from paragraphs 57 through to 63, where Lady Arden’s view is that the package of rights rule could properly apply to this case, particularly because the damage that was suffered where the underwriter:

underwrites a risk in exchange for a premium –

and the premiums are worth less than they should have been because of the negligence, there is a loss suffered at the date the policies are entered. As it is described in 62:

The measure of loss is then the difference between its financial position having issued the policies and its financial position if it had not issued them.

One difference between the majority and the minority comes from paragraph 63, where:

even if damages –

are being:

assessed on the “no transaction” basis –

the loss is incurred at the time the policies are written. And I come back to what I put to your Honour Justice Beech‑Jones, that if it is a failure to advise or a negligent advice and the damage is said to be: I would not have entered the particular transaction, had proper advice been given, one can readily see the loss occurring at that point.

In Lord Justice Longmore, the matter is expressed very pithily at paragraph 73, and whether it is an alternative transaction case or a no transaction case, where there is a flawed transaction, there is:

more than the existence of a mere contingent liability.

So, for Lord Justice Longmore, as seen at 82, if:

the claimants have entered into a flawed transaction which they ought not to have entered into.

That is more than a “mere contingent liability”; loss has been suffered. The dissenting judgment of Lord Justice Lloyd takes a different approach to the particular case, particularly between paragraphs 146 and 157. Leave was granted to the House of Lords, or the Supreme Court and the case settled.

Your Honours, in terms of the Australian authorities subsequent to Wardley, in relation to the Victorian decision in Orwin, we simply rely upon what is in our written submissions that the result is correct, but the reasoning is infelicitous. It is on essentially the same circumstance as our case, it is the closest case in terms of a fact comparator. The reason it is infelicitous is because the Court appeared to contemplate there is a discretion to either apply the Wardley rule or the damaged asset package of rights rule. There is no discretion, there is one right legal answer in each case.

The other decision I want to briefly mention was Winnote v Page, which is volume 4, tab 427. That was the somewhat peculiar case in which the solicitors, by negligence, obtained for the client a mining lease from the landowner to extract peat, whereas what they should have obtained was a mining licence from the government. The majority of President Mason and Justice Tobias were satisfied that loss was suffered at the date that the client was induced to enter what was the wrong transaction, even though it was not until a later date that the full consequences of that loss became apparent.

We would commend the discussion between paragraphs 39 and 59 of the authorities, which explain which cases do fall within Wardley and which do not. The application of the principle is between paragraphs 60 to 62 and, effectively, what the court did was to say, if you look at what you got – which was the mining lease that you did not want – together with what you should have got, which was the mining licence, one can be seen that the overall package was “dramatically inferior” and therefore you have suffered loss at that date, even though the consequences did not fully play out until a much later date.

Justice Basten dissented on that particular issue but, interestingly, at paragraph 344, as we would read it, has approved Forster v Outred and D.W. Moore in the way we understand them, because his Honour says that:

where the negligence gives rise to a contractual relationship, legal interests are created in two parties, which cannot be varied except by consent.

So, we would understand that in our type of case, where the negligence has given rise to interests – rights – in Mr and Ms Daily where Mr Daily’s rights cannot be taken away by Ms Daily without his consent, we are in the territory, consistent with these cases, where loss or damage can be seen to be suffered at an earlier date.

The point of distinction of Justice Basten between paragraphs 345 and following from the majority appears to be that he treated the two transactions as separate, and said: well, although you did not get the mining licence, there was still a chance, until the State gave a licence to someone else, to remedy that deficiency and therefore no loss until the damage became inescapable. We would not commend that approach.

GORDON J: So, that is to challenge his Honour’s reasoning, which concludes at 355 to 356?

MR GLEESON: Yes. We would not commend what his Honour has said at 355 and 356. The loss was suffered, provided you look at the overall package of rights, because you got the wrong agreement with the wrong person. But his Honour’s approach is you can actually separate the two out, and as to the mining licence, which you are meant to get, you still could have got one up until 1993, and therefore your loss was still contingent up to that point.

And so, his Honour then separately, at 357, looks at whether the thing you got – which was the mining lease – whether it was loss, and his Honour said that was not sufficiently proven on the counterfactual. But what we would submit is common across all judgments is what appeared at 344 of Justice Basten, which is the principle we are contending for.

Your Honours, in the Full Court’s reasons on this issue, which run between pages 141 to 146 of the book, these are our submissions. As to paragraph 75, if it is read, as per Orwin, as suggesting the Court has a discretion to choose which of competing characterisations, it is in error. If it is merely saying they are the possibilities, then it is not in error. We would say in respect to, therefore, what is in Orwin, cited at 63, as if the court is approving that, that is wrong.

As to 78, when the court discusses Wardley, what is significant is that the court has not dealt with the English cases – the damaged asset cases, the package of rights cases, which were carefully discussed and approved in Wardley. None of those passages have been picked up. Instead, the passages which really were about the different factual situation are what have been picked up.

Thus, when you come to page 144, the bolding of the “unjust and unreasonable” paragraph, with respect, has lost its context, which is the Court in Wardley not extending the damaged asset type cases into new territory, as opposed to this being some freestanding assessment of what is unjust or unreasonable. And so, when the court says, in 81:

Although Wardley was determined in a markedly different context, those statements seem particularly apt –

We would submit it is an error to adopt, as a principle: would it be unjust and unreasonable for parties to an intact marriage, which may never fail, to commence proceedings before separation as being the basis for saying there is no loss or damage before separation? That is the conclusion the court seems to reach – there can be no loss or damage before separation. If the proceedings are to be commenced, there are a suit between the client and the solicitor, damage will be shown in the way I have explained, the contingencies will then be assessed.

The court then moves to 90DA, and we would disagree with the reasoning that is being expressed in paragraph 84. What Mr Daily was

entitled to was a binding BFA, so far as care could achieve. What he got was a non‑binding BFA, due to negligence, and that represents his loss. Then finally, at 86 to 88, when the court rejects:

the “damaged asset” analogy –

they say:

That is because the BFA is not a tangible or even intangible asset, nor anything like it.

That, we submit, is a mischaracterisation of the statutory scheme as well as the particular BFA. It is an intangible asset – it is a bundle of rights – it is intended to provide you with valuable protection against a future event, and that brings it within the relevant principle. At 88, they say:

because it was void ab initio, in fact the husband got nothing at all by entering into the BFA. Hence it was not akin to a damaged asset, but rather it was nothing whatsoever.

That is just the more extreme version of the damaged asset principle, that the thing you got was close to worthless because it was liable to be set aside, void ab initio.

Finally, our proposition 10, your Honours are aware that in South Australia and, I think, the Northern Territory, there is a provision which allows for extension of time in these types of cases, but perhaps not in the other States. That provision was accepted by the parties to be picked up under section 79 of the Judiciary Act.

Our proposition is that broadly expressed public policy considerations such as what is unjust or unreasonable should not govern the question of when damage accrues; it is open to legislatures to, if they wish, provide for modifications through the concept of discoverability and the like. Legislatures have made their choices on that question; the common law principle does not need to be restated to deal with that public policy consideration.

If your Honours please, they are our submissions.

GAGELER CJ: Thank you, Mr Gleeson. Mr Tokley.

MR TOKLEY: Thank you, your Honour. Your Honours, could I invite you to take up the oral outline which we have provided. In the interests of both efficiency and time, I will endeavour to stick to the oral outline, but at the same time, if I may, comment upon the submissions that my learned friend Mr Gleeson has made as well.

Our first proposition is that which is set out under the heading “Context” and paragraph 1, and this, we say, is the critical finding for the rest of what is to follow, which is that the intention of the parties was to contract out of the jurisdiction of the Court pursuant to section 79 and to determine their separate interests to property settlement and division consequent upon a breakdown of their relationship.

Now, that was the intention that was also conveyed to the solicitors, as your Honours know from the judgement. Critically – and I will come to your Honour the Chief Justice’s question about the nature of the interest very shortly – before separation, the financial agreement did not oblige the parties to it to pay any money, to transfer any property or to incur any liabilities, nor was there to be any adjustment in their joint property interests.

By contrast, and your Honours have been taken to the financial agreement by my learned friend Mr Gleeson, your Honour the Chief Justice pointed out that clause 9 in that agreement is of central importance. That is one that says – the opening words – that:

In the event of separation, the parties shall divide their assets and financial resources –

et cetera, et cetera. We say that the contingency upon which everything hinged was the separation, and it was the interest we have identified in paragraph 5 of our outline – the interest was to have as binding financial agreement compliant with the Family Law Act that was effective upon separation. It was that interest that was infringed by the breach of duty of care owed by the solicitors.

BEECH-JONES J: I think Mr Gleeson says that when you look at the Act, in fact, those financial agreements are effective or should be effective on the point they are entered into.

MR TOKLEY: There may be some provisions of the agreement that are effective upon entry, but the critical interest that is the subject of protection is the division of the property, which can only happen, under the terms of the legislation, upon a separation.

Your Honours will recall – your Honour Justice Edelman asked about the concept of “binding” and, if I may put it this way, the statute creates this universe of discourse, if I may use that expression, whereby the financial agreement is binding if it complies with the terms of the section – I think it is section 90G. So, when one is using the words “a binding financial agreement”, one has to be careful to understand it in that statutory context, as opposed to outside of that statutory context.

GORDON J: Is your short point, then, that one takes this BFA and says that in relation to an aspect of it, that is, the interest which is the relevant interest to be protected here, namely, what is to happen upon separation?

MR TOKLEY: Yes, your Honour.

GORDON J: And that as a result of the statutory framework, both in terms of section 90G, what it needs to be binding, is then subject to the carve‑outs of 90DA and DB?

MR TOKLEY: Yes, your Honour. Yes.

GORDON J: And so you accept, do you, to follow on from the question from Justice Beech‑Jones, that there are other aspects of the agreement that are binding from the time it is created and entered into?

MR TOKLEY: Yes, your Honour.

GORDON J: That does not detract, you say, from the interest you seek to protect?

MR TOKLEY: Correct, your Honour.

GORDON J: In this context?

MR TOKLEY: Correct, your Honour, yes.

JAGOT J: Your paragraph 5 of your outline, in effect, says all of that.

MR TOKLEY: Yes, your Honour, yes. Thank you, your Honour, yes. Again, the short point is that the concept of the interest and the interest to be protected finds its foundation in the Wardley judgment. And I might go to the Wardley judgment now, as your Honours have just been taken to it, in the interests of efficiency.

Your Honours, I do not intend, obviously, to read to your Honours the judgments or large slabs of the judgments. I am sure your Honours will have regard to Wardley itself. What I wanted to do there was to point out – I wanted to say that I read Wardley slightly differently from my learned friend Mr Gleeson. Mr Gleeson said that Wardley had approved of the earlier English line of authorities. In my respectful submission, Wardley does not approve of that line of authority, Wardley questions that line of authority, and I will seek to demonstrate that very shortly, if I may.

Can I invite your Honours – I am using the joint book of authorities, but your Honours may have loose authorities. It is, of course, Wardley (1992) 175 CLR 514. Your Honours, may I simply make these points, as I go through. At page 516 is the argument for the appellants. At about point 5 of the page, the argument is put that:

Loss was suffered by the State on 26 October 1987 when the indemnity was signed.

And then, a little bit after that:

The case is therefore indistinguishable from Forster v. Outred & Co. and cases which apply it.

And in the paragraph, your Honours will see footnote (7), and they list all of the relevant English cases, but also the case of Jobbins as well and a couple of other Australian decisions. So, it is that argument which is being addressed by the plurality when they come to page 527 of the judgment. And although my learned friend Mr Gleeson emphasised the heading on page 527 in italics:

The concept of loss or damage in the context of misrepresentations –

your Honours will see that the sentence immediately following that is not limited to misrepresentations, but it is:

when a cause of action for negligence causing economic loss accrues may require consideration of the precise interest infringed by the negligent act or omission.

And so on. Your Honours will, I am sure, be familiar with the fact that that same paragraph is reproduced in the Cornwell decision and relied upon the majority in that judgment there. Their Honours then go on to address the concept of misrepresentation and ideas concerning when loss or damage arises. They quote, at the bottom of page 527, from the judgment of Lord Justice Ackner in UBAF Ltd v European American Banking Corporation, and the quote that their Honours extract is the one at the top of the page 528:

“The mere fact that the innocent but negligent misrepresentations caused the plaintiffs to enter into a contract which they otherwise would not have entered into, does not inevitably mean that they had suffered damage by merely entering into the contract.”

That is because it was not self‑evident that the value of the chose in action which the plaintiff acquired, the right to repayment of a loan, was worth less than the amount paid to the borrower at the time of entry into the loan agreement. Evidence was required to establish that fact, if it were a fact.

And so on. Then, at about point 6 of that page, you will see that they are then talking – I beg your pardon, point 5 – they are talking about the Full Court decision of Jobbins, and their Honours say:

In the view of the Court, the investment from its inception lacked the qualities which it had been represented as having and was therefore less valuable than it would have been if the representations had been true.

Then in the quotation taken at about point 8, your Honours will see:

According to the pleading, the investment lacked the represented qualities; as a consequence it was from the outset less valuable than it should have been.

They then refer to the fact that the Full Court referred to the English decision of Forster v Outred at the bottom of the page. Your Honours were taken to the first sentence of the paragraph on page 529:

The decision in Forster v Outred & Co. is explicable by reference to the immediate effect –

et cetera. But then – and this is where my learned friend and I differ – on page 530, their Honours, the plurality, say:

Be that as it may, the English decisions have proceeded according to the view that, where the plaintiff is induced by a negligent misrepresentation to enter into a contract and the contract, as a result of the negligence, yields property or contractual rights of lesser value –

and I would emphasise the words “lesser value”:

the plaintiff first suffers financial loss on entry into the contract, notwithstanding that the full extent of the plaintiff’s financial loss may be incapable of ascertainment until some later date –

and your Honours will see that in footnote (69) they have referenced the decisions earlier referred to in the footnote by the appellants in that case, including the ones your Honours have been to or have been mentioned here and taken to briefly, they are D.W. Moore and Bell v Peter Browne.

Then this is where their Honours, rather than approving of the earlier line of English authority, in my respectful submission, start to question it. They say, at about point 7 on page 530:

In part, the English approach appears to have been influenced by the general principle state in Darley Main Colliery Co. v Mitchell –

and then, in the next paragraph:

Another element in some of the English decisions, as in Jobbins, is the conclusion that, because the subject matter of the agreement lacked the qualities which it had been represented as having, that subject matter was therefore less valuable –

Now, I would emphasise the words there:

than it would have been if the representations had been true. That conclusion is acceptable in cases in which the contract measure of damages is appropriate but it is not acceptable here where the contract measure of damages does not apply. The application of that measure of damages may, in some situations, enable a court to conclude more readily that the plaintiff first suffers loss or damage on entry into an agreement.

EDELMAN J: So, that is drawing a distinction between conduct that fails to put you into a better position by virtue of fulfilling what it is that you were promised to do, and conduct where they are talking about the tortious measure, which leaves you in a worse position than you otherwise were in.

MR TOKLEY: Yes, your Honour. Yes.

BEECH-JONES J: But if the tortious duty is such as to put you in that better position, does that still apply?

MR TOKLEY: Well, that is not the case here, though, as I understand it.

BEECH-JONES J: I think it is said to be the case here. The case said to be here is the proper discharge of the respondent’s duty was to obtain an agreement that was as certain, as enforceable, as reasonable care would allow, not just to say: that agreement is hopeless.

MR TOKLEY: Well, as I understand it, the case put by Mr Daily had several components: one was that he did not receive the advice he should have received; the other was that the agreement could have been better drafted, and it was, to avoid the uncertainty; and the third was that, in terms of the advice he received, he could have been given advice about the risks relating to hardship, et cetera. As your Honour knows, because your Honours were taken to it, two of those three were rejected by the trial judge, and what was left was the advice – I should have been given advice about certain matters, which advice I was not given.

BEECH-JONES J: But is not the remittal on the assumption that what would follow from that is the solicitor giving him an agreement, or seeking to get him an agreement, that would fix the certainty and address the potential for hardship? I do not want to distract you from where you are going, but ‑ ‑ ‑

MR TOKLEY: Yes. No, your Honour, the reason I say that is that the remittal is addressed at pages 161 and 162 of the core appeal book – and if I may invite your Honours to go to that, to answer your Honour Justice Beech-Jones’ question – and at paragraph 140 on page 161, you will see, your Honours, in the second sentence, that the Full Court said:

As an aside however, we should note that what we have said about it being unnecessary for the primary judge to have determined the hardship claim, would likely have seen other grounds succeed –

BEECH-JONES J: Sorry, Mr Tokley, what paragraph are you reading, again?

MR TOKLEY: Paragraph 140, your Honour.

BEECH-JONES J: Of the Full Court?

MR TOKLEY: Full Court judgment, yes, page 161 of the core appeal book. Does your Honour have that?

BEECH-JONES J: Yes, I do.

MR TOKLEY: It is the second sentence, and it is the very end of that second sentence:

and certainly his findings in that regard should not be seen as creating some fetter on any future assessment of damages.

And at page 162:

The husband’s appeal as against the wife fails, but as against the solicitors succeeds, leading to the necessity to set aside the assessment of damages against the solicitors, and undertake that assessment afresh.

GORDON J: Can I just ask about – before you leave there, at paragraph 142, it says:

including the absence of necessary findings of fact by the primary judge –

Does that mean that they are to be redone on the reassessment?

MR TOKLEY: Yes, your Honour, yes. It leaves open the possibility for the husband to put forward further evidence. It requires a completely fresh assessment of the damages, and it is not restricted. My learned friend Mr Gleeson said that there was some restriction in relation to the $38,000, but it is not restricted to that amount at all.

In fact, may I just correct, in that regard one matter, which my learned friend – if your Honours will pardon me for one moment – it is in the appellant’s book of further materials – I am sorry to jump around, your Honours, but I thought it would be important to correct this while we are on this point, and if your Honours go to page 83 of the book of further materials. Do your Honours have that there? It is the ‑ ‑ ‑

GORDON J: So, this is your pleading about negligence?

MR TOKLEY: Correct, your Honour, yes, yes. And I address it for two reasons. First of all, I think it was a question from your Honour the Chief Justice about the interest and whether there is or might be more than one component to the interest. But the essential feature of the interest and the claim is in paragraph 50.3, where, if:

the Third Deed is not enforceable, he will be liable to pay the first respondent more by way of property settlement than he would have been required to pay her pursuant to the Third Deed.

And at paragraph 50.7:

he has incurred, and is liable to his advisers for, the costs of these proceedings, including the appeal to the Full Court of this Honourable Court.

EDELMAN J: That is the consequences.

MR TOKLEY: Yes.

EDELMAN J: But the interest itself has got to be the same as the interest in the contract case. The interest itself is the undertaking by the solicitors to produce the FA in the terms that the client wanted.

MR TOKLEY: Yes, your Honour, and to protect him upon a separation or breakdown and separation of the marriage.

BEECH-JONES J: So, I think you may be in heated agreement with Mr Gleeson, that you are getting back to that the interest – one way or another, your case gets to, the respondent had to either secure or use their best efforts to secure a binding agreement that would avoid being set aside. That is what 50.3 is premised upon, “not enforceable”.

MR TOKLEY: Yes, that is correct, yes.

BEECH-JONES J: So, where we were in Wardley was talking about a contractual – you were contrasting it with a contractual measure of damages.

MR TOKLEY: Yes, your Honour.

BEECH-JONES J: And what I was trying to point out was, that premise is actually not different to a contractual measure of damages, because it is about securing an outcome, is it not?

MR TOKLEY: Well, accepting it for the purposes of argument, that may be correct, when we are looking at the contract measure of damages, but it does not follow for the purposes of the measure of damages in tort.

BEECH-JONES J: It does not necessarily follow ‑ ‑ ‑

MR TOKLEY: Does not necessarily follow.

BEECH‑JONES J: ‑ ‑ ‑ but it does in your case, because of the way you put it, does it not? Because you are seeking an outcome, you are seeking to secure an agreement that has these features. That is the case your client puts, as I understand it.

MR TOKLEY: I am not sure if it was put in such simple terms, with respect, your Honour. As I understood it, the ‑ ‑ ‑

EDELMAN J: It must have been put that way for the contract case.

MR TOKLEY: Yes.

EDELMAN J: Because for your contract case, you just asked to be put in the position you should have been put in, for the performance you were promised.

MR TOKLEY: Yes.

EDELMAN J: But for your tort case, relying on the same interest, your claim has to, by definition, point to some loss in the different sense of being worse off.

MR TOKLEY: Correct, your Honour, yes. And that is, we made that point ‑ ‑ ‑

BEECH‑JONES J: But I am sorry, worse off between what? A comparison of what? Worse off between having an agreement that was enforceable and having an agreement that was not. Is that not what you just took us to?

MR TOKLEY: No, worse off – the comparison is between that which he would have enjoyed but for the negligence and the position he now finds himself in as a result of the negligence. We put as proposition number 21 in our outline.

I am sorry, your Honours, I was seeking to make the point that Wardley did not approve of those – the earlier line of English authority. In fact, it was questioning the earlier line of English authority. I had taken your Honours to page 531, where their Honours made the point about the conclusion about “less valuable”. It was “acceptable” if you were using the contract measure of damages, but not if you were using the tort measure of damages. Your Honours know that they, at 531, at about point 4, said that the English decisions:

were decisions which turned on the plaintiff sustaining measurable loss at an earlier –

point in time, and so on. I know your Honours will read the decision. What I wanted then to take your Honours to was page 533, where their Honours come back to the point that:

The conclusion which we have reached with respect to the time when the plaintiff first suffers loss in respect of contingent loss or liability accords with the comment of Gaudron J. in Hawkins v Clayton –

And then their Honours again quoted from her Honour, where they say, at about point 2:

“It would be too simplistic to restrict analysis of economic loss merely to a consideration of reduced value or increased liability.”

And the point that I seek to make, your Honours – and I am sorry for being so longwinded in making it – is that their Honours seem to be drawing a distinction between those cases, those English cases where they have talked about the subject matter being less valuable, as contrasted with those cases where you have got an actual financial loss arising.

So, you can say – and my learned friends’ argument is – upon entry into this agreement, he got rights that were less valuable. But what their Honours, I think, were at pains to out is that in the context of economic loss, you are not looking simply at whether rights may be of a lesser value or not, what you are looking for is an actual financial loss that has occurred.

GAGELER CJ: Mr Tokley, I am genuinely struggling with the relationship between two concepts – they may be the same concept, I am not sure. If we go back to the sentence that you took us to on page 527, it refers to Justice Gaudron in Hawkins v Clayton, there is this emphasis on the need to look to “the precise interest infringed”.

MR TOKLEY: Yes, your Honour.

GAGELER CJ: Here, I understand you have identified that in paragraph 5 of your outline as a contingent interest. It is the relationship between that and the loss or damage, the identification and quantification of the loss or damage infringed by the negligent act or omission, that I am struggling with, particularly in circumstances where, here, the most valuable part of your claim, yet to be litigated, is put as a loss of a chance – the chance that was lost, as I understand it, at the time of the negligence occurring.

MR TOKLEY: I can understand your Honour’s difficulty.

GAGELER CJ: I think it is a conceptual problem.

MR TOKLEY: Yes, yes, I can understand the conceptual problem.

GAGELER CJ: If you want to think about it over lunch, that is ‑ ‑ ‑

MR TOKLEY: It would be helpful, your Honour.

GAGELER CJ: Yes.

MR TOKLEY: May I just make a couple of comments, by way of assistance. Where, in the Full Court judgment, they are quoting from those written submissions, those were the written submissions made before the primary judge, not the written submissions before the Full Court. As your Honours know, there is a difference between, conceptually, the situations where you – I think it is Malec v Hutton – you prove the existence of the loss on the balance of probabilities, but then when you come to assess the loss – what you have lost – you can have regard to opportunities and contingencies in assessment.

The way it was argued before the Full Court was that his Honour had conflated questions of loss with assessment of loss, and the example chosen was that loss of opportunity goes to assessment, not to the existence of the loss. I hope that is of some assistance, your Honour. Is that a convenient time for your Honours?

GAGELER CJ: It certainly is.

MR TOKLEY: Thank you, your Honours.

GAGELER CJ: Thank you.

AT 12.48 PM LUNCHEON ADJOURNMENT

UPON RESUMING AT 2.13 PM:

GAGELER CJ: Yes, Mr Tokley.

MR TOKLEY: Thank you, your Honour. Your Honours, before lunch, I was addressing your Honours on the Wardley decision and how I took issue with my learned friend Mr Gleeson that the Court in Wardley had approved the earlier English line of authorities, and for the reasons I gave, I think that their Honours in the plurality question of the earlier English line of authorities and did not actually approve them, and sought to explain the basis upon which the decisions in those cases were reached.

The only other part I wanted to take your Honours to in the Wardley Case was the decision of Justice Brennan at page 536. My learned friend mentioned the page, but your Honours were not taken to it. It is about point 6 of the page, where his Honour Justice Brennan begins the sentence:

A plaintiff may suffer economic loss or damage in a number of ways: by payment of money, by transfer of property, by diminution in the value of an asset or by the incurring of a liability.

His Honour then goes on to further expand upon what he says in the first sentence and how it is that if a person:

acquires no benefit, the loss or damage is suffered when the event occurs . . . But if a benefit is acquired . . . it may not be possible to ascertain –

whether there is any loss until you weigh the detriment and the burdens or the benefits at the same time. So, that is fairly, I think, straightforward. But the reasons I take your Honours to it is that the passage has been adopted by the English Supreme Court in the Sephton Case, and in particular by Lord Hoffmann, and it has been used as the basis upon which to explain the earlier English decisions as well.

Sephton can be found behind tab 11 of the joint book of authorities, at page 359. At page 365, in paragraph 16, at the very bottom of that page, Lord Hoffmann discusses the broader interpretation of Forster v Outred by this Court in Wardley’s Case. In paragraph 18, his Lordship says:

I say at once that I am in complete agreement with this analysis, which provides that answer to this appeal.

And then, over the page, page 367, page 551 of the report, his Honour says, at about letter B:

This was entirely in accordance with the principles discussed in the Wardley case, where, in a passage to which Lord Nicholls of Birkenhead referred, at p 1634, Brennan J said –

And he then quotes the part I have taken your Honours to from the judgement of Justice Brennan. And then he goes on apply what Justice Brennan says in paragraph 21 and over the page to paragraph 22, opposite letter F:

The plaintiff had paid money, transferred property, incurred liabilities or suffered diminution in the value of an asset and in return obtained less than he should have got.

And so, the point I seek to make is that the relevant principle, if there is one, is not addressing the question of lesser values or less valuable rights. The relevant principle is as stated by Justice Brennan, then adopted by Lord Hoffmann, and shown how it is applied. In other words, by “relevant principle”, I mean this is the way in which this Court and Lord Hoffmann in the Supreme Court has explained the earlier English decisions – that is, you can explain them on the basis that the plaintiff had “paid money” over, “transferred property”, “incurred liabilities” or suffered an immediate “diminution in the value of an asset”.

If one uses the language of, for example, “defective assets” or – I cannot remember the other phrase, but a bundle of rights, what one is doing is you are reasoning from a level of abstraction to a particular result, whereas when you look at the actual decisions themselves, what you will see is – for example, in the case of, I think it is Bell, the mother gave a mortgage over her property; in the case of – I cannot remember the name of it, but the other case where the restrictive covenant was given – in the other case, there was the transfer of one‑sixth of a property. So, those cases are explicable on the basis that the agreement itself immediately either required the payment of payment or the transfer of property, or incurred liabilities or diminished the value of an asset. That is on one side.

On the other side, what we have got here, as your Honour the Chief Justice identified and your Honour Justice Gordon did earlier, too, the finding of the primary judge was that the parties wanted an agreement that was compliant with the provisions of the Family Law Act which enabled the division of their property rights or property interests upon breakdown of the marriage or upon separation.

Before then, there was no need for the agreement to address such matters. As the primary judge said, if there had never been a separation, if there had never been a breakdown of the marriage, the agreement would never have come into play. So, what we have called the “interest” in paragraph 5, and the contingency, which was the separation, is, in my respectful submission, the appropriate way to approach the matter, and not by having regard to what I called less valuable rights – to use that expression.

As I pointed out earlier, in Wardley’s Case, the plurality questioned whether that was the appropriate way to approach damages or cases for economic loss. And, as I said earlier, their Honours quoted from Justice Gaudron that:

“It would be too simplistic to restrict analysis of economic loss merely to a consideration of reduced value –

EDELMAN J: There may be an intermediate position, which is that loss is suffered at the point in time at which the husband was unable to get any agreement, or the equivalent to any BFA, either pre‑ or post‑marriage. Was that case ever run?

MR TOKLEY: I do not think so, your Honour, no, I do not think so. I cannot – I was not counsel at trial. And as your Honours know, I think as the Full Court found, the primary judge’s approach to the matter was somewhat complex – if I can put it that way – in the way in which he approached both the identification of loss and also the time when loss arose, and also the nature of the case.

He seems to have made the finding that because there had been a breach of duty, therefore there was loss. The loss could only arise on separation, in his words, and that it was then a question of ascertaining the amount of that loss. But, with great respect to the primary judge, he has not undertaken the analysis that has come to light and in light of your Honours’ questions today. So, one is dealing with – if I may use the expression politely – a rather imperfect primary judgment.

JAGOT J: Could I just ask, do you have any further answer to the Chief Justice’s question about the conceptual consistency between the interest said to be infringed as per paragraph 5 of your outline and the loss claimed, being a loss of opportunity to renegotiate, which could only be a loss pre‑ the separation declaration?

Whereas in paragraph 5, the interest infringed is as at the separation declaration, to have an agreement in force of a particular kind. You had said, I think, just before the break, that one answer was that loss of opportunity was just a way of measuring damages or a method of measuring. I am not entirely sure about that. I am not sure that there is not a tension between the two.

MR TOKLEY: There may be, your Honour. I mean, in one – part of the answer, I suppose, is that on the facts of this case, that hypothetical situation never arose, and so we are only dealing with the situation where the defect came to light upon separation and upon litigation between the parties.

JAGOT J: Sure, but is that – in order for the loss to be, or in order for the right infringed to be as per paragraph 5, does that mean that the loss has to be reconceptualised? I have no issue with the $38,000 – that was the litigation cost in working out if the BFA is void or uncertain – it is the opportunity cost.

Or is it more that the actual measure of loss cannot be that? That it is actually, as at the date of the separation declaration in the hands of your client, he had an agreement that had one effect – the negligent agreement – versus his position he would have been in as at that date with an agreement that was non-negligent.

MR TOKLEY: Yes.

JAGOT J: Did not – was not a product of the breach. I mean, it may be that – who knows, the exercise has not been done on either basis, frankly, because the Court of Appeal says: but who knows whether that yields any actual loss at all. But I am not sure how it can be a loss of opportunity and 5, that is all.

MR TOKLEY: It may come home to roost, so to speak, where there is the fresh assessment of damages, because – as I hoped I put it, and put it correctly – the opportunity to renegotiate was considered as part of the – to illustrate the point that the primary judge had not done the correct assessment of loss, because he did not take that into account and it is something that he could have taken into account in determining the actual loss that was suffered. So, it was more a component of the assessment process than it was a substantive right. I will have to check, but I do not think that the loss of opportunity was pleaded.

JAGOT J: Right. So, it was – because it does not seem to really appear in the primary – are you saying it was more put on appeal, in order to try to explain what had been allegedly overlooked, and the Court of Appeal said it was overlooked?

MR TOKLEY: Yes, yes.

JAGOT J: Okay.

MR TOKLEY: Yes, I am almost certain it was not a pleaded component. In fact, from memory, that was the point that was taken against, by the solicitors on the appeal, that it was not part of the pleaded case against them, so they did not have to meet it.

JAGOT J: Right.

MR TOKLEY: Your Honours, I have covered, I think, paragraphs 1 through to 17 of my outline. The way in which my learned friend Mr Gleeson put the case today I think is, with great respect, slightly different to the way in which it was put in the written submissions, because in the written submissions – at paragraph 56 of the written submissions – as I understand it, what was sought to be argued was that you could compare two positions, that is, the expectations or entitlement with respect to the financial agreement on the one hand with what in fact he received, which was an agreement, to use his language, with “a vice in it”.

We say that there are difficulties with that approach. First of all, it does not seem to be supported by the earlier English authorities and, as I said, I think that the way in which Justice Brennan in Wardley and Lord Hoffmann in Sephton explained those authorities is by reference to the payment of money, transfer of property, et cetera.

The other difficulty that we have with that approach – that is, the comparison approach – is that it seems to be saying that the subject matter of the agreement lacked the qualities and was therefore less valuable that it would have been, had the representations been true, which was the very point that the plurality makes at page 531 of Wardley, that that may be acceptable where the measure of loss is contract, but not in tort. We have set out what we think is the correct position at paragraph 21, the relevant comparison for tortious loss, and then, in following, paragraphs 21, 22 and 23 of our written outline.

GORDON J: Can I put some propositions to you, just to make sure I understand what your case is?

MR TOKLEY: Yes, of course, your Honour.

GORDON J: If you accept your interest as defined in paragraph 5 of your outline ‑ ‑ ‑

MR TOKLEY: Yes, your Honour.

GORDON J: And do you accept, as I think you do, under tort, that the damages aim to restore your client to their pre‑incident position, compensating them for the harm caused by the tort?

MR TOKLEY: Yes, your Honour.

GORDON J: And if you undertake the comparison, which is a comparison, I think, between no agreement and a defective agreement – because the position but for the tort would have been no agreement, so, he had no agreement versus defective agreement – is it your position then, that there is no loss at that point of entry?

MR TOKLEY: Yes, that is our position – no loss, yes, at time of entry.

GORDON J: And so, just so that I understand it, it is then that – I will not say two buckets, but there are two aspects to that which you rely upon, as I understand it. I just want to make sure I am clear about what your position is. The first is that you have contingencies of fact, comprising, amongst other things, pregnancy, children, separation, plus contingencies of law given by the statute?

MR TOKLEY: Yes, your Honour.

GORDON J: Reinforcing, as I understand your case, that there is no loss upon entry because you are waiting for those contingencies.

MR TOKLEY: Yes. Yes, because the agreement operates under the umbrella of the Family Law Act, specifically so because it seeks to invoke section 90B of the Act, to which then there attach the consequences under section 90G and section 90DA.

GORDON J: So, that is one bucket of things, let us call them contingencies of fact and law.

MR TOKLEY: Yes, your Honour.

GORDON J: And in the other bucket is something that I think Justice Edelman put to you – and I just want to make sure I understand that it is part of your case – and that is that, even if those contingencies could be met, that there is still a difficulty because up until the time of separation, I think, you would have to prove, would you – and I understand that this was not put – or, I do not actually know the answer to that – that the wife would not have entered into a compliant financial agreement.

MR TOKLEY: The reason I hesitate is that a repost to the claim for damages might be: well, the wife would not have entered into this agreement anyway, so, where is your loss? So, one of the things you – – –

GORDON J: So, that is one of the elements you would have had to have proved?

MR TOKLEY: One of the elements that the Court would have to be satisfied with, yes.

GORDON J: And that is something that could be done up to and including the time of separation?

MR TOKLEY: Correct, yes.

GAGELER CJ: That is not a loss of a chance case at all.

MR TOKLEY: Not in the Chaplin v Hicks‑type sense, no, your Honour.

GAGELER CJ: Perhaps could I ask almost identical questions, but in a slightly different way.

MR TOKLEY: Of course, your Honour.

GAGELER CJ: The interest you identify is paragraph 5.

MR TOKLEY: Yes, your Honour.

GAGELER CJ: Which is an interest effective upon separation. The damage of which you complain, as I understand it, is the diminution of that interest.

MR TOKLEY: The damage of which ‑ ‑ ‑

GAGELER CJ: The damage for which you seek damages is the diminution of that interest, is it?

MR TOKLEY: The infringement of the interest, yes.

GAGELER CJ: The infringement of that interest. So, the exercise to which you refer in paragraph 21 – the “comparison” – is a comparison that only occurs as at the date which that interest becomes non‑contingent.

MR TOKLEY: Correct, your Honour, yes.

GAGELER CJ: And at that stage, there is no loss of chance analysis at all, it is just a comparison of what the document that Mr Daily had at that time gave him, compared with what he would have had if there had been no negligence, on the balance of probabilities.

MR TOKLEY: Yes. Yes, your Honour.

GAGELER CJ: All right.

JAGOT J: That seems to be consistent with the recording of counsel’s submissions for the husband below that is set out in paragraph 28 of the judgment – the second judgment, at page 93 of the core appeal book, paragraph 28 – which is not really using the loss of a chance analysis at all. It is just the difference in value, presumably, as at the time – as at the present day – between the void uncertain agreement and another, hypothetical agreement that made sufficient provision for children of the marriage.

MR TOKLEY: Yes, your Honour.

JAGOT J: Leaving aside the prospect of: the marriage would never have happened.

MR TOKLEY: Yes.

GAGELER CJ: So, where do the Full Court get the loss of a chance analysis from?

MR TOKLEY: I think it is reflected in the judgment of the Full Court, but ‑ ‑ ‑

EDELMAN J: At some point the Full Court said that, although it was not pleaded, it was run in submissions.

MR TOKLEY: And that is why I made the point that the submissions were the submissions before the trial judge.

EDELMAN J: Yes.

MR TOKLEY: And to cut a long story short, my recollection of what happened – and I think it is reflected in what their Honours say in their judgment, which is that the – and I will try and find it for your Honours – sorry, I cannot find it, your Honours, but my recollection is that, somewhere, their Honours – basically, time ran out and the request was made for their Honours to look at the submissions that had been advanced before the primary judge, as a means of efficiency, to demonstrate the error on the part of the primary judge in his assessment of damages. That is how it came about.

I had thought that there was a point where their Honours made comment of the fact that it was called in aid, and not that – part of it is at paragraph 99 and part of it is in paragraph 100, and also at paragraph 101, which is the paragraph I was thinking of, on page 149. That, I think, is how it crept into the matter.

BEECH-JONES J: Sorry, I might be a bit slow on the uptake. So, what we get is it is not a lost opportunity case at all, it is a case that simply says: assess damages as at the date – effectively, as at or around the time of separation – by reference to the difference between the agreement that was put into effect and what might be found about either the alternative universe of an agreement that sought to achieve your client’s objectives.

MR TOKLEY: Yes, your Honour. Yes. I understand that is the way it was pleaded, as well.

BEECH-JONES J: Now, that would definitely have included being in an agreement that addressed certainty and therefore, I think, that is where the $38,000 comes from?

MR TOKLEY: No, your Honour, sorry to complicate it, my recollection is the $38,000 was a sum of money that was conceded by the solicitors as legal costs that had been incurred by the husband in litigating an issue ‑ ‑ ‑

BEECH-JONES J: Indeed – of certainty.

MR TOKLEY: Of certainty, yes.

BEECH‑JONES J: So, if they had had an agreement that was certain, you would not have litigated it.

MR TOKLEY: Correct, yes.

BEECH-JONES J: All right. And then the second aspect is the process called in the lost opportunity in paragraph 123 on page 159, but it is actually an assessment. It is not talking about lost opportunity, it is saying, what is the other? What is the counterfactual?

MR TOKLEY: Yes, your Honour. Yes.

JAGOT J: Is the paragraph 119 of the Court of Appeal, at page 158 of the appeal book – I mean, just guessing, but:

Clearly the loss of chance claim was not then particularised, but it later was in the husband’s written submissions –

MR TOKLEY: That is correct, yes.

JAGOT J: They seem to be saying that somewhere in that pleading is a loss of a chance claim, but I must say, it does not seem to be there.

MR TOKLEY: There is not, your Honour.

JAGOT J: The written submissions do not seem to – so, maybe it is the Court of Appeal’s own characterisation.

MR TOKLEY: They do not treat it ‑ ‑ ‑

JAGOT J: So, then, in 122 it characterises it – maybe this is – as a “lost” chance:

to negotiate a BFA which made provision for the birth of a child or children.

But the actual submission seemed to be just a difference in value submission.

MR TOKLEY: Yes.

JAGOT J: Maybe, I do not know. It does not seem to be a lost chance to negotiate, anyway.

MR TOKLEY: My learned friend Mr Gleeson has reminded me, and I should bring it to the Court’s attention, that in paragraph 99 there is mentioned there, in the second‑last sentence of the paragraph – and I have to say, respectfully, I cannot now recall whether that was the submission that was made or whether the submission that was made was that the reason why his Honour had erred in the assessment of damages was because he failed to have regard to contingencies. And as I said, I have invited your Honours to have a look at paragraph 101.

JAGOT J: What paragraph?

MR TOKLEY: Paragraph 101, as well, yes.

EDELMAN J: So, do you say that what has been mentioned in 99, it is not a head of claim for loss of chance, it is a discount for the assessment of the loss at the time of the separation, based upon the chance that a proper agreement might have been entered into anyway.

MR TOKLEY: Correct, your Honour. Yes, that is the correct analysis of it. Your Honours, I was not proposing to go through the other authorities relied upon by my learned friend, in part because the Axa decision is a decision of the English Court of Appeal, which in turn interprets the Sephton decision of the Supreme Court.

I do not think there is any useful benefit to be gained by decisions interpreting other decisions. We note – there is a note, and we can rely upon our written submissions for that purpose – Orwin was one of those cases where, as my learned friend said, it is rather infelicitously expressed, but it is not an authority that stands against us.

JAGOT J: Could I just ask one question.

MR TOKLEY: Of course, your Honour.

JAGOT J: It might off point. Originally, the primary judge had also set this BFA aside for hardship.

MR TOKLEY: Yes, your Honour.

JAGOT J: And that got overturned.

MR TOKLEY: Yes, your Honour.

JAGOT J: Then, despite the primary judge then additionally saying, somehow, that hardship finding survived and therefore meant that there could not be any loss, the Court of Appeal said: no, no, that is not how it works, the hardship finding was set aside. So, is that – I am trying to work out if it is common ground that the only surviving problem with the BFA is the uncertainty point, or if is it not yet determined.

MR TOKLEY: Your Honour’s question is a good one, because I think the primary judge makes mention of the fact that his finding on the hardship ground was not set aside, but he says, in view of the fact that I have found the uncertainty ground, in effect, I no longer need to address the hardship ground.

JAGOT J: Right.

MR TOKLEY: I think what the Full Court was saying was that, although he set it aside on the hardship ground, it is clear that the real basis for his decision was the uncertainty.

JAGOT J: Is all of this just left in the wash for the assessment?

MR TOKLEY: Correct, your Honour, yes.

JAGOT J: Right. So, we do not know one way or another whether, in that assessment, hardship might not re‑arise in some form?

MR TOKLEY: I think that is correct, your Honour, and that is why I think that the Full Court, in these paragraphs I invited your Honours to go to ‑ ‑ ‑

GORDON J: This is 123?

MR TOKLEY: Yes, thank you, your Honour, it is 123, but there is also 140 as well, your Honour Justice Gordon – the last sentence of 140:

we should note that what we have said about it being unnecessary for the primary judge to have determined the hardship claim, would

likely have seen other grounds succeed, and certainly his findings in that regard should not be seen as creating some fetter on any future assessment of damages.

JAGOT J: I am only raising this because that statutory context may well be relevant to setting the parameters of what interest of your client could have been infringed by the duty of care – of what kind of thing a BFA can be, what kind of rights it can secure, and to what it is subject.

MR TOKLEY: Yes, your Honour.

JAGOT J: Okay.

MR TOKLEY: I think that is correct, your Honour, particularly because of – if I just turn to it – because in 90B, which is at page 146 of the joint book of authorities, your Honours will see in subparagraph(2)(a) – it is:

The matters referred to in paragraph (1)(a) are the following:
(a)how, in the event of the breakdown of the marriage, all or any of the property or financial resources of either or both . . . is to be dealt with –

There was only one final point I wish to raise simply, for the assistance of the Court, and that is that in the respondent’s book of further materials at page 8, one of the clauses is clause 5, specifically dealing with separation. Clause 8 which is disposal:

of assets in excess of AUD $5,000.00 –

but that is:

prior to the final payment pursuant to Clause 12.

So, it does not operate independently. Then your Honour the Chief Justice identified clause 9 as being central, and all of them are predicated upon separation, as is clause 13, as is clause 17.

Unless I can be of further assistance to the Court, those are my submissions.

GAGELER CJ: Thank you. Mr Gleeson.

MR GLEESON: Your Honours, the battleground seems to have moved a bit in what was put. I will try and respond to it – I am not sure I can, because I am confused. Let me deal first with loss of opportunity, loss of chance case. That is the case that Mr Tokley ran in the Full Court, and it is the case he succeeded on, and it is the case we got special leave on. If I can just show you the references again, it is paragraph 99 of page 149. Mr Tokley made a submission:

the primary judge needed to be satisfied . . . that some loss comprising the loss of a chance to negotiate a binding BFA had occurred. The question of whether the BFA would have been set aside under s 90K did not foreclose the assessment of damages.

So, that is the submission he put. If you then go to page 153, in paragraph 74 of the submissions below, which is the submission that Mr Tokley was defending, that was a loss of a chance case, because it drew the distinction.

It said: as to incurring the legal costs defending the uncertainty claim, we claim our loss 100 cents in the dollar, because if the solicitor had done their job in 2005 they would have achieved for us an agreement which was not uncertain and, therefore, all loss that we have suffered from that we recover. And then they drew the distinction and said it is different with the hardship point, and what happened her was that there were opportunities that we lost, and they then described the opportunities.

JAGOT J: Where? I am sorry.

MR GLEESON: Page 153, internal paragraph 74 from the submissions below:

It is accepted that the Husband must prove on the balance of probabilities that there was available to him an opportunity or opportunities of securing a better financial result than that which was delivered to him under the judgment –

Then they deal with the uncertainty case and say:

That opportunity must be treated as a certainty. [The solicitors] cannot be heard to say otherwise.

But then, as to the big claim, they say there were two possibilities open: one that an amended agreement would be propounded and the wife would agree with it; the other possibility is that the wife would not agree to any such amended agreement and, in that event, there would be no marriage.

And so, that is why, on page 154, at internal paragraph 77 and 78, the two opportunities were being put forward, the no marriage case and then the alternative BFA case, and they were brought together in 79 under the “broad axe” as giving a certain amount of damages. Now, you see from 111 ‑ ‑ ‑

BEECH-JONES J: First, Mr Tokley said that these were the submissions at first instance.

MR GLEESON: At first instance, which he is advancing because of paragraph 99, that I have shown you.

BEECH-JONES J: Right, and 77 goes away because the trial judge said I am not satisfied you would not have married.

MR GLEESON: Yes. Your Honour, on that, I can be more definitive than this morning. We agree that the relevant paragraph is paragraph 65 on page 99. The trial judge has rejected that limb of the case, it is gone. We do not see that the Full Court has resurrected that limb. So, even though the order for remitter is general in terms, it does not cover, we submit, that case.

GORDON J: That is the no marriage case.

MR GLEESON: The non‑marriage case, that is gone.

GORDON J: The no children case.

MR GLEESON: That is gone as a case but if you go back to page 95, to the paragraphs you raised with me this morning, which is 40 through to 44, what the judge is in fact doing there is saying: I reject the husband’s evidence that he required absolute certainty that the BFA would not be set aside, and it is understandable, that evidence was not credible and was rejected. That is what the judge was rejecting. He was not making further findings as to what would have happened if and when an alternative BFA were propounded.

So, returning to page 154, what happened was our side below submitted that the case that Mr Tokley was running was not supported by the pleadings, and it specifically, at 112, internal 51(2) said the alternative BFA case was not run at trial and, over the page, the no agreement, no marriage case was entirely speculative, and yet, the Full Court found that the case – they then referred to the pleadings, but then, in perhaps a very generous finding at 119, they said that although:

the loss of chance claim was not then particularised . . . it later was in the husband’s written submissions –

So, that is reference back to page 153 to 154 – and we are going to allow it to be run. That is what then leads to what is in 122, which is the finding we have come to challenge, which is an acceptance of Mr Tokley’s submission at 99. With respect to your Honour Justice Edelman, that paragraph cannot be reinterpreted as saying we send it back for an ordinary assessment but for contingencies to be taken into account. That is not what this court has done, this court below.

What they have done is to say the judge did not grapple with a claim for damages for the lost opportunity to negotiate a BFA which made provision for the birth of a child or children, and then in 123 they are saying when you come to assess the value of that lost opportunity, these are three critical contingencies you will need to bring to account.

So, what has implicitly happened at 122, where Mr Tokley’s submission has been accepted, is that the Full Court has made a Badenach v Calvert finding that, on the balance of probabilities, an opportunity to negotiate a better BFA was an opportunity of some value which was lost. If that is not implicit in 122, then the whole paragraph is bad. So, they have said at the first stage, we are satisfied that the husband lost something of value, which was the chance to try and propound a different BFA to the wife which made provision for birth of a child or children. It is inescapable that the date at which that chance was lost was prior to the marriage.

EDELMAN J: Why?

MR GLEESON: Because it is an opportunity to negotiate a BFA going forward which makes provision for the birth of a child or children in a case where the husband’s position was that he wanted these matters settled before he went into the marriage.

BEECH‑JONES J: Did not that chance subsist all the way at least up until they had a child? You said – the chance existed, but it was not lost until then.

MR GLEESON: If it were said that the chance existed until the birth of the first child, the findings of fact are that the children were born ‑ ‑ ‑

EDELMAN J: In 2009, I think it was.

MR GLEESON: In 2006 and 2009, and so would still be out of time. So, that would make no difference. What the court must have been contemplating, we would say, is a BFA – an alternative BFA – at the time that Mr Daily was instructing a BFA, but in the worst of cases, it is a BFA providing for future children, and so it cannot be later than 2006; in 2009, then the case is out of time.

JAGOT J: So, 2009 being the child ‑ ‑ ‑

MR GLEESON: The second – the children were 2006 and 2009, so I should have just said 2006, that is when you lost the chance, finally, irrevocably, to provide in advance for children and thereby reduce the hardship set‑aside risk. It is page 24, paragraph 81. So, given those facts, given the way the husband put his case – and I will just give you one other reference on how he puts the case, it is page 93, paragraph 27:

the husband contends that a satisfactory financial agreement was critical to his preparedness to enter the marriage with the wife.

Now, that evidence has not been rejected at the paragraphs I have been to, that is consistent with the paragraphs, but that was his case. So, when the Full Court has made the finding in 122 about the loss of opportunity, it has to, of necessity, have within it a date. An opportunity has to be lost on a date or no later than a date. I took you Justice Deane this morning in Wardley for the obvious proposition that the loss of a valuable opportunity is, itself, damages.

So, the case that was sent back by the Full Court is a case which necessarily has within it a finding of the loss of an opportunity in 2005 or no later than 2006, the next year. That, your Honours, ought to be enough reason to say that the appeal should succeed and this remitter should never have been granted, because it is out of time. That is the answer to that part of the case. I then have to deal with the other ways it is put.

GAGELER CJ: Yes, the difficulty with this is the disconnect between the grounds of appeal as dealt with by the Full Court below. So, we are concerned with the limitation point, which is dealt with in the previous ground of appeal and disposed of. Then this question about the assessment of damages comes up as ground 15, as I understand it, of the appeal.

MR GLEESON: Yes, page 119, ground 15, yes.

GAGELER CJ: Yes, and that ground was that the primary judge erred in finding that the husband suffered no compensatory loss.

MR GLEESON: And that ground was upheld ‑ ‑ ‑

GAGELER CJ: That is upheld.

MR GLEESON: ‑ ‑ ‑ in paragraph 122, by saying you should have found there was compensatory loss, being the loss of the opportunity – necessarily, no later than 2006 – to seek to negotiate a better BFA. And that being loss suffered no later than 2006, then it was out of time.

GAGELER CJ: I understand that. It is just needing to stitch together these two quite disparate parts of the judgment to now relate that back to the limitation point that had already been disposed of without reference to that ‑ ‑ ‑

MR GLEESON: And that is part of the error, that we submit that in the limitation part of the judgment there is a disconnect. It is, with respect, schizophrenic. They have dismissed the limitation argument at a high level of generality without coming to say what is the loss that we have found is compensatory in damage. That is the error.

So, that is broadly our response to what was the case until just after lunch, that the remitter – that if your Honours, in effect, put together paragraph 122, which grounds the remitter together with the limitation reasoning between 69 and 89, that there is a disconnect because the court has never addressed, for limitation purposes, the damage which it has later found to exist. So, that is the first matter we want to make in reply.

GAGELER CJ: Would that be addressed by a notice of contention? I mean, formally, to abandon the loss of a chance analysis and to put the damages claim on a footing closer to that which was pleaded, would that be a way of answering your concern?

MR GLEESON: Yes – well, at a minimum, it would need a notice of contention, and we would need to be able to respond to that, that would – and that is, a course we would urge your Honours to take if you were going to permit it, because we should have clarity about it. But if it is to be run on that basis, we then have a further series of answers to that, it does not give them a lay‑down misère. But then I need to address your Honour Justice Gordon’s question, and your Honour the Chief Justice’s question, where you sought to interrogate how the interest that they assert feeds through to the damages.

GORDON J: Well, it is not actually feeding through to the damages, it is dealing with the very thing I think you just complained about, and that is in understanding the limitation identification, not working out when the cause of action accrues, because you have not assessed properly when damage first – actual loss actually arose.

MR GLEESON: Yes, and of the answers we would like to give to that – and these are not exhaustive – if your Honours go back to paragraph 5 of the respondents’ outline, which has provoked the new case, we do not agree that that is the relevant interest protected by the tort, but to use Mr Tokley’s language, the way we would identify the interest is as follows:

Mr Daily’s interest was –

to obtain, in 2005, before he entered marriage and thereby exposed himself to the future operation of section 79 – continuing:

a binding Financial Agreement compliant with the Family Law Act that –

would be:

effective upon separation.

And then insert: and from which the wife could not unilaterally withdraw prior to or after separation. That is what we say Mr Daily went to the solicitor to get, the same way Mr Thom went to the solicitor to get, before entering the marriage, effective protection against the operation of the Act in future circumstances.

Now, if that be an accurate way of looking at the interest, then the interest was infringed or diminished in and from 2005, because he did not get that thing – he got something radically inferior to that thing, he got a void agreement, whereas he should have got an agreement which was not liable to be set aside on the grounds of voidness and, to answer your Honour Justice Jagot’s question, had a reduced susceptibility to being set aside on the hardship ground than it in fact had.

So, there are two defects in the agreement. One is treated as a certainty, that it was void – always void because of uncertainty; the second is treated as an unacceptable susceptibility or propensity that it should not have had.

BEECH‑JONES J: Mr Gleeson, part of your analysis in referring to Thom treats section 79 as analogous to the provisions referred to by Chief Justice Elias which, in her Honour’s description had an almost fixing effect from the date of marriage ‑ ‑ ‑

MR GLEESON: There was a range of them, but the one that actually bit was the equivalent of section 79, which was when the marriage broke down, the family home, as matrimonial property, was dealt with under the provisions of the statute as opposed to being dealt with under the provisions of the agreement.

BEECH‑JONES J: No, that case was on marriage, it fell within the Act.

MR GLEESON: So, the way the Act worked is, on marriage ‑ ‑ ‑

BEECH‑JONES J: It ceased to ‑ ‑ ‑

MR GLEESON: ‑ ‑ ‑ if it became matrimonial property, which occurred three years later, it fell under the Act. And under the New Zealand Act, unlike ours, there are sharing provisions which descend during the course of an intact marriage. However, the New Zealand Act then has the equivalent to our section 79 and says, at the end of the marriage, the matrimonial property is divided in accordance with the Act.

Where the negligence bit was not that something happened during the marriage, it bit because at the section 79 stage, Mr Thom, instead of getting the benefit of his agreement, got the operation of the Act descending upon the home. So, there is a difference in the statute, but as to the relevant loss, it is conceptually the same.

But what we would urge your Honours to do is look closely at – I have given an you an alternative formulation to paragraph 5 – but that is simply too narrow to say: when I go to the solicitor pre‑marriage, my interest is and is only to achieve something which comes into effect many years down the track; my interest is to achieve something which now gives me that protection against the wife that she cannot unilaterally withdraw from.

GAGELER CJ: You emphasise the immediately binding aspect of the transaction, and your opponent emphasises the contingently effective aspect of the transaction.

MR GLEESON: Yes, and it is both that have to be looked at, and it is the immediately binding – it is not just that some provisions are, here, immediately binding, it is the immediately binding with no ability in the wife to escape those provisions, if and when separation occurs, without the consent of the husband. If she wants to escape them, she has to come back, get a new BFA, sign a termination agreement; there has got to be consent between them.

So, the difference between having that protection against the other spouse, that you are entitled to get, and having nothing against the other spouse because it is uncertainty, we submit, can be identified as an infringement of the interest that you legitimately held at the date of entry of the agreement. If that is right, then, your Honour Justice Gordon, the comparison is not between the defective agreement you got and a no agreement position in 2005, the comparison is between the defective agreement you got and what due care and skill should have given you on that date, which is an agreement which did not face an uncertainty problem and had a reduced susceptibility to a hardship problem.

Therefore, one sees the diminution of the interest on that date, and then one does the assessment on that date: that is the difference in value between a worthless agreement and the best available agreement, if due care and skill were exercised?

EDELMAN J: So, really, the issue – at least on this appeal, which is joined – is all about at the date of the agreement, at the date of entry into the BFA, was the loss suffered then or not?

MR GLEESON: Yes.

EDELMAN J: And the loss of chance stuff, or the case that I put to Mr Tokley of an intermediate position that some loss might have been suffered because at some point in time there was a lost ability to enter into a new agreement, those intermediate positions we just need to put to one side, for the purposes of the limitation issue.

MR GLEESON: Well, not quite. Your Honour wrapped up two intermediate positions. The one about the possibility of some genuine date between 2005 and 2018 other than 2006 – that is, the birth of the first child, that you should put aside – that has never been pleaded.

It has never been litigated, and that is why date is so important, because you could not simply send off to an assessment the possibility of something different happening at some identified date over a 13-year period, because there is currently no finding and no finding sought, on the balance of probabilities, that there was something valuable that could have been obtained at some point in the 13‑year period. So, that one you should put aside.

The loss of the chance case that was not pleaded but was allowed to be run by the Full Court, that is the case that we have primarily come to meet, and that, as I have analysed, can only be understood as a case at 2005. That is out of time, and what that leaves is the notice of contention case where, provided the interest is identified, as we would say, in the broader sense of paragraph 5, then the interest was infringed on that date. The assessment would occur - - -

GORDON J: What is that date?

MR GLEESON: In 2005, the entry of the agreement.

JAGOT J: When you say “broader”, you mean your reformulation of paragraph 5?

MR GLEESON: Yes.

JAGOT J: Yes.

MR GLEESON: So, the reformulated 5, that would have allowed an assessment along the lines your Honour the Chief Justice put and your Honour Justice Gordon, I think, put. Namely, let us compare what you got – which we know is worthless – and what you were entitled to receive. That is, what is the best available BFA that could have been achieved with due care and skill in 2005? That case is out of time.

So, once the interest is understood, then, in principle, an assessment could be done comparing, as your Honour – my note of your Honour the Chief Justice’s question was: you would then compare what you had – which was a worthless BFA, that is easy – with what you would have had if there were no negligence; you would do that as at 2005, investigating what would have happened.

That would have taken one through the steps I mentioned this morning. The first step would have been: what concessions was the husband prepared to make to the current BFA to reduce the risk of children becoming a problem? Now, there are no findings on that yet, but that would be the first step. And the husband would have had to prove that, on the balance of probabilities, because that is something within his control.

The second step would be: would the wife have been prepared to agree to those amendments to the BFA? Depending upon what view was taken of that question, if the wife were not prepared to agree to the amendments, then there would be no loss, because you would never have a BFA; if the wife were prepared to agree, as part of the assessment you might then have a difference in value which would constitute your assessment, but all of that would be done at 2005.

Your Honours, I did want to refer to Lord Hoffmann in Sephton, because you were taken to only part of that today. It is quite important. It is tab 11. You were taken to paragraph 19 citing Justice Brennan, and then you were referred to 21 but not taken to it, and then you were referred to 22, to the last sentence, and that second‑last sentence, that is said to be the principle.

What that overlooks is that Lord Hoffmann has carefully reconciled what Justice Brennan said in Wardley with the English cases upon which we rely, and in paragraph 21 – which is a critically important paragraph – he says:

None of these cases concerned purely contingent obligations. It is only necessary to observe that in such bilateral transactions the answer to the question of whether damage has been suffered may be different according to whether the liability is for the consequences of the defendant not performing his duty –

pause there, that is our case:

or –

and then, this is Wardley:

or (as is usual in claims for misrepresentation) the consequences, or some of the consequences, of the plaintiff entering into the transaction.

Now, that critical distinction Lord Hoffmann is drawing, we submit, explains why our type of case is different to a Wardley-type case. The liability is for the consequence of the defendant not providing its services with due care and skill, as opposed to a liability for the consequences of the plaintiff entering a particular transaction. Then Lord Hoffmann goes to the first category, that is our case:

If the liability is for the difference between what the plaintiff got and what he would have got if the defendant had done what he was supposed to have done, it may be relatively easy –

as per D.W. Moore:

to infer that the plaintiff has suffered some immediate damage, simply because he did not get what he should have got.

EDELMAN J: But there may be pregnant in that statement that he can no longer get what he should have got. In other words, that is what the loss is: you have not got what you should have got and you cannot get it anymore.

MR GLEESON: Well, that would bring us back to Winnote and perhaps to the difference between the majority and the dissenting judge in Winnote, because the majority says: I will have a look at what you got, you got a mining licence, a mining lease you did not want, and you did not get a mining lease you should have got, and that is sufficient to identify a differential.

But even if you were to give any attention to what your Honour has just raised, if you apply that to our case, what were you to get in 2005? You were to get a 2005 binding agreement which would come into force on a future event, because you say, says Mr Daily, I want the certainty before I

go into a marriage that I have a protection against section 79. That is what you were entitled to get. What you got was a worthless piece of paper.

Now, provided your Honours can identify that difference as an infringement of the interest and a loss of some value, then there is damage at that date. But then your Honours will see, over the page, Lord Hoffmann goes on to the second category of cases and says where:

the difference between the defendant’s position after entering into the transaction and what it would have been if he had not entered into the transaction, the answer may be more difficult. Despite the breach of duty, the transaction may on balance have originally been advantageous to the plaintiff and some evidence may be necessary to show when he was actually in a worse position.

citing Chief Justice Mason in Wardley at 530 to 531. So, that is not our case according to Lord Hoffmann, but even if we were in that case, it requires no evidence to say that the difference between getting a worthless piece of paper and getting a binding agreement not liable to be set aside for uncertainty, with reduced susceptibility to being aside on the hardship ground, means you are in a worse position at that date.

Then, in paragraph 22, of which Mr Tokley cited the second‑last sentence, it is the whole of the paragraph that matters, where Lord Hoffmann says our category of case are those where there is a:

difference between the plaintiff’s position as it was and as it would have been if the defendant had performed his duty and in which it was possible to infer that the plaintiff’s failure to get what he should have got from a bilateral transaction was quantifiable damage, even though further damage which might result from the flaw in the transaction was still contingent.

And then the sentence relied upon by Mr Tokley. So, we would submit that that way in which our category of case has been reconciled with Wardley is both consistent with the judgment of Wardley itself and is well accepted in the United Kingdom, and it is correct. Your Honours, that is what I was able to deal with today in reply. I am not sure where the appeal is going.

GAGELER CJ: Yes. We need to regularise Mr Tokley’s position. Mr Tokley, to recast the damages claim differently from that which is recorded in the Full Court’s judgment, it would be proper of you seek to file a notice of contention. Is that something you are prepared to do?

MR TOKLEY: Yes, your Honour. If I may, I would like the opportunity to check the transcript before the Full Court, because one of the – at

page 159, paragraph 124, their Honours referred to the New South Wales Court of Appeal judgment in Thompson v Schacht. My recollection is that I brought that to their Honours’ attention, and it is that case which raises the question of contingencies and lost opportunities as part of the assessment of damages, and not as a separate head of claim. But if ‑ ‑ ‑

GAGELER CJ: Mr Tokley, could you just take a seat for a moment. Mr Gleeson, you are not opposing a notice of contention on discretionary grounds, are you?

MR GLEESON: I am not happy about it, your Honour.

GAGELER CJ: No, I know you are not, but, really, we have had almost full argument at this point.

MR GLEESON: Well, I do not think we have had – if what is proposed is a notice of contention with no further submission in support of it, with us having an opportunity to respond to it once we have seen it, then we cannot oppose it on discretionary grounds.

GAGELER CJ: Mr Tokley.

MR TOKLEY: Your Honour, I am doing the best I can on my feet. I think we should put it in a notice of contention.

GAGELER CJ: All right.

MR TOKLEY: I think – whether it would help, for the assistance of the Court, it would be probably helpful to put in some short written submissions and have it dealt with on the written submissions in addition to what has already fallen today.

GAGELER CJ: Yes. You have leave to file a notice of contention and leave to file submissions in support of no more than five pages.

MR TOKLEY: Thank you, your Honour. No more than five pages.

GAGELER CJ: Very well. Mr Gleeson.

MR GLEESON: Your Honour, in the rush, I forgot one point that was in my reply. Can we just respond to their written submissions – if those directions are made, can we have the same opportunity?

GAGELER CJ: Yes. You have covered this orally, Mr Gleeson, but in those submissions, it would be helpful if you identified with precision, again, the interest that you say is at stake.

MR GLEESON: Yes.

GORDON J: And why.

MR GLEESON: That will need six pages.

JAGOT J: Your expanded paragraph 5, that is all.

MR GLEESON: Yes. Can I deal with the one point I omitted? It was – at risk of peril, going back to your Honour Justice Jagot’s question about the legal fees.

JAGOT J: The $38,000, yes.

MR GLEESON: Yes. I did not take you sufficiently to paragraph 135 of the Full Court on page 161, where the chain of loss that has been identified is the:

negligence caused the . . . loss, comprising legal fees . . . unnecessarily incurred . . . first, the solicitors’ failure to advise that the BFA was void for uncertainty meant he did not instruct the solicitors to re‑draw it so it was certain –

so, he was worse off immediately in 2005, because he did not give that instruction to re‑draw it to make it certain, because of the negligent advice, and hence incurred cost of litigating that issue against the wife post‑2018. We would analyse that as being worse off in 2005, in not taking the step of repair because of the defective advice, and the $38,000 is the consequential loss later suffered linked to the direct loss in 2005.

May it please the Court.

GAGELER CJ: Thank you, Mr Gleeson. Mr Tokley, you will provide those documents within one week from today.

MR TOKLEY: Yes, thank you, your Honour.

GAGELER CJ: And, Mr Gleeson another week for your response. Subject to receiving those documents, the Court will consider its decision in this matter and will adjourn until 10.00 am tomorrow.

AT 3.25 PM THE MATTER WAS ADJOURNED

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