Rosebridge Nominees Pty Ltd v Commonwealth Bank of Australia
[2001] WASC 358
ROSEBRIDGE NOMINEES PTY LTD -v- COMMONWEALTH BANK OF AUSTRALIA & ORS [2001] WASC 358
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2001] WASC 358 | |
| 21/12/2001 | |||
| Case No: | CIV:1235/1999 | 12 DECEMBER 2001 | |
| Coram: | MASTER SANDERSON | 19/12/01 | |
| 8 | Judgment Part: | 1 of 1 | |
| Result: | Amendment allowed | ||
| B | |||
| PDF Version |
| Parties: | ROSEBRIDGE NOMINEES PTY LTD COMMONWEALTH BANK OF AUSTRALIA CORRS CHAMBERS WESTGARTH (A FIRM) WFB PTY LTD |
Catchwords: | Practice and procedure Application to amend statement of claim Plaintiff claiming breach of duty of care owed by solicitor when acting for other party Turns on own facts |
Legislation: | Nil |
Case References: | Gran Gelato Ltd v Richcliff Ltd [1992] Ch 560 Hill v Van Erp (1997) 188 CLR 159 Ross v Caunters (1979) 3 WLR 605 Tepko Pty Ltd v Water Board [2001] HCA 19 Watts v Public Trustee for Western Australia [1980] WAR 97 Blair v Assets Company [1896] AC 409 British & Colonial Land Assoc Ltd v Foster (1888) 4 TLR 574 Byrd v Nunn [1977] 7 Ch D 284 Commercial Bank of Aust Ltd v Amadio 151 CLR 447 Dalgety Australia Ltd v Rubin, unreported; SCt of WA; Library No 5485; 24 August 1984 Esanda Finance Corporation Ltd v Peat Marwick Hungerfords (1997) 188 CLR 241 FAI General Insurance Co Ltd v Southern Cross Exploration NL (1988) 165 CLR 268 Foamlite Australia Pty Ltd v Campbell & Skilled Engineering Pty Ltd, unreported; SCt of WA; Library No 7686; 31 May 1989 Girando v Padbury (1920) 22 WAR 77 Jingellic Minerals NL v Abi Group Ltd (1992) 7 WAR 562 Meckiff v Simpson [1968] VR 62 Ormindale Holdings Pty Ltd v Wray & Ors (1981) 116 DLR (3d) 346 Perre v Apand Pty Ltd (1999) 198 CLR 180 Sebastian Properties Pty Ltd v Minister Administering The Environmental Planning & Assessment Act 1979 (1986) 162 CLR 341 Sellars v Adelaide Petroleum NL [1994] 179 CLR 332 Smith v Littlemore (1996) 15 WAR 289 Tsaprazis v Goldcrest Properties Pty Ltd [2000] 18 ACLC 285 Wardrope v Dunne [1996] 1 QdR 225 White v Jones [1995] 2 AC 207 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- Plaintiff
AND
COMMONWEALTH BANK OF AUSTRALIA
First Defendant
CORRS CHAMBERS WESTGARTH (A FIRM)
Second Defendant
WFB PTY LTD
Third Defendant
Catchwords:
Practice and procedure - Application to amend statement of claim - Plaintiff claiming breach of duty of care owed by solicitor when acting for other party - Turns on own facts
(Page 2)
Legislation:
Nil
Result:
Amendment allowed
Category: B
Representation:
Counsel:
Plaintiff : Mr R H B Pringle QC
First Defendant : Mr K L Christensen
Second Defendant : Mr A C Willinge
Third Defendant : Mr P K Walton
Solicitors:
Plaintiff : Camillo D'Angelo & Co
First Defendant : Tottle Christensen
Second Defendant : Blake Dawson Waldron
Third Defendant : Jackson McDonald
Case(s) referred to in judgment(s):
Gran Gelato Ltd v Richcliff Ltd [1992] Ch 560
Hill v Van Erp (1997) 188 CLR 159
Ross v Caunters (1979) 3 WLR 605
Tepko Pty Ltd v Water Board [2001] HCA 19
Watts v Public Trustee for Western Australia [1980] WAR 97
Case(s) also cited:
Blair v Assets Company [1896] AC 409
British & Colonial Land Assoc Ltd v Foster (1888) 4 TLR 574
Byrd v Nunn [1977] 7 Ch D 284
(Page 3)
Commercial Bank of Aust Ltd v Amadio 151 CLR 447
Dalgety Australia Ltd v Rubin, unreported; SCt of WA; Library No 5485; 24 August 1984
Esanda Finance Corporation Ltd v Peat Marwick Hungerfords (1997) 188 CLR 241
FAI General Insurance Co Ltd v Southern Cross Exploration NL (1988) 165 CLR 268
Foamlite Australia Pty Ltd v Campbell & Skilled Engineering Pty Ltd, unreported; SCt of WA; Library No 7686; 31 May 1989
Girando v Padbury (1920) 22 WAR 77
Jingellic Minerals NL v Abi Group Ltd (1992) 7 WAR 562
Meckiff v Simpson [1968] VR 62
Ormindale Holdings Pty Ltd v Wray & Ors (1981) 116 DLR (3d) 346
Perre v Apand Pty Ltd (1999) 198 CLR 180
Sebastian Properties Pty Ltd v Minister Administering The Environmental Planning & Assessment Act 1979 (1986) 162 CLR 341
Sellars v Adelaide Petroleum NL [1994] 179 CLR 332
Smith v Littlemore (1996) 15 WAR 289
Tsaprazis v Goldcrest Properties Pty Ltd [2000] 18 ACLC 285
Wardrope v Dunne [1996] 1 QdR 225
White v Jones [1995] 2 AC 207
(Page 4)
1 MASTER SANDERSON: This is the plaintiff's application for leave to amend its statement of claim in terms of a minute of substituted statement of claim dated 7 May 2001 and filed 10 May 2001. The first and second defendants raised a number of objections to the form of the minute. I dealt with all of the objections raised by the first defendant and most of the objections raised by the second defendant during the course of the hearing. However, there was one aspect of the submissions made on behalf of the second defendant which I decided required further consideration. This has to do with the claim by the plaintiff made against the second defendant for breach of duty of care. To understand the plea proposed by the plaintiff against the second defendant it is necessary to summarise briefly the facts.
2 The plaintiff is and was at all material times the owner and operator of nightclubs. As part of its business it leased certain premises known as the Metropolis Concert Club Fremantle ("MCC"). With the aim of expanding its business the plaintiff sought to borrow funds from the first defendant. As part of its review of the plaintiff's business the first defendant gave consideration to the terms of the MCC lease. In circumstances which are not presently relevant, a question was raised as to the validity of the lease. The second defendants were the first defendant's solicitors. When the question of the validity of the lease was raised the first defendant referred the plaintiff to the second defendant, saying that it was taking advice from the second defendant: see par 42. It is alleged that the second defendant represented to the plaintiff that there were problems with the lease. The plaintiff says, based upon that advice, which it was said was given on two separate occasions, and which, it is said, was wrong, it took certain action which has resulted in loss and damage.
3 It is pleaded by the plaintiff that in these circumstances the second defendants owed to the plaintiff a duty of care. The plaintiff pleads the position in this way (par 52):
"By reason of the facts pleaded in paragraphs 49 to 51 above, the second defendant owed a duty of care to the plaintiff:
(a) to give proper and correct advice in relation to the deed and the requirement of approval of a new lease by the WAPC;
(Page 5)
- (b) to advise the plaintiff to take independent legal advice in relation to the terms and effect of the deed and the new lease;
(c) to advise the plaintiff that it should appoint its own solicitors to advise it in relation to the deed and the new lease;
(d) to inform the plaintiff that it at all times acted solely for the first defendant and in its interests and not those of the plaintiff;
(e) to inform the plaintiff not to accept any legal advice from it in the circumstances; and
(f) to inform the plaintiff that its advice was not free from doubt."
4 It was the primary contention of counsel for the second defendant that on the pleaded facts no duty of care either as pleaded in par 52 of the minute or otherwise could arise. It was submitted that there was no authority for the proposition that a solicitor for a party owed a duty of care to a party on the other side of a transaction. In fact, it was submitted, all of the authorities were directly against the proposition.
5 Counsel for the second defendant relied in particular on the High Court decision in Hill v Van Erp (1997) 188 CLR 159. This was a case where a solicitor prepared a will for a client upon the client's instructions to include a testamentary disposition to a friend of the client. When the will was being executed the solicitor asked the husband of the intended beneficiary to attest it. This was contrary to the provisions of the Queensland Succession Act with the effect that the disposition was null and void. After the death of the client the intended beneficiary sued the solicitor for damages in negligence.
6 The Court, by a majority, held the solicitor liable in tort. The Court held that a breach of a retainer by failing to use reasonable care in the preparation of a will is also a breach of the solicitor's duty to an intended beneficiary who thereby suffers foreseeable loss upon the death of a testator. In this State, Burt CJ had reached the same conclusion in Watts v Public Trustee for Western Australia [1980] WAR 97. The same result was also reached by the English Court of Appeal in Ross v Caunters (1979) 3 WLR 605.
(Page 6)
7 The point made by counsel for the second defendant was that liability attached on the facts in Hill v Van Erp, because of the identity of interest between the client and the intended beneficiary. Dawson J put the position in the following way (at 187):
"Recognising a duty of care in a case such as the present one does not involve any conflict of duties on the part of the solicitor such as might occur in other situations, because the interests of the client are in all relevant respects the same as the interests of the intended beneficiary. The interests of the intended beneficiary exist only because of the client's intentions and in carrying out those intentions. The solicitor is necessarily serving the interests of the intended beneficiary. As Megarry V-C observed in Ross v Caunters the duty to the intended beneficiary 'far from diluting the solicitor's duty to his client, marches with it and, if anything, strengthens it.'
For all of these reasons, I am of the view that a solicitor retained to draw up and attend to the execution of a will is in a relationship of proximity with an intended beneficiary under the will. That relationship gives rise to a duty to exercise reasonable skill and care in the performance of those tasks. That will be so whether or not the intended beneficiary knows of the bequest. The duty arises from the special considerations involving testamentary dispositions which I have discussed above. There is nothing in what I have said which is intended to convey the view that whenever a person's performance of a contractual obligation may, if performed negligently, injure a third party's economic interests, that person owes the third party a duty of care. Nor is anything I have said intended to convey the view that, other than in a case of the present kind, a solicitor owes a duty of care to persons other than his client whose interests may be affected by the solicitor's performance of his or her duties to the client. The duty of care which I would recognise in the present case arises from the particular relationship between the parties, that relationship being analogous to other relationships of proximity in which a duty of care has been held to arise. It is that which, in addition to the foreseeability of harm, provides the basis in this case for the recognition of the tortious liability for negligence."
8 All other members of the Court were of a similar view: see for instance Gummow J at 236. Counsel submitted then that the plaintiff
(Page 7)
- could not succeed on this issue on the pleaded facts irrespective of what elements were said to constitute the duty of care. Counsel also mounted the wider argument that in the circumstances pleaded it was not reasonable for the plaintiff to rely upon what was said by the second defendant as the first defendant's solicitors. This expanded submission relied upon the High Court decision in Tepko Pty Ltd v Water Board [2001] HCA 19. This wider question can, I think, be put to one side. It is not appropriate on a pleading summons to determine whether reliance is, in all the circumstances, reasonable. That then leaves the question of whether the plea of a duty of care can stand or whether it ought be struck out.
9 So far as I am aware, there is no authority which deals with a case such as the present. In Gran Gelato Ltd v Richcliff Ltd [1992] Ch 560, Sir Donald Nicholls VC said (at 570 - 571):
"In my view, in normal conveyancing transactions solicitors who are acting for a seller do not in general owe to the would-be buyer a duty of care when answering inquiries before contract or the like. In reaching the conclusion that the law should not generally import a duty of care in such circumstances, three factors have weighed with me. The first lies in the context in which such representations are made …
Secondly, what one finds is that the law does indeed provide the buyer with a remedy against the seller in respect of any misrepresentation in the answers given on his behalf. …
Thirdly, … to impose a duty of care on solicitors would be to expose them to conflicting duties, with one duty owed to their clients and another different duty owed to the buyer."
10 Counsel for the plaintiff maintained that what was said by the High Court in Hill v Van Erprestated a general rule to which there are exceptions. The facts in this case, it is said, are such that it is arguable that the plaintiff's claim falls into one of those exceptions. Counsel made the point that there was in fact unity of purpose between the plaintiff and the first defendant. The plaintiff was looking to borrow money, the second defendant was looking to lend it. Both had a common interest in seeing the transaction completed. In no sense could they be seen as adversaries, even to the extent that a buyer and a seller in a property transaction might be said to have differing interests. Furthermore, counsel referred to the nature of the duty which was said to arise. Leaving to one
(Page 8)
- side the duty to give correct advice, counsel submitted that in the circumstances, the duty to advise the plaintiff to take independent advice or not to rely solely upon the advice of the second defendant, was in all the circumstances reasonable.
11 Not without some hesitation I have concluded that the plaintiff should be given leave to amend so as to plead the duty of care as it appears in par 52. I have reached that conclusion for two reasons. First, and most importantly, I am satisfied that the plaintiff's claim is arguable. I have some doubts that it could be said that there is a unity of interest between the plaintiff and the first defendant in this case which is comparable with the unity of interest which existed between the client and intended beneficiary in Hill v Van Erp. However, I accept that there is not the same sort of disunity of purpose as would exist in most conveyancing transactions. Allowing for the absence of authority directly on point and ever mindful of the need to avoid stifling the development of the law, I think it is proper to allow the plea to stand.
12 Secondly, and of much lesser importance, is the fact that apart from the claim in tort the plaintiff has claimed against the second defendant under the provisions of the Trade Practices Act. Thus, even if the claim in tort was struck out, all of the evidence relevant to the tortious claim would still have to be led in relation to the trade practices claim. In other words there would be no saving in time and expense to the parties in removing the claim in tort from the action. That being the case, there is little practical value in refusing the plaintiff the right to argue its claim in tort.
13 In the circumstances then I am prepared to allow the plaintiff to amend in terms of the minute. I will hear the parties as to the precise form of orders and as to costs.
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