Schmidt v Townsends No. Scgrg-00-603

[2000] SASC 363

SCHMIDT v TOWNSENDS
[2000] SASC 363

Magistrates Appeal (Civil)

GRAY  J                 

Introduction

1       On 15 February 2000, following a trial, judgment[1] was entered for the plaintiff on its claim for professional fees.  The defendant's counter-claim for damages for breach of duty was dismissed.   The defendant has appealed.

[1]      Save as to the final assessment of quantum

Background facts

2      The plaintiff, a firm of solicitors, sought unpaid professional fees in respect of their retainers by the defendant. 

3      The principal retainer related to a dispute between the defendant and his father about a company, Fire and Security Doors Pty Ltd.  The defendant was a director and 50% share holder.  His father and sister held 30% and 20% of the shares respectively.

4      The other retainers related to different matters.  They formed part of the plaintiff's claim and the judgement entered.

5      The disagreement between the defendant and his father concerned the manner in which the business should be conducted.  The defendant sought legal advice from the plaintiff.

6      Negotiations occurred and at a meeting on 7 June 1996, an agreement in principle was reached.  A handwritten document reflecting the terms of that agreement was signed.  It was agreed that the defendant would purchase the shares from his father and sister. The price was to be determined by Mr McKenzie, a valuer and chartered accountant.

7      Valuation figures were not received for six months.  Twelve months after the agreement was signed, the matter remained unresolved.  Settlement occurred in late 1997.  This was after the plaintiff ceased to represent the defendant.

8      Mr Weir was the defendant's solicitor from June 1996.  His involvement reduced towards the end of 1996 when the defendant became frustrated with the progress of the matter.  Mr Townsend, the plaintiff’s principal then became involved. 

9      The magistrate described the principal issue as follows:

"... this dispute arises from the assertion by the defendant that his solicitors did not represent him properly or with due diligence or reasonable skill.  As a consequence the defendant alleges that a final settlement of the dispute between himself and his father was delayed.  The defendant's contention is that had the plaintiff firm properly represented the defendant, the dispute between himself and his father could have been resolved within a matter of months."

10     The magistrate rejected the defendant's contentions.  He found that the valuer had acted with due expedition in regard to a difficult valuation.  He exonerated the plaintiff from any responsibility and found that the defendant had caused the delay.  He found in any event, that no loss or damage had been established.

The Appeal

11     The grounds of appeal were unhelpfully drawn.  They were vague and inconsistent.  As many were abandoned during the course of submissions, I propose to set out the substance of the complaints as finally propounded.

Personal Liability

12     It was submitted that the judgment in favour of the plaintiff should be reduced.  A number of the accounts related to retainers on behalf of companies associated with the defendant, and not the defendant personally.  It was said that with respect to those matters, the defendant should incur no personal liability. 

13     The magistrate rejected this ground of defence on the basis that it was not an issue at trial. The issue arose for the first time during closing addresses. The material facts were not pleaded. The defendant gave no evidence to support his assertions. The plaintiff had no notice of the suggested defence.  There was no application to amend. The defendant made no application to reopen the trial.  No reasons were advanced to explain the delay.

14     The magistrate thought it was inappropriate to allow the issue to form part of the trial because of the obvious prejudice to the plaintiff.  In the above circumstances, it could not be said that the magistrate erred  in his conclusion.[2]

[2]      See State of Queensland v J L Holdings Pty Ltd (1997) 189 CLR 146 at 170, 171

15     The remarks in Ketteman & Ors v Hansel Properties Ltd & Ors[3] are apposite.  There, Lord Griffiths said:

"Whether  an amendment should be granted is a matter for the discretion of the trial judge and he should be guided in the exercise of the discretion by his assessment of where justice lies.  Many and diverse factors will bear upon the exercise of this discretion.  I do not think it possible to enumerate them all or wise to attempt to do so.  But justice cannot always be measured in terms of money and in my view a judge is entitled to weigh in the balance the strain the litigation imposes on litigants, particularly if they are personal litigants rather than business corporations, the anxieties occasioned by facing new issues, the raising of false hopes, and the legitimate expectation that the trial will determine the issues one way or the other.  Furthermore to allow an amendment before a trial begins is quite different from allowing it at the end of the trial to give an apparently unsuccessful defendant an opportunity to renew the fight on an entirely different defence."

[3] [1987] 1 AC 189 at (220); see also State of Queensland v J L Holdings Pty Ltd (1997) 189 CLR at  (155), (161), (166) and 170.

The Scope of the Duty

16     It was submitted that the counter-claim should have been allowed because the defendant suffered loss and damage through negligence. Townsends were said to have been so dilatory that they breached their duty.  Had they acted promptly, a settlement with the defendant's father may have been effected earlier, with a possible saving in the expenses incurred. It was said that Townsends failed to formalise the heads of agreement and failed to ensure that the independent valuer provided a prompt valuation.  Accordingly, damages should be assessed at about $10,000 and offset against the amount owing for professional fees. 

Credit and Reliability

17     The magistrate preferred the evidence of Mr Weir, Mr Townsend and Mr McKenzie to that of the defendant.  His findings as to credit and reliability included the following:

"Weir when he came to give his evidence gave it in circumstances where he no longer has an association with the plaintiff firm of solicitors.  He did not have access to files and records until a day or two before the day when he gave his evidence.  He appeared angry at the attacks upon his integrity but I found him to be an honest and reliable witness in essential respects..

The evidence of Townsend like that of Weir is supported by contemporaneous notes, letters written at the time and the like.  

I accept the evidence of Townsend and Weir to that of the defendant where the evidence is in conflict. ... .

I find that Townsend was an honest and believable witness.

I found the evidence of Mr McKenzie most persuasive. 

The evidence of McKenzie, once accepted, undermines the defendant's argument that the delays in the valuation were in any way the fault of Weir.

The evidence of McKenzie is that of a witness removed from the conflict between the defendant and his father and not involved in the conflict between the defendant and his solicitors.  He was an objective and reliable witness whose evidence I accept without hesitation. 

I am satisfied after perusing the files that the defendant was a difficult client. He was unduly aggressive.  He sought to interfere too much with the manner of his solicitors conduct of the matter.  He was sometimes rude.  He was an honest witness in the subjective sense but I am not satisfied that he is a reliable one.  He gave evidence from his own view point. He was emotionally stressed.  His evidence, in my view, was undermined by that fact."

18     Counsel did not undertake any critical analysis of the evidence before him or of his reasoning.  The submissions amounted to no more than an assertion that the magistrate had erred. 

19     All of the findings made by the magistrate were open on the evidence before him. No evidence was identified as having been overlooked.  No irrelevant material was considered. No unreasonable conclusions were drawn and no error was discernible in his process of reasoning. 

20     The remarks of Brennan, Gaudron and McHugh JJ in Devries v Australian National Railways Commission[4] are apposite:

"More than once in recent years, this Court has pointed out that a finding of fact by a trial judge, based on the credibility of a witness, is not to be set aside because an appellate court thinks that the probabilities of the case are against - even strongly against - that finding of fact. (See Brunskill (1985), 59 ALJR 842; 62 ALR 53; Jones v Hyde (1989), 63 ALJR 349; 85 ALR 23; Abalos v Australian Postal Commission (1990), 171 CLR 167.) If the trial judge's finding depends to any substantial degree on the credibility of the witness, the finding must stand unless it can be shown that the trial judge 'has failed to use or has palpably misused his advantage' (SS Hontestroom v SS Sagaporack, [1927] AC 37, at p.47) or has acted on evidence which was 'inconsistent with facts incrontrovertibly established by the evidence' or which was 'glaringly improbable' (Brunskill (1985) , 59 ALJR, at p.57)."

[4] (1992-1993) 177 CLR 472

21     This passage was  approved by Gaudron, Gummow and Hayne JJ in State Rail Authority of New South Wales v Earthline Constructions Pty Ltd (In Liq)[5].

[5] (1999) 73 ALJR 306

Solicitor’s Duties

22     No attempt was made by the appellant to articulate with any particularity, the nature and extent of the duty owed by the solicitor.  The submission was simply  that the conduct was dilatory.

23     The High Court considered the nature of a solicitor’s duty of care in Hawkins v Clayton[6].  Mason and Wilson JJ said at (544):

[6] (1987-88) 164 CLR 539

“It is that contract which ‘indicate[s] the nature of the relationship that gives rise to the common law duty of care’ Central Trust Co., v Rafuse (1986) 31 DLR (4th) 481 at p.521 per Richmond P Bowen v Paramount Builders [1977] 1 NZLR 394 at p. 407. It was said by Windeyer J in Voli v Inglewood Shire Council (1963) 110 CLR 74 at p. 85, in the context of ascertaining the duty of care which an architect owes to one who is a stranger to the contract between the architect and the building owner, that the contract ‘is not an irrelevant circumstance. It determines what was the task upon which [the architect] entered.’ So it is here. In the case of solicitors, the remarks of Oliver J in Midland Bank v Hett, Stubbs and Kemp [1979] Ch 384 are particularly pertinent:

‘The extent of [a solicitor’s duties to his client] depends upon the terms and limits of [the] retainer and any duty of care to be implied must be related to what he is instructed to do. 

Now no doubt the duties owed by a solicitor to his client are high, in the sense that he holds himself out as practising a highly skilled and exacting profession, but I think that the court must be aware of imposing upon solicitors - or upon professional men in other spheres - duties which go beyond that scope of what they are requested and undertake to do.’"

24     The contract of retainer in the present matter was in the most general of terms.  It amounted to no more than an instruction to act.  No express terms were identified. 

25     In my view, it is an implied term of any retainer that a legal practitioner will act in a timely way.  The scope of the duty will turn on the nature and precise terms of the particular retainer.  What will be timely will depend on the circumstances.  In some cases, a solicitor may be instructed to do nothing. 

26     In the circumstances of this matter, the same duty is owed in tort and in contract.

27     The magistrate's finding that the independant valuer had acted promptly and properly has not been undermined.  Even if it had, the submission that the solicitors had a responsibility to obtain a prompt valuation is misconceived. The valuer was an independant professional.  Townsends had to ensure that the valuer was instructed. A valuation was promptly requested.

28     The other attack on the solicitors' conduct related to alleged delay (in particular of Mr Weir) in formalising the heads of agreement.

29     The magistrate did not make a finding that Townsends had been dilatory.  I do not consider that such a finding should be made.  The document was drafted and sent to the father's solicitors.  However, further disputes developed between the defendant and his father. These matters delayed the finalisation of the documentation and the resolution of the primary dispute. 

30     The magistrate concluded that the defendant and his father had been responsible for delay. These findings were open on the evidence.

31     The magistrate found that the heads of agreement did, in fact, represent an enforceable agreement. This was the belief of the parties and they acted on this basis.  Any delay in formalising the agreement was of no consequence.

32     Counsel for the defendant made no analysis of the evidence in support of his case. The submission was simply that the magistrate had erred in his factual conclusions.   No error has been shown on the part of the magistrate. This complaint is without substance.

Loss and Damage

33     The suggested head of damage was not made out.  The defendant's case was that had the solicitors acted promptly there would have been a chance that legal expenses would have been saved.  No attempt was made to demonstrate that less work would have been involved had the matter proceeded at a faster rate. It is possible to surmise that more work may have been undertaken if the matter had been processed in the way the defendant suggested.  No evidence to this effect was placed before the magistrate.  No basis for an assessment of damages had been established to date. 

Conclusion

34     I do not consider that there is any substance to any of the grounds advanced by the defendant.  This appeal is dismissed.

JUDGMENT CITATIONS
LISTED IN ORDER OF APPEARANCE IN JUDGMENT

1      Save as to the final assessment of quantum

2See State of Queensland v J L Holdings Pty Ltd (1997) 189 CLR 146 at 170, 171

3[1987] 1 AC 189 at (220); see also State of Queensland v J L Holdings Pty Ltd (1997) 189 CLR at  (155), (161), (166) and 170.

4 (1992-1993) 177 CLR 472

5 (1999) 73 ALJR 306

6 (1987-88) 164 CLR 539