Shaw v Gadens Lawyers
[2010] VSC 7
•27 January 2010
Fh
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
COMMON LAW DIVISION
JUDICIAL REVIEW AND APPEALS LIST
No. 10051 of 2008
| JOHN RASHLEIGH SHAW | Appellant |
| v | |
| GADENS LAWYERS (ABN 29 991 935 627) | Respondent |
| GADENS LAWYERS (ABN 29 991 935 627) | Appellant |
| v | |
| JOHN RASHLEIGH SHAW | Respondent |
JUDGE: | WILLIAMS J | |
WHERE HELD: | Melbourne | |
DATES OF HEARING: | 15, 16, 17 July 2009 | |
DATE OF JUDGMENT: | 27 January 2010 | |
CASE MAY BE CITED AS: | Shaw v Gadens Lawyers | |
MEDIUM NEUTRAL CITATION: | [2010] VSC 7 | |
---
APPEAL – Cross appeals from grant and refusal of leave to appeal from VCAT decision– Application to VCAT for compensation from solicitor under Legal Profession Act2004 (Vic) – Whether ‘civil dispute’ under sub-s 4.2.2(2)(b) of Legal Profession Act2004 (Vic) includes claims unknown to common law - Whether tribunal erred in finding that solicitor was not negligent – Whether tribunal erred by failing to consider claim that solicitor acted unconscionably – Whether tribunal erred in assessment of loss - Legal Profession Act 2004 (Vic) sub-ss 4.2.2(2)(b), 4.3.17(1)(a).
---
APPEARANCES: | Counsel | Solicitors |
| For the Appellant | In person | |
| For the Respondent | Mr S Tatarka | Gadens Lawyers |
HER HONOUR:
Appeals
There are appeals before the Court by Mr Shaw and by Gadens Lawyers (‘Gadens’).
On 20 March 2009 an Associate Justice granted leave to Mr Shaw to appeal on three questions from a 6 November 2008 decision of the Victorian Civil and Administrative Tribunal (‘VCAT’). Gadens appeals from that determination.
The three questions were formulated as follows:
(a)Whether the VCAT erred in applying the principles of the law of negligence in determining that [Mr Shaw] had failed to make out any act or omission by [Gadens] entitling him to compensation for pecuniary loss under the provisions of Part 4.2 of the Legal Profession Act 2004.
(b)Whether the VCAT erred in finding that [Gadens] had discharged its duty of care to [Mr Shaw] in circumstances where [Mr Shaw] alleges that he was not specifically advised about the option of seeking injunctive relief in the VCAT to address a rescission notice that had been served by the developer of an apartment that [Mr Shaw] had contracted to purchase and in respect of which [Mr Shaw] had sought [Gadens’] advice.
(c)Whether the VCAT erred in finding that [Gadens] had discharged its duty of care where [Mr Shaw] alleges he was not informed of all the potential consequences of lodging a caveat.
The Associate Justice refused leave to appeal on the following five additional questions (‘the additional questions’), set out in Mr Shaw’s ‘Draft Notice of Appeal’ dated 1 December 2008:
3.Whether [Gadens’] acts or omissions on the facts as found amounted to unconscionable, misleading conduct and/or a breach of an implied contractual requirement to exercise a reasonable standard of care and a breach of contract.
4.Whether the percentage reduction in amount of damages was in accordance with the principles of Malec v JC Hutton and was correct and appropriate on the facts as found.
5.Further and alternatively whether the Malec discount rates applied were correct and appropriate on the facts as found.
6.Whether a factual finding can be made on which there is no evidence.
7.Whether the Tribunal acted fairly and properly took full account of the substantial merits of the case.
Mr Shaw appeals from that refusal.
The hearing de novo proceeded on the basis that, if leave were to be granted in relation to any of the additional questions, the parties would be given an opportunity to address them in further submissions.
Leave to appeal - applicable principles
In Secretary to the Department of Premier and Cabinet v Hulls,[1] Phillips JA summarised the applicable principles relating to the grant of leave to appeal from a VCAT decision under s 148 of the Victorian Civil and Administrative Tribunal Act 1998 (‘the VCAT Act’):
When leave is sought to appeal under s 148, it will be necessary for the applicant to identify a question of law which is relevant to the granting of the relief sought on appeal. The importance of the question, either generally or to the would-be appellant in the particular case, will probably be relevant. The applicant must show that there is a real or significant argument to be put on that question of law at least to this extent: that there is sufficient doubt about it to justify the grant of leave. Moreover, it may have to be shown that to allow the error to go uncorrected would impose substantial injustice, although, where the order below is final, that injustice will often be more readily discernible.
[1][1999] 3 VR 331, 337.
Summary of conclusions
Applying those principles, I have concluded that Gadens’ appeal should be allowed and Mr Shaw’s appeal dismissed. Mr Shaw’s application for leave to appeal should be refused in respect of each of the questions for which leave was given and in relation to the additional questions.
Before addressing the argued grounds of appeal, I will describe the background to the proceeding in the Court. The following matters are common ground.
Background
On about 12 March 2000, Mr Shaw entered into a contract with a developer, Yarranova Pty Ltd (‘Yarranova’) for the purchase of a unit at Docklands ‘off the plan’ for $665,000. It was anticipated that Yarranova would contract with a builder for the construction of the units.
On about 13 December 2000, Yarranova appears to have purported to assign the benefit of the contract to Newquay (Stage 2) Pty Ltd (‘Newquay’). Nothing turns on the identity of the vendor of the unit for present purposes.
Mr Shaw is an engineer and he had certain requirements with regards to the unit’s windows. When the windows did not open, he refused to settle and was served with a rescission notice. Negotiations followed but Mr Shaw was not satisfied that the windows met relevant building code requirements. He again refused to complete the purchase and a second rescission notice was served on 29 September 2003. (There was no issue about the validity or operation of the second notice.)
Mr Shaw had been represented by a firm of solicitors. Nevertheless, on 2 October 2003, he engaged Gadens to act for him in the dispute with the vendors. The 14 day period under the second rescission notice was due to expire on 14 October 2003.
A Gadens partner, Mr Lionel Appelboom, wrote a detailed letter of advice to Mr Shaw, dated 8 October 2003. The letter described the legal consequences of rescission and went on to say that:
· the vendor would not be entitled to rescind the contract if the windows did not accord with the relevant building code;
· if the vendor did purport to rescind, Mr Shaw could either accept the termination and seek damages for breach of contract or seek specific performance and damages;
· ‘the safest legal option’ would be for Mr Shaw to pay the balance of purchase monies, reserving his rights to claim compensation for breach;
· an injunction would not stop time running under the rescission notice; and
· specific performance should be sought in the Supreme Court because Mr Shaw did not want to settle before the windows complied with the code.
Mr Appelboom’s letter advised Mr Shaw that he should lodge a caveat to prevent a re-sale and to protect his interest in the property. It went on to state:
This would be sufficient to protect your interest without incurring the added cost of obtaining an injunction to prevent the Vendor from re-selling the property in the meantime. The caveat should be sufficient to dissuade the Vendor from attempting to re-sell the apartment pending resolution of the dispute, or a purchaser from buying the property whilst the caveat remains on title. In the normal course, a Vendor would seek a Court order to remove a disputed purchaser’s caveat for re-selling.
Mr Shaw instructed Gadens to lodge a caveat claiming that he held an interest in the property as purchaser under the contract of sale. The caveat was lodged on
10 October 2003. Meanwhile, Mr Shaw continued to negotiate with the vendor.
Time under the recission notice expired on 14 October 2003. Mr Shaw did not pay the balance of purchase monies.
The Yarranova Newquay proceeding
On 28 October 2003, the Registrar of Titles served a notice under s 89A of the Transfer of Land Act 1958, requiring Mr Shaw to commence proceedings within 35 days to justify his caveat in a court of competent jurisdiction. (I note at this point that it is common ground that VCAT is not a ‘court of competent jurisdiction’ under the definition in s 4(1) of the Transfer of Land Act 1958.)
On 1 December 2003, Mr Shaw commenced proceedings in the Court against Yarranova and Newquay (‘the Yarranova Newquay proceeding’). He sought declarations that the contract of sale gave him the interest claimed in the caveat and that the vendor was not entitled to rescind the contract because the unit had not been completed. After negotiations failed, the defendants issued what was treated by Hollingworth J as an application for summary judgment on their counter-claim. The application was dismissed on 5 April 2005 and the defendants were ordered to pay Mr Shaw’s costs.
In the meantime, Gadens had ceased to act for Mr Shaw on 4 January 2005. He retained the firm Rigby Cooke in the proceeding some months later.
There was a trial on a preliminary question as to whether the Domestic Building Contracts Act 1995 applied to ‘off the plan’ contracts of sale. On 23 February 2006, Bell J found that the contract of sale was not a ‘domestic building contract’ under the Domestic Building Contracts Act 1995,[2] notwithstanding the application of the legislation to other contracts by VCAT in Bessant v Metro Pacific Pty Ltd[3] and Philp v Mirvac (Docklands) Pty Ltd[4] and by the Court in Mirvac Docklands Pty Ltd v Philp.[5]This meant that the contract had been validly rescinded and that Mr Shaw forfeited his deposit.
[2]Shaw v Yarranova Pty Ltd [2006] VSC 45.
[3][1999] VCAT 56 (‘Bessant’).
[4][2004] VCAT 367.
[5][2004] VSC 301 (‘Mirvac’).
Mr Shaw made an unsuccessful appeal against the decision.[6]
[6]Shaw v Yarranova Pty Ltd (2006) 15 VR 289.
Mr Shaw’s complaint
It was in that context that Mr Shaw complained about Gadens’ conduct in a letter to the Legal Ombudsman dated 21 June 2006. His 1 December 2008 affidavit in this proceeding describes his complaint as a ‘pecuniary loss complaint to the Legal Services Commissioner pursuant to 4.2.5.of the Legal Profession Act 2004’.
The Legal Services Commissioner wrote to Mr Appelboom on 27 July 2006 about the complaint. Mr Appelboom responded by a letter dated 6 September 2006 to the Law Institute of Victoria Professional Standards Section. He answered further questions in a subsequent letter dated 27 January 2007 to the same body.
The Legal Services Commissioner found the dispute unsuitable for resolution and referred it to VCAT under s 4.3.15 of the Legal Profession Act 2004 (‘the Act’).
The Act
The Act then relevantly provided:
4.2.2 Civil complaints and disputes
(1)A civil complaint is a complaint about conduct to which this Chapter applies, to the extent that the complaint involves a civil dispute.
(2) A civil dispute is any of the following—
(a)a dispute (costs dispute) in relation to legal costs not exceeding $25 000 in respect of any one matter — …
(b)a claim that a person has suffered pecuniary losses as a result of an act or omission by a law practice or an Australian legal practitioner in the provision of legal services to the person, other than loss in respect of which a claim lies against the Fidelity Fund;
(c)any other genuine dispute between a person and a law practice or an Australian legal practitioner arising out of, or in relation to, the provision of legal services to the person by the law practice or practitioner.
(3)A civil complaint may be made about the conduct of a law practice or an Australian legal practitioner.
4.2.5To whom is a complaint made?
A complaint is to be made to the Commissioner.
…
4.2.14 Compensation orders
(1)A compensation order may not be made in respect of any loss for which the complainant has received, or is entitled to receive, compensation under an order made by a court or tribunal or a payment from the Fidelity Fund.
(2)A compensation order does not affect the right of a complainant to recover damages for pecuniary loss, but a court in making an award of damages must take the compensation order into account.
…
4.2.16 Ex gratia payments to complainants
(1)Subject to this section, the Commissioner, after consultation with the chairperson of the [Legal Services Board], may pay a complainant an amount determined by the Commissioner as compensation for pecuniary loss suffered as a result of the conduct of a law practice or an Australian legal practitioner, if the Commissioner considers it fair to do so.
...
(3)In deciding whether or not to make a payment under sub-section (1) to a complainant, and the amount of any such payment, the Commissioner may take into account—
(a)whether or not the law practice or Australian legal practitioner has ceased engaging in legal practice; and
(b) the financial position of the practice or practitioner.
(4)Nothing in sub-section (3) limits the matters the Commissioner may take into account in making a decision under subsection (1).
…
4.3.2 Effect of complaint on other proceedings
(1) Subject to sub-section (2)—
(a)a law practice or an Australian legal practitioner must not commence proceedings in relation to the subject-matter of a civil dispute between a person and the practice or practitioner after the practice or practitioner has received notice under section 4.2.8 of a civil complaint about the conduct of the practice or practitioner in respect of the dispute;
…
(c)a complainant must not commence proceedings against a law practice or an Australian legal practitioner in relation to the subject-matter of a civil dispute with the practice or practitioner after the complainant has made a civil complaint about the conduct of the practice or practitioner in respect of the dispute—
until the complaint is determined or dismissed and any appeal rights are exhausted.
…
4.3.17 What may the Tribunal order?
(1)The Tribunal may make any one or more of the following orders in relation to a civil dispute that is the subject of an application—
(a)an order that the law practice or Australian legal practitioner, or any law practice of which the practitioner is an associate, pay to the complainant as compensation a specified amount not exceeding $25 000 within a specified time ("compensation order");
(b) in a costs dispute—…
(c)an order that the law practice or Australian legal practitioner, or any law practice of which the practitioner is an associate, waive or repay the whole or a specified part of legal costs charged to the complainant for any specified legal services;
(d)an order that the law practice or Australian legal practitioner, or any law practice of which the practitioner is an associate, provide specified legal services to the complainant either free of charge or at a specified cost;
(e)an order that the law practice or Australian legal practitioner, or any law practice of which the practitioner is an associate, waive any lien held over documents belonging to the complainant and deliver the documents to the complainant within a specified time;
(f) any other order the Tribunal thinks fit.
Mr Shaw’s application to VCAT
After an unsuccessful settlement attempt, on 12 March 2008, Mr Shaw applied to VCAT for orders against Gadens under s 4.3.17 of the Act. He argued that there was a ‘civil dispute’ under s 4.2.2(2) of the Act between him and Gadens.
Mr Shaw sought $25,000 by way of compensation (under s 4.3.17(1)(a)), the repayment of costs (under s 4.3.17(1)(c)), specified free legal services (under s 4.3.17(d)) and the reimbursement of costs he had paid to the defendants in the Yarranova Newquay proceeding or any further order thought fit (under s 4.3.17(f)).
Essentially, he sought to be reimbursed for all costs paid to Gadens and his evidence was that they totalled $79,781.92. Mr Shaw also claimed compensation of $25,000 (the statutory limit) for losses represented by the difference between the amount of costs he had been ordered to pay the developer in the Supreme Court proceeding and the amount he would have been obliged to pay if the matter had been dealt with at VCAT and the cost of the loss of use of the money. He included a claim for compensation for what he characterised as additional fees charged by Rigby Cook who had replaced Gadens as his solicitors.
Mr Shaw sought Gadens’ services free of charge to recover costs awarded in his favour in the summary judgment application in the Yarranova Newquay proceeding.
In his application documents, Mr Shaw first alleged that Gadens had been negligent by failing to advise him about ‘the VCAT system for settling disputes, denying him a quick, low cost option for dealing with his disputes’ and exposing him to the costs of litigation in the Court.
Mr Shaw provided the following particulars of the alleged negligence:
a.Gadens were negligent in that they failed to advise me of the increased litigation costs to be considered when deciding to lodge a caveat (which might necessitate Supreme Court action) versus the cost [of] commencing proceedings and obtaining an injunction at VCAT.
b.Gadens were negligent in that they failed to investigate whether VCAT could be regarded as a court of competent jurisdiction for the purposes of satisfying the titles office requirements
c.Gadens were negligent in that they failed to advise me of the possibility to lodge proceedings at VCAT and proceeded to lodge a writ of specific performance in the Supreme Court of Victoria.
d.Gadens were negligent in that they failed to advise me that lodging a caveat at the titles office might require me to lodge proceedings at the Supreme Court rather than at VCAT.
e.Gadens were negligent in that they failed to advise me that the defendants would be able to make an application for summary judgement in the Supreme Court.
f.Gadens were negligent in that they failed to transfer the case down to VCAT at the earliest opportunity after lodging the writ in the Supreme Court.
Mr Shaw also claimed that, on 30 December 2004, Gadens made a misrepresentation to him to the effect that the firm was required, by the rules of the Court and generally as his solicitor on the record, to represent him at a forthcoming mediation. He asserted that this misrepresentation amounted to unconscionable, misleading and deceptive conduct in breach of a retainer under which he had previously been allowed to represent himself on occasions. As a result of Gadens’ unconscionable behaviour, Mr Shaw had been obliged to terminate the retainer and to incur the additional cost of engaging Rigby Cooke Lawyers.
Evidence and submissions at VCAT
Mr Shaw represented himself before VCAT.
He relied upon VCAT’s application of the Domestic Building Contracts Act 1995 to an ‘off the plan’ sale in Bessant[7] to argue that Gadens should have advised him to have his dispute about the windows dealt with quickly and more cheaply at VCAT under s 53 of the Domestic Building Contracts Act 1995. He maintained that Gadens should also have advised him to apply to VCAT for an injunction preventing the re-sale of his unit, on the basis of s 42 of the VCAT Act which prohibited a vendor from demanding payment in full before building works.
[7][1999] VCAT 56.
Mr Shaw told the Tribunal that it had been his ‘imperative’ not to lose the unit by having it re-sold.[8]
[8]Transcript of Proceedings, John Shaw and Gadens Lawyers (Victorian Civil and Administrative Tribunal, Judge Ross, 22 September 2008) , T 16-18.
Mr Shaw argued that such a proceeding at VCAT would have taken less than a day, that he would not have been exposed to an order for the payment of the costs of the other party and that neither the Court nor the Court of Appeal would have had the opportunity (subsequently provided by his proceeding in the Court) to decide that the Domestic Building Contracts Act did not apply to an ‘off the plan’ purchase.[9]
[9]See Shaw v Yarranova Pty Ltd [2006] VSC 45; Shaw v Yarranova Pty Ltd (2006) 15 VR 289.
(I note that Mr Shaw abandoned his argument that VCAT was a court of competent jurisdiction for the purposes of s 89A of the Transfer of Land Act.[10])
[10]Transcript, above n 8, T 64, lines 20-24.
Under cross-examination, Mr Shaw also agreed that, by the time of the summary judgment application in about June 2004, he had been told that the project involved a major domestic building contract and that he was not required to pay the balance of purchase price until the works were completed under s 42 of the Domestic Building Contracts Act 1995.[11]
[11]Ibid T 101, lines 7 - T 102, line 11.
During the VCAT hearing, Mr Shaw confirmed that his application was brought under s 4.3.17 of the Act[12] and was not a costs dispute[13].
[12]Ibid T 127, lines 14-5.
[13]Ibid T 128, line 13.
When summing up, Mr Shaw told the Tribunal:
Basically my position is that and my main thrust of the complaint is that the negligence afforded by Mr Appelboom in offering me incomplete advice when I first went to see him(sic). It’s not disputed that we discussed and he advised that there was – possibly two ways to go. One was an injunction which he advised, in his own words, very expensive, could run into tens of thousands of dollars, matter of fact he said a figure of $20,000 to $30,000 and even more possibly yesterday and was risky so – or as he recommended in his letter of 8 October (sic) basically we could go down the caveat route which is relatively simple and would be sufficient to protect your interests.
They were the two options given to me. No other discussion was provided or no other advice was provided with regard to VCAT, what VCAT was all about, what options I might have at VCAT.[14]
[14]Ibid T 250, line 22 - T 251, line 2.
Mr Shaw stressed Gadens’ ongoing obligation to advise him.[15]
[15]Ibid T 254, lines 6-16.
As far as the alleged misrepresentation was concerned, Mr Shaw agreed that Gadens did go off the record so that he could minimise costs by taking over the conduct of the proceedings between early 2004 and about June 2004 and that he had terminated the retainer in December 2004. He agreed that, between January and April 2005, there had been discussions about the retainer being re-established.[16] These discussions had centred on the payment of an outstanding bill. At that stage, he said, Mr Appelboom appeared no longer to act for him.[17] He agreed that he had offered a ‘token part payment of $2,000 as a show of good faith’ to keep Gadens on the record for a directions hearing on 13 April 2005.[18]
[16]Ibid T 147, line 28 - T 148, line 7.
[17]Ibid T 148, line 19-21.
[18]Ibid T 165, lines 15-20.
Mr Appelboom gave evidence before the tribunal. He referred to his 8 October 2003 letter of advice which had suggested that the safest course was to settle the purchase first. He also referred to his subsequent 29 January 2007 letter responding to further enquiries from the Law Institute. Mr Appelboom confirmed that each of his letters accurately represented the views he continued to hold.[19]
[19]Ibid T 178, lines 4-27.
In his 29 January 2007 letter to the Law Institute, Mr Appelboom had explained the reason for commencing the proceeding in the Court, as opposed to VCAT. He noted that he had been aware of VCAT’s decision in Bessant from an article read several months beforehand. He had also attended a Law Institute of Victoria conference on property law on 31 October 2003 at which a barrister had spoken about the case. Mr Appelboom considered that there were distinguishing features, in that Mr Shaw’s contract of sale did not annexe the building contract and there was no express requirement (as there had been in Bessant) for the builder to construct the unit in accordance with the building contract. Further, no injunction had been granted in Bessant, nor had a caveat been involved.
Mr Appelboom said in his letter that he had had real doubts about the correctness of the Bessant decision and was aware that ‘off the plan’ sales were ‘generally being structured so as to avoid any inference that they were ‘domestic building contracts’ and subject to the Domestic Building Contracts Act 1995’.
Mr Appelboom pointed out that he had pleaded the potential applicability of s 42 of the Domestic Building Contracts Act in Mr Shaw’s action in the Court for specific performance of the contract.
He said that, at their first meeting, he had advised Mr Shaw that an injunction would not stop time running under the rescission notice and that a caveat would prevent the vendors from re-selling the property and would require them to apply to a court for its removal, giving Mr Shaw a period of days to institute proceedings to defend the caveat. Mr Shaw had not wanted to apply for an injunction, being concerned about the cost, but had been enthusiastic about pursuing the caveat option.
In his oral evidence, Mr Appelboom disputed that a VCAT injunction application would have been less costly than its equivalent in the Court because, in his opinion, the same issues would have had to be traversed and there would have been a substantial jurisdictional issue for VCAT as to whether the Domestic Building Contracts Act applied to Mr Shaw’s contract. The decision in relation to the jurisdictional issue was also likely to have lead to an appeal to the Court, in any event.[20]
[20]Ibid T 187, lines 13 - T 190, line 7; (under cross-examination by Mr Shaw) T 197, lines 7-23.
Under cross-examination by Mr Shaw, Mr Appelboom said that he had advised Mr Shaw at the time that the lodgement of a caveat provided the best way to achieve Mr Shaw’s aim of completing the purchase of the property, having the defects remedied and obtaining any compensation due.[21]
[21]Ibid T 199, lines 1-24.
Mr Appelboom also denied that there had been any agreement that Gadens would go on and off the record, at Mr Shaw’s direction, in the course of the proceeding in the Court.
In his final address to the tribunal, counsel for Gadens submitted that there was no evidence to support Mr Shaw’s allegations of negligence. He also argued that the evidence demonstrated that Gadens had been prepared to resume acting for Mr Shaw on the basis that he paid its outstanding bill. It was when he refused to do that that the firm would not agree to accept the retainer again.
Mr Shaw replied, re-stating his position that the main thrust of his complaint related to Mr Appelboom’s ‘incomplete advice’ at their first interview. He acknowledged that Mr Appelboom had advised him that it would be very expensive to pursue injunctive relief and that he had pointed out that it was a risky option, recommending that a caveat be lodged which would be relatively simple and sufficient to protect his interest.[22] Mr Shaw also referred to Gadens’ continuing obligation to give advice, suggesting that there should have been consideration given to using the Court’s decision in Mirvac.[23]
[22]Ibid T 250, line 22 - T 251, line 2.
[23]Ibid T 254, lines 6-7.
Mr Shaw told the Senior Member that he had spent $165,000 defending his position and he could not believe that he would have spent anything like that amount at VCAT.[24]
[24]Ibid T 261, lines 7-9.
In relation to the misrepresentation argument, Mr Shaw repeated that he had been induced to take the solicitors off the record by what he alleged were the deliberate misrepresentations about their obligations in an email from Mr Appelboom on 30 December 2004. [25]
[25]Ibid T 264, lines 16-27.
Mr Shaw had previously emailed Mr Appelboom, indicating his desire to represent himself at a scheduled mediation. He said that he would ‘suspend instructions to Gadens from [the following day] until immediately after the mediation session and advise the Court that [he was] representing [himself] for the time being.’ His email had continued to the effect that he trusted that Mr Appelboom would ‘support [him] on this point’ and that he should not spend time trying to dissuade him to change his mind.
Mr Appelboom’s 30 December 2004 email had responded this way:
Thanks for your email. As previously discussed, suspending instructions presents difficulties for us as legal advisers and the solicitors on the Court record.
In dealing with your instructions, we have to take into account:
1.our professional responsibility to you taking into account that this is a complex case
2.the Court orders, which for instance require our involvement in the mediation process
3.the Rules which require us to be either ‘on the record’ and fully responsible or not on the record
4.our duty as officers of the Court eg. The Court may communicate with us at any time in relation to the proceeding, including the outstanding judgment
5. our standing in the profession
As far as the mediation is concerned, our problem is that the Court expects us to attend the mediation as the solicitors on the record, and MAB/ABL [solicitors] may not be prepared to deal with you directly at a mediation as they may see you at a disadvantage which could prevent any settlement being effective. You may be seen by the Court as not approaching the mediation in a genuine manner which could disadvantage you before the Court. We remain of the view that your interests are best served by you being properly represented throughout but will respect your decision. It is relevant that while we are on the record ABL are required by both the Court Rules and ethics to deal with us. Therefore it would become necessary for us to formally withdraw from acting and being solicitors on the record. We could of course be retained again but I have reservations about that course given our comments above and the fact that this would not be the first time.
We will not elaborate further as you have indicated this is not necessary, if you wish to discuss any aspect, please let me know.
In the circumstances, I trust you will understand that we are therefore reluctant to accede to your request for us to be semi-involved in the matter. We therefore ask you to reconsider, otherwise we will have no alternative but to treat your instructions as terminating our retainer and withdrawing formally as solicitors on the record.
The Senior Member’s assistance to Mr Shaw
Throughout the hearing, the Senior Member helpfully summarised Mr Shaw’s arguments from time to time and confirmed them. He treated Mr Shaw with courtesy and gave him every opportunity make submissions and explain his case. He confirmed a number of times that Mr Shaw’s complaint was about Gadens’ failure to advise him of the VCAT option for dealing with his dispute. Mr Shaw agreed when the Senior Member put it to him that all his claims were effectively compensation claims based upon negligence by Gadens in the inappropriate manner in which they handled his matter.[26]
[26]Ibid T 95, lines 23-261; T 96 lines, 12-15.
The VCAT decision
The Senior Member noted Mr Shaw’s contention that Gadens’ failure to provide advice about the possibility of an application to VCAT amounted to negligence on the firm’s part. He found no negligence. He also decided, alternatively, that, in any event, Mr Shaw had suffered no loss or damage as a consequence of any negligence because the dispute had been destined for determination by the Court.
The Senior Member first identified Mr Shaw’s aims of both completing his purchase after the windows accorded with the relevant building code and of seeking extra time to negotiate with the developer to that end.
The Senior Member decided that, at the outset and on many subsequent occasions, Gadens had given Mr Shaw the best possible advice: to pay the balance of purchase monies to avoid the risk of rescission and then to resolve in isolation the windows dispute.
As far as the caveat was concerned, the tribunal concluded both that every competent legal practitioner would have recommended that a caveat be lodged immediately to give notice of Mr Shaw’s claimed interest to Land Victoria and to any prospective purchaser and that such advice was consistent with Mr Shaw’s main aim of gaining time for negotiation. The firm was not negligent in relation to the caveat.
The tribunal found that some competent legal practitioners would then have recommended that Mr Shaw commence proceedings in the Court seeking an order for specific performance to expedite the resolution of the dispute. In those circumstances, Gadens was not negligent in failing to tell Mr Shaw that he could seek to have his dispute determined by VCAT.
The Senior Member went on to consider the ramifications of the alternative view. He concluded that Mr Shaw would almost certainly have taken the inexpensive step of lodging a caveat and would have started negotiations with the vendor before seeking VCAT’s determination of the dispute. If Mr Shaw had been advised to commence a proceeding at VCAT, there was then an 80 per cent chance that he would have done so after receiving the s 89A notice and having considered such proceedings to be quicker, cheaper and more likely to be successful whilst avoiding the possibility of a costs order in favour of the developer.
The Senior Member also found that there was an 80 per cent chance of VCAT being persuaded that it did have jurisdiction (given the state of the law before Mr Shaw’s own cases in the Court had established that s 42 of the Domestic Building Contracts Act did not apply to his ‘off the plan’ purchase).
Assuming that the windows did not comply with the relevant building code, the tribunal concluded that Mr Shaw also had an 80 per cent chance of success at VCAT.
On the basis that the window rectification would have cost slightly less than $100,000, the Senior Member decided that there would almost inevitably have been an appeal from any VCAT decision to the Court. He concluded that there was a 99 per cent chance of Mr Shaw appealing on the jurisdictional issue because:
· otherwise, he would lose both his unit and his deposit;
· he was determined to prove that he was correct in his view that the windows did not comply with the building code;
· he had gone on to appeal from Bell J’s decision that the Domestic Building Contracts Act did not apply;
· he had already demonstrated his determination to succeed by rejecting an offer from the developer to cancel the contract and refund the deposit; and
· his evidence at VCAT had been that he had gone on to lose $576,000 attempting to obtain a determination in his favour.
The Senior Member also found that there was a 75 to 100 per cent chance that the developer would have appealed, if unsuccessful, because:
· the cost of rectification of the windows was a relatively large amount in the context of the sale price of $665,000;
· the decision might have ramifications extending to some or all of the many other units sold in the tower; and
· the decision may have affected other construction projects.
The Senior Member rejected Mr Shaw’s contention that Gadens had not been entitled to withdraw as solicitors and that Mr Shaw had suffered loss because he had been obliged to retain others. He reached this conclusion on the basis of his findings that the relationship of trust and confidence which had formerly existed between Gadens and Mr Shaw had broken down by the date of the mediation and that costs were owing to Gadens.[27]
[27]Reasons, [92].
The application for leave to appeal
The Associate Justice granted Mr Shaw leave to appeal in relation to three questions. The statement of the grounds of appeal in Mr Shaw’s Draft Notice of Appeal dated
1 December 2008 foreshadowed his oral arguments in support of his application for leave to appeal.
I will now give reasons for my conclusions that Mr Shaw should not be granted leave to appeal on any of the three questions (a), (b) or (c), upon which he was given leave, or in relation to the additional questions in respect of which leave was refused.
The stated grounds of appeal set out a number of arguments with a good deal of overlap and I will address them generally and where they seem relevant to a specific question or submission.
Question (a)
(a)Whether the VCAT erred in applying the principles of the law of negligence in determining that [Mr Shaw] had failed to make out any act or omission by [Gadens] entitling him to compensation for pecuniary loss under the provisions of Part 4.2 of the Legal Profession Act 2004.
Mr Shaw makes a number of submissions relating to this question.
He first argues that the tribunal did and should not have restricted its analysis of his claim by dealing with it as a negligence claim against Gadens.
I agree with Gadens’ argument that Mr Shaw made his VCAT application on the basis of alleged negligence on the part of Gadens. He did not put his claim for compensation for pecuniary loss under s 4.3.17 of the Act any other way, except in respect of the additional costs of engaging Rigby Cook. I am not persuaded by Mr Shaw’s submission that he only used the word ‘negligence’ or a variant of it because it was ‘put in his mouth’ by the Tribunal. Mr Shaw articulated his claim as a negligent failure to advise throughout in his documents and his submissions.
Mr Shaw then contends that the Senior Member failed to apply the principles in Astley v Austrust[28] and Hawkins v Clayton[29] by not recognising that Gadens breached its duty of care by its negligence. To the extent that Mr Shaw maintains that the tribunal erred by failing to consider whether there had been a breach of a coextensive contractual obligation to take reasonable care, the point has no substance because the Senior Member did find that Gadens was not negligent.
[28](1999) 197 CLR 1.
[29](1988) 154 CLR 539.
Mr Shaw also maintains that the tribunal in effect ignored his claim that he had suffered loss as a consequence of being induced to terminate Gadens’ retainer as a result of the firm’s unconscionable conduct in misrepresenting to him its obligations as solicitors on the Court record in the Yarranova Newquay proceeding in breach of the terms of its retainer.
I consider that the Senior Member dealt with Mr Shaw’s argument implicitly by finding that the solicitors were entitled to withdraw in the circumstances of the breakdown of the relationship of trust and confidence and when costs were owing to the firm.[30]
[30]Reasons, [92].
A ‘civil dispute’ under s 4.2.2(2) of the Act
Mr Shaw goes on to argue that a client suffering loss as a result of ‘unreasonable mistakes or omissions through carelessness, laziness or incompetence’ should not be obliged to establish the elements of the tort of negligence to obtain an award of compensation under the sub-s 4.3.17(1)(a)of the Act. He contends that the tribunal erred by failing to consider whether he was entitled to compensation on the basis that he had a ‘civil dispute’ under sub-s 4.2.2(2) on such grounds and restricting its analysis to the question whether he had a claim in negligence.
I am not persuaded that there is a real or significant argument that VCAT was empowered under sub-s 4.3.17(1)(a) to order the payment of compensation in a ‘civil dispute’ under sub-s 4.2.2(2)(b) which included a claim based on absolute liability or the right to the exercise of a discretion informed by considerations of fairness or equity.
I agree with counsel for Gadens that there is no indication in Part 4.2 of the Act of a legislative intent to create some new species of action divorced from the common law. Rather, as counsel argues, Part 4.2 should be construed as providing a ‘small claims type jurisdiction’ for the resolution of compensation claims against legal practitioners. The reference to loss flowing from ‘an act or omission’ by a legal practitioner in sub-s 4.2.2(2)(b) describes a concept familiar in the common law of negligence, as Gadens submits.
Neither my researches nor, I am told, those of counsel or Mr Shaw have been able to find authority to support Mr Shaw’s contention. Counsel for Gadens did, however, cite a 1997 decision to the contrary by the Senior Member, who was then a Registrar and Member of the Legal Profession Tribunal.
In Joyce v Richmond & Bennison,[31] the Senior Member considered whether sub-s 122(1)(b) of the Legal Practice Act 1996 (which was relevantly in identical terms to sub-s 4.2.2(2)(b) of the Act) contemplated compensation awarded on the basis of strict liability. He referred to the history of the legislation and relied upon his own 1989 ruling under s 38Z(1)(a) of the Legal Professional Practice Act 1958 that the Tribunal only had power to order compensation ‘upon a finding of negligence, or a failure to follow instructions, or a breach of fiduciary duty, or some other recognised form of legal liability other than strict liability’. The Senior Member noted that nearly 1,000 disputes had been determined by the Registrar of the Solicitors’ Board, and the Legal Profession Tribunal on the basis that there was no discretion to award compensation on the basis of strict liability.
[31][1998] VLPT 7 (‘Joyce’).
The statutory context also supports the proposition that the Tribunal’s power to order compensation under sub-s 4.3.17(1)(a) of the Act does not give rise to any new cause of action for compensation awarded on the grounds of strict liability or in the exercise of a general discretion based on notions of fairness. In this regard, the
sub-section is to be contrasted with sub-s 4.2.16 which does provide the Commissioner with an express discretion to make an ex gratia payment of compensation upon the ground of fairness.
This construction is also supported by the Explanatory Memorandum to the Bill which states:
Clause 4.2.2.defines a ‘civil complaint’ as a complaint about conduct to the extent that it involves a ‘civil dispute’ for the purposes of the Chapter. It is not intended that this clause create any new substantive rights or cause of action.[32]
[32]Explanatory Memorandum, Legal Profession Bill 2004 (Vic) 71.
The treatment of the negligence claim
Mr Shaw also contends that the Senior Member erred in the application of principles relating to the tort of negligence, I agree with Gadens that, once again, Mr Shaw has failed to mount a real or significant argument to this effect in relation to any of the questions for which leave was granted or in respect of any of the additional questions.
The Senior Member correctly identified the requisite standard of care as that of ‘a reasonably competent and skilful legal practitioner’[33] referring to the statement of the test in Voli v Inglewood Shire Council.[34]
[33]Reasons, [58].
[34](1963) 110 CLR 74, 84 (Windeyer J).
Mr Shaw argues that the Senior Member erred in concluding that Gadens had met the appropriate standard of care for a legal practitioner specialising in building and construction law. He then relies upon the High Court’s recognition in Rogers v Whittaker[35] that a failure to ‘warn and inform’ could constitute negligence.[36]
[35](1992) 175 CLR 479.
[36]Citing passages from the judgments of Mason CJ, Brennan, Dawson, Toohey and McHugh JJ.
Mr Shaw contends, in effect, that the tribunal’s conclusions indicated that it had failed to consider whether Gadens had negligently failed to warn him of the consequences of lodging a caveat or to inform him of the available option of an action at VCAT which were relevant matters about which Mr Appelboom was aware.
Even if this contention can be characterised as a question of law, rather than a challenge to factual conclusions, I consider that the Senior Member’s reasons for decision indicate that he did take into account Mr Appelboom’s knowledge of the relevant law about the applicability of the Domestic Building Contracts Act 1995. He considered what a competent legal practitioner, armed with that knowledge, would have done when advising Mr Shaw about the available options and the consequences of a particular course, in the context of Mr Shaw’s objectives at the time. The Senior Member concluded that, notwithstanding his knowledge, Mr Appelboom was not negligent.
Expert evidence of solicitors’ practices
Mr Shaw then argues that expert evidence should have been adduced as to the practice of solicitors. I agree with Gadens’ submission that there was no arguable error in the Tribunal’s approach in this regard, noting the Federal Court’s disapproval of the use of such evidence in a case involving alleged negligence by a solicitor in Yates Property Corporation (in liq.) v Boland.[37]
[37](1998) 85 FCR 84, 110 (Drummond, Sundberg and Finkelstein JJ).
Mr Shaw has failed to satisfy me that question (a) raises any question of law about which there is sufficient doubt to justify the grant of leave to appeal.
Questions (b) and (c)
(b)Whether the VCAT erred in finding that [Gadens] had discharged its duty of care to [Mr Shaw} in circumstances where [Mr Shaw] alleges that he was not specifically advised about the option of seeking injunctive relief in the VCAT to address a rescission notice that had been served by the developer of an apartment that [Mr Shaw] had contracted to purchase and in respect of which [Mr Shaw] had sought the [Gadens’] advice.
(c)Whether the VCAT erred in finding that [Gadens] had discharged its duty of care where [Mr Shaw] alleges he was not informed of all the potential consequences of lodging a caveat.
Questions (b) and (c) can conveniently be dealt with together.
Both these questions appear to be stated as questions of fact as to whether the Tribunal erred in concluding that Gadens met the relevant standard of care.
Absence of evidence
In so far as Mr Shaw maintains that there is sufficient doubt about Gadens’ negligence to justify leave to appeal because there was no evidence to support the Senior Member’s finding that one of Mr Shaw’s initial aims was to gain time for negotiations, I am not persuaded that there is a real or significant argument to that effect. There was ample evidence from both Mr Shaw and Mr Appelboom to support the impugned conclusion.
Failure to consider ongoing obligations
Insofar as Mr Shaw maintains that the tribunal erred in law because it failed to consider Gadens’ ongoing obligations to exercise care, his contention also lacks substance even if the issue as to whether there had been such a failure might be characterised as a question of law.
The tribunal found as a fact that Gadens gave the best possible advice to Mr Shaw, not only at the outset but on ‘many subsequent occasions’.[38] The Senior Member’s reasons also show that he did not limit himself to a consideration only as to what happened in the first two weeks of the retainer.
[38]Reasons, [59].
Mr Shaw complained primarily that he had not been advised to pursue available options at VCAT at the outset or later on. He submits that the Senior Member erred by failing to consider whether Gadens should have advised that he could let the caveat lapse and apply to VCAT for an injunction when his caveat was challenged, rather than pursue the Supreme Court action.[39]
[39]Transcript of Proceedings, John Shaw and Gadens Lawyers (Victorian Civil and Administrative Tribunal, Judge Ross, 22 September 2008) , T 72, line 25 - T 73, line 3.
I am not persuaded that there is any real or significant argument to support this proposition. Whilst the Senior Member did find that there was no negligence on Gadens’ part in failing to advise Mr Shaw of his option to seek an injunction at VCAT, he also considered, in the alternative, the ramifications of Mr Shaw having allowed the caveat to lapse and sought to have his dispute determined at VCAT.[40] He concluded that the matter would inevitably have ended up in the Court on the jurisdictional issue and that Mr Shaw had not proved any loss or damage.
[40]Reasons, [75] ff.
Section 97 VCAT Act
Mr Shaw also seeks to characterise questions (b) and (c) as questions about whether the tribunal had breached its obligations under s 97 of the VCAT Act. Section 97 was in the following terms:
97 Tribunal must act fairly
The Tribunal must act fairly and according to the substantial merits of the case in all proceedings.
This issue is also squarely raised by additional question 7.
7.Whether the Tribunal acted fairly and properly took full account of the substantial merits of the case.
Mr Shaw cites Roennfeldt v Woodgrain Timber and Hardware Pty Ltd[41] in support of the proposition that an analysis as to whether the tribunal has complied with its obligations under s 97 should include consideration as to whether the outcome was fair in all the circumstances, including the evidence which was before it.
[41](2006) VAR 211 (‘Roennfeldt’).
In Roennfeldt, the tribunal was held to have breached its obligations under s 97 in the unusual circumstances of its failure to explain the ramifications of their claims to unrepresented litigants. The facts involved a dispute about windows. The upshot of the tribunal’s order that the subject windows be returned to the manufacturer was that substantial damage was caused to the structure itself. Harper J found that the tribunal had breached s 97 by failing to raise the issue of the effect of its order with the appellants before making it.
I am not persuaded that s 97 required the tribunal in this case to achieve a substantively fair result, as Mr Shaw contends, on the basis of the decision in Roennfeldt or otherwise.
As Ashley J said of s 97 in Bell Corp Victoria Pty Ltd v Stephenson:
That section should be considered to import the concept that, ordinarily, the interests of case management should not be employed so as to shut a party out of litigating its case. The ultimate aim of the Tribunal, as much as of a court, must be the attainment of justice in respect of issues joined.[42]
[42][2003] VSC 255, [51].
Section 97 has also been considered apposite to a situation in which an unduly technical approach ignoring the substantial merits of the issue has been adopted.[43] It does not provide an avenue for merits review of the tribunal’s decision, even though there is a ‘special responsibility’ owed to a litigant in person.[44]
[43]See Ritchie’s Stores Pty Ltd v Bass Coast [2003] VCAT 233, [88].
[44]See Macdiggers Pty Ltd v Dickinson [2008] VSC 576, [55].
Both in respect of the issues raised by questions (b) and (c) and throughout, in my view, the tribunal fulfilled its statutory obligations to Mr Shaw under s 97. The Senior Member gave him ample opportunity to make submissions and assisted him appropriately. The Senior Member often summarised the issues as they were presented by Mr Shaw and his reasons indicate no failure to take evidence into account, bearing in mind the practical limitations of the process. It was not necessary for the tribunal to refer to every piece of evidence or argument put. The reasons for the Senior Member’s decision themselves are clearly expressed and adequately explain the process of reasoning by which the Senior Member arrived at his conclusions.
In so far as Mr Shaw maintains that there is a real or significant argument that the Senior Member breached s 97 by failing to take into account all reasonable hypotheses or possibilities (such as that of him succeeding at VCAT) when considering the issue of loss[45] or erred by concluding that the developer would have appealed without direct evidence of its intent[46] or in relation to any other aspect of the conclusion that no loss was suffered, he has not persuaded me that there is sufficient doubt to warrant leave to appeal.
[45]Transcript of Proceedings, John Shaw and Gadens Lawyers (Victorian Civil and Administrative Tribunal, Judge Ross, 22 September 2008) , T 52, line 22-30.
[46]Ibid, T 53, lines 15-8.
The Senior Member fulfilled his obligations under s 97, in my view, in the context of the submissions and evidence before him. More generally, there was also evidence upon which all the challenged conclusions were open.
I am satisfied that leave should not have been granted in relation to questions (b) and (c) and, further, that leave should be refused in relation to additional question 7.
Additional question 3
Mr Shaw seeks leave to appeal on additional question 3:
3.Whether [Gadens’] acts or omissions on the facts as found amounted to unconscionable, misleading conduct and/or a breach of an implied contractual requirement to exercise a reasonable standard of care and a breach of contract.
Mr Shaw argues, generally, that the Tribunal erred in law by failing to consider Gadens’ breaches of a term of the retainer to the effect that he might perform some of the work and, in particular, might represent himself at a mediation in the Yarranova Newquay proceeding, in order to save money.
Mr Shaw also maintains that the Senior Member failed to address the issue of whether Gadens’ behaviour was unconscionable and amounted to a misrepresentation of its obligations as solicitor on the record. He argues that the evidence as to events occurring after the breakdown in communication or trust which he attributes to the unconscionable breach of the terms of the retainer was irrelevant.[47] He asserts that the relationship broke down as a result of Gadens’ conduct and that he terminated the retainer as a direct consequence, with resulting loss of the amount spent in briefing new solicitors.
[47]Ibid, T 42, lines 22-5.
The evidence was that Gadens remained on the record until negotiations as to the terms upon which the firm might resume acting for Mr Shaw had failed to achieve that outcome.
The Senior Member found that the parties tried to find a mutually acceptable basis upon which Gadens could continue to act and that no agreement was reached. He noted Mr Shaw’s contention that Gadens was not entitled to withdraw from the proceeding and that he had suffered loss because of the need to familiarise other solicitors with the matter.[48] The Senior Member expressly rejected the contention in relation to Gadens and, significantly, went on to decide that Gadens was entitled to withdraw, given the breakdown of the relationship of trust and confidence and the non-payment of fees.[49] It is implicit in this finding that he had concluded that there was no breach of contract or unconscionable behaviour inducing Mr Shaw to terminate the retainer and to incur the consequential loss of the cost of briefing new solicitors. (Gadens would not have been acting in accordance with the terms of the retainer if it was behaving unconscionably and misrepresenting its obligations in relation to the mediation.)
[48]Reasons, [91].
[49]Reasons, [92].
I add (insofar as the matter is addressed by Mr Shaw) that I consider that there was evidence upon which it was open to the Tribunal to make factual findings to that effect in the email correspondence before and after 30 December 2004 and Mr Appelboom’s evidence at the hearing. As for the issue of costs, Mr Shaw’s own email to Gadens of 5 January 2005 indicated that there were outstanding costs of some $7,000 at that point and there had been an exchange of emails relating to Gadens’ charges in June 2004 and Gadens had requested payment of outstanding fees by a 26 November 2004 email to Mr Shaw.
Mr Shaw also submits that, under s 97 of the VCAT Act, the Senior Member should have invoked the tribunal’s power to award damages under the Fair Trading Act 1999, re-characterising the claim brought under the Act. In so far as this argument relates to the alleged unconscionable conduct (which would have breached the terms of the retainer in any event) there is no real or significant argument to justify leave, in light of the tribunal’s finding that Gadens was entitled to withdraw.
Mr Shaw has not established any real or significant argument in support of any questions said to be raised by additional question 3.
Additional questions 4, 5 and 6
4.Whether the percentage reduction in amount of damages was in accordance with the principles of Malec v JC Hutton and was correct and appropriate on the facts as found.
5.Further and alternatively whether the Malec discount rates applied were correct and appropriate on the facts as found.
6.Whether a factual finding can be made on which there is no evidence.
Mr Shaw’s stated grounds of appeal and submissions made numerous arguments in relation to the issues said to be raised by these additional questions.
In so far as Mr Shaw argues that these questions raise an issue as to whether the Senior Member erred when determining whether there had been a breach of duty, I am not persuaded that there is the requisite real or significant argument justifying leave. The Senior Member properly measured Mr Appelboom and Gadens’ conduct against the standard of a reasonably competent and skilful practitioner and found no breach of duty, applying the requisite standard of proof on the balance of probabilities.[50]
[50]Reasons, [58]-[69].
Mr Shaw argues, in effect, that many of the findings of fact made by the tribunal in relation to the issue of negligence were wrong. He submits that the Senior Member should have come to different factual conclusions on the evidence, characterising those reached as unreasonable and, in some cases, as speculative. I do not propose to deal with each such submission, because Mr Shaw has failed to persuade me that there is the requisite doubt about any of the challenged conclusions being reasonably open on the evidence. Nor has he persuaded me that the tribunal reached any factual conclusion in the absence of evidence for it.
Notwithstanding his conclusion that Gadens was not negligent, the Senior Member nevertheless went on to assess the extent of loss and damage to Mr Shaw on the alternative basis that it had been. He concluded that the jurisdictional issue would have ended up in the Court in any event and so Mr Shaw would have failed to prove any loss.
The tribunal calculated the amount of probable loss by applying the principle stated by the majority in Malec v J C Hutton Pty Ltd:
The court addresses the degree of probability that an event would have occurred or might occur and adjusts its award of damages to reflect the degree of probability. The adjustment may increase or decrease the amount of damages otherwise to be awarded.[51]
[51](1990) 169 CLR 638 (‘Malec’).
It is implicit in the Senior Member’s consideration of the issue that he applied the civil standard of proof to the issue of causation and accepted (for the purpose of the exercise) that Gadens’ negligence caused Mr Shaw to lose the amount expended in connection with the Yarranova Newquay proceeding.
Mr Shaw takes issue with the manner in which the tribunal applied the Malec principles and reached its conclusion.
He relies upon a passage from the judgment of Brennan J in Sellars v Adelaide Petroleum NL[52] in support of his argument that the tribunal erred by speculating as to what might have happened. He has not satisfied me that there is an argument justifying leave on this point. I consider that the Senior Member correctly applied the Malec principle to the assessment of the prospects of the same loss being sustained in the hypothetical situation of Mr Shaw having accepted advice from Gadens to proceed at VCAT at the outset or subsequently.
[52](1992-4) 179 CLR 332, 368 (‘Sellars’).
In Sellars, the High Court was considering whether the Malec principle should be applied to the assessment of damages under s 82(1) of the Trade Practices Act 1974 (Cth) where a plaintiff claimed loss of a commercial opportunity. Mason CJ, Dawson, Toohey and Gaudron JJ said, at 355:
… we consider that acceptance of the principle enunciated in Malec requires that damages for deprivation of a commercial opportunity, whether the deprivation occurred by reason of breach of contract, tort or contravention of s 52(1), should be ascertained by reference to the court's assessment of the prospects of success of that opportunity had it been pursued. The principle recognized in Malec was based on a consideration of the peculiar difficulties associated with the proof and evaluation of future possibilities and past hypothetical fact situations, as contrasted with proof of historical facts. Once that is accepted, there is no secure foundation for confining the principle to cases of any particular kind.
On the other hand, the general standard of proof in civil actions will ordinarily govern the issue of causation and the issue whether the applicant has sustained loss or damage. Hence the applicant must prove on the balance of probabilities that he or she has sustained some loss or damage.
In the passage from the judgment of Brennan J to which Mr Shaw refers,[53] his Honour noted that a plaintiff could not rely upon the possibility of a past event occurring and refrain from adducing evidence as to its actual occurrence, citing Johnson v Perez.[54] Suffice it to say that that is not the case which was before the tribunal.
[53]Ibid.
[54](1988) 166 CLR 351, 368-9 (Wilson, Toohey and Gaudron JJ).
Mr Shaw contends further that there was no evidence upon which the tribunal could have assessed the likelihood of the vendor appealing from a VCAT decision in the absence of direct evidence on the point. There is no real or significant argument justifying leave on this point, in my opinion. There was evidence of the facts including those to which I have referred[55] from which the Senior Member drew the relevant inference.
[55]Above, [68].
Mr Shaw then contends that, when the Senior Member reached his alternative factual conclusion that there was no loss, he did not take account of other facts and possibilities including:
· whether leave to appeal on a question of law would have been granted to the vendors;
· whether the Court, differently constituted, might have decided the jurisdictional issue differently at any level;
· the fact that the Yarranova Newquay proceeding had involved the summary judgment application;
· the effect of the worry, anxiety and inconvenience to him resulting from what he says was Gadens’ failure to deal with the matter efficiently and quickly; and
· the substantial amount of what he characterises as his losses.
Once again, I am not satisfied that there is sufficient doubt to justify leave to appeal on any question of law relating to such matters. The tribunal was obliged to take the evidence before it into account and was entitled to draw any inference reasonably open on that evidence. In my view, it was open to the Senior Member to conclude that either party would have appealed from a VCAT determination on the jurisdictional issue and, by implication, that each would-be appellant would have been able to satisfy the relevant test for leave to appeal. It was open to the Senior Member to take into account the outcome of the Yarranova Newquay proceeding when reaching his conclusions, notwithstanding the possibility that the Court may have been differently constituted from that which dealt with the jurisdictional issue in that proceeding.
As far as any worry and anxiety to Mr Shaw is concerned, even if the issue raised could constitute a question of law, no error is demonstrated. The tribunal would have been equally entitled to take into account that Mr Shaw would have had additional worry, anxiety and stress if he had been involved in proceedings at both VCAT and in the Court.
The Senior Member did specifically mention Mr Shaw’s evidence about his loss, indicating that he had taken the quantum into account.
Mr Shaw relies generally upon the Senior Member’s consideration of the application on the alternative basis that Gadens had been negligent, as an indication that there is sufficient doubt to justify a grant of leave to appeal from his decision. There is no substance to this point.
As far as the summary judgment application is concerned, Mr Shaw was successful and was awarded costs.
In any event, the tribunal was only considering the issue of loss in the alternative. The Senior Member had found that there was no negligence on Gadens’ part. I have refused leave to appeal on the issue of negligence and no injustice could be established to justify leave in relation to the decision in the alternative case.
I am not persuaded that that there is any question of law justifying leave to appeal raised by additional questions 4, 5 or 6.
Conclusion
Gadens’ appeal should be allowed and Mr Shaw’s appeal dismissed. The application for leave to appeal should be dismissed.
4
7
0