Shields v NatLaw Pty Ltd & Anor (Civil Dispute)
[2023] ACAT 44
•17 August 2023
ACT CIVIL & ADMINISTRATIVE TRIBUNAL
SHIELDS v NATLAW PTY LTD & ANOR (Civil Dispute) [2023] ACAT 44
XD 542/2022
Catchwords: CIVIL DISPUTE – professional negligence – where asbestos present in property – where applicant contends advice by conveyancing lawyer negligent in not emphasising need for an asbestos report – property a forester’s cottage from the 1950s – whether conveyancing lawyer breached duty of care – whether applicant sustained a loss – whether scope of liability extended to the advice sought
List of Legislation: ACT Civil and Administrative Tribunal Act 2008 s 32
Australian Consumer Law (ACT) s 60
Civil Law (Wrongs) Act 2002 ss 40, 42, 43, 45, 46
List of Cases: Donnellan v Woodland [2012] NSWCA 433
Dey v Victorian Railways Commissioners [1949] HCA 1
Fancourt v Mercantile Credits Ltd [1983] HCA 25
G & M v Armellin [2008] ACTSC 68
PPK Willoughby v Baird [2021] NSWCA 312Trkulja v Google LLC [2018] HCA 25
Vairy v Wyong Shire Council [2005] HCA 62
Tribunal:Senior Member M Hyman
Date of Orders: 17 August 2023
Date of Reasons for Decision: 17 August 2023
AUSTRALIAN CAPITAL TERRITORY )
CIVIL & ADMINISTRATIVE TRIBUNAL ) XD 542/2022
BETWEEN:
LOUISE SHIELDS
Applicant
AND:
NATLAW PTY LTD ACN 616 544 588
First Respondent
AARON MICHAEL CLIFFORD
Second Respondent
TRIBUNAL:Senior Member M Hyman
DATE:17 August 2023
ORDER
The Tribunal orders that:
1.The application is dismissed.
………………………………..
Senior Member M Hyman
REASONS FOR DECISION
Introduction
1.This decision is about whether the legal firm NatLaw Pty Ltd (the first respondent) were negligent in the services they provided to Ms Louise Shields and Mr Aaron Clifford (the applicant and the second respondent respectively, also for convenience referred to from time to time as the purchasers) when the purchasers were buying a house in Canberra.
2.Ms Shields and Mr Clifford were going about buying their first home in 2017, and they found a house in Uriarra Village. They used NatLaw as their lawyer for conveyancing. After buying the house (the property), they found that the exterior cladding contained asbestos. On 22 June 2022, Ms Shields applied to the ACAT, asserting that NatLaw had been negligent in giving her advice on the risk of finding asbestos at the property.
3.In her initial application, Ms Shields also named as respondents ACT Property Inspections Pty Ltd,[1] the company that had carried out the building inspection of the property, and the ACT Government, represented by the Community Services Directorate. On 13 November 2022, Ms Shields filed an application for interim orders seeking that Mr Clifford be joined as an applicant. On 14 November 2022, Ms Shields filed a notice of discontinuation that dropped ACT Property Inspections and the ACT Government as respondents, leaving NatLaw as the sole respondent. The applications against ACT Property Inspections and the ACT Government, being discontinued, were dismissed by the tribunal on 17 November 2022.
[1] ACN 600 397 466
4.The matter first came before me on 10 February 2023. Early in the hearing, and before any evidence was led, Ms Shields mentioned that the property was being sold. Mr Tim McHutchison of McInnes Wilson Lawyers, appearing for NatLaw, moved for an adjournment, on the basis that a recent decision of the NSW Court of Appeal was likely to allow speedy resolution of the matter once the house had been sold. Mr McHutchison distributed a copy of the case at the hearing and provided a citation. He suggested that an adjournment to just after the expected date for settlement on the property would make it likely that the matter would not need to proceed to a hearing.
5.A further point related to the absence from the hearing of Mr Clifford, who was not a party and was not listed as a witness. Ms Shields said that he had been her domestic partner when they had bought the house together but was so no longer, and that he lacked the capacity to be involved in the hearing. Mr McHutchison said that if the matter proceeded to a hearing, NatLaw would wish to obtain evidence from him and would call him as a witness, by subpoena if necessary.
6.On the basis of the points raised, I adjourned the matter until 28 March 2023, a date chosen on the basis that it would fall after the usual 28-day settlement period following sale of the property. I joined Mr Clifford in the proceedings as second respondent and ordered Ms Shields to provide any available evidence to allow me to draw a conclusion about a lack of capacity on his part to participate in the hearing.
The hearing
7.At the hearing on 28 March 2023, Ms Shields appeared in person, as did Mr Clifford. No issues were raised as to Mr Clifford’s capacity to participate in the hearing. Ms Keely Graham of Counsel, who appeared remotely, represented NatLaw (in replacement for Mr McHutchison). Ms Shields, Mr Clifford and the conveyancing lawyer at NatLaw who handled Ms Shield’s matter, Ms Natasha Sandhu, appeared as witnesses and were cross-examined. Ms Sandhu appeared remotely.
8.The documentary evidence before the Tribunal comprised witness statements by Ms Shields and Mr Clifford[2]; documents associated with the purchase of the property, including the contract and annexures;[3] a witness statement from Ms Sandhu;[4] and a body of other documents, many of them filed more than once. These documents were not in general paginated or identified by attachment numbers, so they are set out in the table below with the identifiers used in this decision. Generally speaking, material filed more than once only appears once in the table.
[2] Exhibits A1 and A2
[3] Exhibit R1
[4] Exhibit R2
Document Date Identifier Application 22/06/2022 - Record of settlement 26/09/2017 Application, Attachment A NatLaw tax invoice 26/09/2017 Application, Attachment B Contract for sale of property 29/08/2017 Application, Attachment C Community title documents 20/07/2017 Application, Attachment D Title search 18/07/2017 Application, Attachment E Plans of Uriarra Village - Application, Attachment F Crown lease for Uriarra Village 20/10/2006 Application, Attachment G Lease conveyancing enquiry and report 19/07/2017 Application, Attachment H Letter from respondent to applicant 2/10/ 2017 Application, Attachment I QBE Pest Controller liability certificate of currency 24/03/2017 Application, Attachment J Fact sheet - Common locations of asbestos - Application, Attachment K ACT Revenue Office Conveyance Duty Reassessment Notice 20/09/2017 Application, Attachment L ACT Property Inspections tax invoice 10/01/2018 Application, Attachment M Building report 19/07/2017 Application, Attachment N Drainage plan for property 2008 Application, Attachment O Access Canberra report, including “Conveyancing Part 2” 19/07/2017 Application, Attachment P Settlement Statement 27/09/2017 Application, Attachment Q Emails and correspondence between applicant and respondent Early 2018 Application, Attachment R ASIC Company Extract for NatLaw 5/07/2022 Application, Attachment S Response by ACT Property Inspections 5/09/2022 - Building Report, Pest Report, Energy Efficiency Report, including asbestos fact sheets 19/07/2017 Exhibit R1 Response by ACT Government 6/09/2017 - Response by NatLaw 20/09/2017 - Amended application Dated 20/06/2022; filed 4/11/2022 - Asbestos Report by L&D Consulting 10/10/2020 Amended application, Attachment A Respondent’s submissions Filed 9/01/23 - Ms Sandhu’s witness statement 17/10/2022 Exhibit R2 Updated estimates of property’s value - Respondent’s submissions, Attachment A Social media extracts relating to applicant - Respondent’s submissions, Attachment B Application for Interim Orders 13/11/2022 AIO Applicant’s witness statement 13/11/2022 Exhibit A1 Second respondent’s witness statement 13/11/2022 Exhibit A2 Enquiry to strata management for Uriarra Village 23/08/2017 AIO, Attachment A Unibank - mortgage approval 24/08/2017 AIO, Attachment B Strata management budget material and minutes of meeting held 29/11/2016 - AIO, Attachment C Glade Group quotes for asbestos removal 9/01/2018 AIO, Attachment D Glade Group updated quote 12/07/2021 AIO, Attachment E Material provided when seeking quotes for replacement of cladding 3/11/2022 AIO, Attachment F Respondent’s further submissions 27/03/2023 - Information on Uriarra Village house sale prices - Respondent’s further submissions, Attachment A Applicant’s further submissions Filed 27/03/2023
The motion to dismiss
9.At the start of the hearing, Ms Graham moved to have the application dismissed, on the basis that it was without substance. An important part of her argument was the NSW Court of Appeal case raised at the previous hearing, PPK Willoughby v Baird (PPK Willoughby).[5] In that case, the court[6] considered a negligence action by a developer (PPK Willoughby) which had proceeded with a project but had later discovered that their solicitors – the defendants – had not made them aware of some relevant information, which put them to additional work and expense in the course of the project. PPK Willoughby brought action in the NSW Supreme Court against their solicitors. They said that they would not have proceeded with the project had they been aware of the information that later came to hand. The action was unsuccessful because PPK Willoughby had sold the developed site complex at a profit and had therefore not made a loss. If there is no loss, an action in negligence cannot succeed; the remedy for negligence is damages to restore the injured party, so far as possible, to the position it would have been in if the negligence had not occurred.
[5] [2021] NSWCA 312
[6] Leeming JA, with whom Basten JA and Simpson AJA agreed
10.In the present matter, Ms Shields and Mr Clifford bought the property for $520,000 and sold it for $670,000; $150,000 more than they had paid for it. They had therefore made a profit rather than a loss on the purchase and subsequent sale of the property. If I were to follow PPK Willoughby, the application might therefore be dismissed. But PPK Willoughby had the result it did in part because of the way in which the plaintiffs presented their case: it was a “no transaction” case in which the plaintiffs said that if they had been aware of the information that they received from the defendant later, they would not have undertaken the transaction in the first place. The loss or potential loss was thus assessed by comparing the transaction that occurred – the purchase, development and sale – with the alternative of not having entered into the transaction at all. But in the present matter, Ms Shields did not present the case only in that way. Although her case did include the assertion that if she had known about the asbestos, she and Mr Clifford would not have bought the property, there were other lines of argument as well. There was an argument that they were inhibited in undertaking renovations by the presence of asbestos in the cladding, as the advice of prospective tradespeople was that the cladding would have to be replaced before anyone would be willing to undertake renovations; Ms Shields contended that the prospective cost of removing the cladding was a substantial loss for her. A further argument put forward was that either they had bought the property at too high a price (because the presence of asbestos, if known, would have led to a discount), or sold it at too low a price (because the presence of asbestos, of which the purchaser must have been aware, had led to a lowering of the sale price). Ms Graham addressed these additional arguments, pointing out first of all that no renovations had been done to the property while Ms Shields and Mr Clifford were proprietors (and so no loss had been sustained), and that there was no evidence that the buying price, or the selling price, were different from the best available prices at the time.
11.The motion to dismiss the application at the outset effectively sought summary disposition of the proceedings, without my hearing the evidence or detailed submissions by the parties. Section 32 of the ACT Civil and Administrative Tribunal Act 2007 (the ACAT Act) allows the Tribunal to dismiss or otherwise deal in a summary fashion with applications that are lacking in substance. Summary disposition powers of this kind are held by all Australian courts and tribunals; they are exercised carefully, and usually only where it is clear that a party cannot succeed.
12.There is a long line of cases stating the limited circumstances under which summary judgment is appropriate. In Dey v Victorian Railways Commissioners,[7] Dixon J said that “A case must be very clear indeed to justify the summary intervention of the court to prevent a plaintiff submitting his case for determination …”. In Fancourt v Mercantile Credits Ltd,[8] the High Court stated that “the power to order summary or final judgment is one that should be exercised with great care and should never be exercised unless it is clear that that there is no real question to be tried”. The strictness of this doctrine has been relaxed to an extent, for example by a rewording of the rules of court: see the discussion in Trkulja v Google LLC.[9] Nevertheless, although the pronounced caution of earlier cases may have been softened by the more recent decisions of the courts, it is still the case that a party’s opportunity to be heard is denied only where that party has no reasonable prospects of success. In the present matter, there was a self-represented party untrained in the law; a set of incomplete and imperfectly framed arguments; and evidence that I was reluctant to regard as complete when no witnesses had yet appeared, and no cross‑examination had yet taken place. For these reasons, I denied the motion to dismiss, and the hearing proceeded.
The issues
[7] [1949] HCA 1 at [13]
[8] [1983] HCA 25 at [27] (Mason, Murphy, Wilson, Deane and Dawson JJ)
[9] [2018] HCA 25 at [21]-[23] (Kiefel CJ, Bell, Keane, Nettle and Gordon JJ)
13.Every negligence action has at its heart similar issues to be resolved. Did the applicant suffer loss or injury? Did the respondent owe the applicant a duty of care? Was there a breach of that duty by the respondent? Did that breach cause the loss or injury? Did the applicant herself contribute to the loss or injury? If there was loss or injury to the applicant as a result of the respondent’s negligence, what damages should be awarded?
14.In this particular case, some of these questions are easily answered but others will need to be explored more carefully and in greater detail. I would see the essential issues to be resolved in this matter as:
(a)whether NatLaw owed a duty of care to Ms Shields with regard to the potential presence of asbestos in the property;
(b)whether NatLaw breached that duty;
(c)if so, whether Ms Shields suffered a loss;
(d)whether any loss was caused by, and sufficiently connected to, the breach;
(e)whether NatLaw’s scope of liability extended to direct advice to test for asbestos;
(f)whether Ms Shields contributed to any loss by her own behaviour; and
(g)if NatLaw has been professionally negligent in its dealings with Ms Shields, what damages should be ordered.
The applicable law
15.The law of negligence has in the past been the province of the common law, but reforms in the past 20 or more years have led to statute law playing a larger role. The statutory developments have in some cases codified, and in others limited or abolished aspects of the common law relating to negligence, and other aspects continue as common law. In the ACT the statutory reforms of the law of negligence have been given effect through the Civil Law (Wrongs) Act 2002 (the CLWA).
16.The law of negligence applies where carelessness by one person causes harm to another. The person causing the harm must owe a duty of care to the other person, and the harm that has occurred must be reasonably foreseeable. Chapter 4 of the CLWA deals with negligence. It defines “harm” to include economic loss[10] and “negligence“ to mean “a failure to exercise reasonable care and skill”.[11] The standard of care is that of a reasonable person in the position of the person against whom the negligence claim is brought, with all the information that that person had, or ought reasonably to have had, at the time.[12]
[10] Civil Law (Wrongs) Act 2002, section 40
[11] Civil Law (Wrongs) Act 2002, section 40
[12] Civil Law (Wrongs) Act 2002, section 42
17.The CLWA also sets out what is expected in precautions against risk: a person is not negligent in failing to take particular precautions unless the risk was foreseeable and not insignificant, and a reasonable person in that position would have taken the precautions.[13] There is a non-exhaustive list of matters that must be taken into account in arriving at a conclusion on whether a reasonable person would have taken the precautions, comprising the probability that the harm would happen without the precautions, the likely seriousness of the harm, the burden of taking the precautions, and the social utility of the activity leading to the harm.[14]
[13] Civil Law (Wrongs) Act 2002, section 43(1)
[14] Civil Law (Wrongs) Act 2002, section 43(2)
18.There are two components to a finding that negligence caused particular harm: that the negligence was a “necessary condition” of the happening of the harm; and that it is appropriate for the scope of liability of the respondent to extend to the harm so caused.[15] Among the things that must be considered in determining the scope of liability is whether or not, and why, responsibility for the harm should be imposed on the respondent.[16] The onus of establishing facts relating to causation lies on the applicant.[17]
The facts of the matter
[15] Civil Law (Wrongs) Act 2002, section 45(1)
[16] Civil Law (Wrongs) Act 2002, section 45(3)
[17] Civil Law (Wrongs) Act 2002, section 46
19.Most of the facts of the matter are not in dispute. In 2017, Ms Shields and Mr Clifford, who were domestic partners at the time, decided to enter the property market for the first time. They found a property that they liked, in Uriarra Village, made an offer on it on 5 August 2017,[18] and hired NatLaw to do the conveyancing for them. They met with NatLaw on 19 August 2017, having a session with Ms Sandhu.[19] Settlement occurred on 26 September 2017.[20] The price paid was $520,000.[21] Following settlement, Ms Shields and Mr Clifford discovered that the cladding on the property was likely to include asbestos, when in January 2018 a tree fell on a neighbouring property similar to theirs, revealing asbestos in the cladding.[22] The presence of asbestos was later confirmed by an expert report, which identified chrysotile and amosite – two forms of asbestos – in the cladding.[23]
[18] Exhibit A1 at [2]; Exhibit A2 at [2]
[19] Exhibit A1 at [3]; Exhibit A2 at [3], Exhibit R2 at [3]
[20] Exhibit A1 at [5]; Exhibit A2 at [5], Application, Attachment A
[21] Application, Attachment C
[22] Exhibit A1 at [8]; Exhibit A2 at [7]
[23] Amended application, Attachment A
20.About five years later, Ms Shields and Mr Clifford put the house on the market. It sold for $670,000 and settlement took place on 28 March 2023. In oral evidence, Ms Shields explained that at the time of purchase she and Mr Clifford had intended that the house would be their home.[24] They had intended to renovate the property, at least by addition of a deck, but the advice of tradespeople had been that if they were to do so they should remove the asbestos cladding beforehand; in the event, they had not undertaken any renovations at the property.[25] Their relationship had come to an end, and that is what had prompted the sale of the property.[26]
[24] Transcript of Proceedings, 28 March 2023, page 18
[25] Transcript of Proceedings, 28 March 2023, page 18
[26] Transcript of Proceedings, 28 March 2023, page 37
21.In the course of preparing to buy the property, Ms Shields and Mr Clifford took account of various documents, some of which alerted them to risks involved in property purchase. Critical among those papers, in the present context, was the building report and its annexures,[27] prepared by ACT Property Inspections, which contained a disclaimer with respect to asbestos (that is, it said, in bold type within quotation marks, that no assessment for the presence of asbestos had been carried out and no report was provided on whether or not asbestos might be present). It listed a further 18 reports with a recommendation that a prospective purchaser mighty wish to consider obtaining these reports to inform themselves about a variety of risks, including the presence of asbestos. The report also included ACT Government fact sheets providing advice about asbestos to those purchasing or owning property, suggesting that a first step was to identify where asbestos might be found on a property, that once asbestos was identified risk should be assessed, and where appropriate activities undertaken to manage the identified risks. The fact sheet warned that houses built prior to 1985 were likely to contain asbestos, and identified a number of components of a house where asbestos might be found, including eaves and wet areas such as laundries, but not listing cladding.
[27] Exhibit R1, Application, Attachment M
22.The conveyancing meeting on 19 August 2017 between Ms Sandhu for NatLaw and Ms Shields and Mr Clifford lasted perhaps 45 minutes to an hour. During that time, Ms Sandhu took Ms Shields and Mr Clifford through the documents. Ms Sandhu said that she brought the risks of asbestos being present in the property to the attention of Ms Shields and Mr Clifford, and that she explained to them that she was not a structural engineer and was unable to give them advice about the house in terms of its structural aspects and suitability.[28] Any additional inspections or reports were their responsibility.[29] She also told them that she had not seen the property.[30]
[28] Exhibit R2 at [7]-[8], Transcript of Proceedings, 28 March 2023, page 47
[29] Transcript of Proceedings, 28 March 2023, pages 48, 50, 51
[30] Transcript of Proceedings, 28 March 2023, page 52
23.That meeting was the main opportunity for close engagement between Ms Sandhu and Ms Shields and Mr Clifford. The parties saw the meeting in different ways, although they agreed that it lasted for 45 minutes to an hour. Ms Shields saw the meeting as “rushed”,[31] and Ms Sandhu as “distracted”;[32] Ms Sandhu presented herself as doing a professional job as a lawyer, following a largely standard procedure, and denied that she had been rushed or distracted.[33] Ms Shields and Mr Clifford were sure that they had alerted Ms Sandhu to their wish to renovate (which would have brought into question whether there were things about the property that might constrain the renovation options available), but Ms Sandhu did not recall that. Neither Ms Shields nor Mr Clifford recalled Ms Sandhu saying that she was not a structural engineer and could not advise on the physical aspects of the house.[34] And there was some uncertainty about when Ms Sandhu became aware that the property dated from the 1950s, and how thoroughly she absorbed that timing, although Ms Sandhu herself said that she was aware of the age.[35] Mr Clifford suggested that despite the true age being drawn to her attention, Ms Sandhu seemed to continue regarding the house as dating from 2008.[36]
The arguments of the parties
[31] Transcript of Proceedings, 28 March 2023, pages 32, 33
[32] Exhibit A1 at [17], Exhibit R2 at [3], Transcript of Proceedings, 28 March 2023, pages 47-52
[33] Transcript of Proceedings, 28 March 2023, pages 48, 51, 52
[34] Transcript of Proceedings, 28 March 2023, pages 33, 41-2
[35] Exhibit R2 at [6], Transcript of Proceedings, 28 March 2023, page 49
[36] Transcript of Proceedings, 28 March 2023, page 42
24.Ms Shields’s position was that she and Mr Clifford were first home buyers and were unfamiliar with some of the risks associated with the process. Accordingly, they relied on the professionals assisting them to alert them to the risks. For a property that dated from the 1950s, the conveyancing process should have included specific advice to obtain an asbestos report, and NatLaw breached their duty of care in not providing clear and direct advice to that effect. General alerts, to asbestos among a host of other risks, were not sufficient.
25.The loss sustained could be characterised in more than one way: she and Mr Clifford might have chosen not to proceed with the purchase at all; the renovations they were planning would have required removal of the cladding before proceeding, at considerable cost; they had paid an unwarranted premium for the house in 2017; they had received a discounted price when selling it in 2023.
26.NatLaw argued that first, there was no breach of the duty of care, because the attention of Ms Shields and Mr Clifford was drawn to the asbestos risk; and second, that no persuasive evidence of loss has come forward. If the purchase would not have happened if Ms Shields and Mr Clifford had known of the asbestos, then PPK Willoughby is authority for dismissing the application; with regard to renovation, none was done, and the evidence that the asbestos, sealed as it was, would need to be removed before renovation could proceed, is weak; and there is no evidence that a loss was sustained either in the purchase process in 2017, when the sale took place in contested circumstances, or in the sale process in 2023.
Consideration
27.An issue that is perhaps best addressed at this point is the participation and role of Mr Clifford. It appears that he was an unwilling participant at every stage. Ms Shields brought the application alone; NatLaw pointed out that she was not the only person involved in the critical transaction and insisted that Mr Clifford must be brought into any proceedings, and they would achieve that by subpoena if necessary. In her amended application, dated 20 July 2022 but evidently filed in early November of that year, Ms Shields sought to have Mr Clifford joined as a second applicant. He was evidently unwilling to appear in that role, and at the hearing on 10 February 2023, Ms Shields said that there were capacity limitations on his participation. The respondent was adamant that he should appear and the orders I made at the time joined him as a respondent. In the hearing of 28 March 2023, Mr Clifford was present throughout, appeared as a witness for Ms Shields, and gave every indication that his interests aligned with hers. As he is not an applicant, however, if I were to make any orders in Ms Shields’ favour, the benefits would not flow to Mr Clifford.
28.There are three matters at the heart of this case. The first is whether the duty of care owed by Ms Sandhu to Ms Shields and Mr Clifford extended to the kind of direct, perhaps even insistent, advice that they should have obtained an asbestos report on the property, and if so, whether that duty was breached (the duty of care issue). The second is whether the purchasers sustained a loss because of the presence of asbestos, and if so, whether it can be quantified satisfactorily (the loss issue). The third is whether, if the duty of care was breached, and a loss ensued, the breach caused the loss (the causation issue).
29.At one point in the hearing, Ms Shields said that she was only interested in the first question – whether her legal adviser should have pressed her to seek an asbestos report. But it is at the heart of every negligence action that there must be some form of loss, damage, or injury if the action is to succeed – the remedy for negligence always lies in the award of damages to put the applicant in the position she would have been in if she had not sustained the harm or loss. The justice system, including tribunals as well as courts, is not there to answer questions of principle, but to resolve disputes between parties. This was explained to Ms Shields at the hearing. As will become clear, in practice there are challenges to Ms Shields’ case on the duty of care issue, on the loss issue, and on the causation issue.
Did NatLaw breach the duty of care owed to the purchasers?
30.It is common ground that NatLaw owed a duty of care to the purchasers. The duty of care that a solicitor owes to a client is well established; that duty has been characterised in the common law context as “reasonable care”, exercising “due care, skill and diligence” at the level that is practised by the profession.[37] That is broadly similar to the guarantee under section 60 of the Australian Consumer Law (ACT) that a person supplying services to a consumer in a commercial context will do so with “due care and skill”.
[37] Donnellan v Woodland [2012] NSWCA 433 at [88]
31.It is also common ground that Ms Sandhu took the purchasers through the contract documentation, and that the documentation included the building report, containing the asbestos disclaimer and identifying possible additional reports that could or should be obtained, and the ACT Government fact sheets advising of the likelihood of asbestos being found in houses built before 1985. Those papers also included the ACT Government Conveyancing Part 2 notice, which included the information that there was no record of loose-fill asbestos at the property and no certificate had been lodged attesting that loose-fill asbestos had been removed from the property.[38] It is the respondent’s contention that by putting this material before the purchasers, Ms Sandhu met her duty of care to them. In the applicant’s view, Ms Sandhu’s duty to them as first home buyers buying a house from the 1950s, should have included direct and emphatic advice to obtain an asbestos report before purchasing.
[38] Application, Attachment P
32.Part of Ms Shields’s argument is that NatLaw should have recognised her and Mr Clifford’s status as first home buyers, putting extra care into ensuring that any likely traps that lay ahead were drawn to their attention. It is accepted that the extent of the duty of care of solicitor to client in any given instance depends on the circumstances, including the relevant fact matrix and the sophistication and understanding of the client. Despite Ms Shields’s emphasis on her position (and that of Mr Clifford) as a first home buyer, from the evidence I do not think she could be described as naïve or generally unaware that the transaction she was about to enter into carried some risk. Ms Shields worked in property management for a Commonwealth agency; and she approached the strata title managers of Uriarra Village to find out whether the strata title rules would limit choices that she and Mr Clifford might subsequently wish to make when renovating the property. These facts tell against her lack of awareness of risk, at least in a general sense.
33.More problematic was the question of how clear it was that the property dated from the 1950s. Uriarra Village was originally a forestry settlement, where those working in the extensive forestry plantations in the ACT could live or at least stay, so as to be close to where they worked. The fires in 2003 destroyed most of the settlement as it was, but a small number of cottages survived. The property in the present matter is one of them. The Village was redeveloped from 2008 as a residential precinct, suitable for people who wished for a more rural lifestyle than one might find elsewhere in Canberra. Most of the houses at Uriarra Village, therefore, date from the period 2008-2010; the property the purchasers bought is an outlier among those at the Village.[39]
[39] Transcript of Proceedings, 28 March 2023, pages 38-9
34.The evidence is unclear on how aware Ms Sandhu was of the age of the property at the time of the meeting in August 2017. Ms Shields said in evidence that the only plans she had been able to find lodged with the ACT Government were drainage plans for the block of land, dating from 2008.[40] The witness statements of Ms Shields and Mr Clifford both say that Ms Sandhu referred to the cottage as dating from 2008 but that they corrected her to make it clear that it was an old ranger’s cottage.[41] Mr Clifford said that even after he had corrected her, Ms Sandhu continued to refer to the cottage as dating from 2008.[42] They asked about the possibility of heritage listing being a constraint on future renovation (and that in itself should have triggered a recognition of the age of the property). Ms Sandhu in oral evidence accepted that her title search alerted her to the age of the property and that she was also advised of the age by the purchasers.[43] Yet a few months after the purchase, in January 2018, after Ms Shields had alerted her to the likely presence of asbestos on the property, Ms Sandhu sent an email expressing confusion over how there could be asbestos in a house built after 1985.[44] This might suggest that the age was not firmly fixed in her mind, or perhaps that she had not annotated the file appropriately.
[40] Application, Attachment N
[41] Exhibit A1 at [3]; Exhibit A2 at [3]
[42] Transcript of Proceedings, 28 March 2023, page 42
[43] Transcript of Proceedings, 28 March 2023, page 48
[44] Application, Attachment S
35.Ms Sandhu said that her duty to her client stopped at bringing the asbestos risk to her client’s attention. Beyond that, it was a matter for the client, as she herself lacked the training in structural engineering to give expert advice and would not usually have seen the property. It does seem that a conveyancing lawyer’s focus is likely to be on the legal aspects of a property transaction. The lawyer has a particular responsibility for the title search and to scrutinise the draft contract for irregularities, errors, omissions and the like. It would also be normal, I think, for the lawyer to examine the property report looking for findings that might impact the suitability of the property for the client. During the hearing, Ms Shields referred on several occasions to “red flags” – things that, in her view, should have been drawn to her attention and perhaps have prompted additional action. The red flags she identified were the age of the property and considerations related to renovation, because she and Mr Clifford intended to undertake renovations at some future time.
36.There was some difference between the parties regarding how much attention was paid to the renovation issue, with Ms Shields and Mr Clifford both insistent they had raised it, and Ms Sandhu reluctant to concede it had been raised or given any emphasis, if raised at all. But I am not sure that any change to NatLaw’s duty of care flows from the renovation issue. What alteration to risk there might be from planned renovations is something that the purchasers were best positioned to answer themselves. How the risk might change would depend on matters such as the nature of the renovations, the materials to be used, whether planned renovations might be so extensive as to require planning approval, and so on. These matters would be far easier for the purchasers to take on, given that they are familiar with the property in a physical sense; and it is they who are making the plans to renovate. Nor do these renovation risks primarily attach themselves to the purchase of a property; logically, they follow and are separate from the purchase. I think a conveyancing lawyer’s responsibility would end with advising if the title search or contract threw up a legal obstacle to future renovations (such as, for example, the existence of an easement on the block). Otherwise, the matter would be for the purchasers, with the assistance of a builder if necessary. I cannot see that planned renovations in the present matter could have been expected to prompt a conveyancing lawyer to urge that an asbestos report be obtained; the logical connection is too remote.
37.Section 43 of the CLWA sets out the tests for duty of care in the following terms:
(1) A person is not negligent in failing to take precautions against a risk of harm unless—
(a)the risk was foreseeable (that is, it is a risk of which the person knew or ought to have known); and
(b)the risk was not insignificant; and
(c)in the circumstances, a reasonable person in the person’s position would have taken those precautions.
(2) In deciding whether a reasonable person would have taken precautions against a risk of harm, the court must consider the following (among other relevant things):
(a)the probability that the harm would happen if precautions were not taken;
(b)the likely seriousness of the harm;
(c)the burden of taking precautions to avoid the risk of harm;
(d)the social utility of the activity creating the risk of harm.
38.Applying these tests, I think it unlikely that it was reasonably foreseeable to Ms Sandhu that a failure to insist on an asbestos report would lead to harm at some time in the future when renovations were planned or undertaken. The evidence does not persuade me that there was sufficient specificity about the nature, extent and timing of the renovations to have prompted Ms Sandhu to contemplate the asbestos-related risk that might have eventuated. Nor would Ms Sandhu have been in a position to form any view on the seriousness of any harm that the purchasers might sustain. The burden of providing strongly worded advice to obtain an asbestos report would have been minimal, and the social utility of people buying and renovating a house – their first – is surely not at issue. But that does not change my conclusion. I do not believe that a reasonable person, with the knowledge that Ms Sandhu had, or ought to have had, would advise that an asbestos report should be obtained, with the force and directness for which Ms Shields is contending, because of the possibility of some future renovations.[45] In not taking that precaution, Ms Sandhu did not breach her duty of care to Ms Shields, with respect to the possibility of renovation.
[45] Civil Law (Wrongs) Act 2002, section 43(1)(c)
39.Ms Shields put some emphasis on the absence in the fact sheets referred to earlier of the possibility of asbestos being found in cladding. I cannot see that this leads to any change in the conclusion on liability (although as it might affect the cost of removing or otherwise dealing with the asbestos it could have an effect on the quantum of damages, if Ms Shields were to succeed on the liability issue). When the meeting with Ms Sandhu took place in September 2017, no-one knew about the presence of asbestos, and certainly no-one knew where in the house it might be found. If the fact sheet had included a reference to cladding, it might have prompted Ms Shields to obtain a report; but that does not affect NatLaw’s liability. Nor does it seem to me that it was incumbent on Ms Sandhu to know about the risk of finding asbestos in cladding and draw that to Ms Shields’s attention; that was surely not the responsibility of a conveyancing lawyer.
40.The central issue of liability relates to the harm that might be expected from the discovery of asbestos in a house – and here I am intending to refer to economic harm, not to the health risks from asbestos, as all the evidence suggests that the asbestos was still bonded and sealed. Economic loss from the discovery of asbestos is an eminently foreseeable risk, as evidenced by the materials that the ACT government makes available to alert ACT homebuyers to the issue. Given the central place of buying a house, and perhaps especially a first house, in many people’s lives, the risk appears not insignificant. The question then is whether Ms Sandhu, with the knowledge she had, or ought to have had, should have taken the precautions Ms Shields has urged. The knowledge she had or ought to have had included the age of the house, which, from the title search, should have been perhaps more firmly fixed in her mind.
41.Again, applying the tests in section 43(2) of the CLWA, I think the probability of harm was high: it appears highly likely that a house of this age would contain asbestos materials. The seriousness of the consequence for first home buyers is also potentially high, given the financial strain usually imposed by purchase of a first home. The burden and social utility issues are unchanged from the renovations case. I do not see that there are other factors that might bear on this point. The tests set by the statute, however, do not assist in deciding whether the advice that Ms Sandhu gave – general advice in which the specific risk of asbestos might not have received a great deal of emphasis – was sufficient, as opposed to the highly focused and pointed advice that Ms Shields thinks ought to have been provided. This is a question of degree rather than of kind and goes not to the existence of a duty of care, but to the content of that duty. It presents clear challenges in determining how much emphasis and directness would be needed to meet the duty. For reasons that will become clear, that question comes to be ultimately decided in the context of causation.
Did Ms Shields sustain a loss?
42.There is no persuasive evidence of a loss. On Ms Shields’ first argument, that if she had known of the asbestos, she would not have proceeded with purchasing the property, PPK Willoughby is in my view a complete answer. Ms Shields sold the property at a substantial profit; and if the profit might have been greater in the absence of asbestos, that is of itself of no relevance: there was no loss, on the scenario presented.
43.To the argument that the cost of renovation would have been greatly increased by the presence of asbestos cladding, it is a compelling answer that no renovations in fact took place, and so no loss was incurred. I also find the evidence that no renovation could be done without removing the asbestos cladding to be completely unsatisfactory; Ms Shields says that advice was given to her by a builder; but the builder has not been called as a witness and has provided no evidence in writing. The evidence is hearsay, and I can place no reliance on it.
44.If the argument is that the purchasers paid more than they needed to or would have been obliged to pay if the presence of asbestos had been known in 2017, the evidence is that the purchase was a contested process which suggests that the purchasers acquired the property at the best market price at the time. Ms Shields said that she and Mr Clifford initially bid $485,000, and that this was accepted; the vendor then claimed to have a cash purchaser who was offering more, and Ms Shields and Mr Clifford increased their offer to $520,000 to secure the property. Ms Shields said that this was $35,000 more than they wished to pay; but that is merely a reflection of a seller’s market for real property; it cannot be presented as a loss, let alone a loss caused by the absence of an asbestos report. Ms Shields seemed to think that if she had known about the asbestos, she might have been able to negotiate the price down, but that is nothing but speculation; the weight of the evidence is that if Ms Shields wished to secure the property, she and Mr Clifford would have been obliged to pay about the amount they paid. The evidence does not allow me to conclude that any loss was sustained.
45.That leaves the possibility that the purchasers made a loss when selling the property, that is, that the selling price was discounted because of the presence of asbestos. Ms Shields has not advanced any evidence in support of this thesis, beyond noting that the purchaser had a builder inspect the property and so can be assumed to have been aware of the asbestos. The logic appears to be that asbestos is so well-known a problem material that if it is present in a house, it must bring the sale price down. But the world is not quite so straightforward. As the ACT Government material referred to above makes clear, most of the time asbestos materials are managed; they do not carry with them an imperative for immediate removal. And if properly managed, the risks from contained and sealed asbestos materials are reduced very substantially; the health concerns about asbestos in domestic properties in the ACT are, in my understanding, focused especially on loose-fill insulation material. There would perhaps be many properties with bonded asbestos material present that does not need to be removed. The effect on the selling price of the property in the present matter depends both on the state of the materials – in cladding, eaves and the laundry – and on the plans and attitudes of potential purchasers. On the first, the evidence is that the material was sealed and in good condition; on the second, no evidence has come forward, beyond the fact that a prospective purchaser is assumed to know about the asbestos. Did that factor into the price? I do not think I can draw a conclusion in either direction.
46.Ms Shields offered no other evidence on the sale of the property beyond its price. It is not clear whether the sale was by auction or private treaty, the level of interest in the market (e.g., how many inspections, how many copies of the contract and property report), or the amount of competition in the sale process itself. In all the circumstances I cannot be satisfied that Ms Shields sustained a loss when the property was sold. And the above analysis leaves to one side the anomaly that any loss on sale was sustained well after the present application to the tribunal was made.
Supposing a loss to have been sustained, did any failure to provide advice on asbestos cause the loss?
47.Section 45 of the CLWA sets out tests for causation as follows:
(1) A decision that negligence caused particular harm comprises the following elements:
(a)that the negligence was a necessary condition of the happening of the harm (‘factual causation’);
(b)that it is appropriate for the scope of the negligent person’s liability to extend to the harm so caused (the scope of liability).
…
(2) In deciding the scope of liability, the court must consider (among other relevant things) whether or not, and why, responsibility for the harm should be imposed on the negligent party.
48.For the reasons explained above, the only potential loss to Ms Shields, in my opinion, is in the 2023 sale of the property. Applying the test in Section 45(1)(a) of the CLWA, a positive finding of factual causation would require me to be convinced that the failure to urge Ms Shields to obtain an asbestos report was a necessary condition of that loss occurring. It seems to me that problems of remoteness, of other unknown contributing factors and of a total lack of evidence that might tie the supposed loss to the asbestos advice make that an impossible conclusion to draw. And in any case, as mentioned earlier, I do not think Ms Shields can claim for a loss that occurred after she applied to this tribunal.
49.Further, I do not think Ms Shields’s case meets the test set out in section 45(1)(b) of the CLWA. The scope of liability in any negligence claim turns on the balance between the expectation that people are protected against risk and the reasonable ambit of action by those who are in a position to address risk. In the present context, there is a range of risks associated with buying a house, and there is plainly a limit to the extent to which a conveyancing lawyer can be expected to alert a purchaser to those risks. These issues, in a slightly different context, are teased out at length in Vairy v Wyong Shire Council.[46]
[46] [2005] HCA 62
50.My opinion is that NatLaw’s duty of care did not extend beyond the general alert to asbestos, that is, the advice that Ms Shields was expecting lay outside the scope of NatLaw’s liability. Applying particularly section 45(3) of the CLWA, it was the purchasers who were best placed to know the age and condition of their house; they had before them the very plain and direct warning from the ACT Government about the risk of asbestos being present in older houses, and a property report that alerted them to the possibility of undertaking an asbestos inspection. They were far better placed than Ms Sandhu to arrive at a conclusion about the balance of risk, cost and likely reward. There was a foreseeable risk of loss to the purchasers if asbestos was present on the property, but NatLaw’s scope of liability did not extend to providing more pointed or pressing advice that an asbestos report should be obtained.
51.It is also clear that Ms Sandhu had a standard method in dealing with her clients. She laid a good deal of emphasis on her disclaimer, in which she referred to not being a structural engineer, and therefore her inability to advise on the physical aspects of the property. Both Ms Shields and Mr Clifford denied that she had said this; but I think it likely that even if she did not use those words, Ms Sandhu made it plain that the risks associated with the physical property were for the purchasers to manage. That is effective in limiting the scope of Ms Sandhu’s liability even taking account of the purchasers’ status as first home buyers; provided it is explained to the client, a standard method of this kind has the advantage of making it clear with whom different responsibilities lie (see for example G & M v Armellin).[47]
[47] [2008] ACTSC 68
52.Perhaps another lawyer, in the same circumstances and with the same information, might have decided to tell the purchasers, with greater force, that they should get an asbestos report; such a lawyer might be regarded as providing a better service to their clients. But the duty of care does not demand or expect perfection. Lawyers, like everyone else, are imperfect and will make errors or fail to take steps that would provide a better level of service. But that does not necessarily imply that they have been negligent.
Conclusion
53.In the absence of a loss, Ms Shields’s application cannot succeed. In any case, I do not think NatLaw’s scope of liability extended to the kind of direct and pressing advice she contended should have been given. When she met with the purchasers, Ms Sandhu gave them some general warnings of potential risks about the property, and assurances about the legal risks associated with title and the contract. They had before them the materials to alert them to risks of the presence of asbestos in their particular house. It was then their responsibility, not NatLaw’s, to address those risks.
54.Accordingly, Ms Shields’s application is dismissed.
………………………………..
Senior Member M Hyman
Date(s) of hearing: 10 February 2023 & 28 March 2023 Applicant: In person Counsel for the First Respondent: Mr T McHutchison & Ms K Graham Second Respondent In person
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