Spaulding v Adams
[2013] TASFC 8
•1 August 2013
[2013] TASFC 8
COURT: SUPREME COURT OF TASMANIA (FULL COURT)
CITATION: Spaulding v Adams [2013] TASFC 8
PARTIES: SPAULDING, Michael John
v
ADAMS, Colin BertramFILE NO/S: FCA 917/2012
JUDGMENTAPPEALED FROM: Spaulding v Adams [2012] TASSC 61
DELIVERED ON: 1 August 2013
DELIVERED AT: Hobart
HEARING DATE: 13 June 2013
JUDGMENT OF: Wood, Estcourt and Pearce JJCATCHWORDS:
Equity – Equitable remedies – Equitable compensation – Breach of fiduciary obligations – Solicitor and client – Conflict of interest and breach of duty – Lack of evidence of loss as a result of breach.
Aust Dig Equity [1276]
Limitation of Actions – General matters – Statutes of limitation generally – Operations of State statutes in particular actions – Applications for equitable relief – Equitable compensation – Laches – Application of statutory limitation period by analogy.
Limitation Act 1974 (Tas), ss4, 9.
Aust Dig Limitation of Actions [1006]
Professions and Trades – Lawyers – Duties and liabilities - Solicitor and client – Fiduciary duty.
Aust Dig Professions and Trades [1154]
REPRESENTATION:
Counsel:
Appellant: In person
Respondent: P Jackson
Solicitors:
Appellant: In person
Respondent: Jackson Tremayne & FayJudgment Number: [2013] TASFC 8
Number of paragraphs: 51Serial No 8/2013
File No 917/2012
MICHAEL JOHN SPAULDING v COLIN BERTRAM ADAMS
REASONS FOR JUDGMENT FULL COURT
WOOD J
ESTCOURT J
PEARCE J
1 August 2013Orders of the Court
1 Application for special leave to admit further evidence refused.
2 Appeal dismissed.
Serial No 8/2013
File No 917/2012
MICHAEL JOHN SPAULDING v COLIN BERTRAM ADAMS
REASONS FOR JUDGMENT FULL COURT
WOOD J
1 August 20131 I agree that, for the reasons given by Estcourt J, the appeal should be dismissed.
2 During the hearing of the appeal the appellant sought special leave from the Court to adduce evidence that was not before the learned trial judge. The evidence may be admitted only by special leave of the Full Court, and the Court shall only grant leave in cases in which (a) the evidence was not in the possession of the party seeking to have it admitted, and could not by proper diligence have been obtained by the party before the termination of the hearing at first instance; or (b) there is some other special circumstance which, in the opinion of the Court, justifies the admission of it: Supreme Court Civil Procedure Act 1932, s48(3). Most of the evidence was available to the appellant at the time of the trial. Two of the documents were not in his possession at that time. He did not establish that, by proper diligence, those documents could not have been obtained before the trial concluded. It is understood that the appellant's position with regard to all the evidence he seeks to have adduced, is that there are special circumstances, pursuant to s48(3)(b), which justify its admission.
3 There is a category of documents involving evidence that was ruled inadmissible by the learned trial judge: correspondence to Mr D F Egan of Murdoch Clarke Cosgrove & Drake who acted for Mrs Knight in relation to lot 7, which noted that "from an inspection of the original approval granted by the Commissioner for Town & Country Planning in relation to the subdivision, each lot was to be not less than 20 ha in area"; letter from Mrs Knight to the Commissioner of Police, dated 7 October 1997; and, valuation reports by Saunders & Pitt concerning the quarry property dated 31 July 2012, and the appellant's investment property and home at Nubeena, both dated 3 August 2012. At trial, the appellant did not pursue other avenues of admitting the evidence. The rulings are not the subject of appeal and it is not contended by the appellant that the documents were admissible on the trial.
4 There were documents that were available to the appellant at trial but not sought to be admitted: letter from Mrs Knight to the Law Society of Tasmania; caveat lodged by The Hobart Savings Bank claiming an interest as mortgagee by virtue of equitable mortgage with respect to land transferred by the appellant; a letter co-signed by the respondent to the appellant and Mr P Neilson dated 26 November 1991 advising them to seek independent legal advice; correspondence from Mr J B Gray to the Executive Director of the Law Society of Tasmania dated 3 November 1992 regarding an allegation made by the appellant; an affidavit sworn by the appellant on 9 March 2012 regarding a conversation with counsel for the respondent with respect to the writ; and a deed of settlement regarding the Spaulding Family Trust No 2 dated 24 April 1989.
5 As for the two documents that were not in the appellant's possession at the time of the trial, they were first, extracts from the Brighton Planning Scheme 1977, including a copy taken from Sch1, providing subdivision standards applying to Rural Zone including "Minimum Density Ratio of 1 lot per 20 ha" and a map revealing the area in question was zoned Rural; and second, an affidavit of Graeme Pullen sworn on 26 October 2012 (except par8 and annexure "B") which refers to him having made enquiries through the Freedom of Information Act 1991 during 1999 and having received a "proposed plan of the Gunner's Quoin subdivision CT 2321–67 submitted by Mr Colin Adams and Others". The "proposal plan" said to be "Mr Adams staged rural stratum title subdivision" was annexed to the affidavit and a notation on the plan stated "all lots are to exceed 20 ha in area". These two "new" documents are relied on to show that the land in question is zoned Rural and lots had to be 20 hectares.
6 In arguing for the evidence to be received, the appellant relied on his submissions regarding the appeal and submitted the evidence was relevant to those grounds of appeal. He submitted that the "new" documents were proof that the respondent and Mr Knight had deliberately misled the learned trial judge into believing that all the lots in the respondent's staged rural stratum title subdivision did not have to be 20 hectares or more but were only required to average 20 hectares.
7 The Court's ruling with respect to the evidence was reserved on the basis that the appellant be permitted to develop his submissions in full and the ruling would be delivered having regard to those submissions.
8 Having considered the evidence and the submissions, I have reached the conclusion that the application should be refused. There is nothing in the arguments advanced by the appellant which would justify the granting of special leave to admit any of the documents. It is unnecessary to address what is, no doubt, a fundamental concern with respect to receiving evidence on appeal ruled inadmissible at trial and when, unassailed, those rulings stand as correct. The evidence in its entirety is of limited, if any, significance and does not advance the Court's consideration of the issues raised on appeal. With respect to the "new" evidence relied on to show that at the material time each of the lots in the subdivision had to be 20 hectares or more, it does not tend to establish that the respondent, or anyone else, deliberately misled the trial judge. As noted by Estcourt J, the evidence of the respondent and Mr Knight, said to be false and misleading, did not influence the trial judge's reasoning. Further, for the reasons given by Estcourt J, even if it was misleading, the outcome of the trial would have been unaltered, given other findings by the trial judge. I add, rather unnecessarily, that if any of the documents were to be received, the Court's conclusions with respect to this appeal would be unaffected.
File No 917/2012
MICHAEL JOHN SPAULDING v COLIN BERTRAM ADAMS
REASONS FOR JUDGMENT FULL COURT
ESTCOURT J
1 August 2013The proceedings below
9 In the proceedings before the learned trial judge, Crawford CJ, the appellant sought equitable compensation from the respondent arising out of breaches of alleged fiduciary duties.
10 The respondent was a legal practitioner employed by a Hobart firm of solicitors, Page Seager. It was the appellant's case at trial that the respondent acted for him in relation to four legal transactions. He claimed that as a result the respondent owed fiduciary duties to the appellant, and that he breached those duties on each occasion.
11 The four transactions concerned:
· the purchase by the appellant as the nominee of the respondent of land containing a quarry at Old Beach;
· the purchase by the appellant from the respondent of land described as lot 7 at Old Beach;
· the sale of the appellant's fishing vessel, the Valda S; and
· the sale by the appellant of lot 7 to Stephen and Kathryn Knight.
12 The appellant claimed that the fiduciary duties owed were duties to avoid conflicts between the respondent's duty to the appellant as his solicitor and the respondent's own interests, and/or the respondent's duty to another client.
13 The appellant claimed that the respondent breached those duties, and that the appellant suffered a loss on each occasion.
14 The learned trial judge concluded that the appellant's action in respect of each of the four claims should be dismissed.
15 The appellant was a commercial fisherman. His fishing vessel, the Valda S, was operated by him in partnership with his wife. However, by 1985 he had ceased operating the vessel personally as he had decided to leave the fishing industry due to problems with his legs. As an employee of the firm of Page Seager, the respondent had acted as the appellant's solicitor on a number of occasions in matters that ranged from the sale of property and assets, a possible development of a water-based fishing enterprise, claims for the unpaid price of goods, prosecutions for speeding, and offences under the Fisheries Act 1959. The appellant and the respondent had been on friendly terms with each other.
The central issue on the appeal
16 Central to this appeal is the appellant's contention contained in ground (a) (sic), of his notice of appeal, that the learned trial judge erred in taking into account false evidence given at trial by and on behalf of the respondent in relation to the amount of land to be contained within each lot in a staged subdivision being developed by the respondent, including lot 7, a lot purchased by the appellant from the respondent.
Discussion
17 As I understand the appellant's contention, the alleged false evidence referred to was evidence given by the respondent and a Mr Stephen Knight that lots in the subdivision only had to average 50 acres (20 hectares), when in fact it is alleged each lot in the subdivision had to be 50 acres or more.
18 The appellant states in ground (c) (sic) of the notice of appeal, "Both the defendant and Mr Knight, under cross-examination [sic] by Mr Jackson, lied under oath about the total area of land to be contained within Lot 7. Under intense questioning by Mr Jackson they maintained Lot 7 did not have to be 20 ha or more and so did Mr Jackson."
19 There was and is no evidence to support that allegation. There was some evidence before the learned trial judge that might support the proposition that such evidence was not correct as a matter of law.
20 What the learned trial judge said about the relevant evidence is set out at [61] - [68] of his Honour's reasons for judgment as follows:
"61 By par15 of the statement of claim, the plaintiff pleaded that the defendant agreed to sell part of the 500 acres 'comprising 50 acres and referred to as Lot 7'. At the trial the plaintiff maintained, and he put it to the defendant when he was giving evidence, that 50 acres was the area agreed to be sold by the defendant and was represented to be the area of lot 7. The defendant took issue with those propositions.
62 The evidence does not justify a finding that it was agreed between the plaintiff and the defendant that the area of lot 7 was, or would be, 50 acres. Further, I find that the defendant did not represent that the area was or would be 50 acres.
63 There was no mention of 50 acres in the agreement for sale of the defendant's interest in lot 7 to Mr and Mrs Spaulding. In addition to that, in cross-examination the plaintiff conceded that the defendant did not represent to him that there would be 50 acres. He accepted that all he was told by the defendant was that it would be a requirement with the progressive rural stratum title development that the average size of all of the lots be 50 acres. The plaintiff conceded that when he instructed Mr Jessup to value the property, he informed him that lot 7 comprised 50 acres. I conclude that as a result, Mr Jessup's valuation report stated that the area of lot 7 was approximately 20 hectares.
64 What was transferred by the defendant to Mr and Mrs Spaulding (and then by Mr and Mrs Spaulding to Mrs Knight) was not lot 7 itself but the vendors' right, title and interest as tenant in common in certificate of tile volume 4270 folio 50, with a notification on the transfer, immediately following a reference to the certificate of title, that it concerned lot 7 Baskerville Road, Old Beach. The certificates of title to the 500 acres, once those transfers had been registered, are not in evidence, but I presume that the purchasers of the interest in lot 7, first Mr and Mrs Spaulding from the defendant, and from them, Mrs Knight, came to be described on the title as holding a one-eighth share as tenants in common with all the other registered proprietors. There appeared to be no dispute about that at the trial.
65 I also presume that the certificates of title to the 500 acres at no relevant time contained a reference to lot 7, or any of the other lots into which it was proposed to be divided into stratum titles. So far as the title was concerned, all of the registered proprietors were tenants in common with the others in all of the 500 acres. Their rights to a particular lot, and their other rights as between each other, and their liabilities as between each other, depended very much on the separate agreement they had with each other, or to which, by virtue of the transfer to them, they became a party or became bound.
66 There was no evidence at the trial as to the area of the land depicted as lot 7 in the plan attached to the agreement dated 21 December 1984 (and to these reasons), by which Compton Pty Ltd agreed to sell the 766.5 acres to the defendant and a number of other people. Nor was there any evidence at the trial as to the area of the land depicted as lot 7 in the plan attached to Mr Jessup's valuation of 27 March 1986.
67 The plaintiff accepted in evidence that prior to agreeing to purchase the defendant's interest in lot 7 he had visited the land many times. He also accepted that there were fences that appeared to depict some of the boundaries of the lot, but his evidence about which of the boundaries were so depicted was unclear.
68 For the reasons I have given, I do not find that the defendant agreed with the plaintiff, or represented to him, that lot 7 would contain 50 acres."
21 The appellant argues, as best I can understand the notice of appeal, that it is clear that the evidence of the respondent and Mr Knight was false from the valuation report in evidence at the trial prepared by Mr Jessup, in which Mr Jessup stated on page 2 of the report that, as the land was zoned Rural, the minimum lot size allowable under the provisions of the relevant planning scheme was 20 hectares. It seems that the appellant also argues, relying on page 1 of Mr Jessup's report, in which Mr Jessup describes lot 7 as "an area of approximately 20 ha", that it can be inferred that such information was provided to Mr Jessup as a consequence of a representation to that effect having been made by the respondent to the appellant.
22 Even assuming that the evidence referred to by the appellant was false in any sense of that word, and that Mr Jessup's view as to the requirements of the planning scheme was correct, I nonetheless cannot, for my part, see that the learned trial judge's reasoning in the passages set out above, or the finding based on that reasoning, was in any way influenced by the impugned evidence. The outcome of the appellant's action against the respondent would still have been the same.
23 As best as I can understand it, the appellant seems to be arguing in a very convoluted way that the true position was that each lot had to be greater than 50 acres or 20 hectares, and that, had the learned trial judge known that (assuming he did not, given he was well aware of Mr Jessup's report), he ought to have concluded, noting the contents of Mr Jessup's report, that the evidence of Mr Knight and the respondent was deliberately untruthful, and that he ought to have found as a result, that the respondent had indeed represented to the appellant that lot 7 would contain 50 acres.
24 Even if that possible scenario was conceivable however, and even if reliance before this Court on the passages in Mr Jessup's report is capable of demonstrating appealable error on the part of the learned trial judge, and in fact, even if the representation alleged by the appellant had been made to him by the respondent, both of which propositions I doubt in the extreme, the fact of the matter is that the outcome for the appellant would have been no different in terms of his Honour's findings as to breach of fiduciary duty.
25 That is so because the learned trial judge went on to find that, in respect of that particular transaction, the sale to the appellant of lot 7, the respondent was indeed in breach of a fiduciary duty owed by him to the appellant, both as to the fact that the boundaries of lot 7 (and thus its area) were not settled and that initially, the plaintiff and his wife would own all of the 500 acres as tenants in common with the other owners. The learned trial judge accepted that the respondent might also have been required to give advice to the appellant concerning his incorrect understanding that lot 7 would contain 50 acres. His Honour said at [103] – [108]:
"103 I deal next with the plaintiff's purchase of lot 7. The plaintiff was not legally bound to proceed with the purchase, notwithstanding the oral agreement that he would purchase it, until the defendant and Mr and Mrs Spaulding signed the agreement for sale that was drafted by the defendant. Thereafter, the defendant acted as the solicitor for the Spauldings for the purpose of completing the purchase.
104 I find that at the time they signed the agreement, the defendant owed fiduciary duties to the plaintiff in connection with it. He had been acting as their solicitor on previous occasions, and in particular, at about that time he was acting as the solicitor for them in the purchase of the quarry land, the gravel for which was intended for use in the development of the 500 acres, which included lot 7. He drafted the agreement. It was objectively reasonable for the plaintiff to rely on the defendant to provide him with advice as his solicitor in connection with the transaction.
105 It is a clear case of the defendant's interests conflicting with the interests of the plaintiff. I find that the defendant gave no advice to the plaintiff about a number of aspects of the proposed transaction concerning which the plaintiff, as the purchaser from the defendant, should have been wary. Firm legal advice should have been given to the plaintiff concerning the risks involved in proceeding with the transaction. Those risks would have been obvious to a competent solicitor.
106 Although I accept the defendant's evidence that the plaintiff was familiar generally with what was proposed to be lot 7, and that he was aware of the position of fences on some of the proposed boundaries, the defendant should have warned him that the boundaries were not yet settled, and that under the agreement with his co-developers, he had the power to determine those boundaries. Further, a firmly expressed warning should have been given by the defendant to the plaintiff, in his capacity as a solicitor, of the problems all of the developers would face concerning title. Potentially, title might not have been forthcoming for a long time and many things needed to be done first. One of them was the incurring of considerable expenditure by Mr and Mrs Spaulding in building a residence on lot 7, which was a requirement for a stratum title to issue. In the meantime, the land could not be used as security for a loan. Another matter about which the defendant might have been required to give advice to the plaintiff concerned his incorrect understanding that lot 7 would contain 50 acres. Appropriate legal advice would also have included that initially, the plaintiff and his wife would own all of the 500 acres as tenants in common with the other owners.
107 I do not ignore that Mr Jessup's report referred to the possibility of significant delays before title would issue and to the fact that in the meantime, a mortgage could not be registered against the property in the normal way. But that did not absolve the defendant from his responsibility to properly advise the plaintiff about those matters. In my view, a competent solicitor in the defendant's position would have advised the plaintiff that, at the very least, there were sound reasons for not entering into the agreement to purchase the defendant's interest in lot 7 at all.
108 I find that the defendant breached his fiduciary duty to the plaintiff. His interests conflicted with the plaintiff's interests." (Emphasis added.)
26 Nor would the final result as to the appellant's claim for equitable compensation in respect of the respondent's breaches of fiduciary duty have been any different. His Honour, having identified those breaches of fiduciary duty, went on to deal with the question of compensation with respect to the sale of lot 7 at [109] – [114] in the following terms:
"109 However, that does not mean that the plaintiff's action succeeds. It does not, because he has failed to establish that he suffered loss as a result of the breach.
110 The evidence established that for $45,000 he purchased from the defendant property worth $47,500. He and his wife paid for it, out of the proceeds of sale of the Valda S, in December 1986. In July 1987 he contracted to sell it to Mr and Mrs Knight, making a gross profit of $2,500.
111 By par29 of the statement of claim, the plaintiff asserted that in order to finance the purchase of lot 7, he sold the Valda S and by doing so, lost his primary source of income. His evidence was that once he had sold the vessel, he had 'lost the biggest part of my cash flow'. He complained that the defendant should have advised him 'don't sell your main source of income'.
112 However, there was no evidence enabling me to find that the plaintiff suffered a loss by selling the vessel. There was no evidence that the sale price was less than value. It may have been far greater, for all I know. There was evidence that as a result of the sale, mortgage debts owed to two banks totalling $207,887.64 were cleared. There was no evidence of what the lessee of the vessel, Mr Wignall, was paying the plaintiff by way of rent, nor was there evidence of what interest was being paid on the mortgages.
113 The absence of evidence makes it impossible to find that the plaintiff suffered a financial loss as a result of the sale of the vessel. Even if there was a loss, the absence of evidence makes it impossible to assess the amount of it.
114 For the reasons given, the plaintiff's claim for equitable compensation arising out of his purchase of lot 7 must fail." (Emphasis added.)
Breach of natural justice
27 At ground (d) (sic) the appellant contends that he was, as a consequence of the alleged false evidence, denied natural justice. There is no basis for that claim. There is nothing in the conduct of the trial that suggests to me that the appellant was in any respect denied procedural fairness, or that any other element of the well-understood rules of natural justice was breached.
28 It may be that the appellant's contention in this regard is merely a misconception as to what constitutes a denial of natural justice as the "reasons" he advances for the claimed denial, set out in the 10 paragraphs under ground (d) numbered 1(a) – (h), are in reality arguments with respect to his principal claim on the appeal, namely that the learned trial judge erred in taking into account the claimed false evidence and the consequences flowing therefrom.
29 So too are the claims and arguments set out at pars(2) and (3) of the notice of appeal based around a claim that "because his Honour believed the Defendant and Mr Knight in relation [to] the actual size allowable for Lot 7 and not knowing they were lying under oath, his Honour did not deal with what was meant by the expression fraudulently".
30 There is no substance in that claim. If indeed the respondent and Mr Knight "were lying under oath", and I repeat, there is absolutely no evidence as to that, and had the learned trial judge known that was the case, his finding in favour of the appellant as to the respondent's breaches of fiduciary duty with respect to the sale of lot 7 would undoubtedly have remained unaltered, and his Honour's finding against the appellant with respect to the absence of any proof of loss would doubtless also have remained unaltered.
31 I digress to point out for the benefit of the appellant that his "Quantum of Loss" and "Further and Better Particulars of Loss" documents included in the "Papers for the Use of His Honour the Judge" were not, and are not, evidence of loss. They merely contained an indication to the learned trial judge of amounts the appellant suggested he was able to prove, and would prove, at trial by actual evidence. In the result he was not able to do so, or at least, he did not do so. I should also note that unlike common law damages for negligence or breach of contract, equitable compensation is not available in the form of general damages for emotional harm or vexation and distress. Proof of loss (or gain by the fiduciary), resulting from a breach of fiduciary duty remains necessary.
Bias on the part of the trial judge
32 The appellant's next ground of appeal, ground (4), is that the learned trial judge should have disqualified himself from presiding at the trial because he was a member of the Full Court:
"… when the Law Society, with Mr Daniel Zeeman acting as prosecution counsel, tried unsuccessfully to prosecute the Defendant in 2002/3 for professional misconduct … Chief Justice Cox wanted Mr Adams to be brought to trial. Justice Slicer and Justice Crawford dissented on the basis that to prosecute Mr Adams would be an abuse of process".
33 There is no substance in this ground. The appellant at trial made no application to the learned trial judge that he recuse himself, and there could be nothing in a consideration of the law as to abuse of process in a legal profession disciplinary prosecution that would, as a matter of course, require his Honour to disqualify himself from a subsequent civil action against the same legal practitioner.
Remaining grounds of appeal
34 Grounds 5 to 11 of the notice of appeal in one way or another contend that "as a consequence of the Defendant and Mr Knight lying under oath to his Honour" the learned trial judge "failed to consider evidence he should have considered" and "considered evidence that should not have been considered".
35 I have already set out what to my mind the appellant appears to be agitating as the consequence of the "Defendant and Mr Knight lying under oath", which I repeat is simply not established by any evidence, and I have observed already that such consequence would not have in any way altered the outcome of the action for the appellant. None of the arguments set out in grounds 5 to 11 of the notice of appeal advance any further the appellant's central contention contained in ground (a) of the notice of appeal. They are all variations on the same theme and none of them have any substance in view of what I have already said.
36 Moreover, it is unnecessary to deal discretely with any of such remaining grounds as can be discerned from the notice of appeal with the exception of one. That one remaining ground attacks the finding of the learned primary judge that the appellant's causes of action should be treated as statute barred when they were commenced.
Limitation Act ground
37 As to this question of laches, the learned trial judge said at [117] – [126] of his reasons for judgment:
"117 In view of my decision that the plaintiff's claim for compensation must fail for the reasons I have given, it is unnecessary to deal with this aspect, but I will do so briefly.
118 By par54 (second appearing) of the defence, the defendant pleaded that the plaintiff, by reason of his laches, acquiescence and delay, ought not to be granted any relief.
119 All of the events relied on by the plaintiff as a basis for his claim for equitable relief occurred between about early 1986 and early 1989, although the most material ones occurred no later than 1987. However, the action was not commenced until 19 December 2003, when the plaintiff filed the writ. So there was a delay of over 14 years at least, and arguably, 16 years, between the occurrence of the events and the commencement of the action.
120 If the plaintiff had sued the defendant for damages for breach of contract or for negligence in the performance of his duties as his solicitor, a limitation period of six years would have applied: Limitation Act, s4. It is plain that such an action, if commenced in 2003, would have been defeated as a result.
121 Counsel for the defendant conceded that the Act does not necessarily apply to a claim for equitable compensation for breach of fiduciary duty. That was held by Holt AsJ (as an obiter dictum) in Spaulding v Adams [2009] TASSC 23 at par[1], relying on Maguire v Makaronis [1997] HCA 23; (1997) 188 CLR 449 at 463.
122 However, there is ample authority for the proposition that equity may refuse relief if an analogy can be drawn between the relief sought and a legal claim barred by a limitation statute. See the Limitation Act, s9; Knox v Gye (1872) LR 5 HL 656 at 674 – 675; Cia de Seguris Imperio v Heath (REBX) Ltd [2000] EWCA Civ 219; [2001] 1 WLR 112 at 121, 124 – 126; Duke Group Ltd (In Liq) v Alamain Investments Ltd [2003] SASC 415 at par[130]; Aussie Ideas Pty Ltd v Tunwind Pty Ltd [2006] NSWCA 286 at pars[22] – [24]; Gerard Cassegrain & Co Pty Ltd v Cassegrain [2011] NSWSC 1156 at pars[228] – [235]; Langford v Reddy [2012] NSWSC 289 at par[199]; Candibon Pty Ltd v Minister for Planning [2011] VSC 415 at pars[365] – [382].
123 In my opinion, the plaintiff's claim for compensation is essentially based on the same facts as would found a claim for damages against the defendant for breach of contract and negligence as a solicitor, and the same duties to advise are involved.
124 In my view, it is just, as between the parties, to apply the six-year time limit in the Limitation Act to this action. I am satisfied that by 1992 at the very latest, the plaintiff was aware of the essential facts upon which he relies as the foundation for the action, although he may not have known of every detail. He had raised them as the basis of a complaint he made to the Law Society in 1992 concerning the defendant.
125 For those reasons, I would apply the provisions of s4 by way of analogy to this action, and hold that the plaintiff's causes of action should be treated as barred when he commenced the action.
126 The plaintiff asserted that the defendant concealed his causes of action by fraud, and that it was not until March 1999 that he discovered the fraud. The evidence does not establish that the defendant acted fraudulently."
38 The appellant contends in grounds 12 and 13 of the notice of appeal that time is no bar unless the injured party had actual knowledge that a fraud had been committed, or actual knowledge of facts that would give rise to an action in respect of the fraud.
39 The appellant argues that "the fact that the defendant was in breach of contract to sell to the Plaintiff 50 acres known as Lot 7 was hidden from the Plaintiff by the Defendant and Mr Knight from 1986 onwards to the present day when they both lied under oath during the trial stating that Lot 7 and other lots were not required to be 50 acres or 20ha".
40 Further, the appellant contends that "it was not until 1999 when Sealed Plan No 130998 became available that the Plaintiff discovered the sale proceeds of the Valda S (sic)" and that "The Defendant was only authorised to remove $45,000 from the Plaintiff's trust account for 50 acres known as Lot 7" and that "Unbeknown to the Plaintiff what was legally transferred to the Plaintiff in 1988 was the Defendant's right title and interest as tenant in common in relation to 500 acres on CT4270 Fol 50".
41 The learned trial judge dealt with some of the evidence relevant to some of those contentions at [53] - [57]:
"53 The defendant and Mr and Mrs Spaulding signed an agreement for sale, I infer without much delay for there is no evidence of a reason to delay it. The agreement was drafted by the defendant. It appears to be a standard form of contract, one which I think likely to have been published by the Law Society of Tasmania. It provides for a consideration of $45,000, with no deposit. The defendant agreed to sell to Mr and Mrs Spaulding 'All the Vendors [sic] property known as Lot No 7 on CT Vol 4270 Fol 50 and his interest therein'.
54 The agreement bears as its date 1 November 1988 in the defendant's handwriting, but it is agreed by the parties that it was signed a long time before that. I regard it as likely that it was left undated after being signed in about April 1986, for there is no evidence to suggest a reason for delaying the signing of the agreement once the valuation report dated 27 March 1986 had been received by the plaintiff and the parties had agreed on the price. I also have regard to my experience that it is usual practice once a vendor and purchaser have agreed orally, that a written agreement is prepared and signed by them.
55 The plaintiff's evidence was that the agreement was signed on 1 November 1986. He gave no reason for fixing that date. I do not accept his evidence about the matter. I suspect that all he did was deduct exactly two years from the date written on the agreement itself, 1 November 1988. I add that it is not a fact that needs to be determined, as nothing that is material depends on it.
56 The defendant offered to act as the solicitor for the plaintiff and his wife in the completion of the purchase, free of charge, and subsequently did so. The state of the evidence is that at no stage between them reaching agreement about the purchase and its completion did the defendant suggest to the plaintiff that he obtain independent legal advice. The defendant's evidence was that he perceived no need to do so.
57 In October 1986, the plaintiff and his wife entered into a contract to sell their fishing vessel, the Valda S, and their commercial fishing licence, for $250,000. The sale was completed with the payment of the purchase price to the defendant in his capacity as their solicitor, on or about 10 December 1986. $45,000 of the payment was applied by the defendant on behalf of the plaintiff and his wife in paying the purchase price they owed for the defendant's interest in lot 7. Almost all of the remaining balance of the sale proceeds was applied by the defendant, on behalf of Mr and Mrs Spaulding, in discharging mortgages they had given to Westpac and the Commercial Development Bank. A statement accounting for the application of the vessel's sale price was sent to Mr and Mrs Spaulding on 10 December 1986."
42 It seems to me that there are two propositions bound up in all of the contentions of the appellant in respect of this ground of appeal, taken together.
43 The first appears to be this. That the appellant agreed to purchase what he was led to believe was 50 acres known as lot 7, that the respondent was in breach of that contract because that was not what was transferred to the appellant, that being the respondent's right title and interest in the land in the certificate of title, and that fact was hidden from the appellant until the day during the trial when the alleged false evidence was given.
44 That to me is not a sustainable proposition. At best what could be said is that on the day that relevant evidence was given and, once again, assuming that it was false, there was then a basis for suggesting that the respondent had indeed represented to the appellant that lot 7 comprised 50 acres, an assertion that the learned trial judge rejected on the whole of the evidence before him. None of that establishes fraudulent concealment of the kind required to stop time running against the appellant, if indeed it was concealment of any kind at all.
45 The second proposition appears to be this. That the appellant agreed to purchase what he was led to believe was 50 acres known as lot 7, that the respondent was in breach of that contract because that was not what was transferred to the appellant, that being the respondent's right title and interest in the land in the certificate of title, and that fact was hidden from him until 1999 when he saw the sealed plan.
46 As to that proposition, it may well be arguable that time would not have commenced to run against a common law action for breach of contract or negligence until the discovery of the fraudulently concealed fact, namely the area of the land purchased. However, assuming for the moment that such fact was fraudulently concealed, of which there is no evidence, or assuming that the alleged false evidence if known to the learned trial judge to be false would have caused him not to make the finding he did, that the evidence did not establish that the respondent acted fraudulently, it could only conceivably assist the appellant in respect of his claim for equitable compensation based on the respondent's breach of fiduciary duty relating to the sale of lot 7.
47 Put another way, those facts and circumstances, far-fetched as they are, if established, would only have resulted in the learned trial judge not applying the six year time limit by analogy to the appellant's cause of action in relation to the sale of lot 7. They would not have affected at all, his Honour's decision to apply that time limit by analogy to the appellant's other causes of action.
48 So that if the appellant's arguments were accepted as correct as regards the application of the Limitation Act 1974, it could only be with regard to the cause of action in respect of the sale of lot 7, and, as I have already observed, that cause of action was and would remain unsuccessful on quite a distinct basis, namely the absence of proof of loss.
49 The end result of all of this is that the appellant's arguments in respect of the discernible grounds of appeal demonstrate no material error on the part of the learned trial judge.
Disposition
50 For the reasons given by Wood J, I agree that the application for special leave to admit further evidence should be refused, and for the reasons I have given I would dismiss the appeal.
File No 917/2012
MICHAEL JOHN SPAULDING v COLIN BERTRAM ADAMS
REASONS FOR JUDGMENT FULL COURT
PEARCE J
1 August 201351 For the reasons given by Wood J the application for special leave to admit further evidence should be refused. I agree with the reasons for judgment of Estcourt J and the orders he proposes.
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