Weller v Phipps

Case [2010] NSWCA 323

NEW SOUTH WALES COURT OF APPEAL

CITATION:
Weller v Phipps [2010] NSWCA 323

FILE NUMBER(S):
2009/298420

HEARING DATE(S):
26 August 2010

JUDGMENT DATE:
30 November 2010

PARTIES:
Herbert WELLER  (appellant)
Mark Edwin PHIPPS  (respondent) 

JUDGMENT OF:
Beazley JA Hodgson JA Young JA   

LOWER COURT JURISDICTION:
District Court

LOWER COURT FILE NUMBER(S):
DC 1648/2007

LOWER COURT JUDICIAL OFFICER:
Charteris DCJ

LOWER COURT DATE OF DECISION:
26 June 2009

COUNSEL:
M DEMPSEY SC/ T J BOYD  (appellant)
S M BARRY  (sol.) (respondent) 

SOLICITORS:
David Hooper  (appellant)
CKB Partners  (respondent) 

CATCHWORDS:
LEGAL PRACTITIONERS – Solicitors – Plaintiff obtains order under Family Provision Act 1982 for provision from estate consisting of a house – Plaintiff subsequently seeks advice from solicitor on a claim to the house on the basis of a promise by the deceased and/or estoppel – Costs and liability for estate’s costs incurred over ensuing eight months – Whether solicitor negligent in not previously advising plaintiff, or obtaining counsel’s advice, to the effect that any such claim was hopeless by reason of issue estoppel and/or Anshun estoppel – Whether expert evidence required for court to reach such a view. 

LEGISLATION CITED:
Civil Liability Act 2002 s 5O
Family Provision Act 1982

CATEGORY:
Principal judgment

CASES CITED:
Amadio Pty Ltd v Henderson (1998) 81 FCR 149
Attard v James Legal Pty Ltd [2010] NSWCA 311
Fox v Everingham (1983) 76 FLR 170
Hawkins v Clayton (1988) 164 CLR 539
Heydon v NRMA Ltd [2000] NSWCA 374; (2000) 51 NSWLR 1
Jennings v Zilahi-Kiss (1972) 2 SASR 493
Moy v Pettman Smith (a firm) [2005] UKHL 7; [2005] 1 WLR 581
Neagle v Power [1967] SASR 373
Permanent Trustee Australia Limited v Boulton (1994) 33 NSWLR 735
Port of Melbourne Authority v Anshun Pty Ltd [1981] HCA 45; (1981) 147 CLR 589
Rabelais Pty Limited v Cameron [1993] ANZ Conv Rep 457
Waimond v Byrne (1989) 18 NSWLR 642
Yates Property Corporation v Boland (1998) 85 FCR 84

TEXTS CITED:

DECISION:
Appeal dismissed with costs. 

JUDGMENT:

- 32 -

IN THE SUPREME COURT
OF NEW SOUTH WALES
COURT OF APPEAL

2009/298420
DC 1648/2007

BEAZLEY JA
HODGSON JA
YOUNG JA

30 NOVEMBER 2010

Herbert WELLER v Mark Edwin PHIPPS

Judgment

  1. BEAZLEY JA:  I agree with Hodgson JA. 

  2. HODGSON JA:  On 26 June 2009, Charteris DCJ gave his decision in proceedings in which the respondent Mr Phipps had sued the appellant Mr Weller for damages for breaches of his duties as Mr Phipps’ solicitor.  In that decision, the primary judge gave a verdict and judgment for Mr Phipps for $40,489.00 and made costs orders in his favour. 

  3. Mr Weller sought leave to appeal from that decision, and on 4 February 2010 leave to appeal was granted. 

    Outline of facts

  4. I will begin with an outline of facts not in dispute or clearly proved. 

  5. From about 1983, Mr Phipps had lived in his grandmother’s house at Richmond; and prior to her death on 20 February 2000 at the age of 100, he had…

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AGLC
Weller v Phipps [2010] NSWCA 323
Case
[2010] NSWCA 323
Decision Date

CaseChat Overview and Summary

The case of *Weller v Phipps* involved a dispute concerning the conduct of a solicitor, Mr Weller, who represented Mr Phipps. Mr Phipps had initially brought proceedings under the *Family Provision Act 1982* (NSW) seeking provision from his grandmother's estate, which primarily consisted of a house. Following an order for a legacy and costs from the estate, Mr Phipps sought further advice from Mr Weller regarding a potential claim to an interest in the house based on an alleged promise by his grandmother and/or estoppel. The core of the dispute concerned the liability of Mr Weller for the estate's costs incurred over an eight-month period, arising from allegations that he was negligent in not advising Mr Phipps earlier that such a claim was likely to fail due to issue estoppel and/or *Anshun* estoppel. The matter was heard in the Court of Appeal of New South Wales.

The legal issues before the court were whether Mr Weller, as Mr Phipps' solicitor, was negligent in his conduct. Specifically, the court had to determine if Mr Weller had a duty to advise Mr Phipps, or obtain counsel's advice, that any claim to an interest in the house based on a promise or estoppel was hopeless due to the prior Family Provision Act proceedings. This involved considering whether expert evidence was required for the court to reach such a conclusion regarding the application of issue and *Anshun* estoppel. The court also had to assess whether Mr Weller's actions in obtaining detailed statements from Mr Phipps, rather than immediately seeking urgent advice from counsel on the prospects of a new claim, constituted a breach of his duty of care.

The Court of Appeal dismissed the appeal, upholding the primary judge's decision. The court reasoned that the solicitor's conduct in obtaining detailed statements from Mr Phipps was appropriate, given the complex evidentiary issues surrounding the alleged promise, including the deceased's cognitive capacity at the time, her moral obligations to other children, the lack of written evidence, and the absence of corroboration. These factors presented significant hurdles to any claim. Furthermore, the court found that there was no undue delay in Mr Weller's actions, and that the urgency of the situation did not necessitate immediate advice from counsel, particularly considering the timeframes involved in Supreme Court proceedings and the possibility of a stay. The court implicitly accepted that the solicitor's approach allowed counsel to properly assess the probability of success on the merits of any further action. The appeal was dismissed with costs.

Orders

Orders of the court

Appeal dismissed with costs.

Background

Background to the litigation

Mr Weller sought leave to appeal from that decision, and on 4 February 2010 leave to appeal was granted. Outline of facts I will begin with an outline of facts not in dispute or clearly proved. From about 1983, Mr Phipps had lived in his grandmother’s house at Richmond; and prior to her death on 20 February 2000 at the age of 100, he had been caring for her for a number of years. Apart from money on deposit in a bank, the house at Richmond was the only significant asset in the grandmother’s estate. The grandmother’s will gave her whole estate to her two daughters; one being Mr Phipps’ mother, and it appointed them her executors. However, after the grandmother’s death Mr Phipps continued to reside in the house; and on 8 September 2000, he commenced proceedings under the Family Provision Act 1982 (since repealed) against the executors. Mr Weller represented Mr Phipps in those proceedings. In his affidavit sworn on 3 April 2002 and used in those proceedings, Mr Phipps deposed to a conversation with his grandmother in 1993 to the effect that she was going to give her house to him. The Family Provision Act proceedings were heard on 24 February 2003, and on 30 May 2003, Master McLaughlin gave his decision in them. He determined that the estate consisted of one substantial asset, being the house, which was valued at $800,000.00 in December 2002. He noted that, by reason of the costs of the proceedings, the house would have to be sold. He ordered that there be a legacy of $150,000.00 to Mr Phipps from the estate, and that his costs be paid out of the estate. On 6 June 2003, the executors’ solicitors wrote to Mr Weller requesting that Mr Phipps vacate the property by 20 June 2003, pointing out that the property had to be sold. On 20 June 2003 there was a conference between Mr Phipps and Mr Weller. Mr Phipps said that he wanted to bring a claim in quantum meruit and/or express or implied agreement, claiming an interest in the house; and he was requested to make a detailed statement concerning the express agreement. The possibility of appeal from the Family Provision Act decision was discussed. On 23 June 2003, a six-page letter from Mr Phipps to Mr Weller noted that an appeal in the Family Provision Act proceedings had no prospects, and gave details of Mr Phipps’ dealings with the grandmother. A further such letter, now seven pages, giving expanded details, was sent on 21 July 2003. On 22 July 2003, there was a telephone conversation between Mr Phipps and Mr Weller. Mr Phipps referred to a letter passing between solicitors acting for the individual executors concerning obtaining possession from him, and he said he was drafting his statement. On 30 July 2003, there was a conference between Mr Phipps and Mr Weller in which Mr Phipps brought his statement as prepared that far; and a fee disclosure letter was produced from Mr Weller to Mr Phipps. Mr Weller estimated his fees up to and including the first hearing date of new proceedings at $25,240.00.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

In cross-examination, Ms Suttor gave the following evidence: Q.Do you understand Ms Suttor what you are being asked, whether you have had experience of a solicitor, any solicitor over the years being confronted with like circumstances that applied in the subject case? A.Yes I have had plaintiffs of my own wanting to bring up additional matters after hearing. TURNERQ.And no doubt in that case you advised that it was not possible, having regard to the fact there had been a determination on the merits? A.My recall was I went back to counsel. Q.In relation to the behaviour of other solicitors you have had no experience of other solicitors confronted with similar problems to this sort of situation have you? A.I can't recall any particular instance, but on general principles counsel is there to advise on complex matters, counsel is there as the specialist lawyer, dealing with legal principles. … Q.I want to suggest to you that what he did instead was went about a process of obtaining detailed statements, that is drafting statements along the lines with a view to preparing affidavits, rather than going to counsel urgently and seeking a short advice on the proposition that the client said he had an agreement with the grandmother, she would leave him the house, but hadn't, can we run another case, that would have been a far simpler and cheaper way of going about this problem? A. There were certain difficulties with the allegation of the promise. And I think it was appropriate for the solicitor to get to that by getting detailed statement. I have read the documents and it would seem that at the time the alleged promises were made there were problems with the cognitive impairment and the capacity of the deceased, she was about 95 when those promises were made. She had two other adult daughters to whom she owed a moral obligation, there was nothing in writing, and there seemed to be no corroboration. They were all fairly difficult evidentiary issues, and it was appropriate for the solicitor to get proper statements so that the counsel instructed could assess those issues as well, as to the probability of success. Even if he were able to bring some other action. ….. Q.You are probably right. Mr Phipps was at risk of an urgent eviction application, once the judgment was delivered? A.All plaintiffs who have been given an amount of money in a Family Provision Act order and who are still in possession of one of the assets are in that situation. Q.So-- A.That is not sort of novel. Q.And once a threat was made by the estate solicitors that that was what was going to happen, was it not incumbent upon the solicitor to urgently approach counsel with a view to getting a preliminary view about the prospect of running a further case? A.I don't think there was the urgency involved, having regard to what we know about the procedure in the Supreme Court, and the times taken, the statements of claim for possession and the possibility of a stay. In other words he does it properly in an appropriate time. If he delayed for a long period of time, well that’s a different question. Here there is nothing to suggest that there was an undue delay. …..Q.There was also an exposure to legal costs in relation to a potential eviction suite [sic, suit]? A.But it was for him to make that choice whether he left or not. Q.Was it not a matter for the solicitor to advise on, the counsel? A.Whether he should leave or not? Q.Well on these issues that I'm speaking about at the moment, mean [sic, mesne] profits, leaving, interest, issues, costs? A.Well the solicitor gave, would have given him the judgment and the solicitor normally would indicate that it's up to him then to make some other arrangements for his living. Q.But you would have expected, would you not, that the solicitor would have counselled him about the exposure to mean [sic, mesne] profits if he remained in the premises? A.All of these things are matters of judgment. It may well have been, and I don't know the answer to this, that the executors were content to have him there while the property was sold. A lot of these things are negotiated subsequently to judgment. ….. Q.In fact the proceedings were commenced in October 2003? A. Then it'd become urgent hadn't it? Q.But bearing in mind that the plaintiff was remaining in possession to the knowledge of the solicitor and bearing in mind that the client was consulting the solicitor about a number of matters including discussions about an agreement with the grandmother, and bearing in mind that the solicitor had correspondence from the executors indicating that there was going to be an application for eviction, even before the judgment was handed down, that is the day before, wouldn't a competent solicitor say knowing the attitude of the executor's solicitors, "you're at risk here if you continue to remain"? A.He may have said that, if he'd said that it was up to the plaintiff what he did with that advice. Decision of primary judge

Ratio Decidendi

Legal Principle Established

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