Witcombe v Talbot & Olivier (A Firm) - [2005] WASC 26

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: WITCOMBE & ANOR -v- TALBOT & OLIVIER (A FIRM) [2005] WASC 26

CORAM: MASTER SANDERSON

HEARD: 21 FEBRUARY 2005

DELIVERED : 8 MARCH 2005

FILE NO/S: CIV 2485 of 2004

BETWEEN: GLENYS JUNE WITCOMBE
First Plaintiff
GLENYS JUNE WITCOMBE as Executrix of the Estate of KEITH MALCOLM WITCOMBE (DEC)
Second Plaintiff
AND
TALBOT & OLIVIER (A FIRM)
Defendant

Catchwords:

Practice and procedure - Application to strike out statement of claim - Turns on own facts

Legislation:

Nil

Result:

Statement of claim struck out in part

Category: B

Representation:

Counsel:

First Plaintiff                  :     Mr R I Viner QC
Second Plaintiff             :     Mr R I Viner QC
Defendant:     Ms C H Thompson

Solicitors:

First Plaintiff                  :     Godfrey Virtue & Co
Second Plaintiff             :     Godfrey Virtue & Co
Defendant:     Phillips Fox

Case(s) referred to in judgment(s):

Esanda v KPMG Hungerfords (1997) 188 CLR 241
Graham Barclay Oysters Pty Ltd & Anor v Ryan & Ors (2002) 211 CLR 540
Hawkins v Clayton & Ors (1988) 164 CLR 539
Hill v Van Earp (1997) 188 CLR 159
Modbury Triangle Shopping Centre Pty Ltd v Anzil [2000] HCA 61
Perre v Apand Pty Ltd [1999] HCA 36
Sullivan v Moody (2001) 207 CLR 562

Case(s) also cited:

Anderson v Effexseven (1999) 10 ANZ Ins Cas 61-424
Baker v Bolton (1808) 170 ER 1033
Brownie Wills v Shrimpton [1998] 2 NZLR 320
Caparo v Dickman [1990] 2 AC 605
Cordinup Resorts Pty Ltd v Terana Holdings Pty Ltd (1997) 143 FLR 18
Crayden as Executor of the Estate of Sandra Irene Farnworth v Ottaviano & Anor [2003] WASCA 20
Dey v Victorian Railways Commissioners (1949) 78 CLR 62
Donoghue v Stevenson (1932) AC 562
Esanda v KPMG Hungerfords (1997) 188 CLR 241
Foppoli v Public Trustee [1970] WAR 73
Forsayth Gold NL v Northern Gold NL, unreported; FCt SCt of WA; Library No 940012; 20 January 1994
Francourt v Mercantile Credits Ltd (1983) 154 CLR 87
Giford v Strang Patrick Stevedoring Pty Ltd [2003] HCA 33
Ilievska-Dierva v SGIO Insurance Ltd [2000] WASCA 161
Jaensch v Coffey (1984) 155 CLR 549
Kimberley Downs Pty Ltd & Ors v State of Western Australia & Anor, unreported; FCt SCt of WA; Library No 6414; 25 August 1986
Kirika v Zurich Australia Insurance Ltd & Anor [2002] WASCA 233
Perre v Apand Pty Ltd [1999] ALR 606
Pritchard v Racecage Pty Ltd (1997) 72 FCR 203
Queensland Art Gallery Board of Trustees v Henderson Trout [2000] QCA 93
Ross v Caunters (UK) (1981) Ch 297
Seymour v Seymour (1996) 40 NSWLR 358
Tame v New South Wales & Annetts v Australian Stations Pty Ltd [2002] 211 CLR 317
Voli v Inglewood Shire (1963) 110 CLR 74
Woodcock Street Investments Pty Ltd v CDG Pty Ltd [2004] HCA 16

MASTER SANDERSON: This is the defendant's application for summary judgment pursuant to O 16. Alternatively, the defendant seeks to strike out the claim pursuant to O 20 r 19(1) on the basis that the statement of claim discloses no reasonable cause of action. On this alternative application the defendant seeks judgment, the complaint being as to the substance of the claim made, not merely as to the form of the statement of claim.
The plaintiffs commenced these proceedings by writ issued 23 March 2004 in the District Court. The defendant's appearance was entered on 27 April 2004. In October 2004 the proceedings were remitted to this Court. The writ was endorsed with a statement of claim. The present application was filed 7 May 2004 and was within the time prescribed by the Rules.
Turning to the statement of claim, the first plaintiff pleads that she is the widow and executrix and sole beneficiary of the estate of her late husband, Keith Malcolm Witcombe ("the deceased"). The deceased died on 24 March 2002. The defendant is a firm of legal practitioners who, inter alia, deal with personal injuries claims.
The deceased was injured in a motor vehicle accident which occurred on 13 November 1994. His injuries were frightful. He had limited capacity to communicate and did so through the plaintiff. It is pleaded that on 29 September 1997 the plaintiff and the deceased engaged the defendant to act for them in relation to injuries they had both sustained as a result of the motor vehicle accident.
It is then pleaded that the defendant owed to the plaintiff a duty of care. That plea is found in par 8 of the statement of claim. The duty is pleaded in bald terms - it is said to be a duty "to act at all material times with reasonable skill, care and diligence".
It is then pleaded that the defendant breached the duty of care it owed to the first plaintiff. Particulars of the alleged breaches are provided. Essentially what is said is that the defendant did not pursue the plaintiff and the deceased's personal injuries claim with due despatch. As a consequence of this failure to pursue the claim, the defendant was replaced as solicitors for the plaintiff and the deceased on or about 3 April 2001. It is pleaded that the new solicitors took steps to bring the first plaintiff and the deceased's claims to trial, but before they could do so, the deceased died on 24 March 2002. The plaintiffs plead that had the action gone to trial, the deceased would have recovered $5,236,570. As the cause of action was lost on the death of the deceased, this amount did not pass to the first or second plaintiffs. This, it is said, was directly attributable to the negligence of the defendant.
At the outset, two things may be said about the way this claim is pleaded. First, there is no actual plea of a duty owed by the defendant to the second plaintiff. The plea in par 8 of the statement of claim is that the defendant owed a duty to the first plaintiff and to the deceased. Any duty which may have been owed to the deceased is irrelevant and mention of it ought not be in the pleading. So far as the first plaintiff is concerned, it cannot be the case that she is suing on a breach of duty owed by the defendant to her as a consequence of her engaging the defendant to act for her in the personal injuries claim. The damage that she says she suffered arises out of the alleged failure of the defendant to pursue the deceased's personal injuries claim with despatch. That is what might be called a derivative duty, but it has nothing whatever to do with the first plaintiff's engagement in her own right of the defendants.
The second point to note is that this is a claim for purely economic loss. It is true that the claim by the deceased and by the first plaintiff was originally for damages arising as a result of injuries sustained in a motor vehicle accident. But the alleged breach of duty to pursue the claim and the consequent alleged loss is purely economic.
There is one further point to note. It is nowhere alleged in the pleading that the defendant had actual or constructive notice that the first plaintiff was a beneficiary under the will of the deceased. The defendant knew that the first plaintiff was the wife of the deceased and it might perhaps have assumed that she would be a beneficiary under his will on his death. But there is no plea of knowledge, nor is there any evidence to suggest that the defendant had actual knowledge of the terms of the deceased's will.
As a statement of general principle, it is, I think, fair to say that no general common law duties are owed by a solicitor to a third party. This has emerged from a number of High Court decisions, including Esanda Finance Corporation Ltd v Peat Marwick Hungerfords (1997) 188 CLR 241, Graham Barclay Oysters Pty Ltd & Anor v Ryan& Ors (2002) 211 CLR 540 and Sullivan v Moody (2001) 207 CLR 562. There are, of course, cases where a duty will arise. An example of such a case is Hawkins v Clayton & Ors (1988) 164 CLR 539. That case related to the failure by a firm of solicitors to attempt to locate the executor of a will in their possession. The Court held that the solicitors were under a duty to take steps to locate the executor and deliver the will to him. Brennan J put the position in this way (at 553):
"In my opinion, a duty of disclosure arises from custody of the will after the death of the testator, the nature of the will and the purpose for which custody is accepted as well as from the foreseeable consequences of non‑disclosure."
Deane J preferred to analyse the nature of the duty in terms of proximity, the then fashionable basis for determining whether or not a duty of care existed. His Honour said (at 578 ‑ 579):
"The solicitor, as a specially qualified person possessing expert knowledge and skill, assumes responsibility for the performance of professional work requiring such knowledge or skill. The client relies upon the solicitor to apply his expert knowledge and skill in the performance of that work. In the ordinary case, the only kind of damage which is likely to result from the negligence of the solicitor in the performance of his professional work is pure economic loss. In that context, the elements of assumption of responsibility and of reliance combine with that of the foreseeability of a real risk of economic loss to give the ordinary relationship between a solicitor and his client the character of one of proximity with respect to foreseeable economic loss. The present case fell within that category. It was also a case in which economic loss caused by the negligence on the part of the solicitor might clearly be sustained either by the client or by her estate after her death. If the will was lost by the firm during the testatrix's life, she would personally sustain the economic loss comprising legal costs or other expenses involved in the preparation and execution of a new will. On the other hand, an obvious object of the arrangement under which the testatrix's will was entrusted to the custody of the firm was to ensure that it would be available on her death to the named executor to inform him of his nomination by the testatrix as the person appointed to protect and duly administer the assets comprising her estate. The risk of economic loss being sustained by the estate if the named executor remained unaware of his appointment was real and foreseeable. The risk would plainly be compounded if the person named as executor was also, for practical purposes, the sole beneficiary. In these circumstances, the relevant relationship of proximity which existed with respect to economic loss of the kind which was in fact sustained by the estate extended to include both the testatrix and her legal personal representative after her death."
It is clear that there is a difference between Brennan J and Deane J as to the basis upon which the duty arose in Hawkins v Clayton. Brennan J relies upon foreseeability taken together with the nature of the will and the purpose for which it was held. The analysis of Deane J relies entirely upon notions of proximity. Gaudron J, the other Judge in the majority, leans towards the Deane J view and the proximity analysis. It is, perhaps, open to question to what extent this reliance on proximity would find favour with the court today.
Hill v Van Earp (1997) 188 CLR 159 was also a case involving a solicitor and a will. A solicitor prepared a will for a client upon the client's instructions that was to include a testamentary disposition to a friend of the client. When the will was being executed, the solicitor asked the husband of the intended beneficiary to attest it. As a consequence, the attestation clause was ineffective and the disposition was null and void. After the death of the client the intended beneficiary sued the solicitor for damages and negligence. Five members of the High Court concluded that the solicitor had a duty of care to the disappointed beneficiary. The four separate judgments of the majority all based their conclusion on slightly different reasoning.
Brennan CJ concluded that the terms of the solicitor's retainer determined the work to be done and the scope of the duty in tort and contract. His Honour held that a breach of the retainer by failing to use reasonable care in the preparation of a will was a breach of the solicitor's duty to the intended beneficiary who thereby suffers foreseeable loss upon the death of a testator. The claim by the disappointed beneficiary could only be maintained if the duty to that beneficiary corresponded with the duty owed by the solicitor to the client. His Honour said that the duty did not arise by reason of an assumption of responsibility for the solicitor to the intended beneficiary, but was imposed by law.
Dawson and Toohey JJ analysed the position in terms of proximity. Their Honours noted that proximity was a useful term for signifying the process of reasoning which must be undertaken to establish a duty of care, but said that it was not always a common element underlying all cases in which a duty of care is recognised. This might perhaps be seen as the first move away from what had, for a number of years, been an important aspect at any negligence action. Their Honours concluded that the relationship between the solicitor and the intended beneficiary was sufficiently proximate to give rise to a duty of care. Although the claim was for pure economic loss, there was no reason to deny the duty to prevent that loss because there was no prospect of indeterminate liability, the class of persons to whom the duty was owed was readily ascertainable, creating the duty did not diminish any competitive advantage a solicitor might have, the duty did not supplant or supplement other legal remedies and its existence did not disturb any general body of rules constituting a coherent body of law. Further, their Honours were of the view that in a factual, if not in a legal sense, there was an assumption of responsibility by the solicitor to the intended beneficiary. Furthermore, the duty was said to exist whether or not the intended beneficiary knew of the disposition.
Gaudron J pointed out that where a plaintiff has suffered a loss or impairment of a precise legal right, the need for a special relationship of proximity is less stringent than in other cases of pure economic loss. Her Honour concluded that in the circumstances of this case, what had been lost was a precise legal right and therefore it was not strictly an economic loss case. In any event, her Honour concluded that there was a relationship of proximity and that the solicitor owed a duty to the intended beneficiary to take reasonable steps to prevent foreseeable loss. Gummow J concluded that where a client suffers no loss by reason of the solicitor's breach of contract and an intended beneficiary is not a party to that contract, the law of tort operates to complete and vindicate fulfilment of a contractual obligation. His Honour said that the factors that gave rise to a duty to an intended beneficiary under a will a solicitor is retained to draw were the retainer to enhance the economic position of the intended beneficiary, the control exercised by the solicitor over the realisation of the testamentary contentions, the closeness of the solicitor's act and its direct legal effect, being the failure of the gift, and the public interest in promoting professional competence and avoidance of disappointment of testators and beneficiaries by negligent actions of solicitors.
It was the plaintiffs' position that these so‑called "solicitor" cases established that in certain circumstances a party other than the solicitor's client can recover damages for the solicitor's negligence in respect of the conduct of the client's affairs. That, it was said, was sufficient to allow a claim of this kind, unique though it may be, to proceed. With respect, I am satisfied that unusual though this claim may be, it would not be appropriate to strike out the plaintiffs' action. To do so may stultify the development of the law in an area which is fluid and uncertain.
I am fortified in that conclusion by the decision of the High Court in Perre v Apand Pty Ltd [1999] HCA 36. In that case the Court, and McHugh J in particular, looked to vulnerability as a touchstone for determining whether or not a duty exists. His Honour said (at 125 ‑ 126):
"In my view, reliance and assumption of responsibility are merely indicators of the plaintiff's vulnerability to harm from the defendant's conduct, and it is the concept of vulnerability rather than these evidentiary indicators which is the relevant criterion for determining whether a duty of care exists …
Reliance may therefore be seen - for the purposes of duty of care - as an indicator of vulnerability: the plaintiff is specially vulnerable to the words and/or conduct of the defendant because he or she reasonably relied on the defendant. Reliance may also, of course, be relevant to causation. In terms of a duty of care, however, it is not reliance that is relevant, but its consequence, vulnerability. That is so, even though in certain situations 'reasonable reliance' will be the appropriate test for determining whether the plaintiff was vulnerably exposed to harm from the defendant's acts or omissions."
In this case it would be open to the plaintiffs to argue that they were in a position of vulnerability. If the defendant did not proceed with the deceased's case with despatch, then there was a possibility he would die before the case was settled or judgment entered, with the result that the deceased's estate, and any beneficiary taking under that estate, would suffer loss and damage. The plaintiffs were vulnerable because they could not expedite conduct of the proceedings. It is arguable this vulnerability gives rise to a duty as between the plaintiffs and the defendant and that the duty has been breached.
What is clear from this analysis of the claim is that the present pleading is unsatisfactory. In particular, the alleged duty is not properly pleaded, nor is there is an adequate plea of the breach of that duty. This is one of those cases where formulation of the precise nature of the duty of care is dependant upon careful pleading of the material facts. In Modbury Triangle Shopping Centre Pty Ltd v Anzil [2000] HCA 61, Hayne J put the position as follows at 201:
"Because the extent of the duty falls for decision in relation to 'concrete facts arising from real life activities' it will not always be useful to begin by examining the extent of the defendant's duty of care separately from the facts which give rise to a claim. That may be possible, and useful, in a simple case (like motorist an injured road user) where the duty of care in its content are well established. In other cases, however, it may lead to an insufficiently precise formulation of the duty which obscures the issues that require consideration. That lack of precision may lie in formulating the duty too narrowly: for example, by asking did the defendant owe a duty of care to fence the part of the cliffs in its reserve from which the plaintiff fell? It may also, as in this case, lie in formulating the duty too broadly: for example, by asking did the defendant owe any duty of care to the plaintiff?"
Given the deficiencies of the statement of claim it should, in my opinion, be struck out in part with leave to replead. I will hear the parties as to the precise form of orders and as to costs.