Yates Property Corporation Pty Ltd v Boland, John
[1997] FCA 496
•5 JUNE 1997
CATCHWORDS
ADVOCATES’ IMMUNITY - ambit of immunity - extent to which available to barrister while undertaking work out of court - extent to which available to solicitor undertaking work leading to decisions concerning work done in court.
NEGLIGENCE - standard of care of barrister - whether counsels’ views could reasonably be held by competent counsel who practised in area of valuation law - whether negligent by failure to advise of risks attending particular valuation methodologies - whether appropriate for novel valuation approach to be relied upon in the alternative.
NEGLIGENCE - standard of care of solicitors - whether reasonable to rely on opinions of counsel regarding conduct of court proceedings.
TRADE PRACTICES - Fair Trading Act 1987 (NSW) s42(1) - allegation of misleading and deceptive conduct by implied representations and by silence - whether any relevant “conduct” identified - whether s42(1) an automatic statutory alternative to every common law claim alleging professional negligence.
TRADE PRACTICES - Fair Trading Act 1987 (NSW) s42(1) - misleading and deceptive conduct - whether legislative intention to abolish common law advocates’ immunity.
Trade Practices Act 1974 (Cth) ss 52, 82
Fair Trading Act 1987 (NSW) ss 4(4), 42, 68
Kennedy Street Pty Limited v The Minister [1963] NSWR 1252
Baringa Enterprises Pty Limited v Manly Municipal Council (1965) 15 LGRA 201
Giannarelli v Wraith (1988) 165 CLR 543
Pastoral Finance Association Limited v The Minister [1914] AC 1083
Yates Property Corporation Pty Ltd (In Liquidation) v Darling Harbour Authority (1991) 24 NSWR 156
Spencer v The Commonwealth (1907) 5 CLR 418
Minister of Environment v Petroccia (1982) 30 SASR 333
Turner v Minister of Public Instruction (1956) 95 CLR 245
Housing Commission of New South Wales v San Sebastian (1978) 140 CLR 196
Minister Administering the Heritage Act 1977 v Haddad (1988) 67 LGRA 438 Coastal Estates Pty Ltd v Bass Shire Council [1993] 2 VR 566
Pamalco Pty Ltd v Minister Administering the National Parks and Wildlife Act 1974 [No. 3] (1991) 71 LGRA 44
Housing Commission of New South Wales v Falconer [1981] 1 NSWLR 547
Chalmers v The Minister, The Valuer, July 1978
Secretary of State for Foreign Affairs v Charlesworth, Pilling & Co. [1901] AC 373
Bronzel v State Planning Authority (1979) 21 SASR 513
Austrust Pty Ltd v Astley (1993) 60 SASR 354
Rhone-Poulenc Agrochimie SA v UIM Chemical Services Pty Ltd (1986) 12 FCR 477
Demagogue Pty Ltd v Ramensky (1993) ATPR ¶41-203
Commonwealth Bank of Australia v Mehta (1991) 23 NSWLR 84
Fraser v NRMA Holdings Ltd (1995) 127 ALR 543
Kimberley NZI Finance Ltd v Torrero Pty Ltd [1989] ATPR (Digest) ¶46-054
Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191
Taco Co. of Australia Inc. v Taco Bell Pty Ltd [1982] ATPR ¶40-303
Prestia v Aknar (1996) 40 NSWLR 165
Webb Distributors (Aust.) Pty Ltd v The State of Victoria (1993) 179 CLR 15
Baker v Campbell (1983) 153 CLR 52
Keefe v Marks (1989) 16 NSWLR 713
MacRae v Stevens (1996) Aust. Torts Reports ¶81-405
Donellan v Watson (1990) 21 NSWLR 335
Rees v Sinclair [1974] 1 NZLR 180
Feldman v A Practitioner (1978) 18 SASR 238
Apatu v Peach Prescott & Jamieson [1985] 1 NZLR 50 at 64.
YATES PROPERTY CORPORATION PTY LIMITED v
JOHN BOLAND (as representative partner of Abbott Tout Russell Kennedy)
& ORS
No. NG 44 of 1993
CORAM: BRANSON J
PLACE: SYDNEY
DATE: 5 JUNE 1997
IN THE FEDERAL COURT OF AUSTRALIA )
NEW SOUTH WALES DISTRICT REGISTRY ) No. NG 44 of 1993
GENERAL DIVISION )
BETWEEN YATES PROPERTY
CORPORATION PTY LIMITED
Applicant
AND JOHN BOLAND (as representative
partner of Abbott Tout Russell
Kennedy solicitors)
First Respondent
THEODORE SIMOS
Second RespondentJOHN WEBSTER
Third Respondent
CORAM: BRANSON J
PLACE: SYDNEY
DATE: 5 JUNE 1997
MINUTES OF ORDER
THE COURT ORDERS THAT:
The application is dismissed against all respondents.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
INDEX
THE PARTIES 1
ACTIVITIES OF YPC CONCERNING THE RESUMED LAND 3
YPC’s CLAIM FOR COMPENSATION 14
CAUSES OF ACTION ALLEGED 19
(1) Overview 19
(2) ATRK 20
(3) Second respondent 22
(4) Third respondent 23
THE CASE BEFORE THE LAND AND ENVIRONMENT COURT 25
(1) The valuations generally 25
(2) Mr Egan 26
(3) Mr Parkinson 27
(4) Mr Woodley 31
COMPLAINTS OF YPC RE CONDUCT OF THE
LAND AND ENVIRONMENT COURT PROCEEDING 34
THE CASES OF THE RESPONDENTS 37
(1) ATRK 37
(2) Second respondent 39
(3) Third respondent 40
LEGAL ISSUES AND CONCLUSIONS AS TO LIABILITY 41
(1) The Allegations of Negligence 41
(a) Valuation evidence not called:
The “head start” claim 41
(b) The valuation evidence in fact called 63
(c) Other advice not provided 83
(2) The allegation that ATRK breached
its contract with YPC 83
(3) The statutory causes of action 84
(4) Fiduciary obligations 93
(a) ATRK 93
(b) Third respondent 96
(5) Advocates’ immunity 97
ORDER 106
IN THE FEDERAL COURT OF AUSTRALIA )
NEW SOUTH WALES DISTRICT REGISTRY ) No. NG 44 of 1993
GENERAL DIVISION )
BETWEEN YATES PROPERTY
CORPORATION PTY LIMITED
Applicant
AND JOHN BOLAND (as representative
partner of Abbott Tout Russell
Kennedy solicitors)
First Respondent
THEODORE SIMOS
Second RespondentJOHN WEBSTER
Third Respondent
CORAM: BRANSON J
PLACE: SYDNEY
DATE: 5 JUNE 1997
REASONS FOR JUDGMENT
THE PARTIES
The applicant Yates Property Corporation Pty Limited (“YPC”) is a company incorporated in the State of New South Wales. Ian Francis Yates (“Mr Yates”) is its chairman, managing director and majority shareholder. Mr Yates has been in effective control of YPC since its incorporation in 1975 except for the period from 10 March 1986 to 24 April 1992. During that period YPC was in official liquidation pursuant to an order of the Supreme Court of New South Wales. The official liquidator of YPC was Brian Silvia (“Mr Silvia”) then of the accounting firm Ferrier Hodgson. The initials “YPC” will hereafter be used to refer to the applicant both before, during and after the period when it was in official liquidation.
John Boland is named as the first respondent to the proceeding representing all of the partners of the legal firm Abbott Tout Russell Kennedy at the times of the events with which the proceeding is concerned (Federal Court Rules O6 r13). The first respondent will hereafter be referred to as “ATRK”. ATRK were the solicitors on the record in respect of a legal proceeding commenced by YPC in the Land and Environment Court of New South Wales (“the Land and Environment Court proceeding”) claiming compensation upon the resumption of certain land at Darling Harbour owned by YPC (“the subject land”).
The second respondent, Theodore Simos (“Mr Simos”), was at all material times one of Her Majesty’s Counsel practising as a barrister in Sydney. He was retained by ATRK to act as senior counsel on behalf of YPC in the Land and Environment Court proceeding.
The third respondent, John Webster (“Mr Webster”), was at all material times a barrister practising in Sydney and a member of the Australian Institute of Valuers and Land Economists. He was retained by ATRK to act as junior counsel on behalf of YPC in the Land and Environment Court proceeding.
ACTIVITIES OF YPC CONCERNING THE RESUMED LAND
By an agreement dated 17 August 1981 between Property Holdings Pty Limited, a subsidiary of Petersville Limited, as vendor and YPC as purchaser, YPC agreed to purchase for the sum of $5.1 million three parcels of commercially zoned land at Darling Harbour. Under the agreement YPC could not be required to complete the purchase prior to 1 December 1982 but no guarantee was given as to when vacant possession would be made available to the purchaser. Two of the parcels of land were together known as “the Harbour Street land” and the third parcel as “the James Street land”. The total area of the three parcels was approximately 1.54 hectares. The three parcels together comprise the subject land.
Completion of the agreement dated 17 August 1981 took place on 30 December 1983 with vacant possession being given at that time to YPC.
Mr Yates gave affidavit evidence, which was not challenged, of having been fascinated since childhood with the “retail market concept” and of having developed during his travels around the world a fascination for Asia, its cultures and its ways of life. Certain events in 1982, which it is not necessary to detail, suggested to Mr Yates that YPC could have a local monopoly in respect of retail markets if it developed a retail marketplace on the subject land. Thereafter YPC undertook steps, which are referred to in more detail below, first to test the feasibility of developing retail markets on the subject land, and secondly to advance the proposal to erect and then operate such retail markets.
For about 19 months commencing in late 1982 Mr Yates and others associated with YPC made regular and frequent visits to Paddy’s Markets at Darling Harbour. On such visits information was gathered concerning, among other things, the layout and other design features of the markets, the number of traders in different categories, the quantity and variety of available produce and the car parking requirements of the stall-holders. Research was also undertaken on behalf of YPC into the methods of operation and the nature of tenancies in other markets around Australia. In March 1983 YPC engaged builders to work in conjunction with architects to prepare concept sketch proposals for markets on the subject land. It subsequently engaged other consultants, including quantity surveyors, to provide it with advice and services concerning the proposed markets.
In April 1983 YPC recruited an operations manager for the proposed markets whose primary responsibility was to arrange the licensing of stalls and the selection of stall-holders.
By 13 April 1984 YPC held a development approval (“DA”) in respect of its proposal to erect markets on the Harbour Street land and to operate a car park on such land. A building approval (“BA”) in respect of the proposal issued on 20 July 1984. Shortly thereafter YPC selected a builder for the proposed markets.
In the meantime, in June 1984, YPC had begun to procure licence agreements from some of the 718 individuals and entities who had registered interest in trading in the proposed markets. From this number 187 attended for interview by YPC and 142 of these were selected to be offered stalls in the proposed market; forty of these 142 paid YPC 2 months’ rent in advance to secure their rights to take up stalls.
None of the above steps taken by YPC was disputed. The issue of the availability of finance to YPC to construct the proposed markets was, however, disputed. The statement of claim pleads that -
“In August 1983, financing for the Markets proposal was confirmed in a letter of acceptance received by YPC from Chase NBA.”
Mr Yates gave evidence in support of the above allegation in his principal affidavit. He asserted that by the date of resumption of the subject land, YPC had obtained financial facilities from Chase-NBA Group Limited (“Chase-NBA”) to build the proposed market development. However, the totality of the evidence on this issue indicates, and I so find, that Chase-NBA Group Limited gave no unconditional commitment to provide funds for the construction of the markets. By a letter dated 31 May 1984 addressed to Mr Yates, the Manager-Corporate Lending of Chase-NBA confirmed that Chase-NBA’s “proposal to negotiate for a construction finance loan was conditional upon a number of matters” and two matters were particularly identified. Mr Yates agreed in cross-examination that neither of those two matters was ever satisfied, and that YPC subsequently applied to Estate Mortgage Financial Services Limited (“Estate Mortgage”) for funding to re-finance its existing borrowings from Chase-NBA and to allow construction of the proposed markets.
I do not accept that the difficulties that YPC experienced in bringing its negotiations with Chase-NBA to a satisfactory conclusion were principally related to the letter dated 4 June 1984 from the Director of Public Works, which is referred to below, or to any public conduct of Mr Yates after that date calculated to cause embarrassment to political figures. I am satisfied that in the months preceding YPC’s receipt of the letter of 4 June 1984 YPC was experiencing significant problems of financial liquidity of a kind likely to cause concern to a potential financier, and which I find did cause concern to Chase-NBA. It was also, I find, encountering difficulties in negotiating with others interested in the subject land, and in particular Messrs Foo and Ho who were original joint venturers with YPC in the acquisition of the subject land.
By letter dated 22 October 1984 YPC was advised by Estate Mortgage that it had approved its application for a mortgage loan advance in the sum of $22 million as a suitable investment by the trustee of the Estate Mortgage trust funds subject to certain terms and conditions. As required by the letter YPC indicated on 25 October 1984 its wish to proceed with the borrowing facility. By letter dated 7 December 1984 Estate Mortgage identified certain additional conditions which would attach to the borrowing facility. These conditions limited the sum to be advanced to $10.5 million “until satisfactory resolution of current negotiations with the New Darling Harbour Authority”. Further, the following condition was identified:
“Should there be no resolution reached between the mortgagor and the Authority within six months then the mortgagor shall be deemed to be in default and the mortgagee will then, with the authority given to it pursuant to the mortgage, be empowered to negotiate directly with the Authority and accept any offer it deems reasonable.”
Robert John George Miles (“Mr Miles”), who was at all relevant times a partner of ATRK, gave affidavit evidence which was not challenged that in the few months following late March 1985 he -
“expended time in assisting Ian [ie Mr Yates] with refinancing arrangements for the Petersville site. Ian wanted to acquire the interests of Messrs Foo and Ho who were the original joint venturers with him in relation to the acquisition of Petersville site. Burns Philp were to take the place of Chase AMP [sic] as mortgagee. The title was cluttered with caveats and there was a great deal of negotiating with all the parties involved.”
I am not satisfied that as at the date of resumption of the subject land (i.e. 7 May 1985) YPC had confirmed finance available to it to allow it to proceed promptly with the erection of the markets. Indeed, I find positively that it did not as at that date have the financial capacity immediately to erect the markets.
This is not to say that YPC could not over time have negotiated with a prospective financier, and with others who held an interest in the subject land, to achieve the provision of the necessary finance. On the evidence before me it is not possible for me to reach a conclusion as to precisely how long a period of negotiation would in all likelihood have been necessary for this result to be achieved. It would, however, in my view, have been a period of some months after 7 May 1985.
I note that Cripps CJ in his initial reasons for judgment, now reported at (1990) 70 LGRA 187, observed at 205:
“The Authority put in issue what is described as the limited prospects of Yates to secure finance to undertake the market venture. I am doubtful that this is a relevant circumstance bearing in mind the assumptions I am required to make. ... However, the matter is somewhat academic because having heard the evidence from Mr Tarrant, I am satisfied, on the balance of probabilities, that funds would have been available to Yates in 1984 and 1985 for the markets.”
Cripps CJ was not concerned with the issue of “head start” which assumed prominence before me. Thus his Honour was not concerned to determine whether construction finance would realistically have been available to YPC as at any particular date. His Honour’s concern was with whether the subject land realistically had the potential which YPC claimed it to have. I understand his Honour’s above finding to reflect a view that had YPC during 1984 and 1985 held all necessary approvals, and had it at that time completed all other necessary preliminary steps to commence construction of the proposed markets, absent the resumption, the proposal would not have been frustrated by reason only of the unavailability of finance. This is my view also. However, unlike his Honour, on the view of the law contended for by the applicant before me, I am required to consider when in relation to the resumption date YPC could have had construction finance available to it. My view is that it would at the earliest have been some months after 7 May 1985 even had the letter of 4 June 1984 from the Director of Public Works not issued.
There was also a dispute between the applicant on the one hand, and the respondents on the other, as to steps allegedly taken by YPC towards the establishment of a unit trust in respect of the proposed markets. The further amended statement of claim (“the statement of claim”) contains the following allegations concerning the unit trust:
“44. .... in about 1983, YPC resolved to create a public unit trust to purchase 50% of the equity in the Markets from YPC once the Markets had been completed (‘the Unit Trust’).
45.YPC’s objective in creating the Unit Trust was to apply the proceeds of the sale of 50% of the equity in the Markets to the repayment of all encumbrances over YPC’s remaining 50% equity in the Markets.
46.By 7 May 1985, advisers retained by YPC had in respect of the Unit Trust:
(a)obtained approval from the Corporate Affairs Commission for a Prospectus and Trust Deed;
(b)obtained the consent of Permanent Trustee to act as Trustee of the Unit Trust;
(c)obtained an underwriting commitment in respect of the public offer and
(d)established and trained a sales force for the purpose of selling units in the Unit Trust.
47.The [subject] Land was to be the only asset of the Unit Trust.
48....
49.The Unit Trust was not formed solely because of the Resumption.”
With the possible exception of the allegations contained in pars. 45 and 46(d), the evidence fails to support any of the allegations contained in the above paragraphs from the statement of claim, and in a number of regards establishes to the contrary of such allegations.
No resolution of YPC as alleged in par. 44 was proved.
The evidence discloses that approval from the Corporate Affairs Commission was not obtained for a prospectus and trust deed in respect of the proposed unit trust. It appears that at most approval in principle for a proposed deed of trust was given by the Corporate Affairs Commission. A YPC inter-company memorandum of 31 May 1984 records:
“Since March we have been experiencing increasing frustration with the Corporate Affairs Commission over, firstly, the prospectus and secondly, the necessary Dealer’s Licence; in addition we are not making any substantial progress with under-writing finance.”
Incidentally, this inter-company memorandum contains a recommendation from the individual engaged by YPC to oversee the establishment of the unit trust that the unit trust be put on a “back burner” until the markets were up and running; moreover the memorandum records that individual’s belief that no portion of the proposed markets should be sold to the unit trust. The evidence does not suggest that the unit trust proposal was advanced further after the date of this inter-company memorandum.
The only documentary evidence concerning the consent of “Permanent Trustee” to act as trustee of the unit trust was a letter from Permanent Trustee Company Limited dated 22 March 1982 addressed to Mr Yates as Chairman of YPC. The letter refers to “our conversations with you regarding the proposed property trust which you intend to proceed with to develop land in the Haymarket”. It advises “that this Company would be prepared to act as trustee of such trust subject to the settlement of a satisfactory trust deed and prospectus”. The “consent” of Permanent Trustee Company Limited was plainly a conditional consent, and one obtained at an early stage before the proposal for the unit trust had taken on its subsequent form.
The subsequently proposed form of the unit trust is revealed by a draft prospectus for “The Yates Australia Property Growth Trust” which is an annexure to Mr Yates’ principal affidavit. Mr Yates’ evidence was that the draft prospectus was prepared in about January 1984 by the solicitors retained by YPC with respect to the proposed unit trust. The draft prospectus includes a “Chairman’s Foreword” over the name and description “Ian Yates, Chairman and Chief Executive”. The foreword includes the following paragraphs:
“In addition to the fact that the Yates Australia Property Growth Trust (‘the Trust’) intends to acquire prime real estate situated mainly in Sydney the Trust has an option to acquire an interest (of approximately 50%) in a carpark-market complex to be built in the Darling Harbour area, an inner city area which has been designated by the New South Wales Government to be an urban entertainment, residential re-development area.”
and
“The specific types of properties which I recommend for this first Trust and future Yates property trusts will be:
- hotel or motel
- carpark
- central business district office building
- retirement village
- industrial complex
- entertainment complex; and
- retail centre.”
The “Projection Model: Statement of Outlay, Income and Expenditure” contained in the body of the draft prospectus also reflects an intention for the unit trust to hold a number of types of properties of which the proposed markets would be only one. Indeed of a foreshadowed “probable outlay” of $92 million, only $15 million was indicated as being the outlay in respect of the “market complex”. I find that it was not at any relevant time the intention of YPC that the subject land was to be the only asset of the unit trust.
As to the allegation that by 7 May 1985 YPC had obtained an underwriting commitment in respect of the public offer for the unit trust, Mr Yates gave affidavit evidence that by that date YPC had “[o]btained agreement in principle from Robert Morrison & Associates Pty Limited ... to underwrite the public unit trust”. Mr Yates identified a letter dated 30 November 1983 signed by Robert Morrison, the principal of Robert Morrison & Associates Pty Ltd, as evidencing such approval in principle. The substantive portion of that letter for present purposes reads as follows:
“This is to confirm my verbal commitment that I anticipate my company, Robert Morrison & Associates Pty Ltd, will be in a position to support the Yates Property Trust which includes the Darling Harbour Project.”
I do not accept the evidence of Mr Yates that, despite the equivocal terms of this letter, Robert Morrison & Associates Pty Ltd in fact gave agreement in principle to underwrite the proposed unit trust.
When pressed in cross-examination on the issue of the underwriting of the proposed unit trust, Mr Yates appeared to agree that in the events that happened the idea of Mr Morrison or his company being an underwriter was abandoned and that attempts were made to persuade Chase-NBA to agree to underwrite the proposed unit trust. No evidence of any commitment in writing from Chase-NBA to underwrite the proposed unit trust was produced. I find that as at 7 May 1985 YPC had not obtained an underwriting commitment in respect of the public offer for the proposed unit trust.
Having regard to the whole of the evidence on the issue of the proposed unit trust, including the inter-company memo of 31 May 1984, I am not satisfied that the unit
trust described in the statement of claim was not formed solely because of the resumption of the subject land. I am not satisfied that there was at any relevant time an intention in YPC to form a unit trust of which the subject land was to be the only asset. As to the unit trust which I find YPC did propose, I am not satisfied that YPC’s failure to proceed with that proposal related solely to the resumption of the subject land.
I interpolate here that, in my view, the evidence given by Mr Yates on the topics of the availability of construction finance to YPC and the proposed unit trust reflects poorly on his credit. It seems to me that either Mr Yates prepared himself most inadequately to give evidence, both by affidavit and orally, of events which occurred a good number of years ago, or alternatively, he sought to be less than frank with the Court on these issues. In my view the Court is required to consider with care uncorroborated evidence of Mr Yates tending to the advantage of YPC.
By the letter dated 4 June 1984 from the Director of Public Works, Mr Yates received advice that the New Darling Harbour Authority Bill 1984 had passed through both Houses of Parliament and that the subject land fell within the prescribed development area as defined by the Bill. The letter concluded:
“In view of the size of the ‘Petersville’ site [ie the subject land] and its envisaged usage, it may be anticipated that the Authority would look to acquire the property. Hence the existence of a recently completed market structure which would then have to be removed would undoubtedly be a wasteful and delaying procedure.
It would be appreciated therefore if your Corporation could hold in abeyance its current development proposals until such time as the Authority is established (which is anticipated shortly) when detailed advice as to the Authority’s intentions for the ‘Petersville’ site can be provided to your Corporation.”
On 11 January 1985 a proclamation purporting to resume the subject land was published in the New South Wales Government Gazette (“the Gazette”). YPC successfully challenged such purported resumption. However, on 7 May 1985 by proclamation in the Gazette the subject land vested in the Darling Harbour Authority pursuant to s12 of the Darling Harbour Authority Act 1984 (NSW) (“the Darling Harbour Authority Act”).
YPC’s CLAIM FOR COMPENSATION
Section 12c of the Darling Harbour Authority Act provides:
“ (1)Any person who, but for the operation of section 12 in respect of any land (other than public land), would have an estate or interest in the land shall be entitled to receive compensation from the Authority as a consequence of the land having vested in the Authority pursuant to that section.
(2)A claim for compensation under subsection (1) shall be dealt with as if it were a case in which a claim had been made by reason of the acquisition of land for public purposes under the Public Works Act, 1912, by notification published in the Gazette, and the Court has jurisdiction accordingly.”
The Public Works Act 1912 (NSW) (“the Public Works Act”) provides by s42 for the resumption of private land by the Governor by notification to be published in the Gazette. Section 101(1) of that Act provides:
“Where the land described in any such notification as in section forty-two hereof mentioned consists wholly or partly of land alienated by or not the property of the Crown, or is not Crown land, the owners thereof, or the person who, but for the provisions hereinbefore contained, would have been such owners, shall be entitled to receive such sum of money by way of compensation for the land of which they have been deprived under this Act as shall be agreed upon or otherwise ascertained under the provisions of this Division of this Act.”
Section 124 of the Public Works Act sets out the basis of assessment of compensation under that Act. Relevantly it provides:
“For the purpose of ascertaining the ... compensation to be paid, regard shall in every case be had not only to the value of the land ... taken ...; and the same shall be assessed according to what is found to have been the value of such lands ... at the time notice was given, or notification published, as the case may be, and without the amount of the valuation notified to such claimant being binding in any way in relation to the assessment, and without reference to any alteration in such value arising from ... public works upon or for which such land was resumed: ...”
Section 24 of the Land and Environment Court Act 1979 (NSW) provides:
“(1)Where -
(a)a claim is made for compensation by reason of the acquisition of land for public purposes under -
(i)the Public Works Act 1912; or
(ii)(not here relevant);
and
(b)no agreement is reached between the claimant and the resuming or constructing authority;
the claim shall be heard and disposed of by the Court [ie the Land and Environment Court] and not otherwise.
(2)The Court shall, for the purpose of determining any such claim, give effect to any relevant provisions of any Acts that prescribe a basis for, or matters to be considered in, the assessment of compensation.
(3)Notwithstanding anything in the Public Works Act 1912, the compensation claimed shall not in any case be settled by arbitrators, but in every case where land is taken or acquired, either by Gazette notification or by notice to the parties, any claim as to the amount of compensation shall be heard and disposed of by the Court and not otherwise.”
On 2 January 1986 YPC commenced the Land and Environment Court proceeding claiming compensation by reason of the resumption of the subject land. As is mentioned above, on 10 March 1986 Mr Silvia was appointed official liquidator of YPC. He determined to maintain the Land and Environment Court proceeding.
Mr Silvia allowed Mr Yates to play a significant role in providing factual instructions to YPC’s legal representatives and to the valuers retained on behalf of YPC. Both before and after Mr Silvia’s appointments, Mr Yates attended a high proportion of the conferences with counsel concerning YPC’s claim for compensation. He received copies of the written advice of counsel. Prior to the appointment of Mr Silvia as liquidator of YPC I find that Mr Yates attended such conferences and received copies of such advice in his capacity as chairman and managing director of YPC. Mr Yates’ subsequent involvement with preparations for the Land and Environment Court proceeding was in his capacity as a contributory of YPC. After his appointment Mr Silvia received regular reports from ATRK as to the preparation for the Land and Environment Court proceeding.
The interlocutory steps in the Land and Environment Court were time consuming. The claim for compensation came on for hearing before Cripps CJ on 30 January 1990. The case was heard over 42 days between 30 January and 30 March 1990.
On 1 May 1990 Cripps CJ delivered judgment fixing compensation for the resumption of the Harbour Street land at $21,387,500 and for the resumption of the James Street land at $947,000, providing for total compensation in the sum of $22,334,500.
YPC appealed to the Court of Appeal of New South Wales against the judgment of Cripps CJ. The Darling Harbour Authority cross-appealed. An appeal lies to the Court of Appeal from a judgment of the Land and Environment Court only on questions of law. It was submitted on the appeal by both sides that his Honour’s judgment should be set aside and the proceeding returned to the Land and Environment Court for re-assessment of the compensation payable to YPC. The principle ground relied on by each party before the Court of Appeal related to his Honour’s assessment of special value of the land to YPC. It was agreed before the Court of Appeal that his Honour had erred in acting on the basis that YPC had made no claim for abortive expenditure. In fact YPC had claimed the amount of $217,443.78 and it was not disputed that YPC was entitled to an amount for abortive expenditure. On the important issue of special value, the Court of Appeal, by a majority (Kirby P and Handley JA), concluded that his Honour had, in the words of Kirby P at 162, “erred in disposing of the claim for special value, having regard to the reasons which he identified as warranting that conclusion”.
Disregarding the order made with respect to the costs of the appeal and cross-appeal, the orders of the Court of Appeal made on 11 July 1991 were:
“(1)Appeal in part and cross-appeal allowed.
(2)Award of compensation by the Land and Environment Court set aside.
(3)Remit the proceedings to the Land and Environment Court to determine what additional compensation, if any, should be allowed for abortive expenditure and for any special value which the land had for the appellant.”
The judgment of the Court of Appeal is reported at 24 NSWLR 156.
On 1 August 1991 an application by YPC for special leave to appeal to the High Court from the judgment of the Court of Appeal was filed. Such application was subsequently discontinued.
On 19 March 1992 an application was made on behalf of YPC to Cripps CJ for leave to call further evidence before further submissions were addressed to his Honour on the issue of the compensation to be awarded to YPC having regard to the judgment of the Court of Appeal. The third respondent appeared for YPC before Cripps CJ on 19 March 1992. His Honour refused leave to call further evidence. The matter was listed for submissions to be made to his Honour on 25 March 1992. On that day the second respondent appeared for YPC. A bound volume of submissions was provided to his Honour.
On 1 April 1992 Cripps CJ delivered judgment consequent upon the remittal to him of the Land and Environment Court proceeding by the Court of Appeal. His Honour agreed to add to the compensation that he had previously awarded the sum of $217,443.78 representing abortive expenditures incurred by YPC. However, as to “special value”, His Honour indicated that when he had in his earlier judgment adopted a per square metre estimate of the value of the subject land, he had included in that per square metre estimate an amount of $35 per square metre as the “special value” component; that is as the amount over and above the “market value” a person in the position of YPC would have paid sooner than not obtain the land. His Honour fixed total compensation for the resumption of the subject land at $22,551,944.
On 14 April 1992 the third respondent settled a notice of appeal from the judgment of Cripps CJ of 1 April 1992.
On 24 April 1992 the liquidation of YPC was terminated by order of the Supreme Court of NSW. Immediately thereafter Mr Yates terminated the instructions of ATRK and instructed fresh solicitors to lodge an appeal against the judgment of Cripps CJ of 1 April 1992. On 28 April 1992 the notice of appeal which had been settled by the third respondent was filed. Some time in November 1992, on instruction from YPC, the second appeal to the Court of Appeal was settled on the basis that the Darling Harbour Authority would pay to YPC a sum of approximately $1.25 million in addition to the amounts of compensation determined by Cripps CJ.
On 29 January 1993 YPC commenced this proceeding.
CAUSES OF ACTION ALLEGED
Overview
YPC by its statement of claim has invoked the following causes of action against the respondent or respondents indicated:
(a) negligence against all respondents;
(b) breach of contract against the first respondent;
(c) breach of fiduciary duty/obligation against the first and third respondents;
(d) ss42 and 68 of the Fair Trading Act 1987 (NSW) (“the FTA”) against all respondents; and
(e) ss52 and 82 of the Trade Practices Act 1974 (Cth) (“the TPA”) against all respondents.
ATRK
It is admitted between YPC and ATRK on the pleadings that “[i]n or about late 1985, YPC retained ATRK for reward to commence and thereafter conduct the Land and Environment Court proceedings on behalf of YPC (‘the retainer’)” and that some time after 10 March 1986 ATRK was retained by the liquidator of YPC to conduct the Land and Environment proceedings on behalf of YPC. The statement of claim enumerates 27 terms said to be implied terms of the two retainers. These alleged implied terms are mirrored by 27 virtually identical duties said to be owed by ATRK to YPC in carrying out its instruction in relation to the claim. The case against ATRK was in fact conducted on the basis that the standard of care required to be met by ATRK was the same in contract and in tort and was either the standard of care, skill and knowledge of a qualified, competent and careful solicitor or the standard of care, skill and knowledge of a qualified, competent and careful solicitor expert in the field of valuation law.
The statutory causes of action are pleaded against ATRK on two bases. First, it is pleaded that ATRK engaged in misleading or deceptive conduct by impliedly representing to YPC that:
“(a)the claim had been formulated competently and in accordance with the proper principles and practice of valuation law;
(b)it had been accurately advised as to the proper principles and practice of valuation law;
(c)it had been accurately advised in relation to the evidence by which it was proposed to establish the Claim;
(d)it had been accurately advised as to all risks associated with the Claim;
(e)no alternative ways of formulating the Claim existed which had not been pursued;
(f)no additional evidence could be adduced which would materially affect the amount which YPC could be awarded for special value and
(g)the claim as formulated involved no propositions which were controversial, novel, incorrect in law or raised important matters of legal principle.”
YPC pleaded that in reliance on the above representations and induced by them YPC allowed the Land and Environment Court proceeding to proceed in the way that they did. Secondly it is pleaded that by its silence in, in effect, failing to provide allegedly appropriate advice, ATRK engaged in conduct which was misleading or deceptive by which YPC was induced to permit the Land and Environment Court proceeding to proceed in the way in which they did. The conduct of ATRK sought to be characterised as misleading or deceptive was alleged to be conduct “in trade or commerce” within the meaning of s52 of the TPA and s42 of the FTA.
The case pleaded against ATRK includes an allegation of a breach of fiduciary duty in continuing to act for YPC in the Land and Environment Court proceeding despite the existence of a conflict between the interests of all the respondents in the present proceeding on the one hand, and YPC on the other, occasioned by Cripps CJ having refused the application to adduce further evidence upon the proceedings being remitted to him by the Court of Appeal. This allegation was not pressed at the hearing. However, during the course of the final address on behalf of YPC, two further alleged breaches of fiduciary duty by ATRK were identified. First, a duty to disclose to the liquidator of YPC information being advice previously given to YPC by Messrs Hemmings QC and Tobias QC. Secondly, to the extent to which ATRK considered that they were not under an obligation to provide advice to YPC independent of the advice provided by counsel, a duty to disclose to YPC that they were adopting a role that was essentially reactive to things that they were told to do from time to time by counsel.
Second respondent
There is some dispute on the pleadings between YPC and the second respondent as to the precise terms of the second respondent’s brief. Having regard to the way in which the case was run, this dispute is not, in my view, material. The case was run on behalf of both the applicant and the second respondent on the basis that the second respondent was briefed in about July 1989 to appear in the Land and Environment Court proceeding and to undertake the necessary preparation and other work to that end as instructed. As in the case of the first respondent, the statement of claim enumerates a large number of duties said to have been owed in the circumstances by the second respondent to YPC. The case against the second respondent was run on the basis that the standard of care required to be met by the second respondent was that of a competent senior counsel acting in an area of his or her professional expertise. The case of the applicant is that the second respondent failed to meet such standard in various ways, all ultimately relating to the conduct of the Land and Environment Court proceeding, which are identified below in Parts VI and VIII (1).
As to the statutory causes of action, the applicant has pleaded that the second respondent made the same implied representations to YPC as are set out above in respect of ATRK. Again, in a parallel allegation to that made against ATRK, the applicant has pleaded that by his silence in, in effect, failing to provide allegedly appropriate advice, the second respondent engaged in conduct which was misleading or deceptive, or likely to mislead or deceive in contravention of s52 of the TPA and s42 of the FTA by which YPC was induced to permit the Land and Environment Court proceeding to proceed in the way in which they did.
Claims pleaded against the second respondent alleging conflict of interest, the negligent failure to claim certain holding costs and breach of fiduciary duty were all abandoned.
Third respondent
It is admitted between the applicant and the third respondent on the pleadings that “[a]t some time in the period between July 1985 and November 1985, ATRK with YPC’s consent, consulted the Third Respondent in relation to the Resumption”. It is further admitted between the applicant and the third respondent that the third respondent was briefed to settle the process commencing the Land and Environment Court proceeding, to advise in conference as to pleadings, to appear when required on interlocutory proceedings in the Land and Environment Court and to appear on the hearing in that court.
As in the case of the ATRK and the second respondent, the statement of claim enumerates a large number of duties said to have been owed in the circumstances by the third respondent to YPC. The case against the third respondent was run on the basis that the standard of care required to be met by the third respondent was that of a competent junior counsel acting in an area of his or her professional expertise. The case of the applicant is that the second respondent failed to meet such standard in various ways, again all ultimately related to the conduct of the Land and Environment proceeding, which are identified below in Parts VI and VIII (1).
The statutory causes of action pleaded against the third respondent mirror precisely those pleaded against the second respondent.
As in the case of the second respondent, allegations against the third respondent of conflict of interest and negligent failure to claim holding costs were abandoned.
During the course of final addresses an alleged breach of fiduciary duty by the third respondent was identified. The alleged breach of duty was said to be founded upon evidence given by the third respondent that he did not regard himself as briefed to advise generally, and that he did not see his role, so far as the giving of advice was concerned, to extend beyond providing advice to the Queen’s counsel at the time involved “as to how the case should be prepared and what evidence should be called”. In such circumstances it was contended that the third respondent was under a fiduciary duty to disclose to YPC the material information that he did not regard it as part of his role to provide advice to YPC.
THE CASE BEFORE THE LAND AND ENVIRONMENT COURT
The valuations generally
The claim of YPC before the Land and Environment Court for compensation upon the resumption of the subject land was supported by the evidence of three valuers: Frank Kevin Egan (“Mr Egan”), Kenneth John Parkinson (“Mr Parkinson”) and Charles Allan Woodley (“Mr Woodley”). The evidence before me justifies the conclusion, and I find, that each of them was at the time of the Land and Environment Court proceeding an experienced and well regarded valuer. Mr Parkinson was the first of the valuers to be retained by YPC and I find that he was throughout regarded as the principal valuer for YPC in respect of the Land and Environment Court proceeding.
The reports of the three valuers which were received into evidence in the Land and Environment Court proceeding, and their oral evidence in that proceeding, show each of them to have been familiar with the subject land and its history, and with the recent history, and the likely future development of the Darling Harbour precinct. The evidence before me shows that Mr Yates was meticulous in ensuring that each of the valuers was familiar with the work that had been done by or on behalf of YPC to advance its proposal for a retail market and car park on the subject land. Mr Yates agreed in cross-examination that no stone was left unturned by him to ensure that the valuers had all information which he or YPC’s lawyers thought was relevant.
Mr Egan
Mr Egan’s report notes that fair compensation to YPC for the resumption of the subject land is made up of three major components being the market value of the land, the special value of the land to YPC and costs to YPC rendered abortive by the resumption. Mr Egan determined the market value of both the Harbour Street land and the James Street land by reference to comparable sales. No criticism of this approach is made by YPC.
Mr Egan, like Messrs Parkinson and Woodley, considered the issue of special value to YPC in the context of the valuation of the Harbour Street land. His report states:
“With regards special value I have endeavoured to assess what a prudent purchaser in the position of Yates Property Corporation Pty Limited would have been willing to give for the land sooner than fail to obtain it at the date of resumption.”
Mr Egan’s report then estimates, by reliance on factors not shown to be inappropriate, the annual net income which YPC would have expected to receive from the approved markets and car park. On this basis of this estimate Mr Egan reported:
“The company had completed the acquisition of the site on the 31st December, 1983 and was ready to commence building upon receipt of the Building Approval in July, 1984. It is considered that had it not been for the correspondence from the Department of Public Works on the 4th June, 1984 the building would have been completed by the resumption date.
To replace such an income the company would need to acquire a similarly unique site, obtain development and building approval and construct a suitable building, or acquire a completed market that would provide a similar net return. It is clear from these alternatives that a prudent purchaser in the position of the Company would have been prepared to pay a figure above market value to acquire the Harbour Street property rather than lose it at the date of resumption.”
Mr Egan in his report went on to assess the likely costs to YPC of adopting the two alternative courses of action. Mr Egan then discounted the two sums calculated by him as such costs “[i]n accordance with precedent” and adopted $11 million “as the amount which a prudent purchaser in the position of the dispossessed owner would have been prepared to pay above market value rather than lose the site”.
Mr Parkinson
Mr Parkinson, in his report, estimated the “special value” of the subject land to YPC in an amount inclusive of market value. He did this notwithstanding the assertion in his report that:
“The test that I have applied is ‘what is the amount additional to the market value of the vested land, a prudent purchaser in the position of the owner would have paid (in a hypothetical sale of vesting date) sooner than fail to obtain the land (Falconer - 1981 1 NSWLR 548)’.” (emphasis added)
Mr Parkinson’s estimate of the special value of the subject land to YPC was apparently arrived at independently of his estimate of the market value of the land which was arrived at by reference to comparable sales.
Mr Parkinson, under the heading “SPECIAL VALUE”, stated that “the value of the subject vested land taking into account special value is assessed at SEVENTY FIVE MILLION DOLLARS ($75,000,000)”. Mr Parkinson arrived at the figure of $75 million on the basis that YPC would have been aware as at the date of resumption that a site known as the “Markets One and Two site” was the only land that was available as a replacement for the subject land and that that site would not become available for some years. Mr Parkinson, as I understand his report, formed the opinion that $75 million was the price that a prudent purchaser in the position of YPC at the date of resumption of the subject land would not unreasonably have concluded that it would cost it in 2 - 3 years’ time to purchase the Markets One and Two site. Mr Parkinson consequently expressed the opinion:
“In the circumstances, at the date of vesting, it would not have been unreasonable for Yates not to have sold its site for not less than $75m and for the prudent purchase [sic] to have paid that amount rather than lose it.”
In forming an opinion as to the market value of the subject land, Mr Parkinson had regard to what he identified as two components of that value. First, he sought to assess the redevelopment value of the Harbour Street land and of the James Street land. Secondly, he sought to value the Harbour Street land as a site for the market development for which a DA and a BA had been obtained. He assessed the market value of the subject land as the aggregate of these values. Mr Parkinson’s primary opinion as to the market value of the subject land was expressed as follows:
“Based on the sales information shown on the annexed sales schedules and available rental information, we are of the opinion that the market value of the subject lands at the date of vesting, excluding any items of special value, disturbance, or abortive expenditure was:-
Present value of $8,062,404 pa. being net
rental of stalls and carpark (see Annexure 2)
for 9 years deferred 1-5 years @ 10% $40,246,155Present value of $5,793,110 pa. for 1 year
@ 10% deferred for 6 months $ 5,235,602
$45,481,757
Less 5% risk/contingency factor $ 2,274,087$43,207,670
Less building costs and holding charges $ 6,185,713
Value of site plus interest with
BA/DA for limited period markets $37,021,957
Redevelopment value of main site
based on comparable sales
14,746m less road widening of
approximately 145m = site area of
14,601m @ $2,152 = $31,421,352
less penalty cost of $1,385,000
$30,036,352 - deferred 10.5 years @ 5% $17,995,318Add redevelopment value of James Street
property: 670m @ $1,614 $ 1,081,380
$56,098,655
Less loss of interest on land (ex James
Street site) 16.5% pa. for 6 months $ 4,275,417
$51,823,238
SAY - $51,825,000”
Mr Parkinson’s evidence before the Land and Environment Court explains the basis of the above calculation. He formed an opinion as to what the Harbour Street land might have fetched in the marketplace based on comparable sales. This opinion was, in the words of Mr Parkinson, “simply a development value for whatever, hotel or office, whatever the purchaser desired to do with it”. Mr Parkinson went on:
“Then I examined the fact that there was a DA and BA and it was well down the track towards being developed as a retail market development. I then set about and investigated rental levels which might reasonably have been expected for stalls in that market, what was the likelihood of success for a market on that site? What was the demand for a market on that site? Did that add anything to the value of the land? I came to the very firm conclusion, yes it did ...
Based on all of that research and examination of available data, it was obvious to me it would be imprudent for a buyer simply to pay redevelopment value for the site. He could establish the market and achieve a[n] immediate cash flow, immediate significant cash flow and then he could sit back on that site and watch what went on around him ... The potentialities of a large site like this are limitless and he had a cash flow which enabled him to sit on that cash flow for a period he liked ... Applications for the BA and DA were for a limited period of markets for five to ten years and in fact the buildings were designed - they were what I term as throwaway buildings ... So I took the present value of the market income for the first 10 years at 10 per cent and then I deferred the redevelopment value of the site until the end of that period because I didn’t believe anyone would simply have paid the value as a market site when they had all these other potential flow space ratios available.”
Mr Parkinson stated explicitly in his evidence before the Land and Environment Court that he did not act on the assumption that the retail market building was erected and the markets operational as at the date of the resumption of the subject land. He indicated that his calculations allowed six months to get the building up and the markets running. Mr Parkinson also gave evidence that he formed the opinion that the income from year one of the markets would be lower than in subsequent years. He explained that it was for this reason that he divided the present value of the ten years of rental of the market stalls and car park which he envisaged into two parts: his estimate of the present value of the first year of such rents deferred for six months to allow for construction of the market, plus his estimate of the present value of the remaining nine years of such rents deferred for the six month period of construction and for the first year of operation of the markets.
The figure of 10% used by Mr Parkinson in calculating the two present value figures for net rental of stalls and car parks, Mr Parkinson explained, reflected his analysis of the net return on investment required by the purchaser of another market development, namely the Preston Markets in the State of Victoria. The 5% risk factor used by him as the risk/contingency allowance in his above calculation, he explained, was reduced from a figure of 10% - 15%, which he might otherwise have adopted, by reason of the steps already taken by YPC at the date of the resumption of the subject land to minimise the risk of the retail market development proposal. Such steps included its research and its obtaining of registrations of interest by potential stall-holders.
Mr Parkinson undertook a supplementary valuation of the market value of the subject land using the same methodology as he used in the above calculation but based upon a feasibility study for the proposed retail market development undertaken by Trading Places Pty Limited rather than upon his own research. The supplementary valuation was $41 million.
Mr Woodley
The following paragraph from Mr Woodley’s report identifies his approach to the special value to YPC of the proposed markets site (i.e. the Harbour Street site):
“Assuming compensation for business disturbance will be assessed separately we have taken the view that the special value of this land to the owners may be taken to be the price a hypothetical purchaser in the position of the owners would have been willing to pay to retain such land inclusive of the assumed benefit of being occupied by an operating market together with the perceived potential for future development of air space above the market.”
Like Mr Parkinson, Mr Woodley assessed special value as a figure inclusive of market value. In his opinion the minimum special value of the Harbour Street land to YPC was $50.4 million. Mr Woodley reached this figure on two separated bases. First he expressed the opinion that:
“If it is accepted that it is appropriate for the purpose of assessing compensation to assume that the approved first stage of development of the markets site would have been completed and in operation at the date of resumption had it not been for prior action taken by the resuming authority, an assessment of special value to this land of $50.4 million would be appropriate.”
His report makes it clear that the site (i.e. the vacant land) component of this valuation is $35.4 million. This figure was calculated by him by deducting from his estimate of the special value to the owners of established markets on the Harbour Street land, first, a discount figure of 10% to reflect the risk involved in the assumption that the markets would be completed, and secondly, amounts reflecting the value of improvements, overheads and holding costs included in his estimate of the special value to the owners of established markets. To arrive at the special value to YPC of the Harbour Street land of $50.4 million, Mr Woodley added to the site value calculated by him of $35.4 million an amount of $15 million being his estimate of the added market value for development purposes of the air space over the developed markets. That is, while Mr Parkinson envisaged a “throwaway” market development, Mr Woodley envisaged a market development which could have additional development constructed above it.
The second basis upon which Mr Woodley expressed the opinion that the special value of the Harbour Street land was $50.4 million is contained in the following paragraphs of his report:
“If this [i.e. the basis of his first opinion] is not accepted as an appropriate basis for assessing compensation for special value, a possible alternative approach could well be to take into account the cost of acquiring a comparable site based on estimated market values and including a special value allowance for perceived costs of acquisition and penalty costs of delayed development and loss of competitive advantages.
In this respect the most suitable and comparable alternative site for the development envisaged by Yates Corporation would have been the site of the old Paddy’s Markets Building which was later sold by the State Government with leasehold title for the ‘Studio City’ development incorporating new markets.
Given that the resumed site was held under freehold title, a hypothetical purchaser in the position of the owners would clearly have seen the advantages of securing this unique freehold site with approval for markets development and could reasonably have been expected to pay a special value for the land equating to the value estimated on the previously stated basis rather than fail to secure the site.”
Mr Woodley’s opinion as to the minimum value to YPC of the subject land as at the date of its resumption was $51.27 million made up as follows:
“Special value of market site to owners $ 50.4 million
Market value of James Street site $ 0.87 millionTotal$51.27 million”
Mr Woodley expressed a number of valuation opinions as alternatives to the above opinion. Using the same methodology as that which supported his above opinion but utilising a lower capitalisation rate in estimating the special value of the market site, Mr Woodley arrived at a valuation of such market sites of $59 million. Using an alternative methodology having “regard to the sum required to provide for the perceived future costs of replacement of the operating markets at a comparable location in the Darling Harbour precinct” Mr Woodley estimated the special value of the market site to YPC at approximately $60 million. Mr Woodley estimated the market value of the unimproved site with DA and BA at the date of resumption at $43 million.
COMPLAINTS OF YPC RE CONDUCT OF THE
LAND AND ENVIRONMENT COURT PROCEEDING
By its statement of claim YPC makes the following assertions concerning the conduct of the Land and Environment Court proceeding:
(a)that each of the reports of Messrs Egan, Parkinson and Woodley assumed that the markets had been built and were operating as a going concern as at the resumption date (“the assumption”);
(b)that evidence, arguments and submissions relating to the notional capitalised income stream from the markets as a hypothetical going concern occupied over one half of the hearing time;
(c)that prior to the hearing ATRK and the second and third respondents advised Messrs Egan, Parkinson and Woodley:
(i)to make the assumption;
(ii)alternatively that making the assumption was justified under principles of valuation law and
(iii)to assess the special value based upon the hypothetical future costs of acquiring land described in the reports as “Markets 1 and 2” as an alternative site upon which notionally to reinstate the markets;
(d)That Cripps CJ in the Land and Environment Court and the Court of Appeal correctly rejected as being contrary to proper principles of valuation law:
(i)the valuations of Messrs Egan Parkinson and Woodley based on the notional capitalised income stream; and
(ii)the approach taken by Messrs Egan, Parkinson and Woodley in their respective reports to special value;
(e)that ATRK and the second and third respondents were aware or ought to have been aware that the special value of the subject land to YPC was of the type considered and awarded in Kennedy Street Pty Limited v The Minister [1963] NSWR 1252 and Baringa Enterprises Pty Limited v Manly Municipal Council (1965) 15 LGRA 201; and
(f)that YPC was in an advantageous position at the resumption date relative to other prospective purchasers of the subject land wishing to build markets on the land in that it, for example, did not have to pay stamp duty and other transfer fees on the market value of the land, would not have to pay holding costs for 20 months on the market value of the land, was able to build at 1985 building costs rather than the higher building costs which would obtain 20 months later, and was able to satisfy the Council’s car-parking requirements without substantial additional expense (the alleged “head start” claim);
(g)that in or about 1983 YPC had resolved to create a public unit trust to purchase 50% of the equity in the market from YPC once the markets had been completed with the objective of applying the proceeds of such sale to the repayment of all encumbrances over YPC’s remaining 50% of the equity;
(h)that by 7 May 1985 advisers retained by YPC had in respect of the unit trust:
(i)obtained approval from the Corporate Affairs Commission for a prospectus and trust deed;
(ii)obtained the consent of Permanent Trustee to act as trustee of the unit trust;
(iii)obtained an underwriting commitment in respect of the public offer; and
(iv)established and trained a sales force for the purpose of selling units in the unit trust;
(i)that the subject land was to be the only asset of the unit trust which would have been attractive to potential investors; and
(j)that evidence of the matters referred to in subparagraphs (f)-(i) above was not adduced at the hearing of the Land and Environment Court proceeding.
YPC asserts that in the above premises it:
(a)wasted significant costs and other monies attempting to value the Land based on notional capitalised income stream method;
(b)lost the opportunity to formulate and prove its claim for special value in accordance with the proper principles and practice of valuation law based upon its advantageous position relative to other prospective purchasers who wished to build markets on the subject land and its abortive costs and expenditure with respect to the proposed unit trust;
(c)was thereby inadequately compensated for special value by the allowance for special value made by Cripps CJ in his award of compensation for the resumption of the subject land, which allowance would have been greater had YPC’s claim for special value been formulated and proved in accordance with the proper principles and practice of valuation law.
THE CASES OF THE RESPONDENTS
ATRK
The case presented on behalf of ATRK may be summarised as follows.
As to the case presented on behalf of YPC in the Land and Environment Court proceeding:
(a)there was no error of legal principle in tendering valuation evidence which:
(i)for the purposes of market value, took into account capitalisation of rents from a hypothetical development; and
(ii)for the purposes of special value, took into account the cost of acquiring an alternative site;
(b)there was in 1990, and there is still in 1997, no legal basis for a special value case of the type for which YPC contends in these proceedings; and
(c)in any event, there was in fact no “head start” advantage enjoyed by YPC.
As to ATRK’s duties as solicitors for YPC, its only duty in the circumstances was to warn if counsel’s opinion was affected by glaring error, inherent contradiction or conflict with the valuers or between senior and junior counsel and no such occasion arose. In any event, it was submitted, no conduct by it is shown by the evidence to have been causative of any loss in the circumstances, and that had ATRK advised in accordance with the case now presented by YPC their advice would not have found favour with the second and third respondents whose views would at the relevant time have prevailed with YPC. Moreover, it was submitted, as to the alleged “head start” claim, even if such a claim was available to YPC as a matter of law, the factual foundation of such a claim could not have been established.
As to the statutory causes of action propounded pursuant to s52 of the TPA and s42 of the FTA, it was submitted that ATRK is not a corporation so that s52 of the TPA may be disregarded. As to s42 of the FTA it was submitted that:
(a) no representations as alleged were made;
(b) if such representations were made:
(i) they were legal opinions not given “in trade or commerce”;
(ii) they were not misleading or deceptive;
(iii) reliance on them could not have caused loss;
(iv) they were not relied upon.
To the extent that ATRK as solicitors gave advice independently of counsel with respect to the legal principles which should govern the presentation of YPC’s case in the Land and Environment Court, it was submitted that such advice was with respect to and intimately connected with proceedings in court. It was therefore suggested that it attracted the same immunity from suit as such advice from counsel attracts. Such immunity, it was contended, extends to immunity from suit from causes of action other than negligence including a cause of action under s42 of the FTA.
As to the allegation of breach of fiduciary duty it was contended that:
(a)it is insufficiently pleaded;
(b)the allegation is in substance no more than a claim of failure to advise which falls to be dealt with by conventional tort and contract principles and subject to rules concerning advocates’ immunity from suit; and
(c)there were no relevant facts to be disclosed by ATRK.
Second Respondent
The case presented on behalf of the second respondent may be summarised as follows.
The second respondent’s conduct of the Land and Environment Court proceeding on behalf of YPC was “competent and entirely in accordance with the proper application of the relevant principles of valuation law”. Moreover, the views of the second respondent as to the facts and the law which informed his conduct of the Land and Environment Court proceeding were open and his views of the law are and were the preferable views of the law.
As a matter of law it was contended that the claim of negligence against the second respondent must fail as he was not subject to a common law duty of care in respect of the work which he undertook pursuant to his brief to appear in the Land and Environment Court hearing as senior counsel for YPC. Reliance was placed on barristers’ immunity as discussed by the High Court in Giannarelli v Wraith (1988) 165 CLR 543. In any event, it was contended that YPC failed to prove any loss consequent upon the negligence alleged against the second respondent.
As to the alleged statutory causes of action, of which only that based on s42 of the FTA was ultimately pressed against the second respondent, it was contended that:
(a)no relevant “conduct of the second respondent has been pleaded or established”;
(b)any relevant conduct of the second respondent was not “in trade or commerce”; and
(c) barristers’ immunity extends to the statutory causes of action.
Third Respondent
Broadly the case of the third respondent followed that presented on behalf of the second respondent. The third respondent also placed reliance on the nature of his retainer as junior counsel in circumstances in which senior counsel were at all times retained by YPC and, indeed, advice as to the basis upon which YPC could formulate its claim for compensation upon the resumption of the subject land had been obtained from at least two senior counsel before he himself was retained, initially “to settle the process commencing the Land and Environment Court proceedings and to advise generally in conference”.
The third respondent’s case with respect to the allegation made against him of breach of fiduciary duty was substantially the same as that of ATRK.
LEGAL ISSUES AND CONCLUSIONS AS TO LIABILITY
The Allegations of Negligence
(a) Valuation evidence not called: The “head start” claim
For the purpose of giving consideration to the allegation of negligence made against the respondents, I have assumed that each of them owed a duty of care to YPC. Whether in fact, in the circumstances, they did so is considered below under Part VIII(5) under the heading “Advocates’ Immunity”.
As is mentioned above, the applicant asserts that it was in an advantageous position at the date of the resumption of the subject land relative to any other prospective purchaser of the land wishing to build markets on the land. In summary it was the case of the applicant in this regard that any other prospective purchaser of the subject land would be required to repeat steps undertaken by YPC and would for this reason be delayed 20 months when compared with YPC in being able to start building markets on the subject land. The statement of claim, in providing particulars of the allegation that YPC was in an advantageous position when compared with other prospective purchasers, after referring to the requirement for any prospective purchaser other than YPC to repeat steps undertaken by YPC, asserts:
“YPC thus:
(a)did not have to pay stamp duty, legal fees and usual transfer costs (all at applicable sale or ad valorem rates) on the market value of the Land as at the Resumption date;
(b)did not have to pay interest for the 20 month period on the market value of the Land as at the Resumption date and on the items mentioned in (a) hereof;
(c)avoided any uncertainty caused by future changes to building regulations, conditions of obtaining Development Consent and policies of the Council;
(d)was able to exploit the demand for stalls in the Markets which, as YPC had ascertained during the 20 month period, existed at the Resumption date;
(e)was able to build at 1985 building costs rather than the higher building costs which obtained about 20 months after the Resumption and
(f)by virtue of the matters referred to in sub-paragraphs 39 (c) and (d) hereof, was able to satisfy the Council’s car parking requirements whereas any other prospective purchaser would not have been able to satisfy such requirements at all or without substantial expense additional to that mentioned in (a) and (b) above.”
The matters referred to in sub-paragraphs 39 (c) and (d) of the statement of claim are that by July 1984 YPC had negotiated with the Sydney City Council to purchase from the Council at property known as 23 Pier Street, Haymarket and was the assignee of leasehold interests in lands adjacent to the subject land owned by the State Rail Authority.
It was the case of the applicant that its alleged advantageous position as at the date of resumption of the subject land relative to any other prospective purchaser of the subject land gave the subject land special value to it, and that the respondents should have advised in favour of, and propounded a claim for special value on this basis on its behalf, in the Land and Environment Court proceeding.
There was no dispute between the parties that the nature of “special value” was authoritively determined by the Privy Council in Pastoral Finance Association Limited v The Minister [1914] AC 1083 at 1088 in the following passage:
“That which the appellants were entitled to receive was compensation not for the business profits or savings which they expected to make from the use of the land, but for the value of the land to them. No doubt the suitability of the land for the purpose of their special business affected the value of the land to them, and the prospective savings and additional profits which it could be shewn would probably attend the use of the land in their business furnished material for estimating what was the real value of the land to them. But that is a very different thing from saying that they were entitled to have the capitalized value of these savings and additional profits added to the market value of the land in estimating their compensation. They were only entitled to have them taken into consideration so far as they might fairly be said to increase the value of the land. Probably the most practical form in which the matter can be put is that they were entitled to that which a prudent man in their position would have been willing to give for the land sooner than fail to obtain it.”
(emphasis added)
The expression “head start” in the context of special value appears to have been coined by Handley JA in Yates Property Corporation Pty Ltd (In Liquidation) v Darling Harbour Authority. After referring to a document brought into existence by YPC which recorded the names and addresses of the persons expressing interest in becoming stall-holders or who had pre-paid rent, and expressing approval of the legal principles applied in Kennedy Street Pty Limited v The Minister [1963] NSWR 1252, Handley JA stated at 188:
“The existence of the appellant’s work etc may have given the appellant an advantage or head start over other purchasers in the development of markets on this land. The judge made no finding to that effect. If such an advantage or head start did exist it would generally be worth money to a developer in the position of the owner. Hence it would generally give rise to some special value. These issues raise questions of fact.” (emphasis added)
Reliance was placed by the applicant particularly on two New South Wales cases in which awards of special value were made - i.e. Kennedy Street and Baringa Enterprises Pty Limited v Manly Municipal Council.
I note that Kennedy Street was a case in which Mr Simos appeared as junior counsel for the plaintiff. The plaintiff company in that case had been formed for the purpose of acquiring, subdividing and then selling in subdivided lots a certain parcel of land. It entered into a contract to purchase the land, caused a survey plan to be prepared and made application to the local council for consent to the proposed subdivision. Such approval was given in principle subject to certain conditions. Notification of resumption was given some eight weeks after the signing of the contract to purchase the land and the purchase was not completed. In considering whether the subject land in that case had any special value to the plaintiff company, Hardie J stated at 1255-1256:
“... the application to the facts of the present case of the principles established by the authorities leads me to the conclusion that the subject land had some special value to the plaintiff company over and above its market value. The matters and considerations that have caused me to reach that conclusion arise from the relationship of the plaintiff company to the subject land. The plaintiff company was incorporated to acquire, develop and sell the land. The finance for the project was to be provided equally by the two owners of the shares of the company, and Robertson, one of those owners, was to give the company the benefit of his expert knowledge and advice. Between the date of the contract to purchase the land and the date of its resumption the company had given close and careful consideration to the problems associated with the proposed subdivision. It had paid stamp duty and legal fees to acquire it; it had also paid survey fees and engineering fees, and the Council fee in relation to the subdivision application. The knowledge and experience acquired by Robertson and the time spent by him in examining the land and taking the steps appropriate to ensure an expeditious approval of the subdivision were, in the event that happened, of no value to the company. The resumption deprived the plaintiff of land proposed to be used by it in what would in all probability have been a profitable venture; thus the plaintiff’s profit-earning potential was diminished, the extent of such diminution depending upon a number of factors, one of the most important being the length of time reasonably required by the plaintiff to re-equip itself for this type of business. ... [I]t is difficult to determine what were the reasonable anticipations at the date of resumption as to the period necessary to enable the plaintiff to re-establish itself in the business of selling vacant land in subdivision and as to the prospects of acquiring land with the potential of the resumed land. On the somewhat meagre evidence before me I am of opinion that a period of some two to three months should be allowed for this purpose, at the end of which time the plaintiff company could anticipate having acquired other land suitable for subdivision but probably not quite as attractive from the point of view of subdivision and sale. Bearing in mind all of the relevant facts which the plaintiff would take into consideration if it is to be treated as having been momentarily deprived of the land and proceeding to negotiate its purchase, I am satisfied that the plaintiff company would, rather than lose the opportunity of acquiring the land, have paid a price substantially in excess of the market value of £19,500.”
His Honour went on to fix the special value of the land to the plaintiff company in the sum of £2,500 having noted that the plaintiff had expended £840 in the project over and above the deposit paid.
The above passage from the reasons for judgment of Hardie J in Kennedy Street reveals that his Honour concluded that the land had special value to the plaintiff arising out of the relationship of the plaintiff to the land. However, in assessing such special value, it appears that his Honour looked not at the question of whether the plaintiff would enjoy a head start when compared with another prospective purchase in subdividing the land, but rather at the hypothetical cost to the plaintiff in being required to move its proposed venture to an alternative site.
The facts in Baringa Enterprises were that the plaintiff purchased a parcel of land containing a shop and three old residences. The plaintiff paid a significant sum in compensation to the tenants of the residences to achieve vacant possession. It then demolished the existing buildings and called tenders for the erection of an eight storey development on the land. Council approval in principle to the erection of such a building had been obtained. Severe credit restrictions delayed the project and the land was resumed before the plaintiff was in a position to proceed with it. In considering the special value of the subject land to the plaintiff over and above its market value, Hardie J stated at 204-205:
The ambit of an advocate’s immunity from suit is discussed below in Part VIII (5). It extends to most, but almost certainly not all, of the in-court work of a barrister or a solicitor-advocate. It extends to only a limited extent to out of court work undertaken by a legal practitioner. It seems to me that, even if s42 of the FTA were to be given the wider interpretation rejected by Santow J in Prestia v Aknar, the argument that the FTA does not disclose an intention to abolish the common law immunity of advocates would be a powerful one.
In Webb Distributors (Aust.) Pty Ltd v The State of Victoria (1993) 179 CLR 15 at 37, in considering the interrelationship of s52 of the TPA and the Companies (Victoria) Code in its application to building societies, Mason CJ, Deane, Dawson and Toohey JJ in a joint judgment said:
“The Trade Practices Act is unquestionably a piece of innovative legislation. But it is not to be seen as eliminating, ‘by a side-wind ...’, the detailed provisions established for more than a hundred years to govern the winding up of a company.”
The reference by their Honours to a “side-wind” is taken from the judgment of Brennan J in Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd at 224 where his Honour observed:
“It would be surprising if s52 of the Trade Practices Act were to alter the ‘careful balance’ of the Patents Act 1942 and the Designs Act by a side-wind and ... open the way to the creation of prescriptive monopolies for the manufacture of goods.”
In that case Brennan J further observed at 225:
“Section 52 operates in a milieu of the external legal order, so that the character of conduct which falls for consideration under s52 is to be determined by reference to the external legal order as it exists when the conduct is engaged in.”
See also Fraser v NRMA at 582.
Even if s42 of the FTA were to be given the wider interpretation rejected by Santow J in Prestia v Aknar, the issue of whether, as a matter of construction, the section should be seen as disclosing an intention to abolish the common law immunity of advocates, would remain to be determined. A number of factors might be thought to indicate that it did not. A legislature is not assumed to have intended to abolish important common law rights or principles unless the text of the legislation discloses a clear intention to do so (Baker v Campbell (1983) 153 CLR 52). In addition, the High Court has held that the immunity of barristers rests on important considerations of public policy which protect the administration of justice in the courts. An intention to interfere, albeit indirectly, with the administration of justice in the courts would not, in my view, readily be found to be disclosed by s42 of the FTA. Moreover, the public policy considerations which the High Court has identified as supporting the immunity might be thought to raise the issue of whether the Parliament of New South Wales would have the constitutional power to abolish such immunity in Federal courts or, indeed, in any case in which federal jurisdiction is being exercised. If it does not have such power, it is not lightly to be assumed that the Parliament would have intended advocates to be subjected to different régimes of liability depending upon the character of the court in which they were appearing or the character of the work which they were undertaking.
If it were necessary for me to decide the point, I would hold that the respondents respectively are entitled in respect of the statutory causes of action to rely on the immunity of advocates to the same extent as they are entitled to rely on such immunity in respect of the cause of action in negligence (see Part VIII (5) below).
Fiduciary obligations
(a) ATRK
It is not contentious that ATRK occupied a fiduciary position with respect to YPC in acting on its behalf in respect of the Land and Environment Court proceeding (Meagher, Gummow & Lehane: Equity Doctrines and Remedies, 3rd Ed., Butterworths, 1992, para 502).
The breach of fiduciary obligation alleged against ATRK is twofold. First, it is contended that following the appointment of Mr Silvia as liquidator of YPC and the confirmation or reinstatement of their retainer to act for YPC, ATRK became obliged to impart to Mr Silvia information as to the details of advice given by Messrs Hemmings and Tobias. Secondly, it is contended that ATRK determined to adopt a role in respect of YPC’s claim for compensation that was purely reactive to the advice of counsel and that as a consequence they had a fiduciary duty to disclose to Mr Silvia that they saw their role in this limited way.
I turn to the first aspect of the alleged breach of fiduciary duty. The relevant advice, as I understand it, given by Mr Hemmings, was oral advice given by him in conference, that income capitalisation is always regarded with suspicion and the necessary assumptions are easy to criticise. The relevant advice, again as I understand it, given by Mr Tobias, was also oral advice given by him in conference, that YPC would not be entitled to recover in compensation proceedings loss of profit in not proceeding with the market development and that income capitalisation is not a good basis for property valuation because it is subject to so many variables.
Information as to the advice given by Messrs Hemmings and Tobias was in the possession of YPC. Not only did Mr Yates attend and play an active part in the conferences at which the advice was given (indeed he attended the conferences as chairman and managing director of YPC for the purpose of receiving the advice of senior counsel), he caused an employee also present at the conference to take minutes of what was said at the conference. There being no evidence to the contrary I assume that such minutes became part of the business records of YPC.
Each of the above conferences was held in late 1984. It may be that such advice, or similar advice, was also given in 1985. The relevant conferences were of a preliminary nature and preceded both the instruction of valuers to prepare formal valuation reports and the institution of the Land and Environment Court proceeding. When Mr Parkinson subsequently accepted instructions to undertake a valuation of the subject land, he imposed the condition upon Mr Silvia that he agree “to instruct and use the services of Mr N. Hemmings QC, and Mr J. Webster of Counsel (or some similarly recognised Senior and Junior Counsel in the field) to advise in relation to the valuation and present the case, if necessary, before the Land and Environment Court”. Mr Silvia accepted this condition and advised ATRK of it.
Having regard to the above circumstances, I am not satisfied that information as to the preliminary advice given by Messrs Hemmings and Tobias was material information such that ATRK were in breach of their fiduciary duty to YPC in not disclosing it to Mr Silvia. In any event, as is noted above, the information was already in the possession of YPC.
As to the second arm of the alleged breach of the fiduciary duty to disclose material information, the evidence does not support a finding that ATRK made a decision not to provide legal advice to Mr Silvia as liquidator of YPC. In fact they did not, except at a preliminary stage, provide material advice additional to that provided by counsel. However, they were involved in conferences with senior and junior counsel and were alert to the legal approach being taken to the preparation of YPC’s claim for compensation. They were not asked by Mr Silvia to provide legal advice independently of counsel; indeed they were aware that it was to counsel that Mr Silvia principally looked for legal advice. In the light of my findings above with respect to the claims in negligence, it must be accepted that no situation arose in which they ought reasonably have advised that the approach of counsel, or the approach being adopted by the valuers, was legally in error. If such a situation had, in their opinion, arisen, I see no reason to conclude that they would not have done so if, after discussion with counsel, they maintained their view. I am not satisfied that the second aspect of the alleged breach of fiduciary duty by ATRK has been made out.
It is thus unnecessary to consider whether the breaches of fiduciary duty alleged against ATRK are sufficiently pleaded.
(b) Third respondent
The allegation of breach of fiduciary duty made against the third respondent arises out of certain passages of his evidence given in cross-examination. In response to a question as to whether he gave advice either to ATRK or to YPC as to the possibility of a head start claim for special value, Mr Webster answered:
“It wasn’t my duty to give any advice in that regard, but if I’d have been asked, I would certainly not have given that advice.”
Later Mr Webster said:
“... I never saw my role ... other than advice to Mr Simos or whoever the Queen’s Counsel was involved in the brief at the time as to how the - this was preparing a case for hearing, as to how the case should be prepared and what evidence should be called.”
It is contended by the applicant that the above passages disclose that Mr Webster regarded himself as under no duty to provide advice to YPC and that, in that circumstance, information as to his understanding of his role was material information which he was under a fiduciary obligation to disclose to Mr Silvia.
In my view the true effect of Mr Webster’s evidence in this regard can only be understood against the background that he and Mr Simos did not differ in their views on the proper preparation of YPC’s claim for compensation. I do not conclude that if Mr Webster identified an irreconcilable and material difference between Mr Simos’ views and his own as to the proper preparation of YPC’s case, he would not have thought it appropriate to raise the matter with his instructing solicitors for the purpose of a report being provided to Mr Silvia.
Assuming that a relevant fiduciary relationship existed between Mr Webster and YPC, I find that the breach of such duty alleged against him has not been made out.
It is not necessary in the circumstances for me to rule on whether the applicant’s pleadings in this matter foreclose the raising of this issue against the third respondent, or on whether the fiduciary relationship contended for by the applicant would be inconsistent with Mr Webster’s immunity as a barrister.
Advocates’ immunity
As Mason CJ pointed out in Giannarelli v Wraith at 555:
“The common law has for a very long time recognized that the barrister is not subject to ... a general duty of care. The immunity of the barrister from liability in negligence to his client, at least in respect of court work, is supported by powerful authority, ancient and modern, in England, Scotland and Ireland: see Ronald v Worsley [[1961] 1 AC 191]; Saif Ali v Sydney Mitchell & Co. [[1980] AC 198].”
Following the decision of the High Court in Giannarelli v Wraith and decisions of the Court of Appeal of NSW in Keefe v Marks (1989) 16 NSWLR 713 and MacRae v Stevens (1996) Aust. Torts Reports ¶81-405 the immunity of barristers may be said to be supported by powerful authority in Australia also.
The policy considerations which now lie behind the common law immunity of barristers from liability in negligence to their clients are examined by Mason CJ in Giannarelli v Wraith. His Honour noted at 555 that the first such policy consideration relates to the peculiar nature of the barrister’s responsibility when he or she appears for a client in court; that is, the fact that the barrister’s duty to his or her client is subject to an overriding duty to the court. The second such policy consideration, in the words of the Chief Justice, “arises from the adverse consequences for the administration of justice which would flow from the re-litigation in collateral proceedings for negligence of issues determined in the principal proceedings”.
It is desirable to draw attention to the following passage from the reasons for judgment of Mason CJ in Giannarelli v Wraith at 557:
“To deny the litigant a cause of action for negligence, even if it be limited to in-court negligence, on the part of his counsel is a serious step. It is to sanction a continuing exception in favour of counsel, as against his client, from the ever-expanding tort of negligence. But the exception which the law creates is not to benefit counsel but to protect the administration of justice. And the exception in favour of counsel is in conformity with the privilege which the law has always conferred in the interests of public policy on those engaged in the administration of justice, whether as judge, juror, witness, party, counsel or solicitor, in respect of what they say in court ... .”
Whilst reserving the right to argue elsewhere that Giannarelli v Wraith was wrongly decided, Mr Quick QC, who appeared as senior counsel for the applicant, acknowledged that the majority decision in that case binds this Court. He contended, however, that the applicant’s “claims in negligence do not specifically involve claims for mishandling the matter ‘in court’ ”. Mr Quick further accepted that, at least with respect to the tort of negligence, “whatever immunity is available to a barrister in connection with work ‘in court’ is also available to a solicitor whilst acting as an advocate and undertaking that work”. This concession is in accordance with the views of the majority in Giannarelli v Wraith: see particularly per Mason CJ at 559.
It was contended on behalf of the applicant that the common law immunity was restricted in its operation to the tort of negligence and had no operation, for example, in respect of the law of contract or statutory causes of action. To the extent that a claim for professional negligence may be made under the law of contract this contention is, in my view, contrary to authority (see, for example, Giannarelli v Wraith per Wilson J at 572; and see Donellan v Watson (1990) 21 NSWLR 335 per Handley JA at 340).
In view of the conclusions which I have reached above, it is strictly unnecessary for me to deal with the above contentions. However, lest the matter go further, I shall do so briefly.
As Mason CJ explained in Giannarelli v Wraith at 559-560:
“The public policy considerations underlying immunity from in-court negligence have no relevance to a barrister’s liability for negligent advice in relation to out-of-court matters ... . The problem is: where does one draw the dividing line? ... it would be artificial in the extreme to draw the line at the courtroom door. Preparation of a case out of court cannot be divorced from presentation in court. The two are inextricably interwoven so that the immunity must extend to work done out of court which leads to a decision affecting the conduct of the case in court. But to take the immunity any further would entail a risk of taking the protection beyond the boundaries of the public policy considerations which sustain the immunity.”
In Keefe v Marks the Court of Appeal of NSW, by majority, upheld the striking out of a statement of claim in which a solicitor commenced proceedings against a barrister earlier briefed by the solicitor in respect of a claim for personal injuries by made a Mr Tehfe. The solicitor had compromised a claim made by Mr Tehfe against the solicitor which alleged professional negligence in relation to the loss of entitlement to interest on damages awarded to him for his personal injuries. In the Court of Appeal Gleeson CJ at 718-719 found that the substance of the complaint against the barrister was that:
“... having been briefed to act as counsel for Mr Tehfe in his action for damages for personal injuries, he did not at any relevant time, either prior to the commencement of the hearing, or during the hearing, direct his mind to the desirability of making on his client’s behalf a claim for interest or take the steps necessary to propound such a claim and that his neglect in that regard produced the result that Master Greenwood failed to award interest and the Court of Appeal declined to intervene.”
In considering whether a claim of that nature fell within the area of advocates’ immunity, Gleeson CJ, who formed part of the majority, said at 719:
“... the relevant principle of immunity would be capricious in its operation if its application in a case such as the present were made to depend upon the precise history or circumstances of the communications and dealings between the barrister and his solicitor and lay client. A rule of law which is said to be based upon considerations of public policy should not depend for its practical operation upon chance. Furthermore, it does not seem to me that a plaintiff can circumvent the immunity, simply by constructing allegations of damage in a manner which attempts to relate the harm suffered as a consequence of a barrister’s alleged negligence to that aspect of his conduct furthest removed from physically standing up and speaking in Court. The statement of claim is to be read as a whole, and there is no doubt about what it is the barrister is said to have done that was wrong, or what form of harm befell his client. The barrister’s alleged negligence involved a continuing course of conduct, or inaction, which extended up until the conclusion of the hearing before Master Greenwood and manifested itself in a failure to make a claim for interest, and to apply for any necessary amendment to the pleadings in order to enable that claim to be pursued.”
The Chief Justice found at 719 that -
“so far as complaint is made of action or inaction prior to the commencement of the hearing it concerns a matter which was intimately connected with the work ultimately done in Court, that is to say, the presentation of Mr Tehfe’s claim for damages and any consequential relief to which he was also entitled.”
In MacRae v Stevens, Beazley JA, with whom Priestley JA agreed generally, and Meagher JA agreed, conducted a careful examination of the principal modern authorities on advocates’ immunity, including Giannarelli v Wraith. Her Honour concluded that the appropriate test on the extent of the immunity so far as out of court conduct of barristers is concerned is that formulated by Mason CJ in Giannarelli v Wraith, namely, as I read her Honour’s judgment, that it extends “to work done out of court which leads to a decision affecting the conduct of the case in court”. Her Honour did not, as I read her reasons for judgment, conclude that Mason CJ, by his reference with approval to the statement of McCarthy P in Rees v Sinclair [1974] 1 NZLR 180 at 187, intend to narrow the test which he formulated in his own words. In Rees v Sinclair McCarthy P said -
“the protection exists only where the particular work is so intimately connected with the conduct of the cause in Court that it can fairly be said to be a preliminary decision affecting the way that cause is to be conducted when it comes to a hearing”.
Her Honour noted that Mason CJ, while referring to the application of the immunity to a solicitor’s in-court negligence, did not expressly state that the immunity extended to a solicitor’s out of court negligence. The facts of Giannarelli v Wraith did not put in issue the extent of a solicitor-advocate’s immunity.
So far as the second and third respondents are concerned, the decisions of Giannarelli v Wraith and Keefe v Marks, in my view, provide an answer to the applicant’s contention that the immunity does not extend to a failure to consider a matter or issue with a consequential failure to advise with respect to it. As the passage from the reasons for judgment of Gleeson CJ set out above makes clear, Keefe v Marks concerned directly a situation in which a barrister did not direct his mind to the necessity to consider and advise on a certain issue, namely the possibility of claiming interest on damages. In Giannarelli v Wraith the failure of counsel to rely on a relevant statutory provision might have been the result of either a failure to consider the provision at all or a mistaken view as to its proper application. Nothing in Giannarelli v Wraith, in my view, suggests that the High Court considered this distinction material. Moreover, for the extent of the immunity to depend upon a subtle distinction of this kind, or as Mr Allsop SC, senior counsel for the second respondent would characterise it a “difficult and at times metaphysical distinction”, would, it seems to me, give rise to the sort of capriciousness of operation which Gleeson CJ impliedly deprecated in Keefe v Marks in the passage from his judgment set out above.
So far as the second and third respondents are concerned, I find that all of the allegations of negligence made against them, once realistically analysed, relate either to work done in court or to work done out of court which led to decisions affecting the conduct of the Land and Environment Court proceeding. I find that each of the second and third respondents is immune from liability in negligence to YPC in respect of such work.
ATRK did not engage in any relevant in-court conduct. They briefed Messrs Simos and Webster to conduct the Land and Environment Court proceeding on behalf of YPC. The applicant contends that in these circumstances ATRK cannot rely on the immunity. The applicant places reliance on Feldman v A Practitioner (1978) 18 SASR 238.
In Feldman v A Practitioner Bray CJ considered the extent to which a solicitor was liable in negligence for conduct relating to the preparation of a case for trial. His Honour did so against the background of an amalgamated legal profession, and, of course, without the benefit of the decision of the High Court in Giannarelli v Wraith. The Chief Justice observed at 239 that a solicitor “cannot by assuming the dual role [i.e. of barrister and solicitor] acquire an immunity that he would not have if he had acted as solicitor alone and briefed other counsel”. His Honour concluded:
“If as a counsel he advised himself as solicitor at some stage in the pre-trial history that there was enough evidence on the topic then, even if he acted negligently, he would be immune from suit. If, however, as a solicitor he failed to obtain material which it was within his power to obtain to put before himself as counsel for advice on evidence, or if he failed to obtain such material after being advised by himself as counsel that it was necessary to do so, then it may well be that he would be liable in negligence.”
Bray CJ expressly recognised the artificiality of the dissection of the work of a practitioner acting both as solicitor and barrister but he considered that the authorities required such a dissection to be made.
The extent to which a solicitor-advocate may rely on the immunity was considered more recently in the Court of Appeal of NSW in Donellan v Watson. In that case parties to two appeals reached an agreement for the appeals to be withdrawn and for the respondents to bear their own costs of the appeals. The defendants, who were solicitors, although properly instructed on behalf of the plaintiffs, consented to orders being entered that deprived the plaintiffs of their successful orders at first instance. Mahoney JA, with whom Waddell A-JA agreed, held that the proceeding did not fall within the rationale of the reasons for which the immunity is given; there was no contested hearing as an order from the court was sought by consent and the order made by the judge was not being subjected to collateral attack. Handley JA agreed that the policy considerations which ground the immunity did not apply in that case. He preferred to decide the appeal in accordance with the principles of the law of agency; that is that an agent who exceeds his or her authority which has been defined in clear and unambiguous terms is liable to his principal for breach of a duty which is strict if not absolute. His Honour referred to Bowstead on Agency, 15th Ed. (1985) at 138-139 and Apatu v Peach Prescott & Jamieson [1985] 1 NZLR 50 at 64.
The case of Donellan v Watson is, in my view, of limited assistance in the circumstances of this case. I note, however, that each of the members of the Court of Appeal appears to have assumed that the immunity of solicitor-advocates in respect of the conduct of litigation was co-extensive with that of barristers. That is, they do not appear to have regarded the immunity of solicitor-advocates as being limited strictly to in-court work.
The definition of the boundary between circumstances in which a solicitor involved in the preparation of a case for trial is immune from liability and circumstances in which he or she may be liable will, no doubt, develop on a case by case basis. The circumstances of the present case are far removed from those considered in Donellan v Watson. The case in negligence pleaded by the applicant against ATRK is that by reason of its failure, in effect, to act with the professional care, skill and diligence reasonably to be expected from solicitors, the applicant:
“(a) wasted significant costs and other monies attempting to value the [subject] land based upon the notional capitalised income stream referred to in paragraph 65 hereof. [i.e. costs resulting from the hearing time before the Land and Environment Court being extended]
(b)lost the opportunity in the Land and Environment Court proceedings to formulate and prove its claim for special value in accordance with the proper principles and practice of valuation law based on the matters pleaded in paragraphs 43-51 inclusive hereof [i.e. head start] and
(c)was thereby inadequately compensated for special value by the special value allowance.”
Each of the above matters relates to the in-court conduct of the applicant’s claim for compensation upon the resumption of the subject land.
I have indicated above that I am not satisfied that ATRK failed to act with the professional care, skill and diligence to be expected from competent solicitors experienced in valuation law having regard to the circumstances in which they were retained. Even if they did fail so to act, it has not, in my view, been shown that their failure in any way affected the conduct of the Land and Environment Court proceeding. The conduct of the Land and Environment Court proceeding was in the hands of Mr Simos assisted by Mr Webster. However, if it be assumed that the out of court conduct of ATRK was a cause of the Land and Environment Court proceeding being conducted in the way that it was, it seems to me that the policy considerations which support the immunity of advocates would support such immunity being extended to ATRK. That is, in my view, the relevant work of ATRK would in such circumstances be viewed as “work done out of court which leads to a decision affecting the conduct of the case in court” within the meaning of the test formulated by Mason CJ in Giannarelli v Wraith. I agree with the submission put on behalf of ATRK that -
“[i]t would be an anomalous and unjustifiable distinction if, in respect of advice and decisions affecting the conduct of proceedings, counsel should have immunity but the solicitors should not where both are held to be obliged to give the same type of advice in respect of the conduct of the proceedings”.
Order
The order of the Court will be that the application is dismissed against all respondents.
I certify that this and the preceding one hundred and five (105) pages are a true copy of the reasons for judgment of the Honourable Justice Branson.
Associate:
Date:
Counsel for the applicant: D.M. Quick QC with C.D. Curtis
Solicitors for the applicant: Bruce & Stewart
Counsel for the first respondent: R.B.S. MacFarlan QC with D.J. Fagan
Solicitors for the first respondent: Minter Ellison
Counsel for the second respondent: J.L.B. Allsop SC with P.R. Whitford
Solicitors for the second respondent: Corrs Chambers Westgarth
Counsel for the third respondent: R.A. Conti QC with S.T. White
Solicitors for the third respondent: Moray & Agnew
Dates of hearing: 3-7, 10-14, 17-21, 24-27 March 1997
2-3, 7-11, 15-17 April 1997
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