Aliferis v Kyriacou [2000] VSCA 123

Aliferis v Kyriacou [2000] VSCA 123 - VSCA 2000 case summary — Zoe

[4]

It is perhaps worth noting that the history of the legislation dealing with what debts may be proved in bankruptcy was considered, albeit in a different connection, in Something Better Pty. Ltd. v. Pyramid Building Society (In Liq.)[1]. When the Imperial Bankruptcy Acts of 1861 and 1869 were enacted, the forms of action, although reduced in importance by the then fairly recent Common Law Procedure Act 1852, had yet to be dispatched by the Judicature Acts 1873-5. Lawgivers and lawyers dealt with legal questions by using technical legal terms, not the language of popular journalism: Salter v. Lask[2]. When s.153 of the 1861 Act spoke of liability, by reason of any contract or promise, to a demand in the nature of damages which had not been and could not be otherwise liquidated or ascertained, and when s.31 of the 1869 Act spoke of demands in the nature of unliquidated damages arising otherwise than by reason of a contract or promise, the strong probability is that they were concerned with contracts and promises the breach of which was recognised by the law as a wrong. One approach, as a matter of textual construction, is to say that "contracts" meant those recognised by the law as binding, that is to say, simple contracts (also called contracts by parol) and contracts by deed (also called contracts by speciality), and that "promises" meant promises contained in simple contracts or contracts by deed. But I am disposed to prefer the view that in the phrase "contract or promise" the word "contract" referred only to simple contracts (contracts by parol) and "promise" referred only to promises which were binding by reason of being made by deed; compare Blackstone's definition of "promise", cited by Charles, J.A. On this approach, "promise" was used in the sense of formal promise, by which I mean a promise deriving its binding force from the form employed (a promise under seal). Compare the distinction drawn between formal and informal promises in Anson, Law of Contract, 2nd ed., 1882, pp. 38 et seq. Both views of the proper construction of s.153 and s.31 lead to the same result, but the distinction drawn in those sections between a contract and a promise rather suggests to my mind that "contract" meant simple contract and "promise" meant formal promise - one under seal. Burn's Law Dictionary, 1792, deals with "promise" in the same way as Blackstone, drawing on the first edition of the Commentaries (1768). Another example of the use of "promise" in the sense of a promise made by deed will be found in the classification of actions founded on contract contained in Smith's Action at Law, 8th ed., 1863, p.47.

[31]

Not only was it assumed in argument that the plaintiff was not now pursuing the claim in contract, but it was also assumed - not surprisingly - that, had the plaintiff sought to pursue it, the claim in contract would have been prejudiced by s.82(1) and the Part X deed, as a claim "arising ... from a contract" (and as such excepted from s.82(2)). The contrary was not even suggested. I mention this because the older cases to which Brooking, J.A. has made detailed reference (especially Johnson v. Skafte[14]) seem to indicate that under one or other of the precursors to s.82(2) the reference to "a contract" was taken not to include an "implied contract". The meaning of this expression was not argued before us, but, like Brooking, J.A., as at present advised I too am of opinion that "implied contract" (as used in those early cases) referred to that which was then thought to underlie the common counts - claims quasi ex contractu - such as for money had and received, money paid, quantum meruit and the like: see, for example, Steele v. Tardiani[15]. "Implied contract" did not mean an implied term of the kind upon which the plaintiff would be relying here (to use due care), were she to pursue her claim in contract[16]. Such a claim, founded on an implied term in an express contract, has been treated as a demand "arising ... by reason of a contract" within the meaning of provisions such as s.82(2): see, for example, In re Southern Cross Coaches[17] (in which the bus passengers who were injured in a collision were held entitled to sue in contract the bus owner in liquidation but the passengers in the other vehicle were not) and In re Great Orme Tramways Co.[18] (a like decision, and one which has not since been questioned, save for its application of bankruptcy rules in a company liquidation[19]). Great Orme Tramways is still cited in the texts: Williams & Muir Hunter on Bankruptcy (19th ed., 1979) 161, McDonald Henry & Meek, Bankruptcy Law in Australia (5th ed.) para. 82.2.10; Halsbury's Laws of Australia, para. 415-100; McPherson, The Law of Company Liquidation (4th ed., 1999) 551, footnotes 204, 205.

[67]

"The implied term of reasonable care in a contract of professional services arises by operation of law. It is one of those terms that the law attaches as an incident of contracts of that class. It is part of the consideration that the promisor pays in return for the express or implied agreement of the promisee to pay for the services of the person giving the promise. Unlike the duty of care arising under the law of tort, the promisee in contract always gives consideration for the implied terms. And it is a term that the parties can, and often do, bargain away or limit as they choose. Rather than ask why the law should imply such a term in a contract for professional services, it might be more appropriate to ask why should the law of negligence have any say at all in regulating the relationship of the parties to the contract? The contract defines the relationship of the parties. Statute, criminal law and public policy apart, there is no reason why the contract should not declare completely and exclusively what are the legal rights and obligations of the parties in relation to their contractual dealings. The proposition that, in the absence of express agreement, tort and not contract regulates the duty of care owed by a professional person to a person hiring the professional services is inconsistent with the historical evolution of professional duties of care which, until recently, could be the subject of action only in contract. Moreover, the conceptual and practical differences between the two causes of action remain of 'considerable importance'. The two causes of action have different elements, different limitation periods, different tests for remoteness of damage and, as will appear, different apportionment rules. [48] The theoretical foundations for actions in tort and contract are quite separate. Long before the imperial march of modern negligence law began, contracts of service carried an implied term that they would be performed with reasonable care and skill. Persons who give consideration for the provision of services expect that those services will be provided with due care and skill. Reliance on an implied term giving effect to that expectation should not be defeated by the recognition of a parallel and concurrent obligation under the law of negligence. The evolution of the law of negligence has broadened the responsibility of professional persons and requires them to take reasonable care and skill even in situations where a contractual relationship cannot be established. But given the differing requirements and advantages of each cause of action, there is no justification in recognising the tortious duty to the exclusion of the contractual duty."

At a glance

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Decision date

Before

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Judgment (124 paragraphs)

Parties