Darvall McCutcheon (a firm) v HK Frost Holdings P/L

Darvall McCutcheon (a firm) v HK Frost Holdings P/L - [2002] VSCA 85 - VSCA 2002 case summary — Zoe

[11]

In February 1986 Mr. Frost put his proposal to the Bank in Adelaide with a view to it sponsoring the project. After some negotiations the Bank's board approved the project on 17 March 1986, but on the condition that certain aspects of it were varied. Part of the change that was required by the Bank was that four of the paintings would come from its collection and that, at the conclusion of the bicentennial celebrations, the Bank would retain its four paintings and the commissioned artwork would be donated to the respective State and Territory art galleries and not to the Australian National Gallery. The changes were apparently acceptable to the respondent, because Mr. Frost proceeded, with the Bank's knowledge, to develop the calendar concept, its format and costings and continued with its application for ABA endorsement. In August 1986 the Bank advised Mr. Frost that it no longer desired to go ahead with his proposal. In the same month, without reference to Mr. Frost, it announced the creation of the "ANZ Bicentennial Collection" which would consist of eight commissioned paintings and four others from its own collection. It is plain, however, that the Bank must have been planning to produce its own bicentennial art collection well before August 1986 while, to its knowledge, the respondent was working hard to make the project a success. In its letter dated 7 August 1986, the Bank informed Mr. Frost of its intention to withdraw from the project, and said, inter alia, that it did not wish to go ahead with the calendar, because it had been advised that it was not viable "for us". It is convenient to mention at this point that, as Finn, J. noted, no evidence was called by the Bank at any of the relevant proceedings to support the claim that the calendar was not a viable proposition for it. Moreover, there was no suggestion at that time from the Bank that the calendar aspect of the project was not viable for another, similar, institution which might replace the Bank as the proposed sponsor. After the Bank's withdrawal from the project, the respondent attempted to induce others to support what was then necessarily a variant of the original concept that emphasised the calendar. Not surprisingly, given the Bank's launch of its own bicentennial art collection, those endeavours came to nothing.

[40]

The appellant challenges his Honour's findings that it was negligent and breached its retainer, but in my view, assuming the breach of confidence claim had value, the appellant was clearly negligent and breached its retainer in the manner in which it allowed the claim to be lost to the respondent. The wrongful conduct of the appellant resulted in the respondent being deprived of the opportunity to have the breach of confidence claim (and the question of trial costs) remitted to a trial judge - probably O'Bryan, J. - for determination. It was accepted that the respondent was not advised by the appellant that it could apply to the Full Court to have the claim remitted to the trial judge. It is also obvious that, had such advice been tendered, the respondent would have given instructions to proceed with such an application. As his Honour concluded, the breach of confidence cause of action was not present to the respective minds of counsel and the solicitors at the relevant time. So far as counsel were concerned, they did not turn their minds to the breach of confidence claim principally because they were not asked to do so by the appellant and, in the case of Mr. Bongiorno and Mr. Vickery, because they also believed that it had been abandoned. It is clear that the appellant did not, but should have, adverted to the breach of confidence claim before the Full Court's judgment was entered. Indeed, the appellant held itself out as a firm which was competent in the relevant areas of the law, including trial and appellate work and, as his Honour said, should have taken all reasonable steps to preserve to the appellant the opportunity to prosecute its undetermined claim. Failure to do so amounted to negligence and breach of retainer on its part. In the circumstances, it is not surprising that, as his Honour found, Mr. Resch admitted to Mr. Frost on 28 May 1990 that the firm was negligent in this respect. Although this finding was challenged, for the reasons I give later, his Honour was well entitled to make the finding that he did.

[42]

"The proper analysis of the duty of care owed by a solicitor, other than in respect of in-court advocacy, is to be found not in any immunity secured by analogy, inference or suggested necessity from the immunity enjoyed by a barrister-advocate retained by the solicitor. It rests instead upon general principles governing the liability of a solicitor, operating in a divided legal profession, where he or she has retained a barrister to provide advice and, if it proves necessary, for the barrister to conduct any proceedings in court that may ensue. In such a case the solicitor will, in general, be entitled to act in accordance with instructions given by the client on the basis of the barrister's advice, so long as the solicitor has taken care to retain a barrister of competence with the skill necessary to advise and represent the client in the field of legal practice in question and has properly and competently instructed the barrister to the best of the solicitor's care, skill and ability. Ordinarily in a divided legal profession it is responsible conduct for a solicitor (particularly if he or she has no disclosed specialist experience in a field of legal practice) to rely upon a competent barrister's advice. Doing so makes proper use of the specialised Bar. However, the solicitor must not accept the barrister's advice blindly. He or she retains a legal duty to the client, separate independent and personal, both by reason of the general law of negligence and the contract of retainer. The solicitor must exercise independent judgment to the extent that it is reasonable to demand this having regard to the solicitor's reputed knowledge and experience, the complexity of the case and the skill and experience of the barrister who has been retained. If the solicitor reasonably considers that the barrister's advice is obviously wrong, it is the solicitor's duty to reject that advice and to advise the client independently, including as to the wisdom of retaining a fresh barrister. In a divided profession, the immunity enjoyed by an advocate does not automatically extend to a non-advocate solicitor. The answer which such a solicitor, who has retained a barrister may give to a client's later allegation of negligence is not that the solicitor is immune from suit. It is that, although liable to suit, the solicitor is not negligent because reliance on the advice of the barrister was proper and reasonable in the circumstances and no occasion arose for that advice to be rejected."

At a glance

Court

Decision date

Before

Source

Judgment (117 paragraphs)

Parties