Consideration of a claim for specific performance may have been a response to some perception of the difficulty that the time of performance had not arrived. If specific performance is ordered the court directs the time and place of performance. The Local Court did not have jurisdiction to order specific performance, and it would seem that the District Court did not have jurisdiction either, because the value of vehicle was over $20,000. See District Court Act 1973 s 134 (1)(b). When the proceedings reached the Supreme Court specific performance was not one of the equitable claims; and this is not surprising, as the car did not have unique character.
44 Mr Beilby discussed with Mr Zipser whether proceedings should be commenced in the Supreme Court to claim specific performance. Mr Zipser noted the difficulties of a claim for specific performance in his message containing advice of 27 August 2004 paragraph 5. So far as I can see, no claim for specific performance was ever made in any court; there would be very poor prospects of success, in relation to a second-hand car of a model commonly in use. The events and reasons which led to the decision to transfer to the Supreme Court do not appear clearly to me but the basis probably shown by a file note of a conversation between an employed solicitor and Mr Zipser about 7 June 2006 when Mr Zipser is recorded as saying "Matter should remain in District Court but had to go to Supreme Court because defendant would not agree to indemnify estate of wife".
45 Mr Hodgkiss SC gave written advice on 14 July 2005 the terms of which show that he was asked to advise not on specific performance but on whether all the claims in the proposed 2FAOSC (which was filed on the following day) were within the jurisdiction of the District Court, particularly s 134(1)(h) which relates to equitable claims for money and damages not exceeding $750,000. Mr Hodgkiss' advice generally supported jurisdiction of the District Court but also supported removal to the Supreme Court to avoid doubt.
46 The evidence of Ms Howes, employed solicitor who managed the matter under Mr Beilby's supervision in the months leading up to trial, shows that the concept of the issue held by her and by Mr Zipser was that it was whether the deceased was in a position to repay Mr Galluzzo at the time of her death. More attention was given to the issue of fact whether there had been an agreement at all. She said (affidavit paragraph 26) "I understood this to be evidence of an indication from the deceased as to the likely timing of payment, rather than it amounting to a condition precedent for repayment."
47 During the hearing those representing the plaintiff gave further attention to whether there was a condition precedent and obtained advice on the afternoon of the second hearing day from senior counsel, who was not briefed to appear. In the course of a conference with senior counsel Ms Howe's evidence is that Mr Galluzzo said to this effect: "Trish agreed to pay me for the lease when she had funds available. She only said to me that it would be when her divorce proceedings were over to indicate when she thought that would be." This is the view of the effect of the evidence which was submitted to me in the proceedings; but it does not have a basis in the evidence about what was said.
48 About December 2003 Mr Galluzzo gave the solicitors a statement by Mr McCrudden barrister which in highly general terms tended to confirm that there were some arrangements for Mrs Armstrong to buy the car. Mr McCrudden said "as a result of those conversations I have no doubt that Mr Galluzzo purchased the Mercedes for Mrs Armstrong and she was to pay him for it some time shortly after the purchase." Attempts were made to obtain an affidavit from Mr McCrudden but he declined to make one. Consideration was given to compelling his attendance under subpoena, but this was not done. The statement obtained from him does not indicate that he could have given evidence about the terms of the agreement of much value. The evidence which it was hoped Mr McCrudden would give related to a short explanation about her dealings with Mr Galluzzo which she gave in conversations when he was acting for her in some Local Court proceedings on a different subject.
49 Written contentions of fact prepared by counsel to comply with directions before the hearing include this contention:
3. In April 2002 the plaintiff (through Galluzzo) for and at the request of the deceased, purchased a white Mercedes Benz E200 Kompressor ("the Mercedes") on terms that the deceased would reimburse the plaintiff in respect of the purchase of the Mercedes.
50 In my opinion the plaintiff has shown that the power in s 348(1) to make orders of the kind there referred to exist.
51 The power is discretionary.
52 The respondents displayed great zeal in the conduct of the litigation, in retrospect, excessive zeal. They acted with great determination in conducting the litigation and addressing the successive difficulties which presented themselves. Equipped with their own powers of reasoning and assisted by Mr Zipser's advertence to the difficulty, they pursued a good outcome in the interests of their client. This is what lawyers are expected to do; but they must also comply with their statutory obligations, and the solicitors failed in that respect. They did not bring all their zeal and intellect to bear on the right part of the problem. In conducting litigation heroic optimism and also heroic pessimism are required and they did not bring heroic pessimism to bear. The probability is that although the respondents saw the difficulty and had no well-conceived answer to it, they continued with the litigation in the hope of serving their client's interests well and taking advantage of any favourable development. Litigation is a very uncertain branch of human affairs. There was a small part of the claim to which there was no answer, although it was not distinctly admitted.
53 Mr Galluzzo is not a simple person, and did not act in a way which placed him in the hands of his legal advisers without understanding of his own. I know from having seen him in the witness box and heard him give evidence at length that he is a businessman with considerable understanding, great application and high zeal in whatever he pursues; and before me he showed a strong, inappropriately strong, readiness to pursue advantage. He is not an unsophisticated person and the incompleteness of the circumstances in which he could expect Mrs Armstrong to take the car off his hands and pay for it is just as accessible to his mind as to any other. My observation at paragraph 84 "that this defence existed and was in logic irresistible ought to have been obvious to anyone who saw Mr Galluzzo's principal affidavit" relates to what Mr Galluzzo should see, as well as to legal practitioners. It no lawyers' mystery that agreed preconditions for purchase and payment have to be fulfilled.
54 The existence of the difficulty was put before Mr Galluzzo, was kept before him and was never withdrawn. The plaintiff and Mr Galluzzo had their autonomy; I do not think that the right conduct of the solicitors was to override Mr Galluzzo, by refusing to act or in some other way. It was for the plaintiff and Mr Galluzzo to decide whether to go on with the case; and with respect to his own credibility he was, to say the least, in a far better position than solicitors to see the difficulty.
55 As a contribution to the disastrous outcome of the litigation, the respondents' failure is proportionately far smaller than Mr Galluzzo's contribution. He stated on oath a claim about the facts of his dealings which the tribunal of fact did not accept. There is a very strange air about addressing in detail how the respondents handled what they were told were the facts when what they were told were not established to be facts at all. The respondents pointed out this potential outcome in early advices.
56 The observations of the learned Magistrate should, at least to some degree, have supported the respondents in the view that the proceedings were worth going on with to decision. None of the other judicial officers before whom interlocutory proceedings came appear to have made any relevant observations, supportive or adverse; but it was not their function to do so.
57 The conduct of the litigation produced settlement offers which were in retrospect golden opportunities. Mr Galluzzo should have had a much clear understanding than the respondents of how advantageous each offer of settlement was because he should have understood the frailty of his claim about what arrangements he had made with Mrs Armstrong. Mr Galluzzo rejected offers out of hand. The conduct of the respondents and their pressing on with the litigation brought the plaintiff and Mr Galluzzo opportunities to settle which were far better than the plaintiff's entitlement; and Mr Galluzzo was in a better position than anyone else to see and understand this. The plaintiff got what Mr Galluzzo wanted; not a good settlement offer, but a hearing and determination.
58 The plaintiff's claim had a rather cloudy basis, and was not based on clear principles. This must have been clear to Mr Galluzzo, and advice confirmed it. He was determined to press on and have it decided and rejected compromises out of hand. There are many lawsuits like this; sometimes they are successful, sometimes they are not. I see nothing reprehensible in the respondents' fully supporting their client's wish to get a decision, preparing the case and maintaining it with energy, and then losing. The plaintiff in the person of Mr Galluzzo was much more a part of the litigation and the outcome than the respondents were. I see no justice in throwing the plaintiff's costs burden onto the respondents by a discretionary decision.
59 Subsection 99(1) of the Civil Procedure Act 2005 is in terms closely similar to terms under consideration in the judgment of the Court of Appeal of England in Ridehalgh v Horsefield [1994] Ch 205 where the Court of Appeal considered, with exegesis, "improper", "unreasonable" and "negligent" in generally corresponding United Kingdom legislation - Supreme Court Act 1981 s 51. Their Lordship's approach has been followed in the construction of s 99(1) - see Ideal Waterproofing Pty Ltd v Buildcorp Australia Pty Ltd [2006] NSWSC 155 (Sully J), Whyked Pty Ltd v Yahoo No 7 Pty Ltd [2008] NSWSC 477 (McDougall J).