Fox, George Frederick v Everingham, Paul Anthony & Anor [1983] FCA 277

Federal Court of Australia|1983-07-01|Before: Shrenpara JJ, Shepparc JJ, Leary J

Sclicitors - breach of contract and negligence - | solicitors acting for both parties on contract for sale

o2 land upon wnich vendor would erect house - vurcnasers enter into possession of suostantially corpleted nouse before completion of contract - house taen cestroyed by cyclone - house not insured eltner ty vendor or purcnesers obligations to advise purchesers on salient points of contract, incluaing neec to insure ~- consideration of

obligation in light of particular srovisions of contract -

interest ~ claim for interest made in wr2zt anc statement of claim - legislation appliceble in Northern Territory prior to Northern Territory Supreme Court éct 1979 -

interest not recoveracle - Supreme Court -ct 1979, s.24;

Nortnern Terr:tory Supreme Court Act 1962, s.35; Supreme

Court #.ct 1935 (S.A.), s.30C; Civil Procedure Act 1833

ECRGS FREDZRICK FCX v. PsUL ANTHONY Bo...tb EVERINGYSM n@_ PETER _GECRGE 'iGus4RD

IN THE FEDERAL COURT OF AUSTX-L1A NORIAZRN TEARITURY SISTRICT RECISTRY ) No. nT G 28 of 1982 GENER-L Divislov

"ppeliant AN: PaUL ANTHONY ED.-RD ZVERINGHAM and PSTCR GoonGe HCrakD Rescondents ORDER JUDGES MAKING ORDER: wWoodward, Muirnead and Shrenpara JJ.

That the judgment erterea by the Supreme Court in favour oF tne respondents pe set aside.

That in lieu thereof gucgment ie entered for tne

appellant. 4, That tne action be rerizted to the Suprene Court

for the assessment ot the acveilant's damages. De That tne respondents pay tne apveliant's costs of

Supreme Court. The costs of tne furtner proceea- ings in the Supreme Court are to be in the discreticn of tnat Court.

Tnat there be liberty to any party to ancly on seven

KCRTEERIT TEXALTORY DISTRICT RECT 9) +3 Q@ N @ fe) my kb '0 fee N

Or. Appeal from the Suprere Court of the Nortnern Territorv of Australia

PAUL ANTHONY EDW4sRD RVZRINGHAM and PETHn CeOrnGs dQ.ARD

Court of tne Northern Territory (C'tLeary J.) in which

en action crought oy the avoellant against tne resvondents was dismissed. The action was against tnree defendants, tne two respondéents, who were at the relevent time solicitors, anc a company, Jin Beam Investments Pty. Limited. The company aid not defend tne prceceedines

and his Honour enterec judgment for the #rpeliant = it in the sum of 410,0UC, The cause oF action agéinst 1t was for breach of @ contract te sell lend upon which

The cause of action against the respondents was for breach of obligations they were saic to owe the appellant as their client. The company was 2lso their client. The agreement ebove mentioned wes entered into petween 1t and the appellant ard his wire, Clarice Fox, on 28 November, 1974. It provided that the company vould construct a residence upon certain land and ¢ -1l' the land, upon whicn would ce the completed residence, to tne Foxes. Mrs. Fox died before the action was hearc, Pursuent to Order 19 Xule 50 of the Rules of the Supreme Court, his Honcur pvroceeaed with tne case without recuiring the eppointment cf any person to represent her estate.

Tne Foxes had evinced anterest in the land in tne early months of 1974. Mr. .Fox haa discussions witn a Mr. Simonetti of Jim Beam Investments Pty. Limited. The Foxes accompanied him to tne responcents' office. They were introduced to Mr. #veringham. According to tne appellant, Mr. Simonetti told Mr. Everingnam that they (tne Foxes) were prospective buyers "of the vroperty". The appellant asked ir. everingnem 1f he would revreser~

his 'wife and nimsel? in the purchase of "this house".

Mr. Zverz:ngham said he would. Certair. particulars, including the Foxes' full names and their address were taken. The conversation then enced.

For reasons whicn need not te mentioned tne vtransaction did not then proceed, But in October 1974 the Foxes decided to go ehead, bfter seeing his bank the appellant went to the resporndents'. office. Be took with him a chegue for "about [10,CCO" wnaich ne described as "a deposit cnecue". He saw a person he descriced as a secretery. She gave him e contract to look at, He discussec 1%s terms vwitn Mr. Sinonetti. AS a result of that discussion scme changes were made. The contract was then signed by the Foxes. the common seal of Jim Beem Investments Fry. Limited was placee on it tut there :5 no evicerce to tnis effect. Tne Foxes! signatures were witnessed cy tre secretary who had given the contract to tne anveilant.

The Foxes did not see either of tne resnondents at the time the contract was signea nor dic they see tnem thereafter, at no time diag either of tne respondents explain to the Foxes eny of the terms of tie contract or give them any advice ebour tnsir ricatvs ard oblig-

The evicerce wnich nas been referred to 1s the oniy evidence of the retainer of the responcents «es the Foxes' solicitors. Neitner Wr. Simonetti nor either of the respondents gave eviderce. and tnere was no attemot made to icentify or cell the verson cescribec as a secretary ir Mr. Fox's evidence. This absence oF evidence 1s no doubt due to the fact tnat there 1s no issue acout tne retsiner. It was pleacea

an peragraons 3 ard 6 of tre amended stetement of ciaim

"3. During early i974 the plaintizfs reteined and employed the Solicitor Lefendents as tneir solicitor to advise them ard act upcn tneir

behalf in tke purcnase by then from tke third defendent of a house whick wes in tne course of being ou1lt by the third defendent (ane which 15 hereinefter cailed 'the vroperty').'!

"6, In ocr about ezrly lLovercer i974 tne vlairntif agein retainec ana employed tne solicitor defends as their solicitor to advise and act on their behalf in tne purchase of the proverty from tne third defendant."

In their aefence tne responcents eadnittec the trutn cf

Tne contract recited tke ownership cf the Land by Jim Beam Investments Pty. Limitec, the selection by tre

Foxes of plans anc svec:ficatiors of a house, the 2frsemert

of the company to erect 2 nouse in accorderce "1th the plans and specifications anc tne agreement of the Foxes to pay to the company tne sum of 132,500 for tne land "and tne completed dweiiing house to be erected" by tne company.

Clause 1 of the contract crovined that the company woula sell te the Foxes all tne company's rignt, title ana interest in ard to the said land and dwelling nouse for the sum of $32,50C. By clause 3 tne company wes forthwitn after the execution of tne contrect to commence tne construction, By clause 4 the sum of $32,500 was to be payactle as to tae sum of 72C,COU on the signing thereof to the trust account of the respon- dents, wno were to vay it to the company, es to the furtaer sum of $10,550 on the conpany siving possession of tne proverty tc the roxes anc es to tne balance on the date of actual completion of tre house, It 1s to be observed that, notwitnstending the arpellart's evidence, tne cortract contains no reference to a depos:* and thet the initial payment was to se 120,000, not ,;10,C0U vrich 1s the sum which was paid.

place within 13 weexs of notification oF completion of

duly executed transfer of tne company's rignt, title

(a) Vacant possession cf tre lend nerein agreed to be sold snall be given and taken upon completion of the contract.

(vc) Untii completion tne vendor (or in the event thet possession of tre property herein agreed "to ce sold or any part tnereof 1s given to tne purchaser prior to completion,

(2) Keep the vroperty herein agreed tc ce sold in good repair having "regard TO the condition thereof as at tne cate

(11) Keep the property nsrein epgreed to te sold insurec to its Suli insurecie value in the names of tne vendor and the purchaser including cover against storn and terpest ana treakege of glass and produce tne policy to tne otner party upon demand;

(i211) Ocserve ard comply «itn the nrovi-ions of any Crown Leese in respect of the saic land and wita any laws for the tine being

The clause should te considered alone with clause 27

"The vendor shell et eli times curirg the progress of tne work keep the buildings in tre course of erection insured in the full velue thereot fron loss or damage by fire, storm, tempest ana eartnquake and shall «nen so requestec procuce to the purcaaser all policies and receipts for premiums."

By clause 25 the company uncertcok end agreed to complete the erecticn of the house sithin 18 weeks of the date of tne contract subject to certain contingencies whicn would entitle the company to an extension of time. Clause 29 provided that until the contract snould be conpleted tne compary would te and .oulic remain respon- Sible in every resvect for all loss, ingury and damege to tne premises and to tre Foxes or the cccuplers of any adjoining land or buildings. Clause 32 (wnich should be considered elong vita clause 6) orovidec that 2f the roxes entered into possession without the company's consent they snouid be deemed to have accerted tne work as complete and satisfactory, Their entry into possession was to constitute a waiver of claims waiich they mignt otnerwise nave haa against tne company for faulty worknan- snip and for other cefaults.

It 1s unnecessary to refer to any other vrovision ef the contract.

Altnougn tne evidence :s not Clear, it vould seen that the building must have been commencec well terore

the date of tne contract. That inference must be drawn

pecause tne house was in a state of substantial completion a few days before Cnristmas 1974, taree

work which was outstanding at that time was the installation of kitcnen cupboarcs, the insteliletion

of a light in the laundry, che replacemert of certain

damaged fibro sheets in the eaves, the installation of towel racks and the erection of the fence. it wes agreed between tne comperny ard the Foxes tnrat tne Foxes could move into tne unconpletea siouse wnicn tne compeny would eventually finisn. The Foxes mcvea in accoraingly.

On Christmas morning 1974 tne nouse wes aestroyed by cyclone Tracey. "The Foxes found teirrporary accomnod- ation and eventuelly went tc live in Canterra,

the Foxes to take cut insurance, 1} 3 ' e nd tS ¥ L ve On i May, 1975, the respondents wrote to tne

to this matter. As you know our client Jim Eeem Investments Pty. Ltd. nad no insurance over the property the subgect of tne contract at tre time of tne cyclone. Pursuant to the contract you were liable to take out insurance cover on tne dwelling from the date of possession. Accordingly it would appear that you will be iiable to our client in damages for your railure to insure should you not complete the contract.

We would therefore appreciete your urgent advices as to whether or not you intend to complete the contract. "

It 1s to de ocserved that tne lecter is written as if the respondents actec only for the company ana nov for the Foxes, Tnere 28 no exolanetion in the evidence of now this came about.

The company then purporteu to terminete the contract and resold the property. It did not pursue any action azeinst the Foxes but executec a waiver of its rights in order to ootain cerpensation frem tie covernmentai agency charged with vroviaing compensa*ior. tc victims of the cyclone. The Foxes also nace an apsiicetion fcr ccm-

pensation cut were told thet, because of the waiver, it

was considered tnst they had ro cleim for unznsured loss

The retainer given by the Foxes to the respondents obliged the responcents to act gensrally in the Foxes! interests in end ebout their entering into tne contract and their taking of title to the vroperty pursuant thereto. At the least that obligation required tae respondents, e1tner themselves or by an employee guaiif- 1ed to do SO, to go thraugh the contract with the Fores and explain the salient points of it to *tnem,. In tais way tneir principel rignts and cbligations under it would be explainec ¢5 would the general course the matter magent pe exvected to teke. The respondents were also under an obligations to explain to the Foxes provisions of the

contract which were 1n an unusual form ana vkich might

to be. In this respect we refer to Sykes v. liicland Ban

Executor and Trustee Co. Limitee (1°71) 1 u.B. 113 where

the Court found a solicitor negligent tecause he aad

failed to draw his client's attention to ea clause in an

underlease which pronib:ted the use cf the premises for

otner than specified purposes witnout the consent of tne lessor. We refer eiso to Attard v. Samson (1966) 110

The responcents were elise under an ocligaticon «nich Pp &

required tnem to give attention, cefore tne contract

was Signed by the Foxes, to tne ~uestion of wnetner it, from their point of view, contained adequate provisicns to protect tnem against a variety of contingencies

which might reasonably have ceer foreseen as likely to arise 1f things aic not go as expected. It does not appear whether the contract was drefted in the respon- cents' office, but 1t was proffered by them on behel? of tne company. The Foxes were entitled to rely on the

respondents to see tc it tnat the contréct was édeouate to protect their interests.

In cases such as the present a solicitor is paid not only for what he in fact coes, but also for the respons- 1biiity he assumes in trying to protect clients from financiel loss 17 things go wrone. It 1s easy enough to act for people if things go es tnev are expected to. But 1% 1s because tne unexpected will sometimes nappen

ri command, The corollary of this provosi they co not measure up to the standard shich is resurrec of tner, they are liable for breach of tne osligetion which they owe to clrents. The stendéerd resurred of

them 1S not an acsolute one. In Simmons v. Pennington

& Son (1955) 1 All 2.R. 240, Hodson L.c. (as he was) approved wnat had teen seid by Herman J. (as ne was) at first instance. Hodson L.J. said (p.245):

ne said was: 'I do not think I need Ceal eat any great lengta with the question of a solicitor's liability for negligerce. It 1s tne same as anybocy else's liability. Having regard to the degree of skill neld out to the public by solicitors, does the concuct of the sol2citor fall short of tne stendard which tne public has been lead to exvect of tne sclicitor?'

I tnink that that airection was rignt and consis- tent with authority."

See also Nocton v. asncurton (Lord) (1914) -.c. 932 at

it whicn coula be merntionea; we te only three, each of wnaicn hes a direct or inairect releverce to

contrect was intended being completed in accordance with tne visrs and

specifications, If it were, tre Fores would not tecome

contracts; cr. Davioyca Estates Pty. Lim:zted v. National

Insurance Co. cf New Zealiend Linited (1965) 66 £.R.(N.5..i.)

t is net necessery to determine tnis zuestion.

seid for the view that the contract wes conditional

only and sometning to be said for tne opposite view,

Assume, as was the se, t completed anc the compeny for anv one of a number

of reasons wes uneble to conplete it. The land by that time woulc have vecore very muck more valuable because of the imorove™ert acaed ta it. "were tre Foxes intended to be entatlec to it, notwithstendinge

that the contract had not been completed or was tne

they may nct have «ished to taxe cver an incomplete

house; on tne otner 1t was intended by tne contrect that tney should by that time seve paid et leest »20,0CO - almost two-thirds of the entire purchese price. The question 18 a airficult one ana ought desirably to have been rescivec br en express prevision in the contract. That the contract itself is not particulariy favourecle to the roxes in tnis sort cf eventuality is revealec by clause 26, It proviaes that 1f tne company se wound up cr enter into an

arrangement for the benefit of its creditors or beccme

unable to or refuse or neglect to carry out wae work, then the Foxes rey terminate tre contract.

The clause concludes, "upon the service of such notice (of termination), all liability of the vendor to complete this contract snell cease". But what of the entitlement to tne Jend, and whet remedies (if any) were tne Foxes intended to heve, particul-

More directly in poant are tne two clauses eerlisr quotea concerning insurance. Clause 6(c) o2 which 1t will be necessary to say more later, obliges tne company (or the Foxes 1f they have taken possession), unter alia, to «seep tae property insured "to its full insurable value in the nemes of tne vendor an? the purcnaser", Thus the clause seems tc cast upon tne Foxes tne obligation to insure if they take possession. But cleuse 27 cbhliges tne comrary at aii times suring the progress cf the work to keep tne buildings in tne course of erection insurea in tne fuli value thereol, There 1S no eviaence cnr the point, cut @ verson not

versed in the law mignt well trink tnat there was no

need to insure, if he went into possession, because clause 27 wculd oblige the vendor to insure. The fact thet clause 27 may be overridden by clause 6 or that an insurence policy taken out by the vendor might not benefit the vurcheser may be thougnt to be matters which would not readily occur to a layman. Finally there is the question of the teking of possession itself, Cleuse 6, like cleuse 4, enviseges tnat possessirn may be taken prior to completzon of the contract. But clause 22 rekes arn amportent provision 1f possession is teken without consent. Its operation 1s such as tc ering about a waiver of all claims wnich the Foxes might otherwise have nad 1n relation particularly to faulty workmanship. A sclicitor, retained as were tne ressondents, nac @ prime cbiigetion

ang and the fence. But the possession wnich the Foxes

had was possession for the purposes of clause 6(t).

insure tne property. The insurance was tc te for tne

full insuradle value of the preperty a4 o* the company and themselves.

That tney feilec in tnis obligation 1s ccmmron ground, It was indeec 1n respect of this matter that the resvondents themselves in their letter of 1 May,

1975, earlzer quoted, alleged on tenel? of that tne Foxes were in breacn oF the contract. Tae letter said that the Foxes would be lisble to tne company in damages for their feilure to insure snould they ret complete the contract. It should te sain at tnis soint that it lies 111 in tne mouths of tne respondents, naving on benalf of tne company made tnat ellegetion, now te argue, as they did cefore the learnei1 primary juage anc tefore us, tnat the Foxes were und=r no ocliigation 'to insure because tney were not in vossession. at rey te, as counsel for the respondents suggested in argzunent,

that at the time the letter of 1 Mai, 1975, was wrivten,

a) the respondents were no longer tne FPores' solicitors. It may have been tnet the full amplicaetions of wnat was being said dic not manifest themselves to the respondents in the turmoil which must héeve existed in the aftermath of the cyclone, But this is svecu- lation, It 1s something upon wnich one would have preferrea to nave some evidence.

that the letter and its implications were not matters

case again highlights how dafficult it 1s for tne one

corveyancing transecticn. Wernings eacout the vroolems whicn arise continue to be sounded. In Goody v. Baring (1956) 2 41] &.R.11, Denckwerts J. (as ne was) said (p.i2) that 1t seemed to him practically impossible for a solicitor to do his duty to eacn client proverly wren

he tries to act fcr toth a verdor ere e curcheser. He

Cox & Ysst (1917) 2 ch.71 at p.ol. Later Denckwerts o.,

Simmons v. Pennington & Son (supra), said thet it was plain tnat the standerc of sxill and care required of a solicitor who acts for both parties on a sale ana purchase 1s ét least as greet as that which woula

for a purchaser (or, we would ada, a vendor) alone.

In support of his case the appellant called tuo Darwin solicitors, Messrs. Pariss anc O'Neil, to give evidence of proper practice in the circumstances of this case. There was some tre eppellant's Caméges.

Because o* the long aistory of tne retter era the Gesirability of tnere not being incurrea further costs, we would nove that the perties mirht reach agreement on what 1s to be done, The orcers which we maxe are as follows:

Tnat the appeal be allowed.
Tnat the Jucgment entered by tne Supreme Court an favour of the respondents ce set aside.
That in lieu thereof jucgment ce entered for the eopelient. 4, That the action be remitted to tne Suvreme Court for the assessment of tne appvellant's aamages.
Tnat the resoondents pay tne eppellart's costs of

Supreme Court, Tne costs of the further vroceeaings

in the Supreme Court are tc te in the discretion of that Court,

At a glance

Court

Decision date

Before

Source

Judgment (122 paragraphs)

Cited By (1)