(e) Interest on the above
8 Paragraphs 11 to 14 of the original Statement of Claim form the basis for a somewhat different claim. In paragraph 11 the Plaintiff alleges the delivery to Vardas of a cheque in the sum of $14,000 on 2 June 1997, which monies were to be applied in particular ways. Paragraph 12 claims that in breach of the duties, including fiduciary duties, owed by Vardas, he failed to deposit the monies into his trust account and use them as directed but appropriated them to his own benefit.
9 Paragraphs 13 and 14 make similar allegations in respect of a sum of $21,000 said to have been paid on 20 November 1998 to be applied in payment of the judgment for costs obtained by the Commonwealth. In the proposed amended Statement of Claim some additional allegations are made concerning these matters but they do not alter the substance of the allegations as I have summarised them.
10 Paragraph 15 is in terms:-
"Vardas, in breach of his duties to the plaintiff pleaded above, including those duties pleaded in paragraphs 4 and 5 above, failed, between February 1995 and March 2001, to advise the plaintiff that the plaintiff had or may have had a cause of action for professional negligence and breach of duty, against Vardas arising out of Vardas' conduct of the proceedings, as pleaded and particularised above."
11 In a Defence filed on 22 September 2004, the Defendant, inter alia:-
(i) contended that the claims made in the Statement of Claim were barred by ss14 and 23 of the Limitation Act, 1969;
(ii) denied both any breach of retainer and the suffering of damage; and
(iii) acknowledged receipt of the sums of $14,000 and $21,000, made a number of assertions as to the use of them in payment of various costs, and asserted that a balance was paid to the Plaintiff by a cheque which the Plaintiff cashed.
12 A consideration of the Limitation Act defence requires some reference to the facts. So far as I rely on them, they have not been the subject of challenge. In the Plaintiff's proceedings against the Commonwealth, judgment against the Plaintiff was entered on 10 February 1995. On that date, the counsel who had appeared wrote to Mr Vardas:-
"On Thursday 9 and Wednesday 10 February 1995 [appeared for the plaintiff in the District Court before Freeman DCJ. Regattieri appeared for the defendant. His Honour gave a verdict and judgment for the defendant, and ordered that the plaintiff pay the defendant's costs of the matter. He declined to order that the plaintiff pay the costs of the arbitration.
It was no matter of surprise that His Honour did not find for the plaintiff in respect of the injury of 30 January 1985, but I felt that the prospects were reasonable in respect of the injury of 1 October 1985, in respect of which we were successful at arbitration. His Honour took the view that the plaintiff's description of the circumstances in which the plaintiff suffered his second injury, as given in the witness box was sufficiently different from that given to Dr Stephen for the latter's opinion to be unhelpful. This was perhaps a little harsh; Dr Stephen's history was expressed very briefly, and was capable of encompassing the circumstances given in evidence. However my initial opinion is that an appeal would be unlikely to succeed. If you wish, I will give the matter further consideration on receipt of a transcript of the reasons for judgment.
However the plaintiff now retains his rights to compensation under the Commonwealth act, which should be of value. The Commonwealth admitted liability for compensation in respect of each injury, and the plaintiff still suffers some restriction in respect of each. His tax returns show a loss from his business in each relevant year. Despite the fact that he accepted voluntary redundancy, his earning capacity is affected and his earnings are lower. Advice should be obtained on his prospects of compensation.
I should think it unlikely that the Commonwealth will pursue costs, but it is not a thing of which one can be certain.
The Plaintiff is naturally disappointed at the result, but I believe he understood the risks and understands the reasons for the result.
I now return my brief, with thanks for your instructions, and enclose my memorandum of fees."
13 On 15 February 1995 the Defendant wrote to the Plaintiff. Inter alia the letter said:-
"We confirm that this matter came on for hearing before Judge Freeman in the District Court on 9 and 10 February 1995.
We further confirm that, following the conclusion of the evidence in your case, and following submissions made by both parties, the learned Judge was not satisfied that you had made out a case for negligence against the Commonwealth and accordingly entered a verdict for the Defendant and ordered that you pay the Defendant's costs.
The basis for Judge Freeman's decision appears to be as follows:-
1. The Judge, as did the arbitrator in the earlier arbitration proceedings, was not satisfied the negligence was established in relation to the injuries suffered by you in the first accident on 30 January 1995.
2. In then analysing the circumstances leading to your second injury on 1 October 1985, the Judge did not appear to place great weight on the evidence which was presented on your behalf to the effect that you had been recommended to resume work on light duties and that the Commonwealth had ignored your request…
3. The Judge was not satisfied that the mechanism of your second accident as it came out in the evidence was such as to render the Commonwealth liable in negligence…
4. His Honour rejected the expert evidence of Colin Simpson, an engineer and ergonomist, as to how your accident occurred and whether the Commonwealth was liable…
In the opinion of Mr Stone of Counsel and the writer, the Judge was somewhat harsh with his treatment of the evidence. However, having said that, we do not feel that this is a decision against which an appeal ought to be lodged with the Court of Appeal as the decision does not really demonstrate any major error of law which can be appealable.
We confirm that the result of this case means that your workers' compensation rights remain intact…"
14 No appeal against the decision in favour of the Commonwealth was lodged. It is thus clear that any cause of action the Plaintiff had based on the Defendant's conduct of the Plaintiff's proceedings against the Commonwealth or the letter of advice accrued no later than February, or if one takes as the relevant date that when time expired for the lodging of such an appeal, in March 1995 - c.f. Cheney & Wilson v Duncan [2001] NSWCA 197 at [26 - 28]. Even if one takes account of a possibility that time for lodging an appeal might have been extended, it is unrealistic to think that that possibility would not have ceased to exist long before April 1998, i.e. 6 years before the current proceedings were commenced.
15 Section 14 of the Limitation Act provides:-
"(1) An action on any of the following causes of action is not maintainable if brought after the expiration of a limitation period of 6 years running from the date on which the cause of action first accrues to the plaintiff or to a person through whom the plaintiff claims:-
(a) A cause of action founded on contract…
(b) A cause of action founded on tort…"
16 Counsel for the Plaintiff sought to meet the contention that the statute meant that the Plaintiff's claim was bound to fail by contending that so long as the Defendant was involved in any way in the proceedings between the Plaintiff and the Commonwealth, obligations to the Plaintiff continued to exist, the obligations included those to which reference has been made and thus the Defendant's breaches occurred within 6 years before the proceedings were commenced. I have no difficulty with the first of these propositions. However, the second does not automatically follow.
17 Duties owed by a solicitor to his client reflect the nature of the retainer given, the work undertaken or particular circumstances. It is not the case that merely because a solicitor has some involvement with a piece of litigation, then so long as that involvement remains he has, as it were, a general obligation to advise on all its aspects. In this case, assuming that the Defendant's retainer to conduct the litigation at first instance placed him under an obligation to the Plaintiff to advise as to the prospects of appeal then, providing he exercised the appropriate care in doing so, the obligation was fulfilled when the advice was provided. He did not remain obliged, day after day, to reconsider the advice he had given in case it was in error, or against the possibility that there may have been some change in the law or the Plaintiff's circumstances. I have no difficulty accepting the proposition that if within a short time - defined probably by there being some practicality in doing so - he became aware of error in his advice or of changes in the law or circumstances which may have had some significant effect on the advice, there would have arisen an obligation at that stage either to change it, or at least notify the Plaintiff that the advice needed reconsideration.
18 However, any such obligation would have arisen because of the particular circumstances of the advice having been given and the Defendant becoming aware of the potential for it being erroneous. I see no basis for contending that so long as the Defendant was, or happened to become again, involved in assisting the Plaintiff in connection with the discharge of the liabilities arising in consequence of the proceedings - matters which may last or arise with varying degrees of intensity for years - the Defendant remained under an obligation to revisit a task which had, to all intents and purposes, been completed. That is the argument by which the Plaintiff in this application sought to support his claim in contract and tort to recover the loss of the value of his claim against the Commonwealth and the loss of opportunity to appeal the decision of Freeman DCJ and to overcome the fact that the events referred to in paragraphs 6 to 9 of the Statement of Claim seem clearly to have occurred prior to the April 1998. It is fallacious.
19 Putting aside the significance of any breach of fiduciary duty arising from the dealings with the $14,000 and $21,000, the Plaintiff is in no better position by seeking to rely on the existence of a fiduciary duty. In this connection is it appropriate to note that nothing is alleged to bring the situation within the test expressed by Young J in Marcolongo v Manattrusi [2000] NSWSC 834 whether "there has been an unconscientious use by the solicitor … of his or her position of advantage in circumstances where the person in the position of the client was reasonably expecting a person in the position of a solicitor to act solely on his or her behalf". In any event the Defendant's fiduciary duty imposed no greater or longer obligation on the Defendant to advise the Plaintiff as to the conduct of the original proceedings or on the topic of appeal. Furthermore, the same limitation period applies, s23 of the Limitation Act providing:-
"Sections 14, 16, 17, 18, 20 and 21 do not apply, except so far as they may be applied by analogy, to a cause of action for specific performance of a contract or for an injunction or for other equitable relief."
20 The nature of the Plaintiff's claims in contract and tort on the one hand and for breach of fiduciary duty on the other, are such as to result in the Limitation Act being applied by analogy to a claim for damages or equitable compensation for any breach of fiduciary duty said to have result in the loss of the proceedings against the Commonwealth or of any chance to appeal in that regard - c.f. Cassis v Kalfus [2003] NSWSC 649..
21 In any event, the claim that the Defendant, between February 1995 and March 2001, failed to advise the Plaintiff that the latter had or may have had a cause of action against (the Defendant) arising out of (the Defendant's) conduct of the proceedings and that his was productive of loss is answered by the decision of the Court of Appeal in Sampson v Zucker (unreported, CA, 11 December 1996) where, in a case having a deal of similarity in the facts, the Chief Justice, with the concurrence of the other members of the bench observed:-
"This is not a case in which the tortious act for which the Respondent is sued effectively prevented the Appellant from doing anything. There is no suggestion of any relevant tortious act of the Respondent which occurred at any time later than 31 March 1988. There was nothing to preclude the Appellant at any time thereafter from doing that which he in fact did on 18 February 1992, that is, seeking and obtaining independent legal advice concerning the adequacy of the compensation that he had received as a result of his settlement with the Government Insurance Office."
22 That is the situation here. Following receipt of the letter of 15 February 1995, and presumably accepting the advice not to appeal, there was nothing to prevent the Plaintiff from consulting others as to the adequacy of the Defendant's conduct of the proceedings against the Commonwealth or the appropriateness of the advice not to appeal. Any failure of the Plaintiff to pursue an action against the Defendant during this time was the result of actions and decisions of the Plaintiff himself, not of the Defendant.
23 I turn then to the allegations concerning the $14,000 and $21,000. There are a number of issues that arise. However, it may be said at the outset that there seems to be little or no factual dispute. In his affidavit and documents annexed thereto Mr Vardas detailed his dealings with the moneys and acknowledged impropriety in those dealings which seem to have been investigated by the Law Society. There has been no challenge to the accuracy of Mr Vardas' account.
24 In the filed Statement of Claim the Plaintiff seeks recovery of the $35,000 and interest thereon. Mr Vardas' account leads to the conclusion that the Plaintiff has not suffered loss in consequence of the former's dealings with those monies and one is compelled to the conclusion that as formulated in the original pleading, the claim will fail.
25 In the proposed amended pleading the Plaintiff asserts that by the Defendant's dealings with the sums of $14,000 and $21,000 the Defendant has been unjustly enriched by "the amount by which the interest paid by the defendant (whose office account was said to have then been in overdraft) was reduced by the deposit of the said sum of $14,000" to that account. There is a similar, although somewhat more convoluted, claim in respect of interest on the $21,000. The amounts claimed in this manner are said, in an affidavit of the Plaintiff's solicitor of 18 May 2005, to total $12,527.66. Although that amount is, by comparison with the amounts which generally concern this Court, small and is made up of a number of separate items, there is no practical way in which the claim, and the application to amend to make that claim, can be dealt with except by condescending to the detail. Given that the matter has, as an incident of the other issues before this Court been canvassed here, it would not be proper to simply send it off to another court to be re-argued there.
26 The $14,000 was the total of some smaller amounts and arose this way: On 25 April 1997 Mr Vardas sent to the Plaintiff an itemised Memorandum of Costs and Disbursements, the substance of which was as follows:-
(a) Counsel (Peter Stone) fees $6,300.00
(b) Carrier fees $7.26
(c) RG Coshott's costs and disbursements $4,670.45
(d) Mr Vardas' costs $6,513.00
Total $16,590.71
27 Subsequently, as confirmed in a letter of 3 June 1997, Mr Vardas agreed to accept, in full settlement of his account, a cheque for $14,000 received on that day or shortly earlier. In these circumstances it is appropriate to regard the $14,000 as including the amounts nominated for Mr Stone and Mr Coshott and a balance of $3,029.55 for Mr Vardas.
28 The $14,000 was not deposited into Mr Vardas' trust account as it should have been but into his office account which was then in overdraft, thus saving him interest. However, had Mr Vardas deposited the $14,000 into his trust account, he would have been entitled to immediately withdraw the sum of $3,029.55 and pay it into his office account. To the extent of the use of and interest on this sum there has been no unjust enrichment.
29 The $6,300 owing to Mr Stone should have been paid immediately following its receipt from the Plaintiff or, at least within a reasonable, and in the circumstances, short time thereafter. In fact Mr Vardas paid Mr Stone $6,300 on 22 December 2003, the cheque being presented for payment on 24 February 2004. Thus Mr Vardas had, improperly, the use of that money from 3 June 1997 to 24 February 2004 and has, prima facie, been unjustly enriched by that use. There is nothing to suggest that Mr Vardas compensated Mr Stone for the undue delay in payment of the latter's fees and therefore, putting aside any discretionary considerations, the Plaintiff should be allowed to pursue a claim for the value of the unjust enrichment Mr Vardas enjoyed by improper use of the Plaintiff's money.
30 The $4,670.45 has not been paid to Mr Coshott and constitutes one of a number of amounts for which Mr Coshott is suing Mr Vardas in proceedings where there are numerous claims and counter-claims. On the material before me there is no reason to think that Mr Coshott will not recover the $4,670.45 paid by the Plaintiff on account of Mr Coshott's costs and disbursements and interest thereon. Of course it may be that Mr Vardas will be allowed to set off against this sum moneys owing to him by Mr Coshott in respect of counter claims but these do not affect the basic proposition that Mr Coshott will enjoy the benefit of the principal sum and interest thereon. Thus it seems to me that there is insufficient likelihood of Mr Vardas being unjustly enriched by this sum that an amendment to claim it should be allowed.
31 The interest rates apparently paid by Mr Vardas on his office account for most of the period since he received the $4,670.45 are set out below. At least at times they exceed those provided for under the Supreme Court Rules and upon Mr Coshott's entitlement to interest is as almost certain to be calculated. In these circumstances the Plaintiff may well have a claim for unjust enrichment to the extent of this difference although until the appropriate calculations are made, this cannot be determined.
32 In summary, so far as the $14,000 is concerned, the Plaintiff has at least an arguable case for unjust enrichment arising from the use of $6,300 for a period and may well have a similar and ongoing claim for the use of the further $4,670.45 but nothing more.
33 The history of events relevant to the claim of unjust enrichment in respect of the benefits derived by Mr Vardas in consequence of the $21,000 payment are as follows:-
(i) 20.11.98 The Plaintiff paid $21,000 to Mr Vardas for payment to the Commonwealth in satisfaction of a costs order against the Plaintiff.
(ii) 20.11.98 Mr Vardas deposited $21,000 into his trust account.
(iii) 24.11.98 Mr Vardas improperly used the $21,000 to pay Mr Biscoe QC, counsel in other proceedings.
(iv) 27.4.00 Mr Vardas negotiated an agreement whereby the Commonwealth agreed to accept $17,000 on account of the Plaintiff's costs liability.
(v) 18.5.00 Mr Vardas paid $10,000 from his own funds to the Commonwealth.
(vi) 5.6.00 Mr Vardas paid $7,000 from his own funds to the Commonwealth.
(vii) 17.12.03 A solicitor for Mr Vardas sent a letter to the Plaintiff acknowledging failure to account for the difference between $21,000 and $17,000 and enclosing a cheque for that difference and a further sum of $4,586.85 on account of interest calculated on sums of $21,000 and $4,000 for different periods at the rate of 10%.
(viii) 20.2.04 The Plaintiff presented the cheque for $8,586.85 for payment and it was paid.