The Limitation Issue on the Orford and Bhandary Motions
86Both the Orford and the Bhandary motions seek to strike out Dr Taluja's claims on the grounds they are statute barred.
87The Orford Motion-Contract/Tort. Mr Orford's argument that Dr Taluja's causes of action in contract and tort are statute barred may be shortly stated. Dr Taluja's breach of fiduciary duty claim will be dealt with after the common law causes of action.
88To strike out the causes of action in contract Mr Orford contends the following. Mr Orford's performance of the First Orford Retainer was complete by 21 March 2003. If he breached the First Orford Retainer the breach occurred at the latest on 21 March 2003. A cause of action in contract is complete upon the occurrence of breach. Therefore Dr Taluja's cause of action in contract accrued on 21 March 2003. Limitation Act 1969, s 14(1)(a) sets a limitation period of 6 years in respect of causes of action in contract. Dr Taluja's cause of action in contract therefore expired on 22 March 2009. The 2012 proceedings were not commenced until 18 December 2012, about three years and nine months after the expiration of the applicable limitation period. Mr Orford submits the proceedings are statute barred and should now be struck out.
89Mr Orford applies similar logic to the cause of action in tort. An action in tort accrues upon the occurrence of damage consequent upon the pleaded duty of care. The last date upon which damage could have occurred is 21 March 2003, the date on which execution and exchange of the College Lease Agreement occurred. The limitation period for causes of action in tort is 6 years: Limitation Act, s 14(1)(b). Again, the Statement of Claim was filed some three years and nine months out of time and the cause of action in tort is therefore statute barred. Mr Orford's submissions highlight that the allegations of breach of duty and contract and in tort, but for the allegations of non-disclosure (which will separately considered), all took place in the confined period 17 to 21 March 2003. This is clear from the short considerations of the allegations involved.
90One of Dr Taluja's principal allegations of negligence in breach of contract is that she contends she agreed with the College to commencing monthly rental of $20,000 for certain parts of the Strathfield property with such rent to increase by $500 per week after the first six months of the term, followed by another increase of $500 per week after the next six months, followed then by a rent review escalation of 5 per cent after 18 months. Dr Taluja alleges that Mr Orford failed to prepare a form of lease the College Lease Agreement, and Executed Rental Terms in accordance with her instructions. She alleges that his error was to prepare a lease which commenced in July 2003 with the correct base rent but with a rental increase after six months (in January 2004) of $500 per month, instead of $500 per week, and then a further increase of $500 per month after six months (in July 2004), instead of $500 per week. As a consequence of executing a lease with a monthly rather than weekly rent increase of $500 the plaintiff continued over time to receive less rental income than she would have otherwise have done. Dr Taluja's original Statement of Claim in the 2012 proceedings sets out a calculation of lost rental income which is consistent with the case she now makes: that the increased rental was lost from 15 January 2004 and continues thereafter to be less than that for which Dr Taluja says she bargained. By the time of the filing of the Statement of Claim the difference between the two rental figures had grown to a gross claimed loss excluding interest of $389,197.69. Mr Orford's contention is that an executed lease, or agreement for a lease which fails to record a client's instructions to a solicitor will only ordinarily involve conduct by the solicitor on the retainer up until execution of the lease.
91Dr Taluja also alleges in relation to the First Orford Retainer that she and the College remain in disagreement about whether the standard form lease defined as "the RP Cover" were agreed to be included in the lease as made. This allegation too relates to a period on the pleadings where Mr Orford's conduct is complete by the time that the lease is executed, subject to issues of non-disclosure which will be separately considered.
92The causes of action in contract and in tort on the First Orford Retainer though elaborately pleaded are unspecific as to the breaches of duty that Dr Taluja relies upon. This lack of specificity became the subject of discussion during the parties' submissions. One result of this discussion was that Dr Taluja advanced her post hearing amendments. These post hearing amendments did not identify any other relevant conduct of Mr Orford that post dated 21 March 2003, other than the allegations of non-disclosure.
93Mr Orford undertakes similar analysis with respect to the Implied Orford Retainer, which retainer is said to have been performed in August 2003. Mr Orford contends that all breaches of contract or tortious breaches of duty must have occurred in relation to this claim by no later than 5 August 2003 and that both causes of action must therefore have been compete by that date. The conduct alleged against Mr Orford in respect of the Implied Orford Retainer is that in the course of acting for Shree Shirdi Sydney to prepare the Shree Shirdi Sydney Lease Documents for registration, Mr Orford undertook an implied retainer for Dr Taluja, when he made certain amendments to the Shree Shirdi Sydney Lease Documents and when he allegedly authorised Dr Taluja's execution of them on 5 August 2003. The result of this alleged conduct is said to be that Shree Shirdi Sydney may succeed in the 2010 proceedings in maintaining its rights to a lease and option to purchase over the Temple Building and its surrounds. Applying the same logic to support his strike out of this claim as he does in relation to the First Orford Retainer, Mr Orford argues that any applicable cause of action in contract or tort was complete on 5 August 2003 and therefore expired on 6 August 2009, which is still some 3 years and 3 months before Dr Taluja filed her Statement of Claim in the 2012 proceedings.
94The Implied Orford Retainer claim is puzzling. It is not at all easy to see how Mr Orford could ever have assumed any responsibility to advise Dr Taluja whilst he was acting on behalf of Shree Shirdi Sydney in this transaction. Such doubts can be put aside for present purposes. Were the matter to proceed to a trial they would no doubt be much debated.
95I accept the following analysis arising out of the parties' competing legal contentions. Absent questions of non-disclosure in breach of the advice of negligence term (which will be considered separately), Dr Taluja's allegations with respect to the First Orford Retainer and the Implied Orford Retainer involve Mr Orford's alleged failure to perfect certain lease documents containing rights which corresponded with those that should have been obtained if the firm had executed the retainers in accordance with their instructions and without any breach of duty. The alleged result was that the College Lease Agreement and the Executed Rental Terms, finalised on 21 March 2003, and the later Shree Shirdi Sydney Lease Documents, finalised on 5 August 2003, contained bundles of rights which were inferior to those that Dr Taluja would otherwise have received, absent Mr Orford's conduct. The damage Dr Taluja suffered by acquiring an inferior bundle of rights to those which she was otherwise entitled is not contingent upon any other event. Nor is the fact that Dr Taluja's quantum of damage may have increased over time due to rental increases accruing at a slower rate than Dr Taluja had expected, to the point.
96The law in this State is clear that where a solicitor obtains for a client by way of lease a bundle of rights inferior to those that the client would otherwise have received absent the firm's conduct, either in breach of contract or in breach of a duty of care, the client first suffers loss at that moment and any applicable causes of action in tort and contract run from that date: Winnote Pty Ltd (in liq) v Page t/as Freehill, Hollingdale & Page [2006] NSWCA 287; (2006) 68 NSWLR 531 ("Winnote"), at [40].
97But Mr Raphael, counsel for Dr Taluja sought to bring the case within the well known passage in Wardley Australia Limited v Western Australia (1992) 175 CLR 514 ("Wardley"), at 532 submitting that where the loss is contingent, even if it were very likely to arise, the cause of action does not arise until the loss actually occurs.
98But this is not like Wardley a case of loss subject to a future contingency. It is exactly like Winnote, a case where a solicitor was given instructions to prepare a lease, which was executed in November 1998. Legal proceedings were commenced against the firm in 1995. Mason P, with whom Tobias JA agreed in Winnote, dimissed at [59] and [60] the relevance of comparisons with Wardley thus:
"[59] Of course, a defendant wishing to show that the negligently induced "transaction" caused immediate actual loss of a measurable kind has to establish that proposition. But sometimes this can be "self-evident" (Wardley at 528 per Mason CJ, Dawson J, Gaudron J, McHugh J) or "clear beyond argument" (Moore & Co at 279 per Bingham LJ See also per Neill LJ at 277.).
[60] The present is such a case, in my opinion. From the outset, Winnote got significantly less than it should have, in consequence of the solicitors' 1988 negligence. The "goods were damaged" to use Lord Walker's terms. This is demonstrable when one compares the rights secured under the RPL with the rights that ought to have been secured under mining tenements from the outset. The former instrument was legally worthless as later events demonstrated. As Mr Gageler SC put it during argument in this Court, the rights secured by the RPL "were of a dramatically inferior kind" (CA Tr p 24)."
99And (at [66]) Mason P counsels against ignoring the earlier actual damage merely because substantial loss occurs at a later time:
"[66] Merely because a substantial loss occurs (ex hypothesi) at a later point of time does not establish that there was no damage stemming from the same breach occurring at an earlier date being damage that occurred outside of the limitation period, thereby barring the whole claim (Wardley at 531, Segalat [26]). In this area of economic loss, the same principle applies as for personal injury, namely time commences to run from the first measurable occurrence of damage (Scarcella). It is unnecessary to consider the correctness of decisions such as Mount Albert Borough Council v Johnson [1979] 2 NZLR 234 (invoked by Winnote) which suggest that successive actions will lie for each successive and distinct accrual of damage where negligent work causes a building to subside and crack. The Australian and English "transaction" cases to which I have referred do not recognise any such principle in the present area of discourse."
100Here the loss occurs immediately upon the receipt of an inferior bundle of rights in a lease transaction, in either March 2003 (the First Orford Retainer) or in August 2003 (the Implied Orford Retainer).
101A Continuing Duty to Disclose Negligence. Dr Taluja also alleges that Mr Orford had and has a continuing duty to disclose his own negligence to her, both during and after the completion of both the First Orford Retainer and the Implied Orford Retainer. Neither of these submissions is persuasive.
102Authority is against the submission. This allegation in the Amended Statement of Claim certainly shows ingenuity in avoiding the limitation problem which otherwise confronts Dr Taluja. The allegation seems to have been advanced to outflank an earlier defendants' submission relying on Winnote.
103Such ingenuity has been unsuccessfully deployed before and in not dissimilar situations. In a short judgment in Wood v Jones (1889) 61 LT 551, at 552 dealing with a client's claim against her solicitor for negligence in having advised an investment in a mortgage (which proved insufficient) without disclosing that there had been no independent valuation on behalf of the mortgagee. Kekewich J found that the client's right of action arose when the negligent act was committed, not when it was discovered by the client, it not being a duty on the part of her solicitor continuing day by day to disclose his negligent act, Kekewich J said:
"The defendant's case against the plaintiff is this: You told me as my solicitor that this mortgage was a proper investment. In that you acted negligently, because there had not been any independent valuation made of the property as there ought to have been. The answer is, that was more than six years ago, and the statute applies. To that it is replied that it was the duty of the solicitor to his client to disclose the fact of his negligence. Assuming the facts to be as alleged, the solicitor was guilty of negligence; but his neglect was in 1880, and the action is not brought until 1888. I cannot hold that there was a duty on the part of the solicitor continuing day by day to disclose the fact of his negligence.
104This principle has been applied in England and Australia since that time: see for example Midland Bank Trust Co Ltd v Hett Stubbs & Kemp (1979) Ch 384 ("Midland Bank Trust Co") and Winnote Pty Ltd (in liq) v Page t/as Freehill, Hollingdale & Page (2006) NSWLR 531 at [102].
105Mr Orford submits that there can be no continuing duty to disclose negligence in either the First Orford Retainer or the Implied Orford Retainer, as these were commercial and conveyancing transactions wholly completed in 2003. This argument is persuasive. There seems nothing inherent in the nature of Mr Orford's instructions or the subject matter of his expired retainer which would require him to constantly check after 21 March 2003 whether or not he may possibly have been negligent in his performance of the First Orford Retainer.
106But Dr Taluja has a counter argument. She actually pleads what she submits is a relevant continuing duty at the time of breach. The law is clear that there is an exception to the Wood v Jones (1889) 61 LT 551 principle, if the relevant continuing duty is an aspect of the retainer at the supposed time of breach: Winnote Pty Ltd (in liq) v Page t/as Freehill, Hollingdale & Page (2006) NSWLR 531 at [104]. And here Dr Taluja submits it is pleaded, as an aspect of the alleged retainer from the beginning.
107It was on this point that Mr Raphael sought to bolster his pleading after the hearing. The Further Amended Statement of Claim, Exhibit C, filed on 28 March contains a further paragraph [21A] which pleads that Mr Orford left his conveyancing work incomplete and that the College Lease Agreement was required to be registered as its term exceeded three years but that it could not be registered because Mr Orford had completed only part of the lease work and that a number of matters still needed to be attended to, such as the addition of the RP Lease Cover, the obtaining of the Commonwealth Bank's consent to the lease as mortgagee, and a number of other matters (21A(b)(c) FASC). Moreover, the FASC alleges that Mr Orford did not advise Dr Taluja of those aspects of the incompleteness of the conveyancing transaction upon which she had given him instructions.
108Exhibit C seems designed to mimic of the kind of commercial or conveyancing transaction retainer such as that is inferable from cases such as Midland Bank Trust Co: that a solicitor may in some circumstances assume a retainer which involves asking himself or herself about earlier negligence, where the essential task of the solicitors' retainer is to complete something that is incomplete.
109A brief aside is necessary at this point about Exhibit C. The Court is not prepared to give leave to Dr Taluja to rely upon Exhibit C. No leave was given to file any further pleading at the conclusion of argument on 19 March 2014. The Court allowed the parties to put in supplementary written submissions on the FASC to see whether it could be dealt with. But for the following reasons it cannot now be dealt with. The FASC, Exhibit C: (1) repeats many of the defects in the ASC; (2) raises wholly new issues such as the suspension of limitation periods in equity and the operation of the Limitation Act, s 55 and possible fraudulent conduct of Mr Orford or Ms Bhandary, a class of allegations that were disclaimed in the hearing; (3) is complex and embarrassing in form in a way that cannot be satisfactorily dealt with by short post hearing written submissions; and (4) introduces for the first time the idea that the solicitors were in fact aware of their own negligence.
110But nothing in the present pleading, the Amended Statement of Claim, indicates that the facts would ground the inference of a continuing duty on Mr Orford in this case. In my view the pleading here does not even resemble the kind of facts that would need to be pleaded to establish a duty to keep a matter under constant review, sufficient to found a continuing duty, such as for example a duty to commence litigation within time: see Nikolaou v Papasavas Phillips & Co (No 2) (1989) 166 CLR 394, at 403-404. The Court of Appeal in Winnote at [109] adverted to the nature of the matters that would have to be pleaded to raise a continuing duty, none of which are present here.
"[109] During oral submissions, Winnote's counsel suggested that the retainer incorporated some kind of obligation to correct or keep under review any advice given about a lease, licence or permit needed to extract peat. But no such obligation was pleaded, nor was there evidence directed to this aspect of a solicitor's duties, generally or in the particular case. A retainer that required matters to be kept under constant review in such a way would have costs implications for the client. After the advice of 23 August 1988 had been given, attention turned to the practical matters of drafting the real property lease, its execution, stamping and registration, lodgement of caveats pending registration and so on. Freehill, Hollingdale & Page, Sydney was never instructed to review its earlier advice or to carry out fresh or later investigation as to the status of peat under the Victorian legislation."
111But there is another insurmountable difficulty for Dr Taluja's argument. Even if despite its improbabilities, the pleaded continuing duty of care is established, no fresh damage is pleaded from any such continuing breach of duty. The applicable law is clear, even with a continuing duty of care "a fresh cause of action will only arise if a fresh breach causes loss going beyond the loss resulting from the barred cause of action": Hawkins v Clayton t/as Clayton Utz and Co (1986) 5 NSWLR 109 ("Hawkins v Clayton") and Sheldon v McBeath (1993) Aust Torts Rep. 81-209; (62,069 at 62,082 per Handley JA).
112In Hawkins v Clayton Glass JA received a submission that a negligence claim for financial loss should be governed by the rule in the nuisance-subsidence cases, such as Darley Main Colliery Ltd Company v Mitchell (1886) 11 App Cas 127, and not by the general rule which applies to negligence causing property damage or personal injury. In the subsidence cases a fresh cause of action accrues for wrongful withdrawal of support each time a subsidence occurs. But Glass JA rejected this approach saying (at 124F-125A):
"No reason appears to me why a negligence claim for financial loss should be governed by the rule in subsidence cases and not by the general rule which applies to negligence causing property damage (Pirelli) as well as negligence causing personal injury.
It follows in my view that no fresh cause of action accrued to the beneficiary when he suffered further loss of income during the six year period of limitation. Assuming a continuing duty of care, a fresh cause of action will only arise if a fresh breach causes loss going beyond the loss resulting from the barred cause of action. Such a fresh cause of action was established in Adams v Ascot Iron Foundry Pty Ltd (1968) 72 SR (NSW) 120; 89 WN (Pt 2) 37, where the plaintiff being statute barred in respect of lung disease caused by negligence before the limitation period was able to prove subsequent negligent exposure to dust which rendered his condition worse than it would have been as a consequence of the statute barred negligence."
113The problem for Dr Taluja's pleading is that there is no fresh loss after 21 March 2003. Even if Dr Taluja could establish a continuing duty in contract or tort she would still have to plead that a "fresh breach causes loss going beyond the loss resulting from the barred cause of action". In my judgment the character of any loss that Dr Taluja suffers does not change. It is all loss resulting from the original breach on 21 March 2003. Dr Taluja's Further Amended Statement of Claim attempts to identify such loss through more detailed particulars ([30] FASC). But one way or another all of the fresh particulars propound the idea that Dr Taluja could have commenced proceedings or taken other steps in litigation earlier than she did. But no allegation of fraudulent concealment of the cause of action by the solicitor is made.
114The Orford Motion - Fiduciary Duty. Dr Taluja also alleges that Mr Orford breached his fiduciary duty by his alleged non disclosures of his own negligence during and after the First Orford Retaner and the Implied Orford Retainer. A cause of action for breach of fiduciary duty applies by analogy with that in tort and contract: Aussie Ideas Pty Limited v Tunwind Pty Ltd; Hoddinott v Tunwind Pty Ltd [2006] NSWCA 286 at [19] - [24] and see also Cia de Seguros Imperio v Health Ltd [2000] EWCA Civ 219; [2001] 1 WLR 112. It expires after 6 years. But Dr Taluja contends that the fiduciary duty continues just as the pleaded advice of negligence duty is said to continue after the end of the retainer.
115But allegations of breach of fiduciary duty do not avail Dr Taluja. Mr Orford's fiduciary duty to Dr Taluja ceases at the time that the retainer is completed in both cases. The following passage from Prince Jefri Bolkiah v KPMG (A Firm) [1999] 2 WLR 215 ("Prince Jefri") at 224-225 states the applicable law:
""The fiduciary relationship which subsists between solicitor and client comes to an end with the termination of the retainer. Thereafter the solicitor has no obligation to defend and advance the interests of his former client. The only duty to the former client which survives the termination of the client relationship is a continuing duty to preserve the confidentiality of the information imparted during its subsistence."
116The decision in Prince Jefri was cited with approval by the Court of Appeal in Beach Petroleum NL v Abbott Tout Russell Kennedy [1999] NSWCA 408; (1999) 48 NSWLR 1 at [205] and was recently applied by Beech-Jones J in Marshall v Prescott (No. 3) [2013] NSWSC 1949 at [109]: see also Attorney General v Blake (1998) Ch 439 at 453-5. Only duties of confidentiality arising out of fiduciary relationships survive the ending of the relationship: Co-ordinated Industries Pty Ltd v Elliott (1998) 43 NSWLR 282, and Meagher, Gummow, Lehane Equity Doctrines & Remedies, 4th Edition, paragraph 5-010. But no issues of confidentiality are pleaded or relied upon in this case.
117The Bhandary Motion. The Bhandary motion raises similar limitation issues to the Orford motion. Dr Taluja's case against Ms Bhandary essentially is that because of alleged poor drafting by Ms Bhandary in July 2003, the lease on which Shree Shirdi Sydney now relies in the 2010 proceedings which that company brings against Dr Taluja was more disadvantageous to her than would have been the case if Ms Bhandary had properly carried into effect the Agreed Shree Shirdi Terms in the Joint Venture Agreement. In particular, Dr Taluja is now facing a claim from Shree Shirdi Sydney in the 2010 proceedings that Dr Taluja leased the Temple Building and the surrounding Temple Land to it and gave Shree Shirdi Sydney an option to purchase that land, which Shree Shirdi Sydney exercised. Dr Taluja's case against Ms Bhandary is structured in exactly the same way as is the case against Mr Orford: the terms on which she gave effect a conveyancing and commercial transaction were less advantageous to Dr Taluja than they should have been. As with the claim against Mr Orford, there is no proper basis for a plea of a continuing duty on the part of Ms Bhandary for her to disclose her alleged negligence to Dr Taluja. This claim is also out of time and should be dismissed.