Paltos v Bartier Perry Pty Ltd

Background

1. The short facts, by way of background, were that the Partnership operated from 1 July 2010 until the Partnership was dissolved on or about 21 April 2016, pursuant to orders of the Court. The background to that dissolution was, as stated, that, on 23 December 2015, the plaintiff suffered two strokes and was hospitalised.
2. On 15 February 2016, Mr Milevski wrote to Mr Paltos regarding the Partnership and, the next day, namely, on 16 February 2016, Bartier Perry commenced acting for the plaintiff.
3. It should be noted, at this point, that Bartier Perry became aware of the strokes when they were first engaged on 16 February 2016 and, indeed, before that date, and that the plaintiff suffered many symptoms as a consequence of those strokes.
4. On approximately 29 February 2016, there was a formal retainer from the plaintiff to Bartier Perry, which described the services to be provided by Bartier Perry as including "advising [the plaintiff] with regard to [his] Partnership in Paltos Milevski and in relation to the demands being made by [his] partner" (hereinafter, referred to as "the Retainer").
5. Sometime prior to 18 April 2016, Bartier Perry advised Mr Paltos that Mr Milevski could terminate the Partnership and suggested that Mr Paltos try to sell 20% of the partnership to Mr Milevski or dissolve the partnership, himself.
6. On 18 April 2016, Mr Milevski commenced proceedings in the New South Wales Supreme Court against the plaintiff, seeking dissolution of the Partnership. On the same date, 18 April 2016, Bartier Perry ceased to act for the plaintiff.
7. On 21 April 2016, the Court made orders, by consent, granting the relief sought by Mr Milevski, including that the Partnership be dissolved and receivers be appointed.
8. On 17 August 2016, the plaintiff lodged a Notice of Intention to Engage in Legal Practice with the Law Society of New South Wales under the name Paltos Family Lawyers Pty Ltd and in December 2016, the plaintiff returned to practise as a solicitor.
9. There are a number of obvious issues in the proceedings. One of those issues is what were the terms of the Retainer of the defendant, which goes to the question of the duty of care and the contractual terms upon which the defendant was engaged, and what work or advice was required as a consequence thereof.
10. Over and above those issues, the plaintiff alleges that, for the purpose of one or other of the three Partnership Documents, executed at the time that the Partnership was established, he was totally and permanently disabled, or suffering "TPD" (to be explained later in these reasons), and was not advised of his rights under the Put and Call Option Agreement arising from that circumstance. Involved in that question is the issue, on which the parties are in dispute, as to whether, in accordance with those Partnership Documents, Mr Paltos was, in fact, totally and permanently disabled, as understood in the Partnership Documents, and, whether or not, in that situation, Bartier Perry owed the plaintiff a duty of care to advise him of his rights under the Put and Call Option Agreement, arising from total and permanent disability or his medical issues.
11. Lastly, if liability be shown, did the plaintiff suffer loss and damage as a result of the breach of the duty of care that has been alleged and, if so, what is the quantum of damage. Involved in that latter aspect is an issue associated with contributory negligence.
12. Further, the Court was informed that proceedings were to be heard, raising some of these issues, in the Equity Division, being proceedings between Mr Paltos and Mr Milevski. The Court was informed that those proceedings, including an application for an account, were due to be heard to finality in August 2019. They have not yet been finalised, although some of these issues are better determined as between the partners, binding on them, than against the plaintiff and defendant herein.
13. The plaintiff pleads causes of action in breach of the Retainer (contract); professional negligence (breach of duty of care); and compensation under the Australian Consumer Law [1] (hereinafter "the ACL"). The first two causes of action are governed by the Civil Liability Act 2002 (NSW) (hereinafter "the CL Act").
14. The contraventions of the ACL that are said to give rise to the payment of compensation are contraventions of s 18 (misleading or deceptive conduct) and s 21 (unconscionable conduct in connection with goods or services, not confined to the unwritten law).
15. The claim for breach of the Retainer depends on the extent of the Retainer and its requirements and alleges that "the defendant did not exercise reasonable care, skill and diligence in advising and acting for the plaintiff in respect of the Retainer and its subject matter and thereby breached the Retainer." The provisions of s 5O of the CL Act govern the determination of that which amounts to reasonable care.

Partnership Documents

1. As earlier stated there are three documents that have been described, in these reasons for judgment, as the Partnership Documents. On 11 February 2016, Christopher Hugh McCaffrey, at the relevant time a Consultant to the defendant and an employed solicitor, organised a conference. The conference took place on 15 February 2016 at the plaintiff's residence. Those in attendance were the plaintiff, Mr McCaffrey and John Howell, an accountant from McBurney & Partners, who, it was said, could provide assistance to the plaintiff.
2. At the conference on 15 February 2016, Mr McCaffrey recalls that the plaintiff informed him of certain facts, in the following terms: "I had a stroke two days before Christmas and I have not worked since." "I am having trouble with the junior partner of my practice and I think that he is trying to push me out." "I've been drawing more than my share from the partnership but the junior partner was aware of this and has not taken issue until now."
3. On 16 February 2016, at 10:57 AM, Mr McCaffrey sent an email to Mr Howell referring to the conference with the plaintiff on the previous day and attached a copy of the "Partnership Agreement". The attachment was a copy of a document provided to Mr McCaffrey by the plaintiff and was, in fact, the Put and Call Option Agreement.
4. Later on 16 February 2016, Mr McCaffrey enquired of the plaintiff as to whether there was any "more formal partnership agreement". On 17 February 2016, the plaintiff sent an email to Mr McCaffrey, which forwarded an email from Adam Crowley and attached two additional partnership documents, being the Heads of Agreement and the Partnership Terms. As a consequence, on and from 17 February 2016, the defendant had in its possession the three documents which are said to describe the entirety of the partnership arrangements between the plaintiff and Mr Milevski.
5. There are two fundamental aspects to which the Court must refer, before dealing with the evidence and facts deriving therefrom in these proceedings.
6. Those issues are the provisions of the CL Act, the provisions of the ACL and the three Partnership Documents. Because the Partnership Documents must each be read as a whole in their commercial context and are central to the issues between the parties in these proceedings and the rights of the plaintiff upon which it is said the defendant ought to have advised, it is necessary to recite a greater extract of those documents than might otherwise have been appropriate or, at least, to summarise them. Nevertheless, I start with the legislative background.

The Civil Liability Act

1. The CL Act applies to any claim for damages for harm resulting from negligence, whether or not the claim rests in tort, contract or otherwise. [2] "Damages" is defined [3] to include, subject to some currently irrelevant exemptions, any form of monetary compensation.
2. Further, "negligence" is defined [4] as any failure to exercise reasonable care and skill; "harm" is defined [5] to include economic loss; while "non-economic loss" is defined [6] to mean, essentially, loss other than economic loss, including pain and suffering. The CL Act applies to a cause of action based on the failure to exercise reasonable care and skill under a contract, including a retainer for services of a solicitor.
3. It is necessary then to deal with the general principles included in Pt 1A of the CL Act. By operation of s 5B, a defendant is not negligent in failing to take precautions against a risk unless the risk was foreseeable (i.e. the risk was such that the person knew or ought to have known of it); was not insignificant; and, in the circumstances, was a step that a reasonable person in the position of the defendant would have taken. [7]
4. Further, in determining whether a reasonable person would have taken those steps, one assesses, amongst other things, the probability that the harm would occur if the steps were not taken; the likely seriousness of the harm if it were to occur; the burden of taking the steps; and the social utility of the activity that creates the risk of harm. [8]
5. The foregoing provisions of s 5B of the CL Act are recited, more as a matter of abundant caution and not because they are directly relevant to the issues between the parties. The principles applied under s 5B of the CL Act determine what is not negligent; not what is negligent.
6. Further, in these proceedings, the parties only indirectly referred to precautions that ought to have been taken. Rather, the claim rests upon the proposition that the terms of the Retainer required advice on the rights that the plaintiff possessed as a result of the Partnership Documents, including the rights that would flow from TPD or total and permanent disablement, which advice was not given.
7. The provisions of s 5D of the CL Act require that the alleged "negligence" (a term here used to include the allegation that there was a failure to exercise proper care and skill under the Retainer) caused the harm that is alleged. The plaintiff must prove that the lack of care and skill was a necessary condition of the occurrence of the harm and that it is appropriate for the scope of the defendant's liability to extend to the harm so caused. At all times, the plaintiff bears the onus of proving, on the balance of probabilities, the facts that would satisfy the Court that the failure to provide appropriate care and skill in the advice, if there were such a failure, caused the harm. [9]

The Australian Consumer Law

1. As earlier stated, one of the causes of action pursued by the plaintiff in these proceedings rests upon the provisions of the ACL. It is necessary to recite the provisions upon which the plaintiff relies, which are ss 18 and 21 and which are in the following terms: "18 Misleading or deceptive conduct (1) A person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive." "21 Unconscionable conduct in connection with goods or services (1) A person must not, in trade or commerce, in connection with: (a) the supply or possible supply of goods or services to a person; or (b) the acquisition or possible acquisition of goods or services from a person; engage in conduct that is, in all the circumstances, unconscionable. … (3) For the purpose of determining whether a person has contravened subsection (1): (a) the court must not have regard to any circumstances that were not reasonably foreseeable at the time of the alleged contravention; and (b) the court may have regard to conduct engaged in, or circumstances existing, before the commencement of this section. (4) It is the intention of the Parliament that: (a) this section is not limited by the unwritten law relating to unconscionable conduct; and (b) this section is capable of applying to a system of conduct or pattern of behaviour, whether or not a particular individual is identified as having been disadvantaged by the conduct or behaviour; and (c) in considering whether conduct to which a contract relates is unconscionable, a court's consideration of the contract may include consideration of: (i) the terms of the contract; and (ii) the manner in which and the extent to which the contract is carried out; and is not limited to consideration of the circumstances relating to formation of the contract."
2. Essentially, the plaintiff's cause of action under s 18 of the ACL relies on the advice given being misleading or deceptive, in that it did not advise adequately, or at all, on the available remedy if the plaintiff were suffering TPD or a total and permanent disablement under the Put and Call Option Agreement. Alternatively, it relies upon the omission of advice on that issue as being misleading or deceptive.
3. The reliance on s 21 of the ACL is unusual. Essentially, the plaintiff submits, that, knowing of the plaintiff's disability or special disadvantage as a result of the plaintiff's strokes, the defendant unconscionably failed to advise, as the plaintiff claims the defendant should have.

The Partnership Documents

1. The foregoing discussion of principles deals with the legislative causes of action and, in relation to the CL Act, restrictions on or legislation governing the claim in tort and contract. However, at the heart of the proceedings is that which was contained in the Partnership Documents and the scope of the Retainer of the defendant. It is necessary to deal with the terms of the three documents that are said to give rise to the Partnership Agreement.
2. The first document with which the Court will deal is the document entitled "Heads of Agreement". The Heads of Agreement, so-called, consists of seven paragraphs and was executed on 29 June 2010. It is in the following terms: "Heads of Agreement DATED: 29 June 2010 PARTIES (a) Dennis Paltos, Solicitor of 16/347 Victoria Place, Drummoyne NSW 2047 (b) Peter Milevski, Solicitor of 146 Windsor Street, Paddington NSW 2021 THE AGREEMENT Dennis Paltos offers to Peter Milevski the opportunity to exercise 3 (three) call options to acquire up to a 30% interest in a partnership to be formed on 1 July 2010 between them as follows: 1 On 1 July 2010 a ten percent (10%) interest for a consideration of $77,394 (or such other amount as is agreed) due and payable on that date if exercised to Dennis Paltos. 2 On 1 July 2010 a loan to Dennis Paltos of $154,786 (or 2/3 of such other amount as is agreed) carrying a return by way of a profit share from the Paltos & Co practice over and above a notional salary of $150,000 comprising 30% of the net profit after both his and Dennis Paltos' notional salary which includes a return of 10% on (a) above. 3 On 1 July 2011 a further ten percent (10%) interest for a consideration of $77,394 (or 1/3 of such other amount as is agreed) due and payable on that date by reducing the loan owing by Dennis Paltos to Peter Milevski from $154,786 to $77,392 (or 1/3 of such other amount as is agreed) with the remainder subject to the same terms as (b) above. 4. On 1 July 2012 a further ten percent (10%) interest for a consideration of $77,392 (or 1/3 of such other amount as is agreed) due and payable on that date by reducing the loan owing by Dennis Paltos to Peter Milevski from $77,392 (or 1/3 of such other amount as is agreed) to zero. 5. Concurrent with the signing of this document the parties will enter into a Deed referred to as a 'Put/Call Option Document' as well as agreed terms on which the new partnership will be conducted. 6. From 1 July 2010 and assuming steps (1) to (5) are carried out by the Parties to this document, Peter Milevski will be entitled to receive: 6.1. A 'notional salary' of $150,000 drawn down in monthly amounts from which he is responsible for his superannuation and any taxes payable (deferred to April / May 2012 if a Tax Agent is used). 6.2. An additional draw of up to 30% of the Practice Net Profit from time to time after agreement with Dennis Paltos based on the estimated net profit for the year to date net of the notional salaries of the Partners. 7 From 1 July 2010 and assuming steps (1) to (6) are carried out by the Parties to this document, Dennis Paltos will be entitled to receive: 7.1. A 'notional salary' of $215,000 drawn down in monthly amounts from which he is responsible for his superannuation and any taxes payable. 7.2. An additional draw of up to 70% of the Practice Net Profit from time to time after agreement with Peter Milevski based on the estimated net profit for the year to date net of the notional salaries of the partners. DATED: 29 June 2010 EXECUTED AS A DEED: …"

Principles on the construction of the agreements

1. It is now trite that the construction of a contract is an objective process in which the Court seeks to construe the terms of the contract to determine the intention of the parties. The intention of the parties is determined from the written terms of their bargain and not by any expression of subjective opinion. [26] The objective approach, to which the Court referred above, has, on a number of occasions, been re-affirmed by the High Court, [27] and the Court has observed: "[35] … this Court has reaffirmed the objective approach to be adopted in determining the rights and liabilities of parties to a contract. The meaning of the terms of a commercial contract is to be determined by what a reasonable businessperson would have understood those terms to mean. That approach is not unfamiliar. As reaffirmed, it will require consideration of the language used by the parties, the surrounding circumstances known to them and the commercial purpose or objects to be secured by the contract. Appreciation of the commercial purpose or objects is facilitated by an understanding 'of the genesis of the transaction, the background, the context [and] the market in which the parties are operating'. As Arden LJ observed in Re Golden Key Ltd, unless a contrary intention is indicated, a court is entitled to approach the task of giving a commercial contract a businesslike interpretation on the assumption 'that the parties … intended to produce a commercial result'. A commercial contract is to be construed so as to avoid it 'making commercial nonsense or working commercial inconvenience'." (References omitted.)
2. Further, the High Court in Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [28] succinctly reaffirmed the process: "[40] This Court, in Pacific Carriers Ltd v BNP Paribas, has recently reaffirmed the principle of objectivity by which the rights and liabilities of the parties to a contract are determined. It is not the subjective beliefs or understandings of the parties about their rights and liabilities that govern their contractual relations. What matters is what each party by words and conduct would have led a reasonable person in the position of the other party to believe. References to the common intention of the parties to a contract are to be understood as referring to what a reasonable person would understand by the language in which the parties have expressed their agreement. The meaning of the terms of a contractual document is to be determined by what a reasonable person would have understood them to mean. That, normally, requires consideration not only of the text, but also of the surrounding circumstances known to the parties, and the purpose and object of the transaction." (References omitted.)

Evidence

1. The parties filed a Joint Memorandum of Agreed Facts and Issues in Dispute ("Agreed Facts"), which is extracted below. Further evidence was adduced by Affidavit with cross-examination available to the parties. "Joint Memorandum of Agreed Facts and Issues in Dispute 1. Agreed Facts 1.1. The plaintiff, Dennis Paltos (Dennis) was admitted as a solicitor of the Supreme Court of New South Wales on 11 May 1979 and specialised in family law. 1.2. Dennis and Peter Milevski (Peter) conducted a family law practice (the Partnership) from 1 July 2010 under various names and styles. 1.3. The defendant law firm, Bartier Perry Pty Limited (Bartier Perry), was engaged by Dennis on or about 16 February 2016 to act on Dennis' behalf in relation to a dispute with Peter. Christopher Hugh McCaffrey (the Solicitor) was a solicitor employed by Bartier Perry having over 40 years' experience in commercial law and specialising in commercial agreements. 1.4. When the Partnership was established, Dennis and Peter entered into three documents all dated 29 June 2010 (the Partnership Documents) as follows: 1.4.1. Heads of Agreement; 1.4.2. Deed of Partnership; and 1.4.3. Put and Call Option (PCO). 1.5. From 1 July 2010 Dennis held a 70% interest in the Partnership and Peter held a 30% interest in the Partnership. 1.6. The PCO granted each partner (Dennis and Peter) an option (the Option) to require the other partner to purchase the business of the Partnership if, relevantly, conditions (such as total and permanent disablement of the partner exercising the option) were met. The Option could only be exercised under the PCO within the 'Option Exercise Period'. 1.7. On 23 December 2015, Dennis suffered a left middle cerebral artery stroke and a right posterior cerebral artery stroke (the Strokes) for which he was hospitalised. Dennis suffered executive impairments as a result of the Strokes, including memory problems and perseveration. 1.8. On 15 February 2016 Peter wrote to Dennis regarding the Partnership. 1.9. On or about 16 February 2016, Bartier Perry (by the Solicitor) commenced acting for Dennis. A formal written retainer (the Retainer) was entered into by Dennis and Bartier Perry on or about 29 February 2016. The Retainer relevantly stated that the following work was to be undertaken: 'advising you with regard to your partnership in Paltos Milevksi and in relation to the demands being made by your partner [Peter]' 1.10. It was an implied term of the Retainer that Bartier Perry would exercise reasonable care and skill in performing the Retainer. Further, Bartier Perry owed Dennis a duty of care to use reasonable care, skill and diligence in the provision of the legal services provided by Bartier Perry to Dennis pursuant to the Retainer. 1.11. From at least 16 February 2016 Bartier Perry (by the Solicitor) was aware of the Strokes and that Dennis suffered a number of symptoms arising from the Strokes. 1.12. Bartier Perry was provided with a letter from Dr George Lianos dated 24 February 2016. 1.13. Dennis provided the PCO to Bartier Perry prior to 16 February 2016 and the rest of the Partnership Documents to Bartier Perry on 17 February 2016. 1.14. Bartier Perry advised Dennis, inter alia, that Peter could seek to terminate the Partnership and that Dennis should adopt a strategy to try and sell 20% of the Partnership from his 70% share to Peter or otherwise dissolve the Partnership at 30 June 2018 (Advice). 1.15. Bartier Perry was aware from at least 14 March 2016 that Peter had registered: 1.15.1. Peev Holdings Pty Limited ACN 611 099 980 (Peev) with Peter its sole director, secretary and member; and 1.15.2. Milevski Family Lawyers Pty Limited ACN 611 104 753 with Milevski its sole director and secretary and Peev its sole member. 1.16. On 18 April 2016 Peter commenced Supreme Court proceedings against Dennis seeking the dissolution of the Partnership. On 18 April 2016 ex parte orders were made that the summons be returnable on 21 April 2016. 1.17. On 18 April 2016 Bartier Perry ceased to act for Dennis. 1.18. By email sent at 6.02pm on 20 April 2016 Dennis directly engaged Michael Lowenstein of counsel to appear on Dennis' behalf at the return of Peter's summons. 1.19. At the hearing on 21 April 2016 orders were made granting the relief sought by Peter including an order relevantly, that the Partnership be dissolved and receivers and managers be appointed. 1.20. Bartier Perry did not provide Dennis with the advice referred to at [29] of the further amended statement of claim (Statement of Claim) or undertake or attempt to undertake the calculation referred to at [30] of the Statement of Claim. 1.21. Dennis did not exercise the Option. 1.22. On or about 17 August 2016, Dennis lodged a Notice of Intention to Engage in Legal Practice form with the Law Society of New South Wales under the name Paltos Family Lawyers Pty Limited. 1.23. By at least December 2016, Dennis had returned to practice as a solicitor. 2. Issues in Dispute 2.1. What were the terms of the Retainer? 2.2. [Not agreed by plaintiff where underlined]: What was the meaning and effect of the Option, specifically: 2.2.1. What are the requirements for being 'totally and permanently disabled'? 2.2.2 Was the Option able to be exercised after the Partnership had been wound up? 2.2.3. Was there an implied term of the kind alleged by the plaintiff? 2.2.4 Was the option or the implied term engaged if the Partnership was wound up, or about to be wound up, for reasons that were unrelated to disablement, specifically a breakdown in the partners' relationship and/or misconduct or alleged misconduct by Dennis? [Plaintiff contends that it is not pleaded and not adequate particulars of misconduct have been provided]. 2.2.5. If the alleged implied term exists, was engaged and was breached by Peter, does that breach sound in damages (given that, if so, Dennis still has that cause of action against Peter)? [Plaintiff contends that it is not pleaded]. 2.3 Was Dennis 'totally and permanently disabled' for the purposes of the Option? 2.4. Would Dennis have been entitled to exercise the Option during the Option Exercise Period as defined in the PCO? 2.5. Did Dennis return to work in his usual occupation at any time prior to the: 2.5.1. Expiry of the Option Exercise Period? or 2.5.2. Termination of the Retainer? 2.6. Did the Option contain an implied term as pleaded at 11A of the Statement of Claim? 2.7. Did Bartier Perry have a duty of care, in contract or in tort (Duties), to advise Dennis of the Option including Dennis' right to exercise the Option? 2.8. Did Bartier Perry breach the Duties owed to Dennis by: 2.8.1. Providing the Advice to Dennis; or 2.8.2. Not providing to Dennis the advice set out at [29] of the Statement of Claim or undertaking or attempting to undertake the calculation referred to at [30] of the Statement of Claim? 2.9. Did Dennis suffer loss and damage as a result of the breach of the Duties by Bartier Perry? If so, what is the quantum of the loss and damage? 2.10. If the existence of the Option had been brought to the Court's attention on 21 April 2016, would this have prevented the dissolution of the Partnership and appointment of receivers? 2.11. Is Bartier Perry entitled to rely on (or has Bartier Perry established) the pleaded matters in answer to the whole of the Statement of Claim, as to which Bartier Perry asserts that: 2.11.1. Section 5O of the Civil Liability Act 2002 (NSW) applies; 2.11.2. Alternatively, Dennis has failed to demonstrate that had he received the advice at [29] of the Statement of Claim: (a) he would have instructed Bartier Perry to exercise the Option on the basis that he was totally and permanently disabled; (b) Bartier Perry would have been able to follow such instructions having regard to instructions from Dennis that he wanted to return to work; (c) he would have been in a better position having regard to all the circumstances including, amongst other things, the plaintiff's express instructions which accepted he misconducted himself; such that he suffered loss and damage by reason of the alleged breaches by Bartier Perry. 2.11.3. Alternatively, Dennis caused or contributed to his own loss and damage because he failed to: (a) Inform Bartier Perry of his belief and intention not to return to work; (b) Take reasonable steps to protect his own interests; (c) Use his skills as a solicitor to read and understand the PCO or seek advice in relation to the Option. 2.11.4. Dennis' claim is an apportionable claim pursuant to Part IV of the Civil Liability Act 2002 (NSW) and, if so should be: (a) apportioned between: (i) Dennis on the basis he contributed to his own loss; (ii) Michael Lowenstein of counsel who appeared in Court on behalf of Dennis on 21 April 2016; (iii) Other unspecified parties from whom Dennis is alleged to have sought and obtained legal advice; and (b) limited, having regard to Bartier Perry's responsibility in comparison to any other concurrent wrongdoer pursuant to section 35 of the Civil Liability Act 2002 (NSW). 2.11.5. Bartier Perry is immune from suit on the grounds that: (a) The conduct alleged amounts to conduct of a case in Court by Bartier Perry and work done out of Court affecting the conduct of a case in Court; (b) There was an intimate connection between the conduct alleged and the conduct of a case in Court; and/or (c) There was a functional connection between the conduct alleged and the determination of the case by the Court. 2.12. Is there an implied representation in the provision to Dennis of the Advice, that there was no information known to Bartier Perry which a reasonable client in Dennis' position would expect to be disclosed but which was not disclosed? 2.13. If so, is such implied representation misleading or deceptive, likely to mislead or deceive and / or made in contravention of section 21 of the Australian Consumer Law (ACL)? 2.14. Did Dennis suffer loss or damage as a consequence of the contravention of the ACL, and if so, in what amount?"

The construction of the Partnership Documents

1. The Partnership Documents have been described and, in the case of the Heads of Agreement and the Partnership Terms, have been extracted in full. The length of the Put and Call Option Agreement militated against its recitation in these reasons, but, in every sense, the Put and Call Option Agreement is the most important Agreement in terms of the issues between the parties.
2. While the terms of the contract that deal with the grant and exercise of options have not been summarised in any length, in many respects the definitions and the preconditions to the grant or exercise of those options are far more important than the terms themselves. Nevertheless, that which is relevant to the issues in the proceedings will be summarised and/or quoted when relevant.
3. On one view, the Put and Call Option Agreement is a collateral contract to the Partnership Terms and to the Heads of Agreement. However, it would be misleading to take the view that the Put and Call Option Agreement is in any way subsidiary to the other two agreements. Rather, the three agreements make up the terms under which each of the plaintiff and Mr Milevski entered into the Partnership.
4. Clause 5 of the Heads of Agreement expressly refers to the "put/call option document", which can only be a reference to the Put and Call Option Agreement. Each of the agreements was executed at about the same time and, it seems, by counterpart.
5. As is clear from the Heads of Agreement, that document deals with the mechanism by which Mr Milevski was to purchase 30% of the interest in the Partnership. It refers to the timing of the payments; the salary drawdown during the time that the equity is being purchased and thereafter; and, as earlier stated, the concurrency of the Put and Call Option Agreement. Beyond that, as already noted, it is only necessary to reiterate that Mr Milevski purchased 30% of the Partnership and was, thereafter, a 30% interest holder in the continuing Partnership, at least until orders of the Court dissolved the Partnership in 2016.
6. The document described as the Deed of Agreement of Partnership Terms ("the Partnership Terms"), also extracted in full earlier in these reasons, is, similarly, not directly relevant to the allegations of "negligence" that are before the Court. Nevertheless, the document is part of the three documents that were executed at about the same time and is directly relevant to two issues of some note. Firstly, the overdrawing by the plaintiff of partnership earnings. Secondly, the provisions in clause 6 of the Partnership Terms, which provide mutual first rights of offer in the event that either partner desires to sell all or part of his Partnership interest and a "guideline" as to the manner in which fair market value shall be determined, without additional value for the obtaining of majority interest or diminished value on account of a continuing or existing minority interest.

Implied term

1. Having dealt with the degree to which it should have been obvious to anyone that the plaintiff was suffering a disability and the extent of that disability, whether or not the extent was known, and one of the constructions of the Put and Call Option Agreement, it is necessary to deal with the claim that there is an implied term in the, or attached to, the Partnership Documents. I comment that the parties have seemed to me like the proverbial ships in the night. Each of them is dealing with a slightly different point.
2. The plaintiff, in his Further Amended Statement of Claim, claims that: "[11A] It was an implied term of the Put and Call Option that in the event of the TPD of an Owner or Incoming Partner when there is no Insurance Policy in place, the Owner or Incoming Partner that has not suffered the TPD will not take any steps that would disentitle the Owner or Incoming Partner that has suffered the TPD from exercising the Put Option during the Put Option Period (the implied term)."
3. The defendant denies the claim in the paragraph. The Defendant's Written Outline of Closing Submissions at [64] submits that the plaintiff contends for a particular implied term, worded in the manner described in the Further Amended Statement of Claim at [11A]. That is not my understanding of the claim.
4. Rather, the claim in [11A] of the Further Amended Statement of Claim is that there was, arising from the need to give efficacy to clauses 3.1 and 5.1 of the Put and Call Option Agreement and the defined term "TPD" in clause 1.1 of that agreement, an implied term to the effect of that described in [11A]. The precise wording of the pleaded implied term is not to the point. Nevertheless, the Court is required to determine whether there is a clause to that effect.
5. The particulars of the claim rely upon the necessity to give efficacy to clauses 3.1 and 5.1 of the Put and Call Option Agreement, as well as the definition of "TPD". These reasons have not previously recited the terms of clauses 3.1 or 5.1. The definition of TPD has been recited and the effect of clauses 3.1 and 5.1 has been summarised.
6. Clause 8.2(a) of the Put and Call Option Agreement provides that, with the exception of documents otherwise referred to in the agreement itself, the agreement contains "the entire understanding between the parties in relation to the subject matter" and there "are non [sic] express or implied conditions, warranties, promises, representations or obligations, written or oral in relation to this" agreement other than those expressly stated in it or necessarily implied by law. Leaving aside for present purposes the repetition of the exception to those matters expressly stated, the clause is, again, not well drafted. I do not here refer to the use of the term "non", which I assume should read "no", as I treat that as a typographical error.

Total and permanent disablement

1. The Court has already dealt, at some length, with the medical evidence relating to the capacity of the plaintiff. It has also remarked on its assessment of the plaintiff during the course of the proceedings before the Court. Further, the Court has identified one of the available constructions of the Put and Call Option Agreement and, in particular, the commencement of the Option Exercise Period, the Trigger Event and the meaning of TPD.
2. The circumstances of these proceedings are that the plaintiff did not have an Insurance Policy and, therefore, that part of the definition, found in paragraph (b) of TPD, applies to the plaintiff, as do the other provisions relating to an Exiting Partner, who does not have an Insurance Policy. The term used is total and permanent disablement; not total and permanent incapacity.
3. In the same way as the remainder of the Agreement, the construction of the term "total and permanent disablement" must derive from the words of the Agreement or Agreements, construed in a manner already described. It is "total and permanent disablement" in the context of the relationship between these parties that the Court must examine.
4. As a consequence, prior judgments on the meaning of the term total and permanent disablement, and, even more so, prior judgments on the meaning of the term "total and permanent incapacity" are of some, but not binding, authority. It should also be noted that the term used is "permanent"; not "indefinite".
5. I have been referred by the parties to Sutton on Insurance Law, [84] which has an informative discussion on the issue of TPD in life insurance policies. [85] The learned authors refer to the prescribed contract providing insurance cover in respect of the insured for "total disablement … from carrying out all the normal duties of his or her usual occupation". In this instance, it refers to disablement from disease, but similar provisions relate to accidental injury. [86]
6. Of interest is that the term "occupation" has been defined by the courts in relation to such insurance policies. [87] It is said to be a concept wider than "employment" and wider than "job"; it means usual vocation, business, trade or calling.
7. The term utilised in the definition of TPD in the Put and Call Option Agreement, comparable to the immediately foregoing, is the term "their usual working activities in their usual occupation". Otherwise, the term used is "death or total and permanent disablement". By comparison, in the definition of "Option Exercise Period", the term used is "their usual working activities", with no reference to occupation.

Requirement to Advise on the Put and Call Option Agreement

1. The Court has thus far dealt with the terms of the Retainer; the obvious degree of illness of the plaintiff; the meaning of TPD and whether it is the same as or different from "total and permanent disablement"; the terms of the Partnership Documents; and the principles for the construction of documents of this kind. One of the crucial issues between the parties is whether the defendant was required to advise on the operation of the Put and Call Option Agreement.
2. In some respects, that issue has been put too widely and too generally by each of the parties. In fact, on the evidence before the Court, the defendant did advise on the Put and Call Option Agreement. There is some evidentiary dispute, or, more accurately, there may be some evidentiary dispute, between the plaintiff and the defendant as to the nature of that advice.
3. The defendant maintains [95] that the Retainer required the defendant to advise the plaintiff "with regard to his Partnership in Paltos Milevski and in relation to the demands being made by his partner". There is an evidentiary issue, which in my view is of little moment, as to whether the advice was given that the Put and Call Option Agreement did not apply to Mr Paltos (simpliciter) or whether the advice was in the form of "the Put and Call Option Agreement did not apply to Mr Paltos at the time [or yet]". Being, the defendant submits, a reference to the requirement to meet the six-month time limit. Any more detailed advice was, on my findings, not given. The reconstruction of the defendant through Mr McCaffrey as to reasons it did not apply was not based on any note or reliable recollection.
4. There is no controversy that the defendant advised the plaintiff that the plaintiff's partner, Mr Milevski, could terminate the Partnership and suggested to the plaintiff that he try to sell 20% of his Partnership, thereby rendering the two partners equal partners in the Partnership. Further, at one stage, to which reference has been made earlier in these reasons, the issue was raised by the defendant, through Mr McCaffrey, that the plaintiff may wish to dissolve the Partnership himself.
5. There is also little or no doubt that, from time to time, and sometimes forcefully, the plaintiff expressed the view that he wanted to return to the Partnership and not give up practise as a solicitor. That instruction gives rise to a different consideration with which the Court will deal next in these reasons.

Misleading or Deceptive Conduct

1. As noted earlier, the defendant advised the plaintiff that the Put and Call Option Agreement did not apply to him at that time (or yet), seemingly, I infer, as a result of the requirement for six months to have elapsed, during which the plaintiff was unable to undertake his usual activities in his usual occupation in the Partnership. Nevertheless, the Put and Call Option Agreement applied to the plaintiff, but the plaintiff was not yet suffering TPD.
2. At the time that such advice was given, given the instructions that had been received from the plaintiff, the defendant was not in a position to be able to advance to Mr Milevski that the plaintiff had a total and permanent disablement and, therefore, the double stroke on 23 December 2015, could not, at that stage, have been acted upon as a "Trigger Event". Nevertheless, the advice that was provided, when it was provided, was misleading or deceptive, in that on and after 23 December 2015, there had, on one view of the proper construction of the Deed, been a "Trigger Event" and an Option Notice could have been served.
3. It was misleading to advise that the Put and Call Option Agreement "did not apply" or "did not apply yet" (or give that impression) to the plaintiff. The difficulty is that the defendant in advising that a Trigger Event had occurred would have faced "front on" the stated desire of the plaintiff to return to work.
4. The plaintiff relies upon the omission to advise on or after 13 April 2016, by which time, the defendant was in a position of knowing that the double strokes of 23 December 2015 had occasioned disablement and the plaintiff desired the sale of his Partnership Interest. It is necessary, as the Court has already mentioned, in dealing with whether the failure to advise was misleading or deceptive, to examine the whole of the conduct of the defendant.
5. It is not clear from any of the material before the Court that the plaintiff was relying upon or acting upon the advice that the Put and Call Option Agreement did not apply to him at that time.
6. Of course, the content of that advice did not make clear to the plaintiff that the Put and Call Option Agreement did not apply to him because he had not suffered, on his instructions, total and permanent disablement. Rather, if the defendant had advised on the reasons at all, the defendant had advised that it was the inability to satisfy the required six-month time period that disentitled the plaintiff from any rights under the Put and Call Option Agreement.

Conclusion on liability

1. At the outset of these reasons, the Court remarked that each of the Partnership Documents was not well drafted. Further, to have a serious business relationship between two partners in a law firm governed by ill-drafted documents makes it difficult when that relationship breaks down.
2. There can be little or no doubt that the plaintiff suffered significant disablement as a result of his two strokes on 23 December 2015. So much is conceded in the notes taken by the defendant or its agents. Notwithstanding that disablement, the plaintiff insisted that he desired to return to his practice in the Partnership. Ultimately, he acted upon his desire to continue to practise law, even though he could not successfully run a practice at that later time.
3. As a consequence of those instructions, the task of the solicitor was difficult. It may well have been that the plaintiff was under a formal disability or incapacity, such that a tutor should have been appointed. That is not an issue that has been agitated in these proceedings, but the documentation, at least as between Mr McCaffrey and Mr Howell and Mr Creais was that, at least in relation to his financial affairs, that issue should have been contemplated.
4. It is bewildering that an accountant would consider it necessary to advise on the appointment of a financial tutor, but the solicitors acting for him did not give that issue consideration in relation to his capacity to give instructions. I accept that, given the plaintiff's significant experience as a solicitor, he could, whatever be his lack of insight and disablement, give some impression of a capacity to understand legal issues, based upon his experience in handling them. Nevertheless, it should have been, and in my view was, obvious to the defendant that the plaintiff had significant disablement issues.
5. Nevertheless, it cannot be negligent for the defendant, in those circumstances, to have acted on the instructions of the plaintiff that he wished to return to the Partnership and, as a consequence, not to rely upon any total and permanent disablement. The fiduciary duties to a client with disability are not uncomplicated. [106]
6. The defendant was not dealing with an uneducated client of low-average intelligence and education. It was dealing with a person with whom the solicitor with carriage of the matter had had a long association and he would have been, at least initially, aware of his capacity. However, that capacity also would have been obviously affected by the double strokes. [107]

Damages

1. The defendant seeks to rely on three issues on the question of damages. First, it raises concurrent wrongdoer, being counsel briefed directly to appear at the proceedings in Equity in 2016. Counsel, Mr Loewenstein, was briefed at 6:02 PM on 20 April 2016 to appear before the Court, as otherwise constituted, on 21 April 2016.
2. It is not clear with what material Mr Loewenstein was briefed, but he was not briefed with the Put and Call Option Agreement. There are three reasons that he is not a joint wrongdoer. First, the advice (assuming there was some, at least oral advice) has not been shown to be negligent or in breach of contract. Secondly, the Consent Orders issued by the Court dissolved the Partnership. The dissolution of the Partnership, or consent thereto, did not cause damage to the Plaintiff. Thirdly, the immunity of counsel in such a circumstance is beyond question. It would be odd if, notwithstanding immunity, counsel could be a joint tortfeasor or joint wrongdoer (i.e. in contract), even though unable to be the subject of suit. It is unnecessary to decide the last issue, relating to whether a person under immunity can be a joint wrongdoer, because no concurrent wrongdoing can arise as a result of the other two aspects.
3. The defendant relies on other unidentified persons, from whom, it submits, [142] the plaintiff received advice and they were, as a consequence, joint wrongdoers. The defendant submits that the conduct of these unidentified persons should reduce the damages awarded to be paid by the defendant. I am unaware of any such advice.
4. Further, there is no suggestion that such persons, if any, were under any contractual or proximate relationship such as to make any advice that may have been lacking in due care and skill (assuming the existence of such a duty) actionable or place them in the position of a "wrongdoer", joint or otherwise. This claim is rejected.
5. Secondly, the defendant raises, as a reason for reducing or eliminating the damages against it, the contributory negligence of the plaintiff. [143] The issue of contributory negligence does not depend on the defendant's perception of the plaintiff's capacity. The evidence at the hearing discloses that the plaintiff had significantly impaired executive functioning and could not make complex decisions or decide on tactics.
6. Further, the plaintiff engaged the defendant to provide the advice on matters which he felt he could not handle himself. The test for contributory negligence is the same, the necessary damages being made, as that for primary liability. [144]

Endnotes

1. Sch 2 of the Competition and Consumer Act 2010 (Cth).
2. Section 5A of the CL Act.
3. Section 3 of the CL Act.
4. Section 5 of the CL Act.
5. Ibid.
6. Section 3 of the CL Act.
7. Section 5B(1) of the CL Act.
8. Section 5B(2) of the CL Act.
9. Section 5E of the CL Act.
10. Section 5O of the CL Act.
11. Blomley v Ryan (1956) 99 CLR 362; [1956] HCA 81; Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447 at 461 and 474; [1983] HCA 14.
12. Qantas Airways Ltd v Cameron, Leonie (1996) FCR 246; [1996] FCA 349.
13. Hurley v McDonald's Australia Ltd [1999] FCA 1728.
14. (2019) 93 ALJR 743; [2019] HCA 18.
15. Yorke v Lucas (1985) 158 CLR 661; [1985] HCA 65.
16. Campomar Sociedad, Limitada v Nike International Ltd (2000) 202 CLR 45; [2000] HCA 12 at [105]; Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191; [1982] HCA 44; Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592; [2004] HCA 60.
17. (1982) 149 CLR 191 at 198.
18. Taco Company of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177 at 202-203; [1982] FCA 136, cited with approval in the plurality judgment of Campbell v Backoffıce Investments Pty Ltd (2009) 238 CLR 304; [2009] HCA 25.
19. Taco Company of Australia Inc, supra, per Deane and Fitzgerald JJ.
20. Clause 8.1 of the Put and Call Option Agreement.
21. Clause 8.2 of the Put and Call Option Agreement.
22. Clauses 8.3, 8.4 of the Put and Call Option Agreement.
23. Clauses 8.5 - 8.7, 8.10 of the Put and Call Option Agreement.
24. Clause 9 of the Put and Call Option Agreement.
25. Clause 8.13 of the Put and Call Option Agreement.
26. Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337 at 351; [1982] HCA 24 per Mason J (with whom Stephen and Wilson JJ agreed); Hospital Products Limited v United States Surgical Corporation and Others (1984) 156 CLR 41 at 62; [1984] HCA 64; Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451; [2004] HCA 35; Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 at 179; [2004] HCA 52; Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104; [2015] HCA 37.