Judgment
1BATHURST CJ: These appeals were heard together and judgment was delivered on 28 June 2012 (the primary judgment). In my judgment I reached the following conclusions and proposed the following orders:
"[101] In the result, in my opinion, the liability of Mr Pritchard for the loss of the benefit of the James guarantee should be reduced to the figure of $380,017 as concluded by Whealy JA.
[102] So far as the liability in respect to the costs incurred in the prosecution of the James proceedings, DJZ is entitled to damages measured by reference to 60 percent of the total costs less a discount of 30 percent thereof as a result of the contributory negligence of DJZ. To the extent the damage related to costs incurred up to 30 May 2002, the whole of the damage should be borne by Mr Pritchard. To the extent the damage was suffered between 30 May 2002 and 15 April 2003, it should be borne equally by Mr Pritchard and Giles Payne and thereafter 45 percent each by Mr Pritchard and Giles Payne and 10 percent by Mr McGovern. If the parties are unable to agree on the quantum in accordance with that conclusion, the matter should be remitted to the trial judge for determination.
[103] Due to the limited success each of the appellants had in the appeal, it seems to me that the orders for costs made by the primary judge should not be disturbed.
[104] So far as the costs of the appeal are concerned, no order for costs of the appeal should be made at this stage but each party should be given leave to file a motion seeking such costs orders as they may be advised. Any such motion should be filed within 14 days and will be listed before the Registrar of the Court of Appeal for directions as to their disposal.
Orders
[105] In these circumstances I would make the following orders:
1 Each appeal allowed in part.
2 In the event the parties are able to agree on orders to give affect to the conclusions reached in pars [101]-[102] of this judgment, a draft form of orders should be delivered to my Associate.
3 In the event the parties are unable to agree on the orders within 14 days, the proceedings are to be remitted to the trial judge for determination of the appropriate orders having regard to pars [101]-[102] of this judgment.
4 The parties have liberty to file Notices of Motion seeking orders for costs of the appeal within 14 days of the date hereof."
2Barrett JA agreed with the orders I proposed and as a consequence the orders became the orders of the Court.
3The parties have agreed on certain orders to give effect to the conclusions I reached in pars [101]-[104] but have filed a series of motions in relation to costs.
4Whealy JA retired on 30 June 2012. The parties have agreed, pursuant to s 45AA of the Supreme Court Act 1970, that Barrett JA and I deal with the outstanding issues.
5This judgment should be read with the primary judgment. However, to put the matter in context, it is appropriate to summarise the issues raised and the result.
6The proceedings concerned the liability of professional advisers to the first respondent to each appeal (DJZ) arising out of a decision of this Court in James v Surf Road Nominees Pty Ltd [2004] NSWCA 475 that the entry into a deed in November 2003 had the effect of releasing the guarantees of Mr and Mrs James and New South Head Road Nominees Pty Ltd (the James guarantors) from their obligations under a guarantee contained in a deed dated 1 July 1999. That Court in obiter also held that the guarantee had been released by an earlier deed executed in February 2001. The relevant provisions of each deed and the decision of the Court of Appeal are set out in pars [2]-[28] of the primary judgment and it is unnecessary to repeat them. As a consequence, DJZ brought proceedings against its professional advisers. Its claims relevantly were for the loss of the monetary value of the guarantee and for the costs of the unsuccessful prosecution of the proceedings against the James guarantors.
7In relation to the claim for loss of value of the guarantee, the primary judge held that the appellant Mr Pritchard breached his obligations to advise that the entry into the November 2003 agreement would cause the discharge of the James guarantees. Her Honour considered the possibility that the February 2001 deed had this effect but concluded that Mr Pritchard was neither retained nor owed a duty to advise DJZ in respect of that deed. She assessed damages at $542,882.13.
8In relation to the costs of the James proceedings, the primary judge found that the costs amounted to $489,022, plus interest (at [412]). She concluded that 60 percent of those costs related to the pursuit of the guarantee whilst 40 percent related to other issues. After concluding that the damages should be reduced by 30 percent for the contributory negligence of DJZ in failing to accept an offer of settlement on 18 December 2003, she found that the second and third respondents (Giles Payne) were responsible for 50 percent of the costs incurred after 18 January 2004, whilst Mr Pritchard was responsible for the balance. As the respondent Mr McGovern SC had not advised DJZ on the entry into the November 2003 deed, the claim against him was dismissed. However, the primary judge ordered he pay additional costs incurred by reason of his withdrawal from representing DJZ as senior counsel when he was joined in the proceedings, on the basis that he should have perceived at an earlier point of time that he was in a position of conflict. A similar order was made against Giles Payne in respect of their withdrawal from the proceedings.
9In the result the primary judge entered judgment against Mr Pritchard in the sum of $743,780 and Giles Payne in an amount of $130,701.31.
10The nature of appeal and cross-appeals were summarised in pars [31]-[33] of the primary judgment:
"[31] Mr Pritchard has appealed against the orders of the primary judge in respect each of Giles Payne and Mr McGovern. The grounds of the appeal challenge the contention that the February 2001 deed had no causative effect on any loss suffered by DJZ. As a consequence it is contended that Giles Payne's liability in respect of costs should have commenced in May 2002 rather than 12 January 2004 and that Mr McGovern was liable to make contribution. He also contended that DJZ suffered no loss as the costs were paid by other companies associated with Mr Palmieri rather than DJZ.
[32] Giles Payne has appealed against the findings of the primary judge on the grounds that it was no part of its retainer to advise DJZ on this issue and that any breach of retainer was not causative of any loss. It also appealed against certain costs orders made by the primary judge on the assumption that it was otherwise unsuccessful. It also contended that DJZ suffered no loss as the costs were paid by other companies associated with Mr Palmieri, rather than by DJZ.
[33] Mr McGovern has cross-appealed on an order for costs made against him by the primary judge. By Notice of Contention Mr McGovern submitted that the primary judge's decision should be affirmed on the grounds that the proper application of s 5B, s 5D and s 5E of the Civil Liability Act 2002 would result in the finding that he was not negligent and there was a lack of causation between the alleged negligence and the loss incurred by DJZ."
11It should be noted that the contention of Mr Pritchard referred to in par [31] of the primary judgment was based on a submission that the February 2001 deed discharged the guarantee and that he had no duty to advise in respect of that deed. I have summarised the position in par [20] of the primary judgment:
"[20] The issue in these appeals arises in a somewhat unusual fashion. The primary judge found negligence in failing to advise that the November 2003 sales agreement would operate as a release of the James guarantors and that that was the effect of that agreement. On appeal, Mr Pritchard argued that if there was a release of the James guarantors, it occurred by virtue of the February 2001 deed, in respect of which he owed no duty to DJZ. Therefore, he submitted, even if he was negligent in November 2003, that negligence did not result in any loss to DJZ. DJZ by contrast contended that it had retained Mr Pritchard in respect of the February 2001 deed, and that if it had the effect of releasing the James guarantors the consequent loss which resulted was caused by the negligence of Mr Pritchard in failing to warn of this effect."
12On the appeal the majority held that the February 2001 deed had discharged the James guarantees, but that Mr Pritchard was under a duty to exercise reasonable care in advising DJZ on the deed, which duty was breached by failing to advise of this consequence. Thus Mr Pritchard remained liable. However, the damages were discounted by 30 percent to take account of the possibility that in February 2001 DJZ could not have negotiated a deed which would have avoided the discharge of the guarantee and of the difficulty of recovering money from the James guarantors, particularly Mrs James.
13So far as the costs of the proceedings against the James guarantors were concerned, the majority held that Giles Payne came under an obligation to advise DJZ of the fact that the February 2001 deed discharged the guarantee by 30 May 2002 and Mr McGovern by 15 April 2003. This led to the apportionment referred to in par [102]. The discount of 30 percent for contributory negligence remained.
14In monetary terms, having regard to the agreed orders, the liability of Mr Pritchard was reduced to $543,490, the liability of Giles Payne marginally increased to $132,945, whilst Mr McGovern became liable to the plaintiff in the sum of $29,527.