Rosser v Yates

IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION PROFESSIONAL NEGLIGENCE LIST

20405/01 MICHAEL LEWIS JACK ROSSER v ADRIAN RICHARD YATES

JUDGMENT 1 HIS HONOUR: The plaintiff, Michael Lewis Jack Rosser, is seeking to pursue a claim against his former solicitor, Adrian Richard Yates. A statement of claim was filed by the plaintiff on 23 May 2001 but there was an application to have that statement of claim struck out. The application was heard by Davies AJ and on 27 June 2003 his Honour determined that the statement of claim that had been filed should be struck out. His Honour further determined that leave should be refused to file a proposed amended statement of claim considered by the court on that earlier application. Davies AJ did, however, give the plaintiff liberty to file and serve a further statement of claim within twenty-eight days and the plaintiff availed himself of that opportunity. A further statement of claim was filed on 23 July 2003, and that prompted the defendant to file another notice of motion seeking an order that the further statement of claim be struck out. 2 The application was argued before this Court on 5 February 2004 and, apart from the oral submissions of counsel, I have also had the benefit of written submissions. 3 The claim which the plaintiff wishes to present is quite involved and it arises by reason of a number of alleged contractual obligations undertaken by the defendant and the alleged breach of those obligations. The plaintiff seeks to plead his case in the alternative in negligence. 4 It seems that the defendant employed Mr Gamble who was a solicitor who acted for Mr Franke with whom the plaintiff carried on a partnership business of buying and selling ships and marine equipment. In August 1991 the plaintiff and Mr Franke met in Mr Gamble's office and reached an agreement for the dissolution of their partnership. That agreement is pleaded in the language used in para 50 of the further statement of clam the subject of the application before me. 5 Mr Franke died and proceedings were brought by the plaintiff against his estate in the District Court for the return of a number of items of equipment or their value. The action failed, it would seem because the District Court judge who heard it was not satisfied that any of the items concerning which the claim was brought belonged to the plaintiff. The estate was represented in that District Court action by Mr Gamble. 6 Once those District Court proceedings failed, the plaintiff presented the first of his statements of claim against the defendant in this court. The earlier pleading attracted a number of criticisms from Davies AJ:

(i) "…principal allegations are lumped together without relating them to facts which occurred";

(ii) as to para 2 of the earlier proposed amended statement of claim, his Honour said: "This paragraphs sets out no relevant facts. It concerns a period of five years and a series of distinct matters. In this form it is misleading and embarrassing";

(iii) "In the proposed amended statement of claim there are a myriad of disparate allegations… I doubt that the plaintiff's statement of claim will ever be brought into an acceptable form unless these categories are pleaded separately, the relevant facts in relation to each category being set out";

(iv) "It is particularly important that the various different claims be pleaded with care and separately. The application of the Limitation Act to the claims will obviously be an issue between the parties. Section 14 of the Limitation Act will have application from the date on which each cause of action first accrued. It is desirable that the statement of claim be pleaded in a manner which facilitates the consideration of this issue";

(v) "The proposed amended statement of claim appears to me to be a jumble in which a vast array of allegations of duty and a breach of duty have been pleaded without a description of the underlying factual basis on which the claims are based. Neither the statement of claim nor the proposed statement of claim clearly state the case to be met or gives to the defendant a proper opportunity to answer." 7 This brings me to a consideration of the further statement of claim filed on 23 July 2003. This document contains seventy-eight paragraphs. Some parts of the original document have been repeated, but there is much in the document before me which was not contained in the earlier pleading. 8 The action is unusual and it is complex, and it will inevitably attract consideration of the provisions of the Limitation Act. All these features render it essential that the pleading conform with the requirements of the Rules of Court and that any claim or claims in contract be pleaded with precision, identifying the facts giving rise to any contractual obligations, defining the obligations allegedly breached, when the breach or breaches occurred and what damage resulted in consequence. Similar considerations apply to the case to be presented in tort. 9 All the material facts must be pleaded, and with that degree of specificity as will enable the defendant to appreciate the case he has to meet. It is not the function of particulars to substitute for necessary averments in a statement of claim: see Trade Practices Commission v David Jones (Australia) Pty Limited (1985) 7 FCR 109 and H 1976 Nominees Pty Limited v Galli & Apex Quarries (1979) 40 FLR 242, in particular at 246-247. 10 Having regard to the arguments presented, consideration is also required of Pt 15 r 6 and of Pt 15 r 8 of the Supreme Court Rules: "6 Paragraphs

Where a pleading alleges or otherwise deals with several matters:

(a) the pleading shall be divided into paragraphs, (b) each matter shall, so far as convenient, be put in a separate paragraph, and (c) the paragraphs shall be numbered consecutively.

A pleading shall be as brief as the nature of the case admits." 11 As I understand the position, the plaintiff's claim is not limited to a claim arising from shortcomings of the deed pleaded in paragraph 50 of the statement of claim, but an appreciation of the extent of the claim or claims which the plaintiff is endeavouring to pursue calls for close attention to the form of the pleading, a task I will now undertake:

(a) Paragraphs 1, 2, 3, 4 and 5 introduce the parties in an unexceptional manner.

(b) Then in paragraphs 6 and 7, the pleader has asserted the acquisition by the plaintiff and Mr Franke of a vessel named the "Coral", its later sinking, and an action brought against the vessel's insurer. Those two paragraphs present no problem.

(c) Then there appears above paragraph 8 the heading "Previous Contracts", and paragraphs 8-14 then recite: (i) That in 1990 "and thereafter" the defendant acted for the partnership in the "Coral case", presumably a reference to the proceedings against the insurer. Paragraph 8 asserts the defendant also acted on a continuous retainer to provide legal services to the plaintiff/Franke partnership, and to both Mr Franke and the plaintiff individually. It is not altogether clear whether "the solicitor's engagement" referred to in paragraph 8 embraces all the activity mentioned in that paragraph or whether it excludes services in the "Coral case", but in any event the terms of the "engagement" are not set out. (ii) Paragraph 9 introduces the reader to the existence of a dispute between Mr Franke and the plaintiff concerning two vessels, the "Accolade" and the "Wooree", and paragraph 10 recites that Mr Gamble gave the plaintiff advice about the partnership dispute over two vessels. The advice is not defined. (iii) In paragraph 12 the reader learns that the partnership was successful in the "Coral case" and paragraph 13 recites advice given by Mr Gamble to the plaintiff by reason of Mr Franke's intention to claim all that was recovered in the "Coral case". (iv) Then paragraph 14 recites the background to the conference of 12 August 1991, the date of the execution of the deed earlier mentioned.

Mr Cochrane submitted that paragraph 8 was historical, as were paragraphs 9-14, but then, as I understand it, drew back from that assertion to this extent, that the plaintiff contends that there was a retainer in 1990 and paragraph 8 is relevant to this. Thereafter, from time to time, there were a number of contractual obligations undertaken, and Mr Cochrane submitted that this is set out in the narrative of the statement of claim.

(d) Under a further heading "Contract", paragraphs 15-59 appear: (i) Paragraph 15 pleads that the partnership, Mr Franke and the plaintiff consulted the defendant and Mr Gamble to resolve the partnership dispute. Whether that is intended to refer only to the "Coral" or to include the "Accolade" and the "Wooree" is not apparent. (ii) Paragraph 16 recites advice given by Mr Gamble and also that he brokered an agreement between the plaintiff and Mr Franke, that he drew up the deed and procured the execution of it. (iii) Paragraph 17 recites that after that execution, but on the same day, Mr Gamble gave the clients identified advice about the "Accolade" and the "Wooree" and that he procured an oral agreement for the winding up of the partnership. It is recited that the parties to that agreement were the defendant, Mr Franke and the plaintiff. The paragraph appears then to recite an agreement to which the defendant was a party, that the defendant and Mr Gamble would seek to recover the "Accolade" and the "Wooree" (or their market values), dividing the proceeds up equally between the plaintiff and Mr Franke. (iv) Paragraph 18 recites the distribution of the proceeds of the "Coral case". (v) Paragraph 19 recites a meeting held in an endeavour to have Mr Franke return the plaintiff's personal items and equipment (a reference intended presumably to the items referred to in the deed), and to address alleged deception by Mr Franke about his failure to disclose the earlier seizure of the "Accolade" by a port authority. (vi) Then in paragraph 20 the plaintiff alleges concealment of facts by the defendant in a number of respects in a time frame not precisely defined. (vii) Paragraph 21 recites that the defendant continued to act for the partnership between 12 August 1991 and 18 April 1994, and the successful outcome of an appeal in the "Coral case". (viii) Paragraph 22 recites the plaintiff's instructions to the defendant to recover costs of the "Coral" appeal. (ix) Paragraph 23 asserts numerous consultations between Mr Gamble and the plaintiff in the period October 1991 to January 1996 concerning Mr Franke's failure to perform agreement s of 12 August 1991, and advice given by Mr Gamble. It is also recited that in that period Mr Gamble continuously concealed from the plaintiff his rights of action and the rights of action that the partnership had against the defendant, Mr Gamble and Mr Franke (rights not here defined by the pleader). (x) In paragraph 24 it is asserted that the defended failed "to advise or enforce" the executory portion of the deed of 12 August 1991, and to advise on time limitations. (xi) In paragraph 25 it is recited that in January 1996 Mr Gamble advised that the defendant could no longer act for the plaintiff because of a conflict in interest between the plaintiff and Mr Franke. (xii) There are two paragraphs numbered 26. In the first of these (I shall call it paragraph 26A), the plaintiff alleges the defendant and Mr Gamble: (a) concealed from the plaintiff and from the partnership the causes of action that had accrued to them against the defendant and Mr Gamble between 12 August 1991 and 1 August 1996 (not here defined); (b) failed to advise those persons to obtain independent legal advice; (c) failed to advise on the time limitations on the actions that had accrued against the defendant and Mr Gamble, referred to in (xii)(a) above. Then, in what I refer to as paragraph 26B, there are recited matters the subject of ongoing instructions from the plaintiff to the defendant, although "a variety of incidental matters" is not identified. (xiii) After reciting Mr Franke's death (in paragraph 27), the pleader in paragraph 28 recites that the plaintiff and Mr Franke's executor were in dispute over the winding up of the partnership affairs, the executory aspects of the contract of 12 August 1991 (whether this is a reference to the deed or the oral agreement referred to in paragraph 17 is not clear), and the recovery of costs of the appeal in the "Coral" case.

(e) Under a further heading "Contractual Terms and Conditions - Implied", there are set out what it is asserted are implied terms of the "solicitor's engagement" (the expression used in paragraph 8). Paragraph 29 asserts eleven implied terms.

(f) Paragraph 30 asserts twenty terms of the "solicitor's engagement" claimed to be partly express and partly implied.

(g) Paragraphs 31 and 32 recite failures by Mr Franke and by his executor to carry out "part or all of the agreements" made on 12 August 1991.

(h) Paragraph 33 recites the continuous retainer of the defendant and Mr Gamble between 12 August 1991 and 1 January 1996 to act for the partnership and the plaintiff in winding up the partnership affairs, to act for the partnership, the plaintiff and Mr Franke concerning the "Accolade" and the "Wooree", and to act for the plaintiff to procure from Mr Franke the return of the plaintiff's property and equipment pursuant to the agreement of 12 August 1991.

(i) Paragraph 34 asserts the ongoing acknowledgement by Mr Gamble during the above period to do what was necessary to "procure performance by Franke of the agreement s made on 12 August 1991". The acknowledgment pleaded appears to go beyond the subject matter of paragraph 10 of the deed, but it is not clear what other obligations assume relevance in the context of paragraph 34.

(j) Paragraph 35 asserts the continuing failure of the defendant and of Mr Gamble: (a) to procure Mr Franke to carry out the agreements made by him on 12 August 1991; (b) to do what was necessary to recover the "Accolade" and the "Wooree"; (c) to do what was necessary to recover other items of partnership property (not defined); (d) they failed to wind up the partnership; and (e) they failed to procure Mr Franke to discharge all of the other executory aspects of the agreement s "that were continuing".

(k) Paragraphs 36, 37 and 38 recite the retention at the office of the defendant of certain documents which belonged to the partnership, and notes of the meeting 12 August 1991 and certain documents of the plaintiff. Presumably these documents were significant to the District Court proceedings referred to later in paragraph 47, although the pleading does not make this altogether clear.

(l) Paragraphs 39, 40 and 41 recite acceptance and reliance by the plaintiff on Mr Gamble's advice and the subject matter of the advice is broadly identified, although paragraph 40 refers to breaches of the agreement s by Mr Franke and those breaches are not defined in this paragraph.

(m) Paragraph 42 recites that the defendant through Mr Gamble told the plaintiff that the defendant could no longer act for the plaintiff in relation to "the matters" (not here identified) because of conflicts between the interests of the plaintiff and the interests of Mr Franke (I observe that this paragraph appears to be an unnecessary repetition of paragraph 25).

(n) Paragraph 43 recites alleged failings by the defendant and by Mr Gamble in attending to instructions: (a) to advise the plaintiff of the effect of the limitation period; (b) the concealment of rights of action against Mr Franke concerning the "Accolade"; (c) the concealment of rights as to the rescission of the agreements of 12 August 1991; (d) failing to advise on the expiration of limitation periods that may have been brought by the plaintiff against Mr Franke under the Contracts Review Act and the Fair Trading Act ; (e) failing to advise the plaintiff of the need to obtain independent legal advice; (f) failing to advise on the concealment of actions available against the defendant.

(o) Paragraph 44 recites that the defendant and Mr Gamble were aware between 12 August 1991 and 12 August 1997 of their breaches of duties to the plaintiff and of consequential loss to him, or that they ought to have known of them.

(p) In paragraph 45 the plaintiff recites that the defendant acted for Mr Franke and later for his estate in proceedings in the District Court. (When read in conjunction with paragraphs 53 and 54 it appears the proceedings were brought by the plaintiff for the recovery of items of property claimed by the plaintiff as referred to in the deed of 12 August 1991). Paragraph 45 also alleges the defendant acted for the partnership to recover costs of the appeal in the "Coral" case.

(q) In so acting it is pleaded in paragraph 46 that the defendant was in breach of his duty.

(r) Paragraph 47 asserts the failure by the defendant to produce documents in the District Court proceedings, prejudicing the prosecution of those proceedings. The failure of the proceedings is recited in paragraph 53.

(s) Paragraph 49 returns to the meeting of 12 August 1991 and recites various advices allegedly given by the defendant at that meeting. The preparation and execution and terms of the deed are recited in paragraph 50 and paragraph 51 avers advice allegedly given by the defendant and/or Mr Gamble in respect of that deed.

(t) In paragraph 54 it is recited that "as a consequence of the poor and inadequate drafting of the deed and in particular the executory term 10 of the deed" and as a consequence of the failure of the defendant and Mr Gamble to act to recover the items referred to in paragraph 10 of the deed the plaintiff lost the opportunity to recover those items. Paragraph 55 describes the items in question.

(u) It is averred in paragraph 56 that "by reason of the agreements and the contracts that are herein referred to" the defendant proposed to provide services to the plaintiff that were continuing but the defendant was in breach of his responsibilities as a solicitor. There is a reference back then to paragraph 8, paragraph 29(a)-(k), paragraph 30(a)-(t), and paragraphs 15, 16, 17, 20, 21, 22, 23, 24, 33, 34 and 43.

(v) Then in paragraph 57 it is recited that after the deed was executed on 12 August additional agreements between the plaintiff and Mr Franke were made: (i) Mr Franke was to do what was necessary to recover for the partnership the "Accolade" or its market value; (ii) the plaintiff and Mr Franke were to do what was necessary to recover for the partnership the interest in the "Wooree"; (iii) the plaintiff and Mr Franke were to divide equally between them whatever was recovered in relation to the "Accolade" and the "Wooree".

(w) Then in paragraph 58 it is averred that the defendant, by Mr Gamble, accepted instructions on 12 August 1991 to act on behalf of the partnership and to do "all acts and things" which the defendant and Mr Gamble could do to recover the "Accolade" or its market value and to recover the partnership interest in the tug "Wooree" or its market value. This seems to be repetition of what was averred in paragraph 17

(x) Paragraph 59 recites the alleged breach by the defendant between 12 August 1991 and 16 January 1996 of the agreements with the plaintiff and the partnership "set out in the previous paragraphs". So much for the plaintiff's claim based upon contract. Above paragraph 60 is a heading "Claims in Negligence". Paragraph 60 asserts a duty of care "under the solicitor's engagement".

(y) Then in paragraphs 61-64 further duties of the defendant as a solicitor are asserted and in paragraph 65 breaches of the duties of care are pleaded. Under paragraph 65 particulars of negligence are set out, and it seems that the breaches of duty relate in essence to the same subject matter as the breaches of contractual duty, although the particulars of negligence are very lengthy, there being thirty-nine particulars of negligence altogether.

(z) Under a heading "Concealment", paragraphs 66 and 67 aver an obligation not to conceal information from the plaintiff and not to conceal rights of action, and the breach of that duty between 12 August 1991 and 12 August 1997, during which time the defendant and Mr Gamble knew or should have known that the defendant and his servants (not identified) breached "some, most or all of their duties" to the plaintiff as particularised under paragraph 65.

(aa) Finally, in paragraph 68, the plaintiff asserts his losses in consequence of the defendant's breaches of contract and alternatively breaches of the defendant's duty of care. The loss and damage is particularised as being: (a) the loss of opportunity to enforce performance by Mr Franke and his estate of the agreements made on 12 August 1991; (b) the loss of the opportunity to enforce performance by Mr Franke and his estate of the covenants in the deed; (c) the loss of the chance to recover from Mr Franke or his estate the personal items earlier set out in paragraph 55 and again set out here; (d) costs lost in the unsuccessful District Court action; (e) the lost opportunity of recovering two shipping container loads of property wrongfully detained by Mr Franke prior to January 1996; (f) the loss of the chance to recover damages from Mr Franke and his estate for his breaches of the partnership agreement; (g) the loss of the chance to recover part of the partnership funds to which the plaintiff was entitled, as well as his interest in the "Accolade" and the "Wooree" for their respective market values. 12 I have not set out the losses claimed under paragraph 68 exhaustively but broadly so as to define the nature of the losses. This has some relevance in an overall appreciation of the nature of the plaintiff's claim. 13 Finally, the plaintiff expresses his claim for relief in paragraph 69 and then under the heading "Limitations" he sets out his assertions as to why his various claims are not statute barred. Specific reference is made to the decisions in Hawkins v Clayton (1987-88) 164 CLR 539 per Deane J at 590, to Seymour v Seymour (1996) 40 NSWLR 585 and to Walmsley v Cosentino [2001] NSWCA 403. 14 On my reading of the statement of claim, the plaintiff is claiming breaches of contractual duty in relation to these topics:

(ii) other obligations undertaken on the same day concerning: (a) the "Accolade"; (b) the "Wooree"; (c) the continuance of the "Coral" case; (d) the winding up of the partnership, although the deed of 12 August 1991 addresses this;

(iii) the failure to produce documents in the District Court proceedings, affecting the outcome of those proceedings;

(iv) the failure to recover items of personal property from Mr Franke;

(v) the failure to advise the plaintiff to seek independent legal advice. 15 In his judgment of 27 June 2003 Davies AJ emphasised the importance of the various claims being pleaded "with care and separately". Whilst an attempt has obviously been made to address his Honour's criticisms of the earlier pleading, and the further statement of claim filed on 23 July 2003 is a very lengthy document, I regret that I have come to the conclusion that it is still not in a satisfactory form. 16 There is much repetition in the pleadings: for example, paragraphs 17 and 49 dealing with the oral agreement of 14 August 1991; paragraphs 20, 23, 26, 43, 66, 67 and 78 dealing with concealment; paragraphs 20, 23, 26 and 43 dealing with failure to advise as to the need for separate legal representation; paragraphs 20, 23, 24, 26, 43 and 70-78 dealing with the failure to advise on time limitations. In this repetition the pleading offends Pt 15 r 8, but this feature would not necessarily lead me to conclude that the pleadings should be struck out. It is submitted by the defendant though that the repetition has the vice of not being in the same terms, and this gives rise to embarrassment. On reflection, I consider there is some merit in this submission. 17 However, it seems to me that the fundamental difficulty with the pleading is that it fails to address the various claims separately and in a satisfactory manner. For example, breach of contractual duty is alleged in the failure to produce documents in the District Court proceedings. In the pleading presently before the Court, this breach is referred to in paragraph 29(g) and in paragraphs 36-38. Later the pleader returns to the subject in paragraph 47. In paragraph 47 it is pleaded that the defendant and Mr Gamble "failed to produce documents which ought to have been produced", but the material facts upon which this obligation is asserted to be based are not identified. In all, as I earlier observed, there appear to be eight matters about which the plaintiff complains by way of breaches of contractual duty. The pleading should contain a statement of the material facts upon which reliance is placed in relation to each of these matters in turn. The terms of the agreement must, in each case, be adequately stated. The pleading should, when, for instance, dealing with the claim concerning the deed, make clear what the breaches were, when they occurred, what loss was suffered, and when. Having dealt in this manner with the action on deed, the pleading should then address each of the other matters in turn, approaching this task in the same way as is required for the claim arising on the deed. The reader should find in successive paragraphs all that the pleader relies upon to state the case to be advanced concerning any one breach of contractual duty. 18 The defendant submitted that paragraph 8 of the statement of claim was embarrassing for reasons identified in written submissions. In my opinion, there is merit in those submissions, but I do not propose to address those submissions in detail here since I have concluded that repleading is necessary in any event. The format for further pleadings should avoid the difficulties which paragraph 8 of the present pleading presents. 19 Earlier (at paragraph 6 of this judgment), I recorded a number of the criticisms of Davies AJ concerning the earlier pleading. His Honour at that time remarked upon the desirability of the statement of claim being pleaded in such a way that facilitated consideration of the issue of application of the Limitation Act. I respectfully agree with what his Honour said on that topic, and the further pleading which I am going to allow to be brought forward should heed this requirement. 20 For the reasons stated, I consider that the further amended statement of claim filed on 23 July 2003 should be struck out.

Formal orders 21 1. I order that the further statement of claim filed 23 July 2003, pursuant to the order of Davies AJ, be struck out.

2. The plaintiff is given liberty to file and serve a further amended statement of claim within twenty-eight days from today.

3. I order the plaintiff to pay the defendant's costs of the motion filed on 30 September 2003. **********

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