Segal t/as Segal Litton & Chilton v. Fleming [2002] NSWCA 262

Court of Appeal (NSW)|2002-08-02|Before: Handley JA, Hodgson JA, Young CJ, Howie J, Sperling J

CITATION : Segal t/as Segal Litton & Chilton v. Fleming [2002] NSWCA 262 FILE NUMBER(S) : CA 40169/02 HEARING DATE(S) : 2 August 2002 JUDGMENT DATE : 14 August 2002

PARTIES : Alan Lewis Segal t/as Segal Litton & Chilton - claimaint Brian William Fleming - opponent JUDGMENT OF : Handley JA at 1; Hodgson JA at 2; Young CJ in Eq at 37

LOWER COURT JURISDICTION : Supreme Court - Common Law Division LOWER COURT CL20237/00 FILE NUMBER(S) : LOWER COURT Howie J JUDICIAL OFFICER :

COUNSEL : Mr. D. Davies SC for claimant Mr. T. Lynch for opponent SOLICITORS : Ebsworth & Ebsworth, Sydney for claimant Hunt & Hunt, Sydney for opponent CATCHWORDS : LIMITATION OF ACTIONS - Tort - When damage first suffered - Whether actual or merely contingent or prospective - Chance of a loss or loss of a chance - Property encumbered by easement in circumstances where plaintiff had equitable claim to have easement removed. LEGISLATION CITED : Limitation Act 1969 (NSW), s.14 Argyropoulus v. Layton [2002] NSWCA 183 Bailey v. Redebi Pty. Ltd. (1999) Aust.Torts.Rep. 81-523 Cassis v. Kalfus [2001] NSWCA 460 Cassis v. Kalfus [2001] NSWCA 460 Cigna Insurance Asia Pacific v. Packer (2000) 23 WAR 159 CASES CITED: Forster v. Outred & Co. [1982] 1 WLR 86 Pullen v. Gutteridge [1993] 1 VR 27 Scarcella v. Lettice (2000) 51 NSWLR 302 Sellars v. Adelaide Petroleum (1994) 179 CLR 332 Sorrenti v. Crown Corning Ltd. (1986) 7 NSWLR 77 Wardley Australia Ltd. v. Western Australia (1992) 175 CLR 514 Wilson v. Rigg [2002] NSWCA 246 DECISION : 1. Leave to appeal granted and appeal allowed, subject to a Notice of appeal being filed within 14 days. 2. Opponent to pay claimant's costs of the application and appeal, and to have a suitors' fund certificate if otherwise entitled. 3.Orders below set aside, and in lieu thereof: (a) Opponent to pay the claimant's costs of the separate hearing. (b) Leave to opponent to apply pursuant to Pt.20 r.4(5) to substitute a cause of action based on the facts alleged in the Statement of Claim but specifying the breach of duty referred to in paragraph 9 of the existing Statement of Claim as being negligence referable to the events of August 1989 referred to in the judgment, such application together with a Draft Amended Statement of Claim to be filed and served within 14 days. (c) If no such application and Draft Statement of Claim is filed and served within 28 days, or if such application is dismissed, verdict and judgment for the defendant with costs.

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40169/02 CLD 20237/00

HANDLEY JA HODGSON JA YOUNG CJ in Eq.

Wednesday 14 August 2002 SEGAL t/as SEGAL LITTON & CHILTON V. FLEMING Judgment 1 HANDLEY JA: I agree with the reasons of Hodgson JA as set out below. 2 HODGSON JA: The opponent Brian William Fleming brought proceedings in June 2000 against the claimant Alan Lewis Segal claiming damages for breach of agreement and negligence, in respect of work done by the claimant as the opponent's solicitor. The claimant raised s.14 of the Limitation Act as a defence to the proceedings, and on 31 August 2001 Sperling J ordered that there be a separate trial of the issue raised by this defence. On 14 February 2002, Howie J decided that the limitation defence failed; and the claimant seeks leave to appeal to this Court from that decision.

STATEMENT OF AGREED FACTS 3 Before the primary judge, there was a statement of facts agreed on for the purpose of the separate hearing, containing the following paragraphs: The parties admit for the purposes of the separate hearing on Paragraph 10 of the Defence and Paragraph 2 of the Reply in these proceedings only:

Since May 1977, the plaintiff owned a property at 80 Wolseley Road, Point Piper which is Lot 1 in Deposited Plan 547705 ("Lot 1").

In 1983 the plaintiff and his sister, Mrs Clentsmith, became the registered proprietors of a property at 82 Wolseley Road, Point Piper which is Lot 2 in Deposited Plan 547705 ("Lot 2").

Lot 1 is a "battle axe" block of land, that is a block of land set back from Wolseley Road behind Lot 2 with frontage on Double Bay, with a thin ribbon of land connecting it to Wolseley Road.

From 7 June 1971 until 13 May 1987, Lot 1 was encumbered with a right of way four feet (1.22m) wide over it in favour of Lot 2 created by Deposited Plan 547705 and Instrument No M306169. That right of way extended to Double Bay ("the 1971 right of way").

At all relevant times Lot 1 was encumbered with a drainage easement also created by Deposited Plan 547705 which extended over the same land as the 1971 right of way.

From about 23 February 1976 until the present time, Lot 1 was encumbered with a right of way also four feet (1.22m) wide in favour of Lot 2 created by dealing No P 236518 which extended down the thin ribbon of land from Wolseley Road to Double Bay ("the 1976 right of way").

From 23 February 1976, Lot 2 was encumbered with a right of way six feet (1.83m) wide in favour of Lot 1 created by dealing No P236519 ("the reciprocal right of way").

The 1976 right of way and the reciprocal right of way were created to allow the construction of a stair case and inclinator for use by the occupants of both properties.

In August or September 1986, the Plaintiff instructed the Defendant to extinguish all rights of access to Double Bay over Lot 1 in favour of Lot 2.

On 23 October 1986 the Plaintiff and Mrs Clentsmith entered into an Agreement for the Sale of Land of Lot 2 with Mr Michael Toltz ("the contract").

The contract contained a special condition 11 which provided: "Notwithstanding any other term or condition as herein contained the Purchaser acknowledges that the Vendors will be seeking the extinguishment of that right of carriageway 4 feet wide created by DP 547705 and instrument filed as No. M306169 appurtenant to the land. The Vendors shall do all things reasonably necessary to obatin (sic) such extinguishment on or before settlement PROVIDED HOWEVER that if the Purchaser is unable to obtain registration of such extinguishments on or before settlement then the Purchaser shall do all things necessary and sign all such documents as the Vendors may reasonably request to enable such extinguishment without cost to the Purchaser. This clause shall not merge on completion."

On 13 May 1987: (a) a Transfer Releasing Easement which extinguished the 1971 right of way (dealing No W743976) and then (b) a transfer of Lot. 2 from the plaintiff (sic) and Mrs Clentsmith to Mr Toltz (dealing No 742418) were registered with the Land Titles Office.

The Defendant did not remove the 1976 right of way from the title to Lots 1 & 2.

In about August 1989 the Defendant wrote to the Plaintiff. A copy of that letter is annexed and marked "A".

On 29 April 1994 the plaintiff had a conversation with Mr Michael Toltz to the following effect: Mr Toltz "You haven't removed the right of carriageway" Plaintiff "It's definitely been removed" Mr Toltz "It's still showing on my title" Plaintiff "I will send you a copy of the document"

In or about September 1994 Mr Toltz entered into an Agreement for the Sale of Land for the sale of Lot 2 to Phillip Smouha and Lisa Ho.

On 15 January 1996 the Plaintiff consulted the Defendant as to whether Lot 2 had any right of way over Lot 1 conferring access to Double Bay.

On 3 July 1996 the Defendant wrote to the Plaintiff. A copy of that letter is annexed and marked "B".

In or about July 1996 Philip Smouha and Lisa Ho commenced proceedings against the Plaintiff in these proceedings for a declaration that the 1976 right of way extended across Lot 1 to Double Bay.

On 20 May 1997, the Smouha and Ms Ho obtained a judgment to that effect.

17.(sic) The present proceedings were commenced on 5 June 2000. 4 The letter of August 1989 referred to in par.14 was in the following terms: We would make reference to the various attendances by both yourself and Mr. Woodford at this office over the last few days in which it has been alleged that we made an error when the sale of 82 Wolseley Road Point Piper was effected and in relation to which we acted.

We confirm that at the time it was your instructions to have the right of carriageway, immediately adjacent to the house, extinguished. That particular right of way was created in DP547705 and was four foot wide (or 1.22 metres wide).

We understand that Hunt & Hunt have informed you that that did not occur and that the drainage easement was extinguished.

On re-examining our file, and on further examining documents as obtained by us from the Land Titles Office, it appears to be clearly the case that we complied with-your instructions.

It is clear that the drainage easement alongside your property and also. created by DP547705 was to remain.

Also to remain was a further right of carriageway burdening your property and which extended from the front of the garage, over the garage and down the ribbon of land and stopping just before the main land area of your house.

An examination of both DP547705 and DP577157 show the various easements.

Accordingly no error was made in the matter at all.

An inspection of the Title Deed as received by us from Hunt & Hunt on the evening of 3rd August 1989 confirms the above and when examined against the two Deposited Plans.

We must add that our Mr. Segal is quite annoyed that allegations as to negligence were being asserted and that he expended some three hours in time re-examining the matter and some $50.00 in search fees to confirm that no error was in fact made. 5 The other significant factual matter before the primary judge was evidence that the agreement of 23 October 1986 was the result of an auction, at which it was clearly stated that lot 2 was sold without any water access. The proceedings before the primary judge were conducted on the basis that this constituted evidence of a prior agreement or common continuing intention such as would support a claim for rectification of the contract of sale to Mr. Toltz, so as to make provision that any right of way giving access to Double Bay was to be removed, not merely the 1971 right of way. 6 There was of course no agreement as to negligence by the claimant, and that was and remains very much in issue. However, because the trial was limited to the limitation defence, the discussion there proceeded on the basis that the opponent may establish negligence against the claimant. The same will apply to this judgment.

PLEADINGS 7 The Statement of Claim relied on by the opponent made the following allegations: 1. At all material times, the Plaintiff was the registered owner of the property described in Folio Identifier 1/547705 and known as 80 Wolseley Road, Point Piper ("Lot 1").

Between 1983 and 1987, the Plaintiff and his sister, Lynne Yvonne Clent-Smith, were the registered owners of the property described in Folio Identifier 2/547705 and known as 82 Wolseley Road, Point Piper ("Lot 2").

At all material times, the Defendant carried on practice as solicitors under the name Segal Litton & Chilton.

In about August or September 1986, the Plaintiff instructed and retained the Defendant who agreed to act as solicitors for the Plaintiff in connection with the sale of Lot 2 and the extinguishment of all rights of access to Double Bay over Lot 1 in favour of Lot 2.

Particulars The agreement was partly expressed and partly implied. The express part was wholly oral and was constituted by conversations between the Plaintiff and Alan Lewis Segal on behalf of the Defendant. The implied part consists of such terms as are implied by law in the circumstances.

It was an express term of the agreement that the Defendant would do all things necessary to remove all rights of access to Double Bay over Lot 1 appurtenant to Lot 2.

It was an implied term of the agreement that the Defendant would exercise all due care skill and diligence in acting as solicitors for the Plaintiff and, in particular, in doing the things referred to in paragraph 5.

Further and in the alternative, in the premises, the Defendant owed the plaintiff a duty to exercise all due care skill and diligence in acting as the solicitor for the Plaintiff and, in particular, in doing the things referred to in paragraph 5.

At the time that the Plaintiff instructed and retained the Defendant, Lot 1 was burdened by 2 rights of carriageway in favour of Lot 2 over Lot 1, namely: (a) a right of carriageway created by Deposited Plan 547705 and dealing no. M306169 ("the 1971 right of carriageway"); and (b) a right of carriageway created by dealing no. P236518 ("the 1976 right of carriageway").

In breach of the terms of the agreement referred to in paragraphs 5 and 6 above, and in breach of the duty referred to in paragraph 7, the Defendant failed to cause the extinguishment of the 1976 right of carriageway.

On 20 May 1997, in Supreme Court proceedings no. 2773 of 1996, His Honour Justice Hodgson made a declaration that the owners of Lot 2 had the benefit of a right of carriageway 1.22 metres wide giving access to Double Bay over Lot 1, being the 1976 right of carriageway.

By reason of the Defendant's breach of the agreement, or alternatively, by reason of the Defendant's negligence, the plaintiff suffered loss and damage. Particulars (a) Loss of value of Lot 1 (b) Loss of enjoyment of Lot 1 (c) Further particulars will be supplied in due course. 8 As regards par.9, no particulars were sought or given. It will be noted that par.9 was not limited as to the time of the breach. However, it does contain only one allegation of breach; and Mr. Lynch for the opponent accepted that, probably, the better interpretation was that it was referring to a breach occurring in connection with and at about the time of the sale referred to in par.4. 9 Paragraph 10 of the Defence was that "the plaintiff's claim arose prior to 5 June 1994 and therefore the plaintiff is barred from pursuing that action by the operation of s.14 of the Limitation Act 1969 (NSW)". To this defence, the opponent put on the following Reply: 2. In answer to paragraph 10 of the Defence, the Plaintiff: (a) denies that his claim arose prior to 5 June 1994; (b) says that his-claim arose on 23 September 1994 at the earliest, that is, when the owner of the property described in Folio Identifier 2/547705 and known as 82 Wolseley Road, Point Piper ("Lot 2") exchanged Contracts for Sale of Lot 2 to Phillip Smouha and Lisa Ho, thereby depriving the Plaintiff of the opportunity to procure the extinguishment of all rights of access to Double Bay over Lot 1 in favour of Lot 2. 10 The issues for the separate hearing were those raised by par.10 of the Defence and par.2 of the Reply.

DECISION OF PRIMARY JUDGE 11 Howie J noted that the opponent conceded that the defence must succeed in so far as the claim was based on contract. The question was whether it succeeded in so far as the claim was based on tort. 12 The primary judge decided that the opponent suffered no economic loss from the claimant's failure to remove the 1976 right of way until Mr. Toltz sold lot 2, because until that time the opponent had a right to correct the consequence of that failure, if necessary by bringing proceedings for rectification of contract and specific performance of the contract as rectified. The primary judge acknowledged that, by reason of the failure to remove the 1976 right of way, the opponent was left with a block of land which was not as valuable as it would have been had the right of way been removed; but he considered that this involved no actual damage, so long as the opponent possessed the means to have the defect remedied: any damage was merely prospective or contingent until Mr. Toltz sold lot 2.

GROUNDS OF APPEAL 13 The claimant seeks to rely on the following grounds of appeal: 1. His Honour erred in holding that the Respondent suffered no actual damage from the failure by the Appellant to remove the 1976 right-of-way while he possessed the means to have the defect remedied by taking action against Mr Toltz.

His Honour erred in holding that the Respondent possessed the means to have the defect (the 1976 right-of-way) remedied by taking action against Mr Toltz.

His Honour was in error in not holding that the limitation period commenced to run: (a) on 23 October 1986, or (b) on 14 May 1987, or (c) in August 1989, or (d) on 29 April 1994.

His Honour was in error in holding that the present facts were distinguishable from those in Scarcella v Lettice.

His Honour erred in holding that the proceedings were not statute barred.

SUBMISSIONS 14 Mr. Davies SC submitted that, on completion of the sale to Mr. Totlz, the opponent had land burdened with an easement, with which, but for the breach, it would not have been burdened. As the primary judge found, this made the land less valuable, and accordingly loss was suffered then. The circumstance that it may have been possible to recover the situation does not mean that some damage was not suffered at that time. 15 Mr. Davies submitted that the situation was closely analogous to that where the negligence of a solicitor resulted in the expiry of a primary limitation period, but there remained the possibility of an application for an extension of the limitation period which would have enabled the client to pursue the relevant cause of action: see Argyropoulos v. Layton [2002] NSWCA 183, Wilson v. Rigg [2002] NSWCA 246. In that situation, there is damage suffered and a complete cause of action in tort when the primary limitation period expires; although in those two cases, there was in fact further negligence by the relevant solicitor after that time, by which the client lost the chance to successfully apply for an extension, giving rise to a further cause of action for damages for loss of that chance. 16 Mr. Lynch for the opponent submitted those cases were distinguishable. In those cases, the negligence of the solicitor led to the expiry of a limitation period and therefore the loss of an absolute right to claim damages; and the circumstance that the client could still apply for an extension of the limitation period did not mean that actual loss had not occurred. In that sort of case, there is a heavy burden on an applicant for an extension of a limitation period to satisfy any threshold requirements, to explain the delay, and to justify the exercise of a discretion; whereas in the present case, the opponent had a complete case for rectification which was subject to a minimal discretion in the court to refuse it. 17 Furthermore, Mr. Lynch submitted, the negligence did not place any additional burden on the opponent's title: it was rather the absence of removal of an existing burden, and at worst the loss suffered was the difference between a contractual right for removal and an equitable claim for rectification of a contract. If the latter submission required an amendment to the Statement of Claim so as to claim negligence in relation to the drafting of special condition 11, as not extending to removal of any easement giving access to the water, leave to amend should be granted. 18 Finally, in the event that the appeal is allowed, Mr. Lynch submitted that the outcome should not be judgment for the claimant in the proceedings: the opponent should be given an opportunity to amend the Statement of Claim, so as to rely upon negligence occurring in the events of August 1989, and damage flowing from that negligence only upon the sale by Mr. Toltz in about September 1994. 19 In reply, Mr. Davies SC submitted that such an amendment would be futile. Any such claim would also be statute-barred, he submitted, because loss began accruing as soon as time began passing after that alleged act of negligence, in that delay as it occurred prejudiced any claim for rectification of the contract and specific performance. Furthermore, Mr. Davies submitted, an amendment could not be granted in circumstances where the claimant had an absolute and conclusive defence to the existing proceedings.

DECISION 20 In Scarcella v. Lettice (2000) 51 NSWLR 302, Handley JA said (at 306): 13 A cause of action in negligence is not complete until the plaintiff first suffers actual loss or damage. Damage which is prospective or contingent does not qualify as actual damage for this purpose. See Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 (Wardley ) at 530, 531 per Mason CJ, Dawson, Gaudron and McHugh JJ.

14 In order for the plaintiffs' cause of action to be complete, the plaintiffs' actual damage must be "measurable" ( Wardley at 531), or, in the words of Lord Reid in a personal injuries case ( Cartledge v E Jopling & Sons Ltd AC 758 at 772) the damage must be "beyond what can be regarded as negligible". 21 Reasons for requiring the occurrence of actual and measurable loss are given in Wardley by Mason CJ, Dawson J, Gaudron J and McHugh J at 527, as follows: In many instances the disadvantageous character or effect of the agreement cannot be ascertained until some future date when its impact upon events as they unfold becomes known or apparent and, by then, the relevant limitation period may have expired. To compel a plaintiff to institute proceedings before the existence of his or her loss is ascertained or ascertainable would be unjust. Moreover, it would increase the possibility that the courts would be forced to estimate damages on the basis of likelihood or probability instead of assessing damages by reference to established events. In such a situation, there would be an ever-present risk of under-compensation or over-compensation, the risk of the former being the greater. 22 Wardley established that a person granting an indemnity, under which he or she is obliged to make a payment when the loss of the party to be indemnified is ascertained and quantified, suffers no actual loss until this contingency is fulfilled; so that a cause of action for purely economic loss, dependent upon damage being caused by the granting of the indemnity, does not arise until that contingency occurs. However, during the discussion of this question at 175 CLR 527-533, the majority of the High Court did not disapprove of Forster v. Outred & Co. [1982] 1 WLR 86, where it was held that a plaintiff suffered actual loss, not merely prospective loss, when, on negligent advice from her solicitors, she granted a mortgage over her property to secure debts of her son. 23 Their Honours in Wardley at 529 explained Forster by reference to the immediate effect of the plaintiff's execution of the mortgage, namely, an immediate reduction in the value of the plaintiff's "equity of redemption". I think it might be more accurate to say that the effect was a reduction in the value of the plaintiff's property: prior to the granting of the mortgage, the plaintiff owned the property unencumbered, so at that stage there was no "equity of redemption". By executing the mortgage, she made the property more difficult to sell, irrespective of whether or not her son ultimately defaulted on his debts: a purchaser would pay less for the property with a mortgage still on the title, and the plaintiff would have to come to some arrangement with the mortgagee in order to remove it from the title. As I understand it, that is the immediate loss that arose in Forster. 24 In Cassis v. Kalfus [2001] NSWCA 460 at [71]-[76], I adverted to the relevance of Sellars v. Adelaide Petroleum (1994) 179 CLR 332 to the question of when economic loss occurs. That case established that the loss of a chance having commercial value is actual damage that can complete a cause of action in tort. However, there is a significant difference between the loss of a chance, on the one hand, and the chance of a loss, on the other. 25 In the former case, where a chance is lost, it will never be known how things would have turned out if the chance had not been lost, so that the only possible compensation a plaintiff can obtain is compensation for the value of the chance itself. Accordingly it is reasonable to require a plaintiff to commence proceedings within the limitation period once the chance has been lost, and reasonable to award damages on that basis against a defendant. 26 On the other hand, where a person incurs a chance, even a substantial chance, of suffering a loss, in due course it may become clear that no loss is ultimately suffered; and so long as there is some appreciable chance that no loss will be suffered, it is unreasonable to require a plaintiff to commence proceedings and unreasonable to award damages against a defendant. However, once there is actual loss, even if there is also the chance of further loss, a plaintiff must commence proceedings within the appropriate limitation period, and can obtain damages reflecting actual loss suffered plus damages reflecting the chance of any further loss. 27 A defendant bears the onus of proof of establishing that actual and measurable loss first occurred before a date six years before the commencement of proceedings: Sorrenti v. Crown Corning Limited (1986) 7 NSWLR 77 at 80, Pullen v. Gutteridge [1993] 1 VR 27 at 71-6, Bailey v. Redebi Pty. Limited (1999) Aust.Torts.Rep. 81-523 at 66,286, Cigna Insurance Asia Pacific Limited v. Packer (2000) 23 WAR 159, Cassis v. Kalfus [2001] NSWCA 460 at [65]. 28 In this case, as recognised by the primary judge, the failure to remove the 1976 right of way meant that the opponent's land was not as valuable as it would have been if the right of way had been removed: in that respect, the case is closely analogous to Forster v. Outred. In those circumstances, in my opinion, although the ultimate onus was on the claimant, there was an evidentiary onus on the opponent if the opponent wished to claim that this apparent immediate loss was either illusory or negligible: this may have been achieved if, for example, it could have been shown that there would have been negligible expense, delay and risk in having the right of way removed, or some countervailing benefit that could outweigh this loss. There was in this case no suggestion of any countervailing benefit. There was evidence that the opponent had a good case for rectification and specific performance, but there was no evidence that Mr. Toltz would have acceded to a demand for removal if made to him at that time, or that there would not have been court proceedings contested to some extent at least. In the absence of further evidence of that kind, it would be inferred that at least some expense, delay and risk would be involved in seeking rectification of a contract and specific performance of the contract as rectified, even assuming there was a good basis for bringing those proceedings. In my opinion, this means that the apparent immediate loss of value of the opponent's land could not be considered illusory or negligible. Damages would have been immediately recoverable, albeit substantially discounted because of the good chance of retrieving the situation. 29 For that reason, in my opinion, at least some actual and measurable damage occurred at about the time of the sale to Mr. Toltz (it does not matter whether it be at the time of completion or at the time of registration of the transfer), so that any cause of action based on the claimant's negligence prior to that time was statute-barred by June 2000. I have already noted that the preferable view of the Statement of Claim is that the negligence it alleges is negligence occurring at about the time of the sale to Mr. Toltz; so, on that interpretation of the Statement of Claim, the only cause of action pleaded is statute-barred. Unless the Statement of Claim is amended, this finding would put an end to the proceedings; and in those circumstances, it would be appropriate to grant leave to appeal and uphold the appeal. 30 Mr. Lynch submitted that, in so far as the claimant's negligence consisted in failure to draft a special condition 11 entitling the opponent to removal of any easement giving access to Double Bay, that resulted only in the difference between a claim in contract and a claim for rectification; and that this difference would not be an actual measurable loss. 31 I accept that such a difference would only amount to a chance of a loss; but the submission has two difficulties. One is that the Statement of Claim does not allege negligence in respect of the drafting of special condition 11: that could perhaps be overcome by an amendment, although there may be problems in severing alleged negligence in drafting special condition 11 and from negligence in failing to ensure that the right of way was removed on completion of the sale. The other difficulty is more serious, namely that this negligence, if it can be so severed, never caused any more than the chance of a loss: this negligence did not contribute at all to the ultimate loss of the chance of remedying the situation, which occurred in about September 1994. 32 Mr. Lynch also submitted that there was a possible cause of action in negligence based upon the events of August 1989, in respect of which no damage was suffered until the sale by Mr. Toltz in 1994: at that time, the claimant advised that there was no need to do anything to obtain removal of the 1976 right of way, with the result that the opponent lost the opportunity to bring proceedings for rectification and specific performance. I have noted Mr. Davies' submission that loss for any such negligence started occurring immediately after August 1989: the remedies of rectification and specific performance are discretionary, and any delay in bringing them reduces the chances of success. Accordingly, he submitted, loss occurred progressively from August 1989 onwards. 33 In my opinion, that submission is incorrect. Until the sale by Mr. Toltz in September 1994, the opponent still had the chance of obtaining relief through rectification and specific performance, even if that chance was somewhat reduced from what it had been in August 1989 because of the intervening delay. But the question is whether that delay involved actual and measurable loss, or alternatively involved loss which was no more than contingent or prospective. In my opinion, any such loss prior to September 1994 was plainly no more than contingent or prospective. If the opponent had sued the claimant prior to September 1994 without first taking and losing the rectification and specific performance proceedings, the claimant could have submitted that the opponent had not proved actual loss, because the Court could still grant the same relief as it would have granted if proceedings had been brought in 1989. 34 On that analysis, between August 1989 and September 1994, the opponent incurred no more than the chance of a loss, that is, the chance that the delay would have made a difference to the outcome of the rectification and specific performance proceedings, which were open to be taken by the opponent in 1994 just as they were in August 1989. Accordingly, in my opinion there was no complete cause of action based on any negligence occurring in August 1989 until the sale by Mr. Toltz in September 1994; and that cause of action was not statute-barred when these proceedings were commenced in June 2000. 35 In order to be able to rely on this cause of action, the opponent would need leave under Supreme Court Rules Pt.20 r.4(5), so that the commencement of the amended proceedings would relate back to the commencement of these proceedings. It is my opinion that such leave could be granted. This would I think be "a new cause of action arising out of the same or substantially the same facts" as in the current Statement of Claim: I noted earlier that the failure to cause the extinguishment of the 1976 right of way was generally pleaded, so this Statement of Claim would differ from the original Statement of Claim only in making it clear that the failure to secure removal of the right of way relied on was associated with negligence occurring in August 1989 rather than, as the present pleading tends to suggest, negligence occurring in about September 1986 or May 1987. In my opinion, the circumstance that the claimant has a good limitation defence to the whole of the present Statement of Claim does not preclude an order for amendment under Pt.20 r.4(5).

ORDERS 36 For those reasons, I propose the following orders. 1. Leave to appeal granted and appeal allowed, subject to a Notice of appeal being filed within 14 days. 2. Opponent to pay claimant's costs of the application and appeal, and to have a suitors' fund certificate if otherwise entitled. 3. Orders below set aside, and in lieu thereof: (a) Opponent to pay the claimant's costs of the separate hearing. (b) Leave to opponent to apply pursuant to Pt.20 r.4(5) to substitute a cause of action based on the facts alleged in the Statement of Claim but specifying the breach of duty referred to in paragraph 9 of the existing Statement of Claim as being negligence referable to the events of August 1989 referred to in the judgment, such application together with a Draft Amended Statement of Claim to be filed and served within 14 days. (c) If no such application and Draft Statement of Claim is filed and served within 28 days, or if such application is dismissed, verdict and judgment for the defendant with costs. 37 YOUNG CJ IN EQ: I agree with Hodgson JA. 38 I think, however, I should make it clear that the Court required counsel for the respondent to specify the ambit of the amendment he might seek to make. Counsel specified a breach being negligence referable to the events of August 1989. No other amendment comes within the scope of the orders made in this Court. **********

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