Agar v Hyde [2000] HCA 41; (2000) 201 CLR 552

Dey v Victorian Railways Commissioners [1949] HCA 1; (1949) 78 CLR 62

Dwyer v Commonwealth Bank of Australia [1995] NSWCA

Esanda Finance Corporation Ltd v Peat Marwick Hungerfords [1997] HCA 8; (1997) 188 CLR 241

Fancourt v Mercantile Credits Ltd [1983] HCA 25; (1983) 154 CLR 87

General Steel Industries Inc v The Commissioner for Railways (NSW) [1964] HCA 69; (1964) 112 CLR 125

Potts v Westpac Banking Corporation [1993] 1 Qd R 135

Saif Ali v Sydney Mitchell & Co [1980] AC 198

Webster & Anor v Lampard [1993] HCA 57; (1993) 177 CLR 598

Wickstead & Ors v Browne (1992) 30 NSWLR 1

1 MASTER SANDERSON: This is the defendant's application for leave to apply and for summary judgment. It might be thought strange that the defendant is applying for summary judgment now when the plaintiffs' original statement of claim was filed in February 1996. The defendant says that the statement of claim has only recently been reduced to an acceptable form. That being so, it is said, leave to bring this application ought be granted. Before dealing with the question of the grant of leave to bring the application and the merits of the application itself, I should give some brief history of the progress of the action.

2 From the first, the defendants objected to the form of the statement of claim. (Originally there were two defendants to these proceedings. The action against the person named as the second defendant has now been dismissed.) The plaintiffs made a number of attempts to address the defendants' concerns, but no agreement could be reached as to the form of the statement of claim. Eventually, on 5 September 1997, I struck out the plaintiffs' statement of claim and entered judgment in favour of the defendants: see Smith v McCusker QC, unreported; SCt of WA; Library No 970415; 5 September 1997. From this decision the plaintiffs appealed. The Full Court took the rather creative step of having one of the members of the Court formulate a series of questions, the answers to which determined the outcome of the appeal. The appeal itself was heard in May 1999 and the reasons for decision were delivered on 30 October 2000 (see Smith v McCusker QC [2000] WASCA 320). Subsequent to the determination of the appeal, counsel for the defendant sought to raise with the Full Court matters which, it was said, had not been the subject of argument, but had been covered by the Full Court's decision. Argument on this question took place on 31 January 2001 and reasons for decision were delivered on 6 April 2001: see Smith v McCusker QC [2001] WASCA 85. A reading of these three decisions gives an indication of the plaintiffs' claim against the defendant. I need say nothing further about the facts, save insofar as they are necessary to dispose of this present application.

3 The first question is whether leave ought be given to bring the summary judgment application. The onus is on the defendant to justify the delay by affidavit evidence and its absence is fatal to an application under O 16: see Michael v Nicholson, unreported; FCt SCt of WA; Library No 950660; 1 December 1995. It must be acknowledged that a defendant wishing to bring an application for summary judgment faces a difficulty when it is clear, as in this case, that there are defects in the statement of claim to the point where it does not properly reflect any cause of action a plaintiff may have. In an application for summary judgment by a defendant, it is not for the Court to identify causes of action which are not pleaded but which the evidence might arguably support: see Forsyth NL v Northern Gold NL, unreported; FCt SCt of WA; Library No 940012; 20 January 1994. Looked at in that way, it is in everyone's interests, both the interests of the plaintiff and the defendant that a defendant's summary judgment application is dealt with only when the statement of claim is in a proper form.

4 Given the difficulties with this statement of claim and the negotiations which have taken place between the parties in an attempt to produce a pleading which is mutually satisfactory, I am satisfied that leave to bring the summary judgment application ought be granted. I am satisfied that there has been no undue delay since the statement of claim was put in an acceptable form. Furthermore, there is no real prejudice to the plaintiffs in the grant of leave. They have not taken steps beyond formulating their statement of claim, with the effect that the grant of leave to bring the summary judgment application will result in wasted time and effort. In all the circumstances I am satisfied that this is a proper case for the exercise of the discretion found in O 16 r 1(1).

5 To put this application in context, it is appropriate to begin with the decision of the Full Court ([2000] WASC 320). Question 2 of the questions formulated by the Full Court was in the following form at par 3:

"Do the facts and matters set out in para 9 and in the particulars running from para 9.3.1.1 ... to 9.3.20.4 ... disclose a cause of action in negligence against the first respondent?"

6 The Court answered this question in the affirmative. At par 160 of his decision, Templeman J sets out the allegations of negligence made against the defendant in the pleading. The Court was satisfied that these allegations based on pleaded facts disclosed a cause of action in negligence.

7 There then followed question 3. It was in the following form:

"Do the facts and matters set out in par 10 (of the statement of claim) disclose that the allegedly negligent opinion provided by the first respondent caused the appellants to suffer loss by causing the Legal Aid Commission to terminate the grant of legal aid in reliance on the opinion so that the appellants lost the opportunity of having a trial of their action against the R & I Bank?"

8 The answer to this question was yes. The reason why the answer was yes is to be found in his Honour's analysis of what should have been the basis upon which the claim was made against the bank. There is no dispute that as at the time the defendant's opinion was sought, the claim against the bank was founded on the bank negligently providing a budget to the Smiths when they consulted the bank in relation to their borrowing. Templeman J, having acknowledged that this was the basis of the pleaded claim, went on (at par 137 - 141):

"137 The reality, I think, is that the statement of claim did not reflect the Smiths' case, as it appears in the proof of evidence given to Mr McCusker. The Smiths did not rely on the budget; they relied on the Bank to provide a proper budget. They went to the Bank to obtain finance for a development programme which they did not have the expertise to implement unaided. They wanted advice about how they should plan their programme, and they wanted funds to implement it.

138 The Smiths thought the Bank had agreed to give that advice, and the necessary funds, over an extended period. They borrowed money and they then realised the budget was inappropriate. They then raised their concerns with Mr Danks and he told them not to worry. They did the best they could, but soon encountered financial difficulties. There is then, of course, a question of the cause of those difficulties. Were they the result of lack of advice from the Bank or of extraneous matters, such as the late delivery of the tractor or poor seasons?

139 Setting that question aside for the present, the fact remains, I think, that on the basis of the material submitted to Mr McCusker there is an argument that, as the Smiths allege in par 9.3.15.3, he failed to address the issues raised in Mrs Smith's proof of evidence. At several places in his opinion he focussed on reliance on the budget, which was not a real issue. He did not address the inconsistency in the statement of claim against the Bank, nor did he advise how it should be amended to reflect the true issue.

140 Although Mr McCusker had not been asked specifically to give general advice, he in fact took it upon himself to do so. In par 2 of his opinion, he said, in substance, that he had undertaken a full review of the issues in the action and the basis of the Smiths' claim. As I have noted above, that was his duty in any event.

141 In my view, therefore, this part of the statement of claim against Mr McCusker does disclose a cause of action in negligence. Whether any loss flowed from the alleged negligence is the subject of Question 3."

9 Turning then to the statement of claim (filed 24 February 2003), by par 21 the plaintiffs plead the duty which, it is said, was owed to them by the defendant. Paragraph 22 then pleads the alleged breach of those duties. Because of the importance of these allegations of breach of duty, I will quote par 22 of the statement of claim in full. It reads as follows:

"22. In breach of the duties pleaded in paragraph 21

22.1 The Defendant failed to read or take into account that part of his brief which disclosed that the Smiths did not rely on the 1977 cash flow budget but on the Bank to provide proper advice as to the implementation of the Smiths' proposal for the expansion of their farming activities.

22.2 The Defendant therefore placed undue emphasis in his opinion on the difficulties which the Smiths would face in seeking to prove that they had relied on the budget.

22.3 The Defendant failed to read or to take into account that part of his brief in which Mrs Smith explained that she and Mr Smith had provided only approximate figures to Mr Danks for inclusion in the cash flow budget, on the basis that they would not be held to those figures.

22.4 The Defendant therefore failed to point out that the allegation in the Bank's defence, that the figures had been provided by the Smiths, while true up to a point, was largely irrelevant to their case.

22.5 The Defendant failed to recognise an inconsistency in the Smiths' Statement of Claim against the Bank, which would have been cured by omitting references to reliance on the budget and pleading reliance on the Bank to provide a proper budget.

22.6 The Defendant failed to familiarise himself with that part of his brief in which it was explained how the actual costs for 1977 had exceeded the budget.

22.7 The Defendant failed to familiarise himself with that part of his brief in which Mrs Smith described how the application to the Rural Adjustment Authority came to be made, thus explaining why, as he put it in his opinion, (par 18) 'there is not a hint ... of any suggestion that the R & I Bank was responsible for [the Smiths'] difficulties ...'

10 Although there are seven subparagraphs to par 22, in reality, there are only two interrelated claims made against the defendant. The first is that he failed to advise that the pleadings in the action against the bank should be amended to remove a reference to reliance by the plaintiffs on the cash flow budget provided by the bank. This is the effect of par 22.1 through to par 22.5. The second allegation is that the defendant failed to familiarise himself with certain parts of the brief. These matters are pleaded in par 22.6 and 22.7.

11 It is important at this stage to pause and restate just what claim is being made against the defendant. I think the claim can be fairly summarised in this way:

1. At the time the defendant's opinion was sought, the plaintiffs' claim against the bank was pleaded on the basis that the bank had provided to the plaintiffs a cash flow budget which was negligently prepared. The plaintiffs had relied upon that budget and had suffered loss and damage.

2. The defendant, if he had properly read the materials before him, and if he had not otherwise been negligent, would have recommended an amendment to the statement of claim, deleting reference to the plaintiffs' alleged reliance upon the bank's defective cash flow budget and pleading that the bank should have provided to the plaintiffs some advice which, for want of a better description, I will refer to as "proper advice".

3. If the defendant had not been negligent, the statement of claim would have been amended, the action would have proceeded, the Legal Aid Commission would not eventually have withdrawn funding and the plaintiffs would have been able to pursue their action against the bank with all the advantages which flow from senior counsel representing their interests.

12 Expressed that way, it will be seen that crucial to the plaintiffs' case against the bank was some evidence to the effect that proper advice from the bank would have led the plaintiffs to adopting some course of action which would not have resulted in them sustaining loss. Accordingly, it is essential for the plaintiffs to establish, as a necessary aspect of their establishing the chain of causation, that there was some evidence to the effect that if the bank had provided proper advice, they would not have proceeded as they did. It is the defendant's case on this summary judgment application that no such evidence exists. In fact, it is suggested that all the evidence is one way - the plaintiffs would not have been dissuaded from their pig-farming activities the way they were. That being so, there is nothing on the evidence which would have justified the defendant recommending an amendment to the pleading and which, as a consequence, would have led to a continuation of the Legal Aid funding.

13 In my view, that argument is well-founded. There is nothing in the evidence to indicate that faced with proper advice from the bank, the plaintiffs would not have acted as they did. In fact, such evidence as is available is all to the contrary. On at least two occasions the plaintiffs were advised to alter their farming methods and in each case that advice was ignored. In his opinion of 21 March 1989, the defendant made particular reference to the failure of the plaintiffs to accept advice: see pars 19 and 28 of the opinion; annexure "SSS22" to the affidavit of Sarabdip Singh Sandhu, sworn 17 April 2003, at pages 314 - 315, 320 - 322. A fair reading of the defendant's opinion demonstrates that the defendant, after considering all of the material provided to him, could not conclude that given proper advice, the plaintiffs would not have proceeded as they did. That remains the position today. There is nothing whatever in the evidence filed on behalf of the plaintiffs to demonstrate either that faced with proper advice they would not have proceeded, or that they would have proceeded in some other way which would have resulted in them not making losses.

14 It must be remembered that this is a summary judgment application and that summary judgment ought only be granted in the clearest of cases. It must also be borne in mind that the defendant is attacking the plaintiffs on the issue of causation. Overlaying all of that is the fact that the plaintiffs are acting in person and to some extent must be indulged as they do not have mastery of the techniques of pleading. But equally, a party who wishes to take a matter through to trial must, when called upon to do so in a summary judgment application, present some evidence to answer a defendant's case. In this matter there are thousands of pages of evidence and submissions, copies of documents briefed to the defendant and various drafts of pleadings. But so far as I can ascertain, there is nothing in the material which would indicate how the plaintiffs would have acted differently if the bank had provided proper advice. During the course of her submissions, I put this question direction to Mrs Smith who appeared for the plaintiffs. In the end, there was no satisfactory answer: see transcript pages 71 - 75. It would appear that the plaintiffs are saying that proper advice from the bank would have resulted in some form of syndication of their loans. Quite how this would have assisted the plaintiffs' position does not emerge from the evidence and was not made plain by Mrs Smith's submissions.

15 In reaching the conclusion that I have, I am mindful of the Full Court's supplementary decision of 6 April 2001 ([2001] WASCA 85). On one reading of that decision the Full Court did consider the argument being put now by the defendant - that is to say, that there was a break in the chain of causation. It must be remembered, however, that essentially what the Court was dealing with was a pleading question. Properly construed, it seems to me the Court was saying no more than it was open to the plaintiffs to plead a cause of action, based upon the alleged failure of the defendant to recognise that the cause of action lay in the failure of the bank to provide proper advice. Doubtless that is right, and if evidence had been led by the plaintiffs on that question in this application, the result might well have been different. But it now seems clear no such evidence is available and the chain of causation simply cannot be established.

16 In all the circumstances, I am satisfied that there should be judgment for the defendant. The plaintiffs should pay the costs of this application and the costs of the action, including the reserved costs.