Courts must do the best they can to quantify loss even where the evidence is less than ideal

It is not a new proposition, but it is often glossed over by defendants, just like the thoroughly orthodox proposition that legal causation does not require that a wrong be the sole, predominant, or proximate cause of the damage.  The proposition is that where the court is satisfied that a wrong has caused actual loss of some sort, difficulties in working out what the value of the loss is in money terms cannot defeat the remedy of damages.  The judge must do the best he or she can, even if the evidence is sparse and unsatisfactory.

In a rather wonderful case about the negligent destruction by an RSPCA officer of a herd of cattle which went for 12 years and 68 days of trial, the Court of Appeal has pithily restated the proposition in reasons for dismissing RSPCA’s application for leave to appeal.  The judgment is RSPCA (Victoria) v Holdsworth [2015] VSCA 243.  Subject to further appeal, it looks like the RSPCA or its insurer will have to cough up the judgment of more than one million dollars.  Costs don’t bear thinking about.

The relevant part of the proposed appeal was from a finding of Judge Bowman that had the RSPCA not slaughtered the animals, their owners would have set up a business of selling the bulls’  semen and made a profit from it.  The RSPCA said this was ‘pie in the sky’ and there was no credible evidence that this was in fact the plan or that it could have succeeded.  Certainly, no attempt had been made to set up the business before the RSPA’s lethal destruction of the unarmed furry animals.

The Chief Justice and Justices of Appeal Hansen and Beach said: Continue reading “Courts must do the best they can to quantify loss even where the evidence is less than ideal”

Costs of a solicitor’s negligence claim which bombed only on causation; costs of the successful solicitor’s unsuccessful proportionate liability defence

In King v Benecke [2014] NSWSC 957, Mr King alleged that his solicitor was negligent.  The solicitor denied everything and lost on all but one issue, namely causation, with the result that the solicitor got judgment and Mr King only Pyrrhic victories.

Mr King argued he should not have to pay all of the solicitor’s costs.  Rather, he argued, he should have his costs of the issues on which he succeeded (duty, breach, the proportionate liability defence), which took up most of the case.

Harrison J only acceded to that argument in one respect.  The solicitor had alleged that Mr King’s solicitors in the professional negligence suit were themselves concurrent wrongdoers against whom some of any liability which might be established against him ought to be apportioned under the proportionate liability regime.  The consequence was that Mr King had to get new solicitors, the plea having put the old ones into a position of conflict between self-interest and duty to Mr King.

The solicitor never adduced any evidence in support of the proportionate liability defence.  His Honour found that Mr King should have his costs of and incidental to it, but otherwise pay the solicitor’s costs of the entire proceeding: Continue reading “Costs of a solicitor’s negligence claim which bombed only on causation; costs of the successful solicitor’s unsuccessful proportionate liability defence”

More Corby saga lawyer shenanigans

I have been saying for a while now that Schapelle Corby’s saga is a case study in the importance of choosing your legal team wisely. Moss v Eagleston [2014] NSWSC 6 provides further analysis of the performance of a lawyer selected by another of the players in the saga. That selection was a selection made by a man without the resources to pay for orthodox representation and who obtained rather unorthodox representation.

The decision examines the scope of a duty of care, including by reference to an argument that pro bono work requires a lower duty of care, and the appropriate response to late assertions of the defence of advocates’ immunity, and demonstrates how the courts will deal with a claim of loss suffered as a result of a failure to provide promised legal representation at a trial.

William Moss, also known as William Miller, is a former criminal.  You can see him and hear him in this video. He says that he was supposed to pick up a package in return for a substantial sum and that shortly after Schapelle Corby’s arrest, he was told not to bother because it had ended up in Bali.  He believed that these facts strongly support Ms Corby’s protestations of innocence.  The Daily Telegraph published the claims.  He says they ratted on a promise to pay him $250,000, or at least that they conned him into divulging his claims to them in the expectation of receiving that sum.  They then published articles which were defamatory of him with the imputations that he was a small time shyster lying to get cash. So he approached lawyers.  Quite a few of them.  Finally he found one who would act for him: the firm Reimer William Winterson of Penrith.  They sent a letter of demand for damages for breach of an oral agreement.  The publishers denied the agreement.  The firm ceased to act. Continue reading “More Corby saga lawyer shenanigans”

Plaintiffs have no duty to mitigate their losses

I bet the headline got your attention.  But it’s true: I’ve been looking up the law of mitigation these last few days.  And now the Queensland Court of Appeal’s Acting Justice of Appeal Margaret Wilson, with whom President Margaret McMurdo agreed, has concisely reiterated why in  Pialba Commercial Gardens Pty Ltd v Braxco Pty Ltd & Ors [2011] QCA 148, reproduced below.  Justice of Appeal Muir dissented in the result, but said nothing about the mitigation point. (See also K.R. Handley, ‘Reduction of Damages Awards’ in P.D. Finn (ed.) Essays on Damages, Law Book, 1992, p.116 and Sural SpA v Downer EDI Rail Pty Ltd [2007] NSWSC 1234.)

The thing is, you see, plaintiffs have no obligation to mitigate their losses; it is just that they are not entitled to damages for losses which, had they taken steps to mitigate, they would not have suffered.  So if there are reasons which are good reasons to the plaintiff not to take a step (e.g. they do not want to take a step which is commercially objectively reasonable but might harm their personal relationship with someone whose friendship or custom they value, or they just want the whole dispute over with and want to get relief against the wrongdoer without delay) but which are not objectively reasonable as between plaintiff and defendant, the plaintiff is perfectly entitled to go ahead against the wrongdoer, and take what they can get, leaving it to the defendant to prove that they failed to mitigate, and how things would have been different had they mitigated.

This is what Wilson AJA said in Pialba Commercial Gardens:

    1. In British Westinghouse Electric and Manufacturing Co Ltd v Underground Electric Railways Co of London Ltd[41] Viscount Haldane LC referred to compensation as the basic principle of damages and continued:

      “But this first principle is qualified by a second, which imposes on a plaintiff the duty of taking all reasonable steps to mitigate the loss consequent on the breach, and debars him from claiming any part of the damage which is due to his neglect to take such steps.”


      [40]        Supplementary appeal record volume 3, tab 5, pages 32-33.

      [41]        [1912] AC 673, 689.


    2. Depending on the circumstances, what would be reasonable steps to mitigate loss caused by non-performance of a contractual obligation may include seeking substitute performance.
    3. Although it is commonly said that an injured party has “a duty” to mitigate its loss, as Irvine CJ said in Driver v War Service Homes Commissioner:[42]

      “…This expression, I think, does not mean that he is under any duty in the ordinary sense, towards the party breaking the contract, but that he cannot be said to have really incurred any loss which might have been avoided by his taking such steps as a reasonably prudent man in his position would have taken to avoid further loss to himself; and the best test is, what would such a man do to avoid such a further loss to himself, supposing that, from insolvency of the other party, or from some other reason, he could not get any damages.”

    4. The onus is on the defendant to show that the plaintiff has not fulfilled this duty, and the extent to which it has not.[43]  That onus was not satisfied in this case.

[42]        (1923) 44 ALT 130, 134.

[43]        TCN Channel 9 Pty Ltd v Hayden Enterprises Pty Ltd (1989) 16 NSWLR 130, 158.

New cases

Legal Services Commissioner v Dempsey [2010] QCA 197 is an unsuccessful appeal from a disciplinary prosecution in which findings of dishonesty were made.

Dye v Fisher Cartwright Berriman Pty Ltd [2010] NSWSC 895 is a case in which an application for a costs assessment (NSW version of taxation) outside the allotted 12 month period succeeded.

Young v Masselos & Co [2010] NSWDC 169 is one of those cases where a solicitor negligently let a limitation period go by and damages had to be assessed based on the plaintiff’s prospects of winning the case foregone.

Council of the Law Society of New South Wales v Harrison [2010] NSWADT 201 is a decision about the Law Society’s successful application to amend a charge against the respondent solicitor.  It reviews a lot of NSW law about the requirements for pleading disciplinary charges, and considers the application of Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175; [2009] HCA 27 to disciplinary hearings.


Detailed causation analysis in solicitor’s negligence case

Walton v Efato Pty Ltd [2008] NSWCA 86 was the subject of this sister post in relation to advocates’ immunity. But the case is also interesting for the detailed analysis given in relation to causation, which is the subject of this post. The Court found that the solicitor’s failure to lodge within time an application to set aside a creditors statutory demand was the cause not only of the failure of that application but also of the costs incurred in the ensuing successful defence of an application to wind up the client company, an atypical costs order at the end of that application by which the client company was ordered to pay the costs of the creditor who had applied unsuccessfully (i.e. so that the rule that costs follow the event was turned on its head) and the costs of the liquidation which was occasioned by the client company’s inability to meet the costs order. The decision will have legal liability insurers squirming and a High Court appeal must be a possibility. Continue reading “Detailed causation analysis in solicitor’s negligence case”

2nd edition of Professional Liability in Australia reviewed

I was already a fan of the first edition of Judge Stephen Walmsley SC, Alister Abadee, and Ben Zipser‘s excellent Professional Liability in Australia, published by Thomson, and had been waiting for the new edition with interest. I got myself a copy the other day. It’s good, and there are substantial additions since the first edition, including a lot on expert evidence, a new bit on professional discipline, analysis of the Financial Services Reform Act, 2001, analysis of the cases on the civil liability acts and a good analysis of proportionate liability.

It is a text which delves into all of the legislation which clusters around professional liability these days and grapples with it, a thankless task for an Australian text writer compelled to read and understand all of the states’ and territories’ regimes and then synthesise them. So the availability of compensation in professional discipline regimes is treated properly, as is the effect of professional standards legislation, which caps liability for scheme mebers. The research is wide-ranging and thorough: a VCAT decision is cited. It is written from a practical perspective rather than a theoretical perspective. There is not the over-reliance on English authority which sometimes characterises texts in this area. The writing tends to take positions rather than carrying on at great length about parallel or divergent lines of authorities without suggesting which is to be preferred. One suspects that bad decisions have simply been ignored in the hope that they will be forgotten. If only more text writers would operate in this fashion.

Professional negligence is one of those areas of law in which everyone claims to be a specialist. There are, for example, 387 barristers at the Victorian Bar who claim on their web profile to practise in professional negligence. Then there are undoubtedly many others, like me, who haven’t listed their practice areas using the scheme which allows for searching like that.

Thomson has kindly offered a 10% discount for readers of this blog if you go to their bookshop at 160 William St, Melbourne. Alternatively, the book can be purchased online, for $220 inclusive of postage and handling.

Continue reading “2nd edition of Professional Liability in Australia reviewed”

More loss of a chance cases

Here’s a useful little article from Curwoods Lawyers on loss of a chance specifically in commercial cases.  I  can never quite keep up with the law on loss of a chance and suspect it’s because (i) there are two parallel lines of authority, one in commercial cases and one in medical negligence cases and (ii) all the cases are so turgid that nobody can be frigged reading them all and marrying up the two streams.

I am indebted to Michael Salter at DLA Phillips Fox, one of those rare lawyers who truly enjoys his job, for the reference to this recent decision of Justice Brereton in Sydney, whom I’m reliably informed by an ex-Sydneysider is regarded with a degree of reverence in professional negligence circles: Vukancic v Velcic [2007] NSWSC 1001.  It’s a double whammy loss of a chance case about a man who hired a solicitor to sue his employer.  Then sued a second solicitor to sue the first for negligence, and then hired a third to sue the second after the second let the limitation period run out against the first. There’s not much law in the decision, but all the calculations and considerations are set out diligently, so it is a useful study in how the law is applied in practice.

English cases on auditors’ liability to third parties and on architects’ liability

England’s CMS Cameron McKenna, whose free ‘Law Now’ service is well worth subscribing to, have a couple of interesting articles on their website about auditors’ liability to third parties. Apparently, England has devised legislation, the Company Law Reform Bill, providing for ‘Liability Limitation Agreements. The big new auditors’ liability case discussed is MAN Nuzfahrzeuge AG v Freightliner Ltd [2007] EWCA Civ 910, a decision of the Court of Appeal upholding the decision at first instance ([2005] EWHC 2347). They assert the following elements are required in England before an auditor will owe a duty of care to a third party:

‘i)      the loss must be foreseeable;

ii)    there must be a relationship of considerable proximity;

iii)   it must be fair, just and reasonable in all the circumstances to impose a duty of care;

iv)   the auditor must be expressly made aware of the third party’s likely reliance on the accounts for the particular purpose; and

v)    the auditor should have intended that the third party rely on the accounts for that purpose; absent intention an auditor may still, viewed objectively, be found to have assumed responsibly to a third party.’

And there is a discussion of a new English Court of Appeal decision about architects’ duties to subsequent purchasers of buildings they design, Pearson Education Limited v. Charter Partnership Limited [2007] EWCA Civ 130, and of an earlier case raising similar issues, Baxall v. Sheard Walshaw Partnership [2002] BLR 100 (CA).