Australian Executor Trustees (SA) Limited v Kerr [2021] NSWCA 5

Court of Appeal Supreme Court New South Wales Medium Neutral Citation: Australian Executor Trustees (SA) Limited v Kerr [2021] NSWCA 5 Hearing dates: 2 and 3 April 2020 Date of orders: 4 February 2021 Decision date: 04 February 2021 Before: Gleeson JA at [1] Leeming JA at [336] Emmett AJA at [337] Decision: (1) Appeal against the first respondent (Mr Kerr) dismissed. (2) Appeal against the second to sixty-first respondents (Sparke Helmore) dismissed. (3) Cross-appeal by Mr Kerr dismissed with no order as to costs. (4) The appellant is to pay the first respondent's costs of the appeal. (5) The appellant is to pay the second to sixty-first respondents' costs of the appeal. Catchwords: EQUITY – trusts and trustees – professional trustee company trustee – where beneficiary "covenantholders" invested money in forestry scheme – where covenantholders entitled to share in proceeds of sale of timber – where scheme land subject to encumbrances securing covenantholders' interests – where encumbrances trust property – where scheme land and standing timber sold to third party – where trustee acted in breach of trust by releasing encumbrances CONTRACTS – solicitors – where law firm retained to advise trustee concerning release of encumbrances over scheme land – where advice found to be negligent – whether advice causative of loss to covenantholders occasioned by trustee's breach of trust EQUITY – equitable remedies – equitable compensation – causation – whether award of equitable compensation should be limited to the value of the scheme land – where challenge to factual findings relating to Payout counterfactual – whether award of equitable compensation should be reduced by certain adjustments and deductions EQUITY – equitable remedies – equitable compensation – whether defaulting trustee entitled to apportion loss to law firm – whether South Australian or New South Wales proportionate liability legislation applied – where South Australian law lex loci delicti – whether apportionment provisions procedural in nature or substantive Legislation Cited: Civil Liability Act 2002 (NSW), ss 5A, 5D(3), 5R, 34, Pt 4 Civil Procedure Act 2005 (NSW), s 100 Competition and Consumer Act 2010 (Cth), Pt VA, Sch 2 (Australian Consumer Law, ss 18, 236) Corporations Act 2001 (Cth), s 180, Ch 5C Judiciary Act 1903 (Cth), ss 39(2), 79, 80 Law Reform (Contributory Negligence and Apportionment of Liability) Act 2001 (SA), ss 3, 4, 8 Law Reform (Miscellaneous Provisions) Act 1946 (NSW) Law Reform (Miscellaneous Provisions) Act 1965 (NSW), s 9 Real Property Act 1886 (SA), Sch 10 Transfer of Land Act 1958 (Vic) Uniform Civil Procedure Rules 2005 (NSW), rr 51.36(2), 42.1 Cases Cited: Aboody v Ryan (2012) 17 BPR 32,359; [2012] NSWCA 395 Addenbroke Pty Ltd v Duncan (No 2) [2017] FCAFC 76; (2017) ALR 1 Adrenaline Pty Ltd v Bathurst Regional Council (2015) 97 NSWLR 207; [2015] NSWCA 123 Agtrack (NT) Pty Ltd v Hatfield (2005) 223 CLR 251; [2005] HCA 38 Ahrkalimpa Pty Ltd v Schmit (No 3) [2019] VSC 197 Ancient Order of Foresters in Victoria Friendly Society Ltd v Lifeplan Australia Friendly Society Ltd (2018) 265 CLR 1; [2018] HCA 43 Application of David Kerr [2017] NSWSC 358 Artahs Pty Ltd v Gall Standfield & Smith (a firm) [2013] 2 Qd R 202 AS Bannister v Sirrom Enterprises Pty Ltd [2016] SASCFC 153 Australian Executor Trustees (SA) Ltd v Korda [2013] VSC 7 Australian Securities and Investments Commission v Hellicar (2012) 247 CLR 345; [2012] HCA 17 Australian Special Opportunity Fund LP v Equity Trustees Wealth Services Ltd [2015] NSWCA 225; (2015) 323 ALR 570 AVWest Aircraft Pty Ltd as trustee for AVWest Aircraft Trust v Clayton Utz (a firm) (No 2) [2019] WASC 306 Badenach v Calvert (2016) 257 CLR 440; [2016] HCA 18 Bank of Tokyo Ltd v Karoon [1987] AC 45 Blong Ume Nominees Pty Ltd v Semweb Nominees Pty Ltd [2019] SASCFC 151 Boensch v Pascoe [2019] HCA 49; (2019) 94 ALJR 112 Boyce v Mouat [1994] 1 AC 428 Caffrey v Darby (1801) 6 Ves Jun 488; 31 ER 1159 Canson Enterprises Ltd v Boughton & Co (1991) 85 DLR (4th) 129 Chappel v Hart (1998) 195 CLR 232; [1998] HCA 55 Cherney v Neuman [2011] EWHC 2156 Citicorp Australia Ltd v O'Brien (1996) 40 NSWLR 398 Commercial Union Insurance Co of Australia Limited v Ferrcom Pty Ltd (1991) 22 NSWLR 389 Coulton v Holcombe (1986) 162 CLR 1; [1986] HCA 33 David v David [2009] NSWCA 8 Dominic v Riz [2009] NSWCA 216 Felton v Mulligan (1971) 124 CLR 376 G M & A M Pearce & Co Pty Ltd v Australian Tallow Producers [2005] VSCA 113 Harding v Coburn [1976] 2 NZLR 577 Hawes v Dean [2014] NSWCA 380 Houghton v Immer (No 155) Pty Ltd (1997) 44 NSWLR 46 Howe v Earl of Dartmouth (1802) 7 Ves 137; 32 ER 56 Jackson v Lithgow City Council [2008] NSWCA 312 Jadwan Pty Ltd v Rae & Partners (A Firm) [2020] FACFA 62 John Pfeiffer Pty Ltd v Rogerson (2000) 203 CLR 503; [2000] HCA 36 Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8 Kerr v Australian Executor Trustees (SA) Ltd; Australian Executor Trustees (SA) Ltd v Fuller and others trading as Sparke Helmore Lawyers [2019] NSWSC 1279 Kerr v Australian Executor Trustees (SA) Ltd; Australian Executor Trustees (SA) Ltd v Fuller and others trading as Sparke Helmore Lawyers (No 2) [2019] NSWSC 1438 Korda v Australian Executor Trustees (SA) Ltd [2014] VSCA 65 Korda v Australian Executor Trustees (SA) Ltd (2015) 255 CLR 62; [2015] HCA 6 Kuhl v Zurich Financial Services Ltd (2011) 243 CLR 361; [2011] HCA 11 Kuru v State of New South Wales (2008) 236 CLR 1; [2008] HCA 26 Libertarian Investments Ltd v Hall (2013) 16 HKCFAR 681; [2013] HKCFA 93 LJP Investments Pty Ltd v Howard Chia Investments Pty Ltd (1990) 24 NSWLR 499 Maguire v Makaronis (1996) 188 CLR 449; [1996] HCA 23 Moore v Scenic Tours Pty Ltd [2020] HCA 17; (2020) 94 ALJR 481 Neal v Ambulance Service (NSW) [2008] NSWCA 346 O'Halloran v RT Thomas & Family Pty Ltd (1998) 45 NSWLR 262 Newcrest Mining (WA) Ltd v Commonwealth of Australia (1997) 190 CLR 513; [1997] HCA 38 Ormerod v The Todmodern Joint-Stock Mill Company (1882) 8 QBD 664 Paul v Cooke (2013) 85 NSWLR 167; [2013] NSWCA 311 Provident Capital Ltd v Papa (2013) 84 NSWLR 231; [2013] NSWCA 36 Rahme v Benjamin & Khoury Pty Ltd (2019) 100 NSWLR 550; [2019] NSWCA 211 Redbro Investments Pty Ltd v Ceva Logistics (Australia) Pty Ltd (2015) 89 NSWLR 104; [2015] NSWCA 73 Reinhold v New South Wales Lotteries Corporation (No 2) (2008) 82 NSWLR 762; [2008] NSWSC 187 Rizeq v The State of Western Australia (2017) 262 CLR 1; [2017] HCA 23 Rosenberg v Percival (2001) 205 CLR 434; [2001] HCA 18 SEAS Safor Ltd v Commissioner of Stamps (1997) 36 ATR 272 Swindle v Harrison [1997] 4 All ER 705 Target Holdings Ltd v Redferns [1996] AC 421 The Australian Special Opportunity Fund LP v Equity Trustees Wealth Services Ltd [2015] NSWCA 225; (2015) 323 ALR 570 Wallace v Kam (2013) 250 CLR 375; [2013] HCA 19 Water Board v Moustakas (1988) 180 CLR 491; [1988] HCA 12 Youyang Pty Ltd v Minter Ellison Morris Fletcher (2003) 212 CLR 484; [2003] HCA 15 Texts Cited: Benjamin on Sale of Goods (8th ed, 2010, Sweet & Maxwell) E Sykes and S Walker, The Law of Securities (5th Ed, 1993, Law Book Co) J D Heydon, M J Leeming and P G Turner, Meagher, Gummow & Lehane's Equity: Doctrines and Remedies (5th ed, 2015, LexisNexis Butterworths) J D Heydon and M J Leeming, Jacobs' Law of Trusts in Australia (8th ed, 2016, LexisNexis Butterworth) Nygh's Conflict of Laws in Australia (9th ed, 2013, LexisNexis Butterworths) Nygh's Conflict of Laws in Australia (10th ed, 2020, LexisNexis Butterworths) Category: Principal judgment Parties: Australian Executor Trustee (SA) Limited (Appellant) David Kerr (First respondent / Cross-appellant) Adam John Fuller and Others t/as Sparke Helmore Lawyers (as named in the schedule to the Notice of Appeal and Notice of Cross-Appeal) (Second to sixty-first respondents / Cross respondents) Representation: Counsel: J Lockhart SC / C McMeniman (Appellant) A Sullivan QC / D Sulan/ S Hartford-Davis (First respondent / Cross-appellant) S Donaldson SC / A Zahra (Second to sixty-first respondents / Cross-respondents)