NEVILLE v LICARDY SUPREME COURT OF NEW SOUTH WALES — COURT OF APPEAL HANDLEY JA, POWELL JA and COLE JA 21 March 1996 [1996] NSWCA 387 Handley JA. (On application for leave to amend notice of appeal. See page 23 of transcript.) On this appeal coming on for hearing this morning Mr Alexis for the appellants, as foreshadowed in his written submissions received by the court on 20 March, applied for leave to amend the notice of appeal to add grounds 6 and 7 as follows: 6. Alternatively, his Honour erred in finding that the respondent had no duty of care to advise or warn the appellants in the circumstances of matters that may prejudice their equitable interest in the property at 147 Belgrave Esplanade, Sylvania Waters or may otherwise cause them economic loss. 7. His Honour erred in determining the liability of the respondent only by reference to his knowledge of matters in breach of trust and not by reference to: (a) The conflict of interest in the respondent simultaneously acting for Pewiti Pty Ltd and Mrs M La Camera on the one hand and the appellants on the other, and(b) the facts that the respondent was actually aware of which, although not establishing knowledge of a breach of trust, established that the appellants" equitable interest in the property situate at 147 Belgrave Esplanade, Sylvania Waters may be prejudiced and/or that the appellants may suffer economic loss. This application was opposed by Mr Jacobson QC on grounds foreshadowed in his outline of submissions, also received by the court yesterday. Mr Alexis fairly conceded that grounds 6 and 7, as sought to be added to the notice of appeal, did not raise matters which had been pleaded in the plaintiffs" statement of claim. The claims as pleaded which were pressed at the trial depended upon the existence of an express trust of the property at Sylvania Waters in favour of the plaintiffs and two retainers by the alleged trustee Pewiti Pty Ltd of the respondent solicitor, Mr Licardy, to act in relation to the affairs of the company which involved mortgaging or re-mortgaging the Sylvania Waters property. The common law duty of care relied upon by the plaintiffs, as pleaded, was said to arise out of the relationship of proximity between the solicitor, acting under one or other or both of these retainers, and the plaintiffs, as alleged beneficiaries under an express trust of the Sylvania Waters property. The statement of claim also pleaded statutory causes of action under the Trade Practices Act and the Fair Trading Act. Following extensive discussion between Mr Alexis and the court, Mr Alexis indicated that the original grounds of appeal were not pressed, that the case the appellants would seek to make on the appeal would be based on a breach of a common law duty of care of the Hawkins v Clayton type, alleged to arise out of a third retainer of the respondent by the appellants personally in or about December 1984, in which the respondent was instructed to make wills for the appellants and to act on the sale of their Caringbah unit. 2 UNREPORTED JUDGMENTS Although Mr Alexis acknowledged that this case had not been pleaded, he submitted that it had been litigated at the trial without objection but had not been dealt with by the trial judge. He submitted that the appellants were entitled to have the notice of appeal amended in order to raise this case in this court. It may be accepted that if a case is conducted at the trial in disregard of the pleadings, so that issues which have not been pleaded have been fully and fairly litigated, the court, even an appellate court, will be obliged to allow the pleadings to be amended to properly reflect the case that was in fact litigated. The leading authority for this proposition is the decision of the High Court in Leotta v Public Transport Commission (1976) 50 ALJR 666. In the present case, however, it is not clear to what extent the case now sought to be made, as outlined in the additional grounds of appeal, was fairly and adequately litigated at the trial. Mr Alexis tells the court that the claim as formulated by him, which I have recorded in these reasons, was indeed litigated, and I accept his honesty in this matter. The difficulty, however, is that the learned trial judge in his reserved judgment failed totally to deal with this alternative case. This may have been a mere oversight on his Honour's part, or it may be that the case was presented to him in final address in a way which did not clearly bring home to his mind that this part of the plaintiffs" case was independent of the alternative bases which had been pleaded and were also clearly in issue during the trial and in the final address. The court is in a situation of some difficulty because the oral addresses of counsel, as is normal, were not recorded, there were no written submissions, and Mr Jacobson QC, who appears for the respondent, did not appear at the trial. The difficulty is increased because the point only clearlysurfaced in outline submissions sent to Mr Jacobson earlier this week, at a very late stage in the preparation for this appeal. The hearing occupied four days between 6 and 10 July 1994, addresses commenced immediately after the close of evidence and occupied no more than a day, and his Honour then reserved, delivering judgment on 20 July. Following the delivery of judgment, counsel appearing for the defendant made an application for an order for indemnity costs. His Honour dealt with this question immediately and made the order sought, delivering written reasons on 2 August. The appellants filed a notice of holding appeal on 15 August, which, needless to say, did not contain any grounds of appeal. The clear purpose of the rules which permit the filing of such an appeal, which need not be followed by a notice of appeal containing detailed grounds of appeal and particulars of the orders sought for up to three months, is to enable appellants to protect their position while they obtain advice. The appellants did not wait for the three months permitted by the Rules, but filed a normal notice of appeal within a month. The orders were not entered until 18 November, and during that interval it was open to the plaintiffs to apply to the trial judge to withdraw his reasons and vacate his orders for the purpose of dealing with the issues he is said to have overlooked. No such application was made, and to some extent this is excusable, but the notice of appeal, filed on 15 September 1994, did not allege error on the part of the trial judge in failing to deal with what has been said to be the plaintiffs" alternative case based upon their personal retainer of the solicitor in December 1984. The economic loss said to flow from the breach by the solicitor of the duty of care arising from the personal retainer is the same as that particularised in the statement of claim in relation to the statutory causes of action under the Trade URJ NEVILLE v LICARDY (Handley JA) 3 Practices Act and the Fair Trading Act. His Honournoted that these claims, although pleaded, were not pressed at the hearing, and we have been informed by Mr Alexis that he did not address on those claims in chief but that Mr Davies, then appearing for the solicitor, drew attention to the difficulties the plaintiffs faced because of the three-year limitation periods. He, Mr Alexis, said nothing about those claims in his reply, and thus his Honour concluded, accurately, that these claims had not been pressed. The economic loss said to flow from the breach of the duty arising from the personal retailer was also said to flow from breaches of duty said to arise from the retainers by Pewiti Pty Ltd and also from the claims that the solicitor was an accessory to the breaches of trust alleged against the trustee. In these circumstances, accepting, as I have said, the honesty and substantial accuracy of Mr Alexis" recollection of his submissions to the trial judge, nevertheless it seems to me that the trial judge may not unreasonably have failed to appreciate that those submissions were not only made in support of the claims based on duties arising from the retainers pleaded in the statement of claim but were also made in support of a claim based on breach of a duty derived from the unpleaded personal retainer by the plaintiffs of the solicitor. The existence of the personal retainer, and conduct and conversations arising in the course of its performance, formed part of the plaintiffs" case against the solicitor based on the retainers as pleaded, because the plaintiffs asserted that in the course of acting for them personally the solicitor became aware, if he had not earlier been aware, of the existence of the express trust alleged in the statement of claim and the plaintiffs" position as beneficiaries under it. His Honour dealt with this part of the plaintiffs" claim arising from the personal retainer but, as Mr Alexis complains, failed to deal with theplaintiffs" independent claim based on breach of a duty arising from that personal retainer. In the circumstances, the appellants have failed to satisfy me that the submissions based upon the personal retainer were put to his Honour in a way which brought home to his mind that they were made in support of claims which had not been pleaded which were independent of the claims which had been. As I have said, the matters connected with the personal retainer, and the acts and conversations of the parties pursuant to that personal retainer, were properly before his Honour in connection with the claims that had been pleaded and his Honour may easily have understood that there was no independent case based on the personal retainer. It is impossible for this court to know — or the appellants to prove — in circumstances where the point was not taken promptly, either by an application to recall the judge's reasons or in the grounds of appeal filed on 15 September 1994, that had their submissions brought home to the mind of the trial judge and counsel appearing for the solicitor that a claim based on the personal retainer was being pressed which was completely independent of the claims as pleaded, that objection may not have been taken, and the plaintiffs compelled to apply for leave to amend the settlement of claim. It is impossible to know what course either the defendant or the trial judge, or indeed the plaintiffs, would then have taken. It seems to me that the proper conclusion is that the submissions were sufficiently ambiguous not to clearly convey to either the trial judge or to counsel for the solicitor that there was a completely independent claim based upon the personal retainer, put not only as part of the claims as pleaded but separately, even if the claims as pleaded were to fail. 4 UNREPORTED JUDGMENTS In these circumstances, I am not satisfied that the court could properly allow the pleadings to be amended at this stage to reflect the claim formulatedby Mr Alexis in this court, and unless the court could grant leave to amend the pleadings in my opinion it should not grant leave to amend the notice of appeal as sought. I would therefore propose that leave to amend the notice of appeal should be refused. Powell JA. I agree. Cole JA. I also agree. Orders accordingly.