New South Wales Court of Appeal CITATION : BRODBECK & ANOR. v. POTTS & ORS. [2001] NSWCA 39 FILE NUMBER(S) : CA 40091/01 HEARING DATE(S) : 28/02/01 JUDGMENT DATE : 28 February 2001 PARTIES : DESMOND JAMES BRODBECK and JOAN MAREE BRODBECK (Claimants) CRAIGHTON POTTS, CLIVE ARTHUR POTTS, JOHN LATIMER, ASHLEY REED, ROSS NEVILLE AND PETER CLINCH (Opponents) JUDGMENT OF : Meagher JA at 49; Powell JA at 1 LOWER COURT JURISDICTION : District Court LOWER COURT DC 4385/95 FILE NUMBER(S) : LOWER COURT Delaney DCJ JUDICIAL OFFICER : COUNSEL : P.M. Biscoe QC and F.P. Donohoe (Claimants) J.W.J. Stevenson (2, 4-6 Opponents) SOLICITORS : Verekers (Claimants) Mallesons Stephen Jaques (2,4-6 Opponents) CATCHWORDS : PRACTICE AND PROCEDURE - Hearing date - Application to vacate - Application refused - Application for leave to appeal from refusal ND DECISION : Leave to appeal refused. IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40091/01 DC 4385/95 MEAGHER JA POWELL JA 28 February 2001 BRODBECK & ANOR v. POTTS & ORS. JUDGMENT 1 POWELL JA: The facts which have given rise to the present application for leave to appeal from a judgment delivered and order made by Delaney DCJ on Wednesday last provide yet another example of what appears to be the widespread view of the legal profession that a detailed understanding, and an intelligent application, of the rules of practice and procedure in the several courts of this State is no longer a necessary, nor even a desirable, part of the armory of any legal practitioner who is regularly involved in litigation in this State. The result, I regret to say, is a situation which casts not the slightest credit on any of those members of the legal profession who have acted for the Claimants over the period of the last six years. 2 The proceedings in the District Court to which the application dealt with by Delaney DCJ was related were proceedings in which the Claimants, Mr and Mrs Brodbeck, sought to recover from persons who at various times were said to be members of the firm of Potts Latimer & Co damages in respect of what were alleged to have been breaches of contract or for negligence in relation to actions taken by the various members of that firm on behalf of, and on the instructions of, the Claimants over the period from 1976 to 1991. 3 The facts, first, that there were various retainers over that period and, second, that, during that period, the membership of the firm Potts Latimer & Co varied, give rise to some of the problems which bear upon the fate of the present application. 4 As far as I can judge it, the members of the firm of Potts Latimer & Co in 1976 were Mr Craighton Potts - who is named as the First Opponent - Mr Clive Potts - who is named as the Second Opponent - and Mr John Latimer - who is named as the Third Opponent. 5 The first of the retainers upon which the Claimant rely is said to have been given in about May 1976. It would seem, or so we were informed, that the instructions in question were given by one or other of the Claimants to Mr Craighton Potts. Those instructions, as it would seem, involved the drawing up of documents said to be necessary, or desirable, to be executed in order to give effect to an arrangement said to have been made a little earlier between the Claimants and Mrs Faulkner, who was the mother of the second named Claimant, Mrs. Brodbeck. 6 It is said that Mr Craighton Potts died in December 1976. 7 The documents, which it would appear were drawn by, or at the direction of, Mr Craighton Potts, were executed by Mrs Faulkner and the Claimants in May 1977. Those documents were an Agreement, a Memorandum of Mortgage in relation to land said to be the subject of the agreement between the Claimants and Mrs Faulkner, and a Caveat, no doubt intended to protect what the Claimants claim were intended to be their interests in the subject land. 8 It is said by the Claimants that those documents did not reflect the agreement that they had earlier made with Mrs Faulkner and that, in consequence, the members of the firm of Potts Latimer & Co were guilty of a breach of contract or, alternatively, were liable in negligence. 9 This being so, it is convenient here to note that s.14 of the Limitation Act 1969 provides that, in relation to claims based on breaches of contract or torts, other than torts leading to claims for personal injury, the limitation period is six years from the date of accrual of the relevant cause of action, and that s.65 provides that, at the expiration of that period of limitation, the relevant cause of action is extinguished. 10 At some time in 1978 the Fourth Opponent, Mr Reed, became a partner of the firm of Potts Latimer & Co. 11 In 1983 Mr John Latimer died. 12 In 1986 the Fifth Opponent, Mr Neville, became a partner of the firm of Potts Latimer & Co and remained so until December 1994. 13 The position in 1989, as far as one can judge it, thus was that the partners of the firm of Potts Latimer & Co were Mr Clive Potts, Mr Reed and Mr Neville. 14 It would appear that, at some time during the course of the early part of 1989, disputes broke out between the Claimants and Mrs Faulkner as to the nature of their respective rights and interests under the documents which had been executed in 1977. 15 That being, so it is said, a second retainer was given to the firm in June 1989, the retainer, as I understand such material as is before the Court, being to advise, first, as to whether or not the documents executed in 1977 gave effect to what the Claimants said had been their underlying agreement, and, second, as to whether a letter said to have been written by Mrs Faulkner at an earlier time constituted a sufficient agreement to protect the interests of the Claimants. 16 As best as I can judge it, it is said that whichever of the partners in the firm it was who advised the Claimants, advised them that the documents did not reflect what was said to be the underlying agreement but that the letter which had been written by Mrs Faulkner adequately protected their interests. 17 There the matter apparently was let lie for a few years. 18 Meantime, in April 1990, the Sixth Opponent, Mr Clinch became a partner of the firm of Potts Latimer & Co and remained so until December 1994. 19 Although what happened next is not entirely clear, it would seem that, in October 1991, or thereabouts, the firm was retained by the Claimants to endeavour to negotiate with Mrs Faulkner, or those who were then representing her, a compromise of the disputes which had arisen. 20 It is clear that whatever efforts were taken by the relevant member of the firm were not successful as it is said that in late 1991, or early 1992 the claimants retained a Ms Jacobs, then a solicitor/clerk employed by Messrs Tress Cocks & Maddox to negotiate for them with a view to settling the dispute with Mrs Faulkner. 21 Clearly enough whatever was done by Ms Jacobs was unsuccessful in achieving a settlement, as it is said that, after Mrs Faulkner's death in May 1994, Ms Jacobs was given instructions to take whatever steps might be necessary to protect the Claimants' interests.. 22 At some time in 1995 Ms Jacobs moved to the firm of Dibbs, Crother &Osborne, apparently as a solicitor/clerk. When she did so, the Claimants retained that firm to act for them on their behalf. 23 In June 1995 , the Statement of Claim which commenced the proceedings in relation to which the application dealt with by Delaney DCJ came about was filed in the District Court. In that Statement of Claim, as I have indicated, the Claimants sought to recover against the Messrs. Potts and Latimer and Messrs Reed, Neville and Clinch damages, either, for breach of contract, or, for negligence in relation to the actions taken by them, or such of them as were then members of the firm, in relation to the three retainers which I have briefly dealt with. 24 The rules of the District Court as they were in 1995 provided (inter alia) that a Statement of Claim was valid for service only for three months after the date on which it was filed or for such further period as might be fixed on application to the Court. As best as I can judge it, save for the application which may - it is not clear whether it was - have been made to Delaney DCJ, no application was ever made to extend the time for service of that Statement of Claim, despite the fact that no action was taken to have it served for the better part of two years thereafter. 25 Meantime, in November 1995, there were commenced in the Equity Division of this Court on behalf of the Claimants proceedings in which they sought to against the then legal personal representative of Mrs Faulkner an order for specific performance of what was claimed to have been the underlying agreement between the Claimants and Mrs Faulkner, or, alternatively, a declaration of trust of the land the subject of that agreement, or, further alternatively, relief pursuant to the provisions of the Family Provision Act 1982, the claim under the Act being based, at least in part, on the actions said to have been taken by the Claimants pursuant to the underlying agreement with Mrs Faulkner. 26 In April 1997, Ms Jacobs writing on the letterhead of Dibbs Crowther & Osborne wrote to Messrs Potts Latimer & Co for the attention of Mr Reed, a letter which, omitting formal parts was as follows: "BRODBECK We refer to the writer's telephone conversation with you on 16 April 1997 and confirm that you are prepared to accept service of the enclosed Statement of Claim by DX. Accordingly, we enclose by way of service upon you, District Court Statement of Claim. As our client is involved in Supreme Court proceedings which will ultimately determine their loss the Statement of Claim is served to preserve our client's position. We have instructions to file an application for a stay of the proceedings pending the resolution of the Supreme Court proceedings. We would appreciate your attitude to this application. We note that you have undertaken to advise us how we may serve the other partners named in the Statement of Claim without causing any undue inconvenience to them. We look forward to hearing from you." to which letter Mr. Reed replied on 18 April 1997 as follows: "RE: REED & OTHERS -ats- BRODBECK We refer to your letter of 16 April 1997 and note the contents. We have referred the Statement of Claim to our insurers who will no doubt file a Notice of Appearance on the writer's behalf. We advise in relation to the other defendant's (sic) as follows: 1. Craig Potts died in December 1976 his Executor being Clive Arthur Potts. 2. Clive Arthur Potts is a consultant to this firm but currently resides in Bogata in South America and we are unsure as to when he will return to Australia. 3. Ross Neville and Peter Clinch trade as Clinch Neville Long solicitors at; Level 18, AIDC Building 201 Kent Street SYDNEY NSW 2000 Phone 9247 3334 Fax: 9247 3232" 27 One assumes that action was then taken to serve Messrs Neville and Clinch for on, 9 September 1997, Messrs Mallesons Stephen Jacques wrote Messrs Dibbs Crowther &Osborne a letter, which, omitting formal parts, was as follows: "We act for Potts Latimer in proceedings brought by Desmond and Joan Brodbeck. LawCover, on behalf of our client, has been seeking information about the progress of this matter from you without success. Within the next seven days would you please advise the progress of your clients' claim against any other party and your clients' intentions in respect of the District Court proceedings in which our clients have been joined. The statement of claim was issued in 1995 and has not been progressed. Our clients are concerned to prepare the matter if it is your clients' intention to proceed with it. Accordingly, if I have not heard from you within seven days we will begin preparation of the matter which will involve incurring legal costs which we will seek to recover against your clients if their claim is ultimately unsuccessful." 28 Thereafter, so it would seem, as the result of what was perceived to be a conflict of interest on the part of Messrs Dibbs Crowther & Osborne in relation to the proceedings in the District Court - but not in relation to the proceedings in the Equity Division of this Court - Messrs Dibbs Crowther & Osborne filed a Notice of Ceasing to Act in the District Court proceedings. 29 The files which were held by Dibbs Crowther & Osborne in relation to the District Court proceedings appear to have been passed to Messrs Cassidy, Howlin and Gibson in July 1998 for the purpose of giving advice to the Claimants, who executed a formal Retainer Agreement with that firm in November 1998. Thereafter, in December 1998, there was filed in the District Court proceedings a Notice of Appearance by Messrs Cassidy Howlin and Gibson. 30 In late 1998, pursuant to the provisions of the District Court rules (DCR Pt 12 r 4C) - there having been no praecipe to set down for trial - the District Court proceedings were deemed to have been dismissed. Thereafter, an application was made on behalf of the Claimants to have that deemed dismissal rescinded, that course being permissible having regard to the provisions of DCR Pt 1 r 5 and Pt 3 r 2, which permit the Court to dispense with compliance with any of the District Court rules and which also provide for the extension of time fixed by the District Court rules even though the relevant time period fixed under the rules may have expired (see Harding v Bourke 48 NSWLR 598). 31 The proceedings in the Equity Division of this Court are said to have been compromised in September 1999 upon terms that the Claimants paid certain moneys to Mrs. Brodbeck's siblings and, perhaps, to the personal representative of the late Mrs Faulkner. 32 There the matters rested for another six or seven months until April 2000, when the Claimants' present solicitors were retained. 33 It would appear that, at about the time when the Claimants' present solicitors were retained, there had been a directions hearing conducted by Garling DCJ, who, at the time, directed that the proceeding be re-listed on 29 May, perhaps with a view to it being dismissed for want of prosecution. 34 In May 2000, Mr Titus, the solicitor presently having the conduct of the proceedings on behalf of the Claimants, swore an Affidavit in which, after recounting the history of the matter and, in particular, the steps that needed to be taken to ready it for trial, expressed the view that the case would be ready to be listed for hearing at the expiration of three-four months, that time allowing Mr Titus fully to liaise with the Claimants to prepare answers to a request for particulars which had been made by Messrs Mallesons Stephen Jaques to allow a Defence to be filed and to permit all other preliminary steps to be completed. 35 It would appear that Garling DCJ acceded to the request contained in that Affidavit that no steps be taken to dismiss the proceedings and that the matter was stood over from time to time. 36 Thereafter, so one assumes, the answers to the request for particulars which had been made on behalf of Messrs Reed, Neville and Clinch were provided, for on 4 August 2000, there was filed on their behalf a Defence in which they asserted (inter alia) that they were not members of the firm of Potts Latimer & Co at the time of the first retainer; that, even if the then partners in the firm had been guilty of a breach of contract or of negligence, they were in no way liable to be sued in respect of it; and that, even if a liability such as was sought to be raised against them could be assigned, that potential liability had been extinguished, reference being made to ss.14, 65 of the Limitation Act 1969. The filing of that Defence probably constituted a waiver by Messrs. Reed, Neville and Clinch of the irregular service upon them of the Statement of Claim well out of time. 37 Thereafter, as it would seem, the matter was listed in November before the listing judge who fixed the matter for hearing tomorrow, at the time noting that no adjournment was to be granted except in wholly exceptional circumstances. 38 It would appear that notwithstanding his having had the files for a period of some nine months or thereabouts, Mr. Titus did not advert to the fact that no steps had ever been taken to serve the Statement of Claim upon Mr Clive Potts who, as it would appear, had by this time returned to this country from Bogota and set up practice on his own behalf in the suburbs of this city. 39 On 12 February a Notice of Motion was filed in the District Court in which application was made on behalf of the Claimants to have the hearing date vacated and to have the time for service of the Statement of Claim upon Mr Potts extended. 40 It would appear that although, at the time, no order for extending the time for service on Mr Potts had been made, service of the Statement of Claim was in fact effected on Mr Potts on 20 February. 41 The matter came before Delaney DCJ on 21 February, as I have earlier indicated, on which day Mr J.W.J. Stevenson announced his appearance on the motion for Mr. Potts and, as well, for Messrs Reed, Neville and Clinch. 42 His Honour, so the solicitor's note with which we have been provided records, indicated that, having regard to the whole of the history of the matter, it was not appropriate for leave to serve Mr Potts then to be granted and that the hearing date should not be vacated, the solicitor's note recording (inter alia) that his Honour said:- "There is no reason why the defendants should suffer the burden of a delay. The fourth to sixth defendants are entitled to have their day in court. The failure to take steps to effect service should not be utilised as a means to having the hearing vacated. The application to vacate the hearing is dismissed." 43 In addition to dismissing the Motion, his Honour ordered that the costs of the application should be borne by Mr Titus personally, those costs being fixed by his Honour in the sum of $2,000. 44 Lengthy though this recitation of the facts has been, it has, I think, been necessary in order that one might fully assess the appropriate course to be taken. 45 Such materials as are before the Court this morning tend to indicate that such damages to which the Claimants might otherwise be entitled flow, in no small measure, if not entirely, from what is said to have been the breach by the then partners of the firm of Potts Latimer & Co of the retainer given to that firm in May 1976. Those causes of action have long since been extinguished. 46 It is no answer to that fact to suggest, as Mr P M Biscoe QC, who appears today with Mr F.P. Donohoe, for the Claimants, did that, if, on a hearing, Mr Potts were to raise the provisions of ss.14, 65 of the Limitation Act 1969, relief might be obtained pursuant to the provisions of s.56 of that Act, for in my respectful view, s. 56 says nothing relevant to this matter. That being so, it would be idle now to give leave to serve Mr Potts and to allow the proceedings to continue against him, for it is inevitable that he would raise a defence based on the relevant provisions of the Limitation Act 1969. 47 Even if it were not so, and questions of discretion as to whether relief might be granted to the Claimants could be raised, the fact that it is now some 25 years since the first retainer was given, that the member of the firm to whom the retainer, and the particular instructions, were given has long since died, and that Mr Potts has had no access to any of the relevant records for many years means that, if any discretion were to be exercised against him he would be subjected to immense, indeed insuperable, prejudice. 48 That being so, it seems to me that there is no advantage to the Claimants to accede to the application made on their behalf and I would therefore propose that the Summons for leave be refused with costs. 49 MEAGHER JA: I also agree with what Mr Justice Powell says, though I do so with some regret. 50 I would like to point out, though, as I have already done in argument, that obtaining Mr Clive Arthur Potts in Court to answer the case sought to be made against the defendants does not entirely deal with all the possible problems. It would seem to me that some representative ought be appointed to represent the estates of Mr Craighton Potts and John Latimer, but they are merely additional problems. 51 I entirely agree with what Mr Justice Powell said. 52 The order of the Court therefore, the appeal dismissed with costs. 53 Do you want to say something Mr Stevenson. STEVENSON: I wish to make an application for a special order as to costs. The order seek is one under Section 76C that Mr Titus pay the costs of this application on an indemnity basis. MEAGHER JA: What do you say Mr Biscoe. BISCOE: Can I get some instructions your Honour. MEAGHER JA: Yes. BISCOE: Yes, Mr Titus, I'm instructed, will not oppose an order for costs against him but not on an indemnity basis. 54 MEAGHER JA: In the present case I have already expressed the Court's order that the application be dismissed with costs. 55 The question has now arisen about the nature of the costs. Mr Stevenson, on behalf of the Opponent's has asked for an order of costs against Mr Titus personally and that is not opposed by Mr Titus. Such an order will be made. 56 The question is whether it should be on an indemnity basis or not. The Court feels inclined to decline making an order on an indemnity basis. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.