HOWELL v. WESTON [2001] NSWCA 174

New South Wales Court of Appeal

CITATION : HOWELL v. WESTON [2001] NSWCA 174 revised - 11/07/2001 FILE NUMBER(S) : CA 40947/99 HEARING DATE(S) : 08/06/2001 JUDGMENT DATE : 10 July 2001

PARTIES : Paul Roch Howell (Appellant) William Weston (Respondent) JUDGMENT OF : Powell JA at 1; Beazley JA at 45; Hodgson JA at 51

LOWER COURT JURISDICTION : District Court LOWER COURT DC 7767/97 FILE NUMBER(S) : LOWER COURT Garling DCJ JUDICIAL OFFICER :

COUNSEL : D. T. Kennedy SC/J. Klarica (Appellant) L. G. Foster SC/G.A. Sirtes (Respondent) SOLICITORS : Dennis & Company (Appellant) Deacons Lawyers ( formerly Deacons Graham & James) (Respondent) CATCHWORDS : COURTS AND JUDGES - District Court - Action for damages alleging professional negligence - Application for dismissal on grounds of want of prosecution - Application adjourned on application of plaintiff - Show cause notice given for adjourned day - No appearance of plaintiff on adjourned day - Action dismissed with costs - No formal reasons given - Whether error of law - Whether, if Court of Appeal called upon to exercise discretion, action should be dismissed. D DECISION : (By majority) Appeal allowed.

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40947/99 DC 7767/97 POWELL JA BEAZLEY JA HODGSON JA

10 July 2001 HOWELL v. WESTON

JUDGMENT 1 POWELL JA: By leave granted by this Court on 24 July 2000, the Appellant appealed against an order made by Garling DCJ in the District Court on 8 October 1998, on which day his Honour dismissed with costs the proceedings which had been brought by the Appellant seeking to recover from the Respondent damages which he claimed to have suffered as a result of what was alleged to have been the Respondent's professional negligence. 2 Garling DCJ's order was made on the application, pursuant to the provisions of DCR Pt 18 r 3, of the Respondent upon the ground of the Appellant's failure to prosecute those proceedings with all due dispatch. 3 DCR Pt 18 r 3 provides as follows: "3(1) Where a plaintiff makes default in complying with any order or direction as to the conduct of the proceedings, or does not prosecute the proceedings with due dispatch, the Court may, on application by any party or of its own motion, dismiss the proceedings or make such other order as the Court thinks fit. (2) Where proceedings are dismissed under subrule (1), rules 7 and 8 apply as though the dismissal were a discontinuance. (3) The Court may not make an order under subrule (1) without giving the plaintiff a reasonable opportunity to be heard. (4) The Court may, on application by any party, set aside an order that is made on the Court's own motion under subrule (1)." 4 The Appellant's claim for damages as set out in the Statement of Claim filed on his behalf to commence the proceedings, arose out of his retaining the Respondent, in mid-1986, to act for him, as his solicitor, in connection with a loan of $110,000.00 proposed to be made to a company known as Deonmero Pty. Limited ("Deonmero"), such loan to be secured by a registered second mortgage over a property in Wyee Street, Albury, which property Deonmero was said then to be in the process of purchasing, the first mortgage over the property being intended to be given to AGC (Advances) Limited ("AGC") which it was proposed would also advance moneys to enable the purchase to be completed. 5 In that Statement of Claim, the Appellant alleged (inter alia): "4. On or about 25 August 1986, the plaintiff instructed the defendant that he would consent to the said first mortgage securing advances by AGC to Deonmero Pty. Ltd. up to $280,000.00, but no more. He further instructed the defendant that the said proposed loan of $110,000.00 to Deonmero Pty. Limited was to be repaid to him within one month of the date of loan and was to attract interest at 21% reducible to 18% for prompt monthly payment, until the said loan was repaid. ……… 7. In breach of contract and in breach of the before mentioned duty of care, the defendant failed: (a) to comply with the plaintiff's instructions that the said first mortgage to AGC secured advances by it to Deonmero Pty. Limited not exceeding $280,000.00; (b) to inform the plaintiff prior to settlement of the sale of the property that the said first mortgage in fact secured advances from AGC to Deonmero Pty. Ltd. in the sum of approximately $500,000.00; (c) to obtain a duly executed mortgage document from Deonmero Pty. Ltd. in registrable form securing the sum of $110,000.00, plus interest as aforesaid, over the property in favour of the plaintiff prior to settlement of the sale of the property; (d) to obtain a formal Priority Agreement executed by AGC and the plaintiff or alternatively, a written confirmation or undertaking from AGC, providing, inter alia, for the said first mortgage to secure advances from AGC to Deonmero Pty. Ltd. up to $280,000.00 but no more and further providing for the said second mortgage to rank immediately behind the said first mortgage in priority on any mortgagee sale of the property and securing advances from the plaintiff to Deonmero Pty. Ltd. in the sum of $110,000.00, plus interest as aforesaid; (e) to obtain the consent of AGC to registration of the said second mortgage securing the sum of $110,000.00, plus interest as aforesaid, over the property prior to settlement of the sale of the property; (f) to cause the said second mortgage to be registered on the title to the property following immediately upon registration of the said first mortgage; (g) to take reasonable precautions on behalf of the plaintiff, such as the obtaining of a formal valuation of the property or otherwise, such as to ensure that on any mortgagee sale of the property the plaintiff's interests as proposed second mortgagee, in the circumstances, were adequately and properly protected; (h) to obtain a written personal guarantee from a director of Deonmero Pty. Limited, to adequately and properly protect the plaintiff's interests as proposed second mortgagee, in the circumstances."