New South Wales Supreme Court CITATION : Jackson v Symonds & Anor [2005] NSWSC 228 HEARING DATE(S) : 17 March 2005 JUDGMENT DATE : 22 March 2005 JUDGMENT OF : Simpson J DECISION : statement of claim an abuse of process; struck out in part; leave to file an amended statement of claim CATCHWORDS : application for summary disposal - application for leave to amend originating process - circumstances of revocation of Deed - identical claims in contract and in tort - limitation period Family Law Act 1975 s 87 LEGISLATION CITED : Limitation Act 1969, s14 SCR Part 13 rule 5, Part 15 rule 26 General Steel Industries Inc v Commissioner for Railways (NSW) [1964] HCA 69; 112 CLR 125 CASES CITED : Wilson v Rigg [2002] NSWCA 246, unreported, 26 July 2002 Emma Ruth Jackson - Plaintiff PARTIES : Mark Phillip Symonds - 1st Defendant Ian Ross Pratt - 2nd Defendant FILE NUMBER(S) : SC 20060/03 Mr Ian Harrison SC with Ms Dominique Hogan-Doran - Plaintiff COUNSEL : Mr Paul Brereton SC with Mr Scott Nixon - 1st Defendant Mr Michael Fordham - 2nd Defendant Uther Webster and Evans - Plaintiff SOLICITORS : Hunt and Hunt Lawyers - 1st Defendant Minter Ellison Lawyers - 2nd Defendant LOWER COURT JURISDICTION : IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION SIMPSON J Tuesday 22 March 2005 20060/03 Emma Ruth Jackson v Mark Phillip Symonds & Anor JUDGMENT: (i) on application for summary disposal; (ii on application for leave to amend originating process 1 HER HONOUR: The principal proceedings were commenced by statement of claim filed on 10 March 2003. The most recent version of the plaintiff's claim is contained in a Further Amended Statement of Claim ("FASC"), filed on 15 July 2004. That is a document which extends to 62 substantive paragraphs, over 37 closely typed pages. In the FASC six defendants are named, of whom only the first and second need here be mentioned. The proceedings against the third to sixth defendants have been resolved. 2 It is unnecessary to refer extensively to the allegations made in the FASC. So far as material for present purposes, the plaintiff seeks to prove the following. 3 In 1996 the plaintiff was a litigant in proceedings under the Family Law Act 1975 ("the Act") brought in the Family Court of Australia ("FCA") involving a claim for the allocation or reallocation of property interests of herself and her former husband. She was advised and represented by the first defendant, Mark Phillip Symonds, a solicitor. She retained and took the advice of the second defendant, who was an accountant. On 3 September 1996 the plaintiff and her former husband resolved their disputes over property and entered into a maintenance agreement pursuant to s87(1) of the Act. The agreement was formulated into a Deed. Pursuant to s87(3) of the Act, the FCA on 3 September 1996 approved the agreement contained in the Deed. The agreement required the plaintiff's former husband to pay her a specified sum of money. By s87(4)(b) of the Act the effect of the approval was to terminate any rights the plaintiff then had to claim against her former husband in respect of his or their property interests – that is, the approval operated to finalise all property disputes between them. In entering into the Deed, and in seeking the FCA's approval of it, the plaintiff acted on the legal advice of the first defendant, and on the financial advice of the second defendant. 4 By s87(8) of the Act, approval of a maintenance agreement under s87(3) could be revoked only in very limited circumstances, set out in the subsection. They are: (a) where the approval was obtained by fraud; (b) where the parties desire revocation; (c) where the agreement is void or voidable or unenforceable; (d) where it becomes impractical, in whole or in part, for the agreement to be carried out. 5 In January 1997 the plaintiff's former husband sought her agreement to the revocation of the approval. Having again taken advice from the first defendant and the second defendant (according to the pleading), and acting on their advice, the plaintiff agreed to the proposed revocation, and to seek the approval of the FCA to a revised agreement contained in a substitute Deed. The variations were not major and are not presently material. They did not alter the amount the plaintiff was to receive by way of maintenance or property settlement. The 1996 Deed was, pursuant to s87(8)(b), revoked on 10 March 1997 and the revised Deed was approved. No other basis for revocation was involved. 6 In the FASC the plaintiff alleges that she was negligently advised by both the first and second defendant and that each was in a contractual relationship with her, the terms of which were breached. The substance of the claims in contract are identical in substance with the claims in tort. In each case the plaintiff alleges breaches of duty by each defendant. She alleges inadequate investigation of the value of her former husband's property interests; that he failed to disclose the extent of his property interests, and that as a result of a variety of failings on the part of each of the defendants, the full extent of his healthy financial position was not known. As a consequence, the plaintiff agreed to accept a lesser sum than that to which she would, had the true position been known, have been entitled. 7 [Other causes of action besides negligence and breach of contract are pleaded but it is unnecessary to deal with them for the purposes of the present proceedings.] 8 Each defendant has filed a notice of motion, seeking summary disposal of the plaintiff's claim against him arising out of the advice given in 1996 and 1997. No orders are sought as to the residue of the FASC. 9 The plaintiff has filed her own notice of motion, seeking leave to file a second further amended statement of claim, joining additional defendants. While the first and second defendants have not consented to the grant of leave so sought, they have advanced nothing in opposition other than an argument that such an amendment would be futile. It is appropriate to deal with the defendants' notice of motion first. 10 Each defendant invokes the powers of the Court conferred by SCR Part 13 Rule 5 and SCR Part 15 Rule 26. Those Rules are in the following terms: "Part 13 Rule 5 5 Frivolity etc (1) Where in any proceedings it appears to the Court that in relation to the proceedings generally or in relation to any claim for relief in the proceedings: (a) no reasonable cause of action is disclosed, (b) the proceedings are frivolous or vexatious, or (c) the proceedings are an abuse of the process of the Court, the Court may order that the proceedings be stayed or dismissed generally or in relation to any claim for relief in the proceedings. (2) The Court may receive evidence on the hearing of an application for an order under subrule (1)." "Part 15 Rule 26 26 Embarrassment etc (1) Where a pleading: (a) discloses no reasonable cause of action or defence or other case appropriate to the nature of the pleading, (b) has a tendency to cause prejudice, embarrassment or delay in the proceedings, or (c) is otherwise an abuse of the process of the Court, the Court may at any stage of the proceedings, on terms, order that the whole or any part of the pleading be struck out. (2) The Court may receive evidence on the hearing of an application for an order under subrule (1)." 11 The principles upon which those rules are to be applied are well known and are set out in the decision of the High Court in General Steel Industries Inc v Commissioner for Railways (NSW) [1964] HCA 69; 112 CLR 125. It is only in a very clear case that a plaintiff's properly pleaded case will be disposed of summarily. Summary disposal may, however, be effected even in cases where extensive argument is necessary to establish that the case is untenable. 12 The basis for each application is that the plaintiff has no prospects of succeeding in her claims because they are statute barred. 13 The Limitation Act 1969 provides that proceedings in tort or contract must be commenced within six years from the date on which the cause of action arose (s14(1)(b)). The plaintiff's statement of claim was filed on 10 March 2003. Whether it is statute barred depends upon identification of the date on which each cause of action, on the facts pleaded by the plaintiff, arose. That, in turn, (in relation to the tort claim) depends upon identification of when, on the plaintiff's pleadings, she suffered the damage she alleges. On the contract claim, the cause of action accrues on the occurrence of the breach. 14 The competing contentions are these. 15 Hypothetically accepting, for the purpose of the argument, all the facts alleged by the plaintiff, the defendants contend that the plaintiff sustained damage on the date the 1996 Deed was executed (it would be more accurate to say the date the agreement was approved, but, since both occurred on the same day, it is unnecessary to be pedantic) that is, 3 March 1996. The limitation period for the negligence claim therefore expired on 3 March 2002. 16 The contractual breaches, on the plaintiff's pleading, must have occurred even earlier, or, at least, no later than the same date. 17 Nothing occurred in 1997 that caused new, or further, damage to the plaintiff. 18 The proposal by the plaintiff's former husband to seek revocation of the 1996 approval could not be seen as an opportunity for the plaintiff to reopen negotiations with respect to the quantum of the property settlement. That had been resolved and completed on execution and approval of the 1996 agreement. The revocation of the 1996 Deed and the approval of the substitute Deed in 1997 merely altered the payment schedule to which the parties had agreed. 19 In response, Mr Harrison SC, who appeared with Ms Hogan-Doran for the plaintiff, argued that revocation of the approval of the 1996 agreement put an end to the plaintiff's rights under it and rendered it inoperative, and therefore could not give rise to a claim for damages. 20 This, it seems to me, discloses a misconception as to the nature of the proceedings. The plaintiff does not seek to sue upon the Deed, and her rights under it are irrelevant for this purpose. It is, on the plaintiff's case, the 1996 Deed that effectively incorporates the substance of the agreement between the plaintiff and her former husband. That substance was not altered by the revocation and the approval of the new Deed. If it is the case that the plaintiff was negligently advised, that negligent advice was given in 1996, and her damage was suffered when she executed the 1996 Deed and when the FCA approved it. 21 Mr Harrison also submitted that the first defendant's (and, presumably the second defendant's) negligence subsisted, and the proceedings or revocation "re-energised an obligation" properly to advise in respect of "that document" – that is, the 1997 Deed. This cannot be correct. As a matter of practical and factual reality (explicitly accepted by Mr Harrison) the plaintiff's former husband would not, in 1997, have entered into a fresh negotiation nor agreed to make greater payments than those to which he was committed by the 1996 Deed. 22 I do not doubt that each defendant was under an obligation – a new obligation – properly to advise the plaintiff in relation to the approach by the husband for revocation. But that approach has to be seen in the light of what it is alleged the husband sought. He did not seek to reopen the issue to which the alleged negligence is relevant and his approach did not provide an opportunity to the plaintiff so to do. 23 Mr Harrison also argued that the damage the plaintiff seeks to allege arising out of the 1997 Deed is not the same damage as that she alleges arose out of the 1996 Deed. I do not think this is correct. In fact, properly characterised, the plaintiff does not seek to allege any damage arising out of what occurred in 1997: what occurred in 1997 involved a variation of the payment schedule under the 1996 Deed, and the plaintiff makes no complaint about that. It may be that what she seeks to do is complain that, on the approach by the husband for revocation, an opportunity to reconsider the bargain she had made in 1996 was lost. But that opportunity never existed. As Mr Brereton SC, who appeared with Mr Nixon for the first defendant, submitted, it would be fanciful to think that her husband would have proceeded with his application for revocation if the plaintiff had made it known that she proposed to use the revocation as an opportunity to expand her claim against him. In this respect the terminology of s87(8)(b) is material: the sub-paragraph envisages revocation only on the joint application of the parties. If the plaintiff had agreed to revocation only conditionally upon the reopening of the negotiations, then, undoubtedly, her former husband would have made alternative arrangements. No other occasion for revocation under s87(8) has been proposed. 24 Mr Harrison relied upon the decision of the Court of Appeal in Wilson v Rigg [2002] NSWCA 246, unreported, 26 July 2002. 25 In that case the allegations were that a solicitor had (i) negligently failed to commence proceedings for personal injury within the limitation period; and (ii) negligently delayed in the pursuit of an application for extension of time; and (iii) negligently prepared and pursued the application for extension of time. 26 As I understand the Court of Appeal decision (so far as it is relevant for present purposes) it was to the effect that that plaintiff had a cause of action against the alleged tortfeasor in the personal injury action, but that, on the expiration of the limitation period, the value of that cause of action was diminished (the diminution in value being damage that gave rise to a cause of action in negligence against the solicitor); and that the alleged negligent delay in and pursuit of the application for extension of time gave rise to a separate cause of action with different damage, that being the loss of the chance of pursuing the original claim against the first alleged tortfeasor. 27 Mr Harrison, accordingly, sought to adapt these conclusions to argue that, in the present case, the damage the plaintiff claims to have suffered in 1997 is different from the damage she claims to have suffered in 1996. 28 The argument cannot be sustained. This is because of purely factual considerations – the practical reality to which I earlier alluded. In Wilson, an application for extension of time had, if promptly and diligently pursued, a real chance of success, and, if successful, would have restored the plaintiff to the position he had been in before the expiration of the limitation period. Accordingly, the damage claimed to have been suffered in relation to the extension of time claim was the opportunity to retrieve and pursue an otherwise statute barred claim. Here, revocation of the approval of the 1996 Deed would not, it was conceded, open to the plaintiff an opportunity to renegotiate the property settlement. The plaintiff therefore did not suffer any damage (or further damage) by any negligence on the part of the defendants in 1997. 29 I am satisfied that the limitation point must be decided against the plaintiff. Accordingly the statement of claim, to the extent that it relies upon negligence or breach of contract by both the first and second defendants in relation to the 1997 Deed, must be struck out. 30 This is, therefore, a proper case for the application of one or other of the powers contained in SCR Part 13 rule 5 and SCR Part 15 rule 26. 31 Since the expiration of a limitation period is required to be pleaded as a defence, I am of the view that it could not properly be said that no reasonable cause of action is disclosed. That means that sub-paragraph (1)(a) of each of the rules invoked does not assist the defendants. However, I am satisfied that, since the defence pleaded under the Limitation Act must succeed, the proceedings are an abuse of the process of the court. The relevant portions of the statement of claim will be struck out. 32 The parties were agreed that some of the other causes of action pleaded could succeed; and that at least one cause of action is not statute barred. In those circumstances I think it best to leave to the parties the formulation of final orders. I will grant leave to the plaintiff to file an amended statement of claim in accordance with this ruling and the agreements between the parties. The plaintiff's application for leave to amend falls to be decided in accordance with this judgment. ********** 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.