INSIGHTS: Meridian Lawyers successful in long-running professional negligence case

Meridian Lawyers has successfully defended a long-running professional negligence case against a solicitor.

Case note: Borgese [2017] NSWSC 92: The plaintiff, Domenico Borgese, was born into a family of orchardists near Leeton. He lived with his five sisters and his parents, Carmella and Giuseppe on the family farm. The plaintiff left school at an early age to work on the family farm. In 1976 when the plaintiff was 21 years old, he entered into a Deed of Partnership with his parents. His parents also signed their Wills on the same day in the office of a local solicitor.  In short, the plaintiff asserted that it was the intention of both his parents that he would ultimately inherit the family farm and that his sisters would inherit a smaller farm although, he would have an option to purchase the smaller farm from his sisters. In the events that subsequently unfolded, the plaintiff did not inherit the family farm and was immensely disappointed with that outcome.

The plaintiff’s mother died in 1978 and his father died in 2003.  In 2006, the plaintiff commenced proceedings in the Equity Division of the Supreme Court of NSW under the Family Provision Act 1982 (NSW) ( FPA). Under the terms of his father’s Will, the plaintiff was to receive one-sixth of the Estate.  The plaintiff was successful in his proceedings before Young CJ in Eq and received half of his father’s Estate:  Borgese v Papsidero [2006] NSWSC 407.

Six years to the day from the decision of Young J in EQ on 2 May 2006, the plaintiff commenced proceedings against the solicitor. The plaintiff alleged that the solicitor had been negligent when he prepared the Wills and the Partnership Deed in 1976 and again, when the small farm was sold in 1981, when the partnership was dissolved in 1999 and when the solicitor acted for the father’s estate in the FPA proceedings. Since the plaintiff commenced the professional negligence proceedings in 2012, the proceedings suffered from continual delay at the hands of the plaintiff. After a significant amount of correspondence between the parties and numerous defaults in Court timetables, the lawyers for the solicitor filed a notice of motion seeking an order that the proceedings be dismissed under UCPR 12.71 for want of due despatch. Harrison J dismissed the solicitor’s motion on 31 August 2016:  Borgese [2016] NSWSC 1252 and expressed the opinion that the plaintiff’s cause of action could not succeed.

The plaintiff’s lawyer confirmed to Harrison J that the parties would be able to take a hearing date as soon as possible. Harrison J listed the proceedings for a 5 day hearing commencing on 13 February 2017. At the commencement of the hearing before Justice Adams, the plaintiff sought leave to file a Further Amended Statement of Claim (FASOC), which he had sent to the lawyers for the solicitor in December 2016. The solicitor refused to consent to any amendments.

On 17 February 2017, the plaintiff sought to include a cause of action in equity namely breach of fiduciary duty. Apart from denying any liability to the plaintiff, the solicitor always maintained that the plaintiff’s proceedings were statute barred. After the Judgment of Harrison J, the solicitor filed a notice of motion seeking to have the proceedings dismissed on limitation grounds. However, that motion was stood-over generally pending the hearing date in February.

Futility of case

On 15 February 2017, Justice Adams refused leave for the plaintiff to amend noting both the futility of the plaintiff’s case and the significant prejudice to the solicitor given the solicitor, whose conduct was the subject of the proceedings, had passed away.

Not giving up lightly, the plaintiff made a further application to amend to include a cause of action for breach of confidential information. The plaintiff asserted that the solicitor had acted in breach of confidence when he acted against the plaintiff and for the estate of the plaintiff’s father in the FPA proceedings and when he called for the file of the plaintiff’s family law proceedings, in which the solicitor had acted for the plaintiff. Her Honour heard that application and at the same time the solicitor moved on the motion seeking a dismissal under UCPR 13.4 to the extent that the original pleading of the defendant disclosed no cause of action, was statute barred and the pleading for which the plaintiff sought leave was also fundamentally flawed and disclosed no cause of action.

On Friday 17 February 2017, Her Honour dismissed the plaintiff’s application for leave to amend and allowed the solicitors’ motion seeking a strike-out of the proceedings. This effectively disposed of the proceedings. Her Honour made a usual cost order. The solicitors’ Counsel foreshadowed that his instructions were to seek an indemnity costs order. The parties have leave to make further submissions on costs.

Implications

This case highlights the importance of getting pleadings right in the first place and of properly particularising one’s cause of action. It also highlights the importance of proper case management and of prosecuting cases early. On one of the issues in the case, the solicitor was able to demonstrate that the plaintiff’s lawyer and Counsel had access to documents from late 2012, which would have enabled them to make the amended pleading that they sought to make for which leave was refused.

The case traversed some interesting authorities on the equitable cause of action for breach of confidence. The law relating to breach of confidence uncovers some delightful cases covering a wide array of subjects from patented information, advice given to shareholders and government and marital secrets. In order to assert that there has been a breach of confidential information, it is essential to identify with precision the confidential information the subject of the action. Justice McDougall in LGS v Barbagallo [2012] NSW SC 1099 set out the relevant principles referring to a judgment by Justice Gummow in Corrs Pavey Whiting & Byrne v Collection of Customs (Vic)(1987) 14 FCR 434; [1987] FCA 266 at 443.

In order to succeed in an action based on this equitable cause of action, one needs to identify precisely the confidential information. Justice Bryson in Mancini v Mancini [1999] NSWSC 800 emphasised that “without specificity a claim to protection cannot be defended or decided on any fair procedural basis”.

Justice Adams dismissed the plaintiff’s application to amend on the basis that:

1. The FASOC did not adequately describe the information alleged to be confidential;
2. The FASOC did not disclose how the information had the necessary quality of confidentiality
3. The FASOC did not identify the circumstances in which the information said to be confidential came into existence; and
4. The FASOC did not set out the alleged misuse of the material.

In addition her Honour noted: “The duty of confidence prohibits both disclosure and misuse… While the duty of loyalty prevents a solicitor from acting against… the interests of his or her client during the life of a retainer, possession of confidential information with respect to a former client will not necessarily require that a solicitor refrain from acting against a client…”

The decision of Justice Adams contains a useful summary of the law relating to the equitable cause of action for breach of confidence.