Orwin v Rickards [2020] VSCA 225 (4 September 2020)

Last Updated: 4 September 2020

SUPREME COURT OF VICTORIA

COURT OF APPEAL

S APCI 2019 0074

MIRIAM MARLIN ORWIN

v

MICHAEL AIDAN RICKARDS

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JUDGES:	MAXWELL P, TATE and BEACH JJA
WHERE HELD:	MELBOURNE
DATE OF HEARING:	11 June 2020
DATE OF JUDGMENT:	4 September 2020
MEDIUM NEUTRAL CITATION:	[2020] VSCA 225
JUDGMENT APPEALED FROM:	[2019] VSC 375 (Osborn JA)

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FAMILY LAW – De facto relationships – Division of property – Financial agreement – Efficacy of agreement depended on parties being in de facto relationship – Applicant had denied relationship in earlier proceeding – Applicant claimed earlier sworn evidence was knowingly false – Whether change of evidence credible – Judge not satisfied that relationship existed at relevant time – Finding of fact – No error – Leave to appeal refused – Family Law Act 1975 (Cth), s 90UC.

LIMITATION OF ACTIONS – Tort – Negligence – When cause of action accrued – When damage first suffered – Solicitor’s negligence – Solicitor prepared defective agreement – Client not protected against property claim by former partner – Characterisation of damage – Whether defective contract was ‘damaged asset’ – Whether loss merely contingent –Whether legal fees paid to solicitor recoverable in claim for negligence – No error in trial judge’s conclusion – Wardley Australia Ltd v Western Australia [1992] HCA 55; (1992) 175 CLR 514, Burton v Thom [2008] NZSC 65; [2009] 1 NZLR 437, Winnote Pty Ltd v Page [2006] NSWCA 287; (2006) 68 NSWLR 531 considered – Limitation of Actions Act 1958, s 5(1)(a).

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APPEARANCES:	Counsel	Solicitors

For the Applicant	Mr L Glick QC with Mr J P Tomlinson	Vasilaris + Co Lawyers

For the Respondent	Mr C M Caleo QC with Ms X Teo	Lander and Rogers

MAXWELL P

TATE JA

BEACH JA:

1 The respondent (Mr Rickards) is a solicitor. In the proceeding below, the applicant (Ms Orwin) claimed damages in negligence and breach of retainer^[1] from Mr Rickards in relation to the advice he gave her about, and the preparation of, a financial agreement between herself and her former de facto partner (Mr Sarah).

2 Ms Orwin engaged Mr Rickards on 9 October 2009 to advise her and prepare a binding financial agreement to which she and Mr Sarah would be parties. An agreement (‘the financial agreement’) was prepared, and subsequently signed by Ms Orwin and Mr Sarah on 12 March 2010. In 2011, Ms Orwin and Mr Sarah separated completely, and in 2015, Mr Sarah brought an application in the Federal Circuit Court (‘the FCC’) seeking to set aside the financial agreement on grounds of non-disclosure, duress, undue influence and unconscionable conduct, and seeking an order for the just and equitable alteration of property interests.

3 As it turned out, due to a combination of defects related to the drawing of it, the financial agreement was not a binding financial agreement capable of constituting an effective and complete, or even a partial, bar to the application brought by Mr Sarah. Amongst other problems, the financial agreement failed to comply with s 90UC(1)(c) of the Family Law Act 1975 (Cth) (the ‘FLA’) in that it was not ‘expressed to be made under [s 90UC]’.^[2]

4 It was the failure by Mr Rickards to draw a binding financial agreement, or to advise Ms Orwin that the financial agreement was not such an agreement, which was the gravamen of her case against him at trial. At trial, Ms Orwin sought damages to compensate her for (amongst other losses) the payment by her of Mr Rickards’ fees in relation to the financial agreement and the amount she was required to pay in settlement of Mr Sarah’s application in the FCC on 17 March 2017.

5 The proceeding was heard by Osborn JA, sitting in the Trial Division, over seven days in April and May 2019. On 7 June 2019, his Honour dismissed Ms Orwin’s proceeding against Mr Rickards. He did so on two independent bases.

6 First, in order for the financial agreement to be a binding financial agreement under the relevant statutory provisions, such an agreement had to be made between the parties ‘while in a de facto relationship’.^[3] The judge concluded that, as at 12 March 2010, when the parties entered into the financial agreement, Ms Orwin and Mr Sarah were not in a de facto relationship. Therefore, irrespective of the defects about which Ms Orwin made complaint, the financial agreement could never have satisfied the relevant statutory provisions upon which Ms Orwin sought to rely against Mr Sarah as a bar to the proceedings later brought by him in the FCC.

7 Secondly, Ms Orwin’s claim in negligence against Mr Rickards was, in any event, statute-barred pursuant to s 5(1)(a) of the Limitations of Actions Act 1958, because the proceeding was instituted (by the filing of a writ on 19 July 2017) more than six years after she had first suffered loss by reason of the negligence. The relevant losses were the payment of Mr Rickards’ fees for preparing the financial agreement and the failure to obtain an ‘asset’ — in the form of a properly-drawn agreement under the FLA — which would give her protection in the future. (It was conceded by Ms Orwin that her claim in contract was statute-barred.)

8 Ms Orwin now seeks leave to appeal on grounds that challenge both of those conclusions. The grounds were summarised by the parties as follows:

(1) The judge erred in finding there was no de facto relationship in March 2010, when the only direct evidence of the relationship was led by Ms Orwin. The evidence, when considered as a whole, did not give rise to a sufficient level of doubt as to Ms Orwin’s reliability, nor as to the existence of a de facto relationship extant up to December 2011. The finding that there was no de facto relationship in 2010 should be overturned.
(2) The judge erred in finding Ms Orwin’s claim to be statute barred. His Honour failed to consider and correctly identify the economic interest infringed under the ‘direct loss’ claim. Relevantly, that ‘interest’ was the liability Ms Orwin incurred in 2017, sustained on the happening of two essential contingencies. The payment of fees to Mr Rickards in 2010 did not start time running, because among other things, the liability to pay those fees was not an ‘interest infringed’ by reason of Mr Rickards’ negligence.^[4]

The judge’s finding that Ms Orwin and Mr Sarah were not in a de facto relationship on 12 March 2010

9 The question of whether Ms Orwin and Mr Sarah were in a de facto relationship was governed by s 4AA of the FLA. That section provided:

(1) A person is in a de facto relationship with another person if:
(a) the persons are not legally married to each other; and
(b) the persons are not related by family (see sub-s (6)); and
(c) having regard to all the circumstances of their relationship, they have a relationship as a couple living together on a genuine domestic basis.
Paragraph (c) has effect subject to sub-s (5).
Working out if persons have a relationship as a couple
(2) Those circumstances may include any or all of the following:
(a) the duration of the relationship;
(b) the nature and extent of their common residence;
(c) whether a sexual relationship exists;
(d) the degree of financial dependence or interdependence, and any arrangements for financial support, between them;
(e) the ownership, use and acquisition of their property;
(f) the degree of mutual commitment to a shared life;
(g) whether the relationship is or was registered under a prescribed law of a State or Territory as a prescribed kind of relationship;
(h) the care and support of children;
(i) the reputation and public aspects of the relationship.
(3) No particular finding in relation to any circumstance is to be regarded as necessary in deciding whether the persons have a de facto relationship.
(4) A court determining whether a de facto relationship exists is entitled to have regard to such matters, and to attach such weight to any matter, as may seem appropriate to the court in the circumstances of the case.

10 As the judge observed, the question of whether a relationship is a de facto relationship within the meaning of the FLA requires a consideration of all of the circumstances of the relationship.^[5] His Honour observed that there were five significant bodies of evidence at trial which bore on whether the relationship between Ms Orwin and Mr Sarah was a de facto relationship as at 12 March 2010. They were:

Ms Orwin’s evidence at trial;
Ms Orwin’s evidence to the FCC;
the evidence of Mr Rickards and his file notes bearing on the nature of the relationship between Ms Orwin and Mr Sarah at the time of the making of the financial agreement;
the financial agreement itself; and
the evidence relating to property transactions involving both Ms Orwin and Mr Sarah before and after the financial agreement was entered into.^[6]

11 Ms Orwin was the only witness who gave direct evidence at trial of her relationship with Mr Sarah. Mr Sarah was not called by either party. Ms Orwin’s case at trial was that she and Mr Sarah were in a de facto relationship between January 2000 and February 2011 (albeit that sexual relations ceased in about 2004). There being no other witness who gave direct evidence of the relevant relationship at trial, the judge said that Ms Orwin’s case ‘turn[ed] squarely upon her acceptance as a witness of substantial truth and reliability’.^[7]

12 Ms Orwin’s evidence at trial was that her relationship with Mr Sarah went through ups and downs and periods during which they were angry with each other. She said that such a period occurred at the end of 2009, but that they reconciled after Christmas. According to her evidence:

We had gone away on our holidays together to the coast which we — which he booked very long in advance each year so that he could take — that he could utilise — Christmas and New Year public holidays so we could have, like, two and a half weeks or more on the peninsula. And we’d reconciled. Everything was good and we both decided that we were in a de facto relationship given all our activities together and we’d been on holiday together to the holiday house together, we’d been on bike rides together, we’d been out to dinner for — together, we’d been to his family for Christmas together.^[8]

The judge summarised Ms Orwin’s evidence at trial as follows:

Ms Orwin described a well nuanced multifactorial mutually close domestic relationship as being existent at the date of the financial agreement essentially in a form that had continued for many years and continued thereafter.^[9]

13 The judge described Ms Orwin as having ‘adopted a dramatically different position before the FCC’.^[10] He referred to an affidavit she had sworn in March 2017 in opposition to an assertion, in an affidavit sworn by Mr Sarah, that they were in a de facto relationship from approximately April 1999 to February 2011. In that affidavit, Ms Orwin had said:

[I]n around 2003–2004 we had become estranged as a couple and man/woman activity had ceased, essentially living separately under the same roof. In the following years I asked [Mr Sarah] to move out on numerous occasions however he would always reply, ‘where will I go’. As he was bigger and stronger than me and simply refused to leave there was little I could do. I went to the police who declined to assist me.

14 When cross-examined in the present proceeding about those statements, Ms Orwin said that what she had said on oath for the purposes of the FCC proceeding was false. She admitted that she ‘swore falsely on oath about being estranged as a couple’. As the judge noted, this admission of having given false evidence to the FCC stood in sharp contrast with what Ms Orwin said at another point in her evidence in this case:

I would never lie to the Court. I’ve not been ever known to lie to the Court or mislead a court and I would never mislead a court under any circumstances. That would be risking my practising certificate and my entire career, and I take it very seriously ... it would be a breach of ethics.^[11]

15 The judge summarised in some detail the conflicting positions taken, and accounts given, by Ms Orwin, at trial and in the FCC proceeding,^[12] before turning to what he described as ‘the Jetty Road scenario’. The judge described the Jetty Road scenario as follows:

There is a final complication to the position of Ms Orwin before the FCC with respect to the duration of her relationship with Mr Sarah. This arises from her evidence with respect to the joint purchase by Mr Sarah and one Williams of a property at Jetty Road, Rosebud. The relevant transfer of land demonstrates this purchase took effect on 23 March 2006.
Ms Orwin’s evidence in her trial affidavit filed in the FCC concerning this venture echoed evidence given in an initial affidavit filed in the proceeding and was as follows:
49. Whilst I encouraged the Applicant in his interest in property, I did not want to purchase any real estate conjointly, and avoided doing so. Sometime after the Applicant’s purchase of Booran Road, he decided to acquire another property but again had insufficient funds to do so. He had become good friends with one of my friends I had introduced him to, Kevin Williams, and they decided to buy a property together. They decided to purchase 71 Jetty Road Rosebud (‘Jetty Road’) as Tenants in Common as to one half share each. The total purchase price was $214,000.00 and Jetty Road was then mortgaged to the National Australia Bank Limited. Neither Williams nor the Applicant were able to contribute funds to the purchase, and so I agreed to provide the whole of the deposit and incidental costs on the understanding that each of them would repay me in due course from profits from the transaction. At the time, I had no immediate funds at my disposal, and so relied on borrowed funds taken from my line of credit on which I paid interest. Neither Williams nor the Applicant reimbursed any of the interest to me. I paid all of the deposit in an amount of $21,400.00 being 10 per cent of the purchase price of $214,000.00.
...
50. Unfortunately, the purchase of Jetty Road did not prove to be a viable venture for either the Applicant or for Williams. Neither had the funds to contribute any equity to the property so as to make up the balance of Mortgage repayments or to maintain it when it was not rented out.
In 2008-2009, they both had real difficulty in meeting their obligations, and for a time I provided funds to both of them to enable them to pay the Mortgage. I recall that the Applicant blamed Williams for these difficulties, accusing him of not being able to maintain appropriate books in relation to the property. In late 2009 or early 2010 Williams advised the Applicant that he wanted to dispose of his interest in the property. I was approached to take over that share but as I was reluctant to have any conjoined property dealings I indicated that I could only assist if I purchased the whole of the property. Finally, to extricate both of them from this situation, and to avoid a forced sale of the Jetty Road property, I purchased Williams’ share for $111,150.00, and recovered the funds I advanced to the Applicant by taking a transfer of his interest in the land in February 2010. The agreed transfer amount in relation to Williams was $111,150.00 which was the amount required to:
(a) repay his share of the Mortgage to the National Australia Bank;
(b) reimburse me for the balance of monies paid by me on account of his share of the deposit and Mortgage payments to the date of transfer.
I discharged the Applicant’s share of the Mortgage out of my own funds and took a transfer of the land.
...
51. The inability of the Applicant to properly manage his finances caused me real concern and I became anxious to extricate myself from any financial obligation that either he or third parties might assume I had towards him or on his account. It was at about the time that the Applicant first got into trouble in managing the Jetty Road property that I decided that we should have an agreement which set out our financial obligations to one another. By this time too, our association had deteriorated and we had little in common but the stress and anxiety of his finances. He continued to live at Murchison Street on the same arrangements I have described earlier, only contributing a share of our food expenses and doing his share of domestic chores ...
52. The issues surrounding Jetty Road were very stressful for all concerned and had put me to considerable expense. Accordingly, and following the transfer of that property to me I felt that it was important to clearly define the financial arrangement between us.^[13]
The plain meaning of [51] is that by 2008 Ms Orwin’s relationship with Mr Sarah had deteriorated to a point where they had little in common but the stress and anxiety relating to his finances. This account is again inconsistent with the tenor of Ms Orwin’s oral evidence to this court. She sought to explain it by giving evidence that the friction occasioned by the involvement of Mr Sarah in the Jetty Road purchase resolved once Ms Orwin took the property over in early 2010. She also said that the statement that they had little in common but the stress and anxiety of Mr Sarah’s finances, was written by her in a stressed out state of mind and was not a totally accurate reflection of the truth. She further said that in the period referred to both she and Mr Sarah were under additional stress because of the need to care for Ms Orwin’s mother.
The statements in issue were made in two separate affidavits filed in the FCC. They were deliberately persisted in as a component of Ms Orwin’s trial affidavit. They are not easily explained away. Apart from raising questions as to the consistency of Ms Orwin’s evidence they also raise an intermediate scenario between those postulated by Ms Orwin and Mr Rickards. This is that the relationship neither ended in 2004 nor 2011 but deteriorated very substantially between those dates and collapsed in the two years prior to the execution of the financial agreement.^[14]

16 The judge then turned to Mr Rickards’ evidence. His evidence concerned the dealings he had had with Ms Orwin from the time when he first received instructions on 9 October 2009 until the signing of the financial agreement. His evidence was supported by file notes.

17 In summarising Mr Rickards’ evidence, the judge set out the content of critical file notes and letters passing between Mr Rickards and Ms Orwin, and between Mr Rickards and Mr Sarah.^[15] The earliest of these contemporaneous documents recorded that Ms Orwin and Mr Sarah were not in a de facto relationship. Mr Rickards’ evidence was that, on instructions, he wrote to Mr Sarah saying that he had been instructed to prepare a financial agreement that would contain, among other things, an acknowledgement that Ms Orwin and Mr Sarah were not in a de facto relationship.^[16] Mr Sarah responded, agreeing that he was not in a de facto relationship with Ms Orwin.^[17]

18 In March 2010, however, Mr Sarah told Mr Rickards that he was in a de facto relationship with Ms Orwin and he wanted the financial agreement to say this.^[18] Mr Rickards rang Ms Orwin. Mr Rickards’ file note of that conversation was as follows:

You say that ok to say that you’re still in a de facto relationship now.

The judge observed that what Ms Orwin was recorded as saying on this occasion did not accord with the instructions she had given Mr Rickards up to that point regarding the character of the relationship. Her recorded response was also at odds with the tenor of the relationship that Ms Orwin consistently described, as recorded in telephone messages and emails to Mr Rickards. In evidence, Mr Rickards said that his file note of the conversation with Ms Orwin did not record her having confirmed that she was in fact party to a continuing relationship. Rather it recorded that she was prepared to sign an agreement which asserted that fact.^[19]

19 The judge summarised Mr Rickards’ evidence in the following terms:

Viewed as a whole Mr Rickards’ evidence and in particular his file records tend to support the account given by Ms Orwin to the FCC of her relationship with Mr Sarah rather than the account given to this Court. Mr Rickards’ evidence confirms the following:

detailed instructions initially taken by Mr Rickards did not support the conclusion Ms Orwin was in an ongoing de facto relationship;
the course of communications from Ms Orwin to Mr Rickards up until the signing of the agreement tended strongly to confirm ongoing hostility by Ms Orwin towards Mr Sarah; and
the instructions ultimately received by Mr Rickards were not that Ms Orwin and Mr Sarah were in fact in a de facto relationship but that Ms Orwin would sign an agreement to this effect because Mr Sarah required this.^[20]

20 Next, the judge analysed the terms of the financial agreement.^[21] The judge noted that on the one hand, the financial agreement contained mutual acknowledgements of the existence of a de facto relationship. On the other hand, the agreement effectively set out and settled the existing property rights of the parties.^[22] The judge concluded that the disposition of property in the agreement did not of itself bespeak a close mutual relationship between the parties.^[23] He also concluded that the substantive terms of the agreement were as consistent with the termination of a de facto relationship as with the making of an agreement in the course of an ongoing relationship.^[24]

21 The judge then dealt with the evidence concerning transfers of land made by Ms Orwin to Mr Sarah.^[25] In the course of his analysis of this evidence, the judge noted Ms Orwin’s evidence that the purpose of various transfers to Mr Sarah was to reduce the total land tax that would otherwise be payable by her. While the consideration for a number of transfers was expressed to be for love and affection or in consideration of a domestic relationship, the judge noted that an obvious purpose of expressing the consideration in this way was the avoidance of stamp duty. As the judge put it:

The fact that Mr Sarah was prepared to engage in these transactions does not materially advance Ms Orwin’s case with respect to the threshold issue of fact. It demonstrates that Mr Sarah was prepared to engage in property transactions at the request of and for the benefit of Ms Orwin but it does not substantiate an ongoing de facto relationship of the kind she describes. Mr Sarah was living rent free as a licensee and some cooperation on his part is hardly surprising.^[26]

22 In the course of analysing the evidence concerning property transfers, the judge referred to evidence given that Mr Sarah gave ongoing care to Ms Orwin’s mother from 2006 up to the making of the financial agreement. The judge said that the commencement of this care tended to support the existence of a de facto relationship at that point in time, but that the continuation of the care did not necessarily demonstrate that the relationship continued to flourish. The evidence demonstrated an ongoing relationship between Mr Sarah and Ms Orwin’s mother, but did not necessarily show a continuing closeness between him and Ms Orwin. The judge described it as a ‘circumstance which favours Ms Orwin’s case but is not conclusive’.^[27]

23 Having analysed all of the evidence, the judge set out his conclusions on the issue of whether Ms Orwin and Mr Sarah were in a de facto relationship at the time they entered into the financial agreement as follows:

The evidence establishes that for a number of years Ms Orwin and Mr Sarah were in a de facto relationship. It also establishes that at the date of the financial agreement Mr Sarah continued to live rent free at Ms Orwin’s home in Murchison Street or elsewhere such as the unit at Clowes Street, at her request.
Ultimately however I am not persuaded that the relationship continued to have the characteristics described by Ms Orwin as at the date of the financial agreement.
As she was the only witness called to establish the relationship her credibility was critical in respect of this issue.
Having regard to the inconsistencies between her evidence and position before the FCC compared with her evidence to this court, together with the contemporaneous notes taken by Mr Rickards relating to the background to the financial agreement, I am not persuaded that Ms Orwin is a reliable witness as to the ongoing nature of the relationship in March 2010.
As a matter of probability I am inclined to the view that what I have called the Jetty Road scenario is more probable than that advanced by either of the parties. On this view the relationship neither ceased in 2004 nor continued to flourish in 2010, but deteriorated markedly in the intervening period and had ceased before Ms Orwin gave instructions to Mr Rickards in 2009.
This said I am simply not satisfied that in March 2010 circumstances persisted which amounted to a de facto relationship. I do not accept Ms Orwin has established that she and Mr Sarah were living together as a couple on a genuine domestic basis. In particular I am not satisfied that Ms Orwin’s evidence as to the ways in which they lived a mutually shared life is reliable.
The relationship had reached the point where Ms Orwin desired and obtained a written agreement that she could require Mr Sarah to vacate the premises on 21 days’ notice. Insofar as the relationship remained a mutually positive one I am not persuaded that it extended beyond one of convenience.^[28]

Ground 1: did the judge err in concluding that Ms Orwin and Mr Sarah were not in a de facto relationship on 12 March 2010?

24 In ground 1, Ms Orwin contends that the judge erred in concluding that she and Mr Sarah were not in a de facto relationship as at 12 March 2010. Ms Orwin submitted that this conclusion was unsound because

it was founded on an erroneous misconception that Ms Orwin’s evidence of the relationship was unreliable, where neither of the only two bases for determining the unreliability of Ms Orwin’s evidence as to the circumstances of the relationship were justified.

25 The submission for Ms Orwin was that, as she was the only party to the relationship to give evidence before the judge, her evidence was ‘uncontradicted and sufficient to establish the relevant circumstances of a de facto relationship under s 4AA of the FLA’. Moreover, it was said, the judge erred in his conclusions that the financial agreement and evidence of property transactions did not support the existence of an ongoing de facto relationship. According to the submission, there was no reason to impugn the express acknowledgments of Ms Orwin and Mr Sarah that they were in a de facto relationship at the time they entered into the financial agreement. The judge should have found that, on the whole of the evidence, they were — as at March 2010 and up to February 2011 — in a de facto relationship within the meaning of s 4AA of the FLA.

26 In oral argument, senior counsel for Ms Orwin accepted that Ms Orwin had taken significantly conflicting positions in the FCC and before the trial judge. He submitted, however, that Ms Orwin’s evidence in the two courts regarding the details of the relationship ‘was not dramatically different’. In making that submission, he relied upon evidence she had given in each court that she and Mr Sarah had never shared a bank account; had lived together under the one roof from 2000 until late 2010/early 2011; and had regularly engaged in day to day domestic activities such as shopping, sharing meals, travelling and jointly caring for Ms Orwin’s mother.

27 To the extent that Ms Orwin gave contradictory evidence on the question of whether she was in a de facto relationship with Mr Sarah, it was submitted, her evidence was irrelevant. Indeed, senior counsel went so far as to submit that it was inadmissible for his client to have given (opinion) evidence going to the ultimate question as to whether she was or was not in a de facto relationship.

28 We reject these submissions. Several points should be made. First, it may be accepted that the issue of whether the parties were in a de facto relationship fell to be analysed by reference to s 4AA of the FLA. That does not mean, however, that a party might be limited to giving evidence only about the matters referred to in that section or the underlying factual circumstances of the relationship.

29 Secondly, in an appropriate case, a party may be permitted to express what amounts to an opinion as to whether he or she was, or was not, in a de facto relationship at a particular time. The weight to be given to such evidence will, of course, vary depending upon the witness’ understanding of the expression ‘de facto relationship’ and, in particular, on what the witness says by way of explanation of the opinion expressed. The opinion would be likely to carry additional weight if the witness had some familiarity with the definition in s 4AA of the FLA. In that regard, we note Ms Orwin’s evidence that she was a practising barrister who had, at least on occasions, practised in the family law jurisdiction.

30 Thirdly, Ms Orwin’s case at trial was founded on the evidence she gave about the character of the relationship. That evidence was intended to satisfy his Honour that she was in a de facto relationship with Mr Sarah at the relevant time. Far from the evidence being objected to, it was treated by the parties (correctly in our view) as relevant and admissible.

31 Fourthly, even if we thought that there was some issue about the admissibility of Ms Orwin’s evidence as to the status of her relationship with Mr Sarah, we would not permit her to depart in this Court from the way in which she conducted her case at trial. Had Ms Orwin (improbably) objected at trial to answering questions about the nature of her relationship with Mr Sarah, Mr Rickards’ counsel would doubtless have attempted to ask different questions of her with the purpose of eliciting similarly contradictory evidence.

32 Fifthly, Ms Orwin was properly cross-examined about having taken considered and diametrically opposite positions on the central question of whether a de facto relationship existed. Counsel for Mr Rickards was entitled to suggest to her that she had changed her position to advance what she thought was in her best interests at the time. These matters went directly to the credibility and reliability of her evidence about relevant factual matters — including evidence given by her that she has described as ‘uncontradicted’.

33 In our view, the judge was correct to describe the credibility of Ms Orwin’s evidence as critical to the issue of whether there was a de facto relationship in existence at the time the financial agreement was entered into.^[29] It was Ms Orwin’s evidence that the judge had to analyse before applying s 4AA of the FLA to determine whether the de facto relationship that commenced in about 2000 was still in existence in March 2010. As we have said, his Honour had a variety of sources of evidence against which to test the evidence Ms Orwin had given before him.

34 In our respectful view, his Honour’s analysis of Ms Orwin’s evidence is unimpeachable. Nor is there is any basis for contending that the judge’s ultimate conclusion about the absence of a de facto relationship on 12 March 2010, based upon his assessment of the credibility and reliability of Ms Orwin’s evidence, was ‘glaringly improbable’ or ‘contrary to compelling inferences’.^[30] On the contrary, the evidence clearly favoured that conclusion.

35 In analysing the evidence about the continued existence of the de facto relationship into 2010, the judge identified what he described as three possible characterisations of the extent of the relationship, namely:

a multifaceted and very full relationship between Ms Orwin and Mr Sarah from 2000, which subsisted until after the settlement agreement was entered into;
a relationship which commenced in 2000, but ceased to be that of a couple living together on a domestic basis in or about 2004; and
the intermediate position (described by his Honour as the Jetty Road scenario) in which the relationship commenced in 2000 but ceased in or about 2008 following a progressive deterioration in it.^[31]

36 The judge ultimately found the Jetty Road scenario to be more probable than the other possible scenarios.^[32] Senior counsel for Ms Orwin submitted that there was a contradiction between this finding and the judge’s conclusion that Ms Orwin was not a reliable witness ‘as to the ongoing nature of the relationship in March 2010’.^[33] It was put that the existence of a relationship in March 2010 did not sit well with a conclusion that the relationship ceased in 2008.

37 There is nothing in this submission. The judge’s use of the word ‘relationship’ in this context — stating that he was not persuaded that Ms Orwin was a reliable witness as to its ongoing nature in 2010 — was simply a neutral reference to the state of dealings between them at that time.

38 Ms Orwin also submitted that the judge’s acceptance of the Jetty Road scenario was inconsistent with a conclusion that the de facto relationship terminated in or about 2008. The Jetty Road issue arose when Ms Orwin was approached in late 2009 or early 2010 and told that a co-owner of the property wanted to dispose of his interest. After discussion, Ms Orwin purchased that share of the property and took a transfer of Mr Sarah’s interest in the land in February 2010. As mentioned,^[34] in her affidavit sworn for the purpose of the FCC proceeding, Ms Orwin deposed that:

It was about the time that [Mr Sarah] first got into trouble in managing the Jetty Road property that I decided that we should have an agreement which set out our financial obligations to one another. By this time too, our association had deteriorated and we had little in common but the stress and anxiety of his finances. He continued to live at Murchison Street, on the same arrangements I have described earlier, only contributing a share of our food expenses and doing his share of domestic chores.

39 Senior counsel for Ms Orwin submitted that, on a proper construction of this passage, it was in about February 2010 that the relationship deteriorated. He submitted that, on the evidence given by Ms Orwin in the FCC affidavit, it was still a de facto relationship at that time, and one that could not be said to have been terminated by 12 March 2010.

40 Senior counsel for Mr Rickards, however, submitted that the submission made by senior counsel for Ms Orwin involved a misreading of Ms Orwin’s FCC affidavit. Properly read, Ms Orwin had deposed that Mr Sarah first got into trouble in managing the Jetty Road property in 2008, and it was at that time (as the judge correctly concluded) that the association between them deteriorated to the point where they had little in common as described in the affidavit.

41 In our view, the latter submission is to be preferred. The use of the word ‘first’ in the relevant paragraph of the FCC affidavit^[35] ties the time at which the relationship deteriorated to 2008, as referred to in the preceding paragraph of Ms Orwin’s FCC affidavit. The judge’s conclusion to that effect^[36] was plainly correct.

42 For the reasons we have given, there was no error in the judge’s conclusion that Ms Orwin was not in a de facto relationship with Mr Sarah on 12 March 2010. It follows that ground 1 must be rejected.

Ground 2 — the limitation issue

43 The above conclusions mean that the appeal must be dismissed. For the sake of completeness, however, we will address the limitation issues raised by ground 2. As noted earlier, these issues arise only in relation to Ms Orwin’s claim in negligence. The claim in contract was conceded to be statute-barred.

Background to the limitation issues

44 Mr Sarah commenced his proceeding against Ms Orwin in the FCC in March 2015. In that year, he also lodged caveats over various properties which Ms Orwin owned or controlled. Ms Orwin successfully applied to have the caveats removed and ultimately obtained an order that Mr Sarah pay her costs of the caveat proceeding.

45 In the course of the FCC proceeding, Ms Orwin ultimately conceded that the financial agreement was invalid on its face as it had not been drafted in accordance with the relevant provisions of the FLA. On 17 March 2017, while the FCC proceeding was part-heard, Ms Orwin and Mr Sarah entered into terms of settlement whereby Ms Orwin agreed to pay (and later paid) Mr Sarah $550,000 and forgave the costs order made in her favour in the caveat proceeding.

46 On 19 July 2017, Ms Orwin issued the present proceeding against Mr Rickards. Her claim was that Mr Rickards breached his duty of care in that he:

failed to draw a binding financial agreement within the meaning of s 90UC of the FLA that would protect her assets (and assets that she expected to inherit);
failed to advise her that the financial agreement was not binding under the FLA; and
allowed her to enter into the financial agreement despite it not being binding.

47 In her statement of claim, Ms Orwin alleged that Mr Rickards’ negligence caused damage when two contingencies occurred (the de facto relationship ending, and Mr Sarah making a claim pursuant to the FLA for an alteration of property interests). The losses attributable to his failure to prepare an enforceable agreement were alleged to include:

the total settlement sum paid to Mr Sarah in resolving the FCC proceeding;
the costs of the FCC proceeding; and
the fees paid to Mr Rickards in relation to preparation of the financial agreement (being $8,531.85, paid by Ms Orwin on 5 July 2010).

48 As noted earlier, the judge found against Ms Orwin on both the ‘not in a de facto relationship’ point and the limitation issue. He said, however, that if his conclusions in respect of both of those issues were incorrect, he would have found for Ms Orwin and awarded damages which included the costs paid by Ms Orwin to Mr Rickards in relation to the preparation of the financial agreement.^[37]

A preliminary issue

49 As we have already observed, Ms Orwin claimed as part of the damages for negligence the fees she had paid Mr Rickards in July 2010 for preparing the financial agreement. That amount was paid more than seven years before she filed her writ against Mr Rickards. If, as she contended before the judge, that expense was recoverable in negligence, the entire claim was statute-barred. The fact that Ms Orwin may have later suffered additional damage as a result of the negligence would not change that fact.

50 The trial judge accepted Ms Orwin’s contention that the expense was recoverable as damages for negligence. The consequence, however, was that her negligence claim was issued out of time. In this Court, senior counsel for Ms Orwin (who did not appear at trial) sought to meet that problem by disavowing the position adopted at trial. He argued instead that there was no legal basis for her to recover the costs paid to Mr Rickards as damages for negligence.

51 According to the submission, the measure of damages was the amount which would put Ms Orwin in the position she would have been in if there had been no negligence. On that counterfactual assumption, she would have received an enforceable agreement and would have paid the fees — and perhaps additional fees — pursuant to the contract of retainer. In short, the incurring of the legal expense was not the result of the negligence.

52 Further, it was said, the damage which Ms Orwin suffered by reason of the negligence did not arise until the occurrence of the two contingencies referred to above — the de facto relationship ending and Mr Sarah making a claim pursuant to the FLA. Then and only then was she adversely affected by the inefficacy of the financial agreement as an answer to that claim. On the basis of the decision of the High Court in Wardley Australia Ltd v Western Australia,^[38] time in respect of the negligence claim did not start to run until the two contingencies occurred.

Consideration

53 We deal first with the argument that Ms Orwin sustained no actual damage until the fulfilment of the two contingencies — the breakdown of the de facto relationship and the commencement of a proceeding by Mr Sarah. The authorities show that where — as here — the defendant’s negligence results in the plaintiff being provided with a defective contract, the issue of what damage is suffered, and when, will often turn on how the damage is characterised. If the defective contract is characterised as an asset, and the defendant as having delivered ‘damaged goods’, the loss is treated as having been suffered immediately. If, however, the question is approached by reference to the character of the contract, and the consequences for the plaintiff of its particular provisions (or lack of provisions), a quite different result may follow.^[39]

54 In the present case, the judge considered that the former approach was appropriate. In his Honour’s view, Ms Orwin suffered damage immediately because the ‘asset’ she acquired was worthless:

The economic interest of [Ms Orwin] was that of obtaining the asset of effective ongoing protection with respect to her property rights upon any future breakdown of the de facto relationship. The financial agreement did not give her any effective protection of this kind.^[40]

55 The appeal submission for Ms Orwin relied on the analysis in Wardley. In that case, the plaintiff had been induced by the defendant’s misleading conduct to enter into a contract of indemnity. The plurality concluded that the plaintiff’s loss was ‘contingent’, that is, that no actual loss was suffered until events occurred which entitled the indemnified party to call on the indemnity. The present case was said to be relevantly the same: the deficiencies in the financial agreement caused Ms Orwin no harm unless and until events occurred which made it necessary for her to rely on it for protection against a claim by Mr Sarah.

56 Particular reliance was placed on the following passage from the reasons of the plurality in Wardley:

It is unjust and unreasonable to expect the plaintiff to commence proceedings before the contingency is fulfilled. If an action is commenced before that date, it will fail if the events so transpire that it becomes clear that no loss is, or will be, incurred. Moreover, the plaintiff will run the risk that damages will be estimated on a contingency basis, in which event the compensation awarded may not fully compensate the plaintiff for the loss ultimately suffered. These practical consequences which would follow from an adoption of the view for which the appellants contend outweigh the strength of the argument that the principle applicable to the cases in which the plaintiff acquires property (or a chose in action) should be extended to cases where an agreement subjects the plaintiff to a contingent loss. In such cases, it is fair and sensible to say that the plaintiff does not incur loss until the contingency is fulfilled.^[41]

57 The distinction between the ‘damaged goods’ and the ‘contingent loss’ approaches was highlighted in the decision of the New Zealand Supreme Court in Burton, to which the trial judge referred. That case involved a claim in negligence against solicitors who failed to ensure that a prenuptial agreement complied with provisions of the Matrimonial Property Act 1976 (NZ). The prenuptial agreement was prepared in contemplation of a wedding between the client and his wife-to-be.^[42] Because she did not receive independent legal advice, and because the agreement was not accompanied by certification in terms required by the Act, the agreement did not protect certain property of the client from a claim under the sharing provisions of that legislation.

58 The negligence of the solicitors occurred in 1990. The claim in negligence was not brought until 2002. The client maintained that he had not suffered loss until 1999 when the Family Court refused to treat the agreement as effective. The Supreme Court disagreed, holding that the loss was suffered at the time when the solicitors provided him with the defective agreement. The plurality (Tipping, McGrath and Wilson JJ) said:

This is therefore a damaged asset case, not one of exposure to a contingent liability. The asset in question is the prenuptial agreement under which the plaintiff was supposed to obtain full protection against claims by his future wife for a share in the matrimonial home. The asset which the plaintiff acquired was, as a result of the combined negligence of his solicitors and himself, defective in that it did not give him the protection which it was his purpose to obtain. The product which he instructed his solicitors to procure for him was created with an inherent flaw. That flaw represented actual damage or harm which was suffered by the plaintiff from the moment the defective prenuptial agreement came into existence. The damage was quantifiable at that stage, either on the straightforward basis of what it would have cost the plaintiff to obtain or attempt to obtain a valid agreement or on the more difficult basis of the difference in value between a defective agreement and one which was not defective.^[43]

59 The parallels with the present case are striking. Another case to which the judge referred, and which counsel for Mr Rickards emphasised, was Winnote.^[44] In that case, a client had received negligent advice from solicitors in relation to steps it was required to take in order to acquire a right to extract peat from certain land. The advice was that a lease of the relevant land was sufficient but the correct advice would have been that a mining licence was required. While the advice provided was inaccurate, this fact was not discovered by the client until after the expiration of the limitation period.

60 The Court held that the client suffered damage at the time it obtained the lease (rather than the grant of a mining licence) in conformity with the solicitors’ advice. The majority (Mason P, with whom Tobias JA agreed) said:

Of course, a defendant wishing to show that the negligently induced ‘transaction’ caused immediate actual loss of a measurable kind has to establish that proposition. But sometimes this can be ‘self-evident’ (Wardley at 528 per Mason CJ, Dawson J, Gaudron J, McHugh J) or ‘clear beyond argument’ (Moore & Co at 279 per Bingham LJ. See also per Neill LJ at 277).
The present is such a case, in my opinion. From the outset, Winnote got significantly less than it should have, in consequence of the solicitors’ 1988 negligence. The ‘goods were damaged’ to use Lord Walker’s terms. This is demonstrable when one compares the rights secured under the [real property lease] with the rights that ought to have been secured under mining tenements from the outset. The former instrument was legally worthless as later events demonstrated. As Mr Gageler SC put it during argument in this Court, the rights secured by the RPL ‘were of a dramatically inferior kind’.^[45]

61 As this review of the authorities makes clear, the classification of loss in the present case was a question of real difficulty. For our part, we see real force in the argument that the loss suffered by Ms Orwin other than the payment of fees to Mr Rickards was a contingent loss at the time the financial agreement was entered into. Adopting the language of Wardley, it can properly be said to be ‘unjust and unreasonable’ to expect a person in Ms Orwin’s position to have commenced proceedings at a time when (on her account) she had no reason to suspect that Mr Rickards had been negligent, precisely because nothing had occurred which meant that she had to rely on the agreement.

62 Equally, we see no material distinction between the circumstances of the present case and those considered in Burton. The purpose of engaging the solicitor to prepare the agreement was the same in both cases: to settle future financial arrangements between the parties to the relationship in a way which would prevent them being later adjusted by a court under legislation enacted for that purpose. And in this case, as in Burton, the agreement failed entirely to serve the desired purpose. In those circumstances, the ‘damaged asset’ characterisation seems particularly apt.

63 On this analysis, either characterisation might properly have been adopted. That is, the agreement which Ms Orwin received from Mr Rickards was so completely ineffective that she could accurately be said to have acquired a ‘damaged asset’. At the same time, it could accurately be said that the solicitor’s negligence had exposed her to a ‘contingent loss’. It follows that the challenge to the judge’s characterisation must be rejected. His Honour’s conclusion had a secure foundation in existing authority.

64 What we have said is sufficient to dispose of this ground of appeal. However, it seems to us to be unsatisfactory that the same facts should be open to alternative legal characterisations in this way, when the choice of characterisation produces such dramatically different answers to the limitation question. It is almost 30 years since Wardley was decided by the High Court. This degree of uncertainty in an important area of law is regrettable.

65 We turn finally to the question of whether the legal costs which Ms Orwin incurred in having the financial agreement drawn were recoverable as damages for negligence. Counsel for Mr Rickards maintained that they were — at least in a case (like the present) where the professional services were ‘utterly worthless’. He relied on the following further passage from Winnote, where Mason P said:

Entry into the RPL and onto the land also prejudiced Winnote from the outset. There was measurable damage, albeit that the assessment exercise would have been a difficult one had Winnote got the matter to court in 1989–90. In October 1988 Winnote paid Freehill, Hollingdale & Page, Sydney $3,650 for professional costs in drafting the real property lease. Further substantial costs were paid in August 1989 for legal services provided by Freehill, Hollingdale & Page, Sydney and Freehill, Hollingdale & Page, Melbourne in relation to obtaining the lease (Roach (at [105]-[106])). On 21-22 August 1989 Winnote paid Mr Sadler $7519 on account of royalties and $5305 on account of his costs, these being obligations imposed by the real property lease. The royalties were paid for peat that was not Mr Sadler’s to sell. In truth, Winnote had exposed itself to a claim in conversion by the true owner of the peat, that is the Crown in right of Victoria. All of these were items of wasted expenditure that did not produce any proven commensurable value (see Commonwealth v Amann Aviation Pty Ltd [1991] HCA 54; (1991) 174 CLR 64 at 81-2, 107).^[46]

66 As we have noted, Ms Orwin’s contention in this Court was that her claim at trial that the fees were recoverable, and the judge’s acceptance of it, were contrary to principle. In support of this contention, she relied upon a passage in the judgment of Mason CJ in Baltic Shipping Company v Dillon.^[47] Baltic Shipping was said to be authority for the proposition that fees paid for a service can only be recovered in a contractual claim where there has been a total failure of consideration. While at trial Ms Orwin had submitted that the value of Mr Rickards’ work was worthless,^[48] her submission before us was that the fees she paid Mr Rickards ‘were not thrown away — they had a lot of utility’.

67 Counsel for Ms Orwin pointed out that in Winnote Basten JA, while agreeing in the ultimate result, disagreed with the majority on the limitation issue. In relation to the fees paid by the client, his Honour said:

In the present case, the appellants incurred expenditure of two kinds. The first were the legal costs involved in the preparation and execution of the real property lease. However, they should not be treated separately: were it otherwise, the guarantor in Wardley could not have succeeded. The reason for that approach is that legal costs should be seen as part of the second category of financial expenditure, namely the whole of the expenditure which resulted from the execution and carrying into effect of the real property lease. The expenditure on exploitation of the peat deposit was expenditure which would have been incurred in any event, had the mining tenement been obtained. If the mining tenement had proved to be of value, it was not demonstrated that this expenditure was ‘wasted’...^[49]

68 In our respectful view, the position taken by Ms Orwin in this Court appears to accord with the principles governing the recoverability of damages in negligence. On the ‘no negligence’ assumption which must be made, she would still have paid the fees. That payment was not causally connected with the negligence. Were it otherwise, time would always begin to run when a client pays fees to a negligent professional, even though the fact — and the consequence — of the negligence might not become apparent until years later.

69 In the circumstances, however, it is neither necessary nor appropriate for us to reach a concluded view on the question. First, the limitation question has already been disposed of by the judge on the ‘damaged asset’ basis, and we have accepted that his conclusion is well supported by authority. Secondly, and in any event, this case is an unsuitable vehicle, given that the question has only arisen because of Ms Orwin’s disavowal on appeal of the position she advanced at trial, namely, that the fees she paid Mr Rickards were recoverable as damages in negligence. We see no basis for permitting her change of position.^[50]

Conclusion

70 In order to overturn the judge’s decision, Ms Orwin had to succeed on both of her grounds of appeal. Ground 1 had no real prospect of success. Nor, therefore, did the appeal as a whole.^[51] Accordingly, leave to appeal must be refused.

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^[1] Specifically, breach of a term of the retainer that Mr Rickards would exercise reasonable skill and care in the performance of the retainer.

^[2] Orwin v Rickards [2019] VSC 375, [33]–[39] (‘Reasons’).

^[3] See s 90UC of the FLA.

^[4] See Amended Summary for Court of Appeal dated 7 November 2019.

^[5] Reasons [64].

^[6] Ibid [65].

^[7] Ibid [66(b)].

^[8] Ibid [77].

^[9] Ibid [79].

^[10] Ibid [80].

^[11] Ibid [82].

^[12] Ibid [67]–[98].

^[13] Emphasis added by the trial judge.

^[14] Reasons [99]–[102].

^[15] Ibid [104]–[140].

^[16] Ibid [106]–[108].

^[17] Ibid [109].

^[18] Ibid [136].

^[19] Ibid [138].

^[20] Ibid [141].

^[21] Ibid [142]–[146].

^[22] Ibid [142].

^[23] Ibid [146].

^[24] Ibid [143].

^[25] Ibid [147]–[160].

^[26] Ibid [151].

^[27] Ibid [152].

^[28] Ibid [161]–[167].

^[29] Ibid [60(b)], [163].

^[30] Cf Lee v Lee [2019] HCA 28; (2019) 266 CLR 129, 148-9 [55].

^[31] Reasons [64].

^[32] Ibid [165].

^[33] Ibid [164].

^[34] See [15] above.

^[35] Paragraph 51.

^[36] Reasons [101].

^[37] Ibid [248].

^[38] [1992] HCA 55; (1992) 175 CLR 514.

^[39] See Wardley Australia Limited v The State of Western Australia [1992] HCA 55; (1992) 175 CLR 514 (‘Wardley’); Bodycorp Repairers Pty Ltd v Holding Redlich [2018] VSCA 17; HTW Valuers v Astonland Pty Ltd [2004] HCA 54; (2004) 217 CLR 640; Winnote Pty Ltd v Page [2006] NSWCA 287; (2006) 68 NSWLR 531 (‘Winnote’) and Burton v Thom [2008] NZSC 65; [2009] 1 NZLR 437 (‘Burton’).

^[40] Reasons [60].

^[41] Wardley [1992] HCA 55; (1992) 175 CLR 514, 533 (Mason CJ, Dawson, Gaudron and McHugh JJ).

^[42] Burton [2008] NZSC 65; [2009] 1 NZLR 437, 453 [25].

^[43] Ibid 459 [59].

^[44] [2006] NSWCA 287; (2006) 68 NSWLR 531.

^[45] [2006] NSWCA 287; (2006) 68 NSWLR 531, 542 [59]–[60]. The reference to Lord Walker is to Law Society v Sephton [2006] UKHL 22; [2006] 2 AC 543, 557 [45].

^[46] [2006] NSWCA 287; (2006) 68 NSWLR 531, 542 [61].

^[47] [1993] HCA 4; (1993) 176 CLR 344, 354–5 (‘Baltic Shipping’).

^[48] See Reasons [45], [53] and [176].

^[49] Ibid 555–6 [357].

^[50] Cf Whisprun Pty Ltd v Dixon [2003] HCA 48; (2003) 77 ALJR 1598, 1608 [51].

^[51] Cf s 14C of the Supreme Court Act 1986.

Subsequent Judicial Consideration0