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High Court of Australia |
BRENNAN CJ,
DAWSON, TOOHEY, GAUDRON, McHUGH AND GUMMOW JJ
HILL trading as R F HILL & ASSOCIATES APPELLANT
AND
VAN ERP RESPONDENT
Appeal dismissed with costs.
18 March 1997
On appeal from the Supreme Court of Queensland (Court of Appeal)
Representation
P A Keane QC with S L Doyle for the appellant (instructed by Clayton Utz)
R G Bain QC with E Ford and S J Lee for the respondent (instructed by C Wlodarczyk & Co)
Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports.
CATCHWORDS
Hill trading as R F Hill & Associates v Van Erp
Negligence - Duty of care - Proximity - Failure of solicitor to ensure that spouse of beneficiary did not witness execution of will - Whether duty of care owed to intended but disappointed beneficiary in the absence of a contractual relationship - Extent of duty - Nature of economic loss - Causation.
BRENNAN CJ. Mrs Olive Eileen Currey wished to change her will. Her will had been prepared by the appellant, Mrs Hill, a solicitor practising in the Brisbane suburb of Paddington. Mrs Currey asked Mr Van Erp, a neighbour, to ask Mrs Hill to call on her. She did so. On or about 3 December 1990, Mrs Currey gave Mrs Hill instructions for a new will. In accordance with her instructions, Mrs Hill drew a will cl 4 of which read as follows:
" I GIVE DEVISE AND BEQUEATH my house property situate 25 Perrott Street, Paddington, Brisbane in the said State, and the contents therein not previously bequeathed UNTO my son WILLIAM JOHN AXEN and my good friend RONA VAN ERP as tenants in common in equal shares."
Clause 3(b) of the will also provided that Rona Van Erp should be given Mrs Currey's leather lounge suite, ornate glass top table and antique clock. Rona Van Erp is the spouse of Mr Van Erp as Mrs Hill knew.
On 7 December 1990, Mrs Hill brought the draft will to Mrs Currey's house. Mr Van Erp was present. Mrs Hill read the draft will to Mrs Currey. Mrs Currey signed the will as testatrix. Mrs Hill signed as one attesting witness. Mrs Hill asked Mr Van Erp, who was the only other person present, to sign as the second attesting witness. She pointed to the place where he was to sign and, according to his evidence, he signed "because Mrs Hill asked me to". No advice was sought by him or given to him as to the effect on the gift to his spouse of his being an attesting witness.
The consequence of Mr Van Erp's signing as an attesting witness was to attract the operation of s 15(1) of the Succession Act 1981 (Q) which reads as follows:
" Where any disposition of property ... is, by will, made in favour of a person who attested the signing of the will, or the spouse of such person, to be held by that person or, as the case may be, that spouse beneficially, the disposition is null and void to the extent that it entitles that person, the spouse of that person or another person claiming under that person or that spouse to take property under it."
By reason of s 15(1), the testamentary disposition of an interest in the house property at 25 Perrott Street to Mrs Van Erp failed. Her interest fell into residue and presumably was taken by the residuary beneficiary. She sued Mrs Hill for damages for negligence and recovered a judgment in the District Court for $163,471.50 and interest. Mrs Hill's appeal to the Court of Appeal failed. The question on this appeal is whether Mrs Hill is liable in negligence for procuring Mr Van Erp to be an attesting witness whereby Mrs Van Erp failed to acquire the property which Mrs Currey intended to devise to her.
There are conceptual difficulties in the way of allowing a remedy against a testator's solicitor to an intended but disappointed beneficiary. These were rehearsed by Lord Goff of Chieveley in White v Jones[1], and I respectfully adopt his Lordship's statement of them. In that case, the solicitor for a testator negligently delayed in drawing a will in accordance with the testator's instructions and the testator died leaving a will which did not contain the gifts which the testator had intended the plaintiffs to receive. The principal conceptual difficulties in the way of allowing a remedy were stated by Lord Goff in these terms[2]:
"First, the general rule is well established that a solicitor acting on behalf of a client owes a duty of care only to his client. The relationship between a solicitor and his client is nearly always contractual, and the scope of the solicitor's duties will be set by the terms of his retainer. ...
... A further reason is given which is said to reinforce the conclusion that no duty of care is owed by the solicitor to the beneficiary in tort. Here, it is suggested, is one of those situations in which a plaintiff is entitled to damages if, and only if, he can establish a breach of contract by the defendant. First, the plaintiff's claim is one for purely financial loss; and as a general rule, apart from cases of assumption of responsibility arising under the principle in Hedley Byrne & Co Ltd v Heller & Partners Ltd[3], no action will lie in respect of such loss in the tort of negligence. Furthermore, in particular, no claim will lie in tort for damages in respect of a mere loss of an expectation, as opposed to damages in respect of damage to an existing right or interest of the plaintiff. Such a claim falls within the exclusive zone of contractual liability; and it is contrary to principle that the law of tort should be allowed to invade that zone."
His Lordship expanded the reasons advanced for contending that a beneficiary's claim can lie only in contract[4]:
"Here I refer not only to the fact that the claim is one for damages for pure economic loss, but also to the need for the defendant solicitor to be entitled to invoke as against the disappointed beneficiary any terms of the contract with his client which may limit or exclude his liability; to the fact that the damages claimed are for the loss of an expectation; and also to the fact (not adverted to below) that the claim in the present case can be said to arise from a pure omission, and as such will not (apart from special circumstances) give rise to a claim in tortious negligence. Faced with points such as these, the strict lawyer may well react by saying that the present claim can lie only in contract, and is not therefore open to a disappointed beneficiary as against the testator's solicitor. This was indeed the reaction of Lush and Murphy JJ in Seale v Perry[5], and is one which is entitled to great respect."
Notwithstanding the conceptual difficulties, a majority of the House of Lords held the solicitor liable in negligence to the intended but disappointed beneficiaries. Lord Goff[6] regarded it of "cardinal importance" that if the law did not recognise a duty owed to the disappointed beneficiary, there would be a lacuna in the law which, for reasons of practical justice, ought to be filled. Unless such a duty is recognised "the only persons who might have a valid claim (ie, the testator and his estate) have suffered no loss, and the only person who has suffered a loss (ie, the disappointed beneficiary) has no claim" - a proposition which Sir Robert Megarry V-C had expressed in his judgment allowing a disappointed beneficiary a remedy in Ross v Caunters[7].
The conceptual difficulties in the way of allowing a remedy to an intended but disappointed beneficiary led a majority of the Supreme Court of Victoria to a contrary view in Seale v Perry[8]. However, Seale v Perry was not followed in Watts v Public Trustee for Western Australia[9] or in Finlay v Rowlands, Anderson and Hine[10]. Accepting that "practical justice" tends in favour of allowing a remedy to an intended but disappointed beneficiary, it is necessary to address the conceptual difficulties to determine for this country whether the law of negligence provides such a remedy.
Is there a duty of care in tort?
Although a solicitor's contractual duty is owed solely to the client, the existence of that duty does not necessarily negate a duty of care owed to a third party in tort. To the contrary, the undertaking of a specialist task pursuant to a contract between A and B may be the occasion that gives rise to a duty of care owed to C who may be damaged if the task is carelessly performed[11]. Thus in Pippin v Sheppard[12], in an action by a man and his wife against a surgeon for negligent treatment of the wife, the declaration that the surgeon had been employed for a reward without alleging who had retained him was held to be sufficient. Whether it was the husband or the wife that employed the surgeon, the damage had been suffered by the wife and she had the cause of action. Richards LCB said[13]:
"The Defendant, being a surgeon, undertakes to the public, to cure wounds and other ailments of the human system, and professes himself ready to be employed by any one for that purpose. ... Then negligence and improper treatment are charged, and ... [t]he question then is, to whom was the injury done? ... From the necessity of the thing, the only person who can properly sustain an action for damages, for an injury done to the person of the patient, is the patient himself, for damages could not be given on that account to any other person, although the surgeon may have been retained and employed by him to undertake the cure."
The necessary, but not always sufficient, foundation for a duty of care in tort is reasonable foreseeability of damage to another if the task in hand is carelessly performed. Thus, in Voli v Inglewood Shire Council[14], Windeyer J said of an architect:
"Whatever might have been thought to be the position before the broad principles of the law of negligence were stated in modern form in Donoghue v Stevenson[15], it is now beyond doubt that, for the reasonably foreseeable consequences of careless or unskilful conduct, an architect is liable to anyone whom it could reasonably have been expected might be injured as a result of his negligence. To such a person he owes a duty of care quite independently of his contract of employment."
Then his Honour said[16]:
"[N]either the terms of the architect's engagement, nor the terms of the building contract, can operate to discharge the architect from a duty of care to persons who are strangers to those contracts. Nor can they directly determine what he must do to satisfy his duty to such persons. That duty is cast upon him by law, not because he made a contract, but because he entered upon the work. Nevertheless his contract with the building owner is not an irrelevant circumstance. It determines what was the task upon which he entered. If, for example, it was to design a stage to bear only some specified weight, he would not be liable for the consequences of someone thereafter negligently permitting a greater weight to be put upon it."
Generally speaking, however, a solicitor's duty is owed solely to the client subject to the rules and standards of the profession[17]. That is because the solicitor's duty is to exercise professional knowledge and skill in the lawful protection and advancement of the client's interests in the transaction in which the solicitor is retained and that duty cannot be tempered by the existence of a duty to any third person whose interests in the transaction are not coincident with the interests of the client. But the interests of a client who retains a solicitor to carry out the client's testamentary instructions and the interests of an intended beneficiary are coincident.
Most testators seek the assistance of a solicitor to make their intentions effective. The very purpose of a testator's retaining of a solicitor is to ensure that the testator's instructions to make a testamentary gift to a beneficiary results in the beneficiary's taking that gift on the death of the testator. There is no reason to refrain from imposing on a solicitor who is contractually bound to the testator to perform with reasonable care the work for which he has been retained a duty of care in tort to those who may foreseeably be damaged by carelessness in performing the work. The terms of the retainer determine the work to be done by the solicitor and the scope of the duty in tort as well as in contract. A breach of the retainer by failing to use reasonable care in carrying the client's instructions into effect is also a breach of the solicitor's duty to an intended beneficiary who thereby suffers foreseeable loss. If the solicitor's carelessness results in the loss of a testamentary gift intended to be given to a beneficiary, "it is eminently fair, just and reasonable that the solicitor should be liable in damages to the intended beneficiary", as Sir Donald Nicholls V-C said in White v Jones[18]. Not only is the remedy of damages effective to compensate the beneficiary; it is necessary to enforce the duty owed to the client. "Otherwise", as the Vice-Chancellor said, "there is no sanction in respect of the solicitor's breach in his professional duty."
Does the loss of an intended gift found an action in tort?
In one sense, Mrs Van Erp has suffered no loss. She simply failed to obtain a benefit to which she had no legal entitlement. It is of the nature of a gift that the donee has no prior legal entitlement to the thing given, nor any right to compel the donor to give the thing. If some formality must be observed by the donor in order to effect the gift and the formality is not observed, the donee has no equitable right to compel the observance of the formality.
Property intended to be given may pass from a donor either during the lifetime of the donor or on the donor's death. In the case of an intended gift inter vivos, if the intended disposition fails for some reason, the thing to be given remains the property of the donor; the donor may then dispose of the thing effectively either to the donee first intended or to another. The intention of the donor is not irrevocably frustrated and, as between the donor and the intended donee, the property is not lost. But in the case of an ineffective gift intended to be given by a testator to a beneficiary, the thing intended to be given passes on the testator's death to another. It is no longer the property of the donor. And, unless the intended but disappointed beneficiary can claim the thing from the testator's estate in proceedings under a statute for the relief of the testator's family and dependants[19], the testator's intention is frustrated and the thing which passed from the testator on death is irretrievably lost to the intended donee. That is the nature of the "loss" with which this class of case is concerned. It is a loss that is suffered upon the dropping of the testator's life. It is a loss which follows immediately from breach of the solicitor's duty to safeguard the intended beneficiary from precisely that kind of loss[20].
When an intended beneficiary suffers such a loss as the result of the negligence of a third party, is the loss characterised as a loss which might found an action for damages? This is the novel question for determination.
An action for damages for negligence provides compensation to a plaintiff for loss measured by comparing the plaintiff's actual situation with the hypothetical situation in which the plaintiff would have been but for the negligence of the defendant. If the plaintiff's position is economically worse than it would have been but for the carelessness of the defendant, that is economic loss. Ordinarily, economic loss is recoverable when it is suffered in consequence of physical damage sustained by or manifesting itself in the person or property of the plaintiff or when it is caused by a plaintiff's acting or refraining from acting in reliance on what the defendant has negligently said or done[21]. The present case does not fall within any of these categories.
In Hedley Byrne & Co Ltd v Heller & Partners Ltd[22], there was a mutual relationship between the plaintiff and the defendants which gave rise to a duty of care in the making of a representation by the defendants on which the plaintiff relied and acted to its financial detriment. In White v Jones, Lord Mustill in dissent held[23] that a cause of action against the careless solicitor in favour of the intended but disappointed beneficiaries could not be based on Hedley Byrne because there was no undertaking of responsibility by the solicitor to the beneficiaries in the context of some mutual relationship between them. Although Hedley Byrne has been followed in Mutual Life and Citizens' Assurance Co Ltd v Evatt[24], it has not been thought to limit the recovery of economic loss to cases which exhibit the elements that attracted liability in Hedley Byrne.
In Caltex Oil (Australia) Pty Ltd v The Dredge "Willemstad", economic loss was treated as a head of damage independent of physical damage which might be recovered when the circumstances were such as to impose on the defendant a duty of care to avoid that damage[25]. The problem was to define the elements additional to mere foreseeability which would allow relief to a plaintiff whose damages consist merely of economic loss. As Stephen J said[26]:
"[I]f economic loss is to be compensated its inherent capacity to manifest itself at several removes from the direct detriment inflicted by the defendant's carelessness makes reasonable foreseeability an inadequate control mechanism."
Hedley Byrne is properly to be understood as a case in which damages for pure economic loss were held to be recoverable when they were suffered as a result of the plaintiff's reliance on a statement made by a defendant who had undertaken to the plaintiff, by reason of the relationship between them, to exercise reasonable care in making the statement. The assumption of responsibility by the defendants in Hedley Byrne was a characteristic of the conduct to which a plaintiff's economic loss had to be causally related through inducement and reliance[27], not an element that exhausted the circumstances in which damages for economic loss could be recovered. In my respectful opinion, Hedley Byrne is one type of case in which damages for pure economic loss can be recovered but it does not deny the possibility of recovery in other types of case.
The objection that no claim for damages for economic loss lies in negligence unless it is in respect of damage to an existing right or interest is, in my opinion, erroneous. True it is that a plaintiff who has no existing right or interest that is adversely affected by a defendant's carelessness may suffer no loss and hence have no foundation for a claim in negligence. But it does not follow that it is only in contract that damages may be recovered for loss of something to which the plaintiff has no prior legal right. A benefit that a plaintiff would have received but for the negligence of the defendant is a loss, whether or not the benefit would have been gratuitous. So far as the element of causation is concerned, it is sufficient if the links between the negligent act or omission of the defendant and the plaintiff's loss of the benefit are established[28]. Cases of the present kind are not concerned with the loss of a spes successionis; compensation is sought for the loss of the property which, but for the negligence of the defendant, the plaintiff would have taken. The loss of that property is economic loss of which the law of tort takes cognizance.
It follows that the principal conceptual difficulties in the way of allowing the claim of an intended but disappointed beneficiary are without substance. The lesser difficulties which Lord Goff stated in White v Jones can be dismissed for the reasons which his Lordship gave[29]. The case then falls for consideration in accordance with the principles of the general law of negligence.
By accepting the testator's retainer, the solicitor enters upon the task of effecting compliance with the formalities necessary to transfer property from a testator on death to an intended beneficiary; it is foreseeable that, if reasonable care is not exercised in performing the task, the intended beneficiary will not take the property; the solicitor fails to exercise reasonable care whereby the formalities are not complied with; and the intended beneficiary thereby loses the property. The elements, additional to the elements required by Donoghue v Stevenson in claims for physical damage, which prevent a case of this kind from being a precedent for claims of indeterminate liability for economic loss[30] are twofold: the claim can be made only by an intended but disappointed beneficiary in respect of an intended testamentary gift and the duty of care owed by the solicitor to the intended but disappointed beneficiary is in the performance of the work in which he owes a corresponding duty - albeit contractually - to the testator. It is immaterial, of course, that the negligent act or omission which causes the loss occurs during the lifetime of the testator and the plaintiff's loss is suffered on or after the testator's death.
In White v Jones[31], Lord Goff stated the principle under which the majority allowed the plaintiff's claim in negligence. He said:
"In my opinion, therefore, your Lordships' House should in cases such as these extend to the intended beneficiary a remedy under the Hedley Byrne principle by holding that the assumption of responsibility by the solicitor towards his client should be held in law to extend to the intended beneficiary who (as the solicitor can reasonably foresee) may, as a result of the solicitor's negligence, be deprived of his intended legacy in circumstances in which neither the testator nor his estate will have a remedy against the solicitor. Such liability will not of course arise in cases in which the defect in the will comes to light before the death of the testator, and the testator either leaves the will as it is or otherwise continues to exclude the previously intended beneficiary from the relevant benefit."
Although, in my respectful opinion, his Lordship's statement describes the loss which may found a claim in negligence by an intended but disappointed beneficiary, I would not regard the principle underlying recovery against the solicitor as being an extension of the Hedley Byrne assumption of responsibility. The Hedley Byrne category of case depends upon an assumption of a duty of care as a factual element in the relationship between the plaintiff and defendant. In cases of the present kind, there is no anterior relationship between solicitor and intended beneficiary and the duty of care is imposed by law.
I would therefore hold Mrs Hill liable in damages to Mrs Van Erp. I would dismiss the appeal.
DAWSON J. The question to be determined in this appeal is whether a person deprived of a bequest by the carelessness of a solicitor in attending to the execution of a will may recover damages for negligence from the solicitor.
The testatrix, Mrs Currey, died on 8 May 1991. She was a widow who, during her lifetime, had become friendly with her neighbours, Mr and Mrs Van Erp. Some time after her husband's death in 1988, Mrs Currey told Mr Van Erp that she wanted to make a will and asked him to get a solicitor for her. Mr Van Erp contacted Mrs Hill, a solicitor practising in the same suburb, and asked her to see Mrs Currey. Mrs Hill did so and, in accordance with Mrs Currey's instructions, prepared a will which Mrs Currey executed. By this time Mrs Hill was aware of the existence of Mrs Van Erp and that Mr Van Erp was her husband.
Subsequently, Mrs Currey wanted to change the will and, again through Mr Van Erp, had Mrs Hill call on her. Mrs Hill prepared a new will in accordance with Mrs Currey's instructions and returned on 7 December 1990 to have it executed by her. Under this will Mrs Van Erp was a beneficiary, being left property to the value of $163,471.50. Mrs Currey signed the will which was attested and subscribed by Mrs Hill. A second witness is required by s 9 of the Succession Act 1981 (Q) to attest and subscribe a will, and Mrs Hill requested Mr Van Erp to fulfil that requirement. He did so. Later, both Mrs Currey and Mr Van Erp told Mrs Van Erp that she was a beneficiary under the will and informed her of the nature and extent of the bequest. Mrs Van Erp did nothing either to secure or to confirm her position as a beneficiary.
After Mrs Currey's death, it became apparent that the bequest to Mrs Van Erp was null and void under s 15(1) of the Succession Act because it was in favour of the spouse of a person who attested the execution of the will. Being deprived of her bequest, Mrs Van Erp sued Mrs Hill for damages for negligence in the District Court. Mrs Van Erp was successful in her action and in an appeal by Mrs Hill to the Queensland Court of Appeal. Mrs Hill now appeals to this Court.
Mrs Hill does not contest that her failure to have the will attested by someone other than Mr Van Erp constituted negligent conduct but asserts that her only duty of care was to Mrs Currey, by whom she was retained. She denies that she was under any duty of care to the proposed beneficiary, Mrs Van Erp. The value of the property which Mrs Currey attempted to bequeath to Mrs Van Erp is not in dispute. Thus the sole question in this appeal is whether, in drawing up the will and attending to its execution, Mrs Hill owed a duty of care to Mrs Van Erp.
Clearly Mrs Hill owed a duty of care to the testatrix, Mrs Currey, and it was a duty both in contract and tort. The view that the relationship between solicitor and client is governed exclusively by the contract of retainer and leaves no room for liability in tort on the part of the solicitor was never based upon a firm foundation and is no longer accepted[32]. Of course, if during her lifetime the testatrix had attempted to sue her solicitor for negligence, she could at most have recovered the cost of the preparation and execution of a new will or the re-execution of the existing one. Likewise, had her estate attempted to sue the solicitor after her death it could have recovered no more than nominal damages because it suffered no loss by reason of the solicitor's negligence. The property which would have passed to Mrs Van Erp fell into the residue of the estate and passed to Mrs Currey's son. But so far as the solicitor's liability in contract is concerned, it did not extend to Mrs Van Erp. She had no contract with the solicitor and it is not suggested that the law would recognise any jus quaesitum tertio in the present circumstances[33].
The existence of a duty of care in negligence on the part of a solicitor to an intended beneficiary under a will has, since the decision of Sir Robert Megarry V-C in Ross v Caunters[34], been the subject of some controversy. That case decided, contrary to the decision of the House of Lords in Robertson v Fleming[35], that a solicitor may be liable to a beneficiary who fails to receive an intended bequest under a will by reason of the solicitor's negligence. The Vice-Chancellor's reason for not following Robertson v Fleming was that it had been superseded by Donoghue v Stevenson[36] and subsequent cases based upon that decision. In Seale v Perry[37] the Full Court of the Supreme Court of Victoria declined to follow Ross v Caunters, and there has been a slight indication of a similar view in New South Wales[38], but otherwise the trend in the cases has been in the opposite direction. In England this culminated in White v Jones[39] where the House of Lords held that a solicitor was liable to a disappointed beneficiary, not upon the basis of Donoghue v Stevenson, but upon principles to be found in authorities such as Nocton v Lord Ashburton[40] and Hedley Byrne & Co Ltd v Heller & Partners Ltd[41] which deal with liability in negligence. In New Zealand, the Court of Appeal applied Ross v Caunters in Gartside v Sheffield, Young & Ellis[42], and in Canada[43] and the United States[44] the tendency has been to allow damages to an intended beneficiary deprived of a bequest by negligence in the preparation or execution of a will. In Australia, a duty on the part of a solicitor to an intended beneficiary has been recognised in Western Australia[45] and is supported by dicta in Tasmania[46]. Comments by Deane J in Hawkins v Clayton[47] are consistent with the existence of such a duty.
As I have said, in Ross v Caunters[48] the Vice-Chancellor reached his conclusion that the solicitor in that case owed a duty of care to a disappointed beneficiary by applying Donoghue v Stevenson[49]. However, in White v Jones[50] it was thought that Donoghue v Stevenson did not provide the test which would identify the duty of care, if any, in that situation. Not all foreseeable injuries are compensable in negligence although Donoghue v Stevenson established one category which was. It established that a manufacturer of products owed a duty of care to the consumer of those products to avoid foreseeable injury to the consumer. In establishing that category, Lord Atkin enunciated the famous neighbourhood principle which, whilst helpful in identifying other categories of negligence, does not provide any comprehensive guide. The foreseeability of harm, whilst an essential ingredient of the tort of negligence, is not enough by itself to give rise to a duty of care, at all events in cases not involving ordinary physical damage to persons or property. In other words, it does not set the limits of the tort of negligence: there are situations which lie outside the boundaries of compensable damage even though harm may be reasonably foreseeable.
The most significant of those situations is where the damage is not physical injury or loss flowing from physical injury to a person or property, but consists of nothing more than economic loss. The law was compelled to recognise that in that situation, although the damage may have been foreseeable, it could not impose liability in every case. As Brennan J said in Bryan v Maloney[51]:
"If liability were to be imposed for the doing of anything which caused pure economic loss that was foreseeable, the tort of negligence would destroy commercial competition[52], sterilise many contracts and, in the well-known dictum of Chief Judge Cardozo[53], expose defendants to potential liability 'in an indeterminate amount for an indeterminate time to an indeterminate class'."
So the law set about defining categories of cases of pure economic loss where, without imposing indeterminate liability or destroying commercial competition, it could recognise the existence of a duty of care, the breach of which would sound in damages. The most significant case is, perhaps, Hedley Byrne & Co Ltd v Heller & Partners Ltd[54] in which the House of Lords held that loss caused by a negligent misstatement might give rise to liability in damages, but only where there was an express or implied assumption of responsibility on the part of the person making the statement and reliance placed upon that person's skill and judgment by the person to whom the statement was made. In other words, liability for pure economic loss was recognised in the case of a negligent misstatement, but only for the breach of a duty of care arising out of a particular relationship between the parties.
And in Caltex Oil (Australia) Pty Ltd v The Dredge "Willemstad"[55] this Court held that, although as a general rule damages are not recoverable for pure economic loss even where it is foreseeable, damages are recoverable where the defendant has the knowledge or means of knowledge that a particular person, not merely as a member of an unascertained class, will be likely to suffer economic loss as a consequence of his negligence. Again, the particular relationship between the parties was held to give rise to a duty of care. Of note is the statement of Stephen J[56] that there was a need for "some control mechanism based upon notions of proximity between tortious act and resultant detriment".
The notion of proximity in this context was taken up by Deane J in Jaensch v Coffey[57]. That was a case of injury in the form of nervous shock and fell within another category of case in which it had been held that foreseeability of damage was not of itself sufficient to impose a duty of care. Deane J, with whom Gibbs CJ agreed, said that the relationship between the plaintiff and defendant in that case gave rise to a duty of care on the part of the defendant because it was a relationship of proximity.
The concept of proximity has been articulated in subsequent cases and has been accepted by this Court[58]. For instance, in San Sebastian Pty Ltd v The Minister[59], a majority said:
"The notion of proximity, because it limits the loss that would otherwise be recoverable if foreseeability were used as an exclusive criterion of the duty of care, is of vital importance when the plaintiff's claim is for pure economic loss. When the economic loss results from negligent misstatement, the element of reliance plays a prominent part in the ascertainment of a relationship of proximity between the plaintiff and the defendant, and therefore in the ascertainment of a duty of care. But when the economic loss results from a negligent act or omission outside the realm of negligent misstatement, the element of reliance may not be present. It is in this sphere that the absence of reliance as a factor creates an additional difficulty in deciding whether a sufficient relationship of proximity exists to enable a plaintiff to recover economic loss."
The notion of proximity was advanced by Deane J to describe in general terms the element in a relationship which would give rise to a duty of care where mere foreseeability of harm was insufficient for that purpose and to provide a unifying conceptual determinant to assist in ascertaining what the content of that element was in any given category of case. Perhaps the attempt was an ambitious one, because the assumption would seem to be that there is a common element in each such relationship and that it can adequately be described as proximity. In Jaensch v Coffey[60] Deane J suggested that the concept "involves the notion of nearness or closeness", but the features of a relationship which gives rise to a duty of care do not always answer the description of nearness or closeness. Likewise, some relationships which would as a matter of language be thought proximate nevertheless do not constitute relationships of proximity[61]. That is because, as Deane J recognised in Jaensch v Coffey[62], the identification of the particular requirements of proximity in developing areas of the law is not divorced from the considerations of public policy which underlie and enlighten the concept. But if considerations of policy underlie and enlighten the concept of proximity, and if nearness and closeness are neither sufficient nor necessary to establish a relationship of proximity in all cases, then it cannot be said that any unifying common element has emerged which can adequately be described as proximity. That is why in Gala v Preston I said that Deane J went too far in Stevens v Brodribb Sawmilling Co Pty Ltd[63] when he said that "the notion of proximity can be discerned as a unifying theme explaining why a duty to take reasonable care to avoid a reasonably foreseeable risk of injury has been recognised as arising in particular categories of case".
To the extent that the joint judgment in Burnie Port Authority v General Jones Pty Ltd[64], to which I was subsequently a party, proceeds along similar lines, it would seem to go too far. I have in mind in particular the statement that without proximity as a "general conceptual determinant and the unifying theme"[65] of the categories of case in which a duty of care arises[66],
"the tort of negligence would be reduced to a miscellany of disparate categories among which reasoning by the legal processes of induction and deduction would rest on questionable foundations since the validity of such reasoning essentially depends upon the assumption of underlying unity or consistency."
Reasoning by analogy from decided cases by the processes of induction and deduction, informed by rather than divorced from policy considerations, is not, in my view, dependent for its validity on those cases sharing an underlying conceptual consistency. It is really only dependent upon the fact that something more than reasonable foreseeability is required to establish a duty of care and that what is sufficient or necessary in one case is a guide to what is sufficient or necessary in another.
Nevertheless, and notwithstanding the criticism of the concept by Brennan J[67], whose approach has found favour in the House of Lords[68], I retain the view which I expressed in Gala v Preston[69] that the requirement of proximity is at least a useful means of expressing the proposition that in the law of negligence reasonable foreseeability of harm may not be enough to establish a duty of care. Something more is required and it is described as proximity. Proximity in that sense expresses the result of a process of reasoning rather than the process itself[70], but it remains a useful term because it signifies that the process of reasoning must be undertaken. But to hope that proximity can describe a common element underlying all those categories of case in which a duty of care is recognised is to expect more of the term than it can provide.
Both the approach suggested by Deane J based on proximity, and that suggested by Brennan J, namely "that the law should develop novel categories of negligence incrementally and by analogy with established categories"[71], posit an overall framework but are not specific propositions of law[72]. When the content of proximity falls to be ascertained in a novel category of case, that is to say, when one engages in the process of reasoning signified by that term, then as Deane J pointed out in Stevens v Brodribb Sawmilling Co Pty Ltd[73], one proceeds in accordance with accepted modes of legal reasoning, particularly reasoning by analogy from decided cases. Indeed, although this Court has adopted the approach suggested by Deane J, the reasoning it has employed in formulating the particular requirements of proximity in a novel category is, in my view, similar to that suggested by Brennan J and does not reflect a unifying theme. Brennan J himself had those similarities in mind when he said in San Sebastian Pty Ltd v The Minister[74] that:
"The propositions of law which express the appropriate limitations for each class will be devised having regard, no doubt, to factors of the kind to which Deane J referred in Sutherland Shire Council[75]".
Thus the difference between the approach based on proximity and that suggested by Brennan J is, in my view, far less than the protracted debate on the subject would suggest, and is, perhaps, more a difference of labelling than one of substance. Reasonable foreseeability of harm does not, of itself, always give rise to a duty to take care. Something more is required according to the category of the case in question, and that something more is called proximity. Where a new category is suggested, regard should be had in the first place to the established categories which may be helpful by way of analogy in determining whether to recognise a duty of care. That is how incremental development takes place[76]. The process is affected by relevant policy considerations, such as the need to avoid indeterminate liability or the placing of impediments in the way of ordinary commercial activity. It is also important that the tort of negligence should not be regarded as providing an all-enveloping remedy, supplanting "other torts, contractual obligations, statutory duties or equitable rules in relation to every kind of damage including economic loss"[77]. In the end, policy considerations will set the outer limits of the tort. As Lord Pearce said in Hedley Byrne & Co Ltd v Heller & Partners Ltd[78]:
"How wide the sphere of the duty of care in negligence is to be laid depends ultimately upon the courts' assessment of the demands of society for protection from the carelessness of others."
Sometimes the question of proximity will turn upon the nature of the conduct which caused the damage - such as negligent misstatement or a failure to act - as well as the type of damage suffered - nervous shock or economic loss, for example. However, in this case nothing would appear to turn upon the nature of the conduct which constituted carelessness on the part of the solicitor. In White v Jones[79] the carelessness of the solicitor was a failure to carry out his instructions within a reasonable time before the death of the testator. That was considered indistinguishable from the carelessness of the solicitor in Ross v Caunters[80] which, as in this case, was his failure to see that the testator's signature was properly attested. It is with the type of loss suffered that any consideration of liability in this case must therefore begin.
In Seale v Perry[81] the Supreme Court of Victoria questioned whether an intended beneficiary disappointed because of the negligence of the testator's solicitor suffered any loss at all. It was said that at the time of the solicitor's negligence the only interest that the intended beneficiary had in the bequest was an expectation, a spes successionis. There was no enforceable right or interest. That approach overlooks the fact that, in this case, upon the testatrix's death, Mrs Van Erp would have had an enforceable right to her bequest had it not been for the negligence of the solicitor. In this case, what Mrs Van Erp lost was no mere expectation; it was a share in the testatrix's estate[82]. But in any event there is no rule preventing recovery of damages in tort for loss of an expectation. General damages are routinely awarded in tort for loss of future earnings or profits, which are no more than lost expectations[83]. Had the result of the solicitor's negligence in this case been discovered during the lifetime of the testatrix, the will could have been re-executed by her, provided her intentions remained the same. If her intentions had altered and she no longer wished to bequeath anything to Mrs Van Erp, then Mrs Van Erp would have suffered no loss. But there is nothing to indicate any change of intention on the part of the testatrix before her death, and the fact that the solicitor's mistake could have been rectified if it had been discovered during the testatrix's lifetime does not mean that Mrs Van Erp suffered no loss on the testatrix's death[84].
Whilst the loss Mrs Van Erp has suffered is pure economic loss, the considerations which ordinarily prompt concern about imposing liability for such loss are absent. In the first place, to impose liability upon the solicitor in such a situation is not to raise the prospect of indeterminate liability. An intended beneficiary under a will is a specific, identifiable individual rather than a member of an unascertained class[85]. Nor is the liability to such a person at large. The maximum amount of the damages which might be awarded is fixed by the size of the intended bequest. Indeed, both the beneficiary's existence and identity and the amount to which he or she is entitled will ordinarily be brought to a solicitor's attention.
Secondly, no question of competitive advantage arises. In appropriate cases that is a consideration which is relevant to the scope of the tort of negligence. As Mason CJ, Deane and Gaudron JJ said in Bryan v Maloney[86]:
"Another consideration is the perception that, in a competitive world where one person's economic gain is commonly another's loss, a duty to take reasonable care to avoid causing mere economic loss to another, as distinct from physical injury to another's person or property, may be inconsistent with community standards in relation to what is ordinarily legitimate in the pursuit of personal advantage".
In this case, the solicitor's negligence had nothing to do with her obtaining a commercial or competitive advantage and the recognition of a duty of care would not impede the legitimate pursuit of financial gain.
Thirdly, the recognition of a duty of care would not supplant or supplement remedies available in other areas and would not disturb any general body of rules constituting a coherent body of law[87]. The only areas of law which require particular attention are the law of succession and the law of contract.
It has been suggested[88] that loss such as that suffered by Mrs Van Erp stems, not from the breach of any obligation upon the part of the solicitor, but from the operation of the law governing succession which requires a valid will to dispose of property after death. The intentions of the testator have been frustrated, so the line of reasoning goes, because those intentions are required to be expressed in a particular form. Because they were not, the wrong persons have benefited from the testatrix's estate. In a sense that is true. Had the testatrix re-executed her will and had her signature been properly attested, her intentions would have been realised. But to say as much is to fail to get to the bottom of the matter.
In this case, the real reason why the intended beneficiary failed to take under the will was that the testatrix did not embody her intentions in a will which complied with the requirements of the law. Those requirements may be criticised. Indeed, one may point to the absence in Queensland of a provision such as is to be found in s 12(2) of the Wills Act 1936 (SA) which allows admission of a will to probate which, whilst not executed in accordance with the prescribed formalities, expresses the intentions of the deceased to the satisfaction of the Supreme Court[89]. But whatever the requirements, the testatrix retained the services of the solicitor to ensure compliance with them and it was the solicitor's failure to perform that task that resulted in loss to the intended beneficiary. The testatrix during her lifetime and, after her death, her estate, could have sued the solicitor for breach of contract or in tort (albeit only for negligible or nominal damages) and that is because the fault did not lie in the law of succession but with the solicitor. The law relating to wills explains why the solicitor was at fault in acting as she did but in no way relieves her of responsibility for the loss which the intended beneficiary suffered.
It was pursuant to the contract of retainer between the testatrix and the solicitor that the solicitor undertook to prepare the will and attend to its execution. It was an implied term of the contract that the solicitor should exercise due skill and care in carrying out her duties. The origin of the solicitor's obligations lay in contract, but that is no reason for saying that the relationship to which the contract gave rise could not form the basis of a duty or duties owed otherwise than in contract. After all, it is now clear that the solicitor owed the testatrix a duty to take care in tort as well as in contract[90]. And if the relationship between the solicitor and the testatrix gave rise to a duty of care in tort there is no reason in logic or principle why the relationship between the solicitor and the intended beneficiary should not also do so. At any rate, there was nothing in the existence of a contract of retainer between the solicitor and the testatrix which precluded a duty of care in tort being owed to the intended beneficiary any more than it precluded a duty of care in tort being owed to the testatrix. Bryan v Maloney[91] makes it clear that these duties can co-exist. In that case the Court held that the builder of a house pursuant to a contract with the original owner owed a duty of care to a subsequent purchaser with whom the builder had no contract. Breach of the duty imposed liability upon the builder for the economic loss suffered by the subsequent purchaser. Indeed, in Bryan v Maloney, unlike this case, the identity of the person who suffered the damage was unknown to the builder at the time he carried out the work.
It has been suggested that a difficulty arises in recognising a duty of care to a third party arising from a contract between others. The suggested difficulty is that the contract may exclude liability for negligence[92]. In that context it is useful to recall what Windeyer J said in Voli v Inglewood Shire Council[93] of an architect's duty to strangers to take care to avoid physical damage to them:
"[N]either the terms of the architect's engagement, nor the terms of the building contract, can operate to discharge the architect from a duty of care to persons who are strangers to those contracts. Nor can they directly determine what he must do to satisfy his duty to such persons. That duty is cast upon him by law, not because he made a contract, but because he entered upon the work. Nevertheless his contract with the building owner is not an irrelevant circumstance. It determines what was the task upon which he entered. If, for example, it was to design a stage to bear only some specified weight, he would not be liable for the consequences of someone thereafter negligently permitting a greater weight to be put upon it."
In different terms, the principle expressed in that passage is that a duty of care is imposed on a person who places himself in a relationship which the law will recognise as one of proximity with other persons where damage to those others is reasonably foreseeable as a consequence of careless behaviour on his part, and merely because a person has placed himself in that relationship by reason of a contract with another does not necessarily preclude a finding of proximity (although in some cases it might do so[94]). The contract may give rise to an obligation to perform a task but the performance of the task may, in all the circumstances, give rise to a duty of care to perform it so as not to cause damage, whether of a physical or economic kind, to another. Even if one party to a contract can exclude liability to the other party for negligence in the performance of the contract but cannot do so with respect to someone who is not a party to the contract, that is no reason to deny the existence of a duty of care to that third party. A party to a contract is able to negotiate with respect to the protection of his interests whereas a third party is not in a position to do so.
These considerations lead me to conclude that, even though the loss suffered by a disappointed beneficiary is purely economic, there are not the same reasons to tread warily in that situation as there are in some other cases of economic loss. Indeed, as was suggested by Megarry V-C in Ross v Caunters[95], even though the loss suffered by a disappointed beneficiary is economic, it is suffered in circumstances which, juristically speaking, are as close to Donoghue v Stevenson[96] as they are to Hedley Byrne & Co Ltd v Heller & Partners Ltd[97].
In my view, the relationship between the solicitor, Mrs Hill, and the intended beneficiary, Mrs Van Erp, was one of proximity which did give rise to a duty of care on the part of Mrs Hill towards Mrs Van Erp. No single factor, such as an assumption of responsibility by the solicitor, leads me to that conclusion. The relevant circumstances are more complex than that.
A client who retains a solicitor to draw up a will and attend to its execution must ordinarily rely upon the solicitor to carry out those functions to effectuate the client's testamentary intentions. In that situation the responsibility assumed by the solicitor to the client is clearer, if anything, than it was in Hawkins v Clayton[98] where a solicitor entrusted with custody of a client's will was held to be under a duty to take reasonable steps to find the executor and inform him of the existence, contents and custody of the will. In that case Deane J identified the factors which led him to recognise a duty of care[99]:
"The critical factors of the relationship between the testatrix and the firm which gave it the character of a relationship of proximity with respect to economic loss of the kind sustained in the present case are those related elements which lie at the heart of the ordinary relationship between a solicitor and his client, namely, assumption of responsibility and reliance. The solicitor, as a specially qualified person possessing expert knowledge and skill, assumes responsibility for the performance of professional work requiring such knowledge or skill. The client relies upon the solicitor to apply his expert knowledge and skill in the performance of that work. In the ordinary case, the only kind of damage which is likely to result from the negligence of the solicitor in the performance of his professional work is pure economic loss. In that context, the elements of assumption of responsibility and of reliance combine with that of the foreseeability of a real risk of economic loss to give the ordinary relationship between a solicitor and his client the character of one of proximity with respect to foreseeable economic loss."
In the present case, of course, the relevant parties are not solicitor and client (or, as in Hawkins v Clayton, the client's executor). The relationship here is between a solicitor attending to the preparation and execution of a will and an intended beneficiary under the will. Nor does this case have anything to do with the custody of a will after its execution.
To say that in this case the solicitor assumed responsibility to the intended beneficiary may invite argument but for reasons which will appear the argument would be one over terminology rather than substance. The requirements of an assumption of responsibility and the element of reliance to which Deane J referred in the passage I have just quoted are a means by which the law seeks to avoid undesirable consequences such as indeterminate liability, the destruction of legitimate commercial competition, or the emasculation of other bodies of legal doctrine. Where there is no threat of those undesirable consequences, the assumption of responsibility by a defendant and reliance, or request, by a plaintiff may suggest policy reasons for recognising the existence of a duty of care, although they may not be determinative. Indeed, the element of reliance may be unhelpful as an indication of a relationship of proximity in cases of economic loss which do not involve misstatement[100]. Of course, in cases involving misstatement, the element of reliance plays a prominent part not only in establishing proximity but also in establishing causation. Even in cases involving misstatement, request is "by no means essential"[101]. This is why Deane J said in Hawkins v Clayton[102] that in economic loss cases the requisite relationship of proximity is to be found in "some additional element or elements which will commonly (but not necessarily) consist of known reliance (or dependence) or the assumption of responsibility or a combination of the two".
However, in cases such as the present one, there is both an assumption of responsibility of a kind and reliance of a kind, which at least on grounds of policy suggest that a relationship of proximity might be recognised even though neither is in a form which would suffice in cases where those elements are crucial to a relationship of proximity. The person to whom a testator wishes to make a bequest is the object of the testator's intentions. The reason for engaging a solicitor to make a will is to confer benefits upon the beneficiaries[103]. As Nicholls V-C said in the Court of Appeal in White v Jones[104]:
"The very purpose of the employment of the solicitor is to carry out the client's wish to confer a particular testamentary benefit on the intended beneficiary. There is no other purpose."
Thus, when a solicitor accepts responsibility for carrying out a client's testamentary intentions, he or she cannot, in my view, be regarded as being devoid of any responsibility to an intended beneficiary. The responsibility is not contractual but arises from the solicitor's undertaking the duty of ensuring that the testator's intention of conferring a benefit upon a beneficiary is realised. In a factual, if not a legal sense[105], that may be seen as assuming a responsibility not only to the testatrix but also to the intended beneficiary.
In the present case there was no reliance upon the solicitor by Mrs Van Erp nor did she request her to do anything for her. Mrs Van Erp did not change her position in reliance upon anything said or done by the solicitor. It is true that Mrs Van Erp was told that she was a beneficiary under the will and took no steps to protect her position. In that way it might be said that she relied upon the solicitor to carry out the testatrix's instructions carefully. However, I make no point of that in the present case[106].
What is important is the position of a solicitor as a professional person of specialised skill and knowledge. That is significant with respect to the drawing up and execution of a will because the failure to exercise due care may affect not only the interests of the client but also the interests of others whom the client has in mind as beneficiaries. The interests of those others are relevantly the same as the interests of the client in that situation. Because wills are legal documents involving many technicalities, attending to their preparation and execution requires the exercise of professional skill and care. That led Lord Browne-Wilkinson to observe in White v Jones that[107]:
"Save in the case of those rash testators who make their own wills, the proper transmission of property from one generation to the next is dependent upon the due discharge by solicitors of their duties."
As a result, there is a general reliance extending beyond their clients which is placed upon solicitors in relation to the preparation and execution of wills which is at least analogous with that placed upon public authorities in relation to statutory powers of inspection. Of that situation, Mason J in Sutherland Shire Council v Heyman said[108]:
"the plaintiff's reasonable reliance will arise out of a general dependence on an authority's performance of its function with due care, without the need for contributing conduct on the part of a defendant or action to his detriment on the part of a plaintiff. Reliance or dependence in this sense is in general the product of the grant (and exercise) of powers designed to prevent or minimise a risk of personal injury or disability, recognised by the legislature as being of such magnitude or complexity that individuals cannot, or may not, take adequate steps for their own protection. This situation generates on one side (the individual) a general expectation that the power will be exercised and on the other side (the authority) a realisation that there is a general reliance or dependence on its exercise of power."
The notion of general reliance or dependence described by Mason J is apt also to describe the situation in which, whilst there will usually be no specific reliance by an intended beneficiary upon a solicitor retained to attend to the will, the intended beneficiary's interests are totally and unavoidably dependent upon the proper performance of a function within the sole province of the solicitor. And, it might be added, in that situation the solicitor knows of the beneficiary's dependence and in that respect may be regarded as having assumed responsibility towards the intended beneficiary.
The distinguishing features of a case such as this do not stop there. In such a case the solicitor's mistake is not ordinarily discoverable by anyone other than the solicitor. In the ordinary course, the only persons who have access to a will are the solicitor and the client. A client can hardly be expected to review the will for regularity and even if he or she were to do so, could hardly be expected to discover its defects. Indeed, to do so would be to engage in the very task which the solicitor was retained to perform in the first place.
Moreover, and this seems to me to be crucial, in the normal course the solicitor's error only becomes apparent after the death of the client. Upon that event, the hitherto concealed error becomes irreversible. In this respect the intended beneficiary is particularly vulnerable and it is this aspect of the matter that led Megarry V-C in Ross v Caunters[109] to make the telling remark that in the absence of a duty of care towards the intended beneficiary "[t]he only person who has a valid claim has suffered no loss, and the only person who has suffered a loss has no valid claim".
These circumstances distinguish the present case from others in which a solicitor has been held to owe no duty to anyone other than his client. No doubt that is the general rule[110]. Thus in Gran Gelato Ltd v Richcliff Ltd[111] no duty was owed to a purchaser to whom the solicitor's client was selling an underlease. In Al-Kandari v JR Brown & Co[112] it was said that no duty of care was owed by a solicitor to a client's opponent in adversarial litigation. And in Clarke v Bruce Lance & Co[113] no duty was owed by a solicitor to a prospective beneficiary under a client's will in relation to a proposed dealing with property during the client's lifetime.
Recognising a duty of care in a case such as the present one does not involve any conflict of duties on the part of the solicitor such as might occur in other situations, because the interests of the client are in all relevant respects the same as the interests of the intended beneficiary. The interests of the intended beneficiary exist only because of the client's intentions and in carrying out those intentions the solicitor is necessarily serving the interests of the intended beneficiary. As Megarry V-C observed in Ross v Caunters[114] the duty to the intended beneficiary "far from diluting the solicitor's duty to his client, marches with it, and, if anything, strengthens it".
For all of these reasons, I am of the view that a solicitor retained to draw up and attend to the execution of a will is in a relationship of proximity with an intended beneficiary under the will. That relationship gives rise to a duty to exercise reasonable skill and care in the performance of those tasks. That will be so whether or not the intended beneficiary knows of the bequest. The duty arises from the special considerations involving testamentary dispositions which I have discussed above. There is nothing in what I have said which is intended to convey the view that whenever a person's performance of a contractual obligation may, if performed negligently, injure a third party's economic interests, that person owes the third party a duty of care. Nor is anything I have said intended to convey the view that, other than in a case of the present kind, a solicitor owes a duty of care to persons other than his client whose interests may be affected by the solicitor's performance of his or her duties to the client. The duty of care which I would recognise in the present case arises from the particular relationship between the parties, that relationship being analogous to other relationships of proximity in which a duty of care has been held to arise. It is that which, in addition to the foreseeability of harm, provides the basis in this case for the recognition of tortious liability for negligence.
I would therefore dismiss the appeal.
TOOHEY J. I would dismiss this appeal for the reasons given by Dawson J with which I am in general agreement.
The only comments I wish to make relate to the place of proximity in the jurisprudence of this Court. The authorities according recognition to proximity, and they are noted by Dawson J, culminate in the majority judgments of the Court in Burnie Port Authority v General Jones Pty Ltd[115] and in Bryan v Maloney[116]. Those authorities do not preclude analysis of the relationship of proximity to the duty to take reasonable care to avoid a reasonably foreseeable risk of injury to another. But, as the weight of authority stands, the general conception must be taken as controlling the circumstances which might otherwise, by application of reasonable foreseeability alone, give rise to a duty of care.
The point is made in the judgment of Gibbs CJ, Mason, Wilson and Dawson JJ in San Sebastian Pty Ltd v The Minister[117] where their Honours said:
"The notion of proximity, because it limits the loss that would otherwise be recoverable if foreseeability were used as an exclusive criterion of the duty of care, is of vital importance when the plaintiff's claim is for pure economic loss."
To speak, as was said in Burnie[118], of proximity as "the general conceptual determinant and the unifying theme" in liability in negligence directs attention to Lord Atkin's observation in Donoghue v Stevenson[119]:
"And yet the duty which is common to all the cases where liability is established must logically be based upon some element common to the cases where it is found to exist."
As Stephen J observed in Caltex Oil (Australia) Pty Ltd v The Dredge "Willemstad"[120]:
"The articulation, through the cases, of circumstances which denote sufficient proximity will provide a body of precedent productive of the necessary certainty".
Dawson J has made clear why this is so.
To say that proximity represents the general conceptual determinant and the unifying theme focuses attention on the categories of cases in which proximity has been held to exist. It is the category of cases with which proximity is concerned, rather than whether a relationship of proximity exists on the facts of a particular case. The category may be an established one; it may not.
In Hedley Byrne & Co Ltd v Heller & Partners Ltd[121] Lord Devlin said in relation to Donoghue v Stevenson[122]:
" Now, it is not ... a sensible application of what Lord Atkin was saying for a judge to be invited on the facts of any particular case to say whether or not there was 'proximity' between the plaintiff and the defendant. That would be a misuse of a general conception and it is not the way in which English law develops. What Lord Atkin did was to use his general conception to open up a category of cases giving rise to a special duty. ... What Donoghue v Stevenson did may be described either as the widening of an old category or as the creation of a new and similar one ... An existing category grows as instances of its application multiply until the time comes when the cell divides."
Used in that way, there is no difficulty in treating proximity as the general conceptual determinant and the unifying theme. That does not mean that proximity of itself identifies with any precision a common element underlying all those cases in which liability in negligence has been held to exist. But the general conception does operate as a limitation on any notion that liability in negligence arises simply from a duty to avoid harm that is reasonably capable of being foreseen, at any rate in cases not involving direct physical injury or damage. It designates "a separate and general limitation upon the test of reasonable foreseeability in the form of relationships which must exist between plaintiff and defendant before a relevant duty of care will arise"[123].
Attention is focused on established categories in which a duty of care has been held to exist; analogies are then drawn and policy considerations examined in order to determine whether the law should recognise a further category, whether that be seen as a new one or an extension of an old one. Thus in Bryan v Maloney the existence of a duty of care on the part of the builder to exercise reasonable care in relation to the building work to avoid a foreseeable risk of physical injury to someone who was a subsequent purchaser of the house was a starting point in a consideration of the recoverability for a particular kind of economic loss arising from inadequacies in the performance of the work. At the same time policy considerations, such as avoiding the imposition of an indeterminate liability, were examined to see whether they presented an obstacle to holding that liability existed in that type of case. And so, by the process of reasoning to which reference has been made, the builder was held liable to a subsequent purchaser for diminution in the value of the house because of inadequate footings. Seen in that way, I doubt whether the difference between an approach based on proximity and the incremental approach favoured by Brennan J in Sutherland Shire Council v Heyman[124] is as stark as is sometimes suggested.
Dawson J has referred to the considerations which warrant imposing liability in the type of situation with which this appeal is concerned, including some assumption of responsibility on the part of the solicitor and reliance of a kind, and the absence of compelling considerations for refusing liability. I shall not repeat them. But, for the reasons advanced by his Honour, I conclude that a solicitor retained to draw up and attend to the execution of a will is in a relationship of proximity with an intended beneficiary under the will which gives rise to a duty to exercise reasonable skill and care in those matters. As Megarry V-C noted in Ross v Caunters[125], a comparable case:
"The basis of the solicitor's liability to others is either an extension of the Hedley Byrne principle ... or, more probably, a direct application of the principle of Donoghue v Stevenson."
As I said at the outset, I would dismiss the appeal.
GAUDRON J. The appellant, Ms Rosemary Hill, is a solicitor. She was retained by the late Mrs Olive Eileen Currey ("the testatrix") to prepare and to attend on the execution of her last will and testament. Mrs Currey wished to devise a one-half interest in her house and to bequeath certain items of household furniture to her friend and neighbour, Mrs Rona Van Erp, the respondent to this appeal. Ms Hill prepared a testamentary document to give effect to Mrs Currey's intentions and attended at her home for the purpose of witnessing its execution as her last will and testament. At the request of Ms Hill, Mr Van Erp, the respondent's husband, also witnessed the will. Mrs Currey died some few months later without altering or revoking her will and, apparently, without taking any step in that regard.
Section 15 of the Succession Act 1981 (Q) ("the Act") relevantly provides, as it has since 1981, that where a disposition of property "is, by will, made in favour of a person who attested the signing of the will, or the spouse of such person ... the disposition is null and void". Thus, the provisions of Mrs Currey's will intended to benefit Mrs Van Erp were of no effect. The property which she would otherwise have taken fell into residuary estate and passed to Mrs Currey's son.
On learning of the failure of the testamentary provisions intended for her benefit, Mrs Van Erp brought proceedings in negligence against the appellant in the District Court of Queensland. She recovered judgment in the sum of $163,471.50, the conceded value of the property she would otherwise have taken under the will, together with interest and costs. The appellant appealed unsuccessfully to the Court of Appeal of the Supreme Court of Queensland and now appeals to this Court.
It has at all times been common ground that the appellant was not retained by Mrs Van Erp, whether in relation to Mrs Currey's will or any other matter. Indeed, it is clear from the evidence that at the time the will was executed Mrs Van Erp had not met Ms Hill. It is in this context that Ms Hill denies that she owed a duty of care to Mrs Van Erp. In her defence to the respondent's plaint, Ms Hill also denied that Mrs Van Erp suffered loss by reason of the failure of the testamentary provisions intended for her benefit. However, this seems not to have been argued as a separate issue in the trial.
The trial judge, Morley DCJ, made findings as to the circumstances in which the appellant received instructions to act for Mrs Currey. Those findings were to the effect that, some time after 1988, Mr Van Erp telephoned Ms Hill on behalf of Mrs Currey requesting Ms Hill to visit Mrs Currey at her home to take instructions with respect to her will. Ms Hill agreed and, when she later attended at Mrs Currey's home, she was received by Mr Van Erp. She attended again, some little time later, for the execution of the will. In 1990, Mrs Currey wished to change her will and again requested Mr Van Erp to telephone Ms Hill. He did so with the result that, on or about 3 December 1990, Ms Hill again attended on Mrs Currey and received instructions that Mrs Currey wished to make provision in her will for Mrs Van Erp. Ms Hill returned on 7 December with an engrossed will for execution. As earlier indicated, Mrs Currey then signed the will in the presence of Ms Hill and Mr Van Erp as attesting witnesses.
It is not now in issue that the circumstances in which Ms Hill was retained by Mrs Currey were such that she knew or ought to have known of the marital relationship between Mrs Van Erp, the intended beneficiary, and Mr Van Erp, the attesting witness. Nor is it in issue that Ms Hill had a professional duty to Mrs Currey to ensure that her testamentary intentions were not defeated by operation of s 15 of the Act. And although Ms Hill originally denied that Mrs Van Erp suffered any loss by reason of her, Ms Hill's, failure to ensure that the intentions of the testatrix were carried into effect, that was not argued as a separate issue in this Court or in the Court of Appeal. The only matter for determination in this Court is, as it was in the Court of Appeal, whether Ms Hill owed a duty of care to Mrs Van Erp.
The question whether Ms Hill owed a duty of care to Mrs Van Erp was determined in Mrs Van Erp's favour in the Court of Appeal on the basis that there existed a relationship of proximity between Ms Hill, as a solicitor with a professional duty to ensure that Mrs Currey's testamentary intentions were carried into effect, and Mrs Van Erp, as the person intended to benefit from her will. In approaching the matter in this way, the Court of Appeal followed the decisions of this Court which establish that a duty of care arises only if there is a relationship of proximity between plaintiff and defendant[126]. However, Brennan J has rejected the notion of proximity as a separate requirement for liability, most recently in Bryan v Maloney[127]. And its usefulness as a universal criterion of liability was questioned by Dawson J in Gala v Preston[128]. Thus, the arguments in this Court ranged wider than in the Court of Appeal.
It is well settled that where, as here, a plaintiff sues in negligence to recover pure economic loss - "financial loss which is not 'causally consequent' upon physical injury to the plaintiff's own person or property"[129] - he or she must establish more than the foreseeability of loss. As earlier indicated, the focus of this Court in that regard has been directed to the relationship of proximity and it has been said authoritatively that "the categories of case in which the requisite relationship of proximity with respect to mere economic loss is to be found are properly to be seen as special"[130].
The need for a special relationship in cases of pure economic loss derives from two policy considerations. The first is the need "to avoid the imposition of liability 'in an indeterminate amount for an indeterminate time to an indeterminate class' "[131]. The other is that "in a competitive world where one person's economic gain is commonly another's loss, a duty to take reasonable care to avoid causing mere economic loss to another ... may be inconsistent with community standards in relation to what is ordinarily legitimate in the pursuit of personal advantage"[132]. Neither consideration applies in this case. Liability, if it exists, is confined to Mrs Van Erp, and it is liability in a definite amount which was ascertained or, at least, was ascertainable within a short time of Mrs Currey's death. Moreover, the duty asserted by Mrs Van Erp is co-extensive with the duty owed to Mrs Currey and, on that account, must be viewed as not inconsistent with community standards as to what is legitimate in the pursuit of a personal advantage.
Quite apart from any consideration of proximity, the recognition of a duty of care on the part of a solicitor to an intended beneficiary whose interests (in the sense of rights he or she would otherwise have acquired) are defeated by the solicitor's negligent failure to carry a testator's instructions into effect would bring the law of this country into line with the weight of authority in other common law countries.
Despite the statement by Lord Campbell LC in Robertson v Fleming[133] that it "[was] not the law of Scotland, nor of England, and it [could] hardly be the law of any country where jurisprudence has been cultivated as a science" that a disappointed legatee can sue the solicitor employed by a testator if the will is void for not being properly signed and attested, it was later held in Ross v Caunters[134] that that was, in truth, the law of England[135]. However, the decision in that case was reached by the two-stage approach adopted by the House of Lords in Anns v Merton London Borough Council[136]. On that approach it was necessary, at the first stage, to determine whether there was a sufficient relationship of proximity to establish a prima facie duty of care. The second stage involved a consideration of policy issues to determine whether the duty should be excluded[137].
The two-stage approach adopted in Anns was later rejected by the House of Lords in favour of what is generally considered to be a more stringent proposition, namely, that the law will develop novel categories of negligence "incrementally and by analogy with established categories"[138] - a proposition earlier advanced in this Court by Brennan J in Sutherland Shire Council v Heyman[139]. Recently, the House of Lords, proceeding on the "incremental" approach, affirmed in White v Jones[140] that a solicitor is under a duty of care to an intended beneficiary whose interests are defeated as a result of the solicitor's negligence.
As noted by Lord Goff of Chieveley in White v Jones[141], it has been held in New Zealand, in Gartside v Sheffield, Young & Ellis[142], that a solicitor is under a duty of care to an intended beneficiary whose intended interest is lost as a result of the solicitor's negligence. His Lordship also observed that the law appeared to be developing in the same direction in Canada[143], his observations in this regard having been confirmed, to some extent, by the subsequent decision of the Supreme Court of British Columbia in Smolinski v Mitchell[144]. Moreover, as was also observed in White v Jones, "the trend ... appears to be moving strongly in favour of liability" in the United States[145].
Policy considerations also favour the recognition of a duty of care on the part of solicitors in cases such as the present. As Lord Browne-Wilkinson pointed out in White v Jones, the proper transmission of property from one generation to the next is, as a general rule, "dependent upon the due discharge by solicitors of their duties"[146]. The same point was made by Cooke J in Gartside when he observed that "[i]n practice the public relies on solicitors (or statutory officers with similar functions) to prepare effective wills"[147].
There is also the consideration that, unless there is a duty of the kind presently in question and if, as is usually the case, the defect is not discovered until the testator's death, "the only persons who might have a valid claim (ie, the testator and his estate) have suffered no loss, and the only person who has suffered a loss (ie, the disappointed beneficiary) has no claim"[148]. Thus, the recognition of a duty of care to an intended beneficiary not only promotes the proper transmission of property but also promotes the proper performance by solicitors of their professional duty to those who employ them to give effect to their testamentary intentions.
A further and more pragmatic consideration in favour of the recognition of a duty of care on the part of solicitors is that, as a result of the decision in Watts v Public Trustee for Western Australia[149], a remedy has been allowed to intended beneficiaries in Western Australia for several years, apparently without problem. A similar consideration was taken into account in White v Jones[150], it being observed by Lord Goff of Chieveley that the decision in Ross v Caunters had been applied in the United Kingdom for 15 years without apparent problems in practice.
The position in Victoria is different from that established by the course of judicial decision in Western Australia. In Seale v Perry[151], the Supreme Court of Victoria held in a majority decision (Lush and Murphy JJ, McGarvie J dissenting) that a solicitor does not owe a duty of care to an intended beneficiary. The reasoning in that case placed emphasis on the contractual relationship between solicitor and testator, it being said by Murphy J[152]:
" A contract is not a one-sided matter. The solicitor undertakes to perform his side of a bargain and the client undertakes to perform his. To say that the solicitor is, apart from his contractual duties, bound also by some superimposed duty of care arising, irrespective of the terms, express or implied, of his contract, appears to me to be unwarranted, for it runs counter to the law of contract."
His Honour also indicated that, in his view, the recognition of liability to an intended beneficiary involved "the introduction, through the back door, of a jus quaesitum tertio"153. Lush J expressed similar concerns, albeit that they were stated in terms of a solicitor's duty to his or her client. Thus, his Honour noted that, in that case, "[t]he content of the [solicitor's] duties was entirely within the control of the testator"[154]. He also observed that there were serious difficulties in "the concept that a solicitor may owe a duty of care to any person other than his client in the discharge of his client's instructions", adding that "[t]he result might well be the existence of conflicting duties"[155].
The concerns expressed in Seale v Perry must yield to later developments in the law. In particular, they must yield to the recognition by this Court in Hawkins v Clayton[156] and in Bryan v Maloney[157] that a party to a contract may owe a third party an additional or concurrent duty in tort. That is not to say that contractual duties are irrelevant to a consideration of proximity or the content of a duty of care owed by the contracting party. The relevance of a contractual relationship was expressed in Bryan v Maloney in these terms[158]:
"In some circumstances, the existence of a contract will provide the occasion for, and constitute a factor favouring the recognition of, a relationship of proximity either between the parties to the contract or between one or both of those parties and a third person. In other circumstances, the contents of a contract may militate against recognition of a relationship of proximity under the ordinary law of negligence or confine, or even exclude the existence of, a relevant duty of care."
One way in which the terms of a contract may impact upon tortious liability was indicated by the Supreme Court of Canada in Central Trust Co v Rafuse, it being said in that case that "[a] concurrent or alternative liability in tort will not be admitted if its effect would be to permit the plaintiff to circumvent or escape a contractual ... limitation of liability"[159]. And in my view, a contract between solicitor and client obliging the solicitor to act in the client's interests and contrary to those of a third party excludes any relationship of proximity between the solicitor and the third party. Similarly in my view, there can be no duty of care owed to a third party if the duty asserted is inconsistent with the duty owed to the client or if the solicitor is obliged to act exclusively in his or her client's interests[160].
In Seale v Perry, one other matter was viewed by Murphy J as dictating the conclusion that a solicitor does not owe a duty of care to an intended beneficiary. His Honour was of the view that, as the intended beneficiaries in that case had only a spes successionis, they were to be equated with volunteers and, thus, "the loss of [the] testamentary gift [did] not fall into any category of legally recognized damage"[161]. Seemingly, this was the matter intended to be raised by the appellant's denial that Mrs Van Erp suffered any loss. As loss or damage is an essential element of the action in tort, it is necessary that this issue be considered, notwithstanding that it has not been the subject of separate argument.
Once it is accepted, as it is by the appellant in this case, that but for negligence on the part of a solicitor, a person would have benefited under the will of a testator, the would-be beneficiary's loss is not properly treated as the loss of a mere spes successionis. To determine what has been lost, it is necessary to look to the situation as it would have been had there been no negligence. And when viewed in that way, it is apparent that the intended beneficiary has lost a legal right, namely, the right to have the testator's estate properly administered in accordance with the terms of the will. There is nothing novel in the imposition of liability in tort for the loss or impairment of a legal right.
Discussion of tortious liability for pure economic loss often begins with Hedley Byrne & Co Ltd v Heller & Partners Ltd[162]. The notions of "assumption of responsibility" and "reliance", as indicative either of a relationship of proximity or of liability in negligence for pure economic loss derive from that case[163]. However, it is in my view wrong to consider questions of liability for pure economic loss in isolation from older established torts dealing with economic loss, particularly the tort of interference with contractual rights identified in Lumley v Gye[164]. That tort was recognised without undue regard to the fact that it was concerned with economic loss. To that extent, it is no different from trespass, conversion, detinue and slander of title which, as I pointed out in Hawkins v Clayton[165], are directly concerned with the protection of legal rights.
The torts to which reference has just been made are intentional torts and, thus, are not directly comparable with negligence. However, they are significant in this respect: they illustrate that where, as here, the question is that of liability for the loss or impairment of a precise legal right, the policy questions which necessitate that there be a special relationship of proximity in cases of pure economic loss do not arise. No question arises as to the possibility of liability in an indeterminate amount for an indeterminate time to an indeterminate class, although as occurred in Hawkins v Clayton, difficult questions may arise as to limitation of actions. Nor is there any question of liability for actions which, by community standards, are legitimate in the pursuit of personal advantage. It is simply not legitimate to infringe the legal rights of others. And that is so whether they are infringed intentionally or negligently.
It follows from what has been said that, in my view, where a plaintiff suffers loss or impairment of a precise legal right, the need for a special relationship of proximity is somewhat less stringent than in other cases of pure economic loss. Rather, where the interest infringed is a precise legal right, it may sometimes be appropriate to treat the loss as more closely analogous to property damage.
Although the main focus for the purposes of proximity in relation to cases of pure economic loss has been on the assumption of responsibility and on reliance, it was acknowledged in Bryan v Maloney that they are not the only criteria[166]. Moreover, there are difficulties in speaking of reliance in cases where, as here and as in Hawkins v Clayton[167], the plaintiff is not even aware that his or her position may be affected.
The relationship in this case as between Ms Hill and Mrs Van Erp is not one that is characterised either by the assumption of responsibility or reliance. Rather, what is significant is that Ms Hill was in a position of control over the testamentary wishes of her client and, thus, in a position to control whether Mrs Van Erp would have the right which the testatrix clearly intended her to have, namely, the right to have her estate properly administered in accordance with the terms of her will.
The importance of control as a factor in proximity and also as a factor governing the content of the duty of care is apparent in Burnie Port Authority v General Jones Pty Ltd[168]. And although Deane J rested his judgment in Hawkins v Clayton on assumption of responsibility and reliance[169], it seems to me that that case is more easily explained in terms of control. Thus, there was a duty on the part of the solicitor in that case to take reasonable steps to make the contents of a will known to the named executor because, as Brennan J pointed out, "the executor need[ed] to know of the will and its contents before he [could] accept the office and undertake administration of the estate in accordance with the will"[170]. Or as I put it in that case, "a person in that position of control ought to have [the executor] in contemplation as one affected by his failure to disclose [the contents of the will]"[171]. Moreover, control is in some respects a more stringent test than assumption of responsibility. Certainly neither law nor logic excludes it from consideration as a determinant of proximity in cases of pure economic loss.
I am of the view that, by reason of her position of control, in particular her position to control whether Mrs Van Erp would acquire the right to have Mrs Currey's estate properly administered in accordance with the terms of her will, there was a relationship of proximity between Ms Hill and Mrs Van Erp such that Ms Hill was under a duty of care to take reasonable steps to ensure that Mrs Van Erp's testamentary intentions were not defeated by s 15 of the Act.
As earlier indicated, there has been some criticism of proximity as a criterion of liability, it having been said, for example, by Brennan J in Hawkins v Clayton that it lacks the "specificity of a precise proposition of law"[172]. The same may be said of the proposition that the law should develop incrementally and by analogy. Inevitably, there will be imprecision in any developing area of the common law. However, the quest must be for precision whenever possible.
It is in the interests of precision that I have attempted to show that the loss involved in this case is not sufficiently described as "pure economic loss". Rather, it is the loss of a precise legal right which, in turn, has resulted in economic loss. And it is a loss which occurred by reason of the negligence of a person who was in a position to control the enjoyment of that right. Again, as I have pointed out, control is a stricter requirement than assumption of responsibility.
The nature of the loss involved when a legal right is defeated or its enjoyment is impaired and the particular nature of the relationship involved when one person is in a position to control the enjoyment of another's legal right, including a right which but for the first person's act or omission would have come into existence, lead me to conclude that, subject to one qualification, it should now be held that a person in such a position owes a duty of care to the other to take reasonable steps to prevent any reasonably foreseeable loss or impairment of that right. The qualification which I would make is that the duty of care will not arise if it is inconsistent with some overriding duty, as for example occurred in Smolinski v Mitchell[173] where a duty to see to the expeditious execution of a will was inconsistent with the duty, which arose in the circumstances of that case, for the solicitor engaged by the testator to refer his client for independent legal advice.
The appeal should be dismissed.
McHUGH J. By a grant of special leave, Ms Rosemary Hill, a solicitor, appeals against an order of the Court of Appeal of Queensland upholding a judgment against her for damages for negligence in the course of her practice as a solicitor. The question in the appeal is whether a solicitor who prepares the execution of a will owes an intended beneficiary a duty to take reasonable care to ensure that the will is not witnessed by a spouse of the beneficiary in jurisdictions where this may result in the beneficiary forfeiting the gift. In my opinion, in the absence of an assumption of responsibility for the beneficiary's interest or a representation or promise to the beneficiary which is relied on by that person, a solicitor owes no such duty of care to the beneficiary.
An intended gift fails because a solicitor is careless
In December 1990, Mrs Olive Eileen Currey, the testatrix, instructed Ms Hill (the solicitor) to prepare a will for her. Mrs Currey wanted to leave her house to her son and Mrs Van Erp (the beneficiary), as tenants-in-common in equal shares. On 7 December 1990, the testatrix executed the will in the presence of the solicitor and the beneficiary's husband who attested the execution of the will. The solicitor had never met the beneficiary, but she knew that Mr Van Erp was the husband of the beneficiary. Section 15 of the Succession Act 1981 (Qld) provides that a disposition by will to the spouse of an attesting witness is void. As a result, the beneficiary failed to receive the bequest that the testatrix had intended to give her.
Upon these facts, the beneficiary sued the solicitor for damages for negligence. At first instance, Morley DCJ held that the solicitor owed the beneficiary a duty of care to ensure that she received the bequest if the testatrix died without varying her will. He awarded the beneficiary $163,471.50, the value of the bequest that she would have received under the will. The solicitor appealed to the Court of Appeal of Queensland, but that Court dismissed the appeal.
The solicitor did not owe a duty of care to the beneficiary
In this Court, the solicitor contended that she owed no duty of care to the beneficiary because all the traditional benchmarks of such a duty in a claim for pure economic loss[174] were absent. No professional relationship or contract existed between her and the beneficiary; she had not given the beneficiary any advice or assumed any responsibility towards her; she had not given any assurance to the beneficiary that her interest under the will was protected; and she had not caused the beneficiary to lose any property that she owned. Nor, so far as the evidence discloses, had the beneficiary relied on the solicitor to prepare a will that would be effective to give her the bequest.
The solicitor's breach of duty to the testatrix clearly gave rise to a reasonably foreseeable risk of harm to the beneficiary. But that is not enough to make her liable to the beneficiary. In cases where the only damage that the defendant has caused to the plaintiff is economic loss, reasonable foresight of the risk of that damage occurring is a necessary but not sufficient condition for imposing liability on the defendant[175]. Given the current state of the authorities on claims for pure economic loss, the absence of any representation or assumption of responsibility on the part of the solicitor or any reliance by the beneficiary on the conduct of the solicitor makes a powerful case for concluding that the solicitor owed no duty of care to the beneficiary. However, the weight of precedent in Australia, England, New Zealand, Canada and the United States favours the right of the beneficiary to recover damages in the present case[176].
The case law
The earliest case which considered the present issue was Robertson v Fleming[177] where the House of Lords dealt with a set of facts far removed from the present case. In discussing the issues involved in that case, their Lordships referred as an example to a claim against a solicitor by a disappointed legatee as being so contrary to principle as to illustrate clearly why the claim in the case before them was unfounded. Lord Campbell LC said[178]:
"If this were law a disappointed legatee might sue the solicitor employed by a testator to make a will in favour of a stranger, whom the solicitor never saw or before heard of, if the will were void for not being properly signed and attested. I am clearly of opinion that this is not the law of Scotland, nor of England, and it can hardly be the law of any country where jurisprudence has been cultivated as a science."
In Ross v Caunters[179], where the facts were very similar to the present case, Megarry V-C held that a solicitor preparing a will owed a duty of care to a potential beneficiary. In Ross, the defendants prepared a will for a testator and sent it to him for execution. But they failed to warn him that it should not be witnessed by the spouse of a beneficiary. They also failed to notice, when the will was returned to them, that one of the attesting witnesses was the plaintiff's husband. As a result, the plaintiff forfeited her benefit under the will. The defendants did not dispute that they had been negligent. The central issue was whether they owed a duty to the plaintiff.
In deciding for the plaintiff, Megarry V-C said[180]:
"A solicitor who is instructed by his client to carry out a transaction that will confer a benefit on an identified third party owes a duty of care towards that third party in carrying out that transaction, in that the third party is a person within his direct contemplation as someone who is likely to be so closely and directly affected by his acts or omissions that he can reasonably foresee that the third party is likely to be injured by those acts or omissions".
His Lordship summarised the injustice that would result from denying a duty of care to the beneficiary as follows[181]:
"The only person who has a valid claim has suffered no loss, and the only person who has suffered a loss has no valid claim. However grave the negligence, and however great the loss, the solicitors would be under no liability to pay substantial damages to anyone."
In finding that the solicitor owed a duty of care to the beneficiary, Megarry V-C applied the two-stage test in Anns v Merton London Borough Council[182]. However, Anns was subsequently overruled in England[183]. The reasoning upon which Ross was based has therefore gone.
Ross has been followed in New Zealand[184], but rejected in Victoria[185] and Scotland[186]. In Seale v Perry[187], where the facts were similar to the present case, a majority of the Full Supreme Court of Victoria (Lush and Murphy JJ) held that a solicitor did not owe intended beneficiaries a duty of care and that in any event they had suffered no damage recognisable at law. Lush J thought the solicitor owed the beneficiaries no duty of care because: (i) the testator owed them no duty, so neither should the solicitor; (ii) the solicitor's duties were entirely within the control of the testator; (iii) there were difficulties in the concept that a solicitor could owe a third party a duty of care in the discharge of his or her client's instructions; (iv) the only interest which the beneficiaries had at the time of the solicitor's negligence was a spes successionis, which was not a right capable of protection at law or in equity; and (v) there was no assumption of responsibility by the solicitor. Murphy J came to the same conclusion. He could not see that the intended beneficiaries had suffered any "loss", they had not acted in reliance on the solicitor's work to their detriment, and they had not lost title to any property. McGarvie J held that the solicitor did owe a duty of care but that the court was precluded from so holding by Robertson[188], even though he did not think that that case would be followed in the future by the High Court of Australia or the House of Lords.
The House of Lords decision in White v Jones[189]
In White v Jones by a 3:2 majority, the House of Lords upheld a finding by the Court of Appeal that a firm of solicitors owed a duty of care to the intended beneficiaries under a will and that their delay in preparing the will - which resulted in loss to the beneficiaries - was a breach of their duty. Since most of the arguments that the parties put to us were discussed in that judgment, it is convenient to examine the reasons of their Lordships in some detail.
Lord Goff of Chieveley wrote the leading judgment. He pointed[190] to the "reasons of justice" which had prompted judges and academics to conclude that a solicitor should owe a beneficiary a duty of care: (1) the only person who would otherwise have a cause of action (ie the testator) has suffered no loss, and the person who has suffered a "loss" (ie the expectant beneficiary) has none; (2) inheritance is an important aspect of people's lives; (3) there would be no injustice to hold negligent solicitors liable, even if the damages are paid not to the estate, but to the disappointed beneficiary directly; and (4) to deny a remedy would be to deny the role that solicitors play in society and the reliance that members of the public place on them to prepare effective wills.
Lord Goff then examined whether it was possible for the House of Lords to give legal effect to the "strong impulse for practical justice"[191]. He rejected the suggestion that the beneficiary could be given contractual remedies on the ground that the law relating to consideration and privity of contract prevented it[192]. He thought, however, that the intended beneficiary had a remedy under an extension of the Hedley Byrne & Co Ltd v Heller & Partners Ltd[193] principle. He said that[194]:
"[T]he assumption of responsibility by the solicitor towards his client should be held in law to extend to the intended beneficiary who (as the solicitor can reasonably foresee) may, as a result of the solicitor's negligence, be deprived of his intended legacy in circumstances in which neither the testator nor his estate will have a remedy against the solicitor."
His Lordship was not convinced by the suggestion that it would be impossible to place sensible limits on liability. He thought that liability would be limited to particular beneficiaries, whom the client intended to benefit through the particular will[195]. He therefore dismissed the appeal. But with great respect to his Lordship, I do not think that anything in Hedley Byrne or any other decision authorised the step which he took, and a judge's sense of injustice by itself does not authorise the judge to invent a new legal right.
Lord Browne-Wilkinson agreed with Lord Goff. But he added reasons of his own. He said that he would extend the principle of assumption of responsibility in Hedley Byrne by analogy. He contended that the concept of "assumption of responsibility" was not invented in Hedley Byrne but emanated from Nocton v Lord Ashburton[196], a decision which showed that a duty of care could arise from a "special relationship" (in that case, a fiduciary relationship) which was "dependent neither upon mutuality of dealing nor upon actual reliance by the plaintiff on the defendant's actions."[197] Lord Browne-Wilkinson said that in Hedley Byrne (where negligent advice had been given) the House of Lords had also found a "special relationship". His Lordship held that the legal relationship giving rise to the duty in Nocton and Hedley Byrne was created not by an assumption of legal liability but by an assumption of responsibility for a task[198]. He said[199]:
"As a matter of contract, a solicitor owes a duty to the testator to use proper skill in the preparation and execution of the will and to act with due speed ...
Has the intended beneficiary a cause of action based on breach of a duty of care owed by the solicitor to the beneficiary? The answer to that question is dependent upon whether there is a special relationship between the solicitor and the intended beneficiary to which the law attaches a duty of care. In my judgment the case does not fall within either of the two categories of special relationships so far recognised. There is no fiduciary duty owed by the solicitor to the intended beneficiary. Although the solicitor has assumed to act in a matter closely touching the economic well-being of the intended beneficiary, the intended beneficiary will often be ignorant of that fact and cannot therefore have relied upon the solicitor.
However, it is clear that the law in this area has not ossified. ... In my judgment, this is a case where ... development should take place since there is a close analogy with existing categories of special relationship giving rise to a duty of care to prevent economic loss."
Lord Browne-Wilkinson said that a solicitor accepting instructions to draft a will knows that the future welfare of an intended beneficiary is dependent on his or her proper execution of the task. By accepting instructions, the solicitor assumes "responsibility for ... the task of procuring the execution of a skilfully drawn will knowing that the beneficiary is wholly dependent upon his carefully carrying out his function"[200]. His Lordship said that there were "therefore present many of the features which in the other categories of special relationship have been treated as sufficient to create a special relationship to which the law attaches a duty of care."[201] Lord Browne-Wilkinson added that general factors such as the transmission of property from one generation to the next being dependent upon the work of solicitors made it fair, just and reasonable to impose a duty of care in favour of a beneficiary.
As John Murphy has pointed out, Lord Browne-Wilkinson's use of the term "assumption of responsibility" was "most unconventional"[202]. Prior to White that term had been taken to mean an assumption of legal liability[203]. His Lordship's reasoning therefore departed from the law as previously understood. Moreover, with great respect to his Lordship, the decisive features that led the House of Lords to impose a duty in Hedley Byrne - reliance by, and an assumption of responsibility to, the plaintiff were missing in White.
Lord Nolan agreed with the reasons of Lords Goff and Browne-Wilkinson but added some comments of his own. He said that the beneficiaries "have suffered damage because of the [solicitors'] breach of their professional duty, and they are therefore entitled to the remedy - the only remedy - which the law can offer, notwithstanding the fortuitous aspects of the case and its unusual consequences"[204]. He was heartened by the fact that Ross - which held that a "beneficiary" could recover against a solicitor who had failed to warn the testator that the will should not be witnessed by a spouse of a beneficiary - had stood unchallenged for 15 years and had met with the approval of many academic writers[205]. Lord Nolan said that[206]:
"[A] professional man ... who undertakes to exercise his skill in a manner which, to his knowledge, may cause loss to others if carelessly performed, may thereby implicitly assume a legal responsibility towards them. The fact that he is doing so in pursuance of a contractual duty or a statutory function cannot of itself exclude that responsibility. The most that can be said is that it may be one of the circumstances to be taken into account in determining the nature and extent of the responsibility."
Lord Keith of Kinkel and Lord Mustill dissented. Their Lordships would have allowed the appeal. Lord Mustill questioned two assumptions of the beneficiaries' argument: (1) that there must be something wrong with the law if the beneficiaries did not recover money from the solicitors[207]; and (2) that the remedy must come from the law of tort[208]. He began his analysis of the suggested tortious cause of action by considering Hedley Byrne, in which he detected the four themes of "'mutuality', 'special relationship', 'reliance', and 'undertaking of responsibility'"[209]. His Lordship thought that the House of Lords had found "that the liability arose internally from the relationship in which the parties had together chosen to place themselves"[210]. Lord Mustill said that the element of mutuality was central to the decision and "that the legal responsibility accepted or undertaken by the person in question was one where the acceptance or undertaking was a reflection of the relationship in question."[211]
Lord Mustill then considered whether the principles in Hedley Byrne could help an intended beneficiary. But he held that there was no "special relationship" between the solicitor drafting the will and the beneficiary[212]. He said[213]:
"[The beneficiary] neither invites the solicitor to prepare the will, nor determines [his or her] conduct on the assumption that it will be skilfully and diligently prepared. There is no mutual relationship."
His Lordship went on to consider whether a new duty of care not based on the existing law should be developed for solicitor-beneficiary cases - "a specialist pocket of tort law". But he refused to create such a category because[214]:
"A broad new type of claim may properly be met by a broad new type of rationalisation, as happened in the Hedley Byrne case[215]; but rationalisation there must be, and it does not conduce to the orderly development of the law, or to the certainty which practical convenience demands, if duties are simply conjured up as a matter of positive law, to answer the apparent justice of an individual case. Be that as it may, the present case does not as it seems to me concern a unique and limited situation, where a remedy might be granted on an ad hoc basis without causing serious harm to the general structure of the law; for I cannot see anything sufficiently special about the calling of a solicitor to distinguish him from others in a much broader category ... I cannot discern a principled reasoning which could lead to the recognition of such an extensive new area of potential liability."
Lord Keith agreed, saying that "[t]o admit the plaintiffs' claim ... would in substance ... be to give them the benefit of a contract to which they were not parties"[216]. Further there was no basis on which to ground an action in tort[217]:
"The intention to benefit the plaintiffs existed only in the mind of the testator, and if it had received legal effect would have given them only a spes successionis of an ambulatory character."
If this case had to be decided by the English cases, I would reach the same conclusion as Lords Keith and Mustill. Their Lordships' conclusion that the solicitor owed no duty of care to the beneficiary accorded with both negligence doctrine and the decided cases. Furthermore, I find Lord Mustill's reasons for not extending the law persuasive. However, the test for determining whether the defendant owed the plaintiff a duty of care in negligence cases is not the same in Australia as it is in England.
The duty of care in negligence cases
In England, the courts consider three matters: (1) reasonable foreseeability of damage; (2) the existence of a relationship of proximity; and (3) the justice and reasonableness of imposing a duty of care in that category of case[218]. The best known definition of proximity is that of Deane J in Jaensch v Coffey[219] where his Honour said:
"It involves the notion of nearness or closeness and embraces physical proximity (in the sense of space and time) between the person or property of the plaintiff and the person or property of the defendant, circumstantial proximity such as an overriding relationship of employer and employee or of a professional man and his client and causal proximity in the sense of the closeness or directness of the relationship between the particular act or cause of action and the injury sustained ... The identity and relative importance of the considerations relevant to an issue of proximity will obviously vary in different classes of case and the question whether the relationship is 'so' close 'that' the common law should recognize a duty of care in a new area or class of case is ... likely to be 'difficult' of resolution in that it may involve value judgments on matters of policy and degree."
In England, the judges seem to be increasingly sceptical[220] of the value of proximity in determining whether a duty of care exists. One view is that it merely records a result that has been reached on other grounds[221].
In Australia, on the other hand, to date this Court has consistently emphasised the central place that proximity holds in determining whether a duty of care exists. In Stevens v Brodribb Sawmilling Co Pty Ltd[222], Deane J said that "the notion of proximity can be discerned as a unifying theme explaining why a duty to take reasonable care to avoid a reasonably foreseeable risk of injury has been recognized as arising in particular categories of case". The current emphasis in Australia on proximity as the central determinant of a duty of care reduces the persuasive force of English decisions on the duty of care in economic loss cases.
In addition, the English doctrine of duty of care in economic loss cases has been subjected to strong criticism by academic writers, particularly by Dr Jane Stapleton[223] who argued in a powerful and, to my mind, persuasive article that the "outcome of three decades of litigation is ... a complex, uncertain and anomalous pattern of decisions." She argued[224] that:
"The central flaw in the House of Lords' approach to economic loss is the assumption ... that difficult issues of duty should be analysed within and by analogy to pockets of 'relevant' case law. With respect, this can become a process akin to the tail wagging the dog, because the selection of the 'relevant' pocket can, at the outset, preclude consideration of factors or 'policies' which would provide a more coherent overall approach. If the 'pocket analysis' approach is abandoned and replaced by the more coherent approach of analysing the duty issue according to the policies which the courts have decided should govern the recognition of a duty of care, we would find like cases falling into pockets of like outcomes. But those pockets would be the natural end product of the analysis, not its dictator."
Much of Dr Stapleton's criticism concerning the English decisions on economic loss is equally applicable to Australian decisions. Australian courts like the English courts have also approached the question of duty in pure economic loss cases by focussing "on how the economic loss was caused rather than on characteristics, such as potential for indeterminate liability, on which policy concerns should centre."[225]
Weaknesses in the concept of proximity
The use of the concept or principle of proximity as the criterion of duty has not increased the predictability of judicial decisions or given a real explanation of the grounds upon which a duty of care is imposed in many economic loss cases. In a paper written[226] before I joined this Court, I expressed my scepticism about the usefulness of proximity as a principle or a guide for determining the existence of a duty of care. In Gala v Preston[227], however, I was a party to a joint judgment which held that a plaintiff's action failed because there was no proximity between the plaintiff and the defendant. But the present case has reinforced my scepticism as to whether the concept of proximity gives any real guidance in determining the existence of a duty of care in difficult and novel cases. In cases concerning economic loss where the plaintiff has not relied on the defendant's conduct, the concept of proximity provides no assistance in distinguishing between the cases (if any) where a duty of care is owed and those where it is not owed. Indeed, a majority of this Court recognised these difficulties in San Sebastian Pty Ltd v The Minister[228] when it said:
"The notion of proximity, because it limits the loss that would otherwise be recoverable if foreseeability were used as an exclusive criterion of the duty of care, is of vital importance when the plaintiff's claim is for pure economic loss. When the economic loss results from negligent misstatement, the element of reliance plays a prominent part in the ascertainment of a relationship of proximity between the plaintiff and the defendant, and therefore in the ascertainment of a duty of care. But when the economic loss results from a negligent act or omission outside the realm of negligent misstatement, the element of reliance may not be present. It is in this sphere that the absence of reliance as a factor creates an additional difficulty in deciding whether a sufficient relationship of proximity exists to enable a plaintiff to recover economic loss."
That "additional difficulty" is certainly present when the issue is whether a solicitor who prepares a will for a client owes a duty of care to a proposed beneficiary with whom the solicitor has had no dealings. In accepting the retainer to prepare the will, the solicitor owes the client contractual and tortious duties of care in respect of the preparation and execution of the will[229]. But absent an assumption of responsibility for the beneficiary's interest or a promise or representation to the beneficiary, why should the solicitor owe a duty of care to the beneficiary merely because that person may or will be affected by the solicitor's work for the client? After all, the testator owed no duty of care to the beneficiary. If the testatrix in this case had prepared her own will and had it witnessed by the beneficiary's husband, the beneficiary would have had no cause of action against the estate of the testatrix. So why should the law impose a duty of care in favour of the beneficiary upon the solicitor who is employed to do what the testatrix could have done free of duty? The fact that the solicitor is a professional person seems irrelevant to the existence of a duty to the beneficiary when that person has not relied on the solicitor to protect his or her potential interest. The common law rules of negligence liability do not impose any general duty on professional persons to protect other persons from the consequences of professional carelessness. Absent a contract with the plaintiff or Hedley Byrne mutuality, the professional standing of a person should be irrelevant to the existence of a duty.
No general duty to prevent economic loss to another
It is true that the solicitor owes a duty of care to the testator and, in a case like the present, is liable in nominal damages for breach of that duty. But upon what social, moral or economic principle can the law permit the beneficiary to be a free rider on the contract between the solicitor and the client? It cannot be because the careless conduct of the solicitor may cause economic loss to the beneficiary. Anglo-Australian law has never accepted the proposition that a person owes a duty of care to another person merely because the first person knows that his or her careless act may cause economic loss to the latter person[230]. Social and commercial life would be very different if it did. Indeed, leaving aside the intentional tort cases of wrongful interference with another person's legal rights (inducing breach of contract, intimidation and conspiracy, for example) a person will generally owe no duty to prevent economic loss to another person even though the first person intends to cause economic loss to another person. In our free enterprise society, no one questions the right of the trader to increase its advertising or cut its prices even though that action is done with the intention of taking the market share of its rivals.
In a case like the present, there is an additional reason for doubting the existence of a duty of care. The plaintiff suffered no loss in the sense of damage to her person, property or existing legal rights. The damage for which she seeks compensation is her failure to secure a benefit[231]. Speaking generally, damages for expectation losses are the province of contract law where an award of damages for the failure to secure a benefit results from the agreement of the defendant to subject himself or herself to an obligation to secure that benefit. Liability for an expectation loss in contract is voluntarily incurred. Tort law, on the other hand, typically imposes an obligation on a defendant independently of his or her agreement or wishes. But ordinarily in negligence cases, it imposes that obligation only in respect of some existing interest of the plaintiff[232]. As Lush J pointed out in Seale[233] to succeed in a common law action of negligence, "it was essential that some right of the plaintiff should be infringed by the defendant." Consequently, tort law has compensated for expectation losses only when those losses are the consequence of a wrongful invasion of the person, property or legal interest of the plaintiff. If the likelihood of an expectation loss constitutes a sufficient interest to found a duty of care in negligence cases, the basis of tort liability will be changed and the scope for claims of damages for economic loss is bound to increase.
Moreover, if the solicitor owes a duty of care to the beneficiary, it would seem to follow that the solicitor has an affirmative duty to warn or advise the beneficiary as well as the testator in cases like the present. If the solicitor owes a duty to the beneficiary, he or she must do all that is reasonable to protect the interests of the beneficiary and there must be some situations at least where reasonable care requires the solicitor to warn or advise the beneficiary. But the history of the law of negligence points against such an obligation.
Parallel with and derived from the principle that an action for negligence required an invasion of some legal right of the plaintiff was another fundamental rule of the common law. Absent a special relationship[234] between the plaintiff and the defendant - ordinarily arising from contract, the control of person or property or an assumption of responsibility by the defendant for the plaintiff's existing interests - the common law imposed no affirmative duty on a person to protect another. This rule was the natural outcome of the common law doctrine that the personal action on the case and later the tort of negligence protected only existing rights and interests. As Professor Benson has pointed out[235]:
"The legal principle that there is no liability for nonfeasance articulates a severely limited idea of responsibility toward others: individuals must only not injure what already belongs to others; protected interests are defined in terms of what others have ('suum'), not what they need or want."
To require the solicitor to take steps to protect a potential gift to the beneficiary, a person with whom the solicitor has had no dealings seems a radical departure from the principles of the common law.
Preserving doctrinal integrity
Few would doubt that a person in the beneficiary's position in this case should have a remedy against someone. But I do not think that the tort of negligence is the appropriate area of the law to remedy the "loss" which the beneficiary has suffered. In an ideal legal world, the plaintiff should be able to get the amount of the legacy that was intended for her, the residual beneficiary should not obtain what is effectively a windfall and the careless solicitor should be punished by her professional body by fine or suspension from practice. But the law of tort knows no means by which it can compel the residual beneficiary under this will to disgorge his "windfall". As a result, the solicitor will pay for more than the net social cost of her carelessness[236]. The residual beneficiary will keep his windfall even though the testator did not intend him to have it and even if the law gives the beneficiary a remedy against the solicitor. So for the courts to impose a duty of care on the solicitor in favour of the beneficiary and make her responsible for that person's "loss" solves only part of the problem that arises from a case like the present one. Perhaps this would not matter if the decision in this case and the decision in White v Jones could be shunted off to some siding in the law of torts to be brought out only for use against errant solicitors. But, like Lord Mustill in White, I cannot see how a decision in favour of the beneficiary can be quarantined from the general law of torts. Professor Feldthusen, for example, has said[237] that, if he had to make a prediction, he "would see the Canadian courts applying Ross v Caunters outside the beneficiary situation based on an assumption of professional responsibility."
If the law imposes an obligation on the solicitor to take reasonable care to protect the expectation interest of the named beneficiary, the obligation must be justified by reference to some principle or doctrine of negligence law. If the rule of law is to have any meaning, if judicial decisions are to be based on more than a judge's sense of justice, like cases must be decided alike and in accordance with a principle that transcends the immediate facts of the case. Proximity is too indeterminate a doctrine to provide a justification for imposing a duty on solicitors to protect the expected benefits of beneficiaries. So we must look for a principle. If one looks at the material facts of the present case, the principle that gives rise to the duty must be that a professional person owes a third party a duty to perform a service with proper care whenever the professional person promises to perform that service for a client and the client intends, and the professional person knows, that it will confer a benefit on the third party if it is performed[238]. The ramifications of such a principle are unpredictable, but it must have significant economic effects.
One certain effect is that the cost of professional services will increase. Insurers of professional persons are bound to increase their premiums. These days most professional persons practise their professions in very competitive environments. Few professions are so lucrative that practitioners can absorb costs and not increase their fees. Any increase in practitioners' insurance premiums is therefore likely to be passed on to those who retain their services.
The application of such a principle must also lead to a considerable, perhaps massive, expansion of the law of economic loss. Consider, for example, the case of the accountant who is paid a fee by a client to investigate the prospects of a business knowing that the client intends to purchase the business as a gift for a relative. Does the accountant owe the relative a duty of care? Is the accountant liable for the profits that the relative would have earned if, but for the accountant's negligence in assessing its viability, the business had been purchased? Does the insurance broker who is instructed to take out a life assurance policy for a client owe a duty of care to the proposed beneficiary? Is the broker liable to the beneficiary if, as the result of the broker's undue delay, the "assured" dies before the policy is taken out? Moreover, it is difficult to see why the duty should be confined to gifts as opposed to benefits. In that event, professional persons, acting in purely commercial situations, may often owe duties to third parties who stand to benefit from the retainer of a professional person by a client.
To give the beneficiary a remedy in negligence involves too great a departure from accepted doctrine and must inevitably extend the frontiers of legal liability. How far this extension will go in a world where commercial operations are becoming increasingly integrated and sophisticated is impossible to foresee. If change in the law is to be made, it should be done by the legislature which can deal with this special case, perhaps by amending the legislation relating to wills, rather than by extending the law of negligence in a way that departs from its basic doctrines.
In the courts below, however, the learned judges thought that the doctrine of proximity imposed a duty of care on the solicitor so that her breach of duty to her client became a breach of duty to the beneficiary. The other members of this Court accept that this is so. Various reasons are relied on:
(1) financial "loss" to the beneficiary is reasonably foreseeable;
(2) testators and the public generally rely on solicitors to effectuate testamentary intentions;
(3) the solicitor who agrees to draw up a will for a client assumes responsibility for effectuating the testamentary intentions of the client;
(4) there is no question of an indeterminate liability to an indeterminate class for an indeterminate time - only one person is usually affected and the extent of the "loss" is known at the time when the will was executed;
(5) the only person who has a valid claim has suffered no loss, and the only person who has suffered a loss has no valid claim[239];
(6) there is no conflict between the duty owed to the client and the duty owed to the beneficiary;
(7) if the solicitor retains custody of the will, then upon the testator's death the solicitor owes a duty to the executor to disclose the existence of the will[240];
(8) by undertaking to draw up the will, the solicitor is in a position to control whether the beneficiary will have the right to have the will administered; and
(9) the imposition of liability on the solicitor does not invade any area of liability the subject of an apparent exhaustive coverage by the legislature.
However, none of these reasons persuasively differentiates the present case from numerous other areas of social and business activity where a person is under no duty to prevent economic loss to another. Indeed, in many cases where the courts have held that there was no duty to prevent economic loss to the plaintiff, the plaintiff has actually relied on the defendant to perform a task. Individual investors, for example, rely on auditors and the Australian Securities Commission to monitor the activities of companies, and both have statutory duties in respect of their work. Yet in the absence of a representation and reliance or something similar, neither auditors nor the Commission owe a duty of care to prevent economic loss to investors even when only a single investor is involved[241]. Similarly, local government councils, although charged with the statutory duty of inspecting the foundations of new buildings, owe no duty of care to prevent economic loss to a purchaser of the building even though members of the public rely on councils to carry out this duty[242]. I fail to see how liability in negligence can be denied in these cases but imposed in this case. If the doctrine of proximity leads to the imposition of a duty of care in a case like the present, it ought to and must inevitably lead to the imposition of a duty in cases where previously it has been decided or assumed that there was no duty to prevent pure economic loss to another person.
In my opinion, only one of the grounds put forward to support a duty in the present case gives an arguably persuasive reason for distinguishing this case from the many other cases where it has been decided or assumed that there is no duty to protect against pure economic loss. That is the ground that in this case there is no question of an indeterminate liability to an indeterminate class for an indeterminate time. That ground is undoubtedly true in many will cases. But testators often live for years, even decades, after making a will. Their assets can also increase dramatically between the making of their wills and their deaths. If the gift is a residuary estate, shares in a company which prospers, or a large parcel of land the use of which is rezoned, the value of the gift may have increased many times between the date of the will and the death of the testator. Indeterminacy cannot therefore be regarded as wholly inapplicable in cases like the present one.
Moreover, lack of indeterminacy must be weighed against other factors. The fee for making most wills is very small - often enough it is done or, at all events, used to be done for nothing, particularly when the will is made in the course of or at the end of some other transaction. It does not seem reasonable that the solicitor who has received a small fee from a testator should be liable years after the event for many hundreds of thousands of dollars because a person with whom the solicitor has had no dealings has failed to secure a benefit. In the present case, for example, the solicitor has been held liable for $163,471.50, yet she was probably paid less than $300 for preparing the will.
One factor that has not been put forward but which supports a claim of a duty in a case like the present is that the beneficiary may often be in no position to protect himself or herself against the loss of the "benefit" under the will. No doubt a very careful beneficiary, upon learning of a proposed legacy, might seek his or her own legal advice about it. But many beneficiaries learn about a testamentary gift only upon the death of the testator. The opportunity of the plaintiff to protect himself or herself against loss is an important factor in denying a duty to protect the plaintiff from pure economic loss. Conversely, the absence of such an opportunity is a factor that points in favour of a duty. But it must be evaluated in the context of all the factors. In the present case, imposing a duty represents too great a departure from accepted doctrine and has such potential consequences for social and commercial relationships that the absence of an opportunity to protect against loss cannot be determinative.
Conclusion
In my opinion, imposing a duty of care in favour of a beneficiary is not the way to remedy the problem which arises when the beneficiary has failed to secure a legacy by reason of a solicitor's breach of duty to the testator.
The appeal should be allowed.
GUMMOW J.
The nature of the case
Olive Eileen Currey was born on 7 July 1921 and died, in Queensland, on 8 May 1991. Her husband predeceased her by several years. At the time of the events giving rise to this appeal, Mrs Currey lived alone in her house at 25 Perrott Street, Paddington, a suburb of Brisbane. Mr and Mrs Van Erp lived nearby at 25 Norwood Terrace. They had known Mrs Currey for ten or more years.
Mrs Currey's last will was dated 7 December 1990. In it she revoked all previous wills and appointed Jennifer Melnik sole executrix and trustee. The will was proved in the Supreme Court of Queensland and administration granted to the executrix on 23 July 1991.
By her will, Mrs Currey devised the property at 25 Perrott Street to her son, Mr W J Axen, and to Mrs Van Erp as tenants in common in equal shares. Mr Axen was born in 1940. Jennifer Melnik appears to have been the daughter of Mrs Van Erp. Mrs Currey also bequeathed to Mrs Van Erp certain of the furnishings of the house. She left the balance of the contents to Mr W J Axen and Mrs Van Erp as tenants in common in equal shares. The residue of the estate was given to Mr W J Axen with a gift over, in the event of his death, to Mrs Currey's three grandchildren. The signature and acknowledgment of the will by Mrs Currey was attested by the solicitor who had drawn the will upon Mrs Currey's instructions. This was the appellant, Mrs Hill, who carried on practice at Paddington. The will also was attested by Mr Van Erp, the husband of a beneficiary under the will, Mrs Van Erp. From this circumstance the present litigation arises.
Section 9 of the Succession Act 1981 (Q) ("the Act") states[243]:
"A will shall not be valid unless it is in writing and executed in manner hereinafter mentioned and required (that is to say) it shall be signed at the foot or end thereof by the testator or by some other person in his presence and by his direction and such signature shall be made or acknowledged by the testator in the presence of two or more witnesses present at the same time and such witnesses shall attest and shall subscribe the will in the presence of the testator but no form of attestation shall be necessary provided that:
(a) the Court may admit to probate a testamentary instrument executed in substantial compliance with the formalities prescribed by this section if the Court is satisfied that the instrument expresses the testamentary intention of the testator; and
(b) the Court may admit extrinsic evidence including evidence of statements made at any time by the testator as to the manner of execution of a testamentary instrument."
Section 15 of the Act deals with gifts to attesting witnesses. It provides:
"(1) Where any disposition of property (other than a charge or direction for the payment of any debt or for the payment of proper remuneration to any person, whether executor, administrator, solicitor or conveyancer, for acting in or about the administration of the estate of the testator) is, by will, made in favour of a person who attested the signing of the will, or the spouse of such person, to be held by that person or, as the case may be, that spouse beneficially, the disposition is null and void to the extent that it entitles that person, the spouse of that person or another person claiming under that person or that spouse to take property under it.
(2) The attestation of a will by a person to whom or to whose spouse there is made any disposition as aforesaid shall be disregarded if the will is duly executed without his attestation and without that of any other such person, whether or not the attestation was made upon the execution of a will before the passing of this Act."
Section 15(2) has no saving application in the present case. There were but two attesting witnesses, as I have indicated, and a spouse of one of them was the recipient of dispositions of property under the will. It follows that the gifts to Mrs Van Erp were null and void.
There is no provision in the Act with the width of s 12(2) of the Wills Act 1936 (SA). Whereas s 9(a) of the Act requires "substantial compliance" with the formalities prescribed, the South Australian statute authorises the Supreme Court to admit to probate as the will of a deceased person a document which, whilst not executed with the required formality, the Court is satisfied expresses testamentary intentions of the deceased[244].
One aim of Mrs Currey in enlisting the professional services of Mrs Hill was to ensure attainment of her wish, which it is not suggested changed over the remaining months of her life, to provide benefits from her estate to Mrs Van Erp. Plainly, it was reasonably foreseeable to a solicitor attending to supervise execution of the will that failure to observe the statutory requirements as to the identity of attesting witnesses, as they existed in Queensland, would cause the failure of any gift to a witness or the spouse of that person. The common law provides a remedy to the estate of Mrs Currey against the solicitor but it is accepted that this sounds in nominal damages. The remedy does nothing effectively to remedy miscarriage, by default of the solicitor, in effectuating the intentions of Mrs Currey. Mrs Van Erp enlisted the law of tort to provide her with an effective recourse against Mrs Hill.
The course of the litigation
Mrs Van Erp sued Mrs Hill in tort, seeking damages for negligence. The action was tried in the District Court at Brisbane (Morley DCJ). Judgment was entered for Mrs Van Erp for damages of $163,471.50. An appeal to the Queensland Court of Appeal (Fitzgerald P, Davies and Pincus JJA) was dismissed[245]. The appeal to this Court should also be dismissed.
The primary judge held that the damage sustained by Mrs Van Erp was the loss of the opportunity to receive and derive the advantage of the due administration of Mrs Currey's estate once the contingencies of death without a later inconsistent testamentary disposition had been satisfied. Had she sued the solicitor during the lifetime of Mrs Currey, Mrs Van Erp would have been claiming no more than the loss of a chance. However, it should be observed that, had the will been correctly attested, then, in the events that happened, Mrs Van Erp would have had, from the death of the testatrix, more than a spes successionis. She would have had, at least, the right to have the estate administered in accordance with the duties of the sole executrix[246]. The parties were agreed that the value of that to which Mrs Van Erp would have succeeded, if the will had correctly been executed and the estate duly administered, was, at all material times, $163,471.50.
Before the Court of Appeal the sole issue was whether Mrs Hill owed a duty of care to Mrs Van Erp. It was conceded that, if she did, she had been negligent and that negligence caused loss to Mrs Van Erp in the amount awarded. The appeal was dismissed. The reasoning in the Court of Appeal may be summarised by saying that a duty of care, and a sufficient relationship of proximity, were found by reference to the circumstances that the solicitor had undertaken to prepare the will for Mrs Currey with specific bequests and a specific devise to Mrs Van Erp, that it was foreseeable that Mrs Van Erp would not take those gifts if the will were not executed in accordance with the provisions of the Act, and that it was reasonable for Mrs Van Erp to expect that her position would be protected.
It was accepted in argument in this appeal that the law does not impose any general duty of care to avoid pure economic loss or prejudice even if that consequence was reasonably foreseeable. The dispute is as to what Mrs Van Erp had to establish beyond foreseeability in order to make out a duty of care owed to her by Mrs Hill.
White v Jones
Before us the respondent placed particular reliance upon the recent decision of the House of Lords in White v Jones[247]. However, although in that case the majority of the House held against the solicitors, at the outset two observations should be made. The first is that the facts there presented an issue in somewhat broader terms than do those in the present appeal. The second is that the reasoning of the majority contains diverse elements which provide no clear guide for the resolution of the present appeal.
A fundamental issue in White v Jones was one of how far the law should recognise, by remedy against the solicitor of the testator and in favour of the incipient beneficiary, the intention of a proposed testator which was evinced by means other than a will and which, by reason of default by the solicitor, was not translated into testamentary form with revocation of the current, and in the event, the last will of the testator. Here, the intention of Mrs Currey was evinced by a document executed by her, and effective to revoke all former wills. But, by reason of a failure by her solicitor to ensure compliance with necessary formalities in its execution as a will, the document was in part ineffective. That is to say, the dispositions in favour of Mrs Van Erp were rendered null and void by s 15 of the Act. The question is whether, despite the operation of s 15, Mrs Van Erp has a remedy to approximate her position to that she would have occupied had there been compliance with s 15[248].
In White v Jones, the first defendant was a "legal executive" employed by the second defendants, a firm of solicitors. He had accepted instructions to prepare a will for a client but, in breach of his professional obligation to the client, was dilatory and the client died before the will had been prepared. Instructions had been received on 17 July 1986 and the testator died on 14 September of that year. The instructions for the new will were that it was to reinstate the plaintiffs, the two children of the testator, who had been disinherited under an earlier will. The result of the inaction of the defendants was to leave that earlier will as the last will of the testator. In those circumstances, the House of Lords by majority (Lord Goff of Chieveley, Lord Browne-Wilkinson and Lord Nolan; Lord Keith of Kinkel and Lord Mustill dissenting) dismissed the appeal from the Court of Appeal (Sir Donald Nicholls V-C, Farquharson and Steyn LJJ[249]) which had allowed the appeal by the plaintiffs against dismissal of their actions.
As I have indicated, the judgments of the majority in the House of Lords reflect different processes of reasoning. These include reliance upon proximity, reasonable foreseeability, quasi-fiduciary law notions of "special relationship" and dependence, and what has been identified as "a transactional theory which utilises the idea of assumption of responsibility"[250]. And the judgments do not follow the same paths as had those in the Court of Appeal. Lord Goff of Chieveley said that[251]:
"[The] House should in cases such as these extend to the intended beneficiary a remedy under the Hedley Byrne principle by holding that the assumption of responsibility by the solicitor towards his client should be held in law to extend to the intended beneficiary who (as the solicitor can reasonably foresee) may, as a result of the solicitor's negligence, be deprived of his intended legacy in circumstances in which neither the testator nor his estate will have a remedy against the solicitor." (emphasis added)
Lord Browne-Wilkinson considered[252] that, whilst the law did not impose any general duty of care to avoid negligent misstatements or to avoid causing pure economic loss even if economic damage to the plaintiff was foreseeable, such a duty will arise if there is a "special relationship" between the parties. Here the intended beneficiary was "wholly dependent" upon the solicitor carefully carrying out his function[253]. His Lordship also used, of the solicitor, the phrase "assumption of responsibility for the task" and then concluded[254]:
"[B]y accepting instructions to draw a will, a solicitor does come into a special relationship with those intended to benefit under it in consequence of which the law imposes a duty to the intended beneficiary to act with due expedition and care in relation to the task on which he has entered".
Lord Nolan said[255] that, in the particular circumstances of the case, "the degree of proximity to the plaintiffs could hardly have been closer". His Lordship referred to the role of the defendants as family solicitors and to dealings in relation to the matter of the revised wishes of the testator between the defendants and one of the testator's daughters and the husband of the other daughter. His Lordship added[256]:
"It would be absurd to suggest that they placed no reliance upon the [defendants] to carry out the instructions given to them. I do not say that other potential legatees, less intimately concerned with the carrying out of the testator's wishes, would necessarily be deprived of a remedy: I simply point to the facts as being relevant to the pragmatic, case-by-case approach which the law now adopts towards negligence claims."
In his dissenting speech, Lord Mustill[257] referred to the conduct of the case on the basis of a stark choice "between a duty of general application or no duty at all". What appeared to his Lordship to be "an intermediate solution" had not been investigated either on the facts or the law and for that reason it was inappropriate to pursue it. What would have been involved in such an attempted "solution" is significant for the present appeal. The "special features" of the case which had not been relied upon by counsel were perceived as follows by Lord Mustill[258]:
"The solicitor, the testator and the intended beneficiaries were not strangers. When the division within the family had healed the testator convened a meeting at which he indicated his wish that the plaintiffs should benefit from his will, and asked the first plaintiff to telephone the solicitor and tell him that the will should be changed. This is what the first plaintiff in fact did. Some weeks later the first plaintiff made an appointment for the solicitor to see the testator after his return from holiday. This appointment was frustrated by the testator's illness and death. My Lords, I was for a time attracted by the possibility that a judgment in favour of the plaintiffs could be upheld on these particular facts on the ground that there existed a special relationship not very far distant from Hedley Byrne, even if for the reasons given I am unable to recognise a general duty of care towards intended beneficiaries."
The facts
It is appropriate now to look more closely at the facts as found in the present case.
Sometime after Mrs Currey was widowed and at her request, Mr Van Erp located in the telephone book two local solicitors in practice at Paddington, one female and one male. Mrs Currey said that she would prefer to engage the female solicitor, Mrs Hill. Mr Van Erp then, at Mrs Currey's request, made an appointment for Mrs Hill to attend at Mrs Currey's house to take instructions for her will. At this attendance, Mr Van Erp assisted Mrs Currey to receive Mrs Hill. Mrs Hill returned later and a will was executed. By then, the primary judge found, Mrs Hill was aware of the existence of Mrs Van Erp and that she was the spouse of the Mr Van Erp whom she had met and with whom she had spoken before attending upon and performing Mrs Currey's instructions.
After some interval of time, Mrs Currey indicated to Mr Van Erp that she wished to change the provisions of her will. At her request, Mr Van Erp again communicated with Mrs Hill. She attended upon Mrs Currey on or about 3 December 1990 and took instructions. Mrs Hill returned on 7 December with an engrossed will ready for execution. At Mrs Hill's request that he do so, Mr Van Erp attested Mrs Currey's execution of the will. The primary judge found that, whilst Mrs Hill had never met Mrs Van Erp, she was well aware of her existence and marriage to Mr Van Erp, and of her address and telephone number, they being the address and telephone number which she held from her dealings with Mr Van Erp.
Shortly after 7 December 1990, both Mrs Currey and Mr Van Erp told Mrs Van Erp that she was a beneficiary under the will and informed her of the nature and extent of the bequests to be received by her thereunder. On administration of the estate, Mrs Currey's next of kin entitled on an intestacy, claimed and received the bequests which otherwise would have been received, after due administration, by Mrs Van Erp.
The legal framework
I turn to consider the general framework of the legal relationships between the testatrix, her estate, the intended beneficiary, and the solicitor, within which the intended beneficiary makes the present claim in tort. One consideration of some significance when determining the existence of a duty of care is the provision already made, if any, by the general law in that regard. This is not with a view to supplanting by the tort of negligence other established principle, carefully developed in existing authority, but to determine whether there is a need consistently with the overall policy of the law to provide a coherent and comprehensive system of civil obligations, to supplement those established rules[259].
One of the important functions of an effective law of personal obligations is to facilitate the operation of those elements of the law of property which enable the transmission of ownership whether by a transaction inter vivos or post mortem. At least since the commencement of the Wills Act 1837 (UK)[260], s 3, the law has favoured a full power of testamentary disposition. That previously had not been the case[261]. In Queensland, s 7(1) of the Act empowers a person, by will, to devise, bequeath or dispose of any property to which that person is entitled at the time of his or her death, not being property held on trust and in respect of which that person has no power of disposition by will. That freedom of testation is qualified by formality requirements, including s 15 of the Act, and by the powers in respect of family provision conferred on the Supreme Court by Pt 4 (ss 40-44) of the Act.
The respondent submits that it is not to the point that the established rules as to privity and provision of consideration operate to exclude her from recovery in respect of the dereliction by the appellant solicitor in discharge of professional responsibility in and about the making of Mrs Currey's will. The legal profession plays, and is widely perceived to play, an important part in the exercise of the freedom of testation. In practice, the public relies on the legal profession for the preparation of effective wills, and a coherent law of obligations ought not to leave ineffectual, in a practical sense, the undoubted responsibility in that regard of the solicitor to the client.
It is commonplace that, particularly in the auxiliary jurisdiction, equity developed its doctrines and remedies to meet perceived inadequacies in the treatment by the common law of personal and proprietary rights and obligations. One example, with some significance for the present case, is the use of the trust to supplement rules that only a party to a contract can sue on it and that consideration must move from the promisee. In appropriate circumstances, equity recognised and enforced a trust for the benefit of the contractual promise in favour of a third party. That matter was discussed in this Court in Trident General Insurance Co Ltd v McNiece Bros Pty Ltd[262].
This case, like White v Jones, does not involve a third party C asserting a right to demand performance from the promisor, as where A promises B, for valuable consideration, that A will pay money or will transfer property to C. Nor is it a contract whereby A promises B that A will pay money or transfer property to B on terms that it then be paid by B to C or be applied by B for the benefit of C. Rather, the third party, here the intended beneficiary, seeks recompense which affords her protection against negligent performance by the promisor, the solicitor, of the solicitor's obligations to the promisee, the testator.
In White v Jones, in the Court of Appeal, Sir Donald Nicholls V-C said[263]:
"The law of contract is unable to provide the remedy [against the solicitor]. In some cases, where the purpose of a contract is to confer a benefit on a third party, the purpose can be achieved, in the event of breach, by the court making an order compelling the party in breach specifically to perform his obligation to make a payment or confer some other benefit on a third party: see Beswick v Beswick[264]. That route is not available here. The solicitor did not agree to confer a benefit on the intended beneficiary. He agreed to take steps to enable his client to do so. Specific performance of that agreement is no longer possible once the client has died. I have, indeed, considered whether a remedy for breach of contract could be shaped whereby, the client having lost the opportunity to make a gift to the intended beneficiary, (1) his estate should be regarded as having lost a sum equal to the amount of the intended gift, and (2) the executors should hold that sum, when recovered from the solicitor, upon trust for the intended beneficiary."[265]
In the event, his Lordship did not shape any such remedy. In the House of Lords Lord Goff of Chieveley considered but rejected[266] the possibility of bringing the instant case within the group of decisions described in The Albazero[267]. There a plaintiff may sue in contract and recover damages for a loss suffered by a third party on the footing that the plaintiff be accountable to the third party for the damages so recovered[268]. It should be borne in mind that whatever criticisms may fairly be made of the privity doctrine, there remains "a sensible concern not to allow every breach of contract to generate a tort claim by any third party who had an interest in the performance of that contract"[269].
Mrs Van Erp does not frame her complaint as one against the next of kin, alleging their unjust enrichment at her expense[270]. She is correct in not doing so. There has been some support in the academic literature for development of a remedy to force the party taking under the unaltered or unrevoked will to transfer the benefit in question to the intended beneficiary[271], at least where that party knew of the later and, in the event, unfulfilled intentions of the testator[272]. But in the present case the qualifying or vitiating factor would be negligence of Mrs Hill, something for which the next of kin bore no responsibility. Moreover, the judgment of Peter Gibson LJ in Halifax Building Society v Thomas[273] and the writings of the commentators suggest that a claim of this nature would fail for additional reasons. The enrichment of the next of kin was not "at the expense of" Mrs Van Erp[274]. At best she was a volunteer. Nor is it clear that the wealth in question would "certainly" have vested in Mrs Van Erp had it not been "intercepted" by Mrs Hill and diverted to the next of kin whilst "en route" from the testatrix[275]. Moreover, it appears[276] that much restitutionary theory is concerned with restoration of benefits subtracted from the wealth of the plaintiff rather than with provision of a means of fulfilling expectations[277].
Nor is it suggested that at any time before her death Mrs Currey made an agreement with Mrs Van Erp to make and leave unrevoked a valid will containing a specific legacy or devise to Mrs Van Erp. In such cases, but subject to any necessary compliance with the requirements as to writing specified by the Statute of Frauds and its modern successors, repudiation of the promise by the testator during the lifetime of the testator may found an action in damages for breach of contract[278]. Failure to perform the contract by reason, for example, of the promisor dying intestate may found an action against the estate for damages. At least in certain circumstances, particularly if the contract is to devise or bequeath specific property, a trust may bind the estate in favour of the proposed beneficiary. Relevant principles are discussed by the Privy Council in Schaefer v Schuhmann[279] and in this Court in Palmer v Bank of New South Wales[280].
I have referred to the intervention of equity by the enforcement of trusts in this area. As the illustrations given above show, the intended beneficiary usually will be a volunteer, unable to rely upon contractual rights in his or her favour. In Seale v Perry[281], Murphy J was a member of the majority which allowed the appeal by the solicitor against the award of damages to the plaintiffs, the testamentary gift to whom by the solicitor's client had failed because the will had not been attested according to law. His Honour said[282] that the plaintiffs were volunteers whom equity would not assist; nor would equity perfect the imperfect gift.
Nevertheless, in Seale v Perry consideration no doubt passed from the client to the solicitor. The plaintiffs would have benefited from proper performance of that contract but were strangers to it. It is true that the general principle is that equity does not assist volunteers. But, as Mason CJ and McHugh J pointed out Corin v Patton[283], the rationale for refusing to complete an incomplete gift is that the donor should not be compelled to do so, the decision to give being a personal one for the donor to make. That consideration does not apply where the complaint of the prospective donee is that the donor died with an apparently unchanged intention to confer testamentary bounty, but that intention has miscarried for want of compliance with legal formalities.
The cases grouped under the headings "secret trust" and "mutual wills" illustrate equitable intervention which has the effect of protecting the intended object of testamentary bounty against the consequences of the failure of the testator to comply with legal formalities. Three of the mainsprings of equitable intervention have for a long time been "[f]raud, [a]ccident, and things of [c]onfidence"[284].
An example is provided by the reasoning in the decisions of the Irish Court of Chancery in Segrave v Kirwan[285] and of the House of Lords in Bulkley v Wilford[286]. This suggests that if Mrs Hill had been the next of kin of Mrs Currey, Mrs Hill would have been treated as trustee for Mrs Van Erp of her interest as next of kin in the Perrott Street property. In the second case, the Earl of Eldon attributed, with approval, to the Irish Chancellor, Sir Anthony Hart, the following statement with respect to the lawyers in these cases[287]:
"That is what you ought to have known; you ought to have known it, and you shall not take for your own benefit that which you have derived from your professional ignorance".
However, where a testator has failed to revoke an earlier testamentary gift, by reason of non-compliance with legal formalities, there is, without more, nothing fraudulent or unconscientious on the part of the beneficiary which calls for the imposition upon the beneficiary of a constructive trust in favour of the intended substitute beneficiary[288]. Nor is there any relevant "accident" to enliven equity.
From this concern with "accident" developed equity's intervention in cases of mistake, and the remedies of rectification and rescission. Nevertheless, from at least the time of Lord Hardwicke LC[289], where there is no equitable fraud, in general equity has set its face against relieving against mere "accidents" or errors which cause to miscarry the intention to make a legally effective voluntary disposition of property on death[290].
Accordingly, the claim by Mrs Van Erp in negligence was made in circumstances where, as they presently exist, the other constituent elements comprising the general law of civil obligations afforded her no satisfactory remedy in respect of the failure of Mrs Currey successfully to implement her testamentary intentions in favour of Mrs Van Erp. The question then becomes one of the role, if any, of the law of tort, particularly negligence, to provide a remedy.
Known reliance and assumption of responsibility
The primary task of the courts is to quell controversy, not only as to matters of fact, but by appropriate development of principle. The goal must be that, so far as practicable, the rights of litigants, individual, corporate, or governmental, may be ascertained, and the correlative liabilities accepted, by reference to criteria of some specificity and without recourse to the courts at trial, let alone appellate, level. The expansion of statutory regimes which operate upon private rights by reference to broadly expressed curial powers plainly impedes the attainment of such objectives. However, in the present case one is dealing not with statute but with the development by the courts themselves of the general law. The content of the applicable principles of general law in a given case should not be a jury question. If it were, so that no case was certain and none hopeless, such a state of affairs would be a standing reproach to the common law system[291].
It may be expressing the point too strongly to say that any attempts to establish a single general principle of liability for all negligence cases, "which run the gamut from physical injury to emotional distress to various kinds of economic loss", will be shown "to be as hopeless as it is unwise"[292]. Nevertheless, some such concern does appear to be reflected in the joint judgment in Bryan v Maloney[293]. There their Honours described as "special" the categories of case in which a duty to take reasonable care to avoid causing mere economic loss would arise. They added:
"Commonly, but not necessarily, they will involve an identified element of known reliance (or dependence) or the assumption of responsibility or a combination of the two."
The use of the imprecise and beguiling but deceptively simple terms "known reliance" and "assumption of responsibility" in a number of recent decisions in this field has been subject to stringent criticism by judges[294] and in academic writing. Doubt has been expressed that they have sufficient coherence to dispose of novel cases[295]. Further, it has been said that the picture of liability, now hidden by the language of voluntariness and reliance, is particularly untidy and beset with a multiplicity of concerns, and that the law of negligence would benefit greatly were the courts to set aside these conceptual veils and confront this complex picture[296].
The objective of such confrontation should be that thereafter, on given facts, issues of liability will be susceptible of determination without recourse to the courts. However, the field of liability in negligence for pure economic loss is a comparatively new area. It also is a developing area. The case law will advance from one precedent to the next.
In the present case, the respondent, Mrs Van Erp, did not assert in her favour any identified element of known reliance or dependence by her upon the discharge by Mrs Hill of her professional obligations in seeing to the execution of Mrs Currey's will. However, it was contended that Mrs Hill voluntarily assumed responsibility for the making by the testatrix of a valid will reflecting her intentions, including the bounty to the respondent. The submission was that Mrs Hill did so by holding herself out as having and lending a professional skill for that purpose.
The difficulty with that submission is that the evidence does not disclose, in any specific sense, any assumption of responsibility by Mrs Hill other than to her client. In Marc Rich & Co v Bishop Rock Ltd[297], Lord Steyn, speaking for the majority of the House of Lords, responded to the submission that the classification society had assumed responsibility to the cargo owners when conducting a survey of the vessel in question (which later sank) on instructions of the ship owners, by stressing that it was "not even suggested that the cargo owners were aware that [the society] had been brought in to survey the vessel". On the other hand, in White v Jones Lord Nolan said[298]:
"[A] professional man ... who undertakes to exercise his skill in a manner which, to his knowledge, may cause loss to others if carelessly performed, may thereby implicitly assume a legal responsibility towards them."
In White v Jones[299], Lord Browne-Wilkinson sought to meet criticism of the use in such contexts of the phrase "assumption of responsibility". His Lordship said that it should be understood as referring "to a conscious assumption of responsibility for the task rather than a conscious assumption of legal liability to the plaintiff for its careful performance". Any such general notion of "assumption of responsibility" by reference to the performance of services and without identification of those to whom or for whose benefit they are performed has attracted criticism[300], with which I agree.
The role of the law of tort
Bingham LJ has observed that, like equity, the law of torts may, in appropriate circumstances, fill what otherwise are perceived to be "gaps" in what should be one coherent system of law[301]. Professor Francis Reynolds has written[302]:
"The aim of the law should be to devise principles which provide a way of solving disputes between private persons (including of course corporations); rivalry between principles, as opposed to a study of their interaction and interrelation, is unlikely to be productive. We are used to such interaction of the principles of restitution with contract and (subject to problems of integration) equity. We should accept it also in the case of tort."
That, of course, is not to assert that the function of the law of tort, with respect to recovery of economic loss caused other than by reliance upon deceitful statements, is limited to the filling in of gaps left by the law of contract. But it is a starting point for consideration of the present case.
The point may be illustrated by reference to Hawkins v Clayton[303]. In that case Brennan J (a member of the majority) pointed out[304] that there was no pleading of a contract between the solicitors and the testatrix which governed the obligations of the solicitors to disclose the will to the nominated executor or beneficiaries after the death of the testatrix. Had there been such a contract, the benefit, on the death of the testatrix, would have passed to the executor if no beneficial interest in the promise had been conferred on the executor when the promise was made. In his Honour's judgment, the duty of care upon the solicitors, to find the executor after the death of the testatrix and to inform him of the existence and contents of the will and of their custody of it, arose from two considerations. The first was the purpose for which custody had been accepted by the solicitors. The second was that concealment of the will of a deceased testatrix would preclude enjoyment of the interests in property created by it, as well as from the foreseeable consequences of non-disclosure[305]. Brennan J said[306]:
"If the custodian of the will has reasonable grounds for believing that the executor is ignorant of the will, it is foreseeable that non-disclosure of the will to the executor will result in the will not being produced and not being made effectual. Unless some duty of disclosure be imposed on the custodian and be discharged by him, the will would have to continue in the custodian's safekeeping indefinitely, and the purpose for which the custodian accepted custody would go unfulfilled. Some duty of disclosure must be imposed on the custodian."
The result was that the law of tort assisted, by the recovery of damages from the custodian solicitors, realisation of the intention of the testatrix in making the will and leaving it unrevoked, and the expectation of those whom the testatrix intended, subject to due administration, to receive her estate. The custodian solicitors had been in a position of control over the realisation of the testamentary intentions of the testatrix[307]. This affords guidance as to the appropriate path to be followed in the present case.
Does it matter that the result of so doing will be to compensate for failure in the mere expectation of receipt of the testatrix's bounty? A basic difference between the measure of damages recoverable in contract and tort often is said to be that it is only in contract that damages may be recovered for expectations or benefits not realised, as opposed to losses actually suffered or expenses incurred. The substance of the proposition is that the objective of damages in contract is to put the plaintiff in the position the plaintiff would have enjoyed if the contract had been performed whilst award of damages in tort seeks to place the plaintiff in the position that would have been occupied if the tort had not been committed. However, care is needed before accepting any such propositions as universally applicable[308]. In this case, the complaint of the plaintiff arises from failure to perform services so that the testamentary benefit has not been provided. The allegation here of pure economic loss thus embraces (and may properly embrace) failure to provide the benefit, an "expectation interest"[309].
The disposition of this appeal
One asks what there was in the circumstances, including the existence of Mrs Van Erp as the object (identified by Mrs Currey to Mrs Hill) of intended testamentary bounty, which was sufficient to generate, between Mrs Hill and Mrs Van Erp, a duty of care in tort to supplement the dry right of action by the estate against Mrs Hill310.
The matter may be approached by asking whether the relationship between Mrs Hill and Mrs Van Erp was "equivalent to contract". That term was used by Lord Shaw in Nocton v Lord Ashburton[311] and taken up by Lord Devlin in Hedley Byrne & Co Ltd v Heller & Partners Ltd[312]. It was directed by their Lordships immediately to cases where there was an "assumption of responsibility" in circumstances in which, but for the absence of consideration, there would be a contract. Here there was a contract. But Mrs Van Erp was not a party to it, although if the contract had been duly performed she would have benefited therefrom. The use of contractual analogies in development of new duties of care may make little sense where what is involved is the attachment of responsibilities to relationships which in substance and form are non-contractual. However, that is not this case.
The expression "equivalent to contract", in the context of the present factual matrix, may be understood as embracing a situation where (a) the transmission of the property in question from the client of the defendant to the plaintiff was the objective sought to be accomplished by the contract, and (b) the plaintiff had no interest in the matter adverse to that of the client, yet default by the defendant in performance of her contractual obligations otherwise sounds only in ineffective legal remedies. The duty of the solicitor was one of imperfect obligation. The law of tort operates in such circumstances to complete and vindicate fulfilment of that contractual obligation.
Dean Prosser has pointed out[313] that, in the development of the law relating, for example, to the duties of bailees to bailors and of occupiers of land to invitees and licensees, there have been other instances of extension of liability in negligence by reference to concurrent contractual relationships. More recently, in Al-Kandari v J R Brown & Co[314], Bingham LJ said:
"A solicitor owes a duty of care to his client. If the client intends to confer a benefit on a third party, the solicitor may owe a duty to the third party to take reasonable care to see that effect is given to the client's intentions."
This is an illustration of the proposition espoused by Mason CJ, Deane and Gaudron JJ in Bryan v Maloney[315] that, in some circumstances, the existence of a contract will provide the occasion for, and constitute a factor favouring the existence of, a liability in negligence between one or other of the parties to the contract and a third party.
It is, as I have indicated, well understood that the trust may operate to protect the interests of those concerned in a contractual relationship and to vindicate rights derived therefrom. This was stressed by Mason and Deane JJ in Gosper v Sawyer[316]. In a case such as the present, so also does the law of tort. That was the approach taken by Sir Donald Nicholls V-C in White v Jones[317]. The result is to assist the desirable coherence of the law of obligations.
Not only the foreseeability of harm to Mrs Van Erp as specific legatee and devisee but a complex of other factors combine to summon into existence a duty of care owed by Mrs Hill to Mrs Van Erp to ensure execution of the will in such a manner as not to attract the invalidating operation of s 15 of the Act. These matters include the extent to which the engagement of Mrs Hill by the testatrix plainly was designed to enhance the economic position of Mrs Van Erp as a particular individual, the control exercised (as a practical matter) over the realisation by the testatrix of her testamentary intentions towards Mrs Van Erp, and the closeness of the connection between the request by Mrs Hill to Mr Van Erp that he attest the will and the direct legal effect thereof, being the consequent failure of the gifts to Mrs Van Erp by the will. There is also the public interest in the promotion of professional competence and the avoidance of disappointment of the wishes and expectations of testators and beneficiaries by negligent actions of solicitors[318].
Consequences
So to determine the present matter is to accept what Lord Mustill, in the passage from his dissenting judgment in White v Jones[319] set out earlier in these reasons, would have found attractive as an "intermediate solution" deriving from the special features of the particular case. It is by no means to espouse any general proposition to the effect that if A promises B to perform a service for B which B intends, and A knows, will confer a benefit on C if performed, A owes to C a duty in tort to perform that service with reasonable skill and care[320]. The question whether this or any variant of a proposition in such broad terms[321] should be accepted must be left for another day. The present case lies in a narrower compass. Recently, in Goodwill v Pregnancy Advisory Service[322], Peter Gibson LJ said:
"It must be recognised that White v Jones belonged to an unusual class of cases. A remedy in tort was fashioned to overcome the rank injustice that the only persons who might have a valid claim (the testator and his estate) had suffered no loss and the only persons who had suffered a loss (the disappointed beneficiaries) had no claim."
In Bryan v Maloney[323], Mason CJ, Deane and Gaudron JJ said:
"One policy consideration which may militate against recognition of a relationship of proximity in a category of case involving mere economic loss is the law's concern to avoid the imposition of liability 'in an indeterminate amount for an indeterminate time to an indeterminate class'."
Their Honours were referring to the well-known passage in the judgment of Cardozo CJ in Ultramares Corporation v Touche[324]. They continued[325]:
"Another consideration is the perception that, in a competitive world where one person's economic gain is commonly another's loss, a duty to take reasonable care to avoid causing mere economic loss to another, as distinct from physical injury to another's person or property, may be inconsistent with community standards in relation to what is ordinarily legitimate in the pursuit of personal advantage."
Neither of these considerations applies in the present case in a manner adversely to the recognition of liability in the appellant. The existence of a duty of care owed to Mrs Van Erp by Mrs Hill does not involve the creation of a liability which is indeterminate as to quantum, identity of plaintiff, or time. There is no occasion for imposition of the "control mechanisms" which have been seen as necessary curbs upon liability for negligent misstatement or for pure economic loss in such cases[326].
Further, escape by Mrs Hill from financial responsibility for failure to exercise professional skill in accordance with her undertaking would be inconsistent with what might be thought ordinarily legitimate in the pursuit of personal advantage. Nor, as I have sought to demonstrate, does the law otherwise offer to a person in the position of Mrs Van Erp recourse in respect of the consequences of negligent performance by Mrs Hill as promisor of professional duties owed to Mrs Currey as promisee.
Lord Browne-Wilkinson pointed out in White v Jones[327] that in a class of case (which includes this appeal) the consequences of the negligence of a solicitor usually will not immediately be apparent and will take effect only on the death of the testator. At that point in time the interest of the intended beneficiary would have matured beyond a spes, yet the error which will cause this not to come to pass will have become permanently incapable of direct remedy in jurisdictions where there is no statutory provision such as those found in South Australia, New South Wales and Victoria[328].
Moreover, in a case such as the present there can be no conflict of interest between the solicitor and the testatrix and the intended beneficiaries. To impose upon the solicitor a duty in tort towards the intended beneficiaries is not to mandate a conflict of interest. The duty owed by Mrs Hill to Mrs Currey involved the implementation of Mrs Currey's wish to bestow her property upon Mrs Van Erp. The existence of a duty of care in tort owed by Mrs Hill to Mrs Van Erp does not cut across the basic proposition that, subject to professional rules and standards, the solicitor owes duties to the court as well as its officers and to the client but not, in general, to the other parties with whom the client is dealing in the relevant transaction.
In White v Jones, the Vice-Chancellor[329] illustrated this basic proposition by contrasting cases such as that before him with various examples. These illustrated such propositions as that the solicitor for the vendor does not normally become subject to a duty of care to the purchaser[330]. The solicitor acting for a party who is engaged in "hostile" civil litigation owes a duty to the client and to the court but normally does not owe any duty to the opponent of the client[331]. Reference might also be made to Sutherland v Public Trustee[332]. The plaintiffs were the step-children of the testator. They had been residuary beneficiaries under his earlier will. He had firmly made up his mind to make a will which excluded them and left his entire estate to his wife who, in the event, predeceased him. Relatives of the testator, other than his step-children, then took on intestacy. The solicitor who drew the will had raised with the testator the possibility of intestacy on the prior death of his wife, but the testator would not countenance inclusion of any gift over. The New Zealand Supreme Court held that there was no duty of care on the part of the solicitor to persons who the testator had deliberately refused himself to nominate.
The imposition of liability upon the appellant in tort as sought by the respondent does not invade any area which the legislature has dealt with in the Act in a fashion intended to be exhaustive. The effect is not to gainsay the operation of s 15, but to reinforce the need for professional advisers to ensure compliance with it by testators.
"Proximity"
The result I have reached may be expressed as consistent with a finding of sufficient proximity. However, I have eschewed use of that term in endeavouring to explain the path by which I conclude that the appeal should be dismissed. "Proximity" may be no more than "the currently fashionable touchstone of 'duty'"[333]. My own view is that, in the field of liability for pure economic loss, as elsewhere, the concept of proximity is of limited use in the determination of individual disputes[334]. It may provide a broad conceptual "umbrella" beneath which the concerns particular to discrete categories of case can be discussed. As one recent English commentator has put it[335]:
"Judges now accept that the concept is no more than a broad umbrella beneath which more specific criteria for the imposition of duties operate in particular categories of case."
To my mind, there is real difficulty in treating the requirement of a relationship of proximity as an overriding requirement which provides the conceptual determinant (or a determinant[336]) for the recognition of an existence of a duty to take reasonable care to avoid reasonably foreseeable risk of injury. It may well be that the notion of proximity provides a unifying theme for various categories of case, the genus of which they are species. Each species provides what Professor Morison identified as "a short method of referring, with some particularity and correctness, to the specific set of concrete circumstances giving rise to the duty of care in the individual case"[337].
Thus, each of Burnie Port Authority v General Jones Pty Ltd[338] and Bryan v Maloney[339] provides authority for a distinct species of negligence. The first is concerned with a person who takes advantage of the control of premises to introduce a dangerous substance, to carry on a dangerous activity, or to allow another to do one of those things. The second deals with the duty of a builder to a subsequent owner as regards diminution in value of the structure when the inadequacy thereof first becomes manifest by reason of consequent damage to its fabric. Each species displays a particular manifestation of the notion of a relationship of proximity[340]. But, by itself, the notion of proximity, used as a legal norm, has the uncertainties and perils of a category of indeterminate reference, used with shifting meanings to mask no more than policy preferences[341].
An analogy may help make the point. In a sense it is true that much of equity is concerned with the prevention, or unravelling of the consequences, of unconscientious conduct. Many such situations may usefully be addressed from that starting point. But recitation of the precept stops far short of conveying the content of that sophisticated body of law. This includes the complex doctrines and particular remedies devised and developed by the learning and sagacity of the great equity judges since at least the Chancellorship of Lord Nottingham.
Likewise, in David Securities Pty Ltd v Commonwealth Bank of Australia[342], this Court decided that it was not legitimate to determine whether an enrichment is unjust by reference to some subjective evaluation of what is fair or unconscionable. The Court rejected the proposition that unjust enrichment is a definitive legal principle according to its own terms, and not just a concept. Accordingly, in a given case, recovery depends upon the existence of some qualifying or vitiating factor such as mistake, duress or illegality[343].
To speak of "proximity" is to invite a series of questions which spring from the particular circumstances of the case in question. Put another way, as it was in the Supreme Court of Canada (by La Forest J in Canadian National Railway Co v Norsk Pacific Steamship Co[344]), proximity "expresses a result, rather than a principle". Nevertheless, I would, with respect, accept (as Dawson J put it in Gala v Preston[345]) that it would be going too far to say that the notion of proximity is entirely without legal content and that no principles emerge from the process of extrapolation from decided cases or categories of decided cases. His Honour said:
"For example, there are reasons of general, if not universal application, which lie behind the rule which, for the most part, denies recovery of damages for pure economic loss or the rule which restricts the recovery of damages for nervous shock to a particular kind of plaintiff. But it is obvious that the search for a single principle underlying the concept of proximity is bound to be unsuccessful."[346]
Conclusion
The appeal should be dismissed with costs.
[1] [1995] UKHL 5; [1995] 2 AC 207.
[2] White v Jones [1995] UKHL 5; [1995] 2 AC 207 at 256-257.
[3] [1963] UKHL 4; [1964] AC 465.
[4] [1995] UKHL 5; [1995] 2 AC 207 at 261-262.
[5] [1982] VR 193.
[6] [1995] UKHL 5; [1995] 2 AC 207 at 259-260.
[7] [1980] Ch 297 at 303.
[8] [1982] VR 193. See at 198-199 per Lush J and at 206-207 per Murphy J; contra at 236ff per McGarvie J.
[9] [1980] WAR 97.
[10] [1987] Tas R 60 (see White v Jones [1995] UKHL 5; [1995] 2 AC 207 at 255-256).
[11] See Phillips v Britannia Hygienic Laundry Co [1923] 1 KB 539; Stennett v Hancock [1939] 2 All ER 578; Malfroot v Noxal Ltd (1935) 51 TLR 551.
[12] (1822) 11 Price 400 [147 ER 512].
[13] (1822) 11 Price 400 at 407-408 [147 ER 512 at 515]; see also at 408-409 [at 515] per Graham B and at 409-410 [at 515] per Garrow B.
[14] [1963] HCA 15; (1963) 110 CLR 74 at 84.
[15] [1932] AC 562.
[16] [1963] HCA 15; (1963) 110 CLR 74 at 85.
[17] See White v Jones [1995] UKHL 5; [1995] 2 AC 207 at 223.
[18] [1995] UKHL 5; [1995] 2 AC 207 at 224; see also at 232-233 per Farquharson LJ; at 236, 238 per Steyn LJ.
[19] As suggested in Weir, "A Damnosa Hereditas?" (1995) 111 Law Quarterly Review 357 at 359.
[20] See Caltex Oil (Australia) Pty Ltd v The Dredge "Willemstad" [1976] HCA 65; (1976) 136 CLR 529 at 555.
[21] See San Sebastian Pty Ltd v The Minister [1986] HCA 68; (1986) 162 CLR 340 at 354, 369.
[22] [1963] UKHL 4; [1964] AC 465.
[23] [1995] UKHL 5; [1995] 2 AC 207 at 287-290.
[24] (1970) 122 CLR 628; [1971] AC 793.
[25] See [1976] HCA 65; (1976) 136 CLR 529 at 555-556, 575-579, 591-593, 606 and cf 597.
[26] Caltex Oil (Australia) Pty Ltd v The Dredge "Willemstad" [1976] HCA 65; (1976) 136 CLR 529 at 573-574.
[27] San Sebastian Pty Ltd v The Minister [1986] HCA 68; (1986) 162 CLR 340 at 366-367.
[28] Sellars v Adelaide Petroleum NL [1994] HCA 4; (1994) 179 CLR 332 at 362.
[29] [1995] UKHL 5; [1995] 2 AC 207 at 257-258.
[30] See San Sebastian [1986] HCA 68; (1986) 162 CLR 340 at 353-354.
[31] [1995] UKHL 5; [1995] 2 AC 207 at 268.
[32] See Hawkins v Clayton [1988] HCA 15; (1988) 164 CLR 539; Midland Bank v Hett, Stubbs & Kemp [1979] Ch 384; Ross v Caunters [1980] Ch 297; Henderson v Merrett Syndicates Ltd [1994] UKHL 5; [1995] 2 AC 145; White v Jones [1995] UKHL 5; [1995] 2 AC 207; cf Robertson v Fleming (1861) 4 Macq 167; Groom v Crocker [1939] 1 KB 194.
[33] cf Trident General Insurance Co Ltd v McNiece Bros Pty Ltd [1988] HCA 44; (1988) 165 CLR 107.
[34] [1980] Ch 297.
[35] (1861) 4 Macq 167.
[36] [1932] AC 562.
[37] [1982] VR 193.
[38] See BT Australia Ltd v Raine & Horne P/L [1983] 3 NSWLR 221 at 231.
[39] [1995] UKHL 5; [1995] 2 AC 207.
[40] [1914] AC 932.
[41] [1963] UKHL 4; [1964] AC 465.
[42] [1983] NZLR 37; cf First City Corporation Ltd v Downsview Nominees Ltd [1990] 3 NZLR 265 at 275.
[43] See, for example, Whittingham v Crease & Co (1978) 88 DLR (3d) 353; Peake v Vernon & Thompson (1990) 49 BCLR (2d) 245; Heath v Ivens, McGuire, Souch & Ottho (1991) 57 BCLR (2d) 391 (but see (1993) 77 BCLR (2d) (xxxi)); Smolinski v Mitchell [1995] 10 WWR 68.
[44] See, for example, Biakanja v Irving 320 P 2d 16 (1958); Lucas v Hamm 364 P 2d 685 (1961); Licata v Spector 225 A 2d 28 (1966); Auric v Continental Casualty Co 331 NW 2d 325 (1983); Hale v Groce 730 P 2d 576 (1986); Walker v Lawson 514 NE 2d 629 (1987); cf Viscardi v Lerner 510 NYS 2d 183 (1986); Spivey v Pulley 526 NYS 2d 145 (1988); Deeb v Johnson 566 NYS 2d 688 (1991).
[45] See Watts v Public Trustee [1980] WAR 97 at 100-103.
[46] See Finlay v Rowlands [1987] Tas R 60 at 63-64.
[47] [1988] HCA 15; (1988) 164 CLR 539 at 581.
[48] [1980] Ch 297.
[49] [1932] AC 562.
[50] [1995] UKHL 5; [1995] 2 AC 207.
[51] [1995] HCA 17; (1995) 182 CLR 609 at 632.
[52] See per Lord Reid in Dorset Yacht Co v Home Office [1970] UKHL 2; [1970] AC 1004 at 1027.
[53] Ultramares Corporation v Touche 255 NY 170 at 179 (1931) [174 NE 441 at 444].
[54] [1963] UKHL 4; [1964] AC 465.
[55] [1976] HCA 65; (1976) 136 CLR 529.
[56] [1976] HCA 65; (1976) 136 CLR 529 at 574.
[57] [1984] HCA 52; (1984) 155 CLR 549 at 578-587.
[58] See, in particular, Sutherland Shire Council v Heyman [1985] HCA 41; (1985) 157 CLR 424 at 441, 461-462, 471, 495-498; Stevens v Brodribb Sawmilling Co Pty Ltd [1986] HCA 1; (1986) 160 CLR 16 at 30, 49-53; San Sebastian Pty Ltd v The Minister [1986] HCA 68; (1986) 162 CLR 340 at 355; Cook v Cook [1986] HCA 73; (1986) 162 CLR 376 at 381-382; Burnie Port Authority v General Jones Pty Ltd [1994] HCA 13; (1994) 179 CLR 520 at 542-543; Bryan v Maloney [1995] HCA 17; (1995) 182 CLR 609 at 617-618; 656.
[59] [1986] HCA 68; (1986) 162 CLR 340 at 355.
[60] [1984] HCA 52; (1984) 155 CLR 549 at 584.
[61] See Gala v Preston [1991] HCA 18; (1991) 172 CLR 243.
[62] See Jaensch v Coffey [1984] HCA 52; (1984) 155 CLR 549 at 585.
[63] [1986] HCA 1; (1986) 160 CLR 16 at 52.
[64] [1994] HCA 13; (1994) 179 CLR 520.
[65] [1994] HCA 13; (1994) 179 CLR 520 at 543 (a quote from the judgment of Deane J in Stevens v Brodribb Sawmilling Co Pty Ltd [1986] HCA 1; (1986) 160 CLR 16 at 53).
[66] [1994] HCA 13; (1994) 179 CLR 520 at 543.
[67] See San Sebastian Pty Ltd v The Minister [1986] HCA 68; (1986) 162 CLR 340 at 368; Hawkins v Clayton [1988] HCA 15; (1988) 164 CLR 539 at 555-556; Gala v Preston [1991] HCA 18; (1991) 172 CLR 243 at 260-263; Bryan v Maloney [1995] HCA 17; (1995) 182 CLR 609 at 652-653.
[68] See Caparo Plc v Dickman [1990] UKHL 2; [1990] 2 AC 605 at 618, 633-634.
[69] [1991] HCA 18; (1991) 172 CLR 243 at 276.
[70] See Caparo Plc v Dickman [1990] UKHL 2; [1990] 2 AC 605 at 632-633; Spring v Guardian Assurance Plc [1994] UKHL 7; [1995] 2 AC 296 at 343-344; Canadian National Railway Company v Norsk Pacific Steamship Co (1992) 91 DLR (4th) 289 at 344, 387.
[71] Sutherland Shire Council v Heyman [1985] HCA 41; (1985) 157 CLR 424 at 481.
[72] cf Hawkins v Clayton [1988] HCA 15; (1988) 164 CLR 539 at 555 per Brennan J.
[73] [1986] HCA 1; (1986) 160 CLR 16 at 52.
[74] [1986] HCA 68; (1986) 162 CLR 340 at 369.
[75] [1985] HCA 41; (1985) 157 CLR 424 at 497-498.
[76] See Dorset Yacht Co v Home Office [1970] UKHL 2; [1970] AC 1004 at 1058-1059 per Lord Diplock.
[77] See Downsview Ltd v First City Corporation Ltd [1993] AC 295 at 316.
[78] [1963] UKHL 4; [1964] AC 465 at 536.
[79] [1995] UKHL 5; [1995] 2 AC 207.
[80] [1980] Ch 297.
[81] [1982] VR 193.
[82] cf Dutton v Bognor Regis UDC [1972] 1 QB 373 at 413.
[83] See Fleming, "The Solicitor and the Disappointed Beneficiary", (1993) 109 Law Quarterly Review 344 at 346.
[84] See Otter v Church, Adams, Tatham & Co [1953] Ch 280 at 289.
[85] See Caltex Oil (Australia) Pty Ltd v The Dredge "Willemstad" [1976] HCA 65; (1976) 136 CLR 529 at 555, 593.
[86] [1995] HCA 17; (1995) 182 CLR 609 at 618.
[87] cf Hawkins v Clayton [1988] HCA 15; (1988) 164 CLR 539 at 584.
[88] See White v Jones [1995] UKHL 5; [1995] 2 AC 207 at 278 per Lord Mustill; Weir, "A Damnosa Hereditas?", (1995) 111 Law Quarterly Review 357 at 359.
[89] See also Wills, Probate and Administration Act 1898 (NSW), s 13.
[90] See Hawkins v Clayton [1988] HCA 15; (1988) 164 CLR 539; Midland Bank v Hett, Stubbs & Kemp [1979] Ch 384; Ross v Caunters [1980] Ch 297; Henderson v Merrett Syndicates Ltd [1994] UKHL 5; [1995] 2 AC 145; White v Jones [1995] UKHL 5; [1995] 2 AC 207.
[91] [1995] HCA 17; (1995) 182 CLR 609.
[92] The matter is discussed by Lord Nolan in White v Jones [1995] UKHL 5; [1995] 2 AC 207 at 294.
[93] [1963] HCA 15; (1963) 110 CLR 74 at 85.
[94] See Bryan v Maloney [1995] HCA 17; (1995) 182 CLR 609 at 621.
[95] [1980] Ch 297 at 322.
[96] [1932] AC 562.
[97] [1963] UKHL 4; [1964] AC 465.
[98] [1988] HCA 15; (1988) 164 CLR 539.
[99] [1988] HCA 15; (1988) 164 CLR 539 at 578-579.
[100] See San Sebastian Pty Ltd v The Minister [1986] HCA 68; (1986) 162 CLR 340 at 355.
[101] See San Sebastian Pty Ltd v The Minister [1986] HCA 68; (1986) 162 CLR 340 at 357.
[102] [1988] HCA 15; (1988) 164 CLR 539 at 576; cf Rangen Inc v Deloitte & Touche [1994] 10 WWR 55 at 62.
[103] cf Bryan v Maloney [1995] HCA 17; (1995) 182 CLR 609, where the relationship between a builder and a subsequent purchaser was held to be one of proximity even though it could not be said that the reason for engaging the builder was to confer a benefit on the subsequent purchaser.
[104] [1995] UKHL 5; [1995] 2 AC 207 at 222.
[105] See White v Jones [1995] UKHL 5; [1995] 2 AC 207 at 273-274 per Lord Browne-Wilkinson.
[106] cf White v Jones [1995] UKHL 5; [1995] 2 AC 207 at 219.
[107] [1995] UKHL 5; [1995] 2 AC 207 at 276. See also Gartside v Sheffield, Young & Ellis [1983] NZLR 37 at 43.
[108] [1985] HCA 41; (1985) 157 CLR 424 at 464.
[109] [1980] Ch 297 at 303. See also White v Jones [1995] UKHL 5; [1995] 2 AC 207 at 259.
[110] See Moss v Solomon [1860] EngR 9; (1858) 1 F & F 342 [175 ER 756]; Rae v Meek (1889) 14 AC 558; Seale v Perry [1982] VR 193 at 203; White v Jones [1995] UKHL 5; [1995] 2 AC 207 at 223.
[111] [1992] Ch 560.
[112] [1988] QB 665 at 672, 675.
[113] [1988] 1 WLR 881; [1988] 1 All ER 364.
[114] [1980] Ch 297 at 322.
[115] [1994] HCA 13; (1994) 179 CLR 520.
[116] [1995] HCA 17; (1995) 182 CLR 609.
[117] [1986] HCA 68; (1986) 162 CLR 340 at 355.
[118] [1994] HCA 13; (1994) 179 CLR 520 at 543, quoting Stevens v Brodribb Sawmilling Co Pty Ltd [1986] HCA 1; (1986) 160 CLR 16 at 53 per Deane J.
[119] [1932] AC 562 at 580.
[120] [1976] HCA 65; (1976) 136 CLR 529 at 575.
[121] [1963] UKHL 4; [1964] AC 465 at 524-525. And see Jaensch v Coffey [1984] HCA 52; (1984) 155 CLR 549 at 585; Sutherland Shire Council v Heyman [1985] HCA 41; (1985) 157 CLR 424 at 497; Cook v Cook [1986] HCA 73; (1986) 162 CLR 376 at 387 where various parts of this passage are referred to with approval.
[122] [1932] AC 562.
[123] Jaensch v Coffey [1984] HCA 52; (1984) 155 CLR 549 at 584 per Deane J.
[124] [1985] HCA 41; (1985) 157 CLR 424 at 481.
[125] [1980] Ch 297 at 322.
[126] See, for example, Jaensch v Coffey [1984] HCA 52; (1984) 155 CLR 549 at 583-585; Sutherland Shire Council v Heyman [1985] HCA 41; (1985) 157 CLR 424 at 495; Stevens v Brodribb Sawmilling Co Pty Ltd [1986] HCA 1; (1986) 160 CLR 16 at 52-53; San Sebastian Pty Ltd v The Minister [1986] HCA 68; (1986) 162 CLR 340 at 355; Cook v Cook [1986] HCA 73; (1986) 162 CLR 376 at 381-382; Hawkins v Clayton [1988] HCA 15; (1988) 164 CLR 539 at 545, 576; Gala v Preston [1991] HCA 18; (1991) 172 CLR 243 at 252-253; Burnie Port Authority v General Jones Pty Ltd (1994) 179 CLR 520 at 542-543; Bryan v Maloney [1995] HCA 17; (1995) 182 CLR 609 at 617.
[127] [1995] HCA 17; (1995) 182 CLR 609 at 652-655.
[128] [1991] HCA 18; (1991) 172 CLR 243 at 276-280.
[129] Bryan v Maloney [1995] HCA 17; (1995) 182 CLR 609 at 657 per Toohey J referring to Feldthusen, Economic Negligence, 2nd ed (1989) at 1.
[130] Bryan v Maloney [1995] HCA 17; (1995) 182 CLR 609 at 619. See also Hawkins v Clayton [1988] HCA 15; (1988) 164 CLR 539 at 576.
[131] Bryan v Maloney [1995] HCA 17; (1995) 182 CLR 609 at 618 referring to Ultramares Corporation v Touche 255 NY 170 at 179 (1931); 174 NE 441 at 444 per Chief Judge Cardozo. See also Caltex Oil (Australia) Pty Ltd v The Dredge "Willemstad" [1976] HCA 65; (1976) 136 CLR 529 at 568, 591; Sutherland Shire Council v Heyman [1985] HCA 41; (1985) 157 CLR 424 at 465.
[132] Bryan v Maloney [1995] HCA 17; (1995) 182 CLR 609 at 618. See also Jaensch v Coffey [1984] HCA 52; (1984) 155 CLR 549 at 578; Sutherland Shire Council v Heyman [1985] HCA 41; (1985) 157 CLR 424 at 503.
[133] (1861) 4 Macq 167 at 177.
[134] [1980] Ch 297.
[135] Note that in Scotland, the Outer House of the Court of Session has held that it is bound by Robertson v Fleming; see Weir v JM Hodge & Son [1990] SLT 266; MacDougall v MacDougall's Executors [1994] SLT 1178.
[136] [1977] UKHL 4; [1978] AC 728.
[137] [1977] UKHL 4; [1978] AC 728 at 751-752.
[138] Caparo Industries Plc v Dickman [1990] UKHL 2; [1990] 2 AC 605 at 618 per Lord Bridge of Harwich citing Brennan J in Sutherland Shire Council v Heyman - see note 14. See also Henderson v Merrett Syndicates Ltd [1994] UKHL 5; [1995] 2 AC 145. The Anns approach continues to be followed in New Zealand; see, for example, Brown v Heathcote County Council [1986] 1 NZLR 76; South Pacific Manufacturing Co Ltd v New Zealand Security Consultants & Investigations Ltd [1992] 2 NZLR 282 which was applied in Invercargill City Council v Hamlin [1994] 3 NZLR 513 (upheld in the Privy Council [1996] UKPC 56; [1996] 2 WLR 367; [1996] 1 All ER 756). It has also been followed to some extent in Canada; see, for example, City of Kamloops v Nielsen (1984) 10 DLR (4th) 641; Canadian National Railway Co v Norsk Pacific Steamship Co Ltd (1992) 91 DLR (4th) 289. See also British Columbia Hydro & Power v ND Lea & Associates (1992) 92 DLR (4th) 403 at 430.
[139] [1985] HCA 41; (1985) 157 CLR 424 at 481. See also Hawkins v Clayton [1988] HCA 15; (1988) 164 CLR 539 at 556.
[140] [1995] UKHL 5; [1995] 2 AC 207.
[141] [1995] UKHL 5; [1995] 2 AC 207 at 255.
[142] [1983] NZLR 37.
[143] Lord Goff cited Peake v Vernon & Thompson (1990) 49 BCLR (2d) 245 and Heath v Ivens, McGuire, Souch & Ottho (1991) 57 BCLR (2d) 391 (note that this case has been reversed by the Court of Appeal although its reasons do not appear to have been reported - see (1993) 77 BCLR (2d) (xxxi)).
[144] [1995] 10 WWR 68.
[145] [1995] UKHL 5; [1995] 2 AC 207 at 255. See also the materials there referred to, namely, Teshima, "What constitutes negligence sufficient to render attorney liable to person other than immediate client", (1988) 61 ALR (4th) at 464, 473-475; American Law Institute, Restatement of the Law, Third, The Law Governing Lawyers, Tentative Draft No 7 (7 April 1994) at 16, par 73(3) and the cases cited in the Reporter's Note under par 73.
[146] [1995] UKHL 5; [1995] 2 AC 207 at 276.
[147] [1983] NZLR 37 at 43.
[148] White v Jones [1995] UKHL 5; [1995] 2 AC 207 at 259 per Lord Goff of Chieveley, referring to Ross v Caunters [1980] Ch 297 at 303 per Sir Robert Megarry V-C.
[149] [1980] WAR 97. See also Finlay v Rowlands, Anderson & Hine [1987] TasR 60 where Ross v Caunters [1980] Ch 297 was accepted as correct.
[150] [1995] UKHL 5; [1995] 2 AC 207 at 255.
[151] [1982] VR 193.
[152] [1982] VR 193 at 212. See also at 198-199 per Lush J.
153 [1982] VR 193 at 209.
[154] [1982] VR 193 at 199.
[155] [1982] VR 193 at 199.
[156] [1988] HCA 15; (1988) 164 CLR 539.
[157] [1995] HCA 17; (1995) 182 CLR 609 at 620-622. See also Voli v Inglewood Shire Council [1963] HCA 15; (1963) 110 CLR 74 at 84.
[158] [1995] HCA 17; (1995) 182 CLR 609 at 621.
[159] (1986) 31 DLR (4th) 481 at 522; [1986] 2 SCR 147 at 206.
[160] See White v Jones [1995] UKHL 5; [1995] 2 AC 207 at 231 per Farquharson LJ and 239 per Steyn LJ. See also Smolinski v Mitchell [1995] 10 WWR 68 at 88.
[161] [1982] VR 193 at 222.
[162] [1963] UKHL 4; [1964] AC 465.
[163] [1963] UKHL 4; [1964] AC 465 at 486-487, 502-503, 529-530.
[164] [1853] EngR 15; (1853) 2 El & Bl 216 [118 ER 749]. See also, for example, Northern Territory v Mengel [1995] HCA 65; (1995) 69 ALJR 527 at 537-538; [1995] HCA 65; 129 ALR 1 at 15.
[165] [1988] HCA 15; (1988) 164 CLR 539 at 594.
[166] [1995] HCA 17; (1995) 182 CLR 609 at 619. See also Sutherland Shire Council v Heyman [1985] HCA 41; (1985) 157 CLR 424 at 498; Hawkins v Clayton [1988] HCA 15; (1988) 164 CLR 539 at 593.
[167] See also White v Jones [1995] UKHL 5; [1995] 2 AC 207 at 262.
[168] [1994] HCA 13; (1994) 179 CLR 520 at 551.
[169] [1988] HCA 15; (1988) 164 CLR 539 at 578-579.
[170] [1988] HCA 15; (1988) 164 CLR 539 at 552-553.
[171] [1988] HCA 15; (1988) 164 CLR 539 at 597.
[172] [1988] HCA 15; (1988) 164 CLR 539 at 555.
[173] [1995] 10 WWR 68.
[174] That is, economic loss not resulting from physical damage.
[175] Caltex Oil (Australia) Pty Ltd v The Dredge "Willemstad" [1976] HCA 65; (1976) 136 CLR 529 at 555, 573, 592-593; Jaensch v Coffey [1984] HCA 52; (1984) 155 CLR 549 at 552-554, 575, 582-587; Sutherland Shire Council v Heyman [1985] HCA 41; (1985) 157 CLR 424 at 441, 467, 477, 495; San Sebastian Pty Ltd v The Minister [1986] HCA 68; (1986) 162 CLR 340 at 355, 367-370; Hawkins v Clayton [1988] HCA 15; (1988) 164 CLR 539 at 579; Gala v Preston [1991] HCA 18; (1991) 172 CLR 243 at 254-255; Bryan v Maloney [1995] HCA 17; (1995) 182 CLR 609 at 617-619.
[176] Watts v Public Trustee for Western Australia [1980] WAR 97 (Australia); Ross v Caunters [1980] Ch 297; White v Jones [1995] UKHL 5; [1995] 2 AC 207 (England); Gartside v Sheffield, Young & Ellis [1983] NZLR 37 (New Zealand); Whittingham v Crease & Co (1978) 88 DLR (3d) 353; Heath v Ivens, McGuire, Souch & Ottho (1991) 57 BCLR (2d) 391 (Canada); Biakanja v Irving 320 P 2d 16 (1958); Lucas v Hamm 364 P 2d 685 (1961); Auric v Continental Casualty Company 331 NW 2d 325 (1983); Hale v Groce 730 P 2d 576 (1986) (United States).
[177] (1861) 4 Macq 167.
[178] (1861) 4 Macq 167 at 177.
[179] [1980] Ch 297.
[180] Ross [1980] Ch 297 at 322-323.
[181] Ross [1980] Ch 297 at 303.
[182] [1977] UKHL 4; [1978] AC 728 at 751-752: "First one has to ask whether, as between the alleged wrongdoer and the person who has suffered damage there is a sufficient relationship of proximity or neighbourhood such that, in the reasonable contemplation of the former, carelessness on his part may be likely to cause damage to the latter - in which case a prima facie duty of care arises. Secondly, if the first question is answered affirmatively, it is necessary to consider whether there are any considerations which ought to negative, or to reduce or limit the scope of the duty or the class of person to whom it is owed or the damages to which a breach of it may give rise".
[183] See Murphy v Brentwood District Council [1991] UKHL 2; [1991] 1 AC 398. In this country, its persuasive force finished with the decision of this Court in Sutherland Shire Council [1985] HCA 41; (1985) 157 CLR 424.
[184] See Scott Group Ltd v McFarlane [1978] 1 NZLR 553; Brown v Heathcote County Council [1986] 1 NZLR 76.
[185] See Seale v Perry [1982] VR 193.
[186] Weir v J M Hodge & Son 1990 SLT 266.
[187] [1982] VR 193.
[188] (1861) 4 Macq 167.
[189] [1995] UKHL 5; [1995] 2 AC 207.
[190] White [1995] UKHL 5; [1995] 2 AC 207 at 259-260.
[191] White [1995] UKHL 5; [1995] 2 AC 207 at 260.
[192] White [1995] UKHL 5; [1995] 2 AC 207 at 267.
[193] [1963] UKHL 4; [1964] AC 465.
[194] White [1995] UKHL 5; [1995] 2 AC 207 at 268.
[195] White [1995] UKHL 5; [1995] 2 AC 207 at 269.
[196] [1914] AC 932.
[197] White [1995] UKHL 5; [1995] 2 AC 207 at 272.
[198] White [1995] UKHL 5; [1995] 2 AC 207 at 273-274.
[199] White [1995] UKHL 5; [1995] 2 AC 207 at 275.
[200] White [1995] UKHL 5; [1995] 2 AC 207 at 275.
[201] White [1995] UKHL 5; [1995] 2 AC 207 at 276.
[202] Murphy, "Expectation Losses, Negligent Omissions and the Tortious Duty of Care", (1996) 55 Cambridge Law Journal 43 at 50: "most unconventional ... notion of 'assumption of responsibility'". See also the use of the term "assumption of responsibility" by this Court in Bryan v Maloney [1995] HCA 17; (1995) 182 CLR 609 at 627.
[203] cf Bryan v Maloney [1995] HCA 17; (1995) 182 CLR 609 at 627.
[204] White [1995] UKHL 5; [1995] 2 AC 207 at 293.
[205] White [1995] UKHL 5; [1995] 2 AC 207 at 293.
[206] White [1995] UKHL 5; [1995] 2 AC 207 at 294.
[207] White [1995] UKHL 5; [1995] 2 AC 207 at 277.
[208] White [1995] UKHL 5; [1995] 2 AC 207 at 279.
[209] White [1995] UKHL 5; [1995] 2 AC 207 at 283.
[210] White [1995] UKHL 5; [1995] 2 AC 207 at 287.
[211] White [1995] UKHL 5; [1995] 2 AC 207 at 287.
[212] White [1995] UKHL 5; [1995] 2 AC 207 at 289.
[213] White [1995] UKHL 5; [1995] 2 AC 207 at 289.
[214] White [1995] UKHL 5; [1995] 2 AC 207 at 291.
[215] [1963] UKHL 4; [1964] AC 465.
[216] White [1995] UKHL 5; [1995] 2 AC 207 at 251.
[217] White [1995] UKHL 5; [1995] 2 AC 207 at 251.
[218] Marc Rich & Co AG v Bishop Rock Marine Co Ltd [1995] UKHL 4; [1996] 1 AC 211 at 235.
[219] [1984] HCA 52; (1984) 155 CLR 549 at 584-585.
[220] See, for example, Caparo Industries Plc v Dickman [1990] UKHL 2; [1990] 2 AC 605 at 616-618 per Lord Bridge of Harwick; at 628 per Lord Roskill; at 633 per Lord Oliver of Aylmerton.
[221] See, for example, Lord Oliver in Caparo Industries Plc [1990] UKHL 2; [1990] 2 AC 605 at 633: " 'Proximity' is, no doubt, a convenient expression so long as it is realised that it is no more than a label which embraces not a definable concept but merely a description of circumstances from which, pragmatically, the courts conclude that a duty of care exists."
[222] [1986] HCA 1; (1986) 160 CLR 16 at 52.
[223] "Duty of Care and Economic Loss: A Wider Agenda", (1991) 107 Law Quarterly Review 249 at 258.
[224] "Duty of Care and Economic Loss: A Wider Agenda", (1991) 107 Law Quarterly Review 249 at 284-285.
[225] "Duty of Care and Economic Loss: A Wider Agenda", (1991) 107 Law Quarterly Review 249 at 259.
[226] "Neighbourhood, Proximity and Reliance" in Finn (ed), Essays on Torts, (1989) 5 at 36-39.
[227] [1991] HCA 18; (1991) 172 CLR 243.
[228] [1986] HCA 68; (1986) 162 CLR 340 at 355.
[229] Midland Bank Trust Co Ltd v Hett, Stubbs & Kemp [1979] Ch 384.
[230] Dorset Yacht Co v Home Office [1970] UKHL 2; [1970] AC 1004 at 1027 per Lord Reid.
[231] cf Cane, "Contract, Tort and the Lloyd's Débâcle" in Rose (ed), Consensus Ad Idem, Essays in the Law of Contract in Honour of Guenter Treitel, (1996) 96 at 110-111.
[232] See Bily v Arthur Young and Co 834 P 2d 745 at 760 (1992) per Lucas CJ: "The threshold element of a cause of action for negligence is the existence of a duty to use due care toward an interest of another that enjoys legal protection against unintentional invasion."
[233] [1982] VR 193 at 202.
[234] Dorset Yacht Co [1970] UKHL 2; [1970] AC 1004 at 1027 per Lord Reid.
[235] Benson, "The Basis for Excluding Liability for Economic Loss in Tort Law" in Owen (ed), Philosophical Foundations of Tort Law, (1995) 427 at 457.
[236] Posner, Law and Legal Theory in England and America, (1996) at 46-47.
[237] "The Recovery of Pure Economic Loss in Canada: Proximity, Justice, Rationality, and Chaos", (1996) 24 Manitoba Law Journal 1 at 12.
[238] cf White [1995] UKHL 5; [1995] 2 AC 207 at 283 per Lord Mustill. In Ross [1980] Ch 297 at 322-323, Megarry V-C decided for the plaintiff by reference to a principle defined in substantially similar terms.
[239] cf White [1995] UKHL 5; [1995] 2 AC 207 at 259.
[240] Hawkins [1988] HCA 15; (1988) 164 CLR 539.
[241] Mutual Life & Citizens' Assurance Co Ltd v Evatt (1970) 122 CLR 628; Yuen Kun Yeu v Attorney-General of Hong Kong [1988] AC 175; Caparo Industries Plc [1990] UKHL 2; [1990] 2 AC 605.
[242] Sutherland Shire Council [1985] HCA 41; (1985) 157 CLR 424. Similarly, in Marc Rich [1995] UKHL 4; [1996] 1 AC 211, the House of Lords held that marine surveyors owed no duty of care to the owners of cargo carried on a ship which sank soon after the surveyors had certified that it was seaworthy.
[243] Minor editorial changes which appear to have been made pursuant to the Reprints Act 1992 (Q) may be ignored for the disposition of the present appeal.
[244] See In The Estate of Kolodnicky (1981) 27 SASR 374; and see also Wills, Probate and Administration Act 1898 (NSW), s 13; Wills Act 1958 (Vic), s 13.
[245] Van Erp v Hill (t/a R F Hill & Associates) [1995] Aust Torts Reports |P81-317.
[246] Official Receiver in Bankruptcy v Schultz [1990] HCA 45; (1990) 170 CLR 306 at 314.
[247] [1995] UKHL 5; [1995] 2 AC 207. The respondent also relied upon other authorities including Biakanja v Irving 320 P 2d 16 (1958); Ross v Caunters [1980] Ch 297; Gartside v Sheffield, Young & Ellis [1983] NZLR 37; and the dissenting judgment of McGarvie J in Seale v Perry [1982] VR 193.
[248] cf Matthews, "Round and Round the Garden", [1996] Lloyd's Maritime and Commercial Law Quarterly 460 at 461.
[249] [1995] UKHL 5; [1995] 2 AC 207 at 216ff.
[250] Cane, "Contract, Tort and the Lloyd's Débâcle", in Rose (ed), Consensus Ad Idem, (1996) 96 at 109.
[251] [1995] UKHL 5; [1995] 2 AC 207 at 268.
[252] [1995] UKHL 5; [1995] 2 AC 207 at 274.
[253] [1995] UKHL 5; [1995] 2 AC 207 at 275.
[254] [1995] UKHL 5; [1995] 2 AC 207 at 276.
[255] [1995] UKHL 5; [1995] 2 AC 207 at 295.
[256] [1995] UKHL 5; [1995] 2 AC 207 at 295.
[257] [1995] UKHL 5; [1995] 2 AC 207 at 291-292.
[258] [1995] UKHL 5; [1995] 2 AC 207 at 291.
[259] Hawkins v Clayton [1988] HCA 15; (1988) 164 CLR 539 at 584; Downsview Ltd v First City Corporation Ltd [1993] AC 295 at 316.
[260] 7 Will 4 & 1 Vict, c 26. See Lee, Manual of Queensland Succession Law, 4th ed (1995), pars [102]-[103].
[261] Halsbury, The Laws of England, 1st ed (1914), vol 28 at 517, note (q).
[262] [1988] HCA 44; (1988) 165 CLR 107 at 120-121, 134-135, 138-139, 146-149, 155-157, 169.
[263] [1995] UKHL 5; [1995] 2 AC 207 at 223-224. The more relaxed view of privity doctrine taken in various jurisdictions in the United States has led to decisions in which the prospective beneficiary has recovered in contract against the testator's lawyer; see the authorities discussed in Eisenberg, "Third-Party Beneficiaries", (1992) 92 Columbia Law Review 1358 at 1393-1396.
[264] [1967] UKHL 2; [1968] AC 58.
[265] See as to that latter possibility Briggs, "Privity Problems in Damages for Breach of Contract", (1981) 131 New Law Journal 343; Barker, "Are We up to Expectations? Solicitors, Beneficiaries and the Tort/Contract Divide", (1994) 14 Oxford Journal of Legal Studies 137 at 140-141.
[266] [1995] UKHL 5; [1995] 2 AC 207 at 266-267.
[267] [1977] AC 774 at 846-847.
[268] cf in tort, as to recovery of the value of services to be gratuitously provided, Griffiths v Kerkemeyer [1977] HCA 45; (1977) 139 CLR 161; Nguyen v Nguyen [1990] HCA 9; (1990) 169 CLR 245 at 261-263; Kars v Kars [1996] HCA 37; (1996) 71 ALJR 107 at 115; [1996] HCA 37; 141 ALR 37 at 48; and cf Hunt v Severs [1994] UKHL 4; [1994] 2 AC 350 at 363-364.
[269] Stapleton, "Duty of Care: Peripheral Parties and Alternative Opportunities for Deterrence", (1995) 111 Law Quarterly Review 301 at 324; cf Fleming, "Tort in a Contractual Matrix", (1995) 33 Osgoode Hall Law Journal 661 at 677.
[270] cf Trident General Insurance Co Ltd v McNiece Bros Pty Ltd [1988] HCA 44; (1988) 165 CLR 107 at 174-177.
[271] Luntz, "Solicitors' liability to third parties", (1983) 3 Oxford Journal of Legal Studies 284 at 288-289; Cane, "Negligent Solicitors and Doubly Disappointed Beneficiaries", (1983) 99 Law Quarterly Review 346; Matthews, "Round and Round the Garden", [1996] Lloyd's Maritime and Commercial Law Quarterly 460.
[272] Birks, An Introduction to the Law of Restitution, revised ed (1989) at 133-136.
[273] [1995] EWCA Civ 21; [1996] Ch 217 at 227; discussed Watts, "The Limits of Profit-Stripping for Wrongs", (1996) 112 Law Quarterly Review 219 at 220-221.
[274] The expression "at the expense of another" appears first to have been used by Professor Ames in his article, "The History of Assumpsit", (1888) 2 Harvard Law Review 53 at 64, 66. This is pointed out by Morritt LJ in Kleinwort Benson Ltd v Birmingham City Council [1996] 3 WLR 1139 at 1157; [1996] 4 All ER 733 at 750.
[275] See Smith, "Three-Party Restitution: A Critique of Birks's Theory of Interceptive Subtraction", (1991) 11 Oxford Journal of Legal Studies 481 at 482-487, 511-514.
[276] In his article "Rationalizing Restitution", (1995) 83 California Law Review 1191, the American scholar, Professor Andrew Kull, after referring (at 1195) to decline in teaching of the subject in that country, turns (at 1219-1220) to the basic definitional issue of whether restitution is "merely a description of the end result" or "a reference to the basis of liability", and continues (at 1241): "Before we can tell a straight story about restitution, we must decide what the subject is about. Is restitution the body of law concerned with avoiding unjust enrichment? Is it mostly that but partly other things as well? Or is the identification with unjust enrichment altogether an illusion, and restitution merely a hodgepodge of devices for undoing, unwinding, throwing into reverse, and giving things back?"
[277] Soh, "Privity of Contract and Restitution", (1989) 105 Law Quarterly Review 4; Jackman, "Recent Cases", (1989) 63 Australian Law Journal 368; Proksch, "Restitution and Privity", (1994) 68 Australian Law Journal 188; Barker, "Unjust Enrichment: Containing the Beast", (1995) 15 Oxford Journal of Legal Studies 457 at 468-471.
[278] Parker v Clark [1960] 1 WLR 286; [1960] 1 All ER 93.
[279] [1972] AC 572.
[280] [1975] HCA 51; (1975) 133 CLR 150.
[281] [1982] VR 193.
[282] [1982] VR 193 at 220.
[283] (1990) 169 CLR 540 at 558.
[284] See Coco v A N Clark (Engineers) Ltd [1969] RPC 41 at 46 per Megarry J; Keeton & Sheridan, Equity, 3rd ed (1987) at 37-38.
[285] (1828) 1 Beatty 157.
[286] [1834] EngR 112; (1834) 2 Cl & F 102 [6 ER 1094]. See also Re Birchall; Wilson v Birchall (1881) 44 LT 243 at 245 per Malins V-C.
[287] [1834] EngR 112; (1834) 2 Cl & F 102 at 178 [6 ER 1094 at 1122]. See also at 177 [1122] per the Earl of Eldon and at 182 [1124] per Lord Wynford.
[288] cf Posner, Law and Legal Theory in England and America, (1996) at 47-48.
[289] Whitton v Russell [1739] EngR 67; (1739) 1 Atk 448 [26 ER 285].
[290] Story, Commentaries on Equity Jurisprudence, 13th ed (1886), vol 1 at 58-59, 186, 263-264; Pomeroy, Equity Jurisprudence, 5th ed (1941), vol 3, par 828. But cf the so-called rule in Strong v Bird identified by Kitto J in Cope v Keene [1968] HCA 53; (1968) 118 CLR 1 at 8, and the doctrine of donatio mortis causa.
[291] See, further, the discussion by Brennan J in San Sebastian Pty Ltd v The Minister [1986] HCA 68; (1986) 162 CLR 340 at 367-369; Hawkins v Clayton [1988] HCA 15; (1988) 164 CLR 539 at 555-556; Gala v Preston [1991] HCA 18; (1991) 172 CLR 243 at 258-263; Bryan v Maloney [1995] HCA 17; (1995) 182 CLR 609 at 652-655.
[292] Christie, "The Uneasy Place of Principle in Tort Law", in Owen (ed), Philosophical Foundations of Tort Law, (1995) 113 at 123.
[293] [1995] HCA 17; (1995) 182 CLR 609 at 618-619 per Mason CJ, Deane and Gaudron JJ.
[294] Smith v Bush [1990] UKHL 1; [1990] 1 AC 831 at 864-865 per Lord Griffiths; Caparo Plc v Dickman [1990] UKHL 2; [1990] 2 AC 605 at 628 per Lord Roskill.
[295] Steele, "Scepticism and the Law of Negligence", (1993) 52 Cambridge Law Journal 437 at 444.
[296] Barker, "Unreliable Assumptions in the Modern Law of Negligence", (1993) 109 Law Quarterly Review 461 at 483-484; see also Stapleton, "Duty of Care and Economic Loss: A Wider Agenda", (1991) 107 Law Quarterly Review 249 at 259-263, 284-288.
[297] [1995] UKHL 4; [1996] 1 AC 211 at 238.
[298] [1995] UKHL 5; [1995] 2 AC 207 at 294.
[299] [1995] UKHL 5; [1995] 2 AC 207 at 274-275.
[300] Murphy, "Expectation Losses, Negligent Omissions and the Tortious Duty of Care", (1996) 55 Cambridge Law Journal 43 at 49-50; Whittaker, "Privity of Contract and the Tort of Negligence: Future Directions", (1996) 16 Oxford Journal of Legal Studies 191 at 204-205; Cane, "Contract, Tort and the Lloyd's Débâcle", in Rose (ed), Consensus Ad Idem, (1996) 96 at 108.
[301] Simaan Contracting Co v Pilkington Ltd (No 2) [1988] QB 758 at 782.
[302] "Contract and Tort: The View from the Contract Side of the Fence", (1993) 5 Canterbury Law Review 280 at 281.
[303] [1988] HCA 15; (1988) 164 CLR 539.
[304] [1988] HCA 15; (1988) 164 CLR 539 at 549.
[305] [1988] HCA 15; (1988) 164 CLR 539 at 551-553.
[306] [1988] HCA 15; (1988) 164 CLR 539 at 552.
[307] Hawkins v Clayton [1988] HCA 15; (1988) 164 CLR 539 at 597-598 per Gaudron J.
[308] Cane, Tort Law and Economic Interests, 2nd ed (1996) at 136-145 and Whittaker, "Privity of Contract and the Tort of Negligence: Future Directions", (1996) 16 Oxford Journal of Legal Studies 191 at 207-212, where various illustrations are given. They include Ross v Caunters [1980] Ch 297 and White v Jones [1995] UKHL 5; [1995] 2 AC 207.
[309] Burrows, "Solving The Problem of Concurrent Liability", (1995) 48 Current Legal Problems 103 at 119-120.
310 cf White v Jones [1995] UKHL 5; [1995] 2 AC 207 at 276, 291, 295.
[311] [1914] AC 932 at 972.
[312] [1963] UKHL 4; [1964] AC 465 at 529-530.
[313] Prosser, Selected Topics on the Law of Torts, (1982), Ch VII, "The Borderland of Tort and Contract" at 391-402. See also Cane, Tort Law and Economic Interests, 2nd ed (1996) at 325-334.
[314] [1988] QB 665 at 675.
[315] [1995] HCA 17; (1995) 182 CLR 609 at 621.
[316] [1985] HCA 19; (1985) 160 CLR 548 at 568-569.
[317] [1995] UKHL 5; [1995] 2 AC 207 at 223.
[318] Gartside v Sheffield, Young and Ellis [1983] NZLR 37 at 51.
[319] [1995] UKHL 5; [1995] 2 AC 207 at 291-292.
[320] cf Henderson v Merrett Syndicates Ltd [1994] UKHL 5; [1995] 2 AC 145 at 181, where Lord Goff of Chieveley, in delivering the leading speech given in the House, said: "[I]f a person assumes responsibility to another in respect of certain services, there is no reason why he should not be liable in damages for that other in respect of economic loss which flows from the negligent performance of those services". See also Gran Gelato Ltd v Richcliff Ltd [1992] Ch 560 at 569-571 and the criticism thereof in Bernstein, Economic Loss, (1993) at 420-423.
[321] Variants of the proposition of Lord Goff of Chieveley, namely that the defendant is liable in damages if (i) the plaintiff has entrusted the defendant with the conduct of the plaintiff's affairs, the defendant has failed to exercise reasonable care and skill in so doing and the plaintiff has suffered loss as a result, and (ii) the defendant undertook the exercise of power over the plaintiff, knowing the plaintiff expected the defendant to use reasonable care and skill in so doing and the defendant failed to do so, thereby causing loss to the plaintiff, are considered by McBride and Hughes, "Hedley Byrne in the House of Lords: an interpretation", (1995) 15 Legal Studies 376 at 382-385.
[322] [1996] 1 WLR 1397 at 1403; [1996] 2 All ER 161 at 167.
[323] [1995] HCA 17; (1995) 182 CLR 609 at 618.
[324] 174 NE 441 at 444 (1931).
[325] [1995] HCA 17; (1995) 182 CLR 609 at 618.
[326] See Esanda Finance Corporation Ltd v Peat Marwick Hungerfords (Reg), unreported, High Court of Australia, 18 March 1997.
[327] [1995] UKHL 5; [1995] 2 AC 207 at 276.
[328] Wills Act 1936 (SA), s 12(2); Wills, Probate and Administration Act 1898 (NSW), s 13; Wills Act 1958 (Vic), s 13.
[329] [1995] UKHL 5; [1995] 2 AC 207 at 223.
[330] cf Gran Gelato Ltd v Richcliff Ltd [1992] Ch 560 at 569-571.
[331] Al-Kandari v J R Brown & Co [1988] QB 665 at 672, 675; cf as to prosecuting authorities Elguzouli-Daf v Commissioner of Police [1995] QB 335 at 348-349, 352.
[332] [1980] 2 NZLR 536.
[333] Fleming, "Tort in a Contractual Matrix", (1995) 33 Osgoode Hall Law Journal 661 at 664.
[334] cf Bryan v Maloney [1995] HCA 17; (1995) 182 CLR 609 at 617-618.
[335] Barker, "Are We up to Expectations? Solicitors, Beneficiaries and the Tort/Contract Divide", (1994) 14 Oxford Journal of Legal Studies 137 at 147.
[336] In Marc Rich & Co v Bishop Rock Ltd [1995] UKHL 4; [1996] 1 AC 211, Lord Steyn delivered the speech attracting majority support in the House of Lords. Lord Steyn approved (at 236) a formulation in which proximity, with foreseeability and "fairness", are elements for the imposition of a duty of care, but added that these three elements are really facets of the same thing. The result, it is suggested, is no different from the application of the rejected two-stage test favoured by Lord Wilberforce in Anns v Merton London Borough [1977] UKHL 4; [1978] AC 728 at 751-752: Tan, "Of Duty", (1996) 112 Law Quarterly Review 209 at 213-214.
[337] Morison, "A Re-Examination of the Duty of Care", (1948) 11 Modern Law Review 9 at 18.
[338] [1994] HCA 13; (1994) 179 CLR 520.
[339] [1995] HCA 17; (1995) 182 CLR 609.
[340] cf Caparo Plc v Dickman [1990] UKHL 2; [1990] 2 AC 605 at 618.
[341] The Hon Justice McHugh, "Neighbourhood, Proximity and Reliance", in Finn (ed), Essays on Torts, (1989) 5 at 13.
[342] [1992] HCA 48; (1992) 175 CLR 353.
[343] [1992] HCA 48; (1992) 175 CLR 353 at 378-379.
[344] [1992] 1 SCR 1021 at 1115. His Lordship agreed with the views to this effect of Stevenson J at 1178, expressed after consideration of the judgments of Brennan J and the extrajudicial writing of McHugh J. In Caparo Plc v Dickman [1990] UKHL 2; [1990] 2 AC 605 at 632-633 (a passage recently repeated by Lord Woolf in Spring v Guardian Assurance Plc [1994] UKHL 7; [1995] 2 AC 296 at 343-344), Lord Oliver of Aylmerton said that "proximity" embraces not a definable concept but is "merely a description of circumstances from which, pragmatically, the courts conclude that a duty of care exists". His Lordship spoke later to similar effect in Alcock v Chief Constable of South Yorkshire Police [1991] UKHL 5; [1992] 1 AC 310 at 411.
[345] [1991] HCA 18; (1991) 172 CLR 243 at 277.
[346] This passage was accepted and applied by Brennan J in Bryan v Maloney [1995] HCA 17; (1995) 182 CLR 609 at 654.
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