PPK Willoughby Pty Ltd v Baird

HIS HONOUR: The plaintiff retained the defendants in 2009 to act as its solicitor with respect to the proposed acquisition of a large tract of land at Willoughby situated to the north of the Shore school playing fields. The plaintiff intended to develop the site by constructing 76 homes for sale at a profit. In due course, the plaintiff was successful in tendering for the property at a price of $25.5M. However, the plaintiff maintains that it was never advised or informed that the land was subject to significant flood control restrictions that both diminished the value of the land and increased the cost of development as the result of the need to commission a flood study and by reason of variously caused but associated delays. The plaintiff alleges in these proceedings that the defendants were negligent inasmuch as they did not properly conduct a due diligence of the property as they were instructed to do or as they should have done.

In that context, the following paragraphs of the further amended statement of claim should be noted:

The defendants have responded to the plaintiff’s allegations of breach of duty and misleading and deceptive conduct, both of which they have admitted, by maintaining that they were given separate and specific instructions not to carry out the searches that would have revealed the flood affectation concerning the land. The defendants maintain that the due diligence that they were instructed to perform was specifically limited for various reasons, including the fact that the plaintiff had the benefit of a due diligence process undertaken on behalf of Pamada Pty Ltd, a company that had previously contracted to buy the site but was unable to complete when its bank withdrew funding for the purchase.

Paragraphs 43 and 46 of the defence to the further amended statement of claim should be noted in this respect:

UCPR 17.5 provides as follows:

In the course of these proceedings, the defendants discovered two file notes dated 1 December 2009 created by Ms Deane Ogilvie, a senior associate employed by them to assist with the conveyance at the time of the events giving rise to these proceedings. The first file note, in Ms Ogilvie's handwriting, is in the following terms:

The second file note, also in Ms Ogilvie's handwriting, is in the following terms:

The plaintiff neither denied the authenticity of the documents in accordance with UCPR 17.5(3)(a) nor served a notice to the effect that it disputes their authenticity in accordance with UCPR 17.5(3)(b). The plaintiff is therefore taken to have admitted the authenticity of both file notes. When senior counsel for the plaintiff sought to cross-examine Ms Ogilvie about the timing and circumstances of the creation of these file notes, the defendants objected upon the basis that the plaintiff is taken to have admitted that each was “written, signed or executed as it purports to have been”, and that the Court has not otherwise ordered.

In these circumstances, the plaintiff applied to withdraw the admission. That application is opposed.

In the way of things, the defendants’ contention pleaded in response to the plaintiff’s claims, asserting that their instructions were specific and limited, has necessarily attracted a significant amount of evidentiary attention. The question of whether or not the plaintiff has, or should be taken to have, admitted the authenticity of the file notes arises in that context.

Ms Ogilvie’s affidavit affirmed by her on 14 June 2017 concerning this topic was relevantly in these terms:

The defendants objected to any challenge being mounted to Ms Ogilvie’s evidence about either the file notes in general or her recollection of the manner and timing of their creation in particular, if any such challenge was in truth an attempt by the plaintiff to dispute their admitted authenticity. That objection generated the present application.

Senior counsel for the plaintiff submitted that it should not be bound by its admission for a number of reasons. First, he contended that it would be unreasonable in the circumstances of this case, which has generated literally thousands of pages of documents, to hold the plaintiff to the consequence of what was little more than an oversight at the time that the discovered documents were inspected. He submitted that what has now emerged as a significant issue concerning the file notes, and whether they were, or at least one of them possibly was, created after the event, was not always as readily apparent as it now appears potentially to be.

Secondly, the plaintiff has changed solicitors since the discovery and inspection of documents took place. To that extent there appears to have been a failure to appreciate the potential importance of all of the information that may have been acquired by the plaintiff’s original solicitors following the handover of the files.

Thirdly, the prejudice created by holding the plaintiff to the admission would deprive it of a distinct forensic advantage, in not being able to cross-examine the author of the file notes, and would therefore cause an unfair prejudice to the plaintiff in its response to the defendants’ pleading that they were released from the obligation to carry out any due diligence that would have revealed the true flood control status of the land.

However, while I can accept that the plaintiff may feel that it is prejudiced in these circumstances, the prejudice is neither unfair nor the result of anything done or omitted by the defendants. The pleadings in this matter closed many years ago. The defendants’ position with respect to their responsibility for the way in which they performed their retainer on behalf of the plaintiff has been clear for just as long. If the plaintiff had been concerned to question the authenticity of Ms Ogilvie’s file notes, it should have done so much earlier than this.

Moreover, it should not be overlooked that the plaintiff’s application to withdraw its admission is based upon a desire to allege, or at least to explore the possibility, that Ms Ogilvie and others on behalf of the defendants may have acted improperly in order to shore up the evidence that supported this aspect of their defence. If a very serious allegation of that type were ever to be made, it should have been properly pleaded and particularised and well before Ms Ogilvie entered the witness box without any notice that it might be asserted. Whether or not it is correct to characterise this approach as prejudicial to the defendants, it is undoubtedly unfair.

The plaintiff should not in the circumstances be permitted to resile from or to withdraw the admission that Ms Ogilvie’s file notes are authentic.