Goddard Elliott (a firm) v Fritsch [2012] VSC 87

The conclusion well summarises the facts and the outcome of this extraordinary case. I refer you to paragraphs 405 – 419; 545 – 570 and 769 – 833, which deal with the duty of care owed by professionals and advocates immunity.

Bell J

Conclusion

1136 Paul Fritsch is a 64-year-old invalid pensioner with a mental illness. His marriage of 24 years broke down in 2002. In the property settlement proceeding in the Family Court of Australia, his solicitor was Andrew Goddard of Goddard Elliott, his barristers were Noel Ackman QC and Clive Rosen and his accountant was Kevin Ferguson. The proceeding settled at the door of the court on 16 September 2004 on terms which were very generous in favour of the wife. In the proceeding in this court, he has sued his lawyers and accountant in negligence (and other causes of action) for damages for lost opportunity represented (in effect) by the difference between the amount he received under the settlement and the amount he would have received under a just and equitable order of the Family Court.

1137 During the hearing, Mr Fritsch settled his claims against the barristers and accountant, leaving Goddard Elliott as the remaining effective defendant.

1138 I have rejected Mr Fritsch’s claims of coercion, breach of fiduciary duty and misleading and deceptive conduct (contrary to s 9(1) of the Fair Trading Act) against Goddard Elliott.

1139 Mr Fritsch has established Goddard Elliott was negligent in two respects:

Preparation negligence

• failing to have expert business valuation and taxation evidence ready for the commencement of the hearing on 13 September 2004

• failing to prepare any answering affidavits in relation to the wife’s application for costs and indemnity costs

• failing to prepare any affidavits or other evidence in relation to the post-separation amounts spent by the husband in the maintenance and conservation of the matrimonial assets

Capacity negligence

• taking and acting on instructions from Mr Fritsch to settle the case when he did not have the mental capacity to give those instructions, which Mr Goddard should have known

1140 On the findings I have made, the circumstances of the preparation negligence were that the business valuation, taxation, costs and post-separation expenditure by the husband were important issues in the trial. Mr Fritsch repeatedly asked for evidence of this kind to be prepared. Mr Goddard inexcusably allowed the case to drift towards trial without doing so. In consequence and on the application of Mr Fritsch’s counsel, the commencement of the hearing on 13 September 2004 had to be adjourned. The trial judge allowed three days until 16 September 2004 for the preparatory gaps to be filled. That placed enormous pressure on Mr Fritsch and his legal and accounting team.

1141 On my findings, the circumstances of the capacity negligence were that Mr Fritsch was a Vietnam war veteran who was known to be suffering from major depression and post-traumatic stress disorder. He was being treated by a psychiatrist who had provided reports to Mr Fritsch’s lawyers which were filed in the Family Court. Mr Fritsch’s mental condition greatly deteriorated over the days leading up to the adjourned and then the final hearing. The medical opinion of his treating psychiatrist was that Mr Fritsch should be in a psychiatric hospital. The psychiatrist advised Mr Fritsch’s lawyers to take his mental condition into account in the conduct of the hearing, which they did not do. On the day when Mr Fritsch settled the case, he was very ill and suicidal. He was not in a fit mental state to be giving instructions, which his lawyers should have known.

1142 The preparation negligence did not cause any loss or damage to Mr Fritsch. However, the capacity negligence deprived him of the opportunity to obtain a better result, which was strongly probable, by going to trial.

1143 I have assessed the value of that lost opportunity after determining, on the evidence, what the Family Court would have decided was the pool of matrimonial assets and liabilities and the percentage share to which each party was entitled. I have found the net pool was in the amount of $4,295,117. By reason of his substantial financial contributions at the start of the marriage and other matters, Mr Fritsch was entitled to 55 per cent ($2,362,314) and Lianne Fritsch was entitled to 45 per cent (($1,932,803) of that pool. In coming to that view, I have taken into account the evidence of two eminent former judges of the Family Court. Under the settlement, Mr Fritsch actually received a net amount of $1,343,808 (31 per cent), leaving a deficiency of $1,018,506. After making certain appropriate subtractions, I have assessed the value of Mr Fritsch’s lost opportunity as $900,000.

1144 Under pt IVAA of the Wrongs Act, it is necessary to apportion responsibility for loss and damage among concurrent wrongdoers. Mr Fritsch’s barristers are concurrent wrongdoers. I have found they too were negligent in taking and acting on instructions from Mr Fritsch to settle the case when he did not have the mental capacity to give those instructions, which they should have known. I have assessed Goddard Elliott to be 75 per cent responsible and the two barristers jointly to be 25 per cent responsible for Mr Fritsch’s loss and damage. In money terms, Goddard Elliott’s proportionate responsibility is $675,000. That is the amount I would have ordered as damages against Goddard Elliott in favour of Mr Fritsch, but for advocates’ immunity.

1145 Advocates’ immunity operates in Australia to shield solicitors and barristers from liability for negligence (and other wrongs) occurring in the course of work leading to decisions about, or intimately connected with, the conduct of a case in court. After examining decisions of the High Court of Australia which bind me, I have decided that advocates’ immunity supplies a complete defence to Mr Fritsch’s claim for damages against Goddard Elliott. Its capacity negligence (as does its preparation negligence) falls within the immunity because it occurred in the course of work leading to decisions about, or intimately connected with, the conduct of a case in court, which is a very wide test. By reason of the immunity, Goddard Elliott is not liable to pay damages for the loss which its negligence caused Mr Fritsch, a conclusion to which I am driven by the binding authorities and find deeply troubling.

1146 Goddard Elliott must succeed in its claim for outstanding fees against Mr Fritsch. I will hear the parties in relation to the form of the final orders and costs.

Brisbane Barrister – David Cormack

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