Victorian Supreme Court judge’s silken advice in a property dispute was negligent … Damages of $1.185 million to be shared with law shop … Inadequate information to support advice … Hopefully, insurers will save the judge’s bacon … Janek Drevikovsky reports
Victorian judge John Digby gave negligent advice while he was still a practising silk, the Yarraside Supreme Court has found, and he must stump-up part of a $1.185 million damages bill owed to a construction company.
Digby is a former bar council chairman and since 2012 has sat in the trial division of the Vic Supremes.
In the negligence action he was unable to rely on the advocates’ immunity because the advice he gave was not closely connected to court proceedings.
South Australian judge Malcolm Blue was flown in for the case, to avoid a Victorian having to try one of their own.
Acting Judge Blue, as his Honour became, delivered judgment in over 1300 paragraphs of judicial prose, throughout referring to Digby as “Mr Digby QC” so as “to reflect the capacity in which he is sued without disrespect to his position as a Justice of this Court.”
Boutique law shop Hoeys Lawyers, which has since been acquired by Russell Kennedy, was also found liable. The source of the negligence action was one of the firm’s former clients, building outfit Pearl Hill Ltd.
In the late 2000s, Pearl Hill started dealing with property developer Marina Cove Pty Ltd. The builder signed a contract to construct 69 houses at Safety Beach, Mornington Peninsula.
Before the project was finished, the parties fell into a dispute and Pearl Hill brought in Hoeys for advice.
Working with Digby, Hoeys advised Pearl Hill to enter into a “heads of agreement” to settle the ructions. Under the agreement, Pearl Hill would have a first and discounted option on buying 33 of the Safety Beach houses.
But the dispute continued. Eventually, in March 2009, Digby sent an email to Hoeys, advising Pearl Hill to terminate both the heads of agreement and the original contract.
There was limited discussion before Digby gave his advice, and certainly no conference. Nor did the barrister explain the consequences of termination, or any alternatives.
Digby was convinced there was little chance of obtaining specific performance against Marina Cove. It was better, he thought, to terminate and go after the developer for a money judgment.
But as Blue AJ explained, Digby’s logic only worked if Marina Cove had enough funds to pay damages. Otherwise, it would have been better to keep the agreements afoot and force the developer to sell the 33 houses to Pearl Hill.
Digby simply did not know enough about Marina Cove’s finances to safely give his advice:
“Mr Digby QC did not have the necessary information to value the advantages and disadvantages and hence was not in a position to weigh them and advise that the balance favoured, or clearly or overwhelmingly favoured, termination,” Blue AJ said.
Pearl Hill followed Digby’s advice. The consequence was, Blue AJ found, that they lost their chance at obtaining 33 valuable properties.
His Honour assessed the value of this lost chance at $1.185 million, to be apportioned between Digby and Hoeys at a later date.
Digby tried to argue he was protected by the advocates’ immunity. Blue AJ was unconvinced, saying that the immunity is only for court work, or work closely connected to a court case. Advice on termination, with no pending litigation, could not fit that description.
Another barrister involved with Pearl Hill, Kenneth Oliver, was found not to have acted negligently.
We discover that the word “Digby” has a Norse origin, meaning town by a ditch.