FEATURE ARTICLE -
Advocacy, Issue 102: December 2025
In R Lawyers v Dailey (a pseudonym) [2025] HCA 41 (5 November 2025), the High Court addressed two important issues in relation to a pre-nuptial agreement. First, there was considered when the cause of action for damages against the defendant solicitors accrued for limitation purposes. Second, the court addressed whether the plaintiff, on the evidence adduced proved his claim for damages. It is the second of those matters which is the subject of this case note. In the separate judgments delivered (Gageler CJ, Jagot and Beech-Jones JJ, and also Gordon and Edelman JJ) the court provides critical reasoning as to the pleading and proof of a professional negligence claim against a lawyer. The reasons of the court highlight the distinction between pleading a case of loss arising from a negligent act or omission as being the loss of a particular alternative outcome, on the one hand, and the loss of an opportunity to enjoy such outcome.
Gageler CJ, Jagot and Beech-Jones JJ wrote:
The appeal
[1] Before his marriage, the first respondent to this appeal, Mr Daily (a pseudonym), purported to enter into a financial agreement under Pt VIIIA of the Family Law Act 1975 (Cth) (“the FLA“) with his prospective spouse, Ms Daily (also a pseudonym), providing for how their property and financial resources were to be dealt with in the event of a breakdown of the marriage (the so-called “BFA“).1 The appellant, R Lawyers, is the firm of solicitors that advised and acted for Mr Daily in relation to the preparation of the BFA.
[2] After the marriage ended many years later, on the application of Ms Daily the Federal Circuit and Family Court of Australia (Division 1) (“the Division 1 Court”) set aside the BFA on the grounds that the Division 1 Court was satisfied that it was void for uncertainty and that since the time the BFA was made there had been a material change in circumstances relating to the care, welfare and development of children of the marriage the result of which would occasion hardship if the agreement was not set aside.2 The Division 1 Court also upheld part of a claim brought by Mr Daily in negligence against R Lawyers in relation to the advice it gave about the drafting of the BFA.
[3] The Federal Circuit and Family Court of Australia (Division 1) Appellate Jurisdiction (“the Appellate Court”) allowed an appeal by Mr Daily against the Division 1 Court’s dismissal of the balance of his claim against R Lawyers in negligence and remitted that balance for a further hearing at first instance.3 The Appellate Court rejected R Lawyers’ contention that the claim in negligence against it was statute barred under the Limitation of Actions Act 1936 (SA).
[4] The question of principle argued in this appeal is whether Mr Daily‘s claim against R Lawyers for negligence is statute barred because loss or damage caused by the negligence as found occurred at the time the BFA was entered into or at the time of his marriage on the one hand (as R Lawyers contend), or when Mr Daily and Ms Daily separated on the other (as Mr Daily contends).
[5] For the reasons that follow the answer is that, on the evidence in this case, R Lawyers’ negligence did not cause Mr Daily to incur any loss or damage until the time he separated from Ms Daily. Accordingly, Mr Daily’s action is not statute barred and the grounds of appeal contending that the Appellate Court erred in concluding to that effect should be rejected.
[6] After oral argument in this appeal R Lawyers applied for leave to amend its notice of appeal to include a further ground that raises another issue, namely whether that part of Mr Daily‘s claim for negligence against R Lawyers that was remitted for a further hearing was bound to fail because Mr Daily did not adduce evidence of the terms or scope of a financial agreement drafted with reasonable care and skill addressing the contingency that there might be children of the marriage.
[7] For the reasons that follow R Lawyers should be granted leave to amend its notice of appeal and the additional ground of appeal should be upheld. Orders should be made accordingly.
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Background
[17] All the relevant events occurred in South Australia. Mr Daily and Ms Daily met in 1996 and started living together the following year. Between 2002 and July 2005, R Lawyers provided advice to Mr Daily and prepared a draft financial agreement. On or around 21 July 2005, Mr Daily and Ms Daily signed a deed. That deed recited the parties’ intention to “contract out” of Pt VIII of the FLA and to enter into a “binding financial agreement under s 90B” within Pt VIIIA of the FLA (ie, the BFA). The BFA’s intended effect under the FLA has already been described. Mr Daily and Ms Daily were married later that year. They had a child in 2006 and another in 2009. They separated in September 2018.
[18] In December 2019 Ms Daily commenced proceedings in the Division 1 Court against Mr Daily. She sought a declaration under s 90G that the BFA was not binding, an order under s 90K that the BFA be set aside, and an order under s 79 for the alteration and settlement of property. In August 2021, and against the contingency that the BFA might be set aside or unenforceable, Mr Daily filed an application joining R Lawyers to the proceedings and seeking damages for breach of contract and negligence. The particulars of breach concerned the drafting of the BFA, the provision of advice about the terms of the BFA, and the provision of advice about the operation of the FLA. R Lawyers denied negligence and breach of contract, and pleaded that the claims against it were statute barred.
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[22] One component of Mr Daily’s claim was for the recovery of damages for the legal costs he incurred in litigating whether the BFA was void for uncertainty which had been wasted given the setting aside of the BFA on that ground (“the first component”). The Division 1 Court allowed that component of the claim and assessed damages for that component as $38,000. In awarding that amount, the Division 1 Court found either a further breach of R Lawyers’ duty to Mr Daily or further particularised the breaches that had already been found, namely a failure to draft a financial agreement that would not be set aside for uncertainty.
[23] The second component of Mr Daily‘s claim was that, by reason of R Lawyers‘ breaches of duty, he was financially worse off as a result of the outcome of Ms Daily’s application for orders under s 79 of the FLA (“the second component”). With this second component, Mr Daily accepted before the Division 1 Court that he needed to “prove on the balance of probabilities that there was available to him an opportunity or opportunities of securing a better financial result than that which was delivered to him under the judgment of the Court”. Proceeding from the premise that, had R Lawyers discharged its duty to Mr Daily, his financial agreement with Ms Daily would not have been liable to be set aside for uncertainty, Mr Daily‘s written submissions before the Division 1 Court articulated the basis for the second component of his claim as follows:
… there are only two realistic possibilities open. Either the[h]usband would not have reached agreement with the [w]ife on a financial agreement and would not have entered the marriage or the [h]usband would have reached agreement with the [w]ife on the terms of a financial agreement consistent with his instructions to [R Lawyers] but including a sufficient provision for any child of the marriage, in the event of a breakdown in the marriage, so that the agreement was not vulnerable to being set aside under s 90K(1)(d). (emphasis added)
[24] The Division 1 Court rejected this second component of Mr Daily‘s claim and declined to award any further “compensatory damages” against R Lawyers beyond the $38,000 for the first component in respect of wasted litigation costs as outlined above. The Division 1 Court made three critical factual findings in rejecting the second component of the claim.
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[42] To establish his case against R Lawyers in negligence, it was necessary for Mr Daily to prove on the balance of probabilities that the breaches of the duty of care owed to him by R Lawyers were a cause of loss or damage “(in the sense of detrimental difference)“.35 While that standard of proof is not exacting and “does not require certainty or precision”,36 that standard is not discharged by merely proving the loss of a possible chance of a better outcome.37 In some contexts, a lost opportunity may constitute loss or damage in tort38 but, even in those cases, the opportunity must itself be of some value; that is, it must be shown that there was a “substantial prospect of a beneficial outcome” but for breach of the duty of care.39
[43] The argument in this Court did not address whether the second component of Mr Daily‘s claim could be framed as a claim for a lost opportunity. Instead, the argument in this Court addressed how Mr Daily in fact framed this second component of his case. That framing is encapsulated in the paragraph of his submissions before the Division 1 Court noted earlier [para [23] above].40 Although that paragraph of those submissions is prefaced by a reference to proving an “opportunity or opportunities of securing a better financial result”, the submissions contended that, in the context of receiving advice about entry into a hypothetical financial agreement that was not liable to be set aside under the FLA, there were “only two realistic possibilities”. According to those submissions, those two possibilities represented an exhaustive statement of the counterfactual scenarios; they were not two examples of valuable lost opportunities amongst other possibilities.
[45] While a plaintiff may seek to frame their case as they choose, the nature of their loss and the time at which loss occurs is a matter which a defendant may contest and, ultimately, is for the court to determine. Until the hearing before the Appellate Court, Mr Daily’s claim was not framed as a loss of chance case. Nor is it apparent that Mr Daily could have proved the loss of a chance of any value given that, irrespective of the invalidity of the BFA for uncertainty as found below, the BFA was always vulnerable to be set aside on any of the other grounds in s 90K(1) of the FLA which include contingencies (such as s 90K(1)(c) and (d)) that could not be known or assessed at the time the BFA was executed. As such, Mr Daily’s case should have risen or fallen before the Appellate Court on the basis of his alleged loss as put before the Division 1 Court.
[46] As noted, one ground of Mr Daily‘s notice of contention is that, even if the Appellate Court erred in properly characterising the claimed loss, it was correct to conclude that the Division 1 Court did not properly consider Mr Daily’s loss. However, as also noted, the Division 1 Court found that Mr Daily did not instruct R Lawyers to the effect that he wanted a financial agreement that “was effectively bullet proof against the application of s 90K(1)(d)“ of the FLA and otherwise noted the absence of any evidence of the terms of a financial agreement that even amounted to a “reasonable attempt to avoid a potential application of s 90K(1)(d)“. Those findings were fatal to the second component of Mr Daily’s case.
[47] In any event, the second component of Mr Daily’s claim was bound to fail by reason of Mr Daily’s failure to adduce evidence establishing the fact of loss beyond the litigation costs wasted in unsuccessfully defending the validity of the BFA as not void for uncertainty. At trial Mr Daily did not adduce any evidence as to a form of financial agreement that a lawyer in 2005, exercising reasonable care and skill, would (or might) have drafted to avoid that financial agreement being set aside and to have that financial agreement be effective upon separation, including a financial agreement that addressed the potential that Mr Daily and Ms Daily might have had children. Nor did Mr Daily adduce any evidence from which it could have been inferred that Ms Daily would (or might) have agreed to such a financial agreement around that time.
[48] In this Court, Mr Daily asserted that there was such evidence but did not identify what it was beyond pointing to the Division 1 Court’s finding of negligence on the part of R Lawyers, and part of Mr Daily‘s evidence of his instructions to the effect than he wanted the BFA to “include our plans and scenarios, including children”. The Division 1 Court’s findings of negligence on this topic, however, went no further than that R Lawyers failed to advise Mr Daily “what would happen upon the birth of a child and whether that might represent a material change in circumstances”.
[49] In some lawyer negligence cases a court can infer the particular steps that might have been taken had the lawyer discharged their duty.41 However, the lack of any evidence about what such a financial agreement should have provided in this case if there were children of the marriage could not be so inferred.42
[50] It may be that a finding that Mr Daily suffered loss as a consequence of R Lawyers’ failure to exercise reasonable care and skill would not have required the precise terms of the counterfactual financial agreement to have been identified, but Mr Daily would have had to identify at least the scope, nature and likely monetary amount or range of monetary amounts that any provision for children would have entailed. Unless that was done there could not be any assessment of whether Ms Daily would (or may) have agreed to such a financial agreement, whether it would or may have survived a challenge on hardship grounds many years later and, if so, whether it would have secured a better outcome for Mr Daily compared to the orders the Division 1 Court made under s 79 of the FLA.
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Disposition
[72] The orders proposed by Gordon and Edelman JJ should be made.
Gordon and Edelman JJ wrote:
Pt 3: Principles relevant to loss caused by solicitor’s negligence
[141] Before turning to the appeal in this Court, it is necessary to address the measure of damages in tort and contract and the ways in which a client may prove loss by reason of the negligence of their solicitor.
Measure of damages in tort and contract
[142] In an action in tort or contract, the compensatory principle entitles the injured party to damages in a sum which, so far as money can do, will put that party in the same position as they would have been in had the wrong not occurred.125 Part of the compensatory principle requires the award of damages for consequential losses, such as those claimed by Mr Daily. In general, and subject to the rules that limit the awards of damages, when awarding damages for consequential losses the court awards compensation for all losses that the plaintiff would not have suffered but for the defendant’s wrong.
[143] For actions in tort, damages for consequential losses are intended to put the plaintiff in the same position as they would have been in, so far as money can do, had the tort not been committed.126 A claim in negligence requires that the defendant’s breach of a duty of care caused loss or damage to the plaintiff within the scope of that duty with damages recoverable where they are not too remote. As loss or damage is an element of the cause of action, the plaintiff bears the onus of proving loss or damage and negligence is not actionable until it results in actual damage to the plaintiff,127 as distinct from potential or likely damage.128 What qualifies as actionable damage is a question of fact and degree.129 The onus then shifts to the defendant to exclude or limit the extent of liability or to establish any relevant defence.130
[144] By contrast, damages for breach of contract aim to put the plaintiff in the same position they would have been in had the defendant performed the contract.131 In essence, the court asks how much it costs the plaintiff to obtain a pecuniary substitute for the primary performance of the contractual obligation together with any consequential losses. For a claim for breach of contract, the onus is on the plaintiff to prove that the plaintiff has a cause of action for breach of contract.132 Unlike a claim for negligence, in the absence of proof of actual loss a defendant will still be liable to pay nominal damages for breach of contract.133 Like in tort, the onus is on the defendant to exclude or limit the extent of liability including proving that the plaintiff has failed to take reasonable steps to mitigate loss.134
Heads of loss or damage for negligence by solicitor
[145] There are several ways in which a client may suffer and then prove loss or damage as a result of the negligent conduct of a solicitor.
[146] On the one hand, the client may have incurred loss by reference to events that allegedly would have occurred but for the solicitor’s negligence — that is, a past hypothetical. In such a case, there are two ways in which the client might formulate their claim. First, the client might claim to have lost an identified benefit or interest that they would have obtained but for the solicitor’s negligence. As a matter of causation, the client would need to prove, on the balance of probabilities, that they would have obtained the identified benefit or interest but for the solicitor’s negligence. This might be described as a case based on the loss of a particular outcome. So, for example, if a solicitor failed to ensure that a financial agreement was signed by all parties,135 or failed to record the agreement of the parties to a financial agreement with sufficient certainty, the client might contend that, but for the solicitor’s negligence, they would have had an enforceable financial agreement and thereby obtained a more favourable property settlement.
[147] In the case of a client’s claim for loss of a particular outcome caused by negligent drafting of a financial agreement, the client would need to prove, on the balance of probabilities, that (a) the financial agreement, including the substance of the terms of that agreement, would have been agreed; (b) that agreement would not have been set aside; and (c) that agreement would have secured for the client a better outcome than that which they in fact achieved. It would be necessary for the client to prove the amount of the loss, but they would be entitled to recover the loss in full.
[148] Alternatively, the client might claim that, as a result of the solicitor’s negligence, they “lost the chance or opportunity” to enter into a different agreement and thereby secure a more favourable property settlement, and recover damages “by reference to the court’s assessment of the prospects of success of that opportunity had it been pursued”.136 This might be described as a case based on the loss of a chance. As a matter of causation, the client would need to prove, on the balance of probabilities, that the solicitor’s negligence caused them to suffer the loss of a chance or opportunity to secure a better outcome, and that that chance or opportunity was a “significant chance”137 or a “substantial prospect”138 and had “some value (not being a negligible value)“.139 In a loss of chance case, therefore, the client is usually required to plead at least that the loss they have suffered is a loss of a valuable opportunity, identifying that opportunity with some particularity, as well as what the client might have done but for the solicitor’s negligence where that is necessary to prove causation.140
[149] In the case of a defective and negligently drawn financial agreement entered into under the FLA, proof of causation of the loss of a chance of obtaining a different financial agreement might depend on proof, on the balance of probabilities, of matters such as whether there was a substantial and valuable chance that the client and the other party would have agreed to a different financial agreement, including the substance of the terms of that agreement.141 Once the client has proved that there was a substantial and valuable chance that they and the other party would have entered into a different agreement, their loss is then valued by reference to “the degree of probabilities or possibilities”, often expressed as a percentage, of the chance or opportunity succeeding.142 That assessment would take into account matters such as the likelihood that the different agreement would not have been set aside and that it would have secured a better outcome for the client than that which they in fact achieved.
[150] Of course, a client also may have incurred loss that may be proved by reference to actual past events. For example, the client may have expended money in litigating against a third party with respect to the loss or damage suffered due to the solicitor’s negligence. The costs of litigation that are reasonably incurred in an attempt to reduce losses caused by wrongdoing are recoverable.143 In such a case, provided that the client can prove, on the balance of probabilities, that the solicitor’s negligence caused the actual past loss, the client will be entitled to recover the full amount of that loss (subject to defences and limits including remoteness and mitigation).
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[162] Contrary to Mr Daily’s submissions, the primary judge did not err in failing to separate out the issues of causation of loss and the assessment of damages. The task of the primary judge, after he correctly found that loss accrued, at the earliest, on separation, was to determine what position Mr Daily would have enjoyed but for R Lawyers’ negligent advice and, therefore, how much worse off he was. The difficulty for Mr Daily was and remains that found by the primary judge — the failure by Mr Daily to prove loss caused by the negligence of R Lawyers other than the legal costs of the uncertainty claim.146
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[166] Mr Daily’s central premise was that he would have secured a financial agreement that reflected his instructions in certain terms and he was entitled to damages for the difference between that financial agreement and the position he now finds himself in. That was the case which Mr Daily put to the primary judge and which was rejected. Mr Daily has maintained this central premise, although at times he has framed his case as a lost opportunity to obtain a financial agreement that would not have been set aside on hardship grounds. On either case, Mr Daily failed to prove that head of loss.152 At no point in the proceedings did Mr Daily demonstrate that a different financial agreement would or might153 have been agreed with Ms Daily. He did not prove: the substance of the terms of that agreement; that that agreement would or might not have been set aside; and that it would or might have secured a better outcome than the position he found himself in after the Court made orders under s 79 of the FLA.
[167] Mr Daily claimed that he suffered loss in the amount of the difference between what the Court ordered he pay Ms Daily and what a financial agreement properly prepared in accordance with his instructions would have fixed as the amount he could be obliged to pay on the breakup of the marriage. But whether there was a difference between these two sums depended on identifying the amount which a properly prepared financial agreement would or might have fixed as the amount he could be obliged to pay Ms Daily. As the primary judge found, Mr Daily led no evidence at trial of what R Lawyers could or should have done to prepare a financial agreement of the kind just described.154 And, there being no evidence at trial of what that hypothetical financial agreement would or might have been, Mr Daily led no evidence that an agreement of that kind would or might have been agreed with Ms Daily. On the contrary, at trial his central contention was that, unless a financial agreement had been prepared that would have fixed the amount he would be obliged to pay, there would have been no marriage and he and Ms Daily would have had no children.
[168] Further, the primary judge found (as noted above) that: (a) Mr Daily was told he could not have a bullet proof agreement; (b) Mr Daily was told that there were five bases on which a financial agreement could be set aside (including hardship); and (c) this was a case of hardship. In these circumstances, to the extent to which Mr Daily pleaded a case based on the loss of a particular outcome, the case was not proved; it failed for want of evidence of the terms that the financial agreement should have contained, evidence that Ms Daily would have agreed to those terms prior to separation, and evidence that that financial agreement would have remained on foot and been enforceable at separation.
[169] No different result would follow if it were accepted that Mr Daily had argued that he had lost an opportunity to obtain a different financial agreement that would not have been set aside on hardship grounds. Such a claim would also have failed for want of evidence: (a) of the substance of the terms that the financial agreement would or might have contained; and (b) that Ms Daily would or might have agreed to those terms prior to separation. If those matters had been proved to the requisite standard, then there would have been a further difficulty that Mr Daily had failed to establish that loss valued by reference to “the degree of probabilities or possibilities” that that agreement would or might have remained on foot and been enforceable at separation.
[170] Both kinds of cases would have likely encountered a further difficulty — that the evidence would need to have addressed what terms were required in the financial agreement to avoid it being set aside under s 90K(1)(d) of the FLA on hardship grounds. For a case based on the loss of a particular outcome, that difficulty was insuperable. For a case based on the loss of a chance, the difficulty was at least very large, if not insuperable. Mr Daily failed to lead any evidence to prove that he would have secured, or that he would have had a substantial prospect of securing, an enforceable agreement which would have provided Ms Daily with less than the amount awarded.
[171] It follows that the primary judge was correct to confine the assessment of damages in respect of Mr Daily’s legal fees to the amount conceded by R Lawyers — that is, the costs of Mr Daily’s proceeding against Ms Daily in so far as they related to the uncertainty claim. As Mr Daily failed to prove that he and Ms Daily would or might have entered into an alternative financial agreement that would or might not have been set aside on hardship grounds, he was not entitled to damages referable to his legal costs in litigating the hardship issue against Ms Daily. The Full Court was therefore wrong to remit the assessment of damages as they pertained to Mr Daily’s legal fees.
(emphasis added)
A link to the decision is here.
1 FLA, s 90B(2)(a).
2 Daily & Daily [2023] FedCFamC1F 222; FLA, s 90K(1)(b), (d).
3 Daily & Daily[No 4] [2024] FedCFamC1A 185.
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35 Tabet v Gett (2010) 240 CLR 537 at 564 [69]; see also at 562 [58], 575 [101].
36 Tabet (2010) 240 CLR 537 at 587 [145].
37 Tabet (2010) 240 CLR 537 at 559 [46], 564 [68]–[69], 575 [101], 587 [143], 589 [152].
38 See especially Sellars v Adelaide Petroleum NL (1994) 179 CLR 332 at 364; Tabet (2010) 240 CLR 537 at 561 –562 [55].
39 Badenach v Calvert (2016) 257 CLR 440 at 454 [40]. See also Sellars (1994) 179 CLR 332 at 364, quoted in Tabet (2010) 240 CLR 537 at 561 [54].
40 See [23] above.
41 See, eg, Badenach (2016) 257 CLR 440 at 452 [28]–[29], 453 [31]–[33]. See also Attard v James Legal Pty Ltd (2010) 80 ACSR 585 at 611 [131]; Howe v Fischer (2014) 12 ASTLR 66 at 80 [80].
42 See CGU Insurance Ltd v Porthouse (2008) 235 CLR 103 at 122 [72].
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125 Livingstone v Rawyards Coal Co (1880) 5 App Cas 25 at 39; Butler v Egg and Egg Pulp Marketing Board (1966) 114 CLR 185 at 191; Haines v Bendall (1991) 172 CLR 60 at 63; Stewart v Metro North Hospital and Health Service (2025) 99 ALJR 1348 at 1354 [24]–[25]; 424 ALR 468 at 475.
126 Butler (1966) 114 CLR 185 at 191; Haines (1991) 172 CLR 60 at 63.
127 Williams v Milotin (1957) 97 CLR 465 at 474; Alcan Gove Pty Ltd v Zabic (2015) 257 CLR 1 at 7 [8].
128 Wardley (1992) 175 CLR 514 at 526 –527.
129 Alcan Gove (2015) 257 CLR 1 at 7 [8].
130 Watts v Rake (1960) 108 CLR 158 at 159.
131 The Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64 at 80 –81 , 161.
132 In relation to proof of loss or damage, see Amann Aviation (1991) 174 CLR 64 at 80 , 99 , 118 , 137 –138.
133 Luna Park (NSW) Ltd v Tramways Advertising Pty Ltd (1938) 61 CLR 286 at 300 -301 , 305 , 312.
134 TC Industrial Plant Pty Ltd v Robert’s Queensland Pty Ltd (1963) 180 CLR 130 at 138.
135 FLA, s 90G(1)(a).
136 Sellars (1994) 179 CLR 332 at 355. See also Amann Aviation (1991) 174 CLR 64 at 119.
137 Sellars (1994) 179 CLR 332 at 356.
138 Sellars (1994) 179 CLR 332 at 365. See also Badenach v Calvert (2016) 257 CLR 440 at 454 –455 [40]–[41] .
139 Sellars (1994) 179 CLR 332 at 355 (emphasis in original).
140 Lantrak Holdings Pty Ltd v Yammine [2023] FCAFC 156 at [17] , [289], citing Graham & Linda Huddy Nominees Pty Ltd v Byrne [2016] QSC 221 at [50].
141 Badenach (2016) 257 CLR 440 at 454 –455 [40]–[41], 467 [98]. See also Sellars (1994) 179 CLR 332 at 355 –356 , 368 –369.
142 Sellars (1994) 179 CLR 332 at 355 , 368. See also Malec v J C Hutton Pty Ltd (1990) 169 CLR 638 at 643; Thompson v Schacht (2014) 53 Fam LR 133 at 135 –136 [7], 147 [76].
143 Talacko v Talacko (2021) 272 CLR 478 at 502 [60], citing Gray v Sirtex Medical Ltd (2011) 193 FCR 1 at 11 [24], [26], in turn quoting Berry v British Transport Commission [1962] 1 QB 306 at 321.
