Background
PQ Management Pty Ltd (PQM), the majority shareholder in Treated Waste Agencies Pty Ltd (TWA), engaged the law firm McCullough Robertson to assist in exercising a contractual call option to acquire the remaining shares held by a co-shareholder, Leviston. A 2017 Shareholders Agreement gave PQM the right to acquire Leviston’s 60,901 shares at not less than 2.2 times EBITDA. Before the option was exercised in March 2020, McCullough Robertson identified several material deficiencies in the transaction documents — including a blank Schedule 5, uncertainty over the EBITDA calculation date, and doubts about the validity of the power of attorney — but the option was nonetheless purported to be exercised. Leviston disputed the exercise and commenced proceedings in the Federal Court.
McCullough Robertson was then retained to defend the Federal Court proceedings. That litigation ended badly for PQM: the Federal Court declared the exercise of the call option ineffective, found the share transfer invalid, held that oppressive conduct under s 232 of the Corporations Act 2001 (Cth) had occurred, and ordered PQM to acquire the shares at a court-determined price while paying a proportion of Leviston’s costs. PQM and its directors Ison and Eldridge subsequently commenced proceedings in the Supreme Court of Queensland against McCullough Robertson, alleging negligence, breach of retainer, and breach of fiduciary duty in relation to both the original option exercise and the conduct of the Federal Court litigation.
McCullough Robertson applied to strike out the loss and damage paragraphs (paragraphs 67–71) of the Amended Statement of Claim, contending they were deficient because insufficient facts and no quantified amounts were adequately pleaded to establish either the nature of the claimed losses or the causal connection between the alleged breaches and that loss.
The Court’s Holding
Morrison J granted the strike-out application. Applying the four-part test from Graham & Linda Huddy Nominees Pty Ltd v Byrne [2016] QSC 221, his Honour found the lost commercial opportunity claims failed on multiple grounds. The pleading did not identify any specific price at which PQM contended it would have acquired Leviston’s shares — instead offering conflicting ranges ($169,000–$240,000 in one paragraph, a figure “less than $479,020” in another, and $280,000 in a third) without explaining the inconsistencies or pleading which scenario was primary. The pleading also failed to state what the plaintiffs would have done had they received the allegedly missing advice, failed to plead the proportion or percentage of the opportunity that was lost, and failed to plead with particularity the facts by which any certain outcome would have been achieved. Descriptions such as “practically certain” and “strong chances” were found to be insufficiently precise to satisfy the third requirement.
The causation pleading was separately found deficient. Following Southern Cross Mine Management Pty Ltd v Ensham Resources Pty Ltd [2004] QSC 457 and Bond Corporation Pty Ltd v Thiess Contractors Pty Ltd (1987) 14 FCR 215, Morrison J confirmed that bare phrases like “as a result of” are not a substitute for pleading material facts establishing the causal link. The Amended Statement of Claim was silent on what the plaintiffs would have done in response to each hypothetical piece of correct advice, what Leviston’s reaction to those steps would have been, and what consequences would have followed. The court noted it cannot assess counterfactual causation where the plaintiff’s own hypothetical conduct — and a third party’s response to it — is left unpleaded.
The defective paragraphs were struck out. The plaintiffs were granted leave to replead and ordered to pay the defendant’s costs of the application.
Key Takeaways
- A plaintiff claiming loss of a valuable commercial opportunity must plead four things with specificity: the opportunity itself, what the plaintiff would have done absent the breach, the proportion of the chance lost, and — where near-certainty is asserted — the particular facts by which the expected outcome would have been achieved.
- Bare causation assertions (“as a result of”) are insufficient; the pleading must identify the factual chain linking each breach to each category of loss, including the plaintiff’s hypothetical response to correct advice and any relevant third-party reaction.
- Alternative loss scenarios must be internally consistent; pleading incompatible price ranges across different paragraphs will itself be grounds for striking out the offending claims.
- Where lost opportunity to settle litigation is pleaded, the pleading must identify what the settlement terms would have been — a general allegation of a missed settlement opportunity will not suffice.
Why It Matters
For practitioners advising on or defending solicitor negligence claims, this decision provides a detailed and practical checklist of what Queensland courts require before a lost commercial opportunity claim will be allowed to proceed. The judgment makes clear that particularity is required not only about the opportunity itself but about the complete counterfactual causal narrative: what the plaintiff would have done, how a third party (here, Leviston) would have responded, and what would ultimately have followed. Claims that paper over these gaps with ranges, percentages, or optimistic adjectives will be vulnerable to strike-out.
The decision also illustrates the pleading risks that arise when defendants are also solicitors who previously acted for the plaintiffs in related matters. The court’s willingness to strike out the loss paragraphs in their entirety — rather than requiring mere particulars — underscores that deficiencies in the core causal and quantum allegations are structural problems, not cosmetic ones, and that leave to replead does not come without a costs consequence.