Abu-Mahmoud v Consolidated Lawyers Pty Ltd

The Proceedings

1. The claims made by the plaintiff are set out in their final form in a Second Further Amended Statement of Claim which filed on 11 December 2013. The defence of all defendants to the claims made in that Second Further Amended Statement of Claim are set out in a Defence which was ultimately filed on 24 June 2014.
2. The Second Further Amended Statement of Claim (to which it will be convenient to refer to as the Statement of Claim) alleges that between about September and November 2006, Mr Abu-Mahmoud, and a fellow investor, Mr Trad, retained Mr Kassem and through him Consolidated Lawyers, to act on their behalf with respect to any possible personal liability arising out of a corporate tax assessment which had been raised with respect to a completed property development at Brookvale.
3. The plaintiff claims that in about November 2006, he received oral advice from Mr Kassem to restructure his affairs so as to avoid any personal liability for that tax debt. He alleges that in eight separate ways, between when the advice was given and August 2008, Mr Kassem was in breach of his duty by giving him inappropriate advice, failing to give him appropriate advice and failing to carry out instructions.
4. He alleges that as a consequence of the various breaches of duty, he suffered loss constituted by the following: 1. monies owing under a guarantee which he had given to the St George Bank. The guarantee was called up by the Bank when the borrower company had administrators appointed; 2. loss of possession and loss of equity in two properties, one at Lidcombe and one at Condell Park. The properties were part of the security given to the Bank under the personal guarantee; 3. the legal costs which he paid to Mr Kassem; and 4. legal costs which he paid to another firm of lawyers to assist him in dealing with the consequences of the restructure advice.
5. Mr Kassem and/or the firms for which he worked, deny giving the restructure advice and deny being in breach of any duty. In broad terms, where it is alleged that advice was not given, the defendants accept that that was so, but deny any obligation to give the advice.
6. As well, the defendants seek to argue that even if Mr Abu-Mahmoud establishes one or more breaches of duty, those breaches did not cause any loss to Mr Abu-Mahmoud.
7. Finally, the defendants allege that if there was breach of duty, and they were liable for loss, Mr Abu-Mahmoud ought be found to have contributed to his own loss by his negligence.

Parties and Participants

1. It is convenient to commence this judgment by identifying the parties, and various corporations and individuals who or which have a role to play in these proceedings.
2. Mr Abu-Mahmoud obtained a Bachelor of Civil Engineering in 1988 and a Master of Engineering and Science in 1992 from the University of NSW. Since graduating from the University in 1988, he has worked as a structural engineer.
3. In 1994, he started his own property development business in which he worked part-time, whilst also continuing to work as a structural engineer. Between 1994 and 2001, he engaged with a variety of partners in a number of different property developments.
4. One person, whom he was accustomed to working with, was Mohammad Trad, whom Mr Abu-Mahmoud first came to known as a fellow school student. Mr Trad had skills as a carpenter, and from time-to-time worked with Mr Abu‑Mahmoud on jobs for their clients. At other times, Mr Trad joined in with Mr Abu-Mahmoud in property developments.
5. He was also accustomed to joining with Mr Mohamed Skaf in various property developments. Mr Skaf undertook the active role for any investment made on behalf of himself and his wife, Mrs Eman Skaf. One of their jointly owned companies was Inulik Holdings Pty Ltd ("Inulik"). It will be sufficient to refer to Mr Skaf only, as his conduct was done on behalf of his family interests. Mrs Skaf was not separately mentioned in the evidence as having been an active participant in any of the relevant events.
6. Mr Kassem was admitted to practice as a solicitor in 1998. His initial employment was as a solicitor at a firm in Sydney, and then a firm in Canberra. In about 1999, Consolidated Lawyers Pty Ltd ("Consolidated"), a legal firm, employed Mr Kassem as a solicitor. He was remunerated in part by a profit sharing agreement.
7. Consolidated initially established an office in Pitt Street in Sydney. By about 2004, it had opened an office in Parramatta. Mr Kassem predominantly worked at the Parramatta office.
8. According to the Defence filed by the three defendants, in the period from 1 July 2006 to 30 September 2006, Mr Kassem was employed as a solicitor by Consolidated. Between 1 October 2006 and 30 June 2007, he was employed by Consolidated as a consultant solicitor, although the change in terminology is unexplained. The Defence pleads that his employment as a consultant solicitor in this last identified period was only with respect to one file involving a dispute between Elite Apartments Pty Ltd ("Elite") and the Arab Bank about a development at Vaucluse.
9. Between 1 October 2007 and 1 July 2008, Mr Kassem practised as a solicitor on his own account trading as S K Lawyers ("SKL"). Between 1 July 2008 and 2 March 2009, Mr Kassem was employed as a solicitor by Shaw Reynolds Bowen & Gerathy ("SRBG").
10. Consolidated, Mr Kassem agreed, held itself out as a firm which was able to provide high levels of service for its clients, including business and legal services, and, as well, taxation advice with respect to corporate and commercial transactions.
11. Even though there are three separate periods when Mr Kassem acted as a solicitor in association with Consolidated, his own practice and SRBG, at all relevant times, the solicitor with whom Mr Abu-Mahmoud principally dealt was Mr Kassem. Accordingly, it will be sufficient to refer only to him, unless otherwise necessary. There were junior staff, some lawyers, and some paralegals or conveyancers who undertook various specific tasks. But in my view, they were doing so either at the direction of, or else subject to, the supervision of, Mr Kassem.
12. Mr Kassem's brother, Ozem, gave evidence that he was a certified practising accountant by occupation, and a registered liquidator, who carried on his business in the central business district of Sydney. By the time he gave evidence in 2013, he had been undertaking work in the insolvency area for over 20 years. In 2006, he was a partner in a firm which did insolvency work, Cor Cordis, and was a registered liquidator. In 2006, his practice did not involve him acting for companies which were not in administration or liquidation.
13. A number of companies are relevant to, and feature in, the evidence. It is appropriate to identify those.
14. The first company is Fairchild Development Pty Ltd ("Fairchild"). It was incorporated in about 2001, the directors Mr Abu-Mahmoud, Mr Trad and Mr Mohamad Skaf. The shares in Fairchild were owned as to one third by Inulik and the Skaf company, and as to two thirds by Elite.
15. Elite was a company which was owned by Mr Abu-Mahmoud and Mr Trad, or their own corporate interests, equally.
16. Elite had purchased land at Vaucluse in 1997, and was the corporate vehicle used by Mr Abu-Mahmoud and Mr Trad to develop a property at Vaucluse. That development ("Vaucluse development") was funded by a loan from the Arab Bank. It is this company which was in dispute with the Arab bank.
17. The last company which it is necessary to identify, is NorthAxis Pty Ltd ("NorthAxis "), which was incorporated on 30 April 2007. The purpose for the incorporation of NorthAxis was so that it could be the purchaser, as part of the restructure scheme, of the Fairfield property. NorthAxis was owned by Mr Abu-Mahmoud and Mr Trad in equal shares.
18. Mr Kemal Shockair was the accountant retained by Mr Abu-Mahmoud to prepare the accounts for each of the developments. It was he who initially dealt with the Australian Taxation Office ("ATO") about the tax affairs of Elite and Fairchild. He prepared the accounts for those companies. An error by Mr Shockair lead to the existence of the tax liability in Fairchild, and the possible tax liability for Mr Abu-Mahmoud which lead to his seeking advice about any way he could protect his personal position against that liability.
19. Mr Alf Chehab was a timber merchant of some significant means. He was accustomed to invest in, or to undertake property developments which ranged from a small number of townhouses to a combined shopping centre and residential apartment complex. He had known Mr Abu-Mahmoud since about 1995 or so. Mr Abu-Mahmoud had provided him with structural engineering services on some of his development projects and also on his own personal home. Mr Chehab and Mr Abu-Mahmoud had been participants in a joint venture. Mr Abu-Mahmoud sold his share of the joint venture to Mr Chehab. According to his unchallenged evidence, Mr Chehab reposed great trust in Mr Abu-Mahmoud.

The Developments

1. In 2001, Mr Abu-Mahmoud, Mr Trad and Mr Skaf decided to undertake a development with respect to a property at Dee Why ("the Dee Why development"). Fairchild was the corporate vehicle used by these three investors, either personally or by their companies, to undertake the Dee Why development.
2. The Dee Why development was designed and constructed between about January 2002 and February 2004. The development was on-sold and profits were distributed to the shareholders by way of dividend by the end of that period.
3. In November 2002, Mr Abu-Mahmoud, Mr Trad and Mr Skaf decided to develop a property which had been purchased in Brookvale ("Brookvale development"). The development was to be carried out by using Fairchild as the corporate vehicle. Land was purchased in November 2002.
4. The Vaucluse development was one being undertaken by Mr Abu-Mahmoud and Mr Trad. Mr Skaf had no role to play in this development. The vehicle being used for the Vaucluse development was, as I have earlier indicated, Elite. The funds for the Vaucluse development were advanced by the Arab Bank. At the time of the various events concerning the Fairfield development, Elite was in litigation with the Arab Bank about its funding of the Vaucluse development. Mr Kassem was acting for Elite in that litigation.
5. In addition to these joint developments, Mr Abu-Mahmoud himself had purchased two other properties. One was at Condell Park, for which he had borrowed money from the St George Bank to fund the purchase. The other property which Mr Abu-Mahmoud held, was one at Lidcombe. He borrowed $574,000 from the St George Bank to fund the purchase of that property. Mr Abu-Mahmoud intended to develop each of the Condell Park and Lidcombe properties. However, no steps had been taken so to do at the time of the Fairfield development.

The Fairfield Development

1. In mid-2003, Mr Abu-Mahmoud, Mr Trad and Mr Skaf decided to purchase for develop a property at 82-94 Ware Street, Fairfield ("the Fairfield development"). There was an existing shopping centre complex on the Ware Street site.
2. This Fairfield purchase and development was carried out using Fairchild, again, as the development vehicle. The Fairfield development was significantly larger than previous developments. Capital needed to be borrowed.
3. In November 2003, the available capital, in round figures, for the Fairfield development, consisted of $3.5 M raised by the three joint venturers - Mr Abu‑Mahmoud, Mr Trad and Mr Skaf. In addition, a sum of $5 M was needed by way of borrowed capital. Initially, at least Mr Abu-Mahmoud understood that that sum was to come from the Arab Bank. After exchange of contracts and prior to settlement of the purchase, the Arab Bank declined to advance the funds. The monies were ultimately borrowed from the St George Bank.
4. It will be necessary to describe, in some detail, the events connected with the Fairfield development, and to make findings with respect to it.
5. On 27 May 2004, Fairchild exchanged contracts to purchase the Fairfield property. The purchase price was $7.55 M. There were in fact two contracts exchanged which dealt separately with the various parcels of land which comprised the site upon which existing development had been constructed. Nothing turns on that fact. It will be convenient to regard the purchase (and sale process) as a single contractual process.
6. As indicated earlier, it was initially proposed to raise the balance of the required funds to purchase the property from the Arab Bank. The Arab Bank did not advance the funds.
7. At, or shortly after, the time of the exchange, because of the falling values in the property market generally, and the falling value of the Fairfield property, Mr Abu‑Mahmoud formed the opinion that the value of the property needed to be increased above the nominated purchase price, so as to enable Fairchild (and thereby its investors) to have sufficient equity to justify the proposed borrowing. He determined that the way in which to do this was to lodge an application for development consent for the redevelopment of the site. To enable this to happen, he needed, and obtained, an extension of the settlement period which had been originally agreed at the time of exchange of contracts.
8. On 20 October 2004, Fairfield Council granted consent to the development application submitted by Mr Abu-Mahmoud. That development consent was valid for a period of two years.
9. Settlement was extended from 29 October 2004 to 10 December 2004. It in fact occurred on that day.
10. The purchase was funded by the St George Bank. It provided a loan of $5.75 M, which was apportioned as to $5 M to the Fairfield development and as to $750,000 to repay the National Australia Bank with respect to a loan which it had made to Elite with respect to a development at The Entrance. The term of the St George Bank loan was 18 months from the first draw‑down, which occurred at settlement on 10 December 2004.
11. At the same time, the St George Bank also loaned to the joint venturers the sum of $3.75 M as a construction and development facility for the Brookvale development. The term of that loan was 12 months from first draw-down.
12. As I have said, the existing property at Fairfield was a shopping centre. It was a relatively modest facility. The development which was planned by Mr Abu‑Mahmoud, Mr Trad and Mr Skaf to replace it incorporated a new shopping centre, commercial offices and residential apartments. It was a considerably bigger development than the existing one.
13. When the Fairfield property was purchased, there were existing shops and businesses which were operating in it. As a consequence, Fairchild received rents from the businesses operating in the centre. One of the owners of those businesses was Mr Abdul Antar, who operated a fruit and vegetable shop. The question of whether Mr Antar had an agreement for lease with Fairchild, and was therefore entitled to a lease in registrable form with respect to his fruit and vegetable shop, and, if so, what the terms of that lease were, is a central one in the unfolding of the events with respect to the Fairfield development.
14. It is convenient to deal now with this question.

Agreement to Lease with Abdul Antar

1. In December 2005, Mr Antar approached Mr Abu-Mahmoud about leasing a fruit shop in the Fairfield property. A discussion took place about the terms of a possible lease.
2. On 17 February 2006, Mr Antar sent a document by facsimile to Mr Abu‑Mahmoud setting out the terms of a proposed lease. Mr Abu‑Mahmoud and Mr Skaf signed the facsimile and returned it to Mr Antar, indicating their agreement to a lease on the terms set out.
3. A solicitor at Atkinson Vinden Heazlewood Lawyers ("AVH") was instructed by Mr Abu-Mahmoud to prepare a formal lease between Fairchild and Mr Antar based on the terms set out in the facsimile.
4. The facsimile of 17 February 2006, contained an outline of the proposed agreement. When signed and returned, it was in this form: "This is an outline of our agreement: Lease term of 3 x 2 years of $125,840 pa inc GST with a 4% increase each year. There will be a demolition clause in the last 2 years. If the lessor decides to vacate the tenant in the first year and a half of the last 2 years, there will be a compensation to the tenant of that year value of rent. After the construction and completion of the new building there will be an option for the tenant to take up a 5 x 5 year lease at a rate of $160, 160pa inc GST for the same area of existing premises. The new premises is to contain at least the same width of Ware street exposure as to existing premises. New premises is to have all general facilities to council requirements i.e. roof, roller shutters, electricity and water systems in place. There to be a restriction clause: the landlord will not lease another premises with the same business. There are two option for the lessor: 3 month free rent to tenant from 1/2/06 or 3 month free rent to the tenant from the signing of the lease with a clause stating that if the tenant trades earlier than the 3 month the rent starts from that time. The tenants will supply with 3 month bond of rent and 1 month rent in advance, as deposit as soon as the lease is signed." (sic)
5. The strike though in clause 6 was inserted by pen before the facsimile was signed by Mr Abu-Mahmoud and Mr Trad and returned to Mr Antar thus signifying their acceptance of the proposed lease agreement.
6. On 20 February 2006, Mr Abu-Mahmoud spoke with his solicitor at AVH, and instructed him that he wanted "a harder term" of the lease, and informed his solicitor that he would send through new instructions, about the acceptable lease terms.
7. By an email dated 1 March 2006, AVH confirmed to Mr Abu-Mahmoud that they had received instructions to prepare a lease to Mr Antar for part of the shopping centre at Ware Street, Fairfield. This email made no specific reference to the terms of the conversation of 20 February 2006, but Mr Abu‑Mahmoud was asked to provide instructions with respect to a number of issues which would enable the preparation of a written lease. AVH drew Mr Abu-Mahmoud's attention to the Retail Leases Act 1994 which required a disclosure statement to be provided to Mr Antar prior to his entering into a lease. A draft disclosure statement was provided. There was apparently no prompt response to this letter.
8. The solicitors followed that up with a further email to Mr Abu-Mahmoud on 7 March 2006.
9. On 13 March 2006, Mr Abu-Mahmoud contacted AVH and provided them with answers to the four questions which had been originally raised. Specifically, AVH was instructed by Mr Abu‑Mahmoud that there would be no compensation payable on vacation of the tenant.
10. On 21 March 2006, AVH forwarded to Mr Antar's lawyers an email which included a covering letter, the lease in duplicate, a relevant Retail Tenant's Guide and a Disclosure Statement. The letter noted that the documentation was "forwarded subject to our client's final approval".
11. The letter required the return to AVH of the signed lease in duplicate, the signed Disclosure Statement, cheques in various amounts and a bank guarantee.
12. On 3 April 2006, Mr Antar's lawyers, El Masri & Associates ("El Masri"), wrote to AVH indicating that the terms of the lease which had been forwarded did not accord with the agreement between their respective clients. In particular, the letter of El Masri noted that the following terms were agreed to, but were not contained in the lease: "1. If the lessor decides to issue a notice to the less[ee] to vacate the premises within the first year and a half of the last two years of the option, the lessor must pay compensation to the lessee of the total rent for that year. 2. At the completion of the construction and completion of the new building, there will be an option for the tenant to take a 5 x 5 year lease in the new premises with a rent rate of $160,000 pa inc GST for the same area of existing premises. Our client measured an area of 415m2. 3. The new premises are to meet all council requirements including roller shutters, electricity and water systems in place. 4. The new premises to be the same width, facing Ware Street as exposure. Lessee measured 10.9m facing Ware Street. 5. There is to be a restriction of trade clause: the landlord will not lease another premises to a similar business as the tenants, namely fruit and vegetables and groceries. 6. The lessee has permission from the landlord to remove internal wall petition and glass petitions."
13. On 13 April 2006, AVH wrote to Mr Abu-Mahmoud, enclosing the letter which it had received from El Masri, and seeking instructions.
14. On 18 April 2006, Mr Abu-Mahmoud responded to that letter by an email in the following terms: "1. Yes, we did agree on this, but the compensation should be drafted along these lines. If we terminated the lease sometime in the first year, then we will compensate him for the remainder of that year. The same applies for the second year. But if we ask him to terminate the lease by the end of the first year, then no compensation is payable. Secondly, we have the right to refuse him the 2 year option period. However, we must pay him one year compensation for such actions. 2. Yes, we did agree to such a condition. However, the rate of the lease will be at market value, not one that is determined today. 3. NO. The new premises shall be constructed to counsel's wishes and to all relevant codes and standards. We will not accommodate the wishes of any other person. 4. No, not necessary. The new premises shall be of approximate area. The face to Ware Street is one that is difficult to accommodate as we have not yet submitted our revised design and thus we do not have any idea as to the setup of the proposed design. 5. OK. 6. Agreed."
15. Upon receipt of that set of instructions, AVH wrote to El Masri a letter of 18 April 2006. That letter was sent by email on 19 April 2006. Considerable time then passed before there was any further correspondence with respect to the lease.
16. On 27 November 2006, AVH sent an email to Mr Abu-Mahmoud in the following terms: "The tenant's solicitor has advised that the tenant has obtained the required 3 months security bond (finally!). Prior to finalisation of the documents however, they are requesting an amendment to the clause 27 - Right of First Refusal, so that it will show that the rent for the new premises will be $160,160 inclusive of GST (as per the initial Letter of Offer from the tenant). The lease currently refers to the rent for the new premises being $160,000 plus GST."
17. The email sought instructions. An email was sent the same evening by Mr Abu-Mahmoud with his instructions in these terms: "Thanks for your email. No I do not agree with this amendment. The lease shall be set at $160,000 plus GST. In addition the roller door issue has not yet been resolved. As I mentioned earlier, I do not want to sign a lease for this tenant. I have waited for him for almost 12 months to get his act together and I am not willing to sign anything for him. I am happy for him to remain for as long as he wishes. Thus my intention is prolong the matter as long as he did."
18. It appears that by this stage, Mr Antar had in fact entered into possession and was paying rent, although he had not paid the necessary bond as required. Clearly, Mr Abu-Mahmoud wanted to place himself in the best possible position which he could, namely to have an ongoing tenancy and payment of rent, but without a fixed term lease and ongoing obligations after the development was completed. He also does not seem to have appreciated, or been advised, that there was in fact an agreement to lease on reasonably ascertainable terms, which obliged Fairchild to enter into an executed lease with Mr Antar.
19. There were further communications between Mr Abu-Mahmoud and AVH. On 8 January 2007, AVH sent an email to Mr Abu-Mahmoud confirming advice with respect to difficulties that may be encountered when a tenant takes possession of premises prior to finalisation of lease documentation.
20. The email also dealt with the question of the impact of the Retail Leases Act with respect to the allowable term for the tenant. It went on in these terms: "We note your subsequent instructions that you wish to grant the tenant a maximum 2 year lease (with no option to renew). Presumably all other terms will remain the same i.e. rent, outgoings etc. … Please note that the tenant's solicitor may raise the point that there was an 'agreement for lease' in place on terms previously discussed (including the option to renew with the demolition clause). This is a complicated area of law and unfortunately there is no black and white approach to such an issue, but you should be aware that it may pose some problems if the tenant's solicitor raises it."
21. On 8 January 2007, Mr Abu-Mahmoud responded to that email with the following instructions: "Can you please add to this that our circumstances have dramatically changed since February 2006 and we are no longer able to uphold the agreement and terms of agreement discussed then. The length of time it has taken for you to provide the necessary documents has now nullified the initial agreement, and thus we are now able to accommodate the following …"
22. This was followed up by a further email by Mr Abu-Mahmoud to AVH in the following terms, on 10 January 2007: "I have a serious problem with Abdul Antar the tenant with the fruit shop. Council has written to me and has served an order on to me and has threatened to fine me if the condition of the arcade remains in the state it's currently in. I have since spoken to my cleaner who takes care of the premises and he has indicated to me that Abdul has requested that he be permitted to open and close the arcade. This is a task commonly carried out by my cleaner and thus this convenient arrangement between the pair has placed me in a very difficult and embarrassing situation. …"
23. The email went on to deal with a series of issues relating to the tenancy of Mr Antar. The email concluded with the following: "I need all of the above issues addressed as soon as possible. Abdul's solicitor shall be made aware of the issues at hand with a consequence that he may face if these issues are not tackled immediately."
24. Importantly, the instructions from Mr Abu-Mahmoud to AVH did not include any instructions to use this conduct as a basis for asserting either a repudiation of the lease or a termination of it. Nor did AVH proffer any advice as to whether Mr Antar's conduct may have permitted such an approach.
25. On 12 January 2007, Mr Abu-Mahmoud spoke to AVH by telephone. He instructed them that he still wanted the tenant, Mr Antar, in "for now", but that he didn't want him in the new premises when built. He specifically drew attention to the fact that Mr Antar was in breach of the terms of the proposed lease, because he had not paid any security deposit and because of failure to comply with other terms of the lease.
26. The solicitor made a note that he assumed that possession had been entered into because the tenant has been paying the rent, and Mr Abu-Mahmoud did not instruct him otherwise.
27. The note goes on to record: "Raised the issue with the rent for the new premises? Client wants to leave other 'new' lease issue for now. See what happens later, close to the end of the 3 year term."
28. Those instructions were acknowledged by AVH on 16 January 2007.
29. On 25 February 2007, Mr Abu-Mahmoud sent an email to AVH in the following terms: "I wish to discuss the current situation of the fruit shop located at the abovementioned premises. I have met with Abdul Antar and his father on two occasions, on the first occasion the father was not present (7 and 16 February). We have been unable to come to any real resolution. On both occasions Mohammad Trad (my partner) was present. Abdul seems adamant that he requires a solid lease of at least 5 x 5 or as per original agreement. He has noted that his whole aim is to sell the business and make a handsome profit from this, and without a lease it would not be possible. I have indicated to him that I will not be able to accommodate him on such terms, however, I am able to give him a 3 x 2 lease with a demolition clause on the last 2 years. He does not find this acceptable. We are not quite bewildered (sic) and need directions as to where we go from here. I am leaning towards forwarding a lease to his solicitor which reads something along the lines of what is acceptable to me and failure to sign this lease will mean that he will be allowed to remain on a month-to-month basis. Please advise me as to what is the best method of approach at this stage. … In addition, I also wish to bring to your attention that the abovementioned property will be sold in the near future to a new entity … Can you please take this scenario on board when replying to my email. What will be the position of the new company with respect to the current tenant? And what obligations does the new company have to the current tenant? In addition, what will Fairchild need to do prior to the effect of sale to safeguard the new company against this current tenant?"
30. The evidence is silent as to any response by AVH to these questions from Mr Abu-Mahmoud.
31. On 4 May 2007, Mr Antar caused a caveat, ultimately numbered AD72616A, to be lodged over part of the premises of Ware Street, Fairfield. He described his caveatable interest as a leasehold interest pursuant to agreement dated 17 February 2006. He described the relevant facts in the following terms: "On 17 February 2006, the caveator sent a facsimile to Muhammed Mahmoud (described in ASIC company extract …) a director of Fairchild Development Pty Ltd and described thus 'this is an outline of our agreement'. Mahmoud signed the fax and sent it back to the caveator by return fax."
32. The existence of the caveat was brought to Mr Abu-Mahmoud's attention probably by about 14 May 2007. Mr Abu-Mahmoud says, and Mr Kassem agrees, that at that time a conversation took place between them the following effect: "Kassem: Antar's caveat needs to be removed or otherwise the contract cannot be completed. Abu-Mahmoud: Well what can we do to remove it? It's vital that the contract proceeds to completion so that we can discharge the liability and the personal guarantees. Kassem: A transfer can't be registered against the title of the Fairfield property because the caveat will prevent it. The caveat must be removed first."
33. Mr Kassem accepts that this was the substance of the advice which he gave at that time, and that at the end of that conversation he was instructed by Mr Abu-Mahmoud to "get the caveat removed".
34. On 14 May 2007, and apparently for the purpose of carrying out his instructions, which accorded with this advice, Mr Kassem telephoned Thurlow Fisher, solicitors, who by that stage were acting for Mr Antar in place of El Masri. After the telephone conversation, there was an exchange of correspondence.
35. Although his name dos not appear on the letter as the "responsible person", I am satisfied having regard to the co-incidence of subject matter and phrases used in the telephone call just referred to, and this letter, that it was Mr Kassem himself, who then wrote to Thurlow Fisher in the following terms: "We refer to the writer's telephone attendance with you earlier this morning, and confirm we are the solicitors for Fairchild Development Pty Ltd, and an associated company, Elite Apartments Pty Ltd. We refer to the caveat lodged by your client, Mr Abdul Rahim Antar, against our client's property at 1-5/82 Ware Street, Fairfield. As advised in our said telephone attendance, we put your clients on notice of the following: The subject property is due to be sold to a third party for a price in excess of $5 million and is due to settle on Wednesday 16 May 2007; and Part of the proceeds of the sale are to be utilised to conduct litigation proceedings involving Elite Apartments Pty Ltd. As you are aware, if your client maintains there (sic) caveat, it would jeopardise the sale and conduct of legal proceedings for Elite Apartments Pty Ltd. Any undertaking as to damages by your client would cover such damages. Our client wishes to mitigate any damages arising and seeks your client consent to withdraw the caveat to allow the settlement to proceed, and to lodge a fresh caveat after the settlement. We advise that the purchasing company has the same directors and shareholders of the current vendor company. Our client reserves their right in respect to contesting the said caveat and the substantive claims upon which it is based."
36. For the reasons which I discuss later in this judgment, I am satisfied that this letter contained material which was, to Mr Kassem's knowledge, incorrect. There was no contract which had been exchanged at that time, and there was no settlement due to take place within the 48 hours of the letter being sent.
37. Thurlow Fisher responded promptly on the same day. Their response said: "We note that: On 2 March 2007 we wrote to your client's former solicitors Atkinsons Vinden Heazlewood (AVH) setting out our client's position in this matter (copy enclosed for your reference); On 5 March 2007 AVH acknowledged receipt of our 2 March letter and advised that 'we are currently seeking our client's further instructions and will provide you with a response in due course'; On 22 March 2007 we followed up AVH in relation to their response to our 2 March letter; and In the absence of a response from your client or AVH and in order to protect our client's position, we subsequently prepared and lodged a caveat on our client's behalf. … In relation to the alleged sale, given the correspondence that is set out above, your client must have known of the existence of our client's claim at the time of the sale and has had ample opportunity to take the appropriate steps in relation to the caveat. Your client has failed to do so. … We advise that our client will not agree to provide a withdrawal of caveat as requested. If our client were to consent to the sale of the property to "a third party", one of the remedies currently available to him, namely, specific performance of the agreement between our clients, would be obliterated and no longer available to our client. In the event that your client sees fit to apply for the issue of a lapsing notice, and serves such notice upon our client, we advise that we are instructed to make the necessary application to the Duty Judge for the extension of the operation of our client's caveat."
38. This was responded to by Mr Kassem, in the following terms: "We confirm our client's offer to enter into a deed whereby any rights your client may have against Fairchild Development Pty Ltd would be equally enforceable against the purchaser of the land being NorthBridge Investments Pty Ltd."
39. On the following day, Thurlow Fisher responded: "The dispute between our clients could easily be resolved by the submission to our client by your client of a lease in conformity with the Agreement to Lease between the parties of 17 February 2006. We note that the parties have acted in accordance with the Agreement to Lease for over one year, and a lease submitted in conformity would not alter the position between our clients. If a lease in conformity with the Agreement to Lease was submitted to our client, we could have it executed and returned without delay for you to attend to registration with LPI. The 'third party purchaser' would then take their interest subject to the lease."
40. That letter was responded to by Mr Kassem on 21 May 2007 noting that Fairchild denied Mr Antar's claim. It is unclear what instructions Mr Kassem had which enabled him to write that letter.
41. On 4 June 2007, Mr Kassem wrote to Thurlow Fisher a "Without Prejudice" letter in which, on behalf of Fairchild, an offer with respect to a proposed lease was made. The letter said: "We … offer a lease to your client on the following terms: Three year with a two year option; Rent commencement to be February 2006; Initial rent to be $125,840 per annum including GST with annual rent increase of 4% each year; and Demolition clause in respect to the premises for the option period of two years. Please advise if this is accepted by your client and we will immediately prepare appropriate lease documentation."
42. The impetus for this letter was instructions received by Mr Kassem from Mr Abu‑Mahmoud at an early hour on 4 June 2007, by email. Mr Abu‑Mahmoud asked Mr Kassem if he could make an attempt to finalise the lease between Fairchild and Abdul Antar. He added these remarks: "I think it would be in our favour to do this before we exchange contracts with NorthAxis on this property. At this point of time we are still in control of the matter and any delay will hinder this process. If you need any further information regarding the shop or any other matter regarding the premises, please contact [the real estate agent]."
43. The without prejudice letter from Mr Kassem to Thurlow Fisher was responded to promptly, on 4 June 2007. That letter in response read: "We refer to your letter of even date and are somewhat surprised by your client's instructions. This offer to lease is substantially different to what our respective clients have agreed to. We refer to our letter to you dated 14 May 2007 which is quite clear as to the agreement between our respective clients. We enclose again a copy of the terms and conditions as agreed and signed by your client. We advise that pursuant to that agreement, our client has continued to pay monthly payments as agreed and carried out extensive renovations at a substantial cost. Pursuant to the doctrine of part performance, both parties have agreed on terms and have acted in accordance with those terms. It is your client's obligation to provide our client with a registrable lease in accordance with the terms and conditions agreed to by the parties on 17 February 2006. Kindly forward a lease pursuant to the agreement of 17 February 2006, so that we may finalise this matter urgently in the interests of both parties."
44. On 6 June 2007, Mr Abu-Mahmoud wrote the following to Mr Kassem in an email: "Mohammed Trad met with Abdul Antar of the fruit shop located within the abovementioned premises. It appears that he is not willing to budge in any shape or form. I do not know how to solve this problem as he has probably been informed that he is in a good position to proceed further. This is not going to be an easy solution. What do you suggest?"
45. The discussions between Mr Trad and Mr Antar led to yet another "agreement", which was acceptable to Mr Antar. That agreement was set out in a letter from Thurlow Fisher to Mr Kassem dated 21 June 2007. The relevant part of that letter was: "We have been instructed that our respective clients have been in discussions, yet again, in relation to this matter and confirm that the following agreement has been reached: Five year term with a five year option. Rent commencement to be February 2006. Initial rent to be $125,840.00 pa including GST with annual rent increase of 4% each year. A warranty by your client that they will not demolish the building during the lease and option periods."
46. The letter called for a formal lease to be forwarded.
47. On 18 July 2007, Mr Kassem responded to Thurlow Fisher's letter of 2 July 2007, by saying that his instructions were that no such agreement had been reached.
48. A further offer was made in these terms: "Our client is prepared to offer your client a lease with the terms set out at point 1 to the letter from Fruitopia Fresh which allows for a lease of 3 x 2 years at a commencement of rent at $125,840 pa including GST with an annual increase of 4%. Further, the lease allows for a demolition clause in the last two years, if the lessor decides to vacate the tenant in the first year and a half of the last two years, the lessor will pay compensation for that period. It is advised that your client accepts the lease with the terms set out above, otherwise our client's instructions are to proceed with a further lapsing notice on your client."
49. The confusion in the various offers and respective positions continued until 7 August 2007. On that day, Mr Kassem wrote the following letter to Thurlow Fisher in response to their letter set out in [99]: "We refer to the above matter and to your correspondence dated 21 June 2007. Using the same numbered paragraphs as set out in our your letter, our client agrees to the following: Agreed. Agreed. Agreed. Not agreed. Please advise if your client agrees with these terms. If your client does not agree, we will be forced to serve a lapsing notice."
50. On Friday 10 August 2007, Mr Abu-Mahmoud provided further written instructions about a variety of matters. In the course of that email with respect to the lease to Mr Antar, he said: "Has the amended terms of the lease (5 x 5 with a demolition clause in the last 5 years) been issued to Abdul Antar? And has the lapsing notice been issued? This matter needs to be resolved ASAP."
51. There does not seem to have been an immediate response to this correspondence. As will be apparent from other facts described, Receivers and Managers were shortly appointed to Fairchild in November 2007. Kemp Strang Solicitors were appointed to act for the Receivers and Managers ("the Receivers"). Mr David Bucci was the relevant officer giving instruction on behalf of the Receivers.
52. On 20 April 2008, Mr Graham, the partner at Kemp Strang acting for the Receivers, wrote a letter to Mr Bucci which included the following report with respect to the Antar lease: "The matter is not without its difficulties insofar as the existence of a lease in favour of Antar is concerned. That is primarily because he has been in occupation of the property and paying rent for several years. What the terms of that lease are is another matter. He will no doubt assert an oral agreement between Fairchild and he, which agreement is the one that both parties have been performing for some years. I have not taken up with Thurlow Fisher the notion of whether there is a lease or not. I am hoping that the solicitor for Antar misses that issue, gets overwhelmed with all the other issues and takes the easy way out by giving us a withdrawal of caveat. The land has been sold subject to tenancies. The LTO must not refuse to register any dealing which does not affect the interest claimed in the caveat (which they have not expressly put at the moment, will, once someone a bit switched on gets hold of the matter, be described as leasehold). The interest of any tenant in occupation of which NorthAxis has notice, will not be affected by the transfer of the property to NorthAxis. There can be no doubt that NorthAxis has the requisite notice given the role of Mahmoud in both Fairchild and NorthAxis. If a leasehold is ultimately asserted, we should be able to get the Court to remove the caveat anyway, either on the basis that the tenancy, whatever its terms are, will prevail against NorthAxis, of if there is no tenancy, there is nothing to protect."
53. Further correspondence indicates that it appeared that Mr Graham of Kemp Strang, having made appropriate enquiries, decided that it was necessary to proceed to litigation with respect to the caveat.
54. Application was made to the LTO for preparation of a lapsing notice. It was lodged by Kemp Strang on 28 April 2008.
55. On 11 June 2008, Kemp Strang told Mr Kassem, who by that stage was practising as S K Lawyers, that the Receivers were presently endeavouring to effect the withdrawal of the caveat lodged by Abdul Antar so as to enable completion of the contract with NorthAxis to take place.
56. On 16 June 2008, Palmer J, sitting in the Equity Division, ordered that the caveat lodged by Mr Antar, subject to the proffering of an undertaking as to damages, be extended. In effect, at that stage, it was determined that Fairchild had a lease obligation to Mr Antar which Mr Antar was sufficiently entitled to continue to assert.

The Relationship between Mr Kassem and Mr Abu-Mahmoud

1. This is an issue about which the parties are at odds. First, there is dispute about the date when the relationship of solicitor and client commenced. Secondly, there is a dispute about whether Mr Kassem had a solicitor/client relationship whilst working for Consolidated, with anyone other than Elite. Thirdly, there is a dispute about the metes and bounds of the relationship which did exist.
2. According to Mr Abu-Mahmoud's affidavit of 30 July 2012, he first met Mr Kassem through Mr Skaf in about mid-2004. He says that at that meeting he was informed that Mr Kassem had recently opened a law firm with a friend from university. Mr Abu-Mahmoud goes on to say that he first retained Mr Kassem in March 2005 to undertake the conveyancing for the Vaucluse development which was being undertaken by Elite.
3. It is clear that Ms Kassem was not the only lawyer used by Mr Abu-Mahmoud and Mr Trad. In February 2006, they retained Mr Guy Vinden at AVH to do the conveyancing for the development which had been undertaken at Brookvale. He also retained AVH at least, initially, to deal with the lease question with respect to Mr Antar and the Fairfield development.
4. In 2006, a complication arose with respect to the Vaucluse development. The Arab Bank, which was the financier of the development, had been sued by Perpetual Trustees and First American Title Insurance Company of Australia. Those companies claimed to have been defrauded, and that Arab Bank was in part responsible for such fraud.
5. That litigation suggested a connection to the sale of two of the units making up the Vaucluse development. The Arab Bank took possession of the entire Vaucluse development claiming to exercise rights under the finance agreement relating to the Vaucluse development.
6. Mr Trad and Mr Abu-Mahmoud, according to Mr Abu-Mahmoud, engaged Mr Kassem to act for them, and Elite as their solicitor, for the purpose of suing the Arab Bank with respect to an allegation of wrongful taking of possession of the entire Vaucluse development.
7. Mr Kassem accepts that he was instructed to do the conveyancing work for the Vaucluse development, and to conduct the litigation between Elite and the Arab Bank. His instructions came from either or both of Mr Trad and Mr Abu‑Mahmoud. They were the directors and shareholders of Elite. Elite was the corporate vehicle being used to conduct the property development at Vaucluse.
8. No letter of retainer has been tendered. Any conclusion about the retainer must therefore be drawn from such evidence as is available, and such inference or implication as is necessary to be made.
9. I am satisfied that Mr Kassem the solicitor, was acting for Elite in the two respects to which I have just referred. He was also acting in the interests of Mr Abu-Mahmoud and Mr Trad. There is little doubt that their interests and Elite's interests were the same. Mr Kassem was their solicitor, insofar as they were dealing with the Vaucluse development. I am satisfied that a retainer existed with Mr Kassem which he entered into in his capacity as a solicitor who was then working for Consolidated. Thus, they were also retained.
10. In the course of that, on 30 May 2006, AVH sent a facsimile to Mr Kassem at Consolidated, informing him that the Deputy Commissioner of Taxation had served a Creditors Statutory Demand on Elite on or about 27 April 2006, seeking payment of an outstanding tax debt of about $496,000. By the time of this facsimile (about a month after the service of the Creditors Statutory Demand), the sum owed to the Deputy Commissioner would have increased.
11. The facsimile said: "We have engaged in preliminary correspondence with the Deputy Commissioner of Taxation with a view to brokering an arrangement whereby our client will pay the debt to the ATO from the proceeds of the sale of the Vaucluse property. The ATO has provisionally agreed to this arrangement on the basis that a garnishee arrangement is formally entered into with you. We are instructed that our client agrees with this arrangement and directs you to take all reasonable steps to have the arrangement fully entered into."
12. On 7 June 2006, Mr Kassem wrote to the Australian Taxation Office ("ATO") asking that it "… forward to our office a garnishee order as soon as possible".
13. This particular incident was dealt with as a part and parcel of Mr Kassem's retainer for Elite and its principals with respect to the Vaucluse development.
14. According to Mr Abu-Mahmoud, in August 2006 he was informed by Mr Shockair that the ATO was about to conduct an audit of Fairchild's affairs. He was later informed that the result of that audit was that Fairchild owed about $400,000 in tax. This came about he said because of a miscalculation made by Mr Shockair with respect to the GST for the development which Fairchild had carried out at Brookvale.
15. Mr Abu-Mahmoud says that he, Mr Trad and Mr Skaf, who was a partner in the Brookvale Development, but not the Vaucluse development, discussed what needed to be done with respect to the ATO requirement arising out of the Brookvale development. He says that he and Mr Trad decided to fund their share out of the expected profits from the Vaucluse development. That decision was made prior to the litigation commencing with respect to the Vaucluse development.
16. Mr Abu-Mahmoud says that, because he could not ultimately fund this tax bill from the expected profits of the Vaucluse development, he sought to find another solution. He says that between September and November 2006, because he and Mr Trad were regularly consulting with Mr Kassem with respect to matters concerning the litigation about the Vaucluse development, they decided to retain Mr Kassem to deal with the Brookvale development tax liability problem of Fairchild. He says that he retained him in a meeting in circumstances where he asked Mr Kassem to liaise with the ATO about the $400,000 tax liability. He then says that in mid-November 2006, he and Mr Trad met with Mr Kassem at which meeting he (Mr Kassem) gave them advice which dealt with the rearrangement of Fairchild's affairs so that Fairchild would have no relevant assets, and could be wound up without having to meet any liability to the ATO.
17. Mr Kassem denies such a retainer, or perhaps denies that his existing retainer was extended to encompass this additional subject matter.
18. Mr Abu-Mahmoud asserts in his affidavit that the retainer occurred orally, in mid‑November 2006, at a meeting at which Mr Kassem was present with Mr Abu-Mahmoud and Mr Trad. He said that at that meeting, Mr Kassem advised him and Mr Trad that they should incorporate a new company which would purchase the Fairfield property which was Fairchild's only significant asset. The sale price should be as low as possible "… provided that it is still commercial, otherwise, one way or another, the sale might be undone …". He said that he and Mr Trad were advised that they should resign as directors of Fairchild after the sale, and appoint someone as sole director "… who has nothing to lose". He said that he and Mr Trad were advised that after the sale the incoming director would place Fairchild into liquidation so that it would then be wound up with the effect that the ATO liability would remain with Fairchild and that Mr Abu-Mahmoud and Mr Trad would not have any personal liability with respect to that sum. It is convenient to refer to this advice as the "restructure advice".
19. Mr Abu-Mahmoud's evidence is that he broadly accepted Mr Kassem's advice, although he formed the view that whatever the sale price of the Fairfield development was, it had to be sufficient so that Fairchild's borrowings from the St George Bank would be repaid with the result that he would not be liable on his personal guarantee.
20. In some further discussions with Mr Kassem, Mr Abu-Mahmoud said that he, or Mr Trad, gave instructions for the company to be incorporated and for a contract of sale to be prepared.
21. Mr Abu-Mahmoud dates the advice he received from Mr Kassem, in the company of Mr Trad, as being in mid-November 2006. He says that shortly after he gave instructions to Mr Kassem, he received a letter from him dated 21 November 2006 with respect to the sale of the Fairfield development, which enclosed a retainer agreement with respect to that property. He also notes that on the same day, he received a letter from Mr Kassem entitled "Commercial Transaction" which referred to the setting up of a company which was then to be called BuildNorth Pty Ltd.
22. Mr Abu-Mahmoud gave evidence that at a second meeting on 22 November 2006, he and Mr Trad met Mr Kassem at the El Sweetie restaurant at Granville, where he was introduced to Mr Kassem's brother, Ozem, who was a registered liquidator.
23. Mr Abu-Mahmoud derives that date from an entry which he made in his diary on the top of the page for that day, and which simply recorded the following: "Ozem the liquidator". A mobile telephone number is recorded for Mr Ozem Kassem.
24. Mr Abu-Mahmoud says that in the course of the meeting at the El Sweetie Restaurant, Mr Kassem informed his brother of the reconstructed scheme about which they had previously received advice, and Mr Ozem Kassem said that the scheme was satisfactory and that he would be willing to participate by handling the liquidation of Fairchild.
25. According to the evidence of Mr Abu-Mahmoud, the description of the scheme given by Mr Kassem, the defendant, to his brother, Mr Ozem Kassem, the liquidator, is contained in these words: "Ozem, I have advised Trad and Mohammed that they should incorporate a new company which should purchase Fairchild Development Ltd's only significant asset, the Fairfield property. The sale price should be as low as possible, provided that it is still commercial, otherwise, one way or another, the sale might be undone. After the sale, Trad and Mohammed should resign as directors of Fairchild Development Ltd, and instead appoint someone as sole director who has nothing to lose. After the sale, the incoming director places Fairchild Development Ltd into liquidation so that it is then wound up. The effect of winding up Fairchild Development Ltd is that Trad and Mohammed no longer have any personal liability for the $400,000 tax liability."
26. Mr Abu-Mahmoud says that one of the pieces of advice which he received from Mr Kassem was that it was necessary for a meeting of directors to be held and minuted with respect to the decisions of Fairchild about one step in the reconstruction scheme.
27. Such a meeting of Fairchild was held on 23 November 2006, and minutes were prepared, which were sent by facsimile to Mr Abu-Mahmoud on 24 November 2006. The minutes record a meeting on 23 November 2006, at which Mr Trad, Mr Abu-Mahmoud and Mr Skaf were each present.
28. The first item on the agenda was the liability for the ATO. The minutes record this: "It is now apparent that we have a liability owing to the Australian Taxation Office (ATO) for the approximate sum of $505,000. In addition, we have continuously struggled to pay the shortfall on the mortgage for the Ware Street property. It sought to discuss how this debt can be paid. Muhammad Abu-Mahmoud moves a motion to sell the Fairfield project known as 82-94 Ware Street, Fairfield. We should obtain a current valuation report from Landmark White and thus use this report as a benchmark to sell the property. The valuation figure shall be our reserve price. Our main objective is to pay the current debt owed to St George and all remaining monies shall be used to pay the Australian Taxation Office debt."
29. The motion was carried according to the minutes, with Mr Abu-Mahmoud and Mr Trad in favour, and Mr Skaf against.
30. The second item discussed at the meeting, was a debt owed to Mr Shockair, the accountant for Fairchild.
31. Neither Mr Trad nor Mr Skaf, were called to give evidence during this trial and, accordingly, no account is available from either of them as to what occurred during these meetings.
32. Mr Ozem Kassem was called as a witness. In 2006 Mr Ozem Kassem was a registered liquidator, and had been working in the field of insolvency since 1991. He said that in his practice, leading up to and including 2006, he had not had any experience of working with companies which had not gone into administration or had a liquidator appointed. He specifically agreed that at that time he had no experience of restructuring companies, thereby avoiding administration or liquidation.
33. Mr Ozem Kassem recalled having a coffee meeting in Granville with his brother, Salem, and a gentleman called Mahmoud. He did not recall the date of the meeting when he gave evidence, but he was able to produce a diary timesheet for the week commencing 2 October 2006. On that weekly timesheet, on 3 October 2006, between 1300 and 1500 hours, there is recorded a two hour meeting under the heading "Salem and Elite Pty Ltd and Fairchild …". With respect to the name of the matter of the firm for which he worked, what is recorded as "[internal] marketing". He also produced his diary timesheet for the week commencing 20 November 2006. There were no entries for 22 November 2006 which referred to any meeting with his brother and Mr Abu-Mahmoud.
34. As well, the diary for 22 November 2006 records work against identified files for a total 7.5 hours on that day. The diary shows that he was engaged on those matters between 8.30am and 4pm. Based upon those diary entries, Mr Ozem Kassem concluded that the meeting at the El Sweetie Restaurant took place on 3 October 2006.
35. Whilst the diary entries of themselves are not conclusive, they do not support the meeting at the El Sweetie Restaurant taking place on 22 November 2006 as Mr Abu‑Mahmoud stated in his evidence. However, they do record a meeting of the kind to which Mr Abu‑Mahmoud referred as having taken place on 3 October 2006.
36. In his evidence, Mr Ozem Kassem said he had a general recollection of a meeting at Granville at a coffee shop. He said that he was able to generally recall the subject matter of the meeting. He said that it was about the possibility of placing Fairchild into liquidation. He was unable to recall who said what to whom during the meeting, but was able to recall some topics of discussion. He said that he remembered there was a discussion about outstanding tax debts. There was a discussion about a partnership dispute, and that he learned that there was a development site in Fairfield.
37. Mr Ozem Kassem said that he did not take any notes of the meeting. When pressed further, in his evidence in chief, he gave evidence of what he thought he would have said in such a meeting.
38. Mr Ozem Kassem was being asked when he gave evidence in December 2013, to recall what was said in a conversation which had occurred seven years earlier. He had declined to prepare a written statement setting out his version of events, and had not made any affidavit recording his version of the events. I accept that Mr Ozem Kassem could not remember what was said at that meeting. I found his evidence of reconstruction of what would have been said to be unconvincing. I do not accept that he has any accurate recollection of what occurred. I am unable to place any weight on his recollection as an accurate account of what occurred at this meeting.
39. There are some documents which assist in shedding some light as to when the meetings between Mr Trad, Mr Abu-Mahmoud and Mr Kassem took place.
40. The first is a Memorandum dated 13 October 2006 and addressed to Mr Kassem from Melissa Hoffman, a paralegal employed at Consolidated. It is entitled "Re: Mohammed Abu-Mahmoud Subject: Stamp Duty Research"
41. The body of the document reads: "Salem, I conducted the stamp duty research as requested and advise as follows: Where property is owned by one company and transferred to another company with the same shareholding - stamp duty IS NOT exempt and therefore payable. Stamp duty on a $5 million property is: (a) residential - $290,490; and (b) non-residential - $260,494."
42. A file note of 20 November 2006, records two attendances by telephone between Ms Hoffman and Mr Abu-Mahmoud. The first notation on the file note refers to a telephone call of Friday 17 November 2006. It reads as follows: "Mohammed contacted me, provided me with the details for the company set up. He advised he spoke at length with Salem regarding the matter and wanted the company set up as follows: Company name - M&M Developments Pty Ltd; All other company details to be exactly as they are for Elite Apartments Pty Ltd. I conducted an ASIC search with respect to the availability of the above company name. The search concluded the name is currently identical to another company name. I contacted Mohammed back and advised him of same. He said he would give me a call back in a few minutes as to suggestions for other company names."
43. The second telephone call note referred to a telephone call on 20 November 2006. It reads as follows: "Mohammed contacted me with respect to the company name. He advised that the company names he has chosen are (in order of preference): BuildNorth Pty Ltd … I conducted an ASIC search which revealed BuildNorth was not identical to that of another company and therefore available. I contacted Mohammed to confirm its availability and confirm he wanted the "B" and "N" in caps and the rest in lower case. I also confirmed the company details for Elite Apartments are current as to addresses etc., and confirmed I would be proceeding on that basis. Mohammed confirmed these instructions."
44. On 22 November 2006, Ms Mae Iborg, a conveyancer employed by Consolidated Lawyers, wrote a memo/file note. It was in the following terms: "Re: your sale to ……………………. 86-94 Ware Street, Fairfield. Subject: S149 certificates"
45. The body of the document read: "Telephone client on 17 November 2006 requesting to fax me details of the properties he is selling on Ware Street, Fairfield. Mohammed advised he will fax me copies of front pages of contract when he purchased the properties. Client also advised he will attend to the s 149 Certificates from Council. A fax came in on Monday 20th from client forwarding two front pages of contract. Ordered searches today."
46. On 24 November 2006, according to a file note prepared by Mr Daniel Essey, a senior lawyer at Consolidated, he received a telephone call from Mr Kassem. He records the nature of the call in the following terms: "[He] indicates to me that he is seeking contracts of exchange in this matter on Monday. I advised Salem that we needed authority from the client, that they have been advised that the property is taxable supply and GST liable. Salem confirms that the client will be in later this afternoon to execute the authority in his presence."
47. There is no diary note made by Mr Kassem of the contents of any meeting which he had with Mr Abu-Mahmoud during which he gave any advice with respect to Fairchild, or the Fairfield development.
48. Mr Kassem gave evidence in his affidavit and in cross-examination, about this alleged retainer and the restructure advice.
49. It was Mr Kassem's evidence that the conversation recounted by Mr Abu‑Mahmoud, to which I have referred in [128] above, did not happen. His evidence was that he did not, at any time, give the restructure advice. Rather, it was his contention that he had learned from Mr Abu‑Mahmoud or Mr Trad or both, that Fairchild was in some financial difficulty not only because of the ATO liability, but because the rent being received from the Fairfield development was not sufficient to cover the interest payments, and equity was being introduced into the company to enable it to stay solvent.
50. When he heard this, Mr Kassem suggested that Mr Abu-Mahmoud would be assisted by a discussion with his brother Mr Ozem Kassem and, accordingly, arranged a meeting at the El Sweetie Restaurant for them to meet Mr Ozem Kassem. He says that the restructure advice, or at least the essence of it, and a substantial part of it, was given at this meeting by his brother Ozem.
51. In support of his account of the advice, and his relationship with Mr Abu‑Mahmoud, Mr Kassem swore two affidavits. The first, dated 31 January 2013, was prepared by his then solicitor, Mr Hetherington of Colin Biggers & Paisley. In that affidavit he records a discussion with Mr Abu‑Mahmoud or Mr Trad or both of them, in which he was informed they were in financial difficulties and were having a dispute with Mr Skaf over a development which had been carried out with him at Brookvale. Mr Kassem suggested that this occurred in late 2006. He suggested that the conversation also had the following content: "A development which we have been carrying out at Vaucluse is in difficulty because our financier, the Arab Bank, is being sued in relation to fraud concerning the conversion of a cheque or cheques and all transactions on that development have been frozen. As a result, we have not been meeting our mortgage repayments on a loan which we took out with St George Bank in order to acquire property in 2004 at Fairfield which we want to develop. Skaf and his wife are involved in that property and we need to get him out of that transaction."
52. Mr Kassem says that it was at about that time he took Mr Abu‑Mahmoud and Mr Trad met with his brother, who was an accountant. He then gives a description of the meeting at the El Sweetie Restaurant. In this first affidavit, he gives an account of the effect of the words which he said at that the commencement of that meeting. The terms in which he gives that account are identical to the terms in which he gives an account of those opening words in his second affidavit, which was sworn on 23 October 2013, and prepared by Mr Robert Crittenden of DLA Piper Australia.
53. However, there is a significant difference between the first and second affidavit. Having set out the introductory words in his first affidavit, Mr Kassem denies the words attributed to him by Mr Abu‑Mahmoud and then says: "I do not recall anything else which was said at the meeting, or any discussion concerning GST, although GST was something which I recall being raised by Mahmoud on a number of occasions, and it is possible that it was discussed at this meeting. There was no discussion at this meeting of any meeting of directors. I do not recall any advice which my brother gave them in the course of this lunch. I do not know whether he had any subsequent meetings or provided any advice to them."
54. With respect to setting up the company and making other arrangements, Mr Kassem's first affidavit records this: "25. At some time after this meeting, I recall discussion between myself and Mahmoud and Trad in relation to them setting up a new company. It was not my advice that this should be done. 26. I had no knowledge at that time of the terms of any agreements or arrangements between Mahmoud and Trad and the Skafs, or of the details of their financial arrangements."
55. Mr Kassem thus denies giving the restructure advice of the kind which Mr Abu-Mahmoud claimed. He also says that he has no recollection that his brother gave any advice, which I infer, included the restructure advice.
56. The effect of this account in his first affidavit is that he does not recall the restructure advice being given by him or in his presence. He seems to be advancing the view Mr Abu-Mahmoud and Mr Trad themselves came up with the restructure scheme.
57. With respect to setting up a new company, whilst denying that he gave any advice, Mr Kassem in his first affidavit gives an account of what occurred with respect to this. He said: "I think it likely that the advice they were given about setting up a new company would have been given on before 13 October 2006. I believe that this is likely date having seen the contents of the memo/file note which Melissa Hoffman sent me dated 13 October 2006. … I believe I requested her to do that calculation as a result of Mahmoud or Trad saying to me at, or some time after such advice had been given to them, in words to the effect: 'what would be the costs involved in a sale of the Fairfield property to a related company?' "
58. By the time he swore his second affidavit in October 2013, which was at a time approaching the hearing of the matter, Mr Kassem added significantly to his account of what was said at the El Sweetie Restaurant meeting. He recalled further conversation which took place there. He also recalled that he had been given specific instructions by Mr Abu-Mahmoud or Mr Trad to set up a new company for them, and to prepare a contract for sale.
59. He said this: "Some time after this meeting, whether before or after 13 October 2006, I don't recall, the plaintiff or Trad instructed me: Plaintiff/Trad: Can you set up a new company for us with me and Trad as directors and shareholders and also prepare a contract for sale from Fairchild to the new company of the commercial premises in Fairfield? The contract price will be $4.8 million and can we make the deposit less than 10%? Me: Yes. Contact Melissa Hoffman at Consolidated's city office and she will set up the companies for you."
60. In cross-examination, Mr Kassem accepted that, based upon the content of the file note of 13 October 2006, he must, prior to that date, have had a conversation with at least Mr Abu-Mahmoud, and perhaps Mr Trad, at which the transfer of a property of approximately $5 M between companies with the same shareholdings was raised and discussed. He further agreed that it was a conversation to which his brother Mr Ozem Kassem was not a part. He accepted that that conversation was not mentioned in his affidavit evidence, however, he maintained that it was not him who raised the matter of the transfer of the Fairchild property to another company with Mr Abu-Mahmoud.
61. There was then some further cross-examination about the content of the conversation to which Mr Kassem deposed in paragraph 21 of his first affidavit, which was repeated in paragraph 21 of his second affidavit, and to which I have earlier referred. In the course of that cross‑examination, Mr Kassem accepted that Mr Abu‑Mahmoud had told him about the financial affairs of Fairchild, that it was in trouble and that Mr Abu‑Mahmoud was seeking "…my help". Mr Kassem accepted that the help which was being sought from him included the matter of the financial affairs of the company and the liability which it owed to the ATO.
62. He accepted that this was the first occasion in which he had been asked to act on behalf of Fairchild, as opposed to acting for Elite, and Mr Abu‑Mahmoud with respect to the affairs of Elite.
63. Mr Kassem's answers in cross-examination suggested that although he knew that Mr Abu-Mahmoud was seeking his help with respect to Fairchild and the financial position in which it was, particularly having regard to the liability of the ATO, he denied that he was being asked to act for Fairchild in relation to the tax liability.
64. He gave this evidence: "Q. Why do you think that Mr Abu-Mahmoud mentioned the audit and tax liability? A. It was obviously to seek my help in some way, but in that first conversation I didn't understand or didn't, as you said, I didn't have instructions from that conversation. We were meeting regularly in respect to the Elite Apartments matter and discussing things and this conversation came up in October as I said there."
65. He continued with evidence on this topic on the following day. His evidence was to this effect: "Q. You were aware, weren't you, that the purpose of these meetings was, as you said yesterday, to seek your help in relation to legal issues. A. Not necessarily legal issues, no. It was to seek my assistance. Q. What assistance did you understand Mr Abu-Mahmoud to be seeking? A. As I said in my affidavit, he told me about the financial situation of his other company and he wanted my assistance with regards to matters that he told me about. Q. Including the taxation issue, didn't he? A. There was a taxation issue. Q. You were aware, weren't you, that this was a serious matter for Mr Abu‑Mahmoud? A. Yes. Q. He was obvious worried, wasn't he, when you saw him? A. Yes. Q. You knew that he was taking steps towards retaining you to act on his behalf, didn't you? A. No. Q. You knew he wanted you to be his solicitor in relation to the matters he raised, didn't you? A. At that stage, I was already his solicitor, but in respect to the matters he raised on that occasion at that point, I still wasn't aware whether he was going to be instructing me in any part what he told me, whether I could assist him on any part legally, or whether there would be no legal assistance. At that point he was telling me information about a company - me being his solicitor, for other matters that I had at the time."
66. The topic was again the subject of further cross-examination where Mr Kassem denied that he understood that Mr Abu-Mahmoud was instructing him or seeking to retain him in respect to the "tax issue" i.e. the liability which Fairchild owed to the ATO.
67. The following cross-examination then took place: "Q. Mr Abu-Mahmoud was an existing client wasn't he? A. Yes. Q. You knew that he had a purpose in raising these matters with you? A. Yes. Q. The purpose was to seek your help? A. Yes. Q. Because you were a solicitor, that he told you that he wanted your help as a solicitor, didn't he? A. Yes. Q. You knew, it follows therefore, that he was thinking of retaining you as his solicitor. That's right isn't it? In relation to the matters discussed there? A. I don't know what he was thinking about. As I said, I didn't think at that point, or any point after that, he hadn't instructed me or wanted me to act - provide legal advice orally by retaining me in respect of the tax issue."
68. It is necessary to resolve this dispute as to the conversations which were held between the plaintiff and the defendant, who proffered the advice to restructure the interests in the Fairfield development, and whether that was a step intended, at least in part, to address the outstanding tax liability of Fairchild, and the risk of that liability being brought home to the account of Mr Abu‑Mahmoud and Mr Trad.
69. In attempting to resolve these issues, it is clear by reference to contemporaneous documents, that some of the recollections of Mr Abu‑Mahmoud, Mr Ozem Kassem and Mr Salem Kassem are less than perfect.
70. It is also necessary to first deal with the submissions of the plaintiff that Mr Kassem's evidence ought not be accepted because particular features of it, and that the evidence generally demonstrated that he was not a witness of any credibility.

The Credit of Salem Kassem

1. As is apparent from the affidavits read by the parties to the proceedings, there is no agreement on the substantive issues of fact. There are few, if any, contemporaneous notes of the conversations between Mr Abu-Mahmoud and Mr Salem Kassem.
2. The plaintiff submitted that the Court ought not accept the truth or accuracy of the evidence of Mr Salem Kassem, unless it was independently corroborated or else a statement against interest. I am satisfied that this submission should be accepted.
3. There are a number of reasons for my coming to that conclusion. Putting it generally, Mr Kassem's evidence was unsatisfactory because of differences between two sworn affidavits about the central issues of fact; some of his communications, one conversation and letter in particular, were substantially and, I infer, deliberately inaccurate; and his claim that his brother had a central role in the restructure advice which came very late in the litigation, all combine to support this conclusion. It is appropriate to discuss these matters in greater detail.
4. Mr Salem Kassem swore two affidavits, the first was filed on 31 January 2013 ("the first affidavit"), and the second was filed on 23 October 2013 ("the second affidavit"). Only the second affidavit was read by his senior counsel as forming his evidence-in-chief in these proceedings. It became apparent in the course of cross-examination that there were significant differences between the two affidavits. The second affidavit contained additional, and different, material to the first. In particular, Mr Salem Kassem's first affidavit did not contain any reference at all to anything said by his brother, Ozem Kassem, at the meeting at the El Sweetie Restaurant. Mr Salem Kassem said, in paragraph 24 of that affidavit, that he did not recall any advice given to Mr Abu-Mahmoud and Mr Trad "… in the course of this lunch".
5. In his second affidavit, some months later, Mr Salem Kassem set out in paragraph 25, advice which he said his brother Ozem had given at the meeting. That advice was, in substance and effect, the restructure advice which Mr Abu-Mahmoud claimed had been given to him by Mr Salem Kassem. The advice which was attributed to Mr Ozem Kassem in the second affidavit, included mention of a new company being used to purchase the Fairfield property.
6. The first affidavit denied that Mr Kassem gave any advice about the setting up and use of a new company, but did not say by whom that advice had been given.
7. When cross-examined about these differences in the affidavits, Mr Kassem could not point to any specific document which had caused him to recall the advice proffered by his brother. All he could say was that in the process of preparing the second affidavit with his solicitor, he was able to recall this conversation. He suggested that the process for the second affidavit required him to go chronologically through documents, and that this process had jogged his memory.
8. The difficulty with this explanation is that it is apparent that a similar process was followed for his first affidavit (as described in paragraphs 10 and 12 of the first affidavit) and which did proceed chronologically, as it responded to Mr Abu‑Mahmoud's principal affidavit.
9. I cannot accept Mr Kassem's explanation for the discrepancy between the affidavits in this respect. In effect, his explanation is that when he did a similar exercise for the second time, without any specific documents being of assistance, his memory was jogged about the advice. This is implausible.
10. By the time of his second affidavit, Mr Kassem had been required to consider not just his account of the facts given in his first affidavit, but on two prior occasions when, in 2011 a defence to the Amended Statement of Claim was filed, and in August 2013 when a defence to Further Amended Statement of Claim was filed. On each of these occasions, the defence denied that he had provided the restructure advice which was alleged in the pleading. When providing instructions on each of these occasions, Mr must have turned his mind to the question of whether any advice had been given and, if so, by whom. If the account in his second affidavit, and in evidence, is to be believed, he did not on either of those occasions remember the advice his brother had given. That seems to me to be most unlikely.
11. There is another significant difference between the first and second affidavits. In paragraph 21 of each affidavit there are two versions of the same conversation. In his first affidavit, the conversation is described as occurring in "… around late 2006". The content of it includes the following statement attributed to either Mr Abu-Mahmoud or Mr Trad: "A development which we have been carrying out at Vaucluse is in difficulty because our financier, the Arab Bank, is being sued in relation to fraud concerning the conversion of a cheque or cheques and all transactions on that development have been frozen."
12. Mr Kassem recorded in paragraph 18 of his first affidavit, that he had first been retained to act for Elite in mid-2006, and that after 1 October 2006, it was the only file for which he was responsible at Consolidated.
13. Given the dates of his retainer for Elite, it must have been well before late 2006 that he came to understand, know of and have had discussions with Mr Abu-Mahmoud and Mr Trad about the details of the Vaucluse development and the dispute with the Arab Bank. After all, there was litigation either threatened or in place, about in respect to which Mr Kassem had been retained as Elite's (and Mr Abu-Mahmoud's) solicitor. It defies logic that Mr Abu‑Mahmoud and Mr Trad would have had felt it necessary, as Mr Kassem deposed in his first affidavit, and as I have set out above, to give him a description of the Vaucluse development and the dispute with the Arab Bank as though introducing the topic for the first time.
14. This account had changed by the time of the second affidavit, without any explanation being given. The first change was that Mr Kassem's retainer by Elite in respect of the Vaucluse development had changed from commencing around mid-2006 to "sometime in 2006". The second change occurred in the recounting of the conversation from the detailed description which was said to have been given, apparently as the first introduction of the issue, to this account: "As you know, the development which we have been carrying out at Vaucluse is in difficulty because of the dispute with the Arab Bank".
15. While such a change may be explicable by a late realisation of the sequence of events, had Mr Kassem paid attention to what he said in his first affidavit as to when he received instructions from Elite in respect of the Vaucluse development, the complete inaccuracy of the conversation would have been obvious.
16. There is also a difference of substance between the affidavits regarding the circumstances of the involvement of Mr Ozem Kassem. In his first affidavit, Mr Kassem said little, if anything, to indicate that he was involved in introducing his brother to Mr Abu-Mahmoud and Mr Trad. In paragraph 22, after setting out the conversation with Mr Abu-Mahmoud and Mr Trad in late 2006, he simply says this "I believe it was around this time they met with my brother, an accountant".
17. In his second affidavit, he describes his role in making the introduction in this way: "I did not have any expertise in relation to taxation and company matters. However, my brother Ozem was a liquidator. Therefore I arranged a meeting between the plaintiff, Trad and my brother."
18. I do not regard these two accounts as being compatible. Mr Kassem's use of the word "belief" in his first affidavit, suggests that he has no recollection at all of the reasons for, or else the circumstances leading up to, a meeting between the Mr Abu-Mahmoud, Mr Trad and his brother. He does not suggest that he had any role to play in it. Yet, his second affidavit sets out that he played the principal role, for an essentially sound reason, in engaging his brother to provide advice to Mr Abu-Mahmoud.
19. Mr Kassem was not asked specifically about this difference in cross‑examination. He did not proffer any explanation of the difference in his evidence. The fact of the difference gives me no confidence that his evidence in his second affidavit is reliable on this central issue in the proceedings.
20. I turn now to the issue of deliberate inaccuracies in his communications. On 14 May 2007, Mr Kassem wrote to a letter to Thurlow Fisher attempting to get Mr Antar's caveat removed. I have set out the contents of that letter in [89]. The note of the earlier telephone call suggests that similar words were used to those in the letter. Of particular relevance is that Mr Kassem said: "The subject property is due to be sold to a third party for a price in excess of $5 million and is due to settle on Wednesday 16 May 2007."
21. The plaintiff submits that there was no such contract for sale, and the statement made by Mr Kassem in this letter was untrue to his knowledge. The plaintiff submits that there is no written evidence of such a contract, no file was ever created for such a contract, there is no record of any file being created, and that there is no record of any conveyancing steps having been taken to enable a contract, of any size let alone the size of a commercial contract of $5M, to be able to be settled two days after that letter was sent.
22. The plaintiff also points to the content of an email which he sent to Mr Kassem on 4 June 2007, which demonstrates a state of affairs entirely inconsistent with an existing contract being on foot, particularly one which ought to have settled on 16 May 2007. The plaintiff also says that he had no knowledge of any such contract for sale.
23. Mr Kassem, in his first affidavit, in reference to the letter said, that his understanding was that contracts had been exchanged and that "…settlement was anticipated in the near future on the Fairfield contract". He said he did not recall ever having seen the contract.
24. In his second affidavit, he said that his present recollection was that there was a proposed contract for sale, although he could not recall the basis for that recollection "… other than a conversation with Iborg". This is a reference to Ms Mae Iborg, who was a conveyancer then employed at Consolidated. Ms Iborg was not called to give evidence.
25. In cross-examination, Mr Kassem was taken to this letter. He gave evidence that his recollection was that there was a contract exchanged in late 2006, about December, between Fairchild and another company, which was not called NorthAxis. He said he had not seen such a contract. He had not been able to produce such a contract.
26. He agreed in cross-examination that if there had been no contract exchanged in December 2006, then he would have told a deliberate lie to the solicitor at Thurlow Fisher with the contents of his letter of 14 May 2007, which was preceded by a telephone call containing statements to a similar effect.
27. A second letter was written on 14 May 2007, which the plaintiff says was again a deliberate misleading of the solicitor acting for Mr Antar at Thurlow Fisher. That letter, to a part of which reference is made above at [92], repeats the statement that settlement of the sale is due for Wednesday 16 May 2007. It suggests that the name of the purchaser is NorthBridge Investments Pty Ltd.
28. NorthBridge Investments Pty Ltd was not one of the company names identified in the file note of 20 November 2006, although it was identified in a later file note in 2007. It is to be recalled that was one of the names suggested for the company which was being incorporated by Consolidated to carry out the restructure scheme.
29. On 22 November 2006, in a file note of Ms Iborg, she records some details with respect to the sale by Fairchild of the Fairfield property. The file note described an initial step towards drafting of a contract. Importantly, for present purposes, the matter file reference was 5027. A further note to file of 24 November 2006, from Mr Daniel Essey, also dealing with Fairchild and a possible sale, is allocated matter number 5026. Neither of these notes records the identity of the purchaser.
30. On 14 May 2007, Ms Iborg sent to Fairchild, a tax invoice in each of the matters 5026 and 5027. There were two files because one file number was allocated to the property at 82 Ware Street, Fairfield and the other to the property at 86-94 Ware Street, Fairfield. Of course, these properties were being sold together in the one contract.
31. Importantly, these tax invoices, coming on the same day that Mr Kassem asserted that contracts for sale of the property had been exchanged and were due to be settled two days later, show relatively modest amounts invoiced, being a total of $550 (including GST) by way of professional fees. The description of work did not include any suggestion that there had been any exchange of contracts. The description of work did not include any suggestion that there had been any work towards a settlement. At their highest, these were tax invoices for preparation of a contract for sale in respect of the property.
32. As well, if a contract for sale was to settle on 16 May 2007, then ordinary conveyancing practice would mean that a tax invoice would be raised and sent to the client after the completion of the sale. There was simply no reason for Consolidated to raise the tax invoices on the 14 May 2007 for basic preparation work when the sale was to be completed within 48 hours.
33. Although the file reference numbers were identified, the defendants did not tender those files as a whole, and did not tender the contract for sale which Mr Kassem asserted was to be exchanged. The contract, if it existed, must have been in one of those two files. There was no evidence that those files had been destroyed. I infer that the contents of the files would not have assisted the defendants' case on this issue.
34. These contemporaneous documents by way of the tax invoices tell strongly against there being any contract for sale by Fairchild of the Fairfield property which had, as at 14 May 2007, been exchanged and certainly tell strongly against there being any settlement scheduled to occur on 16 May 2007.
35. Shortly put, there is no evidence produced which is capable of supporting the assertions of fact by Mr Kassem in his two letters of 14 May 2007. There is material which strongly tells against them. The company mentioned in the letters has not been proved to have been involved with respect to the affairs of Mr Abu-Mahmoud at Fairfield, or in connection with the Fairchild sale. The tax invoices do not suggest that there was any contract which had been exchanged and which was due for settlement in two days' time. The fact that tax invoices were raised and sent, tells against there being any imminent settlement.
36. Mr Abu-Mahmoud's evidence, which I accept, was that he did not know of any such contract, let alone one that had been exchanged and had been arranged to settle 48 hours later. In order to enable such settlement to have taken place, at the very least Mr Abu-Mahmoud must have been involved in the execution of the contract and other relevant conveyancing documents, and in arrangements to raise the funds to ensure that the purchase could be completed. There is no evidence that he did any of these things. He says that he did not. His assertion to that effect was not challenged in cross‑examination.
37. I conclude that there was no such contract which had been exchanged. I conclude that there was no contract fixed for settlement on 16 May 2007. I conclude that these matters were well-known to Mr Salem Kassem. I am persuaded that his correspondence to Thurlow Fisher contained deliberate lies.
38. This conduct, at that time, and Mr Kassem's evidence asserting to the contrary, which I do not accept, casts considerable doubt on the credibility and veracity of Mr Kassem's evidence.
39. The final matter which causes me to be concerned about the accuracy and reliability of Mr Kassem's evidence, and which forms a basis for me not to accept his evidence unless it is corroborated, or is against his interest, is his evidence surrounding the role of his brother. As I have earlier indicated, according to his first affidavit, and the terms of his defences up until the time of his second affidavit, Mr Salem Kassem did not recount that his brother had given any advice in his presence, nor that the architect of the restructure scheme was his brother and that such advice had been given at the El Sweetie Restaurant.
40. Further, his Defences, which merely denied that he gave the restructure advice, did not, as they ordinarily would be expected to, disclose that in fact, the advice was given by Mr Ozem Kassem.
41. The proceedings were commenced by Mr Abu-Mahmoud in 2010. The first Defences were filed in 2011. In the early part of 2013, Mr Kassem swore, what I take to be, a considered account of events which was contained in his first affidavit. As has earlier been indicated, that account did not reveal the role of his brother, Mr Ozem Kassem, who was described merely as an accountant.
42. The real revelation about Mr Ozem Kassem, and his advice which at that stage would have exculpated Mr Salem Kassem from liability on the then existing pleadings, and which provided a logical explanation for Mr Abu‑Mahmoud to have entered into the restructure scheme, was not revealed. In effect, shortly prior to the hearing, a new factual version was provided which involved Mr Ozem Kassem.
43. Where such important evidence as this appears a few weeks prior to a hearing date, in circumstances where litigation has been on foot for over three years, where no earlier reference to such evidence has been made, and there is no obvious explanation for such evidence to have emerged so late in the piece such as perhaps by late discovery of a contemporaneous document, and in circumstances where the defendant, a solicitor, had cause to turn his mind to the events on a number of occasions prior to the evidence becoming apparent, and where the evidence was central to an exculpation of liability of the solicitor on the pleadings as they then stood, I find the absence of any compelling explanation or even one supported by logic or by reference to external events, to be deeply troubling. It is particularly troubling as Mr Salem Kassem asserts that this was the principal restructure advice. Advice in which he took no part, because he did not have the specialised knowledge that Mr Ozem Kassem had, advice about which he claims he was not sufficiently expert to, nor could reasonably be expected to, comment on to his only clients.
44. On the other hand, if the circumstances are, as I have been persuaded to find, that in truth Mr Salem Kassem was the person who gave the principal advice about the restructure scheme, and it was he who then sought in effect some confirmatory expression of opinion from his brother to assist his clients in their consideration of this advice, then the fact that he had overlooked that "second opinion" would not be as surprising as it would be if the opinion was the principal restructure advice.
45. This, together with other issues to which I have referred, causes me to form the view that I cannot accept Mr Kassem's evidence unless it is independently corroborated or else is a statement against his own interest.

The Restructure Advice and Scheme

1. It is necessary to return to the narrative of events and to determine whether Mr Abu-Mahmoud's claim, that he was given the restructure advice by Mr Salem Kassem, has been made out.
2. It is clear that not all of Mr Abu-Mahmoud's evidence on this issue can be accepted. He was wrong, for example, about the date upon which the advice was given. The extent of all of these errors requires careful consideration of all of the evidence in order that I can be satisfied that the restructure advice was given.
3. In undertaking this consideration, it is relevant to keep in mind that the defendants did not, either in cross-examination or in submission, suggest that the restructure scheme came about because either Mr Abu-Mahmoud or Mr Trad (or even Mr Skaf) thought it up, and gave instructions to Mr Kassem to implement it. The components of the restructure scheme, in particular the dealing with the administration and liquidation of Fairchild, and the appointment of a new director, were not matters which Mr Abu-Mahmoud and his fellow investors were sufficiently knowledgeable of to have conceived, without expert advice.
4. Some features from the evidence can be accepted. The first is that there was a conversation between Mr Abu-Mahmoud at least, and Mr Salem Kassem during which Mr Abu‑Mahmoud discussed with Mr Salem Kassem the financial difficulties in which Fairchild found itself, and the fact that Fairchild had an ATO liability. Mr Abu‑Mahmoud says there was such a conversation, and Mr Kassem, in cross-examination, accepted that this was so.
5. I am also satisfied that on the probabilities Mr Abu-Mahmoud's evidence of the fact that this conversation took place is correct because of the file note relating to a telephone conversation on 17 November 2006, which records that Mr Abu-Mahmoud told Ms Hoffman that he had spoken "at length with Salem".
6. The second matter, which can be readily accepted, is that that conversation must have taken place prior to the meeting at the El Sweetie Restaurant at which Mr Abu-Mahmoud and Mr Trad were in attendance with Mr Salem Kassem, the solicitor, and Mr Ozem Kassem, the liquidator. That this must have been the sequence is clear from the introductory words which Mr Kassem himself says was the substance of the conversation in the presence of his brother. This also accords with what Mr Abu-Mahmoud says about the purpose of the meeting, namely that it was to seek a "second opinion" from Mr Ozem Kassem. I am also satisfied that the conversation must have occurred before 13 October 2006, because of the contents of the file note of Ms Hoffman.
7. Because of the content of what it is that Mr Kassem says his brother Mr Ozem Kassem said at the El Sweetie Restaurant meeting, namely: "If I am appointed as administrator and there is a contract that's on foot, and there's a valuation to support it, then that will probably go ahead and the Bank will be paid out. If the tax debt is not attached to you personally, that debt will stay with the company." I conclude that there must have been an earlier discussion between Mr Abu‑Mahmoud and Mr Salem Kassem about the sale of the Fairfield development from one company to another, the price at which the Fairfield development was to be sold, and the issue of placing Fairchild into administration (or perhaps liquidation). This first conversation must have been one at which Mr Ozem Kassem was not present, and which had occurred prior to Mr Ozem Kassem making those remarks.
8. That conclusion is based on the fact that Mr Ozem Kassem had no reason to even contemplate, according to the version given by Mr Salem Kassem, that any restructure advice had been given by that stage, nor that Fairchild would be put into administration or liquidation. On Mr Salem Kassem's account, that was not ever discussed between him and Mr Abu-Mahmoud prior to the meeting El Sweetie.
9. I do not accept the account of Mr Salem Kassem. I am satisfied that the restructure scheme was discussed, between Mr Abu-Mahmoud and Mr Kassem, and, on the probabilities, between the brothers Kassem in order for Mr Ozem Kassem to know in advance of the El Sweetie Restaurant meeting, what was intended to be discussed. I find that this brotherly discussion must have occurred prior to the meeting at the El Sweetie Restaurant. This necessarily means that prior to that discussion between the brothers, there had been an initial request for advice from Mr Abu-Mahmoud to Mr Kassem, which Mr Salem Kassem had acted upon, and given the restructure advice.
10. The handwritten note of 22 November 2006, of Mr Abu-Mahmoud containing the mobile telephone number for "Ozem the liquidator", suggests strongly, and I so find, that the purpose for which Mr Abu-Mahmoud had contact with Mr Kassem, was to have him appointed as the liquidator for Fairchild. That is what his note describes Ozem Kassem as. It was not the purpose of Mr Abu‑Mahmoud being put in contact with Mr Ozem Kassem to obtain general financial advice with respect to the options for Fairchild and himself and Mr Trad, as Mr Salem Kassem asserts. That this was not the purpose of any discussion with Mr Ozem Kassem, is confirmed by Mr Ozem Kassem's evidence that he did not ever give advice of such a kind. He said that his practice extended only to working as a liquidator or administrator. He did not give general financial advice to companies which were in financial difficulty. He said that he had never acted for a company unless the company was either in liquidation or administration.
11. Finally, there is no doubt that a restructure scheme bearing the features which Mr Abu‑Mahmoud says was the essence of the content of the advice from Mr Kassem, was put into place. There is equally no doubt that Mr Salem Kassem, or his firm, Consolidated, acted to give effect to this scheme.
12. I am satisfied, and I so find, that Mr Kassem advised Mr Abu‑Mahmoud and Mr Trad about this restructure scheme. He conceived of it, gave the advice about it and then proceeded to accept instructions to give effect to it.
13. The probabilities are, and I find, that the meeting at the El Sweetie restaurant took place so that Mr Abu-Mahmoud and Mr Trad could obtain some reassurance from an accountant who was experienced in liquidation and administration. The effect of the discussions at the El Sweetie restaurant was that the restructure advice was appropriate, Mr Ozem Kassem confirmed that he would act for their company if it were placed in administration or liquidation, and confirmed that so far as he was concerned, the sale transaction which was the central feature to give effect to this scheme would be able to be proceeded with, subject only to the price of the property being an appropriate one.
14. Mr Salem Kassem was the architect of the scheme, not Mr Ozem Kassem. Mr Ozem Kassem's role was a confirmatory one.
15. In summary, my conclusions are these: 1. During a conversation between Mr Kassem and Mr Abu‑Mahmoud, assistance was sought by Mr Abu-Mahmoud about the appropriate way to deal with the ATO liability in Fairchild; 2. At that time, Mr Kassem gave Mr Abu-Mahmoud the restructure advice; 3. Mr Kassem then gave instructions to staff at Consolidated to research the question of the stamp duty payable on a transfer of a property between companies which had the same shareholding; 4. Mr Abu-Mahmoud accepted a suggestion that he should have a meeting with Mr Ozem Kassem, to confirm that he would be an appropriate person to appoint as a liquidator of Fairchild, and would be comfortable to proceed with the liquidation in accordance with the restructure advice. Mr Abu-Mahmoud saw this meeting as an opportunity for the appropriateness and efficacy of the restructure scheme and the advice which he had received to be affirmed by Mr Ozem Kassem; 5. Mr Kassem spoke to his brother, Ozem, told him of the nature of the scheme he had proposed, asked him if he would be willing to be the liquidator, and asked him to attend a meeting at the El Sweetie restaurant; 6. The meeting at El Sweetie took place. Mr Abu-Mahmoud decided to go ahead with the scheme in accordance with the restructure advice.
16. Finally, it is necessary to say something about the dates of these various meetings and the date of the diary entry of Mr Ozem Kassem. At the time when this scheme was being implemented, there was no immediate urgency. No deadline existed. Mr Shockair had advised in August 2006 that there was a taxation problem for Fairchild. Sometime later, he was advised that the ATO had completed an audit. Fairchild had been called upon to attend to the ATO liability, but no steps had been taken at that stage by the ATO to enforce that liability. The probabilities are that the first conversation between Mr Abu‑Mahmoud and Mr Kassem in which advice was sought and proffered, occurred in the last half of September 2006 and probably in the last four days of September. Notwithstanding the evidence of Mr Abu‑Mahmoud and Mr Salem Kassem, I am satisfied that the contemporaneous diary record of Mr Ozem Kassem is most likely to be the reliable record of the date of the meeting at the El Sweetie Restaurant. Accordingly, I am satisfied that meeting occurred on 3 October 2006.
17. It was then 12 days between then and the diary note from Ms Hoffman. Whilst an instruction was given to her to research the issue of stamp duty, I am satisfied that it was probably given after the initial meeting between the Abu-Mahmoud and Mr Kassem, and before the meeting at the El Sweetie Restaurant. The instruction was not urgent and it was carried out by Ms Hoffman in her own time.
18. It follows that the account of Mr Abu-Mahmoud as to the dates upon which the meeting occurred is wrong. His account of those dates comes from a reconstruction based on his diary entry on 22 November 2006, recording the mobile telephone number of Mr Ozem Kassem. He has used that entry to reconstruct when the other meetings occurred. The existence of the note is consistent with it being made at a time when he was provided with the detail of Mr Ozem Kassem's telephone number. In my view, that is the reason for the note on that day.
19. That he is wrong on these dates, does not cause me to disbelieve his account of the conversations. There is more than sufficient evidence to corroborate, or else make more likely, Mr Abu-Mahmoud's account of what occurred.

Fairchild and the Fairfield Development

1. It is now necessary to return to the detail of the Fairfield development to examine and understand the consequences of the restructure advice.
2. It is to be recalled that Fairchild was the corporate vehicle which involved Mr Abu-Mahmoud, Mr Trad, and Mr and Mrs Skaf.
3. On 27 May 2004, Fairchild exchanged contracts to purchase the Fairfield property for $7.55 M. It was intended to finance part of that price through equity provided by the Abu-Mahmoud, Trad and Skaf interests, and to fund the balance, $5 M, with a loan from the Arab Bank. That loan did not eventuate.
4. On 30 November 2004, St George Bank offered finance to Fairchild for the purpose of the purchase of the Fairfield property. It was a condition of the St George loan that each of Mr Abu-Mahmoud, Mr Trad; and Mr and Mrs Skaf gave a personal guarantee. As well, the St George Bank loan was secured by a mortgage over the Fairfield property and a Deed of Charge over all of Fairchild's assets.
5. On 10 December 2004, the purchase of the Fairfield property by Fairchild settled.
6. At the time that Mr Abu-Mahmoud received the restructure advice from Mr Kassem, Fairchild was the owner of the Fairfield property, subject to a mortgage to St George Bank, and also subject to the claim by Mr Antar to be entitled to a lease. There were also personal guarantees, including one given by Mr Abu-Mahmoud to St George Bank. His personal guarantee was supported by mortgage security over other property.
7. In November 2006, Mr Kassem was instructed to act for Fairchild on the sale of the Fairfield property. On 13 February 2007, CBRE produced a valuation of the Fairfield property at $6.75 M in an undeveloped state, and $26 M in a completed state after development.
8. Mr Abu-Mahmoud instructed Mr Kassem and through him Consolidated, to incorporate a new company which was ultimately called NorthAxis Pty Ltd ("NorthAxis"). On 18 April 2007, NorthAxis applied for a loan from Suncorp Metway ("Suncorp") to fund the purchase of the Fairfield property from Fairchild. On 4 May 2007, Suncorp sent a letter of offer to NorthAxis for the provision of a loan of $4.725 M.
9. On 27 June 2007, Mr Kassem had a two hour meeting with Mr Abu-Mahmoud during which the sale of the Fairfield property from Fairchild to NorthAxis was discussed. It is clear from a file note which Mr Abu-Mahmoud kept of that meeting that much of the discussion centred upon the financial arrangements which were to be in place to enable the acquisition, and whether there were sufficient funds available to permit the acquisition, and at a particular price.
10. According to the file note, if the only finance available to support the purchase was the approved loan from Suncorp, then Mr Abu-Mahmoud and Mr Trad needed to provide further equity of about $590,000 to enable the completion of the purchase by NorthAxis at a purchase price of $4.8 M.
11. I would infer that this exercise enabled Mr Abu-Mahmoud and Mr Trad to accept the offer of finance from Suncorp to NorthAxis, because on 20 July 2007, Suncorp's solicitors, the Marsdens Law Group ("Marsdens"), sent a letter to Mr Kassem containing a large number of documents to enable the loan of $4.725 M to NorthAxis to be put into place. The documentation forwarded by Marsdens to Mr Kassem required, as one of the conditions of the loan, that both Mr Abu-Mahmoud and Mr Trad were to give joint and several guarantees of the debt.
12. On 15 August 2007, Mr Abu-Mahmoud signed a declaration acknowledging his status as a guarantor and confirming that he had received independent advice. On that day Mr Kassem witnessed Mr Abu-Mahmoud's signature on a number of documents for Suncorp, including the Deed of Guarantee and Indemnity.
13. On 15 October 2007, contracts were exchanged for NorthAxis to purchase the Fairfield property from Fairchild.
14. Consolidated acted for both Fairchild and NorthAxis on this sale. The deposit paid on exchange of contracts was $200,000. Mr Trad contributed $100,000 and Mr Abu-Mahmoud contributed $100,000 - each from their own resources.
15. On 16 November 2007, Fairchild was put into voluntary administration. Mr Ozem Kassem and Mr Derek Andrew of Cor Cordis, were appointed joint administrators of Fairchild. Although the details of this are sparse, it appears that this was as a consequence of a decision of the members of Fairchild.
16. On 21 November 2007, Consolidated wrote to NorthAxis to confirm that the contract had been exchanged and that settlement was to take place in six months on 15 April 2008. They noted that the stamp duty payable on the contract and transfer was $253,619.
17. On 21 November 2007, Consolidated wrote to St George Bank informing them that contracts had been exchanged on 15 October 2007, and indicating that they anticipated settlement occurring on 15 April 2008.
18. On 22 November 2007, Mr Abu-Mahmoud sent an email to Mr Kassem which included, amongst other things, this: "Has Fairchild Development been placed into administration? And has ASIC been notified of the change of directorship?"
19. As I have earlier averted to, on 28 November 2007, St George appointed Mr John Lord and Mr Atlee Crowe-Maxwell as Receivers and Managers of Fairchild. They did so pursuant to provisions contained in a registered debenture charge created by the company in favour of St George Bank. The event of default under the charge, which enabled St George Bank to appoint the Receivers, was the fact that Fairchild was placed into voluntary administration.
20. By that time, the development approval which had been granted by Fairfield City Council (and subsequently extended) with respect to the Fairfield property on 20 October 2004, had lapsed.
21. It appears from a letter of 4 December 2007, sent by the firm PKF of which the Receivers were members, that a Mr Rami Mohamad Chakas had been appointed a director of Fairchild on 24 October 2007. The evidence contains no other personal detail about Mr Chakas.
22. At the time PKF made its initial enquiries immediately after appointment on 28 November 2007, they established that the gross rents received by Fairchild were approximately $30,000 per month. PKF established that the agent dealt directly with Mr Abu-Mahmoud, and that there were a number of leases over, and tenants in occupation of, the Fairfield property.
23. On 4 December 2007, PKF wrote to Consolidated informing them of their appointment as the Receivers of Fairchild, requesting some information about the contract which had been exchanged between NorthAxis and Fairchild, and advising them in the following terms: "I have been advised that the mortgagee, St George Bank Ltd, will not allow for the sale to proceed and discharge the mortgage at this stage, without 100% repayment of the debt due to them."
24. In a response to that letter, Mr Kassem wrote that the purchaser, NorthAxis, expected to be able to settle prior to the Christmas break. The evidence does not reveal what the instructions were which enabled Mr Kassem to write this letter.
25. The letter was responded to by PKF in the following terms: "I have been advised by St George Bank Ltd that the sale price is inadequate to repay their debt in full. In the interim, I am arranging for the property to be valued by an independent valuer. Until the valuation has been completed, and I have provided my recommendation to St George Bank Ltd, the sale will not be authorised to proceed at this stage."
26. On 18 January 2008, Fairfield City Council confirmed to PKF that the development consent which had been granted on 20 October 2004, had lapsed and there could be no further extension to the validity of the consent. Accordingly, if there was to be any redevelopment of the site, a new development application had to be lodged.
27. On 13 December 2007, the creditors of Fairchild resolved to wind up the company. The two partners of Cor Cordis, who had been the administrators, were appointed as joint liquidators of Fairchild.
28. On 18 January 2008, a file note was prepared by an unidentified individual in the employ of Consolidated, which refers to a telephone conversation between an officer of PKF and Consolidated. The subject matter was the purchase price for the sale of the property, the period of settlement and Mr Abu-Mahmoud's instructions.
29. In January 2008, the offer of finance from Suncorp Metway lapsed. Mr Abu‑Mahmoud, on behalf of NorthAxis, sought finance from alternative sources. On 29 February 2008, NorthAxis received an offer of finance from Challenger Ltd for $3.75 M.
30. Thereafter, over a period of some months there were a number of meetings during which various proposals were put by NorthAxis, or one or other of the investors in both Fairchild and NorthAxis, to the Receivers with respect to the contract to enable the purchase to proceed. Different prices were discussed. Different amounts to pay out St George Bank were raised.
31. In a formal letter sent by email on 7 March 2008, by Ledlin Partners, a firm of lawyers (apparently retained by Mr Skaf), an offer was made by Mr Skaf, Mr Abu-Mahmoud and Mr Trad to purchase the property (without the intervention of NorthAxis) for a purchase price of $4.5 M. It was a condition of that offer that St George Bank accepted the sum in full and final satisfaction of the company's debt, and also in full and final discharge of the guarantors' liabilities. Settlement was offered within three weeks.
32. St George Bank was not prepared to accept the offer, because the sum was inadequate. It asked its solicitors to respond by indicating it would rely upon the contract, the settlement of which was due on 15 April 2008. St George Bank's position was that it required repayment in full of all outstanding monies - which by then was about $5.1 M.
33. By 27 March 2008, St George Bank's position had modified to an extent. It indicated that if it received $4.875 M from the sale of the Fairfield property, it would release the guarantors of the obligations which they had to the Bank in respect of the monies owed by Fairchild to the Bank, and it would transfer the property to the three investors.
34. On 11 April 2008, Mr Kassem, who was by that stage working in his own practice, S K Lawyers, in his role of acting for NorthAxis, wrote to the solicitors for the Receivers of Fairchild asserting that the vendor was in default of the contract, and asserting that the vendor had repudiated the contract. The letter reserved the rights of the purchaser with respect to those defaults. He also asked, with respect to the caveat which had by that stage been lodged by Mr Antar, the following: "In respect of the due completion of the contract, please confirm you have obtained and will be able to give my client a withdrawal of the caveat that has been lodged on the subject property."
35. This letter does not specifically advert to the fact that the exchanged contract for sale of the Fairfield property, indicated that the property was sold "subject to existing tenancies". On any view, Mr Antar was an existing tenant. If anything was unresolved about Mr Antar's tenancy, it was the terms of it, not the fact of it. NorthAxis was not entitled to demand the removal of the caveat.
36. On 14 April 2008, Mr Kassem wrote to Mr Abu-Mahmoud and Mr Trad. He indicated that the purchaser, NorthAxis, had the right to terminate the contract "... for repudiation by the vendor". The basis of that advice is not clearly set out, but must have been related to the effluxion of time, the expiry of the six month settlement period, and the presence of the caveat on the title of the Fairfield property. His letter continued: "I note my advice to you that the above rights to rescind the contract will expire if they are not acted upon prior to completion. Notwithstanding my advice, you have instructed me that you do not wish to rescind the contract and instead wish to proceed to completion. This is despite the fact that based on my instructions to date, you do not yet have the funds to complete, and further, that if you are unable to complete, you could lose the deposit paid of $200,000."
37. Mr Abu-Mahmoud, in his affidavit, says that that letter was incorrect insofar as it suggested that NorthAxis did not have funds to complete the purchase contract.
38. Following these discussions and exchange of correspondence, the Receivers determined that an attempt would be made to remove the caveat lodged by Mr Antar. A Lapsing Notice was served and an application was made to the Supreme Court. Palmer J dismissed the application on 16 June 2008, and extended the caveat.
39. After the judgment of Palmer J was delivered, on 25 June 2008, Mr Abu‑Mahmoud and Mr Trad spoke with Mr Kassem about his Honour's reasons. The substance of the advice that was given was that the caveat could not be permanently removed unless St George Bank itself brought proceedings to remove the caveat in its capacity as mortgagee exercising a power of sale.
40. At about that time, Mr Trad and Mr Abu-Mahmoud held a meeting with Mr Antar at his home. The intention was to attempt resolve their differences. Mr Antar said that he would agree to remove the caveat if he was offered a lease in accordance with the conditions originally agreed upon in February 2006.
41. Further negotiations with respect to the purchase of the property continued. On 8 July 2008, Mr Kassem, by then with SRBG, wrote to the Receivers offering to pay $4.5 M inclusive of GST on the basis that Mr Antar remained as a tenant, and Mr Abu-Mahmoud and Mr Trad's personal guarantees were released by St George Bank.
42. On 21 July 2008, Mr Kassem wrote to the Receiver's lawyers "confirming" an agreement which had been reached during the course of a meeting between the respective lawyers, whereby both parties agreed that the current contract "should not be pressed', that St George Bank would proceed to have the caveat removed and take vacant possession of the fruit shop before a new contract was negotiated.
43. Mr Kassem took Mr Abu-Mahmoud's instructions and wrote a confirming letter to him on 21 July 2008, in the following terms: "We again note the writer's advice to you to protect your interest by issuing a Notice to Complete, and note notwithstanding the writer's advice, your instruction following the meeting between the writer and Mr Graham from Kemp Strang was to agree to the following course of action: St George will use the power of sale to remove the interest registered by the caveat and also remove Antar from his tenancy; and Renegotiate a new contract on the same price with clear title."
44. On 29 July 2008, Mr Kassem, acting on Mr Abu-Mahmoud's instructions which accorded with his advice, sent a Notice to Complete from NorthAxis to Fairchild. Prior to so doing, in an email to Mr Abu-Mahmoud, Mr Kassem advised: "I will send notice to complete today. Just to confirm though, if we issue the notice it is on the basis that you are ready to complete. They may attempt to actually complete the contract, although I think that is unlikely."
45. On 15 August 2008, Kemp Strang, the solicitors for the Receivers, sent Mr Kassem a letter which included the following: "Our client, St George Bank Ltd, does not propose to become embroiled, by way of its receivers and managers, of the assets and undertaking of Fairchild, in a dispute with your client about the completion of the existing contract. … the bank will now market the property for sale by the bank as mortgagee. The receivers and managers will not deal further with the contract which is presently on foot between Fairchild Developments Pty Ltd and your client."
46. It appeared that Mr Abu-Mahmoud was continuing to have difficulty finding an acceptable solution, so during the month of August he made an offer to Mr Antar that if NorthAxis was able to buy the property, Mr Antar having removed his caveat, then he would enter into an arrangement to sell as a strata title, the area of the existing fruit shop to Mr Antar.
47. On 28 August 2008, Mr Abu-Mahmoud wrote to Mr Kassem in the following terms: "Further to our conversation held yesterday, I wish to reiterate the importance of corresponding with Tim Fisher of Thurlow Fisher. The only hope we currently have in settling this deal is by selling the fruit market to Abdul Antar. Yet it appears we have done nothing about it for the past two weeks. We need to have a round table meeting with Mr Fisher ... I also believe we should write immediately to Kemp Strang and inform them that NorthAxis Pty Ltd is prepared to purchase the property by entering into a new contract with St George for the same sum (4,875,000) providing that Abdul Antar (fruit shop) is removed on settlement. A simultaneous approach to this issue may ensure that we have our last chance at finalising this deal. If the Bank places their advertising board then Antar will most definitely not purchase the fruit shop."
48. Mr Kassem sent an email later on 28 August 2008, offering to sell the fruit shop to Mr Antar for $1.65 M. He also sent an offer to Kemp Strang in accordance with Mr Kassem's instructions.
49. On 3 September 2008, Mr Abu-Mahmoud received a demand from St George Bank to pay to it, by reason of his guarantee, the monies which were then owed to it by Fairchild. At that stage, the sum owed to the Bank was $5,143,012.90.
50. On 5 September 2008, the offer made by email to Kemp Strang was rejected. They reaffirmed that their client, St George Bank, would market the property for sale as mortgagee.
51. In about November 2008, the offer of finance from Challenger lapsed. According to Mr Kassem, that made completion of the Fairfield purchase impossible.
52. On 23 March 2009, the Receivers of Fairchild exchanged contracts to sell the Fairfield property. The purchaser was Mr Antar. The settlement of that sale occurred on 13 May 2009. The purchase price was $4.3 M.

Mr Abu-Mahmoud's Personal Position

1. On 15 June 2009, St George Bank commenced proceedings against Mr Abu‑Mahmoud in relation to his liability under the guarantee. The proceedings were commenced in the Commercial List of the Supreme Court.
2. On 17 September 2009, on the advice of his solicitors and counsel, Mr Abu‑Mahmoud consented to judgment being entered against him. The short minutes of order note that Mr Abu-Mahmoud gave St George Bank possession of the properties at Condell Park and Lidcombe. He also consented to a monetary judgment in the sum of $2,476,788.63 plus interest. He agreed to pay the Bank's costs.

A Duty of Care

1. The plaintiff submits that Mr Kassem owed him a duty of care of the conventional kind, namely, to exercise reasonable diligence in and about the provision of advice with due care and skill. He submits that when Mr Kassem provided him with the restructure advice, Mr Kassem owed him such a duty.
2. The plaintiff submits an alternative case, namely, that if upon the proper findings of fact, the advice was provided by Mr Ozem Kassem, in the presence of his brother Mr Kassem, then the conventional duty was owed to him by Mr Kassem to provide him with advice about the appropriateness of the restructure scheme proposed by Mr Ozem Kassem. Having regard to the facts which I have found, this alternative case does not arise.
3. It seems to me to be clear that if the circumstances are that Fairchild received information that it owed money to the ATO arising out of an ATO audit, and Mr Abu-Mahmoud sought help from Mr Kassem by way of advice about what could be done to address that debt having regard to the position of Fairchild and the development potential of the Fairfield property, then Mr Kassem would owe Mr Abu-Mahmoud the conventional duty when giving that advice.
4. The features which lead me to that conclusion are: 1. the only connection between Mr Abu-Mahmoud and Mr Kassem was a solicitor and client, there was no suggestion that they were social friends or acquaintances; 2. the occasion when advice was first sought and given was not a social occasion, but was rather during the course of a meeting attended by Mr Abu-Mahmoud as the client and by Mr Kassem as his solicitor; 3. the general informality of their communications on this subject matter does not tell against the advice being delivered in circumstances where a duty would arise. It must be said that the tenor of such correspondence and email communication, at or about this time, was largely informal; 4. the subject matter, namely, a debt to the ATO, in circumstances where the profits from the particular development had been distributed, and the impact of that debt upon Fairchild and its shareholders was a significant and important matter to Fairchild and its shareholders. It was not a trivial issue; 5. Mr Kassem recognised and accepted, in his evidence, that Mr Abu‑Mahmoud was seeking his help and assistance with that problem, and the advice which was ultimately given, whether by Mr Kassem, was intended to assist Fairchild and Mr Abu‑Mahmoud with the issues of substance which existed; 6. The restructure advice concerned matters of law, and the effective protection of the legal position of Mr Abu‑Mahmoud with respect to the ATO debt and, as well, the taking of steps which fell within the ordinary and usual expertise of a solicitor.
5. The fact that a letter of retainer was not specifically formulated and sent by Mr Kassem to Mr Abu-Mahmoud is unsurprising. Its absence does not tell against the existence of a duty. It is fair to say that Mr Kassem's attention to written detail, and the proper recording of communications between him and Mr Abu-Mahmoud, was not a strong feature of their professional relationship. Except in two instances, no file notes existed. What work was being done in the files opened by Consolidated was not always clearly delineated as to subject matter.
6. Mr Abu-Mahmoud regarded Mr Kassem as his solicitor. Mr Kassem accepted that he was Mr Abu-Mahmoud's solicitor. It is clear that in acting for Mr Abu Mahmoud, Mr Kassem was also acting with respect to his various companies. When acting for one or other of his various companies, it is clear that Mr Kassem obtained instructions largely from Mr Abu-Mahmoud, and regarded himself as acting for him. Neither Mr Abu-Mahmoud nor Mr Kassem in practice sought to differentiate between the corporate status of any one of the entities, or Mr Abu-Mahmoud personally.
7. In short, the only connection between Mr Abu-Mahmoud and Mr Kassem was as solicitor and client. Advice was sought on a matter of substance from Mr Kassem because of his role as a solicitor. Advice was given by him about a course of conduct which was intended to have legal consequences which benefitted Mr Abu-Mahmoud.
8. I am satisfied that the advice was given in circumstances where Mr Kassem owed to Mr Abu-Mahmoud a duty of care, of the kind which conventionally arises between solicitor and client.

Breach of Duty

1. I have determined that it was Mr Kassem who gave the advice, and that Mr Salem Kassem was present when his brother, Mr Ozem Kassem, added to that advice with what may have been seen to be a second opinion.
2. The question which now arises is whether there has been a breach of that duty of care. In overall terms, Mr Abu-Mahmoud alleges that it was a breach of duty for Mr Kassem to give the restructure advice. He also alleges that advice given, or not given, on a number of different occasions with respect to Mr Antar's caveat, was negligent. It is convenient to deal with the breaches separately, that is, to deal first with the restructure advice, and then the deal with the caveat advice separately.
3. In considering any breach of duty, it is necessary to have regard to the provisions of s 5B of the Civil Liability Act 2002. I am satisfied that the risk of financial harm to Mr Abu-Mahmoud, namely that if his guarantee to St George Bank was crystallised and called up he would suffer financial loss, was a foreseeable one, and having regard to the sums of money involved, was a not insignificant one. I am also satisfied that in the circumstances, a solicitor such as Mr Kassem, acting reasonably, would have taken precautions to avoid causing Mr Abu-Mahmoud such financial harm.
4. The restructure advice was argued by senior counsel for Mr Abu‑Mahmoud to be inappropriate and negligent advice. In that submission, he was supported by the evidence of Mr Stephen Martin, who was called as an expert solicitor.
5. Mr Geoffrey Bartels, also an expert solicitor who was called by the defendants, disagreed with Mr Martin. It is necessary to consider the respective evidence of Mr Bartels and Mr Martin.
6. Mr Martin's opinion was that the restructure advice which Mr Abu‑Mahmoud contended that Mr Kassem had given to him was, if given, negligent and not the advice that a competent solicitor would have given at the time.
7. Mr Martin bases that conclusion upon two propositions, namely, that the restructure scheme would not have avoided the tax liability because the ATO could have and would have issued the appropriate notices permitted by statute to the directors making them personally liable for the unpaid tax liability. He further opined that the entry into voluntary administration of Fairchild, or else the appointment of a liquidator to the company, meant that it was inevitable that St George Bank would either take possession of the property at Fairfield, or appoint Receivers to Fairchild, thus exposing the plaintiff to proceedings being brought against him by the St George Bank as guarantor.
8. This opinion supported the pleading of the breach of duty in the Statement of Claim, which was described as the first breach of duty.
9. The issue of the ATO issuing an appropriate notice was the subject of cross‑examination of Mr Martin. He gave this evidence: "Q. Do you mean by use of the word 'would' that the ATO, as a matter of certainty, would have issued appropriate notices at some time in the future? A. Well, I couldn't say with certainty, but my opinion would be [that] there was a considerable high risk they would have (sic). Q. When you say in your opinion there was a considerable high risk, what was that opinion based upon? A. Based on actions I have seen the ATO take in similar situations where they feel that the only debt that has been left behind is theirs. Q. Had you come across situations when the ATO had not, in your experience I am talking about, had not issued those notices? A. Yes."
10. It is clear from these answers that Mr Martin had personal experience of circumstances in which the ATO had issued such notices to directors, and circumstances where the ATO had not. It was on the basis of his observation of the ATO practice that he expressed his opinion that there was a "considerable high risk" that the ATO would have. Mr Martin was correct to say that this was not a matter of certainty. No one could be bold enough to make such a prediction. Nevertheless, I understand Mr Martin's evidence to be that, in all likelihood, one would expect the ATO to issue notices to directors, and that accorded with his experience.
11. It also accords with common sense that the ATO would seek to recover from the director personally a liability owing to it in circumstances where a company was placed into liquidation, only owing money to the ATO.
12. Mr Bartels gave a contrary opinion. In his report he drew a distinction between a failure to make PAYG payments and a failure to pay the required GST. Mr Bartels noted with respect to PAYG that, where there had been a failure to make such payments, the relevant notice issued under the statute to the director required him (or her) to either pay the debt, or make an agreement to pay the debt, to the Commissioner, or else to place the debtor company into voluntary administration and to commence the voluntary winding of up of the corporation. Mr Bartels opined that in those circumstances, if those steps were followed, the directors could not have been made personally liable.
13. Mr Bartels went on to consider the position with respect to GST, and whether the outstanding tax liability referred to a failure to recover unremitted GST. Mr Bartels noted that pursuant to the provisions of s 57 of the Taxation Administration Act 1953, if a notice under that section was served on a director, then the director has the same liability as the corporation. Mr Bartels noted that s 57 was later replaced by s 444-15, but observed that the provisions were in identical terms.
14. Mr Bartels went on to say that he had no personal experience of being asked to advise with respect to the provisions of either s 57 or s 444-15 of the Taxation Administration Act. He noted however that no notice had been served on the directors personally, at any time before the company went into liquidation.
15. Section 444-15 of the Taxation Administration Act which was in force with effect from 1 July 2006,was in the following form: "1. Any notice, process or proceeding that may be given to, served on or taken against a company or its public officer under an indirect tax law may, if the Commissioner considers it appropriate, be given to, served on, or taken against an entity (the representative) who is: (a) a director, secretary or other officer of the company; or (b) an attorney or agent of the company. 2. The representative has the same liability in respect of the notice, process or proceeding as the company or public officer would have had if it had been given to, served on or taken against the company or public officer. 3. This section does not, by implication, reduce any of the obligations or liabilities of the company or public officer."
16. I do not accept the qualification which Mr Bartels gives, that if a company is already in liquidation then a notice cannot be given to a director. On the contrary, the provisions of s 57 (and s 444-15) have the effect that with respect to an indirect tax law, GST being one such indirect tax, the proceeding may be taken against a director who has the same liability in respect of that proceeding as the company. It is important to pay attention to the use of the word "may" in the first subsection. Where used in respect of the company, it suggests that notices or proceedings have not yet been served, but an entitlement exists for the ATO to serve the notices or commence proceedings if it decides to. As well, the use of the phrase, "would have had if it had been given" in subsection (2) of the section plainly indicates an intention that a notice may be served upon, and proceedings taken against, a director, without the necessity for any action being first taken against the company.
17. Accordingly, if the company has not paid its indirect tax debts, then it is open to the Commissioner to take proceedings directly against the director for that liability.
18. Mr Bartels' understanding of this provision upon which his opinion was based, was not entirely correct. More importantly, he had no experience of proffering any advice with respect to the statutory provisions dealing with GST.
19. The notice from the ATO to Mr Shockair in August 2006with respect to Fairchild referred plainly, on its face, to an issue with respect to GST.
20. I am satisfied that Mr Martin's opinion is correct and should be accepted. He was an expert who had had experience of these matters. His opinion that the ATO could have issued appropriate notices to directors making them personally liable, so far as the liability arose with respect to an indirect tax, namely GST, was correct. His experience persuades me that, given the likelihood of the ATO behaving in that way, then a prudent solicitor acting in accordance with their duty, would have given the advice which he sets out.
21. Accordingly, in respect of the first breach of duty alleged in the Statement of Claim, I am satisfied that the restructure advice given by Mr Kassem was in breach of his duty, and negligent. I am so satisfied because, in giving that advice, Mr Kassem made no reference to the fact that the ATO was likely to issue notices making the directors personally liable, and made no reference to the likely actions of the secured creditor, St George Bank, when the borrower, Fairchild, was put into voluntary administration and then liquidation.
22. That both of these actions were likely, indeed with respect to the ATO in Mr Martin's opinion, "a considerable high risk" that it would occur, and inevitable that the secured creditor would act in the way St George Bank did, meant that the restructure scheme was doomed to fail, insofar as its purpose was to eliminate any personal liability for Mr Abu-Mahmoud to the ATO, whilst enabling Mr Abu-Mahmoud to retain his share of the Fairfield development.
23. In those circumstances, Mr Kassem's advice was not only negligent, but set Mr Abu-Mahmoud and Fairchild on a course which could deliver no benefit to Mr Abu-Mahmoud or Fairchild.
24. If, contrary to my view of the facts, it was Mr Ozem Kassem who had given that advice in the presence of Mr Salem Kassem, then such was the inutility of the advice, and such was the inadequacy of it, particularly with respect to the legal liability of the directors for the liability of Fairchild to the ATO, then Mr Kassem was obliged to proffer advice, warning Mr Abu-Mahmoud of the legal consequences of the scheme, and counselling him not to enter into the restructure scheme.
25. I accept, as Mr Martin did, that it was reasonable for Mr Kassem to have obtained insolvency advice from an insolvency expert. However, in these alternative circumstances, the advice which was proffered went beyond mere insolvency advice, and Mr Salem Kassem was not entitled to take refuge in the advice proffered by Mr Ozem Kassem, and then stand by mute as he implemented the restructure scheme on behalf of his client without proffering any further advice.
26. Mr Martin expressed the view that a competent solicitor would, in either of the factual circumstances, that is, giving the advice directly, or alternatively hearing the restructure advice given, should have advised the plaintiff against such a transaction in any event. I accept that opinion.
27. I note that Mr Bartels was not asked to, and did not, express any opinion with respect to the alternative factual scenario advanced in Mr Salem Kassem's affidavit.
28. It is necessary to turn to the series of alleged breaches which refer to Mr Antar's claim to be entitled to a lease, and the existence of, and validity of, the caveat which he had caused to be lodged. These are the second to the seventh pleaded breaches of duty. Mr Kassem denies these breaches of duty.
29. It is convenient to shortly restate some factual conclusions: 1. the facsimile exchange of 17 February 2006 set out at [56] to [59] above created an agreement for a lease between Fairchild and Mr Antar; 2. Mr Antar entered into possession sometime in the early part of 2006 and seemingly commenced paying rent at a rate which accorded with the February facsimile; 3. the terms of the caveat included a specific reference to the facsimile of 17 February 2006 as the basis of Mr Antar's claim to be entitled to a leasehold interest over part of the Fairfield property; 4. the existence and terms of the caveat were known to Mr Kassem by about mid-May 2007. On 14 May 2007, Mr Kassem corresponded with Mr Antar's solicitors on the basis that he was acting for Fairchild; 5. the terms of the contract exchanged between Fairchild and NorthAxis noted that the sale was subject to existing tenancies. Mr Antar's occupation of the fruit shop premises fell within the phrase "existing tenancy".
30. The plaintiff pleads six separate breaches of duty with respect to advice which was given, and ought not to have been, and advice which ought to have been given, but was not. Some of the breaches relate to the period prior to the exchange of contracts between Fairchild and NorthAxis in October 2007, and some relate to the period after the exchange of contracts. It will be sufficient to address the alleged breaches of duty together by reference to each of these two periods.

May 2007 to October 2007: Second & Third Breaches of Duty

1. The substance of these alleged breaches of duty in this period is that, prior to the exchange of contracts, but in circumstances where the contract had been prepared by conveyancing staff at Consolidated, under Mr Kassem's supervision, Mr Kassem advised Mr Abu-Mahmoud that: 1. Mr Antar's caveat needed to be removed before a contract for the sale of the Fairfield property by Fairchild could be completed. Put differently, the existence of the caveat would prevent settlement of any purchase contract; 2. Mr Antar had to vacate the Fairfield property in order for any sale agreement to be able to complete.
2. The corollary of these alleged breaches, is that there was a failure to give appropriate advice, namely that: 1. Mr Antar as an existing tenant was permitted to remain in occupation of part of the Fairfield property; and 2. the proper and appropriate step for Fairchild and Mr Abu‑Mahmoud to take was to grant a registered lease to Mr Antar in the terms agreed in February 2006
3. In addition, it is alleged that Mr Kassem ought to have, but did not, advise Mr Abu-Mahmoud that there were dangers in exchanging contracts in the circumstances when Mr Antar's position had not been addressed either by eviction of Mr Antar, or else removal of his caveat.
4. In his second affidavit, Mr Kassem says that at some time in the week between receiving by facsimile on or about 27 May 2007, a copy of the 17 February 2006 agreement for lease with Mr Antar, and 4 June 2007 when he sent a letter to Thurlow Fisher in the terms set out in [95] above, he had a meeting with Mr Abu-Mahmoud in which he gave advice to him that Mr Antar was entitled to a lease, and one should be entered into with him, and further that Mr Antar's caveat would not prevent settlement of the proposed contract.
5. There is no clear file note recording this advice which was said by Mr Kassem to have been given in a café at Auburn. However, Mr Kassem said, without challenge, that he made handwritten notes at the time on a copy of the 17 February facsimile, which notes reflected Mr Abu-Mahmoud's instructions. The document bearing those handwritten notes was tendered as part of the evidence.
6. The letter of 4 June 2007 appears to follow the handwritten notes (or a reasonable interpretation of them). In particular, the proposal in the letter of 4 June that there be included in the lease " … a demolition clause in respect to the premises for the option period of 2 years" reflects a note which reads "demolition clause (last 2 years)".
7. In addition, the email from Mr Abu-Mahmoud sent at 5.25am to Mr Kassem, to which I have referred at [96] above, contains instructions which reflect part of the advice which Mr Kassem says that he gave, namely to enter into a lease with Mr Antar prior to exchange of contracts.
8. Notwithstanding my general reservations about accepting the evidence of Mr Kassem, because of the contemporaneous corroborative material to which I have referred, I accept Mr Kassem's evidence about the advice which he gave Mr Abu-Mahmoud at this time.
9. It also appears from exchanges of correspondence between Mr Kassem and Thurlow Fisher in the period from June 2007 up to the time of exchange of contracts in October 2007 that there were continuing attempts to arrive at an agreement about the terms for a formal lease. An email from Mr Abu‑Mahmoud of 22 November 2007 referring to a discussion between Mr Antar and himself about a lease shows that at that stage the parties were attempting to negotiate and formalise a lease. Those documents also reflect the position that Mr Abu-Mahmoud knew that the appropriate course was to enter into a lease with Mr Antar. The ongoing issue between then reflects nothing more or less than two commercially minded parties attempting to obtain more favourable terms than those contained in the original agreement to lease of February 2006. Had a lease been agreed upon and entered into, it would follow that the caveat would have been removed, because the lease would have been registered on the title. It would obviously have then been an "existing tenancy" and would not have prevented settlement of any contract which may have been exchanged.
10. In those circumstances, I am not persuaded that the allegations of breach of duty relating to a failure to provide appropriate advice with respect to entering into a formal lease, and the consequences of it, have been made out.
11. One part of the allegations of breach of duty prior to the exchange of contracts is an allegation that the various risks (or "dangers" as pleaded) relating to the difficulties of settlement of a contract when a caveat existed.
12. Of this particular allegation, Mr Martin expressed the opinion that Mr Kassem was not acting in a competent fashion prior to the exchange of contracts in these terms: "The defendant was negligent as he failed to advise the plaintiff that it should not exchange contracts when no steps had been taken to either evict Antar, or make arrangements with Antar to have the caveat removed, because a prudent practitioner would have known a purchaser and its incoming mortgagee would require the property to be free of encumbrances such as a caveat on settlement."
13. Mr Bartels was not asked to, and did not express, any opinion with respect to this alleged breach of duty.
14. In cross-examination it became apparent that Mr Martin's opinion, from which he did not withdraw, was that given the existence of the caveat prior to exchange, a prudent solicitor would address the issue of the existence of the caveat, by giving advice to his client, prior to the exchange of contracts. In short, Mr Martin said that the advice would encompass one of two possibilities, either: 1. if there was an enforceable agreement to lease, then to advise the client that the lease should be entered into and the caveat removed, or else the caveat ought be removed; or 2. steps ought to be taken to have the caveat removed prior to the exchange of contract.
15. As the sequence of events which I have recounted earlier demonstrate, at least by 17 September 2007, which is well before the exchange of contracts, Mr Kassem had discussed the question of the lease with Mr Abu-Mahmoud, proffered advice to him, and had received instructions to proceed with issuing a lease on acceptable terms (which seemed to vary from time to time).
16. By 17 September 2007, a lease in registrable form had been prepared by Ms Iborg, the conveyancer employed by Consolidated. That lease was discussed by Mr Kassem with Mr Abu-Mahmoud on 17 September 2007. An email of that date from Mr Kassem to Ms Iborg records the fact of a discussion, and to my mind, confirms the position that advice had been given by Mr Kassem that the appropriate course was to obtain a formal lease from Mr Antar prior to exchange of contracts.
17. In all of the circumstances, I am satisfied that the state of advice given by Mr Kassem prior to the exchange of contracts accorded with the substance of Mr Martin's opinion as to the conduct of a reasonable prudent solicitor. I am not satisfied that the plaintiff has established any breaches of duty in this period prior to the exchange of contracts referable to the second and third pleaded breaches of duty. I am not persuaded that these breaches of duty have been made out.

April 2008 to June 2008: Fourth to Sixth Breaches of Duty

1. These breaches of duty centre upon allegations of various failures to provide appropriate advice in the period from April 2008 which is well after exchange of contracts, and shortly prior to the six month settlement period of the contract, until June 2008 after the judgment of Palmer J was delivered.
2. During this period, Fairchild was under the control of the Receivers. Any advice which was being given, or which ought to have been given, would be given to Mr Abu-Mahmoud and NorthAxis which was the purchaser of the Fairfield property under the contract.
3. It is important to keep in mind that these allegations of breach of duty refer to a period which is later in time than the first breach of duty to which I have referred above and which is alleged to have directly resulted in financial harm to Mr Abu-Mahmoud because his guarantee to St George Bank of the loan to Fairchild crystallised from a contingent liability once St George Bank acted upon the event of default, namely, the placing of Fairchild into voluntary administration.
4. The detrimental effect of these breaches of duty is that they did not enable Mr Abu-Mahmoud to take advantage of one or more opportunities for NorthAxis to proceed with the contract, thereby releasing Mr Abu-Mahmoud from his obligations to St George Bank.
5. Part of the factual context during this period was the position of St George Bank. Kemp Strang, the solicitors for the Receiver, set out the Bank's minimum position on 27 March 2008 - namely that the bank required $4.875 M to effect a transfer of the Fairfield property, and to release the guarantees which then existed.
6. On 11 April 2008, Mr Kassem wrote to Kemp Strang asserting that Fairchild was in default under the contract, and reserving NorthAxis's rights to rescind the contract. A letter of 14 April 2008, from Mr Kassem to Mr Abu-Mahmoud and Mr Trad, noted that they had instructed him that they did not wish to rescind the contract but wished to proceed to completion. Mr Abu-Mahmoud confirmed in his evidence that this was the correct position.
7. On 28 April 2008, Mr Kassem, having had a meeting with Mr Abu-Mahmoud on 27 April 2008, or at least a discussion with Mr Abu-Mahmoud at that time, which is evidenced by a file note created by Mr Abu-Mahmoud, wrote to Kemp Strang informing them that NorthAxis would complete the contract subject to confirmation that the caveat would be removed and there was vacant possession of the fruit shop. The letter also reaffirmed repudiatory conduct on the part of the Receivers by erecting a "For Sale" sign on the Fairfield property and asking for its removal.
8. In a prompt response on 29 April 2008, Kemp Strang informed Mr Kassem, that Fairchild was not obliged to provide vacant possession of the fruit shop because the contract made the sale subject to existing tenancies. Kemp Strang also informed Mr Kassem that Fairchild was not obliged to ensure the removal of the caveat prior to settlement, and that NorthAxis would be obliged to settle even with the caveat in place. Kemp Strang also indicated that although the Receivers did not have any obligation to remove the caveat before settlement of the contract, they were nevertheless going to do so.
9. On 4 June 2008, Mr Kassem wrote to NorthAxis confirming his instructions, namely " … NOT to issue a Notice to Complete and to work with the Vendor in the removal of the Caveat and the outstanding issues for completion".
10. On 25 June 2008, according to a file note of Mr Abu-Mahmoud, he met with Mr Kassem to discuss the judgment of Palmer J.
11. On 8 July 2008, Mr Kassem, by then with SRBG, wrote to Kemp Strang making an offer on a without prejudice basis that NorthAxis would proceed with the purchase "as is" i.e. with the caveat remaining on the title on the basis of a reduction in the purchase price to $4.5 M and a release of the personal guarantees.
12. On 14 July 2008, there was a further meeting between Mr Kassem and Mr Abu-Mahmoud at Auburn. The next day, Mr Kassem wrote a letter to Mr Abu-Mahmoud summarising the position. He noted that he had advised Mr Abu-Mahmoud that a Notice to Complete should be issued as, in effect, a strategy to enable the negotiation of a new contract with the Receivers. The letter notes that he was instructed not to issue a Notice to Complete at that stage but to seek further discussions with the Receivers.
13. By 27 July 2008, the position of Mr Abu-Mahmoud had changed. In an email of that date (although wrongly dated 27 August), he instructed Mr Kassem to issue a Notice to Complete, in circumstances where he was concerned that Challenger may withdraw their offer of finance for the purchase. On 29 July 2008, Mr Kassem issued the Notice to Complete upon the basis of this instruction, having appropriately cautioned Mr Abu-Mahmoud that he needed to be in a position to complete if called upon. Mr Abu-Mahmoud acknowledged his understanding of the risks involved.
14. It is clear from these factual references, that whatever be advice given by Mr Kassem, the Receivers preferred course of action was to remove the caveat of Mr Antar prior to settlement notwithstanding the absence of any legal obligation falling upon them, and Mr Abu-Mahmoud was giving instructions to Mr Kassem that he, and NorthAxis, wanted the contract to be completed, initially without a Notice to Complete being issued, and then by means of the Notice to Complete.
15. In those circumstances, even if the advice alleged to constitute each the fourth to sixth breaches of duty was given, and there is a dispute about that, it was clearly given in circumstances where it had no direct effect upon the instructions given by Mr Abu-Mahmoud to Mr Kassem which did not reflect the advice he was being given by Mr Kassem from time to time. The context also clearly was that the circumstances were fluid and changing Mr Abu-Mahmoud was seeking to exploit the opportunities which presented from time to time to obtain more favourable terms. He was also seeking to ensure that Challenger, the provider of the finance for the purchase, was not dissuaded from their offer of finance. He knew that if a Notice to Complete was issued, he had to be in a position to complete the contract if called upon. In short, he and Mr Kassem were confronted with a complex set of circumstances including the unsuccessful desire of the Receivers to remove the caveat, a process which was entirely under the control of the Receivers.
16. Whilst it is entirely possible that different advice may have been given from time to time by Mr Kassem, I am not prepared to find that such advice as was given, if it accorded with what was alleged, was negligent and in breach of his duty of care. Even if it was, it is clear that the course which Mr Abu-Mahmoud took, was one which he charted without relying on the advice of Mr Kassem, and which he thought, given the position which existed from time to time, was in his best commercial interests.
17. I am not satisfied that the fourth to sixth breaches of duty have been established.

August 2008: Seventh and Eighth Breaches of Duty

1. The Statement of Claim alleges that there were two breaches of duty by Mr Kassem dealing with the subject of fresh contracts for sale being entered into between the Receivers and NorthAxis to replace the original contract entered into in October 2007.
2. At the conclusion of the case, no submissions were made in writing by counsel for Mr Abu-Mahmoud explaining how these allegations were made out on the evidence, and supporting findings against Mr Kassem on these allegations of breach of duty. In submissions in reply, counsel for Mr Kassem, submitted that the Court should take these allegations of breach to have been abandoned.
3. During oral submissions, senior counsel for Mr Abu-Mahmoud made no submissions to the contrary of that submission of abandonment. Accordingly, I take these allegations to have been abandoned, or at least, not pressed. It would be inappropriate, and there is no need, to make any findings dealing with these allegations.

Causation

1. The plaintiff claims that he entered into the restructure scheme as a result of the restructure advice from Mr Salem Kassem. I have found that this is so. The plaintiff claims that the implementation of the restructure scheme had three principal consequences: 1. the plaintiff's guarantee was called up by St George Bank, and he was confronted with having to consent to judgment; 2. he lost his interest in the properties at Condell Park and Lidcombe; and 3. he paid out unnecessarily significant monies by way of fees to Mr Kassem.
2. The defendants submitted: 1. the evidence, including the lack of Mr Trad and Mr Skaf giving evidence, meant that the Court could not be satisfied that any different course would have been followed; 2. Fairchild's financial position was such that it was heading towards a winding up in late 2007 in any event, with the consequence that the Fairfield property would have been sold at around that time.
3. In considering any determination of causation of whether particular harm was caused, the provisions of s 5D of the Civil Liability Act, require the Court to be satisfied of factual causation, i.e. that the negligence was a necessary condition of the occurrence of the harm, and also of the scope of liability, namely that it is appropriate for the scope of the liability to extend to the harm so caused.
4. In considering factual causation, the Court must consider the matter subjectively in light of all of the circumstances: s 5D(3)(a) Civil Liability Act.
5. Section 5E of the Civil Liability Act requires the plaintiff to prove any fact relevant to the issue of causation on the balance of probabilities. In so doing, a plaintiff is not entitled to lead evidence at a trial after the suffering of loss and damage, which describes what would have been done: s 5D(3)(b) Civil Liability Act.
6. The outline of the facts above permits the following short recitation of some critical steps relevant to causation: 1. the contract for sale of the Fairfield property from Fairchild to NorthAxis was exchanged on 15 October 2007. The contract provided for a settlement period of six months. Settlement was intended to occur on or before 15 April 2008; 2. on 16 November 2007, Fairchild was placed into voluntary administration which was an event of default under the loan agreement with St George Bank; 3. on 28 November 2007, St George Bank, acting upon that event of default, appointed Receivers and Managers to Fairchild. Control of the assets of Fairchild fell to the Receivers; 4. on 29 November 2007, the Receivers informed Mr Kassem that the sale to NorthAxis would not be allowed to proceed unless Fairchild discharged 100% of its liability to St George Bank. At that time, the liability was a little over $5 M; 5. Mr Abu-Mahmoud sought finance from Challenger. The firm offer of finance from Challenger ($3.75 M), and the contractual sale price was insufficient to meet the requirements of the Receivers; 6. additional finance was sought by Mr Abu-Mahmoud from private lenders. This was unsuccessful; 7. on 3 March 2008, Mr Abu-Mahmoud informed the Receivers that NorthAxis could not settle for the full contract price; 8. on 7 March 2008, an offer was made on behalf of Mr Abu‑Mahmoud and is fellow investors, Mr Trad and Mr Skaf, to purchase the Fairfield property for $4.5 M. St George Bank refused to accept the offer. It required repayment in full of its outstanding debt; 9. St George Bank's final negotiating position seems to have been reached on 27 March 2008 when it indicated that if it received $4.875 M from the sale of the Fairfield property, it would transfer the property to Mr Abu-Mahmoud and his fellow investors, and discharge them from any liability to the Bank on their personal guarantees.
7. The history of the events which took place after 28 March 2008 is set out more fully above. The ultimate fate for the Fairfield property was its sale by the Receivers on 23 March 2009 for $4.3 M.
8. It seems clear, and I am satisfied, that the financial losses of the kind set out in [373] would not have occurred without the restructure advice being given by Mr Kassem, and Mr Abu-Mahmoud and Fairchild giving effect to that advice. There was no other basis identified as having existed by November 2007 which could have been relied upon as an event of default by St George Bank, and which entitled it to take the actions which it did.
9. The appointment of the Receivers gave full control of the Fairfield property to St George Bank. The decision as to the sale or other disposition of the property, and on what terms, was removed from Fairchild and given to St George Bank.
10. The placing of Fairchild into voluntary administration was an event of default under Fairchild's loan agreement with St George Bank. As a consequence, Fairchild's debt was in default. The whole of the debt became immediately due and payable. Fairchild, did not, and could not repay the date promptly. All of its assets fell to the control of St George under the deed of charge. Mr Abu‑Mahmoud's guarantee crystallised and he became liable upon it for the defaults of Fairchild. His liability was to pay, on demand, the full amount outstanding to St George Bank. Prior to these events, his liability was a contingent one.
11. At that point in time, I am satisfied that he suffered a financial loss, because he had an immediate obligation to comply with this guarantee. The sum of his obligation was the total outstanding to St George Bank, namely $5.071 M. In fact, the likelihood was that his ultimate liability to St George Bank may have been less because of the value of the Fairfield property recovered after sale. However the prospect of that reduction in the amount owed, because of the recovery does not affect the conclusion that the implementation of the restructure advice caused financial loss to Mr Abu‑Mahmoud on and after 16 November 2007.
12. Subject to what is about to be discussed, there is a clear connection between the entry into voluntary administration of Fairchild, and the St George bank acting to enforce its security by reason of that event of default, and the liability of Mr Abu-Mahmoud crystallizing. Without the event of default, there was no basis for St George Bank to have acted. Accordingly, he has demonstrated factual causation as required by the Civil Liability Act.
13. It was not pleaded or submitted that the losses claimed fell outside the scope of liability for which Mr Kassem ought be liable. No occasion arises to consider any further the issue of scope of liability as that is referred to in s 5D of the Civil Liability Act.
14. But this is not the only factual issue which must be determined before the plaintiff conclusively establishes the issue of factual causation. There is an anterior finding which is necessary. The Court needs to be persuaded that, if the restructure advice had not been given, and the restructure scheme not implemented, the plaintiff's guarantee would not have crystallised at or about the time which it did. Put another way, can Mr Abu-Mahmoud prove that his guarantee would not have been called up by November 2007.
15. On this issue, the plaintiff carries the onus of proof. An examination of the question requires the Court to examine a hypothetical factual construct. It needs to assume that there would have been no contract for sale of the Fairfield property entered into between Fairchild and NorthAxis, Fairchild had an ongoing obligation to meet the loan repayments to St George Bank, it had the benefit of rental income to assist in that task, and it had an obligation to meet the ATO debt. The hypothetical factual construct needs also to assume that Mr Antar was asserting his claim to be entitled to a lease of the fruit and vegetable shop area. It is relevant to note here that, as was the fact, St George Bank had not called upon the guarantee at any time prior to Fairchild entering into voluntary administration or liquidation. There was no suggested basis for any entitlement for St George Bank so to do.
16. It is convenient to commence this analysis in May 2006. At that time, Fairchild was wound up on the application of the ATO. The details of the debt and the basis for that winding up are not in evidence. The Federal Court (Gyles J) set aside the winding up. The winding up order could not have been set aside unless the Federal Court was satisfied that Fairchild was solvent. Whether its solvency depended upon its relationship with St George Bank is not directly relevant because the fact is that it was solvent, and until the administrators were appointed, St George Bank did not move against Fairchild.
17. Fairchild's financial position was not an easy one. In May 2006, it was unable to commence construction of the proposed development at Fairfield because "… it was experiencing financial hardship…". Whilst this may have been in the past a reference to the company's capital position, it is not unreasonable to conclude that it refers to its overall position.
18. By July 2006, Fairchild's cash position was that it depended upon rental and the partners' contributions by way of equity to meet its outgoings, which included payments to St George Bank. In August 2006, the ATO notified Fairchild of the $400,000 debt owed to it. It is important to note that at no time did the ATO commence any recovery action against Fairchild (or its directors) to collect this amount prior to November 2007.
19. In the period, at least from July 2006 onwards, the rental received did not always cover the loan repayments to St George Bank. On average, the monthly shortfall was about $9,000 over that period. Undoubtedly, there were fluctuations. In some months, the rental was adequate, in other months it was not. I accept that over this period, Mr Abu-Mahmoud and Mr Trad contributed equally in some months to cover the interest. According to the financial details in Exhibit 2, prepared by counsel for the defendant, the amount of equity introduced into Fairchild from 1 July 2006 to October 2007, was about $160,000. No reason was suggested in the evidence as to why this could not have, and would not have continued as necessary.
20. According to Exhibit 1, which are the Profit & Loss statements for Fairchild for the period 1 July 2006 to October 2007, the company as a whole suffered a cash loss during this period of about $275,000.
21. The evidence suggests strongly that Mr Abu-Mahmoud and his fellow investors wanted to hold onto the Fairfield property because they anticipated that a significant profit would be realised if the development could go ahead to completion. That was not an unreasonable anticipation. Mr Chehab, whose evidence was not challenged, formed a similar opinion.
22. Whilst this was no doubt the preferred option, Mr Abu-Mahmoud had other options available to him. One was to invite Mr Chehab to participate as an additional partner in the Fairfield development. There is no doubt that Mr Chehab was a potential partner who had the financial means and an interest in the development. At one stage, it is unclear when, but I would infer after the Receivers were appointed, he indicated, conditionally, that he was prepared to purchase a one third share in the project for $1.4 M.
23. His evidence also is that in 2008, had Mr Abu-Mahmoud offered the whole site to him for $5 M, he would have purchased it. He does not directly address the position in the period between 1 July 2006 and November 2007. The defendants' submit that I should draw an inference adverse to the plaintiff's case because of Mr Chehab's failure to address his preparedness to purchase the development at an earlier period. I am not prepared to draw that inference.
24. Mr Chehab obviously had a high regard for Mr Abu-Mahmoud. They had worked together in various developments including on Mr Chehab's personal house. Mr Chehab said that he placed extensive trust in Mr Abu‑Mahmoud and his abilities. Mr Chehab's financial position was a stable one. The evidence suggests that his net asset position was many times the price he was prepared to pay for the Fairfield development.
25. I have no reason to think that his approach to the purchase of the Fairfield property would have been any different in the period July 2006 to October 2007. I am satisfied that it would have been the same.
26. Had Mr Chehab purchased the Fairfield development in the 2006/2007 period for $5 M, the St George Bank debt would have been discharged in full. Mr Abu-Mahmoud's guarantee would not have been called upon. The position of Fairchild would have been that it owed the ATO the liability of a little over $400,000 but increasing with interest being added over time. It had other, relatively minor, unsecured creditors. In those circumstances, Mr Abu‑Mahmoud would have been liable for one third of the ATO, and remaining, debts. I am satisfied that the probabilities are that, freed of his guarantee to St George Bank, he and his fellow investors would have been able to either repay the ATO, or come to an arrangement to do so.
27. But this was only one hypothetical possibility. No doubt there were others. After all, confronted with the ATO debt, for one-third of which Mr Abu‑Mahmoud was responsible, he could have made attempts to borrow his share. In all of the circumstances, whilst it was not an insignificant sum, I am not persuaded that it was beyond his capacity to obtain that money from another source, particularly if it meant that he would not lose the benefit of the Fairfield property.
28. Another possibility was to engage in meaningful negotiations with the ATO. Elite was apparently able to do so with respect to a similar sum. And the ATO itself invited such contact. No attempt was actually made to engage in such negotiations. There was a real prospect that a satisfactory arrangement could have been reached.
29. All of these possibilities persuaded me that although the financial position of Fairchild was difficult in the period from 1 July 2006 to November 2007, it was not likely that Fairchild would in that period have ended up in voluntary administration or liquidation. I am not satisfied that Receivers would have been appointed by, or about November 2007, when they were actually appointed.
30. These findings mean that Mr Abu-Mahmoud's loss, consequent upon the restructure advice, namely the crystallising of his guarantee from a contingent to an actual liability, would not have occurred by November 2007, but for the restructure advice which I have found was given in circumstances amounting to a breach of duty.
31. It follows, also, that I reject that part of the defendants' submissions that Fairchild "… was heading inexorably toward liquidation", and that the only means by which it could avoid that result and which would enable Mr Abu‑Mahmoud to retain the benefit of the Fairfield property, was to sell it to NorthAxis.
32. It follows that I am satisfied that the plaintiff has proved that his reasonable losses flowing from the call by St George upon his guarantee were caused by the advice given by Mr Kassem that he enter into the restructure scheme, and his implementation of that advice.
33. Although the defendants originally pleaded that the plaintiff had failed to mitigate his loss, in written submissions at the conclusion of the hearing, the defendants did not press this defence. There is accordingly no argument being propounded that the plaintiff failed to act reasonably in seeking to minimise the loss which he had suffered.
34. This position bespeaks an acceptance that even though there may be criticisms of the way in which the plaintiff went about: 1. trying to organise funding for NorthAxis to purchase the property, and failing so to do; 2. giving instructions about the attitude which NorthAxis should take with respect to the position of Mr Antar, and whether it ought require the Receivers to attempt to remove the caveat; and 3. taking any step towards assisting the Receivers to obtain any higher bid at the public auction of the Fairfield property, his actions cannot be regarded as unreasonable or a failure to mitigate his losses.
35. Subject to the consideration of the contributory negligence issue below, there is no reason therefore in considering the amount by which Mr Abu-Mahmoud is to be compensated for such recoverable losses as he sustained to hold that those recoverable losses have not been caused in whole by the defendants. It will also be necessary to consider the issue raised by the defendants as to which of the claimed losses are recoverable and to what extent.

Contributory Negligence

1. In their final written submissions, the defendants pressed only one of the three particulars of contributory negligence.
2. The defendants alleged that Mr Abu-Mahmoud "… could easily have prevented all that followed by putting Mr Chehab in contact with the Receiver". His failure to do that was said to be contributorily negligent.
3. Whether or not a plaintiff has been contributorily negligent is to be determined by reference to s 5R of the Civil Liability Act.
4. The defendants bear the onus of proof of any allegation of contributory negligence. They submitted that since Mr Chehab was willing to pay $5 M for the property, then the Court ought infer that the Receivers would have sold him the property at that price rather than to Mr Antar for $4.3 M.
5. The Receiver had the power to sell the Fairfield property either by private treaty or by public auction subject to an overriding obligation to act reasonably in so doing and to obtain, in all of the circumstances, a proper price.
6. The evidence about how the sale took place is non-existent. It was not established whether the Fairfield property was sold by public auction or otherwise. What is revealed by the evidence is that contracts were exchanged on 23 March 2009. No allegation is made that the Receivers did not conduct themselves appropriately. I would infer that the property was offered for sale publically. In light of the fact that the Receivers had in late 2007, caused "For Sale" signage to be publically displayed on the property, I have no doubt, and would infer, that the signage was again displayed. No doubt there would have been an appropriate advertising regime. I would infer that there was. After all, it was in the Receiver's interest, and it was their obligation, to obtain the best available offer for the property.
7. There is no evidence as to who actually attended the auction, if there was an auction. The defendants have not proved Mr Chehab did not attend at the auction if there was one. They have not proved that he did not make a bid for the property either at auction, or by offer to the Receivers. They have not proved that Mr Chehab was not introduced to the Receivers by Mr Abu‑Mahmoud.
8. Proof of these matters was readily able to be achieved. The defendants could have, but did not, require Mr Chehab to attend for cross‑examination upon his affidavit. It was open to the defendants had they required his attendance to cross-examine Mr Chehab to prove the necessary factual foundation for their allegations of contributory negligence. They chose not to do so.
9. I reject the defendants' submissions that Mr Abu-Mahmoud was contributorily negligent because they have not established the necessary factual foundation for the proof of such allegation.

Loss and Damages

1. The plaintiff is entitled to recover a sum of money which puts him in the position in which he would have been, but for the breach of duty by the defendants which I have found to have been proved.
2. I have found that Mr Kassem was in breach of his duty by giving the restructure advice. I have found that Mr Abu-Mahmoud acted upon that advice and as a result sustained financial loss in November 2007, when an event of default occurred upon which the St George Bank relied to appoint Receivers to Fairchild. At that point in time, the guarantee crystallised, and Mr Abu-Mahmoud became obliged to pay St George Bank the monies owing to it.
3. It was as a direct consequence of the loss that the plaintiff: 1. consented to judgment being entered against him, and in favour of St George Bank in the sum of $2,476,788.68. That judgment carried interest. Mr Abu-Mahmoud also agreed to pay St George Bank's legal costs; 2. forfeited the value of his proportion of the equity, if any, of Fairchild in the Fairfield property; 3. forfeited the value of the equity, if any, in the properties which he owned at Lidcombe and Condell Park; and 4. made payments for the expenses incurred in undertaking the restructure scheme to the extent that he, and not Fairchild or NorthAxis, incurred them.
4. The sum required to compensate Mr Abu-Mahmoud with respect to the first item above, is relatively straight forward. That is the judgment sum, less any monies which have been paid in reduction of that sum, if paid by Mr Abu‑Mahmoud, plus interest to date of payment. Put differently, the current outstanding balance owing for the judgment sum. In addition, the plaintiff is entitled to reimbursement by the defendants of the amount of costs which Mr Abu Mahmoud was required, or else is liable to pay, to St George Bank. The parties ought calculate the total of those sums to the date of this judgment.
5. As to the second item of loss identified above, the evidence does not permit of a conclusion that there is any separately identifiable sum which would reflect the value of any equity which Fairchild had in the Fairfield property. At the time the Receiver was appointed, and thereafter until the Fairfield property was sold, the evidence does not satisfy me that there was any equity in the Fairfield property. By that I mean that the property did not have a market value which was in excess of the total amount of money owed by Fairchild to St George Bank and secured over the Fairfield property. The plaintiff has not proved any loss in respect of this head of damage.
6. As to the third item, namely the value of the equity which the plaintiff had at the time of the forced sale of the properties at Lidcombe and Condell Park, I am satisfied that the plaintiff has proved loss arising from the sale of these properties. I accept the plaintiff's evidence on this issue of loss. It was not challenged in cross examination, and is supported by contemporaneous documents. That evidence leads to these conclusions.
7. First, the sum for which judgment was entered in the proceedings referred to in the first item of loss (or which is presently owing under that head of loss), was a net sum of the amount outstanding to St George after all recoveries had been effected. Taken into account in the figure was the whole amount of the recovery from the two properties. Thus St George received the benefit of the entire proceeds of sale regardless of the amounts secured against those two properties by borrowings which related to those properties.
8. Secondly, the evidence established that the plaintiff had net equity in each of those properties. On the day that the Condell Park property was sold, 30 November 2009, there was a net equity of $390,393.96. On the day that the Lidcombe property was sold, there was net equity of $165,29.60. The net equity of the plaintiff in each both property was lost because St George Bank received the whole of the proceeds of sale of both properties.
9. The plaintiff is entitled to have included in the judgment in these proceedings, those sums of lost net equity, together with interest from the date of the losses of the net equity to the date of this judgment.
10. The fourth item above claims additional costs and expenses which have been incurred as a consequence of relying upon the restructure advice. Here, it is important to differentiate between costs and expenses incurred by Fairchild, NorthAxis and the plaintiff.
11. In the proceedings brought by St George Bank against Mr Abu-Mahmoud, he paid to AVH, for their representation of him, a total of $39,901.73 for legal costs. The Memoranda of Costs form part of the evidence. The plaintiff claims the entirety of these costs. The defendants submit that from a perusal of the Memoranda, some of these costs relate to the exploration of whether a claim should be brought in those proceedings against the present defendants in the nature of these proceedings.
12. The defendants submit that any such sums are more appropriately addressed by any order for costs in these proceedings and not by way of damages. The defendants point to the absence of any Commercial List response by the plaintiff and the ultimate outcome of the St George Bank proceedings as indicating that there was no real defence to the claim. They submit that therefore, the Court should infer that the real substance of the expenditure on costs related to whether these proceedings should be brought.
13. No time was spent in cross-examination with respect to this issue. No evidentiary challenge was mounted to the reasonableness of this item of loss claimed.
14. I am satisfied that the whole of this claim should be allowed. The costs were incurred by the plaintiff in seeking advice about, and in the proper protection of his position, with respect to the claim made by St George Bank against him. That claim was brought about because of his liability under his guarantee having crystallised through the negligence of Mr Kassem. It was not unreasonable for Mr Abu-Mahmoud's solicitors to have explored, in the St George Bank proceedings, the question of whether to issue a cross-claim in those proceedings against the current defendants. Any costs incurred in so doing are properly a part of the costs of those proceedings.
15. The time and place to challenge the reasonableness of those costs, if a challenge was to be made, was in these proceedings, by cross-examination and evidence directed to that issue. The claim properly forms part of the damages in these proceedings. I am satisfied that the whole of it should be allowed.
16. I am not satisfied that any other claims for payments and expenses ought be allowed.
17. The parties will need to bring in short minutes of order to reflect the correct total of these losses and interest up to the date of this judgment.

Costs

1. I can see no reason, at this time, why costs should not follow the event. My tentative view is that an order should be made that the plaintiff's costs of the proceedings be paid by the defendants on the ordinary basis.
2. However, I will give the parties an opportunity to make an application for, or to resist such application for, any other order for costs.

Orders

1. I make the following orders: 1. Judgment for the plaintiff in an amount to be calculated. 2. Plaintiff to file and serve proposed short minutes of order, any motion seeking an order for costs different from that proposed, and any affidavit and submissions in support of that motion by Monday 1 June 2015. 3. Defendants to file and serve proposed short minutes of order, any motion seeking an order for costs different from that proposed, and any affidavit and submissions in support of that motion by Monday 15 June 2015. 4. Stand proceedings over for determination of all outstanding issues, if any, to 10am on Friday 19 June 2015. 5. Direct the parties, at the time of filing any documents in accordance with Orders 3 and 4, to provide a copy to my Associate. 6. Liberty to apply on 2 days' notice.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 19 May 2015