Supreme Court of SA|1996-07-01|Before: Doyle CJ, Duggan JJ

AUSTRUST LTD v ASTLEY & ORS No. SCGRG 89/970 Judgment No. 5681 Number of pages - 43 Negligence (1996) 67 SASR 207 [1996] SASC 5681 (1 July 1996)

COURT IN THE FULL COURT OF THE SUPREME COURT OF SOUTH AUSTRALIA DOYLE CJ, OLSSON AND DUGGAN JJ

CWDS Negligence

essentials of action for negligence - duty of care - solicitor - asked to advise generally - scope of instructions - solicitor did not advise client in relation to exposure to personal liability as a trustee - solicitor owed client a duty to give advice which it needed regardless of whether it was specifically requested - there was a continuous relationship in which the solicitor was looked to for advice on what matters the client needed to consider - the solicitor's instructions were in general terms - the solicitor did not act, or regard himself as acting, only on specific tasks and in response to specific instructions - need for client to protect itself not so obvious that solicitor entitled to pay no attention to it - involvement in purchase and security transactions also required solicitor to advise client on need to protect itself - cross-appeal against finding of negligence dismissed.

Negligence

contributory negligence - failure of solicitor to advise trustee of danger of personal liability - trial judge found contributory negligence on the part of the trustee in entering into business transactions without proper care - duty owed to beneficiaries of trust distinguished from duty to take care of one's own interests - trustee's conduct did not constitute a failure to take proper care of its own interests, or those of a defendant - breach of duty owed to a third person cannot give rise to contributory negligence
further, risk of exposure to personal liability was the very matter against which the solicitor should have guarded - no rule of law preventing a claim of contributory negligence by a professional adviser against a client - no contributory negligence - appeal allowed. Daniels v Anderson (1995) 37 NSWLR 438, applied. Pennington v Norris [1956] HCA 26; (1956) 96 CLR 10; Jackson v Goldsmith [1950] HCA 22; (1950) 81 CLR 446; Ramsay v Pigram [1968] HCA 34; (1968) 118 CLR 271, considered.

Damages - measure and remoteness of damages in actions for tort - remoteness and causation - costs incurred in litigation with third party - trial judge allowed costs up to date where appellant considered not to have been justified in continuing to litigate

trial judge entitled to so find. Monies gained from sale of assets used to pay litigation costs - trial judge abated appellant's claim by this sum - trial judge was only correct to abate the amount to the extent that the money was used to pay litigation costs unreasonably incurred - appeal allowed in part on this point - further submissions necessary. Damages for loss of use of money - "Hungerfords v Walker" interest allowed on payments which appellant was required to make as a result of the breach until 1 March 1990 - after that date, payments made by associated companies in group - judge correct in allowing damages for loss of use of money only until 1 March 1990 - appeal dismissed on this point.

HRNG ADELAIDE, 8-10 May 1996 (hearing), 1 July 1996 (decision) #DATE 1:7:1996 #ADD 19:2:1997

Counsel for appellant: Mr F Mcalary QC with Mr G Colyer

Counsel for respondent: Mr D Quick QC with Mr B Beasley

In this matter the Full Court is called upon to consider both an appeal and a cross-appeal in relation to a judgment entered by Mullighan J against the respondents in favour of the appellant.

The appellant sued the respondents, legal practitioners practising in partnership, for damages for breach of contract and negligence. The appellant based its claim upon a claimed failure by the respondents to provide proper and appropriate legal advice to the appellant.

The case resulted from the appellant, as trustee of a trading trust, having to discharge the obligations it incurred as trustee, when the trust became insolvent.

The appellant said that the respondent failed to warn it, when it was considering accepting an appointment as trustee of the trading trust, that it would be personally liable in respect of obligations incurred as trustee, and that the respondent was in breach of the duty it owed as a solicitor. The respondent said that its retainer was limited to the giving of advice on limited aspects of the matter, not including that about which the appellant complained, and that it owed no duty to advise about personal liability. The respondent also said that the appellant knew or should have known that it was personally liable. The respondent said further that the appellant was guilty of contributory negligence, because it accepted an appointment and incurred obligations without giving proper consideration to the financial affairs of the trust. Had it done so, it would have seen that the trust was unable to meet the obligations which the appellant incurred. There were also issues as to the damages which were claimed.

In order to understand the issues arising on these appeals, and to consider them in their proper context, it is necessary to appreciate the facts in relation to which they arise.

It is appropriate to commence, as did the trial judge, with a consideration of the parties and main witnesses.

The appellant was incorporated in 1910. Its original name was Elders Trustee and Executor Company Limited and it was associated with the well known pastoral group stemming from Elder Smith and Company Limited. The appellant's name was changed to 'Austrust Limited' late in 1990.

Following a corporate merger or takeover in the 1980's the appellant, under its original name, became part of the Elders IXL Group. As the trial judge pointed out, this gave rise to changes in the structure of its management and, to some extent, the work which it was prepared to undertake.

Under its new management the appellant was, among other things, looking to broaden and expand the nature and extent of its work.

Traditionally, in its role as a corporate trustee, the appellant had accepted appointments as trustee of deceased estates, settlements, protected estates, moneys to which infants and other persons under disability were entitled and the like. All of these were 'conventional' trusts, in relation to which assets were held, invested and managed pursuant to non trading trusts - although, no doubt, in the administration of some trusts, the management of pastoral properties and businesses was necessarily involved from time to time. The scope of the appellant's activities (including a property management role) is more extensively referred to in the copy brochure reproduced in the appeal books at pp2149-2159.

The trial judge found that in mid-1983, by reason of what were then new management policies, the appellant was anxious to become involved in work as trustee of commercial trading trusts, a field into which it had, prior to that time, not ventured.

The Chairman of the Board of the appellant was a Mr Peter Wells ("Wells"), who was an experienced chartered accountant in private practice.

At the relevant times the witness Wood ("Wood") was general manager of the appellant. Prior to October 1983, when he came to the appellant, he had been general manager for the southern division of Beneficial Finance Corporation. His experience, immediately prior to the events relevant to these proceedings, had been in the commercial finance sphere; and not in areas germane to what had been the core activities of the appellant. Wood succeeded the witness Oakeshott, who retired as general manager in September 1983. The latter had had prior long service as a senior trust officer. During his tour of duty the company had some developing experience as trustee of debenture trusts and the routine administration associated with borrowings on securities of that type. However, he testified that, during the time that he had been general manager of the appellant, he had never been aware of the company borrowing moneys in its capacity as a trustee.

A person called Brian Lamshed ("Lamshed") was initially employed by the appellant as a staff legal officer. He was a qualified legal practitioner. Although he was a key participant in events relevant to these proceedings he was not called as a witness. No doubt that was due to the fact that he had been named as a defendant in separate proceedings initiated by the appellant against him. For that reason the trial judge was not disposed to draw any adverse inference from a failure to present him as a witness.

It is not clear when Lamshed was first employed, but Oakeshott thought that it would probably have been prior to 1980. The evidence of the latter as to Lamshed's role as legal officer is recorded in the transcript in these terms: "HIS HONOUR Q. What is your understanding of Mr Lamshed's duties as a legal officer in your company during the time that you were the manager.

A. It was to assist officers of the company on matters, legal matters, on which they were not clear: Wills, taxation, anything else that came up in the company that had some legal implications. In no way did he give formal advice to the management. It was merely an initial interpretation as to whether we were hitting our heads against a brick wall, or whether it was something we should really get some qualified advice."

The trial judge obviously accepted that evidence. He found - "... The plaintiff employed Mr Lamshed who is a solicitor. He held various positions but worked closely with senior management and also in the administration of trusts. His duties included advising staff on legal matters relating to wills, income taxation and, according to Mr. Oakeshott, the former general manager, 'anything else that came up in the company that had some legal implications', but he did not give formal legal advice to management."

There was no material before the trial judge which indicated the breadth of professional experience of Lamshed. There was certainly no evidence that he had any particular expertise or knowledge in the fields of commercial or corporate law, or in relation to trading trusts.

The defendant Astley ("Astley") was a highly experienced legal practitioner having expertise in the commercial and corporate law areas. In 1983 he was the senior partner of Messrs Finlaysons, a large firm of solicitors practising in Adelaide. He was also a director of various public companies. His firm had been the corporate solicitors for the appellant for many years and he, personally, had attended to a good deal of legal work for it. He was well known to the senior staff of the appellant and quite familiar with its structure and the type of work traditionally undertaken by it. He said that he knew that the appellant was - "... a specialised trustee company which acted as trustee of various wills and ... estates and also trustee for inter vivos trusts"

He was of opinion that the senior staff of the company were well trained and mentioned that his own firm had participated in "in house" training programmes for them. From time to time he received instructions direct from the trust officers. He was acquainted with Lamshed and knew him to be employed by the appellant as a professionally qualified legal officer.

The next person to be noted for present purposes is one Hunt ("Hunt"), who was a legal practitioner on the staff of Messrs MacGillivray and Co, a firm of solicitors practising in Brisbane. Hunt acted for a person named O'Dea, who was, in essence, the promoter of the undertaking which was to become the subject of a trading trust, to which reference will be made in due course.

Finally, it is necessary to identify the witness James ("James"). This witness was a chartered accountant who was a senior consultancy partner with a major national accountancy firm. He specialised in bankruptcy and insolvency administrations.The facts relevant to the issue of negligence and breach of contract and the trial judge's findings on those facts

The events begin with the receipt by Finlaysons of a letter in the following terms: "ELDERS TRUSTEE ELDERS TRUSTEE AND EXECUTOR COMPANY LIMITED (INCORPORATED IN SOUTH AUSTRALIA) 27-39 CURRIE STREET, ADELAIDE, SOUTH AUSTRALIA POSTAL ADDRESS: G.P.O. BOX 546, ADELAIDE, SOUTH AUSTRALIA TELEPHONE: 218 4911 WHEN CALLING OR TELEPHONING PLEASE ASK FOR Mr. Lamshed Ph. 218 4990 AND QUOTE REFERENCE No 31st August, 1983

Messrs. Finlaysons, DX 152, ADELAIDE,South Australia, 5000. Attention: Mr. Gerlach Dear Sirs,

Re: G G I Rural Income Trust We have been approached by the principals of Golden Grove Industries Ltd. to act as the Trustee for the unit holders of the above Trust. A draft copy of the proposed Deed of Trust has been forwarded to us for our perusal. We would be obliged if you could examine the Deed and let us have your comments on it in due course. We understand that discussions have been held with the Corporate Affairs Commission in Brisbane, but that the Deed has not been submitted to the Commission yet.The aim of the Trust, briefly is to set up an intensive piggery on land at Young in New South Wales. The land is presently owned by Golden Grove, and, in fact, is part of a larger holding upon which Golden Grove have already established (using private funds) a piggery of a similar but smaller nature to the proposed for the Trust. It is proposed

that the Trust should also become involved in the slaughter and processing of pigs later.If you require any further information please let us know. Yours faithfully, 23. Lamshed) Legal Officer."

Within Finlaysons, that letter was assigned to Astley for his attention.

As the trial judge pointed out, this letter disclosed the product of various prior negotiations which had been conducted between O'Dea and the appellant. Astley had not been privy to those negotiations and, prior to receipt of the letter of 31 August 1983, knew nothing of them. The trial judge summarised the situation thus -
- O'Dea was the principal of a Brisbane based company known as Queensland Financial Planning Pty Ltd ("QFP"), which carried on business as a financial and investment adviser. QFP was associated with a separate entity known as QFP Properties Pty Ltd ("QFP Properties").

On 30 July 1982 O'Dea established a unit trust known as the GGI Pig Trust, of which QFP Properties was trustee and another company, Golden Grove Industries Pty Ltd ("Golden Grove"), was manager. This provided the administrative structure for the conduct of a piggery conducted at Young (in New South Wales) on land owned by O'Dea and his family, but acquired by QFP Properties on 30 August

O'Dea proposed a substantial increase in the size of the piggery operation. To that end, on 9 June 1983, he obtained an option to purchase a property of some 1028 hectares (referred to during the trial by a shortened name "Booka") near Tenterfield in northern New South Wales. Much of that property was utilised to grow soya beans, but it was proposed to set up a further piggery on it and some additional land.

The GGI Pig Trust was a private trust. It was ultimately proposed to create a new public trust to subsume the private trust. The funds required to extend the operations of the GGI Pig Trust would be raised by public subscription. O'Dea approached the appellant, in about March or April 1983, to act as trustee of the proposed public trust. On 13 May 1983 Oakeshott wrote to him saying that the appellant was prepared to act as trustee of the proposed public trust.

Mullighan J made the following express finding in relation to the situation, as it then stood -

"It appears that the responsibility for handling this proposal must have been entrusted to Mr. Lamshed at this time. The proposal represented a new type of venture for the plaintiff as it had never before been involved as trustee of a trust of this nature, i.e. a trust which conducted a business and traded in livestock. Mr. Oakeshott regarded that sort of business as risky ..."

The draft deed which is referred to in the letter written by Lamshed to Finlaysons on 31 August 1983 was that which related to the proposed new public trust.

It will be seen that the instructions given in the letter were somewhat vaguely expressed and Astley sought no further clarification of them. In the course of his evidence Astley said that he could not recollect whether what was said in the letter from Lamshed was amplified by the latter verbally. When asked what the letter meant to him, he responded - "A. It meant, to me, to go through the deed, as I did, and then, having been through the deed, discuss any comments or otherwise that I had with Mr Lamshed, which I also did.

On 9 September 1983 Hunt telephoned Astley (whose name must, presumably, have been given to him by the appellant) and enquired where matters stood. According to his costs entries Astley told him that the documentation had only been received on the preceding Monday and that he would look at it as soon as possible.

It is relevant to record that Astley's costs entries in relation to the period immediately thereafter read in these terms - "1983 Sep 23 Attending Lamshead [sic] of Elders telephone discussing shortly with him. Further engaged on perusal of draft Deed. 1 3/4 hours.

27 Further engaged in checking draft deed and in particular checking it against the Companies Act. 1.5 hours

Attending Hunt on phone and requesting further information concerning some of the clauses which he would put on telex.

28 Attending Lamshed telephone arranging for discussion with him tomorrow. Also perusing telex from John Hunt with further details of their clauses and their cross reference to Companies Code.

29 Attending Lamshed when he called going through draft deed with him. Subsequent letter advising we approved of same and that it conformed with the Act.

Attending Mr Hunt telephone discussing with him some of our amendments. Agreeing them with him and also asking him to let us have a draft of the prospectus as soon as available. Letter to him confirming."

Mullighan J found that Astley's primary focus on the trust deed was in relation to compliance with the relevant Companies Code and regulations. It apparently did not enter his mind to discuss with either Lamshed or any officer of the appellant, the potential legal implications related to acting as trustee of a trading trust, notwithstanding that, based on his past experience of acting for the appellant, the relevant transaction was, for it, a venture into a new type of business. He was not made aware at that stage that it was likely that the appellant would be requested, as trustee, to borrow money for the purposes of the new unit trust.

The draft trust deed did, in the body of it, contain a provision to the effect that the trustee was empowered to borrow money, with or without security, within prescribed limits "PROVIDED THAT the Trustee shall not be required to accept any personal liability for such borrowing". There is no suggestion that Astley discussed with Lamshed or any other officer of the appellant the meaning and legal significance of that proviso. Nor is there any suggestion that he advised that it had no potential operation, in itself, in relation to (or as against) any potential lender of money. This is an important consideration because, to the inexperienced reader, such a clause may have misled the reader into believing that, so far as third party lenders were concerned, no personal liability would arise.

Following his discussion with Lamshed on 29 September 1983 Astley wrote him a letter as follows - "29th September, 1983 Mr. B.A. Lamshed, Legal Officer, Elders Trustee & Executor Co. Ltd., 27 Currie Street, ADELAIDE. S.A. 5000

We refer to the writer's discussion with Mr. Lamshed on 29th September concerning the draft Trust Deed forwarded by Messrs. MacGillivray & Co. solicitors of Brisbane.

We confirm that we have read the draft and checked it against the provisions of the Companies Code and it conforms with those provisions. We have spoken to Mr. Hunt of Brisbane regarding drafting amendments which we discussed with you and he will incorporate them.

We have asked Mr. Hunt to let us see a draft of the proposed

prospectus as soon as possible. However he is not sure when that will be available as he has not yet received instructions from his client as to the contents of that document. As soon as we hear any further we will let you know."

Mr Quick QC, for the respondents, argued that Astley's activities during September 1983 were in the course of a limited set of instructions, completed either by his letter of 29 September 1983 or when he later perused the associated draft prospectus. He went so far as to suggest that, in relation to the mortgage security documents, to which reference will shortly be made, "Mr Astley acts more or less as a post office, sending them on very politely and promptly without too much by way of advice at all".

All that need be said concerning that argument is that it conflicts with the evidence placed before the trial judge.

In the first place, Astley's letter of 29 September 1983 clearly contemplates an ongoing need to consider the contents of a prospectus in due course. Moreover, his file memoranda and cost entries disclose that he acted and charged for work done on the basis of a single, ongoing retainer from the appellant, not limited to initial advice concerning the draft trust deed. So much will clearly emerge in due course.

On the last mentioned date Astley also wrote to Hunt in these terms

"29th September, 1983

Messrs. MacGillivray & Co., Solicitors, 180 Queen Street, BRISBANE, QLD. 4000 Attention: Mr. J.B. Hunt

We refer to our several telephone conversations concerning the draft Trust Deed and in particular to our discussion on 29th September. We confirm that we have discussed the draft with our client company and subject to the several aspects which we have discussed it is in order.

We look forward to receiving a draft of the prospectus from you as soon as it is available."

Nothing further seems to have transpired until, on 26 October 1983, Hunt telephoned Astley to discuss certain audit requirements concerning the proposed trust. At that time he intimated that he hoped to send a copy of the prospectus soon. By this time Oakeshott had retired as general manager of the appellant and Wood had succeeded him.

Under cover of a letter dated 30 November 1983 Lamshed sent Astley a copy of the draft prospectus, which he must have received from Hunt. In that letter he said "We would appreciate your comments on the prospectus in due course". On 8 December 1983 Hunt told Astley that the matter was not said to be urgent.

There is something of a gap in Astley's cost entries related to this period. However, his file indicated that, on 13 December 1983, he received a letter from Hunt enclosing copies of the amended draft trust deed, a draft prospectus and what was described as a statutory compliance checklist. The letter indicated that there had been some direct discussions between O'Dea and the appellant. It sought comments on the drafts. This was followed by a letter from Hunt to Astley, dated 15 February 1984, seeking comments concerning a matter raised by the Corporate Affairs Commission.

Astley's evidence was to the effect that (for some reason which is not apparent) he did nothing about this correspondence until, on 5 April 1984, he telephoned Hunt enquiring about the situation. He was told that some difficulty was being experienced in obtaining subscriptions, that consideration was being given to converting the private GGI Pig Trust into a public trust, and that nothing further needed to be done for the moment.

Lamshed's status within the appellant changed as of 1 March 1984. He ceased being a salaried employee of the company and commenced private legal practice.

However, he conducted his practice under an unusual arrangement with the appellant. He operated from accommodation provided by the appellant, for which he paid a rental. He was assisted by a staff member allocated to him by the company, but who remained an employee of the company.

Lamshed thereafter attended to conveyancing and probate work for the appellant, but not to its general corporate work. Wood testified that, as at the time of the change, he made an oral arrangement with Lamshed that - " ... as there was no person on the staff to carry the conduct of ... [the GGI unit trust] ... file, he was prepared to carry it out in a personal capacity until the point when there was somebody to manage that department." The file was eventually taken over from Lamshed, by an employee of the appellant called Bacon, in either October or early November 1984, on the return of the latter from long service leave.

In the course of his submissions Mr Quick QC argued that the inference arising on the evidence was that, as from 1 March 1984, any exchanges between Lamshed and Astley took place on the basis that the former was then acting as an independent solicitor for the appellant and dealing with the latter on that basis. The argument was that Lamshed's role was to provide any general advice required by the appellant, and that Astley's role was a subsidiary one.

In our opinion such a contention must be rejected.

In his evidence in chief Wood testified that, from 1 March 1984 until Bacon eventually took over the file, Lamshed was not paid anything by the appellant for whatever he might have done for the Company on the matter.

Later, in cross-examination, he had this to say - "Q. ... Was there a system whereby correspondence addressed to Mr Lamshed at Elders was brought to your attention.

Q. In relation to this trust, was it a matter for his discretion about whether it came to your attention or not.

Q. Even those that were addressed in the sense of physically to the premises of Elders, if his name was on it, whoever opened the mail would give it to him.

Q. And it was up to him to decide what to do about it.

Q. The arrangement with Mr Lamshed, which you orally arranged, was that he would continue to handle the business on behalf of Elders arising out of Mr O'Dea's proposal for Elders to become the trustee, wasn't it.

Q. In fact, he did that between March and September 1984.

Q. In fact, he did that and you, during that period, were relying upon him to use care, skill and judgment in the work that he did.

Q. What I suggest to you is that the arrangement with Mr Lamshed was that you had retained him to act for Elders from time to time and as necessary in his judgment to engage other solicitors. That's right, isn't it.

A. I'd find the word 'retained' to be a little strong. He, in this particular matter, acted as if he were an employee. In this particular matter, the solicitor had already been engaged and he continued to conduct the operation as it was before he ceased being an employee.

Q. It was part of his process to decide when and to what extent to involve other solicitors, wasn't it.

He went on to make these statements - "Q. Putting aside the question of fee or reward in terms of doing the work, he was retained by Elders to act for Elders from time to time in conjunction with other solicitors in relation to Mr O'Dea's proposal, wasn't he.

Q. Do you positively assert now that the arrangement with Mr Lamshed excluded him having a responsibility to do legal work in relation to this proposal.

A. I would disavow there was a brief to advise on legal matters in this instance.

Q. Is it the position, that you assert that Mr Lamshed was subject to the ordinary duty of a solicitor owed to Elders as his client to use reasonable care, skill and judgment in doing the work he did in relation to Mr O'Dea's proposal.

A. I find it difficult to give a precise answer to that. But I would say, that I expected him to behave as if he was an employee of the company. Those were the terms on which the arrangement was made. I would have expected his legal knowledge to be of use, but not to be relied upon. His duty, as a solicitor, was not in question, in my mind, in this particular arrangement.

Q. If your solicitors were to assert that Mr Lamshed, in doing what he did in relation to this proposal, was subject to the duty of a solicitor, to use reasonable care, skill and judgment in relation to Elders as a client, do you disavow that.

Mullighan J did not specifically refer to this evidence in the course of his reasons for decision, but the tenor of them suggests that he accepted it.

Moreover, it is not without significance that, in the correspondence which was subsequently sent by Astley to the appellant in relation to the GGI unit trust matter, he almost invariably addressed letters to - "Mr B A Lamshed Legal Officer, Elder's Trustee and Executor Co Ltd, 27 Currie Street, Adelaide, SA 5000" (or to the appellant, for attention of "Mr B A Lamshed"), this being the same mode of address as had been employed by him prior to 1 March 1984. This indicates Astley's view of Lamshed's role at the time.

Both Astley and Wood agreed that, on the afternoon of 11 April 1984 (at the direction of the Board of the appellant) the latter called on the former, informed him of the change of status of Lamshed, and reassured him "that Finlaysons remained our principal solicitors".

In our opinion that, also, is a significant matter.

The next relevant development was the receipt by Astley, on 24 July 1984, of a letter from Hunt transmitting the final version of the trust deed and some associated documentation. In the course of that letter Hunt said

"We understand that our respective clients have agreed that your client will forthwith accept appointment as Trustee, and that the Trust Deed, in its finally accepted form, will forthwith be adopted as the Trust Deed of the existing 'private' trust, so that your client as trustee may, on 31st instant, complete the purchase of a large grazing and soya bean property at Tenterfield, New South Wales."

Hunt went on to request Astley's "urgent comments as to the acceptability of the" documents forwarded by him.

This was followed by a further letter from Hunt on the following day which said - "24th July, 1984

Messrs. Finlaysons, Barristers and Solicitors, 211 Victoria Square, ADELAIDE. S. A.

We refer to our letter of yesterday's date and now enclose herewith form of New South Wales transfer in respect of the property "Bookookoorara" Tenterfield which, as indicated in our earlier letter we understand that your client has agreed to purchase as trustee of the abovenamed trust.

We understand that our client has furnished all relevant

documentation relating to the purchase to your client, but in case this is not so, we are enclosing herewith a copy of the relevant contract of purchase.

We should be pleased if you would arrange for your client to execute under seal, urgently, the transfer and if you would then return same to us.

We have not inserted an attestation clause and trust that you will

do so. The clause should be somewhere in the area which we have marked with a pencilled cross.

In addition to the attesting signatories a witness should witness the attestation and should, in addition to his or her signature, insert his or her full name, address and occupation, as provided.

You will no doubt appreciate that the vendor must execute the transfer prior to settlement which we are informed is to take place on 31st instant, and we should therefore greatly appreciate the return of the transfer at the earliest possible date.

Should you require any further information please do not hesitate to telephone or telex the writer.

The contract of purchase disclosed that the consideration to be paid to the vendor (which was the trustee of the "Ted Reeves Family Trust") was $1m, of which $490,000 was to be secured by a second mortgage over Booka, a bill of sale over all plant, machinery and chattels at Booka and a second mortgage over the piggery property at Young. Each of these was to be granted by the appellant.

Astley's file notes reveal that, on 25 July 1984, he went through the Trust Deed documentation in detail and also examined the documentation related to the sale of Booka. He telephoned Hunt and ascertained that $1m was to be paid for the Booka land and $200,000 for the plant and equipment at that property. Hunt then expressed the view that it was unlikely that settlement would actually occur on 31 July, as originally contemplated.

On this occasion Astley passed on the instrument of transfer of Booka to Lamshed for execution by the appellant, in anticipation of settlement. It was found by the trial judge that Astley understood that Lamshed would be attending to the actual conveyance of Booka.

It is instructive to consider Astley's cost entries made at that time. On 25 July he noted - "July 25 Perusing letter from John Hunt with further draft trust deed, checking same, subsequently attending Lamshed, going thru the amendments with him, satisfying ourselves on same, (it appeared he knew very little about proposal for company to become trustee of the private trust which would then be converted to public trust), arranging for him to come again tomorrow with Brenton Wood, attending Hunt telephone re several matters, see notes on file."

Astley's file notes, made at the time, record - "Brian Lamshed He seems to know very little - spoke to Brenton Wood & to discuss w/- him tomorrow 0930."

The file notes for 25 July 1984 also contain these entries - "John Hunt ( ) 1615 Told him seeing Wood tomorrow. Vendors solrs now want to settle on 31/7 also talking about an advance to one of O'Dea's coy. w/- gntee from Elders - sd that not on. Reported same to Brian Lamshed."

These notes reveal that, in relation to the sale transaction, Astley was not acting as a "mere post office box" as Mr Quick QC argued. The tenor of the notes is that he regarded himself as acting fairly generally in the matter and protecting the interests of the appellant in the matter. The notes are also inconsistent with an argument that Lamshed was playing the principal part and Astley a subsidiary part.

On the following day Astley had a conference with Wood and Lamshed. His contemporaneous notes indicate that, at that point, he was told - - the overall transaction included giving a first mortgage of $813,000 (including in respect of the plant) and a second mortgage of $490,000 plus stamp duty.

the overall concept was satisfactory to the appellant, including cash flow and getting investors.

the appellant was, to employ Wood's expression - "Happy to go into this as trustee even if no public investors come for. Satisfied as to security. We have seen all books of A/C up to a couple of months ago. So happy about assets we are taking over and the books of a/c."

Wood was recorded as also commenting - "We were always ready to come in as trustee of existing trust."The words emphasised are important because they emphasise the proposed role of the appellant as trustee and imply that it was not, in any sense, proposing to enter into the transaction as a financier."

Once again, it is instructive to record the cost entries made by Astley in relation to the conference. They are expressed as follows

"Discussions with Wood and Lamshed when Wood satisfied us that they were aware of what was happening, (they) had seen the books of account up to 2 months ago, they were satisfied about the assets that were being taken over from the private trust, auditors were auditing the a/cs to 30th June and they expected to get report shortly. See notes on file.

Attending Hunt telephone re same in the presence of Wood and Lamshed, suggesting that conf. next Thursday may not be essential and we would leave it open for the moment. He still had not seen the mortgage documents and would forward them to us as soon as they became available."

The material to which we have referred does not support the submission made by Mr Quick QC that Astley had no significant, ongoing role in relation to the property transactions or any retainer to advise or look after the appellant's interests in relation to them.

It is not disputed that Astley did not, at any stage, even after he became aware of the projected mortgage transactions at his conference with Wood and Lamshed, raise with either Wood or Lamshed the issue of the need to exclude any personal liability of the appellant under any relevant securities executed by it. The information imparted by them to him of the proposed mortgage loans should have alerted him to a need to consider such an aspect and to point out the legal implications to them.

In this regard Mullighan J found, as he was clearly justified in doing, that Oakeshott, Wells and Wood did not, at any relevant stage, ever appreciate that a trustee is personally liable for debts incurred in that capacity, unless personal liability is, in clear and unambiguous terms, excluded by the relevant loan agreement or security. He also inferred, despite the submission by Mr Quick QC that he was not justified in so doing, that it is probable that, despite his legal qualifications, Lamshed also did not appreciate that point. There was no evidence put before the trial judge to suggest that any other officer of the appellant appreciated it. In our opinion there is no reason to assume that they did.

In the lastmentioned regard Mullighan J particularly made reference to the contents of a memorandum written by Lamshed to Wells on 7 August 1984 as being strongly suggestive of such a situation - which he was fairly entitled to do.

Astley did not give any specific legal advice to Wood or Lamshed at all on 26 July 1984 and nothing was said at the time, one way or another, as to the nature of his further involvement. On the other hand, that he would continue to be involved on behalf of the appellant in a general way was implicit both from the prior correspondence with Hunt and his dealing with both Wood and Lamshed. If, as he inferred in his evidence, he had received no instructions at all, either express or implied, to do other than peruse and comment on the original draft deed, and if his role was limited to that, then it is inexplicable that Wood and Lamshed would not have made this clear to him, in relation to his continuing involvement. There is also the fact that the appellant eventually paid for the work done by him at all stages without demur.

Be that as it may, on 31 July 1984, Astley received a further letter from Hunt. The letter enclosed a series of three deeds related to the unit trust transactions for execution by the appellant. These were perused and checked by Astley, who telephoned Hunt concerning some errors detected in them. It is important to observe that, in his file note of the conversation had by him with Hunt, Astley recorded - "Are we to sign these documents w/out seeing the mtges? He does not have mtge yet." This is a clear indication that Astley then appreciated that execution of the proposed securities was part and parcel of the overall transaction, in the form in which the appellant was being invited to embark on it.

By letter dated 2 August 1984, addressed to Lamshed in the form earlier described, Astley forwarded the trust documentation received from Hunt, for execution by the appellant. His letter concludes with this paragraph - "We assume from our discussion last week that your company is probably willing to execute these deeds now notwithstanding that completion of the purchase of the New South Wales property has not been completed and we still await the forms of mortgage."

On 7 August 1984 Astley received a letter from Hunt which forwarded the various security documents for execution by the appellant. Hunt stated that the mortgages were in abbreviated form which referred to standard conditions as lodged in the Lands Titles Office. A copy of those would be forwarded to Astley direct by the solicitors for the mortgagees. They were sent to Astley from Brisbane on 7 August 1984. Those documents did not contain any provisions exempting the appellant, as trustee, from personal liability for the moneys secured.

On 9 August 1984 (prior to the receipt by him of the standard conditions later the same day) Astley telephoned Lamshed and informed him of the receipt of the security documents. He told Lamshed that he did not yet have the standard mortgage conditions and that the appellant should await their receipt before executing the documentation. Astley then wrote the following letter to Lamshed - "9th August, 1984 Mr. B.A. Lamshed, Legal Officer, Elders Trustee & Executor Co. Ltd., 27 Currie Street, ADELAIDE. S.A. 5000.

We refer to previous correspondence and enclose a copy of a letter of 6th August which we have received from Mr. Hunt of Messrs MacGillivray & Co., together with a copy of a letter from the vendor's solicitors dated 30th July, 1984.

We think the letter from Mr. Hunt is self explanatory and sets out the manner in which the documents are to be executed. We might add that the set of standard mortgage conditions referred to in the second paragraph of Mr. Hunt's letter has not yet arrived.

We are unable to check the title references as you have the Memorandum of Transfer and Contract.

So far as the forms of mortgage, stock mortgage and bill of sale

are concerned, they appear to be in a standard form. Presumably the amounts are correct but you will have particular knowledge of this and likewise we assume that the number of pigs in the stock mortgage and the plant and equipment referred to in the bill of sale are accurate.

If you have any queries regarding the documents, please let the writer know."

It is to be noted that this letter merely states that the security documents appear to be in a standard form, but makes no mention of any issue of personal liability. It was Wood's evidence, apparently accepted by the trial judge, that he took the statement that the documents were in a standard form to constitute advice from Astley that it was in order to execute them.

Despite the receipt of the standard conditions on 9 August, Astley appears to have done nothing about them until 13 August. His cost entries for that date reveal that he then considered them and related stamp duties aspects. (Those actions on his part belie the present contention that he had no retainer to consider or advise as to the security documentation.)

On the following day he telephoned Lamshed and, according to his file note "Told him mtge conditions looked quite normal Prospectus yet to be approved". Lamshed informed Astley that the security documents had been executed and sent back to Hunt. On 15 August Astley confirmed with Hunt by telephone that the security documents had in fact arrived.

Hunt telephoned Astley on 17 August and said that the solicitors for one of the mortgagees had requested certain amendments to the security documentation. The text of the desired amendments was telexed to Astley on 20 August. Astley perused and discussed them with Hunt on the telephone. He then wrote to Lamshed in these terms -

"20th August, 1984 Mr. B.A. Lamshed, Legal Officer, Elders Trustee & Executor Co. Ltd., 27 Currie Street, ADELAIDE. S.A. 5000.

We enclose a copy of a telex which we received last Friday from Messrs Ellison Hewison & Whitehead, solicitors for Invia Pty. Ltd., one of the mortgagees.

We have discussed the suggested amendments to the mortgage with John Hunt, as set out in paragraphs (A), (B) and (C) of that telex. We do not see any problem with the suggested variations and we believe Mr. Hunt is now incorporating them in the document.

With regard to the penultimate paragraph of that telex, we have asked Mr. Hunt whether the assets are sufficient to ensure the ratio is not breached and he has told us he has been so assured.

On that basis, Mr. Hunt has drafted a form of certificate to be given under the common seal of your company, as set out in a telex which we received this morning.

Assuming you are content with this situation, we enclose three copies of the form of certificate to be given under the common seal of your company. Could you please execute two of them and return them to us immediately as Mr. Hunt wishes to settle tomorrow. The third copy is for your file.

Referring to the last paragraph of the telex of 17th August, Mr. Hunt has explained to Margaret Campbell that her reading of the deed is not correct. The quarterly valuation, under Clause 15, is a book entry exercised by the Manager. An actual valuation takes place only every three years."

Astley received the form of certificate back, duly completed on the same day. On 21 August he telephoned Hunt advising of that situation and faxed a copy to the solicitor for the mortgagee. He sent original executed copies to both that solicitor and Hunt by courier that day.

Apart from receiving copies of the finally amended securities after settlement (which occurred on 22 August), nothing further appears to have happened until, on 14 September, Astley received a letter from Hunt concerning a proposed variation of the Trust Deed. Having considered the proposal Astley wrote to Lamshed advising that the variation should be agreed to. He received this back, duly executed, on 24 September and despatched it to Hunt that day.

Some further work was done by Astley in relation to the prospectus and transfer of the Young property in late September and October, but the details of this are not of significance. What is, however, of importance is that on 25 September Hunt wrote to Astley forwarding a loan agreement, memorandum of mortgage proposed to be executed by QFP Properties and other ancillary documentation in relation to a loan of $400,000 to be made by Eagle Star Nominees Ltd to the appellant as trustee of the unit trust. This loan related to the Young piggery operation and was required to discharge some existing loans of the Trust and to provide working capital.

Mullighan J found, on the evidence, that Astley had not been aware of the proposed loan until Hunt contacted him about it. When Astley spoke to Lamshed the latter asked him "to have a look at them [ie the documents related to the loan]".

All of this material was considered by Astley in detail on 2 October and certain aspects were discussed by him on the telephone with both Hunt and Lamshed. On 3 October Astley wrote a lengthy letter to the appellant (for attention of Lamshed) in which he discussed various provisions of the Loan Agreement in considerable detail. Once again, no reference was made to the need to exclude personal liability, although he did suggest various amendments to it. This is consistent with the fact that he, himself, does not seem to have directed his attention to that aspect at any stage.

It is of importance to note the express findings of the trial judge concerning the events of early October. In the course of his reasons he said - "According to Mr. Astley he examined these documents carefully because he had been asked by Mr. Lamshed to do so.

Mr. Astley gave advice, in some detail, in his letter of 3rd October 1984 about each of the documents. Of particular significance is advice which he gave about the obligations of the plaintiff under the proposed loan agreement. He gave detailed advice about most clauses including that the plaintiff was the borrower as trustee of the Trust and suggested that there be an amendment to one of the clauses, cl.16. He also advised that there should be amendments to the statutory declaration required to be executed by one of the directors of the plaintiff. Both Mr. Wells and Mr. Wood saw this letter and the suggested amendments to the documents were made. The loan agreement was executed by the plaintiff on 4th October 1984. The loan to the plaintiff was

secured by a mortgage over the Young property by QFP Properties Pty. Ltd. which was still the owner of that property.

The documentation with respect to the Eagle Star loan included a bill of sale which was again sent by Mr. Hunt to Mr. Astley on 5th October 1984 for re-execution and the completion of a statutory declaration and an affidavit by one of the authorized officers of the plaintiff. Mr. Astley presented the bill of sale to Mr. Lamshed and requested him to attend to Mr. Hunt's request and return the documents to him promptly. Upon receiving them, Mr. Astley forwarded them to Mr. Hunt."

Once again, one finds Astley playing a significant part and advising the appellant generally. Once again, there is no reference in that advice to the issue of the appellant's own liability.

On 23 October Hunt sent Astley a memorandum of transfer of the Young property from QFP Properties to the appellant. This was sent by him to Lamshed and duly executed by the company.

The foregoing facts fall to be considered against the background of Astley's evidence at trial as to the nature and extent of his retainer.

He was insistent that he had not been instructed to do other than direct his attention to the trust deed and related matters; and that the appellant itself was attending to the conveyancing aspects, including the mortgages. He asserted that his reference to various security documents being in standard form was intended to indicate that he had not been through them in detail. He testified that, had he been asked to give advice concerning the security documents, he would have sought instructions to include a clause limiting liability to the trust assets and excluding any personal liability. He said that he did not give that advice - "Because it was not part of my job to have anything to do with the mortgages or the transfer or the contract, or the bill of sale or the stock mortgage."

The same situation applied, he testified, to the standard conditions, when they arrived. He further said that he regarded the later, telexed, proposed changes to the mortgages as "quite inconsequential amendments".

Astley agreed that he had been asked to look carefully at the Loan Agreement and had done so. He believed that he would have noticed any omission in it of any limitation of personal liability and would have appreciated the need to exclude it.

In examination-in-chief, counsel for the respondents skirted somewhat gingerly around this topic. However, it was squarely addressed in cross-examination. Astley, in effect, sought to derive comfort from Clause 16 of the Loan Agreement, which, so far as was material, provided as under - "16. (a) The Borrower discloses that it enters into this Deed and the Securities as trustee of The G.G.I. Rural Income and Growth Trust (hereinafter called 'the Trust') being a Trust established by a certain Deed of Trust dated 6th August 1984 and made between Golden Grove Industries Limited as Manager of the first part the Borrower as Trustee of the second part and the several persons therein mentioned of the third part(hereinafter called 'the Trust Deed'). All parties declare that their paramount intention is

that the Borrower enters into this Deed as such trustee to the intent that the Principal Sum should, forthwith upon its being advanced or provided, become part of the assets of the Trust and be applied for the benefit of the Trust and, for that purpose and in consideration of that benefit, that the assets of the Trust should be charged in favour of the Lender with the due payment and performance of all liabilities and obligations imposed on the Borrower by this Deed of Securities."

In the course of his cross-examination Astley seems to suggest that this was adequate to limit liability to the trust assets. However, such a contention cannot withstand scrutiny. On the face of it the clause does no more than ensure that, from the lender's point of view, the loan is to be a charge on trust assets, and facilitates recourse to them. Nowhere is there any express or implied exclusion of liability on the borrower's personal covenant.

At the end of the day the inference, which appears to have been accepted by the trial judge, is that Astley simply overlooked the problem of liability on the covenant.

As to the wider issue of Astley's evidence concerning a lack of instructions when he looked at the earlier security documents, it must be said that this sits uneasily with the events set out above, including the fact that virtually all of his activities were duly recorded in his cost entries, for which appropriate charges were made to the appellant.

In the course of his reasons Mullighan J made the following express findings - "The plaintiff's case is that there was, in effect, one transaction. From the time the defendants were instructed on 31st August 1983 until late in 1984, the plaintiff had retained them as its solicitors in relation to all aspects of the plaintiff's involvement in the Trust and Mr. Astley had a duty to exercise care and skill with respect to each matter which arose over that period and to properly and adequately advise the plaintiff with respect to each of them. The defendants contest that approach. They contend that the terms and limits of the retainer must be considered at each relevant stage over this period and that upon doing so, it may be seen that Mr. Astley had been instructed to do very little.

In considering these matters, it is appropriate to have regard to the experience and expertise of the plaintiff and what action it took independently of the defendants. These matters are also of importance in determining the nature and extent of the duty of care and whether Mr. Astley was in breach of it. If any authority is required for such a common sense proposition, it may be found in Ormindale Holdings Ltd. v. Ray & Ors. (1980) 116 D.L.R.(3d) 346 at p.357 and Carradine Properties Ltd. v. D.J. Freeman & Co. 96. 1 PN 41. The plaintiff had considerable experience as a trustee and in administering trusts in accordance with the instruments creating them. It employed Mr. Lamshed. There was no evidence to suggest that he was not a competent and experienced solicitor in the fields in which he worked. The plaintiff had staff sufficiently competent to undertake conveyancing. Mr. Wood had considerable expertise in commercial matters and expert advice as to financial and rural matters was available to the plaintiff from within the Elders Group.

Also the relationship between the parties in the past is of significance. The defendants regularly acted for the plaintiff. Mr. Astley was aware of the usual business of the plaintiff. The plaintiff had sought and relied upon advice of members of the defendant's firm, including Mr. Astley, for many years which was known to him. He expected that the plaintiff would value and take any advice that he gave.

Having regard to all of these matters, the only sensible

conclusion is that the scope of the duty which Mr. Astley owed to the plaintiff included the duty to give the advice which it appeared to need regardless of whether or not it had been specifically requested: Carradine Properties Ltd. v. D.J. Freeman & Co. (supra) per Donaldson L.J. at p.41. The instruction in the letter of 31st August 1983 to '... examine the Deed and let us have your comments on it ...' obliged Mr. Astley to advise as to all matters which a competent and experienced solicitor of his standing would expect the plaintiff would need to know relative to its obligations as trustee and the liabilities which it could incur if it became the trustee. These matters included whether the plaintiff would be exposed to personal liability for any excess of liabilities over assets of the Trust should it fail, that all relevant documentation should, in the plaintiff's interest, exclude such personal liability and other particular matters relating to that question. This duty also included duty to give advice about the documentation relating to the mortgages with respect to Booka and the Young property and other security documents in the context of the need to exclude personal liability and further to advise as to the need to define the relationship between the plaintiff as trustee and Golden Grove Industries Pty. Ltd. as manager so as to exclude personal liability of the plaintiff for debts incurred by the manager.

It is, and was at the time, well known that a trustee is personally liable for debts which he incurs in that capacity unless personal liability is expressly excluded in the relevant transaction, e.g. a loan agreement or a memorandum of mortgage, and care must be taken to ensure that such exclusion is expressed in clear and unambiguous terms:

In my view, Mr. Astley ... failed to advise the plaintiff of the need to protect itself from personal liability for the debts of the Trust. He knew of the proposal to purchase Booka and to borrow a substantial amount for that purpose before the trust deed was executed. He had perused the trust deed and given some advice about it. He had perused the memoranda of mortgage with respect to Booka and had given some advice, namely that they were in standard form. He continued to act for the plaintiff over the total period. Whilst it must be acknowledged that the plaintiff undertook some tasks independently of the plaintiff and that the instructions of the plaintiff lacked precision, Mr. Astley was sufficiently aware of each transaction to be able to appreciate the need for the plaintiff to be protected against personal liability. He should have appreciated that the plaintiff needed to know that it should be protected from such risks and he was in breach of his duty to the plaintiff in failing to give the appropriate advice. It was a simple matter to draft appropriate amendments to the trust deed so as to make it clear to anyone who intended to deal with the plaintiff and chose to read the deed, that the liability of the plaintiff extended only to the trust assets. It was a simple matter to advise the plaintiff to insist upon appropriate amendments to the mortgage documents and any other security documents to which it might become a party. It was also a simple matter to advise the plaintiff of the need to exclude personal liability with respect to each transaction into which it entered and to adequately and carefully define its relationship with the manager so that it did not become personally liable for any of the trading debts of the Trust incurred by the manager.

I accept that the plaintiff did rely upon Mr. Astley and if he had given the advice which he should have given, either the plaintiff would have insisted upon the exclusion of personal liability in all relevant documents or would not have agreed to be the trustee. I accept Mr. Wood's evidence in that respect and I also accept that Mr. Wells would not have permitted the execution of the trust deed and other documents if he had been aware that the plaintiff would be exposed to personal liability. Furthermore, I find that this breach of duty was causative of losses suffered by the plaintiff to the extent which is discussed later in these

It is beyond question that all of these findings (and particularly the findings of fact included in them) were fairly open to the trial judge on the evidence. In our opinion there is nothing which has been put by Mr Quick QC which should be accepted as a basis for impugning them. It is clear that the trial judge accepted the appellant's submission that there was, in effect, one transaction in relation to which Astley had a duty to advise the appellant. In our opinion that finding has not been shown to be wrong.

By the end of December 1984, it became obvious to the appellant that the unit trust was in financial difficulty. Early in 1985, following a conference in Brisbane between Wood, the directors of the manager and the trust auditors, it was apparent to him that the trust could not continue to operate. On 15 March 1985 steps were taken to terminate it. The appellant took over its management and, ultimately, a winding up resolution was confirmed by the Supreme Court of Queensland. A realisation of assets eventually resulted in liabilities exceeding assets by a considerable margin and the appellant was called upon to make good the shortfall by virtue of its personal liability under the relevant security documents executed by it.

Initially, the winding up was handled by Bacon. However, due to problems related to realisation of assets and legal issues concerning the activities of O'Dea, the administration became very complex and embroiled in litigation. James was therefore retained to attend to the work, at a not inconsiderable cost which had to be borne by the appellant.

This result precipitated the present proceedings, in which the appellant claimed its net losses arising from its role as trustee and claimed interest, by way of damages, from the respondents. That claim was based both on alleged breach of contract and professional negligence. Mullighan J upheld that claim, but also found the appellant guilty of contributory negligence. He apportioned liability on the basis that each party was equally negligent and awarded the appellant $718,418.89 by way of damages and interest on that footing.Respondent's appeal against finding of negligence and breach of contract

In the course of dealing with the trial judge's findings we have already indicated our agreement with his conclusions on some points and our agreement with his findings that Astley was in breach of the duty which he owed to the appellant.

It is appropriate to say here that the judge accepted that all witnesses before him were truthful, and did their best to recall accurately the relevant events. We proceed on that basis, and see no reason to doubt that conclusion. In particular, in what follows we see no reason to doubt the truthfulness of the evidence which Astley gave.

We now deal with particular submissions advanced upon the hearing of the appeal.

The respondent argued that Astley was under no duty to advise the respondent in relation to its exposure to personal liability as trustee of the GGI Pig Trust. The submission was that there was no request to advise generally on the Trust deed; that the matter of personal liability was elementary; that Astley had no reason to think that the appellant, employing Lamshed and competent staff, was unaware of its exposure, and that it should have been clear to the appellant that Astley's advice was limited to matters relevant to compliance with the Corporations Law.

In our opinion this submission is, by and large, answered by the findings of the trial judge set out above. In particular, we refer to and adopt the conclusion that "... the duty which Mr Astley owed to the plaintiff included the duty to give the advice which it appeared to need regardless of whether or not it had been specifically requested..."

This conclusion flows from a number of matters.

First of all, there is the fact that the firm of Finlaysons was regarded as the appellant's solicitors, the firm to which it turned regularly for advice, even though the appellant was an experienced and skilled trustee and employed its own solicitor. It seems clear to us that the relationship was one in which the appellant looked to Finlaysons for general advice and, as is not uncommon, for Finlaysons' advice on the matters which it needed to consider. We do not accept, and nor did the trial judge, that the relationship was one in which Finlaysons generally or on this occasion gave advice only on specifically identified matters.

In our opinion the circumstances make it clear that the appellant was relying upon Astley to give it such advice as Astley might consider it required. In that aspect we adopt the trial judge's findings set out above.

In our opinion the very generality of the terms in which the matter was first referred to Astley made it incumbent upon him to limit the scope of the advice which he was to give, if some particular limit was to be set to that advice.

It is also our opinion that the facts indicate that Astley did not regard himself as playing a narrowly confined part in the matter. He did not, of course, deal with all aspects of the appointment of the appellant as trustee of the GGI Pig Trust and of the purchase of land and borrowings. But nor did he act only in response to specific instructions to perform defined tasks. There was a sensible division of labour between Astley and Lamshed, but it was not one which suggests that Astley's duty would be confined to the giving of advice on matters on which his advice was sought in terms.

It is true that the appellant was an experienced corporate trustee, holding itself out as such and willing to act for reward. But, on the judge's findings, this was the first time that the appellant had acted as trustee of a trading trust, and this was known to Astley. There was no evidence led before the trial judge to the effect that a reasonably competent trustee such as the appellant would have been aware of the need to protect itself against personal liability. The judge found in terms that neither Oakeshott, Wells nor Wood were aware of the need, and concluded that Lamshed was unaware of this. While the liability of a trustee for liabilities undertaken by it is well known by experienced solicitors, that fact, and the desirability of excluding personal liability, were not, in our opinion, so obvious and basic that the appellant could be expected to be aware of them and, without any prompting from the solicitor from whom advice was sought, to attend to them adequately.

Granted, the issue of protection against personal liability did not arise when the appellant was appointed trustee. A provision in the trust deed excluding personal liability would not have protected the appellant. But, in our opinion, a proper consideration of the client's interests required of Astley that, at the least, he confirm that the appellant was aware of the issue and would, when the need arose, either itself ensure that liability was excluded or seek further advice from Astley. It is not uncommon for a solicitor to confirm that a client is in fact aware of matters of which the solicitor considers it is or should be aware. It was Astley's duty to go that far at least.

We have already made the point that in our opinion the need for the appellant to protect itself was not so obvious that Astley was entitled to pay no attention to it. As to Lamshed, it is clear in our opinion that he played a role subsidiary to that of Astley, and that his limited involvement did not remove the obligation upon Astley to consider the range of matters which should be brought to the appellant's attention in connection with the proposed assumption of office as trustee.

In our opinion it follows from this that there was no reason why the appellant should have understood Astley's consideration of the matter and advice to be narrowly confined. Quite the contrary, it was entitled to assume that he would bring to its attention any matters of importance. It would, of course, be different if the complaint was that Astley had not given advice on a peripheral matter or on some highly specialised point or some aspect of the matter which would not usually arise.

For those reasons we conclude that it was the duty of Astley to advise the appellant, in connection with its appointment as trustee, of its exposure to personal liability should it undertake liabilities as trustee and to advise it of the need to exclude that liability. He was, in our opinion, under that duty even if his advice was sought only in connection with the trust deed. Had that advice been given, the appellant would have been in a position to protect itself.

In our opinion Astley's involvement in the purchase of Booka and in the security arrangements into which the appellant entered was sufficient, even if his retainer had been limited to advice upon the trust deed, to require him to advise the appellant of the desirability of excluding personal liability. At the least his later involvement in the purchase of Booka, which we have outlined above, should have made it clear to him that as trustee the appellant was about to incur substantial liabilities. In our opinion, bearing in mind that the purchase of Booka was under consideration before the trust deed was executed, the prospective purchase was sufficient, if more was required, to require that Astley advise the appellant about its own exposure.

But we would go further than that. In our opinion Astley's involvement in the purchase and security arrangements was sufficient, in the circumstances of the relationship between the appellant and Finlaysons, to require of Astley that he advise the appellant in relation to the purchase and security documents of the need to protect itself.

It is not necessary to make a precise finding about the scope of Astley's function in relation to the purchase and giving of security. It suffices to say, as we said earlier, that Astley was not a "mere post office box" in relation to these matters and that he was acting fairly generally in relation to these matters. As we understand the facts, Lamshed was playing the subsidiary role, attending to details, and Astley was playing the leading role. In our view the dealings between Astley and the appellant would have led the appellant to conclude, quite reasonably, that if there was an aspect of the purchase to which its attention should be drawn as a matter of importance, as distinct from some detail of the purchase, then Astley would do so.

In that connection we regard the change of Lamshed's status on 1 March 1984 from employee to independent solicitor as immaterial. On the evidence, it had no effect on the manner in which, as between themselves, Lamshed and Astley dealt with the trust deed or the purchase of Booka. The reassurance which Wood gave to Astley on 11 April 1984 that Finlaysons remained the appellant's "principal solicitors", while not apparently directed to these specific transactions, confirms the view that in substance nothing had changed.

The manner in which Astley dealt with Hunt and with the appellant in connection with the purchase of Booka gave every indication that Astley was acting for the appellant quite generally. Indeed, as we have noted, Astley agreed in evidence that if his advice had been sought in connection with the security documents, he would have advised that personal liability should be included. He did not give that advice because, in his view, it was not part of his job to do so. In our opinion it was. We add, that in this context Astley did not suggest that such advice was unnecessary or superfluous having regard to the appellant's own knowledge or its use of Lamshed's services.

In our opinion it matters not how Astley came to be involved in the purchase of Booka, whether at the instance of Hunt or of the appellant. Nor does it matter that the appellant made no specific request for advice in relation to the purchase. The involvement of Astley in the purchase is explicable only on the basis that he was, at least in a general way, acting in the interests of the appellant. In our opinion it was incumbent upon Astley to make clear the limits to his retainer, if there were limits. The issue of personal liability was neither a peripheral matter nor the sort of matter on which one would expect a specific request for advice if it was to be considered. Under the circumstances, the appellant acted reasonably in assuming that Astley would advise it on matters on which it needed advice, such as the issue of personal liability. Even if Astley thought that his retainer did not extend to that matter, as he said in evidence, the manner in which he involved himself gave rise to a reasonable belief by the appellant that he was considering its interests. His involvement was, in our opinion, inconsistent with the limited view of his retainer which he described in evidence.

For those reasons we would dismiss the appeal against the trial judge's finding that Astley was in breach of the duty which he owed to the appellant.The facts and findings on the issue of contributory negligence

AUSTRUST LTD v ASTLEY & ORS No. SCGRG 89/970 Judgment No. 5681 Number of pages - 43 Negligence

At a glance

Court

Decision date

Before

Source

Judgment (332 paragraphs)

AUSTRUST LTD v ASTLEY & ORS No. SCGRG 89/970 Judgment No. 5681 Number of pages - 43 Negligence (1996) 67 SASR 207 [1996] SASC 5681 (1 July 1996)

Parties

Cases Cited (9)