Torts - Negligence - Whether defendant negligent in preparation of advice regarding plaintiffs' prospects of successful claim against R & I Bank for alleged breach of contract and negligence - Whether defendant negligent in failing to deliver opinion in a timely fashion - Whether plaintiffs suffered any loss - Turns on own facts

Baltic Shipping Co v Dillon [1993] HCA 4; (1993) 176 CLR 344

Commonwealth Bank of Australia v Smith [1991] FCA 375; (1991) 102 ALR 453

Commonwealth of Australia v Amman Aviation Pty Ltd [1991] HCA 54; (1991) 174 CLR 64

Cornish v Midland Bank Plc [1985] 3 All ER 513

Darvall McCutcheon (a firm) v HK Frost Holding Pty Ltd (in liq) [2002] VSCA 85; (2002) 4 VR 570

Hammond Worthington v Da Silva [2006] WASCA 180

Heywood v Wellers (a firm) [1975] EWCA Civ 11; [1976] QB 446

Instant Nominees Pty Ltd v Redman [1987] WAR 218

James v ANZ Banking Group Ltd [1986] FCA 41; (1986) 64 ALR 347

Kitchen v Royal Air Forces Association [1958] 1 WLR 563

Lenin v Australian Bank Ltd (Unreported, NSWSC, 21 June 1991)

Metha v Commonwealth Bank of Australia (Unreported, NSWSC, 27 June 1990)

Nikolaou v Papasavas Phillips & Co (No 2) [1989] HCA 11; (1989) 166 CLR 394

Poseidon Ltd & Sellars v Adelaide Petroleum NL [1994] HCA 4; (1994) 179 CLR 332

Ralik Pty Ltd v Commonwealth Bank of Australia (Unreported, NSWSC, 14 August 1990)

Smith v Bank of Western Australia Ltd [2010] WASCA 15

Smith v Commissioners of the Rural & Industries Bank of Western Australia [2009] WASC 100

Smith v McCusker QC [2000] WASCA 320

Smith v McCusker QC [2005] WASCA 226

Smith v McCusker QC [2010] WASCA 55

Smith v McCusker QC [No 4] [2009] WASC 101

Smith v McCusker QC [No 6] [2009] WASC 381

Stanton v Australia & New Zealand Banking Group Ltd (1987) ATPR 48-191

1 The plaintiffs, Mr James Smith and Mrs Libby Smith, were farmers. The defendant, Mr Malcolm McCusker QC, is a legal practitioner. In 1986, in accordance with the terms upon which legal aid had been granted to Mr and Mrs Smith by the Legal Aid Commission of Western Australia, Mr John Gilmour, who was then a solicitor acting on behalf of Mr and Mrs Smith, retained Mr McCusker QC to provide advice in relation to a claim which Mr and Mrs Smith had brought against the Commissioners of the Rural and Industries Bank of Western Australia Ltd (the R & I Bank). Mr and Mrs Smith claim that as a result of Mr McCusker QC's negligence and delay in the provision of advice, they lost the opportunity to pursue their claim against the R & I Bank in a timely fashion and with legal representation. They claim damages.

2 For the reasons which follow, I have concluded that Mr McCusker QC was not negligent in the advice which he gave. I have also concluded that any reasonable barrister provided with the instructions given to Mr McCusker QC would have advised Mr and Mrs Smith that they had no reasonable prospect of succeeding in their claim against the R & I Bank, and that even if they did succeed, they had no reasonable prospect of establishing an entitlement to any more than nominal damages. I have also concluded that the advice given by Mr McCusker QC did not cause Mr and Mrs Smith to lose the benefit of legal aid, or cause them to forego their claim against the R & I Bank, which was of no value in any case.

3 I have concluded that Mr McCusker QC breached his obligation to provide his advice within a reasonable time, but I have also concluded that the delay in the provision of his advice did not cause Mr and Mrs Smith to suffer any loss or damage.

4 In order to provide a context for the enunciation of the issues that require determination, and the course that will be followed in these reasons, it is necessary to commence with a brief overview of the sequence of events giving rise to these and other related proceedings, and to chart the history of the various proceedings commenced by Mr and Mrs Smith. In the section which follows I will refer only to significant events which are not contentious. It will be necessary to return to assess a number of these events in much greater detail later in these reasons, and to make findings in respect of the facts that are in contention between the parties.

5 In August 1952, Mr Smith entered in a lease of an area of crown land situated near Borden in the south-west of Western Australia. The land comprised 2,684 acres and had not previously been developed for farming use. The term of the lease was 29 years. The lease also provided Mr Smith with the option to purchase the land if certain conditions relating to its development were satisfied. I will refer to this land as 'the farm'.

6 In 1962 Mr and Mrs Smith married. In 1969 they moved to the farm but did not operate it as a farm on a full-time basis.

7 In about February 1976, Mr and Mrs Smith resolved to develop and operate the farm on a full-time basis. The farm was partly cleared, and a portion of it was used for cropping purposes. Other parts of the farm were used for the raising of pigs.

8 In early 1977, Mr and Mrs Smith wished to acquire a new and larger tractor for use in the development of their farming operations. They approached their bank, the National Bank of Australia (the NAB), to borrow the funds required for a deposit on the tractor, which was to be acquired under a hire purchase agreement. That bank refused their request. They then approached Mr Richard Danks, the manager of the Ongerup branch of the R & I Bank to request the funding that had been refused, and with a view to moving their banking business to the R & I Bank.

9 The R & I Bank agreed to provide banking services to Mr and Mrs Smith, and to advance $7,000 by way of a loan, being the amount required for the deposit on the tractor. The R & I Bank also agreed to provide an overdraft facility up to an amount of $3,000 by way of working capital for the farming operation. In the course of dealings between Mr and Mrs Smith and Mr Danks, a cash flow budget for the farming operation for the year April 1977 to March 1978 was prepared.

10 In May 1977, the Smiths entered into a hire purchase agreement with the Commonwealth Development Bank relating to a new heavy duty tractor. The tractor was delivered around that time.

11 During 1977, Mr and Mrs Smith exceeded the amount of the overdraft approved by the R & I Bank. In early 1978, in the context of an annual review of their account by the bank, the Smiths requested an increase in their overdraft to the amount of $14,000. That request was declined. Mr and Mrs Smith then applied to the Rural Adjustment Authority and to the Commonwealth Development Bank for financial assistance. Both applications were refused. However, in July 1978, the R & I Bank approved a temporary increase in the overdraft facility.

12 Later in 1978, Mr and Mrs Smith negotiated with Western Livestock, stock agents, for the provision of financial assistance. Around the same time, farm advisers employed by the R & I Bank visited the farm and recommended that the overdraft facility be increased to a limit of $7,000.

13 In January 1979, the R & I Bank increased the overdraft facility to a limit of $10,000.

14 In September 1979, Mr and Mrs Smith sought and received legal advice in respect of a possible cause of action against the R & I Bank. In November 1979, the Legal Aid Commission granted legal aid to Mr and Mrs Smith for the purposes of the further investigation and pursuit of that cause of action.

15 In December 1979, Mr and Mrs Smith requested an advance of $36,000 from the R & I Bank by way of loan. The bank refused that request.

16 In July 1980, Mr Barry Rowland QC provided advice to solicitors retained by Mr and Mrs Smith in relation to their claim against the bank. In October 1980, Mr Rowland QC provided a preliminary opinion with respect to prospects and a draft statement of claim.

17 In 1981, Mr and Mrs Smith acquired freehold title to the farm.

18 In May 1981, Mr Rowland QC provided further advice and a revised statement of claim. In September of that year, Mr Rowland QC provided advice on the quantum of damages Mr and Mrs Smith might receive from the R & I Bank.

19 In December 1981 the R & I Bank foreshadowed issuing demand against Mr and Mrs Smith for repayment of their debt to the bank. In January 1982, the Legal Aid Commission extended aid to Mr and Mrs Smith for the purposes of commencing proceedings against the bank. Aid was granted to cover all matters up to, but not including, listing the matter for trial.

20 In August 1982, Mr and Mrs Smith commenced proceedings against the R & I Bank claiming damages for breach of contract and negligence. There were various interlocutory steps in those proceedings in succeeding years.

21 In October 1982, Mr and Mrs Smith applied to Town and Country Building Society (the Building Society) for debt reconstruction finance, in an amount of $135,000, in order that they could pay out their debt to the R & I Bank. The Building Society approved that request and in January 1983 an amount of approximately $135,000 was advanced by the Building Society to enable Mr and Mrs Smith to pay out creditors including the R & I Bank (approximately $80,000 in total) to acquire some capital items (approximately $23,000), and to provide working capital (approximately $30,000). During 1984, the Building Society made a further advance of $20,000 to enable Mr and Mrs Smith to carry on.

22 Mr and Mrs Smith did not make the repayments required under the terms of the loan provided by the Building Society. In April 1985, the Building Society issued notice of demand requiring repayment of the loan in full. The Building Society exercised its rights as mortgagee of the farm and attempted to sell the property by auction in May 1986. However, no bids were received at a level acceptable to the Building Society and the property was passed in.

23 In the meantime, in August 1985, Mr and Mrs Smith had instructed a new solicitor to represent them in their proceedings against the bank, namely Mr John Gilmour (as Justice Gilmour then was) of Gilmour Richardson. In August 1986, Mr Gilmour retained Mr McCusker QC to provide an opinion on the prospects of success in the claim against the R & I Bank. During 1987 and 1988 various communications, conferences and correspondence took place between Mrs Smith, Mr Gilmour and Mr McCusker QC. I will set out the detailed findings I have made in relation to those matters later in these reasons.

24 In September 1988, the Building Society again issued a notice of demand to Mr and Mrs Smith, requiring payment of the debt in full. The Building Society, in its capacity as mortgagee of the farm, arranged another auction of the farm to take place on 30 March 1989.

25 On 21 March 1989, Mr McCusker QC provided a draft of his advice to Mrs Smith for her review. That advice was to the effect that there were poor prospects of success in the claim against the bank and that, even if the claim succeeded, the damages recovered would not be substantial. Mr McCusker QC made some changes to the draft opinion, and on 28 March 1989 provided a signed version of the opinion to Mr Gilmour, who in turn provided a copy of the opinion to the Legal Aid Commission on 29 March 1989.

26 In the meantime, Mrs Smith had convened a media conference in which she made a number of statements critical of Mr McCusker QC.

27 On 16 May 1989, the Building Society advised Mr and Mrs Smith that the property had been sold by private treaty. The proceeds of sale were insufficient to satisfy the entire debt due to the Building Society. The outstanding balance due to the Building Society was later written off by the Society as a bad debt, and Mr and Mrs Smith were not required to make up the shortfall.

28 In 1989, Mr and Mrs Smith engaged new solicitors to represent them in their claim against the bank - Messrs Haynes Robinson of Albany. They retained Mr Daryl Williams QC to provide advice. In June 1990, Mr Williams QC provided advice on the prospects of Mr and Mrs Smith succeeding in their claim against the bank which was more positive than that provided by Mr McCusker QC.

29 In March 1991, Mr David Van Zalm of junior counsel, provided an opinion on prospects, which was also positive. Later that year, the Legal Aid Commission extended aid for the purposes of providing Mr and Mrs Smith with continuing legal representation up to and including trial, and also for the purpose of obtaining advice from senior counsel on the quantum of damages likely to be recovered.

30 In August 1993, Mr Peter Nisbet QC provided an opinion on quantum.

31 In August 1994, the Legal Aid Commission terminated the grant of aid to Mr and Mrs Smith. Mr and Mrs Smith requested reconsideration of the termination of aid. In October 1994, the Legal Aid Commission advised Mr and Mrs Smith as to the reasons why aid had been terminated and declined to reinstate the grant of aid. In November 1994, Mr and Mrs Smith requested further reconsideration of the grant of aid, although in the result did not pursue their request for a review of that decision.

32 In March 1995, Mr and Mrs Smith commenced these proceedings. Mr Gilmour (who had by then been appointed Queen's Counsel) was named as the second defendant. At about the same time, Mr and Mrs Smith commenced proceedings claiming damages from the Building Society and various related entities and individuals. In April 1997, Master Bredmeyer granted summary judgment in favour of the defendants in those proceedings. In September 1997, Master Sanderson entered judgment in favour of Mr McCusker QC and Mr Gilmour QC in these proceedings.

33 Mr and Mrs Smith appealed from the decisions dismissing their claims against the Building Society and others, and against Mr McCusker QC and Mr Gilmour QC. In 1997, the Full Court dismissed their appeal from the decision dismissing their claim against the Building Society and others. Mr and Mrs Smith applied for special leave to appeal to the High Court of Australia from that dismissal. Special leave was refused.

34 In October 2000, the Full Court dismissed the appeal by Mr and Mrs Smith in these proceedings insofar as their claim against Mr Gilmour QC was concerned, but upheld the appeal in relation to the proceedings against Mr McCusker QC. It will be necessary to consider in some detail the precise basis upon which the Full Court permitted these proceedings to proceed.

35 In August 2003, Master Sanderson again entered summary judgment in favour of Mr McCusker QC. In 2005, the Court of Appeal allowed an appeal by Mr and Mrs Smith against that decision, and again set aside the summary judgment.

36 In 2006, Mr McCusker QC joined the R & I Bank as a third party to these proceedings (albeit that by then, the legal entity responsible for the liabilities of the R & I Bank was different - now being the Bank of Western Australia Ltd). In 2009, solicitors acting on behalf of the defendant in the proceedings which Mr and Mrs Smith had commenced against the R & I Bank in 1982 moved to dismiss those proceedings for want of prosecution. At the same time, application was made to dismiss the third party proceedings against the bank in this action.

37 No substantive step had been taken by any party in the proceedings commenced by Mr and Mrs Smith against the R & I Bank in 1982 since February 1986. The only document filed on behalf of Mr and Mrs Smith since that time was a notice of change of solicitors filed in 1991. In April 2009, I dismissed those proceedings for want of prosecution, and on the further grounds that the Smiths' election to pursue these proceedings against Mr McCusker QC amounted to an election to discontinue the pursuit of their claim against the bank, and that the continued pursuit of their claim against the bank would constitute an abuse of process (Smith v Commissioners of the Rural & Industries Bank of Western Australia [2009] WASC 100). At the same time, I dismissed the third party claim brought by Mr McCusker QC against the bank in these proceedings (Smith v McCusker QC [No 4] [2009] WASC 101). An appeal by Mr and Mrs Smith against the dismissal of their claim against the bank was dismissed in February 2010 (Smith v Bank of Western Australia Ltd [2010] WASCA 15).

38 In the latter part of 2009, Mr and Mrs Smith sought to amend their statement of claim to reintroduce a number of issues which the Full Court had determined were unarguable in its decision delivered in 2000 (Smith v McCusker QC [2000] WASCA 320). I disallowed those amendments (Smith v McCusker QC [No 6] [2009] WASC 381). The appeal brought by Mr and Mrs Smith from that decision was dismissed by the Court of Appeal in the month preceding the commencement of the trial of these proceedings (Smith v McCusker QC [2010] WASCA 55).

39 The plaintiffs have represented themselves at all times in these proceedings. More particularly, Mrs Smith has prepared all relevant court documents and made all submissions on behalf of herself and Mr Smith. In those circumstances, subject, of course, to the need to ensure that Mr McCusker QC was aware of the case he was called upon to meet, and given adequate opportunity to meet that case, it is appropriate to construe the pleadings filed on behalf of Mr and Mrs Smith with a degree of latitude. The issues that require determination in the case are to be derived from a liberal construction of the statement of claim, read in the context of the opening and closing submissions presented on behalf of Mr and Mrs Smith.

40 However, there is a constraint upon the construction properly given to the statement of claim arising from prior appellate decisions in this case, particularly the decision of the Full Court delivered in 2000.

41 Mr and Mrs Smith filed and served the statement of claim which was operative at the time of trial in May 2007. Mr McCusker QC foreshadowed an application to strike out portions of the statement of claim, in part because it was inconsistent with prior appellate rulings, including in particular the judgment of the Full Court in 2000. Given the considerable delays which had resulted from previous interlocutory disputes in the case, I was concerned to try to ensure that the case went to trial without further delays of that kind. I therefore directed that any application to strike out the statement of claim be reserved to be heard at the time of trial, and further indicated that the proper ambit of the statement of claim would, of course, be constrained by prior appellate rulings in these proceedings, including the reasons of the Full Court given in 2000. The trial was conducted on the basis that, given that the parties were obviously bound by prior appellate rulings, it would be unnecessary for me to rule formally upon the objections to the statement of claim which had been foreshadowed.

42 It is appropriate to first consider the constraints imposed by previous appellate rulings in this case before considering the statement of claim and the submissions advanced on behalf of Mr and Mrs Smith.

43 Because of difficulties arising from the way in which Mr and Mrs Smith had presented their case to Master Sanderson, the appeal to the Full Court proceeded by way of the determination of a number of questions which were settled in consultation with the parties prior to the hearing of the appeal. It is unnecessary to refer to some of those questions, which are not germane to the issues tried before me. One of the questions posed for the determination of the court was whether various matters set out in the then statement of claim disclosed a cause of action in negligence against Mr McCusker QC.

44 In addressing that question, Templeman J (with whom the other members of the court agreed), analysed the many particulars of negligence that had been advanced. In the course of that analysis, he referred to what he took to be the case advanced by Mr and Mrs Smith in the following terms:

The point here, I think, is that the Smiths did not just want a loan. They also wanted advice about the viability of their proposed operations, in respect of which they sought finance. They did not want to borrow money on a basis which would result in their becoming hopelessly indebted to the bank [92].

45 At another point, Templeman J construed the Smiths' case in the following terms:

The reality, I think, is that the statement of claim did not reflect the Smiths' case, as it appears in the proof of evidence given to Mr McCusker. The Smiths did not rely on the budget; they relied on the bank to provide a proper budget. They went to the bank to obtain finance for a development programme which they did not have the expertise to implement unaided. They wanted advice about how they should plan their programme, and they wanted funds to implement it [137]. (Note: the statement of claim referred to is the statement of claim in the proceedings against the R & I Bank)

46 In that context Templeman J concluded that it was arguable that Mr McCusker QC failed to address the issues raised in Mrs Smith's proof of evidence by focusing on reliance on the budget which was not a real issue.

47 It is important to note that these observations were made in the context of a consideration of whether pleaded facts were capable of giving rise to an arguable case. When pleading issues of that kind arise, various assumptions are made, including the assumption that the facts pleaded are true. Views expressed by the Full Court in that context are not to be construed as predicating the conclusion properly reached after a trial, at which evidence is adduced and findings of fact are made on the basis of that evidence.

48 Templeman J also concluded that, on the various assumptions made for the purposes of the pleading issue before the Full Court, there was an arguable case of negligence in the form of failure to read and appreciate the instructions given to Mr McCusker QC.

49 Templeman J also concluded that there was an arguable case relating to delay in delivery of the opinion. He also considered that the facts asserted in the version of the statement of claim presented to the Full Court gave rise to an arguable case to the effect that by reason of the negligence of Mr McCusker QC, the Smiths had lost their grant of legal aid and thereby their opportunity of recovering damages from the R & I Bank.

50 In answering the various other questions posed, Templeman J concluded that it was not open to Mr and Mrs Smith to pursue claims against Mr McCusker QC on the basis of alleged conflicts of interest, fraudulent misrepresentation or defamation. As I have mentioned, the court concluded that there was no arguable case against Mr Gilmour QC, and the appeal of Mr and Mrs Smith, insofar as it related to the claim against him, was dismissed.

51 Following publication of the reasons of the Full Court, Mr McCusker QC moved to set aside some of the orders made on the ground that he was not given an opportunity to be heard in relation to those matters. The court rejected that motion. In the reasons given, the Full Court pithily enunciated its view of the case which it apprehended Mr and Mrs Smith wanted to run:

The Smiths contend that if the respondent had discharged his duty to them, he would not have focused on the insuperable hurdles in the case as pleaded, but would have identified and explored the true case. This no doubt involved an expectation by the Smiths that the [R & I] Bank would provide a proper budget. However, on our view of the Smiths' case, that was not the full extent of the Bank's obligation. On their case, the Smiths were relying on the bank for advice and guidance generally: see par 137 of the previous reasons. That being so, the Smiths' pleading did not necessarily require an allegation that their loss was caused by the bank's failure to provide a proper budget.

It is not for the court to formulate a pleading for the Smiths. However, it may be acknowledged that a failure by the bank to give general advice and guidance, when relied on to do so, has the potential to found a claim for loss [11] - [12]. (Smith v McCusker QC [2001] WASCA 85)

52 The Full Court allowed the appeal of Mr and Mrs Smith, insofar as it related to Mr McCusker QC, on the basis that the thrust of their case was as enunciated, together with the allegation that Mr McCusker QC was negligent by failing to properly read and appreciate his instructions, and in breach of duty by delaying the delivery of his opinion. In all other respects, the Full Court considered that the matters asserted by Mr and Mrs Smith did not disclose an arguable cause of action. Their current statement of claim should therefore be construed as falling within the ambit of the case permitted to proceed by the Full Court.

53 As I have mentioned, Master Sanderson granted summary judgment in favour of Mr McCusker QC in 2003. In 2005, the Court of Appeal upheld an appeal by Mr and Mrs Smith against that judgment. In the course of her reasons for upholding the appeal, Wheeler JA characterised the case which the Full Court had considered to be arguable, in its decision in 2001, as a failure by Mr McCusker QC to appreciate that the plaintiffs' case was based upon a failure of the R & I Bank to provide 'proper advice' (Smith v McCusker QC [2005] WASCA 226). Her Honour went on to observe that in order to make out their cause of action, it would also be necessary for Mr and Mrs Smith to establish that a barrister exercising reasonable care and skill would have advised that there was some prospect of success in a claim against the bank based on a failure by the bank to give 'proper advice' and that, if such legal advice had been given, Mr and Mrs Smith would not have lost the opportunity to pursue their case against the bank, as a consequence of their loss of legal aid.

54 In the view of Wheeler JA, Mr and Mrs Smith should have been required to amend their pleading to identify precisely what advice the bank should have given to them, what they would have done if such advice had been given, and what loss they suffered as a consequence of the bank's failure to give the advice identified. Although McLure JA (with whom Roberts-Smith JA agreed) upheld the appeal on a different basis to that enunciated by Wheeler JA, she agreed with that aspect of the decision of Wheeler JA which required Mr and Mrs Smith to more fully enunciate the case against the R & I Bank which they assert they lost the opportunity of pursuing. In the view of McLure JA, the entry of summary judgment was precluded by the decision of the Full Court in 2000, as it had then been held that some aspects of the claim which Mr and Mrs Smith wished to advance were arguable.

55 It is clear from the current form of the statement of claim that Mr and Mrs Smith have done their best to comply with the observations made by the Court of Appeal in 2005 with respect to their pleaded case. However, perhaps understandably, their pleading does not capture with precision the case against the R & I Bank which they assert Mr McCusker QC should have identified and advised upon.

56 In par 2 of the pleading, there is a general assertion that the R & I Bank, through its manager, Mr Danks, agreed to 'advise the plaintiffs and to draw up a suitable budget and to provide finance and assistance in applying for finance to implement the plaintiffs' proposed expansion plans'. The nature of the advice agreed to be given is not specified in this paragraph.

57 In par 5 it is asserted that Mr Danks 'failed to use reasonable skill and care in giving of advice and in the preparation of the cash flow budget', although no particulars of negligence are given at this point in the pleading.

58 Later in the pleading, in par 9, it is asserted that:

The plaintiffs wanted advice about how they should plan their programme, including the most suitable finance to develop their farm and continue farming on the farm in the future, and they wanted funds to implement it.

The manager, Richard Danks agreed to advise and to provide finance to implement the plaintiffs' proposed expansion plans.

60 Read in conjunction with par 9, I construe par 10 as asserting an agreement to provide the advice referred to in par 9.

61 In par 12 it is asserted that Mr Danks represented to Mr and Mrs Smith that 'the budget and financial plan would be a reasonable programme which would assist them to continue developing the farm and living on it in the future'. The pleading does not identify 'the financial plan' referred to in this paragraph, nor is that expression used elsewhere in the pleading. Rather, at other points in the pleading, repeated reference is made to a budget - see for example, pars 13.1.3, 13.2.4, 14.1, 14.3, 17, 18 and 19.

62 In par 13 it is asserted that there was an agreement between Mr and Mrs Smith and the bank which contained a number of terms, including a term to the effect that the bank would provide a budget suitable for the plaintiffs' needs 'so that they could put into effect their plan to purchase a heavy duty tractor and continue developing the farm'.

63 Paragraph 14 of the pleading asserts that there were further terms of the agreement, one of which was a term to the effect that Mr Danks 'would prepare a cash flow budget suitable for the plaintiffs' ongoing farming development plans'.

64 Further, in par 17 of the pleading it is asserted that in purported performance of the agreement, Mr Danks drew up and provided a budget which was not suitable for the purpose - namely, of enabling Mr and Mrs Smith to continue the development of the farm.

65 Paragraph 18 asserts that Mr Danks was negligent in the preparation of the budget, and par 19 asserts that the budget provided by Mr Danks constituted a breach of the agreement earlier pleaded, in that it was not suitable.

66 Up to this point of the pleading, the thrust of the case against the R & I Bank appears to focus upon an alleged breach of an obligation assumed by the bank to produce a budget, and provide finance, which would enable Mr and Mrs Smith to acquire a heavy duty tractor and develop the farm in accordance with their plans. However, the case presented by Mrs Smith to the Full Court in 1999 was to the effect that the budget prepared by the bank was an irrelevant distraction, because Mr and Mrs Smith never relied upon it and knew it was unworkable. Indeed, it was put to the Full Court that the essence of Mr McCusker QC's negligence lay in the emphasis which he erroneously placed upon the budget provided by the bank. It is difficult to reconcile these propositions with the various parts of the pleading to which I have referred.

67 Paragraph 23 of the statement of claim purports to set out the loss and damage suffered by Mr and Mrs Smith. In that context, rather than in the context of the allegations with respect to the duty of care owed by the bank, or the contractual obligations assumed by the bank, there are assertions made as to 'the proper advice' that should have been given. Then follow 28 paragraphs of advice which purport to synthesise the advice which it is asserted Mr Danks should have given. However, those paragraphs are not consistent within themselves, or with the earlier portions of the pleading to which I have referred. For example, in the paragraph numbered 23.5.15, it is asserted that 'the proper advice' would have been that due to the deepening debt revealed by the budget, Mr Danks should have advised Mr and Mrs Smith to reappraise the intended borrowings with an extension of the business plan for one or two more years to reveal the trend of the depending debt levels. Further, par 29.3.9 asserts that advice should have been given to the effect that Mr and Mrs Smith should spend the first two years or whatever time was necessary utilising the overdraft and stock firm finance to 'consolidate their enterprise'.

68 These paragraphs appear to assert, somewhat inconsistently with the earlier portions of the pleading to which I have referred, that performance of the bank's duty would have resulted in advice being given to defer borrowing to acquire the heavy duty tractor and the plans to develop the farm until some later time. A case put on that basis is also inconsistent with the express assertion made by Mrs Smith to the Court of Appeal during the hearing in 2005, to the effect that the plaintiffs did not assert a 'no borrowing' case.

69 In the course of opening submissions at trial, the following exchange took place:

SMITH, MS: So we say that the advice that he [Mr Danks] should have given us was advice that would have given us an idea of what was involved in preparing a plan, a development plan of the type we had in mind and that we had discussed with him.

MARTIN CJ: So the advice that he should have given you was procedural advice, ie, the steps that you should have taken?

SMITH, MS: Yes, it was. Also, I have divided the advice into two lots, the advice he should have given us before he did anything, and then the advice he should have given us after he had prepared the budget because it was plain, looking at it, to him anyway - it should have been plain to him; it wasn't plain to us but it was plain to him, or should have been, that it wasn't going to work, so he should have advised us that it wasn't going to work (ts 488).

70 Shortly thereafter, Mrs Smith read from par 23.5.15 of the pleading, to which I have referred above. The following exchange then took place:

MARTIN CJ: So your case is that he should have said, 'Well, if you do this reappraisal, then the outcome of that would be that you don't actually borrow the money'.

SMITH, MS: Yes.

MARTIN CJ: You spend a couple of years in consolidation and then go to the Commonwealth Development Bank.

SMITH, MS: Yes, something like that. Well, precisely that, really, that we were in the position where we could go ahead but it had to be properly financed; they couldn't just lend us money, and if he had bothered to go back through the previous two years or however many years of our income, he would have seen that the farm wasn't generating an income, not much of one; it was running at a loss, and so that was really - I mean, that was the reason I have pleaded it like that, because it's the sensible thing for him to have said (ts 489).

71 Again, this submission appears fundamentally inconsistent with the submission put to the Court of Appeal in 2005 to the effect that the plaintiffs eschewed a case based on the proposition that the bank should have advised against borrowing funds.

72 During closing submissions I tried to tease out the case that was being put by Mr and Mrs Smith in this respect. It was submitted that the bank breached its duty to advise with respect to the type of borrowing properly taken - and in particular, by failing to suggest that Mr and Mrs Smith seek a development loan with deferred terms of repayment (ts 1322, 1333, 1335). At points in her oral closing submissions, it appeared that Mrs Smith was again reverting to a 'no borrowing' case, although when I put that proposition to her, she resiled from it and asserted that the bank should have advanced funds on overdraft (as compared to the loan for the deposit on the tractor), and recommended additional finance from a stock firm (ts 1336). However, shortly thereafter Mrs Smith characterised the advice that should have been given in these terms:

He should have given us this advice here, 'mark time for a couple of years until you get a cash flow going, then apply - - - (ts 1337).

73 At another point in closing submissions I asked Mrs Smith whether it was her case that the bank had a duty to tell them not to buy the tractor. She answered affirmatively (ts 1339). That answer is inconsistent with the portions of the pleading to which I have referred, and with the case put to the Court of Appeal in 2005.

74 At another point, Mrs Smith submitted that the bank had a duty to find out whether the farm could generate the money to repay the loan, which included a duty to inspect the farm. However, in that context Mrs Smith submitted that:

We weren't seeking farming advice; we were seeking advice as to how to set our farm up financially (ts 1351).

75 I tried again to obtain a clear statement of the case against the bank which Mr and Mrs Smith asserted Mr McCusker QC should have identified and advised upon in the following exchange:

MARTIN CJ: So that is the no borrowing case then, you are saying, that that three year budget would have resulted in him saying to you, 'You shouldn't buy the tractor because you won't be able to service your debt'. Is that really what you're saying?

SMITH, MS: I'm not sure what it would have resulted in. It might have resulted in him saying probably the same sort of thing that we - we didn't have a cash flow to start with, you know. We didn't have a past history of surplus money with which to pay debts, so it revealed that we actually would have to repay the debt, the repayments out of further borrowings, and that is not a viable proposition.

MARTIN CJ: The answer to my question is yes, that would have resulted in a no borrowing case then?

SMITH, MS: Unless he proposed some longer term finance with a repayment holiday at the start which I know the bank had access to. They had access to farm development loans through the government but it definitely - yes, unfortunately it's impossible to do it now, your Honour so I would say it would have resulted in one of two propositions. They're: either no borrowing or ... a different form of finance (ts 1357 - 1358).

76 Doing the best I can to reconcile the various different ways in which Mr and Mrs Smith have, over the years, expressed the case against the bank which they assert Mr McCusker QC should have identified, it seems clear that they do not rely upon the budget actually produced by Mr Danks, because they have repeatedly asserted, and continue to assert, that they knew immediately that it was unworkable and that they did not rely upon it. Rather, the case seems to be that a different budget should have been prepared, and over a longer time period. It seems to be asserted that if such a budget had been prepared, it would have shown that borrowing in the form undertaken by Mr and Mrs Smith was not sustainable, and that advice should have been given to either limit the borrowing to a modest overdraft facility, or seek some other type of finance with extended repayment terms. This is the case against the R & I Bank which I will describe as 'the proper advice' case.

77 As I reminded the parties many times before and during the trial, these are proceedings in which Mr and Mrs Smith claim damages from their legal adviser, Mr McCusker QC. The bank is no longer a party to these proceedings. The claim which Mr and Mrs Smith brought against the bank, and which they wished to pursue is, however, relevant in two respects. First, it is relevant to the assessment of the allegations of breach of duty by Mr McCusker QC, to the extent that those allegations include a failure to identify and advise upon the 'proper advice case' which the Smiths wished to pursue against the bank, and a failure to properly appreciate the issues raised by the brief in that respect. Second, Mr and Mrs Smith allege that as a consequence of breaches of duty by Mr McCusker QC they lost the opportunity of pursuing their claim against the bank with the benefit of legal representation, and it is therefore necessary to place some value upon that lost opportunity (without, of course, purporting to try that claim in the course of these proceedings - see Nikolaou v Papasavas Phillips & Co (No 2) [1989] HCA 11; (1989) 166 CLR 394, 404; Hammond Worthington v Da Silva [2006] WASCA 180 [114] - [119].

78 The claims against Mr McCusker QC which Mr and Mrs Smith have enunciated in their statement of claim must be construed in the context of the extensive history of interlocutory appeals to which I have referred. As I have indicated, put shortly, those decisions permit Mr and Mrs Smith to run a case against Mr McCusker QC which has three general components:

(a) an alleged failure to appreciate that the case which Mr and Mrs Smith should have pursued against the bank was a breach of a duty which the bank owed to them to give them proper advice and guidance, and to provide advice in respect of their prospects of success in pursuing a claim formulated on that basis;

(b) an alleged failure to properly appreciate and comprehend the factual and legal issues raised by the brief;

(c) an alleged failure to provide advice in a timely fashion.

79 These issues are to be determined by reference to the course of dealings between Mr and Mrs Smith, their solicitor, Mr Gilmour, and Mr McCusker QC, including the terms of Mr McCusker QC's retainer, the instructions provided to him in his brief, and the instructions that would have been provided if it was his duty to seek further instructions on particular topics. Put another way, the liability of Mr McCusker QC is to be determined by reference to the instructions he was given with respect to the dealings between Mr and Mrs Smith and the bank, not by reference to findings of objective fact that might be made with respect to the actual dealings which took place between Mr and Mrs Smith and the bank. Findings of the latter kind are relevant to the assessment of the value of the opportunity to pursue a claim against the bank with the benefit of legal representation which Mr and Mrs Smith assert they lost as a consequence of Mr McCusker QC's breaches of duty. But they are not relevant to the question of whether or not Mr McCusker QC breached his duty except to the extent that they shed light on the instructions he would have been provided with, if it were his duty to seek them.

80 The evidence given by the bank manager, Mr Danks, in the course of the proceedings before me illustrates this point. That evidence was not available to Mr McCusker QC, nor would it have been available had he sought instructions with respect to it. It follows that the evidence given by Mr Danks is not relevant to the liability of Mr McCusker QC. It is, however, relevant to an assessment of the value of the opportunity which Mr and Mrs Smith claim they lost, in the event that liability is established. It follows that the primary source of evidence relevant to the assessment of liability, will be the instructions provided to Mr McCusker QC.

81 The parties have endeavoured to recreate the written instructions provided to Mr McCusker QC, and that recreation was tendered in evidence. It is largely, but not entirely, complete. The initial written instructions were augmented by information provided by Mr and Mrs Smith in and after conferences with Mr McCusker QC, which is also to be considered. The prefix TB 1, when used in respect of a document referred to in these reasons, indicates that it was a document provided to Mr McCusker QC prior to the provision of his opinion. Relevant also are the instructions which would have been provided by Mr and Mrs Smith if Mr McCusker QC was obliged, by the proper discharge of his duties and responsibilities, to seek further instructions. Relevant also to the allegations of delay, are the terms upon which Mr McCusker QC was retained by Mr Gilmour.

82 I have identified the three general areas of claim which Mr and Mrs Smith were permitted to advance following their successful appeals against the interlocutory dismissal of their claims. Within those general areas of claim, Mr and Mrs Smith have endeavoured to particularise the breaches of duty upon which they rely in their pleading, and in the course of submissions. Those attempts at particularisation are impeded by their lack of legal representation. However, I will set out what I have taken to be their case, derived from their statement of claim and the submissions presented at trial.

83 Mr and Mrs Smith plead (in par 54) that Mr McCusker QC had a duty to exercise all due professional care, skill and diligence. The existence of that duty is not contested, nor is it disputed that the standard of care which Mr McCusker QC was obliged to provide was that of a senior Queen's Counsel experienced in commercial litigation.

84 In the written opening submissions provided by Mr and Mrs Smith, it is asserted that the ambit of the duty owed by Mr McCusker QC was somehow shaped or influenced by his experience as a director of Town & Country Building Society. However, this is not asserted in the statement of claim, and in any event, in this case, the duty to provide legal advice cannot be shaped or influenced by expertise in another field, such as banking. The extent of the duties owed to Mr and Mrs Smith by the R & I Bank is a legal issue to be assessed in the context of the particular dealings between Mr and Mrs Smith and the Bank, not by reference to generic banking practice.

85 In the course of closing submissions, Mrs Smith asserted that the standard of care was also to be assessed by reference to Mr McCusker QC's experience in farming, and in particular in relation to the development of new land farms. That is not a proposition enunciated anywhere in the pleaded case, nor was it identified in the course of opening submissions. Leaving aside the questions of procedural fairness that would arise if a proposition that arose so late in the trial was to be countenanced, it seems to me to be without substance in any event. The evidence falls well short of establishing that Mr McCusker QC had sufficient expertise to qualify him to give expert evidence on farming matters and in any event, the case against him is put on the basis that he should have identified, from the instructions given, that the case that should have been brought against the bank was a case based upon the bank's failure to give 'proper advice'. That alleged breach is a breach of a duty to give legal advice, not breach of a duty to provide expert advice on farming matters. For these reasons I reject the assertion that either the ambit of the duty of care owed by Mr McCusker QC, or the standard of care he was obliged to provide, are influenced by the extent of his farming experience. Otherwise, there is no dispute between the parties as to the duty of care owed by Mr McCusker QC.

86 Mr and Mrs Smith set out the breaches of duty by Mr McCusker QC which they allege in par 55 of the statement of claim. They assert that he placed undue emphasis upon the budget which was prepared, and should instead have focused upon the issue of the bank's obligation 'to provide a proper budget'. It is further asserted that Mr McCusker QC breached his duty by failing to seek instructions upon the expert evidence that might have been available to establish the advice which the bank should have given to Mr and Mrs Smith, and the course of action they would have followed if so advised.

87 It is further asserted that Mr McCusker QC failed to familiarise himself with those parts of his brief:

(a) in which it was explained how the actual costs for 1977 had exceeded the budget; and

(b) in which Mrs Smith described how the application to the Rural Adjustment Authority came to be made.

Further, in par 63 of their pleading, Mr and Mrs Smith complain of unreasonable delay in the delivery of written advice.

88 Mr and Mrs Smith assert that if Mr McCusker QC had performed the duties which he owed to them, he would have provided a more favourable opinion which would have enabled them to pursue their claim against the bank with the benefit of legal representation funded by the Legal Aid Commission. Given the sequence of events following the provision of Mr McCusker QC's written advice, to which I have briefly referred, the general issue of causation includes the following specific issues:

(a) Would the proper discharge of the duty of care owed to Mr and Mrs Smith more likely than not have resulted in the provision of a favourable opinion as to the prospects of success in their claim against the bank? (If the answer to this issue is in the negative, then the only remaining causation issue concerns the consequences of any established delay).

(b) Did any period of delay for which Mr McCusker QC was liable cause or materially contribute to any loss or damage suffered by Mr and Mrs Smith including:

(i) in respect of interest paid to Town and Country Building Society;

(ii) in respect of their prospects of averting a sale by the mortgagee;

(iii) in respect of their prospects of going to trial prior to the termination of legal aid?

(c) Did any breach of duty by Mr McCusker QC cause or materially contribute to the termination of legal aid granted to Mr and Mrs Smith given:

(i) legal aid was continued, and extended repeatedly after the provision of Mr McCusker QC's advice;

(ii) after Mr McCusker QC gave his advice, other opinions were given by three other counsel?

(d) Did any breach of duty by Mr McCusker QC cause or materially contribute to Mr and Mrs Smith's lost opportunity to pursue their claim against the bank, given the manner in which that claim was ultimately determined?

89 Mr and Mrs Smith assert that by reason of breaches of duty by Mr McCusker QC they lost the opportunity to pursue their claim against the bank with the benefit of legal representation in a timely fashion. It will be necessary to make an assessment of the value of that opportunity in due course. In that context I will refer to the legal principles governing such an assessment.

90 Mr and Mrs Smith also claim, as components of the damages claimed, damages for mental distress and illness, lost opportunities to earn other income, and damage to reputation. Their claim for these matters does not clearly delineate between those components which they assert were components of the damages which they could have obtained in their claim against the bank, or those components which they assert are the consequence of breach of duty by Mr McCusker QC. As will be seen, the levels of generality at which these claims are advanced, and the lack of an evidentiary basis for them, present significant obstacles to their success.

91 As I have noted, the only evidence which is relevant to the question of whether Mr McCusker QC breached the duty of care which he owed to Mr and Mrs Smith is, with one exception, evidence which goes to the instructions he was given, and the advice which he gave as a consequence of those instructions. The exception arises if it is concluded that the proper discharge of his professional duties required Mr McCusker QC to seek further instructions upon a particular topic or topics. In that circumstance, evidence as to the instructions that he would have received had he requested them would be relevant.

92 In January 1982 the Legal Aid Commission granted assistance to Mr and Mrs Smith for the purpose of initiating proceedings against the R & I Bank. The grant of assistance covered work done up to, but not including, listing the matter for trial. At that time the Smiths had engaged Messrs Michael White & McGregor to act on their behalf in the pursuit of their claim against the R & I Bank.

93 During 1985 Mr and Mrs Smith decided to engage Mr Gilmour to represent them in the proceedings which they had by then commenced against the R & I Bank, in place of Messrs Michael White & McGregor. Mr Gilmour was then practicing as a partner in the firm Gilmour Richardson. In August 1985 the Legal Aid Commission approved the transfer of assistance from Messrs Michael White & McGregor to Gilmour Richardson, and further approved the grant of assistance for the provision of a full opinion from senior counsel on the merits of the proceedings together with an opinion on quantum (TB 1, page 2464). In about July or August 1986 Mr Gilmour enquired whether Mr McCusker QC would be prepared to give an opinion on the merits of the claim Mr and Mrs Smith brought against the R & I Bank. Mr McCusker QC advised that he would be prepared to receive instructions to provide an opinion, but was extremely busy at that time, and could not accept instructions if the advice were required urgently (witness statement of Mr McCusker QC, par 11).

94 By letter dated 28 August 1986 Mr Gilmour retained Mr McCusker QC to provide an 'opinion as to the merits of the action' (TB 1, page 2722). Either accompanying the letter, or delivered shortly thereafter, was a large quantity of documents contained in approximately nine lever arch files.

95 It would be misusing language to describe the documents that were delivered to Mr McCusker QC as a brief. There are no observations on contentious issues of fact or law. There was no chronology, overview of the facts or list identifying the roles of the many people referred to in the documents. It seems clear that the documents were compiled by Mrs Smith, without any input from Mr Gilmour, whose contribution appears to have been limited to the covering letter. Mr Gilmour took no part in the trial before me. There may well be an explanation for the form of the materials provided to Mr McCusker QC, but if so, it did not appear from the evidence adduced at trial. Although the documents were provided in very general groupings, within those groupings they were not provided in any particular order or sequence. The documents comprised more than 2,000 pages, many of which, probably most, are entirely irrelevant. Included within the documents was a document described as a 'witness proof' which was prepared by Mrs Smith apparently in 1986 (the 1986 proof) (TB 1, page 2556). Although the document follows a broad chronological sequence, it bears a very distant resemblance to a proof of evidence that would be prepared by a competent lawyer. It contains much material that is plainly irrelevant, a lot of material that is argumentative, rather than evidentiary, and is generally hard to follow.

96 Mr McCusker QC said in evidence that when he reviewed the documents provided to him he had considerable difficulty in identifying the basis of the claim which Mr and Mrs Smith wished to advance against the R & I Bank and in gleaning from the documents the information and factual instructions that were relevant to that claim. That difficulty is entirely understandable. Having carefully reviewed the documents provided to Mr McCusker QC myself, I have experienced precisely the same difficulties. However, it is necessary to undertake the difficult task of attempting to analyse the information contained within those papers, because the claim which Mr and Mrs Smith make against Mr McCusker QC depends critically upon such an analysis.

97 In the 1986 proof Mrs Smith provided the background to the dispute with the R & I Bank. She records that she was brought up in the metropolitan area before marrying Mr Smith in 1962. Mr Smith had been brought up on a farm in the Borden area. In 1952, while working as a shearer, he had been granted 2,684 acres of land under a conditional purchase lease which had a term of 29 years.

98 The 1986 proof confirms that consistently with the terms of the lease, Mr Smith spent money and time improving the land by sinking dams and erecting fences, and carrying out clearing work. Machinery was purchased and a dwelling constructed.

99 Included within the documents provided to Mr McCusker QC was a proof of the evidence to be given by Mrs Smith prepared in about 1980 by her then solicitors (the 1980 proof) (TB1, page 1673). It seems that this was the proof briefed to Mr Rowland QC prior to the provision of his advice. That document records that in 1969 Mr and Mrs Smith and their children went to reside on the farm. For the seven previous years following their mortgage, they had lived elsewhere, while Mr Smith was working as a contract shearer and truck driver. After the family moved onto the farm in 1969, Mr Smith continued that work part-time, and operated the farming property part-time.

100 According to the 1980 proof, in 1969 when Mr and Mrs Smith moved onto the farm, about one half of the boundary of the property was fenced, there was one internal paddock fenced, and about 500 acres had been cleared. Two hundred sheep were grazed on the farm, and pig farming was undertaken on a small scale. According to the 1980 proof, by 1975, the property had been developed to the point where there was a paddock fenced for pigs, which held approximately 100 pigs, three quarters of the boundary had been fenced, together with three internal paddocks, a grain silo and all purpose shed had been acquired, and three dams had been completed. Various items of plant and machinery had also been acquired.

101 According to the 1980 proof, in about March 1975 Mr and Mrs Smith moved onto another property in the vicinity pursuant to a share farming arrangements with Mr Des Welstead. However, in about February 1976 they returned to reside at the farm.

102 Mr and Mrs Smith had an overdraft facility with the National Australia Bank (NAB). In July 1976 Mrs Smith wrote to the manager of the Gnowangerup branch of the NAB explaining why they had overdrawn the facility provided to them. She asserted that they had become much more reliant on pigs than previously planned, and expected to derive significantly greater revenue than had previously been foreshadowed. Mrs Smith also explained that a crop had not been planted that year, because of seasonal conditions, and that more barley may be required as pig feed before the pigs were sold. In the letter Mrs Smith requested an increase in the overdraft facility to enable the feed to be purchased, and outstanding accounts to be settled (TB 1, page 427).

103 In his reply, the manager of the Gnowangerup branch of the NAB expressed disappointment that a crop had not been planted, given that the income from cropping was to form the major part of Mr and Mrs Smith's projected income. He declined to extend the overdraft facility, and suggested that more reliance be placed upon contract work in order to meet outstanding liabilities (TB 1, page 430).

104 In August 1976 Mrs Smith wrote to the Perth office of the NAB complaining of the refusal to extend the overdraft facility, and seeking an explanation (TB 1, page 431). In that letter Mrs Smith asserted that it was:

[A]nnoying and embarrassing to find ourselves in the position of having planned our financial strategy on what we consider to be a sound basis only to have our programme interrupted for no apparent reason. I could understand there being some unwillingness to advance monies which did not have a good chance of being repaid within some reasonable time, but as I have pointed out, we have several options open to us for the repayment of the money.

105 The regional manager of the NAB replied to that letter by letter dated 18 August 1976. In that letter he referred to discrepancies between the information contained in the letter from Mrs Smith, and the information available to the bank with respect to gross income in the preceding three years (TB 1, page 435). The author of the letter observed:

Even at the anticipated gross income of $6,500 that you expect to realise from the proceeds of sale of pigs, it is doubtful whether you would have the capacity to maintain yourselves and family, including the children at college, work and improve the property and service the commitments to the bank from within the figure available.

Reference is then made in the letter to a mortgage over the farming property securing the debt. The letter then concludes:

We believe that if you can clearly establish to our branch manager's satisfaction your income achievement and ability to repay, he would be receptive to a working limit facility, but there is little point in making such further approach to him unless this is clear. We are more interested in the satisfactory servicing of a debt, than in its repayment being forced through the recovery from proceeds of sale of the security itself.

106 In the meantime Mrs Smith had written to the manager of the Gnowangerup branch of the NAB by letter dated 4 August 1976 (TB 1, page 437). In that letter she challenged assertions made with respect to likely income and costs by reference to a budget which had been prepared by the NAB for the period up until March 1977. The letter contains a detailed analysis of the comparative cost to be incurred and revenue derived from cropping as compared to raising pigs. The letter displays a facility in the projection of costs and revenue. The manager replied (TB 1, page 440) reiterating his assertion that the cost of raising pigs would exceed the projected costs of cropping, and requiring advice as to the source of funds that would be used to bring the overdraft account back to the approved limit. He also directed that further cheques not be drawn until the account was returned to the approved limit. Mrs Smith replied advising that the scheduled payments from crops harvested in previous years would be used to return the account to the approved limit (TB 1, page 441).

107 By letter dated 10 March 1977 Mrs Smith wrote to the manager of the Gnowangerup branch of the NAB setting out what she described as 'our proposed budget' (TB 1, page 445). As the letter noted, Mrs Smith did not have the proper form, so she provided estimates of income and expenditure in narrative form, summarised in a table comparing projected income from the sale of pigs and other sources, and projected expenditure. The table suggested a surplus of income over expenditure of just under $3,000.

108 Both the 1980 proof and the 1986 proof later prepared by Mrs Smith record that shortly thereafter Mr and Mrs Smith decided that they needed to purchase a new tractor, because their existing tractor was not adequate for the future development of the farm. In their view, because of the clearing work that was to be undertaken, and the prospect of undertaking more cropping work, a heavy duty tractor was appropriate, rather than a light duty tractor.

109 Mr and Mrs Smith approached the manager of the Gnowangerup branch of the NAB with a request that the bank provide finance for the acquisition of the tractor. He advised that the bank would be able to grant the finance for the purchase of a light duty tractor only. It must have been clear to Mr and Mrs Smith that the NAB did not consider that they would be able to satisfactorily service a debt of the magnitude required to acquire a heavy duty tractor. Mr and Mrs Smith then decided to approach the manager of the R & I Bank branch at Ongerup, where Mrs Smith had an account which she had used for the purpose of paying school fees.

110 I digress at this point to observe that the documents provided to Mr McCusker QC supported the following conclusions in relation to Mr and Mrs Smith's dealings with the NAB:

(a) they had constructed their own farming and financial strategy for the development of their farm, and were committed to that strategy;

(b) they were quite capable of making future estimates of costs and revenue that could be included in a budget;

(c) they were not looking to the NAB for either farming or financial advice, all they wanted from the NAB was financial accommodation;

(d) when the NAB expressed pessimism about the capacity of their farming operation to service the loan they were seeking, instead of reappraising their plans, they sought finance from another source.

Dealings with the R & I Bank (as revealed in the instructions to Mr McCusker QC)

111 Mr Richard Danks, who was the manager of the Ongerup branch of the R & I Bank in March 1977, gave evidence. Plainly that evidence was not available to Mr McCusker QC, nor would it have been available had he sought instructions from Mr and Mrs Smith. Accordingly, as I have noted, that evidence is relevant only to my assessment of the value of the claim which Mr and Mrs Smith had against the R & I Bank, and is irrelevant to the issue of whether or not Mr McCusker QC breached his professional duties. This portion of my reasons is therefore concerned only with the information available to Mr McCusker QC within the documents he was provided at the time he was retained in August 1986. I will deal in due course with information which he received subsequent to his initial retainer, but prior to the provision of his advice in March 1989.

112 The 1980 proof records that Mr and Mrs Smith approached the R & I Bank because they 'remained firm with our decision that we required a heavy duty tractor'.

Prior to the formal discussion with Mr Danks we had been to Hendry & Associates in Gnowangerup, machinery dealers, and we had selected a tractor which was a Massey Ferguson 1085 tractor, purchase price $17,500, and the deposit was $7,000.

(The reference to 'the formal discussion' appears to be a reference to the second meeting between Mr Danks and Mr and Mrs Smith on 5 April 1977).

114 An invoice from that company shows that an amount of $17,500 was debited from the account of Mr and Mrs Smith on 1 April 1977, which was shortly after Mr and Mrs Smith approached the R & I Bank in March of that year, and before the cash flow budget had been prepared. Although this invoice does not appear to have been amongst the documents provided to Mr McCusker QC, it is consistent with the instructions he was given as to the sequence of events.

We approached the R & I Bank generally because we were unhappy with the situation with the National Bank. They had for example as previously indicated not agreed to allow us sufficient finance to purchase a larger tractor. We had had arguments with them about their refusal to allow us to expand our overdraft facility so that we could in turn expand our business operation on the farm.

Generally we needed a bank which would extend to us sufficient finance to purchase the larger tractor and also allow us sufficient finance so that we could expand our business. We were looking to a bank which would finance us generally at a stage when our assets and liability position was secure such that we could generally expand our operation and the bank that was to back us would be required to generally assist with the expansion programme.

When we approached Mr Danks we explained generally our assets and liability position in that we had partly clear[ed] the property, we had sufficient machinery except the tractor, we had some fuel and super and we wanted to crop part of the property.

We explained generally that we required assistance in our expansion programme firstly for the tractor and also generally and as previously indicated what we required was a bank who would finance us generally and this was made known to Mr Danks.

Mr Danks indicated that his bank would not bounce our cheques and that the bank would assist with our general finances as well as the tractor finance. He indicated that his bank would be prepared to extend the overdraft facility with the overdraft facility to be renewed each year. We had explained to him that we did not require simply a static overdraft but were looking to a more flexible overdraft facility to help with the financial arrangements.

There is nothing in this description of the reasons for approaching Mr Danks which would suggest that Mr and Mrs Smith wanted anything other than financial accommodation.

116 The 1986 proof described the first meeting with Mr Danks in the following terms:

At our first meeting we explained who we were, where our farm was, our history, the stage of development of the farm, our need for a better tractor and the refusal of the National Bank to finance the size tractor we needed. We went to great lengths to give him every detail that was relevant, and we stressed that we needed a bank which understood that the farm needed fully developing, was not supporting us at that time, and that we knew it was no use going in for finance we couldn't repay. We were worried about the failure of the National Bank manager to grasp even the basics of our situation and we told Richard so. He said, 'we won't bounce your cheques', and we were very relieved and took this to mean that we would be able to sort out problems which might arise, as they do in farming. At this point, in response to our allegations that the National Bank manager did not seem to understand our needs he said as well, 'see, you should have come to the R and I'. We mentioned to him the long term development loans made available to land settlement farmers after the war and we said that we thought that sort of loan would be ideal. He said they were no longer available, but that banks looked after long term development programmes now by other means, but they could still provide suitable finance. I explained that I could not do an expert budget and he said that he would do it. I also said that we had never had a large loan before, and so we were not familiar with the procedure, the paperwork or anything. He told us not to worry about that as it was all done by the bank. We told him what the farm was like, that the cleared land had re-growth on it and would have to be chained and root raked before cropping; that you could expect a maximum of six bags to the acre off the ground, and that with new ground it was less. Sometimes people got bumper crops, but we thought it was wise to be conservative. We were optimistic because it was good land, sandy loam, and the district average was pretty good, but we went to great lengths to get our point across that it was no use going into debt beyond what we were able to pay back, and stressed that we would need long term help. We said that we could not count on much family help as we were basically developing the property unaided. We said that in order to produce pigs for sale the feed must be kept up to them or they would stop growing and lose weight. We told him that pigs were more practical than sheep or cattle, because our property was covered in box poison, which pigs seldom eat, but sheep and cattle do. We said that we would need to sink another dam to ensure adequate water for increased pig numbers, but that could wait till, say, next summer. We said that we would have to buy a truck before long, as, with the increased cartage of pigs to market and with the increased cartage of grain and fuel and other items it would be cheaper than paying cartage.

...

We said we had about $1,000 in accounts to pay, and that we would need a $3,000 overdraft to pay out the National Bank and our outstanding accounts. We thought that the $3,000 overdraft would be plenty to start with but we had not done a budget and didn't know much about how it should look on paper, or what expenses would be paid out of the overdraft, and what expenses would be paid by other means. We just didn't know how it was done and how it should look on paper, or how long it would take. We went to the R & I with an idea, and we relied on Richard to put it on paper.

...

When we had reached the agreement that the R & I would finance the purchase of the tractor and provide other finance, we left, and in response to our parting words, which were basically that, above all we needed a bank that understood our situation and would provide the right sort of working relationship we needed, he stood at the front door of the bank and let us out, and said, for the second time that day, 'Don't worry, we won't bounce your cheques'. We were very happy that we had found a bank manager that understood and we said, 'Well that's good. We'll go and tell the National Bank manager' (TB 1, pages 254 - 256).

There are a number of observations usefully made about this description of the first meeting with Mr Danks.

117 First, it is significant that Mr and Mrs Smith considered that they had reached agreement with Mr Danks for the provision of finance at that meeting. That is significant because there is no suggestion that Mr Danks gave any advice during that meeting or that Mr and Mrs Smith thought he had given advice except perhaps as to the form of loan to be utilised. The cash flow budget was not prepared until later. Reaching agreement before the bank had given any significant advice is unequivocally inconsistent with any proposition that Mr and Mrs Smith were looking to the bank for advice, or had relied upon advice from the bank before proceeding to acquire the tractor. As I have stated, their account was debited with the cost of the tractor by the machinery supplier before the meeting with Mr Danks at which he presented the cash flow budget, although this particular fact may not have been known by Mr McCusker QC.

118 Second, the flavour and thrust of the description of the meeting was that Mr and Mrs Smith wanted finance - a bank that would provide the advances they needed to implement their plan, unlike the NAB which was not supportive. The documentation to be prepared was for the bank's purposes, not theirs.

119 Third, there is nothing in that description of the meeting with Mr Danks that would suggest he held himself out as being able to provide farming advice, or purported to give such advice. To the contrary, it is clear that all the information as to the strategy to be adopted, and upon such things as likely crop yields, was provided by Mr and Mrs Smith. In that context an assertion that 'it was no use going into debt beyond what we were able to pay back' is a statement of the obvious, perhaps made to foster an impression of fiscal prudence, not a request for advice as to the farming strategy to be adopted, or as to the likely profitability of the farming strategy which Mr and Mrs Smith had decided upon.

120 On 1 April 1977 Mr and Mrs Smith completed an application form seeking a loan from the R & I Bank in the amount of $10,000, for the purpose of paying out the debt to the NAB ($3,000), and providing the deposit on the tractor ($7,000) (TB 1, page 7). On 5 April 1977 that application was approved (TB 1, pages 13, 64). The finance was to be provided in the form of an overdraft facility in the amount of $3,000 and a term loan of $7,000, which was to be reduced at the rate of $2,000 per annum.

121 On 5 April 1977 Mr and Mrs Smith met again with Mr Danks. In the course of that meeting he presented to them a document which he had prepared on a form used by the R & I Bank entitled 'R & I Bank Monthly Cash flow Budget' (TB 1, page 17). The form provides 12 columns, corresponding to the months of the year (commencing with April), and allows for the listing of income and expenditure anticipated in each of those months. The form presented to Mr and Mrs Smith shows anticipated income in the form of revenue from cropping, wheat and barley, revenue from the deferred payments in respect of crops produced in previous years, revenue from the sale of pigs, wages, and from a pension.

122 Then follow estimates of expenses, including such things as the costs of grain, fertiliser, cartage and fuel etc. Estimates are also made of personal expenses, including living expenses and school fees. Next to the entry for 'loan repayments' is shown an amount of $7,000, described as '40% deposit for tractor balance on terms'. There does not appear to be any corresponding entry on the form showing the advance of that amount by the bank, with the result that the balance of cash flow shown at the very bottom of the form is, to that extent, distorted.

123 The 1980 proof asserts that neither Mrs Smith nor her husband:

[W]ere in any way informed about cash flow budgets or general farm budgeting. We had operated on a small scale and in fact any budgeting arrangements and general financial arrangements had been undertaken for us by the National Bank manager. To that extent we were relying totally on the figures produced by Mr Danks. ... The bank manager did not produce to us a cropping or stock programme and for the period of the budget we attempted to operate as closely as possible to the cash flow budget projections (TB 1, page 1680 - 1681).

124 However, a rather different approach is taken in the 1986 proof. In that document Mrs Smith records that 'Richard took in the information given to him, and wrote it all in the bank documentation'. The 1986 proof sets out in detail the information that Mr Danks was given by Mr and Mrs Smith as to the number of pigs they hoped to raise and sell, sale prices likely to be achieved, the cost of fodder, the work to be undertaken for the purposes of cropping, the likely yields to be derived from cropping, the methodology to be used, the fuel on hand and so on. In that context, the proof asserts:

We discussed all aspects of the farm with Richard, including our comments and replies to his questions about likely costs and incomes, but we did not draw up the budget, and we did not know many of the details required. In drawing up a budget, the approach taken depends on what you are trying to show (TB 1, page 2574).

At a later point in the 1986 proof, Mrs Smith asserts:

It was immediately obvious that the budget could not be adhered to. Richard had left out the accounts and put a large sale of pigs right at the start. Both were untrue so I had to just use my brains and do the best I could. As it happens we did manage very well (TB 1, page 2602).

125 So, from the 1986 proof it was clear that the assumptions as to the farming operations to be reflected in the budget, such as the number of stock, the area to be cropped, prices likely to be achieved for stock sold etcetera, were all provided to Mr Danks by Mr and Mrs Smith. Further, Mr and Mrs Smith did not rely on the cash flow budget for anything, as it was 'immediately obvious' that it was flawed. As I will note later in these reasons, these conclusions are consistent with oral instructions given by Mr and Mrs Smith to Mr McCusker QC in conference.

126 Amongst the documents provided to Mr McCusker QC was another version of Mr and Mrs Smith's response to the cash flow budget which was produced by the bank. That is a document prepared by Mr White, of Messrs Michael White & McGregor in response to issues raised by Mr Rowland QC at the time of providing his advice. In that document it is reported that:

When the budget was handed to them they simply went away to farm as farmers on the understanding based on apparently the trust position created by Mr Danks to the effect that from discussions with him they were confident that Mr Danks understood what they proposed to do on the farm and that he had investigated their financial position and their programme had the backing of the bank in relation to future advances etc.

Neither Mr or Mrs Smith when the estimated income figures were produced were able to read the document and make any sense of it at all. Although they would be able to indicate to some extent what change of super for example was required to support the virgin land when the figures were produced to them even though in simple form in the budget they were unable to understand and in fact did not understand the budget figures at all. They simply went away to farm the property however it became apparent early that they would not be able to farm the property even in accordance with Mr Smith's understanding of the limitations of the property.

Although the clients did not actually attempt to follow the terms of the budget strictly as they in fact did not understand it when they went to for example purchase trace elements to put in the ground bearing in mind the fact that the farm was new land when they requested an advance from the bank to complete the purchase of the trace elements Mr Danks would not allow the advance because he said there was not sufficient allowance for it in the budget (TB 1, page 1797 - 1798).

According to this version of their reaction to the budget, they did not rely upon it because they did not understand it, not because they 'immediately' concluded it was flawed. But on either view they placed no reliance upon it, and made all farming and financial decisions without reference to it.

127 On 6 May 1977, Mr and Mrs Smith entered into a hire purchase agreement with the Commonwealth Development Bank of Australia relating to a new Massey Ferguson tractor (TB 1, page 27). The cash price for the tractor specified in the agreement is $17,340, of which $7,000 was to be paid by deposit, and the balance on terms.

128 The 1980 proof notes that during 1977 the R & I Bank allowed Mr and Mrs Smith to exceed the limit of their overdraft facility. By letter dated 1 December 1977, Mr Danks wrote to Mr and Mrs Smith advising that the time for annual review of their account was approaching, and enclosing information to be used in the preparation of budget projections, such as grain payments anticipated from previous harvests, freight costs, the wool price, and various costs associated with cropping (TB 1, page 92).

129 During February 1978 Mrs Smith produced her own cash flow budget for use in discussions with Mr Danks. According to the 1980 proof she 'had by this time learnt how to produce a cash flow budget'. However, as I have noted, it was clear from the documents relating to the dealings with the NAB, that Mrs Smith was quite capable of preparing projections of costs and revenue before any approach to the R & I Bank.

130 According to the 1986 proof, following harvest, and Mrs Smith's attendance at a farm management foundation course in Ongerup in February 1978, she sat down to prepare a summary of the financial position which she discussed with her husband. They concluded 'that the only way out was for the bank to substantially increase its lending to us, to put the farm on some sort of realistic footing' (TB 1, page 2606). She then drew up four documents, which were included within the documents provided to Mr McCusker QC. Those documents were taken to a meeting with Mr Danks on 28 February 1978.

131 The first document was entitled 'Summary of Past Years Budget 1/4/77 to 28/2/78' (TB 1, page 624). The document reviews income and expenditure over the period it covers. It includes assertions to the effect that the delivery of the tractor was taken 'much too late to put in a large crop' and that 'seasonal conditions affected what crop we had and some didn't even come up'. It was noted that grain had been retained for fodder for pigs, and that about 300 acres of the property was properly cleared ready for cropping.

132 It was also observed that the dry season had increased the price of grain, which reduced the amount which was able to be purchased. This, together with a lack of green feed, produced a slower growth rate than anticipated in the pigs. The document also records that living expenses were higher than 'our budget estimate'. The document further asserts:

Although cash wise we are not in the estimated budget position the year has been one of consolidation and we have made many improvements to the farm and to our long term programme for it (TB 1, page 625).

133 The second document produced by Mrs Smith was on a form provided by the bank entitled 'Information for Annual Review' (TB 1, page 626). That form provides an estimate of income over the next 12 months, which Mrs Smith had completed to show income from cropping, the sale of pigs, and of farm income. That part of the form relating to present debts shows that the R & I Bank overdraft had, by this stage, risen to $8,123, which was a little over $5,000 above the approved limit.

134 Another part of the form makes provision for estimated expenditure over the next 12 months, and this part of the form was completed by Mrs Smith so that, when compared to estimated income, a surplus of approximately $4,000 was shown.

135 The third document prepared by Mrs Smith at this time was a document in which she had inserted, in the R & I Banks' monthly cash flow budget form, actual income and outgoings over the preceding 12 months (TB 1, page 628).

136 The fourth document prepared by Mrs Smith was another document using the bank's monthly cash flow budget form, but this time completed so as to include her projected income and expenditure over each of the succeeding 12 months (1978 - 1979) (TB 1, page 632). This document showed that by October 1978, cash flowing out would have exceeded cash flowing in to the point where a facility of slightly over $18,000 would be required.

137 The 1986 proof says that during the meeting with Mr Danks, Mr and Mrs Smith requested an increase of $14,000 in the approved overdraft facility of $3,000. Mr Danks advised that he would make the application to the head office of the bank on their behalf, but doubted that it would be approved. He suggested that Mr and Mrs Smith should consider applying to the Rural Adjustment Authority to rewrite all existing debts, and obtain funding for the development of the farm. He also suggested that a similar application could be made to the Commonwealth Development Bank, according to Mrs Smith's 1986 proof, because refusal by the Commonwealth Development Bank was a prerequisite to consideration by the Rural Adjustment Authority.

138 Included in the documents provided to Mr McCusker QC was an application to the bank's lending department, submitted by Mr Danks, seeking approval to increase the overdraft facility provided to Mr and Mrs Smith to an amount of $14,000 for a period of three months (TB 1, page 94). The commentary provided by Mr Danks was in the following terms:

Through circumstances beyond their control customers were unable to adhere to their budget last year. They have prepared a cash flow of actual income and expenditure together with a summary of their reasons for the shortfall. This is attached together with a budget for this year plus a Y I Y O [year in year out] to show long term viability. If for nothing else, they are to be commended for their effort in preparing the cash flows and their determination to analyse where they went wrong.

Their biggest drawback is the size of their farm. Realising the limitations that this imposes they propose intensifying their piggery. They have all the materials to do this, including a plane hangar of 60' x 40'.

Their debt situation is a little high in relation to their programme therefore, ideally, they should obtain further borrowing. However, it would be necessary to increase their limit in order to just meet their carry on requirements.

I could just decline, however, applicants are hard working, budget conscious and good economic managers. I feel they deserve some assistance even if not from us. I therefore propose submitting a RAS [Rural Adjustment Scheme] to provide carry on and take the opportunity to obtain finance to bring the farm up to Y I Y O position. This takes time of course. In the meantime they wish us pay their education cheque for $2,500. Whilst I want to help, I am reluctant to let them in any deeper if there is no prospect of RAS or R & I getting assistance.

If I apply for temporary finance I must show the means of clearing the advance. In this case, assuming R & I cannot increase the limit, then RAS would provide the end finance to clear our [indecipherable] temporary. I am recommending temporary $14,000 for three months and am therefore attaching their programme so you can briefly appraise their RAS prospect.

139 Mr Danks was advised on 20 March 1978 that the application for a temporary increase in overdraft facility had been declined.

140 Mr Danks advised Mr and Mrs Smith that their application had been refused. He then assisted them to prepare applications for finance to the Commonwealth Development Bank and the Rural Assistance Authority.

141 One of the documents prepared by Mrs Smith in support of those applications sets out year in year out figures designed to show a continuing surplus from operations of around $10,000 per year. The same document contains a commentary on operations during 1977 in the following terms:

We opened 1977 with 1,000 galls fuel and 20 tonnes of superphosphate on hand, and 60 sows as well as 100 other growing pigs. Feed grain was then $30 per tonne and we proposed raising baconers. With the drought, feed prices doubled to $96 per tonne within three months. Lacking green feed and sufficient fodder, the pigs did not thrive. It also became uneconomical to raise baconers and necessary to increase sow numbers in order to sell more porkers. We planted 80 ha of crop and harvested 50 ha yielding .65 tonne per ha. The remaining 30 ha of crop did not grow high enough to be harvested. We retained all grain for seek and fodder. We commenced 1977 with good prospects and had it not been for altered economical factors due to drought I am sure we would have finished in a much better situation (TB 1, page 108).

142 I digress to observe that it is clear from the documents prepared by Mrs Smith in early 1978 that she and her husband had undertaken a careful and detailed analysis of their farming and financial performances over the preceding 12 months, and had used that to make projections for the next 12 months. There is no suggestion in these analyses that their poor performance was due to anything other than worse than expected seasonal and economic conditions, nor any suggestion that their farming strategy was flawed or needed to be reviewed. Mr and Mrs Smith were clear and emphatic in their view that all that was required to enable their strategy to work was increased finance.

143 This conclusion is strongly reinforced by a letter which Mrs Smith wrote to Mr Danks on 29 March 1978 (TB 1, page 124) in the context of an application to the Rural Adjustment Authority for finance. In that letter, Mrs Smith wrote:

We are applying for this assistance because of a shortage of cash brought about by the side effects of drought. We had proposed relying on the sale of baconers at $70 a head, based on the ready availability of cheap grain fodder at $50 a tonne. However, with the dry conditions early in 1977 farmers retained grain fodder for stock feed and the price of grain fodder doubled to $96 a tonne. This had a threefold effect on our operation:

(1) We could not afford to buy the grain we would have needed to raise the budgeted number of baconers.

(2) It became uncommercial to raise baconers, and we had to begin reorganising our pig venture. In order to maintain income levels while selling porkers at $35 a head, the number of sows would have to be increased. However, this is impractical without better facilities, so we started planning for the building of a pig house.

(3) It became more economical to retain grain grown on the property for fodder, as grain fodder is now similar to price to FAQ grain.

In 1977 we planed 80 ha of crop and harvested 50 ha, which yielded .65 tonne per ha. The remaining 30 ha did not grow high enough to be harvested, and we are at present grazing pigs on it. We have retained all grain for fodder and seed. We now plan on growing all our grain fodder, and have 90 ha of fallow prepared as part of our plan to plant 160 ha of crop, for fodder for 155 sows, which is our proposed increased number.

With increased number of sows it is necessary to have a pig shed for proper supervision and management to be carried out. We feel it would be impractical to have such large numbers of pigs without increased housing.

The assistance we are seeking would allow us to reorganise to fit in with the changes conditions we are facing, and would restore the farm to viability.

144 It can thus be seen that Mrs Smith attributed their predicament entirely to unexpected seasonal conditions. There is no suggestion that the Bank were in any way responsible for the farming or financial strategy which they had adopted. To the contrary, the letter was only consistent with Mr and Mrs Smith being in complete control of the farming strategy, and the strategy for the development of the farm. Nor is there any suggestion that the R & I Bank had breached an agreement for the provision of increasing financial support.

145 On 11 April 1978 the Commonwealth Development Bank wrote to Mr and Mrs Smith advising that their request for finance would be considered provided that they could confirm that satisfactory arrangements had been made for their carry on requirements (TB 1, page 595).

146 By letter dated 29 May 1978, the Rural Adjustment Authority advised Mr and Mrs Smith that their application for debt reconstruction finance had been refused. The letter advised:

All of the information which you presented in your application has been examined and related to the likely future income and expenditure pattern of your farming enterprise. From this examination our conclusion is that you would be unable to generate sufficient income to service the borrowing involved (TB 1, page 705).

147 In a letter dated 30 May 1978 from the Commonwealth Development Bank to Mr and Mrs Smith (TB 1, page 706), the bank noted that no reply had been received to their letter of 11 April 1978, and advised that unless a response was received with 14 days, the application for finance would lapse.

148 Mrs Smith replied to the letter from the Commonwealth Development Bank by letter dated 6 June 1978 (TB 1, page 715). In that letter she asserted that their application to the Rural Adjustment Authority 'has not been finalised yet', and further asserted that the R & I Bank had agreed to provide carry on finance for the whole scheme. Plainly those assertions are inaccurate.

149 By letter dated 7 June 1978 (TB 1, page 716) Mrs Smith wrote to the Rural Adjustment Authority requesting that their application be reassessed at the next meeting of the board of that authority. This letter asserted that carry on finance from the R & I Bank had been approved providing that the whole scheme was approved.

150 By letter dated 15 June 1978, the Commonwealth Development Bank responded to Mrs Smith, advising that the request for finance would be further considered when it had been confirmed that carry on assistance would be provided by the R & I Bank, and that the Rural Adjustment Authority had approved a loan for debt reconstruction (TB 1, page 718).

151 By letter dated 19 June 1978 (TB 1, page 719), the Rural Adjustment Authority advised Mr and Mrs Smith that while their application had been reconsidered at a recent meeting of the board, which analysed a variety of alternative programmes, the board's conclusion 'was that there would not be sufficient income generated from any of them to service the borrowing involved in bringing them about' (TB 1, page 719). The letter concluded by suggesting that Mr and Mrs Smith enter into a share cropping arrangement in relation to the land that had been cleared, in order to produce grain with which to feed their pigs. By letter dated 28 June 1978, Mr and Mrs Smith replied, asserting that the proposal for introducing sheep on to cleared land would not work, because the block was entirely covered with box poison. The letter also makes various assertions as to costs and income likely to be derived if the finance for the programme was approved.

152 By letter dated 29 August 1978, the Rural Adjustment Authority advised that after reconsidering their application, they had 'again concluded that your farming enterprise will not be able to generate sufficient income to service the liabilities which we believe will necessarily be incurred in trying to achieve that income' (TB 1, page 756). The letter continued:

Our continued inability to help you following consideration of alternative programmes, may lead you to consider whether or not you wish to remain in farming, or in fact whether you will be able to remain in farming. The Rural Adjustment Scheme does provide some assistance to farmers in positions such as yours who are considering whether or not to adjust out of farming.

153 It seems clear that Mr and Mrs Smith were not daunted by these responses, and in either late 1978 or early 1979 again applied to the Rural Adjustment Authority for finance. By letter dated 12 February 1979 (TB 1, page 2998), they were again advised that their application had been refused. In that letter, they were again referred to the suggestion made in the letter of 29 August 1978, to the effect that they consider taking the benefits of a scheme that would assist them to leave farming.

154 According to the 1980 proof, between May and August 1978 Mr and Mrs Smith were still experiencing financial difficulty and made various applications for loans to other banks, finance companies, the RAC, the Japanese Embassy, the Bridging Finance Company of WA and Wesfarmers (TB 1, page 1689). All applications for assistance were refused. It is significant that despite being told by every financial institution they approached that their farming strategy was not considered sufficiently viable to service an advance, Mr and Mrs Smith took no step to review their strategy, or seek expert advice as to its viability. They resolutely stuck to their strategy notwithstanding all the advice they had been given as to its inviability.

155 In September 1978 Mr and Mrs Smith applied to Western Livestock for financial support (TB 1, page 2615). Western Livestock agreed to enter into an arrangement with Mr and Mrs Smith, which Mr and Mrs Smith regarded as the provision of financial assistance. However, it is clear from the terms proposed that Western Livestock was not proposing to provide any significant monetary assistance, and would require all proceeds from the sale of pigs to be paid direct to it (TB 1, page 602).

156 Mr and Mrs Smith advised Mr Danks of their proposal to enter into the arrangement with Western Livestock, a term of which required the grant of a bill of sale in favour of that company. Mr Danks discouraged Mr and Mrs Smith from entering into that arrangement, and advised that the R & I Bank would give further consideration to providing financial assistance. To that end, on 20 September 1978, two farm advisers employed by the R & I Bank, Mr Stone and Mr Robinson, attended the Smiths' property and carried out inspections and interviewed Mr and Mrs Smith. According to the 1980 proof, this was followed by a meeting of five hours duration at the Ongerup branch of the R & I Bank involving Mr and Mrs Smith, Mr Stone, Mr Robinson and Mr Danks. In the course of that meeting a cash flow budget was prepared by the bank officers. Following the meeting it was completed and sent to Mr and Mrs Smith under cover of a letter from Mr Danks dated 29 September 1978 (TB 1, page 195). The letter advised that the provision of further financial assistance was subject to formal approval by the bank's head office. The cash flow enclosed with the letter was focused upon revenue to be derived from the operation of the piggery (with some other income). A document amongst those provided to Mr McCusker QC, showed that Mr Robinson had prepared a report on the finance proposal which recommended approval mainly because the only alternative was liquidation of the assets of Mr and Mrs Smith. The report suggested that there was 'a chance the Smiths may be able to trade their way out of their present position' (TB 1, page 192). The author of the report also observed:

The present piggery is a very ad hoc affair and at the interview we suggested that they reduce the number of sows to about 60 to give them more time, to build up an efficient piggery, put in the crop and carry out the planned off farm work and reduce their liquidity problems. However, they were adamant that they could handle the load. We have reservations about the Smiths' ability to rear 10 pigs per sow per annum under the present situation. We also indicated the disease problems that could occur in the present set up. The handling facilities are poor and will not allow good management practices to be carried out. In view of these possibilities we consider that this account has a high risk factor and will have to be watched very closely.

157 By letter dated 12 October 1978 Mr Danks advised Mr and Mrs Smith that the bank had approved an increase in the overdraft facility to an amount of $7,000 on the terms and conditions set out in earlier correspondence (TB 1, page 203).

158 Also included within the papers provided to Mr McCusker QC was a letter from Mr Danks to the Commonwealth Development Bank dated 18 October 1978. That bank was of course the provider of hire purchase on the tractor which had been acquired with funds advanced by the R & I Bank. The letter enclosed a copy of the cash flow which had been prepared by the R & I Bank and observed, that 'on paper, the Smiths have the capacity to get out of their present problems' (TB 1, page 205). The letter went on:

You will note that the programme relies heavily on income from pigs. The risk is high and they are somewhat vulnerable. It appeared to be the best of the alternatives and gives them a chance to generate some liquidity.

In practice however, their results for October were almost a disaster. From three pigs sales they have only fetched $1,100 so far. This is well below budgeted figures. Their pigs apparently are either not up to scratch or not in demand as they have been bringing several back from market unsold.

We are far from optimistic about their prospects for getting out of trouble in the short term without selling assets.

159 Also amongst the documents provided to Mr McCusker QC was a report from Mr Danks to the lending department of the R & I Bank dated 31 October 1978 (TB 1, page 206). The report arose from Mr Danks' decision to dishonour a cheque that had been written by Mrs Smith to pay for school fees. The report records that revenue from pig sales for the month of October 1978 had been well below budget. It also records that off farm income earned by Mr Smith was not being used to reduce bank debt, but to pay school fees. Mr Danks observed, 'I just cannot see them getting out of their problems in the short term, if at all, without selling some assets'.

160 The report concludes with Mr Danks proposing that Mr and Mrs Smith be given until March 1979 to improve their position and make a reasonable reduction in their debt, failing which consideration should be given to calling up the loan. This recommendation was accepted (TB 1, page 1702).

161 By letter dated 16 January 1979, the incoming manager of the Ongerup branch of the R & I Bank advised Mr and Mrs Smith that the bank had increased the limit on the overdraft facility to an amount of $10,000 (TB 1, page 268).

162 As I have noted, in either late 1978 or early 1979 Mr and Mrs Smith again applied to the Rural Adjustment Authority for the provision of finance. That application was refused. According to the 1980 proof, during 1979, Mr and Mrs Smith made various applications to various financial institutions for the provision of finance, all of which were refused.

163 Included in the papers provided to Mr McCusker QC was a letter written by Mrs Smith to the Chairman of Commissioners of the R & I Bank on 1 November 1979 (TB 1, page 287). In that letter Mrs Smith asserted:

In 1977, we approached the R & I Bank, Ongerup, with a view to becoming customers. Following discussions with Mr Richard Danks, the branch manager, he drew up a cash flow budget for us, and advised us of bank policy. This budget proved faulty and as a result of following his advice we have lost a great deal of money and are continuing to do so. In two years, we have gone from a debt free farm to $30,000 in debt. Our creditors are pressing and we have no way of settling unless we sell our assets and put ourselves out of business.

...

Recently we sought a legal opinion on the situation, and we are advised that the bank could be held liable for breach of contract and negligence. We feel that this would not show the bank in a good light.

It is our belief that your bank should help us, and I now request that you do so.

This letter appears to assert that the financial predicament which Mr and Mrs Smith confronted was caused by their reliance upon the cash flow budget, inconsistently with the various other documents to which I have referred.

164 By letter dated 15 November 1979 (TB 1, page 291) the Chairman of the R & I Bank replied to Mr and Mrs Smith denying that officers of the bank had at any time been guilty of negligence or breach of contract, and asserting that they had at all times attempted to be of the utmost assistance.

165 On 10 December 1979 the R & I Bank sent to Mrs Smith forms being an application for loan, information for annual review and cash flow which were to be returned to support an application for finance (TB 1, page 297). The letter advised that 'once this information is to hand we will be able to assess the application, having due regard to the viability of the farming programme'.

166 As requested Mrs Smith prepared a cash flow budget in support of an application for a loan of $30,000. Shortly before Christmas 1979, Mr Jennings, a farm advisor employed by the R & I Bank, reported (TB 1, page 300), that he could not see how Mr and Mrs Smith could service additional borrowings, even on the most favourable terms. In Mr Jennings' view, the application for $30,000 on long term loan would only pay outstanding accounts and hire purchase debt. They would still require increased overdraft assistance of about $16,000, and on their own cash flow figures the situation would deteriorate further in the following year. He concluded, 'I cannot find a satisfactory solution to the Smiths' problems. Advancing more funds would merely delay the inevitable and erode the Smiths' equity'.

167 Also included in the papers provided to Mr McCusker QC was a further report on the loan application prepared in January 1980. In that report, the divisional manager lending advised the senior manager that the farm advisor department had made a further examination of the request for finance, but had concluded that 'the position is hopeless' (TB 1, page 301). The report also notes:

Officers of the V & FA department who have interviewed Mr Smith on the property have not been impressed by his approach to farming. They have gained the impression that he is more interested in simply being on the land rather than applying himself to the task of farming the land successfully.

168 The document shows that the senior manager lending agreed with the recommendation to decline assistance. He observed that the investigations clearly show that there was no merit in injecting additional funds into the Smiths' farming enterprise. He also observed:

I am also aware of the allegation that the bank acted negligently and to the disadvantage of these people in the production of a cash flow budget, the figures for which were extracted from information provided by the customers. There are no legal or moral grounds for such an assertion.

169 By letter dated 25 January 1980 (TB 1, page 305) the R & I Bank advised Mrs Smith that the bank would not provide assistance with financing the payment due on a truck which they had acquired.

170 By letter dated 22 December 1981 (TB 1, page 347), the R & I Bank wrote to Mr and Mrs Smith noting that they had not maintained arrangements to reduce debt, or covered interest for some considerable time. The letter asserted that the indebtedness was becoming cause for great concern, and that the position could not be allowed to go on indefinitely. The letter requested that Mr and Mrs Smith provide information as to their financial circumstances.

171 Included amongst the documents provided to Mr McCusker QC, was a document which showed that Mr and Mrs Smith had not responded to the request for further information (TB 1, page 349).

172 In August 1982, Mr and Mrs Smith commenced proceedings against the R & I Bank.

173 In December 1982, Mr and Mrs Smith obtained debt reconstruction finance from the Town & Country WA Building Society. A document provided to Mr McCusker QC showed that the amount of $132,000 to be provided by that society was to be deployed as to approximately $80,000 in payment of existing debts (including approximately $42,000 owed to unsecured creditors), to permit capital expenditure of $23,000, and to provide carry on finance of almost $30,000 (TB 1, page 605).

174 A letter dated 5 April 1984 from the building society discloses that the repayment due to the society on 31 January 1984 was to be deferred, and that additional carry on finance of $20,000 was to be advanced to Mr and Mrs Smith (TB 1, page 613).

175 The default of Mr and Mrs Smith in making repayments to the building society was also clear from documents provided to Mr McCusker QC, including a copy of a notice of demand that was served upon them by solicitors acting on behalf of the building society in May 1985, demanding repayment of the entire debt as a consequence of failure to pay instalments. The amount demanded was $211,782.02 (TB 1, page 1536).

176 It was clear from the information provided to Mr McCusker QC that Mr and Mrs Smith had made no significant payments of interest to the building society, and had certainly not made any repayments of capital. Given that the advance from the building society had enabled them to pay out all existing debts, and provided additional funding for capital improvements and working capital, it is difficult, if not impossible, to see how their subsequent financial failure could be attributed in any way to the relatively modest amount which they borrowed from the R & I Bank, and which was paid out by the building society.

177 Also included within the documents provided to Mr McCusker QC was a suite of documents dealing with the proceedings which had been commenced against the R & I Bank, including advice which had been given in relation to those proceedings.

178 As I have noted, in the materials provided to Mr McCusker QC, the first occasion upon which Mr and Mrs Smith attributed their financial predicament to a breach of duty or contract by the R & I Bank was in their letter to the chairman of that bank dated 1 November 1979. However, as might have been inferred from the terms of that letter, Mr and Mrs Smith had previously consulted lawyers in relation to their complaint against the R & I Bank, and had received written advice on that topic (TB 2, pages 615 and 682), although the advice does not appear to have been included within the materials provided to Mr McCusker QC. Further, it seems that in September 1979, Mrs Smith wrote to the Premier of Western Australia complaining about the bank's conduct, and received a reply dated 18 October 1979 (TB 2, pages 688 - 694), although again these materials do not appear to have been included within the materials provided to Mr McCusker QC. However, included within those materials was correspondence passing between Mr and Mrs Smith and Messrs Michael White & McGregor, and the Legal Aid Commission, which reveal that legal aid was sought and obtained by Mr and Mrs Smith in the context of action having been taken to repossess the truck which they had acquired on hire purchase. Other materials of a similar kind showed that by March 1980, Mr and Mrs Smith were being pursued by a number of creditors who were threatening legal action (TB 1, page 1668). It was in that context that the document which I have described as the 1980 proof was prepared by Mr White after conferring with Mrs Smith.

179 By letter dated 11 March 1980 to the Legal Aid Commission, Mr White sought an extension of legal aid in order to obtain senior counsel's opinion in relation to possible causes of action against the R & I Bank (TB 1, page 1716). The causes of action identified in the letter included a claim based on the proposition that there was a contract between Mr and Mrs Smith and the R & I Bank with terms to the effect that Mr and Mrs Smith would adopt a cash flow budget prepared by the bank, and an implied term that the cash flow budget prepared by the bank would be suitable for the farming purposes of Mr and Mrs Smith, which term was breached because the budget was 'unworkable'. Reference is also made to a possible claim in negligence, also based upon the asserted deficiencies in the cash flow budget prepared by the bank. It seems that this letter was provided in draft to Mrs Smith for her comment prior to being sent to the Legal Aid Commission (TB 1, page 1719).

180 Mr McCusker QC was also provided with a copy of a letter from Michael White & McGregor to Mr P L Seaman, requesting his opinion in respect of the claim against the R & I Bank (TB 1, page 1735). A copy of this letter was apparently sent to Mrs Smith (TB 1, page 1734). In the letter, the claim against the bank was cast in terms of a claim in negligence or contract arising from asserted deficiencies in the cash flow budget. It seems a copy of the letter was sent to Mrs Smith (TB 1, page 1734). As Mr Seaman was unavailable to provide advice, the letter was instead referred to Mr Rowland QC (TB 1, page 1740).

181 Mr Rowland QC provided a memorandum of advice dated 21 July 1980 (TB 1, page 1752), which was sent to Mr and Mrs Smith (TB 1, page 1751). In his memorandum, Mr Rowland QC observed that it was essential to see what advice was actually sought by the Smiths from the bank. As he observed, from the 1980 proof, it was clear that Mr and Mrs Smith went to the bank seeking finance. Mr Rowland QC went on:

If, in fact, the Smiths went to the bank for advice on these matters that one would normally expect to get from a farm management consultant, then if that advice is negligently given, there is a cause of action and, clearly, on Mr Nelson's assessment it would seem that the advice is patently wrong.

The difficulty I see in this case is whether, in fact, that is the advice that the Smiths sought. The impression I get from the proof of evidence is that they were seeking money rather than advice on how to farm.

182 Mr Rowland QC concluded that it was not possible for him to make an assessment as to whether a claim would succeed, in the absence of a detailed proof from Mr and Mrs Smith as to the precise conversation that occurred when the cash flow was being discussed, and in particular, as to the source of the information as to the amount of land to be cropped, the amount of superphosphate to be used, and the likely yield. He posed the critical question in the following terms:

The question really is did the bank prepare the cash-flow on figures given to it by the Smiths or did the bank, in fact, supply the basic farming information as to what the farm could carry? Does the bank hold itself out as being competent to advise on actual farming operations and the cropping and carrying capacities of farms? The Smiths do not indicate in Mrs Smith's proof that they went to the bank seeking advice on farming. These questions must be thoroughly canvassed.

183 The memorandum concluded by suggesting that instructions might be given in conference, and the materials provided to Mr McCusker QC suggested that arrangements were made for such a conference (TB 1, page 1756).

184 It is to be inferred from the materials provided to Mr McCusker QC that following a conference with Mr Rowland QC, he provided a letter of advice (TB 1, page 1769), and a draft statement of claim. In the letter of advice, Mr Rowland QC observed:

I find it difficult to give a concluded opinion on the chances of success in this matter. I believe it is clear from Mrs Smith's proof and subsequent conferences I have had with her that she relied upon the advice given by the bank and she relied upon the bank's undertaking to meet the various cheques in September of 1978.

The real difficulty lies in the fact that from the farming side it is hard to understand why Mr Smith was not able to see fairly readily that the land in its then condition was simply not capable of yielding the income that was proposed. The form itself is not difficult to follow. The form, itself, sets out the estimated income for wheat and barley. If, as Mr Nelson suggests, these figures are patently too high for that particular land, I query why this was not known to be the case by Mr Smith. He had share farmed it the previous year and one would assume that he knew the likely yield on that land and that he would know how much the crop would be worth in normal circumstances and that he would know how much fertiliser was required to produce that crop.

It seems to me that this is the critical area in question and in my view, it is necessary to proof Mr Smith quite carefully as to who supplied the base information on what had to be done and what the farm was capable of doing which gave rise to the figures that were subsequently produced by the bank in its budget. Mr Smith should be proofed as to his reaction to the estimated income figures that were given.

I repeat, the form, itself, is not difficult to understand for a layman with no accounting abilities. It sets out in quite simple language the estimated income from each of the farming endeavours.

I have placed a great deal of emphasis on this aspect in my earlier memorandum and I still do. An action of this type is, by its nature, extremely costly and at the moment I am concerned that although the bank may be in default, it will probably say that it relied upon information given to it by the Smiths on which to calculate the budget. If that is not the case, then it is necessary to ascertain from Mr Smith precisely what his reaction was when he saw the estimated income that was proposed for the first year.

Unless there is a satisfactory explanation on that aspect, then I believe that the claim based on negligent representations and even the precontractual warranty will fail.

185 Mr White wrote to Mr Rowland QC on 18 February 1981 enclosing a copy of a statement taken from Mr and Mrs Smith in relation to the terms of a draft statement of claim (TB 1, page 1788). Although this letter and the statement were within the documents provided to Mr McCusker QC, it is not clear that the draft statement of claim, in its then form, was also provided. However, the letter was copied to Mr and Mrs Smith (TB 1, page 1787).

186 The draft statement contains the following passage, apparently in relation to the cash flow budget:

The clients indicated that the bank manager (Danks) said he had to prepare a budget and submit it to head office for approval. He indicated that if there were any difficulties in following or maintaining the budget line the clients should come back and discuss it with him.

It was clearly understood by the clients that they had no option in relation to the budget ie. if they wanted the money they had to in fact accept the budget and abide by it.

The budget was part of the overall package ie. if the clients had said 'we want the money but not the budget' then quite clearly they would not have received the money and it was clearly understood by the clients that they would not receive any advance unless they accepted the budget as part of the overall package.

The budget apparently provided the R & I Bank with the basis for the loan and was certainly to be followed by the clients.

It was also indicated to the clients that they had to close all accounts with other banks and bank solely with the R & I Bank. For example, Mr Smith held a savings account which he had had since his school days and he was required to deposit that with the R & I Bank.

It was quite clear that the clients had to deal solely with the R & I Bank and according to their methods and policies. As part of their policies and methods they prepared a budget to be followed by the farmers in relation to the loan advance.

In the initial discussions with the bank manager the clients provided certain information and the manager indicated to the clients that he would prepare a budget and it would go to head office. He said he could not advise them whether they would get the money definitely although he believed they would but it was subject to head office approval and ratification of his budget (TB 1, pages 1790 - 1791).

187 On the issue raised by Mr Rowland QC in respect of the source of the information used to prepare the budget, the following passage appears in the statement:

Mr Smith indicates that Mr Danks asked general questions as to what we wanted to do. We discussed in general terms our overall plan however there were no specific questions and answers in relation to, for example, total crop or total income to be received etc.

The bank had previously inspected the property and were aware of its size and croppable area and tonnage of super on hand and type of ground. Mr Danks for example indicated that he would have a look at other 'new land farmers' in the area and their budgets so that he could prepare a reasonable budget for submission to head office.

...

Mr Smith and Mrs Smith indicate that they supplied very few figures to support what they wanted to do on the farm. They provided full information as to what they intended to do on an overall basis without providing specific figures to support their proposal. They left the initial mechanics of figures etc to Mr Danks. There was no discussion as to what the farm was capable of doing specifically and figures produced by the bank and reduced to the budget were produced as a result of inquiry and research and inspection undertaken by the R & I Bank (TB 1, pages 1795 - 1796).

188 The statement also contains the passage, which I have already set out above, which records that after they received the budget, Mr and Mrs Smith were unable to read the document or make any sense of it and 'simply went away to farm the property'.

189 The three critical issues posed by Mr Rowland QC were:

(a) Did Mr and Mrs Smith go to the bank seeking farming advice or simply the provision of finance?

(b) What was the source of the information used in the cash-flow budget?

(c) Was the budget relied upon by Mr and Mrs Smith?

In relation to these issues, the statement had provided clear answers to the first and third questions. Mr and Mrs Smith had sought the provision of finance and had not relied on the budget. In relation to the question of the source of information, the statement was somewhat equivocal, by suggesting that the overall plan and strategy was provided by Mr and Mrs Smith, but the details inserted by the bank.

190 Mr Rowland QC provided a memorandum entitled 'Opinion' and dated 20 May 1981 (TB 1, page 1835). On the subject of liability, the memorandum records his conclusion that their claim would be likely to succeed, although it exposes none of the reasoning by which that conclusion was reached. I digress to observe that this is, on the face of it, a surprising conclusion, given what I would take to be fairly clear instructions in the statement briefed to Mr Rowland QC to the effect that Mr and Mrs Smith neither sought farming advice from the bank, nor relied upon the budget provided by the bank as the source of farming advice. It is of course possible that different instructions were given to Mr Rowland QC in conference, but if so, they were not recorded in the instructions provided to Mr McCusker QC and are therefore irrelevant to the current analysis, which is focused upon those instructions in the context of the alleged breach of duty by Mr McCusker QC. The balance of the document prepared by Mr Rowland QC is directed to the question of quantum and expresses doubts as to the ability of Mr and Mrs Smith to prove a general loss arising from any breach of duty or contract by the bank.

191 Mr Rowland QC also prepared a draft statement of claim (TB 1, page 1839). The draft pleading contains an assertion that the R & I Bank, through its manager, Mr Danks, held itself out as being competent to advise Mr and Mrs Smith on farming generally, and on the budgetary aspects of farming and on the 'farming requirements to give effect to' their desire to expand to full-time farming operations. Again, I digress to observe that this is a surprising allegation in the context of the instructions that had been given to Mr Rowland QC, which, at least to the extent that they were recorded in writing, did not support it. The draft statement of claim advanced claims in contract and in tort based upon alleged deficiencies in the cash flow budget.

192 In the latter part of 1981, further instructions were given, and advice provided by Mr Rowland QC on the topic of quantum.

193 On 14 March 1982, Mrs Smith prepared another document for consideration by Mr Rowland QC (TB 1, page 1946). In this document she again addressed the basis upon which she and her husband had approached Mr Danks. In essence, she emphasised that they went to see Mr Danks because they were dissatisfied with the response that they had received from the NAB and wished to obtain finance to enable them to acquire a new tractor which they considered to be vital to their expansion plans. There is nothing in her description of their dealings which would suggest that they went to Mr Danks seeking farming advice or that they relied upon him to provide that, or any other advice. In her words, '[w]e understood from Richard that the budget was a part of the requirements of the bank's paperwork' (TB 1, page 1948). This is consistent with her description of the role of the budget in the 1986 proof, and inconsistent with the role attributed to the budget in the draft pleading then under consideration.

194 In May 1982, Mr Rowland QC prepared a revised draft statement of claim (TB 1, page 1972). It advanced the same causes of action as the draft pleading he had prepared in May of the previous year. It repeated the assertion that the R & I Bank, through Mr Danks, had held itself out as being competent to advise Mr and Mrs Smith on farming generally, and on the budgetary aspects of farming. It further asserted that the cash flow budget prepared by Mr Danks 'advised the plaintiffs of the extent of the farming operations for the year, the income they could expect for the ensuing 12-monthly period and the outlays and time of outlay of moneys required to produce such income'. Curiously, a later paragraph in the draft pleading asserts that the representation was 'promissory in nature', even though there is nothing in the cashflow budget which could be characterised as incorporating a promise by the Bank (except perhaps as to the advance of funds). Presumably it is characterised in this manner because of the assertion, also included within the pleading to the effect that Mr and Mrs Smith would carry out farming operations and develop their farm in conformity with the budget prepared by the bank. I digress to observe that on the instructions provided to Mr Rowland QC, it was clear that if the relationship between Mr and Mrs Smith and the R & I Bank included such a promise on their part, it was never performed.

195 The pleading also contains an assertion that the relationship between Mr and Mrs Smith and the bank gave rise to a contract which included a term to the effect that the budget prepared by the bank was 'a proper budget that was suitable for the plaintiffs' purposes and that proper farming operations envisaged within such budget were capable of being effected within the financial restraints therein contained'. The pleading further asserts that Mr and Mrs Smith had entered into the alleged contract in reliance upon the budget. Again, that assertion is contrary to their instructions that they placed no reliance on the budget, and considered that they had reached agreement with the bank for the provision of finance at the first meeting with Mr Danks, prior to the presentation of the budget at the subsequent meeting, by which time their account with the machinery supplier had already been debited with the cost of supply of the tractor (although this precise fact may not have been known to Mr McCusker QC, the general sequence of events was known to him).

196 The draft pleading further asserts that the R & I Bank breached its contract with Mr and Mrs Smith because of certain deficiencies in the budget. The draft pleading also asserts a cause of action in negligence based upon negligent advice in the form of the budget. Further causes of action were pleaded in relation to the negotiations that occurred in the latter part of 1978, in the context of the negotiations which Mr and Mrs Smith had undertaken with Western Livestock Ltd. It unnecessary to dwell upon those causes of action, as nothing turns upon them.

197 As I have mentioned, Mr and Mrs Smith commenced proceedings against the R & I Bank on 4 August 1982 (TB 1, page 2800). A statement of claim was issued on 6 August 1982 (TB 1, page 2804). The statement of claim took the form of the draft which had been prepared in May 1982.

198 The copy of the bank's defence provided to Mr McCusker QC is undated save for the reference to the year 1982 (TB 1, page 2824). In its defence the bank asserts that when Mr and Mrs Smith approached the bank, they represented that they had a lifetime of farming experience and by implication were competent and experienced farmers. The defence further asserted that Mr Danks completed a standard cash flow form on the basis of information supplied by Mrs Smith. The defence further asserts that Mr and Mrs Smith were unable to meet the budget by their own default. The legal characterisations put upon the dealings between Mr and Mrs Smith and the bank, and the causes of actions said to flow from them were all denied.

199 Interestingly, among the documents provided to Mr McCusker QC is a draft application form for finance under the Rural Adjustment Scheme apparently prepared in October 1982, shortly after the bank filed its defence (TB 1, page 2059). In answer to the question on the form seeking a summary of experience in farming, someone, apparently on behalf of Mr and Mrs Smith, has written that Mr Smith has 'lifetime farming experience, took up present property as C/P block in 1952'. Further, Mrs Smith is described on the form as a 'part qualified accountant'. The form also lists the many creditors who were then pursuing Mr and Mrs Smith in a total amount of around $23,000. Secured creditors are shown as totaling $54,000. Of course, these amounts substantially exceed any amount advanced by the R & I Bank. As I have noted, these creditors were paid out with funds received from the Town and Country Building Society in early 1983, together with other funds for capital expenditure and ongoing working capital.

200 In September 1982, the bank provided discovery (TB 1, page 2840).

201 In November 1982, the bank applied to strike out part of the statement of claim (TB 1, page 2860).

202 Included amongst the papers provided to Mr McCusker QC is a letter from Mr White (who had by then commenced practice on his own account) to Mrs Smith dated 25 November 1982 (TB 1, page 2096). That letter refers to a conference which followed the bank's application to strike out part of the statement of claim. The letter records:

I confirm that the statement of claim as currently pleaded accurately reflects your instructions and that you are satisfied with that document. I note however your anxiety in relation to any potential deletions from the document. I have written to Mr Rowland of even date requesting an appointment time so that you and I may attend him to discuss the nature of any potential deletions to the statement of claim.

203 On 14 December 1982, Mr Rowland QC prepared a minute of proposed amendments to the statement of claim intended to address the issues raised in the application to strike out part of it (TB 1, page 2125). The amendments proposed are essentially matters of nuance, save for the insertion of paragraphs which alleged breach of contract by the R & I Bank failing to provide a sufficient overdraft facility to enable Mr and Mrs Smith to continue their expanded farming operations. In that context, I note that the bank had in fact increased the overdraft facility available to Mr and Mrs Smith on a number of occasions, and further, that Mr and Mrs Smith had in fact financed their operations by acquiring goods and services on credit which resulted in the various claims from creditors referred to in the documents provided to Mr McCusker QC.

204 Amongst the documents provided to Mr McCusker QC was a letter from Mrs Smith to Mr White of February 1983 (TB 1, page 2163). In that letter, Mrs Smith advised Mr White that the debt to the R & I Bank had been paid out as a result of the borrowings from the Town and Country Building Society. She described that borrowing in the following terms:

We borrowed about $135,000, which is sufficient to allow us to recommence farming slowly. We intend, indeed are bound by this new arrangement, to purchase certain other machinery, plant 1,000 acres of crop this year and make one annual repayment after crop returns in 1984. We had to agree in writing that if we fail this year we will, after seven days' notice from Town and Country, place the property on the market.

205 It is significant that Mr and Mrs Smith proceeded to borrow these funds despite the advice they had repeatedly received from the many financial institutions who had previously rejected their requests for finance on the ground that their farming operation would not produce sufficient revenue to service the debt. Further, as I have noted, notwithstanding this injection of funding, it was apparent from the instructions provided to Mr McCusker QC that the Smiths' farming venture had failed. It is difficult, if not impossible, to see how that failure could be attributed in any way to any funds advanced, or advice given or not given by the R & I Bank six years earlier, given that:

(a) the farming enterprise upon which Mr and Mrs Smith embarked in 1983 involved a substantial cropping enterprise, and was quite different in character to that discussed with the R & I Bank which focused upon raising pigs; and

(b) no significant repayments of capital or payments of interest were made by Mr and Mrs Smith to the building society, so that it could not be said that their ultimate failure was attributable to the burden of continuing debt.

206 During the first half of 1983, there was a deal of correspondence between Mr White, Mrs Smith and Mr Rowland QC relating to the amendment of the statement of claim, all of which was provided to Mr McCusker QC. One such document was a letter from Mrs Smith to Mr White dated 23 June 1983 (TB 1, page 2190), in which Mrs Smith observed:

I have reread the statement of claim, and I note that it makes clear that we intended to stay on that particular farm and expand those particular farming operations.

207 There is nothing in the letter that suggests that Mrs Smith was concerned at that assertion. The correspondence does not suggest that Mr and Mrs Smith were open to suggestion or advice as to that ultimate objective.

208 The first payment due by Mr and Mrs Smith under the advance from the Town and Country Building Society was to be made in January 1984. Amongst the documents provided to Mr McCusker QC was a letter from the building society dated 5 April 1984 (TB 1, page 613) to Mr and Mrs Smith advising that the repayment due in January 1984 would be deferred, and additional carry on finance of $20,000 would be advanced for the 1984/1985 season. Also included amongst the documents provided to Mr McCusker QC was a notice of demand from the building society to Mr and Mrs Smith dated 15 May 1985 (TB 1, page 1536). In that demand, it was recorded that Mr and Mrs Smith were in default of instalments due under the mortgage totaling $74,265, as a result of which the whole of the principal sum and interest was demanded, namely, $211,782. Mr McCusker QC was also provided with a further notice of demand issued by the building society in October 1985 (TB 1, page 1576), which revealed that overdue instalments had by then reached $93,965, and the outstanding principal was $228,825. It is clear from the figures in these documents that Mr and Mrs Smith had made no significant repayment to the building society, of either capital or interest.

209 The amendments to the statement of claim which had been the subject of the correspondence in the first part of 1983 to which I have referred, were not in fact made until an amended pleading was filed on 6 June 1985 (TB 1, page 2907). There is no apparent explanation for the delay of almost two years in making those amendments.

210 On 26 February 1986, the bank filed a substituted defence (TB 1, page 2934). In that defence, it was again asserted that the budget was prepared on the basis of, and using, information supplied by Mr and Mrs Smith. As a consequence, it was also pleaded that if the budget was unrealistic and/or incapable of being implemented, that was because of the inaccuracy of the information supplied by Mr and Mrs Smith to the bank and/or because of the poor management and conduct of farming activities by Mr and Mrs Smith.

211 This was the state of the proceedings brought by Mr and Mrs Smith against the R & I Bank when Mr McCusker QC was instructed in August 1986. As I observed when dismissing those proceedings for want of prosecution, the defence filed by the bank in February 1986 was the last substantive step taken in those proceedings, in that the only documents filed between then and the bank's application to dismiss the proceedings for want of prosecution 22 years later in 2008 were notices of change of solicitors filed on behalf of Mr and Mrs Smith in September 1991, and on behalf of the bank in June 2008 (Smith v Commissioners of the Rural & Industries Bank of Western Australia [2009] WASC 100 [17]).

212 It is appropriate to now specifically address the 1986 proof, as Mr and Mrs Smith place considerable reliance upon that document in support of their allegation that Mr McCusker QC breached his professional duties. However, it is important to approach the 1986 proof, as any sensible legal advisor would, recognising that it was prepared nine years after the critical discussions between Mr and Mrs Smith and Mr Danks, four years after the commencement of legal proceedings against the bank, and at a time when Mr and Mrs Smith faced the imminent loss of the farm which had been their life's work. The accuracy of the events recalled in the proof would undoubtedly have been diminished by the passage of time, and coloured by the predicament which Mr and Mrs Smith faced.

213 In the section of the proof relating to their dealings with the NAB, Mrs Smith describes the difficulties that they had experienced in obtaining sufficient finance from the NAB. In that context she stated:

[W]e decided that, because our present tractor was not adequate for the future development of the farm, we would look into the purchase of a new tractor, to enable us to undertake cropping as part of our aim to make the farm self-supporting. We went to see some tractors, and picked out the one Jim thought the most suitable for our needs, and we went to see Mr Ennels (the NAB bank manager) to see if suitable finance could be arranged. We explained to him why it would be a good move, in our opinion, providing suitable finance was available. He would only allow us [a] $3,000 deposit on a smaller tractor, which was too small to handle our machinery in the rough paddocks, so Jim and I discussed it, and, as I had a personal account at the Rural and Industries Bank (R and I), in Ongerup, and the R and I was supposed to be a bank set up to finance farmers, we went to the R and I to inquire whether there was any suitable finance available there (TB 1, page 2561).

214 This passage of the proof is consistent with the proposition that Mr and Mrs Smith had decided upon the farming strategy which they wished to adopt, and required a heavy duty tractor to implement that strategy. It further supports the conclusion that their purpose in approaching Mr Danks was to obtain finance, not farming advice.

215 I have set out already (at [116]) above, the most pertinent portion of the 1986 proof concerning the purpose of visiting Mr Danks. As I have observed, there is nothing in that description of the meeting with Mr Danks that would suggest he held himself out as being able to provide farming advice, or purported to give such advice, or that the documentation to be prepared by him was for anything other than the bank's purposes.

216 Much of the 1986 proof is concerned with the cash flow budget prepared by Mr Danks. Errors in the budget are identified (TB 1, page 2565). Mrs Smith asserted:

Now that I know how to do budgets I know how much work has to go into putting together and how much information has to be gathered. For many reasons we would have been unable to draw up the programme and budget for the development of our farm. We did not know how to do a full and proper budget. Anyone can see that the income goes in one place and the expenditure goes in another, but there is a lot more to it than that. The inexperienced person, or the ill-educated, is intimidated by the possibilities when confronted by a cash-flow budget form. I had really only seen the forms put out by the Commonwealth Development Bank and the National Bank. Just looking at these two it is clear that an ordinary person would have no idea what sort of forms might be required, as each bank clearly has its own preferences. Cash-flow budget forms are a vital part of this case, and a part of the reason we requested Richard to do our budgeting for us (TB 1, page 2566).

217 I digress to observe that the assertion that 'cash flow budget forms are a vital part of this case' is somewhat inconsistent with the proposition now advanced to the effect that Mr McCusker QC was negligent in placing too much emphasis in his opinion upon the cash flow budget prepared by the bank.

218 In another portion of the 1986 proof, Mrs Smith refers to her inability to 'prepare a programme for the development of the farm'. However, when viewed in context, it is clear that she is there referring to the paperwork that would be required by a financial institution to support the grant of finance (TB 1, page 2567). It is clear from the 1986 proof that Mrs Smith was drawing a distinction between the strategy for the development of the farm, which she and her husband had agreed upon, and the paperwork required by financial institutions to support the approval of finance.

219 Because the 1986 proof was prepared without legal assistance, it fails to draw a clear distinction between what was said or written in the course of communications with the bank, and unexpressed opinions held by Mr and Mrs Smith at the time of those communications. Of course, the extent of the bank's duties to Mr and Mrs Smith is to be identified by reference to the former, not the latter. An example of that failure to distinguish is the passage I have set out immediately above, all of which is concerned with Mrs Smith's uncommunicated state of mind, save for the inferential suggestion that Mr Danks was asked 'to do our budgeting for us'. That suggestion is, however, inconsistent with other portions of the instructions given to Mr McCusker QC, from which it was clear that the cash flow budget was prepared for the bank's purposes, not for Mr and Mrs Smith's purposes.

220 Another example of this characteristic of the 1986 proof is the following passage:

We were just two ordinary people enquiring about a loan, and it never occurred to us that the bank manager would not be capable of advising us. Apart from the technical side of banking, I was not trained to do the act of working out the figures for a budget and development programme. I would have had to consult experts to get a lot of the proper estimates; and we had no telephone, so that would have meant writing to them and waiting for a reply and rewriting if I needed more information.

...

The fact of the emergence of farm management courses, consultants, budget guides, computer programmes and seminars etc., is an indication of the general need for these services at that time and a general lack of them; but no matter how well equipped or informed the farmer becomes, only a banker can say whether his bank will lend him the money, and refusal is quite often for reasons unknown to the customer (TB 1, page 2568).

221 There is nothing in that passage which suggests that any of these matters were the subject of communications between Mr and Mrs Smith and Mr Danks. Further, in the context of the 1986 proof as a whole, it is a fair inference that, in this passage, Mrs Smith is referring to the preparation of a document required to support an application for finance, not the development of a farming strategy. That inference is reinforced by the following passage from the 1986 proof:

The average person is not in a position to know all these things, and so only his bank manager can advise on whether the bank will lend money on the facts put before it. It is not possible to know before the application goes through the bank system whether you have slotted the facts of your application in with what the bank policy is. We knew that we were inexperienced, and so we asked Richard to draw up the budgets for us, and to advise us on the most appropriate kind of finance for us and we supplied him with all the information we had. We said we would need at least $3,000 apart from the tractor deposit, as we had to pay $1,000 in accounts, and we had to pay out the National Bank debt of $2,000, which would mean an immediate pay-out of $3,000. We said we thought we needed a long-term development loan like the soldier settlement farmers used to get over 30 years at low interest, but he said they were not available any more (but they were - see G34 page 86 and 87) [references to documents originally annexed to the proof] but that the bank serviced the same needs through overdrafts and other loans. We believed him, and went on with the discussion. We described our property and assets and our belief as to their value. He did not contradict us. We described the farm, Richard took in the information given to him, and wrote it all in the bank documentation. We told him we had 200 pigs, consisting of 50 sows, 150 mixed pigs from birth to baconer, and we would be able to sell 150 of these during the year, and in addition some of our sows were pregnant, and these, together with future pregnancies, would produce about 300 more pigs during the year, which could be sold as baconers. We said we would like to build up the number of sows until eventually we had 100 to 150 sows, in full production some years in the future. We said we could breed our own sows, but may also be able to improve bloodlines by purchasing some, but they were expensive and may not thrive out of sheds. We said we would need at least $3,000 for fodder to start with, and that if we could afford it, meatmeal, which should be added to the pigs' diet to speed up production. We had not done a chart like (G41), as we did not know how to do it, but we tried to give Richard the idea of what would be involved in raising for baconers for sale at a constant rate, and we said that you have to keep the food up to them or they don't grow. We also said that they grow slower than pigs raised in sheds, but you get a better quality carcass, because of the exercise they get and the roughage they eat. We said we could sell the pigs we had on hand as they reached baconer stage, and depending on the carcass weight you would expect returns of between $55 to $70 per head. We said that the price of pig feed was currently $50 a tonne, but that it went up and down, depending on seasonal conditions. If there was early rain in 1977, the grain that the farmers held back for sheep feed would be on sale, as the sheep would then be eating green feed, and the grain would be cheap. If it was a late year, the farmers would keep back their feed grain and it would be expensive. The bank would need to know that in order to understand our situation and financial needs. As far as cropping went, the land we were proposing to crop on our property had been cleared some years ago, but that we had been involved in share farming, and while we were away and since, the bush had grown back up to a height of 3 to 4 feet, (as seen by inspection of Richard's relieving officer) so we would have to chain it, plough it, root rake it, plough it again and then seed it. The land to be share farmed was all cleared and clovered and some of our land had clover on it. We had 1,000 gallons of fuel on hand and would need to buy more later. We thought it may be enough for seeding but we didn't know how much fuel the new tractor would use, so there was need to have flexibility. As far as crop yields were concerned, we said that as with all crops, it depended on how good the season was. If we had a good season we could get up to six bags to the acre, and if we had a bad season it could be as low as two bags to the acre, or could be unharvestable as, unless it grew high enough, it couldn't be harvested on the rough ground, because the header would be broken by the mallee roots and rocks. We said we had enough super on hand for half a bag to the acre over the whole crop. We thought it would be good if we could put more, but were uncertain whether we could afford it, and that would depend on how much money the bank could lend us and we could repay. We have seen many people waste thousands of dollars on super, and we had observed conservative neighbours who consistently got good yields with reasonable applications of super by using good tillage techniques, and we hoped to emulate them (TB 1, pages 2569 - 2572).

The passage goes on to discuss various other agricultural issues relating to the presence of weeds, the use of careful tillage methods, the use of urea and so forth.

222 It is again clear from this passage that Mr and Mrs Smith understood that the budget was being prepared for the bank's purposes, not theirs, and that it would be prepared from the information they were giving to Mr Danks. The passage is entirely inconsistent with any proposition that they were looking to Mr Danks for advice as to the farming strategy they should adopt, or as to the likely profitability of that strategy, given the unpredictability of farming returns.

223 At another point in the 1986 proof, Mrs Smith observes:

We told Richard there would be pig sales, crop income, wages, pension and education allowance. When asked about our costs we gave him rough estimates, and some of these are what appear on the cash-flow forms. They may have been wrong and we told him so. They were guestimates. We had never operated at full production before and we just didn't know how to estimate the amounts properly. What happened was that he sat on one side of the desk and asked questions and wrote down our answers. Taking pig fodder for example, he asked us how much fodder would cost for the year. We said, 'Well, we haven't sat down and worked it out in detail but $3,000 should be enough, but it will depend on how expensive it is'. He said, 'Well, yes, but we have to have a figure to work on, what would you say, $3,000 then?', and we said, 'Well, yes, providing we can come back to you if there are any problems' and he said, 'That's what I'm here for. The cash-flow is a guide, but ring me and discuss any problems you might have'. We said, 'One of the problems we are having with the National Bank is that we can see the most practical way to spend money and we ring and ask the manager and he won't allow us to do it. He said, 'Well that's what the R and I is for. It's set up for farmers' needs and understands their problems' (TB 1, pages 2575 - 2576).

224 This passage reinforces the conclusion that the basic information included within the cash flow budget was provided by Mr and Mrs Smith, to their knowledge, and that they were essentially looking to the R & I Bank to provide the finance they required to implement their programme, rather than for advice as to the programme appropriately implemented, or as to the viability of their plans. Indeed, their complaint with the NAB was that the bank would not support their farming decisions with the provision of appropriate finance.

225 At another point in the 1986 proof, Mrs Smith describes their meeting with Mr Danks in the following terms:

When we were sitting across that desk from him, giving him information and figures, we didn't know how it would turn out. We had come to see if we could get money. We had not come to present him with a fully worked out set of figures. We wanted to improve out position and we were happy to co-operate with him. We told him everything. We just trusted in him to put it all together in a professional way. We said we needed $3,000 to pay out the bank and pay our accounts but we didn't say, 'Look, we can do it, just give us $3,000 and we'll be right'. We told him all our doubts, problems, hopes and reasonings, and he, for some reason, incomprehensible to me, drew up the cash-flow budget presented here. We were too ignorant to know that wasn't how it was done. What should have happened was that a much more thorough approach should have been taken. The basic aim was not to buy a tractor. Obviously we had enough assets to sell some and pay cash for it. The basic aim was to continue in our chosen direction of living on the farm, developing it and earning our income from it. At that time we needed a tractor and we decided that instead of selling other old machinery and assets, it would be more practical to keep the old machinery in case of emergency or for parts or repair and sale later, and to increase our assets and borrow the money to allow us to purchase the new tractor, provided it was possible to do without putting our whole operation at risk. We stressed this one condition to Richard time and time again. We said 'we don't want to get in over our heads. We've managed okay until now and it would be better not to buy the tractor than to send ourselves broke'. He agreed, but said that he understood and that the R & I Bank was a reasonable bank, not in the business of sending people broke, but rather in the business of helping them to prosper (TB 1, pages 2577 - 2578).

226 The observation I have already made about the tendency to intermingle unexpressed subjective thoughts or objectives with evidence of what was said in the dealings with Mr Danks is pertinent to this passage. The passage is also somewhat equivocal, given that it commences by asserting that their purpose in seeing Mr Danks was to get money, but then inferentially suggests, in the latter part of the passage, that by saying to him that they did not want to 'get in over their heads' they were looking to him for some kind of advice. However, nowhere in the 1986 proof, or in any of the statements Mrs Smith has made about her dealings with Mr Danks, is it suggested that they ever told him that they were looking to him for advice on whether they should acquire the tractor, or how they should manage the farm. Nor has it ever been suggested at any point that Mr Danks purported to give that advice.

227 At another point in the 1986 proof, Mrs Smith suggests that Mr Danks should have visited the farm to look at the pigs. She suggested he should have done so because 'he would have known how to write down the proposed pig sales, as he would have seen that we could only sell baconers (which is a large pig), as the smaller ones grew to baconer size' (TB 1, page 2579). However, there is no suggestion that Mr and Mrs Smith ever inquired of Mr Danks as to his experience in pig farming, or that he held himself out as having any expertise in that field. Further, the passage in the 1986 proof to which I have already referred makes clear that the information in respect of projected pig sales and likely revenues was provided by Mr and Mrs Smith.

228 In the 1986 proof Mrs Smith also suggested that Mr Danks should have inspected the land to see the regrowth on the area intended for cropping. However, once again, there is no suggestion that Mr and Mrs Smith considered Mr Danks had expertise in cropping, or that he held himself out as having that expertise. Further and in any event, as the portion of the proof I have already set out makes clear, they clearly described the condition of the regrowth to Mr Danks, and indicated precisely the work that had to be carried out to make the land suitable for cropping.

229 A large part of the 1986 proof is devoted to commentary upon the various documents which Mrs Smith had compiled in the lever arch files. Although the first part of this portion of the 1986 proof is entitled 'The evidence of what was said between Richard and us', it does not provide any further exposition of what was actually said at the meetings with Mr Danks. Rather, the document takes the form of a précis of each of the many documents included in the files provided to Mr McCusker QC. The other parts of this portion of the 1986 proof are similar in character, although in some areas somewhat more argumentative, such as those portions which contain assertions as to the proper banking advice Mr Danks should have given. However, occasionally interspersed through these parts of the 1986 proof are statements as to what was said in the meetings with Mr Danks. For example, Mrs Smith wrote:

We explained to him when we first saw him that, although we knew what the farming side involved, we did not know how to put it in written form and we asked him to do it for us (TB 1, page 2593).

230 This assertion is consistent with the conclusions properly drawn from the other portions of the 1986 proof to which I have referred - namely, that Mr and Mrs Smith were clear in their own minds what their farming strategy would be, but wanted documentation prepared to enable them to obtain finance to support that strategy.

231 In another portion of the 1986 proof, Mrs Smith characterises the arrangements she had negotiated with Western Livestock Ltd in the following terms:

Stock firms do not usually lend lump sums or long-term, but they will allow you to overdraw your trading account as long as there is money going in, so we came to an arrangement to buy and sell pigs through them and to withdraw cash from the programme. This involved borrowing $2,500 in September, $3,000 in October, repaying it in November, and from December using the income earned ourselves, while continuing to purchase 40 slips, or small pigs, a month, to keep sales going. It was a good scheme, with all the elements necessary to get us out of our difficulties. If we had adopted it, we would have gradually been able to pay off the creditors and establish ourselves (TB 1, pages 2615 - 2616).

232 Mrs Smith's optimism about the outcome of this arrangement is difficult to understand. It was apparent from closing submissions made during the trial that she appears to fail to comprehend that the arrangement did not involve the provision of any substantial financial assistance from Western Livestock Ltd - no more than about $5,000 at any one time - but if adopted, would have tied up all the revenue from the sale of pigs, to the detriment of Mr and Mrs Smith: see the report of Dr McKenzie of 6 December 1991 (TB 2, page 2250). Mrs Smith's unshakeable belief in the benefit likely to be derived from those arrangements is entirely misplaced (ts 1336). As it happened, the R & I Bank provided greater financial assistance than was being offered by Western Livestock Ltd, but the pig sales anticipated by Mr and Mrs Smith never eventuated.

233 At another point in the 1986 proof, Mrs Smith draws attention to the internal bank document, in which one of the farm advisors who visited their property in the latter part of 1978 had recorded his view that it was an 'abortion of a pig farm and deep in debt' (TB 1, page 2617). Mrs Smith resisted that characterisation of the property (understandably enough).

234 The 1986 proof was apparently prepared in two parts. There was an issue at trial as to precisely when the second part was delivered to Mr McCusker QC, but nothing turns upon that issue, as it is clear that he received it at some point prior to the preparation of his opinion, and it is not suggested that Mr McCusker QC deferred the provision of his advice pending delivery of the second part of the proof. The second part, like a substantial portion of the first part, provides a commentary upon the various documents that had been included within the files compiled by Mrs Smith. This part of the proof is mostly argumentative, and largely devoid of evidentiary content independent of the documents to which reference is made. In relation to the advance by the Town and Country Building Society, Mrs Smith asserts that the advance 'put a very big strain on our operation. While it was nice to have the debts paid, the debt level and development requirements were too high for efficient operations and normal seasonal variations, plus the debt levels have caused the debt to escalate' (TB 1, page 2717). However, this assertion appears to ignore the fact that Mr and Mrs Smith did not service the debt to the building society in any material respect, prior to the sale of the farm by the building society.

235 So far I have only addressed the instructions give to Mr McCusker QC at or about the time he was retained. As I have noted, that was in August 1986, after Mr McCusker QC had advised Mr Gilmour that due to other commitments, he would not be able to provide advice on an urgent basis. On 13 February 1987, Mr Gilmour wrote to Mr McCusker QC inquiring whether his opinion had been finalised (TB 2, page 1463). It appears that no reply was received. Mr Gilmour wrote again on 2 June 1987 expressing concern that application might be made to strike out Mr and Mrs Smith's claim for want of prosecution (TB 2, page 1472). Again, it appears that no reply was received. A file note made by Mr Gilmour on 14 September 1987 was tendered in evidence (TB 2, page 1473). It records a telephone conversation with Mrs Smith, arising from her distress at the lack of progress. The note records that Mr Gilmour had been in touch with Mr McCusker's office several times over the last few months, and that on the last two or three occasions he had spoken to Mr McCusker QC, he had been advised that he would be given something by the end of the week. However, that had not eventuated. The note records that Mr Gilmour made contact with Mr McCusker's secretary and advised her of their concerns. The note records that he indicated to her that consideration was being given to terminating Mr McCusker's instructions, but that he was concerned that he would experience similar delay if he changed senior counsel at that point.

236 During cross-examination, Mr McCusker QC explained his inactivity over this period on the basis that he was awaiting further instructions which he had sought from Mr Gilmour (ts 883 - 885; 1174 - 1176). However, those assertions are inconsistent with the letters and file note to which I have referred, and not otherwise corroborated. It is, of course, to be remembered that Mr McCusker QC was giving evidence 23 years after the events in question and that he has acted for many other clients on many other matters over that period. During closing submissions, I indicated to counsel representing Mr McCusker QC that I had difficulty with that portion of Mr McCusker QC's evidence which appeared to me to be inconsistent with the contemporaneous records. Counsel did not press me to accept that evidence, and I do not (ts 1305).

237 Mr McCusker QC did not dispute the proposition that he was under a duty to provide his advice within a reasonable time. Rather, it was put on his behalf that what was a 'reasonable' time was to be assessed taking into account the conversation with Mr Gilmour at the time he was retained, to the effect that he was very busy and would not be able to provide advice urgently.

238 It was also submitted that an assessment of the 'reasonableness' of time taken to provide his advice should take account of the increases in client expectations of timeliness which have occurred over the last 20 years or so. I accept that general proposition, but the contemporaneous records of the communications passing between the parties on the subject of delay in the provision of Mr McCusker QC's advice show that the periods of delay involved substantially exceeded expectations at that time.

239 As I have observed, the instructions provided to Mr McCusker QC did not resemble anything that could properly be described as a brief. The volumes of documents provided to Mr McCusker QC were largely incomprehensible. Most barristers would have returned the documents provided and insisted upon a proper brief. However, that was not the course taken by Mr McCusker QC.

240 Ultimately, arrangements were made for Mr McCusker QC to confer with Mr Gilmour and Mr and Mrs Smith on 2 October 1987. This was a little over 13 months after he had been retained. Although the delay may be explained by the incomprehensibility of the instructions provided to him, it did not justify it. If that was the reason for Mr McCusker QC's lack of action, the proper course was for him to notify Mr Gilmour accordingly as soon as he became aware of the lamentable state of his instructions. Nor was delay of that magnitude justified by the observation made by Mr McCusker QC to the effect that he would be unable to provide advice on an urgent basis. On any view, 13 months delay is well outside any notion of 'urgency'. Accordingly, I conclude that Mr and Mrs Smith have made out their complaint that Mr McCusker QC breached his duty to provide advice in a timely fashion in respect of this period of delay. It seems to me that a period of about four months would have been a reasonable period within which to form the views which were ultimately expressed by Mr McCusker QC in conference on 2 October 1987. Accordingly, I conclude that a period of nine months delay is properly attributed to Mr McCusker QC's departure from an appropriate standard of timeliness. I will address the complaints relating to other periods of delay in due course.

241 Mr Gilmour's handwritten notes of the conference which took place on 2 October 1987 are in evidence (TB 1, page 1474). They record the following instructions given by Mr and Mrs Smith:

On receipt of budget they were at once aware of insufficient provision for fertiliser, feed, income from barley/wheat.

242 The notes also suggest that Mr and Mrs Smith complained that the budget allowed insufficient funds to develop a piggery, and that the kind of financing provided was inappropriate in that it was a 12-month loan, rather than a long-term development loan. The note also suggested that Mr and Mrs Smith complained that they understood that the bank had agreed to provide reasonable finance - that is, up to $40,000 overdraft facility over four years.

243 Those notes are consistent with a typed file note made by Mr Gilmour a few days after the conference (TB 1, page 1478), which records that before Mr McCusker QC could provide his opinion as to the quantum of damages, expert evidence would be required as to the following:

1. In the circumstances of the Smiths' case and on the basis that the effect of what Danks said was that the bank would provide reasonable finance to the Smiths to achieve the proposed farm development amounted in effect to the provision of a facility of approximately $40,000 over four years.
2. If in early 1978 the R & I Bank had complied with the request for an increase in the overdraft facility from $13,000 to $43,000 over a period of 12 months, then the piggery could have been viable within three years and making profits by then of approximately $20,000 per annum.

244 These notes suggest that the focus of matters discussed at the conference was an assertion that the bank's breach of duty lay in a failure to provide sufficient funding to enable the piggery to be developed as proposed by Mr and Mrs Smith.

245 On 14 October 1987, Mrs Smith wrote to Mr Gilmour. A copy of that letter was provided to Mr McCusker QC (TB 1, page 2724). The letter recorded that Mrs Smith had sought expert advice from a Mr Norman Godfrey, an expert in the production of pigs.

246 The letter also expresses concern at the 'apparent lack of knowledge of the overall facts of the case by both yourself and Mr McCusker'. It contained an assertion that neither Mr Gilmour nor Mr McCusker QC were really familiar with what was written in the witness proof. I digress to observe that if that observation is accurate, it is not particularly surprising, given the form which the witness proof took. Responsibility for the incomprehensibility of that document does not rest with Mr McCusker QC, but, on the face of it, with Mr Gilmour, given his role as instructing solicitor. However, Mr Gilmour took no part in these proceedings, and there may well be an explanation for the form of the 'brief' to Mr McCusker QC. The letter from Mrs Smith also records observations which are consistent with consideration being given to a case based upon the bank's failure to provide further finance in 1978.

247 Also in October 1987, Mr Gilmour wrote to Mr McCusker QC, apparently at the request of Mr and Mrs Smith, drawing his attention to the negotiations with Western Livestock in late 1978, which Mr and Mrs Smith considered (and apparently still consider) to be of great importance (TB 2, page 1479). For the reasons I have already given, this view of the importance of the Western Livestock negotiations is misconceived.

248 Mr Godfrey provided a report dated 16 October 1987, which was also provided to Mr McCusker QC (TB 1, page 2732). He expressed his conclusion in the following terms:

The bank's cash-flow budget provided insufficient funds for feed if the herd size and potential productivity was to be maintained. As a result, whatever course of management strategy was undertaken, the herd asset and potential for earning income in the second year was severely eroded.

Had sufficient funds been provided to maintain the breeding herd and its productive capacity for the full two years, the operators would have improved their position by $15,200 (inventory change plus operating surpluses). The best that could probably be achieved with the bank's budget, by the end of the second year, would be $2,400 improvement. The difference could be regarded as capital improvements which could have consolidated and increased the big enterprise.

249 I digress to observe that this opinion does not appear to suggest that the constraints imposed by the finance provided by the R & I Bank would have resulted in an unprofitable venture. Rather it suggests that the limitations upon finance reduced profits by a little under $13,000.

250 I digress also to observe that the focus of Mr Godfrey's report was upon the budget provided by the bank, notwithstanding the instructions clearly and unequivocally given to the effect that Mr and Mrs Smith did not rely upon that budget. In that context, it is also difficult to understand the assertion made by Mrs Smith in the letter of 14 October 1987, to the effect that following recent discussions with Mr Gilmour, 'the important matter to demonstrate is that the initial advice received in March 1977 is the most important to seek expert opinion on, and that all damages will flow from that'. As the only thing resembling 'initial advice' is the cash flow budget, this assertion is difficult to reconcile with the statement that Mr and Mrs Smith were 'at once' aware of the budget's deficiencies, in a context in which they had agreed upon the provision of funding by the bank, and committed to the purchase of the tractor, prior to receiving the cash flow budget.

251 On 23 October 1987, Mr McCusker QC wrote to Mr Gilmour. In the letter he recorded that he had received quite a large quantity of additional material from Mr and Mrs Smith following their conference on 2 October 1987. The letter records a summary of Mr McCusker QC's preliminary opinion in the following terms:

(a) The basis of the claim as presently pleaded is questionable. It is based on alleged negligent advice in the form of a budget which Mr Smith in the course of our conference agreed had been obviously incorrect and on which no reliance appears to have been placed.

(b) The real basis of any claim appears to be the allegation that the bank had undertaken to provide sufficient finance. That, of course, begs the question of what is meant by 'sufficient'.

(c) Assuming that it can be established that there was a promise to provide 'sufficient finance'; that the meaning of 'sufficient' can be established; and that there was a breach of that undertaking, the question then is, what damages flow?

(d) It appears to have become very clear at quite an early date that the bank was not prepared to provide further finance, so that a further question is, what steps were taken to obtain alternative finance?

(e) Finally, on the question of damages, I have pointed out to Mr and Mrs Smith that any damage claimed must be shown to have been a direct result of the bank's breach of its alleged undertaking to provide sufficient finance (TB 2, page 1505).

The letter concludes by suggesting that a further conference be arranged.

252 Mrs Smith made notes after receiving a copy of Mr McCusker QC's letter of 23 October 1987. She says that she supplied those notes to Mr McCusker QC at a subsequent conference. In those notes she records:

Perhaps some reliance was placed on the budget, even if only as a document required by the bank. It was handed to us as a guide to go by (TB 2, page 1507).

253 This note is consistent with the conclusion I have drawn from the 1986 proof, as to the understanding which Mr and Mrs Smith had as to the purpose of the budget - namely, as a document required by the bank.

254 Mrs Smith's notes went on to record that 'sufficient finance' is not hard to prove and to suggest that the claim should be pursued on the basis indicated in Mr McCusker QC's letter - that is, on the basis of the Bank's failure to provide sufficient finance. This basis of claim is, of course, fundamentally inconsistent with a case against the Bank based on failure to advise that no funds should be borrowed, and very difficult to reconcile with a case based on the proposition that the Bank had undertaken to give 'proper advice' as to the farming and financial strategy to be adopted.

255 Mr Gilmour and Mrs Smith conferred again with Mr McCusker QC on 28 October 1987. The only real evidence of what occurred at that conference are hand written notes made by Mr Gilmour, which suggests that the conference lasted for a little over two hours (TB 2, page 1521). The notes also suggest that discussion was directed towards financial matters, including Mr and Mrs Smith's assets and the expenditure which they had incurred developing the farm.

256 Mr Gilmour conferred with Mrs Smith on 6 November 1987. His notes of that meeting (TB 2, page 1522) suggest that the conference lasted for a little over two hours. Following that conference, he prepared a draft proof of evidence, which he sent to Mr and Mrs Smith under cover of a letter dated 10 November 1987 (TB 2, page 1523) (the 1987 proof). That letter confirmed that Mr and Mrs Smith were to provide Mr Gilmour with a further cash flow budget using the same format as that utilised by the R & I Bank but inserting figures provided by Mr John Nelson of the Farm Management Services Laboratory at the University of Western Australia. The letter records that the purpose of that budget was to 'demonstrate the deficiency of the bank's budget by reference to omissions of income and expenditure'. This focus of attention upon the deficiencies in the bank's budget is difficult to reconcile with the clear instructions given by Mr and Mrs Smith to Mr McCusker QC, in Mr Gilmour's presence recorded in Mr McCusker QC's letter of 23 October 1987, to the effect that they had not relied upon the cash flow budget.

257 The draft proof of evidence prepared by Mr Gilmour was amended and finalised, and signed by Mrs Smith on or about 27 November 1987. It appears to have been provided to Mr McCusker QC either at or shortly before a conference which took place on 30 November 1987. The 1987 proof asserts that it was Mrs Smith's recollection that when she went with her husband to see Mr Danks she told him that they would require a facility of about $30,000 over a period of several years to develop the farm and the piggery (TB 1, page 2748). The 1987 proof further asserts that Mr Danks was advised that it was Mr and Mrs Smith's aim to increase the piggery from 50 to 150 sows over the next three to four years. The 1987 proof also sets out other information given by Mr and Mrs Smith to Mr Danks as to their plans for the development of the farm, and their requirements in order to fulfill those plans. Another portion of the 1987 proof is directed to identifying the alleged inadequacies and inaccuracies in the cash flow budget produced by the bank. Again, it is difficult to see why attention was being focused upon the budget given the instructions that had been previously given with respect to the lack of any reliance upon the budget produced by the bank.

258 Another portion of the 1987 proof is directed to the negotiations with Western Livestock in the latter part of 1978.

259 It seems that the proof was directed at three general propositions:

(a) the bank was made aware of Mr and Mrs Smith's plans for development of the farm, and of their need of substantial capital to complete the development;

(b) the inadequacies and inaccuracies in the cash flow budget prepared by the bank; and

260 As I have already noted, the first portion of the proof is difficult to reconcile with a case against the bank based upon the proposition that Mr and Mrs Smith were seeking 'proper advice' from the bank as to the farming and financing strategy to be adopted. It is clear from the proof that Mr and Mrs Smith had resolved upon the strategy which they wished to pursue, and that all they required was a financier willing to provide them with sufficient finance to enable them to implement that strategy.

261 As I have mentioned, there was another conference with Mr McCusker QC on 30 November 1987. The only real evidence of the matters discussed at that conference is a file note which suggests that the conference lasted three quarters of an hour, involved lengthy discussion with respect to the difficulties regarding quantum and the basis of liability, and that Mrs Smith was to obtain comments from an expert on the budget that she had prepared (TB 2, page 1543).

262 It seems that on 17 December 1987, a Mr Garry Kennedy prepared comments with respect to the cropping programme proposed in the original 1977/1978 cash flow budget (TB 2, page 1543_1). However, there is no evidence that this document was ever provided to Mr McCusker QC. The document also contains comments on other variations on the budget, apparently prepared in the context of the litigation against the R & I Bank. As I have noted, it is unclear why continuing attention was being paid to the precise components of the cash flow budget, given the clear and unequivocal instructions that had been given by Mr and Mrs Smith as to their lack of reliance upon the budget prepared by the bank.

263 Also on 17 December 1987, comments relating to the piggery component of certain budgets were provided by Mr Godfrey. However, it seems that they were not sent to Mr McCusker QC until 15 February 1988 (TB 1, page 2761). Again, it seems that Mr Godfrey's comments were directed toward budgets that had been prepared in the context of the litigation brought against the bank based upon alleged deficiencies in the budget it had prepared.

264 On 19 January 1988 the Town and County Building Society wrote to Mr Gilmour enquiring as to the current status of the proceedings that had been brought by Mr and Mrs Smith against the R & I Bank (TB 2, page 1576). By letter dated 28 January 1988, Mr Gilmour replied advising that the proceedings against the bank were considerably more involved than first appeared to be the case, but that senior counsel's opinion was expected within the next month (TB 2, page 1577). On its face, that assertion seems inconsistent with the note suggesting that the conference on 30 November 1987 was left on the basis that further instructions were to be provided to Mr McCusker QC, and which had not been provided as at the time of Mr Gilmour's letter to the building society.

265 A further conference was held on 7 April 1988, attended by Mr McCusker QC, Mr Gilmour and Mr and Mrs Smith. Following the conference, on 8 April 1988, Mr McCusker QC wrote to Mr Gilmour, confirming the main points discussed at the conference (TB 2, page 1578). In that letter Mr McCusker QC observed:

As previously mentioned (see my letter of 23 October 1987) the real basis of the claim by Mr and Mrs Smith would appear to be not so much as negligent advice (in the form of the budget prepared by the bank) but breach of the bank's contractual undertaking to provide sufficient finance to carry through with their programme of development and upgrading of the piggery and the farm itself.

266 Mr McCusker QC went on to observe that his advice as to merits was intertwined with his advice as to the quantum of damages that might be awarded. On the latter subject, he observed that he had explained to Mr and Mrs Smith that many of the items of damages claimed were too remote to be recoverable. The letter records that Mrs Smith was to prepare:

[A] summary, under each head of damage which she has specified, of the actual financial loss which she claims to have suffered under that head, with an explanation of the way in which that figure has been calculated.

267 The letter further records that Mr McCusker QC had given oral advice to the effect that if liability was established, the recoverable damages would appear to be confined largely to the loss of profit that might have been expected over the three to five years of the development programme, if the bank had supplied the necessary finance, together with loss of the income producing asset which they might reasonably expected to have owned at the end of that development programme.

268 It is clear from the terms of this letter that by this time, the focus of attention was upon a claim against the bank based upon breach of a contractual obligation to provide sufficient finance to enable Mr and Mrs Smith to carry out the development programme which they had formulated, rather than a claim based upon negligent advice.

269 Mr McCusker QC concluded his letter with the following observation:

We have had a number of conferences now, with Mr and Mrs Smith. It is clear that their expectations are much higher than even the most optimistic assessment that could be made of their prospects. I doubt very much whether they are able to accept that the bank is not answerable for all of the exigencies that they have suffered over the past 10 years, or for the entirety of the present straitened circumstances in which they find themselves, as compared with the extremely rosy vision which they had.

I doubt whether any further conference is going to assist. I will therefore proceed to give a written opinion once I have Mrs Smith's further statement regarding damages, which she undertook to provide shortly.

It seems that Mrs Smith did not receive a copy of this letter until it was given to her in the course of a conference with Mr McCusker QC on 23 October 1988 to which I refer below.

270 On 12 April 1988 Mrs Smith wrote to Mr McCusker QC (TB 2, page 1580). The letter was in the following terms:

At our last conference you asked us whether the outline of your perception of our claim seemed accurate to us. Your outline was, that we alleged that there was a contract with Richard formed during discussions and evidenced in the documents, which included the provision of sufficient money to do certain developments and earn certain incomes over a period of several years. This we agreed was accurate.

You also mentioned some comment on negligence.

As this will be our last opportunity to offer some input before you deliver your opinion we thought we ought to outline to you the things which we would like specific comment on in your opinion.

1. Richard's and the Bank's initial negligence in failing to inform us of normal banking practice and borrowing restrictions and in drawing up a bad budget and allowing to be passed by head office.
2. The failure to provide the agreed upon money and facilities.
3. The loss of the Western Livestock budget.
4. The actions by the bank officers which in our opinion are in breach of the Trade Practices Act, or ought to be considered in breach of some similar standard of professional behaviour.

271 This letter confirms that by this time, the thrust of the claim which Mr and Mrs Smith wished Mr McCusker QC to consider was a claim for breach of contract based upon failure to provide adequate financial assistance to enable Mr and Mrs Smith to develop the farm in accordance with their plans. Although the letter also refers to a claim in negligence, the negligence is suggested to have two components, namely:

(a) failure to inform of normal banking practice and borrowing restrictions; and

(b) allowing a 'bad budget' to be passed by head office.

The first aspect of the alleged negligence, in relation to advice with respect to banking practice and borrowing restrictions, seems to be related to the claim based upon a failure to provide adequate financial assistance. The second aspect of the asserted negligence appears to focus upon departure from appropriate banking practice by agreeing to advance funds based upon inaccurate information. Significantly, there is no reference in this letter to any failure of the bank to provide advice with respect to farming practice or as to the likely financial consequences of the implementation of the development programme which Mr and Mrs Smith had formulated. Put shortly, there is no suggestion in this letter of any claim based upon what has been characterised as the 'proper advice' case against the bank, following the decision of the Full Court in 2000.

272 The copy of the letter from Mrs Smith to Mr McCusker QC of 12 April 1988 tendered in evidence appears to have attached to it a four page document entitled 'Damages Estimates for JG and EA Smith'. Although the evidence establishes that this letter was provided to Mr McCusker QC, it does not establish with certainty whether it was in fact provided to him shortly following the conference on 7 April 1988 (TB 1, page 2772). Nevertheless, it seems more likely than not that it was provided to Mr McCusker QC at that time, and I so find. The document asserts that it is intended to be read with 'document G244'. That is a reference to the system used by Mrs Smith to number the documents in the nine lever arch folders previously provided to Mr McCusker QC. Within those folders, document G244 is a document entitled 'We Lost', and which sets out 45 separate items. The document attached to the letter to Mr McCusker QC of 12 April 1988 uses the same numbering, and essentially allocates, without elaboration in the vast majority of cases a dollar figure to the item listed in G244. So, for example, in document G244, item 1 is stated as:

The chance to use the National Bank offer of finance to purchase the tractor and use of overdraft facilities.

10% of the potential benefit of the National Bank finance offer. $50,000.

In respect of that item in the 1988 document, it is asserted that $50,000 is claimed, without any basis whatever for the assertion or explanation for the quantification.

273 These two examples, which are typical of the 1988 document generally, reveal its unintelligibility. The document certainly does not meet the description given in Mr McCusker QC's letter of 8 April 1988 of the document which Mrs Smith was to prepare, which was to provide 'an explanation of the way in which' the amounts claimed had been calculated. Further, as the letter of 8 April 1988 records, Mr McCusker QC had explained in the course of the conference with Mr and Mrs Smith that their damages claim would be confined largely to lost profit that might have been expected during the development programme of three to five years duration, together with any reduction in value of the capital assets at the end of such a programme, as compared to the assets which they in fact held. The extensive list of items of claim prepared by Mrs Smith and previously provided to Mr McCusker QC as document G244, and the figures attached to those items by Mrs Smith in the document prepared in April 1988, go well beyond the two areas of claim identified by Mr McCusker QC, and in many instances bear no relationship whatever to those areas of claim.

274 The document prepared by Mrs Smith in April 1988 appears to pluck large figures of asserted losses, apparently from the air, without explanation or justification. The document strongly reinforces the observations made by Mr McCusker QC in the letter of 8 April 1988 as to Mr and Mrs Smith's unrealistic expectations of their claim against the bank.

275 On 30 May 1988 Mr Gilmour wrote to Mr McCusker QC enquiring as to when his opinion might be expected (TB 2, page 1585). The letter bears a hand written annotation, apparently made by Mr McCusker QC, which apparently records a telephone conversation with Mr Gilmour. The note reads:

Will not be able to do so without further detail re damages - see my letter April re basis.

276 It is not clear from the note whether reference was made to the document which Mrs Smith had prepared and sent to Mr McCusker QC the previous month, and in particular, whether Mr McCusker QC advised Mr Gilmour that the document did not satisfy the requirements for further instructions on the subject of damages identified in his letter of 8 April 1988. However, assuming the note is accurate (and there is no reason to think otherwise), it must have been clear to Mr Gilmour that Mr McCusker QC was awaiting further instructions on damages before he was in a position to provide his written advice.

277 Two weeks later, on 14 June 1988, Mr Gilmour wrote again to Mr McCusker QC (TB 2, page 1588). The letter is in the following terms:

We refer to our previous correspondence. We have now received a requisition from the Director of the Legal Aid Commission to provide a report in relation to the above matter within the next 28 days. The requisition is dated 9 June 1988 and was received by this office on 13 June 1988.

Apart from the situation with the Legal Aid Commission we regard the position as critical in the sense that the defendant in the action must now be on relatively good ground should it seek to strike out our clients' action for want of prosecution.

278 The letter seems to infer that it was intended to be taken as a request for prompt delivery of the opinion, although it does not explicitly say so. Further, if the letter was intended to convey that meaning, it appears to ignore the fact that Mr McCusker QC had indicated, both in his letter of 8 April 1988, and in a telephone conversation following Mr Gilmour's letter of 30 May 1988, that he would be unable to provide his opinion without further instructions on the subject of damages.

279 A file note made by Mr Gilmour's secretary (TB 2, page 1591) records that on 13 July 1988 she telephoned Mr McCusker QC's secretary to find out when his opinion would be available. Again, such a query appears to ignore the fact that Mr McCusker QC was awaiting further instructions on the subject of damages.

280 On 19 July 1988 Mr Gilmour sent a facsimile to Mr McCusker QC's secretary asking '[w]hen may we receive the opinion. Our clients are pressing us constantly' (TB 2, page 1593). Further, a file note prepared by Mr Gilmour on 28 July 1988 (TB 2, page 1595) records a conversation with Mrs Smith, in which Mr Gilmour advised her that he had telephoned Mr McCusker QC's office two or three times, and on one occasion had spoken to Mr McCusker QC. The note records that on that occasion Mr Gilmour had gained the impression 'that the opinion was nearly ready and that it didn't look like it was going to be a good opinion'. Again I observe that this impression, and the repeated requests for the provision of the opinion, do not appear to be consistent with Mr McCusker QC's request for further instructions.

281 During this period Town and Country Building Society had sent a number of letters to Mr Gilmour enquiring as to progress in the proceedings which had been commenced against the R & I Bank. A file note made by an officer of the building society on 10 August 1988 (TB 2, page 1597) records a conversation with Mr Gilmour in which he advised that Mr McCusker QC's opinion 'should be to hand very soon'.

282 A file note made by Mr Gilmour (TB 2, page 1598) records a telephone conversation with Mrs Smith on 26 August 1988. The note records that Mrs Smith was extremely upset that Mr McCusker QC's opinion was still not to hand. The note records the various steps that might be taken as the result of non-delivery of the opinion, including terminating Mr McCusker QC's instructions. The note records that Mrs Smith 'felt that as clearly McCusker was so close to giving an opinion that it would be counter-productive' to pursue any of the possible options identified by Mr Gilmour.

283 On 7 September 1988 the Legal Aid Commission wrote to Mr Gilmour seeking a report on progress (TB 2, page 1600). On 13 September 1988, Mr Gilmour wrote to Mr McCusker QC enclosing a copy of the letter from the Legal Aid Commission, and advising that Mr and Mrs Smith had been served with notice by the building society to the effect that it would proceed with a mortgagee auction sale unless outstanding monies were paid by 14 September 1988. The letter concludes '[w]e understand that your opinion is almost finalised and we look forward to receiving it as soon as possible'. Again, the terms of this letter appear inconsistent with Mr McCusker QC's outstanding request for further instructions on the subject of damages.

284 A file note apparently made by Mr McCusker QC's secretary (TB 2, page 1613_1) on 19 September 1988 records a telephone conversation with Mrs Smith. It records that Mrs Smith had contacted the Attorney General's Office, and the Federal Minister for Justice, in relation to 'not only the fact that they have not received the opinion but the delay in why it has taken 11 years since the cause of action arose and has not gone to trial'. The note records that Mrs Smith had also suggested that if her approaches to the ministers failed she would go to the media. The note further records that although Mrs Smith considered that Mr McCusker QC and Mr Gilmour were the appropriate people to handle their claim against the R & I Bank, because the building society were going to sell them up they felt they could wait no longer. Mrs Smith concluded by requesting that Mr McCusker QC contact Mr Gilmour to let him know what the position was.

285 It seems that Mrs Smith was telephoning Mr McCusker QC's office regularly over this time, enquiring as to progress with respect to completion of his opinion.

286 On 28 September 1988 Mr Gilmour wrote to the Legal Aid Commission (TB 2, page 1615) asserting that '[w]e have now been advised by Mr McCusker that the opinion will be delivered to our office by the end of this week'. Assuming that statement to be accurate, it supports an inference that at some stage, Mr McCusker QC had indicated that he would proceed to finalise his opinion without receiving the further instructions as to damages which he had requested in April and again in May 1988.

287 A file note made by Mr Gilmour on 6 October 1988 (TB 2, page 1616) records a conversation with Mr McCusker QC's secretary, in which Mr Gilmour enquired about the opinion. Mr McCusker QC's secretary advised that she had not received the opinion to type, and that Mr McCusker QC was engaged in a two week hearing. Mr Gilmour left a message requesting that Mr McCusker QC call him. A file note made by Mr Gilmour on 19 October 1988 (TB 2, page 1628) records that he had received a message to the effect that Mrs Smith had called, threatening to go to the Federal Court where he was appearing in a case, and to report him to the barrister's board for not returning her telephone call. It seems from the note that by this stage a further conference had been arranged with Mr McCusker QC. The note also records that Mr Gilmour telephoned Mr McCusker QC's office, and spoke to his secretary, asking whether Mrs Smith could have a draft of Mr McCusker QC's opinion prior to the conference.

288 On 20 October 1988 Mr Gilmour wrote to the Legal Aid Commission (TB 2, page 1629) advising that:

We did not as we had expected receive Mr McCusker's opinion by the end of last week. However we understand that the opinion is now finalised in draft form subject to review by Mr and Mrs Smith to ensure that it covers all matters in respect of which they have sought Mr McCusker's opinion. We understand that review is to take place by Thursday 20 October 1988 and that the final opinion will be forthcoming shortly thereafter.

289 Assuming that this letter accurately reflects information that had been provided to Mr Gilmour by Mr McCusker QC (and there is no reason to think otherwise), it seems clear that by this stage at least Mr McCusker QC had indicated that he would be in a position to finalise his opinion without receipt of further instructions on the subject of damages. However, when Mr and Mrs Smith conferred with Mr McCusker QC on 23 October 1988 (without Mr Gilmour) he again requested further instructions on the subject of damages. On 7 November 1988 Mr Gilmour wrote to the Legal Aid Commission (TB 2, page 1661) advising that he had been informed by Mrs Smith that in the recent conference with Mr McCusker QC he had advised that there was some further information required to enable the finalisation of the aspect of the opinion relating to quantum of damages, and that Mr and Mrs Smith were presently attending to gathering that information.

290 Mrs Smith made an extensive note of the conference with Mr McCusker QC in her diary (TB 2, page 2125). The note records that Mr McCusker QC had advised that he had considerable difficulty in seeing, from within the many documents that had been given to him, how damages could be quantified and assessed. The note records:

He said, if we can establish there was a breach of the undertaking to supply sufficient finance then the damages would be limited to what profit you would have made if sufficient finance had been supplied plus the loss of the assets which would have been built up. Then he went on to discuss the difficulties he had had in trying to assess damages. He thought that he had to do it from Norm Godfrey's pig budgets, which he didn't and he didn't really grasp the significance of each budget as he looked at a maintenance budget and assumed that the figures it gave related to earnings from the development budget. He was anxious to know if his interpretation was correct and I showed him where he had misunderstood the document. He also said he could not come to any conclusion about damages as he didn't see how the 54 categories I had given him applied to loss of earnings over 3 - 5 years of development from the initial finance. I said it wasn't intended to show that, it was just that I couldn't get any idea of the legal basis for assessing the damages, so I had supplied him with an exhaustive list of all possible damages for him to choose from. Some categories cancelled each other out. Some amounts were simple guesses, but I did not know how to do it as I had no written basis for estimating damages. He said he had written to John in April setting out the basis for a claim and it was all in that. I said I couldn't remember the letter so he gave it to me to read. I had never seen it before as far as I know, when I go home I will check the file but I have never had the letter to work with when assessing damages. It could be that I received it after all the damages assessment was done and if so I would not have been consulting it during assessment of damages. (On reading the letter it is evident it was written before I did the damages assessment). Malcolm said he was sure John would have sent me a copy. When I read the letter through then, I could see that I could take it away and use it as a basis for doing the budgets for the 3 - 5 year period mentioned by Malcolm (TB 1, page 2125 - 2126).

291 The evidence to which I have referred sustains the following findings, which I make. In the conference on 7 April 1988 Mr McCusker QC provided oral advice as to the basis upon which damages would be assessed. He confirmed that advice in his letter to Mr Gilmour of 8 April 1988. However, Mr Gilmour did not provide a copy of that letter to Mrs Smith. Mrs Smith provided Mr McCusker QC with the document dated 12 April 1988, relating to 54 separate items of damage, and which conspicuously failed to address the requirements set out by Mr McCusker QC in his letter of 8 April 1988. However, it seems clear that nobody advised Mrs Smith that further information was expected from her. Although Mr McCusker QC advised Mr Gilmour in late May or early June 1988 that he was awaiting further instructions on quantum, that does not appear to have been communicated to Mrs Smith, and over the ensuing months, Mr McCusker QC gave each of Mr Gilmour and Mrs Smith to understand that he would be in a position to finalise his opinion without further instructions. However, during the conference on 23 October 1988, Mr McCusker QC advised Mr and Mrs Smith that further instructions on quantum were required, and provided Mrs Smith with a copy of his letter of 8 April 1988. The conference concluded on the basis that Mr and Mrs Smith would compile the information which Mr McCusker QC had requested, after which he would finalise his opinion.

292 Based on these findings I conclude that if in fact the lack of instructions on quantum was the reason why Mr McCusker QC was unable to finalise his opinion, he had a responsibility to make that clear when he was being pressed to provide his opinion. He did not fulfill that responsibility, as a result of which the period between about mid-June 1988, and the day of the conference on 23 October 1988 elapsed without any significant progress being made. That period, of about four months, is a further period of delay of which I conclude is attributable to breach of obligation by Mr McCusker QC.

293 It is also significant to note that Mrs Smith's diary note makes clear that during the conference on 23 October 1988, consistently with previous conferences, attention was focused upon a claim against the bank based upon breach of a contractual obligation to supply sufficient finance to enable Mr and Mrs Smith to carry out the development programme which they had formulated. There is no reference whatever in Mrs Smith's diary note of any discussion with respect to a claim against the bank based upon what has been characterised as the 'proper advice' case following the decision of the Full Court in 2000.

294 Mrs Smith provided further information to Mr McCusker QC on the subject of damages in a letter dated 28 November 1988 (TB 1, page 2778). The letter refers to the basis for assessment of damages specified in Mr McCusker QC's letter of 8 April 1988, and advises that Mrs Smith had relied upon data supplied by Mr Garry Kennedy, and Mr Norm Godfrey to draw up cash flow budgets for the five years of the development programme. The letter also states that Mrs Smith had included a summary of the development programme from 1952 - 1977, so that Mr McCusker QC could see how the proposed development programme from 1977 - 1982 was the logical next step. I digress to observe that this assertion is entirely inconsistent with any proposition to the effect that Mr and Mrs Smith were looking to the bank for advice as to the farming programme which they should follow. To the contrary, the letter is only consistent with a view that they wished to make a claim against the bank on the basis that it had failed to provide the financial accommodation required to support the programme which they had formulated, and which was consistent with earlier programmes they had formulated. That basis of claim is explicitly stated in the following portion of Mrs Smith's letter where, after referring to various iterations of the budget that had been produced by Mr Godfrey, and the cash flow budget produced by the R & I Bank, Mrs Smith observed:

The only course of action which would have worked would have been the development programme as alleged. The present budgets and data demonstrate what 'sufficient finance' would have been to enable the development as alleged to proceed; show expected profit at the end of the development and the value of the improved asset resulting from the development. This, as I understand it, is what you sought in your letter to John of 8 April 1988, which you gave to me at our recent conference.

Please note that borrowings from the bank peak with an overdraft of $29,572 in November 1978, and come to an end in June 1980, except for repayment of short term machinery loans and loans for the building of sheds, which would show up as annual repayments in the cash flows each year, paid for out of profits.

The development programme is completed in 1982, when 150 sows are in place, the piggery is built and 1,500 acres are cleared and pastured, all dams, fencing and sheds have been paid for out of profits, and a house built.

295 This letter makes it abundantly clear that, by this stage, the claim which Mr and Mrs Smith wished to advance against the bank was a claim in contract based on failure to provide sufficient finance to enable them to develop the farm as they wished. The letter makes no reference whatever to any claim against the bank based upon what has come to be described as the 'proper advice' case, since the decision of the Full Court in 2000.

296 The letter from Mrs Smith concludes by observing that the building society had required them to give vacant possession of the farm by 31 December 1988, in order that they could proceed to mortgagee sale, and requesting an opinion prior to that date.

297 The letter encloses Mrs Smith's estimate of damages. In that estimate she calculates profit lost up to March 1982 in the amount of $98,633. It also contains an estimate of the value of the assets which Mr and Mrs Smith would have had as at March 1982, on the basis that they had by then erected a new house, a new shearing shed, a new machinery shed, a general purpose shed, and had cleared approximately 1,200 acres of land, and also developed an intensive piggery and yards capable of handling 150 sows. From that estimated value, the actual value of the farm as at March 1982 is estimated and deducted. By this method, Mrs Smith calculated damages as at March 1982 in an amount of $745,168, to which she added interest at 13% per annum between March 1982 and December 1988, giving rise to a total claim of $1,506,783. The balance of the document shows the various assumptions made by Mrs Smith for the purpose of performing these calculations, including the cash flows that were used to arrive at an estimated loss of profit of $98,633.

298 By letter dated 30 November 1988 (TB 2, page 1695), Mr McCusker QC wrote to Mrs Smith advising that his commitments were such that he would not be in a position to consider the information which she had provided in her letter of 28 November 1988 until January, and as a consequence would not expect to be in a position to provide his opinion until late January.

299 However, the opinion was not completed by late January 1989. It seems that Mrs Smith telephoned Mr McCusker QC in early March, and drew his attention to the imminent sale of the farm by the building society. In a letter to Mrs Smith dated 9 March 1989 (TB 2, page 2034), Mr McCusker QC advised that he would proceed to complete his opinion, which he expected to provide the following week. The letter also recorded an arrangement whereby the opinion would be provided in draft to Mrs Smith, for her review, prior to it being finalised.

300 That arrangement was followed, and on 21 March 1989, Mr McCusker QC provided his opinion to Mrs Smith in draft for her review. Given that Mr McCusker QC had previously indicated that the opinion would be provided by the end of January, this is a further period of delay, of approximately two months, which is attributable to Mr McCusker QC's failure to provide his advice in a timely fashion. It follows that the total period of delay which I would attribute to Mr McCusker QC's breach of obligation is a period of 15 months.

301 After Mrs Smith had been provided with the opportunity to review Mr McCusker QC's draft opinion, she called a press conference in which she made a number of allegations against Mr McCusker QC. Those allegations are not relevant to the issues in this case. On 28 March 1989, Mr McCusker QC provided his finalised opinion to Mr Gilmour.

302 During the trial attention was drawn to the changes made to the draft opinion provided to Mrs Smith prior to its finalisation. An issue was also pursued as to an incorrect version of the opinion which had been compiled and used by Mrs Smith in earlier proceedings. However, in my view neither of those issues has any real bearing upon the issues that require determination in this case, and it is unnecessary for me to address them.

303 The opinion commences with a consideration of the advice previously given by Mr Rowland QC on the subject of damages. The opinion then points out that the most recent assessment of damages provided by Mrs Smith is substantially in excess of the assessment made at the time Mr Rowland QC had been briefed.

304 The opinion then addresses the basis for the claim against the bank. It recites the facts which Mr McCusker QC had drawn from his instructions which he took to be relevant to the issue of liability. That recitation is not controversial. Specific reliance is placed upon the 1987 proof provided by Mr Gilmour, in which reference is made to Mr and Mrs Smith advising Mr Danks that they would require an overdraft facility of about $30,000 over a period of several years to develop the farm and the piggery. In that context, the opinion records the assertion that Mr Danks undertook to provide an overdraft facility that would enable them to embark upon and complete their proposed expansion and development programme. The opinion also notes that Mr and Mrs Smith considered Mr Danks had undertaken to provide them with a loan facility of $7,000 to enable them to pay a deposit on the purchase of the heavy duty tractor, and to produce a cash flow budget.

305 The opinion then refers to the allegations made in the statement of claim in the proceedings against the bank with respect to the cash flow budget prepared by the bank.

306 Mr McCusker QC then observes, uncontroversially, that the success of Mr and Mrs Smith's claim would depend upon a court's acceptance of their evidence as to their dealings with the bank. In that regard, Mr McCusker QC drew attention to a number of factors which he considered would be relevant to a court's assessment of the true arrangement between Mr and Mrs Smith and the bank.

307 The first matter to which he drew attention was the terms of the application for advance completed by Mr and Mrs Smith on 5 April 1977. Mr McCusker QC observed in the opinion that the application for advance is in an amount of $10,000, and makes no reference to any potential overdraft maximum of $30,000, nor to any commitment by the bank to provide any overdraft facility of any more than the amount of $3,000 specified in the application form. Obviously this observation is directed to the claim which Mr and Mrs Smith had clearly indicated that they wished to advance in their instructions to Mr McCusker QC to the effect that the bank was in breach of contract by failing to provide sufficient finance to enable them to develop the farm in accordance with the plans which they had formulated. The fact that Mr and Mrs Smith completed a form applying for finance which makes no reference to any amount over and above $10,000, made up as to $7,000 by way of deposit for the tractor, and $3,000 by way of overdraft facility, and which makes no reference to any other advance, was obviously of the greatest significance to the claim which Mr and Mrs Smith had enunciated in their instructions to Mr McCusker QC.

308 In the context of that basis for claim, Mr McCusker QC also observed, in the opinion, that if, as Mr and Mrs Smith asserted, the bank was committing to provide sufficient finance to fund an expansion programme which would take between three to five years, it would be reasonable to expect that a cash flow budget covering that period would have been prepared, rather than a cash flow budget covering a period of only one year.

309 That observation was plainly relevant to the claim which Mr and Mrs Smith had enunciated. Also relevant to that claim was Mr McCusker QC's observation, in the opinion, to the effect that the cash flow budget which had been prepared by the bank made no provision for finance being extended beyond the 12 month period covered by the budget. In that context Mr McCusker QC observed that a court might consider it surprising that Mr Danks would have committed the bank orally to the provision of overdraft finance for a programme which was expected to take between three and five years, without recording anywhere, in writing, that such a commitment had been made.

310 In the same context, Mr McCusker QC draws attention, in the opinion, to the terms of the letter from the bank to Mr and Mrs Smith dated 10 May 1977, in which the bank advised of the financial accommodation which it had agreed to provide. That letter refers to a term loan of $7,000, and an overdraft facility of $3,000. Mr McCusker QC observed that if the true arrangement were a commitment in the terms alleged by Mr and Mrs Smith, that would have been set out in the letter provided by the bank. To the contrary however, the letter makes no reference to the provision of any finance beyond the amount of $10,000 the subject of the application. Again, these observations are obviously directly pertinent to the claim which Mr and Mrs Smith had enunciated in their instructions to Mr McCusker QC, based upon an alleged breach of contract by the bank in failing to provide sufficient finance to enable the development programme which they had formulated to be implemented.

311 In this context Mr McCusker QC also observed in the opinion that a court might think it of significance that after receiving the letter of 10 May 1977 setting out the terms upon which finance was to be provided, Mr and Mrs Smith did not respond either orally or in writing setting out what they took the true arrangement to be. As Mr McCusker QC recorded, the 1987 proof of evidence signed by Mrs Smith and provided by Mr Gilmour supported the claim which had been enunciated by Mr and Mrs Smith to the effect that the arrangement between them and the bank involved the provision of an overdraft facility which might peak at $30,000 to finance their proposed expansion and development programme.

312 The opinion records that Mr McCusker QC had asked Mr and Mrs Smith in conference why they had not responded to the bank's letter of 10 May 1977, setting out what they took to be the true arrangement. The opinion records Mrs Smith's response, which was to the effect that Mr Danks had their full confidence, and they considered any reply unnecessary. In his opinion Mr McCusker QC makes the reasonable point that a judge may not consider that explanation to be acceptable.

313 This portion of the opinion concludes with Mr McCusker QC's observation that where a court is confronted with conflicting oral testimony, great reliance is likely to be placed on contemporaneous documents, and such contemporaneous documents as existed did not support Mr and Mrs Smith's claim that there was an agreement to provide financial accommodation over and above the amount of $10,000 the subject of the application form and the correspondence. I digress to observe that the process of reasoning adopted by Mr McCusker QC in relation to this aspect of Mr and Mrs Smith's claim appears to me to be entirely conventional and uncontroversial.

314 The opinion then addresses Mr and Mrs Smith's complaint that they were provided with insufficient funding during the first 12 month period, with the result that they were unable to purchase sufficient feed for their pigs. In that context however, Mr McCusker QC observes that in fact the bank allowed Mr and Mrs Smith to substantially overdraw the facility which had been provided, by an amount of approximately $5,000 in excess of the approved limit. He further notes that if the true arrangement between Mr and Mrs Smith and the bank was that the bank was to provide all funds reasonably required to implement their farming programme, the failure of Mr and Mrs Smith to complain of a breach of that arrangement during the first year, when they asserted they were provided with insufficient funding, would be construed as significant. Again, that process of reasoning appears to me to be entirely conventional and uncontroversial.

315 The opinion next addresses the cash flow budget prepared by the bank in April 1977. In that context, the budget is described as 'central' to the Smiths' case against the bank. That observation was accurate if confined to the statement of claim at the time Mr McCusker QC was briefed, but did not, of itself, reflect the instructions which had been given to Mr McCusker QC. However, those instructions are reflected in the next portion of the opinion, which addresses the question of reliance on the budget. In that context, Mr McCusker QC records in the opinion Mr Smith's instructions to the effect that he appreciated the budget was inaccurate, and expresses the view that Mr and Mrs Smith would have difficulty in establishing reliance on the budget. Given the instructions which Mr and Mrs Smith had given on a number of occasions, to the effect that they immediately appreciated the inadequacies of the budget and did not rely upon it, that conclusion is entirely justified.

316 The opinion might be criticised for directing too much attention to issues relating to the budget. However, it is to be remembered that those issues were central to the case which had been pleaded against the bank, in a statement of claim which had been on foot for a number of years prior to Mr McCusker QC's engagement. The budget was also central to the claim first advanced by Mrs Smith in her letter to the bank in 1979, and to the causes of action identified by Mr Rowland QC. In that context, it seems to me to have been entirely appropriate for Mr McCusker QC to address the pleaded case.

317 In that context, Mr McCusker QC addressed the issue raised by the bank in its defence, to the effect that the information contained within the cash flow budget was provided by Mr and Mrs Smith. On that issue, he expressed the view that despite pursuing these issues in conference, and reviewing several detailed proofs of evidence, he was still not left with an entirely clear picture as to the extent to which Mr and Mrs Smith conceded that they had provided the basic information presented in the cash flow budget. Mr McCusker QC observes in his opinion that it seems highly unlikely that Mr Danks could have completed the budget without considerable assistance from Mr and Mrs Smith, given the detailed information which it presents. These observations and conclusions appear to me to be entirely justified having regard to the instructions given to Mr McCusker QC, and which I have reviewed above.

318 In summary therefore, Mr McCusker QC concluded that the pleaded case advanced by Mr and Mrs Smith based upon the cash flow budget suffered two significant defects - namely, lack of proof of reliance, given its obvious inadequacies and the instructions he had received on the subject, and secondly, the likely finding that much of the information presented in the budget was provided by Mr and Mrs Smith. Those conclusions appear to me to be entirely justified on the materials and instructions provided to Mr McCusker QC.

319 After briefly returning to an aspect of the claim based upon an agreement to provide finance sufficient to fund their development programme, the opinion then turns to the instructions Mr McCusker QC had received with respect to the events of 1978, following the annual review of the facility provided by the bank. In that context, he refers to the application made by Mrs Smith to the Rural Adjustment Authority, and the letter from Mrs Smith to Mr Danks dated 29 March 1978 (TB 1, page 124), to which I have referred above. In his opinion, Mr McCusker QC made the following observation in relation to that letter:

What emerges from this application is the not uncommon story, in the farming industry, of budgeted income and expenditure being thrown out as a result of adverse seasonal conditions, resulting, in the Smiths' case, in them having no income at all from cropping and facing increased costs in feeding their pigs due to grain shortage. There is not a hint in the application or in Mrs Smith's letter, of any suggestion that the R&I Bank was responsible for their difficulties, either in failing to provide promised finance, or in providing them with a budget which was unworkable, and on which they relied.

That observation appears to me, with respect, to be entirely apt.

320 The opinion records the outcome of the application to the Rural Adjustment Authority for finance, and then addresses the negotiations with Western Livestock. In that context, Mr McCusker QC accurately describes the proposal as the proposal for the provision of finance of a limited nature.

321 The opinion next addresses the bank's consideration of the provision of further finance to Mr and Mrs Smith in the latter part of 1978, and in that context, the assessment of the farming operation by the bank's farming advisors. In that context, the opinion addresses issues that had been raised in the statement of claim with respect to the arrangements entered into in the latter part of 1978. The opinion then recounts the dealings between Mr and Mrs Smith and the bank during 1979 in uncontroversial terms. It also records that since December 1979, Mr and Mrs Smith had sought finance from various sources without success. Reference is then made to the advance from the Town and Country Building Society and records that 'due to adverse seasonal conditions and poor results from farming, the Smiths have found themselves unable to service this restructured loan facility, and again face a mortgagee sale'.

322 The opinion then turns to the quantum of damages, and summarises the information provided by Mrs Smith in the letter dated 28 November 1988. The opinion records the view that the approach taken, in terms of principle, is correct if the bank could be shown to have breached a contractual commitment to provide finance sufficient to cover the development and farming programme which was envisaged by the cash flow budgets prepared by Mrs Smith. Of course that observation focuses upon the instructions that had been given by Mr and Mrs Smith to Mr McCusker QC as to the basis for the claim which they wished to advance against the bank.

323 However, Mr McCusker QC went on to observe that the amount awarded by a court would likely be reduced to allow for contingencies, and any findings made by the court as to Mr Smith's capacity to farm effectively and profitably. In that context Mr McCusker QC accurately observes that Mr Smith's record demonstrates a lack of capacity to effectively implement a profitable farming programme, even when the R & I Bank increased the financial accommodation available, and even after the loan had been totally restructured by the Town and County Building Society.

324 Mr McCusker QC then notes that Mr Rowland QC had suggested an alternative approach to the calculation of damages. He observes, accurately in my view, that upon the alternative approaches suggested by Mr Rowland QC, the damages recovered would be comparatively insignificant, and beset with many uncertainties.

325 Mr McCusker QC concluded with the observation that in his view the claim of the Smiths against the bank was most unlikely to succeed, and that if it were to succeed, the damages recoverable would be nowhere near the amount of $1.5 million which the Smiths had calculated as their probable loss. He summarised his reasons for that conclusion. They were:

(a) a court was likely to find that the information contained in the 1977 cash flow budget was largely provided by Mr and Mrs Smith;

(b) the court was unlikely to accept that Mr and Mrs Smith had relied upon the cash flow budget prepared by the bank;

(c) it was unlikely that a court would accept that the bank gave an undertaking to provide whatever finance was necessary in order to assist the Smiths in their proposed development programme for the farm;

(d) it was made abundantly clear at the end of 1977, that the bank would not make any additional advance, and the letter of 29 March 1978 prepared by Mrs Smith does not suggest that the bank was in breach of any undertaking to provide additional finance;

(e) the apparent lack of success of the farming operations conducted by Mr and Mrs Smith over more than a decade, despite the increase in financial accommodation made available to them would be relied upon as evidence that the Smiths were unlikely to have succeeded in their farming programme, even if the bank had provided additional finance; and

(f) consequently, any damages awarded to Mr and Mrs Smith if they were able to establish liability would be comparatively nominal, and nowhere near the amount of $1.5 million proposed by Mr and Mrs Smith.

326 It will be apparent from the observations I have already made that there is nothing in the opinion provided by Mr McCusker QC with which I or any reasonable barrister would disagree. By the time the opinion was provided, Mr and Mrs Smith had clearly instructed Mr McCusker QC that the claim they wished to advance against the bank was a claim based on breach of a contractual obligation to provide sufficient finance to enable them to carry out the development of the farm in accordance with the plans which they had formulated. Mr McCusker QC expressed the opinion that such a claim would have little prospect of success, for reasons which cannot faulted.

327 The claim which Mr and Mrs Smith had brought against the bank had an initially been formulated by Mrs Smith on the basis of the provision of negligent advice in the form of the cash flow budget. That claimed remained a central aspect of the case which had been pleaded against the bank. It was therefore appropriate for Mr McCusker QC to express a view with respect to that claim. He expressed the opinion that the claim was unlikely to succeed, also for reasons which cannot be faulted.

328 Further, the views expressed by Mr McCusker QC as to the difficulties which Mr and Mrs Smith would confront in proving any compensable loss even if they succeeded in establishing a claim against the bank were entirely justified by the instructions provided to Mr McCusker QC.

329 As I have mentioned, an aspect of the case which the Full Court permitted Mr and Mrs Smith to run against Mr McCusker QC by its decision in 2000 involves an allegation that Mr McCusker QC failed to properly appreciate and comprehend the factual and legal issues raised by his instructions. However, as I have mentioned, there is nothing in the recitation of facts contained in Mr McCusker QC's opinion, or his appreciation of the legal issues which would sustain that allegation.

330 It is extremely difficulty to identify with any precision just what Mr and Mrs Smith assert Mr McCusker QC failed to adequately comprehend. Written submissions supplied by them at the commencement of the case are replete with generalised assertions that are almost devoid of meaning such as:

The defendant did not familarise himself with the facts of Danks' continuing advice and guidance and its consequences and consequently did not apply his mind to it or address it in any meaningful way in his opinion (par 32).

The defendant failed to consider that the delivery of the cash flow budget constituted partial specific performance thereby pointing to the existence of the oral contract (par 34)

The defendant failed to consider that advances of credit beyond the limits of the flawed cash flow budget constituted specific performance of the initial oral contract and therefore confirmed the existence of the latter (par 35).

331 However, the opinion does specifically address the role played by Mr Danks, and in particular, the question of whether Mr and Mrs Smith had made it clear that they were looking to him for advice as to the farming or financial strategy to be adopted. Further, the opinion specifically addressed the issue of whether it was likely that a court would find that there was an agreement for the provision of finance in the terms alleged by Mr and Mrs Smith, and assessed the significance to be attached to the advance of credit beyond approved limits in that context.

332 Further, these assertions in the written submissions appear to go well beyond the pleaded case against Mr McCusker QC. The breaches of duty alleged against him are enumerated in par 55 of the statement of claim. That paragraph contains 11 subparagraphs. Two of those subparagraphs (pars 55.9 and 55.11) are not allegations of breach of duty. Four subparagraphs (pars 55.1, 55.5, 55.8 and 55.10) are concerned with the assertion that Mr McCusker QC breached a duty to appreciate and provide advice on a claim against the bank based upon the bank's failure to give 'proper advice'. I will turn to that assertion shortly, after dealing with the other five subparagraphs.

333 Paragraph 55.2 asserts that Mr McCusker QC placed undue emphasis in his opinion on the difficulties which Mr and Mrs Smith would face in seeking to prove that they had relied on the budget. However, as I have indicated, given that Mrs Smith first formulated the claim against the bank on the basis of reliance upon a negligently prepared cash flow budget, and that this claim remained a central feature of the pleaded case against the bank, it was entirely appropriate for Mr McCusker QC to express a view on that claim.

334 Paragraph 55.3 asserts that Mr McCusker QC failed to read or take into account that part of the brief in which Mrs Smith explained that she and Mr Smith had provided only approximate figures to Mr Danks for inclusion in the cash flow budget. However, Mr McCusker QC specifically addressed that issue in his opinion and concluded, correctly in my view, that it was most likely that a court would conclude that the bulk of the information included in the cash flow budget was provided by Mr and Mrs Smith.

335 Paragraph 55.4 asserts that Mr McCusker QC should have concluded that the allegation in the bank's defence to the effect that the figures in the cash flow budget had been provided by Mr and Mrs Smith was largely irrelevant to their case. However, this assertion is simply wrong. At the time of Mr McCusker QC's advice was provided, the pleaded case against the bank asserted a claim based upon reliance upon a negligently formulated budget. The source of the information contained in the budget was plainly relevant to that case, which is also the case which Mrs Smith first asserted against the R & I Bank. If this paragraph of the pleading should be construed as asserting that the budget was irrelevant to the 'true' or 'proper advice' case, the comments below on that general proposition are apt.

336 Paragraph 55.6 asserts that Mr McCusker QC failed to familiarise himself with that part of the brief in which it was explained how the actual costs for 1977 had exceeded the budget. However, this assertion appears fundamentally inconsistent with the earlier assertion that Mr McCusker QC erred by placing undue emphasis upon the 1977 cash flow budget. But, in any event, Mr McCusker QC specifically addressed the question of Mr and Mrs Smith's failure to meet the 1977 budget, and referred to the statements they had made in early 1978 with respect to the adverse impact of seasonal conditions upon the 1977 farming operations.

337 Paragraph 55.7 asserts that Mr McCusker QC failed to familiarise himself with that part of his brief in which Mrs Smith described how the application to the Rural Adjustment Authority came to be made. However, the opinion makes clear that Mr McCusker QC was aware that the application to the Rural Adjustment Authority was made as a consequence of the R & I Bank's refusal to provide additional financial accommodation, and that Mr Danks was assisting Mr and Mrs Smith in the preparation of the application. Neither of those facts detract from the force of the observation made by Mr McCusker QC, with respect to the likely impact of Mrs Smith's attribution of all difficulties to unexpected seasonal conditions, and the failure to attribute any blame to the bank, upon the likely findings of a court.

338 For these reasons I conclude that Mr and Mrs Smith's claim that Mr McCusker QC failed to appreciate the factual and legal issues raised by his instructions must be rejected.

339 It remains to consider the claim that Mr McCusker QC breached his duty by failing to appreciate and advise upon a claim that Mr and Mrs Smith might have brought against the bank based upon a failure to give proper advice and guidance.

340 The first point to note about this assertion is that a claim against the bank formulated in this way is fundamentally inconsistent with Mr and Mrs Smith's instructions to Mr McCusker QC to the effect that the claim they wished to advance against the bank was based upon breach of an agreement to provide sufficient finance to enable Mr and Mrs Smith to develop the farm in accordance with the plan they had formulated. Those instructions presupposed that:

(a) the plan for the development of the farm had been formulated by Mr and Mrs Smith; and

(b) the role of the bank lay in the provision of sufficient finance to enable Mr and Mrs Smith to implement their plans.

Each of those propositions is fundamentally inconsistent with a claim brought against the bank on the basis of a failure to give proper farming and financial advice.

341 The second point properly made in respect of this aspect of Mr and Mrs Smith's claim is that there was nothing in the materials or instructions provided to Mr McCusker QC which would have enlivened the possibility of a claim against the bank based upon a failure to provide proper advice and guidance. As I have endeavoured to show through the lengthy analysis of the materials provided to Mr McCusker QC, and the instructions he was given, there is nothing in those materials or instructions, viewed in context, which would suggest that the bank had undertaken to provide Mr and Mrs Smith with general advice and guidance. On the contrary, the materials provided to Mr McCusker QC, and his instructions, compelled the following conclusions:

(a) Mr and Mrs Smith had formulated a plan for the development of the farm prior to approaching the NAB for the provision of finance to acquire a heavy duty tractor;

(b) when the NAB refused their request for finance, implicitly on the basis that their plans were not sufficiently viable to enable the proposed debt to be serviced, Mr and Mrs Smith were undaunted and sought finance from another source;

(c) Mr and Mrs Smith did not approach Mr Danks for farming advice, but for finance;

(d) Mr and Mrs Smith were aware that the budget was prepared not for the purpose of providing them with advice as to how they should manage their farm, but for the bank's internal purposes;

(e) Mr and Mrs Smith did not attempt to follow the budget in any way, and placed no reliance upon it;

(f) all decisions made as to the strategy to be adopted on the farm were made by Mr and Mrs Smith without resort to the bank, and having regard to seasonal and other conditions;

(g) there was nothing in the materials or instructions provided to Mr McCusker QC which would suggest that Mr and Mrs Smith did or did not do anything in reliance upon any advice given or not given by the bank;

(h) the materials and instructions provided to Mr McCusker QC demonstrated clearly that the failure of Mr and Mrs Smith's farming venture had nothing whatever to do with any advice provided by any financial institution, including the bank, nor was it based upon any failure to provide sufficient finance, as the venture failed notwithstanding the provision of increased finance by the bank, and the complete restructuring of the loan by the Town and County Building Society; and

(i) the materials and instructions provided to Mr McCusker QC demonstrated clearly that Mr and Mrs Smith were resolutely determined to pursue the farming programme which they had formulated irrespective of any advice they were given by the NAB, the R & I Bank, and all the many other financial institutions they approached for financial accommodation (other than the Town and County Building Society), to the effect that the farming programme which they had formulated would not generate sufficient revenue to service their borrowings.

342 The third general observation properly made with respect to the so-called 'proper advice' case is that even if, contrary to my view, there was material before Mr McCusker QC which enlivened its consideration, a moment's thought would have revealed its futility. That is because Mr and Mrs Smith were, of course, well aware of the advice which they had, or had not received from the bank. The only information provided by the bank to Mr and Mrs Smith that could have possibly constituted the provision of advice was the provision of the cash flow budget, and the agreement to provide the finance which Mr and Mrs Smith had requested. In relation to the cash flow budget, Mr and Mrs Smith's clear and unequivocal position was that they were aware of the deficiencies in the budget as soon as it arrived, and placed no reliance upon it. In relation to the provision of finance, although Mr and Mrs Smith now assert that the bank should have advised them as to alternative forms of borrowing, such as long term development loans, the materials and instructions provided to Mr McCusker QC establish beyond argument that all that Mr and Mrs Smith sought from the bank was an advance of the deposit required for the tractor ($7,000), and an overdraft facility of $3,000. That is what the bank agreed to provide. Accordingly, there is no reasonable basis upon which entry into that transaction could be construed as the provision of advice by the bank.

343 It follows that Mr and Mrs Smith were aware at all times that they had not received any advice from the bank upon which they had relied. Any case based upon the failure of the bank to fulfill an undertaking to provide proper advice and guidance was therefore doomed to fail because of an inability to establish any reliance upon that advice. In this context it is significant that Mr and Mrs Smith have expressly eschewed any case based upon the proposition that Mr McCusker QC should have considered and advised upon a case to the effect that the bank should have advised them not to borrow any funds, and to continue their current programme without acquiring the new tractor. Such a case would of course be doomed to fail, because that is precisely the advice which they were given by the NAB, and which they rejected.

344 For these reasons Mr and Mrs Smith's claim that Mr McCusker QC breached his duty by failing to appreciate and advise upon a claim against the bank based upon the bank's failure to give proper advice and guidance must be rejected.

345 I have arrived at this conclusion notwithstanding the decision of the Full Court in 2000 to the effect that Mr and Mrs Smith had an arguable case against Mr McCusker QC based on an alleged failure to appreciate and advise upon the 'proper advice' case. There are a number of reasons why I do not consider my conclusions are inconsistent with the decision of the Full Court.

346 First, as I have observed, the Full Court's decision was made on an appeal from the striking out of a pleading. When issues of that kind arise, they are resolved on the basis of assumptions of fact, rather than findings of fact made on the basis of evidence. There is therefore always the prospect that the evidence adduced at trial will negate the assumptions made for the purposes of ascertaining whether or not a pleading discloses an arguable cause of action. This is such a case.

347 Secondly, the views expressed by the Full Court appear to have been based almost entirely upon a consideration of the 1986 proof. Given that the issue before the Full Court was a pleading issue, it was neither necessary nor appropriate for the court to place the 1986 proof in its evidentiary context, and in particular in the context of the earlier proofs that had been prepared by Mr White, the subsequent proof prepared by Mr Gilmour, the instructions provided to Mr McCusker QC both orally and in writing by Mrs Smith, and the great volume of written materials provided to Mr McCusker QC. When the 1986 proof is placed in that broader evidentiary context, it casts a rather different light, as I have endeavoured to show.

348 Third, as I have mentioned, the 1986 proof fails to distinguish, with any clarity, between things that were actually said in the meetings between Mr and Mrs Smith and Mr Danks, and unexpressed thoughts or views, and is replete with argumentative assertions lacking any evidentiary significance. In the context of the pleading summons it was perhaps appropriate for the Full Court to apply a benevolent interpretation to the 1986 proof, given that the question was whether or not the claim should be summarily dismissed without trial. However, different considerations apply at trial, particularly when it is possible to put the 1986 proof in its evidentiary context.

349 Fourth, because of the limited nature of the evidence available to the Full Court, the fundamental flaw in the 'proper advice' case would not have been apparent. The fundamental flaw to which I refer, is the undeniable fact that Mr and Mrs Smith knew at all material times that they had not received any advice from the bank upon which they had relied to their detriment or otherwise.

350 For these reasons I have concluded that Mr and Mrs Smith's claims against Mr McCusker QC based on alleged breach of the duty of care which he owed to them must be dismissed. However, as I have indicated, I would uphold their claim that Mr McCusker QC breached the duty which he owed to provide his advice in a timely fashion, by reason of which his opinion was supplied approximately 15 months later than it should have been. It will therefore be necessary in due course to consider whether or not this breach caused Mr and Mrs Smith to suffer any loss or damage. Further, in case a different view is taken on appeal on the question of breach of duty of care, it is appropriate for me to consider the various other issues relating to causation and quantum on the assumption that breach of a duty of care had been established.

What advice would or could have been given in performance of the duty of care?

351 The first causation issue appropriately addressed is that identified by Wheeler JA in the 2005 appeal - namely, on the assumption that the advice given by Mr McCusker QC was given in breach of a duty of care, what advice would or could have been given consistently with the performance of the duty of care owed by a barrister to Mr and Mrs Smith.

352 It should be apparent from the views I have already expressed that I am firmly of the view that any barrister given the materials and instructions provided to Mr McCusker QC could only reasonably have concluded, and advised, that the claim against the bank was hopeless, and that there was no realistic prospect of recovering any significant damages.

353 The claim against the bank initially enunciated by Mrs Smith was based upon reliance upon the cash flow budget which was said to have been negligently prepared by the bank. Such a claim was doomed to fail for the following reasons at least:

(a) Mr and Mrs Smith went to Mr Danks for finance, not for farming advice;

(b) the information contained in the cash flow budget was provided almost entirely by Mr and Mrs Smith, not Mr Danks; and

(c) Mr and Mrs Smith placed no reliance on the cash flow budget.

354 As I have observed, by the time Mr McCusker QC provided his opinion, the thrust of the instructions given by Mr and Mrs Smith was to the effect that they wished to maintain a claim against the bank based upon breach of an agreement to provide them with sufficient finance to enable them to implement development plans which they had formulated. Such a claim had no prospect of success for the reasons given by Mr McCusker QC in his advice.

355 For the reasons I have given, it was neither appropriate nor necessary for any barrister provided with the instructions given to Mr McCusker QC to provide advice on a claim against the bank based upon a failure to provide proper advice and guidance. Indeed, it seems that the first time such a claim was enunciated was in the course of the proceedings before the Full Court in 1999/2000. But even if consideration had been given to such a claim, in my view the only advice reasonably given was that it had no prospect of success, for the reasons I have given.

356 Further, in my view any reasonable barrister considering the materials and instructions provided to Mr McCusker QC could only have concluded, as he did, that there was no prospect of Mr and Mrs Smith ever establishing more than nominal damages, even if they succeeded in establishing a claim against the bank. There was simply no evidence to suggest that Mr and Mrs Smith did or did not do anything in reliance upon anything done or not done by the bank, other than borrow money from the bank so as to implement their farming strategy. Nor is there any evidence to suggest that their farming strategy was impeded by a lack of finance, given that the R & I Bank did in fact increase the financial assistance provided to Mr and Mrs Smith, a substantial amount of goods and services were acquired on credit, and even after a complete restructuring of the debt when the Town and Country Building Society advanced funds, the farming venture still failed financially. The materials provided to Mr McCusker QC established convincingly that Mr and Mrs Smith were incapable of farming profitably, and that the unprofitability of their venture had nothing to do with anything done or not done by any financier. Further, the materials provided to Mr McCusker QC established overwhelmingly that Mr and Mrs Smith were committed to the pursuit of their farming venture no matter what they were told by the many financial institutions who advised them that the venture would not be sufficiently profitable to enable them to service their borrowings.

357 I am of course aware that the views that I have formed as to the advice that could have been properly given to Mr and Mrs Smith is at odds with some of the advice which they in fact received, to the effect that their claim against the bank had some prospect of success. However, when detailed consideration is given to the other advice which Mr and Mrs Smith received, it is possible to reconcile that advice with the views I have expressed.

The advice given by Messrs Warren, McDonald, French & Harrison in 1979

358 Mr and Mrs Smith were provided with written advice Messrs Warren, McDonald, French & Harrison, solicitors, by letter dated 18 September 1979 (TB 2, page 682). That advice was concerned only with causes of action in contract and tort arising from the alleged inadequacies of the cash flow budget prepared by the bank. The instructions given to the solicitors for the purposes of that advice are not established by the evidence. However, on the instructions given to Mr McCusker QC, it is plain that any and all causes of action based upon reliance on the 1977 cash flow budget had no prospect of success.

359 I have already expressed the view, with respect, that the opinions expressed by Mr Rowland QC, and the pleading he prepared, did not correspond with the instructions which he received. He also formulated a claim which centered largely upon alleged inadequacies in the cash flow budget. That basis of claim was destroyed by the clear and unequivocal instructions given to Mr McCusker QC with respect to the lack of reliance upon that budget. Further and in any event, Mr Rowland QC was always of the view that Mr and Mrs Smith would have great difficulty in recovering anything more than nominal damages.

360 Mr Williams QC provided a memorandum of advice dated 28 May 1990 (TB 2, page 2106). His advice was based upon a brief which set out the material facts on which he was asked to advise (TB 2, page 2108_1). That brief is not in evidence. Mr Williams QC also conferred with Mr and Mrs Smith in conference on one occasion. Again, there is no evidence as to the instructions that were provided in that conference.

361 However, the paucity of materials provided to Mr Williams QC is apparent from the following observation in his memorandum:

[I]n the interests of economy and efficiency, I have been furnished with a summary only of the principal evidence but no proofs of witnesses and only a small number of the relevant documents.

362 On that limited basis, Mr Williams QC expressed the following view:

On the material made available to me, it is clear that the Smiths in April 1977 relied heavily upon the financial management advice of the manager of the bank's Ongerup branch and that would have been readily apparent to him. There is, in the circumstances, little doubt that the bank owed the Smiths a duty of care in relation to the advice offered.

This view must have been shaped by the very limited nature of the instructions given to Mr Williams QC. It is not a view that could have been reasonably formed upon the basis of the materials and instructions provided to Mr McCusker QC given that, on those materials, the only possible advice given by Mr Danks took the form of the cash flow budget, and Mr McCusker QC was explicitly instructed that no reliance was placed upon that budget.

363 Mr Williams QC went on to advise that the information available to him was not sufficient to enable any meaningful comment to be offered on whether the negligent advice of the bank manager was the cause of any particular loss by the Smiths and if so, the extent of that loss.

364 Mr Van Zalm of junior counsel provided a written opinion dated 28 March 1991 (TB 2, page 2190). The opinion suggests that Mr Van Zalm was provided with a substantial proof of evidence from Mrs Smith (presumably the 1986 proof), copies of the pleadings, and copies of the opinions of Mr McCusker QC, Mr Rowland QC, and Mr Williams QC. Mr Van Zalm also conferred upon one occasion with Mrs Smith.

365 At the commencement of his opinion, Mr Van Zalm set out the facts, as he took them, for the purposes of his advice. Amongst those facts are an assertion that Mr Danks gave a cash flow budget to Mr and Mrs Smith as a guide to their future financial planning. It is also asserted that Mr and Mrs Smith acted in reliance on the budget as a result of which they lost income they would otherwise have earned. Those assertions of fact are of course inconsistent with the instructions given to Mr McCusker QC. Mr Van Zalm also proceeded upon the basis that representations were made by the bank in the latter part of 1978 to the effect that Mr and Mrs Smith could operate in accordance with the budget which was then prepared.

366 In the expression of his views on liability, Mr Van Zalm asserted that in his view the cash flow budget was central to the case. Of course Mr and Mrs Smith assert that Mr McCusker QC was negligent in placing undue emphasis upon the cash flow budget. Mr Van Zalm assumed that the cash flow budget was negligently prepared by the bank, on the basis of what he had been told was the view of Mr Nelson and Mr Godfrey, but without any consideration or analysis of those views. Mr Van Zalm then asserted:

Even if it is established that the original information used by the bank to prepare the cash flow budget is found to have come from the Smiths this does not prevent a finding that the budget was negligently prepared.

With respect, it is difficult to see any basis for this proposition, given that Mr Van Zalm does not appear to have had any instructions as to just why the budget was said to have been negligent.

367 Mr Van Zalm then refers to the difficulty Mr McCusker QC had with the lack of reliance on the budget. In that context he observes:

When I put this to the Smiths during the conference that I had with them they emphasised to me, as they apparently did to Mr McCusker, that they had no understanding of cash flow budgets at the time. Further I was advised by them that the bank continued to make small advances and the condition of these advances was that the Smiths followed the bank's cash flow budget.

Because of the respective bargaining positions of the parties I am of the view that this is a more than adequate explanation.

It seems a reasonable inference from this passage that Mr and Mrs Smith may not have instructed Mr Van Zalm, as they had Mr McCusker QC, that they placed no reliance on the budget. In any event, with respect to Mr Van Zalm, if Mr and Mrs Smith had no understanding of cash flow budgets, it is difficult to see how they could have relied upon it. Further, the bank imposing a condition of compliance with the budget in respect of future advances is, of course, very different in character to Mr and Mrs Smith relying upon the budget.

368 Mr Van Zalm dismisses the conclusions which Mr McCusker QC drew from the letter from Mrs Smith to Mr Danks dated 29 March 1978 on the basis of Mrs Smith's anxiety to obtain finance from the R & I Bank. However, this overlooks the fact that by the time that letter was written, finance had been refused by the R & I Bank.

369 The balance of Mr Van Zalm's advice is concerned with the further investigations that should be carried out, and in particular on the subject of the quantum of damage.

370 Mr Van Zalm concludes by advising that there is a good case on liability in tort and contract against the R & I Bank. However, as with Mr Williams QC, that advice is only as good as the instructions upon which it was based. Plainly those instructions were quite different, and the conclusions drawn by Mr Van Zalm quite contrary to the conclusions properly drawn from the instructions and materials provided to Mr McCusker QC.

371 Mr Peter Nisbet QC provided advice by a memorandum dated 9 August 1993 (TB 2, page 2489). Mr Nisbet QC's advice focuses upon the causes of action asserted in the statement of claim. In relation to the claims based upon reliance on the 1977 cash flow budget, Mr Nisbet QC agreed with Mr McCusker QC that this claim was likely to fail because of the failure to prove reliance. On the subject of a claim based upon the failure of the bank to provide adequate financial assistance, Mr Nisbet QC drew attention to the advice that had been received from an expert, Mr McKenzie, to the effect that whatever had been lent to Mr and Mrs Smith, they would not have been able to repay it. In a nutshell, Mr Nisbet QC expressed pessimistic views with respect to Mr and Mrs Smith's prospects of success.

372 Accordingly, as I earlier suggested, when regard is had to the information made available to the various lawyers who have provided advice to Mr and Mrs Smith, and their processes of reasoning, there is no inconsistency with the views I have expressed as to the advice properly given on the basis of the materials and instructions provided to Mr McCusker QC. I am firmly of the view that the only advice that could have been properly given to Mr and Mrs Smith on that basis was that their claim against the bank had no prospect of success.

373 I have concluded that Mr McCusker QC's breach of duty to provide his advice in a timely fashion resulted in his opinion being delivered approximately 15 months later than it would have been if he had provided timely advice. It is therefore necessary to assess whether that delay caused Mr and Mrs Smith to suffer any loss or damage. In the context of this case, there are three ways in which delay in delivery of the opinion could have caused Mr and Mrs Smith to suffer loss:

(i) in respect of interest paid to the Town and Country Building Society;

(ii) in respect of their prospects of averting a sale by the building society; and

(iii) in respect of their prospects of going to trial prior to the termination of legal aid.

374 Dealing firstly with the question of interest, as I have mentioned, the building society deferred exercising its power to sell the farm as mortgagee pending the provision of Mr McCusker QC's advice on prospects. Interest on the outstanding debt would have accrued during this period of deferral, and could be attributed to the delay, at least in respect of that part of the debt which could have been repaid by an earlier exercise of the mortgagee's power of sale.

375 In the result, the farm was sold by the building society in the exercise of its powers as mortgagee by a contract dated 16 May 1989 (TB 2, page 2062). The sale price was $185,000. After deducting the costs of sale, this amount would have only been slightly more than the capital advanced to Mr and Mrs Smith by the building society, which was approximately $155,000. However, the total debt owed by Mr and Mrs Smith as at March 1989, including accrued interest, equated to approximately $400,000 (TB 2, page 1633). The building society accepted the funds realised by the sale in full and final satisfaction of the debt owed by Mr and Mrs Smith, and wrote off and discharged Mr and Mrs Smith from any liability for the balance (TB 2, page 2570). It is clear then that the building society discharged Mr and Mrs Smith from any obligation to pay almost all the interest which had accrued on the loan from its inception. Certainly the amount of interest liability which was waived by the building society substantially exceeded the interest that could have been saved if the building society had proceeded to exercise its power of sale 15 months earlier. Accordingly, the evidence fails to establish that Mr and Mrs Smith have suffered any loss by reason of deferral of the mortgagees power of sale as a consequence of the delay in the provision of Mr McCusker QC's advice.

376 Turning now to the question of whether the earlier provision of Mr McCusker QC's advice might have averted the sale of the farm by the mortgagee. Of course, that could only be the case if Mr and Mrs Smith had established that Mr McCusker QC had breached his duty of care and provided negligent advice, and had also established that a barrister in receipt of the materials and instructions provided to Mr McCusker QC properly discharging his duties would have advised that Mr and Mrs Smith's claim against the bank had some prospects of success. As Mr and Mrs Smith have failed to establish either of those propositions, it follows that they cannot establish that the delay in the provision of the Mr McCusker QC's advice reduced the prospect of averting a sale by the mortgagee.

377 The question of whether Mr and Mrs Smith suffered compensable loss in the form of a reduced prospect of getting their case to trial prior to the termination of legal aid as a consequence of Mr McCusker QC's delay is best considered in the context of a consideration of the events that followed the provision of Mr McCusker QC's advice, and my findings as to the reasons for the termination of legal aid.

The period following Mr McCusker QC's advice up to the termination of legal aid

378 Mr Gilmour provided the Legal Aid Commission with a copy of Mr McCusker QC's opinion under cover of a letter dated 29 March 1989 (TB 2, page 1894). As I have mentioned, in May 1989 the mortgagee exercised its power to sell the farm. In early June 1989 the Legal Aid Commission approved the transfer of legal aid from Mr Gilmour to Haynes Robinson, a firm of solicitors practicing in Albany. Notwithstanding Mr McCusker QC's pessimistic advice, aid was transferred and continued for the purposes of advice and representation in the claim against the bank. Further, aid was extended to include the cost of obtaining a second opinion from senior counsel. It is therefore clear that Mr McCusker QC's advice did not, of itself, result in the loss of legal aid.

379 On 8 June 1990 Haynes Robinson provided the Legal Aid Commission with a copy of the opinion of Mr Williams QC (TB 2, page 2108_1). In that letter, the solicitors requested an extension of aid for 'getting up the case for trial'. By a memorandum of 11 October 1990, an officer of the Legal Aid Commission, Mr Allen, summarised the issues in the case and the advice that had been received to date (TB 2, page 2156). That memorandum went to Mr Ronald K Smith, amongst others. Mr R K Smith was the solicitor in charge of the Legal Services Section of the Legal Aid Commission.

380 On 12 October 1990 Mr R K Smith sent a memorandum to the Director of Legal Aid (TB 2, page 2163). In that memo, Mr R K Smith expressed the view that aid should not be extended 'given the current financial difficulties facing this Commission, and in particular the budget overrun of almost one quarter of a million dollars'.

381 The Director of Legal Aid, Mr Lees, replied to Mr R K Smith by a memorandum of 23 November 1990 (TB 2, page 2166). In that memo Mr Lees expressed the justifiable view that the opinion of Mr Williams QC was so heavily qualified as to be valueless. Nevertheless, Mr Lees was of the view that the Legal Aid Commission had no alternative other than to continue the grant of aid, and directed that aid be extended for the purposes of obtaining an opinion from an experienced junior counsel, based on a properly constructed brief.

382 Consistently with that decision, by certificate dated 26 November 1990, aid was extended for the purpose of preparing a detailed brief on the evidence and the merits, and to obtain an opinion from an experienced junior counsel on those issues.

383 As I have mentioned, Mr Van Zalm of counsel provided his opinion in March 1991. That opinion was provided to the Legal Aid Commission under cover of a letter from Haynes Robinson dated 5 April 1991 (TB 2, page 2208). That letter sought an extension of aid to proceed to trial.

384 On 22 April 1991 an officer of the Legal Aid Commission, Ms Andretich, prepared a memorandum to the Director of Legal Aid and Mr R K Smith, amongst others (TB 2, page 2209). In that memorandum she expressed the view that Mr Van Zalm did not necessarily qualify as 'experienced' junior counsel, and further expressed the view that the opinion was deficient, because the comments were not supported by case law and merely represented Mr Van Zalm's personal view as to what should occur.

385 During May and June 1991 the Legal Aid Commission requested further information from Messrs Haynes Robinson. On 1 July 1991, an officer of the Legal Aid Commission, Mr Garnsworthy, prepared a memorandum recommending the extension of aid (TB 2, page 2222). On 5 August 1991, the Legal Aid Commission issued a certificate extending legal aid up to and including trial, together with obtaining expert advice, and the advice of Queen's Counsel on quantum (TB 2, page 2235).

386 As I have mentioned, Mr Nisbet QC gave his advice by memorandum dated 9 August 1993.

387 I digress to observe that this advice was given almost four and a half years after the advice given by Mr McCusker QC. Preparation of the case for trial had not been assisted in any material way by the advice given by Mr Williams QC, or Mr Van Zalm, because of the deficiencies in the instructions given to the former, and in the advice given by the latter. In addition to the work involved in obtaining the advice of counsel, and the extensions of legal aid, activity seems to have focused upon the obtaining of expert advice from Mr McKenzie, Mr King, and Mr Harrison, an accountant. Perhaps understandably, Mr McKenzie's advice prompted a hostile reaction from Mrs Smith, given that its tenor was to the effect that the farming venture would have failed whatever finance was provided.

388 Following delivery of Mr Nisbet QC's opinion, on 23 August 1993 aid was extended for the purposes of a further conference with him (TB 2, page 2464). However, it seems that conference did not take place until 28 January 1994. The evidence provides no explanation for that delay. Following that conference, Mr Nisbet QC wrote to Messrs Haynes Robinson responding to a number of questions that had been posed by that firm in a letter of 17 November 1993 (TB 2, page 2514). Mr Nisbet QC's letter concludes with the following observation:

At the end of this conference which lasted almost three hours, I told Mrs Smith that whilst I was always prepared to review my opinions in the light of new facts or additional information supplied by way of brief and the like, nothing that she had told me nor anything that I realistically expected her to give me would cause me to change my opinion about the prospects of success for her case. I promised though to hold off final confirmation of this until I had had the opportunity of seeing the additional material Mrs Smith wished to send me.

389 Mrs Smith responded to Mr Nisbet QC's letter by a letter of 4 February 1994 (TB 2, page 2519).

390 During the middle of 1994, the file relating to Mr and Mrs Smith's case maintained by the Legal Aid Commission was reviewed by Ms Robyn Weston, a paralegal employed by the Commission. After reviewing the file, she wrote a note to Mr R K Smith recommending that the matter should be handled by a solicitor, rather than a paralegal. In that note she expressed the view that because there were conflicting opinions of two QCs, she did not think she was the appropriate person to consider the merits of the claim.

391 On 1 August 1994 Mr R K Smith endorsed that note with the following words, 'I have directed that aid be terminated' (TB 2, page 2548).

392 Ms Weston then drafted a letter from the Legal Aid Commission to Messrs Haynes Robinson, which was settled by either Ms Lee (Ms Weston's supervisor), or Mr R K Smith. The letter advised that the Legal Aid Commission did not consider that the grant of legal assistance should continue, and observed that over $35,000 had already been expended by the Legal Aid Commission, 'and the future success of this claim is largely in question'. The letter advised that if Mr and Mrs Smith were dissatisfied with the decision, they could seek reconsideration (TB 2, page 2550).

393 Mr R K Smith gave evidence. His evidence was that he could not recall the reasons why he decided to terminate aid in early August 1994. However, his practice in relation to such matters at that time was to consider the cost to the Legal Aid Commission, the benefit to be gained by the recipient of the grant of legal aid, and the detriment or loss likely to be suffered if aid was to be refused or terminated, together with the monies currently available in the legal aid fund for the provision of legal aid, together with the competing claims of other applicants for legal aid. Mr R K Smith stated that while he had difficulty recalling precisely what occurred, he would have read the file before making his decision to terminate aid, and therefore would have read the opinion of Mr McCusker QC, along with the other opinions on the file. He was however emphatic in his evidence, both in-chief and under cross-examination, that under no circumstance would he have terminated legal aid based on the merits of the case in circumstances where there were conflicting opinions provided by eminent Queen's Counsel (ts 404 - 405). There is no reason to doubt that evidence, which I accept. Of course by this time Mr McCusker QC's advice was not the only negative advice as to prospects which had been received from senior counsel. Advice to similar, although less emphatic effect had been received from Mr Nisbet QC. Given Mr R K Smith's evidence to the effect that aid was not terminated on the basis of any assessment of the merits of the claim, which I accept, it follows that Mr McCusker QC's advice had no bearing upon Mr R K Smith's decision to terminate legal aid.

394 By letter dated 16 August 1994 Haynes Robinson advised that Mr and Mrs Smith sought a reconsideration of the decision to terminate aid (TB 2, page 2552). Further, Mrs Smith wrote to the Legal Aid Commission on 3 September 1994 (TB 2, page 2554) seeking an explanation as to why legal aid was terminated.

395 The Legal Aid Commission responded to Mrs Smith's request for reasons by a letter to Haynes Robinson dated 10 October 1994 (TB 2, page 2557). The letter was apparently prepared by Ms Lee. The letter refers to Mrs Smith's active involvement in challenging reports that had been produced by expert witnesses engaged by her solicitors, and the advice given by Mr Nisbet QC, in the context of responding to Mrs Smith's complaints about delay.

396 The letter goes on to observe that in 1991 the projected cost of taking the matter to trial was in the vicinity of $60,000. However, as at 1994 that projection was no longer accurate, and the cost of funding the matter to trial would be substantially increased. The letter concluded:

The fact now remains that this office is no longer in a position to fund a trial of this nature and magnitude. In view of extreme present funding constraints, a decision was then made to terminate the grant of legal aid for the above two claims [the letter also referred to the proceedings Mr and Mrs Smith had brought against the building society].

As advised previously, your client has a right to seek reconsideration of the above decision terminating the grant of legal aid. Under the circumstances I am prepared to extend the time limit by a further 28 days from the date of this letter.

397 The terms of this letter are consistent with Mr R K Smith's evidence, to the effect that an assessment of the merits of Mr and Mrs Smith's claim against the bank was not a factor in the decision to terminate legal aid. Rather, the dominant consideration appears to have been the escalating cost of taking the case to trial, in the context of the increasingly straitened financial circumstances of the Legal Aid Commission.

398 By letter dated 2 November 1994 (TB 2, page 2561), Mrs Smith sought reconsideration of the decision to terminate aid. She advised that she would compile documents in support of the application for reconsideration and provide them within the next two weeks. Mrs Smith was advised by a letter from the Legal Aid Commission dated 7 November 1994, that reconsideration would be deferred until she had provided the documents to which she had referred (TB 2, page 2563).

399 On 15 November 1994 Mrs Smith wrote to the Legal Aid Commission advising that she had not yet completed the task of compiling the documents (TB 2, page 2566). The documents were ultimately provided to the Legal Aid Commission under cover of a letter from Mrs Smith dated 12 December 1994 (TB 2, page 2571). The letter advanced various reasons why aid should be reinstated.

400 By letter dated 1 February 1995 the Legal Aid Commission advised Haynes Robinson that consideration was being given to reinstating aid for the limited purpose of obtaining expert evidence on the subject of damages (TB 2, page 2585). However, nothing seems to have occurred in relation to the reinstatement of aid until Haynes Robinson wrote to the Legal Aid Commission by letter dated 10 November 1995 seeking authority to engage Mr Rodney King to provide advice (TB 2, page 2613). The evidence does not explain the lengthy delay, although it does refer to Mr and Mrs Smith having made extensive enquiries regarding the identification of an appropriate expert.

401 By letter dated 24 November 1995 (TB 2, page 2618), the Legal Aid Commission advised that aid would be extended for the purpose of obtaining a report from Mr King, subject to the provision of an estimate of his fees.

402 On 6 June 1996 Haynes Robinson wrote to the Legal Aid Commission enclosing a quote of Mr King's fees, dated 28 May 1996 (TB 2, page 2630). Again, the evidence does not provide any explanation for the substantial delay.

403 Although Mr King's quote does not appear in evidence, its approximate size can be deduced from a letter written to Messrs Haynes Robinson by the Legal Aid Commission dated 13 August 1996 (TB 2, page 2634). That letter was written by Ms Gonsalves, who is a paralegal employed by the Legal Aid Commission. The letter states that the effect of the extension being sought would be in the total amount of $10,000 for the work necessary to obtain the further expert report. The letter states:

In view of this, I have had occasion to once again review my file quite carefully. I regret to advise that, on reconsideration, the termination of your clients' grant of legal assistance has been confirmed.

In coming to this decision I have taken into account the sizeable cost that will have to be incurred to obtain evidence to determine whether or not the action is likely to succeed, the total amount of costs already paid to date, and the anticipated substantial costs that will have to be then incurred if the matter is to proceed to a trial.

Legal aid has also been refused in view of the very limited resources and the greater need of other applicants.

I have also noted that the expert you intend instructing is Mr R I King who, it would appear, provided a report dated 5 May 1993 which was rejected by Mr Peter Nisbet QC in his opinion dated 9 August 1993.

If your clients are dissatisfied with this decision, they have the right to have it reviewed by a Review Committee. If a review of the decision is sought, that request must be made by writing to me within 28 days.

If a review of the decision is sought, would you please advise the total amount of legal costs and disbursements you expect to incur in relation to your own fees, counsel fees at trial, and all disbursement costs, including the cost of experts who will be called to give evidence at trial.

404 The terms of this letter are consistent with the evidence to which I have already referred, to the effect that the dominant considerations governing the Legal Aid Commission's decision to refuse to extend aid were economic. There is no suggestion in this letter that the decision to refuse to reconsider the reinstatement of aid was based upon any assessment of the merits of the claim.

405 The author of the letter, Ms Gonsalves, gave evidence. Her evidence was that she believes that she confirmed the termination of aid because of the very limited resources of the Legal Aid Commission, and because of the greater need of other applicants at the time. She also took into account the sizeable costs that would have to be incurred to obtain the further evidence proposed, the costs paid to date, and the substantial anticipated costs that would have to be incurred if the matter was to proceed to trial. While she cannot specifically recall the particular matters to which she had regard, it is her belief that she would not have had regard to Mr McCusker QC's advice. However, because of Mr McCusker QC's position as Chairman of the Legal Aid Commission, Ms Gonsalves is firm in her view that she would not have allowed his opinion to influence her, and is therefore firm in her view that the opinion expressed by Mr McCusker QC had no bearing upon her decision to confirm the termination of legal aid to Mr and Mrs Smith. There is no reason to doubt Ms Gonsalves' evidence, which I accept.

406 Mrs Smith instructed Haynes Robinson to seek a review of the decision to confirm the termination of aid, and such a review was requested by letter from Haynes Robinson to the Legal Aid Commission dated 6 September 1996 (TB 2, page 2637). The letter advised that information and submissions in support of the application for review would be provided by the end of October 1996. By letter dated 9 September 1996, the Legal Aid Commission advised that the review would be deferred until those materials had been provided.

407 By letter dated 10 October 1996, Haynes Robinson provided submissions in support of the application for review of the decision to terminate aid (TB 2, page 2639). Mrs Smith wrote her own letter to the Legal Aid Commission dated 5 November 1996 (TB 2, page 2644).

408 Ms Gonsalves prepared a memorandum dated 18 November 1996 for consideration by the Review Committee (TB 2, page 2655). The memorandum attached a summary of the history of the matter, and of the issues, which had been prepared in April 1995 (TB 2, page 2595).

409 In her memorandum, Ms Gonsalves advised the Review Committee that the decision to confirm the termination of aid was made:

[I]n view of the costs that had been incurred in relation to this matter ($25,679.18), the sizeable cost that would have to be incurred to obtain the evidence to determine whether or not the action is likely to succeed and the anticipated substantial costs that will have to then be incurred if the matter is to proceed to a trial.

Legal aid was also refused in view of the very limited funds available to this office for the provision of legal aid.

This memorandum is consistent with the evidence given by Ms Gonsalves as to the reasons for her decision to confirm the termination of aid.

410 During November and December 1996 Mrs Smith attended the Legal Aid Commission on three occasions to inspect her files. She then sent a facsimile letter to the Legal Aid Commission dated 9 December 1996 (TB 2, page 2662). In that facsimile Mrs Smith requested that the matter not be referred to the Review Committee, as proposed, until matters on the file which she asserted were erroneous had been corrected. In accordance with that request, the matter was withdrawn from the Review Committee meeting which was scheduled to take place in December 1996. Mrs Smith was advised of that decision by letter from the Legal Aid Commission dated 11 December 1996 (TB 2, page 2669).

411 On 3 February 1997 Mrs Smith telephoned Ms Gonsalves and discussed a number of the issues which she had raised in her facsimile of 9 December 1996. However, Ms Gonsalves observed that the facsimile was incomplete, and requested that Mrs Smith resend it.

412 On 27 March 1997 Mrs Smith spoke to Ms Gonsalves and advised that she could not find the complete facsimile, and that she intended to prepare new submissions for the consideration of the Review Committee. At her request, Ms Gonsalves agreed to take no action on the file until Mrs Smith provided the further submissions she was proposing to prepare. It seems those submissions were never in fact provided to the Legal Aid Commission, with the result that the decision to terminate legal aid was never reviewed by the Review Committee (TB 2, page 2722).

413 It is to be remembered that by this time Mr and Mrs Smith had commenced these proceedings against Mr McCusker QC. In fact those proceedings were commenced by a writ filed on 13 March 1995. In my decision to dismiss the proceedings which Mr and Mrs Smith had brought against the R & I Bank, I found that sometime after the withdrawal of legal aid in 1994, Mr and Mrs Smith decided to refrain from pursuit of their claims against the bank, and instead put all their energy and resources into their claims against their legal advisors. The evidence which I have received in these proceedings reinforces that conclusion, to which I adhere.

414 The first question that must be addressed arising from the sequence of events following the provision of Mr McCusker QC's advice which I have set out above is whether that advice caused or materially contributed to the termination of legal aid granted to Mr and Mrs Smith. It will be clear from the findings I have made that I am firmly of the view that Mr McCusker QC's advice had no bearing whatever upon the decision to terminate the legal aid granted to Mr and Mrs Smith. The evidence of Mr R K Smith, as to his reasons for the decision to terminate aid in 1994, and of Ms Gonsalves as to her reasons for confirming the termination of aid in 1996 is consistent with all the contemporaneous documents and is inherently plausible. It was, after all, approximately five and a half years after Mr McCusker QC gave his advice that legal aid was terminated, and seven and a half years after he gave his advice that the decision to terminate aid was confirmed. Over that period, conflicting opinions had been received from various counsel. Plainly the decision to terminate aid, and the decision to confirm the termination of aid were not made based upon any consideration of the merits of the claim, but rather upon an assessment of the escalating costs of continuing to extend aid, in the context of the increasingly strained financial resources of the Legal Aid Commission.

415 It is appropriate to now return to the question of whether Mr McCusker QC's delay in providing his advice caused or materially contributed to Mr and Mrs Smith being unable to bring their claim against the bank to trial prior to the termination of legal aid. As I have mentioned, the period of delay for which I would hold Mr McCusker QC responsible, is a period of approximately 15 months. As I have noted, that period is a relatively minor portion of the total period of delay between the commencement of the proceedings against the bank in 1982 and the termination of legal aid in 1994. Further, after the provision of Mr McCusker QC's advice in March 1989, there were extensive periods of unexplained delay, perhaps associated with obtaining advice from other counsel. During this time very little progress in the preparation of the case for trial appears to have been made. Although some expert evidence was gathered, Mr Nisbet QC was dismissive of the evidence obtained from Mr King, and Mrs Smith was dissatisfied with the evidence obtained from Mr McKenzie. No advice on evidence had been prepared, nor had proper proofs of evidence of prospective witnesses been prepared. Further, the various issues which had been identified relating to the assessment of damages remained entirely unresolved.

416 Essentially the question is whether, if Mr McCusker QC had given his advice at the end of 1987, rather than in March 1989, the case would have advanced to the point where it would have gone to trial, or been sufficiently close to trial that legal aid would not have been terminated in 1994. Given the conspicuous lack of progress in preparing the matter for trial following the provision of Mr McCusker QC's advice in 1989, consistent with the long periods of unexplained delay which preceded his engagement, and the very substantial amount of work that remained to be done in order to prepare the case for trial when aid was terminated in 1994, I am firmly of the view that the delay in the provision of Mr McCusker QC's advice had no material impact upon the prospects of Mr and Mrs Smith bringing their case to trial prior to the termination of legal aid, or sufficiently close to trial to avert the termination of legal aid.

417 I therefore conclude that Mr McCusker QC's failure to provide advice in a timely fashion did not cause Mr and Mrs Smith to suffer any loss or damage either in respect of interest paid to the building society, or in respect of their prospects of averting a sale of the farm by the mortgagee, or in respect of their prospects of bringing their case to trial prior to the termination of legal aid.

418 The last issue that remains to be considered on the subject of causation requires an assumption that breach of duty by Mr McCusker QC was, for some reason or other, responsible for Mr and Mrs Smith losing the benefit of legal aid. On that assumption, the question is whether the loss of legal aid caused them to lose the opportunity to pursue their claim against the bank.

419 In my decision to dismiss the proceedings which Mr and Mrs Smith had brought against the bank, I found that at some time after the termination of legal aid in 1994, Mr and Mrs Smith consciously decided to inject all their energies and endeavours into their claim against Mr McCusker QC and Mr Gilmour, and effectively to abandon their claim against the bank: Smith v Commissioners of the Rural & Industries Bank [62]. The evidence in these proceedings reinforces that conclusion. The extent of the endeavours they have applied to the pursuit of the claim against Mr McCusker QC is evident from the history of these proceedings which I have recounted. There would appear to be no reason why those energies and endeavours could not have been applied to the pursuit of their claim against the bank, notwithstanding the termination of legal aid. While I readily accept that their pursuit of the claim against the bank would not have been as efficacious without the benefit of legal assistance, I do not accept that the termination of legal aid caused Mr and Mrs Smith to lose their opportunity to pursue their claim against the bank. Rather, the loss of their opportunity to pursue their claim against the bank was the consequence of the decision which they took to inject all their energies and endeavours into the claim against their legal advisors, with the result that their claim against the bank was ultimately dismissed.

420 For these various reasons I have resolved all the issues which bear upon the issue of causation and which I identified earlier in these reasons against Mr and Mrs Smith.

421 Against the contingency that a different view of Mr McCusker QC's liability is taken on appeal, it is now necessary for me to make some findings with respect to the value of the opportunity which Mr and Mrs Smith assert they lost to pursue their claim against the bank with the benefit of legal representation in a timely fashion. Of course that assessment must be made on the assumption that Mr and Mrs Smith have established an entitlement to damages assessed on that basis.

422 This section of my reasons assumes, contrary to the conclusions I have set out above, that Mr McCusker QC breached his duty to Mr and Mrs Smith, with the consequence that they lost the opportunity to pursue their claim against the bank. In other words, I am proceeding on the assumption that adverse findings have been made against Mr McCusker QC both on the question of breach of duty, and on the various issues of causation which I addressed above. In particular, this portion of my reasons assumes that Mr and Mrs Smith have established, on the balance of probabilities that, but for the negligence of Mr McCusker QC, they would have pursued the cause of action against the bank, as this is an essential element of their claim - see Hammond Worthington v Da Silva [118]. Such an assumption is of course directly contrary to my finding that even if Mr and Mrs Smith had established that Mr McCusker QC's opinion was negligently prepared, they have failed to establish that this had any effect upon the termination of legal aid almost five and a half years later, or their failure to pursue their claim against the bank, which was the consequence of their deliberate election to pursue the claim against their legal advisors and abandon their claim against the bank.

423 The general principles governing claims for the loss of an opportunity to obtain a benefit are conveniently set out in the decision of the High Court in Poseidon Ltd & Sellars v Adelaide Petroleum NL [1994] HCA 4; (1994) 179 CLR 332. The plurality (Mason CJ, Dawson, Toohey & Gaudron JJ) drew a distinction between the principles governing the determination of liability, and the principles governing the assessment of damages. Issues going to the determination of liability, including causation issues, are to be determined on the balance of probabilities (353). That is why, in these proceedings, it is necessary for Mr and Mrs Smith to establish on the balance of probabilities that Mr McCusker QC's breach of duty caused or materially contributed to the loss of their opportunity to pursue their claim against the bank. However, once liability has been established, the assessment of damages proceeds taking into account any reductions arising from the uncertainty of future events, even if those uncertainties produce the conclusion that realisation of the opportunity was a possibility, rather than a probability. Put another way, provided the plaintiff establishes that he or she has sustained some loss or damage, because the opportunity foregone had some commercial value, the plaintiff does not carry the burden of proving that it was more likely than not that the full commercial value of the opportunity would have been realised. Provided the plaintiff can show that there was a possibility, other than a negligible possibility, that the opportunity would have realised something of value, the court can award damages based on its assessment of the likelihood of the possibility being realised, without damages being restricted to the situation in which realisation was more likely than not.

424 One species of the genus of lost opportunity claims, is the claim in which the opportunity foregone is the opportunity to pursue litigation. Most often such a claim will arise in cases such as this, where proceedings are brought against a legal advisor whose breach of duty is said to have caused the client to lose the opportunity to pursue litigation.

425 The approach properly taken to the assessment of the value of the lost opportunity to pursue litigation is set out in Nikolaou v Papasavas Phillips & Co (Wilson, Dawson, Toohey & Gaudron JJ):

That loss would ordinarily be quantified by the trial judge taking a broad brush approach to the several matters that in a particular case may require to be resolved - the likely date when in the absence of the negligence of the solicitor the action would have come to trial, the evidence that would or should have been available to the plaintiff at that time, the relevant principles of law then governing the assessment of damages, the question of contributory negligence, and [an issue which would not be a problem in the present case] the prospect of any judgment given in the favour of the plaintiff being satisfied - in order to arrive at a figure representing the loss suffered by the plaintiff (404).

426 The requirement that the court take a 'broad brush' approach to the valuation of a claim foregone is consistent with the observations of Burt CJ in Instant Nominees Pty Ltd v Redman [1987] WAR 218:

There are many cases in the books in which solicitors have been held liable for damages for failure to take some step which has resulted in their client's claim becoming statute barred. In such cases the court does not conduct a trial within a trial so as to determine whether the barred claim if prosecuted would, on the balance of probabilities, succeed or not, so that depending upon that decision the client would recover all or nothing. The consistent approach has been to deal with such cases upon the basis that the client has lost a chance of succeeding and if such be the case the task of the trial court is to place a value on the chance so lost (226).

See also Darvall McCutcheon (a firm) v HK Frost Holding Pty Ltd (in liq) [2002] VSCA 85; (2002) 4 VR 570 [71]; Hammond Worthington v Da Silva [115].

427 Consistently with those authorities, on various occasions during the interlocutory hearings prior to trial, and during the trial, I attempted to discourage the parties from conducting 'a trial within a trial' - that is, of using these proceedings as a surrogate for the trial of the claim against the bank. Those attempts failed, and a significant body of evidence was led which went only to the merits of Mr and Mrs Smith's claim against the bank. The bulk of the evidence called by Mr and Mrs Smith was of this kind. Similarly, a body of evidence was called on behalf of Mr McCusker QC which went only to the merits of the claim against the bank, including the evidence of Mr Danks, and another officer of the bank, Mr Robinson, who was one of the rural advisors who visited the farm in late 1978.

428 Out of deference to the position adopted by the parties in this regard, and against the possibility that a different view is taken on appeal, I will deal with that evidence, and set out the findings which I make based upon it. However, I would not want these reasons to be taken as any charter for departing from the 'broad brush' approach mandated by the decision in Nikolaou v Papasavas Phillips & Co, or to provide support for the proposition that in cases of this kind there should be 'a trial within a trial'. For that reason, my assessment of the evidence which goes only to the merits of the claim against the bank will be conducted at a level of generality, consistent with the authorities to which I have referred, and will not descend to the level of detail that would be appropriate if the claim against the bank was being tried in these proceedings.

429 Consistently with the general principles relating to claims for lost opportunity, a plaintiff claiming damages for the lost opportunity to pursue litigation must establish that the claim had some value. In that context, the value of the claim must be something more than 'a nuisance value which I could have so utilised as to extract something from the other side, and they would have had to pay something to me in order to persuade me to go away': Kitchen v Royal Air Forces Association [1958] 1 WLR 563, 574 - 575 (Lord Evershed MR), cited with approval by Burt CJ in Instant Nominees v Redman (226), and by Buss JA in Hammond Worthington v Da Silva [115]. However, again consistently with the general approach in Poseidon Ltd & Sellars v Adelaide Petroleum, it is not necessary for a plaintiff seeking damages for the lost opportunity to pursue litigation to establish that it is more likely than not that the litigation would have succeeded - see Commonwealth of Australia v Amman Aviation Pty Ltd [1991] HCA 54; (1991) 174 CLR 64, 119 (Deane J). Provided that the claim had more than negligible prospects of success, damages will be awarded by the court by reference to its assessment of those prospects, even if they are less than 50%, using the broad brush approach stipulated in Nikolaou v Papasavas Phillips & Co.

430 In the proceedings commenced against the bank in 1982, causes of action were formulated in both contract and tort. As I have indicated, notwithstanding the terms in which those causes of action were enunciated in the statement of claim in those proceedings, Mr and Mrs Smith now assert that their claim should be evaluated on the basis of a failure by the bank to give 'proper advice' as to the farming strategy which they should have adopted, including perhaps advice to the effect that they should have obtained advice from an appropriate qualified farming consultant, and as to the financial strategy which should have been adopted, including as to the most appropriate form of finance. As will be seen, at points in the evidence, the case advanced by Mr and Mrs Smith as to the form of finance that should have been provided by the R & I Bank comes very close to the proposition that was put in the instructions provided to Mr McCusker QC - namely, that the bank breached a duty to provide long term finance to enable Mr and Mrs Smith to implement the farm development strategy which they had formulated.

431 For the purposes of the broad brush evaluation which I am undertaking, it is unnecessary to dwell at length upon the distinctions between a claim advanced in contract, and a claim advanced in tort. Plainly there was a contract between Mr and Mrs Smith and the bank for the provision of finance. The question of whether or not terms were incorporated into that contract for the provision of advice by the bank would turn upon the findings made as to the precise communications between Mr and Mrs Smith and the bank, and whether those communications constituted, or gave rise to, terms of the contract. Similarly, the question of whether or not the bank was under a common law duty to advise Mr and Mrs Smith (irrespective of its contractual obligations) would also turn critically upon the precise communications between Mr and Mrs Smith and the bank. As I have already noted, the question of whether the bank owed a duty to advise Mr and Mrs Smith turns critically upon the terms of the communications between them, and not upon the unexpressed opinions or thoughts of Mr and Mrs Smith. As I have also noted, the 1986 proof (which Mrs Smith incorporated by reference into her evidence in these proceedings) is replete with statements of the latter kind. However, they are not relevant to the assessment of the existence of a duty of care, although they could conceivably be relevant to the issue of reliance.

432 The authorities establish quite clearly that no general duty to advise arises merely from the relationship between banker and customer - see Metha v Commonwealth Bank of Australia (Unreported, NSWSC, 27 June 1990) (48 - 51) (Rogers CJ); Stanton v Australia & New Zealand Banking Group Ltd (1987) ATPR 48-191; Cornish v Midland Bank Plc [1985] 3 All ER 513, 516 - 517; Commonwealth Bank of Australia v Smith [1991] FCA 375; (1991) 102 ALR 453, 475; James v ANZ Banking Group Ltd [1986] FCA 41; (1986) 64 ALR 347, 384; Lenin v Australian Bank Ltd (Unreported, NSWSC, 21 June 1991) (Cole J).

433 Accordingly, a customer asserting that a bank owed a duty to advise must establish that the duty arises from something other than the mere relationship between banker and customer. Courts will approach the relationship between banker and customer on the basis that customers will generally approach banks for loans, not for commercial advice: see Stanton v ANZ and Lenin v Australian Bank. Further, the bank is entitled to have regard to its own commercial interests in dealings with its customer, and is not obliged to satisfy itself that the customer has made a wise or commercially prudent decision based upon a full understanding of all the risk: see Ralik Pty Ltd v Commonwealth Bank of Australia (Unreported, NSWSC, 14 August 1990) (97 - 99) (Cole J); Lenin v Australian Bank.

434 So, in order to establish that a bank was under a duty to provide advice, the customer must establish some specific incident or aspect of the particular relationship which gives rise to such a duty. There are a number of ways in which this could be done. One way is by the fact of the bank providing advice: see Metha v Commonwealth Bank. Another way such a duty could arise is from communications between banker and customer in which the customer made clear that it was looking to the bank for the provision of advice, and the bank undertook the responsibility of providing such advice.

435 Against that legal context, it is now appropriate to turn to the facts established by the evidence. In this portion of my reasons I am, of course, referring to the evidence as a whole, not only to the evidence of the instructions given to Mr McCusker QC.

436 Mr and Mrs Smith had difficulties in their relationship with the NAB during 1976. In that context Mrs Smith wrote to the head of the bank by letter dated 2 August 1976 (TB 2, page 266). That letter makes clear that Mrs Smith had reviewed a budget drawn up by the bank and disagreed with it. There is no suggestion in the letter that she had any difficulty comprehending the budget or its format. The letter goes on to make various assertions as to projected costs and income over the ensuing period.

437 Two days later Mrs Smith wrote to the manager of the NAB at Gnowangerup (TB 2, page 270). The letter contains a detailed assessment of various aspects of the budget which had been prepared by the NAB (TB 2, page 286). The letter also contained detailed projections of income and cost. Further, by letter dated 10 March 1977 (TB 2, page 282), Mrs Smith wrote again to the manager of the Gnowangerup branch of the NAB setting out detailed projections of income and expenditure over the forthcoming 12 months.

438 This correspondence is entirely inconsistent with Mrs Smith's repeatedly asserted naivety in relation to financial matters, and her asserted incapacity to comprehend a cash flow budget. The documents also reinforce other evidence to the effect that Mr and Mrs Smith had clearly formulated the development strategy which they wished to adopt, and sought financial support to enable that strategy to be implemented.

439 As part of that strategy, Mr and Mrs Smith had decided to acquire a heavy duty tractor, to facilitate clearing operations, when their tractor broke down. It is clear that they were firm in that view, because when the NAB branch manager advised that he would only provide finance to support the acquisition of a light duty tractor, because of his doubt that they could service the debt, they rejected the view implicit in that position, and went to see the R & I Bank with a view to taking their banking business elsewhere.

440 The evidence clearly establishes that before Mr and Mrs Smith approached Mr Danks, they had formulated the development strategy which they wished to adopt. They had decided that they needed to acquire a heavy duty tractor to implement that strategy. They had not been discouraged from that course by the pessimistic view taken by the NAB branch manager.

441 Mr Smith considered himself to be an experienced farmer, and Mrs Smith shared that view, and described him as such in a number of documents which she prepared and submitted to prospective lenders. Before they approached the R & I Bank, they were well aware of the various factors which affected the success of their farming venture, including seasonal factors, and in respect of their piggery, the impact which the price of fodder had upon those operations (ts 554). They were also aware that specialist farm advisors were available to provide advice (ts 795).

442 When they approached Mr Danks, they knew that he had recently arrived from England and had no experience of pig farming (ts 693).

443 In her evidence, Mrs Smith described in detail the farm development plan which she and her husband had formulated prior to seeing Mr Danks (ts 557). Mr Smith confirmed that when they went to see Mr Danks, it was this plan which they put to him (ts 808). Mr Smith also accepted that he reassured Mr Danks that if there was any shortfall in projected farming income, he would augment that income by working off the farm, as he had done in previous years (ts 1238).

444 As I have noted several times, a critical issue in any claim against the bank would be the findings of fact properly made as to precisely what was said in the meetings between Mr and Mrs Smith and Mr Danks. Over the 33 years between those meetings and the trial of these proceedings Mr and Mrs Smith have made various attempts to record what was discussed. Three of those attempts were before Mr McCusker QC and have already been considered in my reasons. The first of those was prepared by Mr White in 1980, and is obviously the most proximate, in point of time, to the critical events. It is abundantly clear that subsequent attempts by Mrs Smith to recreate the discussion in her initial meeting with Mr Danks have been significantly influenced by her extensive involvement in almost 30 years of litigation. I have set out the relevant portions from the 1980 proof already in these reasons, and expressed the conclusion that there is nothing in the description of the meeting with Mr Danks contained in that proof which would suggest that Mr and Mrs Smith wanted anything other than financial accommodation: see [115] above.

445 The 1986 proof is extremely difficult to follow. As I have already suggested, viewed in context, perhaps the closest any part of that proof comes to asserting a communication between Mr and Mrs Smith and Mr Danks which could enliven a general duty to advise, is the proposition that Mr and Mrs Smith stated that they did not want to borrow funds which they could not afford to repay. However, as I have already noted, that assertion, if in fact made, appears to be nothing more than a statement of the obvious, or perhaps as an indication of fiscal prudence, is and when viewed in context, quite insufficient to enliven a general duty to provide farming or financial advice.

446 The 1987 proof sets out in detail the development plan which Mr and Mrs Smith outlined to Mr Danks in their first meeting. It also asserts that Mr Danks was told that Mr and Mrs Smith would require a facility of about $30,000 over a period of several years to implement that plan. As I have noted, this proof was prepared in a context in which Mr and Mrs Smith instructed Mr McCusker QC that the claim which they wished to advance against the bank was a claim in contract based upon the bank's failure to provide them with sufficient finance to implement the development plan which they had formulated. As I have already noted, that assertion is fundamentally inconsistent with the proposition that they went to the bank seeking advice as to the farming and financial strategy which they should implement.

447 I will deal below with a number of the documents that were prepared by Mr and Mrs Smith in the late 1970s, at the time they were dealing with the R & I Bank. There is nothing in those documents, or in any of the proofs of evidence to which I have referred, that would support the 'proper advice' case which Mr and Mrs Smith say they lost the opportunity to pursue against the bank. It is not a case which found expression in the statement of claim, or in any advice given by any legal advisor engaged by Mrs Smith prior to the termination of legal aid in 1995. There is no evidence that any consideration was given to formulating a claim in this way, nor any evidence adduced to support a claim formulated in this way, prior to the decision of the Full Court in 2000. Of course by then, as I have found, Mr and Mrs Smith had effectively abandoned their claim against the R & I Bank, although for the purposes of this portion of my reasons, I am proceeding upon an alternative hypothesis.

448 Put shortly, any claim advanced by Mr and Mrs Smith against the R & I Bank on the basis of breach of a duty to give 'proper advice' would face the insuperable obstacle that there was no contemporaneous evidence to support such a claim, which appears to have been formulated many years after the event. Of course the hypothesis upon which this portion of my reasons proceeds is the assumption that that Mr McCusker QC should have given advice in respect of such a claim by 1987, but this was already 10 years after the critical events, by which time the criticism would have been just as valid.

449 The evidence given before me falls manifestly short of providing any plausible basis for the imposition of a duty to advise upon the bank. The statement which comprised Mrs Smith's evidence-in-chief describes the first meeting in these terms:

We both told him of our plans for the farm and made it clear that it was our intention to stay there, to fully develop it and to live on it. We made it very clear that we were seeking finance to do that and that we were willing to change banks if we could be sure the R&I understood our plans and financial needs and was prepared to work with us and advise us financially to achieve our plans, and to lend us money to achieve our plans. We emphasised very strongly that we didn't want to get into debt beyond what we were able to repay and that we would rather carry on the way we were than go into too much debt for the farm to repay [14].

There is nothing in that description of the conversation which is capable of giving rise to a duty to advise. To the contrary, that description of the meeting reinforces the impression gained from the 1980 proof that to the effect that what Mr and Mrs Smith wanted from the R & I Bank was financial support, not advice.

450 In relation to the form of loan, Mrs Smith's statement proceeds:

We said we needed a long term development loan to give us time to get the farm producing enough money to service the proposed debt and to live on. He said he understood that. We asked about the Commonwealth Development Bank or whether there was any other development finance like the solider settlers got and Danks told me that you couldn't get that sort of loan any more but the bank achieved the same purpose with overdrafts [18].

This evidence appears to go to the proposition that there was some agreement with the bank for the provision of long term support. However, as Mr McCusker QC pointed out in his opinion, that proposition is inconsistent with the documentation which Mr and Mrs Smith signed at the time, with the fact that, as everybody was aware, the cash flow budget was only prepared to cover one year, and with the fact that there is no document in which Mr or Mrs Smith asserted at any time prior to the commencement of proceedings against the bank, that the bank was in breach of an agreement to give them more finance, and over a longer term.

451 In cross-examination Mrs Smith was asked repeatedly whether she sought or received any advice from Mr Danks in their first meeting. She was unable to identify anything other than the precise form of the finance which was to be advanced by the bank, although it is clear what Mr and Mrs Smith sought in their meeting with Mr Danks, namely, the deposit of $7,000 required for the tractor, and an overdraft facility of $3,000 (see ts 572 - 578).

452 The statement which comprised the evidence-in-chief of Mr Smith gave the following description of discussions during the first meeting with Mr Danks:

We went to see Danks and showed him the map of what we had cleared and the layout of what we had on the place.

We said we wanted finance to clear more land and to eventually buy the cement floor and internal fittings for a pig shed for the growers. We already had the materials to build the shell of the shed. In order to clear more land for cropping we needed a more reliable tractor so we also needed finance for that. We had looked at a Massey-Ferguson 1085. Danks told us that he would draw up the budget and any other paperwork needed and he would send it to Head Office. He was enthusiastic and he seemed to think that there would be no problem in the application and it was his opinion that it seemed to be straightforward [29] - [30].

Again, this description of what was actually said in the meeting is quite incapable of giving rise to any duty to provide advice. On the contrary, it is only consistent with a meeting in which customers of the bank sought the provision of finance. It is also consistent with the various portions of the materials provided to Mr McCusker QC which reveal that Mr and Mrs Smith were aware that the primary purpose for the formulation of the budget was to facilitate the grant of the loan - that is, that it was for the bank's internal purposes. There was nothing in Mr Smith's oral evidence which cast any different light upon the matters discussed at the first meeting.

453 As I have noted in the context of the materials provided to Mr McCusker QC, it is clear that Mr and Mrs Smith left the first meeting with Mr Danks with the view that they had received oral approval for the finance which they sought, and that there was an oral agreement to that effect. In reliance upon that understanding, they placed an order for the tractor, the cost of which was debited to their account on 1 April 1977, prior to their second meeting with Mr Danks.

454 At the time Mr and Mrs Smith committed themselves to the purchase of the tractor, they had only had one meeting with Mr Danks. They had presented to him their development plan, and sought the provision of finance. He agreed to provide the finance which they sought. As they were well aware, he had given them no advice whatever on farming matters, and on financial matters, had essentially agreed to give the financial accommodation which they sought. It must have been clear to Mr and Mrs Smith that Mr Danks had neither the expertise, nor the opportunity to undertake any meaningful assessment or appraisal of the detailed aspects of their farm development plan. Leaving to one side the various assertions of unexpressed thoughts and argumentative propositions advanced by Mrs Smith over the years, and focusing upon the evidence of what was said in the first meeting, there is simply no evidence capable of giving rise to an arguable case for the imposition of a duty to advise.

455 At the meeting with Mr Danks on 5 April 1977, he presented the cash flow budget which he had prepared, using the information which Mr and Mrs Smith had provided at their first meeting. The evidence, both within the materials provided to Mr McCusker QC, and in the evidence before me, establishes unequivocally that the overwhelming bulk of the information contained within the budget was provided by Mr and Mrs Smith (see Mrs Smith ts 590 and following ts 692 - 693; Mr Smith ts 808 - 809; and Mr Danks' statement pars 21 - 22). Further, as I have noted, Mr Smith confirmed that he told Mr Danks that if there was any shortfall in farm income required to service the debt, he would undertake off farm work.

456 It was obvious to Mr and Mrs Smith that the budget prepared by Mr Danks was for one year only (ts 686). Further, although Mrs Smith denied in cross-examination that she was not aware that budgets for succeeding years would depend critically upon the performance achieved in the year covered by the 1977 budget, those denials were implausible, and I do not accept them. It must have been obvious to Mr and Mrs Smith that the accuracy of budgets to be prepared for 1978 and 1979 would depend critically upon financial performance during 1977, in relation to such things as the area of land cleared during that year, the number of breeding pigs retained, cash generated by farming activities, costs incurred and so on.

457 At the meeting on 5 April 1977 Mr and Mrs Smith signed application forms for the advances they were seeking. Those forms made clear that finance was to be provided for one year only. That was confirmed by the letter which Mr Danks sent them dated 10 May 1977 (TB 2, page 297), which confirmed that repayment of the account would be subject to annual review, and that the term loan was to be reduced at the rate of $2,000 per annum.

458 As Mr McCusker QC noted in his advice, the contemporaneous documents relating to the grant of financial accommodation by the R & I Bank are unequivocally inconsistent with any assertion that the bank had agreed to provide financial accommodation in any amount greater than $10,000, or for any period longer than one year.

459 In evidence in these proceedings Mr and Mrs Smith confirmed the instructions they had given to Mr McCusker QC, to the effect that they did not rely upon the budget, in the sense of making farming decisions by reference to it (Mrs Smith ts 624 - 628; Mr Smith ts 815). Rather, they farmed in accordance with decisions which they made having regard to seasonal conditions and their view of appropriate farm management (Mrs Smith ts 698 and following; Mr Smith ts 812 and following). They were both aware of the defects in the budget as soon as they considered its terms. However, significantly, at no point prior to the threatened commencement of proceedings, did they suggest to the bank that they had been given defective advice, and nor did they require further advice from either the bank or any other farming advisor.

460 Accordingly, there is no evidence which is capable of sustaining the conclusion that the cash flow budget was proffered or received as advice to Mr and Mrs Smith as to how they should conduct their farm, and the evidence establishes unequivocally that no reliance was placed upon the budget by Mr and Mrs Smith when making farming decisions.

461 As I have mentioned, during 1977, in fact the R & I Bank advanced funds significantly in excess of the overdraft limit which had been agreed earlier in that year.

462 In early 1978 Mrs Smith prepared a document for the bank reviewing their performance over the preceding 12 months (TB 1, page 454). In that document, Mrs Smith wrote:

The dry year made stock grain scarce and expensive, doubling the price from the time when we made out our budget until the time when we needed to make purchases.

Our living expenses were higher than our budget estimate.

These descriptions of the budget as being 'our budget' are entirely inconsistent with any case based upon the budget as a form of advice by the bank.

463 More generally, the document provides a number of explanations for the failure to perform to expectation. Significantly, at no point in the document is there any suggestion that the bank bore any responsibility whatever for the under achievement. Rather, the explanations proffered focus upon seasonal conditions. The same is true of another document prepared around this time for submission to the bank, in which Mrs Smith wrote:

We commenced 1977 with good prospects and had it not been for altered economical factors due to drought I am sure we would have finished in a much better situation (TB 2, page 474).

When cross-examined on this statement, she endeavoured to assert that her optimism was attributed to her confidence in Mr Danks (ts 696). However, this is an implausible proposition, which I reject. Plainly the farm development programme was the work of Mr and Mrs Smith, not Mr Danks. As they both acknowledged, no decisions as to how the farm should be worked or developed were ever made in reliance upon any advice given by Mr Danks, or upon the budget which he prepared.

The applications for finance from other sources

464 In the context of my consideration of Mr McCusker QC's opinion, I have already referred to the materials presented to him relating to the applications made by Mr and Mrs Smith for finance from other sources, following the bank's refusal of continued support in early 1978. I have in that context referred to a document prepared by Mrs Smith dated 29 March 1978, for inclusion in an application to the Rural Adjustment Authority (TB 1, page 124). The terms of that document, consistently with the documents provided to the R & I Bank, make clear that:

(a) Mr and Mrs Smith considered themselves the masters of their own destiny, in terms of the decisions to be made with respect to the management and development of the farm, all of which had been made without reference to the budget or the bank; and

(b) there was no suggestion that any of the difficulties they had experienced were attributable in any way to any advice given by the bank, or any failure by the bank to honour an agreement to provide additional finance.

465 Further, as I have already noted, during 1978 Mr and Mrs Smith were advised on a number of occasions by those with apparent expertise, notably the Rural Adjustment Authority, that they did not consider their farm development proposal to be viable, and that they should consider leaving the farming industry (TB 2, pages 529, 557). The fact that Mr and Mrs Smith resolutely persisted in their plans reinforces the view that if they had been told by the R & I Bank in early 1977 that their farm development proposal was unwise, and that they should defer their plans, they would not have taken their banking to the R & I Bank, but would have sought financial accommodation to support their plans from another source.

466 Further, when the R & I Bank sent two farm advisors to visit the farm in the latter part of 1978, Mrs Smith was well aware that their advice was that the viability of their farm was questionable. However, notwithstanding that expression of view from apparently qualified advisors, Mr and Mrs Smith were adamant in their decision to remain on, and expand the farm. Those events tell overwhelmingly against any proposition that Mr and Mrs Smith were looking to the bank for advice as to how they should conduct their farm, or that they would have accepted and acted upon any advice given by the bank.

467 The first occasion upon which Mr and Mrs Smith attributed any fault to the bank for the financial predicament in which they found themselves was in the letter to the bank of 1 November 1979 (TB 2, page 698). However, the complaint in that letter is put on the basis of reliance upon negligent advice given in the budget, being the cause of action considered by Messrs Warren McDonald French & Harrison as a result of instructions given by Mrs Smith. That cause of action is now conceded to be hopeless. That cause of action was also the central feature of the statement of claim, settled with the concurrence of Mr and Mrs Smith, in the proceedings brought against the bank. These observations reinforce the views I have already expressed with respect to the claim against the bank based upon a failure to give 'proper advice' being unsustained by any document or instruction prior to the engagement of Mr McCusker QC, or indeed, prior to the decision of the Full Court in 2000.

468 The contemporaneous documents to which I have referred reinforce the conclusion that the losses incurred by Mr and Mrs Smith in the conduct of their farming operations were inherent in those operations, attributable either to poor seasonal conditions, or poor farm management, or both. The proposition that Mr and Mrs Smith were inhibited in the management of their farm by the bank's breach of an agreement to provide them with additional finance, must fail, firstly, because there is no evidence of any such agreement and secondly, because the bank did in fact provide significant additional finance. Further and in any event, after many rejections, Mr and Mrs Smith succeeded in obtaining additional finance from the Town and County Building Society, which not only eliminated all existing debt, but provided them with additional capital for improvements, and working capital. Their farming venture still failed, notwithstanding their failure to make any significant repayment of the capital or interest. Their failure to repay either capital or interest on that loan makes it impossible to assert that the failure of their venture was somehow attributable to the financial strictures imposed by their debt.

469 At all events, the debt owed to the R & I Bank was, in the overall scheme of Mr and Mrs Smith's financial picture, a relatively small component of the debt which was refinanced by the Town and County Building Society. There is no evidence to suggest that it was this component of that debt which had any impact upon the ultimate failure of their farming venture.

470 The only way in which any causal connection could be established between Mr and Mrs Smith's dealings with the R & I Bank, and the losses which they ultimately incurred, would be through an assertion that Mr and Mrs Smith embarked upon a farming management and development programme in reliance upon advice given by the bank which led to the ultimate failure of their farming venture. However, there are a number of reasons why any such proposition must be rejected, including the lack of any evidence to the effect that the bank gave them any advice of a farming character at all, let alone advice covering the entire period up to the failure of their farming venture, and the evidence which establishes unequivocally that Mr and Mrs Smith were resolutely intent upon developing the farm in accordance with their plans irrespective of the pessimistic views expressed by many financial institutions. And as I have noted, Mr and Mrs Smith eschew any case against the bank based upon the proposition that the bank should have told them not to borrow money to buy a tractor, but continue as they were.

471 As I indicated at the outset of this portion of my reasons, because it is inappropriate to conduct a trial within a trial, I have not descended in this portion of my reasons to the level of detail that would be appropriate if I had been trying the claim against the bank. It seems to me that the findings I have made above are sufficient for the purposes of the claim against Mr McCusker QC. However, in case a different view should be taken on appeal, it may be appropriate to set out the general views which I formed in relation to credibility of the witnesses whose evidence bore upon the merits of the claim against the bank.

472 Mrs Smith gave the bulk of the evidence relied upon by the plaintiffs for this purpose. While I did not conclude that she was being deliberately mendacious at any point in her evidence, it is clear that she has made the pursuit of these proceedings her life's work, and that the strong attachment she has to the issues has inevitably distorted and shaped her recollection of events. Generally speaking, I would not accept her evidence on any contentious issue of fact unless it is corroborated by other contemporaneous evidence.

473 Mr Smith has not been as involved in the prosecution of these proceedings as his wife. He did his best to recall the events in question, although his capacity to do so accurately is no doubt influenced by the lapse of time, and his appreciation of the enormous emotional investment which Mrs Smith has made in the prosecution of these proceedings, and I therefore approach his evidence with caution. At all events, as I have noted, his evidence did not substantially support the plaintiff's case in any significant respect.

474 Mr Danks was a credible and plausible witness whose evidence I accept. Although his evidence also suffers from a significant lapse in the time between the occurrence of the relevant events, and the time it was given, I accept that the claims made by Mr and Mrs Smith against him within a relatively short period of the occurrence of the events in question would have caused him to bring them to mind, and to retain a recollection of them, to some extent at least, over all the years that have elapsed.

475 Mr Robinson, one of the farm advisors who visited the farm in late 1978 was also called. He refreshed his memory by reference to notes which he made at the time. I have no reason to doubt in any way the evidence which he gave.

476 Mr and Mrs Smith and also called Mr Rodney King to give expert evidence. I ruled a substantial quantity of that evidence to be inadmissible. Mr King was called to give evidence on matters which essentially related to an assessment of components of the 1977 cash flow budget. For the reasons I have given, in these proceedings against Mr McCusker QC, there is no need to make findings with respect to the adequacies or inadequacies of the cash flow budget, which was not relied upon. However, should a different view be taken on appeal, I should record the view which I formed to the effect that Mr King's evidence was not convincing, in that he showed very limited familiarity or appreciation of the items included within the budgetary scenarios he assessed.

The likely quantum of the claim against the bank

477 In order to undertake any assessment of the value of the claim against the bank which Mr and Mrs Smith assert they have foregone as a consequence of Mr McCusker QC's breach of duty, it is necessary to make an assessment of the likely amount of damages that Mr and Mrs Smith would have recovered if their claim against the bank had succeeded. However, there is simply no evidence which would enable me to conclude that Mr and Mrs Smith would have recovered any damages from the bank, even if their claim had succeeded.

478 There are a number of reasons for this. First, the approach taken by Mr and Mrs Smith, in the formulation of the claim which they would have pursued against the bank for damages is misconceived. That formulation is undertaken on the basis of the value of which the farm would have had, as at the date of trial, if developed and successfully operated.

479 However, there are only two alternative scenarios with respect to the possible retention of the farm. One is based upon the hypothesis that if Mr McCusker QC had performed his duty to Mr and Mrs Smith the sale of the farm by the building society would have been averted. On this scenario, the case against the bank would have gone to trial claiming damages without a claim for loss of the farm. The other scenario is based upon the hypothesis that if Mr McCusker QC had performed the duties that he owed to Mr and Mrs Smith the farm would nevertheless have been sold by the building society. However, on that hypothesis the claim would have been brought against the bank, and successfully prosecuted within a few years of Mr McCusker QC's advice - say, by 1991 or 1992. The value of the claim against the bank would therefore have crystalised at that time, not at the time of the trial of these proceedings.

480 On either hypothetical scenario, there is no basis for assessing damages by reference to the value of the farm as at the time of the trial of these proceedings.

481 The second insuperable obstacle in the path of any assessment of the likely quantum of any claim against the bank is the lack of any admissible evidence with respect to the financial losses incurred by Mr and Mrs Smith. The closest one gets to that evidence is a schedule of claims of various items, none of which have been substantiated by any evidence.

482 The third impediment to the attribution of any value to the claim against the bank is one I have already mentioned, arising from the relatively modest debt incurred by Mr and Mrs Smith with the bank, which was entirely overtaken by the refinancing by the building society. In the events which occurred, it is difficult, if not impossible to see how anything arising from Mr and Mrs Smith's dealings with the R & I Bank could have had any significant impact upon the ultimate outcome of their farming venture, which was dictated by events which occurred well after there was any continuing impact or influence arising from their dealings with the bank.

483 The plaintiffs also claim damages for mental distress and stress induced illness. It is not clear from the way in which these claims are presented whether they are sought as a component of the claim against the bank, or as a component of the claim against Mr McCusker QC. It is unnecessary to consider the legal principles governing the availability of such claims (see Heywood v Wellers (a firm) [1975] EWCA Civ 11; [1976] QB 446; Baltic Shipping Co v Dillon [1993] HCA 4; [1993] HCA 4; (1993) 176 CLR 344) because:

(a) there is no admissible evidence from any medical practitioner establishing any recognisable illness or condition, or its cause;

(b) there is no admissible evidence establishing that any condition suffered by Mrs Smith was caused, in the relevant legal sense, by the conduct of either the bank or Mr McCusker QC; and

(c) there is no evidence disentangling the impact which the conduct of either the bank or Mr McCusker QC had upon Mrs Smith from the effect which the relentless prosecution of these proceedings is likely to have had upon her psychologically.

484 For these reasons, there is no basis upon which damages for emotional distress, or stress induced illness could be awarded.

485 There are other components of the schedule of damages which include claims for loss of what I might call lifestyle benefits, loss of reputation and so on that are plainly irrecoverable on any basis, and unsustained by any admissible evidence

486 For these reasons, even if Mr and Mrs Smith had established that they lost the opportunity to pursue a claim against the bank which had some prospect of success, there is no evidence or other material which would enable me to conclude that the successful prosecution of a claim against the bank would have resulted in the award of any significant damages.

487 As I observed at the outset of this portion of my reasons, in a claim for lost opportunity it is necessary for the claimant to establish that the opportunity foregone had some value. In the context of a claim for the loss of an opportunity to pursue litigation, the claimant must show that the litigation had some prospect of success over and above its 'nuisance value'. For the reasons I have endeavoured to give, in my opinion Mr and Mrs Smith have failed to establish that they had any claim against the bank which had any prospect of success. Put shortly:

(a) there is no evidence of any communications between Mr and Mrs Smith and the bank capable of supporting an argument to the effect that the bank had a duty to advise;

(b) the evidence establishes that Mr and Mrs Smith went to the bank for finance, not advice;

(c) Mr and Mrs Smith were at all times aware that they had not been given any advice by the bank;

(d) the bulk of the information set out in the 1977 cash flow budget was provided by Mr and Mrs Smith;

(e) Mr and Mrs Smith were aware that the cash flow budget was prepared essentially for the bank's purposes, not as a means of providing them with farming advice;

(f) Mr and Mrs Smith never relied upon the budget as the source of advice as to the management or development of their farm;

(g) there is no evidence capable of supporting an argument to the effect that the bank committed to the provision of ongoing finance over and above the approval that was given in April/May 1977;

(h) all the contemporaneous evidence is overwhelmingly against any version of the events which would sustain a claim by Mr and Mrs Smith against the bank;

(i) the complaint initiated and maintained by Mr and Mrs Smith and the bank over many years was a complaint based upon reliance on the budget - a claim which has now been eschewed;

(j) there is no evidence or instructions capable of sustaining a claim against the bank for failure to give 'proper advice' which predates the ruling of the Full Court in 2000;

(k) the evidence establishes overwhelmingly that Mr and Mrs Smith were resolutely intent upon implementation of their plans for the development of the farm, irrespective of the views expressed by any financier, including the bank;

(l) there is no evidence that anything arising from the dealings between Mr and Mrs Smith and the bank caused the ultimate failure of the farming venture;

(m) the evidence strongly supports the conclusion that the failure of Mr and Mrs Smith's farming venture was due to matters unrelated to any advice they did or did not receive, or any finance they did or did not receive; and

(n) there is no evidence to support the conclusion that even if a claim had been successfully prosecuted against the bank, any significant damages would have been recovered.

488 For these reasons I have no hesitation in concluding that Mr and Mrs Smith's claim against the R & I Bank was always hopeless and doomed to fail. It had no prospect of success, and no value. So, even if Mr and Mrs Smith had made good their claim against Mr McCusker QC, and even if they had shown that his breaches of duty caused them to lose the opportunity of pursuing their claim against the bank, I would have concluded that they had not lost anything of value.

489 For these various reasons Mr and Mrs Smith's claim must be dismissed.