HRNG ADELAIDE, 5-15, 22-25 February, 1-25 March 1993 #DATE 26:5:1993 Counsel for plaintiff: Mr S W Tilmouth QC with Mr Colyer Solicitors for plaintiff: Knox and Hargrave Counsel for defendant: Mr J R Mansfield QC with Mr B F Beazley Solicitors for defendant: Daenke O'Donovan

JUDGE1 MULLIGHAN J This action arises out of the plaintiff becoming, in 1984, the trustee of a unit trust known as the GGI Rural Income and Growth Trust ("the Trust") which failed soon thereafter, causing substantial financial loss to the plaintiff which brings this action against the defendants, a firm of solicitors, for damages for alleged breach of contract and negligence in the discharge of the duty of one of them, the first-named defendant ("Mr. Astley") in the course of carrying out work which the plaintiff had instructed him to do in relation to the Trust. 2. The plaintiff's claim, in brief terms, is that Mr. Astley failed to give advice, which was called for in the circumstances, and which if given would have caused the plaintiff to take appropriate steps at relevant times to exclude itself from personal liability for the losses of the Trust which exceeded $1.3m. It is also claimed that advice was given which was wrong and which, if correct, would have avoided certain losses. Liability is denied and the defendants contest that Mr. Astley acted, at any time, in breach of his duty of care to the plaintiff and assert that the plaintiff was the author of its own misfortune. 3. It is appropriate to say, at the outset, that in relation to the Trust, the plaintiff did act, in certain respects, without the degree of commercial competence which could be expected from an organization of its experience and expertise with the result that there was vagueness and lack of particularity in the instructions given to Mr. Astley. Consequently there has been dispute as to the nature and extent of those instructions and the ambit of the retainer. The resolution of that dispute has been all the more difficult due to the passage of time, nearly nine years, which has understandably affected the memory of each witness. A further complication has been the absence of various persons who played a part in important events from the witness box. Consequently it has been necessary to draw inferences from the vast number of documents admitted into evidence without the benefit of the testimony of various persons about events to which the documents refer. 4. Before turning to the events which are relevant to the issues between the parties and the conclusions I have reached about them, it is appropriate that I say something about the witnesses. I accept that all of the witnesses were truthful and did their best to accurately recall and relate the events relevant to the issues. In many instances they were unable to do so due to the passage of time. However, I have found no reason to disregard the evidence of any witness due to a lack of credibility. In most respects there is no significant conflict in the evidence of any of the witnesses. Where there is, I have been able to resolve that conflict upon consideration of all of the evidence which I have found acceptable and without reaching any conclusion adverse to the credit of any witness. 5. This has been a long trial with a considerable amount of evidence, including documentary evidence. It would be impracticable for me to set out all of the issues which were raised at the trial and my reasons for each conclusion that I have reached. To do so would result in these reasons being of inordinate length, more so than is already the case. The narrative of the facts in these reasons reflects my findings and in reaching my conclusions I have had regard to all of the arguments and submissions of counsel even though I do not mention all of them. 6. The plaintiff was incorporated in 1910. Since then it had, in the main, carried on the business as an executor of wills and as a trustee of various types of testamentary, inter vivos and debenture trusts. It is fair to say that it conducted its business conservatively, and, presumably, competently and effectively. At all times relevant to these proceedings, it was controlled by a board of directors of which Mr. Wells was chairman. It employed a number of trust officers who were senior employees and adequately trained to discharge their duties. Indeed the defendant's firm participated in that training from time to time. The responsibility for the administration of each trust was committed to a trust officer who had the responsibility to ensure that the plaintiff carried out its duties properly and in accordance with the trust instrument. The plaintiff employed Mr. Lamshed who is a solicitor. He held various positions but worked closely with senior management and also in the administration of trusts. His duties included advising staff on legal matters relating to wills, income taxation and, according to Mr. Oakeshott, the former general manager, "anything else that came up in the company that had some legal implications", but he did not give formal legal advice to management. 7. In the early 1980's the plaintiff became part of the Elders IXL Group of companies when its shares were acquired by Elders Finance Group Limited ("Elders Finance"). After that acquisition there were changes in the style and structure of management of the plaintiff and, to some extent, in the work it was prepared to undertake. These changes were dictated by the management of the Group. A consequence was that the plaintiff was looking to expand the extent and nature of its work as a trustee. 8. The defendants' firm had existed and acted for the plaintiff for many years. Generally the plaintiff instructed the firm to act for it in relation to its own affairs and on occasions instructed the firm to act for it in its capacity as executor or trustee. Mr. Wells and senior management regarded the firm as the plaintiff's solicitors. Mr. Astley had been in practice for over thirty years when the events relevant to this action occurred. He is the only member of the firm to have undertaken legal work with respect to the subject matter of this action. He was the senior partner of the firm. He practised almost exclusively in commercial law and may accurately be described as an expert in that field. 9. During the course of these reasons I mention Mr. O'Dea, Mr. Lamshed and Mr. Hunt, each of whom played an important role in significant events. None of them gave evidence. I have mentioned one consequence of the absence of various persons from the witness box. Another consequence is that the evidence of Mr. Astley, in many important respects, has not been contradicted. Even though I found him to be an honest witness and I am inclined to accept his evidence in any event, I am more readily able to do so as it has not been contradicted. 10. I now turn to the matters which gave rise to the relationship of solicitor and client between the parties and from which the nature and extent of the retainer and the duty of care of Mr. Astley to the plaintiff must be determined. Due to the lack of precision in the instructions given by the plaintiff to Mr. Astley at various times, it is necessary to recount the events in some detail because it is said that these matters must be determined from all of the circumstances. 11. A Mr. O'Dea controlled Queensland Financial Planning Pty. Ltd. which carried on the business of a financial and investment adviser. It appears that he was the motivating force behind the establishment on 30th July 1982 of a unit trust known as the GGI Pig Trust. QFP Properties Pty. Ltd. was the trustee, and Golden Grove Industries Pty. Ltd. was the manager, of that Trust. A piggery was conducted upon land at Young in New South Wales. The land had been owned by Mr. O'Dea and members of his family and was acquired by QFP Properties Pty. Ltd. on 30th August 1982. It was proposed to substantially increase the size of the business conducted by the Trust and the scope of its activities. A Mr. Reeves owned a property at near Tenterfield in northern New South Wales and near the border of that State and Queensland. That property is known as "Bookookoorara" and, during the trial, was referred to as "Booka". It is comprised of 1028 hectares about 870 of which was used to grow soya beans. It was proposed to acquire this property and use it in conjunction with the piggery at Young for the purposes of the Trust. No doubt with this purpose in mind Mr. O'Dea obtained an option to purchase the Booka property on 9th June 1983. A further piggery was to be established at Booka and additional land acquired for further expansion. 12. The concept was participation in the total aspect of piggeries including the marketing of meat products with a retail outlet in Canberra. The GGI Pig Trust was a private trust in the sense that subscription for units was not open to the public. The subscribers were, in the main, customers of Mr. O'Dea. It was proposed to create a new unit trust, to which the public could subscribe, in order to raise sufficient funds to extend the operations of the GGI Pig Trust. Initially it was proposed that this public trust would be a second trust but eventually the proposal was modified so that the new trust would, in effect, take over and absorb the GGI Pig Trust. A suitable trustee was required and an approach was made to the plaintiff in the early part of 1983, probably in March or April. On 13th May 1983, Mr. Oakeshott wrote to Mr. O'Dea and confirmed that the plaintiff was prepared to act as trustee of the proposed "Phase 2 of the GGI Pig Trust". 13. It appears that the responsibility for handling this proposal must have been entrusted to Mr. Lamshed at this time. The proposal represented a new type of venture for the plaintiff as it had never before been involved as trustee of a trust of this nature, i.e. a trust which conducted a business and traded in livestock. Mr. Oakeshott regarded that sort of business as risky. Furthermore, the plaintiff had never before borrowed money in its capacity as a trustee. 14. It appears that a Mr. Hunt of MacGillivray and Co., solicitors in Brisbane, acted for Mr. O'Dea, companies in which he had an interest and others who were promoting the proposed trust. He must have prepared a draft deed and sent it to the plaintiff, although there is no direct evidence to that effect. On 31st August 1983 Mr. Lamshed, on behalf of the plaintiff, wrote to the defendants and instructed them as follows:- "Dear Sirs, Re: G G I Rural Income Trust We have been approached by the principals of Golden Grove Industries Ltd. to act as the Trustee for the unit holders of the above Trust. A draft copy of the proposed Deed of Trust has been forwarded to us for our perusal. We would be obliged if you could examine the Deed and let us have your comments on it in due course. We understand that discussions have been held with the Corporate Affairs Commission in Brisbane, but that the Deed has not been submitted to the Commission yet. The aim of the Trust, briefly is to set up an intensive piggery on land at Young in New South Wales. The land is presently owned by Golden Grove, and, in fact, is part of a larger holding upon which Golden Grove have already established (using private funds) a piggery of a similar but smaller nature to the (sic) proposed for the Trust. It is proposed that the Trust should also become involved in the slaughter and processing of pigs later. If you require any further information please let us know. Yours faithfully, (B.A. Lamshed) Legal Officer." 15. Mr. Astley handled the matter. He had not heard anything about the proposed trust before receiving this letter which he acknowledged on 7th September 1983. 16. It is appropriate to interrupt this narrative to mention how Mr. Astley regarded the plaintiff and its senior staff. He had received instructions from the plaintiff on many occasions over many years. He was on friendly terms with Mr. Wells and often saw him socially. He knew Mr. Oakeshott, Mr. Lamshed and the trust officers. At all relevant times he knew Mr. Lamshed was a solicitor who was involved in the work of the plaintiff as trustee. He correctly believed that the trust officers were competent and well trained for the duties which they discharged. When they instructed the defendants they did so for a specific purpose and the defendants were obliged to act in accordance with those instructions and not undertake legal work otherwise than in accordance with their instructions. 17. The vagueness of the instructions to Mr. Astley may be seen from the letter. These instructions were contained in the passage, "We would be obliged if you could examine the Deed and let us have your comments on it in due course". 18. Mr. Astley did not seek clarification of these instructions and no other instructions were given. 19. On 23rd September 1983 he went through the draft deed and considered various of the clauses in light of the provisions of the relevant Companies Code and regulations. Obviously he interpreted the instructions as requiring him to undertake that task. In the meantime Mr. Hunt had contacted Mr. Astley's office and enquired as to the progress of the matter. He must have been informed by the plaintiff of the defendant's involvement. Mr. Astley saw Mr. Lamshed on 23rd September 1983 and had a brief discussion with him, but he could not recall what passed between them. On 27th September 1983 Mr. Astley continued his work on the draft deed and telephoned Mr. Hunt and sought information from him as to various clauses, apparently in the context of statutory requirements. That information was supplied by telex on the following day. Mr. Astley then arranged for Mr. Lamshed to see him on 29th September 1983. At this meeting, he went through the draft deed with Mr. Lamshed who instructed Mr. Astley that he should approve the draft. Mr. Astley wrote to Mr. Lamshed on the same day in the following terms:- "Mr. B.A. Lamshed, Legal Officer, Elders Trustee and Executor Co. Ltd., 27 Currie Street, ADELAIDE. S.A. 5000 Dear Sir, G.G.I. Rural Income Trust We refer to the writer's discussion with Mr. Lamshed on 29th September concerning the draft Trust Deed forwarded by Messrs. MacGillivray and Co. solicitors of Brisbane. We confirm that we have read the draft and checked it against the provisions of the Companies Code and it conforms with those provisions. We have spoken to Mr. Hunt of Brisbane regarding drafting amendments which we discussed with you and he will incorporate them. We have asked Mr. Hunt to let us see a draft of the proposed prospectus as soon as possible. However he is not sure when that will be available as he has not yet received instructions from his client as to the contents of that document. As soon as we hear any further we will let you know.

Yours faithfully," 20. He referred to the draft of the proposed prospectus because Mr. Lamshed had instructed him to obtain a copy of it from Mr. Hunt. On the same day Mr. Astley wrote to Mr. Hunt and informed him that he had discussed the draft deed with the plaintiff and that it was in order. He also wrote that he looked forward to receiving the draft prospectus. 21. On 26th October 1983 Mr. Astley again heard from Mr. Hunt who informed him that auditors had suggested amendments to the draft deed as to how frequently assets of the proposed trust had to be valued so that the value of units could be ascertained. Mr. Astley could not recall but he expects that he would have obtained instructions from Mr. Lamshed. 22. In the meantime Mr. Oakeshott retired in September 1983. Mr. Wood was appointed general manager in October of that year, a position which he has since retained. He was appointed a director of the plaintiff in about February 1985. He had considerable experience in commerce. He had been commercial manager of Mobil Oil Australia Ltd. for Victoria and Tasmania and joined Beneficial Finance in 1977. During the year or so before he joined the plaintiff, he was general manager for the southern division of Beneficial Finance. 23. Soon after joining the plaintiff, Mr. Wood was informed by Mr. Lamshed of the proposed unit trust. However, he had little involvement with the proposal. Mr. Lamshed continued to handle the matter for the plaintiff. 24. On 30th November 1983 Mr. Lamshed wrote to Mr. Astley enclosing the draft prospectus. The instructions with respect to the prospectus were also vague, namely, "We would appreciate your comments on the prospectus in due course". 25. Mr. Astley received no other instructions with respect to the draft prospectus and did not do anything at that stage in response to that letter. Mr. Lamshed had informed him that there was no urgency. On 13th December 1983 Mr. Astley received a letter from Mr. Hunt enclosing an amended draft deed of trust, a draft prospectus and a statutory compliance checklist. Mr. Hunt explained that the documents had been lodged with the Office of the Corporate Affairs Commission in Brisbane on instructions from his client after discussions with the plaintiff. He went on to say, "We explained to our client that it would have been preferable to submit the documents for your perusal first, but that was not to be". He asked Mr. Astley for comments as to these documents "and particularly in respect to provisions in either document which are not acceptable to your client trustee". 26. According to Mr. Astley, it is probable that the draft prospectus had been lodged at the office of the Commission because, at that time, a prospectus could not be issued without approval of the Commission. Mr. Astley had not been informed that there had been discussions between Mr. Hunt's client, presumably Mr. O'Dea and the plaintiff. However, he was aware that the plaintiff was dealing with the matter independently of him. 27. In view of what Mr. Lamshed told him on 8th December 1983, Mr. Astley did nothing further at this stage. 28. Mr. Wood met Mr. O'Dea in December 1983 but there was little discussion about the proposed trust at that time. Thereafter Mr. Wood had little involvement until March 1984 when he had a meeting with Mr. O'Dea and Mr. Lamshed. 29. On 16th February 1984 Mr. Astley received a letter from Mr. Hunt and a further copy of a draft trust deed which included amendments made by the Commission. Mr. Hunt also informed Mr. Astley of other amendments suggested by the Commission. 30. On 1st March 1984 Mr. Lamshed's employment by the plaintiff was terminated, apparently at his own request. Thereafter he practised on his own account as a solicitor in private practice at the plaintiff's premises in Adelaide. He undertook work for the plaintiff which provided him with staff. Most of his work was conveyancing and probate work but he continued to handle the proposed trust on behalf of the plaintiff. 31. On 16th March 1984 Mr. Wood and Mr. Lamshed met with Mr. O'Dea in Adelaide. Mr. Wood had not seen any documents before this meeting so far as he could recall, including the draft trust deed and draft prospectus. The proposed trust was discussed. Mr. O'Dea spoke of the intention to purchase the Booka property. He said that because of delay in obtaining approval for the prospectus and agreement on legal aspects of the trust, the purchase of the Booka property should be financed by borrowing money which would be repaid by subscriptions to the proposed trust. He made it clear that he had sufficient intending investors for this purpose. Mr. O'Dea produced various documents at the meeting which he used in an attempt to support the financial projections which he had mentioned. Among those documents was a written valuation of Booka by a Mr. Hynes. It appears that Mr. Hynes had valued the property in July 1983 at $1,187,078 and $1,356,524 as at 6th March 1984. Mr. O'Dea told Mr. Wood that Mr. Hynes was an independent valuer and that he had been referred to him by an Institute of Valuers. All that was agreed at this meeting was that the plaintiff would help Mr. O'Dea obtain finance for the purchase of Booka. 32. Immediately following this meeting and on the same day, Mr. Wood wrote to the Brisbane office of his former employer, Beneficial Finance, to assist Mr. O'Dea in his attempts to obtain finance. He sent to that office copies of the documents which Mr. O'Dea had given him. The letter is expressed in terms strongly supporting the proposed borrowings and it reflects what Mr. O'Dea had told Mr. Wood at the meeting and the conclusions which Mr. Wood had reached from all of the information which he had received. It reveals that Mr. Wood enthusiastically embraced the proposed trust and accepted the information given to him by Mr. O'Dea on face value which is a matter of significance to which I return later. 33. It appears that before this meeting the initial proposal of Mr. O'Dea to establish a second unit trust with public subscription in addition to the GGI Pig Trust had changed to a proposal for one unit trust to absorb the GGI Pig Trust. On 5th April 1984 Mr. Hunt told Mr. Astley of the new proposal and the conversation between Mr. O'Dea, Mr. Wood and Mr. Lamshed appears to have been along those lines. Mr. Astley had heard nothing more since the previous December and so he contacted Mr. Hunt by telephone on that occasion. Mr. Hunt told him that there was nothing further for him to do, but he also informed him that "they were having difficulty with subscriptions". 34. It seems that the next significant step in the establishment of the Trust is that Mr. O'Dea exercized the option to purchase the Booka property as he, and the vendor, executed an agreement for sale and purchase of that property on 25th June 1984 at the price of $1m. On that day another agreement was executed between Mr. O'Dea and Mr. Reeves which provided for the extension of time for completion of that transaction until 31st August 1984. The agreement for sale and purchase provided that a nominee of Mr. O'Dea could be the purchaser. 35. On 2nd July 1984 Mr. Wood wrote to Golden Grove Industries Pty. Ltd. in the following terms:- "Re: G.G.I. Rural Income and Growth Trust We refer to our recent telephone conversations with you concerning this Company becoming trustee of the above Trust as from the 1st July, 1984. We confirm that this Company consents to becoming Trustee as from the above date. We also confirm that the Trust will incorporate the assets and unit holders in the previously existing G.G.I. Pig Trust No. 1. We look forward to receiving the necessary documents to appoint this Company as Trustee and also the auditor's report relating to the G.G.I. Pig Trust No. 1 as at 30th June, 1984." 36. It may be seen that Mr. Wood was obviously aware by this time of the proposal having been altered so that there would be one trust. 37. On 24th July 1984 Mr. Astley received a letter from Mr. Hunt enclosing what he, Mr. Hunt, hoped was the final draft of the trust deed incorporating the amendments suggested by the Commission. The letter includes the following paragraph:- "We understand that our respective clients have agreed that your client will forthwith accept appointment as Trustee, and that the Trust Deed, in its finally accepted form, will forthwith be adopted as the Trust Deed of the existing 'private' trust, so that your client as trustee may, on 31st instant, complete the purchase of a large grazing and soya bean property at Tenterfield, New South Wales." 38. Mr. Hunt also sent to Mr. Astley other essential documents including copies of a draft deed of appointment of the plaintiff as the new trustee and a draft deed of variation of the trust deed. He concluded this letter as follows:- "We should appreciate your urgent comments as to the acceptability of the enclosed draft documents. Subject to - (i) your comments; (ii) any adverse comments by the Corporate Affairs Commission; and (iii) the proposed resolutions being passed on 25th instant, on 26th instant we shall dispatch to you by courier relevant documentation executed by the Manager and for execution by your client as trustee." 39. The next day Mr. Astley received another letter from Mr. Hunt enclosing a form of transfer of Booka with the plaintiff as the purchaser, presumably as Mr. O'Dea's nominee. Both of these letters make it clear that Mr. O'Dea and the plaintiff, presumably through Mr. Lamshed, had been discussing matters and it had been agreed that the plaintiff would purchase Booka as trustee of the proposed trust. Settlement was due on 31st July 1984. Mr. Astley attended to these matters promptly. On 25th July 1984 he considered the provisions of the draft deed. Prior to this time he was not aware of the proposal that the plaintiff should acquire Booka or that money would be borrowed for that purpose. He had received no instructions or information from Mr. Wood, Mr. Lamshed or anyone else employed by the plaintiff as to those matters. He was not aware of what had transpired between Mr. O'Dea and the plaintiff. Indeed he had no information as to whether the proposal had lapsed. Before reading the letter from Mr. Hunt which he received on 24th July 1984 he did not know that the plaintiff had agreed that the trust deed "will forthwith be adopted". After considering the draft deed of trust and the draft deed of variation, Mr. Astley saw Mr. Lamshed and went through the various amendments which had been made since the previous draft and obtained Mr. Lamshed's approval of them. Also, it appears, that he handed the form of transfer to Mr. Lamshed. In view of his knowledge of the plaintiff and the expertise of its staff and the qualifications and experience of Mr. Lamshed, Mr. Astley believed that the plaintiff would attend to the conveyance of Booka. He did not receive any instructions as to that aspect of the matter and he believed that Mr. Lamshed would act as solicitor for the plaintiff in that transaction. At no time did Mr. Lamshed ask Mr. Astley for any advice in relation to the purchase of Booka and he did not give any. Mr. Astley spoke to Mr. Hunt on the telephone whilst Mr. Lamshed was with him and ascertained some details of the proposed purchase of Booka. Mr. Hunt informed him that the plaintiff had been told all the details. Mr. Astley formed the view that Mr. Lamshed appeared to know very little about the proposal to act as trustee of the proposed trust from a commercial point of view. Consequently he arranged to see Mr. Wood the next day. Up until this time Mr. Astley had not had any dealings with anyone from the plaintiff except Mr. Lamshed, whom he accepted, had the carriage of the matter for the plaintiff. 40. Mr. Wood and Mr. Lamshed attended on Mr. Astley the next day, 26th July 1984. There was no dispute between Mr. Wood and Mr. Astley as to what occurred at that meeting. Mr. Astley made notes of the conversation at the time which provide a reasonably reliable summary of the main points discussed. It is unnecessary for present purposes to set out all of the conversation. It is sufficient to note that Mr. Wood described essential features of the proposed borrowings and other commercial aspects accurately, thereby revealing that he correctly understood them. He also said that the plaintiff had tried to help Mr. O'Dea finance the proposal, that the overall concept was satisfactory to the plaintiff including the projected cash flow and the anticipated investors. He went on to say that the plaintiff was happy to act as trustee even if there were no public investors and that he was satisfied with the necessity of the proposed loans. He had seen all books of accounts up until a few months previously and was happy about assets and the books of account. Mr. Wood denied that he had made this statement but I am satisfied that he did. It is recorded in precise terms by Mr. Astley and attributed to Mr. Wood. Mr. Astley was not instructed, or requested, at that meeting to do any more by way of legal work than had already been the case and nothing was said to him which extended or altered the work which he had previously been instructed to do. After the meeting, Mr. Astley concluded that Mr. Wood was aware of the proposal and had approved it. He did not give any legal advice to Mr. Wood and Mr. Lamshed on this occasion, including as to the terms of the trust deed, or the proposed mortgages. 41. On 31st July 1984 Mr. Astley received a letter from Mr. Hunt informing him that an extraordinary general meeting of the unit holders in the GGI Pig Trust had been held on 25th July 1984 and had resolved that the plaintiff be appointed the trustee of that trust in lieu of QFP Properties Pty. Ltd. and that the name of the trust be changed to GGI Rural Income and Growth Trust. He also informed Mr. Astley that at an adjourned extraordinary meeting of unit holders on 27th July 1984 it was resolved that the trust deed be altered by adopting the provisions of the new draft deed. He enclosed a deed of appointment in triplicate, a deed of variation of trust deed in duplicate relating to the change of name of the Trust and a deed of variation of trust deed relating to the adoption of the new trust deed. He asked Mr. Astley to arrange for execution of all of these deeds by the plaintiff and then to return to him the deed of appointment and the first mentioned deed of variation. Mr. Astley spoke to Mr. Hunt on that day by telephone after he had received the documents and told him that the name of the plaintiff in the documents was incorrect and asked if the plaintiff was to sign the documents without seeing the mortgages which Mr. Hunt said he did not yet have. On the same day Mr. Hunt wrote to Mr. Astley and enclosed fresh copies of the two deeds of variation with the correct name of the plaintiff. 42. On 2nd August 1984 Mr. Astley wrote to Mr. Lamshed informing him of the information he had received from Mr. Hunt as to the extraordinary general meetings of the unit holders. He also set out the further minor amendments to the trust deed which had been made following Mr. Hunt's meeting with the Commission. He enclosed the documents which Mr. Hunt had sent to him and gave some advice as to formal matters relating to the execution of them. He did not give any other advice but he did mention that the purchase of Booka had not been completed and that he was awaiting the forms of mortgage. 43. On 6th August 1984 the deed of trust, the deed of variation of the trust deed and the deed of appointment were executed by the plaintiff by the common seal being affixed with the authority of Mr. Wells and Mr. Wood. Not surprisingly, neither of them has a clear memory of all of the circumstances in which the documents were executed. Mr. Wells attempted to recall what occurred but his evidence was based upon a combination of recollection, reconstruction and his memory of his usual practice. He asserted that he would not have signed the documents without advice from the defendants that it was appropriate to do so. He claimed to have recalled that he was concerned that there was no written advice from the defendants and so he sought such advice. He acknowledged that he did not have any clear recollection of what occurred. He said that he rang Mr. Astley and sought advice which was given, but later acknowledged that he could not be sure that he did so. He went on to say that if he did not speak to Mr. Astley, he would not have signed these documents without a letter from the defendants. Mr. Astley had no recollection of Mr. Wells contacting him about these documents. He made no note of any such conversation and I accept his evidence that if Mr. Wells, as chairman of the board of directors of the plaintiff, had contacted and sought his advice about these documents, this being a matter of importance, he would have made a note of that conversation. Furthermore, Mr. Astley made no cost entry of such a conversation. It is true that his account for his professional services rendered to the plaintiff on 20th December 1984 included "attendances on Mr. Wells as to declarations required of the Directors and generally". However, it is likely that this is a reference to Mr. Astley contacting Mr. Wells by telephone on 26th October 1984 in order to ascertain whether he was available as a director to make a declaration. This declarations was required with respect to approval of the prospectus by the Commission and had been sent to Mr. Astley by Mr. Hunt on 23rd October 1984. There is a record of that telephone conversation in Mr. Astley's cost entries, but there is no other record of any other conversation or attendance on Mr. Wells by Mr. Astley. Mr. Astley explained that the account was prepared by his secretary from information in the file and placed before him in draft form. He settled the draft but did not alter the reference to attendances on Mr. Wells. I have no hesitation in accepting Mr. Astley's evidence. In the circumstances it is not appropriate to regard the account as an admission by him that he did attend on Mr. Wells on more than one occasion. It is possible that the use of the plural was a mistake by his secretary or alternatively that she intended to refer to Mr. Wood and not Mr. Wells. I do not regard this account as evidence which assists in determining whether Mr. Wells did contact Mr. Astley and obtain advice before he signed the documents. 44. Having considered all of the evidence carefully, I am not satisfied that the plaintiff has proved this allegation on the balance of probabilities and consequently I have no regard to it. 45. Mr. Wells thought that he did see the letter from Mr. Astley of 2nd August 1984. He accepted that Mr. Astley had considered the documents thoroughly. He acknowledged that he could not say if he treated this letter as, in effect, advice by Mr. Astley that it was in order for the plaintiff to execute the documents. However, he did receive a letter from Mr. Lamshed dated 7th August 1984, the day after the deeds were executed, giving an explanation of them and the letter from Mr. Astley of 2nd August 1984. Mr. Lamshed's letter was in the following terms:- "Re: G.G.I. Rural Income and Growth Trust In further explanation of the documents presented for execution and the letters from Finlaysons I advise as follows:- 1. Deed of Appointment As I understand you are aware there is already in existence a private unit trust known as G.G.I. Pig Trust. It is proposed that this trust be incorporated into the new public G.G.I. Rural Income and Growth Trust. As the private trust is a functioning entity with a positive cash flow, this procedure gets the public trust off to a flying start. In order to accomplish the above aim it is necessary for the present trustee (Q.F.P. Properties Pty. Ltd.) of the private trust to retire and appoint Elder's Trustee in its place. Hence this Deed. 2. Deed of Variation Following on from (1) above the private trust will then vary its trust Deed by adopting the Deed for the public trust (approved by Finlaysons and Corporate Affairs Commission) in place of its original Deed. This entity then effectively becomes the public trust with Elder's Trustee as trustee. As you will see the new Deed attached to the Deed of Variation as an exhibit, but does require execution by Elder's Trustee. 3. Finlaysons letter You will note in the last paragraph of their letter of 2nd August a reference to completion of the purchase of a New South Wales property. This refers to a farming property which is to be purchased by the Trust. But the variation and creation of the new Trust is in no way dependent upon the purchase; in fact, the opposite applies." 46. Mr. Wells claimed that, apart from this transaction he had little to do with Mr. Lamshed and that he never sought any legal advice from him about the deeds. However, Mr. Lamshed did take the documents to Mr. Wells for his signature and I accept that he did give some explanation to Mr. Wells as his letter suggests. Whilst it may be true that Mr. Wells did not understand Mr. Lamshed to be giving him legal advice about the documents, I find that Mr. Wells sought information from Mr. Lamshed before he signed them and the information which he received would have been favourable to the documents being executed. The subsequent letter confirms the favourable attitude of Mr. Lamshed. 47. The documents were also executed by Mr. Wood but not in the presence of Mr. Wells. They were sent to Mr. O'Dea by the plaintiff and were not returned to Mr. Astley. 48. On 7th August 1984 Mr. Astley received a letter from Mr. Hunt enclosing various documents relating to the borrowing of money for the purchase of Booka including two memoranda of Mortgage. The first mortgage secured a loan of $813,000 by a syndicate of lenders to the plaintiff ("the syndicate mortgage"). The balance of the purchase price of Booka and certain plant and equipment, $490,000, was, in effect, advanced by Mr. Reeves' company, and secured by a second mortgage over Booka and also by a mortgage over the Young property. Mr. Hunt explained in his letter that the Registrar-General for New South Wales had registered a set of standard mortgage conditions which had been adopted in each of the two mortgages. However, those standard conditions were not included with the memoranda of mortgage at that time. Mr. Hunt requested Mr. Astley to arrange for the plaintiff to execute the memoranda of mortgage, a bill of sale relating to plant and equipment and a stock mortgage. Mr. Astley spoke to Mr. Lamshed by telephone on 9th August 1984 and told him that he was sending to him those documents and that he did not yet have the standard conditions. On that day Mr. Astley wrote to Mr. Lamshed. He enclosed the letter from Mr. Hunt and a copy of the letter from Mr. Reeves' solicitors which had also been sent to him by Mr. Hunt. He mentioned that the copy of the standard mortgage conditions had not yet been received by him. The penultimate paragraph of the letter is said to be of significance and is in the following terms:- "So far as the forms of mortgage, stock mortgage and bill of sale are concerned, they appear to be in a standard form. Presumably the amounts are correct but you will have particular knowledge of this and likewise we assume that the number of pigs in the stock mortgage and the plant and equipment referred to in the bill of sale are accurate. If you have any queries regarding the documents, please let the writer know." Mr. Wood regarded this letter as the legal advice which he received with respect to the mortgages, that advice being that the mortgages were in a standard form. His evidence is that he understood that advice to mean that the mortgages were in order to be executed by the plaintiff. 49. Mr. Astley received a copy of the standard mortgage conditions from Mr. Hunt on 9th August 1984. On 14th August 1984 he spoke to Mr. Lamshed by telephone and told him that these conditions appeared to be in order. However, Mr. Lamshed told him that the security documents had already been executed and returned, presumably to Mr. Hunt. The solicitors acting for one of the members of the lending syndicate requested alterations to the first memorandum of mortgage. Mr. Astley received a copy of the telex which they had sent to Mr. Hunt on 17th August 1984 setting out additional clauses which were requested. They also requested a certificate under seal from the plaintiff and the manager of the Trust confirming that neither company was in default of its obligations under the trust deed and that the loan to assets section contained in cl.36 of the deed had not been breached. That clause provides, inter alia, for the power in the trustee to borrow with or without security up to a limit whereby the total liabilities of the trust do not, at the time of the borrowing, exceed 60% of the gross asset value of the fund of the trust. Mr. Hunt sent a telex to Mr. Astley on 20th August 1984 suggesting the wording of the required certificate. Mr. Astley perused the telex on that day. He spoke to Mr. Hunt by telephone. His cost entry recalls that he agreed the proposed amendments. He then wrote to Mr. Lamshed, on that day, enclosing a copy of the telex and informing him that he had discussed the requested amendment to the mortgage with Mr. Hunt, that there did not appear to be any problem with them and that Mr. Hunt was incorporating them in the relevant mortgage. As to the certificate, the letter went on as follows:- "With regard to the penultimate paragraph of that telex, we have asked Mr. Hunt whether the assets are sufficient to ensure the ratio is not breached and he has told us he has been so assured. On that basis, Mr. Hunt has drafted a form of certificate to be given under the common seal of your company, as set out in a telex which we received this morning. Assuming you are content with this situation, we enclose three copies of the form of certificate to be given under the common seal of your company. Could you please execute two of them and return them to us immediately as Mr. Hunt wishes to settle tomorrow. The third copy is for your file." 50. Mr. Astley discussed the certificate with Mr. Lamshed. The certificate was executed by senior staff of the plaintiff, Mr. Pipprell and Mr. McArthur, and was returned the same day to Mr. Astley who, in turn, sent it on to the solicitors for the member of the syndicate who had required it. 51. The sale and purchase of Booka was settled on 22nd August 1984. Mr. Astley took no part in that settlement and he was not instructed to do so. 52. On 24th August 1984 Mr. Hunt sent to Mr. Astley copies of the mortgages over Booka and the Young property, the stock mortgage and the bill of sale, which Mr. Astley sent on to Mr. Lamshed. On 14th September 1984 Mr. Astley received a letter from Mr. Hunt enclosing a deed of variation of the trust deed for consideration and execution by the plaintiff. In that letter he set out the reason of the proposed variation which, for present purposes, it is unnecessary to recite. It is sufficient to say that it was a sound reason in the interests of unit holders and it appears that the Commission had approved of the proposed alteration. Mr. Astley considered the proposed alteration and wrote to Mr. Lamshed on the same day. He explained the effect of the proposed alteration and advised that it would be proper for the plaintiff to consent. Mr. Astley explained, in evidence, that he acted in that way, on this occasion, because consideration of the amendments and advising with respect to them was in accordance with his instructions. On 21st September, Mr. Astley contacted Mr. Lamshed by telephone to ascertain the whereabouts of the deed of variation. He received it, duly executed by the plaintiff, on 24th September and sent it off to Mr. Hunt. 53. On 25th September 1984 Mr. Astley received a letter from Mr. Hunt and documentation relating to a proposed loan of $400,000 to the plaintiff for the purposes of the Trust. This loan was referred to, during the trial, as "the Eagle Star loan" after the subsequent name of the lender. Mr. Hunt asked that the plaintiff execute the documents if it considered them in order. Mr. Astley was not previously aware of this proposed loan, except that Mr. Hunt had informed him the previous day that he would be receiving mortgage documents the next day. Mr. Astley contacted Mr. Lamshed and told him that he had received the documents. Mr. Lamshed asked him "to have a look at them". Mr. Astley was unable to do so immediately but he considered the documents in detail a few days later. On 3rd October 1984 he wrote to the manager of the plaintiff, marked for the attention of Mr. Lamshed, a long letter containing detailed comments and explanations about each of the documents which he enclosed with this letter. According to Mr. Astley he examined these documents carefully because he had been asked by Mr. Lamshed to do so. The Eagle Star loan was negotiated by Mr. O'Dea with the knowledge and consent of Mr. Wood. It was required to discharge some existing loans of the Trust and to provide working capital. Earlier, when the previously mentioned borrowings had been finalized in August 1984, it was not envisaged by Mr. Wood that any further borrowings would be required. However, Mr. O'Dea was able to convince Mr. Wood of the need for this loan and of the capacity of the Trust to repay it. I return to this loan and the plaintiff's ready acceptance of it later in another context. 54. Mr. Astley gave advice, in some detail, in his letter of 3rd October 1984 about each of the documents. Of particular significance is advice which he gave about the obligations of the plaintiff under the proposed loan agreement. He gave detailed advice about most clauses including that the plaintiff was the borrower as trustee of the Trust and suggested that there be an amendment to one of the clauses, cl.16. He also advised that there should be amendments to the statutory declaration required to be executed by one of the directors of the plaintiff. Both Mr. Wells and Mr. Wood saw this letter and the suggested amendments to the documents were made. The loan agreement was executed by the plaintiff on 4th October 1984. The loan to the plaintiff was secured by a mortgage over the Young property by QFP Properties Pty. Ltd. which was still the owner of that property. 55. The documentation with respect to the Eagle Star loan included a bill of sale which was again sent by Mr. Hunt to Mr. Astley on 5th October 1984 for re-execution and the completion of a statutory declaration and an affidavit by one of the authorized officers of the plaintiff. Mr. Astley presented the bill of sale to Mr. Lamshed and requested him to attend to Mr. Hunt's request and return the documents to him promptly. Upon receiving them, Mr. Astley forwarded them to Mr. Hunt. 56. Work continued with respect to the preparation of the proposed prospectus. Mr. Lamshed undertook that work for the plaintiff and Mr. Astley played no part in it. On 17th October 1984 Mr. Astley received a letter from Mr. Hunt, informing him that officers of the Commission had requested a letter from the plaintiff as trustee certifying that information to be contained in a schedule to be attached to the prospectus was correct. The relevant part of the schedule was enclosed with the letter and Mr. Hunt asked Mr. Astley to arrange for the plaintiff to forward the required certificate in letter form direct to the Commission in Brisbane. A copy of that letter and the enclosures were collected by a member of the plaintiff's staff soon after the letter was received by Mr. Astley. Mr. McArthur had known it was being sent by Mr. Hunt and asked Mr. Astley's secretary to let him know when it was received. 57. On 23rd October 1984 Mr. Hunt wrote to Mr. Astley informing him that the final draft of the prospectus had been approved by the Commission and it remained for the Commission to approve the trustee pursuant to the Companies (Queensland) Code. Mr. Hunt included information and enclosed documents for that purpose. Mr. Astley contacted Mr. Lamshed and asked him to call and see him. He also contacted Mr. Wells to ascertain if he was available to make the necessary declarations. Mr. Astley saw Mr. Lamshed and discussed the application with him. Subsequently he was informed by Mr. Lamshed that Mr. Wells had declined to sign a necessary document but Mr. Wood had done so. The documents were prepared by the plaintiff and sent to Mr. Hunt without any involvement of Mr. Astley. 58. On 26th October 1984 Mr. Hunt forwarded a copy of the final draft of the prospectus to Mr. Astley which he sent on to Mr. Lamshed for his comment and approval by the following morning. Mr. Lamshed informed Mr. Astley that the plaintiff approved of the prospectus and Mr. Hunt was informed accordingly. 59. Earlier, by letter dated 23rd October 1984, Mr. Hunt sent to Mr. Astley a memorandum of transfer of the Young property from QFP Properties Pty. Ltd. to the plaintiff in its capacity as trustee of the Trust. Mr. Hunt intimated that his firm certified the form of transfer as correct. He asked Mr. Astley to arrange for execution of the document by the plaintiff. On 30th October 1984 Mr. Astley sent this document on to Mr. Lamshed and asked him to have it executed by the plaintiff under seal and that he return it direct to Mr. Hunt. 60. Mr. Astley was then overseas until the end of November 1984. Upon his return he was informed by Mr. Lamshed, on 13th December 1984, that the prospectus had been printed and was available to the public. It was arranged that Mr. Astley should send an account for his services and he did so on 20th December 1984. 61. Soon after the plaintiff became trustee of the Trust, serious problems became apparent. Mr. Wood instructed Mr. Bacon, who, at the time, was the corporate trust officer of the plaintiff, to establish appropriate accounting, management and reporting procedures with the manager of the Trust. By the end of December 1984 it was obvious that the Trust was in financial difficulty. The manager was inefficient and had incorrectly applied money subscribed by investors. Mr. Bacon reported the many problems in detail to Mr. Wood in late January 1985 when Mr. Wood returned from a holiday. Mr. Wood then acted promptly. He went to Brisbane to meet with the directors of the manager and the auditors of the Trust, Duesburys. He quickly learned that the Trust could not continue to operate and that it should be terminated. He informed the manager accordingly on 15th March 1985 and on the same day the manager gave notice of a month, pursuant to the deed, that the Trust be terminated and also that it forthwith ceased to act as manager. 62. The plaintiff took over the management of the Trust with Mr. Bacon undertaking much of the work. A meeting of unit holders resolved on 15th May 1985 to wind up the Trust. The plaintiff then applied to the Supreme Court of Queensland for an order confirming the resolution to wind up the Trust which was made on 25th June 1985. The order provided that the plaintiff be authorized to carry out the winding up. Mr. Wood had sought, and obtained, from Duesburys, the audited accounts of the trust which showed substantial loss and a relatively small surplus of assets over liabilities. However, the subsequent sale of the assets resulted in the liabilities exceeding the value of the assets. 63. The plaintiff continued to carry out the winding up of the Trust. Mr. Ware was, at relevant times, a director of both the plaintiff and Elders Finance Group Australia Limited, a member of the Elders IXL Group of companies. He did not give evidence but it is clear from the evidence of other witnesses that he was clearly involved in the winding up of the Trust. In November 1985 he asked Mr. James, a chartered accountant, company auditor and liquidator, whom he had known for many years, to take over the winding up of the Trust so as to enable senior staff of the plaintiff to resume their normal duties. Mr. James agreed and a deed setting out the terms and conditions of his appointment was executed by him and the plaintiff on 3rd December 1985. In the course of my reasons for the assessment of damages, I mention the significant events in the winding up of the Trust. It is sufficient to say, at this stage, that there have been substantial losses to the plaintiff in respect of which it seeks damages from the defendants. At no time did the defendants play any part in the winding up. 64. It is beyond question that in view of the relationship between the parties of solicitor and client, that Mr. Astley owed a duty to the plaintiff to exercize the care and skill to be expected of a qualified competent and careful solicitor in the practice of his profession. The following observation of Deane J in Hawkins v. Clayton (1988) 164 CLR 539 at p 578 applies to Mr. Astley and his relationship with the plaintiff:- "The solicitor, as a specially qualified person possessing expert knowledge and skill, assumes responsibility for the performance of professional work requiring such knowledge or skill. The client relies upon the solicitor to apply his expert knowledge and skill in the performance of that work"; as do the observations of Oliver J in Midland Bank v. Hett, Stubbs and Kemp (1979) 1 Ch 384 at pp 402-403: "The extent of his duties depends upon the terms and limits of that retainer and any duty of care to be implied must be related to what he is instructed to do. Now no doubt the duties owed by a solicitor to his client are high, in the sense that he holds himself out as practising a highly skilled and exacting profession, but I think that the court must beware of imposing upon solicitors - or upon professional men in other spheres - duties which go beyond the scope of what they are requested and undertake to do." 65. This passage was approved by Mason CJ and Wilson J in Hawkins v. Clayton (supra) at p 544. True it is that they were in a minority, but the Court, in that case, was concerned with whether solicitors owed a duty in tort to a person other than the client and the judgments in that case must be read in that context. The majority held that such a duty did exist. Considerable attention was given during argument to the judgments in that case. Doubtless there may be circumstances in which the duty of care in tort is different from, or more extensive than, the duty in contract where the relationship between a solicitor and client comes into existence by reason of a contract of retainer, but it is unnecessary, for present purposes, to consider how such a situation may arise. Here the duty arose in both contract and in tort and was, in my view, the same duty. 66. The plaintiff's case is that there was, in effect, one transaction. From the time the defendants were instructed on 31st August 1983 until late in 1984, the plaintiff had retained them as its solicitors in relation to all aspects of the plaintiff's involvement in the Trust and Mr. Astley had a duty to exercize care and skill with respect to each matter which arose over that period and to properly and adequately advise the plaintiff with respect to each of them. The defendants contest that approach. They contend that the terms and limits of the retainer must be considered at each relevant stage over this period and that upon doing so, it may be seen that Mr. Astley had been instructed to do very little. 67. In considering these matters, it is appropriate to have regard to the experience and expertise of the plaintiff and what action it took independently of the defendants. These matters are also of importance in determining the nature and extent of the duty of care and whether Mr. Astley was in breach of it. If any authority is required for such a common sense proposition, it may be found in Ormindale Holdings Ltd. v. Ray and Ors. (1980) 116 DLR(3d) 346 at p 357 and Carradine Properties Ltd. v. D.J. Freeman and Co. (1982) 1 PN 41. The plaintiff had considerable experience as a trustee and in administering trusts in accordance with the instruments creating them. It employed Mr. Lamshed. There was no evidence to suggest that he was not a competent and experienced solicitor in the fields in which he worked. The plaintiff had staff sufficiently competent to undertake conveyancing. Mr. Wood had considerable expertise in commercial matters and expert advice as to financial and rural matters was available to the plaintiff from within the Elders Group. 68. Also the relationship between the parties in the past is of significance. The defendants regularly acted for the plaintiff. Mr. Astley was aware of the usual business of the plaintiff. The plaintiff had sought and relied upon advice of members of the defendant's firm, including Mr. Astley, for many years which was known to him. He expected that the plaintiff would value and take any advice that he gave. 69. Having regard to all of these matters, the only sensible conclusion is that the scope of the duty which Mr. Astley owed to the plaintiff included the duty to give the advice which it appeared to need regardless of whether or not it had been specifically requested: Carradine Properties Ltd. v. D.J. Freeman and Co. (supra) per Donaldson LJ at p 41. The instruction in the letter of 31st August 1983 to "... examine the Deed and let us have your comments on it ..." obliged Mr. Astley to advise as to all matters which a competent and experienced solicitor of his standing would expect the plaintiff would need to know relative to its obligations as trustee and the liabilities which it could incur if it became the trustee. These matters included whether the plaintiff would be exposed to personal liability for any excess of liabilities over assets of the Trust should it fail, that all relevant documentation should, in the plaintiff's interest, exclude such personal liability and other particular matters relating to that question. This duty also included duty to give advice about the documentation relating to the mortgages with respect to Booka and the Young property and other security documents in the context of the need to exclude personal liability and further to advise as to the need to define the relationship between the plaintiff as trustee and Golden Grove Industries Pty. Ltd. as manager so as to exclude personal liability of the plaintiff for debts incurred by the manager. 70. It is, and was at the time, well known that a trustee is personally liable for debts which he incurs in that capacity unless personal liability is expressly excluded in the relevant transaction, e.g. a loan agreement or a memorandum of mortgage, and care must be taken to ensure that such exclusion is expressed in clear and unambiguous terms: Muir v. City of Glasgow Bank and Liquidators (1879) 4 App Cas 337. Earl Cairns LC expressed the following statement of principle at p 355:- "My Lords, whether, in any particular case, the contract of an executor or trustee is one which binds himself personally, or is to be satisfied only out of the estate of which he is the representative, is, as it seems to me, a question of construction, to be decided with reference to all the circumstances of the case; the nature of the contract; the subject-matter on which it is to operate, and the capacity and duty of the parties to make the contract in the one form or in the other. I know of no reason why an executor, either under English or Scotch law, entering into a contract for payment of money with a person who is free to make the contract in any form he pleases, should not stipulate by apt words that he will make the payment, not personally, but out of the assets of the testator." 71. Lord Penzance, at p 368, made the following observations about trade debts incurred by a trustee:- "But meanwhile it will not be doubted that a person who, in his capacity of trustee or executor, might choose to carry on a trade for the benefit of those beneficially interested in the estate, in the course of which trade debts to third persons arose, could not avoid liability on those debts by merely shewing that they arose out of matters in which he acted in the capacity of trustee or

executor only, even though he should be able to shew, in addition, that the creditors of the concern knew all along the capacity in which he acted. The case of an agent who acts for others is, of course, entirely different. His contracts are the contracts of his principal; and the liabilities from which, as a general rule, he is personally exempt, fall upon his principal who acted through him. But to exonerate a trustee something more is necessary beyond the knowledge of those who deal with him that he is acting in that capacity, and it would not be sufficient in all cases to state that fact on the face of any contracts he may make. To exonerate him it would be necessary to shew that upon a proper interpretation of any contract he had made, viewed as a whole - in its language, its incidents, and its subject-matter - the intention of the parties to that contract was apparent that his personal liability should be excluded; and that although he was a contracting party to the obligation the creditors should look to the trust estate alone." 72. The observations in Muir's case were applied by Yeldham J in Helvetic Investment Corporation Pty. Ltd. v. John Knight (1982) 7 ACLR 225 and by the Court of Appeal (NSW) 9 ACLR 773. 73. It is necessary to refer to but a few well known texts to illustrate the importance of advice as to this matter. In Essays in Equity, P.D. Finn 1985, McPherson J wrote at p 144:- "It is not contrary to public policy for a trustee to limit or exclude personal liability ... (see Muir v City of Glasgow Bank (1879) 4 App Cas 337 at 355) but such an exclusion can be achieved only by clear words. In Lumsden v Buchanan (1865) 4 Macq 950 at 955 Lord Westbury LC went so far as to say that a limitation of liability 'must be the result of express stipulation'; but express words are not required if the circumstances, including the construction and nature of the contract, demonstrate the intention that payment should be made not personally by the trustee but only from the assets of the trust. The presumption in favour of personal liability is strong. It is not displaced because a person makes a contract or covenant 'as trustee'. Those words are simply descriptive and it remains a personal contract or covenant by the trustee himself." 74. In Halsbury's Laws of England 4th Ed. 1980, Vol.32, para.470, the principle is stated as follows:- "A trustee or other fiduciary owner who mortgages the trust estate does not usually covenant to pay the money borrowed (see Stroughill v. Anstey (1852) 1 De G M and G 635 at 642), and a provision expressly excluding any personal liability on his part for payment is commonly inserted in the mortgage." 75. Standard texts refer to the need to exclude personal liability of a trustee: The Law and Practice in All States of Australia Relating to Mortgages and Securities for the Payment of Money 2nd Ed 1975 by E.A. Francis at p 48, The Australian Land Titles (Torrens) System 1927 by D. Kerr at p 376, para.823 and Principles of the Law of Trusts 1983 by Ford and Lee at para.1402, pp 621-622, The Australian Encyclopaedia of Forms and Precedents 2nd Ed. 1974, Vol.9 at p 59 and Jessup's Forms and Practice of the Lands Titles Office of South Australia, 6th Ed. 1982 at pp 149-150. Most of these citations and texts were published before Mr. Astley received instructions. 76. The plaintiff called Mr. Goldberg, a practitioner of this court of some 20 years standing. I accept that he has considerable expertise and experience in the practice of commercial law and, in particular, in the formation of trusts, including unit trusts, and advising about them. Over the objection of the defendants I permitted Mr. Goldberg to give evidence about matters of legal practice relevant to matters in issue and in doing so I followed the observations of Oliver J in Midland Bank v. Hett, Stubbs and Kemp (supra) at p 402:- "As to this (the scope of a solicitor's duty) I have heard the evidence of a number of practising solicitors. Mr. Harman modestly contented himself with calling one; but Mr. Gatehouse - mindful,

no doubt, of what is said to be the divine preference for big battalions - called no less than three. I must say that I doubt the value, or even the admissibility, of this sort of evidence, which seems to be becoming customary in cases of this type. The extent of the legal duty in any given situation must, I think, be a question of law for the court. Clearly, if there is some practice in a particular profession, some accepted standard of conduct which is laid down by a professional institute or sanctioned by common usage, evidence of that can and ought to be received. But evidence which really amounts to no more than an expression of opinion by a particular practitioner of what he thinks that he would have done had he been placed, hypothetically and without the benefit of hindsight, in the position of the defendants, is of little assistance to the court; whilst evidence of the witnesses' view of what, as a matter of law, the solicitor's duty was in the particular circumstances of the case is, I should have thought, inadmissible, for that is the very question which it is the court's function to decide." 77. I gave my ruling as to the admissibility of Mr. Goldberg's evidence before his evidence commenced on an understanding of what was proposed to be lead from him. As often occurs in such situations, some of the evidence given by Mr. Goldberg, although not objected to, went beyond the permissible reach of expert evidence of this nature. I have not had regard to that evidence. Indeed, most of Mr. Goldberg's evidence was not required to enable me to resolve the various issues as to the nature and extent of Mr. Astley's duty of care to the plaintiff at relevant times and the standard of care which the law expects of him as it was unnecessary to go beyond Mr. Astley's own evidence. 78. Mr. Astley acknowledged that where the relationship of trustee and manager of a trust is created, it is important, when advising the trustee, to give advice for steps to be taken to ensure, so far as is possible in the deed, that the trustee does not become responsible for the debts incurred by the manager. He said that he could not recall if he gave such advice, but if he did he would have given it to Mr. Lamshed as perusal of his file establishes that he did not give such advice in writing. I accept that, at relevant times, Mr. Astley was aware that, in law, a trustee is personally liable for the debts and liabilities of the trust, beyond the assets of the trust, unless such liability is excluded in clear and unambiguous terms. He did not give any such advice. 79. I have considered in the context of Mr. Astley not being able to now recall what verbal advice, if any, he gave to Mr. Lamshed, the significance of the absence of Mr. Lamshed from the witness box. The only explanation in the evidence for the plaintiff not calling him is that the plaintiff instituted proceedings against him in this court on 5th August 1990 for damages for breach of contract and negligence with respect to many of the transactions which are the subject of this action and that on 18th December 1992 and 16th February 1993 he refused to see the plaintiff's solicitors to finalize his proof of evidence to be given in the trial of this action because of advice which he had received. In those circumstances I do not think it should be inferred that if Mr. Lamshed had been called he would have given evidence as to important issues unfavourable to the plaintiff. That may or may not be so, but there is sufficient explanation for his absence from the witness box to make it unsafe to draw that conclusion. The next question is whether the failure to call him permits the inference be drawn that Mr. Lamshed knew that personal liability for debts of the trust attached to the trustee unless expressly excluded or that Mr. Astley so advised him. All of the evidence, including that of Mr. Oakeshott, Mr. Wells and Mr. Wood and the memorandum of Mr. Lamshed to Mr. Wells of 7th August 1984, leads to only one conclusion. It is probable that Mr. Lamshed was not aware of this important matter because if he had been aware, he would have informed Mr. Oakeshott, Mr. Wells or Mr. Wood. There is no reason to doubt their evidence that they did not have that knowledge. It is probable that Mr. Astley did not give to Mr. Lamshed any advice as to that matter. 80. Mr. Astley maintained that he did not give any advice to the plaintiff as to the purchase of Booka, the borrowing of money for that purpose, the terms of the mortgages, or the certificate given by the plaintiff as to the ratio of borrowings to assets to the loans. He acknowledged that he did not give any advice about the need, pursuant to the deed, to obtain a fresh valuation within two months of the purchase of Booka, the plaintiff's power to purchase that property, the valuation of Mr. Hynes or that he was not a qualified valuer as defined in the deed. According to Mr. Astley, he was not asked to give any such advice and he was not asked to advise the plaintiff at all in relation to the steps which were necessary to be taken for the purchase of Booka or to protect the plaintiff as the purchaser of that property or as to the implications of its relationship with Golden Grove Industries Pty. Ltd., the manager of the Trust. 81. In my view, Mr. Astley was in breach of his duty to the plaintiff in the following respects. He failed to advise the plaintiff of the need to protect itself from personal liability for the debts of the Trust. He knew of the proposal to purchase Booka and to borrow a substantial amount for that purpose before the trust deed was executed. He had perused the trust deed and given some advice about it. He had perused the memoranda of mortgage with respect to Booka and had given some advice, namely that they were in standard form. He continued to act for the plaintiff over the total period. Whilst it must be acknowledged that the plaintiff undertook some tasks independently of the plaintiff and that the instructions of the plaintiff lacked precision, Mr. Astley was sufficiently aware of each transaction to be able to appreciate the need for the plaintiff to be protected against personal liability. He should have appreciated that the plaintiff needed to know that it should be protected from such risks and he was in breach of his duty to the plaintiff in failing to give the appropriate advice. It was a simple matter to draft appropriate amendments to the trust deed so as to make it clear to anyone who intended to deal with the plaintiff and chose to read the deed, that the liability of the plaintiff extended only to the trust assets. It was a simple matter to advise the plaintiff to insist upon appropriate amendments to the mortgage documents and any other security documents to which it might become a party. It was also a simple matter to advise the plaintiff of the need to exclude personal liability with respect to each transaction into which it entered and to adequately and carefully define its relationship with the manager so that it did not become personally liable for any of the trading debts of the Trust incurred by the manager. 82. I accept that the plaintiff did rely upon Mr. Astley and if he had given the advice which he should have given, either the plaintiff would have insisted upon the exclusion of personal liability in all relevant documents or would not have agreed to be the trustee. I accept Mr. Wood's evidence in that respect and I also accept that Mr. Wells would not have permitted the execution of the trust deed and other documents if he had been aware that the plaintiff would be exposed to personal liability. Furthermore, I find that this breach of duty was causative of losses suffered by the plaintiff to the extent which is discussed later in these reasons. 83. Before parting with the issue of breach of duty by Mr. Astley and consequential liability of the defendants in contract and tort, I mention a contention of the defendants with respect to the proceedings instituted by the plaintiff against Mr. Lamshed. Allegations made in the particulars of claim by the plaintiff against Mr. Lamshed attribute, in effect, responsibility to him for the plaintiff's losses arising out of the Trust and are inconsistent with its case as evidence in this action. It is contended that those allegations are in the nature of admissions by the plaintiff and are binding upon it. Consequently I should not make any findings which are inconsistent with those allegations. 84. The action against Mr. Lamshed was instituted shortly before it would have become statute-barred and it is reasonable to infer that as this action had not then come to trial, the plaintiff was ensuring that it could proceed against him should it fail in this action. In my view there is no reason to conclude that the allegations in the pleading have any bearing upon what is to be decided in this action. The purpose and function of pleadings is to outline the party's case and the issues to be tried and an assertion in a pleading does not usually constitute an admission by the party filing the pleading: Laws v. Australian Broadcasting Tribunal [1990] HCA 31; (1990) 93 ALR 435 per Mason CJ and Brennan J at pp 446-447 and Gaudron and McHugh JJ at p 456. The pleading against Mr. Lamshed has not assisted me in reaching my conclusions. 85. I now turn to the defendants' plea of contributory negligence. Before considering whether that plea has been made out, it is necessary to consider whether, as a matter of law, it is available as the plaintiff's action is for breach of contract and in negligence. In Meddick v. Cutten and Harvey (1984) 36 SASR 542, White J, at first instance, after reviewing the relevant authorities, concluded that there was no reason why the apportionment legislation, s.27a(3) of the Wrongs Act 1936, should not be applied to concurrent causes of action in contract and in tort if both causes of action are pleaded and provided the ambit of the duty of care is the same in each cause of action: see his discussion at pp 556-558 and the cases cited. On appeal the Full Court held that it was unnecessary to consider the question as there could not be a finding of contributory negligence in the circumstances: see King CJ at p 564. 86. Bollen J, at first instance, in Walker and Ors. v. Hungerfords and Ors. (1987) 44 SASR 532 after reviewing various cases and acknowledging that the question had not been authoritatively decided by an appellate court concluded that contributory negligence is a plea available where the breach of contract is caused by negligent conduct which would constitute a cause of action in tort: see p 553. However, he found no such negligence. On appeal the Full Court also acknowledged that whether a plea of contributory negligence for the purpose of reducing damages is available where the action is based upon negligence and breach of contract had not been authoritatively resolved and that it was unnecessary to do so as Bollen J had correctly concluded that there was no contributory negligence: see Walker v. Hungerfords (1987) 49 SASR 93. 87. Recently, Rogers J considered the same question in AWA v. Daniels (1992) 7 ACSR 759 at pp 841-842. He found auditors liable for damages in both contract and tort and concluded that the apportionment due to contributory negligence was available where the breach of duty was co- extensive. He said:- "Until recently, it had been accepted that the defence of contributory negligence was unavailable in all cases in answer to an action brought for breach of contract. This view is supported by the decision of the majority of the full court of the Supreme Court of Western Australia in Arthur Young and Co v WA Chip and Pulp Co Pty Ltd (1989) WAR 100. However the WA Act is in different terms from the NSW legislation. The decision rests on the words of the WA Act. While there is no decision, at an appellate level, in Australia, to a contrary effect to that arrived at by the WA full court, in

my view, the tide has been running so strongly against that view, in authoritative pronouncements in other countries, that, even at first instance, it is open to a judge to take a different view. Smart J did so in Bains Harding Construction and Roofing (Aust) Pty Ltd v McCredie Richmond and Partners Pty Ltd (1988) 13 NSWLR 437. His Honour followed the decision of the English Court of Appeal in Forsikringsaktieselskapet Vesta v Butcher [1989] UKHL 5; (1989) AC 852. On appeal, the House of Lords found it unnecessary to discuss the question. A differently constituted Court of Appeal cited Vesta with approval in Tennant Radiant Heat Ltd v. Warrington Development Corp (1988) 1 EGLR 41. The decision in Vesta has been applied as well in Youell v. Bland Welch and Co Ltd (1990) 2 Lloyds Rep 431 at 461. The Court of Appeal in New Zealand in Day v Mead [1987] NZCA 74; (1987) 2 NZLR 443, after a careful analysis by Sir Robin Cooke, expressed the view that, where a defendant's liability in contract is the same as his liability in the tort of negligence, independently of the existence of any contract, the defence of contributory negligence may be available. Indeed Mr. Bathurst QC, for the plaintiff, did not seek to argue to the contrary. I propose to adopt that view and hold that, in the present case, contributory negligence, if otherwise available, is not denied by the words of the legislation." 88. The relevant legislation in New South Wales is, in all material respects, in the same terms as s.27a(3) which is as follows:- "(3) Where any person suffers damage as the result partly of his own fault and partly of the fault of any other person or persons, a claim in respect of that damage shall not be defeated by reason of the fault of the person suffering the damage, but the damages recoverable in respect thereof shall be reduced to such extent as the court thinks just and equitable having regard to the claimant's share in the responsibility for the damage: Provided that - (a) this subsection shall not operate to defeat any defence arising under a contract; (b) this subsection is subject to subsection (4) of this section." 89. "(F)ault" is defined in s.27a(1) as follows:- "'fault' means negligence, breach of statutory duty or other act or omission which gives rise to a liability in tort or would, apart from this Act, give rise to the defence of contributory negligence." In Forsikringsaktieselskapet Vesta v. Butcher [1989] UKHL 5; (1989) 1 AC 852, referred to by Rogers J, O'Connor LJ, with whom Niell LJ agreed, held that where the liability in contract is the same as the liability in the tort of negligence independently of the existence of any contract, then the apportionment legislation could be applied. He accepted the reasoning of Prichard J in Rowe v. Turner Hopkins and Partners (1980) 2 NZLR 550 at pp 555-556:- "To my mind, the Act provides its own interpretation if it is acceptable to regard the definition of 'fault' in s.2 as comprising two limbs - the first referable to the defendant's conduct, the second to the plaintiff's conduct. Section 2 defines 'fault' as meaning 'negligence, breach of statutory duty, or other act or omission which gives rise to a liability in tort' (the first limb). It then goes on to include any act or omission which 'would, apart from this Act, give rise to the defence of contributory negligence' (the second limb). In my view, the first limb of the definition is plainly directed to defining 'fault' as it relates to the conduct of the defendant - in other words, as it relates to the plaintiff's cause of action. This phrase is qualified by the expression 'which gives rise to a liability in tort'. It follows that no negligence, breach of statutory duty and no other act or omission of the defendant will bring s.3(1) into play unless it is one which gives rise to liability in tort. In other words, the Act applies only when the plaintiff's cause of action is in respect of some act or omission for which the defendant is liable in tort. Conceivably, the defendant may be concurrently liable in contract - but that is immaterial - the sine qua non is conduct creating liability in tort. The second limb of the definition is concerned with and is referable only to the conduct of the plaintiff. It relates not to any cause of action but to conduct which, prior to the Act, would give rise to the defence of contributory negligence and which is now to be

regarded as that conduct on the part of a plaintiff which will lead not to a complete defence but to a reduction in damages. Before the enactment of the Contributory Negligence Act, the defence of contributory negligence was a complete defence in tort: it was not a defence in contract - where the issue was more likely to be simply causation. I therefore conclude, in the absence of any clear authority to the contrary, that the first limb of the definition of s.2 determines the meaning of the word 'fault' as it relates to the plaintiff's cause of action: that accordingly, the Contributory Negligence Act cannot apply unless the cause of action is founded on some act or omission on the part of the defendant which gives rise to liability in tort: that if the defendant's conduct meets that criterion, the Act can apply - whether or not the same conduct is also actionable in contract. By the same token - the second limb of the definition means simply and logically that no act or omission of the plaintiff will entitle the defendant to a reduction of damages unless it amounts to the sort of conduct which, prior to the enactment of the Contributory Negligence Act, would have afforded a defence of contributory negligence." 90. Prichard J felt bound by New Zealand authority to the effect that claims for damages for professional negligence arise exclusively ex contractu although he did not subscribe to that view, see pp 557-559, and consequently a plea of contributory negligence was not available. It appears that O'Connor LJ accepted that liability may co-exist in contract and tort and consequently there was no bar to apportionment. The view expressed by Cooke P in Day v. Mead [1987] NZCA 74; (1987) 2 NZLR 443, referred to by Rogers J in AWA v. Daniels (supra) has been adopted by the Court of Appeal in New Zealand in Mouat v. Clark Boyce (1992) 2 NZLR 559, per Cooke P at pp 564-565 and Gault J at pp 574-575. The Court was concerned with negligence and breach of fiduciary duty of a solicitor and the contributory negligence of the client. 91. The relevant provisions of the apportionment legislation in the United Kingdom and in New Zealand are in the same terms as s.27a(1) and (3). 92. Whilst I accept that there has not been any authoritative decision of an appellate court in this country, it is necessary to decide whether the plea of contributory negligence is available to the defendants as I have reached the conclusion, for reasons which I shall express, thatthe plaintiff was guiltyof contributory negligence. The true interpretation of s.27a(1) and (3) is, in my view, as stated by Prichard J in Day v. Mead (supra) and accepted by the Court of Appeal in Vesta. It accords with the views expressed by White J in Meddick v. Cutten and Harvey (supra) Bollen J in Walker and Ors. v. Hungerfords and Ors. (supra) and with an approach of Cooke P in Mouat v. Clark Boyce (supra). It also accords with the reasoning of Crisp J in Queen's Bridge Motors And Engineering Co. Pty. Ltd. v. Edwards [1964] TASStRp 7; (1964) Tas SR 93. The plea is available where the duty of care is the same in contract and in tort and both causes of action are pleaded. I have noted that this view has been accepted in Canada: see Doiron v. Caisse Populaire D'Inkerman Ltee (1985) 17 DLR (4th) 660 at pp 671-672. Consideration of the circumstances as they existed before the plaintiff became the trustee, and before each of the mortgages was executed, easily leads to the conclusion that the plaintiff was guilty of negligence which was also causative of its loss. I have discussed the nature of the plaintiff's business and its experience and expertise which is a matter of significance. Mr. Wood was a businessman of considerable knowledge and experience with respect to relevant matters such as raising finance for business activities. The plaintiff was a member of a corporate group which employed senior staff with considerable and relevant expertise in business and rural management and analysis. The plaintiff was anxious to become the trustee as it was keen to develop that type of business. 93. There were two crucial issues to be resolved before the plaintiff became the trustee and incurred the respective debts: the legal implications and the commercial soundness of doing so. Without question Mr. Astley played no part in the second matter and was not called upon to do so. That matter had to be assessed by the plaintiff. It failed to do so. Even cursory inspection of the accounts of the GGI Pig Trust by a person with a modicum of business acumen would have revealed that at all material times the Trust was insolvent. It had no prospects of success unless there was substantial public investment. The plaintiff blindly accepted that there were sufficient investors standing by to purchase units when the new trust was established and the prospectus issued, and that sufficient capital would be obtained to resolve all of the financial ills of the Trust, which was plainly not the case. No enquiry was made by the plaintiff of Mr. O'Dea or anyone else as to the identity of these potential investors or as to any other matter which would have revealed that the financially hazardous position of the Trust would not be resolved by public subscription to units. It appears that Mr. Wood was content to rely upon assurances given by Mr. O'Dea without any enquiry or checking, not even from the auditors of the GGI Pig Trust. Had appropriate enquiries been made and the accounts been considered, the plaintiff would have realized that the Trust was insolvent and likely to remain so with the consequence that the plaintiff would not have agreed to be the trustee. 94. Furthermore, the plaintiff failed to inform Mr. Astley of the true position. He was assured that the proposed venture was commercially viable and without risk. 95. Mr. Colyer argued that in cases of professional negligence the defence of contributory negligence is not available with respect to a breach of the core or primary duty of the professional and that support for such a proposition is to be found in the reasoning of Rogers J in AWA Ltd. v. Daniels at pp 842 ff and the authorities referred to therein. True it is that Rogers J acknowledged that the defence is not available, where it is based upon the negligent conduct of a person to an auditor if the relevant duty of the auditor is to check and report upon the conduct of that person. So, an auditor could not seek contribution from a company which failed to keep proper books of account if the core or primary duty of the auditor was to ensure that it did and report to the Board if it did not. Mr. Colyer contended that there can never be contributory negligence in the case of a professional advisor unless the performance of his duty was hindered by an act or default said to constitute the contributory negligence. No doubt such a situation commonly exists, but this proposition cannot be elevated to a principle of law. Whether in the context of professional relationships, not involving an auditor, the defence of contributory negligence will be denied because the professional is in breach of a core or primary duty will depend upon the circumstances. No such circumstances exist here. As I have found, the plaintiff was exposed to personal liability due to the failure of Mr. Astley to give appropriate advice and because of its own failure to assess the financial worth of proposed trust. Both the default of Mr. Astley and the default of the plaintiff were "concurrent and successive causes of" the plaintiff's loss, March v. Stramare [1991] HCA 12; (1991) 171 CLR 506 per Mason CJ at p 512, and the responsibility for that loss must be apportioned in accordance with well known principles. I am unable to distinguish between the plaintiff and Mr. Astley as to the share of responsibility for the loss which should be borne by each of them. I apportion responsibility fifty percent to each of the plaintiff and the defendants. 96. Before turning to the assessment of damages, it is appropriate to consider two matters raised by the defendants. The first is their application to dismiss this action on the ground of abuse of process due to failure to give discovery at appropriate times. The second is the contention that, regardless of any breach of contract or negligence by Mr. Astley, the plaintiff has not suffered any loss due to the implications of the sale of its shares on 1st March 1990. 97. The facts upon which the application to dismiss this action is based may be stated briefly. The action was commenced in the Supreme Court of New South Wales on 9th December 1988. The defendants were served on 15th December 1988. On 17th March 1989 the action was transferred to this Court. An application by the plaintiff for a direction that the issues of liability and damages be tried separately was refused, so the plaintiff was aware that it had to present its case on damages when the issue of liability was tried. Discovery was made from time to time. It appears that although discovery was made through the plaintiff's solicitors in this State, a considerable quantity of documents was produced for that purpose through the plaintiff's solicitors in Sydney. Discovery was extensive and included discovery from third parties. The solicitors for the parties were co-operative in the discovery and inspection process and appropriate short cuts were taken. There were some problems in identification and inspection of documents but efforts were made to overcome those problems sensibly and expeditiously. Discovery and inspection of the plaintiff's documents was still being undertaken when the trial commenced on 5th February 1993. During the course of the trial substantial further discovery was made after the plaintiff's legal advisers had decided that legal professional privilege would be waived in order to facilitate proof of the alleged reasonableness of the plaintiff's involvement in litigation. There has been selectiveness in the further discovery and I accept that although opinions of counsel have been discovered, documents, including statements of witnesses which formed part of the instructions to counsel, were not discovered. It is also asserted by the defendants that other documents have not been discovered but there is dispute as to the existence of some of them. Much of the late discovery occurred after all of the witnesses in the plaintiff's case, with the exception of Mr. James, had completed their evidence. The defendants contend that they have been prejudiced in the conduct of their defence by the late discovery and the failure to discover certain documents, which could not be overcome by witnesses being recalled or the trial being adjourned. There was no application for any witness to be recalled or for an adjournment of the trial. If either application had been made and relevant prejudice was established, appropriate orders would have been made to prevent prejudice or injustice to the defendants. 98. There is no doubting the power to dismiss the action of a plaintiff who fails to comply with rules of court or orders requiring discovery: R.59.06 of the Supreme Court Rules 1987. The principles to be applied upon an application to dismiss an action for such non-compliance were discussed in Birkett v. James (1978) AC 297. Lord Diplock, at p 318, expressed them as follows:- "The power should be exercised only where the court is satisfied either (1) that the default has been intentional and contumelious, e.g., disobedience to a peremptory order of the court or conduct amounting to an abuse of the process of the court; or (2) (a) that there has been inordinate and inexcusable delay on the part of the plaintiff or his lawyers, and (b) that such delay will give rise to a substantial risk that it is not possible to have a fair trial of the issues in the action or is such as is likely to cause or to have caused serious prejudice to the defendants either as between themselves and the plaintiff or between each other or between them and a third party." 99. This Court must also have regard to the principles set out in R.2 regarding positive case flow management and the efficient use of the court's resources by the requirement that parties must be ready for trial. 100. Usually the problem of inadequate discovery will not arise during trial because an action will not be entered for trial unless the court is assured that all pre-trial procedures and requirements, including discovery, have been completed. Here, the parties proceeded with extensive continuing discovery after the date for trial had been fixed and were willing to do so. There was no objection to that course and there was mutual desire to hold the trial date and proceed without further delay. I was informed that there was no reason why the trial could not commence on time and there was substantial and commendable co-operation between the parties to ensure that all discovery was completed and issues of admissibility of documents resolved by agreement before trial. The substantial additional discovery occurred mainly because of the decision by the plaintiff's legal advisers to waive legal professional privilege. It is unnecessary to mention the many cases which discuss the principles to be applied when considering whether an action should be dismissed as an abuse of the process of the Court. It is clear that the circumstances which will justify such a course must be rare and exceptional. In my view they do not here exist. It is likely that the defendants would have preferred to have had all of the documents before certain witnesses were cross- examined, but it has not been established that the recall of relevant witnesses or the adjournment of the trial would not have overcome any prejudice or disadvantage which the defendants perceived had occurred to them. Furthermore, I am bound to have regard to R.3.01 which provides:- "Subject to Rule 2 except where the Court otherwise orders no breach of or non compliance with a Rule which does not arise out of disobedience or contumacy in relation to a prior order of the Court shall cause any proceedings to abate or be dismissed out of the Court. In cases of disobedience or contumacy the Court shall not order that the proceedings abate or be dismissed unless there is no other way of securing obedience to or compliance with the orders of the Court. Nothing in this Rule affects: (a) the inherent jurisdiction of the Court to dismiss proceedings which disclose no cause of action known to the law or cannot by amendment be made to disclose such a cause of action, or which are frivolous, vexatious or an abuse of the process of the Court; (b) the power of the Court to grant a stay of proceedings where the justice of the case so requires." 101. Even if the late discovery was due to the disobedience of rules of court or orders or contumacy in relation to an order, and I am not satisfied that it was, I think R.3.01 requires that the drastic step of dismissing an action should be avoided unless justice admits of no other course, which accords with the principles to be applied in civil actions where an abuse of the process of the court is alleged due to failure to make discovery. I think it is very likely that in view of the vast amount of documentation in the possession or control of the plaintiff, the late discovery was due to the lack of appreciation by legal advisers of many documents and not wilfulness or contumacy. I decline to dismiss the plaintiff's action for failure to give discovery. 102. I now turn to the second of these two matters which arises for consideration in this way. On 1st March 1990 Elders Finance sold to Totners Pty. Ltd. ("Totners") all of the issued shares in the plaintiff. The terms and conditions of the sale are set out in a memorandum of agreement of that date between those two companies Elders IXL Limited ("Elders IXL") and State Government Insurance Commission of South Australia. Elders IXL participated in that transaction in that it indemnified and agreed to keep indemnified Totners in respect:- "of any claim, demand, cause of action, action, loss or expense incurred directly or indirectly by the Company (the plaintiff) in its own right or as trustee of the G.G.I. Rural Income and Growth Trust in relation to the management, administration or winding up of the said Trust." 103. This indemnity was conditional upon the Totners doing various things of a nature common to indemnities. Furthermore it was agreed that Totners would procure the plaintiff to pay to Elders Finance or otherwise as directed by it any moneys recovered by the plaintiff from any other party in relation to the Trust and to account to Elders Finance for any such moneys. It is unnecessary for present purposes to set out the precise terms of the memorandum of agreement in these respects. The evidence establishes that these terms of the agreement have been carried into effect. Elders Finance has met the financial obligations of the plaintiff arising out of the Trust since 1st March 1990 and, in conformity with other provisions of the memorandum of agreement, directions as to the conduct of the matters arising out of the Trust have been given by management of the two Elders companies. 104. The defendants contend that the effect of those arrangements is that any losses since 1st March 1990, are not the losses of the plaintiff but of Elders Finance and, or, Elders IXL, save and except possibly some nominal loss occasioned by putting the arrangement into effect. On their case the plaintiff cannot recover more than it has lost: Parry v. Cleaver [1969] UKHL 2; (1970) AC 1 at p 13 and Haines v. Bendall [1991] HCA 15; (1991) 172 CLR 60 at p 63. The plaintiff contends that the effect of the arrangement is that the plaintiff has a collateral benefit and the defendants cannot rely upon the existence of such a benefit to diminish or avoid liability to the plaintiff. 105. I have not found it necessary to resolve the issues raised by the extensive arguments addressed by both parties as the extent of the plaintiff's entitlements is to be ascertained from the true effect of the transaction recorded in the memorandum of agreement. The plaintiff remains the same entity despite the change of name and ownership of the shares. The parties to the agreement acknowledged that the plaintiff would go on defending the various actions, suits, claims and demands against it arising out of the Trust and that it would continue to prosecute this action. Those matters represent contingent assets and liabilities of the plaintiff, but it was agreed by the parties to the deed that the financial implications would not affect the purchaser, Totner. That does not mean that as from the date of the transaction the plaintiff has not suffered, or could not suffer, any loss arising out of the Trust. All it means is that any such losses were, pursuant to the terms of the sale of the shares in the plaintiff, to be, in effect, paid by Elders IXL and that any losses recovered were to be paid to Elders Finance. Any losses remain those of the plaintiff. 106. The only significance of this transaction for present purposes is, in my view, that since 1st March 1990 the plaintiff has not, in fact, been called upon to expend any of its own funds and therefore no damages for the loss of use of its money after that date may be awarded. 107. I now turn to the assessment of the plaintiff's damages. The plaintiff claims damages in respect of four primary heads of loss which were compendiously described at the trial as the Reeves claim, the YSF claim, the AMIC claim and the costs of winding up the trust. The plaintiff also seeks damages for the loss of the use of its money caused by having to pay various expenses and losses out of its own funds. I propose to deal with each of these claims in that order. 108. There were three claimants with respect to the Reeves claim, Mr. Reeves' Company and Mr. and Mrs. Reeves. For present purposes they may be treated as one claimant and referred to as "Reeves". It was on the day that GGI gave the notices to the plaintiff, 15th March 1985, that Reeves gave notices of demand with respect to the mortgages over Booka and the Young property and the other securities. Booka was eventually sold by members of the syndicate mortgage as mortgagees in possession for $500,000. Settlement of that sale was effected on 17th March 1986. Consequently there was no payment to Reeves with respect to the second mortgage. Reeves instituted various actions in the Supreme Court of New South Wales claiming moneys due pursuant to the mortgages and bill of sale. In one action Reeves sought judgment for the amount due under the mortgage over the Booka property, $490,000, together with interest. The plaintiff filed a defence and claimed rectification of the mortgage. It then took proceedings in the Federal Court of Australia on 30th September 1986 claiming that Reeves had committed breaches of ss.52 and 53A of the Trade Practices Act 1974 (Cth.) and sought relief which would have had the effect, inter alia, of removing its obligations to Reeves under the mortgage and also for rectification of the mortgage to include that it had mortgaged Booka to Reeves as trustee and to limit its liability to the trust assets. In brief terms, the alleged breaches of the Trade Practices Act were that Reeves had failed to make certain disclosures to the plaintiff when obliged to do so and that certain representations were false or misleading. The detail of the plaintiff's claim is set out in the judgment of Gummow J in Elders Trustee and Executor Co. Ltd. v. E.G. Reeves Pty. Ltd. and Ors. [1987] FCA 332; (1987) 78 ALR 193. In order to be able to proceed in that Court the plaintiff was ordered, on 9th October 1986, to deposit $484,000 in an interest bearing deposit, to abide the order of the court and it did so on 9th November 1986 from its own funds. At the same time Reeves was restrained from proceeding further with its action in the Supreme Court of New South Wales with respect to the amount due under this mortgage. After a lengthy trial which commenced on 16th February 1987, the plaintiff's action was dismissed. Reasons for judgment were given on 29th September 1987 and judgment was entered on 12th February 1988. The plaintiff did not appeal. Interest continued to run pursuant to the mortgage and, in all, the plaintiff had to pay to Reeves the sum of $699,473.75. This amount was paid as follows: $400,000 on 4th November 1987 and the balance on 11th July 1988. Of the balance $166,625 came from the interest bearing deposit, which included interest, and the remainder was paid by the plaintiff out of its own funds. 109. After Gummow J delivered judgment, there were negotiations betwee n the plaintiff and Reeves through their respective legal advisers as to the other outstanding litigation and costs. According to Mr. James, the plaintiff, after taking legal advice, decided to cut its losses and agreed to pay to Reeves the further sum of $205,646.57. Mr. James prepared a calculation of the potential loss to the plaintiff should the various actions proceed on best and worse case bases with respect to each action. He expressed the best position in money terms at $174,225 and the worst at $319,958. He agreed to settle after discussing the matter with Mr. Ware. A deed incorporating the terms of settlement was executed by Reeves and the plaintiff on 17th April 1990 and the amount due to Reeves was paid during April 1990. After the sale of the Young property and the payment due with respect to the Eagle Star mortgage and other expenses and liabilities, there remained $164,967 which was invested in interest bearing deposits. This sum and the interest earned was used to pay the amount due to Reeves. According to Mr. James, there was an excess of about $49,000 after this settlement which was retained by the plaintiff, however, his calculation made for Mr. Ware shows an excess of $80,748.42. Under this head, the plaintiff claims damages to be calculated as to the total amount paid to Reeves, namely $905,120.32 and all of the costs which it paid to Mr. James and to its solicitors on a solicitor and client basis incurred in relation to the Reeves claim and in prosecuting the action in the Federal Court. 110. The defendant's case upon this head of damages is that the plaintiff is not entitled to any damages for interest beyond 30th June 1986 when it should have paid the amount due under the mortgage which was then $487,005 including interest and that it is not entitled to any costs or other expenses of the litigation or any damages by way of interest. 111. I accept that the amount due to Reeves at that time after the payments which had been made from the proceeds of sale of pigs and plant and machinery is as calculated by the defendants and upon allowing interest at 20% to 30th June 1986. 112. The evidence establishes that in June 1985 the plaintiff had received an opinion from senior counsel that it was personally liable for the debts of the Trust, including any shortfall under the mortgages and other securities. It had ample funds to pay the Reeves claim but chose not to do so. 113. In assessing damages under this head an important question arises as to whether the plaintiff may recover from the defendants all of the costs, expenses and interest which it had to pay to Reeves. I have mentioned the amount which was owing to Reeves on 30th June 1986, after the sale of Booka and the Young property, namely $487,005. In the end result it had to pay Reeves $903,120.32. It also paid Mr. James $437,123.39, a substantial, but unproven, part of which was incurred with respect to the proceedings in the Federal Court. The plaintiff paid to its solicitors legal fees amounting to $741,324.64 with respect to the Reeves claim. As might be expected, the defendants contend that total payments of nearly $2m, after allowing some part of Mr. James' fees for other aspects of the winding up, is so unreasonable as to not be recoverable from the defendants. They point to the well known principle expressed in Short v. Kalloway (1839) 11 A. and E. 29 at 31:- "... no person has a right to inflame his own account against another by incurring additional expense in the unrighteous resistance to an action which he cannot defend." 114. The plaintiff contends that its conduct in defending the Reeves claim and prosecuting its own action was reasonable in all the circumstances and was supported by legal advice. 115. The plaintiff had the advice of yet another senior counsel. His opinions were admitted into evidence. The first was given on 15th October 1986 after the plaintiff had commenced the action in the Federal Court. It is clear that he did not have a good deal of information. He stated that the only opinion which he expressed, "as a legal matter is that on the facts known to me there is a proper basis for instituting the proceedings by way of the properly drafted Statement of Claim". The only other opinion which he expressed was on 16th January 1987, after he had received extensive instructions. He concluded by saying:- "In summary, my view is that the present action from the point of view of the Trustee is a very difficult one with no certainty of success but with some prospects." 116. Careful consideration of those opinions and the reasons for judgment of Gummow J does not suggest that the plaintiff was taken by surprise at the trial or that there was some unforeseen circumstance which caused an apparently sound claim to be defeated. At best the plaintiff's action was speculative. The opinion of his senior counsel was hardly encouraging. I am unable to accept that the prosecution of the action at such enormous expense was justified given that the plaintiff's goal was to avoid paying the Reeves claim. There was no evidence to suggest that any sound commercial consideration was brought to bear in the decision to prosecute the action. A reasonable analysis of the facts and circumstances as they existed at the time leads to the conclusion that the plaintiff was not justified in resisting the Reeves claim. 117. The plaintiff appealed to the principles relating to mitigation of damage in order to justify its action in the Federal Court and in opposing the Reeves claim. In my view, given the advice of the senior counsel and the known facts and circumstances at the time, it could not now be said that the plaintiff would have failed to mitigate its loss if it had simply paid out the Reeves claim. Despite the forceful argument of the plaintiff to the contrary, the action taken by it was not in appropriate mitigation of its loss. It was an attempt to offset personal liability for the Reeves claim by the prosecution of a speculative action that was, almost inevitably, bound to fail. Consequently, it was unreasonable and the breach of duty by Mr. Astley was not causative of these expenses and losses. 118. The defendants also contend that the plaintiff should have applied to the Reeves claim the surplus of funds upon the sale of the Young property and the profits from trading at that property before the sale. After the plaintiff assumed the management of the Trust, it continued the trading operation at the Young property. There was dispute between the first mortgagee and Reeves about various matters. Mr. James caused the plaintiff to institute proceedings in the Supreme Court of New South Wales for an order for sale of the property and for orders as to the distribution of the proceeds of sale. Those proceedings were necessary. The documentary evidence presents a confusing picture as to what was the amount of the net proceeds of sale. The defendants contend that the evidence discloses that the amount is $200,160 and was available to be paid in part satisfaction of the Reeves claim. The plaintiff is obliged to prove all facts upon which its claim for damages is based. Having considered the evidence and attempted various calculations, I accept the calculation of the defendants as being probably accurate. The majority of this amount, together with interest, was in fact applied to the Reeves claim and the balance was probably applied to other expenses incurred by the plaintiff in the winding up. It is convenient to deduct this amount from the Reeves claim. 119. The evidence does not permit a finding that there was any amount available from the proceeds of trading at the Young property to be applied in reduction of the Young claim. Whilst there is no evidence to establish the reasonableness of each of the expenses set out in the amounts of that trading, I accept that there was no surplus of funds. There was an excess of income over expenditure in trading of about $100,000, but there were costs which were not of a trading nature amounting to $128,397.02 which were paid, in part, from the trading surplus. Some of those expenses may not be justified but others clearly are and so I do not reduce the Reeves claim on account of the trading profits. 120. Thus far I would allow the Reeves claim at $487,005 less $200,160, ie $286,845. In addition I allow the reasonable legal costs incurred by the plaintiff seeking advice as to the Reeves claim and generally as to obtaining advice as to whether it was personally liable. Such costs are to be calculated on the basis of what would be allowed a solicitor and client basis upon a taxation of costs in the Supreme Court of New South Wales. 121. I consider the claim for Mr. James' costs with respect to the Reeves claim under the head of the costs of the winding up. 122. I turn to the YSF claim. YSF Pty. Ltd. ("YSF") provided pig feed during the period from December 1984 to March 1985 which was used at the Young property. The cost of that feed was $82,515.96 which was not paid by Golden Grove Industries Pty. Ltd. or by the plaintiff. YSF instituted proceedings in the District Court of New South Wales at Young on 16th July 1986 for recovery of that amount and interest. I have mentioned that in June 1985 the plaintiff had the opinion of senior counsel advising that it was personally liable for the debts of the Trust. In October 1985 it had an opinion from another member of the senior bar that it was liable for the debt due to YSF. The plaintiff defended the proceedings which were transferred to the Equity Division of the Supreme Court of New South Wales. In May 1988 the plaintiff was advised by its solicitors that it was personally liable for this debt. It continued to defend the proceedings because of claims which might be made by other creditors of the Trust should judgment be obtained by YSF. In early 1991 there was a "readiness" hearing before Young J who expressed the tentative view that the plaintiff appeared to have little prospects of successfully defending the proceedings. The limitation period with respect to the other claims expired not later than 15th March 1991, six years after the manager ceased to manage the Trust. Nevertheless the plaintiff refused to settle the YSF claim even though it had sufficient funds to do so. It decided simply to put off the evil day for payment for as long as possible. 123. The proceedings went to trial and Young J found for YSF. By that time, 22nd April 1991, the claim had grown to $173,314.58. The plaintiff has appealed and the appeal is to be heard shortly. 124. The plaintiff claims the full amount due to YSF should the appeal be unsuccessful, including additional interest and all legal costs on a solicitor and client basis incurred with respect to the claim and the proceedings. 125. The defendants contend that it has not been established that Mr. Astley's conduct in any way caused the plaintiff to incur any liability to YSF. I reject that contention. In my view it is very likely that if Mr. Astley had given the advice which he should have given, steps would have been taken to ensure that the plaintiff did not have any personal liability for this debt. In the alternative, the defendants contend that damages under this head should be confined to the extent of the original indebtedness, $82,515.96, in the event that the appeal is unsuccessful and that I should assess as a contingency the prospects of the plaintiff succeeding on the appeal. As the determination of the appeal is imminent, I decline to assess the prospects of the liability of the plaintiff being maintained. I do not think that, in the circumstances, the defendants should bear the consequence of the plaintiff's decision to defend the proceedings in order to avoid other creditors and to put off payment for as long as possible. The evidence does not establish that other creditors did not press claims because of the plaintiff's attitude to the YSF claim. The plaintiff could have paid the YSF claim at an early stage without prejudice to its rights with respect to other claims. Delaying payment has had a consequence opposite to mitigation. In my view damages under this head should be limited to $82,515.96, together with some reasonable allowance for legal fees incurred to enable the plaintiff to take advice at an early stage. Those fees are to be calculated on the basis of what would be allowed on a solicitor and client basis upon taxation by the Supreme Court of New South Wales. 126. The AMIC claim arises in this way. Australian Mortgage Insurance Corporation Limited ("AMIC") carried on the business of a mortgagor insurer. It insured the syndicate mortgage to the extent of $325,000. When Booka was sold there remained a shortfall of $409,342.15, including outstanding interest. AMIC exercized its right of subrogation and each member of the syndicate assigned to AMIC such amount as was owing to each of them as at 10th April 1986, the total amount of which is the amount of the shortfall. On 12th January 1988, AMIC instituted proceedings against the plaintiff in the Supreme Court of New South Wales for recovery of the shortfall and interest. The plaintiff filed a defence and asserts, inter alia, that it was the common and continuing intention of the plaintiff, AMIC and the members of the syndicate that the mortgage bound the plaintiff to the extent only of the assets of the Trust. The plaintiff raises various matters by way of defence and seeks rectification of the mortgage. It is unnecessary, for present purposes, to set out the issues raised by the pleadings in those proceedings. The plaintiff and the defendants in this action contend that the plaintiff is likely to succeed in its defence. I accept the evidence of Mr. James that he decided that the plaintiff should defend the proceedings after receiving advice to that effect from the counsel who had been retained to advise, including senior counsel. The proceedings have not yet come to trial. None of the parties has taken steps to ensure a trial at the earliest possible time. The plaintiff has been content to allow the matter to drift along. Nevertheless it is likely to come to trial during this year, possibly in July or August. If the plaintiff succeeds, then there will not be any damages under this head, except perhaps by way of compensation for any reasonable legal costs expended but not recovered. If judgment is entered against the plaintiff, it seeks damages in the same amount, together with its costs in those proceedings. 127. The plaintiff seeks a declaration that the defendants are liable to pay to the plaintiff such amount, if any, as it must pay to AMIC, including costs together with its own costs of defending the action on a solicitor and client basis. The defendants contend that I should now finally dispose of this claim by assessing the relevant contingencies and that upon doing so I should accept that the plaintiff will succeed in its defence and therefore not have to pay any amount to AMIC. Consequently, no damages should be awarded. 128. There are considerable difficulties in adopting that approach. In effect I am being asked to express a view about the prospects of the plaintiff successfully defending the proceedings without any knowledge of the evidence which may be led on the submissions made by AMIC. If the proceedings were not to be heard for some years, such a course may be necessary in the interests of finalizing this litigation. However, as it is likely that they will be heard relatively soon, I think the plaintiff's contention is preferable. 129. In my view the defence of the proceedings by the plaintiff has been shown to be reasonable. Mr. Astley's breach of duty is causative of any loss which the plaintiff may suffer with respect to the syndicate mortgage. I am prepared to make the type of declaration sought by the plaintiff. 130. I shall hear the parties as to its terms and whether any conditions should be imposed upon the plaintiff or consequential orders made as it is implicit in the approach that I have taken that the plaintiff conduct the litigation appropriately and at reasonable cost. Of course the declaration must be expressed in terms which reflect my decision as to apportionment of responsibility. 131. The costs of the winding up of the Trust are substantial on the plaintiff's case. I have mentioned Mr. James' fees. In addition there are legal fees and costs apart from those incurred in the claims which I have mentioned thus far. The defendants contend that none of the costs of the winding up should be recovered by way of damages as it has not been proved that Mr. Astley's breach of duty caused, in any way, the winding up of the Trust. 132. Whether there is a causal link between Mr. Astley's breach of duty and the winding up of the Trust may be tested by considering what would probably have occurred if he had properly discharged his duty to the plaintiff. It must readily be accepted that the plaintiff was very keen to be the trustee. It is reasonable to conclude that the promoters of the Trust were anxious that the plaintiff act in that capacity. It is likely that had the plaintiff insisted that it be excluded from personal liability, the promoters would have agreed and the relevant documents would have been drawn accordingly. Had that occurred the Trust would still have failed. Whether or not the plaintiff was personally liable, the debts of the Trust had no bearing upon its solvency. Once public subscription did not occur the winding up of the Trust was inevitable regardless of Mr. Astley's breach of duty. In my view the costs of the winding up are not recoverable by way of damages from the defendants. 133. I have rejected the possibility that if Mr. Astley had given the advice which he should have given the plaintiff would never have become the trustee and therefore the winding up costs would never have been incurred by the plaintiff. The evidence as to the enthusiasm of the plaintiff for being involved in this type of trust prevents such a finding. The insolvency of the Trust existed independently of Mr. Astley's breach of duty and the necessary causal link does not exist. 134. That is not to say that the plaintiff is not entitled to damages for the reasonable costs incurred in responding to the Reeves claim, the YSF claim and the AMIC claim consistent with the conclusions which I have expressed as to the extent of the defendants' liability with respect to each of those claims. In the winding up proceedings Mr. Wood filed an affidavit in which he deposed to the charges which would be made by the plaintiff in the winding up, namely $40 per hour for the chief executive, $15 per hour for a trust officer and $10 per hour for a secretary and a typist. At no time did the plaintiff inform the court that it proposed or needed to engage Mr. James. 135. His fees have been charged at rates between $175 per hour in 1986 to $320 per hour in 1992. Members of his staff charged at lower rates. All of these rates were in excess of those recommended by the professional body of insolvency practitioners on the scale approved by the Supreme Court of New South Wales. Needless to say they were far in excess of the costs sought by Mr. Wood. Mr. James' fees could not be regarded as reasonable in the present context. 136. I would have allowed the damages for the reasonable cost of the responding appropriately to the claims fixed upon the basis of the costs set out in Mr. Wood's affidavit. It has not been established to my satisfaction that the engagement of Mr. James was necessary and reasonable. I have no doubt that it was convenient to the plaintiff to pass over the winding up to him, but his costs cannot be recovered from the defendants. No claim has been made for the work done by Mr. Wood, Mr. Bacon or Mr. Ware and there is no evidence upon which damages could be calculated for the cost of their work. 137. The plaintiff also claims damages for loss of use of its money in accordance with the principles discussed in Hungerfords v. Walker [1989] HCA 8; (1988) 171 CLR 125. The evidence establishes that prior to 1st March 1990 amounts paid by the plaintiff on account of the Trust were paid out of its own funds. Despite the detailed argument of the defendants to the contrary, the evidence of Mr. Armstrong, which I accept, establishes that the plaintiff earned interest on the substantial amounts of its own money, which it had invested with associated companies. If it had not been obliged to pay monies for debts and losses of the Trust, it would have invested those monies with associated companies at the interest rates which the other investments earned. After 1st March 1990 other companies, mainly, if not solely, Elders Finance, paid all such outgoings. Consequently the plaintiff was not deprived of the use of its money and no damages can be awarded with respect to such payments after this date. 138. With respect to payments made before 1st March 1990 and which are the subject of the award of damages, the plaintiff is also to have damages for the loss of use of that money at the rates of interest it was receiving from time to time with respect to the investment of money with associated companies or at the prevailing commercial rates whichever is the lower. I shall give the parties the opportunity to agree the amount of such damages. If they are unable to do so, I shall request a Master to enquire into that matter and make a report to me as to the extent of the loss of the plaintiff. 139. I propose to give the parties the opportunity of considering these reasons and speaking to the terms of the judgment which should be made.