Cassis & Anor. v. Kalfus (No.2) [2004] NSWCA 315

Cassis & Anor. v. Kalfus (No.2) [2004] NSWCA 315 | Case summary | Zoe

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The principal claim 4 The duties asserted on appeal, as duties owed by a solicitor to the solicitor's client or alternatively by one joint venturer to another, were - (a) to advise Mr Cassis to obtain independent legal and financial advice; (b) to document the joint venture agreement; (c) to advise Mr Cassis that a fundamental term of the joint venture, namely the proposal to pool and share profits, was unlawful by operation of s 119 of the Legal Profession Act ; (d) not to mislead Mr Cassis as to Mr Kalfus' true financial position and the true earnings of his legal practice and his ability to fulfil the representations made to Mr Cassis; and (e) to disclose Mr Kalfus' true financial position and the true earnings of his legal practice. 5 The judge considered that, with one qualification, the relationship between Mr Cassis and Mr Kalfus in relation to embarking on the joint venture was not a solicitor/client relationship. He said, as I read his reasons referring to a duty of care as between solicitor and client, that no case established that "in commercial dealings between two parties at arms length there is a relevant duty of care on one party to the other simply because the party on whom the obligation is alleged to lie happens to be a lawyer." 6 Mr Kalfus had acted as solicitor for CMA and as solicitor for Mr Cassis, but it did not follow that he was acting as solicitor for Mr Cassis when they were discussing a joint venture between them. The judge found that Mr Cassis "with full knowledge of all relevant circumstances was prepared to accept CMF's terms", and there was no occasion for Mr Kalfus to advise Mr Cassis on commercial or prudential aspects of taking over the business. Mr Kalfus did not purport to act as Mr Cassis' solicitor, either in advising him on legal aspects of taking over the business or in documenting the transaction: the letter of 23 January 1989 was by particular request made by Mr Cassis, plainly not in fulfilment of a solicitor's responsibilities in acting for a client. No evidence from Mr Cassis provided a sound basis for engagement of Mr Kalfus as his solicitor in relation to entry into or documentation of the joint venture, or for expectation that Mr Kalfus would act as his solicitor in those respects. The judge's finding as to the relationship has not been shown to be incorrect. 7 Mr Kalfus was not otherwise acting for Mr Cassis as his solicitor at the time, so as to raise a possible conflict of interest in also dealing with Mr Cassis as joint venturer. No requirement arose that he advise Mr Cassis to obtain independent advice. Even if it had, there was no evidence going to what the independent advice would have been or how it would have affected Mr Cassis' conduct. 8 The qualification, in the judge's view, was Mr Cassis' allegation "that he was not adequately advised concerning the potentially illegal or unenforceable obligation assumed by [Mr Kalfus] with respect to sharing the proceeds of his practice with another person": that is, the duty earlier mentioned to advise that the proposal to pool and share profits was unlawful. The judge thought the qualification necessary "where by reason of the solicitor's special knowledge, he may find himself committing his co-venturer to a transaction that may be unenforceable or illegal". 9 I doubt that, if the relationship between Mr Cassis and Mr Kalfus was not otherwise that of solicitor and client, it became such a relationship to the extent that the joint venture dealt with the profits of Mr Kalfus' legal practice, or that if Mr Kalfus was not otherwise acting as Mr Cassis' solicitor he came under a duty to give legal advice to Mr Cassis with respect to that aspect of their commercial dealing. It does not matter. There was evidence that an accountant, Mr Loewy, told Mr Cassis that it was contrary to s 119 to share profits because Mr Cassis was not a legal practitioner, and the judge considered that any illegality had "little impact" on Mr Cassis because he nonetheless went ahead. It was submitted that the letter of of 23 January 1989 post-dated the Loewy occasion, which it did by a short time, and that it amounted to Mr Kalfus' implicit representation that the sharing was nonetheless permissible whereby any warning on the Loewy occasion was swamped. In my opinion, the judge's findings that Mr Cassis went ahead believing that the sharing of profits would be honoured, and that whatever effect s 119 might have had did not trouble him, was well open. It has not been shown to be incorrect. 10 The substance of Mr Cassis' case, then, lay in the duties concerning Mr Kalfus' financial position and the earnings of his legal practice, as fiduciary duties owed by one joint venturer to another. The judge was of the view that, with the exception of the operation of s 119, "there was no relevant duty of care … as a fiduciary that was breached by [Mr Kalfus] as claimed in these proceedings". He immediately said that Mr Cassis and Mr Kalfaus "entered into a business relationship". From these last words it seems that he considered that, with the exception mentioned, the relationship was that of parties to a business relationship which did not carry with it fiduciary duties. In my opinion, however, Mr Kalfus owed to Mr Cassis fiduciary duties, arising from the relationship between him and Mr Cassis as prospective joint venturers, extending to the duties concerning Mr Kalfus' financial position and the earnings of his legal practice. 11 A fiduciary relationship may arise during negotiations for a partnership or a joint venture, before any partnership or joint venture agreement has been finally concluded, if the parties have acted upon the proposed agreement, or have acted on an informal arrangement to become partners or joint venturers and taken steps to establish or implement the partnership or joint venture (United Dominions Corporation Ltd v Brian Pty Ltd (1985) 157 CLR 1 at 6, 11-12, 16). If partnership is not involved, whether there is such a relationship depends upon the nature of the particular joint venture and the content of the obligations which the parties to it have undertaken (ibid at 10-11). In the present case Mr Cassis and Mr Kalfus were to share in profits, the profits from Mr Kalfus' legal practice and from the business of IGC. As a non-lawyer, Mr Cassis depended on Mr Kalfus for the conduct of the legal business from which the former profits would come. Mr Kalfus was inexperienced in gas water heaters, and depended on Mr Cassis and his knowledge of the business of IGC for the latter profits. There had to be, and no doubt at the time was, the mutual confidence and trust between them which underlies most consensual fiduciary relationships (ibid at 8, 12, 16). I consider that the joint venture relationship between Mr Kalfus and Mr Cassis was fiduciary. 12 To describe a relationship as fiduciary is only the first step: it is necessary to determine what duties thereby arise. I do not think that there arose all the duties asserted by Mr Cassis on appeal. 13 One intending joint venturer normally does not have to advise the other to obtain independent legal and financial advice. How the joint venture agreement is to be documented is a matter for both joint venturers, and there was nothing to establish that Mr Kalfus rather than Mr Cassis was obliged to do more by way of documentation than was in fact done: in any event, it was left entirely speculative that doing something more would have meant that Mr Cassis did not leave his employment with CMA and involve himself in the purchase and conduct of its business. I doubt that advice upon the legality of sharing the proceeds of the practice was required by the solicitor joint venturer to the lay joint venturer, but for the reason earlier given it does not matter. 14 As a general proposition, one intending joint venturer is not obliged to disclose to the other its financial position, although in some circumstances disclosure may be required. Misrepresentation is another matter: it is inconsistent with mutual trust and confidence. Mr Kalfus was under a fiduciary duty not to mislead Mr Cassis by misrepresentation of his financial position and the earnings of his legal practice, and if Mr Cassis' case was to succeed it was necessary and sufficient for breach of duty to establish misrepresentation of that kind. 15 Mr Cassis pleaded his case, in this respect, as breaches of duty in that Mr Kalfus - "(e) Mislead [Mr Cassis] as to his true financial position by representing that his legal practice was earning $200,000 net per annum when in fact it was earning less than $70,000 net per annum and by representing that he was able to fulfil the representations made to [Mr Cassis'] concerning pooling of profits and contributing to capital.

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(f) Failed to disclose to [Mr Cassis] his true financial position, the true earnings of his legal practice and the inability to fulfil the representations made to [Mr Cassis]." 16 The representations concerning pooling of profits and contributing to capital picked up in these paragraphs were rather obscure. So far as going beyond the earnings of $200,000, they appear to have been in the earlier pleading that Mr Kalfus would meet and be responsible for one half of any capital contribution required by or in respect of the new company. 17 The representation as to earnings of $200,000 was, on the evidence in Mr Cassis' case, made orally: later in these reasons I set out Mr Cassis' evidence. The judge said that he was "not persuaded that this was a representation made by the defendant to the first named plaintiff". This finding of fact was not challenged on appeal. 18 But the judge went on, referring to the letter of 23 January 1989 - "However, it is fairly clear from the terms of the above letter that the defendant was representing, or at least implying, that his legal practice was netting, or could be netting, an amount in excess of $100,000 per year, sufficient to make a contribution to the 'pool' that was said to be established by the joint venture." 19 The judge then said that Mr Kalfus "said in evidence that his earnings at that time never rose above $70,000 per year before tax". This was not entirely accurate. Mr Kalfus' evidence had been that the net income before tax had been between $70,000 and $100,000. 20 The finding thus made was of a misrepresentation as to the earnings of Mr Kalfus' legal practice. It was not the specific misrepresentation pleaded, but would fall within the pleaded case because there was a failure by misrepresentation to disclose the true earnings of the legal practice. 21 It did not follow that there was breach of fiduciary duty as to true financial position or ability to fulfil the representations. Mr Kalfus' financial position and capacity went beyond the earnings of his legal practice, and was but ineffectually addressed in the conduct of Mr Cassis' case at the trial. Mr Kalfus contested on appeal that the letter conveyed the representation as to earnings of $100,000, and it may be that what the judge said was not meant to be a concluded view. Nonetheless, on the finding Mr Cassis had a basis for breach of fiduciary duty by misrepresentation, through the letter of 23 January 1989, that the earnings of Mr Kalfus' legal practice were in excess of a net $100,000 per annum. 22 There was widespread contest at the trial over reliance by Mr Cassis on Mr Kalfus' acts or omissions, as solicitor or joint venturer. For the fall-back claims, Mr Cassis suffered adverse findings by the judge. The judge said - "65. … Throughout all the transactions [Mr Cassis] knew perfectly well what he was committing himself to do, and was prepared to undertake obligations to keep IGC afloat. He accepted in the case of the White and Vesaro transactions that [Mr Kalfus] could provide a guarantee only and in the case of the Roden transaction he was providing no support at all.

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I would not have given up what I regarded as my secure executive position at CMA unless I believed that the Defendant was able to fulfil and would in fact, fulfil his side of the bargain. He never informed me of any impediment to his doing so." 31 This left unclear what Mr Cassis regarded as necessary to fulfil Mr Kalfus' side of the bargain, more particularly that earnings of $100,000 was part of what was necessary - indeed, it referred to drawings from the combined profits, with the uncertainty of what profits IGC would have extending to uncertainty of the profits from the legal practice. 32 To this, then, was added Mr Kalfus' evidence of direct relevance to what the letter of 23 January 1989 would have conveyed to Mr Cassis, and to its effect on his conduct as a representation of the earnings from the legal practice. He said in cross-examination that in a series of conversations in December 1988, more than once, he told Mr Cassis that he had not earned an income from the practice beyond $100,000 net and that the practice was not earning more than that figure. He said that "I had been telling him that I had been earning about that sort of income and I didn't know what I would earn in the future, so there was no certainty I was going to go over that figure", and that Mr Cassis "acknowledged that that was the position because he had to rely upon what I told him". 33 These conversations had not been put to Mr Cassis. Mr Cassis was not called to give further evidence about them. The judge made no finding as to the conversations. 34 Quite apart from the conversations, it would not be easy for this Court to find whether or not the letter of 23 January 1989, so far as it contained a representation as to earnings of $100,000, affected Mr Cassis' conduct. Mr Cassis had been disbelieved in his evidence of direct representation as to earnings of $200,000. He had been found to have known what he was committing himself to, and to have made his own decisions in relation to the later transactions, with disbelief of his evidence to the contrary. A reading of Mr Cassis' evidence shows, in the cold print, a witness who could be called inconsistent and argumentative, whose credibility would be better assessed with the benefit of seeing and hearing him so as to judge whether these were marks of the man or of lack of credibility. 35 When there is added the unresolved issue of Mr Cassis being told that the practice was not earning more than $100,000, which if correct would have meant that Mr Kalfus would be contributing no income to the joint venture, what the letter conveyed to Mr Cassis and its effect on his conduct can not be found in this Court. The manner in which Mr Kalfus' evidence of the conversations emerged could cause one to doubt it, but the judge made no general assessment adverse to Mr Kalfus' credibility and I do not think the evidence can be put aside. There were numerous conflicts between the evidence of Mr Kalfus and Mr Cassis, and a holistic approach to fact-finding is necessary. 36 In my opinion, therefore, while the judge's disposal of the principal claim cannot stand, this Court is not in a position to decide whether or not Mr Cassis made out a case for damages for breach of fiduciary duty, even before getting to quantification of any damages. In this I include that I do not think Mr Cassis would be statute barred or defeated by delay in equity, as Mr Kalfus submitted. The limitation defence was the subject of an earlier appeal, see Cassis v Kalfus [2001] NSWCA 460. It is sufficient, in the light of what was there said, that I do not think Mr Cassis suffered loss upon entering into the joint venture or at any time prior to mid-1990. The joint venture may have been successful, sufficient to make up for the loss of Mr Cassis' (relatively) secure employment. It may not have been successful. That the distributorship obtained from CMF was only for three years, without certainty of renewal, did not mean that failure of the joint venture was inevitable, although as it turned out non-renewal was significant to the continuance of the business. There was no evidence to the effect that the price paid for the business was more than it was worth. It was not shown that loss was suffered until well after mid-1990, when the business in fact fell upon hard times. 37 There must be a new trial of the principal claim. This is an unpalatable conclusion. There have already been two trials of the proceedings, and a third trial raking over events of 1988 and subsequent years has inherent difficulties and imposes significant financial and other burdens on the parties. I nonetheless do not think it can be avoided.

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The fall-back claims 38 If Mr Cassis is entitled to succeed on the principal claim, it may be that he is foreclosed from succeeding on the fall-back claims because all recoverable loss is caught up under the principal claim. Whether or not that is so, in the manner he put his claims success on the fall-back claims would bring less recovery than success on the principal claim. 39 The appeal in relation to the fall-back claims in any event has great difficulties. On fall-back claims 1, 2 and 3, he encounters the judge's findings that he knew what he was committing himself to, and made his own decisions whether to proceed or not. In fact Mr Kalfus advised Mr Cassis against entering into the Roden transaction, and on fall-back claim 3, although the judge did not specifically refer to it, there was evidence that Mr Kalfus advised Mr Cassis of the perils of insolvent trading. As to fall back claim 4, so far as Mr Kalfus may have promised to contribute to half the losses of the business, Mr Cassis did not sue in contract. A fiduciary duty as joint venturer to "meet and be responsible for half of any losses and liabilities of [Mr Cassis] arising out of the operations of IGC" was pleaded, but any such obligation could arise only as part of an accounting between the joint venturers and, as the judge expressly noted, no claim was made for an account to be taken in equity. 40 Notwithstanding this, I do not think the new trial should be confined so as to preclude Mr Cassis from maintaining fall-back claims in relation to the White-Vesaro and Roden transactions and trading while insolvent, to the extent that they are pleaded and if he be so advised. A new trial is on all issues unless a different course can properly be taken (see for example Pateman v Higgin (1957) 97 CLR 521 at 527; Quinn v Rocla Concrete Pipes Ltd (1986) 6 NSWLR 586 at 602). Questions of credibility in the dealings between Mr Kalfus and Mr Cassis and reliance by Mr Cassis on Mr Kalfus cannot be quarantined between undertaking the joint venture and the later transactions. It is not necessary, and is undesirable, to say more about these fall-back claims. Fall-back claim 4, however, was never an issue and is not maintainable.

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CIRCUMSTANCES 43 Mr. Cassis worked in France between 1970 and 1981 as an engineer for the firm Chaffoteaux et Mauri (CMF), at that time the world's largest manufacturer of instant gas hot water heaters. 44 Mr. and Mrs. Cassis migrated to Australia in 1981; and in 1982, Mr. Cassis began doing work for CMF in Australia, through a subsidiary established in Australia, namely Chaffoteaux et Mauri Pty. Ltd. (CMA). Mr. Cassis became managing director of CMA. Mr. Kalfus acted as a solicitor for CMA, and was an alternate director of it. 45 A friendship developed between Mr. Cassis and Mr. Kalfus. Mr. Kalfus acted for Mr. Cassis in the acquisition of a residential property in Coogee in 1984. 46 CMA expanded its business between 1982 and 1988. In 1983, its turnover was $425,824.00, and in 1988 it was $1,986,985.00. By 1988, Mr. Cassis was on a salary package which was stated to be the equivalent of $100,000.00 per annum, made up of a salary of about $85,800.00 per annum, the provision of a car and payment of superannuation. 47 In 1988, Mr. Cassis and Mr. Kalfus discussed the possibility of entering into a joint venture directed to taking over the business conducted by CMA. Mr. Cassis raised the matter with Mr. Eskander of CMF in Paris in July 1988. 48 Mr. Cassis and Mr. Kalfus agreed that, if CMF allowed them to take over the business of CMA, they would form a company International Gas Corporation Pty. Limited (IGC) for this purpose; and that they would both become directors and shareholders of IGC. 49 On 23 January 1989, Mr. Kalfus executed a document on the letterhead of his legal practice, in the following terms: Re: Legal Practice of MARCEL, KALFUS & CO This letter is by way of confirmation of the agreements reached between ourselves concerning International Gas Corporation Pty Ltd and the above practice. I hereby confirm and acknowledge that you shall as from 1st February 1989 be entitled to an one half share of the net profits of the above legal practice. In determining the net profits there shall be deducted from the gross fees received in any tax year or trading period, all operating expenses including wages, rent, equipment leasing charges and bank interest and other charges and income tax. I hereby further confirm that the net profit from the legal practice and from International Gas Corporation Pty Ltd (IGC) and all other jointly related companies or businesses operated by us jointly are, to be pooled or aggregated and then shared by us on an equal basis. I also confirm that you shall be entitled during an annual period of operation of IGC and related entities to draw the sum of $100,000 as an annual salary as managing director of the company. Similarly I shall be entitled to draw the sum of $100,000 as from the gross fees received by Marcel Kalfus & Co on account of my share of such profits. Our respective advance drawings against profits may exceed the sum of $100,000 but in the absence of express agreement between ourselves the same shall not in any year exceed the total of the permissible advance on drawings by more than twenty-five per cent, ie in the first year such advance drawings must not exceed $125,000. We may by agreement, at any time vary the amount of advance drawings in any year. All amounts paid by way of advance drawings shall be debited to the account of share of profits of yourself and myself respectively. If the amount of advance drawings of either of us in any accounting period exceeds a half share of the net profit of IGC (and its related entities) and the legal practice, then shall excess will be debited against such person's account for share of profits in the ensuing year. I trust this letter provides you with the comfort you desire concerning our new and exciting venture. 50 Also in evidence were letters from Mr. Kalfus to CMF in October 1988 and January 1989 concerning terms of a proposed agreement for the acquisition of the business of CMA, dealing among other things with a proposed sole agency agreement which CMF was to grant. In the second of those letters, Mr. Kalfus wrote the following: I note that at the conference in July, 1988 you had agreed to the initial terms being three (3) years with a right to the local distributor to renew for a further term of three (3) years. If you wish me to supply you with a copy of my notes taken at that conference, I will be happy to do so. Therefore, I suggest that this Clause provide for an initial term of three (3) years with an automatic renewal for a further three (3) years at the end of the initial period unless I.G.C. has not less than six (6) months prior to the end of the initial term notified Chaffoteaux et Maury S.A. that it does not wish to renew the Sole Agreement. By the way, it might be noted, that on page 5 of my fax to you dated 5th October, 1988 under the heading of "Clause 4" I had made reference to the right of renewal by the purchaser for a further term of three (3) years. From the outset, Sami Cassis has made it clear that a term of only three (3) years is not sufficiently long considering the capital investment and time and effort which will be made to expand the business in Australia. 51 In a facsimile sent to Mr. Kalfus and Mr. Cassis on 23 January 1989, Mr. Eskander responded to this as follows: Clause 4: did agree in July that the INITIAL period be 3 years and that is exactly what is written in our draft. The renewal period however is a different story and we cannot accept, nor did we ever accept, renewals for more than one year. As for your proposal of leaving the renewal to the decision of just the Purchaser is totally unacceptable. The right of cancelling or reviewing must be reciprocal. 52 Mr. Kalfus met Mr. Eskander in Paris in February 1989; and on 27 February 1989, they both signed a handwritten document which provided for the purchase by Mr. Kalfus and Mr. Cassis from CMF of all the shares in CMA for $A1,155,213.00 (subject to certain adjustments) to be paid by 24 equal monthly instalments. The agreement stated that it was "interdependent with CMF entering into a Sole Distributorship Agreement with CMA". A typed copy of this agreement was later signed by Mr. Cassis. 53 A sole distributorship agreement was signed on 5 October 1989, providing that IGC would be CMF's sole distributor in Australia from 1 February 1989 to 31 December 1991, and thereafter unless and until cancelled by six months' notice by either party. Clause 28 of this agreement provided as follows: 28. This whole Agreement is conditioned on Mr. Sami CASSIS being the Managing Director of Distributor. Any modification of Mr. Sami CASSIS' role will automatically allow Principal to immediately terminate this Agreement, if he so wishes, without Distributor being entitled to any indemnity. 54 IGC commenced trading in or about March 1989. It raised working capital by obtaining an overdraft facility of $200,000.00 with Banque Nationale de Paris (BNP). Mr. Cassis and Mr. Kalfus were guarantors of this facility, and their obligations were secured by mortgages. Mr. Cassis gave a mortgage over his residential property at Leeton Avenue, Coogee, and Mr. Kalfus gave a third mortgage over his residential property at Double Bay. 55 The primary judge found that ICG traded profitably for almost three years. It paid off the purchase price for CMA, as agreed, within two years. During those three years, Mr. Cassis had a gross salary of $68,723.00 in 1990, $56,000.00 in 1991, and $56,000.00 in 1992. From that package was deducted moneys for superannuation and provision of a car. Mrs. Cassis and one of their sons were also on the company's payroll. 56 However, it should be noted that by 24 April 1992, IGC's accountants were expressing concerns about IGC's solvency and the possibility of insolvent trading, in a letter indicating a loss for the year ended 30 June 1991 of nearly $400,000.00, and a deficiency of assets of $733,827.00. The primary judge did not attempt to reconcile this with his finding of profitable trading for almost three years. 57 In February 1991, Mr. Cassis and Mr. Kalfus entered into a shareholders deed conferring mutual rights of first refusal in relation to the shares each had in IGC. 58 In September 1991, BNP was paid out, and the National Australia Bank (NAB) took over the facility previously granted by BNP. It advanced $100,000.00 to pay out BNP, and granted an overdraft facility of $150,000.00. It also advanced $70,000.00 to pay out a loan previously made by the Advance Bank and secured over the Leeton Avenue property. As security, NAB took a first mortgage over the Leeton Avenue property and a third mortgage over Mr. Kalfus's Double Bay property. Mr. Kalfus acted as solicitor for IGC and Mr. Cassis, as well as on his own behalf, in these transactions. 59 About this time, Mr. Cassis became concerned that he was exposed to a greater potential loss than Mr. Kalfus because of the greater equity that he had in the Leeton Avenue property, compared with the equity Mr. Kalfus had in his Double Bay property. In October 1991, at the request of Mr. Cassis, Mr. Kalfus signed a letter promising to indemnify Mr. Cassis for 50 percent of any personal loss to him in respect of the liability incurred to NAB. 60 On 9 April 1992, CMF gave written notice that the distribution contract would terminate on 31 December 1992. The primary judge found that the consequent loss of the French distributorship was the real cause of the subsequent collapse of IGC. 61 During 1993, the financial position of IGC became such that Mr. Kalfus could no longer draw wages. 62 On 12 December 1993, Mr. Kalfus signed another letter addressed to Mr. Cassis promising to indemnify him as to 50 percent of any personal liability Mr. Cassis might have to third party creditors. 63 On 23 December 1993, NAB was paid out from advances by two new lenders in what have been referred to as the White and Vesaro transactions. The first was an advance of $280,000.00 arranged through Mr. White, a solicitor, and which was secured by a mortgage given by Mr. Cassis over the Leeton Avenue property. The second was an advance arranged through a mortgage broker, Mr. Vesaro, for $40,000.00, which was secured by a second mortgage over the Leeton Avenue property. In these transactions, Mr. Cassis alone was the borrower, not IGC or Mr. Kalfus. However, although Mr. Kalfus did not provide security over real estate owned by him, he gave a personal guarantee. He acted for the firstnamed plaintiff, and charged a fee with respect to these transactions. 64 Although IGC made some repayments under the mortgages, it was unable to continue to do so. By about mid-1994 Mr. Cassis came to an arrangement with a Mr. Roden, and a new company called International Gas Appliances Pty. Limited (IGA) was formed. Mr. Roden had 50 percent of the shares of IGA, Mr. Cassis had 42.5 percent of the shares, and another shareholder had 7.5 percent of the shares. IGA acquired the assets of IGC for $45,000.00, and this amount was used to discharge the Vesaro mortgage. 65 An advance by Mr. Roden of $220,000.00 was secured by a charge over the assets of IGA and 50 percent of the loan facility was guaranteed by Mr. Cassis. These transactions were completed in July 1994. Mr. Cassis received legal advice concerning them from Mr. Kalfus. Mr. Kalfus said it was a bad deal, and advised Mr. Cassis not to enter into it; but Mr. Cassis felt that he had no option and proceeded with the transactions notwithstanding this advice. 66 The business now conducted by IGA continued to decline, and in April 1995 Mr. Roden gave notice requiring Mr. Cassis to pay an amount of $106,250.00, being the amount secured by the guarantee. It was not paid; and on 17 November 1995 Mr. Roden, after a contested hearing, obtained judgment in the Supreme Court for this amount plus interest. 67 Later the Leeton Avenue property was sold to a son of Mr. Cassis for $450,000.00, of which $288,000.00 was paid to discharge the White mortgage. Mr. Kalfus acted as a solicitor on the transaction and was paid legal fees. Mr. Cassis procured payment to Mrs. Cassis of $162,000.00 being the balance of the purchase money. Mr. and Mrs. Cassis continued then to live in the property, although they were living apart. 68 Proceedings were commenced by Mr. and Mrs. Cassis against Mr. Kalfus on 12 June 1996. A trial of the proceedings gave rise to an appeal, decided on 11 December 2001, in which a new trial was ordered: Cassis v. Kalfus [2001] NSWCA 460. The new trial gave rise to the decision now appealed from.

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DECISION OF PRIMARY JUDGE 69 The primary judge found that Mr. Kalfus, in the letter of 23 January 1989, was representing or at least implying that his legal practice was netting or could be netting an amount in excess of $100,000.00 per annum, sufficient to make a contribution to the pool that was said to be established by the joint venture; whereas his evidence was that his earnings at that time never exceeded $70,000.00 before tax. 70 The primary judge noted that Mr. Cassis alleged breaches of duty of care and of fiduciary duty against Mr. Kalfus, giving rise to damages flowing from proceeding with the joint venture, giving up his employment, and becoming liable to pay out mortgages and creditors of IGC. However, the primary judge noted that Mr. Cassis was not suing Mr. Kalfus in tortious misrepresentation, and despite the finding concerning representations in the letter of 23 January 1989, concluded that, with the exception of a possible breach of fiduciary duty with respect to the operation of s.119 of the Legal Practitioners Act, there was no relevant duty of care in law or as a fiduciary that was breached by Mr. Kalfus. He went on to hold that, except in relation to the s.119 question, there was no solicitor and client relationship relevant to the claims. He held that the relationship between Mr. Cassis and Mr. Kalfus was a business relationship, and that Mr. Cassis was an experienced businessman and made his own decisions. 71 The primary judge set out s.119 of the Legal Practitioners Act as it was in 1988-1999 as follows: 119(1) It is professional misconduct for a solicitor to share with another person the receipts of a business of the kind usually conducted by a solicitor unless - (a) the other person holds a current practising certificate issued by the Law Society Council; or (b) the Law Society Council has first given its consent. (2) If a solicitor is employed under a contract of service, subsection (1) does not operate to limit any right of the employer to recover costs in relation to the conduct of business by the solicitor on behalf of the employer. 72 The primary judge apparently considered that Mr. Kalfus may have been in breach of fiduciary duty to Mr. Cassis by reason of his failure to ensure that Mr. Cassis received independent advice concerning the potential unenforceability of the promise made by Mr. Kalfus in the letter of 23 January 1989 to share profits of his legal practice. However, the primary judge considered that any damage suffered as a result consisted in potential unenforceability of Mr. Kalfus's promise, and that occurred in 1989; so that any claim of Mr. Cassis would be statute barred. 73 In relation to the later transactions, the primary judge held that Mr. Cassis understood his obligations, knew what he was doing, and was prepared to undertake the obligations to keep IGC afloat. Mr. Cassis accepted that in the case of the White and Vesaro transactions, Mr. Kalfus could provide a guarantee only, and in the case of the Roden transaction could provide no support at all. 74 On that basis, the primary judge found against Mr. Cassis.

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GROUNDS OF APPEAL 75 Mr. Kalfus relies on the following grounds of appeal: 1. His Honour erred in failing to hold that the Respondent owed duties as a solicitor to the Appellant in and about the formation of the Joint Venture arising from the Respondent's previous dealings with the Appellant; the Respondent's role in relation to the formation of the joint Venture; the fact that the Respondent was the solicitor for the joint venturers, and; the fact that the Respondent was a joint venturer. 2. His Honour erred in failing to find that the Respondent owed the following duties to the Appellant in and about the formation of the Joint Venture arising from the Respondent's role as solicitor: (a) duty to advise the Appellant to obtain independent legal advice as to the Joint Venture; (b) duty to document the terms of the joint Venture; (c) duty to advise the Appellant on the terms and effects of the Joint Venture agreement including the fact that a fundamental term of the Joint Venture, namely the proposal to pool and share the profits of the Respondent's legal practice was unlawful and unenforceable by operation of s 119 of the Legal Profession Act; (d) duty not to mislead the Appellant as to his (the Respondent's) true financial position, the true earnings of his legal practice and his ability to fulfill (sic) representations made to the Appellant concerning pooling of profits and contributing to capital; (e) duty to disclose to the Appellant his (the Respondent's) true financial position, the true earnings of his legal practice and his inability to fulfill (sic) representations made to the Appellant concerning pooling of profits and contributing to capital; (f) duty to advise the Appellant to have an independent check made of the financial worth of the Respondent. 3. His Honour erred in failing to find (or failing to positively find) that the Respondent breached each of the aforementioned duties to the Appellant. 4. If his Honour found that the conversation involving the Respondent, Mr Loewy and the Appellant constituted the advising of the Appellant, or the conferral of independent legal advice, in respect of the Respondent's promise to share with the Appellant profits from his legal practice, then his Honour erred, as: (a) the evidence was that the conversation did not concern the proposal outlined in the Respondent's letter to the Appellant of January 1989; (b) neither the Respondent nor Mr Loewy were independent legal advisors. 5. His Honour erred in holding that any breach of fiduciary duty by the Respondent involving the promise to share with the Appellant profits from his legal practice and any failure on the part of the Respondent to ensure that the Appellant received independent legal advice on this subject resulted in: (a) damage being suffered by the Appellant in 1989; and (b) the Appellant's claim founded on such breach being statute barred by the end of 1995. 6. His Honour should have held that the Appellant suffered no relevant damage from any of the aforementioned breaches of duty until 1993. 7. In holding that the Appellant's claim would, if made out, be statute barred (or barred by analogy in equity), his Honour erred in failing to consider the matters pleaded in the Reply to the Defence as to why the claim was not or should not be statute barred. 8. His Honour erred in failing to hold that even if the Appellant suffered damage in 1989, his claim was not statute barred (or barred by analogy in equity) by reason of the conduct of the Respondent. 9. His Honour erred in failing to deal with the Appellant's case against the Respondent as co-joint venturer. 10. His Honour erred in failing to hold that the Respondent owed fiduciary duties to the Appellant in and about the formation of the joint Venture agreement arising from the fact that the Respondent was a joint venture with the Appellant. 11. His Honour erred in failing to find that the Respondent owed the following duties to the Appellant in and about the formation of the Joint Venture agreement arising from the Respondent's role as co-joint venturer: (a) duty to reduce to writing the terms of the Joint Venture; (b) duty not to enter into an arrangement with his co-joint venturer (the Appellant) which the Respondent knew or ought to have known contained a fundamental term as to the sharing of the Respondent's profits from his legal practice which was unlawful and unenforceable and of no efficacy by operation of s 119 of the Legal Profession Act; (c) duty not to take unfair financial advantage of his co-joint venturer (the Appellant); (d) duty not to mislead the Appellant as to his (the Respondent's) true financial position; (e) duty to disclose to the Appellant his (the Respondent's) true financial position; 12. His Honour erred in failing to find that the Respondent breached each of the aforementioned duties to the Appellant. 13. His Honour erred in failing to positively find that the Appellant would not have proceeded with the Joint Venture/buy-out of CMA had he been aware of: the true financial position of the Respondent; the true earnings of the Respondent's legal practice; the fact that the proposed agreement between them involved a fundamental term which was unlawful and unenforceable, and; that the Respondent considered that the agreement was subject to qualifications (including that the pooling of profits would cease in the event that the Respondent was no longer in sole legal practice) and, in any event, would never be implemented. 14. His Honour erred in failing to positively find that the Respondent's (continuing) failure and/or inability to contribute money to the joint venture by way of capital was a factor in the collapse of IGC and hence a cause of all of the business losses suffered. 15. His Honour erred in failing to find that had the Appellant not been induced by the Respondent to enter into the Joint Venture/buy out of CMA, the Appellant would not have suffered any of the losses which he ultimately did and that the Respondent's breaches of duty (whether as solicitor or co-joint venturer) were sufficiently causally linked to all of the losses suffered to warrant damages/compensation being awarded. 16. His Honour erred in failing to find that the Respondent owed to the Appellant, as his solicitor and co-joint venturer, a duty of care in relation to the buy out of the business of CMA. 17. His Honour erred in failing to find that the Respondent breached his duty referred to in paragraph 16 and committed the Appellant to an agreement with CMF in February 1989 which made inadequate provision for the sole distribution in Australia of CMF's products and further erred in finding that that (sic) the Appellant was fully apprised (as at that time) of all relevant circumstances. 18. His Honour erred in failing to find that in relation to the White-Versaro transaction, the Respondent owed to the Appellant a duty to advise him to obtain independent legal advice before entering into the transaction. 19. His Honour erred in failing to find that the Respondent breached the duty referred to in paragraph 18 and that consequential loss ($218,675.00 plus interest to 30 June 2003 totalling $405,755.91, plus other amounts claimed of $6,745.00 and $7,000.00 plus interest, resulted personally to the Appellant by reason of entering into this transaction. 20. His Honour erred in failing to compensate the Appellant in respect of the loss previously referred to. 21. His Honour erred in failing to find that that (sic) the Respondent breached his duties as solicitor to the Appellant in respect of the Roden transaction in the following ways: (a) by failing to inform the Appellant that he (the Respondent) viewed the entering into of the Roden agreement as putting to an end the Respondent's liability to contribute to the losses of IGC and putting to an end the Respondent's liabilities in respect of the Joint Venture; (b) by failing to advise the Appellant to take independent legal advice as to the effect of the Roden transaction on the Appellant's obligations and liabilities under the Joint Venture and of the status of the First and Second Guarantees; (c) by failing to ensure that the Appellant received proper and timely legal advice before he was called on to execute the Roden agreement including advice on the matters referred to in (b) above. 22. His Honour erred in failing to compensate the Appellant for the loss which flowed from entering into the Roden transaction ($98,779.54 plus interest from 1 July 2003). 23. His Honour erred in failing to find that the Respondent had a duty as co-Joint venturer to meet half of the losses and liabilities incurred in respect of the failure of IGC. 24. His Honour erred in failing to award the Appellant compensation in respect of the Respondent's failure to meet any of the losses incurred in respect of the failure of IGC and paid for by the Appellant. 25. His Honour erred in holding that the Appellant could not obtain damages for personal injury arising as a consequence of his economic loss and erred in failing to award damages/compensation in this regard. 76 Mr. Kalfus relied on a Notice of Contention containing the following grounds: 1 The arrangements between the Appellant and the Respondent did not involve a contravention of section 119 of the Legal Profession Act 1987 (Judgment paragraphs 75-83 and 90). 2 The Respondent was not in material breach of any material duty owed to the Appellant in relation to the provision of independent legal advice, or other advice, to the Appellant as to the operation of section 119 of the Legal Profession Act 1987 (Judgment paragraphs 75-83 and 90). 3 The Respondent did not represent to the Appellant that there were profits from his practice as a solicitor over and above $100,000 per annum that would available (sic) to IGC (Judgment. paragraphs 27, 30, 62 and 78-79). 4 If, as the Appellant contends, the Respondent was in breach of some duty owed to the Appellant associated with entry by the parties into a "joint venture", that breach occurred no later than 27 February 1989 or thereabouts, and any entitlements that the Appellant had to claim relief in respect thereof was extinguished by operation of sections 14 and 63 of the Limitation Act 1969 (NSW), or precluded by the operation of section 23 of the Act, before the commencement (on 12 June 1996) of the proceedings below. 5 Insofar as the Appellant claims relief in Equity, he should be denied relief for discretionary reasons, either because Equity applies limitation periods by analogy (as recognized by section 23 of the Limitation Act 1969) or because of his acquiescence, laches and delay. 77 In my opinion, the most substantial issues raised on this appeal concern the absence of a finding by the primary judge of a breach of duty by Mr. Kalfus by reason of misrepresentation or non-disclosure concerning Mr. Kalfus's financial position in and about January 1989. The first issue is whether the primary judge thereby erred, and whether such a breach should be found by this Court. 78 If such a breach were found, that would give rise to issues not addressed by the primary judge, namely whether the breach caused loss to Mr. Cassis, if so how much, and whether Mr. Cassis's cause of action in respect of such loss is statute-barred. In relation to these issues, and in particular the first and second of them, there is a real question whether they can and should be decided by this Court or sent back for a further first instance hearing. 79 In my opinion, for reasons I will give, there is no substance in other matters raised by the appellant in this appeal. 80 I will deal with the issues in the following order. First, I will consider whether the primary judge erred in not finding a breach of duty by reason of misrepresentation and/or non-disclosure concerning Mr. Kalfus's financial situation in and about January 1989. Second, I will consider whether and to what extent this Court should decide issues of causation and quantification of loss. Third, I will address the question of causation. Fourth, I will address the question of quantification of loss. Fifth, I will consider the limitation issue. 81 Then, I will briefly deal with less substantial issues. Sixth, I will consider whether there was a material error in the way the primary judge disposed of other alleged breaches of duty in and about January 1989, including that concerning alleged illegality of sharing profits of a legal firm. Seventh, I will consider whether there was material error in the way the primary judge disposed of claims concerning later alleged breaches of duty, notably in relation to the White/Vesaro transactions, the Roden transaction, insolvent trading and breach of duty as joint venturer in meeting losses of the joint venture. Eighth and finally, I will consider whether there was material error in relation to the claim for psychological injury.

[51]

BREACH OF DUTY BY MISREPRESENTATION OR NON-DISCLOSURE 82 Mr. Roberts SC for Mr. Cassis submitted that, even accepting the finding of the primary judge that Mr. Kalfus was not relevantly acting as solicitor for Mr. Cassis, plainly he owed a fiduciary duty as a prospective or actual joint venturer: United Dominion Corporation Ltd. v. Brian Pty. Limited (1984) 157 CLR 1. The misrepresentation found by the primary judge, and the associated non-disclosure of the true position, was a breach of that duty. 83 Mr. Lindsay SC for Mr. Kalfus submitted that there was no relevant fiduciary duty. In any event, the matter relied on by Mr. Cassis was a representation by Mr. Cassis that his income was $200,000.00 per annum, and that was rejected by the primary judge. There was no relevant finding of misrepresentation or non-disclosure; and in any event, the primary judge misconstrued the letter of January 1989. Furthermore, Mr. Lindsay submitted, the true position was disclosed in a conference with BNP. 84 In my opinion, UDC v. Brian establishes that there was a relevant fiduciary duty, so that it is necessary to address the question whether or not there was misrepresentation and/or non-disclosure by Mr. Kalfus in breach of his duty. 85 As pointed out by Giles JA, Mr. Kalfus gave evidence in cross-examination (Black 174) that he told Mr. Cassis in conversations in December 1988 that his practice was not earning more than $100,000.00 net; and the primary judge made no express finding as to whether such conversations took place. However, in my opinion the primary judge did make a definite finding that the letter of 23 January 1989 did represent or at least imply that the practice was netting or could be netting in excess of $100,000.00 per year: although this finding is expressed less than conclusively in par.[22] of the judgment, it is taken up as a definite conclusion in par.[62]. In my opinion, this clear finding negatives the existence of circumstances that would have precluded the conveying of that representation to Mr. Cassis, and thus indicates that the primary judge was not satisfied that in December 1988 it was brought home to Mr. Cassis that the practice was not earning more than $100,000.00 per year net. 86 Furthermore, it is clear in my opinion that what happened at BNP cannot be considered an appropriate disclosure. The evidence concerning disclosure to Mr. Cassis in association with disclosure to BNP does not suggest a disclosure of the income of the legal practice: what may have been disclosed at the meeting, and was subsequently disclosed in writing, was an allegation that the goodwill, plant, equipment and fittings of the practice were worth $185,000.00, that outstanding debtors excluding bad debts were $60,000.00, and that work-in-progress was worth $70,000.00. Those figures would not appear to fit well with a practice that did not earn over $100,000.00 net per year. 87 In considering Mr. Lindsay's submission that the primary judge was in error in construing the letter as containing the representation in question, it is pertinent that there is reason to think that the parties' expectation was that IGC would itself have earnings of this order, considered before any payment was made to Mr. Cassis: the business had been remunerating him at the rate of about $100,000.00 per annum (before tax), and the parties were willing to pay $1,155,213.00 for the business. 88 Having regard to all these considerations, I am not satisfied the primary judge erred in his findings as to the representation made by the letter. 89 However, as pointed out by Giles JA, the primary judge was in error in saying that Mr. Kalfus said that his earnings at that time never rose above $70,000.00 per year before tax: his evidence was that it was between $70,000.00 and $100,000.00 before tax (Black 155), and between about $45,000.00 and $75,000.00 after tax (Black 177). 90 The letter of 23 January 1989 expressly contemplated that the net profits were an after-tax figure, so that the representation found by the primary judge related to an after-tax figure. Accordingly, it was in my opinion materially false, and gave rise to a duty on Mr. Kalfus to disclose the true position, which he did not do. 91 Accordingly, in my opinion the misrepresentation found by the primary judge and the associated non-disclosure of the true position amounted to breaches of duty owed by Mr. Kalfus to Mr. Cassis as an actual or prospective joint venturer.

[52]

SHOULD THIS COURT DECIDE CAUSATION AND LOSS? 92 In my opinion, there is no hard and fast rule determining whether this Court should enter into consideration of matters not determined by a primary judge, where those matters may require findings which to some extent depend on the credibility of witnesses. In my opinion, the primary considerations to be taken into account in deciding whether this Court should undertake that task are the need for adequate material on which to make such a decision, the affording of procedural fairness, and the desirability of just, quick and cheap resolution of issues between the parties (cf. Supreme Court Act 1970, s.64; Supreme Court Rules Pt.1 r.3). 93 The first question that would need to be determined is the question of whether or not, but for the breaches I have identified, Mr. Cassis would have gone on with the joint venture, and in particular would have given up his employment with CMA. In considering whether this Court should decide that question, I note first that the question is a hypothetical one, so that direct evidence of Mr. Cassis of what he would have done is of limited weight: see Cackett v. Keswick [1902] 2 Ch 456 at 463-4. Next, I note that this Court does have substantial evidence and substantial findings by the primary judge as to the circumstances relevant to the question. 94 Third, on the question whether Mr. Cassis would have gone ahead with the transaction, it is relevant to have regard to what was said by the Privy Council in Brickenden v. London Loan & Savings Co. [1934] 3 DLR 465 at 469, as follows: When a party, holding a fiduciary relationship, commits a breach of his duty by non-disclosure of material facts, which his constituent is entitled to know in connection with the transaction, he cannot be heard to maintain that disclosure would not have altered the decision to proceed with the transaction, because the constituent's action would be solely determined by some other factor, such as the valuation by another party of the property proposed to be mortgaged. Once the Court has determined that the non-disclosed facts were material, speculation as to what course the constituent, on disclosure, would have taken is not relevant.

[55]

QUANTIFICATION OF LOSS 99 A person caused loss by a breach of fiduciary duty is entitled to equitable compensation for such loss: Nocton v. Lord Ashburton [1914] AC 932, Beach Petroleum. In my opinion, the approach to quantification of that compensation is not the same approach as would be taken in the case of a trustee who has paid away trust property, as discussed in Youyang Pty. Ltd. v. Minter Ellison (2003) 77 ALJR 895. In my opinion, the appropriate approach is more along the lines of the approach taken in cases of tort or misleading conduct under the Trade Practices Act, as illustrated by Henville v. Walker (2001) 206 CLR 459. 100 Beginning with the question of "but for" causation, it seems that if Mr. Cassis had not gone ahead with the joint venture, the most likely scenario was continued employment with CMA to age 65, with the possibility of improving his position or working longer, and also the possibility of doing worse, by reason of losing his employment or the business closing down. The general consequence of going ahead with the transaction was that Mr. Cassis ceased drawing wages from July 1993 onwards, and was obliged to pay substantial debts and costs. It appears that he has not worked since, apart from three-four months in the Post Office at Woollahra in about 2000 (see 5 Blue 1222). 101 However, in my opinion some of the losses should be regarded as too remote, because not foreseeable, or because so substantially caused by other factors that they are not reasonably attributed to Mr. Kalfus's breach of duty. In particular, losses attributed to the loss of the French franchise should in my opinion largely be considered as losses flowing from a risk fully recognised by Mr. Cassis and taken, he being in a far better position than Mr. Kalfus to assess this risk and to minimise it by the way the business was then conducted. However, the loss of the franchise itself may partly have been due to a lack of financial resources to fall back on, and that lack of financial resources may also have lessened the chances of the business pulling through notwithstanding the loss of the franchise. 102 Doing the best I can on skimpy material, I would calculate the total "but for" losses relevant to the quantification of damages as follows. 103 First, loss of the employment that would have delivered remuneration at the rate of about $100,000.00 per annum gross from 1 July 1993 (when Mr. Cassis ceased being remunerated by IGC) and 15 October 2001 (age 65). (Mr. Cassis accepted that he did not suffer loss in this respect so long as he and members of his family were being remunerated by IGC). I would assess this at the after-tax figure of $70,000.00, for 8 years and 15 weeks, giving $580,192.00. To this I would add interest calculated from 1 April 1997, roughly 7½ years at 10%, giving $435,144.00, and resulting in a total of $1,015,336.00. To take account of vicissitudes and the small amount of work Mr. Cassis actually performed, I would reduce this to $900,000.00. 104 Second, money paid to discharge the White mortgage, that is $288,675.00 paid on 3 March 1995 (4 Blue 898) less $70,000.00 attributable to the loan for the use of Mr. Cassis, giving $218,675.00. To this I would add interest, roughly 9½ years at 10%, giving $207,741.00, and resulting in a total of $426,416.00. 105 Third, money paid to obtain the White mortgage in about December 1993, namely $6,285.00 (4 Blue 735). To this I would add interest, roughly 10¾ years at 10%, giving $6,757.00, and resulting in a total of $13,042.00. 106 Mr. Cassis claimed $7,000.00 for instalments paid in respect of the White mortgage. However, he did not establish that this was in excess of what was appropriate for his own $70,000.00 part of that mortgage. 107 Fourth, creditors of IGC paid by Mr. Cassis between July 1994 and February 1985, amounting to $39,780.00 (1 Blue 200, 2 Blue 224-45). To this I would add interest, roughly 10 years at 10%, giving $39,780.00 and resulting in a total of $79,560.00. 108 Fifth, payments in respect of the Roden debt. $51,000.00 was paid between 3 March 1996 and 6 December 1998 (4 Blue 953). Legal costs of $7,000.00 were also paid. To this I would add interest, roughly 7 years at 10%, giving $40,600.00. There is also a liability for $15,000.00 which will take effect if Mr. Cassis is sufficiently successful in these proceedings (6 Blue 1228). The total of these figures is $113,600.00. Since the Vesaro mortgage was paid out through this transaction, this total includes the liability of Mr. Cassis in respect of the Vesaro mortgage. 109 The grand total of these figures is as follows: Employment $900,000.00 White mortgage 426,416.00 White expenses 13,042.00 Creditors 79,560.00 Roden (including Vesaro) 113,600.00 $1,532,618.00 110 In so far as the losses were due to the failure of Mr. Kalfus to contribute one half of the amounts for which Mr. Cassis became liable under the White and Vesaro transactions, in my opinion those losses are plainly not too remote. The Vesaro liability was discharged by a payment of $45,000.00 in mid-1994 in connection with the Roden transaction, so that the liability can be quantified at that figure plus 10 years' interest at 10%, giving a total of $90,000.00. Mr. Kalfus thus failed to contribute one half of $426,416.00 plus $90,000.00, that is, $258,208.00; and this sum should be included in the damages. 111 As to the balance of the loss, that is, $1,274,410.00, in my opinion it is too remote except to the extent that it includes the value of the chance that the loss may have been avoided, had Mr. Kalfus been in the financial position suggested by his representation. Doing the best I can, I would assess this chance at 10%; and would add $127,441.00 to the damages on this amount. 112 Accordingly, I would award damages of $385,649.00. 113 The approach I have taken is consistent with the view expressed in the dissenting judgment of Gleeson CJ. in Henville v. Walker at [23] and [35] that a defendant liable for inducing a plaintiff to enter into a business venture does not thereby become an underwriter of all losses incurred by the business, whenever and however those losses may arise. I believe it is also consistent with the leading judgment of the majority in that case, the judgment of McHugh J. This is a case where, in my opinion, the excluded part of the loss was not foreseeable, even in a general way, by Mr. Kalfus (see Henville at [134] and [136]); and where the excluded part is loss which would not have occurred but for the realisation of a risk knowingly undertaken by Mr. Cassis (and not significantly affected by the breach of duty), and the manner in which the business was conducted by Mr. Cassis (see Henville at [140]). I would add that, in so far as equitable compensation is required to be fair, the result does in my opinion constitute a fair assessment of compensation for the relevant breaches, in all the circumstances.

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Judgment (61 paragraphs)

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