Churchill v Connolly

LOWER COURT District Court JURISDICTION : LOWER COURT 9466/99 FILE NUMBER(S) : LOWER COURT Dodd DCJ JUDICIAL OFFICER :

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL 41217/02

BEAZLEY JA HODGSON JA YOUNG CJ in EQ

Monday 28 June 2004 DAVID SPENCER CHURCHILL v JOHN MICHAEL CONNOLLY Judgment 1 BEAZLEY JA: I agree with Young CJ in Eq. 2 HODGSON JA: I agree with the orders proposed by Young CJ in Eq. and, subject to what I say below, substantially with his reasons. 3 In this case, there could be no claim for compensation consequential on entry into the contract or failure to terminate it: the appellant concedes that the contract was advantageous, but contends that, but for breaches of duty by the respondent and his partner, it would have been more advantageous. 4 A caveat was placed on the title on behalf of a beneficiary in July 1983. The appellant and his wife instructed new solicitors at or about the end of 1984, but did not commence proceedings for specific performance of their contract until after 1990. There is no possible basis for saying that any breach of duty by the respondent or his partner occurring after July 1983 caused any loss. 5 So the question is, was there some breach or breaches of duty occurring prior to July 1983 causing loss to the appellant in relation to the carrying into effect of the contract? 6 The primary judge found there was no relevant negligence. The respondent and his partner were unable to cause the contract to be completed, because the vendor was not the registered proprietor. They were deceived by the solicitor with the conduct of the task of getting the vendor on the title. Once the respondent realised that the only way to proceed was to take over the task, he sought instructions from the vendor. She delayed giving such instructions; but once those instructions were given, the respondent moved with reasonable expedition to take over the task, and to pursue it. From the time he took over the task in December 1982 to the time the caveat was lodged in July 1983, the primary judge found nothing in his conduct of the matter that could be criticised. 7 I agree with Young CJ in Eq. that there is no basis for overturning those findings. 8 That leaves the question of whether there was a breach of fiduciary duty in acting for both vendor and purchasers between entry into the contract in April 1980 and the lodging of the caveat in July 1983, causing loss to the appellant. 9 Had the respondent ceased to act for the appellant in or after December 1982, the most that any solicitor acting for the appellant could have done then was to put pressure on the respondent to expedite the matter, or to commence specific performance proceedings. Having regard to the primary judge's findings that the respondent acted with reasonable expedition between December 1982 and July 1983, there is no basis for concluding that either course would have resulted in completion prior to the lodging of the caveat, or any result more favourable to the appellant than actually occurred. 10 So the remaining question is whether the respondent should have ceased to act for the appellant well prior to December 1982. In effect, it is now submitted that it was clear before the end of 1980 that the vendor was in very serious breach of contract, giving rise to such a substantial conflict of interests that the respondent and/or his partner should have ceased to act for the appellant and his wife. Had this happened, and appropriate pressure been applied by an independent solicitor acting for the purchasers, the contract would have been completed before the caveat was lodged. 11 One difficulty with this is that this case was not put below. It was alleged in the Statement of Claim that the respondent, in breach of fiduciary duty failed conscientiously to withdraw from the matter, and negligently failed to take proper steps to ensure the title was conveyed to the appellant and his wife. In opening the case, it was put that there was failure to deal with conveyance properly after exchange, particularly in putting pressure on the vendor. It was put in cross-examination that "conflict or the potential for that conflict" of interests had existed as early as April 1980; but not that a conflict requiring withdrawal had arisen by reason of the vendor's breaches of contract in late 1980 or indeed at any time prior to December 1982. There was no relevant submission in final addresses. 12 The case that might possibly have been made, as noted above, was that, following withdrawal by the respondent or his partner, pressure from an independent solicitor would have resulted in completion. In my opinion, at the very best, there was a chance that such pressure (whether applied with or without commencement of specific performance proceedings) may have resulted in the task of obtaining registration for the vendor being taken over earlier than December 1982, so that completion may have been achieved prior to a caveat being lodged. At most, the appellant would be entitled to compensation for loss of that chance. 13 On the available material, I would rate that chance as extremely slim. However, in my opinion the Court may not have available all the material that would go to the assessment of that chance, because that case was not put below. Accordingly, without determining whether there was a breach of fiduciary duty in failing to withdraw in or about late 1980, in my opinion this possible case should be rejected on the basis of Suttor v Gundowda Pty Ltd (1950) 81 CLR 418. 14 YOUNG CJ in EQ: This is an appeal from his Honour Judge Dodd in the District Court dismissing the plaintiff's claim for damages or equitable compensation against his former solicitor. The appellant below put his claim in tort for breach of duty of care, or alternatively, for breach of fiduciary duty. 15 The appellant's claim arises out of a contract for the sale of property at 31 Dans Avenue, Clovelly entered into by him and his then wife as purchasers, the vendor being one Leila Marlow Fryer on 2 April 1980. The purchase price in the contract was $50,000. 16 Up until her death on 8 July 1941, Mrs Ida Mary Fryer was the owner of the property. Indeed, as at the date of the contract, 2 April 1980, and even on 16 December 1993, Ida Mary Fryer was still registered as proprietor of the property. The will of Ida M Fryer of 3 August 1933 was admitted to probate by this Court on 2 October 1941, Leila M Fryer and another were the executors of that estate. 17 As circumstances fell out, as at 2 April 1980, provided the estate had been fully administered, the property was to pass to the estate of John Gordon as to a three-eighths share, to Leila Fryer as a three-eighths share, and to various people surnamed Steele for a one-quarter share. 18 The actual will provided that Ida M Fryer's husband who died on 31 July 1954 was to have a life interest in the house and that the testatrix's five daughters would then take the proceeds in equal shares. Two daughters died intestate so that one has the present split-up. 19 Because of the provisions of the Stamp Duties Act 1920, particularly s 102(2)(g) imposing cesser duty, although initially the death duty payable on the estate was duly paid and a certificate was obtained that the head estate was not liable to Federal Estate Duty, duty became payable on the cessation of various beneficiaries' interests in the estate. 20 The Commissioner of Stamp Duties required that these duties be paid before he would mark the executors' transmission application. There was evidently some argument as to whether there was a quick succession rebate due, but for whatever reason as at the date of the contract the Commissioner had not marked the transmission application in such a way that the Registrar General would register it, and accordingly it had not been registered. 21 Leila M Fryer was living in the property until March 1980. It was in a very run down condition. She wished to move out of it and was willing to sell to the appellant who appears to be a friend of her family for a good price. The appellant and his wife moved into the property in April 1980 after the contract and commenced putting the place into good repair. Leila M Fryer died on 6 July 1983 and in due course probate of her will was granted to Mollie Stokes who became the executor by representation of the estate of Ida M Fryer. 22 As at April 1980 it appeared that John Gordon, who was entitled to a three-eighths share of the estate, was happy with the sale at the discount price. However, he died on 10 September 1981 and one Alan Malcolm Campbell became his executor. Mr Campbell considered that he needed to protect the beneficiaries under his estate and lodged a caveat, T639635 against the title to the property on 12 July 1983, six days after the death of Leila M Fryer. 23 In proceedings in the Equity Division of this Court, No 5189 of 1990, Mollie Stokes sought possession of the property from the appellant and his wife. They cross claimed for specific performance. 24 On 16 December 1993, Santow J held that because the "good purchase price" was at under-value the appellant and his wife were not entitled to specific performance. They were, however, entitled to damages for the loss of their bargain, the rule in Bain v Fothergill (1874) LR 7 HL 158 not applying in the circumstances. His Honour stood the matter over for short minutes to be brought in. 25 Following his Honour's judgment the parties settled the matter and his Honour ordered on 30 August 1994 that there be specific performance with an increase of price of $185,000, that is, in addition to the contractual price and that there be no order for costs in the proceedings. 26 The appellant with his wife were still in possession in 1994. It was found that when the increased purchase price was produced, the problems with the Stamp Duties Office faded away and the conveyance was able to be settled without problem. 27 The present proceedings were commenced on 15 December 1999 by the appellant against the present respondent. The claim was that the respondent and his former partner, Mr Salmon, were negligent, particularly in failing to realise the state of the title, failing to take proper steps to ascertain that Leila M Fryer had a valid power of sale, failing to take proper steps to ensure title was conveyed to the Churchills and failing to effect settlement of the conveyance within a reasonable time. As I have said, the claim was put alternatively on the basis of breach of fiduciary duty. 28 Shortly before the hearing, the plaintiff gave the defendant a notice to admit 94 different facts. Forty-four of these were admitted. It was also common ground between the parties below that all that was found by Santow J was to be accepted as a finding of fact in the District Court and that the Judge was also entitled to rely completely on Santow J's reasons. 29 As I have said, the trial judge found a verdict for the defendant. 30 Before turning to the notice of appeal I should deal with one other matter. It is clear that the people who had Messrs Salmon and Connolly as their solicitors, were both the appellant and his wife. There has evidently been some estrangement between the couple more recently. Originally the proceedings in the District Court were taken in the name of the appellant alone. However, after the trial commenced, Mrs Churchill appeared, and after oral application, she was added as a defendant. The Judge was also given a notice of assignment under s 12 of the Conveyancing Act 1919 which said that she irrevocably assigns to the appellant all her right, title and interest in the present proceedings to the appellant (the document is Blue p 344). The assignment is dated 30 January 2002, that is, well after the proceedings had been commenced and perhaps after the expiry of the relevant limitation period. The hearing commenced before the District Court on 10 April 2002. The joinder was made on 12 April 2002; see Black 65 and following. 31 There seems little doubt that the right against the solicitor was a joint right. Procedurally, in accordance with District Court Rules Part 7 r3, where the plaintiff claims an amount to which any other person is entitled jointly with him all persons so entitled shall be parties to the action. Part 7 r7 provides that no action is to be defeated by reason of non-joinder of any person as a party. Identical rules appear in the Supreme Court Rules as respectively Part 8 r3 and Part 8 r7. 32 The technicalities involved with joint contracts (to take a simple example) were very great before the Judicature Act system and indeed Professor Glanville Williams was easily able to produce a full book on the subject in his "Joint Obligations" (Butterworths, London, 1949). Most of the problems occurred with joint defendants, it being an almost sacred rule that a defendant who was jointly liable on a contract together with other defendants could successfully plead in abatement and force the plaintiff to add the co-obligors as defendants so that it would be clear who had to contribute to the damages; see Glanville Williams op cit Chapter 2. There are not as many authorities dealing with problems where there were or should have been joint plaintiffs. 33 However, in cases where there had been a reluctant co-plaintiff the court has been content with merely adding the co-contractor as a defendant so that it is possible for all the parties to be bound by the action; see eg Burnside v Harrison Marks Productions Ltd [1968] 1 WLR 782. There does not seem to be any rule that a joint right can only be enforced by action brought by all the holders of the joint right. 34 Accordingly, the addition of the wife as a defendant on the third day of the hearing was sufficient to cure any problem with Part 7 r3. Thus it is not necessary to make a decision as to whether Part 7 r7 overrides or trumps Part 7 r3. 35 In Kenya, which has the same rules, there is a decision in Lochab Bros v Kenya Furfural [1985] Law Reports of the Commonwealth, Commercial 737, 750, that a deliberate non-compliance with Part 7 r3 entitles the Judge to dismiss the action notwithstanding Part 7 r7. That is because rule 7 applies to a "mere" non-joinder and does not govern the case where it is necessary to have all holders of the right before the Court for the Court to be able to adjudicate on the issue. A similar decision was reached by the Court of Appeal for East Africa in Qureshi v Patel (1951) 18 EACA 1. 36 These authorities are weakened by the fact that they appear to have proceeded on a misunderstanding of the decision of Kanti Chandra Tarafdor v Radhu Rahman Sarkar (1930) 17 AIR (Cal) 461, which was evidently not available in East Africa, but is available in the Law Courts Library, Sydney. My present view is that I would follow the court in Kenya, but I should not decide the question until it arises for direct decision. 37 The other point that arises on the assignment is whether the assignment having taken place only in January 2002, there was some adding of a new cause of action outside the limitation period. 38 So far as the action at law in negligence was concerned, there was a common law chose of action which was not vested in the appellant as at the date of the commencement of the proceedings. That cause of action would have been added on the date on which the amendment was made under Part 17 r3A of the District Court Rules. So far as the claim for breach of fiduciary duty was concerned, that was an equitable cause of action and s 12 of the Conveyancing Act would have no application though the document may have been evidence that there had an equitable assignment. It is best to leave these problems until after dealing with the main issues in the appeal. 39 In his notice of appeal the appellant said that he was entitled to judgment for $185,000 being the additional consideration he had to pay to secure the property, $70,555 being his costs of the Equity proceedings, and interest on those sums totalling $247,279.44 as at 8 March 2004. 40 The learned Judge held that the plaintiff suffered no loss through the defendant's conduct. As to this, the appellant says that the trial judge should have found that there was a window of time up until July 1983 when the conveyancing transaction could and should have been completed and that the failure by the solicitor to complete the contract during this period has caused the loss detailed above. 41 On the appeal, Mr J Marshall SC and Mr M Evans appeared for the appellant and Ms J Oakley appeared for the respondent. I am indebted to all counsel for their learned submissions. 42 Because the parties accepted everything that Santow J said about facts and law, a good starting point is his Honour's judgment in Stokes v Churchill. His Honour said (Blue 306) that by letter of 25 August 1975 the then solicitors for Leila M Fryer, Messrs Carmont & Cordingley, advised her that they had prepared the necessary documents to transmit the title of the property into her name. They lodged the appropriate documents with the Stamp Duties Office on 4 September 1975. On 8 October 1975, the Commissioner raised two requisitions, one relating to the estate of Ida Fryer's husband Sydney, and the other in respect of the estate of Kathleen Steele, one of Ida's daughters. Santow J said: "Nothing further seems to have happened to satisfy these requisitions. Despite requests for action by the Stamp Office, and a desultory exchange of correspondence, Mr Cordingley (on behalf of Leila Fryer as executor) advised the Commissioner of Stamp Duties in November 1977 that outstanding matters had not been finalised." 43 His Honour then went on to say that Leila Fryer, who had been living in the house, was concerned about her position. The property was in need of substantial repairs and renovation. She knew the Churchill family well and knew that the appellant and his wife were wanting to buy a home. They entered into an agreement to buy the property at a low but realistic price of $50,000, but no undue influence or unconscionable conduct took place on the part of the appellant or his wife in securing the property at an under-value. His Honour considered that the value of the property at the relevant time was $90,000 to $100,000. 44 Santow J then continued (Blue 308): "Land tax remained payable on the estate of Ida Mary Fryer. Administration of the estate of Ida Fryer depends upon completion of various matters including the administration of the Gordon estate, before transmission of the property into the name of the executor could take place. Cordingley, the solicitor responsible for winding up the estate, had not obtained transmission of the title into the name of Leila Fryer as at 23rd December 1982 when he finally handed his files over to Messrs Salmon Connolly. The sorry tale of his 'neglect of his client's interests' and totally ineffectual efforts in acting for the estate in completing its administration, with its implications for the Churchills, emerges starkly in the Law society's Statement of Findings and Orders of the Solicitors' Statutory Committee delivered on 25th February 1985. In a detailed letter dated 7th February 1983, Messrs Salmon Connolly wrote to the Commissioner of Stamp Duties about the position of the Estate of Ida Mary Fryer and related matters. From a file note which follows that letter it appears that a verbal reply was received on or about 21st April 1983." 45 I should interpolate here that somewhere between December 1984 and February 1985 Messrs Salmon Connolly ceased to act on behalf of Mr and Mrs Churchill. They continued to act for the estate. As at the date of hearing before Santow J the subject property was the only asset in the estate. It was subject to three caveats, one for land tax and others by beneficiaries and there had not been any transmission application because of the difficulties with the Stamp Duties Office. 46 I should say that it would seem that the difficulties with the Stamp Duties Office principally appear to have related to the non-filing of an Affidavit HH specified in the Stamp Duties Regulations (see Hill, Stamp Death Estate and Gift Duties (Law Book Company, 1970) p 503). An affidavit in form HH was required to be made by a person in whom non-aggregated property liable to cesser duty is vested so far as the estate of Sydney Fryer is concerned and the non-compliance with the estate of Kathleen Fryer in filing an Affidavit M (see Hill pp 478-9). This is an affidavit to be filed when there has been no grant of probate in a small estate. The primary obligations to file these documents may well have been in people other than those able to be compelled by Leila M Fryer or her solicitor, though it is to be noted that when money became available for the purchase at a proper price these difficulties melted away. 47 Santow J said that there was evidence to suggest that the Churchills' solicitors anticipated releases from the Steele family and Gordon, but no reasonable endeavours were made by the vendor at the time of the contract or within a reasonable time thereafter to obtain those releases if they were needed. 48 Santow J then held that the administration of the head estate had not been concluded. The executor was not functus officio and retained a statutory power of sale for the purpose of administration. In addition there was some power of sale in the will. His Honour concluded that Leila Fryer had power of sale over the property on each of these bases. He concluded that she sold as executor not trustee either under the statutory power of sale or pursuant to the power in the will. His Honour then referred to Colyton Investments Pty Ltd v McSorley (1962) 107 CLR 177 and said that the court should not foist specific performance onto an estate when not satisfied of the fact that the estate was receiving proper value for the property. 49 However, his Honour found that the Churchills were entitled to damages and that the rule in Bain v Forthergill did not apply. 50 At Blue 325 his Honour concluded by saying that the Churchills were entitled to damages to place them as nearly as may be in the position they would have been had the breach not occurred. He cited Wenham v Ella (1972) 127 CLR 454 and said that: "In all the circumstances, I consider that damages should be assessed at the expiry of 12 months from the date the contract was repudiated, that is to say 9 July 1987. The 12 months fairly reflects the complexities which confronted the Cross-Claimants and recognises that they should have had a reasonable opportunity to assess their position. Equally, to assess damage at the date of judgment, when the property had increased in value quite markedly, would be unfair to the Cross-Defendants, given the considerable delay by the cross-claimants in bringing their action." 51 His Honour then referred to other authority where the date of repudiation or breach was preferred to the date of judgment. 52 Santow J said that on the evidence before him he would adopt the value of $145,000 as at 27 September 1986 as being the value in July 1987 unless some other value was established and would allow interest from that date with a deduction for unpaid rent. 53 As I have said, after that time there was a settlement of the whole conveyance. Mr Marshall puts that it is clear that it was a fair bargain. His client was entitled to bargain away the right to costs and the right to damages in return for buying the property for $185,000 extra. He points to admitted facts 93 and 94, viz: "93. Following the judgment given by Santow J in proceedings No 5189 of 1990 the plaintiff and Kim Irene Churchill had no right or means of obtaining title to the Clovelly property save and except by some further agreement with Mollie Stokes and those interested in the estate of the late Ida Mary Fryer. 94. On or about 30 August 1994 the plaintiff and Kim Irene Churchill made an agreement with Mollie Stokes, Alan Campbell and John Joseph Steele (on behalf of the Steele interests in the estate of the late Ida Mary Fryer) which agreement was embodied in short minutes of orders made finally disposing of proceedings No 5189 of 1990 in the Supreme Court of New South Wales." 54 Those admitted facts do not go quite far enough. However, Mr Marshall says that the bargain was struck at arm's length between people who were trying to do the best for themselves, there was never any allegation below that it was a bad bargain and the court should hold that it was necessary to pay $185,000 in order to secure the property because of the negligence or breach of fiduciary duty of the respondent. 55 It is significant that the claim is put in the alternative in negligence at common law and breach of fiduciary duty. 56 Up until recently, with small exceptions, the District Court was purely a court of common law. However, under s 134(1)(h) the Court now has jurisdiction to hear any equitable claim or demand for recovery of money or damages in an amount not exceeding $750,000. 57 It is clear from the authorities that very different principles may apply to common law actions in negligence on the one hand and claims for equitable compensation for breach of an equitable duty on the other hand with respect to causation, foreseeability and remoteness of damages; see eg Beach Petroleum NL v Kennedy (1999) 48 NSWLR 1, 89-93 and Youyang Pty Ltd v Minter Ellison [2001] NSWCA 198 [16]. 58 Although it is a difficult matter, courts at first instance and on appeal must be careful to observe these differences and really need to deal separately with the common law counts and the equitable counts before them, rather than endeavour to deal with the counts globally. 59 I consider that there is a lot to be said for the proposition which I espoused in Youyang at [50] that if a person has a good remedy for damages in negligence, there is cause for equity to intervene by the remedy of equitable compensation only to the extent to which common law damages are clearly inadequate. Youyang was reversed in the High Court; see Youyang Pty Ltd v Minter Ellison Morris Fletcher (2003) 77 ALJR 895, but the passages to which I have referred were unaffected. 60 I believe that I have now set out the facts and the surrounding circumstances in sufficient detail to be able to deal with the decisions that need to be made on this appeal. 61 However, before I do so, I should note two significant matters with respect to the conduct of the trial. 62 The first is that apart from a few pages of transcript in which Mrs Kim Churchill made her appearance before the court, the only evidence was given by the plaintiff and the defendant. There was no expert evidence given at all. There was no external evidence to support the view that the increase in price of $185,000 was fair and reasonable. 63 The second is that the principal way in which the appellant put his case to this Court was that there was a window of opportunity which, whilst it was open, allowed the appellant to have the contract of sale completed at the price referred to in the contract. That window of opportunity closed on or about the death of Leila M Fryer or John Gordon. Thereafter, if the appellant was to obtain the property he had to pay much more for it. 64 Mr Marshall says that whilst the case may not have been put quite this way below, such a way of putting the case is within the pleadings and was within what was put to the trial judge. Ms Oakley does not agree with this. Although she faintly said that there was a situation that the trial might have been run differently had the point been raised, it does not seem to me that there is sufficient material to make good that assertion. 65 In this background then I must deal with the matters that arise and I believe the following is a convenient way in which to consider them.

1. (a) Was there a duty in negligence owed by the solicitor to the appellant?

2. (a) Was there a fiduciary duty owed by the solicitor to the appellant?

3. (a) Was any loss suffered by the appellant as a result of the solicitor's negligence? (b) Was any loss suffered by the appellant because of the solicitor's breach of fiduciary duty? (c) If the answer to either or both (a) and (b) is "Yes", what was the quantum of that loss?

5. Result of the appeal. 66 1. Seven particulars of alleged negligence were set out in the statement of claim, viz: (a) failing to ascertain the true state of the title of Leila M Fryer to the Dans Avenue property; (b) failing to advise the Churchills that Leila M Fryer was not the registered proprietor of that property but that she exercised power of sale as surviving executor of Ida M Fryer; (c) failing to conduct a proper or any search of the title before exchange of contracts; (d) failing to take proper steps to ascertain that Leila M Fryer had a valid power of sale; (e) failing to take proper steps to ensure the title of the property was conveyed to the Churchills; (f) allowing and advising the Churchills to enter into possession of the property and to expend money and effort thereon notwithstanding defects and questions in relation to the title; (g) failing to do what was necessary to effect settlement of the sale of the property within a reasonable time. 67 The learned Judge said of these:

(a) Mr Salmon (Mr Connolly's then partner) was at all times aware of the true position and envisaged that Leila M Fryer would sell as surviving executor and confirmed this to the plaintiff and his wife, thus the plaintiff cannot succeed on this aspect of the case;

(b) and (c) the Judge ruled that what he had said in (a) meant that the plaintiff failed on these two aspects of the case as well;

(d) as Santow J held that Leila M Fryer did have a power of sale, this must fail;

(e) and (g) (which the Judge considered together as he said they expressed the same idea) the Judge said: "The answer by the defendant is in my view complete. Once he had realised this course of action was the only effective way of ensuring proper administration of the estate he sought those instructions from Miss Fryer and urged that course upon her. She resisted for some time. Eventually she gave those instructions. The defendant obtained the estate files on 23 December 1982."

The Judge then said that the solicitor worked assiduously to familiarise himself with the matter, wrote to the Commissioner of Stamp Duties, attended the Stamp Duties Office on 21 April 1983, and then in July 1983 the caveat was lodged. His Honour continued: "I do not understand that the plaintiff seeks to make a case that he could have done or done anything appreciably quicker. I would if required find nothing in his conduct of the matter of the estate in this period which could be criticised."

Accordingly he found the case under (e) and (g) failed. 68 (f) The Judge said that insofar as this particular relies upon the assertion of a defect in the vendor's title it fails. However, as to the assertion that Mr Salmon should have foreseen the possibility that Mr Cordingley would have failed to act as he did and warned the Churchills of the deal the first thing to be said that whilst the estate was complicated, no-one seemed to think that what was required by Mr Cordingley was inherently difficult. Why then, other than in hindsight should it be though that Mr Salmon would think that transaction paralysis would grip Mr Cordingley. The Judge held that there was no need for Mr Salmon to suspect Mr Cordingley at the beginning of his instructions for the sale of the property. 69 Accordingly, his Honour held that all the allegations of negligence failed. 70 I should make it clear that when dealing with the allegations of negligence, the trial judge noted his conclusion that the plaintiff's evidence was generally unreliable. He said: "I have no doubt that he is attempting to give an accurate account of events so far as he can recollect. However, his memory is not good. The significant events are over 20 years ago. The plaintiff has had serious ill health in the last 10 years or so and he conceded that had affected his memory. I have come to the conclusion that unless the plaintiff's evidence is corroborated by other evidence I should not rely on it alone." 71 On the appeal the appellant pressed particulars (d), (e) and (g). So far as (d) is concerned, Mr Marshall put that the trial judge's finding only goes half way. The Judge needed to examine the basis upon which Mr Connolly proceeded and that was that he appears to have thought that Leila M Fryer sold as beneficial owner. However, whether that be right or not, there was no doubt about Leila M Fryer's power to convey, and this really had nothing to do with the problem. The problem was that those who were administering other estates, particularly those of Sydney Fryer and Kathleen Steele, in the eyes of the Commissioner of Stamp Duties, had not complied with the death duty provisions of the Act and he would not release the executors' transmission applications until they had done so. Leila M Fryer did have power to convey and any error that Mr Connolly may have made about this was completely immaterial. 72 So far as (e) and (g) are concerned, as far as I can see the Judge made a finding of fact that Mr Connolly acted in all the circumstances in such a way that he did all that could have been done as quickly as possible. There was material on which his Honour could find and his findings should not be disturbed. 73 2. The fiduciary duty aspect of the appeal has caused me more concern than the negligence aspect of the case. 74 Paragraph 7 of the statement of claim alleged that by virtue of the contract of retainer and by reason of his position as solicitor for the Churchills, Mr Connolly was under a fiduciary duty (a) not to place himself in a position where his personal interests might conflict with his duty to the Churchills as his clients; (b) not to place himself in a position where there might be a conflict between his duty to the Churchills as purchasers and his duty to Leila M Fryer as vendor. 75 Paragraphs 18 an 19 then plead as follows: "18. In breach of the fiduciary duty pleaded in paragraph 7 the defendant allowed himself to be placed in a position in which his duty to the Churchills conflicted with his duty to Leila Marlow Fryer and later to Mollie Stokes for whom he also acted and the defendant failed to act properly or conscientiously to withdraw from the matter and to advise the Churchills accordingly. 19. In further breach of the fiduciary duty pleaded in paragraph 7 above the defendant allowed himself to be placed in a position in which his personal interest, in protecting himself from liability for negligence and/or breach of his contract of retainer conflicted with his duty to the Churchills to act properly at all times in their interest and to advise them adequately in respect to the proposed purchase of the property at 31 Dans Avenue." 76 The appellant says that the treatment of breach of fiduciary duty by the learned trial judge in his judgment was inadequate. 77 It is clear from the argument that the appellant does not allege that there was a breach of fiduciary duty merely in acting for both the vendor and the purchaser. However, from 1981, that is about the time Mr Connolly took over from Mr Salmon, Mr Connolly was already in his own mind getting to the point or had reached the point where he realised that there was a conflict of interest between his clients. Mr Marshall says this was well within the window of opportunity which closed on Leila Fryer's death and that had Mr Connolly at that stage ceased to act for the Churchills (or for both parties), then the new solicitors would have forced completion by the window closed so that the Churchills would have got the property for the contract price. 78 The learned trial judge rejected para 19 saying it could not possibly be made out on the evidence, bearing in mind that the Churchills were encouraged to seek other advice and did so at a stage when any rights they may have had against the defendant could be maintained. 79 As to 18, which is the kernel of the case on appeal, the Judge held that the plaintiff was aware at all times that the same solicitor was acting for both vendor and purchaser and was aware of the cause of the hold up in completion of the purchase. The Judge said that in hindsight it is possible to say that Leila M Fryer had an interest in the failure of the sale proceedings because she might be exposed to an action by the beneficiaries for selling at an under-value. On the other hand, if she did not complete, she was exposed to loss by paying damages to the Churchills for loss of bargain. Leila M Fryer's interests thus were to have the contract terminated. This was not in the Churchill's interests. The Judge then asked: "Were the interests of Miss Fryer preferred to those of the Churchills? The answer must be an emphatic 'No"." 80 The appellant's counsel say: "This finding is simply wrong, given the absence of the advice that needed to be provided and the fact that Mr Connolly continued to act without providing that advice."

They also note that in fact Mr Connolly had made the suggestion to the Churchills that they terminate their contract and recover their deposit. Counsel say the trial judge failed to recognise the significance of that evidence. It was inappropriate advice and it favoured the vendor over the Churchills. 81 The appellant's written submissions in the Orange Appeal Book spent pages extracting passages from leading cases as to how courts have in some circumstances held that a solicitor who has a conflict of interest between two clients may be liable to pay equitable compensation to one of those clients who suffers the loss because the conflict breached fiduciary duty. I will not deal with all these passages, but cite from what Gummow J said in Breen v Williams (1996) 186 CLR 71, 135-5, a passage which was probably obiter, but which sums up the law: "The fiduciary will be brought to account for any benefit or gain which (1) has been obtained or received in circumstances where a conflict or significant possibility of conflict existed between the fiduciary duty and personal interest in pursuit of possible receipt of the benefit or gain or (2) was obtained or received by use or by reason of the fiduciary position or opportunity or knowledge resulting from it. Where the breach of duty produces not a gain to the fiduciary but a loss to the party to whom the fiduciary duty was owed, then the judgment of Viscount Haldane LC in Nocton v Ashburton [1914] AC 932 at 956 and of Sir Owen Dixon in McKenzie v McDonald [1927] VLR 134 at 146-148 show that there is an obligation to account for the loss by provision of equitable compensation." 82 There is little doubt about the general principle that there may be some debate about its exact coverage. 83 However, the problem in the instant case was not quite so much the law even though the learned Judge below felt he did not need to discuss it fully in his reasons, but rather the application of the facts. Again, Mr Marshall says that this was a case where the Churchills knew that they were buying at an under-value but there was no unconscientious behaviour on their part as Leila M Fryer realised she was selling to the Churchills at what would be for them a good price and that Mr Gordon appeared to agree with it. 84 Mr Churchill knew that Mr Connolly or his firm was acting for both the vendor and the purchaser, the Churchill family would appear to be friendly with the Fryer family, that's how the contract came about in the first place. He knew there were complications. Where is the breach of fiduciary duty? 85 Mr Marshall says that it is in not realising that there was only a window of opportunity until Mrs Fryer died and ensuring either that the contract was completed or else he removed himself from a situation where Ms Fryer's interest conflicted with the Churchills. 86 To this, one must superadd the Judge's finding that Mr Connolly was in all the circumstances acting as quickly and efficiently as he could. 87 However, the awkward point for the respondent is that at some point after a reasonable time had gone by for the completion of the conveyancing transaction and when it appeared that there were problems, Mr Connolly's firm should have ceased acting. It seems to me necessary to look at the chronology fairly carefully. On 22 April 1980, Mr Connolly's firm wrote to the appellant telling him that Salmon Connolly had written to Mr Cordingley to arrange to vest title in the name of the vendor as surviving executrix as soon as possible and suggesting that he ask Ms Fryer to continue to press Mr Cordingley to finance the estate. 88 On 23 December 1982, Mr Connolly took over from Mr Cordingley the conduct of the administration of the estate of Ida M Fryer. On 7 February 1983 he wrote to the Commissioner of Stamp Duties about that estate, and on 6 July 1983 Ms Fryer died. Accordingly, there was only a six months period where Mr Connolly was acting for both parties whilst the window of opportunity was open. Although submissions have been made that Mr Connolly realised that there was a conflict, there is no substantial evidence of this until after he came back from the Stamp Duties Office in April 1983. However, the main conflict that he saw at that stage was between the various beneficiaries in the Ida M Fryer estate rather than conflict between Mr Churchill and Leila M Fryer. 89 The file notes of Mr Connolly show that in July he did reach the view that he ought not to act for Mr Churchill and told him so. However, it was over a year before Mr Churchill got around to discharging Mr Connolly and retaining new solicitors. It must be remembered that even though Mr Churchill gave answers contrary to some of these matters in his cross examination, the learned Judge, generally speaking, did not accept his evidence. The file notes and Mr Connolly's evidence, all of which were put to the appellant at about pp 73 and following of the transcript, indicate that he was advised in July 1983 and on at least two other occasions towards the end of 1983, but told that Mr Connolly was willing to give him information notwithstanding the termination of their former relationship. 90 What happened after July 1983 because of the way in which the appellant now puts his case is of relatively little moment. 91 The other attack which featured in the issue of alleged breach of fiduciary duty is that Mr Connolly became aware of the potential sale at an under-value in either April or June 1983. It would seem from the evidence that the date Mr Connolly first became aware of that possibility was 8 June 1983 when another solicitor, Mr Jeffcott, suggested the property at the relevant time was worth $100,000. Of course, at all material times, whilst Mr Churchill may not have known the true value of the property he did know he was getting "a good deal". 92 At pages Black 198-9, Mr Connolly told Mr Evans who appeared for the appellant below, that it was only shortly after 8 June 1983 when he had the conversation with Mr Jeffcott that the fact that there might be a conflict of interest between the Churchills and the estate of Fryer became crystallised. He then said that on 7 July Mr Churchill Senior told him that Leila M Fryer had died, and on 8 July he spoke to Mollie Stokes. He was then asked: "Q. Did you consider you might have a conflict of interest, that is to say, between the interests of two clients in Mollie Stokes as executrix of the estate of Leila Fryer and the Churchills as purchasers from Leila Fryer? A. I thought there was a conflict that existed before Leila Fryer's death. Q. Indeed that conflict or the potential for that conflict had existed as early as April 1980 hadn't it? A. Well, armed with all the knowledge that I subsequently found out and if I had had all the papers, the administration papers with me, yes, I suppose I wouldn't have - I would have given her the advice, 'do not enter into the contract to sell this property until such time as the title is rectified.' " 93 The appellant's submissions treat these answers as almost winning the case for them on the conflict of interest point. The phraseology of the question could not have brought about that result in any event, but I do not consider that the evidence shows that before June 1983 there was any situation of such great conflict as would require the solicitor to cease to act for the Churchills. Had a solicitor ceased to act for the Churchills on say 8 June 1983, then there would have been little chance of any solicitor taking over from Mr Connolly being able to complete the conveyancing transaction before Leila M Fryer's death, particularly because the trouble spots were those in charge of two estates over which none of the direct parties had any control. 94 In any event, one must be very careful with the term "conflict of interest". There are many conflicts of interest that turn up in everyday life and in commercial life, and if everybody realises that there is a conflict and takes care, damage flowing from the conflict can be eliminated or minimised. Very often parties who are completely free of any disability would prefer the situation of a known legal adviser who has a conflict of interest with another client continuing to act rather than retain another. Of course, free consent is a defence to breach of fiduciary duty, but the matter really goes further than that. The mere fact that a conflict of duty exists will not necessarily mean that there is a breach of fiduciary duty. 95 In the instant case, in my view there was no breach of any fiduciary duty in respect of conflicts of interest until after 8 June 1983 and between that time and the time the window of opportunity closed, no adverse consequences flowed through to the appellant. 96 3. Even if I had found there to be some breach of duty, I would have great difficulty in making an award of equitable compensation in anything like the amount that was claimed by the appellant. The rules for determining the way in which equitable compensation for breach of fiduciary duty are to be assessed are not completely clear. It may be that the proper question is to ask what, if anything, should the person in breach of fiduciary duty pay to the plaintiff by reason of some default? See Webb v Stenton (1883) 11 QBD 518, 530; Youyang Pty Ltd v Minter Ellison Morris Fletcher (2003) 77 ALJR 895, 903. In that latter case, the High Court reminded that there is no equitable by-pass of the need to establish causation, a phrase taken from the judgment of Mummery LJ in Swindle v Harrison [1997] 4 All ER 705 at 733, 744. 97 In the present case, if I were to assume that there had been a breach of fiduciary duty, and had to ask myself what was the loss caused to the appellant by reason of the default with respect to breach of the fiduciary duty, the only answer I can come up with is "none". After 8 June until the window of opportunity closed, there was just no time for anyone to do anything to improve the position and before 8 June as the Judge held, Mr Connolly had done all that was reasonably expected. Although the appellant's counsel throws scorn on this, that is the finding that his Honour and he were entitled to make on the evidence. 98 In any event, the appellant claims the $185,000 extra he had to pay his counsel and solicitors' fees of the equity suit and interest of $247,279.44 as at 8 March 2004. 99 As a result of the reasons given by Santow J, the appellant was entitled to damages for loss of bargain as against Leila M Fryer and he may well have been entitled to his costs or at least a substantial part of them. 100 However, the facts were that the plaintiff and his wife had been in occupation since June 1980; they had spent a lot of money on the property; they had lived there for many years and they actually wanted the property. They could not get it by proceedings at law or in equity, and so they bargained away their rights for damages and costs in return for securing the property. 101 One would have expected that there would have been some evidence given to the Judge as to whether that was a good bargain or a bad bargain. I have already noted the point that in the absence of any other evidence, and as the parties were at arm's length, the Judge could conclude that the bargain was fair and reasonable. However, where a party can place before the court good reliable expert evidence on a point and chooses not to, one is very wary in drawing inferences. 102 In any event, it seems to me that the $185,000 and indeed, counsel's fees too, clearly came about because the plaintiff had no equity because the price was at an under-value, his only remedy was a remedy at law for damages as at the date of breach, and this is what he got or would have got had he not proceeded to make some other arrangement. The cost of securing the property did not flow from any negligence or breach of fiduciary duty, it flowed from the fact that at law the only remedy available was damages and Mr Churchill considered that this was not enough. It cost him more to secure by bargaining what he could not get at law or in equity. Thus I do not consider that the sum claims flow from any breach of duty at law or in equity even if one had been found to exist. 103 The most that might have flowed was relatively nominal damages for loss of a chance. Although this olive branch was handed out to the appellant, he indicated that he would only grasp it as a last resort and no substantial argument was put to us on the point. I do not see the need to consider it further. 104 4. I mentioned earlier on in this judgment about problems with limitations. The learned Judge held that this was unanswered and unanswerable. There was, however, no notice of contention filed with respect to the point. In view of what I have already said, there does not seem to be any purpose in discussing it further. 105 Likewise, there does not appear to be any purpose in further discussion of the point as to whether Mrs Churchill's assignment of her rights ran foul of any rule of the District Court. 106 5. It follows from what I have said above that the appeal must be dismissed with costs.

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