Clarke v Wakeling & Anor

Astley v Austrust Ltd [1999] HCA 6; 197 CLR 1 Dominic v Riz [2009] NSWCA 216 CASES CITED : Heydon v NRMA Ltd [2000] NSWCA 374; 51 NSWLR 1 Kowalczuk v Accom Finance Pty Limited [2008] NSWCA 343 Waimond Pty Ltd v Byrne (1989) 18 NSWLR 642

Souad Clarke - Plaintiff PARTIES : Donald Wakeling - First Defendant LawCover Insurance Pty Limited - Second Defendant

COUNSEL : Mr A P Cheshire - Plaintiff Mr W McManus - First and Second Defendants

SOLICITORS : Oliveri Lawyers - Plaintiff Colin Biggers & Paisley - First and Second Defendants

IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

JUDGMENT 1 HIS HONOUR: Nature of Proceedings The plaintiff has brought proceedings against the first defendant (Mr Wakeling) alleging that he acted as her solicitor in certain loan transactions and that he carried out that function negligently. There were three loan transactions. The plaintiff claims the loss of the moneys loaned and for consequential loss such as legal fees incurred when seeking to recover the loan moneys from the borrower. No claim is made in contract. The claim is based on negligence. 2 Although two defendants are named, the Court was advised on the first day of the hearing that the second defendant had agreed to indemnify Mr Wakeling. The same counsel represented both defendants. The matter was conducted as if Mr Wakeling were the only defendant. 3 The issue between the parties is essentially a factual one. If the plaintiff's version of events is accepted, the liability of Mr Wakeling is clear. If only part of the plaintiff's evidence is accepted, or if it is rejected substantially, a question may still arise as to the extent of the duty owed by Mr Wakeling to her.

Factual Background 4 Except as otherwise indicated, I find the facts to be as follows. 5 At the time of these events, Mr Wakeling held a practising certificate as a solicitor and was the principal of the firm Wakeling and Associates. 6 The plaintiff at the time of trial was aged 50. She had tertiary qualifications in interior and fashion design obtained in France in the 1970's. She arrived in Australia in 1985 with only a poor knowledge of English. Soon after her arrival, she gained employment as a retail manager in a designer shop. She worked in the fashion industry until 1990. 7 In 1994 she married Richard Clarke and there was one child of that union. The plaintiff and Mr Clarke divorced in 1997. As a result of the divorce, the plaintiff received assets to the value of about $1.3 million. In 2001, the plaintiff owned two unencumbered properties: one, an apartment in William Street, North Sydney and the other, a townhouse in Hayberry Street, Crows Nest. 8 In about March/April 2001 the plaintiff commenced a romantic relationship with Peter Jones. That relationship was harmonious until about April 2002. Thereafter, it continued on an intermittent basis until December 2002. There was a reunion for a short period of probably less than a month in early 2003. The relationship then ceased entirely. For a period of approximately 4-5 months (December 2001 until April 2002) the plaintiff was living with Mr Jones in his apartment in Shirley Road, Wollstonecraft. 9 As of July 2001, the plaintiff and a neighbour, Ms Dawn Wade, had been friends for over three years. At that time the plaintiff had agreed to participate in a real estate development project which Ms Wade was organising in respect of a property in Emmett Street, Crows Nest. Ms Wade and the plaintiff were also considering other real estate development projects which included the acquisition of a hotel at Gloucester in country New South Wales. There was a project involving a wine bar or hotel in Crows Nest, which the plaintiff and Ms Wade considered, but did not proceed with. 10 In 2001 Mr Jones was a property developer. He was developing a project at Olympia Road, Naremburn ("the Naremburn project"). This project involved the construction of a number of townhouses at that location. The company which was carrying out the project was South Australian Buying Corporation Pty Limited (SABC), a company controlled by Mr Jones. 11 Mr Wakeling first met the plaintiff at a dinner party held at Mr Jones' apartment in Shirley Road in August 2001. The other attendees at the dinner party were Mr Jones and Ms Wade. At that time Mr Wakeling had known Mr Jones for approximately 15 years and over that time, had performed legal work for him. In August 2001 he was acting for Mr Jones and SABC in relation to the Naremburn project. He said that he was owed between $10,000 and $15,000 for legal fees for work done in relation to that project. He had agreed to wait for payment until the project was completed. 12 Following the dinner party, the four persons became friends. Mr Wakeling commenced a romantic relationship with Ms Wade shortly afterwards. This lasted until July/August 2002 when Mr Wakeling moved to Budgewoi on the Central Coast. Mr Wakeling moved in with Ms Wade in September 2001. 13 I find that between August 2001 and December 2001 Mr Jones would have spoken about the Naremburn project to the plaintiff, no doubt in glowing terms. He probably said that the project was likely to be very successful and that if she invested in it, she was likely to make a substantial profit. He probably indicated an expectation that ten townhouses could be constructed on the site and that for a loan of $200,000 she could gain a substantial profit, perhaps as much as $1,000,000. 14 In making those findings, I have had due regard to paragraph 9 of the plaintiff's first affidavit. In that paragraph the plaintiff deposed to a detailed discussion between her and Mr Jones as to her investing moneys in the Naremburn project. In particular, paragraph 9 referred to the plaintiff requesting some security for any investment and Mr Jones responding that he would get Don Wakeling to organise a mortgage for her. 15 For reasons which will emerge, I regard the plaintiff's evidence on most contentious issues to be unreliable. I would be surprised if her recollection of this conversation was accurate, given the differing versions of events which she has given. With the benefit of hindsight, it would be surprising if Mr Jones made such a comment since he would have had no desire to have a further mortgage placed over the Naremburn property. 16 The content of that conversation is further complicated by the evidence of Mr Jones who disputed a number of details of it (paragraph 2 of his affidavit). While I regard the evidence of Mr Jones on a number of issues to be unreliable, I cannot entirely disregard the fact that he disputed important parts of this conversation. Even if these comments were made by Mr Jones to the plaintiff, there is no evidence that any of them were passed onto Mr Wakeling. 17 On 22 November 2001 the plaintiff made loan applications to enable her to invest in projects with Ms Wade. In those loan applications the plaintiff offered as security her apartment in William Street, North Sydney (exhibit 1, pages 8, 9, 14 and 15; T.15.29). In late November or early December 2001, the four friends went to Gloucester to look at the hotel property which was being considered for development. The plaintiff continued to look for investment opportunities with Ms Wade in December 2001. 18 In December 2001 discussions took place between Mr Jones and the plaintiff concerning her investing in the Naremburn project. Contrary to what Mr Jones says in his affidavit (paragraph 3), I find that he was the one who sought to persuade the plaintiff to put money into the project and that he described the project in very positive terms. I do not accept that the plaintiff said to Mr Jones, "Can you get Don Wakeling to come over and give me some advice and arrange the necessary documents" (paragraph 10 of her first affidavit). 19 Apart from the general unreliability of the plaintiff's evidence, it is apparent from her other loan applications that the plaintiff was quite capable of arranging loan documents for herself. That statement is also inconsistent with the loan which was actually made. It is clear that the plaintiff completed the application herself and processed correspondence until the loan was approved (exhibit 1, page 51). This is despite the fact that the plaintiff inserted Mr Wakeling's name on the application form as her solicitor. 20 It follows from that finding that I also reject that part of paragraph 11 of the plaintiff's first affidavit which attributed to Mr Wakeling the statement "Where is the title deed of your unit so that I can organise a loan for the purpose of funding Peter's development?" The plaintiff's purpose when inserting that comment was twofold. Firstly, she wished to establish that Mr Wakeling participated in arranging the mortgage from the Public Trustee of Queensland and secondly, she wished to establish knowledge on his part that the purpose of this loan was to advance moneys for the Naremburn project. 21 The plaintiff and Ms Wade in their first affidavits imply but do not expressly state that Mr Wakeling in some fashion arranged the loan by the Public Trustee of Queensland to the plaintiff of $250,000 for which her North Sydney property was security. Ms Wade in particular (paragraphs 17 and 18) referred to observations which she made of Mr Wakeling "preparing" the mortgage documents. Neither the plaintiff nor Ms Wade explained either there or in their oral evidence how those documents came into the possession of Mr Wakeling. In her evidence at trial the plaintiff could not remember whether Mr Wakeling was involved in applying for this loan. (T.33.36, 34.45) 22 I reject their evidence on this issue. I find that the application for the $250,000 loan from the Public Trustee of Queensland was made by the plaintiff and that Mr Wakeling played no part in it. It is significant that the application itself was completed by the plaintiff. Even though it referred to Mr Wakeling as her solicitor, there was a specific notation on the application as to where documents were to be sent and that was not an address to which Mr Wakeling had access. It is also clear on the face of the mortgage and the other loan documents that they were addressed to and sent to the plaintiff. There is no reference anywhere to Mr Wakeling. 23 This is confirmed by a letter from the plaintiff's former solicitors, Messrs Hazan Hollander, dated 20 September 2005 (exhibit 2) which was sent to a Ms MacDougal, solicitor. The purpose of this letter was to elicit an expert opinion as to the conduct of Mr Wakeling. Amongst the assumptions which Ms MacDougal was asked to make was the following: "4. Ms Clarke made application for finance of $250,000 with the mortgage broker to be secured against real estate she owned unencumbered, at 708/9 William Street, North Sydney. Subsequently, loan and mortgage documents arrived for signature … … the letter from the mortgagee's Solicitors to Ms Clarke dated 7 January 2002 enclosing the mortgage documents, is addressed to Ms Clarke." 24 Exhibit 2 is an important document in these proceedings. As a letter providing the factual basis upon which expert opinion was being sought, the solicitors would have been careful to accurately record a history from the plaintiff as to what occurred and to accurately transmit that history to the expert. If a mistake were made in the history and the assumptions upon which the expert was expected to base her opinion, the whole report could be invalidated. I accept exhibit 2 as representing an accurate record of what the plaintiff told Messrs Hazan Hollander as of that date. 25 Mr Wakeling, whom I accept on this issue, denied that he arranged any mortgage or loan documents (affidavit, paragraph 24). It was his evidence, which I also accept, that on 9 January 2002 he had a telephone conversation with Mr Jones in which he was asked to go to Mr Jones' residence to witness some mortgage documents. That was the first he knew of any loan transaction.

What happened on 9 January 2002 26 In relation to the events of 9 January 2002, the only issue upon which the parties agree is that the plaintiff signed the mortgage and security documents sent by the mortgagee and that her signature was witnessed by Mr Wakeling. 27 The plaintiff's case as set out in the Amended Statement of Claim was that she sought professional advice from Mr Wakeling in relation to the proposed loan by her to SABC for the Naremburn project. It alleged that Mr Wakeling prepared and advised the plaintiff in relation to a loan agreement dated 17 January 2002 which was executed on 24 January 2002. The Amended Statement of Claim also alleged that Mr Wakeling failed to insert in the agreement a term that in consideration for her loan, the plaintiff would receive 50 percent of the net profit from the Naremburn project. 28 The content of the Amended Statement of Claim is important because both the original Statement of Claim, filed towards the end of 2007, and the Amended Statement of Claim filed in May 2008, contained an affidavit by the plaintiff affirming that the allegations of fact in the Statement of Claim were true. The Statements of Claim are silent about Mr Wakeling witnessing or providing any advice in relation to the mortgage and security documents received from the Public Trustee of Queensland. 29 It was Mr Wakeling's case that in response to the request from Mr Jones he had gone to Mr Jones' residence on 9 January 2002 in order to witness the mortgage and other security documents to enable the plaintiff to borrow $250,000 from the Public Trustee of Queensland. He said that he explained the meaning of the documents to the plaintiff and witnessed her signature where appropriate. He then arranged for the certificate of title to be sent to the mortgagee and also for the security and mortgage documents to be sent. He said that he did not charge any fee. He said that he was unaware of, nor did he ask about, the purpose for which the moneys were being borrowed. 30 In her first affidavit the plaintiff said: "12 On or about January 2002 I had a meeting with the first defendant and we had a conversation to the following effect: FIRST DEFENDANT: You'll need to sign these mortgage documents and also the attached agreement that Peter has prepared regarding your agreement with him. ME: Is everything in order regarding the interest payments? I am concerned because the interest will be my only form of regular income for the time being. FIRST DEFENDANT: I have read through the documents and everything is fine. I signed both documents in the places indicated to me by the first defendant believing that the first defendant as my solicitor was satisfied that my interests as investor and lender were fully protected. Annexed and marked "A" is a copy of the agreement." 31 There is an immediate problem with that paragraph of the affidavit. The document annexed and marked "A" is a loan agreement between SABC and the plaintiff. It bears at its top the date "17th day of January". It has been witnessed by Mr Jordan, JP and after his signature it bears the date 24/01/02. Annexure "A" is clearly inconsistent with paragraph 12 of the affidavit, which the plaintiff agreed referred to the events of 9 January 2002. 32 In addition, paragraph 12 of the affidavit is inconsistent with paragraph 9 of the Amended Statement of Claim. The Amended Statement of Claim asserted that Mr Wakeling prepared the loan agreement whereas the affidavit accepted that the agreement was prepared by Mr Jones. The other difficulty with paragraph 12 is the assertion that "interest will be my only form of regular income for the time being". If such an assertion were made it was not true. The plaintiff was receiving rental payments from the property the subject of the mortgage, significant maintenance payments from her previous husband and income from other sources which she did not disclose. 33 In her oral evidence the plaintiff agreed that she signed the mortgage documents at the residence of Mr Jones in Shirley Road. She said that Ms Wade was also present as was Mr Jones. The plaintiff said that Mr Wakeling and Ms Wade had come over for dinner. When the inconsistency between annexure "A" and paragraph 12 of her affidavit was pointed out to her, the plaintiff said that she was in fact referring to an earlier agreement which she had signed on 9 January 2002 which was in identical terms to that which was subsequently signed on 24 January 2002. She was unable to produce a copy of the earlier agreement. She agreed that until she gave that evidence about an earlier agreement (T.44.14), she had made no mention about any agreement predating that signed on 24 January 2002. 34 In relation to Mr Wakeling's knowledge of whether the moneys being borrowed from the Public Trustee of Queensland were to be invested in the Naremburn project, the plaintiff did not give evidence as to specifically advising Mr Wakeling of that fact. She said that there was no need to do so because he was already aware of the reason why the moneys were being borrowed. This was because he used to socialise with her and Mr Jones and they talked about everything (T.52.20). 35 In the letter from Messrs Hazan Hollander to Ms MacDougal, Ms MacDougal was asked to make the following assumptions in relation to this meeting: "6. On or about 9 January 2002 Ms Clarke and Mr Jones attended a dinner party at Ms Wade's residence. Mr Wakeling was also present. During the party, there was discussion in relation to the development. Plans for the development were referred to. Mr Jones gave Mr Wakeling documents relating to Ms Clarke's loan and asked him to witness her signature on them. Ms Clarke had never signed a loan agreement or a mortgage before. She did not expressly ask Mr Wakeling to act for her on the mortgage transaction. Mr Wakeling seems to have assumed that role. (Kindly note that Ms Clarke cannot now recall whether the terms of the discussion expressly confirmed to Mr Wakeling that Ms Clarke was proposing to on-lend the proceeds of the mortgage advance to Mr Jones for the development. Ms Clarke does recall however, that Mr Jones did inform those gathered for the dinner party that he would pay her 8 percent and that it was a good investment, because it was going to make over $2M from the development.) 7. After the documents were given to Mr Wakeling, Ms Clarke observed him to look at them. Ms Clarke had not read the documents before the dinner party or before she signed them. Ms Clarke recalls that Mr Wakeling asked her a number of questions, but cannot now recall their terms or their answers to them. She did not ask for advice on the documents and never received a bill from Mr Wakeling." 36 Other evidence on this issue was a letter, dated 22 April 2003, sent by the plaintiff to the Legal Services Commissioner complaining about the conduct of Mr Wakeling (exhibit 1, page 89). Relevantly, that letter said: "In January 2002 I agreed to loan to Peter William Jones $205,000 to assist him in a property development. Don Wakeling was his solicitor and personal friend. He was also the solicitor to various companies that Peter Jones was director of. The loan was made to South Australian Buying Corporation Pty Limited. Don Wakeling witnessed the deed but did not advise me that I should have taken independent legal advice. I had to mortgage my unit to obtain the money for the loan …" 37 There was a letter from the plaintiff to the Australian Securities Commission dated 23 May 2003 (exhibit 1, page 111) which is relevant. In that letter the plaintiff said: "In January of 2002 I lent Peter William Jones approximately $215,000 to assist him in a property development in Naremburn NSW. I mortgaged my unit to advance him the money. The mortgage was witnessed by Don Wakeling, solicitor. Peter Jones gave me a deed verifying that I had lent the money to South Australian Buying Corporation and he promised to give me caveats over the property that the company owned or a company charge over its assets and that Don Wakeling would organise the security for me." 38 I have concluded that the evidence of the plaintiff at trial as to the existence of an earlier agreement, signed by her on 9 January 2002, which was in identical terms to that signed on 24 January 2002, should not be accepted. I have concluded that it was a recent invention designed to extricate her from the difficulties created by paragraph 12 of her first affidavit. 39 I have reached that conclusion for the following reasons.

(a) The plaintiff did not include this evidence in her first affidavit.

(b) The plaintiff did not include this evidence in her second affidavit of March 2009 even though Mr Wakeling in his affidavit of 8 December 2008 had clearly asserted that there was no loan agreement between the plaintiff and SABC discussed on 9 January 2002.

(c) A call was made for the production of the earlier agreement but it was not produced. (T.47.37)

(d) The plaintiff accepted that this was the first time that she had given any evidence about an earlier agreement.

(e) The plaintiff could not explain why, if an agreement had been entered into on 9 January 2002 there would be a need to execute a further agreement on 24 January 2002. In that regard, the plaintiff accepted that the agreement annexed to her first affidavit was executed on 24 January 2002 in front of a JP, Mr Jordan, at a time when Mr Wakeling was not present.

(f) If a loan agreement had been signed on 9 January 2002 it is incredible that the plaintiff would not have mentioned that fact, either in her letter of complaint to the Legal Services Commissioner, in her letter to the Australian Securities Commission or when she was providing instructions to Messrs Hazan Hollander which would form the basis of the assumptions which they asked Ms MacDougal to make when preparing her expert opinion.

(g) The existence of such a document is inconsistent with the allegations made in the Statements of Claim to the effect that Mr Wakeling prepared and advised the plaintiff in relation to a loan agreement dated 17 January 2002 which was executed on 24 January 2002. 40 Implicit in the rejection of the plaintiff's evidence as to the existence and execution of an earlier agreement is the finding that paragraph 12 of her affidavit must be incorrect and that annexure "A" was not signed by her on 9 January 2002, nor did Mr Wakeling on that occasion provide any advice in relation to it. What seems clear is that the loan agreement between the plaintiff and SABC in respect of the $205,000 loan was signed on 24 January 2002 in the absence of Mr Wakeling. In that regard I accept Mr Wakeling's evidence that he knew nothing about the agreement, that he was not asked to advise in relation to it and did not provide any advice in relation to it. As the plaintiff stated in paragraph 12 of the affidavit, the loan agreement was prepared by Mr Jones. He provided it directly to her without any part being played by Mr Wakeling in relation to it. 41 It follows from those findings that no instructions were given by the plaintiff to Mr Wakeling to include in an agreement a term that in consideration of her loaning moneys to SABC, she would be entitled to 50% of the profits generated from the Naremburn project. Apart from its inconsistency with the above findings, there was no evidence from the plaintiff that she ever instructed Mr Wakeling to prepare a loan document or to include in such a document particular terms. 42 I have concluded that Mr Wakeling acted on behalf of the plaintiff as her solicitor in her dealings with the Public Trustee of Queensland. I accept his evidence that he explained the meaning of the mortgage and other loan documents to her. I accept that he assisted her in finalising the transaction by obtaining and forwarding a copy of the title deed to the solicitors for the lender and in arranging for the completed mortgage and other loan documents to be returned. Mr Wakeling agreed that he had acted as the plaintiff's solicitor on that limited basis. In correspondence to the solicitors for the lender, he said that he acted on behalf of the plaintiff.

Knowledge of purpose of loan 43 The most direct evidence as to Mr Wakeling's knowledge of the purpose of the loan comes from Ms Wade. Before referring to that evidence in detail, I should make some observations concerning Ms Wade as a witness. 44 I formed the opinion that Ms Wade had a deep and abiding dislike of Mr Wakeling and that her evidence in the proceedings was designed to do him harm. Accordingly, on important issues, I have significantly discounted its effect and I regard it as being largely unreliable. 45 My reasons are these: The contents of exhibit 3 are revealing. This is a letter from the Official Receiver in Bankruptcy, dated 4 January 2008, addressed to the plaintiff's solicitors. The subject of the letter was the Statement of Claim in these proceedings. Relevantly, the letter stated: "Early today Ms Dawn Wade attended our Sydney Office seeking to serve a copy of a Statement of Claim for the abovementioned matter upon the Official Trustee in Bankruptcy. … 4. I did not follow Ms Wade on all points raised by her but understand that she is of belief that the Official Trustee in Bankruptcy has capacity to make a claim to LawCover in relation to this matter. I have advised Ms Wade that on the basis of point 1 above, I do not consider that the Trustee has the capacity to make such a claim. …" 46 I infer from that letter that Ms Wade was not objective in her approach to the plaintiff's claim but was actively assisting the plaintiff in it. Her assistance extended to serving documents as exhibit 3 demonstrated. 47 Cross-examination of Ms Wade revealed that she and/or companies controlled by her are presently pursuing a number of claims against Mr Wakeling through the courts. She is clearly of the opinion that if the plaintiff succeeds in this claim, this will assist her in her claims against Mr Wakeling. 48 Ms Wade gave evidence (second affidavit, paragraph 4, T.105.14) that the reason she sold the Emmett Street property was because the plaintiff was not prepared to invest in it. The implication was that the plaintiff's unwillingness to invest in that project was because she had been persuaded by Mr Jones to invest in the Naremburn project. This evidence was clearly incorrect in that the Emmett Street property was sold in September 2001, well before the plaintiff had decided to invest in the Naremburn project and at a time when the plaintiff and Ms Wade were discussing other projects in which they might invest together, such as that at Gloucester. 49 For the reasons already indicated, Ms Wade's evidence about observing Mr Wakeling "preparing" mortgage documents for the plaintiff is incorrect. Ms Wade expanded on that evidence at trial as follows: "He had mortgage documents and some, I don't know, something else with it and he was flicking through pages, writing on it, doing something. I didn't take any notice. And I did see him sign something and it was then that he said "I am preparing these documents for Souad. Can you drive me there?" and I remember thinking well, I'll do it. Q. You have no idea what the documents are? A. He said "I'm organising the mortgage and the loan for Souad" but I didn't look". (T.111.34)

The inaccuracy of that evidence when compared with what was contained in the letter from Messrs Hazan Hollander to Ms MacDougal provides an illustration of the way in which Ms Wade was prepared to tailor her evidence in order to assist the plaintiff and damage the defendant. 50 After Ms Wade had completed her evidence, she remained in Court and was present when Mr Wakeling was being cross-examined. On at least three occasions during that process, Ms Wade approached the plaintiff's solicitor and provided some information to him which on two of those occasions, was passed onto counsel for the plaintiff. This supported the opinion which I had formed that Ms Wade's approach to this matter was not objective but was hostile to Mr Wakeling. 51 In paragraph 9 of her first affidavit, Ms Wade set out a statement which she alleged was made to her by Mr Wakeling in August or September 2001: "I don't think Souad should invest her money with you as Peter needs money for the development of his townhouse project. They are a couple and she should invest with him. He is a financial genius and you should not get involved in their relationship. As her solicitor that is what I will be advising her to do." 52 This statement attributed by Ms Wade to Mr Wakeling, does not fit the context in which it is placed. It is clear that as late as December 2001 the plaintiff was still giving serious consideration to investing in projects with Ms Wade. While I have no doubt that Mr Jones was promoting the Naremburn project in August/September 2001 to the plaintiff, I would be surprised if he had sought money from the plaintiff at that time. Certainly the plaintiff had not made any decision about that matter until December 2001. 53 The comment attributed to Mr Wakeling about him being the plaintiff's solicitor at that time appears to have no factual basis. Nowhere in her evidence has the plaintiff made any suggestion that such was the case at that point in time. This is particularly so when the plaintiff had only met Mr Wakeling in a social context some weeks before this alleged conversation. I find that the conversation between Ms Wade and Mr Wakeling, as set out in paragraph 9 of her affidavit, did not occur. 54 Similarly, although nothing significant turns on it, the conversation between Ms Wade and the plaintiff in paragraph 10 of Ms Wade's first affidavit, does not sit easily with the loan applications made by the plaintiff in November 2001, which indicated a clear intention to participate in projects with Ms Wade. I have concluded that it is unlikely that the conversation in paragraph 10 of that affidavit took place. 55 I have already indicated why I do not accept the accuracy of paragraphs 17 and 18 of Ms Wade's first affidavit. In addition to the reasons already given, it is of significance that the plaintiff did not give evidence as to a conversation with Mr Wakeling such as is set out in paragraph 17, i.e. that Mr Wakeling told her that "he would do the mortgage for her and make sure that she got all the paperwork right". 56 The strongest argument in favour of Mr Wakeling being aware of the purpose for which the plaintiff was borrowing money in January 2002 is the closeness of the relationship between him and Mr Jones and the apparent closeness of the relationship between the two couples. There is a certain plausibility in the proposition that given the closeness of the relationship, Mr Wakeling must have known the purpose of the loan or alternatively, he would have felt entitled to ask the plaintiff about it. 57 Mr Wakeling's evidence on this issue is clear and unequivocal. He said that he did not know and that he deliberately did not ask. The plaintiff's evidence would seem to support that second proposition in that there is no suggestion in her evidence or that of Ms Wade that Mr Wakeling did ask what the purpose of the loan was on 9 January 2002. 58 Support for the proposition that as of 9 January 2002 Mr Wakeling did not know the purpose of the loan from the Public Trustee of Queensland is provided by the Messrs Hazan Hollander letter to Ms MacDougal (exhibit 2). That letter candidly stated that the plaintiff at the time of the letter (September 2005) could not recall whether the discussion on 9 January 2002 confirmed to Mr Wakeling that she was proposing to on-lend the proceeds of the mortgage advance to Mr Jones for his development. In the concluding parts of that letter Messrs Hazan Hollander asked Ms MacDougal to express her opinion on two alternative bases i.e., that Mr Wakeling was aware that the plaintiff was on-lending the mortgage advance to Mr Jones and that he was not so aware. 59 It is clear that the plaintiff had not made a decision about lending for Mr Jones' project until she applied for the loan from the Public Trustee of Queensland in December 2001. That is not long before the meeting of 9 January 2002. While Mr Wakeling may have been aware in a general way, that Mr Jones was seeking money for the project from the plaintiff, he might not have been aware that the plaintiff had decided in December 2001 to make such a loan. It is also clear that as late as December 2001 the plaintiff was still considering participating in a project with Ms Wade . 60 It needs to be remembered that Mr Wakeling was at the time in a relationship with Ms Wade. A likely effect of the plaintiff advancing money for Mr Jones' project was that she would be unlikely to participate in any of Ms Wade's projects. As Mr Wakeling's evidence made clear, he was reluctant to become involved in any business arrangements between Ms Wade and the plaintiff. This almost certainly explains his evidence that he was careful not to ask the purpose of the loan when advising the plaintiff in relation to the mortgage documents on 9 January 2002. 61 There are indications in the evidence which are consistent with Mr Jones not wanting Mr Wakeling to know that the plaintiff had agreed to lend money for the project at this time. The loan moneys from the mortgage were to be paid directly into the plaintiff's account and not to SABC or Mr Jones. The preparation of the loan agreement with SABC by Mr Jones (not Mr Wakeling) and the signing of it by the plaintiff in front of a JP (not Mr Wakeling) is consistent with Mr Jones not wanting Mr Wakeling to be aware of the transaction at that time. Given the closeness of their relationship, one would have expected Mr Jones to have asked Mr Wakeling to deal with those formalities had Mr Wakeling been aware of the transaction. This is particularly so in relation to the drafting of the loan agreement with SABC. Whilst the agreement is replete with "legalese", it was clearly not drafted by a lawyer. 62 On this issue I accept the evidence of Mr Wakeling. I reject the evidence of Ms Wade. I reject the evidence of the plaintiff on this issue in paragraph 12 of the first affidavit and her oral evidence as to the existence of an earlier agreement with SABC. I find that on 9 January 2002 when Mr Wakeling provided advice to the plaintiff as to the mortgage documents, he did not know that part of the proceeds of that loan would be advanced by the plaintiff to Mr Jones' project. He may have had his suspicions but I am not prepared to go any further than that. 63 Once one rejects the plaintiff's evidence of Mr Wakeling's knowledge of an agreement between her and SABC, there is no direct evidence of actual knowledge on his part of such a loan transaction. The basis for the plaintiff's submission was the plausibility of him having such knowledge, given the close relationship between him and Mr Jones. I am not prepared to draw that inference, particularly in the light of the strong denial under oath by Mr Wakeling. 64 It follows from those findings that since Mr Wakeling had nothing to do with the preparation and signing of the loan agreement between the plaintiff and SABC and was unaware of the plaintiff's intention to lend moneys to SABC at the time when he provided advice concerning the mortgage documents on 9 January 2002, that the allegations in paragraphs 6 - 11 of the Amended Statement of Claim have not been made out.

Incidental factual issues 65 At this point in the judgment, it is convenient to deal with two incidental factual issues which arose. 66 In her oral evidence, the plaintiff said that she had made payments of cash to Mr Wakeling from time to time. I reject that evidence. It was an assertion which the plaintiff had not made previously. It did not appear in either of her affidavits. It did not appear in her letter of complaint to the Legal Services Commissioner of 22 April 2003, nor did it appear in the factual background provided to Ms MacDougal in the letter from Hazan Hollander of 20 September 2005. Apart from anything else, the plaintiff did not identify for what services such cash payments were made. The proposition was denied by Mr Wakeling and I accept his evidence on that issue. 67 The other issue arises from the evidence of the plaintiff's former husband, Richard Clarke. He gave evidence about being introduced to Mr Wakeling by the plaintiff at some time during 2002 as follows: "Richard, this is Don Wakeling. He is my solicitor".

I assume that this evidence was meant to ground an inference that Mr Wakeling's apparent silence indicated an admission on his part that this was a correct description of the relationship between him and the plaintiff. 68 It is difficult to draw any inference from that evidence. Mr Clarke was unable to identify when in 2002 he was introduced to Mr Wakeling. At that time Mr Clarke resided in the Philippines and used to only come to Australia three or four times a year to visit his daughter. He thought it had occurred on the second or third occasion when he had visited Australia in 2002. He thought it was earlier than September 2002. 69 Strictly speaking, Mr Wakeling had acted as the plaintiff's solicitor in relation to explaining the mortgage documents received from the Public Trustee of Queensland. In August and September 2002 Mr Wakeling acted on behalf of the plaintiff on the sale of her North Sydney unit. Depending upon the date of the introduction, that statement may well have been correct. The more likely explanation regardless of when the introduction took place, is that the plaintiff was overstating the situation and Mr Wakeling was not prepared to embarrass her by denying such a relationship, particularly since the introduction was being made in a social context. I am not prepared to draw any inferences from this evidence.

Subsequent loans 70 As a result of the mortgage of her North Sydney unit, $244,350 was paid into the plaintiff's bank account on 16 January 2002. On 17 January 2002 she paid out $205,649 to SABC. This is the date on the top of the loan agreement with SABC, which was signed on 24 January 2002. The plaintiff apparently applied the balance of the loan moneys for her own purposes. 71 In paragraph 13 of her affidavit, the plaintiff set out a conversation between Mr Jones and herself which she said took place in April 2002: "ME: Peter you are not paying me the interest on my loan. I can't live without the interest it is my only form of income at the moment. JONES: The development is taking longer than I expected. I won't be able to pay you interest for a couple of months." 72 As previously indicated, if the plaintiff did say to Mr Jones that interest from the loan was her only source of income, that was untrue. She was at that time still receiving rent from the North Sydney unit and was also receiving maintenance payments of $1000 per week from Mr Clarke. Despite that conversation (if it occurred in those terms), on 7 May 2002 the plaintiff advanced a further $5000 to either Mr Jones or SABC. The circumstances in which that further loan was made were never explained. 73 The plaintiff alleged that in July 2002 the following conversation took place between her and Mr Wakeling (first affidavit paragraph 14): "ME: I am very worried that Peter hasn't paid me any interest. I have no income and I can't pay the interest on my mortgage. What do you think I should do, Don? This is causing me so much stress. FIRST DEFENDANT: Souad, the best advice I can give you is for you to sell your place and loan Peter some more money so he can finish the development quickly and you'll be able to get your money back and half the profit out of the deal. I am telling you now that if Peter doesn't get some more funding the whole deal with fall over and you will lose your whole investment." 74 It was the plaintiff's case that relying upon that advice, she sold her North Sydney unit (Amended Statement of Claim, paragraph 16) and from the proceeds of sale advanced a further $125,000 for the Naremburn project. Ms Wade sought to support the plaintiff's evidence (affidavit, paragraph 21) by saying that the plaintiff told her that Mr Wakeling had given her advice to this effect. 75 In her first affidavit (paragraph 17) the plaintiff said that before making the further loan she asked Mr Wakeling whether she should sign some other papers concerning the loan. She said that his reply was as follows: "No, the terms of the initial loan documents covers you for any further money loaned as it is the same company that you have advanced the money to. ME: Are you sure? I am feeling very concerned about my position. FIRST DEFENDANT: I am sure. You need not worry." 76 It was the plaintiff's evidence (affidavit, paragraph 18) that after making the further loan of $125,000 the following conversation took place between her and Mr Wakeling: "ME: Peter is becoming very abusive and our personal relationship is breaking down. I am worried about my money. I don't have any agreement for the second lot of money I have given him. FIRST DEFENDANT: If you are worried, just get Peter to write you an agreement that you have given him the money." 77 It was Mr Wakeling's evidence that he did not become aware that the plaintiff had loaned moneys in respect of the Naremburn project until February or March 2002. Even then he was not told, nor did he inquire as to how much was lent. He agreed that on at least two occasions during 2002, the plaintiff sought his advice because Mr Jones was not paying interest on the money which she had loaned. He could not remember the precise dates of those inquiries. He said that on each occasion he told the plaintiff that he could not advise her, nor could he act against Mr Jones. He advised the plaintiff to consult another solicitor if she had problems with Mr Jones. 78 At paragraph 47 of his affidavit, Mr Wakeling deposed to the following conversation between himself, Mr Ellicott, a barrister who was the plaintiff's brother-in-law, and Ms Wade: "ELLICOTT: Don, Souad has loaned money to Jones for his property development. Is it secured? WAKELING: Mark, I didn't act for Souad on her financial dealings with Peter. I only learned about her lending his company money after it had already happened. She never asked me for advice and she never told me what her intentions were. When she said to me that she was not receiving interest from Peter and wanted her money back, I told her she would have to go see a lawyer". WADE: Yes, Don told Souad she would have to see another solicitor." 79 Mr Wakeling, both in his affidavit and in his oral evidence, expressly denied that he had given any advice to the plaintiff concerning her loan to Mr Jones or his company and specifically denied the statements attributed to him by the plaintiff and Ms Wade. Mr Ellicott was not called to give evidence in the plaintiff's case. 80 On this issue I accept the evidence of Mr Wakeling. In particular I do not accept the plaintiff's evidence that Mr Wakeling advised her to sell the North Sydney unit and increase her loan to Mr Jones' project and that he told her that she was adequately protected in respect of any further loans by the original loan agreement with SABC. 81 My reasons for reaching that conclusion are these. By August 2002 Mr Wakeling was residing in Budgewoi and was not readily accessible to the plaintiff. The sale of the North Sydney unit was completed on 25 September 2002, as a result of which the plaintiff received $487,500. After paying out the mortgage and other costs, including $1,100 to Mr Wakeling as conveyancing fees, $174,000 was paid into her bank account on that date. The further loan of $125,000 to Mr Jones' company did not occur until 23 October 2002, i.e. a month later. It is difficult to explain this delay if, as the plaintiff asserted, the sole purpose of the sale was to provide a further advance to Mr Jones to ensure the success of the Naremburn project. 82 The letter from the plaintiff to the Legal Services Commissioner of 22 April 2003 supports that conclusion. In that letter the plaintiff described the sale of the North Sydney unit as follows: "I had to mortgage my unit to obtain the money for the loan. In October 2002, I decided to sell the unit and pay the mortgage out. Don Wakeling did that conveyancing on that sale for me. Peter Jones then asked me to loan him a further $135,000 from the residue of the sale of the unit. I agreed to advance the further loan on the basis that I was given security. Peter Jones promised that he would give me a mortgage over the townhouses he was intending to renovate in Naremburn which he had an option on to purchase". 83 Since the purpose of this letter was to complain about the conduct of Mr Wakeling, if his advice had been instrumental in the sale of the unit, the plaintiff would have said something about it. On the contrary, the way in which she has expressed herself allows a clear inference that Mr Jones requested further loan moneys from her after the North Sydney unit had been sold. The use of the word "then" does not allow any other inference. 84 The letter from Messrs Hazan Hollander to Ms MacDougal of 20 September 2005 also supports that finding. That letter described the transaction as follows: "Following the settlement of the loan, Ms Clarke loaned approximately the sum of $200,000 to Mr Jones and companies associated with him, for the development, on a completely unsecured basis. Enclosed are copies of the loan documents that Ms Clarke received from Mr Jones and a further agreement entered into in February 2003 when Ms Clarke made a further loan of funds after the sale of the secured property. Mr Jones and/or his companies did not pay interest to Ms Clarke or repay the loan. Their relationship broke down and they became estranged. As Ms Clarke was not able to meet the commitments on the mortgage, she had to sell the secured property. Mr Wakeling acted for Ms Clarke on the sale of the property and the discharge of the mortgage. During a brief period of reconciliation, Ms Clarke lent Mr Jones further moneys from the surplus she received from the sale. …" 85 When one has regard to the purpose of this letter, i.e. to obtain expert opinion as to the conduct of Mr Wakeling as a solicitor, one would have expected there to be a reference to all conduct on the part of Mr Wakeling which might be the subject of criticism. The absence of any mention of the matters referred to in the plaintiff's affidavit in such a letter is difficult to understand unless they did not happen. 86 It is trite to observe that the plaintiff's recollection of these events would have been better in 2003 and 2005, than it was at the time that she swore her affidavit in 2008 and during the trial. 87 The advice attributed to Mr Wakeling, i.e. that the plaintiff ought contribute a further amount of money to save the development otherwise she would lose the money originally advanced, seems more likely to have come from Mr Jones than from Mr Wakeling. I suspect that was part of the inducement used by Mr Jones to extract further moneys from the plaintiff in October 2002. 88 There are other difficulties with the plaintiff's evidence about the advice which she says she was given by Mr Wakeling before and after the further loan. Apart from the fact that no reference to that further advice is made in the letter to the Law Society, or in the letter to Ms MacDougal, there is an inherent difficulty in the evidence. The first and most obvious difficulty is that the two pieces of advice are quite inconsistent with each other. The second is that it is hard to imagine even the most careless of solicitors providing advice such as the plaintiff described. 89 Significantly, there is no reference to this advice in either the Statement of Claim or the Amended Statement of Claim. Accordingly, it does not appear to form part of the plaintiff's claim. In any event, I am not satisfied that this advice was ever given by Mr Wakeling to the plaintiff. 90 What the Statement of Claim does say in paragraph 19 (which was sworn to by the plaintiff as being the truth) is: "19. In early 2003 the first defendant prepared and advised the plaintiff in relation to a second loan document and guarantee which increased Jones' indebtedness to the plaintiff to $332,649 and included terms that the plaintiff was to be paid interest at a rate of 8% per annum (8% pa). PARTICULARS Deed dated 20 February 2003 between the plaintiff as lender, with Jones as guarantee and Western Pacific Management Limited as the borrower, a company incorporated in New Zealand of which Jones was a director. 91 There was no evidence concerning that agreement in either of the plaintiff's affidavits. When these matters were put to the plaintiff in cross-examination (T.76.21) the plaintiff admitted that she did not know who prepared the February 2003 agreement and that she merely assumed that Mr Wakeling had done so. Later she said she could not remember who prepared the 2003 agreement. There was no mention of these matters in the letter to Ms MacDougal from Hazan Hollander of 20 September 2005. In the letter to the Legal Services Commissioner of 22 April 2003 the plaintiff described the situation as follows: "I advanced the $135,000 to Peter Jones and a new deed was prepared. He suggested that I loan the entire amount which was now $360,000 with outstanding interest to Pacific Management Pty Limited. I asked Don Wakeling to witness the deed. He said, no just take it and have it witnessed by a JP which I did."

The clear inference from that letter is that Mr Jones, and not Mr Wakeling, prepared the agreement of February 2003. 92 In the letter from the plaintiff to the Australian Securities Commission of 23 May 2003, the plaintiff said the following in relation to this agreement: "I sold the property which I had mortgaged to advance the money in August of 2002. Don Wakeling did the conveyancing. I then lent Peter Jones a further $130,000 odd and he prepared a new deed, this time the loan was in favour of Pacific Management Pty Limited. As he was about to exercise the option he had over the Naremburn townhouses, I instructed Don Wakeling to organise security for my loan on the settlement of those properties. Don Wakeling assured me that he would do this in my absence as I was about to leave for France for a holiday". 93 I have concluded that Mr Wakeling had nothing to do with the preparation of any document in February 2003 and that the allegation in paragraph 19 of the Statement of Claim has not been made out. On the contrary, all of the available evidence makes it clear that Mr Jones was the author of that document and Mr Wakeling had nothing to do with it. 94 In paragraph 24 of her first affidavit, the plaintiff said: "At all times I believed my investment with Jones was secured and this belief was based on the verbal advice provided to me by the first defendant during my numerous conversations with the first defendant between January 2002 and January 2003, which were consistently to the following effect: FIRST DEFENDANT: Souad, your investment is secured and the written agreement and subsequent verbal agreement are sufficient to ensure that you will realise a handsome profit from the development with Jones. You will receive regular interest payments from Jones to meet your living expenses. Stop worrying."

That was the evidence relied upon by the plaintiff to substantiate the allegations in paragraph 20 of the Amended Statement of Claim. 95 Paragraph 20 of the Amended Statement of Claim provided: "20 At all material times the plaintiff believed her loans to Jones were secured by a registered mortgage over the project. The plaintiff's belief in this regard arose from representations made by the first defendant to the plaintiff, representations which the plaintiff reasonably relied upon to her detriment. PARTICULARS (a) The first defendant's representations were oral. (b) The first defendant's representations were numerous and made to the plaintiff between January 2002 until January 2003." 96 There are problems with that evidence. It is inconsistent with the fact that the plaintiff had been complaining since April 2002 about interest not being paid to her. It strains credulity to suggest that Mr Wakeling would have been saying such things to the plaintiff between January 2002 and January 2003 when both he and the plaintiff were aware that no interest payments had been made. 97 Another difficulty is that there is no evidence, other than in this rolled up and inappropriate form, as to any specific conversations between the plaintiff and Mr Wakeling, about the provision of any security in respect of the moneys which she loaned to Mr Jones and his companies. In relation to the first loan, no such conversation could have taken place because I have found that Mr Wakeling was unaware of the loan until after it had been made. In relation to the final loan in October 2002, the evidence which the plaintiff has given as to discussions with Mr Wakeling is inconsistent with a belief that the loans were secured. 98 The only evidence before the Court that the plaintiff had ever asked Mr Wakeling to prepare a mortgage or to secure the indebtedness of Mr Jones and his companies comes from the letter to the Legal Services Commission of 22 April 2003 and that to the Australian Securities Commission in May 2003. That evidence is in the form of a bare allegation. It is not supported by the plaintiff's affidavits in these proceedings, nor is it supported by her oral evidence. It follows that the allegation in paragraph 20 of the Statement of Claim has not been made out. 99 The findings which I make in relation to the period July 2002 until February 2003 are as follows. I find that complaints were made by the plaintiff to Mr Wakeling about the failure of Mr Jones and his companies to pay interest to her. I find that Mr Wakeling advised the plaintiff that he could not act on her behalf against Mr Jones or his companies and that if she wished to pursue her rights against them, she should consult another solicitor. I find that Mr Wakeling did not provide any advice to the plaintiff concerning those matters and in particular, that he did not suggest to the plaintiff that she should sell the North Sydney unit and advance further moneys to Mr Jones and his companies. I find that Mr Wakeling was asked by the plaintiff to act on her behalf on the sale of the North Sydney unit and that he did so. I find that his retainer was limited to that matter only. I find that the decision by the plaintiff to lend further moneys to Mr Jones and his companies was not related to the sale of her unit, but was a decision made by the plaintiff after the sale had been completed. I find that Mr Wakeling had nothing to do with the agreement of February 2003 entered into between the plaintiff, Mr Jones and one or other of his companies. I find that at no time did the plaintiff request of Mr Wakeling that he obtain security for the loans which she had made to Mr Jones and his companies and that he provided no advice to her in relation to that matter. 100 Before leaving the factual issues, I should say something further about the witnesses. I have already set out why I found the evidence of Ms Wade to be unhelpful. I have indicated that I placed little reliance upon the evidence of Mr Jones. I found his demeanour unimpressive and he sought in his evidence to exculpate himself from any responsibility for the improvident loans which he had clearly persuaded the plaintiff to make. Nevertheless, his evidence did support that of Mr Wakeling and on those issues he was not shaken in cross-examination. 101 Of all the persons who gave evidence, the two most impressive were Mr Clarke and Mr Wakeling. Mr Clarke, while still having sympathy and affection for the plaintiff, seemed to me to do his best to tell the truth. 102 Mr Wakeling also impressed me as a witness of truth. Not only was his evidence given in a forthright and straightforward way, but there was a consistency between the evidence which he gave at trial, his affidavit and the response which he made to the Professional Standards Division of the Law Society when responding to the allegations made against him by the plaintiff (exhibit 1, page 97). Where his evidence conflicted with that of the plaintiff and Ms Wade, I have no difficulty in preferring his evidence. 103 In relation to the plaintiff, the kindest thing which can be said about her evidence is that it was unreliable. The evidence itself was to a large degree inherently incredible in many respects. On crucial issues where her evidence could be tested against contemporaneous documents, such as the complaint to the Legal Services Commission and the letter from her solicitors seeking expert opinion from Ms MacDougal, it was found to be inaccurate. Regrettably, she showed a tendency when confronted with inconsistencies and difficulties in her evidence, to confabulate. The invention of an earlier agreement, which she said existed on 9 January 2002 and which was in identical terms to that signed by her on 24 January 2002, provides an example. 104 One of the major difficulties with the plaintiff's evidence is the extraordinary difference between the case in the Amended Statement of Claim, the plaintiff's two affidavits, the complaint made to the Law Society in April 2003 and the contents of the letter from her previous solicitors to Ms MacDougal. The four versions of events simply cannot be reconciled. Of course the claim which has to be considered by the Court is that which is set out in the Amended Statement of Claim. Numerous matters in the Amended Statement of Claim have been shown to be incorrect, despite the plaintiff apparently checking it and verifying its truth by way of affidavit.

Plaintiff's submission 105 Although it was not clear from the Amended Statement of Claim, the legal basis for the plaintiff's claim was the proposition that a solicitor, who was acting for a borrower in circumstances where he or she was required to explain mortgage documentation sent by the lender, had an obligation to provide further advice if he or she were aware of the purpose for which the money was being borrowed. 106 In this case the proposition was that if Mr Wakeling was aware that the plaintiff was borrowing money in order to make a loan to Mr Jones and his companies, he should have inquired as to the precise terms of that loan and advised her to obtain independent advice from another solicitor and to have otherwise taken steps to ensure that the plaintiff's position was protected. 107 As I understood the submission, it went even further than that. The plaintiff seemed to be submitting, at least implicitly, that even if Mr Wakeling were not aware that the plaintiff intended to lend some of the mortgage moneys to Mr Jones, he should still have inquired of the plaintiff her purpose in wanting to borrow the mortgage moneys. This obligation was said to arise, not only from his position as a solicitor advising as to the mortgage documents, but because of the fact that he acted for Mr Jones and his companies. 108 The basis for these submissions was said to lie in the observations of Allsop P in Dominic v Riz [2009] NSWCA 216 where his Honour said: "[87] The views of the primary judge … all embody the proposition that a solicitor retained to advise on a loan and mortgage transaction will be obliged to address the fairness or reasonableness of the underlying transaction. With respect, that is going too far. It is unnecessary to examine the so-called independent advice cases. They are concerned with the extent of advice required for there to be an antidote to vitiating circumstances such as unconscionability. They do not provide a sound ground upon which to conclude that a solicitor with a limited retainer must advise beyond the retainer. They were not dealt with in Citicorp , for the reason that they do not address the content of the professional duty of the solicitor.

[88] The primary judge's reasons in a number of places, in particular [128], contain a proposition or assumption that Ms Jajoo was obliged to form and express some view upon the fairness or reasonableness of the underlying transaction. This duty can be seen in his Honour's reasons to flow from a duty wider than the retainer which has its source in Waimond .

[89] It is unnecessary in order to resolve this controversy to undertake an extended exegesis on the solicitor's duty of care. The analysis of Waimond by the Court of Appeal in Heydon , the discussion of the authorities by Campbell JA in Kowalczuk and the subsisting authority of Citicorp make the issue of the circumstances of the responsibility of a solicitor to act in respect of a matter falling outside his or her retainer less than clear. Part of that lack of clarity is the impossibility and unwisdom of seeking to cover future factual circumstances of an infinite kind with a legal test. The primary judge's formulation of principle was, however, overly broad. This breadth was derived from the misuse of the independent advice cases. [90] In David v David at [76], I said the following (with which Hodgson JA and Handley AJA agreed): "Some reliance was placed on Waimond Pty Ltd v Byrne (1989) 18 NSWLR 642 in argument. In Kowalczuk v Accom Finance Pty Limited [2008] NSWCA 343 at [267] - [294] Campbell JA undertook a detailed analysis of the precedential status of Waimond in particular after Heydon v NRMA Ltd [2000] NSWCA 374; 51 NSWLR 1 and Astley v Austrust Ltd [1999] HCA 6; 197 CLR 1. It is unnecessary to repeat that analysis. It is sufficient to say that the notion that a solicitor may owe a client a 'penumbral' duty that extends beyond scope of the retainer is doubtful. If, however, the solicitor during the execution of his or her retainer learns of facts which put him or her on notice that the client's interests are endangered or at risk unless further steps beyond the limits of the retainer are carried out, depending on the circumstances, the solicitor may be obliged to speak in order to bring to the attention of the client the aspect of concern and to advise of the need for further advice either from the solicitor or from a third party."

[91] Neither party submitted that this expression of the matter either involved error or was inappropriate for application here. The passage in David at [76] was not meant, however, to be an operative legal principle. It was intended to do no more than posit the possibility that the performance of the retainer, and what is learnt during it, may affect how the retainer is properly discharged." 109 On the facts of this case as I have found them, the primary submission of the plaintiff does not arise. Even if it did, i.e. had I found that Mr Wakeling did know that the plaintiff intended to make a loan to Mr Jones and his companies at the time that he provided advice in respect of the mortgage documents, I have considerable doubt as to whether he would have had an obligation to do anything more than that which he did, i.e. explain the mortgage documents. 110 In that regard one needs to be conscious of the context in which he was asked to perform this task. He was a solicitor who was being asked by a friend (Mr Jones) to assist another friend (the plaintiff) so as to enable that person to borrow money from a third party. He performed that function without charge by explaining what the mortgage documents meant and by witnessing, where appropriate, the plaintiff's signature. Where the solicitor has had nothing to do with the further loan arrangement, I do not see that an obligation to do anything more would arise. 111 On the facts as I have found them, Mr Wakeling at the relevant time had not been told, nor did he have a positive belief, that the plaintiff intended to lend some of the proceeds from the mortgage transaction to Mr Jones and his companies. In that circumstance, I do not accept that there was any obligation on his part to make an inquiry of the plaintiff as to her purpose in borrowing that money. On the facts that I have found, Mr Wakeling as of 9 January 2002 had not learned of any matter which put him on notice that the plaintiff's interests were endangered or at risk unless he took further steps beyond the task which he had been asked to perform, i.e. explain the mortgage documentation.

Causation 112 If I am wrong in that conclusion, the plaintiff's claim confronts serious causation difficulties. It was necessary for the plaintiff to establish that had Mr Wakeling advised her to seek independent advice concerning the loan to Mr Jones and his companies, she would have acted on that advice and had she sought independent legal advice and had that advice been not to make the loan or to obtain security for it, that she would have taken that advice. 113 Mr Clarke gave evidence that he had given a warning to the plaintiff about the transaction as early as December 2001. The plaintiff does not seem to have done anything about that warning. The plaintiff (somewhat incredibly) seems to have accepted at face value that if she made a loan of $200,000 not only would she receive interest at the rate of 8% per annum but she would also receive a 50% percent share in the profits to be made from the Naremburn project and that the profit might be as much as $1 million. She agreed in cross-examination that this provided a major incentive for her making the loan. 114 The plaintiff was romantically involved with Mr Jones. He clearly had significant influence over her. This can be seen from the fact that despite her not receiving interest on her loan as of April 2002, she was still prepared to advance a further $5000 in May. By October 2002 when she still had received no interest, and when it must have been clear that her original loan was at risk, she was prepared to advance a further significant sum of $125,000 to Mr Jones and his companies. I can only infer that Mr Jones' persuasive abilities insofar as the plaintiff is concerned were considerable. 115 It follows that had the matter got that far, I would not have been satisfied that any failure on the part of Mr Wakeling to advise the plaintiff to seek independent advice caused the plaintiff's loss. All the indicia are that she would still have made loans to Mr Jones and his companies.

Conclusion 116 It follows from the above findings that the plaintiff has not made out her claim against Mr Wakeling. I find that in relation to the two transactions in which he acted as solicitor for the plaintiff, i.e. advising as to the mortgage documentation in respect of the loan from the Public Trustee of Queensland and acting on the sale of the North Sydney unit, he did not breach the duty which he owed to her as her solicitor. 117 Should I be wrong in that finding, I am not satisfied that any breach on his part caused the loss which the plaintiff has suffered. I am of the opinion that if he had advised the plaintiff on 9 January 2002 to seek independent advice before making a loan to Mr Jones and his companies in respect of the Naremburn development, the plaintiff has not established that she would have acted on that advice and even if she did act on that advice, she has not satisfied me that she would have acted on any independent advice which she received so as to not make a loan to Mr Jones or his companies. 118 I make the following orders:

(1) I enter judgment in favour of the defendants against the plaintiff.

(2) I order the plaintiff to pay the defendants' costs of these proceedings. **********

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