iii) he failed to insist on contractual safeguards as to the financial ability of Stamfords to complete the purchase of No 33.
74. As the Deed of Rescission and the contract for the purchase of No 33 by Stamfords will be set aside so that the parties are restored to the positions in which they were prior to the execution of the Deed of Rescission, no loss to the Plaintiffs will flow from negligence on the part of Mr Heenan under grounds (ii) and (iii). Indeed, if Skyworld performs its obligations under the contract for the purchase of No 33, the Plaintiffs will suffer no loss at all.
75. As I have noted, Mr and Mrs Di Sisto are exposed to loss by reason of negligence on ground (i) only if Skyworld completes the contract for the purchase of No 126 but fails to complete the purchase of No 33 and a judgment against it for breach of contract is not fully satisfied.
76. It is, therefore, necessary to consider whether Mr Heenan breached his contractual or tortious duty of care to Mr and Mrs Di Sisto in failing to ensure that the completion of both contracts with Skyworld was interdependent."
12 After carefully considering the evidence, His Honour's conclusions were set out at paragraphs 89 to 91 in these terms:
"89. Accordingly, I hold that in failing either to seek instructions from Mr and Mrs Di Sisto as to whether the contracts for sale of Nos 33 and 126 to Skyworld should be made interdependent or in failing to suggest that such provision should be included in the contracts, Mr Heenan failed to act in accordance with the standards of a prudent and competent solicitor so that he was in breach of his contractual and tortious duty of care to Mr and Mrs Di Sisto.
90. As I have indicated above, Mr Heenan's negligence may not occasion loss to Mr and Mrs Di Sisto: Skyworld may fully perform its obligations under the contract for the sale of No 33 as well as performing its obligations under the contract for the sale of No 126. However, if Skyworld completes only the contract for No 126 and if a judgment against it for breach of contract for the sale of No 33 cannot be recovered in full, Mr Heenan will be liable for the loss, if any, which Mr and Mrs Di Sisto suffer thereby. Had the two contracts been interdependent, Skyworld would not have been able to put Mr and Mrs Di Sisto in the position of having to re-enter the market to sell No 33 on its own rather than in conjunction with No 126.
91. In those circumstances, the parties have agreed that the assessment of the damages for which Mr Heenan may be liable to the Plaintiffs should abide performance of Skyworld's obligations under both contracts. I think that that is an appropriate course."
13 It is to be noted that His Honour's conclusions in paragraph 89 were not in the terms set out in paragraph 73 (i) of the judgment. His Honour found that the actual breach was the failure to seek instructions about making the contracts interdependent or failing to suggest that such a provision should be included in the contracts. This raises one of the issues before me, namely, whether it was likely that the purchasers would have agreed to the contracts if the plaintiffs had sought to include a term stating that the contracts were interdependent.
14 His Honour also found that Mr Heenan did not carry out all the steps which he should have on the exchange of the contract with Stamfords. At paragraph 29 he said:
"However, there was no provision in the new contract with Stamfords making completion of that contract dependent upon completion of the contract with Skyworld for the purchase of No 126. Mr Heenan concedes that upon exchange of the Deed of Rescission and the new contract with Stamfords, he did not seek and obtain guarantees of the directors of Stamfords or a letter of approval of finance from Stamfords' bank, as required by Special Conditions 14 and 15 of the contract. Mr Heenan concedes that in this regard, he failed to comply with his instructions to obtain proof of Stamfords' ability to complete the contract."
15 The contract with Stamfords has been set aside and accordingly any such failure on the part of Mr Heenan is irrelevant.
16 The plaintiffs submit that His Honour decided the question of causation in his conclusion in paragraph 90, in respect to 33 Petersham Road. However, it is apparent that the trial proceeded on the basis, which His Honour accepted, that at that stage Skyworld intended that they would complete the purchase of 126 Livingstone Road, Marrickville. After all, it had brought a cross-claim seeking specific performance of that contract. What eventually occurred was that Skyworld did not purchase either property. His Honour did not consider this situation when he discussed Mr Heenan's liability. In these circumstances the question of causation needs to be examined in order to determine what damages might flow.
17 The fourth defendant's submissions pointed out the differences between claiming against Mr Heenan for his actual breach, as found by His Honour, in contrast to the claim against Skyworld, which is really a failure to complete the contract.
18 Mr Heenan raises the issue as to whether or not, if it were suggested that the contracts should be interdependent, Skyworld would have proceeded with the contract. If Skyworld would not have proceeded, it was submitted that the plaintiffs would have had two options. These options were either to proceed with the contracts without the interdependency conditions or not to proceed with the contracts. If the plaintiffs proceeded with the contracts without the interdependency conditions that was their choice and they suffered no loss. If they did not so proceed, they would have needed to go into the market and obtain another buyer or buyers. There is market evidence to suggest that if the plaintiffs had attempted the second course the market price they would have achieved would be substantially below the sale price under the contracts with Skyworld. If it was found that there was a possibility of Skyworld agreeing to interdependency of the contracts, it was submitted that such a chance was very slim and damages should be reduced accordingly.
19 The second causation issue raised was whether Skyworld would have settled the purchase for $2,100,000. Mr Heenan also raised questions regarding the rate of interest and the period for which it should be applied.
Would the purchaser have accepted an interdependency clause?
20 The objective evidence indicates that exchange occurred for the plaintiffs' properties on 20 December 2002. It also demonstrates that, on 24 February 2003, Skyworld agreed to purchase 124 Livingstone Road from the other vendors. As a result of His Honour's decision and findings, Skyworld had decided to proceed with a different development and put into place the deception during April 2003.
21 The other evidence that is available, to decide whether or not the deception was planned at an earlier time, is the evidence of Mr Hu, the principal of Skyworld. His Honour was extremely critical of his evidence and would not accept it unless it was corroborated or inherently probable. I have not had the benefit of seeing Mr Hu in the witness box but part of the transcript of his cross-examination and parts of his affidavit evidence have been tendered before me.
22 Mr Hu's affidavit evidence demonstrates that there was a period of some weeks when the price was negotiated prior to exchange of contracts. Documentary evidence shows and that after exchange draft plans were prepared by his surveyor together with a development application. That application was taken to the council but not lodged. The development application was in respect of the plaintiffs' two properties. It is also apparent from diary notes that Skyworld's architect made inquiries in early January with the council about the development of the plaintiffs' two properties on behalf of Skyworld.
23 In cross-examination it appears that Mr Hu had been negotiating to purchase 124 Livingston Road before exchange on 20 December 2002. He was cross-examined as to whether he would have accepted an interdependency clause in the contract. Plainly in that cross-examination he did not concede that he would have accepted such a clause. All that he would concede in cross-examination was that, if such a request had been made, he would have considered it. The reason he gave was that he had been negotiating for the purchase of 124 Livingston Road and may have wished to purchase that property. He clearly did not say that he would not have accepted such a condition.
24 However, at the time of exchange the plaintiffs were insisting on selling both properties and the objective evidence shows that shortly after exchange Mr Hu was proceeding with the development of the plaintiffs' two properties.
25 There does not seem to be a suggestion that Skyworld could have developed 124 Livingstone Road alone. The inference which I am asked to make must be made in accordance with the civil standard of proof.
26 In Transport Industries Insurance Co Ltd v Longmuir [1977] 1 VR 125 at 141, Tadgell JA referred to the High Court's formulation of this standard in the unreported case of Bradshaw v McEwans Pty Ltd (27 April 1951) in these terms:
"…The difference between the criminal standard of proof in its application to circumstantial evidence and the civil is that in the former the facts must be such as to exclude reasonable hypotheses consistent with innocence, while in the latter you need only circumstances raising a more probable inference in favour of what is alleged…."
27 Plainly, Skyworld was prepared to pay the price demanded by the plaintiffs. Skyworld obtained a clause in the contracts allowing it to make a development application and it took immediate steps to process that application. When it did so in early January, it found it had difficulty with the development it was considering. This, no doubt, focussed its attention on 124 Livingstone Road.
28 There was no exchange on 124 Livingstone Road until 24 February 2003 and nothing in the evidence suggests that there was an advanced stage of negotiation for that purchase at the end of 2002. On the available evidence it seems that at exchange and shortly thereafter Skyworld was intent on proceeding with the purchase from the plaintiffs. In all these circumstances it seems that the more probable inference is that Skyworld would have accepted a condition that the contracts be interdependent.
29 This conclusion raises the next causation issue, which is whether Skyworld would have settled on both properties (126 Livingston Road and 33 Petersham Road) at 31 July 2003.
30 It is plain that the plaintiffs bear the onus of proof that the solicitor's negligence caused them loss: see Gore v Montague Mining Pty Ltd [2000] FCA 1214 at para 34 and Ng v Chong [2005] NSWSC 270 at 51. It was submitted by Mr Heenan that the plaintiffs had not proved that Skyworld would have settled both properties on 31 July 2003.
31 Mr Heenan pointed to the fact that, late in 2005 when Skyworld had the opportunity to settle, it did not do so. The contracts were terminated and Skyworld went into liquidation in April 2006. His further submission was that Skyworld's conduct in 2003 indicated a willingness to avoid its obligations. It was also submitted that the Court should infer that the sale of the two properties would not have settled and that the plaintiffs would have been required to go back into the market to attempt to sell the properties. This then raises the question of valuation evidence because the evidence is that the value of the two properties sold as a combined development site at 31 July 2003 was $1.68M. In due course the actual sale price achieved was $1.58M together with forfeited deposits of $160,000. Therefore, on this basis there would be no loss suffered.
32 His Honour Mr Justice Palmer dealt with the findings on fraud and misrepresentation at paragraphs 42 to 64 of his judgment. His conclusions at paragraph 64 are relevant and in these terms:
"For the reasons which I have given, I hold that the three misrepresentations in the 1 April letter to which I have referred above were material and were fraudulently made by Skyworld in order to induce Mr and Mrs Di Sisto to rescind the contract with Skyworld for the purchase of No 33 and to enter into a contract for sale of that property to Stamfords, a company which Skyworld knew to be without substance. To put it bluntly, the whole transaction with Stamfords was procured by calculated trickery on the part of Mr Hu and Skyworld."