Dominic v Riz [2009] NSWCA 216 | Case summary

Dominic v Riz [2009] NSWCA 216 | Case summary | Zoe

The facts in detail 7 The primary judge made some important observations about Mr and Mrs Riz early in his reasons, saying at [3] and [4]: "[3] It is very difficult to ascertain with precision the events which culminated in Mr and Mrs Riz borrowing from Perpetual and investing in KSE. The evidence of Mr and Mrs Riz was imprecise, to the point of often being very uncertain, and sometimes contradictory, as to the sequence and detail of events. Their evidence manifested confusion and poor recollection of events, and demonstrable errors. While I accept that due allowance must be made for their linguistic difficulties and lack of commercial sophistication, I do not accept that all the deficiencies in their evidence can be so benignly explained. They appeared very guarded, particularly in respect of their financial resources and the status of their relationship (including whether or not they were separated). Given the rate at which they reduced the Citibank mortgage, the circumstance that they had six children to support, the funds available to them from time to time for a deposit on their home and other expenditures, including overseas travel, I am confident that they must have had sources of income that they have not disclosed, and which would have disqualified them from unemployment benefits and required lodgement of tax returns. In my view their evidence is strongly coloured by their perception that they have been let down by many on whom they relied - including those who solicited their investment on behalf of KSE, and Ms Jajoo. They were determined to attribute as much responsibility for their predicament as they could to Ms Jajoo, and this affected the evidence of their son Mohammed also; yet in some respects at least they were demonstrably incorrect in this endeavour. Mohammed was determined to implicate the solicitors in everything that his father had done, including in matters which it is highly improbable if not impossible that DDS had any involvement; in this respect his evidence probably reflects what Mohammed was told in 2004 and subsequently, in connection with the preparation of his affidavit, as distinct from what he recalls of the events of 2001. [4] Moreover, Mr and Mrs Riz often gave evidence inconsistent with their earlier affidavit and oral evidence on material issues, advancing first one and then another version of an event, the second version typically being more favourable to their case than the first; and not infrequently, one or other of Mr Riz, Mrs Riz and Mohammed was contradicted by another of them. Their evidence must be treated with great caution. What follows summarises what I am prepared to accept, having regard to their evidence, the documentary record, and the evidence of Ms Jajoo and Ms Hanna - which, as I will explain below, was ultimately implicitly accepted on behalf of Mr and Mrs Riz, whose submissions proceeded on that basis."

13 The persuasions of Lilly were persistent, involving the introduction of an apparently successful investor, a Mary Daniel and an employee of Karl Suleman, as described by the primary judge at [11]-[14] of his reasons: "[11] Lilly persisted, pursuing Mr Riz many times over the ensuing year, and saying that such an investment would provide an opportunity to buy a bigger house and have a better life. Lilly continued to tell him that all those who had invested with KSE had received a lot of interest, and some who had had only one house now had two or three houses. Mr Riz was told that Mr Suleman was very wealthy and successful. On a couple of occasions Mr Suleman himself purchased a kebab from Mr Riz at the Kebab House, and gave Mr Riz generous tips. [12] An acquaintance of Lilly, Mary Daniel, (although Mr Riz did not know her surname) attended at the Kebab House on a number of occasions, and Lilly mentioned that she had invested with KSE and was making a lot of money. Mary Daniel asked whether he wanted to invest with KSE; Mr Riz was equivocal, but ultimately replied that he would make further inquiries. Mr Riz's evidence was that he was not convinced by Lilly directly, because Lilly did not herself invest, and wanted to enquire from people that had already invested with KSE directly. [13] Lilly took Mr Riz to see Mary Daniel at her home at Canley Vale. He did not tell Mrs Riz that he was going to see Mary Daniel; as far as he was aware she was still opposed to any investment. Mr Riz says that at this stage he was simply making enquiries and gathering information. Mary Daniel told Mr Riz that KSE was a very good investment that would enable him to improve his life and his house. She said that for each $50,000 invested there would be a return of $5,000 every fortnight. She said that Mr Suleman was good, and was paying the interest on her investment on time. It occurred to Mr Riz that the return being offered seemed too good to be true. [14] On the same day of the visit to Mary Daniel, Lilly took him to see Esher, apparently an employee of KSE, at Smithfield; Esher told him that Mr Suleman was paying him $1,200 per week for doing nothing, and that Mr Suleman was a good person and that it was good to invest with him. Mr Riz did not ask any questions about Mr Suleman's business and his operations. Mr Riz remained unresolved. Then, in Mr Riz's presence, Lilly asked a number of people sitting in a coffee shop, who said that they had invested with Mr Suleman and were making lots of money."

[21] QLS submitted the loan application to a mortgage originator, KBL. On 13 August 2001, Mr Peter Zhao of KBL forwarded the loan application to DMS, accompanied by a body of supporting documentation, some of which (such as copy driving licences and certificates of citizenship) were plainly authentic; there were also rate notices, a statement of the mortgage account from Citibank, and a valuation of the Condell Park property apparently obtained by KBL. However, it was also accompanied by a bundle of income tax returns and financial statements for a purported partnership of Mr and Mrs Riz, and for each of them individually, for the financial years ending 1999 and 2000. The copy tax returns were unsigned by either Mr or Mrs Riz but apparently signed by a tax agent, Mark A Thompson, for whom a contact phone number was provided. The partnership returns described the main business activity as 'Venetian blinds installation', and that for the year 2000 referred in the statement of distribution to the partners' names as being Saddi, Elia and Saddi, Nawal. [22] From the facts (1) that the occupation 'blinds installation' and the income of each of Mr and Mrs Riz of $38,000 - corresponding with what appears on the tax returns - is stated in the loan application signed by Mr and Mrs Riz at QLS, in the same handwriting as the balance of the loan application, and (2) that when received by DMS from KBL, the returns (but not most other documents in the bundle faxed) bore not only the imprint of transmission from KBL (the so-called Sanctuary Windows imprint) but also another, earlier (but undesignated) imprint, I infer that the false tax returns were procured, and included in the loan application, by QLS." 19 DMS assessed and approved the loan on 17 August 2001. 20 At this point, the appellants appeared in the unfolding of events. Once the loan application approval had been communicated to QLS, the primary judge found (at [23] of his reasons): "[23] … QLS sent a facsimile to DDS [the appellants], covering a copy of the formal loan approval and purporting to convey the instructions of Mr and Mrs Riz 'to proceed with their formalities, our client has been advised to contact your esteemed office'."

21 Before coming to the steps taken by Ms Jajoo in her dealings with Mr and Mrs Riz, it is appropriate to set out some of the findings and the evidence concerning what Mr and Mrs Riz appreciated about this transaction, including its risk and possible consequences. 22 Mrs Riz was fearful of losing the house and appreciated that risk: T513; T515 (transcript references in these reasons refer to the page number of the first instance transcript, not the page number of the Black Appeal book). She communicated this to her husband: T516. Mohammed Riz (the respondents' son) discussed the investment in KSE with his father and the magnitude of the returns: T559. It did not seem like a secure investment to him: T560. He discussed with his father the lack of security in the investment. It appeared too good to be true to both of them: T559. While Mr Riz was considering the investment he (Mr Riz) said to his son on a number of occasions that the investment seemed too good to be true: T562. When Mohammed discussed the investment with his father in the above conversations, Mrs Riz was present and participated in them: T562-563. Mrs Riz also said the investments seemed to good to be true and that it sounded probably insecure and risky: T563. Nevertheless, despite these considerations and family discussions about the apparent unreality of the transaction, its risk and insecurity, Mr Riz and Mrs Riz became persuaded by their enquiries that they should invest with KSE. It is clear from the evidence that these deliberations took place before seeing Ms Jajoo. 23 The first step taken by Ms Jajoo was to ring the home of Mr and Mrs Riz on 17 August. She spoke to Mohammed and asked for certain documents to be brought in to her in the next few days. These were provided. On 29 August Mr and Mrs Riz attended the appellants' offices and executed a discharge authority for Citibank. 24 On 30 August 2001, a necessary step was undertaken, as recounted in [25] of his Honour's reasons: "[25] On 30 August 2001, before Mr Riz had met Sabrina Jajoo, an account was opened with the St George Bank in the name of Mohammed in readiness for the investment. This refutes the persistent assertion of Mohammed and Mr Riz that it was the recommendation of Ms Jajoo that this account be opened, to avoid potential loss of Centrelink benefits for Mr and Mrs Riz if the investment were in their names; it is far more probable that (as Mr Riz first asserted) the suggestion was that of Mary Haider at QLS."

27 The primary judge's findings about the meeting were set out by him at [34]-[43] of his reasons: "[34] In the course of the consultation with Mr and Mrs Riz on 25 September 2001, Ms Jajoo explained that the first repayment was due 28 days after settlement, and the minimum monthly repayment was $1,796.61. Mr Riz interjected: '$10,000 every fortnight'. Mrs Riz said: 'No, we want to pay $10,000 every fortnight from the beginning'. Ms Jajoo altered her file note accordingly. [35] Mr and Mrs Riz executed the loan contract, the mortgage, and various associated authorities. They also signed a certificate that they had obtained legal advice and understood the documents and did not require them to be translated. [36] Ms Jajoo explained that the lender required references from an acceptable referee; Mrs Riz said that the family doctor would complete them, and Ms Jajoo gave her the two reference forms for that purpose. Ms Jajoo completed the direct debit authority, except for the details of the account from which repayments were to be made, which had not yet been decided. She wrote on the form, as requested, '*Please direct debit the minimum monthly repayment for the first monthly repayment and thereafter $10,000 every fortnight?'. Mr and Mrs Riz signed and dated the authority, which was left with Mr Riz for completion and return when it had been decided from what account the repayments would be made. [37] Later in the course of the consultation, Mrs Riz again instructed Ms Jajoo: But you tell the bank we want to pay $10,000 every fortnight like we talked about before. [38] Mrs Riz continued: We want a cheque to Karl Suleman. Omar's told me what you've told him. This is a big risk. [39] Ms Jajoo answered: I did have a conversation with Omar and I told him that we don't advise on anything to do with Karl Suleman. We don't approve of it. Karl previously had a solicitor who set up his whole business structure. Then Suzy David from our office had referred him to a firm of lawyers and trying for a few months to change the whole structure. However, Karl Suleman did not provide all the requirements, and Susie doesn't know details of the structure. Karl Suleman went back to his own lawyer some time in May this year and said it was all being fixed up by his own lawyer. But we don't know where it is up to. So if you are taking the risk of investing in whatever it is you are wishing to invest in, then you must see an independent solicitor and also a financial adviser in relation to any Karl Suleman contracts. [40] Mrs Riz replied: 'You recommend someone', and Ms Jajoo responded: 'No I can't recommend, but you should go to your own accountant and also see another lawyer'. Mr Riz concluded: 'Okay, we continue with the loan for now'. [41] When it came to discussing how the proceeds of the loan were to be drawn down, Ms Jajoo said: After paying out Citibank you will be left with approximately $159,800. How do you want that drawn?

[43] Although Mr and Mrs Riz maintained that Ms Jajoo spoke glowingly of Mr Suleman in response to inquiries they claimed to have made of her about the prudence of their proposed investment in KSE, no submission to that effect was pressed and I do not accept that any such conversation took place." 28 As can be seen in these findings: whatever the Rizs had been told, they believed that they would receive $24,000 per month or $12,000 per fortnight, permitting a repayment schedule of $10,000 per fortnight; Mrs Riz and Mr Riz understood that the investment with KSE was a "big risk"; the question of risk was understood by Mrs Riz (and implicitly, Mr Riz) to be related to what Ms Jajoo had already told Mr Riz in plain terms some days before - of the "need" to see, and that they "should" see an independent lawyer and financial adviser; Ms Jajoo repeated this to both of the respondents. She used the words "must" see an independent solicitor and financial adviser. Mr Riz said they would continue "for now". 29 Some debate took place on appeal by reference to the evidence as to what Ms Jajoo was told by Mr and Mrs Riz as to the expected return on the investment. The finding in [42] was, however, not challenged. Whatever else Ms Jajoo was told by the Rizs, she was told at one point in this conversation that they had a belief as to this return, though it was unclear from this conservation whether the amount of $24,000 or $12,000 they said they would "get" was a return on capital by way of interest or profit or interest or profit together with some return of capital. 30 The primary judge rejected the version of this meeting put forward in evidence by Mr and Mrs Riz. The Rizs (including their son) claimed in their evidence that Ms Jajoo had persuaded them to invest by representations as to the prudence and wisdom of the investment. They also said that her explanation of the loan documentation was deficient and they did not understand much of what she said. This was rejected by the primary judge. One aspect of his Honour's resolution of the competing evidence about the meeting is important to note because it contains a finding as to Mr and Mrs Riz's understanding. At [45] the primary judge said: "… despite their denials of being given documents to take away for completion and of understanding what was said, in fact Mr and Mrs Riz must have received and taken away a direct debit request and referee forms and subsequently had them completed and returned, which not only undermines the reliability of Mr and Mrs Riz's recollection, but also demonstrates understanding and compliance with requests made and instructions given in the course of the consultation …" 31 Another important finding by the primary judge at [90] was that: "… Ms Jajoo was reasonably entitled to think that Mr and Mrs Riz could understand what she said to them."

38 Bad news was not long in coming, as explained in [49] of the primary judge's reasons: "[49] A fortnight later, Mohammed received, into the St George account in his name, the initial payment of $9,555, but that was the only payment received. Mr and Mrs Riz continued to service the Perpetual loan for about a year, they say from funds that they borrowed for that purpose from acquaintances." 39 Before turning to the primary judge's disposition of the case against the appellants, some additional findings made by his Honour in the case against Perpetual should be noted. At [57] of his reasons, the primary judge said: "[57] … Although I accept that Mr and Mrs Riz were commercially unsophisticated, I do not accept that Mr Riz - who was the moving party and had the conduct of the transactions on behalf of them - was naïve. He had previously borrowed funds from financial institutions on three occasions - from the National Bank to finance the purchase of the Beirut Pizza Shop, from St George to finance the purchase of the home, and from Citibank to refinance. The last two involved giving mortgage security over the home. Ultimately it was conceded that Mr and Mrs Riz understood the fundamentals of a mortgage, in that if they defaulted they would lose their home. In my assessment, Mr Riz also knew that he ought not have been able to obtain the loans from St George and Citibank if he was living on Centrelink benefits, and he was at best indifferent to what his agents might say or do on his behalf to obtain loan approvals. It took him some considerable time - perhaps a year - to be persuaded to invest in KSE and to borrow funds for that purpose, and he undertook considerable investigations before deciding to do so. When the investment was made, it was made in the name of their son Mohammed, plainly so that the income received would not affect Mr Riz's social security entitlements; I am unable to accept Mr Riz's professed ignorance as to that being the reason for the arrangement (which, according to his son, he told Mohammed at the time). Nor, in the light of Mohammed's evidence, can I accept that when Mr Riz went to QLS and completed the loan application, he had contemplated investing not $150,000, but only some lesser amount." The case against the appellants and its disposition by the primary judge 40 It was first necessary for the primary judge to dispose of some aspects of the evidence of Mr and Mrs Riz. As already indicated their case had been put more extravagantly than it ultimately was in address. This is important. The case of Mr and Mrs Riz was not that some things had been explained to them, but the risk of the investment had not been brought home to them. They claimed, in evidence that was rejected, that Ms Jajoo had persuaded them to invest. The assessment of Ms Jajoo's conduct proceeded substantially on the basis of the evidence given by her. As I have already said, in [90] of the primary judge's reasons, his Honour made a clear finding that Ms Jajoo was reasonably entitled to think that Mr Riz and Mrs Riz could understand what was said to them. 41 At [91] of his reasons, the primary judge identified the only two complaints ultimately pressed (and pressed implicitly accepting Ms Jajoo's evidence): " Breach of fiduciary duty, by failing to cease to act for Mr and Mrs Riz, in circumstances that the firm had 'multiple allegiances' arising from a complicated web of business and professional associations between them and Mr Suleman. This is put on the dual bases of conflict of duty and duty, and conflict of interest and duty. As to conflict of duty (to Mr Suleman) and duty (to Mr and Mrs Riz), it is said that DDS had an overriding duty of undivided loyalty to Mr and Mrs Riz, which required DDS to cease acting for Mr and Mrs Riz when the firm became aware that the proceeds of the loan were likely to paid to KSE, in circumstances where it was known that the KSE investment was risky, and that Mr and Mrs Riz had not obtained financial or legal advice in relation to it. It is said that DDS had conflicting duties to Mr and Mrs Riz (to warn them against imprudent transactions) and to Mr Suleman (to secure further investment funds). As to conflict of interest (of DDS) and duty (to Mr and Mrs Riz), it is said that, DDS having advanced $170,000 to a Suleman entity, the firm had an interest in Mr and Mrs Riz obtaining the loan, in order to enable them to make a payment to KSE, which would indirectly facilitate repayment of the advance (although there is no suggestion that it was contemplated that it would be repaid from the Riz investment), retain favour with Mr Suleman, and secure his ongoing business; which conflicted with their duty to Mr and Mrs Riz to deter them from imprudent investments. Breach of their professional duty of care (in tort and/or contract), by failing to cease to act for Mr and Mrs Riz unless and until they had obtained financial advice, or - as refined in the course of submissions - failing at least to warn Mr and Mrs Riz that their proposed investment was imprudent." 42 As to the case based on conflicts between duty and duty and between duty and interest, the primary judge made the following findings at [93] and [94]: "[93] Mr and Ms David, and Ms Jajoo, are of Assyrian decent. A good portion of their clientele, though not the majority, are Assyrians. Ms Jajoo agreed that in 2000 and 2001, everyone in the Assyrian community was talking about Mr Suleman, and she had heard that some of his ventures included investment opportunities which produced high returns. Ms Jajoo explained that although during 2000 and 2001 she handled about 95 matters in which clients invested in KSE, in most cases the intention to invest in KSE did not come to her attention until the time of cheque direction. She explained: I know at the moment it is obvious that all those people invested in some kind of a scheme, but at the time it wasn't like that. It was some people were investing in some kind of an investment. Some people were buying trolley runs, and I would see them in the shopping centres around the area pushing trolleys and managing those. Some people were saying they are in some limousine business with him. Some people were saying they were in, they were in the internet business with him. Some - I really had no idea at the time what people were investing in or what business venture they were entering.

A. It was a high return. I did not make that assessment, but that was definitely the reason that they should have gone to somebody who should have advised them on that aspect of their transaction, but that didn't affect the transaction that I was advising them on. Your Honour, I need, I wanted to make sure that they could make, or they understood that they had to make the minimum repayments, which were $1,780 I think a fortnight, and if they didn't make those repayments that would be an act of default and they would lose the house. [99] She said that she did not have any understanding as to what the employment of Mr and Mrs Riz was, and did not ask, but 'comfortably assumed that there would be some employment for them to be able to obtain a loan'. She had no understanding and formed no impression as to their education. She said she formed a view that they both knew that whatever they were getting themselves into had risks, some kind of risks associated with it, like any other business. She said: 'On that basis I told them, "you should go and obtain the advice of somebody who could tell you if there is any risks or not". Now I was satisfied that they understood that, and they would follow that up at some stage whenever time came for them to enter that business transaction'." 48 The essence of the criticism of Ms Jajoo made by the primary jduge is found in [100] of his reasons, as follows: "[100] While generally I accept Ms Jajoo's evidence, and I accept that she told Mr and Mrs Riz that they should obtain separate legal and financial advice in respect of the proposed KSE investment, I do not accept that she was reasonably entitled to be satisfied that they would follow up that advice, or that they understood its importance. The context was that not only did Mr and Mrs Riz (without having any prior opportunity of first seeking such advice) go ahead and there and then execute the loan contract and mortgage; they also gave instructions for the inclusion of $10,000 per fortnight on the direct debit authority, and for the settlement cheques to include one for $150,000 in favour of KSE. In those circumstances, it ought to have been apparent to Ms Jajoo that she had not done enough to bring home the importance to Mr and Mrs Riz [of] obtaining independent advice." (emphasis added)

50 The primary judge then set out at [103]-[107] some of the debate between the cross-examiner and Mr Fisher, which because of the way the primary judge approached the matter it is helpful to set out: "[103] In cross-examination, Mr Fisher accepted that where a solicitor was not retained to advise in respect of a particular transaction and does not assume an obligation to advise on it, the solicitor is not obliged to give advice on that transaction; but he did not accept that a solicitor retained in respect of a loan and mortgage transaction was not obliged to give 'financial advice' about it in any circumstances: Well, no. If there was, let's say, an extraordinary interest rate or some other condition of the loan which was out of the ordinary, I would feel it is the responsibility of the solicitor to bring that clearly to his client's attention. [104] However, he accepted that unless the solicitor assumes the responsibility of giving financial advice, the solicitor was under no duty to do so. But while he generally accepted that the scope of the solicitor's responsibility was defined by the retainer, he insisted that this was not always so: But I keep saying there are other factors. If it becomes apparent that what a client is doing is imprudent or unreasonable at some point that solicitor, I believe, has a duty to that client. So that would extend the assumed, the assumed retainer. [105] Elsewhere he said: Q. You would say that in the ordinary mortgage lending situation, where a solicitor acts for the mortgagor and borrower, do you say that the solicitor would be under a duty to advise the client about transactions other than the loan transaction itself? A. No, not to advise the client but to take care for the client. And if it is made known to the solicitor that the client was, say, to engage in an illegal transaction or if the solicitor became, in his judgment, aware that the client was, had diminished responsibility, say, or was doing something extreme it is incumbent on the solicitor to look into that further. [106] In the course of cross-examination about the information which Ms Jajoo had as to the proposed investment and anticipated return, he was asked what he had assumed about the scope of her retainer and answered: I don't know that I had assumed the retainer was extended. But the use of those words to any ordinary reasonable competent solicitor would have the effect of ringing some alarm bells. [107] This was a reference to the anticipated return of $10,000 per fortnight. However, Mr Fisher had some difficulty in formulating what was standard practice for a solicitor confronted by a relatively unsophisticated client in a borrowing transaction when it was intended to apply the proceeds to an investment in respect of which the client harboured what appeared to be totally unrealistic expectations. He said that it would be standard practice 'to send that client off for financial advice'. When it was suggested that the client might be told 'that sounds an impossibly high return, too good to be true, and I would not recommend you go into any such investment', he said 'that may be appropriate, but if the client is unsophisticated they may not hear that statement'. When asked why they would hear it any better form a financial planner than from a solicitor, he suggested that the different qualifications may be significant, but then added that in this case, a solicitor would be confident that a 200% return was ridiculous and would advise the client not to proceed." 51 It is important to understand the primary judge's reasoning process. First, he accepted that the appellants' retainer was to advise on the loan and mortgage transaction and that they were not retained to advise on the proposed investment in KSE: see [108]. His Honour then referred to the judgment of Sheller JA (with whom Meagher JA and Abadee AJA agreed) in Citicorp Australia Ltd v O'Brien (1996) 40 NSWLR 398 at 418 E-F where Sheller JA said: "In my opinion the difficulties faced by the O'Briens which his Honour considered were so great and, to professional persons, so obvious that a solicitor could not reasonably leave them unstated, did not impose the duty his Honour held Mr Eliades to be under. Stated bluntly, such a duty would require solicitors, retained to act on a purchase or mortgage for their skill in the law, to inform every client for whom they so acted of their views about the financial prospects of the purchase or mortgage where they felt or ought reasonably to have felt that there was risk of loss. One consequence of this would be to require solicitors to give opinions, which they were not qualified to give, with the obvious consequence that if they were wrong and the client had acted on the basis of those views, they would be liable in negligence. For good reason such a proposition is contrary to authority. The solicitor's duty is found in the terms of the retainer and the ambit of any additional assumed responsibility relied upon." 52 At [109] the primary judge said that while the scope of the retainer was of considerable significance in identifying the extent of the solicitor's duty of care, the scope of the solicitor's duty of care to a client was not confined to the contract of retainer but may extend in the circumstances of a particular case to require the taking of positive steps beyond the specifically agreed task or function where such steps are necessary to avoid a real and foreseeable risk of economic loss being caused to the client: Waimond Pty Ltd v Byrne (1989) 18 NSWLR 642. (I note at this point, as I did in David v David [2009] NSWCA 8 at [76], that in Kowalczuk v Accom Finance [2008] NSWCA 343 at [267]-[294] Campbell JA undertook a detailed analysis of the precedential status of Waimond. I will return to this topic and my comments in David at [76] in due course.) 53 At [111] the primary judge said that Waimond had not been expressly overruled or disapproved in Citicorp. His Honour noted that since Citicorp critical views have been expressed as to the authority of Waimond in Heydon v NRMA Ltd [2000] NSWCA 374; 51 NSWLR 1, though his Honour noted that Davies AJA (with whom Meagher JA concurred) in Curnuck v Nitschke [2001] NSWCA 176 had said that Waimond remained good law. 54 The primary judge then expressed what he saw as the prevailing position at [113] of his reasons as follows: "[113] Accordingly, the prevailing position is that the scope of a solicitor's duty of care is not limited to the terms of the retainer but, depending upon the circumstances of the particular case, may require the taking of positive steps beyond the specifically agreed professional task or function, where these are necessary to avoid a real and foreseeable risk of economic loss being sustained by the client." 55 His Honour then turned to the question of solicitors giving advice in relation to financing and mortgage transactions raising money as the appellants were here. His Honour then examined solicitors providing so-called "independent advice" and stated the following at [115] after referring to Citicorp: "[115] … solicitors providing 'independent advice' are expected to warn clients against improvident transactions, and while they are not required to provide the type of financial analysis that might be expected of accountants or stockbrokers or financial planners, they are expected to form a view as to the fairness of a transaction and whether it is reasonable for the client to enter into it, and if it is beyond their capacity to do so, to obtain appropriate specialist assistance." (emphasis added) 56 His Honour then discussed the role of independent advice under the Contracts Review Act and in the context of undue influence and unconscionable bargains, referring to the extent to which independent legal advice will act "as an antidote to the invalidating presumptions which otherwise arose in those contexts": [116] of his Honour's reasons. His Honour then looked at the necessity for a solicitor giving such advice (that is, for there to be an antidote) to ensure that the client comprehends the contents, nature and effect of the relevant documentation and as to the advice as to the propriety of the transaction (by which term the primary judge was referring to the underlying transaction). His Honour referred to Permanent Trustee Co of New South Wales Ltd v Bridgewater [1936] 3 All ER 501 at 507-508, Bester v Perpetual Trustee Co Ltd [1970] 3 NSWLR 30 at 35, Stivactas v Michaletos (No 2) [1994] ANZ Conv R 252; Credit Lyonnais Bank Nederland NV v Burch [1997] 1 All ER 144, Royal Bank of Scotland v Etridge (No 2) [2001] 4 All ER 449: see generally [116]-[126] of the primary judge's reasons. 57 His Honour said, at [127], that none of these authorities were cited in Citicorp (which was correct) and were not overruled. 58 His Honour then, at [128], expressed the effect of the so called independent advice cases, saying the following: "[128] In my respectful view, the position was correctly stated by Danckwerts LJ (with whom Sachs LJ concurred) in the Court of Appeal in Neuschul v Mellish & Harkavy (1967) 111 SJ 399, that although the duty normally owed by a solicitor to a client only extends to legal advice, it is often difficult in a given situation to disentangle legal and business or practical advice, and a solicitor who is carrying out a transaction for a client is not justified in expressing no opinion when it is plain that the client is rushing into an unwise, not to say disastrous, adventure. The cases that state that it is not the function of a lawyer to give financial advice mean that a lawyer is not expected to bring to his or her task the knowledge and expertise of a stockbroker, an accountant or a financial planner. But a lawyer giving independent advice is required to address the fairness or reasonableness of a proposed transaction, so that the client can appreciate its disadvantages; if this involves matters beyond the lawyer's expertise, then the lawyer should seek specialist assistance. That is not to say that the solicitor is to be expected to give financial advice - of the type that a stockbroker might - about the proposed investment. But where it is evident that the borrower is relying on the investment to generate the income to service the loan which is secured over the family home, and where at first sight the expectation appears utterly unrealistic, a solicitor acting reasonably would, as Mr Fisher explained, take steps for the protection of the client's interest." 59 Returning to the facts of this case, at [129], his Honour expressed his criticism of Ms Jajoo and his conclusion of negligence of the appellants in the following terms: "[129] In this case, it was or ought to have been plain to Ms Jajoo that Mr and Mrs Riz were putting their home at risk for the purpose of raising funds for an investment in respect of which they had expectations that objectively were absurd, such that (as Ms Jajoo conceded) it appeared to involve a very high risk. In my view, it was insufficient to tell Mr and Mrs Riz that she was not advising on the proposed investment (or anything else to do with Mr Suleman) and that they should seek and obtain legal and financial advice elsewhere, yet continue to act on and facilitate the loan transaction, all the more so where, as I have concluded, it ought to have been evident that they did not appreciate the importance of obtaining such advice and did not intend to do so. What was required was advice that firmly brought home the apparent improvidence of the proposed investment. I would not go so far as to hold that Ms Jajoo was on that account alone bound to cease to act, but in my view reasonable care required that she bring home to her clients forcefully the improvidence of their proposed course. That might have been achieved by forceful oral advice, or preferably by insisting on written instructions to proceed notwithstanding. If because of a conflicting duty to Mr Suleman Ms Jajoo could not give that advice, then she ought to have declined to act further; I do not accept that a solicitor acting as she was on a loan transaction can avoid the consequences of what would otherwise involve a conflict of duties by disavowing responsibility to give advice which she was otherwise bound to give, on the topic which would otherwise give rise to the conflict - here, the apparent improvidence of the proposed investment. In any event, more than mere advice to obtain independent advice was required. In my opinion the minimum requirement was forceful advice to bring home the improvidence of the transaction, and that did not occur. It follows that Ms Jajoo was in breach of her duty of care."

62 At [137], the primary judge dealt with the question of negligence and the question of conflict as follows: "[137] Accordingly, DDS's obligations to serve Mr Suleman's interests did not excuse it from warning other clients against entering into transactions if to their knowledge, howsoever derived, the proposed transactions appeared improvident. Because, as I have endeavoured to explain, it is my view that a solicitor's duty can extend beyond the bounds of the retainer, and in the context of a borrowing transaction the solicitor is necessarily required (consistent with Khoshaba ) to give consideration to the purpose of the loan and the providence of the transaction - it was necessary for Ms Jajoo to give some consideration to the purpose and proposed application of the loan. But as soon as that is recognised, the conflict - which Patten AJ accepted would arise if DDS acted on any transaction involving Mr Suleman - could not be avoided." 63 At [139] the primary judge rejected the proposition put by the appellants that Mr and Mrs Riz had made an irrevocable decision to invest with KSE and that there was no reason to think that anything that Ms Jajoo might have said would have made them change their mind. His Honour supported this conclusion with the following comments at [139]: "[139] … Mr Riz had taken quite some time to be persuaded that he should borrow and invest, and Mrs Riz at least initially was not an enthusiastic participant. The period of time over which Mr Riz was persuaded to make such an investment, and the enquiries that he made before doing so, suggests that he was cautious and would not have risked his home had he not believed that the promised return was likely to be attained. Even on Ms Jajoo's version, while Mr and Mrs Riz were minded to invest with KSE, what they said to her did not suggest that it was inevitable that they would do so. On Ms Jajoo's version, what Mr Riz said at least at the 21 September consultation suggested that he was not necessarily committed to proceed to invest with KSE. In my view, strong advice of the type appropriate to bring home to him the unreality of his expectations would probably have deterred him from proceeding with the investment, and with the loan. In my view it is very probable that, properly advised by Ms Jajoo, Mr and Mrs Riz would not have proceeded with the loan or the subsequent investment."

[9]

The trial judge erred in holding that had Ms Jajoo firmly advised that the proposed investment was apparently improvident the respondents would not have proceeded to borrow or enter into the proposed investment (see judgment at [139])." 66 The appellants emphasised that the primary judge accepted Ms Jajoo's evidence ("generally"). What Ms Jajoo said was tolerably clear: see [29], [31], [39] and [40] of the primary judge's reasons set out at [25] and [27] above. His Honour found that Ms Jajoo was reasonably entitled to think that Mr and Mrs Riz could understand what she said to them: [90] of the primary judge's reasons (at [31] above). Yet, the primary judge found (at [100]) that Ms Jajoo was not reasonably entitled to be satisfied that they would follow up the advice or that they understood the importance of it. His Honour's view was that she had not done enough to "bring home the importance to Mr and Mrs Riz" of obtaining independent advice. 67 The appellants pointed out that it was not part of the respondents' case that they had been given a warning, but that it was expressed in too anodine a fashion "to bring home the importance" of obtaining independent advice. Their case, that Ms Jajoo had encouraged them into the transaction was rejected, in effect, as untruthful. 68 The evidence of Ms Jajoo recounted at [99] of the reasons by the primary judge was from a question asked by his Honour at T798: "Q. Did you in the course of your two conferences or two with Mr Riz, one with Mrs Riz, form a view as to whether there was any differential in their desire to go ahead with this transaction? Did it seem to you that one was more determined or keen than the other, or not? A. I formed a view that they both knew that whatever they were getting themselves into had risks, some kind of risks associated with it, like any other business would. On that basis I told them, 'You should go and obtain the advice of somebody who could tell you if there is any risks or not.' Now I was satisfied that they understood that, and they would follow that up at some stage whenever time came for them to enter that business transaction. " (emphasis added) 69 It was this evidence that his Honour did not accept at [100]. That lack of acceptance has a number of difficulties. First, I do not read his Honour's reasons at [100] as rejecting Ms Jajoo's evidence that she thought Mr and Mrs Riz had understood her advice and that they would seek further advice. Rather, his Honour was making an objective assessment of the evidence of what she said and its adequacy.

70 Secondly, and related to the first point, the evidence was not the subject of any challenge. It was never suggested to Ms Jajoo that she could not have been satisfied that the respondents understood the importance of her recommendations (especially in circumstances in which she was entitled to believe that they could understand what she told them). She was taxed with an otherwise false case. 71 Thirdly, this evidence conformed with the context in which she found herself. It is plain that the Rizs understood that there was "a big risk" to the transaction. Mrs Riz said she understood that. What Ms Jajoo had said to Mr Riz on the first occasion conveyed a notion of risk to them - Mrs Riz's words make that clear. 72 Fourthly, the primary judge's conclusions (at [100]) that Mr and Mrs Riz "there and then" executed the loan contract and mortgage was wrong, this had already been done before Ms Jajoo said what she did to both Mr and Mrs Riz. 73 Fifthly, the complaint of the primary judge was that Ms Jajoo had not done enough to bring home the importance of independent advice. Yet, Mr and Mrs Riz said that they would proceed "for now", indicating to Ms Jajoo that the question of obtaining further advice was available to be considered by them. 74 Sixthly, it is difficult to understand precisely what it is that Ms Jajoo should have said. She used expressions that conveyed the necessity to seek legal and financial advice: "need", "must", "should". If, as his Honour found, this reasonably could be taken to have been understood and if, as they did, Mr and Mrs Riz said they knew it involved a big risk, it is a difficult to understand why Ms Jajoo was negligent in failing to label the underlying transaction as "improvident" or otherwise to "bring home" the importance of the obtaining of advice. 75 One aspect of the difficulties involved in requiring Ms Jajoo to label the underlying transaction as "improvident" or by some equivalent expression was her lack of instructions to examine the matter and her lack of knowledge about it. I will return to this. 76 The assessment made by the primary judge at [100] is one that this Court is obliged to form its own view upon: Fox v Percy [2003] HCA 22; 214 CLR 118 at 126 [25]. No subtle influence of demeanour arose here. The judge in this context was not balancing the evidence of the parties, he was expressing a view on the adequacy of the conduct of this solicitor. The evidence of the Rizs was rejected and did not direct itself to the subtleties of emphasis by reference to which Ms Jajoo was judged. In any event, in circumstances where 14 months elapsed from the last day of the trial to delivery of judgment, if there were to be considered any advantage of some kind, it can be seen to have likely evaporated. 77 The primary judge drew upon the expert evidence of Mr Fisher which I have set out at length. That evidence had a difficulty embedded within much of it of the same kind as revealed by the primary judge's discussions of the "independent advice" cases. That is, his evidence tended to assume that the retainer of Ms Jajoo extended to ensuring that the Rizs understood the underlying transaction. Ultimately, as made clear at [107] of the judge's reasons, the issue was whether a solicitor should "send that client off for financial advice". That is what Ms Jajoo did. I do not understand the primary judge to conclude that Ms Jajoo, to avoid the conclusion that she was negligent, should have told the Rizs not to proceed. Rather, the primary judge concluded at [100] that she was not reasonably entitled to be satisfied that they would follow up her advice or to be satisfied that she had done enough to bring home the importance of the need to obtain independent advice.

(b) She gave the following evidence (at T 769, 770, 771): "Q. That is not what I'm asking you. When you heard from Mr Riz that there was an investment with Karl Suleman 'So we will be making repayments of $10,000 every two weeks.' What did that convey to you? What did you understand you were being told? A. That they are getting, they are contemplating some kind of a business venture and they will be making enough money out of it to be making repayments of $10,000 every two weeks towards the loan. Q. And did you say to Mr Riz, 'Can I put my money in as well, because that sounds a pretty good return'. Did you think something like that at the time? A. No. Q. Did you say to him, 'Are you on medication?' Did you enquire as to his mental health, after having heard that? A. No. Q. Did it strike you at the time that Mr Riz was joking with you? He was being a bit of a prankster an pulling your leg? A. No. Q. No? A. No. Q. You listened to him suggest a $10,000 a fortnight return on money from a business venture with Karl Suleman Enterprises and you thought - well, what did you think? A. I thought that's a very high return and he should go and obtain some advice in relation to that business venture. Q. Did you perhaps secretly chuckle to yourself that this is just absurd? Did you check that it wasn't April Fools Day? That someone was having, that your colleagues had sent someone in to play a bit of a joke on you? A. No. Q. Did those thoughts go through your mind? A. No. The thought of being a high return did, but that's about it. Q. Your maths in 2001 would have been reasonably good, wouldn't it? You would have been able to go: 10,000 a fortnight, 26 fortnights in the year, okay, that is $260,000 return in the year on a loan of [$] 275,000. You didn't look for hidden cameras? You know the TV shows where they set people up as a bit of a prank? A. No. Q. No? A. No. Q. Seriously? A. Did I look for cameras? Q. This did not strike you as being just so absurd that someone must be being a bit of a prankster? A. No, I considered it as a high return. Q. Are you seriously saying that? Let's reflect on where we are at at the moment. You are in the Supreme Court, you are a solicitor of the Supreme Court, you are under oath? A. Yes. Q. And are you faced with a return of $260,000 on an investment of some part of $275,000. You knew that the Citibank loan had to be paid back, didn't you? A. Yes. Q. Let's just get that in perspective? A. Yes. Q. And perhaps take a deep breath and let's revisit your answer. You are not seriously suggesting that it struck you as being properly described as a high return, are you? A. Yes, I am. It was a very high return. Q. A very high return? A. Yes. Q. An absurdly, a patently absurdly high return, it must have struck you as? A. A very high return. Q. How old were you in 2001? A. I was 31. Q. Right. In your 31 years of life had you ever heard of an investment in New South Wales, Australia, returning something like $260,000 in one year on a $275,000 investment? A. I hadn't looked at investments but I considered this investment as a very high return, a very high risky return. Q. Dealing with my question, in your 31 years of living? A. Right. Q. Had you ever heard of anyone in New South Wales, Australia, in 12 months having received a return on an investment of $260,000 for an investment of $275,000? It is capable of being answered yes or not? A. Well, I don't think it can because I hadn't heard, I hadn't, I hadn't had any dealings in investments. I considered this as being a very high return but as to what the details of that investment were or how it was or over what period of time it was or what it entailed, I didn't know anything about that investment."

84 It was not put to Ms Jajoo that she should have known that by 8 or 10 or 15 October the Rizs had not seen a legal or financial adviser or that there should have been another warning or recommendation on one or more of these later dates. All that was put to her was that she had no basis to conclude at these later times that the Rizs had received legal or financial advice. It was put to Ms Jajoo that she appreciated that the Rizs had not obtained independent legal and financial advice on 25 September and that when they left her office they had not gone to see such persons. Ms Jajoo's answers concerned the time before and immediately after 25 September. The relevant cross examination was at T 781-782: "Q. When the Rizes executed the mortgage and then left your company on 25 September 2001, you knew that they had not left your office and gone and seen an accountant or another lawyer and come back, that hadn't occurred, had it? A. Most likely not. Q. You say, 'Most likely not.' Are you seriously suggesting that the - A. I wasn't sure what inquiries Mr Riz had made, but I knew that they probably haven't taken their business contract to a lawyer or a financial advisor to be advised on the actual contract. Q. That was your state of knowledge when thr Rizes left your office on 25 September 2001, wasn't it? A. Yes. Q. Let me just jump ahead for a moment. Settlement occurred on 15 October 2001 as far as you are aware, you know that now, don't you? A. Yes. Q. At settlement a bank cheque in favour of Karl Suleman Enterprises for $150,000 was received by Dominic David Stamford [sic] on behalf of the Rizes at settlement in exchange for the executed mortgage over the family home? A. Yes. Q. You had no conversations between the end of the conference on 25 September with Mr and Mrs Riz, and settlement occurring on 15 October 2001, which suggested that the Rizes had in fact obtained financial advice or independent legal advice in relation to the investment, that's so isn't it? A. Yes."

86 It is necessary at this point to say something of the legal test posited by the primary judge because it clearly influenced his factual assessment of the legitimacy of Ms Jajoo's performance of the retainer. 87 The views of the primary judge contained in [109] (see [52] above), [113] (see [54] above), [115] (see [55] above) and [128] (see [58] above) 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. 92 Applying that test here, in my view, Ms Jajoo executed her retainer and discharged her duty of care without negligence. 93 The judge was persuaded that Ms Jajoo should have said something more forceful or obtained written instructions. I do not agree. To comment on any informed basis about the underlying transaction required a knowledge of it. She did not have that knowledge. She was not retained to advise on it. She told her clients clearly to obtain independent financial advice and that it was necessary for them to do so. She thought that they understood the need for it and that they would act on her advice. In all the circumstances of how the case was fought, the evidence given and findings made I disagree with the primary judge that Ms Jajoo was not entitled to form that view. This is a factual conclusion which I reach recognising the obligation to undertake a rehearing. There was no relevant credit finding, save for those adverse to the respondents. Ms Jajoo's evidence was accepted, but not the reasonableness of her belief and evaluation that the Rizs understood the significance of the need to see other advisers. She was not taxed in cross-examination as to the reasonableness of her view that she had been sufficiently clear and forceful. An entirely different case was run against the appellants. 94 It can be accepted that Ms Jajoo knew that the Rizs' views on returns were very high, indeed extraordinary, betraying a high degree of risk. That is why she said what she did to clients who themselves expressed an understanding of a big risk. 95 It was submitted on appeal, and in effect the judge concluded, that Ms Jajoo did not tell Mr and Mrs Riz (and should have done) that they should obtain independent legal and financial advice because the transaction was improvident and risky. With respect, high risk was understood by the Rizs, to Ms Jajoo's knowledge. There can have been no doubt that the question of risk was related to her clear advice as to the necessity of seeking advice. She told them that the appellants did not approve of Mr Suleman's contracts. The recognition of high risk was clearly in the context of the high returns. In my view, Ms Jajoo's clear advice amounted to a statement about the high risk in the context of the apparently high returns. I disagree that her advice was inadequate in any way. What occurred here, plainly on the evidence, was that the Rizs (fully aware that the returns appeared too good to be true and that it was a big risk) chanced their investment believing in the returns to follow. They were clearly advised to obtain independent legal and financial advice and chose not to do so. 96 An important question for the assessment of Ms Jajoo's conduct, and for the assessment of the primary judge's criticism of her, is whether or not what she was told by the Rizs about their expectations of return on the investments was such as to make reasonably apparent to her the inadequacy of the advice she had given them. In my view, the evidence of Ms Jajoo reflected a reasonable approach by her. She did not and could not comment on the transactions because she did not understand what they were investing in. It was not part of her retainer so to understand those matters. But she recognised a very high return and a big risk and for that reason clearly advised the Rizs to take independent legal and financial advice. She could reasonably conclude that they understood what she said. In my view, Ms Jajoo fulfilled her retainer without negligence.

Causation 97 If I am wrong in the above conclusion and Ms Jajoo should have been more forceful in her views, I cannot agree with the primary judge that the Rizs proved that that would have made the slightest difference. 98 I have already set out the primary judge's finding of causation at [139] of the reasons (see [63] above). 99 The Rizs each gave self serving evidence that was inadmissible under the Civil Liability Act 2002 (NSW), s 5D(3)(b) (a difficulty that was not dealt with at the trial). The evidence was of little or no value. It took its place in a case based on false evidence as to Ms Jajoo encouraging the Rizs to invest. It posited little more than the approach taken by Ms Jajoo. 100 Examining the matter by reference to the objective circumstances the following is to be recognised. First, the Rizs were told to see independent legal and financial advisers. Secondly, no finding was made that this was not understood by the Rizs. Thirdly, there was no finding that this had not been "brought home" to them - though this can perhaps be implied in the negligence and causation findings of the judge. Fourthly, the Rizs had fully discussed the risks and the fact that the return was too good to be true before seeing Ms Jajoo. 101 Although, as was said by the primary judge, it had taken some time for the Rizs to be persuaded and although Mrs Riz had had to be brought around, it was tolerably clear that they had made up their minds to invest before seeing Ms Jajoo. The overwhelming inference is that the lure of the returns was persuasive. 102 They knew the undertaking involved big risks. They had discussed the very possibility of losing the house. 103 Objectively this reveals that, although it took some time to win them over, eventually the promised height of the returns outweighed these appreciated risks. 104 The belief in the fabulous returns was undoubtedly the product of what Mr Riz had been told by numerous people. This evidence included the following from Mr Riz (at T153, 157, 158, 264, 265-266): "Q. By the time you had this conversation with Lily [sic] about going to see Mary, what was it that changed your mind? A. I decided to go because Lily [sic] said repeatedly to me, 'It's a very good option, people are making a lot of money. Look at this one, he has beautiful Mercedes, the other one has two or three houses, other people are making a lot of money out of that. He is an honest person, he has been in this business for four years and if I had money I would invest for sure. Go and give it a go, go ahead with that.' And she was swearing to God that 'if anything wrong happens I would bear the consequences, I will sell my house to cover the loss.' Q. You trusted Lily [sic], did you? A. I didn't trust Lily [sic] herself alone but because I saw many people, four or five people, and they all did say the same, that's why I could trust the whole issue. … Q. You thought, did you, that the interest that Mr Suleman was saying sounded as if it might be too high to be true? A. This is why we went to see Mary because Mary knew him and to see other people that were investing with him and everyone said that he is a good person. And when we, when I went with Lily [sic] to see, to meet with Mary, Mary pointed at the house that she bought. She said 'This house is mine, this one is mine and also she said the other one and the one in Darling Harbour and all these properties are because of the money that is coming from the investment with Karl Suleman. And Karl is very punctual, he gives money on time and I've been with him for four years and he has never been late to give me my money. ...

The Notice of Contention 108 It was common ground that the first task involved in considering the noticed contention was to assess the relevant duties said to conflict: Pilmer v Duke Group Limited (in Liquidation) [2001] HCA 31; 207 CLR 165 at 200-201 [83]. 109 It was accepted by the respondents that if Ms Jajoo's duty did not extend to advising on the underlying transaction then there was no conflict of duty and duty. Ms Jajoo's duty did not extend so far. If the circumstances of the performance of the retainer required anything to be said it did not require any more than was said. Therefore that aspect of the case evaporates. 110 Though there had, apparently, been some dealings between some of the appellants and Mr Suleman in the past, both professionally and commercially, this did not impinge upon Ms Jajoo. These relationships had ceased by the time she was seen. She fulfilled the retainer. Neither the antecedent duties or interests placed her in a position of conflict. She was not otherwise required to say more than she did and, on the facts, she was not prevented from saying more than she was required to say by some duty or interest arising from the firm's previous dealings with Mr Suleman. 111 There was no basis in the pre-existing relationships with Mr Suleman and his companies not to act in advising on the loan and mortgages. 112 In these circumstances, the matters raised by the notice of contention do not save the primary judge's orders. 113 If I am wrong about the absence of any breach of fiduciary obligation there would arise difficult questions as to the operation of principles of causation in this area: see Brickenden v London Loan & Savings Co of Canada [1934] 3 DLR 465, White v Illawarra Mutual Building Society Limited [2002] NSWCA 164, in particular at [145] per Hodgson JA; Breen v Williams [1996] HCA 57; 186 CLR 71; O'Halloran v R T Thomas & Family Pty Ltd (1998) 45 NSWLR 262 at 272-3. 114 The importance of this issue is such that it makes it inappropriate to deal with the matter by way of obiter dicta in a case such as this. Relevant to the consideration of the factual underpinnings are what a reasonable solicitor would have said in the circumstances unconstrained by any difficulty of having had any contact with Mr Suleman in the past. That question would not arise in the abstract. If it be the case that Ms Jajoo should have ceased to act it might be thought that the overwhelming likelihood was that Mr Riz would have returned to Mary Haider's office to ask what to do and he would have been sent to another solicitor chosen by Mary Haider. There would also need to be considered in this matrix the evidence of Mr Fisher. Given that, in my view, it is both unnecessary and inappropriate to deal with Brickenden I do not propose to evaluate the probabilities in relation to what would have happened had the Rizs approached another solicitor in the circumstances of this case. 115 Further, if it be the case that Ms Jajoo had a primary duty to Mr and Mrs Riz to say (as she did) something to the effect that DDS did not approve of Mr Suleman's contracts, then there is a possibility that this duty could conflict with a primary duty to maintain confidentiality in relation to communications from Mr Suleman when he was a client, giving rise to a secondary fiduciary duty to avoid this conflict of primary duties. Whether or not such a conflict did arise in this case would require close consideration of what relevant confidential communications there were from Mr Suleman. Ms Jajoo, however, did fulfil any such relevant primary duty to Mr and Mrs Riz by saying what she did, so that the only duty she might have breached was one of confidentiality owed to Mr Suleman. In those circumstances, Mr and Mrs Riz do not make good any case of loss due to breach of fiduciary duty to them.

Dominic v Riz

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Judgment (99 paragraphs)

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Legislation Cited (2)

Cases Cited (15)

Cited By (25)