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[2025] NSWCA 173
respondent. Appeal dismissed with costs: [77].
The solicitors were found to have breached their duty by not identifying and addressing a problem with the life-estate arrangements in the sale contract. That did not establish that the breach caused the appellants’ loss. The evidence did not show that the vendor would probably have agreed to change the life estate in 2012. Nor did it show that the life estate caused the failure to complete in 2017: Mr Fussell did not use available finance while seeking a better deal. The appeal was dismissed with costs.
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2,583 words · generated 06/10/2026
Fussell v Hanrahan concerned a failed purchase of an industrial property at Camellia, New South Wales, and a negligence claim against solicitors involved in the transaction. The Court of Appeal’s central task was not to decide whether the transaction documents presented difficulties. The primary judge had already found that Mr Hanrahan breached his professional duty in relation to the life-estate provision. The appeal instead concerned whether that breach caused loss.
2 cited instruments linked from this judgment.
On 10 May 2012, Bernard Fussell agreed to buy the property from James Lockrey for $1.7 million. Settlement was deferred for five years, until 10 May 2017 [1]. Blue Star Trading Corporation, a company associated with Mr Fussell, leased the property during the deferral period and operated its business there [3].
The contract provided that, on completion, Mr Lockrey would receive a life estate “for the home built on top of the six garages on the property” [4]. But the transfer form attached to the contract described a life estate in Mr Lockrey and a remainder to Mr Fussell in the whole property [5]. The stated intention and the form of transfer were therefore not aligned. The legal difficulty was compounded by the fact that the contemplated life estate related to only part of unsubdivided land. Ward P noted the relevance of s 23F(2) of the Conveyancing Act 1919 (NSW), and that Mr Brown later identified a problem with the proposed transfer [2].
Mr Fussell did not complete on the contractual date, 10 May 2017. Mr Lockrey died two days later. Under cl 33.2, a party could rescind by written notice if a party died before settlement. Mr Lockrey’s legal representative subsequently rescinded the contract [1]. Mr Fussell had earlier unsuccessfully sought specific performance. He then brought negligence proceedings against the solicitors who had acted for him at different stages [2].
The primary judge found that Mr Hanrahan had breached his duty in two respects. The life-estate breach relevant to this appeal was his failure to identify the inconsistency between the transfer and the parties’ intended arrangement, explain the difficulty in giving legal effect to it, and seek instructions about negotiating a transfer or transfers that better reflected the intention [11]. The primary judge nevertheless found no loss was caused by that breach, because the appellants had not proved that Mr Lockrey would probably have agreed to alter or remove the life estate [12]. The judge also found that the life-estate issue did not cause Mr Fussell’s failure to complete in 2017 [16].
The appeal was narrowed to the life-estate issue. The appellants accepted that they needed to establish both that Mr Lockrey would likely have agreed to a changed arrangement in 2012 and that, with such an arrangement, Mr Fussell would likely have been able to complete by the contractual date [18]-[20]. Ward P gave the principal reasons; Mitchelmore JA and Harrison JA agreed [78]-[79]. The appeal was dismissed with costs [77].
The Court treated causation as a counterfactual inquiry: what would probably have happened if the solicitor had identified the problem and sought instructions before the contract was exchanged? The appellants accepted that they bore the burden of establishing that outcome on the balance of probabilities [13], [46]. It was not enough to show that renegotiation could have been attempted, or that the life-estate drafting was problematic.
The history of Mr Lockrey’s dealings with earlier prospective purchasers weighed against the proposed counterfactual. In 2010, his solicitor had advised him that a “clean” sale without a life estate would be preferable. Mr Lockrey rejected that advice. In discussions concerning Mr Wang, Mr Lockrey insisted on a life estate rather than a lease, and refused to sell without the life estate even when additional compensation was proposed [24]-[27]. Ward P considered this evidence significant because it showed the importance Mr Lockrey attached to security of possession in his home [49]-[50].
The appellants argued that the earlier negotiations did not answer the relevant question. They said that the legal difficulty had not been clearly identified in those dealings, and that the August 2016 correspondence showed Mr Lockrey could be willing to consider relinquishing the life estate. In 2016, after Mr Brown raised the problem and proposed solutions, Ms Deigan said Mr Lockrey would consider relinquishment on conditions, including an increase of $1.5 million in the purchase price [34]-[37].
The Court acknowledged a factual error in the primary judge’s account of the August 2016 correspondence. The primary judge had incorrectly attributed the statement that the life estate was an “essential term” to a response to Mr Brown’s later letter identifying the legal difficulty. Ward P held that this error did not undermine the primary judge’s ultimate conclusion [47]-[48]. The earlier history remained evidence that Mr Lockrey had insisted on the life estate and rejected advice to sell without one [49]-[50].
Nor did the 2016 exchange establish what Mr Lockrey would have done in 2012. The 2016 offer was conditional, and the circumstances had changed. The argument that Mr Lockrey would have been more willing to compromise before exchange was, in the Court’s view, speculation. The Court noted that the appellants themselves accepted the position was different by 2016, including because rent arrears and amounts under the contract were then relevant [52]. The Court did not need to decide what Ms Deigan would have advised in 2012, because the evidence did not establish that Mr Lockrey would probably have acted on advice to remove the life estate and proceed with the sale without it [53].
The Court also rejected the argument that the life-estate problem caused the failure to settle. It accepted that the life estate had created difficulties in obtaining finance from St George Bank [57], [72]. But the inquiry was whether that difficulty caused the non-completion and resulting loss on the case pleaded and argued. Mr Fussell had an offer of finance from Ozwide Asset Management and other identified sources of funds. The evidence accepted by the primary judge was that he did not use the available facility because he was seeking a better interest rate [62]-[68]. Ward P concluded that he chose not to put himself in a position to complete on 10 May 2017 [72].
The appellants’ case did not establish that the life estate caused the higher interest rate or that increased finance costs were the pleaded causal loss. The Court noted that the appellants accepted there was no evidence establishing a causal connection between the life estate and the higher rate, and that this was not how the case had been pleaded [73]-[74]. On the case before it, the possibility of obtaining less attractive finance did not show that the life-estate breach caused the failure to complete [75].
The judgment applies causation principles to the specific counterfactual arising from a professional-negligence claim. The appellants accepted that they had to establish, on the balance of probabilities, what would likely have happened if the solicitor had acted competently [13], [46]. The Court’s analysis therefore focused on evidence of the vendor’s likely response, not simply on whether competent advice could have opened negotiations.
The decision does not purport to alter or restate a broad rule of negligence law. No competing general causation test is identified in the reasons, and the Court does not announce a new doctrine. Its contribution in the supplied judgment is an application of the accepted burden of proof to a fact-specific negotiation counterfactual.
The reasoning illustrates two practical evidentiary points. First, a later willingness to consider a different arrangement does not, without more, establish that a party would have agreed to it at an earlier date and in different circumstances [52]. Second, showing that a contractual feature made financing harder is not necessarily enough to prove that it caused non-completion, particularly where the evidence indicates that available funding was not taken up for another reason [72]-[75].
The judgment also demonstrates the significance of the pleaded case. Ward P noted that the asserted causal theory about bank finance and higher interest costs was not the case as pleaded, and that there was no evidence linking the life estate to the higher rate [73]-[74]. The decision does not suggest that every unpleaded argument is automatically excluded. Rather, it explains why the particular argument advanced did not establish causation on the record before the Court.
The legal sources identified in the judgment include s 23F(2) of the Conveyancing Act 1919 (NSW), mentioned in connection with the contemplated life estate over only part of unsubdivided land [2]. The Court did not decide a separate appeal issue about the construction or application of that provision. The life-estate difficulty formed context for the professional-negligence and causation questions, rather than a standalone statutory determination.
At [46], Ward P identified the counterfactual the appellants needed to prove: if the problem had been identified before exchange, Mr Lockrey would have agreed in 2012 to a sale arrangement that did not involve a life estate, while still giving him security to remain in his home. Plain English: it was not sufficient to show that the solicitor should have raised the problem; the appellants had to show what the vendor would probably have agreed to instead.
At [49], Ward P said that Mr Lockrey attached great importance to having security in his home and had rejected advice to sell without a life estate. Plain English: the vendor’s earlier conduct was evidence about how he was likely to respond to a proposed change, even though the legal difficulty had not been raised in exactly the same way before.
At [50], Ward P stated that the possibility Mr Lockrey would refuse to proceed without a life estate was “at the very least” an equally plausible alternative, and that this was fatal to the appellants’ case because they bore the onus of proof. Plain English: the Court was not satisfied that agreement to remove the life estate was more likely than refusal to sell without it.
At [52], Ward P described the proposed inference that Mr Lockrey would have been more motivated to negotiate in 2012 as “mere speculation”. Plain English: the Court would not infer a different response merely because the appellants considered the earlier bargaining position more favourable to them.
At [72], Ward P said that Mr Fussell chose not to put himself in a position to complete because he was waiting for a better financing deal. Plain English: the Court accepted that the life estate had made some financing more difficult, but found that the decisive reason for non-completion was the choice not to use available financing on the terms then offered.
At [75], Ward P concluded that the appellants could have completed, albeit at a higher interest rate, but chose not to do so. Plain English: on the evidence and pleaded case, the financing difficulty did not prove that the solicitor’s breach caused the transaction to fail.
The reasoning is relevant to professional-negligence claims where a claimant says competent advice would have prompted negotiations and changed a contract. The key question in such a case is likely to include whether the claimant can prove what the other contracting party would probably have done, rather than merely showing that negotiations were possible. In Fussell, the vendor’s prior responses to similar proposals were central evidence [49]-[54].
The case is also relevant where the proposed counterfactual depends on a later negotiation. A later conditional willingness to consider a change may have limited value if the circumstances, leverage, or contractual position differ from the earlier period. Here, the 2016 willingness to consider relinquishing the life estate did not establish what Mr Lockrey would have agreed to in 2012 [52].
Another potentially relevant fact pattern is one in which a claimant alleges that a drafting or conveyancing issue prevented access to finance and caused a transaction not to complete. The judgment distinguishes between evidence that a feature created difficulty obtaining a particular lender’s finance and evidence that it actually caused non-completion. The availability of alternative funds, the claimant’s reasons for not using them, the pleaded case, and evidence linking the feature to any additional cost were all material in this appeal [62]-[75].
The judgment is not a finding that a life estate over part of unsubdivided land is always registrable or unregistrable. Nor does it decide what a properly structured alternative arrangement would have achieved. The appeal concerned whether the appellants proved that such a change would probably have been agreed and that the breach caused the loss claimed.
The judgment provided here does not identify any later judicial treatment of Fussell v Hanrahan. It was decided on 1 August 2025, and the supplied reasons contain no subsequent cases applying, distinguishing, or criticising it. It would therefore be unsupported to describe a later line of authority or claim that the case has been adopted by other courts.
The judgment itself refers to two earlier decisions. It cites Carolyn Deigan as executrix for the estate of the late James Boyd Lockrey v Barnard James Fussell [2019] NSWCA 299 as the unsuccessful specific-performance proceeding arising from the sale contract [2]. It also refers to the primary judgment, Fussell v Hanrahan t/as Dignan & Hanrahan Solicitors [2024] NSWSC 1388, when describing the trial judge’s findings and reasoning [9], [11]-[12]. These are procedural and decisional references within the history of the dispute, not evidence of later treatment of the 2025 appeal decision.
For research purposes, the supplied judgment supports describing the decision as a fact-specific application of proof of counterfactual causation in professional negligence. Any assessment of its subsequent precedential weight would require later judgments or other legal sources not included here.
The judgment leaves open what would have happened if a different proposed arrangement had been put forward in 2012. The Court did not determine whether a lease, licence, caveat, or another structure could have protected Mr Lockrey’s occupation while avoiding the problem with the proposed transfer. It noted that the primary judge had referred to a possible caveat, but the evidence about that option was limited [51].
The Court also did not decide what advice Ms Deigan would have given in 2012 if Mr Hanrahan had raised the legal difficulty. Ward P said it was unnecessary to speculate about that question because the evidence did not show, on the balance of probabilities, that Mr Lockrey would have agreed to proceed without the life estate [53].
The judgment does not resolve the legal treatment of every life estate over part of unsubdivided land, or determine the effect of industrial zoning on the contemplated residential occupation. Ward P noted that zoning and subdivision difficulties were not part of the appellants’ pleaded case [9]. The statutory reference to s 23F(2) provides context, but the Court did not decide an independent statutory issue under that provision [2].
Finally, the reasons address causation on the pleadings and evidence in this case. They do not establish how a differently pleaded and evidenced claim about increased financing costs would be decided. Ward P noted that there was no evidence linking the life estate to the higher interest rate and that the increased-cost theory was not the pleaded case advanced at trial [73]-[74].
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Source: NSW Caselaw (www.caselaw.nsw.gov.au). Converted to plain text by ZoeLaw. Not the official version.
Medium Neutral Citation: Fussell v Hanrahan [2025] NSWCA 173
Hearing dates: 16 June 2025
Date of orders: 1 August 2025
Decision date: 01 August 2025
Before: Ward P at [1]; Mitchelmore JA at [78]; Harrison JA at [79]
Decision: 1. Appeal dismissed with costs.
Catchwords: NEGLIGENCE – causation – professional negligence – where contract for sale of land provided for 5-year deferred settlement and life estate in favour of vendor – where purchaser did not complete on completion date and vendor died two days later – sale contract subsequently rescinded by vendor’s legal representative – where solicitor found to have breached duty of care by failing to identify difficulties with grant of a legal life estate over a portion only of unsubdivided land but primary judge found no loss caused by that breach – whether primary judge erred in concluding that appellants did not discharge their onus of establishing that any negotiations with vendor prior to exchange of contracts in 2012 would likely have resulted in vendor agreeing not to require a life estate – whether primary judge erred in concluding that problem with life estate played no part in the purchaser’s failure to complete in 2017 and was thus not causative of loss – appeal dismissed.
Legislation Cited: Conveyancing Act 1919 (NSW), s 23F(2)
Cases Cited: Carolyn Deigan as executrix for the estate of the late James Boyd Lockrey v Barnard James Fussell [2019] NSWCA 299
Fussell v Hanrahan t/as Dignan & Hanrahan Solicitors [2024] NSWSC 1388
Category: Principal judgment
Parties: Bernard James Fussell (First Appellant)
Blue Star Trading Corporation Pty Ltd (A.C.N: 156 585 376) (Second Appellant)
Bruce Vincent Hanrahan t/as Dignan & Hanrahan Solicitors (First Respondent)
David James Duncombe t/as Dignan & Hanrahan Solicitors (Second Respondent)
Steven Brown t/as Etienne Lawyers (Third Respondent)
Representation: Counsel:
K Smark SC (Appellants)
A H Harding SC with J Norton (First and Second Respondents)
Solicitors:
Penhall & Co Lawyers (Appellants)
K & L Gates (First and Second Respondents)
Sparke Helmore Lawyers (Third Respondent)
File Number(s): 2024/000466602
Publication restriction: Nil
[This headnote is not to be read as part of the judgment]
On 10 May 2012, the first appellant (Mr Bernard Fussell), as purchaser, entered into a contract for the sale of land (sale contract), an industrial site at Camellia in New South Wales (the Property) for the sum of $1.7 million with a 5-year deferred settlement date. The second appellant, Blue Star Trading Corporation Pty Ltd, is a company associated with Mr Fussell which was granted a lease of the Property during the period of the deferred settlement and conducted its business from the Property.
In consideration for the vendor (Mr James Lockrey) entering into the sale contract, the contract provided for the grant to the vendor, on completion, of a life estate “for the home built on top of the six garages on the property”, in the terms set out in a Deed of Life Estate annexed to the contract and executed on exchange. Clause 49 of the sale contract required the parties on exchange to execute a form of transfer to be registered on completion*,* which in its terms provided for the transfer to Mr Lockrey, on completion, of a life estate in the whole of the Property, with the remainder to Mr Fussell on Mr Lockrey’s death. Mr Fussell did not settle on the deferred completion date (10 May 2017). Two days later, Mr Lockrey died. Mr Lockrey’s legal representative, Ms Carolyn Deigan (the solicitor who had acted for him on the sale transaction), subsequently rescinded the contract for sale pursuant to a clause which provided that, if a party died before settlement, either party could rescind by notice in writing (cl 33.2).
After an unsuccessful attempt by Mr Fussell to obtain an order for specific performance of the contract for sale, Mr Fussell brought proceedings in negligence against the respective solicitors who had acted for him in connection with the sale transaction. Relevant to the appeal was the claim brought against the first and second respondents (Mr Bruce Hanrahan and his partner in the firm Dignan and Hanrahan Solicitors), who acted for Mr Fussell at the time of entry into the sale contract.
The primary judge found that Mr Hanrahan breached his duty of care as a solicitor to Mr Fussell in two respects, only one of which is here relevant, namely the failure to identify that the form of transfer provided by cl 49 was inconsistent with the parties’ intention and to advise Mr Fussell of the difficulties of giving legal effect to the agreement in relation to the life estate, and in failing to seek instructions to negotiate a transfer or transfers which better reflected the parties’ intention. However, the primary judge found that no loss was caused by that breach because the appellants did not establish that, had Mr Hanrahan sought and obtained those instructions, Mr Lockrey would have likely agreed to renegotiate cl 49 (to alter or remove the life estate). Further, the primary judge held that the “problem” with the life estate played no part in Mr Fussell’s failure to complete the contract in 2017 and hence was not causative of any loss. On appeal, the appellants challenged the causation findings in relation to the life estate issue.
The Court held (Ward P, Mitchelmore and Harrison JJA agreeing), dismissing the appeal with costs:
(1) The primary judge did not err in concluding that the appellants did not discharge their onus of demonstrating on the balance of probabilities that any negotiations in 2012 would have resulted in Mr Lockrey agreeing to remove the provision for a life estate over the house. The fact that Ms Deigan had advised Mr Lockrey in 2010 that it would be better to have a “clean” sale without a life estate and hence was not “resolutely committed” to a life estate does not overcome the problem that Mr Lockrey attached great significance to the life estate as a means of ensuring security of possession of his home. The fact that Mr Lockrey had been willing to consider relinquishing the life estate in 2016 (on certain conditions including additional compensation) did not demonstrate that he would have been prepared to do so in 2012. The fact that Mr Lockrey had earlier refused a sale, even with additional compensation, if the sale was not accompanied by a life estate strongly suggests that, had Mr Lockrey been asked in May 2012 to remove the life estate, then Mr Lockrey may well have taken the same position that he did with regard to the earlier proposed sale and refused to sell the Property at all. This is at least an equally plausible alternative to the appellants’ contention that Mr Lockrey would have agreed to forego the life estate and hence fatal to the appellants’ claim: [48]-[51] (Ward P), [78] (Mitchelmore JA), [79] (Harrison JA).
(2) The primary judge did not err in concluding that the breach in relation to the life estate “issue” was not causative of any loss on the part of the appellants. Mr Fussell chose not to put himself in a position to complete the contract on 10 May 2017 because he was waiting to obtain a better deal in terms of the finance available to him: [69], [72], [74] (Ward P), [78] (Mitchelmore JA), [79] (Harrison JA).
WARD P: This appeal arises out of the failed attempt by the first appellant, Mr Bernard Fussell, to purchase an industrial site at Camellia (the Property). Mr Fussell entered into a contract for sale of land dated 10 May 2012 with the owner, Mr James Lockrey, to acquire the Property for $1.7 million with a 5-year deferred settlement date (the sale contract). Mr Fussell did not settle on the completion date (10 May 2017). Two days later, Mr Lockrey died. Mr Lockrey’s legal representative, Ms Carolyn Deigan (the solicitor who had acted for him on the sale transaction), subsequently rescinded the sale contract pursuant to a clause which provided that, if a party died before settlement, either party could rescind by notice in writing (cl 33.2).
After an unsuccessful attempt by Mr Fussell to obtain an order for specific performance of the sale contract (see Carolyn Deigan as executrix for the estate of the late James Boyd Lockrey v Barnard James Fussell [2019] NSWCA 299), Mr Fussell brought proceedings against the respective solicitors who had acted for him in connection with the sale transaction. First, Mr Bruce Hanrahan and his partner in the firm Dignan and Hanrahan Solicitors (the first and second respondents to this appeal), who acted for Mr Fussell at the time of entry into the sale contract. Second, Mr Steven Brown of Etienne Lawyers (the third respondent), who acted for Mr Fussell in the time leading up to the deferred settlement date (and who first identified an issue with the proposed transfer of a life estate to Mr Lockrey on completion of the sale – see s 23F(2) of the Conveyancing Act 1919 (NSW) (Conveyancing Act) since the contemplated life estate was over only a portion of unsubdivided land). Nothing here turns on the claim unsuccessfully made against Mr Brown, as the appeal against the decision by the primary judge in favour of Mr Brown was dismissed by consent prior to the hearing of the appeal. When I refer to the respondents in these reasons I refer only to the first and second respondents.
The second appellant, Blue Star Trading Corporation Pty Ltd, is a company associated with Mr Fussell for whom Mr Hanrahan and his firm also acted at the time of the sale contract. The second appellant was granted a lease of the Property during the period of the deferred settlement and conducted its business from the Property.
Relevantly, the sale contract provided for the grant to Mr Lockrey, in consideration for him entering into the sale contract, of a life estate on completion of the sale contract “for the home built on top of the six garages on the property”, in the terms set out in a Deed of Life Estate (the Deed) annexed to the sale contract (cl 49). The sale contract provided that the Deed, once signed, would be held in escrow pending stamping of that document and completion. The Deed provided for the grant of “a life estate in the House” (defined as meaning the house constructed on the Property as at the date of the sale contract together with all inclusions contained in the house).
On appeal, as significantly narrowed prior to the hearing, there is now no challenge to the finding that Mr Lockrey would likely not have been prepared to renegotiate cl 33.2 (the right of rescission) (though it appears that it was this clause that occupied principal focus at first instance). Rather, the grounds of appeal are limited to the findings in relation to the life estate (cl 49). In those circumstances, the respondents accept that it is unnecessary to consider their Notice of Contention (supporting the conclusion that the appellants failed to establish causation in relation to the case against the respondents relating to cl 33 of the sale contract) (AT 3).
The grounds of appeal (which were further amended in oral submissions) as pressed are as follows:
1 The trial judge erred in finding that it had not been established on the balance of probabilities that, as a result of the first respondent's breach of duty as found by his Honour at Judgment [135], [146], the appellants were deprived of a chance to have the contract of sale amended to alter or remove clause 49 before exchange (Judgment [159]-[169]).
2 The trial judge ought to have found that:
(a) if the first respondent had advised the first appellant to negotiate with the vendor to alter or delete clause 49 in May 2012 before exchange, it was more likely than not that the vendor would have agreed to have the draft contract of sale varied accordingly; and
(b) consequently, if the contract of sale had been varied so as to alter or delete clause 49, it was more likely than not that the first appellant would have been able to obtain bank finance, such that he would have been able to complete the sale on or before 10 May 2017.
At the heart of Ground 2(a) is the contention by the appellants that a reasonably competent solicitor would have sought instructions to negotiate for the removal of the life estate and to accommodate Mr Lockrey’s desire to continue to reside on the Property in another way (see AT 8). The appellants contend that, had Mr Hanrahan done so, Ms Deigan would have advised Mr Lockrey to remove the provision for a life estate from the sale contract and that Mr Lockrey would likely have agreed to do so.
The appellants contend that his Honour erred in finding that Mr Hanrahan’s breach of duty in relation to cl 49 did not cause loss in two respects. First, by relying on the evidence of Ms Deigan, who his Honour found to be a reliable witness ([112]). The appellants argue that Ms Deigan’s evidence as to how Mr Lockrey would have responded to a proposal to renegotiate the sale contract (in 2012) was limited and did not provide an adequate evidentiary foundation for the primary judge’s finding that the life estate was ‘non-negotiable’ or of such importance to Mr Lockrey that he likely would have refused to negotiate (had Mr Hanrahan raised the problem posed by s 23F(2) of the Conveyancing Act) (cf [163], where his Honour found that the issue of a life estate was of great significance to Mr Lockrey). Second, the appellants contend that his Honour erred in failing to give adequate consideration to the evidence of what occurred when Mr Brown (then acting for Mr Fussell) attempted to renegotiate cl 49 in August 2016.
As to the first, to place the submissions as to the import of Ms Deigan’s evidence in context, it is relevant to note the evidence as to Mr Lockrey’s attempts to sell the Property prior to entering into the sale contract with Mr Fussell (to which the appellants point for the proposition that Mr Lockrey had not always regarded the grant of a life estate as an essential condition of selling the Property).
Ms Deigan’s evidence was that in October 2009, Mr and Mrs Calleija (the Calleijas) had considered purchasing the Property. The draft sale contract presented to the Calleijas contained no clauses relating to a life estate. That contract did not proceed. Ms Deigan deposed to a subsequent conversation with Mr Lockrey in May 2010 in which she told him that “[t]here are only two ways to ensure you stay in the property, don’t sell or get granted a life estate” and she advised him “to move out and sell the property clean” (see Ms Deigan’s 4 May 2023 affidavit at [22]). It is not disputed that Mr Lockrey did not accept that advice.
The next prospective purchaser was Mr Wang, with whom Mr Lockrey appears to have directly negotiated the terms of purchase in July 2010. Ms Deigan deposed that Mr Lockrey told her on 8 July 2010 that he had “put the life estate to them” and that “[t]hey are okay with it” (Ms Deigan’s affidavit at [27]). The appellants place significance on the fact that the inclusion of a life estate as a term of the contract here seems to have been on Mr Lockrey’s initiative, rather than on Ms Deigan’s advice (though I note that the conversation in May 2010 to which Ms Deigan deposed – see [24] above – may well have been where Mr Lockrey obtained the idea of a life estate).
The respondents maintain that the primary judge did not err in finding (at [168], [169]) that Mr Lockrey was not prepared to settle for anything less than a life estate over the house and that the appellants had not discharged their onus of demonstrating that any negotiations would have resulted in Mr Lockrey agreeing to something other than a life estate.
The respondents point to Ms Deigan’s evidence and the history of the negotiations with previous prospective purchasers (to much of which I have already referred) as supporting the primary judge’s conclusion that the issue of a life estate was of great significance to Mr Lockrey ([163]) and they submit that the appellants had not discharged their onus of demonstrating that any negotiations would have resulted in Mr Lockrey agreeing not to require a life estate over the house ([169]). The respondents note that his Honour considered that it was clear from the history of negotiations with Mr Wang that Mr Lockrey was not prepared to accept a lease, let alone a possessory licence, and that in 2010 he was not prepared to relinquish a life estate even for an additional payment of money ([168]).
Insofar as the appellants contend that Ms Deigan’s evidence was quite limited, the respondents point out that the primary judge’s conclusions were not based only on Ms Deigan’s evidence (which was largely unchallenged in cross-examination and accepted by the primary judge); they were also supported by the contemporaneous documents and by Mr Fussell’s own evidence.
As to the significance attached by the appellants to the advice given by Ms Deigan in 2010 that it would be better for Mr Lockrey to “sell the property clean” (i.e., without a life estate), the respondents argue that the more significant fact is that on each occasion that advice was rejected by Mr Lockrey, who continued to insist on a life estate. The respondents here embrace the proposition that the life estate was a term which appears to have originated from Mr Lockrey himself (arguing that this tends against, rather than assists, the appellants’ argument).
As to the events of 2016, the respondents emphasise that what happened in August 2016, when Mr Brown identified the problems with the life estate, was that Ms Deigan advised Mr Brown that Mr Lockrey would “consider” relinquishing the life estate, provided the purchase price was increased by $1.5 million. The respondents submit that it is not logical to draw from this that, had the issue with the life estate been raised with Mr Lockrey in 2012, he would have agreed to relinquish the life estate for nothing. (As already noted, the appellants disavow any suggestion that in 2012 Mr Lockrey would have been prepared to do so.) As to the appellants’ suggestion that, in 2012, Mr Lockrey would have been “more motivated to compromise” than he was in 2016, the respondents say that this is no more than unsupported speculation and conjecture. The respondents emphasise that up to 2012 Mr Lockrey had consistently insisted upon a life estate, even against the advice of his solicitor and even where additional compensation was offered to him.
Ground 2(a) raises what the appellants identify as the main error in his Honour’s judgment (the causation issue in relation to the life estate) ([160]-[170] of the primary judgment). As noted above, the appellants argue that the best evidence for what is likely to have happened, had Mr Hanrahan identified the problem with the life estate and sought instructions to renegotiate cl 49 of the sale contract, is what happened when Mr Brown raised the issue in 2016 (namely that Mr Lockrey was willing to consider relinquishing the life estate on conditions). The appellants’ position is that once Mr Brown raised issues with the life estate it was not the case that no other transfer or arrangement would have been acceptable (AT 20). As already noted, the appellants accept that they bear the relevant onus. In oral submissions, they identified what they had to establish on the balance of probabilities was that, if the life estate “issue” had been identified, Mr Lockrey would have been prepared (in 2012) to enter into an agreement for sale in a way that did not involve a life estate (but some other structure to permit him security to remain in his house for his life) (see AT 21). In my opinion, this was not established for the following reasons.
At the outset, I accept that, at [167], his Honour wrongly attributes the statement (contained in the 8 August 2016 letter) that “the life estate is an essential term of the contract” as being made in response to Mr Brown’s (11 August) letter identifying the difficulties arising from the inconsistency between the form of the transfer and the life estate arrangement. It was not, as his Honour later appears to have recognised (see [197] where the 25 August 2016 letter is extracted and his Honour refers to this as a “reply”, which in context can only have been to the 11 August 2016 letter).
However, I am not persuaded that this error (perhaps, as suggested by Senior Counsel for the appellants, arising from the order in which the correspondence appeared in the Court Books before his Honour) taints his Honour’s conclusion that it was not established on the balance of probabilities that, had Mr Hanrahan sought and been given instructions to renegotiate the life estate clause before exchange, Mr Lockrey would have agreed to the removal of the clause.
In that regard, the evidence as to what occurred in the previous negotiations with other prospective purchasers is telling. It is clear that, as at 2012, Mr Lockrey attached great importance to having security in his home (as his Honour accepted). It is also apparent that, once Mr Lockrey had embraced the idea of a life estate as the means of ensuring that he could live on the Property until he died (and not be at risk of being ‘kicked out’), he rejected Ms Deigan’s advice to the effect that it would be better to have a “clean” sale without a life estate. The fact that the advice was given as a matter of practicality (rather than in the context of a recognition of the legal difficulties involved with a life estate) does not overcome the problem that Mr Lockrey attached great significance to the life estate as a means of ensuring security of possession of his home.
Ground 2(b) challenges the finding that Mr Hanrahan’s breaches did not cause loss because Mr Fussell was never able to settle the contract before Mr Lockrey died ([170]). (I note that the later finding at [236] was in fact expressed in terms that Mr Fussell was “not in a position to settle” prior to Mr Lockrey’s death.) The appellants complain that, in making this finding, his Honour gave no consideration to the reason why Mr Fussell was not able to complete the purchase before Mr Lockrey died. (The respondents cavil with this submission, pointing to his Honour’s reasoning leading to the conclusion at [236].)
The appellants point out that (at [8]) his Honour accepted that the life estate gave rise to finance problems when St George Bank was not prepared to lend Mr Fussell money to assist in the purchase of the Property and (at [145]) that the evidence tended to show that the grant of the life estate proved a barrier to Mr Fussell being able to obtain mortgage finance to assist in the settlement (his Honour referring at [187] to Mr Fussell’s evidence as to his conversation with an employee at St George Bank in this regard). The appellants also refer to the evidence that, on 22 June 2016, St George Bank had offered Mr Fussell a $525,000 loan facility but that, by 25 July 2016, the Bank had informed Mr Fussell that it could not accept the Property as security, because he only had a remainder interest due to Mr Lockrey’s life estate (see Mr Fussell’s 15 September 2022 affidavit at [80]-[81]).
The appellants submit that, given that the Property was worth substantially more by the date of settlement than the purchase price (see [243]), it is most likely that Mr Fussell would have been able to obtain a bank loan (whether from St George or another bank) secured against the Property with relatively little difficulty but for the “complicating factor” of the life estate (and would not have been “forced” to seek finance from non-bank lenders at higher rates of interest).
The appellants thus contend that his Honour ought to have found that, if the contract had been renegotiated to alter or delete cl 49, it was more likely than not that Mr Fussell would have been able to obtain bank finance well prior to 10 May 2017, such that he would have had funds to complete the sale before Mr Lockrey’s death. In oral submissions, the appellants emphasise the distinction between ‘Bank’ finance (such as from St George Bank) and finance from other lenders or financiers (no doubt because it was apparent on the evidence that Mr Fussell in fact did have the offer of a facility from another financier – variously referred to as Auswide Asset Management and Ozwide Asset Management – and had not accepted it because of the higher interest rate; in effect holding out for a better deal).
The respondents argue that the unstated premise of Ground 2(b) is that Mr Fussell was unable to complete the contract by reason of the life estate. (As I note in due course, the appellants cavil with this proposition.) The respondents complain that Mr Fussell never ran that case (i.e., that, by reason of the life estate, he was unable to complete the contract) in the proceedings at first instance and they say that the appellants in fact asserted the opposite (referring to Mr Fussell’s contention, in both evidence and submissions, that he had the means to settle the contract on or before 10 May 2017 but did not do so because Mr Brown did not properly communicate with him about settlement – a contention rejected by the primary judge). To the extent that the appellants here indirectly challenge his Honour’s finding (at [228]) that the reason the contract did not settle was because Mr Fussell was waiting for a “better deal”, and hence that the problem with the life estate played no part in the failure to settle, the respondents say that it is not open for the appellants to do so given the way the case was conducted at first instance.
In reply submissions, the appellants say that it is not a premise (nor a necessary premise) of Ground 2(b) that Mr Fussell was unable to complete the purchase on or before 10 May 2017; rather, that it is sufficient for Ground 2(b) that Mr Fussell in fact did not have finance to complete the purchase by the settlement date, and that it is more likely than not that he would have obtained bank finance to complete the purchase if Mr Hanrahan had negotiated a contract that did not contain the life estate. (I interpose to note that this does not grapple with the force of the respondents’ submission, insofar as the submission as to inability to complete places that inability as causally linked to the existence of the life estate in the sale contract (see [58] above). That is more than an unstated premise, in the sense that it is the nub of the appellants’ submission I have noted above at [58].)
As noted earlier, the primary judge found (at [228]) that the reason Mr Fussell did not complete was because he was waiting on “a better deal” from Auswide Asset Management (from whom he had obtained an offer for funds of some $234,000). The respondents point out that finding (which was based on sworn evidence given by Mr Fussell in the earlier 2017 proceedings in which he sought specific performance of the sale contract) is not challenged on appeal. In the 2017 proceedings, Mr Fussell deposed that, in April 2017, he had been approved for a loan of $234,000 from “Ozwide Asset Management”, and that he “could have drawn down on those funds” on or before 10 May 2017 but did not do so because he was hoping to obtain a better interest rate on the loan. (See Mr Fussell’s affidavit of 16 October 2017 at [114].) The respondents note that the primary judge rejected Mr Fussell’s evidence before him that the evidence he gave in the 2017 proceedings was wrong and that the true position was he did not settle because he was waiting to hear from Mr Brown; instead accepting as true the evidence Mr Fussell gave in the 2017 proceedings.
The primary judge did not err in concluding that the breach in relation to the life estate “issue” was not causative of any loss on the part of the appellants.
Insofar as the appellants resist the proposition that the unstated premise of Ground 2(b) is that Mr Fussell was unable to obtain bank finance, such a conclusion is hard not to reach in circumstances where Ground 2(b) is postulating as a counterfactual that, had the contract of sale been varied to alter or delete cl 49, “it was more likely than not that the first appellant would have been able to obtain bank finance, such that he would have been able to complete the sale on or before 10 May 2017”. In any event, the finding which the appellants contend the primary judge should have made is one that in terms clearly predicates the ability to complete the sale on or before the completion date on the existence of bank finance. What is more to the point, given the submissions made by Mr Fussell to which I have referred above, is that the allegation now made that Mr Fussell was unable to obtain bank finance because of the existence of the life estate was not part of the pleaded case (see below).
His Honour (at [239]) said that all the evidence showed that Mr Fussell intended to settle on the basis of the transfer as signed. When his Honour went on to say that “[h]e just did not have the funds to do so”, I accept that, in context, this must have meant that he did not have the funds “ready to go” or had not put himself in the position to call in those funding sources in order to proceed to settle the contract.
The difficulty for the appellants’ challenge to the causation finding made by his Honour as to the failure to settle is that it is abundantly clear from the evidence that Mr Fussell chose not to put himself in a position to complete the contract on 10 May 2017 because he was waiting to obtain a better deal in terms of the finance available to him. While the life estate was accepted by his Honour to have given rise to difficulties in obtaining finance from St George Bank, it did not prevent Mr Fussell from obtaining a loan facility (albeit at less attractive interest rates) that, coupled with other sources of funds, would have enabled him to complete the contract, had he wished to do so as at the completion date.
The appellants made clear that they were not seeking to resile from the way that the case on causation was run at first instance; and that they contend here that Mr Fussell could have accessed funds and put himself in a position to settle by 10 May 2017. As noted earlier, the appellants also point to the evidence that by May 2017 the land had increased substantially in value (see at [243]) and therefore they contend that, absent the issue with the life estate, Mr Fussell could have obtained bank finance at a lower (and more acceptable) interest rate. However, that is not how the case was pleaded. There was an allegation (pleaded at [33](b)), and made further in the alternative, to the effect that if Mr Hanrahan had advised Mr Fussell as to the issue with the life estate one or both of the appellants would have arranged their affairs so as to be able to settle the sale contract without obtaining a mortgage secured over the Property but that says nothing about the interest rate aspect of non-lender finance, as to which this Court was not taken to any evidence in support.
There is no reason for costs not to follow the event. For the above reasons, I consider that the appeal should be dismissed with costs.
MITCHELMORE JA: I agree with Ward P.
HARRISON JA: I agree with Ward P.
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Fussell
Hanrahan [2025] NSWCA 173
Appeal dismissed with costs: [77].
Clause 49 of the sale contract also provided for the parties to execute a form of transfer to be registered on completion*,* which in its terms described the estate to be transferred on completion as “[a] Life Estate in the transferor [Mr Lockrey] and the Estate in Remainder to the transferee [Mr Fussell]”; the effect of which therefore would be to transfer a life estate in the whole of the Property to Mr Lockrey, with the remainder interest to go to Mr Fussell on Mr Lockrey’s death.
Both the Deed and the transfer were duly executed at or around the time of exchange of the sale contract and held in escrow.
Emphasis is here placed by the appellants on the inconsistency between (or tension inherent in) the form of transfer provided for under the sale contract and the more limited life estate the subject of the grant contemplated by cl 49 of the sale contract and the Deed (i.e., of a part only of the Property) (see for example at AT 5).
Ms Deigan’s evidence was that when she had prepared the draft sale contract for the proposed Wang transaction, she had contacted the Land and Property Management Authority (LPMA) as to how best to register Mr Lockrey’s life estate (given it was over part only of the Property) and that she was advised that Mr Lockrey should transfer the life estate to himself and the remainder to the purchaser, by way of a single transfer on completion. The draft transfer for the proposed sale to Mr Wang was in the form that the LPMA had suggested. This was in substance the same form of transfer as was later attached to the sale contract with Mr Fussell. The appellants, however, argue that it is unlikely that the LPMA understood the whole context of the life estate arrangement (AT 7), suggesting that the advice from the LPMA may not have been based on a full exposition of the relevant matters in relation to the proposed life estate (such as that the land was zoned industrial and the life estate was for residential use).
The difficulty of granting a life estate over a portion of undivided land is what was referred to in submissions as the “complicating factor” (or, by the primary judge, as the “problem”) with the life estate (F**ussell v Hanrahan t/as Dignan & Hanrahan Solicitors [2024] NSWSC 1388 – the primary judgment; at [29]). His Honour considered that the life estate “problem” was probably insoluble but went on to find that Mr Hanrahan’s failure to “come to grips” with the life estate issue was not causative of loss ([93]). On appeal, the appellants emphasise the perceived difficulty of obtaining a subdivision for residential use, and registering a life estate, of part of the Property when it was zoned industrial (see AT 8), though neither the difficulty with the industrial zoning nor indeed the likely difficulty with subdivision was part of the appellants’ pleaded case.
I also note by way of background that the appellants alleged in their pleadings that Mr Fussell made it known to Mr Hanrahan in May 2012 (prior to execution of the sale contract) that Mr Lockrey was ill and unlikely to survive until settlement (see [11](b) of the Further Amended Statement of Claim filed 8 July 2021); and that Mr Fussell later informed Mr Brown, who was not retained until April 2016, that Mr Lockrey was in “poor health” (see at [42](c)(i)) and that Mr Fussell was concerned to ensure that the appellants’ interests were not imperilled “if anything happened” to the vendor prior to settlement (see at [42](c)(ii)). Hence, on his own pleadings, Mr Fussell was conscious of the risk that Mr Lockrey would die before the completion date in 2017. That said, in oral submissions on the appeal it was said that Mr Fussell, at around the time of the completion date, was “not … apparently conscious of a pressing need to have his funds in order” (see AT 27.19).
The primary judge found that Mr Hanrahan breached his duty of care as a solicitor to Mr Fussell in two respects: first, in failing to advise Mr Fussell to instruct him to renegotiate cl 33 (to seek the removal of the right of rescission on death of a party) ([124], [128]-[129]) and, second, in failing to identify that the form of transfer provided by cl 49 was inconsistent with the parties’ intention and to advise of the difficulties of giving legal effect to the agreement in relation to the life estate, and in failing to seek instructions to negotiate a transfer or transfers which better reflected the parties’ intention (i.e., to renegotiate or remove the life estate) ([135], [146]).
However, the primary judge found that no loss was caused by either of those breaches of duty because the appellants did not establish that, had Mr Hanrahan sought and obtained those instructions, Mr Lockrey would have likely agreed to renegotiate either cl 33.2 or cl 49 ([158]; [169]).
The appellants accept, as they did before his Honour, that it was their burden to establish what would likely have happened had the breach(es) of duty not occurred (AT 8).
Ms Deigan gave evidence that, if Mr Hanrahan had requested that there be two transfers (the first, to transfer the whole of the Property to Mr Fussell, with a subsequent transfer of the life estate interest over part of the Property back to Mr Lockrey) she would have rejected this suggestion and advised Mr Lockrey not to agree to it because of the risk that the second transfer might not be registered ([82] of Ms Deigan’s 4 May 2023 affidavit). The suggestion of some alternative course of action (such as a lease back or an irrevocable licence to occupy part of the Property for the duration of Mr Lockrey’s life) was not addressed by Ms Deigan in her evidence in chief (nor put to her in cross-examination). In this regard, the respondents explain that at first instance Mr Fussell did not identify the transaction that it was said would have been entered into but for Mr Hanrahan’s negligence until closing submissions; hence Ms Deigan did not deal with that hypothetical scenario in her evidence in chief (see AT 35).
Ms Deigan deposed to her understanding that if the land was transferred to Mr Lockrey without the life estate Mr Lockrey would be dependent on the purchaser to remedy any problem with the life estate rather than being in control of the process. Ms Deigan said that she drafted the transfer as part of the sale contract so that it was clear on exchange the form of transfer that Mr Lockrey was prepared to sign (see at [82] of her 4 May 2023 affidavit).
His Honour further concluded that any causal link was broken because the “problem” with the life estate played no part in Mr Fussell’s failure to complete the sale contract in 2017 (see [170]). The primary judge held that Mr Fussell’s failure to settle on 10 May 2017 was because Mr Fussell was waiting for a better deal on finance ([228]). (There is no direct challenge to this finding, although it is seemingly indirectly the subject of challenge by Ground 2(b) – see below.)
Finally, it may be noted that the appellants conceded that his Honour made damning credit findings against Mr Fussell (see [48]), which are not the subject of challenge (AT 6-7), although the appellants point out that in some respects his Honour accepted Mr Fussell’s evidence (for example, as to his conversation with an employee of St George Bank in 2016 as to problems with the life estate affecting the availability of finance by the Bank).
A dispute then arose between Mr Wang and Mr Lockrey as to whether Mr Wang had agreed to a life estate as opposed to a lease back (see file note of Ms Boustani, who was principally handling the conveyance for Mr Lockrey, as set out at [165] of the primary judgment). Ms Boustani’s notes record that Mr Lockrey instructed her that he wanted a life estate not a lease; and in August 2010 Mr Lockrey rejected the proposition that the life estate be removed for some additional compensation (Ms Boustani advising Mr Wang’s solicitor that without a life estate Mr Lockrey was not interested in selling the Property). The primary judge also noted that subsequent file notes indicated that Mr Wang was having difficulty obtaining a loan because of the life estate ([166]).
Ms Deigan’s evidence was that she had a conversation with Mr Lockrey in late 2010 (see Ms Deigan’s affidavit at [32]-[36]) in which Ms Deigan told Mr Lockrey that “[i]t’s the life estate that is the problem. If you get rid of the life estate, you could bring people in and sell the property”, to which she deposed that Mr Lockrey said “No, I want to live on the property until I die. I don’t want there to be any way they can kick me out” (see [166] of the primary judgment).
In March 2011, there were again negotiations with Mr Calleija in which special conditions including a life estate in favour of Mr Lockrey were proposed but those negotiations did not proceed.
The appellants accept that the evidence as to the negotiations with Mr Wang in July 2010 indicated that Mr Lockrey attached importance to the life estate. However, they submit that this evidence has limited probative value as to Mr Lockrey’s probable attitude to a request by Mr Fussell in 2012 to renegotiate cl 49 because: the life estate appears to have been a term which Mr Lockrey himself proposed to Mr Wang; there is no suggestion in Ms Deigan’s evidence that she participated in those negotiations or that Mr Lockrey had the benefit of her advice in proposing that term; and the dispute with Mr Wang was as to whether he had agreed to the life estate, not as to any legal impediment to the registration or grant of a life estate over an unsubdivided part of the Property.
The appellants emphasise that Ms Deigan had on two occasions (in May and July 2010) advised Mr Lockrey against insisting on a life estate (see her affidavit at [22], [37]) and they argue that Ms Deigan was thus not “resolutely committed” to a life estate (AT 9). The appellants further point out that Ms Deigan’s advice appears to have been based on the practical difficulties posed by a life estate (and not any legal difficulty). They argue that it can readily be inferred that, had the legal difficulty been raised with Ms Deigan (as the primary judge accepted Mr Hanrahan should have done), Ms Deigan would probably have advised Mr Lockrey not to insist on a life estate and that an alternative solution should be found. The appellants say that it is not fatal that this proposition was not put to Ms Deigan in cross-examination because it was not inconsistent with her evidence.
In this context, the appellants point to the respondents’ position at first instance (as recorded by the primary judge at [157]) that it should be inferred that Mr Lockrey would have acted on whatever advice Ms Deigan gave him. His Honour accepted (in the context of submissions as to Mr Lockrey’s likely position had the rescission clause (cl 33) been raised with him) that the likelihood was that Mr Lockrey would have acted on Ms Deigan’s advice (see [158]). The appellants accept that the respondents’ submission was in the context of the rescission clause (where Ms Deigan’s advice was that the clause should remain in the contract) not the clause as to the life estate but they argue that the import of the evidence on that issue was that Mr Lockrey was prepared to act on whatever advice Ms Deigan gave him about any issue, and the appellants say that this evidence is not apt to be limited to the single issue of cl 33.2.
In any event, the appellants argue that the better evidence on which to base an inference as to how Mr Lockrey would have responded to a request from Mr Fussell (through Mr Hanrahan) in 2012 to renegotiate cl 49 is not the evidence of the previous negotiations in relation to the Property but, rather, evidence as to what in fact happened in August 2016, when Mr Brown attempted to renegotiate cl 49 on behalf of Mr Fussell. In reply submissions, the appellants say that this is because, prior to August 2016, nobody had identified or pointed out the legal fact that the life estate could not operate in the way Mr Lockrey intended it to operate.
The appellants submit that the primary judge erred in failing to recognise the significance of the events in August 2016 when considering what is likely to have occurred had Mr Hanrahan acted competently in May 2012.
The reference to the events of August 2016 is to the following. On 2 August 2016, Mr Brown had a telephone discussion with Ms Deigan’s office in which the issue of the life estate was raised, and Mr Brown was told that it was an essential term. The same advice was contained in letters from Ms Deigan on 4 August and 8 August 2016. On 11 August 2016, Mr Brown sent Ms Deigan a letter which set out in some detail the legal problem with granting a life estate over only part of the Property, and proposed solutions to the problem. In response, Ms Deigan, in her letter of 25 August 2016, advised that Mr Lockrey was prepared to consider relinquishing the life estate provided that certain conditions were met, including an increase of $1.5 million to the purchase price.
The appellants complain that his Honour only made findings about the August 2016 negotiations for the purpose of determining whether settlement could have occurred sooner than 10 May 2017 (relevant to the appellants’ case against Mr Brown) and that his Honour’s consideration of this evidence on the question whether Mr Lockrey would have been prepared to renegotiate cl 49 in 2012 was a single reference to Ms Deigan’s firm telling Mr Brown (before he had pointed out the difficulties with the grant of a legal life estate over a portion of unsubdivided land) that “the life estate is an essential term of the contract” ([167]).
The appellants submit that this is an incomplete account of what occurred in August 2016 (as set out above) and that it does not accurately reflect the evidence because it incorrectly attributes the statement that “the life estate is an essential term of the contract” as being in response to Mr Brown raising the difficulties associated with the life estate and proposing a lease for life to Mr Lockrey (rather than this statement predating Mr Brown’s 11 August 2016 letter that articulated the problem and proposed a solution). The appellants attach significance to the fact that, in response to Mr Brown’s 11 August 2016 letter, Mr Lockrey was willing to consider relinquishing the life estate altogether (albeit on conditions) without any alternative arrangement to enable him to live on the Property until his death.
Further, the appellants argue that Mr Lockrey’s insistence in 2016 on payment of $1.5 million to relinquish the life estate and Mr Fussell’s refusal to pay more are not indicative of what would “necessarily” have occurred had such a negotiation happened in 2012. They submit that Mr Lockrey’s demand for additional compensation in 2016 should be viewed in the context that Mr Fussell was by then in arrears of rent and owed a further $500,000 under the contract; and they say that Mr Lockrey would therefore have seen himself as being in a position to make demands “given Mr Fussell was asking to be relieved of the consequences of his own bad bargain”. The appellants submit that, if this negotiation had instead occurred before exchange of contracts, the outcome is likely to have been different, arguing that Mr Lockrey would not have been in the “advantageous position” to be making the demands that he was in 2016 and that he would have been more motivated to compromise, given the history of two previous failed attempts to sell the Property. Nor, they point out, would Mr Fussell have owed the outstanding obligations for rent or payment of the $500,000, which the appellants submit underlay Mr Lockrey’s demands for additional payment.
The appellants thus contend that his Honour ought to have found, on the basis of the evidence of what occurred in August 2016, together with the evidence that Ms Deigan had consistently advised him not to insist on a life estate, that Mr Lockrey would more likely than not have agreed to renegotiate cl 49 had Mr Hanrahan acted competently by raising the issue prior to exchange. In reply submissions, the appellants disavow any contention that Mr Lockrey would have agreed to relinquish the life estate “for nothing”, rather saying that their position is that he would more probably than not have been prepared to negotiate a sale of the Property which did not include the life estate. I note that the appellants disavowed any loss of a chance case, insofar as they accepted that any such case did not overcome the need to prove on the balance of probabilities what would have happened had the breach(es) of duty not occurred (see AT 8.)
The respondents therefore submit that there is no basis for a finding that, if Ms Deigan had advised Mr Lockrey in 2012 to relinquish the life estate, he would have accepted that advice. Nor, they say, is there any basis to conclude that Ms Deigan would have given such advice to Mr Lockrey in the first place. As to that last proposition, the respondents say that: it was never put to Ms Deigan in cross-examination, let alone accepted by her; by 2012, Ms Deigan knew from her dealings with Mr Lockrey that the life estate was “extremely important” to him and that he had twice previously rejected her suggestions to consider an outright sale without a life estate; and, by 2012, Ms Deigan was aware of the potential difficulty involved in seeking to have registered a life interest in respect of part only of a property and had sought advice about that issue from the LPMA.
The respondents emphasise that Ms Deigan’s unchallenged evidence, which the primary judge accepted, was that if an alternative form of transfer had been sought by Mr Fussell, she would have advised Mr Lockrey against it. As to this last submission, I note that in reply submissions, the appellants point out that Ms Deigan’s evidence was not that she would have advised Mr Lockrey against any alternative form of transfer; rather, her evidence was that she would have advised against the specific alternative form of transfer described in her affidavit (see her affidavit of 4 May 2023 at [82]) and there was no evidence in chief from Ms Deigan that she would have advised Mr Lockrey against any alternative transaction structure to address the life estate problem.
The fact that Mr Lockrey was prepared to forego a sale (to Mr Wang), even with additional compensation, if the sale was not accompanied by a life estate suggests strongly that, had the issue as to the difficulties with the grant of a legal life estate been raised in May 2012 before exchange of contracts (i.e., that it was not possible or would be very difficult to obtain a registered life estate in respect of the house), then Mr Lockrey may well have taken the same position that he did with the proposed sale to Mr Wang (i.e., refused to proceed if he could not obtain a life estate). At the very least that is an equally plausible alternative, particularly where this Court was not taken to any evidence that suggested a pressing need for Mr Lockrey to sell the Property at that stage. That is fatal to the appellants’ case since they bear the onus of demonstrating that, on the balance of probabilities, Mr Lockrey would have agreed to remove the life estate (i.e., that he would have acted quite inconsistently with his conduct from at least the time of the Wang negotiations onwards).
I note that the primary judge postulated an alternative scenario as to what might have been done had Mr Hanrahan raised the issue with the life estate in 2012, namely, that agreement might have been reached to protect Mr Fussell’s interest under the contractual arrangement (i.e., the life estate) by a caveat (see at [142]), indicating that the difficulty with that solution to the problem was that there was no evidence about it from Ms Deigan (see at [143]). Nevertheless, it highlights the difficulty for the appellants in contending that it is more probable than not that, had the issue been raised in 2012, Mr Lockrey would have been prepared to relinquish the life estate.
The fact that Mr Lockrey was willing to consider relinquishing the life estate in August 2016 on certain conditions does not in my opinion demonstrate that he would have been prepared to do so (with or without additional conditions) in 2012 (at a time when he had already rejected the proposition of an alternative lease back arrangement for additional compensation). The suggestion that Mr Lockrey would have been more motivated to negotiate in 2012 than 2016 (because he was said to be in a less advantageous position before the contract was exchanged) is mere speculation. The appellants themselves accept that the position had changed by 2016. One way in which it had objectively changed was that there had been default on rent payments and a sum was owing under the contract (which, contrary to the appellants’ argument, may have given Mr Lockrey more motivation to negotiate in 2016 than in 2012).
It is not necessary to speculate as to what Ms Deigan would have advised in 2012 had the legal difficulties with the life estate or the inconsistency between the transfer and the contract provisions as to the life estate been raised with her (i.e., whether she would have revisited the advice given by the LPMA – as suggested at AT 15). That is because I do not accept that Mr Lockrey would more likely than not have acted on Ms Deigan’s advice to remove the life estate and then to proceed with exchange of contracts without it, in circumstances where he had already refused to contemplate the Wang sale without a life estate (even for more compensation) and had rejected Ms Deigan’s twice repeated advice that a “clean” sale would be more practical or preferable.
Therefore, I do not accept that the primary judge erred in concluding (at [169]) that the appellants did not discharge their onus of demonstrating that any negotiations in 2012 would have resulted in Mr Lockrey agreeing not to require a life estate over the house.
Appeal Grounds 1 and 2(a) are therefore not made good. Although this disposes of the appeal, for completeness I now turn to Appeal Ground 2(b).
The respondents read his Honour’s finding at [236] as being merely that Mr Fussell did not have the funds “ready to go” on 10 May 2017. (Pausing here, as already noted, the finding at [236] was in terms that Mr Fussell “was not in a position to settle” prior to Mr Lockrey’s death – at no fault of Mr Brown; [236].) The respondents say that the reasoning on which that finding was based (in particular, what was said at [228]; [230]-[233]) makes clear that his Honour’s finding was not that Mr Fussell could not have obtained the finance by that date but that he had not in fact done so. I accept that submission.
The respondents say that, as his Honour recognised and as was put by the appellants in their submissions and evidence, the appellants’ case was conducted on the basis that Mr Fussell had the necessary financial capacity to settle the sale contract on or before 10 May 2017 and that, but for Mr Brown’s failure to communicate with Mr Fussell in the lead up to settlement, Mr Fussell could and would have completed the contract (referring to [30], [203], [236] of the primary judgment). As adverted to above, the respondents submit that the appellants are bound by the conduct of the case at trial in this regard; and they say that, had the appellants led evidence, or argued in the proceedings at first instance, that they were unable to complete the contract on 10 May 2017 because of the life estate, Mr Fussell would have been cross-examined on that topic and the respondents would potentially have led other evidence. Thus, it is submitted that it would not be in the interests of justice to allow the appellants to argue for the first time on appeal that they were unable to complete the contract up to 10 May 2017 because of the life estate.
In any event, the respondents say that the evidence before the primary judge demonstrated that Mr Fussell did have the funds available to him to settle on or before 10 May 2017; it was just that he did not access those funds. The respondents note that the amount required at completion was $1,746,000 and they say that the evidence adduced by the appellants established that, as at May 2017, Mr Fussell had available to him sources of funds well in excess of that sum (totalling $2,259,567.02), although he did not have those funds “ready to go”. The sources of those funds, as itemised by the respondents in their submissions, included an amount by way of loan from “Ozwide Finance” of $234,000.
The respondents also note that in the 2017 specific performance proceedings, Mr Fussell gave evidence that the life estate was not an impediment to him completing on or before 10 May 2017 and gave similar evidence in the proceedings before his Honour. While the appellants rely on the refusal of finance in 2016 by St George Bank because of the form of the transfer, the respondents point out that, by the completion date in May 2017, the appellants had access to the necessary funds, including the offer of finance from Ozwide Asset Management.
In reply to the above submissions, the appellants say that the loan facility offered by Ozwide Asset Management (of $234,000) would not by itself have put Mr Fussell in a position to complete the purchase. (Presumably, that is only because Mr Fussell had not called upon the other available sources of finance identified by him since otherwise, on the figures, there seem to have been sufficient funds with the Ozwide facility to meet the amount due on completion.)
The appellants accept that Mr Fussell did not take up the Ozwide facility because of the higher interest rate applicable to that facility (noting that the broker himself admitted in the offer letter that “the interest rate isn’t flash”) ([228]). However, the appellants submit that this is indicative of the way in which the life estate hindered Mr Fussell’s ability to obtain finance on reasonable terms, namely that he was unable to obtain finance from a bank and was forced to resort to non-bank lenders such as Ozwide, whose offers of finance were subject to unattractively high rates of interest. Further, the appellants argue that their submission that the life estate was an impediment to Mr Fussell completing the purchase is consistent with his Honour’s findings (referring to the matters set out at [57] above).
The appellants argue that the only reason Mr Fussell was in a position that he did not have bank finance was the life estate “problem” (AT 23-24) but the pleaded case was not that the existence of the life estate in the contract caused Mr Fussell to incur increased finance costs. The appellants, moreover, accept that there was no evidence (expert or otherwise) for the suggestion that there was a causal connection between the existence of the life estate and the higher interest rate (AT 27). The thrust of their argument on appeal seems to have been that Mr Fussell was exposed to a risk to which he ought not have been exposed because, without the life estate, bank finance would have meant that settlement was straightforward (AT 29). This was not the pleaded case.
In circumstances where the appellants insist that they could have put themselves in a position to settle the contract as at the completion date (and, presumably, at any time up to the time at which the contract was ultimately rescinded pursuant to cl 33.2), it cannot be concluded that the “life estate issue” was causative of the appellants’ claimed loss. The appellants had it within their capability to complete the contract (albeit at a higher interest rate). They chose not to do so.
Ground 2(b) is not made good.