Fussell v Hanrahan t/as Dignan & Hanrahan Solicitors

Supreme Court of NSW|2024-07-31|Before: Davies J

Background

The property was a large industrial site, but Mr Lockrey lived in a house on part of the land. He was elderly and wished to remain living in the house until he died. Accordingly, the arrangement was that he would have a life estate over the house with the remainder to the first plaintiff on his death.
The problem in relation to the proposed life estate was that the life estate was effectively over part of the land only. Section 23F(2) of the Conveyancing Act 1919 (NSW) provided that the Register General could refuse to register a transaction over part of the land unless the part of the land was shown on a current plan or was part of a proposed plan of subdivision. The part of the land containing the house was neither.

The plaintiffs' case

The plaintiffs pleaded (para 26 of the FASOC) that if they had received the appropriate advice concerning cl 33: (a) the plaintiffs would and could have negotiated with the vendor to remove and/or amend clause 33 of the Contract of Sale to make it clear that the Contract of Sale would continue at the election of the plaintiffs even in the event that the vendor died before settlement; (b) further or in the alternative, the plaintiffs, or one or more of them, would have arranged their affairs so as to settle the Contract of Sale prior to the death of the vendor; (c) alternatively, the plaintiffs would not have entered into the Contract, Lease and Life Estate and would have instead purchased a similar or alternative property in or around mid-2012.
They also pleaded (para 33) that if they had received the correct advice in relation to the life estate, they: (a) would and could have negotiated with the vendor to amend the Life Estate, if necessary to enable a transfer to be prepared and registered that would not have the effect of granting the vendor a life estate over the entire Property; (b) further or in the alternative, the plaintiffs, or one or more of them, would have arranged their affairs so as to be able to settle the Contract of Sale without obtaining a mortgage secured over the Property; (c) alternatively, the plaintiffs would not have entered into the Contract, Lease and Life Estate and would have instead purchased a similar or alternative property in or around mid-2012.
The plaintiffs allege that Mr Hanrahan breached his duty of care to them by: (a) failing to exercise reasonable skill and care in the advice he gave and/or did not give to Mr Fussell in relation to clause 33.2; (b) failing to exercise reasonable skill and care by failing to advise Mr Fussell to instruct him to negotiate with the vendor's solicitor to have clause 33.2 removed or amended so that it did not entitle the vendor to rescind if the vendor died before completion; (c) failing to exercise reasonable skill and care in relation to the advice he gave and/or did not give to Mr Hanrahan in relation to the life estate; (d) failing to exercise reasonable skill and care by failing to advise Mr Fussell to instruct him to negotiate with the vendor's solicitor to make changes in relation to the provisions relating to the life estate; and (e) failing to exercise reasonable skill and care in relation to the preparation of the form of transfer relating to the life estate.
The plaintiffs allege that as a result of those breaches, they suffered the loss of the opportunity to have had the contract with cl 33.2 deleted or amended so that it did not entitle the vendor to rescind if the vendor died before completion, and without the problems relating to the life estate. They also allege that the errors regarding the life estate created an impediment to obtaining finance in order to settle early to alleviate the problems arising from clause 33.2.
The plaintiffs' case against Mr Brown is that he breached his duty of care owed to the plaintiffs by: (a) failing to exercise reasonable skill and care in relation to the advice he gave and/or did not give to Mr Fussell in relation to clause 33.2; (b) failing to exercise reasonable skill and care in relation to the advice he gave and/or did not give to Mr Fussell in relation to the desirability of attempting to achieve an early settlement; (c) failing to exercise reasonable skill and care in relation to the steps taken and/or not taken by him to ensure that settlement would occur by 10 May 2017; (d) failing to exercise reasonable care in relation to the steps taken and/or not taken by him to overcome the problems relating to the life estate; (e) failing to exercise reasonable skill and care by failing to advise Mr Fussell to instruct him to obtain advice from suitable counsel in relation to a rectification claim relating to the life estate; and (f) failing to exercise reasonable skill and care by failing to advise Mr Fussell to instruct him to serve a Notice to Complete on the vendor on 10 May 2017 or at a time thereafter and before rescission on 17 October 2017.
The plaintiffs allege that, as a result of those breaches, they lost the opportunity to settle the contract before Mr Lockrey died.
In opening, the plaintiffs put their case in this way. The starting point was whether Mr Fussell had the financial capacity to settle the contract on 10 May 2017 or at time between April 2016 (when Mr Brown became involved) and 10 May 2017. The plaintiffs submitted that the Court would find on the evidence that Mr Fussell had the necessary financial capacity at both of those times. In such circumstances, the damages for the loss of the opportunities caused by Mr Hanrahan and Mr Brown are to be assessed as follows.
As far as Mr Hanrahan is concerned, in relation to cl 33.2, if Mr Hanrahan had advised Mr Fussell of the presence and effect of that clause, the probabilities are that Mr Fussell would have instructed Mr Hanrahan to request Mr Lockrey to delete it or amend it to remove the right of the vendor to rescind if the vendor died. The plaintiffs submitted that the Court would find on the evidence that the prospects of Mr Lockrey having done so were quite high. In those circumstances, the damages are to be assessed as a high percentage of Mr Fussell's position had settlement occurred and Mr Fussell had become the owner of the property.
Had that happened Mr Fussell would have made a significant profit, being the difference between the purchase price of $1.7m and the value of the property. The plaintiffs accepted that the value of the property depended on what was the appropriate valuation date. The parties' valuers had agreed on the values on the available valuation dates, but the parties did not agree on what the appropriate valuation date was.
In relation to the problem concerning the life estate, if Mr Hanrahan had been aware of the problem and advised Mr Fussell in relation to it, the probabilities are that Mr Fussell would have instructed Mr Hanrahan to request Mr Lockrey to agree to steps to overcome the problem. The plaintiffs submitted that the Court would find that the prospects of Mr Lockrey having done so were quite high, and that, therefore, the impediment to a settlement before Mr Lockrey's death would not have existed. In those circumstances, the damages should be assessed as a high percentage of Mr Fussell's position had settlement occurred and Mr Fussell had become the owner of the property.
As far as Mr Brown was concerned, in relation to cl 33.2, had Mr Brown advised Mr Fussell of the presence and effect of that clause, the probabilities were that Mr Fussell would have acted urgently to achieve an early settlement. He may have had to pay more for the property, but he had funds available to do so. In such circumstances, the prospects that he would have achieved an early settlement were high, and damages should be assessed as a high percentage of Mr Fussell's position had settlement occurred and he had become the owner of the property. He would have made a significant profit which is to be determined by reference to the amount he would have had to pay for an early settlement and the value of the property at the appropriate valuation date.
In relation to Blue Star's claims against each of the solicitors, Blue Star's damages are reliance damages, also as known as wasted expenditure damages. Where a plaintiff has incurred expenses in anticipation, or reliance on, the performance of a defendant's contractual obligation, and the defendant's breach of that obligation has the effect that the expenditure is wasted, the plaintiffs submitted that those damages are commonly referred to as wasted expenditure or reliance damages.
The total claim by Blue Star was in an amount of $2,187,032.50. The plaintiffs submitted that Mr Hanrahan was liable for the entirety of the expenses, and Mr Brown is liable for the expenses which were incurred after he took over the conduct of the conveyance in April 2016.
In relation to the legal costs in litigation against Ms Deigan which Blue Star paid, the plaintiffs submitted that although Blue Star was not a party to those proceedings, Blue Star was attempting to mitigate its loss, being the loss of the very real prospect that it would remain in possession of the property after the expiration of the six year lease if Mr Fussell became the registered proprietor.

Clause 33.2

Mr Fussell first retained Mr Hanrahan, probably in late March 2012. At the first meeting between them, Mr Fussell told Mr Hanrahan that he had reached an understanding with Mr Lockrey about the purchase of the land and that there would be a delayed settlement for five years. At that time the contract had not yet been prepared.
On 4 May 2012 Mr Hanrahan received an email attaching the front page and special conditions of the contract, and the draft commercial lease for the property. On 7 May 2012 Mr Hanrahan received a copy of the whole of the draft contract and a draft of the commercial lease by mail.
Later on 7 May 2012, Mr Fussell had a conference with Mr Hanrahan where the contract and the lease were discussed.
Mr Fussell's evidence in chief about the advice he received at that conference concerning cl 33.2 was this: 49. My notes in relation to this meeting are at page 98 and 99 of the Exhibit. I made these notes in 2017 at the request of Mr Brown. In particular, it includes a note of the following questions and answers: Me: "If Jim dies does it affect the sale?" Hanrahan: "No, it doesn't matter. The sale can still go ahead." Me: "Are you sure there is nothing that cancels the sale?" Hanrahan: "There is nothing in there." 50. I set out hereafter the question on the paper, the question I asked and the reply from Mr Hanrahan. … (b) If Jim dies, does it affect the sale? Hanrahan: "No, it doesn't matter. The sale can still go ahead." Fussell: "Are you sure there is nothing that cancels the sale?" Hanrahan: "There is nothing in there." … 52. I was not given a copy of the Contract by Mr Hanrahan nor did I read through it or any of the other documents by myself at that time. Mr Hanrahan did provide me with a copy of the Lease because I had to get my son to sign it.
On 16 May 2017 Mr Fussell went to see Mr Brown in his office for the purpose of fixing a settlement date after Mr Fussell had been told that Mr Lockrey had died. Mr Fussell gave evidence that Mr Brown said to him: When you said Mr Lockrey had died, I pulled out the contract to check something. I did not realise there is a clause in the contract titled "Rescission". If he dies or indeed you die, the other party can cancel the contract. We have a problem.
Mr Fussell said to Mr Brown that he "certainly did not know that". Mr Fussell also said in his affidavit: 127 The conversation I had with Mr Brown on 16 May 2017 was the first time he raised the existence of, or a potential or actual problem in relation to, cl 33.2 of the contract. 128 At no time until this conversation on 16 May 2017 was I aware that the contract contained cl 33.2.
Mr Hanrahan's evidence in chief was that in the meeting he held with Mr Fussell on 7 May 2012 to discuss the contract, he went through each of the clauses in the special conditions to the contract. In relation to cl 33 Mr Hanrahan said that he said to Mr Fussell: Clause 33, if the vendor goes bankrupt, you can cancel the contract. If you were to go bankrupt the vendor could contract (scil. cancel) the contract. If either party dies or becomes mentally ill, either party can cancel the contract. Mr Fussell responded, "Ok".
Mr Hanrahan also said this in his affidavit: 39 Clause 33 of the special conditions of the contract is, in my experience, a clause, or clause with similar provisions, which is included in the special conditions in contracts for the sale of land in New South Wales. 40 At no time during the course of our conference nor at any time while I acted for the (sic) Mr Fussell in relation to the sale did he raises any questions or concerns about the provisions of cl 33.
In his evidence in chief Mr Brown said this: 78. In around August 2016 I recall that in a meeting with Mr Fussell I went through the special conditions in the Contract with him. When we were discussing Clause 33.2 of the Contract, I recall saying to Mr Fussell words to the following effect: "I note that you have agreed to a clause in the Contract that allows either party to rescind in the event that either party dies before completion of the Contract." 79. I do not recall specifically when I went through the special conditions in the Contract with Mr Fussell and when I said those words to Mr Fussell, however I recall it was in a meeting at my Ermington office. To the best of my recollection it was at either the meeting with Mr Fussell on 9 August 2016 referred to at paragraph 58 above or the meeting with Mr Fussell on 29 August 2016 referred to at paragraph 74 above. … 119. At paragraph 126 of the Fussell Affidavit, Mr Fussell describes his recollection of the meeting on 16 May 2017. I deny saying the following to Mr Fussell, in that conversation or at all: a. "I did not realise there Is a clause in the Contract titled 'Rescission'". b. "We have a problem." … 121. At paragraph 127 and 128 of the Fussell Affidavit, Mr Fussell says that, in that conversation on 16 May 2017, was the first time he became aware of clause 33.2 of the Contract. I deny that, as I recall telling Mr Fussell about the existence of the clause in August 2016 as referred to at paragraphs 78 and 79 above.
In the light of the conflict between Mr Fussell's evidence and that of the solicitors, it is necessary to say something about the credibility of witnesses.

Witnesses

The important events in these proceedings took place in 2012 and 2016 to 2017, that is, from 7 to 12 years ago. In that regard, it is important to bear in mind what has been said in relation to human memory in the context of recall during litigation.
In Campbell v Campbell [2015] NSWSC 784 Sackar J said: [73] In Watson v Foxman (1995) 49 NSWLR 315 and 319, McLelland CJ in Eq made the following remarks: …human memory of what was said in a conversation is fallible for a variety of reasons, and ordinarily the degree of fallibility increases with the passage of time, particularly where disputes or litigation intervene, and the processes of memory are overlaid, often subconsciously, by perceptions or self-interest as well as conscious consideration of what should have been said or could have been said. All too often what is actually remembered is little more than an impression from which plausible details are then, again often subconsciously, constructed. All this is a matter of ordinary human experience. [74] I made the following observations in Craig v Silverbrook [2013] NSWSC 1687 at [140]-[142]: [140] Whilst a trial judge is entitled to make observations relating to the demeanour of certain witnesses, it is a notoriously crude and inaccurate methodology. Its defects have been exposed on numerous occasions. [141 In that regard, I am of course mindful of the comments of Gleeson CJ, Gummow and Kirby JJ in Fox v Percy [2003] HCA 22; (2003) 214 CLR 118 (at [30]-[31]) when they remarked (citations omitted): [30] It is true, as McHugh J has pointed out, that for a very long time judges in appellate courts have given as a reason for appellate deference to the decision of a trial judge, the assessment of the appearance of witnesses as they give their testimony that is possible at trial and normally impossible in an appellate court. However, it is equally true that, for almost as long, other judges have cautioned against the dangers of too readily drawing conclusions about truthfulness and reliability solely or mainly from the appearance of witnesses. Thus, in 1924 Atkin LJ observed in Societe d'Avances Commerciales (Societe Anonyme Egyptienne) v Merchants Marine Insurance Co (The "Palitana"): "... I think that an ounce of intrinsic merit or demerit in the evidence, that is to say, the value of the comparison of evidence with known facts, is worth pounds of demeanour." [31] Further, in recent years, judges have become more aware of scientific research that has cast doubt on the ability of judges (or anyone else) to tell truth from falsehood accurately on the basis of such appearances. Considerations such as these have encouraged judges, both at trial and on appeal, to limit their reliance on the appearances of witnesses and to reason to their conclusions, as far as possible, on the basis of contemporary materials, objectively established facts and the apparent logic of events. This does not eliminate the established principles about witness credibility… [142] In the recent decision of McGraddie v McGraddie and another [2013] UKSC 58; [2013] 1 WLR 2477, the UK Supreme Court emphasised that, especially in cases where a trial judge is faced with a stark choice between irreconcilable accounts, the credibility of the parties' testimony, and the trial judge's assessment of the character of witnesses and the manner in which the witnesses give evidence, is of primary importance. Those observations are particularly relevant to the present case. Similar observations have been made in Australian authorities (Fox v Percy at [23]; Rosenberg v Percival [2001] HCA 18; (2001) 205 CLR 434 at [41] per McHugh J and see generally comments in Ritchie's Uniform Civil Procedure NSW at SCA s 75A.20). [75] In Camden v McKenzie [2008] 1 Qd R 39 at [34] Keane JA (as he then was) made the observation that "the rational resolution of an issue involving the credibility of witnesses will require reference to, and analysis of, any evidence independent of the parties which is apt to cast light on the probabilities of the situation." This remark was cited with approval by Leeming JA (with whom Barrett JA and Tobias AJA agreed) in New South Wales v Hunt (2014) 86 NSWLR 226 at [56]. [76] Hallen J recently set out the relevant principles in Evans and Braddock [2015] NSWSC 249 at [70]-[77]. After referring to Watson v Foxman, his Honour said: [71] In that case, his Honour was talking of a cause of action founded on s 52 of the Trade Practices Act 1974 (Cth) or s 42 of the Fair Trading Act 1987 (NSW): see the discussion by McDougall J in Harbour Port Consulting v NSW Maritime [2011] NSWSC 813, at [10]-[18]. However, as McLelland CJ in Eq also pointed out, the views apply to all types of litigation. [72] I also remember what was said by Emmett J (as his Honour then was) in Warner v Hung, in the matter of Bellpac Pty Ltd (Receivers and Managers Appointed) (In Liquidation) (No 2) [2011] FCA 1123; (2011) 297 ALR 56, at [48]: "When proof of any fact is required, the Court must feel an actual persuasion of the occurrence or existence of that fact before it can be found. Mere mechanical comparison of probabilities, independent of any belief in reality, cannot justify the finding of a fact. Actual persuasion is achieved where the affirmative of an allegation is made out to the reasonable satisfaction of the Court. However, reasonable satisfaction is not a state of mind that is attained or established independently of the nature and consequences of the fact to be proved. The seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, and the gravity of the consequences flowing from a particular finding are considerations that must affect whether the fact has been proved to the reasonable satisfaction of the Court. Reasonable satisfaction should not be produced by inexact proofs, indefinite testimony or indirect inferences (see Briginshaw v Briginshaw (1938) 60 CLR 336 at 361-2)." [73] The credibility of a witness and his, or her, veracity may also be tested by reference to the objective facts proved independently of the evidence given, in particular by reference to the documents in the case, by paying particular regard to his, or her, motives, and to the overall probabilities: Armagas Ltd v Mundogas S.A. (The "Ocean Frost") [1985] 1 Lloyd's Rep 1, per Robert Goff LJ, at 57. Also see, In the matter of Kit Digital Australia Pty Ltd (in liq) [2014] NSWSC 1547, per Black J, at [7]. [74] A court, in cases involving events which occurred long before the litigation, usually prefers to rely upon contemporaneous, or near contemporaneous, documents, which will often provide valuable and, usually, more revealing, information than what may be flawed attempts at recollection of those facts by persons with an interest in the outcome of the litigation: Bathurst Regional Council v Local Government Financial Services Pty Ltd (No 5) [2012] FCA 1200, per Jagot J, at [1247]. Greater weight is usually accorded to such documents, as often they provide a safer repository of reliable fact, particularly when it is clear that they have been prepared by a person with no reason to misstate those facts in the documents and where there is no suggestion that the documents are other than genuine: Hughes v St Barbara Mines Ltd [No 4] [2010] WASC 160, per Kenneth Martin J, at [157]. [75] … [76] The circumstances of this case, make what was written by Tamberlin J in Lake Cumbeline Pty Ltd v Effem Foods Pty Ltd (trading as Uncle Ben's of Australia) (Federal Court of Australia, Tamberlin J, 29 June 1995, unrep), at 122 - 123 (in a passage cited with approval by the High Court when it upheld his Honour's decision: Effem Foods Pty Ltd v Lake Cumbeline Pty Ltd [1999] HCA 15; (1999) 161 ALR 599, at [15]) appropriate to remember: "[Given the lapse of time] between the events and conversations raised in evidence and the hearing of the evidence before me, the only safe course is to place primary emphasis on the objective factual surrounding material and the inherent commercial probabilities, together with the documentation tendered in evidence. In circumstances where the events took place so long ago, it must be an exceptional witness whose undocumented testimony can be unreservedly relied on. The witnesses in this case unfortunately did not come within that exceptional class. The discussions referred to in evidence were capable of bearing quite opposed meanings depending on subtle differences of nuance and emphasis, and a proper appreciation of the significance of those matters must necessarily be considerably diminished over such a long period of time." [77] Finally, I should mention an article by the former the Chief Judge at Common Law, P McClellan entitled "Who Is Telling the Truth? Psychology, Common Sense and the Law" (2006) 80 ALJ 655, in which he wrote, at 665, quoting a passage from the "Guidelines Relating to Recovered Memories" (2000) of the Australian Psychological Society: "Memory is a constructive and reconstructive process. What is remembered about an event is shaped by how that event was experienced, by conditions prevailing during attempts to remember, and by events occurring between the experience and the attempted remembering. Memories can be altered, deleted and created by events that occur during and after the time of encoding, during the period of storage, and during any attempts at retrieval."
In In the matter of Kit Digital Australia Pty Ltd (in liq) [2014] NSWSC 1547 Black J said at [7]: …It is important in this context to have regard to the fallibility of human memory which increases with the passage of time, particularly where disputes or litigation intervene: Watson v Foxman (1995) 49 NSWLR 315 at 318-319 per McLelland CJ in Eq; Hoy Mobile Pty Ltd v Allphones Retail Pty Ltd (No 2) [2008] FCA 810 at [41] per Rares J; Varma v Varma [2010] NSWSC 786 at [424]-[425] per Ward J. To the extent that credit issues need to be determined in respect of particular conversations, I have also had regard to the fact that objective evidence is likely to be the most reliable basis for determining them. I summarised the relevant principles in Re Colorado Products Pty Ltd (in prov liq) [2014] NSWSC 789 at [10], where I noted that the credibility of a witness and his or her veracity may be tested by reference to the objective facts proved independently of the testimony given, in particular by reference to the documents in the case, by paying particular regard to the witness's motives and the overall probabilities: Armagas Ltd v Mundogas SA [1985] 1 Ll R 1 at 57; Camden v McKenzie [2007] QCA 136; [2008] 1 Qd R 39 at [34]; Craig v Silverbrook [2013] NSWSC 1687 at [141]; State of New South Wales v Hunt [2014] NSWCA 47 at [56].
In the present case, I have placed greatest weight on the contemporaneous material found generally in the solicitors' files, whether the documents are theirs or Mr Fussell's.

Mr Fussell

I found Mr Fussell to be a most unreliable witness, and in some respects he was dishonest by his own admission to having sworn to evidence which was untrue. On a number of occasions he denied propositions that were put to him, but when confronted with the fact that he had asserted the proposition in his affidavit evidence, he agreed that it was so. The strong impression I had was that Mr Fussell had reconstructed events, perhaps mostly unconsciously, to support his underlying position, that he did not know about cl 33.2 until after Mr Lockrey's death at a time when settlement of the contract ceased to be available to him.
A matter that took on some significance for Mr Fussell's reliability, but which was otherwise not of any crucial importance, was the date on which he met with Mr Hanrahan to discuss the contract. In his affidavit of 15 September 2022 Mr Fussell insisted the meeting was on the afternoon of Friday, 4 May 2012. He maintained that the meeting took place on that day in his oral evidence when being cross-examined. The evidence overwhelmingly pointed to the meeting having occurred on Monday, 7 May 2012.
For a start, although Mr Hanrahan had received an attachment to an email on the afternoon of 4 May 2012 containing the front page of the contract, the special conditions, and the draft commercial lease, the whole of the contract did not arrive at Mr Hanrahan's office until 7 May 2012. Further, in his affidavit in support of his claim for specific performance, Mr Fussell gave evidence that the meeting took place on 7 May 2012 and that that was the first time he had met Mr Hanrahan (although the affidavit says "8 May" it seemed to be accepted that that was a typographical error - despite Mr Fussell saying 8 May was correct, he did not suggest there was a meeting on Tuesday 8 May).
In the pleading of the statement of claim, the plaintiffs had asserted there was only a telephone call to Mr Hanrahan on 4 May, and that the in-person meeting took place on 7 May. Mr Fussell first tried to blame Mr Brown for that pleading, which he said was an error (although he accepted that he, Mr Fussell, swore it as being true) but, ultimately, he also accepted that his present solicitors maintained that pleading in the present iteration of the statement of claim, which he also swore was true.
Related to that was Mr Fussell's evidence in the present proceedings that he had three meetings with Mr Hanrahan concerning the contract. Two of those were said to be on 4 May and 7 May.
In the present proceedings, Mr Fussell's attention was drawn to paragraphs 41 to 43 of his affidavit relied upon in the specific performance proceedings. Those paragraphs detailed a telephone conversation between Mr Fussell and Mr Hanrahan on 4 May and the meeting on 8 (sic) May when Mr Fussell said, "I met for the first time Mr Bruce Hanrahan". He gave the following evidence in the present proceedings: Q. Would you read, please, paragraph 42? A. Yes, and that's incorrect. Q. It refers to a telephone conversation with Mr Hanrahan on or about 4 May, doesn't it? A. It does refer to a telephone conversation. Q. There's no mention of a face to face meeting on 4 May, is there? A. That's correct. Q. And there's no mention of the list of questions that you say you brought with you to that meeting, is there? A. There is no mention. Q. In paragraph 42 you said you met Mr Hanrahan for the first time on 8 May? A. On 8 May? Q. Sorry, paragraph 43. "On or about 8 May I met for the first time Mr Bruce Hanrahan"? A. That's right. These dates are all incorrect. This was-- Q. Well the seventh, 8 May should read 7 May, shouldn't it? A. No. Q. Well you say, it was 7 May that you executed copies of the documents, wasn't it? A. I first met Mr Hanrahan in his office in March. Q. That's right. And that's before he ever received the documents? A. Right. Q. Yes. A. And then we had the meeting on the 4th. Q. Well so you say now, but you didn't say that in this affidavit, did you? A. This affidavit was put together by Jeremy Lucas and a junior barrister. And I signed it, but it went backwards and forwards so many times. Q. So you just say that they made it up, do you, is that what you say? A. No, I'm not saying that. I'm just saying it was terribly inaccurate and there were a lot of things that were omitted from this by the defendant. Q. When you say "it was terribly inaccurate", you were the person giving instructions to them for the preparation of this affidavit, weren't you? A. I conveyed the information to Mr Brown who relayed it to Jeremy Lucas, who gave it to the junior barrister, who put the items together, and it bounced backwards and forwards. The changes were so difficult and onerous to make. Q. So is the answer to my question yes? A. That it's inaccurate? Q. No, that it was you giving the instructions for the preparation of this affidavit? A. I've yet to find the solicitor that follows my instructions, if that's what you mean. HIS HONOUR Q. If this affidavit was inaccurate why did you swear it was true? A. It was only on minor details but it bounced backwards and forwards and it was so difficult to make changes. When I did make the changes it would come back with something completely different. So I would say that there are details in there, dates, et cetera, that are inaccurate. Like it says there, I first met him on 8 May. That was not my recollection ever that it was the first meeting.
He also gave this evidence about the number of meetings with Mr Hanrahan: Q. You say there were two do you? That's not what you told Parker J, is it, in this affidavit? Is that right? A. In that affidavit it says that I only had one meeting and it was on the eighth. Q. I think we all agree that in you in fact had an earlier meeting back in March where you had an introductory meeting-- A. But that doesn't say that, it says "The first time I met Bruce Hanrahan was on 8 May". Q. That's plainly wrong, isn't it? A. It is wrong. Q. Yes. But it certainly doesn't say anything about a meeting that took place at Mr Hanrahan's offices on 7 May, does it? A. No. Q. And you gave oral evidence before Parker J, didn't you, that you only had one meeting with Mr Hanrahan regarding the contract? A. Yes. Q. Just to orient you, would you turn please to tab 6, page 77 [This was the transcript in the specific performance proceedings]. Down the bottom right hand corner of the page is the numbering. Do you have page 77? A. Yes, yes. Q. Do you see a number of letters down the right hand side of the page, running from A to Z? A. Yes. Q. Do you see letter D? A. Yes. Q. You were asked, "Did you only have one meeting with Mr Hanrahan regarding the contract?" A. That's right. Q. And you answered, "Yes". A. Yes. Q. That was the truth, wasn't it? A. (No verbal reply) Q. You did only have one meeting with Mr Hanrahan regarding the contract? A. On the Friday. Q. On the Monday. Is that true or not? A. It's not true. Q. So is your case that you had two meetings - sorry, do you ask his Honour to accept that you had two meetings with Mr Hanrahan regarding the contract, one on 4 May and one on 7 May? A. That's exactly right. Q. And yet you told Parker J, didn't you, that you only had one? A. I did - I may have not recollected properly at the time under duress. Q. Under duress? A. Well, we had this little South African barrister and he was firing questions one after the other. Q. You blame it on the barrister-- HIS HONOUR: Q. You mean the barrister who was cross examining you? A. Yes.
Some examples of Mr Fussell changing his oral evidence when confronted with his own affidavit evidence are these: (a) In relation to Mr Hanrahan going through the special conditions in the contract, Mr Fussell gave the following evidence: Q. So returning to para 38.2 that I was asking you about a minute ago, and so was his Honour, on 7 May Mr Hanrahan told you that he had reviewed the special conditions of the draft contract for sale and also the draft lease, didn't he? A. Right, right. Q. Do you agree or not? A. I can agree with that. Q. And on 7 May Mr Hanrahan said to you, "Let's go through them", didn't he? A. No. Q. Mr Hanrahan - Mr Fussell - I want to give you the opportunity just to reflect on your answer and to ask you again the same question in case you wish to change it. On 7 May Mr Hanrahan said to you, "Let's go through them", didn't he? A. No. Q. Well, have a look at your affidavit, please, at paragraph - page 148, which you've got open in front of you - at paragraph 38.2, last sentence. You said and swore that, "Mr Hanrahan indicated we would go through the special conditions". Is that the truth or not? A. I'm sorry, I can't find it. Q. 38.2, can you find that? A. 38.2. Q. The last sentence of 38.2. A. Right, go through the special conditions, yes. Q. Mr Hanrahan said to you, didn't he, let's go through the special conditions, do you agree or not? A. It depends on the fashion in which you talk about. It was not, it was not a case that I had a copy of the special conditions in front of me like he claims. And it was not a matter of we both read it at the same time. He had a copy and he may have gone through them. Q. He did go through them, because that's what you said in this paragraph of your affidavit? A. All right. Q. Do you agree? A. Yes. Q. He said to you, "Let's go through the special conditions", didn't he? A. Let's go along with that. Q. Let's along with that, Mr Fussell? It's your evidence in the last sentence of paragraph 38.2 that Mr Hanrahan indicated to you "We would go through the special conditions". A. Right. Q. Is that right or is it wrong? A. Well, it's in there and I'm struck with it. Q. What do you mean you're stuck with it? Is it right or not? A. Well, I don't believe so. HIS HONOUR: Q. Mr Fussell, this [is] your affidavit-- A. Yes. Q. --that you swore was true. Are you saying parts of it are not true? A. Most likely some inconsistencies, yes. Q. Did you read this affidavit through before you swore it was true? A. Yes, I would have. HARDING: Q. So presumably you would have read that sentence then? A. Well, it was read in a fashion, so it is, it's true that he, he may have went through the special conditions. I certainly did not. Q. Well, he indicated to you that that's what you were going to do, didn't he? A. Read through the special conditions. Q. No, go through the special conditions. A. Go through. Q. Do you agree or not? That's what he said to you, let's go through the special conditions? A. Yes. … Q. When you made your first affidavit in these proceedings on 15 September 2022, you made no mention at all of Mr Hanrahan taking you through the special conditions of the contract, did you? A. Right. Q. Did you? A. No. Q. Why not? A. I don't know. Q. Did you not remember that he had done that? A. I don't believe that he did in the fashion that you're speaking.
Of some significance in relation to that evidence was the fact that in Mr Fussell's first affidavit of 15 September 2022 he said nothing about Mr Hanrahan going through the special conditions of the contract. That only appeared for the first time in his affidavit of 6 June 2023 after he had been served with Mr Hanrahan's affidavit that attached to it a file note of the meeting of 7 May 2012 which noted that the special conditions were discussed and provided some detail in that regard.
(b) In his affidavit, Mr Fussell said at para 68 that he decided he needed a new solicitor because he became dissatisfied with Mr Hanrahan's performance acting on his behalf in relation to a dispute with the local government. He also said, "At this time, I had no concerns about his work in relation to the purchase of Camellia".
He was asked this question and gave this answer: Q. You say in paragraph 68 that at that time, that is in 2016, you had no concerns about Mr Hanrahan's work in relation to the purchase of Camellia, do you see that? A. That's correct, I was not aware that he'd done anything wrong.
Letters that Mr Fussell wrote to Mr Hanrahan in 2014 and 2016 complaining about why Mr Hanrahan had permitted him to become liable to pay interest to the Office of State Revenue ("OSR") for late payment of stamp duty, accused him of being ignorant of the rules of the OSR and demanded that he pay for his own mistake or Mr Fussell would make a complaint to the Law Society. In that regard, he demanded that Mr Hanrahan deduct the amount of penalty interest from Mr Hanrahan's account to Mr Fussell. In his letter of 10 May 2016 to Mr Hanrahan he said, "To ask me to pay for your stupidity is making my blood boil."
He was asked about these letters: Q. Mr Hanrahan attended to the stamping of the contract for sale on your behalf, didn't he? A. Right. Q. When you say "right", do you mean you're agreeing with me? A. He did. Q. Yes. And this was a letter that you wrote to him about that issue on 10 May 2016, wasn't it? A. Yes. Q. The subject matter of this letter related to the purchase of Camellia, didn't it? A. Yes. Q. In this letter you complained that Mr Hanrahan's handling of the stamp duty was substandard and in no way representative of a skilled solicitor, didn't you? A. Yes. Q. And you said that "Your bill states that you are charging for skill, care and responsibility. Your handling of this matter is deficient in all three", didn't you? A. Yes. Q. You then said in the next paragraph that he wasn't capable of understanding various rules, didn't you? A. In relation to the stamp duty, yes. Q. And then you said, "To ask me to pay for your stupidity is making my blood boil", didn't you, yes? A. Yes. Q. So is it true that your blood was boiling at this stage? A. Metaphorically. Q. Yes. You then in the next paragraph threatened a complaint with the Legal Services Commission, didn't you? A. Yes. Q. A complaint about Mr Hanrahan. A. Yes. Q. In relation to your purchase of Camellia? A. In relation to the stamp duty. Q. In relation to the stamp duty with respect to your purchase of Camellia? A. That's correct. Q. So what you said in paragraph 68 of your affidavit that you had no concerns about Mr Hanrahan's work in relation to the purchase of Camellia, I want to suggest to you is completely false? A. I had no concern because I, I did not understand at that time that he'd done anything wrong as far as the contract was concerned. I did have a concern about the stamp duty and the paying of a little more than $3,00 interest, penalty interest. Q. In paragraph 68 you're dealing with the year 2016, aren't you? A. Yes. Q. You're saying in that paragraph that in that year you didn't have any concerns about Mr Hanrahan's work in relation to the purchase of Camellia, do you understand that? A. That's right. Q. And yet that's completely false, isn't it? Because in 2016 you did have concerns about his work in relation to the purchase of Camellia? A. If you wish to put it that way because it was the stamp duty, yes. Q. You draw that distinction, do you? A. I had no idea at that time that there was a problem in relation to the contract itself.
(c) The following evidence concerned his approach to Mr Brown: Q. And you went to see Mr Brown because you were concerned to ensure that your interests under the contract were not imperilled in case anything happened to Mr Lockrey prior to settlement? A. No. Q. That's right, isn't it? A. That's not the case. Q. All right, well, would you please take up the court book, volume 1, and turn in the further amended statement of claim to paragraph 42 which is at page 22. Do you have that? A. Yes. Q. You remember that you verified to the truth of the allegations in this further amended statement of claim, didn't you? A. Right. Q. Does that mean yes? A. Yes. Q. In paragraph 42 you alleged that in the course of the conference on 20 April 2016 you informed Mr Brown of certain things, didn't you? A. Yes. Q. In paragraph (c) you said that in that conference you informed Mr Brown that the vendor under the contract was in poor health. A. That's correct. Q. You denied a moment ago that you went to see Mr Brown because you were concerned that Mr Lockyer was in poor health. A. That wasn't the reason that I wanted to finalise the contract. Q. You informed Mr Brown on 20 April 2016 that the vendor was in poor health, didn't you? A. Yes, I did. Q. You allege that you informed him that you were concerned to ensure that your and Blue Star's interests were not imperilled if anything happened to the vendor prior to settlement on 10 May. That's your allegation in the further amended statement of claim, isn't it? A. Does it say imperilled to ensure? Q. Yes. A. Yeah, well that's not correct. Q. What's your response? A. That's not correct. That wasn't the reason that I wanted to do it. I was not aware of the clause and the fact that the sale would fall over. Q. Do you say that you wouldn't have given instructions to your solicitors along the lines set out in paragraph 42(c)? A. Had I known about clause 33 I would've been desperately hurrying. Mr Brown - Mr Lockrey had been in extremely poor health since I'd known him. Q. That's exactly right, and that's exactly why you went to see Mr Brown because you were concerned about your interests under the contract being imperilled. A. That's not-- Q. That's what you-- A. That's not why I approached Mr Brown. I wanted to settle the sale. Q. You say, do you, that paragraph 42(c) as it appears in your further amended statement of claim is just not right, is that right? A. Yes. Q. Turn to page 123 of the court book. Do you have that? A. Yes. Q. Do you see that at paragraph 86 you give an account of discussions that you say you had with Mr Brown in August 2016? A. Yes. Q. Over the page at 124 you said, according to you "Look, I also want you to see if I can make arrangements to make an early settlement. I don't want to wait the full term of the contract if I can avoid it, because I'm very worried that Jim Lockley (sic) will die. His health is very bad." Do you see that? A. (No verbal reply) Q. Do you see that? A. I do see it, yes. Q. This is your affidavit, isn't it? A. Yes. Q. Is that your account of the conversation with Mr Brown or isn't it? A. I was sure - no, it's not. I was sure that was taken out. Q. Taken out by who? A. The solicitor. Q. You say that-- A. It's not accurate. Q. The whole paragraph? A. I'm concerned about his health because it's bad. I was concerned about that in 2012. Q. Is your position that both the allegation in 42(c) of the further amended statement of claim and the contents of this paragraph 86 of your affidavit - A. They're not accurate. Q. --at court book 123 is all just incorrect? A. It's incorrect. Q. Are the solicitors to blame again for that? A. Am I blaming a lot of solicitors? Q. You're not blaming your current solicitors-- A. No, I'm just saying that I thought - I thought that had been taken out, because it wasn't accurate.
(d) Paragraph 153 of his affidavit said this: My decision to purchase Camellia and for Blue Star to rent the premises was that I wanted Blue Star to establish a business closer than Wallacia to receive material and to make sufficient profit to cover the lease and other outgoings and to develop, in time, a business that may be able to be sold.
He gave this evidence: Q. In relation to Blue Star, the second plaintiff, you always had in mind that Blue Star Trading Corporation would use the site, the Camellia site to turn a profit, didn't you? A. Maybe not always. Q. Let's just have a look at paragraph 153 of your affidavit at page 138 of the court book. Do you see paragraph 153? A. Yes. Q. Prior to entering into a contract to purchase Camellia you wanted Blue Star to make a profit from its occupation of the premises, didn't you? A. That would be correct, yes. (e) He was asked questions about Blue Star being behind in the rent at the time he saw Mr Brown in August 2016. He gave this evidence: Q. At this time you knew that Mr Lockrey could terminate the lease if you were behind in rent, didn't you? A. I did not. Q. Well, you'd read the lease through in 2014, hadn't you? A. I would not, I would not have thought that he would have been able to terminate the lease for a late rent payment.
Yet in his affidavit in response to Mr Hanrahan's affidavit Mr Fussell said: 38.6 There was discussion about clause 37 in that if the rent was not paid, then the vendor could pull out of the contract.
He was asked in that regard if he had read the lease through in 2014, to which he answered: I read some parts of the lease, yes.
He was then reminded of the evidence he gave in the specific performance proceedings as follows: Q. Can you please turn to page 85 of the page numbers in the bottom right hand corner? You have page 85? A. Yes. Q. Using the letters on the right hand side of the page at about letter I, you're asked a question: "Q. The important point is do you accept you had read over the lease carefully in February 2014? A. Yes." A. Yes. Q. Then you're asked, "Is that correct or not?" and you say "Yes, I've read the lease, yes", don't you? A. Yes. Q. And you're asked "Carefully?" and you answer "Yes". A. Yes. Q. And that sworn evidence that you gave before Parker J was true, wasn't it? A. In saying that I read the lease, I suppose, yes it is. Q. You said you read the lease carefully, Mr Fussell? A. Right.
He then gave this evidence: Q. You understood from 2012 that if Blue Star Trading Corporation was behind in rent then the vendor could terminate the contract? A. That may well be. Q. And that was a risk you were willing to take, wasn't it? A. Well, it wasn't something that I was thinking of at the time, because it was just the way I do business.
A little later on he sought to change his evidence about his knowledge in that regard as follows: Q. [Relating to paragraph 38.6 of his affidavit referred to above] But your own evidence on page 149 of the court book is that you understood from the advice you'd had from Mr Hanrahan that the vendor could terminate if the rent was unpaid. That's your evidence, isn't it? A. Terminate the contract or the lease? Q. Terminate the contract if the rent under the lease was unpaid. That is your evidence? A. Right. Q. That is your evidence? A. Terminate the contract if the rent was unpaid? Q. Yes, you understood from Mr Hanrahan's advice to you in 2012 that the vendor could terminate the contract if the lease, the rent under the lease, had not been paid? A. I don't believe that the contract's worded like that. I believe it says if the lease is terminated the contract can be terminated. I don't believe that it says if the rent is unpaid they can terminate the contract. Q. I'm asking about your evidence in these proceedings, Mr Fussell. A. Right, yes. Q. And your evidence is that you had discussed with Mr Hanrahan that if the rent was not paid then the vendor could terminate the contract. Do you agree that's your evidence in this case? A. That is the evidence, yes. Q. And that was your understanding from 2012 when you saw Mr Hanrahan, wasn't it? A. Not necessarily so, no.
(f) He gave this evidence concerning first moving to the Camellia premises: Q. Before you reached any agreement with Mr Lockrey to buy the property, you began moving materials into the Camellia property and paying rent? A. That's not correct. Q. Well turn please to paragraph 108 - page 108 rather, I'm sorry, page 108. Would you turn to paragraph 24, which I've already taken you to, and do you see in that paragraph you say you had some discussions with Jim? Do you see that? A. Yes. Q. You can see over the page that you had a conversation with Jim whereby you offered to pay him a thousand dollars a week cash, or he offered to let you store materials for a thousand a week cash, and you agreed and you said you'll pay the rent and pay council rates. That's what you've sworn evidence about, isn't it? A. That's correct. Q. Do you say that's true? A. Yes. Q. That's before you reached an agreement with Mr Lockrey about buying his property, isn't it? A. No, it's not. That is an agreement, it's not documented, and I think it says there that there was no legal document. Q. What it says, just before the next paragraph, is, it says, "At the time of this conversation we were still talking about an ultimate purchase of the property", is that right? A. Yes. Q. The fact that you were still talking about an ultimate purchase of the property means you hadn't yet reached agreement as to an ultimate purchase of the property? A. Not a final agreement, no. Q. So at that stage although you didn't have a final agreement, you were prepared to pay a thousand dollars a week cash for the property and to pay council rates, is that right? A. That's correct.
(g) He gave contradictory evidence about being able to settle the contract without a mortgage in August 2016. In the further amended statement of claim para 36 he pleaded: In or about August 2016, Bernard was able to pay the balance of the purchase price due under the Contract of Sale only if he could obtain a mortgage with St George Bank secured against the Property.
He then gave this evidence: Q. What I want to suggest to you, Mr Fussell, is that you couldn't settle on the purchase without the funding from St George in 2016. That's the case, isn't it? A. No. Q. At this time in July 2016, Blue Star Trading Corporation was also behind on the rent owing under the lease, isn't that the case? A. It may have been, yes. Q. Have you got MFI 1 with you in the witness box still? A. I don't. Q. Behind tab 3 in MFI 1, can you please turn to page 99 of the numbering that's in the bottom right? There are two numbers in the bottom right. It's a little bit confusing. I'm talking about the number on the far right. A. Yes. Q. You've got there paragraph 102 of your affidavit sworn by you on 16 October 2017? A. Yes. Q. And if you have a look in subparagraph (a), the last sentence there, this is talking about the time as at August 2016? A. Yes. Q. "I had the money to pay the missing rent together with the purchase price so long as I could obtain access to the mortgage from St George Bank." Do you see that? A. That's correct. Q. That was the case in August 2016, wasn't it? A. Under the circumstances, yes.
Earlier he had given this evidence: Q. I'm not going to weigh into that debate with Mr Brown, but what I want to suggest to you is that by no later than August 2016 you were aware of the problems with the life estate? A. I was. Q. Did you seek to arrange your affairs so as to be able to settle the contract for sale without a mortgage? A. At which time? Q. Then. A. No.
When subsequently asked he gave this evidence: Q. Well leaving aside what Mr Brown advised you, do you say that in August 2016 you were in a position - sorry, do you agree or disagree with the following? By August 2016 you knew about the problem with the life estate? A. Yes. Q. And you were in a position to organise finance for the purchase of the property even without a mortgage over the property? A. I could have, yes.
Another example of the inconsistency of his evidence concerns reading the lease and the use of Mr Lockrey's house. He gave the following evidence: Q. In 2014, you read through the lease closely, didn't you? A. Yes, I did. Q. And that was the time that you realised it didn't say anything about the use of the house in the event of Mr Lockrey's death-- A. No, that-- Q. --isn't that right? A. --that wasn't how the situation evolved. Q. Do you have MFI 1 in the witness box with you? A. I don't believe so. HIS HONOUR: That's the specific performance folder, is it? AVERY-WILLIAMS: It is. MFI 1 SHOWN TO WITNESS Q. Could you please turn to tab 3? This is your affidavit of 16 October 2017. You recall you were asked some questions about this yesterday, about this affidavit? A. Yes. Q. This is an affidavit that you swore in the specific performance proceedings, that's right isn't it? A. That's right, yes. Q. Could you turn to paragraph 54 of this affidavit which appears on page 89 of the bottom right-hand numbers? A. Yes. Q. In paragraph 54 the first sentence says "In or about February 2014 I read over the lease and noticed that it did not contain anything about me moving into the upstairs residence when Jim died." Do you see that? A. I see that. Q. That was the case, wasn't it? You did read the lease in 2014? A. I'd, I'd read the lease, yes. Q. You realised it didn't say anything about the upstairs residence if Jim died? A. That wasn't a condition that I asked to be put into the lease. Q. My question was when you read the lease in 2014, you realised it did not say anything about moving into the upstairs residence when Jim died, that's the case isn't it? A. That's not the case. Q. You read the lease closely in 2014, didn't you? A. It wasn't - it wasn't a matter that was concerned with the lease. Jim and I were great mates and we got along well. HIS HONOUR Q. That wasn't the-- A. That wasn't the question, sorry. Q. --question you were asked. AVERY-WILLIAMS Q. My question was, you read the lease closely in 2014 didn't you? A. Not particularly so, no.
Then again later he denied knowing that Mr Lockrey could terminate the lease for non-payment of rent, and he gave this evidence: Q. At this time you knew that Mr Lockrey could terminate the lease if you were behind in rent, didn't you? A. I did not. Q. Well, you'd read the lease through in 2014, hadn't you? A. I would not, I would not have thought that he would have been able to terminate the lease for a late rent payment. Q. I'll just ask my question again-- A. Right. Q. --and perhaps if you could direct yourself to answering my question. You had read the lease through in 2014, hadn't you? A. I read some parts of the lease, yes. Q. Now you said you read some parts of the lease. Is that the sworn evidence you give his Honour? A. Yes, that would be right. Q. Have you got MFI 1 in the witness box with you still? A. (No verbal reply) Q. Can you turn to tab 6 in that bundle, please? That's the transcript of the evidence in the specific performance proceedings before Parker J. A. Right. Q. Do you have that? A. Yes. Q. Can you please turn to page 85 of the page numbers in the bottom right hand corner? You have page 85? A. Yes. Q. Using the letters on the right hand side of the page at about letter I, you're asked a question: "Q. The important point is do you accept you had read over the lease carefully in February 2014? A. Yes." A. Yes. Q. Then you're asked, "Is that correct or not?" and you say "Yes, I've read the lease, yes", don't you? A. Yes. Q. And you're asked "Carefully?" and you answer "Yes". A. Yes. Q. And that sworn evidence that you gave before Parker J was true, wasn't it? A. In saying that I read the lease, I suppose, yes it is. Q. You said you read the lease carefully, Mr Fussell? A. Right.
A further example of Mr Fussell admitting to swearing false evidence is in this exchange: Q. I understand it's your position in this case that the reason you didn't settle on 10 May was because you were waiting to hear from Mr Brown. That's what you say in this case? A. Yes. Q. And you agree that's a very different explanation to what you gave to the Court in the specific performance proceedings-- A. It is. Q. --don't you? A. Yes. Q. And the explanation you give in this case suits your case against Mr Brown, doesn't it? A. That could be a double-edged sword. Q. Doesn't it, Mr Fussell? A. Does it suit my case against Mr Brown? Q. Yes. A. I'm not crafting evidence to suit. Q. What I want to suggest to you is that you have changed your evidence about the reason you didn't settle on 10 May 2017, from that which is contained in your sworn affidavit of October 2017, do you agree? A. No. Q. You disagree that you've changed your evidence? A. Changed my evidence. This was crafted by the defendant. Q. But you swore it? A. Yes, I did. Q. And before you swore it you read it? A. Right. Q. And when you swore it you swore to the truth of it, didn't you? A. I did. Q. And that's because the explanation you gave in 2017 was true, wasn't it? A. In relation to which? Q. In relation to the reason you didn't settle on 10 May 2017? A. No arrangements were made to settle. Q. What I'm putting to you is that the reason you didn't settle on 10 May 2017 is because you were waiting for a better deal on the Auswide Asset Management loan, do you agree or disagree? A. No, that's not correct. Q. And what you told the Court in 2017 was the true position, do you agree or disagree? A. No, it's, it's not correct.
By reason of all these matters, and other evidence to which I will refer later, I do not accept Mr Fussell's evidence unless it is corroborated by contemporaneous documents or is against his interest.

Mr Hanrahan

I thought Mr Hanrahan was a straightforward and impressive witness. His evidence was largely, but not completely, supported by contemporaneous file notes and letters, and he remained largely unshaken in cross-examination.
A significant matter which causes me to prefer the evidence of Mr Hanrahan over Mr Fussell in relation to the conference on 7 May 2012 (even ignoring the problems in Mr Fussell's evidence that I have detailed above) is that in Mr Fussell's principal affidavit he claims that the conference on 7 May proceeded on the basis of his asking questions of Mr Hanrahan and Mr Hanrahan providing answers. Those answers were set out in a document prepared by Mr Fussell in 2017 after Mr Lockrey had died and, on Mr Fussell's evidence (although denied by Mr Brown) at Mr Brown's suggestion. The evidence Mr Fussell gives derived from that document was not contemporaneous evidence.
Mr Fussell said that the meeting took place with Mr Hanrahan looking through the contract and the lease, and then Mr Fussell asked the questions and obtained the answers which appear in his 2017 document. Mr Fussell also said that he was not given a copy of the contract by Mr Hanrahan, nor did he read through it or any other documents at the conference.
After Mr Hanrahan swore and served his affidavit detailing his recollection of the conference, which largely relied on his contemporaneous file note of that day, Mr Fussell's account of the conference changed, and he acknowledged that Mr Hanrahan had in fact gone through the special conditions including giving a summary of the clauses. Mr Fussell said that Mr Hanrahan discussed some, but not all, of the special conditions that were noted in Mr Hanrahan's file note.
Mr Hanrahan's diary note appears to be in two parts. The first of it, with words largely written in upper case letters, consists of a very brief summary of the contract, the life estate and the lease. Mr Hanrahan said that he wrote that section of the note before the conference started. The second part of the diary note commencing "Discuss the special conditions…" is written in ordinary script and says (inter alia) "issues which were raised included the following" and that was followed by specific references to particular special conditions. Mr Hanrahan said that he wrote that section during the conference or shortly thereafter.
Clause 33 was not noted in the file note and much was made of that on behalf of the plaintiffs to suggest that Mr Hanrahan never discussed cl 33 at the meeting. On the other hand, Mr Fussell claims that he had this conversation with Mr Hanrahan: Fussell: If Jim dies does it affect the sale? Hanrahan: No.it doesn't matter. The sale can still go ahead. Fussell: Are you sure there is nothing that cancels the sale? Hanrahan: There is nothing in there.
Mr Hanrahan denied that that conversation took place. He set out in his affidavit the conversation that he says he had with Mr Fussell concerning the special conditions. That conversation involved all of the special conditions although his file note only mentions some of them. In relation to cl 33 he said that he said to Mr Fussell: Clause 33, if the vendor goes bankrupt you can cancel the contract. If you were to go bankrupt, the vendor could contract (scil cancel) the contract. If either party dies or becomes mentally ill, either party can cancel the contract. He said that Mr Fussell responded by saying, "Okay."
Clauses like cl 33 are common in contracts for the sale and purchase of land in New South Wales as both Mr Hanrahan and the plaintiffs' conveyancing expert Mr Rosier made clear in their evidence. It was only of particular significance in Mr Fussell's contract because the settlement date was five years from the date of contract and, on what Mr Fussell likely told Mr Hanrahan, Mr Lockrey's health was not good.
I accept the evidence of Mr Hanrahan that he advised Mr Fussell about cl 33 and I accept his evidence that he did not say that there was nothing in the contract that would enable the contract to be cancelled if Mr Lockrey died.
My one criticism of Mr Hanrahan is that it does not appear that he gave any attention to the issue of the life estate. By reason of the way the plaintiffs have conducted these proceedings, there are difficulties about making findings against Mr Hanrahan in that regard. Mr Cashion of Senior counsel for Mr Fussell asked no questions in cross examination of Mr Hanrahan about the life estate or the manner in which Mr Hanrahan dealt with the life estate. When Mr Cashion indicated that he had concluded his cross examination, I asked Mr Hanrahan to leave the court. I then raised with Mr Cashion how, as a matter of procedural fairness, I could make adverse findings against Mr Hanrahan (if I was so minded) when no questions had been asked of him about the life estate. It seemed inappropriate in the circumstances for me to ask questions of Mr Hanrahan that might be regarded as cross examination when the plaintiffs did not intend to do so.
Mr Cashion indicated that he had considered whether it was appropriate or necessary to ask Mr Hanrahan questions about the life estate and he had formed the view that he would not do so. I decided that it was inappropriate that I should do so in the circumstances.
It became clear during the course of final addresses that Mr Cashion did not want to give Mr Hanrahan the opportunity to explain how he had addressed the issues relating to the life estate and that that was the reason for no cross examination about it. That was a decision Senior counsel was entitled to make. Despite that, the submissions on behalf of the plaintiffs suggest adverse findings should be made in relation to Mr Hanrahan's dealing with the life estate issues.
Although the parties principally focused on the issues of Mr Fussell's knowledge of cl 33.2 and whether Mr Fussell was in a position to complete the contract in 2016/2017 in terms of having sufficient funds, the life estate issue cannot be ignored. The parties accepted that the transfer that the Deed and Ms Deigan required Mr Hanrahan to sign was inconsistent with the agreement the parties had reached and was inconsistent with the express terms of the Deed and the contract. The transfer provided that Mr Lockrey had a life estate over the whole of the land with Mr Fussell purchasing only the remainder on Mr Lockrey's death. That was never the intention of the parties. The problem was initially brought about because Ms Deigan seemingly followed the advice of an officer at the Land Titles Office who, as Mr Rosier made clear, is unlikely to have understood the whole context of the life estate arrangement in providing the advice to Ms Deigan. Ms Deigan should have understood that the transfer was inconsistent with the arrangement and the Deed. However, she was not challenged about that, and procedural fairness issues arise there too.
Mr Hanrahan does not seem to have been cognisant of the discrepancy between the form of the transfer and the Deed. It is hard to see, in any event, how the problem could be solved. Subject to one matter which I will discuss later) it was not possible to grant a life estate over an unsubdivided portion of the land, and s 23F of the Conveyancing Act 1919 (NSW) made it very likely that a transfer expressed as the Deed was expressed would not be registered.
While the parties suggested that a distinction should be made between settlement of the contract, and registration thereafter (subject to the one matter to be discussed later), such a solution does not appear at all feasible, particularly where Mr Brown was very alive to the difficulties with the life estate and the fact that the transfer did not reflect the agreement or the Deed.
It will be seen, when I later discuss the life estate, that the problem was probably insoluble, and that Mr Hanrahan's failure to come to grips with the life estate issue was not causative of the plaintiffs' loss.

Mr Brown

In my opinion, Mr Brown was an impressive witness who appeared to have a good memory of the events. His evidence was supported by contemporaneous documents. Contemporaneous documents were important for resolving a dispute between Mr Fussell and Mr Brown about events at the beginning of May 2017 where Mr Fussell denied a phone call with, and a subsequent email from, Mr Brown, but which the contemporaneous material in Mr Brown's file clearly supported Mr Brown's evidence about those contacts.
I accept Mr Brown's evidence that at a meeting on either 9 or 29 August 2016 with Mr Fussell he went through the special conditions in the contract with him and when they were discussing cl 33.2 he said to Mr Fussell: I note that you have agreed to a clause in the Contract that allows either party to rescind in the event that either party dies before completion of the Contract.
Mr Brown was challenged about that evidence, and it was put to him, on the basis of what Mr Fussell had said in his evidence, that the first time there was any discussion between Mr Brown and Mr Fussell about cl 33.2 was after Mr Lockrey had died. Part of that challenge was based on an entry Mr Brown made in his electronic record for 15 May 2017 where he noted, "consider issue of vendor dying prior to completion. Clause 33.2 arguably vendor's estate might seek to rescind contract?".
Mr Brown said in his evidence: [113] After I was informed that Mr Lockrey had passed away, I reviewed the Contract again to remind myself of Mr Lockrey's rights to rescind under the Contract. I had previously reviewed and considered clause 33.2 and was aware of it. I had previously raised it with Mr Fussell as referred to in paragraph 78 above. However, upon finding out that Mr Lockrey had passed I wanted to look at it again so that I could provide updated advice to Mr Fussell. … [116] On 16 May 2017 Mr Fussell and I had a conference where we exchanged words to the following effect: Me: I have looked at the Contract again just to remind myself of the detail of it. You know how we discussed that clause in the Contract which would allow it to be rescinded if a party died. I think you have said before you didn't know about it before you entered the Contract. Your previous lawyer, you said, did not raise it with you. Mr Lockrey's estate has the right to end the Contract because Mr Lockrey died before the Contract completed. Mr Fussell: What does that mean for the Contract?
Mr Fussell's evidence was that on 16 May 2017 he attended Mr Brown's office for the purpose of discussing fixing the settlement date. He said that Mr Brown said to him: When you said Mr Lockrey had died, I pulled out the Contract to check something. I did not realise that there is a clause in the Contract titled "Rescission". If he dies or indeed you die, the other party can cancel the contract. We have a problem.
Mr Fussell said that he responded: I certainly did not know. I recall that Jim's death was something that I told Hanrahan that could happen because of Jim's extreme bad health. Hanrahan said absolutely nothing to me about any such clause.
The conversation that Mr Fussell reports could not have occurred in those terms. Clause 33 is not entitled "Rescission". It is entitled "Death or Insolvency etc". The clause in the contract entitled "Rescission of Contract" is cl 19. That is a standard condition clause about the exercise of any right of rescission by a party. It is not a clause which confers a right of rescission but deals with procedural aspects of exercising a right to rescind.
Mr Brown has been a solicitor since 1983, and at least from the establishment of his firm Etienne Lawyers in 2003 he has been involved in the sale and purchase of residential and commercial properties. As Mr Rosier, Mr Hanrahan and Ms Deigan all said in their evidence, a clause like cl 33 is ordinarily included in contracts for the sale of residential property. I do not accept that Mr Brown would have been surprised to find cl 33 in the present contract as Mr Fussell's evidence suggests. Further, for reasons which I will come to, I do not accept that Mr Fussell did not know about cl 33 until the meeting with Mr Brown on 16 May 2017.
The plaintiffs submitted that Mr Brown had a conflict of interest in continuing to act for Mr Fussell after the notice of rescission. It was submitted that the Court would draw one or more of three conclusions. First, Mr Brown did not want an independent solicitor looking at the matter in case he or she advised a claim against Mr Brown. Secondly, if Mr Brown controlled the specific performance proceedings and Mr Fussell was successful any claim against Mr Brown would fall away. Thirdly, Mr Brown rather than another solicitor would earn significant fees in acting in the specific performance proceedings.
None of these matters was put to Mr Brown in cross-examination.
Mr Brown denied, in answers to a number of questions, that he was in a conflict of interest in continuing to act for the plaintiffs after the contract was rescinded. He accepted that what he had done in acting for the plaintiffs might be examined and might be criticised but he drew a distinction between that and being in a conflict of interest. I agree that the two matters are not the same. He also gave evidence that Mr Fussell had been advised by one of the barristers Mr Brown briefed to advise on what should be done that Mr Fussell should get some independent legal advice. When Mr Brown gave that answer in cross-examination, no further questions were asked relating to any asserted conflict of interest. It may be inferred that Mr Fussell decided not to take the barrister's advice, and he continued to retain Mr Brown. Mr Fussell did not give evidence to deny that he had been so advised by a barrister.
In my opinion, Mr Brown had no reason to consider he was in a conflict of interest at the time. He had reminded Mr Fussell about the need to settle and to have his funds organised so that settlement could be arranged. As I find later in this judgment, Mr Fussell was not in a position to settle prior to the notice of rescission. There is no contemporaneous evidence of complaint by Mr Fussell to or about Mr Brown, concerning what Mr Brown did or did not do. Indeed, such lack of complaint tends to undercut Mr Fussell's evidence about Mr Brown supposedly only finding out about cl 33.2 after Mr Lockrey's death.
There was a general, but vague, suggestion by the plaintiffs that in assessing Mr Brown's credibility I should take into account the fact that he acted for the plaintiffs while in a conflict of interest. In the absence of contemporaneous complaints or the raising of issues concerning Mr Brown's conduct, I do not consider that Mr Brown should have regarded himself as having a conflict. His conflict only arose when Mr Fussell raised matters about Mr Brown that I have found are without any foundation. I do not consider Mr Brown's credibility is affected by his continuing to act.

Ms Deigan

Ms Carolyn Deigan was the principal of CLS Legal, Mr Lockrey's solicitors.
Ms Deigan's evidence was only of importance for two matters which were in dispute, and also for providing the historical context in which the contract under consideration came into being. Ms Deigan gave evidence of having acted for Mr Lockrey on the sale of the Camellia property from the time she was retained in October 2009 up to Mr Lockrey's death in May 2017.
Paragraphs [11]-[51] of her affidavit relate to prior attempts by Mr Lockrey to sell the land to other potential purchasers. Objection was taken to those paragraphs on the basis of relevance. It was ultimately agreed that the paragraphs should be admitted subject to relevance and that I would determine their relevance in this judgment.
In my opinion, the paragraphs objected to should be received into evidence. They provide an explanation for the form of the transfer that was in issue in the proceedings. They also throw light on the issue of whether Mr Lockrey would have agreed to changes in the contract, particularly with regard to the life estate, but also in relation to cl 33.
The two disputed issues in respect of which Ms Deigan's evidence was relevant were, first, the assertion by Mr Fussell that he sat in on a conference Ms Deigan had with Mr Lockrey when Mr Lockrey was providing instructions to her about the agreement he and Mr Fussell had reached. The second disputed area concerned advice Ms Deigan said she would have given to Mr Lockrey if particular matters had been raised with her on behalf of Mr Fussell.
In assessing the reliability of Ms Deigan's evidence, I take into account that she has no interest in the outcome of the present proceedings. Certainly, as with any solicitor challenged about the way they behaved in the course of a transaction, she had her own reputation to protect. However, I consider that she was a wholly disinterested witness, that her evidence was given truthfully to the best of her recollection, and that her evidence should be accepted.
In particular, I accept her evidence that Mr Fussell did not remain present when Mr Lockrey was giving instruction to her about the contract. As most solicitors know, and as all solicitors should know, it would be quite inappropriate for both parties to the contract to be present at a conference with one of the party's solicitors, when the terms of the contract are being discussed. This was the more so when Mr Fussell was the third of a number of purchasers who had entered into negotiations with Mr Lockrey, and through Ms Deigan as his solicitor, to purchase the land.
My acceptance of Ms Deigan's evidence about what occurred when Mr Fussell went to her office with Mr Lockrey is an additional reason why I doubt the reliability of Mr Fussell's evidence generally.
I also accept Ms Deigan's evidence on the other area of dispute, concerning the advice she would have provided to Mr Lockrey and whether it was likely Mr Lockrey would have followed that advice. The evidence of what had occurred in relation to the two earlier aborted contracts provides support for the evidence given by Ms Deigan in that regard. I will deal in greater detail with this later.

Retainer

The plaintiffs alleged that Mr Hanrahan agreed to act for both Mr Fussell and Blue Star. Mr Hanrahan agrees that he acted for Mr Fussell but did not admit that he was retained by Blue Star - he did not deny it. There was no evidence that Mr Hanrahan sent a formal retainer letter providing the disclosures required by the Legal Profession Uniform Law (NSW) No 16a of 2014. His only letter concerning his retainer was a letter of 2 April 2012 addressed to Mr Fussell confirming instructions to act on his behalf in reaction to the purchase of the property. That was, no doubt, because at the preliminary meeting in late March or early April there was no mention of Blue Star or a lease.
However, by 4 May 2012 Mr Hanrahan knew that the arrangement involved a lease to Blue Star, and that it was linked to the purchase contract - see cls 37.7 and 51. He advised on the lease at the meeting on 7 May 2012.
Mr Hanrahan accepted an implied retainer to act for Blue Star, and he owed it a duty of care. There is nothing pleaded, nor any evidence, suggesting any duty on Mr Hanrahan's behalf to Blue Star beyond ensuring that advice was given on the lease and that it was entered into as both Mr Fussell and Blue Star intended. Mr Hanrahan was never told, for example, that Blue Star was spending money on the property on the basis that a new lease would be entered into after the 6 year period (the Lease did not provide an option for renewal). There was no evidence of Mr Fussell's or Blue Star's intentions beyond the 6 year period, and there is no basis for implying any obligation on Mr Hanrahan's part to enquire.
In Macindoe v Parbery (1994) 6 BPR 13,483, Young AJA (with whom Priestley JA agreed) discussed a number of cases involving purchases (albeit, generally of businesses) that contained an unusual provision or provisions, and said (at P.13,493): Accordingly, there is no lack of authority for the proposition that the retainer of a solicitor for the purchaser on the purchase of a business ordinarily extends beyond mere documentation and includes the duty to warn the purchaser of anything that is unusual and anything that may affect the purchaser obtaining the benefit of the contract which he or she discloses to the solicitor is sought to be obtained.
In the same case, Kirby P said (at P. 13,484): With Young AJA I would reject the argument for the solicitor that his obligation extended no further than to prepare the documents for the sale of the business and to explain to the clients the legal effect of the various clauses of the documents. In modern circumstances, a solicitor's duty of care to a client such as the appellant is not so confined. One of the reasons for the expansion of the solicitor's duty of care is the acceptance, in Australia at least, that a solicitor is liable to a client not only in contract…but also in the tort of negligence. See Hawkins v Clayton (1998) 164 CLR 539 at 574 and discussion in Waimond Pty Ltd v Byrne (1989) 18 NSWLR 642 (CA at 652). However, this extension of the solicitor's duty of care to the client - beyond the strict confines of the contract of retainer narrowly construed - still has its boundaries. The solicitor is not (at least ordinarily), by reason of a retainer, converted into a general investment advisor for the client. Nor is the solicitor deemed by the law to be imbued with perfect foresight. He or she is not required to foresee every conceivable business risk and to alert the client against them. Certainly, the solicitor's duty goes beyond the obligation to explain the usual perils. It will embrace, as well, the duty to explain unusual risks which are reasonably foreseeable and which the client should weigh.
The absence of pleading and evidence about Blue Star's intentions beyond entering into the lease, especially evidence that Mr Hanrahan and Mr Brown were informed about Blue Star's intentions, is significant because, as I have noted earlier, the damages Blue Star seeks are reliance damages.

Clause 33.2

Mr Hanrahan accepted that he owed Mr Fussell a duty to advise him of the presence and effect of cl 33. In my opinion, Mr Hanrahan discharged that duty because he informed Mr Fussell of that clause and that either party could cancel the contract if either party died. Mr Fussell also claims that Mr Hanrahan breached his duty of care by failing to recommend appropriate changes to the contract. There is no evidence that Mr Hanrahan made such recommendations, nor that he made any approach to Mr Lockrey's solicitors to modify or delete cl 33.2.
In the present case, although cl 33 might have been a clause usually found in contracts in New South Wales, the situation was an unusual one to Mr Hanrahan's knowledge. First, the contract had a five year settlement date. Secondly, he also knew that Mr Fussell had told him in an email of 2 May 2012 that "the vendor is not in good health". Mr Hanrahan's evidence was that he did not know Mr Lockrey's state of health but he had no reason to doubt what Mr Fussell told him in that regard.
I accept Mr Rosier's evidence, although I do not consider that evidence in this regard was really necessary, that in those circumstances Mr Hanrahan ought to have advised Mr Fussell to provide him with instructions to approach the vendor's solicitor in an endeavour to renegotiate cl 33.
Mr Hanrahan pointed to some evidence given by Mr Fussell to submit that, because of what Mr Fussell knew, there was no obligation on Mr Hanrahan to provide that advice and seek those instructions.
Counsel for Mr Hanrahan had been cross-examining Mr Fussell on the statement in his affidavit that if he had known that either party could cancel the contract in the event that a party died "that would have been very alarming to me". The following evidence was then given: Q. Is his Honour to understand that if those words had been said to you - and I understand you deny they were said - but is his Honour to understand that if those words were said to you, you would have instructed Mr Hanrahan to seek for the clause to be removed from the contract? A. Absolutely. Q. You didn't need Mr Hanrahan to specifically tell you that's what you should do, did you? A. I don't know what you mean. Q. Well, it would have been obvious to you if Mr Hanrahan had said that if either party dies either party can cancel the contract, the risk would have been obvious to you, wouldn't it? A. Yes. Q. And you would have told him to seek to have that clause removed, on your case? A. That's right, yes. Q. You wouldn't have needed Mr Hanrahan to also say to you, I recommend to you that you seek the removal of that contract (as said), because that would have been obvious to you, is that right? A. The term, are you saying? Q. Yes. A. You said "the contract". Q. The provision in the contract, the clause. A. Right. Q. Clause 33. A. Exactly right, because as I've said I've specifically asked that question. Q. Well the fact is you didn't give instructions to Mr Hanrahan to seek for the clause to be removed, did you? A. Because I knew nothing about the clause.
Mr Hanrahan submitted that if it was found (as I have) that Mr Hanrahan did explain the presence and effect of cl 33 to Mr Fussell that further advice about what should be done was unnecessary because the risk would have been obvious to Mr Fussell and he would not need to have Mr Hanrahan recommend to him that he seek the removal of that clause.
Two things should be said about that. First, I do not think that in the exchange set out, Mr Fussell clearly accepted that he did not need Mr Hanrahan to give him that advice or recommendation. Secondly, simply because Mr Hanrahan had told Mr Fussell the terms of cl 33.2, that did not relieve Mr Hanrahan of the obligation to recommend to Mr Fussell that he be given instructions to seek that the clause be modified or deleted. Again, that was Mr Rosier's expert opinion which I accept, although it seems to me that the matter clearly falls within what was said in Macindoe v Parbery, that the solicitor had an obligation to provide advice about the clause in the unusual circumstances that existed.
In those circumstances, I consider that Mr Hanrahan breached his duty of care to Mr Fussell in that regard.

Life Estate

The extent of Mr Hanrahan's evidence concerning the life estate was this. He made reference to cl 49 in the draft contract forwarded to him, noting that it referred to a Deed of Life Estate granting Mr Lockrey the right to continue to live in his home on the property. Mr Fussell pointed out that it should be in relation to "the home built on top of the six garages on the property", and Mr Hanrahan said he would speak with the vendor's solicitors to get that amended. Mr Fussell said he was aware that Mr Lockrey would have a life estate and he had no problem with it. Mr Hanrahan said that he noted that on his file the words "joint application for assessment of transfer" (a reference to cl 49.5 for the vendor and purchaser to ensure that a joint application was made to the OSR for the purpose of stamping the contract and marking the transfer) as a reminder to himself to put that in place.
He later contacted Ms Boustani at CLS Legal, telling her that cl 49.1 needed to be amended to make clear it was the house on top of the six garages on the property. He also said it might be necessary to obtain a valuation of the life estate for stamp duty purposes.
Subsequently, on 2 July 2012, Mr Hanrahan signed the transfer in the form required pursuant to cl 49 and forwarded it to Mr Lockrey's solicitors.
Mr Hanrahan said nothing in his evidence about noticing that the transfer did not give effect to the agreement contained in cl 49 or in the Deed, nor that he advised Mr Fussell that if the contract settled with transfer in the form it was, Mr Fussell would not be receiving the property on settlement except in remainder. That is to say, he did not advise Mr Fussell that Mr Lockrey would receive a life estate over the whole of the property.
As I mentioned earlier, senior counsel for Mr Fussell did not cross examine Mr Hanrahan about what he did or failed to do in relation to the life estate. Although I indicated that this course raised a prima facie issue about procedural fairness to Mr Hanrahan if I was minded to make adverse findings in this regard, it seems to me that Mr Hanrahan made a forensic choice in relation to the evidence that he put forward, in the knowledge that the plaintiffs were asserting in the FASOC that Mr Hanrahan had breached his duty of care by not advising the plaintiffs about the effect of the transfer in the circumstances. That forensic choice means that there is no procedural unfairness to Mr Hanrahan in making findings against him in relation to the life estate issue.
In my opinion, Mr Rosier is correct in his conclusion that Mr Hanrahan departed from common professional practice when he failed to advise Mr Fussell of the anomaly between the form of transfer and what was contained in the Deed and cl 49 of the contract, and in failing to seek instruction to negotiate a transfer or transfers which better reflected the agreement that the parties had made.
Mr Hanrahan submitted that no breach has been made out where the plaintiffs put their case on the basis of a lost opportunity to have the contract "without the problem relating to the life estate". He submitted that, although registration of the bargain between the parties could not have been achieved, settlement could have taken place, and equity could be called in aid to recognise the beneficial interest which Mr Fussell had pursuant to the agreement, of his being the owner of the whole of the property except Mr Lockrey's house which was his for life. That is, equity would recognise that Mr Fussell was the owner of all of the property except the house. That was because it would be unconscionable in the light of the agreement reached between the parties and the fact that Mr Fussell had paid the purchase price for the whole of the land. It was submitted that the principle was similar to the position with a resulting trust in cases like Calverley v Green (1984) 155 CLR 242 at 266-267, 246-247 and 258, and the Trustees of the Property of Cummins v Cummins (2006) 227 CLR 278; [2006] HCA 6 at [55] and [58].
In my opinion, there is some prospect that equity might have intervened in that way. In Pirrottina v Pirrottina [2024] NSWSC 558, the parents of two brothers gave one of the brothers, Sam, the right to build a house for himself and his family to live in, on an unsubdivided, but otherwise defined, part of land owned by the parents. The gift of the house was known to and accepted by the other brother, Rocco. Subsequently, the parents transferred the whole of their land to the two brothers equally as tenants-in-common. After the death of the parents, the brothers fell out. Rocco denied that Sam had any interest in the land. One argument put forward by Rocco was that the parents could not give part of the land to Sam as it could not be subdivided. Sam sought a declaration that Rocco held his interest in the land on trust for Sam to the extent of Sam's equitable interest in the land. The equitable interest was said to arise from a personal equity.
In discussing personal equities, Rees J said: [182] A "personal equity" is simply the right to access the courts of equity, that is, a personal right to seek an equitable remedy. Indefeasibility of title "in no way denies the right of a plaintiff to bring against a registered proprietor a claim in personam, founded in law or in equity, for such relief as a court acting in personam may grant": Frazer v Walker [1967] 1 AC 569 at 585 (per Lord Wilberforce); approved in Bahr v Nicolay (No 2) (1988) 164 CLR 604 in respect of the Torrens system: at 637 (per Wilson and Toohey JJ). [183] The indefeasibility provisions do not protect a registered proprietor from the consequences of their own actions, where those actions give rise to a personal equity in another, such an equity arising from conduct of the registered proprietor before or after registration: Bahr v Nicolay at 638. As Brennan J there observed at 654: "A registered proprietor who has undertaken that his transfer should be subject to an unregistered interest and who repudiates the unregistered interest when his transfer is registered is, in equity's eye, acting fraudulently and he may be compelled to honour the unregistered interest. A means by which equity prevents the fraud is by imposing a constructive trust on the purchaser when he repudiates the unregistered interest. That is not to say that the registration of the transfer to such a proprietor is affected by such fraud as may defeat the registered title: the fraud which attracts the intervention of equity consists in the unconscionable attempt by the registered proprietor to deny the unregistered interest to which he has undertaken to subject his registered title."
It is worth noting the arguments summarised by Rees J because of their relevance to the present submission by Mr Hanrahan: [224] Sam seeks a declaration that he has an equitable interest in the Lot, together with a declaration that Rocco holds his title to the Mangrove Mountain farm on trust for Sam to the extent of his equitable interest. Sam submitted that the fact that the Lot was not capable of subdivision did not preclude such relief, where Sam did not seek separation of the farm into two portions. Rather, the appropriate relief to satisfy Sam's expectation and to achieve justice between the parties was to order a buy-out of Rocco's interest (excluding the Lot) by Sam. In the alternative, Sam sought an order that, upon any sale of the Mangrove Mountain farm, he receive a sum representing the value of the Lot and improvements, or equitable compensation. [225] Rocco submitted declaratory relief ought not be granted where the parents and Sam were said to have known that a separate title for the Lot was impossible. The Court ought not declare a trust over a portion of the Mangrove Mountain farm in the face of local government planning instruments; equity should follow the law. Declaration of a trust would affect Rocco's ability to realise his interest in the land. Any relief should be in the form of equitable compensation, limited to the value of the improvements which Sam paid for personally. Further, Rocco submitted that Sam was wholly responsible for the breakdown of relationship between the brothers and the resulting dissolution of the partnership. In these circumstances, it was not unconscionable to sell the Mangrove Mountain farm. (I have earlier rejected this submission; both brothers contributed to the breakdown of the partnership.) Rocco sought an order under s 66G of the Conveyancing Act 1919 that a trustee be appointed for sale, with either party entitled to buy the property, whether at auction or otherwise, without payment of a deposit and by setting off that party's entitlements to the proceeds against the money bid or offered.
Her Honour then held: [226] Where Rocco took the 2002 transfer subject to Sam's unregistered interest, and then repudiated that unregistered interest after becoming the registered proprietor, equity may compel him to honour the unregistered interest by imposing a constructive trust: Bahr v Nicolay at 654. I see no reason to depart from that course in this case. True it is that declaration of such a trust will affect Rocco's ability to recognise his interest in the land. That is the purpose of the equitable remedy: to address the unconscientious insistence by the legal owner of property that they own title free of the equitable interest: Ryan v Starr at [92]. [227] Rocco fully appreciated that he took title to the Mangrove Mountain farm subject to Sam's interest and should not now be permitted to sell the farm as if that interest does not exist. The fact that the Lot cannot be sub-divided from the rest of Mangrove Mountain farm does not preclude the imposition of a constructive trust, but may have implications for what should happen next, where Rocco wishes to realise his interest in the property.
In the present case, the clear written agreement between the parties was that Mr Lockrey was only to have a life estate over the house. If, after any settlement using the transfer as signed, Mr Lockrey had resisted the notion that Mr Fussell was entitled to the rest of the property apart from the house, the issue could have been brought to a head by Mr Fussell lodging a caveat identifying his interest in the Deed and cl 49 of the contract.
If all of that is correct, it only highlights the difficulty for Mr Hanrahan in submitting that there is no breach by his failure in relation to the life estate. If he had provided the appropriate advice, Mr Fussell or his solicitors, would have had the opportunity to negotiate with Mr Lockrey's solicitors so that the rights of each them under the arrangement could have been protected. Agreement may have been reached for Mr Fussell to protect his interest by a caveat.
The difficulty, however, with this solution to the problem is that there was no evidence about it from Ms Deigan. The submission that the contract could have settled with a subsequent agreement about the extent of Mr Fussell's equitable interest, or the lodgement of a caveat identifying that interest, was not supported by evidence from Ms Deigan that she would have recommended it to Mr Lockrey or evidence of whether he was likely to have agreed to it. Since it was Mr Hanrahan who put forward this outcome in submissions, his failure to adduce evidence from Ms Deigan about it is significant. The plaintiff did not suggest this as a solution to the life estate problem, and so, asked no questions of Ms Deigan about it.
To the extent that the submission was made to suggest no breach because of "no lost opportunity to have the contract 'without the problem relating to the life estate'", there is simply no evidence to support it. On balance, I cannot accept that the problem could have been resolved in that manner.
What the evidence did tend to show in relation to the grant of the life estate was that it provided a barrier to the plaintiffs being able to obtain mortgage finance to assist in the settlement. Although the FASOC pleaded that Mr Hanrahan ought to have warned Mr Fussell that he would have difficulty getting finance from a major lender by reason of the life estate issue, no expert evidence was led from Mr Rosier about that the matter, nor was the allegation pursued by the plaintiffs in their submissions.
I am satisfied that Mr Hanrahan was in breach of his duty of care by his failure to identify the discrepancy between the transfer on the one hand and the Deed and cl 49 of the contract on the other, and his failure to advise of the difficulties of giving effect legally to the agreement contained in the Deed and cl 49 of the contract.

Causation

If I am wrong in my determination that Mr Hanrahan advised Mr Fussell about cl 33.2 and its effect, it is necessary to consider whether that breach on his part was causative of any loss. The principles governing the determination of causation are set out in s 5D of the Civil Liability Act 2002 (NSW) (the "CLA"). The determination of factual causation under s 5D(1)(a) is a statutory statement of the "but for" test of causation: the plaintiff would not have suffered the particular harm but for the defendant's negligence: Adeels Palace Pty Ltd v Moubarak (2009) 239 CLR 420; [2009] HCA 8 at [55]; Strong v Woolworths Ltd (2012) 246 CLR 182; [2012] HCA 5 at 18.
Even if it is accepted that Mr Fussell would have given instructions to Mr Hanrahan (whether at the suggestion of Mr Hanrahan or not) to negotiate to alter or delete cl 33.2, the evidence strongly suggests that no such agreement would have been reached with Mr Lockrey in that regard.
Prior to the negotiations with Mr Fussell, Mr Lockrey had negotiated with two other intending purchasers of the property. The first of those were Mr and Mrs Calleja. The second was Mr Wang. In both cases, the form of the contract submitted to them by Ms Deigan contained a clause saying: 33. If either party dies or becomes mentally ill or being a company becomes an externally administered body corporate within the meaning of the Corporations Law, or the purchaser being a person is made bankrupt, the vendor may rescind this contract by notice to the purchaser. (emphasis added)
How the contract with Mr Fussell came to a position of mutuality on the right to rescind was not made clear. There was only this evidence from Ms Deigan: [62] Prior to Mr Lockrey exchanging the Fussell Contract, I had a conversation with Ms Boustani in words to the following effect: Me: Rita, can you check the special conditions and make sure we leave in that clause about being able to get out of the sale if Jim dies? RB: Ok, will do.
Those earlier contracts and what Ms Deigan said to Ms Boustani tend only to show the importance of cl 33.2 to protect Mr Lockrey's position.
Ms Deigan also gave this evidence: [71] If Mr Hanrahan had requested that clause 33 of the special conditions of the Fussell Contract be deleted, my advice to Mr Lockrey would have been not to delete the clause. This clause or a clause in similar terms is in all my precedent contracts.
When cross-examined about the advice she would have given to Mr Lockrey in those circumstances, Ms Deigan rejected the notion that she did not really know what advice she would have given or that she was speculating about it. She said: No, because it's advice that I would always give people in circumstances where there was a long settlement. I mean, it was unusual, but it's not the only matter I've been involved in where there was a long settlement.
Ms Deigan also said that a clause like cl 33.2 became more important in a contract with a five year' settlement period. She said: It becomes more important because death or insolvency and things like that, there's more chance of it in a longer-term contract.
That was the extent of the evidence about the matter. The plaintiffs submitted that her evidence should not be accepted. They submitted that any advice she gave Mr Lockrey would have been given after "the ascertaining the relevant facts and obtaining informed instructions from the client." What the information and informed instructions might have been was not disclosed. It was suggested it might have been about the relationship between Mr Lockrey and Mr Fussell, and about Mr Lockrey's desires about the property and in relation to the rest of his life and his estate. None of that takes the matter any further.
The plaintiffs submitted that the probabilities were that Mr Lockrey would have agreed because he was old and unwell, he wanted to sell the property before he died, he may have had difficulty finding another purchaser, and because of his close relationship with Mr Fussell he might have agreed to delete the clause.
Mr Hanrahan submitted that the likelihood was that Mr Lockrey would simply have followed Ms Deigan's advice. He pointed to Mr Fussell's evidence that, when he accompanied Mr Lockrey to Ms Deigan's office for Mr Lockrey to sign the contract, Mr Lockrey said, "I just signed it and left. I couldn't be bothered reading it." Mr Hanrahan submitted that this was an indication Mr Lockrey was content to leave those matters to Ms Deigan, the implication being that he would act on whatever she said. Mr Hanrahan submitted that Mr Lockrey did not need to sell the property and pointed to his withdrawal from an earlier proposed sale to Mr Wang because the terms Mr Lockrey wanted could not be agreed upon.
There can be little doubt that a clause preserving the right of the parties to rescind on death was of much greater benefit to a vendor who was in poor health, and with the not unreasonable prospect in the Sydney metropolitan area, that the land was more likely to increase in value over the five year period than decrease. Further, I consider that the likelihood is that Mr Lockrey would have acted on Ms Deigan's advice which, I accept, was that the clause should remain in the contract.
Section 5E of the CLA places the burden on the plaintiff of proving, on the balance of probabilities, any fact relevant to the issue of causation. I do not consider that the plaintiffs have established on the balance of probabilities that they were deprived of a chance to have the contract amended to remove or amend cl 33.2 to remove the right of the vendor to rescind in the event that a party to the contract died before settlement.
In relation to the life estate issue, I have determined that Mr Hanrahan breached his duty of care in failing to advise Mr Fussell of the problems in relation to the life estate and to the fact, in particular, that the transfer that was signed, and was required to be signed by the vendor, did not reflect the agreement Mr Fussell had reached with Mr Lockrey.
As was made clear (at [21], [22] and [29] above), the plaintiffs' case is that they would have given instructions to Mr Hanrahan to negotiate with the vendor's solicitors to rectify the life estate issue.
Ms Deigan's evidence was this: Had D&H 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, I would have rejected the suggestion and advised Mr Lockrey not to agree to this because of the risk that the second transfer might not be registered.
Ms Deigan also gave evidence that she was well aware of how important the life estate was to Mr Lockrey. That evidence was admitted only as to her understanding and not as to the truth of the statement. However, an examination of the history of Mr Lockrey's attempts to sell the property demonstrates that the issue of a life estate was of great significance to him, and that Ms Deigan's understanding was well-based.
In May 2010 Ms Deigan had told Mr Lockrey that there were only two ways to ensure he stayed in the property: either he did not sell or he obtained the grant of a life estate.
In July 2010 Mr Lockrey and his solicitors conducted negotiations with Mr Wang with a view to Mr Wang purchasing the property. Mr Lockrey had told Ms Deigan that the prospective purchaser was okay with the life estate. However, a file note of Ms Boustani (who was principally handling the conveyance for Mr Lockrey) dated 28 July 2010 said this: Life estate will no longer be included and a lease back. They say that a life estate was never agreed to. Telephone call with Wang's solicitor. Rang Jim to confirm which it was in fact a lease agreed to as opposed to a life estate and Jim stated that he wants a life estate and not a lease.
Subsequent file notes indicated that the purchaser was having problems getting a loan because of the life estate, and Ms Deigan had a conversation with Mr Lockrey in these terms: Ms Deigan: It'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. Mr Lockrey: 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.
In August 2016, when Mr Brown raised with CLS Legal the difficulties arising from inconsistency between the form of the transfer and the life estate arrangement in the Deed and cl 49 of the contract, and suggested a lease for life for Mr Lockrey, CLS responded by saying: We reiterate that the life estate is an essential term of the contract.
Although Mr Rosier gave evidence that one possible way around the life estate problem was for the property to be transferred in fee simple to Mr Fussell and a possessory licence given to Mr Lockrey to occupy the house, it seems clear from the negotiations with Mr Wang that Mr Lockrey was not even prepared to accept a lease let alone a possessory licence which would not provide any firm guarantee of his position until he died.
In my opinion, the plaintiffs have not discharged their onus of demonstrating that any negotiations would have resulted in Mr Lockrey agreeing not to require the life estate over the house. That left the life estate issue unresolved because of the difficulties associated with registration by reason of s 23F of the Conveyancing Act.
Quite apart from my findings that the plaintiffs do not demonstrate a loss of chance in relation to the renegotiation of cl 33.2 and the life estate issue, the evidence to be considered later in this judgment demonstrates that Mr Fussell was never able to settle the contract before Mr Lockrey died and, in 2016, was not willing not do so on the amended terms proposed by Mr Lockrey. The cause of any loss suffered by the plaintiffs was not any breach on Mr Hanrahan's part.

Claim against Mr Brown

Mr Brown admitted a retainer to act for Mr Fussell in relation to the sale of the property and completion of the contract of sale. He admitted also a retainer with Blue Star in relation to unpaid rent under the lease.
The particulars of breach of Mr Brown's retainer did not differentiate between Mr Fussell and Blue Star. The breaches all concerned cl 33.2 and the life estate and included claims, now seemingly abandoned, that Mr Brown failed to warn and advise the plaintiffs about the inconsistency between the transfer and the agreement identified in the Deed and cl 49 of the contract.
However, when pleading matters of causation, the plaintiffs alleged that Mr Brown's negligence caused economic loss to Blue Star "as a result of the loss of opportunity to enjoy occupation of the Property beyond the period of the lease and related losses". There was no pleading of a duty of care, nor any breaches, in relation to Blue Star's occupation of the property after the lease expired. Nor did Mr Fussell give any evidence of having discussed with Mr Brown Blue Star's intentions after the expiry of the lease, nor that money was being expended by Blue Star for the purpose of Blue Star's occupation of the premises beyond the 6 year lease term. Mr Brown accepted, however, that he knew Blue Star intended to stay in occupation of the premises after the lease expired.
The extent of Mr Brown's duty to Blue Star concerned unpaid rent under the lease. The evidence disclosed that Mr Brown advised Mr Fussell, and thereby Blue Star, that in order to settle the contract prior to 10 May 2017 the arrears of rent would need to be paid up to date. There are no breaches pleaded concerning the lease.

Clause 33.2 and the life estate

Although Mr Fussell claimed that he first found out about the provisions of cl 33.2 in May 2017 after Mr Lockrey died, I have found that Mr Hanrahan advised him about cl 33.2 before he entered into the contract with Mr Lockrey.
If I am wrong in my determination that Mr Hanrahan advised Mr Fussell of cl 33.2, it needs to be determined whether Mr Fussell knew, in any event, about cl 33.2 at any time prior to Mr Lockrey's death.
Mr Fussell gave evidence that he had bought a lot of property with a delayed settlement. He then gave this evidence: Q. And you would have read the contract of sale no doubt in each case? A. I probably used a solicitor. Q. But you would have read the contract as well no doubt? A. There's reading and reading, yes. Q. Well you read this contract in 2012, the Hanrahan - well, the contract with Mr Lockrey, didn't you? A. Later. I didn't have a copy of the contract. Q. You didn't? Pardon me? A. I didn't have a copy of the contract until later. Q. When is later? A. Some months after exchange. Q. So you did get a copy after exchange, did you? A. Yes. Q. All right. And you read it, didn't you? A. Well there's reading and reading. Like if I read the newspaper, I can't say what was on page 47, but I -
In the specific performance proceedings he gave this evidence: Q. Have you ever read the contract? A. Yes, I have. Q. When was the first time you read the contract? A. I asked Mr Hanrahan for a copy of the contract at a later date and he - Q. When was that? A. I think a few months after we had exchanged contracts. Q. So you asked him to provide you with a copy? A. Yes. Q. You did? A. Yes. Q. You read through it? A. Yes. Q. You read all of it? A. Yes. Q. You read clause 33? A. Quite possibly. Q. You tell me, you did or didn't? A. Yes, I read the entire contract. Q. You saw that that contract dealt with people dying? A. It's possible. Q. That didn't cause you any concern? A. Well, I'd been to the solicitor, he gave me legal advice, I assumed that he was correct.
In the present proceedings he was asked about having a copy of the special conditions in the contract and reading the contract. He gave this evidence: Q. You were given a copy of the special conditions for the contract in the meeting with Mr Hanrahan on 7 May, weren't you? A. No. Q. In any event, you don't deny do you that by the end of 2012 you had a copy of the contract? A. I did. Q. Including the special conditions? A. I did. Q. Yes. So you say that you got a copy from Mr Hanrahan, did you? A. Yes. Q. And you read through the contract? A. Not immediately, no. Q. No, I'm not asking you about immediately. You read through it when you got a copy? A. No. Q. Well, you read through all of it didn't you? A. I have read through all of it. Q. Well, let me take you please in MFI 1, that's the narrow folder I gave you before? A. Yes. HIS HONOUR: Q. It's the folder with the specific performance proceedings documents in it. HARDING: Q. Do you have that folder? A. I do, yes. Q. Turn to tab 6, please, commencing at page 82. And picking it up at about letter U do you see you were asked a question whether you read the contract and you said "no". Do you see that question at letter U, you didn't read it at all? A. Yes. Q. You said "no". A. Yes. Q. And then you were asked, "Have you ever read the contract?" and you said, "Yes, I have". A. Yes. Q. You were asked, "When was the first time?" and you said, "I asked Mr Hanrahan for a copy of the contract at a later date". A. Yes. Q. And then you were asked, "When was that?" And you said, "I think a few months after we had exchanged contracts". Do you see that? A. That's correct. Q. So you asked him to provide you with a copy, you were asked and you said, yes. A. Yes. Q. Yes. And you agreed that you read through it? A. Right. Q. Do you see that at letter G-- A. I do see it. Q. --on page 83? A. Yep. Q. And you read all of it and you agreed with that at letter H? A. In a fashion, yes, I would have read through it. Q. "In a fashion"? You just said you read through all of it, you agreed to that, didn't you? A. I'm not - well-- Q. You don't say "in a fashion". A. It's like with an insurance contract, I don't read every line. Q. You were asked then specifically at letter I whether you read clause 33 and you answered "Quite possibly". A. Quite possibly, that's correct. Q. Well, then you were asked, "You tell me, you did or didn't?" And then you said, "Yes, I read the entire contract". A. Right. Q. So do you agree now that at least by the end of 2012 you had been provided with a copy of the contract and read the entirety of it, including clause 33? A. Which I'd already been advised on. Q. That didn't answer my question. A. Okay. I read-- Q. You read the contract-- A. Right. Q. --during 2012, including clause 33, didn't you? A. Yes. Q. You saw that the contract dealt with people dying? A. That's simplifying the clause. Q. Did you or didn't you see when you read the contract that it dealt with people dying? A. That I'd already had legal advice on. HIS HONOUR: Q. That wasn't an answer to the barrister's question. A. Right. I did read it, yes. HARDING: Q. In 2012. A. Right.
That evidence itself put the lie to Mr Fussell's assertion the first time he became aware of cl 33.2 was in May 2017 after Mr Lockrey had died. The lie was perpetuated in Mr Fussell's affidavit in reply to Mr Brown's affidavit where Mr Fussell said: [78] I deny that Mr Brown went through clause 33.2 of the special conditions of the contract with me … I would have been very concerned at that time to learn of the existence of clause 33.2 because I knew that Mr Lockrey was not well and I had informed Mr Brown of that position.
In his evidence, Mr Brown said: [78] In around August 2016 I recall that in a meeting with Mr Fussell I went through the special conditions in the Contract with him. I have already referred to Mr Fussell's denial that Mr Brown went through cl 33.2. Mr Brown then continued in his affidavit: When we were discussing Clause 33.2 of the Contract, I recall saying to Mr Fussell words to the following effect: I note that you have agreed to a clause in the Contract that allows either party to rescind in the event that either party dies before completion of the Contract. Mr Brown does not record Mr Fussell responding to that statement, and Mr Fussell does not say anything about it in his affidavit in reply.
The lack of challenge to Mr Brown's statement in that regard should also be seen in the light of the evidence of Mr Fussell's desire to settle early because of his concern for Mr Lockrey's health.
Mr Brown gave evidence that in a telephone call with Mr Fussell on 14 June 2016 Mr Fussell said: I might try to settle early, as Mr Lockrey may not be in the best of health. I will be ready to settle once I have the funding sorted to complete. Further, Mr Fussell said to Mr Brown in early August 2016 (as his affidavit attests): Look, I also want you to see if you can make arrangements to make an early settlement. I don't want to wait the full term of the contract if I can avoid it because I'm very worried that Jim Lockley (sic) will die. His health is very bad.
Those two matters in combination (Mr Brown's evidence of going through the special conditions and Mr Fussell's desire to settle early because of Mr Lockrey's health) point strongly to the fact that Mr Fussell was aware of cl 33.2. He did not challenge Mr Brown's statement that he had agreed to the clause in the contract, and his concern that Mr Lockrey would die is very likely to have been because he was aware of the right of the vendor to rescind if a party died.
I am satisfied, in any event, that Mr Brown drew Mr Fussell's attention to cl 33.2 in 2016. Mr Brown, of course, was presented with a fait accompli in relation to the existence of cl 33.2 in the contract. In such circumstances he could only have breached his duty of care to Mr Fussell in relation to cl 33.2 if he failed to do what he could to endeavour to bring about settlement before Mr Lockrey died. That could only occur if Mr Lockrey was agreeable to bring forward the date of settlement, because the contract stipulated that settlement was to occur on 10 May 2017. In opening submissions, senior counsel for the plaintiff said that the claim against Mr Brown was "utterly dependent on agreement from Mr Lockrey to settle earlier than 10 May". It is necessary, therefore, to see what Mr Brown did in that regard.

Did Mr Fussell have the funds to settle?

On 19 July 2016 Mr Fussell sent an email to Mr Brown which said: I have the finance sorted and I am ready to settle on this property. At your convenience give me a call and we can work out the next step.
Mr Fussell said that on or about 25 July 2016 he spoke with Lisa Badri, an employee at the Parramatta branch of St George Bank ("the Bank"). She told him the Bank had a problem settling the mortgage because Mr Lockrey had a life estate over the entire property.
Although Mr Fussell claims that he then rang Mr Brown to tell him about the problem, there is no entry in Mr Brown's electronic record of a phone call with Mr Fussell at that time. The electronic record and Mr Brown's affidavit, suggests that Mr Brown became aware of the problem by reason of an email exchange between Ms Badri at the Bank and Mr Brown's employee, Mr Sujono. Ms Badri had asked for the transfer to be amended. Mr Brown replied to Ms Badri's email saying: Our client is only purchasing an interest in remainder. The amendment you seek would not produce this.
That email was copied to Mr Fussell and he forwarded an email to Mr Brown on 28 August saying (inter alia): Steven, I am looking at the last email that was sent to St George Bank. I don't believe the statements you have made reflect how I want this to be handled. I have already sorted a few issues relating to this finance. What has been said will set off alarm bells to the bank and they may very well withdraw their offer of finance.
Mr Brown said that after he received Mr Fussell's email he had a telephone conversation with Ms Pierce at CLS Legal. Later that day, Mr Brown received a letter from CLS Legal which said the following (inter alia): We note the following moneys are currently outstanding from your client: 1. $500,000 payable lo our client on or about exchange for certain additional items that our client sold to your client; 2. The rent due and payable under the lease; and 3. The price of the demountable home payable under clause 48.2 on completion. … We note that the life estate is an essential term of the contract. In reference to your comments regarding stamp duty on the life estate, this has already been contemplated by clause 49.5. Our client would be willing to agree to an early completion.
It seems likely from the terms of that letter that Mr Brown must have referred to the life estate issue that Ms Badri had raised.
Mr Brown said that he had a conference with Mr Fussell where he said words to the following effect: The contract talks about a life estate over part of the land, being the "home built on top of the six garages on the property in the terms set out in the deed of life estate". The life estate deed also talks about you granting Mr Lockrey a life estate in the 'House', which is defined as the house on the Camellia property. However, the transfer document does not limit the life estate to the residential areas of the property. That means that the life estate as described in the transfer document is over the whole of the Camellia property rather than part of the land which is what it is supposed to be. Essentially, you signed up to a contract where there were differences in what was meant by the life estate. The contract you signed up to means that you purchase a vested interest in the remainder of the property. That would mean that Lockrey is still entitled to rent under the lease even once you have paid the full purchase price. We can try to have the contract varied, otherwise you are stuck with this. … The issue with the transfer and the need to amend it is an issue raised by St George rather than by Mr Lockrey's solicitors. St George needs the transfer document to be amended for the purpose of your loan. An alternative may be for you to have the fee simple interest in the Property and provide Mr Lockrey with a lease for life. That way, a mortgage can be granted over the Property, and you can settle.
It was in that meeting that Mr Fussell also told Mr Brown that he wanted to settle early because he was worried Mr Lockrey would die (see above at [183]).
What was said by Mr Brown is largely borne out by his contemporaneous diary entry for that day and, in any event, it was not challenged in Mr Fussell's affidavit nor in cross-examination. Mr Brown noted in his diary note that he was instructed to discuss issues with the vendor especially about the lease.
On 11 August 2016 Mr Brown wrote a long letter to CLS Legal identifying the inconsistency between the transfer on the one hand and the Deed and cl 49 of the contract on the other. Mr Brown's letter concluded by saying: It would appear to us that the parties (sic) commercial aims would be better structured by Fussell buying the fee simple and Fussell granting to Mr Lockrey a lease for life of the House. The rates of the House (area) can then be dealt with by the terms of the lease. Using this structure, Fussell will be the lessor of the land to his company and can determine or vary the terms of the lease as he thinks fit. Fussell will bear all liability for council and water rates thereby saving Mr Lockrey this expense.
On 8 August 2016, as mentioned earlier, Ms Pierce sent a letter to Mr Brown which said, inter alia: We reiterate that the life estate is an essential term of the contract. Clause 49.5 specifically outlines the requirements of the transfer being in the form of Annexure "B", a copy of which is attached for ease of reference. We require that this form be executed by the parties in readiness for completion. The balance of the clause's contents does not affect the requirement of the transfer being in the agreed form.
After a brief letter from Ms Deigan on 11 August saying she was seeking instructions in relation to the letter, Ms Deigan replied on 25 August 2016 in these terms: I have been able to make contact with my client. The $500,000 was a payment your client was to make to our client In connection with various items he was acquiring in addition to the property and was to have been paid prior to exchange. We were only recently made aware of the arrangement and the fact that the moneys were not paid. Your client is also currently at least 4 months behind in his lease payments to our client and he owes a significant amount of rent in respect of the part of the premise that were formerly occupied by a tenant which your client required to vacate and was paying the rent in lieu. In discussing the matter with our client our instructions are that our client wants the outstanding moneys resolved before he will consider any amendments to the documents. However, he has instructed that if you client would like to acquire the property now not subject to the life tenancy he would consider relinquishing it on the following basis: 1. The contract is settled within 8 weeks; 2. The purchase price is increased by $1.5m being the $500,000 and a further $1m for the life estate; 3. The rent is paid in full by completion; 4 Your client indicates whether he requires the container that is referred to the contract and if so pays for that on completion; 5. The contract is varied by deletion of the reference to the life estate but settled otherwise on Its terms (subject to the agreed variation contained in this email).
Mr Brown and Mr Fussell had a further conference on 29 August 2016 where words to the following effect were said: Me: "As we have discussed, there are some ambiguities in the contract for sate, in that the contract and the deed of life estate talk about a life estate being granted over the house at the Camellia property but the transfer grants a life estate over the entire property. I sent a letter to Mr Lockrey's solicitors pointing out that difficulty. They came back with that offer which was in my email to you the other day. The contract has a date to complete, which means you won't be able to settle early without Mr Lockrey's permission - you can't force them to settle before the agreed date. The issue is they will not settle unless you agree to pay more money for the property. They are probably thinking that the property has gone up in value since 2012. If you don't want to or can't pay more for the property then you will have to wait until the settlement date as we can't do anything until then." Mr Fussell: "I don't want to pay any more for the property. I don't want to accept their offer". Me: "Your options are, you either settle now for $3,200,000.00 or wait until settlement date and settle for $1,700,00.00. If you have the money to pay them more for the property, it could be useful to try and settle early." Mr Fussell: "What about the Life Estate problem?" Me: "Ms Deigan refuses to discuss it unless you agree to settle early and pay the additional $1,500,000." Mr Fusell: "I won't pay any more for the property." Me: "Then we will have to wait until closer to the settlement date next year." Mr Fussell: "Ok." Me: "If that's your decision, there is not much to be done on the matter until closer to settlement next year. I'll look at the matter again in the new year." Mr Fussell: "All right."
Following that meeting, Mr Brown wrote to Ms Deigan as follows: We are instructed that our client denies any collateral agreement concerning the unspecified "various items he was acquiring in addition to the property". Mr Fussell is not aware of any alleged arrangement: is the alleged arrangement documented? If so please provide us with a copy so we can discuss it with Mr Fussell. We are instructed that the arrears in rent will be paid. Please provide details of the issue concerning a former tenant which our client required to vacate, as he is again not aware of what that alleged arrangement is about. Is the alleged arrangement documented? If so please provide us with a copy so we can discuss it with Mr Fussell. Mr Fusseil is not willing to pay more for the interest he is acquiring than that which has been negotiated. Mr Fussell does need to deal with the following issues concerning the documentation that. was drafted, including: 1 - if there is a life estate, then how will the issue of rent be addressed. The special conditions in the contract are to the effect that once there is completion of that sale, the rent under the subsisting lease is to be paid to the purchaser not the life tenant? How does the Life Tenant propose to have this transfer of rights recorded? 2 - We note that as Life Tenant all rates and taxes on the land will be paid by the Life Tenant during their life time. 3 - We are instructed that our client is not interested in the containers on the property and that the containers can be disposed of by the vendor. 4 - Similarly we are instructed that our client is not interested in purchasing he demountable and can be disposed of by the vendor. Mr Fussell opines that the vendor has no interest in resolving the drafting ambiguities now and as such will look to raise the matters again prior to the scheduled settlement in May 2017.
Ms Deigan replied on 2 September saying: We are instructed not to consider any drafting Issues until the other matters are resolved.
Mr Brown responded in an email saying: Matter for your client about when the issues are to be addressed and tied up. Unless your client wishes to do so sooner, as advised our client will revisit the matter closer to the proposed settlement date next year.
Mr Brown said that he had no contact with Mr Fussell or CLS Legal between 3 September 2016 and 19 March 2017.
Two things can safely be concluded from the foregoing evidence. First, the only way that settlement could occur prior to 10 May 2017 was if Mr Fussell was prepared to pay substantially more than the contract price for the property. Secondly, Mr Fussell was not prepared to pay an extra amount of money to settle early even if he had the means to do so. What Mr Fussell said in that conference with Mr Brown (at [198]) and the instructions given which are set out in Mr Brown's letter to Ms Deigan (at [199] are to be compared with the case Mr Fussell now seeks to make, that he would have acted early to settle and that he had the funds to do so (see above at [30]).
Mr Brown did not breach his duty of care in relation to his acts and omissions between the time he was retained and March 2017 when he next had contact from Mr Fussell. His advice to Mr Fussell that his options were either to settle then for $3.2 million or wait until settlement and settle for $1.7 million with the only options available to Mr Fussell. Senior counsel for Mr Fussell was critical of Mr Brown both in what he put to him in cross-examination and in submissions on behalf of Mr Fussell, that Mr Brown did not consider the third possibility which was that Mr Lockrey might die before settlement and the contract might be rescinded. That, however, is a misunderstanding of what Mr Brown was saying to Mr Fussell. The possibility that Mr Lockrey might die and the contract be rescinded was not an option for Mr Fussell. Certainly, Mr Lockrey's dying and the contract being rescinded was a possible outcome of one of the options that Mr Fussell had, the option not to settle early by paying more money but waiting until the settlement date. But that possibility was out of Mr Fussell's control unless he chose to settle early and pay more money, which option he did not accept or pursue. There were only two options for Mr Fussell, settle early by paying more, or waiting until settlement date.
The evidence also suggests that Mr Fussell did not in August/September 2016 have the funds to complete the purchase because part of the funds he was relying on to do so were the funds being borrowed from the Bank. The Bank had made it clear that it was not prepared to lend that money whilst the transfer remained in the form it had been executed as required by the vendor. The vendor's solicitor had made it clear that no other transfer or arrangement would be acceptable.
The only reasonable conclusion is that Mr Fussell did not at that time have the funds to complete the settlement. He did not lead evidence from his sons or his friend Stephen Viglione that they would have lent him the money or had funds to do so in August/September 2016, as they gave evidence about in respect of May/June 2017 (see at [230]). That is not to say such evidence would have demonstrated that Mr Fussell had the funds in August/September 2016, but the absence of that evidence left the position as I have earlier indicated, namely, that he needed the loan from the Bank to settle, at least at the contract price. There was no evidence about where the extra sums demanded by Mr Lockrey would have been sourced. The requirement to pay that extra amount for an early settlement came after the time Mr Fussell claimed to have the funds to settle, which funds included the loan from the Bank.
On 20 March 2017 Mr Fussell sent an email to Mr Brown saying that he needed $450,000.00 to make up the balance of the funds. He said the other money was in his account.
It seems likely from some conversations reported by Mr Fussell and Mr Brown that Mr Brown made an offer to speak to someone who might have been able to assist Mr Fussell with funds, but that did not eventuate.
On 19 April 2017 Mr Fussell sent Mr Brown an email in these terms: Our settlement date is fast approaching (10 May). I am just organising a few things to finalise matters. I have been paying all the utilities, including rates, water, electricity for the last 5 years, so there should be no adjustments to make?? I will sort the rent up to settlement date. How would you like the funds paid? (Bank cheque in favour of JB Lockrey?) Will the Vendor provide us with a land tax clearance from OSR? Will rates notices issued after settlement be in my name or the vendor? Can you see any major problem? (emphasis added)
On 19 April 2017 Mr Brown replied dealing with the land tax and rates issues. He also raised an issue with the lease in relation to whom the rent should be paid after settlement. The email then said: Settlement date and cheques Once we have a date for settlement we will get from the vendor's solicitor a direction on how the balance of proceeds of sale are to be paid. At that time, we will know how many cheques we need and to whom they are to be made payable to.
On 1 May 2017 Mr Brown had a telephone conversation with Mr Fussell where Mr Fussell said: I am arranging the funds to complete the purchase. Mr Brown said: Ok. Let me know when you are ready, and I will contact Mr Lockrey's solicitors and call for settlement.
Mr Fussell denied that this conversation took place. However, there is an entry in Mr Brown's electronic record for 1 May 2017 at 12:12 that says: Telephone call B Fussell Duration: 0:06 Bernie arranged for funds and we will call the settlement. Bernie to get back to me when ready.
On 3 May 2017 Mr Brown sent an email to Mr Fussell which said: Confirming my call on 1 May 2017. When you looked at settling early about 12 months ago, you could not get a lender to lend the money with a life estate. For is (scil. us) to arrange a date for completion we need to know when you will have the funds to complete? Let me know about the funds as we need to arrange the funds to be in either available in Pexa or in our trust account. Need to know the funds are available to get this going. Get back so we can get settlement underway. We cannot issue or try and force the vendor to settle before the due date which is the tenth. We can use the transfer we have on file. Stamp duty has been paid.
Mr Fussell also claimed that he did receive this email. The email forms part of an email chain that commenced with Mr Fussell's email of 19 April 2017. A copy of the email is in Mr Brown's records and there is separately an entry in his electronic records identifying an email to Mr Fussell at 11:38 on 3 May 2017.
In coming to the view I have formed that Mr Brown sent this email and Mr Fussell received it, I have taken into account Mr Fussell's denial of the telephone conversation on 1 May 2017 which has been clearly demonstrated to have occurred, with the substance of it being (as in the email) that Mr Fussell would get back to Mr Brown when his funds were available.
On 13 May 2017 Mr Brown sent an email to Mr Fussell saying: I know that Alex has been looking at raising the missing funds [That is a reference to Alex Locaputo who was a finance broker for Mr Fussell]. Have not heard but not (scil. note) that settlement was due 10 May 2017. We have not heard or had any contact from the vendors (sic) solicitor since September 2016. A notice to complete could be served any time now. How are you progressing in getting the funds? Without a plan there is no point in our contacting the vendors (sic) solicitor until they contact us but that may mean you only have 14 days to settle. Can you let us know where you are at so we are prepared to help you.
Mr Fussell replied by an email sent on 14 May 2017 saying: Steve, I have some money coming in during this next week which will complete the funds required. There has, however, been a development in that Mr Lockrey passed away on Friday. I would like to call in and speak to you about a few matters before we approach his solicitor. (emphasis added)
On 16 May 2017 Mr Brown sent an email to Ms Deigan confirming that he was seeking to arrange settlement of the matter. He mentioned the signed transfer that they held and said stamp duty had been paid and the transfer marked accordingly. The email concluded by saying: Please advise when we can book in settlement. As there is a signed transfer we presume the death of the vendor last Friday will not delay settlement.
Later that day Ms Deigan emailed asking for a copy of the transfer. Then on 18 May 2017 she sent a letter to Mr Brown saying: As previously advised, Mr Lockrey passed away last Friday. Please find by way of service on your client a notice of rescission. We also enclose a trust account cheque in the amount of $50,000.00 being the refund of the deposit paid by your client under the contract. The letter enclosed a notice of rescission which purported to rely on cl 33.2 of the contract, stating that the vendor died on 12 May 2017.

Did Mr Brown breach his duty of care?

Effectively, only two complaints are made about Mr Brown. The first is that he failed to advise Mr Fussell of the presence of cl 33.2 until after Mr Lockrey had died. Secondly, he failed to arrange settlement of the contract prior to Mr Lockrey's death.
For the reasons already given, not only did Mr Brown inform Mr Fussell of cl 33.2 before Mr Lockrey's death, but Mr Fussell was well aware of cl 33.2 because he had been advised about it by Mr Hanrahan and, even if that is not correct, he was aware of it by the time he came to see Mr Brown because he had read the clause after Mr Hanrahan sent him copies of the special conditions. It was because he was aware of the clause that he sought to settle the contract early when he first came to see Mr Brown. He told Mr Brown he was worried that Mr Lockrey might die. That concern reinforces the view I have that Mr Fussell was well aware of cl 33.2 when he retained Mr Brown to act for him.
Nor did Mr Brown breach his duty of care by failing to arrange settlement of the contract prior to Mr Lockrey's death. The evidence discloses clearly that in August and September 2016 Mr Fussell did not then have the funds to complete the settlement because the Bank was not prepared to lend him the money that he needed to top up what he had to pay the purchase price. That was because of the issue with the life estate.
But quite apart from that issue, the evidence discloses that Mr Lockrey was only to prepared to settle at that time if Mr Fussell paid an extra $1.5 million being $1 million for the life estate and the further $500,000.00 which the vendor's solicitor was claiming Mr Fussell owed as payment in connection with various items he was acquiring in addition to the property. That latter amount was said to have been paid prior to exchange. Mr Fussell made it clear to Mr Brown, and it was conveyed to Ms Deigan, that Mr Fussell was not prepared to pay the extra amounts demanded for early settlement.
In the conversation on 1 May 2017, Mr Fussell said he was arranging funds to complete the purchase. Mr Brown told him to let him know when he was ready and Mr Brown would contact the solicitors to arrange settlement. That was followed by Mr Brown sending an email which stressed that he needed to know when Mr Fussell had the funds to complete. The email asked Mr Fussell to get back to him so that they could arrange settlement.
Mr Fussell thereafter made no contact with Mr Brown until Mr Brown sent another email on 13 May 2017 saying that he had not heard from him. That prompted Mr Fussell's email of 14 May which told Mr Brown that Mr Fussell had "money coming in during this next week which complete the funds". Thereafter, Mr Fussell did not let Mr Brown know that he had the funds and the notice of rescission was served by Ms Deigan.
Mr Fussell maintained that he had the funds to complete, and that the email of 19 April 2017 (at [209] demonstrated he did so because it asked Mr Brown "How would you like the funds paid?". Mr Fussell said that the fact he asked, in effect, who the cheques should be paid to demonstrated that he had the funds.
In my opinion, it should not be inferred from Mr Fussell's enquiry about how the funds were to be paid that Mr Fussell had the funds at that point. First, the seeking of information about the payees of the cheques is information that is merely preliminary to having the funds. Secondly, the email commences by saying, "I am just organising a few things to finalise matters". Thirdly, in the telephone conversation of 1 May 2017, Mr Fussell said "I am arranging the funds to complete the purchase", and Mr Brown asked Mr Fussell to let him know when he, Mr Fussell, was ready. Fourthly, in the email of 3 May 2017, Mr Brown said, "Let me know about the funds as we need to arrange the funds to be in either available in PEXA or in our trust account".
Fifthly, Mr Fussell's evidence in his affidavit in the specific performance proceedings was that he did not have the funds ready to go on 10 May 2017 because he was waiting to get a better deal from Auswide Asset Management. In the present proceedings. Mr Fussell said that the evidence he gave in the specific performance proceedings was wrong and the true position was he did not settle because he was waiting to hear from Mr Brown. If Mr Fussell had been waiting to hear from Mr Brown, one would have expected his email to Mr Brown of 14 May 2017 (which responded to Mr Brown's email of 13 May 2017) to have said that he had been waiting to hear from him and that he had had the funds from April 2017. Instead, it said he had money coming in during the following week. The evidence of Mr Brown's phone call on 1 May 2017 and his email of 3 May 2017 to Mr Fussell demonstrates that Mr Fussell's evidence in the present proceedings that he was waiting to hear from Mr Brown is false, and what was not said in his email of 14 May 2017 is supportive of that determination. The explanation given in the specific performance proceedings should be accepted as being true. Sixthly, Mr Fussell gave this evidence in the present proceedings: Q. You did obtain a better deal and drew down on the funds on 9 June 2017, didn't you? A. That's correct. Q. So it was not until 9 June 2017 that you had the funds ready to settle. That's the position, isn't it? A. That's correct.
Finally, (as noted above) in Mr Fussell's email of 14 May 2017, he said, "I have some money coming in during this next week which will complete the funds required".
At the trial, Mr Fussell led evidence from Mr Stephen Viglione, and Mr Fussell's sons that his sons and Mr Viglione were prepared to lend him money if he needed to complete the purchase. All of those witnesses, except Clayton Fussell, agreed that Mr Fussell had never actually asked for the money. Mr Viglione's evidence that Mr Fussell never "actually asked" him to borrow the money is in stark contrast to a conversation Mr Fussell records that he asked Mr Vigilone for the money and Mr Viglione agreed to lend it to him. I prefer Mr Vigilone's evidence, partly because of the general unreliability of Mr Fussell's evidence but also because Mr Viglione did not have an interest in the proceedings, and to the extent that his evidence was designed to assist Mr Fussell, his statement did not in fact assist Mr Fussell and is more likely to be true.
I do not accept Mr Clayton Fussell's evidence that his father did request to borrow Mr Clayton Fussell's money. He did not say so in his affidavit sworn in the specific performance proceedings, where it might have been expected to be significant evidence, because a party seeking specific performance must show that they are in a position to settle. Nor does Mr Clayton Fussell say in his affidavit in these proceedings that his father had requested a loan from his funds. In his affidavit, Mr Bernard Fussell refers only to his sons, Martin and William, and to Mr Viglione, being prepared to lend him money. If, as Mr Clayton Fussell insisted, his father actually asked him to borrow money at the time, I would have expected Mr Bernard Russell to have said so in his affidavit.
Quite apart from that, the inquiry is not whether Mr Fussell could have obtained those funds at that time by borrowing from other people. Rather, the inquiry is whether he had the funds at the time and had informed Mr Brown that he did so, so that settlement could be arranged. Neither Mr Fussell nor Mr Brown records any communication from Mr Fussell in April/May 2017 that he had sought or borrowed money from any of his sons or Mr Vigilone. All of those persons said that they had the funds available. That is inconsistent with what Mr Fussell was telling Mr Brown from 19 April up to 14 May 2017.
In the same way, the evidence that Mr Fussell gave about the fact that he could have sold silver bars or machinery, as unsatisfactory as that evidence was in any event, misses the point entirely that he had not done so by 14 May 2017.
The earliest date this contract could, in theory, have settled was 10 May 2017, and that would have been by agreement between the solicitors. That could only have occurred if Mr Fussell had the money and Mr Brown had made the necessary arrangements with CLS Legal. If the matter did not settle on that date, the first date that settlement could have been compelled was 14 days after service of a Notice to Complete by Mr Brown. Again, such a notice could not be served until Mr Fussell had the funds. But by that time Mr Lockrey would have been dead.
The service of a notice to complete by Mr Brown would not have prevented the vendor from rescinding on the basis of cl 33.2: Ogle v Comboyuro Investments Pty Ltd (1976) 136 CLR 444 at 460-461. The plaintiffs no longer rely on that allegation of breach.
The evidence clearly points to the conclusion, and I so find, that Mr Fussell was not in a position to settle prior to Mr Lockrey's death, and that was no fault of Mr Brown. It was, first, because Mr Fussell was not prepared to pay more to settle early and there was no evidence that he had the funds to do so, contrary to the submission made by him. Secondly, it did not settle at or around 10 May 2017 because he did not have the funds to do so.
Mr Brown did not breach his duty of care to the plaintiffs. He did everything he could in an endeavour to provide for settlement of the contract both in August 2016 and again in May 2017. In August 2016 Mr Fussell refused to pay any more than the purchase price for his desire to settle early, and that was not accepted by Mr Lockrey. In April and May 2017 Mr Brown did what he could to remind Mr Fussell of the need to have the funds available so settlement could be arranged. Mr Fussell did not have the funds until some time after Mr Lockrey's death when settlement became impossible.
For the same reasons, any loss suffered by the plaintiffs by not completing the contract and from the notice of rescission was solely caused by Mr Fussell not having the funds to complete.
In that way also, Mr Hanrahan's breach in not picking up on the life estate issue was not causative of any loss. The problem with the life estate played no part in the failure to settle. All the evidence showed that Mr Fussell intended to settle on the basis of the transfer as signed. He just did not have the funds to do so.

Damages

Judges at first instance are encouraged, where they find judgment for a defendant to embark, nevertheless, on a hypothetical calculation of damages, in the event that they are found to be in error on liability. That is often a relatively straightforward exercise where the claim is one for personal injury or medical negligence. It is not so straightforward in commercial cases or cases such as the present, because so much depends on discrete fact finding. One of the particular difficulties in the present case is that the damages claimed are for loss of a chance to achieve certain things. My findings, particularly in relation to whether Mr Lockrey would have agreed to changes in the contract, make it difficult to proceed on a different hypothetical.
Nevertheless, what follows is put forward on the assumptions that both Mr Hanrahan and Mr Brown breached their duties of care to both Mr Fussell and Blue Star, and that those breaches caused the losses claimed by both plaintiffs.

Mr Fussell

The plaintiffs submitted that the loss of chance was in the order of 80%. Mr Brown submitted that, if the Court finds that Mr Fussell suffered a loss of opportunity to settle early or by 10 May 2017, the value of the loss is to be assessed on the probabilities that an early settlement would have occurred. Mr Brown submitted that the probabilities of that occurring were nil or very low because Mr Fussell had rejected an offer to settle early for the payment of an extra $1.5 million. Mr Brown submitted also that the loss of opportunity should be subject to a substantial reduction on the basis that Mr Fussell did not have the funds to settle by or about 10 May 2017 before Mr Fussell's death. For present purposes, I must assume that Mr Fussell did have the funds to complete on or about 10 May 2017 and that settlement would have been achieved.
In relation to Mr Fussell, his loss is confined to the value of the land. Valuations of the land were obtained at various dates. Ultimately, agreement was reached as to the value of the land at various dates. The dates and values are as follows: 1. May 2017 Mr Lockrey's death $5,250,000 2. Oct 2017 Probate - contract validly rescinded $5,550,000 3. Dec 2019 Decision of Court of Appeal $5,815,000 4. Nov 2022 $11,050,000
The plaintiffs submitted that the appropriate date was December 2019 when the Court of Appeal gave judgment, alternatively, October 2017 when the notice of rescission was served. Mr Brown submitted that the appropriate date was May 2017 when the cause of action accrued. Mr Hanrahn submitted that the appropriate date was the date the contract was entered into, when Mr Fussell did not get the package of rights he had contracted for. That is to say, he obtained a contract saddled by cl 33.2 and the life estate issues. Mr Hanrahan relied in that regard on what was said in D'Agostino v Anderson [2012] NSWCA 443 at [11]. D'Agostino was one of many cases to like effect that relied on what was said in Forster v Outred [1982] 1 WLR 86; [1982] 2 All ER 753 and subsequently in Wardley Australia Ltd v Western Australia (1992) 175 CLR 514; [1992] HCA 55.
In my opinion, entry into the contract containing cl 33.2 amounted to no more than sustaining "a detriment in a general sense" (Wardley at 527). The joint judgment in Wardley went on to say (at 527): In UBAF Ltd v European American Banking Corporation, Ackner LJ said: "The mere fact that the innocent but negligent misrepresentations caused the plaintiffs to enter into a contract which they otherwise would not have entered into, does not inevitably mean that they had suffered damage by merely entering into the contract." That is because it was not self-evident that the value of the chose in action which the plaintiff acquired, the right to repayment of a loan, was worth less than the amount paid to the borrower at the time of entry into the loan agreement. Evidence was required to establish that fact, if it were a fact. (citations omitted)
In HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd (2004) 217 CLR 640; [2004] HCA 54 the Court said: It is incorrect to treat this case as being like Wardley Australia Ltd v Western Australia, on which the trial judge relied. That case held that a risk of loss is not itself a category of loss, and that if a plaintiff enters a contract exposing it only to a contingent loss or liability, the plaintiff "sustains no actual damage until the contingency is fulfilled and the loss becomes actual". The plaintiff was not exposed to a contingent loss; it had suffered an actual loss. (citations omitted)
I do not consider that Mr Fussell did not get the package of rights he contracted for. The life estate was exactly what he had agreed with Mr Lockrey. The only problem was the form of the transfer. Certainly, cl 33.2 gave the parties the right to rescind if a party died, but that right was mutual. There is no suggestion that Mr Fussell paid more for the property than it was worth with cl 33.2 included. No loss could be suffered until Mr Lockrey died and his estate exercised its right of rescission, if it did so.
In my opinion, the appropriate date to calculate the loss of profit from the value of the land is October 2017. That was the earliest time the contract could have been rescinded. Ms Deigan did not obtain probate until 21 September 2017. The earliest date on which Mr Brown could have served a Notice to Complete, on the assumption that Mr Fussell had the funds to complete, was 11 May 2017. Mr Lockrey's death then intervened. Ms Deigan could not respond to any Notice to Complete served by Mr Brown before she obtained probate. Until the contract was rescinded, Mr Fussell has suffered no loss.
The plaintiffs say that the sum of $2,304,000 needs to be deducted from the valuation figure of $5,550,000 leaving a loss to Mr Fussell of $2,304,000. The amount of $2,304,000 is made up of $1,650,000 (balance of purchase price), $1,500,000 (extra price demanded), and $96,000 (outstanding rent). The deduction of $1,500,000 is only relevant on the basis that settlement was to occur prior to 10 May 2017, and more likely in August 2016 when that amount was demanded. Settlement prior to 10 May 2017 is not a realistic hypothetical because Mr Fussell declined to agree to settlement early on that basis. The damages must be calculated on the basis that settlement at or around 10 May 2017 was thwarted by the breaches of either or both or Mr Hanrahan and Mr Brown. Further, the rent was not owed by Mr Fussell. It should not be deducted from anything to which he is entitled.
All that should be deducted from the valuation at October 2017 is the balance of the purchase price. Mr Fussell's damages amount to a percentage of $3,900,000 ($5,550,000 - $1,650,000).
If I am wrong in concluding that Mr Fussell did not, on the balance of probabilities, lose the opportunity to have the contract amended by the removal of cl 33.2, I consider that the prospects of success of doing so do not exceed 25%. In reaching that assessment I have regard to Ms Deigan's evidence of the advice she would have provided to Mr Lockrey, and to the history of the proposed sale by Mr Lockrey and what is reported of his approach to the legal issues by Ms Deigan and Mr Fussell (referred to above at [149]-[154]).

Blue Star

The claim on behalf of Blue Star against both Mr Hanrahan and Mr Brown is for all of the amounts paid as rent, insurance, rates, and other property expenses (hereafter referred to as the "property expenses") for the six years of the lease, together with Mr Fussell's legal costs in the specific performance proceedings, and the costs Mr Fussell was ordered to pay Mr Lockrey with respect to those proceedings.
Since the property expenses are said to fall within the description of reliance damages, the assumption must be, although this was not made clear in the plaintiffs' submissions, that these expenses were expended because Blue Star would be conducting its business at the property after the six year lease expired.
There are a number of problems in relation to Blue Star's claim. First, before Blue Star was incorporated, Blue Star Enterprises (a partnership between Mr Bernard Fussell and one or more of his sons) moved onto the property, paying rent to Mr Lockrey of $1000 per week with no lease in place between them. Blue Star Enterprises continued to conduct its business from the property, at least up until April 2016, as Mr Fussell admitted. Further the business conducted on the property by Blue Star Enterprises was "very similar" to the business conducted by Blue Star. Blue Star Enterprises owned all of the plant, vehicles and equipment. Blue Star Enterprises owned the only EFTPOS terminal on the property. Blue Star Enterprises made some of the rent payments under the lease that Blue Star entered into with Mr Lockrey. Indeed, in the specific performance proceedings it was only Blue Star Enterprises that was pleaded as conducting business from the property. Blue Star was said to be only the lessee under the lease.
Despite that intermingling of the affairs and businesses of Blue Star and Blue Star Enterprises, the plaintiffs' approach was to tender in Exhibit BJF-2 and Exhibit E bundles of documents containing rent receipts, bank statements and other financial documents, some of which, in any event, made clear that it was Blue Star Enterprises which had borne the liability. Initially, schedules in the Court Book at pp 1659ff, and subsequently MFI 9 were relied on as proof of Blue Star's loss. Objection was taken to those documents, and I ruled that they could only be regarded as submissions.
The plaintiffs' written submissions identified totals of categories of expenses which cannot be accepted at face value as demonstrating what Blue Star had incurred, by reason of Blue Star Enterprise's involvement, as mentioned above.
Secondly, if, as seems to be the case the plaintiffs were putting forward, the total of the expenses incurred by Blue Star for the period of the lease were incurred only as setting up costs, as it were, to what the plaintiffs were intending after the six year lease period, Blue Star would have to give credit, at least, for the profits it made during the six year lease period that it carried on business at the property. That was a matter I raised with Senior counsel for the plaintiffs who submitted that any such profits would not need to be brought to account. This was because the money was expended to improve the property for the running of the business after the lease expired. He submitted that because that never eventuated, all of the expenditure was wasted. However, Mr Fussell said in his affidavit that he wanted Blue Star to make a profit to cover the lease and outgoings to develop a business which he would sell.
In my opinion, on the assumption that the expenditure is recoverable from the defendants, credit must be given for profits made along the way. There was no evidence showing what profits had been made. For example, Blue Star's tax returns for the period of the lease were not tendered. Without that evidence, the plaintiffs fail to establish their loss from the expenditure, on the basis that any damages awarded may well constitute a windfall.
Thirdly, in relation to the legal costs associated with the specific performance proceedings, it cannot be said that Mr Lockrey's costs, which were ordered to be paid by the Court, were paid by Blue Star to mitigate its loss. It was only Mr Fussell who was ordered to pay Mr Lockrey's costs. By that stage, Mr Fussell had lost the case. Payment by Blue Star when the case was lost cannot have been with the intention to mitigate or reduce any loss that might otherwise be sustained. Not only was Mr Fussell ordered to pay the costs, he alone entered into a Deed with Ms Deigan as Mr Lockrey's executor dated 1 May 2020 whereby he became liable for the costs as agreed.
Funding Mr Fussell's litigation before the outcome is known is, on the other hand, capable of amounting to mitigation, all other things being equal. However, all other things are not equal. As I have determined, Mr Hanrahan's retainer by Blue Star was limited to perusing and advising on the lease and arranging for it to be executed. Mr Brown's retainer by Blue Star was related only to its rental arrears. Mr Fussell did not provide information to either solicitor of his intentions beyond the six year period. It is accepted that Mr Brown said that he was aware that Mr Fussell's plan was that Blue Star would remain in the possession of the property beyond the six year lease. He denied that he knew that if Blue Star was not able to stay at the property beyond that six year period it would suffer a loss. No further questions were put to him after that denial.
In circumstances where neither solicitor had been apprised of Mr Fussell's and Blue Star's intentions beyond carrying on business during the six year lease, and where neither solicitor owed any duty of care to Blue Star in respect of its business generally, damage suffered by Blue Star by voluntarily taking on responsibility for the payment of Mr Fussell's legal fees to mitigate its loss is too remote.

Conclusion

I make the following orders: 1. Judgment for the first and second defendants. 2. Judgment for the third defendant. 3. The plaintiffs are to pay the defendants' costs.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 21 November 2024

Trade Practices Act 1974(Cth)

Adeels Palace Pty Ltd v Moubarak (2009) 239 CLR 420; [2009] HCA 48 Calverley v Green (1984) 155 CLR 242; [1984] HCA 81 Campbell v Campbell [2015] NSWSC 784 Carolyn Deigan as executrix for the estate of the late James Boyd Lockrey v Barnard (sic) James Fussell [2019] NSWCA 299; (2019) 19 BPR 39,853 D'Agostino v Anderson [2012] NSWCA 443 Forster v Outred [1982] 1 WLR 86; [1982] 2 All ER 753 Fussell v Deigan [2018] NSWSC 1419; (2018) 19 BPR 38,755 HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd (2004) 217 CLR 640; [2004] HCA 54 In the matter of Kit Digital Australia Pty Ltd (in liq) [2014] NSWSC 1547 Macindoe v Parbery (1994) 6 BPR 13,483 Ogle v Comboyuro Investments Pty Ltd (1976) 136 CLR 444; [1976] HCA 21 Pirrottina v Pirrottina [2024] NSWSC 558 Strong v Woolworths Ltd (2012) 246 CLR 182; [2012] HCA 5 Trustees of the Property of Cummins v Cummins (2006) 227 CLR 278; [2006] HCA 6 Wardley Australia Ltd v Western Australia (1992) 175 CLR 514; [1992] HCA 55 Texts Cited: Nil Category: Principal judgment Parties: Bernard James Fussell (First Plaintiff) Blue Star Trading Corporation Pty Ltd (Second Plaintiff) Bruce Vincent Hanrahan t/as Dignan & Hanrahan Solicitors (First Defendant) David James Duncombe t/as Dignan & Hanrahan Solicitors (Second Defendant) Steven Brown t/as Etienne Lawyers (Third Defendant) Representation: Counsel: M Cashion SC & M Karam (First & Second Plaintiffs) A C Harding SC (First & Second Defendants) A Avery-Williams & L Dargan (Third Defendant)

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