Gerrard Toltz Pty Ltd v City Garden Australia Pty Ltd

Breen v Williams (1996) 186 CLR 71; [1996] HCA 57 Brickenden v London Loan & Savings Co [1934] 3 DLR 465 Cassegrain v Cassegrain [2016] NSWCA 71 City Garden Australia Pty Ltd (in administration) as trustee for the Ming Tian City Garden Unit Trust v Dai [2023] NSWSC 1498 City Garden Australia Pty Ltd (in administration) as trustee for the Ming Tian City Garden Unit Trust v Dai (No 2) [2024] NSWSC 22 Clark Boyce v Mouat [1994] 1 AC 428 Dartberg Pty Ltd v Wealthcare Financial Planning Pty Ltd (2007) 164 FCR 450; [2007] FCA 1216 David v David [2009] NSWCA 8 Electricity Networks Corporation v Herridge Parties (2022) 276 CLR 271; [2022] HCA 37 Farrington v Rowe McBride & Partners [1985] NZLR 83 Ferguson v John Dawson & Partners (Contractors) Ltd [1976] 1 WLR 1213 Gilbert v Shanahan [1998] 3 NZLR 528 Godfrey Spowers (Victoria) Pty Ltd v Lincoln Scott Australia Pty Ltd (2008) 21 VR 84; [2008] VSCA 208 Herridge Parties v Electricity Networks Corp t/as Western Power (2021) 59 WAR 69; [2021] WASCA 111 Johnston v Brightstar Holding Company Pty Ltd [2014] NSWCA 15 Maguire v Makaronis (1997) 188 CLR 449; [1997] HCA 23 Mantonella P/L v Thompson [2009] QCA 80 Mao v Bao [2023] NSWCA 278 Midland Bank Trust Co Ltd v Hett, Stubbs & Kemp [1979] Ch 384 Re Minister for Immigration and Multicultural Affairs; Ex parte Lam (2003) 214 CLR 1; [2003] HCA 6 Monaghan Surveyors Pty Ltd v Stratford Glen-Avon Pty Ltd [2012] NSWCA 94 O'Halloran v R T Thomas & Family Pty Ltd (1998) 45 NSWLR 262 Perpetual Trustee Company Ltd v CTC Group Pty Ltd (No 2) [2013] NSWCA 58 Perpetual Trustee Company Ltd v Milanex Pty Ltd (in liq) [2011] NSWCA 367 Prince Jefri Bolkiah v KPMG (a Firm) [1999] 2 WLR 215 Provident Capital Ltd v Papa (2013) 84 NSWLR 231; [2013] NSWCA 36 Rahme v Benjamin & Khoury Pty Ltd (2019) 100 NSWLR 550; [2019] NSWCA 211 Reinhold v NSW Lotteries Corporation (No 2) (2008) 82 NSWLR 762; [2008] NSWSC 187 Richtoll Pty Ltd v WW Lawyers (in liq) Pty Ltd [2016] NSWSC 438 Shrimp v Landmark Operations Ltd (2007) 163 FCR 510; [2007] FCA 1468 Stead v State Government Insurance Commission (1986) 161 CLR 141 Stephen James Rigg v Paul Sheridan & Ors [2008] NSWCA 79 Tanah Merah Vic Pty Ltd v Owners Corp No 1 of PS613436 [2021] VSCA 72 White v Illawarra Mutual Building Society Ltd [2002] NSWCA 164 Xiao v BCEG International (Australia) Pty Ltd (2023) 111 NSWLR 132; [2023] NSWCA 48 Youyang Pty Ltd v Minter Ellison Morris Fletcher (2003) 212 CLR 484; [2003] HCA 15 Zakka v Elias [2013] NSWCA 119 Texts Cited: A Scalia and B Garner, Reading Law: The Interpretation of Legal Texts (2012, Thomson/West) B McDonald and JW Carter, "The Lottery of Contractual Risk Allocation and Proportionate Liability" (2009) 26 Journal of Contract Law 1 J Edelman, McGregor on Damages (21st ed, 2021, Sweet & Maxwell) JD Heydon, Heydon on Contract (2019, Thomson Reuters) JD Heydon, MJ Leeming and PG Turner, Meagher, Gummow and Lehane's Equity Doctrines and Remedies (5th ed, 2015, LexisNexis Butterworths Australia) JLR Davis, Inquiry into the Law of Joint and Several Liability: Report of Stage 2 (Australia, Attorney-General's Department, January 1995) Category: Principal judgment Parties: Gerrard Toltz Pty Ltd (Appellant) City Garden Australia Pty Ltd (in liq) as trustee for Ming Tian City Garden Unit Trust (Respondent) Representation: Counsel: R Dick SC and M Hall (Appellant) P Clarke and F Lim (Respondent)

Solicitors: Sparke Helmore Lawyers (Appellant) Francis Lim Barristers & Solicitors (Respondent) File Number(s): 2023/461689 Publication restriction: Nil. Decision under appeal Court or tribunal: Supreme Court New South Wales Jurisdiction: Equity Citation: [2023] NSWSC 1498 Date of Decision: 05 December 2023 Before: Rees J File Number(s): 2020/128125

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

HEADNOTE [This headnote is not to be read as part of the judgment] From early 2017, City Garden Australia Pty Ltd (City Garden) was undertaking a property development in North Rocks. Meng (Adam) Dai and (from July 2017) Jian Wei (Victor) Liang were directors of City Garden. On 13 November 2018, City Garden entered into a loan agreement with Gemi Investments Pty Ltd (Gemi Investments) for $2,109,942 (the first loan). The loaned funds were paid to another company involved in the development at the direction of Mr Dai. This loan was subsequently refinanced by a second loan, which was in turn refinanced by a third loan. As of 12 December 2023, $21,870,688.55 (inclusive of legal costs, accrued interest and charges on legal costs) was owing under this third loan. The primary judge found that Mr Liang had no knowledge of these loans and that Lin (Julianne) Zhu, who executed the relevant transaction documents, was not validly appointed as secretary of City Garden at any material time. Gerrard Toltz Pty Ltd (Toltz) was a firm of solicitors that from July 2016 acted for Mr Dai, and City Garden, in a variety of capacities. Toltz also acted for the Gemi Investments, and the broader Gemi group of companies, on all of its lending from at least 2016, including on the first loan. In respect of the first loan, Toltz prepared a document headed "Schedule 1A: Declaration by Borrower" that contemplated the borrower receiving independent legal advice regarding the loan and security documents. This document was signed by Mr Dai and Ms Zhu and certified by Xiuping (Alice) Yang, solicitor. On 29 April 2020, City Garden commenced proceedings alleging that Toltz was retained by City Garden on the first loan and acted in breach of the fiduciary duty it owed to City Garden by also acting for the Gemi group lenders in respect of this loan. City Garden alleged that Toltz was in a position of conflicting duties as regards this loan, and that City Garden did not give informed consent to Toltz acting notwithstanding this conflict. The primary judge found that Toltz was retained by City Garden to assist and advise in respect of the first loan, and that Toltz was in breach of the fiduciary duty which it owed City Garden, as its solicitor, in respect of City Garden's entry into the first loan. The primary judge found that if Toltz had contacted Mr Liang in the course of obtaining fully informed consent or in discharging its obligation to act in City Garden's best interests on the first loan, then Mr Liang would have prevented the first loan from proceeding. The primary judge ordered that Toltz pay City Garden equitable compensation in the sum of $16,403,016 (being 75% of the amount that the primary judge found that City Garden owed under the third loan) and costs. The primary judge rejected Toltz's contention that this was an apportionable claim for the purposes of Part 4 of the Civil Liability Act 2002 (NSW) on the basis that a failure to take reasonable care was not an element of the cause of action against Toltz. Toltz appeals against the orders finding it liable in damages. The principles issues in the appeal were: (i) Did the primary judge err in finding that Toltz's retainer extended to relevantly acting for City Garden in relation to the first loan and was Toltz in a position of conflicting fiduciary duties in respect thereof (appeal grounds 1 to 3). (ii) Was Toltz denied procedural fairness by reason of the primary judge's findings as to breach of fiduciary duty (appeal ground 4). (iii) Was Toltz denied procedural fairness and did the primary judge err in her Honour's findings as to lack of informed consent (appeal grounds 5 and 6). (iv) Was Toltz denied procedural fairness and did the primary judge err in her Honour's findings as to causation (appeal grounds 7 and 8). (v) Was Toltz denied procedural fairness and did the primary judge err in her Honour's findings as to loss (appeal grounds 9 and 10). (vi) Did the primary judge err in finding that the claim against Toltz was not an apportionable claim under s 34 of the Civil Liability Act and in not reducing Toltz's liability on that account (appeal ground 11). The Court (Stern JA, Kirk JA and Basten AJA agreeing in part) held, allowing the appeal: As to issue (i) (per Stern JA, Kirk JA and Basten AJA agreeing) (1) The ambit of a solicitor's retainer is of overarching significance to any claim that the solicitor has acted in breach of fiduciary duty by reason of a conflict between their duty to their client and either their interest or their duty to another client: [37], [40]. Maguire v Makaronis (1997) 188 CLR 449; [1997] HCA 23; Beach Petroleum NL v Kennedy (1999) 48 NSWLR 1; [1999] NSWCA 408, applied. Stephen James Rigg v Paul Sheridan & Ors [2008] NSWCA 79; Anderson v Canaccord Genuity Financial Ltd (2023) 113 NSWLR 151; [2023] NSWCA 294, referred to. (2) The question in such a case as the present is whether the client can establish that the solicitor was retained on the particular transaction, a matter to which an ongoing, general retainer may be relevant: [27], [30], [34]. The evidence disclosed that there were occasions on which Toltz did not act for City Garden in relation to financing transactions, such that the ongoing general retainer that Toltz had should be distinguished from a general retainer of the character discussed in Richtoll Pty Ltd v WW Lawyers (in liq) Pty Ltd [2016] NSWSC 438; Minkin v Landsberg [2016] 1 WLR 1489, where the question was whether tasks usually associated with an extant retainer had been carved-out: [53]-[54]. The primary judge erroneously approached the question of Toltz's retainer regarding the first loan on the basis that it was for Toltz to clearly limit its ongoing general retainer to exclude the first loan: [92]. Midland Bank Trust Co Ltd v Hett, Stubbs & Kemp [1979] Ch 384; Beach Petroleum NL v Kennedy (1999) 48 NSWLR 1; [1999] NSWCA 408, applied. Richtoll Pty Ltd v WW Lawyers (in liq) Pty Ltd [2016] NSWSC 438; Minkin v Landsberg [2016] 1 WLR 1489, distinguished. (3) The objective facts known to both parties, having regard both to the background circumstances and the immediate circumstances of the first loan, are more consistent with Toltz not acting for City Garden on the first loan. The primary judge erred in making findings to the contrary: [91]. (4) Unless Toltz was relevantly assisting or acting for City Garden in respect of the first loan, there is no basis to find that Toltz owed a fiduciary duty to City Garden to act in its best interests as regards its entry into the first loan. The primary judge erred in finding that there was a real sensible possibility of conflict between any duty owed by Toltz to City Garden and Toltz's duty to Gemi Investments in respect of the first loan: [95]-[96]. (5) The assumption underlying the document certified by Ms Yang was that an independent solicitor would provide meaningful independent legal advice: [85]-[87]. As to what Ms Yang should be taken to have known, the Court would infer from the declaration itself that Ms Yang had read, and understood, the loan and security documents. There was no basis to infer that Ms Yang knew very little about City Garden or the transaction, although the evidence did not disclose what, if anything, Ms Yang knew about Mr Liang's involvement in City Garden: [100]-[101]. Provident Capital Ltd v Papa (2013) 84 NSWLR 231; [2013] NSWCA 36, applied. As to issue (ii) (per Stern JA, Kirk JA agreeing, Basten AJA not deciding) (6) The concern of the law as regards procedural fairness is to avoid practical injustice. The primary judge's findings that Toltz was in breach of fiduciary duty fell within the ambit of City Garden's pleaded case such that there was no practical injustice arising out of these findings: [103]-[108], [114], [120]. Re Minister for Immigration and Multicultural Affairs; Ex parte Lam (2003) 214 CLR 1; [2003] HCA 6, applied. Stead v State Government Insurance Commission (1986) 161 CLR 141; [1986] HCA 54, referred to. As to issue (iii) (per Stern JA, Kirk JA agreeing, Basten AJA not deciding) (7) The primary judge's conclusion was predicated upon Toltz being aware that there was a disconformity between the borrower (City Garden) and the recipient of loan funds (the Builder), thus being on notice that Mr Dai may not be acting in the best interests of City Garden, and Toltz taking no steps to confirm that Mr Dai had authority on behalf of all directors of City Garden. Those factual predicates for the primary judge's finding were sufficiently notified to Toltz in City Garden's pleadings: [122]-[123], [125]. Clark Boyce v Mouat [1994] 1 AC 428, considered. Breen v Williams (1996) 186 CLR 71; [1996] HCA 57, Maguire v Makaronis (1997) 188 CLR 449; [1997] HCA 23, Farrington v Rowe McBride & Partners [1985] NZLR 83; Birtchnell v Equity Trustees, Executors and Agency Co Ltd (1929) 42 CLR 384, referred to. (8) The primary judge did not err in finding that informed consent should have included consent from Mr Liang. It was entirely consistent with the purpose underlying the fiduciary duty for informed consent to require the consent of Mr Liang, the director who had no personal interest in the Builder's projects other than at the North Rocks development: [127]. As to issue (iv) (per Stern JA, Kirk JA agreeing, Basten AJA not deciding) (9) As the complaints of a denial of procedural fairness as to breach of duty and causation were necessarily linked, Toltz's contention as to procedural unfairness on the issue of causation must also be rejected: [131]. (per Stern JA, Kirk JA and Basten AJA not deciding) (10) The primary judge erred in approaching the issue of causation by asking what Mr Liang would have done had Toltz contacted him, the proper counterfactual in this case was Toltz desisting from acting for City Garden and thereby avoiding the conflict or Toltz recommending that City Garden obtain independent advice as to the first loan: [147]-[148]. Blackmagic Design Pty Ltd v Overliese (2011) 191 FCR 1; [2011] FCAFC 24; Coope v LCM Litigation Fund Pty Ltd [2016] NSWCA 37, considered. Xiao v BCEG International (Australia) Pty Ltd (2023) 111 NSWLR 132; [2023] NSWCA 48; Mantonella P/L v Thompson [2009] QCA 80; Break Fast Investments Pty Ltd v Rigby Cooke Lawyers [2022] VSCA 118, referred to. As to issue (v) (per Stern JA, Kirk JA and Basten AJA not deciding) (11) Toltz's contentions as to procedural unfairness based upon the failure of City Garden to more fully articulate its case as to causation and the lack of analysis by the primary judge as to the benefits received by City Garden did not lead to any practical unfairness: [162]. (12) The primary judge did not err in finding that City Garden's entry into the second and third loans were caused by Toltz's breach of fiduciary duty as there was no evidentiary basis before the primary judge for a conclusion that City Garden had any alternative other than entry into the second and third loans if it were not simply to remain in default of its obligations under the first loan: [168]. As to issue (vi) (per Stern JA, Kirk JA not deciding) (13) It is unnecessary to reach any concluded view on this issue, however there is doubt as to the correctness of the statement of this Court in Rahme v Benjamin & Khoury Pty Ltd (2019) 100 NSWLR 550; [2019] NSWCA 211 at [135] ("Rahme"), relied upon by the primary judge. There remains considerable support at the appellate level for an approach to s 34(1)(a) that looks to both how a claim is framed, and to the findings of the court, but is not limited in its focus to the narrow question whether a lack of reasonable care is an element of the cause of action: [173]-[182]. Reinhold v NSW Lotteries Corporation (No 2) (2008) 82 NSWLR 762; [2008] NSWSC 187; Perpetual Trustee Company Ltd v CTC Group Pty Ltd (No 2) [2013] NSWCA 58; Rahme; Herridge Parties v Electricity Networks Corp t/as Western Power (2021) 59 WAR 69; [2021] WASCA 111; Tanah Merah Vic Pty Ltd v Owners Corp No 1 of PS613436 [2021] VSCA 72, considered. (per Basten AJA, Kirk JA not deciding) (14) Although the appeal should be upheld on other grounds, this issue raises an independent issue of principle: [186]-[187]. A claim, whatever the pleaded cause of action, which has been upheld on the basis that there was a failure to take reasonable care will constitute an apportionable claim under s 34(1)(a): [240]-[241].

JUDGMENT

1. KIRK JA: I agree with the orders proposed by Stern JA. I also agree with her Honour's judgment, save as follows. Grounds 7-9 address issues of causation. I agree with Stern JA's reasons for concluding that ground 7 is not made out to the extent it raises an issue of procedural fairness. Beyond that, the issues raised by grounds 7-9 are complex and fact-specific. There is a degree of artificiality in seeking to determine the issue where no breach has been made out. I prefer not to do so.
2. Ground 11 relates to apportionment. Like Stern JA, I do not consider it necessary to determine the ground. I express no views, tentative or otherwise, on the matters raised by it. Construing ss 34 and 35 of the Civil Liability Act 2002 (NSW) raises issues which are complex and important. It is appropriate that they be determined in a case where it is necessary to do so and where arguments are presented on point. This is not such a case. Senior counsel for the appellant expressly stated in oral submissions that "we don't seek to challenge Rahme in this appeal", referring to Rahme v Benjamin & Khoury Pty Ltd (2019) 100 NSWLR 550; [2019] NSWCA 211. Consistently with that position, the Court received no written submissions, and only very brief oral submissions, grappling with interpretation of the provisions.
3. STERN JA: These proceedings arise out of three loans entered into or guaranteed by the respondent (the plaintiff at first instance) (City Garden). The loans were entered into on 13 November 2018 (the first loan), 22 May 2019 (the second loan) and most recently 15 October 2019 (the third loan). The essential question on the appeal is whether the appellant, Gerrard Toltz Pty Ltd (Toltz), was relevantly acting as solicitor for City Garden on the first loan, and if so whether it was in breach of fiduciary duty by reason of the fact that it acted for the lender on the first loan. Issues also arise as to the primary judge's approach to causation and loss. The commercial context for the loans was that City Garden was undertaking a property development in North Rocks (the North Rocks Project, and the North Rocks Property, respectively). For the purpose of the North Rocks Project, City Garden entered into a construction contract with a related building company Ming Tian Real Property Pty Ltd (the Builder). Meng (Adam) Dai, the first defendant in the proceedings at first instance, was a director of both City Garden and the Builder at the time of the three loans.

Issues arising on the appeal

1. The various matters raised in the Toltz's notice of appeal can be grouped broadly into the following substantive issues: 1. Did the primary judge err in finding that Toltz's retainer extended to relevantly acting for City Garden in relation to the first loan and was Toltz in a position of conflicting fiduciary duties in respect thereof (appeal grounds 1 to 3); 2. Was Toltz denied procedural fairness by reason of the primary judge's findings as to breach of fiduciary duty (appeal ground 4). Whilst ground 4 also alleges error in its chapeau, the matters relied upon went only to denial of procedural fairness; 3. Was Toltz denied procedural fairness and did the primary judge err in her Honour's findings as to lack of informed consent (appeal grounds 5 and 6); 4. Was Toltz denied procedural fairness and did the primary judge err in her Honour's findings as to causation (appeal grounds 7 and 8); 5. Was Toltz denied procedural fairness and did the primary judge err in her Honour's findings as to loss (appeal grounds 9 and 10); and 6. Did the primary judge err in finding that the claim against Toltz was not an apportionable claim under s 34 of the Civil Liability Act and in not reducing Toltz's liability on that account (appeal ground 11).
2. In this judgment, I consider the matters arising by reference to these issues.
3. It should be observed that the matters in issue on the appeal relate essentially to the inferences and conclusions to be drawn from the primary facts. Those primary facts are largely uncontroversial.

The key entities and individuals

1. City Garden was incorporated in 2015. At incorporation, Mr Dai and Ms Zhu were both directors and Mr Dai was secretary: J[41]. At that time Mr Dai and Ms Zhu were equal shareholders. Ms Zhu ceased being a director in August 2016 before being purportedly appointed as secretary shortly before the first loan, without Jian Wei (Victor) Liang's knowledge. Mr Liang became a director of City Garden in July 2017. From that time Mr Liang was also the majority shareholder in City Garden: J[92], [100], [118]. City Garden's constitution provided that the business of the company was to be managed by or under the direction of the directors. Facing bankruptcy, on 27 November 2019, Mr Dai resigned as both director and secretary of City Garden: J[443]-[444]. On 18 February 2020, Mr Liang lodged a Form 484 removing Ms Zhu as secretary of City Garden: J[451]. City Garden is now in liquidation.
2. The Builder was incorporated in 2013. At all material times, its largest shareholder was Maxmara Trinity Pty Ltd, one of Mr Dai's family companies. Mr Dai was the sole director of the Builder. On 23 August 2017, City Garden entered into a construction contract for the North Rocks Project with the Builder (the construction contract): J[130]. Under that contract, the Builder was obliged to arrange for the supply of all materials, labour, construction plant and equipment and everything needed to complete the works, and to pay for the supply of such services: clause 2.1(c)(i)(A). In the event that City Garden had paid any workers, consultants or subcontractors directly, these payments could be set-off: cl 38, J[130]. The Builder is also now in liquidation: J[40].
3. Toltz is a firm of solicitors of which Mr Toltz is the principal. Over a number of years, Toltz had acted for a group of companies associated with George Fleming (which I will describe as the Gemi group), in relation to loans provided by that group: J[46]-[47]. In July 2016 Toltz was approached by Andrew Margi, a finance broker, about working for Mr Dai on a proposed purchase of the North Rocks Property. That was his first involvement with Mr Dai or City Garden. Thereafter, he acted for Mr Dai, or City Garden, in a variety of capacities: for him personally, for him as a director of companies, for various companies with which he was associated and for various trusts with which he was associated: J[54]. There is no doubt that from 2016 Mr Dai and Mr Toltz developed something of a rapport. It is apparent, for example, that on at least one occasion they had a social dinner together, albeit that matters relating to the third loan were also discussed on that social occasion.

The first loan

1. The first loan was a loan from Gemi Investments to City Garden for $2,109,942 million, payable in two tranches, for a six-month term. It was entered into on 13 November 2018 (erroneously described in some documents as being entered into on 15 October 2018) and completed on 14 November 2018. It was secured in part by a mortgage over the North Rocks Property and guaranteed by Mr Dai and Ms Zhu. On 13 November 2018, Mr Dai and Ms Zhu signed a "Declaration by Borrower", declaring that they, the director and secretary of City Garden, had received independent legal advice regarding the loan and security documents for the first loan, and this declaration was certified by Xiuping (Alice) Yang, solicitor, who confirmed that she had known both Mr Dai and Ms Zhu for at least 12 months. Mr Toltz explained in his affidavit that Ms Yang had previously acted for another of Mr Dai's companies in an unrelated transaction and this evidence was not challenged.
2. The primary judge found that Ms Yang appeared to have been contacted at short notice and charged no fees. On that basis her Honour found that it seemed "unlikely that any substantive advice was given in respect of the proposed transaction beyond the import of documents to be executed" or that she received comprehensive or accurate instructions as to Mr Dai and Ms Zhu's authority to execute the transaction documents on behalf of City Garden. Her Honour also found that it was not clear whether Ms Yang's client was Mr Dai and Ms Zhu or City Garden and that there was no evidence as to how Ms Yang went about her job, what she was told, or the advice she gave: J[176], [496]-[497]. There was also the "problem here … that the persons to whom Ms Yang was giving the advice were unauthorised": J[498]. Toltz challenges the inferences drawn by the primary judge as regards the role of Ms Yang.
3. The funds advanced under the first loan were, at Mr Dai's direction: J[216], advanced to an account in the name of City Garden Australia Pty Ltd, but that was in fact the Builder's bank account. The first tranche of $1.1 million was advanced on 14 November 2018 and the second tranche of $900,000 was advanced on 6 December 2018. Whilst the primary judge found that the stated purpose of the first tranche of the loan was to obtain a bank guarantee, likely for a property other than the North Rocks Property, the primary judge found that the funds were expended on suppliers, subcontractors, consultants, mortgage brokers, director's loans, tax, American Express, and Mr Dai, and it was likely that some of the expenditure, at least, related to the North Rocks Project: J[178]-[180]. The primary judge found that, in a broad sense, City Garden received a benefit from a portion of the first loan as at least some of the money from the first loan was likely used to pay expenditure that related to the North Rocks Project and that the Builder may have issued a progress claim for those amounts and been reimbursed out of the loan funds, but that it was difficult if so and to quantify how much: J[178]-[181], [476]-[477]. Beyond the tender of one invoice linked to the North Rocks Project which was paid out of the proceeds of the first loan, no evidence was led at trial to establish the extent to which money from the first loan was in fact used to benefit City Garden, nor the extent to which, if at all, the expenditure was to meet a progress claim by the Builder for the North Rocks Project, or if City Garden set-off the money paid against money City Garden owed to the Builder under the construction contract.

The second loan

1. The second loan was a loan from Weriton Finance No 2 Pty Ltd (Weriton) and Saddleback Mountain Estates No 2 Pty Ltd to the Builder for $4.5 million for an approximately six-month term, guaranteed by City Garden and secured in part by a mortgage over the North Rocks Property. It was entered into in May 2019. Piper Alderman, solicitors, acted for City Garden on this loan. Of the money advanced, $2,355,086.66 was used to pay out the first loan and to pay the costs of the second loan. Beyond that, approximately $391,000 was used to discharge City Garden's land tax liability and $746,000, which the primary judge found appeared to have been mostly used in relation to the North Rocks Property, was paid to the Builder: J[355]. A sum of $536,575.82 was retained by the lenders. No complaint is made about Toltz's conduct regarding the second loan.

The third loan

1. The third loan was a loan from Gemi 130 and Bridge Street to City Garden for $5,292,543, for a six-month term, entered into on 15 October 2019. Of this, $4,507,617.77 was used to pay out the second loan: J[404], and the balance was for fees and capitalised interest in advance. Mr Holt was City Garden's solicitor on this loan. Gemi 130 and Bridge Street have yet to be repaid and at the time of judgment, interest on the loan was accruing at 27% per annum: J[5]. By 12 December 2023, the amount owing on the third loan, inclusive of legal costs, accrued interest and charges on legal costs, was $21,870,688.55. No complaint is made about Toltz's conduct regarding the third loan in this appeal.

The North Rocks Project

1. From around July 2016, Mr Dai and Mr Liang liaised about taking over a loan then in place in respect of the North Rocks Property. On 19 July 2016, Mr Dai sent an email to Mr Toltz, copied to Mr Liang, authorising Mr Toltz: "to act on my behalf for the JV agreement and negotiation of the present deal at North Rocks, Documentation prepared and that will be used will be will be [sic] issued from Piper Alderman or similar category firm".
2. On 1 December 2016, an amended Development Deed relating to the North Rocks Project was executed and a contract of sale exchanged, pursuant to which City Garden agreed to purchase the North Rocks Property. Completion took place in February 2017. To assist in purchasing the North Rocks Property, prior to completion City Garden borrowed $8.25 million from Kenxue Pty Ltd (Kenxue) and signed a term sheet with Weriton for a second mortgage facility of $2.68 million to supplement this funding, which was only for a fixed six-month term: J[76]. On completion, mortgages were granted to Kenxue and Weriton: J[86]. City Garden purchased the North Rocks Property in its capacity as the trustee of the Ming Tian City Garden Unit Trust (the Trust).
3. Over time, Mr Liang, and companies associated with Mr Liang, provided funds for the purpose of the North Rocks Project, at times by way of investment and at times by way of loan. By way of example, on 1 August 2016, Rose Ives Pty Ltd (a company owned by Mr Liang and his wife's company LV.Esb Pty Ltd) invested $4 million in the North Rocks Project, in return for which it was allocated 40 units in the Trust. The primary judge found that by January 2017, Mr Toltz was aware of this: J[81]. Thereafter, Mr Liang continued, through various companies, to provide further finance for the North Rocks Project.
4. On 16 April 2020, a final occupation certificate for the North Rocks Project was issued: J[455]. On 1 May 2020, the first of many sales of lots in the North Rocks Project was completed, with the proceeds of sale deployed to pay down a $25 million construction loan facility with Westpac (the Westpac loan): J[463]. In December 2021, the Westpac loan was paid out and Westpac's mortgages over the North Rocks Property were discharged: J[467]. Lot sales were continuing at the time of trial. On 5 September 2023, voluntary administrators were appointed to City Garden. On 11 October 2023, liquidators were appointed, and on 1 March 2024, a receiver and manager was appointed over certain lots in the North Rocks Property pursuant to the unregistered mortgage (and registered memorandum of common provisions) associated with the third loan.

Did Toltz's retainer extend to assisting or advising City Garden and was Toltz in a position of conflict of fiduciary duties on the first loan?

1. As set out above, Toltz contends that the primary judge erred in finding that Toltz was retained to assist or advise City Garden in respect of the first loan and relevantly owed a fiduciary duty to City Garden in respect of the first loan, which it breached. Toltz contends that the proper inference to be drawn is that Toltz was acting only for Gemi Investments on the first loan. Thus, Toltz contends that the primary judge erred in finding that Toltz had an ongoing retainer to assist City Garden in financing and incidental matters relating to the North Rocks Project which encompassed such steps in relation to the first loan: J[260]. For its part, City Garden contends that the primary judge was correct to find that Toltz's retainer included acting for it on the first loan, and that Toltz breached the fiduciary duty which it thereby owed, by also acting for Gemi Investments on that loan without the informed consent of City Garden.

A solicitor's retainer

1. The question that arises is whether City Garden have shown that Toltz was relevantly retained to assist in arranging or to advise in relation to the first loan, such that Toltz was in a position of conflicting duties in so acting for City Garden when also acting for Gemi Investments on the first loan. This is because the extent of a solicitor's duty to its client is determined by the retainer. As this Court stated in Beach Petroleum NL v Kennedy (1999) 48 NSWLR 1; [1999] NSWCA 408 ("Beach Petroleum") at [208] (Spigelman CJ, Sheller and Stein JJA), "'Retainer' is a word used to describe a contract between the solicitor and the client for the provision of legal services by the solicitor for a fee and must be proved like any other contract". Whether a retainer exists depends essentially upon whether it was the intention of the parties that it should be created: Maxwell v Chittick [1994] NSWCA 196 (unreported) (Mahoney JA, Priestley and Powell JJA agreeing). That understanding reflects basic contractual principle. A retainer may be implied from conduct: Beach Petroleum at [208]. A retainer will be presumed if the conduct of the parties shows that the relationship of solicitor and client has in fact been established between them: Groom v Crocker [1939] 1 KB 194 at 222 (Scott LJ).
2. The same principles, logically, apply to determine what matters fall within the ambit of a solicitor's retainer. Thus, even if a retainer is established, it is necessary "to determine what legal services the solicitor agreed to provide": Beach Petroleum at [208]. As Oliver J said in Midland Bank Trust Co Ltd v Hett, Stubbs & Kemp [1979] Ch 384 at 402-3 ("Midland Bank"): "Mr. Harman sought to rely upon the fact that Mr. Stubbs was Geoffrey's solicitor under some sort of general retainer imposing a duty to consider all aspects of his interest generally whenever he was consulted, but that cannot be. There is no such thing as a general retainer in that sense. The expression "my solicitor" is as meaningless as the expression "my tailor" or "my bookmaker" in establishing any general duty apart from that arising out of a particular matter in which his services are retained. The extent of his duties depends upon the terms and limits of that retainer …. I think that the court must beware of imposing upon solicitors - or upon professional men in other spheres - duties which go beyond the scope of what they are requested and undertake to do."

A solicitor's fiduciary duty

1. The duty of "undivided loyalty", which a solicitor owes to the client, is at the heart of the fiduciary obligation owed: Maguire v Makaronis (1997) 188 CLR 449 at 465 (Brennan CJ, Gaudron, McHugh and Gummow JJ); [1997] HCA 23 ("Maguire"). As Lord Millett explained in Prince Jefri Bolkiah v KPMG (a Firm) [1999] 2 WLR 215 at 224-225 (cited with approval in Beach Petroleum at [205]): "…a fiduciary cannot act at the same time both for and against the same client, and his firm is in no better position…".
2. The ambit of a solicitor's retainer is of overarching significance to any claim that the solicitor has acted in breach of fiduciary duty by reason of a conflict between their duty to their client and either their interest or their duty to another client: Beach Petroleum at [188]. As Brennan CJ, Gaudron, McHugh and Gummow JJ observed in Maguire at 464: "…to say that the appellants stood as fiduciaries to the respondents calls for the ascertainment of the particular obligations owed to the respondents and consideration of what acts and omissions amounted to failure to discharge these obligations."
3. As was held in Beach Petroleum at [188], and applied in Stephen James Rigg v Paul Sheridan & Ors [2008] NSWCA 79 at [33] (Handley JA, Beazley and Giles JJA agreeing) ("Rigg v Sheridan"): "Even in the case of a solicitor client relationship, long accepted as a status based fiduciary relationship, the duty is not derived from status. As in all such cases the duty is derived from what the solicitor undertakes, or is deemed to have undertaken, to do in the particular circumstances …."
4. The duty of the fiduciary is to "refrain from engagements which conflict, or which may possibly conflict, with the interests of those whom he is bound to protect": Birtchnell v Equity Trustees, Executors and Agency Co Ltd (1929) 42 CLR 384 at 408 (Dixon J); [1929] HCA 24 ("Birtchnell"). In acting for two principals with potentially conflicting interests there is an automatic breach of fiduciary duty: Bristol and West Building Society v Mothew [1998] Ch 1 CA at 19 (Millett LJ), cited with approval in Rigg v Sheridan at [46] (Handley JA, Beazley and Giles JJA agreeing).
5. There must, however, be "a real sensible possibility of conflict" and it is not enough to identify some conceivable possibility that may result in conflict: Beach Petroleum at [425]; Rigg v Sheridan at [38]. The scope of the retainer will be material to whether a conflict of duty and duty arises relevant to an impeached transaction: Beach Petroleum at [237]; Anderson v Canaccord Genuity Financial Ltd (2023) 113 NSWLR 151; [2023] NSWCA 294 at [146] (Gleeson, Leeming and White JJA).

Relevant circumstances other than the immediate circumstances of the first loan

1. There are a number of matters, over and above the immediate circumstances of the first loan, that go to the question of whether Toltz was retained by City Garden to assist in arranging, or relevantly to act in respect of, the first loan so as to put Toltz in a position where its duties to City Garden conflicted with its duties to its client, Gemi Investments. Before turning to these, it should be observed that City Garden did not contend, either at first instance or on appeal, that Mr Dai did not have authority to instruct Toltz on the first appeal and to communicate with him for that purpose. City Garden did not contend, further, that the knowledge of Mr Dai was not the knowledge of City Garden for the purpose of determining whether Toltz was retained on the first loan, and if so in what capacity. It is thus not necessary to consider the principles as to attribution of corporate knowledge: see eg Aidzan Pty Ltd (in liq) v K. and A. Laird (N.S.W.) Pty Ltd (in liq) [2024] NSWCA 185 at [70]-[72] (Meagher JA, Ward P and Adamson JA agreeing).
2. First, there is no evidence of any conversations between Mr Dai and Mr Toltz after July 2017 (discussed at [63] below) bearing on the question of whether it was agreed that Toltz would act for City Garden on the first loan. Mr Dai does not give evidence of anything said or done by Mr Toltz that suggested that Toltz was acting for City Garden on the first loan. For example, there is no evidence that Mr Dai requested that Toltz act for City Garden on the loan, or that Mr Toltz agreed with Mr Dai that he would so act. Nor is there any suggestion that Mr Dai sought, or Toltz gave, any advice to City Garden on the first loan. The position is further clouded having regard to the speed at which the first loan appears to have been put in place, and the fact that the key players in the transaction were already familiar with each other and had ready lines of communication in place.
3. Second, as set out above, the Gemi group (instructing Toltz) had lent money to a company associated with Mr Dai on a development in Wallis Island in 2016. Thus, Mr Dai had had an existing relationship with Mr Fleming such that the willingness of the Gemi group to provide a loan to City Garden did not necessarily turn on the involvement of Toltz.
4. Third, prior to City Garden's entry into the Development Deed or the loan from Kenxue, on 4 August 2016, Mr Toltz sent Mr Dai a Costs Disclosure and Costs Agreement (the August 2016 Costs Disclosure). The primary judge found that, although the client referred to in the agreement was the Builder, Mr Toltz considered himself to be retained by City Garden: J[53]. The scope of work set out was: "You have instructed us to assist in financing, acquisition of development rights, sales of units and incidental matters relating to the development at 221 NORTH ROCKS ROAD NORTH ROCKS NSW."

The immediate circumstances of the first loan

1. Unlike the primary judge, I consider that the available evidence does not establish that Toltz assisted City Garden in arranging the first loan. Rather, unlike the loan on 1 August 2017 (which Toltz did assist in arranging), the evidence discloses that Toltz only became aware of the first loan very shortly before it was entered into. The primary judge's erroneous conclusion in this regard is in part premised upon her finding that Toltz was having conversations with Mr Fleming and Mr Dai about funding, including in relation to the first loan, in October 2018. That finding is, in turn, premised upon the fact that the date of 15 October 2018 appears on some of the documentation for the first loan: J[145] and [258]. Mr Toltz was not, however, challenged on his affidavit evidence that the date of 15 October 2018, where it appears on documents relating to the first loan, was added in error to those documents and that the date should instead have been 13 November 2018. Elsewhere in her judgment the primary judge accepted this evidence, finding that the loan agreement for the first loan was "incorrectly dated 15 October 2018": J[174].
2. The primary judge also found that in October 2018, Toltz was "assisting Mr Dai to raise further finance" for City Garden from Mr Liang and that such activities fell within the scope of Toltz's initial retainer: J[258]. To the extent that this was a reference to the loan from Tempe to City Garden, there is no evidence that Toltz took any steps to assist in arranging this beyond responding to instructions that he should act for Tempe on that transaction. Toltz's role in relation to the consolidation of loans to City Garden from Mr Liang's interests in October 2018 (discussed above at [51]) does not say anything about whether he was at that time assisting City Garden to obtain finance.
3. The first communication in the evidence relating to the first loan is an email dated 10 November 2018, from Mr Fleming to Mr Dai indicating what facility the Gemi group could offer. It would appear from the terms of this email that there had already been some discussion between Mr Dai and Mr Fleming as to the terms of any finance facility to be offered by the Gemi group. There is nothing in the evidence to suggest that Toltz had been involved in any such discussion and Toltz was not copied on this email when sent. Mr Toltz's email of 11 November 2018, discussed below at [80], is consistent with Mr Toltz first being informed of the loan at this time. The email concluded: "Please advise if you are happy with these conditions and we will get Documentation prepared."

Conclusion

1. In the circumstances, Toltz's contention that it did not act for City Garden in arranging the first loan, advising on the first loan, or otherwise acting for City Garden as regards its entry into the first loan, should be accepted. The primary judge erred in making findings to the contrary. Whilst, as City Garden submits, the email of 11 November 2018 could be read as Toltz being given or seeking instructions from Mr Dai, the objective facts known to both parties, having regard both to the background circumstances and the immediate circumstances of the first loan, are more consistent with Toltz not acting for City Garden on the first loan.
2. The primary judge also, erroneously, approached the question of Toltz's retainer regarding the first loan on the basis that it was for Toltz to clearly limit its ongoing general retainer to exclude the first loan (see eg at J[257]), whereas I have found that the ongoing general retainer was one only to act regarding financing transactions where instructed by City Garden to do so and that there was thus no onus on Toltz to "limit" its retainer. In any event, notwithstanding that Toltz could have, but did not, send an email to Mr Dai clearly stating that he was not acting for City Garden on this loan, I would have concluded that Toltz provided sufficient indication to City Garden that any general retainer did not include acting for City Garden on the first loan. The conversation in July 2017, together with the steps taken by Toltz to ensure that Mr Dai and Mr Liang (or Ms Zhu) obtained independent advice on the loan documentation, which would have been unnecessary if Toltz were acting for City Garden on the loan, suffice for this purpose, having regard to the nature of the ongoing general retainer. And, as already discussed, there is no evidence of Toltz assisting in arranging the first loan.
3. Appeal ground 1 should be upheld.

Was a fiduciary duty relevantly owed and was there any relevant conflict of interest?

1. In appeal ground 3, Toltz relies upon the error alleged in ground 1 (and that in ground 2, which I consider below) in support of a contention that the primary judge erred in finding that Toltz owed a fiduciary duty to City Garden to advise in relation to the first loan and that it was in a position of conflict of interest by reason of also acting for Gemi Investments on the first loan.
2. Unless Toltz was relevantly assisting or acting for City Garden in respect of the first loan, there is no basis to find that Toltz owed a fiduciary duty to City Garden to act in its best interests as regards its entry into the first loan. Toltz had no duty to City Garden to ensure that it was in City Garden's interest to enter the first loan. It necessarily follows that there is also no basis to find that Toltz had a material conflict of duties in acting for Gemi Investments on this transaction. No relevant conflict arose merely from the background circumstance of Toltz's ongoing, general retainer, or its involvement in the loans from Tempe or NCC. It is not contended that Toltz thereby had some confidential information about City Garden that gave rise to a conflict between the interests of City Garden and Gemi Investments.
3. In these circumstances, I would accept Toltz's contention that the primary judge erred in finding at J[267] that there was a real sensible possibility of conflict between any duty owed by Toltz to City Garden and Toltz's duty to Gemi Investments in respect of the first loan.
4. It follows that appeal ground 3 should be upheld.
5. Given that extensive submissions were advanced, and bearing in mind the desirability generally of determining all substantive issues raised on an appeal, that course should (to the extent practicable) be taken notwithstanding that the findings on appeal grounds 1 and 3 are dispositive: Boensch v Pascoe (2019) 268 CLR 593; [2019] HCA 49 at [7]-[8] (Keifel CJ, Gageler and Keane JJ), [101] (Bell, Nettle, Gordon and Edelman JJ).

The role of Ms Yang

1. In appeal ground 2, the appellant challenges the primary judge's findings at J[496] that it was not clear whether Ms Yang advised City Garden or Mr Dai and Ms Zhu, and at J[499] that Ms Yang probably knew very little about the company or the transaction. The actual advice provided by Ms Yang does not bear on the issue of Toltz's retainer.
2. I would accept Toltz's contention that the more natural construction of the "Declaration by Borrower" is that Ms Yang was advising City Garden through Mr Dai and Ms Zhu. That follows from the heading to the document, identifying it as a declaration by the "borrower". It also follows from the reference to the loan advance being "for our business" in paragraph 1 of the declaration. Further, there is nothing in the declaration which refers to the obligations of Mr Dai as director, or Ms Zhu as secretary, of City Garden. Whilst that is not determinative, it might be expected that, if such advice had been given, it would have been referred to in paragraph 2 of the declaration which instead simply identifies the receipt of independent legal advice regarding the identified loan and security documents relating to the loan from Gemi Investments to City Garden.
3. As to what Ms Yang should be taken to have known, the Court would infer from the declaration itself that Ms Yang had read, and understood, the loan and security documents. Ms Yang also advised Mr Dai and Ms Zhu as guarantors of the loan from Gemi Investments and witnessed their execution of those guarantees and the loan agreement. All of this appears to have taken place on 13 November 2018, but there is no evidence as to when Mr Dai and Ms Zhu made contact with Ms Yang, how long they spent with her or whether they sent her the relevant documents in the afternoon of 12 November 2018. It is also apparent that Ms Yang had some prior involvement with Mr Dai's interests. In these circumstances, I would accept Toltz's contention that there is no basis to infer that Ms Yang knew very little about City Garden or the transaction, although the evidence does not disclose what, if anything, Ms Yang knew about Mr Liang's involvement in City Garden.
4. It follows that appeal ground 2 should be upheld.

Was Toltz denied procedural fairness by reason of the primary judge's findings as to breach of fiduciary duty?

1. Toltz contends that the primary judge determined the issue of breach of fiduciary duty on a basis that was neither pleaded nor run at trial. More particularly, Toltz submits that the primary judge found that the relevant breach of fiduciary duty was a failure by Toltz to ensure that Mr Dai was properly authorised to give instructions on behalf of City Garden to enter the first loan when this was not pleaded, and any contention to this effect was expressly disavowed by counsel for City Garden at trial. Toltz contends that it may have succeeded at trial if City Garden had been kept to its pleaded case, or if it had been given a reasonable opportunity to meet the allegations ultimately upheld by the primary judge. Thus, Toltz contends that it was deprived of the possibility of a successful outcome and is therefore entitled to a new trial: Stead v State Government Insurance Commission (1986) 161 CLR 141 at 147 (Mason, Wilson, Brennan, Deane and Dawson JJ); [1986] HCA 54.
2. For the reasons set out below, these contentions should be rejected. The primary judge's finding that Toltz was in breach of fiduciary duty fell within the ambit of City Garden's pleaded case and City Garden did not, at trial, indicate anything other than that it would be bound by its pleaded case. There was no practical injustice arising out of the primary judge's findings of breach of fiduciary duty. As is well established, the concern of the law as regards procedural fairness is to avoid practical injustice: Re Minister for Immigration and Multicultural Affairs; Ex parte Lam (2003) 214 CLR 1; [2003] HCA 6 at [37] (Gleeson CJ).
3. In the 2FASOC (unless otherwise stated, all paragraph numbers below refer to paragraphs in that pleading), it was alleged that Toltz was retained by City Garden in relation to the purchase and development of the North Rocks Property: [26]; Mr Liang did not authorise the first loan: [50]; Toltz acted as solicitor for Gemi Investments on the first loan: [54] and also had an ongoing retainer to act as solicitor for City Garden at that time: [55]; there was an actual or potential conflict between the interests of City Garden and Gemi Investments: [56]; and Toltz did not obtain the fully informed consent of City Garden to acting for Gemi Investments on the first loan: [57]. It was further pleaded that Toltz knew at that time that Mr Liang was a director of City Garden: [58]; that entry into the first loan was not authorised by the City Garden board: [58A]; that the Builder had other projects: [60], that Mr Liang had no involvement in the first loan: [61]; and that the monies were to be advanced under the first loan to the Builder: [62].

Was Toltz denied procedural fairness and did the primary judge err in respect of her Honour's findings as to lack of informed consent?

1. The significance of informed consent is that it affords a defence to the fiduciary who has acted with a divided loyalty, negating what otherwise was a breach of duty: Breen v Williams (1996) 186 CLR 71 at 125 (Gummow J); [1996] HCA 57 ("Breen v Williams") and Maguire at 466-467. If there is a conflict in a solicitor's duties to two separate clients, the solicitor "must ensure that he fully discloses the material facts to both clients and obtains their informed consent to his so acting": Farrington v Rowe McBride & Partners [1985] NZLR 83 at 90 (Richardson J), referred to with approval in Maguire at 465 fn 60. The onus of establishing informed consent rests on the fiduciary: Birtchnell at 398 (Isaacs J). Further, as held in Maguire at 466: "What is required for a fully informed consent is a question of fact in all the circumstances of each case and there is no precise formula which will determine in all cases if fully informed consent has been given." (footnotes omitted)
2. Consistent with this reasoning, the Privy Council in Clark Boyce v Mouat [1994] 1 AC 428 at 436 ("Clark Boyce") held that what is required by way of informed consent will depend upon what services are required of a solicitor who is acting for two clients in the one transaction. Further, where a solicitor acts for both parties to a transaction, the solicitor will be in breach of fiduciary duty if he does not disclose to one party "material facts relative to the other party of which he is aware", however this "cannot be prayed in aid to enlarge the scope of contractual duties": at 437.

Was there a denial of procedural fairnesss?

1. Toltz contends that the primary judge denied it procedural fairness by finding that City Garden did not give fully informed consent to Toltz acting for both City Garden and Gemi Investments on the first loan because her Honour's finding was premised upon a failure of Toltz to contact Mr Liang. Toltz contends that there was no allegation of breach of fiduciary duty on the part of Toltz in not ensuring that instructions on the first loan were from those with authority to bind City Garden, and that the primary judge's finding as to informed consent at J[275]-[276] (at [19] above) is premised upon Toltz having such a duty. As Senior Counsel for Toltz put it: "If it's no part of the element of the breach of fiduciary duty that you knew that the board of directors hadn't resolved to enter into the transaction and it's no [part] of your breach that you failed to take that into account, in my submission it should follow that that ought not to have been taken into account for an informed consent, i.e. you are entitled to essentially rely on Mr Dai's instructions and Mr Dai's conduct."
2. This contention should be rejected. The primary judge's conclusion that City Garden did not give informed consent to Toltz acting for both City Garden and Gemi Investments on the first loan was predicated upon Toltz being aware that there was a disconformity between the borrower (City Garden) and the recipient of loan funds (the Builder), thus being on notice that Mr Dai may not be acting in the best interests of City Garden, and Toltz having taken no steps to confirm that Mr Dai had authority on behalf of all directors of City Garden: J[275]. Those factual predicates for the primary judge's finding were sufficiently notified to Toltz in the 2FASOC: see above at [105]-[107]. Those matters would plainly inform City Garden's contention in its pleading that Toltz did not obtain the fully informed consent of City Garden to act on behalf of Gemi Investments in the circumstances. The issue of informed consent was engaged with in Toltz's defence at [57], where it pleaded that it obtained informed consent from Mr Dai. In its reply at [7], City Garden pleaded that Mr Dai did not have actual, implied or ostensible authority to consent on City Garden's behalf.
3. In the circumstances, Toltz's contention that it was denied procedural fairness must be rejected. In any event, as is readily apparent from the relevant legal principles discussed above, what is required by way of informed consent is a question of fact that depends upon all of the circumstances of the case. Here, one obviously relevant circumstance, which was apparent from the pleadings, was whether a consent from Mr Dai would suffice to establish that City Garden gave its informed consent to Toltz acting for both City Garden and Gemi Investments on the first loan. It follows that appeal ground 5 should be rejected.

Did the primary judge err?

1. I would also reject Toltz's contention that the primary judge erred in her findings as to informed consent because informed consent should not have included consent from Mr Liang unless the breach of fiduciary duty found against Toltz included a breach in not ensuring that City Garden was authorised to enter the first loan. Given that the concern that the transaction may not be in City Garden's interests was inextricably linked to the finding (at J[278]) that Toltz had no knowledge of Mr Liang's level of involvement in City Garden's decision-making, it is entirely consistent with the purpose underlying the fiduciary duty for informed consent to require the consent of Mr Liang, the director who had no personal interest in the Builder's projects other than at the North Rocks Property. It follows that appeal ground 6 should be rejected.

Was Toltz denied procedural fairness and did the primary judge err in respect of findings as to causation?

The primary judge's findings as to causation

1. As to the question of what, if any, loss was caused by Toltz's breach of fiduciary duty as regards the first loan, the primary judge found that if Toltz had contacted Mr Liang in the course of obtaining fully informed consent or in discharging its obligation to act in City Garden's best interests in the first loan, then Mr Liang would have prevented the first loan from proceeding: J[492]. At J[494] the primary judge found that: "Had [Toltz] discharged its obligation to avoid conflicts, it would have taken the steps necessary to ascertain that where [City Garden's] interests lay, in particular, given that there was a disconformity between the borrower and the recipient of the loan funds. The solicitor failed to ensure that [City Garden], as opposed to Mr Dai, wished to enter into the transaction."
2. The primary judge found that, to the extent that the North Rocks Project required further funds, Mr Liang had been a steady source of such funds and it was in his interests to get the development to completion: J[492]. The primary judge attached no weight to a submission made by Toltz that Mr Liang had cashflow issues at the time of the first loan. As to this, her Honour said that there was no evidence of this, other than Mr Dai's assertion: J[484]. Toltz challenges these findings on appeal. The primary judge also found that the independent advice provided by Ms Yang did not break the chain of causation between Toltz's breach of fiduciary duty and the consequences which followed for City Garden: J[499].
3. It should also be observed that, when considering Toltz's submissions, the primary judge found that it was "no doubt true" that, but for the asserted conflict, Mr Dai's decision to cause City Garden to enter into the three relevant loans would not have changed. Her Honour found, further, that it did not really matter how comprehensive the advice of Ms Yang was as Mr Dai and Ms Zhu were going to execute the loan documents for the first loan "come what may": J[483], [498]. These findings indicate that, were the relevant counterfactual on causation not to include any involvement of Mr Liang, the likelihood is that City Garden would have entered the first loan irrespective of any breach of fiduciary duty by Toltz.

Was there a denial of procedural fairness?

1. The complaints of a denial of procedural fairness as to breach of duty and causation are necessarily linked. It follows that Toltz's contention as to procedural unfairness on the issue of causation must also be rejected.

Did the primary judge err?

1. Toltz contends that the primary judge erred in finding that Toltz's breach of fiduciary duty caused City Garden to enter the first loan. More particularly, Toltz contends that a breach of fiduciary duty constituted by Toltz acting in a situation of conflict where the transaction was not in the best interests of City Garden: "would not bring with it the consequence that the transaction would not have taken place because that seemed to turn on Mr Liang's lack of involvement and lack of knowledge".
2. Toltz contends that, unless Mr Liang was to be informed of the first loan, it would have proceeded "come what may". Senior Counsel for Toltz submitted that this contention as to causation finds support in the approach taken in Beach Petroleum at [434]-[435], [444], [446]-[448] which, in turn, rely upon the decisions in Gilbert v Shanahan [1998] 3 NZLR 528 and Brickenden v London Loan & Savings Co [1934] 3 DLR 465 ("Brickenden"). I discuss these cases below.
3. City Garden submits that the primary judge's analysis of the authorities was unexceptional.

Relevant principles

1. City Garden's allegation of breach of fiduciary duty relied upon Toltz acting when it had conflicting duties to two clients: 2FASOC [63]-[64]. There was no allegation of breach of fiduciary duty by reason of non-disclosure by Toltz: cf eg Brickenden; White v Illawarra Mutual Building Society Ltd [2002] NSWCA 164 at [134] (Powell JA, Hodgson JA and Hamilton J agreeing) ("White v Illawarra"); Rigg v Sheridan, and there was no suggestion that Toltz stood to benefit from or had an interest in the first loan: cf eg ABN AMRO Bank NV v Bathurst Regional Council (2014) 224 FCR 1; [2014] FCAFC 65 at [1072]-[1080], [1084] (Jacobson, Gilmour and Gordon JJ).
2. The nature of the breach relied upon necessarily informs how the issue of causation should be addressed because the approach to causation in cases of breach of fiduciary duty depends upon identifying the "criteria which supply an adequate or sufficient connection between the equitable compensation claimed and the breach of fiduciary duty": Maguire at 473-474. Consistent with this, in O'Halloran v R T Thomas & Family Pty Ltd (1998) 45 NSWLR 262, ("O'Halloran") (involving the disposition of property in breach of a director's fiduciary duty) Spigelman CJ (Priestley and Meagher JJA agreeing) explained at 273-274: "…a claim for equitable compensation for breach of a fiduciary obligation requires a causal link between the breach and the loss. Causation in equity is not, however, susceptible to the formulation of a single test. It is necessary to identify the purpose of the particular rule to determine the appropriate approach to issues of causation see Environment Agency v Empress Car Co (Abertillery) Ltd and Barnes v Hay as noted above."
3. More recently, in Ancient Order of Foresters in Victoria Friendly Society Ltd v Lifeplan Australia Friendly Society Ltd (2018) 265 CLR 1; [2018] HCA 43 at [89], where the defaulting fiduciary made a gain from the relevant transaction, Gageler J (as his Honour then was) explained: "Obviously enough, as with any other question of causation in equity, the causal connection between a fiduciary's breach of fiduciary obligation and a benefit or gain must be judged using common sense and 'with the full benefit of hindsight'. And as with other questions of causation in equity, the inquiry into causation is not to be constrained by normative limitations imported from the common law. To introduce those limitations would risk confusing distinct legal policies underlying distinct bases of legal liability and limiting equity's capacity to mould equitable relief to the circumstances of the individual case." (footnotes omitted)

Determination

1. Consistent with the relevant principles discussed above (some of which were not drawn to the primary judge's attention), the causation enquiry must focus on the nature of the breach as well as the policy and purpose of the relevant rule. The policy and purpose of the rule forbidding a solicitor fiduciary acting in a situation of conflicting duties is to hold a fiduciary to the duty of utmost loyalty that is owed by a solicitor to their client. Toltz was bound by that duty not to act where he could not properly discharge his duty and could not loyally act in City Garden's interests. Having regard to the nature of the breach, the primary judge erred in having regard to what Toltz would have done if acting only in City Garden's interests when analysing causation.
2. It follows that causation should have been approached by asking what would have happened if Toltz had avoided that situation of conflict, not by asking what would have happened if Toltz had taken steps to obtain informed consent: see Blackmagic and Xiao discussed at [144]-[145] above. Having regard to these authorities, the primary judge erred in approaching the issue of causation by asking what Mr Liang would have done had Toltz contacted him "either in the course of obtaining fully informed consent… or… in discharging the solicitor's obligation to act in the plaintiff's best interests in the first transaction": J[492]. Her Honour should not have approached the issue of causation on the counterfactual that the premise that informed consent was sought, or on the premise that the breach of fiduciary duty was a failure by Toltz to take such steps as were necessary to act in City Garden's best interests. City Garden did not contend that Toltz owed a prescriptive duty to act in City Garden's best interests and the question of causation should not be approached on that basis.
3. The proper counterfactual in this case is Toltz desisting from acting for City Garden and thereby avoiding the conflict or Toltz recommending that City Garden obtain independent advice as to the first loan: see eg Break Fast Investments at [108] and Mantonella P/L v Thompson [2009] QCA 80 at [117] (Muir JA), [149] (Fryburg J). As to the former, given what appeared to be a requirement of Gemi Investments that the lender sign a declaration certifying that they had received independent legal advice, it is likely, if Toltz had desisted from acting for City Garden (as I have in fact held that it did), that Mr Dai and Ms Zhu would have sought, and obtained, independent legal advice before executing the transaction documents for the first loan. As to the latter, that is what in fact happened. There is no reason to suppose that independent advice would have been sought or provided by anyone other than Ms Yang, or that City Garden would not have entered the first loan given that the independent advice Mr Dai and Ms Zhu did obtain from Ms Yang did not lead to any disclosure to Mr Liang and did not prevent City Garden from entering the first loan.

Was Toltz denied procedural fairness and did the primary judge err in respect of her Honour's findings as to loss?

The primary judge's findings

1. The primary judge found that the loss which resulted from Toltz's breach of fiduciary duty was City Garden's indebtedness to Gemi Investments, which ultimately (via part of the second loan) became City Garden's indebtedness to Gemi 130 and Bridge Street on the third loan: J[503]. The primary judge found that, as funds additional to those necessary to pay out the first loan were advanced in the second loan, and because land tax paid out of the second loan benefitted City Garden, an appropriate measure of compensation was 75% of the current indebtedness of City Garden to Gemi 130 and Bridge Street. The reduction of 25% was to take account of the amount of the second loan that was not incurred in order to repay the first loan: J[504]-[505]. The primary judge, at J[475], stated that she did not agree that the onus of proving that the funds advanced under the first loan were not used for the benefit of the plaintiff "necessarily fell on the plaintiff" as: "The fact that the loan funds were provided to the builder and not the plaintiff prima facie indicates that the plaintiff did not receive the benefit of the funds. It was the defendants who contended that, notwithstanding that the funds were provided to the builder, the funds were used for the benefit of the plaintiff. I decline to draw the suggested inference."
2. This was despite the fact that her Honour held that some of the funds from the first loan were disbursed by the Builder for purposes "probably related to the North Rocks [Project]" and that it could be said "in a broad sense, that [City Garden] received a benefit from a portion of the first loan": J[476]. In this regard the primary judge referred to her earlier finding that City Garden had an entitlement under the construction contract with the Builder for the North Rocks Project to set-off any payments City Garden made directly to contractors or workers and others: J[477] referencing J[130], and to the possibility that the Builder may have issued a progress claim and been reimbursed out of the funds from the first loan: J[477].

Was there a denial of procedural fairness?

1. Toltz contends that City Garden advanced its case at trial on the basis that the loss caused by Toltz's breach of fiduciary duty was the amount loaned in the first loan. Thus, Toltz contends, that it was denied procedural fairness because it was denied the opportunity to make submissions as to whether the loss flowing from City Garden entering the second and third loans was caused by its breach of fiduciary duty, including submissions as to any benefits conferred thereby upon City Garden. Toltz says that if the primary judge had confined her consideration to loss occasioned by the first loan, causation would not have been established as the whole amount of the first loan was paid out by the second loan, which was not obtained through any breach of Toltz's fiduciary duty. Toltz submits that it was deprived of the opportunity to lead expert evidence seeking to quantify the amounts of the three loans which conferred benefits upon City Garden.
2. Toltz also contends that, in circumstances where City Garden's case as to causation and loss was not clearly articulated and there was no detailed investigation of the benefits that City Garden received, the primary judge denied Toltz procedural fairness and erred in finding that Toltz was responsible for 75% of the amount now owing under the third loan. Senior Counsel for Toltz accepted in oral submissions, however, that this was ultimately an "evidence and onus" point, rather than a complaint of denial of procedural fairness. This contention will thus be dealt with as a contention of error, rather than procedural unfairness.
3. Turning first to the contention that City Garden's pleaded case as to loss did not include the loss occasioned by City Garden entering the second and third loans, even a cursory look at the 2FASOC requires that this contention be rejected. At [152] of the 2FASOC, City Garden pleaded that it would not have entered into the first loan but for the breaches of fiduciary duty "pleaded at [63]-[64]" and would then not have incurred the liability under the first loan and would not have had to refinance the first loan by entering into the second and third loans. At [153]-[154] of the 2FASOC, City Garden pleaded that it had suffered loss and damage, being either the amount of monies it was found to have owed to Gemi 130 and Bridge Street, being the lenders on the third loan, or (pleaded by way of alternative) its liability under the first loan. Whilst the amount so owing was not particularised, City Garden's pleading was sufficiently clear to put Toltz well on notice of its case as to causation and loss. City Garden's pleaded claim was that its loss was the amount found owing to Gemi 130 and Bridge Street, the lenders on the third loan. This was also identified as City Garden's case as to causation of loss in City Garden's oral closing submissions before the primary judge (albeit erroneously by reference to [162] rather than [153] of the 2FASOC).

Did the primary judge err?

1. In appeal ground 9, Toltz challenges the primary judge's finding that City Garden's loss caused by Toltz's breach of fiduciary duty was 75% of City Garden's indebtedness to Gemi 130 and Bridge Street as at 12 December 2023 (being one week after the date of judgment). In summary, Toltz contends that there is no sufficient connection between Toltz's breach of fiduciary duty as regards the first loan and the amounts owing by City Garden as at 12 December 2023 under the third loan, and relies in this regard upon the fact that Toltz was not liable as regards the second and third loans, Mr Dai decided to enter those loans after receiving independent legal advice, Toltz's breach was not dishonest or fraudulent, there was no pleaded non-disclosure by Toltz, and the amount of the third loan as at 12 December 2023 included millions of dollars in default interest and the financiers legal costs. City Garden contends that the first loan had to be, and was, refinanced by the second loan, which in turn had to be and was refinanced by the third loan. City Garden contends that where some of the expenditure was for projects other than the North Rocks Project, calculation of City Garden's loss as being 75% of its current indebtedness is a common sense and logically supportable assessment.
2. As to the matters relied upon by Toltz which focus upon the nature of its breach, I would reject the contention that they militate in favour of a different outcome from that found by the primary judge. There is no reason why those matters should preclude City Garden from being compensated commensurately with the loss occasioned by the breach. Nor do the circumstances in which City Garden entered into the second and third loans suggest that Toltz should not have been liable for the full extent of the loss caused.
3. As to Toltz's contentions that focus upon the amount of interest, and the terms of the second and third loans, these implicitly suggest that City Garden could or should have taken steps other than entering into loans on the terms agreed between the Builder, or City Garden, and the respective lenders. That question, in my judgment, is one on which the relevant breach of fiduciary duty has created difficulties of proof which would not have occurred but for the breach. In these circumstances, consistent with the caselaw discussed at [141] above, Toltz bore the evidentiary onus as to whether City Garden could or should have done anything other than enter the second and third loans, on their respective terms.

Did the primary judge err in finding that the claim against Toltz was not an apportionable claim?

1. The primary judge rejected Toltz's contention that the claim against Toltz was an apportionable claim for the purposes of Part 4 of the Civil Liability Act on the basis that a failure to take reasonable care was not an element of the cause of action against Toltz: J[509]. Toltz contends that the primary judge erred in this regard having regard to what it contends was the nature of the primary judge's finding as to breach of fiduciary duty. Toltz contends that the liability as found by the primary judge, albeit not as pleaded by City Garden, was predicated upon a finding by the primary judge at J[288] that Toltz breached the fiduciary duty that it owed to City Garden on the first loan by failing to ensure that City Garden's board of directors had resolved to obtain the first loan. Toltz contends that, in light of that reasoning, there is an available characterisation of her Honour's findings as amounting to a failure by Toltz to take reasonable care. Toltz says that such a claim for economic loss falls within the ambit of s 34(1)(a) of the Civil Liability Act, which provides that an apportionable claim includes: "a claim for economic loss or damage to property in an action for damages (whether in contract, tort or otherwise) arising from a failure to take reasonable care, but not including any claim arising out of personal injury".
2. Given my finding (at [103]-[121] above) that the primary judge's reasoning should not be understood in this way, Toltz's contentions as to apportionment do not arise. In these circumstances, it is unnecessary to reach any concluded view on appeal ground 11.
3. Notwithstanding this, it is appropriate to record that I have some doubt as to the correctness of the statement of this Court in Rahme v Benjamin & Khoury Pty Ltd (2019) 100 NSWLR 550; [2019] NSWCA 211 at [135] (Macfarlan JA, Bathurst CJ and McCallum JA agreeing) ("Rahme"), relied upon by the primary judge at J[509], that, to fall within the ambit of s 34(1)(a), a failure to take reasonable care must be an element of the cause of action upon which the plaintiff succeeds.
4. Rahme was a case in which solicitors were found to owe fiduciary duties to the client, and to have breached those duties by acting in circumstances in which the interests of the client conflicted with the financial interests of the solicitors, who stood to gain considerably by the plaintiff entering into the relevant agreement (see Rahme at [88], [97], [117]). In that context, Macfarlan JA found, as a matter of principle, that a defence of proportionate liability was not available. His Honour found that it was necessary for this purpose that "the absence of reasonable care was an element of the, or a, cause of action upon which the plaintiff succeeds" (at [135]). As is apparent, however, in Rahme the successful cause of action did not involve any finding at trial that the solicitors acted without reasonable care. Liability was based upon them acting when they had a conflict of interest.

Conclusion

1. It follows from my reasons as set out above that the appeal should be allowed. Neither party submitted that the costs of the appeal should not follow the usual rule. Neither party to the appeal made any submissions as to what costs orders should be made as to the proceedings at first instance if, as I have found, Toltz succeeds in its appeal. In those circumstances, it is appropriate that the court order that those costs also follow the event.
2. In these circumstances, as I would allow Toltz's appeal, the orders I propose are: 1. Appeal allowed. 2. Set aside order 3 of the orders made by the primary judge on 5 December 2023. 3. Set aside orders 3 and 4 of the orders made by the primary judge on 31 January 2024. 4. The respondent is to pay the appellant's costs of the appeal and of the proceedings at first instance.
3. BASTEN AJA: For the reasons given by Stern JA, I agree that the appeal should be upheld on the basis of grounds 1 and 3. It follows that the grounds pleaded by Toltz1 in relation to findings by the trial judge as to causation and loss do not arise. Further, the conclusions that Toltz did not act for City Garden with respect to the first disputed loan transaction, and did not breach any fiduciary duty owed to City Garden, require that the relevant counterfactual in assessing causation and loss will be based on what in fact happened. In that circumstance, the degree of artificiality in addressing issues of causation and loss make that exercise inappropriate.
4. The question of whether the claim against Toltz was an apportionable claim, rejected by the trial judge but reagitated pursuant to ground 11 raised an independent issue of principle, based on the facts found by the trial judge. At the risk of adding to the number of authorities which have discussed the issue when it was not dispositive, I address my understanding of the principles below.
5. In its amended defence Toltz pleaded, in response to the whole of the statement of claim, that: [1] "(a) the proceedings comprise a claim by the Plaintiff for economic loss in an action for damages (whether in contract, tort [or] otherwise) arising from an alleged failure by the Second Defendant to take reasonable care, such that the Plaintiff's claim against the Second Defendant is an apportionable claim within the meaning of s 34(1) of the Civil Liability Act 2002 (NSW)."

Legal principles

1. Section 34(1)(a) of the Civil Liability Act 2002 (NSW) contains four discrete elements. The first is that there must be "a claim for economic loss or damage to property". The scope of that element is apparent from the fourth element, which excludes "any claim arising out of personal injury".
2. The second element locates the claim "in an action for damages (whether in contract, tort or otherwise)". This element appears to be expansive rather than constrictive. The phrase "or otherwise" at least indicates that the form of action is not intended to be a constraint. On the other hand, the requirement that there be "an action for damages" may exclude some kinds of claim for economic loss, although probably not for damaged property. The word "damages" is defined in s 3 of the Act (for the purposes of the whole Act) as a term which "includes any form of monetary compensation", with certain immaterial exclusions. There is no reason to exclude from that definition amounts claimed by way of equitable compensation. [4]
3. For present purposes, the key element is the third ("arising from a failure to take reasonable care"). The first issue is to identify the subject matter of the connecting phrase "arising from": in a case of ambiguity, the grammatical rule would suggest that it involves the last matter referred to, in this case "an action for damages". [5] That understanding would make sense, but reading the whole of the provision, including the fourth element, that approach may not be correct. The fourth element refers to a "claim arising out of" personal injury, which suggests that everything preceding the qualifying exception relates to the "claim" referred to in the first phrase of par (a). That would require identifying "a claim for economic loss or damage to property … arising from a failure to take reasonable care". Because the second element, appears to be expansive rather than restrictive, in referring to the claim, it makes sense that the first three elements are all referrable to the "claim". That is the claim is (i) "for" economic loss or damage to property, (ii) "in" an action for damages, and (iii) "arising from" a failure to take reasonable care. On the other hand, and reading the first affirmative limb of par (a) consistently with the qualification, "arising from" would refer to "economic loss or damage to property", and not "personal injury". Putting the four elements together, the last approach should be adopted. This is consistent with the terms of s 34A(1) which excludes what might otherwise have been identified as an apportionable claim under s 34(1), referring to intentionally or fraudulently causing economic loss or damage to property.

Case law

1. The principal issue discussed in the cases has involved the means of identifying an apportionable claim. Broadly speaking, there are two schools of thought, although they may overlap. The first, chronologically, identified apportionable claims by reference to findings at trial. The reason is, broadly, that no occasion arises for assessing damages until a finding as to liability has been made. The second school accepts that there may need to be a finding that a particular cause of action has been made out, but the claim will only be apportionable if the cause of action upheld involves an essential element of failure to exercise due care. The second view prevents the resolution of the s 35(2) dilemma noted above.
2. In 2007, a single judge in the Federal Court, Middleton J, identified and adopted the first approach in Dartberg Pty Ltd v Wealthcare Financial Planning Pty Ltd [7] dealing with the Victorian equivalent to Pt 4 in the Civil Liability Act, namely Pt IVAA of the Wrongs Act 1958 (Vic): "29 As the respondents observed, in drafting the provisions of [Pt IVAA] of the Wrongs Act, the legislature deliberately chose to define 'apportionable claim' by reference to an action for damages arising from a failure to take reasonable care. The provisions do not require that the claim itself be a claim in negligence or for a breach of duty - it only requires that the claim arise from a failure to take reasonable care. The expressions 'arising from' or 'arising out of' are of wide import …. 30 In my view, Pt IVAA could apply in the circumstances of this proceeding according to its own terms. Where a claim brought by an applicant does not have as one of its necessary elements any allegation of failing to take reasonable care, an additional enquiry into the failure to take reasonable care may become relevant in the course of a trial to determine the application of Pt IVAA. Even though the claims in this proceeding themselves do not rely upon any plea of negligence or a 'failure to take reasonable care' in a strict sense, a failure to take reasonable care may form part of the allegations or the evidence that is tendered in the proceedings. At the end of the trial, after hearing all the evidence, it may be found that Pt IVAA applies. 31 … The court, after hearing all the evidence, will then need to determine, as a matter of fact, whether the relevant claim brought by the applicant is a claim arising from a failure to take reasonable care."

Conclusions

1. For these reasons, this Court should follow the analysis of s 34(1) adopted by Barrett J in Reinhold, approved by the Victorian Court of Appeal in Godfrey Spowers, and explained in CTC Group, not being inconsistent with Herridge Parties. The Court should not have adopted a different view in Rahme unless comfortably satisfied that the reasoning in Godfrey Spowers either did not apply or was erroneous: it did neither. Furthermore, the reasoning relied upon in Rahme was almost entirely dependent upon acceptance of Macfarlan JA's minority view in CTC Group, which, for the reasons set out above, is not persuasive.
2. Section 34(1)(a) should not be construed as extending to a claim found to have arisen absent any failure to take reasonable care. On the other hand, a claim, whatever the pleaded cause of action, which has been upheld on the basis that there was a failure to take reasonable care will constitute an apportionable claim under s 34(1)(a). Notably, Gemi 130 filed a cross-claim alleging that Toltz had acted for it and had failed to take reasonable care in assisting and advising it.
3. To the extent that s 35(2) presents a dilemma, the resolution is to be found by application of s 34(1A), where, even if a number of causes of action have been pleaded, there will only be a single apportionable claim in respect of proceedings for the same loss or damage. That resolution of the dilemma is available so long as the definition of apportionable claim turns upon factual findings made in the course of the trial, rather than upon merely upon the pleading of an individual cause of action.
4. There is a suggestion, implicit in CTC Group, that a plaintiff can, after pleading different causes of action, one of which involves a claim arising from a failure to take reasonable care and another of which involves fault-free liability, after obtaining a favourable judgment on both, withdraw the former claim so as to avoid a finding of an apportionable claim. That position is not tenable; it finds no basis in the statute and is a false solution to the s 35(2) dilemma.
5. I agree with the orders proposed by Stern JA.

Endnotes

1. Adopting the abbreviations used by Stern JA, "Toltz" refers to Gerrard Toltz Pty Ltd and "City Garden" to City Garden Australia Pty Ltd (in liq).
2. Defence filed 8 June 2023, par 168.
3. Primary judgment at [289].
4. (1997) 188 CLR 449 at 467 (Brennan CJ, Gaudron, McHugh and Gummow JJ); [1997] HCA 23.
5. See Perpetual Trustee Company Ltd v CTC Group Pty Ltd (No 2) [2013] NSWCA 58 at [17]-[18].
6. A Scalia and B Garner, Reading Law: The Interpretation of Legal Texts (2012, Thomson/West), p 144 "Last-Antecedent Canon".
7. Part 2 concerns personal injury damages and is not presently relevant.
8. (2007) 164 FCR 450; [2007] FCA 1216.
9. (2008) 82 NSWLR 762; [2008] NSWSC 187 at [23] and [29].
10. (2008) 21 VR 84; [2008] VSCA 208.
11. Being the Victorian equivalent of NSW s 35; s 24AJ is the equivalent of NSW s 36.
12. They are based upon the Law Reform (Married Women and Tortfeasors) Act 1935 (UK) and the Civil Liability (Contribution) Act 1978 (UK). (Original footnote)
13. Albion Insurance Co Ltd v Government Insurance Office (NSW) (1969) 121 CLR 342 at 350 per Kitto J (Original footnote).
14. (2007) 163 FCR 510; [2007] FCA 1468 at [62]; Godfrey Spowers at [93].
15. Godfrey Spowers at [106]-[109].
16. [2013] NSWCA 58.
17. Cassegrain, Felicity v Cassegrain, Denis [2016] NSWCA 71 (Basten JA, Sackville and Emmett AJJA).
18. B McDonald and JW Carter, "The Lottery of Contractual Risk Allocation and Proportionate Liability" (2009) 26 Journal of Contract Law 1 at 19. (Footnote in original.)
19. JLR Davis, Inquiry into the Law of Joint and Several Liability: Report of Stage 2 (Australia, Attorney-General's Department, January 1995) (Davis Report) at p 31.
20. Davis Report, p 33, (c) statutory liability.
21. (2019) 100 NSWLR 550; [2019] NSWCA 211.
22. CTC Group at [23].
23. [2011] NSWCA 367 (Campbell, Macfarlan and Young JJA).
24. [2012] NSWCA 94 at [76], [77].
25. See fn 17 above.
26. See also my reasons at [26].
27. [2021] VSCA 72 (Beach and Osborn JJA, Stynes AJA).