Greer v Pickering

Greer v Pickering - [2015] NSWSC 1131 - NSWSC 2015 case summary — Zoe

The proposed purchase of the Property

In early August 2009 Christopher Wright, the plaintiff's husband, told her that he had been speaking to consultant at work, Jeff Gilbert, who had mentioned that he had a friend, Mr Beresford, who wanted to sell the Property at a reduced price. The reason given for the proposed sale was that Mr Beresford, the owner, who was not expected to live long due to a medical condition, owed significant sums to the Australian Taxation Office and wanted to ensure that he could live in the Property until he died. The proposal was that he would sell the Property at a discount in return for the promise that he would be entitled to reside there until his death.
On 5 August 2009 the plaintiff and her husband visited the Property with a view to her deciding whether to agree to buy it on the terms proposed by Mr Beresford. The plaintiff assessed the Property to be in generally good repair although she noted that the vegetation in the garden was overgrown and the kitchen and bathroom were dated. She also checked the water supply and noted that the water from the taps ran clear. Mr Beresford who told them that his doctors had predicted that he had a maximum of six months to live as he had a kidney infection. He offered to sell the Property, which he asserted was worth $300,000, for $150,000.
The plaintiff, who had experience as a tenant but not as a landlord, told Mr Beresford that she was only interested if there was a tenancy agreement. She said that such an agreement ought also include a provision that if Mr Beresford left the Property for six months, the tenancy would be at an end. She also suggested that there would need to be a provision that he would be required to give one month's notice if he decided to return to his family in the United Kingdom. The plaintiff also proposed that the agreement provide "the normal tenant/ landlord rules": that the landlord pay the council rates, strata fees, water connection fees, and that the tenant pay for gas, electricity and water. The plaintiff also told Mr Beresford that, if he did anything wrong, she wanted to be covered.
During their conversation the plaintiff confirmed that if Mr Beresford breached any of the conditions of the tenancy agreement, she would have the right to evict him. He responded: "I understand. I just want to live a quiet life. I won't do anything to damage this property, this is my home. I just want to live here until I die, I have always looked after it. It's a great deal for you. I will most likely be dead in a month or two and you get a cheap house. I just don't want the Tax man to get it."
Mr Beresford also told the plaintiff that his solicitor was Ian Crichton-Browne and that Mr Gilbert had a power of attorney for him.
Later that evening, Mr Wright typed up a document in which he set out the conditions that he and the plaintiff had discussed and agreed ought be included in her agreement with Mr Beresford. The document, which he sent by email to Mr Gilbert the following day, read as follows: Conditions of Sale [Address of Property] Greenfield Park NSW Purchase Price $150,000 Seller: Brian Beresford, [address of Property], Greenfield Park Purchaser: Annette Greer, [address and phone number] Settlement period: As soon as possible Conditions of sale 1. Brian Beresford will be permitted to continue to live in the house with no rent payable until one of the following occurs - His death - He permanently vacates the premises 2. All other residents must vacate the house within 30 days if condition of sale no 1 occurs. 3. Brian must give 1 months [sic] notice if he intends to permanently vacate the premises. 4. If more than $10,000 of wilful damage is done to the property then this agreement ceases and the premises must be vacated. 5. Standard tenant/landlord rules apply (Owner to pay all council rates, strata fees and water connection fees, Brian to pay gas, electricity and water usage charges). 6. As agreed, the purchaser is to pay the legal costs of both parties. This is my plain English version, if you want to put it into legal speak then no problems……Chris
Mr Wright subsequently relayed to the plaintiff that Mr Gilbert had told him that Mr Beresford agreed to the conditions but wanted a deposit of $20,000 paid immediately. The plaintiff resisted immediate payment because she was concerned that Mr Beresford might back out, but Mr Wright told her that if that happened he would repay her himself and "cop the risk".
On 11 August 2009 Mr Crichton-Browne emailed a list of questions to Mr Gilbert who forwarded the email to the plaintiff, care of Mr Wright's work email address. One of the questions was whether the purchaser had a solicitor. At about this time, Mr Wright suggested to the plaintiff that she retain a solicitor because of the seriousness of the transaction.
The plaintiff found Mr Pickering's name in the local telephone book and either she or Mr Wright contacted his office to enquire whether he could act for her and to find out how much he would charge.

[4]

Mr Pickering's conveyancing practice

In August 2009, Mr Pickering was the sole legal practitioner in a practice conducted from premises in Eastwood. His practice largely involved conveyancing but he also took instructions with respect to wills, probate and other matters. Since about 1995 he specialised in conveyancing and estimated that, by the time of the hearing, he had acted on approximately 19,000 conveyances. Mr Pickering was assisted by several experienced, non-legally trained paralegals including: Tania (who assisted generally with conveyancing); Josephine (who assisted with leases and litigation); Jeanette and Tammy (who assisted with settlements); and Linda (who assisted with wills, probate and litigation). Mr Pickering's wife, Deborah, was responsible for the accounts, including the trust account.
Mr Pickering did not generally see clients except where a prior appointment had been made in a work appointment diary which was kept for that purpose. He explained that he could not otherwise control his workload, which was considerable. Although he volunteered that he might be prepared to depart from that practice in the case of a long-standing client who actually had a contract, it was otherwise an invariable practice, the importance of which he repeatedly emphasised to his staff. Indeed when, on occasions, clients would drop in to Mr Pickering's office, hoping to see him without an appointment, he reminded his staff that he would not see anyone who had not made an appointment.
Mr Zahra, who appeared on behalf of Mr Pickering, tendered copies of the pages of Mr Pickering's work appointment diary for 11 August 2009 to 18 August 2009 inclusive. Mr Pickering's work appointment diary recorded that, at 6.30pm on 11 August 2009 he had an appointment at 6.30pm with a named client (who was not the plaintiff) concerning mortgage documents.
Mr Pickering's appointment diary recorded that on 12 August 2009 he had an appointment at 10am with a named client (not the plaintiff) concerning a will. He had another appointment at 11.30am with another named client.
On 12 August 2009 at 3.24pm Tania sent a quotation to the plaintiff by email attaching an estimate of fees. Thereafter she assisted Mr Pickering with the plaintiff's transaction.
On 12 August 2009 at 3.30pm Mr Wright responded to the questions in Mr Crichton-Browne's email and set out Mr Pickering's details. Mr Wright responded to Tania by email sent at 3.34pm in which he said: "Tania, I have passed your details to the sellers [sic] solicitor. The property is at [address], Greenfield Park. The purchaser is Annette Greer, [address]. You should be hearing from them soon (we are both anxious to settle as soon as possible). If there are any questions please let me know . . . . . Chris."

[5]

Whether there was another conference before the conference on 18 August 2009

The plaintiff and her husband gave evidence that the meeting that occurred at Mr Pickering's office on 18 August 2009 was the second of such meetings, the first having occurred, at most, a week before, on about 12 August 2009. The plaintiff deposed that she had rung Mr Pickering's office and made an appointment to see him on 12 August 2009. The plaintiff and Mr Wright both deposed that they had first gone to Mr Pickering's office after Mr Wright had finished work, when it was dusk but not dark, and had spoken with Mr Pickering, given him the document Mr Wright had typed entitled "Conditions of Sale" and instructed him to make sure that those clauses were included in the contract for sale. They also gave evidence that Mr Pickering had given them assurances that the plaintiff would be "totally protected".
Mr Pickering's evidence was that no such meeting with him occurred. I accept his evidence in the following exchange in cross-examination: Q. . . . Isn't it possible that in fact Mr and Ms Greer made an on‑the‑run ad hoc appointment to see you? A. They wouldn't have got to see me. Q. Wouldn't have got to see you? A. I don't see people without an appointment, unless they're really old clients and I'm handling the matter. I don't see clients without an appointment. I'm sorry. Q. Nevertheless, an appointment can be arranged very quickly? A. No, it can't, not when I'm seeing clients. Q. I see. So you just don't accept that it's possible that Ms Greer rang up; this email exchange went on on the day of the 12th? A. Did not happen.
Mr Pickering was adamant in the following evidence, which I accept: "If they've got a contract and they're on the way to an agent and they want me to go through it, yes, maybe. Maybe. But anyone else just coming in off the street when there's no contract, no. Sorry, does not happen. Does not happen and the reason being is because of the volume of work that I have. I just cannot possibly accommodate everyone."
Mr Pickering did, however, accept that the plaintiff and her husband might have come to his office and seen one of the staff on a date earlier than 18 August 2009. Mr Pickering's work appointment diary established that the only appointment for the plaintiff was at 7pm on 18 August 2009. Moreover, Mr Pickering gave evidence that the draft contract, which was sent under cover of letter dated 14 August 2009 (see below), did not arrive until Monday 17 August 2009 or Tuesday 18 August 2009. It was not his usual practice to see a client more than once, or to see a client without access to the contract documents.
I do not accept the evidence of the plaintiff and her husband that there was a meeting with Mr Pickering before the meeting on 18 August 2009. The reasons for my preference for Mr Pickering's version are addressed below when I address the credibility of witnesses.

[6]

The period between 12 August 2009 and 18 August 2009

On 12 August 2009 appointments were recorded in Mr Pickering's diary with named clients (none of whom was the plaintiff) at 5pm, 6 pm and 6.30pm. The entry for the appointment at 6pm indicated that its purpose was to discuss complex loan documents; the appointment at 6.30pm was to discuss a sale contract.
Mr Pickering's diary recorded the appointments for Thursday 13 August 2009 at 9.30am; 5pm; 6pm; 7pm and 7.30pm. There was also a note that a named person would drop in between 3pm-5pm to sign an affidavit of service.
On Friday 14 August 2009, or Monday 17 August 2009, Mr Pickering received a letter from Mr Crichton-Browne which attached a duplicate contract. The letter said in part: "We are the solicitors for the vendor and understand that you are acting for the purchaser. We attach duplicate Contract for approval and if approved for execution by your client and subsequent exchange provided that on or before exchange we receive duly completed Section 66W Certificate and the 10% deposit."
I note that, of the six conditions listed in the Conditions of Sale document, five were included in the draft contract. Only the fourth, which related to wilful damage in excess of $10,000, was excluded. I infer that Mr Crichton-Browne, who had received the Conditions of Sale document, had either been instructed by his client not to include it or had advised his client that he ought not agree to its inclusion. In these circumstances I am not prepared to infer that, had the plaintiff insisted on its inclusion in the contract for sale, Mr Beresford would have been prepared to proceed with the sale to the plaintiff, even though he subsequently agreed to a wider clause in the tenancy agreement.
Mr Pickering's diary recorded appointments with named clients (none of whom was the plaintiff) on Friday 14 August 2009 at 2pm; 3.30pm; and 4.30pm.
Mr Pickering's diary recorded the appointments with named clients (none of whom was the plaintiff) on Saturday 15 August 2009 at 9am; 10am; 10.30am; 11am; midday; 12.30pm; 1pm; 2pm; 3pm and 4pm. There was a vertical line drawn below 4pm, which I infer signified that it was expected to be a long appointment and the last one for the day.
Mr Pickering's appointment diary was blank for Sunday 16 August 2009. The appointment diary recorded the appointments for Monday 17 August 2009 with named clients (none of whom was the plaintiff) at 11am; 12.30pm; 1pm; 5pm; 6pm; and 7pm.
On 18 August 2009 Mr Pickering received a sewerage diagram in respect of the Property under cover of a "with compliments" slip from Mr Crichton-Browne.
Mr Pickering's diary recorded appointments for Tuesday 18 August 2009 with named clients (none of whom was the plaintiff) at 3pm; 3.30pm; 5pm and 6pm. The diary recorded an appointment at 7pm with the plaintiff. The entry read "Greer P", which I understood to mean that the client was the purchaser in a conveyancing transaction.

[7]

The conference on 18 August 2009 at Mr Pickering's office

Both the plaintiff and Mr Wright came to Mr Pickering's office for the plaintiff's appointment at 7pm on 18 August 2009. As referred to above, I am not satisfied that the plaintiff met Mr Pickering on any other occasion in 2009.
The plaintiff told Mr Pickering that Mr Beresford had a serious medical condition and was not expected to live much longer and that she had agreed to buy the Property and allow him to live there rent-free for the rest of his life. Notwithstanding Mr Pickering's advice against entering into the transaction, because of the uncertainty about how long Mr Beresford would live, the plaintiff confirmed her desire to proceed with the transaction.
Mr Pickering went through the contract of sale with the plaintiff. The contract included the following special conditions: 1.1 (a) In consideration of the purchaser paying to the vendor the purchase price the purchaser agrees to the vendor remaining in possession of the property subsequent to completion until the earlier of the following: (i) the demise of the vendor; or (ii) the vendor permanently vacating the property. (b) Whilst the vendor remains in the property the purchaser will pay all municipal rates, water rates, and strata levies including special levies relating to the property. (c) During the period of his occupation the vendor will pay all utility charges including gas, electricity and water usage. 1.2 In the event of the vendor vacating the property pursuant to sub-clause 1 the vendor must ensure that all other occupants of the property vacate same at the same time. 1.3 Should the vendor wish to vacate the premises the vendor shall give to the purchaser one month's notice of his intention to do so. … 1.5 It is hereby agreed that this clause constitutes a caveatable interest in the property on behalf of the vendor.
During this conference the plaintiff told Mr Pickering that her middle name was Queeta and requested that it be inserted in the contract. The plaintiff also advised Mr Pickering that the deposit was to be $20,000, rather than $15,000 (being 10% of the purchase price of $150,000), which was the figure that appeared on the draft contract. Mr Pickering advised the plaintiff not to agree to special condition 8(g) (which provided that cl. 16.8 was deleted) and advised her to seek reinstatement of cl 16.8 (which related to payment for settlement cheques). Mr Pickering also pointed out special condition 12 of the draft contract which provided that the plaintiff was obliged to pay Mr Beresford's legal costs.
The plaintiff acknowledged in cross-examination that she left it to Mr Pickering to properly document the transaction in the way that he considered to be most appropriate.
The following exchange occurred concerning payment of the deposit: Plaintiff: I want to pay a deposit of $20,000 directly to the vendor, with $10,000 to be immediately available for him to use. If for some reason the contract does not proceed then he will have to return that money. Mr Pickering: I don't think that is a good idea because you have no certainty of ever getting your money back. Normally the deposit only gets released on completion. Plaintiff: I know that, but I want to do it anyway.
Mr Pickering made the changes they discussed in handwriting on the draft contract. The plaintiff then signed the front page of the contract.
According to the plaintiff and Mr Wright, the plaintiff noted that the clause that was listed in the document entitled "Conditions of Sale" (which Mr Wright had typed up and provided to Mr Crichton-Browne) relating to damage in excess of $10,000 did not appear in the draft contract and raised its omission with Mr Pickering at the conference. I do not accept this evidence. I regard it as founded on a reconstruction of events based on their belief (which I regard as mistaken) that they gave Mr Pickering the Conditions of Sale document at an earlier conference on or about 12 August 2009.
In my view, the more likely explanation is that they gave the Conditions of Sale document to Mr Gilbert and did not appreciate until much later that, although Mr Crichton-Browne had included some of the terms set out in the Conditions of Sale document in the sale contract, he had not included the one concerning damage above $10,000. It follows that I do not accept the evidence of the plaintiff or Mr Wright that that Mr Pickering apologised to the plaintiff for not including the clause in the draft contract (which was, in any event, prepared by Mr Crichton-Browne, as the vendor's solicitor) or that Mr Pickering blamed Tania for not noticing its absence. I accept Mr Pickering's evidence that there was no mention in the course of the conference on 18 August 2009 of a clause being included in the sale contract relating to damage to the Property and that the topic of damage to the Property was not raised at all. I do not accept the plaintiff's evidence that she noted that the damage clause had not been included in the sale contract.
I accept that it is likely that Mr Pickering, in accordance with his usual practice, asked the plaintiff to supply details of her mortgage broker so that he could send the front page of the contract and a title search to such a person on exchange to facilitate the procurement of finance.
In the course of the conference Mr Pickering advised the plaintiff of the need to have a lease arrangement to cover Mr Beresford's right to reside on the Property.
At the conclusion of the meeting, Mr Pickering asked the plaintiff whether she was happy for him to exchange contracts if Mr Beresford agreed to the changes proposed on the draft contract. The plaintiff responded, "Yes". I do not accept that the plaintiff was ever advised of any need to return to Mr Pickering's office to sign the contract again once it was retyped to include the changes he suggested. I accept that the plaintiff signed the contract on 18 August 2009 and gave Mr Pickering instructions to exchange contracts on the basis of what she had signed.
It was put to Mr Pickering in cross-examination that he should have obtained the plaintiff's signature on each page of the contract and her initials beside each of the handwritten amendments to the draft contract forwarded by Mr Crichton-Browne. Mr Pickering responded that such a process did not accord with his practice, which was to take instructions from the client and have the client sign the front page, but otherwise to deal with the vendor's solicitor, who would be responsible for exchange after all agreed amendments had been made to the final version.
There was no evidence to the effect that there was anything untoward about Mr Pickering's practice or that it was not the usual practice of those solicitors who practised generally in conveyancing. Moreover, Mr Pickering took exception to the insinuation that there was anything wrong with it and intimated that one was entitled to trust another solicitor to prepare a document in accordance with the communications between solicitors as to the agreed terms of a contract. I reject the submission of Ms McDonald, who appeared on behalf of the plaintiff, that Mr Pickering's practice in this regard reflected adversely either on his competence or his diligence.

[8]

The email of 19 August 2009

On Wednesday 19 August 2009 at 7.38am Mr Wright sent an email from his work email address (which was also used by the plaintiff) to Tania: "Tania, we met with Garry last night about our purchase of [the Property] (In the name of Annette Greer). He asked us to pass on our mortgage broker's information. Please find these details below. There was also two other items that were mentioned. One was that we will be paying $20k direct to the vendor as a deposit, Garry said that he will make sure that this is in the contract. The other is a condition of sale that both parties agreed on but was not in the sale contract (this needs to be added). There are currently two conditions which would end the vendor's right to stay in the property after settlement (either his death, or permenantly [sic] vacating the premesis [sic], we also agreed on a third condition "If there is more than $10,000 malicious damege [sic] done to the property." Can this third condition be addressed[?] If there are any questions please let us know……Annette Greer, [mobile phone number supplied] Mortgage Brokers contact details John Spry ph [supplied] mob [supplied] fax [supplied]"
The plaintiff's counsel relied on the email to corroborate the plaintiff's and Mr Wright's evidence that they had instructed Mr Pickering to include a clause that Mr Beresford would have to vacate the premises if he did more than $10,000 of malicious damage to the Property. I do not read the email as necessarily asserting that such instructions were given. Mr Zahra argued that the email, fairly read, indicated that the plaintiff was informing Tania that she and Mr Beresford had agreed to such a condition and that she wanted the condition to be "addressed", in the sense of considered, by Mr Pickering.
I am not satisfied, for the reasons given above, that the plaintiff instructed Mr Pickering on or at any time prior to 18 August 2009 to include a clause in the contract for sale of the Property that damage (whether wilful, malicious or otherwise) in excess of $10,000 would give her a right to terminate the right to possession conferred on Mr Beresford by that contract. However, her email to Tania dated 19 August 2009 did, in my view, constitute such an instruction because of her wording "this needs to be added". Although a subsequent sentence "Can this third condition be addressed?" qualified that instruction, I consider that Mr Pickering was obliged, in light of the terms of the email, to address the question whether such a clause ought be inserted into the sale contract.
In support of her submission that Mr Pickering saw the email, Ms McDonald relied on the fact that the email contained the mortgage broker's contact details and that a facsimile of the front page of the contract was sent to the mortgage broker to the number supplied in the facsimile. There is a number of possibilities to account for this: first, Tania may have obtained the mortgage broker's number an earlier telephone communication with the plaintiff; or secondly, she might have seen the email and taken the mortgage broker's contact details from it and used them in the letter she prepared which was signed by Mr Pickering and sent to the mortgage broker on 21 August 2009, which is referred to below.
I am not satisfied that Mr Pickering saw a copy of this email prior to the commencement of these proceedings. Although the plaintiff had given him instructions to exchange contracts if the changes suggested had been made, it was open to her to change those instructions before exchange had been effected. Nonetheless, since the plaintiff had instructed Mr Pickering to exchange contracts if Mr Beresford agreed to the changes proposed, I consider that she ought to have rung Mr Pickering direct, rather than send an email to Tania, if she had wanted exchange to be deferred pending consideration of the matters she had raised. This was particularly so since the plaintiff and Mr Wright had impressed on Mr Pickering the urgency of the transaction and their desire to have it finalised as soon as possible because of their belief that Mr Beresford's death was imminent.
I accept Mr Pickering's evidence that, had he seen the email, he would not have altered the contract for sale to include a special condition because he would not have considered that the condition advanced the plaintiff's rights. Furthermore because he was asked (in the email) to "address" the question, he was entitled to use his professional judgment to decide whether to include the term in the contract for sale, notwithstanding his client's view that it should be "added" to the contract. Indeed, the plaintiff accepted in cross-examination that she relied on Mr Pickering to use his professional judgment in such matters. I accept Mr Pickering's evidence that he would, had he seen the clause, regarded it as superfluous and potentially undesirable since the plaintiff had an implied right to terminate the tenancy (pursuant to s 84(1)(b) of the Conveyancing Act 1919 (NSW)) if Mr Beresford damaged the Property, whether wilfully, maliciously or otherwise.

[9]

The period between the conference on 18 August 2009 and exchange of contracts

On 20 August 2009 Mr Crichton-Browne rang Mr Pickering's firm and spoke to one of the paralegals, in all likelihood Tania, to find out how the plaintiff's matter was going. On the same day, Mr Pickering sent a letter to Mr Crichton-Browne in which he set out his instructions as to the proposed amendments to the contract: the addition of the plaintiff's middle name; the deletion of special condition 8(g); the reinstatement of special condition 16.8; the amendment of the deposit amount from $15,000 to $20,000; and the insertion of a further special condition as follows: "14 The purchaser shall pay a deposit of $20,000.00. Of that amount $10,000.00 shall be immediately released to the purchaser for his own use absolutely. Should for whatever reason the contract not settle, then that money shall remain a debt to the purchaser and shall be returned immediately to the purchaser by the vendor on termination of the contract."
By facsimile sent on 21 August 2009, Mr Crichton-Browne wrote to Mr Pickering and informed him that he had made the changes referred to in the letter of 20 August 2009, save that the word "purchaser" in the second line of cl 14 ought be changed to "vendor". The facsimile concluded: "We are now arranging for our client to attend this office to execute the original Contract with a view to effecting an exchange of Contracts."
By letter dated 21 August 2009 Mr Pickering wrote to Mr Crichton-Browne in the following terms: "We enclose by way of exchange counterpart contract executed by the purchasers in the matter. We would be pleased if you could date both the original and counterpart contracts and return the executed original contract to our office by return mail."
I accept Mr Pickering's evidence that he relied on his instructions obtained on 18 August 2009 to exchange contracts. He was satisfied by the facsimile sent by Mr Crichton-Browne that he could exchange on that basis as all the changes proposed on behalf of the plaintiff had been accepted by Mr Beresford.
On 21 August 2009 Mr Pickering also wrote to John Spry, the plaintiff's mortgage broker, and attached a copy of the front page of the contract.
On Monday 24 August 2009 Mr Pickering signed a certificate pursuant to s 66W of the Conveyancing Act, which had the effect of waiving the cooling-off period in relation to the contract. On the same day he received a facsimile from Mr Crichton-Browne who noted that the $20,000 deposit had been received by Mr Beresford. Mr Crichton-Browne sought an executed contract and a s 66W certificate so that exchange could be effected. He also reminded Mr Pickering of special condition 12, which provided that the plaintiff was liable for Mr Beresford's reasonable legal costs and foreshadowed that he would send a tax invoice to him. I infer that the tax invoice was passed onto the plaintiff for payment as provided for by special condition 12 of the contract for sale.

[11]

Between exchange and settlement

On 27 August 2009, shortly after Mr Spry called her to say that her loan had been approved, the plaintiff telephoned Mr Pickering's office and left a message to say that she wanted to exchange contracts. I infer that she was unaware at that stage that exchange had already been effected on 25 August 2009. On 28 August 2009 Mr Crichton-Browne sent an executed transfer and a tax invoice for his fees to Mr Pickering.
On 31 August 2009 Mr Pickering wrote to the plaintiff confirming that exchange had been effected on 25 August 2009 and informed her that settlement would take place on 6 October 2009. Mr Pickering also wrote to Mr Crichton-Browne enclosing his firm's standard requisitions on title and notices under s 118 of the Conveyancing Act.
On 31 August 2009 at 12.32pm the plaintiff sent an email to Mr Pickering's email address in the following terms: "Hello Garry, A couple of things to sort out with the Greenfield Park Property contract. I am still a little confused on why the exchange of contracts happened when neither Chris [n]or I contacted you for this to happen. Can you confirm why this happened? I would also like the other $10,000 which is with Brian's lawyer to be released to Brian immediately as we discussed at the meeting with you. I asked you to change the front page of the contract to state $20,000 to be released before Settlement (on exchange) and the other $130,000 to be paid once Settlement occurred. Can this please be done[?] Can you also fax the front page of our exchanged contract to our Financial Advisor John Spry so he can pressure the bank to move quicker on confirming our loan. His fax number is: [supplied] Over the weekend I discussed with Chris the Rental Agreement we would like drawn up between me and Brian. It will be a standard Rental Agreement with the following items added: (as per the original contract) - If $10,000 of damage is caused to the house or property the tenancy agreement with Brian ceases. - If Brian vacates the property permanently then the agreement is ended. - If the house is unoccupied by Brian for a 12 month period the Owners may rent to a 3rd party but the Owners must keep the property available on the date stated by Brian on his return. - Brian has no rent to pay for the period [he] resides at the house as per agreement during sale of property. - Brian must remain the actual tenant of the property and not substitute another party. Can you please put this into legal wording and pass onto Brian's solicitors. If you need any clarification on anything please call me anytime on [phone number] or you can reply to this email address. Thank you."
The contents of this email revealed that the plaintiff was unaware of what the concept of "exchange" involved, although she was aware that it had occurred. The contents of the email do not establish that Mr Pickering exchanged without instructions since his usual practice did not require the plaintiff to attend again to sign a new version of the contract which had been engrossed with the amendments sought and which contained the additional special condition 14 which Mr Pickering had proposed on behalf of the plaintiff. I regard the contents of this email as constituting the plaintiff's instructions as to clauses that ought be inserted into the proposed residential tenancy agreement.
Once he had read the plaintiff's email, Mr Pickering hand-wrote instructions to his staff on the printed copy of the email as to the preparation of a residential tenancy agreement.
On or shortly prior to 11 September 2009 the plaintiff received an invoice for Mr Crichton-Browne's fees. Apparently, she had forgotten that her agreement to pay those fees had been included in the contract as special condition 12. She rang Mr Pickering's office and complained to Jeanette, who in turn informed Mr Pickering of her complaint. Mr Pickering wrote to the plaintiff and reminded her that he had taken her through the special conditions of the contract, including cl 12. He referred to Mr Crichton-Browne's invoice, informed her that he did not regard the fee as reasonable and asked her whether she wanted him to take issue with the amount. The letter concluded: "With respect to the preparation of the Rental Agreement, do you want me to prepare the Rental Agreement or are you wanting the solicitor acting for the vendor to prepare the Rental Agreement?"
After the plaintiff received Mr Pickering's letter of 11 September 2009 she rang Mr Pickering's firm and spoke to Jeanette. The plaintiff apologised for her earlier complaint and explained that she had not been listening very carefully when Mr Pickering had taken her through the terms of the contract. She confirmed to Jeanette that she had agreed that the conditions of sale included a requirement that she pay Mr Beresford's legal costs.
On 29 September 2009 Jeanette wrote a memorandum to Mr Pickering which attached a standard form residential tenancy agreement. She requested that he dictate the note he had handwritten on the printed copy of the plaintiff's email dated 31 August 2009 referred to above. By facsimile dated 1 October 2009 Mr Crichton-Browne sent a request to Mr Pickering for the rental agreement, which was to be delivered to Mr Beresford, as he was said to be too ill to attend Mr Crichton-Browne's office to execute the agreement.
On 2 October 2009 Mr Crichton-Browne informed Mr Pickering of settlement figures for 6 October 2009.
On Monday 5 October 2009 Jeanette sent a copy of the draft residential tenancy agreement to the plaintiff for her approval. On the following morning, by email to Jeanette sent at 5.27am the plaintiff wrote: "I have checked the Residential Tenancy Agreement and all is correct. . . "

[13]

The Lease

The plaintiff attended Mr Pickering's office on 7 October 2009 and saw Tania. On that occasion she signed a residential tenancy agreement which was largely in the standard form (the Lease). It provided that rent of $1 for the duration of the term of the Lease was to be paid on 6 October 2009, being the commencement date. The Lease also provided: "The term of this agreement is until such date as Mr Beresford permanently vacates the property or upon the date of his death."
The Lease provided that the tenant was not to use the premises for any illegal purpose (cl 8.1). The following additional terms were included: Additional Terms The Tenant agrees that: (a) Should he cause significant damage to the property, and to this end, significant is defined to be "damage defined to be requiring expenditure in excess of $10,000 to rectify, then the lease shall automatically end and the tenant shall in such event leave the premises immediately upon being notified by the Landlord and this lease shall be at an end. (b) Should the tenant vacate the property and remain absent for a period in excess of twelve (12) months then the Lease shall be regarded as having ended and the tenant shall permanently vacate the property upon being notified by the Landlord, and (c) Should the tenant leave the premises unoccupied for a period of twelve (12) months or less and notifies the landlord prior to commencing the period of absence and nominate to the landlord a return date, then the landlord shall have the right to lease the premises to a Third Party but shall ensure that any lease entered into with any third party shall not exceed the period of the tenant's absence and shall ensure that the property will be available for immediate occupation by the tenant upon the tenant's return. (d) The tenant shall have no right to sub-let the premises.
Just before she executed the Lease, the plaintiff noticed that it contained a term that no more than one person could live on the Property at any one time. As the plaintiff recalled Mr Beresford saying that he wanted company, she deleted the clause and initialled the change. The plaintiff subsequently received from Mr Pickering a letter dated 7 November 2009 which enclosed two copies of the Lease, executed by herself and Mr Beresford.
The plaintiff sought to cast aspersions on Mr Pickering's competence and diligence (and therefore on his reliability and credibility) by asserting that the Lease should have been registered as it had a potential term of greater than three years. I do not regard this as a material matter. Mr Pickering was led to believe that Mr Beresford was at Death's door. Further, although a legal lease for a term greater than three years can only be created by registration, an agreement for lease is still binding (as long as it is supported by consideration, as I have found this Lease was). Registration may have, in other contexts, have had consequences for the priority of Mr Beresford's interest; however, it was not required to protect the plaintiff's interest, since she was the registered proprietor of the Property.

[14]

The breaches between 6 October 2009 and the end of 2012

Mr Beresford breached the Lease from the time of its commencement. The plaintiff received regular communications from the Owners Corporation for the Property requesting that she undertake work or remediate some nuisance or other that he had either caused, or permitted to occur.
On 2 November 2009 the plaintiff received minutes of a meeting of the Owners Corporation in which she was requested, as owner of the Property, to remove or control "out of control" dogs and replace a damaged fence. She rang Mr Beresford who responded: "The dogs are not mine. I can't control them. They belong to my house guests. They are not my responsibility."
On 6 November 2009 the plaintiff received a letter from the Owners Corporation which said in part: "It appears that there are dogs within your lot that you have no control over. The dogs are wandering the common property and attacking other residents and in that respect you are asked to remove them immediately. You are also asked to clean up around the area and replace the damaged fence at the rear of the property which has been vandalised from someone within [the Property]."
On occasion Mr Wright heard news about Mr Beresford from Mr Gilbert, including that Mr Beresford was spending time in gaol and that several people were living on the Property. Mr Wright relayed these alarming snippets to the plaintiff.
The plaintiff inspected the Property on various occasions. She observed that Mr Beresford allowed the vegetation to become overgrown. In about July 2010 she received a notice of a proposed order from Fairfield Council giving her 14 days to clear overgrowth on the Property because of a concern that it might become a haven for vermin.
On 12 December 2011 the plaintiff telephoned Fairfield Council and the strata manager for the Property to inform them that she proposed to remove all the growth from the Property and repair the broken windows.
The condition of the property was degraded by damage to the fence, deck, windows and door. The plaintiff visited the Property on 3 February 2012 to obtain a quotation for replacement of the windows. She noted the following on a condition report: "Visited 03-Feb-2012 to get window replacement quote & place smelt. Yard was totally overgrown - grass up to knees. 5 windows needed replacing - did not go inside. Backyard smelt - not rubbish but damp & rotting wood etc. Very very unpleasant. Left letter in letterbox warning that state of property must change."
On 12 February 2012 the plaintiff arranged for the overgrown vegetation to be removed and the broken windows to be replaced at a total cost of $8,900. On 1 March 2012 she arranged for the back fence to be repaired at a cost of $1,750. This payment brought the total she had spent by reason of damage done to the Property to more than $10,000.
Mr Beresford also breached the Lease by failing to pay some of the water bills. The plaintiff attended to payment of these bills.
In March 2012, notwithstanding the following, the plaintiff decided that she would not move to evict Mr Beresford from the Property: 1. More than $10,000 damage had been done; 2. He had failed to keep overgrown vegetation under control; 3. He had caused, or permitted, damage to the Property (broken windows, rotting deck, damaged fence etc.); 4. His actions and inactions had led to letters being sent to the plaintiff from the Council and the Owners Corporation requiring her to carry out works.
The plaintiff's evidence was that she felt sympathy for Mr Beresford because he was dying. She may also have been influenced by her belief that time would solve the problem because she would be entitled to possession on his death. Her view as at March 2012 appears from the following exchange in her cross-examination: Q. But what about the other problems. Mr Beresford had made all sorts of promises to you about keeping the property in good repair and had failed to live up to them. That's your evidence, isn't it? A. The inside of the property had been kept in good repair. It was only the outside which was - he claimed constantly was through various people who resided with him at different times. . . . Q. Are you trying to justify Mr Beresford's conduct, are you? A. No, I want to explain that this is someone's home, and to take the responsibility of kicking someone out of their home is something that I take very seriously. Q. You felt sorry for him. A. Yes, I did. Q. But this was a clause that you said was very important for you to have in your arrangement with Mr Beresford, that if $10,000 damage was caused, you could evict him? A. Yes. But to throw someone out of their home for $10,001 is, I think, heartless. You need to have something more than a bit of overgrown vegetation and some rubbish. Q. You picked the number of $10,000 in your document, didn't you? A. It was a point that we had to draw in the sand, yes. Q. Was it important to you or not? A. Yes, it was important.

[15]

The use of the Property as a drug laboratory

On or before 17 November 2012 the New South Wales Police Force Drug Squad conducted a raid on the Property and discovered a clandestine drug laboratory. Numerous dangerous goods and chemicals were removed during a site inspection conducted by Police. The Property was also found to be contaminated with substances that were potentially harmful to health and safety.
On or about 3 December 2012 the plaintiff was informed that the Police had raided the Property and arrested Mr Beresford and his associates in relation to drug-related activities alleged to have been conducted on the Property. A notice dated 7 December 2012 was served on her by Fairfield Council pursuant to s 124 of the Local Government Act 1993 (NSW) (the s 124 notice). The order made by the s 124 notice required the plaintiff to: "Within THIRTY (30) DAYS of the date of this Order, ensure that the premises are placed in a safe or healthy condition by undertaking the following: Engage the services of a suitably qualified Occupational Hygienist to undertake an assessment of the presence of any drug related substance residue from the drug manufacturing activities discovered on the premises. This investigation shall include (but not be limited to) the land, drainage systems and pathways that may have been contaminated during the storage, handling, manufacturing, transportation or disposal of chemical and drug related substances. Upon completion of the works a report shall be submitted to Fairfield City Council certifying that any clean-up works have been completed under the supervision of Occupational Hygienist. Subsequently, a clearance certificate issued by a suitably qualified occupational hygienist shall be submitted to Fairfield City Council indicating that the subject premises is rendered in a safe and healthy condition for human occupation."
The plaintiff was also informed that non-compliance with the s 124 notice constituted an offence. The plaintiff agreed in cross-examination that from this time she knew that the Property was "highly toxic and unfit for human habitation". At about this time the plaintiff made a claim on the landlord insurance she had taken out with Hubbard Insurance (formerly Real Insurance) with respect to the Property.

[16]

The plaintiff's attempts to obtain possession: the CTTT proceedings

On 12 December 2012 the plaintiff sent to Mr Beresford, by registered mail, a notice to terminate the Lease, relying on a breach of cl 8.1: namely that he had, in contravention of that clause, used or caused or permitted the Property to be used for an illegal purpose. The plaintiff prepared the notice after speaking with an unidentified person from the Consumer Trader and Tenancy Tribunal (CTTT). She did not consult a solicitor for advice. Mr Beresford collected the letter on 17 December 2012 but refused to budge from the Property.
The plaintiff's evidence was that if Mr Beresford had vacated the Property as required by the notice, she would have rented out the Property and would not have sued Mr Pickering.
On 9 January 2013 the plaintiff commenced proceedings in the CTTT to have Mr Beresford evicted from the Property.
On 25 January 2013 the plaintiff rang Detective Senior Constable Marshall of the Drug Squad to obtain a copy of the site inspection report prepared following the raid on the Property. She learned through speaking with him that Mr Beresford and two others had been arrested; that the drug laboratory was a medium size; that most of the drugs and chemicals were found in the garage, although chemicals and drug-related items were also found in the house; and that Police had spent all day clearing the Property. Detective Marshall confirmed that it would not have been possible for someone to live in the house and not know about the laboratory. Following this conversation the plaintiff obtained a copy of the site inspection report from the Fairfield Council. The report included the following warning: Personal Protective Equipment The following is the minimum recommended Personal Protective Equipment to be worn when inspecting or remediating the premises: • Chemical resistant overalls • Safety glasses or goggles • Chemical resistant gloves • Construction helmet • Safety boots or shoes • P2 Dust mask

[19]

The engagement of Marsdens in February 2013

On the following day, 26 February 2013, the plaintiff engaged Marsdens, a law firm, to assist her to evict Mr Beresford.
The plaintiff received a letter dated 4 March 2013 from the Registrar-General informing her that a caveat had been lodged on the title to the Property by Mr Beresford, whose signature had been witnessed by Mr Hazard. The nature of the estate or interest identified was said to be: "The caveator is entitled to exclusive possession for his life or until he permanently vacates the land. The caveator's interest is in the nature of a life estate."
The facts said to ground the interest were said to be: "The caveator sold the land to the Registered Proprietor. For consideration (a sale price of less than half the land's market value), the caveator retained a life tenancy under the contract. The caveator still uses and occupies the land."
The plaintiff withdrew her application in the CTTT on 8 March 2013 when she was informed by the CTTT that it did not have jurisdiction by reason of s 8(f) of the Residential Tenancy Act 2010 (NSW), which exempted from the Act an agreement for the sale of land that conferred a right to occupy residential premises on a party to the agreement.
Master Floor Care retained Hibbs & Associates Pty Ltd (Hibbs) to inspect the property and assess the contamination. Hibbs, by report dated 16 April 2013, reported to Master Floor Care, which in turn reported to the plaintiff. The report disclosed that methylamphetamine had been found in high levels in 100% of the locations tested. Positive results were found in every room of the house and in the garage. Hibbs prepared a further report dated June 2013. In August 2013 Hibbs prepared a remediation action plan. In her affidavit of September 2014 the plaintiff said: 95. Due to the current dispute with the defendant I have not yet attended to the remediation of the Property. According to the RAP [Remediation Action Plan] referred to in paragraph 93 above and exhibited to this affidavit, remediation of the Property requires the Property to be vacant for the duration of the remediation work. The defendant refuses to vacate the Property and refuses to allow access to the Property. 96. The RAP also states that all soft furnishings from the residence should be disposed of as hazardous waste. As the soft furnishings are property of the defendant I am not entitled to dispose of them, and if the defendant does not voluntarily dispose of them, I am concerned that he will return the contaminated items to the Property after it has been remediated and will thereby re-contaminate the Property.
It was not until six months after the plaintiff engaged her present solicitors, Marsdens, to help her evict Mr Beresford, that she instructed them to forward a further notice of termination to Mr Beresford on 28 August 2013. The evidence does not reveal the reason for the delay. When the plaintiff was asked in cross-examination what took them so long, she responded: "You would have to ask them". Although Emma Macfarlane, the employed solicitor at Marsdens with carriage of the matter, deposed to the fees the firm had charged the plaintiff, she did not give any explanation of why the eviction of Mr Beresford from the Property progressed so slowly or why no application for urgent relief was ever made on the plaintiff's behalf.
The notice of termination dated 28 August 2013 relied on breaches, including a breach of the "additional term", cl 6(a), which referred to damage requiring expenditure in excess of $10,000. The notice concluded: "If you do not vacate the premises on or by 4 September 2013, my client initiate [sic] proceedings in the Supreme Court of NSW to recover possession. Any such application will incur significant legal costs which my client will seek to recover from you."
Notwithstanding that proceedings for possession in this Court were foreshadowed, the plaintiff commenced proceedings in the Local Court on 30 October 2013 for possession of the Property and damages for breach of the Lease by statement of claim filed by Marsdens. The plaintiff explained in her evidence that she was advised to commence the proceedings in the Local Court rather than in this Court by reason of Part 4 of the Landlord and Tenant Act 1899 (NSW) and a concern that Mr Beresford might have a defence to a claim in this Court by reason of s 2A of the Landlord and Tenant Act, which provides that a claim for ejectment cannot be made in this Court if, relevantly, the rent does not exceed twenty-five dollars and twenty cents per week.

[24]

The plaintiff

Although I consider that the plaintiff's evidence largely accorded with what she believed to be the truth, I did not consider her evidence to be reliable. It was my impression that she and Mr Wright had gone back over their documents (principally the Conditions of Sale document and the various emails) many years after the events of August 2009 in order to reconstruct what had occurred in order to make a case against Mr Pickering. However, even their reconstruction was at odds with contemporaneous documents. For example, their belief, which appeared to amount to a conviction, that they had seen Mr Pickering twice had no documentary support. Indeed the only reference in their documents to an actual meeting with Mr Pickering was in the email of 19 August 2009 from the plaintiff to Tania which referred to the meeting on 18 August 2009.
The objective probabilities were also against there being a conference earlier than 18 August 2009. There was no reason for the plaintiff to see Mr Pickering until he had received the contract from Mr Crichton-Browne. The occurrence of a conference prior to 18 August 2009 is also inconsistent with Mr Pickering's diary, which was a contemporaneous business record of his commitments during the relevant period and his practice of refusing to see clients who had not made prior appointments.
I regard it as a significant factor that weighs against the plaintiff's reliability as a witness that she did not recall, on 11 September 2009, that she had agreed to pay Mr Beresford's legal costs, notwithstanding that it had been addressed in conference with Mr Pickering on 18 August 2009 and was contained in the document entitled "Conditions of Sale" that she and her husband had discussed and which he had typed up on 5 August 2009. That she forgot such an important matter within a period of about three weeks indicates that her anxiety to conclude the transaction before Mr Beresford's death diverted her from the details of the sale, to which she paid no particular attention.
The plaintiff also gave evidence, in the course of her cross-examination on 4 August 2015, that was not included in her affidavit, that when she rang Tania to see if she and her husband could see Mr Pickering on 12 August 2009 (which was a Wednesday), Tania said: "He stays back but not for long, if you want to try and make it as soon as you can after 5 o'clock."
This evidence is to be contrasted with Mr Pickering's own evidence that he generally worked until 8pm on weeknights, which is corroborated by the pages from his diary that were tendered. The plaintiff's oral evidence is also inconsistent with Mr Pickering's appointment diary for 12 August 2009 in which appointments at 5pm; 6pm; and 6.30pm were recorded. In my view, the plaintiff's evidence about what Tania said about coming as soon after 5pm was a recent invention designed to give verisimilitude to the proposition that there had been a meeting on 12 August 2009, when in fact there was no such meeting.
The plaintiff admitted that she had discussed her affidavit evidence with Mr Wright and that they had read each other's affidavits. She said that they had both attended a conference on 24 September 2014 at her solicitor's office at which their affidavits were discussed, before they were signed. There is a close similarity between their versions which suggests that there was some collaboration in the preparation of the evidence.
Furthermore, the words the and Mr Wright attributed to Mr Pickering, which included an alleged assurance that they were "totally protected" does not fit with the language which I consider, having heard Mr Pickering in the witness box, he would use.
I also infer that the plaintiff's evidence was largely reconstruction rather than recollection since there was a disparity between her evidence and the orthodox progress of such a transaction. The following exchange from Mr Pickering's cross-examination provides an example: Q. So you would not dispute Ms Greer's account that what you said to her, either on the 12th or the 18th was, "This is an unusual circumstance. We need to separate the financial aspect from the tenancy agreement. I can do a contract for sale for this." A. Well, that's just simply nonsense, because they're not my words that I would use. I'm not preparing the sale contract, the sale contract which was sent to me by the other solicitor. So I'm not preparing a sale contract.

[25]

Mr Wright

I did not regard Mr Wright as a reliable witness, although, like the plaintiff, he was, in most respects, telling the truth as he believed it to be. Nonetheless, there were times when his evidence was, in my view, untruthful. For example, Mr Wright was asked in cross-examination about his experience of leases in the following exchange: Q. Have you ever rented a property? A. I have not, no. Q. Under a lease? A. To be honest I don't. I've never rented a property.
Mr Zahra subsequently asked Mr Wright about his business and the premises from which it operated. The following exchange ensued: Q. Do you rent those premises? A. I do, yes. Q. So the evidence you gave a little earlier, that you've never rented a property, is false, isn't it? A. I suppose if you look at it that way, yes. Q. You know perfectly well what's involved in renting a property, don't you, Mr Wright? A. In all honesty, my lawyer looked at the lease. I pay a cheque every month.
My impression was that Mr Wright's evidence that he had never rented a property was a deliberate attempt to downplay his commercial acumen, with a view to exaggerating his (and the plaintiff's) reliance on Mr Pickering. I regard this matter as adversely affecting his credit.
My view that Mr Wright's evidence of interchanges with Mr Pickering is substantially a reconstruction rather than his recollection was influenced by Mr Wright's evidence in his affidavit that: "After the meeting with Mr Pickering I sent an email to Jeff Gilbert and gave him Mr Pickering's details. A copy of that email is annexed and marked "C"."
Annexure "C" to his affidavit is the email referred to above, dated 12 August 2009, sent at 3.30pm. There was no indication from the contents of the email that there had been any meeting at all. The only matter relating to Mr Pickering in that email was his name and address. Furthermore Mr Crichton-Browne had not yet sent the contract to Mr Pickering as he had only just, by that email, been notified of his identity.
Mr Wright denied that he and the plaintiff had spoken to each other about their evidence in the case. He also denied ever reading her affidavit, although her evidence was that they had read each other's affidavits. I am satisfied that this denial was dishonest. Since he was the one who suggested the transaction to the plaintiff in the first place, it may be that he felt responsible for the situation and the trouble, distress and expense it has caused the plaintiff. After all, he was prepared to wager $20,000 of his own money to repay her for the deposit if the transaction fell through and she could not recover it from Mr Beresford. It may be that, in these circumstances, he felt obliged to conceal their discussions about their evidence. I infer that the denial was borne of an understandable, but misplaced, desire to assist the plaintiff in her case.

[29]

The plaintiff's case as pleaded

The plaintiff relevantly alleged in the second further amended statement of claim that: [19] On or about 12 August 2009: . . . c. the plaintiff instructed the second defendant to include in the Contract for Sale a special condition that: i. If the first defendant caused more than $10,000 damage to the Property, then the first defendant's right to possession of the Property shall terminate and the first defendant shall in such event leave the premises immediately upon being notified by the plaintiff; and ii. that all the terms found in the Standard Form Residential Tenancy Agreement would apply to the first defendant's occupancy of the Property. Particulars The plaintiff orally instructed the second defendant that she wanted some conditions that would protect her in the event the first defendant damaged the property and handed to the second defendant a document headed "Conditions of Sale" . . . which included a proposed condition that "if more than $10,000 of wilful damage is done to the property then this agreement ceases and the premises must be vacated" and a proposed condition that "Standard tenant/ landlord rules applies [sic] (Owner to pay all council rates, strata fees and water connection fees, Brian to pay gas, electricity and water usage charges)".
In [20] of the pleading, the plaintiff alleged that, on or about 18 August 2009, she attended Mr Pickering's office; was given the draft contract for sale; noted that it did not contain the special conditions pleaded in [19.c] above; and instructed him to ensure that they were included. The plaintiff alleged that Mr Pickering told her that he would arrange for another version of the contract to be prepared and for her to sign the amended version.
As appears from the findings of fact set out above, the plaintiff has failed to prove the matters alleged above. I have found that she did not give the Conditions of Sale document to Mr Pickering at any time. I have also found that there was only one meeting between the plaintiff and Mr Pickering and that his meeting occurred on 18 August 2009, at the conclusion of which the plaintiff instructed Mr Pickering to exchange contracts if Mr Beresford agreed to the changes that were proposed on her behalf.
The additional difficulty for the plaintiff is that she has, even on her own evidence, failed to prove the condition alleged. Her evidence was that she instructed Mr Pickering (through the Conditions of Sale document, the oral instructions she gave and the email of 19 August 2009) to include a condition in the sale contract that Mr Beresford would have to vacate if more than $10,000 "wilful damage" or "malicious damage" was caused.
The discrepancy between the evidence on which the plaintiff relied and her pleaded case was highlighted by Mr Pickering in his defence to the second further amended statement of claim in [5c], where he alleged: "As to paragraph 19, the second defendant: . . . c. says, in further answer to the paragraph, that the document relied on in the particulars to paragraph 19(c) used the expression "more than $10,000 of wilful damage", not the expression "more than $10,000 damage" pleaded in paragraph 19(c)(i)."
The discrepancy was also relied on by Mr Zahra in his final submissions, both orally and in writing. Notwithstanding that the issue had been well and truly identified, the plaintiff did not seek to amend the pleading to bring the allegation into line with the evidence. In these circumstances, I propose to address the plaintiff's case in accordance with her pleading. Although a failure to amend a pleading to correspond exactly with the facts established by the evidence does not preclude reliance on such facts (Dare v Pulham (1982) 148 CLR 658 at 664), the plaintiff is not entitled to have her pleading treated as if it were other than the basis on which her case was put. This is particularly so where the issue has been specifically identified by the opposing party and no application for leave to amend has been made.
Moreover, there may have been a good forensic reason why the pleading was worded thus. Paragraph [19.c.i.] may reflect a concern that it would be more difficult to prove that the damage was "wilful" or "malicious" rather than that there was damage simpliciter. It is important to respect the forensic decisions made by a party's legal representatives: see, in a criminal context, TKWJ v The Queen [2002] HCA 46; 212 CLR 124, especially at [8] per Gleeson CJ. I note for completeness that Ms McDonald continued to rely on the pleading in her written submissions in reply, which were provided pursuant to leave given at the conclusion of the oral hearing.
The plaintiff has, accordingly, failed to establish her pleaded case of breach of contract or breach of duty of care (which was based on the failure to act in accordance with instructions). However, even had she been able to establish a breach, there is the further difficulty posed by the circumstance that a term of greater benefit to the plaintiff was implied by law in any event.

[30]

The plaintiff's submissions on causation

Ms McDonald accepted that Mr Beresford's interest in the Property was probably a tenancy for life, rather than a life estate. However, she submitted that, because the clause relating to damage in excess of $10,000 was not included in the sale contract, Mr Beresford was able to exploit the uncertainty and remain on the Property on the footing (whether correct or not) that he had a life estate in the Property. She also contended that it was not enough for Mr Pickering to rely on a term implied by the Conveyancing Act because a term implied by statute is "arcane" and "something that people have to go digging for".
The plaintiff's submissions as to causation (which I reject for the reasons more fully set out below) were refined in the following extract from Ms McDonald's written submissions: In the present case, if the term concerning damage over $10,000 had been expressly included in the Contract for Sale, the likelihood, in the events which occurred, is that: (a) Mr Beresford would not have been able to mount the defence that he did to Ms Greer's attempts to have him evicted and Ms Greer would have obtained possession of the Property in or around early 2013; (b) Ms Greer would not have had to commence and prosecute these proceedings; (c) After cleaning and decontaminating the Property Ms Greer would have rented the Property out and obtained an income; (d) Ms Greer would not have had to repair the damage to the Property that was caused sometime after mid 2013.
It was contended on behalf of the plaintiff that, had Mr Pickering included the clause relating to damage that the plaintiff had wanted included in the contract for sale, Mr Beresford would not have obtained a grant of legal aid, since there would not have been an arguable defence on the merits to qualify him for such a grant. Ms McDonald argued that the omission of the damages clause created sufficient ambiguity to enable Mr Hazard of Legal Aid to lodge a caveat on the basis of an alleged life estate and to argue, on behalf of Mr Beresford, that the Lease was inoperative because the right to possession amounted to past consideration and the rent of $1 did not amount to valuable consideration.
The unstated (and unproved) premiss of the plaintiff's case was that, if Mr Pickering had not obtained legal representation, he would not have resisted the plaintiff's claim for possession or the plaintiff would have obtained, in early 2013, default judgment for possession, or at least an order for possession. On that scenario, the plaintiff contended that she would have rented out the Property in early 2013 and avoided the damage that was done to the Property subsequently.
Ms McDonald relied on Hudson Investment Group Ltd v Atanaskovic [2014] NSWCA 255 in which it was found that the appellant was entitled to damages as it was forced to compromise its claim because of the respondent's negligent drafting of a deed. She contended that Mr Pickering had been negligent in failing to spell out her right to evict in the contract for sale and that, if he had done so, that the plaintiff would have been able to evict Mr Beresford and that, accordingly, he was liable for the consequences of that negligence, being the time and cost required to evict Mr Beresford and the cost of repairs resulting from the damage to the Property occasioned by the delay.

[33]

Analysis of the legal position concerning the contract for sale and the Lease

Section 84(1)(a) of the Conveyancing Act incorporates an implied term into leases to the effect that the lessee is obliged to keep the demised premises in good and tenantable repair, reasonable wear and tear excepted. Although s 84(1)(b) provides that the section applies to leases under the Real Property Act 1900 (NSW), the same covenants are implied into an agreement for lease. Section 85(1)(d) confers an implied power on the lessor, if the lessee is in default of the covenant to repair and the default continues for two months, to terminate the lease, without releasing the lessee from liability for the breach of covenant.
Section 74 of the Conveyancing Act provides that implied covenants can be negatived, varied or extended by an express declaration in the deed wherein it is implied, or another deed. The effect of s 129(1) of the Conveyancing Act is that the lessor must give a notice to the lessee to remedy the breach before terminating.
There is nothing "arcane" about these provisions. They form the basis of the study of real property in New South Wales and, as such, they are not only fundamental aspects of a legal education but also prerequisites to admission to legal practice in this jurisdiction. That lay persons, and indeed some lawyers, might not be familiar with them is not to the point.
The contract for sale not only provided for the transfer of the legal title in fee simple to the Property from Mr Beresford to the plaintiff, but it also created an agreement pursuant to which the plaintiff, as the owner of the Property (in equity from exchange to settlement and at law once the transfer was registered), granted a right to Mr Beresford to exclusive possession of the Property on terms. The two requirements for a lease: first, that the possession granted be exclusive; and, second, that the term is certain, or capable or being rendered certain, were fulfilled by the contract for sale.
I reject the plaintiff's submission that the contract for sale could reasonably be regarded as creating a life estate. The circumstance that it included a term that the plaintiff would be liable for rates but Mr Beresford would be liable for usage of water, electricity etc. strongly suggests that a tenancy rather than a life estate was what was intended. To the extent to which there was any ambiguity, recourse could be had to extrinsic evidence to establish the Codelfa factual matrix (named, eponymously, after Codelfa Constructions Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337 at 352-353 per Mason J). Such extrinsic evidence, as the plaintiff's and Mr Wright's affidavits established, was that, far from retaining a life estate in the Property, Mr Beresford was anxious to divest himself of it, lest it be appropriated by the Australian Taxation Office to pay his tax debts (or potentially forfeited to the State pursuant to the Criminal Assets Recovery Act 1990 (NSW), although the latter risk was never articulated and does not appear in the evidence).
Because the contract for sale created a lease, the terms implied by ss 84 and 85 were part of that contract. Such terms were also implied into the Lease. I take the plaintiff to accept these matters, as they formed part of her pleading against Mr Beresford.
The effect of the inclusion in the Lease of the additional term, (a) (relating to significant damage, being damage in excess of $10,000), was to confer on the plaintiff an additional right to terminate the Lease by immediate notice. Accordingly, in the event of (a) applying, no notice to remedy the breach under s 129(1) of the Conveyancing Act was required. As there was no express declaration that negatived, varied or extended the terms implied by ss 84 and 85, they continued to form part of the contract for sale and the Lease: s 74.
I regard the suggestion that the Lease was not binding, or would not have been enforced because Mr Beresford was already in possession of the Property before its commencement, as without merit. The Lease commenced on 6 October 2009. He occupied the Property prior to that date pursuant to the contract for sale. Merely because the rent stipulated was $1, does not mean either that there was insufficient consideration or that consideration was lacking. Mutual promises can amount to consideration: Mr Beresford's covenants to keep the premises in good repair and to pay utility charges are sufficient to constitute valuable consideration and were given in return for the plaintiff's promise to allow him to enjoy exclusive possession and to pay the rates on the Property for the duration of the term. In my view, neither party to the transaction could be regarded as a "volunteer".
In these circumstances, the plaintiff was entitled to rely on the Lease and the contract for sale as concurrent sources of her right to evict Mr Beresford. In Hudson Investment Group Ltd v Atanaskovic, the relevant ambiguity was found to have been caused by negligent drafting. The present is not such a case. There was, in my view, no relevant ambiguity. The fact that Mr Beresford took a position that had the effect of delaying proceedings, and deferring his eviction, does not mean that the legal position was, in fact, uncertain or ambiguous; or that Mr Pickering's acts or omissions had contributed to any legal uncertainty or ambiguity. The transaction, though not standard, was not particularly complex and was sufficiently documented. The argument that Mr Beresford had a legal right to continued occupation irrespective of any breaches of the Lease (of which there were several) was, in my view, untenable.
The plaintiff chose that not to take steps to evict Mr Beresford until late 2012. That she failed to obtain possession until December 2014 was the result both of Mr Beresford's intransigence and her failure to enforce her legal rights by applying for urgent relief. Although she might be regarded as an unfortunate victim of Mr Beresford's wrongdoing, her own conduct amounted, in the context of her claim against Mr Pickering, both to contributory negligence (had I found him to be negligent) and to an unreasonable failure to mitigate her loss.

[34]

Causation

The determination of what difference, if any, it would have made had a clause to the effect alleged been included in the contract for sale raises substantial issues of causation. Section 5D of the Civil Liability Act requires, before a determination is made that negligence caused particular harm, a finding that the negligence was a necessary condition of the occurrence of harm (factual causation) and a finding that it is appropriate for the scope of the negligent person's liability to extend to the harm so caused (scope of liability).
It is, at best, problematic to speculate on what would have occurred had a clause entitling the plaintiff to terminate the lease for damage (whether malicious, wilful, in excess of a monetary figure, or otherwise) been included in that document.
The inference that the presence or absence of such clause would have made a difference to Legal Aid is debatable. No evidence has been adduced from Mr Hazard. Although communications between him and Mr Beresford were privileged, he could still have given evidence as to the basis on which legal aid was granted.
The inference that the presence or absence of such a clause would have made a difference to Mr Beresford is even more vexed. As Gleeson CJ said in Modbury Triangle Shopping Centre Pty Ltd v Anzil [2000] HCA 61; 205 CLR 254 at [19], [26] and [29], criminal behaviour is not predictable, which makes it more difficult to draw inferences as to what would have occurred in hypothetical situations. Mr Beresford's cavalier approach to the law was amply demonstrated by the methylamphetamine laboratory which was conducted on the Property while he was in possession. His trenchant refusal to relinquish possession was hardly likely to be transformed into capitulation had he been deprived of the resources of Legal Aid. Indeed, in my view, the probabilities favour the inference that he would have stood his ground (however legally unsustainable) until he was required, either by Court order, or by his own mortality and decrepitude, to vacate the Property, as eventually occurred in December 2014.
In my view, the damage suffered by the plaintiff was caused by the deplorable conduct of Mr Beresford and the plaintiff's failure to assert her legal rights with expedition to stop the conduct and regain possession of her Property. Even had I found negligence, I would not have been satisfied that it was a necessary condition of the occurrence of harm (being the damage to the Property, the legal fees or the lost rental income). In proceedings relating to liability for negligence, the plaintiff bears the onus of proof of every fact relevant to the issue of causation: s 5E of the Civil Liability Act.
Moreover, I am not persuaded that it would be appropriate to extend the scope of the Mr Pickering's liability to the harm caused by Mr Beresford's wrongful conduct. Accordingly, the plaintiff has established neither factual causation nor scope of liability within the meaning of s 5D of the Civil Liability Act. There are further impediments to causation which are addressed below in the context of damages.

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Judgment (42 paragraphs)

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Legislation Cited (9)

Cases Cited (8)