H K Frost Holdings Pty Ltd (In Liquidation) v Darvall McCutcheon

(b) The Claims Made 7 Mr Frost sought legal advice, first, from a South Australian firm and later from Darvall McCutcheon. On 5 June 1986 Darvall McCutcheon on behalf of Frost Holdings instituted proceedings in the Supreme Court of Victoria against the Bank for damages for breach of contract and for breach of confidence. As to the latter, the Statement of Claim alleged that: "10. Further or alternatively the concept of the collection and the calendar was at all material times prior to 7th February 1986 the original idea of and confidential to the plaintiff, save to the extent that the same had been disclosed to the Australian Bicentennial Authority for the purpose of obtaining its endorsement. 11. The concept of the collection and the calendar was communicated to the defendant only for the purpose of seeking its agreement to participate in the project, and in circumstances in which the defendant well knew the limited purpose for which this disclosure was made. 12. In the premises the defendant was under a duty of trust and confidence towards the plaintiff with respect to the concept of the collection and the calendar and was not entitled to use or apply the said concept or any part thereof except in participation in the project with the plaintiff. 13. In or about August 1986 and thereafter, and despite its said repudiation of the agreement and its refusal to continue to participate in the project, the defendant, in breach of its said obligation of trust and confidence, without the authority, licence or consent of the plaintiff, used and applied that part of the concept constituted by the collection and has obtained and continues to obtain very substantial benefits therefrom." 8 The damages claimed, as later particularised, did not differentiate between the contract and breach of confidence claims. The same sum was claimed in respect of each and was computed on the basis of the profits lost by Frost Holdings on the project, those profits being the projected return on the sale of the calendars to the Bank. An amount somewhat in excess of $190,000 was claimed.

(c) The Trial 9 The Bank denying liability, the matter proceeded to trial before O'Bryan J of the Supreme Court. Both claims were proceeded with before His Honour. Dr Jessup, counsel for Frost Holdings, led evidence in support of both claims. At the close of the evidence, counsel for the Bank addressed on both claims. Dr Jessup in turn addressed O'Bryan J on the contract claim. When he turned to the breach of confidence action the following exchange occurred with the Judge: "DR JESSUP: Would it be convenient then if I went to the confidential information? HIS HONOUR: Yes. I do not know whether I will need to decide the alternative claim, Dr Jessup. The claim for damages for breach of contract absorbs everything in the alternative claim. DR JESSUP: It does. It is the larger of the two. HIS HONOUR: Yes. DR JESSUP: It is only if that were unsuccessful that we would be seeking damages for breach of confidential information, your Honour. HIS HONOUR: Yes. DR JESSUP: Or for misuse of confidential information. Shall I sit down, your Honour. HIS HONOUR: Yes, you may. Thank you … ." 10 In his reasons for judgment, O'Bryan J found the Bank to be in breach of contract with Frost Holdings, the terms of the intended agreement being settled in all essential respects if not in every matter of detail. It was concluded that the company probably had suffered a loss of profit on the contract of $125,000, this sum being computed on the basis of a profit of $2.50 per calendar on a projected sale to the Bank of 50,000 calendars. An additional sum of $3,576 for expenses incurred in mitigating loss was also awarded. 11 As to the breach of confidence claim, O'Bryan J concluded his reasons for judgment with the following observations: "I find it unnecessary to deal with the breach of confidence claim beyond saying I am disposed to hold that the concept communicated to the defendant, in February, in confidence, was sufficiently developed to be capable of being the subject of protection in court. In my opinion, the defendant did use the plaintiff's concept for a Bicentennial art collection for its own commercial gain and in doing so deprived the plaintiff of the chance of profit which would have been produced from the second element of the concept. The defendant did not deal fairly with the plaintiff inasmuch as it took and used the plaintiff's ideas without its authority or recompense." 12 The judgment entered in the matter was in the terms that: "There be judgment for the Plaintiff for $128,576.00 with costs together with damages in the nature of interest in the sum of $180.00." 13 I would emphasise in passing that while this order disposed of the proceedings it was not made in consequence of a determination of the breach of confidence claim. That claim was not itself the distinct subject of any order or judgment as such. 14 From the above judgment the Bank appealed to the Full Court of the Supreme Court of Victoria.

(d) The Appeal 15 The Bank's Amended Notice of Appeal challenged both the finding that the parties had reached a concluded agreement for sale of calendars by Frost Holdings to the Bank and the damages award made. Additionally, Ground 7 of the Notice claimed: "7. That in relation to the breach of confidence claim: (a) (subject to (b) hereof) the learned judge was wrong in law (insofar as he did so hold): (i) that the concept of a bicentennial art collection was sufficiently developed, or of sufficient originality or novelty or otherwise capable of being the subject of protection by the Court; (ii) that the Bank had used Frost's concept for its own commercial gain and deprived Frost of the chance of profit; (b) the Bank in any event contends that Frost has abandoned the breach of confidence claim in that: (i) no argument was addressed or sought to be addressed to the learned judge on behalf of Frost in support of the breach of confidence claim; (ii) no award of damages or other relief was sought from the learned judge in respect of the breach of confidence claim." 16 On the advice of Dr Jessup now of Queens Counsel, Frost Holdings in turn filed a Notice of Cross Appeal against the sum awarded by way of damages. Dr Jessup QC later became unavailable to conduct the appeal and Mr Hayne QC with Mr P Vickery were retained by Frost Holdings. There is no evidence that they received any instructions in relation to the breach of confidence claim or that they gave, or were asked for, any advice in relation to it. Mr Hayne QC in turn became unavailable and several days before the hearing of the appeal the services of Mr Bongiorno QC were engaged. 17 The appellant Bank's submissions were heard by the Full Court on Thursday 20 October 1988 and the respondent company's, on Monday 24 October. There is no transcript of the appeal. What appears in evidence in this proceeding to be a copy or version of the Bank's "Outline of Appellant's Submission" contained no submissions relating to the breach of confidence claim nor to Ground 7 of the Amended Notice of Appeal. The "Outline of the Respondent's Argument" (prepared by Mr Bongiorno QC) adverted to Ground 7 in the following way: "GROUND 7 11. As, in the event, nothing turns on this ground no argument is addressed in respect of it." 18 There is no evidence before me to suggest that, on the hearing of the appeal any reference was made either by counsel or by members of the Court to the breach of confidence action. I should add Frost Holdings did not prosecute its cross-appeal at the hearing. 19 Having reserved its decision, the Court gave judgment on 7 November 1988 allowing the appeal. In his reasons for judgment, agreed in by the other two members of the Court, Kaye J held that there was no agreement between the parties upon essential terms relating to the calendar and in consequence no contract for the sale of goods had been formed. 20 The orders of the Full Court, as taken out on 24 July 1989, were that: "1. The appeal be allowed with costs. 2. The judgment be set aside. 3. There be judgment for the Appellant/Defendant with costs. 4. There will be an Indemnity Certificate granted to the Respondent/Plaintiff pursuant to Section 13 of the Appeal Costs Act 1984." 21 One effect of these orders was that Frost Holdings' breach of confidence claim merged in the judgment in favour of the Bank: that cause of action could have no independent existence for as long as the Full Court's judgment stood: see Chamberlain v Deputy Commissioner of Taxation (1988) 164 CLR 502. It was neither reopened nor challenged subsequently. 22 On the handing down of the judgment on 7 November, no reference was made by counsel or the Court to the breach of confidence claim. 23 There are two additional matters I would note. The first is that prior to the appeal the Bank made an offer of settlement of $105,000 that was rejected by Mr Frost. He was prepared to agree to a settlement for $170,000 plus costs. Secondly, on the day after the Full Court hearing Mr Bongiorno QC and Mr Vickery sent a memorandum to Mr Resch of Darvall McCutcheon - he was the member of the firm with whom Mr Frost dealt - in which they expressed their view that the Bank would win the appeal but noted that Frost Holdings seemed to have a valid claim in quantum meruit for work performed in furtherance of the project with the Bank up until its abandonment on 7 August 1986 which could be put forward as part of proposals to settle the appeal. The memorandum did not refer to the breach of confidence claim.

(e) The Aftermath of the Appeal 24 Mr Frost was dissatisfied both with the outcome of the appeal and with its conduct by those representing him. He sought to arrange his own settlement of the matter with the Bank directly; he had a conference with Dr Jessup QC for advice on an application for leave to appeal to the High Court; and there, he turned upon his own counsel in the appeal and Mr Resch of Darvall McCutcheon. Correspondence with Mr Resch critical of Mr Bongiorno QC and Mr Vickery was forwarded to them and elicited sharp responses by way of denial. Mr Frost by now was refusing to pay in full his accounts to the firm and especially those items relating to counsel's fees. 25 As previously noted on 24 July 1989 the judgment of the Full Court was entered. In early 1990 the Bank, contrary to the expectations of Mr Frost and Mr Resch, proceeded to present bills to have their costs taxed - in the sum of $44,522.22 in respect of the trial and of $38,260.50 for the appeal. 26 Mr Resch then sought to raise the quantum meruit claim Frost Holdings asserted it had against the bank, to stave off the taxation. Additionally, there was by early May 1990 a real question as to whether the company would be kept on foot. On 17 May 1990, Mr Frost consulted a Mr Goldberg of Goldberg & Co solicitors of Adelaide concerning the opportunities available to him to protect the company's assets. He appears then to have made contact with Mr Resch who on 18 May 1990 wrote a letter to Mr Bongiorno QC (copied to Mr Vickery) stating (inter alia) that: "Keith Frost consulted a solicitor in Adelaide this week in relation to the question of issuing proceedings claiming breach of confidentiality by ANZ Bank. The advice he received was that the Full Court, having up held the Appeal in relation to lack of Contract, should have referred back to O'Bryan J. the question of "theft" of the concept. … What Frost has in mind is that, if you agree that the matter should have been referred back to O'Bryan J., the taxation should proceed but an Order should be sought staying execution of the Taxing Master's Order and in either the matter going back to O'Bryan J. or, alternatively, a new action being launched in relation to both the concept and the quantum meruit claim. You will see that the Full Court in the second last paragraph of the Judgment did not rule out a claim on the basis of a Contract for services but made no comment in relation to claim for the loss of concept. If ANZ are allowed to proceed with enforcement of the Order for payment of costs, H.K. Frost Holdings Pty. Ltd. would necessarily have to go in to liquidation and there is little or no chance that a Liquidator would pursue the matter any further against ANZ." 27 It is unlikely that Mr Bongiorno ever received the letter but a hand-written file note of Mr Resch indicated that he had a communication from Mr Vickery on 23 May which insofar as presently relevant recorded: "Frost 23.5.90 Vickery - Jessup/Martin P.7 Bank's Notice (a) (b) abandoned Jessup (b) no bad case assess damages differently on breach of confidence - a/c for breach [sic] of profit ? bank profit - PR - goodwill Bank at trial in final address at some length - Jessup started to address - O'Bryan told him didn't want to hear - Damages a lot less than contract ANZ didn't address on P.7 - nor us Slip rule - Shaddock Brew v Whitlock 1968 VR 504 Quantum Meruit 1980 Pt of Melb vs Anshun VR 321 Security for Costs ? Full Court - motions day - no High Court" 28 On 28 May 1990, Mr Frost went to Mr Resch's office. As I will later indicate, he has sworn that Mr Resch then admitted that the company had a claim in negligence against his firm for the loss of the breach of confidence claim. Mr Resch's file note of the meeting does not record such an admission. It does suggest that the substance of the advice given by Mr Vickery on 23 May was communicated to Mr Frost. 29 The Bank's Bills of Costs were taxed by consent on 29 May 1990 and a Certificate of Judgment given on that day in favour of the Bank in the sum of $49,820. 30 On 31 May Mr Frost saw Mr Goldberg. The latter's file note reflects in its content Mr Resch's file note of 23 May set out above and contains as well the following: "Simon Resch of Darvall McCutcheon is now of the view that there is no further recourse to the courts on the breach of confidence claim and that matter of remitting to Trial Judge should have been dealt with at Full Court appeal. Resch now says Frost should take independent advice." 31 The Melbourne law firm, McKean & Park was then engaged by Frost Holdings, via Goldberg & Co, to advise on whether senior counsel's advice should be obtained relating to the breach of confidence claim and the courses now open to Frost Holdings. To anticipate matters, after a positive response from McKean & Park on 11 July 1990, the opinion of Mr H R Hansen QC was sought. It was provided on 20 December 1990. That advice, while canvassing a variety of possible claims (and impediments thereto) need not be recounted here other than to note that Mr Hansen (i) considered that the better view was that the mooted quantum meruit claim would not be defeated by pleas of res judicata or of Anshun estoppel: see Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589; and (ii) advised that further instructions as to the facts were needed before advice on the negligence claim against the company's legal advisers could be given. 32 On 26 October 1990 the Bank served on Frost Holdings a Notice of Demand under s 364(2) of the Companies (South Australia) Code for its taxed costs of $49,820.00. On 20 December 1990 a petition to wind up the company was presented to the Supreme Court of South Australia. 33 On 16 January 1991 Frost Holdings commenced quantum meruit proceedings in the Victorian County Court against the Bank in the sum of $52,227. The Bank's defence, filed on 5 March 1991 relied upon Anshun estoppel. McKean & Park had the carriage of this matter for Frost Holdings. Separately, the Adelaide firm, Esau, Meister & Associates represented Frost Holdings in the winding-up proceedings. A Master of the Supreme Court dismissed that petition on 25 March 1991. On the Bank's appeal to the Supreme Court, Millhouse J ordered on 13 May 1991 that the company be wound up. His Honour, while expressing "a lot of sympathy" for Mr Frost, found the company to be "hopelessly insolvent." On 17 October 1991 a judge of the County Court of Victoria ordered that the quantum meruit proceedings be stayed permanently on Anshun estoppel grounds. 34 On 4 November 1994 Frost Holdings initiated the present proceeding in the Supreme Court of Victoria. It was subsequently cross-vested to this Court. 35 The date of the proceedings is important. It was merely three days short of six years from the date on which the Full Court handed down its decision in the ANZ Bank litigation. Consequently, for reasons related to limitation of actions, the applicant only relies upon such alleged negligence or breach of retainer as occurred on or after 4 November 1988. This explains what might otherwise appear to be the unusual frame of the present action.

The Present Proceeding 36 For present purposes it is only necessary to set out several paragraphs of the Further Amended Statement of Claim. They betray the essence of the applicant's case. 37 After (a) outlining the course of the ANZ Bank litigation up to the delivery of the Full Court's judgment on 7 November 1988 and (b) noting that the issue of breach of confidence was neither referred to during, nor was the subject of any finding in, the appeal, the pleading alleged: "17. After 4 November 1988, and after receiving the Judgment in the Appeal on 7 November 1988 1989, and despite having the opportunity to do so, (a) no submission was made on behalf of the Company by its Counsel to refer the Proceeding back to the Trial Judge to determine the breach of confidentiality cause of action, nor did the Defendant advise counsel to do so, or that any costs order which the Full Court might make as a result of the matters determined at the Appeal, as to the costs of the trial, should take into account the fact that the breach of confidentiality issues had been the subject of full hearing and address by the counsel for the ANZ Bank at trial; or that the status of the breach of confidentiality cause of action was such that it should have been remitted to the trial judge for completion. (b) Further , the Defendant did not at such stage, nor within a reasonable time thereafter, advise the Company to institute fresh proceedings for the breach of confidentiality cause of action or as to the obtaining of a stay on the order for costs in favour of the ANZ Bank made by the Full Court; or to approach the Full Court to have the proceeding remitted to O'Bryan J. for completion or to another judge to have the breach of confidentiality claim determined; or as to the courses of action open to the Company. 18. In the premises, the Company has lost the right to argue its breach of confidentiality cause of action. 19. The breach of confidentiality cause of action, if raised on appeal or if referred back to the Trial Judge or if issued afresh, would have succeeded or had good prospects of doing so, and the Company would have been awarded substantial damages and costs which could have been used to set off against the costs order in favour of the ANZ Bank, and it would not have been wound up by reason of its inability to pay such costs. 20. The Respondents were in breach of the retainer and were negligent in that they: - (a) on and after 4 November 1998 and prior to 7 November 1988 failed to take any steps to have the hearing of the appeal relisted before the Full Court in order that submission might be made as to the remission of the breach of confidence cause of action, or otherwise address the Court in relation to the outstanding cause of action and the consequences as to costs; (b) on 7 November 1988 failed to take any steps, in particular it did not instruct Mr Vickery of Counsel, to make submissions to the Full Court as to the remission of the breach of confidence cause of action or otherwise address the Court in relation to the outstanding cause of action and the consequence as to costs; (c) on and after 7 November 1988 and prior to 24 July 1989 and at all material times after 24 July 1989, failed to take any steps, to have the hearing of the appeal relisted before the Full Court in order that submissions might be made as to the remission of the breach of confidence cause of action or otherwise address the Court in relation to the outstanding cause of action and the consequences as to costs; (d) on and after 4 November 1988 and prior to 7 November 1988, and after 7 November, failed to provide any advice to the Applicant as to having the Full Court remit the breach of confidence action; (e) on and after 4 November 1988 and prior to 7 November 1988, and after 7 November, failed to provide any advice in relation to having the Full Court reconsider its consequential orders including the costs order, in light of the outstanding cause of action; (f) between 7 November 1988 and 24 July 1989 and at all material times after 24 July 1989, failed to advise the company to institute fresh proceedings for the breach of confidence cause of action or as to the obtaining of a stay on the order for costs in favour of the ANZ Bank made by the Full Court. 21. By reason of the negligence of the Defendant firm and breach of the Retainer, the Company has suffered loss and damage." 38 The particulars of damage later supplied by the applicant have undergone some metamorphosis but they comprise essentially, (a) a claim for damages in the sum of $128,576.00 - the amount awarded Frost Holdings for loss of profits by O'Bryan J; (b) a sum in respect of Frost Holdings' liability to pay the Bank the taxed costs of the trial insofar as those related to the breach of confidence claim; (c) half the costs incurred in the retainer of the respondent in the ANZ Bank litigation, the apportionment of costs being made so as to reflect Frost Holdings' loss of, and consequent liability to pay the expenses of the breach of contract action; and (d) post-ANZ Bank litigation legal expenses incurred with other law firms by way of "salvage" attempts and in resisting the winding-up proceedings. 39 The respondent denies any wrongdoing on its part; in relation to the matters set out in para 17 of the Further Amended Statement of Claim it claims, additionally, that "it was entitled to rely and did rely on the advice of Counsel"; and it denies that if the breach of confidence action had been referred back to the trial judge it would have had reasonable prospects of success. 40 Because of the complexity of some of the issues raised in this matter, it is convenient (though somewhat artificial) to deal separately with the questions (i) whether, as a result of negligence or of breach of retainer, the opportunity was lost to have the breach of confidence claim determined; (ii) whether that opportunity was of any value; and (iii) what was its value. A The "Loss" of the Breach of Confidence Claim 41 Before turning to the actual issues raised it is appropriate to make brief reference to several additional matters of evidence. Additional Evidence (i) Unfortunately Mr Resch, the member of Darvall McCutcheon who dealt with Mr Frost in the Bank litigation, died in 1993. His death robbed both the respondent and the Court of the testimony of the person most central to the conduct of the litigation - the more so given the turnover of counsel during the litigation. I have taken due account of the disadvantage to the respondent occasioned by this state of affairs. (ii) It is Mr Frost's uncontested evidence - and it is consistent with the contemporary documentary evidence - that he did not at any relevant time receive advice from Mr Resch or from Darvall McCutcheon as to the possibility of having the breach of confidence claim referred by the Full Court back to O'Bryan J. The documentary evidence suggests reference to the claim after the trial only resumed in April/May 1990, long after judgment had been entered in the matter. (iii) In his first witness statement Mr Frost swore to the following admission said to have been made by Mr Resch: "14. On 28 May 1990, I went to Mr Resch's office. After we greeted each other, he said words the substance of which were: "I have some bad news for you - you have lost your chance to claim against ANZ Bank for breach of confidentiality. At the appeal, we should have asked for the breach of confidence issue to be referred back to the trial judge for hearing and completion. We did not do that and you should get yourself a solicitor as you now have a claim for negligence against Darvall McCutcheon." Mr Resch then apologised saying he was sorry about it … "as you are a thoroughly decent bloke". Those were his words. He repeated this apology and I left. This was the first time Mr Resch had mentioned sending back the breach of confidence claim to O'Bryan J." When cross-examined on his meeting on 28 May with Mr Resch, Mr Frost did not make express reference to the admission as such though he was not cross-examined directly on it. (iv) Of the various counsel who represented Frost Holdings in the Bank litigation and who may have been able to shed some light on the reason for the fate of the breach of confidence claim, only Mr Bongiorno QC and Mr Vickery QC gave evidence for the respondent. Notably Dr Jessup QC did not. (v) Mr Bongiorno QC, who frankly acknowledged a very imperfect recollection of events over ten years old, stated in cross-examination that: (a) he did not think he ever discussed the breach of confidence claim with Mr Resch, nor was he party to any advice as to what might happen to it when the Full Court gave its judgment; and (b) his best recollection was that that claim had been abandoned at trial. While he expressed a view adverse to the prospects of the claim as such, that view was based on assumptions and on quite imperfect understanding of what actually transpired at the trial before O'Bryan J. (vi) Mr Vickery QC's evidence was more extensive than Mr Bongiorno's, though it was to similar effect. He said that: (a) he did not have any conversation with Mr Resch or anyone else of Darvall McCutcheon about the breach of confidence claim prior to the Full Court judgment; (b) he had no instructions from Darvall McCutcheon to do anything about that claim or about costs (other than to make application under the Appeal Costs Fund Act) on the handing down of the Full Court judgment; and (c) he understood that in a practical, but not in a technical, sense the breach of confidence claim had been abandoned at trial. More strongly so than Mr Bongiorno QC, Mr Vickery QC had an adverse view of the claim itself: it was "a hopeless piece of litigation." It needs again to be said, though, that as with Mr Bongiorno this was in quite some degree was based on assumption and misunderstanding. (vii) Dr Emmerson QC gave expert evidence for the respondent on the conduct of the Bank litigation as it related to the breach of confidence claim. While I allowed the evidence to be given, perhaps inadvisedly: see Yates Property Corporation (in Liq) v Boland (1998) 157 ALR 30 at 56-57; I have in the event place no reliance upon it. At best it merely confirmed views I had on several matters and beyond that it was inappropriate for me to have regard to it. Some Preliminary Propositions of Law and Practice The Required Standard of Care 42 It is not in contest that (i) the standard of care to be expected of the respondent is that of a reasonably competent and diligent solicitor; and (ii) if a solicitor takes the advice of counsel on a particular point, he or she is still under an obligation to turn his or her own mind to the subject - the advice of counsel cannot be followed blindly: see generally Yates Property Corporation, above. Appellate Practice 43 The breach of confidence claim, as I have noted, was not the subject of actual findings by O'Bryan J let alone of any order or judgment in its own right. As such, it was not itself an appropriate subject of appeal to the Full Court: see Landsal Pty Ltd v REI Building Society (1993) 41 FCR 421; notwithstanding that, on the delivery of O'Bryan J's judgment in the proceeding, that claim ceased to have independent existence and merged in the judgment itself: cf Chamberlain v Deputy Commissioner of Taxation; above. The setting aside of that judgment had the effect of restoring the breach of confidence claim to its original condition of an undecided claim: see MacIntosh v Lobel (1993) 30 NSWLR 441 at 459. It was a claim that Frost Holdings was entitled to have determined. Ordinarily such would occur in the Supreme Court before a single judge exercising the original jurisdiction of the Supreme Court. And in my view save in exceptional circumstances (eg possibly where the claim itself was an obvious abuse of process), a Full Court on setting aside judgment in such circumstances would as of course remit the matter to the trial judge to have the outstanding cause of action decided - if it was aware that the cause of action was still a live one. It clearly had inherent jurisdiction to remit. Equally, in my view, a Full Court while making a costs order in relation to the appeal itself would be more than likely to reserve to the trial judge the costs of the trial. Re-opening the Appeal 44 Notwithstanding the slight liberalisation in the preparedness of appellate courts to re-open their judgments prior to entry: see eg Autodesk Inc v Dyason (1993) 176 CLR 300; Theo v Official Trustee in Bankruptcy, Federal Court of Australia, Black CJ, Sackville and Finn JJ, 23 July 1998; it clearly is the case that, after entry of the Full Court's judgment on 24 July 1989, there was no prospect at all of its judgment being reopened by it to allow for the remitter of the breach of confidence claim or for the order relating to the costs of the trial to be reagitated. This was correctly appreciated at the time in light of decisions of the Full Court of Victoria; see eg Brew v Whitlock (No 3) [1968] VR 504. Findings and Conclusions 45 Later in these reasons I consider the question whether the breach of confidence claim was a viable and valuable one and conclude that it was. Assuming that finding for the present, I would have to say that the circumstances of this case reveal a clear and regrettable instance of professional negligence and breach of retainer in the manner in which the breach of confidence claim was allowed to be lost sight of, and then lost. The combination of (a) O'Bryan J's conclusion that he need not decide the claim; (b) the limitation of the appeal to the contract question; (c) the lack of continuity in counsel; and (d) assumptions later made by counsel on the appeal about the claim they having received no instructions concerning it, may well explain its passing from consciousness. But this provided no excuse for that occurring. It is not surprising that Mr Resch made the admission Mr Frost claims. And I find that admission was made, though I was invited by Mr North, counsel for the respondent, to find it more likely that Mr Resch at the 28 May meeting did no more than recommend the obtaining of independent legal advice. I find no reason to disbelieve Mr Frost in this. And the admission is consonant with the course of events and actions taken at the time. 46 Most of the essential findings I need make are in the nature of omissions and are in considerable degree the subject of admission by the respondent. (i) There is no evidence to suggest, after the trial before O'Bryan J and prior to entry of the Full Court's judgment, either that Darvall McCutcheon gave instructions to Mr Hayne QC, Mr Bongiorno QC or Mr Vickery at any relevant time concerning the breach of confidence claim or that it sought or received from any or all of these counsel advice concerning it. I find no such instructions were given and no such advice was sought or received. The respondent simply did not address its, or counsel's, mind to the matter. In consequence all of the "omissions" alleged by the applicant in its pleadings at paras 17 and 20 can be said to be made out, though all are mere illustrations of what might have been advised or done had minds been turned to the matter. In particular I do not find that Mr Resch acted on the advice of counsel in the manner in which he dealt with the breach of confidence claim in the appeal to the Full Court, on receipt of judgment, or thereafter. (ii) Despite the respondent's attempt to assert to the contrary - an assertion not pleaded I would add - the evidence does not support a finding that the breach of confidence claim was abandoned at the trial. In not addressing on it after the exchange with His Honour I earlier set out, Dr Jessup did no more than make a prudential choice that counsel often make in response to the intimations of judges. It is, furthermore, quite clear that O'Bryan J in the final paragraph of his reasons for judgment did not at all consider that the claim had since been abandoned. On the contrary. It was merely unnecessary for him to decide the claim. There is nothing to suggest that it was abandoned in the Full Court. It was not relevant to any issue in the appeal. And in any event both Mr Bongiorno QC and Mr Vickery seem to have assumed that it had been abandoned at the trial. (iii) I find that Mr Frost did not between the period from O'Bryan J's judgment until the entry of the Full Court judgment receive advice on the breach of confidence claim. Neither did he give any instructions in that period in relation to it and, in particular, concerning its abandonment. 47 Turning now to what in the circumstances was the standard to be expected of a reasonable competent solicitor engaged in trial and appellate practice, it was in my view the obligation of such a solicitor to take all such steps as were reasonable and appropriate in the circumstances to preserve for a person in the applicant's position its opportunity to prosecute its breach of confidence claim to judgment in the event of its being unable to hold its favourable contract judgment on appeal. Such a solicitor would, moreover, be expected to know (a) the effect of entry of judgment on undetermined causes of action; (b) of the very limited capacity of a Full Court to reopen a judgment of its own; and (c) the power of a Full Court to remit an undecided claim - and consequential questions of costs of the trial - to the trial judge, and the likelihood of it so doing where findings on that claim had not been made for reasons such as in the instant case. 48 Given the clear pessimism entertained by Frost Holdings' legal advisers on 25 October 1988 as to the prospects of the appeal - as witness the Bongiorno/Vickery memorandum of that date raising the question of a quantum meruit claim - the respondent ought from that time by appropriate instructions to counsel taking the judgment have taken steps to protect the interests of the client both in relation to the breach of confidence claim and in relation to any possible adverse costs award relating to the trial. It failed to do so and from this the chronicle of omissions multiplied. 49 Further, and more particularly I accept the applicant's submission that the respondent acted without reasonable care, skill and diligence in that it: "(a) ought to and could have, ensured that on (or relevantly prior to) 7 November 1988 the Full Court was requested to remit the cause of action to the trial judge; but it failed to do so; (b) ought to and could have, ensured that on (or relevantly prior to) 7 November 1988 the Full Court was requested to reserve the question of the costs of the trial to the trial judge; but failed to do so; (c) ought to and could have after 7 November 1988 and prior to 24 July 1989 ensured that an application was made to the Full Court the result of which was the remission of the cause of action of the trial judge, and a stay on the order for costs in favour of the bank; but it failed to do so." As to para (c) I find that if Mr Frost was advised that such a course was possible and appropriate, he would have given instructions accordingly. I conclude, then, that as a result of the negligence and the breach of retainer of the respondent after 4 November 1988, Frost Holdings lost the opportunity (or chance) to pursue its breach of confidence claim. I now turn to whether it was a valuable opportunity (or chance.) 50 I should add for completeness that the respondent has submitted that the breach of confidence claim was so "weak" that it would have had no reasonable prospects of success and that it should not, for that reason, have been the subject of any request or application to the Full Court to remit it for trial. For reasons given in the next section of these reasons for judgment, I have rejected this submission. I would, of course, note that there is no evidence that the actions of the respondent and its counsel in taking no steps at all in relation to the breach of confidence claim, proceeded from such an appreciation of the claim. B An Opportunity of Value? 51 It is important at the outset to emphasise that my function is not to decide the breach of confidence claim brought by Frost Holdings as a hypothetical question. While I necessarily must make an assessment of the likelihood of that claim succeeding and the extent thereof had it been remitted to O'Bryan J, my concern in this action is with the loss of the opportunity to prosecute the breach of confidence claim: cf Sellars v Adelaide Petroleum NL (1994) 179 CLR 332. 52 Given my finding that the claim was not abandoned it is clear that on and from 7 November 1988 when the Full Court judgment was handed down, the opportunity to prosecute the claim was lost. The respondent's defence, essentially, is that that opportunity was one without value in that the breach of confidence claim was doomed to failure. Before considering this question of "value" it is necessary again to refer to additional factual material and to comment briefly on the Full Court's decision and its possible significance to a later hearing of the breach of confidence claim had it been remitted to O'Bryan J. Additional Evidence Evidence relating to the breach of confidence 53 It is necessary to refer in a little detail both to the claimed subject matter of the breach of confidence and to the alleged unauthorised use of it. (i) The concept put by Frost Holdings to the Bank in its proposal of February 1986 contained the core ideas of a Bicentenary art collection of 12 commissioned paintings to be financed by the Bank and of a calendar thereof. It contained as well a considerable variety of related proposals concerned with the development of the subject matter of the paintings, the commissioning of them, the use and disposition of the collection, the quality etc of the calendar, the prospects of endorsement by the ABA, marketing, etc. (ii) As previously noted, the Bank required and secured the amendment of the proposal with the result that only 8 paintings would be commissioned (the principal public gallery in each State commissioning the work) the remaining 4 coming from the Bank's own collection. Additionally the commissioned works were later to be presented to their respective commissioning gallery rather than being kept in a collection to be given to the Australian National Gallery as Frost Holdings had proposed. (iii) When the Bank created its own "Bicentennial Collection" in August 1986 it followed the path in the creation of the collection that was envisaged the revised proposal, not Frost Holdings' original proposal. The Breach of Confidence Claim at Trial 54 The entire transcript of the trial before O'Bryan J has been put in evidence in this proceeding. While it reveals that the contract claim provided the centrepiece of the litigation, it equally shows a full canvassing of the breach of confidence claim save, as previously noted, Dr Jessup did not make submissions upon it at the end of the hearing. 55 Because they have some possible bearing on the issue before me there are certain parts of the transcript to which reference should be made. (a) The damages claim 56 In opening his case, Dr Jessup described the compensation claim in the breach of confidence claim as being: "the same as the loss of profit on the undertaking, because it will be submitted in due course that the plaintiff might have anticipated a profit of a fairly like order if they have been able to go ahead with the sale of the calendar to somebody else." The decision in Talbot v General Television Corporation Pty Ltd [1980] VR 224 loomed large in submissions on damages. In the respondent's address the following exchange occurred (Transcript pp 485(a) - 485(b)): "MR STRAHAN: And that is put squarely in the alternative to the - as an alternative basis for claiming precisely the same damages as are sought in the contractual action. HIS HONOUR: Well, that may be, but I thought prima facie the quantification of damages for breach of the confidential information, may not comprehend all the matters which would be taken into account in the assessment of damages for breach of contract. MR STRAHAN: Indeed, your Honour. HIS HONOUR: It would be a lesser sum. MR STRAHAN: Indeed and it is put that in no way can one simply say "Well, look at our particulars of damages under the contract claim, and there you see how we put this" but - and we have gone so far as to write to the defendant - the plaintiff in effect saying "Well, this can't be right, tell us how you put your claim under this head" --- HIS HONOUR: Yes? MR STRAHAN: The answer we got back is "Look at our particulars under the other claim and there it is" and that is the way that it sought to be put. HIS HONOUR: Marks J, in Talbot's case, found very real difficulty in assessing damages, and the Full Court agreed." (b) Communication of the information in confidence 57 At p 476 of the Transcript the following exchange occurred between O'Bryan J and Mr Strahan: "HIS HONOUR: But he imparted that idea to your client in confidence. Clearly the conversations in the first place were confidential. MR STRAHAN: Yes, we cannot dispute that --- HIS HONOUR: And he showed them a way in which they could breathe life into his idea and not costs anything. MR STRAHAN: Yes. HIS HONOUR: That is really what he was all about." (c) The variation of the original proposal 58 At p 482 of the Transcript in an exchange over the Bank's variation of the proposal, it was said: "MR STRAHAN: And so on, and from the initial outline by Mr Frost, we have in the period up to 11 April moved to the position where now Mr Frost is in effect inquiring of the bank the confirmation as to exactly what the bank is going to do. In other words, his original proposal has been played around with and altered to the point where the initiative as to how it is all going to take place is with the bank. HIS HONOUR: But that is not uncommon, where people meet in confidence and discuss a proposal, one party puts a proposal to another in confidence and the other refines it, and out of it comes the secret if you like which is to be protected. MR STRAHAN: Indeed. HIS HONOUR: And that is what happened at this stage, is it not?" (d) Originality 59 At a variety of places in the Transcript the Bank put squarely in issue the lack of sufficient "novelty" or "uniqueness" of the proposal or of the remnant of Mr Frost's idea in the proposal as varied.

The Full Court Decision 60 In breach of confidence cases where protection is sought for an idea, there has been an understandable insistence that the idea itself be "sufficiently developed." So in Fraser v Thames Television Ltd [1984] 1 QB 44 in considering an idea for a television programme (which in its pirated form was broadcast as "Rock Follies"), Hirst J observed (at 65-66): "I accept that to be capable of protection the idea must be sufficiently developed, so that it would be seen to be a concept which has at least some attractiveness for a television programme and which is capable of being realised as an actuality: see per Harris J in Talbot v General Television Corporation Pty. Ltd. [1981] R.P.C. 1, 9, lines 20-22. But I do not think this requirement necessitates in every case a full synopsis. In some cases the nature of the idea may require extensive development of this kind in order to meet the criteria. But in others the criteria may be met by a short unelaborated statement of an idea. In Talbot's case itself I do not think the detailed submission, quoted at p. 5, added very much of substance to the idea which is set out in one sentence starting at line 10 on p. 5." 61 This variable requirement of specificity or development is, of course, markedly different from the requirement that for a contract to exist, its essential or critical terms must be certain and agreed. The decision of the Full Court in the Bank litigation was concerned solely with the latter question: see esp ANZ Banking Group Ltd v Frost Holdings Pty Ltd [1989] VR 695 at 700. Its conclusion on that matter had no direct bearing at all on the question whether the Frost Holdings' idea was sufficiently developed to be a candidate for protection by equity. The best that could be said of the significance of the Full Court decision to a later decision on the breach of confidence claim had such transpired, would be that the trial judge may have been inclined to re-examine his own view as to the sufficiency of the idea's development before concluding it was an appropriate subject for protection. 62 I have found it necessary to deal with this matter as the respondent has sought to attribute a significance to the Full Court decision in this regard in the present proceeding which it clearly does not have. Findings and Conclusions on the Chance Lost 63 The applicant has rightly submitted that this is not a case in which I am required to speculate about what the evidence might have been at a hypothetical trial. The case was in fact conducted and an intimation given by the trial judge of his likely view on the issue of liability but not of damages. The applicant's submission in consequence is that it lost the certain chance of a finding in its favour on the merits. 64 For my own part I would have to say I am in broad agreement with this submission though I would not put the matter as absolutely as the applicant does. It may well have been the case that on a remitter to O'Bryan J, His Honour would have invited further submission on the breach of confidence claim generally given that the applicant had not actually addressed on it. That process may have affected the view ultimately arrived at by the trial judge. Nonetheless, I consider the greater likelihood to be that he would have adhered to his tentatively expressed view at the end of his judgment that the Bank had been guilty of an actionable breach of confidence. The matters raised by the respondent before me to suggest the contrary - that the idea was not sufficiently developed or was not novel; that the information used by the Bank differed from Frost Holdings' proposal - are in my view images of, or variants on, the matters actually canvassed at the trial, as witness the exchanges I have set out. While I do not consider that the views expressed by O'Bryan J in those exchanges necessarily reflected his actual or concluded views, they nonetheless indicated that the issues being raised before me were there adverted to. At best, and then to no significant extent, the matters raised by the respondent are merely contingencies that might affect the value of the opportunity. They do not in any way diminish or destroy the opportunity itself. 65 There is no real disagreement between the parties as to what are the essential ingredients to be proved to make out the actionable breach of confidence. The information in question - the "idea" here - must be confidential in the sense of being "relatively secret"; it must be communicated in circumstances importing an obligation of confidence, this commonly being shown by proof that it was disclosed for a particular purpose only; there must be an unauthorised use of the information or of some part thereof; and, because confidentiality is claimed for an idea, the idea itself must be "sufficiently developed": see generally Interfirm Comparison (Australia) v Law Society of New South Wales (1975) 5 ALR 527; Ansell Rubber Co Pty Ltd v Allied Rubber Industries Pty Ltd [1967] VR 37; Talbot v General Television Corporation Pty Ltd, above; Smith Kline & French Laboratories (Aust) Ltd v Secretary, Department of Community Services and Health (1990) 22 FCR 73. 66 While it may be that a claim of the variety advanced by Frost Holdings might be considered by some to be somewhat adventurous, I am satisfied that a judge in the position of O'Bryan J could find - and that His Honour would have found - an actionable breach on the material before him. 67 Far more problematic in my view is the level of compensation O'Bryan J might have awarded for the wrong. It is this part of the matter that occasions most difficulty. C Damages for the Lost Opportunity 68 O'Bryan J did not provide any indication of how, and in what likely measure, he would have assessed damages for the breach of confidence claim beyond observing in argument (i) that those damages would be in "a lesser sum" than for the breach of contract; and (ii) that the judges in Talbot's case experienced "very real difficulty' in assessing damages. 69 The manner in which the claim was put by the applicant was that its loss was the profit it was unable to obtain from the exploitation of the idea (being the profit to be derived from the sale of the calendars to the business sponsor of the project) and that for practical purposes this loss was identical to that suffered in the contract claim. The respondent's submission is that, with the demise of the contract claim in the Full Court, the alleged loss evaporated and no other basis for valuing the loss was put forward as a matter of evidence. Additionally it is claimed that no loss flowed to the applicant from the Bank's use of the "collection" part of the concept as it was only from the sale of the calendar that the applicant was to derive profit. 70 Before expressing my findings and conclusions on this part of the damages claim in the present proceeding I should refer to two matters, the first of evidence; the second of loss. Additional Evidence 71 First, when the Bank indicated to Mr Frost of 7 August 1986 that it did not wish to go ahead with the calendar the reason given for its decision was that it had been advised that it was not viable. The Bank's letter of that date stated (inter alia) that: "As you know, we have been conducting further research into the viability of this project. Our main concern lies in that we have discovered that public perceptions of a calendar produced by a corporation is that it should be a 'giveaway' item as the National Australia Bank have done successfully over many years. As you know this project was planned to be self funding and based on your sales projection of 50,000 calendars, our research now indicates this is not feasible. Our Market Research area also believes it is impractical to utilise our branch network for the sale of the poster due to the large stock holding requirement and that we would have to consider a direct sales campaign, again, a further costly area. The Australian Bicentennial Authority Licensing fee also dilutes the attractiveness of the project and, unfortunately, we no longer believe that the project is a viable public relations exercise for us. Keith, we are just unable to see how, given the above facts, that this could become a successful commercial project or even a break-even venture. On reflection we feel the project would be best sold on a commercial basis, without naming rights, through retail chains; perhaps a 'Myer' involvement would not have the same restrictions." No evidence was led by the Bank at the trial in support of the views stated in the letter. 72 Secondly, after the Bank's withdrawal from the project, Frost Holdings attempted to induce other sponsors to support what then necessarily was a variant of the original concept that emphasised the calendar, the Bank having appropriated the commissioned collection part of it. These endeavours came to nothing. They properly can be described as attempts to salvage something from the original idea. Damages for Breach of Confidence 73 The manner in which damages are to be assessed for breach of confidence has a complexity that is compounded, variously, by the significance to be attributed to the nature of the information itself, the use the confider intended to make of it, and the circumstances and consequences of the breach of confidence. The end purpose of an award of damages is, though, to put the innocent party in the position it would have been in had the misuse of the confidential information not occurred: see Dowson & Mason Ltd v Potter [1986] 2 All ER 418; and see general, Dean, The Law of Trade Secrets, 1990, 316 ff; Stuckey-Clarke, "'Damages' for Breaches of Purely Equitable Rights: The Breach of Confidence Example" in Finn (ed), Essays on Damages, 1992. And so, depending on the circumstances, damages may be assessed on the bases, variously, of a loss of profits: cf Dowson & Mason Ltd v Potter, above; of a fair user charge: cf Interfirm Comparison (Australia) Ltd v Law Society of New South Wales, above; of the market value of the information: cf Seagar v Copydex Ltd (No 2) [1969] 2 All ER 415; of a consultant's fee: Seagar v Copydex Ltd (No 2); etc. 74 I mention the above because even if a "loss of profits" basis for an assessment would have been found to be inappropriate in the circumstances of the applicant's breach of confidence claim, another measure may in principle at least have been available - even if its invocation might have required either leave being given to adduce further evidence or, alternatively, the reference of the inquiry as to damages to a Master. Findings and Conclusions 75 It is not my task to conduct "a trial within a trial." Nonetheless, unusually, I am confronted with a state of affairs in which the breach of confidence claim was in fact all but fully litigated. In consequence what it revealed or suggested ought to be taken into account when evaluating the value of the opportunity lost, constraining though this may be. I should re-emphasise though, that I am not in this proceeding required to decide the breach of confidence claim as a hypothetical. But in the distinctive circumstances it is appropriate, in my view, to have regard to the courses that would have been open to O'Bryan J and to the likely characterisation His Honour would have made of the issues and evidence before him on a remitter. 76 Turning to the breach of confidence action itself, it is important to emphasis that although the idea devised by Frost Holdings and later developed during negotiations with the Bank had two component parts - the collection and the calendar - it was a composite idea. Once the collection element had been appropriated by the Bank, it would have been open to the trial judge to have found that the whole idea had been rendered useless so far as the applicant was concerned, and that any later proposal Frost Holdings may have advanced to other sponsors involving a calendar alone - as was the case - was a separate if partially similar concept. In other words whatever profit-making potential the concept had (via the calendars) before the breach of confidence, that evaporated on the breach. It is more probable than not that the trial judge would have found that the breach of confidence robbed the confidential information of residual value, the integrity of the whole idea having been destroyed by it. 77 Frost Holdings having thus been wholly deprived of the right to exploit the idea for its own advantage, how might the trial judge have measured the loss it thereby suffered? Necessarily I must engage in some speculation as to possibilities and probabilities. 78 First, that assessment would have taken place in a setting in which there was no contract in fact, with the consequence that a contractual measure of loss could not have been relied upon as such to provide the yardstick for the award. Nonetheless, it would properly have been open to the trial judge to consider the likelihood of a contract having been entered into had the Bank not misappropriated part of the idea: cf Talbot's case, at 251. While the Bank intimated that it did not want to proceed with the calendars for commercial reasons, it would have been open to the judge to discount that explanation, lacking as it did any independent evidentiary foundation, and as being self-serving. Equally, the view might well have been taken that the value to the Bank of the collection part of the concept was such that, in order to have the benefit of it, the Bank would have been prepared to accept the calendar component even if at some scaled down price. The above contingencies may well have led the trial judge to conclude that a loss of profits basis for the assessment of the loss remained appropriate, albeit the contingencies to which I have referred requiring quite significant discounting (in the order of 50 per cent) of the sum awarded. There is, in my view, some real likelihood that such an approach would have been taken. 79 Secondly, if the trial judge had approached the matter on the basis that the Bank would not have contracted with the applicant because the calendar proposal was not viable, a loss of profits basis as such for damages would have become distinctly problematic. It would have been necessary to show that the idea, nonetheless, was one reasonably capable of being brought to realisation with another sponsor and at a likely profit. The evidence of this was distinctly lacking, though His Honour may have been prepared to re-open the evidence to allow the remedy of this. 80 Thirdly, while finding the Bank would not have contracted to buy the calendars, the trial judge may well have considered - and inferred - that the Bank would have been prepared to buy the entire concept so as to enable it to use the collection part of it. The difficulty on the evidence before His Honour, in constructing a contract of sale would have been significant but again further evidence may have been permitted. In any event I consider that the profit Frost Holdings would have derived from the projected sale may have provided some foundation from which a process of discounting to arrive at a "sale price" could have been undertaken. Alternatively such profit could have provided some evidence of what a "conversion" measure of damages would have yielded. 81 What is certain, in my view, is that the measure adopted would have resulted, on any of the bases mentioned, in a sum significantly less than that in fact awarded in the contract claim because of the contingencies involved. 82 I am satisfied that, despite the slender material before the trial judge and its direct link only to a loss of profits basis of assessment, His Honour would probably have found sufficient in the material before him to award damages albeit on a significantly discounted non-contractual basis using the findings His Honour had previously made as to the loss of anticipated profits on the sale of the calendars as a foundation for the award. 83 There are obvious limitations to a process of assessing the prospects of a claim as if tried ten years ago. What then the arguments would have been must necessarily be matter of some conjecture. Further, I mean no disrespect in saying that the courses or approaches likely to have been taken by O'Bryan J cannot be predicted with certainty. What, though, I am satisfied of is that Frost Holdings' right to argue its claim was clearly valuable and that if pursued would have resulted in a substantial damages award: cf Instant Nominees Pty Ltd v Redman [1987] WAR 218 at 226-227. 84 In assigning a value to the opportunity lost for the purposes of the present proceedings, I consider that the award of a sum in the order of $55,000 represents a reasonable distillation of the possibilities affecting the prosecution of the breach of confidence claim. I have in arriving at this sum used His Honour's profit estimate on the calendar sales in the contract action, discounted first, by a small percentage against the contingency that on re-argument no breach of confidence would be found on the facts, and secondly, by a much larger percentage (in the order of 50 per cent) to take account of the variety of possibilities and contingencies that could have affected the assessment of damages. 85 There is a number of additional matters to which reference should be made. First, while one contingency affecting the value of the opportunity to which reference should be made was the prospect of an appeal from any decision of O'Bryan J favourable to Frost Holdings on the breach of confidence claim, I would have to say that I do not consider the likelihood thereof to be of any particular moment. Rather, I consider the Bank more likely to have wanted this matter to be finalised. Its moral position was decidedly weak. 86 Secondly, the Bank in fact made offers of compromise both before the trial (of "expenses") and before the appeal (in the sum of $105,000). These were rejected by Mr Frost. The present respondent has claimed that the applicant's loss in the Bank litigation was caused by its refusal to accept any such offer. As to this I need only say that the offers and their rejection pre-date the negligence and breach of retainer I have found. Equally, there is no evidence to suggest Mr Frost was advised to accept any of the offers. The Additional Damages Claims 87 These, in varying forms, are made up of legal costs. The first relates to the Bank's cost order, the others to expenses incurred both with the respondent and with other legal firms. (i) The Bank's Costs Order 88 If, as I have found would probably have occurred, the Full Court had remitted the breach of confidence claim to the trial judge, I am satisfied that the Full Court would as well have reserved the issue of the costs of the trial to the trial judge. The costs order for the appeal would, though, have stood in favour of the Bank. 89 Having already found that the applicant would have been successful in recovering substantial damages on the remitter of the breach of confidence claim, the question then arises as to the costs order that the trial judge would probably have made in relation to the trial as a whole. 90 Predictably in submissions the parties have taken polar opposite positions. The applicant's is that there is no reason why costs should not follow the event given that the action as an event was conducted on the basis of two causes of action that were not wholly distinct from each other and that shared a large factual core: cf The Ritz Hotel Ltd v Charles of the Ritz Ltd (1989) AIPC 90-567. The respondent's contention, based in some degree on page references to breach of confidence in the transcript of the original trial, is that the proceeding was in substance one for breach of contract; that claim was unsuccessful; and the costs award accordingly should reflect this. Only a small portion should be attributed to breach of confidence. 91 The nature and scope of the judicial discretion exercised in the award of costs are well known and need not be canvassed here. I am of the view, though, that a trial judge would in the circumstances have been likely to have made some apportionment of costs - albeit an apportionment that reflected that the applicant at the end of the day was vindicated in instituting legal proceedings. Given the extent of the factual core of the two claims and the level of interconnectedness of the claims as prosecuted, that apportionment could have been at some point in the range of 80:20 and 50:50 as between breach of confidence and breach of contract. In these circumstances a 60:40 figure would not be unreasonable and is the one I adopt. 92 Translating these proportions into a monetary sum on the figures provided to me, the amount of the costs as taxed that were attributable to the trial was $26,768.29 (being 53.73 per cent of $48,420). Sixty per cent of that sum is in the order of $16,060. I find that the respondent's negligence and breach of retainer rendered the applicant liable in this sum to the ANZ for costs, a liability it would not have suffered but for that wrongdoing. (ii) Legal Expenses (a) O'Loughlin Robertson 93 The costs claimed here are half of those incurred in the initial retainer of O'Loughlin Robertson in South Australia that led ultimately to Frost Holdings' retainer of Darvall McCutcheon first on an agency basis, and then as solicitor on the record in the Bank litigation. The basis of the claim is that as a result of the respondent's negligence and breach of retainer, the applicant lost its opportunity to secure judgment in its favour and so wasted the above proportion of these costs. 94 I am unable to accept this. These costs were of an exploratory and preparatory nature, and were incurred before any claim was formulated and importantly before a breach of confidence claim was envisaged. I do not consider that they properly should be characterised as wasted costs in the Bank litigation. (b) Darvall McCutcheon 95 The claim here is for $23,615.39 being one half of the sum of $47,230.77 paid to the respondent in respect of its retainer by the applicant. The 50 per cent apportionment represents a crude attempt to attribute costs to each of the two causes of action. I should add that the figure of $47,230.77 is significantly less than the amount for which Frost Holdings was actually billed. 96 It is the case that in some significant degree costs incurred were wasted because of the firm's wrong. It is a matter of no little guess-work to settle upon a figure that properly should be taken reasonably to represent that loss. There can be no science in the matter. A sum in the order of $20,000 would, in my view, be a proper one to adopt in this respect. I should add I do not consider that any detailed analysis of the various accounts rendered would have assisted in the selection of an appropriate figure. (c) Goldberg & Co/McKean & Park 97 The costs claimed relate to legal expenses incurred in obtaining advice on further proceedings against the Bank and in prosecuting the unsuccessful quantum meruit claim. I need not set out any of these costs here as I do not consider they are properly recoverable in this proceeding. 98 It may well be - and probably was - the case that the applicant had a strong and substantial claim against the respondent for professional negligence in not including a quantum meruit claim in the original proceedings against the Bank: cf Mason and Carter, Restitution Law in Australia, 1995, para 1033ff. That claim would have long since have been statute barred. What, in my view, is now being sought is an impermissible attempt to recover costs thrown away in pursuit of a claim unrelated to the negligence/breach of retainer claim with which I am concerned. Rather, it relates to a matter not part of the present proceedings and it cannot be brought within it by resort to some notion of "salvage" or attempted "mitigation." (d) Winding-up legal costs 99 The applicant company, as I have previously indicated, was wound up on the petition of the Bank in respect of its unpaid taxed costs. What is sought here by way of damages are the costs incurred in retaining Esau, Meister & Associates to resist the winding-up application. 100 It is unnecessary again for me to enter upon this matter in any detail. The evidence, which I do not set out here, satisfies me on the balance of probabilities that the company's inability to satisfy the Bank's debt was a consequence of actions taken by Mr Frost. Once it became clear that the Bank intended to proceed to a taxation of its costs, Mr Frost set in train steps to preserve the assets of Frost Holdings, transferring out of it both a holding of prints on which, in conversations both with Mr Goldberg and Mr Resch, he placed a value of around $90,000 and a Mercedes-Benz car that he valued at around $25,000. The liquidator's notes confirmed the occurrence of these transfers, but at a great undervalue. 101 Furthermore, while the company was technically insolvent at all relevant times in the sense that its liabilities far exceeded its assets, those liabilities were in large measure debts to shareholders. In reality, it would seem, the company could operate for as long as Mr Frost was prepared to stand behind it. 102 In this instance not only was he not prepared to stand behind Frost Holdings, he took positive steps to ensure it was without assets. In these circumstances I am not satisfied that the money spent in resisting the petition - it was incurred contemporaneously with expenditure on the quantum meruit claim against the Bank - is a proper head of damage in this proceeding. Conclusion 103 This is a particularly unfortunate proceeding. The applicant, though probably having good claims both in quantum meruit and in breach of confidence against the Bank, has suffered the misfortune of being left remediless against the Bank. Insofar as its claim against the respondent is concerned such remedy as it now has available to it is very much second best. And what is particularly ironic is that such recovery as it has secured in this proceeding may well inure to the benefit of the Bank as a creditor of the company in liquidation. 104 The Bank is not a party to the present proceedings and has not had an opportunity to address me on any of its actions in this matter. In those circumstances I refrain from comment upon its conduct other than to say that, unexplained, it borders on the reprehensible. 105 As to the damages award to be made it will be in the sum of $91,060.00 being the aggregate of the sums of $55,000, $16,060 and $20,000. There will be judgment for the applicant in that sum. The parties have asked to be heard on the question of interest and costs. I certify that the preceding one hundred and five (105) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Finn.

Associate: Dated: 5 May 1999 Counsel for the Applicant: Mr D Porter QC

Solicitor for the Applicant: Russell Kennedy Solicitors

Solicitor for the Respondent: Deacons Graham & James

Dates of Hearing: 12 - 14 April, 19 - 22 April 1999