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[1995] SASC 5381
Supreme Court of SA
1995-12-14
Doyle CJ
Original judgment source is linked above.
COURT IN THE FULL COURT OF THE SUPREME COURT OF SOUTH AUSTRALIA DOYLE CJ(1), OLSSON(2) AND DEBELLE(3) JJ
CWDS Negligence - professional negligence - Causation - solicitor - advice to plaintiff who as purchaser seeks to avoid contract to purchase land - advice that contract can be avoided - advice contrary to decided authority - solicitor negligent - loss of opportunity to settle claims arising out of contract - whether negligence caused loss of opportunity - appeal allowed. Real Property Acts223 lb, referred to. Castanelli v Hay ; Midland Bank Trust Co Ltd v Hett, Stubbs and Kemp ; Aluminium Products (Qld) Pty Ltd v Hill ; Sykes v Midland Bank Executor and Trustee Co Ltd ; Lillicrap v Nalder and Son ; Hanflex Pty Ltd v H S Hope and Associates ; Sellars v Adelaide Petroleum NJ ; ; Duchess of Argyll v Beuselink ; Faithfull v Kesteven ; Fletcher v Jubb , applied.
HRNG ADELAIDE, 7 August 1995 #DATE 14:12:1995 #ADD 15:1:1996
Counsel for appellants: Mr N W Morcombe QC with Mr B Beazley
JUDGE1 DOYLE CJ For the reasons to be delivered by Debelle J, in my opinion the appeal should be allowed. I agree with the orders which he proposes.
JUDGE2 OLSSON J This is an appeal against a judgment entered by Lee DCJ in an action in the District Court. In those proceedings the respondent had claimed damages from the appellants for their alleged negligence and breach of contract in relation to certain legal work done by them as her solicitors. The learned trial judge upheld that claim and entered judgment in favour of the respondent against the appellants in the sum of $62,820 (inclusive of interest), plus costs to be taxed.
The appellants initially sought to appeal against that judgment, both as to liability and quantum. However, on the hearing of the appeal, the appeal as to quantum was abandoned, and need not further be considered.
The trial extended over many hearing days, the transcript of evidence totalling some 948 pages. A substantial quantity of documentary evidence was also tendered.
Before attempting to address the fundamental issues arising on the appeal it is first necessary to attempt to tease out the key narrative facts, bearing in mind the findings expressed or implied in the written reasons published by Lee DCJ.
At all material times the appellants, in partnership, conducted a legal practice under the firm name "Bonnins". The appellant Nield was a senior partner in that firm and was the practitioner who had the conduct of the relevant matter. At the time he held himself out as a legal practitioner who had particular expertise in the conveyancing field. He testified that he was then principal partner of Bonnins dealing with Real Property Act matters.
The respondent was a woman of Chinese birth, aged 48 years. She gave evidence that she had, in 1982, migrated from Hong Kong to Australia. Thereafter she was involved, with other relatives, in the conduct of a series of restaurants or retail food outlets in South Australia. She was able to speak basic English and read numerals, but unable to read or write that language.
As a consequence of negotiations conducted through one Danny Luc, who was also of Chinese extraction and was associated with a real estate agency company known as New World Realty Pty Ltd, the respondent, in June 1990, signed a contract note for the purchase of a property situated at 419 The Parade, Kensington Gardens for the sum of $360,000. The vendors were Enrico and Maria DeMichele.
The contract was conditional upon mortgage finance becoming available to the respondent on stipulated terms. It was also signed subject to a special condition related to the necessary subdivision of the relevant certificate of title. The proposed sale purported to be of portion only of the land in a single certificate of title; and the special condition appears to have contemplated two separate titles issuing in respect of the portion agreed to be purchased. The subdivision consents were to be obtained by 20 September 1990 and new titles issued by 20 January 1991.
It was asserted by the respondent that, at or before the time of entry into the contract note, Luc represented that she would be able to build eight home units on the property; and that she agreed to purchase on that basis. It later emerged that such a proposal was almost certain to be rejected by the Corporation of the City of Burnside, as the relevant planning authority. That situation was advised to Bonnins by letter from the City Planner on or about 6 December 1990.
The evidence given by the respondent was to the effect that, informally, she became aware of the fact that she would not be able to construct eight town houses on the property well prior to 6 December 1990. Accordingly, she consulted Mr Ardalich, a solicitor, on 21 September 1990 to seek advice as to whether she could "get out of the contract".
It appears that Mr Ardalich then acted for the respondent, both in relation to that matter and also with regard to another transaction; but she eventually became disenchanted with him and, in November 1990, sought separate advice from Nield.
The respondent's evidence as to what transpired when she did so was, at least implicitly, accepted by the learned trial judge. Indeed, it was in substantial conformity with Nield's own testimony.
At an initial consultation on 1 November 1990, the respondent asked Nield whether she could "get out of the contract". Having examined the contract note he, unequivocally, told her that it was void. When she said to him "Are you sure?" Nield left the room and then, somewhat dramatically, returned with a "big book", from which he proceeded to read to her and others who had accompanied her. When again queried, Nield reiterated that advice and told her to go and invite the attention of Ardalich to the contents of the book. (In this regard it was common ground that, at the time, Nield was directing attention to the provisions of section 223lb of the Real Property Act, 1886 ("the RPA section"), which contained certain prohibitions, inter alia, against the sale of part allotments of land.)
The respondent thereupon told Nield that she did not trust Ardalich any more and requested him to act for her. Nield agreed to do so upon the respondent obtaining her file from Ardalich, which she duly procured. At that point the solicitor acting for Mr and Mrs DeMichele was Mr Minicozzi.
What then followed was summarized by the learned trial judge in these terms:-
"In an exchange of correspondence in November and December 1990, the defendant and N Minicozzi, the vendors' solicitor,
joined issue on the following propositions advanced by the defendant on the plaintiff's behalf:-
heritage significance of large trees at the front of the property."
It is convenient, at this juncture, to pause to record that the evidence led before the learned trial judge indicates that the advice tendered by Nield to the respondent was at odds with the decision of the Full Court of this Court in Castanelli v Hay (1990) 156 LSJS 95, which had been published on 8 February 1990. A perusal of the evidence of Nield indicates that he, at all material times, somewhat perversely, strongly disagreed with the approach taken by the Full Court and strenuously argued that he was correct and it was wrong. His initial advice to the respondent was patently based on that premise.
It is apparent from the correspondence written by Nield, soon after he was instructed, that he intimated to the vendors that the respondent regarded the contract as void, primarily having regard to the RPA section (despite the decision in Castanelli v Hay). He did also make mention of some other matters of complaint.
The attitude expressed by Nield, on the face of it, amounted to a repudiation of any contractual liability. Minicozzi, on behalf of his client, maintained that the contract was still on foot. He challenged Nield's interpretation of the effect of the RPA section.
By late November 1990 an issue had also arisen as to whether the contract was at an end because, it was asserted, planning approval had not issued by what was alleged to be the date contemplated by it. What had issued was, in effect, a contingent approval dated 20 September 1990, which required certain conditions to be met. However, by letter dated 17 December 1990, Minicozzi advised Nield of the projected issue of new titles prior to 20 January 1991, the date stipulated in the contract. Their actual issue was confirmed by Minicozzi on 8 January 1991. At that time a notice to settle under the contract was given, on behalf of the vendors, to the respondent, settlement date at the Lands Titles Office being nominated as 18 January 1991.
On 8 January 1991 Nield had a conference with the respondent. Her evidence was to the effect that, by that stage, she was perplexed by the attitude of Minicozzi, in light of the fact that Nield was so adamant that the contract was void. As to this she deposed:- "... because I see everything still looks a mess for me and I got question 'Why Minicozzi don't want to know?' So I tell Mr Nield, I say 'What about we get a second opinion, see what's going on?'".
She said that he agreed and, after some discussion, suggested seeking an opinion of Mr Robert Cameron, of counsel.
Nield conceded, in cross examination, that a stage was reached when it was agreed that an opinion should be sought from Mr Cameron, but it was his memory that the suggestion emanated from him. Certainly it is clear that, after he had a conversation with Luc on 9 January, the respondent confirmed Nield's authority to seek the opinion.
The evidence indicates that Nield spoke to Mr Cameron on 10 January and then formally wrote to him, on 11 January, raising a series of issues for opinion and supplying relevant background information.
On 14 January 1991, Nield had two telephone conversations with Cameron, who gave certain tentative oral advice, on the basis that, due to his commitments, he would not be able to give a written opinion for several weeks. By then the matter was becoming somewhat urgent, because settlement had been stipulated for 18 January and, in any event, a conference had been called for 15 January at Minicozzi's office (presumably by Minicozzi) for the purpose of attempting an agreed resolution of the differences between the parties. It is obvious that Minicozzi's intention was that both clients and their solicitors would be present.
As to this Minicozzi deposed:- "Q. Again, can you recall how that conference was arranged, or why it was held. A. Again, without looking at my notes I can't be precise, but at that conference I had my client present, I had the agent present, and Mr Nield and his client were invited to attend.
Q. Having regard to the nature of the parties attending the conference, can you now recall why it was brought on. A. My clients were in a difficult financial situation at the time and they were anxious to resolve this matter and achieve settlement early, and the object was to see if the matter could be resolved.
Q. Did you have any specific instructions at that stage as to settlement. A. I didn't have specific instructions in the sense that I had a bottom line figure to settle on, but I had a mandate to achieve a prompt settlement and my client would give consideration to any reasonable proposal."
Against that background the evidence as to exactly what was said by Mr Cameron to Nield on 14 January, surprisingly, is by no means entirely clear.
Nield was cross examined as to somewhat staccato notes made by him at the time, but the notes were not actually tendered in cross examination. Mr Cameron was not called and Nield's memory as to precisely what was said to him was far from good.
However, what does emerge from Nield's notes is that Mr Cameron's preliminary view was that there was nothing in Nield's point concerning the RPA section, but that there may be another basis, or other bases, for avoiding contractual liability. Nield's note as to this was really unintelligible. It read:- "Basis for arguable defence on the contract, on the basis the contract was void, on the basis that the contract was cancelled."
Nield was unable to enlighten the learned trial judge as to what that note was intended to convey.
Of particular significance for present purposes was Nield's final note, to the effect that Mr Cameron had indicated "Difficult to resile from the contract". Once again, Nield was unable to amplify precisely what had been conveyed to him in that regard, although he did accept that "a few alarm bells or warning lights were flashing". Mr Morcombe QC, of senior counsel for the appellants, contended that this was obviously related only to the RPA section point, but it is difficult to perceive how that could be so. The fact that it was the final point noted, after a suggestion that other bases of defence might exist, strongly indicates that it was a final, general observation made by Mr Cameron.
It must be recalled that the advice given was obviously unpalatable to Nield. On the one hand he readily conceded that he had, to that point, strongly and unequivocally advised the respondent that, by virtue of the RPA section, the contract was void - an opinion which "she obviously held in high regard". Moreover, Nield further conceded, in cross examination, that he did not agree with Mr Cameron's view.
On the evidence, there was strong reason to believe that, in those circumstances, there was considerable incentive for Nield to downplay the effect of the views expressed by Mr Cameron, especially as the latter had identified some alternative possibilities of escape from contractual liability. In giving evidence Nield insisted that he would have reported Mr Cameron's view as to section 223lb to the respondent. However, there is good reason to doubt that he did so, at least in clear and specific terms.
The respondent told the learned trial judge that, following his initial conversations with Mr Cameron, Nield said to her that he was "Very happy, because Robert Cameron same feelings, agree with what I say". This was consistent with her further evidence to the effect that she was subsequently contacting Nield quite regularly concerning the availability of Mr Cameron's considered written opinion, because she wanted to know precisely what he said.
There was thus ample basis for the comments made by the learned trial judge, in his published reasons, to the effect that:- "It is difficult to avoid the conclusion, put to the defendant in cross-examination but denied, that he had made section 223 1b, or at least his view of the section, a 'hobby-horse', and that he had developed a mind-set against any contrary view. The defendant said that he would have
passed Cameron's opinion on to the plaintiff before the conference on 15 January 1991. Whether he reconstructed his evidence in this regard or not, I am satisfied that his advice to the plaintiff at that time left her with a firm understanding that she had a good cause. I am also satisfied that his advice was based primarily upon his view of section 223 1b. If it be true that the plaintiff did not want to proceed with the purchase of the property for reasons of her own, the defendant should still have advised the plaintiff that failure to settle on the day appointed by the vendors, namely 18 January 1991, would expose her to
substantial risks in the litigation which had been threatened."
It is clear that, on 15 January 1991, Nield telephoned the respondent concerning the conference at Minicozzi's office. This was the first occasion on which he spoke to her, following his conference with Mr Cameron. The respondent testified that he told her that it was unnecessary for her to go to the conference - that he would represent her. His evidence was to the effect that she was not prepared to make an offer. It is to be noted that the respondent was not cross examined on what advice was given to her on his occasion.
The evidence as to precisely what passed between Nield and the respondent prior to the conference is quite unsatisfactory. Nield's notes indicate that she actually came to his office for a consultation at 12.30 pm, but they do not record either what advice (if any) was tendered by him or what instructions he received as to the conference.
Contrary to the respondent's evidence, it was Nield's assertion that she instructed him to go to the conference alone and try to obtain an offer. He claimed that he advised her to go, but she refused. He did, however, concede that he cannot remember whether he gave her advice from which she could give him precise instructions.
Nield alone attended the conference, which was, essentially, an abortive exercise. He projected a quite intransigent stance and was prepared to concede nothing - despite an obviously conciliatory attitude displayed by Minicozzi and his clients. Undoubtedly, the situation which developed was the direct product of Nield's entrenched views and the manner in which he had communicated them to the respondent. Indeed, the learned trial judge found that the whole tone was set by Nield's indication, on arrival, to the effect that his client did not see any reason for coming. The possibility of compromise was never really seriously canvassed.
In the course of his reasons the learned trial judge summed up the situation at that point by saying:- "... the conference presented the plaintiff with the opportunity of settling her dispute with the vendors for substantially less than the sum which she ultimately paid in March 1992. I hold that the plaintiff's failure to take the opportunity was mainly a consequence of the defendant's
strong but erroneous advice to her that section 223 1b was a ground of avoidance."
What transpired subsequently to the conference can be summarised in relatively brief terms.
The evidence indicated that Nield spoke with the respondent following the conference. He secured her instructions to waive any requirement for Minicozzi to issue notices to complete for the projected settlement date of 18 January. He also had a strategy conference with Mr Cameron. Nield's notes of the conference are somewhat cryptic and are difficult to read, but they do refer to expressing to Minicozzi reliance on grounds other than the effect of the RPA section.
In the event, on the following day, Nield wrote to Minicozzi, inter alia, in the following terms:- "We acknowledge receipt of your letter of 7th January 1991 and confirm attendance at a conference at your office on 15th January 1991.
As the conference was of no benefit to either party, you asked us to let you know whether our client proposed to attend settlement on 18th January 1991 at 11.00 a.m. at the Lands Titles Office as specified in your notice of 7th January 1991.
We have told you repeatedly that our client does not consider she is bound by the contract signed by the parties on 27th June 1990 for a number of reasons, including:-
September 1990 was not complied with and that the contract was cancelled by notice to your clients by letter from New
... we reject your notice dated 7th January 1991 and your request that settlement take place on the 18th January 1991. Our client will not be attending settlement on that date or any other date set by you and there is no need for your clients to go through the procedure of drawing and executing a Memorandum of Transfer or preparing in other respects for a settlement on that date. ..."
It is to be noted that the letter still persisted with Nield's assertion as to the impact of the RPA section.
Mr Cameron's formal, written opinion was eventually received by Nield on 28 February 1991. This was a substantial document, a copy of which is to be found from pages 1193 to 1210 of the appeal book. The learned trial judge accurately summarised the conclusions in it in these terms:- "1. there is a good basis to suggest that the contract was induced by misrepresentation of Luc acting as agent for the vendors so as to make both Luc and the vendors liable in misrepresentation to the plaintiff and entitling her to rescind the contract.
not granted by the relevant authorities by 20 September 1990, but the plaintiff may be precluded from taking the point because of the correspondence emanating from the previous solicitor."
A perusal of the opinion reveals that the RPA section point was discussed, in relatively brief terms, well into the document. The extent to which a lay reader, such as the respondent, would truly have appreciated the significance of it may well be a moot point.
This is a not unimportant consideration in light of the evidence-in-chief of the respondent as under:- Q. What did he say about receiving a letter from Mr Cameron. A. He just say 'Oh, I got answer from Mr Cameron, very good. Happy. Because it was the same, he agree, Mr Cameron agree what I say'.
Q. I just want to be sure that I understand that. If you can't explain what you want to say, perhaps it will be appropriate if you indicated to his Honour, and we'll come back to that matter when the interpreter arrives. Do you
Q. If you are having any difficulty, would you tell his Honour, if not we'll just keep going as we are. A. Yes, okay.
Q. So what did Mr Nield say about Mr Cameron's letter. A. He say Mr Cameron got the same feeling as him.
Q. Got the same feeling. A. Yes, the contract void.
Q. Did he say anything else about Mr Cameron's opinion. A. No, he just tell me on the telephone, or something.
Q. Did you see a document, letter or whatever that Mr Cameron had sent Mr Nield. A. No."
It was put to the respondent that, as was contended by Nield, a copy of the opinion had been sent to her by courier on 1 March 1991 with the request that someone read it to her. In cross examination she said that she had no memory either of receiving it or, on 4 March 1991, of attending Nield's office, when, it was asserted by him, he went through it page by page.
This issue was not resolved by the learned trial judge in his reasons. All that can be said is that Nield produced a contemporaneous note dated 4 March 1991 in which he recorded that he did see the respondent between 10.02 and 11.01 am and then "Went over R Cameron's opinion and my notes re same and my queries with Robert."
Nield had, in fact, discussed tactics with Mr Cameron on 1 March, in the course of a telephone conversation, having received and read the formal opinion. It had then been agreed between them that it was best to "let dust settle", which appears to have meant that it was felt advisable simply to allow the vendors to attempt to re-sell the Kensington Gardens property and await the actual outcome of that sale.
It seems obvious that this advice was relayed by Nield to the respondent on 4 March 1991 and accepted by her. What is not obvious is the extent to which she really comprehended the effect of the conclusions to which Mr Cameron had finally come, as set out in his formal opinion.
The property was put up for auction on 20 March 1991, but was passed in. It was not subsequently resold until 17 June 1991 - at which time it realised $292,500, by way of contrast with the consideration of $360,000 stipulated in the contract note entered into with Mr and Mrs DeMichele.
Those vendors instituted a claim for damages against the respondent which, on the advice of trial counsel, was eventually settled on the second day of trial. In terms of that settlement she was required to pay to them a total sum of $75,000 by way of damages.
As was pointed out by the learned trial judge, the major issues as to liability which he was required to address were:- - was Nield's advice concerning the effect of the RPA section erroneous and negligently given? - did the conference on 15 January 1991 represent a lost opportunity for the respondent to settle on favourable terms? - should Nield have advised the respondent that she ought to settle the claim by DeMichele and sue Luc and his company for misrepresentation? - did Nield fail adequately to prepare the respondent's case for trial, so that she was obliged, ultimately, to settle on unfavourable terms?
Lee DCJ entertained no doubt that the advice tendered by Nield to the respondent immediately prior to the conference of 15 January 1991 was both erroneous and negligently given. His finding in that regard has earlier been recited.
As to the second point he held that:- "... the conference presented the plaintiff with the opportunity of settling her dispute with the vendors for substantially less than the sum which she ultimately paid in March 1992. I hold that the plaintiff's failure to take the opportunity was mainly a consequence of the defendant's strong but erroneous advice to her that section 223 1b was a ground of avoidance."
It was on that basis that he assessed damages in the sum not now in dispute as to quantum.
His Honour was, however, unpersuaded that the third question ought to be answered affirmatively. In this regard he commented:- "... I am unpersuaded that the defendant's failure to proffer advice at that time in the absolute terms asserted in this question represented a breach of his duty to the plaintiff. Section 223 1b was not the only point of dispute. Settlement on the contract was due on 18 January 1991, and the defendant did not receive a written opinion from counsel until 28 February 1991."
The validity of that conclusion was not in contention on the present appeal.
The learned trial judge concluded that the fourth question ought to be answered in the negative. By her notice of alternative contentions the respondent sought to challenge that conclusion on the ground that Lee DCJ ought, in any event, to have found that Nield:- (a) failed to arrange satisfactory evidence to prove the falsity of the misrepresentation as to the permissible number of townhouses resulting in an unfavourable settlement on 10 March 1992 and a consequent loss no less than the sum awarded;
(b) failed to advise the respondent to complete the sale and purchase agreement, reserving her rights to recover damages, so as to prevent additional losses resulting from the vendors' resale.
All that need be said on that score is that there is not a scintilla of evidence to indicate that Mr Roder, who appeared as counsel for the respondent on the trial of the vendor's claim, considered that there was any deficiency in the preparation for trial or material prepared for his use. In full knowledge of the range of contentions which she had sought to advance he concluded that the settlement arrived at was the best result which she could hope to have achieved. Material related to the alleged misrepresentations was procured and considered and, as to the tactics to be adopted, Nield was, at the relevant times, consulting counsel and awaiting his advice. That advice, when received, was followed. There is simply no force in the contentions sought to be advanced.
It follows that the only matters of substance to be addressed are those related to the first two questions postulated.
In addressing the first question it is important to keep firmly in mind that the conference of 15 January 1991 afforded an important opportunity to the respondent to settle the dispute which had arisen, on terms which were relatively advantageous to her. As already indicated, the purchasers were anxious to resolve the matter and the evidence suggests that they may well have accepted any reasonable, positive proposal eg that the contract be rescinded on forfeiture of the deposit.
Once Nield had attended that conference and announced a totally uncompromising attitude the Rubicon was virtually passed over. On the one hand the vendors proceeded to take steps to effect a default resale. On the other, the respondent was really placed in a position from which she could not resile without losing considerable "face". As the learned trial judge pointed out, that situation was the inevitable product of the strong and unqualified advice which Nield had given her, which advice he had not qualified at any material time prior to the conference on 15 January 1990.
This court must, necessarily, proceed on the basis that, as the learned trial judge put it, Nield's "advice to the plaintiff at that time left her with a firm understanding that she had a good case ... his advice was based primarily upon his view of section 2231b". What he did not do, and ought to have done, was, fully and fairly, to have informed her both that Cameron did not share his view of the section and that it could well prove to "be difficult to resile from the contract" - that, at best, an ability to resile would depend upon the acceptance by a court of evidence that Luc had positively misrepresented the practical situation in a manner which, in law, rendered the contract voidable; an end result which was contestable, and as to which no guarantee of the ultimate outcome could be given. A prudent legal adviser would, against such a background, clearly also have advised the respondent that the notice to complete was significant and that it would have been in her best interest, as a very low risk strategy, to at least attend, or be represented at, the conference and there attempt to explore a possible settlement of the dispute on relatively advantageous terms. Moreover, as Lee DCJ also pointed out, the circumstances indicated that Nield ought to have advised the respondent that a refusal to settle on the due date would almost inevitably expose her to embroilment in litigation, which could carry with it substantial economic risks and uncertainties, including a possible liability for damages. These aspects were not canvassed by Nield with the respondent.
Such a scenario patently amounted to a breach of Nield's legal duty of care towards the respondent as a direct product of the "mind set" which he had, unfortunately, developed.
It follows that there is no basis upon which the conclusion of the learned trial judge may successfully be impeached.
Did that breach of duty precipitate a lost opportunity, on 15 January 1991, for the respondent to settle the dispute on favourable terms?
In one sense it undoubtedly did. The evidence established beyond question that the vendors were not only willing, but anxious, to endeavour to compromise the matter, as of the time of the conference. Even had they been asked to adjourn the conference and defer further default action until the respondent had been able to obtain considered advice from counsel, they may well have been prepared to accede to that request.
However, Mr Morcombe QC strongly contended that, even if it be accepted that Nield had been guilty of a breach of duty, nevertheless, it was not causative of any loss of opportunity. He argued that the conduct and attitude of the respondent subsequent to 15 January 1991 strongly indicated a firm, continuing resolve on the part of the respondent to avoid her contractual liability and an unwillingness to compromise. It was, he declaimed, simply not established that, had she been adequately and frankly advised immediately prior to the conference, she may well have agreed to negotiate a settlement. A fatal flaw in the defence case was, he said, that she had never been asked the fundamental question as to what her attitude would have been.
It is beyond question that, to succeed in her action against Nield, the respondent had to establish more than the simple proposition that he had been negligent in the advice tendered to her. She also had to discharge the onus of demonstrating that she would have acted differently in relation to the conference of 15 January 1991, had she received proper advice. (Sykes and Others v Midland Bank Executor and Trustee Co Ltd and Others (1971) 1 QB 113, Hanflex Pty Ltd v N S Hope and Associates (1990) 2 Qd R 218, Lillecrap and another v Nalder and Son (1993) 1 All ER 724.)
Had the respondent directly been asked such a question then the learned trial judge would have had a clear basis of evidence on which to proceed. Unfortunately, this topic was not explored with her. That being so, the question arises as to whether, on the whole of the evidence, a relevant inference in that regard may fairly be drawn.
At the end of the day it may reasonably be said that an objective appraisal of the evidence does provide an answer to such question, on the balance of probabilities. As to this, these features are of vital significance:- - the respondent certainly was, specifically, asked what her attitude would have been, had she been advised that she was bound by the contract. Her unequivocal response was that she would have settled on it. - it is clear that, well prior to 15 January 1991, the respondent was concerned because Mr Minicozzi was adopting and persisting in an attitude as to the legal position which was quite different from that advised by Nield, even given
that Nield was saying that the RPA section placed the matter beyond doubt. It was her uneasiness on that score that led
to the eventual decision to seek independent counsel's opinion. The respondent was, thus, not merely blindly persisting in a stubborn and uncompromising attitude of refusal to go on. She was genuinely concerned to know what were her legal rights and obligations. - when, ultimately, the respondent went to trial, the proceedings were eventually compromised. She was certainly prepared to accept the advice of counsel given at that time.
The obvious inference arising from that combination of circumstances is that the respondent's actual instructions over relevant periods of time were the direct product of the very dogmatic (if not flamboyant) opinion expressed to her by Nield. The obvious implication is that, had he been completely open with her at the relevant time (instead of merely saying that he was very happy, because Mr Cameron had the same feelings and agreed with what he had said) and had he tendered proper advice to her, she would have acted upon it. As has already emerged, the respondent obviously held Nield's views "in high regard".
Once it be accepted that Nield's duty was to make full disclosure of Mr Cameron's initial views to the respondent and that he ought to have advised her to at least participate in the conference and exhibit a positive approach towards possible bases of compromise, then the logical inference is that she would have proceeded in that manner. It ill behoves Nield to seek to argue that, because his inappropriate advice led the respondent into a particular mind set, then such mind set ought to be used as evidence of her own likely intransigence, come what may. It is against commonsense to seek to reason in that fashion.
True it is that, at a later stage, the respondent was made aware of the full extent of Mr Cameron's opinion and did not resile from her previous stance based on Nield's initial advice. However, this must be viewed against the situation into which she had been led by negligent advice, her own cultural background and the fact that steps were under way, on the part of the vendors, to initiate a default sale. It is also not to be forgotten that, as early as 1 March 1991, Mr Cameron had suggested that, having regard to what had transpired, it was probably best to "let the dust settle". Surely, when this was relayed to the respondent it must have had a significant impact upon her attitude at that stage.
It is apparent that, on the whole of the evidence, the learned trial judge was satisfied that Nield's advice to the respondent (and/or his failure fully to disclose the possibilities to be considered) precipitated the aborting of the conference and led her to reject an opportunity to settle to which she probably would have given serious consideration and of which she may well have availed herself.
That was a view which fairly arose on the evidence and entitled the learned trial judge to enter judgment as he did. That being so, this appeal must fail.
JUDGE3 DEBELLE J This is an appeal from a decision of a judge in the District Court finding that the defendants, a firm of solicitors, had acted negligently when advising the plaintiff in relation to a dispute concerning a contract for the sale of land. The judge awarded $59,000 damages to the plaintiff.
The plaintiff was born in China. She migrated to Australia in 1970. She can speak English and read numerals but cannot read or write English. In November 1990, she consulted Mr Nield, one of the partners in the defendants' firm, seeking advice in relation to her obligations under the contract in which she was purchaser. All her dealings thereafter were with Mr Nield and he acted for and advised her. I will refer to Mr Nield as the defendant.
In June 1990, the plaintiff had contracted to purchase a house property at Kensington Park. The price was $365,000. The vendors were Enrico and Maria De Michele. The vendors' agent was a company called New World Realty Pty Ltd. The plaintiff dealt with Mr Danny Luc and Ms Susan Townsend of that company. Mr Luc was the principal of New World Realty Pty Ltd and Ms Townsend was an employee. It appears that Luc also acted as agent for the respondent as purchaser. The contract was conditional upon approval of a division of land and the obtaining of all necessary consents to the land division by 20 September 1990: see Special Condition F of the contract which provided: "This offer is conditional upon the subdivision of portion of allotment Pt. 142 and Pt. 141 from allotment 143 and portion of allotment Pt. 142.
Refer Annexure "A" portion C subdivided from portions D and E.
Subdivision consents from the relevant authorities to be obtained by the 20th day of September 1990, subdivision to be completed and certificates of titles to be issued on or before the 20th day of January 1991.
Dimensions provided by the vendors are to be taken as approximate only. Measurements to be verified by surveyor and agreed as suitable for this subdivision between vendors and purchasers prior to consents being obtained.
The costs of and incidental to this subdivision to be borne by the vendors."
The plaintiff sought to avoid the contract. In September 1990 she consulted Mr Ardalich, a solicitor, who is a member of the firm called Wakefields. Mr Ardalich wrote to the vendors informing them that the plaintiff terminated the contract on the footing that the sub-divisional approvals had not been obtained by 20 September. Correspondence was then exchanged between Mr Ardalich and the solicitors for the vendors. The matter remained unresolved. Mr Ardalich had advised the plaintiff that she should complete the contract.
On 1 November 1990 the plaintiff consulted the defendant. She saw him with two friends. The defendant had been introduced to her as a solicitor experienced in transactions relating to real estate. The plaintiff gave a copy of her contract to the defendant and said she wanted to know if she could get out of it. The defendant read the contract and advised her that the contract was void. In response to her question "Are you sure?", the defendant produced a copy of the Real Property Act and read s223 1b. Section 223 1b was also read by one of the plaintiff's friends. The defendant reiterated his advice and recommended that the plaintiff ask Mr Ardalich to seek to avoid the contract in reliance on s223 1b. The plaintiff then asked the defendant to act for her. He agreed and on 2 November 1990 he wrote to the vendors confirming that the plaintiff had already terminated the contract and added that the contract was void as it did not comply with s223 1b.
The defendant made a note of this consultation. It begins with the words "Advise contract void - my opinion only. Others can argue that I am wrong". Neither the plaintiff nor Mrs Quong, who went with her to this consultation, recalled the defendant qualifying his advice in the matter suggested by that note or at all. The trial judge found that it was likely that any such qualification was lost in the plaintiff's joy in hearing that the contract was void.
The defendant's view as to the effect of s223 1b was wrong and, more significantly, the defendant held that view notwithstanding the decision of the Full Court in Castanelli v Hay (1990) 156 LSJS 95 which had been delivered on 8 February 1990, some nine months before the defendant gave his initial advice. It was common ground on the appeal that the defendant's view was wrong.
In November and December 1990 letters were exchanged between the defendant and the vendors' solicitors. The parties joined issue on the following propositions which were advanced by the defendant on the plaintiff's behalf: 1. The contract was void for breach of section 223 1b of the Real Property Act.
The two solicitors conferred. Mr Minicozzi did not agree with the defendant's interpretation of s223 1b. The dispute remained unresolved. On 7 January 1991 Mr Minicozzi served notice on the plaintiff on behalf of the vendors stipulating 18 January 1991 as the date of settlement and stating that time was of the essence of the contract.
By this time the plaintiff was expressing concern to the defendant that the dispute was still unresolved. Given that the defendant had so unequivocally told her that by reason of s223 1b she could avoid the contract, she could not understand why Mr Minicozzi did not have a like view. It was decided to obtain counsel's opinion. Mr R Cameron, barrister, was retained. On 11 January the defendant sent Mr Cameron a letter of instructions.
In the meantime, the defendant and Mr Minicozzi had arranged for a conference to be held on 15 January with themselves and the parties present. The defendant's evidence was that this was to be an important conference and had been called to try to avoid litigation.
On 14 January 1991 the defendant twice telephoned Mr Cameron. The only evidence of these conversations is the evidence of the defendant. Mr Cameron was not called. On the first occasion, Mr Cameron informed the defendant he had not yet read the papers. The defendant then referred Mr Cameron to the decision in Castanelli v Hay. In the second conversation, Mr Cameron told the defendant that his preliminary view was that the contract was not void but was saved by subs(4) of s223 1b. According to the defendant's note of this conversation Cameron also stated that there was a "basis for an arguable defence on the contract, on the basis the contract was void, on the basis the contract was cancelled". The defendant's note of this second conversation concluded with the words "Difficult to resile from contract". The notes are curious. The reference to the contract being void was wholly inconsistent with the advice concerning s223 1b and, as will be seen, with Cameron's later written opinion. The defendant's evidence was that he did not know what his notes meant but he agreed that it indicated that "a few alarm bells or warning lights or something were flashing" in Cameron's mind.
The defendant next spoke to the plaintiff on the morning of 15 January. The conference with the vendors was to be held that afternoon. The plaintiff came to the defendant's office. The meeting was quite long. It ended at 12.30pm. The evidence does not show the purpose of the meeting nor is there any finding on that question. The defendant's notes of this consultation occupy two pages. However, despite the detail in those notes, there is no record that he informed the plaintiff of the advice he had received from Mr Cameron or that he gave her any advice as to her position or how she should act in consequence of Cameron's advice. Nevertheless, the defendant's evidence was that he would have informed the plaintiff of Cameron's advice.
The defendant's evidence of this consultation was quite vague. He had no recollection of the advice he had given the plaintiff other than that he had advised her that she should attend the conference that afternoon. He said that she refused to do so because she did not want to face the people who were going to be at the conference. He could not recall whether he had tried to persuade her to go or whether he had given her any advice so that she could instruct him. He could not recall whether he had advised her whether she should make an offer. He did, however, assert that she had instructed him not to make an offer of settlement and to try to secure an offer from the vendors. The plaintiff's evidence was that she had spoken to the defendant on the question whether she should go to the conference. Her evidence was that the defendant had advised her that she need not go and that there was no discussion whether she should make an offer. In the event, she did not go to the conference. The plaintiff was not asked, either in examination-in-chief or in cross-examination whether the defendant had informed her of Cameron's advice before the conference. In cross-examination, she remembered receiving some advice from the defendant in mid-January stating that Cameron had agreed with his advice. That aspect of the matter was not taken any further.
The trial judge found that, whatever was said by the defendant to the plaintiff, the defendant did not clearly state the effect of Mr Cameron's advice. The judge found that the defendant had developed a mind-set against any view contrary to his own as to the effect of s223 1b and that, when he advised the plaintiff on 15 January, he had left her with the firm understanding that she had a good case based primarily on s223 1b. The finding was expressed in these terms: "It is difficult to avoid the conclusion, put to the defendant in cross-examination but denied, that he had made section 223 1b, or at least his view of the section, a 'hobby-horse', and that he had developed a mind-set against any contrary view. The defendant said that he would have passed Cameron's opinion on to the plaintiff before the conference on 15 January 1991. Whether he reconstructed his evidence in that regard or not, I am satisfied that his advice to the plaintiff at that time left her with a firm understanding that she had a good case. I am also satisfied that his advice was based primarily upon his view of section 223 1b. If it be true that the plaintiff did not want to proceed with the purchase of the property for reasons of her own, the defendant should still have advised the plaintiff that failure to settle on the day appointed by the vendors, namely 18 January 1991, would expose her to substantial risks in the litigation which had been threatened."
Although the trial judge did not expressly find that the defendant did not communicate the full effect of Mr Cameron's advice, that is the effect of his findings. He found that the defendant had acted negligently in failing to inform the plaintiff of the effect of the advice.
The conference with the vendors did not bring the parties any closer. The defendant arrived late. His attitude was most uncompromising and intransigent. On his arrival, he said that his client did not see any reason for attending the conference. There was no discussion as to compromise because, as Mr Minicozzi said, given what the defendant had stated there was no point in seeking to do so. The defendant did not question Mr Minicozzi's account of the events of the conference. As the trial judge found, the discussions at the conference concentrated on the issues which divided the parties and not on the possibility of compromise.
The vendors were anxious to settle. Mr Minicozzi's evidence was that his clients were in a difficult financial situation at the time. The object of the conference was to see if the matter could be resolved. Although he had no specific instructions as to the terms on which the vendors would settle, he had clear instructions to achieve a prompt settlement and his clients would consider any reasonable proposal. The vendors were aware that the plaintiff had no real property and they sought at least to recover the $20,000 deposit.
The trial judge held that the conference on 15 January was important both as to its timing and as to its purpose. Its importance as to timing lay in the fact that the day before Mr Cameron had cast considerable doubt on the defendant's interpretation of s223 1b and the defendant had been given notice to complete the contract at the Lands Titles Office three days later. On the purpose of the conference, the trial judge said: "I hold that the conference presented the plaintiff with the opportunity of settling her dispute with the vendors for substantially less than the sum which she ultimately paid in
March 1992. I hold that the plaintiff's failure to take the opportunity was mainly a consequence of the defendant's strong but erroneous advice to her that section 223 1b was a ground of avoidance."
Indeed, the defendant admitted in his evidence that nothing was said to the plaintiff on 15 January to cause her to believe that she did not have a good case.
On 16 January 1991 the defendant wrote to Mr Minicozzi reiterating the plaintiff's position and restating the grounds on which the plaintiff believed she was not bound by the contract. Those grounds included the ground that the contract was void because of a failure to comply with s223 1b. He said that the plaintiff would not settle on 18 January and requested repayment of the deposit. Given the defendant's uncompromising attitude at the conference the day before and the peremptory tone of his letter, the vendors would have been left under no illusion that the plaintiff did not wish to enter upon negotiations.
It is necessary to note only the significant events which followed. On 25 January Mr Minicozzi sent to the defendant a notice requiring the plaintiff to complete the contract on 5 February 1991 but the plaintiff did not comply. On 8 February the vendors gave notice of termination of the contract.
On 28 February 1991 the defendant received Mr Cameron's opinion. His conclusions were stated in these terms: "1. There is a good basis to suggest that the contract was induced by misrepresentation on the part of Luc acting as agent for the De Micheles so as to make both Luc and the De Micheles liable in misrepresentation to Mrs Foong and entitling her to rescind the contract.
On 1 March the defendant telephoned Mr Cameron to discuss the opinion. He suggested that the opportunity to rescind had passed. Cameron advised that the best course was to "let the dust settle".
On 4 March 1991 the defendant had a consultation with the plaintiff. The evidence is not clear whether the defendant sent the plaintiff a copy of Cameron's written opinion. She was, however, informed of the effect of Mr Cameron's opinion and advised that she should wait until the vendors sold the house property at auction before deciding what further steps she should take. On 6 March 1991, Mr Minicozzi wrote to the defendant advising that the vendors' property was to be offered for sale by auction on 20 March.
The vendors' property was passed in at auction on 20 March. In April 1991 the defendant telephoned the plaintiff on two or three occasions reporting developments and giving advice. On 22 April, the defendant and plaintiff consulted Mr Cameron in his chambers. This was the first occasion on which the plaintiff had met Cameron. In the course of that meeting, Cameron advised the plaintiff that she had reasonable prospects of success but that there were some risks.
On 3 May 1991 the vendors' solicitors commenced proceedings naming the plaintiff and the agents as defendants. The defendant acted for the plaintiff in that action. On 17 June the vendors sold the house property for $292,500. The action proceeded to trial. A pre-trial conference was listed for 23 September. On 18 September the plaintiff instructed the defendant not to make an offer but to seek offers from the other parties. On 19 September the defendant consulted Mr Cameron, who advised that the plaintiff should offer to settle the action on terms that the vendors would discontinue the action and return the deposit to her and pay her costs, and that she should recover $50,000 from the agents, who were co-defendants. The defendant then had several telephone conversations with the plaintiff. In the course of these conversations, the plaintiff asserted a claim for $250,000 but on Cameron's advice, the defendant did not pursue that claim. The upshot was that the plaintiff instructed the defendant to put no offer to the other parties. The pre-trial conference failed to resolve the issues. Subsequent pre-trial conferences and negotiations also failed to produce a compromise.
The action proceeded to trial on 9 March 1992. Mr Cameron was unavailable and Mr J S Roder was briefed to appear for the plaintiff. After the first day, the parties began to negotiate. In the result the action was settled on terms that the vendors recovered $75,000 (including the deposit) from the plaintiff and $10,000 from the agents. The plaintiff agreed to settle only because she had been advised to do so by Mr Roder. As the trial judge found, although there was no suggestion that the plaintiff misunderstood Roder's advice and that her instructions were freely given, she was justifiedly shocked and upset at the result. At all times prior to the negotiations in March 1992, the plaintiff had believed with good reason that the action would produce a net payment of damages to her.
The plaintiff then brought this action against the defendant. Although there were a number of issues at the trial, they resolved into the following four issues: 1. The defendant's advice to the plaintiff with respect to section 223 1b of the Real Property Act was erroneous and
misled the plaintiff into believing that she had a good defence to the claim by the vendors.
The trial judge upheld the claim on the first two grounds but found that the plaintiff had not proved the other two claims. He, therefore, held that as a consequence of the breach of duty to the defendant that the plaintiff had lost the opportunity to settle her dispute with the vendors at or shortly before the conference on 15 January 1991. He assessed the value of the lost opportunity in the sum of $40,000. In addition, he awarded the plaintiff $4,000 for the anxiety and depression she had suffered in consequence and $15,000 for costs thrown away in consequence of the breach.
The defendants appealed against the decision both as to liability and as to quantum. However, the appeal against quantum was abandoned at the hearing. The plaintiff filed a notice of contention seeking to support the decision of the trial judge on other grounds. I will deal later with the alternative contention.
WAS THE DEFENDANT NEGLIGENT? 32. The defendants attacked the finding of liability on two fronts. Mr Morcombe QC, who appeared for the defendants, first contended that the defendant Nield had not acted negligently when he saw the plaintiff on 15 January 1991. He then submitted that, even if the defendant Nield had been negligent, his negligence did not cause the plaintiff's loss. I deal first with the attack upon the finding of negligence.
CAUSATION 39. The liability of the defendants for the negligence of the defendant Nield existed both in contract and in tort: Midland Bank Trust Co Ltd v Hett, Stubbs and Kemp (1979) Ch 384; Aluminium Products (Qld) Pty Ltd v Hill (1981) Qd R 33. In order to recover other than nominal damages for the lost opportunity, the plaintiff had to prove not only that the defendant was negligent in failing to advise her of the effect of Mr Cameron's opinion but also that by the defendant's failure to advise had caused her loss: Sykes v Midland Bank Executor and Trustee Co Ltd (1971) 1 QB 113; Lillicrap v Nalder and Son (1993) 1 All ER 724; Hanflex Pty Ltd v N S Hope and Associates (1990) 2 Qd R 218. The plaintiff had to prove on the balance of probabilities that, if properly advised, she would have acted differently. If she did not, she was entitled to nominal damages only for the breach of contract: Sykes v Midland Bank Executor and Trustee Co Ltd (supra) at 127; Lillicrap v Nalder and Son (supra) at 729 and Hanflex Pty Ltd v N S Hope and Associates (supra) at 228. Once liability is established, the assessment of the plaintiff's loss for the deprivation of a commercial opportunity is to be made by reference to the Court's assessment of the prospects of success of that opportunity had it been pursued: Sellars v Adelaide Petroleum NL [1994] HCA 4; (1994) 179 CLR 332 at 355. It cannot be emphasised too much that causation must be established before the Court is required to assess damages: Sellars v Adelaide Petroleum NL (supra) at 353 and 364.
The plaintiff would not, therefore, succeed simply by proving that the defendant had been negligent in failing to advise her properly as to the effect of Cameron's opinion. The plaintiff had to prove that, had she been properly advised, she might have acted differently on that day, for example, by giving the defendant different instructions before he went to the conference on 15 January. There were two steps to be proved. The first is the advice she should have received. The second is how she would have acted on receipt of that advice.
The plaintiff was not asked either in evidence-in-chief or in cross-examination, how she would have acted if the plaintiff had correctly informed her of Cameron's preliminary advice. She was asked very few questions indeed as to what advice she received on 15 January. In the absence of direct evidence from the plaintiff, the Court can have regard to any contemporaneous facts or documents which might assist in determining how the plaintiff might have acted: Sykes v Midland Bank Executor and Trustee Co Ltd (supra) per Salmon LJ at 127.
The trial judge did not address the question of causation. Notwithstanding the lack of oral evidence from the plaintiff on that issue, he found that the plaintiff's "failure to take the opportunity (of settling the dispute) was mainly a consequence of the defendant's strong but erroneous advice to her that s223 1b was a ground of avoidance". The trial judge found that the conference on 15 January presented the plaintiff with the opportunity of settling the dispute for substantially less than what she ultimately paid later in March 1992 and that her failure to do so was caused by the erroneous advice which the defendant gave. The reasoning appears to proceed on the footing that the appellant's negligence necessarily resulted in loss to the plaintiff. The conclusion fails to have regard to the steps which are necessary to reach that conclusion.
It is necessary to dispose of two matters before examining causation. First, care must be taken not to use against the defendant the evidence of the willingness of the vendors to sell. The fact that a conference had been convened for 15 January 1991 could fairly be considered as encouraging. But the plaintiff was not, of course, aware of the financial position of the vendors or that they were anxious to settle. The evidence given by Mr Minicozzi on this topic was relevant to the assessment of damages but not to the issue of causation. When determining the issue of causation, therefore, it is necessary to proceed on the footing that the plaintiff was unaware of the financial position of the vendors and that all that she knew was that it had been decided to confer to see if it was possible to reach a compromise.
Secondly, Mr Morcombe QC submitted that the trial judge failed to examine the question whether the conference on 15 January was the only opportunity for the plaintiff to settle the dispute. But I do not think his reasoning is flawed on that ground. As a general rule, it is always open to a party to a dispute to seek a compromise. There is no evidence that the vendors would have been unwilling later to confer for the purpose of exploring the possibility of a compromise. As events unfolded, the possibility of negotiating a compromise might well have become more difficult. The best opportunities for a compromise would have existed between 15 January and 20 March, the date when the vendors attempted to sell their house property at auction. Thereafter, with the knowledge that the house property would sell for substantially less than anticipated, the vendors might have been less willing to negotiate.
But it is necessary to weigh against those considerations, the likelihood that, if the plaintiff made overtures for settlement after 15 January, she might not have been in as strong a bargaining position as she was on that day. On 15 January the vendors had already given notice to complete by 18 January. When the plaintiff did not complete, the vendors gave notice that they were terminating the contract. The vendors might well have perceived any attempt by the plaintiff to re-open negotiations after 15 January as indicating that the plaintiff then saw that her position was weaker than it had been before. The vendors might then have been less willing to compromise. In short, the opportunity to seek to settle the matter on 15 January was the best opportunity available to the plaintiff. She lost that opportunity. The fact that other opportunities might have been available to her later might reduce the value of the opportunity lost on 15 January. Nevertheless, the plaintiff did lose that opportunity.
The question then is whether the plaintiff would have taken up that opportunity. Unless she was willing to do so, she had suffered no loss. The trial judge did not examine this question. Mr Morcombe QC submitted that her subsequent conduct demonstrated that, on the balance of probabilities, she would not have made an offer. He pointed to the fact that she wished to avoid the contract and to the fact that she did not seek to re-open negotiations after she had received Cameron's written opinion.
As already noted, the advice the plaintiff had received from the defendant had led her to believe that she would not fail in having the contract set aside. She was justified in that view given the nature of the advice and the manner in which it had been expressed to her. Against that background, there can be little doubt that, had the defendant told her that the s223 1b point was no longer available, that another defence might be available, but that it was difficult to resile from the contract, the advice would have come as a great shock to her. Mr Cameron's preliminary advice was so different from the advice she had received on 1 November that it is quite reasonable to infer that, had she been properly informed of Cameron's advice, the plaintiff would have immediately have sought advice as to what she should then do. In all likelihood, she would have wished to know how strong her position then was. For reasons already given, the plaintiff would in all likelihood have accepted whatever advice was given her. It was obviously necessary for her to know how to act at what the defendant acknowledged to be the important conference on 15 January.
A reasonably competent solicitor would have advised the plaintiff that the advice had been tendered on a preliminary basis, that a written opinion had been requested, and that the preliminary view did include some prospects of success although those prospects were not as strong as initially believed. He would have pointed out that until the written opinion was received, it was not possible to assess in any final way her prospects of success. He would have informed the plaintiff that she could act on the preliminary advice or wait until she received the written opinion. He would have asked whether she wished to attend the conference to explore at least the prospects of settlement. As the trial judge found he would have advised that failure to settle on the day appointed by the vendors, 18 January 1991, would expose her to substantial risk in the litigation which had been threatened.
But I do not think it is possible to conclude that there was only one avenue of advice that the defendant ought to have given. Broadly speaking, on 15 January the plaintiff had three options available to her. The first was to make no offer because the advice was preliminary and it might, therefore, be desirable to wait for the written opinion. Cameron's advice did not rule out a defence. Another reason for advising that she make no offer was the fact that Cameron had mentioned another possible defence which provided another reason for waiting for his opinion. That option involved the risk that negotiations would be broken off and, although she could seek to resume the negotiations, she might run the risk of starting from a weaker negotiating position. The second was to seek to keep all options open pending receipt of the final advice. Her capacity to do so depended on the willingness of the vendors to extend the date of completion while they negotiated with the plaintiff. It is not unreasonable to assume that the vendors might have been willing to continue to negotiate for a reasonable period of time. There was nothing in the correspondence which suggested otherwise. I emphasise that I have reached this conclusion without relying in any respect on the evidence of Mr Minicozzi, the vendor's solicitor, that the vendors were anxious to compromise the matter. A variation of this second option was that the plaintiff could have attended the conference simply to explore the possibility of settlement. The third option was to make an offer of settlement. One difficulty with this last option is that the plaintiff would not have known whether to make an offer or what kind of offer to make until she had received the written opinion particularly as Cameron had advised that at least one defence might be available. It might well have been negligent, as Mr Morcombe QC submitted, to advise the third option before the written advice had been received. No doubt, there were other possible avenues of advice.
It is important that the Court does not allow hindsight to insinuate itself into its reasoning. Hindsight is no doubt useful in other contexts but, as a general rule, it must be avoided when determining liability. As Megarry J observed in Duchess of Argyll v Beuselink (1972) 2 Lloyds LR 172 at 185: "In this world there are few things that could not have been better done if done with hindsight. The advantages of hindsight include the benefit of having a sufficient indication of which of the many factors present are important and which are unimportant. But hindsight is no touchstone of negligence. The standard of care to be expected of a professional man must be based on events as they occur, in prospect and not in retrospect."
In addition, it is not possible to identify one course only as being the proper advice to be given by the defendant to his client. Opinions will differ as to what was the most appropriate advice. I do not think a court could fairly conclude that the defendant had been negligent if he had advised either of the first two options or even if both had been discussed and a choice made between them. Advice of this kind involved an exercise of judgment. A solicitor is not guilty of negligence merely because he has committed an error of judgment unless that error is grossly made: Faithfull v Kesteven (1910) 103 LT 56; Fletcher v Jubb (1920) 1 KB 275; Duchess of Argyll v Beuselink (supra).
There is a further gap in the evidence as to causation. The plaintiff had to prove that she would have wished to explore settlement on 15 January. It is difficult to determine from the facts and documents how she would have acted if properly advised. The facts which point to the conclusion that she would not have wished to explore settlement are that the advice from Cameron was, at that stage, only preliminary advice and, although it contradicted the defendant's initial advice, it nevertheless promised some success. It would be reasonable to conclude that in the absence of advice from Cameron to the effect that she should complete the contract, she would not have been willing to make any offer of compromise or even explore the prospects of settlement. Such a view is consistent with her conduct after she received the written advice. Those facts which point to the conclusion that she might at least have been willing to explore settlement are the substantial change in the nature of the advice and the fact that there was no risk to her in exploring settlement because could have always have called off the negotiations if later advised that her position was stronger that it was believed to be on 15 January. It is not possible to determine even on the balance of probabilities how she would have acted. Her desire to avoid the contract might have been so strong that she would have grasped at any suggestion that a defence might be available. Cameron's preliminary advice left that possibility open.
Thus, the position is reached where it is not possible to infer from either contemporaneous documents or events how the plaintiff would have acted had she been informed of the full effect of Cameron's opinion. It is not possible to conclude that there was only one appropriate form of advice. It was open to her to pursue or terminate negotiations. In the absence of evidence as to what would have been proper advice and as to how the plaintiff would then have instructed the defendant, the plaintiff has not proved that the defendant's negligence on 15 January caused any loss.
The absence of a causal link between the defendant's negligence and any loss is even more pronounced than in Sykes v Midland Bank Executor and Trustee Co Ltd (supra), where the nature of the advice which ought to have been given was clear. In this case, at least two forms of advice could have been reasonably and properly given and the plaintiff could have accepted or rejected either.
It is pertinent to add that the failure of the defendant properly to inform the plaintiff of the true effect of Cameron's preliminary advice might have caused her to lose the opportunity of reconsidering her position. But that is not what the plaintiff claimed nor is it the loss for which the trial judge assessed the loss. Had he done so, it would have been for a sum considerably less than the damages he awarded.
THE PREPARATION FOR TRIAL 56. The plaintiff filed a notice of contention stating that the decision should be upheld on two other grounds. Only one of those grounds was pursued at the hearing of the appeal, namely, that the defendant had failed properly to prepare the case for the plaintiff in that he had failed to arrange satisfactory evidence to prove the falsity of the representation as to the number of townhouses which could be constructed on the land.
made no complaint of that kind either in his letter of 12 March 1992 or in his evidence before me. The better view on the evidence is that the risks of failure were always greater than advised to the plaintiff."
CONCLUSION 59. For all of these reasons I would allow the appeal, set aside the decision of the learned trial judge, and in lieu thereof order that the plaintiff recover nominal damages from the defendant.
HALL and ORS (T/A BONNINS)
KAREN FOONG No. SCGRG 95/93 Judgment No. 5381 Number of pages - 29 Negligence - professional negligence
(1995) 65 SASR 281
(1990) 2 Qd R 218
(1994) 179 CLR 332
(1990) 2 Qd R 218