Orders
94As I said, the Court was advised that the cross-appeal should be dismissed by consent. Mr Laughton suggested that costs would follow the event, to which there was no demur on Mr Curtin's part, no doubt because Mr Laughton added that the cross appeal was "only ever filed". I infer from the later remark that no costs were incurred. In such circumstances I would not make any order for the costs of the cross-appeal.
95I propose the following orders:
(1)Appeal dismissed with costs.
(2)Cross-appeal dismissed.
96BASTEN JA: On 3 November 2001 the appellant (Mr Dean Lucantonio) purchased at auction a commercial property situated on Majors Bay Road, Concord. The purchase price was $2.2 million and a deposit of $220,000 was paid.
97A development approval granted by the local Council permitted the replacement of existing buildings with a new building comprising retail shops and commercial units. It was a condition of the consent that 21 underground car parking spaces be provided, on two levels.
98Following exchange of contracts, the appellant arranged bank finance in an amount sufficient to cover the cost of the purchase and the proposed development. He also engaged an architect to prepare the necessary drawings to obtain a construction certificate and allow for the project to proceed expeditiously following settlement. The sale contract provided for settlement to take place on 18 January 2002.
99On 21 November 2001, the architect (Mr Kleinert) advised the appellant that there was inadequate space to construct the development in accordance with the approved plans and, in particular, that 21 parking spaces could not be fitted in the proposed two level basement.
100On 7 February 2002, the vendors' solicitor gave notice of termination of the sale contract for failure by the appellant to complete. Proceedings brought by the appellant in the Equity Division to recover the deposit and damages for breach of contract by the vendors were unsuccessful. The appellant then commenced proceedings in the Common Law Division seeking damages from the architect, his solicitor and a barrister (Mr Warren) briefed by the solicitor. On 19 July 2011 those proceedings were dismissed by Brereton J: Lucantonio v Kleinert [2011] NSWSC 753. An appeal was lodged with respect to the claim in negligence against the solicitor, Mr Otto Stichter. Dismissal of the claims against the architect and the barrister was not challenged.
101For the reasons set out below, the appeal should be dismissed with costs.
Issues on appeal
102The present appeal concerns the adequacy of the legal advice given by Mr Stichter to the appellant between 21 November 2001 (when the appellant sent the architect's letter to Mr Stichter) and 7 February 2002 (when the vendors terminated the sale contract). Before identifying the events in question and the manner in which they were dealt with by the trial judge, it is convenient to note the limited scope of the appeal.
103When settlement did not occur in accordance with the contract, on 16 January 2002, the vendors' solicitor gave a notice to complete, requiring completion by 6 February 2002. The critical findings of the trial judge with respect to the events between 16 January and 7 February 2002 were succinctly stated in the following paragraphs:
"157 Upon receipt of notice to complete, a reasonably competent and prudent solicitor in Mr Stichter's position was obliged to discuss with the client the possible courses of action, and their respective advantages and disadvantages, and the risks and opportunities associated with each, so as to enable the client to make an informed determination on a strategy, in sufficient time for it to be adopted. In substance the complaint as to the timeliness of Mr Stichter's advice in this respect is established, in that he failed to give timely advice to Mr Lucantonio of the courses open to him in the light of the notice to complete, and their respective advantages, disadvantages and risks. The advice that completing the purchase was the safest option came manifestly too late to be acted upon.
158 Properly advised, the Lucantonios would have been informed, in ample time to make and implement their decision, that they could either: (1) complete the purchase for the full price, with the problems associated with the development approval, and pursue proceedings for damages for misleading and deceptive conduct after completion; or (2) refuse to complete and, in the likely event of termination by the vendor and forfeiture of the deposit, bring proceedings for recovery of the deposit under s 55(2A) and for damages for misleading and deceptive conduct; of these, the first involved the least legal risk, as they would be performing their legal obligations under the contract, but they might end up with a property worth less than the price; whereas the second risked loss of the deposit and potential exposure to damages if their position proved to be incorrect.
159 However, so advised, the Lucantonios would nonetheless not have completed the purchase by the payment of the undiscounted purchase price, but would still have assumed the risks of not completing, and embarked on the consequential litigation, on the basis that this was the more commercial approach, and in the belief that they would in due course reach a compromise with the vendor - notwithstanding that completion of the purchase may have involved less legal risk."
104The grounds of appeal challenged the finding that, properly advised, the appellant would not have completed the purchase by payment of the undiscounted purchase price on 6 February 2002. The grounds alleged that the trial judge, having accepted Mr Lucantonio as a reliable witness, should have accepted his evidence that he would have completed the contract, if given timely advice that that was the safest course. It was further alleged that the trial judge erred in taking into account "correspondence in February 2002 concerning the settlement of the contract" and failing to take into account the conduct of the appellant in December 2001 through to mid-January 2002 concerning settlement.
105The solicitor filed a cross-appeal challenging the finding of breach of duty, but it was not pursued. The finding as to breach therefore stands and it is not necessary to address the evidence or reasoning relevant to that finding.
Background to appeal
106Because the appellant placed reliance upon the events preceding the receipt of the notice to complete, it is necessary to refer to the steps taken (and not taken) prior to 16 January 2002.
107During that period, the appellant commenced proceedings against the vendors, seeking specific performance of the contract. The trial judge identified the nature of the proceedings in the following terms at [23]:
"The theory of the claim for specific performance with compensation was that the vendor was said to be obliged to convey a property with an efficacious (or 'buildable') development approval, or otherwise to allow compensation for the additional cost that would be incurred; such a remedy, if obtained, would give the Lucantonios exactly the outcome they preferred. The theory of the claim for damages under the Fair Trading Act [1987 (NSW)] was that the Lucantonios had purchased the property in reliance upon representations to the effect that there was a development approval for a development that was feasible."
108At trial, the negligence claim against the solicitor included advising the appellant to commence such proceedings and advising him to continue the proceedings after an interlocutory application to extend a caveat lodged on the vendors' title failed, on 7 June 2002. The trial judge rejected those allegations and the appeal made no challenge to the dismissal of the claim of negligence with respect to the Equity proceedings. However, as pointed out by the trial judge, "[i]t was not implicit in commencing the Equity proceedings that completion would not take place": at [107].
(a) the first period - 21 November 2001 to 15 January 2002
109There was no doubt that Mr Kleinert's advice placed the appellant in a predicament. The existence of the development consent made the property attractive to the appellant because it avoided the expense and potential delays in obtaining development approval from the Council: at [11]. Even an amendment to the existing consent (for example to allow a further basement level for additional parking spaces) could have involved delay and would certainly have involved increased building costs, possibly in excess of $200,000: at [18] and [19].
110Neither was the legal situation straightforward. The standard conditions in the contract for sale included cll 6 and 7, which relevantly provided:
"6 Error or misdescription
6.1 The purchaser can (but only before completion) claim compensation for an error or misdescription in this contract (as to the property, the title or anything else and whether substantial or not).
...
7 Claims by purchaser
The purchaser can make a claim (including a claim under clause 6) before completion only by serving it with a statement of the amount claimed, and if the purchaser makes one or more claims before completion -
7.1 The vendor can rescind if in the case of claims that are not claims for delay -
...
7.1.2 the vendor serves notice of intention to rescind; and
7.1.3 the purchaser does not serve notice waiving the claims within 14 days after that service; and
7.2 if the vendor does not rescind, the parties must complete and if this contract is completed -
7.2.1 the lesser of the total amount claimed and 10% of the price must be paid out of the price to, and held by, the depositholder until the claims are finalised or lapse...."
111The contract also contained two relevant special conditions, namely cll 31 and 40, in the following terms:
"31 The Purchaser acknowledges that he does not rely in the Contract upon any warranty or representation made except as are expressly provided herein but has relied entirely upon his inspection of the property and his own enquiries relating thereto.
...
40 The Purchaser acknowledges that annexed to the contract is Notice of Determination of a Development Application dated 4 September, 2001 in respect of the property issued by the City of Canada Bay Council and accompanying documents. The Purchaser agrees that they shall not raise any objection, requisition, claim for compensation or be entitled to delay completion because of the said Notice or accompanying documents."
112Immediately he received Mr Kleinert's opinion on 21 November 2001 the appellant sought advice from Mr Stichter. The trial judge summarised the substance of the discussion between the appellant and the solicitor in conference on 22 November 2001 in terms which may be accepted as findings of fact and not merely a summary of the evidence, at [19].
"Mr Lucantonio made clear that he really wanted the property, but could not go back to Council for significant amendments; he said that he could not afford the time and the money to go back to Council for a new approval. Mr Stichter said that the vendor may give compensation by way of a reduced price, and referred to standard condition 7. He advised Mr Lucantonio to the effect that, if Mr Kleinert was correct, the Lucantonios would (or may) have rights against the vendor; and that while he had not yet looked into it, off the top of his head it seemed that there were a couple of options, the first being to settle the purchase and claim damages later; the second being to seek a declaration as to whether he was entitled to terminate the contract; and a third possibility being to institute proceedings for specific performance, on the basis that the vendor was conveying something substantially different from what he had contracted to buy, and for damages for misleading and deceptive conduct under the ... Fair Trading Act 1987, s 42. Mr Stichter admittedly harboured some doubts as to whether proceedings for specific performance with compensation could succeed, in the face of special condition 40; and it was this, coupled with the thought that one could not contract out of rights under the Fair Trading Act, that prompted consideration of that Act as providing a relevant remedy."
113On the same day, Mr Stichter wrote to the vendors' solicitor, identifying the problem raised by Mr Kleinert and requiring that the vendors bear the cost of an amended consent and additional development costs, estimated at $200,000. On 27 November 2001 the vendors' solicitor replied, rejecting the complaint and, in any event, relying upon special condition 40.
114On 3 December 2001, the appellant and Mr Stichter again conferred, including by telephone with the barrister, Mr Warren. Proceedings were to be commenced against the vendors. On 6 December Mr Warren drafted a summons and affidavit in support, which were forwarded to Mr Stichter on 10 December. The appellant obtained a further advice as to the structural problems with respect to the 21 parking spaces which, by report dated 13 December, confirmed Mr Kleinert's advice: at [25]. Proceedings were instituted on 21 December, although the solicitor was unable to effect service immediately and had to obtain an order for substituted service, which did not take place until 31 January 2002 and was only effective on 7 February 2002.
115The appellant completed arrangements with the National Australia Bank to finance the purchase and development. By letter dated 2 January 2002 the bank offered a bill facility in an amount of $3.4 million. The securities involved mortgages over the Majors Bay Road property, another property held by the appellant and his wife in Lilyfield and guarantees and indemnities from members of the Lucantonio Family Trust, supported by mortgages over properties owned by the beneficiaries. However, the final steps necessary to draw down the necessary amount for settlement of the purchase on 16 January 2002 were not taken.
(b) the events of 5 February 2002
116The second set of events took place in early February 2002, triggered by a letter from the vendors' solicitor enclosing settlement figures for 6 February 2002, together with a warning that if the purchasers did not complete the vendors would terminate the contract. On the day following receipt of the letter, 1 February 2002, Mr Stichter sent a facsimile to the barrister noting the difficulties with service of the proceedings, noting that the notice to complete expired on 6 February 2002 and enclosing a copy of the facsimile with the settlement figures. The document concluded with the following propositions:
"6. Dean wants to buy the property but would like compensation by reason of the matters the subject of his Supreme Court proceedings.
7. However because of those matters needing to be disclosed to his incoming mortgagee, he will have difficulties with finance.
8. The approval he had for finance has now lapsed.
9. Would you please call me to discuss appropriate action relative to the solicitor's fax and in relation to the matter generally.
10. The options I see:
a) Seek urgent injunction to restrain the threatened termination.
b) Seek urgent orders that the Notice to Complete is invalid.
c) Dispute the termination post-termination and caveat the title.
117On 4 February 2002 Mr Stichter wrote to the vendors' solicitor referring to the "purported" notice to complete, the validity of which was in dispute. The letter continued:
"We are instructed to advise that our client is willing to complete pending the determination of our client's entitlement to damages, upon the following conditions:-
1. The time for completion be extended to 20 February 2002;
2. An amount of $300,000.00 from the purchase monies is held by us in our trust account pending the Court's final determination and paid and disbursed acoding [sic] to such determination; and
3. The said $300,000.00 is to be invested, enitledment [sic] to interest to follow the entitlement to the principal.
Would you please advise."
118On the same day, Mr Stichter recorded in a file note a telephone conversation with the solicitor for the vendors:
"'Without Prej'. DL willing to get dep plus interest earned and each party walks away. He to seek instns. Says if accepted, would like to formalise with Deed of Release."
119The file note also identified that there were two options: (a) "settle, $300K in trust to determination"; (b) "dep + interest, each walks away".
120On 5 February 2002, the appellant had a conversation with Mr Warren, as to which Mr Warren's file note recorded:
"I indicate the consequences of failing to complete in accordance with a valid Notice to Complete and also point out that if the Notice to Complete is invalid the termination is no more than a repudiation i.e. the contract still remains on foot.
If the termination is valid then the purchaser will lose the deposit and, subject to the price of the property, may be liable for damages.
...
If the termination is invalid and the contract is on foot then the purchaser can seek specific performance and damages.
Mr. Lucantonio asks whether if he settles it would be possible then to sue the vendor for damages. I indicate that in my view it would ....
The difficulty that may flow from such a course is that if the funds are disbursed it may be difficult to recover the damages from the vendor.
The third alternative is to continue to seek specific performance with compensation i.e. maintain the current position.
Mr. Lucantonio asks what his changes are.
I state that in my opinion his chances are good but I cannot give any assurance as there are too many vagaries in litigation."
121At 6.05pm that day, the appellant sent a handwritten facsimile to Mr Stichter. It commenced by stating that he would not be available on the phone until after a time which is illegible in the facsimile. He then set out a number of courses of action and sought advice.
122Mr Stichter responded by a facsimile to the appellant setting out in a number of brief handwritten paragraphs the history of the matter and ending with a request for instructions. Paragraph 8 referred to the issue of the notice to complete; the memorandum continued:
"9. I ask you: do you want the property and get damages, or do you want out of the contract?
You reply you don't want to lose the property but it is not worth the price if the development consent does not work.
10. Because you want to keep the property, we institute proceedings for:
a) Specific Performance - that they perform the contract with a proper development consent, and/or
b) damages.
11. They say: we rely on our Notice to Complete and if you don't settle, we will terminate the contract, keep the deposit etc.
12. You then say: Because it is less risky, I think I would rather settle and get them to keep $300,000 in trust or, if they won't agree to that, end the contract and get my deposit back.
13. They say no to both proposals.
14. The safest course for you now is to settle and argue the damages issue later.
That way the worst you stand to lose is a costs order, you stand to gain damages, interest and costs.
15. To settle, we would probably need an extension of time, a day or so.
16. Do they have a right to terminate?
We say no, they say yes.
The issue is not clear cut.
17. According to Mr Warren (with whom I agree), if they purport to terminate, we say to them: 'You had no right to terminate because of the invalid development consent. However, we are treating your purported termination as a repudiation of the contract, entitling us to get our deposit back.'
18. We then amend our Court pleadings to obtain return of the deposit by reason of the repudiation instead of specific Performance and damages.
19. The issue is: what do you want?
Keep property and claim damages?
End the contract and seek the deposit?
123The appellant responded at 10.46pm, in a facsimile setting out an analysis of the options and his preferred position: the handwritten document is transcribed by the trial judge at [47]. As the trial judge noted at [48]:
"None of Mr Lucantonio's proffered options then included completing the purchase, or seeking an extension of a day or two to do so. Although Mr Lucantonio now says that that is because by 5 February 2002 there was (so far as he was aware) insufficient time to obtain finance, there is no reference to that being a relevant factor in his contemporary analysis of the options."
Findings of trial judge
124The trial judge accepted (a) that Mr Stichter had sent the appellant a copy of the notice to complete when it was received, (b) that the appellant understood that he was required to complete the purchase by 6 February 2002 and (c) that if he did not, the vendors would be entitled to terminate. The trial judge also accepted that the appellant had said that he did not wish to settle without a reduction in the purchase price: at [28] and [122]. In the latter paragraph the trial judge continued:
"Mr Lucantonio had received, and read, the notice to complete, and he understood the consequences of not complying with it, which were spelt out in it, and also by Mr Warren in their telephone conversation on 5 February, in which Mr Warren advised that if he failed to comply with the notice to complete and the notice was valid, then he would lose the deposit and may be liable for damages. In that telephone conversation - prior to Mr Lucantonio's receipt of Mr Stichter's 5 February facsimile - Mr Warren also responded to Mr Lucantonio's inquiry about settling and claiming damages subsequently by confirming that, in his opinion, it was an option, and Mr Lucantonio not only raised the issue, but also expressed no surprise at the response. Mr Lucantonio's response to Mr Stichter's 5 February facsimile, setting out his own analysis of the options, contains no hint of surprise that he was now being advised that the safest option was to complete."
125The trial judge then assessed what the appellant would have done had he been given timely advice. No criticism has been raised as to the statement of the proper approach to that matter, which is lucidly set out at [126]-[128] and need not be repeated. At [129] the trial judge stated:
"Proper advice to the Lucantonios in the circumstances would have been, in ample time to make and implement their decision, that they could either: (1) complete the purchase for the full price, with the problems associated with the development approval, and bring proceedings for damages for misleading and deceptive conduct after completion; or (2) refuse to complete and, in the event of termination by the vendor and forfeiture of the deposit, bring proceedings for recovery of the deposit under s 55(2A) and for damages for misleading and deceptive conduct. Of these options, the first involved the least legal risk, as they would be performing their legal obligations under the contract, but they might end up with a property worth significantly less than the price they were paying for it, and their ability to recover moneys from the vendor if their claim succeeded could not be assured; whereas the second risked loss of the deposit and potential exposure to damages if their position proved to be incorrect."
126At [134] the trial judge noted that:
"While, from a legal perspective, it may have been safest to complete, in that the alternative of not completing risked that the vendor might terminate and forfeit the deposit, leaving any chance of a successful outcome to the vagaries of litigation, the risk in completing was commercial - that (by reason of the problems with the development approval) the purchaser might acquire a property worth significantly less than he had assumed and was prepared to pay (and in addition that the vendor might dissipate the proceeds so as not to be able to satisfy a judgment)."
127At [135], he continued:
"Underlying the message in Mr Lucantonio's 6.05 pm 5 February facsimile to Mr Stichter is a disinclination to complete by paying over the full balance purchase price: Mr Lucantonio's desire to acquire the property was not so great as to justify, in his mind, parting with the whole of the balance purchase price. ... Even when admittedly told, on 5 February 2002, that the safest option was to 'settle and argue the damages issue later', Mr Lucantonio does not appear to have given that course serious consideration. Although it might be said that there was (in his mind) insufficient time to pursue it, as (so far as he reasonably knew) funds could not be arranged with the Bank in the few hours remaining until 2.00 pm on 6 February, it is particularly striking that he did not adopt Mr Stichter's suggestion that a short extension of a day or two could be sought to permit them to complete - a course which one would have expected him to explore if he were at all inclined to the 'safest' course. ... Even though settlement with a subsequent claim for damages was an option of which he was fully aware - he had asked Mr Warren about it earlier on 5 February, as well as its being mentioned as the 'safest' course by Mr Stichter - his review of the options did not include it at all."
128The trial judge concluded that the appellant made a commercial decision with knowledge of the legal options, having been advised by counsel that the vagaries of litigation precluded any firm conclusion as to the likelihood of success. The appellant was a sophisticated developer with some experience of litigation.
Challenges on appeal
129The first basis of challenge relied on the suggestion that the trial judge had disregarded steps taken by he appellant in late 2001 which demonstrated a willingness to settle, if given timely advice. The events during this period were said by the appellant to support a finding that he would, if advised to do so, have completed the purchase, if not on 16 January 2002 then on the date provided in the notice to complete, namely 6 February 2002.
130However, to the extent that the appellant's state of mind was revealed by the events prior to 17 January 2002, it was significant that the appellant had not taken significant steps preparatory to settling the purchase. The appellant agreed in cross-examination that he had not advised the Bank of the information provided by Mr Kleinert prior to 17 January: Tcpt, 05/08/09, p 143. He also agreed that, prior to settlement, he "would have felt obligated to" tell the Bank about the Kleinert information: Tcpt, p 145(20-25). Not having discussed the information with the Bank, he did not know what its attitude would have been: Tcpt, p 144. Further, although he believed that Mr Stichter had been communicating with the Bank, he did not instruct him to proceed with preparation of necessary security documents: Tcpt, p 147(40).
131Contrary to the submissions for the appellant, the events of that period were largely neutral. It was true that the appellant put in place the contractual documentation (including signing the necessary guarantees and possibly the mortgages on 7 January 2002) to enable settlement to take place. However, at no stage did he give instructions that settlement should take place. It was by no means clear that the trial judge disregarded the events which occurred during that period (all of which he addressed in the course of his reasons) in his analysis of what the appellant would have done if properly advised; in any event, those events should not have led him to a different conclusion.
132The appellant also submitted that, as the evidence demonstrated, he had a history of accepting legal advice. Thus, in December 2001 he had commenced proceedings in the Equity Division when advised that such a course was legally warranted. There were, however, difficulties in giving weight to this submission. First, the precise motivation for those instructions was not explored in evidence. There was no reason to conclude that the decision to commence the Equity proceedings was not the result of commercial and legal considerations being aligned. The material set out above supports the conclusion that the decision not to complete the contract was an entirely rational assessment of commercial risks, albeit risks associated with litigation. Whether or not the trial judge gave weight to the history of accepting legal advice (and the Court was not taken to any submissions at trial in support thereof) this Court would not give it significant weight.
133The second limb to the appeal was that, having concluded that the solicitor's advice came too late for the appellant to consider it properly and make a decision based upon it, the trial judge nevertheless placed significant reliance upon the actual response of the appellant. The appellant contended that limited weight should have been given to his response to the options placed before him on 5 February 2002 because he had no time to digest the advice, being faced with a crisis created by the negligence of his solicitor. Although the funds could have been made available the next day, as the evidence demonstrated, neither the appellant nor Mr Stichter were aware of that fact, as was accepted by the trial judge. The proper course, it was submitted, was to determine what would probably have been done had the appellant been properly advised in late January, when there was time to reach a considered decision.
134In theory the appellant's submission was valid; in practical terms, it failed to accord adequate weight to the evidential difficulties confronting the appellant on such an issue. Thus, the appellant could not himself have given evidence as to what he would have done had he been given proper advice in a timely fashion: Civil Liability Act 2002 (NSW), s 5D(3). The course which the appellant would have taken (as to which he bore the burden of proof) had to be assessed by reference to the admissible evidence bearing upon the issue. While appropriate allowance should properly be made for the difficulties created for the appellant by the solicitor's negligence in giving the advice belatedly, the appellant's response to the advice when given was nevertheless relevant and significant. This was not a case where proper advice was not given: it was a case where proper advice was given, but belatedly.
135The superficial attraction of these submissions also dissipates on closer inquiry as to the facts. First, as appears from the history of events set out above, the options being considered on 5 February were not novel: they were all matters which had been raised before. The only novelty was the recording by Mr Stichter of completion as being the "safest" option. While the discussion of options came very late in the day, the possibility of completion (and the need to complete) by 6 February to avoid termination by the vendors had been known to the appellant for some time.
136Secondly, the trial judge was correct in taking account of the absence of any protest by the appellant at the suggestion that he should complete the purchase, beyond his complaint that Mr Stichter had failed to return telephone calls over the preceding days, a complaint which went to breach rather than causation.
137Thirdly, the suggestion that he dismissed the possibility of completion because he assumed that finance would not be available from the Bank and further assumed that the vendors would not allow "a couple of days" to permit finance to be obtained was speculative. In cross-examination, the appellant had accepted that he would not have settled the transaction with finance from the Bank without informing it of the Kleinert information: Tcpt, p 151(5), confirming that that was true as at 5 February 2002. The cross-examination continued, at 151(20)-152(10) :
"Q. You did not ask Mr Stichter to see if he could arrange for a settlement with the National Australia Bank, did you?
A. With respect, he mentioned it in the letter before.
Q. Well, you didn't ask him to arrange to take steps to arrange for settlement with the National Australia Bank, did you?
A. No, I did not.
Q. You didn't ask Mr Stichter to see if the vendor would agree to a couple more days of extension so that a settlement could take place, did you?
A. No, I did not.
...
Q. You didn't make any attempt in 2002 to tell National Australia Bank about the Kleinert advice, did you?
A. What date was that.
Q. February 2002?
A. Well, that was on 5. It was quarter to 11 at night. I couldn't.
Q. And you had no intention, whatever else happened, of settling this transaction without telling the National Australia Bank about the Kleinert advice, did you?
A. I believe that I would have wanted to have told them about the issues with the DA.
Q. But you weren't going to settle without first telling them?
A. That's correct?"
138As counsel for the appellant conceded in the course of oral argument, not only did the appellant not express surprise at the advice he was being given on 5 February, but he took no steps the following morning, either to inquire of the Bank as to the possibility of obtaining finance expeditiously, or to instruct Mr Stichter to pursue the possibility of a short delay with the solicitor for the vendors.
139Finally, the appellant sought to make a case based on an objective assessment of the profitability of the proposed development, even accepting the additional costs which might be incurred because of the problems with the accommodation of the necessary parking spaces. It was not suggested that the appellant had himself made such a calculation, but rather that the timeframe within which advice was given and a decision required had precluded a considered approach to the problem. Thus, counsel took the Court to an internal Bank document involving a feasibility assessment, no doubt based on figures provided by the appellant, but investigated and accepted by the Bank's officers. Thus, although the appellant had apparently submitted a return on costs in excess of 67%, the property finance unit at the Bank worked from a return on cost of 27%. Counsel submitted that even an increased cost of $340,000, would only be 10% of the project cost and hence would leave a respectable margin even on the Bank's conservative calculation.
140The submission did not suggest that the trial had been run on that basis. Indeed, as counsel for the respondent noted, the appellant's own pleading had stated that the "extra cost involved in excavating a further level and in attempting to obtain further development approval including the delays associated therewith, when added to the purchase price, made the project uneconomical and unavailable if the property had to be purchased at the price stipulated in the Contract for Sale": Third Further Amended Statement of Claim, par 16. More significantly, if there had been substance in the point raised on appeal, it would have been a response expected from the appellant immediately the problem was raised by Mr Kleinert in November 2001. There was no such response. Finally, in the absence of any discussion of the issue at trial, little can be made of the estimates of profit margin. The widely disparate estimates of the appellant (67%) and the Bank (27%) do not allow for a retrospective assessment of commercial feasibility by the Court, which was not raised contemporaneously by the appellant himself.
Conclusions
(a) the appeal
141This was a case in which the trial judge found that accurate legal advice as to the preferred option, in respect of a commercially fraught development, was given, but only belatedly. The further finding that the appellant would not have acted differently from the course in fact adopted had the advice been given in a timely fashion was well supported on the evidence. The specific complaints as to the use made by the trial judge of particular aspects of the evidence lacked substance. The appeal should be dismissed with costs.
(b) the cross-appeal
142The cross-appeal was abandoned, but there remained an issue as to costs. The notice of cross-appeal was filed on 20 December 2011, seeking to uphold the judgment below on the basis that the trial judge erred in finding a breach of the solicitor's duty of care to his client. Two grounds were relied upon. However, success on either ground would only have resulted in the order below being affirmed, without variation. Accordingly no cross-appeal was required; each ground should have been dealt with in a notice of contention: Uniform Civil Procedure Rules 2005 (NSW), r 51.40.
143Where a notice of contention has been filed and pursued on appeal, but the respondent is otherwise successful in resisting the appeal, the Court will not normally limit the recovery of costs by the respondent from the appellant. In this case, the cross-appeal was not only unnecessary, but was not the subject of any supporting submissions and was in practical terms abandoned at an early stage. The respondent should not be able to recover any costs incurred in relation to the cross-appeal, but neither should it pay costs (assuming that the respondent incurred any with respect to the cross-appeal). Accordingly, the cross-appeal should be dismissed with no order as to costs.
144The Court should make the following orders:
(1) Dismiss the appeal from the judgment of Brereton J in the Common Law Division delivered on 19 July 2011.
(2) Order the appellant to pay the respondent's costs of the appeal.
(3) Dismiss the cross-appeal.
145BARRETT JA: For the reasons stated by McColl JA and Basten JA, the primary judge correctly concluded that, although the respondent solicitor was negligent, his negligence was not causative of the loss in respect of which the appellant sued for damages. I agree, therefore, that the appeal should be dismissed with costs.
146As to the cross-appeal, the fact that it was abandoned at an early stage and played no real part in the litigation is sufficient to warrant the conclusion that it should simply be dismissed with no order as to costs.