Notaras & Anor v Hugh & Ors

• 2 - IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION Professional Negligence List

20217/98 Irene Notaras & Anor v Robert Hugh & Ors 20212/98 Irene Notaras & Anor v Graeme Newman & Anor

Judgment 1 His Honour: I provide the following index to this judgment: Section Paragraph The facts in summary [6] Agreed facts [31] The case as pleaded and particularised [32] Principles relating to loss of an opportunity [42] A fuller account of the facts [45] Bon Trading Company [47] Property acquisitions [48] Dealings with the bank, April 1989 to November 1991 [52] Dealings November 1991 to March 1992 [80] The Newman Psaltis & Co period: from March 1992 [88] Three "offers" of finance, July 1992 [108] The Sly & Weigall period: from 8 July 1992 [117] The $3.3m settlement proposal, and the auction sale of Oxford Street on 15 July 1992 [122] Events following the auction sale of Oxford Street on 15 July 1992, including the sale of Bourke Street on 12 August 1992 [143] The plaintiffs' financial situation in 1991 and 1992 [158] Mr Marsh, Mr Miller and Mr Landy [162] Mr Roberts [178] Was there more than a negligible chance of an injunction being granted on the ground of no effective power of sale? [180] Was there more than a negligible chance of an injunction being granted notwithstanding an effective power of sale? [210] The amount of the debt [219] Offers of finance [220] Delay [226] Other considerations [227] Conclusion [228] The value of the allegedly lost opportunity [229] The negotiations with the bank on 15 July 1992 [230] The prospect of concluding an agreement [239] The value of an injunction [245] Conclusion [247] The case against the defendants [248] Summary of major findings [254] Orders [255]

2 In separate proceedings, the plaintiffs Irene Notaras and Enijar Pty Limited sue the partners (as at 1992) of Newman Psaltis & Co, solicitors, and the partners (as at 1992) of Sly & Weigall, solicitors, for damages. The proceedings have been heard together. 3 Mr R W Evans and Mr J S Whyte of counsel appeared for the plaintiffs. Mr D Davies SC and Mr J Downing of counsel appeared for Newman Psaltis & Co and Mr J R Sackar QC and Mr R S Hollo of counsel appeared for Sly & Weigall. 4 Ms Notaras is the alter ego of Enijar Pty Limited. 5 The relevant partners of Newman Psaltis & Co were Mr G S Newman and Mr K Psaltis. The relevant partner of Sly & Weigall was Mr M Mathas.

The facts in summary 6 I provide here a brief summary of the facts by way of introduction. A fuller review of the facts appears later in this judgment. 7 In May 1989, Enijar purchased the freehold of the Kingsgate Private Hotel, 397-405 Bourke Street, Darlinghurst for $3.15m. For that purpose, $3.455m was borrowed from the State Bank of New South Wales under a commercial bill acceptance facility secured by mortgages over Bourke Street and over 17 Oxford Street, Paddington, a commercial property owned by Ms Notaras. By arrangement, this facility was to be serviced out of an account in the name of Bon Trading Co, a firm through which Ms Notaras carried on an importing business. 8 Following default under the bill acceptance facility on 24 July 1990, $3.455m was debited to Enijar's current account with the bank on 30 July 1990. Interest was then debited periodically to that account at a penalty rate. A notice of demand dated 10 April 1991 was served on Enijar by mail. At a meeting with bank officers on 13 May 1991, s57(2)(b) notices dated 10 May 1991 addressed to Ms Notaras and Enijar were served. 9 In July 1991, Ms Notaras sold a property, 57 Arthur Street, Surry Hills, and the proceeds of the sale (approximately $180k) were paid into Enijar's account. In the same month a sum of $400k, obtained by Ms Notaras as an interest free loan, was paid into Enijar's account. 10 Between May 1991 and July 1991, discussions took place between Ms Notaras and the bank, resulting in an agreement which involved waiver of penalty interest by the bank and the rationalising of Ms Notaras' investments. On 21 October 1991, the bank's solicitors sent documentation to Newman Psaltis & Co to formalise the agreement. However, Ms Notaras did not proceed. 11 On 20 November 1991, nothing further having been paid in reduction of the Enijar debt, Ferrier Hodgson & Co were appointed by the bank as agents for the bank as mortgagee in possession of the Oxford Street and the Bourke Street properties. 12 On 4 March 1992, Ms Notaras consulted Mr Newman. Following an unproductive approach by him to the bank, Mr P Strasser was briefed to advise. There were conferences with him on 19, 23 and 26 March 1992. Mr Strasser advised that the sale of the mortgaged properties by the bank could not be prevented without an unconditional offer of finance from some other lender. 13 Meanwhile, on 14 March 1992, Real Investment Pty provided a conditional offer of $4.4m on Oxford Street and Bourke Street, but that fell through. 14 Efforts to obtain finance, made on behalf of Ms Notaras by a financial adviser, Mr Brumby, in May and June 1992, were unsuccessful. 15 In late June or thereabouts, Ms Notaras retained Mr P Marsh, a licensed valuer and a finance broker who valued Oxford Street at $2.5m as at 1 July 1992 and Bourke Street at $2.7m as at 3 July 1992 with a view to interesting prospective lenders. 16 The bank served a notice of demand dated to 2 July 1992 on Enijar, pursuant to s460 of the Corporations Law. It was received by Ms Notaras on about 6 July. 17 On 6 and 7 July 1992, three separate notifications were addressed to Notaras concerning finance. These were as follows:

(a) a conditional offer of finance from Howard Funds Management Pty Limited in the sum of $3m on the security of Bourke Street and another property owned by Ms Notaras, 67 Moncur Street, Woollahra (which Ms Notaras says she did not receive till 10 July 1992);

(b) a letter from Roberts Lumley & Associates advising that $1.2m was available on the security of Oxford Street, subject to satisfactory valuation; and

(c) a letter from a finance broker, Ms Eustace, conveying a conditional offer by Morlend of $1.02m on the security of Moncur Street. 18 On 8 July 1992, Ms Notaras consulted Mr Mathas of Sly & Weigall. On 10 July 1992 and again on 13 July 1992, Ms Notaras instructed him to apply for an injunction to prevent the sale of Oxford Street. Mr Mathas advised that such an application would fail for lack of merit and because of delay. No such application was made. 19 On 15 July 1992, Oxford Street was sold at auction for $1.75m. 20 On that day, shortly before the property was sold, the bank proposed settlement for a payment by Ms Notaras of $3.3m. A written communication was required from Ms Notaras within 10 minutes by facsimile transmission. (Precisely what was put by the bank to Ms Notaras that morning and whether it was an offer capable of acceptance will be examined later.) A fax was sent by Ms Notaras, but not within the stipulated time. Ms Notaras contended nonetheless that there was a binding agreement and that the bank was wrong to proceed with the sale and with the later sale of Bourke Street on that account. 21 On 17 July 1992, Ms Notaras accepted Howard's conditional offer of finance and forwarded the application fee, but on 22 July 1992 her broker, Mr Marsh, was advised by Howard that Bourke Street did not meet their lending criteria, although they were still willing to provide finance on the security of Moncur Street up to 65 per cent of valuation. 22 On 12 August 1992, Bourke Street was sold at auction for $1.806m. 23 In September and again in October 1992, Mr Ireland QC advised, on instructions from Mr Mathas, that there was no prospect of obtaining an injunction against completion of the sales and poor prospect of obtaining an order for specific performance of the alleged agreement with the bank to accept $3.3m in satisfaction of their claims. 24 On 22 October 1992, the sale of Bourke Street was completed and, on 14 December 1992, the sale of Oxford Street was completed. 25 On 26 May 1993, the bank commenced proceedings against Ms Notaras claiming $1.8m as the balance owing after recovery against the properties. Ms Notaras retained Sly & Weigall to act for her in those proceedings. 26 On 24 September 1993, Sly & Weigall ceased to act and, by arrangement, Newman Psaltis & Co were retained in their place. Mr George of counsel had been briefed to appear for Ms Notaras. Mr Jucovic QC was now briefed to lead him. 27 The proceedings were heard by Rolfe J between 29 September and 8 October 1993. By then the bank's claim was for approximately $2m. Ms Notaras' defence under the Contracts Review Act and cognate defences failed. However, Mr Jucovic QC identified a partial defence to the claim based on a failure by the bank to give notice of its intention to charge penalty interest rates. That had the effect of reducing the bank's claim by approximately $600k. In the result, the bank recovered judgment for approximately $1.4m. 28 The bank appealed and Ms Notaras cross-appealed. Ms Notaras secured a stay of proceedings on the judgment. 29 On 20 December 1995, Ms Notaras commenced proceedings against the bank claiming damages for wrongful sale of the properties. She was represented in those proceedings by other solicitors, Ferrier and Associates. 30 On 15 April 1998, neither the appeal nor Ms Notaras' proceedings having yet come on for hearing, all outstanding claims were settled for a payment by Ms Notaras to the bank of $1.5m, each party to pay their own costs.

Agreed facts 31 I record the following agreed facts:

(a) The combined debt of Bon Trading and Enijar as at March 1992 was between $3.97m and $4.13m ($4m in round figures). That implied an overcharge of approximately $400k. (b) Property values: Oxford Street, present day: $5.375m Bourke Street, present day @ 62 rooms: $5.573m @ 54 rooms: $4.905m Moncur Street, as at July / August 1992: $1.85m

The case as pleaded and particularised 32 In the current pleading (the Third Further Amended Statement of Claim in each case), the plaintiffs assert against both sets of defendants that, in breach of their respective retainers and negligently, the defendants failed to exercise due care, skill and diligence in a number of respects. The particulars of conduct ultimately relied upon as sounding in damage are very much more confined than those pleaded. The abandonment of a good deal of what was pleaded in the current statements of claim occurred at the commencement of Mr Evans' final address and in the course of his argument. A large part of the evidence and a good deal of the written argument goes by the board in consequence. (I do not suggest that anything of value was abandoned. The concessions were reasonable and necessary.) 33 The particulars ultimately pressed were the same as against each set of defendants. They are as follows: Failed to commence proceedings in the Supreme Court to set aside the said notices and / or to obtain injunctive relief or other relief so as to prevent the Bank selling the Bourke Street and Oxford Street Properties on the grounds: (a) that the notices themselves were defective in incorrectly stating that there had been default in the payment of interest and other bank charges and that the sum of $4,444,932.36 was outstanding; (b) that the Bank by reason of its continuing negotiations with the plaintiffs following the service of the notices was estopped from alleging that the demand in the notices had been made; and, Particulars The Plaintiffs relied upon an assumption induced by the Bank representing by writings and words found in the following written communications and oral statements recorded in file notes that it would not enforce the section 57(2)(b) notices dated 10 May 1991. The Plaintiffs suffered detriment in not taking steps to set aside the said notices or restrain the operation of the same at an earlier time. 34 Although not particularised, the plaintiffs advanced a further ground on which it was said that proceedings for an injunction should have been maintained, namely, that a short postponement of the auction sale of Oxford Street should have been sought in the exercise of the court's discretion, even if the bank's power of sale could not be impugned. The case was argued on that basis also. 35 Consequential damage is pleaded as follows against both sets of defendants (so far as is material): By reason of the breaches of duty and retainer and negligence … the Plaintiffs were unaware … of their right to have the Notices set aside … For several days before 15 July 1992 the plaintiffs and the Bank were negotiating with a view to agreeing a sum to discharge the said mortgages. On that day, shortly before the auction of Oxford Street, the bank offered to accept payment of $3.3m provided the plaintiffs could show an unconditional approval of funds. A conditional approval had been obtained at the time of the auction. Had the said properties not been sold the plaintiffs would have taken the opportunity to borrow the funds which the Bank had indicated it would accept, which opportunity was of value and was lost by reason of the defendants' failure to prevent the sales from proceeding under the notices. 36 As against Newman Psaltis & Co, the following additional matter is pleaded in relation to the causation of damage: By reason of the Defendants' said failures, the Plaintiffs were obliged to instruct other solicitors, Messrs Sly and Weigall in or about late June/early July 1992. This action by the Plaintiffs was too late to prevent the Bank selling the Oxford Street property on 15 July 1992 and the Bourke Street property on 12 August 1992. 37 The gist of the plaintiffs' case against both sets of defendants is as follows. An application should have been made for an injunction against the sales or at least against the first sale, Oxford Street. A settlement with the bank was available at $3.3m, for which finance would have had to be obtained within a period of a month or so from an order restraining the sales. The defendants' failure to prevent the sales as and when they occurred - or at least the sale of Oxford Street - deprived the plaintiffs of the opportunity of settling with the bank on the foregoing basis. A settlement with the bank, it is said, would have avoided sale of the properties altogether, and the properties have since substantially increased in value. 38 The limited time the plaintiffs would have had to arrange alternative finance arises from the plaintiffs' concession (properly made) that, if an injunction had been granted on the ground that the notices were defective, the bank would have issued fresh notices curing the alleged defects and would have reprogrammed the auction sales immediately. Any deferral of the auction sales on discretionary grounds could also only have been for a short period. There was also evidence that a settlement with the bank at $3.3m would have required payment of that amount within three weeks. 39 Mr Newman was retained in relation to Ms Notaras' dealings with the bank early in March 1992. The first auction was not until mid-July 1992. An injunction obtained prior to mid-June 1992 was unnecessary to secure an opportunity to settle on the foregoing basis. Breach of duty prior to mid-June 1992 does not, therefore, sound in damages. The plaintiffs' case is, however, that the solicitors were under a continuing duty, so that failure to do later what should have been done earlier is actionable (it is said), notwithstanding that failure to do it when it should first have been done is not. 40 The claim is then for the present day value of the two properties, with credit for $3.3m; for the nett income which would have been derived from the properties to date, with credit for the cost of servicing a loan of $3.3m; for the $1.5m paid in settlement (which extinguished the bank's claim for the unpaid balance of the debt); for legal costs which would not otherwise have been incurred; and for interest on past losses. 41 The plaintiffs' claim, being for loss of opportunity, involves assessment of the chance that an application for an injunction would have been successful and assessment of the chance that the plaintiffs would then have been able to conclude a settlement along the foregoing lines. Any damages would be assessed according to the value of the lost opportunity having regard to those considerations.

Principles relating to loss of an opportunity 42 Where damages are claimed for loss of a chance, the principles are as follows: Malec v J C Hutton (1990) 169 CLR 638, 643 (per Deane, Gaudron and Gummow JJ). If the law is to take account of future or hypothetical events in assessing damages, it can only do so in terms of the degree of probability of those events occurring ... But unless the chance is so low as to be regarded as speculative - say less than 1 per cent - or so high as to be practically certain - say over 99 per cent - the court will take that chance into account in assessing the damages. Where proof is necessarily unattainable, it would be unfair to treat as certain a prediction which has a 51 per cent probability of occurring, but to ignore altogether a prediction which has a 49 per cent probability of occurring. Thus, the court assesses the degree of probability that an event would have occurred, or might occur, and adjusts its award of damages to reflect the degree of probability. 43 These principles apply to loss of a commercial opportunity: Sellars v Adelaide Petroleum NL (1992) 179 CLR 332, 350 (per Mason CJ, Dawson, Toohey and Gaudron JJ.) [W] e consider that acceptance of the principle enunciated in Malec requires that damages for deprivation of a commercial opportunity, whether the deprivation occurred by reason of breach of contract, tort or contravention of s 52(1), should be ascertained by reference to the court's assessment of the prospects of success of that opportunity had it been pursued. The principle recognized in Malec was based on a consideration of the peculiar difficulties associated with the proof and evaluation of future possibilities and past hypothetical fact situations, as contrasted with proof of historical facts. Once that is accepted, there is no secure foundation for confining the principle to cases of any particular kind. On the other hand, the general standard of proof in civil actions will ordinarily govern the issue of causation and the issue whether the applicant has sustained loss or damage. Hence the applicant must prove on the balance of probabilities that he or she has sustained some loss or damage. However, in a case such as the present, the applicant shows some loss or damage was sustained by demonstrating that the contravening conduct caused the loss of a commercial opportunity which had some value (not being a negligible value), the value being ascertained by reference to the degree of probabilities or possibilities. It is no answer to that way of viewing an applicant's case to say that the commercial opportunity was valueless on the balance of probabilities because to say that is to value the commercial opportunity by reference to a standard of proof which is inapplicable.

In that passage proof of "some loss of damage" on the balance of probabilities means no more than proof of "the loss of a commercial opportunity which had some value (not being a negligible value)". 44 Cases in the same vein are Daniels v Anderson (1995) 37 NSWLR 438, Feletti v Kontoulas [2000] NSWCA 59, and Sinclair v SSET Constructions Pty Ltd [2002] NSWCA 125.

A fuller account of the facts 45 I provide here a fuller account of the facts of the case. 46 Ms Notaras was born on 24 June 1936 and is currently 66 years of age.

Bon Trading Company 47 For some years prior to the events now under consideration, Ms Notaras had carried on an importing business under the trade name, "Bon Trading Company". She maintained an account in that name with the State Bank of New South Wales from at least 1988.

Property acquisitions 48 By 1988, Ms Notaras owned, in her own name, 76 Oxford Street, Woollahra; 78-80 Oxford Street, Woollahra; Lots B and C, James Street Woollahra; 12 Oxford Street, Woollahra; 17 Oxford Street, Paddington; 334 Wilson Street, Redfern; 57 Arthur Street, Surry Hills; a property in Pound Street, Grafton; and a unit in "The Esplanade", Woolgoolga. Through a company owned and controlled by her, John K Newton & Co Pty Limited, she owned 68 Moncur Street, Woollahra, subject to a mortgage liability of $200k. 49 In 1988, Ms Notaras acquired 103-105 Palmer Street East Sydney for $1.26m through a company owned and controlled by her, Liflo Pty Limited, for which purpose she borrowed $1.2m from the bank, secured on that property together 12 Oxford Street and 76 Oxford Street. 50 In the same year, Ms Notaras acquired 101 Palmer Street, East Sydney, through a company owned and controlled by her, Zamojazz Pty Limited, for $350k, for which purpose she borrowed the full purchase price from the bank, secured on that property. 51 In April 1989, Ms Notaras purchased the Kingsgate Private Hotel, 397-405 Bourke Street, Darlinghurst for $3.15m. The bank advanced $3.455m under a commercial bill acceptance facility. The purchase and loan transaction were in the name of a company owned and controlled by Ms Notaras, Enijar Pty Limited. An overdraft account was also established in the name of Enijar at about that time. These arrangements were secured by mortgage over Bourke Street and 17 Oxford Street. By arrangement, the bill acceptance facility was serviced from the Bon Trading Company account.

Dealings with the bank, April 1989 to November 1991 52 Bon Trading had an overdraft facility with the bank subject to a limit of $20k. It was secured by second mortgage over Lots B and C James Street. Following the acquisition of Bourke Street in April 1989, the account was consistently in debit for more than that limit. In September 1989, the limit was raised to $120k, but in October 1989 there was a debit balance of over $150k. From mid-October to mid-November 1989, the balance was consistently in debit for more than $140k. 53 Ms Notaras claimed in evidence that, in November 1989, Bon Trading's overdraft limit was increased to $200k. However, in proceedings before Rolfe J in 1993, Ms Notaras said she did not think this was so. I find that the overdraft limit was never increased beyond $120k, notwithstanding that the bank did take security up to $200k in November 1989. By November 1989 the debit balance exceeded $200k. 54 In December 1989, a rollover under Enijar's bill acceptance facility resulted in a debit balance in Bon Trading's overdraft account of close to $250k. The charge was accordingly reversed and the interest and charges for the rollover, of about $50k, were debited to Enijar. After some obfuscation in her evidence before me, Ms Notaras conceded that she did not have the funds to cover that payment. 55 The rollover interest and charges for January 1990 and February 1990 could not be met from the Bon Trading account either. They were debited to Enijar's account. In February 1990, Ms Notaras deposited a sum of approximately $147k. The source of those funds is unknown. There is no reason to suppose they represented business profits. That roughly covered the December 1989, January 1990 and February 1990 interest and charges which had been debited to the Enijar account. 56 In the period February to June 1990, Bon Trading's overdraft account was consistently at a debit balance in excess of $100k. In the same period, the debit balance in Enijar's overdraft account increased steadily to more than $150k in June 1990. At the end of June 1990, the aggregate debt on the two accounts exceeded $300k. 57 In June 1990, the bill acceptance facility was extended for three months with additional security over Bourke Street, 17 Oxford Street and Arthur Street. An overdraft limit of $180k was established for Enijar, secured by the same mortgages. 58 As at 24 July 1990, Bon Trading and Enijar were overdrawn in aggregate by about $360k and the rollover interest and charges for July could not be found under existing arrangements. On 30 July 1990, the bill acceptance facility was terminated for default, and the loan of $3.455m was debited to Enijar's overdraft account. 59 It is apparent that the purchase of Bourke Street in May 1989 had been beyond Ms Notaras' capacity to finance. That is clear from the extent to which her indebtedness to the bank increased over the ensuing 15 months. 60 The bank's response to this situation was to request, as a matter of urgency, trading figures and a detailed cash-flow forecast. Ms Notaras had not responded to that request by October 1990. That month, the bank repeated its request, and again in December 1990. 61 Ms Notaras said that her accountant provided the bank with trading figures in about February or March 1991. However, there was no evidence of this by way of documentation from Ms Notaras or from the bank's records which were produced under subpoena, nor from any accountant. I do not find that this occurred. 62 The most likely explanation for Ms Notaras' failure to respond to the bank's request for financial information is that any such information would have confirmed her inability to meet the financial commitment she had undertaken with the purchase of Bourke Street. 63 Meanwhile, the bank debited the Enijar overdraft account with interest at penalty rates and with other charges. By the end of 1990, the debit balance on that account was just over $4m. 64 In December 1990, nothing had been paid by Ms Notaras against the Enijar overdraft account since the loan of $3.455m was debited to that account in July 1990. This further confirms that Ms Notaras did not have the financial capacity to service the acquisition of Bourke Street.

65 In December 1990, the bank carried out a review, notifying Ms Notaras that the debt balance was not to increase and that monthly interest charges were to be met. No restructuring arrangements were suggested at this stage, presumably because the bank did not have the information upon which to formulate a plan.

66 A notice of demand dated 10 April 1991 was served on Enijar requiring repayment of the loan with accrued interest and charges within 30 days. The notice was posted on 10 April 1991. No payment was made in reduction of the Enijar overdraft account in response to the notice of demand. 67 At a meeting with the bank on 13 May 1991, attended by Ms Notaras and her accountant, Mr Clarke, s57(2)(b) notices dated 10 May 1991, and relating to the Oxford Street and Bourke Street properties, were served, addressed to Ms Notaras and Enijar. 68 An agreement was reached whereby the bank undertook to recalculate interest on the Enijar account as if the bill acceptance facility had continued, Ms Notaras undertook to arrange the sale of Arthur Street in order to commence a debt reduction plan and Mr Clarke agreed to provide trading figures for Ms Notaras' various interests. 69 Ms Notaras asserted in her evidence that some financial information in relation to her various interests was provided to the bank at the meeting on 13 May 1991. However, it does not appear that the trading results promised on that occasion were subsequently provided. No such communication was produced from Ms Notaras' or from the bank's records and Mr Clarke was not called. There was no proof of his unavailability. 70 On 14 June 1991, Ms Notaras was given a further two weeks to submit a proposal based on up-to-date trading figures. 71 On 1 July 1991, Mr Feros, an accountant engaged by Ms Notaras, wrote to the bank. In that letter, Mr Feros acknowledged that Ms Notaras had relied too heavily on external borrowings to purchase Bourke Street and the two Palmer Street properties. ($5m in round figures had been borrowed for those acquisitions, representing effectively the whole of the purchase price for the Palmer Street properties and something more than the purchase price in the case of Bourke Street.) Mr Feros said in the letter that this had resulted in an interest burden which could not be met from the group's current rental income and group operations. Mr Feros proposed a business plan, involving the sale of Arthur Street, Wilson Street and the Palmer Street properties. The plan also included a payment of $400k to the bank which Mr Feros indicated was to be obtained by way of an interest-free private loan. Working on what he acknowledged to be limited information and with limited time, Mr Feros proposed that, with reduction of the bank debt to approximately $3.5m, Ms Notaras' group would be able to service the debt. 72 In July 1991, Arthur Street was sold and the proceeds of the sale (approx $180k) were paid into Enijar's account. In the same month, the sum of $400k (as foreshadowed) was also paid into Enijar's account. 73 At a meeting on 12 July 1991, the bank made an offer to restructure Enijar's debt on terms which included the sale of Wilson Street and the two Palmer Street properties and the payment of monthly interest at reduced rates to October 1991, with review at that time. The bank also stipulated that Ms Notaras was to obtain independent legal advice and a certificate from her solicitor to that effect. The bank's proposal was put formally by letter dated 23 July 1991. The letter offered to stay the current recovery action if the bank's proposal was accepted by 9 August 1991. 74 In her evidence in the present proceedings, Ms Notaras said that she signed the bank's letter of offer of 23 July 1991 and faxed it back to the bank by 9 August 1991. That does not appear to be so. The bank extended the time for acceptance of the proposal until 16 August 1991. 75 During the conversation in which that extension of time was granted, Ms Notaras asked Mr Williams of the bank whether the bank would be prepared to finance the purchase by her of a further backpackers' hostel with a loan of $2-3m. (The hotel at Bourke Street was a similar enterprise.) For Ms Notaras to have been contemplating a further acquisition, in the context of an asset reduction programme to cure an acknowledged over-commitment, says little for her business acumen.

76 Ms Notaras eventually submitted a conditional acceptance of the bank's proposal on or shortly after 20 August 1991. She proposed a variation in the security sought by the bank and she marked her acceptance "without prejudice". On 27 August 1991, Mr Williams informed Ms Notaras that the bank did not regard the arrangement as having been accepted and Ms Notaras undertook to have the letter of offer of 23 July 1991 accepted by Enijar under seal. 77 On 26 September 1991, the bank wrote to Ms Notaras confirming that her conditional acceptance of the letter of 23 July 1991 was rejected and stating that the restructuring offer would remain open until 4 October 1991. On or about 4 October 1991, the bank's proposal was formally accepted in writing by Ms Notaras and Enijar. Ms Notaras nominated Newman Psaltis & Co as her solicitors. 78 On 21 October 1991, the bank's solicitors, Abbott Tout Russell & Kennedy, forwarded documents to Newman Psaltis & Co for the purpose of implementing the arrangements. The documents were received in Newman Psaltis' office on 23 October 1991. I accept Mr Newman's evidence that, at this stage, he knew nothing of Ms Notaras' dealings with the bank and that he did no more than inform Ms Notaras that documents had arrived for her, in response to which Ms Notaras said to wait to hear further from her about them. It was not until a couple of weeks later that Ms Notaras came to the office and took the documents away. That was after Mr Newman had reminded her on more than one occasion that the documents were there for her. Ms Notaras did not assert that she sought or received any advice from Mr Newman in relation to the documents. 79 Ms Notaras did nothing about executing the documents. In her evidence before, me she gave as her reason that the documents were confusing. I reject that explanation. In her evidence before Rolfe J in 1993, Ms Notaras acknowledged that she did not intend to comply with the bank's proposal when she signed her acceptance of the offer contained in the letter of 23 July 1991; and she admitted that she accepted the proposal to buy time. I find that Ms Notaras was stringing the bank along between July and October 1991. I can only think that she was hoping - quite irrationally - that, if she delayed the bank long enough, something would turn up which would extricate her from her present difficulties.

Dealings November 1991 to March 1992 80 The bank's response to Ms Notaras' failure to execute the documents implementing the arrangement to which she had agreed was to appoint Ferrier Hodgson as the bank's agents as mortgagee in possession of the 17 Oxford Street and the Bourke Street properties. That was done on 20 November 1991. 81 In November 1991, Ms Notaras did exchange contracts for the sale of the Palmer Street properties. 82 Having declined to implement her agreement with the bank, Ms Notaras turned her mind to the possibility of refinancing the debt to the bank. In mid- to late November 1991, Ms Notaras approached Westpac. They inspected Bourke Street on 22 November 1991 or thereabouts, but no offer of finance was forthcoming. At about that time, Ms Notaras retained a finance broker, Ms M Eustace, but nothing came from that source either until much later, and then by a different route. 83 Ms Notaras claims that in October and December 1991, she received unsolicited offers of $100k per annum rent for part of the ground floor of 17 Oxford Street and $270k per annum for the whole of the building. The letters are from a real estate agent. They are in evidence. Real estate agents are not known for understatement. There is no evidence that the agents followed up these approaches as one would have expected them to do if there was any serious prospect of completing such a transaction. The agents were not called to say what was truly behind the letters. There was no evidence that Ms Notaras had responded to the approach. There is nothing to suggest that she took it seriously although there was nothing to stop her from doing so; the ground floor was let at a much lower rental from month to month and the upper floor was vacant. I give no weight to these letters as evidence of the rent which could have been obtained for those premises at that time, or anything like it. 84 Surprisingly, in January 1992, Ms Notaras was still looking to expand rather than to contract her commitments. In that month she exchanged contracts for the purchase of the Paddington Terrace Motel in Oxford Street, Paddington. Ms Notaras had no firm offer of finance. (This might have been the same proposition for which she had sought finance from the bank a little earlier.) She was unable to complete the contract and lost the deposit of $100k. 85 On 5 February 1992, Ms Notaras spoke to Mr Williams of the bank. She said she was having second thoughts about refinancing because to do so would cost her about $100k in fees and legal expenses. It is apparent, however, that Ms Notaras still had refinancing under consideration as an option. On 5 February 1992, the bank provided her with a payout figure and allowed a further 28 days in which to refinance the Enijar debt, failing which the recovery process would commence. 86 Ms Notaras had come to an arrangement with Ferrier Hodgson & Co that she would pay rent of $7.5k per week in relation to the 17 Oxford Street and the Bourke Street properties. The last such payment, being for arrears of rent to 5 February 1992, was made on 21 February 1992. 87 On 2 March 1992, Ms Notaras telephoned Mr Williams. An interview with the bank and Ferrier Hodgson was arranged for 6 March 1992. Mr Williams, according to his note, made it clear that the bank wanted the debt repaid.

The Newman Psaltis & Co period: from March 1992 88 It was at this stage that Ms Notaras consulted Mr Newman. He had acted for her previously in relation to other matters but this was his first involvement in her situation with the bank. Ms Notaras met with Mr Newman for some three hours on 4 March 1992. They discussed the objective of trying to stop the bank selling the Oxford Street and Bourke Street properties. Whether Mr Newman was given the s57 notices at that stage is uncertain but immaterial. He was on notice of the need to acquaint himself with the situation as between the bank and Ms Notaras in relation to the properties, and he came by copies of the s57 notices soon after, if not then, when they were sent to him by Ferrier Hodgson on 19 March 1992. Mr Newman was also made aware, either on 4 March 1992 or shortly thereafter, that Ms Notaras claimed that the bank had overcharged her substantially in relation to interest and other charges debited to the Enijar account since June 1991. Ms Notaras asked Mr Newman to represent her in negotiations with the bank. 89 At that time, the aggregate debt of Bon Trading and Enijar stood at approximately $4.4m of which it is now agreed $400k was overcharged. 90 The meeting with the bank and Ferrier Hodgson occurred on 12 March 1992 (rather than 6 March as had been foreshadowed). A proposal for postponement of action against the properties, put by Mr Newman on behalf of Ms Notaras, was rebuffed peremptorily. The bank's response at the meeting was that, unless Enijar's borrowings were refinanced at $4.1m by 5 pm on 12 March 1992, Ferrier Hodgson would be instructed to commence marketing the properties for sale immediately.

91 Meanwhile, Ms Notaras had applied to Real Investment Pte Limited for finance. That company issued two letters of offer dated 14 March 1992. The first related to the Paddington Terrace Motel. The second letter related to refinancing the debt to the bank. It contained a conditional offer of $4.4m to be secured on the Oxford Street and Bourke Street properties, not exceeding 62 per cent of valuations acceptable to the lender (which required an aggregate valuation of $5m in round figures). Further, Ms Notaras was to supply unaudited balance sheets, trading and profit and loss statements for Enijar for the previous two years. 92 That Ms Notaras' concern to prevent the sale of the properties was known to Mr Newman is confirmed by a conversation which he had with Mr Williams of the bank on 17 March 1992, in the course of which he informed Mr Williams that it might be necessary for Ms Notaras to apply for an injunction to restrain those sales. 93 Mr Newman briefed Mr P Strasser of counsel to confer and advise. Ms Notaras and Ms Newman attended at Mr Strasser's chambers on 19 March 1992. Mr Strasser was briefed with the documents. The two major topics discussed were Ms Notaras' dispute with the bank about overcharging and her wish to avoid the sale of the properties. In the first connection, Mr Strasser advised that a letter be sent to the bank asking for an accounting. As the second, he advised that the dispute as to the amount of the debt did not provide a case for preventing the sale, and he advised against doing anything in relation to an application for an injunction without having an unconditional offer of finance. 94 There were further conferences with Mr Strasser on 23 and 26 March 1992. In the course of the conference on 23 March 1992, Mr Strasser suggested that, if the bank refused to give an undertaking to refrain from selling the properties, an application for an injunction should be brought. However, that was, expressly or by necessary implication, subject to his advice that an unconditional offer of finance would be required. 95 On 25 March 1992, Ferrier Hodgson wrote to Ms Notaras directing her to vacate the properties by 5 pm on 27 March 1992 on the ground of default in the payment of rent as had been agreed. 96 On 26 March 1992, Mr Psaltis accompanied Ms Notaras to the last of the three conferences with Mr Strasser. An affidavit was drafted at that conference for the purpose of an application for an injunction. The evidence was to be completed with information as to the way in which the conditions of the loan offer from Real Investment were satisfied. This information was to be provided by Ms Notaras. 97 It is the plaintiffs' case that, on 26 March 1992, Newman Psaltis received express instructions from Ms Notaras to apply for an injunction. I do not find that this is so. The only evidence in support of the contention is a file note made by Mr Psaltis which is equally consistent with instructions to speak to Ferrier Hodgson and what to say to them. Mr Psaltis' file note goes on to record that he did speak to a representative of Ferrier Hodgson following the telephone conversation with Ms Notaras. 98 On 2 April 1992, Ferrier Hodgson wrote to Ms Notaras extending, for a further 30 days, the time within which Ms Notaras was required to finalise arrangements for finance with Real Investment. On 3 April 1992, the bank provided Ms Notaras with a payout figure of approximately $4.4m for the purpose. 99 It is apparent that Mr Newman's understanding was that the arrangements with Real Investment were proceeding. On 23 April 1992, he ordered a full set of inquiries in relation to the Oxford Street and Bourke Street properties in readiness for the refinancing transaction. However, Real Investment did not proceed. According to Ms Notaras' evidence, a representative came from Singapore and, when he realised there were agents in possession, "he shied away". 100 That Real Investment did not proceed is hardly surprising for other reasons. There was no way that Ms Notaras could establish the value of the two properties offered as security at the required aggregate figure of $7m. Nor, as will appear, was she in a position to satisfy the interest of Real Investment in the financial situation of Enijar. 101 On 7 May 1992, Mr Newman lodged caveats over the Oxford Street and Bourke Street properties on Ms Notaras' instructions, notwithstanding his advice that this would serve no purpose. 102 It appears that, in April 1992, Ms Notaras had engaged a Mr Nunnerly to assist her in her dealings with the bank. In May 1992, he was replaced by a Mr Brumby. On 12 May 1992, Mr Brumby was informed by Ferrier Hodgson that instructions had been given to Baillieu Knight Frank to sell the properties, that the Oxford Street property was to be auctioned on 15 July 1992, and that the Bourke Street property was (at that stage) to be offered for sale by private treaty. 103 On 20 May 1992, Mr Brumby informed Ms Notaras that he had sent applications to two finance brokers. That appears to have been unproductive. 104 On 5 June 1992, the bank refused a request by Mr Brumby to defer the sale of the properties pending refinancing arrangements. 105 On 12 June 1992, Mr Nunnerly was again active on Ms Notaras' behalf. He spoke to the bank on that date and made an offer to settle Enijar's debt for $2m. The offer was rejected. 106 It is apparent, from a letter written on 19 June 1992 by Mr Newman to Ms Notaras in relation to payment of his fees, that Mr Newman was unaware that the application to Real Investment had fallen through, or that new efforts to obtain finance were being made on Ms Notaras' behalf by Mr Brumby. In that letter, Mr Newman said he was still waiting to hear from Ms Notaras as to whether the loan from Real Investment was proceeding. Nor, as at that date, had Ms Notaras informed Mr Newman that the bank had instructed agents to sell the Oxford Street and Bourke Street properties. There is no evidence that Mr Newman was kept abreast of developments by Ms Notaras during the month of June 1992. 107 On or about 6 July 1992, Ms Notaras received a letter from Abbott Tout dated 2 July 1992, which was addressed to Enijar and which enclosed a notice of demand on Enijar pursuant to s460 of the Corporations Law.

Three "offers" of finance, July 1992 108 In early June 1992, Ms Notaras retained Mr P Marsh, a licensed valuer and finance broker, to assist her to arrange loans for the purpose of refinancing the Enijar debt. Mr Marsh prepared valuations of Oxford Street at $2.5m as at 1 July 1992, and Bourke Street at $2.7m as at 3 July 1992. These valuations were prepared for the purpose of interesting prospective lenders in advancing money on the security of those properties. It was expected by Mr Marsh that prospective lenders would require their own valuations. 109 Mr Marsh approached a firm of accountants, Roberts Lumley & Associates, for finance on the security of Oxford Street. He applied directly to Howard Funds Management for finance on the security of Bourke Street and Moncur Street. 110 On 6 July 1992, Roberts Lumley wrote to Ms Notaras as follows: Re: Property 17 Oxford St, Paddington We confirm that $1.2 Million is available to be advanced on the security of the above property subject to the satisfactory valuation of same. 111 Mr Roberts said, in his evidence in the present proceedings, that this offer came from a Ms M Jenkins, an accountant in Adelaide who was setting up a mortgage broking business. He had no further information about the source of the funds. No letter of offer was produced, conditional or otherwise. Ms Jenkins was not called. There was no evidence of Ms Notaras having followed up this proposal. In these circumstances, it is impossible to know whether Ms Jenkins had told Mr Roberts of a particular lender who was willing to advance funds in this instance or whether she was speaking in a more general vein about what, in her opinion, would be available in the market. No satisfactory explanation was advanced for the absence of Ms Jenkins as a witness to say what, if anything, of a specific nature was behind Mr Roberts' letter. 112 In 1992, Mr N Dennis was carrying on business as a finance broker. He was contacted by Ms Notaras in response to an advertisement and passed applications for finance to another broker, Ms M Eustace (who had earlier been retained directly by Ms Notaras, without any response). Ms Eustace submitted the applications to Morlend Finance Corporation (Vic) Pty Limited. On 26 June 1992, Morlend issued three separate conditional offers of finance addressed to Mr Dennis. These were forwarded under separate cover of letters from Ms Eustice dated 6 July 1992. 113 The letters from Ms Eustace are in evidence, but only one of Morlend's letters of offer has survived. It relates to Moncur Street. The offer was to lend $1.02m on the security of that property, subject to conditions, including independent valuation at not less than approximately $2.5m and an LVR not exceeding 50 per cent, and the further condition of being satisfied as to all financial information concerning the borrower as may be requested or required by the mortgage insurer. The letter then specified, presumably as what was required in that regard, signed copies of the borrower's 1989, 1990 and 1991 taxation returns, including balance sheet and profit and loss statements, a certified statement of assets and liabilities and a satisfactory credit bureau check. A refinance report was also required from the borrower's current mortgagee to evidence that the existing loan had been conducted in a satisfactory manner. 114 Ms Notaras said her main reason for not pursuing this offer was the requirement for production of a finance report from the current mortgagee, which she knew from past experience that the bank would not be willing to give as a matter of policy. That is not a convincing reason. The logical response to that problem would have been to ask the finance company to waive the condition. That was not done. A further reason given by Ms Notaras was that Howard was a local company. The fact that Morlend was located in Melbourne was not a convincing impediment. The more obvious reasons for Ms Notaras not proceedings with Morlend were, first, that the true value of Moncur Street, as agreed in the present proceedings, was $1.85m as at July-August 1992, which would have yielded only $925k at an LVR of 50 per cent, out of which an existing mortgage of $200k had to be paid, thus yielding only about $725k nett; and, secondly, the need to satisfy Morlend's interest in Ms Notaras' capacity to service the loan by provision of financial evidence as specified. 115 Mr M Landy, a director of Morlend, gave evidence in the present proceedings. He said that, if the circumstances of Ms Notaras' relationship with the bank concerning the Enijar debt had been known, Morlend would not have advanced funds on the security of the Oxford Street or Bourke Street properties. He also said that Morlend did not, as a matter of policy, lend on properties in respect of which a mortgagee or its agent was in possession, or on private hotels. He said that no funds would have been advanced to Ms Notaras in 1992. His evidence was not challenged except in relation to insistence upon a favourable report from the existing mortgagee. I accept his unchallenged evidence. 116 On 7 July 1992, Howard Funds Management issued a conditional offer of finance in the sum of $3m, not to exceed 65 per cent of their valuation of Moncur Street and 60 per cent of their valuation of Bourke Street. The letter indicated that Howard would undertake a preliminary assessment of the properties and, if satisfied, would complete a formal assessment including an independent valuation. $7.5k was to be paid to cover the cost of property assessment and legal expenses, of which $7.2k would be refunded if the properties failed to meet their requirements following preliminary assessment. The offer was to remain open until 10 July 1992. Ms Notaras said she did not receive the letter until 10 July 1992, which may be correct (it was addressed to her through Mr Marsh).

The Sly & Weigall period: from 8 July 1992 117 Early in July 1992, Mr Nunnerly suggested to Ms Notaras that she retain Sly & Weigall to represent her in her dealings with the bank in place of Newman Psaltis & Co. Mr Nunnerly contacted the firm on 7 July 1992. On 8 July 1992, he and Ms Notaras met with Mr Mathas. Mr Newman knew nothing of this or of anything else that was going on at that stage concerning Ms Notaras' dealings with the bank. Indeed, he did not learn of the sale of the Oxford Street property until after the auction. 118 The conference with Mr Mathas lasted some hours. It appears that it proceeded on the basis that Mr Mathas' instructions, at that stage, were limited to consideration of the s460 notice and its implications as a basis upon which Enijar might be wound up. The amount of the debt owing to the bank was discussed as was the prospect of refinancing the debt. Mr Mathas was made aware of the appointment of agents for the bank as mortgagee in possession. He said, in his evidence, that he believed that the bank was likely to move to sell the property within a short time, but that he was not made aware, at that stage, of the s57 notices or of the bank's programme for sale of the Oxford Street and Bourke Street properties. 119 There is an air of unreality about this. The Bourke Street property was Enijar's only asset. The only practical significance of a winding-up order would have been the sale of that property for the benefit of Enijar's only significant creditor, the bank. The bank's programme for the sale of the Bourke Street property without the necessity of a winding-up order seems not to have been considered in that context. But, however that may be, two days later, on 10 July 1992, Ms Notaras expressly raised with Mr Mathas the possibility of obtaining an injunction to stop the sale of Oxford Street. Mr Mathas' advice was that it was "too late" to apply and that there was no merit in such an application. It is unclear from the expression "too late" whether Mr Mathas meant that such an application was too late in the sense of too soon before the auction or too late in the sense that too much time had passed without an application having been made. 120 Meanwhile, Mr Nunnerly was in communication with the bank. A conversation on 10 July 1992 indicated that the bank was open to negotiation. 121 Later that day, after the conversation in which the possibility of an injunction had been mentioned, Ms Notaras telephoned Mr Mathas and instructed him to make an offer of $2.6m. She also raised again the possibility of an injunction. Mr Mathas now made clear what he had previously meant, or at least what he now meant by "too late". He told Ms Notaras that she would need to show that there was a good reason why she had not obtained the injunction earlier.

The $3.3m settlement proposal, and the auction sale of Oxford Street on 15 July 1992 122 Mr Mathas conveyed the offer of $2.6m to the bank's solicitors later that day and Ms Notaras faxed a copy of Mr Mathas' letter to the bank. 123 It was also on 10 July 1992 that Ms Notaras said she received Howard's conditional offer dated 7 July 1992. She did not accept the offer immediately. She spoke to a representative of Howard, sought an extension of time and attempted to negotiate a more favourable interest rate. It was not until 17 July 1992 (after the auction on 15 July 1992) that Ms Notaras drew a cheque for $7.5k on the Bon Trading account, indicating that the Howard conditional offer was not accepted by her until that date. 124 Mr Nunnerly spoke to the bank again on 13 July 1992 and was left with the understanding that the bank was unlikely to accept anything less than $3m in settlement. He conveyed that opinion to Ms Notaras. 125 Notwithstanding Mr Nunnerly's advice, Ms Notaras put an offer to the bank of $2.9m on 13 July 1992, indicating that she could settle within approximately three weeks. (That timing became a feature in subsequent negotiations.) It should be noticed that, at this stage, Ms Notaras did not have any unconditional offer of finance. 126 On the same date, 13 July 1992, Ms Notaras raised the question of injunction again with Mr Mathas. At Mr Mathas' request, Ms Notaras faxed him the s57 notices. Later that day, Mr Mathas had a telephone conversation with Mr Nunnerly, in which the question of an injunction was again raised. Mr Mathas told Mr Nunnerly that he could not see any way that an injunction would work and that, apart from anything else, the time taken to make the application would almost certainly be fatal to any injunction application. 127 On the morning of 14 July, Ms Notaras telephoned Mr Mathas. She requested him to send a letter to the bank complaining about the notices (that was a reference to the amount claimed) and threatening to obtain an injunction. Mr Mathas said that the chance of getting an injunction was so slim that the threat would only be a bluff. He told Ms Notaras that the delay since the notices had been received (which was now well over a year) would probably mean that any injunction application would fail. He also said that there was no time to seek an injunction before the auction set for the following day and that, if an attempt was to be made to do so, it would be necessary to come up with evidence of a good explanation for the delay. 128 The advice that there was no time to seek an injunction was not correct, but there were his other reasons for advising against making the application and for refusing to do so. 129 Later that day, as promised, Mr Mathas sent a letter to the bank's solicitors objecting to the exercise of the bank's power of sale and threatening an injunction. Mr Mathas faxed a copy of the letter to Ms Notaras with a cover note that she should appreciate that the letter was for bluff value only because the success of any application for an injunction would depend upon her putting forward evidence which adequately explained why she had left it so late before applying to the court. 130 The bank's solicitors responded to Mr Mathas' letter to them, dismissing the objections to the s57 notice and refusing to give an undertaking not to proceed with the auction. The response came to Mr Mathas' attention while he was speaking to Ms Notaras on telephone. He confirmed his previous advice, saying that she could not obtain an injunction and that she had no choice other than to keep negotiating with the bank. 131 Meanwhile, on 14 July 1992, according to its records, the bank had resolved to reject Ms Notaras' offer of $2.9m. There is no evidence of this decision having been communicated to Ms Notaras or anyone on her behalf that day. 132 A series of conversations occurred on the morning of the auction, 15 July 1992, between Mr Nunnerly and officers of the bank. The best evidence of these conversations is an internal memorandum of the bank bearing that date. Understandably, Mr Nunnerly does not have a detailed recollection of the conversations which took place. 133 At about 8.45 am, Mr Nunnerly called Mr Dodd of the bank and was informed that the bank rejected Ms Notaras' offer of $2.9m. After a further call to Mr Dodd, Mr Herington called Mr Nunnerly. He had authority to conclude a deal. The bank's records indicate that it had been decided that, if an offer of $3.5m was made, the offer would have to be given serious consideration, although it would need to be accompanied by evidence satisfying the bank that finance was available. In the conversation which then took place between Mr Herington and Mr Nunnerly, the figure of $3.5m was discussed. 134 It appears that Mr Nunnerly now collected Ms Notaras from her home and the two of them proceeded towards the city in Mr Nunnerly's car. On the way, Mr Nunnerly apparently discussed the matter with Ms Notaras and received instructions from her to offer $3.2m. He contacted Mr Herington and did so. 135 According to the bank's records, it was now decided that a figure of $3.35m would be acceptable as long as Ms Notaras could provide satisfactory evidence of ability to complete. Mr Herington rang Mr Nunnerly and advised him that $3.35m was the lowest figure that the bank would consider in settlement. He also pointed out the bank's concern that Ms Notaras might not be able to complete and reminded him that documentary evidence of her ability to do so would be required. A letter of offer was suggested by Mr Herington. 136 It was now about 10.15 am and the auction was programmed for 10.30am. Mr Nunnerly advised Mr Herington that the maximum Ms Notaras could offer was $3.3m with settlement within 21 days. There was then apparently a problem about Mr Nunnerly being heard on the telephone. Mr Herington understood that Mr Nunnerly either did not have a letter of offer or similar evidence of ability to complete, or did not have it with him. 137 At 10.23 am, Mr Herington advised Mr Nunnerly that the bank would not stop the sale unless a written offer to pay $3.3m within a 21 day settlement period was sent by facsimile to the bank within ten minutes. Mr Herington gave Mr Nunnerly the fax number. Documentary evidence of ability to complete, as previously mentioned, would have remained a term in this proposal. 138 It appears that the bank may well have been actuated to moderate their position as they did on 14 and 15 July 1992 in response to information contained in the memorandum of 14 July 1992 which records the decision to reject Ms Notaras' offer of $2.9m. That memorandum also records that in June 1991, Oxford Street had been valued at $1.5m (that was by Baillieu Knight Frank) and by Colliers in July 1992 at $1.05m. Bourke Street had been valued at $2.75m in June 1991 and $1.6m in July 1992. The Colliers valuations were to be confirmed when valuation reports came to hand, indicating that those valuations were very recent. In relation to Oxford Street, there was a note that Ferrier Hodgson estimated its value at $1.25m and Baillieu Knight at $1.1m to $1.3m. That data was followed by a note that, based on the Ferrier Hodgson estimates, the nett return to the bank on sale of the two properties was expected to be $2.349m. That was substantially less than the Enijar debt. 139 It then appears from the bank memorandum of 15 July 1992 that, at 10.30 am, the bank contacted Ferrier Hodgson at the auction site and alerted them to the possibility of the auction being called off. Between 10.40 and 10.45 am, the bank attempted to make contact with Mr Nunnerly but without success. The bank again spoke to Ferrier Hodgson's representative at the auction. He advised that the auction was due to commence shortly. 140 Ms Notaras apparently had some difficulty obtaining access to a facsimile machine. A fax was sent, but not until 11.01am. It was in the following terms: I hereby confirm my offer of $3.3 million in full settlement of the Enijar A/C as discussed.

The facsimile was not sent to the number specified by Mr Herington to Mr Nunnerly and there was a delay in it coming into Mr Herington's hands. 141 Ms Notaras arrived at the auction when it was already in progress. She produced the document which she had faxed and insisted that the auction cease. The bank was contacted, but receipt of the fax could not be confirmed and the auction continued. At about 11:15 am, the property was sold at $1.75m. 142 Between 11:15 and 11:30 am, Ms Notaras' fax having by then come into Mr Herington's hands, Mr Nunnerly and Ms Notaras telephoned complaining that the property had been sold despite the existence of what they claimed to be a binding agreement. They were informed that the bank had not received the fax within the agreed time frame (as was the case) and that, as a result, there was no agreement.

Events following the auction sale of Oxford Street on 15 July 1992, including the sale of Bourke Street on 12 August 1992 143 Ms Notaras now directed her attention to enforcing what she regarded as a binding contract with the bank to accept $3.3m in settlement of the Enijar debt within three weeks of the agreement. Ms Notaras was advised by Mr Mathas that, apart from any other difficulty, it would be necessary for her to establish in any such proceedings (which would have been for specific performance) that she was in a position to pay the $3.3m. 144 About a week after the Oxford Street auction (which was on 15 July 1992), Mr Marsh was advised by Howard that they could not proceed in relation to Bourke Street because the property did not meet their lending parameters. However, according to him, they said that they were prepared to lend 65 per cent of their valuation on Moncur Street. That, presumably, would have been subject to the same conditions as appeared in their conditional offer dated 7 July 1992. 145 Bourke Street was to go to auction on 12 August 1992. On 11 August 1992, Ms Notaras raised the question of an injunction with Mr Mathas to prevent the sale of that property. Mr Mathas advised her not to apply for an injunction, that the delay of over 15 months since the s57 notices were served could not be answered. 146 On 12 August 1992, Bourke Street was sold at auction for $1.806m. 147 In September 1992, Mr Newman, through a finance company, Newtis Financial Services Pty Ltd, sent an application for finance to Metway Finance on behalf of Ms Notaras at her request. There was no response to that application. 148 In September 1992, Mr Mathas, at Ms Notaras' request, instructed Mr J Ireland QC to advise. In a written opinion and a supplementary memorandum of advice, Mr Ireland advised that the facts did not provide any basis for action being taken to restrain completion by the bank of the sales. 149 On 22 October 1992, the sale of Bourke Street was completed and, on 14 December 1992, the sale of Oxford Street was completed. 150 As at December 1992, notwithstanding efforts to obtain finance in response to Mr Mathas' advice that this would be necessary to support any proceedings for specific performance, Ms Notaras had been unsuccessful in obtaining any unconditional offer of finance. 151 In view of the confinement of the plaintiffs' case to negligence on the part of the defendants in failing to commence proceedings to restrain the bank from selling the Bourke Street and Oxford Street properties, it is unnecessary to review subsequent events in detail. However, in order to make this fuller account of the facts complete, I include here the balance of the summary appearing earlier in this judgment insofar as it relates to events after the completion of the sales. 152 On 26 May 1993, the bank commenced proceedings against Ms Notaras claiming $1.8m as the balance owing after recovery against the properties. Ms Notaras retained Mr Mathas to act for her in those proceedings. 153 On 24 September 1993, Sly & Weigall ceased to act and, by arrangement, Newman Psaltis & Co were retained in their place. Mr George of counsel had been briefed to appear for Ms Notaras. Mr Jucovic QC was now briefed to lead him. 154 The proceedings were heard by Rolfe J between 29 September and 8 October 1993. By then, the bank's claim was for approximately $2m. Ms Notaras' defence under the Contracts Review Act and cognate defences failed. However, Mr Jucovic QC identified a partial defence to the claim based on a failure by the bank to give notice of its intention to charge penalty interest rates. That had the effect of reducing the bank's claim by approximately $600k. In the result, the bank recovered judgment for approximately $1.4m. 155 The bank appealed and Ms Notaras cross-appealed. Ms Notaras secured a stay of proceedings on the judgment. 156 On 20 December 1995, Ms Notaras commenced proceedings against the bank claiming damages for wrongful sale of the properties. She was represented in those proceedings by other solicitors, Ferrier and Associates. 157 On 15 April 1998, neither the appeal nor Ms Notaras' proceedings having yet come of for hearing, all outstanding claims were settled for a payment by Ms Notaras to the bank of $1.5m, each party to pay their own costs.

The plaintiffs' financial situation in 1991 and 1992 158 On the uncontested evidence of Mr Gower, an accountant qualified by the defendants for the purposes of the proceedings, Enijar was insolvent from at least 30 June 1991, Bon Trading from at least 30 June 1992, and the Notaras Family Trust from 30 June 1992. Because that evidence is uncontested, I need not give a fuller account of it. It is consistent with the history of the matter from 1990 to 1992. 159 The history of this case between 1989 and 1992 is consistent with that state of affairs: the increase in the Bon Trading and the Enijar overdrafts, the default under the bill acceptance facility, the subsequent inability to reduce the bank debt out of business revenue, the default in the payment of agreed rental to Ferrier Hodgson, the failure to obtain alternative finance in order to repay the bank and keep the properties, not consulting solicitors for eight months after service of s57 notices. I also mention here (although not recorded in my earlier review of the facts) persistent delay in the payment of solicitor's fees once solicitors were retained. 160 There is no evidence that Ms Notaras' revenue situation improved subsequently. 161 The only aspect of the plaintiffs' financial position as at mid-1992 to which I would refer specifically is the rental value of Oxford Street as the building stood at that time. I confirm that I give no weight to the letters from the estate agent. For reasons given elsewhere in this judgment, I give no weight to Mr Marsh's assumption of a rental value of $130 per square metre. And I note that the only other evidence of the rentability of Oxford Street is the evidence of actual rental income as recorded by Mr Marsh, namely, $5k per month as at July 1992, and as recorded in Ms Notaras' tax returns, namely, approximately $33k for each of the full years ended 30 June 1991 and 30 June 1992.

Mr Marsh, Mr Miller and Mr Landy 162 In July 1992, Mr Marsh valued Oxford Street at $2.5m as at 1 July 1992 and Bourke Street at $2.7m as at 3 July 1992. 163 He valued Oxford Street on a capitalisation basis on the assumption of a rental value of $130 per square metre per annum, capitalised at 9.5 per cent. He said he established rental value from information obtained from real estate agents in the area. He had no record or recollection of further detail in that regard. He also had regard to the letters from the real estate agent to which I have referred, which he took to be evidence of achievable rent but which I do not. 164 In his valuation report relating to the Oxford Street property, Mr Marsh recorded that the ground floor of the property was let on a monthly basis to an antique dealer at $5k per month (which was equivalent to $76 per square metre); the first floor was vacant; the rear of the first floor was partly open and partly covered by an asbestos cement roof; the property was in need of general maintenance. 165 Bourke Street was also valued by Mr Marsh on a capitalisation basis. He said he also had regard to the profit to be made from conversion to strata title and sale as units. The report includes information as to shop rentals said to be within market guidelines and to income projections for the hotel business said to have been prepared by the owners' accountants. There was no evidence to back up these assumptions and there was no capitalisation calculation in the report. Again, there was no record or recollection of enquiries made at the time about comparable rentals or comparable unit sales. 166 It was Mr Marsh who had submitted Ms Notaras' application to Howard. He said they were an "asset lender" who did not require detailed evidence of servicing capacity. He said: Had I been aware of Howard Funds Management's inability to lend on the Bourke Street security, before the sale of 17 Oxford Street, there were other prospective lenders who I could have approached for a loan on the security of the Bourke Street property. I recall at that time there was a lender of last resort called "MoreLend", which was based in Melbourne who would lend at a slightly higher interest. From my knowledge of the market at the time for this type of loan there was a 75 per cent to 80 per cent chance of securing finance of 50 per cent to 60 per cent of the lender's valuation of 397 Bourke Street within a couple of weeks of being aware of the outcome of the Howard Funds Management application. … … … From my work as a finance broker I recall that loans were generally available throughout 1992 on lending ratios of between 60 per cent and 65 per cent for commercial properties and 70 per cent and 75 per cent for residential. 167 Mr Marsh's valuations of Oxford Street and Bourke Street as at July 1992 were lower than those of Mr Miller, a licensed valuer qualified by the defendants for the purpose of the proceedings: $1.9m and $2m by Mr Miller compared with $2.5m and $2.7m by Mr Marsh. 168 Mr Miller valued Oxford Street on the basis that its highest and best use was as a redevelopment site. But he first valued the property on a capitalisation basis at 11.5 per cent and tested that by reference to comparable sales, which were listed in the report. He included particulars of sample retail sales and development site sales. For the purpose of a capitalisation calculation, Mr Miller adopted Mr Marsh's figure for rental value at $130 per square metre per annum, but he did not accept Mr Marsh's figure as reliable. Indeed, he said there was no evidence to justify it. His primary approach was to value the property as a redevelopment site. 169 Mr Miller also valued Bourke Street as a redevelopment site. He provided a schedule of gross realisations for sale as residential units and shops, together with an itemised schedule costing renovations. 170 I much prefer Mr Miller's evidence to that of Mr Marsh. Mr Miller has had considerably more experience as a valuer than Mr Marsh and his opinion as to values was more carefully reasoned. He also had the advantage of knowing the prices obtained at auction in 1992, namely, $1.75m and $1.806m for Oxford and Bourke Street respectively. 171 Mr Marsh's evidence suffers from a number of deficiencies. First, his valuation opinions, which were formed before the auctions but to which he adhered, are at odds with the auction sale results: about 40 per cent higher than the sale price in the case of Oxford Street, and about 50 per cent higher in the case of Bourke Street. 172 Mr Marsh valued Moncur Street at $2.4m in July 1992 and provided a certificate to that effect on 8 September 1992. By contrast, as recorded earlier, the valuers qualified by the parties as expert witnesses for the purpose of these proceedings agreed that the value of Moncur Street in July / August 1992 was $1.85m. Mr Marsh's valuation was about 30 per cent more than that. 173 Then, Mr Marsh's confidence in Morlend being a potential lender was utterly misplaced. Mr Landy, a director of that company, was called. Notwithstanding that an employee of Morlend had (unbeknownst to Mr Marsh in 1992) issued a conditional offer to lend to Ms Notaras in July 1992, it is clear from Mr Landy's evidence (which I accept) that the application would not have been approved when it came to be assessed by the credit committee of the company. 174 Mr Marsh also said in his evidence that Morlend would have lent without evidence of serviceability at all. Having heard Mr Landy, I find that to be quite wrong. Indeed, it is wrong on the face of Morlend's conditional offer to which I have referred. It also defies common sense. When shown Mr Landy's affidavit, Mr Marsh agreed that it would have been difficult to persuade Morlend to finance Ms Notaras or her companies in 1992. 175 Mr Marsh's evidence proved to be unreliable in other aspects as well. For example, he said he had known Morlend to lend on properties that a lot of other lenders would not have lent on. But it then transpired that Mr Marsh had no experience of any application to Morlend having proceeded to settlement. 176 Mr Marsh also appears to have failed altogether to consider whether Ms Notaras would have been able to satisfy even an "asset lender" that she had capacity to service the loan that was sought. 177 I have to say that I am left without confidence in Mr Marsh's evidence altogether, including his assumption as to the market rental value of Oxford Street and his evidence estimating the prospect of Ms Notaras finding finance in 1992.

Mr Roberts 178 Mr Roberts said in his evidence that, in his experience - and certainly in the case of business he placed with Ms Jenkins - valuation counted for 90 per cent and serviceability for only 10 per cent. I took that to mean that valuation was, in Mr Roberts' experience, much more important than evidence of capacity to service, but that capacity to service did count and could be a fatal flaw. Mr Roberts confirmed that impression when he said, "They (the lender) would have wanted to have some comfort in seeing some ability to be able to service it". 179 Yet, in cross-examination, Mr Roberts maintained that a prospective lender "would not be greatly interested" in the borrower having traded at a loss for years if the valuation of the security was satisfactory, that "it would make it a little more difficult but not too difficult". I have to say that that evidence is so absurd as to lead me, reluctantly, to the conclusion that I cannot rely on Mr Roberts for anything, including some oblique general statements about his dealings with Ms Jenkins and the undemanding requirements of her clients.

Was there more than a negligible chance of an injunction being granted on the ground of no effective power of sale? 180 The Real Property Act 1900 provided as follows in 1991 and 1992. (The following extract is from the statute reprinted as at 8 February 1993.) 57(2) A registered mortgagee … may, subject to this Act, exercise the powers conferred by section 58 if: (a) in the case of a mortgage … default has been made … in the payment, in accordance with the terms of the mortgage … of the principal, interest … or other money the payment of which is secured by the mortgage … … (b) where: (i) the default relates to that payment; (ii) … a written notice that complies with subsection (3) has been served on the mortgagor … (3) A notice referred to in subsection (2) complies with this subsection if: (a) … (b) it requires the mortgagor ... on whom it is served: (i) … (ii) as the case may be, to pay the principal, interest … or other money in respect of the payment of which he made default: (c) … (d) it notifies the mortgagor … that, unless the requirements of the notice are complied with within one month after service of the notice … it is proposed to exercise a power of sale in respect of the land mortgaged … (4) Where a notice is served under subsection (2)(b) and the requirements of the notice are complied with within the time applicable to the notice under subsection (3)(d), the default to which the notice relates shall be deemed not to have occurred. (5) Without prejudice to any other manner in which it may be deprived of force or effect, a covenant, agreement or condition whereby upon a default referred to in subsection (2)(a): (a) the whole of the principal or other money of which the payment is secured by a mortgage or charge becomes payable; or (b) a part of that principal or other money (not being a part to which that default relates) becomes payable, has no force or effect until the powers conferred by section 58 become exercisable by reason of that default. 58(1) Where a mortgagee … is authorised by section 57(2) to exercise the powers conferred by this section, the mortgagee … may sell the land mortgaged … 58A(1) Any notice… prescribed by section 57 (not being notice or lapse of time relating to default in the payment, in accordance with the terms of the mortgage or charge, of any principal, interest, annuity, rent-charge or other money) may, by agreement expressed in the mortgage… be dispensed with, and in such case section 58 shall operate as if no notice… were thereby required. 181 In broad terms, the statute precludes sale of mortgaged property on the ground of default in making a payment secured by the mortgage, unless the mortgagor has been given the opportunity of remedying the default by notice specifying the default and specifying not less than one month for rectification. 182 In the present case, the notice dated 10 May 1991, addressed to Enijar and served on 13 May 1991, was in the following terms: A. By Memorandum of Mortgage made the 4th day of May 1989 Registered No. Y368974 (hereinafter called "the Mortgage") you mortgaged to STATE BANK OF NEW SOUTH WALES LIMITED (hereinafter called "the Mortgagee") all your estate and interest in the land now comprised in Certificate of Title Volume 5570 Folio 12 known as 17 Oxford St, Paddington (hereinafter called " the property ") to the Mortgagee to secure loan facilities and all other monies owing to the Mortgagee by Enijar Pty Limited on any account whether as Guarantor or otherwise together with Bank charges and interest and other moneys payable to the Mortgagee pursuant to its arrangements with Enijar Pty Limited. B. Enijar Pty Limited has defaulted under its obligations to the Mortgagee in relation to the said loan facilities the arrears due and outstanding to the Mortgagee as at 7 May 1991 being $33,634.15 in unpaid interest and other bank charges and the total sum outstanding to the Mortgagee including the said arrears is $4,444,932.36 as at the said date with interest accruing thereafter at the rate of $2,516.36 per day. C. The Mortgagee has expended costs in relation to the default under the Mortgage. NOW TAKE NOTICE that you are hereby required to pay to the Mortgagee all outstanding monies secured by the Mortgage being the said sum of $4,444,932.26 together with all accruing interest up until the date of such repayment together with the Mortgagee's legal costs in relation to this notice amounting to $250.00 within one (1) month from the date of service of this Notice upon you and further take notice that if within the said period of one (1) month you do not comply with the terms of this Notice then the Mortgagee shall be entitled to exercise its power of sale in respect of the property without further notice. 183 The notice addressed to Ms Notaras, also dated 10 May 1991 and served on 13 May 1991, specified Bourke Street as the mortgaged property. It asserted the same default by Enijar and demanded payment by Ms Notaras in the same terms as the demand addressed to Enijar. 184 On any view, the s57 notices overstated the amount truly payable on the Enijar overdraft account. Penalty interest had apparently been incorrectly charged to the account since September 1990. At a rough estimate, the true debt was in the order of $200k to $250k less than that asserted as at May 1991. (The overcharge was $400k in March 1992.) That did not matter, however. An error in the amount asserted to be payable does not invalidate a s57 notice: Websdale v S & J D Investments Pty Limited (1991) 24 NSWLR 573, 578 (per Clarke JA); Wongala Holdings Pty Limited v Mulinglebar Pty Limited (1994) 6 BPR 13,527, 13,529 and 13,532-3. 185 On behalf of the plaintiffs, it was submitted that there was at least a prospect that a court would have found that the s57 notices asserted a non-existing default. If that were so, the notices would have been invalid and ineffective to support a power of sale pursuant to s58: Websdale at 578. 186 The default specified in the notices was said to have been arguably non-existent for several reasons. One reason advanced was that a debt owing on an overdraft account is due and payable only on demand, absent agreement to the contrary: Williams and Glyn's Bank Ltd v Barnes [1981] Com LR 205; The Law Relating to Banker and Customer in Australia, G A Weaver and C R Craigie (2nd ed, 1990) at [24.50]. In the present case, the demand dated 10 April 1991 required payment within 30 days. There is documentary evidence that the demand was posted on 10 April 1991 and would, therefore, not have been received until 11 April 1991 at the earliest. That evidence would have been readily available under notice to produce with short service if Ms Notaras did not recall, in 1992, that the demand had been served by post. So the plaintiffs would have been in a position to prove that there was no expired demand as at 10 May 1991, and, therefore, no default in payment as asserted in the s57 notices. That would have established non-compliance with s57 and a prima facie case that there was no effective power of sale. 187 A second reason the s57 notices were said to be invalid was that they specified non-payment of interest as a default, whereas there was no interest payable as at 10 May 1991. The registered memorandum incorporated in the mortgages provided as follows: Interest 2.1 Except as otherwise provided in any Agreement:- 2.1.1 (Payment) interest as herein provided shall be payable by the Mortgagor and / or the Customer on the last day of each and every period as determined by the Mortgagee and advised to the Mortgagor and / or Customer from time to time and failing such advice of the last day of each and every calendar month; 2.1.2 (Accrual) interest shall accrue from day to day and shall be computed from the day or respective days that any moneys or amounts forming the whole of or part of the moneys hereby secured are paid, disbursed to and / or become owing by (whichever is the first to occur) the Mortgagor and / or the Customer by or to the Mortgagee as the case may be; 2.1.3 (Calculation) interest shall be calculated by applying the interest rate upon the maximum debit balance of any account of and / or advance to the Mortgagor and / or Customer for that period for calculation of the interest immediately preceding the due date for payment of interest; 2.1.4 (Capitalisation) interest unpaid on the due date shall, on that date and without notice to the Mortgagor and / or Customer, be added to the moneys hereby secured and bear interest at the rate or rates as hereinafter provided for moneys not paid on the due date and shall, at the option of the Mortgagee, be capitalised …

The bank's standard terms and conditions for loan transactions which applied to the Enijar overdraft account included the following: LATE PAYMENT OF MONIES DUE AND PAYABLE 10. If any interest is not paid on or before its due date, then that amount will be debited to the account as at the last day of the month that it is due and will form part of the principal amount owing. 11. If at any time monies due and payable are unpaid then the Bank shall be immediately entitled to charge interest on the unpaid monies or the amount by which arrangements are exceeded at the interest rate for the time being charged by the Bank. 188 A rough calculation by reference to the statements of account issued by the bank in relation to Enijar's overdraft account suggests that the sum of $33,634.15 for "unpaid interest and other bank charges" may have been computed as interest for the period 1 to 7 May 1991 (at the penalty rate) plus the administration fee charged to the account periodically. Interest was payable on the last day of the month pursuant to cl 2.1.1 of the registered memorandum and, if unpaid, was capitalised on that day at the bank's option pursuant to cl 2.1.4. Clauses 10 and 11 of the standard terms and conditions were broadly to the same effect. It was, accordingly, at least arguable that interest for the period 1 to 7 May 1991 was not due and payable on 7 May 1991. In that respect, it was said, the notices, arguably at least, specified a non-existing default. A notice which specifies a non-existing default (here, non-payment of interest) was arguably invalid even if an existing default (here, non-payment of the balance of the account) was specified: Websdale at 578. 189 There is nothing, however, in the notices stating that the unpaid interest is for the period 1 to 7 May 1991. The interest claimed could be a reference to interest accrued to the end of April 1991 which had fallen due and payable. Again, a discrepancy as to amount does not matter. But the plaintiffs say that such interest had been capitalised and, accordingly, was no longer interest. Therefore, it is said, if the reference to interest was a reference to interest previously due and payable, the notices wrongly asserted non-payment of interest as a default as at 10 May 1991. The question then becomes whether "interest" in the notices has a meaning which excludes interest that became due and payable as such at an earlier time and has since been capitalised. 190 Uninstructed by authority, I would have said, plainly not. Whatever became payable as interest continued to be payable whether it had been capitalised or not. Why would anyone suppose that "unpaid interest" did not include unpaid interest that had been capitalised? Capitalising in the present context is just bookkeeping, done that way for the purpose of calculating and recording interest on interest. 191 The plaintiffs invoke authorities described in Bank of New South Wales v Brown (1983) 151 CLR 514, 523 by Mason and Wilson JJ in the following way: an impressive stream of authority for [the] proposition that on the capitalization by a bank of unpaid accrued interest on a current overdraft account at regular periods, the unpaid interest loses its character as interest and becomes capital …

But Mason and Wilson JJ then went on to cite the more recent decision of the House of Lords in Inland Revenue Commissioner v Oswald [1945] AC 360. As to that decision, they said (at 531): Lord Macmillan and Lord Porter gave expression to a proposition concerning capitalization of interest which is implicit in the other speeches. Lord Macmillan said ([1945] AC 360, at 373): The unpaid interest never ceases to retain its character as interest although it has from time to time been added to the capital indebtedness and has carried interest in its turn. Lord Porter said (at 379): Capitalization means no more than that interest which continues to be interest shall be treated together with the capital sum due is itself interest bearing but does not alter its quality as interest. 192 It would be wrong, in these circumstances, to ascribe to Mason and Wilson JJ a view that, as between banker and customer, capitalised interest is not within the meaning of the word "interest" as a general proposition. If anything, the contrary is the case. 193 The determining factor to my mind is that there could be no confusion arising on the face of these notices as to what was alleged as default and what was required to rectify it. It was asserted that interest had accrued and was unpaid. At least as to interest accruing before the end of April, that was unquestionably true. There was a balance of account including that interest which had not been paid. That was also true. The requirement was to pay the balance of the account as at 7 May 1991, including that interest. There was no question as to what was required to rectify default. 194 For these reasons, the proposition that the notices specified a non-existing default when they referred to unpaid interest being "due and outstanding" was not reasonably arguable. 195 I am fortified in that view by the decision in Sibard Pty Ltd v AGC (Advances) Pty Ltd (1992) 4 BPR 13,178, which, although not decided and available to be cited in mid-1991, follows the foregoing line of reasoning. 196 As to whether the plaintiffs also had a seriously arguable case that the bank was estopped from relying on the s57 notices, it was submitted on behalf of the plaintiffs that such an estoppel arose from the course of dealings between the plaintiffs and the bank following issue of the notices. There is, however, no evidence in the present proceedings that the bank represented to the plaintiffs, expressly or by implication, that it would not sell the properties in reliance upon the notices, or that the plaintiffs acted to their detriment in reliance upon any such representation. There was, accordingly, no prospect of supporting a challenge to the bank's power to sell the properties as and when they did on the ground of estoppel. 197 For these reasons, the s57 notices were impugnable on the ground that there was no expired demand as at the date when default was asserted as having occurred, and therefore no default as alleged. There was no prospect of impugning the notices on any other ground advanced. But one good ground is enough. 198 The defendants say, however, that, even if there was an arguable case that the s57 notices were invalid, the bank would have had an irrefragable counter-argument in reliance upon s58A of the statute. I have quoted that section earlier. 199 On behalf of the plaintiffs, it was submitted that the bank might not have invoked s58A. I disagree. There was no occasion for the bank to review the efficacy of the s57 notices until Mr Mathas wrote to the bank's solicitors, Abbott Tout, on 14 July 1992, the day before the auction for the Oxford Street property. I have to say that the objections specified in the letter were patently specious. They would have given rise to no concern. On the other hand, if the notices had been impugned on any seriously arguable ground, whether by correspondence or by application for an injunction, I do not doubt that the relevance of s58A would have been recognised by the bank's legal advisers and that the section would have been invoked. 200 In the present case, cl 18.2 of the registered memorandum incorporated in the mortgages provided as follows: 18.2 Upon the occurrence of an Event of Default, the Mortgagee may in its absolute discretion and at any time and from time to time and without giving any notice to the Mortgagor, do all or any one or more of the following in such manner as the Mortgagee shall think fit:- 18.2.1 sell the mortgaged premises …

Clause 18.1 specified the following events of default: 18.1.4 (Insolvency) The Mortgagor and/or the Customer is Insolvent: … 18.1.8 (Diminution of value) If in the reasonable opinion of the Mortgagee the realisable value of the mortgaged premises is materially diminished for any reason…

The definition of "insolvent" in cl 1.1 of the memoranda of mortgage included: (b) in respect of a corporation, any corporation that enters into or resolves to enter into a scheme of arrangement or assignment for the benefit of its creditors; that a liquidator, provisional liquidator, official manager, Receiver or similar officer is appointed in respect thereof or its assets; that an application for an order is made to the Court for the appointment of such a person; that resolves or gives notice of its intention to wind itself up (other than for the purpose of reconstruction or amalgamation on the terms approved by the Mortgagee); that is unable to pay its debts when they fall due or is deemed to be unable to pay its debts within the meaning of the Code, or ceases to or attempts to cease to carry on business. 201 As at mid-1992, the relevant authorities included Isherwood v Butler Pollnow Pty Limited (1986) 6 NSWLR 363. In that case, the deed of charge included the following clause: F. That notwithstanding that a receiver may or may not have been appointed as aforesaid the mortgagee shall have the right at any time after the moneys hereby secured have become payable without any consent on the part of the mortgagor and without the necessity for any demand or notice to exercise all or any of the powers authorities and discretions conferred on the receiver by these presents. ...

It was held by a majority (McHugh JA with whom Glass JA agreed) that the clause effectively dispensed with the statutory requirement of notice subject to proof of a specified event or default which did not involve non-payment. In R J Wood Pty Limited v Sherlock (Davies J, Federal Court of Australia, 18 March 1988, unreported) the clause in that case did not involve non-payment but it lacked a phrase of dispensation similar to the phrase "without the necessity for any demand or notice" such as was present in Isherwood . The clause was therefore ineffective to dispense with the need for a s57 notice. In Abalcheck Pty Limited v Pullen (Hodgson J, 26 June 1990, unreported), Isherwood was applied. 202 There is no material difference between the phrase used in cl 18.2 in the present case, "without giving any notice to the Mortgagor", and the phrase used in the relevant clause in Isherwood, "without the necessity of any demand or notice" or in Abalcheck, "without giving any notice". The clause in the present case is effective to dispense with the need for notice in the event of a default not in involving non-payment. 203 The bank's own clause came under consideration in Topfelt Pty Limited v State Bank of New South Wales (1993) 4 BPR 13,209. Sheller JA, with whom Priestley and Cripps JJA agreed, held the clause to be effective. That does not aid the defendants in the present case because the case was decided, both at first instance and on appeal, after the time when any application would have been made in the present case. However, in favour of the present plaintiffs, it should be noted that a further point emerged in Topfelt, namely, whether the phrase in cl 18.2, "in its absolute discretion", required proof that the bank had given consideration to whether or not to rely on the particular event of default. That construction was rejected (at 13,216). I see no prospect that the point would have been held to be seriously arguable on an application for an interlocutory injunction in 1992. 204 Having regard to the state of the authorities at the relevant time, it was, in my view, as good as certain that, if the point had been taken against the bank that cl 18.2 was not framed to dispense with notice pursuant to s57(2) upon proof of a specified event of default (not involving non-payment), that argument would have failed. 205 The bank had a strong case available to it that there were two specified events of default (not involving non-payment) which satisfied the requirements of 58A. These were insolvency (cl 18.1.4) and diminution in value (cl 18.1.8). (The clauses are quoted above.) 206 As to insolvency, it was by no means certain that the appointment of Ferrier Hodgson as the bank's agents as mortgagee in possession was the appointment of a "Receiver or similar officer" within the meaning of the definition of "insolvent" in cl 1.1. In the context, it was reasonably arguable that "Receiver or similar officer" was limited to some kind of statutory officer. However, that Enijar was insolvent in the ordinary sense of being "unable to pay its debts when they fell due" was incontrovertible on evidence readily available from the bank's own records and from documents readily obtainable under a straightforward notice to produce. Enijar's only asset was 17 Oxford Street and its only income was rent from that property. In 1992, the only tenant was an antique dealer on the ground floor. The rent was $5k per month. The rest of the building was vacant and in need of repair and maintenance. (See Mr Marsh's valuation report dated 1 July 1992.) Enijar's rental income for the year ended 30 June 1992 was only $32,541 according to its tax return. The company had defaulted under the commercial bill facility in July 1990. It now owed over $4m to the bank on overdraft account, on which interest was continuing to accrue. Nothing had been paid off the overdraft account out of Enijar's own resources following the default in relation to the commercial bill facility in July 1990. A closer examination of Enijar's finances would only have served to confirm that the company was insolvent. That was Mr Gower's unchallenged evidence in the present proceedings. 207 There was also a strong prima facie case to be made by the bank that the mortgaged premises, Oxford Street and Bourke Street, had diminished in value, an event of default under cl 18.1.8. In May 1989, when the commercial bill facility was established, the bank recorded that value at a total of $5.3m. In January-February 1992, Baillieu Knight Frank valued the properties for the bank at a total of $3.6m. As at July 1992 (before the auction sale), Colliers valued the properties at a total of $2.65m. In view of the severe downturn in the property market since 1989, it is very likely that Mr Marsh's valuations for Ms Notaras at a total of $5.2m in early July 1992 would have been rejected as unrealistic even on an interlocutory hearing. And even Mr Marsh's July 1992 valuation of Bourke Street at $2.7m was less than the price paid for the property in 1989, $3.15m. However, I cannot say with certainty that a court would have held, on an application for interlocutory relief, that there was no serious issue about diminution in value of the mortgaged properties in view of Mr Marsh's valuations. But that would have left insolvency as an unquestionable event of default, which avoided the need for a s57 notice. 208 There was, accordingly, no serious prospect that the bank would have failed to answer any arguable case impugning the validity of the s57 notices by recourse to s58A. 209 There was, accordingly, not more than a negligible prospect that the plaintiffs would have established, on an application for interlocutory relief, that the bank had no effective power of sale by reason of a defect in the s57 notices.

Was there more than a negligible chance of an injunction being granted notwithstanding an effective power of sale? 210 I now proceed on the basis that there was negligible prospect of impugning the bank's power of sale in proceedings to restrain the sale of the properties. The question which then arises is whether there was more than a negligible prospect of obtaining such an injunction notwithstanding that the mortgagee had an effective power of sale. 211 In such a case, what has been referred to as "the ordinary rule" or "the general rule" applies. There is a long line of authority that a payment into court is required as a condition upon which any such relief will be granted. In Harvey v McWatters (1948) 49 SR(NSW) 173, Sugerman J said (at 177): It is obvious that the maximum possible loss is not the amount sworn to be due or the amount in fact due under the mortgage, but the value of the security itself, and the evidence here suggests a strong possibility that this is a good deal less than the amount secured by the mortgage. But while this is the maximum in any case, the greatest loss possible in a given case may be much less. In the present case I think that there should be a payment into court by the mortgagor, but that the amount of such payment should be governed by the principles which I have stated. 212 Inglis v Commonwealth Trading Bank of Australia (1971) 126 CLR 161 was a case instituted in the High Court. Walsh J said, at first instance, that the amount claimed by the mortgagee must be paid into court "unless, on the terms of the mortgage, the claim is excessive". On appeal, Barwick CJ said (at 169) that, where the "general rule" applied, Failing payment into court of the amount sworn by the mortgagee as due and owing under the mortgage, no restraint should be placed by order upon the exercise of the respondent mortgagee's rights under the mortgage. 213 In MCP Muswellbrook Pty Limited v Deutsche Bank (Asia) AG (1988) 12 NSWLR 16, 32, Powell J said: One is left with a case in which the mortgagors who are in default seek to restrain the exercise by their mortgagee of its undoubted powers. The basic rule to be applied in such a case is - since there can only be one account between a mortgagor and mortgagee and since that account can only be taken in a redemption suit - that relief in the way of restraining a mortgagee from exercising its rights as such will be granted only if the mortgagor brings into court either the whole of the sum claimed by the mortgagee, or such lesser sum as the court, having considered the whole of the matters, might consider appropriate in the circumstances … 214 But, as Bryson J observed in an article, "Restraining Sales by Mortgages and a Curial Myth" (1993) 11 Australian Bar Review 1, 9 (speaking, it may be noted, at a time relevant to the present case): [I] nstances occur in practice where mortgagees are restrained for periods of some days or weeks so that refinancing proposals can be carried out, or are restrained conditionally on their actually being carried out within defined periods.

Later in the article, his Honour said (at 16): If it is essential that the plaintiff offer to do equity and there must be an offer to redeem the mortgage and pay the amount found to be due on taking the accounts if the court is to act at all, how much of this must the plaintiff do at the moment of making an interlocutory application? It must be said that the case law does not seem to explain or even to examine why the need for the plaintiff to do equity leads to an essential requirement that he produce money to repay the mortgage at the moment of making his application. What if he offers to redeem out of the proceeds of a sale which he alleges that he has made or can make, but which will not be completed until some weeks or months have passed? What if he offers to redeem out of the proceeds of another loan? It is hard to accept that for some reason of principle the court cannot or should not hear evidence that money can be expected to be forthcoming in one of those ways, and should not appraise that evidence and form a view about whether to restrain the mortgagee's sale in the light of it. 215 His Honour's decision in Grose v St George Commercial Credit Corporation Limited (1991) NSW ConvR 55-586, illustrates that approach. There was no challenge, in that case, to the mortgagee's power of sale, although his Honour had reservations about the way in which the power of sale was being exercised; there appeared to have been undue haste and insufficient time appeared to have been allowed to generate interest before the date set for sale by auction. His Honour made the following observations concerning the facts of the case (at 59,300): The plaintiff's case should be considered on two sides. The first side is that he claims to be in a position to redeem the mortgage, not immediately, but as he would put it in June, the prediction being 21 days from today, although complete precision is not to be expected. In support of that he produces a letter offering finance from Public Investment Company Limited, a company which appears to operate in the very distant places of the Isle of Man and Connecticut, and this offer is borne out to some degree by an affidavit of Mr MacEnroe, a person associated with Public Investment Company Limited, made on 24 May, some days before the offer.

His Honour went on to say (at 59,300): The offer suggests that subject to conditions which in this kind of business are not unusual, there is a willingness to advance to the plaintiff enough money to pay out the defendant's claim within the time I have mentioned. Much experience has taught me that such proposals are not always fulfilled, but on its face it appears to be a suitable and reliable proposal, subject to no abnormal contingencies, although to many contingencies to which finance is subject in the ordinary course of business. That is to say the plaintiff is in substance claiming that he can redeem the mortgage within a fairly short time. He does not exactly conform to what is described as the ordinary rule in the judgment of Sugerman J in Harvey v McWatters 49 SR 173 at 174.

Nonetheless, his Honour made an order restraining the auction which was set for the following day. 216 I think it is fair to say that, at the relevant time, being the year 1992, there was an absence of uniformity between the judges of this Court as to whether invariably or almost invariably a payment into court would be required in such cases, or whether a reasonably promising conditional offer of finance might justify a short postponement of a mortgagee sale if other discretionary considerations favoured it. 217 Of course, even among those who took the more liberal view, a conditional offer of finance, however promising, did not automatically lead to the grant of an injunction. A range of discretionary considerations would arise in the circumstances of the particular case. Bryson J said in his article (at 2): The court is taken to consider what in particular is said to be wrong about the lender's proceedings, what will be lost and what will be gained by stopping a sale from taking place in the near future, whether the expense thrown away can be provided for, and (and this is usually of great importance) why the application is made so late. If the application is made at a later stage and there is a purchaser from the mortgagee, the discretionary considerations against interlocutory relief begin to accumulate; but of course there may yet be circumstances which justify restraint if the sale was at an undervalue or there were shortcomings in the way in which the market was approached, the auction was advertised or conducted, or there were associations between the mortgagee and the purchaser, or other grounds for alleging that the power was not exercised in good faith.

Of these matters, it is apparent that the manner in which the power of sale was being exercised was an important factor in his Honour's decision in Grose . For the purpose of the present case, it may be noted that his Honour referred to the question as to why the application is made so late. He said that was usually of great importance. 218 In the present case the following factual considerations are relevant.

The amount of the debt 219 In the period March to July 1992, the debt to the bank stood at about $4.5m on which about $400k is now agreed to have been an overcharge. The undisputed debt can be taken as having been $4m in round figures.

Offers of finance 220 There never was an unconditional offer of finance. The only conditional offer of finance received prior to July 1992 was from Real Investment and that had collapsed. Between 6 and 10 July 1992, three communications came into Ms Notaras' hands within three or four days. I have reviewed them. 221 For the reasons given previously, I do not believe there was any prospect that the Roberts Lumley letter of 6 July 1992 would have been received on an application for an interlocutory injunction as evidence of a conditional offer of finance. Nor can I infer from the letter that there was any prospect of adducing such evidence from Ms Jenkins or any particular lender behind her. 222 The Morlend letter of 26 June 1992 forwarded to Ms Notaras on 6 July 1992 was a conditional offer to lend $1.02m on the security of Moncur Street, subject to valuation, at an LVR of 50 per cent. Mr Marsh was prepared to value that property at $2.4m. $200k was required to pay out an existing mortgagee. So the plaintiffs had evidence of that conditional offer, amounting to $1.02m or $820k net from that source. 223 The Howard letter of 7 July 1992, which Ms Notaras said she received on 10 July 1992, was a conditional offer to lend $3m on Moncur Street and Bourke Street not exceeding 65 per cent of the value of Moncur Street and 60 per cent of the value of Bourke Street. Mr Marsh valued Moncur Street at $2.4m and Bourke Street at $2.7m. There was adequate securely on the valuation to support a loan of $3m or $2.8m nett. 224 The conditional offers of finance on Moncur Street were not cumulative. $2.8m fell far short of $4m. Despite considerable activity by Ms Notaras and others on her behalf, that was all that had come in. The only reasonable inference is that this was as good as could be done. Having regard to the appointment of Ferrier Hodgson in relation to the Oxford Street and Bourke Street properties and to Ms Notaras' parlous cash flow situation at that time, it is not surprising that great difficulty was experienced in obtaining even conditional offers of finance. 225 The plaintiffs have not established to my satisfaction that there was more than a negligible prospect of obtaining unconditional offers of finance to a value of $4m or thereabouts at any time between March and July 1992.

Delay 226 There had been default in arrangements to service the 1989 loan from the bank since July 1990. The s57 notices had issued in May 1991. There was no available explanation for a late application.

Other considerations 227 There was no other consideration, such as in Grose (undue haste in exercising the power of sale), to put in the balance in favour of postponing the auction sales.

Conclusion 228 In these circumstances, there was not more than a negligible prospect that an application for an injunction to postpone the sale of the properties would have succeeded on discretionary grounds.

The value of the allegedly lost opportunity 229 Assuming, contrary to my finding, that there was more than a negligible prospect of obtaining an injunction to restrain the sales, was there more than a negligible prospect that the plaintiffs would have obtained a benefit from the grant of such an injunction? I conclude not. My reasons follow.

The negotiations with the bank on 15 July 1992 230 The plaintiffs rely on this part of the history of events to ground an inference that a settlement at $3.3m was available with the bank prior to 15 July 1992. The plaintiffs then say that there was at least a more than negligible chance that the plaintiffs could and would have availed themselves of the opportunity of settling with the bank on those terms if an injunction had been obtained and the sales postponed. 231 In order to assay that contention, it is necessary to examine what transpired on 15 July 1992 more closely. 232 First, I should be more precise about what was said by Mr Herington at that time and its implications. As previously indicated, Mr Nunnerly, understandably, did not have a good recollection of the detail of his conversations with Mr Herington that morning. In his evidence in chief, the following was as good as he was able to do: A: It is over 10 years ago, so it is rather difficult for me to specifically recall, and also I should mention the circumstances are such that I was driving a motor vehicle and I had to pull it into the kerbside to take the call, and the call was exceptionally brief because time was short and very definitely the price of $3.3m was a figure - I forget whether I'd said that or whether Mr Herrington [sic] had said that, but it would have been a figure that was under discussion, and that was a figure that was confirmed and Mr Herrington agreed that was the amount on the property. It was also - he said provided we confirmed that with a fax almost immediately. With that, I just drove on. So there was hardly a conversation, as such. 233 The following is a verbatim extract from the bank's file note of 15 July 1992, to which I have previously referred: At 10.23am Mr Herington advised Nunnerly the Bank would not stop the sale unless a written offer for the $3.3m with a 21 day settlement period was sent by facsimile to the SBN on 283 1453 within 10 mins. This was due to the fact the auction was scheduled to commence at 10.30am. 234 As I indicated earlier in this judgment, there was a further requirement, arising from earlier conversations, for documentary evidence of ability to complete. 235 Mr Nunnerly did not dispute the account of the relevant conversation as it appears in the bank's note. The following is from his evidence under cross-examination: HIS HONOUR: Q: What was being put to you, Mr Nunnerly, was that in the course of that conversation Mr Herrington proposed $3.3m - proposed that the sale would not be stopped unless the bank received a written offer of $3.3m to be paid within 21 days with the written offer being sent by facsimile within 10 minutes. A: Yes. Q: The extent of the documentation that is being suggested to you as being sought, at the moment, is the written offer to pay $3.3m within 21 days. A: Yes. I recall that, but it was more in the nature of a fax confirming that, a facsimile, not an offer document.

(When Mr Nunnerly said "not an offer document", one has to bear in mind that his background was in banking. An offer document in banking practice is a document, customarily prepared by the bank, in which a customer applies for accommodation of some kind with full particulars of their financial affairs and so on. It is common ground that a short fax is all that was required.) 236 In these circumstances, I have no hesitation in accepting the account in the bank's note as a reliable account of the negotiations. 237 What Mr Herington said to Ms Notaras at 10.23 am was not an offer to accept $3.3m if paid within 21 days. It was not even an offer to cancel the auction if an offer to pay $3.3m within 21 days was received from Ms Notaras within 10 minutes. Mr Herington said no more than that the bank would not stop the auction unless an offer as specified was received within the specified time. There was no assurance that the bank would accept the offer to settle at $3.3m, and not even an assurance that the bank would cancel the auction if the offer was received. Apart from anything else, the requirement that Ms Notaras produce evidence of ability to complete remained to be satisfied. 238 I know Ms Notaras and Mr Nunnerly afterwards took the position that they had a deal to cancel the auction, but that was not so. The bank would not have cancelled the auction without strong evidence that Ms Notaras would be able to refinance the debt at $3.3m within the contemplated period of 21 days. That is what Mr Herington said would be required and it is what he would have required. If the fax had arrived in time, the best Ms Notaras could have hoped for was that the auction would be stood down until later in the day to give her the opportunity of tabling such evidence. At a minimum, the bank would have required a conditional offer of finance for at least $3.3m, with good prospects of Ms Notaras being able to satisfy the conditions. The most that can be inferred from this episode is that, if an injunction had been obtained, that is as good an opportunity as would have been available.

The prospect of concluding an agreement 239 Was there more than a negligible prospect that the plaintiffs would have concluded an agreement with the bank if an injunction had been granted? I do not think so. My reasons follow. 240 It is reasonable to assume that there was at least the prospect that whatever deal the bank was prepared to do on 15 July 1992 would have been available shortly before that date if an injunction had been obtained, but what were the prospects that the plaintiffs could have met the bank's terms? 241 For the reasons I have given, there was not more than a negligible chance that the plaintiffs could have produced a conditional offer of finance for $3.3m. Ms Notaras did not have any such offer or offers making up that amount. She had done her best and her best was $2.8m. And, even as to that, the prospect of Howard lending $3m ($2.8m net) on Moncur Street and Bourke Street would have been dismissed out of hand by the bank. That loan depended on Howard receiving an independent valuation of that property which was far in excess of valuations held by the bank. 242 Then there would have been the need to satisfy the bank of Ms Notaras' capacity to service a loan of $3.3m, if procurable. For the reasons I have given, that would have been next to impossible. 243 All in all, there was not more than a negligible prospect of satisfying the bank that the plaintiffs would have been in a position to pay $3.3m within three weeks time or within any time of that order. 244 It follows that there was not more than a negligible prospect that, if an injunction had been obtained, the sale of the properties by the bank would have been avoided.

The value of an injunction 245 Even if, contrary to my findings, the plaintiffs had been granted an injunction, had obtained finance and had paid the bank out at $3.3m or at some similar figure, there remains the question as to whether the plaintiffs could then have serviced the new loan. 246 There was not more than a negligible prospect that they could have done so. Ms Notaras and her related entities had no more capacity to service a new loan at $3.3m than the old one at $3.455m. The history of default shows that to be so, as does the parlous revenue situation of Ms Notaras' operations attested to by Mr Gower.

Conclusion 247 The plaintiffs lost nothing of value for want of an injunction to restrain the sale of the Oxford Street and Bourke Street properties. If those properties had not been sold by the bank as and when they were and a new loan obtained, the properties would certainly or almost certainly have been sold anyway very shortly thereafter (compulsorily, if not voluntarily), or Ms Notaras would have had to sell other property of similar value in order to hold them.

The case against the defendants 248 The content of the duty of care owed by solicitor to a client was, for present purposes, succinctly and sufficiently stated by Malcolm AJA in Heydon v NRMA Ltd (2000) 51 NSWLR 1 (at 53): Both barristers and solicitors owe a duty of care to those whom they advise or for whom they act. In the present context, their duty is to exercise reasonable care and skill in the provision of professional advice … There is no implied undertaking that the advice is correct, but only that the requisite degree of professional skill and care has been exercised in the giving of the advice. 249 Mr Newman adopted Ms Strasser's advice that there was no serious prospect of obtaining an injunction without an unconditional offer of finance. Mr Boyce, solicitor, who gave opinion evidence as an expert witness, said that for Mr Newman to have relied on counsel's advice in the circumstances of this case was appropriate. I agree. 250 Whilst Mr Strasser's professional conduct is not in issue, I would observe that his advice that an injunction application could not succeed without an unconditional offer of finance is consistent with my finding that there was not more than a negligible chance of an injunction application being successful in the circumstances that existed (which did not include such an offer). 251 Mr Mathas' advice was that there was no prospect of such an application being successful on its merits and because of the delay. That advice was perhaps a little stronger than my finding that, objectively, there was not more than a negligible prospect that such an application would be successful. But the advice was comfortably within the range of opinions which a reasonably competent solicitor could have formed exercising proper care. In particular, as Bryson J said in his article, explaining delay is always important. In a particular case it may be critical. On the facts of the present case, it was open to be considered that the delay was fatal. 252 Mr Mathas, but not (as I have found) Newman Psaltis, was instructed by Ms Notaras to institute proceedings notwithstanding his advice that an application would be hopeless. That being his opinion, this did not constitute an actionable breach of duty to the plaintiffs in view of his duty to the court. 253 The claim against both sets of defendants also fails because it is not established that anything of value was lost by the plaintiffs for want of proceedings for an injunction because there was not more than a negligible chance of an interlocutory injunction being granted. If - contrary to my finding - there was such a chance, it is not established that anything of value was lost as a result of the sales going ahead as and when they did because there was not more than a negligible prospect that the plaintiffs could then have refinanced the debt or, having refinanced the debt, could have serviced the new loan.

Summary of major findings 254 I summarise my major findings as follows:

(1) There was not more than a negligible chance - (a) that an injunction would have been granted on the ground of no effective power of sale, nor (b) that an injunction would have been granted notwithstanding an effective power of sale, nor (c) that the plaintiffs would have obtained a benefit from the grant of such an injunction.

(2) The defendants were not guilty of breach of duty in advising against proceedings for an injunction as they did or (in Mr Mathas' case) in refusing to institute such proceedings.

(3) No damage was suffered by the plaintiffs in consequence of any breach of duty.

(1) Verdict and judgment for the defendants in each of the proceedings, with costs.

(2) Liberty to apply for any other order, my associate to be notified of any such application within fourteen days from today's date. -o0o-

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