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[2010] VSC 601
Supreme Court of Victoria
2010-12-17
KYROU J
Original judgment source is linked above.
LAWYERS - Proceeding by a former client against a solicitor alleging breach of retainer and negligence - Alleged failure to advise adequately about the exercise of an option to purchase land - Nature of duty of care - Whether client must establish vulnerability - Relevance of expert evidence - Duty to advise on comparative legal merits where alternative legal avenues are available - Role of solicitor to advise, rather than to make commercial decisions for client.
NEGLIGENCE - Breach - Relevance of client's refusal to permit solicitor to brief counsel.
NEGLIGENCE - Duty to mitigate - Failure to accept settlement offers - Failure to commence proceedings expeditiously.
NEGLIGENCE - Causation - Whether client would have allowed the option to lapse irrespective of any advice from solicitor.
DAMAGES - Date for assessment where value of land is involved - Breach of retainer - No loss - Nominal damages.
1 Simply Irresistible Pty Ltd ('Simply') has sued its former solicitors, Riordan & Partners ('Riordans'), alleging that they breached their retainer and/or their common law duty of care ('tort duty') by failing to advise it adequately, or at all, about the exercise of an option to re-purchase an apartment known as Unit 20, 50 Bourke Street, Melbourne ('Apartment') from Millennium Markets Pty Ltd ('Millennium').
2 The option was granted by cl 7 of an agreement dated 16 March 1999 between Simply, Millennium and other parties ('Agreement'). The terms of the option are set out at [27] below ('Option'). The Agreement was executed in the context of the sale by the Maher family and their associated companies (including Simply) of various properties to Millennium and its associated companies for the purpose of repaying loans from Westpac Banking Corporation Ltd ('Bank'). The properties included the Apartment and land upon which a trash and treasure market known as the Bundoora All-Weather Market was conducted ('Market Land').
3 Clause 3 of the Agreement provided for the cancellation of the contract of sale of the Apartment and the re-transfer of the Apartment to Simply for nil consideration if, by the settlement date, a condition relating to the proposed uses of the Market Land was satisfied. If the condition was not satisfied prior to the settlement date, the Option allowed Simply to purchase the Apartment for $210,000 within two years after the settlement date. Settlement took place on 9 July 1999 ('Settlement'). Simply did not exercise the Option and it lapsed on 9 July 2001.
4 Riordans claim that they advised Simply about the Option and deny that they breached any duties that they owed to Simply. In the alternative, they allege that, if they breached any duty that they owed to Simply, the breach did not cause any loss to Simply because it had no intention of exercising the Option. Riordans also allege that Simply failed to mitigate its loss and was contributorily negligent.
5 The issues that require resolution in this proceeding are:
(a) What was the scope of the retainer between Simply and Riordans?
(b) What advice did Riordans provide to Simply regarding the exercise of the Option?
(c) Did Riordans breach their retainer in relation to the Option?
(d) Did Riordans breach their tort duty in relation to the Option?
(e) If Riordans breached their retainer or tort duty, did the breach cause any loss to Simply?
(h) What damages, if any, should be awarded to Simply?
6 For the reasons that follow, I have concluded that, although Riordans breached their retainer and tort duty, those breaches did not cause any loss to Simply. Simply's claim in negligence will be dismissed and nominal damages of $1 will be awarded to Simply for Riordans' breach of their retainer.
7 For convenience, I have included a glossary of defined terms and abbreviations at the end of this judgment.
8 For many years, Patricia Maher and her sons, Justice Maher and Dominus Maher, (collectively, 'the Mahers') conducted a number of businesses and owned various commercial and residential properties either personally or through corporate entities, including Simply. I will refer to the Mahers and their corporate entities collectively as 'the Maher Group'.
9 At all relevant times, Patricia Maher and Justice Maher were directors of Simply and other companies in the Maher Group, including Eighty-Sixth Eternity Pty Ltd ('Eternity'), Bundoora All-Weather Market Pty Ltd ('BAWM') and Pamah Pty Ltd.
10 Prior to Settlement, the Maher Group owned the following properties:
(a) The Apartment. The Apartment was purchased by Simply in approximately 1990 for $650,000. Patricia Maher has lived in the Apartment since it was purchased. As discussed below, she continues to do so.
(b) The Market Land. This land is situated at 187 Settlement Road, Thomastown and was owned by Eternity. The Bundoora All-Weather Market was conducted on the Market Land by BAWM.
(c) The land situated at 161-167 Settlement Road, Thomastown, which was owned by Patricia Maher.
(d) The land situated at 169 Settlement Road, Thomastown, which was owned by Simply.
(e) The land situated at 14 Warranwood Place, Bundoora ('Warranwood Land'), which was owned by BAWM.
(f) The land situated at Cannonvale, Queensland, which was owned by Pamah Pty Ltd.
11 All the properties listed at [10] above were mortgaged or charged to the Bank to secure loans that had been taken out by the Maher Group ('Security Properties'). In 1998, the Maher Group encountered difficulties in servicing the loans and the Bank was exerting pressure on the Mahers to repay the loans. The Maher Group was able to service the interest on the loans, but was not able to reduce the capital amount, which totalled approximately $6.3 million. The Bank gave the Maher Group an opportunity to find a buyer for the Security Properties before the Bank took action to enforce its securities.
12 Following unsuccessful negotiations with potential purchasers and joint venture partners, in late January 1999, the Maher Group engaged Issac Brott to act as their solicitor in negotiations with the Bank. In February 1999, Mr Brott introduced the Maher Group to Myer Herszberg and, later, to Moishe Gordon.
13 On 1 March 1999, Mr Brott successfully negotiated an agreement with the Bank whereby the Bank agreed to accept the reduced capital amount of $5.8 million provided that all the Security Properties were sold as a group for not less than that amount.
14 Following extensive negotiations, Mr Herszberg and Mr Gordon agreed that their company, Millennium, would purchase the Security Properties and the businesses that were conducted on them for a total amount of $5.8 million. Graeme Efron of Efron & Associates acted for Millennium in relation to the transaction. I will refer to Millennium, Mr Herszberg and Mr Gordon collectively as 'the Millennium Group'.
15 There were two key contentious issues that arose during the negotiations for the sale of the Security Properties to Millennium.
16 The first issue was Patricia Maher's reluctance to sell the Apartment. The Apartment had been her home since 1990 and its sale would result in the loss of her place of residence.
17 The second issue was the uses to which the Market Land could be put. In 1999, the Market Land was being used as a trash and treasure market pursuant to two permits issued by the City of Whittlesea ('Council'). Millennium indicated that it wished to explore a possible expansion of the uses of the Market Land to include shops and a supermarket. The Maher Group, principally through Justice Maher, informed Millennium that the Market Land could not be used for shops or a supermarket, but that it could be used for factory retailing outlets, a fruit and produce market, and a trash and treasure market ('Proposed Uses'). As Millennium's ability to use the Market Land for the Proposed Uses affected the price that it was prepared to pay for the Security Properties, it wanted to include the Apartment in the sale transaction to allow for the possibility that the Market Land could not be used for the Proposed Uses.
18 The Maher Group and the Millennium Group agreed to resolve the above issues as follows:
(a) The Apartment would be included in the sale of the Security Properties to Millennium, but only by way of 'securing' that the Market Land could be used for the Proposed Uses.
(b) If, prior to Settlement, it was established that the Market Land could be used for the Proposed Uses, the contract of sale of the Apartment to Millennium would be cancelled and Simply would be entitled to the re-transfer of the Apartment for nil consideration.
(c) If, prior to Settlement, it was not established that the Market Land could be used for the Proposed Uses, Simply would have a two-year option to purchase the Apartment for $210,000.
(d) The two-year option would include a provision whereby, if a planning permit for the use of the Market Land for the Proposed Uses was obtained within the two-year option period, Simply could re-purchase the Apartment for $10,000 plus the costs of obtaining the permit.
19 The above arrangement was embodied in the Agreement.[1] Concurrently with the Agreement, separate contracts of sale were executed for each of the Security Properties. The contract of sale for the Apartment specified a sale price of $300,000. This price was part of the total amount of $5.8 million for the sale of all the Security Properties.
20 I will now consider the key provisions of the Agreement.
21 The Agreement was in the form of a deed. The parties to the Agreement were Millennium (which was described as the 'Purchaser'), BAWM, Simply, Eternity, Justice Maher, Mr Herszberg and Mr Gordon.
22 Clause 3 of the Agreement provided for the cancellation of the contract of sale of the Apartment in the event that it was established prior to Settlement that the Market Land could be used for the Proposed Uses. Clause 3 was in these terms:
3. Cancellation of Apartment Contract
At Simply's request, and despite the fact that the Apartment Contract has been exchanged just before, or simultaneously with, exchange of parts of this Deed, Simply and the Purchaser hereby agree that, provided that the Market Land can be used for the Proposed Uses without breaching the provisions of the planning scheme that affects the Market Land (including without limitation the Whittlesea Planning scheme) by the due date for settlement thereunder (whether because of a rezoning of the Market Land and/or by the grant of planning permits on terms reasonably acceptable to the Purchaser) with effect as and from the time that settlement occurs ... the Apartment Contract is hereby cancelled and they hereby acknowledge that neither of them will, as from the time that the cancellation takes effect, have any rights under it save and except that the deposit paid or payable by the Purchaser under its terms must forthwith be refunded to the Purchaser.
23 I will refer to the proviso in cl 3 of the Agreement about the Proposed Uses as the 'Proposed Uses condition'.
24 Clause 1.8 of the Agreement defined 'Proposed Uses' as follows:
1.8 'Proposed Uses' means the use of the Market Land for the following:
1.8.1 including without limitation factory retailing outlets;
1.8.2 a fruit and produce market; and
1.8.3 a trash and treasure market;
with the ability to grant leases (or at the Purchaser's option licences) for tenancies.
25 An earlier draft of the Agreement included the following sub-clauses in the definition of 'Proposed Uses' in cl 1.8:
1.8.1 shops (as defined in the Whittlesea Planning Scheme) including without limitation factory merchandise outlets;
1.8.2 a fruit and produce market;
1.8.3 a trash and treasure market; and
1.8.4 supermarket
with the ability to grant leases (or at the Purchaser's option licences) for tenancies.
These sub-clauses were amended by hand at the request of the Mahers - principally Justice Maher - to accord with the final version set out at [24] above.
26 Clause 6 of the Agreement dealt with the procurement of a planning permit in relation to the Proposed Uses. It was in these terms:
6. Proposed Uses
6.1 Justice convenants with the Purchaser that he will use his best endeavours to procure the issue to the Purchaser of a town planning permit that allows the Market Land to be used for the Proposed Uses.
6.2 Subject to the Purchaser being reasonably satisfied that the expenditure is warranted and justified and that the issue of a town planning permit for the Proposed Uses is likely to be attained, the Purchaser will spend an amount of up to $200,000.00 in paying for Consultants to assist in procuring the issue to the Purchaser of a town planning permit, so that the Market Land can be legally used for the Proposed Uses.
6.3 The choice of Consultants shall be at the complete discretion of the Purchaser and shall be reasonable.
6.4 The Purchaser shall have the conduct of all proceedings and meetings in relation to the matters referred to in this Clause 6 and Justice acknowledges and agrees that he must, in relation to those matters, only act under, and in accordance with, the directions and instructions of the Purchaser.
6.5 Justice acknowledges that he has no power or authority to pledge the credit of, or make commitments or give undertakings or enter into agreements on behalf of, the Purchaser.
27 The Option was set out in cl 7 of the Agreement and was relevantly in the following terms:
7.1 Grant of Option
Subject to the Purchaser completing its purchase of the Apartment under the Apartment Contract, and in consideration of the [sum] of $1.00 (the 'Option Fee') now paid by Simply to the Purchaser (the receipt of which the Purchaser hereby acknowledges) the Purchaser irrevocably grants to ... Simply an option (the 'Option') to purchase the Apartment from the Purchaser for the Apartment Purchase Price, and upon and subject to terms and conditions contained in ... a contract of sale ('Sale Contract') to be prepared by the Purchaser's solicitors ... The Sale Contract shall provide that the Apartment Purchase Price is to be paid as to a 10% deposit on exercise of the Option and as to the balance 60 days thereafter.
7.2 Exercise of Option
The Option can be exercised at any time on any day during the period of time ('the Option Period') commencing on the date of this Deed and ending at 5 pm on the second anniversary of the date on which the Purchaser becomes entitled to possession of the Apartment ... under the Apartment Contract ('the Expiration Time') by Simply delivering to the Purchaser:
7.2.1. written notice to that effect executed by or on behalf of ... Simply ( ... 'the Exercise Notice'); and
7.2.2. a cheque payable to the Purchaser's solicitors named in the Sale Contract for the deposit ...
...
7.7 No caveat
7.7.1. Simply (for itself and its nominee) undertakes to the Purchaser that Simply must not lodge, cause or allow to be lodged at the Land Titles Office a caveat in respect of its interest in the Apartment created by this Clause 7 or otherwise until after registration of a mortgage over the titles to the Apartment given by the Purchaser in favour of its banker or financier to secure (amongst other things) funds provided for the purchase of the Apartment by the Purchaser.
7.7.2. Simply (for itself and its nominee) undertakes to the Purchaser that, if (after Simply or its nominee have lodged or caused or allowed to be lodged at the Land Title Office a caveat in respect of its interest in the Apartment created by this Clause 7 or otherwise) the Purchaser requests Simply (or its nominee) to consent to lodgment or registration of a mortgage over the titles to the Apartment, Simply will procure that the appropriate consent, acceptable to the Land Titles Office and the mortgagee, is given to the Purchaser within 3 days after a written request is made for it.
7.8 Consequences of caveat
If Simply (or its nominee) breaches Clause 7.7, then the Option lapses on the date that the caveat is lodged at the Land Titles Office or (in the case of a request under Clause 7.7.2) at 9 am on the day that is the fourth day after the request is given to Simply.
...
28 Clause 1.2 of the Agreement defined 'Apartment Purchase Price' as follows:
1.2 'Apartment Purchase Price' means:
1.2.1. if by the Expiration Time, the Market Land cannot be lawfully used for the Proposed Uses, $210,000.00; or
1.2.2. if by the Expiration time, the Market Land can be lawfully used for the Proposed Uses, the lesser of:
1.2.2.1. $210,000.00; or
1.2.2.2. the sum of:
1.2.2.2.1. $10,000.00; plus
1.2.2.2.2. all monies spent, and expenses incurred, by the Purchaser for Consultants (including expenses and disbursements charged by the Consultants) in relation to the matters referred to in Clauses [6.1] and [6.2] hereof ...
29 Clause 8 of the Agreement conferred on Patricia Maher a right to occupy the Apartment rent free during the 'Option Period'. Pursuant to cl 10, BAWM agreed to make available to Millennium the services of Justice Maher and his wife, Helen Maher, to assist in the operation of the Bundoora All-Weather Market.
Three methods for Simply to re-acquire the Apartment under the Agreement
30 Under the Agreement, there were three methods by which Simply could re-acquire the Apartment.
31 The first method was for Simply to satisfy the Proposed Uses condition by 9 July 1999. If this occurred, cl 3 of the Agreement provided that the contract of sale of the Apartment would be cancelled.
32 The second method was for the Market Land to satisfy the Proposed Uses by 9 July 2001. If this occurred, cll 1.2.2, 6 and 7 of the Agreement provided that Simply would have to pay $10,000 plus the costs incurred in satisfying the Proposed Uses, which were capped at $200,000. Clause 6 contemplated that the second method would involve the issue of a new planning permit by 9 July 2001.
33 The third method was for Simply to exercise the Option in cl 7 of the Agreement prior to 9 July 2001 and to pay $210,000 under a new contract of sale of the Apartment from Millennium to Simply. Clauses 7 and 1.2.1 contemplated that the Option would be exercised if the Market Land did not satisfy the Proposed Uses by 9 July 2001.
34 Much of the evidence in this proceeding was documentary and not in dispute. Large parts of the oral evidence were also not contested. Set out below are relevant events which were not in dispute.
Events prior to the engagement of Riordans on 19 March 2001
35 In relation to the Market Land, the Council issued planning permit number P3405 on 8 May 1990 and planning permit number 704159 on 6 March 1998. Those permits authorised the Market Land to be used 'as a trash and treasure market' and stipulated that the authorised use had to 'comply with the provisions regarding Trash and Treasure Market as defined in the Whittlesea Planning Scheme.' Until 8 July 1999, the Market Land was zoned 'Reserved Light Industrial Zone'.
36 Shortly after the Maher Group engaged Mr Brott in late January 1999, they agreed to pay him a lump sum of $40,000 for his legal fees. After Mr Brott introduced Mr Herszberg and Mr Gordon to the Mahers, he negotiated an arrangement whereby the Bank paid $5,000 towards the amount of $40,000 and Mr Herszberg paid the balance. In addition, Mr Herszberg agreed to pay Mr Brott a 'procurement fee' of $150,000 ('procurement fee') by instalments. The procurement fee was disclosed to the Maher Group.
37 Shortly after the execution of the Agreement, a dispute arose between the Maher Group and Millennium as to whether the Proposed Uses condition had been satisfied.
38 On 28 March 1999, Justice Maher wrote a letter to the Council - on BAWM's letterhead - in which he referred to some of the then current uses of the Market Land, gave details of proposed renovations to the property, and sought 'confirmation of this use on our permit' so that the proposed 'upgrading [of] the Market' could commence. The Council responded by letter dated 14 April 1999, which relevantly stated that BAWM was required to lodge a plan highlighting the proposed changes.
39 Under cover of a letter dated 30 April 1999, BAWM lodged with the Council amended plans and an application for a planning permit for 'building alterations'. The covering letter described the proposed changes as 'building extensions', 'a new Foodhall store', '[replacing] existing offices ... with car parking' and '[enhancing] further the existing landscaping with new ground cover and fencing'. The Council responded by letter dated 5 May 1999 in which it stated that the application could not be processed until the application fee was paid. Justice Maher gave evidence that the fee was $280 and that Mr Gordon had refused his request for that amount. The fee was never paid and, accordingly, the application did not proceed.
40 On 18 May 1999, Mr Brott wrote a letter to Mr Efron in which he asserted that the Proposed Uses condition had been 'satisfied in full'. Mr Efron replied by letter dated 2 July 1999 in which he stated that the Maher Group had 'not provided sufficient evidence to assure [Millennium] that the Market land can be lawfully used for the Proposed Uses' and that, accordingly, the contract of sale of the Apartment 'has not been cancelled'. Mr Brott responded by letter dated 2 July 1999 in which he stated that the contents of Mr Efron's letter were 'false and unacceptable' and that the Maher Group 'will not proceed unless all terms are met.'
41 On 8 July 1999, a notice of the approval of a new Whittlesea Planning Scheme was published in the Victoria Government Gazette.[2] The new Scheme, which commenced immediately, had the effect of including 'trash and treasure market' within the definition of 'Market', and of changing the zoning to 'Industrial 1 Zone'.
42 At Settlement on 9 July 1999, the Security Properties were transferred to Millennium and its associated companies. On the same day, Mr Brott wrote a letter to Mr Efron in which he asserted that the Proposed Uses condition had been satisfied and that Millennium had wrongfully refused to cancel the contract of sale of the Apartment. In the letter, Mr Brott stated that a caveat would be lodged over the title to the Apartment and that proceedings would be instituted if the dispute was not settled within 14 days.
43 On 14 July 1999, Justice Maher instructed Mr Brott to lodge a caveat over the title to the Apartment.
44 On 23 July 1999, Mr Brott wrote to Mr Herszberg and attached a copy of the Gazette Notice. The letter asserted that the Maher Group had satisfied the conditions of the Agreement and that Millennium had wrongfully refused to cancel the contract for the sale of the Apartment. The letter 'called upon' Millennium to perform the terms of the Agreement.
45 On 2 September 1999, Mr Brott lodged a caveat, in his own name, over the title to the Apartment. On 15 November 1999, following a requisition from the Land Titles Office, Eternity was substituted as the caveator. The caveat claimed that the caveator had an interest in fee simple under the Agreement.
46 According to the evidence of Patricia Maher, prior to lodging the caveat, Mr Brott warned her that the lodgement of the caveat would cause the Option to lapse. She said that Mr Brott did not want to lodge the caveat, but that she insisted that he do so. Justice Maher's evidence was that Mr Brott never advised him that the lodgement of the caveat would cause the Option to lapse.
47 In mid October 1999, Patricia Maher engaged Kim Whitby of McKean & Park to provide independent advice in relation to Mr Brott's handling of the dispute with Millennium concerning the Apartment. According to Mr Whitby's file note dated 21 October 1999, he had a conference with Patricia Maher at which she informed him that she wanted him 'to brief Counsel for the purpose of ascertaining whether or not it is possible for her to take action against [Millennium] and the likelihood of success.' According to the file note, Patricia Maher 'wishe[d] to have a second opinion in relation to the likelihood of success'.
48 On 22 October 1999, Justice Maher wrote a letter to Mr Brott in which he stated that the Mahers 'are very concerned about the delay in ... receiving the title of the [Apartment].' The letter requested an update on the 'current situation'.
49 On 25 October 1999, Mr Brott wrote a letter to Patricia Maher in which he advised her that he was 'of the view that the purchasers have acted improperly and, further, that you would certainly be successful in a litigation.'
50 On 9 November 1999, Patricia Maher, Justice Maher and Mr Whitby attended a conference with Nick Jones of counsel. Mr Whitby gave evidence that both he and Mr Jones advised that, on the balance of probabilities, any court would consider that the Proposed Uses condition had been met and that the Apartment should have been reconveyed to the Mahers. Mr Jones suggested that it might be worthwhile for the Mahers to write to the Council to seek confirmation that the Proposed Uses were permitted.
51 On 10 November 1999, Mr Whitby settled a draft letter from BAWM to the Council that had been drafted by Justice Maher. That letter, in the form in which it was sent to the Council on 10 November 1999, relevantly stated: [3]
We have sold the [Market Land] to new owners and they wish us to define, the uses of the land they have purchased, could you please confirm the following.
a. Can the stall operators in the Market sell by Retail.
b. Can the stall operators in the Market sell by Wholesale.
c. Can the stall operators in the Market sell Fruit and Produce.
d. Can the stall operators in the Market sell Trash and Treasure.
We are requesting verification of these uses from you, which we understand were confirmed in the Government Gazette dated 8th July 1999.
We recognize shops and supermarket are not included in the uses specified.
52 The Council responded by letter dated 23 November 1999 in which it stated:
(a) The permit for the Market Land authorised the use 'Trash and Treasure Market', which was defined as 'land where vendors of goods temporarily occupy an area or stall for a fee.'
(b) Under the new Whittlesea Planning Scheme, which was approved on 8 July 1999, the Market Land was zoned 'Industrial 1', but 'the permit allows a Trash and Treasure market only and all goods sold must conform to this primary use.'
(c) Retail sales of trash and treasure items are allowed from the market stalls.
(d) The endorsed plan for the Market Land limits the areas where fruit and produce can be sold. In general terms, fruit and produce are food items, rather than trash and treasure items.
(e) The term 'wholesale' means the sale of goods and materials to be sold by retail. This generally implies that goods are sold in quantities which exceed what could be stored in a temporary stall. Although the wholesale of trash and treasure items is not prevented, it was not anticipated as being possible from the stalls shown on the approved plan.
53 On 26 November 1999, Justice Maher asked Mr Whitby whether or not the Proposed Uses condition had been satisfied. Mr Whitby responded, 'Well, from our point of view the answer is yes.' Justice Maher asked Mr Whitby to confirm this advice in writing.
54 On 30 November 1999, Mr Whitby wrote a letter to Patricia Maher, which relevantly stated:
We ... believe that provided no permanent structure is erected inside the trash and treasure market then all of the purposes outlined can be met. It is our view therefore that the refusal of the purchasers to return your property [to] you is a breach of the contract and that you should be in a position to take legal proceedings successfully against them.
We would however suggest that the independent opinion of a Town and Country Planning expert be obtained. It will be necessary in the future that such expert advice be given to the Court in the event that you proceed with proceedings. The Court will have to be satisfied that under the normal course of events the Plaintiffs would have been able to use the premises for the use which you agreed could be done. Therefore expert advice should be obtained and you should be prepared to call the Planning Officers from the relevant Council to establish that they would have no objection to the uses as anticipated by the contract.
Under the circumstances we believe our Retainer is complete as you really wished a second opinion as to whether or not you should proceed with this matter.
Subject to the qualifications above we believe that you should speak to Mr Brott and request that he proceed to seek enforcement of the contract as soon as possible, or alternatively seek damages.
55 As a result of Mr Whitby's advice, the Maher Group decided that Mr Brott should continue to act for them.
56 On 7 December 1999, Patricia Maher wrote to Mr Brott and instructed him to commence proceedings for '"specific performance" of the [Agreement] relating to [the Apartment]'. Similar instructions were given by Justice Maher in a letter to Mr Brott which was apparently faxed to Mr Brott on 25 January 2000.
57 In May 2000, Justice Maher met with Mr Brott. According to Justice Maher's evidence, he told Mr Brott that he was concerned that time was running out and asked him whether the Maher Group should consider exercising the Option in order to keep the Apartment. Mr Brott told him that the Maher Group did not need to pay to get back the Apartment. On the basis of Mr Brott's advice, the Mahers did not exercise the Option.
58 On 18 May 2000, Mr Brott wrote a letter to Mr Efron in which he stated that the Maher Group intended to commence proceedings 'to enforce the [Agreement] as a result of [Millennium's] default in cancelling the contract [of sale of the Apartment], and not ensuring effective transfer to [the Maher Group of] proprietorship of the [Apartment].'
59 On 8 June 2000, Justice Maher wrote a letter to Mr Brott in which he stated that Millennium's refusal to 'return' the Apartment constituted a breach of the Agreement because the statements that had been made in the Agreement about the uses of the Market Land had been substantiated. The letter asserted that Mr Brott had 'always said [that the Maher Group] would get [the Apartment] returned, even if it meant resorting to the law' and requested Mr Brott to 'attend to this problem urgently'.
60 Some time in 2000, Mr Herszberg and Mr Gordon had a falling out. Mr Herszberg and his associated companies retained the Market Land, while Mr Gordon and his associated companies retained all the other Security Properties. Millennium, which came to be controlled by Mr Gordon, continued to own the Apartment.
61 On 30 June 2000, Mr Brott briefed Daryl Dealehr of counsel to advise in conference and to draft documents for the commencement of proceedings against Mr Gordon and his associated companies - but not against Mr Herszberg and his associated companies - for the transfer of the Apartment. Mr Dealehr advised in conference that the Maher Group had a good case for specific performance. Mr Dealehr prepared a draft statement of claim naming Simply as plaintiff and Millennium as defendant, but that document was never settled. No proceedings were commenced.
62 At some time prior to 30 January 2001, on the instructions of the Maher Group, Mr Brott made a demand upon Mr Efron that Millennium transfer the Apartment to Patricia Maher at no cost.
63 Mr Efron responded by letter dated 30 January 2001. In that letter, Mr Efron stated that it was his 'considered view that the market land could not be used for the Proposed Uses by the due date for settlement' and that a new planning permit had not been issued 'to allow the Market Land to be used for the Proposed Uses.' The letter went on to say:
If your client's position is that the Market Land can be used for the Proposed Uses, please provide written evidence in support of such proposition by return.
In the alternative, if you are unable to do so, our client's position is clear, that being that subject to the exercise of the option the Apartment purchase price is $210,000.
64 Mr Brott forwarded Mr Efron's letter to Patricia and Justice Maher under cover of a letter dated 11 February 2001 in which he described Mr Efron's letter as 'absurd' and 'dribble', and asserted that the Mahers had 'demonstrated that the usage was for a market of the type required by the agreement'.[4]
65 In February 2001, the Maher Group terminated Mr Brott's retainer and engaged Bernard Balmer of Balmer & Associates Pty. Mr Balmer organised a conference with Laurence Maher of counsel (who was not related to the Mahers) to discuss the restoration of the Maher Group's ownership of the Apartment. The conference was held on 23 February 2001 and was attended by Patricia Maher. On 1 March 2001, Laurence Maher provided a short memorandum of advice. The thrust of the memorandum was that Laurence Maher needed further information before he could provide any substantive advice.
67 On 15 March 2001, Mr Balmer informed Patricia Maher that, due to his other commitments, he was not able to assist her further in relation to the Maher Group's dispute with Millennium. He recommended that she engage Stephen Curtain, a partner of Riordans.
Engagement of Riordans and events between 19 March 2001 and 9 July 2001
68 Patricia Maher's first contact with Mr Curtain was on 19 March 2001, when she telephoned Mr Curtain to ask him to act for the Maher Group. Mr Curtain agreed to act. There is a dispute between the parties about the scope of Riordans' retainer. This issue is discussed separately below.
69 Within Riordans' internal file-keeping records, the subject matter of the new file was described as 'Breach of Agreement'.
70 According to Mr Curtain's file note of his telephone conversation with Patricia Maher on 19 March 2001, Patricia Maher gave him detailed background information about the Maher Group's dealings with the Bank, Mr Brott and Millennium, and about the contractual arrangements between the Maher Group and Millennium and its associated companies. The file note attributed to Patricia Maher the following statements:
(a) 'I now owe $210K' and 'if not what we say it is will have to pay ... $210K towds / cost of making it what we said the mkt was'. I infer from these statements that Patricia Maher was aware of the availability of the Option and that she explained to Mr Curtain that the need to pay $210,000 pursuant to the Option would arise if the Market Land could not be used for the Proposed Uses.
(b) 'We altered contract to what cd do'. I infer from this statement that Patricia Maher informed Mr Curtain that the Maher Group had altered the definition of 'Proposed Uses' in the Agreement so that it coincided with the uses to which the Market Land could be put.
(c) 'IB telling me will get my house back free' and 'IB says we'll win hands down'. I infer from these statements that Patricia Maher informed Mr Curtain that Mr Brott had advised her that the Maher Group would get the Apartment back for nil consideration and that any proceeding brought by the Maher Group against Millennium to recover the Apartment for nil consideration would be successful.
(d) 'Sue for specific perf. of contract to get my apartment back', 'IB says will not sue Herzberg - friend of long standing', 'IB says /y'll settle' and 'Sue them and /y'll settle @ / door - IB says /re's a lot /y won't want to come out'. I infer from these statements that Patricia Maher informed Mr Curtain that the Maher Group wanted to sue Millennium for specific performance of the Agreement in order to get the Apartment back; that Mr Brott had advised her that, if proceedings were instituted, Mr Herszberg and Mr Gordon would settle at the door of the Court because they did not want damaging evidence to be presented; and that Mr Brott had refused to sue Mr Herszberg because he was a longstanding friend.
(e) 'IB has a file a foot long - won't give file to me - but to my son - who has copied most dox', 'Brott won't let him take originals' and 'IB w'dn't provide all papers'. I infer from these statements that Patricia Maher informed Mr Curtain that Mr Brott had an extensive file and that Mr Brott was permitting Justice Maher to copy some of the documents, but was refusing to release the whole file.
(f) 'McKean & Park said we'd win.' I infer from this statement that Patricia Maher informed Mr Curtain that McKean & Park had advised her that the Maher Group would succeed in any proceeding against Millennium to recover the Apartment.
(g) 'Apartment $650K'. I infer from this statement that Patricia Maher informed Mr Curtain that the Apartment was worth $650,000.
71 On 22 March 2001, Patricia Maher met Mr Curtain and provided information about her dealings with Mr Herszberg, Mr Gordon and Mr Brott regarding the Apartment. Mr Curtain's file note attributes to Patricia Maher the statement: 'Effect of gazettal is to make it comply with what we said we were selling.' I infer from this statement that Patricia Maher told Mr Curtain that the new Whittlesea Planning Scheme made the Proposed Uses accord with the permitted uses of the Market Land.
72 At Patricia Maher's first meeting with Mr Curtain, she gave him copies of some of the relevant documents, including the Agreement. The Maher Group did not have all the relevant documents at that stage because Mr Brott was refusing to release his file.
73 On 23 March 2001, Mr Curtain sent a letter to Patricia Maher ('retainer letter'). The retainer letter was headed 'Millennium Markets Pty Ltd and Others' and commenced by thanking Patricia Maher for her 'instructions in this matter'. Although the retainer letter made subsequent reference to the word 'matter', it did not define that word. The retainer letter relevantly stated:
Professional fees
Stephen Curtain will be the partner responsible for the matter and will charge at the rate of $275 per hour plus GST for professional fees until the matter becomes litigious in which case we will charge you according to the appropriate Court scale. ... Without [having] considered all the material and taken detailed instructions from you, we envisage that if we advise you not to pursue the matter the costs will be in the vicinity of $2,000. If you decide to take legal action professional fees would be in the vicinity of $30,000. If it becomes apparent at any stage that this estimate is no longer accurate, we shall advise you as soon as practicable of any substantial change.
Disbursements
...
We anticipate disbursements for the purposes of providing you with advice as to whether to take action will consist principally of Counsel's fees and be in the vicinity of $1,000. If the matter proceeds to Court disbursements could be $20,000. Should it appear that substantial additional disbursements need to be incurred, we shall advise you as soon as practicable. ...
...
We would anticipate at this early stage your case could run between 2 and 3 days although this may change as the hearing approaches due to the number and complexity of issues involved.
...
Total Costs
It is difficult to provide you with an accurate estimate of the total costs but on the basis of these estimates the total costs should range between $3,000 and $50,000, if the matter proceeds to a hearing.
... If you do not succeed in the action you can expect the court to order you to pay the other side's party and party costs and disbursements which are likely to be comparable to yours.
74 On 23 April 2001, Mr Curtain met with Patricia Maher. She provided further factual information. Mr Curtain's file note states, 'Gazette allows MKT to do what we put in the cont.', which I infer means that Patricia Maher informed Mr Curtain that the new Whittlesea Planning Scheme that was gazetted on 8 July 1999 permitted the Market Land to be used for the Proposed Uses that were set out in the Agreement.
75 On 30 April 2001, Riordans rendered their first tax invoice to Patricia Maher. It was headed 'Property Sales'.
76 On 9 May 2001, Mr Curtain had a conference with Patricia Maher and Justice Maher. Justice Maher discussed the operation of the Bundoora All-Weather Market, his correspondence with the Council and whether leases could be granted to stallholders. According to Mr Curtain's file note, he was instructed to '[t]ell Efron [the Mahers] want the apartment back'.
77 According to a more detailed typed file note relating to the conference that Mr Curtain prepared on 10 May 2001, 'Justice advised that he was working in Town Planning with Whittlesea for 12 years.' Justice Maher gave evidence that the typed file note was inaccurate because he had never been employed by the Council. Mr Curtain conceded that the statement in the file note was ambiguous. In my opinion, the statement in the file note meant that Justice Maher informed Mr Curtain that, over a 12-year period, he had dealt with the Council in relation to town planning matters.
78 On 13 June 2001, Patricia Maher telephoned Mr Curtain to enquire about progress. During this discussion, Patricia Maher asked Mr Curtain to find out the intentions of 'the other side' in relation to the Apartment. Mr Curtain's file note records that he told Patricia Maher that the '2 yr contract comes up shortly' and that she told him, 'Don't brief'.
79 On 18 June 2001, Mr Curtain telephoned Patricia Maher. According to Mr Curtain's file note, Patricia Maher told him that the uses of the Market Land were no different from previously and that they already had retail outlets and fruit and vegetables there. The file note also stated that the Maher Group had been informed that Mr Herszberg was ready to return the Apartment at the end of June 2001 and that they had received two opinions stating that the Apartment was recoverable. Mr Curtain was instructed to write to Millennium to request that the Apartment be returned to the Maher Group.
80 On 19 June 2001, on his own initiative, Mr Curtain sent a letter of advice to Patricia Maher. As this letter is of critical importance, it is set out in full below:
I refer to our discussions in this matter. I enclose copy letter I propose to forward to Millennium Markets Pty Ltd and its solicitors relating to the Apartment Contract.
On a plain reading of the contract I consider there are some difficulties associated with having the Apartment Contract cancelled.
I understand your instructions to be that you understood that as long as the amended Whittlesea Planning Scheme did not materially change the permitted use of the Market Land you would be entitled to have the Apartment Contract cancelled because no more than existing uses were required by the contract with Millennium Markets.
However, the proviso in clause 3, requiring the land to be used for the Proposed Uses, states with reference to the proposes uses, whether because of a rezoning of the Market Land and/or by the grant of planning permits on terms reasonably acceptable to the Purchaser. This suggests that some change was necessary to facilitate the Proposed Uses. Furthermore, it is arguable whether the land can be used for factory retailing outlets, fruit and produce market with the ability to grant leases. The most significant concern in this regard is the ability to grant leases when, according to the City of Whittlesea the permit allows a use which is defined as 'land where vendors of goods temporarily occupy an area or stall for a fee'.
I note your advice in this regard that some stall holders did have leases and the Council effectively sanctioned those leases by granting shop permits to them.
However, the grant of leases involves entitlement to the land which is greater than the right to temporarily occupy it for a fee and the fact that the Council overlooked the difference does not have the effect of allowing a grant of a lease where no such power existed.
In relation to the use as a fruit and produce market, the explanatory memorandum to the definitions related to use of premises under the Planning Scheme states that Trash and Treasure has its ordinary meaning and fruit and produce may well not constitute Trash and Treasure. Further in its letter of 23 November 1999, the City of Whittlesea notes that the endorsed plan for the site limits the areas where fruit and produce can be sold and also points out that the permit allows a Trash and Treasure Market only and all goods sold must conform to this primary use.
On the other hand, I understand your instructions to be that the premises has operated as a fruit and produce market for some time. Furthermore, a Trash and Treasure Market is included in the definition of Retail Premises which is described as land used to sell goods, including foodstuffs from stalls.
In summary, it appears that without objection from the City of Whittlesea, and perhaps with its sanction, the Market Land has been put to a use which does not accord with the permit.
I understand your instructions to be that these issues [were] known to the directors of Millennium Markets Pty Ltd and that the real agreement between the parties was that if the market could continue to operate in the way that you had operated it for some time, then the 'Proposed Use' provision had been satisfied and the Apartment Contract could be cancelled.
Courts are able to look beyond the written word of a contract where the words are capable of ambiguity. You will have the burden of showing not only that the existing uses continued and were legal but also that the discussions that you had with the directors of Millennium Markets were such that they were agreeing to accept the existing uses of the Market Land.
Will you kindly confirm that the enclosed letter to Millennium Markets is acceptable to you and I will forward it to that company.[5]
81 Mr Curtain's letter of 19 June 2001 attached a draft letter from Riordans to Millennium. The draft letter was prepared in accordance with Patricia Maher's instructions of 18 June 2001 and was in the following terms:
We act for Simply Irresistible Pty Ltd. We note that by a contract dated 16 March 1999 between, inter alia, your company and our client, it was agreed, by clause 3, that provided the Market Land (as defined in the contract) could be used for the Proposed Uses (as defined) without breaching the provisions of the planning scheme that affects the Market Land by the due date for settlement of the Apartment Contract (as defined), the Apartment Contract was thereby to be cancelled and the deposit repaid to your company.
We are instructed that on 8 July 1999 approval of the Whittlesea Planning Scheme was gazetted in the Victoria Government Gazette and no material change was made which affected use of the Market Land.
We are also instructed that at all times your company well knew the permitted use of the premises and it was not expected that any other use would be obtained. Representatives of your company had visited the market on several occasions and your company's solicitor had also visited it.
Furthermore, on our instructions the requirement that title to the [Apartment] be provided was to enable you to use the property as security for finance and that this aim has now been fulfilled and satisfied.
Accordingly, our client requires the Apartment Contract to be cancelled and we request that you provide us with a duly executed transfer of the [Apartment] ... Our client would like to have the matter resolved by 30 June and we request you provide us with your response by 5.00pm Friday 22 June accordingly.
82 On 20 June 2001, Mr Curtain spoke to Patricia Maher by telephone. According to Mr Curtain's file note, Patricia Maher informed him that the Gazette Notice brought the Bundoora All-Weather Market under the 'Market' umbrella, clarified what the Maher Group had said about 'shops etc' and reinforced their understanding. Patricia Maher also informed Mr Curtain that Mr Brott had guaranteed her that the Maher Group would get the Apartment back as Millennium wanted to know that it could do what it wanted to do with the Market Land. Mr Curtain's file note also states: 'Advised of option - right to e'cise'.
83 On 21 June 2001, Justice Maher telephoned Mr Curtain to discuss the draft letter to Millennium. According to Mr Curtain's file note, Justice Maher informed him that BAWM gave a lease to a fruiterer, that the lease was upheld as a valuable item and that the Council was giving them annual licences which were not temporary. Justice Maher also told him that the new Whittlesea Planning Scheme had brought trash and treasure markets within the definition of 'Market'.
84 During the telephone discussion, Justice Maher requested that the following changes be made to Mr Curtain's draft letter to Millennium:
(a) in the first paragraph, deletion of the words 'and the deposit repaid to your company';
(b) in the second paragraph, substitution of the words 'which included the uses set out in the contract' for the words 'and no material change was made which affected use of the Market Land'; and
(c) in the third paragraph, substitution of the words 'that you would approach Council for any changes in use' for the words 'it was not expected that any other use would be obtained'.
85 On 21 June 2001, Mr Curtain sent the final version of his letter to Millennium and forwarded copies to Patricia Maher, Mr Efron and Richard Szental, who acted for Mr Herszberg. On 22 June 2001, Mr Efron responded to Riordans' letter on behalf of Millennium. He requested proof that the Whittlesea Planning Scheme was gazetted on 8 July 1999 and that it 'included uses set out in the [Agreement].' He said that '[t]o date we are unaware that the Market Land can be used for the Proposed Uses' and that Millennium had instructed 'that the Market Land cannot be put to the Proposed Uses.'
86 Mr Curtain provided a copy of the Gazette Notice to Mr Efron under cover of a letter dated 26 June 2001. The letter referred back to Riordans' letter of 21 June 2001, stated that the gazettal did not result in any 'detrimental change to the uses' and requested Mr Efron to advise whether Millennium 'will cancel the Apartment Contract by midday Friday 29 June 2001.'
87 On 25 June 2001, Riordans rendered their second tax invoice to Patricia Maher. It was headed 'Millennium Markets Pty Ltd - Agreement' and included the following narration: 'reviewing relevant material including permitted uses and effect of gazettal'.
88 On 28 June 2001, Mr Efron wrote a letter to Riordans in which he stated that, while Riordans had provided proof that the Whittlesea Planning Scheme had been gazetted, they had 'not proved that it includes uses as set out in the [Agreement].' The letter reiterated Mr Efron's and Millennium's view that the Market Land could not be used for the Proposed Uses and concluded as follows:
We require specific proof that the land can be used for the Proposed Uses and thus far you have failed to demonstrate that. We await proof of such from you.
89 On 29 June 2001, Mr Curtain telephoned Mr Efron to discuss Mr Efron's letter of 28 June 2001. According to Mr Curtain's file note, Mr Efron told him that the Proposed Uses did not 'comply' in relation to '[l]eases, etc' and that the Maher Group 'must make [an application] to make [them] comply'.
90 On 29 June 2001, Mr Curtain telephoned Patricia Maher to advise her of his discussion with Mr Efron. According to Mr Curtain's file note, Patricia Maher disagreed with Mr Efron. She said that shops and supermarkets had been crossed out of the definition of 'Proposed Uses' and that this might make a difference. She also said that leases had been granted. Mr Curtain explained to Patricia Maher that he had doubts about whether leases could be granted. Patricia Maher instructed Mr Curtain to write to Mr Szental because he was 'softer'.
91 On Saturday, 30 June 2001, Mr Curtain commenced annual leave, returning to work on Monday, 23 July 2001. The steps that were taken by Riordans during Mr Curtain's absence on leave are set out below:
(a) on 2 July 2001, another lawyer at Riordans sent to Patricia Maher Mr Efron's letter of 22 June 2001 and Mr Curtain's reply dated 26 June 2001; and
(b) on 3 July 2001, Riordans sent a letter to Mr Szental asking whether Mr Herszberg 'will cancel the apartment contract and transfer the [Apartment] to [Simply]' and also sent a copy of that letter to Patricia Maher under cover of a letter which stated that Patricia Maher would be informed as soon as Riordans received a reply.
92 There is no documentary evidence that the Mahers contacted Riordans in the period from 30 June 2001 until 9 July 2001.
93 As at 9 July 2001, Riordans had not received Mr Brott's file.
95 According to the documentary evidence, the Mahers contacted Riordans on two occasions while Mr Curtain was on leave. The two occasions are recorded in two entries in Riordans' 'Matter Transaction Report'. The first entry is dated 10 July 2001 and states: '[telephone call from] client, would like a copy of the letter to Szental faxed to her.' The second entry is dated 16 July 2001 and states: '[telephone call from] client, we may receive a call from Szental. See notes on file.' The notes to which reference is made in the second entry have not been tendered.
96 On the day that Mr Curtain returned from leave, 23 July 2001, Patricia Maher telephoned him to discuss Millennium's refusal to pay an electricity bill for the Apartment. Patricia Maher instructed Mr Curtain to tell Millennium that the Maher Group would sue for specific performance. Mr Curtain's file note does not refer to the Option.
97 Mr Curtain spoke to Patricia Maher by telephone on 26 July 2001. Mr Curtain's file note does not refer to the Option.
98 On 27 July 2001, Mr Curtain met Patricia Maher. According to Mr Curtain's file note, Patricia Maher informed him that the Apartment was worth between $450,000 and $650,000, and that she would not buy the Apartment for $250,000, but that she would buy it for '$10K+'. There is a subsequent statement in the file note that indicates that Patricia Maher informed Mr Curtain that the Apartment was worth between $400,000 and $450,000. The only reference to the Option in Mr Curtain's file note was the following statement that was attributed to Patricia Maher: 'Option clause included because worried that [they would] get me out'.
99 On 30 July 2001 and 9 August 2001, Mr Curtain spoke by telephone to Patricia Maher. Mr Curtain's file notes do not refer to the Option.
100 On 2 and 3 August 2001, Mr Curtain inspected Mr Brott's file at Mr Brott's office. Riordans did not receive the file until after 30 October 2001.
101 As the dispute between the Maher Group and Millennium over the Apartment could not be resolved, Patricia Maher instructed Mr Curtain to obtain written advice from a town planner, Matrix Planning Australia Pty Ltd ('Matrix'). In a draft report dated 8 August 2001, Matrix advanced arguments as to why the Proposed Uses condition had been satisfied.
102 On 13 August 2001, Mr Curtain met the Mahers and obtained information from them for the purposes of the proposed proceedings against Millennium. According to Mr Curtain's file note, the Mahers told him that '[Mr Brott] said not to e'cise the option' and that they were '[n]ot prepared to pay $210K', but '[w]ould pay $10K'.
103 On 30 August 2001, Riordans rendered their third tax invoice for work performed in the period from 25 June 2001 until 29 August 2001. For the period from 25 June 2001 until 9 July 2001, the tax invoice referred to telephone discussions and correspondence in which Riordans had engaged.
104 The Mahers instructed Mr Curtain to brief Peter Riordan SC with a view to commencing proceedings against Millennium. On 27 September 2001, Peter Riordan SC provided a memorandum of advice, which relevantly stated:
These appear to be imprecise matters and matters about which experts disagree. For example, see the letter of 7/7/99 from Szental who asserts that factory retail outlets require shop premises and the deed of 16/3/99 contemplated rezoning or a new permit.
...
Commencement of proceeding against the Millennium Group and Mr Brott
105 On 21 December 2001, in accordance with their instructions from the Maher Group, Riordans commenced in this Court proceeding number 8883 of 2001 ('prior proceeding') on behalf of the Mahers, Simply, Eternity, BAWM and Pamah Pty Ltd ('plaintiffs in the prior proceeding'). The defendants were the Millennium Group and Mr Brott ('defendants in the prior proceeding').
106 In the prior proceeding, the principal claim was against Mr Brott. It was alleged that he breached his retainer and acted negligently in advising the plaintiffs in the prior proceeding in relation to the execution of the Agreement and the contract of sale of the Apartment. It was also alleged that he breached his fiduciary duty to the plaintiffs in the prior proceeding by accepting the procurement fee[6] from Mr Herszberg in circumstances which gave rise to a conflict of interest ('Fee Claim').
107 The main claims against the Millennium Group in the prior proceeding were that they knowingly participated in Mr Brott's breach of fiduciary duty and that they demanded the transfer of the Apartment in circumstances which amounted to economic duress, unconscionable dealing and a breach of s 51AA of the Trade Practices Act 1974 (Cth).
108 The relief that was sought in the prior proceeding included an order setting aside the transfer of the Apartment from Simply to Millennium and an order that Mr Brott pay the procurement fee to the plaintiffs in the prior proceeding. Millennium made a counter-claim against Patricia Maher for possession of the Apartment.
109 On 8 August 2002, Patricia and Justice Maher met with Mr Gordon. Mr Gordon offered to settle the prior proceeding on the basis that Patricia Maher would be given a life tenancy in the Apartment ('Life Tenancy Offer'). On 9 August 2001, Patricia Maher telephoned Mr Curtain and advised him of the offer. Mr Curtain's file note attributes the following statements to Patricia Maher: 'Believe will offer to take apartment back + will sue Brott for damages + legal costs' and '[b]elieves they will give us the apartment'.
110 On 22 August 2002, Mr Curtain telephoned Patricia Maher to discuss settlement options. Mr Curtain's file note records that, in response to his advice that she would have to do more than to agree to bear her own costs to secure a settlement, Patricia Maher said that she 'won't give more'. The 'Matter Transaction Report' records that Patricia Maher told Mr Curtain that 'she would settle on the basis she would walk away and retain the apartment', but that she was 'not prepared to move on this position.'
111 Mr Curtain had a further discussion with Patricia Maher on 30 August 2002. His file note records that, in response to his urging her to consider a compromise, she said that she 'won't settle for less than the ownership of the apartment'. The 'Matter Transaction Report' records the following: 'I suggested she should be prepared to compromise to some extent e.g. by paying some money for the apartment - perhaps something recovered from Brott. She does not want to do this. She wants it made clear that she wants the apartment and nothing less.'
112 On 12 March 2003, a mediation took place in relation to the prior proceeding.[7] At the mediation, the plaintiffs in the prior proceeding were represented by Patricia Maher, Justice Maher, Mr Curtain and Peter Riordan SC. A junior solicitor from Riordans, Sandra McColl, also attended the early stages of the mediation. Mr Brott attended the mediation with Howard Obst and Anna Skreiner, who were the solicitors engaged by Mr Brott's professional indemnity insurer. The Millennium Group were represented by Mr Efron, Mr Herszberg and Mr Gordon.
113 During the mediation, Mr Obst offered to pay the plaintiffs $150,000 in relation to the claims against Mr Brott other than the Fee Claim. Mr Obst informed Peter Riordan SC that Mr Brott was uninsured in respect of the Fee Claim. Mr Brott refused to make any offer in relation to the Fee Claim. Millennium offered to sell the Apartment to the plaintiffs for $400,000. The combined effect of these offers was that Simply was given the opportunity to purchase the Apartment for a net outlay of $250,000. I will refer to the offers collectively as 'the First Joint Mediation Offer'.
114 The plaintiffs in the prior proceeding rejected the First Joint Mediation Offer. There is a dispute about the advice that Peter Riordan SC and Mr Curtain provided to the plaintiffs about whether they should accept the offer. That issue is discussed separately below.
115 At the mediation, the plaintiffs in the prior proceeding made a counter-offer that Millennium transfer the Apartment to the plaintiffs for nil consideration and that it pay to the plaintiffs $190,000. Millennium rejected this counter-offer.
116 Millennium made a counter-offer according to which Patricia Maher would pay $100,000 for a life tenancy in the Apartment. The offer of $150,000 from Mr Brott's insurer also remained open for acceptance. I will refer to these offers collectively as 'the Second Joint Mediation Offer'.
117 At the conclusion of the mediation, Mr Efron and Mr Obst made it clear that the First Joint Mediation Offer remained open for acceptance notwithstanding that the offer had already been rejected by the plaintiffs in the prior proceeding. The offer was never accepted.
118 On 30 September 2003, the Mahers met with Mr Gordon. Mr Gordon offered to return the Apartment for $1 provided that the Maher Group agreed that the Millennium Group could take over, and partly fund, the Maher Group's claims against Mr Brott and retain part of any amount recovered from Mr Brott ('the $1 Plus Assignment Offer'). Mr Gordon did not quantify the amount that the Millennium Group would retain. On 13 October 2003, Patricia Maher telephoned Ms McColl and informed her of the $1 Plus Assignment Offer. Patricia Maher did not seek Ms McColl's advice on whether the offer should be accepted. Ms McColl did not provide any advice on the offer; nor did Mr Curtain, once he became aware of the offer. Ms McColl's file note attributes the following statement to Patricia Maher: 'She'd rather get a sum out of Brott's insurer and then haggle with Gordon and Herszberg over what they'll accept for the [Apartment].'
119 On 11 November 2003, Patricia Maher telephoned Ms McColl and informed her that the Millennium Group had made an offer to settle all claims between the Maher Group and the Millennium Group on the basis that the Millennium Group would retain the Apartment and the parties would bear their own costs ('Walk Away Offer'). Patricia Maher did not accept the offer.
Independent advice about possible claim by Maher Group against Riordans
120 On 25 February 2004, Patricia and Justice Maher sought independent advice from Anthony Strahan of counsel. In his memorandum of 1 March 2004, Mr Strahan relevantly stated:
121 Notwithstanding Mr Strahan's advice, Riordans continued to be retained for the purposes of the prior proceeding.
Osborn J's judgment dated 20 May 2004 in the prior proceeding
122 The prior proceeding was heard by Osborn J in March and April 2004. In his judgment dated 20 May 2004 ('Osborn J's judgment'),[8] Osborn J upheld the Fee Claim against Mr Brott and ordered him to pay to the plaintiffs in the prior proceeding the amount of $150,000 together with $42,290 in interest, a total of $192,290. His Honour dismissed all other claims against Mr Brott and the other defendants, and ordered Patricia Maher to deliver possession of the Apartment to Millennium and to pay to Millennium $10,260 together with interest of $264 and $60 per day until possession was delivered. His Honour also made costs orders, which, as discussed below, were the subject of taxation or agreement between the parties.
123 Osborn J's judgment contains a detailed discussion of whether the Proposed Uses condition had been satisfied as at Settlement on 9 July 1999. His Honour concluded that the existing permits for the Market Land did not enable the Proposed Uses to be conducted lawfully on 9 July 1999.[9]
124 In early August 2004, the Maher Group engaged Coadys to represent them. Coadys wrote to Riordans on 6 August 2004 and put them on notice that the Maher Group might make a claim against them. The Maher Group terminated Riordans' retainer on 9 August 2004.[10]
125 Following the termination of Riordans' retainer, a dispute arose with the Maher Group about outstanding legal fees. That dispute was settled on 26 July 2007. On that day, the parties signed terms of settlement pursuant to which the Maher Group agreed to pay to Riordans the amount of $71,848.41. The total amount that the Maher Group paid to Riordans for work done pursuant to the retainer was $270,528.02.
126 Recital A to the terms of settlement dated 26 July 2007 described Riordans' retainer as follows:
On 19 March 2001 the Mahers instructed Riordan & Partners to provide legal advice concerning agreements entered into by the Mahers with Millennium Markets Pty Ltd, Myer Herszberg and Moishe Gordon and the Mahers' claim arising from entry into those agreements against their former solicitor Issac Brott ('the Retainer').
127 Clause 5 of the terms of settlement provided that Riordans would deliver their file to the Maher Group at the time that the payment of $71,848.41 was made.
128 On 11 June 2004, Mr Brott appealed to the Court of Appeal in respect of Osborn J's judgment.
129 On 15 June 2004, the plaintiffs in the prior proceeding cross-appealed against Osborn J's judgment in so far as it related to the orders that were made in favour of the Millennium Group. On 5 October 2004, Patricia Maher and Simply discontinued the cross-appeal. As a result of the discontinuance, on 11 October 2004, the Court of Appeal made an order for costs against the plaintiffs in the prior proceeding.[11]
130 On 27 October 2006, Master Wood assessed at $56,005.53 the costs of the plaintiffs in the prior proceeding that Mr Brott was ordered to pay pursuant to Osborn J's judgment. This amount was arrived at after setting off certain costs that were awarded in favour of Mr Brott.
131 All outstanding claims between the Maher Group and the Millennium Group were settled by a deed dated 11 November 2004. The deed relevantly provided that:
(a) the plaintiffs in the prior proceeding agreed to pay to Mr Gordon the amount of $150,000 and to assign to him the amount of $170,000 out of the judgment for $192,290 that they were awarded as against Mr Brott;
(b) Millennium agreed to grant to Patricia Maher a licence to occupy the Apartment rent free until 11 November 2014 or the date that she ceases to reside there or the date of her death, whichever occurs first; and
(c) the parties agreed to mutually release each other of all liabilities, including all orders made in the prior proceeding.
132 On 8 December 2004, Mr Brott's appeal to the Court of Appeal was dismissed with costs.[12] The costs of the plaintiffs in the prior proceeding were subsequently assessed at $60,000. On 29 April 2005, an application by Mr Brott to the High Court for special leave to appeal was dismissed.
133 This proceeding was commenced on 5 July 2007 by way of a generally indorsed writ. The writ was served in July 2008 and a statement of claim was filed on 22 August 2008.
134 Simply called three witnesses: Patricia Maher, Justice Maher and an expert town planning lawyer, John Cicero. Riordans called four witnesses: Mr Curtain, Ms McColl, Mr Whitby and Peter Riordan SC. In addition, Riordans tendered expert reports from two valuers, Perron King and Saviour Vella.
135 As the evidence on some of the critical issues in the proceeding was in dispute, the credit of the main witnesses assumed obvious significance. In this part of the judgment, I will make some general comments on the credit of the witnesses who gave oral evidence and set out my broad conclusions about the veracity of their evidence. More specific findings about their evidence are set out below in my discussion of particular issues in dispute.
136 Patricia Maher is 79 years of age. It was apparent that her age affected her ability to recollect some details, such as the dates of meetings and telephone discussions and whether she was present at particular meetings. It was also apparent that she had difficulty hearing some questions.
137 After making allowances for these matters, I have concluded that Patricia Maher was not a witness of truth. She was selective about the matters that she claimed to recollect and demonstrated a willingness to improvise, even in the face of inconsistent evidence that she gave in the prior proceeding.
138 The inconsistencies between Patricia Maher's evidence in the current proceeding - in which it was in Simply's interest to blame Riordans for the failure to recover the Apartment - and her evidence in the prior proceeding - in which it was in the Maher Group's interest to blame Mr Brott and the other defendants for the loss of the Apartment - were glaring.
139 Patricia Maher prevaricated, obfuscated and sought to deflect questions that she did not like by making speeches, becoming argumentative or being unresponsive. On a number of occasions, I had to instruct her to answer the question that she had been asked.
140 On several occasions, Patricia Maher paused excessively before answering questions. She exaggerated the significance of matters that she perceived to be favourable to Simply's case and evaded answering questions that did not suit Simply's case.
141 Patricia Maher stubbornly refused to concede a number of matters, even though they were obvious from the documentary evidence. At times, extracting answers from her was a tortuous process.
142 Patricia Maher's evidence was almost identical to the evidence of Justice Maher in some important respects. A stark example was their evidence - which I have rejected[13] - that Mr Curtain advised them that Mr Brott's lodgement of a caveat on 2 September 1999 had caused the Option to lapse and that the only way in which they could get back the Apartment was to litigate.
143 Patricia Maher's evidence was contradictory in many important respects.
144 Overall, I found Patricia Maher to be an unreliable witness. I would not accept her evidence on any material issue unless it was supported by contemporaneous records or other objective evidence.
145 Justice Maher was prepared to depart from the truth if he thought that this course would assist Simply's case.
146 As was the case with Patricia Maher, there were stark inconsistencies between the evidence that Justice Maher gave in the current proceeding and the evidence that he gave in the prior proceeding. Justice Maher refused to acknowledge these inconsistencies when he was confronted with them; instead, he made feeble attempts to reconcile the irreconcilable.
147 Justice Maher also sought to explain away contemporaneous documents which were inconsistent with Simply's case against Riordans. I formed the impression that he was making up some of his evidence as he went along.
148 Justice Maher deliberately downplayed the importance of some matters that he perceived to be adverse to Simply's case and concocted some matters that he perceived would assist Simply's case. Among the matters that he downplayed was the extent of his experience in planning matters. Among the matters that he concocted was the anxiety that he and Patricia Maher were said to have experienced as the expiry date of the Option approached.
149 Justice Maher brazenly insinuated that Mr Curtain had fabricated his file note of the meeting on 9 May 2001 and that Riordans had withheld evidence in the prior proceeding in order to protect themselves from a negligence claim. He also repeatedly stated that he had diary notes that supported key aspects of his evidence in the current proceeding, but few such diary notes were tendered in evidence.
150 As I have stated at [142] above, Justice Maher's evidence was almost identical to that of Patricia Maher in some important respects. Like the evidence of Patricia Maher, Justice Maher's evidence was often contradictory; however, he was more willing than Patricia Maher to make concessions.
151 It follows that, in my opinion, Justice Maher was not a reliable witness. As with Patricia Maher, I would not accept Justice Maher's evidence on any material issue unless it was supported by contemporaneous records or other objective evidence.
152 Mr Cicero was an honest witness who gave evidence in a clear and emphatic manner. For reasons which I will discuss below, however, I did not find Mr Cicero's evidence of much assistance in resolving the issues in dispute.
153 Mr Curtain was a refreshingly honest witness who gave evidence to the best of his recollection irrespective of any consideration of whether it would assist or prejudice Riordans' case against Simply. He made concessions when it was appropriate for him to do so and did not take advantage of opportunities to improvise, even on matters where there was little risk of his evidence being contradicted. He acknowledged that he had no memory of certain events and was careful not to speculate with the benefit of hindsight.
154 It follows that Mr Curtain was a truthful and reliable witness. I have no hesitation in accepting Mr Curtain's evidence where it conflicted with the evidence of Patricia Maher or Justice Maher.
155 There were, however, some aspects of Mr Curtain's evidence that I did not accept because his recollection was faulty.
156 Ms McColl, Mr Whitby and Peter Riordan SC were honest witnesses whose evidence I accept.
Principles regarding solicitor's duty of care in performance of retainer
157 A solicitor is subject to an implied duty to exercise reasonable care and skill in the provision of professional advice and other professional services pursuant to his or her retainer with a client.[14]
158 The standard of care and skill that a solicitor must exercise is that expected of a reasonably competent solicitor having regard to the standards normally adopted by the profession.[15] In the case of a solicitor professing special skill in a particular area of the law, the standard of care is that of the ordinary skilled person exercising and professing to have that special skill.[16]
159 The content of the duty of care will depend on the circumstances of the case, including the terms and scope of the solicitor's retainer.[17]
160 The nature and scope of the duty of a solicitor to exercise reasonable care, particularly when litigation is in prospect or being, must be assessed in the knowledge that litigation always involves some uncertainties.[18]
161 A solicitor has a duty to warn his or her client of a material risk if a reasonable person in the client's position, if warned of the risk, would be likely to attach significance to it.[19]
162 Where alternative courses of action are available to a client, it is not sufficient for a solicitor simply to satisfy himself or herself that the client is aware of the alternatives. The solicitor has a duty to consider, and to advise the client of, the comparative legal merits of each course of action - including the prospects of success, the risks, the costs and the likely outcomes of each course of action - in order to enable the client to make an informed choice.[20]
163 The experience of the client is a factor to be taken into account.[21]
164 Where professional negligence is alleged to consist, at least in part, in failing to warn of a risk that legal advice given to a client might turn out to be mistaken, a solicitor is not normally required to warn experienced business clients of the possibility that his or her opinion, though firmly held, may not in fact prevail.[22]
165 Because a solicitor owes a duty in tort as well as in contract, in particular circumstances, he or she may be required to go beyond the specifically agreed professional task or function in order to avoid a real and foreseeable risk of economic loss being sustained by the client.[23]
166 However, the extension of the solicitor's duty of care to the client beyond the strict confines of the retainer has boundaries. The solicitor is not, at least ordinarily, by reason of a retainer, converted into a general investment adviser for the client. Nor is the solicitor deemed by the law to be imbued with perfect foresight. He or she is not required to foresee, and to alert the client against, every conceivable business risk.[24]
167 It has never been part of the duty of a solicitor under a conventional retainer - or under the tort duty - for the solicitor to make a commercial decision on behalf of the client. The solicitor's duty is to obtain instructions from the client, to identify legal and factual issues arising from the instructions, to advise on the applicable law, to identify alternative courses of action that are available to the client and, at the express request of the client or if the circumstances so require, to make a recommendation on which course of action would be the most appropriate from a legal perspective in achieving the client's objectives. The ultimate decision on which course to adopt is for the client rather than the solicitor.
168 It is for the Court to determine what is the appropriate standard of care and whether, in the particular case, the relevant advice was given consistently with, or in breach of, that standard.[25]
169 Generally, the Court is 'well placed to determine the liability in negligence of a legal practitioner without the aid of [expert] evidence where questions of particular practices do not arise.'[26]
171 The principles discussed above under the heading 'Principles regarding solicitor's duty of care in performance of retainer' broadly apply to Riordans' tort duty to Simply.
Did Simply have to establish that it was 'vulnerable'?
172 Mr Booth, who appeared for Riordans, submitted that, as Simply's claim was for pure economic loss, in order to establish the existence of a duty of care owed by Riordans, it had to overcome 'an additional hurdle', namely, that it was 'vulnerable' in the sense explained in cases such as Perre v Apand Pty Ltd[29] and Woolcock Street Investments Pty Ltd v CDG Pty Ltd.[30]
173 I reject this submission. In the circumstances of the present case, there cannot be any doubt that Riordans owed to Simply a duty of care both in contract and in tort and that, if Riordans breached that duty and thereby caused foreseeable economic loss to Simply, Simply would be entitled to damages for that loss. While evidence that Simply was or was not 'vulnerable' in the relevant sense may inform matters such as the content of the duty of care and causation, Simply did not have the onus of proving that it was vulnerable in order to establish the existence of a duty of care either in contract or in tort.
174 At [5] above, I listed the issues in dispute as follows:
(a) What was the scope of the retainer between Simply and Riordans?
(b) What advice did Riordans provide to Simply regarding the exercise of the Option?
(c) Did Riordans breach their retainer in relation to the Option?
(d) Did Riordans breach their tort duty in relation to the Option?
(e) If Riordans breached their retainer or tort duty, did the breach cause any loss to Simply?
(h) What damages, if any, should be awarded to Simply?
175 I will discuss these issues in turn. The discussion will include, where relevant, any conflicting evidence, my findings of fact and my conclusions on the law.
176 There was a significant divergence in the parties' positions about the scope of Riordans' retainer. Mr Bailey, who appeared for Simply, submitted that, although Simply approached Riordans for assistance in instituting proceedings against Millennium for specific performance of cl 3 of the Agreement, Riordans' retainer extended to the giving of advice on other issues that arose under the Agreement, including the exercise of the Option. Mr Booth submitted that Riordans' retainer was limited to instituting proceedings against Millennium for the recovery of the Apartment and that it did not extend to the giving of advice on the exercise of the Option.
177 Patricia Maher gave evidence that she engaged Mr Curtain, at the recommendation of Mr Balmer, to advise her on 'get[ting her] apartment back, nothing else.' Her objective was to 'restore [her] ownership' of the Apartment through whichever legal avenue was appropriate and was not confined to enforcing cl 3 of the Agreement. She relied on Mr Curtain to give her advice on the legal avenues that were available to her to achieve that objective. During her telephone discussions and meetings with Mr Curtain, she endeavoured to provide him with all the information that he needed to advise her. She expected Mr Curtain to give her written advice on all the available avenues for 'get[ting] the apartment back', including on whether to exercise the Option.
178 During her cross-examination, Patricia Maher initially said that, at the meeting with Mr Curtain on 23 April 2001, she asked him for advice 'about the exercise of the option'. Later, she said that she was not sure about the date. Later still, she said that she discussed the Agreement with Mr Curtain and that, as the Option was in the Agreement, they 'could have' discussed the Option.
179 Patricia Maher's evidence that she asked Mr Curtain for advice about the exercise of the Option is devoid of any credibility and must be rejected.
180 Justice Maher gave evidence that the Maher Group engaged Mr Curtain for the purpose of regaining ownership of the Apartment and to obtain advice on how this purpose could best be achieved. The Maher Group looked to him to protect their interests in relation to the Apartment without limiting him in what legal course he might recommend. Although he believed that the Proposed Uses condition had been satisfied and communicated this belief to Mr Curtain, the instructions that were given to Mr Curtain were not confined to the taking of proceedings to specifically enforce cl 3 of the Agreement. Mr Curtain's instructions included the provision of advice in relation to the exercise of the Option.
181 Justice Maher said that, at the meeting with Mr Curtain on 9 May 2001, he asked Mr Curtain, 'Why don't we exercise the option?' and that Mr Curtain replied, 'The option is not available to you because of Brott's caveat'. Later in his evidence, Justice Maher re-formulated his question as the statement: 'We want to exercise the option, we don't want to lose the apartment'. He also re-formulated Mr Curtain's reply, which became: 'You must litigate because Brott's caveat has negated the [Option] clause'.
182 Justice Maher said that, during his telephone discussion with Mr Curtain on 21 June 2001,[31] he asked Mr Curtain, 'Why don't you exercise the option?' and that Mr Curtain replied, 'The option is not exercised because of Brott's caveat'.
184 Mr Curtain gave evidence that, when he was first approached by Patricia Maher, he understood that his instructions were to consider and to advise on the appropriateness of proceedings against Millennium for the recovery of the Apartment on the basis that Simply was entitled to have the contract of sale of the Apartment cancelled. He did concede, however, that the scope of the retainer 'evolved' as he had further discussions with the Mahers and he familiarised himself with the documentation and the relevant facts.
[M]y retainer wasn't to advise about the right to exercise the option because [Patricia Maher] knew she had that right to exercise that option and that it was always there.
...
I was certainly making further inquiry. I saw it as an obligation having Mrs Maher consult me about something to be able to - I guess I was expanding the retainer myself. Because she had mentioned these other issues [such as the allegation of duress] then I was finding out about them to see whether or not they should be the subject of some action.
186 Mr Bailey put to Mr Curtain that the duty of a solicitor may not necessarily be confined to the client's specific instructions if there is a real and foreseeable risk about which he or she needs to warn the client. Mr Curtain agreed. He also agreed that, on the basis of his then view of the planning position, there was considerable risk in Simply's proposal to pursue litigation to specifically enforce the Agreement.
187 However, when Mr Bailey put to Mr Curtain that the scope of his instructions had widened beyond the litigation to cover also the exercise of the Option, Mr Curtain said:
I didn't get instructions to expand the scope of my advice. I mean, I was really always working on the basis that [Patricia Maher] knew that the option was there, that she could exercise the option, she could pay the money and exercise the option, and that she wasn't prepared to do it.
188 Mr Curtain said that, at no stage prior to 9 July 2001, did Patricia Maher or Justice Maher ask him for advice about the exercise of the Option or tell him that they wanted to exercise it.
189 One would expect that the retainer letter of 23 March 2001, which is set out at [73] above, would have clearly set out the scope of Riordans' retainer. Unfortunately, it did not do so. Nevertheless, the letter identifies that Riordans were being engaged to advise the[32]aher Group32 in relation to a dispute with Millennium 'and Others' that had the potential to become litigious. The retainer letter contemplated that initial advice would be provided and advice from counsel would be sought, before any proceedings were instituted against Millennium. It estimated that the likely costs would be in the range of $3,000 to $50,000 (inclusive of counsel's fees) depending on whether litigation eventuated.
190 The terms of the retainer letter do not support Mr Booth's contention that Riordans were retained for the narrow purpose of instituting proceedings against Millennium to enforce cl 3 of the Agreement. Rather, the retainer letter expressly contemplates that Riordans would advise the Maher Group about its dispute with Millennium before a decision was made to commence proceedings. This must mean that it was contemplated that Riordans would advise on the merits of the Maher Group's claims against Millennium.
191 Mr Curtain's file notes in the period from 19 March 2001 until 9 July 2001 and the three tax invoices that Riordans rendered to Patricia Maher for work done during that period indicate that Mr Curtain spent a large number of hours in discussions with the Mahers; in reviewing the documents that were progressively provided to him by the Mahers; and in analysing the Maher Group's rights under the Agreement, including cl 7 of the Agreement.
192 In the light of the above evidence, I make the following findings in relation to the scope of Riordans' retainer:
(a) In engaging Riordans, the Maher Group were motivated by their desire to institute proceedings against Millennium to enforce cl 3 of the Agreement, with the effect that the contract of sale of the Apartment would be cancelled and the Apartment would be re-transferred by Millennium to Simply for nil consideration.
(b) Riordans' retainer, however, was not confined to the preparation and filing of a writ and statement of claim, and to the conduct of litigation. It expressly included the provision of advice on the appropriateness of the commencement of proceedings against Millennium based on an analysis of the contractual documentation, other relevant evidence and a consideration of the law. It also included advice on the risks of litigation and the likely costs of litigation.
(c) The performance of the task to which reference is made in (b) above necessarily required Riordans to review the whole Agreement, to consider any related contracts and correspondence between the parties, and to obtain instructions from the Maher Group about the dealings between the parties.
(d) The retainer also included the provision of advice on any matter upon which the Maher Group requested advice in relation to Millennium unless Riordans expressly declined to advise the Maher Group on that matter. It also included the provision of advice on any matters of which Riordans became aware during the term of the retainer that had a material bearing on the rights of the Maher Group to recover the Apartment from Millennium.
(e) Although the Maher Group did not expressly request advice about the Option, Riordans were required to provide advice on the Option because, to their knowledge, it had a material bearing on the rights of the Maher Group to recover the Apartment from Millennium.
Riordans' advice about the Option and the effect of the caveat
193 Initially, Simply's claim against Riordans was that they failed to give any advice about the Option. At the hearing, Simply's case was put in the alternative that Riordans failed to provide adequate advice about the Option.
194 The evidence of Patricia Maher was confusing. Initially, she insisted that Mr Curtain had advised her that the Option had lapsed upon the lodgement of the caveat on 2 September 1999,[33] and that litigation was the only avenue open to her to get back the Apartment. She then said that, although Mr Curtain had advised her that the Option could be exercised until 9 July 2001, he had failed to give adequate advice about the Option. Later, she said that Mr Curtain had failed to give written advice about the Option.
195 Patricia Maher said that, on 13 June 2001, Mr Curtain said to her words to the effect that the two-year contract comes up shortly, and that the reference to the 'contract' was to the Option. At that time, she was aware that the Maher Group had until 9 July 2001 to exercise the Option.
196 Patricia Maher also said that Mr Brott had advised her that 'litigation was the only way that [she] would get [her] house back'.
197 In the prior proceeding, Patricia Maher gave the following evidence while she was being cross-examined by counsel for Mr Brott:
[Mr O'Callaghan:] ... Did Mr Stephen Curtain discuss with you the issue of exercising the option?
[Patricia Maher:] Not to my knowledge.
[Osborn J:] Does that mean no?
[Patricia Maher:] No.
[Mr O'Callaghan:] You see the notes of your solicitors refer to the timetable for the exercise for the option - it expires on 9 July or perhaps 8 July. We must give notice of exercise by that date. I put it to you that that suggests that this was a matter which was being discussed with you?
[Patricia Maher:] Mr Curtain said he would put a caveat straight away on the property and he said he would get the file and attend to it and that's what happened.
[Mr O'Callaghan:] Are you saying that he did not discuss with you whether or not the option should be exercised?
[Patricia Maher:] He couldn't. He didn't have the file.
[Mr O'Callaghan:] He had all the particulars in effect?
[Patricia Maher:] How? He wouldn't give him the file. He wouldn't give me - - -
[Osborn J:] Did you not have a copy of the agreement of 16 March?
[Patricia Maher:] Yes Your Honour, I did.
[Osborn J:] Didn't you discuss the option under it with Mr Curtain?
[Patricia Maher:] No Your Honour, I didn't.
198 As discussed at [181] and [182] above, Justice Maher gave evidence that, on 9 May 2001 and 21 June 2001, he had sought Mr Curtain's advice regarding the exercise of the Option and that Mr Curtain had advised him that the lodgement of the caveat on 2 September 1999 had caused the Option to lapse. Justice Maher said that Mr Curtain had advised that the only way for the Maher Group to get back the Apartment was to litigate.
199 In the prior proceeding, Justice Maher gave the following evidence while he was being cross-examined by counsel for Mr Brott:
[Mr O'Callaghan:] Well, if Mr Brott had said to you, 'Look, if you pay $210,000 you can exercise the option,' would you have exercised it?
[Justice Maher:] Yes.
[Mr O'Callaghan:] You would have?
[Justice Maher:] Yes.
[Mr O'Callaghan:] Well, why didn't you?
[Justice Maher:] Because we never had that advice.
[Mr O'Callaghan:] Why didn't you exercise it after you went to your current solicitors?
[Justice Maher:] Because our advice from Mr Brott - - -
[Mr O'Callaghan:] I'm sorry, continue?
[Justice Maher:] Was that we don't have to exercise the option because we had done all this and that is what I would have told Riordan when I first went there.
[Mr O'Callaghan:] You'd have told Riordan, 'Brott's given us advice that you don't need to exercise the option and therefore we can't'?
[Justice Maher:] No, I would have said, 'Brott has told us that - we don't need to exercise the option, we've done everything correctly and therefore probably the only way we can get the apartment back is to litigate.'
200 In the prior proceeding, Justice Maher also gave evidence to the effect that, prior to 9 July 2001, Riordans were not able to advise him that he could exercise the Option because they did not obtain Mr Brott's full file until September 2001.
201 Mr Curtain gave evidence that he was aware of the Option in cl 7 of the Agreement and that he gave advice to Patricia Maher about the Option on 13 and 20 June 2001.
202 As stated at [78] above, Mr Curtain's file note of his telephone discussion with Patricia Maher on 13 June 2001 records that he told her that the '2 yr contract comes up shortly'. Mr Curtain gave evidence that this statement referred to the fact that Patricia Maher had until 9 July 2001 to exercise the Option. He said that Patricia Maher was not interested in exercising the Option because that would mean paying money for the Apartment. He also gave evidence that, during the telephone discussion, he asked Patricia Maher whether he could brief counsel, and that she instructed him not to do so.
I wanted to brief Counsel because I thought a decision needed to be made as to whether proceedings should be issued, and if so, the cause of action which would be pursued and if not, whether to exercise the option. I note that Patricia Maher's instructions to me at all times were that she did not want to exercise the option and if I had briefed Counsel to consider whether the option should be exercised, that would have been outside her express instructions to me.
204 As stated at [82] above, Mr Curtain's file note of his telephone discussion with Patricia Maher on 20 June 2001 states: 'Advised of option - right to e'cise'. In his witness statement, Mr Curtain stated:
On 20 June 2001 I asked Patricia Maher whether she wanted to exercise the option and she said words to the effect that she did not, I did not consider that I was in a position to advise her whether she should exercise the option.
205 In his witness statement, Mr Curtain also stated:
Patricia Maher told me she did not want to pay the money required to exercise the option. At no stage during the course of my retainer did she instruct me to offer any sum of money to Millennium or its interests by way of 'payment' for the return of the apartment. ... Patricia Maher maintained the view that she was entitled to the return of the apartment on the basis that the proposed uses had been met from the time I was first instructed by Patricia Maher for the entire duration of the retainer. She and Justice Maher told me for this period that they thought they didn't have to exercise the option because they were entitled to specific performance of the contract and they didn't want to pay $210,000 or any amount.
206 Mr Curtain denied that he advised Patricia and Justice Maher on 9 May 2001 that the lodgement of the caveat had the effect of causing the Option to lapse. He also denied telling Justice Maher on 9 May 2001 that he must litigate.
207 Mr Whitby gave evidence that the Option was discussed at the conference with Mr Jones of counsel on 9 November 1999.[34] Patricia and Justice Maher said words to the effect that they had been advised that it was too late to exercise the Option and that the most appropriate course of action was to litigate. They said that they were left with no alternative but to issue proceedings. I infer that Patricia and Justice Maher were referring to advice that they had received from Mr Brott.
208 Mr Curtain's file notes for the period from 19 March 2001 until 29 June 2001 do not record any statement by Patricia Maher or Justice Maher to the effect that they did not want to pay $210,000 or any amount to acquire the Apartment. Nevertheless, I accept Mr Curtain's evidence that, prior to his going on leave on 30 June 2001, Patricia and Justice Maher told him that they believed that the Proposed Uses condition had been satisfied and that the Maher Group were entitled to the re-transfer of the Apartment pursuant to the Agreement for nil consideration. I also accept his evidence that, prior to 30 June 2001, on more than one occasion, Patricia and Justice Maher used words which conveyed to him that they did not want to pay any money for the Apartment. Further, I accept his evidence that, on 20 June 2001, in response to his advice that the Option was available to be exercised, Patricia Maher told him that she did not want to exercise the Option.
209 Mr Curtain's evidence was broadly consistent with the evidence that he gave in the prior proceeding. In the prior proceeding, however, Mr Curtain was less emphatic in his evidence that Patricia Maher instructed him that she did not want to exercise the Option.[35] This is not surprising: in the prior proceeding, Mr Curtain was more guarded because his evidence was directed at establishing that Mr Brott was negligent in not advising Simply to exercise the Option.
210 It will be recalled from [46] above that, prior to 2 September 1999, Mr Brott advised Patricia Maher that the lodgement of a caveat would have the effect of extinguishing the Option. It will also be recalled from [104] above that, on 27 September 2001, Peter Riordan SC advised the Maher Group that the lodgement of the caveat had extinguished the Option.
211 Both Patricia and Justice Maher gave evidence that, prior to 9 July 2001, they were aware that the Option was available to be exercised on or before that date.
212 I reject Patricia and Justice Maher's evidence that Mr Curtain advised them that the caveat had caused the Option to lapse. That evidence cannot be reconciled with their evidence that they knew that the Option was available to be exercised on or before 9 July 2001. It is likely that Patricia and Justice Maher made up the evidence that Mr Curtain had advised them that the Option had lapsed. Alternatively, they confused the advice that they had received from Mr Brott and Peter Riordan SC with the advice that they had received from Mr Curtain.
213 I also reject Patricia and Justice Maher's evidence that Mr Curtain had advised them that the only way that the Maher Group could get back the Apartment was to litigate. It is clear from [196], [199] and [207] above that this advice was given by Mr Brott rather than Mr Curtain. As Mr Curtain had advised Patricia Maher on 13 and 20 June 2001 that the Option was available to be exercised, he would not have advised the Maher Group that litigation was the only avenue for recovering ownership of the Apartment.
(a) Prior to 19 March 2001, Mr Brott advised Patricia Maher that the lodgement of the caveat had caused the Option to lapse. He also advised her and Justice Maher that litigation was the only way in which the Maher Group would re-acquire the Apartment.
(b) Mr Curtain did not, at any stage, advise that the lodgement of the caveat had caused the Option to lapse or that litigation was the only way in which the Maher Group would re-acquire the Apartment.
(c) On 13 and 20 June 2001, Mr Curtain advised Patricia Maher that the Option was available to be exercised.
(d) Between 19 March 2001 and 9 July 2001, Patricia and Justice Maher were aware that Simply had until 9 July 2001 to exercise the Option.
(e) On more than one occasion prior to 30 June 2001, Patricia and Justice Maher used words which conveyed to Mr Curtain that they did not want to pay any money for the Apartment.
(f) On 20 June 2001, Patricia Maher told Mr Curtain that she did not want to exercise the Option.
Did the lodgement of the caveat cause the Option to lapse?
215 In Osborn J's judgment, Osborn J indicated that he preferred the view that the lodgement of the caveat led to a loss of rights under the Option.[36] Given Mr Efron's letter of 30 January 2001, however, his Honour decided that it could not be said that the lodgement of the caveat prevented the exercise of the Option.[37]
216 Before me, the parties agreed that, whether or not the caveat caused the Option to lapse, Mr Efron's letter of 30 January 2001[38] had the effect of enabling Simply to exercise the Option according to its terms.
217 In the light of the above, I will proceed on the basis that, following Mr Efron's letter of 30 January 2001, the provisions of the Agreement dealing with the Option continued to operate according to their terms.
218 My conclusions on the scope of Riordans' retainer are set out at [192] above.
219 It will be recalled from [80] above that, on 19 June 2001, Mr Curtain provided written advice to Patricia Maher setting out the difficulties in establishing that the Proposed Uses condition had been satisfied. Mr Bailey properly conceded that the letter accurately identified the key problems and that the letter is consistent with some of the findings in Osborn J's judgment.
220 It will also be recalled from [214] above that I have concluded that, between 19 March 2001 and 9 July 2001, Patricia and Justice Maher were aware of the Option and the deadline for its exercise, and that, on 13 and 20 June 2001, Mr Curtain advised Patricia Maher about the availability of the Option.
221 Mr Curtain gave evidence that his letter of 19 June 2001 to Patricia Maher did not contain advice about the exercise of the Option because he considered that he had insufficient information to advise her on whether she should pay money to re-purchase the Apartment or to pursue litigation. He was concerned that it would be difficult to establish in litigation that the Proposed Uses condition had been satisfied. On the other hand, it was clear to him from Patricia Maher's instructions throughout the retainer that she was aware that the Option was available, but that she did not want to pay anything to re-purchase the Apartment because she believed that she was entitled to recover the Apartment without cost.
222 Mr Booth submitted that Riordans had discharged their obligations under the retainer by advising Patricia Maher, first, about the difficulties that the Maher Group would have in establishing that the Proposes Uses condition was satisfied and, second, about the availability of the Option. He contended that no more was required of Riordans in the circumstances.
223 Mr Bailey submitted that, in order for Riordans to discharge their obligations under the retainer, it was not enough for them simply to point out that there were difficulties in establishing that the Proposed Uses condition was satisfied and, in a separate communication, to state passively that the Option was available to be exercised. According to Mr Bailey, it was incumbent upon Riordans to advise on the 'merits' of the alternative courses of action in order to enable the Maher Group to make an informed decision about which course of action to take.
224 Mr Bailey submitted that Mr Curtain should have taken the following steps:
(a) The letter of 19 June 2001 should not only have identified the potential difficulties in satisfying the Proposed Uses condition; it should also have discussed the implications of those difficulties for the prospects of success of any proceeding brought against Millennium to enforce cl 3 of the Agreement. The letter should have set out the risks of the litigation.
(b) The letter should have referred to alternative legal avenues for recovering ownership of the Apartment. The alternative avenues were: first, exercising the Option prior to 9 July 2001 under cl 7 of the Agreement and paying $210,000; and, second, obtaining a new planning permit from the Council in respect of the Proposed Uses prior to 9 July 2001 and paying $10,000 plus the costs of obtaining the permit.[39]
(c) The letter should have compared the advantages and disadvantages of the alternative courses of action that were available to Simply, including the prospects of success, the risks and the costs associated with each course.
(d) The letter should have discussed the possibility of Simply exercising the Option while reserving its rights under cl 3 of the Agreement.
225 For the reasons that follow, I agree with much of Mr Bailey's submission.
226 Although the letter of 19 June 2001 correctly identified some of the difficulties that Simply would encounter in establishing that the Proposed Uses condition was satisfied, it was deficient in that it did not go on to explain the legal and practical consequences of those difficulties in relation to the Maher Group's instructions that they wanted to recover ownership of the Apartment under the Agreement.
227 In evidence, Mr Curtain said that the risks of litigation were 'implicit in the letter'. Such an important matter, however, should not have been left to implication. The risks had to be spelt out in the letter, together with an explanation of the delays and the costs associated with any litigation to enforce cl 3 of the Agreement.
228 As at 19 June 2001, the Maher Group had received only two substantive letters from Riordans, namely, the retainer letter dated 23 March 2001 and the letter dated 19 June 2001. The retainer letter was written a few days after Riordans were engaged by the Maher Group and well before Mr Curtain had sufficient information to enable him to accurately estimate costs. The estimate that costs would be in the range from $3,000 to $50,000 may have been an appropriate preliminary estimate as at 23 March 2001 - when Mr Curtain had only a few of the relevant documents and did not fully understand the issues - but it may have ceased to be realistic in the light of the difficulties that Mr Curtain had identified as at 19 June 2001.
229 Yet, contrary to an express term in the retainer letter - namely, the undertaking that advice would be provided 'as soon as practicable' if there was any 'substantial change' to the estimates of professional costs and disbursements - the letter of 19 June 2001 did not revisit the costs estimates. The letter should have done so. It may be that, as Mr Curtain still had not received the contents of Mr Brott's file in their entirety, all that the letter could have done was to state that it was not possible to estimate accurately the costs of proceedings against Millennium to enforce cl 3 of the Agreement. Nevertheless, an update should have been provided in relation to costs in order to enable the Maher Group to properly appreciate the implications of instituting proceedings and to reconsider whether that was the best course to achieve their objective of recovering the Apartment.
230 At [192] above, I concluded that the terms of the retainer included the provision of advice on any matters of which Riordans became aware during the term of the retainer that had a material bearing on the rights of the Maher Group to recover the Apartment from Millennium, and that those matters included advice on the Option.
231 In the circumstances, the fact that Mr Curtain reminded Patricia Maher of the Option was insufficient. In the light of the Maher Group's express instructions that they wanted to recover ownership of the Apartment and Mr Curtain's advice of 19 June 2001 that there were difficulties in achieving that objective through the cancellation of the contract of sale of the Apartment under cl 3 of the Agreement, Mr Curtain had a duty to advise on the availability of the Option under cl 7 of the Agreement as an alternative to the enforcement of cl 3 of the Agreement.
232 It was not sufficient for Mr Curtain to raise the existence of the two alternative courses of action as discrete matters on separate occasions, as suggested by Mr Booth. Mr Curtain had a duty to advise concurrently on the comparative legal merits of the alternative courses.[40]
233 The retainer letter contained an express term that Riordans would advise the Maher Group 'as to whether to take action'. In the context of the letter as a whole, this meant that Riordans would advise the Maher Group on 'whether to institute legal proceedings against Millennium and others under the Agreement'.
234 Any advice on whether the Maher Group should institute legal proceedings against Millennium and others would necessarily require consideration of the comparative legal merits of such proceedings and any other remedy that was available under the Agreement. It would also have to invite the Maher Group to contact Mr Curtain to discuss what steps should be taken by them in the light of the advice. The obvious 'other remedy' was the exercise of the Option. Consideration of the comparative legal merits of commencing proceedings and exercising the Option required advice on the advantages and disadvantages of the two alternative courses of action, including the prospects of success, the risks and the costs associated with each course.[41] The comparative legal merits advice should have made reference to the following:
(a) while proceedings to enforce cl 3 of the Agreement could result in a re-transfer of the Apartment for nil consideration, the proceedings would be risky and costly, without any guarantee that ownership of the Apartment would be recovered; and
(b) while the exercise of the Option would involve an imminent outlay of $210,000, it had the advantage of certainty about the recovery of ownership of the Apartment.
235 Not only did the letter of 19 June 2001 fail to discuss the comparative legal merits of proceedings to enforce cl 3 of the Agreement and the exercise of the Option under cl 7 of the Agreement, it did not identify any process by which the Maher Group should decide which course to adopt, or set out a timeline for the making of such a decision in the light of the imminent expiration of the Option. It simply referred to the difficulties in satisfying the Proposed Uses condition and left the matter 'hanging', without providing any guidance to the Maher Group about the action that they might consider taking.
236 The letter of 19 June 2001 enclosed a draft letter to Millennium which sought the cancellation of the contract of sale of the Apartment in accordance with cl 3 of the Agreement and requested that the matter be resolved by 30 June 2001.[42] The draft letter was prepared in accordance with instructions that Patricia Maher gave to Mr Curtain on 18 June 2001. The preparation of the draft letter was no substitute for the provision of advice of the type set out at [234] above.
237 By 28 June 2001,[43] it became clear that Millennium would continue to refuse to cancel the contract of sale of the Apartment under cl 3 of the Agreement. As at that date, and with 11 days remaining before the Option was due to expire, Mr Curtain was obliged to provide advice of the type set out at [234] above. Not only did Mr Curtain fail to provide such advice, he failed to give any guidance to the Maher Group prior to commencing three weeks' leave on 30 June 2001.
238 It is necessary for me to refer to the penultimate paragraph of the letter of 19 March 2001, which raised the possibility that a court might be able to construe any ambiguity in the Agreement in favour of the Maher Group. Although the paragraph mentioned that the Maher Group would have the burden of persuading the Court to do so, it did not identify the provisions of the Agreement that were ambiguous or the legal bases - such as rectification - upon which the Court could depart from the natural meaning of the provisions of the Agreement. In the absence of an explanation of the legal bases that may have been available to the Maher Group and the difficulties of establishing them,[44] that paragraph of the letter was capable of conveying the potentially erroneous impression that the Maher Group might be able to obtain some relief from the strict terms of the Agreement.
239 For the above reasons, Riordans breached their duty to Simply under the retainer.
240 Before leaving the issue of Riordans' breach of the retainer, it is convenient to discuss briefly a number of matters that were said by the parties to have a bearing on the issue.
Absence of advice about obtaining a new planning permit
241 Mr Bailey criticised Mr Curtain - and the previous lawyers that had advised the Maher Group - for failing to advise on Simply's right to re-acquire the Apartment by obtaining, prior to 9 July 2001, a new planning permit authorising the Proposed Uses on the Market Land.[45] If such a permit were obtained, the purchase price for the Apartment would have been the lesser of $210,000 or $10,000 plus the costs incurred in obtaining the planning permit.[46]
242 Whatever may have been the position prior to 19 March 2001, however, by the time that Riordans received sufficient documents and instructions to enable them to provide meaningful advice on the relevant issues, it would not have been possible to obtain a new planning permit prior to 9 July 2001. Although Justice Maher had an obligation under the Agreement to use his best endeavours to obtain a new planning permit, he required Millennium's authority to engage consultants and to incur any expenses.[47] He could not obtain a new planning permit without Millennium's cooperation and that cooperation was not forthcoming. Mr Herszberg and Mr Gordon had fallen out in 2000,[48] and Mr Gordon had shown an unwillingness to spend any money to obtain a permit.[49]
243 As the right to re-acquire the Apartment by obtaining a new planning permit prior to 9 July 2001 was set out in the Agreement, Riordans should have investigated that right and advised the Maher Group in respect of it. It is more probable than not that this issue was raised in one of the many discussions that Mr Curtain had with the Mahers and that he was informed that the Millennium Group were not cooperating. In any event, notwithstanding that Mr Efron raised the issue of a new planning permit on 30 January 2001[50] and 29 June 2001,[51] the practical reality was that it would not have been possible for a new planning permit to have been obtained between 19 March 2001 and 9 July 2001.
244 For the above reasons, Mr Curtain's failure to advise the Maher Group about the merits of re-acquiring the Apartment by obtaining a new planning permit is not material for the purposes of this proceeding.
245 It will be recalled from [224](d) above that Mr Bailey submitted that Riordans were obliged to advise the Maher Group of the possibility of exercising the Option while reserving their rights under cl 3 of the Agreement. Mr Booth disputed this obligation on the basis that the doctrine of merger would have prevented such a reservation.
246 For present purposes, the doctrine of merger can be summarised as follows: upon the completion of a contract for the sale of land, the contract is merged in the conveyance - thus extinguishing the rights and obligations of the parties under the contract - except in so far as the contract expressly or impliedly provides that the merger shall not take place.[52]
247 The doctrine of merger does not defeat the parties' rights to enforce obligations under the contract that are 'collateral' to the conveyance.[53] Such rights include the right to be paid compensation if the property was misdescribed in the particulars of sale;[54] the right to enforce the vendor's obligation to pay for the cost of complying with local council notices issued prior to completion;[55] and the right to enforce the vendor's obligation to construct a building on the property in the manner set out in the contract.[56]
248 In the present case, the Option was set out in cl 7 of the Agreement. That clause provided that, upon the exercise of the Option, Simply had to deliver to Millennium a contract of sale of the Apartment from Millennium to Simply.[57] Once that contract was completed and Simply became the registered proprietor of the Apartment, Simply's rights under the contract would be extinguished pursuant to the doctrine of merger.
249 In my opinion, however, Simply's rights under cl 3 of the Agreement arose independently of cl 7 of the Agreement and any contract of sale arising from the exercise of the Option, and would not have been extinguished by the registration of a transfer pursuant to that contract of sale, particularly if those rights were expressly reserved.
250 Mr Booth also submitted that the Option could not be validly exercised by Simply with a purported reservation of the company's rights under cl 3 of the Agreement because the valid exercise of an option requires the unequivocal acceptance of its terms.[58]
251 In my opinion, provided that Simply complied with all the requirements of cl 7 of the Agreement in relation to the exercise of the Option and did not seek to vary them in any way, the validity of the exercise of the Option would not be affected by a reservation of rights to recover damages for breach of cl 3 of the Agreement.
252 For present purposes, the critical issue is not whether the views that I have set out at [248] to [251] above are correct. Rather, the critical issue is whether Mr Curtain's retainer extended to considering those issues and to advising Simply in relation to them. In my opinion, the retainer did so extend.
253 However, my finding that Riordans breached their retainer does not turn on the absence of advice about the possibility of exercising the Option while reserving the right to recover damages for breach of cl 3 of the Agreement.
Relevance of Patricia Maher's refusal to permit Mr Curtain to brief counsel
254 In support of his submission that Mr Curtain had done all that was required of him under the retainer, Mr Booth relied on Mr Curtain's evidence that he had sought instructions from Patricia Maher to brief counsel for advice and that Patricia Maher had refused to provide those instructions.
255 Although Patricia Maher denied that Mr Curtain had sought her permission to brief counsel and that she had refused to give that permission, I accept Mr Curtain's evidence.
256 Nevertheless, I reject Mr Booth's submission. In order for Patricia Maher's refusal to permit Mr Curtain to brief counsel prior to 9 July 2001 to be relevant to the question of whether Riordans breached their retainer, I would need to be satisfied that Mr Curtain explained to Patricia Maher why he wanted to brief counsel. The evidence does not enable me to be so satisfied. In particular, I cannot be satisfied that, at any stage prior to 9 July 2001, Mr Curtain explained to Patricia Maher that he wanted to brief counsel because he did not have sufficient expertise to advise the Maher Group on issues arising under the Agreement.
257 In evidence, Mr Curtain could not recall whether he gave any explanation to Patricia Maher as to why he wanted to brief counsel. All that he could recall was that the issues were complex, that he wanted 'another opinion from somebody' and that he told Patricia Maher, 'I think I need to brief counsel'.
258 Although Mr Curtain did not hold himself out as an expert in planning law, he could not recall specifically informing the Maher Group of the areas in which he had expertise or of the areas in which he did not have expertise. He held himself out as an experienced commercial litigation solicitor and did not bring to the attention of the Maher Group any reason why he could not advise them on the matters falling within Riordans' retainer.
259 Accordingly, in the circumstances of this case, Patricia Maher's refusal to permit Mr Curtain to brief counsel did not affect Riordans' obligations under the retainer. The refusal has no bearing on my conclusion that Riordans breached their retainer.
260 Mr Cicero is a partner of Best Hooper and specialises in planning law. In his expert witness statement, he analysed whether the Proposed Uses condition was satisfied as at Settlement, and concluded that it had not been satisfied. In reaching this conclusion, he relied heavily on the findings in Osborn J's judgment.
261 Mr Cicero's witness statement relevantly concluded:
262 During his cross-examination, Mr Cicero steadfastly and confidently adhered to the evidence in his witness statement.
263 Mr Cicero's evidence took full advantage of the benefit of hindsight. At the core of his conclusion that the Proposed Uses condition had not been satisfied was his adoption of the findings and reasoning in Osborn J's judgment. Mr Cicero adopted Osborn J's findings and reasoning without having copies of the permits for the Market Land or the Whittlesea Planning Scheme as it was in force in March 1999 or July 2001. He also made assumptions about how the Bundoora All-Weather Market operated.
264 I do not accept Mr Cicero's evidence that, as at June 2001, Riordans should have reached the same conclusions as Osborn J eventually did - after a lengthy contested hearing - about whether the Proposed Uses condition had been satisfied. In my opinion, that was an issue upon which lawyers and town planners could have had different views on the basis of the information that had been made available to Riordans.
265 Overall, neither Mr Cicero's approach to his task nor the substance of his evidence assisted me in deciding whether Riordans had breached their retainer.
Riordans did not have a duty to decide for Simply whether to exercise the Option
266 There were suggestions in the evidence of Patricia and Justice Maher that Riordans should have advised them to exercise the Option. For the reasons set out at [167] above, Riordans did not have a duty to decide for Simply that it should make the commercial decision to exercise the Option.
Did Riordans breach their tort duty in relation to the Option?
267 The parties did not relevantly differentiate between Riordans' potential liability for breach of their retainer and their potential liability for breach of the tort duty. In particular - with the exception of Mr Booth's submissions about vulnerability, which I have rejected[59] - the parties did not submit that there would be any reason to hold Riordans liable in contract, but not in tort. Accordingly, for the reasons set out at [218] to [239] above, I find that Riordans breached their tort duty to Simply.
Did Riordans' breaches of duty cause any loss to Simply?
268 Mr Booth submitted that if the Court found that Riordans breached their duties to Simply, Simply's actions in contract and in tort could not succeed because the breaches did not cause Simply to suffer any loss. This was because, so it was said, Simply did not rely on Riordans' advice and had no intention of exercising the Option.
269 Much of Mr Booth's cross-examination was directed at establishing that Simply had relied on the assessment of its legal position that had been made by the Mahers and other advisers of the Maher Group, rather than on the advice of Riordans, and that, at all relevant times, the Maher Group had no intention of 'paying a cent for the apartment'.
270 In deciding whether Riordans' breaches of their retainer and tort duty caused Simply to suffer any loss, it is necessary for me to analyse the evidence in detail. For convenience, I will do so under the following sub-headings:
(a) Did Simply rely on the advice of other persons and not Riordans?
(b) Would Simply have exercised the Option if properly advised by Riordans?
Did Simply rely on the advice of other persons and not Riordans?
271 Patricia Maher gave evidence that, prior to signing the Agreement, she and her sons made a joint decision to amend the definition of 'Proposed Uses' so that the definition reflected the actual uses of the Market Land as at 16 March 1999. She was aware that, if the Proposed Uses condition was satisfied, she would 'get back' the Apartment at no cost. She was convinced that the Proposed Uses condition was satisfied as at the time that the Agreement was signed because the Proposed Uses were consistent with the actual uses of the Market Land at that time. She considered that the Maher Group had a 'very good case' for getting back the Apartment on the basis that the Proposed Uses condition had been satisfied. Justice and Dominus Maher also believed that the Proposed Uses condition had been satisfied.
272 Patricia Maher said that she and Justice Maher were of the view that the new Whittlesea Planning Scheme that took effect on 8 July 1999 made the actual uses of the Market Land conform with the Proposed Uses.
(a) by the time she engaged Mr Curtain on 19 March 2001, she and Justice Maher had a firm view - based on their own assessments and on the advice the Maher Group had received from Mr Brott,[60] Mr Jones,[61] Mr Whitby[62] and Mr Dealehr[63] - that the Proposed Uses condition had been satisfied and that Simply was entitled to a re-transfer of the Apartment for nil consideration under cl 3 of the Agreement; and
(b) the Maher Group had engaged Mr Curtain to institute proceedings to enforce cl 3 of the Agreement and were not looking to him for advice on the legal avenues that were available to recover ownership of the Apartment.
274 Patricia Maher denied these assertions. She said that, although she had received favourable advice from other lawyers, when she engaged Mr Curtain, she expected him to give her fresh advice on all legal avenues that were available to enable her to achieve her objective of 'get[ting her] apartment back'. She denied that she was only interested in regaining ownership of the Apartment under cl 3 of the Agreement because this would not involve any payment to Millennium and that she had no interest in exercising the Option.
275 Patricia Maher said that she was aware that the Option was available to be exercised until 9 July 2001. As that day approached without any resolution of the dispute with Millennium, she became 'anxious' and 'distraught' about the exercise of the Option. She looked to Mr Curtain to give her advice on whether she should exercise the Option, but no advice was forthcoming. She was 'amazed' and 'aghast' to discover after the event that Mr Curtain was absent on leave between 30 June 2001 and 22 July 2001.
276 Patricia Maher acknowledged that she had 'a great deal of experience' in business and in buying and selling land. She also acknowledged that, prior to 9 July 2001, she had been involved in litigation between the Maher Group and the Maher Group's financiers, and that she had previously given evidence in court.
277 Justice Maher acknowledged that he had experience in buying and selling land, and 'a great deal of experience' in business generally.
278 In his cross-examination, Justice Maher denied that he had extensive experience in planning matters. While he acknowledged that he had gained some 'very limited' experience in planning matters from 1989 until 1999 in the course of various dealings between BAWM and the Council relating to the Bundoora All-Weather Market, he said that the Maher Group relied on their external town planning adviser, Alex Kamenev, for town planning advice. He assisted Mr Kamenev 'only in ... very minor things'.
279 Justice Maher acknowledged that the Maher Group relied principally on him to negotiate the wording of the definition of 'Proposed Uses' in the Agreement. He said that the original wording, which is set out at [25] above, was unacceptable to the Maher Group because it did not reflect the then current uses of the Market Land. He made handwritten amendments to the definition, which were acceptable to Millennium. Those amendments were incorporated into the final wording of the definition, which is set out at [24] above.
280 Justice Maher said that the amended definition of 'Proposed Uses' was acceptable to him and the Maher Group because it reflected the manner in which the Market Land was being used at the time that the Agreement was executed. He was confident that, at that time, the Market Land was being used as factory retailing outlets, a fruit and produce market, and a trash and treasure market, and that such uses were in accordance with the Council permits. Accordingly, he was confident that the Proposed Uses condition was satisfied when the Agreement was signed, and that, in accordance with cl 3 of the Agreement, the contract of sale of the Apartment would be cancelled and the Apartment would be re-transferred to Simply.
281 Justice Maher said that, between 16 March 1999 and 19 March 2004, he never had a shadow of doubt that the Proposed Uses could be satisfied.
282 Justice Maher said that, between March and July 1999, he obtained advice over the telephone from Mr Kamenev about the dispute between the Maher Group and Millennium regarding the Proposed Uses condition. Mr Kamenev's advice was consistent with his own view about what could be done under the existing permits for the Market Land. On 21 March 1999, he spoke to Mark Bernhardt, a former officer of the Council, who confirmed that the Proposed Uses could be, and were, satisfied.
283 Justice Maher said that, at about the time the Agreement was signed, he and Mr Brott spoke to Graeme Peake of counsel about the Proposed Uses. Mr Brott spoke to Mr Peake again and subsequently informed Justice Maher that Mr Peake had said that the Proposed Uses were met.
284 Justice Maher said that, prior to the meeting with Mr Curtain on 9 May 2001, Margaret Blackney - who had been a planning officer at the Council in 1999 - had told him that the Proposed Uses had been satisfied.
285 Surprisingly, Justice Maher said that, on 9 May 2001, he informed Mr Curtain that the Proposed Uses could not be achieved because the Maher Group had not obtained a new permit.
286 Justice Maher said that, in June 2001, he was not interested in Mr Curtain's advice about the Proposed Uses because he had plenty of advice from other people that the Maher Group had satisfied the Proposed Uses.
288 Mr Booth put to Justice Maher the assertions that are set out above at [273] that he had previously put to Patricia Maher. Justice Maher denied those assertions. He said that the Maher Group had engaged Mr Curtain for 'fresh advice' on how to 'get the apartment back'.
289 Justice Maher said that, as the expiry date of the Option approached, he and his mother were 'beside [them]selves with worry'.
290 As discussed at [258] above, Mr Curtain was an experienced commercial litigation solicitor. He did not have particular expertise in town planning law or property law nor did he expressly hold himself out as having particular expertise in those areas. However, he did not inform the Mahers of the areas in which he had expertise or the areas in which he did not have expertise.
291 Mr Curtain gave evidence that the Maher Group did not ask him for advice about the Option at any stage prior to 9 July 2001. On his own initiative, he mentioned the Option to Patricia Maher on 13 June and 20 June 2001.
292 Mr Curtain said that, from his receipt of initial instructions from Patricia Maher on 19 March 2001 until he went on leave on 30 June 2001, Patricia and Justice Maher consistently told him that the Maher Group were entitled to have the contract of sale of the Apartment cancelled because the Proposed Uses condition had been satisfied. He was initially approached on the basis that the Maher Group wanted to recover the Apartment by taking proceedings to 'specifically enforce' the Agreement and that they had terminated Mr Brott's retainer because no proceedings had been instituted.
293 Mr Curtain said that Justice Maher made it clear to him that he believed that the Proposed Uses condition had been satisfied. Justice Maher informed him that his view was based on his own experience in planning matters and on advice that he had received from Mr Brott and McKean & Park.
294 Mr Curtain said that, at the meeting with Patricia Maher on 23 April 2001, she informed him that she had a very good case; that she had been told so by Mr Brott and McKean & Park, who had retained counsel; and that that was also her personal belief.
295 Mr Curtain said that, during his telephone discussion with Patricia Maher on 18 June 2001:
(a) Patricia Maher instructed him that Mr Herszberg would transfer the Apartment to her at the end of June 2001 on the basis that she would not have to pay for it and without the need for litigation;
(b) Patricia Maher instructed him to write a letter to the solicitors for Millennium asking for the Apartment back and that, if this was done, she expected that the Apartment would be transferred to her without her having to pay for it;
(c) Patricia Maher informed him that she already had two opinions to the effect that she was entitled to the return of the Apartment without having to pay for it; and
(d) Patricia Maher instructed him that the Proposed Uses were existing uses and that the Mahers had achieved them such that they were entitled to cancel the contract of sale of the Apartment.
296 Mr Curtain said that, as at 18 June 2001, Patricia Maher had made it clear to him that she would not entertain the prospect of paying for the Apartment pursuant to the Option and that her position was supported by the opinions of two solicitors who had previously acted for her.
297 Mr Curtain said that, when he spoke to Patricia Maher on 29 June 2001 and conveyed to her that Mr Efron had said that the Proposed Uses had not been met, Patricia Maher told him that she did not agree with Mr Efron, that the Market Land could be used for the Proposed Uses and that he should persist with the approach that he had been taking.
298 Mr Whitby gave evidence that, at the conference with Patricia Maher on 21 October 1999,[70] she instructed him that it was her and Justice Maher's view that they would be successful in proceedings to recover the Apartment because the Proposed Uses condition had been satisfied.
299 Mr Whitby said that Justice Maher was 'very convinced and enthused over the fact that he thought [that] all of the conditions had been complied with.'
300 In my opinion, from 19 March 2001 until 9 July 2001, the Maher Group did not rely on Riordans for advice about the Option, including the comparative legal merits of exercising the Option and instituting proceedings to enforce cl 3 of the Agreement. My reasons are set out below.
301 I accept Mr Curtain's evidence that the Maher Group did not, at any stage prior to 9 July 2001, seek advice from Riordans on the Option. Mr Curtain mentioned the Option on two occasions on his own initiative.
302 Both Patricia and Justice Maher knew that the Option was available to be exercised until 9 July 2001. They were also familiar with the provisions of the Agreement that dealt with the Option.
303 Until well after 9 July 2001, Patricia and Justice Maher held an unshakeable view that the Proposed Uses condition had been satisfied and that the Maher Group were entitled to a re-transfer of the Apartment for nil consideration pursuant to cl 3 of the Agreement. This view had been informed by Justice Maher's assessment of the planning issues and the advice that the Maher Group had received from Mr Kamenev,[71] Mr Bernhardt,[72] Ms Blackney,[73] Mr Brott,[74] Mr Jones,[75] Mr Whitby[76] and Mr Dealehr.[77]
304 As a result of the advice that the Maher Group had received prior to engaging Riordans, Patricia and Justice Maher believed that the most cost effective way in which the Maher Group could recover the Apartment was to institute proceedings for specific enforcement of cl 3 of the Agreement. The Maher Group engaged Riordans for the purpose of instituting such proceedings in the light of the facts that they lost confidence in Mr Brott and Mr Balmer was too busy to act for them.
305 Justice Maher acknowledged that, in June 2001, he was not interested in Mr Curtain's advice about the Proposed Uses because he had plenty of advice from other people that the Maher Group had satisfied the Proposed Uses. This was a most telling statement.
306 Mr Curtain wrote the letter of 19 June 2001 on his own initiative to place on record his belief that there were difficulties with the firmly held view of the Maher Group that the Proposed Uses condition had been satisfied. Patricia and Justice Maher brushed aside the difficulties that Mr Curtain had identified. They did not seek further advice about those difficulties. Instead, they maintained their position and requested Mr Curtain to make amendments to his draft letter to Millennium to strengthen the contention in the draft letter that the Proposed Uses condition had been satisfied. When Mr Efron rejected that contention on 22 June 2001 - as he had done repeatedly since 2 July 1999 - Patricia and Justice Maher were not deterred. On 29 June 2001, Patricia Maher effectively told Mr Curtain that Mr Efron was wrong and that there was no need to change strategy.[78]
307 My conclusion that, prior to 9 July 2001, the Maher Group had an unshakeable belief that the Proposed Uses condition had been satisfied is supported by the fact that they steadfastly refused to follow consistent advice to confirm the correctness of their belief by briefing counsel with planning expertise. That advice had been given by Mr Whitby on 30 November 1999 and Laurence Maher on 1 March 2001.[79] On 13 June 2001, Mr Curtain's request that he be permitted to brief counsel was refused by Patricia Maher. Although Mr Curtain's evidence about his reasons for seeking permission to brief counsel was vague, it can be inferred that counsel would have been briefed to advise on the prospects of success of an action to enforce cl 3 of the Agreement, which necessarily would have involved advice on whether the Proposed Uses condition had been satisfied.
308 I reject Justice Maher's evidence that, on 9 May 2001, he informed Mr Curtain that the Proposed Uses could not be achieved because the Maher Group had not obtained a new planning permit. This statement is inconsistent with Justice Maher's evidence that he was confident that the Proposed Uses condition had been satisfied. Procurement of a new planning permit was not a condition precedent to satisfying the Proposed Uses condition and that is why Justice Maher never applied for such a permit. I can only conclude that Justice Maher's evidence that the Proposed Uses could not be achieved without a new planning permit was a recent invention to assist Simply's case against Riordans.
309 In addition to Patricia and Justice Maher's unshakeable view that the Proposed Uses condition had been satisfied, Patricia Maher was convinced that Mr Herszberg and Mr Gordon would agree to re-transfer the Apartment for nil consideration. She expressly said so to Mr Curtain on 19 March 2001,[80] on 18 June 2001[81] and on 9 August 2001.[82] Her confidence that Mr Herszberg and Mr Gordon would agree to re-transfer the Apartment is borne out by the fact that, in June 2001, Patricia Maher continued to instruct Mr Curtain to write letters to Millennium, Mr Efron and Mr Szental maintaining that the contract of sale of the Apartment had been cancelled notwithstanding the fact that similar letters that had been written in the past had been consistently and stridently rebuffed by Mr Efron on behalf of Millennium.
310 During Mr Curtain's absence on leave from 30 June until 22 July 2001, the Mahers did not contact his office to seek advice on the Option, even though they were aware that the Option was due to expire on 9 July 2001. As discussed below,[83] after Mr Curtain returned from leave, the Maher Group did not complain to him about his failure to advise them about the Option prior to its expiration.
311 The only evidence in support of the Maher Group's contention that they were relying on Riordans to advise them on all legal avenues that were available to them to recover the Apartment, including the exercise of the Option, was that of Patricia and Justice Maher. As discussed at [136] to [155] above, I have concluded that Patricia and Justice Maher were unreliable witnesses, that Mr Curtain was a reliable witness and that I would not hesitate to accept Mr Curtain's evidence in so far as it was inconsistent with the evidence of Patricia and Justice Maher.
312 I reject the evidence of Patricia Maher that, in the lead up to 9 July 2001, she was 'anxious' and 'distraught' about the Option. Likewise, I reject the evidence of Justice Maher that, during this period, he and Patricia Maher were 'beside [them]selves with worry'. The matters that I have set out at [301] to [311] above overwhelmingly indicate that Patricia and Justice Maher were not looking to Mr Curtain to provide any advice about the Option and that they did not rely on his advice about whether the Proposed Uses condition had been satisfied.
313 In their witness statements, Patricia and Justice Maher sought to convey the false impression that Millennium's position on whether the Proposed Uses condition had been satisfied did not become clear until 22 June 2001, when Mr Efron responded to Mr Curtain's letter of 19 June 2001 to Millennium. The fact is that Mr Efron had been steadfastly maintaining since 2 July 1999 - which was prior to Settlement - that the Proposed Uses condition had not been satisfied. Patricia and Justice Maher knew from the outset that this was Millennium's position, but maintained their assessment that the Proposed Uses condition had been satisfied. Their assessment was reinforced by the advice that they had received from Mr Brott, Mr Jones, Mr Whitby, Mr Dealehr, Mr Kamenev, Mr Bernhardt and Ms Blackney.
314 Patricia and Justice Maher ignored Mr Curtain's advice about the difficulties associated with the satisfaction of the Proposed Uses condition because it was contrary to their own assessment and to the previous advice that they had received from others. They also ignored that advice because Patricia Maher had a longstanding belief - which was probably engendered by comments that had been made by Mr Brott - that the Millennium Group would 'give back' the Apartment without the necessity for a Court order. Patricia and Justice Maher knew Mr Herszberg and Mr Gordon, and they had views about what Mr Herszberg and Mr Gordon would be prepared to do in relation to the Apartment. Mr Curtain, on the other hand, had not met with, or spoken to, Mr Herszberg or Mr Gordon prior to 9 July 2001.
315 In the light of the above, I find the following:
(a) Prior to 9 July 2001, the Maher Group had decided that the Proposed Uses condition had been satisfied and that the commencement of proceedings to specifically enforce cl 3 of the Agreement was the best legal avenue to recover the Apartment for nil consideration if, contrary to their expectation, Millennium refused to re-transfer it.
(b) The Maher Group's decision had been informed by the views of Patricia and Justice Maher and the advice that they had received from Mr Brott, Mr Jones, Mr Whitby, Mr Dealehr, Mr Kamenev, Mr Bernhardt and Ms Blackney.
(c) The Maher Group sought assistance from Riordans to write letters to Millennium, Mr Efron and Mr Szental with a view to persuading Millennium to re-transfer the Apartment and to institute proceedings for specific performance if Millennium ultimately refused to do so.
(d) The Maher Group's strategy for re-acquiring the Apartment was devised before they engaged Riordans. They sought Riordans' assistance to implement the strategy, but not to reconsider it.
(e) The Maher Group brushed aside the difficulties set out in Mr Curtain's letter of 19 July 2001. They were not interested in Mr Curtain's advice in so far as it questioned their own firmly-held views about the Proposed Uses condition, and they did not want any further detailed advice from him in so far as it was contrary to their views.
(f) Prior to 9 July 2001, the Maher Group were aware of the Option and did not seek any advice from Mr Curtain in relation to the Option.
Would Simply have exercised the Option if properly advised by Riordans?
316 In her witness statement, Patricia Maher stated:
The paramount task for Mr Curtain as Simply Irresistible's solicitor was to save the apartment. That is why we went to him on the recommendation of Mr Balmer. If he had advised us to exercise the option to preserve our rights in the circumstances whilst the planning dispute was dealt with we would have paid the $210,000.00 to exercise the option and reserved our position.
At no stage during my dealings with Mr Curtain between 19 March and 9 July 2001, did he advise me that I should get the apartment back by exercising the option and paying $210,000.00 to ensure that the ownership of the apartment remained with me. In fact Mr Curtain never gave me detailed advice about the terms of the deed in writing and the alternatives available to protect my interest in the apartment.
If Mr Curtain had advised me that I had the option to exercise, and that in the circumstances with significant doubt about the planning issue I should exercise it I had the means to be able to do it. Raising the money was not a problem. The apartment was worth much more than the option price of $210,000.00 in June 2001, and would have been worth at least $600,000.00. ...
...
Had Justice and I been advised to exercise the option by Riordan & Partners we would not have incurred the costs liabilities to Riordan & Partners, Coadys or the other parties and Simply Irresistible would have regained the apartment so there was no limit on how long I can live there and it would have the full ownership of the apartment.
[Osborn J's] judgment ... was very clear that the planning condition could not have been satisfied as at 9 July 1999. It is clear to me that after Efron & Co had identified the essential problem with the planning condition in June 2001 - that is to say that it had not been satisfied as at the date of settlement on 9 July 1999 - there was no real alternative to save the apartment but to exercise the option subject to any claim by us that we had in fact complied with the [Agreement].
317 In her cross-examination, Patricia Maher acknowledged that she was familiar with the Agreement. From the time that she engaged Mr Curtain on 19 March 2001 until 9 July 2001, she was aware that the Option subsisted, that it would expire on 9 July 2001 and that, if the Maher Group exercised the Option, they would have to pay $210,000. She mentioned the Option to Mr Curtain during their first telephone discussion on 19 March 1999.[84]
318 When Mr Booth put to Patricia Maher that she never wanted to pay any money to get back the Apartment, she replied as follows:
If I had to pay it I would pay it. The apartment was worth 650,000. The option was worth 210 so if I was going to lose the apartment I certainly would pay the 210,000, though I never thought it was in danger.
319 Patricia Maher said that, by June 2001, she was becoming increasingly worried about the situation. She was 'ringing [Mr Curtain] all the time [and] was saying "You've only got till 9 July, can we get a resolution."' However, Mr Curtain never gave her detailed advice in writing about the Option or how it might be exercised. She said that, had she been advised that the only way to recover the Apartment was by exercising the Option and paying $210,000, she would have done so. She said, 'Any reasonable person would ... pay [$]210,000 to get a [$650,000 apartment] - and I'd lived in it for ten years, it was my home.'
320 Mr Booth asked Patricia Maher whether she complained to Mr Curtain about his failure to provide advice on whether the Maher Group should exercise the Option. She said that she was distraught and worried, and that she telephoned Mr Curtain in July 2001, but he was not there. She said that she 'would' have complained to Mr Curtain on 23 July 2001 about his failure to provide advice on the Option. When reminded that her witness statement did not mention the making of a complaint, she said that 'it's only common reason you'd say how disappointed you are.' She said that, when she spoke to Mr Curtain by telephone on 30 July 2001, she complained to him about the fact that the Option had lapsed.
321 Patricia Maher also said that she complained to Mr Curtain on 13 August 2001 about 'the option going'. She said, 'It's only reasonable if you lose your house, you complain.' When reminded that she did not say in her witness statement that she complained on 13 August 2001, she said: 'It doesn't need to be in the witness statement because everybody would realise if they lost their home how upset they'd be and they'd be really, really upset. It's only normal.' Later in her evidence, she said that she complained to Mr Curtain, but that she could not remember the date. She said that the complaint was not included in her witness statement because she 'didn't think it was necessary.'
322 Patricia Maher acknowledged that, if she had exercised the Option, she would have had to borrow money to purchase the Apartment.
323 In his witness statement, Justice Maher stated:
The paramount task for Mr Curtain was to save the apartment. That is why we went to him. If he had advised us to exercise the option we would have paid the $210,000.00. We did not think that we owed it but were prepared to pay it so that we did not lose an asset that was appreciating.
We had basically been to Brott, he'd done nothing, we'd been to - and this is after Whitby, after Brott, after Nick Jones, after Daryl Dealehr, after Bernie Balmer, Laurence Maher, we were at Stephen Curtain and Riordan & Partners. We had been to all these lawyers, barristers, et cetera, and we had a property that was worth in excess of $600,000, we had to pay 210 grand to keep it or otherwise lose it and litigate. Had we had advice from Stephen Curtain at that time to exercise the option we certainly would have exercised it. We are supposedly commercially, you know, brilliant people, we have been very lucky in our business life and we've had a horrendous thing with legal things over the last ten years. But the reality of that is, had we had the correct advice we wouldn't be here now. We went to Stephen Curtain and we trusted his advice. I have the diary note to that effect. He told us not - it wasn't available to us, the option, because of Brott's caveat. That was his advice.
325 Justice Maher acknowledged that, at the time that the Maher Group had engaged Riordans, he was aware that the Option was due to expire on 9 July 2001 and that, if the Maher Group had exercised the Option, they would have had to pay $210,000. He also acknowledged that the Maher Group would have had to borrow money if they had purchased the Apartment by exercising the Option. He maintained, however, that Mr Curtain had advised on more than one occasion that the lodgement of the caveat on 2 September 1999 had caused the Option to lapse.
326 When Mr Booth put to Justice Maher that the Maher Group did not want to exercise the Option because they did not want to pay for it, he said, 'No, absolutely not.'
327 I have already discussed much of Mr Curtain's evidence that is relevant to the issue of whether Simply would have exercised the Option if Riordans had not breached their retainer and tort duty.[85] I will not repeat that evidence at length. I will, however, highlight some of that evidence.
Patricia Maher told me she did not want to pay the money required to exercise the option. At no stage during the course of my retainer did she instruct me to offer any sum of money to Millennium or its interests by way of 'payment' for the return of the apartment. ... Patricia Maher maintained the view that she was entitled to the return of the apartment on the basis that the proposed uses had been met from the time I was first instructed by Patricia Maher for the entire duration of the retainer. She and Justice Maher told me for this period that they thought they didn't have to exercise the option because they were entitled to specific performance of the contract and they didn't want to pay $210,000 or any amount.[86]
329 Further, in his witness statement, Mr Curtain said that Patricia Maher told him on 20 June 2001 that she did not want to exercise the Option.[87]
330 Mr Curtain denied that, on 9 May 2001, he advised Patricia and Justice Maher that the lodgement of the caveat had the effect of causing the Option to lapse. He also denied telling Justice Maher on 9 May 2001 that he must litigate.[88]
331 Mr Curtain gave evidence that, after he returned from leave on 23 July 2001, neither Patricia Maher nor Justice Maher complained to him that the Option had lapsed on 9 July 2001 without the Maher Group having received advice from him about whether it should have been exercised.
332 On 27 July 2001, Patricia Maher told Mr Curtain that she was not prepared to buy the Apartment for $250,000, but that she would buy it for '$10K+'.[89]
333 On 13 August 2001, Patricia Maher told Mr Curtain that the Maher Group were '[n]ot prepared to pay $210K', but '[w]ould pay $10K'.[90]
334 On 22 August 2001, Patricia Maher told Mr Curtain that she would settle on the basis that she would walk away and retain the Apartment, and that she was not prepared to move from that position.[91]
335 On 30 August 2001, Patricia Maher told Mr Curtain that she was not prepared to pay any money for the Apartment.[92]
336 At the mediation on 12 March 2003, the Maher Group rejected the First Joint Mediation Offer, which would have enabled them to purchase the Apartment for a net outlay of $250,000.[93] On 30 September 2003, the Maher Group rejected the $1 Plus Assignment Offer, which would have enabled them to purchase the Apartment for $1.[94]
337 In assessing the evidence, I have been mindful of Ashley JA's observations in Stipanov v Mier,[95] where the facts were, in some respects, similar to the facts in the present case. The question is not an abstract one of whether Simply had any intention to exercise the Option prior to 9 July 2001. The 'true question'[96] is: has Simply established that, if Riordans had advised it of the comparative legal merits of litigation and exercising the Option - along the lines set out at [234] above -it would have exercised the Option?
338 In my opinion, for the reasons that follow, that question should be answered resoundingly in the negative.
339 As discussed at [15] to [18] above, Patricia Maher never wanted the Apartment to be included in the sale transaction of 16 March 1999. Eventually, she agreed to its inclusion on the basis that it would be a form of 'security' for the Maher Group's representations that the Market Land could be put to the Proposed Uses. On 16 March 1999, the Mahers insisted on changes to the definition of 'Proposed Uses' that would, in their opinion, align that definition with the actual uses of the Market Land at the time and thereby satisfy the Proposed Uses condition. Having taken this step, the Mahers believed from the outset that Simply was entitled to re-acquire the Apartment for nil consideration and continued to hold that belief steadfastly well past 9 July 2001. Believing that the Apartment was rightfully theirs, they were unwilling to accept that they should have to pay anything to re-acquire it.
340 On 2 September 1999, Mr Brott lodged a caveat over the title to the Apartment on instructions from Patricia and Justice Maher. Those instructions were given after Mr Brott had advised Patricia Maher that the lodgement of the caveat would cause the Option to lapse.[97] The Maher Group's readiness to forgo the Option is consistent with my conclusion at [339] above that, from the outset, the Mahers regarded the Apartment as rightfully theirs and they had no intention of paying anything to re-acquire it.
341 Prior to 9 July 2001, the Maher Group were aware of the Option, the purchase price of $210,000 pursuant to the Option, the expiry date of the Option and the provisions of the Agreement dealing with the Option. Both Patricia and Justice Maher conceded that they were aware of these matters. The fact, as I have found,[98] that the Maher Group never sought advice from Mr Curtain about the Option is consistent with their having no intention to exercise it.
342 Until they received Peter Riordan SC's written advice on 27 September 2001, the Maher Group had an unshakeable belief that they were entitled to the re-transfer of the Apartment for nil consideration pursuant to cl 3 of the Agreement.
343 Patricia Maher was confident, until well after 9 July 2001, that Millennium would agree to re-transfer the Apartment without the need for a Court order.[99] It is instructive that Patricia Maher qualified her evidence that she would have exercised the Option if she was 'going to lose the apartment' with the words, 'though I never thought it was in danger'.[100]
344 When, on 20 June 2001, Mr Curtain raised - on his own initiative - the issue of the exercise of the Option, Patricia Maher expressly told him that she did not want to exercise the Option.
345 In my opinion, the following evidence has no factual basis and must be rejected:
(a) Patricia Maher's evidence that she was 'anxious' and 'distraught' about the imminent expiration of the Option;[101]
(b) Justice Maher's evidence that he and Patricia Maher were 'beside [them]selves with worry' as the expiry date of the Option approached;[102]
(c) Patricia Maher's evidence that she was 'ringing [Mr Curtain] all the time [and] was saying "You've only got till 9 July, can we get a resolution?"';[103]
(d) Justice Maher's evidence that, on 9 May 2001, he asked Mr Curtain, 'Why don't we exercise the option?' and that Mr Curtain replied, 'The option is not available to you because of Brott's caveat';[104]
(e) Justice Maher's evidence that, during his telephone discussion with Mr Curtain on 21 June 2001, he asked Mr Curtain, 'Why don't you exercise the option?' and that Mr Curtain replied, 'The option is not exercised because of Brott's caveat';[105] and
(f) Patricia Maher's evidence that, in July and August 2001, she complained to Mr Curtain about the expiration of the option.[106]
346 While Mr Curtain was on leave between 30 June 2001 and 22 July 2001, Patricia Maher called Riordans twice regarding Mr Szental, but she did not mention the Option.[107]
347 The conduct of the Mahers in the period prior to 9 July 2001 was consistent only with a resolute desire to re-acquire the Apartment without making any payment for it. That conduct is sufficient for me to conclude that, prior to the expiration of the Option, Simply had no intention of exercising its rights under the Option and that its position would not have changed if Riordans had not breached their retainer and tort duty.
348 Reliance on a party's conduct after an event for the purpose of determining its state of mind prior to that event will often be fraught with danger. One needs to avoid speculation and conjecture. While bearing these considerations in mind, in my opinion, in the circumstances of this case, the events that occurred after 9 July 2001 are informative of Simply's intentions prior to that date.
349 On 23 July 2001, the day that Mr Curtain returned from leave, Patricia Maher telephoned him to discuss Millennium's failure to pay an electricity bill. She did not mention the Option, let alone complain about Mr Curtain's failure to advise about the Option prior to its expiration.
350 Within five weeks of the Option lapsing and within three weeks of Mr Curtain returning from leave, Patricia Maher told Mr Curtain on two separate occasions - on 27 July 2001 and on 13 August 2001 - that she was not prepared to pay $250,000 and $210,000, respectively, for the Apartment.[108] Not long afterwards - on 22 August 2001 and on 30 August 2001 - Patricia Maher told Mr Curtain that she wanted to re-acquire the Apartment without making any payment.[109]
351 It may be said that, in the absence of appropriate advice on the comparative legal merits of litigation and the exercise of the Option, Patricia Maher's statements were made on an uninformed basis. That was not the case, however, after Peter Riordan SC gave his advice on 27 September 2001.[110] He advised the Maher Group about the difficulties in seeking specific performance of cl 3 of the Agreement on the basis that the Proposed Uses condition had been satisfied. As a result of that advice, no such relief was sought in the prior proceeding.
352 It follows that, at the time of the mediation on 12 March 2003, Simply was aware not only of the risks of seeking relief under cl 3 of the Agreement, but also of the delays and the costs associated with litigation. By the time of the mediation, Simply was fully aware of the matters upon which Mr Curtain had failed to advise in June 2001. As discussed at [113] and [114] above, at the mediation, Simply rejected the First Joint Mediation Offer, which effectively gave it the opportunity to purchase the Apartment for a net outlay of $250,000. The fact that Simply rejected the First Joint Mediation Offer and made a counter-offer which involved a re-transfer of the Apartment for nil consideration supports my conclusion that, prior to 9 July 2001, Simply would not have paid any amount close to $210,000 for the Apartment, even if Mr Curtain had provided advice along the lines set out at [[[111]](2010_601 > The fundamental basis [for awarding damages for breach of contract] is ... compensation for pecuniary loss flowing from the breach; but this first principle is qualified by a second, which imposes on a plaintiff the duty of taking all reasonable steps to mitigate the loss consequent on the breach, and debars him from claiming any part of the damage which is due to his neglect to take such steps.[115]
363 Although this statement was made in the context of a claim in contract, the principle is equally applicable to claims in tort.[116]
364 Riordans relied on the following matters in support of their contention that Simply failed to mitigate its loss:
(a) Simply failed to accept the following offers of settlement which, if they had been accepted, would have reduced its loss:
(i) the First Joint Mediation Offer;[117]
(ii) the Second Joint Mediation Offer;[118]
(iii) the $1 Plus Assignment Offer;[119]
(b) Simply should have commenced this proceeding on 11 November 2004 or on 27 October 2006. If Simply had done so, it would have obtained judgment approximately two years from those dates - namely, on 11 November 2006 or on 27 October 2008 - when the value of the Apartment was $650,000 and $790,000, respectively, compared to its current value of $925,000.[122]
Simply's failure to accept offers of settlement
366 It was common ground between the parties that the First Joint Mediation Offer was made at the mediation on 12 March 2003. There was a dispute, however, about whether Mr Curtain and Peter Riordan SC advised the Maher Group not to accept the offer.
367 Mr Bailey tendered three pages of handwritten notes and a one-page diary entry that had been prepared by Justice Maher. Justice Maher gave evidence that he wrote the notes during the course of the mediation and made the diary entry subsequently, possibly on the same day.
(a) 'Peter/Stephen offer unreasonable, wanted to Walk Out Peter';
(b) 'Advice Peter/Stephen offer completely unacceptable Must litigate to get Unit back'; and
369 The handwritten notes contain the following statement: 'Riordans Advice Must Litigate OFFERS NOT REASONABLE RIORDANS'.
370 Justice Maher gave evidence that was consistent with his notes and diary entry. According to that evidence, Peter Riordan SC said, 'Absolutely no' to the First Joint Mediation Offer and told the Mahers to get up and walk out of the mediation. Mr Curtain said that the offer was unreasonable. As the mediation progressed, Peter Riordan SC and Mr Curtain advised that the Maher Group must litigate to get back the Apartment.
371 Patricia Maher gave evidence that Peter Riordan SC advised the Maher Group not to accept the First Joint Mediation Offer and that they rejected the offer on his advice. Mr Curtain did not advise them that the offer was a good deal and that they should accept it.
372 Mr Curtain's file note of the mediation does not record the advice, if any, that he gave to the Mahers about the First Joint Mediation Offer.
373 Mr Curtain gave evidence that he recalled advising Patricia Maher that the First Joint Mediation Offer was a good deal and that she should accept it. He believed that Peter Riordan SC would have given the same advice. If Peter Riordan SC had given different advice, he would have regarded that fact as significant and would have recorded it.
374 Mr Curtain said that Patricia Maher rejected the First Joint Mediation Offer because she wanted money for a claim relating to a quarry. He and Peter Riordan SC advised her that the quarry claim had little or no merit and that she should accept the First Joint Mediation Offer. He did not recall seeing Justice Maher taking any notes at the mediation.
375 Mr Curtain denied that Peter Riordan SC had advised the Mahers to walk out of the mediation.
376 Ms McColl gave evidence that Justice and Patricia Maher rejected the First Joint Mediation Offer because they wanted to receive payment for the quarry claim. Her file note does not record any advice given by Mr Curtain on whether the offer should be accepted. Ms McColl recalled that Patricia Maher said that she did not want to have to pay for the return of the Apartment.
377 Peter Riordan SC gave evidence that, while he had no specific recollection of any advice that he gave about the First Joint Mediation Offer, it is likely that he advised the Mahers to reject the offer and to make a counter-offer so that a negotiated settlement could be reached. He had no recollection of ever saying that the Mahers should walk out of the mediation. He would be surprised if he had done so, as that would have brought the negotiations to an end. He strongly believed that he would not have said, 'Must litigate to get unit back'. He could not recall ever saying that to any client. In any event, he certainly doubted that he would have made such a comment to the Mahers, as it was his understanding that the Maher Group did not have the capacity to fund the litigation.
378 Peter Riordan SC said that he did not believe that Mr Curtain gave any advice independently of him at the mediation.
380 Based on Mr Curtain's evidence that he did not see Justice Maher taking any notes at the mediation, I have reservations about whether Justice Maher's diary entry and three-page document were written on 12 March 2003. Some of the words in the diary entry were written in blue pen, whereas others were written in black pen. Some words were spaced normally, whereas others were spaced tightly together, suggesting that the contents were written on separate occasions. For these reasons, I am not satisfied that the diary entry or the three-page document accurately record what Mr Curtain and Peter Riordan SC said to the Mahers at the mediation.
381 In the absence of any support for Mr Curtain's evidence about the advice that was given to the Mahers concerning the First Joint Mediation Offer in his or Ms McColl's file notes, the most reliable evidence about that advice was that of Peter Riordan SC. In accordance with that evidence, I make the following findings:
(a) Peter Riordan SC advised the Mahers not to accept the First Joint Mediation Offer and to negotiate for a better offer;
(b) Peter Riordan SC did not advise the Mahers to walk out of the mediation or that they must litigate; and
(c) Mr Curtain did not give any advice that differed from Peter Riordan SC's advice. In particular, he did not advise that the First Joint Mediation Offer was a good deal and that Patricia Maher should accept it.
382 It was not unreasonable for the Maher Group to accept Peter Riordan SC's advice to reject the First Joint Mediation Offer and to negotiate for a better offer. This is particularly the case having regard to the fact that Riordans did not advise Simply to accept the First Joint Mediation Offer.
383 I am satisfied that Simply did not act unreasonably in rejecting the other offers of settlement. The Second Joint Mediation Offer, the Life Tenancy Offer and the Walk Away Offer would not have resulted in Simply attaining ownership of the Apartment. The $1 Plus Assignment Offer was not in a form that would have enabled a binding contract to result from its acceptance. Furthermore, as Riordans did not provide any advice to the Maher Group about the merits of the offer, it is difficult to see how they can rely on the Maher Group's rejection of the offer as a breach of Simply's duty to mitigate its loss.
384 For the above reasons, in my opinion, Simply's failure to accept the offers of settlement that were made after 9 July 2001 did not constitute a failure to mitigate any alleged loss arising from Riordans' breaches of their retainer and tort duty.
385 Mr Booth submitted that Simply should have commenced this proceeding on 11 November 2004 when all outstanding issues in the prior proceeding were settled,[123] rather than waiting until 2007 to do so. In the alternative, he submitted that the proceeding should have been commenced on 27 October 2006 when Mr Brott made payments pursuant to costs orders.[124]
386 Justice Maher gave evidence that there was a delay between the termination of Riordans' retainer in 2004 and the commencement of this proceeding in 2007 because of the dispute between the Maher Group and Riordans over unpaid fees. The dispute delayed the delivery of Riordans' file to the Maher Group's new lawyers, Coadys, until approximately July 2007.[125] Coadys went into receivership in late 2007 and had to be replaced by the Maher Group's current lawyers.
387 I reject Justice Maher's evidence that the Maher Group's delay in commencing this proceeding was causally related to Riordans' refusal to deliver their file to Coadys. This is because the proceeding was commenced before Riordans delivered their file to Coadys.
388 Nevertheless, I have not been persuaded that Simply acted unreasonably in delaying the commencement of this proceeding until 2007. The fact that all outstanding issues in the prior proceeding were settled on 11 November 2004 does not mean that Simply had the financial resources to commence the proceeding at that time; nor does the fact that the Maher Group received some costs on 27 October 2006. I would need to know more about Simply's financial position and the other pressing financial needs of the Maher Group before I could conclude that Simply was able to fund the litigation in 2004 or 2006.
389 Accordingly, Simply's failure to commence this proceeding prior to 2007 did not constitute a failure to mitigate any alleged loss arising from Riordans' breaches of their retainer and tort duty.
390 I note, in passing, that Mr Booth was not able to refer me to any case in which it was held that a plaintiff's decision to delay the commencement of a proceeding constituted a failure to mitigate its loss. Litigation that was previously unviable may become viable at a later time. Where the plaintiff commences a proceeding within the limitation period and the nature of the proceeding is such that the relief sought is not discretionary, it is not clear to me why his or her damages should be reduced merely because the time at which the proceeding was commenced was determined by reference to his or her interests, rather than those of the defendant. However, it is not necessary for me to express a final view on this issue.
391 For the above reasons, if, contrary to my finding at [360] above, Simply suffered a loss as a result of Riordans' breaches of their retainer and tort duty, I would not have reduced the award of damages on the basis that Simply had failed to mitigate its loss.
392 Mr Booth's submission that Simply was contributorily negligent was based on the same matters as those upon which he based his submissions that Simply had not relied on Riordans' advice and had failed to mitigate its loss.
393 As contributory negligence relates to the plaintiff's conduct before the defendant's breach, whereas mitigation relates to the plaintiff's conduct after the defendant's breach,[126] Simply's failure to accept the settlement offers and its delay in commencing the proceeding cannot constitute contributory negligence.
394 My conclusion that Simply did not suffer any loss as a result of Riordans' breaches of their retainer and tort duty renders it unnecessary for me to reach a conclusion on whether Simply was contributorily negligent. I would only note that, if Simply had relied on Riordans for advice about the Option and had suffered loss as a result of Riordans' negligent provision of that advice, it would have been difficult to justify any reduction in the damages that Simply could have recovered on the basis of contributory negligence.
Principles for assessing damages in contract and in tort.
395 In an action for breach of contract, damages are awarded with the object of placing the plaintiff, as nearly as possible, in the position in which he or she would have been had the contract been performed.[127]
396 In an action in tort, damages are awarded with the object of placing the plaintiff, as nearly as possible, in the position in which he or she would have been had the tort not been committed.[128]
397 A party that has breached a contract is liable to pay at least nominal damages, even if the breach has not caused any loss.[129]
398 The general, although not universal, rule is that damages in tort or in contract are assessed as at either the date of the breach or the date when the cause of action accrued.[130]
399 This general rule is applied more strictly in contract than in tort.[131] It will yield if, in the particular circumstances of the case, another date for the assessment of damages is necessary to provide adequate compensation to the plaintiff.[132] As Brennan J explained in Johnson v Perez:[133]
The general rule as to the date at which damages are to be assessed is subject to the principle governing the measure of damages. A plaintiff who has suffered damage as a result of a defendant's tort or breach of contract is entitled to such a sum as will, so far as possible, put him in the same position as he would have been in but for the tort or breach of contract ... The time at which damages are assessed must be so fixed as to give effect to the governing principle.[134]
the principles governing the assessment of damages do not permit the application of rigid rules based on categories of actions. Instead, the injured party's intentions and the surrounding circumstances must be considered in light of the underlying principles in order to do justice between the parties. Where mitigation is possible, an early date for assessment may be appropriate. Where mitigation concerns are not relevant and the circumstances indicate that the injured party would have maintained possession of the goods had the accident not occurred, the date of judgment is the most appropriate date for assessment.[135]
401 At [360] above, I concluded that Riordans' breaches of their retainer and tort duty did not cause any loss to Simply.
402 As stated at [397] above, a party in breach of contract is liable to pay at least nominal damages.
403 Accordingly, Simply will be awarded nominal damages of $1 for Riordans' breach of their retainer.
Assessment of damages on assumption award of nominal damages is incorrect
404 In case my conclusion that Simply did not suffer any loss is wrong, I will provide brief reasons for my conclusion that, if Simply did suffer loss, its loss amounted to $575,070.
405 The amount of $575,070 is calculated as follows:
(a) $925,000, representing the current value of the Apartment; less
(b) $210,000, representing the purchase price of the Apartment under the Option clause of the Agreement; less
(c) $130,000, representing borrowing costs on the amount of $210,000 for the period from 9 July 2001 until the date of judgment; less
408 Patricia Maher gave evidence that she wanted to recover ownership of the Apartment because it was her home, and that she wanted to live there for the rest of her life. I have inferred from this evidence that, if Simply had recovered ownership of the Apartment, the Apartment would have been retained at least for the rest of Patricia Maher's life.
409 In accordance with the principles set out at [400] above, in assessing damages, the most appropriate value of the Apartment is its value at the date of judgment.
410 Riordans tendered, without objection, expert witness reports prepared by Mr King. Those reports express the following opinions:
(a) the value of the Apartment on 11 November 2006 was $650,000;
(b) the value of the Apartment on 27 October 2008 was $790,000;
(c) the value of the Apartment on 5 July 2009 was $830,000; and
(d) the value of the Apartment on 10 March 2010 was $925,000.
411 The parties agreed that I can accept the accuracy of the above evidence for the purposes of this proceeding. The parties also agreed that the current value of the Apartment is the same as its value as at 10 March 2010, namely, $925,000.
Purchase price of the Apartment upon exercise of the Option
412 The amount of $210,000 is contained in cl 1.2 of the Agreement, which is set out at [28] above.
Borrowing costs or allowance for rent-free occupation of the Apartment
414 Mr Booth submitted that an amount of $130,000 was a reasonable estimate for the interest that Simply would have paid between 9 July 2001 and the date of judgment on the amount of $210,000. He based this calculation on average rates of interest during that period. Mr Bailey did not dispute Mr Booth's estimate.
415 In the alternative, Mr Booth submitted that an allowance should be made for the value of Patricia Maher's rent-free occupation of the Apartment since 9 July 2001. He tendered an expert witness report prepared by Mr Vella, which listed the rent being paid by tenants of other units in the Apartment's building at 50 Bourke Street, Melbourne. The parties agreed that, on the basis of Mr Vella's report, I can make the following findings about the market rent of the Apartment:
(a) the market rent for the Apartment in the period from 2001 until 2003 was $1,200 to $1,600 per month; and
(b) the market rent for the Apartment in the period from 2003 until the date of judgment was $1,600 to $2,255 per month.
416 In the light of the imprecision in these rental figures, I am of the opinion that it is more appropriate to make an allowance for borrowing costs.
417 The parties agreed that Simply would have incurred conveyancing costs of $9,930 if it had exercised the Option on 9 July 2001. The costs would have comprised $8,260 for stamp duty, $725 for Land Titles Office registration fees and $945 for reasonable legal costs and disbursements.
Items that I have not taken into account in assessing damages
(a) during the retainer, the Maher Group paid to Riordans the net amount of $154,522.49;
(b) the Maher Group paid to Coadys the amount of $139,206.66 in relation to Mr Brott's appeal and the Maher Group's cross-appeal, and in obtaining the file from Riordans;
(c) the Maher Group paid a net amount of $107,760 to the Millennium Group under the deed of settlement dated 11 November 2004;[136] and
(d) Millennium paid to the Maher Group the amount of $71,113.61 representing costs that were recovered from Mr Brott.
419 In my opinion, the amounts referred to at [418] above (which total $330,375.54) should not be taken into account in assessing damages because there is no causal relationship between them and Riordans' breaches of their retainer and tort duty. This is because the evidence overwhelmingly indicates that, if Simply had exercised the Option, it would also have instituted the prior proceeding. The events that occurred following the commencement of the prior proceeding - including the incurring of various costs - were caused by the commencement of that proceeding and by the decisions that the Maher Group made in relation to that proceeding, and not by any antecedent breach of duty by Riordans.
420 Riordans will be ordered to pay to Simply nominal damages of $1 for breach of contract.
421 I will hear from the parties on the precise form of the orders to be made by the Court and on the question of costs.
Agreement dated 16 March 1999 between Simply, Millennium and other parties.
The claim to which reference is made at [106].
The offer to which reference is made at [113].
The notice of the making of a new Whittlesea Planning Scheme that was published in the Victoria Government Gazette on 8 July 1999. See [41].
The offer to which reference is made at [109].
The Mahers and their corporate entities, including Simply.
The land situated at 187 Settlement Road, Thomastown, upon which a trash and treasure market known as the Bundoora All-Weather Market was conducted.
The option to re-purchase the Apartment that is contained in cl 7 of the Agreement, the terms of which are set out at [27].
Maher v Millennium Markets Pty Ltd [2004] VSC 174 (20 May 2004).
The Mahers, Simply, Eternity, BAWM and Pamah Pty Ltd.
Supreme Court proceeding number 8883 of 2001 commenced on 21 December 2001 by the plaintiffs in the prior proceeding against the defendants in the prior proceeding.
The fee of $150,000 to which reference is made at [36].
Use of the Market Land for factory retailing outlets, a fruit and produce market, and a trash and treasure market.
The proviso in cl 3 of the Agreement about the Proposed Uses.
Letter dated 23 March 2001 from Mr Curtain to Patricia Maher. See [73].
The offer to which reference is made at [116].
The properties listed at [10].
The offer to which reference is made at [118].
The offer to which reference is made at [119].
The land situated at 14 Warranwood Place, Bundoora.
[1] A third contentious issue was the Mahers' reluctance to sell the Warranwood Land, which was used by Dominus Maher as his home. This issue was resolved by the inclusion of a provision in the Agreement which entitled BAWM to request that the contract of sale of the Warranwood Land be cancelled unconditionally at Settlement.
[2] Victoria, Victoria Government Gazette, No G 27, 8 July 1999, 1607 ('Gazette Notice').
[7] On 8 November 2010, I ruled that evidence about the making of offers of settlement at the mediation and after the mediation was admissible pursuant to s 131(2)(g) of the Evidence Act 2008 (Vic). See Simply Irresistible Pty Ltd v Couper [2010] VSC 505 (8 November 2010).
[8] Maher v Millennium Markets Pty Ltd [2004] VSC 174 (20 May 2004) ('Maher').
[9] Maher [2004] VSC 174 (20 May 2004) [162].
[10] The Riordans partnership was reconstituted and changed its name on 1 July 2004. These changes do not have any bearing on the issues in this proceeding.
[11] Brott v Maher [2004] VSCA 186 (11 October 2004) [7], [10].
[12] Brott v Maher [No 2] [2004] VSCA 220 (8 December 2004).
[14] Heydon v NRMA Ltd [2000] NSWCA 374; (2000) 51 NSWLR 1, 53-4 [146], [147].
[15] Midland Bank Trust Co Ltd v Hett, Stubbs & Kemp [1979] Ch 384, 403; Hill v Van Erp (1997) 188 CLR 159, 167.
[16] Heydon v NRMA Ltd [2000] NSWCA 374; (2000) 51 NSWLR 1, 53 [146].
[17] Hawkins v Clayton (1988) 164 CLR 539, 579.
[18] Boland v Yates Property Corporation Pty Ltd [1999] HCA 64; (1999) 167 ALR 575, 658 [307].
[19] Heydon v NRMA Ltd [2000] NSWCA 374; (2000) 51 NSWLR 1, 53 [145], [146].
[20] Stipanov v Mier [2008] VSCA 116 (25 June 2008) [7]-[16].
[21] Yager v Fishman & Co [1944] 1 All ER 552, 554, 556; Scottsdale Homes Pty Ltd v Gemkip Pty Ltd [2008] QSC 326 (3 December 2008) [90]-[104].
[22] Heydon v NRMA Ltd [2000] NSWCA 374; (2000) 51 NSWLR 1, 118 [363].
[23] Hawkins v Clayton (1988) 164 CLR 539, 578-9; Waimond Pty Ltd v Byrne (1989) 18 NSWLR 642, 652; Montague Mining Pty Ltd v Gore [1998] FCA 1334 (23 October 1998); Heydon v NRMA Ltd [2000] NSWCA 374; (2000) 51 NSWLR 1, 51 [139]; May v Mijatovic [2002] WASC 151; (2002) 26 WAR 95, 126 [148].
[24] MacIndoe v Parbery [1994] Aust Tort Reports 81-290, 61,534.
[25] Heydon v NRMA Ltd [2000] NSWCA 374; (2000) 51 NSWLR 1, 55 [152].
[26] Yates Property Corporation Pty Ltd v Boland [1998] FCA 8; (1998) 85 FCR 84, 111; revd (on other grounds) [1999] HCA 64; (1999) 167 ALR 575.
[27] Hawkins v Clayton (1988) 164 CLR 539, 574.
[28] Heydon v NRMA Ltd [2000] NSWCA 374; (2000) 51 NSWLR 1, 53 [146].
[32] Although the retainer letter was addressed to Patricia Maher, it was common ground that Riordans' clients were the Maher Group, including Simply.
[35] In the prior proceeding, after repeatedly saying that the Mahers consistently told him that they did not want to exercise the Option, Mr Curtain allowed for the possibility that they may have exercised the Option if he had said 'Well you should exercise the option'.
[36] Maher [2004] VSC 174 (20 May 2004) [258].
[37] Maher [2004] VSC 174 (20 May 2004) [259], [260].
[44] In relation to rectification, see The Club Cape Schanck Resort Co Ltd v Cape Country Club Pty Ltd [2001] VSCA 2; (2001) 3 VR 526, 537-40 [34]-[39]; Franklins Pty Ltd v Metcash Trading Ltd [2009] NSWCA 407; (2009) 264 ALR 15, 117-21 [443]-[461].
[52] Svanosio v McNamara [1956] HCA 55; (1956) 96 CLR 186, 206-7.
[53] Pallos v Munro (1970) 72 SR (NSW) 507, 510-12; Lawrence v Cassel [1930] 2 KB 83, 89.
[54] Palmer v Johnson (1884) 13 QBD 351.
[55] Pallos v Munro (1970) 72 SR (NSW) 507, 510-12.
[56] Lawrence v Cassel [1930] 2 KB 83, 89; Dean v Gibson [1958] VicRp 90; [1958] VR 563, 572-3.
[58] Quadling v Robinson [1976] HCA 31; (1976) 137 CLR 192, 200-1.
[85] See, in particular, the discussion of Mr Curtain's evidence under the headings 'What was the scope of Riordans' retainer?' and 'Riordans' advice about the Option and the effect of the caveat'.
[95] [2008] VSCA 116 (25 June 2008).
[96] Stipanov v Mier [2008] VSCA 116 (25 June 2008) [10].
[111] As appears from [384] below, I have concluded that Simply's rejection of the First Joint Mediation Offer did not constitute a failure to mitigate any loss it allegedly suffered as a result of Riordans' breaches of their retainer and tort duty. That is a different issue, however, from the issue of whether any inferences about Simply's state of mind at an earlier time can be drawn from the rejection of the offer.
[112] Patricia and Justice Maher gave evidence that, in July 2001, the Apartment was worth $650,000.
[115] [1912] AC 678, 689.
[116] See, eg, Richardson v Schultz (1980) 25 SASR 1, 19-20.
[126] Richardson v Schultz (1980) 25 SASR 1, 19-20.
[127] Commonwealth v Amann Aviation Pty Ltd [1991] HCA 54; (1991) 174 CLR 64, 80, 98, 116-17, 134, 148, 161; Gates v City Mutual Life Assurance Society Ltd (1986) 160 CLR 1, 11-12; Johnson v Perez [1988] HCA 64; (1988) 166 CLR 351, 371, 386.
[128] Gates v City Mutual Life Assurance Society Ltd (1986) 160 CLR 1, 12; Johnson v Perez [1988] HCA 64; (1988) 166 CLR 351, 355, 371, 386.
[129] See, eg, Luna Park (NSW) Ltd v Tramways Advertising Pty Ltd [1938] HCA 66; (1938) 61 CLR 286, 305, 311-12; Huppert v Stock Options of Australia Pty Ltd [1965] HCA 30; (1965) 112 CLR 414, 424, 431; Chappel v Hart (1998) 195 CLR 232, 270 [93], 290 [149].
[130] Johnson v Perez [1988] HCA 64; (1988) 166 CLR 351, 355-6, 367, 370, 380; Wenham v Ella [1972] HCA 43; (1972) 127 CLR 454, 473. Subject to one exception that is not relevant to this case, where these dates are different, it is more accurate to refer to the date when the cause of action accrued: see M J Tilbury, Civil Remedies (Butterworths, 1990) vol 1, 166 [3224].
[131] Johnson v Perez [1988] HCA 64; (1988) 166 CLR 351, 356.
[132] Johnson v Perez [1988] HCA 64; (1988) 166 CLR 351, 355-6, 367, 371, 380.
[134] [1988] HCA 64; (1988) 166 CLR 351, 371.
[135] Johnson v Perez [1988] HCA 64; (1988) 166 CLR 351, 360.
Simply Irresistible Pty Ltd
Couper & Ors [2010] VSC 601
(2000) 51 NSWLR 1
(1997) 188 CLR 159
(1988) 164 CLR 539
(1999) 167 ALR 575
(1989) 18 NSWLR 642
(2002) 26 WAR 95
(1998) 85 FCR 84
(1999) 198 CLR 180
(2004) 216 CLR 515
(2001) 3 VR 526
(2009) 264 ALR 15
(1956) 96 CLR 186
(1976) 137 CLR 192
(1980) 25 SASR 1
(1991) 174 CLR 64
(1986) 160 CLR 1
(1988) 166 CLR 351
(1938) 61 CLR 286
(1965) 112 CLR 414
(1998) 195 CLR 232
(1972) 127 CLR 454