Polon v Dorian

PART A - INTRODUCTION 1The plaintiff, Hazel Beverley Polon, claims damages against the defendants with respect to losses she suffered after investing $1,190,000 in a scheme styled as a bridging finance scheme ("the Scheme"). The Scheme was originally operated by a company, Skyder Investments Pty Ltd ("Skyder") and subsequently by another company, Silkwater Group Pty Ltd ("Silkwater"). 2The principals of Skyder and Silkwater, Mr Sam Hraiki and Mr Darryl Tombleson, have been declared bankrupt. Skyder and Silkwater are in liquidation. 3Mr Dorian, the first defendant, who introduced the plaintiff to the operators of the Scheme, has also been declared bankrupt. He took no part in the proceedings. 4The plaintiff alleges that the second defendant, Ms Renae Fowler-Hay, solicitor, made a number of representations concerning the Scheme. These representations, on the plaintiff's case, played a material part in her decision to invest in it. The second defendant was referred to throughout these proceedings as "Ms Fowler", notwithstanding that she is otherwise known by her married name, her marriage having taken place subsequent to the events with which these proceedings are concerned. 5At all material times Ms Fowler was an employee of the fourth defendant, Tiernan & Associates Lawyers Pty Ltd ("Tiernan & Associates"), an incorporated legal practice conducted by Mr Phillip Tiernan. The plaintiff alleges that the fourth defendant is vicariously liable for Ms Fowler's conduct. The second and fourth defendants will subsequently be referred to as "the defendants". 6The proceedings were originally brought against Mr Tiernan as the named third defendant. However, when it was established that the practice was an incorporated practice, they were discontinued against him.

Overview 7The plaintiff alleges that Ms Fowler made representations centred upon the safety and security of the Scheme as an investment proposition. 8The Scheme, in essence, involved the provision of money by members of the public, "investors", who would place monies with the proponents of the Scheme, Skyder/Silkwater, which were then used by the proponents to operate a business in short-term bridging finance. 9A potential investor in the Scheme, in order to assess any risk of such an investment, would require information on the following: (a) The safeguards that were available for protecting or for securing investors' loan monies provided to the proponents under a "Loan Agreement". (b) The security available in respect of the monies then on-loaned by the Scheme proponents to third parties by way of short-term bridging finance. 10On the plaintiff's evidence, the representations made to her by Ms Fowler were related to both the security of the Scheme itself and to the security of the transactions between Skyder/Silkwater and third-party borrowers. 11The representations allegedly made by Ms Fowler to the plaintiff (and others) included, in particular, representations as to the existence and operation of a trust structure said to have been established for investors' funds so that: (a) Investors' funds would be held in a separate trust account from the "workings" of Skyder and Silkwater; (b) The loan monies of individual investors would be held in the trust account and be separated from the monies of other investors/lenders. 12Additionally, the plaintiff's case relies upon representations allegedly made by the Scheme's proponents and by Ms Fowler that monies lent by way of bridging finance would be protected by mortgage security (usually second mortgages) over property offered as security by the third party borrowers, thereby, in effect, providing another tier or level of protection. 13The plaintiff further alleges that representations were made by Ms Fowler to the plaintiff, and to other potential investors, that their interests would be protected by caveats registering the interest of the relevant investor on the title of the property offered as security for the short-term finance. 14Additional representations relied upon by the plaintiff are discussed below. 15The "Loan Agreement" as drafted by Ms Fowler referred to the individual investor as "the Lender" and to Skyder/Silkwater as "the Borrower". It contained recitals in the following terms: "A The Borrower is in the business of providing bridging finance to Third Parties; B The Lender seeks to invest a sum of [amount specified] with the Borrower to allow the Borrower to conduct its Business; C At the request of the Borrower, the Lender has agreed to loan and the Borrower has agreed to accept the Lender's [amount specified] subject to the terms and provisions herein." 16Clause 1 of the Investor Loan Agreement set out relevant definitions. They included: "'Security' means any mortgage, pledge, lien, hypothecation, security interest or other encumbrance or charge now or in the future given by the borrower or any guarantor in favour of the lender to secure the obligations of the borrower under this agreement and includes any guarantee executed by any guarantor. 'Third Party Loan' means a contract for the provision of bridging finance entered into between the Borrower and a third party." 17The plaintiff's case in negligence raises issues as to (i) alleged representations concerning the Scheme, including in particular, as to the safeguards said to be in place to protect investors' funds; (ii) the content and nature of the alleged representations; (iii) the duty of Ms Fowler as a representor to exercise reasonable care; (iv) the content of any duty of care owed by her; (v) reliance; (vi) breach, and (vii) causation. 18Whilst the plaintiff, together with her former husband, had been investors in residential real estate, there is no evidence to suggest that she was otherwise an experienced investor in the area of money-lending (including multi-tiered lending schemes) or other forms of investment involving investment experience or prowess. 19The plaintiff's case, essentially, was that Ms Fowler made the relevant representations supposedly in her capacity as a legal practitioner, in particular, one with a working knowledge of the Scheme.

The Credibility or Demeanour of Witnesses 20Central to the dispute in the present case is the conflicting testimony as to what was said during a meeting with potential investors held on 19 September 2005, and otherwise between the plaintiff and Ms Fowler. 21A period of several years passed between the relevant events and when the affidavits in these proceedings were sworn. Given that delay, and the importance, in particular, of the conversation that took place on 19 September 2005, the onus is on the plaintiff to establish with a degree of precision the words spoken by Ms Fowler constituting the alleged representations: Watson v Foxman (1995) 49 NSWLR 315 at 318 per McLelland CJ in Eq. 22In resolving the conflicting testimony, it has been necessary to carefully consider the reliability of the evidence given by the respective witnesses in terms of both the evidence itself and the manner in which it was given. In this respect, it has been necessary to bear in mind inherent risks involved in making findings of fact based on the demeanour of witnesses, that is, of the dangers of too readily drawing conclusions about truthfulness and reliability based solely or mainly from appearances of witnesses: see Fox v Percy [2003] HCA 22; (2003) 214 CLR 118 at 128-9 [30]-[31]; Goodrich Aerospace Pty Ltd v Arsic [2006] NSWCA 187; (2006) 66 NSWLR 186 at 189-191 [16]-[27]. 23In Fox v Percy, Gleeson CJ, Gummow and Kirby JJ said (at 128-9): "[30] It is true, as McHugh J has pointed out, that for a very long time judges in appellate courts have given as a reason for appellate deference to the decision of a trial judge, the assessment of the appearance of witnesses as they give their testimony that is possible at trial and normally impossible in an appellate court. However, it is equally true that, for almost as long, other judges have cautioned against the dangers of too readily drawing conclusions about truthfulness and reliability solely or mainly from the appearance of witnesses ... [31] ... Considerations such as these have encouraged judges, both at trial and on appeal, to limit their reliance on the appearances of witnesses and to reason to their conclusions, as far as possible, on the basis of contemporary materials, objectively established facts and the apparent logic of events. This does not eliminate the established principles about witness credibility; but it tends to reduce the occasions where those principles are seen as critical." 24Accordingly, whilst impressions as to demeanour may assist, they are to be weighed in light of the evidence in the proceedings, in particular, the evidence concerning undisputed and incontrovertible facts: Goodrich Aerospace Pty Ltd v Arsic, supra, at 191 [27] per Ipp JA. 25The principles and approach considered in the above cases accordingly must be kept in mind in determining the factual issues.

Summary of Material Events 26The central events leading up to the plaintiff's investment in the Scheme occurred between August 2005 and March 2006. They include the following: (a) A meeting held in early September 2005 in the boardroom at Skyder's offices ("the Skyder boardroom meeting"). (b) A public meeting of the Chat Club at Seven Hills RSL Club on 19 September 2005 ("the Chat Club meeting"). (c) A number of conversations between the plaintiff and Ms Fowler in relation to the Scheme subsequent to the Chat Club meeting. 27The plaintiff alleges that at the Skyder boardroom meeting:

• The second defendant, Ms Fowler, was introduced as being an expert in bridging finance contracts;
• A representative of Skyder stated in her presence that Ms Fowler would manage the monies invested in the Scheme;
• A statement was also made by the Skyder representative in her presence that investors' funds would be deposited in and controlled by way of a trust account; and
• The operation of the Scheme was explained by Mr Hraiki to the plaintiff in the meeting in the presence of Ms Fowler. 28Ms Fowler disputed each of the above matters. As neither she nor the plaintiff made any contemporaneous notes or any other form of record of the Chat Club meeting, it has been necessary to closely consider their evidence in light of other matters established in the proceedings. 29Subsequent to the Skyder boardroom meeting, a promotional meeting was organised by Messrs Dorian, Tombleson and Hraiki at the Seven Hills RSL Club on 19 September 2005, that is, at the Chat Club meeting. The plaintiff's evidence is that Ms Fowler was present for the greater part of that meeting. 30Two speakers, Mr Tombleson and Ms Fowler, addressed members of the public who were in attendance. The plaintiff's evidence was that a number representations were made by Mr Tombleson concerning the operation of the Scheme and its claimed benefits and safeguards. 31The plaintiff's evidence was that Ms Fowler made statements to the effect, that: (a) Members of the Scheme would be registered as second mortgagees and their names would be placed on title deeds of properties offered as security by the third party borrowers, together with caveats on the titles of the properties. (b) She would prepare and retain the documents in respect of investors' loans to the Scheme and oversee the protections in place for investors. (c) She would manage the funds in a trust. (d) She would provide legal assistance as required to the Chat Club members. 32The plaintiff said that Mr Tombleson made statements at the meeting to the effect that: (a) Ms Fowler would be involved with and be responsible for investments by drawing up the investor loan contracts. (b) The funds would be secured against properties with low LVRs. 33The plaintiff's evidence was additionally:
• That statements were allegedly made by Ms Fowler and Mr Tombleson to the effect that there was no or little risk to investors.
• That statements were allegedly made by Ms Fowler and Mr Tombleson to the effect that the "loan deals" would be initially sourced by Mr Tombleson and Mr Hraiki and that registered valuers with current indemnity insurance would be required to provide accurate valuations. 34The plaintiff said in evidence that at the meeting Mr Dorian, in Ms Fowler's presence, said that Mr Tombleson had agreed to cover the legal and administrative costs of paying for Ms Fowler's role, including drawing up contracts and registering the second mortgages and caveats for Chat Club members. 35The plaintiff said that during the meeting she asked Ms Fowler a question. She said Ms Fowler responded by stating:
• That investors' funds would be held in a nominated trust account that she would personally manage.
• That the funds would be quarantined from the workings of Skyder so that they would be safe if the company failed.
• That the funds would be "pigeon-holed" from other investors' funds so that they could only be lent out on specific projects about which they would be fully informed. 36Ms Fowler denied that she participated in any way in Mr Tombleson's PowerPoint presentation at the meeting. She also denied that she made the statements as alleged by the plaintiff. Ms Fowler's evidence was that the only statements she made are those set out in paragraph [29] of her affidavit sworn 26 April 2012. 37As with the Skyder boardroom meeting, no contemporaneous notes were made of the Chat Club meeting on 19 September 2005. 38The plaintiff gave evidence that a couple of weeks after the Chat Club meeting she rang Ms Fowler on a number of occasions for the purpose of discussing the Scheme. She said that these calls related to:
• Skyder;
• Ms Fowler's role in relation to Skyder and the Scheme generally; and
• The period over which she had known Messrs Tombleson and Hraiki. 39The plaintiff said that mostly when she rang Ms Fowler after the Chat Club meeting she would always take her calls. If, however, she was unavailable, Ms Fowler would always return her calls promptly. During certain of those calls the plaintiff said Ms Fowler reiterated comments she had made at the Chat Club meeting, saying words to the effect: "Your investment will always be safe and managed by me." (Plaintiff's affidavit sworn 8 November 2011 at [81]) 40It was put to the plaintiff in cross-examination that Ms Fowler did not say those words. She insisted that she had. 41The plaintiff said that she rang Ms Fowler at times when she had felt anxious or unsure about any aspect of the Scheme. Her evidence was that she asked Ms Fowler questions to the effect: "Is it 100% legal? ..."; "Is it a commonly used strategy? ..."; "Had she litigated against anyone who had defaulted? ..."; "Are Daryl and Stan Hraiki trustworthy people? ..."; and "Would the caveats and second mortgages provide me sufficient security?" (at [82]) 42The plaintiff said that she could not recall Ms Fowler's specific responses to such questions. She said that at no stage did she receive an answer from Ms Fowler that made her consider that there were any concerns with the Scheme. 43She said that on one occasion when she rang Ms Fowler she asked her whether, in the event any of "the deals" associated with the Scheme experienced difficulties, she would commence litigation against the defaulting party. She said Ms Fowler replied to the effect: "In the very unlikely event that this would happen, I will immediately litigate against the defaulting party" (at [85]) 44The plaintiff gave evidence of her belief that it was her clear impression that Ms Fowler was acting in the interests and/or for the benefit of the investors in the Scheme: at [86]. 45In paragraph [87] of her affidavit the plaintiff said: "Further, and at about this time and prior to my investing any money in Skyder, Mr Dorian said to me words to the effect that 'If you are concerned about Skyder, just ask to look at their books and records and that will satisfy you that it is financially secure'. I did ask a few time for this information from Mr Tombleson but it was never provided. On discussion of the same with Mr Tombleson, he always said that he was in the process of making them 'fully available' (but it never happened). I also asked Ms Fowler-Hay words to the effect of: 'I have asked Darryl if I can see Skyder's financial records, do you know when they are going to be available?' She responded in words to the effect of: 'If you have asked Darryl, I am sure he will given them to you as soon as he can." 46In response to paragraphs [81] to [86] of the plaintiff's affidavit, Ms Fowler in her affidavit sworn 26 April 2012 said that, to her recollection, the plaintiff did not after the Chat Club meeting ask her in any telephone call about the operation of the Scheme. 47The only calls that Ms Fowler recalled from the plaintiff were concerned with loan documentation. She said she found it to be "unusual" that investors called her about the Scheme. She said that when that occurred she would always suggest that they speak to their lawyers, Mr Hraiki or Mr Tombleson: at [37]. 48Ms Fowler said that she recalled the plaintiff ringing in late October 2005 and telling her that she had recently invested $80,000 with Skyder in the Scheme but that she had not received any written loan contract. The plaintiff asked her if she could provide the contract. 49Ms Fowler said she prepared an agreement which had the plaintiff's details in it as well as details of her investment. She said that she forwarded it to the plaintiff with a covering letter (Tab 1 to Ms Fowler's affidavit was said to be a copy of the letter and Tab 2 a copy of the agreement).

Challenge to Ms Fowler's Evidence Regarding Advice to Potential Investors 50Ms Fowler's evidence that she had never said anything to prospective investors in the years 2005 and 2006 regarding the way in which the Scheme operated, or the level of security that potential investors would enjoy, was strongly challenged in cross-examination: T 174:35-40; T 175:20-25; T 175:48-T 176:1-2. It was put to Ms Fowler: "Q. And that is similar to what you said in paragraph 37, but I understand that in that passage you are speaking generally about the practice that you adopted while you were working in 2005 and 2006 on the bridging finance scheme, is that correct? A. That's correct. Q And you are seeking to convey by that, that you had an invariable practice of not answering the investors' questions about their investments, but of always referring them on to Mr Tombleson and Mr Hraiki? A. And their lawyers. Q. And their lawyers? And this was the case, whether they were people who were considering investing or people who had already invested, is that correct? A. That's correct. Q. And so that evidence that you wish to give this morning is that it was not your practice, and could not have been the case, that you gave advice to prospective borrowers about the way the scheme would operate and the level of security available to them, is that your evidence? A. That's not entirely true, because I did talk about what is a mortgage and what is a caveat, what is a trust account at the seminar. So I talked about the legalities, so." (T 175:21-42) 51It was then put to Ms Fowler that this evidence by her (to the effect that she had not given advice to potential investors) was incorrect: "Q. And I want to suggest to you that that is false. I invite you to reconsider that evidence. Are you prepared to, this morning, continue to persist with that expression about what you did and the answer you have just given? A. No, I maintain that I did not give financial advice. Q. I didn't ask you about financial advice. I asked you whether you gave advice to potential investors about the operation of the scheme and the security that was available to potential investors in regard to the scheme. So, just considering carefully the question I have put to you -- A. Mm-hmm. Q. -- do you maintain that you did not give any such advice, other than that that you have referred to in your affidavit? A. That's correct." (T 176:8-21) 52Ms Fowler, a little later in cross-examination, was asked about information that she had sent to a Mr Ayoub about the Scheme: "Q. And so, because you have had a conversation with Mr Ayoub you have decided to send him some details about the scheme, is that correct? A. I've probably, I think, looking at this I think what's happened, I've gone back to Sam and said: 'Sam Ultra Management Sam wants the particulars'. Q. Yes? A. And Sam, Hraiki Sam has instructed me to give him this document or this email. Q. I asked you at the beginning of this cross-examination whether or not it was true that you had never described to prospective investors the nature of the bridging scheme and the security that was in place and you told me confidently that you had not done that. That you had not given those descriptions to investors. Do you agree now that that answer was false? A. Well, looking at this, it appears that I have." (T 212:12-27) 53Ms Fowler was also cross-examined on information she provided to a Mr McCarthy, solicitor, who had sought information about the Scheme on behalf of his clients, Mr and Mrs Croker: "Q. That is a document on Tiernan & Associates letterhead dated 24 September 2005? A. Sure. Q. Addressed to Mr McCarthy, do you see that? A. Yes. (T 219:24-29) ... Q. You then see you said this. 'As discussed please find below a synopsis of our clients' use and protections afforded to your client on monies they propose to advance'. You see that? A. Yes, I do. Q. Then you will see that in the body of the letter you then set out a series of statements about the way in which the bridging finance scheme was to work. That is correct, isn't it? A. Yes, it is. (T 219:41-50) ... Q. And you will see under the second numbered paragraph on the second page it says: 'Therefore at all times you will know where your money is and that it is not being used for any other purpose than that for the transactions which you have been a co signatory to'. (T 220:37-42) ... Q. In fact, do you agree now that what had happened was that Mr McCarthy had contacted you on behalf of his clients because he did want to know how the scheme operated and that you had told him various things and then you had followed it up with the written assurances and record that you have put in that letter? A. Yeah. It looks like he wanted more detail." (T 221:7-13) 54In relation to the information supplied to Mr McCarthy it was then put to Ms Fowler: "Q. In any event, you understood this was the position though, that Mr McCarthy had concerns on behalf of his client? A. Yes. Q. And it was to you he had turned for reassurance about the investment that they were intending to make; that's correct, isn't it? A. Yes. Q. That's what you understood? A. Yes. Q. And rather than refer him to Mr Hraiki or Mr Tombleson -- A. No, he also spoke to Mr Hraiki and Mr Tombleson at length. In fact he had numerous meetings with them. Q. And then in addition to those meetings, he spoke with you and you then provided him with this letter of reassurance, I would suggest; do you agree? A. I know I actually met with him afterwards, but, yes I definitely sent - well, it appears that I have sent this letter, yes. Q. And in doing so you made substantially the same representations that you made to Mr Ayoub, do you agree? A. Yes." (T 223:5-27) 55The Australian Securities & Investments Commission "(ASIC") conducted investigations into Skyder and Silkwater. In the submissions for the defendants it was contended that the plaintiff's recollections as to Ms Fowler's involvement were significantly expanded in her affidavit beyond the matters appearing in her ASIC statement, which was made in 2008: Defendants' Written Submissions at [35]. In response, Dr Birch for the plaintiff submitted that it was necessary to take into account the context in which the ASIC statement was made. The focus of that investigation differed from that of her lawyers' questions concerning the involvement of Ms Fowler: Revised Plaintiff's Outline of Argument at 20. In any event, it was submitted that an examination of the plaintiff's handwritten statement to her solicitors, created in 2007, and the ASIC statement, corroborated her evidence on the representations she alleges in these proceedings. 56It was also contended that the plaintiff's evidence was supported in material respects by the evidence of corroborative witnesses called in her case. The submission was that they gave evidence of "substantially similar" representations having been made by Ms Fowler at the Chat Club meeting. Dr Birch submitted that Ms Fowler's written communications with Mr Ayoub and Mr McCarthy contained similar representations to those detailed by the plaintiff. In this respect reliance was placed upon what Dr Birch contended amounted to "advice" set out in Ms Fowler's email to Mr Ayoub on 3 August 2005 and, additionally, in her letter dated 24 September 2005 to Mr McCarthy.

Pleaded Causes of Action 57In the Amended Statement of Claim filed on 16 September 2011, the following causes of action are pleaded: (i) Negligence; (ii) Breach of implied retainer/breach of fiduciary duty; (iii) Alleged misleading or deceptive conduct contrary to the provisions of the Fair Trading Act 1987; (iv) Contravention of the Corporations Act 2001 (Cth), in particular ss 911A or 911B of that Act.

(a) Claim in Negligence 58In relation to the claim in negligence, the following issues arise: (i) The issue of the alleged "representations" by Ms Fowler; (ii) The issue of reliance - whether the plaintiff relied upon any statements and information made or supplied by Ms Fowler; (iii) Ms Fowler's alleged conduct in her dealings with the plaintiff concerning the Scheme; (iv) Whether Ms Fowler was aware that the plaintiff was relying upon her to protect her interests; (v) Whether, in her dealings with the plaintiff, Ms Fowler ought to have realised that she was being trusted to warn or otherwise advise the plaintiff as to the basis upon which her alleged representations were made before the plaintiff commenced investing in the Scheme; (vi) Issues of duty and the scope of any duty of care owed by Ms Fowler to the plaintiff; (vii) Whether Ms Fowler owed a duty of care to the plaintiff in circumstances in which she was required to act on and discharge the instructions given on behalf of Skyder and Silkwater; (viii) Whether, on the evidence, Ms Fowler breached a duty of care owed to the plaintiff; and (ix) Whether the plaintiff's loss was caused by a breach of duty by Ms Fowler.

(b) Retainer / Breach of Fiduciary Duty 59It is the plaintiff's claim that, by implication, she retained Ms Fowler to advise her in relation to the Scheme and to protect her interests in relation to it: Amended Statement Claim at [63]. The plaintiff relies upon a number of pleaded circumstances from which the implication is said to arise. 60The plaintiff's case is that an implied retainer existed between her and Ms Fowler from which a fiduciary duty arose. 61The claim against Ms Fowler for breach of fiduciary duty is pleaded in the Amended Statement Claim at paragraphs [79]-[82]. The plaintiff alleges that in advising her to invest in the Scheme, in the circumstances pleaded, Ms Fowler assumed a fiduciary obligation to her in the giving of that advice. 62The factual circumstances relied upon in support of this are pleaded in paragraph [62] of the Amended Statement of Claim. These include that Ms Fowler was aware that the plaintiff had not received independent legal advice and that the plaintiff had reposed trust and confidence in her as adviser. 63The plaintiff pleads her cause of action for fiduciary breach, inter alia, upon the basis that Ms Fowler was obliged to avoid any conflict between her interests and the interests of parties related to her and not to subjugate the plaintiff's interests to those of third parties with whom she had a professional relationship. 64The plaintiff contended that Ms Fowler breached her duty of care by advising her to invest in the Scheme notwithstanding a conflict of interest in that she had been retained by Skyder and Silkwater, that the advice she had given to the plaintiff was without proper regard to her interests in circumstances where such advice advanced the interests of Skyder and Silkwater. 65In these circumstances the plaintiff alleges that Ms Fowler is liable to pay equitable compensation to her in respect of the former's alleged breach of fiduciary duty in an amount representing the totality of the loss suffered. 66It was further contended on behalf of the plaintiff that the claim of breach of fiduciary duty is not a claim arising from and based on a failure to take reasonable care and that accordingly the apportioning provisions of the Part 4 of the Civil Liability Act 2002 do not apply to that claim. 67The case for the defendants is that, even on the plaintiff's version of events, nothing was said by Ms Fowler which could give rise to a reasonable apprehension that she, as solicitor, would be acting in the plaintiff's interests, or that could have given rise to an understanding in the plaintiff that Ms Fowler had undertaken to act as her legal representative. 68It was submitted that, on Ms Fowler's version of events, nothing was said to suggest that she would be, or might be, acting for potential investors (including the plaintiff) at the relevant time: Defendants' Written Submissions at [7].

(c) Claim Based on the Fair Trading Act 1987 69The claim under s 42 of the Act, as formulated in plaintiff's final submissions, was argued upon the basis that Ms Fowler's representations constituted conduct engaged in by her in trade or commerce, and that the representations were misleading or deceptive or likely to mislead or deceive. 70It was contended for the plaintiff that Ms Fowler's conduct occurred in the course of professional activity as a solicitor thereby falling within the extended definition of conduct in trade or commerce for the purposes of s 42(1) of the Act: Kowalczuk v Accom Finance Pty Ltd [2008] NSWCA 343; (2008) 77 NSWLR 205 at 279. 71Liability under s 42 additionally depends upon the provision of financial investment advice to the plaintiff and whether, in providing such advice, Ms Fowler acted unconscionably in all the circumstances in the meaning of s 43 of the Fair Trading Act. If so, the issue arises as to whether loss and damage was suffered by the plaintiff by virtue of the alleged contraventions of the Act. 72To the extent that the representations were about a future matter, namely how the sums invested by the plaintiff would be dealt with in the future, the plaintiff relied upon the provisions of s 41(1) of the Act. Section 41(2) of the Act provides that the onus of establishing that the person had reasonable grounds for making the representation is on that person, the representor. Ms Fowler did not plead in her defence that what was alleged was said by her had a reasonable basis, as she denied having made the representations. 73The plaintiff's case is that Ms Fowler had no reasonable basis for making the representations. The alleged representations in question were those allegedly made by Ms Fowler: (i) at the Skyder boardroom meeting, (ii) at the Chat Club meeting on 19 September 2005 and (iii) in verbal communications post-dating the Chat Club meeting. 74In the Plaintiff's Submissions in Reply at paragraph [30] it was accepted that in light of the decision of the High Court in Hunt & Hunt Lawyers v Mitchell Morgan Nominees Pty Ltd [2013] HCA 10; (2013) 247 CLR 613 the proportionality provisions of the Civil Liability Act 2002 applied in respect of any finding of breach of duty of care or breach of the Fair Trading Act.

(d) Claim Based on ss 911A and 911B of the Corporations Act 2001 (Cth) 75The plaintiff pleaded a cause of action under the above provisions on the basis that Ms Fowler allegedly provided financial services advice without holding a financial services licence or without being exempt from holding such a licence. In that respect, it is alleged that Ms Fowler acted in contravention of ss 991A or 991B of the Corporations Act. The plaintiff claims that she suffered loss and damage in acting on her advice to invest in the Scheme and thereby suffered loss and damage in consequence of the above mentioned contraventions. 76The plaintiff alleges that Ms Fowler is liable to be ordered pursuant to s 1324 of the Corporations Act to compensate her for the losses incurred by her in consequence of the contravention: Amended Statement of Claim at [76]-[78]. 77It was contended in the Revised Plaintiff's Outline of Argument at paragraph [90] that the claim under s 1324 of the Act is not an apportionable claim under the provisions of Part 4 of the Civil Liability Act.

Affidavit and Other Evidence 78The affidavit evidence in the plaintiff's case included:

• Affidavits of the plaintiff sworn on 8 November 2011 (referred to in this judgment as "the plaintiff's first affidavit") and 23 May 2012.
• Affidavit of Charles Galea sworn on 23 November 2011.
• Affidavit of Geoffrey Cohn sworn on 30 November 2011.
• Affidavit of Aisling Frances Monahan sworn 15 June 2012. 79The defendants relied upon the affidavit of Renae Jean Fowler sworn 26 April 2012. 80The following exhibits were tendered in the proceedings:
• Exhibit A - Plaintiff's Tender Bundle Vol 1 (pages 6-56)
• Exhibit B - Plaintiff's Tender Bundle Vol 2
• Exhibit C - Plaintiff's Tender Bundle Vol 3
• Exhibit D - Bank statements for Silkwater Group Pty Ltd for period 24/1/06 to 23/9/07 in respect of Account XXXXXX28
• Exhibit E - Bank statements for Silkwater Group Pty Ltd for period 22/11/05 to 21/3/08 in respect of Account XXXXXXX70
• Exhibit 1 - Defendants' Tender Bundle

The Plaintiff 81The plaintiff was born in 1952. She holds a Bachelor Degree in Psychology, an H/Dip Ed and a Bachelor of Social Work (Hons). Between approximately 1986 and 2002 she practised on a part-time basis as a psychologist. 82The plaintiff was married in 1978 and separated from her husband in June 2001. There are two children by that marriage. When they separated, she continued to own investment properties previously acquired with her former husband during their marriage. 83In about 2001 the plaintiff met a Mr David Dorian at an Amway of Australia Pty Ltd function. Thereafter she would see him at Amway functions and, subsequently, in or about April 2003, she met him again at a property seminar at Star City Casino. 84The plaintiff said that she attended three meetings of the "Follow Me Chat Club" ("the Chat Club"), with which Mr Dorian was associated, between 2003 and September 2005. 85The Chat Club comprised a group of persons interested in property development. The plaintiff attended her first meeting of the Chat Club in or about late 2003. She understood Mr Dorian was the founder and supervisor of the Club and she said it was promoted by him as being a "safe space". 86The plaintiff received regular emails from the Chat Club including newsletters concerning meetings and investment opportunities. 87The plaintiff's matrimonial proceedings were finalised in or about October 2004. As a result of a property settlement with her former husband she retained ownership of the family house in Wolseley Road, Coogee together with investment properties that they had co-owned, apart from one property in Beach Street, Coogee which her former husband retained. He also retained their share portfolio and his medical practice rooms. 88The plaintiff said that after the property settlement there was a shortfall between her income and the mortgage payments on the investment properties of the order of $8,000 to $10,000 per month. 89In due course Mr Dorian mentioned to the plaintiff that he had been involved in developing an investment scheme known as the Bridging Finance Investment Scheme ("the Scheme"). He told her that the investment return was set at 2% per month. She said she was sceptical. She was told at that time that those involved had been working on the Scheme for about 18 months in order to make it 100% safe before they introduced it to the Chat Club. 90The plaintiff recalled that in about June 2005 the Chat Club newsletters began to discuss the potential for investment in the Scheme. In late August or early September 2005 Mr Dorian told her that the formal parts of the Scheme were being set up and monitored by a lawyer who was an expert in the relevant field of investment. 91At this time the plaintiff was working on a casual basis for a real estate agency. She told the principal of the agency, Mr Giltinan, about the Scheme. He told her that she should be careful about investing any money in such a scheme because there could be a risk if anything went wrong. 92The plaintiff said that she was concerned by his comments. For that reason she said she raised queries with Mr Dorian. The plaintiff said that Mr Dorian, "precisely and methodically" addressed each of her concerns. She later told Mr Giltinan of her discussion with Mr Dorian. Mr Giltinan convinced her to meet with her local Westpac Branch Manager, a Mr Coelho, which she did. At the meeting with Mr Coelho, Mr Giltinan explained the Scheme to Mr Coelho, which explanation the plaintiff said reflected Mr Giltinan's views. After some discussion Mr Coelho told the plaintiff that he agreed with Mr Giltinan's view. She subsequently discussed what Mr Coelho had said with Mr Dorian. Mr Dorian, in effect, stated that a "simple bank manager" would not be able to understand or comprehend the Scheme. 93Notwithstanding the plaintiff's interest in these proceedings vis-a-vis the defendants, I gained the impression during her evidence that she was a careful witness who did not display any tendency towards obfuscation or evasiveness and was prepared to acknowledge limitations on her ability to recall certain matters.

Tiernan & Associates Lawyers 94In her affidavit sworn on 26 April 2012, Ms Fowler stated that she was admitted as a solicitor in New South Wales in February 2004. During 2003 she had worked at Leitch Hasson & Dent Solicitors as a legal clerk. She remained with that firm after her admission as a solicitor. Before and after admission her practice mainly involved work on retail leases and general commercial and property litigation. She met and worked with Phillip Tiernan, solicitor, at that firm. 95In February 2005, Mr Tiernan left Leitch Hasson & Dent Solicitors and set up his own firm, Tiernan & Associates. In early March 2005, Ms Fowler left Leitch Hasson & Dent and commenced working as an Associate at Tiernan & Associates, whose offices were located in Cronulla. 96She stated that her practice with Tiernan & Associates was mostly general commercial work, including retail leasing, conveyancing, partnership agreements and the like. 97From approximately May 2005, Tiernan & Associates provided legal services in relation to the Scheme. 98Ms Fowler agreed in cross-examination that in 2005 she had a qualified practising certificate and, accordingly, it was her obligation to submit to the supervision of a senior solicitor. In her case, the senior solicitor was Mr Tiernan. 99After she left Tiernan & Associates Ms Fowler set up her own practice. 100In relation to the regulation concerning the public offering of investments in financial products, Ms Fowler stated that when she was with Tiernan & Associates she was aware of the existence of laws designed to establish and give effect to such regulation: "Q. And you understood that there were indeed quite wide ranging laws by 2005 which govern the offer of financial products generally where they were offered by a business in many cases? A. Yes. Q. Is that correct? A. That is correct. Q. You understood, for example, that it may be that if a company or business was offering to the public financial products or securities there could be a need for a prospectus or something of that sort, is that correct? A. I didn't know the detail of the requirements but I had a general knowledge, yes. Q. You knew enough to know that that is an issue that might have to be considered if a company was engaged in conduct of that sort? A. That's right. Q. And did you know by the time you had completed your studies and attained your legal practitioner's certificate that for certain business engaged in selling or marketing financial products they may need to have a licence from ASIC? A. Yes. Q. Again I take it that did not have a detailed knowledge of the term that apply to those licences or their requirements but it was part of your working knowledge that something like that might well apply to business in the financial sector? A. That is correct." (T 167-168). 101A little later Ms Fowler stated that as at May 2005 she had not previously done legal work concerning a public offering of financial products nor had she been involved in legal work associated with the obtaining of financial services licences for businesses: T 168. 102Ms Fowler said that the work undertaken by Tiernan & Associates for Messrs Tombleson and Hraiki formed quite a substantive part of the legal work that she did in the years 2005 and 2006: T 168. In that respect, she was asked: "Q. Were they and their associated businesses your major clients in 2005 and 2006? A. Of the practice or me personally? Q. Of you personally? A. I would say they are, yes." (T 168)

The Skyder Boardroom Meeting In Early September 2005 103At a boardroom meeting held at the offices of Skyder in early September 2005, the plaintiff met, for the first time, Ms Fowler and Messrs Tombleson and Hraiki. The meeting assumes significance in light of the following matters: (i) At that time, despite Mr Dorian's attempts to reassure the plaintiff about the Scheme, the plaintiff had not then committed herself to investing in it. (ii) There is a strong inference that the meeting was set up to "sell" the Scheme to her as being a worthwhile investment proposition. (iii) As the plaintiff had not decided to invest at that stage, Ms Fowler's presence at the meeting was not for the purpose of her performing any legal services for the plaintiff. As discussed below, that is a relevant matter in understanding the basis upon which Ms Fowler rendered her fee invoice for attending the meeting. It may be readily inferred that Ms Fowler's attendance was seen by the Scheme's promoters as giving the Scheme credibility. (iv) On the findings discussed below, Ms Fowler was present at the meeting during the presentation by Messrs Hraiki and Tombleson. 104In early September 2005, Mr Dorian told the plaintiff that he was having a meeting in Cronulla with the lawyer and other persons who had been working on the Scheme. He suggested that she should come along and meet them and hear more about the investment strategy involving the Scheme. 105She came to understand that the Scheme was operated by Skyder and that that company's offices were located in Cronulla. She was, in due course, introduced by Mr Dorian to Messrs Darryl Tombleson and Sam Hraiki, who were then both directors of Skyder. 106The plaintiff said that for the introductory meeting they went into a boardroom at Skyder's offices. The company's offices were in the same building and adjacent to the offices of Tiernan & Associates. She was told that a lawyer, Ms Fowler from Tiernan & Associates, would be joining them shortly. 107The plaintiff's evidence was that Mr Hraiki started to discuss the Scheme and he demonstrated on a whiteboard how investment funds would be used. She recalled him talking about people making investments in the Scheme of about three or four million dollars which she said made her very nervous as she did not have that amount of money to invest. 108According to the plaintiff, Ms Fowler arrived soon after the meeting commenced. The plaintiff said that Mr Dorian said that: "This is Renae Fowler-Hay the lawyer from Tiernans that I told you about. She is an expert on bridging finance contracts. She will be setting up the loan investor contracts, managing the trust and taking care of all of the legal aspects of the Bridging Finance Scheme for investors." 109Ms Fowler in evidence, denied hearing Mr Dorian say those words. 110According to the plaintiff, Ms Fowler remained in the room and the presentation continued. She recalled Mr Hraiki saying words to the following effect: "As a mortgage broker, there is a huge pool of clients that I have who need bridging finance. There are deals happening all over the place which give enormous potential to the Bridging Finance Scheme. That is why we have developed this investment opportunity - the work that has gone into it by Darryl, Renae and myself has been to make the investment 100% safe for investors." 111The plaintiff said that she recalled Mr Tombleson saying words to the effect: "As you can see from Sam's diagram on the whiteboard, there are safeguards in place to protect investors' money, which will be administered by Renae and her firm. There are checks and balances put in place by her, including unregistered mortgages, caveats and loan agreements placed over borrowers' properties so there will always be safety for investors of their principal." 112The plaintiff said that she said to Mr Hraiki, Mr Tombleson and Ms Fowler, words to the effect: "But won't there be issues with valuing the property for the purposes of putting security in place? Isn't property quite subjective for valuations?" 113She said that Mr Tombleson replied: "We only use registered valuers with indemnity insurance to protect investors - and even then, we only go ahead with a loan to borrowers of bridging finance if there is at least 40% equity in every property - so there's plenty of fat in each loan made by Skyder. The property market would have to crash over 40% for the investments to have any trouble!" 114According to the plaintiff, Ms Fowler was present during the majority of Mr Hraiki's demonstration on the whiteboard and was present during the above discussion. Ms Fowler, on the other hand, said she was only present for about five minutes. 115The plaintiff said that from time to time Ms Fowler interrupted Mr Hraiki's presentation to elaborate on and clarify matters he had raised, including his comments on the practical implications of the Scheme. She said she could not now recall precisely Ms Fowler's comments. 116The plaintiff said she thought Ms Fowler appeared young for someone who was said to be an expert on bridging finance. Shortly after the meeting she said she asked Mr Dorian about her age. He in reply said words to the effect that she was about "fortyish". 117The plaintiff's evidence in paragraph [52] of her first affidavit was admitted only as to her then belief. She there said that from her observations at the meeting she had the impression that Ms Fowler was working very closely with Mr Hraiki, Mr Tombleson and Mr Dorian on the development of the Scheme. She said she thought that Ms Fowler was acting for the benefit and on behalf of the interests of the investors in the Scheme. However, in cross-examination she accepted that Ms Fowler did not say in the meeting that she was acting on behalf of investors or for their benefit. 118The plaintiff said that following the Skyder boardroom meeting she had a number of conversations with Mr Dorian about the Scheme, principally on the telephone. He told her that he was impatient to introduce the Scheme to the Chat Club and that there were people in it who were keen to invest in the Scheme. However, he said he had held back until he was content with the final detail of it and that "all checks and balances were in place". 119She said she recalled after that conversation reading in Chat Club documents that Ms Fowler should be contacted for legal advice concerning the Scheme. She also said that Mr Dorian made similar comments to her saying that Ms Fowler would speak to her if she had any concerns or questions. 120In relation to the plaintiff's account of the meeting, set out in her handwritten statement provided to her then solicitor in April 2007, the following are noted:

• The operation of the Scheme was the subject of a promotional presentation by Mr Hraiki at the Skyder boardroom meeting.
• Whilst the plaintiff's account does not record Ms Fowler's presence throughout the whole of the Skyder boardroom meeting, it is not inconsistent with that having been present for the greater part of the meeting. In the plaintiff's ASIC statement made in September 2008 it was noted that she said: "After our meeting, I was asked to wait outside as Mr Dorian had a meeting with Messrs Tombleson, Hraiki and Ms Fowler-Hay".
• The plaintiff's account, including the lastmentioned statement, is not consistent with Ms Fowler's account of her having entered the boardroom, met the plaintiff and then leaving within approximately five minutes of being introduced.
• The plaintiff's account reflects her apprehension about investing, she stating her concern that her "money was safe".

The Chat Club Meeting at the Seven Hills RSL Club on 19 September 2005 121The plaintiff attended a meeting of the Chat club on 19 September 2005 at the Seven Hills RSL Club. She estimated that approximately eighty people were present. Not all were members of the Chat Club. In particular, the evidence was that neither the plaintiff nor Dr Geoffrey Cohn were members. 122The plaintiff's evidence was that she understood the meeting was to be an occasion on which the Scheme would be explained to members of the Chat Club. In reality, it was a promotion for the Scheme. Prior to the meeting she had been told by Mr Dorian that she would need to fill out a form. He explained that it was an ASIC requirement for her to fill it in and to sign it because there was going to be a lawyer present. 123On the plaintiff's arrival at the Seven Hills RSL Club, she went to the front desk and was handed a Chat Club attendance register. There was also a disclaimer document which she was told she needed to sign before attending the meeting. A copy of the document, entitled "Acknowledgment and Disclaimer" is at p 160 of Exhibit A. The plaintiff said she assumed it was the document that Mr Dorian had previously referred to. She said she skim read it and signed it. 124The plaintiff agreed that the document said that the Chat Club received a referral commission. When asked whether she read that at the time or not, she said she read it very quickly and understood that the Chat Club would get a commission if she invested: T 51:15-20. 125She said that it was her understanding from the Chat Club Newsletters that the Club was structured as a "safe space", that it was a not-for-profit organisation, and that accordingly the fee to be paid to the Chat Club would be a nominal amount towards covering administration expenses. She said that she did not consider the disclaimer document she was required to sign before attending the meeting (as to which see discussion below) bore any relevance at all to the investment in the Scheme, other than it being a requirement for attendance at the meeting. 126She said that after the meeting Mr Dorian approached her with the document and asked her to complete parts of it. She said that Mr Dorian said to her "Hazel, can you fill this out? You can say on it that you have had bridging finance experience, as you have, haven't you?". 127The plaintiff said that she told him that when she purchased her home in Coogee she and her husband had borrowed over a period of three months by way of bridging finance to complete the purchase. 128Mr Dorian said that as she knew what bridging finance was, just to write down "No problems". 129The plaintiff said she attended the meeting in the company of a friend, Dr Geoffrey Cohn. 130Mr Tombleson and Ms Fowler were present and the plaintiff said they were introduced by Mr Dorian at the commencement of the meeting. 131According to the plaintiff, Ms Fowler was introduced by Mr Dorian at the meeting in words to the effect of: "This is Renae Fowler-Hay from Tiernan & Associates Lawyers, the lawyer who will be drawing up the bridging loan documentation and contracts on behalf of investors." 132She said she recalled Ms Fowler acknowledging the introduction. 133The plaintiff said that there then followed a PowerPoint presentation which she said was jointly conducted by Mr Tombleson and Ms Fowler. Ms Fowler's evidence was to the contrary, that is, that it was not a joint presentation. The PowerPoint slides for the presentation are in Exhibit C, Tab 175. No printed copies of them were handed out at that time. The plaintiff acquired a copy of them at a later time. 134The plaintiff's evidence was that Mr Tombleson and Ms Fowler were both standing up at the same time speaking to Chat Club members but that Mr Tombleson was the person primarily presenting and explaining the PowerPoint presentation as it proceeded through a number of slides. She said the presentation lasted for approximately 45 minutes. 135In the Revised Plaintiff's Outline of Argument at [15] it was stated: "The plaintiff says that at the Chat Club meeting: a) Ms Fowler then made statements representing that: i. Members would be registered as second mortgagees and their names placed on Title Deeds. ii. She would retain the documents and oversee the protections in place for investors. b) Ms Fowler was present when Mr Tombelson said that: i. She (Ms Fowler) would be involved with and be responsible for the investments by drawing up the investor loan contracts. ii. She would manage the funds in a trust. iii. She would provide legal assistance as required to the Chat Club members. iv. That the funds would be secured against property with low LVRs with a maximum 65%, or generally 55%. c) Mr Dorian also said in Ms Fowler's presence that: i. Mr Tombelson had agreed to cover the legal and administrative costs of paying for Ms Fowler's role including registering caveats, drawing up contracts and registering the second mortgages for Chat Club members. d) Each of Ms Fowler and Mr Tombelson said that: i. There was no risk to investors. ii. The loan deals would be initially sourced by Mr Tombelson [sic] and Mr Hraiki and registered valuers having current indemnity insurance had to give up to date accurate valuations." 136The plaintiff, in her first affidavit, said that Ms Fowler referred to second mortgages and caveats, at which time she assured the attendees with words to the effect that their investments would be protected by "registered caveats lodged on their behalf to provide investors with further security": at [67]. 137According to the plaintiff, Ms Fowler also said words to the effect: "The lenders are also going to be registered as second mortgagees, and their names are going to be placed on the Title Deeds. I will retain the documents and oversee the protections in place for investors." 138The plaintiff's evidence was that at this point Mr Tombleson said words to the effect: "It's true that most Banks don't like second mortgages - but the Banks we are using for the Bridging Finance Scheme have all agreed to do so." 139She said that Ms Fowler did not comment on this. Mr Tombleson then went on to say words to the effect: "These are the types of issues that Ms Fowler-Hay is going to be involved with and responsible for when you invest your money into the Bridging Finance Scheme. She is going to be in charge of drawing up the Investor Loan Contracts, managing your funds in a trust and providing all legal assistance as required to the Chat Club members who invest in the Bridging Finance Scheme." (at [68]) 140The plaintiff said at this point Mr Dorian interjected saying words to the effect: "Mr Tombleson has very generously agreed to cover the legal and administrative costs including paying for Ms Fowler-Hay's role, including for registering the caveats, drawing up the contracts and registering all of the second mortgages for Chat Club members to protect their interests." (at [69]) 141The plaintiff said Mr Tombleson explained (as she said he had done at the Skyder boardroom meeting), with words to the effect that: "The funds would be secured against property with low LVR's with a maximum of 65%, more generally 55%." (at [70]) 142She said that she recalled Ms Fowler and Mr Tombleson each specifically stating words to the effect that there was: "No risk to investors because the funds were all secured against property with lots of equity." 143She said they both said words to the effect that "the loan deals would be initially sourced by Mr Tombleson and Mr Hraiki", and that: "All of the registered valuers (whose job it was to value the secured property) had to have current indemnity insurance so that their valuations would be accurate, up to date and reliable." 144The plaintiff said she recalled Mr Tombleson also saying at the meeting words to the effect: "Another layer of protection that will occur will be that, for example, if you invest $200,000 in the scheme your investment will not be placed solely into one particular bridging finance 'deal'. What I mean by this is that in order to further minimise the risk, for example, 4 tranches of $50,000 each will be invested in 4 different bridging deals to 'spread' your investment over multiple transactions. Basically this is just another strategy to spread the risk on your investments." (at [72]) 145She said that when she heard this she was concerned and queried the comment in front of everyone at the meeting, in words to the following effect: "Darryl, I thought you said there was no risk in relation to this Scheme." 146She said Mr Dorian responded in words to the following effect: "Hazel, thanks for your question. This is just another check and balance that we have put in place to ensure that your investments are 100% safe, and it's because we have so many of these checks and balances in place that your funds will always be secure. As we discussed earlier on, we also have Renae at our disposal to litigate in the very unlikely event that any problems arise. Don't forget that we'll always ensure that there's enough fat in the security properties to hedge your position." (at [74]) 147The plaintiff said she also recalled asking a question of Ms Fowler in front of everyone at the meeting in words to the effect: "Is this any different from the investment strategy that led to the Westpoint collapse, or from other mezzanine lending schemes?" 148According to the plaintiff, Ms Fowler responded with words to the effect: "Investor funds will be held in a nominated trust account that I will personally manage. These funds will be quarantined from the workings of Skyder, so that even in the very unlikely event that the company fails, your funds will still be safe. Your funds will be pigeon-holed from other investors' funds, so they can only be lent out on specific projects, of which you will be fully informed and the investment funds will then be returned to the trust account. The other rationale in pigeon-holing your funds will be that it will be easier for you to trace your specific investment as it will not be pooled with other investors and this again will provide you with extra transparency and security" (at [76]). 149She said that those present at the September 2005 Chat Club meeting were told by Mr Tombleson words to the effect that: "Investors will be paid 2% interest on a monthly basis, and Skyder charged its clients 6% monthly interest for bridging finance so that Skyder could bear all the administration and legal costs" (at [77]). 150At the conclusion of the meeting the plaintiff said that Mr Tombleson or Mr Dorian (she could not recall which) said words to the effect: "Ms Fowler-Hay has volunteered to stay and answer any questions which you may have - please feel free to speak with her now" (at [78]). 151She said that a group of attendees gathered around Ms Fowler and asked questions about the Scheme. She said she asked Ms Fowler if she was going to invest, to which she said she responded in words to the effect of "I would if I had the money" at [79]. 152At this time she said Ms Fowler gave her her business card which stated that she was a solicitor of the firm Tiernan & Associates. The plaintiff said Ms Fowler said words to the effect that: "I will be away on holidays for a few weeks, following which I will be back to answer any questions which you may have regarding the bridging Finance Scheme - feel free to call me": (at [80]).

(a) The First Investment 153Towards the end of October 2005 the plaintiff invested an amount into the Scheme at Mr Dorian's suggestion, namely $80,000, to initially "test the waters". The plaintiff drew a cheque on her bank account as identified in evidence for that amount and delivered it to Skyder's offices. 154She said that not long after that she realised that she had not received a written contract from Skyder relating to this investment sum. She said she then telephoned Ms Fowler and after several telephone calls to her office a loan agreement document arrived by ordinary mail. The cover page to the agreement said it had been prepared by Tiernan & Associates. The plaintiff said that the loan agreement was not accompanied by any other documents or letter. 155She said she signed the loan agreement on 31 October 2005 and returned the signed original agreement to Ms Fowler. She said it was her understanding that her investment monies would be utilised by Skyder and that Ms Fowler would take out, as security, a second mortgage over a property relating to the initial $80,000 investment and that she would lodge a caveat over the property to protect her investment. 156She said that she was not provided with a second mortgage document. However, she recalled seeing a document described as a caveat at some time after executing this first Loan Agreement. She no longer had a copy of that document. 157In early November 2005 she received a letter from Skyder acknowledging receipt of her First Loan Agreement (Tab 7 to her first affidavit). At this time she was also provided with a document on Skyder's letterhead which set out details in relation to the borrower to whom her investment funds were being on-lent: Tab 8 to her first affidavit. 158The plaintiff said she recalled receiving the initial interest payment on this investment.

(b) The Second Investment 159In about November 2005 the plaintiff refinanced four of her investment properties. She said she did this so that she could borrow monies to invest a further $310,000 into the Scheme. 160Shortly after the re-financing she was informed by Mr Dorian that "the partnership" between Mr Tombleson and Mr Hraiki was being dissolved, and that Mr Tombleson had formed a company known as Silkwater Group Pty Ltd and that the funds previously invested in Skyder would be transferred to Silkwater: Plaintiff's first affidavit at [97]. 161She said that Mr Dorian told her that Mr Tombleson would be taking over the Scheme in full and that all future investments would be made to Silkwater. 162The plaintiff said that when she found out that the "partnership" had split she was concerned but that Mr Dorian's comments reassured her that her funds were safe. 163She proceeded to make an investment with Silkwater for the amount of $310,000. She drew two cheques from her bank account for the second investment, one on 29 November 2005 for $205,000 and the other on 5 December 2005 for $105,000. 164She delivered the two cheques to Mr Tombleson at Silkwater's office in Cronulla. On a date after this she said she telephoned Ms Fowler in order to obtain the written agreement for her loan, and copies of the mortgage and caveat in relation to the second Loan Agreement. She said to Ms Fowler: "Renae, I have not received any documentation regarding my loan of $310,000 to Silkwater. Has the paperwork been done?" 165She said Ms Fowler replied: "You should have it - I posted it to you not long ago": (Plaintiff's first affidavit at [102]). 166The plaintiff said that the Second Loan Agreement did not arrive by post. She made a further call to Ms Fowler and said: "Renae, I still have not received any documentation regarding my loan. It hasn't arrived in the post. Have you sent it to the right address - at Wolseley Road?" 167She said that Ms Fowler said that she had sent it, that the situation was "odd" and she would post another copy. 168A few days later, as the second Loan Agreement had not arrived, the plaintiff said she made a further call to Ms Fowler and told her that it had not arrived and that the situation was "ridiculous" and that she would go and collect it from Cronulla. 169She said that Ms Fowler said "No, don't worry about it. I can drop it off to you in Coogee on my way home from work as it is not far." 170The plaintiff said she replied that she could come and pick it up from Ms Fowler in Maroubra. Ms Fowler said "no", "don't worry about it" and that she would drop it off. 171According to the plaintiff, in about mid-December 2005, and shortly after the last-mentioned conversation, Ms Fowler personally delivered the second Loan Agreement to the plaintiff's house in Coogee. The plaintiff said she signed the agreement (Tab 10 to her first affidavit). She said it was prepared by Tiernan & Associates. It was dated 9 December 2005. However, she said she did not in fact sign it on that date as she had not by that date even received it. 172When the second Loan Agreement was dropped off by Ms Fowler at the plaintiff's house, the plaintiff said they spoke for about 15 minutes. She said she signed the second Loan Agreement at that time and handed it back to Ms Fowler. 173She said that she asked Ms Fowler "Aren't you going to invest in the bridging finance scheme as well?" to which Ms Fowler replied: "At the moment I have a mortgage over my property in Maroubra, so I can't afford it. But once that mortgage is paid off, then I would like to invest in the scheme myself." 174The plaintiff said she responded: "Well, I will have some money available soon - about $800,000 - and the left-over proceeds from the sale this house, which has just sold at auction. I am going to put this into the Bridging Finance Scheme as well": (Plaintiff's Affidavit at [107]). 175The plaintiff subsequently received a copy of a caveat in respect of her second investment (Tab 11 of her affidavit) although she could not recall when this occurred. 176She said that she received two letters acknowledging receipt of her second Loan Agreement from Silkwater (Tab 12 to her affidavit). 177Notwithstanding that she was unnerved about the delays associated with the contracts and caveats, the plaintiff said at this stage, given the assurances made by Ms Fowler, she was not concerned about the "veracity" of the investments or as to the security of the funds she had by then invested. She said she was still at that time receiving regular interest payments (copies of the cheques are at Tab 14 to her affidavit).

(c) The Third Investment 178The plaintiff said that at sometime in about November 2005 she had a further discussion with Mr Dorian in which he suggested she make a further and larger investment in the Scheme using the proceeds of the sale from her house at Coogee. He suggested that the interest from doing so could cover the costs of her property portfolio and the plaintiff could then borrow money against her Dudley Street apartment in order to provide her with a steady income to live on. He said that if a total amount of $1,000,000 or more was invested in the Scheme then the monthly interest payments would be 2.5% instead of 2%. 179The plaintiff said that she spoke to Ms Fowler frequently after her second investment. On numerous occasions she said she told Ms Fowler: "I have a lot invested in the Bridging Finance Scheme, and as discussed, I am about to make a bigger investment. I cannot afford to lose my capital, and need to keep getting my regular interest payments. I will be relying on these to keep me and my two children afloat as well as keeping my financial commitments fully covered." 180According to the plaintiff, Ms Fowler responded on each occasion with words to the effect: "Of course, Hazel, I understand that." (Plaintiff's first affidavit at [115]). 181The plaintiff said that at no time before or during these or other conversations did Ms Fowler state that she should seek independent legal advice concerning the Scheme. 182The plaintiff recalled that at about this time that Mr Dorian informed her that he was soon to become one of the directors of Silkwater. When this had not occurred a couple of months later she asked him why he had not become a director. He, according to her evidence, responded to the effect that he was waiting for Ms Fowler to become a director and that when this occurred he would also be appointed. Subsequently he told her that Ms Fowler did not become a director and so he had not become one. 183The plaintiff was invited to a Christmas dinner in Cronulla hosted by Mr Tombleson in early December 2005. She was seated next to Ms Fowler and she chatted to her and told her that she understood that Ms Fowler was going to work full-time for Silkwater. She said that Ms Fowler looked embarrassed and tried to change the topic. 184On 2 March 2006, the plaintiff made her third investment of $800,000 in the Scheme. She said that the sale of her house at Coogee had settled in about late February 2006 and that shortly thereafter she provided a cheque in the sum of $800,000 directly to Mr Tombleson whose offices were at that time in Gannons Road, Caringbah (a copy of the cheque is exhibited at Tab 16 to her first affidavit). 185In relation to this, her third and largest investment, she said she did not want to take any chances that the documents relating to it were mislaid in the post. She said she subsequently phoned Ms Fowler and said "Renae, I haven't got the loan documents for my investment of $800,000. Don't bother posting it - I will come and collect it": Plaintiff's first affidavit at [122]. 186She said that she then had a telephone conversation with Mr Tombleson in which he said words to the effect: "I have your third loan agreement documentation ready for collection here at my office - Renae tells me that you want to collect it." (Plaintiff's first affidavit at [123]) 187The plaintiff said she drove to Cronulla and picked up the loan agreement directly from Mr Tombleson at Silkwater's offices. She signed the agreement for the third investment of $800,000 with Silkwater on 17 March 2006. A copy is behind Tab 17 to her first affidavit. 188After making the third investment the plaintiff received what she thought was a copy of a caveat over a property which she understood to be a property in Woodville Road, Burwood, although she said she never received a copy of any second mortgage. She also received a letter from Silkwater acknowledging receipt of her third loan payment (Tab 18 to her first affidavit). 189After the third investment she recalled telephoning Ms Fowler to ask her something about her investment. She stated that it may have related to interest payments. She could not recall precisely what was discussed. Shortly after the conversation the plaintiff's evidence was that Ms Fowler said words to the effect: "Hazel, I am now acting for Silkwater ... I can't talk to you any more": Plaintiff's first affidavit at [128]. 190The plaintiff said she was very confused by this statement. She took it to mean that she could no longer ask Ms Fowler for her advice unless she paid Ms Fowler directly (as opposed to Mr Tombleson paying the legal costs of the investors). However, she said that whilst somewhat confused, she was not at that point particularly concerned by the statement as she did not really need Ms Fowler's services any longer given that she had already invested all the funds she could afford in the Scheme. She says she still believed that Ms Fowler would continue to manage the affairs of the Scheme and protect the interests of the investors: at [129]. 191The plaintiff said she did not seek any independent legal advice before entering into the third investment as she had understood that Ms Fowler would be managing the trust fund for Silkwater. Additionally, she said she believed the explanations given at the meetings in September 2005. 192The plaintiff said in early 2006 she had sporadic phone contact with Mr Dorian and that on one occasion he told her that in order for the promotion and the raising of funds for the Scheme to continue a "financial services licence was now required". When she found out that Silkwater required a licence she recalled panicking somewhat, but she said Mr Dorian said "Hazel, it's fine - everything has been conducted legally by Silkwater and Ms Fowler-Hay. There are no problems regarding the financial services licence, it's all ok": Plaintiff's first affidavit at [132]. 193The plaintiff said interest payments on her loans were made by Silkwater in: March 2006; April 2006; May 2006; and June 2006. 194She said that the July 2006 payment and the August 2006 payment were made on or about 12 September 2006 (Tab 19 to the plaintiff's first affidavit). However, full amounts of interest payments were not paid after that time. A further four $5,000 cheques were received on or about the following dates:

• 17 November 2006;
• 29 November 2006;
• 4 December 2006, and
• 18 December 2006 (Tab 20 to the plaintiff's first affidavit). 195The plaintiff said that after this occurred she was regularly on the phone to Mr Tombleson who repeatedly told her different stories about why the delays were occurring and what was being done to overcome them. 196She said she rang Mr Dorian regarding the non-payment of interest on many occasions to tell him that she was extremely anxious that she had not received any payments. She said that on one occasion Mr Dorian told her that Mr Tombleson owed him approximately $300,000 which he had not paid him for about 10 months. 197In December 2006, the plaintiff insisted on meeting with Mr Tombleson and Mr Dorian to try and establish precisely what was going on with the interest payments. At the meeting Mr Dorian agreed that he would be "proactive" in helping Mr Tombleson to ensure that people were paid what was owing to them. 198In about late January 2007, the plaintiff decided to "rollover" her principal loans with Silkwater for a further term. She said she did this by reason of the need she had for interest monies to make payments on her home loan and other bills. At this time she said Mr Tombleson and Mr Dorian again reassured her in words to the effect that "your capital [in the Bridging Finance Scheme] is safe - all of the checks and balances are still in place". 199On or about 8 February 2007 she agreed to vary the three loan agreements in respect of her loans ($80,000, $310,000 and $800,000) by rolling her investments over and extending the period of the term of the contract from 12 months to 24 months. A copy of the Variation Agreement is behind Tab 21 to her first affidavit. 200She said that Mr Tombleson had said words to the effect that this Variation Agreement which she signed was "done as an interim arrangement until Ms Fowler-Hay can draft up a new agreement". She said that Mr Tombleson wrote down the details of the rollover when she attended his offices. 201No interest payments were received by the plaintiff from Silkwater after signing the Variation Agreement. 202The plaintiff says that at about the end of March 2007, a Mr Stark, who she understood was working for Silkwater, telephoned her and told her that all of her money invested in Silkwater had gone and that there were no securities. 203She made phone contact with Ms Fowler sometime after March 2007 to express her concern. According to her evidence, Ms Fowler said that she was not an accountant and that accountants manage trusts, and that, in any event, as "... from last week I no longer act for Silkwater": Plaintiff's first affidavit at [150]. 204She said that Ms Fowler terminated the conversation. The plaintiff said it became clear to her that Ms Fowler no longer wished to speak to her. 205In due course some of the plaintiff's investment properties were sold. She said she only retained the Coogee apartment she was then living in and another apartment in Coogee.

Compliance Issues: Financial Services Licence, Disclosure Statements etc 206Ms Fowler was asked about a meeting that took place in June 2005 with Mr Tombleson and Mr Hraiki at which Mr Dorian was present. She was asked whether at that point she considered that Mr Hraiki and Mr Tombleson were engaging in an operation that may require the issue of a prospectus or a product disclosure statement. She said that she did not. She offered by way of explanation that she and Mr Tiernan had been told that they had been in business for some time and had previous solicitors acting for them, and that they had current investors and current borrowers in an ongoing business. 207Ms Fowler was cross-examined on an email sent by Mr Malcolm Bersten on the subject of "Skyder Investments - Advice on Public Fundraising" dated 24 June 2005 to Mr Tiernan and Mr Tombleson. Mr Tiernan forwarded a copy of this email to Ms Fowler on 19 August 2005. The document is at MFI 2, Documents from Police Subpoena, at p 36. 208In the email, Mr Bersten stated that, by reason of other commitments, he was unable to assist them by mid-July as "... as previously indicated to do the prospectus trust deed and other documents ...". 209He then continued: "Accordingly, I believe that it will be in your best interests to engage another lawyer to assist you. ..." 210Mr Bersten then went on to make a recommendation as to a suitable lawyer. He, towards the end of his email, stated: "Please note that ASIC is looking at all debenture issuers very closely. They are taking a very hard line on a number of issues - their approach is impracticable but they are the regulator. The fundamental aspect of this area for ASIC is disclosure." 211It was put to Ms Fowler in cross-examination: "Q. And you understood I presume therefore, from this, that it might well be that they were going to need a prospectus for the offerings that they were planning to make on behalf of Skyder, is that correct? A. No, that is not correct. What this email is about is not too long after they moved to our offices they were planning on growing the business and having a new business called Lendwide and they were going to be offering all sorts of different products. That's what this is all about." (T 214:49-T 215:5) 212It was then put to her: "Q. Did this cause you to think yourself about whether they might need a prospectus or a product disclosure statement for the bridging finance that they were marketing? A. No, I didn't. Q. You just did not address your mind to that question? A. No, I didn't. And the reason I did not is because they always maintained they were compliant with the regulations and that everything was okay. And the other reason was that because they had been doing this for quite some time, they had lawyers previously engaged for these transactions. We had been delivered with a number of files carried on from the previous solicitors so I was of the understanding that everything was compliant and okay. This was in relation to a new business that they were developing." (T 215:15-30) 213Ms Fowler later said that she did not ever think one way or the other as to whether the law would, or would not, require a product disclosure statement: T 215:45-50. 214Ms Fowler agreed that she presumed that any necessary prospectus or product disclosure statement had been drafted by previous solicitors: T 177:15-35. She said that she did not ask to see any advice or discuss the nature of such advice given by any solicitors who had previously acted for Messrs Tombleson and Hraiki. She said that: "... we walked away from the meeting under the understanding that the business was fine, that it was compliant and that we were merely engaged to draft contracts with respect to that business." (T 177:45-50) 215Ms Fowler's evidence was that she had "an understanding" that the business operated by Mr Hraiki and Mr Tombleson was "compliant". This she said was based upon what she had been told. She said that Mr Hraiki had represented that he had a financial services licence and that Mr Tombleson had requested of her to look into whether or not he had to have a financial services licence having regard to the fact that he and Mr Hraiki had "split up": T 191:5-15. 216After the split-up, Silkwater became the key company involved. Ms Fowler said that it was her understanding that it was the particular businesses that were operated by the companies Skyder and Silkwater that had to have a financial services licence: T 191:20-50. She said she understood that Mr Tombleson had done everything that he needed to do on the matter of obtaining a licence: T 192:5-10. The evidence, however, indicates that no licence had been issued in respect of the Scheme or to any person or entity involved in it at the time of the plaintiff's three investments. 217According to Ms Fowler, Mr Tombleson approached her and asked her to obtain a licence for a business that he was involved in, being one of the businesses for which she had been doing work: T 192:10-20. 218In the tax invoices of Tiernan & Associates (Exhibit C, at p 781) an entry was made for 23 December 2005: "perusal of Corporations Act, review ASIC website, file notes". There was a further entry, "Preparation of application for financial services licence": T 193:10-20. 219Further entries were made in the firm's financial records, in particular:

• 15 January 2006 - "work on financial services licence"; and
• 13 February 2006 - "preparation of proofs and scheme matrix for FSL licence". 220Ms Fowler invoiced the amount of $2,200 in respect of such work extending through to 3 March 2006: T 193:35-50. 221It was put to her in cross-examination that in the period between December 2005 and March 2006 she knew that the entity was making application for a licence. She said, "I'm not sure I can answer that. I know the business but I'm not sure what entity he (Mr Tombleson) was going to use": T 194:5-7. When asked what the business was she replied that it was the Scheme that he was operating at that time: T 194:5-10. It was then put to her: "Q. Yes, and the bridging finance scheme you understood in December and throughout the early part of 2006 did not have a licence. That is correct, isn't it? A. No, I didn't know that. I didn't think there was a problem at this stage. The whole time through I didn't think it was a problem." (T 194:12-16) 222In subsequent evidence in cross-examination, Ms Fowler said her understanding did not enable her to say whether the licences she said she had been told about were licences that attached to the business or the relevant entity conducting it: T 195:1-10. 223She agreed that based on answers she had given in her ASIC interview as to the requirement for a financial services licence that she understood that the business being conducted by Silkwater had to have a licence: T 195:40-50. However, she maintained that she did not understand that Silkwater did not have a licence and that she thought everything was "Okay": T 195:47-49. 224Ms Fowler was taken to segments of the transcript of interviews carried out by ASIC on 29 April 2008 (in particular at T 54-55). She was asked the following questions in cross-examination (at T 195:24-36): "Q. From what you understood, they [Mr Hraiki and Mr Tombleson] had licences in place. Would it have made a difference to your understanding of what their business was if they didn't have a licence. A. Absolutely. They have got to have licences. They're dealing in financial products. Q. And that's what you thought that their businesses were about, financial products? A. Well, I believed, from my knowledge, that they required financial services licences, based on the fact that they were representing to people - they were advertising to people, you know, I thought they had - I thought they had to have a licence." 225Ms Fowler was taken to a copy of an email sent by her on 6 April 2006 to Mr Tombleson, a copy of which was behind Tab 81 of Exhibit B. The email referred to a matter that had been raised by a Mr Stephen Teen, who it appears on the evidence to have been a solicitor who had acted for Mr Dorian. The email recorded, inter alia: "Mr Teen has conveyed concerns that the Investor Loan Contract does not contain a reference to the FSL Licence. I have advised that we do not have the licence as yet and when we do, this document will need to be changed again to factor in the product, the custodian and the auditors requirements. Given the urgency of the licence, last night I spent quite some time going through the licence and what we need to do to go forward - and this requires some input from the pair of you. ..." 226It was put to Ms Fowler in cross-examination in relation to this: "Q. The urgency, I take it, was because you realised that the scheme was up and running and it wasn't unlicensed (as said), isn't that correct? A. Yes. Q. And the necessity, therefore, was to do whatever needed to be done to try and fix that position up, that is to correct, isn't it? A. Yes. My understanding was that there was nothing wrong with the scheme in terms of licences. I had been continually - they represented to me it was compliant. The business had changed a couple of times, the first time of which was when Sam and Darryl split and then, secondly, when Darryl and Dave Dorian began to have dealings with each other and it was my understanding that they required a new licence. I looked at whether or not I could do the licence and I could not and I advised Darryl that he needed to get somebody who could. And on numerous occasions I had spoken to Darryl about how that was going and he said that it was okay. I had received a call from Stephen Teen saying 'there are still no details of the licence number', of which I think this is why this email has come about." Q. Well, what you had to have known, I suggest, by 6 April was that the scheme was no longer compliant. That's correct, isn't it? A. I wouldn't say no longer. I would say it is not compliant as it was at that point in time, and then mm-hmm." (T 197-198) 227A little later it was put to Mr Fowler: "Q. Surely by April at the latest, if not December, it had occurred to you that there could well be a problem in that the scheme might not be compliant? A. Yes." (T 198:33-35)

The Individual Recollections of the Witnesses 228The plaintiff's evidentiary case includes the evidence of Dr Cohn, Mr Galea and Ms Monahan, all of whom attended the Chat Club meeting and who all subsequently invested in the Scheme. There was no attack on the integrity of any of these witnesses. However, it was submitted for the defendants that their evidentiary statements had to be viewed in light of the fact that they were made many years after the relevant events. Additionally, in 2007, they had participated in an informal group referred to as the 'Silkwater Action Group'. The submission was that there was at least a risk that their recollections may have become contaminated through discussions: Defendants' Written Submissions at [36]-[37]. 229However, there is no precise evidence that in any of these group discussions the investors in the Scheme heard other investors state their recollections of any particular representations allegedly made by Ms Fowler at the Chat Club meeting. In this respect, the plaintiff's evidence was that discussions in the action group concerning Ms Fowler were "...around litigation funding...", and when asked whether the plaintiff discussed with other members Ms Fowler's alleged representations at the Chat Club meeting, she responded "not really, because we had all been there and we had all been there and we knew she had done that": T 134:25. 230Later in cross-examination, when asked about the discussions between investors concerning Ms Fowler's involvement in the Scheme, the plaintiff responded: "I'm saying we all understood that she had made representations at the meeting. We didn't, as I recollect, discuss it in detail because we had all been there, we knew what she had said. We all understood what her role was meant to be. I didn't understand from that, at that time, that that gave me a cause for legal action..." (T 134:45-49) 231A little later, in part-answer to a further question, the plaintiff stated "most of the focus of those meetings was then on the rescue package and the development that was supposed to happen that was going to help us recoup our funds": T 135:17-19. 232Mr Galea stated in cross-examination that during 2007 he participated in meetings of the Silkwater Action Group. He agreed that he would have attended three or four of those meetings. When asked about whether there were discussions at the meetings about what had been said at the Chat Club meeting, he responded that each investor had their own opinion, including as to what they thought about Ms Fowler's involvement: T 157:4-28. 233It was not suggested in cross-examination that any of the abovementioned witnesses had cross-referenced with each other statements that had been made at the Chat Club meeting. 234Dr Cohn agreed that he had at some time discussed what had been said at the Chat Club meeting with the plaintiff, the last time having been up to four years prior to giving evidence. When asked whether he had discussed it with the plaintiff to assist in the preparation of his affidavit, he answered "no": T 140:15-20. Dr Cohn later conceded that having discussed the events of the Chat Club meeting with the plaintiff, up to four years previously, that his memory "might" have been in some respects influenced by those discussions: T 140:29-32. As I have elsewhere observed, Dr Cohn was an impressive witness and appeared prepared to make reasonable and appropriate concessions. 235Ms Monahan accepted that the presentation at the Chat Club meeting would have been discussed at Silkwater Action Group meetings. However, when asked whether she had discussed the representations made at that meeting with the plaintiff, she replied "I don't recall ever discussing that with her": T 147:4-10. 236Ms Monahan said that she did not recall specific discussions regarding Ms Fowler's representations at the Chat Club meeting. She said that a lot of the things discussed at the action group meetings, included "future potential investments that we would redeem our money from", and that only a "small part" of the discussions were "around legal action". She said that they all had to agree to pay a certain amount of money to see if the investors could get a litigation funder, so that "we didn't really get into all those kind of details": T 147:12-25. 237The evidence of each of these witnesses, including the plaintiff, to which I have referred above appeared to be evidence given in a sincere manner and to the best of their individual recollections on the question of any possible risk of contamination. There is no evidence, in my assessment, that would justify a conclusion that any of the witnesses, as it were, cross-checked any of their recollections when providing evidentiary statements or their affidavit evidence.

Mr Galea 238Mr Charles Galea, a teacher by occupation, swore an affidavit on 23 November 2011. He gave an impression of being a straightforward witness. 239Mr Galea became acquainted with the Chat Club in about 2003. He said that he would occasionally write articles on property and economic matters for the Chat Club's newsletters. 240In cross-examination Mr Galea said that he had an interest in real estate and contributed some articles to Chat Club newsletters. He said that between 2003 and 2005 he would have attended more than twenty meetings of the Chat Club. When asked why he would particularly remember the meeting held on 19 September 2005 he responded with, "because it was a particularly important meeting": T 153:10-15. 241In or about 2005 at a meeting of the Chat Club, Mr Dorian told him and others that he had heard of an investment in bridging finance. He said he referred to a company by the name of "Skyder". 242In paragraph [5] of his affidavit he said that Mr Dorian said he had been speaking to two "contacts", Sam Hraiki and Darryl Tombleson, who ran Skyder. Mr Dorian said that investments in Skyder received interest at a rate of 12%. Mr Dorian also suggested that the people in the Chat Club who were interested in banding together and put in a group investment, but that Skyder would not take investments of less than $50,000. 243Mr Galea said that as a result of this conversation, several members of the Chat Club, under the organisation of Mr Dorian, formed an investment group. Each invested the sum of $10,000 with the total amount being then jointly invested by Mr Dorian. 244Mr Galea attended the Chat Club meeting at Seven Hills RSL Club on 19 September 2005. He said that he had become aware from a Chat Club newsletter that the feature presentation at the meeting would be on investing in bridging finance with Skyder and that it would be given by Mr Tombleson and Ms Fowler. 245He agreed that before that meeting he had already invested in the Scheme: T 153:18-20. In that respect he was referred to paragraphs [6]-[7] of his affidavit in which he stated that several members of the Chat Club formed an investment group investing $10,000 each. He said that that occurred in 2005. He said that he received back his investment (of his $10,000 contribution) but he could not recall when that occurred: T 154:10-20. 246He accepted that that investment had been a "success" in the sense that he recovered his capital with interest: T 154:30-35. 247However, Mr Galea said that with the group investment amounting to $50,000 there had been a three month delay before the monies were repaid with interest. He said that Mr Dorian explained that this was "due to the disorganisation of Sam Hraiki": at [8]. 248He said Mr Tombleson said at the meeting: "The bridging finance bridging opportunity is a 100% safe investment. We have cleared everything with ASIC and Ms Fowler of Tiernan & Associates is here to make sure everything required for the legality of the investment is on the level." 249He also said that during the presentation he recalled Ms Fowler saying words to the effect: "Investors' funds will be pigeon-holed in a trust. I will be managing this trust to protect investor's [sic] money. Investments will be 100% safe as they will not be mixed together. They will all be kept separate." 250He said he also recalled Ms Fowler saying words to the following effect: "The bridging finance investment opportunity is all completely O-K with regard to ASIC rules and regulations - there are no problems at all there": at [13]. 251Mr Galea also said that he recalled Ms Fowler saying words to the effect: "Investors in the Chat Club will be protected in their interests. I will be overseeing this process. The funds will be safe and we will lodge caveats and mortgages to protect the monies loaned out. The investments made will be 100% safe": at [14] 252He said that his wife invested all her superannuation monies amounting to $50,000 in the Scheme: at [16]. 253He said shortly after the deposit was made he received an investment loan contract from Tiernan & Associates which he signed and returned to Ms Fowler. 254He said initially the Silkwater investment was "progressing well" as they received interest. In those circumstances, his wife and he made a further investment with Silkwater of $100,000 in or about January 2006. These monies were borrowed from the Commonwealth Bank. 255He said that in or about August 2006 payment of interest on his loans by Silkwater stopped being paid on a monthly basis. 256He said that he on occasion spoke to Ms Fowler and asked her what was happening with the payments. Ms Fowler would reply to the effect: "I will chase up the payments for you - no problems": at [24]. 257He said that every time a payment was late Ms Fowler said words to the effect: "I'll take [sic] to Darryl [Tombleson] why you haven't received your interest payment": at [25]. 258He said that on or about 30 March 2007 he spoke to Ms Fowler by telephone and told her that interest payments had not been received. He said he would need copies of the caveats that she had placed for their investments. 259According to Mr Galea she replied: "Charles, I can't talk to you anymore - I no longer act with regard to Silkwater or your investment." 260When he queried who was looking after the investments, and who should he speak to, she replied "I don't know what you mean. Anyway, I no longer am involved with Silkwater; I can't help you anymore": at [26]. 261He was asked in cross-examination as to how his memory was as to what was said at the meeting on 19 September 2005. He responded, "it's been a long time now and all I can remember is from the words written in my affidavit": T 156:20-21. 262It was put to him that the affidavit had been prepared more than six years after the meeting. However, he responded, "but there was the ASIC one": T 156:25. 263In final submissions, Dr Birch referred to the fact that both Mr Galea and Ms Monahan had given statements to ASIC. I note at this point that Ms Monahan was not cross-examined on that statement: T 351:1-20. I also note that Mr Galea was not cross-examined upon the basis that anything contained in his affidavit in the present proceedings was inconsistent with his ASIC account. 264He agreed that in 2007 he was a member of what was referred to as the Silkwater Action Group: T 156:45-50. 265He said that he may have attended three or four meetings of that group. When asked as to whether he discussed with those present what had been said at the meeting of the Chat Club on 19 September 2005, he replied "Well, all of them had their own opinion": T 157:5-10. When asked as to what that opinion related to, he responded "About the circumstances in which they were-": T 157:16. he was not asked about particular statements that had been made by Ms Fowler, but was asked: "Q. And did they have their own opinions about the involvement of Renee [sic] Fowler in the investments? A. That was consistent with everyone, I reckon. ... Q. So everyone said what they thought about Renee [sic] Fowler's involvement, correct? A. Yes. (T 157:25-30) 266He said that he recalled a PowerPoint presentation being made at the Chat Club meeting on 19 September 2005 and recalled Ms Fowler speaking. It was put to him: "Q. Do you remember anything being said about rules or regulations of Government authorities being followed, anything like that? A. Yes, she said - she spoke briefly on those things, about ASIC mainly. Q. Are you sure she said something about ASIC? A. Yes. (T 157:30-45) 267A little later he confirmed that ASIC had been discussed at Chat Club meetings even before September 2005. I note at this point in paragraph [13] of his affidavit he referred to Ms Fowler saying the Scheme "... was all completely O-K with regard to ASIC rules, regulations - there are no problems at all there". 268Mr Galea was cross-examined on paragraph [12] of his affidavit which included words attributed to Ms Fowler "... I will be managing this trust to protect investor's [sic] money ...". It was suggested that he could not remember her saying that at all. He responded, "I remember that, yes. It was consistent always". He was then asked: "Q. What does that mean? A. It means the same statement has been said. Q. That same statement has been said by others, has it? A. No, by me. Q. Then I'm not sure what you mean by 'it's been consistent'.? A. Consistent with previous ASIC, when we were having the case presented to them. Q. To ASIC? A. To ASIC. Q. You mean you have always been consistent about that? A. Yes, I believe so." (T 158:20-45) 269Again, in relation to paragraph [12] it was put: Q. And is that where you got these passages from, from an earlier statement that you had made, is that right? A. No, these were basically statements which obviously I remembered from information that I gave previously, obviously." (T 158:46-50) 270It was put to him that he could not remember when he came to make his affidavit what had been said by Mr Tombleson, Ms Fowler or by Mr Dorian. He was asked whether that was a fair statement. He replied: "A. Yeah, but I remember the truth, what was said. Q. You remember things that were said? A. Yes. Q. You are less sure about who said them, would you agree with that? A. I remember who said what." (T 159:6-12) 271Mr Galea was next asked about paragraph [26] of his affidavit which was the occasion he said he phoned Ms Fowler on or about 30 March 2007 and told her that interest payments had not been made. In cross-examination he said that he had in fact made a note of what was said. He said he still had the note which was identified at Exhibit C, p 734. 272It was put to Mr Galea that Ms Fowler in that conversation did not say "Charles, I can't talk to you any more - I no longer act with regard to Silkwater or your investment". Mr Galea responded "That is exactly what she said": T 161:15-20. 273In re-examination Mr Galea was asked to read his handwritten note concerning the conversation at Exhibit C, p 734. He then proceeded to read from the note as follows: "Called Renae asking for caveat. She told me not connected with Silkwater any more for a while. I asked her about how contracts were prepared by her firm did not contain caveats. She said 'What do you mean?' but she second confirmed and repeated she -" (T 161:39-45) 274Mr Galea said he could not read one particular word of the note and then continued: "She confessed and repeated, she the same answer that she has nothing to do with Silkwater any more." 275He was further cross-examined and accepted that the word "confessed" should read "confirmed" or "something": T 162:30-35.

Dr Cohn 276Dr Geoffrey Cohn, a practicing ophthalmologist, swore an affidavit in the proceedings on 30 November 2011. He was cross-examined on 26 March 2013 at T 137-143. He stated that he was introduced to the Chat Club by the plaintiff with whom he had had an acquaintance for some years. In about mid-2005 she mentioned to him that she had been attending meetings of the Chat Club and asked if he would be interested in attending a meeting with her. 277In or about early September 2005, he said he had a conversation with her in which she referred to a "new investment method", namely, a bridging finance scheme. He expressed interest and said he would come to the meeting. 278He subsequently attended the Chat Club meeting on 19 September 2005 at the Seven Hills RSL Club. He estimated that there were fifty to sixty people there. 279He said that Mr Dorian acted as Chairperson that evening and he introduced two guest speakers who would be giving presentations. He said that one was Darryl Tombleson and the other was Ms Fowler of Tiernan & Associates. 280In his affidavit sworn 30 November 2011, he said that they both then gave a presentation to the Chat Club members which ran for about ninety minutes and that it was a detailed presentation: at [10]. 281He said that as part of the presentation he recalled Ms Fowler emphatically stating to the Chat Club words to the effect of: "I will be responsible for protecting the money that people invest with Bridging Finance. Your funds will be placed in a trust, and I will be managing the trust. Each investor's funds will not however be left in a general trust account - instead they will be pigeon-holed for individual investors. There are numerous checks and balances in place, which I will personally be managing, so that your funds will always be 100% secure." (at [11]) 282Dr Cohn said that he also recalled Ms Fowler saying words to the effect of: "The funds loaned to Bridging Finance will also be protected by registered interests in properties. While the properties in question will likely have mortgages over them, we will take out second mortgages in favour of the individual investors. The interests of investors will be 100% safe." (at [12]) 283Dr Cohn continued that he recalled Mr Tombleson saying during the presentation, in the presence of Ms Fowler, words to the effect of: "Ms Fowler-Hay will be looking after the Chat Club members. If you have any problems, queries or want to know anything about how the scheme works please feel free to call her. She is here to help the investors in Bridging Finance." (at [13]) 284After the presentation, Dr Cohn said that Mr Dorian, Mr Tombleson and Ms Fowler all stood around answering questions posed by Chat Club members about investing in the Scheme. He said that Ms Fowler gave out business cards showing her as an associate of Tiernan & Associates, and that she said words to the effect of: "Here is my card. Feel free to call me anytime, although I'll be away shortly overseas for a few weeks. I will be back then, and can help you with anything you need to know." (at [14]) 285Dr Cohn said that he recalled that several questions were posed to Mr Tombleson and Ms Fowler during the presentation by Chat Club members. Although he could not recall the questions he did recall someone saying to Ms Fowler words to the effect: "How do we know that the monies will be safe? What if the people that the monies are loaned to for bridging finance don't repay it?" (at [15]) 286He recalled Mr Tombleson responding and in the presence of Ms Fowler, said words to the effect of: "Ms Fowler-Hay will be there to protect and to commence any enforcement proceedings against them. All of the funds as loaned out for the Bridging Finance will be secured against property with low LVRs, with a maximum of 65%. Therefore, there shouldn't be any problems whatsoever with recovery." (at [16]) 287Dr Cohn said that subsequent to the Chat Club meeting he telephoned Mr Tombleson and told him of his intention to invest monies in the Scheme. He subsequently made the following investments in the Scheme: (a) $200,000 - February 2006 (b) $300,000 (date not specified) (c) $100,000 - July 2006 288He received copies of loan agreements in respect of his investments. He said they each contained a notation that they had been prepared by Tiernan & Associates. 289Dr Cohn said that not long after his third investment in July 2006, the interest payments on his loans ceased. He said he spoke to the plaintiff who told him that her interest payments had also not been made but that Mr Dorian had told her that everything was "under control". 290Shortly thereafter he spoke to Barry Kerwand, who he understood to be an employee of Silkwater, who told him that the monies he had invested in Silkwater were gone and that the company was "completely broke": at [25]. 291Dr Cohn said he did not seek independent legal advice before investing in the Scheme. Whilst he said that he noticed that the letters from Tiernan & Associates stated that he should obtain independent advice, he said he did not think it was necessary. He said that he was sure at the time that what he and other investors had been told by Ms Fowler was correct as he thought that her professional obligations bound her to be honest and trustworthy in her representations. Accordingly, he said that he did not consider that he needed to obtain independent advice. 292Dr Cohn was cross-examined in relation to the first of two Chat Club meetings that he said he attended. The first was in early to mid-2005. He was asked as to whether he could recall what that meeting was about. He said it was a discussion of "wealth built through property, accumulating properties, one after the other": T 138:10-15. He said he believed that Mr Dorian was the only speaker. He said he could not recall anything of consequence. It was suggested that the same would apply to the meeting of 19 September 2005. However, Dr Cohn distinguished the two. He said the first, the earlier meeting, was "fairly pedestrian": T 138:36. By that he said it meant that there was nothing new or original being presented. 293In cross-examination he said that there was a later, third meeting of the Chat Club meeting that he attended. He said that at that meeting they were hoping to have Ms Fowler speak but she did not arrive: T 139:15-20. 294Dr Cohn said that he thought the third meeting to which he referred could have occurred some time before February 2006: T 139:40-45. 295In relation to his affidavit sworn on 30 November 2011 he said that he did not have notes to assist him. It was put to him: "Q. Were you just relying on your memory? A. My training is focused on remembering what is important. Q. By that answer can we take it that you were just relying on your memory? A. Yes. Q. But you had discussed what had been said that night with [the plaintiff] since that night, hadn't you? A. I had. Q. Had you discussed it with her to assist you prepare your affidavit? A. No. Q. When was the last time you discussed with her what had been said on that night? A. I expect it would be at least four years ago now." (T 140:10-25) 296It was then put to him: "Q. Doctor Cohn, it must be, mustn't it, that your memory of what was said that night in the presentation has been influenced by discussions you have had with [the plaintiff]? A. In some respects it might be." (T 140:29-35) 297In cross-examination it was put to him in that respect: "Q. But you did not consider that she was your lawyer, did you? A. From her representations in September 2005 I understood that she was acting on behalf of the investors so I considered that she was representing my interests. Q. You don't say that in paragraph 27, do you? That you considered that she was representing your interests? A. I understood that her representations were that she would be protecting my interests." (T 141:32-41) 298A little later it was put: "Q. And it is a different reason, isn't it, to say that she was your lawyer so you didn't need a lawyer? A. I thought there was a responsibility implicit in her professional obligations." (T 141:49-T 142:1) 299Dr Cohn was then taken back in cross-examination to paragraph [11] of his affidavit in which he said he recalled Ms Fowler emphatically stating the matters therein set out. It was then put to Dr Cohn: "Q. Your memory of that now cannot be good, do you accept that? A. All the words, definitely not. Q. It being eight years? A. Yes. Q. I want to suggest to you that she did not say words to the effect of what is in that paragraph and you are mistaken. What do you say to that? A. The words I cannot be sure of. The inference I have no doubt. I made a major decision based on what I heard her say. Q. And your recollection is that she said things about the investment scheme that suggested that your funds would probably be safe, or would be safe? A. Yes. Q. Mr Tombleson also gave a lengthy presentation at that meeting, didn't he? A. He did. Q. Is it possible that some of the things you have attributed to Ms Fowler were said by Mr Tombleson that night? A. I believe that the words to the effect of paragraph 11 were very clearly stated by Ms Fowler-Hay. Q. I want to suggest to you that she may well have explained how the scheme might work, but she did not say that she would be responsible for protecting the money, or managing the trust; what do you say to that? A. I have little doubt that I heard words to this effect." (T 142:7-T 143:6) 300Dr Cohn was then taken in cross-examination to paragraph [14] of his affidavit in which he said that those identified (including Ms Fowler) stood around answering questions and that she gave out her business card and said to those present that they were free to call her anytime. In relation to paragraph [13], which contained a statement by Mr Tombleson in Ms Fowler's presence that she would be looking after the Chat Club members and that she was there to help investors, he was asked: "Q. Are you referring to something that Mr Tombleson said in paragraph 13? A. No. Q. To what are you referring? A. My investment decisions is based on an unambiguous understanding from Ms Fowler-Hay from her own statements that she would be managing the trust, monitoring the trust and that this made the investment safe." (T 143:16-25) 301The cross-examination concluded at that point. There was no re-examination.

Ms Monahan 302Ms Monahan stated in her affidavit sworn 15 June 2012 that she trained as a Systems Engineer in the United Kingdom. She previously had received a Bachelor of Arts Degree (with Honours) from Trinity College, Dublin. 303Ms Monahan was present at the Chat Club meeting on 19 September 2005. Her affidavit took the form of responding to particular paragraphs in Ms Fowler's affidavit. I was impressed in giving her evidence, that she was prepared to make concessions and appeared as a conscientious witness who was not overstating matters beyond what her recollection would permit. 304In paragraph [9] of her affidavit, Ms Monahan stated that she could not remember exactly what was said by Mr Tombleson or Ms Fowler at the meeting during the presentation. However, she said: "... I deny that the statements which Ms Fowler attributes to herself were the extent of her input into the Presentation. I recall statements being made either by Mr Tombleson or Ms Fowler as part of the Presentation to the following effect: 'This [the bridging finance scheme] is a fabulous high return, and a 100% safe investment vehicle, that you as small investors would not normally get access to.... It is 100% safe and many investors have been benefiting from it for years.... For investors, the investment is secured by a 1st or 2nd mortgage and a caveat over the property... As investors you will receive full disclosure of the borrower's financial details and an up-to-date valuation of the security property by Skyder's appointed valuer... All mortgages will be in your name and you will have complete control of your money, as it will be managed in a trust account'." 305In paragraph [10] of her affidavit, Ms Monahan stated: "I say that throughout the Presentation, Ms Fowler did not contradict, and indeed at times nodded in apparent agreement with, comments made by Mr Tombleson during the Presentation." 306In paragraph [11] of her affidavit she denied, in reference to paragraph [30] of Ms Fowler's affidavit, that Ms Fowler "was not involved in the Presentation". Ms Monahan continued that Ms Fowler was involved in it and spoke when several of the PowerPoint slides were shown to the Chat Club meeting. These included descriptions of how the Scheme worked and the protections for investors. 307She said that Ms Fowler was introduced as the person who drew up the "legal agreements": at [12]. Ms Monahan then stated that Ms Fowler gave a presentation which included a section on the alleged legal security available to the Chat Club members. 308In response to paragraph [31] of Ms Fowler's affidavit, Ms Monahan recalled Ms Fowler saying words at the meeting to the effect: "I have been working closely with Dave and Darryl to ensure that all the correct and relevant legal documents will be in place to protect the capital of investors." (at [13]) 309In paragraph [15] of her affidavit Ms Monahan said, in response to paragraph [36] of Ms Fowler's affidavit, that she was one of the Chat Club meeting persons in attendance who "gathered around" Ms Fowler after the presentation and asked questions. She said she denied that Ms Fowler "was not asked about bridging finance". In particular, she said that Ms Fowler made a statement to the following effect to her and others who were gathered around: "Through my employer, I will be overseeing all of contracts with Skyder. Dave [Dorian] has set it up this way so that it is safe. I highly recommend the investment." 310She said that she herself asked Ms Fowler if she would be investing in the Scheme. She said Ms Fowler looked her in the eye and said words to the effect of, "If only I had the money available I would absolutely be investing": at [16]. 311Ms Monahan said in paragraph [17] of her affidavit that she asked Ms Fowler if it would be okay for her to contact her with further questions about the Scheme. She said Ms Fowler responded with words to the effect that she "would be delighted to assist", and she gave her her business card. 312Ms Monahan said that she spoke on the telephone with Ms Fowler on several occasions following a conversation that she had had with Mr Tombleson during the following weeks. She was unable to remember the specifics of what queries she had raised with Ms Fowler: at [19]. 313She said that Ms Fowler prepared the relevant loan agreements and emailed her on a number of occasions, including sending details of the Silkwater bank account so that she could arrange the transfer of her investment of $100,000. 314Subsequently, on or about 20 April 2007, Ms Monahan, in paragraph [22] of her affidavit, sets out a conversation she said she had with Ms Fowler in which she said Ms Fowler said she was no longer acting for Silkwater. 315In relation to paragraph [19] of her affidavit, Ms Monahan said that after early February 2006 she spoke with Mr Tombleson and decided to go ahead with her investment in the Scheme and he said that Ms Fowler would be in touch with her. She was asked: "Q. And can you recall now any of the items of information that you asked to have confirmed by Ms Fowler-Hay? A. Around the safety of the investment. Q. Yes. A. And the legal agreements that were being drawn up that I was going to sign. Q. And can you recall any more specifically the questions or the specific matters that you raised with her on that topic? A. Around it being secured against mortgages and the money being placed in a trust fund, so the money would be safe. Those were the kinds of things I wanted validated. Q. And can you recall now the substance of any of her answers, even if you can't remember the exact words in which she gave them? A. Well, the substance alleviated my concerns. So it was a positive 'yes, it's safe. Yes, there will be a trust fund. Yes, these documents are valid, being put together'. That sort of thing." (T 146:9-27) 316Ms Monahan was cross-examined at T 146-149. 317She was asked: "Q. And did you have any occasion to discuss with her [the plaintiff] what was said by Ms Fowler at the presentation on 19 September 2005? A. I don't recall ever discussing that with her. Q. That would have been discussed, that subject, in those Silkwater Action Group meetings, wouldn't it? A. Yeah. Q. Was it the case in those meetings that the people who attended the meeting said that they could remember about what had been said by Ms Fowler-Hay? A. A lot of the meetings - I don't remember specifically what you've just said. There was a lot of things being discussed at the meetings, including future potential investments that we would redeem our money from. Only a small part of it was around legal action and we all had to agree to pay a certain amount of money to see if we could get a litigation funder. So we didn't really get into all those kinds of details. Q. But you did discuss who might be able to sue, didn't you? A. Absolutely, and at the time we would have been looking at all the parties who had been involved." (T 147:4-24) 318Ms Monahan said that when she prepared her affidavit she was "... pretty sure my ASIC statement, a statement I had made to ASIC previously" was available to assist her in preparing her affidavit in the present proceedings: T 147:25-35. 319Ms Monahan was then taken to paragraph [7] of her affidavit which related to statements which she said Mr Dorian made, in particular to the fact that he had been working with "Renae from Tiernan & Associates" and that she would be representing the interests of investors. She was asked: "Q. Were you also told that she was Skyder's solicitor? A. No. Q. You came to know that though, didn't you? A. After I lost my money." (T 148:22-25) 320She was asked whether she became aware at any time that Ms Fowler was a lawyer acting for Skyder in relation to the Scheme. She replied in the negative, saying that the way the matters had been presented over the previous ten months at meetings was: "... that I had gone to an education forum and an investment buddy group, in a way, and that Dave Dorian was setting up a safe space for investors and that Renae was part of that safe space ..." 321She said that she believed that Ms Fowler was part of that "whole structure": T 148:30-36. 322She rejected the proposition that Mr Tombleson had told her that Ms Fowler was Skyder's lawyer. She said: "No, he told me to contact her, to set up the legal agreements and because she had co-presented with him at the meeting, had been introduced by Dave Dorian, I just thought it was all part of this nice neat package they had created for Chat Club members." (T 148:40-45) 323Ms Monahan was then taken to paragraph [9] of her affidavit in which she said certain statements were made either by Mr Tombleson or Ms Fowler. It was put to her: Q. So if we go through those statements there, you can't say that Ms Fowler said any one of them in particular, is that true? A. Yes, that's true. I couldn't remember exactly who said what. Q. So they could have all been said by Mr Tombleson, with Ms Fowler present, is that right? A. Yeah or vice versa. Q. And it wasn't said that night, was it, by anyone that the monies that were invested would be pain into the solicitor's trust account? A. I remember it being said that they would be paid into a trust account, so I assumed that that's what that meant. Q. You assumed it had something to do with the lawyers? A. Yes, that it was a safe structure. Q. You assumed it was a safe structure, because the lawyers had something to do with it? A. Yeah, I know it is really stupid, but I did at the time. I believed that this lawyer was being brought in by Dave Dorian to work with us and Skyder to make sure everything was legit and safe. Q. When you say, against yourself, it was stupid, do you mean by that, that looking back it was obvious that her involvement can't have made it safe? A. I know now, by looking back since I've lost money, that I should have done more due diligence. Q. You didn't seek any independent advice? A. No." (T 149:4-32) 324There was no re-examination on Ms Monahan's evidence.

PART D - ADVICE AND INFORMATION BY MS FOWLER TO PROSPECTIVE INVESTORS 325Ms Fowler stated that she had come to know that Mr Dorian had been conducting a seminar-style business, which she considered was more related to property development and investment properties, and that he offered education to members of the public in relation to property development: T 182:20-40. 326She agreed in cross-examination that she had understood that Mr Dorian was important to Mr Tombleson and Mr Hraiki by reason of his access to a number of people who could be potential investors in their "Skyder business": T 182:40-45. She also understood that she was dealing with someone who would be likely to convey whatever information she gave to him to members of his Chat Club or business: T 182:45-50. 327Ms Fowler agreed that she undertook work designed to assist in presenting information about the Scheme to members of the public. In that respect she had sent a facsimile to Mr Dorian to which was attached a flow chart in relation to Skyder and its Scheme. The handwritten version of the flow chart was in her handwriting and she agreed that she made it: T 183:1-22. 328She explained that she created the flow chart based on an explanation that Mr Tombleson had given to her. She charged Skyder a fee for preparing it: Exhibit C, Tab 164 - invoices of Tiernan & Associates - p 763, the fourth entry: "peruse email from client, drafting flow chart, drafting handout, facsimile to client: $250." 329Ms Fowler also agreed that the flow chart represented the structure of the Scheme: T 185:40-45. She subsequently agreed that she understood that the flow chart explanation would be provided to Mr Dorian for use when speaking to "his Chat Club people and introducing them into the scheme": T 186:25-50. 330The heading of this chart was "How Your Investment Works". Notwithstanding her earlier evidence about it Ms Fowler subsequently stated: "I did not consider it was going to be produced to the Chat Club members": T 187:40-45. When it was put to her that the title to the flow chart suggested that it was directed to people who were investing, she said "I didn't turn my mind to that at the time": T 187:49-50. 331She agreed that Mr Tombleson had asked her to settle the document: "... so that you, as a lawyer, could be sure that it was correct if I can put it this way? A. Yes." (T 188:14-16) 332Ms Fowler was asked in cross-examination about her contact with investors in relation to the Scheme. The effect of her evidence was that she did not speak to them about the operation of the Scheme: "Q. Do you say to the Court that you never said to prospective investors anything regarding the way the scheme operated, or the level of security that potential investors will enjoy? A. No." (T 174:35-40) 333She was asked whether she always referred investors' questions about their investments to Mr Tombleson or Mr Hraiki. She agreed she had and said also that she referred them to their lawyers: T 175:25-30. She said that applied to people who were considering investing: "Q. And so the evidence that you wish to give this morning is that it was not your practice, and could not have been the case, that you gave evidence to prospective borrowers about the way the scheme would operate and the level of security available to them, is that your evidence? A. That's not entirely true, because I did talk about what is a mortgage or what is a caveat, what is a trust account, at the seminar. So I talked about the legalities, so. ... Q. --that you set out in this affidavit. But you are saying that other than the statements that you've referred to in this affidavit, you did not give advice to or make representations to investors or potential investors about the way the scheme would operate. That's your evidence, is it? A. Yes, it is." (T 175:36-176:2) 334It was put to Ms Fowler in cross-examination that her evidence in that respect was false: T 176:5-10. She was invited to reconsider her evidence, to which she said: "A. No, I maintain that I did not give financial advice. Q. I didn't ask you about financial advice. I asked you whether you gave advice to potential investors about the operation of the scheme and the security that was available to potential investors in regard to the scheme. So, just considering carefully the question I have put to you -- A. Mm - Hmm. Q. -- Do you maintain that you did not give any such advice, other than that you have referred to in your affidavit? A. That's correct." (T 176:12-21) 335The discussion below deals with particular occasions on which Ms Fowler provided information on the Scheme and matters associated with investing in it to possible or potential investors in the Scheme, to which reference has been made above.

Ms Fowler's Advice to Mr Sam Ayoub Regarding Skyder Investments Pty Ltd 336On 3 August 2005, Ms Fowler sent an email to Mr Sam Ayoub in response to a recent inquiry concerning Skyder. 337Mr Ayoub was a manager of professional football players. Ms Fowler's email referred to the Scheme. The email stated that should he or the players he managed invest with Skyder, then he/they would receive 2% interest per month, payable monthly in arrears on the investment. 338The email proceeded to give an example based on an amount of $200,000 at which Ms Fowler stated "... As is evident, the returns are significant". 339After reference to optional terms of any investment, Ms Fowler's email proceeded to discuss the issue of "security on the investment". It did so under the headings:

1. Investor Loan Contract
2. Unit Trust Scheme
3. Bridging Contracts (MFI 2, Documents from Police Subpoena at p 28.) 340The email went on to observe that a loan contract, caveat and mortgage: "... are essential to every Bridging Finance deal." 341The email contained the following assurance: "Therefore, at all times you will know where your money is and that it is not being used for any other purpose than for the transactions which you have been a co-signatory to." 342The email then posed the question: "What happens if Skyder went bankrupt or did not pay?" The email provided an assurance in response in the following terms: "As discussed above, your funds are kept separate to the internal workings of Skyder, therefore if Skyder went bankrupt, your funds could still not be touched. If, using the above example, you had leant [sic] Skyder $200,000.00 and $100,000.00 was being held by Skyder in the pigeon hole and $100,000.00 was presently being used for a bridging customer, you would instantly receive back your $100,000.00 and when the term of the Bridging Finance deal completes, the full $100,000.00 would be returned to you." 343Ms Fowler concluded the email by stating: "Sam, if I can be of further assistance, please do not hesitate to contact me. Yours faithfully Renae Fowler-Hay Associate Tiernan & Associates Lawyers" 344In cross-examination, Ms Fowler agreed that Mr Ayoub was a prominent manager of football players. She said she had met him at some time before September 2005. She understood that Mr Hraiki had been talking to him about the Scheme: T 203:40-45. 345In sending her email to Mr Ayoub, she said she assumed that Mr Hraiki had spoken to Mr Ayoub and that Mr Ayoub had then contacted her. She agreed that the email was in essence her telling Mr Ayoub the way in which the Scheme would operate: T 204:25-35. She said that she had been told to send the email to Mr Ayoub: T 204:45-50. 346In cross-examination Ms Fowler was taken through the various statements contained in the email. She agreed that the information was supplied under her name to Mr Ayoub, she having known him from previous business dealings and he having known that she was a solicitor: T 209:45-T 210:10. 347In response to Ms Fowler's statement that she sent the email because she had been requested to send it, it was put to her that she did not say in the email that she had been instructed by her client to supply the information but that she was putting her name to it. Ms Fowler did not agree: T 210:25-T 211:5. 348She agreed that there had been nothing in earlier evidence to suggest that Mr Hraiki knew Mr Ayoub. It was put: "Q. And of course Mr Hraiki could simply have sent a letter to Mr Ayoub, or an email to Mr Ayoub himself couldn't he? A. He could have, yes." (T 211:50-T 212:2) 349A little later it was put to Ms Fowler: "Q. I asked you at the beginning of this cross-examination whether or not it was true that you had never described to prospective investors the nature of the bridging scheme and the security that was in place and you told me confidently that you had not done that. That you had not given those descriptions to investors. Do you agree now that that answer was false? A. Well, looking at this, it appears that I have." (T 212:22-30). 350Ms Fowler's answer was made in reference to the email of 11 August 2005 which she had sent to Mr Ayoub.

Ms Fowler's Advice to Mr McCarthy, Solicitor for Mr and Mrs Croker 351Clients of the firm RJ McCarthy & Co, solicitors, a Mr and Mrs Croker, developed an interest in the Scheme. On 5 July 2005, Ms Fowler sent a letter to them enclosing a loan contract, mortgage, caveat, a Property Acknowledgment document and a Witness Certificate. The letter requested them to return the documents once signed. 352Mr and Mrs Croker sought advice about the proposed investment from RJ McCarthy & Co. On 9 August 2005, Ms Fowler wrote to that firm concerning its clients' proposal to invest in the Scheme: MFI 2, McCarthy Documents. On 22 August 2005, a letter was sent by RJ McCarthy & Co to Mr and Mrs Croker in which, inter alia, advice was given that the writer had contacted Tiernan & Associates and it was observed: "... and our concerns as to the nature of such reinvestment remain genuine concerns ..." 353On 24 September 2005, Ms Fowler wrote to Mr McCarthy at Robert J McCarthy & Co setting out a number of matters concerning the operation of the Scheme. The letter stated, inter alia: "As discussed, pleased find below a synopsis of our clients [sic] use and protection afforded to your client on monies they propose to advance. We note that all monies 'draw down' are used exclusively for the purpose of Bridging Finance to third parties. The monies used are secured by way of Third Party Loan Agreement between Skyder and the Crokers as 'Lenders' to the Third Party. Prior to any Third Party loan offer, Skyder ensure that each third party loan, approval is conditional upon being satisfied that; (a) A comprehensive evaluation of third party security property allows for equity in security property; (b) A mortgage over the Third Party Property being entered into; (c) A caveat securing the Mortgage; (d) Personal guarantees." 354The letter continued, stating that Mr McCarthy's clients would be afforded rights pursuant to the Investor Loan Contract under which Skyder guaranteed to pay 2.5% interest monthly and the principal at the conclusion of the term. 355The letter went on to outline other forms of security offered. This included details as to a "Unit Trust Scheme" and "Bridging Contracts". Ms Fowler then wrote: "Therefore, at all times you will know where your money is and that it is no [sic] being used for any other purpose than for the transactions which you have been a co-signatory to." 356The letter continued under a question posed "What happens if Skyder went bankrupt or did not pay?" The terms of the explanation were similar, if not identical, to those appearing in the email to Mr Ayoub referred to above. 357The letter concluded: "If we can be of further assistance in fielding your queries, please do not hesitate to contact us. Yours faithfully Renae Fowler-Hay TIERNAN & ASSOCIATES Associate" 358A tax invoice issued by Tiernan & Associates to Skyder recorded the following entry: "5 May 2005 Conference with Mr & Mrs Croker - .8hrs - $200." (Exhibit C at p 751) 359In cross-examination it was put to Ms Fowler that Mr and Mrs Croker had to be persuaded to go ahead with the Skyder investment. Ms Fowler said she could not say: T 218:20-25. 360In relation to this correspondence with Mr McCarthy it was put to her: "Q. In fact, do you agree now that what had happened was that Mr McCarthy had contacted you on behalf of his clients because he did want to know how the scheme operated and that you had told him various things and then you had followed it up with the written assurances and record that you have put in that letter? A. Yeah. It looks like he wanted more detail." (T 221:7-15) 361Ms Fowler was shown a "synopsis" document in Exhibit A commencing at p 146. The document commenced with an introduction "Thank you for entering into negotiations with us for financial investments ...". 362Ms Fowler agreed in cross-examination that the statements on page 4 of the document (Exhibit A, p 149) under the heading "Unit Trust Scheme" and "Bridging Contracts" were expressed in almost identical terms to the material set out in her letter to Mr McCarthy and it was put to her: "Q. I'm asking you this: Firstly, is it possible that the material that you sent to Mr McCarthy was derived from the document which appears at Tab 11 in the Court Book and I have drawn your attention to page 4? A. I appreciate that, yeah. It appears that page 149, which is page 4, is consistent with the information that was provided to Mr McCarthy, yes. But this document, I - it is incomplete. I don't think it is this document that you are saying is going to Mr Doran. Q. In any event, you understood this was the position though, that Mr McCarthy had concerns on behalf of his clients? A. Yes. Q. And it was to you he had turned for reassurance about the investment that they were intending to make; that's correct, isn't it? A. Yes. Q. That's what you understood? A. Yes. Q. And rather than refer him to Mr Hraiki or Mr Tombleson -- A. No, he also spoke to Mr Hraiki and Mr Tombleson at length. In fact he had numerous meetings with them. Q. And then in addition to those meetings, he spoke with you and you then provided him with this letter of reassurance, I would suggest; do you agree? A. I know I actually met with him afterwards, but, yes I definitely sent - well, it appears that I have sent this letter, yes. Q. And in doing so you made substantially the same representations that you made to Mr Ayoub, do you agree? A. Yes. Q. And you understood that the reason that you were writing this letter was because your clients hoped that by doing this, you would encourage the Crokers to make their investment in the bridging finance scheme? You understood that at the time, didn't you? A. No, that is the document that has been compiled by my clients and they asked me to give that to Mr Ayoub, which I did. Q. You understood you were forwarding it through on the Tiernan & Associates letterhead, didn't you. A. Yes, I do. Q. Signing it as an Associate at that firm of solicitors, didn't you? A. Yes, and saying that I act for Skyder Investments. Q. Yes, and setting out and assuring Mr McCarthy, the solicitor for the Crokers, of the matters that you described in the letter, isn't that correct? A. Assuring him? Where did I say "I assure you"? Q. If I take you to page 2. A. Mm-hmm. Q. After the paragraph with the heading "Bridging Contracts"? ... Q. And under the heading "Bridging Contracts" on the second page, I took you to this short paragraph. You said: "Therefore, at all times you will know where your money is and that it is not being used for any other purpose than for the transactions which you have been co-signatory to." Do you see that? A. Yes, I do. Q. And you were giving that assurance to Mr McCarthy that if his clients invested, that's what would happen, weren't you? A. Well, I didn't say words "I assure you", but I certainly - it appears that that's what I have written there." (T 222:47-T224:31) 363Ms Fowler went on to state that what she had written is what she had understood would happen. 364In summary the following matters are noted:

• The above correspondence were not communications or statements made by a solicitor in the course of transactional work;
• Particular statements by Ms Fowler were capable of being understood as supportive of the Scheme, including as to the benefits to be derived: for example, "As is evident, the returns are significant": at [338] above;
• Some statements contained assurances to the recipients who were at that time potential investors: at [339] and [342] above;
• Such statements do not qualify the information (for example as to attributing them to a particular source) and were not accompanied by any disclaimers;
• Particular statements referred to the security measure that would apply to investors' funds, eg, [342] and the "protection" afforded to monies advanced by investors: at [353] above.

The Trust - An Absence of Knowledge 365Notwithstanding her statements to Mr Ayoub and to Mr and Mrs Croker concerning the existence of a unit trust, Ms Fowler conceded that she had no knowledge of the internal workings of any trust that operated for the purposes of the Scheme: T 243:20-25. 366She acknowledged that she had never seen a unit trust deed: T 247:25. She conceded in cross-examination that she had never sighted any trust ledgers or bank accounts or anything that related to it: T 247:30. Ms Fowler agreed that she had absolutely no basis for knowing whether a trust scheme existed or whether it was simply a figment of the imagination of Mr Hraiki. Notwithstanding, she agreed that she was prepared to tell Mr Ayoub and Mr and Mrs Croker's solicitor that it was one of the safeguards for investors: T 247:28-46. 367Particular issues arising from Ms Fowler's affidavit evidence are considered below. In general terms it was put to her that she sought to downplay her role at the Chat Club meeting with the plaintiff because she was conscious that it would damage the case against her if she admitted the fact. She denied that that was the case: T 248:5-15.

PART E - EVIDENCE IN THE DEFENDANTS' CASE 368Ms Fowler stated that while she could recall events from 2005 and 2006, she did not claim to have a reasonably good recollection of all events having occurred some eight years earlier: T 170:21-25. Subsequently, however, she stated when giving evidence in response to the plaintiff's affidavit that she did have a very sound knowledge of what happened in relation to the events in question: T 173:11-16. She said she had not had access to any documents from the files of Tiernan & Associates relating to those years in preparing her affidavit: T 170. She said she did not have access to the transcript of her ASIC interview when preparing her affidavit. The documents that she had available when preparing her affidavit were those annexed to it: T 172. 369She said she had recalled the plaintiff by reason of having met her before the Chat Club meeting. She also said that she had had contact with the plaintiff by telephone: T 173.

Ms Fowler Meets Messrs Tombleson and Hraiki 370Ms Fowler said she first met Darryl Tombleson and Sam Hraiki in May 2005. At that time they had moved onto the same floor as Tiernan & Associates. 371She said that in or about June 2005, she attended a meeting with Mr Tiernan, Mr Hraiki and Mr Tombleson at their offices to discuss the bridging finance loan business. According to her evidence, Mr Tombleson explained that he had been conducting business successfully for quite a while and said: "... we are always looking for new investors and new borrowers. The investors give us funds which we put into our trust account. This is usually for a short period for one month up to twelve months. Interest is paid monthly to the investors at good rates, usually 2% a month, sometimes more ..." 372She said he explained that the funds were used by short-term borrowers who sought bridging finance for a few months and that they obtained security over the property of the borrowers usually by an unregistered mortgage and the lodging of a caveat: Ms Fowler's affidavit at [9]. He also stated that the loans to borrowers invariably had low loan to value ratios, no higher than 65% and sometimes they registered a second mortgage. He told her "it is a good business, we protect ourselves and the investors' funds are safe". 373Ms Fowler stated that Mr Hraiki asked her to draft a new form of loan agreement to be provided to investors. 374After taking instructions, she drafted a loan agreement. She said it was based on versions that had been provided by Mr Hraiki and Mr Tombleson's previous solicitors, Inner West Legal. She said that she provided a draft to Mr Tiernan who did some work on settling the document. 375Ms Fowler said that she commenced working for Mr Hraiki and Mr Tombleson on various conveyancing and property development matters. She would open a new file for each matter. On her evidence, the Scheme's promoters were for some time seen as worthwhile clients. She said that she raised time costed invoices which were furnished to Mr Tombleson or Mr Hraiki. Generally in the early stages the invoices were paid but as time went by payments were very late or not at all. 376Ms Fowler said that about this time (that is, a little later in 2005) Mr Tombleson approached her and a conversation to the following effect took place: Mr Tombleson: "Can you help me get a financial services licence? Ms Fowler: "I don't know what the requirements are. I will look into it." 377She said that shortly afterwards she told Mr Tombleson that he should find a lawyer who specialised in that area. 378In about July 2005, Mr Tombleson approached her in her office and said words to the effect: "A contact of mine, David Dorian, needs some contracts drafted. He will get in contact with you." 379Ms Fowler said that shortly afterwards Mr Dorian, who she had not met before, attended her office. He advised her that he had a business called the 'Chat Club', the members of which paid a fee to join and they could then attend regular meetings to hear about property investment ideas. He told her that he had been very successful in that area over many years and wanted to help other people. He told her that he wanted to franchise out that business to other subscribers and asked her as to how that could be done and to draft the necessary contracts. 380Ms Fowler commenced drafting a franchise agreement. She said the process was not straightforward and when she reached the point at which she needed further particulars she rang Mr Dorian but he told her that there was no need to do any more on the matter at that point as it was not proceeding.

Ms Fowler's Account of the Skyder Boardroom Meeting 381Ms Fowler said that in or about early September 2005 she heard Mr Hraiki and Mr Tombleson talking to a person who she later found out to be the plaintiff. She said she did not hear what was said. She said they were talking in the reception area to her firm's offices which was also the reception area for Mr Hraiki and Mr Tombleson's business. 382Some time after that occurred, Mr Hraiki approached her in her office unannounced and without any appointment. She said he asked her if she could attend the boardroom to meet the plaintiff. 383Ms Fowler said she went to the boardroom and was introduced to the plaintiff who she had not previously met. She said that she had not heard what had been said in the boardroom before she entered it. Mr Dorian was also present. 384Following the introduction, according to Ms Fowler, Mr Hraiki said words to the following effect: "Renae works for Tiernan & Associates. She is a solicitor. She drafts the loan contracts for the bridging finance scheme and she will do all of the legal work and drafting for your investment in the scheme. Renae will draft the caveats and mortgages as necessary": Ms Fowler's affidavit at [20]. 385In response to paragraph [44] of the plaintiff's affidavit, Ms Fowler said that nothing was said in her presence to the effect that she was "an expert on bridging finance contracts". She also said that it was not said in her presence that she would be "managing the trust". 386In reply to paragraphs [45] to [48] of the plaintiff's affidavit, Ms Fowler said she did not recall the conversations occurring as set out in those paragraphs. She said that it was not said in her presence that she would be administering the Scheme or managing any trust or trust account. She said she could not recall any explanation being given in her presence as to the way the Scheme operated. She said she was only with the plaintiff on this occasion for approximately five minutes. After that, she said she returned to her office and commenced working on behalf of Mr Tombleson and Mr Hraiki "... on documents in the name of the Plaintiff": at [22]. That statement was the subject of particular attention in cross-examination for at that time there was no transaction involving the plaintiff. This aspect, involving Ms Fowler's credit, is further discussed below. 387Contrary to Ms Fowler's evidence, there was other evidence that the Skyder boardroom meeting had been pre-planned. In particular, emails referred to arrangements for the meeting, with Ms Fowler being copied in on the email exchange. In summary: (i) The plaintiff's evidence was that the meeting had been pre-planned. Ms Fowler's evidence was that it was not a pre-arranged meeting involving her as a participant. (ii) An email written by Mr Dorian to Mr Tombleson on 13 September 2005 suggests that the meeting was set up and pre-arranged. In the email, copied to Ms Fowler, two matters were raised as urgent matters, the second concerning the Scheme. It stated: "Hi Darryl and Renae, I have sent you the agreement from Lendwide with the changes required and an explanation in BLUE. Please read prior to my coming over tomorrow so we can discuss. ASLO [sic] ABOUT BRIDGING FINANCE: Clients are querying why they do not get any receipt for their money. Can you please detail the procedures prior to me coming over with [the plaintiff] tomorrow." (emphasis added) 388This email suggests that the recipients had some prior knowledge about the plaintiff, in particular that she was then seen as a prospective investor, and that Mr Dorian was bringing her with him "tomorrow", this being consistent with the meeting which the plaintiff says she attended in the boardroom of Skyder. 389Following this meeting, Ms Fowler rendered a tax invoice to Skyder. The legal services were described as "Conference with Darryl, Sam, Dave Dorian & Hazel about Haxel's [sic] Investment" (Exhibit B, p 767). A fee of $250 was charged, which represents Ms Fowler's usual hourly rate for a conference.

Ms Fowler's Account of the Chat Club Meeting 390Ms Fowler said that Mr Tombleson rang her and asked her if she would go with him to a meeting of the Chat Club. There is some conflict in the evidence on this aspect with reference being made in the plaintiff's submissions to a document which indicates that arrangements had been made for Ms Fowler to attend the meeting on 19 September 2005 before that date. 391Ms Fowler said that on 19 September 2005 Mr Tombleson rang her and said: "There should be quite a few potential investors there. I want you to come along and explain the legal aspects of the bridging finance scheme loans such as how mortgages and caveats work. I will explain how the bridging finance scheme works." 392Ms Fowler said she would ring him back with an answer. She said that Mr Tombleson rang her again later in the day and told her that he would be making a PowerPoint presentation at the meeting that night. According to Ms Fowler, he also said: "... This should provide a good opportunity for your firm to get some exposure for some property transaction work from the group. Do you want to join in my PowerPoint presentation?" 393Ms Fowler said she would get back to him with an answer. She said that after speaking to Mr Tiernan about attending the Chat Club meeting she rang Mr Tombleson back and said words to the effect: "I will come along tonight but I don't want to be involved in the PowerPoint presentation, thanks anyway": Ms Fowler's affidavit at [26]. Ms Fowler admitted in cross-examination to largely relying only upon her recollection in making her affidavit. Apart from some documents annexed to it, she had not had access to the files of Tiernan & Associates. 394Ms Fowler said that she decided to attend the meeting because she thought it would be good exposure for Tiernan & Associates in the local area. 395She said that she attended the Seven Hills RSL Club and entered the room where the Chat Club meeting was about to be held. Mr Dorian introduced Mr Tombleson to the meeting. She said Mr Tombleson then made a PowerPoint presentation explaining the Scheme. Ms Fowler said that she sat at the front of the room, but off to one side. She said "I was not involved in this presentation": at [28]. 396Ms Fowler's affidavit evidence was to the effect that her contribution to the promotion of the Scheme at the Chat Club was confined to providing legal explanations of caveats, mortgages and trust accounts. Ms Fowler did not create any notes or record of the statements made by her. Her affidavit would seem to be the first known written recollection of events. 397Ms Fowler's evidence was that, based on her recollection, she addressed the meeting using words to the following effect: "Investors in the bridging finance scheme will enter into loan contracts setting out various terms, including the amount invested, interest rate and the period. Borrowers will enter into separate loan agreements with their own terms. You have heard Mr Tombleson talking about mortgages. Mortgages are agreements in relation to property under which a party that owns property, called the mortgagor, gives another party, called the mortgagee, security over that property, usually in return for loan monies. Mortgages can either be registered or unregistered. Registered mortgages are recorded on the Title of the property and give the mortgagee control over any dealing in the property. Unregistered mortgages do not appear on the Title but are simply agreements between the parties. Properties can be subject to more than one mortgage. If there is a second (or more) mortgage on the one property, the second mortgagee also has the security and control over dealing, however, the first mortgagee has priority if the property needs to be sold to recover loan monies. Another instrument that can provide security for lenders that Daryl mentioned is a caveat. A caveat is a registered warning placed on the Title of a property to any other party that the person who has placed the caveat, known as the caveator, has an interest in the property that, similar to a mortgage, can prevent the transfer of the land without the approval of the caveator. Caveats are often used in conjunction with unregistered mortgages to provide security to lenders. These things that appear on the Certificate of Title of properties are all important because of the legal concept known as indefeasibility of title. This means that the ownership and other interests in land are determined by what appears on the Title conclusively and this cannot be challenged by other arguments, agreements or disagreements about the history of ownership and interest in the land. You also heard Daryl mention trust accounts. Trust accounts can come in various forms but essentially money put into a trust account can only be used for a purpose properly approved and cannot be used simply at the discretion of the account holder. If various people contribute monies to a trust account, each of their separate contributions are to be kept separate and not mingled with the funds of the others. In this way the purpose of the application of the individual contributions can be monitored." (Ms Fowler's affidavit at [29]) 398In referring to paragraph [65] of the plaintiff's first affidavit, Ms Fowler again stated that she was not involved in the PowerPoint presentation at all. 399In relation to paragraph [67] of the plaintiff's affidavit Ms Fowler said that she did not say "I will retain the documents and oversee the protections in place for investors". 400In reference to paragraph [68] of the plaintiff's affidavit, Ms Fowler said that Mr Tombleson did not say the words quoted in that paragraph in her presence. At that time she said she had not been asked to, nor had she taken any steps to, create any trust or trust account relating to the Scheme. She said that she had not been asked to manage any trust or trust account or receive any funds into her firm's trust account relating to the Scheme. She said that she was not at that time, or at any time, a signatory to the firm's trust account. She said, based upon what Mr Tombleson and Mr Hraiki said, it was at that time her understanding that Mr Hraiki and Mr Tombleson operated a trust account or trust accounts for the purposes of conducting the bridging finance business. She said that she did not say anything, or hear anything said in her presence, contrary to that position. 401In relation to paragraph [69] of the plaintiff's affidavit, Ms Fowler said she did not recall Mr Dorian saying the words contained in that paragraph. She said that when she arrived at the meeting Mr Dorian said to her that a man by the name of Angelo was a solicitor and a member of the Chat Club and he did the legal work for members of that Club. She said that at no time did she hear in her presence, or did she say, that someone else would be paying for her or her firm to be providing legal services to Chat Club members: at [33]. 402Ms Fowler said that she did not recall the conversation in her presence as set out at paragraphs [70] to [74] of the plaintiff's affidavit. 403As to paragraphs [75] to [76] of the plaintiff's affidavit, Ms Fowler denied the conversation set out in those paragraphs. She said she did not recall being asked about 'West Point'. She said at no time did she say she would personally manage a trust account. 404In relation to paragraphs [78] and [79] of the plaintiff's affidavit, Ms Fowler said that she recalled Mr Dorian addressing the group and inviting questions. A number of those in attendance gathered around Mr Tombleson and herself and asked some questions about the Scheme. She said Mr Tombleson answered their questions. 405Ms Fowler said that she recalled being specifically asked about how to obtain a copy of a title deed and to clarify the difference between a registered and an unregistered interest. She said she was not asked about bridging finance. She said she did not say she would invest in the Scheme herself if she had the money. 406In relation to paragraphs [81] to [86] of the plaintiff's affidavit, Ms Fowler said that to her recollection the plaintiff did not call her after the Chat Club meeting and ask her about the operation of the Scheme. She said the only telephone conversations that she recalled having with the plaintiff after the meeting of 19 September 2005 related to the loan documentation as discussed in her affidavit. She said she did recall being called by investors. She said that she found this to be unusual as they would call her regarding the Scheme and she always suggested that they speak to their lawyers, Mr Hraiki or Mr Tombleson: at [37]. 407Ms Fowler stated that in about late October 2005 she received a telephone call from the plaintiff to the following effect: "I recently invested $80,000 with Skyder in the bridging finance scheme but I haven't yet received any written loan contract. Can you please provide me with a contract?": (at [38]). 408Ms Fowler said she caused to be prepared a loan agreement with the plaintiff's details and the details of the investment and sent it to her with a covering letter (Tab 1 to her affidavit). 409She said that shortly after she received a signed copy of the loan agreement back from the plaintiff. 410Ms Fowler said she did not receive any of the invested funds, nor to her knowledge did the firm receive them. She said that at the time she held standing instructions from Mr Hraiki and Mr Tombleson to forward loan agreements to any new investors. She said she did not receive any instructions to receive, oversee or manage the placement or disposition or the plaintiff's funds. She said she did not receive any instructions in relation to the payment of interest to the plaintiff. 411In about mid-November 2005, Ms Fowler said that Mr Tombleson asked her to send another agreement to the plaintiff for a further investment totalling $310,000. Ms Fowler then sent her a further loan agreement under a covering letter to her. 412She said that some time later the plaintiff rang her and said that she had not received any loan documentation for her further investment and asked what was happening. Ms Fowler said that she had posted it to her and that if she had not received it she would deliver another copy to her home as it was on her way home from work: at [43]. 413Shortly after, Ms Fowler said she attended at the plaintiff's home and handed to her another copy of the second loan agreement, and an undated version of a covering letter (Tab 3 to her affidavit). 414Ms Fowler said that she could not recall a conversation as set out at paragraph [107] of the plaintiff's affidavit. She said that she had not at that time given a mortgage over any property in Maroubra. 415Ms Fowler said that in or around November 2005 Mr Tombleson moved out of the offices at Cronulla. By that time he was using a company "Silkwater" as a vehicle for his involvement in the Scheme. She said that after that time Mr Hraiki, to her observation, continued to operate the Skyder and Lendwide businesses from the Cronulla office and Mr Tombleson operated the Silkwater business from separate offices. 416At about this time (that is, in or around November 2005), Ms Fowler said Mr Hraiki or Mr Tombleson from time to time would ask her to prepare "caveat documents" in relation to the Scheme. She said that she did not receive instructions to prepare a caveat by reference to any specific investor funds: at [47]. 417A copy of such a request from the Silkwater Group to prepare a caveat in favour of the plaintiff dated 10 February 2006 was behind Tab 5 to her affidavit. A copy of the caveat is behind Tab 6. The caveat identifies the "Nature of Instrument" as "Loan, 2/12/05 Silkwater Group Pty Ltd, Hazel Polon & Julianne Tombleson". The caveat refers to a loan from the caveator in the amount of $310,000 for 12 months commencing December 2005. 418Ms Fowler said that she could not recall a conversation to the effect as set out at paragraph [114] of the plaintiff's affidavit: at [49]. 419In relation to the plaintiff's third investment in the amount of $800,000, the plaintiff at paragraph [122] of her affidavit stated that she did not want the loan agreement associated with the third investment to be mislaid in the post as had apparently happened with her previous investment. She said she telephoned Ms Fowler and said "Renae, I haven't got the loan documents for my investment of $800,000. Don't bother posting it - I will come and collect it". 420The plaintiff said that she then telephoned Mr Tombleson about it in which he told her that he had the third loan agreement documentation ready for collection from his office and that Ms Fowler had told him that she wanted to collect it: at [123]. 421Ms Fowler, in response to paragraph [122] of the plaintiff's affidavit, said that to the best of her recollection the conversation set out in that paragraph did not occur. She said she did not recall at any time becoming aware that the plaintiff had made a third investment in the Scheme or that she had invested a sum of $800,000. She said she did not receive any instructions from Mr Tombleson or Mr Hraiki in relation to any such investment: at [54]. 422As referred to above, the plaintiff in her affidavit at paragraph [128] said that shortly after her third investment she recalled telephoning Ms Fowler to ask her something about her investment or the interest payments, that she could not precisely recall her reason for ringing and that shortly into the conversation Ms Fowler is alleged to have said words to the effect of "Hazel, I'm now acting for Silkwater ... I can't talk to you any more". 423In response, Ms Fowler stated that she did not recall such a conversation occurring. She said she did recall that on occasions from about mid-2006 onwards, investors in the Scheme would ring her and ask her what was happening with their investments. She said she would always direct them to call their solicitors and either Mr Hraiki or Mr Tombleson: at [55]. 424In relation to a meeting of the Chat Club at the Top Ryde Bowling Club in or about March 2006 in which the plaintiff said (at paragraph [131] of her affidavit) that Ms Fowler was supposed to attend in order to speak about the Scheme to potential new investors, Ms Fowler in her affidavit at paragraph [56] stated that she recalled on more than one occasion Mr Tombleson asking her to attend further meetings of the Chat Club but that she declined. She said she did not recall the meeting referred to in the plaintiff's affidavit at [131]. 425Ms Fowler said that throughout 2006 and into 2007, she, on behalf of Tiernan & Associates, continued to provide legal services to Mr Tombleson and Mr Hraiki. She set out the various matters that she worked upon which included the following: "a. a joint venture between Mr Tombleson and Mr Dorian in relation to bridging finance business; b. a purchase by a company controlled by Mr Tombleson, ACKS Developments Pty Limited, of property in Queenstown, New Zealand; c. defence of Local Court proceedings brought by Tsoukarellis against Skyder Property Group Pty Limited; d. sale of property Crown Street, Wollongong, by Mr Hraiki to Manzi; e. purchase by Skyder Financial Pty Limited from Witham and Mikosic of shares in Lithgow Project Development Pty Limited; f. purchase by company operated by Mr Hraiki, Oztrop Pty Limited, and company operated by Mr Dorian, Chat Club Pty Limited, or Nananu Island in Fiji from Sletterdahl Investment Corp; g. defence for Oztrop Investments Pty Limited of VCAT proceedings brought by Chiverton Design Pty Limited' h. purchase by Oztrop Investments Pty Limited from Fitzgerald Capital Investments Limited of shareholding in Goldfield Properties Limited; i. purchase by Mr Tombleson of land at Bendemeer from Santos and Manlangit." 426In cross-examination, Ms Fowler gave evidence as to conveyancing and other property development matters that she undertook for Mr Hraiki and Mr Tombleson: T 188-189. These included a development in New Zealand (Brecon Street and Frankton Road, and a project in Queenstown, "Goldfields"): T 189. She said that she had travelled to Christchurch in relation to the Queenstown project. 427She said that in about early February 2007, Mr Tombleson asked her to prepare a variation of the loan agreement for the plaintiff. She said she did this and forwarded a copy of the document to the plaintiff under a covering letter (Tab 7 of her affidavit). She said she did not recall receiving a signed agreement back from the plaintiff. 428Ms Fowler stated at paragraph [60] of her affidavit that although she was never instructed by either Mr Hraiki or Mr Tombleson or any of their associated entities to manage trust monies or oversee the allocation of investor funds, she did remind them of their obligations in this regard. She referred to a single email of 10 February 2006 from her to Mr Tombleson on that subject (Tab 10 to her affidavit). She said that she sent this at the time: "... because I had previously made numerous requests to Mr Tombleson and Mr Hraiki to provide the Firm [Tiernan & Associates] with signed versions of the borrower documents and such requests had not been honoured. I felt that if I could get a copy of Silkwater's Trust Account statement I could check the Firm's records and see what borrower contracts had not been returned, if any": (at [60]). 429Ms Fowler said that while acting for Mr Hraiki and Mr Tombleson she maintained a record, as best she could, of "... the allocation of investor funds and of loans to short term borrowers, including a summary table for both forms of transactions ...". She said that Tab 11 to her affidavit was a copy of the summary table. She said that she was not, however, provided with sufficient instructions by either Mr Hraiki or Mr Tombleson to maintain accurate records ongoing, particularly into the year 2006. 430Ms Fowler again said (as referred to above) that she recalled receiving calls from investors in the Scheme asking questions about their investments and she said she would refer them to Mr Tombleson or Mr Hraiki: at [62]. 431Ms Fowler said that she recalled that in late 2006 and early 2007 she started receiving telephone calls from investors complaining about late payments of interest. She referred them to Mr Hraiki or Mr Tombleson as the case may be, as she said she was not privy to the status of the loans or their repayments. However, she said she was becoming concerned because of the calls suggested that the Scheme was not meeting its obligations. 432She said she became aware in early 2007 from Mr Tiernan that Mr Hraiki was not regularly meeting his rental obligations to her firm under the sublease. Additionally, at about that time it became increasingly difficult to obtain payment from Mr Tombleson and Mr Hraiki for legal services rendered by the firm. She said, for all these reasons, her firm stopped providing any legal services to either them or associated entities in about April 2007. 433Ms Fowler said she did not recall the conversation referred to in paragraph [150] of the plaintiff's affidavit and denied that the plaintiff said to her "you told me that you were managing my funds in a trust, and there were supposed to be caveats and mortgages". 434Ms Fowler also said that at some stage she was receiving calls from investors and she was getting an indication that something was "not right" in early September 2007: T 169:5-10. 435In December 2007, Ms Fowler said she left Tiernan & Associates. In or about April 2009 she said she set up her own practice. 436Ms Fowler stated, at paragraph [67], that at no time did she say or represent anything to any person about the Scheme other than what she herself was told about the Scheme by Mr Tombleson or Mr Hraiki. She said she did not say or represent to any person that she would perform any particular task or function in relation to the Scheme, that she did not at that time believe she would perform, nor did she perform any such task/function.

(a) Negligence 437It was submitted for the plaintiff that a solicitor may assume a duty of care to persons to whom he or she offers advice in circumstances where it would be reasonable to expect that the recipient would rely upon that advice: Revised Plaintiff's Outline of Argument at [31]. This submission was put on the basis that an ad hoc duty of care may arise even in circumstances where the solicitor already acts for other parties in a transaction: Watkins t/as Watkins Tapsell v De Varda [2003] NSWCA 242 at [140] and Pritchard v DJZ Constructions Pty Ltd (2012) 16 BPR 31,141; [2012] NSWCA 196 at [67] to [70]. 438In support of the submission it was contended that there would have been no other purpose in making the statements which Ms Fowler admitted to in her own affidavit other than to offer legal advice to those present at the meeting: Revised Plaintiff's Outline of Argument at [32]. 439By participating in the presentation, and explaining mortgages, caveats and trust accounts, it was contended that that Ms Fowler's statements about them would have given any reasonable attendee at the meeting clear grounds to believe that she was directing her advice towards aspects of the Scheme. The plaintiff's case, however, was that Ms Fowler's statements at the Chat Club meeting were far more extensive than she had been prepared to concede. It was contended that her statements were clearly directed to those attending the meeting, in particular the plaintiff, and they were intended to be relief upon by her. This, in itself, was said to found a relevant duty of care. This was reinforced, it was argued, by the fact that Ms Fowler was aware that the plaintiff did not have a solicitor acting for her and that she appreciated that the plaintiff, following the meeting, was considering investing substantial sums of money in the Scheme. It was contended that it was reasonable in all the circumstances for the plaintiff and others present to believe that they did not need to obtain further or separate legal advice and that Ms Fowler was looking after their interests. 440It was submitted in this respect that Ms Fowler's participation in the Skyder boardroom meeting and the Chat Club meeting, and the advice said to have been given by her to the plaintiff in the telephone conversations between September 2005 and March 2006, provide an ample basis upon which the plaintiff could conclude that Ms Fowler was acting for her as well as for the abovementioned companies. 441It was additionally submitted that although Messrs Dorian, Tombleson and Hraiki had all made representations to the plaintiff to induce her to invest in the Scheme, that did not detract from the causal efficacy of the representations made by Ms Fowler. 442It was further submitted the statements/representations made by Ms Fowler would be understood by a reasonable person in the plaintiff's position to be inducements to invest in the Scheme. In that respect a number of factors were relied upon, including that Ms Fowler held herself out as a lawyer and that her status as such gave weight to her statements beyond the weight that would be attached to the statements of businessmen. 443Additionally, it was submitted that the attempts by others to persuade the plaintiff as referred to above, were insufficient to overcome her nervousness about investing in the Scheme. The evidence established that she required assurances and cross-checked what she was being told with Ms Fowler. 444It was submitted that had Ms Fowler made fair and accurate statements, rather than misleading statements, it is unlikely that the plaintiff, or any other person present at the meeting of 19 September 2005, would have proceeded with their investments. 445It was contended that Ms Fowler's role was not simply that of a transactional lawyer performing drafting work for Skyder but that she was involved in assisting Skyder in promoting its Scheme. Her attendance and introduction to the plaintiff at the Skyder boardroom meeting was said to have had no other explanation. This, it was argued, had similarities to Ms Fowler's role in being a provider of information to Mr McCarthy on behalf of Mr and Mrs Croker who were interested in investing in the Scheme. 446It was submitted that the plaintiff's account of events in relation to the both Skyder boardroom meeting and the Chat Club meeting should be accepted on a number of bases. The plaintiff's handwritten 2007 statement and her ASIC statement, it was submitted, contained most of the key representations the plaintiff says were made by Ms Fowler at the Chat Club meeting. Additionally, it was submitted her evidence was corroborated by the evidence of Dr Cohn, Ms Monahan and Mr Galea. 447The plaintiff's account of the representations by Ms Fowler, it was observed, were substantially similar to those she made to other investors in email correspondence (Mr Ayoub and Mr McCarthy). 448It was submitted that findings should be made that the representations by Ms Fowler referred to particular safeguards incorporated into the Scheme that were said to operate for the protection of investors' funds. These safeguards were said to include protections that secured their funds, including second mortgages and caveats, that Ms Fowler would draft the investor loan contracts for investors' investments, that she would manage funds in a trust account and that the funds would be secured against property with low LVRs. 449It was argued that Ms Fowler addressed those attending the Chat Club meeting without apparently being conscious that there were issues involving conflicts of interest in her speaking publicly to those present as a lawyer. Further, it is part of the plaintiff's case that Ms Fowler did not advise attendees of the meeting that they should seek independent legal advice before investing in the Scheme. 450It was further submitted that on the evidence the Court would accept that after the Chat Club meeting the plaintiff spoke to Ms Fowler seeking assurances from her. Ms Fowler's denial was said to be not credible. Ms Fowler in her ASIC interview said she spoke to the plaintiff frequently with the latter asking questions. Ms Monahan's evidence was that she herself spoke to Ms Fowler after the Chat Club meeting. 451It was submitted that there was considerable evidence that established that the plaintiff had been nervous about investing her money in the Scheme and that there was objective evidence that she had persisted in raising questions concerning safeguards. Such evidence was relied upon as supportive of her own accounts and evidence of having sought information about the Scheme from Ms Fowler. 452It was submitted that, in a number of respects, prior to 19 September 2005, Ms Fowler had been involved in her capacity as a solicitor in providing both legal services to Skyder/Silkwater and, as noted above, in the promotion of the Scheme. 453It was contended that by 10 February 2006 (the date of her email, Exhibit B p 346) Ms Fowler was aware that the Scheme was not being appropriately administered. That particular email, it was argued, reflects attempts by Ms Fowler to regain control. 454It was submitted that in relation to the alleged representations made by Ms Fowler on 19 September 2005 the evidence established that:

• The representations were untrue.
• The plaintiff relied upon the representations in deciding to invest her monies in the Scheme.
• The representations were false and misleading and the plaintiff suffered economic loss by reason of her reliance upon them. 455It was submitted that Ms Fowler failed at a number of levels: "a) She did not reveal that she was performing extensive further legal work for both Skyder and David Dorian. b) She did not advise those present to seek independent legal advice given that she, herself, was not an independent legal advisor. c) Skyder's presentation was the giving of financial services advice. Ms Fowler did not advise that Skyder was not licensed in this regard and that its conduct was unlawful and in breach of s 911A of the Corporations Act. d) Mr Tombleson and Ms Fowler were giving financial services advice on behalf of Skyder and therefore were in breach of s 911B of the Corporations Act. In the event that it was found that Ms Fowler's advice was strictly legal advice, and capable of falling within the exemption, the fact remained that both Skyder and Mr Tombleson were engaged in unlawful conduct, yet Ms Fowler's advice to the audience of the Chat Club meeting did not warn of this. Her presence and participation in the presentation carried the clear implication that the scheme was safeguarded and worthy of investment. e) In either case (either [the plaintiff's] or Ms Fowler's) Ms Fowler represented that there would be a trust account in existence in regard to the scheme. No such trust account existed. Ms Fowler's belief was apparently that it was some form of unit trust. She had done nothing that could possibly have reasonably satisfied her that such a trust account existed (TT.pg. 247 [18]-[35]). f) Ms Fowler had drafted the loan contract for investors including [the plaintiff], but it made no provision for monies to be paid into a trust account (TT.pg. 295 [42]-[22]). g) There were no procedures in place to ensure that advances were made only for bridging finance on the appropriate LVRs with the appropriate valuation certificates, with appropriately drafted second mortgages and caveats, and Ms Fowler had sighted nothing to substantiate any of the matters that were being represented by Mr Tombleson and Mr Hraiki. 39. In addition to the argument based upon a tortious duty the plaintiff also relies upon the argument that there was an implied retainer by which through the conduct of the plaintiff and second defendant, the second defendant had tacitly agreed to act for the plaintiff as well as Skyder and Silkwater (Amended Statement of Claim paragraph 63). In Pegrum v Fatharly (at WAR 92 at 103) Anderson J said:- 'when both parties to a transaction consult the same solicitor and together give him the information needed to prepare the documents in which their respective rights and obligations are to be set out, and the solicitor accepts the responsibility to prepare the documents without any indication that he cannot fully discharge his professional duties to them both, there is a strong bias towards finding the solicitor tacitly agrees to act for both parties and to undertake the usual professional responsibilities to them both: See Midland Bank Trust Co Limited v Hett, Stubbs and Kemp [1979] Ch 384 especially at 396' see also McGeoch v Hendriks & Ors [2007] NSWSC 311 at [52] to [54], and (see Watkins v De Varda [2003] NSWCA 242 at [138]). 40. The participation by Ms Fowler in the meeting in early September, the advice she gave to those at the meeting on 19 September and the advice she gave to [the plaintiff] in the telephone conversations between September 2005 and March 2006 were ample basis upon which [the plaintiff] could conclude that Ms Fowler was acting for both Skyder and Silkwater in the loans made by [the plaintiff] to the Bridging Finance Scheme, and [the plaintiff] herself. 41. Having, through her conduct, assumed an obligation to act for [the plaintiff] (and indeed the other members of the Chat Club) Ms Fowler breached that retainer through her failure to exercise due care and skill. In that regard the matters described above, concerning her negligence, are equally applicable to this claim in regard to the breach of the implied retainer." 456In relation to the defendants' reliance upon a disclaimer on a form that the plaintiff signed as she entered the Chat Club meeting, it was submitted for the plaintiff that the disclaimer was intended to operate for the benefit of the Chat Club, in effect Mr Dorian. Further, it was observed, the reference to independent legal advice was in small print at the bottom of the document. It was provided in circumstances that would not have alerted participants attending the meeting to seek advice. 457As to covering letters said to have been sent by Tiernan & Associates with the Loan Agreements containing a recommendation to investors to obtain independent advice, the plaintiff's evidence was that she did not receive a covering letter with the first investor Loan Agreement and therefore, for that reason, was unaware of any such statement. The second Loan Agreement sent to her by Ms Fowler had a covering letter, but by the date she received it she had already paid the investment monies and the plaintiff simply filed the documents sent to her upon receipt without having read the letter. It was common ground that there was no covering letter sent concerning the plaintiff's third investment. 458In the submissions on behalf of the plaintiff it was observed that in the period in which the plaintiff made her investments in the Scheme, there was evidence of poor administration of the Scheme including difficulty in the plaintiff subsequently obtaining a copy of the second contract, not having received one in the mail. There was evidence that others experienced similar problems (see the evidence of Mr Galea). It was submitted that with a poorly administered organisation it was plausible that the first contract was sent without a covering letter. 459In the plaintiff's submissions, it was noted that Ms Fowler did not suggest to the plaintiff at either the Skyder boardroom meeting or the Chat club meeting that she obtain independent advice before making an investment in the Scheme. 460It was contended that the recommendation in the covering letter in respect of the second investment was, in any event, ineffectual to protect Ms Fowler as: (a) The letter was sent with a copy of the contract after it had been executed and after the money had been committed to the transaction. (b) The "inappropriate timing" of the letter could not suggest to any recipient that they needed to pay attention to it. (c) The plaintiff denied receiving the first covering letter. (d) There was no dispute that no covering letter was sent in respect of the plaintiff's third investment. (e) Other investors did not perceive the need to seek independent legal advice. (f) The representations made by Ms Fowler were likely to cause prospective investors to believe or expect that she, a lawyer, would look after their interests and further legal advice was unnecessary.

(b) Breach of Fiduciary Duty 461It was submitted that Ms Fowler was subject to a fiduciary duty to the plaintiff by virtue of the assumed relationship of solicitor and client. 462Ms Fowler, it was submitted, could not assume a position where her self-interest might conflict with the honest and impartial giving of advice. She was bound, it was further submitted, to avoid being in a position of conflict between Skyder's and Silkwater's interests and duties and her duties to the plaintiff and not to obtain any unauthorised benefit from her position: Breen v Williams (1996) 186 CLR 71, 113. 463The plaintiff contended that Ms Fowler breached the duty by: (a) Advising the plaintiff to invest in the Scheme when she had a conflict of interests by reason of her interest and duty to advance the interests of Skyder/Silkwater. (b) Advising the plaintiff to invest in the Scheme without any proper regard to the plaintiff's interests and in order to advance the interests of Skyder/Silkwater. 464It was also said to be "beyond contest" that Ms Fowler acted as the solicitor for Skyder/Silkwater and was involved in organisational and promotional activities for the Scheme. 465Reliance was placed upon dicta expressed in Blackmagic Design Pty Ltd v Overliese [2011] FCAFC 24; (2011) 191 FCR 1 at [105] and [109] as to equitable compensation for loss that would not have occurred had a conflict of interest not arisen.

(c) Fair Trading Act Claim 466In relation to the plaintiff's claim based on misleading or deceptive conduct under the Fair Trading Act, it was submitted that Ms Fowler's conduct was in a business or a professional activity of being a solicitor and falls within the extended definition of conduct in trade or commerce for the purposes of s 42(1) of the Fair Trading Act. 467As to representations concerning a future matter, namely, how the monies invested would be dealt with, the plaintiff relied upon s 41(1) of the Act. 468Ms Fowler did not raise as a defence that there was no reasonable basis for any representations, as she denied making any. Accordingly, no basis was said to exist for casting any onus on the plaintiff to establish the representations were without a reasonable basis: Awad v Twin Creeks Properties Pty Ltd [2012] NSWCA 200. 469The plaintiff, notwithstanding, submitted Ms Fowler had no reasonable basis for making the representations. In that respect, the following matters were relied upon: (i) The mere statement of intention by Messrs Tombleson and Hraiki in relation to the Scheme and its operation would not suffice when no basis existed for Ms Fowler accepting that they would fulfil their word. (ii) Mr Tombleson's "instructions" to Ms Fowler did not, in any event, cover all the matters represented. (iii) Ms Fowler drafted the investor contracts. She knew or ought to have known that they contained no provision for the monies invested to be held in trust. (iv) From the early stages, Ms Fowler was aware caveats had not been lodged in accordance with the representations. (v) Ms Fowler's email of 10 February 2006 (Exhibit B, p 346), displayed an awareness that the Scheme was not being administered as represented. See also matters identified in subparagraphs (g) to (i) of paragraph [50] of the plaintiff's written submissions. 470All the representations made at the Skyder boardroom meeting and the Chat Club meeting, it was submitted, were false and misleading. 471As with the plaintiff's claim in negligence, it was contended that Ms Fowler's representations, including in particular those made at the Chat Club meeting, induced the plaintiff's reliance upon the truth of the same, namely, that monies invested in the Scheme would be protected investments. The representations made by Ms Fowler, it was submitted, contained an emphasis upon the existence of mechanisms that ensured accountability and security.

(d) Corporations Act Claim 472In support of the plaintiff's claim under ss 911A, 911B and 1324 of the Corporations Act 2001 (Cth), it was submitted that Ms Fowler gave financial services advice (paragraph [64] of the Amended Statement of Claim) without holding a financial services licence in breach of ss 911A and 911B of the above Act. 473The expression "financial service" as defined in s 766A of the Act includes "financial product advice", which is defined in s 766B. It includes a recommendation or a statement of opinion or a report that: "is intended to influence a person or persons in making a decision in relation to a particular financial product ..." or "could reasonably be regarded as being intended to have such an influence." 474The plaintiff's written submissions identify the provisions relating to "personal advice" and "general advice" and the key provisions in s 763A and 763B respectively as to "a financial product" and the expression "makes a financial investment". 475The submission was that investors in the Scheme were making a financial investment within the meaning of s 763B as they gave money to Skyder, and later Silkwater, with the intention of generating a financial return. The plaintiff did not have day-to-day control of the contributions she made to the Scheme thus satisfying the provisions of s 763B(b). 476A number of authorities were cited to support the submission that the representations in question involved the giving of "financial product advice": Australian Securities Investment Commission v Sydney Investment House Equities Pty Ltd (2008) 69 ACSR 1; [2008] NSWSC 1224 at [358]-[359]. 477The submission was that, applying the s 766B definition, Ms Fowler by the conduct pleaded in paragraph [64] of the Amended Statement of Claim: "... made a recommendation or gave her statement of opinion that was intended to influence or which could reasonably be regarded as having been intended by her to influence the plaintiff to invest in the Bridging Finance Scheme". (at [63]) 478It was further contended that neither Ms Fowler nor any of the corporate entities or people that engaged in the establishment or conduct of the Scheme held a financial services licence, contrary to s 911B of the Act. It was submitted that Ms Fowler gave financial services advice on behalf of Skyder and later Silkwater. 479The claim for damages arising from the alleged contravention of the Corporations Act was made under s 1324 of the Act. It was noted in the written submissions for the plaintiff that there is a division of opinion as to whether it is necessary for a plaintiff to seek an injunction in order to enliven the jurisdiction for damages pursuant to s 1324(10) of the Act. No injunction was sought in the present proceedings. 480The division of authority was referred to in Dungowan Manly Pty Ltd v McLaughlin [2012] NSWCA 180 by Bathurst CJ. The Chief Justice observed that the predominant view in cases in recent years is that damages can only be awarded in proceedings where an injunction is actually sought. 481The plaintiff's submissions also noted that no authority has been found on the question of whether discretionary apportionment principles apply to the claim for damages under s 1324(10). 482The plaintiff's alternative case for a tortious duty of care owed to the plaintiff was argued on the basis that there was an implied retainer whereby Ms Fowler tacitly agreed to act for the plaintiff as well as Skyder and Silkwater (Amended Statement of Claim at [63]). Reliance was placed upon observations in Pegrum v Fatharly, supra, per Anderson J.

Defendants' Submissions 483Mr Priestley of counsel for the defendants relied upon written submission dated 2 April 2013, supplemented by his oral submissions.

(a) Retainer 484It was submitted for the defendants that no retainer can be implied on the evidence. 485As to the Skyder boardroom meeting, it was submitted that Ms Fowler was introduced to the plaintiff, but nothing was said to support a reasonable apprehension that Ms Fowler would be acting in her interests or that could have supported such an understanding. 486Further, it was submitted, no retainer could be implied from anything said at this meeting. Reliance was placed in this respect upon Ms Fowler's evidence as to the meeting. 487In relation to the Chat Club meeting it was submitted that no retainer could be implied from anything said by, or about, Ms Fowler. 488It was submitted that, on the competing versions, there was no evidence that Ms Fowler advised that she would be acting for the plaintiff. If statements that she would be "looking after the interests" of investors were made, it was submitted that could not give rise to an implied retainer when Ms Fowler was acting for the proponents of the Scheme. Further, it was contended that Ms Fowler did not say she would act for the plaintiff or would protect her interests. The plaintiff did not ask her to do so. 489Additionally, it was noted there was no payment made to Ms Fowler by the plaintiff. There was no prior relationship between them. Ms Fowler did not know the plaintiff had not sought her own legal advice. Ms Fowler had twice written to the plaintiff in which a recommendation was made to the plaintiff to obtain independent legal advice. 490In any event, it was submitted Ms Fowler discharged any duty by writing to the plaintiff addressing the risk of an apprehension that a third party would have believed that she was acting for the plaintiff. 491Reliance was placed upon the disclaimer which the Chat Club personnel required her to sign on entering the club where the meeting of 19 September 2005 was held (Tab 16, Exhibit 1). 492In the circumstances, it was submitted that it could not be said there was any necessary and clear inference of a tacit understanding or agreement. 493A finding that at the relevant time the plaintiff was specifically advised to seek independent legal advice was said not only to discount the possibility of an implied retainer, but it also bore upon the question of any duty owed and any breach. 494Submissions were made as to the sending of a covering letter with the first investment loan contract, which the plaintiff denied receiving. It was noted that a draft copy of the letter appeared in the solicitor's file. It was submitted it would be unlikely that the contract document itself would have been sent without a covering letter: Defendants' Written Submissions at [16]. 495The Court, it was argued, would be strongly inclined to find that such a letter was sent and received and that the evidence showed that other investors received letters containing the same recommendation. 496It was submitted that if there was any doubt about a covering letter being sent with the first investment contract, then the evidence revealed that one was sent with the contract for the second investment. 497It was contended that whether or not a covering letter was sent with the first contract did not matter as Ms Fowler had discharged any duty she may have owed and addressed the risk of an apprehension by a third party that the solicitor was acting for, in this case, the plaintiff.

(b) Duty of Care 498It was argued on behalf of the defendants that they did not owe the plaintiff a duty of care because the statements allegedly made on 19 September 2005 were "neutral statements as to the current law" (which it was not contended the plaintiff relied specifically upon) and that anything else that may be found to have been said to the attendees was, on Ms Fowler's evidence, on instructions. 499Further, it was submitted that a solicitor would not owe a duty to a third party where the performance of the duty would or could conflict with the solicitor's obligations to a client. In this case, Ms Fowler did not come under a duty to the plaintiff, as she owed clear duties to Skyder and Silkwater. 500Further, it was submitted that the evidence in this case did not establish that the plaintiff relied on Ms Fowler - she received nothing by way of legal services or advice that she had not received from others that she trusted more in any event. 501Finally, it was submitted that foreseeability of harm alone was not enough to create an assumption of responsibility by the solicitor. What needed to be demonstrated was that Ms Fowler ought to have realised that she was being trusted to give advice: Beach Petroleum NL v Kennedy (1999) 48 NSWLR 1 at [78]. It was not so demonstrated in this case, in the defendants' submissions.

(c) The Representations 502In the defendants' submissions, it was contended that the Skyder boardroom meeting was merely an introductory meeting. Given the passage of time, it was argued, neither the plaintiff nor Ms Fowler would have a good recollection of what was said. 503It was submitted that it was unlikely that Ms Fowler was represented in any meeting as being an expert in bridging finance or that anything was said to the effect that she would be managing the monies invested. Ms Fowler never received monies in the firm's trust account. The plaintiff paid all her investment monies direct to the Scheme's proponents. 504In respect of the Chat Club meeting, it was noted that the affidavit evidence of the plaintiff was given at least six years after the event. The presentations at the meeting were said not to have had "dramatic significance" to anyone at the time. It was unlikely anyone would remember detailed discussions. 505The plaintiff's witnesses set out in considerable detail their recollections but could remember little about other Chat Club meetings that had taken place around the same time. 506The plaintiff's ASIC statement and handwritten statement were acknowledged as "better reflections" of the plaintiff's memory and were said to present a "different picture" of what was said at the meeting. The plaintiff, it was submitted, expanded her recollections of Ms Fowler's involvement in her affidavit. She had only justified this fact by saying her lawyers pushed her to remember things more clearly. 507It was observed that it could not be ignored that the plaintiff's witnesses had belonged to the informal "Silkwater Action Group". There was a risk of contamination of recollections. That, and the passage of time, meant little independent weight could be placed on disputed conversations. 508In addition, there was a lack of confidence in the witnesses as to what Ms Fowler said as against what Mr Tombleson had said at the meeting. 509It was contended that there was little objective basis to conclude that Ms Fowler said she would personally be managing any funds in the trust. This did not appear in any of the affidavits or at all in the plaintiff's ASIC statement. 510It was also submitted that it was unlikely that Ms Fowler said the investment was "100% safe" when some risk was acknowledged by the presenters. 511It was further submitted that: "The court may conclude that some of the safety mechanisms attributed to the scheme were discussed at that meeting in Ms Fowler's presence, but for reasons which follow there was no breach of duty by her in that regard." (at 41]) 512In relation to telephone conversations after the Chat Club meeting, Ms Fowler, it was said, convincingly denied making any representations and any such calls and there were no notes, letters or emails to corroborate the plaintiff's evidence. 513It was further argued that it had not been explained as to why the plaintiff would have called up Ms Fowler to ask questions that had apparently been answered. Further, it was said there was some unsatisfactory expansion of recollections beyond earlier statements. 514In any event, there seemed to be nothing new said in any conversations post-19 September 2005. It was submitted that the evidence given by this plaintiff on this aspect was vague and amounted to generalised evidence, which could not form the basis for a finding of false and misleading advice or conduct: Watson v Foxman, supra, at 318.

(d) Breach of Duty 515A number of submissions were made regarding the allegations of breach of duty by Ms Fowler based on the proposition that she had been acting on instructions. Further, Ms Fowler had a duty to her clients, Skyder and Silkwater. On these bases, it was submitted, the allegations had not been made good. 516Reference was made to the proposition put in cross-examination of Ms Fowler that she should have made better enquiries to determine whether or not the Scheme would be operating in accordance with the safety mechanisms for investors that had been represented. This was met by the following:

• It assumed Ms Fowler had a duty to the investors, which was disputed.
• In any event, Ms Fowler made clear that she did make a number of enquiries with her clients, the Scheme proponents, both before and after the making of relevant representations to the investors. 517As to the time before making the representations, Ms Fowler said, she had clear and detailed instructions from her clients. That is, that her clients had presented it as something they had been operating successfully within the parameters of the law and that they had complied with all regulatory requirements and had the involvement of other solicitors. 518It was submitted it was now artificial, with the benefit of hindsight, to place a burden on Ms Fowler, despite such instructions, to have, in effect, refused to trust her client's instructions, but also to have conducted investigations against the client's wishes into underlying structures and systems of the Scheme (eg trust deeds, trust account statements, and the like). 519It was observed on behalf of the defendants that it was clear that "the clients" (ie. Skyder and its directors) were prepared to avoid answering any interrogation from their solicitors about such matters. Ms Fowler had said a number of times in evidence that she asked her clients for documentation and information about the operation of the Scheme when she had not been given sufficient information, and her clients ultimately did not comply. 520In respect of evidence indicating Ms Fowler had been aware that at least one of the proponents of the Scheme required a financial services licence, the response again relied upon instructions that she had been specifically advised by her clients that the operation was compliant with relevant regulations. Additionally, her evidence was that she was advised and reasonably accepted that the need for the licensing question arose because of changes and developments in the operations of at least one of the clients. The requirement for a licence only arose as a result of the development of a "new business". 521In answer to the fact that at least one of the "safety mechanisms" represented to the plaintiff as inherent in the Scheme was not reflected in the Investor Loan Contracts (the absence of terms requiring investors' monies to be held in trust), it was stated that it could not be ignored that Ms Fowler was provided with versions of Investor Loan Contracts that had been in use (for which she was later asked to consider and re-draft). By way of further response, it was said that she had not been instructed by her clients to insert additional clauses into the Investor Loan Contracts "...to refer to the operation of a Unit Trust or otherwise specifically provide protections for investors": Defendants' Written Submissions at [51]. 522By way of further response it was said that whilst theoretically the omission of appropriate clauses in the Contracts meant there was less contractual protection for an individual investor, this did not necessarily indicate to Ms Fowler, or to a prudent solicitor, that such a structural protection would not be employed. 523In further response it was stated, more importantly, that the evidence overwhelmingly suggested that if such matters had been inserted in the Contracts, they would not have been properly, if at all, observed by the Scheme proponents in any event. This again raises the contention that Ms Fowler could not be sure of cooperation or agreement by the Scheme proponents. 524Finally, on this aspect, it was said that the covering letters sent by Ms Fowler had recommended independent legal advice be obtained. 525It was submitted there could not have been negligence in failing to advise the plaintiff that the operation of the Scheme was not compliant with the Corporations Act and the ASIC Regulations. This, firstly, again was put on the basis of "instructions". It was said she was entitled to rely on "the clear instructions" that she had from her clients in this regard. 526It was submitted that: "It is tolerably plain that Ms Fowler was kept isolated from the parts of the business that would put her on notice that the Scheme would not operate in the relatively safe, structured and legally compliant way that the proponents had represented to her and potential investors..." (at [57]) 527The submission went on to say that even if this was "evidently deliberate", in that context it was said to be "unduly harsh" to now say that the solicitor should have recognised that "isolating effect" and refused, despite her instructions, to remain ignorant of any part of the proponent's business and conduct. That is, "...whatever forensic investigation was necessary into the affairs of her clients so as to protect the interests of others. There is no warrant for construing the duty of a solicitor in that way": at [57]. 528It was submitted that Ms Fowler was not negligent in failing to apprehend that the Scheme was not operating in accordance with the safeguards that had been represented to investors as at September 2005. As will be discussed below, the submission for the defendants was that there was no evidence to establish that she should have formed such an opinion at that time. It was acknowledged that as time progressed in 2006, Ms Fowler became aware from the reconciliation of her records that her clients had not provided her with sufficient documents to be able to reconcile the investors' funds in such a way as to satisfy herself in such a way that they had been dealt with in accordance with the public presentation of the Scheme. It was accepted that once this became apparent it would have been reasonable for her to make further enquiry of her clients, regardless of whether the investors were considered her clients or not. Again, however, it was said she had made some enquiries which led her to genuinely believe at the time of the representations that they were true. 529In relation to these submissions there is evidence, discussed below, which deals with email correspondence from Ms Fowler in February and April 2006 which identifies specific administrative problems which the evidence indicates was an ongoing problem in relation to matters concerning the Investor Loan Contracts and problems that had arisen in accounting for investors' funds in the Scheme's trust account. 530It was said that if by the email of 20 April 2006 Ms Fowler was in possession of sufficient information to take more "serious steps" to address the possible dysfunction of the Scheme, a question would arise as to what she should have then done and what the likely result of such action would have been. 531It was submitted that by April 2006 the plaintiff had already made her three investments. The issues related to Ms Fowler's obligations up to the date on which the third investment was made are addressed below under "Consideration".

(e) Reliance and Causation 532It was submitted that the plaintiff faced an "insurmountable problem" with finding any negligence, as the evidence did not suggest on the balance of probabilities that any further steps by Ms Fowler would have prevented the plaintiff's loss. 533The submission, in effect, was that if Ms Fowler had "blown the whistle" some time after April 2006, it was not open to find that the Scheme proponents would have been prepared to or able to return all or any of the plaintiff's funds. This is a matter discussed in the analysis below. A question arises as to whether Ms Fowler was under a duty to have warned, prior to any investments, the plaintiff of the basis upon which her alleged representations had been made. 534It was argued that by February 2007 the plaintiff had not received any interest payments for approximately six months and that she could not reasonably have been confident or secure that her capital was safe in any event. It was acknowledged that, plainly, some of the things that had been said to her were not being honoured at that time. Despite this, she was prepared to enter into a variation agreement "rolling over" one of the substantial investments ($310,000). This evidence was relied upon to support the proposition that it was not open to find that anything Ms Fowler should have done in 2006 could have prevented the plaintiff's loss. 535In relation to the issue of reliance, the onus was on the plaintiff to establish that she relied on any advice or representation she received from the defendants, and that their conduct caused any loss she suffered. 536The issue of causation was noted as governed by the provisions of s 5D of the Civil Liability Act 2002. This, it was said, applied to all relevant causes of action relied upon in the Amended Statement of Claim: Booksan Pty Ltd v Wehbe [2006] NSWCA 3; (2006) Aust Torts Rep 81-830 per Ipp JA at [167]. 537The plaintiff's affidavit evidence as to what she would have done had Ms Fowler not done what she did was objected to and was rejected pursuant to s 5D(3)(b) of the Act. 538In any event, it was submitted such evidence would have negligible weight. 539It was submitted that the plaintiff was at pains to emphasise the influence of Ms Fowler's participation in the representations and was evidently acutely aware of addressing the probability that that was so. It was submitted the plaintiff would have been aware that, by reason of the financial circumstances of other "responsible parties", she would be unable to recover from such parties. 540It was submitted that, despite Ms Fowler's involvement in the representations and the plaintiff's contention that they were crucial to her investment decisions, that was not borne out by objective evidence. A number of matters were set out at paragraph [73] of the defendants' written submissions in this respect. These included the association of Mr Dorian, the history of the plaintiff, the plaintiff's matrimonial settlement, and her need for investment income by reason of what was contended was a "somewhat desperate situation" for her. 541Additionally, reference is made in paragraph [73] to the persistent and convincing overtures made to the plaintiff by Mr Dorian to invest in the Scheme, and that representations alleged to have been made by Ms Fowler had been made by Mr Dorian. 542A further matter was said to be the attractive investment return rates: at 73. 543Additionally, there was some delay before the plaintiff invested her monies, and having continued to seek Mr Dorian's advice and guidance: at 73. 544The plaintiff, it was argued, had not been deterred by Mr Tombleson's failure to produce records of the business prior to her investments: at 73. 545It was submitted that if the plaintiff made enquiries of Ms Fowler, it did not appear that she said anything that had not been already said by Mr Dorian and the Scheme proponents: at 73. 546It was submitted that the plaintiff knew that Ms Fowler was acting for the Scheme proponents and her involvement could not have been a decisive factor for the plaintiff: at 73. 547All of the evidence, once properly considered, along with what was asserted to be the objective self-hindsight based reliance and causation assertions of the plaintiff, put to one side, showed the plaintiff had fallen well short of establishing that, either on the necessary basis ("but for") test, or on a common sense basis, any advice or negligent conduct on the part of Ms Fowler had caused the plaintiff's loss. 548Even if there is doubt about that, it was submitted there would not be any in relation to the third investment in March 2006. By that time, it was submitted, the plaintiff had been receiving higher returns from her earlier two investments and she had been intent on introducing new investors. She had just come into a large sum of money as a result of the sale of her house and was wondering what to do with the money. It was submitted that she had considered the position, in effect, afresh and consulted Mr Dorian for investment advice. 549It was submitted that Mr Dorian had given her persuasive advice to invest in the Scheme which, it was submitted, she did as a direct and sole result. 550She had not consulted Ms Fowler about the last mentioned investment or received any representations from Ms Fowler or the Scheme proponents leading up to the decision to make the third investment. 551It was submitted that the claim, under each of the various causes of action for all of the investment monies, failed for want of establishing causation. 552In the written submissions for the defendants, specific submissions were made in relation to each of the Fair Trading Act claims (at [82]-[91]) and the Corporations Act claim (at [92]-[97]). I do not here reproduce all of those submissions, although, of course, I have had close regard to them.

(f) Contributory Negligence 553It was submitted that any damages awarded to the plaintiff should be significantly reduced to reflect the want of care for her own interests. It was observed that ss 5R and 5S of the Civil Liability Act apply and the same standards of conduct that apply to the defendants must be applied to the plaintiff. 554It was submitted: (1)The plaintiff declined to take any independent legal advice. There was no satisfactory excuse for that. (2)She was investing large sums of money, apparently on contractual documentation she did not understand. (3)She was advised to take advice and either did not read the letter sent to her or forgot what she read in them, or simply declined such advice. (4)She was attracted by high returns and "closed her eyes" to a risk of which she ought to have known. (5)Quite a number of potential investors did seek independent legal advice. It could not be said it was reasonable to not do so by reason of what was said at the Chat Club meeting. (6)In particular, in relation to the March 2006 investment, she relied heavily on Mr Dorian's advice when it appeared that she did not fully understand the Scheme. 555It was submitted that damages should be reduced significantly to reflect contributory negligence to an extent approaching 50%.

(g) Proportionate Liability 556Reliance was placed upon Part 4 of the Civil Liability Act and the principles to be applied in relation to proportionate liability: see ss 34(1)(a), 35. 557The apportionment process, as discussed by Brereton J in Perpetual Trustee Company Limited & Anor v Peter Ishak [2012] NSWSC 697, was set out in the defendants' written submissions. 558It was submitted that the proportionate liability of the defendants for any loss suffered by the plaintiff should be no more than 10%: at [109]. 559Particular matters relied upon to support the submission were set out at paragraph [110] of the defendants' written submissions. These related to activities of Mr Dorian and the persuasion that he is said to have exercised upon the plaintiff's decision to enter into the Scheme, to the conduct of Mr Hraiki and of Mr Tombleson, although the latter had made persuasive representations on 19 September 2005 and on other occasions. The submission was that Mr Tombleson "apparently" as operator of Silkwater, received the plaintiff's second and third investment funds and was the apparent dissipater and beneficiary of all the money ("but for the interest payments"). It was submitted that Mr Tombleson was probably, in his dealings with the plaintiff, acting "unconscionably, dishonestly, and possibly criminally". 560In contrast, it was submitted that Ms Fowler had acted honestly at all times. There was no suggestion that she had received any of the plaintiff's monies, and her only material gain was the remuneration she was paid by the fourth defendant and that firm's receipt of charged legal fees. It was submitted that she had no personal influence over the plaintiff. It was further submitted she had no involvement in the third investment in March 2006. 561Reference was made to the need for an apportionment to be just and equitable, having regard to the relative blameworthiness and causal potency of Ms Fowler's involvement in the plaintiff's loss.

(h) Quantum of Damages 562It was submitted that the three investments needed to be separately considered in any damages assessment. 563In a very brief submission it was argued on behalf of the defendants that it was unclear whether any of the plaintiff's monies were indeed used for bridging finance, and for that reason, that the payments made by the Scheme's proponents back to the plaintiff, though characterised in places as "interest payments", did not have that character and were, in effect, returns of capital: Defendants' Written Submissions at [115]. The submission was, therefore, that payments by the Scheme proponents back to the plaintiff should be deducted from any award of damages: at [116]. As discussed below, I do not accept the argument so advanced. 564This submission is, in essence, based on assertions without reference to, amongst other matter, the basis upon which the plaintiff (and other investors) put their money at risk by investing in the Scheme in accordance with the Investor Loan Agreement. Clause 4 of that Agreement at "Payment of Interest" specifies the terms and conditions concerning: (i) Rate of interest; (ii) Payment of interest; and (iii) Payment of principal. 565The rate of interest is explained in the Agreement as being payable on "the Advance" as defined in clause 1 (that is, the capital sum invested) and the applicable rate. 566Clause 4(2) of the Agreement specifically requires monthly payments in arrears to be made, calculated on the first day of each and every month. Clause 4(3) distinguishes between "the Advance" as referring to the obligation to pay it at the end of the term from the obligation to pay "interest". 567As stated earlier, the essential structure of the Scheme was, in reality, a money lending scheme with the individual investors, such as the plaintiff, being described as "the Lender" in the Investor Loan Agreement. In that Agreement, Skyder/Silkwater are referred to as "the Borrower". The Borrower had the right under the Agreement to on-lend to third parties by way of bridging finance. Under the Agreement, Skyder/Silkwater were constrained to using "the Advance" for this purpose: Clause 3(3). 568In conventional terms, there is a clear distinction between return of loan monies and the capital sum lent. 569Accordingly, I am satisfied that payments made by Skyder/Silkwater to the plaintiff, as earlier particularised, were payments in the nature of interest and there exists no basis for deducting then from the capital sums which the plaintiff lent to the Scheme or from any award of damages.

PART G - Consideration 570The plaintiff's claim, arising from the several causes of action pleaded in the Amended Statement of Claim, is based upon the premise that Ms Fowler made a number of representations, in the nature of advice, concerning the Scheme which were false and misleading. 571These, it was submitted on behalf of the plaintiff, were made in breach of the duty owed to the plaintiff under an alleged retainer and in breach of a duty of care: under the common law; and/or in breach of s 42 of the Fair Trading Act as having been misleading or deceptive or likely to mislead or deceive; and/or by acting in breach of the provisions of ss 911A and 911B of the Corporations Act. I will deal separately with the pleaded statutory causes of action below. 572The critical statements by Ms Fowler are alleged to have been made on 19 September 2005 at what the plaintiff has said was a joint presentation by Mr Tombleson and Ms Fowler at the Chat Club Meeting: Amended Statement of Claim at 62. 573There is an issue as to whether the presentation was "joint" in the sense that both Mr Tombleson and Ms Fowler were contributing together in the making of one presentation or whether it involved Mr Tombleson making his oral presentation utilising visual material on a screen followed by an address by Ms Fowler.

Ms Fowler's Role 574I have set out above Ms Fowler's evidence in which she said that she had not given advice to potential investors (Mr Ayoub and the Crokers). She eventually agreed in cross-examination that she had done so. In relation to questions as to whether she had made statements on the operation of the Scheme and safeguards for funds invested in it, Ms Fowler conveyed the impression, in somewhat unconvincing terms, that what she said was an explanation of mortgages, caveats and trust accounts, but only as what legally was understood was the function of the same. 575It was put to Ms Fowler that she knew that the purpose of the Chat Club meeting was to allow Mr Tombleson to promote his bridging finance product that had been marketed by Skyder. She surprisingly denied that that was the case: T 248:35-50. Her denial, however, as discussed below, was a curious response given her involvement in dealing with Messrs Tombleson and Hraiki throughout the period from May 2005 to September 2005, before the Chat Club meeting. 576Ms Fowler would not accept in earlier cross-examination that she knew Mr Tombleson would be "promoting" the Scheme at the Chat Club meeting: T 249:20-40. However, she later modified that position, conceding that she would have thought that he would have hoped that he would get clientele from the meeting: T 249:40-42. 577Ms Fowler, however, rejected the proposition that she understood that she had been brought along to assist in achieving Mr Tombleson's goal: T 248:40-50. 578She stated in cross-examination: "We had separate presentations. I wasn't even with him when he gave his presentation. I was sitting in the front row.": T 250:7-8. She said that she was simply there to talk about legal concepts: T 250:16. She rejected the suggestion that she spoke during the course of the PowerPoint presentation by Mr Tombleson: T 253:5-15. 579Ms Fowler continued to maintain the position that her participation in the meeting was entirely separate from the presentation by Mr Tombleson and was limited to "legal concepts": T 254:1-16 and T 254:48-50. It was then put to her in cross-examination: "Q. What you were talking about were the legal arrangements that existed in the bridging finance scheme, weren't they? A. Yes. (T 255:1-5) ... Q. And you were putting to this meeting, representations about Mr Tombleson's bridging finance scheme, similar to the way you had already made them to Mr Ayoub and to the Crokers, that's correct, isn't it? A. No, it is not." (T 255:6-10) 580Subsequently, however, Ms Fowler agreed that what she was doing was offering the audience further information about some of the matters that Mr Tombleson had discussed during the PowerPoint presentation: T 255:39-45. She agreed she also gave an explanation as to what a caveat was, Mr Tombleson having referred to caveats in the course of his PowerPoint presentation: T 256:1-10, T 256:15-27. 581Ms Fowler was taken to the reference in her affidavit to having heard Mr Tombleson refer to trust accounts. She heard him during his PowerPoint presentation say that investors' money would be lodged in a trust account (T 256:35-40) and accepted that that reference conveyed (to those who might be persuaded to invest) an assurance that their money would be protected: T 256:40-50. 582Ms Fowler would not concede that what Mr Tombleson was setting out to achieve was to obtain millions of dollars from members of the public. However, she then said she thought he was, "like generating business": T 257:2-10. She agreed that one of the ways he was seeking to do so was to offer an assurance that their money would be safely deposited in a trust account: T 257:15-20. She agreed that after he had referred to the existence of a trust account she then talked about what a trust account was: T 257:20-25. It was put to her: "Q. Surely you understood that when you spoke about trust accounts, everyone in the audience would understand that you were speaking of the things that had been mentioned by Darryl Tombleson? A. Yes. Q. The things that would be securing their money in regard to the bridging finance scheme? A. Yes. Q. And after the PowerPoint presentation and after the additional explanation that had been given by you of mortgages, caveats and trust accounts, do you agree that you remained in the room and that members of the audience came and addressed questions to you? A. Yes." (T 257:50-T 258:1-13) 583She said she did not recall being asked a question as to whether she herself was going to invest in the Scheme. She said it was not a matter of not being able recall such a question, but that it was not a statement made to her: T 259:5-10. 584Ms Fowler did not agree that at the Chat Club meeting Mr Dorian introduced her as the lawyer from Tiernan & Associates. She did not agree that he said that she would be drawing up the bridging loan documentation or the contracts on behalf of the investors (T 259:20-30), although that was in fact a legal service that was offered to investors in the Scheme and one that she did subsequently perform. 585In relation to her role at the meeting it was put: "Q. And you understood from the introduction that was given that you were going to be saying something about the legal effects of mortgages, caveats and trust accounts to the audience, is that correct? A. The legal effect? Like, yes. Q. So you had to have at least believed this, that you were about to give the people in the audience some legal advice about mortgages, caveats and trust accounts. That is what you understood, wasn't it? A. I was describing what they are. Q. You were giving advice as a lawyer, weren't you? A. Yes, I was. Q. You were giving legal advice to all the people in the audience. That is what you believed you were doing, wasn't it? A. Yes. Q. You don't say in the affidavit that you prefaced your remarks with anything to the effect that people should get their own independent legal advice about any of the matters that they might embark on with the bridging finance scheme, did you? A. I don't recall saying that, no." (T 260:40-T 261:11) 586Ms Fowler said that she charged a fee for attending the Chat Club meeting, which Mr Tombleson's company paid: T 261:25-30. 587During her cross-examination she explained that the reason she went to the Chat Club meeting was that: "... we were told that they were members that bought and sold properties so we thought it might be an opportunity to be able to get some clients in relation to conveyancing matters. That is the reason that I went." 588She said that she had previously spoken to "Phil" (clearly a reference to Mr Phillip Tiernan), who suggested that she go because it might be "an opportunity": T 262:25. 589Ms Fowler said, however, that the purpose in attending the meeting and addressing the audience was not for the purpose or the objective of assisting or supporting Mr Tombleson and/or his company: T 263:4-10. 590Contrary to Ms Fowler's account that she confined and restricted her presentation or statements to legal concepts or legal instruments, in particular, caveats and mortgages, the plaintiff, and Dr Cohn, Mr Galea and Ms Monahan all gave evidence that she spoke about matters relating to the operation of the Scheme including, in particular, the various safeguards associated with it. Each indicated in evidence that that was what was of particular interest to them. They additionally said that statements were made at the meeting by Mr Tombleson and Mr Dorian in Ms Fowler's presence. Such statements were identified in paragraph [15] of the Revised Plaintiff's Outline Of Argument. 591The plaintiff's evidence, including the plaintiff's handwritten statement, her ASIC statement, as well as the evidence of Dr Cohn, Mr Galea and Mrs Monahan, all refer to Ms Fowler's statements at the Chat Club meeting as extending beyond the account set out in paragraph [29] of Ms Fowler's affidavit. Rather than her statements being in the nature of a formal legal explanation or dissertation for the uninitiated as to the nature of a caveat, a mortgage, and a trust account, their evidence each suggested a common theme, namely, that Ms Fowler's statements to those present at the meeting were directed to the safety or security aspects of the Scheme that operated as protection for investor funds.

The Plaintiff's Account as to Representations by Ms Fowler 592In assessing the plaintiff's evidence in these proceedings, the plaintiff's handwritten statement made approximately 18 months after the Chat Club meeting and her ASIC statement provide a basis for cross-checking the reliability of that evidence. In the former, the following matters were referred to: (i) Mr Tombleson and Ms Fowler spoke at the meeting. She said she could not differentiate between what was said by either of them but that "they" explained how funds would be lent to people who needed short-term bridging finance which would be secured against properties with low LVRs. (ii) That Ms Fowler said that "there is no risk because the funds were therefore secured property with lots of equity and the deals would be sourced by Darryl": Exhibit 1 at p 117. (iii) That all valuers had to have indemnity insurance so that their valuations had to be reliable: Exhibit 1 at p 117. (iv) Investors would be told exactly where their funds were going and would be given caveats and their names would be recorded on the title deeds as second mortgagees: Exhibit 1 at p 117. (v) She recalled asking Ms Fowler in front of everyone to explain how this strategy was different from Westpoint and from mezzanine lending. She recorded, "She explained that investors' funds would be held in trust and quarantined from the workings of the company (Skyder Investments) at that stage and pigeon-holed from other investors' funds so they could only be lent out on specific projects of which we would be fully informed, and then returned to the trust": Exhibit 1 at 118. (vi) Statements to the effect that the 2% interest that investors would be paid monthly came out of the 6% monthly interest charged for bridging finance and that Skyder would bear all of the administration costs. (vii) A group of people gathered around Ms Fowler to ask further questions at the end of the meeting. The plaintiff asked her if she was going to invest in bridging and she said "she would if she had the money": Exhibit 1 at p118. 593Reference is made above to the plaintiff's nervousness about investing in the Scheme and pursuing questions about it up to the time of the Chat Club meeting. There is evidence on this aspect having been raised. 594In her ASIC statement the plaintiff said she raised the issue of investment risk: at [25]. She referred to a conversation with Mr Hraiki, who came to her house in September 2005, in which she asked him what the risks were involved in "Bridging". She also asked him how long he had been doing that sort of work and had any money ever been lost. 595In her ASIC statement the plaintiff said she spoke to Mr Dorian "... seeking reassurances from him that my money would be safe": at [26]. In paragraph [27], she said: "I remember that I spoke to other people about the Bridging Finance Scheme, looking to get their views on the risks involved. I would often get negative comments. Each time I received the negative comment or was advised against it, I would go back to Mr Dorian and each time he would dismiss the comments and explain why his strategy was safe, contrary to what others might be telling me ..." (emphasis added) 596In paragraph [36] of her ASIC statement the plaintiff indicated that she continued to raise questions concerning risk or security in investing in the Scheme. When relating the events of the Chat Club meeting the plaintiff referred to her request of Ms Fowler to explain how the "strategy" was different from Westpoint and mezzanine lending. 597In her handwritten statement the plaintiff also referred to the fact that she had many conversations with Mr Dorian checking what she had been told by Mr Hraiki and Mr Tombleson: Exhibit 1 at p116. 598In that statement she also referred to calls she made to Ms Fowler seeking reassurance on certain matters, stating: "... I rang Renae a number of times to discuss and to ask questions relating to how long she had known Darryl and Sam, about Skyder investments, what her role was in the company. I cannot remember specific questions, nor her responses, but I came away reassured after each conversation." (Exhibit 1 at p 118) 599The plaintiff's 2007 handwritten statement and her ASIC statement establish that in her statements to the Chat Club meeting Ms Fowler went beyond providing a legal dissertation or legal explanation on legal instruments such as mortgages, caveats and trust accounts. The plaintiff's 2007 statement and ASIC statement both referred to the following as having been addressed by Ms Fowler: (a) That investors' monies would be on-loaned for "bridging" or short-term purposes that would be adequately secured by caveats and second mortgages on real property, being property that had low loan to value ratios (a maximum of 65% of value). (b) That investors' funds would be securely held in a trust account and (i) would thereby be separated from Skyder's operations and (ii) that individual investor's funds would be "pigeon-holed" from the funds of other investors. 600These two matters were, on the plaintiff's evidence and that of the witnesses called in her case, central to the "pitch" made by Mr Tombleson at the Chat Club meeting. 601In her abovementioned statements the plaintiff was frank in admitting that she was unable to recall certain specific questions or responses. Although her evidence in that respect does not affirmatively assist her case, it does importantly, on the issue of her creditworthiness, at least to some extent acts as a measure of the plaintiff's preparedness to acknowledge limitations on her recollection on particular matters. 602On the subject of investor safeguards, however, both the plaintiff's handwritten statement and the ASIC statement refer to both Mr Tombleson and Ms Fowler having spoken on matters concerned with the purported safeguards of the Scheme. 603The plaintiff's handwritten and ASIC statements record that a specific question was directed by the plaintiff, in the presence of others at the meeting, to Ms Fowler who answered the question by statements representing that investors' funds would be protected by a trust arrangement (in particular, a trust account). The plaintiff's statements refer to Ms Fowler's answer to the plaintiff's question as having five aspects as follows: (i) That investors' funds in the Scheme would be held in a trust account. (ii) That their funds, once deposited, would be held separated, or quarantined from, Skyder. (iii) That investors' funds would be further held separated from each other ("pigeon-holed"). (iv) That investors' funds could only be lent out on "specific projects". (v) Upon loan funds being repaid by borrowers, the funds would be returned to the trust account. 604Mr Galea and Dr Cohn stated they each heard Ms Fowler explain how the trust would be managed, namely: (i) That investor funds would be held in a trust account. (ii) That individual investors' funds would be "pigeon-holed". 605Each also gave an account consistent with the plaintiff's account of hearing Ms Fowler saying that investors' funds would be protected by caveats and second mortgages: Mr Galea's affidavit at paragraph [14] and Dr Cohn's affidavit at paragraph [12]. 606The evidence of those two witnesses is consistent with the account set out in the plaintiff's first affidavit at paragraphs [67] and [68]. 607Ms Fowler's evidence conceded that she addressed those in attendance at the Chat Club meeting. She was clearly not present merely to answer any questions members of the audience may have had. On her own account she made a speech. The central issue for determination goes to the content of the statements she made to those present. 608In analysing Ms Fowler's evidence her statements are to be seen as part of and in the context of the meeting being a presentation or a promotion of the Scheme. It is clear from the evidence that Mr Tombleson emphasised both the benefits and the alleged safety of investing in the Scheme. In those respects, he was being supported by statements made by Ms Fowler which, on the evidence of the plaintiff, Dr Cohn, Mr Galea and Ms Monahan, whose evidence I accept, focussed on the purported safeguards of the Scheme, a subject that Mr Tombleson had shortly mentioned before, namely, caveats, mortgages and trust accounts. In this regard there is to be found in Ms Fowler's own evidence in paragraph [29] of her affidavit, statements by her: "Another instrument that can provide security for lenders that Darryl mentioned ..." and "you also heard Darryl mention trust accounts. Trust accounts can come in various forms ..." (emphasis added). Statements by Ms Fowler, I find, were made by reference to and as support for what Mr Tombleson had said on such safeguards. 609In my assessment of the evidence, I have concluded that Ms Fowler's account of her statements at the Chat Club meeting on the subject of safeguards - caveats, mortgages, trust accounts - as having been no more than a legal discourse or explanation of what mortgages, caveats and trust accounts were, divorced from the Scheme itself and not highlighting or giving emphasis to the safeguards available for those who invested in the Scheme, to be a highly implausible account. 610It is plain on the evidence that Ms Fowler knew that the meeting was being held by Messrs Tombleson and Hraiki for the purpose of promoting or "selling" the Scheme to potential investors. Furthermore, on her own account she was not present merely to answer questions. As noted above, she addressed those present at the meeting and subsequently answered questions. 611It is not, in my assessment, plausible that Ms Fowler addressed the audience on the premise that those in attendance required or might need an explanation as to what a mortgage or a caveat was or what how a trust account was. She, of course, was able to answer questions as to what such legal instruments were if there was anyone present who did not know. It is a reasonable assumption to make that those present who were interested in investing would know what a mortgage was and had at least a general understanding of caveats and trust accounts. 612The evidence of the plaintiff, Dr Cohn, Mr Galea and Ms Monahan, which I accept, establishes that the discussion at the meeting focussed upon promoting the Scheme with emphasis being placed upon two matters: (i) the prospect of a high return on investment, and (ii) security of an investment in the Scheme. 613As to the latter, the evidence of the plaintiff and that of the witnesses called in her case was that Ms Fowler addressed the subject of mortgages, caveats, low LVRs and a trust account as matters central to the Scheme that constituted functioning elements of it for safeguarding investors' funds. 614I have considered the plaintiff's evidence as to the further representations she attributes to Ms Fowler, namely: (1)At the boardroom meeting Ms Fowler allegedly stating that there was "no risk to investors because the funds were all secured against property with lots of equity": Plaintiff's affidavit sworn 8 November 2011 at [71]. (2)"Investor funds will be held in a nominated trust account that I will personally manage...": Plaintiff's affidavit sworn 8 November 2011 at [76]. 615As to (1), I consider having regard, in particular to the plaintiff's handwritten statement and her ASIC statement, that it is probable that it was Mr Tombleson who said the words "no risk to investors", rather than Ms Fowler (for example, the plaintiff's ASIC statement at [21]). The plaintiff, in evidence, frankly conceded that with some statements she could not say whether it was one or the other would made the statements. I conclude on this aspect that it is likely that the plaintiff's recollection was deficient. 616As to (2), the plaintiff recorded those words as having been spoken by Ms Fowler in part answer to a question she directed to her at the Chat Club meeting. In both the handwritten statement and the ASIC statement the plaintiff gave an account of Ms Fowler's answer, namely, "investors' funds will be held in trust and quarantined..." (I do not reproduce the whole of the answer as set out in both of the above statements and paragraph [76] of the plaintiff's affidavit sworn 8 November 2011). I note that the above last quoted segment is not followed in the handwritten or ASIC statements with the words "I will personally manage" (a reference to Ms Fowler). 617However, on page 10 of her handwritten statement the plaintiff wrote: "... I did not seek independent legal advice because I was made to understand that the lawyer Renae Fowler-Hay would be managing the trust fund and because I believed what she told the meeting ..." 618As noted at [249] above, Mr Galea also referred to Ms Fowler speaking of "managing" the trust, as did Dr Cohn at [281] although he also said she said she "would be managing the trust, monitoring the trust and that this made the investment safe": at [300] above. 619I accept that on the evidence it is likely that Ms Fowler spoke on the subject of the trust and how it operated and that when referring to the existence of a trust account into which investors' funds would be placed, she, in discussing that as a safeguard, stated that she would have some involvement with the operation of the trust account by way of exercising ongoing oversight of the funds invested in the Scheme, or by monitoring the fund as distinct from personally or directly herself handling the trust account and the funds placed in it. 620In that respect, I note there is evidence that Ms Fowler in fact exercised some form of oversight, check or monitoring on investors' funds with a view to keeping track of them. I observe, for example, that Ms Fowler's email dated 10 February 2006 referred to a list of "present borrowers" and funds, and raised a query as to where "all funds have gone", and that there was a need for a "breakdown" of the funds. 621I have referred above at [137] to the plaintiff's evidence in which she stated that Ms Fowler said that "I will retain the documents and oversee the protections in place for investors". Mr Galea, as noted above at [251] stated, inter alia: "I will be overseeing this process ...". Ms Monahan as noted above at [309] said to those gathered around her "through my employee I will be overseeing all of contracts ...". 622As to the effect of Ms Fowler's statements, the plaintiff and each of the abovementioned witnesses who heard Ms Fowler speak at the Chat Club meeting, stated in evidence that they gave credence to and placed weight upon what Ms Fowler said about the Scheme. I accept their evidence as to the content and meaning conveyed by Ms Fowler's statements as reliable evidence. I accept their evidence that they were persuaded by her statements to believe that the Scheme was safe for investment. Further, I have concluded that had Ms Fowler made known that she was basing her statements only on what she had been told and/or made an appropriately worded disclaimer, it is unlikely that the plaintiff would have been induced to rely upon them. 623The plaintiff and the witnesses called in her case additionally gave evidence that Ms Fowler represented that investors' monies lent as bridging finance would be protected by instruments that secured investors' interests during the bridging loan period and that on repayment investors' monies would be secured by being placed in a trust account until required again for bridging finance loan purposes. 624I have had close regard to the evidence of the plaintiff and the defendants on the alleged misleading statements relied upon by the plaintiff. I have also examined the plaintiff's April 2007 handwritten statement and her ASIC statement and the evidence given by Mr Galea, Dr Cohn and Ms Monahan. 625The plaintiff's April 2007 handwritten statement and her ASIC are consistent with her affidavit evidence. They refer to Ms Fowler having told those attending the Chat Club meeting: (i) That investors' funds will be held in trust. (ii) Investors' funds will be kept separate from the workings of the company (a reference at that time to Skyder). (iii) Investors' funds will be kept separate from other investors' funds. (iv) Investors' funds could only be lent out on specific projects of which the individual investor would be informed. The funds would thereafter be returned to the trust and held in a trust account. (v) Specific safeguards were in place or built into to protect investors' funds including second mortgages and caveats. (vi) She herself would be involved in "managing the trust fund" in the sense of oversighting it or monitoring it. 626Contrary to the statements referred to above, it is clear that Skyder and Silkwater in fact were able to use investors' funds as those managing and operating the companies chose. Investors' funds were not in fact being protected by the measures referred to in (i) to (iv) above or at all. 627In addition to the overall consistency between the plaintiff's affidavit evidence and her the 2007 ASIC statements, Dr Cohn's evidence lends support to the fact that Ms Fowler referred to the Scheme as operated with "a trust", that investors' funds would be placed in "the trust", that the funds would not be left "in a general trust account" but would be "pigeon-holed for individual investors": Dr Cohn's affidavit at [11]. In cross-examination, Dr Cohn said that his evidence was based upon his recollection and not on notes: T 140. However, he was adamant "I believe that the words to the effect of paragraph 11 were very clearly stated by Ms Fowler-Hay": T 142. 628As earlier noted, Dr Cohn was a most impressive witness. He appeared objective and was prepared to make concessions appropriate to a witness who was not giving evidence from a fixed point of reference but was prepared to acknowledge limitations on his ability to recall or confirm specific matters. His evidence, which I largely accept, corroborates the plaintiff's evidence on a number of representations made by Ms Fowler.

The Second Defendant: Credibility 629The cross-examination of Ms Fowler on the question as to whether she had given advice to potential investors, other than the plaintiff, did little to enhance her reliability as a witness. As noted above, Ms Fowler initially stated that she had not given advice to potential investors in the Scheme "about the operation of the Scheme and the security that was available to potential investors in regard to the scheme ...": [334] above. That is not a dissimilar position to that which Ms Fowler adopted with respect to her participation in the Chat Club meeting. 630In later cross-examination it was established that she had communicated with potential investors in which emphasis was given by her to both the benefits and the security of the Scheme. The communications on such matters with Mr Ayoub, and, via Mr McCarthy, with the Crokers, contained assurances with regard to such matters. 631I closely observed Ms Fowler during her oral evidence during cross-examination. I consider her evidence that she confined her statements at the Chat Club meeting to legal concepts only to be highly implausible. I accept the plaintiff's evidence, and that of Dr Cohn, Mr Galea and Ms Monahan, that she went beyond that to in effect convey that the Scheme represented a safeguarded investment. 632I was unimpressed by Ms Fowler's evidence on certain aspects. I have referred above to some of those. Her attempt to maintain, in respect of the Skyder boardroom meeting, that she was present for only five minutes required her to explain why then the relevant invoice she issued to Skyder was expressed as relating to "Conference with Darryl, Sam, Dave Dorian & Hazel about Haxel's [sic] Investment", and was calculated on the basis of an attendance for one hour. 633At first Ms Fowler said that notwithstanding the terms of the tax invoice she in fact spent time completing documents concerning the plaintiff. That explanation is a most unlikely one. As earlier noted, at the time of the Skyder boardroom meeting, the plaintiff had not made a decision to invest. No transaction concerning her and Skyder then existed. There were therefore no documents concerning the plaintiff as at the date of the meeting requiring completion by Ms Fowler. 634Ms Fowler proffered a second explanation, namely, that on the day of the Skyder boardroom meeting she spent time with Mr Dorian in an attempt to resolve terms of a contract with the plaintiff. That explanation, however, was contrary to the terms of the tax invoice which referred to the legal service as "a conference", was contrary to both explanations given by her, which had not been put forward in Ms Fowler's affidavit evidence as an explanation. 635Ms Fowler's account in paragraph [29] of her affidavit that she explained at the Chat Club meeting the concept of a mortgage and a caveat, but that she did not discuss the operation or security of the Scheme as a safe investment, I consider to be implausible. Upon a consideration of all of the evidence I am satisfied that Ms Fowler's statements to those at the meeting emphasised the alleged safeguards of it. Such assurances effectively endorsed or supported Mr Tombleson in his presentation. 636Ms Fowler's statements at the Chat Club meeting were not qualified by any indication that the information she was acting upon in making the statements was based on and only on what the Scheme proponents had told her, and had not been verified. Significantly, Ms Fowler made no disclaimers either in relation to the statements she made to the meeting or in her answers to questions put after the formal presentation concluded. 637The relevant context in which Ms Fowler attended and addressed the meeting and answered questions includes the fact, as I find to have been the case, that in making statements at the meeting she was a pivotal figure, being a solicitor supposedly with knowledge of the Scheme. Her supposed knowledge and skill as a lawyer, vis-à-vis the Scheme in part, I consider largely explains why after the formal presentation she was questioned on the security aspects of investing in the Scheme. The questions put to her, in particular those put by both the plaintiff and by Ms Monahan, are consistent with each looking to her for reassurance about the Scheme as a safe investment proposition. 638Ms Fowler, though a young solicitor at the time, must be taken to have had an appreciation that public statements by a lawyer to interested members of the public at an investment promotion meeting which addressed the alleged safeguards built into the Scheme, could be taken as being understood by those present as an endorsement of the investment as a safe one and as endorsing of the representations that had been made by the promoter, Mr Tombleson. Whether or not that be the case, it is plain on the plaintiff's evidence, which I accept, as I do that of Mr Galea, Dr Cohn and Ms Monahan, that Ms Fowler's statements were of significance to each of them. I accept the evidence of each that they were significant statements which each relied upon in making their respective decisions to invest in the Scheme.

Findings on Representations (i) I am satisfied on the evidence that Ms Fowler made representations in terms set out in [625] above. (ii) As to the question of whether Ms Fowler made an express representation that she would "look after the interests" of the plaintiff, I do not consider that the evidence assessed as a whole sufficiently supports a finding that an express statement to that effect was made by her. However, that said, I have concluded that: (a) The representation referred to above - that Ms Fowler would be involved in managing (oversighting or "monitoring the trust fund") and (b) Ms Fowler's actual conduct in acting in the interests of investors in the respects referred to in (iii) below supports the existence of an implied representation that she would act in the plaintiff's interests. (iii) I am satisfied on the evidence that Ms Fowler additionally represented that she was prepared to provide investors (including the plaintiff) the necessary loan agreements under which monies could be invested and that she would in their interests undertake work directed to putting in place, as security measures, second mortgages and caveats that would offer an additional level of protection for investors.

(a) Liability of the Second Defendant at Common Law 639The plaintiff's claim seeks to establish liability in the second defendant, Ms Fowler, (and vicariously) liability in the fourth defendant, Tiernan & Associates, for breach of duty of care said to have been owed to her. 640The plaintiff's case is that Ms Fowler is liable at common law in accordance with the principles relating to negligent misstatements. The common law duty of care may, it was submitted, be assumed by a solicitor to persons to whom he or she offers advice in circumstances where it would be reasonable that the recipient would rely upon that advice. Such an "ad hoc" duty of care, it was contended, may exist in circumstances as in the present case, where the solicitor is acting for another party to a particular transaction. 641The plaintiff's claim, alternatively, was argued upon the basis that an implied retainer arose between the plaintiff and Ms Fowler under which the latter assumed an obligation to act for the plaintiff and exercise due care and skill. The factual matters concerning the alleged negligence are relied upon as establishing a breach of such a duty. The plaintiff's case, in part, is that in making representations and giving advice to the plaintiff and others at the Chat Club meeting, Ms Fowler was promoting the commercial interests of her client, Skyder, for whom she also acted.

(b) The Cause of Action in Negligence 642The question of whether Ms Fowler owed a duty of care is to be answered by considering whether a reasonable solicitor addressing a meeting of potential investors upon the soundness of investing in a particular financial product would realise that he or she is being or is likely to be trusted by those who are the recipients of the particular information and advice given by the solicitor, believing that the solicitor is in a position to give the same. If so, the statements by the solicitor may give rise to a relationship between the solicitor and the recipient(s) requiring the solicitor to exercise reasonable care in giving the information or advice. 643Issues of duty or scope of duty and breach are addressed below. In particular, the following matters arise for consideration: (1) Before Ms Fowler addressed the Chat Club meeting it was made known to those present that she was a solicitor who was familiar with the Scheme. That information conveyed the fact that she possessed a capacity for judgment in speaking on the Scheme. (2) Without appropriate qualifications or a disclaimer, what was not conveyed was the fact that Ms Fowler had not by enquiry been in a position to verify the existence and operation of the Scheme's supposed safeguards. As earlier stated, her statements to the meeting were based only upon the assertions of Mr Tombleson and, to a lesser extent, Mr Hraiki. (3) Whilst the recipients of Ms Fowler's information and advice were entitled to believe that the solicitor addressing them had superior information and a capacity for judgment on the Scheme and its safety as an investment, the recipients were in an unequal position being unaware that Ms Fowler's statements were solely based upon the assertions referred to in (2). (4) An unqualified representation or one without a disclaimer may subject the representor to a continuing obligation to inform and warn a representee before he/she acts on it of the need for independent enquiry and not to rely upon the representor's statements. In the present case that obligation required such information and a warning from Ms Fowler on and after 19 September 2005, in particular, in October 2005 when the plaintiff told Ms Fowler that she was proposing to invest monies in the Scheme. As noted above, by this time Ms Fowler was aware that the plaintiff would be receiving a large amount of money from the sale of her house in the not too distant future. Reference was made in the email dated 18 October 2005 from Mr Dorian to Mr Tombleson and Ms Fowler that the plaintiff wanted to invest at least $1 million in then Scheme.

(c) Liability Principles 644The principles relating to a person who has relied on a statement made by another which was negligently made and which caused economic loss was established by the House of Lords in Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] 2 All ER 575. Lord Reid there stated: "A reasonable man, knowing that he was being trusted or that his skill and judgment were being relied on, would, I think, have three courses open to him. He could keep silent or decline to the give the information or advice sought: or he could give an answer with a clear qualification that he accepted no responsibility for it or that it was given without that reflection or inquiry which a careful answer would require: or he could simply answer without any such qualification. If he chooses to adopt the last course he must, I think, be held to have accepted some responsibility for his answer being given carefully, or to have accepted a relationship with the inquirer which requires him to exercise such care as the circumstances require." (at 583) 645In Australia, the principle upon which the cause of action rests was stated by the High Court in Mutual Life & Citizens' Assurance Co Ltd v Evatt, supra, in which Barwick CJ stated at 571: "[T]he circumstances must be such as to have caused the speaker or be calculated to cause a reasonable person in the position of the speaker to realize that he [or she] is being trusted by the recipient of the information or advice to give information which the recipient believes the speaker to possess or to which the recipient believes the speaker to have access or to give advice, about a matter upon or in respect of which the recipient believes the speaker to possess a capacity or opportunity for judgment, in either case the subject matter of the information or advice being of a serious or business nature. It seems to me that it is this element of trust which the one has of the other which is at the heart of the relevant relationship. I should think that in general this element will arise out of an unequal position of the parties which the recipient reasonably believes to exist. The recipient will believe that the speaker has superior information, either in hand or at hand with respect to the subject matter or that the speaker has greater capacity or opportunity for judgment than the recipient ... Then the speaker must realise or the circumstances be such that he [or she] ought to have realized that the recipient intends to act upon the information or advice in respect of his property or of himself in connexion with some matter of business or serious consequence ... Further, it seems to me that the circumstances must be such that it is reasonable in all the circumstances for the recipient to seek, or to accept, and to rely upon the utterance of the speaker. The nature of the subject matter, the occasion of the interchange, and the identity and relative position of the parties as regards knowledge actual or potential and relevant capacity to form or exercise judgment will all be included in the factors which will determine the reasonableness of the acceptance of, and of the reliance by the recipient upon, the words of the speaker." See also San Sebastian Pty Ltd v Minister Administering Environmental Planning Act (1986) 162 CLR 340 at 356; Tepko Pty Ltd v Water Board (2001) 206 CLR 1 at 16. 646In Esanda Finance Corporation Ltd v Peat Marwick Hungerfords (1997) 188 CLR 241 at 252, Brennan CJ stated: "But, in every case, it is necessary for the plaintiff to allege and prove that the defendant knew or ought reasonably to have known that the information or advice would be communicated to the plaintiff, either individually or as a member of an identified class, that the information or advice would be so communicated for a purpose that would be very likely to lead the plaintiff to enter into a transaction of the kind that the plaintiff does enter into and that it would be very likely that the plaintiff would enter into such a transaction in reliance on the information or advice and thereby risk the incurring of economic loss if the statement should be untrue or the advice should be unsound. If any of these elements be wanting, the plaintiff fails to establish that the defendant owed the plaintiff a duty to use reasonable care in making the statement or giving the advice."

(d) The Absence of Any Qualification or Disclaimer 647The submissions for the defendants strongly emphasised that Ms Fowler, at all relevant times, was simply acting on the basis of information that was given to her by the directors of Skyder, Messrs Hraiki and Tombleson. This was said to extend to information concerning both the structure and operation of the Scheme and the Scheme's compliance with the law, in particular, the Corporations Act. The submission was that Ms Fowler was only acting on her client's instructions and that "... she was merely passing on information prepared and presented to her by others without expressly endorsing the matters ..." It was submitted that she was "merely a conduit": Defendants' Written Submissions at [83]. 648It was further submitted that a reader of a solicitor's letter (such as that written by Ms Fowler to Mr McCarthy) would not have assumed that the writer was speaking from personal knowledge or was providing any personal assurance independently of the solicitor's client's instructions: Defendants' Written Submissions at [85]. 649However, a fundamental and important distinction exists between information that is passed on to a third party where a solicitor is acting merely as a conduit and the case where a solicitor by what he/she says endorses or adopts the representations made by a client. The relevant principles in this respect are discussed below. 650Statements made by a solicitor to members of the public at a public meeting as part of in an investment promotion without an appropriate disclaimer may supplement, reinforce, endorse or adopt statements made by the promoters of the financial product. That is what I find and conclude occurred in the meeting held on 19 September 2005. Ms Fowler, in making her statements as to the various safeguards that existed in the Scheme, could not, in my assessment, be said to have been simply acting as a mere conduit passing on information from Skyder or its proponents. She herself accepted that she was giving legal advice: see T 260-261. 651On the evidence there is no basis for concluding that Ms Fowler limited or qualified the representations that I have earlier determined she made as to the Scheme's safeguards by making it clear that she had not been able to verify and had not verified the factual basis for them or that she was making the representations merely on instructions. Additionally, it is clear that she did not inform or warn those present at the Chat Club meeting that they should rely on their own enquiries with the assistance of a solicitor. 652In the making of representations (for example by a real estate agent or a solicitor), what is important is whether the provider of information places appropriate qualifications on the information - that the information is supplied in good faith but is unverified and that the inquisitor or addressee should confirm the information, or it is otherwise qualified: Meredith v Commonwealth (No 2) [2013] ACTSC 221 at [389]. See Rawlinson & Brown Pty Ltd v Witham (1995) Aust Tort Rep 81-341 at 62,412-3 (Kirby P). See also Commonwealth v Cornwell [2006] ACTCA 7 at [41]-[43]. 653In my assessment, it is clear that no such qualification was made in the present case. 654In Rawlinson & Brown Pty Ltd v Witham, supra, the vendor's stock and station agent engaged to sell a farming property failed to inform the purchaser of the correct capacity of a water bore, which was a matter of significance to the viability of the business capacity of the property. Kirby P stated: "Thus, Mr Owers [the agent] could have avoided his liability by honestly stating that the figure of water flow came from the Briggs, unverified. This would have clarified the limits of Mr Owers' personal knowledge (and thus that of the appellant) while extinguishing any reliance which Mr Witham might have placed on the statement. In effect, Mr Witham would have been placed on alert to ask further questions, to approach independent advisers, to examine the bore himself or even to withdraw from the purchase." 655Kirby P also observed: "... what Mr Owers passed on was not simply information supplied by Mr Briggs. It was his understanding of that information. In conducting himself so, he attracted a duty to act with reasonable care .." 656Kirby P additionally noted the following matters: (1) That the information concerning the water bore was clearly fundamental to the purchase. (2) The misrepresentation affected the sale in such a way that the property bargained for was significantly different. (3) It was reasonable in the circumstances of that case for a purchaser to accept that the agent would verify the accuracy of the statements on the particular subject matter in question. (4) This was especially so given the purchasers' lack of knowledge, and that they therefore relied on the accuracy of the information. 657There are, in my opinion, similarities between the matters identified in (1) to (4) above and the circumstances of the present case. 658In that same case, Mahoney JA observed that an agent may pass on information received from another in a way that conveys that the information reflects his or her own understanding: "... where the agent makes statements of fact as its own, it may, of course be liable if, within the principles established in L Shaddock & Associates Pty Ltd v The Council of the City of Parramatta ... and San Sebastian ... loss flows from the inaccuracy of them. If an agent conveys to the prospective purchaser the information which has been given to him by his principal or by another and makes it clear that it is passing on the information given by another, ordinarily the agent will not be liable in negligence if the information is inaccurate. But in particular circumstances, it may be liable. There may be circumstances in which, for example, the information, though sourced to another, is given in a manner which invites the prospective purchaser to act upon the accuracy of it ..." (at 62-413) 659The difference between a person passing on information merely as a conduit and a case of information obtained from another being conveyed in a way that suggests an endorsement or adoption of the information is well established in misleading and deceptive conduct cases under trade practices legislation: see, for example, Yorke v Lucas (1985) 158 CLR 661; Butcher v Lachlan Elder Realty Pty Limited (2004) 218 CLR 592 at [37]-[42]. In the latter case it was confirmed that an agent may be liable for inaccurate or untrue information. Similar principle applies in the case of negligent misstatement. 660In the present case, Ms Fowler's statements were, as earlier stated, unqualified. They were conveyed as expressing her knowledge and understanding of the Scheme. They were also so expressed as to be endorsing what had been said on the safeguards of the Scheme that were referred to by Mr Tombleson a little earlier in his presentation.

(e) A Continuing Duty on the Second Defendant 661Following the Chat Club meeting, Ms Fowler became aware that the plaintiff had decided to invest a substantial amount of money in the Scheme. By then she had met the plaintiff twice - at the Skyder boardroom meeting and at the Chat Club meeting. 662The making of the representations, as earlier discussed, may create or establish a relationship between the representor and the recipient. It may not only give rise to a duty of care, but as discussed below a duty that continues. 663McCullagh v Lane Fox & Partners Ltd [1995] EWCA Civ 8 involved a misstatement made by an estate agent, a Mr Scott, to the purchaser of a residence. He, through mistake, represented the property as having a larger total area of land than was the case. Lord Justice Hobhouse observed: "Returning to the present case, I consider that the question whether Mr Scott owed to Mr McCullagh a duty of care must be answered taking into account all that Mr Scott knew and ought reasonably to have known and contemplated at the time he last spoke to Mr McCullagh before Mr McCullagh finally relied upon what he had said on the Saturday morning. Having made a representation, the relationship had been established and the potential for a duty of care continued up to the time that the representation was finally relied on. As soon as it becomes reasonably foreseeable by him that a careless misrepresentation might cause loss to Mr McCullagh, it was his duty to take reasonable steps to see that Mr McCullagh was not caused loss. The law of negligence is in line with the law of contracts and other aspects of the law of tort. A representation is treated as continuing up to the time of the making of the contract, or other reliance, with a co-relative duty on the maker to correct any misrepresentation. (Banque Keyser Ullman v Skandia [1990] 1 QB 665; Davies v London Provincial Marine (1978) 8 Ch D 469). Accordingly I do not accept the Judge's approach to the origin of the duty (if any) of the Defendants nor the Defendants' argument based upon the Judge's approach." (emphasis added) 664Similarly in Brownlie v Campbell (1880) 5 AC 925 at 950, Lord Blackburn stated: "[W]hen a statement or representation has been made in the bona fide belief that it is true, and the party who has made it afterwards comes to find that it is untrue, and discovers what he [or she] should have said, he [or she] can no longer honestly keep up that silence on the subject after that has come to his knowledge, thereby allowing the other party to go on, and still more, inducing him to go on, upon a statement which was honestly made at the time when it was made, but which he [or she] has not now retracted when he [or she] has become aware that it can be no longer honestly persevered in." (emphasis added) 665There is evidence that in February 2006 Ms Fowler was concerned about investors' funds. She raised with Mr Tombleson her concerns about how investors' funds were being managed. They were detailed in an email sent 10 February 2006 by her to Mr Tombleson: Exhibit "RJF-1" to the affidavit of Ms Fowler, Tab 10. The email stated: "Darryl, I have just given Amy photocopies of a list of all present borrowers with Silkwater. Their investments total $785,000. According to the paperwork, there are only two borrowers whose funds total $110,000. Therefore, technically, there should be $675,000 sitting in your trust account. I am aware that withdrawals have been made. I need to know the following:

1. the current balance of the trust account - if funds are in other accounts, they need to be transferred across;
2. a list of additional borrowers (how much, who and for how long) so that I can complete their borrower loan contracts;
3. a breakdown of where all the funds have gone. As you are aware under no circumstances are client's funds to be deposited anywhere else than into Silkwater's Trust account. And no funds are to be withdrawn, unless it is for a property deal secured by a loan contract etc. We need to send Notification to all investors if and where there [sic] monies have been on-lent. Thanks. Renae Fowler-Hay Associate Tiernan & Associates, Lawyers" 666In paragraph [61] of the Defendants' Written Submissions it was stated: "... If it can be said that by reason of the concerns raised with Ms Fowler in emails of 20 April 2006 that by the time she was in possession of sufficient information to take more serious steps to address the possible dysfunction of the bridging scheme, then the questions that arise are what she should have done, and then what would have been the likely result of those adequate actions?" 667It was noted that by April 2006 the plaintiff had already made her three "investments" in the Scheme and was receiving "significant income": Defendants' Written Submissions at [62]. 668It was also noted in the defendants' submissions that the evidence strongly suggested that Ms Fowler had been insistent with Skyder and Silkwater in assessing the conduct of the Scheme (for example, demanding to see their accounts and trust account ledgers etc), but, it was submitted, her client's directors (Messrs Tombleson and Hraiki) would have continued to have obfuscated and frustrated any such requests. 669The contention on behalf of Ms Fowler that it was, in effect, too late for Ms Fowler to have done anything before the plaintiff committed herself to investing in the Scheme, in particular, by the time of her third investment, requires a more searching analysis than merely looking at the temporal sequence of events. Those events, it may be noted, included Ms Fowler's realisation by February 2006 that all was apparently not in accordance with what had been the public representation of the Scheme and as to how investors' monies would be managed. 670There is evidence that, for some time, there had been a number of management and/or administrative problems concerning the operation of the Scheme and possible breaches of the Investor Loan Contracts. Thus, in an email from Ms Fowler to Mr Dorian dated 20 April 2006 (Exhibit B, p 414) questions were raised by her indicating her awareness that there had been ongoing problems over time. Whilst the subject of the email was relating to a "J.V. agreement", Mr Dorian included information about general problems with the Scheme. To the question posed by Ms Fowler "please clarify what is it exactly that is being breached in the agreement and we can rectified [sic] this?" the information supplied is recorded as: "You say how can we rectify! What exactly do you mean? Who is we and what is your role in the administrative side of the agreement? We hear conflicting stories about who is responsible for what and it causes concern. Most of the problems with Lenders relate to a number of administration matters in relation to the investor loan contact [sic] and the brochures used to promote the product of Bridging Finance, all of which I thought you were aware of. Lenders not receiving the following: · documentation as detailed · documentation as expected on time or not at all · payment of funds on the due date · payment of commission on time · wrong payment · early payment · being paid out early · The administration of the trust that is so important to the ILC seems to be a little cloudy to say the least. Lenders are very nervous about writing cheques out to Silwater [sic] Group and not being given any indication that the funds are being used through the trust. ... Some of the items that are of concern; · Poor record keeping · For us to control the Lender side we naturally require the details of all the lenders. This has not been forthcoming. We have been told we cannot have the details of non Chat Club people, If this is the case we would prefer to be told how we can have these details. We know it is quite easy to put a structure in place that wil [sic] accommodate this basic requirement, but to date no effort has been made to address this situation. Other procedures outlined in the J.V. agreement not being followed properly. · All lender enquires should be directed to me. · Non supply of New Lender details other than Chat Club · Non payment of full commissions · No details of commissions paid · Poor use of the Data spreadsheet provided · Wrong information on the Data spreadsheet There are other matters, but if there is a way to fix some of these matters it would help us to move forward and structure the systems to cope with the waitging [sic] masses of people who have pledged to invest. We currently have a list of some 120 people who are waiting for the administration of the structure to be put right so they can invest their hard earned funds." 671On the findings that I have made, Ms Fowler made a number of representations which were directed to the supposed "security" of the Scheme in terms of the safeguards that were said to be in place to protect investors. As later events unfortunately demonstrated, there was in fact no security in the Scheme sufficient to secure the plaintiff's investments. The same, of course, was the position with respect to the monies invested by others. 672On the findings made above, Ms Fowler's representations provided assurance to the plaintiff and acted to induce her to invest her money in the Scheme upon the basis that she believed it would be a safe and beneficial investment. 673The duty of care owed by Ms Fowler to the plaintiff in the circumstances of this case did not cease at the point of time at which she made the representations. As discussed above, they had a continuing operation or a continuing life during the period the plaintiff relied upon them in making her three investments (the period between October 2005 and March 2006). 674I have referred earlier to dicta in McCullagh v Lane Fox & Partners Ltd which confirms that a duty of care may arise and continue until the representation is relied upon. Once it becomes reasonably foreseeable by the representor that a careless misrepresentation may cause loss to another (in particular, to a person to whom a representation has been earlier directed), the representor places himself or herself under an obligation of a continuing nature to take action, namely, to take reasonable steps to inform and warn those who may act upon the representation or who have already acted upon it and may do so again. 675In the present proceedings, I am of the opinion that Ms Fowler's duty of care to the plaintiff continued through the four-month-plus period October 2005 to March 2006 during which the plaintiff placed her monies with Skyder/Silkwater. In having made the representations, without any disclaimer or any qualification, that the Scheme had in place the specified safeguards and protections for investors making it a safeguarded investment scheme, it was reasonably foreseeable that those who had heard the representations, in particular the plaintiff, would be induced by them to invest in the Scheme. 676I am of the opinion that it remained Ms Fowler's continuing duty to take reasonable steps to provide to those to whom she had made the representations appropriate cautions and warnings that made clear that the statements that she had made on or about 19 September 2005 and thereafter as to the security of the Scheme had not been verified by her and were wholly based on the say-so of Messrs Tombleson and Hraiki and the representees should undertake their own inquiries. That duty remained operative up to the date on which the plaintiff invested $800,000 in the Scheme. 677Accordingly, for the above reasons, I am unable to accept the proposition as advanced in the submissions made on behalf of Ms Fowler that if there were signs of dysfunction in the management of the Scheme by April 2006 that it had not been possible for Ms Fowler to have taken any action before that time. 678There is a further matter concerning Ms Fowler's continuing duty of care. The relationship of solicitor/client between Ms Fowler and Skyder/Silkwater did not operate as an impediment or restriction on her such as to prevent her from issuing a subsequent warning to investors, in particular, to the plaintiff. Having, without proper substantiation, made the representations that she did on 19 September 2005, Ms Fowler was entitled to require her client, Skyder, to produce to her information that verified the safeguards that had been represented to her as operative parts of the Scheme. If, as Ms Fowler's evidence indicates, it was the case that Messrs Tombleson and Hraiki continued to obfuscate in revealing the true position, it would then have placed her in the position of being obliged to inform the investors (including the plaintiff) to whom she had spoken that they needed to investigate for themselves the Scheme so as to evaluate for themselves any risk of investing in it. Such advice or disclosure to investors would have constituted a necessary clarification of what she had already said on behalf of and for the benefit of her clients, Skyder/Silkwater, and would not have compromised any duty owed by her to her clients.

Solicitor/Client Relationship 679A solicitor/client relationship arises if, on the balance of probabilities, the conduct of the parties shows that such a relationship has come into existence: Meerkin & Apel v Rossett Pty Ltd (1998) 4 VR 54 at 62 and Watson v Ebsworth & Ebsworth (a firm) (2010) 278 ALR 487 at [111]. 680In Lawyers' Professional Responsibility (4th ed, 2010, Lawbook Co), Professor GE Dal Pont summarised the law on implied retainers as follows: "Retainers, like other contracts, need not be created by express words, whether written or oral; their existence can be inferred or implied from the circumstances. In this context it is the existence of the retainer that is implied, not its terms ... Proof of an implied retainer rests on proof of facts and circumstances sufficient to establish a tacit agreement to provide legal services. Its existence is determined by inference from objective facts, not merely by the lawyer's belief as to which clients he or she was acting for. The reasonable expectations of the alleged client carry significant weight here, as the lawyer may always take steps to dissuade any person from a belief that the lawyer acts for that person. The lawyer's file (including letters and other correspondence) and diary notes, specifically regarding how he or she has referred to and dealt with the claimant, may prove useful. Aspects that may impact upon a client's reasonable expectations of a retainer include the capacity in which the lawyer acted (say, giving advice in a non-legal capacity), who instructed the lawyer, who is liable for the lawyer's charges, and whether a contractual relationship existed with the claimant in the past (as the court may be readier to assume that the parties intended to resume that relationship in such a case)." (at [3.50]) (footnotes omitted) 681It has been accepted that there are a number of factors that may be relevant as indicating the existence of a retainer. They include: (i) That a retainer may be inferred from acts and conduct of the parties as well as or in the absence of their express words. (ii) The conduct of the parties may reflect a tacit understanding or agreement. Their conduct is to be considered in the light of surrounding circumstances. See Stringer v Flehr & Walker (a firm) [2003] QSC 370 per Philippides J at [72]. 682In Stringer it was also stated that the conduct of a party or the parties must be capable of proving all the essential elements of an express contract. 683In Hendriks v McGeoch [2008] NSWCA 53, Giles JA observed at [11]: "Whether a contract has been entered into is to be judged objectively on 'an objective assessment of the state of affairs between the parties': Ermogenous v Greek Orthodox Community of SA Inc [2002] HCA 8; (2002) 209 CLR 95 at [25]. The status of the parties, the relationship between them and the nature of the putative contract would bear upon whether a contract should be inferred to have been made ..." 684In McDonald v Grech; Bank of Western Australia Limited v McDonald [2012] NSWSC 717, Ward J (as her Honour then was) observed at [80]: "... It is noted that factors which have been recognised as indicative of the existence of a retainer include the following: acceptance by the solicitor of responsibility to prepare documents or do professional work without any indication that he cannot fully discharge his professional duties to the client (Pegrum v Fatharly (1996) 14 WAR 92 at 102, where it was said that in such a case there is a strong bias towards finding that the solicitor tacitly agrees to act and to undertake the usual professional responsibilities); consultation by the alleged client with the solicitor or evidence of reliance by the alleged client on the solicitor (Pegrum at 102); the fact that the solicitor has acted for the alleged clients on previous occasions (Hendriks at [12]); the giving by the solicitor of the impression of acting in the alleged clients' interests (Hendriks at [12]); payment of legal fees by the alleged clients (Pegrum at 6); the undertaking by the solicitor of work which appears to be in the alleged clients' interests (IGA Distribution Pty Ltd v King & Taylor Pty Ltd and Anor [2002] VSC 440 at [234]), and/or which appears to be legal in nature and goes "beyond the provision of casual assistance" (Fleeton v Fitzgerald unreported, NSW Court of Appeal, 18 December 1998 per Beazley JA at 11); the fact that the solicitor does not make clear that he or she is not acting for the alleged clients (Hendriks at [12]); knowledge of the solicitor that the alleged clients are not represented by another solicitor (IGA at [234]); knowledge of the solicitor that the alleged clients would be at risk of loss if their interests were not looked after (IGA at [234]); the unlikelihood, given the alleged clients' inexperience or inability, that they "would undertake and complete the proposed transaction without the benefit of legal assistance" (Jeandin v Tzovaras [2011] NSWSC 1254 at [62]-[65])."

(a) The Issue of Retainer in this Case 685The plaintiff alleges that the defendants were retained by her to advise her in relation to the Scheme and to protect her interests in relation to the Scheme: Revised Plaintiff's Outline of Argument at 6. 686The plaintiff, as earlier stated, does not rely upon an express retainer. Her contention was that an implied retainer existed pursuant to which she alleges Ms Fowler provided advice and other legal services. In this respect it was contended that, although not retained in a conventional manner, a solicitor may assume a duty of care to persons towards whom he or she offers advice in circumstances where it would be reasonable to expect the recipient would rely upon that advice. Further, it was observed that an ad hoc duty of care may arise even in circumstances where the solicitor already acts for other parties in the transaction: Watkins v De Varda [2003] NSWCA 242 at [140]; Pritchard v DJZ Constructions Pty Ltd (2012) 16 BPR 31,141 [67] to [70]. 687It will be necessary to closely examine the factual circumstances in which an implied retainer is said to have arisen in this case. However, before doing so I will refer to certain principles to be applied in determining the existence of a retainer of that kind. 688As indicated above, the existence of a contract in its basic terms may be inferred from the conduct of the parties, notwithstanding the absence of the usual evidence of formation and content: Australian Energy Ltd v Lennard Oil NL [1986] 2 Qd R 216 at 237 per Thomas J; Integrated Computer Services Pty Ltd v Digital Equipment Corporation (Aust) Pty Ltd (1988) 5 BPR 11,110 at 11,117 per McHugh JA (as his Honour then was). There is nothing in principle which prevents proof of a contract by conduct or admissions: Australian Energy Ltd v Lennard Oil NL, supra, at 237. 689In Groom v Crocker [1939] 1 KB 194 at 222, Scott LJ, in relation to the contractual relationship between solicitor and client, observed: "The relationship is normally started by a retainer, but the retainer will be presumed if the conduct of the two parties shows that the relationship of solicitor and client has in fact been established between them." 690Accordingly, a contractual relationship of solicitor and client will be presumed if it is proved that the relationship of solicitor and client existed de facto between the solicitor and another person: Pegrum v Fatharly [1996] 14 WAR 92 at 95 per Ipp J. 691It will only be in cases where the inference is clear that such a relationship will be found to exist. Ordinarily a court will only conclude that a tacit agreement has been arrived at if such a conclusion is a necessary inference from the proved facts: Australian Energy Ltd v Lennard Oil NL, supra, at 237; Pegrum v Fatharly, supra, at 94. 692The plaintiff alleges that by providing advice and legal services to her concerning the Scheme at the Chat Club meeting and in the period following it, Ms Fowler assumed a fiduciary duty to her by virtue of an assumed relationship of solicitor and client, which relationship Ms Fowler adopted in respect of her dealings with the plaintiff: Revised Plaintiff's Outline of Argument at [71]. 693The plaintiff's submission was that by reason of the fiduciary duty which Ms Fowler owed to the plaintiff she could not assume a position whereby her self interest might conflict. Accordingly, it was submitted that Ms Fowler breached her duty to the plaintiff in the following respects: "75. The plaintiff contends that [Ms Fowler] breached this duty by: (a) Advising the plaintiff to invest in the Bridging Finance Scheme despite having a conflict of interest in that she had, at the time of advising the plaintiff, an interest, and duties to advance the interests of Skyder and Silkwater; and (b) Advising the plaintiff to invest in the Bridging Finance Scheme without any proper regard to the plaintiff's interests and in order to advance the interests of Skyder and Silkwater." 694The alleged conflict of interests accordingly is said to have arisen in circumstances where Ms Fowler acted as the solicitor to Skyder and Silkwater and she was also involved in a number of important steps in relation to the organisation and promotion of the Scheme as described in the Defendants' Written Submissions at paragraph [76]. 695In addition, it was submitted that it was beyond contest that Ms Fowler did not have any regard to the plaintiff's interests in making the representations and assurances which it was contended were directed at inducing her to invest in the Scheme: Revised Plaintiff's Outline of Argument at [77]. 696On the plaintiff's evidence it was contended that at no time did Ms Fowler advise the plaintiff to obtain independent legal advice: Revised Plaintiff's Outline of Argument at [78]. 697The issues of implied retainer and breach of fiduciary duty that arose for consideration in Dean v Allin & Watts (a firm) [2001] EWCA Civ 758 and Pegrum v Fatharly, supra. These cases provide illustrations of the principles applied to specific fact situations and afford guidance in determining the issue in the present case. 698In both cases there are some similarities to the plaintiff's case insofar as the plaintiff in each had loaned monies. In one, the securities provided proved to be unavailable. In Pegrum, the security was inadequate. In both cases, the same solicitor acted for lender and borrower.

Pegrum v Fatharly [1996] 14 WAR 92 699This case concerned monies that had been borrowed by a Mr Wilkins and his group of companies from Mr and Mrs Pegrum, the appellants. It was noted that ordinarily a loan deed and securities, which were largely if not entirely for the lenders' benefit, would be prepared by the lenders' solicitors at the borrower's expense. To save legal costs, however, the borrower (Mr Wilkins) proposed to Mr Pegrum that the respondent, who was retained as the solicitor for the Wilkins Group, prepare all the documents. Mr Pegrum agreed. It was understood that the respondent solicitor would be (and he was) the only solicitor involved in receiving instructions and in preparing the documents. 700Both parties attended on the respondent solicitor and gave him information to be put into the documents. At this meeting, the respondent solicitor sought and obtained the male appellant's confirmation that it was in order for him to prepare the documents. The respondent prepared the documents and in the land deed he inserted a clause to the effect that the borrower would pay the lenders' (the appellants') costs of and incidental to the instructions for and the preparation of the deed. 701The solicitor had knowledge of the fact that the Wilkins Group were a bad risk and that the securities given were inadequate to secure the loan, but did not warn the appellants about this. 702The borrower was unable to repay the loan and the securities proved to be inadequate in point of value. 703The action by the appellants against the respondent was for damages for professional negligence in failing to give proper advice and for breach of fiduciary duty. At first instance it was held that the appellants had not proved that the respondent had acted for them in the transaction or that he owed them any relevant professional duty. 704However, on appeal it was held that a professional engagement could be implied and would be presumed if the conduct of the parties shows that the relevant relationship (solicitor/client) had been, and in fact, was established between them. 705It was also held that where both parties consult the one solicitor who accepts responsibility to prepare the documents in which their respective rights and obligations are to be set out, there is a bias towards finding he has agreed to act for both parties. In that regard, the Court cited and applied dicta in Midland Bank Trust Co Ltd v Hett Stubbs & Kemp (a firm) [1979] Ch 384. 706The Court determined that in all the circumstances the proper inference in the case was that the respondent had tacitly agreed to act as the male appellant's solicitor and owed to the male appellant the usual professional duties. 707The following circumstances were identified as relevant in determining the implied retainer: (i) After the first meeting between Mr Pegrum and Mr Wilkins, the circumstances were such that it was obvious to all that the appellants, for their own protection, required the services of a legal practitioner. The security provided was relatively large and the scheme pursuant to which Mr Pegrum was to provide security was complex. Mr Wilkins was not able, unaided by a solicitor, to give Mr Pegrum a sufficient understanding of the scheme. (ii) One of the tasks that was performed by the respondent solicitor was to give an explanation of the scheme to Mr Pegrum. (iii) Security documents had to be prepared. These documents were of a kind that could not have been prepared by anyone other than a legal practitioner, the parties not being able to draft them. (iv) The task of preparing such documents is, as a matter of practice, normally performed by the lender's solicitor, not the borrower's. In that case they were prepared by the respondent solicitor. (v) The respondent solicitor received information from Mr Pegrum in order to complete the security documents. (vi) The security documents were drawn by the respondent supposedly for the appellants' protection. (vii) It was obvious that the appellants relied on the respondent solicitor in that respect - that is that they relied on the respondent solicitor in the belief that he was their solicitor to act for their benefit and in their interests. (viii) The inference that the appellants had appreciated this was compelling. It was obvious that Mr Pegrum did not have the skill or knowledge to understand the transaction fully, let alone to prepare the security documents. (ix) It was obvious to Mr Wilkins that Mr Pegrum needed a solicitor. There was nothing that suggested that this need would not have been equally obvious to the respondent solicitor: at 95. 708In relation to the above matters, Ipp J further observed: "... As Anderson J has pointed out, the learned trial judge found that Mr Pegrum in fact regarded the respondent as his solicitor and that he did in fact place reliance on the respondent to provide him with professional advice and assistance. The respondent did nothing to disabuse Mr Pegrum of his belief that he was being, in effect, looked after by the respondent. This suggests that the respondent was content that there be a solicitor, client relationship between him and the appellants. This inference is supported by the respondent's conduct in regard to the fees to which he was entitled for the work done in regard to the security documents." (at 95-96) 709In Pegrum the respondent solicitor had contended that he was not retained as a solicitor for the appellants and owed no relevant duties to them. Anderson J in that case analysed the facts in some detail in order to determine whether this contention was sound. 710It was noted that it was Mr Wilkins who suggested that the male appellant, Mr Pegrum, meet with the respondent solicitor, who "... could independently verify all the facts ...": at 98. 711It was further noted that the respondent solicitor prepared the documents in circumstances of some urgency and left blanks for title details. The loan deed was to be filled in before it was executed, but otherwise prepared the documents as engrossments in a form to be executed, together with a mortgage and caveat in a form to be registered. 712Mr Pegrum under the loan deed advanced $50,000 to Mr Wilkins and he had given a mortgage for $150,000 over Mr Pegrum's home to a corporate entity to secure an advance in that amount to another entity. 713The action arose out of the subsequent failure of the Wilkins Group and the inability of Mr Wilkins to repay the $50,000 loaned to him by Mr Pegrum and the inability of the entity, CH, to redeem the mortgage of the appellants' home to Mr Wilkins' entity as well as the substantial failure of the securities that had been executed in favour of Mr Pegrum to protect him against those eventualities. 714It was in these circumstances, Anderson J noted, that the appellants sued the respondent as their solicitor. 715It was noted: (i) The solicitor had met Mr Pegrum, once, at Mr Wilkins' office. (ii) Mr Pegrum did not expressly engage the respondent as his or the appellants' solicitor. 716Anderson J then proceeded: "When both parties to a transaction consult the same solicitor and together give him the information needed to prepare the documents in which their respective rights and obligations are to be set out and the solicitor accepts responsibility to prepare the documents without any indication that he cannot fully discharge his professional duties to them both there is a strong bias towards finding that the solicitor tacitly agrees to act for both parties and to undertake the usual professional responsibilities to them both. Midland Bank Trust Co Ltd v Hett, Stubbs and Kemp [1979] 1 Ch 384 especially at 396. In the absence of a clear indication by the solicitor that the solicitor does not accept one of the parties as his client it is natural in such a case to assume both are relying on him for professional advice and assistance. This follows from the mere fact that both have consulted him. There may be other circumstances which show that there is no reliance by one or other of the parties on the solicitor, but, if not, reliance should be inferred as a fact. And when a solicitor accepts responsibility to do professional work requiring special knowledge and skill and there is in fact a reliance on him to apply his expert knowledge and skill in the performance of that work, there exist "the elements which lie at the heart of the ordinary relationship between a solicitor and his client..." Hawkins v Clayton (1988) 164 CLR 539, per Deane J at 578. This is not a special rule applicable only to solicitors, I do not think. For an example of its application to a statutory auditor see Shire of Frankston and Hastings v Cohen (1960) 102 CLR 607 per Fullagar J at 619." 717His Honour then stated: "This does not mean a solicitor whose services are sought by both parties is bound to accept that he is to serve both parties. He can refuse to do so and elect to act for one party only. This requires a very clear statement by the solicitor that this is to be his position. It has even been held that he is duty bound in such a case to positively recommend the other party get another solicitor and take independent advice before entering into the transaction, and, in the event that recommendation is not followed, to give him proper advice as to the risks in signing the documents. Irvine v Shaw (1992) ANZ Conv R 83. The agreement in this case under which it was proposed Mr Pegrum would extend fully secured financial accommodation to Wilkins was to be a substantial transaction, from the perspective of these parties. The main object of preparing the loan deed and other securities, was to protect Mr Pegrum's interests. It was vital to him as lender that the documents, especially the securities, be in proper form and legally effective. The professional skill and judgment needed to ensure this result was therefore to be applied for the most part for the benefit and protection of Mr Pegrum. The transaction was not uncomplicated. The documents would be of some complexity and specialised. It is not to be expected that Mr Pegrum would fully understand their technical aspects or fully grasp the jurisprudential basis for all that was written in them even if he could comprehend the literal text. Reliance would have to be placed on the solicitor drawing up the documents. For obvious and very good reason that would usually be a solicitor engaged by the lender. Both Wilkins and the respondent asked Mr Pegrum to agree that the respondent do this work. In giving his assent to the respondent performing the function normally performed by the lender's solicitor, it should not be inferred Mr Pegrum was dispensing with reliance on professional assistance and advice. The proper inference is that he was doing no more than accepting the respondent as the person on whom he should rely to provide him with professional services. Mr Pegrum gave evidence that it was his "clear understanding" that the respondent was acting for him and his Honour seems to have accepted that was his belief. His Honour observed of Mr Pegrum's state of mind on this issue: 'No doubt, as a result of what had been said during the earlier discussion which preceded the meeting on 19 April 1992, Mr Pegrum thought that Mr Fatharly was to act as his solicitor in connection with the preparation of the security documents.' I think this must be taken as a finding that Mr Pegrum did in fact regard the respondent as his solicitor; that he did in fact place reliance on the respondent to provide him with professional advice and assistance. In my respectful opinion no other finding could have been made." 718In the present case, there are a number of similarities with Pegrum. First, on the plaintiff's case, Ms Fowler provided her with advice on the security of an investment in the Scheme. Second, she would and did prepare the loan contract for the investment to be made by the plaintiff in the Scheme. Third, there was communication between the plaintiff and Ms Fowler for the purposes of supplying her with particulars to complete the loan agreement. Fourth, from a practical point of view, the loan agreement was largely for the lender's benefit and protection as in the ordinary case of a loan transaction. Fifth, as in Pegrum, as Ms Fowler was the only solicitor acting, it must have been apparent that the plaintiff was relying upon Ms Fowler to provide the professional services for her investment as is the position in any case of a solicitor who is responsible for acting on behalf of a lender client. Sixth, at no time did Ms Fowler tell the plaintiff that she could not discharge that responsibility. Seventh, the loan agreement made provision for the legal costs of the loan contract to be paid by both Skyder and the plaintiff: see clause 5(2)(a). Eighth, Ms Fowler rendered legal services supposedly intended to protect the plaintiff's interest, by mortgages and caveats. 719On the plaintiff's case, she acted upon the basis of an understanding that Ms Fowler was providing the legal services to bring into effect the loan transaction in respect of the monies she was to loan to Skyder by way of an "investment" in the Scheme and to provide advice concerning the same. The plaintiff did not, at any stage, have any other legal practitioner acting in her interests and it must be taken that it was obvious to Ms Fowler that she was looking to her and relying upon her for the abovementioned legal services and advice. 720On the issue of the plaintiff receiving a covering letter from Ms Fowler recommending independent legal advice be obtained, for reasons earlier stated, I accept the plaintiff's evidence that she did not, before the first advance made by her to Skyder, receive a copy of a letter advising her to seek independent advice. I also accept that before the second advance the plaintiff had not read the terms of a covering letter subsequently sent with the loan contract. It was common ground that there was no letter sent by Ms Fowler accompanying the loan contract in respect of the third advance made by her to Silkwater. 721Looking at the material facts as to a relationship that developed between the plaintiff and Ms Fowler during and after the meetings in September 2005, the following are noted:

• Ms Fowler undertook to prepare and provide the contract(s) which would contain the relevant provisions, including those in the interests of the individual investors, and she did so.
• Ms Fowler, on the plaintiff's evidence which I accept, was available to take and return telephone calls from the plaintiff, which she did.
• Ms Fowler undertook administrative tasks which included corresponding with the plaintiff as well as maintaining some form of overall checks or monitoring of funds invested in the Scheme, including the plaintiff's. In this respect, I again note Ms Fowler's email dated 10 February 2006 concerning the trust account.
• Ms Fowler attended to preparing mortgages and caveats arising in respect of bridging finance loans. 722I have concluded that, having regard to the relevant principles and all of the circumstances to which I have referred above, an implied retainer existed between Ms Fowler and the plaintiff. On that basis, Ms Fowler was at all material times subject to a fiduciary duty to act to protect and advance her interests.

(b) Did a Fiduciary Relationship Arise Independently of an Implied Retainer? 723The plaintiff claimed an entitlement to damages from the defendants independently of the existence of a retainer upon the basis that apart or separate from the retainer there had been a breach of an ad hoc fiduciary duty by Ms Fowler. 724The plaintiff's case essentially is that Ms Fowler took on the role of a fiduciary by having represented that she would "... retain the documents and oversee the protections in place for investors" (Plaintiff's first affidavit at [67]) and/or that she said "investor funds will be held in a nominated trust account that I will personally manage ..." (Plaintiff's first affidavit at [76]). 725In Beach Petroleum NL v Kennedy, supra, the Court at [192]-[195] stated: "It is well-established that a person may take upon herself or himself the role of a fiduciary by a less formal arrangement than contract or by self-appointment: see Lyell v Kennedy (1889) 14 App Cas 437 at 456 and 459-460; Boardman v Phipps [1967] 2 AC 46 at 100 118 and 126-127; Walden Properties Ltd v Beaver Properties Pty Ltd [1973] 2 NSWLR 815 at 833; Meagher, Gummow and Lehane, Equity Doctrines and Remedies, 3rd ed (1992), Butterworths, Sydney, para 505; Parkinson (ed), The Principles of Equity (1996), LBC, Sydney, at 369-370. Ultimately a fiduciary responsibility is an imposed not an accepted one, one concerned with an imposed standard of behaviour; Finn, "The Fiduciary Principle," in Youdan (ed), Equity Fiduciaries and Trusts (1989) Carswell, Toronto, at 54. But whether the relationship derives from retainer, a less formal arrangement or self-appointment, it must be examined to see what duties are thereby imposed on the fiduciary and the scope and ambit of those duties: see Boardman v Phipps (at 127). [The appellant] relied on the reasoning of Mason J in Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41 at 96-97: 'The critical feature of these [fiduciary] relationships is that the fiduciary undertakes or agrees to act for or on behalf of or in the interests of another person in the exercise of a power or discretion which will affect the interests of that other person in a legal or practical sense. The relationship between the parties is therefore one which gives the fiduciary a special opportunity to exercise the power or discretion to the detriment of that other person who is accordingly vulnerable to abuse by the fiduciary of his position.' The existence and scope of the duty may derive from a course of dealing. In a passage frequently cited with approval from Birtchnell v Equity Trustees, Executors and Agency Co Ltd (1929) 42 CLR 384, a partnership dispute, Dixon J, as his Honour then was, said (at 408): '... The subject matter over which the fiduciary obligations extend is determined by the character of the venture or undertaking for which partnership exists; and this is to be ascertained, not merely from the express agreement of the parties, whether embodied in written instruments or not, but also from the course of dealing actually pursued by the firm.' Moreover a role which was limited when originally assumed may, by reason of conduct in the performance of the role, be expanded so as to extend the duty: see, eg, Australian Breeders Co-operative Society Ltd v Jones (1997) 150 ALR 488 especially at 514-517." 726In Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41, Gibbs CJ observed that although the category of fiduciary relationships are not closed, relevant authorities did not provide any comprehensive criteria as to when such a relationship came into existence. His Honour referred with approval to observations of McLelland J (as his Honour then was) in that case in which his Honour observed: "In the present case McLelland J said that there are two matters of importance in deciding when the Court will recognise the existence of a relevant fiduciary duty. First, that one person is obliged, or undertakes, to act in relation to a particular matter in the interests of another and is entrusted with the power to affect those interests in a legal or practical sense, the situation is, in his opinion, analogous to a trust. Secondly, he said that the reason for the principle lies in the special vulnerability of those whose interests are entrusted to the power of another to the abuse of that power. The learned members of the Court of Appeal consider that the first of these statements needed a qualification which McLelland J had intended to suggest, namely that the undertaking to act in the interests of another meant the fiduciary undertook not to act in his own interests; they said that the principle is that 'a fiduciary relationship exists where the facts of the case in hand establish that in a particular matter a person has undertaken to act in the interests of another and not in his own'. They added that it is not inconsistent with this principle that a fiduciary may retain that character although he is entitled to have regard to his own interest in particular matters ..." (at 68-69) 727Given that a fiduciary relationship may arise in various circumstances and that fiduciary relationships of a different type carry different obligations, it is not possible for any one test to be stated in determining whether such relationship exists in a particular case. 728Subsequent to the Chat Club meeting, the plaintiff contacted Ms Fowler and, before her decision to invest in the Scheme, asked her further questions as earlier discussed. In due course the plaintiff entered into a relationship with Ms Fowler under which Ms Fowler provided a number of legal services towards facilitating the investment - providing her with the Loan Contracts containing terms that supposedly offered certain contractual rights and protections, undertook the preparation of the security (mortgage) documents to be used, as indicated at the Chat Club meeting, to safeguard the sub-lending (bridging finance) using investors' funds, and the lodging of caveats as a further protection for investors. That work was performed in the name of Tiernan & Associates. 729Apart from undertaking of such services, on the finding I have earlier made, Ms Fowler assumed a form of oversight or monitoring of the funds held by Skyder/Silkwater as reflected in her email of 10 February 2006 to which I have earlier made reference. Such a role was complementary to the role Ms Fowler played in her subsequent contact with investors in relation to the above services including forwarding Loan Contracts to them for execution, and forwarding covering correspondence with the contract document in the name of Tiernan & Associates. 730Whilst the representations which I have earlier found were made by Ms Fowler at the Chat Club meeting occurred prior to the relationship with the plaintiff coming into existence, pursuant to which the above services were provided, Ms Fowler became aware or must be taken to have been aware that the plaintiff had very likely been influenced to invest on the basis of the representations she had earlier made. For reasons earlier discussed, Ms Fowler was under a duty to speak up and provide the plaintiff with appropriate information and warning as indicated above, in particular, at [672] to [689]. 731Whilst in general terms, solicitors do not owe a duty of care to persons who are not their clients (Hill v Van Erp (1997) 188 CLR 159 at 167) the mere absence of a retainer does not mean that a solicitor may not be subject to a duty of care to another: Watkins v De Varda, supra, at [140]; Beach Petroleum NL v Kennedy, supra, at 78. At the time Ms Fowler addressed the meeting with potential investors she had placed herself in a position of conflict between the duty she owed to the proponents of the Scheme, who she must be taken as having appreciated were keen to obtain investors' funds, and her duty to the potential investors to either validate the facts or make an appropriate disclaimer. 732In the above circumstances, I consider that the plaintiff in her dealings with the defendants was in a position of vulnerability and whose interests were entrusted to another within the principles stated by McLelland J as extracted in paragraph [726] above. I am of the opinion that the plaintiff did entrust her interests as investor in Ms Fowler both in terms of advice sought and given to her as discussed above, and in Ms Fowler in her capacity of a solicitor providing the services referred to above. The evidence in my assessment establishes that Ms Fowler was, in the circumstances of the case, under a duty to act in the interests of the plaintiff, and that by not informing and warning her as discussed above, she failed to do so.

Causation 733The High Court's decision in Mutual Life & Citizens' Assurance Co Ltd v Evatt (1968) 122 CLR 556 establishes that an action for negligent misstatement must establish a number of matters, one of which is the issue of causation. Upon proof of the giving of information or advice in circumstances identified by the High Court, it is necessary for a plaintiff to establish causation, that is, that he or she acted upon the information or advice.

(a) The Plaintiff's Personal Position 734In this respect, it is necessary to consider the evidence concerning the plaintiff - her background, her personal position in 2005, the inquiries she made about the Scheme, and the influence or persuasion sought to be exercised by others upon her decision-making. 735The evidence establishes that the plaintiff was well-educated and had acquired a number of properties with her former husband. As earlier noted, the evidence, however, does not establish or suggest that she had been an investor and/or had acquired knowledge and experience in investing in money lending, shares, or other financial products. There is no evidence that, prior to investing in the Scheme, the plaintiff had been a risk-taking investor beyond the usual risks associated with the Sydney property market. 736In 2005 the plaintiff's life position changed upon the dissolution of her marriage. She had reached a property settlement with her former husband under which she became sole registered proprietor of investment properties formerly jointly held by her with her former husband. The properties were subject to a number of mortgages and the relevant loan repayments had to be serviced by rental or other income. The plaintiff's evidence was that there was a shortfall between the monthly loan repayments and income received.

(b) The Plaintiff's Concerns for a Safe Investment 737These facts form the background to the plaintiff's introduction to the Scheme, initially through Mr Dorian. In 2005, she was a person with a need to support her position on an ongoing basis as a property owner with a secure investment(s) that would enable her to service her loan commitments. 738The evidence establishes that some time elapsed between Mr Dorian suggesting the Scheme as an investment and her ultimate decision to invest in it. Some time also elapsed between the plaintiff's initial introduction to Messrs Hraiki and Tombleson and Ms Fowler and her decision to invest. 739Notwithstanding Mr Dorian's attempts to interest the plaintiff in the Scheme in or about late August/early September 2005, as noted above at [92] she firstly sought advice about doing so from her former employer Mr Giltinan and then from her local Westpac bank manager, Mr Coelho. 740Although Mr Dorian again continued to advocate the Scheme as a worthwhile investment, the evidence points to the plaintiff's continued hesitation and nervousness about investing in it. She said, and I accept her evidence, that she continued to seek reassurance by raising questions about the Scheme at the Skyder boardroom meeting, even after Messrs Tombleson and Hraiki had sought to apply their persuasive "pitch". 741I have earlier referred to the plaintiff directing a question about the Scheme to Ms Fowler at the Chat Club Meeting, in answer to which Ms Fowler gave information which purportedly distinguished the Scheme from mezzanine lending schemes. 742Mr Dorian sent an email on 18 October 2005 addressed to Mr Tombleson and Ms Fowler. In it he referred to a "customer" who he said had lots of money, being a reference to the plaintiff. In the email reference was made to the plaintiff's concerns about investing in the Scheme, this being approximately one month after the Chat Club meeting at the Seven Hills RSL Club. In it he wrote: "Then there is Hazel who want sto [sic] put up at least $1,000,000 in, but is still asking me all sorts of questions about safeguarding herself with the Bridging. I am showing her Darryl's details, but she is very waring of Sam. Must be honest. Her house goes to auction on 12th Nov so there is time to put adequate safeguards in place by then." (emphasis added) 743In her ASIC statement the plaintiff referred to her concern about investing in the Scheme. This was the position prior to the meeting in the Skyder boardroom. At paragraph [18] she stated, in part: "I was interested in investing in bridging finance but was still uncertain about the safety of my money and around the end of August or early September 2005 Mr Dorian suggested I meet with three of his associates ..." (emphasis added) 744After she left the boardroom, the plaintiff set out in her ASIC statement the conversation that she said she had with Mr Tombleson who, according to her account, said to her: "There will come a time when you have to be prepared to trust someone." 745She said that she replied: "I said: 'I need to know my money is safe as I cannot afford to lose it'." He said: 'Your money will be secured against property with low loan to value ratios (LVR), 55% to a maximum 65%, so there will never be a problem. There will always be enough equity in the security property to cover the funds." (emphasis added) 746I accept that up until the Chat Club meeting the plaintiff had not committed herself to investing in the Scheme, but that having heard Ms Fowler speak on the Scheme she was persuaded that it was a sufficiently safe investment. On consideration, I am satisfied on the balance of probabilities that the plaintiff relied and acted upon the representations made by Ms Fowler at the Chat Club meeting in making the investments in the Scheme.

(c) Factual Causation and Scope of Liability 747On the findings made I determine that the elements in s 5D(1)(a) and (b) of the Civil Liability Act have been established. The findings made in this judgment establish that the representations made by Ms Fowler and her failure to warn and otherwise protect the plaintiff against economic loss or harm resulting from an investment in the Scheme was a necessary condition of the occurrence of such economic harm. 748Further, on the findings made, it is appropriate, in my assessment, that the scope of Ms Fowler's liability, as determined in this judgment, as representor to potential investors and as a practising legal practitioner, should extend to the economic loss or harm so caused. 749In determining the scope of the liability of the defendants, I have considered, amongst other matters, whether or not and why responsibility for the harm should be imposed on the defendants. In the circumstances established in the evidence and on the findings made, the plaintiff was induced by the representations made by Ms Fowler and acted upon them. Additionally, I have determined that had Ms Fowler exercised reasonable care, in the respects earlier discussed, the plaintiff would not have made her three investments in the Scheme. On that basis, and by reason of the plaintiff's reliance on Ms Fowler's statements made, it is appropriate, in my assessment, that the responsibility for the economic harm suffered by the plaintiff to be imposed on the defendants.

The Plaintiff's Claim Under the Fair Trading Act 1987 750The general position at law in relation to the liability of intermediaries for misleading and deceptive conduct under the trade practices and fair trading legislation is that liability will not be imposed where an intermediary, when viewing his or her conduct as a whole, was merely passing on information supplied by another and not adopting or endorsing the representation: Yorke v Lucas (1985) 158 CLR 661 at 666; Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592. 751In Gardam v George Wills & Co Ltd (No 1) (1998) 82 ALR 415, French J (as his Honour then was) observed: "The innocent carriage of a false representation from one person to another in circumstances where the carrier is and is seen to be a mere conduit, does not involve him in making that representation. Nobody would expect that the postman who bears a misleading message in a postal article has any concern about its content or is in any sense adopting it. The same is true of the messenger boy or courier service. When, however, a representation is conveyed in circumstances in which the carrier would be regarded by the relevant section of the public as adopting it, then he makes that representation. It will be a question of fact in each case ...": (at 427). 752In Google Inc v Australian Competition and Consumer Commission (2013) 294 ALR 404; [2013] HCA 1, the High Court (French CJ, Crennan and Kiefel JJ) cited the above passage from Gardam with approval and observed: "It has been established in relation to intermediaries or agents that the question whether a corporation which publishes, communicates or passes on the misleading representation of another has itself engaged in misleading or deceptive conduct will depend on whether it would appear to ordinary and reasonable members of the relevant class that the corporation has adopted or endorsed the representation. It has also been established that, if that question arises, it will be a question of fact to be decided by reference to all the circumstances of a particular case." (at [15]) (emphasis added) 753In relation to solicitors' negligence in the context of representations by a solicitor to a third party, the question of a duty to exercise reasonable skill and care in the context of conveyancing work was examined in Dean v Allin & Watts (A Firm), supra, by Lightman J, with whom Walker and Sedley LJJ agreed, observing: "The greatest caution is required in treating statements made by a solicitor in the course of conveyancing transactions and the like on or in accordance with the instructions of his client as representations made by the solicitor rather than as "conveyed" by him as (in effect) a medium of communication or messenger for his client, for this may readily be assumed to be understood to be part of his role in the transactions. The solicitor's position in such a situation is to be contrasted with his position in a situation where the solicitor makes an express unequivocal statement to a third party which is not attributable simply to performing his role as the client's adviser: for in the latter case the adviser may readily be held to have assumed responsibility to the third party, since the explanation of his acting merely as a messenger would be inapplicable ...": at [28]. 754I have earlier referred to the general proposition that solicitors do not owe a duty of care to persons who are not their clients and in that respect to the observations of the High Court in Hill v Van Erp, supra. Similarly, in McCullagh v Lane Fox and Partners Ltd [1995] EWCA Civ 8 Hobhouse LJ observed at [18]: "These authorities show that the governing principle is still that in Hedley Byrne and that an agent can be held responsible for a careless misrepresentation as much as his principal. In certain special situations, rules which restrict the liability of the agent may be superimposed. One such situation is ... a solicitor in a conveyancing transaction ... It is the professional duty of the solicitor that is owed to his client alone. It is the activities covered by the rules and standards of his profession and his duties to the court as one of its officers that the restriction applies. Within that framework and when exercising the standard of skill and care appropriate to his status as a solicitor his duty is confined to his client. In any other situation, or when it is a reliance (ie Hedley Byrne) case, the special rule does not apply ..." (emphasis in original) 755In the present case there was no circumstance analogous to a solicitor providing advice or information in the course of a conveyancing transaction. On the facts established in evidence, Ms Fowler made the various statements, as I have determined, as a legal practitioner, such statements amounting to representations as to supposed facts concerning the Scheme and her understanding and knowledge of the safeguards that were available to provide security for an investment in it. Such a case is unlike those in which an agent merely acts as a conduit for passing on information supplied by others. 756The liability of intermediaries is unlikely to arise where the person making the statement expressly indicates that he or she is doing no more than merely passing on information supplied by another or others. This would be the case where an intermediary passes on information and discloses his or her source or in some circumstances, where no comment is made regarding information conveyed, a disclaimer is made. A disclaimer, however, must do more than merely disclose that the intermediary is not the source of the information: Borzi Smythe Pty Ltd v Campbell Holdings (NSW) Pty Limited [2008] NSWCA 233 at [48]. 757In particular, where her statements did not identify the source of her information and therefore in that way were unqualified and made without disclaimer, she was, as a minimum requirement, under an obligation to obtain for herself objective verification of the facts and matters contained within her representations as to the existence and operation of the Scheme's alleged safeguards. 758The reasonable care expected of a solicitor in the circumstances of this case in other words, in my opinion, extended to Ms Fowler satisfying herself that what had been asserted by the proponents of the Scheme was truthful and accurate information. In the circumstances in which she acted upon the mere assertions of her client without any other inquiry and without any verifying data, the representations which I have earlier found to have been made by her, in my opinion, constituted a breach of her duty of care to the plaintiff. 759In the defendants' submissions it was contended that the plaintiff had not established that Ms Fowler engaged in misleading and deceptive conduct in breach of s 42 of the Act. 760In this respect, emphasis was placed upon the fact that Ms Fowler had made all the representations "...on the basis of unequivocal instructions from her clients". It was submitted that she was a mere conduit and that liability for misleading and deceptive conduct cannot rise. 761It was acknowledged that Ms Fowler had conceded that she had written to other potential investors about the workings of the Scheme and that she did not use the words "on my instructions" or similar words. The submissions then referred to solicitors' letters and the way in which they would normally be taken as being built upon clients' instructions. 762It was separately submitted that it would appear that it could not be said that the relevant representations, so far as the plaintiff's prospective investments were concerned, as at the time they were made, were necessarily false as a matter of fact. This was argued on the basis that the way the plaintiff's personal investments would be dealt with could not be known with certainty because the investments had not yet occurred. They were future events. 763It was noted that the plaintiff relied upon, in the alternative, the provisions of s 41 of the Act relating to future matters and that these provisions reverse the onus and required the defendants to prove they had a reasonable basis for the belief that the future matters would come to pass. In order to meet this submission, reliance was placed by the defendants upon the fact that Ms Fowler's statements were based on instructions from her clients. 764The claim under s 42, the defendants submitted, did not establish that any misleading or deceptive conduct had caused the plaintiff loss. Reliance was placed upon submissions made in relation to negligence on that issue. 765Finally, in relation to the provisions of s 43(2), that provision sets out the matters to be taken into account in determining unconscionable conduct. It was submitted that that evidence did not establish that Ms Fowler acted unconscionably in any way. 766I have earlier addressed the relevant authorities that deal with statements that constitute misleading and deceptive conduct made by agents of another and the distinction between a statement made merely by a person as a conduit from other statements made, as for example, where statements are based upon the representor's knowledge and/or experience. The submission that Ms Fowler said what she said on instructions from her clients does not address the important distinction to which the authorities refer. I do not consider, on the evidence and the findings made above, there to be any basis for the submission that the statements did not constitute misleading and deceptive conduct. 767The factors to which I have earlier referred in relation to the cause of action in negligence concerning the nature and content of the representations made by Ms Fowler, are relevant to the action based on s 42 of the Act. 768The representations made by Ms Fowler related to matters concerning the security or safety of investing in the Scheme, about which Ms Fowler had no direct knowledge. The provisions of s 42, in my opinion, apply. 769The issue of causation has been addressed above in relation to the claim in negligence. Those observations, in my opinion, apply equally to the plaintiff's claim under the Fair Trading Act. 770The test for causation is subjective, so that it concerns the actual effect of the conduct on the particular plaintiff: Butcher v Lachlan Elder Realty Pty Limited, supra, at [37]. A plaintiff is not denied relief because a reasonable person in his or her position, acting diligently to protect his or her interests, would not have been misled or deceived: Henville v Walker [2001] HCA 52; (2001) 206 CLR 459 at [13], [140]; World Series Cricket Pty Ltd v Parish (1977) 16 ALR 181, 203. 771The representations found to have been made at the Chat Club meeting were misleading and deceptive within the meaning of s 42 of the Act.

Alleged breach of s 911A and s 911B of the Corporations Act 772The plaintiff pleads at paragraph [76] of the Amended Statement of Claim that in giving the financial services advice described in paragraph [64] of the Amended Statement of Claim, without holding a financial services licence, that the second defendant acted in contravention of the Corporations Act. 773Pursuant to s 766A(1) of the Act, a person provides a "financial service" if they: (1)Provide financial product advice; (2)Deal in a financial product; (3)Make a market for a financial product; (4)Operate a registered scheme; (5)Provide a custodial or depository service; or (6)Engage in conduct of a kind prescribed by the regulations made for the purposes of that paragraph. 774Relevantly, "financial product advice" is defined under s 766B of the Act as follows: "(1) For the purposes of this Chapter, financial product advice means a recommendation or a statement of opinion, or a report of either of those things, that: (a) is intended to influence a person or persons in making a decision in relation to a particular financial product or class of financial products, or an interest in a particular financial product or class of financial products; or (b) could reasonably be regarded as being intended to have such an influence. (1A) However, subject to subsection (1B), the provision or giving of an exempt document or statement does not constitute the provision of financial product advice. (1B) Subsection (1A) does not apply for the purpose of determining whether a recommendation or statement of opinion made by an outside expert, or a report of such a recommendation or statement of opinion, that is included in an exempt document or statement is financial product advice provided by the outside expert. (2) There are 2 types of financial product advice: personal advice and general advice. (3) For the purposes of this Chapter, personal advice is financial product advice that is given or directed to a person (including by electronic means) in circumstances where: (a) the provider of the advice has considered one or more of the person's objectives, financial situation and needs (otherwise than for the purposes of compliance with the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 or with regulations, or AML/CTF Rules, under that Act); or (b) a reasonable person might expect the provider to have considered one or more of those matters. (4) For the purposes of this Chapter, general advice is financial product advice that is not personal advice. (5) The following advice is not financial product advice: (a) advice given by a lawyer in his or her professional capacity, about matters of law, legal interpretation or the application of the law to any facts; (b) except as may be prescribed by the regulations--any other advice given by a lawyer in the ordinary course of activities as a lawyer, that is reasonably regarded as a necessary part of those activities; (c) except as may be prescribed by the regulations--advice given by a registered tax agent or BAS agent (within the meaning of the Tax Agent Services Act 2009), that is given in the ordinary course of activities as such an agent and that is reasonably regarded as a necessary part of those activities." 775A "financial product" is defined in s 763A as: "(1) For the purposes of this Chapter, a financial product is a facility through which, or through the acquisition of which, a person does one or more of the following: (a) makes a financial investment (see section 763B); (b) manages financial risk (see section 763C); (c) makes non-cash payments (see section 763D). This has effect subject to section 763E." 776An investor will make a "financial investment" pursuant to s 763B where: (a) the investor gives money or money's worth (the contribution ) to another person and any of the following apply: (i) the other person uses the contribution to generate a financial return, or other benefit, for the investor; (ii) the investor intends that the other person will use the contribution to generate a financial return, or other benefit, for the investor (even if no return or benefit is in fact generated); (iii) the other person intends that the contribution will be used to generate a financial return, or other benefit, for the investor (even if no return or benefit is in fact generated); and (b) the investor has no day-to-day control over the use of the contribution to generate the return or benefit. Note 1: Examples of actions that constitute making a financial investment under this subsection are: (a) a person paying money to a company for the issue to the person of shares in the company (the company uses the money to generate dividends for the person and the person, as a shareholder, does not have control over the day-to-day affairs of the company); or (b) a person contributing money to acquire interests in a registered scheme from the responsible entity of the scheme (the scheme uses the money to generate financial or other benefits for the person and the person, as a member of the scheme, does not have day-to-day control over the operation of the scheme). Note 2: of actions that do not constitute making a financial investment under this subsection are: (a) person purchasing real property or bullion (while the property or bullion may generate a return for the person, it is not a return generated by the use of the purchase money by another person); or (b) a person giving money to a financial services licensee who is to use it to purchase shares for the person (while the purchase of the shares will be a financial investment made by the person, the mere act of giving the money to the licensee will not of itself constitute making a financial investment)." 777In Australian Securities and Investments Commission v Fuelbanc Australia Limited [2007] FCA 960 it was found that a financial investment will be made in accordance with s 763B where: (7)A participant gives money to another person who uses that contribution to generate a financial return or other benefit for the participant; (8)The participant intends that the other person will use the contribution to generate a financial return or other benefit for him or her; and (9)The other person intends the contribution will be used to generate a financial return or other benefit for the participants. 778In that case Heerey J held that "in all these respects the contribution is caught even if no return or benefit is in fact generated": at [34]. 779In Australian Securities and Investments Commission v PFS Business Development Group Pty Ltd & Ors [2006] VSC 192 Hargrave J considered that: "In my view, s. 763B(b) applies wherever the investor has, as a matter of fact, no day-to-day control over the use of the contribution for the purpose of generating a financial return or other benefit. The fact that the structure of the arrangement pursuant to which an investor gives another person money contemplates or provides that the investor will have an element of day-to-day control does not, in my view, exclude the contribution from constituting a financial investment if, as a matter of fact, the investor has no day-to-day control over the investment of the contribution." 780Under s 911A of the Act, "a person who carries on a financial services business in this jurisdiction must hold an Australian financial services licence covering the provision of the financial services". 781Section 911B of the Act in effect provides that a person must only provide a financial service on behalf of another person (the principal) who carries on a financial services business if the principal holds an Australian financial services licence covering the provision of the service.

(b) Failure to comply with s 911A and s 911B is an offence under the Act 782There are two issues that arise for consideration. First, was there a breach of ss 911A and 911B? Second, depending upon the answer to that questions, is the plaintiff entitled to damages arising from the breach of s 911A and s 911B? 783The claim for damages arising from the contravention of ss 911A and 911B is made pursuant to s 1324 of the Act. 784Under s 1324 the Court has the power to grant injunctions, including upon the application of a person whose interests have been affected, where another person has engaged is, is engaging in, or is proposed to engage in conduct that would constitute a contravention of the Act. 785Section 1324(10) relevantly provides: "Where the Court has power under this section to grant an injunction restraining a person from engaging in particular conduct, or requiring a person to do a particular act or thing, the Court may, either in addition to or in substitution for the grant of an injunction, order that person to pay damages to any other person". 786There is a dispute in these proceedings as to whether an injunction must be sought in order to enliven the jurisdiction for damages under s 1324. The authorities also appear to be divided on this point. 787At no point has the plaintiff sought an injunction against the defendant. It was also conceded by counsel for the plaintiff during opening address that there was no appropriate injunction that could have been sought at any time in the circumstances of this matter. 788In Permanent Trustee Australia Ltd v Perpetual Trustee Co Ltd (1994) 15 ACSR 722 ("Permanent Trustee"), Cohen J held that the power to make an award for damages (under a provision in substantially similar terms to s 1324) is conditional upon the court's power to grant an injunction, and not whether an injunction was actually sought in the proceedings. 789As will be observed, the predominant view in subsequent cases has been that the jurisdiction to award damages under s 1324 is only engaged in proceedings where an injunction is sought. 790In Executor Trustee Australia Ltd v Deloitte Haskins Sells (1996) 22 ACSR 270 an application for damages was made under s 574 of the Companies (SA) Code, which is in "substantially similar terms" to s 1324, with such differences between the provisions "being irrelevant for present purposes". 791In that case Perry J closely examined the wording of s 574, and observed that every other sub-paragraph of that section expressly dealt with, in one way or another, applications for an injunction. His Honour considered that the wording "in addition to or in substitution for the grant of the injunction" in the relevant sub-paragraph to identify a situation in which an injunction is sought, but the court exercises the discretion to make an order for payment of damages at the same time as granting the injunction or in lieu of doing so. 792Accordingly, it was held that: "Given the statutory context, it is difficult to accept the argument advanced by Deloittes that the power to award damages under subs (8) exists independently of any application for an injunction, or if such a power did in some abstract sense exist, that it could be invoked absent an application for an injunction." (at 273) 793His Honour proceeded to conclude that: "True it is that the words 'where the Court has power under this section to grant an injunction' could possibly identify a situation where the power, in the sense of jurisdiction, exists to grant an injunction, but there has not necessarily been an attempt to invoke it. In my opinion, however, that would be a strained interpretation of the section, and would not sit comfortably with the words 'in addition to or in substitution for the grant of the injunction." (at 273.) 794The words "an injunction" refer to an injunction sought pursuant to the preceding subsections of s 1324, and therefore the subsection operates in aid of the principle that an injunction will not usually be granted where damages will be an adequate remedy. 795In respect of the decision in Permanent Trustee, Perry J stated that, "I feel obliged to take another view". His Honour observed that: "There would seem to be no sense in limiting what is suggested as a general power to award damages to situations where the court had power at some stage to grant an injunction, but no injunction is sought. If there were to be created in the Code a general power to award damages for contraventions of the Act, one would expect to see it disengaged from a section dealing with the jurisdiction to make an injunction": at 279. 796The jurisdiction to grant damages under s 1324(10) was considered by this Court in Waterhouse v Waterhouse (1998) 46 NSWLR 449. In that case, Windeyer J found the reasoning of Perry J "more compelling than the reasoning" in Permanent Trustee, "particularly as the wording of s 1324 seems appropriate to a discretionary power of the court to grant injunctions and to award damages in lieu, rather than to give some general right to damages": at 490-491. 797This observation was supported in Artistic Builders Pty Ltd v Elliot & Tuthill (Mortgages) Pty Limited [2002] NSWSC 16. In that case, an interlocutory injunction had been granted, but had expired prior to the conclusion of the hearing. Accordingly, there was no injunction on foot. Campbell J (as his Honour then was) came to the conclusion that: "132 In my view s 1324(10) does not authorise the award of damages in the present case. It has been decided in both the Supreme Court of South Australia (Executor Trustee Australia Ltd v Deloitte Haskins Sells (1996) 22 ACSR 270 per Perry J) and the Supreme Court of New South Wales (Waterhouse v Waterhouse (1999) 46 NSWLR 449 at 490-491 per Windeyer J) that section 1324(10) does not permit a court to award damages in the absence of an actual claim for injunctive relief. 133 As there had been some remarks, possibly obiter, by Cohen J in Permanent Trustee Australia Ltd v Perpetual Trustee Co Ltd (1994) 15 ACSR 722 which construed a closely analogous section of the Companies (NSW) Code in a wider fashion, it is appropriate for me to say that I agree with the reasons given by Perry J and Windeyer J for their decisions." (emphasis added) 798It was later observed by Bathurst CJ in Dungowan Manly Pty Ltd v McLaughlin [2012] NSWCA 180 that "the predominant view in subsequent cases [to Permanent Trustee Australia Ltd v Perpetual Trustee Co Ltd (1994) 15 ACSR 722] has been that damages can only be awarded in proceedings where an injunction is actually sought": at [5]. 799Therefore, "in the absence of a claim for an injunction the court has no power to award damages [under s 1324]": Porter v OAMPS Ltd (2005) 215 ALR 327, 348. See also GE Capital Australia v Davis [2002] NSWSC 1146 at [61]. 800Having regard to the relevant authorities, I have concluded that damages under s 1324 can only be awarded in proceedings where an injunction is actually sought. 801The plaintiff did not seek an injunction in these proceedings. Accordingly, the plaintiff's claim for damages under the Corporations Act cannot succeed. I therefore do not consider it necessary to address the question of whether the defendants in fact contravened ss 911A or 911B.

PART H - THE PROPORTIONALITY PROVISIONS 802The plaintiff's claim is an "apportionable claim" within the meaning of s 35 of the Civil Liability Act 2002. As explained below, if the provisions in Part 4 of the Civil Liability Act apply, they operate to limit the liability of the defendants. 803The provisions of Part 4 represent a significant departure from the previous regime of "solidarity liability" at common law under which liability could be joint or several but each wrongdoer could nonetheless be treated as an effective cause and be required to bear the whole loss. Under that regime a plaintiff was able to sue one wrongdoer and recover the whole loss for that wrongdoer, thus leaving that tortfeasor to seek contribution from any other wrongdoers. 804The provisions of Part 4, however, are intended to visit on each concurrent wrongdoer only that amount of liability which the Court considers "just", having regard to the comparative responsibilities of all wrongdoers for the plaintiff's loss: Yates v Mobile Marine Repairs Pty Ltd [2007] NSWSC 1463 per Palmer J at [93]-[94]. 805The relevant provisions of the Civil Liability Act are as follows: "34 Application of Part (1) This Part applies to the following claims (apportionable claims): (a) a claim for economic loss or damage to property in an action for damages (whether in contract, tort or otherwise) arising from a failure to take reasonable care, but not including any claim arising out of personal injury, (b) a claim for economic loss or damage to property in an action for damages under the Fair Trading Act 1987 for a contravention of section 42 of that Act (as in force before its repeal by the Fair Trading Amendment (Australian Consumer Law) Act 2010) or under the Australian Consumer Law (NSW) for a contravention of section 18 of that Law. ... (2) In this Part, a concurrent wrongdoer, in relation to a claim, is a person who is one of two or more persons whose acts or omissions (or act or omission) caused, independently of each other or jointly, the damage or loss that is the subject of the claim. ... 34A Certain concurrent wrongdoers not to have benefit of apportionment (1) Nothing in this Part operates to limit the liability of a concurrent wrongdoer (an excluded concurrent wrongdoer) in proceedings involving an apportionable claim if: (a) the concurrent wrongdoer intended to cause the economic loss or damage to property that is the subject of the claim, or (b) the concurrent wrongdoer fraudulently caused the economic loss or damage to property that is the subject of the claim, or (c) the civil liability of the concurrent wrongdoer was otherwise of a kind excluded from the operation of this Part by section 3B. ... 35 Proportionate liability for apportionable claims (1) In any proceedings involving an apportionable claim: (a) the liability of a defendant who is a concurrent wrongdoer in relation to that claim is limited to an amount reflecting that proportion of the damage or loss claimed that the court considers just having regard to the extent of the defendant's responsibility for the damage or loss, and (b) the court may give judgment against the defendant for not more than that amount. (2) If the proceedings involve both an apportionable claim and a claim that is not an apportionable claim: (a) liability for the apportionable claim is to be determined in accordance with the provisions of this Part, and (b) liability for the other claim is to be determined in accordance with the legal rules, if any, that (apart from this Part) are relevant. (3) In apportioning responsibility between defendants in the proceedings: (a) the court is to exclude that proportion of the damage or loss in relation to which the plaintiff is contributorily negligent under any relevant law, and (b) the court may have regard to the comparative responsibility of any concurrent wrongdoer who is not a party to the proceedings. (4) This section applies in proceedings involving an apportionable claim whether or not all concurrent wrongdoers are parties to the proceedings. ..." 806The issues arising for consideration include the following: (1) Whether Part 4 is applicable in accordance with s 34(1); (2) Whether the defendants are concurrent wrongdoers within the meaning of that expression in the s 34(2) definition; (3) The amount that reflects the proportion of each defendant's liability that is "just having regard to the extent of the defendant's responsibility for the damage or loss" pursuant to s 35; and (4) Whether s 34A operates to make a defendant an excluded concurrent wrongdoer. 807It is necessary to determine the application of the apportionment process in this case. The effect of s 35(1) of the Civil Liability Act is to limit the liability (in this case of the second and fourth defendants) to a particular amount and to preclude an award of judgment against them for more than that amount. I note that s 35(4) provides that the proportionality provisions apply in proceedings involving "an apportionable claim" whether or not all concurrent wrongdoers are parties to the proceedings. 808Accordingly, the Court is required to determine the proportion of the plaintiff's loss of $1,190,000 that it "considers just having regard to the extent of [the second defendant's responsibility and, vicariously, the fourth defendant] for the damage or loss". 809In so deciding, I approach the matter before me in accordance with the accepted determinants of responsibility as discussed in Reinhold v New South Wales Lotteries Corporation (No 2) (2008) 82 NSWLR 762; [2008] NSWSC 187 at [60] by Barrett J (as his Honour then was). On that basis I am required to assess and make findings as to: (i) The degree of departure from the standard of care of the reasonable man, as regards the causative conduct of Ms Fowler (and vicariously, Tiernan & Associates) and of other relevant wrongdoers; and (ii) The relative importance of the acts and omissions of Ms Fowler and other wrongdoers in causing the economic loss suffered by the plaintiff. 810The assessment of those matters requires the making of a comparative examination of the whole conduct of Ms Fowler and of the other wrongdoers in the circumstances in which the loss was sustained.

Concurrent Wrongdoers 811The making of a finding as to whether defendants or other persons are concurrent wrongdoers, for the purposes of Part 4, is to be determined by reference to findings as to liability and causation already made in the proceedings: Reinhold v New South Wales Lotteries Corporation (No 2), supra, at [24]. 812A defendant calling in aid the benefit of the proportionate liability provision has the onus of pleading and providing the required elements: Dartberg Pty Ltd v Wealthcare Financial Planning Pty Ltd [2007] FCA 1216 at [31]. "In these circumstances, where a respondent desires to rely upon Pt IVAA of the Wrongs Act, it will need to plead and prove each of the statutory elements, including the failure to take reasonable care. In a proceeding where the applicant does not rely upon any such failure, then the need for a particularised plea by a respondent may be particularly important for the proper case management of the proceedings: see eg Ucak v Avante Developments Pty Ltd [2007] NSWSC 367 at [41]. It would be desirable at an early stage of proceedings for a respondent to put forward the facts upon which it relies in support of the allocation of responsibility it contends should be ordered. If a respondent calls in aid the benefit of the limitation on liability provided for in Pt IVAA of the Wrongs Act, then the respondent has the onus of pleading and proving the required elements. The court, after hearing all the evidence, will then need to determine, as a matter of fact, whether the relevant claim brought by the applicant is a claim arising from a failure to take reasonable care." 813In Reinhold v New South Wales Lotteries Corporation (No 2), supra, Barrett J found: "The provisions of Part 4 are compulsory. They change substantive rights, so that a plaintiff's ability to obtain an adjudication of joint and several liability is removed where the circumstances are of the type to which the alternative regime of proportionate liability is applied. A case no doubt needs to be pleaded and proved by one or more defendants so as to engage the statutory provisions. But it will be the findings ultimately made that determine whether the statutory conditions compelling the court to adopt the proportionate approach are satisfied." (at [32]) 814Additionally, it is noted that a concurrent wrongdoer must not only have caused the loss or damage but also have a legal liability for that loss: Shrimp v Landmark Operations Limited [2007] FCA 1468; (2007) 163 FCR 510; St George Bank Ltd v Quinerts Pty Limited [2009] VSCA 245; (2009) 25 VR 666. 815However, a plaintiff cannot be found to be a concurrent wrongdoer: Rennie Golledge Pty Ltd v Ballard (2012) 82 NSWLR 231; [2012] NSWCA 376 at [128]. The decision as to whether the plaintiff was contributorily negligent is separately addressed below. 816In an action for negligence, it will almost always be necessary to identify, with some precision, the interest infringed by the negligent act: Hawkins v Clayton (1988) 164 CLR 539 at 601. 817In the present case, the plaintiff's loss or damage is that which arose from her investment in the Scheme and her inability to recover those monies. 818There are a number of authorities that address how the Court is to undertake an assessment of what proportion is "just" in each case. Ultimately, it is a matter for judgment, and not a matter of scientific exactitude: Vella v Permanent Mortgages Pty Ltd [2008] NSWSC 505 at [591]. 819In Reinhold v New South Wales Lotteries Corporation (No 2), supra, Barrett J observed that: "There is not in the Australian case law any indication that factors beyond the relevant person's "responsibility for the damage in question" may be taken into account in the determination of what is "just" or "just and equitable"; or that the benefit of profits or burden of losses is relevant to the question of such "responsibility". The "having regard to" specification delimits the field of inquiry" (at [53]). 820The relevant principles regarding the apportioning of liability, particularly where fraudsters are involved, were summarised by Brereton J in Perpetual Trustee [2012] NSWSC 697: "In determining the relative responsibility of concurrent wrongdoers for a loss, it is necessary to compare the blameworthiness and causative potency of the conduct of each of them [Reinhold v New South Wales Lotteries Corporation (No 2) [2008] NSWSC 187, [50]-[53]]. Relevant factors include, but are not limited to, which of the wrongdoers was more actively engaged in the activity causing loss, and which was more able effectively to prevent the loss [Yates v Mobile Marine Repairs Pty Ltd [2007] NSWSC 1463, [93]-[97]]. Although allowance should be made for the circumstance that the responsibility of one wrongdoer may be relatively increased if it was engaged by the plaintiff specifically for the purpose of guarding against the potential wrongdoing of another (such as a fraudster), there must nonetheless still be a reduction in the liability of the first, as the fraudster is on any view a concurrent wrongdoer, and the fraudster's responsibility may well exceed that of the solicitor. Thus in Ginelle Finance Pty Ltd v Diakakis [2007] NSWSC 60, Hoeben J apportioned liability 90% to the fraudster and 10% to the solicitor. An almost identical result was reached by Bryson AJ in Chandra v Perpetual Trustees Victoria Ltd [2008] NSWSC 178. In Vella v Permanent Mortgages Pty Ltd [2008] NSWSC 505, [571]-[600], Young CJ in Eq (as he then was) apportioned responsibility 72.5% to the principal fraudster (Caradonna), 15% to a solicitor who had falsely witnessed a signature (Flammia), and 12.5% to the negligent solicitors - even though a purpose of engaging solicitors was to guard against the conduct of the fraudster. As his Honour said (at [593]-[595]), it would be wrong simply to say that those cases almost compel subsequent courts to reach the same apportionment in similar cases; but they do provide much needed guidance. While his Honour's decision was overturned in Mitchell Morgan, on the ground that there was not a single apportionable claim, it remains valuable in indicating how the relative responsibility of fraudsters and negligent solicitors has been evaluated. With reference to the foregoing decisions, in Kayteal Pty Ltd v Dignan [2011] NSWSC 197, I apportioned liability between a fraudster (47.5%), a grossly negligent valuer (40%) and negligent solicitors (12.5%)" (at [194]) (emphasis added) 821In those proceedings, Heidtmans had been retained by the plaintiff mortgagee to procure first priority registered mortgages over properties in Vaucluse that were allegedly being purchased by a company known as Equis, which was controlled by a Mr Ross. 822The loan transaction was entered into by Mr Ross at the request of his business associate, Mr Iaconis. However, the Court found that Mr Iaconis was the architect of an elaborate scam in which the mortgagee's loan would generate a cash surplus which Mr Iaconis used to purchase a property at Maroubra for his own purposes. 823Unusually, at settlement, the mortgagee did not receive any security for the loan at settlement. Instead, it relied on a title insurance policy and proceeded to advance $1.6 million to Mr Ross to enable Equis to purchase the Vaucluse properties. 824However, contracts had never been exchanged in respect of the Vaucluse properties, despite settlement of the loan having already taken place. Accordingly, Equis never obtained an equitable interest in the properties, and the mortgagee therefore held no enforceable security, despite the loans having already been dissipated. Further, Mr Ross was unable to repay the loan. 825Brereton J made the following assessment with respect to apportionment: "In my assessment, Mr Iaconis, as the architect and chief beneficiary of the scam bears the predominant responsibility for Perpetual's loss. The gravity of Heidtmans' departure from prudent practice indicates a significantly higher degree of responsibility vis-à-vis the fraudster than in the cases to which I have referred. Their much more proximate and direct relationship with and obligations to Perpetual would ordinarily indicate that Heidtmans' responsibility for Perpetual's loss exceeded that of Mr Ishak, but that is offset by the circumstances that Mr Ishak derived a direct benefit from the transaction, and that his conduct contributed to Heidtmans' relevant state of mind. If it were relevant to do so, I would apportion liability for Perpetual's loss 50% to Mr Iaconis, 25% to Heidtmans, and 25% to Mr Ishak" (at [196]). 826In Hunt & Hunt v Mitchell Morgan Nominees Pty Ltd [2013] HCA 10; (2013) 247 CLR 613 a question arose as to contribution and apportionment. Those proceedings concerned another case of mortgage fraud. The facts may be shortly stated as involving the following. In 2005 Messrs Caradonna and Vella entered into a business venture and opened a bank account for that purpose. Mr Vella, on the same day, attended upon his solicitors. In the presence of Mr Caradonna, Mr Vella took possession of Certificates of Title for three properties. Mr Caradonna subsequently obtained possession of the Certificates of Title and forged Mr Vella's signature. On the basis of the forged documents and certification, Mitchell Morgan registered a mortgage over one of the properties and advanced approximately $1 million in loan monies to the joint account. The mortgage secured the debt owed to Mitchell Morgan by reference to a loan agreement drawn by the appellant, Hunt & Hunt. Mr Caradonna withdrew the money from the joint account by forging Mr Vella's signature. 827The High Court, inter alia, determined that Mitchell Morgan suffered economic loss in the nature of the lack of security caused by Hunt & Hunt's negligence in failing to include a covenant to repay in the mortgage instrument. The primary judge had held that Hunt & Hunt's liability should be limited to 12.5% of Mitchell Morgan's loss. 828The majority of the High Court (French CJ, Hayne and Kiefel JJ) held that having regard to the part played by the fraudsters' conduct, Mitchell Morgan should not receive any more than that for which Hunt & Hunt was responsible, as found by the primary judge: at [58]. 829In George v Webb [2011] NSWSC 1608 the claim related to money disbursed out of a trust account maintained by a firm of solicitors, Grogan Webb, otherwise than for the purpose for which the plaintiff, Mrs George, contended those monies were to be paid. 830The plaintiff's contention was that the monies ($150,000) were to be placed into the solicitors' trust account upon terms that the monies were to be held on trust for her and used for the purposes of an investment referred to as to Elderslie/Allco HIT acquisition and were to be distributed at the direction of a Mr Burke. 831Mr George and Mr Burke had been involved in discussions concerning a proposed acquisition by a consortium co-ordinated by Mr Burke of assets of certain companies then in receivership or administration. 832There was a dispute as to the agreement they reached. Following the agreement, the monies were transferred into the Grogan Webb's trust account. 833Grogan Webb had acted for Mr Burke and his companies for many years. The day after the funds were placed into the trust account, Mr Burke authorised their distribution to various entities and for various purposes (the bulk of expenditure being for payment of school fees for Mr George and the balance for fees of Grogan Webb and another debt of Mr Burke). 834The principal claim was for breach of trust, or alternatively, a claim in negligence. Ward J (as her Honour then was) held that Grogan Webb breached the trust by paying out the $150,000 and was liable to return to Mr George that amount plus interest. 835Although it was not therefore necessary for the issue of proportionate liability to be determined, her Honour stated as follows: "Had the issue of apportionment arisen (and noting that, as an excluded wrongdoer in light of the conduct I have found on his part in intentionally causing the loss to be suffered, Mr Burke would be liable for the whole of the loss without any reduction), I would have balanced on the one hand the fact that had it not been for the payment out by Grogan Webb the direction of Mr Burke would have caused no loss (and thus the final point at which the loss could have been avoided was the point at which Grogan Webb bears ultimate responsibility) and that if one looks at the standard of care expected of a trustee, the failure to make enquiries when a direction so obviously outside the expressly stated purpose was received seems to be a not insignificant departure against the fact, on the other hand, that Mr Burke appears to have been the architect of the arrangements pursuant to which the funds were distributed contrary to the intent of Mrs George and that he obtained the benefit of the distribution of the funds (though Grogan Webb also did to an extent in the sense that the claim against Mr Burke for fees was thereby discharged, in circumstances where they knew he was otherwise short of funds). Recognising that this is largely a discretionary judgment and balancing those factors, in the end I would have held that the proportionate liability to be borne by Grogan Webb was 60%." (at [332]) 836In the present case, as discussed below, there is insufficient evidence to determine the cause or causes of the ultimate failure of the Scheme and, in particular, whether it arose through the intentional or fraudulent conduct of Mr Hraiki and/or Mr Tombleson, and if so, to what extent. I have earlier referred to the requirement specified in Reinhold at [32] that it is for a defendant(s) to plead and prove a case in order to engage the statutory provisions in Part 4.

Plaintiff's Submissions on Apportionment 837On the issue of apportionment between Ms Fowler, Mr Dorian, Mr Tombleson and Mr Hraiki, it was the plaintiff's submission at paragraph [93] that: "(a) Mr Hraiki had little part to play in regard to the representations made to the plaintiff. Mr Dorian noted in his email to Ms Fowler that the plaintiff did not trust Mr Hraiki. (b) The plaintiff did give some weight to Mr Dorian's statements, but Mr Dorian himself relied upon Ms Fowler's statements as to how the Scheme would work. Mr Dorian was present and a recipient of the representations in the early September and 19 September 2005 meetings. (c) Mr Dorian's email of April 2006 to Ms Fowler suggests that he, likewise, considered that the Scheme had not operated as Ms Fowler had represented. (d) Ms Fowler had undertaken a substantial role in promoting the scheme to [the plaintiff] and other Chat Club investors. She had made broad and significant representations about the way the Scheme would operate. (e) Ms Fowler's status as a lawyer gave her statements weight and gave the scheme a respectability that it could not have obtained in the hands of Mr Hraiki and Mr Tombleson alone. (f) Ms Fowler undertook a role far broader than that of a mere transactional lawyer drafting documents on instructions. She had a pivotal role in the relationship between the Chat Club and Skyder and Silkwater. (g) She became by late 2005 a Director of Silkwater. (h) She was aware of and most probably drafted the joint venture agreement between the Chat Club and Silkwater. (i) She represented that she would be involved in managing the trust, and yet did this only ineffectually." 838In relation to (g), namely, that Ms Fowler became a director of Silkwater by late 2005, I note that in her affidavit Ms Fowler states that some time after November 2005 she prepared and caused to be filed documents registering Silkwater Group Pty Limited and appointing her as a director: at [51]. However, Ms Fowler then proceeded to state: "Once I had considered further the potential responsibilities of being a Director of this company, I came to a view that it was not appropriate. I advised Mr Tombleson as much and drafted a letter of resignation to the company. I also provided to Mr Tombleson the necessary documentation withdrawing my directorship to be filed with ASIC. I recall Mr Tombleson took some time to attend tot this." 839Ms Fowler then stated that in February 2006 she became sole director of Silkwater Grandview Pty Limited in order to create a corporate vehicle for her horse training business. However, "within some weeks of this occurring" she then caused to be filed with ASIC the necessary paperwork to resign as a Director and transferring directorship and control to Mr Tombleson as she had decided that she did not need a company for that business: at [53].

Defendants' Submissions on Apportionment 840Mr Priestley, on behalf of the defendants, observed that Part 4 is not limited to actions pleaded in negligence relying upon observations made in Bathurst Regional Council v Local Government Financial Services Pty Ltd (No 5) [2012] FCA 1200. Reference was additionally made to the observations of Brereton J in Perpetual Trustee Company Ltd v Ishak [2012] NSWSC 697 at [93]-[97] and the apportionment made in Mitchell Morgan Nominees Pty Ltd v Vella [2011] NSWCA 390 in which Giles JA supported the trial judge's apportionment of 12.5% to the solicitors. 841It was submitted for the defendants that the proportionate liability of the defendants for any loss suffered by the plaintiffs should be no more than 10%: Defendants' Written Submissions at [109]. The defendants relied upon the matters set out in paragraph [110] of their written submissions which, in summary, focussed upon the role of Messrs Dorian, Hraiki and Tombleson. 842As to Mr Dorian, the matters relied upon included his influence over the plaintiff, the exercise of that influence up to each of the three investments made by her, that he was the one who introduced her to the Scheme, that he made "significant" commissions, repeatedly address her concerns, advised her to reject "cautionary advice" given to her including by her bank manager and purportedly represented her at meetings and suggested contract amendments. 843As to Mr Hraiki, matters relied upon included his submissions encouraging the plaintiff to invest in the Scheme and attending at her home, that it "seems" he operated Skyder, that he was the recipient of the first investment and that this was "presumably" applied to his benefit (the submission does not identify any evidence relied upon that he alone operated the company or personally received those investment monies) and that those funds were lost, that it "appears" that in obtaining investment monies and in dispersing them, and in the operation of the Scheme, he acted unconsciously and dishonestly (the submission does not refer to particular evidence in this respect) that he made the initial presentation and made persuasive representations to the plaintiff: at [110]. 844As to Mr Tombleson, matters relied upon were that he "apparently" as operator of the Silkwater Group received the second and third investment funds and was the disperser and beneficiary of all that money and the loss of the plaintiff's monies (the submissions do not identify the evidence relied upon as supporting each of the specific aspects referred to), and that it "appears" that he at all times acted unconscionably, dishonestly and "possibly" criminally. 845The defendants' submissions in paragraph 111 to (f) set out the matters said to minimise Ms Fowler's conduct and involvement. They include:

• She acted honestly at all times;
• There was no suggestion she received any of the plaintiff's monies;
• She was paid wages only as a junior solicitor;
• She had no personal influence over the plaintiff;
• Any departure from the standard of a reasonable prudent solicitor by her was marginal;
• She had no involvement in the third investment in March 2006. 846It was submitted the vast majority of the apportionment that must be undertaken should be allocated to those other than Ms Fowler.

(i) Mr Hraiki 847In terms of identifying any concurrent wrongdoer being the operator of the Scheme, the operating entities, of course, were the corporate entities Skyder/Silkwater, they acting in different periods by their directors (Messrs Tombleson and Hraiki). 848Mr Hraiki's involvement, on the evidence, mainly occurred up to the time he and Mr Tombleson parted ways. He made attempts at an early stage (approximately August/September 2005) to interest the plaintiff in the Scheme and tried to "sell it" to her at the Skyder boardroom meeting. However, there is little by way of evidence of his role before he ended his "partnership" with Mr Tombleson in terms of the management and control of the Scheme or afterward that occurred. I have earlier referred to evidence that indicates that the plaintiff did not trust him. 849The plaintiff's first investment did follow immediately upon his attempts to "sell" the Scheme to the plaintiff in September 2005. That occurred after the Chat Club meeting. 850In summary, taking all matters into consideration, I find that his participation in the events that led to the plaintiff's investment was limited in terms of time and scope and that the plaintiff did not place much confidence in what he had said to her. The evidence does not establish any direct financial benefit received by him or the level of any such benefit. Mr Tombleson's role and participation was a much greater one and of more significance than that of either Mr Hraiki or Mr Dorian or both considered together.

(ii) Mr Tombleson 851As to Mr Tombleson, the evidence does not enable findings to be made as to whether his conduct was in whole or in part fraudulent, reckless, or simply negligent. The defendants' submissions variously put that he was "acting unconscionably, dishonestly and possibly criminally": Defendants' Written Submissions at [110]. 852Whilst the evidence suggests that Mr Tombleson may have acted at times with a fraudulent intent, the evidence does not establish the monies or the amount of money in the Scheme lost through mismanagement (for example, breach of directors' duties, negligence) as distinct from those that were or may have been lost through misappropriation by Mr Tombleson and/or others. Specific findings as to the latter, of course, require cogent evidence before such findings may be made: Briginshaw v Briginshaw (1938) 60 CLR 335, 362. 853There is evidence of Mr Tombleson's wife having received loan finance from Silkwater: see caveat drawn by Tiernan & Associates (Exhibit 1, tab 6), in respect of a loan dated 2 December 2005. The registered proprietor of the security property is recorded as Julianne Tombleson and the plaintiff, Ms Polon, is recorded as the caveator. Whilst the evidence does not establish whether such monies were repaid, it is reasonable to assume that mismanagement of the Scheme resulted in Mr Tombleson, by some means or other, being a beneficiary of the Scheme's "mismanagement" through having improperly received monies invested in it. That is a factor I have taken into account, having regard to the relevant case law authorities in determining the issue of apportionment. 854Whilst the evidence does not establish to the requisite standard that Mr Tombleson fraudulently misappropriated any particular funds invested in the Scheme or the amounts of any such funds, given the investment of substantial funds by investors in it and the loss of such monies, it is reasonable to proceed upon the basis that Mr Tombleson was significantly responsible for the misapplication and loss of funds held in the Scheme. 855I am, however, satisfied that Mr Tombleson at least acted negligently and probably recklessly and so acted over a substantial period. Further, his conduct or operation of the Scheme represented a significant departure from his responsibilities including his duty of care to investors arising from his role in the management of the Scheme and as a director of Skyder and Silkwater. He, in particular, failed to ensure that either company was ASIC compliant in relation to the operation of the Scheme.

(iii) Mr Dorian 856The evidence as to Mr Dorian's role largely focuses upon his involvement as the apparent founder of the Chat Club, his activities associated with it, his association with the plaintiff, and his various statements advocating the Scheme as a worthwhile investment proposition. He did not hold himself out as a professional financial adviser. He did not have a contractual or professional relationship with the plaintiff, though he gave advice as a friend or associate. 857The evidence establishes that Mr Dorian had some form of association with the proponents of the Scheme although it does not establish the nature of it. There is evidence that at one point he was proposing a franchise arrangement with them, which appears to have come to nothing. He also communicated with Mr Tombleson about the Scheme and its introduction to persons who were interested in investment, in particular, members of the Chat Club. 858There is no evidence that Mr Dorian was a participant in the establishment or the operation of the Scheme (in particular, as to its management), or that he had any direct financial interest in it. There is some limited evidence, referred to in the defendants' submissions, that he stood to earn commissions of an undisclosed amount for introducing potential investors to the Scheme. The evidence does not disclose the period over which commissions were received or the total amount received by him. 859Further, the evidence in the defendants' case does not establish the level or extent of Mr Dorian's knowledge of the Scheme, or its internal management and operation or the safeguards alleged to have been in place. There is some evidence, as noted in the written submissions for the plaintiff, that he may have himself been misled to some extent about the Scheme and he may have suffered some financial loss, though the evidence in this respect is imprecise and no definite findings may be made on the issue of his loss (if any). 860Although Mr Dorian was an advocate for the Scheme in his communications with the plaintiff, the evidence suggests that his role was largely as a "go-between" by bringing the plaintiff and other potential investors to "the table" and leaving it principally to Mr Tombleson to "sell" the Scheme to the plaintiff although he did himself also engage in some promotion of the Scheme to the plaintiff. 861The submissions for the defendants do not suggest that there is evidence that establishes a clear basis upon which the level of Mr Dorian's culpability may be evaluated, apart from his role as an introducer of potential investors and one who strongly recommended the Scheme. I have referred earlier to the onus on the defendants to establish matters that permit particular findings as to liability and the level of culpability to be established. 862On the evidence it is clear, in my assessment, that any liability Mr Dorian had as a "wrongdoer" is of a significantly different order of magnitude than that of Mr Tombleson.

(iv) Ms Fowler 863In the determination of the proportionate liability of the second defendant, Ms Fowler, the following matters are to be taken into account: (1)The representations in question were made in her capacity as a practising solicitor and, on the findings made above, they adopted and endorsed the promotion of the Scheme by its proponents, in particular, Mr Tombleson. (2)The breach of duty by her to a large extent occurred while she was engaged in assisting and promoting the interests of Skyder/Silkwater being activities beyond the normal scope of a retainer between a solicitor and a client, including, in particular, her representations at the Chat Club meeting, which was plainly a promotional function for the benefit of Skyder, her firm's client. (3)On the findings set out above, the second defendant's statements at the Chat Club meeting induced the plaintiff (and Dr Cohn, Mr Galea and Ms Monahan) to invest in the Scheme. (4)Ms Fowler failed to warn or inform the plaintiff (and other attendees), both before her first investment and subsequently, that it was essential that they undertake their own enquiries and obtain advice disclosing that the statements she had made about the Scheme had not been verified by any independent inquiry conducted by her. (5)Ms Fowler must have appreciated that those to whom she made the representations (in particular, the plaintiff) could very well be influenced by, and act upon, her statements. (6)The representees (in particular, the plaintiff) were in an unequal position to Ms Fowler. No disclosure was made by her as to her lack of personal knowledge to support the representations she made. Further, no disclaimer was made by her in relation to the statements she made about the Scheme. In accordance with findings made earlier, the plaintiff was reassured and relied upon her as a professional person, a practising lawyer, supposedly with knowledge of the safeguards said to have been in place for the protection of the investors. (7)Ms Fowler accepted that she did not warn or advise those present at the Chat Club meeting that they should obtain their own independent legal advice. (8)The making of unqualified representations by Ms Fowler without any disclaimer entitled the representees (including the plaintiff) to understand and act upon the basis that the representations were properly based upon established fact. Had the true position as to the basis on which they were made been made known, it is in my assessment, in accordance with the finding earlier made, unlikely that the plaintiff would in these circumstances have relied upon the representations made by Ms Fowler. (9)The extent of Ms Fowler's departure from the required standard of care of a solicitor. 864Before determining the issue of apportionment under Part 4 I will deal with the issue of contributory negligence, noting that s 35(3)(a) of the Civil Liability Act requires the proportion of the damage or loss for which the plaintiff is contributorily negligent (if any) to be first excluded before responsibility is apportioned between concurrent wrongdoers: Rennie Golledge Pty Ltd v Ballard, supra, at [135].

Contributory Negligence 865The defendants plead a defence of contributory negligence in their defences filed on 5 March 2013. The particulars of the defence are pleaded at paragraph [32] as: "(b) Failing to carefully consider the relevant terms of the loan agreements in question; (c) Failing to obtain independent legal advice and/or independent financial advice so as to be in a position to carefully consider the relevant terms of the loan agreements in question; (c) Entering into loan agreements without considering the relevant terms of the loan agreements in question; (d) Providing monies for the purpose of investment without seeking or following independent legal advice and/or independent financial advice as to the prudence of the investments." 866Contributory negligence operates as a partial or full defence under ss 5R and 5S of the Civil Liability Act: "5R Standard of contributory negligence (1) The principles that are applicable in determining whether a person has been negligent also apply in determining whether the person who suffered harm has been contributorily negligent in failing to take precautions against the risk of that harm. (2) For that purpose: (a) the standard of care required of the person who suffered harm is that of a reasonable person in the position of that person, and (b) the matter is to be determined on the basis of what that person knew or ought to have known at the time. 5S Contributory negligence can defeat claim In determining the extent of a reduction in damages by reason of contributory negligence, a court may determine a reduction of 100% if the court thinks it just and equitable to do so, with the result that the claim for damages is defeated." 867It was submitted for the defendants that the plaintiff had declined to take any independent legal advice and that there was no satisfactory excuse for that, despite what the plaintiff said about relying on Ms Fowler: Defendants' Written Submissions at [100]. 868This submission was supported by the contention that the plaintiff was investing large sums of money based apparently on contractual documentation that she did not understand. It was submitted that the plaintiff was advised to take such advice but either did not read the letter sent to her or forgot what she had read in them or simply declined to take such advice. 869The submission on behalf of the defendants was that the plaintiff was attracted by higher returns and closed her eyes to a risk on which she ought to have known. Reference was made to warnings given by her bank manager and her accountant to be wary of investing in something like the Scheme, but that she did not heed such advice: Defendants' Written Submissions at [101]. 870It was further submitted that in relation to the third investment in March 2006 she relied heavily on Mr Dorian's advice even though she still did not fully understand the Scheme. 871The submission for the defendants was that any damages awarded to the plaintiff should be reduced significantly to an extent approaching 50%: Defendants' Written Submissions at [104]. 872In the Plaintiff's Submissions in Reply it was contended that one could not view the plaintiff's attempts to protect her interests from the perspective of a lawyer. It was submitted that any conflict of interests involving Ms Fowler would not be evident to a layperson: at [27]. 873It was additionally argued that Ms Fowler's own conduct involved an apparent blindness to the conflict that she had created through giving advice to those present at the Chat Club meeting and in later conversations. Lay people would be less likely than her to have appreciated that she was not an independent legal advisor or a suitable legal advisor. 874It was further observed that other investors had invested in the Scheme without having sought independent legal advice, in particular, Dr Cohn, Mr Galea and Ms Monahan. They took advice and assurances from Ms Fowler. Although they were not "sophisticated investors", they were nonetheless educated people. 875As to the argument on behalf of the defendants that the plaintiff had been sent a covering letter which recommended the taking of legal advice, on the evidence, that letter would have only been received by the plaintiff after she had committed to the transaction. Further, it was noted that Ms Fowler made no disclaimer at the meeting: Revised Plaintiff's Outline of Argument at 27. 876It was argued that the plaintiff had thought she was being prudent in asking questions of Ms Fowler and seeking assurances from her. In pursuing such questions and seeking assurances, the plaintiff demonstrated that she was taking care for her own interests. The fact that such enquiries were ineffectual, it was contended, was not to the point. The appropriate test was whether she failed to do what an ordinary layperson would do: Revised Plaintiff's Outline of Argument at 27.

Decision on Contributory Negligence 877In determining contributory negligence, a comparison is required of the degree of fault or culpability on the part of each of the parties. That consideration occurs in the context of a comparison between the lack of care of one party with the lack of care of the other and then a determination, having assessed the culpability and the causal potency of the relevant acts, of the degree of contributory negligence on the part of the plaintiff: see Podrebersek v Australian Iron & Steel Pty Ltd (1985) 59 ALR 529 at 523; Ghunaim v Bart [2004] NSWCA 28 per McColl JA at [71]. As the High Court observed in Podrebersek, it is the whole of the conduct of each negligent party in relation to the circumstances of the case that must be subjected to comparative examination. 878However, it is also necessary to take into account the nature of the duty owed to a plaintiff. In Astley v Austrust Ltd (1999) 197 CLR 1; [1999] HCA 6 at 14 [30] the majority observed: "A finding of contributory negligence turns on a factual investigation of whether the plaintiff contributed to his or her own loss by failing to take reasonable care of his or her person or property. What is reasonable care depends on the circumstances of the case. In many cases, it may be proper for a plaintiff to rely on the defendant to perform its duty. But there is no absolute rule. The duties and responsibilities of the defendant are a variable factor in determining whether contributory negligence exists and, if so, to what degree. In some cases, the nature of the duty owed may exculpate the plaintiff from a claim of contributory negligence; in other cases the nature of that duty may reduce the plaintiff's share of responsibility for the damage suffered; and in yet other cases the nature of the duty may not prevent a finding that the plaintiff failed to take reasonable care for the safety of his or her person or property. Contributory negligence focuses on the conduct of the plaintiff. The duty owed by the defendant, although relevant, is one only of the many factors that must be weighed in determining whether the plaintiff has so conducted itself that it failed to take reasonable care for the safety of its person or property." 879The following propositions were enunciated in Astley v Austrust Ltd, supra, in the joint judgment (Gleeson CJ, McHugh, Gummow and Hayne JJ) at 11-16: (i) At common law, contributory negligence consisted in the failure of a plaintiff to take reasonable care for the protection of his or her person or property: at [21]. (ii) Although conduct amounting to contributory negligence may also constitute the breach of a duty which the plaintiff owes to the defendant, a plaintiff can be guilty of contributory negligence notwithstanding that he or she owes no duty to the defendant or any third person: at [21]. (iii) There is no rule that apportionment legislation does not operate in respect of the contributory negligence of a plaintiff where the defendant, in breach of its duty, has failed to protect the plaintiff from damage in respect of the very event that gave rise to the defendant's employment: at [29]. (iv) Contributory negligence focuses on the conduct of the plaintiff. The duty owed by the defendant, although relevant, is one only of the many factors that must be weighed in determining whether the plaintiff has so conducted itself that it failed to take reasonable care for the safety of its person or property: at [30]. (v) Courts, including the High Court, have accepted that contributory negligence can be made out in non-contractual situations, notwithstanding that the defendant was under a duty to protect people in the class of which the plaintiff was a member: at [31]. (vi) The standard of care required of a plaintiff is determined objectively by reference to what a reasonable person would have done in all the circumstances of the case: at [35]. 880In addition to the above, the standard of contributory negligence is a matter addressed in s 5R of the Civil Liability Act. Those provisions, of course, to an extent overlap the principles summarised in [879] above. See also Origin Energy LPG Ltd v BestCare Foods Ltd [2012] NSWCA 407 per Hoeben JA (with whom Macfarlan and Ward JJA agreed), at [217]. 881In the present case, the submissions on behalf of the defendants placed emphasis on the fact that the plaintiff did not seek independent legal advice. In examining the whole of the evidence, including the evidence on that matter, the following matters are relevant: (i) The Scheme was described and promoted as an "investment" to members of the public with an interest in investing. In essence, it was a scheme involving the placement of loan monies at the disposal of Skyder/Silkwater for a promised return. (ii) Whilst the terms of the Investor Loan Agreements were deficient (in particular, the absence of provisions that would ensure that the Scheme would be conducted as represented), the primary cause of the plaintiff's lost investment was that the Scheme was in fact an unprotected and insecure form of investment that allowed the Scheme's operators to deploy investors' funds as they chose. (iii) The representations made by Ms Fowler were made in her capacity as a lawyer supposedly with a certain level of understanding of the Scheme, even if not a full understanding. Those representations, I have earlier determined, acted as a powerful factor in influencing investors, in particular the plaintiff, to enter the Scheme. (iv) Ms Fowler made the representations, although conveyed as based upon her knowledge of the Scheme, when she had no verified or adequate primary knowledge of any underpinning facts for those representations. That fact was not disclosed to representees, including the plaintiff. 882The defence of contributory negligence in this case is one that must be considered in the context of the relevant facts and matters including, in particular, the nature of the duty of care upon Ms Fowler as a solicitor and one who made the representations. 883In determining contributory negligence in the present case, it is necessary to bring to account that there is a distinction between an omission by a solicitor to do something and the making of express representations that assert or convey facts and matters that are not true or are misleading in circumstances where it may be anticipated that representees will accept and act upon them. This distinction is discussed below: 884In some cases, as the High Court observed in Astley v Austrust, it may be proper for a plaintiff to rely upon a defendant to perform its duty. The nature of the duty owed by a particular defendant, the High Court observed in that case, may exculpate the plaintiff from a claim of contributory negligence. In Astley, the plaintiff succeeded in its case against the solicitors in negligence. In the course of considering the issue of contributory negligence it was noted that Austrust had sought general advice from its solicitors about its intention to become trustee of an investment trust to be set up to establish a piggery on land in New South Wales. Having received advice, Austrust became the trustee of the trust and borrowed substantial funds to purchase the land. 885The trust business failed shortly after its establishment. Austrust sued the solicitors in negligence for failing to advise that it should not have accepted the office of trustee without excluding or limiting personal liability,. 886The finding of contributory negligence in the particular circumstances of that case is to be seen in light of the fact that the plaintiff, being a commercially sophisticated entity, had a high level of expertise available to it. The Chairman of its Board was an experienced chartered accountant and its General Manager had a background in commercial finance and it had available other qualified personnel. The trust, although required to borrow substantial funds to complete the purchase, took no steps to investigate the viability of the venture. This was an aspect for consideration in light of the fact that the scope of the solicitors' retainer, based on original instructions to Astley, was to give advice, the request for such advice having been expressed in very general terms. 887In other cases, those involving express representations by a solicitor, there has developed over many years a recognition that contributory negligence is to be considered in terms of whether it is just and equitable where a representee acts upon an express representation made to another person (not being the solicitor's client) upon which that person then proceeds to act. 888It was long ago observed in Nocton v Lord Ashburton [1914] AC 932 at 962 by Lord Dunedin: "No one is entitled to make a statement which on the face of it conveys a false impression and then excuse himself on the ground that the person to whom he made it had available the means of correction." 889That approach, cited in Gran Gelato Ltd v Richcliffe (Group) Ltd [1992] 1 All ER 865, is a further exemplification of a case involving negligent misrepresentation by a solicitor in which damages for breach of duty of care was sought. 890In that case, the first defendant had granted the plaintiff an underlease of a basement in ground floor shop premises for a term of 10 years. Unknown to the plaintiff and its solicitors, the head leases contained redevelopment break clauses giving the head lessor the right to terminate the head leases. 891In the course of negotiations leading to the grant of the underlease, the plaintiff's solicitors sent inquiries to the first defendant's solicitors asking whether there were any rights affecting the superior leasehold title. The solicitors answered "Not to the Lessor's knowledge". 892The plaintiff's claim was brought against both Richcliffe and its solicitors for damages for negligent misrepresentation at common law and for breach of the Misrepresentation Act 1967. 893In the course of his judgment, Nicholls VC observed: "In my view it would not be just or equitable to make any reduction in Gran Gelato's damages. The essential feature of the present case is that Gran Gelato's claim, both at common law and under the 1967 Act, is based on misrepresentation. Richcliffe intended, or is to be taken to have intended, that Gran Gelato should act in reliance on the accuracy of the answers provided by [the solicitors]. Gran Gelato did so act. In those circumstances it would need to be a very special case before carelessness by Gran Gelato, the representee, would make it just and equitable to reduce the damages payable to compensate Gran Gelato for loss suffered by it in consequence of doing the very thing which, in making the representation, Richcliffe intended should happen, viz that Gran Gelato should rely on the representation. In principle, carelessness in not making other inquiries provides no answer to a claim when the plaintiff has done that which the representor intended he should do. This is a well-established principle when misrepresentation, whether innocent or fraudulent, is being relied on as a ground for seeking recision of the ensuing contract ... In my view, the like approach is applicable when considering what is Gran Gelato's share in the responsibility for the damage flowing from the misrepresentation. It may be surprising that Mackenzie Mills did not advise their clients against proceeding without seeing the head leases containing the covenants their clients were undertaking to perform. But that has no relevance to the loss suffered by Gran Gelato in consequence of its reliance on the representation in answer 3(A)." (at p 876) 894In the present case, the plaintiff heard the express representations by Ms Fowler and on the findings made above, she acted upon them, they having been made by a solicitor with assumed knowledge of the Scheme. The plaintiff, as earlier discussed, may be properly considered for the purpose of this case to have been a relatively unsophisticated investor in that she had no experience in investments of the kind in question. She, apart from having purchased residential real estate with her former husband, had no other known investment experience. It was reasonable in the particular circumstances of this case for her to act upon the representations of a solicitor that were directed to particular issues concerned with the security or safety of the investment in circumstances in which no warning or qualification or disclaimer was made. It is relevant to have some regard to the fact that she was not alone in this respect and that other investors on their evidence, which I accept, were very much influenced by the fact that the representations, in the nature of assurances, were given by a solicitor. 895The evidence, as earlier discussed, establishes that the plaintiff was hesitant and nervous about investing her own monies and the monies she subsequently received from her matrimonial settlement. In that context, she turned to Mr Dorian and received his views from time to time in favour of investing in the Scheme. She also was subjected to persuasion at the hands of Mr Hraiki and, in particular, Mr Tombleson. 896However, it is not without significance that up to 19 September 2005, that is before she heard the representations of Ms Fowler, despite the "advice" or "selling" of the Scheme to her by Messrs Dorian, Tombleson and Hraiki, the plaintiff was not yet ready to be persuaded. 897As the High Court in Astley v Austrust Ltd, supra, stated the "duties and responsibilities of the defendant" are a central consideration in determining contributory negligence. Depending upon the nature and scope of the responsibility assumed by a defendant, the Court observed that the nature and duty owed by a defendant may exculpate the plaintiff from a claim of contributory negligence. 898In the present case, unlike in Astley v Austrust Ltd, the central issue is not concerned with determining the scope of the retainer of the solicitor. This is a case involving affirmative statements (the "representations") made at a meeting of potential investors by a solicitor upon matters capable of influencing investment decisions. Further, as discussed above, and as noted in the defendants' written submissions, notwithstanding the fact that Ms Fowler experienced obstruction on the occasions when she sought information on the Scheme from its proponents, Messrs Tombleson and Hraiki, no attempt was made by her to convey or emphasise to the plaintiff that she herself was not or had not been in a position to verify the representations before the plaintiff commenced to place her funds with Skyder/Silkwater. 899As indicated above, this is a representation case and not only a case involving a failure or omission by a solicitor, although the failure in this case is, of course, also a matter of significance. 900I have concluded on the basis of the matters to which I have referred and the provisions of ss 5R(1) and (2) of the Civil Liability Act that there is no proper basis for a finding of contributory negligence.

Conclusions on Proportionality 901As recorded above, I have determined that the defendants are liable on the basis of negligence, breach of s 42 of the Fair Trading Act, breach of retainer, and breach of fiduciary duty. The liability arising in respect of each cause of action pleaded in those respects, in my assessment, is predicated and arises from a failure to take reasonable care within the meaning of s 34(1)(a) of the Civil Liability Act. The claim under s 42 also falls within s 34(1)(b) of that Act. 902In relation to the action for breach of fiduciary duty, I note the reasons of Ward J in George v Webb [2011] NSWSC 1608, in which her Honour observed that an "action for damages", as required under s 34(1) of the Civil Liability Act, encompasses a claim for equitable compensation where the claim is one "arising from a failure to take reasonable care" and in proceedings in which the claim has been predicated on, or arising from, such a failure. Her Honour proceeded to conclude that: "In my view, irrespective of the fact that the failure to take reasonable care may have contributed to or been the underlying cause of the conduct that amounted to the relevant breach of trust, the principal liability here is a liability for breach of trust by the payment out of the funds other than in accordance with the express purpose trust on which they were held. This breach of trust would have occurred (and the liability arises) whether or not there had been a failure on the part of the solicitors to take sufficient care in complying with the directions that were given to them. Therefore I consider that the liability, as found, is not one predicated on or arising from a failure to take reasonable care and this is not an apportionable claim..." (at [325]) 903Having regard to the observations on proportionate liability to which I have referred, I proceed to assess the plaintiff's damages on the basis that the plaintiff's total loss amounted to $1,190,000. 904The various factors concerning the role and actions of each of the concurrent wrongdoers in these proceedings to which I have referred above is to be assessed having regard to all matters relevant to the twin issues referred to in [809] above, recognising that this is largely a discretionary evaluation or judgment that involves a balancing of those factors. On that basis, I assess the proportionate liability as follows: (i) The combined proportionate liability of Messrs Tombleson and Hraiki, the directors of Skyder/Silkwater, I assess at 60%, which I further apportion as to 50% to Mr Tombleson and 10% to Mr Hraiki. 60% of the total loss is the amount of $714,000. (ii) The proportionate liability of Mr Dorian I assess at 10% of the total loss, which is the amount of $119,000. (iii) The proportionate liability of the second and fourth defendants I assess at 30%. 30% of the total loss is $357,000. 905Accordingly, there is to be judgment in favour of the plaintiff against the second and fourth defendants in the amount of $357,000.

Pre-judgment Interest 906In the Amended Statement of Claim the plaintiff claims "interest on such sums as the defendants are ordered to pay". 907Section 100 of the Civil Procedure Act 2005 provides that in proceedings for the recovery of money the Court may include interest in the amount for which judgment is given, with interest to be calculated at such rate as the Court thinks fit: (a)On the whole or any part of the money, and (b)For the whole or any part of the period from the time the cause of action arose until the time the judgment takes effect. 908Practice Note SC Gen 16 prescribes the rate of pre-judgment interest that may be awarded under s 100 of the Civil Procedure Act as being: (a)In respect of the period from 1 January to 30 June in any year - the rate that is 4% above the cash rate last published by the Reserve Bank of Australia before that period commenced, and (b)In respect of the period from 1 July to 31 December in any year - the rate that is 4% above the cash rate last published by the Reserve Bank of Australia before that period commenced. 909The plaintiff received interest payments on her investment from October 2005 to 18 December 2006. A schedule of all payments made is contained in paragraph [34] of the Amended Statement of Claim. 910I have determined that the interest rate payable is the average of the pre-judgment interest rate for the period December 2006 to the date of this judgment. The table below sets out the relevant pre-judgment interest rates during this period: Period Pre-judgment interest rate (RBA cash rate + 4%) 1 July 2006 to 31 December 2006 9.75% 1 January 2007 to 30 June 2007 10.25% 1 July 2007 to 31 December 2007 10.25% 1 January 2008 to 30 June 2008 10.75% 1 July 2008 to 31 December 2008 11.25% 1 January 2009 to 30 June 2009 8.25% 1 July 2009 to 31 December 2009 7.00% 1 January 2010 to 30 June 2010 7.75% 1 July 2010 to 31 December 2010 8.50% 1 January 2011 to 30 June 2011 8.75% 1 July 2011 to 31 December 2011 8.75% 1 January 2012 to 30 June 2012 8.25% 1 July 2012 to 31 December 2012 7.50% 1 January 2013 to 30 June 2013 7.00% 1 July 2013 to 31 December 2013 6.75% 1 January 2014 to 30 June 2014 6.50%

911The average interest rate for this period is 8.58%. 912I propose to grant leave to the parties to deal with and be heard in respect of ancillary and consequential orders as to: (1)Pre-judgment interest; (2)Costs.

Orders and Directions (1) Subject to the leave referred to in [912], I propose to enter judgment in favour of the plaintiff against the second and fourth defendants in accordance with these reasons for judgment. (2) The parties are to bring in Short Minutes of Order to give effect to this judgment and any agreed orders as to interest and costs. (3) The proceedings will be re-listed on Tuesday, 20 May 2014 at 2.00pm for the purpose of orders (1) and (2) above and any ancillary orders.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 15 May 2014