Scottsdale Homes Pty Ltd v Gemkip Pty Ltd & Ors [2008] QSC 326

Supreme Court of Queensland|2008-12-03|Before: Chesterman J

[1] The plaintiff company ('Scottsdale') carries on the business of buying, developing and selling land, and building and selling houses. It was at all material times, and is, owned and controlled by Mr Dudley Quinlivin who, however, became a director only in September 2005, after the events with which this action is concerned.

[3] The third defendant is a solicitor who has practised as such for many years in Surfers Paradise. Mr Robinson had no personal involvement with the subject matter of the action but is sued for the alleged negligence of an employed solicitor,

Mr Michael Goodman. Mr Robinson's firm was retained by the plaintiff to provide advice and prepare documents in connection with some of the dealings between the plaintiff and the first defendant.

[4] The third defendant was not the only firm of solicitors retained by Scottsdale. It utilised the services of several firms, retaining one or another for particular tasks or particular activities undertaken by Scottsdale. As well, Scottsdale employed its own conveyancing clerk or clerks and was described by Mr Goodman, in terms which I accept, as a 'sophisticated' client in real property dealings and conveyancing. Scottsdale, by Mr Quinlivin, was very experienced in buying and selling real property, both land and home units, on the Gold Coast. It engaged in many transactions involving the development and sale of land.

[5] Gemkip is in liquidation and the action against it has been stayed. The plaintiff compromised its action against the second defendant at the commencement of the trial upon the second defendant establishing, to the plaintiff's satisfaction, that his entire fortune has dissipated and that he stands on the edge of bankruptcy.

[6] The action proceeded against the third defendant to recover as damages for professional negligence the profits which Scottsdale expected to recover from its dealings with Gemkip.

[7] The land of particular interest to the action was described as Lots 960 and 964 on Registered Plan 842395 County of Ward, Parish of Boyd, Title Reference 18332042. The subdivision planned for it rejoiced in the name 'Eden's Landing'. It was to contain 135 suburban allotments. The dispute concerns stage 1 of

Edens Landing which paradoxically was to be developed last, after the construction and sale of lots in stages 2, 3 and 4. It contained 29 lots. The first defendant engaged consulting engineers JF & P Consulting Engineers Pty Ltd ('JFP') to design their intended subdivision and supervise construction work.

[8] On 15 May 2003 Scottsdale and Gemkip executed a 'Put and Call option agreement' ('the May agreement') in which Gemkip was described as the grantor and Scottsdale the grantee. Clause 2 was headed 'Call Option' and provided:

'In consideration of the payment of the Option Fee by the grantee to the grantor and in further consideration of the payment of the amount payable on account of deposit the grantee or its nominee shall have the option to purchase the Property upon the terms and conditions appearing in the Contract.'

The Option Fee was defined by reference to item 4 in the schedule to the agreement as the sum of $1.

[9] The 'Contract' was a reference to a contract for the sale of land, the form and terms of which were set out in an annexure. It was in fact the standard form of contract for the sale of land approved by the Queensland Law Society and the Real Estate Institute of Queensland. 'Property' was defined to mean the subject matter of the contract, i.e. one of the subdivided lots which would come into existence upon the sealing of the plaintiff's subdivision and registration of the new titles to the subdivided lots.

[10] The option was to be exercised by serving a notice in the form described by an annexure to the agreement before the expiration of the 'Call Option Period'; and by delivering a contract duly executed and dated by the grantee or its nominee; and a notice of nomination executed by the nominee.

[11] By clause 2.3 upon the exercise of the option by the grantee the parties were 'deemed to have entered into a contract' for the sale of the lot identified in the contract. By clause 2.4 the grantor was obliged to execute any contract delivered to it by the grantee.

[12] Clause 4 was headed 'Put Option' and provided:

'4.1 The grantee grants the grantor a put and call option (sic) to sell the grantee the land on the terms and conditions of this deed.

4.2 ... To exercise the put option the grantor must serve the notice of exercise of put option ... before expiration of the Put Option Period.

4.3 ... The parties shall be deemed to have entered into a contract for the sale of the property on the terms and conditions of the Contract.'

[13] 'Land' was defined by reference to item 3 of the schedule to mean:

'All lots in stages 1, 2, 3 & 4 being 45 in stage no 2, 55 in stage no 3 & 4 and 29 in stage no 1 and as per attached plans.'

The plans were of a proposed subdivision of land which was not particularly described.

[14] In his evidence Mr Quinlivin described Scottdale's transaction with Gemkip from which it intended to make a substantial profit. It 'found' Gemkip which at the time owned land suitable for subdivision in an area where land prices seemed relatively low by comparison with other land in the vicinity. Scottsdale 'signed it up' to a 'put and call agreement' and, once it had secured the right to buy the subdivided land by means of the option agreement, it engaged marketers to sell the future subdivided allotments. By 'marketers' Mr Quinlivin meant 'marketing companies (which) go out and sometimes ... telemarket to find clients or ... do seminars or presentations on the benefits of buying property for investment.' 'Telemarketing', Mr Quinlivin explained, is the process by which telephone call centres are utilised to 'ring people and ... invite people to seminars ... or ... ask for an appointment for an in-home consultant to go and visit the home.' Whether to groups in seminars or individuals in their own homes, the marketers 'explain to prospective purchasers about the benefits of negative gearing.'

[15] Gemkip was a novice at the business of land development. It was a new venture for Mr Elcock who, judging by a letterhead he used on occasions, had practised optometry. He did not himself devote much time or effort to the detail of the development but left it to Mr Chancellor who had been Mr Elcock's accountant and business manager for many years. Mr Chancellor described himself as the project manager for the development but what he knew of that role he learnt from the

Edens Landing subdivision, and another which Gemkip had undertaken at about the same time.

[16] Mr Quinlivin and Scottsdale were very experienced in their work. They had no difficulty in finding buyers for all of the proposed lots in the other estate ('Crestmead') and all but about six of the proposed lots in stages 2, 3 and 4 of the Edens Landing development. In that development, stage 2 was completed first followed by stages 3 and 4 together.

[17] No doubt by reason of Gemkip's inexperience but also, it emerged, by reason of its impecuniosity, work on the subdivisions did not proceed at the pace usual for such work. There were substantial periods when the contractors left the site because they had not been paid.

[18] Meanwhile Scottsdale had entered into contracts for the sale of proposed lots and had nominated purchasers under the May agreement. It had as well executed contracts with those buyers for the construction of houses on the proposed lots and the builders had commenced work or were anxious to do so. Delays in the completion of the subdivision led to some degree of alarm amongst the buyers which in turn made Scottsdale and Mr Quinlivin anxious about Gemkip's capacity to complete the subdivisions.

[19] Fortuitously Gemkip's first endeavours as a land developer occurred at a time of rapidly increasing land prices and very strong demand by the public for land or land and houses.

[20] Scottsdale stood to make very substantial profits from the exercise of its options contained in the May agreement. It had agreed a price with Gemkip which was far below the price for which Gemkip could, and did, on-sell the lots.

[21] That fact and its own financial difficulties led Gemkip and Mr Elcock to attempt to escape the obligations imposed on it by the May agreement, or at least to assert that it was not binding.

[22] Graeme Hart was employed by Scottsdale as a 'stockman'. His role was to find companies such as Gemkip and procure contracts of the May agreement type so that Scottsvale could market future subdivisional allotments.

[23] On 13 August 2003 Mr Hart wrote to Mr Quinlivin:

'The medium price of land in Edens Landing since the beginning of 2002 is $61,000. So if Elcock had ... placed them on the market with ... local agents he would have gone broke. The same could be said with Crestmead ... . He was having major problems selling ... in fact he didn't sell any until we came along. ... We have been able to create a market whereas he couldn't. He does see the difference in his selling price and our selling price ... . He is saying that our put and call option is illegal, however he is not too worried about Crestmead, but only Edens Landing.'

[24] On 14 August 2003 Mr Elcock wrote to Mr Quinlivin:

'It is becoming more difficult for us to continue to fund both the land purchase and the actual development. I am more than willing to offer you the first right of refusal on all land that I have coming up but believe that we should both share in the development costs. ... For this reason I consider that Edens Landing prices should be increased to $92,500 (plus GST) ...'

[25] Apparently in response to Mr Hart's intimation Mr Quinlivin wrote to Mr Goodman on 18 August 2003:

'Please find enclosed a copy of two put and call agreements which Scottsdale ... has executed,

Scottsdale ... has pre-sold all the properties in the Crestmead ... agreement and the first stage of 45 lots in the ... Eden Landing agreement.

... Gemkip has approached us and ... sought a revision of the price ... (We have agreed to adjust the price to $92,500 for the first stage of 45 home sites then $95,000 for the remaining sites.

We ask that you check both agreements to ensure that they are legally binding and adjust the (Eden Landing) agreement.'

[26] In response, Mr Goodman drafted another put and call option agreement ('the second agreement') which he sent to Mr Quinlivin under cover of a letter of

The grantor (owner of the land) grants to the grantee a call option at a price nominated in the schedule.

The grantee then identifies a third party buyer. Once that occurs the buyer then becomes the grantee's nominee and exercises the call option as if it was the grantee. Pursuant to the exercise of the option the grantee's nominee enters into a contract for sale at a price equal to or more than the minimum price.

The grantee then stands aside from the contract between the grantor and the buyer. There is no contractual arrangement between those two parties.

To ensure that the grantee receives the difference between the contract price and the minimum price set out in the agreement, the grantee has a right to lodge a caveat on the title. The agreement provides that the grantor will consent to the caveat and it therefore remains on the title until released. It is important that if it is envisaged that legal protection is required to ensure that the grantee is paid the difference in price that the consent to the caveat is executed by the grantor when the option agreement is created.

It should be noted that if the grantor chooses not to pay the price difference to the grantee then the only recourse by the grantee is to sue. This is not commercially accepted therefore we recommend that a caveat is lodged to protect its interest.

The option agreement also includes a put option. ...

We attach a draft ... agreement. If you would care to send us the schedules by email we can engross the agreement ...'.

[27] The draft was substantially similar in terms to the May agreement. It differed by the inclusion of three clauses, numbered 5, 6 and 7. They provided:-

'5.1 The grantee shall have the right to assign the benefit of the call option ... prior to the expiry of the call option ... in which event the call option may be exercised by the grantee's nominee in the manner described by clause 2.2 ... and by service of a notice ... .

5.3 The grantor acknowledges that in the event that the call option is exercised by the nominee:

(a) any moneys paid by the grantee to the grantor shall be repaid to the grantee on settlement, and

(b) the amount being the price between the minimum price and the purchase price set out in the contract, shall be paid to the grantee on settlement.

It is the intention of the parties that a separate call option ... be granted for each parcel of land as described in item 6 of the schedule. The expression 'call option' ... where it appears ... shall be construed as the call option ... for the land described in terms of each separate parcel of land in the schedule of land.

7.1 The grantor acknowledges that the grantee and/or its nominee shall have the right to register a caveat over the title to the land and will execute on demand all documents necessary for the registration of consent caveats.

7.2 The grantee will hand to the grantor on settlement of the contract an executed withdrawal of caveat in return for all monies payable to the grantee ... .'

[28] 'Land' was defined by reference to item 6 in the schedule to the agreement which in turn referred to the 'schedule of land annexure "B" hereto.' The draft appears to have been sent by facsimile transmission to Scottsdale's office but the pages which were annexure B have become detached. There is no complete copy of the draft either in Scottsdale's files or in those of the third defendant. The parties identified different pages in the agreed bundle as being the missing schedule. One of those schedules is arranged in column form and was headed:

It lists lots numbered consecutively from 1 to 135 against each of which is set a figure designated 'purchase price from Gemkip'.

[29] On 2 September 2003 Mullins & Mullins, who were the solicitors for Gemkip, wrote to Scottsdale. Having referred to the May agreement the letter went on:

'We are instructed by our client that the purchase price in the contract of sale is to be inserted as $92,000.

Would you please confirm that you are agreeable to this amendment following which we will produce amended sale documentation.'

The reference to 'contract of sale' is, I take it, a reference to the form of contract annexed to the May agreement.

[30] On 5 September 2003 Mr Goodman wrote to Mr Hart:

We attach the draft agreement. We have used the contract for sale annexed to the previous agreement.

Please note that we have amended the schedule of land to provide a sufficient title reference to clearly identify each Lot. You will note that the put and call option agreement will be construed as a separate put and call option for each lot provided that there is a sufficient title reference.

[31] It is a cause for regret and a source of much inconvenience that Mr Goodman's file was not maintained in its proper order and none of the parties seems to have kept correspondence intact with enclosures so that it is very difficult, if not impossible, now to know what documents and what versions of documents were sent with particular letters. An exacerbating circumstance is that the agreed bundle of documents has been put together without any regard for chronology, sequence or order.

[32] The best one can do to identify the document Mr Goodman sent with his letter of

5 September is to read exhibit 5 together with page 42 of volume 2 of the agreed bundle. Exhibit 5 is a draft caveat in which Scottsdale is identified as the caveator claiming an interest as grantee of an option to purchase the fee simple over Lot 960 on RP 846130. The document in the agreed bundle is a 'general request' utilising Queensland Land Registry form 14 which, in item 6, has the words 'I hereby request that'. Mr Goodman's intention was that Gemkip should signify its consent to the caveat by that form of general request.

[33] Mr Goodman explained that he sent the 5 September letter because he did not have all the necessary inclusions to complete the annexures to the draft option agreement he had sent under cover of his 21 August letter. He said he recalled speaking to

Mr Hart when he sent the second letter. He explained his reasons for including the 'consent caveat provision'. He 'was concerned that (Scottsdale) protected themselves by having a caveat consented to by the registered owner.' He recalled 'making the point ... that this is very important if they wish to rely upon the caveat that they had to (get) consent of the registered owner ...'. He said that Mr Hart expressed some reservations about a caveat which would refer to the put and call option agreement because at the time Mr Quinlivin, or one of his other companies, was a litigant in the Federal Court defending a claim by the Australian Competition and Consumer Commission. Mr Quinlivin did not 'want to scare off any purchasers ...'.

[34] On 18 September 2003 Mr Gooman wrote to Mullins & Mullins and attached 'for their approval' a put and call option agreement for Edens Landing. The letter said:

'Our client has requested that a consent caveat be lodged on the titles prior to the subdivision. The effect of this would be that each separate lot would be affected by the caveat and each caveat would then be released by our client on settlement of each lot'.

[35] On 25 September Mr Hart sent a handwritten note by facsimile transmission to

'Could you please advise what is the current situation re the above ('put and call'). It has been going on for weeks & I am getting very anxious.'

[36] The next day Mr Goodman signed and lodged two caveats, one over Lot 960 on

RP 846130 and one over Lot 964 on RP 842395. The interest claimed in each was 'an equitable estate or interest as grantee of an option to purchase an estate in fee simple' 'pursuant to an option agreement dated 15 May 2003 ...'.

[37] Mr Goodman explained that Mr Hart rang him almost simultaneously with the facsimile transmission of 25 September. He told Mr Goodman that he had become anxious about Gemkip's commitment to the transaction. Mr Hart said that Scottsdale 'weren't protected' and instructed Mr Goodman to lodge a caveat. I infer that he was particularly concerned at Gemkip's reluctance to execute a fresh option agreement about the validity of which there could be no doubt.

[38] Mr Hart agreed that he instructed Mr Goodman 'about lodging a caveat'. The instruction was confirmed in writing on 29 September 2003. Mr Quinlivin knew of the instruction.

[39] Under cover of a letter dated 1 October 2003 Mullins Lawyers (as that firm had become) gave Scottsdale notices pursuant to s 126 of the Land Title Act 1994 ('LT Act') requiring it 'to institute proceedings in a court of competent jurisdiction to establish the interest claimed under the caveat within 14 days of the date of this notice or otherwise withdraw the caveat ...'. A copy of the letter and notices appeared in Mr Goodman's file but no witness had any recollection of sending the documents to him. Mr Goodman did not recall receiving them. It is not obvious that Mr Hart sent them. Some other employee at Scottsdale may have done so. What is clear is that there was no evidence that Mr Goodman was asked to give any advice with respect to the letter and notices or to commence proceedings to validate the claim made in the caveat. The consequence was, of course, that the caveats lapsed in mid-October by the operation of s 126(4)(a)(i) and (5) of the LT Act.

[40] Early in October 2003 Mr Quinlivin was becoming concerned with the slow pace of development. He discussed with Mr Elcock means by which Gemkip might be put in funds to enable it to complete the development in good time. Mr Quinlivin had had prior dealings with Shakespeare Haney Securities Ltd ('SH Securities') and was favourably known to Mr Haney. The company was a money lender which specialised in lending to land developers. Mr Quinlivin spoke to Mr Haney as a result of which SH Securities made an offer to Gemkip on 3 November 2003 to refinance the development of Edens Landing. SH Securities required a first registered mortgage over the land. The amount of the advance was $7,390,000. The term was 12 months. Interest was to be capitalised. It was a term of the offer that Mr Quinlivin give his personal guarantee for the performance by Gemkip of its promise to repay the advance and interest. Neither Gemkip nor Mr Elcock were known to Mr Haney and did not have a past record of successful land development. Mr Quinlivin, on the other hand, fulfilled both criteria. Mr Quinlivin was, apparently, prepared to give his guarantee because Scottsdale had pre-sold all the lots in the subdivision and land prices were rising rapidly. The risk seemed small and the profits large. Gemkip accepted the offer.

[41] Although the offer was addressed to Gemkip it came also to Mr Quinlivin's attention because he was to be a guarantor. Mr Quinlivin read the terms of the offer 'carefully' before signing it on 11 November 2003 to signify his acceptance. The fees to be charged by SH Securities were set out on page 2. One item of the fees was:

which Mr Quinlivin read without, he said, appreciating 'which caveats they were'.

[42] Lots 960 and 964 had previously been mortgaged to secure a loan from a private money lender, Mr Donald Chenner. That mortgage debt was to be repaid from part of the advance made by SH Securities. Obviously before its mortgage could be registered the prior mortgage in favour of Mr Chenner had to be released. To achieve the registration of the new mortgage the caveats lodged on behalf of Scottsdale by Mr Goodman had to be withdrawn.

[43] By facsimile transmission of 5 November 2003 Mr Quinlivin told Mr Elcock that Scottsdale would agree to an increase in price, to $92,000, for each of 64 lots. His letter went on:

'We have asked ... Mr ... Goodman ... to contact Mullins & Mullins to finalise the Put & Calls so we can run through to settlement in an orderly fashion.'

[44] Mr Elcock replied on 10 November to say that he thought:

'We should keep the lawyers out of this as I believe it is something we can work out between us ... . We signed off to the balance of Edens Landing being increased to $95,000 with the purchase price of the first 65 remaining at $82,500.'

[45] The same day Mr Hart sent Mr Goodman a handwritten memorandum by facsimile transmission in which he enclosed the two communications just described and noted that Scottsdale had agreed to Elcock's terms:

'... i.e. $82,500 for 65 lots, $95,000 for 64 lots.'

'Can you organise this to be put in contract form so we can get it signed and then Dudley can sign off the loan agreement to enable Elcock to pick up the cheque for the developments.'

[46] The events of mid-November are of particular importance to the action.

[47] By this time all communications between Scottsdale and Mr Goodman occurred through the agency of Mr Hart. He was not asked about, and said nothing about, any communications between him and Mr Goodman on or about 10 November. All that is known from his side is contained in his facsimile transmission of that day.

[48] Mr Goodman testified that by early November he was still 'finalising the (Put and Call) documents. The last item to be finalised was the schedule of prices' which he understood to be a point of difference between Scottsdale and Gemkip. He understood Mr Hart's fax to be 'the final instructions ... to make up the price list to be annexed to the Put and Call Option Agreement based upon $82,500 for 65 lots, $95,000 for 64 lots (in) ... Stages 3 and 4'.

[49] Mr Goodman took the information faxed to him and completed the 'price schedule' as an annexure to the option agreement and had it sent by facsimile transmission to Mr Hart's office at about 4pm on 10 November 2003. This document was the 'latest draft of the Put and Call Option Agreement ... to be approved by (Scottsdale) ...'.

[50] Mr Hart treated the documents received from Mr Goodman by facsimile transmission as the final form of the agreement, suitable for execution. It was duly signed on behalf of Scottsdale and Gemkip, and stamped.

[51] Mr Goodman explained that it was not his intention that the documents he faxed to Mr Hart would become the executed agreement. He understood it to be a draft for the approval of the client. If its terms and form were acceptable he anticipated receiving instructions to have the documents prepared in a more formal manner for execution. He was not told for some time that the option agreement had been signed on 11 November. He has no recollection of speaking to Mr Hart at the time.

[52] It was put to him that he had faxed the documents to Mr Hart in the expectation that they would be signed and become the final agreement. He answered that his understanding was that:

'... Once it had been approved ... the formal execution documents would then be prepared by me - this had been my practice with other clients. At this stage I had not got used to Scottsdale doing some of it themselves ... this was a final draft ... it never occurred to me that a client would take a draft document with a fax header ... and treat it as a final document ...'.

[53] Mr Goodman also testified that he was not retained or involved in the execution process of the second agreement nor in any aspect of the advance made by

SH Securities to Gemkip which included the provision of a guarantee by

[54] Mr Goodman's testimony was the subject of severe criticism from Scottdale's counsel. There were certainly instances in which Mr Goodman's evidence was wrong and occasions on which it appeared embellished. Nevertheless I accept his evidence which I have just rehearsed. It was not contradicted and appeared to me to be credible. Mr Goodman impressed me as a fastidious solicitor and I believe him when he said he did not intend the faxed documents to be the execution copy of a formal agreement for a substantial transaction. The errors and embellishments in his testimony I put down to his anxiety at being the subject of a suit for professional negligence. Some errors are also explicable when one recalls that the events in question were, at the time, routine property dealings and no complaint was made about Mr Goodman's professional proficiency until April 2007, three and a half years after those events. It is not surprising that his recollection was imperfect or that gaps in memory would be filled in a manner favourable to his case.

Mr Goodman's evidence cannot be accepted uncritically but for the most part I thought it accurate.

[55] On 11 November Mr Goodman prepared a request to the Registrar of Titles for the withdrawal of the caveats over Lots 960 and 964. They were lodged the following day, 12 November 2003.

[56] Settlement of the loan transaction, the advance and taking of securities, appears to have occurred on 28 November 2003 by which date the caveats had been withdrawn.

[57] Thereafter work proceeded on the development of Stage 1 which, again, did not proceed as rapidly as Mr Quinlivin had hoped. On 20 July 2004 a meeting was convened between Mr Quinlivin and his son Mr Randall Quinlivin, Mr Elcock and Mr Chancellor representing Gemkip, Mr Coles of JFP who had convened the meeting and appears to have chaired it, and Messrs Haney and Stapleton from

SH Securities. It will be necessary to refer to the various accounts of what was said at this meeting later, but for the moment it is enough to note that thereafter

Mr Elcock proceeded on the basis that Scottsdale had relinquished its interest under the second agreement to the lots in Stage 1 and Mr Quinlivin maintained Scottsdale's rights to exercise the option to buy those lots.

[58] On 13 October 2004 Gemkip executed a Put & Call option agreement in respect of a number of the lots in Stage 1 in favour or Corrin Projects Pty Ltd. On

26 October 2004 Gemkip executed another Put & Call option agreement over further lots in Stage 1, this time in favour of Vickers Investments Pty Ltd. On

13 October 2004 Gemkip executed a mortgage in favour of Thunder Enterprises Pty Ltd ('Enterprises') of the whole of the land in Stage 1 to secure a loan from that company of about $24,000,000.

[59] The mortgage to Enterprises ranked behind the mortgage in favour of SH Securities but Gemkip defaulted under the second mortgage and Enterprises exercised its right to appoint a receiver who, I was told, eventually completed the development of Stage 1 and sold off the lots.

[60] Scottsdale's rights under the second agreement were destroyed by the actions of the second mortgagee, Enterprises. It seeks to recover the profits it would have made from the exercise of the call options and on-sale of the lots in Stage 1 as damages for negligence against Mr Goodman's employer.

[61] As finally pleaded in the further amended statement of claim filed by leave on the first day of the trial the case in negligence advanced against the third defendant is that Mr Goodman failed to advise Scottsdale:

'(i) of the withdrawal of a caveat lodged in respect of the plaintiff's interest in the land under an earlier option agreement;

(ii) to lodge a further caveat in respect of its interest in the land ... after the withdrawal of the first caveat.'

The 'withdrawal of a caveat lodged ... under an earlier option agreement' is a reference to the caveats lodged by Mr Goodman on 26 September 2003 which were withdrawn on or shortly after 12 November 2003 to allow the registration of the mortgage to secure the loan from SH Securities.

[62] By paragraph 3(j) and 6(e)(vii) of his defence filed 6 June 2007, the third defendant alleged that the caveats were withdrawn 'on 11 November 2003 in accordance with the plaintiff's instructions'. In its amended reply filed by leave on the first day of the trial Scottsdale denied that the caveat was withdrawn on its instructions 'because neither ... Hart nor any other person on behalf of the plaintiff instructed the third defendant to withdraw the caveat.'

[63] The first allegation of negligence thus comes down to a simple question of fact to be determined with reference to a conflict in testimony: did Scottsdale by Mr Hart or Mr Quinlivin instruct Mr Goodman to withdraw the caveats on or about

[64] Mr Goodman's evidence was that on the morning of 11 November 2003 Mr Hart rang him and said that 'they', by which I infer he meant Gemkip and Scottsdale were 'finalising the documents' in preparation for the advance from SH Securities and the giving of security. He said that the lender had conducted a title search and found two caveats 'registered on the title'. Apparently Mr Elcock had been told and had rung Mr Quinlivin to complain angrily about the caveats' presence. Mr Hart asked Mr Goodman to remove the caveats immediately.

[65] It should be noted that there is no corroboration for that part of Mr Goodman's testimony in which he described Mr Elcock's expression of anger to Mr Quinlivin. Mr Elcock was not asked about it. Mr Quinlivin denied it.

[66] Mr Goodman said that he prepared the requests for the caveats to be withdrawn and that an employee of Scottsdale collected them to lodge with the Titles Office. On this point he was mistaken. His cross-examination demonstrated that Mr Goodman himself arranged for the urgent lodging of the withdrawals.

[67] Mr Quinlivin gave evidence that he understood how caveats operated and that, having received Mr Goodman's advice in August, he told Mr Hart 'to follow it right through and make sure we were protected ... make sure we've got a caveat on (the subdivision)'. He was told by Mr Hart that caveats had been lodged over Stage 1 and he never gave 'any instructions to anybody to remove any caveat from the property', nor was he ever told that the caveats had been removed. Had he been asked for instructions to remove the caveats he would have refused because his instructions 'never varied, (they were) always (to) protect us at all times.'

[68] Mr Hart testified that on or about 18 September 2003 he instructed Mr Goodman to lodge caveats 'on all the properties' and that Mr Goodman never spoke to him about removing the caveats. He did not seek instructions to remove the caveats and did not tell Mr Hart that they had been withdrawn. Mr Hart said that he would have been 'horrified' if he had been told that the caveats had been withdrawn and 'there was no caveat over the land'.

[69] In my opinion the conflict should be resolved in favour of accepting Mr Goodman's version of events. The circumstances established in the case make it impossible to accept Mr Quinlivin's and Mr Hart's evidence.

[70] For a start there is the inherent unlikelihood of a solicitor withdrawing the caveats without instructions. The withdrawal required a positive act by Mr Goodman. It does not occur by oversight or omission. Mr Goodman impressed me as a thoughtful and conscientious solicitor though not particularly articulate in the expression of his advice. Nevertheless he had a good understanding of property transactions and I do not accept that he would have withdrawn the caveats without instructions.

[71] Secondly there is the point that this allegation of serious misconduct was first made only when the trial commenced. Prior to that the third defendant's defence had explicitly raised the assertion that Mr Goodman had been instructed to remove the caveats. That adumbration was not denied in the pleadings until the amended reply was filed by leave and, at the same time, the statement of claim was further amended to squarely raise Scottsdale's complaint. The amendments were made only after Mr Dunning SC, who appeared with Mr Johnston for the third defendant, foreshadowed objection to the plaintiff's case as opened. He complained that he had had no notice from the pleadings that the case against the third defendant was that the caveat had been withdrawn without instructions. He was, he said, during the course of the following debate, able to meet such a case. It turned on a short question of fact and his witness was available. Nevertheless he insisted that the plaintiff's case be properly pleaded and did not oppose leave being given to make amendments to the statement of claim and reply.

[72] In or about November 2004 Scottsdale discovered that Gemkip had agreed to sell, or had granted options to sell, lots in Stage 1 to other developers. On

1 December 2004 its solicitors wrote to Gemkip's solicitors to assert that it was acting in breach of the November agreement and to intimate that it would lodge a caveat over the proposed individual lots and sought Gemkip's consent to the caveat 'pursuant to clause 7.1 of the Put & Call option agreement ...'.

[73] It must then have been obvious to Scottsdale, its solicitors, Mr Quinlivin and

Mr Hart that Scottsdale did not have the protection of any caveat lodged over the title to Stage 1. Yet there was no complaint made to Mr Goodman, or his employer. No claim was made against the solicitors until 24 April 2007 when Mr Robinson was joined as third defendant. As I have pointed out, the complaint that the caveat was withdrawn without instructions was not made until 20 October 2008.

[74] If Scottsdale's case were genuine I find it impossible to accept that it would not have pleaded it, explicitly, when the third defendant was joined in the action. The allegation that Mr Goodman withdrew the caveats without instructions did not appear in any version of the statement of claim until the first day of trial. No hint of it appeared previously. The assertions in the defence that the withdrawal followed instructions went unanswered. That circumstance is only explicable if the complaint was a recent one.

[75] The third point is that in January 2007 Scottsdale engaged the services of an experienced and reputable conveyancing solicitor, Mr Scott Gregory, to express his expert opinion on a number of questions thought relevant to the litigation. The questions reflected the pleadings as they were prior to their amendment in

October 2008. Significantly, Mr Gregory was not asked to advise whether, in his opinion, it would have been negligent for a solicitor, acting for a client in a transaction, to withdraw caveats lodged for the protection of the client's proprietary interest in land, without instructions. No doubt not much evidence would be needed to provide an affirmative answer to the question but it is significant that the question was not asked. It can only be because the question did not then arise in Scottsdale's case.

[76] There is an even more compelling reason why Scottsdale's evidence should be rejected. It is that the caveats had to be removed to allow the registration of

SH Securities' mortgage. The money would not be lent until the advance was secured by a first registered mortgage and both Gemkip and Scottsdale wanted the advance. It was necessary for Scottsdale to achieve its objective that the caveats be removed. Moreover Mr Quinlivin knew this to be the fact. He said that he 'totally underst(ood) that caveats have to be removed for new mortgages' and that before the settlement of the loan transaction from SH Securities proceeded 'the caveats had to be removed'.

[77] This evidence completely falsifies Mr Quinlivin's earlier testimony that he did not understand that the caveats had been removed and that he had understood they were in place to protect Scottsdale's interest in the land. That evidence was, I am satisfied, deliberately false.

[78] Given that (i) the caveats had to be withdrawn to allow the registration of

SH Securities' mortgage; (ii) Mr Quinlivin understood that requirement; (iii) he wanted the loan transaction to proceed; the conclusion is inescapable that Mr Hart instructed Mr Goodman to withdraw the caveats.

[79] The last point I mention is the unsatisfactory nature of Mr Quinlivin's evidence on this point. A consideration of what he said shows that his testimony was unreliable and provides a reason for preferring Mr Goodman's recollection.

[80] The letter of offer from SH Securities of 3 November 2003 came to Mr Quinlivin's attention and he read it 'with some care ... because (he was) concerned to make sure that it would provide the means by which the development could be completed.' Page 2 of the letter contains, as I mentioned earlier, as part of the financier's fee the cost of registering the withdrawal of three caveats. Mr Quinlivin was asked about that part of the letter:

'Now you understood that to be the removal of the three caveats that you had the previous month instructed Robinson & Robinson ...? - No - no I didn't. ... I would have assumed that they were caveats by Channer (the prior mortgagee). I had no reason to know which caveats they might have been.

Can I suggest to you that you wouldn't have ever believed that they were caveats lodged by Channer because he had a registered mortgage? - Well, that's true. But I wouldn't have read that.

So your answer a moment ago was your assumption they were Channer's, you are now telling me that the explanation is that you wouldn't have read it? - No. I am saying I wouldn't know which caveats they were because I didn't ... read those figures. I read the amount and who it was going to.

You are not disputing that you knew three caveats ...? - Look they may well have been my caveats ... I just don't know which caveats he is referring to.

You are not disputing that when you signed the guarantee you read the provision and you understood that three caveats were being removed? - I didn't read that part. But had I read it, I would have understood.

And you would have accepted that upon seeing that there was a real likelihood it was the removal of your caveats? - I don't have a problem with that. I totally understand that caveats have to be removed for new mortgages.'

[81] This rehearsal shows an unconvincing attempt by Mr Quinlivin to avoid the consequence, which he ultimately accepted, that he knew that caveats had been removed, because they had to be, to secure the refinancing of the development.

Mr Quinlivin's rapid change of position to accommodate the circumstances of cross-examination give added grounds for the conclusion that the first allegation of negligence against the first defendant is an invention.

[82] I am satisfied that Mr Goodman was instructed by Mr Hart to remove the caveats and that this part of Scottsdale's case has not been made out.

[83] The remaining claim is that Mr Goodman failed to advise Scottsdale that it should lodge fresh caveats after the registration of SH Securities' mortgage to forbid any other dealings affecting Stage 1 until registration of the lots and the exercise of the call options. Counsel for Scottsdale submitted that Mr Goodman had committed:

'... a very simple failing of which he was well aware, namely that as he recited in his letter to Mullins & Mullins he had been asked to obtain a consent caveat, he had drawn an agreement which provided for one, he had removed the non-consent caveat and had no further caveat. In those circumstances it was imperative to advise of the necessity to obtain a further caveat.'

'He sent the option agreement which provided on his initiative for a consent caveat. When he received the Mullins & Mullins S126 notices he must have appreciated ... that the non-consent caveats would lapse. He withdrew the non-consent caveats. ... He sent the completed option agreement to Scottsdale (November 2003) without another form of consent caveat knowing that it (the agreement) would be signed. The option agreement was faxed to Scottsdale without ... any advice as to what should be done ... to protect Scottsdale's interests ... . He knew it was signed shortly thereafter. He did not mention the matter again albeit he knew it was Scottsdale's central focus. He did not seek instructions to obtain Gemkip's consent to a caveat at the time the option agreement was executed, even though he had advised this was the most opportune time to do so ... .'

[84] This depiction of Scottsdale's case emphasises what is implicit in the further amended statement of claim: that the allegation of a failure to advise of the importance of lodging further caveats follows on from, and is really a consequence of, the first allegation that the caveats lodged in September had been removed without instructions and therefore without the knowledge of Scottsdale. The premise underlying the plaintiff's case is that a careful solicitor would not have removed the caveats without instructions but, having done so, would have advised of the need to replace them. The point was put by senior counsel for Scottsdale in the course of argument about the amendments. He said, with admirable succinctness: 'We are saying he withdrew one and didn't replace it by another.' That case, if made out, would have been compelling but the failure of the first allegation robs the second of much of its force.

[85] The finding that Mr Goodman withdrew the caveats on the express instructions of Mr Hart takes much of the sting from Scottsdale's case that the solicitors failed to advise that fresh caveats should be lodged. Mr Goodman had written in his letter of 21 August 2003, referring to the option agreement he had drafted:

'The agreement provides that the grantor will consent to the caveat and it therefore remains on the title until released. It is important that if it is envisaged that legal protection is required to ensure that the grantee is paid the difference in price that the consent to the caveat is executed by the grantor when the option agreement is created. ... We recommend that a caveat is lodged to protect (Scottsdale's) interest.'

[86] Mr Quinlivin gave evidence that he read the letter 'with care' and understood

Mr Goodman's advice that Gemkip's consent to the lodging of a caveat should be obtained to prevent Gemkip from disposing of the land otherwise than pursuant to the option agreement. He knew 'what a caveat was' and 'how it provided protection to a person in (his) position'. He understood the significance of the caveat remaining 'on the title until release' should Gemkip give its consent. He understood Mr Goodman's advice that if he wanted the protection of a caveat he 'needed to make sure that that ... consent caveat (was) obtained at the time (he) got the put call option signed.'

[87] It is necessary to digress to mention a point which occupied a good part of the submissions but which in the end is of no consequence. The point was whether the second agreement as drafted by Mr Goodman provided for a caveat which, in its terms, applied to the broad acres of Lots 960 and 964 or whether it applied to the individual subdivided allotments which would come into existence upon the registration of the plan of subdivision. There are indications in support of both constructions in the terms of the second agreement itself, in the terms of the draft caveat, and in the surrounding circumstances. The answer is, I think, that the former is the proper construction. There are two particular grounds for the conclusion. The first is that the draft caveat, exhibit 5, is expressed to be a prohibition of dealings on the existing, broad acre, titles. The second is that it is only such a caveat that could have been effective. By definition the proposed subdivided allotments did not exist prior to the registration of the plaintiff's subdivision. Caveats drafted with reference to those allotment descriptions could not have been lodged prior to the existence of the allotment. There would be no titles corresponding to the caveat description over which the caveats could operate. To be registrable and to provide any protection the caveats had to be lodged over the existing titles.

[88] Scottsdale had no claim to any proprietary interest in either Lot 960 or 964. Such interest as it had was over the lots which would come into existence when the subdivision plan was registered. Section 122(3) of the LT Act makes clear that the interests of a purchaser in such a lot has no such interest as will support a caveat. Therefore, as Mr Goodman advised, a caveat over the broad acres required Scottsdale's consent: otherwise it could be removed whenever Scottsdale wished, and, in any event, after the caveat expired pursuant to s 126(4)(a)(ii) of the LT Act. Scottsdale did not have any claim, or even the colour of any claim, to support the caveat and could not have commenced proceedings 'to establish the interest claimed under the caveat'.

[89] Given the state of affairs I have described the complaint against Mr Goodman is not that he did not advise Scottsdale to lodge caveats but that he did not repeat the advice after the caveats were withdrawn pursuant to Scottsdale's instructions.

[90] The content of a solicitor's duty to take reasonable care in the discharge of a retainer depends to a large extent upon the terms of the retainer. I summarised the effect of the authorities in Queensland Art Gallery Board of Trustees v Henderson Trout (a firm) BC 9805920 (unreported, 1750/92, judgment given 10 November 1998):

'[156] ... The standard to determine whether there has been a breach of duty is not that of a "particularly meticulous and conscientious practitioner ... . The test is what the reasonably competent practitioner would do having regard to the standards normally adopted in his profession' (per Oliver J in Midland Bank Trust Co Ltd v Hett Stubbs & Kemp [1979] Ch 384 at 403). ... Relevant to this conclusion is that what a reasonably competent practitioner would do in the circumstances depends to a degree upon the client's needs and ability to understand what is needed and to articulate to the solicitor what is required. See Carradine Properties Ltd v DJ Freeman & Co (a firm) (1982) 5 Const LJ 267; Rybak v Senneh Pty Ltd (1997) ANZ Conv R 74 at 78-9 ...'

'... Cases such as Duchess of Argyle v Beusclinck [1972] 2 Lloyds Rep 172; Griffiths v Evans [1953] 1 WLR 1424 and Hall v Meyrick [1957] 2 QB 455 demonstrate that the duty is directly related to the confines of the retainer.'

[92] In Carradine Donaldson LJ said: (The case is also reported in 1982 126 Solicitors Journal at 157. The following passage does not appear in the Construction Law Journal report. I have taken it from the judgment in Rybak):

'A solicitor's duty to his client is to exercise all reasonable skill and care in and about his client's business. In deciding what he should do and what advice he should tender the scope of his retainer is undoubtedly important, but it is not decisive. ... The precise scope of that duty will depend inter alia upon the extent to which the client appears to need advice. An inexperienced client will need and will be entitled to expect the solicitor to take a much broader view of the scope of his retainer ... than will be the case with an experienced client.'

[93] Mr Goodman was not retained to act generally for Scottsdale with respect to its dealings with Gemkip. He was engaged to perform particular tasks pursuant to particular instructions given from time to time by Mr Hart. Scottsdale employed persons experienced in conveyancing and effecting property transactions. As well it retained the services of a number of solicitors in addition to the third defendant.

[94] There is no doubt that Scottsdale fell into the category of 'experienced client'. There is not only the evidence of Scottsdale's extensive business of buying and selling real property and employment of conveyancing clerks, there is

Mr Quinlivin's own admission that he understood the nature and function of caveats.

[95] The plaintiff's case is that Mr Goodman was negligent in not telling an experienced client, for the second time, that it would be advisable, and in Scottsdale's interests, to obtain Gemkip's consent to a caveat over Stage 1 to protect its rights until registration of the plan of subdivision, when the advice had been given and understood.

[96] Accordingly to Jackson & Powell on Professional Negligence, 3rd ed, para 4-106:

'As a general rule, there is no duty on a solicitor to remind a client of advice once it has been given. In West London Observer v Parsons ... the defendant solicitors acted for lessees. The lease could be renewed if the lessees gave notice on March 25 ... and were not, on that date, in breach of covenant. The defendants explained the provisions for renewal both in ... October 1950 and ... April 1951. It was held that the defendants were not negligent in failing to repeat that advice in or shortly before March 1953.'

[97] The second authority cited is Yager v Fishman & Co (1944) 1 All ER 552, the facts of which were that solicitors gave advice, from time to time, to a client about his difficulties with a lease which contained 'the usual break clause'. The client complained that the date for giving notice to determine the lease had been allowed to pass without his being reminded of his opportunity to give notice and bring the lease to an end. The client, it seems, was of the 'experienced' kind. Scott LJ said (554):

'The inference is irresistible that (the solicitor) was justified in assuming throughout that the (client) was alive ... to the terms of the under-lease. ... If the (client) at any stage forgot the date for notice to the landlord, as is possible, it was his duty to tell (the solicitor) so in plain language; the more so as he was not the kind of client to pay his solicitor for unasked advice. ... I infer ... that he was a businessman who took his own business decisions, and did not ask advice on them from his lawyers. He was quite well able to decide for himself whether it was better to get rid of the under-lease and cut his loss, or to get hold of it for himself ... . It was only on legal questions that he turned to his lawyers.'

'(The client) was ... left with the argument that ... (he) ought to have been reminded of the date when such a notice ought to be given. The answer to that is that the ... solicitors were not bound to supply deficiencies in their client's memory unless they were clearly requested to do so. I am by no means sure that (the client) would have welcomed a bill of costs which included charges for reminding him unasked of dates which he might be assumed to have in mind.'

[99] The rule which must be one of practice, not of law, is not, of course, absolute. Another case referred to in Jackson & Powell, R P Howard Ltd v Woodman Matthews (1983) BCLC 117, held a solicitor negligent for not reminding a client of the date by which proceedings had to be commenced to secure a tenure under landlord and tenant legislation. Staughton J said (121):

'In general the duty of the solicitor, when his client as tenant is served with a notice under ... the Landlord and Tenant Act ... is clear. He must tell his client of the two time limits. He must also take such steps as are sufficient, in all the circumstances of the case, to ensure that if either time limit is allowed to expire without the appropriate step being taken, that is the fault of the client. By "fault" I mean, either the client shall have unconsciously time to expire, or that the client shall have failed to exercise that degree of attention to his affairs which any person on his education and background could be expected to show'.

[100] Under the particular legislation if the landlord gave notice that it intended to terminate the tenancy a tenant who wished to remain in possession had to give notice within two months of the landlord's notice that he wished to remain and had to apply to the court for a new tenancy within four months of the notice.

[101] The judge found that the solicitor advised the client of the two time limits when he was first consulted. The first notice was duly given but no application was made to the court. The solicitor wrote to the client not long before the expiration of the time limit and reminded him of the need to make an application but did not mention the time by which it had to be made. Staughton J found that the solicitor had failed in the second duty he described, i.e. 'to ensure that if either time limit is allowed to expire ... (it) is the fault of the client.' The client was, apparently, in the 'inexperienced' category. He was (122):

'... an engineer. He was not a lawyer or a man of any formal business training. ... He was precisely the sort of man who could be expected to rely on his solicitor to remind him when legal steps ought to be taken.'

[102] I do not, with respect, accept the correctness of Staughton J's formulation of the solicitor's duty. In my opinion it is not part of a solicitor's duty to ensure that if a client does not act in accordance with advice given it is the client's fault. No authority was cited to support the existence of such an onerous duty which is inconsistent with the formulation which appears in such cases as Midland Bank and which has been relied upon on innumerable occasions.

[103] The case should be properly be regarded not as one in which the solicitor was negligent because he did not repeat advice given earlier, but as one for giving advice which was, in the circumstances, misleading. To write to the client to advise that 'in the absence of agreement application can be made ... to the court to settle the terms of the new lease' without adverting to the time limit which was fast approaching would tend to intimate that there was no urgency and that the client's position was protected. The advice should have been fuller.

[104] The application of the principles I have just discussed lead to the conclusion that

Mr Goodman was not negligent. The 'general rule' that it is not negligent not to remind a client of advice already given should be applied in the circumstances of the case.

[105] No evidence was led from Quinlivin or Mr Hart that they had forgotten

Mr Goodman's earlier advice, or overlooked it. They had been told about the advisability of protecting Scottsdale's interest in the land by caveat and that Gemkip's consent should be obtained when the second agreement was signed. They had understood it. Scottsdale and its officers were clearly clients of the 'experienced kind'. There is nothing in the evidence to show that Mr Goodman should have thought that Mr Quinlivin and/or Mr Hart had forgotten what they knew and had been told about caveats. Indeed Mr Goodman would have had every reason to believe that Scottsdale, who knew caveats had been lodged to protect its interests and who knew that the caveats had been withdrawn to permit the registration of the mortgage would appreciate that its interests were unprotected against further dealings but that the protection might be reinstated by the lodging of further caveats. He had no reason to believe that there was a need for a repetition of the earlier advice.

[106] A 'particularly meticulous and conscientious practitioner' may have repeated the advice but that is not the test for negligence. The appropriate test is what the reasonably competent practitioner would do having regard to the standards normally adopted in the profession. On the facts and on the authorities the reasonably competent practitioner would not have thought it necessary to give the advice again.

[107] Scottsdale's case, as put by its counsel, (see para 83) was that because Mr Goodman knew the option agreement which he faxed to Mr Hart on 10 November 2003 would be 'signed shortly thereafter', and because he knew the protection afforded by a caveat was 'Scottsdale's central focus', he was negligent because 'he did not seek instructions to obtain Gemkip's consent to a caveat at the time the option agreement was executed ...'.

[108] The reasoning is wrong, as a matter of fact. Mr Goodman did not know, as I have found, that Mr Hart would take the faxed document and have it signed.

Mr Goodman contemplated that he would be approached to engross the agreement for execution. Nor does the evidence establish that lodging caveats was Scottsdale's 'central focus', or that Mr Goodman believed it was. The statement of claim does not allege that Mr Goodman should have sought instructions to lodge a consent caveat. The pleaded case against the third defendant is a narrow one: a failure to advise that a caveat should be lodged over the title.

[109] At times the argument seemed to proceed on the basis that Mr Goodman should himself have lodged the caveats or insisted that Scottsdale do so. That, however, is not the pleaded case. Moreover it is not, on the evidence, what Mr Goodman was retained to do. The argument presupposes a degree of active initiative on the part of a solicitor that no evidence was led to suggest was normal.

[110] It is important that the retainer given to Mr Goodman in mid-November was limited. It was to complete the earlier draft of the option agreement by inserting the new price schedule. He was not asked for advice, and was not consulted about the transaction more generally. In a sense it was the completion of the retainer given earlier by Mr Quinlivin's letter of 18 August 2003 in the course of which he had given appropriate advice. There was no circumstance in mid-November which suggested he should repeat it.

[111] I have said enough to show that, in my opinion, Scottsdale has not made out its case that the third defendant was negligent in the discharge of his retainer. There is, as well, another consideration. To succeed in its action, Scottsdale had to prove that, had the retainer been performed as it contends for, by a repetition of the advice, it would have avoided the loss which befell it. It had to prove that it would have lodged caveats to prevent the registration of Enterprise's second mortgage.

[112] It is, I think, significant that neither Mr Quinlivin nor Mr Hart was asked about what he would have done had Mr Goodman repeated his advice. Such a question, and the answer, would have had to address the point that the advice had been given earlier. Neither witness said (they were not asked) that they had forgotten what

Mr Goodman had explained in his letter of 21 August. Yet the plaintiff's case requires the Court to assume that, without more, a repetition of the advice would have led inexorably to the lodging of caveats. Such evidence, had it been given, might have required careful scrutiny. In its absence I am not prepared to make the required assumption. I suspect that the reason the evidence was not given was that it would have undermined the plaintiff's primary case which was that

Messrs Quinlivin and Hart did not know that the caveats had been withdrawn.

[113] It is clear that Mr Goodman was not instructed to prepare caveats giving effect to clause 7.1 of the second agreement (which contained an acknowledgment by Gemkip that Scottsdale had 'the right to register a caveat over the title to the land' and a promise to 'execute on demand all documents necessary for the registration of consent caveats'). It is also clear that Mr Goodman was not instructed to approach Mr Elcock, or Mullins Lawyers, to obtain consent to the lodging of caveats.

[114] It is implicit in Scottsdale's case that it would have given those instructions had

Mr Goodman repeated the advice. On a point so critical to its case the implication should not be made when the necessity for it could have been avoided by evidence which Scottsdale declined to provide.

[115] It is no doubt right that the most propitious time for obtaining Mr Elcock's consent to the caveat was on the occasion of Gemkip's execution of the second agreement. That contained the promise to give consent. It was argued that Mr Goodman was negligent in not bringing this fact to Scottsdale's attention and not pointing out the effect of clause 7.1. The answer is that Mr Goodman did not know that the execution of the second agreement was imminent when he faxed the draft to

Mr Hart on 10 November. A further answer is that nothing was said to Mr Goodman to alert him to the fact that such advice was needed or wanted.

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