Simon v Janesland Holdings Pty Ltd

EXTEMPORE REASONS FOR JUDGMENT 1 THE COURT: This is a sad case. The effect of the decision of Crispin J, as his Honour recognised, is that the appellants, Francis Simon and Maria Simon, are likely to lose the house owned by them in which they had hoped to reside in their old age. Regrettably, however, it seems to us there is no way in which the Court can prevent that result. 2 The appellants raised a number of defences to the claim of the mortgagee, Janesland Holdings Pty Limited, for possession of the mortgaged property. Those defences all failed at trial. An appeal against Crispin J's decision on those issues was abandoned. 3 However, the appellants persist with their claim that Placido Costa, the solicitor who acted on behalf of Decabel Pty Ltd, the borrower, and who treated himself as also acting on their behalf, was guilty of breach of fiduciary duty and/or negligence. Their counsel concedes there is no rule of law that a solicitor must refuse to act for more than one party to a transaction; the obligation is to ensure that each party knows that the solicitor is acting for the other party or parties. Counsel also concedes that Mr and Mrs Simon were aware that Mr Costa was acting for Decabel. However, he submits that, in this particular case, Mr Costa was under an obligation not to act for Mr and Mrs Simon at all; he should have insisted they obtain independent legal advice before the transaction proceeded. Counsel's reason is that Mr and Mrs Simon were unable to give informed consent to Mr Costa's acting by reason of their lack of commercial sophistication and experience, age, and lack of English language skills. 4 We do not accept that Mr Costa was obliged to refuse to act. While it is clear from his Honour's findings that Mr and Mrs Simon were relatively inexperienced in commercial matters, it is equally clear that they understood the position of Decabel, the nature and effect of the transaction and the risks for them it involved. They had agonised for some time over the question whether they would mortgage their home to assist their son in business and had initially refused to do so. They changed their minds and reached a considered decision before they went to Mr Costa's office. 5 The suggestion was made that Mr Costa breached his duty by failing to advise Mr and Mrs Simon that there were, or might be, other ways in which finance could be raised without their having to incur such a risk. No such case was put at trial. Importantly, it was not put to Mr Costa during the course of his lengthy cross-examination. We do not think it is open to an appellate court to speculate what answer he might have given. 6 Crispin J criticised Mr Costa for having failed to ask Mrs Simon junior, the representative of Decabel at the meeting, to leave the room while he advised Mr and Mrs Simon senior. We agree that this would have been desirable. However, Crispin J found there was no causal connection between this omission and the execution of the mortgaged documents. We agree and we note no contrary submission was put to us. 7 We think it is important to note that, by letter to Mr and Mrs Simon, written immediately after the execution of the documents and before settlement of the mortgage transaction, Mr Costa spelled out the effect of their decision. After summarising the transaction he said in that letter: "We confirm our advice to you before you attended to the execution of the documents that you were free to go and seek independent Legal Advice in relation to the Mortgage document and the security being given by yourself. We note your advice that you refuse to attend and obtain Independent Legal advice and that you wish to carry on and sign the documents. We confirm once more that by signing the Mortgage documents, you are in fact giving security over your property in favour of Decabel Pty Limited. In the event that Decabel Pty Limited does not re-pay the loan or defaults in the payment of the loan or any interest and/or costs on recovery procedures in respect of any default then the Lender is entitled to enter the property, take possession of the premises and then sell the premises at a public auction to recover the amount outstanding to them including the principal amount, any Interest and any costs and charges outstanding." Mr and Mrs Simon did not protest that anything in this letter differed from their understanding of the situation, at least not until after litigation was commenced. 8 As we see the position, this is a case where two people made a considered decision to risk their home in order to assist their son. The outcome has been most unfortunate, but it is clear they knew what they were doing, in all material respects, and made a considered decision to go ahead. The appeal must be dismissed. [There was discussion regarding costs.] 9 The order of the Court will be that the appeal is dismissed and the appellants pay the costs of the second respondents to the appeal. I certify that the preceding nine (9) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Wilcox, Higgins and Kenny.