Fussell v Hanrahan t/as Dignan & Hanrahan Solicitors

1. [1]

   The plaintiffs seek damages from two firms of solicitors who acted for them in respect of a contract to purchase a property in Grand Avenue, Camellia. The first plaintiff, Bernard Fussell, entered into the contract on 10 May 2012 with the vendor James Lockrey (“the contract”). The purchase price was $1.7 million. The parties had agreed on a delayed settlement of five years from the date of the contract, that is, 10 May 2017. In the meantime, and in conjunction with the contract, a lease was entered into between the second plaintiff, Blue Star Trading Corporation Pty Ltd (“Blue Star”), as the lessee and Mr Lockrey as the lessor for a period of six years.

Background

1. [2]

   The property was a large industrial site, but Mr Lockrey lived in a house on part of the land. He was elderly and wished to remain living in the house until he died. Accordingly, the arrangement was that he would have a life estate over the house with the remainder to the first plaintiff on his death.

2. [3]

   The problem in relation to the proposed life estate was that the life estate was effectively over part of the land only. Section 23F(2) of the Conveyancing Act 1919 (NSW) provided that the Register General could refuse to register a transaction over part of the land unless the part of the land was shown on a current plan or was part of a proposed plan of subdivision. The part of the land containing the house was neither.

3. [4]

   The contract provided for the intended life estate to Mr Lockrey in special condition 49 as follows:

4. [5]

   The document identified as “A” in cl 49.1 was a “Deed of Life Estate” (“the Deed”) which was entered into on 25 July 2012. The Deed recited the entry into the contract and provided:

5. [6]

   “House” was defined in the Deed as meaning:

6. [7]

   The form of the transfer referred to as “B” in cl 49.5 had as the title reference “F 33553” (the folio identifier for the whole of the land) and identified the Transferee as “JAMES BOYD LOCKREY with respect to the Life Estate and BERNARD JAMES FUSSELL with respect to the remainder of the Estate”.

7. [8]

   The effect of that form of transfer was that the whole of the land was transferred to Mr Lockrey for life with the remainder to Mr Fussell on Mr Lockrey’s death. Not only was that not intended by the arrangement between the two men, it was inconsistent with the terms of the contract and the Deed, and it later gave rise to finance problems when St George Bank was not prepared to lend money to Mr Fussell to assist in the purchase of the property.

8. [9]

   The principal issue which has given rise to the proceedings relates to a special condition in the contract which relevantly provides:

9. [10]

   The contract did not settle on 10 May 2017 as it provided, and on 12 May 2017 Mr Lockrey died. Thereafter, on 18 May 2017, Mr Lockrey’s solicitor, Carolyn Deigan, who was also his executor, sent a notice purportedly rescinding the contract pursuant to clause 33.2. Ms Deigan did not obtain probate of Mr Lockrey’s will until 21 September 2017. Subsequently, she sent a further notice of rescission on 16 October 2017.

10. [11]

    Mr Fussell commenced proceedings against Mr Lockrey’s executor on 17 October 2017 seeking specific performance of the contract. In those proceedings it was contended on behalf of Mr Fussell that, where one party to a contract dies, it was only the other party who had the right to rescind the contract. That argument was upheld at first instance and specific performance was ordered: Fussell v Deigan [2018] NSWSC 1419; (2018) 19 BPR 38,755. The executor appealed, and the Court of Appeal on 10 December 2019 upheld the appeal, holding that, at least by 16 October 2017, the vendor had effectively rescinded the contract on the basis that under clause 33.2 the right to rescind was given to either party: Carolyn Deigan as executrix for the estate of the late James Boyd Lockrey v Barnard (sic) James Fussell [2019] NSWCA 299;(2019) 19 BPR 39, 853.

11. [12]

    In the meantime, the plaintiffs, represented at that time by the third defendant, Steven Brown, commenced these proceedings on 2 May 2018, seeking damages against the first and second defendants, Bruce Hanrahan and David Duncombe trading as Dignan and Hanrahan Solicitors. Mr Hanrahan had acted for the plaintiffs in relation to the various agreements with Mr Lockrey from late March or early April 2012 until about April 2016. On 24 July 2020, when the plaintiffs retained their present solicitors, an amended statement of claim was filed adding some further particulars of breach and negligence against those defendants.

12. [13]

    On 8 July 2021, a further amended statement of claim (“FASOC”) was filed joining Steven Brown as the third defendant. Mr Brown had been retained by the plaintiffs in 2016 in lieu of the first and second defendants, and had acted for the plaintiffs up to the time of Mr Lockrey’s death and thereafter in the specific performance proceedings, and in instituting the present proceedings against the first and second defendants.

13. [14]

    The plaintiffs’ case against Mr Hanrahan in essence is that he breached his duty of care by:

14. [15]

    The claim against Mr Brown was that he breached his duty of care to Mr Fussell and Blue Star by failing to advice Mr Fussell of the presence and effect of clause 33.2 until after Mr Lockrey’s death, and by failing to arrange settlement of the contract prior to Mr Lockrey’s death.

15. [16]

    The losses said to have been caused by Mr Hanrahan’s breaches were the loss of the opportunity to have had cl 33.2 of the contract deleted or amended so that it did not give the vendor the right to rescind if the vendor died, and the loss of the opportunity to have the contract without the problem relating to the life estate. In relation to Mr Brown, the loss was said to be the loss of opportunity to achieve an early settlement before Mr Lockrey died.

16. [17]

    Although the FASOC sought damages, equitable compensation and an account of profits for breaches of fiduciary duty, the plaintiffs accepted at the outset that there was not sufficient or appropriate evidence to found the equitable claims. However, the plaintiffs submitted that Mr Brown had a conflict of interest (which had formed the basis of the claim for breach of fiduciary duty) in continuing to act for the plaintiffs in the litigation against Mr Hanrahan, and that conflict of interest was relevant to an assessment of Mr Brown’s credibility.

17. [18]

    Part of the arrangement reflected in the contract was that Mr Fussell’s company, Blue Star was to have a six year lease of the property. Blue Star entered into that lease but, as a result of Mr Lockrey’s death, it lost the right to remain as the lessee beyond the six year period. It claims for losses expended during the time it was in occupation on the basis that the expenditure was wasted when it could no longer remain as the lessee.

18. [19]

    As the case developed it became clear that the two significant factual issues to be decided were, first, whether Mr Fussell had been advised by Mr Hanrahan and Mr Brown about cl 33.2 of the contract (particularly Mr Hanrahan, because by the time Mr Brown was retained the contract had been entered into) and, secondly, whether Mr Fussell had the funds to complete the purchase before Mr Lockrey died, and particularly, in the months leading up to Mr Lockrey’s death.

The plaintiffs’ case

1. [20]

   The plaintiffs pleaded (para 26 of the FASOC) that if they had received the appropriate advice concerning cl 33:

2. [21]

   They also pleaded (para 33) that if they had received the correct advice in relation to the life estate, they:

3. [22]

   The plaintiffs allege that Mr Hanrahan breached his duty of care to them by:

4. [23]

   The plaintiffs allege that as a result of those breaches, they suffered the loss of the opportunity to have had the contract with cl 33.2 deleted or amended so that it did not entitle the vendor to rescind if the vendor died before completion, and without the problems relating to the life estate. They also allege that the errors regarding the life estate created an impediment to obtaining finance in order to settle early to alleviate the problems arising from clause 33.2.

5. [24]

   The plaintiffs’ case against Mr Brown is that he breached his duty of care owed to the plaintiffs by:

6. [25]

   The plaintiffs allege that, as a result of those breaches, they lost the opportunity to settle the contract before Mr Lockrey died.

7. [26]

   In opening, the plaintiffs put their case in this way. The starting point was whether Mr Fussell had the financial capacity to settle the contract on 10 May 2017 or at time between April 2016 (when Mr Brown became involved) and 10 May 2017. The plaintiffs submitted that the Court would find on the evidence that Mr Fussell had the necessary financial capacity at both of those times. In such circumstances, the damages for the loss of the opportunities caused by Mr Hanrahan and Mr Brown are to be assessed as follows.

8. [27]

   As far as Mr Hanrahan is concerned, in relation to cl 33.2, if Mr Hanrahan had advised Mr Fussell of the presence and effect of that clause, the probabilities are that Mr Fussell would have instructed Mr Hanrahan to request Mr Lockrey to delete it or amend it to remove the right of the vendor to rescind if the vendor died. The plaintiffs submitted that the Court would find on the evidence that the prospects of Mr Lockrey having done so were quite high. In those circumstances, the damages are to be assessed as a high percentage of Mr Fussell’s position had settlement occurred and Mr Fussell had become the owner of the property.

9. [28]

   Had that happened Mr Fussell would have made a significant profit, being the difference between the purchase price of $1.7m and the value of the property. The plaintiffs accepted that the value of the property depended on what was the appropriate valuation date. The parties’ valuers had agreed on the values on the available valuation dates, but the parties did not agree on what the appropriate valuation date was.

10. [29]

    In relation to the problem concerning the life estate, if Mr Hanrahan had been aware of the problem and advised Mr Fussell in relation to it, the probabilities are that Mr Fussell would have instructed Mr Hanrahan to request Mr Lockrey to agree to steps to overcome the problem. The plaintiffs submitted that the Court would find that the prospects of Mr Lockrey having done so were quite high, and that, therefore, the impediment to a settlement before Mr Lockrey’s death would not have existed. In those circumstances, the damages should be assessed as a high percentage of Mr Fussell’s position had settlement occurred and Mr Fussell had become the owner of the property.

11. [30]

    As far as Mr Brown was concerned, in relation to cl 33.2, had Mr Brown advised Mr Fussell of the presence and effect of that clause, the probabilities were that Mr Fussell would have acted urgently to achieve an early settlement. He may have had to pay more for the property, but he had funds available to do so. In such circumstances, the prospects that he would have achieved an early settlement were high, and damages should be assessed as a high percentage of Mr Fussell’s position had settlement occurred and he had become the owner of the property. He would have made a significant profit which is to be determined by reference to the amount he would have had to pay for an early settlement and the value of the property at the appropriate valuation date.

12. [31]

    In relation to Blue Star’s claims against each of the solicitors, Blue Star’s damages are reliance damages, also as known as wasted expenditure damages. Where a plaintiff has incurred expenses in anticipation, or reliance on, the performance of a defendant’s contractual obligation, and the defendant’s breach of that obligation has the effect that the expenditure is wasted, the plaintiffs submitted that those damages are commonly referred to as wasted expenditure or reliance damages.

13. [32]

    The total claim by Blue Star was in an amount of $2,187,032.50. The plaintiffs submitted that Mr Hanrahan was liable for the entirety of the expenses, and Mr Brown is liable for the expenses which were incurred after he took over the conduct of the conveyance in April 2016.

14. [33]

    In relation to the legal costs in litigation against Ms Deigan which Blue Star paid, the plaintiffs submitted that although Blue Star was not a party to those proceedings, Blue Star was attempting to mitigate its loss, being the loss of the very real prospect that it would remain in possession of the property after the expiration of the six year lease if Mr Fussell became the registered proprietor.

Clause 33.2

1. [34]

   Mr Fussell first retained Mr Hanrahan, probably in late March 2012. At the first meeting between them, Mr Fussell told Mr Hanrahan that he had reached an understanding with Mr Lockrey about the purchase of the land and that there would be a delayed settlement for five years. At that time the contract had not yet been prepared.

2. [35]

   On 4 May 2012 Mr Hanrahan received an email attaching the front page and special conditions of the contract, and the draft commercial lease for the property. On 7 May 2012 Mr Hanrahan received a copy of the whole of the draft contract and a draft of the commercial lease by mail.

3. [36]

   Later on 7 May 2012, Mr Fussell had a conference with Mr Hanrahan where the contract and the lease were discussed.

4. [37]

   Mr Fussell’s evidence in chief about the advice he received at that conference concerning cl 33.2 was this:

5. [38]

   On 16 May 2017 Mr Fussell went to see Mr Brown in his office for the purpose of fixing a settlement date after Mr Fussell had been told that Mr Lockrey had died. Mr Fussell gave evidence that Mr Brown said to him:

6. [39]

   Mr Fussell said to Mr Brown that he “certainly did not know that”. Mr Fussell also said in his affidavit:

7. [40]

   Mr Hanrahan’s evidence in chief was that in the meeting he held with Mr Fussell on 7 May 2012 to discuss the contract, he went through each of the clauses in the special conditions to the contract. In relation to cl 33 Mr Hanrahan said that he said to Mr Fussell:

8. [41]

   Mr Hanrahan also said this in his affidavit:

9. [42]

   In his evidence in chief Mr Brown said this:

10. [43]

    In the light of the conflict between Mr Fussell’s evidence and that of the solicitors, it is necessary to say something about the credibility of witnesses.

Witnesses

1. [44]

   The important events in these proceedings took place in 2012 and 2016 to 2017, that is, from 7 to 12 years ago. In that regard, it is important to bear in mind what has been said in relation to human memory in the context of recall during litigation.

2. [45]

   In Campbell v Campbell [2015] NSWSC 784 Sackar J said:

3. [46]

   In In the matter of Kit Digital Australia Pty Ltd (in liq) [2014] NSWSC 1547 Black J said at [7]:

4. [47]

   In the present case, I have placed greatest weight on the contemporaneous material found generally in the solicitors’ files, whether the documents are theirs or Mr Fussell’s.

5. [48]

   I found Mr Fussell to be a most unreliable witness, and in some respects he was dishonest by his own admission to having sworn to evidence which was untrue. On a number of occasions he denied propositions that were put to him, but when confronted with the fact that he had asserted the proposition in his affidavit evidence, he agreed that it was so. The strong impression I had was that Mr Fussell had reconstructed events, perhaps mostly unconsciously, to support his underlying position, that he did not know about cl 33.2 until after Mr Lockrey’s death at a time when settlement of the contract ceased to be available to him.

6. [49]

   A matter that took on some significance for Mr Fussell’s reliability, but which was otherwise not of any crucial importance, was the date on which he met with Mr Hanrahan to discuss the contract. In his affidavit of 15 September 2022 Mr Fussell insisted the meeting was on the afternoon of Friday, 4 May 2012. He maintained that the meeting took place on that day in his oral evidence when being cross-examined. The evidence overwhelmingly pointed to the meeting having occurred on Monday, 7 May 2012.

7. [50]

   For a start, although Mr Hanrahan had received an attachment to an email on the afternoon of 4 May 2012 containing the front page of the contract, the special conditions, and the draft commercial lease, the whole of the contract did not arrive at Mr Hanrahan’s office until 7 May 2012. Further, in his affidavit in support of his claim for specific performance, Mr Fussell gave evidence that the meeting took place on 7 May 2012 and that that was the first time he had met Mr Hanrahan (although the affidavit says “8 May” it seemed to be accepted that that was a typographical error – despite Mr Fussell saying 8 May was correct, he did not suggest there was a meeting on Tuesday 8 May).

8. [51]

   In the pleading of the statement of claim, the plaintiffs had asserted there was only a telephone call to Mr Hanrahan on 4 May, and that the in-person meeting took place on 7 May. Mr Fussell first tried to blame Mr Brown for that pleading, which he said was an error (although he accepted that he, Mr Fussell, swore it as being true) but, ultimately, he also accepted that his present solicitors maintained that pleading in the present iteration of the statement of claim, which he also swore was true.

9. [52]

   Related to that was Mr Fussell’s evidence in the present proceedings that he had three meetings with Mr Hanrahan concerning the contract. Two of those were said to be on 4 May and 7 May.

10. [53]

    In the present proceedings, Mr Fussell’s attention was drawn to paragraphs 41 to 43 of his affidavit relied upon in the specific performance proceedings. Those paragraphs detailed a telephone conversation between Mr Fussell and Mr Hanrahan on 4 May and the meeting on 8 (sic) May when Mr Fussell said, “I met for the first time Mr Bruce Hanrahan”. He gave the following evidence in the present proceedings:

11. [54]

    He also gave this evidence about the number of meetings with Mr Hanrahan:

12. [55]

    Some examples of Mr Fussell changing his oral evidence when confronted with his own affidavit evidence are these:

13. [56]

    Of some significance in relation to that evidence was the fact that in Mr Fussell’s first affidavit of 15 September 2022 he said nothing about Mr Hanrahan going through the special conditions of the contract. That only appeared for the first time in his affidavit of 6 June 2023 after he had been served with Mr Hanrahan’s affidavit that attached to it a file note of the meeting of 7 May 2012 which noted that the special conditions were discussed and provided some detail in that regard.

14. [57]

    (b) In his affidavit, Mr Fussell said at para 68 that he decided he needed a new solicitor because he became dissatisfied with Mr Hanrahan’s performance acting on his behalf in relation to a dispute with the local government. He also said, “At this time, I had no concerns about his work in relation to the purchase of Camellia”.

15. [58]

    He was asked this question and gave this answer:

16. [59]

    Letters that Mr Fussell wrote to Mr Hanrahan in 2014 and 2016 complaining about why Mr Hanrahan had permitted him to become liable to pay interest to the Office of State Revenue (“OSR”) for late payment of stamp duty, accused him of being ignorant of the rules of the OSR and demanded that he pay for his own mistake or Mr Fussell would make a complaint to the Law Society. In that regard, he demanded that Mr Hanrahan deduct the amount of penalty interest from Mr Hanrahan’s account to Mr Fussell. In his letter of 10 May 2016 to Mr Hanrahan he said, “To ask me to pay for your stupidity is making my blood boil.”

17. [60]

    He was asked about these letters:

18. [61]

    (c) The following evidence concerned his approach to Mr Brown:

19. [62]

    (d) Paragraph 153 of his affidavit said this:

20. [63]

    He gave this evidence:

21. [64]

    Yet in his affidavit in response to Mr Hanrahan’s affidavit Mr Fussell said:

22. [65]

    He was asked in that regard if he had read the lease through in 2014, to which he answered:

23. [66]

    He was then reminded of the evidence he gave in the specific performance proceedings as follows:

24. [67]

    He then gave this evidence:

25. [68]

    A little later on he sought to change his evidence about his knowledge in that regard as follows:

26. [69]

    (f) He gave this evidence concerning first moving to the Camellia premises:

27. [70]

    (g) He gave contradictory evidence about being able to settle the contract without a mortgage in August 2016. In the further amended statement of claim para 36 he pleaded:

28. [71]

    He then gave this evidence:

29. [72]

    Earlier he had given this evidence:

30. [73]

    When subsequently asked he gave this evidence:

31. [74]

    Another example of the inconsistency of his evidence concerns reading the lease and the use of Mr Lockrey’s house. He gave the following evidence:

32. [75]

    Then again later he denied knowing that Mr Lockrey could terminate the lease for non-payment of rent, and he gave this evidence:

33. [76]

    A further example of Mr Fussell admitting to swearing false evidence is in this exchange:

34. [77]

    By reason of all these matters, and other evidence to which I will refer later, I do not accept Mr Fussell’s evidence unless it is corroborated by contemporaneous documents or is against his interest.

35. [78]

    I thought Mr Hanrahan was a straightforward and impressive witness. His evidence was largely, but not completely, supported by contemporaneous file notes and letters, and he remained largely unshaken in cross-examination.

36. [79]

    A significant matter which causes me to prefer the evidence of Mr Hanrahan over Mr Fussell in relation to the conference on 7 May 2012 (even ignoring the problems in Mr Fussell’s evidence that I have detailed above) is that in Mr Fussell’s principal affidavit he claims that the conference on 7 May proceeded on the basis of his asking questions of Mr Hanrahan and Mr Hanrahan providing answers. Those answers were set out in a document prepared by Mr Fussell in 2017 after Mr Lockrey had died and, on Mr Fussell’s evidence (although denied by Mr Brown) at Mr Brown’s suggestion. The evidence Mr Fussell gives derived from that document was not contemporaneous evidence.

37. [80]

    Mr Fussell said that the meeting took place with Mr Hanrahan looking through the contract and the lease, and then Mr Fussell asked the questions and obtained the answers which appear in his 2017 document. Mr Fussell also said that he was not given a copy of the contract by Mr Hanrahan, nor did he read through it or any other documents at the conference.

38. [81]

    After Mr Hanrahan swore and served his affidavit detailing his recollection of the conference, which largely relied on his contemporaneous file note of that day, Mr Fussell’s account of the conference changed, and he acknowledged that Mr Hanrahan had in fact gone through the special conditions including giving a summary of the clauses. Mr Fussell said that Mr Hanrahan discussed some, but not all, of the special conditions that were noted in Mr Hanrahan’s file note.

39. [82]

    Mr Hanrahan’s diary note appears to be in two parts. The first of it, with words largely written in upper case letters, consists of a very brief summary of the contract, the life estate and the lease. Mr Hanrahan said that he wrote that section of the note before the conference started. The second part of the diary note commencing “Discuss the special conditions…” is written in ordinary script and says (inter alia) “issues which were raised included the following” and that was followed by specific references to particular special conditions. Mr Hanrahan said that he wrote that section during the conference or shortly thereafter.

40. [83]

    Clause 33 was not noted in the file note and much was made of that on behalf of the plaintiffs to suggest that Mr Hanrahan never discussed cl 33 at the meeting. On the other hand, Mr Fussell claims that he had this conversation with Mr Hanrahan:

41. [84]

    Mr Hanrahan denied that that conversation took place. He set out in his affidavit the conversation that he says he had with Mr Fussell concerning the special conditions. That conversation involved all of the special conditions although his file note only mentions some of them. In relation to cl 33 he said that he said to Mr Fussell:

42. [85]

    Clauses like cl 33 are common in contracts for the sale and purchase of land in New South Wales as both Mr Hanrahan and the plaintiffs’ conveyancing expert Mr Rosier made clear in their evidence. It was only of particular significance in Mr Fussell’s contract because the settlement date was five years from the date of contract and, on what Mr Fussell likely told Mr Hanrahan, Mr Lockrey’s health was not good.

43. [86]

    I accept the evidence of Mr Hanrahan that he advised Mr Fussell about cl 33 and I accept his evidence that he did not say that there was nothing in the contract that would enable the contract to be cancelled if Mr Lockrey died.

44. [87]

    My one criticism of Mr Hanrahan is that it does not appear that he gave any attention to the issue of the life estate. By reason of the way the plaintiffs have conducted these proceedings, there are difficulties about making findings against Mr Hanrahan in that regard. Mr Cashion of Senior counsel for Mr Fussell asked no questions in cross examination of Mr Hanrahan about the life estate or the manner in which Mr Hanrahan dealt with the life estate. When Mr Cashion indicated that he had concluded his cross examination, I asked Mr Hanrahan to leave the court. I then raised with Mr Cashion how, as a matter of procedural fairness, I could make adverse findings against Mr Hanrahan (if I was so minded) when no questions had been asked of him about the life estate. It seemed inappropriate in the circumstances for me to ask questions of Mr Hanrahan that might be regarded as cross examination when the plaintiffs did not intend to do so.

45. [88]

    Mr Cashion indicated that he had considered whether it was appropriate or necessary to ask Mr Hanrahan questions about the life estate and he had formed the view that he would not do so. I decided that it was inappropriate that I should do so in the circumstances.

46. [89]

    It became clear during the course of final addresses that Mr Cashion did not want to give Mr Hanrahan the opportunity to explain how he had addressed the issues relating to the life estate and that that was the reason for no cross examination about it. That was a decision Senior counsel was entitled to make. Despite that, the submissions on behalf of the plaintiffs suggest adverse findings should be made in relation to Mr Hanrahan's dealing with the life estate issues.

47. [90]

    Although the parties principally focused on the issues of Mr Fussell's knowledge of cl 33.2 and whether Mr Fussell was in a position to complete the contract in 2016/2017 in terms of having sufficient funds, the life estate issue cannot be ignored. The parties accepted that the transfer that the Deed and Ms Deigan required Mr Hanrahan to sign was inconsistent with the agreement the parties had reached and was inconsistent with the express terms of the Deed and the contract. The transfer provided that Mr Lockrey had a life estate over the whole of the land with Mr Fussell purchasing only the remainder on Mr Lockrey's death. That was never the intention of the parties. The problem was initially brought about because Ms Deigan seemingly followed the advice of an officer at the Land Titles Office who, as Mr Rosier made clear, is unlikely to have understood the whole context of the life estate arrangement in providing the advice to Ms Deigan. Ms Deigan should have understood that the transfer was inconsistent with the arrangement and the Deed. However, she was not challenged about that, and procedural fairness issues arise there too.

48. [91]

    Mr Hanrahan does not seem to have been cognisant of the discrepancy between the form of the transfer and the Deed. It is hard to see, in any event, how the problem could be solved. Subject to one matter which I will discuss later) it was not possible to grant a life estate over an unsubdivided portion of the land, and s 23F of the Conveyancing Act 1919 (NSW) made it very likely that a transfer expressed as the Deed was expressed would not be registered.

49. [92]

    While the parties suggested that a distinction should be made between settlement of the contract, and registration thereafter (subject to the one matter to be discussed later), such a solution does not appear at all feasible, particularly where Mr Brown was very alive to the difficulties with the life estate and the fact that the transfer did not reflect the agreement or the Deed.

50. [93]

    It will be seen, when I later discuss the life estate, that the problem was probably insoluble, and that Mr Hanrahan's failure to come to grips with the life estate issue was not causative of the plaintiffs’ loss.

51. [94]

    In my opinion, Mr Brown was an impressive witness who appeared to have a good memory of the events. His evidence was supported by contemporaneous documents. Contemporaneous documents were important for resolving a dispute between Mr Fussell and Mr Brown about events at the beginning of May 2017 where Mr Fussell denied a phone call with, and a subsequent email from, Mr Brown, but which the contemporaneous material in Mr Brown's file clearly supported Mr Brown's evidence about those contacts.

52. [95]

    I accept Mr Brown's evidence that at a meeting on either 9 or 29 August 2016 with Mr Fussell he went through the special conditions in the contract with him and when they were discussing cl 33.2 he said to Mr Fussell:

53. [96]

    Mr Brown was challenged about that evidence, and it was put to him, on the basis of what Mr Fussell had said in his evidence, that the first time there was any discussion between Mr Brown and Mr Fussell about cl 33.2 was after Mr Lockrey had died. Part of that challenge was based on an entry Mr Brown made in his electronic record for 15 May 2017 where he noted,

54. [97]

    Mr Brown said in his evidence:

55. [98]

    Mr Fussell's evidence was that on 16 May 2017 he attended Mr Brown's office for the purpose of discussing fixing the settlement date. He said that Mr Brown said to him:

56. [99]

    Mr Fussell said that he responded:

57. [100]

    The conversation that Mr Fussell reports could not have occurred in those terms. Clause 33 is not entitled "Rescission". It is entitled "Death or Insolvency etc". The clause in the contract entitled "Rescission of Contract" is cl 19. That is a standard condition clause about the exercise of any right of rescission by a party. It is not a clause which confers a right of rescission but deals with procedural aspects of exercising a right to rescind.

58. [101]

    Mr Brown has been a solicitor since 1983, and at least from the establishment of his firm Etienne Lawyers in 2003 he has been involved in the sale and purchase of residential and commercial properties. As Mr Rosier, Mr Hanrahan and Ms Deigan all said in their evidence, a clause like cl 33 is ordinarily included in contracts for the sale of residential property. I do not accept that Mr Brown would have been surprised to find cl 33 in the present contract as Mr Fussell's evidence suggests. Further, for reasons which I will come to, I do not accept that Mr Fussell did not know about cl 33 until the meeting with Mr Brown on 16 May 2017.

59. [102]

    The plaintiffs submitted that Mr Brown had a conflict of interest in continuing to act for Mr Fussell after the notice of rescission. It was submitted that the Court would draw one or more of three conclusions. First, Mr Brown did not want an independent solicitor looking at the matter in case he or she advised a claim against Mr Brown. Secondly, if Mr Brown controlled the specific performance proceedings and Mr Fussell was successful any claim against Mr Brown would fall away. Thirdly, Mr Brown rather than another solicitor would earn significant fees in acting in the specific performance proceedings.

60. [103]

    None of these matters was put to Mr Brown in cross-examination.

61. [104]

    Mr Brown denied, in answers to a number of questions, that he was in a conflict of interest in continuing to act for the plaintiffs after the contract was rescinded. He accepted that what he had done in acting for the plaintiffs might be examined and might be criticised but he drew a distinction between that and being in a conflict of interest. I agree that the two matters are not the same. He also gave evidence that Mr Fussell had been advised by one of the barristers Mr Brown briefed to advise on what should be done that Mr Fussell should get some independent legal advice. When Mr Brown gave that answer in cross-examination, no further questions were asked relating to any asserted conflict of interest. It may be inferred that Mr Fussell decided not to take the barrister’s advice, and he continued to retain Mr Brown. Mr Fussell did not give evidence to deny that he had been so advised by a barrister.

62. [105]

    In my opinion, Mr Brown had no reason to consider he was in a conflict of interest at the time. He had reminded Mr Fussell about the need to settle and to have his funds organised so that settlement could be arranged. As I find later in this judgment, Mr Fussell was not in a position to settle prior to the notice of rescission. There is no contemporaneous evidence of complaint by Mr Fussell to or about Mr Brown, concerning what Mr Brown did or did not do. Indeed, such lack of complaint tends to undercut Mr Fussell’s evidence about Mr Brown supposedly only finding out about cl 33.2 after Mr Lockrey’s death.

63. [106]

    There was a general, but vague, suggestion by the plaintiffs that in assessing Mr Brown’s credibility I should take into account the fact that he acted for the plaintiffs while in a conflict of interest. In the absence of contemporaneous complaints or the raising of issues concerning Mr Brown’s conduct, I do not consider that Mr Brown should have regarded himself as having a conflict. His conflict only arose when Mr Fussell raised matters about Mr Brown that I have found are without any foundation. I do not consider Mr Brown’s credibility is affected by his continuing to act.

64. [107]

    Ms Carolyn Deigan was the principal of CLS Legal, Mr Lockrey’s solicitors.

65. [108]

    Ms Deigan's evidence was only of importance for two matters which were in dispute, and also for providing the historical context in which the contract under consideration came into being. Ms Deigan gave evidence of having acted for Mr Lockrey on the sale of the Camellia property from the time she was retained in October 2009 up to Mr Lockrey's death in May 2017.

66. [109]

    Paragraphs [11]-[51] of her affidavit relate to prior attempts by Mr Lockrey to sell the land to other potential purchasers. Objection was taken to those paragraphs on the basis of relevance. It was ultimately agreed that the paragraphs should be admitted subject to relevance and that I would determine their relevance in this judgment.

67. [110]

    In my opinion, the paragraphs objected to should be received into evidence. They provide an explanation for the form of the transfer that was in issue in the proceedings. They also throw light on the issue of whether Mr Lockrey would have agreed to changes in the contract, particularly with regard to the life estate, but also in relation to cl 33.

68. [111]

    The two disputed issues in respect of which Ms Deigan's evidence was relevant were, first, the assertion by Mr Fussell that he sat in on a conference Ms Deigan had with Mr Lockrey when Mr Lockrey was providing instructions to her about the agreement he and Mr Fussell had reached. The second disputed area concerned advice Ms Deigan said she would have given to Mr Lockrey if particular matters had been raised with her on behalf of Mr Fussell.

69. [112]

    In assessing the reliability of Ms Deigan's evidence, I take into account that she has no interest in the outcome of the present proceedings. Certainly, as with any solicitor challenged about the way they behaved in the course of a transaction, she had her own reputation to protect. However, I consider that she was a wholly disinterested witness, that her evidence was given truthfully to the best of her recollection, and that her evidence should be accepted.

70. [113]

    In particular, I accept her evidence that Mr Fussell did not remain present when Mr Lockrey was giving instruction to her about the contract. As most solicitors know, and as all solicitors should know, it would be quite inappropriate for both parties to the contract to be present at a conference with one of the party's solicitors, when the terms of the contract are being discussed. This was the more so when Mr Fussell was the third of a number of purchasers who had entered into negotiations with Mr Lockrey, and through Ms Deigan as his solicitor, to purchase the land.

71. [114]

    My acceptance of Ms Deigan's evidence about what occurred when Mr Fussell went to her office with Mr Lockrey is an additional reason why I doubt the reliability of Mr Fussell's evidence generally.

72. [115]

    I also accept Ms Deigan's evidence on the other area of dispute, concerning the advice she would have provided to Mr Lockrey and whether it was likely Mr Lockrey would have followed that advice. The evidence of what had occurred in relation to the two earlier aborted contracts provides support for the evidence given by Ms Deigan in that regard. I will deal in greater detail with this later.

Retainer

1. [116]

   The plaintiffs alleged that Mr Hanrahan agreed to act for both Mr Fussell and Blue Star. Mr Hanrahan agrees that he acted for Mr Fussell but did not admit that he was retained by Blue Star – he did not deny it. There was no evidence that Mr Hanrahan sent a formal retainer letter providing the disclosures required by the Legal Profession Uniform Law (NSW) No 16a of 2014. His only letter concerning his retainer was a letter of 2 April 2012 addressed to Mr Fussell confirming instructions to act on his behalf in reaction to the purchase of the property. That was, no doubt, because at the preliminary meeting in late March or early April there was no mention of Blue Star or a lease.

2. [117]

   However, by 4 May 2012 Mr Hanrahan knew that the arrangement involved a lease to Blue Star, and that it was linked to the purchase contract – see cls 37.7 and 51. He advised on the lease at the meeting on 7 May 2012.

3. [118]

   Mr Hanrahan accepted an implied retainer to act for Blue Star, and he owed it a duty of care. There is nothing pleaded, nor any evidence, suggesting any duty on Mr Hanrahan‘s behalf to Blue Star beyond ensuring that advice was given on the lease and that it was entered into as both Mr Fussell and Blue Star intended. Mr Hanrahan was never told, for example, that Blue Star was spending money on the property on the basis that a new lease would be entered into after the 6 year period (the Lease did not provide an option for renewal). There was no evidence of Mr Fussell’s or Blue Star’s intentions beyond the 6 year period, and there is no basis for implying any obligation on Mr Hanrahan’s part to enquire.

4. [119]

   In Macindoe v Parbery (1994) 6 BPR 13,483, Young AJA (with whom Priestley JA agreed) discussed a number of cases involving purchases (albeit, generally of businesses) that contained an unusual provision or provisions, and said (at P.13,493):

5. [120]

   In the same case, Kirby P said (at P. 13,484):

6. [121]

   The absence of pleading and evidence about Blue Star’s intentions beyond entering into the lease, especially evidence that Mr Hanrahan and Mr Brown were informed about Blue Star’s intentions, is significant because, as I have noted earlier, the damages Blue Star seeks are reliance damages.

Did Mr Hanrahan breach his duty of care?

1. [122]

   Mr Hanrahan accepted that he owed Mr Fussell a duty to advise him of the presence and effect of cl 33. In my opinion, Mr Hanrahan discharged that duty because he informed Mr Fussell of that clause and that either party could cancel the contract if either party died. Mr Fussell also claims that Mr Hanrahan breached his duty of care by failing to recommend appropriate changes to the contract. There is no evidence that Mr Hanrahan made such recommendations, nor that he made any approach to Mr Lockrey’s solicitors to modify or delete cl 33.2.

2. [123]

   In the present case, although cl 33 might have been a clause usually found in contracts in New South Wales, the situation was an unusual one to Mr Hanrahan’s knowledge. First, the contract had a five year settlement date. Secondly, he also knew that Mr Fussell had told him in an email of 2 May 2012 that “the vendor is not in good health”. Mr Hanrahan’s evidence was that he did not know Mr Lockrey’s state of health but he had no reason to doubt what Mr Fussell told him in that regard.

3. [124]

   I accept Mr Rosier’s evidence, although I do not consider that evidence in this regard was really necessary, that in those circumstances Mr Hanrahan ought to have advised Mr Fussell to provide him with instructions to approach the vendor’s solicitor in an endeavour to renegotiate cl 33.

4. [125]

   Mr Hanrahan pointed to some evidence given by Mr Fussell to submit that, because of what Mr Fussell knew, there was no obligation on Mr Hanrahan to provide that advice and seek those instructions.

5. [126]

   Counsel for Mr Hanrahan had been cross-examining Mr Fussell on the statement in his affidavit that if he had known that either party could cancel the contract in the event that a party died “that would have been very alarming to me”. The following evidence was then given:

6. [127]

   Mr Hanrahan submitted that if it was found (as I have) that Mr Hanrahan did explain the presence and effect of cl 33 to Mr Fussell that further advice about what should be done was unnecessary because the risk would have been obvious to Mr Fussell and he would not need to have Mr Hanrahan recommend to him that he seek the removal of that clause.

7. [128]

   Two things should be said about that. First, I do not think that in the exchange set out, Mr Fussell clearly accepted that he did not need Mr Hanrahan to give him that advice or recommendation. Secondly, simply because Mr Hanrahan had told Mr Fussell the terms of cl 33.2, that did not relieve Mr Hanrahan of the obligation to recommend to Mr Fussell that he be given instructions to seek that the clause be modified or deleted. Again, that was Mr Rosier’s expert opinion which I accept, although it seems to me that the matter clearly falls within what was said in Macindoe v Parbery, that the solicitor had an obligation to provide advice about the clause in the unusual circumstances that existed.

8. [129]

   In those circumstances, I consider that Mr Hanrahan breached his duty of care to Mr Fussell in that regard.

9. [130]

   The extent of Mr Hanrahan’s evidence concerning the life estate was this. He made reference to cl 49 in the draft contract forwarded to him, noting that it referred to a Deed of Life Estate granting Mr Lockrey the right to continue to live in his home on the property. Mr Fussell pointed out that it should be in relation to “the home built on top of the six garages on the property”, and Mr Hanrahan said he would speak with the vendor’s solicitors to get that amended. Mr Fussell said he was aware that Mr Lockrey would have a life estate and he had no problem with it. Mr Hanrahan said that he noted that on his file the words “joint application for assessment of transfer” (a reference to cl 49.5 for the vendor and purchaser to ensure that a joint application was made to the OSR for the purpose of stamping the contract and marking the transfer) as a reminder to himself to put that in place.

10. [131]

    He later contacted Ms Boustani at CLS Legal, telling her that cl 49.1 needed to be amended to make clear it was the house on top of the six garages on the property. He also said it might be necessary to obtain a valuation of the life estate for stamp duty purposes.

11. [132]

    Subsequently, on 2 July 2012, Mr Hanrahan signed the transfer in the form required pursuant to cl 49 and forwarded it to Mr Lockrey’s solicitors.

12. [133]

    Mr Hanrahan said nothing in his evidence about noticing that the transfer did not give effect to the agreement contained in cl 49 or in the Deed, nor that he advised Mr Fussell that if the contract settled with transfer in the form it was, Mr Fussell would not be receiving the property on settlement except in remainder. That is to say, he did not advise Mr Fussell that Mr Lockrey would receive a life estate over the whole of the property.

13. [134]

    As I mentioned earlier, senior counsel for Mr Fussell did not cross examine Mr Hanrahan about what he did or failed to do in relation to the life estate. Although I indicated that this course raised a prima facie issue about procedural fairness to Mr Hanrahan if I was minded to make adverse findings in this regard, it seems to me that Mr Hanrahan made a forensic choice in relation to the evidence that he put forward, in the knowledge that the plaintiffs were asserting in the FASOC that Mr Hanrahan had breached his duty of care by not advising the plaintiffs about the effect of the transfer in the circumstances. That forensic choice means that there is no procedural unfairness to Mr Hanrahan in making findings against him in relation to the life estate issue.

14. [135]

    In my opinion, Mr Rosier is correct in his conclusion that Mr Hanrahan departed from common professional practice when he failed to advise Mr Fussell of the anomaly between the form of transfer and what was contained in the Deed and cl 49 of the contract, and in failing to seek instruction to negotiate a transfer or transfers which better reflected the agreement that the parties had made.

15. [136]

    Mr Hanrahan submitted that no breach has been made out where the plaintiffs put their case on the basis of a lost opportunity to have the contract “without the problem relating to the life estate”. He submitted that, although registration of the bargain between the parties could not have been achieved, settlement could have taken place, and equity could be called in aid to recognise the beneficial interest which Mr Fussell had pursuant to the agreement, of his being the owner of the whole of the property except Mr Lockrey’s house which was his for life. That is, equity would recognise that Mr Fussell was the owner of all of the property except the house. That was because it would be unconscionable in the light of the agreement reached between the parties and the fact that Mr Fussell had paid the purchase price for the whole of the land. It was submitted that the principle was similar to the position with a resulting trust in cases like Calverley v Green (1984) 155 CLR 242 at 266-267, 246-247 and 258, and the Trustees of the Property of Cummins v Cummins (2006) 227 CLR 278; [2006] HCA 6 at [55] and [58].

16. [137]

    In my opinion, there is some prospect that equity might have intervened in that way. In Pirrottina v Pirrottina [2024] NSWSC 558, the parents of two brothers gave one of the brothers, Sam, the right to build a house for himself and his family to live in, on an unsubdivided, but otherwise defined, part of land owned by the parents. The gift of the house was known to and accepted by the other brother, Rocco. Subsequently, the parents transferred the whole of their land to the two brothers equally as tenants-in-common. After the death of the parents, the brothers fell out. Rocco denied that Sam had any interest in the land. One argument put forward by Rocco was that the parents could not give part of the land to Sam as it could not be subdivided. Sam sought a declaration that Rocco held his interest in the land on trust for Sam to the extent of Sam’s equitable interest in the land. The equitable interest was said to arise from a personal equity.

17. [138]

    In discussing personal equities, Rees J said:

18. [139]

    It is worth noting the arguments summarised by Rees J because of their relevance to the present submission by Mr Hanrahan:

19. [140]

    Her Honour then held:

20. [141]

    In the present case, the clear written agreement between the parties was that Mr Lockrey was only to have a life estate over the house. If, after any settlement using the transfer as signed, Mr Lockrey had resisted the notion that Mr Fussell was entitled to the rest of the property apart from the house, the issue could have been brought to a head by Mr Fussell lodging a caveat identifying his interest in the Deed and cl 49 of the contract.

21. [142]

    If all of that is correct, it only highlights the difficulty for Mr Hanrahan in submitting that there is no breach by his failure in relation to the life estate. If he had provided the appropriate advice, Mr Fussell or his solicitors, would have had the opportunity to negotiate with Mr Lockrey’s solicitors so that the rights of each them under the arrangement could have been protected. Agreement may have been reached for Mr Fussell to protect his interest by a caveat.

22. [143]

    The difficulty, however, with this solution to the problem is that there was no evidence about it from Ms Deigan. The submission that the contract could have settled with a subsequent agreement about the extent of Mr Fussell’s equitable interest, or the lodgement of a caveat identifying that interest, was not supported by evidence from Ms Deigan that she would have recommended it to Mr Lockrey or evidence of whether he was likely to have agreed to it. Since it was Mr Hanrahan who put forward this outcome in submissions, his failure to adduce evidence from Ms Deigan about it is significant. The plaintiff did not suggest this as a solution to the life estate problem, and so, asked no questions of Ms Deigan about it.

23. [144]

    To the extent that the submission was made to suggest no breach because of “no lost opportunity to have the contract ‘without the problem relating to the life estate’”, there is simply no evidence to support it. On balance, I cannot accept that the problem could have been resolved in that manner.

24. [145]

    What the evidence did tend to show in relation to the grant of the life estate was that it provided a barrier to the plaintiffs being able to obtain mortgage finance to assist in the settlement. Although the FASOC pleaded that Mr Hanrahan ought to have warned Mr Fussell that he would have difficulty getting finance from a major lender by reason of the life estate issue, no expert evidence was led from Mr Rosier about that the matter, nor was the allegation pursued by the plaintiffs in their submissions.

25. [146]

    I am satisfied that Mr Hanrahan was in breach of his duty of care by his failure to identify the discrepancy between the transfer on the one hand and the Deed and cl 49 of the contract on the other, and his failure to advise of the difficulties of giving effect legally to the agreement contained in the Deed and cl 49 of the contract.

Causation

1. [147]

   If I am wrong in my determination that Mr Hanrahan advised Mr Fussell about cl 33.2 and its effect, it is necessary to consider whether that breach on his part was causative of any loss. The principles governing the determination of causation are set out in s 5D of the Civil Liability Act 2002 (NSW) (the “CLA”). The determination of factual causation under s 5D(1)(a) is a statutory statement of the “but for” test of causation: the plaintiff would not have suffered the particular harm but for the defendant’s negligence: Adeels Palace Pty Ltd v Moubarak (2009) 239 CLR 420; [2009] HCA 8 at [55]; Strong v Woolworths Ltd (2012) 246 CLR 182; [2012] HCA 5 at 18.

2. [148]

   Even if it is accepted that Mr Fussell would have given instructions to Mr Hanrahan (whether at the suggestion of Mr Hanrahan or not) to negotiate to alter or delete cl 33.2, the evidence strongly suggests that no such agreement would have been reached with Mr Lockrey in that regard.

3. [149]

   Prior to the negotiations with Mr Fussell, Mr Lockrey had negotiated with two other intending purchasers of the property. The first of those were Mr and Mrs Calleja. The second was Mr Wang. In both cases, the form of the contract submitted to them by Ms Deigan contained a clause saying:

4. [150]

   How the contract with Mr Fussell came to a position of mutuality on the right to rescind was not made clear. There was only this evidence from Ms Deigan:

5. [151]

   Those earlier contracts and what Ms Deigan said to Ms Boustani tend only to show the importance of cl 33.2 to protect Mr Lockrey’s position.

6. [152]

   Ms Deigan also gave this evidence:

7. [153]

   When cross-examined about the advice she would have given to Mr Lockrey in those circumstances, Ms Deigan rejected the notion that she did not really know what advice she would have given or that she was speculating about it. She said:

8. [154]

   Ms Deigan also said that a clause like cl 33.2 became more important in a contract with a five year’ settlement period. She said:

9. [155]

   That was the extent of the evidence about the matter. The plaintiffs submitted that her evidence should not be accepted. They submitted that any advice she gave Mr Lockrey would have been given after “the ascertaining the relevant facts and obtaining informed instructions from the client.” What the information and informed instructions might have been was not disclosed. It was suggested it might have been about the relationship between Mr Lockrey and Mr Fussell, and about Mr Lockrey’s desires about the property and in relation to the rest of his life and his estate. None of that takes the matter any further.

10. [156]

    The plaintiffs submitted that the probabilities were that Mr Lockrey would have agreed because he was old and unwell, he wanted to sell the property before he died, he may have had difficulty finding another purchaser, and because of his close relationship with Mr Fussell he might have agreed to delete the clause.

11. [157]

    Mr Hanrahan submitted that the likelihood was that Mr Lockrey would simply have followed Ms Deigan’s advice. He pointed to Mr Fussell’s evidence that, when he accompanied Mr Lockrey to Ms Deigan’s office for Mr Lockrey to sign the contract, Mr Lockrey said, “I just signed it and left. I couldn’t be bothered reading it.” Mr Hanrahan submitted that this was an indication Mr Lockrey was content to leave those matters to Ms Deigan, the implication being that he would act on whatever she said. Mr Hanrahan submitted that Mr Lockrey did not need to sell the property and pointed to his withdrawal from an earlier proposed sale to Mr Wang because the terms Mr Lockrey wanted could not be agreed upon.

12. [158]

    There can be little doubt that a clause preserving the right of the parties to rescind on death was of much greater benefit to a vendor who was in poor health, and with the not unreasonable prospect in the Sydney metropolitan area, that the land was more likely to increase in value over the five year period than decrease. Further, I consider that the likelihood is that Mr Lockrey would have acted on Ms Deigan’s advice which, I accept, was that the clause should remain in the contract.

13. [159]

    Section 5E of the CLA places the burden on the plaintiff of proving, on the balance of probabilities, any fact relevant to the issue of causation. I do not consider that the plaintiffs have established on the balance of probabilities that they were deprived of a chance to have the contract amended to remove or amend cl 33.2 to remove the right of the vendor to rescind in the event that a party to the contract died before settlement.

14. [160]

    In relation to the life estate issue, I have determined that Mr Hanrahan breached his duty of care in failing to advise Mr Fussell of the problems in relation to the life estate and to the fact, in particular, that the transfer that was signed, and was required to be signed by the vendor, did not reflect the agreement Mr Fussell had reached with Mr Lockrey.

15. [161]

    As was made clear (at [21], [22] and [29] above), the plaintiffs’ case is that they would have given instructions to Mr Hanrahan to negotiate with the vendor’s solicitors to rectify the life estate issue.

16. [162]

    Ms Deigan’s evidence was this:

17. [163]

    Ms Deigan also gave evidence that she was well aware of how important the life estate was to Mr Lockrey. That evidence was admitted only as to her understanding and not as to the truth of the statement. However, an examination of the history of Mr Lockrey’s attempts to sell the property demonstrates that the issue of a life estate was of great significance to him, and that Ms Deigan’s understanding was well-based.

18. [164]

    In May 2010 Ms Deigan had told Mr Lockrey that there were only two ways to ensure he stayed in the property: either he did not sell or he obtained the grant of a life estate.

19. [165]

    In July 2010 Mr Lockrey and his solicitors conducted negotiations with Mr Wang with a view to Mr Wang purchasing the property. Mr Lockrey had told Ms Deigan that the prospective purchaser was okay with the life estate. However, a file note of Ms Boustani (who was principally handling the conveyance for Mr Lockrey) dated 28 July 2010 said this:

20. [166]

    Subsequent file notes indicated that the purchaser was having problems getting a loan because of the life estate, and Ms Deigan had a conversation with Mr Lockrey in these terms:

21. [167]

    In August 2016, when Mr Brown raised with CLS Legal the difficulties arising from inconsistency between the form of the transfer and the life estate arrangement in the Deed and cl 49 of the contract, and suggested a lease for life for Mr Lockrey, CLS responded by saying:

22. [168]

    Although Mr Rosier gave evidence that one possible way around the life estate problem was for the property to be transferred in fee simple to Mr Fussell and a possessory licence given to Mr Lockrey to occupy the house, it seems clear from the negotiations with Mr Wang that Mr Lockrey was not even prepared to accept a lease let alone a possessory licence which would not provide any firm guarantee of his position until he died.

23. [169]

    In my opinion, the plaintiffs have not discharged their onus of demonstrating that any negotiations would have resulted in Mr Lockrey agreeing not to require the life estate over the house. That left the life estate issue unresolved because of the difficulties associated with registration by reason of s 23F of the Conveyancing Act.

24. [170]

    Quite apart from my findings that the plaintiffs do not demonstrate a loss of chance in relation to the renegotiation of cl 33.2 and the life estate issue, the evidence to be considered later in this judgment demonstrates that Mr Fussell was never able to settle the contract before Mr Lockrey died and, in 2016, was not willing not do so on the amended terms proposed by Mr Lockrey. The cause of any loss suffered by the plaintiffs was not any breach on Mr Hanrahan’s part.

Claim against Mr Brown

1. [171]

   Mr Brown admitted a retainer to act for Mr Fussell in relation to the sale of the property and completion of the contract of sale. He admitted also a retainer with Blue Star in relation to unpaid rent under the lease.

2. [172]

   The particulars of breach of Mr Brown’s retainer did not differentiate between Mr Fussell and Blue Star. The breaches all concerned cl 33.2 and the life estate and included claims, now seemingly abandoned, that Mr Brown failed to warn and advise the plaintiffs about the inconsistency between the transfer and the agreement identified in the Deed and cl 49 of the contract.

3. [173]

   However, when pleading matters of causation, the plaintiffs alleged that Mr Brown’s negligence caused economic loss to Blue Star “as a result of the loss of opportunity to enjoy occupation of the Property beyond the period of the lease and related losses”. There was no pleading of a duty of care, nor any breaches, in relation to Blue Star’s occupation of the property after the lease expired. Nor did Mr Fussell give any evidence of having discussed with Mr Brown Blue Star’s intentions after the expiry of the lease, nor that money was being expended by Blue Star for the purpose of Blue Star’s occupation of the premises beyond the 6 year lease term. Mr Brown accepted, however, that he knew Blue Star intended to stay in occupation of the premises after the lease expired.

4. [174]

   The extent of Mr Brown’s duty to Blue Star concerned unpaid rent under the lease. The evidence disclosed that Mr Brown advised Mr Fussell, and thereby Blue Star, that in order to settle the contract prior to 10 May 2017 the arrears of rent would need to be paid up to date. There are no breaches pleaded concerning the lease.

5. [175]

   Although Mr Fussell claimed that he first found out about the provisions of cl 33.2 in May 2017 after Mr Lockrey died, I have found that Mr Hanrahan advised him about cl 33.2 before he entered into the contract with Mr Lockrey.

6. [176]

   If I am wrong in my determination that Mr Hanrahan advised Mr Fussell of cl 33.2, it needs to be determined whether Mr Fussell knew, in any event, about cl 33.2 at any time prior to Mr Lockrey’s death.

7. [177]

   Mr Fussell gave evidence that he had bought a lot of property with a delayed settlement. He then gave this evidence:

8. [178]

   In the specific performance proceedings he gave this evidence:

9. [179]

   In the present proceedings he was asked about having a copy of the special conditions in the contract and reading the contract. He gave this evidence:

10. [180]

    That evidence itself put the lie to Mr Fussell’s assertion the first time he became aware of cl 33.2 was in May 2017 after Mr Lockrey had died. The lie was perpetuated in Mr Fussell’s affidavit in reply to Mr Brown’s affidavit where Mr Fussell said:

11. [181]

    In his evidence, Mr Brown said:

12. [182]

    The lack of challenge to Mr Brown’s statement in that regard should also be seen in the light of the evidence of Mr Fussell’s desire to settle early because of his concern for Mr Lockrey’s health.

13. [183]

    Mr Brown gave evidence that in a telephone call with Mr Fussell on 14 June 2016 Mr Fussell said:

14. [184]

    Those two matters in combination (Mr Brown’s evidence of going through the special conditions and Mr Fussell’s desire to settle early because of Mr Lockrey’s health) point strongly to the fact that Mr Fussell was aware of cl 33.2. He did not challenge Mr Brown’s statement that he had agreed to the clause in the contract, and his concern that Mr Lockrey would die is very likely to have been because he was aware of the right of the vendor to rescind if a party died.

15. [185]

    I am satisfied, in any event, that Mr Brown drew Mr Fussell’s attention to cl 33.2 in 2016. Mr Brown, of course, was presented with a fait accompli in relation to the existence of cl 33.2 in the contract. In such circumstances he could only have breached his duty of care to Mr Fussell in relation to cl 33.2 if he failed to do what he could to endeavour to bring about settlement before Mr Lockrey died. That could only occur if Mr Lockrey was agreeable to bring forward the date of settlement, because the contract stipulated that settlement was to occur on 10 May 2017. In opening submissions, senior counsel for the plaintiff said that the claim against Mr Brown was “utterly dependent on agreement from Mr Lockrey to settle earlier than 10 May”. It is necessary, therefore, to see what Mr Brown did in that regard.

16. [186]

    On 19 July 2016 Mr Fussell sent an email to Mr Brown which said:

17. [187]

    Mr Fussell said that on or about 25 July 2016 he spoke with Lisa Badri, an employee at the Parramatta branch of St George Bank (“the Bank”). She told him the Bank had a problem settling the mortgage because Mr Lockrey had a life estate over the entire property.

18. [188]

    Although Mr Fussell claims that he then rang Mr Brown to tell him about the problem, there is no entry in Mr Brown’s electronic record of a phone call with Mr Fussell at that time. The electronic record and Mr Brown’s affidavit, suggests that Mr Brown became aware of the problem by reason of an email exchange between Ms Badri at the Bank and Mr Brown’s employee, Mr Sujono. Ms Badri had asked for the transfer to be amended. Mr Brown replied to Ms Badri’s email saying:

19. [189]

    That email was copied to Mr Fussell and he forwarded an email to Mr Brown on 28 August saying (inter alia):

20. [190]

    Mr Brown said that after he received Mr Fussell’s email he had a telephone conversation with Ms Pierce at CLS Legal. Later that day, Mr Brown received a letter from CLS Legal which said the following (inter alia):

21. [191]

    It seems likely from the terms of that letter that Mr Brown must have referred to the life estate issue that Ms Badri had raised.

22. [192]

    Mr Brown said that he had a conference with Mr Fussell where he said words to the following effect:

23. [193]

    It was in that meeting that Mr Fussell also told Mr Brown that he wanted to settle early because he was worried Mr Lockrey would die (see above at [183]).

24. [194]

    What was said by Mr Brown is largely borne out by his contemporaneous diary entry for that day and, in any event, it was not challenged in Mr Fussell’s affidavit nor in cross-examination. Mr Brown noted in his diary note that he was instructed to discuss issues with the vendor especially about the lease.

25. [195]

    On 11 August 2016 Mr Brown wrote a long letter to CLS Legal identifying the inconsistency between the transfer on the one hand and the Deed and cl 49 of the contract on the other. Mr Brown’s letter concluded by saying:

26. [196]

    On 8 August 2016, as mentioned earlier, Ms Pierce sent a letter to Mr Brown which said, inter alia:

27. [197]

    After a brief letter from Ms Deigan on 11 August saying she was seeking instructions in relation to the letter, Ms Deigan replied on 25 August 2016 in these terms:

28. [198]

    Mr Brown and Mr Fussell had a further conference on 29 August 2016 where words to the following effect were said:

29. [199]

    Following that meeting, Mr Brown wrote to Ms Deigan as follows:

30. [200]

    Ms Deigan replied on 2 September saying:

31. [201]

    Mr Brown responded in an email saying:

32. [202]

    Mr Brown said that he had no contact with Mr Fussell or CLS Legal between 3 September 2016 and 19 March 2017.

33. [203]

    Two things can safely be concluded from the foregoing evidence. First, the only way that settlement could occur prior to 10 May 2017 was if Mr Fussell was prepared to pay substantially more than the contract price for the property. Secondly, Mr Fussell was not prepared to pay an extra amount of money to settle early even if he had the means to do so. What Mr Fussell said in that conference with Mr Brown (at [198]) and the instructions given which are set out in Mr Brown’s letter to Ms Deigan (at [199] are to be compared with the case Mr Fussell now seeks to make, that he would have acted early to settle and that he had the funds to do so (see above at [30]).

34. [204]

    Mr Brown did not breach his duty of care in relation to his acts and omissions between the time he was retained and March 2017 when he next had contact from Mr Fussell. His advice to Mr Fussell that his options were either to settle then for $3.2 million or wait until settlement and settle for $1.7 million with the only options available to Mr Fussell. Senior counsel for Mr Fussell was critical of Mr Brown both in what he put to him in cross-examination and in submissions on behalf of Mr Fussell, that Mr Brown did not consider the third possibility which was that Mr Lockrey might die before settlement and the contract might be rescinded. That, however, is a misunderstanding of what Mr Brown was saying to Mr Fussell. The possibility that Mr Lockrey might die and the contract be rescinded was not an option for Mr Fussell. Certainly, Mr Lockrey’s dying and the contract being rescinded was a possible outcome of one of the options that Mr Fussell had, the option not to settle early by paying more money but waiting until the settlement date. But that possibility was out of Mr Fussell’s control unless he chose to settle early and pay more money, which option he did not accept or pursue. There were only two options for Mr Fussell, settle early by paying more, or waiting until settlement date.

35. [205]

    The evidence also suggests that Mr Fussell did not in August/September 2016 have the funds to complete the purchase because part of the funds he was relying on to do so were the funds being borrowed from the Bank. The Bank had made it clear that it was not prepared to lend that money whilst the transfer remained in the form it had been executed as required by the vendor. The vendor’s solicitor had made it clear that no other transfer or arrangement would be acceptable.

36. [206]

    The only reasonable conclusion is that Mr Fussell did not at that time have the funds to complete the settlement. He did not lead evidence from his sons or his friend Stephen Viglione that they would have lent him the money or had funds to do so in August/September 2016, as they gave evidence about in respect of May/June 2017 (see at [230]). That is not to say such evidence would have demonstrated that Mr Fussell had the funds in August/September 2016, but the absence of that evidence left the position as I have earlier indicated, namely, that he needed the loan from the Bank to settle, at least at the contract price. There was no evidence about where the extra sums demanded by Mr Lockrey would have been sourced. The requirement to pay that extra amount for an early settlement came after the time Mr Fussell claimed to have the funds to settle, which funds included the loan from the Bank.

37. [207]

    On 20 March 2017 Mr Fussell sent an email to Mr Brown saying that he needed $450,000.00 to make up the balance of the funds. He said the other money was in his account.

38. [208]

    It seems likely from some conversations reported by Mr Fussell and Mr Brown that Mr Brown made an offer to speak to someone who might have been able to assist Mr Fussell with funds, but that did not eventuate.

39. [209]

    On 19 April 2017 Mr Fussell sent Mr Brown an email in these terms:

40. [210]

    On 19 April 2017 Mr Brown replied dealing with the land tax and rates issues. He also raised an issue with the lease in relation to whom the rent should be paid after settlement. The email then said:

41. [211]

    On 1 May 2017 Mr Brown had a telephone conversation with Mr Fussell where Mr Fussell said:

42. [212]

    Mr Fussell denied that this conversation took place. However, there is an entry in Mr Brown’s electronic record for 1 May 2017 at 12:12 that says:

43. [213]

    On 3 May 2017 Mr Brown sent an email to Mr Fussell which said:

44. [214]

    Mr Fussell also claimed that he did receive this email. The email forms part of an email chain that commenced with Mr Fussell’s email of 19 April 2017. A copy of the email is in Mr Brown’s records and there is separately an entry in his electronic records identifying an email to Mr Fussell at 11:38 on 3 May 2017.

45. [215]

    In coming to the view I have formed that Mr Brown sent this email and Mr Fussell received it, I have taken into account Mr Fussell’s denial of the telephone conversation on 1 May 2017 which has been clearly demonstrated to have occurred, with the substance of it being (as in the email) that Mr Fussell would get back to Mr Brown when his funds were available.

46. [216]

    On 13 May 2017 Mr Brown sent an email to Mr Fussell saying:

47. [217]

    Mr Fussell replied by an email sent on 14 May 2017 saying:

48. [218]

    On 16 May 2017 Mr Brown sent an email to Ms Deigan confirming that he was seeking to arrange settlement of the matter. He mentioned the signed transfer that they held and said stamp duty had been paid and the transfer marked accordingly. The email concluded by saying:

49. [219]

    Later that day Ms Deigan emailed asking for a copy of the transfer. Then on 18 May 2017 she sent a letter to Mr Brown saying:

50. [220]

    Effectively, only two complaints are made about Mr Brown. The first is that he failed to advise Mr Fussell of the presence of cl 33.2 until after Mr Lockrey had died. Secondly, he failed to arrange settlement of the contract prior to Mr Lockrey’s death.

51. [221]

    For the reasons already given, not only did Mr Brown inform Mr Fussell of cl 33.2 before Mr Lockrey’s death, but Mr Fussell was well aware of cl 33.2 because he had been advised about it by Mr Hanrahan and, even if that is not correct, he was aware of it by the time he came to see Mr Brown because he had read the clause after Mr Hanrahan sent him copies of the special conditions. It was because he was aware of the clause that he sought to settle the contract early when he first came to see Mr Brown. He told Mr Brown he was worried that Mr Lockrey might die. That concern reinforces the view I have that Mr Fussell was well aware of cl 33.2 when he retained Mr Brown to act for him.

52. [222]

    Nor did Mr Brown breach his duty of care by failing to arrange settlement of the contract prior to Mr Lockrey’s death. The evidence discloses clearly that in August and September 2016 Mr Fussell did not then have the funds to complete the settlement because the Bank was not prepared to lend him the money that he needed to top up what he had to pay the purchase price. That was because of the issue with the life estate.

53. [223]

    But quite apart from that issue, the evidence discloses that Mr Lockrey was only to prepared to settle at that time if Mr Fussell paid an extra $1.5 million being $1 million for the life estate and the further $500,000.00 which the vendor’s solicitor was claiming Mr Fussell owed as payment in connection with various items he was acquiring in addition to the property. That latter amount was said to have been paid prior to exchange. Mr Fussell made it clear to Mr Brown, and it was conveyed to Ms Deigan, that Mr Fussell was not prepared to pay the extra amounts demanded for early settlement.

54. [224]

    In the conversation on 1 May 2017, Mr Fussell said he was arranging funds to complete the purchase. Mr Brown told him to let him know when he was ready and Mr Brown would contact the solicitors to arrange settlement. That was followed by Mr Brown sending an email which stressed that he needed to know when Mr Fussell had the funds to complete. The email asked Mr Fussell to get back to him so that they could arrange settlement.

55. [225]

    Mr Fussell thereafter made no contact with Mr Brown until Mr Brown sent another email on 13 May 2017 saying that he had not heard from him. That prompted Mr Fussell’s email of 14 May which told Mr Brown that Mr Fussell had “money coming in during this next week which complete the funds”. Thereafter, Mr Fussell did not let Mr Brown know that he had the funds and the notice of rescission was served by Ms Deigan.

56. [226]

    Mr Fussell maintained that he had the funds to complete, and that the email of 19 April 2017 (at [209] demonstrated he did so because it asked Mr Brown “How would you like the funds paid?”. Mr Fussell said that the fact he asked, in effect, who the cheques should be paid to demonstrated that he had the funds.

57. [227]

    In my opinion, it should not be inferred from Mr Fussell’s enquiry about how the funds were to be paid that Mr Fussell had the funds at that point. First, the seeking of information about the payees of the cheques is information that is merely preliminary to having the funds. Secondly, the email commences by saying, “I am just organising a few things to finalise matters”. Thirdly, in the telephone conversation of 1 May 2017, Mr Fussell said “I am arranging the funds to complete the purchase”, and Mr Brown asked Mr Fussell to let him know when he, Mr Fussell, was ready. Fourthly, in the email of 3 May 2017, Mr Brown said, “Let me know about the funds as we need to arrange the funds to be in either available in PEXA or in our trust account”.

58. [228]

    Fifthly, Mr Fussell’s evidence in his affidavit in the specific performance proceedings was that he did not have the funds ready to go on 10 May 2017 because he was waiting to get a better deal from Auswide Asset Management. In the present proceedings. Mr Fussell said that the evidence he gave in the specific performance proceedings was wrong and the true position was he did not settle because he was waiting to hear from Mr Brown. If Mr Fussell had been waiting to hear from Mr Brown, one would have expected his email to Mr Brown of 14 May 2017 (which responded to Mr Brown’s email of 13 May 2017) to have said that he had been waiting to hear from him and that he had had the funds from April 2017. Instead, it said he had money coming in during the following week. The evidence of Mr Brown’s phone call on 1 May 2017 and his email of 3 May 2017 to Mr Fussell demonstrates that Mr Fussell’s evidence in the present proceedings that he was waiting to hear from Mr Brown is false, and what was not said in his email of 14 May 2017 is supportive of that determination. The explanation given in the specific performance proceedings should be accepted as being true. Sixthly, Mr Fussell gave this evidence in the present proceedings:

59. [229]

    Finally, (as noted above) in Mr Fussell’s email of 14 May 2017, he said, “I have some money coming in during this next week which will complete the funds required”.

60. [230]

    At the trial, Mr Fussell led evidence from Mr Stephen Viglione, and Mr Fussell’s sons that his sons and Mr Viglione were prepared to lend him money if he needed to complete the purchase. All of those witnesses, except Clayton Fussell, agreed that Mr Fussell had never actually asked for the money. Mr Viglione’s evidence that Mr Fussell never “actually asked” him to borrow the money is in stark contrast to a conversation Mr Fussell records that he asked Mr Vigilone for the money and Mr Viglione agreed to lend it to him. I prefer Mr Vigilone’s evidence, partly because of the general unreliability of Mr Fussell’s evidence but also because Mr Viglione did not have an interest in the proceedings, and to the extent that his evidence was designed to assist Mr Fussell, his statement did not in fact assist Mr Fussell and is more likely to be true.

61. [231]

    I do not accept Mr Clayton Fussell’s evidence that his father did request to borrow Mr Clayton Fussell’s money. He did not say so in his affidavit sworn in the specific performance proceedings, where it might have been expected to be significant evidence, because a party seeking specific performance must show that they are in a position to settle. Nor does Mr Clayton Fussell say in his affidavit in these proceedings that his father had requested a loan from his funds. In his affidavit, Mr Bernard Fussell refers only to his sons, Martin and William, and to Mr Viglione, being prepared to lend him money. If, as Mr Clayton Fussell insisted, his father actually asked him to borrow money at the time, I would have expected Mr Bernard Russell to have said so in his affidavit.

62. [232]

    Quite apart from that, the inquiry is not whether Mr Fussell could have obtained those funds at that time by borrowing from other people. Rather, the inquiry is whether he had the funds at the time and had informed Mr Brown that he did so, so that settlement could be arranged. Neither Mr Fussell nor Mr Brown records any communication from Mr Fussell in April/May 2017 that he had sought or borrowed money from any of his sons or Mr Vigilone. All of those persons said that they had the funds available. That is inconsistent with what Mr Fussell was telling Mr Brown from 19 April up to 14 May 2017.

63. [233]

    In the same way, the evidence that Mr Fussell gave about the fact that he could have sold silver bars or machinery, as unsatisfactory as that evidence was in any event, misses the point entirely that he had not done so by 14 May 2017.

64. [234]

    The earliest date this contract could, in theory, have settled was 10 May 2017, and that would have been by agreement between the solicitors. That could only have occurred if Mr Fussell had the money and Mr Brown had made the necessary arrangements with CLS Legal. If the matter did not settle on that date, the first date that settlement could have been compelled was 14 days after service of a Notice to Complete by Mr Brown. Again, such a notice could not be served until Mr Fussell had the funds. But by that time Mr Lockrey would have been dead.

65. [235]

    The service of a notice to complete by Mr Brown would not have prevented the vendor from rescinding on the basis of cl 33.2: Ogle v Comboyuro Investments Pty Ltd (1976) 136 CLR 444 at 460-461. The plaintiffs no longer rely on that allegation of breach.

66. [236]

    The evidence clearly points to the conclusion, and I so find, that Mr Fussell was not in a position to settle prior to Mr Lockrey’s death, and that was no fault of Mr Brown. It was, first, because Mr Fussell was not prepared to pay more to settle early and there was no evidence that he had the funds to do so, contrary to the submission made by him. Secondly, it did not settle at or around 10 May 2017 because he did not have the funds to do so.

67. [237]

    Mr Brown did not breach his duty of care to the plaintiffs. He did everything he could in an endeavour to provide for settlement of the contract both in August 2016 and again in May 2017. In August 2016 Mr Fussell refused to pay any more than the purchase price for his desire to settle early, and that was not accepted by Mr Lockrey. In April and May 2017 Mr Brown did what he could to remind Mr Fussell of the need to have the funds available so settlement could be arranged. Mr Fussell did not have the funds until some time after Mr Lockrey’s death when settlement became impossible.

68. [238]

    For the same reasons, any loss suffered by the plaintiffs by not completing the contract and from the notice of rescission was solely caused by Mr Fussell not having the funds to complete.

69. [239]

    In that way also, Mr Hanrahan’s breach in not picking up on the life estate issue was not causative of any loss. The problem with the life estate played no part in the failure to settle. All the evidence showed that Mr Fussell intended to settle on the basis of the transfer as signed. He just did not have the funds to do so.

Damages

1. [240]

   Judges at first instance are encouraged, where they find judgment for a defendant to embark, nevertheless, on a hypothetical calculation of damages, in the event that they are found to be in error on liability. That is often a relatively straightforward exercise where the claim is one for personal injury or medical negligence. It is not so straightforward in commercial cases or cases such as the present, because so much depends on discrete fact finding. One of the particular difficulties in the present case is that the damages claimed are for loss of a chance to achieve certain things. My findings, particularly in relation to whether Mr Lockrey would have agreed to changes in the contract, make it difficult to proceed on a different hypothetical.

2. [241]

   Nevertheless, what follows is put forward on the assumptions that both Mr Hanrahan and Mr Brown breached their duties of care to both Mr Fussell and Blue Star, and that those breaches caused the losses claimed by both plaintiffs.

3. [242]

   The plaintiffs submitted that the loss of chance was in the order of 80%. Mr Brown submitted that, if the Court finds that Mr Fussell suffered a loss of opportunity to settle early or by 10 May 2017, the value of the loss is to be assessed on the probabilities that an early settlement would have occurred. Mr Brown submitted that the probabilities of that occurring were nil or very low because Mr Fussell had rejected an offer to settle early for the payment of an extra $1.5 million. Mr Brown submitted also that the loss of opportunity should be subject to a substantial reduction on the basis that Mr Fussell did not have the funds to settle by or about 10 May 2017 before Mr Fussell’s death. For present purposes, I must assume that Mr Fussell did have the funds to complete on or about 10 May 2017 and that settlement would have been achieved.

4. [243]

   In relation to Mr Fussell, his loss is confined to the value of the land. Valuations of the land were obtained at various dates. Ultimately, agreement was reached as to the value of the land at various dates. The dates and values are as follows:

5. [244]

   The plaintiffs submitted that the appropriate date was December 2019 when the Court of Appeal gave judgment, alternatively, October 2017 when the notice of rescission was served. Mr Brown submitted that the appropriate date was May 2017 when the cause of action accrued. Mr Hanrahn submitted that the appropriate date was the date the contract was entered into, when Mr Fussell did not get the package of rights he had contracted for. That is to say, he obtained a contract saddled by cl 33.2 and the life estate issues. Mr Hanrahan relied in that regard on what was said in D’Agostino v Anderson [2012] NSWCA 443 at [11]. D’Agostino was one of many cases to like effect that relied on what was said in Forster v Outred [1982] 1 WLR 86; [1982] 2 All ER 753 and subsequently in Wardley Australia Ltd v Western Australia (1992) 175 CLR 514; [1992] HCA 55.

6. [245]

   In my opinion, entry into the contract containing cl 33.2 amounted to no more than sustaining “a detriment in a general sense” (Wardley at 527). The joint judgment in Wardley went on to say (at 527):

7. [246]

   In HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd (2004) 217 CLR 640; [2004] HCA 54 the Court said:

8. [247]

   I do not consider that Mr Fussell did not get the package of rights he contracted for. The life estate was exactly what he had agreed with Mr Lockrey. The only problem was the form of the transfer. Certainly, cl 33.2 gave the parties the right to rescind if a party died, but that right was mutual. There is no suggestion that Mr Fussell paid more for the property than it was worth with cl 33.2 included. No loss could be suffered until Mr Lockrey died and his estate exercised its right of rescission, if it did so.

9. [248]

   In my opinion, the appropriate date to calculate the loss of profit from the value of the land is October 2017. That was the earliest time the contract could have been rescinded. Ms Deigan did not obtain probate until 21 September 2017. The earliest date on which Mr Brown could have served a Notice to Complete, on the assumption that Mr Fussell had the funds to complete, was 11 May 2017. Mr Lockrey’s death then intervened. Ms Deigan could not respond to any Notice to Complete served by Mr Brown before she obtained probate. Until the contract was rescinded, Mr Fussell has suffered no loss.

10. [249]

    The plaintiffs say that the sum of $2,304,000 needs to be deducted from the valuation figure of $5,550,000 leaving a loss to Mr Fussell of $2,304,000. The amount of $2,304,000 is made up of $1,650,000 (balance of purchase price), $1,500,000 (extra price demanded), and $96,000 (outstanding rent). The deduction of $1,500,000 is only relevant on the basis that settlement was to occur prior to 10 May 2017, and more likely in August 2016 when that amount was demanded. Settlement prior to 10 May 2017 is not a realistic hypothetical because Mr Fussell declined to agree to settlement early on that basis. The damages must be calculated on the basis that settlement at or around 10 May 2017 was thwarted by the breaches of either or both or Mr Hanrahan and Mr Brown. Further, the rent was not owed by Mr Fussell. It should not be deducted from anything to which he is entitled.

11. [250]

    All that should be deducted from the valuation at October 2017 is the balance of the purchase price. Mr Fussell’s damages amount to a percentage of $3,900,000 ($5,550,000 - $1,650,000).

12. [251]

    If I am wrong in concluding that Mr Fussell did not, on the balance of probabilities, lose the opportunity to have the contract amended by the removal of cl 33.2, I consider that the prospects of success of doing so do not exceed 25%. In reaching that assessment I have regard to Ms Deigan’s evidence of the advice she would have provided to Mr Lockrey, and to the history of the proposed sale by Mr Lockrey and what is reported of his approach to the legal issues by Ms Deigan and Mr Fussell (referred to above at [149]-[154]).

13. [252]

    The claim on behalf of Blue Star against both Mr Hanrahan and Mr Brown is for all of the amounts paid as rent, insurance, rates, and other property expenses (hereafter referred to as the “property expenses”) for the six years of the lease, together with Mr Fussell’s legal costs in the specific performance proceedings, and the costs Mr Fussell was ordered to pay Mr Lockrey with respect to those proceedings.

14. [253]

    Since the property expenses are said to fall within the description of reliance damages, the assumption must be, although this was not made clear in the plaintiffs’ submissions, that these expenses were expended because Blue Star would be conducting its business at the property after the six year lease expired.

15. [254]

    There are a number of problems in relation to Blue Star’s claim. First, before Blue Star was incorporated, Blue Star Enterprises (a partnership between Mr Bernard Fussell and one or more of his sons) moved onto the property, paying rent to Mr Lockrey of $1000 per week with no lease in place between them. Blue Star Enterprises continued to conduct its business from the property, at least up until April 2016, as Mr Fussell admitted. Further the business conducted on the property by Blue Star Enterprises was “very similar” to the business conducted by Blue Star. Blue Star Enterprises owned all of the plant, vehicles and equipment. Blue Star Enterprises owned the only EFTPOS terminal on the property. Blue Star Enterprises made some of the rent payments under the lease that Blue Star entered into with Mr Lockrey. Indeed, in the specific performance proceedings it was only Blue Star Enterprises that was pleaded as conducting business from the property. Blue Star was said to be only the lessee under the lease.

16. [255]

    Despite that intermingling of the affairs and businesses of Blue Star and Blue Star Enterprises, the plaintiffs’ approach was to tender in Exhibit BJF-2 and Exhibit E bundles of documents containing rent receipts, bank statements and other financial documents, some of which, in any event, made clear that it was Blue Star Enterprises which had borne the liability. Initially, schedules in the Court Book at pp 1659ff, and subsequently MFI 9 were relied on as proof of Blue Star’s loss. Objection was taken to those documents, and I ruled that they could only be regarded as submissions.

17. [256]

    The plaintiffs’ written submissions identified totals of categories of expenses which cannot be accepted at face value as demonstrating what Blue Star had incurred, by reason of Blue Star Enterprise’s involvement, as mentioned above.

18. [257]

    Secondly, if, as seems to be the case the plaintiffs were putting forward, the total of the expenses incurred by Blue Star for the period of the lease were incurred only as setting up costs, as it were, to what the plaintiffs were intending after the six year lease period, Blue Star would have to give credit, at least, for the profits it made during the six year lease period that it carried on business at the property. That was a matter I raised with Senior counsel for the plaintiffs who submitted that any such profits would not need to be brought to account. This was because the money was expended to improve the property for the running of the business after the lease expired. He submitted that because that never eventuated, all of the expenditure was wasted. However, Mr Fussell said in his affidavit that he wanted Blue Star to make a profit to cover the lease and outgoings to develop a business which he would sell.

19. [258]

    In my opinion, on the assumption that the expenditure is recoverable from the defendants, credit must be given for profits made along the way. There was no evidence showing what profits had been made. For example, Blue Star’s tax returns for the period of the lease were not tendered. Without that evidence, the plaintiffs fail to establish their loss from the expenditure, on the basis that any damages awarded may well constitute a windfall.

20. [259]

    Thirdly, in relation to the legal costs associated with the specific performance proceedings, it cannot be said that Mr Lockrey’s costs, which were ordered to be paid by the Court, were paid by Blue Star to mitigate its loss. It was only Mr Fussell who was ordered to pay Mr Lockrey’s costs. By that stage, Mr Fussell had lost the case. Payment by Blue Star when the case was lost cannot have been with the intention to mitigate or reduce any loss that might otherwise be sustained. Not only was Mr Fussell ordered to pay the costs, he alone entered into a Deed with Ms Deigan as Mr Lockrey’s executor dated 1 May 2020 whereby he became liable for the costs as agreed.

21. [260]

    Funding Mr Fussell’s litigation before the outcome is known is, on the other hand, capable of amounting to mitigation, all other things being equal. However, all other things are not equal. As I have determined, Mr Hanrahan’s retainer by Blue Star was limited to perusing and advising on the lease and arranging for it to be executed. Mr Brown’s retainer by Blue Star was related only to its rental arrears. Mr Fussell did not provide information to either solicitor of his intentions beyond the six year period. It is accepted that Mr Brown said that he was aware that Mr Fussell’s plan was that Blue Star would remain in the possession of the property beyond the six year lease. He denied that he knew that if Blue Star was not able to stay at the property beyond that six year period it would suffer a loss. No further questions were put to him after that denial.

22. [261]

    In circumstances where neither solicitor had been apprised of Mr Fussell’s and Blue Star’s intentions beyond carrying on business during the six year lease, and where neither solicitor owed any duty of care to Blue Star in respect of its business generally, damage suffered by Blue Star by voluntarily taking on responsibility for the payment of Mr Fussell’s legal fees to mitigate its loss is too remote.

Conclusion

1. [262]

   I make the following orders:

   1. (1)

      Judgment for the first and second defendants.

   2. (2)

      Judgment for the third defendant.

   3. (3)

      The plaintiffs are to pay the defendants’ costs.