Cadoks Pty Ltd v Wallace Westley & Vigar Pty Ltd
[2000] VSC 167
•10 May 2000
| SUPREME COURT OF VICTORIA | |
| COMMON LAW DIVISION | Not Restricted |
No. 5477 of 1995
| CADOKS PTY LTD (ACN 006 335 173) | Plaintiff |
| v | |
| WALLACE WESTLEY & VIGAR PTY LTD (ACN 008 075 090) | Defendant |
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JUDGE: | Ashley J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 22, 24, 27, 28, 29, 30 September; 1 October 1999 | |
DATE OF JUDGMENT: | 10 May 2000 | |
CASE MAY BE CITED AS: | Cadoks Pty Ltd v Wallace Westley & Vigar Pty Ltd | |
MEDIUM NEUTRAL CITATION: | [2000] 167 | |
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Solicitor and client – scope and limits of retainer – breach of retainer – breach of common law duty of care – contributory negligence – Astley & Ors v Austrust Ltd (1999) 73 ALJR 403 – damages – opportunity lost to sell property in a favourable market – sale made in a depressed market – causation and remoteness of damage
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APPEARANCES: | Counsel | Solicitors |
For the Plaintiff | Mr R. Meldrum QC with | Maddens Lawyers |
| For the Defendant | Mr P. Riordan | Hall & Wilcox Lawyers |
TABLE OF CONTENTS
THE CLAIM AND DEFENCE SUMMARISED................................................................................................................. 1
MESSRS CHARLICK AND WESTLEY.............................................................................................................................. 3
MR CHARLICK'S SCHOOLING AND EMPLOYMENT HISTORY........................................................................ 4
FIRST CONTACT BETWEEN MR CHARLICK AND THE DEFENDANT IN 1986........................................... 5
THE SEQUENCE OF EVENTS.............................................................................................................................................. 6
DAMAGES.................................................................................................................................................................................. 30
Extra moneys required to settle...................................................................................................................... 30
Additional legal costs incurred....................................................................................................................... 32
Interest paid on extra moneys required to settle...................................................................................... 32
Interest paid on additional legal fees............................................................................................................ 36
Loss on sale of property....................................................................................................................................... 37
INTEREST FOREGONE........................................................................................................................................................ 69
TO WHAT JUDGMENT IS THE PLAINTIFF ENTITLED?...................................................................................... 71
HIS HONOUR:
The claim and defence summarised
On 14 February 1986 Cadoks Pty Ltd ("Cadoks") entered into a terms contract for the purchase of a farming property known as Weerangourt East at Byaduk south of Hamilton from Daneia Park Pty Ltd. The purchase price of $631,150, representing about $650 per acre for a property on five titles totalling about 971 acres, was payable by a deposit of $161,400 (partly on signing and partly on 9 May 1986), by a payment of $287,500 on 9 May 1986, and by a final payment of $180,000 on 8 May 1989 or earlier agreed date. Interest was payable on the residue at 12½% per annum.
The plaintiff paid the deposit and the first amount of residue and went into occupation in May 1986.
Cadoks was and is trustee of the Peter Charlick Family Trust. In substance, though not in form, Mr Charlick was the purchaser.
Cadoks, having gone into occupation, leased the property to a farming partnership constituted by Mr Charlick and his wife Susan. The partnership conducted a mixed farming operation on the land in the succeeding years.
As the contract required, interest was paid on the residue between the time when the plaintiff went into occupation and December 1988. But the plaintiff did not pay the resident of $180,000 by 8 May 1989.
The vendor gave notice of rescission. The notice, dated 9 May 1989, specified a period of 15 days from the date of giving the notice within which the default must be remedied.
The default continued until 30 May 1989. On that day an amount representing the residue plus penalty interest was tendered. Apparently, the solicitor who made the tender on the plaintiff's behalf made it clear to the vendor's solicitors that the plaintiff would in addition be prepared to pay reasonable damages. Be that as may, the tender was rejected.
The plaintiff quickly commenced a proceeding in this Court seeking, inter alia, a declaration that the rescission was ineffective; and alternatively relief, on terms, against forfeiture of its interest in the land.
The proceeding was eventually compromised by Cadoks agreeing to pay the vendor $246,000 – being residue, interest and costs - in return for transfer of title. Agreement was reached in May 1990. Payment and transfer were to take place on 15 June 1990. But the mortgagee from the vendor had lost the certificates of title. It was necessary that application be made for cancellation, and for issue of replacement titles. Those steps delayed settlement until 13 (perhaps 15) September 1990, by which time replacement titles had apparently been issued.
The plaintiff sold the property by contract of sale dated 27 August 1993. The sale price was $679,223 – that is, about $700 per acre. The sale was completed on 4 January 1994. According to the plaintiff's case the property had been on the market since title was obtained in 1990; but no satisfactory offer had earlier been made.
At different stages of the purchase of Weerangourt East the defendant, Wallace Westley and Vigar Pty Ltd, a company carrying on business as "Wallace & Co" at Naracoorte in South Australia, acted as solicitors for Cadoks. The particular solicitor involved was Mr Peter Westley.
Cadoks now sues the defendant alleging, in substance, that Mr Westley failed to exercise due care, skill and diligence in acting for it, whereby it suffered loss and damage. The claim is laid both in contract and in tort.
In respect of damages, the plaintiff claims that it incurred additional expenditure by reason of the rescission. It claims the amount of that expenditure, and interest incurred thereon. It further claims that it intended to and would have effected the sale of the property during 1989, that being a time when prices were buoyant; but that it was prevented from doing so by the defendant's default. The consequence, says the plaintiff, is that it eventually sold at a substantial discount to the price it would have achieved in a 1989 sale. It says, moreover, that it was deprived of the use of the proceeds, and thereby investment income.
The defendant, by its defence, admits that it owed the plaintiff contractual and common law duties of care. But it says that it was retained solely to provide "legal services and advice to the plaintiff in respect of matters of law pertaining directly to the purchase of the property".
The defendant admits forwarding a copy of the rescission notice to the plaintiff, and asserts that it advised the plaintiff of its ramifications.
The defendant denies breach of duty, whether contractual or tortious. It alleges, alternatively, contributory negligence.
As to loss and damage, the defendant pleads that any loss was attributable to the plaintiff's inability to settle – which was, on the defendant's case, not attributable to any fault on its part.
In argument, counsel for the defendant raised a particular argument in respect of the plaintiff's claimed loss and damage to which I should now briefly refer. He submitted that on no view could the plaintiff recover damages for loss on sale of the property where the loss was attributable to a general decline in the property market.
Messrs Charlick and Westley
Messrs Charlick and Westley were the leading players in the events which culminated in the rescission of the contract. Mr Charlick also played a leading role in events which occurred thereafter from the plaintiff's perspective.
Counsel for the plaintiff sought to portray Mr Charlick as a poorly educated not very intelligent man whose deficiencies were so obvious that Mr Westley could not have but become aware of them. Counsel for the defendant attacked Mr Charlick's credibility in the course of an attack on the reliability of his evidence.
I later conclude that in a number of respects I do not accept evidence given by Mr Charlick. On the other hand, I also later conclude that I do not accept certain parts of Mr Westley's evidence.
Focussing on Mr Charlick, for the most part I consider that where his evidence was inaccurate it was not deliberately so; but rather reflected understandable difficulties of recollection, and at times a simplistic extrapolation of his actual recollection to his apparent advantage. Mr Charlick is a man, I consider, of pretty limited horizons, cautious, and stubborn. Those features of his character reflect the fact that he is not very clever, and that he does not have (and did not have at relevant times) a ready understanding of issues.
I find it hard to believe that the character traits to which I have just referred, and their root causes, did not impress themselves upon Mr Westley. But my conclusions decisive to determination of this proceeding do not depend upon my drawing such an inference.
Mr Westley has been a solicitor in South Australia since 1978. He completed his articles with Wallace & Co, and has been a partner since about 1980. He appears to have been an experienced conveyancer in South Australia as at 1989; but he was not an experienced conveyancer in Victoria. The evidence showed that there were differences in South Australian and Victorian land law at the relevant time. I consider that Mr Westley was not keenly aware of those differences in 1989. In his evidence he relied upon file notes which he made from time to time. The quality of the file notes was poor. I consider that parts of his evidence, file notes or not, were inaccurate. But I do not consider that his evidence was deliberately false.
Mr Charlick's schooling and employment history
The evidence showed that Mr Charlick was born in Adelaide and that he moved with his father to a property in south-eastern South Australia when he was aged about ten. He was a poor scholar and left school at Year 3 level when aged 17. He worked on the family farm and did some contracting work. In the early 1980s he bought part of the family farm, but not in an arm's length transaction. After about 2½ years he sold the property, leasing it back for about a year. During that time he looked about – in Victoria, Northern New South Wales and Queensland - for a new property. Eventually he came upon Weerangourt East. By the time a contract was signed about 3½ years had passed since he sold the South Australian land. He gave evidence that his first dealings with the defendant were when Mr James Wallace acted for him in the purchase and sale of the South Australian property.
First contact between Mr Charlick and the defendant in 1986
Mr Charlick gave evidence that when the Victorian property was to be purchased he attended Mr Wallace, who referred him to Mr Westley; and that it was Mr Westley who advised him that the property should be purchased by a company as a trustee of a family trust, it being leased to a farming partnership consisting of Mr Charlick and his wife. He also said that it was Mr Westley who told him that there would be an advantage in entering into a terms contract of sale – that is, by delaying the obligation to pay stamp duty.
Mr Westley gave quite different evidence. He said that the plaintiff's accountant had given him instructions to purchase a shelf company and draw up a trust deed in 1985; and that the first he knew of the contract for the purchase of Weerangourt East was when the contract was referred to him by the vendor's agent, already executed.
So far as I can see neither account was the subject of cross‑examination. The one emphasised, and the other downplayed, the extent of Mr Westley's early involvement in the purchase of the Byaduk land. Mr Charlick's account tended to portray him as having no great understanding of tax and succession matters.
The form of the contract favours Mr Westley's account of events. I entertain some doubt whether he appreciated the stamp duty implications of a terms purchase in 1986. But I do not find it necessary to decide whether the evidence of one or the other witness should be accepted.
What is significant, for present purposes, is that Mr Westley became aware in 1986 that the plaintiff had executed a terms contract; and that he acted for the plaintiff at the time. Necessarily, he became aware in 1986 that the residue was due on 8 May 1989.
I do not doubt that Mr Charlick was advised, whether it was by his accountant or by Mr Westley, that there were succession and tax advantages in the property being purchased by a trustee and by its being leased to and run by a farming partnership; and this advice he broadly understood. Equally, I am satisfied that someone – be it Mr Charlick's accountant, Mr Westley, or perhaps the vendor's agent – mentioned to Mr Charlick the stamp duty benefit of a terms contract; and that he understood the nature of that benefit. But it does not matter who provided Mr Charlick with the particular information.
The sequence of events
In addition to the contract for sale the plaintiff and the vendor entered into what was called an "agreement of conditions" for occupancy arrangements before the date of preliminary settlement. The evidence showed that dispute arose between vendor and purchaser about a number of those arrangements, that Mr Westley was made aware of the dispute and that he entered into some correspondence about it. The evidence also showed that on one occasion, made known to Mr Westley, the vendor complained about late payment of interest; and that some penalty interest had to be paid. The disputation and the incident concerning late payment of interest took place in 1986 and January 1987 respectively. They were some evidence of a prickly relationship between vendor and purchaser.
The contract was due for final settlement on or before 8 May 1989. As early as 16 February 1989 the vendor's solicitors wrote to the defendant confirming that fact. They sought a transfer for execution by the vendor and the purchaser's calculation of the amount, including interest, that would be payable. The letter was followed up by a reminder letter dated 8 March.
On 17 March Mr Westley wrote to Mr Charlick. He confirmed receipt of advice from the vendor's solicitors that the balance of purchase moneys was payable on 8 May. He enclosed transfers for execution and speedy return, and enquired "which branch of which bank will be providing the funds on your behalf at settlement".
Mr Charlick gave evidence, which I accept, that even before receiving the letter of 17 March he had been enquiring about finance. He said that he did so in the context that interest rates were rising, and that early completion might be to the plaintiff's advantage. He had approached the ANZ Bank in late 1988. He had been advised that he would do better by borrowing from the Rural Finance Corporation ("RFC"). Then, in February 1989, he had asked Mr Widdicombe, the physical manifestation of the vendor, if the vendor would be prepared to re-finance at a "more realistic interest rate at the time". The vendor had not been willing to do so.
On 22 March 1989, according to Mr Charlick, he discussed the situation concerning finance with his accountant. The latter enquired of solicitors in Warrnambool whether mortgage moneys were available. That got nowhere. So on or about 22 March 1989 he collected an application form from RFC. His understanding, from what he was then told by an RFC employee, was that it would take two weeks to obtain an approval. I accept those parts of Mr Charlick's evidence.
On 28 March 1989 Mr and Mrs Charlick drove to Naracoorte, a journey of about three hours, to meet with Mr Westley. It is common ground that Mr Westley took instructions for their wills; and that there was some discussion about re‑financing Weerangourt East. I am satisfied that Mr Charlick told Mr Westley that an application for finance would be lodged with RFC, and that he referred to a possible alternative source of funds. I am satisfied also that Mr Westley told Mr Charlick that he needed to get his finances sorted out.
Mr Westley made a very brief file note on 28 March. It is far from a complete account of what transpired at the meeting. But I accept that it accurately reflects what Mr Westley told Mr Charlick about the need for him to get finance. Whether or not Mr Westley plainly told Mr Charlick that this needed to be done quickly, as Mr Westley said in his viva voce evidence, may be doubted. But I consider it likely that he did convey a sense of urgency to Mr Charlick about the matter.
Further concerning the meeting on 28 March 1989 it is common ground that the transfers were returned, having either already been executed, or then being executed.
There was some debate whether on 28 March Mr and Mrs Charlick told Mr Westley that they wished to sell the property; and, if so, what they said in that connection. Mr Charlick said that they had done so; and that he had asked Mr Westley who should be the vendor – that is, the plaintiff or the partnership. He said that he and Mr Westley had discussed land prices, that Mr Westley had told him about land that he had purchased in South Australia, and that he, Mr Charlick, had advised his solicitor to sell the land because prices were very high and would decline. Mrs Charlick gave evidence to similar effect.
Mr Westley said that he recalled Mr Charlick "making some reference about whether the company could be sold". He could not recall discussion about plans to sell the property. He thought he would have recalled if Mr Charlick had said that its price had doubled.
I am satisfied that Mr and Mrs Charlick did indicate to Mr Westley their desire to sell the land, and that the substance of a principal reason for sale which they advanced was Mr Charlick's belief that the market was high and likely to fall. I think it is likely that they also referred to other reasons why they wished to sell – a certain problem with Mr Charlick's health, and dissatisfaction with the climate in Western Victoria.
On 29 March 1989 Mr Westley wrote to the vendor's solicitors enclosing the executed transfers and advising that his client "at this stage has not confirmed his finance arrangements". That was accurate.
The plaintiff did not expedite its application for finance to the RFC. An application was eventually completed. It was dated 17 April 1989. It was lodged at the office of RFC at Warnambool on 19 April 1989. The application disclosed that capital and interest was due on 8 May.
According to Mr Charlick there were several reasons why he delayed making the application. In the first place, he hoped to get a favourable interest rate – this being influenced by the date on which the application was made. In that context he understood that approval could be speedily obtained. In the second place, he continued to investigate other possible sources of finance.
I accept Mr Charlick's evidence about this matter. It seems very likely that he was concerned to get the cheapest possible finance; and that he was beguiled by his understanding that finance could be speedily approved by RFC – not realising the delay that there must have been between approval and readiness to settle.
Mr Mark Eaves, then a rural field officer employed by RFC, now a certified practising valuer, inspected the property on 24 April. After his inspection he told Mr Charlick that "the application was a positive application". Mr Eaves was not the decision-maker. That explains the caution with which he expressed himself. But the gist of what he said could not have but encouraged Mr Charlick to believe that provision of finance by the RFC was assured.
Messrs Charlick and Westley gave a deal of evidence about contact and attempted contact between the two of them in the period 1 May to 29 May 1989; and, in the case of Mr Charlick, about contact generally with the defendant's office in that period. Some evidence concerning contact was also given by Mrs Shirley Cox, then Mr Westley's secretary.
In the body of evidence to which I have just referred there was a degree of conflict. It is not necessary, however, to resolve all of that conflict. For it is clear that within that period certain critical events took place, in consequence of which some things were done, and others were not done.
On 1 May 1989 Mr Charlick enquired about the availability of bridging finance with his banker, ANZ. He said that he made the enquiry because on that day Mr Westley had told him that settlement would be one or two days late. He had rung Mr Westley to enquire whether the latter had had any contact with RFC, to see what was going on. He had initiated contact with ANZ. It had not been his solicitor's idea.
Mr Westley gave evidence of a conversation between Mr Charlick and himself on 1 May. Mr Charlick had conveyed a "similar message"; that "he was still to make up his mind where he was going to get his finance from".
There is no file note of the conversation. But Mr Westley's note-keeping, so far as it is revealed by this case, inspires little confidence that the absence of a file note should be considered decisive.
There is evidence that on 1 May Mr Westley spoke to the vendor's solicitor and confirmed a settlement time – inferentially, for 8 May. Mr Westley said in his evidence that "I was of the belief, and had no belief to the contrary, that everything would be in order to settle on that day".
An ANZ file note for 1 May 1989 was put into evidence. Mr Charlick is said to have told a bank employee, by telephone, that he was "under the impression that he will get money from RFC but funds will not be available on 8/5"; and that "he will get his solicitor to check if vendor will grant him an extension".
The evidence about what conversation took place on 1 May between Messrs Charlick and Westley, and what belief they then respectively held about the prospect of settlement being effected by 8 May is not readily reconcilable. But I consider that, despite Mr Westley's telephone call to the vendor's solicitors, and his evidence, both he and Mr Charlick had doubts on that day whether settlement would be possible by 8 May. I do not conclude that either of them then had specific information from RFC; but Mr Westley, if not his client, must have known that the financier would need documents to be completed before moneys would be provided. I should add that I reject Mr Charlick's evidence that Mr Westley told him on 1 May that bridging finance was not necessary.
On 2 May Mr Charlick spoke to Mrs Cox. He told her that he was unsure of the source of the necessary funds. He mentioned the possibility of bridging finance or a bank bill. He referred to the State Bank of Victoria and RFC as possible lenders. The former needed more time. The latter needed 30 days. Mrs Cox asked him for details of the person with whom contact was to be had for the purpose of ensuring that settlement was effected.
In reaching conclusions as to what was said in conversation on 2 May I have rejected some of Mr Charlick's evidence in favour of evidence given by Mrs Cox. Her evidence was supported, to an extent, by two file notes made on that day.
Also on 2 May Mrs Cox typed and signed a letter by which the defendant instructed Mr Geoffrey Ripper, of Vail & McBain, to act as its agents in attending a settlement which was to be held on 8 May. The letter reflected Mr Westley's uncertainty about the source of funds. Clearly it must have been dictated before Mr Charlick's conversation with Mrs Cox on 2 May.
On 3 May Mrs Cox made a file note arising out of her conversation with Mr Charlick the previous day. Directed to Mr Westley, it said, in part: "finance … could be up to a month late. Settlement won't proceed Monday. Please advise other side".
Mrs Cox did not suggest in her viva voce evidence, nor did the file note of 2 May suggest, that Mr Charlick had himself said that settlement would not proceed on 8 May, and that the vendor should be so advised. They were conclusions reached by Mrs Cox.
Messrs Charlick and Westley had a conversation on 3 May. I am satisfied that Mr Charlick told Mr Westley that his loan application had been approved but that it could be up to a month before funds were available. Mr Westley specified a period of "up to six weeks" in a letter sent by him to the vendor's solicitors on that day. That reflected excessive caution on his part.
In concluding that Mr Charlick mentioned a delay of about a month in his conversation with Mr Westley I reject his evidence that he mentioned no period at all. He told me that Mr Eaves had called him on 3 May to say that the application had been approved. I accept that evidence. It seems highly probable that he would then have asked Mr Eaves how long it was likely to be until funds were available. Bearing in mind the need for documentation, Mr Eaves might well have been specified a period of a month on a cautious approach.
I am satisfied that in their conversation on 3 May Mr Westley in substance told Mr Charlick that if the plaintiff was not able to settle on time "it would receive a letter that we were in default of the contract". I am sure that Mr Charlick was led to believe that the plaintiff would have to pay default interest if it went into default; but that he was not told that the plaintiff could lose the farm within a short period.
Apart from the matters to which I have so far referred I am satisfied that in the conversation between the two men on 3 May there was some general reference to bridging finance; and that the position was reached that Mr Charlick would communicate direct with Mr Widdicombe concerning the delay.
Mr Charlick did communicate with Mr Widdicombe on 4 May. He denied seeking an extension of time for settlement; but I have no doubt that he did so. That approach got nowhere.
On 5 May Mr Charlick telephoned Mr Westley. The latter made a note that Mr Charlick told him that RFC had approved finance and that it could be 30 days before moneys were available. I accept that Mr Charlick did say those things, which were a re‑iteration of things said on 3 May.
Mr Charlick had spoken to Mr Widdicombe on 4 May. I consider it likely that he reported the unrewarding outcome of his approach when he spoke to Mr Westley on 5 May.
By letters dated Friday 5 May RFC advised its acceptance of the plaintiff's loan application. One letter was sent to Mr and Mrs Charlick, one to the defendant, and one to the ANZ Bank. The letter to the solicitors requested them to forward copies of the Transfer and Contract to RFC's head office in Melbourne so that security documentation could be prepared.
According to Mr Charlick, the letter sent to him arrived on Monday 8 May. I accept that evidence.
Mr Westley, by reconstruction, concluded that he received the letter sent to the defendant on Wednesday 10 May. It seems unlikely to me that the mail would have been so long delayed, notwithstanding Mr Westley's account of the circuitous route by which mail despatched in Warnambool found its way to Naracoorte. Mr Westley set store on the fact that he sent a letter in reply dated Thursday 11 May. His reconstruction involved the proposition that he would have speedily replied to the RFC letter when it came to hand. I am not persuaded that he did immediately respond, despite the fact that after 8 May the plaintiff was in default.
Mr Charlick gave evidence that on receipt of the RFC letter he spoke to Mr Westley, as the letter requested him to do. He said that this happened on or about 8 May, and that Mr Westley told him, jokingly, that "you will be getting a dirty letter".
Mr Westley did not give evidence of any such conversation; nor was any pertinent file note produced. But I consider it very likely that Mr Charlick did communicate with Mr Westley as soon as he received the RFC letter. For it requested him to arrange for his solicitors to send documents to RFC so that security documents could be prepared.
Having regard to the fact that the plaintiff was by then in default I consider it likely that Mr Westley did say that the plaintiff would be receiving a dirty letter. But I do not accept that it was said jokingly – though perhaps Mr Charlick so understood it.
By letter dated (Tuesday) 9 May the vendor's solicitors wrote to the defendant enclosing a rescission notice which was also dated that day. The letter specified an obligation to pay penalty interest, costs, and any damages incurred by reason of the plaintiff's default.
Notice of rescission was also sent directly to the plaintiff. The notice was sent under cover of a letter dated, oddly, (Friday) 5 May. The notice itself was dated 9 May. The evidence of Mr Charlick and his wife was that the documents were picked up at the Byaduk store on the late afternoon of 12 May.
It is clear that the letter and notice sent to the defendant was received by it on Thursday 11 May.
On that day Mr Westley did two things. First, he posted a copy of the letter and notice to Mr Charlick. By the letter he requested his client to contact RFC and have it do its very best to complete the settlement as soon as possible.
Second, he wrote to RFC, at Warnambool. He requested RFC to complete documentation as soon as possible, noted that settlement was overdue and that the plaintiff was incurring 20% penalty interest, and enclosed the documents that RFC had requested.
I pause to make these points:
· Mr Westley's letter to Mr Charlick did not spell out in simple language the consequences of failure to remedy the default, or the date by which the default must be remedied. Further, it did not suggest that Mr Charlick should either make mention of the rescission notice when approaching RFC, or inform RFC that there was now an unalterable final date for settlement.
· At that time was Mr Westley of the view that the last possible date for settlement was 24 May. Later he formed the view that it was 25 May.
· Mr Westley's letter to RFC was sent to the wrong address – that is, to its Warnambool office rather than the RFC's head office; and it made no mention of receipt of the rescission notice, nor that there was now an unalterable final date for settlement. Mr Westley said that perhaps the letter to RFC was sent before he saw the rescission notice. But no further letter was sent to RFC at about that time advising either of the matters to which I referred a moment ago.
· Mr Westley did not orally communicate with Mr Charlick on 11 May concerning receipt of the rescission notice. The next oral contact they had was on 12 May; and, as I conclude, it was initiated by Mr Charlick.
On 12 May there was a telephone conversation between the two men. Mr Westley described it as "quite … lengthy". He made a file note. It runs to seven lines.
The evidence was in conflict as to who initiated the call; and as to whether Mr Charlick had by then received the rescission notice sent directly to the plaintiff. Whilst the file note contains a very abbreviated account of the conversation, I think it likely that it accurately records Mr Charlick as saying that he had received the rescission notice sent directly by the vendor's solicitors. It follows that Mrs Charlick collected the documents at the Byaduk store on 11 May; or else that the phone call on 12 May took place after their collection that day. My conclusion involves rejection of some of the evidence of Mr and Mrs Charlick.
I consider it likely, Mr Charlick having received notice of rescission, that it was he who initiated the telephone call.
As to what was said in the telephone call, I accept Mr Westley's evidence that Mr Charlick asked him, in substance, whether the vendor could call the contract off; and that he replied that it could.
I do not accept Mr Westley's evidence that Mr Charlick asked him "how many days have we got". I am satisfied, moreover, that Mr Westley did not then tell his client what was the last possible day for effecting settlement.
I do not accept Mr Charlick's evidence that his solicitor told him not to worry about it. For Mr Westley to have said that was incompatible with what he had written in his letter to Mr Charlick on 11 May. On the other hand, Mr Westley may well have said something along the lines that there was time enough to settle - if only to calm the situation.
I consider it likely that Mr Westley told his client that he had better get his finances together quickly. That was compatible with what he had said in his letter to Mr Charlick of 11 May. It was compatible also with his view that arrangements for finance were his client's responsibility.
I consider it likely that the two men discussed the need for preparation by RFC of security documentation. I further consider it probable that in conversation on 12 May Mr Charlick suggested that he drive to Melbourne, collect documents, courier them to Naracoorte for inspection by Mr Westley and for execution, and then return them to Melbourne. I am satisfied that Mr Charlick did make the particlar suggestion, and that it was not made on 22 May. The particular suggestion was not compatible with the state of affairs which existed on 22 May. I am also satisfied that, apart from a general observation that the plaintiff needed to get its finances together quickly, Mr Westley did not address the suggestion that Mr Charlick travel to Melbourne for the purpose to which I referred a moment ago.
In reaching the conclusions which I have just expressed I do not ignore the account of events given by Mr Charlick in a statement which he made to Mr Ripper on 30 May 1989. Nor do I ignore the contents of Mr Westley's file note of 12 May.
There was a conflict in the evidence whether Messrs Charlick and Westley had any telephone contact in the week commencing Monday 15 May and ending Friday 19 May. According to Mr Charlick, he twice spoke with Mr Westley on 16 May. His evidence concerning the conversations was this: on the first occasion Mr Westley told him that there was time enough to settle, and that it was the plaintiff's turn to be a bastard to the vendor. On the second occasion he offered to drive to Melbourne, collect documents from RFC, drive to Naracoorte with his wife, sign the documents in Mr Westley's presence and return them to Melbourne. Mr Westley told him that this was totally unnecessary, they had plenty of time.
Mr Westley had no recollection of any conversation between he and his client during the week in question. No file note of any conversation was produced.
I conclude that there was no contact between solicitor and client in the week ending Friday 19 May. For the most part, what Mr Charlick ascribes to conversation on 16 May was, I conclude, the subject of discussion on 12 May; whilst other parts of the alleged conversations did not take place. Specifically, I reject Mr Charlick's evidence that Mr Westley said to him, either on 16 May or at any other occasion, that it was the plaintiff's turn to be a bastard to the vendor.
There is no doubt that by letter dated Friday 19 May RFC advised Mr and Mrs Charlick that security documents had been prepared and forwarded to the defendant for execution; and that under cover of a letter dated that day RFC sent certain documents to the defendant. In the second of those letters RFC said this:
"3. SETTLEMENT
The Corporation will endeavour to settle this loan as soon as possible, but this will depend how quickly the Corporation's requirements for settlement are met. However, providing all settlement requirements are in order, arrangements will be made to settle the loan within five working days."
Mr Charlick gave evidence that the letter addressed to he and his wife was received on Monday 22 or Tuesday 23 May. I accept that evidence.
Mr Westley gave evidence that the letter addressed to the defendant was received on Monday 22 May. Clearly that was so.
Mr Westley gave evidence that he unsuccessfully attempted to contact Mr Charlick during the course of the morning of 22 May; and that the documents were then posted to the client by priority paid mail. I accept that evidence.
The documents sent to Mr Charlick on 22 May were not received by him, according to his evidence, until 29 May. It seems clear that they were mislaid in the post, and that Mr Charlick's evidence upon the matter was accurate.
After the documents ultimately arrived, Mr Charlick and his wife took them to Melbourne. They did so on the advice of Mr Westley's secretary, given on 29 May. They travelled to Melbourne and attended on Mr Ripper on 30 May. The documents were executed. Mr Ripper arranged matters so that an attempt could be made to settle the purchase. That attempt was made on 30 May and was, as I said earlier, rejected. The attempted settlement involved moneys sourced primarily from RFC, but also from the ANZ. The import of Mr Ripper's evidence was that RFC was ready to settle on 30 May after he had alerted it on 29 May. It was on 29 May that he first learned of service of the rescission notice.
I should go back a little. On Monday 22 May, after Mr Westley had posted the documents to Mr Charlick, the two men had a telephone conversation. I am satisfied that Mr Westley told Mr Charlick that he had posted the RFC documents, and that his client should chase the post to get them. It is not likely that Mr Westley described the documents other than in general terms. Despite a file note of the conversation I consider it extremely improbable that Mr Charlick said anything to suggest that he believed the documents would reach him the next day. Again despite the file note, I am satisfied that it was Mr Charlick who proposed that, when the documents were received, he would take them to Melbourne straight away. That he should have done so was consistent with his earlier, somewhat similar, suggestion. It was not necessary for Mr Charlick to know exactly what the documents were, or precisely what the last possible day for settlement was, in order for him to realise that there was urgency about the plaintiff accessing moneys from RFC.
Neither on 22 May nor on any day thereafter before settlement was attempted did Mr Westley communicate with RFC the extreme urgency of the situation.
He did not take and retain copies of the documents which he posted to Mr Charlick on 22 May.
He did not follow up with Mr Charlick whether the documents had been received. According to his evidence, whilst he told his client that he was able to be in Melbourne for a settlement on 24 May, he did nothing to see that arrangements were in hand so that a settlement could then be effected.
There was a conflict in the evidence whether and if so when Mr Charlick contacted his solicitors in the period commencing Tuesday 23 May, and ending Friday 26 May. He said that he continually rang the defendant's office "to try to find out what was going on", and that he did so to the point where he was told by a secretary or receptionist to stop ringing because he was a pest. He said that on one occasion, he thought it was on a Wednesday – later, he said it was the Thursday – he rang Mr Westley at the home of the latter's parents in Adelaide. He did so after the solicitor's secretary seemed disbelieving when he told her that he had not received the posted documents. He said that, on telling Mr Westley that the documents had not arrived, he was given no advice other than to sit and wait.
Mr Westley said that he had no contact with his client, direct or indirect, in the period 23 to 26 May; though he believed that he may have attempted to contact Mr Charlick on 25 May after he had spoken with the vendor's solicitor. There is no file note recording any such contact.
Mr Westley said that he was not in Adelaide either on Wednesday 24 or Thursday 25 May. On 24 May he attended an auction at Dartmoor. A file note made by the vendor's solicitor on 25 May records that he rang Mr Westley – inferentially at the latter's office – on that day. The note records that Mr Westley informed the vendor's solicitor that his client had the documents to sign and that he thought they could settle by the end of the next week.
Mrs Cox gave evidence that she did not speak to Mr Charlick between 23 and 29 May.
It is clear that on 29 May Mr Ripper was told by the vendor's solicitor that the vendor was resolved to retake possession of the property, that this information was made known to Mrs Cox, and that she passed it on to Mr Westley who said (and I find) that he was then in Adelaide. It is also clear that Mrs Cox informed Mr Charlick of this development.
Mr Westley gave evidence that Mr Charlick rang him in Adelaide on the evening of 29 May, and that in answer to the latter's question "Can they do this?", he replied, "Yes".
I think it is certain that the conversation which took place whilst Mr Westley was in Adelaide took place on 29 May, and that Mr Charlick's recollection to the contrary was inaccurate. I consider that the question "can they do this?", which I accept was asked, reveals Mr Charlick's relative ignorance of his position, even at that late stage.
I consider it probable that Mr Charlick did not attempt to contact his solicitor, and that he did not in fact speak with either Mrs Cox or any other member of the defendant's staff in the period 23 to 26 May. Any call he made was likely to have been put through to Mrs Cox. It is improbable that she would not have made a file note – particularly if Mr Charlick had told her that the RFC documents had not arrived.
I should refer to a discrete aspect of the attempted tender on 30 May. The vendor's solicitor told Mr Ripper that the mortgagee of the vendor, the State Bank, had the titles in its possession, and that the cheques should have been payable to the Bank. It was not disclosed that the bank had lost the titles, as later proved to be the case. Asked what would have happened had the titles not been available, Mr Ripper said: "The settlement would have stopped at that point". Both the purchaser and RFC would have needed, if not physical possession of title, an arrangement tantamount to the same.
Duty and Breach
According to the plaintiff's case the defendant owed it contractual and common law duties of care, and was in breach of both. According to the defendant's case, it owed contractual and common law duties of care to the plaintiff, but it breached neither; and in any event the plaintiff was contributorily negligent.
The real areas of debate at trial were as to the scope of the retainer, the practical content of the common law duty of care, breach, and contributory negligence.
According to the defendant's case the duties it owed – contractual and common law – were in substance duties to exercise the care and skill to be expected of a qualified and ordinarily competent and careful solicitor in the exercise of his profession in providing "legal services and advice to the plaintiff in respect of matters of law pertaining directly to the purchase of the property".
According to the plaintiff's case the defendant's contractual duty required it "to do all things usual and necessary on the part of a conveyancing solicitor to achieve settlement of the plaintiff's purchase of the property and obtain titles to the property"; and that was, essentially, the scope of the common law duty.
It is now well established that prima facie a plaintiff may sue a solicitor in either contract, or tort, or both. The concurrent duties are not necessarily co‑extensive. The position is summarised in Astley & ors v Austrust Ltd (1999) 73 ALJR 403 at pp. 413-415 in the majority judgment.
Where a plaintiff sues in both contract and tort, and establishes a breach of both duties, Astley is authority for the proposition that the plaintiff may recover all the damage provable in the claim founded in contract without reduction for contributory negligence. The plaintiff is able, in effect, to rely upon the plea of his choice to preclude reduction of damages for contributory negligence.
Astley concerned s.27A of the Wrongs Act 1936 (SA). But ss.25 and 26 of the Wrongs Act 1958 are not materially different, and the principle established in that case has application under the Wrongs Act in the present context. Sections 23A, 23B, 24, 24AA, 24AB and 24AD of the Wrongs Act, referred to by Callinan J in his dissenting judgment in Astley at footnote 180, do not bear on the present applicability of the majority judgment.
In the present case, counsel for the plaintiff contended that all the damages which their client sought to recover were recoverable both in contract and tort. On that footing it could not be doubted, though it was not said, that if the plaintiff was able to establish its case in both contract and tort it would seek to recover in contract – so as to defeat any possible reduction in damages for contributory negligence.
That said, counsel for the plaintiff submitted that there was no contributory negligence. To the contrary, counsel for the defendant submitted that if his client was guilty of breach of duty then contributory negligence was to the extent of 50%.
In determining whether there was breach of the contract of retainer it is first necessary to determine the terms and limits of the retainer. It is to be remembered, in discerning those terms and limits, that a solicitor is characteristically engaged to provide professional care and skill within the area of his professional expertise. That is why, at least ordinarily, it is not part of a solicitor's retainer to provide his views about financial matters. On the other hand, the limits of a retainer should be sensibly defined, not unnecessarily restricted. Astley (in the Full Court of the Supreme Court of South Australia – the issue was not before the High Court) is an example of such an approach. Where a solicitor is pursuing a task, issues may arise whose implications require legal understanding and whose resolution may sensibly require action by the solicitor. It would be too restrictive to say that if such an issue arises it is outside the retainer of the solicitor to take necessary action or to give necessary advice to the client because the issue is not itself the task which is to be concluded.
In the present case there was no written retainer. Its content is a matter of inference and perhaps implication; as to which see the observations of Deane J in Hawkins v Clayton & ors (1988) 164 CLR 539 at 570.
The defendant, as I have said, was engaged in 1986. Its retainer was certainly to do all that was necessary to effect preliminary settlement consistent with protection of its client.
Subsequent to preliminary settlement the retainer was either extended - or a fresh retainer was constituted – when there were disputes between the plaintiff and the vendor.
The retainer was enlivened when the vendor's solicitors wrote to the defendant in mid February 1989 concerning preparation of transfers and the plaintiff's estimate of the total amount payable. Mr Westley certainly assumed to act on the plaintiff's behalf thereafter. He wrote to Mr Charlick on 17 March enclosing transfers and seeking details of the source of funds for the final payment.
On any view, the defendant was retained, from February 1989, to exercise its professional skill to ensure that final settlement was effected within time; and thus to avoid a situation where the contract was rescinded or, less seriously, where the plaintiff had to pay penalty interest for failure to settle within time.
Mr Charlick took to himself the job of locating the necessary finance. By 3 May, if not earlier, Mr Westley knew that (according to Mr Charlick) settlement on 8 May was impossible. An important question is whether, at least from that time, the retainer required Mr Westley to fully advise Mr Charlick of the potential consequences of events concerning finances and final settlement as they occurred; and required Mr Westley to take positive steps to ensure that, at the very least, settlement was effected before the rescission notice expired.
In my opinion the retainer did require those steps to be taken. If they were not taken, it seems to me to have been inevitable that what did happen would happen. For that to occur was entirely at odds with the outcome that the defendant was seeking to achieve. Mr Westley, as the professional man, was the person equipped to fully understand and respond to the unfolding situation. It is unnecessary to call Mr Charlick's general level of intelligence into the discussion to make the point that, by contrast with his solicitor, he was ill-equipped to understand the detail of what might happen.
Two very experienced conveyancing solicitors gave evidence at the trial. So also did Mr Westley. Mr L.E. Penttila gave evidence directed to the scope and practical content of the retainer of a solicitor in the case of a terms purchase. He did so by reference to accepted standards of conduct sanctioned by common usage. Mr Ripper, the agent solicitor for the defendant in May 1989, gave evidence of what he would have done at various stages in the unfolding saga.
A good deal has been said whether evidence of either type ought be received; and, if it is, then as to its worth. I do not intend to add to the literature on the subject. It is enough to say that in my opinion evidence of the first type is admissible and may be useful; and that evidence of the second type can be of little assistance to the court, subject only to this – that it may provide some confirmation of accepted standards of conduct.
In the present case I found Mr Penttila's evidence useful; and I regard Mr Ripper's evidence as providing some, though incomplete, support for the standards of conduct described by Mr Penttila. In my opinion both witnesses, though not in exactly the same way, described a retainer whose terms required Mr Westley to fully advise his client of the potential consequences of events concerning finances and final settlement as they occurred; and required Mr Westley to take positive steps to ensure that, at very least, settlement was effected before the rescission notice expired. Their evidence further supported a conclusion that the defendant, by Mr Westley, was in breach of the duty imposed by the retainer.
Mr Penttila's evidence, in short, was that a prudent solicitor would have been on his guard to see that completion took place on the due date, and should have done these things:
· made sure that the client had the ability to settle on the due date;
· assisted the client in its efforts to obtain finance;
·ensured that whatever had to be done was being done;
·advised the client in very specific terms about the consequences of a rescission notice;
·taken every step to see that documents required by the financier were executed in time – achieving that by daily pestering of the financier, if need be, for the documents.
Mr Penttila squarely asserted that if a solicitor is retained to complete a conveyance it must also be part of the retainer to make sure that the finance is available.
Mr Ripper, speaking as I said of what he would do, said that if a client had told him on 5 May that finance had been approved, and he knew that settlement was due on 8 May, he would have obtained documents from the financier straight away by one means or another. He said that he would have contacted the financier to see whether settlement could be effected by 8 May. Once a rescission notice had been served he would have had his secretary pester the financier each day to ensure that the matter moved along. If the financier did not produce the documents he would not sit on his hands and do nothing. If the client seemed unable to advance the matter he would tell the client that he would take it over, and do it.
Mr Westley had a rather different view of his obligations under the retainer. I refer to these questions and answers in the course of his cross‑examination.
"You saw your office as being required to do no more than receive such documents as emerged from other parties to the transaction, be they the financier or the vendor and to pass them back to the people to whom they were meant to go?---That is a fair statement.
Yes?---To the extent that the finance wasn't within the providence (sic) of my retainer, and I was acting as the conduit."
and
"You never told Rural Finance that the 8th or the 24th or the 25th of May were significant dates?---That's correct.
And you didn't think it was in your retainer to ensure that the lender knew the date of settlement?---My belief was that Mr Charlick was arranging his finance and that I had communicated to him everything that was critical about the dates.
You didn’t believe it was in your retainer to inform the lender as to what the critical dates were?---I can't recall what my belief was at the time, but I didn't do it.
And it clearly was in your retainer, wasn't it, to inform the lender?---I don't accept that."
Later in his evidence he conceded that, with the advantage of hindsight, his retainer was broader. He conceded that it extended to stepping into the driving seat when the client was not driving adequately on the road to finance (see T445, 446).
Finally, I should briefly refer to the evidence of Mrs Cox. She said that this was, so far as she recalled, the first Victorian conveyancing transaction handled by Mr Westley (that was contrary to his evidence; but regardless whose evidence was accurate it is clear that Mr Westley was not a very experienced Victorian conveyancer, and in South Australia there is no such thing as a terms purchase). She agreed that the name of a financier was sought – on 2 May 1989 – because her expectation was that when she knew who the financier was Mr Westley would instruct her to chase the financier up to make sure that everything was done in a timely way. That, she agreed, is how Mr Westley behaved in respect of other clients.
The evidence of Mrs Cox, I have no doubt, offers support for the thrust of the evidence of Messrs Penttila and Ripper. It suggests the existence of a practice of contact with financiers to ensure that settlement occurred within time – a practice that was not implemented in this instance.
In my opinion the defendant, through Mr Westley, failed to abide its contractual duty at a number of points and in a number of ways. Cumulatively, and in some cases individually, they were a cause of the contract being rescinded, and of the plaintiff suffering loss and damage. I mention the matters chronologically, not in order of significance.
First, at latest by March 1989 Mr Westley should have done more to alert his client to the need to have its finances in order before 8 May. He should have plainly described the potential consequences if the plaintiff failed to do so.
Second, by 3 May Mr Westley was on notice that Mr Charlick was saying that RFC would be the lender, but that settlement would not be possible for a month. That was the time when Mr Westley should have initiated contact with RFC, advising it of the date for settlement and seeking early action.
Third, what Mr Westley did was to await receipt of the letter of offer and then send requested documents to the wrong RFC office without advising RFC that there was now an unalterable final date for settlement (that is, by reason of the rescission notice).
Fourth, if, by chance, the RFC letter was despatched before the notice of rescission was received, Mr Westley did not thereafter communicate the existence of an unalterable final date to the RFC.
Fifth, on 12 May Mr Westley should have told his client that he, the solicitor, must attend to obtaining finance in order that rescission of the contract could be avoided. The discussion which took place on 12 May, supplementing the brief letter of 11 May which enclosed a copy of the rescission notice, was not sufficiently full. The last possible date was not specified in the letter or in the discussion. Mr Charlick's suggestion that he go to Melbourne and collect documents was not addressed.
Sixth, Mr Westley did nothing to follow up what was happening about finance – either with Mr Charlick or with RFC – between 12 and 19 May. He should certainly have done so.
Seventh, on 22 May, when documents were received by Mr Westley, time was extremely short. If the documents were to be mailed to the client then a fail-safe arrangement should have been made. It might sensibly have been agreed that if the documents were not received on 23 May then Mr and Mrs Charlick should go direct to RFC at Melbourne and there execute documents. RFC should have been advised of such an arrangement just as Mr Westley should have advised RFC of the last available date for settlement. Whether he then thought it was 24 or 25 May presently matters not.
Eighth, Mr Westley did nothing to contact either his client or RFC between 22 May and 29 May. Having regard to the urgency of the situation, I find that incredible. It assumed, in the absence of hearing from Mr Charlick, that all had gone well. That was not an assumption that could safely be made. It precluded the opportunity of securing last minute action on the part of RFC such as Mr Ripper was able to achieve.
The requirements of the contractual duty that I have described also define the practical content, so far as it is relevant, of the common law duty of care owed by the defendant to the plaintiff. Failure to abide those requirements was negligent.
I turn to the question of contributory negligence. The plaintiff having established breach of the contract of retainer, contributory negligence is irrelevant so long as the damages claimed by the plaintiff are not damages solely compensable by reference to breach of the common law duty.
But suppose breach of the common law duty could be relevant. Did the plaintiff fail to conduct itself so as to take reasonable care for the safety of its property? And, if so, to what extent is just and equitable that damages be reduced having regard to the plaintiff's share in the responsibility for the damage?
In his final address counsel for the defendant submitted that the plaintiff was guilty of contributory negligence in that Mr Charlick
· delayed for a month in lodging the application for finance with RFC;
· did not disclose the position apropos finance to the defendant until 2 May;
· continued to consider an alternative possible source of finance until 10 or 15 May;
· failed to inform the defendant that the RFC documents had not been received until 29 May.
In my opinion it may fairly be said that the plaintiff, by Mr Charlick, did delay too long in applying to RFC for finance; and did fail to disclose the incomplete situation concerning finance until a time when it would have been difficult to achieve settlement on 8 May whatever Mr Westley might have done.
I consider, on the other hand, that there is nothing to the third matter raised for the defendant.
I am not prepared to conclude that the fourth matter shows any want of reasonable care by the plaintiff for its own safety. Mr Charlick did not attempt to contact his solicitor in the period 23 – 26 May. The circumstances in which he did not do so are disclosed by my analysis of the course of events between 1 and 29 May. Mr Charlick's conduct between 23 and 26 May must be viewed in context.
I consider that the two matters in respect of which the defendant has made out criticism of the plaintiff's conduct do demonstrate a want of reasonable care on its part for its property. I further consider that it cannot be said that this want of care had no causative role in the rescission of the contract, notwithstanding that, had the defendant not been in breach of duty, I am certain that rescission would have been avoided.
The starting point of the plaintiff's claim for the loss of a valuable commercial opportunity, so far as it concerns the lost opportunity to effect a sale in a favourable sales climate, is thus $368,726 or $388,140 – depending upon whether regard is had to the sale price actually achieved, or to the value of the property as at September 1990. The difference is, really, marginal. It becomes the more so when regard is had to "the degree of probabilities or possibilities" in assessing the prospects of success of the opportunity had it been pursued.
In practical terms it matters not whether, as Mr Charlick said (and I have accepted), the property was constantly on the market between December 1990 and August 1993, nor whether offers or intimations of offers were made in that period along the lines described in his evidence, nor whether the saleability of the property was affected in the period December 1990 to August 1993 by the fire to which I made earlier reference. Those things do not matter because the difference between the value of the property in September 1990 and the actual sale price were very little different (and even less significant when necessary consideration is given to the degree of probabilities and possibilities); and because the evidence leaves me in no doubt that no greater value attached to the land at any time between late 1990 and August 1993. The evidence shows a persisting and severe weakness in the relevant part of the rural economy throughout that period. The wool market support scheme collapsed in February 1991. Mr Hose emphasised the significance of that matter. The charts at pages 10 and 11 of Mr Linke's report and the text of Mr Mackarness' report at p.18 underline the extent and persistence of the problem in the relevant part of the rural economy in the period under consideration.
I turn to consider the degree of probabilities or possibilities. Whilst it was more probable than not that a sale would have been effected in September 1989, there is a significant risk that this would not have happened. Whilst Mr Charlick was keen to sell, I do not doubt that he set considerable store on the value of the property. His asking price in May 1989 was $1,400 per acre. Even assuming that he would have then been prepared to take a lesser amount in September 1989, there is a pretty considerable difference between $1,100 and $1,400 per acre – in gross terms, more than $290,000. The market was not overtly collapsing in September 1989. There is a prospect which is not negligible that the plaintiff would not have met the market at $1,100 per acre.
Then consider the position of a prospective purchaser in September 1989. This was a good and well‑improved property. But wool prices had passed their peak and interest rates were very high. $1,100 per acre was a very substantial figure to pay for broad acres in what was principally wool-growing country – even if the vendor had been prepared to offer terms. The prospect that in the circumstances described a buyer at that price would not have been found is again not negligible. Add to that the fact that some properties, for all their good qualities, do not attract a buyer.
Less common matters require consideration. So, for example, a buyer might have been found, but defaulted. The property might thereafter have been harder to sell. Sale at a lesser price at a later time was on the cards. Not always does a vendor succeed, in a practical sense, in recouping its position in a proceeding brought against a defaulting purchaser.
In matters of degree an evaluation must be made which is in truth arbitrary. In the event, I consider that the starting figure for valuing the loss of opportunity now under discussion should be reduced by one‑third. On that footing the loss resolves into a figure of about $252,000 (which reflects an approximate mid point between the reductions from the starting points of $368,726 and $388,140).
Interest Foregone
The plaintiff claimed that, had a sale been effected in the spring of 1989, all moneys would have been in hand by January 1990. Then the moneys – nett of re‑payment to the RFC – would have been invested for a period of about 12 months whilst Mr Charlick made investigations and settled upon a new farm for purchase. That had been the pattern of activity involved in his sale of the South Australian property and the purchase of Weerangoort East. The plaintiff claimed interest foregone, it being asserted that available funds would have been put into bank bills.
This claim is closely connected with the core content of the loss of commercial opportunity claim. If the claim could succeed at all, it must succeed as a loss of opportunity claim. I consider that it could not succeed in a claim founded in contract. Whether it could and should succeed in a claim founded in tort now requires consideration.
By depriving the plaintiff of the opportunity of effecting a sale in a favourable climate the plaintiff was deprived of the opportunity of having moneys available for investment, and investing them. Once it is concluded that the plaintiff was more likely than not to have effected a sale in September 1989, the loss of opportunity of investing moneys might be accounted a loss of a valuable opportunity. It was reasonably foreseeable that in some way such an opportunity would have been availed.
There is, I think, a real question whether it is enough to conclude that it was foreseeable that the proceeds of an hypothetical sale would have been invested in a non‑specific way. Need it be reasonably foreseeable that moneys were likely to have been invested in bank bills, or on term deposit, rather than re‑invested in land? One would have produced an immediate return, the other not.
What can be said, I think , is that it was reasonably foreseeable that, if the plaintiff did not have another property ready for investment when sale proceeds became available, then it was likely to have invested the money in the interim – whether in bank bills or on term deposit seems to me to be beside the point so far as foreseeability is concerned; and that this was, in theory at least, a lost commercial opportunity of real value. But then the claim as it was formulated needs to be considered.
According to the plaintiff's case this aspect of its claim was simply resolved by assuming a sale price in the spring of 1989, assuming all proceeds were to hand by January 1990, netting off the proceeds only for the RFC loan, and assuming that bank bill interest was earned on three monthly roll overs for a 12 months' period. As framed, this was not a loss of opportunity claim. It took no account of the significant prospect that a sale would not have been effected. It took no account of selling costs. It took no account of the prospect that bank indebtedness would have been cleared, thus reducing the amount available for investment (though reducing bank interest payable in the first place by Mr and Mrs Charlick). It did not address the prospect that, if sale moneys had been invested, it would have been on term deposit (this is what happened when sale was eventually effected). It did not consider whether there need be set against the value of the opportunity lost interest which was in fact earned (though at lower prevailing rates) when the property was eventually sold.
To my mind the multiple problems posed by the claim as it was formulated and the necessarily hypothetical evidence given by Mr Charlick combine to give good reason for not allowing any amount in respect of it. It is one thing to say that putting a value on the loss of a valuable commercial opportunity always involves a court in consideration of the hypothetical, in consideration of matters of probabilities or possibilities. It is another thing to invite a court to put a value to a claim which is presented as something which it is not, and which baldly makes a series of assertions which invite more questions than they answer. I do not consider that, treating the claim as one for loss of a commercial opportunity, Sellars could be sensibly applied.
To what judgment is the plaintiff entitled?
According to my reasons the plaintiff has made out a claim in contract and a claim in tort. In respect of the former claim the plaintiff would be entitled to damages of $77,248.44 (that is, $44,155 for extra moneys required to settle, $11,470 additional legal costs, $18,260 additional interest on extra moneys required to settle and $3,363.44 interest on additional legal fees). In respect of the latter claim the plaintiff would be entitled to damages of $329,248.44 (that is, the amounts to which I referred a moment ago plus $252,000 for the loss of a valuable commercial opportunity).
The issue of contributory negligence must be revisited. A number of questions arise: must the plaintiff be awarded all its damages either in contract or in tort? If so, is it for the court or the plaintiff to decide whether the plaintiff's claim should be allowed in contract or tort? If the claim is to be allowed in tort, must all the damages be reduced for contributory negligence despite the fact that some of the damages might have been awarded in the contract claim and not been reduced for contributory negligence? If no to the first question, should the plaintiff be awarded a single sum in damages which represents all the damages available in the contract claim and the damages available only in tort – the former not being reduced for contributory negligence, the latter being so reduced?
In my opinion the various issues should be resolved as follows:
First, it appears to me that a plaintiff must recover damages, in a case such as this, on one cause of action or the other; not on both. I do not consider that Astley, supra, requires any different outcome. In that case, I note, the measure of damages was the same whether the claim was viewed in contract or tort.
Second, whilst it cannot sensibly be supposed that the plaintiff would wish to recover less than the entirety of the damages which it has established – and that can only be on the cause of action in tort – the plaintiff should have the opportunity of formally making an election to recover under that cause of action.
Third, if damages are to be awarded upon the cause of action in tort, the damages must all be subject to reduction for contributory negligence. The fact that, if some of the damages had been recovered on the contract claim, those damages would not have been subject to reduction for contributory negligence is beside the point.
It follows that, if the plaintiff makes the election that I have surmised it will make, the plaintiff will be entitled to judgment for $296,323.59, being damages of $329,248.44 reduced by 10% for the plaintiff's contributory negligence.
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