Dinh v Nguyen

[2017] NSWDC 156

District Court

New South Wales

• Amendment notes

Medium Neutral Citation:	Dinh v Nguyen [2017] NSWDC 156
Hearing dates:	23, 24 and 26 May 2017
Date of orders:	29 June 2017
Decision date:	29 June 2017
Jurisdiction:	Civil
Before:	Gibson DCJ
Decision:	(1) Judgment for the defendant. (2) Plaintiffs pay defendant’s costs. (3) Liberty to apply in relation to costs.
Catchwords:	TORT – professional negligence – landlord provided new refrigerator in leased premises subject to a clause which excluded the landlord’s liability for its suitability and performance – whether a solicitor advising as to the terms of a lease breached his duty of care by not advising in relation to this clause – foreseeability – whether conduct fell short of the expected standard – causation – whether breach caused loss – whether the loss was in part attributable to a concurrent wrongdoer – mitigation – contributory negligence – quantum
Legislation Cited:	Civil Liability Act 2002 (NSW), ss 5B, 5D, 5E, 5R, 35 Competition and Consumer Act 2010 (Cth), Sch 2, Australian Consumer Law, s 236
Cases Cited:	Abu‑Mahmoud v Consolidated Lawyers Pty Ltd [2015] NSWSC 547 Addenbrooke Pty Ltd v Duncan (No 2) [2017] FCAFC 76 Bebonis v Angelos (2003) 56 NSWLR 127 Chandra v Perpetual Trustees Victoria Ltd (2007) 13 BPR 25,259 Cullen v Sema [1998] NSWCA 65 Dhaildeal v Pade [2003] NSWCA 16 Finishing Services Pty Ltd v Lactos Fresh Pty Ltd [2006] FCAFC 177 Ginelle Finance Pty Ltd v Diakakis [2007] NSWSC 60 Heenan v Di Sisto [2008] NSWCA 25 Heydon v NRMA Ltd (2000) 51 NSWLR 1 Hunt & Hunt Lawyers v Mitchell Morgan Nominees Pty Ltd [2013] HCA 10 Kayteal Pty Ltd v Dignan (2011) 15 BPR 29,515 Lucantonio v Stichter [2014] NSWCA 5 Neill v New South Wales Fresh Food & Ice Pty Ltd (1963) 108 CLR 362 Perpetual Trustee Company Limited & anor v Peter Ishak [2012] NSWSC 697 Pilkington v Wood [1953] Ch 770 at 777 Provident Capital Ltd v Naumovski [2011] NSWSC 270 Schacht v Thompson and Staunton t/as Staunton & Thompson Lawyers [2012] NSWSC 168 Vella v Permanent Mortgages Pty Ltd [2008] NSWSC 505 Walker v Geo H Medlicott & So (1999) 1 WLR 727 Wallace v Kam [2013] HCA 19 Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 Yates Property Corp Pty Ltd (in liq) v Boland (1998) 85 FCR 84
Category:	Principal judgment
Parties:	First Plaintiff: Quang Thach Dinh Second Plaintiff: Kim Hoang Bui Defendant: Nathan Nguyen
Representation:	Counsel: Plaintiffs: Mr M Rollinson Defendant: Mr D Lloyd   Solicitors: Plaintiffs: Tran Solicitors & Attorneys Defendant: Mullane & Lindsay Solicitors
File Number(s):	2016/19660
Publication restriction:	None

Judgment

Introduction

1. The plaintiffs bring proceedings for negligence arising out of the retainer by the second plaintiff of the defendant as a solicitor to advise in respect of a proposed lease of a butcher shop at Dee Why in the State of New South Wales, for which the first plaintiff was to be the lessee.

The issues in the proceedings

2. The issues in dispute are as follows:

1. Whether the defendant breached his duty of care.

2. If so, whether that breach caused any loss, including:

1. Whether the landlord or any other landlord would have agreed to omit clause 2.2;

2. Whether clause 2.2 had any practical effect on the plaintiffs’ rights against the landlord;

3. Whether the plaintiffs were in a position to exercise their rights to sue the landlord if the Deed did not contain clause 2.2.

3. If there was a breach which caused loss, whether the plaintiffs are guilty of failure to mitigate or contributory negligence.

4. The concurrent wrongdoer defence.

5. The measure of the plaintiffs’ loss.

The relevant terms in the Incentive and Works Deed

3. As is set out in more detail below, the plaintiffs proposed to take over the lease of a butcher’s shop, but only on condition that a refrigerator built to their specific requirements was installed. The plaintiffs’ case is that no warranty as to the performance or suitability of this refrigerator was given by the landlord.

4. The negligence is the asserted failure to advise in relation to clause 2.2(b) in the Incentive and Works Deed, which provides:

“The Tenant acknowledges that no warranty or undertaking has been given by the Landlord in respect of the performance of the items installed by the Landlord pursuant to this clause or the suitability of such items for the Tenant’s particular proposed use of the Premises and the Tenant agrees that it has satisfied itself in this regard.”

The parties

5. Only the second plaintiff gave evidence. The first plaintiff and the defendant did not give evidence. Both parties asked me to draw a Jones v Dunkel inference (Jones Dunkel (1969) 101 CLR 298) from the failure of these parties to tender affidavit material or present themselves for cross-examination. However, as the evidence set out below demonstrates, the facts were largely agreed and there is little or no challenge to the second plaintiff’s account of those facts. In those circumstances, the evidence of the first plaintiff (who was the lessor more or less in name only) and of the defendant would add little or nothing to the findings concerning the relevant issues of fact.

6. The second plaintiff has owned a series of butcher shops in the Sydney Metropolitan area since 1999. The first plaintiff, his brother-in-law, worked in these shops and was responsible for cutting up meat, while the second plaintiff attended to management issues. Their staff included their wives.

7. The second plaintiff first met the defendant in about 2008, when he acted on behalf of the second defendant in the conveyance for a lease at a butcher shop in Bass Hill. In about 2011 the defendant also acted in relation to the conveyance of a lease at a butcher shop in Wentworthville. He also acted for the first plaintiff’s wife by carrying out the conveyance for the lease of a nail shop at about the same time.

8. At all relevant times, all the parties spoke to each other in Vietnamese. The second plaintiff’s evidence was that he did not understand and was not able to read the lease documents and left it to the defendant to advise.

The plaintiffs consider leasing “another butcher shop”

9. The circumstances leading to the transaction the subject of this action for negligence were as follows. In about the middle of 2012 the second plaintiff visited the defendant at his office in Bankstown to ask him to “be my solicitor again for another butcher shop” at Dee Why Plaza. He said to the defendant, “I will give you contact details and help to get the documents over to you, check them and look after my interests” (affidavit of the second defendant of 25 June 2016, paragraph 9).

10. Prior to retaining the defendant, the second plaintiff had had discussions with Mr Gary Zoabi, the manager of the shopping centre in which the butcher shop was located, about the two butcher shops available for lease. The second plaintiff decided that he was interested in leasing one of these, the Dee Why Plaza butcher shop, but was concerned that the fridge display counter was very old. He told Mr Zoabi that he would need “a new fridge display counter” if he was to take on the Dee Why Plaza lease (affidavit, paragraph 13). Mr Zoabi agreed to provide a new refrigerated display counter for the plaintiffs if they entered a lease of the premises. Mr Zoabi said that he was prepared to spend up to $76,000 on a standing fridge and main fridge display counter as well as provide three months’ free rent.

11. In about July 2012 the second plaintiff told the defendant that Mr Zoabi had “agreed to provide a new fridge display as part of a deal for me to enter into the lease” (affidavit paragraph 16). He went on to say:

“This is very important, because if there is no new fridge display there is no deal. I have already told Gary, that they have to draw a 3D visual of the proposed fridge with specifications for my satisfaction, and this has to happen before they begin construction on the fridge.”

12. The second plaintiff went on to stress that it was important that he had “a proper fully functional fridge display in accordance with my requirements” (affidavit paragraph 16).

13. In his subsequent conversations with Mr Zoabi, the second plaintiff was insistent that he needed to have precisely the fridge he wanted, complete with a 3D drawing before they started building it, and that it was a case of “no fridge no deal, so it has to be proper and suitable for my business” (affidavit paragraph 18). Mr Zoabi replied that once the lease was signed and a bank guarantee provided as well as one month’s rent in advance, “we will start building your fridge counter and standing counter” (affidavit paragraph 18).

14. The second plaintiff reported to the defendant “how important the new fridge is” and that:

“…it has to be in accordance with my specifications and proper and suitable for me to run my business. I said no fridge no deal, a good new fridge is vital for me to run this new butcher shop well. I also told him I want a 3D drawing before they start to build it.” (Affidavit paragraph 19)

15. The second plaintiff added that it was essential that the date of commencement of the lease must be the date when the counter installation had been completed.

16. Completion of these additional requirements for the lease to be entered into took some months. In August 2012, the second plaintiff went to the defendant’s office to look at a letter from the landlord dated 21 August 2012. The second plaintiff once again repeated that he had to check and approve everything for the fridge before they started building it and it had to be “proper and suitable for me to run my butcher shop business” (affidavit paragraph 20). He again said “no fridge, no business, no butcher shop”.

17. The second plaintiff spoke to the defendant in early September 2012 and reminded him that “the fridge is very important”. The defendant replied “Yes, the fridge will be part of the agreement and will be what you want. I have included this as a special condition. Here is the Disclosure Statement.”

18. The second plaintiff was not satisfied with the handover date of 1 October 2012 and commencement of the lease on 13 October 2012 and requested that these be deleted. The defendant said this was not necessary as the letter from Mr Zoabi had confirmed that the commencement date must be the date the shopping centre finished the counters and handed them over, working to the second plaintiff’s satisfaction. The second plaintiff then signed the disclosure statement on behalf of the first plaintiff and about a week later, on 17 September 2012, attended the defendant’s office where he was shown the lease agreement documents, which had not been seen by either of them before. The defendant said “This is the lease agreement, there is a lease and incentive deed. Please sign.” (Affidavit paragraph 28).

19. As he did so, the second plaintiff said “You checked that everything is okay, including the fridge display and cabinet? I cannot trade without them.” The defendant replied “Don’t worry about that, whatever happens and whatever the lease says, by law they are guaranteed for 12 months” (affidavit paragraph 29).

20. At around the same time Mr Zoabi and the second plaintiff went to the offices of Mr Ayoub, the fridge display dealer, and the second plaintiff requested Mr Ayoub to provide him with a 3D design of the fridge display. The second plaintiff was not satisfied and took Mr Ayoub to see another butcher shop and instructed him to make a counter exactly the same.

21. The new fridge display counter display and all the relevant trades and parts were delivered on 26 November 2012. Installation of the fridge display and trays were completed on 10 December 2012. The second plaintiff then ordered the meat, but immediately noticed on the first day of trading that the refrigerator was not cold enough inside. He rang Mr Zoabi and said there was a problem with the refrigerator, who replied:

“Check again. But if there’s something wrong we will fix it. I will get the manufacturer to sort it out. If there’s a problem, I won’t pay money to the manufacturer.”

22. The second plaintiff also rang the defendant to say that the fridge was not cold enough, to which the defendant replied “The landlord has to fix it”. The second plaintiff instructed the defendant to contact the landlord and “tell them to send technicians to fix this immediately”.

23. For the first week of trading, technicians and repairmen were present every day. Despite all their work, the new refrigeration unit was a complete failure. Mr Zoabi said that he would speak to the technicians but that “the counter is guaranteed for 12 months, they will fix this”. He said if it was not fixed, he would not pay them.

24. Another problem was that the refrigerator supplied was not the one that the second plaintiff had wanted. He had been very specific, both to the landlord and to the company designing this new refrigerator, in his requirements, and had told them to follow the design of the Marrickville refrigerator. This had not been done. He said to Mr Zoabi:

“This fridge display has one cooler, whereas the Marrickville one has two coolers, remember I showed you and Mr Ayoub. Also the light is different to the one in Marrickville, the box covering it was broken at installation and water could get into it, which is dangerous. The light is also not installed properly, there is not enough light making the meat look darker and not fresh.” (Affidavit paragraph 45)

25. This evidence is relevant in relation to any liability the landlord, as well as the refrigerator manufacturer, may have in relation to the landlord’s purported restriction of liability in the relevant clause.

26. The plaintiffs sold all their meat for the first week of trading on 21 December 2012 but despite the daily visits from the repairers, after that time, the meat began to show discolouration and browning and customers started returning their meat.

27. The second plaintiff telephoned the defendant who said “the landlord has to fix this” and that the refrigerator was covered by a 12 month warranty. He said that “the landlord had an obligation to give you a refrigerator that was fit and proper”. If there was a problem with the refrigerator, then the plaintiffs could sue the landlord. He advised the plaintiffs to buy a video camera and collect evidence of the problems they were having. The second plaintiff said to the defendant: “if the fridge is not fixed, I will have to walk away from the lease” (affidavit paragraph 49).

28. Meanwhile, all of the plaintiffs’ customers were continuing to return their meat. As advised by the defendant, the second plaintiff took videos of temperature readings of the fridge counter in late December and January and the defendant said that the plaintiffs should “take the landlord to court for this” (affidavit paragraph 55).

29. A letter dated 8 January 2013 from Lai & Nguyen Lawyers to Mr Zoabi contains the following description of the difficulties of the second plaintiff:

“Our client contacted our office today in distressed [sic].

We have been working with my client for the past 10 years. This is the first time I have seen him in distressed [sic] and depressed.

We are instructed that the counter have [sic] broken down during the festive period, 23rd and 24th December and that you tried your very best to assist our client.

Our client also instructed that he had a meeting with you and Peter last Thursday in an effort to resolve the problems with the counter, and you have promised that you will try your very best to resolve this.

Our client instructed our office to make the following request on his behalf:

1. That the existing standing counter is to be removed as it was designed for different purpose, and not for butchery usage. Could you request the supplier to swap this for a correct one?

2. To this date, both our client and the supplier do not seem to know what is exactly wrong with the main counter. It would appear that the problems are more than just teething problems as our client keeps discovering new problems with the main counter every day, despite the supplier and its electricians have tried their best to repair the counter.

3. It appears that the counter had not been made in according to the specification and design as per the counter model at the Marrickville Butcher Shop which the supplier had been specifically instructed to follow.

4. Instead of going around in circle wasting yours and our client’s time, may we suggest the following options:

a. The supplier to re-inspect the counter at Marrickville again and attend to repair the main counter to the exact specification and design; or

b. Obtain a report from an independent butcher counter maker, who will inspect and test the counter and make a list of report items/issues which need to be fixed; and get the supplier to fix it once and for all so that no more time is wasting [sic] on this counter; or

c. If it is not practical to repair the current counter, you may want to insist the supplier to provide a replacement counter.

d. We understand that you had paid the premium price for this counter. One should be expecting the premium quality counter and not a lemon one.

5. Our client has been experiencing great difficulties while trading with the faulty counter.

a. The meat cannot be kept at the required statutory temperature, as the counter does not and cannot keep the meat cold enough.

b. Our client is facing a catch 22, he cannot start a full marketing campaign to expand the business when everything in house are [sic] not in order. He cannot order more meat, for he fears that he will have to throw them [sic] away as the meat tends to go off quickly as they are not being kept in a correct temperature.

c. Our client [sic] business has been interrupted during the busiest trading time of the year. Instead of serving customers, our client has to make room for the technician to repair the counter.

d. You can appreciate that it is not possible to trade when the counter is being repaired. All potential customers have been “pushed away”.

e. It takes more time to clean the counter because of the leaking issue.

f. Our client and his staff morale are at their lowest point. Our client wants to focus on running the business, ie selling meat, and not spending time chasing the technician with numerous counter related problems.

6. Could you advise our client urgently: (a) when will the repair be carrying [sic] out; (b) how long the repair will take place? so that our client can make arrangements for staff roster and ordering stock?

7. Our client instructed that the problems need to be addressed and resolved urgently, otherwise our client will be forced to close the shop and walk away as our client cannot continue trading in the current circumstance.”

30. On 12 January 2013 the second plaintiff met the defendant to give him instructions about the faulty refrigerator, including drawings which were to be sent to Mr Zoabi (Exhibit P to the affidavit). The defendant said that he would “handle this” (affidavit paragraph 57), which he did. Meanwhile, Mr Zoabi told the second plaintiff to get his own technician and that he (meaning the landlord) would pay for this.

31. The technician told the second plaintiff:

“No one can touch this fridge counter while this is still under warranty. The shopping centre is trying to transfer responsibility for the warranty to you Mr Bui. Don’t touch it or repair it. Only the manufacturer can repair the fridge display counter.”

32. The technician went on to explain that the problem was the cooler was not strong enough to maintain the low temperature.

33. The second plaintiff had an argument with Mr Zoabi the following day, saying that if this refrigerator was not fixed, he would have to close the shop, as “I can’t trade like this” (affidavit paragraph 60). The plaintiffs did in fact stop trading on 15 January 2013, and put signs to the effect that the shop was shut on the front door.

34. The second plaintiff contacted the supplier of the fridge for the Marrickville butcher shop (which had been the “model” for the design of the Dee Why refrigerator) for a quotation. This technician told the second plaintiff that “no one can fix” the refrigerator and that the only thing to do was to replace it (affidavit paragraph 63).

32. An email dated 16 January 2013 from Nathan Nguyen to Mr Zoabi contains the following:

“I refer to our telephone discussion of even date and wish to confirm our discussion as follows:

My client is forced to close the business because:

1. He cannot continue to operate a business where the counter does not function as it should be.

2. I [sic] my client continue trading, he will be inadvertently breaking the laws.

3. If the Food Authority inspect the premises, my client will be fined on the spot for failing to keep the meat under 4 degree C.

4. Attached is the diagram of the counter and messaged in relation to the temperature reading.

5. It appears that the section 1 and 2 of the counter does not produce enough cold air to keep the meat temperature reading at 4 degree and below. Could you please inform the technician of the important [sic] of this health requirement?

6. Please note that where meat are being kept at a higher temperature than 5 degree C, the meat will discolor, ie they become darker. Once the meat is discolored, it cannot be offer [sic] to sell to the public. It must be thrown away. This is recorded in the video clip.

7. My client has been trying to communicate this problem to the technician and you since last Thursday 10/01/2013. But it seemed that the message has not been understood.

8. My client instructed that he has thrown away a large quantity of meat due to the discoloration. My client is in the process of quantify [sic] the amount of losses.

9. My client instructed that in the course of conducting the business, the counter doors will be opened and closed constantly and it is expected that the counter must produce sufficient cold air to keep the meat under 4 degree, even the doors are being kept opened.

10. I have tried to attach the video clips, but they are too large, I will attempt to burn in a dvd and will post the same to you.

You advised that the technician is requesting access into the shop to carry out the repair. My client will grant access subject to the following conditions:

(i) the technician must advise my client of the duration of repair, because my client need know in order to make arrangements staff and order trading stock. My client will close the business during the repair period to enable the technician maximum space and time to work on the counters.”

36. In the second plaintiff’s affidavit, page 163 is followed by another document entirely on page 164, which is clearly unrelated as it starts part way through a sentence (“fixed; and get the supplier”). It has a numbered paragraph 5, followed by 6 and 7, whereas the previous page has ten points and then starts with a roman numeral. It clearly is not part of the same letter. This error was not picked up during the hearing and was one of several factual determination difficulties I faced when writing this judgment. These kinds of problems were a feature of the plaintiffs’ case and may explain some of the contradictions in relation to factual evidence. It certainly did not make the plaintiffs’ case any easier to understand.

37. An email dated 18 January 2013 from Nathan Nguyen to Mr Zoabi contains the following:

“Hi Gary,

Base [sic] on the email from the supplier, please correct me if I am wrong – that the supplier will replace the display counter and the fridge? Please confirm.

Furthermore, my client instructed my office to request for:

1. The list items that the supplier will fix or repair to the counter; and

2. The time frame that the supplier needs to carry out the repair; and

My client further instructed that he will need to clarify the above before allowing the supplier technician to access the shop.

At the moment, my client instructed that he does not know who come and go.

Could you please let me know as soon as you findout [sic].

I am in the process to [sic] burn the video clips for you and the landlord’s solicitors.”

38. An email dated 22 January 2013 from Nathan Nguyen to Adrian Liaw contains the following:

“Dear Adrian,

My client instructed that the new counter has not been working properly from 10/01/2013, and in particular, 2 sections of the counter cannot keep meat at 4 degree or below. The meat temperature readings at these two sections are 8 to 10 degree Celcius [sic].

My client reported the issue to Gary numerous times. The centre manager contacted the supplier to send in technicians to inspect the counter.

The technicians came and went. They did not service the counter. They did not test the counter reading temperature. They all reported to Gary that the counter is working as it should be. This implies that my client is lying.

My client requested Gary to come to the shop so that my client will show Gary the actual reading temperature of the meat.

Gary had agreed to go to the shop last Friday at 3.30pm to see for himself. Gary changed his mind and cancelled the appointment in the last minute.

To sum up:

We have a broken counter.

The supplier refused to acknowledge that there is a problem with the counter, despite the fact that they have been servicing the counter more than 10 times in the first month since the counter has been delivered to the shop.

It is noted that this is the first time that this supplier made and supplied a meat display counter.

My client asked Gary, as a representative of the Landlord, and buyer to see for himself that the counter does not function as it should be. Gary refused to attend.

My client is forced to close the shop.

My client requests that the counter be inspected and fixed urgently.”

39. A letter dated 22 January 2013 from Blueprint Stainless to Ayoub Supply contains the following:

“Dear Jamal,

Our responses to Lai & Nguyen Lawyers letter are below.

We are committed to resolving any legitimate concerns as soon as possible so please keep me updated once the opportunity to do so is confirmed.

1. Blueprint will guarantee compliant lighting.

2. The photos are inconclusive as the Dee Why display has been taken from a higher level. Note that the top surface of the canopy can be easily seen unlike the Marrickville display.

3. The light brightness (lux) looks similar in both displays. Note the reflected light on the front s/steel ledge of the Dee Why display.

4. This is not necessary or plausible. The light can be lowered if needed.

5. Blueprint is not responsible for connection to services.

6. The counters are new and custom made. (Refrigeration by others)

7. The cabinet has the ability to provide adequate temperature when properly refrigerated.

8. As above.

9. As above.”

40. An email dated 24 January 2013 from Nathan Nguyen to Adrian Liaw contains the following:

“Dear Adrian,

I refer to my last correspondence.

My client instructed that he cannot afford to close his shop and waiting for the counter-technician to sort out their responsibilities and liabilities.

My client instructed that in his 15 years in the business, he has not seen such a substandard counter.

My client cannot trade because, the counter cannot keep the display meet [sic] at the temperature required by law.

For every day that the shop is closed, my client is losing money. The problem was reported to the centre manager since 10/01/201 [sic]. To this date, it has been 14 days, and there has not [sic] been no positive action to rectify the situation.

May I suggest a centre manager/landlord to attend the shop and to hear what my client got to say and see for himself what is actually wrong with the counter.

I await for your urgent reply.”

41. A letter dated 25 January 2013 from Ayoub Supply to Mr Zoabi contains the following:

“Dear Gary,

Re: Butcher Shop situated at 11 Dee Why Village Plaza

We can inform you the following information provided is ‘Without Prejudice’

We are the suppliers and manufacturers of the Butcher Display counters supplied and installed at the Butcher shop in Dee Why Village Plaza.

Please find attached to this letter a series of service call reports attended to by our subcontractors whom manufactured and installed the butcher display counters in Dee Why. In addition to this, I have obtained and attached ‘Job Sheets’ on each and every service call attended to by our technicians in relation to the refrigerant works at Dee Why.

Please find attached the following;

Blue Print Stainless Letter: Manufacturer of the Butcher Display Counter

Responsibilities: All work accept [sic] for Refrigeration

Ultra Refrigeration ‘Job Sheets’: Refrigeration Works

Responsibilities: All Refrigeration Works Only

It is evident that we have continued to support and back our guarantee to warrant these products & services from the amount of service calls made. On many attempts, we had been refused entry into his store. As you are well aware Gary, how many times did we try to gain access into the store to service his service calls and he would purposefully not show up to allow us access into his shop?

Ayoub Supply has been manufacturing and supplying butcher display counters for the past 26 years. We custom build our butcher displays according to our clients needs and most importantly to Australian Standards. We can assure you that we do not compromise or shortcut any manufacturing process otherwise. We proudly support major butchers throughout NSW and Australia wide. The likes of IGA Supermarkets, Marathon Meats, Freds One Stop Shop and many more independent butcher stores around Australia.”

42. This email is of significance in relation to the defendant’s causation argument.

43. An email dated 31 January 2013 from Adrian Liaw to Nathan Nguyen contains the following:

“Nathan

Further to our telephone conversation, I have now received a response from the manufacturer of the refrigeration units. That response is attached.

You will note from the response that:

• The manufacturer has attended the premises on 14 occasions and your client had denied entry on a number of these instances. It is therefore incorrect to you to assert that no action has been taken to rectify the alleged faults.

• Where the manufacturer could gain access, they did not find any fault with the units.

• Their responses to your letter of 20 December 2012.

You should also note that the manufacturer is a reputable company with more than 25 years of experience in manufacturing refrigerated display units. Your client may have 15 years of experience as a butcher but he is not a refrigeration expert. Further, on what basis does your client maintain the assertion that the unit does not comply with the relevant Australian standard?

I have also been instructed to point out the following to you:

a) Clause 2.2(b) of the incentive deed clearly outline the need for your client to be satisfied with the units and that our client is not warranting the suitability and performance capability of the units.

b) Clause 18.8 of the lease requires your client to open the premises for trade during the centre’s core trading hours, failing which our client may require your client to pay $200 for each hour it fails to trade.

Despite the above provisions, our client has proceeded to attempt to address your client’s concerns. However, a number of these attempts have been frustrated by your client.

As a last attempt to resolve this issue, our client will be prepared to arrange for the manufacturer to attend the premises together with our client’s managing agent on the condition that your client accepts the findings of the manufacturer and released our client from all claims your client may have against our client in respect of this matter. Please advise whether your client is prepared to accept this offer.

On separate note, our client has also informed us that several other premises within the centre were recently damaged due to water penetration which originated from your client’s premises. Our client holds your client responsible for these damage [sic] and the claims which our client may receive from these tenants. Our client reserves all rights it may have in pursuing this matter against your client.”

44. A letter dated 4 February 2013 from Lai & Nguyen Lawyers to Hicksons Lawyers contains the following:

“We refer to your email dated 31 January 2013, our client instructed the office the [sic] follows:

1. Our client disputed the contents of the letter from Ayoub Supply dated 25 January 2013, and in particular, with reference to the list of History of Events & Service Calls listed in the annexure they were incomplete, inaccurate and fraudulent. Our client will address these events in full particulars in due course when he has the opportunity to speak to the landlord in person.

2. Our client and our office have been told that the independent consultants have been engaged to inspect the unit, and to this date, we have not received any reports claimed.

3. The technicians sent by the supplier, either: did no works, made false reports or to carry out unplanned major repairs without informed [sic] our client in advance and had caused significant disruptions to our client’s trading.

4. Our client has consulted the opinion of another counter supplier, (this supplier has requested that his company name to be withheld). Our client was informed that the installed refrigeration unit is not adequate for the intended usage.

5. Our client’s electrician cannot work on the unit as the counter is currently under warranty.

6. As a layman, our client can see that the counter is not cold enough through three simple observations:

a. The fresh meat changed its colour at the end of each day; and

b. The thermometer reading on the meat show [sic] a consistent reading of 7 to 8 degree Celsius, at two sections of the counter; and

c. Most importantly there are [sic] no ice formed at certain sections of the counter.

7. Our client is utterly dismayed that his complaints have been [sic] fallen to deaf ears. Our client was forced to close the shop.

8. Our client invites and requests the landlord and its representatives to come to the shop and see the condition of the counter in operation in person.

Please find attached the Notice to Remedy Breach by way of services.

In anticipation.”

45. The Notice to Remedy Breach states:

“Pursuant to clause 19 of the Lease Agreement, I request you to make arrangement with me within 3 working days, and to attend the premises to:

1. observe the counter in operation, and

2. observe the temperature reading measurement; and

3. following the above observations instruct technician to repair the counter to the satisfactory working condition.

If you are unable to remedy the above breach, I reserve my rights with respect to seeking compensation for any financial losses incurred by me.”

46. An email dated 5 February 2013 from Adrian Liaw to Nathan Nguyen contains the following:

“I refer to your letter of 4 February 2013.

I have been instructed by our client to respond to your comments as follows (using the same paragraph referencing):

1. If your client has a different view he should set out his view in full now. Our client does not see the need to meet your client as it has managing agents to carry out this role. Further, it concerns our client to see your client labelling Ayoub Supply as ‘fraudsters’. Our client hopes your client has evidence to demonstrate his views as your correspondence will be forwarded to Ayoub Supply for comments (as this appears to be a case of your client’s words against Ayoub Supply’s words).

2. The refrigeration units were independently inspected by Jarman Refrigeration who verbally advised our client’s managing agent that the units meet the relevant Australian standards.

3. As noted above, this is a serious allegation which our client hopes your client will be able to substantiate.

4. If your client is interested in resolving this issue, then we cannot see the point in withholding this information. If your client’s other supplier believes the units are not adequate then he or she will to [sic] elaborate on what exactly in [sic] inadequate.

5. Noted. Hence, Ayoub Supply has sent technicians to investigate the issue on fourteen separate occasions.

6. As you have correctly indicated, your client is a ‘layman’. Although he is entitled to make observations, our client does not believe your client is qualified to make any technical assessment on the performance of units.

7. Our client does not understand the basis of this statement. Our client has offered to have the technicians re-visit the premises to inspect the units in the presence of the managing agent and your client (and if available, your client’s consultant/supplier). Your client does not appear to have accepted this invitation.

In relation to your client’s notice, please advise on what basis does your client claims [sic] our client is under an obligation to comply with that notice. Clause 19 of the lease relates to plant and machinery that service the Centre (not the premises). Further, the incentive and works deed (under which the units were supplied) clearly specified that our client makes “no warranty or undertaking” that the units will suitable [sic] for your client’s particular use. Accordingly, our client does not agree your client has any right to issue the notice and rejects your client’s ability to claim any damages from our client.

Despite this view, our client has instructed us to re-iterate its offer to have technicians from Ayoub Supply to re-inspect the units in the presence of our client’s managing agent, your client and any other consultant your client may wish to engage on the condition that your client releases our client from any claim your client may have against our client in relation to the units. This is the final time our client will make this offer and it is open to acceptance by 5pm 7 February 2013.”

47. The second plaintiff’s life from this period onwards was difficult. His health began to decline, his marriage began to disintegrate, and he had to move into a friend’s house in Granville. He suffered a serious heart attack and required hospitalisation, which meant he was unfit to work. Meanwhile, the premises remained closed. When he was well enough to do so, he continued to attend the premises to try to work out what to do.

48. The defendant told the second plaintiff that the landlord’s solicitor had stopped Mr Zoabi from going to the premises and that “from now on, the landlord’s solicitor is taking over the correspondence and communications with me”. He advised the second plaintiff that the step to take was to sue the landlord and to find an expert to prepare a report on the faulty fridge.

49. The defendant quickly found an expert named Warren Cole who had given many reports for court proceedings (the report findings he made are set out in more detail below). He also sent a Notice to Remedy Breach to the landlord (Exhibit S) and the plaintiffs (through Mr Bui, the second plaintiff) instructed him to continue to prepare to sue the landlord.

50. Warren Cole’s report was prepared in relatively short order, being dated 5 March 2013. Its conclusions were as follows:

“4. Inspection Conclusions

4.1 My calculation of the necessary plate evaporator capacity for the cabinet in the Dee Why shop is 2300 Watts, at an evaporating temperature of -15°C. Based on commercially available product data the necessary cross fin coil capacity is approximately 1800 Watts at an evaporating temperature of -10°C.

4.2 The absence of ice indicated that the surface temperature of two of the plate evaporators was well above 0°C. The thermostatic expansion valves fitted to these two evaporators were starving the coils of refrigerant; consequently the degree of refrigerant superheat in the evaporators was also high.

4.3 The relatively wide 140mm spacing of the serpentine coil bonded to the cabinet well resulted in areas where there was no ice formation even on the plate evaporator that appeared to be working correctly.

4.4 Reference to industry tables and recommendations confirms that the length of the pipe run between the cabinet and condensing unit would require a minimum suction line tube diameter of ¾“. The smaller pipe installed would result in a greater refrigerant pressure drop and a subsequent fall off in system performance and capacity.

4.5 The deficiencies in the cabinet construction, in particular the incidence of dripping condensate and the exposed raw metal edges would pose definite health and safety threats to both the shop staff and customers alike.

4.6 The quality and standard of the cabinet installation at the Dee Why shop is well below that at the Marrickville shop.”

51. On 13 March 2013 the defendant showed the second plaintiff a Notice of Breach he had received. Mr Nguyen told him that he could ignore it because he did not need to pay anything.

52. On a later occasion the defendant showed him a letter dated 18 March 2013 and said “We will sue the landlord because the fridge was faulty”. The defendant also showed the second plaintiff a letter from the landlord dated 20 March 2013 and said “there is an implied term of the lease, that the fridge is free of defects” (affidavit paragraph 77). That letter contains the following:

“With respect to the Notice of Breach, our client instructed our office as follows:

1. It was a special agreement that the tenant should have two clear weeks to fit out and carryout [sic] the tenant’s works before the lease commencing date. We refer you to the lease disclosure statement dated 7/09/2012 and email correspondence with Gary dated 6/9/2012.

2. Our client cannot start the fit out until the landlord works have been completed.

3. We are instructed that the counter was delivered to the shop on or about 10 December 2012. Therefore the lease commencing date should be 24/12/2012.

4. We understand that the tenant is further eligible for 3 months’ rent free period, ie to 24/03/2013.

5. Our client was forced to close the shop because of the counter problems in our about mid-January 2013. This was not by choice.

6. It is an implied term of the agreement that the landlord’s works should be free of defects. The landlord has not remedied the defects in timely manner.

7. Our client has suffered and continues to suffer financial losses due to the landlord’s and its employee’s, agent’s conducts [sic].

8. Our client reserves all his legal rights in this matter.”

53. The landlord then terminated the lease.

54. With the lease terminated and the landlord seeking the unpaid rent, the plaintiffs had to determine their next step with some urgency. The defendant told them they needed advice about whom to sue, and in what jurisdiction. In July 2013 the defendant told the plaintiffs “you will have to pay $5,000 for a barrister to look at and advise on the litigation to sue the landlord regarding the lease”. The second plaintiff said “I don’t want to pay that. That is your responsibility to sue the landlord.” (Affidavit paragraph 79.) Not having any funds from his clients, the defendant then applied for mediation before the Small Business Commissioner. However, the second plaintiff said he was not able to participate because his English was so poor.

55. In or about November 2013 the plaintiffs attended the defendant’s office and the defendant said he had received a letter of demand for $142,128 for breaching the lease and for unpaid rent. He says that the defendant told them that they should go bankrupt. The second plaintiff said “This is not our fault. You said you would take them to court.” (affidavit, paragraph 81). At about this time the defendant ceased acting for the plaintiffs.

Against whom did the plaintiffs have a claim?

56. Apart from brief references to Mr Cole’s report, I was not addressed as to what was actually wrong with the refrigerators and how this fitted in with the plaintiffs’ entitlements against the landlord and the manufacturer. It would appear from the inspection conclusions of Mr Cole that there are defects in terms of what was actually provided (in terms of quality and standard) for installation for the plaintiffs’ Dee Why shop, as the contents as well as the quality were “well below that at the Marrickville shop” which had been provided by the second plaintiff as a model. This raises the question of whether these cabinets were in fact made to the specifications of the plaintiffs, which may mean that the landlord, who played a part in the obtaining of the equipment and paid the manufacturers despite knowing of the plaintiffs’ complaints, may also be liable. It is clear that the performance of the items installed was significantly inadequate, which indicates that the manufacturer was in breach of warranties. However, it would also appear that the plaintiffs’ failure to satisfy themselves that the refrigerator was fit for the purpose and their claimed refusal to be available when the repairers came to the shop to carry out work may also be relevant. In other words, this was not a simple fact situation where, but for the landlord’s exclusion of liability under clause 2.2, that the landlord would have been liable for the damage and for repair and/or would have accepted liability for the faulty machinery without contesting this in court proceedings.

57. The plaintiffs’ contention is that clause 2.2 of the Incentive and Works Deed made it impossible to maintain any contractual claim of any kind against the landlord in respect of the landlord’s works and as well as rendering it “impossible” for the plaintiffs to rely on any implied exemption from their obligations to pay rent. This meant that any claim of any kind (which was seen as not involving litigation but negotiation) against the landlord was impossible. Any claim against the manufacturer involved litigation, which was submitted to be expensive and risky.

The relevant provisions of the Civil Liability Act 2002 (NSW)

58. Section 5B Civil Liability Act 2002 (NSW) provides:

“5B General principles

(1) A person is not negligent in failing to take precautions against a risk of harm unless:

(a) the risk was foreseeable (that is, it is a risk of which the person knew or ought to have known), and

(b) the risk was not insignificant, and

(c) in the circumstances, a reasonable person in the person’s position would have taken those precautions.”

59. Causation is also challenged. Section 5D provides:

“5D General principles

(1) A determination that negligence caused particular harm comprises the following elements:

(a) that the negligence was a necessary condition of the occurrence of the harm ( "factual causation" ), and

(b) that it is appropriate for the scope of the negligent person’s liability to extend to the harm so caused ( "scope of liability" ).

(2) In determining in an exceptional case, in accordance with established principles, whether negligence that cannot be established as a necessary condition of the occurrence of harm should be accepted as establishing factual causation, the court is to consider (amongst other relevant things) whether or not and why responsibility for the harm should be imposed on the negligent party.

(3) If it is relevant to the determination of factual causation to determine what the person who suffered harm would have done if the negligent person had not been negligent:

(a) the matter is to be determined subjectively in the light of all relevant circumstances, subject to paragraph (b), and

(b) any statement made by the person after suffering the harm about what he or she would have done is inadmissible except to the extent (if any) that the statement is against his or her interest.

(4) For the purpose of determining the scope of liability, the court is to consider (amongst other relevant things) whether or not and why responsibility for the harm should be imposed on the negligent party.”

60. Section 5E provides:

“5E Onus of proof

In proceedings relating to liability for negligence, the plaintiff always bears the onus of proving, on the balance of probabilities, any fact relevant to the issue of causation.”

61. A concurrent wrongdoer defence is also pleaded under Part 4 of the Act. Section 35 provides:

“35 Proportionate liability for apportionable claims

(1) In any proceedings involving an apportionable claim:

(a) the liability of a defendant who is a concurrent wrongdoer in relation to that claim is limited to an amount reflecting that proportion of the damage or loss claimed that the court considers just having regard to the extent of the defendant’s responsibility for the damage or loss, and

(b) the court may give judgment against the defendant for not more than that amount.

(2) If the proceedings involve both an apportionable claim and a claim that is not an apportionable claim:

(a) liability for the apportionable claim is to be determined in accordance with the provisions of this Part, and

(b) liability for the other claim is to be determined in accordance with the legal rules, if any, that (apart from this Part) are relevant.

(3) In apportioning responsibility between defendants in the proceedings:

(a) the court is to exclude that proportion of the damage or loss in relation to which the plaintiff is contributorily negligent under any relevant law, and

(b) the court may have regard to the comparative responsibility of any concurrent wrongdoer who is not a party to the proceedings.

(4) This section applies in proceedings involving an apportionable claim whether or not all concurrent wrongdoers are parties to the proceedings.

(5) A reference in this Part to a defendant in proceedings includes any person joined as a defendant or other party in the proceedings (except as a plaintiff) whether joined under this Part, under rules of court or otherwise.”

62. Contributory negligence is also pleaded. Section 5R provides:

“5R Standard of contributory negligence

(1) The principles that are applicable in determining whether a person has been negligent also apply in determining whether the person who suffered harm has been contributorily negligent in failing to take precautions against the risk of that harm.

(2) For that purpose:

(a) the standard of care required of the person who suffered harm is that of a reasonable person in the position of that person, and

(b) the matter is to be determined on the basis of what that person knew or ought to have known at the time.”

63. Having set out the relevant statutory provisions, I next consider the duty of care owed by the defendant to his clients.

The duty of care owed by the defendant

64. The defendant gave advice as to the provisions of the lease and the Incentive and Works Deed which contained the clause the subject of these proceedings. He had advised the second plaintiff about leases before and should be taken to have some level of expertise in this area.

65. The plaintiffs’ case is that the defendant owed a duty to advise about the restrictive effect of clause 2.2(b) of the Incentive and Works Deed, in that it purported to exclude the landlord from all obligations of any kind. It is agreed that no advice was given by the defendant about this provision; the question on breach (as is set out below) is whether a reasonable practitioner with conveyancing and/or leasing experience would have been bound to give advice about that clause of the kind asserted by the plaintiffs.

66. The defendant accepts that he owed the plaintiffs a duty to exercise reasonable care in the provision of legal services to them: Heydon v NRMALtd (2000) 51 NSWLR 1 at [146]. The defendant’s limited role in relation to modifying the terms of the lease is clear from the material set out in his tax invoice for $860 and expenses of $219 (Exhibit A, p 124); his obligations were limited to advising the plaintiffs about what the provisions in the lease were. Any advice he gave about a particular clause would be of the “take the deal, or leave it” variety.

67. There is no evidence that the clause the subject of challenge in these proceedings was in any way unusual or unexpected. Accordingly, the statement of principle in Heydon v NRMA Ltd is the relevant one to apply, rather than the standard owed by a solicitor professing expertise in a particular field as set out in Yates Property Corp Pty Ltd (in liq) v Boland (1998) 85 FCR 84.

68. As to breach of duty, the scope of the duty which was owed was agreed by the parties to be the exercise reasonable care in reviewing and advising in relation to the lease documents prepared by the landlord.

69. There is no evidence of departure from long-established practice, or another method to minimise the risk, and the only basis upon which it is asserted that the plaintiffs’ loss would be prevented is that, had the plaintiffs known of the risk, they say they would not have entered into the contract at all.

70. The plaintiffs have adduced no expert evidence as to the need to advise on clause 2.2(b) and have approached this issue as if it is one of common knowledge or common sense. However, the limits of the application of common knowledge to the question of breach (a question of fact, and one in which the onus lies on the plaintiffs) does not extend to this kind of generalised claim: Neill v New South Wales Fresh Food & Ice Pty Ltd (1963) 108 CLR 362 at 369-370.

71. Counsel for the defendant submits, and I accept, that a distinction should be drawn between the practice of conveyancing or leasing solicitors, where expert evidence is generally required (Provident Capital Ltd v Naumovski [2011] NSWSC 270; Abu‑Mahmoud v Consolidated Lawyers Pty Ltd [2015] NSWSC 547; Schacht v Thompsonand Staunton t/as Staunton & Thompson Lawyers [2012] NSWSC 168), and failure to properly conduct litigation or the assessment of the value of a lost common law action, where it is generally not required (Cullen v Sema [1998] NSWCA 65).

72. Evidentiary factors of relevance include the limited scope of the $860 retainer (namely the role being limited to advising) and his understanding of the role the plaintiffs had played in the Incentive and Works Deed. The conversations the second plaintiff had with the defendant all emphasised the importance of the installation of new equipment, for which the landlord was paying a substantial sum. The plaintiffs’ argument is predicated upon the defendant advising as to the likelihood of this new equipment totally failing in circumstances where the manufacturer was either not liable or it was too risky or expensive to sue the manufacturer (as opposed to the landlord, whom it was assumed would simply attend to his obligations under the lease without being sued).

73. There is no evidence that the defendant was on notice that the manufacturer, which boasted of being a large business with many customers, was too risky to sue, and that the only party of substance would be the landlord.

Foreseeability and the relevant test to apply

74. In Lucantonio v Stichter [2014] NSWCA 5, the Court of Appeal identified the test (at [79] – [81]):

“[79] In order to establish that any breach of duty on the respondent’s part caused the appellant harm, the appellant had to establish that that negligence was a necessary condition of the occurrence of that harm, an exercise the Act labels “factual causation”: s 5D(1)(a), Civil Liability Act 2002. That required the appellant establishing that the respondent’s negligence was a condition that must be present for the occurrence of the harm: Strong v Woolworths Ltd [2012] HCA 5; (2012) 246 CLR 182 (at [18], [20]) per French CJ, Gummow, Crennan and Bell JJ; (at [44]) per Heydon J.

[80] Such determination “is entirely factual, turning on proof by the plaintiff of relevant facts on the balance of probabilities in accordance with s 5E” (Wallace v Kam [2013] HCA 19; (2013) 87 ALJR 648 (at [14])) and is approached by applying common sense to those facts: Hunt & Hunt Lawyers (a firm) v Mitchell Morgan Nominees Pty Ltd [2013] HCA 10; (2013) 247 CLR 613 (at [43]; [56]) per French CJ, Hayne and Kiefel JJ. It “involves nothing more or less than the application of a ‘but for’ test of causation”: Wallace v Kam (at [16]); Adeels Palace Pty Ltd v Mourbarak [2009] HCA 48; (2009) 239 CLR 420 (at [45], [55]). “Proof of the causal link between an omission and an occurrence requires consideration of the probable course of events had the omission not occurred”: Strong v Woolworths Ltd (at [32]) per French CJ, Gummow, Crennan and Bell JJ.

[81] The inquiry into causation is retrospective, seeking to identify what happened and why: Vairy v Wyong Shire Council [2005] HCA 62; (2005) 223 CLR 422 (at [124]) per Hayne J; Lesandu Blacktown Pty Ltd v Gonzalez [2013] NSWCA 8 (at [28]) per Basten JA (Davies J agreeing). It focuses on the particular conduct or omission which is found to constitute the defendant’s breach of duty: Kocis v SE Dickens Pty Ltd [1998] 3 VR 408 (at 419) per Phillips JA (Ormiston JA generally agreeing).

75. The question of whether the appellant would have completed the lease but for this clause, or resiled from the whole of the transaction, has to be determined subjectively in light of all the relevant circumstances: s 5D(3)(a) Civil Liability Act 2002 (NSW); Wallace v Kam [2013] HCA 19 at [17].

76. The plaintiff were experienced butchers with sufficient knowledge about refrigerator requirements to give very specific instructions to the manufacturer, including a model for the new refrigerator which they asked the manufacturer to follow. They were receiving a significant incentive to enter into this lease in the form of very expensive new equipment. They emphasised the importance of this equipment to their business to the defendant as being that a brand new refrigerator built to their specifications was required, in circumstances where the plaintiffs were ensuring fitness for purpose by requiring compliance with their own design. No question of liability for the refrigerator if it totally failed was ever raised, probably because the likelihood of total failure of this brand new custom-built unit was never considered a foreseeable risk.

77. I am satisfied, from the nature and extent of the transactions, that if the advice had been given, it would have made no difference to the transaction, in that it would have been given in the context of the plaintiffs’ rights in relation to the manufacturer and supplier of the goods. The likelihood of total failure of the newly installed refrigeration never came into consideration because it was so remote as to be a factor that it did not need to be considered. Given the remoteness of likelihood of such an event and the evidence that the manufacturer was both reliable and solvent, for the defendant to give advice to the plaintiffs of the kind Mr Rollinson submits should have been provided (namely not to enter into the transaction unless the landlord making this valuable offer also gave guarantees, in addition to any warranties given by the manufacturer, in relation to the brand new equipment designed to the plaintiffs’ specifications) would itself have arguably been negligent.

78. Even if no expert evidence as to the correct standard of advice from a conveyancing/leasing solicitor is required, I am of the view that the advice given by the defendant did not fall short of the expected standard.

Did the conduct fall short of the expected standard?

79. Clause 2.2(b) provides that the landlord does not give a warranty for the “Landlord’s Works”, as part of a wider provision. The plaintiffs refer to it as a “non‑liability clause” in the statement of claim, but I accept the submissions of the defendant that this is not the correct description. It is consistent with the negotiations between the second plaintiff and landlord (see affidavit of Mr Bui, paragraphs 10, 13, 14-16, 18-22, 24, 25, 28, 29-35, 40, 42 and 45) and restricts the landlord’s liability in relation to fitness for purpose and performance issues, which are matters for the manufacturer in terms of the manufacturer’s warranty. The plaintiffs never instructed the defendant that the landlord had promised any warranty (see paragraph 29 of the second plaintiff’s affidavit).

80. Finally, and most importantly, the defendant was retained for a fee of $860 to give some advice about a lease in a general sense. He did not owe a duty to give advice about every clause in the lease or to give advice about every eventuality, including something as unforeseeable as a new refrigerator which totally failed to perform.

Conclusions as to breach of duty of care

81. For the above reasons, I am not satisfied that the defendant breached the duty of care by failing to give the asserted necessary advice as to clause 2.2(b).

82. I am satisfied that there was no breach of duty.

81. In the event that I have erred in my findings in relation to breach of duty of care, I next set out alternative findings in relation to the concurrent wrongdoer defence.

Concurrent wrongdoer – Ayash Pty ltd

84. Even if the defendant’s advice were negligent, the plaintiffs had (and still have) a very strong claim against the manufacturer, as Mr Cole’s long and careful report demonstrates.

85. The concurrent wrongdoer is identified in the defence as Ayash Pty Ltd, the manufacturer and supplier. The facts and circumstances relied upon to render this company a concurrent wrongdoer are set out in the defence as follows:

“(e) the facts and circumstances that make Ayash Pty Ltd a concurrent wrongdoer are:

(i) Ayash Pty Ltd constructed and installed the fridge display cabinet and the open meat refrigerated meat cabinet (“the cabinets”);

(ii) on the plaintiffs’ instructions the defendant, and as pleaded in the SOC [sic] were faulty, not fit for purpose and were unable to maintain low temperatures to store meat;

(iii) the plaintiffs’ expert report from Warren Cole dated 5 March 2013 states that the cabinets created a risk to health and safety and were inadequate to meet Australian Food Safety requirements;

(iv) Ayash Pty Ltd had obligations at law, under the Australian Consumer Law and under the Fair Trading Act 1987 to ensure goods and/or services it supplied were not faulty, were fit for purpose and free of risks to health and safety;

(v) The basis of the plaintiffs’ own allegations and expert report alleged inability to trade, and the damage and losses resulting from the inability to trade were all wholly the result of the cabinets being faulty as set out in paragraph 15 SOC;

(vi) In the premises, Ayash Pty Ltd caused or contributed to any loss sustained by the plaintiffs.”

86. The apportioning of a claim under Part 4 Civil Liability Act 2002 (NSW) in relation to a claim against a solicitor is explained in Hunt & Hunt Lawyers v Mitchell Morgan Nominees Pty Ltd [2013] HCA 10 and in Kayteal Pty Ltd v Dignan (2011) 15 BPR 29,515.

87. In Kayteal Pty Ltd v Dignan, Brereton J was required to apportion liability between a solicitor, a negligent valuer and a defaulting borrower. His Honour explained the procedure at [71] as follows:

“In determining the relative responsibility of concurrent wrongdoers for a loss, it is necessary to compare the blameworthiness and causative potency of the conduct of each of them [Reinhold v New South Wales Lotteries Corporation (No 2) [2008] NSWSC 187, [50]-[53]]. Relevant factors include, but are not limited to, which of the wrongdoers was more actively engaged in the activity causing loss, and which was more able effectively to prevent the loss [Yates v Mobile Marine Repairs Pty Ltd [2007] NSWSC 1463, [93]-[97]]. Although allowance should be made for the circumstance that the responsibility of one wrongdoer may be relatively increased if it was engaged by the plaintiff specifically for the purpose of guarding against the potential wrongdoing of another (such as a fraudster), there must nonetheless still be a reduction in the liability of the first, as the fraudster is on any view a concurrent wrongdoer, and the fraudster's responsibility may well exceed that of the solicitor. Thus in Ginelle Finance Pty Ltd v Diakakis [2007] NSWSC 60, Hoeben J apportioned liability 90% to the fraudster and 10% to the solicitor. An almost identical result was reached by Bryson AJ in Chandra v Perpetual Trustees Victoria Ltd (2007) 13 BPR 25,259. And in Vella v Permanent Mortgages Pty Ltd [2008] NSWSC 505, [571]-[600], Young CJ in Eq (as his Honour then was) apportioned responsibility 72.5% to the principal fraudster (Caradonna), 15% to a solicitor who had falsely witnessed a signature (Flammia), and 12.5% to the negligent solicitors - even though a purpose of engaging solicitors was to guard against the conduct of the fraudster]. As Young CJ in Eq said (at [593]-[595]), it would be wrong simply to say that those cases almost compel subsequent courts to reach the same apportionment in similar cases; but they do provide much needed guidance. ”

88. Brereton J apportioned liability 47.5% to the defaulting borrower, 40% to the valuer and 12.5% to the solicitor. Counsel for the defendant drew to my attention that, in other cases where liability has been apportioned, the lion’s share of the damage lies with the actual wrongdoer rather than the solicitor who gave the negligent advice.

89. The examples listed by Brereton J in Perpetual Trustee Company Limited & anor v Peter Ishak [2012] NSWSC 697 are:

1. 10% in Ginelle Finance Pty Ltd v Diakakis [2007] NSWSC 60;

2. 12.5% in Chandra v Perpetual Trustees Victoria Ltd (2007) 13 BPR 25,259;

3. 12.5% to the negligent solicitor and 15% to a solicitor who engaged in fraud in Vella v Permanent Mortgages Pty Ltd [2008] NSWSC 505;

4. 12.5% to the negligent solicitor in Kayteal Pty Ltd v Dignan [2011] NSWSC 197, although a grossly negligent valuer’s percentage was put at 40%, and the balance was apportioned to the fraudster; and

5. 25% would have been apportioned to a conveyancer whose misleading conduct was enhanced by his professional status in Perpetual Trustee Company Limited & anor v Peter Ishak if apportionment orders had been made.

90. On the plaintiffs’ evidence, Ayash Pty Ltd supplied defective equipment and failed to remedy the problem, even though a guarantee had been given. Mr Cole’s report is damning in its findings.

91. I also note that, if there was a breach, it occurred in circumstances where the defendant did not draft either the lease or the deed, or take part in the negotiations. He only charged $860 (Exhibit A, p 124). Any failure to advise did not have the significant causal potency that it might have had.

92. I agree with the estimate given by counsel for the defendant that, taking the above into account, the apportionment should be 80% to Ayash Pty Ltd and 20% to the defendant.

Contributory negligence

93. Paragraph 20 of the defence contains the following particulars:

“(a) the second plaintiff read the Lessor’s disclosure document dated 7 September 2012;

(b) the second plaintiff signed the Lessor’s disclosure document on 7 September 2012;

(c) the first and second plaintiff failed to read or consider the incentive and works deed or to ask the defendant questions about it when they knew it contained details about the fridge display cabinet and the open refrigerated meat cabinet;

(d) failure to allow enough time to consider the lease and the incentive and works deed;

(e) the plaintiffs abandoned shop 11 and ceased trading in or about February 2013;

(f) the plaintiffs failed to negotiate with, or respond to offers to negotiate with, or to meet with representatives of the Lessor of shop 11 and/or Ayash Pty Limited in relation to the alleged defects in the cabinets.”

94. In addition, the plaintiffs failed to action Mr Cole’s report or to take the defendant’s advice to retain counsel to advise. As the defendant’s area of work was conveyancing and not litigation, he should not have been expected to commence and maintain what could have been substantial court proceedings at his own expense. The second plaintiff’s refusal to spend the quite moderate sum of $5,000 to retain counsel was unwise.

95. However, these are arguably matters going to mitigation rather than to contributory negligence, so I have not taken them into account in relation to contributory negligence.

96. Even harder to understand than the failure to sue the manufacturer is the plaintiffs’ failure to take any of the steps set out above. These were experienced butchers with other shop premises and the second plaintiff had carried out negotiations with Mr Zoabi.

97. A significant percentage would have to be allowed for contributory negligence and I would put that figure at 40%.

Causation

98. Causation is governed by s 5D and applies to all causes of action pleaded: Booksan Pty Ltd v Wehbe (2006) Aust Torts Rep 81-830 per Ipp JA at [167].

99. Both parties took unusual positions in relation to the giving of evidence by the second plaintiff as to what he would have done if the advice had been given. I note that no objection was taken to this despite s 5D(3)(b) (see, for example, Polon v Dorian [2014] NSWSC 571 at [536] – [537]). Counsel for the plaintiffs in fact frequently reminded me of the second plaintiff’s evidence that if he had been advised that he could not look to the landlord for repair or replacement of the refrigerator, he would never had entered the lease at all, inviting me to draw the same inference in relation to the first plaintiff, the actual lessor. Counsel for the defendant similarly pointed to the fact that the first plaintiff (the lessee), while in court, did not give any evidence to this effect. However, having regard to the provisions of 5D(3)(b)), I do not consider that failure to call the first plaintiff to give such evidence would have any relevance to this issue in any event.

100. The determination of arguments about causation is largely fact-driven, rather than depending upon the interpretation of statutory provisions. In the present case, there is no evidence that the clause restricting the landlord’s liability in relation to the new refrigerators was anything other than standard. This raises the question as to what the nature and quality of the advice which should have been given in the exercise of reasonable care would be. Counsel for the defendant submits that the absence of this evidence creates significant problems in terms of causation, because the nature of the advice which ought to have been given by the exercise of reasonable care is central to the plaintiffs’ case on causation. For example, if reasonable care required no more than advice that the clause was reasonable and standard, then that is relevant to causation, because it affects the question of whether the plaintiffs would have acted differently if given that different advice.

101. The plaintiffs need to establish that they lost an opportunity of value to raise with the landlord the removal of clause 2.2(b) or the alteration of it to the plaintiffs’ benefit. I accept the submissions of counsel for the defendant that there is no evidence on that point. To the contrary, the evidence appears to show that the second plaintiff’s negotiations were never conducted on the basis that the landlord would give a warranty.

102. The plaintiffs’ case is that they were unable to trade for the term of the lease and were unable to sue the landlord (paragraph 16 of the Amended Statement of Claim). However, clause 2.2(b) did not prevent them from suing the landlord, Ayash Pty Ltd or (preferably) both. Instead, the evidence shows that the second plaintiff did not sue the landlord because he thought it was his solicitor’s job to do so without expecting him to pay.

103. The plaintiffs’ argument on causation appears to be that a more favourable outcome may have been obtained if the landlord was not able to rely upon clause 2.2(b) of the deed and was prepared to negotiate without going to court. The landlord’s solicitors’ correspondence demonstrates that this was not the case. The landlord had already spent substantial sums on the new equipment; the prospects of spending more, without seeking legal advice and ending up in court, were remote.

104. All of the evidence, along with what is clearly self-hindsight based reliance of the plaintiffs, falls well short of establishing that, either on the necessary basis ("but for") test, or on a common sense basis, any advice or negligent conduct on the part of the defendant was the reason for entering into a transaction they would otherwise never have considered.

105. I was not addressed as to other potential areas for argument, such as impact of the plaintiffs’ refusal to pay for an advice from counsel as to what to do, or the claims by Ayash Pty Ltd that they were not able to enter the premises to repair the refrigerator because of the failure of the plaintiffs, after the first week of business when they closed the premises, to be present to let them in.

106. I would be satisfied, if my findings in relation to breach are in error, that the plaintiffs have not established causation.

Failure to mitigate

107. The defence sets out the following particulars at paragraph 18:

“18. In addition, or in the alternative, the plaintiffs have failed to take steps reasonably available to them to mitigate their loss and damage (which is denied), particulars of which are as follows:

(a) the defendant repeats paragraph 17;

(b) in the premises the plaintiffs had statutory or other rights available to them to require Ayash Pty Ltd to rectify any defects in the cabinets;

(c) on the plaintiffs’ own allegations and expert report, any claim on Ayash Pty Ltd would have resulted in the repair or replacement of the cabinets, and costs;

(d) in the premises the plaintiffs have failed to mitigate.”

108. The plaintiff is not under any duty to bring risky litigation to mitigate his loss and damage: see Pilkington v Wood [1953] Ch 770 at 777; Dhaildeal v Pade [2003] NSWCA 16; Bebonis v Angelos (2003) 56 NSWLR 127. I note that these issues are not to be relied upon in relation to contributory negligence, but that they are available in relation to the issue of mitigation.

109. The plaintiffs have not exercised their rights to sue Ayash Pty Ltd, the supplier of the works. This claim for professional negligence involves the same factual issues as any case brought against Ayash Pty Ltd would do, namely the impact of the defective refrigerator on the plaintiff’s business, in circumstances where it is hard to see how Ayash Pty Ltd would have any case of substance on liability.

110. Such a claim would not have most, if not all, of the problems that the plaintiffs have in relation to their claim against their former solicitor. For instance, particularly in relation to the second plaintiff, standing to sue the supplier under the Australian Consumer Law (Schedule 2 of the Competition and Consumer Act 2010 (Cth)) is no barrier to the claim, because a plaintiff’s entitlements to remedies under s 236 of the Australian Consumer Law do not require reliance on the representations made to the plaintiffs. An actionable link between the loss and the misleading and deceptive conduct is sufficient. In Finishing Services Pty Ltd v Lactos Fresh Pty Ltd [2006] FCAFC 177 Kiefel, Sundberg and Edmonds JJ stated at [31] – [32]:

“[31] His Honour accepted that Lactos Fresh did not itself have to rely upon the misrepresentation in order to make a claim under s 82. The authorities accept that third party reliance may cause an applicant’s loss: Janssen-Cilag Pty Ltd v Pfizer Pty Ltd (1992) 37 FCR 526; Haynes v Top Slice Deli Pty Ltd (1995) ATPR (Digest) P 46–147; McCarthy v McIntyre [1999] FCA 784 (‘ McCarthy v McIntyre’). However the authorities require there to be a ‘sufficient and direct link’ or a ‘requisite element of proximity’ in order for the section to be satisfied.

[32] In McCarthy v McIntyre the Full Court observed that precisely what tests should be used to judge what constitutes the sufficient cause or connexion required between the misleading conduct and the outcome is the subject of some difficulty. A common sense approach had been required and the ‘but for’ test of causation used in many areas. Whilst that test, as an exclusive test of causation, had been found to be wanting in some contexts, it still provided a useful approach to the issue of causation. In the present case his Honour applied that test at the outset. In his Honour’s view it could not be said that ‘but for’ the agent’s assessment Mr Allen would have sent the applicants a notice for less than the sum actually specified in it. The figure may have even been higher, given that Mr Allen believed that the figure advised by Colliers Victoria was ‘a bit low’ and that the premises were worth more. The case presented by Lactos Fresh would require findings about ‘what would have happened’ in a way which would border upon speculation.”

111. The observations of the Full Court of the Federal Court of Australia in Addenbrooke Pty Ltd v Duncan (No 2) [2017] FCAFC 76 at [501] as to the approach of the common law generally in considering whether there is a causal connection between a defendant’s failure to warn or advise of a risk, on the one hand, and a plaintiff’s loss on the other underline the availability of this course of action to the plaintiffs against Ayash Pty Ltd.

112. The plaintiffs did not only have good evidence of their own, by taking temperature readings in January 2013; they also had Mr Cole’s report of 5 March 2013. There was a strong basis for claiming Ayash Pty Ltd made misleading representations to the landlord about the quality of the units they supplied. Ayash Pty Ltd did in fact give a 12-month warranty which the plaintiffs could have availed themselves of (Exhibit A, p 161; see also Exhibits 2 and 3 as to the company’s viability).

113. Counsel for the defendant referred in his submissions to the following extract from Walker v Geo H Medlicott & So (1999) 1 WLR 727:

“In answer to this suggestion, Miss Wicks submitted that it was entirely reasonable for the plaintiff not to have brought proceedings for rectification. She referred us to the decision in Pilkington v Wood [1953] Ch. 770, on the facts of which Harman J held that the plaintiff was not obliged, even under an indemnity against his costs, to undertake “complex litigation”. We were told that not infrequently, in cases where the solicitor draftsman of a will admits a negligent error, proceedings for rectification will be brought with the protection of an indemnity offered by the solicitor in respect of the costs of the proceedings. In the present case, Miss Wicks pointed out, Mr Medlicott, so far from offering any indemnity, firm the start denied that there had been any failure to carry out the testatrix’s wishes and instructions in the drafting of the will. An action for rectification, she submitted, would have bene as hotly disputed as this present action.

This may be so, but, so far as I can see, the evidence on both sides would have been precisely the same. If the plaintiff had a valid claim in negligence, then a fortiori he would have had a good claim for rectification of the will. (I say “a fortiori” because, as I have already indicated, proof of the factors necessary to ground a claim for rectification would not ipso facto establish negligence on the part of Mr Medlicott.)

Throughout this judgment, I have assumed in favour of the plaintiff, without deciding, that a beneficiary who, due to the negligent failure of the solicitor draftsman of a will to carry out the testator’s instructions, takes no benefit under the will in its form as executed has a good cause of action against the solicitor who drafted the will, even though he also has a good claim for rectification. Even on that assumption, however, I do not think that the law should encourage the bringing of actions against solicitor draftsmen in such circumstances.

First, successful actions for negligence in such circumstances will or may result in beneficiaries other than the successful plaintiff, for example, the five other residuary beneficiaries in the present case, retaining adventitious benefits greater than those which they would have enjoyed if the will had been rectified so as to accord the testator’s intentions, for example, in the present case, a share of residue depleted by the removal of the house Justice would seem to demand that such other beneficiaries should share the financial burden of putting things right. Secondly, in my judgment, notwithstanding the decision in Pilkington v Wood, this is a situation in which, as a general rule, the courts can reasonably expect the plaintiff to mitigate his damage by bringing proceedings for rectification of the will, if available, and to exhaust that remedy before considering bringing proceedings for negligence against the solicitor, for example, in relation to costs incurred in the rectification proceedings.

Accordingly, I would accept Mrs Peacocke’s submission that since the plaintiff has failed to mitigate his damages, if any, by first issuing proceedings for rectification or the will, he would on this ground, if no other, recover nothing in this action. On this further or alternative ground I think his claim against the defendants must fail.”

[Emphasis added]

114. I agree that the same principles apply here. It is still open to the plaintiffs to sue Ayash Pty Ltd. The time limit under s 236 of the Australian Consumer Law is six years from the date of loss. It is also still open to the plaintiffs to sue the landlord as a joint defendant in that litigation. I consider that the likelihood of such a step is the most likely reason for the landlord’s otherwise inexplicable failure to commence proceedings against the first plaintiff for unpaid rent, despite serving notices to do so. Had such an action been commenced, the plaintiffs might have brought a cross-claim, or joined Ayash Pty Ltd.

Loss of opportunity

115. The defendant also submits that the plaintiffs have failed to establish any loss of opportunity under the lease for a 5 year term. Although this part of the claim has largely fallen away by reason of the change of approach of the plaintiffs to damages, I note that on 17 February 2013 the second plaintiff had a heart attack, and that since then he has remained unfit for work (Exhibit 1). The defendant would have submitted that there would be no business without him. In addition, the second plaintiff and his wife separated and she appears no longer to be involved in the business, although whether that would have had an impact on the business is questionable. However, as the plaintiffs have made it clear that a claim for loss of opportunity on this basis is no longer put, I need only note these submissions.

116. As noted below, the parties have largely agreed as to the quantum of damages. Apart from a challenge to the basis of cost for meat, the only substantial issue of dispute is the defendant’s contention that the landlord’s claim for $142,128 fails as there is presently no loss and there can be no damages awarded with respect to that contingent liability: see Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 at [26].

117. I consider the reason for this is that the landlord’s legal advisers are aware of the risk, if they sue, that there will be a defence and cross-claim that the landlord breached the lease. In other words, although there is no current demand or court proceedings, that does not mean that there will not be any in the future, and this is not a contingent loss.

118. However, this does not help the plaintiffs in relation to mitigation, because if the claim is prosecuted by the landlord, the plaintiffs can argue in their defence and cross-claim that the landlord breached the lease (see paragraph 16 of the defence and the discussion of mitigation set out above).

Observations on quantum

119. The parties were able to agree upon most of the heads of damage and the defendant provided a schedule setting out the assessments of both parties:

Claim	Plaintiff’s claim	Defendant’s allowance
A.	Paid rent	$7,012	$7,012
B.	Bank guarantee	$21,037	$21,037
C.	Search expenses, including interest	$444	$444
D.	Spoilt meat	$18,750	$6,750 (Calculated at $4.50/kg)
E.	Insurance premiums	$1,726	$1,726
F.	Set up costs	$32,409	$32,409
G.	Rent liability	$71,064	Nil (Contrary to settled principle: Wardley at 526.)
H.	Sub total	$152,442	$69,378
I.	Less profits made	$5,000	$5,000
J.	Sub total	$147,442	$64,378
K.	Interest on items A to F (less profits made) for 4.25 years @ 7%	$22,722.46	$19,152.46
L.	Total	$170,164.46	$83,530.46
Less Deductions Less discount for lost chance including that losses would have been suffered anyway, if applicable (See Heenan v Di Sisto [2008] NSWCA 25 at [28]-[33]) Less concurrent wrongdoer defence if applicable (which the defendant puts at 80%)

120. The plaintiff’s schedule of damages, entitled “Plaintiff’s Damages Caculations Wasted Expenditure Case”, is as follows:

$	Agrees with Def’s table?
A.	Paid rent	7,012	Y
B.	Bank guarantee	21,037	Y
C.	Search expenses	444	Y
D.	Spoilt meat	12,000	No
• Mr Bui’s valuation of meat thrown away, at $12.50/kg, was or at least included meat that he sold to customers but was returned with refunds paid (evidence in xxm). So the actual loss is somewhere between the av. $4.50/kg price to buy wholesale and $12.50/kg, say $8.00/kg x 1,500 kg = $12,000
E.	Insurance premiums	1,726	Y
F.	Set up costs	32,409	Y
G.	Rent liability	71,064	No
145,692
Less profit made	5,000	Y
140,692
Plus Court rate interest
4.25 y x av. 7%	41,856	Y (rate)
TOTAL	$182,548

121. As noted above, I do not accept the defendant’s submissions as to the Wardley issue. The liability of the plaintiffs to the landlord is no mere contingency. The issue as to the value of the spoilt meat is based on an over-refining of the meat costs and I prefer the plaintiff’s position in this regard.

122. Accordingly, if I have erred in my findings as to liability, I would have accepted the plaintiff’s estimates in relation to quantum.

123. However, this sum would then have to be reduced very substantially to allow for my successive findings under s 35, for contributory negligence and mitigation of damages. It would also have to survive my finding that the plaintiffs fail on causation.

Concluding orders and costs

124. The defendant has been successful on every issue except the Wardley argument. Costs should follow the event. I have, however, granted liberty to apply.

Orders

1. Judgment for the defendant.

2. Plaintiffs pay defendant’s costs.

3. Liberty to apply in relation to costs.

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Amendments

04 July 2017 - Paragraph 102 - typographical error

Decision last updated: 04 July 2017