Edwards v Anderson - [2009] NSWSC 373

No judgment structure available for this case.

CITATION: Edwards and Anor v Anderson and Ors [2009] NSWSC 373

HEARING DATE(S): 15 April 2009, 16 April 2009

JUDGMENT DATE :
15 May 2009

JUDGMENT OF: Schmidt AJ

DECISION: Proposed Orders:
1. Verdict to the Plaintiffs, with a damages order.
2. Plaintiffs are to bear defendants' costs of the two adjournment applications, and the defendants otherwise to bear the plaintiff's costs of the proceedings, as agreed or assessed.

CATCHWORDS: PROFESSIONS AND TRADES - lawyers - duties and liabilities - negligence in advising clients - sublease of a unit in retirement village - duty to advise - duty of care owed - foreseeability and causation - damages - TORTS - negligence - general matters - solicitor negligence - damages - EVIDENCE - admissibility and relevancy - opinion evidence - qualification of witness

LEGISLATION CITED: Civil Liability Act 2002
Retirement Villages Act 1999
Retirement Villages Regulations 2000
Trade Practices Act 1974 (Cth)

CATEGORY: Principal judgment

CASES CITED: Australian Securities and Investment Commission v Vines [2003] NSWSC 1095
Capebay Holdings Pty Ltd v Sands [2002] WASC 287
Capital Brake Service Pty Limited v Meagher & 8 Ors t/as Sparke Helmore [2003] NSWCA 225
Dean-Willcocks v Commonwealth Bank of Australia (2003) 45 ACSR 567
Director General Department of Fair Trading v Woolcott Village Pty Ltd [2001] NSWSC 889
Fox v Everingham and Another (1983) 50 ALR 337
Henville and Another v Walker and Another (2001) 206 CLR 459
Heydon v NRMA Ltd (2000) 51 NSWLR 1
Macindoe and Another v Parbery (1994) Aust Torts Reports 81-290
Midland Bank Trust Co Ltd v Hett Stubbs & Kemp (A firm) [1979] Ch 384
Nguyen v Cosmopolitan Homes [2008] NSWCA 246
Pegrum and Pegrum v Fatharly [1996] 14 WAR 92
Permanent Trustee Australia Ltd v Boulton (1994) 33 NSWLR 735
Sykes v Midland Bank Executor and Trustee Co Ltd [1971] 1 QB 113

PARTIES: First Plaintiff - David Harry Edwards
Second Plaintiff - Judith Anne Gorry
First Defendant - Paul Richard Anderson
Second Defendant - Peter William Turk
Third Defendant - Pieter Edward Oomens
Fourth Defendant - Graham Kenneth White
Fifth Defendant - John Kenneth Myatt
Sixth Defendant - Samuel Kennedy
Seventh Defendant - John Peter Hick
Eighth Defendant - Roger Daniel Walter
Ninth Defendant - Joanna Apostolopoulos
Tenth Defendant - David Eric Collinge
Eleventh Defendant - Mary Karekos
Twelfth Defendant - Alphonse Luke Edwards
Thirteenth Defendant - Michelle Anne Riordan
Fourteenth Defendant - Christine Tsekouras
Fifteenth Defendant - Kerry Haddock

COUNSEL: Plaintiffs - Mr JC Thompson, counsel
Defendants - Mr D Fagan SC with Mr MCL Dicker, counsel

SOLICITORS: Plaintiffs - Lander & Lander
Defendants - Colin Biggers & Paisley

- 38 -

IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION

SCHMIDT AJ

Friday, 15 May 2009

20099/07 DAVID HARRY EDWARDS & ANOR v PAUL RICHARD ANDERSON & ORS

JUDGMENT

1 HER HONOUR: These proceedings were commenced by Harry Joseph Augustus Edwards in April 2007. They were pursued by further amended statement of claim filed in Court on 15 April 2009 by David Harry Edwards and Judith Anne Gorry, Mr Edward’s son and daughter and the executors and trustees of his will.

2 The claims concern advice given in 2001 to Mr Edwards by Mr Paul Anderson, one of the defendants, a partner of the firm TurksLegal. Mr Edwards and his wife then took a sublease of a unit in a retirement village known as Woolcott Court. The lessor was the operator of the village, Woolcott Village Pty Ltd ('Woolcott Village'). Mr and Mrs Edwards also entered into a residence contract with Woolcott Village. Woolcott Village had itself leased the unit from Sarana Holdings Pty Ltd ('Sarana'), after selling the unit to Sarana for $292,000 in 1999. The rent payable to Sarana under the head lease was $29,200 per annum. The rent payable by Mr and Mrs Edwards was $12 per year. They were required to make other payments under the residence contract for the provision of various services, which included meals, cleaning and laundry, as well as paying Woolcott Village an ingoing contribution payment of $272,000.

3 Mr and Mrs Edwards moved into unit 8 of Woolcott Village on 26 May 2001, after the residence contract was executed on 10 May. The sublease was not executed until June, after the sale of their former residence was completed. The defendants acted for Mr and Mrs Edwards on that transaction, as well as in relation to the residence contract and sublease. Under the residence contract Woolcott Village was obliged to repay the ingoing contribution payment made by Mr and Mrs Edwards, less certain deductions, as a departure fee when they gave up possession of the unit. After completion of the sale of their unit, Mr and Mrs Edwards made the ingoing contribution payment of $272,000 due under the residence contract to Woolcott Village on the basis of $252,000 in cash, with $20,000 to be deducted from the departure fee, due to be paid to Mr and Mrs Edwards by Woolcott Village when they gave up possession of the unit in the future.

4 There was an issue between the parties as to the legality of this aspect of the transaction, given the provisions of s 156 of the Retirement Villages Act 1999. The provisions of the Retirement Villages Act governed the residence contract, both by express provision in the contract and by virtue of s 199 of that Act, which precluded parties to such agreements contracting out of the statutory regime.

5 Unbeknownst to Mr and Mrs Edwards, in May 2001, shortly after entering the residence contract, an external controller was appointed to Woolcott Village. On 5 October 2001, an application under the Retirement Villages Act for the appointment of an administrator, was brought before the Court, on the application of the Director General of the Department of Fair Trading. In his decision in Director General Department of Fair Trading v Woolcott Village Pty Ltd [2001] NSWSC 889, Hamilton J referred at [1] to the Director General’s affidavit, which described the situation at Woolcott Court as:

6 On 12 October 2001, a Mr Condon was appointed administrator. On 8 October, an application that Woolcott Village be wound up came on for hearing before the Court. It was dissolved in November 2005. Mr Condon operated the retirement village as administrator until 2007. During the administration, attempts to find another operator for the retirement village failed.

7 Mr and Mrs Edwards continued living in the unit at Woolcott Court until August 2005. The services formerly provided by Woolcott Village under the residence contract were not all maintained during that time, with the administrator and Mr and Mrs Edwards making various arrangements from time to time as to such services. In 2005, both Mr and Mrs Edwards had difficulty in continuing to cope at Woolcott Court, given their health and the absence of meals formerly provided to them under the residence contract. On 8 August 2005, they both left to go into respite care, while efforts were made to find them another residence. Mrs Gorry described the difficulty in finding such accommodation for them, they having no funds to make another ingoing contribution payment to another operator. Woolcott Village defaulted on the departure payment due to them when they left Woolcott Court. Sarana, the owner of the unit they had occupied, had no obligation to make such a payment to them, nor did anyone else. They did not have any right even to assign their sublease. On the evidence of the two experts, Mr Bevan and Mr Manning, this was an unusual arrangement, later described by the administrator of the retirement village, Mr Gordon, as ‘unique’, and giving rise to difficulties when attempts were made to find another operator of the village.

8 Accommodation was finally found for Mr and Mrs Edwards, at a higher level of care than that which they had received at Woolcott Court, necessary because of their health at that stage, although in Mrs Gorry's opinion, if meals had continued to be provided at Woolcott Court, her father might have been able to remain there for another six months. Mr and Mrs Edwards moved to Bowden Brae retirement village in October 2005, where the ingoing contribution payment was waived by the operator, the Uniting Church, after representations were made on their behalf.

9 In July 2007 the administrator was removed, in accordance with provisions of the Retirement Villages Act, again on application of the Department of Fair Trading. Residents were then advised by the administrator that Woolcott Court would no longer operate as a retirement village; that the Residential Tenancies Act 1987 would in future apply to their leases and that they should seek legal advice. The last of Mr and Mrs Edwards' property had been removed from the unit in March 2007, when the keys were handed to the then owner of the unit (which had acquired the property from Sarana as part of the settlement of certain family law proceedings).

The adjournment applications

10 On 14 April 2009, an application to vacate the hearing fixed to commence on 15 April was refused by Hoeben J, but leave to proceed on a further amended statement of claim in the form annexed to the plaintiffs' motion of 9 April was granted, that application not being opposed.

11 The application to vacate the hearing arose from a proposed further amended defence, which the defendants had served on 1 April 2009, which raised s 129 of the Retirement Villages Act 1999 as a defence. This, it was claimed for the plaintiffs, if pressed, would necessitate an adjournment of the hearing, because the plaintiffs were not in a position to meet the evidentiary case which it raised.

12 Hoeben J was not convinced that such an adjournment was necessary, but made it clear that his refusal of the application did not preclude the plaintiffs from renewing the adjournment application at the hearing. His Honour reserved the question of costs. That application was pressed again at the commencement of the hearing, the plaintiffs' case being that they objected to the further amended defence to the further amended statement of claim, if the s 129 point was pressed. If leave to proceed on that defence was granted, an adjournment of the hearing was pressed, so that an investigation into relevant underlying facts could be pursued.

13 Having heard the parties as to what the s 129 defence raised, I came to the conclusion that the defendants had to be given leave to proceed on the further amended defence and that the adjournment application had to be declined. Like Hoeben J, it appeared to me that there was no proper foundation for the suggested difficulty with the factual foundation for any argument in relation to s 129. That followed from what was not in issue between the parties, what the evidence which they each proposed to lead showed and that the real issues raised by the s 129 defence were questions of construction of that and other provisions of the Retirement Villages Act. The defendants pressed for an order for costs in relation to the two adjournment applications, which I declined to deal with at that stage.

14 The arguments about s 129 of the Retirement Villages Act which the parties had advanced at the commencement of the hearing, largely fell away as matters important to a determination of what was here truly in issue. Section 129 provides:

129 How and when residence right or contract is terminated

(1A) A residence right arising from a residence contract that is in the form of an assignable lease terminates on the assignment of the lease.

(2) A residence contract relating to premises other than premises owned by the resident or premises that are subject to an assignable lease (and the residence right under the contract) terminates:

(b) on the date on which the resident delivers up vacant possession of the residential premises, with the prior consent of the operator, to the operator, or

(c) on the date on which the resident delivers up vacant possession of the residential premises to the operator after receiving notice of the operator’s intention to apply to the Tribunal for an order terminating the resident’s residence contract, or

(d) on disclaimer (for example, on renunciation by the resident accepted by the operator), or

(e) on the death of the last surviving resident under the contract, or

(f) on the date specified by the Tribunal in an order under section 143 declaring that the resident has abandoned the premises, or

(g) on the date on which the contract is terminated by the Tribunal, or

(h) if the contract is frustrated:

(i) on eighth day after the date specified in the notice of termination given under section 132, unless application is made to the Tribunal within the time allowed by that section (or the notice of termination is withdrawn within that time), or

(ii) on the date specified by the Tribunal, if the Tribunal determines that the contract is frustrated.

15 While there was an argument as to aspects of the sublease and how it incorporated various documents by reference, it became apparent that there was no issue between the parties that Mr and Mrs Edwards were entitled to occupy their unit, despite Woolcott Village’s default of its head lease with Sarana. This flowed from the provisions of s 129 (2) of the Retirement Villages Act. On the evidence, they in fact did occupy the unit until August 2005, albeit Woolcott Village was then in default of various of its obligations under the residence contract.

16 I am satisfied, given the way that these issues unfolded between the parties, that the defendants must have an order for costs in their favour, in relation to the unsuccessful adjournment applications.

The issues in dispute

17 The parties were not agreed about the issues which required determination in the proceedings. The plaintiffs submitted that what required determination was:

1. What was the extent of the defendants' duty of care to the clients?

2. Did the defendants breach that duty of care?

3. Did the clients suffer any loss as a result of any breach found?

4. What was the quantum of the loss, if any?

18 The defendants submitted that what required determination was:

1. Introduction

(a) This matter involves a suit against a firm of solicitors for alleged negligence and breach of the implied terms in the contract of retainer in acting for a Mr and Mrs Edwards (both now deceased) in respect of the sale of a unit at Hornsby and the acquisition of a sub-lease interest in a retirement village in Wahroonga in Sydney.

2. Duty of Care

(a) It is not disputed that the Defendants owed Mr and Mrs Edwards a duty of care in acting for them on the retainer as stated above. The precise extent of the retainer is in issue on the pleadings .

3. Breach of duty of care

(i) at no time did the Defendants ever meet or talk to Mr and Mrs Edwards;

(ii) at all times Mr and Mrs Edwards were represented by their daughter, Mrs Judith Anne Gorry (also known as Judith Anne Edwards), who was a solicitor employed at the Defendants' firm then known as PW Turk & Associates. In essence, Mrs Gorry acted as the agent of Mr and Mrs Edwards for all purposes and gave instructions to the Defendants;

Whether there has been a breach is an issue in the proceedings.

Retirement Villages Act 1999 (NSW)

4. Causation

(a) It is disputed that even if there was breach, that advice on the matters indicated would have resulted in Mr and Mrs Edwards not going ahead with the transaction. The onus rests on the Plaintiffs on the balance of probabilities and it should be held that Mr and Mrs Edwards, in the circumstances, would have gone ahead with the transaction anyway.

(b) The defendants will submit that private retirement village operators did not offer or give security for incoming contributions by retirement village residents.

(c) Causation is thus an issue in the proceedings .

5. Damages

(a) There will be issues in the proceedings as to why Mr and Mrs Edwards vacated the unit in the retirement village at Wahroonga and left to go to another retirement village at Normanhurst in circumstances where it is asserted by the Defendants that Mr and Mrs Edwards had protection under the Retirement Villages Act 1999 . This will be a disputed issue. The Defendants will assert that this was due to the age and frailty/illness of Mr and Mrs Edwards which is unconnected to any alleged breach of the Defendants.

The expert evidence

19 A difficulty arose at the hearing, in that an objection was taken to parts of the expert evidence called by the plaintiffs, which were upheld. I indicated that I would later give reasons for the conclusion that certain parts of the affidavit of Mr Bevan were not admissible. These are those reasons.

20 Mr Bevan’s affidavit indicated that he had been instructed to give his opinion ‘as to the issue of negligence in these proceedings, being the question of what duty of care was owed’ and ‘whether the defendant observed or carried out such duty of care’.

21 As to this, he said in his affidavit that:

8. In my opinion the duty owed by the Defendant to the Plaintiff and his wife in this transaction was the duty to ensure that their interests were totally secured and protected from any possible loss. This entailed the Plaintiff and his wife receiving proper and adequate security for the repayment to them of the Incoming Contribution of $272,000, subject to certain allowances, on termination of their sub-lease together with the protection of a sub-lease registered on title to Apartment 8, 1 Woolcott Avenue, Wahroonga ("the Apartment") which would be free from forfeiture so long as the Plaintiff and his wife met their obligations there under.

12. I consider that the transaction constituted by the Sub-lease and the Residence Contract was fundamentally flawed, defective and contrary to the interests of the Plaintiff and his wife and I believe that on considering the proposed transaction the Defendant should have reached the same conclusion and that he should have advised the Plaintiff and his wife accordingly.

13. The structure of the proposed transaction was flawed, defective and contrary to the interests of the Plaintiff and his wife for the following reasons:

(a) Under the general law, on the termination of a lease by forfeiture all sub-leases also came to an end, even if validly created and effective at the date of the forfeiture. Accordingly, in this transaction the position of the Plaintiff and his wife as sub-lessees was entirely dependent on Woolcott meeting all of its obligations to Sarana under the Head-lease.

(b) The Head-lease required that Woolcott pay rent of at least $29,200 per annum to Sarana. As a proprietary company with nominal capital and no apparent substantial assets, Woolcott had no credit worthiness. In my experience no bank or credit-provider will usually lend money to a proprietary company without proper security. Such security would ordinarily be by way of mortgage on realty or personal property or the guarantees of the directors or other persons interested in the company, in such case supported by mortgages or securities over the assets of such directors or other interested persons. In this case clearly Woolcott could fail for any number of reasons, which would leave rent due by it under the head-lease unpaid, thereby resulting in forfeiture of the Head-lease and the forfeiture of the Sub-lease to the plaintiff and his wife. Indeed, this proved to be the case. Woolcott was wound up with no dividends to any unsecured creditors.

(c) Under the terms of the Residence Contract the Plaintiff and his wife were to pay $272,000 to Woolcott. It was obliged to repay that amount, diminished to a certain small extent, at any time on termination of the Sub-lease. This is entirely inconsistent with the continuing obligation of Woolcott to pay at least $29,200 per annum to Sarana pursuant to the terms of the Head-lease. What was to be the source of funds with which Woolcott would meet its obligations to both Sarana under the Head-lease and its obligations to the Plaintiff and his wife under the Residence Contract?

(d) A sub-lessee may apply for the statutory relief against the forfeiture of a sub-lease pursuant to Section 130 of the Conveyancing Act 1919. However the Court in this particular case could do little of assistance for the Plaintiff because the Court would not have the power to diminish the benefits of the Head-lease accruing to Sarana as owner of the Apartment. An application by the Plaintiff under Section 130 could at the best result in the Plaintiff assuming the obligations of Woolcott under the Head-lease as a condition of the Plaintiff remaining in possession of the Apartment. The Plaintiff having already paid $272,000 to Woolcott, such result would mean that the Plaintiff would suffer substantial additional loss if he chose to follow that course of action.

(e) The rights of a sub-lessee under Section 130 are of no assistance to the Plaintiff in recovering the Incoming Contribution of $272,000 from Woolcott.

14. In my opinion the Defendant failed in his duty to the Plaintiff and his wife to properly advise them as to the flawed and defective nature of the proposed transaction. My reasons for this opinion are as follows:

(a) It appears from the documents before me that at the time of representing the Plaintiff and his wife the Defendant failed to recognize, investigate or consider the existence and the terms of the Head-lease and its significance in relation to the Sub-lease. In his letters of 6 April 2001, 13 June 2001 and 19 June 2001 the Defendant incorrectly refers to the Sub-lease as a "lease". The Defendant should have advised his client of the existence and terms of the Head-lease and its significance as aforesaid but he failed to do so.

(b) The Defendant should have advised his clients that the Apartment was owned by Sarana, not Woolcott, and that Woolcott held a head-lease only and that the Plaintiff and his wife were to receive a sub-lease, rather than a head-lease. The Defendant failed to do so.

(c) The Defendant should have obtained an extract from Australian Securities & Investments Commission as to Woolcott and if he had done so he would have found that there had been liquidation proceedings instituted against Woolcott only 7 months before the transaction was entered into. The Defendant failed to obtain such extract.

(d) The Defendant should have informed his clients that the transaction was a sub-lease rather than a head-lease, that any proprietary company had no credit worthiness in the absence of proper security for money lent to it and that Woolcott had indeed recently faced liquidation proceedings.

22 Mr Bevan’s view of the duty here in question departed considerably from that frequently discussed in the authorities, namely a duty to exercise reasonable care and skill in the provision of professional advice (see Heydon v NRMA Ltd (2000) 51 NSWLR 1 at 146 for instance). Given that his evidence was expressed in the context of a different and higher duty, namely the duty to ensure that Mr and Mrs Edwards' interests were totally secured and protected from any loss; that his opinions were relevant to what here fell to be decided, was difficult to see. Even if that difficulty were not insuperable, as to which see Midland Bank Trust Co Ltd v Hett Stubbs & Kemp (A firm) [1979] Ch 384 at 402, what also had to be considered was that in the disputed parts of his affidavit, Mr Bevan did not give any opinions as to the general practice of solicitors in the circumstances with which these proceedings were concerned. (See Austin J’s discussion in Australian Securities and Investment Commission v Vines [2003] NSWSC 1095 at [20]). Nor was his evidence directed to the practice of competent or careful solicitors in advising in such circumstances, (see Vines at [21]); or what a reasonably competent or careful solicitor would or should do in the specifically defined circumstances of this case (see Vines at [22] – [26]); or even what industry wide practice or common practice amongst solicitors of good repute was (as discussed by Young J in Permanent Trustee Australia Ltd v Boulton (1994) 33 NSWLR 735 at 738).

23 Instead, the evidence sought to be given by Mr Bevan was an opinion that the defendants were negligent in doing and failing to do certain things, evidence which is not admissible on Young J’s approach in Boulton, because ‘This is the question for the court to decide’. Nor on his Honour’s approach could Mr Bevan give evidence of what he himself would have done, if the purpose of adducing that evidence was to lead to the inference that all good solicitors would have done things that way. Austin J took a similar view in Vines at [31] - [32].

24 As to expert evidence about the ‘ultimate issue’, Austin J observed in Vines:

27 My ninth proposition is that, although there is no bar, as such, to the expert giving evidence about the ultimate issue having regard to s 80 of the Evidence Act, expert evidence directed to answering a question of law or fact that is directly before the Court for decision is inadmissible: see, before the commencement of the Evidence Act, ULV Pty Ltd v Scott (1990) 19 NSWLR 190, at 203-5 per Priestley JA. This proposition may be not so much a rule as an injunction to take particular care "when experts move close to the ultimate issue" ( R v GK (2001) 53 NSWLR 317, 326-7; cited in Adler (46 ACSR at 633, [622], per Giles JA). The evidence is likely to be inadmissible not because it goes to the ultimate issue, but because it will not be wholly or substantially based on the expert's specialised knowledge, or it will be irrelevant: Allstate Life Insurance Co v Australia and New Zealand Banking Group Limited (No 6) (1996) 137 ALR 138 at 142 per Lindgren J).

28 The concern about giving evidence of the ultimate issue is manifested in two ways. First, it is said that the expert may not give evidence of the content and application of a legal standard, for these are matters for the judge. Thus, in the Midland Bank Trust case ([1979] Ch at 402) Oliver J said that evidence of the witness's view of what, as a matter of law, a solicitor's duty was in the particular circumstances of the case was inadmissible, "for that is the very question which is the court's function to decide". Contrast this with expert evidence about professional standards laid down by a professional institute or regularly practised. Evidence of the latter kind leaves it open to the Court to say that the standard is either too low or more exacting than reasonable skill and care requires: Rabelais, BC9302077 at 38 per Hodgson J.

Makita

Dean-Willcocks v Commonwealth Bank of Australia

25 Here, there could be no question that the evidence sought to be led from Mr Bevan suffered from the difficulty considered in Dean-Willcocks. Mr Bevan’s opinions as to the deficiencies of the transactions and the advice given about them, was simply the type of submission which might be made by counsel for the plaintiffs. It did not go to establish what competent or careful solicitors might do in the circumstances here before the Court.

26 Mr Bevan went on to give certain oral evidence as to common practice in relation to transactions such as this, which it is not necessary to refer to at this stage, but to which I will return.

The defendants' duty of care

27 The evidence showed that Mr Anderson came to act for Mr and Mrs Edwards in early 2001, because Mrs Gorry was at that time working for the defendants as an employed solicitor. The terms of her employment precluded her from acting for her parents. Her area of expertise was workers’ compensation law. She approached Mr Anderson, the partner at the firm practising in this area of law, explained that her parents were very elderly and in ill health and would not be able to come to see him. He agreed to act for Mr and Mrs Edwards in relation to their dealings with Woolcott Village and the sale of their unit at Hornsby. Mr Anderson was not called to give evidence, but it was not in dispute that he never spoke to either Mr or Mrs Edwards, but communicated with them through Mrs Gorry and by correspondence.

28 Mr and Mrs Edwards had decided to sell their home, a unit at Hornsby and to move into assisted living. With their children’s help, they had investigated such accommodation and had selected Woolcott Court as their preferred choice. There were a number of other units in other retirement villages which were also suitable and available, but they preferred Woolcott Court.

29 There can be no question that Mr Anderson owed Mr and Mrs Edwards a duty to exercise reasonable care and skill in the provision of his professional advice as to the matters in relation to which he was retained. That duty was not diminished by the fact that Mrs Gorry was an employee of the defendants, or that the defendants agreed to reduce the fee they charged Mr and Mrs Edwards by 10%, on account of her position. I accept, as the defendants argued, that Mrs Gorry’s role as her parents' agent would have had an impact on how Mr Anderson gave his advice to Mr and Mrs Edwards. As observed in Capebay Holdings Pty Ltd v Sands [2002] WASC 287 at [94]:

94 There is clearly a difference between the way advice is given to an experienced client and a client completely inexperienced in the type of transaction in respect of which a solicitor is retained. To take an obvious example, a solicitor retained by a bank to act in relation to a mortgage transaction, gives advice in a much different way from the advice given to the person who has never before been involved in a mortgage transaction. A solicitor acting for a bank, may simply have to tell the bank that there is a caveat protecting another interest in property over which the bank is to take security. That advice and a copy of the caveat may, in a particular case, be sufficient to inform the bank of the prior interest and the consequences. On the other hand, a solicitor acting for a completely inexperienced person, might have to start by explaining what a caveat is, how it operates, how it might be removed and what the effect of a claimed prior interest would be on that person's security.

30 Mr Anderson was entitled to have regard to the fact that Mrs Gorry was a practicing solicitor, in how he couched the advice which he conveyed to her on behalf of her parents. That, however, did not mean that Mr Anderson, or the defendants, were relieved of their obligations to exercise reasonable care and skill in the provision of his advice to Mr and Mrs Edwards in relation to the transactions in which he was acting for them.

Did the defendant's fail in their duty?

31 Against that background, what here has to be determined is whether the plaintiffs have demonstrated that the defendants failed in their duty to Mr and Mrs Edwards, in the advice which Mr Anderson gave them in relation to the residence contract and sublease which they entered with Woolcott Village. These matters must be determined having in mind the provisions of the Civil Liability Act 2002 (see Nguyen v Cosmopolitan Homes [2008] NSWCA 246). What also has to be borne in mind is what the Court of Appeal observed in Capital Brake Service Pty Limited v Meagher & 8 Ors t/as Sparke Helmore [2003] NSWCA 225 at [30] that:

32 I turn then to consider what was known to Mr Anderson in 2001, when he advised Mr and Mrs Edwards about the residence contract and sublease they proposed to enter.

33 Woolcott Village, the operator of Woolcott Court was a private company, which had only a leasehold interest in the unit owned by Sarana. Mr Anderson had been provided with a copy of the head lease. It showed that rent payable to Sarana was $29,000 per annum. The rent due under the sublease was $12 per annum. What was proposed was that Mr and Mrs Edwards would only take a sublease from Woolcott Village, which they had no right to assign, but would pay Woolcott Village an ingoing contribution fee of $272,000. On its face this situation would have given rise to an obvious question as to whether or not Woolcott Village had assets sufficient to ensure that it could pay Mr and Mrs Edwards their departure fee, if they had to leave Woolcott Court and whether it could provide the services it had proposed to provide to them, while they resided there.

34 The question of the security of their ingoing contribution payment was thus an obvious issue to consider when advising Mr and Mrs Edwards about this transaction. This was all the more so, given the evidence that this arrangement was an unusual one. On the evidence, in this industry, in cases where the incoming residents were not themselves acquiring their unit by way of strata title, it was more usual to take a lease direct from an owner, then by way of sublease. In this case, Mr and Mrs Edwards were only entering a sublease, which they had no right themselves to assign. On the evidence, Mr Anderson gave Mr and Mrs Edwards no advice about the proposed structure and any risks which it gave rise to, nor did he give them any advice in relation to the security of their ingoing contribution fee.

35 It appears that these were matters Mr Anderson did not consider. Mr Anderson did not conduct any ASIC search in relation to Woolcott Village. Had he done so, he would have discovered that it had a share capital of only $100. That would have raised an obvious question as to its financial capacity. The evidence suggested that normal practice would be for a solicitor to conduct such a search, when acting for incoming residents. Whatever might be the practice, it seems to me obvious that a careful and prudent solicitor acting on a transaction such as this one, would certainly obtain such a search in relation to a private company such as Woolcott Village, given its role in the transaction as operator and lessor. Mr and Mrs Edwards plainly had to depend on its ability to pay them a departure fee in future, as well as its ability to provide the promised services while they resided at Woolcott Court. Some investigation of the company's capacity to meet its obligation was undoubtedly required.

36 Even without having conducted a search, Mr Anderson did have information which put him on notice that there were questions as to Woolcott Village’s financial situation. Again, on the evidence, Mr Anderson gave no advice to Mr and Mrs Edwards about this information, or whether it should give rise to any concerns on their part.

37 The transactions about which Mr Anderson was advising, were regulated by the provisions of the Retirement Villages Act. It applied to Woolcott Village’s operation of Woolcott Court and the contractual arrangements it proposed with Mr and Mrs Edwards. The legislation is concerned to ensure that persons such as they, receive the benefit of certain protections, commencing with the provision of various important information before any contracts are entered into. Section 18 of the Retirement Village Act provides:

18 Disclosure statement concerning village

(1) The operator of a retirement village must provide a prospective resident (or a person acting on behalf of the prospective resident) with a disclosure statement in accordance with this section.

(2) A disclosure statement is a written statement containing detailed information concerning the village.

(3) The statement must:

(b) contain the information required by that form, and

(c) be signed and dated by the operator.

Maximum penalty: 10 penalty units.

(5) ...

38 Schedule 1 to the Retirement Villages Regulation 2000 specifies the form of the disclosure statement to be provided. The statement provided by Woolcott Village was incomplete and contradictory on its face, although it did contain the required introductory words specified in Schedule 1, which were:

This statement is required to be given to all prospective residents under the Retirement Villages Act 1999 . It is designed to give you a general understanding of the features and financial arrangements of this retirement village, should you choose to become a resident.

The retirement village industry offers a wide range of features and financial arrangements. Comparing the disclosure statements from a number of retirement villages will assist you in identifying the most suitable and affordable village for your needs.

39 The statement provided by Woolcott Village, thus on its face, invited further enquiry. Despite the obvious deficiencies of the statement provided, Mr Anderson did not draw any problems which the statement disclosed to Mr and Mrs Edwards’ attention, even through Mrs Gorry and did not advise them that any difficulties might exist. I am well satisfied that a consideration of this disclosure statement, provided inconsistently with the obligations imposed by s 18 of the Retirement Villages Act, should have put any reasonably careful and competent solicitor squarely on notice of the need to make further enquiries as to the financial position of Woolcott Village.

40 Under the scheme of this Act, persons who become occupants of retirement villages pay very substantial ingoing contribution fees to operators such as Woolcott Village. In the case of Mr and Mrs Edwards, what they paid essentially represented the bulk of their assets, flowing from the sale of their unit at Hornsby.

41 While the financial management of retirement villages and the conduct of operators generally, is closely regulated under the Retirement Villages Act, what is not regulated at all, is what operators may do with ingoing contribution payments received from residents when they take up residence. What is regulated is what must be paid as a departure fee, once residents leave. While the disclosure statement suggested on its face that some operators hold ingoing contribution payments in a trust account, that was not what Woolcott Village proposed. Again, this information also suggested a need to ascertain something about Woolcott Village's financial situation.

42 On the evidence, persons connected with operators in this industry do not as a matter of practise provide any guarantees to residents, as to repayment of departure fees. Such guarantees are not required by the Retirement Villages Act. As the defendants argued, an operator's ability to make a departure payment depends entirely on financial viability when the payment falls due. Consequently, as was also argued for the defendants, persons such as Mr and Mrs Edwards are always at risk of an operator not being in a position to pay the departure fee due, when they leave. This underpins the importance of the disclosures required by s 18 of the Act, as to the operator’s financial position, to prospective residents before they enter into any contract with an operator.

43 It follows that if there is any doubt as to the financial viability of a particular operator, it will be important to make enquiries as to its situation before any moneys are paid over by a resident. That is the purpose of the disclosure statement, namely, to provide information as to the operator’s financial position, so that potential residents can make informed decisions about paying over a substantial ingoing contribution payment, before they enter any agreements with the operator.

44 On the evidence, Mr Anderson was aware that Mr and Mrs Edwards were elderly, in ill health, and in need of services promised under the proposed residence contract. In order to obtain such services they had to pay a fee of $272,000 to Woolcott Village. He knew that they were depending on the sum flowing from the sale of their unit to finance this payment.

45 It was Mrs Gorry’s evidence that she had not given any thought to Woolcott Village's ability to repay this sum to her parents, if they needed to leave Woolcott Court. She relied on Mr Anderson for advice. Had Mr Anderson given advice as to any difficulties with Woolcott Village's financial position, she would have advised her parents not to enter a contract with it. While that evidence seems a little surprising, given that Mrs Gorry was a practicing solicitor of some 10 years standing, it must be accepted. Mr Anderson did not raise this issue with Mrs Gorry and she did not think of it herself. No advice about such matters was given to Mr and Mrs Edwards.

46 It was the defendants' case that it was obvious from the disclosure statement provided that there was a question as to Woolcott Village's financial position, so obvious that there was no need for Mr Anderson to give any advice to Mr and Mrs Edwards as to the risk which they would incur if they entered into the proposed arrangements, or of the prudence of making further enquiries about Woolcott Village. I do not accept that submission.

47 While I accept that the disclosure document, on its face, made abundantly clear that there was a difficulty, I do not accept what was implicit in the defendants' argument, namely that Mr Anderson had no resulting duty to give any advice to Mr and Mrs Edwards as to the risks which they were taking if no further enquiries were made as to Woolcott Village's financial position. Mrs Gorry's role in the transaction can not have relieved the defendants of their duty in this way. It was not her duty to advise her parents about these risks. That was the defendants' duty.

48 The very failure of Woolcott Village to make the disclosures it was required to make by s 18 of the Retirement Villages Act, was a matter about which Mr Anderson ought to have given advice to Mr and Mrs Edwards.

49 The disclosure document was signed by two directors, Mr Dalrymple and Mr Godfrey, on 14 February 2001. It indicated that Woolcott Court was developed in 1991 by Woolcott Court Pty Ltd, but that the current operator was Woolcott Village, which had been operating the village since January 1999. In clause 7.1, it indicated that the village had a maintenance fund for long term maintenance of the village, but in relation to the balance in the fund for the last financial year, it was said that the fund was 'not yet established’. Given the requirements of the Retirement Villages Act in relation to capital maintenance and maintenance funds in Part 7, Division 3 of the Act, this obviously conflicting information should have raised some concerns in Mr Anderson’s mind.

50 What clause 7 of the disclosure statement provided puts that conclusion beyond doubt. It provided:

7. FINANCIAL MANAGEMENT

1. The financial year of the village is from 1 July to 30 June.

No

If Yes, the balance in the fund at the end of the last financial year was - Not yet established.

3. Is a specific proportion of ingoing contributions or departure fees (or both) paid by residents set aside in a capital replacement fund for the purpose of financing depreciation and capital replacement in the village? ~~Yes~~ /No.

4. Are any ingoing contributions paid by residents held by a trustee? ~~Yes~~ /No.

5. Is there any personal or legal connection between any of the trustees and the operator? ~~Yes~~ /No.

No

7. Did the audited accounts for the previous financial year contain a statement from the auditor expressing considerable uncertainty regarding the ability of the operator to meet the liabilities of the village as and when they fall due during the financial year immediately following? ~~Yes~~ /No.

8. Has the operator ever applied to the residential Tribunal to extend the period of time to pay refunds to former occupants? ~~Yes~~ /No.

if fewer than 3

delete whichever

is not applicable

51 There was an obvious inconsistency in the answers provided. While on the one hand, it was stated that Woolcott Village's auditors had expressed no uncertainty about its ability to meet its obligations, as and when they fell due, on the other it provided no details of the last three years' accounts, as required, claiming only in relation to the 2000 financial year, that the accounts were 'in the course of completion'. Having in mind the requirements imposed on Woolcott Village by Part 7, Division 6 of the Retirement Villages Act, this ought to have raised obvious concerns, which Mr Anderson should have drawn to Mr and Mrs Edwards’ attention. Sections 118 and 119 of the Retirement Villages Act provided:

118 Auditing of accounts

Maximum penalty: 50 penalty units.

(a) the fees must be itemised in the statement of proposed expenditure, and

(b) the item must include the name of the auditor to be appointed, and

(3) The operator of the retirement village must also give the Residents Committee copies of quarterly accounts of the income and expenditure of the village.

(4) If there is no Residents Committee established for the village, a copy of the quarterly accounts must be given to any resident who requests one.

(5) The quarterly accounts are not required to be audited.

119 Copies of audited accounts to be provided to residents

Maximum penalty: 50 penalty units.

(a) the following particulars:

(i) details of the income and expenditure of the village during the financial year, including income and expenditure of any capital replacement fund or maintenance fund,

(ii) details of the balances in any capital replacement fund or maintenance fund,

(iii) details of amounts received for insurance claims made in respect of any matter referred to in section 97 (3) (a) (i) or (ii) relating to the village during the financial year,

(b) a statement that:

(i) specifies whether or not money payable by the village operator to former residents during the financial year concerned was paid in full and on time, and,

(ii) specifies, if any money so payable has not been paid, the amount concerned, details of the delay and the reasons for the delay, and

(iii) contains the matters required to be included by subsection (3), and

(c) such other matters as may be prescribed by the regulations.

(3) If the auditor is not satisfied that the operator has the capacity, during the financial year immediately following, to meet the liabilities relating to the village as and when they fall due, or if the auditor believes that there is considerable uncertainty regarding the ability of the operator to meet the liabilities of the village as and when they fall due during the financial year immediately following, a statement to that effect must appear in the audited accounts.

(4) The format of the accounts must correspond as closely as possible with the layout of the statement of proposed expenditure.

(5) A person who is the operator of more than one retirement village may provide audited consolidated accounts in relation to any 2 or more of the villages concerned, but, when providing the accounts to the residents of a particular village, must include a separate statement of income and expenditure for that village.

(6) It is sufficient compliance with this section if the copies of the accounts are provided to the Residents Committee for the retirement village to which they relate and to any individual resident who asks the operator for one.

52 On its face, the disclosure statement revealed that as at February 2001, Woolcott Village was in breach of these obligations. The problem ought to have been drawn to Mr and Mrs Edwards' attention and an enquiry as to whether this default been rectified ought to have been made.

53 It was Mr Bevan’s evidence that an ASIC search of the company ought to have been undertaken; that was normal practice in transactions such as this. Given the unusual nature of the arrangement here proposed by Woolcott Village and what the disclosure statement revealed as to its failures to comply with the provisions of the Retirement Villages Act, particularly in relation to the provision of financial information to Mr and Mrs Edwards, it is entirely apparent that a reasonably competent and careful solicitor would have undertaken such a search in this case. It was not.

54 On the evidence, if the search had been obtained, what would have been disclosed was that a winding up application had been made in November 2000, which was dismissed in December 2000. As was submitted for the defendants, this would not have shown that Woolcott Village was insolvent, but would have confirmed that there was another basis for concern as to its financial position. At a time when it was in default of its obligation to provide audited accounts to residents, and to provide information as to its financial position to a prospective resident as to its operations in the previous three years, a creditor had sought to have the company wound up, albeit unsuccessfully.

55 At the very least, this difficulty should have been drawn to the attention of Mr and Mrs Edwards, so that they could consider whether they wished to make further enquiries, or to seek advice as to Woolcott Village’s financial viability. I accept that was not what Mr Anderson had been retained to determine. Nevertheless, he did have a duty to draw to their attention the risks of the transactions they were considering embarking upon. They were not given such advice. Mrs Gorry did not think of these matters herself; that was not her obligation, it was Mr Anderson’s.

56 Had such advice been given, further simple and obvious lines of enquiry could have been pursued. ASIC searches in relation to the two directors and the other companies with which they had been involved, would have revealed that Mr Godfrey and Mr Dalrymple were directors of other companies wound up in 1998, a circumstance which precluded them from being directly or indirectly involved in the management or control of Woolcott Village, pursuant to s 57 of the Retirement Villages Act. This would have been yet another good reason for Mr and Mrs Edwards reconsidering their decision to enter into the proposed lease and residential contract with Woolcott Village.

57 It is unnecessary to speculate as to what else might have been uncovered, had simple and available enquiries been pursued. It was Mrs Gorry’s evidence that had Mr and Mrs Edwards been advised of these problems, they would not have entered the sublease and residence contract with Woolcott Village. Her father was a retired clergyman, careful with his money. Her parents were elderly, in ill health and of limited means. Essentially what they paid to Woolcott Village represented the bulk of their assets, on which they depended to live out their lives. They had investigated a number of retirement villages which were suitable and available before deciding on Woolcott Court, which they preferred. I am unable to accept the defendants' submission that this preference would have overborne any consideration that the operator, to whom they were proposing to give the bulk of their assets, was in breach of its various obligations under the Retirement Villages Act; had no obvious means of paying them a departure fee in future; had not provided audited accounts as required to residents; appeared to be facing some unexplained financial challenges and was being operated by two directors who simply ought not to have been involved, given what the Retirement Villages Act specified. It was Mrs Gorry’s evidence that she would have advised them not to go to Woolcott Court. That was only commonsense. The evidence does not leave open the conclusion that they would have come to any different view, to the contrary, it suggests that they would have accepted that advice.

58 What is required of a solicitor when advising clients has often been described. In Fox v Everinghamand Another (1983) 50 ALR 337, the Full Federal Court observed at 341 - 342:

Sykes v. Midland Bank Executor and Trustee Co. Limited

Attard v. Samson

Simmons v. Pennington & Son

Nocton v. Ashburton (Lord)

59 Such an approach was critical in this case. Mr Anderson could not ensure that Woolcott Village would be in a position to pay Mr and Mrs Edwards a departure fee in future, or that it was sufficiently financially viable to provide the services promised under the residence contract, while they resided at Woolcott Court. That was not his responsibility. In this industry, personal guarantees are not required of, or provided by people such as Mr Godfrey and Mr Dalrymple, directors of a private company operating a retirement village, even though such companies receive very substantial payments from incoming residents, which they have a statutory obligation to repay on departure (minus certain deductions). That very fact required Mr Anderson to draw the obvious questions which arose on the face of the disclosure statement in relation to the financial viability of Woolcott Village to Mr and Mrs Edwards' attention; to advise them of the unusual form of the arrangement which Woolcott Village proposed and the risks which they were consequently running, in entering the proposed transaction, given the position which the disclosure statement revealed. Mr Anderson failed to give such advice. As discussed in Pegrum and Pegrum v Fatharly [1996] 14 WAR 92 at 21:

60 This approach is entirely consistent with long held views such as those discussed in Sykes v Midland Bank Excutor and Trustee Co Ltd [1971] 1 QB 113 at 124, where Harman LJ said ‘when a solicitor is asked to advise on a leasehold title it is, in my judgment, his duty to cal his clients attention to clauses in an unusual form which may affect the interests of his client as he know them’. In Macindoe and Another v Parbery (1994) Aust Torts Reports 81-290, Kirby P’s view at 61,534 was that a solicitor’s duty went beyond the obligation to explain 'the usual perils' and included a duty to explain unusual risks which were 'reasonably foreseeable and which the client should weigh'.

61 I am satisfied on the evidence in this case, that here, there can be no question that the defendants failed in their duty to Mr and Mrs Edwards.

Foreseeability and Causation

62 I am also satisfied that the loss arising from Woolcott Village’s failures, including the failure to pay the departure fee it owed Mr and Mrs Edwards in August 2005, was reasonably foreseeable and caused by the defendants' breach of their duty.

63 While the defendants advanced submissions in relation to s 129 of the Retirement Villages Act, they are not relevant to this issue. No one other than Woolcott Village had an obligation to make a departure fee payment to Mr and Mrs Edwards, when they left Woolcott Court. I am satisfied that had they been advised in 2001, as they ought to have been, they would not have entered these transactions with Woolcott Village, but would have moved into another of the suitable units available in other retirement villages.

64 The defendants relied on Mrs Gorry’s evidence that the ingoing contribution fee at such other units ranged from $120,000 to $400,000, depending on the services and level of care provided and the fact that Mr and Mrs Edwards had selected Woolcott Court as the village which they preferred. Account must also be taken of Mrs Gorry's evidence that at the time there were units available in other villages, at a price which was suitable. Mr and Mrs Edwards required assistance; they had limited means; they depended on the proceeds of the sale of their former residence to fund payment of the required ingoing contribution payment and depended on its repayment as a departure fee in future, if they needed a higher level of care, to enable them to live out their lives in a suitable environment, given their advancing years and frail health.

65 I am satisfied that in 2001, they had available to them the opportunity to take other suitable, available accommodation which they had the funds to acquire. Had they done so, their loss would have been entirely avoided. Causation was established; their transactions with Woolcott Village and the losses which resulted are the direct result of the defendants’ failure in 2001 to advise Mr and Mrs Edwards of the risks of the transactions, in breach of the duty owed to them.

Damages

66 Given the breach of their duty to Mr and Mrs Edwards, it follows that the defendants are responsible for any loss which they suffered as the result of that breach.

67 I do not accept the plaintiffs' claim that the costs of the respite care incurred after 8 August 2005, when Mr and Mrs Edwards left Woolcott Village is such a loss. That they were then seeking a higher level of care given their then health, precludes that conclusion. Nor do I accept that the assessment of the damage suffered must commence with the figure of $272,000, as the plaintiffs argued.

68 In 2001, Mr and Mrs Edwards paid $252,000 in cash, with payment of the balance of the $272,000 ingoing contribution to be deducted from the departure fee when it was paid. The plaintiffs' case was that this arrangement involved a breach of the Retirement Villages Act, which does not permit such a deduction from a departure fee. That this is a correct characterisation of what was agreed is doubtful. The definition of ‘ingoing contribution’ in s 6 of the Act certainly contemplates that such a payment may be made by lump sum, or by instalment. There would seem to be nothing which would preclude such an instalment only becoming payable at the time of the departure fee, as Mr and Mrs Edwards agreed with Woolcott Village. Given their limited means, that delay was obviously to their advantage.

69 It ought not to be overlooked that Mr and Mrs Edwards lost $252,000, the sum paid in 2001 to Woolcott Village, not $272,000. The additional $20,000 of the purchase price still outstanding was never paid. As a matter of logic, if nothing else, a sum which was never paid to Woolcott Village by Mr and Mrs Edwards cannot be regarded as having been a loss which flowed from the defendants' failures.

70 Had the defendants advised Mr and Mrs Edwards in 2001 of what they should have paid by way of ingoing contribution fee, as the plaintiffs argued they ought to have done, Mr and Mrs Edwards would have had to pay a further $20,000, thereby suffering a $20,000 higher loss, when Woolcott Village failed to pay the departure fee it owed them. That, however, is not what happened. All that was paid and lost was $252,000 and accordingly, the calculation of damages must have regard to that sum.

71 Otherwise, the defendants also argued that in assessing damages attention had to be paid to the fact that there was no evidence as to what Mr and Mrs Edwards would have paid by way of ingoing contribution fee at another retirement village, had they not moved into Woolcott Village in 2001, nor what they would have been entitled to receive by way of departure fee, when subsequently leaving such accommodation. This, it was argued, made it impossible to assess damages, the proper measure of which depended on what would have flowed from an entirely different transaction. The best that could be done would be to discount the damages by 50%. Otherwise, the only option would be to conjecture that Mr and Mrs Edwards would not have sold their unit at Hornsby. That they had the value of the occupation of a unit at Woolcott Court for 3 or 4 years, which suited them, could also not be ignored. On the evidence, the value of that occupancy was the $29,000 per annum rent payable under the lease between Sarana and Woolcott Village.

72 For the plaintiffs it was submitted that this latter argument entirely overlooked that Woolcott Village had the use of the $272,000 ingoing contribution for the entire period of Mr and Mrs Edwards' residence at Woolcott Court. As to the idea of a 50% discount, on the evidence it was entirely reasonable for the Court to proceed on the basis that had Mr and Mrs Edwards been advised as they ought to have been in 2001, they would have used the proceeds of the sale of their unit to acquire one of the available units in another village, at a price they were able to pay. On the evidence, other retirement villages operated under the same legislative scheme. Ingoing contribution fees ranged from $100,000 to $400,000. Mr and Mrs Edwards would have paid an ingoing contribution payment which they could afford and would have been paid a departure fee, in accordance with the provisions of the Retirement Villages Act, on their departure. Had Mr and Mrs Edwards gone elsewhere in 2001, as was open to them then, they would not have suffered the loss which flowed from their transactions with Woolcott Village. It followed that they were entitled to be put back into the position they would have been in, had they not entered this contractual arrangement with Woolcott Village, that being the true measure of the loss which flowed from the defendants’ breach of their duty.

73 I am satisfied that the calculation of damages must be approached as the plaintiffs argued. It cannot be overlooked that what Mr and Mrs Edwards paid was not only the $12 per annum under the lease, but also fees for services provided, as well as $252,000 of the $272,000 ingoing contribution, which was to be repaid as a departure fee, after deduction of an amount for each day that they occupied the unit. In the meantime, Woolcott Village had the use of the money. Had Mr and Mrs Edwards been properly advised, they would not have suffered the loss of this departure fee, because they would have gone elsewhere.

74 While the defendants relied on the approach of the High Court in Henville v Walkerand Another (2001) 206 CLR 459 to support their approach to the assessment of damages, the case was not of assistance, it seems to me. There it was established that the damages suffered did not only result from the contravention of s 52 of the Trade Practices Act 1974 (Cth) in question, but also from other causes, for which the agent who had given the advice in question was not responsible. This was not such a case, of course, but even so, McHugh J, in the majority, took the view that the entirety of the damages there suffered were recoverable in the proceedings, observing:

Watts v Rake

75 Hayne J similarly observed:

[166] There may be cases where some of the loss suffered by a person following -- and I use the word "following" in a neutral sense -- the conduct of another in contravention of the Act may not be loss suffered by that person by the contravening conduct. Had the appellants chosen, for wholly extraneous reasons, to change the design of the units, part way through their construction, in such a way as to waste some costs of construction already incurred, it might be said that the extra costs incurred were not caused by the respondents' contravention. Whether, as Gaudron J suggests [Reasons of Gaudron J at 483 [70].] , it would be for the contravener to demonstrate in such a case that part of the loss suffered was not attributable to the contravention is a point I need not decide. For the moment, it is enough to say that it seems to me that such questions must find their answers within the Act rather than in analogies with common law. Thus, if notions of remoteness of damage or reasonableness are to find reflection in s 82(1) it seems probable that they may do so only through consideration of the causation question which the subsection poses. As Professor Stapleton has pointed out [Stapleton, "Perspectives on Causation", in Horder (ed), Oxford Essays in Jurisprudence(2000) 61, at pp 72, 75-76, 78-80.] , questions of remoteness of damage in tort can be seen in terms of causation. Likewise, asking what is "reasonable" in assessing how much of the loss was caused by the contravention may invite attention to the nature and extent of the causal connection between the loss and contravening conduct. This case does not present such questions and it is not necessary to decide them.

76 This approach was clearly of no assistance to the defendants in this case. The parties were agreed that certain deductions had to be made from the figure of $252,000, depending on the number of days during which Mr and Mrs Edwards resided at Woolcott Court, but could not agree on the number of those days, which depended on when it was that Mr and Mrs Edwards permanently vacated the unit.

77 Section 158 of the Retirement Villages Act provides:

158 Period for which departure fee may be charged after permanent vacation of premises: new contracts

(1) This section applies only in the case of a former occupant whose village contract providing for payment of a departure fee was entered into on or after the commencement of this section.

(2) A departure fee is not payable to the extent that it is calculated in respect of a period after the former occupant permanently vacated the residential premises concerned.

78 On the evidence, Mr and Mrs Edwards could no longer cope with the situation at Woolcott Court and moved out, going initially into respite care on 8 August 2005, before obtaining permanent accommodation at Bowden Brae in October. Given the level of services then available to them at Woolcott Court and their health not permitting them to return to reside there due to that level of service, it must be concluded that when they left in August, they ‘permanently vacated’ the unit. The reason for going into respite care was the difficulty which they faced in obtaining other permanent accommodation, because Woolcott Village was unable to pay them their departure fee and because they had no other funds which they could use to pay an ingoing fee to another operator. It was Mrs Gorry’s evidence that if the services at Woolcott Court had been maintained at the initial level, her father might have been able to stay there for up to another six months. However, the services were not maintained and thus when Mr and Mrs Edwards departed in August, their departure was, of necessity, permanent, even though it was not until October that they obtained permanent accommodation elsewhere.

79 It follows that the deductions must be calculated having regard to the date Mr and Mrs Edwards left Woolcott Court in August 2005. The parties’ legal representatives must undertake the calculation of the damages which flows from these conclusions.

Orders

80 The orders which I propose to make are verdict for the plaintiffs, with a damages order calculated on the basis of the conclusions reached in this judgment. Unless the parties wish to advance any submissions in relation to costs, the plaintiffs should bear the defendants’ costs of the two adjournment applications and otherwise the defendants should bear the plaintiffs' costs of the proceedings, as agreed or assessed.

81 The parties are to bring in short minutes of order, within 14 days of today’s date.

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Citations

Edwards v Anderson [2009] NSWSC 373

Cases Citing This Decision

0

Cases Cited

16

Statutory Material Cited

4

Director General Department of Fair Trading v Woolcott Village Pty Ltd [2001] NSWSC 889

ASIC v Vines [2003] NSWSC 1095

Astley v AusTrust Ltd [1999] HCA 6

CITATION:	Edwards and Anor v Anderson and Ors [2009] NSWSC 373
HEARING DATE(S):	15 April 2009, 16 April 2009
JUDGMENT DATE :	15 May 2009
JUDGMENT OF:	Schmidt AJ
DECISION:	Proposed Orders: 1. Verdict to the Plaintiffs, with a damages order. 2. Plaintiffs are to bear defendants' costs of the two adjournment applications, and the defendants otherwise to bear the plaintiff's costs of the proceedings, as agreed or assessed.
CATCHWORDS:	PROFESSIONS AND TRADES - lawyers - duties and liabilities - negligence in advising clients - sublease of a unit in retirement village - duty to advise - duty of care owed - foreseeability and causation - damages - TORTS - negligence - general matters - solicitor negligence - damages - EVIDENCE - admissibility and relevancy - opinion evidence - qualification of witness
LEGISLATION CITED:	Civil Liability Act 2002 Retirement Villages Act 1999 Retirement Villages Regulations 2000 Trade Practices Act 1974 (Cth)
CATEGORY:	Principal judgment
CASES CITED:	Australian Securities and Investment Commission v Vines [2003] NSWSC 1095 Capebay Holdings Pty Ltd v Sands [2002] WASC 287 Capital Brake Service Pty Limited v Meagher & 8 Ors t/as Sparke Helmore [2003] NSWCA 225 Dean-Willcocks v Commonwealth Bank of Australia (2003) 45 ACSR 567 Director General Department of Fair Trading v Woolcott Village Pty Ltd [2001] NSWSC 889 Fox v Everingham and Another (1983) 50 ALR 337 Henville and Another v Walker and Another (2001) 206 CLR 459 Heydon v NRMA Ltd (2000) 51 NSWLR 1 Macindoe and Another v Parbery (1994) Aust Torts Reports 81-290 Midland Bank Trust Co Ltd v Hett Stubbs & Kemp (A firm) [1979] Ch 384 Nguyen v Cosmopolitan Homes [2008] NSWCA 246 Pegrum and Pegrum v Fatharly [1996] 14 WAR 92 Permanent Trustee Australia Ltd v Boulton (1994) 33 NSWLR 735 Sykes v Midland Bank Executor and Trustee Co Ltd [1971] 1 QB 113
PARTIES:	First Plaintiff - David Harry Edwards Second Plaintiff - Judith Anne Gorry First Defendant - Paul Richard Anderson Second Defendant - Peter William Turk Third Defendant - Pieter Edward Oomens Fourth Defendant - Graham Kenneth White Fifth Defendant - John Kenneth Myatt Sixth Defendant - Samuel Kennedy Seventh Defendant - John Peter Hick Eighth Defendant - Roger Daniel Walter Ninth Defendant - Joanna Apostolopoulos Tenth Defendant - David Eric Collinge Eleventh Defendant - Mary Karekos Twelfth Defendant - Alphonse Luke Edwards Thirteenth Defendant - Michelle Anne Riordan Fourteenth Defendant - Christine Tsekouras Fifteenth Defendant - Kerry Haddock
COUNSEL:	Plaintiffs - Mr JC Thompson, counsel Defendants - Mr D Fagan SC with Mr MCL Dicker, counsel
SOLICITORS:	Plaintiffs - Lander & Lander Defendants - Colin Biggers & Paisley