Gojkovic v Taylor

[2002] NSWCA 106

Reported Decision: (2002) Aust Torts Reports 81-661

New South Wales

Court of Appeal

CITATION:	GOJKOVIC & ANOR v TAYLOR & ANOR [2002] NSWCA 106
FILE NUMBER(S):	CA 40311/01
HEARING DATE(S):	18 March 2002
JUDGMENT DATE:	19 April 2002
PARTIES :	BOGDAN GOJKOVIC & ANOR v MICHAEL TAYLOR & ORS (t/as Watson Stafford)
JUDGMENT OF:	Mason P at 1; Handley JA at 94; Sheller JA at 95

LOWER COURT JURISDICTION :	District Court
LOWER COURT FILE NUMBER(S) :	DC 608/98
LOWER COURT JUDICIAL OFFICER :	Phelan DCJ

COUNSEL:	Appellant: P Le G Brereton SC/ M M Hilbery Respondent: D L Davies SC
SOLICITORS:	Appellant: Autore & Associates, Wollongong Respondent: Watkins Tapsell, Kirrawee
CATCHWORDS:	NEGLIGENCE - professional negligence - whether solicitor adequately advised mortgagors of risks associated with giving a mortgage and the potential consequences of entering the transaction - whether trial judge erred in accepting the credibility of the solicitor's evidence - whether the evidence established that a party lied under oath at trial - whether it was open to the trial judge to find evidence was false - to what extent a finding of perjury can affect other findings of credibility. (ND)
CASES CITED:	Beneficial Finance Corporation Ltd v Karavas (1991) 23 NSWLR 256; Abalos v Australian Postal Commission (1990) 171 CLR 167; Devries v Australian National Railways Commission (1993) 177 CLR 472; Rosenburg v Percival (2001) 75 ALJR 73.
DECISION:	Appeal dismissed with costs.

CA 40311 of 2001
DC 608 of 1998 (Wollongong)

MASON P
HANDLEY JA
SHELLER JA

Friday 19 April 2002

Bogdan GOJKOVIC & Anor v Michael TAYLOR & Ors

JUDGMENT

1 MASON P: The appellants lost money when forced to meet their liability as guarantors of the indebtedness of a company known as Nova Constructions Pty Limited (Nova). They sued the firm of solicitors whose employee, Mrs Radjenovic (the solicitor) gave them advice about the mortgage. That claim failed in the District Court.

2 Certain land in Stewart Street Wollongong was being acquired by the Illawarra Retirement Trust in conjunction with Nova. Seventy seven retirement units were to be constructed by Nova, a company owned by members of the Bundalo family. At a late stage in the contractual negotiations the vendor, Evenplum Pty Ltd, demanded that Nova promise to pay an additional consideration of $338,000 and that such promise be secured to Evenplum’s satisfaction.

3 The construction project was to be a major one. Nevertheless, the Bundalo family was (at the very least) strapped for ready cash in late 1992. Mr Alex Bundalo asked the appellant Mr Bogdan Gojkovic whether he would assist in offering his family home as the security required by Evenplum. Mr Gojkovic readily assented and then set about persuading his more cautious and reluctant wife. Some time in November/December 1992 he told Alex Bundalo that he and his wife were willing to give the security requested.

4 The liability incurred by the appellants allegedly in consequence of the solicitor’s negligence arose under a Mortgage executed on 31 December 1992 and registered on 20 January 1993. The appellants were the mortgagors and the land encumbered was their family home at 75 Goolagong Crescent Mount Warrigal. The mortgagee was Evenplum.

5 The Mortgage effectively incorporated two documents. The first was a Memorandum (Q860000) which set out standard form provisions capable of being incorporated into such mortgages as referred to the Memorandum. The second was a Deed. Condition 2 of the Mortgage stipulated that it secured the repayment to the mortgagee of all moneys payable pursuant to that Deed.

6 The Deed required Nova to pay the principal sum ($338,000) on 30 December 1993 with interest at 20% reducible to 12% commencing from 30 March 1993 (cl 1). The appellants agreed to grant the Mortgage to secure repayment (cl 2). The Messrs Bundalo guaranteed performance by Nova and the mortgagors (cl 4).

7 Nova defaulted under the Deed, apparently from the outset. It went into liquidation in about 1994.

8 In 1994 the mortgagee commenced proceedings against the appellants for possession under the terms of the Mortgage. Ultimately Evenplum agreed to accept a payment from the appellants in discharge of their obligations under the Mortgage. It was this sum (plus interest) that was claimed by the appellants as the damages flowing from the transaction into which they would not have entered had it not been for the solicitor’s negligence.

The transaction in detail

9 The full details of the appurtenant conveyancing transaction are shrouded in considerable mystery. The key documents were not tendered. The details were not explored in the oral evidence. Such glimpses as are provided are to be found in the recitals to the Deed and a statement of a somewhat discredited witness, Alex Bundalo (Blue 152).

10 Subject to these caveats, the following picture emerges.

11 In 1992 Evenplum, a company owned by members of the Kollaras family, purchased land in Stewart Street Wollongong. It set about arranging a major development that would involve a body called the Illawarra Retirement Trust (IRT). The land would be sold by Evenplum to IRT and there would be an accompanying building contract entered into between IRT and Nova for the construction of seventy seven retirement units. Negotiations involving members of the Kollaras and Bundalo families and an estate agent named Petrov took place in late 1992 and early 1993.

12 The solicitor for Evenplum was Mr Heard of Kell Heard McEwan and Lough Solicitors of Wollongong. The solicitor for Nova and the Bundalos was Mr Martin of Verekers, although there were occasions when Mr Heard dealt directly with the Bundalos (this was a matter of complaint on Verekers’ part). There were various meetings in late December 1992 involving members of the Bundalo and Kollaras families, the solicitors, Mr Heard and Mr Martin and the agent Mr Petrov. The money side of the deal as between the Kollaras and Bundalo interests was negotiated and re-negotiated. There was a lot of brinkmanship. As late as 31 December 1992 and possibly later there were threats to walk away from any deal (Blue 157).

13 Late in 1992 IRT indicated that it was not prepared to pay the price demanded by Evenplum. Evenplum then turned to Nova and indicated in effect that if it wanted the deal to come to fruition it would need to make up the shortfall. The figure was $338,000 and that became the sum secured by the Deed. The principals of Nova were willing to agree to pay this sum on a deferred basis, intending to recoup the money out of progress payments as they fell due. For its part Evenplum was only prepared to accept this if Nova’s undertaking to pay was adequately secured. The security ultimately agreed upon consisted of the guarantees by Milan and Alex Bundalo and the third party mortgage by the appellants embodied in the Deed and Mortgage.

14 At that time the appellants’ home was subject to a small bank mortgage of $15,000. Nova paid off this mortgage, thereby putting the appellants in a position to offer a clear title. The bank mortgage was discharged on 29 December 1992.

15 It was no part of that arrangement that the appellants would receive any direct financial benefit. It is true that the Bundalos discharged the existing bank mortgage of about $15,000 so that the appellants could offer a first mortgage to Evenplum after their suggestion of a second mortgage had been rebuffed. This however was an incidental benefit to the appellants that was probably never part of the bargain (but cf Black 89L). Nor was it a matter disclosed to the solicitor when she came later to give advice to the appellants.

16 There was a degree of dependence by the appellants upon the Bundalos. But there was also friendship between the families. In the trial judge’s words, the Bundalo and Gojkovic “families were friendly and there had been a history of favours”. Mr Gojkovic told his wife that they should agree to the proposed mortgage because:

(a) Mr Milan Bundalo employed their son in the construction business and he wanted their son to have a good job;

(b) Mr Bundalo had helped Mr Gojkovic with part-time work and he wanted that relationship to continue; and

(c) Mr Bundalo was considered to be a personal friend and Mr Gojkovic wanted to honour that friendship. (See also Blue 29 as to Mrs Gojkovic’s motives and Blue 113 as to evidence that Mr Bundalo had built a granny flat for the appellants.)

(The appellants never asserted against the solicitor that the transaction with Nova was tainted by undue influence.)

17 It would appear that the appellants had agreed in principle to provide the mortgage by 18 December 1992. On that day Verekers wrote to the vendor’s solicitor offering the appellants’ home as security for the side arrangement. Mrs Gojkovic was however nervous about the transaction from the outset. She wanted to speak to a solicitor who spoke her native Serbian.

18 On about 22 December 1992 Mr Milan Bundalo telephoned the solicitor, Mrs Radjenovic. She had been admitted to practice in 1984 and, as the trial judge found, was an experienced conveyancer. She was fluent in Serbian and English and was obviously known to the Bundalos although she never acted for them in this or any other transaction.

19 On 22 December 1992 Mr Milan Bundalo contacted the solicitor’s firm, in effect to arrange for the solicitor to provide independent advice to the appellants as guarantors (Blue 111, 124). Milan is Alex’s father.

20 On that or the following day Milan or possibly Alex Bundalo brought Mr Gojkovic to see the solicitor at the respondents’ office in Fairfield. Mr Bundalo introduced the appellant as a person who had agreed to guarantee a loan in regard to the Wollongong project. The solicitor spoke to Mr Gojkovic in the absence of Mr Bundalo and obtained from him general details about his personal circumstances and the proposed transaction. She was told that the appellants were married, that Mr Gojkovic was on a pension income, that they had two student children, that Mr Gojkovic was putting “my home” up as security. He told her that the home which he owned with his wife represented their sole asset. The solicitor gave him advice and a warning (Blue 113). The detail of this conversation does not matter very much because the solicitor made it plain that she was not prepared to act in the matter without the opportunity to advise Mrs Gojkovic as well as her husband (Blue 114). It was the later meeting on 31 December that is of critical importance to this appeal. Nevertheless, this earlier meeting provides relevant background because the solicitor made no bones about her concerns as to the risks of the proposed transaction. She communicated them to Mr Gojkovic at the time (Blue 113-114). She mentioned them to her secretary (Black 104) and she gave evidence to similar effect at the trial (Blue 113-4).

21 There was a dispute at trial as to whether this earlier meeting took place. The primary judge held that it did (Red 52).

22 By 31 December 1992 Evenplum was pressing Nova to finalise the deal and exchange the various contracts. Evenplum’s solicitor Mr Heard provided Mr Alex Bundalo with the documents which had to be executed by the appellants and their independent solicitor. Mr Bundalo drove the appellants from Wollongong to Fairfield to meet the solicitor. The appellants brought the title deed of their house and the recently executed discharge of the bank mortgage.

23 The evidence was conflicting but the trial judge found that the solicitor interviewed the appellants in the absence of Mr Bundalo (Red 52J).

24 At the end of the interview the appellants executed the Mortgage; the Deed; and an Acknowledgement to the effect that the solicitor had explained the documents to the appellants who in turn understood them. The solicitor executed an Acknowledgement to similar effect. These documents had been prepared by the vendor Evenplum’s solicitor.

25 The solicitor’s evidence as to what was said at this interview is to be found in her written statement (Blue 115-118) and her oral evidence (especially Black 140ff). It is no longer in dispute that she adequately explained (in Serbian) the legal purport of the documents that were to be executed and it has never been in dispute that she told the appellants that they were at risk of losing their home if the mortgage was called up consequent upon default by the Bundalo company Nova Constructions Pty Ltd. The appellants had disputed the former proposition in their sworn evidence at the trial.

26 The appellants through their senior counsel also accept that the solicitor’s evidence as to the advice and warnings that she gave, if accepted, discharged whatever duty of care she had to bring home to the appellants the financial risks of the third party mortgage in the particular circumstances. This concession is properly made in light of the solicitor’s evidence as to what she said about the practical effect of a worst case scenario, her warnings and her strong advice to the appellants to verify the financial situation of the company and of the Bundalos before handing over the documents (Blue 116-118).

27 The appellants, Mr and Mrs Gojkovic, were born in 1931 and 1939 respectively. They had emigrated from Yugoslavia. Serbian was their native tongue although Mr Gojkovic is reasonably proficient in English. Mr Gojkovic worked at the steel mill in Port Kembla until he suffered a work injury. Thereafter he received some category of pension. The couple had two children in their late teens. It would appear that Mrs Gojkovic had been primarily involved in home duties. She had also done cleaning work for the Bundalos. Her command of English was quite limited.

28 At the relevant time the Bundalo family were well regarded members of the Wollongong Serbian community who displayed all the outward signs of material affluence. They lived in a luxury home and were generous donors to church and Serbian community causes.

29 It was contended at trial that the solicitor was negligent in the manner in which she explained the purport of the documents to the appellants at the meeting on 31 December 1992. It was also pleaded that she had been negligent in failing to respond to “knowledge” that the documents signed by the appellants had been handed over to Evenplum before 8 January 1993 and by failing to advise the appellants of their right to lodge a Caveat against registration of the mortgage (Red 15-16). These claims were rejected by the trial judge and are no longer pressed. Indeed, it will become apparent that a major part of the appellants’ case on appeal involves the very negation of their alternative claim at trial based as it was upon the solicitor “receiving knowledge” of facts indicating that the appellants were entitled to resile from the transaction and coming under a duty to do something to protect their interests (Red 15-16).

30 The substantive issue pressed in the appeal is the claim that the solicitor negligently failed to bring home to the appellants the real risks of Nova defaulting when she spoke to them at her office in Fairfield on 31 December 1992. The appellants cite Beneficial Finance Corporation Ltd v Karavas (1991) 23 NSWLR 256 at 263. The appellants acknowledge that the evidence of the solicitor (if accepted) demonstrates that she did satisfy any duty in that regard. They contend that the trial judge erred in accepting the credibility of her evidence. A new trial is sought. The appellants acknowledge that they must address the difficulties placed in their path by cases such as Abalos v Australian Postal Commission (1990) 171 CLR 167 and Devries v Australian National Railways Commission (1993) 177 CLR 472 which severely restrict the capacity of an appellate court to overturn a trial judge’s credit-based findings.

31 I shall return to the way in which the appellants seek to meet these hurdles after surveying the course of the trial and the reasons of the learned primary judge.

32 Before doing so I will complete the narrative of the later events involving the appellants, to the extent that they are not a matter of dispute.

33 The appellants were driven back to Wollongong by Mr Bundalo. They handed over the documents which had been signed in the solicitor’s office. Those documents were in turn delivered to Evenplum’s solicitors on or about 4 January 1993, apparently at the time the main contracts were exchanged. (It is possible that the purchase contracts were exchanged on 31 December (CA Tr p16) in which event the exchange of documents that occurred later on 4 January 1993 was confined to those documents concerning the side-arrangement.) The Mortgage was registered on 20 January 1993.

34 Something happened between 6 and 8 January to put the solicitor and her firm on notice that all was not well. The solicitor swore that instructions to that effect came personally from Mr Gojkovic, definitely on 8 January. The appellants contend that it was Mr Alex Bundalo who raised the matter, through his solicitor Mr Martin of Verekers, and that he did so without notice to the appellants, behind the appellants’ back, and for his own purposes in an attempt to renegotiate or renege on the side arrangement embodied in the Deed.

35 It is convenient to provide a short chronology of the events in 1993 which are not in dispute:

4 January 1993
The exchange of documents concerning (at least the side-deal part of) the Wollongong contracts took place during a late night meeting between Mr Alex Bundalo and the vendors’ solicitor Mr Heard. It was on this occasion that Mr Bundalo handed over to the vendor the executed Mortgage and Deed.

6 January 1993
An unidentified person in the solicitor’s firm spoke by telephone to a legal officer at the Land Titles Office. The discussion related to the form of a possible caveat which the appellants might lodge against the title to their own land in order to block the registration of the Mortgage. The diary note (Blue 136) records:
legal officer
Caveatable in land

Put on X basis for X eg fraud
Undue Influence or Duress
Claim INT as reg’d Prop of fee simple

The inference is inevitable that something had happened to put the solicitor’s firm on notice that the appellants (or, as the appellants submit someone purporting to represent them, eg Alex Bundalo) were possibly seeking to resile from the mortgage transaction.

7 January 1993
This was Christmas day according to the Orthodox calendar. The solicitor, Mrs Radjenovic was certain that she was not at work.
A receipt issued for the payment of the legal fees owed to the solicitor in respect of the work previously done for the appellants (Blue 135). One may infer that the cheque was received at the solicitor’s office that day (whether by post or hand delivered) (cf Black 176). The receipt was issued by the solicitor’s secretary (Black 160R). The fees were paid by cheque from Nova Constructions. Incidentally, the cheque was later dishonoured.

8 January 1993
Mrs Radjenovic returned from one or two days Christmas leave (Black 159). She received a telephone call from Mr Martin of Verekers (the Nova/Bundalos’ solicitor) and she made a diary entry of it (see further below). Later that day the solicitor sent a letter to the vendor’s solicitor, Mr Heard, which was in the following form (Blue 137):
We advise that we act for the abovementioned Mortgagors and note that you act for the above Mortgagee.
We advise that our clients have instructed us that they withdraw their consent to the Mortgage and Deed executed by them on 31st December 1992.
We understand that the above documents have not been registered and we request that you do not proceed to stamp and register the documents. We request the immediate return of our clients’ Certificate of Title Folio Identifier 70/244447 together with the said Mortgage documents and Deed.

We advise that we have concerns as to the validity of the transaction and we reserve our clients’ rights in respect of the documents.
We advise that should we not receive a letter in confirmation that your office will not proceed to stamp and register the documents and that your office will return our clients’ security documents by 4.00pm this day, we shall register a Caveat protecting our clients’ rights without further notice to your office.
This letter was faxed and there was a response at 5.15pm that day from a secretary in Mr Heard’s office (Blue 120-1, 138). The secretary informed Mrs Radjenovic that Mr Heard was away holidaying in Queensland and that “nothing had happened to date” . The secretary also told Mrs Radjenovic that the solicitor for the other party (presumably Verekers) had also written and put the vendor on notice that litigation might ensue. This links in with the evidence that Mr Alex Bundalo gave in a detailed statement to Messrs Martin and Swan, solicitors at Verekers, late on 4 January 1993 (Blue 152ff). It is also consistent with what Mr Flavin told the solicitor on 8 January 1993 as recorded in her diary note (see below).

11 January 1993
The solicitor received a letter from Kell Heard McEwan and Lough. It was signed by the secretary to whom she had spoken on 8 January. The letter acknowledged receipt of the letter of 8 January and continued
So that we may obtain proper instructions, kindly let us know the reason behind your ‘concerns as to the validity of the transaction’.

The solicitor wrote to the appellants as follows (Blue 140):

We refer to your attendance at our office on Thursday, 21 December 1992.
We confirm that on that day you executed mortgage documents and Deed after the writer advised you on the terms and conditions and of your legal obligations thereunder and after you acknowledged your understanding thereof.
We confirm that pursuant to the Deed Nova Constructions Pty Limited has agreed to pay to Evenplum Pty Limited the sum of $338,000.00 and that you have agreed to provide security for the payment namely a first registered mortgage in favour of Evenplum Pty Limited over your above home property.
Nova Constructions are to pay to Evenplum the sum of $338,000.00 and interest thereon at twelve percent (12%) per annum by ten (10) monthly instalments of $35,321.00, the first instalment to be paid on 30 March 1993 and thereafter on the same day in each succeeding month with a final instalment on 30 December 1993.
Should the monthly repayments not be made within seven (7) days of the due date the applicate interest rate will be twenty percent (20%) per annum.
Messrs Milan Bundalo and Alex Bundalo pursuant to the Deed are to unconditionally guarantee the due and punctual payment of the moneys payable.
We also confirm that in the event of default in repayment and such default continues for at least two (2) months and of which the mortgagee must give to (sic)
We advise that our fees have been paid by Nova Constructions Pty Limited.
We thank you for your instructions and enclose a photocopy of the following documents for your records, the originals of which were taken by Mr Alex Bundalo on the day, in accordance with your instructions:
(1) Acknowledgement by you.
(2) Mortgage
(3) Deed.
We also enclose original memorandum Q860000 for your records.
We further confirm that your repayment of the moneys in full the mortgagee must provide you with a Discharge of Mortgage.
We refer to your subsequent instructions on the 7th instant whereby you instructed that following your conference with the writer, and more specifically upon your return home, you instructed Mr Alex Bundalo that you did not wish to proceed with the matter. You advised Mr Bundalo that you withdrew your consent and instructed him not to hand over the documents in his possession.
We also confirm that you are instructed by Mr Bundalo that he was unduly pressured in handing over the documents despite your specific instructions and that he is in the process of instituting legal proceedings in respect to the transactions.
We advise that you may have legal rights against Mr Alex Bundalo in accordance with your instructions in the event that his legal proceedings are unsuccessful.
We forwarded a letter to the solicitors for Evenplum Pty Limited and we enclose a copy for your information.
We advise that following our letter the writer had telephone discussions with solicitor of the office who informed that the solicitor having carriage of the matter Mr Heard, is away on holidays and that the documents have not been stamped registered. The solicitor informed the writer that upon contacting Mr Heard he will advise of their client’s intention.
We are in the process of preparing a caveat and we will proceed to register the same.
Kindly forward the sum of $200.00 on account of further legal fees, namely for costs of preparing and lodging caveat and registration fees.


Mrs Gojkovic said that she was never told about this letter, but her husband gave contrary evidence to the effect that he explained it to her in Serbian (Black 80).

20 January 1993
Evenplum registered the Mortgage.

8 February 1993
Having heard nothing from the appellants the solicitor wrote again noting that she had not received any further instructions. She confirmed that she was unable to proceed to register the caveat until put in receipt of funds (Blue 143).
Mr Gojkovic denied receiving this letter (Black 87).
26 February 1993
A further letter was sent by the solicitor to the appellants. It recorded that because the solicitor had not received further instructions despite her two earlier letters she would cease to act as and from 26 February 1993.

36 I have passed over the detail of the events of 8 January and the solicitor’s diary note of her conversation with Mr Martin that day. To these I shall return, after dealing with the course of the trial and recording the trial judge’s conclusions about the events of January 1993.

The course of the trial

37 As indicated, the appellants’ case as pleaded and litigated in the District Court contended that the solicitor was negligent in the advice that she failed to give when the Mortgage and Deed were executed by the appellants on 31 December 1992; and alternatively in failing to advise adequately as to the need to lodge a caveat to prevent registration of the Mortgage in light of the events occurring before 8 January 1992.

38 The case as opened (Black 5) and revealed by the witness statements exchanged before trial was to the effect that the solicitor gave extremely perfunctory advice on the sole occasion that she interviewed the appellants in relation to the documents. It was contended that the appellants were brought to the solicitor’s office by Alex Bundalo, who was said to be a client of the solicitor (a submission not ultimately pressed). Mr Bundalo brought with him various documents which were to be executed in the presence of the solicitor.

39 Each witness gave evidence by way of verified statement, supplemented by oral evidence and subject to cross-examination.

40 The primary witnesses for the plaintiffs were the appellants themselves and Mr Alex Bundalo.

41 The first witness was Mrs Gojkovic. In her witness statement (Blue 25) she confirmed that she agreed in late 1992 to provide Milan Bundalo with a mortgage “to help him pay $300,000” although she was a bit angry and anxious about the matter “because I really did not understand why we had to be asked for a mortgage over our home” (Blue 26). Mrs Gojkovic said that Alex Bundalo was present with the solicitor and the appellants on 31 December when the mortgage documents were explained. She said that:

… we were there only a few minutes because Ms Radjenovic had papers ready for us to sign and simply indicated to us where we should sign the papers, they were not read over to us in Serbian or in English …. she gave us virtually no explanation of any of it when we were there…. After we had signed she said ‘if he does not pay you could lose your house, but he is a rich man and he will give you back your mortgage very soon’. (Blue 28)

42 Mrs Gojkovic acknowledged that she understood that if the Bundalos did not pay the money that they were guaranteeing, the appellants could lose their house under the mortgage. She agreed to sign the mortgage because she and her husband trusted the Bundalos, they thought that they had plenty of money, that everything was ok and there was really no risk (Blue 29).

43 Mrs Gojkovic’s oral evidence in chief was to similar effect (Black 14-17, 23, 25, 28-30).

44 Mrs Gojkovic was cross-examined on the basis of a statement she had given her solicitor Mr Wells in 1995 which suggested that her understanding of the transaction was greater than she deposed in evidence (Black 37).

45 Alex Bundalo gave a sworn statement and was called as a witness for the plaintiffs at trial. He set out the arrangements that led to the need for the appellants to provide security and their agreement to do so. He had made the arrangements to take the appellants to see the solicitor on 31 December 1992. He said that he spoke first to the solicitor alone and then remained in her room when she spoke to the appellants. On his version the solicitor gave a limited explanation of the documents proffered for signature (Blue 4-5). The documents were then signed and photocopied. The originals were given to Mr Bundalo. In his statement Mr Bundalo said:

22. Not many days later I heard from the Gojkovics that they were unhappy with the documents and I told Mr Heard and Mrs Radjenovic this but I did not get the documents back at any stage. My company proceeded with the construction work in 1993 but ran into difficulties and although in the end Nova Constructions paid all but $8,000.00 of the $338.000.00 (and an added amount of interest required to accompany the progress payments it had promised to pay), the payments were made late and accumulated some $50,000.00 to $60,000.00 in extra interest under the guarantee documents signed by the Gojkovics.

46 In cross-examination Mr Bundalo agreed that there was a period during the meeting with the solicitor on 31 December 1992 when he went out to check his car, leaving the appellants alone with her (Blue 56). He did not recall the solicitor ever telling the appellants that they might lose their house (Blue 56), although it was common ground at trial that this had occurred. Mr Bundalo adhered to his evidence that the solicitor had not explained the effect of the documents to the appellants (Blue 57).

47 Mr Bundalo agreed that he may at some stage have told the agent Mr Petrov that the appellants were not prepared to give the security or that they were not happy with doing so (Blue 59-60). Had he done so this would have been a lie because the appellants never were unhappy to give him the security (ibid). Rather Mr Bundalo was lying in an attempt to try not to give the security, perhaps because he and his father were also parties to the deed. This exchange with the agent occurred on 31 December 1992 (Black 59 ff). There were further discussions with the vendors and their solicitor in an attempt to try to convince the vendors to go ahead with the deal without the security documents given by the appellants (Black 60, 63). In this context Mr Bundalo may have represented that the appellants were not prepared to give the security [which he was in fact holding duly signed] (see Black 63). This all appears to have been part of the brinkmanship in early January 1993 prior to the exchange of contracts and the televised announcement of the project.

48 Ultimately Mr Bundalo submitted to the vendor’s demands and the Deed, Mortgage and other relevant documents were handed over by him to the vendor’s solicitor Mr Heard. The exchange appears to have occurred late on 4 January 1993 and in the absence of Nova’s solicitor (Blue 136, 163, Black 66, 68).

49 Having dealt directly with the vendor’s solicitor, Mr Bundalo spoke to his own solicitor and provided a detailed statement of recent events. This statement was taken on 5 January 1993 (Blue 152). The portion of the statement that asserted that Mrs Radjenovic went through the documents with Mr and Mrs Gojkovic and had them explained (Blue 158) was used effectively to contradict Mr Bundalo’s evidence in chief at the trial in which he had asserted in effect the solicitor had done little more than tell the clients where to sign.

50 In his statement, Mr Gojkovic said that he was asked by Milan Bundalo to guarantee the obligation to pay Evenplum $300,000 out of the progress payments. Because of the standing and apparently wealth of the Bundalo family and the fact that the contract was expected to realise millions of dollars he never believed that there was any real possibility that the guarantee might be called up (Blue 16-17). Mr Gojkovic also thought that assisting the Bundalos would be good for his son because it would make it easier for him to get a job with Nova Constructions when he finished school (Blue 17-19).

51 His evidence, if accepted, would have raised a very serious question as to whether the solicitor met the requisite standard of care. According to Mr Gojkovic, Alex Bundalo was present in the room the entire time on 31 December 1992. He said:

Ms Radjenovic displayed the Deed of Guarantee, Mortgage and Acknowledgement papers, and told us where to sign and where to initial. She did not explain anything about it to us, she just told us to sign. We did not read the documents before we signed it. My wife cannot read English, and speaks only broken English. I could read English at this time. I did not read the documents. We trusted them, and Milan was a well-respected man. After we signed the documents Ms Radjenovic mentioned, “If they do not pay, you will lose the house”. I said, “Yes, we know, but we trust the Bundalo family.” She then said “You have no need to worry the Bundalos are rich, they have lots of money and they will pay. Everything will be OK”. My wife had just followed what I did. She just signed where I was signing. She only knew that she was signing the deed. She didn’t know what was in the deed. In Serbian culture, it is normal for a woman not to become very involved in business dealings. It is normal that, if a woman needs to sign something, she just does as her husband tells her. The husband would normally explain to her what she is signing.
The interview with Ms Radjenovic was very short a matter, of only two or three, four minutes maximum. The documents we were to sign were already prepared before we arrived: there was a pen on the table and she put it on top of the document in front of me and I picked it up, she pointed to places in succession where we were to sign or place our initials. There were brackets in the margin opposite alterations. Alex of course signed nothing. Not only did we not read the documents, but they were not read over to us either in Serbian or English. Until we had signed Alex said virtually nothing. Afterwards Ms Radjenovic went out of the room for a moment, and while she was out Alex said, “There is nothing to worry about, you will get your mortgage back very soon”. At no time did Ms Radjenovic ask us whether we had any direct interest in the company, or whether we knew the purpose for which the guarantee would be needed. She was not told that Alex had paid off our mortgage so he could give a free title to the Guaranteed parties nor did she ask in any way what benefits we could derive from the whole deal. If she knew anything about the actual personal or familial relations between us, my wife and myself, and the Bundalos it certainly was not due to anything she was told at the interview when we were present. She did not ask anything about the party being guaranteed or whether we knew any of its Directors.


(See also Black 95)

52 According to Mr Gojkovic there was no further discussion of the mortgage or contract in 1993. There was something on the television that indicated that the project was going ahead, but nothing further happened involving the solicitor until Evenplum called up the guarantee years later (Blue 23, Black 78).

53 Mr Gojkovic’s oral evidence about the perfunctory nature of the solicitor’s advice was even more emphatic. It was to the effect that the solicitor did no more than tell the parties where to place their signatures (Black 76-77, 91). In cross-examination Mr Gojkovic was confronted, most effectively, with a statement dated 20 February 1995 (Blue 59) that he had given to a solicitor then engaged to seek counsel’s advice as to the enforceability of the mortgage. That statement indicated that Mrs Radjenovic had read and explained the effect of the Deed. Mr Gojkovic also stated that the appellants had signed because they trusted the Bundalos and thought that they had plenty of money (see esp Blue 60, 61. See also the solicitor’s observations to counsel at Blue 65.)

54 Mr Gojkovic was also cross-examined as to his assertion that there had been no contact between him and the solicitor between 31 December 1992 and 1994. He specifically denied having telephoned the solicitor in January 1993 (Black 78, 80, 81). He adhered to this position despite his acknowledgement that he had received and read the letter from the solicitor dated 11 January 1993 referred to below. At one stage he suggested that the solicitor had written what she did in the letter of 11 January “so to help her on this case here” (Blue 81L. See also 82F).

55 The solicitor’s written and oral evidence at trial stood in marked contrast to that of the plaintiffs and their witness Alex Bundalo. The solicitor said that she was very concerned that the plaintiffs were putting their house at risk in a transaction that offered them no material benefit (the solicitor was ignorant of the arrangement whereby the Bundalo’s paid off the $15,000 bank mortgage). (It would be surprising and very discreditable if she had not been concerned, since the information of which she was aware indicated that the appellants got nothing out of the transaction and the signs about Nova’s solvency were ominous.)

56 The solicitor swore that she warned the appellants in no uncertain terms. She advised them to verify the financial situation of Nova and of the Bundalos (Blue 117) and she urged them jointly and individually not to go through with the transaction that day. As previously indicated, the appellants agree that her evidence (if accepted) shows that she amply discharged her duty of care as a solicitor. It is no longer suggested that she should have refused to participate in the transaction or that there was any impropriety in her providing the Acknowledgement of independent advice upon which the mortgagee doubtless intended to rely, thereby avoiding what were probably apparent risks that the mortgage might be tainted by undue influence.

57 Whatever may have been the position before the mortgage was registered and ultimately discharged, no one in the present proceedings suggests that it was unenforceable according to its terms as between mortgagor and mortgagee. Nor is it now suggested that the solicitor was in any way negligent in what she did or did not do after the meeting in her office on 31 December 1992.

58 I pass over the contested evidence as to the communication between the solicitor and the appellants in or about 8 January 1993. It will be seen that this lies at the heart of the way the appellants now press their claim in this appeal.

The reasons of the trial judge

59 It should be said at the outset that the judgment of his Honour Judge Phelan is clear as to the evidence relied upon and as to the ultimate conclusions reached.

60 The appellants complain that it is not as detailed as one would have hoped for in recording the primary findings of fact. Some of the evidence that is recited appears to have been accepted, if only because it is a necessary step to the ultimate conclusion (as a matter of logic). There are a number of specific findings, but the reasoning process is said to be very narrow in its compass or else partially opaque. Lack of exposure of reasons is not however a ground of appeal. Indeed, this aspect of the appellants’ criticism appears exaggerated in light of the many detailed findings in the passages at Red 44-6, 47-8, 49, 51-3 that I set out below.

61 Ultimately, the appellants focus upon one particular reason given for rejecting the appellants’ case (ie Mr Gojkovic’s perjury on one matter) which, if made good, throws up the question about the ultimate impact of that error upon an otherwise unassailable credit-based judgment.

62 The judgment commences by setting out the pleadings. The background to the transaction between solicitor and client is then recounted, including the material indicating that neither the Bundalos nor Nova had available security to offer Evenplum.

63 The reasons why the appellants were willing to assist the Bundalos are then set out (Red 26-7).

64 It is recorded that the plaintiffs abandoned the allegation that Mrs Radjenovic knew the Bundalos personally.

65 The judge found that there was a meeting between one of the Bundalos (probably Milan: cf Red 28) and Mr Gjokovic on about 23 December 1992. The solicitor’s evidence in her statement about the details of that meeting is then set out (Red 29-31). On my reading of the judgment that evidence was implicitly accepted, but (for reasons already given) nothing much turns on this meeting.

66 His Honour then sets out the solicitor’s evidence in her statement concerning what took place at the meeting on 31 December 1992 (Red 31-35). Then follows the observation that it is clear from the evidence that the documents were brought by the Gjokovics and that they were prepared by Mr Heard for Edenplum.

67 His Honour then addresses the evidence of Alex Bundalo and the appellants to the effect that Alex Bundalo was present when the solicitor explained the documents. He observed in passing that it was clear from Mrs Radjenovic’s evidence that she urged the Gjokovics to desist or at least to make further enquiry (Red 35S). I take this to be one of several additional pointers to the conclusion that the trial judge accepted the solicitor’s version of what took place at the critical meeting.

68 His Honour then recounted portions of Alex Bundalo’s statement made on 5 January 1993 relating to his attempt (falsely) to persuade the agent Mr Petrov that he did not have the documents signed by the appellants as part of the last minute attempt to renegotiate the terms. This statement dated 5 January 1993 came fortuitously to the knowledge of the respondent’s solicitors after Nova went into liquidation. The judge concluded that the evidence tended to confirm the truth of the 1993 statement’s contents. Accepting the truth of the 1993 statement, Mr Bundalo emerged:

… as the person primarily responsible for the plaintiffs’ unfortunate position. Apart from showing that he was deceitful it shows that in giving contradictory evidence he was prepared to lie under oath.

69 The judge records that ultimately Mr Bundalo collected the documents and took them to Mr Heard’s office and the contracts were exchanged on 5 January 1993 (Red 37L). Once again I read this as an implicit acceptance of that portion of Mr Bundalo’s evidence. This is confirmed in my mind by the portion of the judgment that next follows in which the judge notes that the “affidavit” (scil, witness statement) and evidence given in court by Alex Bundalo swore to an “altogether different story” (Red 37M). His Honour then recounted aspects of that “altogether different story” which he obviously rejected, preferring the contemporaneous version given on 5 January 1993. The portions of Mr Bundalo’s evidence at trial that were implicitly but specifically rejected were:

(i) His claim to have been present at the conference when the appellants were seeking advice and signing the documents (Red 37P);

(ii) His evidence to the effect that the solicitor gave the most perfunctory of advice concerning the guarantee (Red 38T-39T).

70 His Honour continued (Red 40-46):

In any event, in Exhibit F at DR7A [Blue 136] there seems to be direct confirmation of what Bundalo told his solicitors [on 5 January 1993] in the form of a record of a phone conversation on 8 January between Mrs Gojkovic and Bundalo’s solicitor (Tony Martin). The note records “Re Gojkovic – express concerns re transaction, requested that he not hand over security but pressure to hand over documents”. In the margin “Were aware when left office and reconsidered their position, realised what’s involved and said, don’t go ahead”. Mrs Radjenovic noted “reserving rights in relation to all documents – withdraw consent – return of documents”.
It is apparent from a memo of 6 January 1993 appearing in DR7A above that just referred, that an approach was made to the office of the defendants on that date by the plaintiffs. As a consequence it appears that contact was made with the Registrar General’s office and to a legal officer in particular inquiring about caveats. Mention is made in that memo of fraud, undue influence or duress and “claim INT as registered Prop of fee simple”
Following the conversation with Tony Martin of Verekers she wrote immediately on 8 January to Kell, Heard and McEwan and Lough (DR8) as follows;
“we advise that our clients have instructed us that they withdraw their consent to the mortgage and deed executed by them on 31 December 1992.
We understand that the above documents have not been registered and we request that you do not proceed to stamp and register the documents. We request the immediate return of our clients certificate of Title, Folio Identifier 70/244447 together with the said mortgage documents and deed.
We advise that we have concerns as to the validity of the transaction and we reserve our clients’ rights in respect of the documents.
We advise that should we not receive a letter in confirmation that your office will not proceed to stamp and register the documents and that your office will return our clients’ security documents by 4pm this day, we shall register a caveat protecting our clients’ rights without further notice to your office.”
From a memo on the same day she spoke to Mr Heard’s secretary (DR9). In a follow up letter of 11/01/93 Kell, Heard, McEwan and Lough asked for reasons as to the alleged invalidity of the transaction (DR10).
Of even greater significance in my conclusion is the letter of 11 January 1993 that she wrote to Mr and Gojkovic (DR11). In it she reports what took place on 31 December, wrongly referred to as 21 December. I quote that letter because of its significance:-
[the key portions are then set out]
Mr Bogdan Gojkovic denied that he had telephoned the defendants’ office and claimed to have had no further contact with that office apart from the letter DR11. In particular he claimed he did not know what a caveat was and he says that the letter of 8 January 1993 to Kell, Heard and McEwan was not enclosed. In evidence he claimed not to have read parts of the letter DR11 particularly on the second page or received some of the annexures.
Mr Gojkovic struck me as a shrewd and intelligent person. I find it most unlikely that he would not have read all of the letter and would not have noticed the omissions by way of attachments. I have little doubt from his alertness in the witness box that he would have followed up these matters.
The fees requested in order to enable the caveat to be filed were never sent. There was nothing forthcoming. There was no telephone message from him and I have to come to the conclusion that the plaintiffs decided that they would accept the status quo and honour the original consent. Letters from Mrs Radjenovic dated 8 February 1993 seeking further instructions and 26 February 1993 effectively closing off the file remained unanswered.
I form the conclusion that Mr Gojkovic lied under oath when he claimed not to have communicated with the defendants’ office after 21/12/92 and about his ignorance of the need to file a caveat. As the documents remained unregistered until 20 January legal action might have protected the plaintiffs.
Indeed when the mortgagee took action against the plaintiffs they turned to Mrs Radjenovic whom they now claim to have so badly let them down, to continue to act for them.
A telephone conversation recorded in Mrs Radjenovic’s hand on 26 April 1994 in DR16 in her affidavit records Mr Gojkovic as saying that he admitted to signing the mortgage voluntarily, that he had not been forced by the Bundalos to execute it, that he was aware of the consequences and accepted them. He acknowledged no legal ramifications against the Bundalos. He wanted to do the best he could without losing his home.
On 25 August 1994 the plaintiffs wrote to her in these words in Serbian, (DR17), translated into English, “from the day that I and my wife signed that contract up until the present day nothing extra happened to us and no one said nothing to us, all up until we turned to you Mrs Radjenovic for legal help to get back the titled deeds to our house”. From that letter it can be gleaned that they still had faith in Mrs Radjenovic. After all she was the one who warned them so clearly about the dangers of what they were doing. That letter also implicitly condemns the Bundalos, their wealthy friends who had failed to warn them that they were in financial difficulty. They then instructed her to get counsel’s advice which she sought on 26 August 1994. Mrs Radjenovic continued to act for them until January 1995 when she left the defendants’ firm.
It is apparent that Mrs Radjenovic is mistaken in saying that she received a telephone call from Mr Gojkovic on 7 January. She says as a member of the Orthodox church she would not have worked on 6 or 7 January, those days being the Orthodox Christmas. I am satisfied that Mr Gojkovic did ring the office on 6 January and spoke to an unidentified person who made inquiry of the Registrar General as I have recorded. It is clear that on her return to work on 8 January as her memo and correspondence shows, Mrs Radjenovic immediately took steps to reverse the plaintiffs’ situation.

71 The judge then addressed the events of 1995, when the appellants sought legal advice concerning the mortgage and when they or their then solicitors made statements inconsistent with the case advanced in the District Court (Red 46-8).

72 The following additional findings were made (Red 47-8, 49, 51-53):

Thereafter the plaintiff sought advice from a number of other solicitors. It is apparent from their statements thereafter, the statement of claim in these proceedings and their oral evidence that their perception has changed as to what took place and it is of interest to compare exhibit A and what they told Mr Wales, with exhibits E, K, 2 and 3, their oral evidence at this trial as well as what is reflected in their statement of claim.
I conclude that at a certain point in time there was a critical change of evidence.
In exhibit 2, (para 15) Mr Gojkovic gives the following description of what took place at Mrs Radjenovic’s office:-
…
Mrs Gojkovic says in her affidavit,…
…
There is no hint in that statement of what Alex Bundalo so graphically described in his memo of 5 January to his solicitor that Mrs Gojkovic was critically worried about what was about to take place.
Indeed in her oral evidence Mrs Gojkovic made it look even worse from the point of view of Mrs Radjenovic. She said the latter was standing up. She pointed to the papers and said, “You have to sign these papers”, “Don’t worry Mr Bundalo is a rich man, he will pay, I’ve known him for a long time”. She said she was in a hurry. They were only there for some ten to fifteen minutes. She was not told what she was guaranteeing. She stressed to them that it was a nine million dollar job, they were not to worry because they the Bundalos would pay for it. So that with time the story got worse.
…
In relation to matters going to credit I formed the view that Mrs Radjenovic was a conscientious person who had high professional standards and was a witness of truth. I accept that she gave proper explanation and advice not to sign and to think carefully before handing the documents over. Even if she had not given evidence the fact remains that the plaintiffs made no recriminatory claims against her apart from claiming to Mr Wales at conference that she had not explained the interest rates. That assertion was not directly made to Mr Wells, the instructing solicitor, when they gave their instructions or when the male plaintiff made his statement on 20 February 1995. Indeed the converse was the case. As to that issue Mr Gojkovic in contrast to his wife, acknowledged receiving letter of 11/01/93 (DR11). I cannot accept his claim that he did not read all of the letter in which the interest rate is outlined.
The plaintiffs sought advice from no less than five firms of solicitors and three barristers. In none of the statements at the relevant time did they make the assertions that they make now in the statement of claim. In particular I accept what is now conceded that Mrs Radjenovic did not personally know the Bundalos but knew of them. I accept the evidence of Mrs Radjenovic as corroborated by her secretary that there had been a prior meeting with Mr Bogdan Gojkovic and either Milan or his son, Alexander Bundalo. I accept that she did not interview Mr Bundalo on 31 December 1992. I accept the evidence of her secretary and indeed her evidence that she did not have her children with her in the room on that day and her secretary’s assertion that it was not her normal practice to do so. I accept that on 30 December 1992 she had taken details of the various parties and their solicitors from Alex Bundalo as a preliminary to her retainer. I also accept that she had photostatted all the relevant documents. She had taken a copy in blank and she had analysed the document carefully as reflected in DR4 by underling and making marginal notes in relationship to a transaction that was unusual. I accept that such were her warnings that the plaintiffs were persuaded that they should not proceed and were reluctant to hand over the documents to Alex Bundalo. DR7(A) eloquently confirms her evidence that the plaintiffs wanted the deal stopped and that Alex Bundalo had cheated on them. These facts are corroborated by her note of the conversation with the Bundalo’s solicitor on 8 January 1993, and her letter on 8 January 1993 to Kell, Heard, McEwan and Lough. By Alex Bundalo’s statement of 5 January 1993 and her letter to the plaintiffs of 11 January 1993, it is evident that they changed their mind again and failed to respond to her correspondence no doubt following further pressure and blandishments from the Bundalos.
The conduct of the plaintiffs in retaining her until January 1995 not only signifies their faith in her but their confidence up until that time that the Bundalos would pay up. The presentation of Mrs Gojkovic’s case as requiring separate consideration because of the inferior position of women in Serbian traditional culture suggests a conflict of interest. But from the outset the evidence shows that it was Mrs Gojkovic who was more alert to the dangers and less impressed by concepts of loyalty and friendship to their rich friends who from the beginning in their desperation to obtain the contract put greed and their own interests first. Document DR17 eloquently spells out the plaintiffs feeling of abandonment as well as their continuing trust in Mrs Radjenovic whose advice they recognised belatedly, they should have taken.

I am left to conclude that in their plight they dishonestly and belatedly manufactured a case along with Alex Bundalo against the defendants. Thus there will be a verdict for the defendants.

The appellants’ attack on the trial judge’s reasoning

73 The appellants launched the following challenge upon the core reasoning in the judgment. It was accepted that the judge (implicitly at least) accepted the credibility and substantial accuracy of the solicitor’s evidence. That conclusion was, however, said to be fatally flawed because one plank, arguably a substantial plank, in the reasoning was “the conclusion that Mr Gojkovic lied under oath when he claimed not to have communicated with the defendants’ office after 31/12/92 and about his ignorance of the need to file a caveat. As the documents remained unregistered until 20 January legal, action might have protected the plaintiffs”.

74 This conclusion of perjury was said to be without foundation. It was further submitted that the error necessarily infected the overall assessment of the appellants’ credibility both generally and vis-à-vis the credibility of Mrs Radjenovic the solicitor. A new trial is sought.

75 The perjury conclusion forms part of an extended discussion in the judgment that addresses the events of January 1993. The judge was explaining both why he rejected some of Alex Bundalo’s trial testimony and why he accepted the solicitor, generally and especially as to her evidence that Mr Gojkovic personally instructed her on 8 January 1993 that he was considering resiling from the transaction. The events of early 1993 were relevant in their own right, inter alia because of the alternative allegation that the solicitor had been negligent in her response to what I shall neutrally term the information she received in early January concerning the appellants’ wish to renege on the transaction. This head of negligence is no longer pressed.

76 What the appellants seek to do in this Court is to take that discussion somewhat out of its original context and to use it as the basis of an attack on the credibility findings surrounding the events of 31 December 1992. I say “somewhat out of context” because it may be accepted that the strong “conclusion” as to Mr Gojkovic’s perjury must have been one of the factors influencing his Honour’s conclusion over all, including his conclusions touching the meeting of 31 December 1992. There is therefore nothing wrong with the appellants seeking to use an attack on this latter portion of the judgment as part of the challenge to the verdict below as they now wish to press it.

77 In the critical portion of the judgment (Red 41-45) the learned judge recorded the events in January-February 1993. In doing so, he held implicitly that the letters of the 8 and 26 February were sent and presumably received notwithstanding Mr Gojkovic’s evidence that he had not read them.

78 I interpose that it was quite understandable that witnesses may have been uncertain as to detail, given the lapse of over seven years between the events in question and the trial (March 2001). It seems to me entirely rational to look closely at the contemporaneous documents where they differed from the uncertain and contradictory evidence of interested witnesses.

79 The conclusion that Mr Gojkovic had lied under oath when he claimed not to have communicated with the defendants’ office after 31 December 1992 was premised upon these matters, in part. The appellants’ failure to respond to the three letters from the solicitor was in itself evidence that strongly supported the judge’s conclusion that the appellants decided that they would accept the status quo and honour the original consent (Red 44V). The failure to protest or respond to the various letters could also be used in resolving the conflict raised in the oral evidence as to the truth of the critical assertions in the letter of 11 January. The judge was clearly entitled to give considerable weight to the contemporaneous documents, all the more so because the letters passing from the solicitor at that time could not easily be said to be affected by any interest on her part at that time. With this background as to the “objective” circumstances, I turn to the evidence at trial touching on the matter of the perjury finding.

80 In her statement the solicitor said this: (Blue 119G-120T)

On 7 January 1993, I received a telephone call from Mr Gojkovic. He said to me,
“We have been thinking about what you have told us. We do not wish to proceed with the matter. I have told Alex Bundalo that we do not want to go ahead with the matter. I told him not to hand over the documents. But Alex says that he was pressured to hand over the documents despite me telling him not to. Alex is taking legal proceedings in respect of the transaction.”

I said,
“I will send a letter to Kell Heard and McEwen. But you can also take action against Alex if he handed over the documents contrary to your instructions.”
On 8 January 1993, I received a telephone call from Tony Martin, from Verekers, the solicitors for the Bundalos and Nova. He said to me,
“Mr Heard had spoken to Bundalo directly. This raises some issues of professional ethics. The settlement is at 11.00am. There are some issues as to the validity of the transaction.”
I said,
Mr Gojkovic has expressed concerns to me about the transaction and he has requested that the Bundalos not hand over the securities. He tells me that they were pressured into handing over the documents.”
He said,
“But your client was aware of their obligations.”
I said,
“They were aware when they left my office, and have reconsidered their position. My clients have realized what is involved and they have said to the Bundalos: ‘don’t go ahead’.”
He said:
“The documents were given to me late on Monday night, but they are not stamped as yet. I reserve my clients rights in relation to all the documents.”
I said,
“They have withdrawn their consent, and I want the return of the documents.”
I annexe and mark DR-7A a copy of my file note for 8 January 1993. The top part of this file is a file note of 6 January 1993. This is not my handwriting but it appears to be that of someone who took a message for me from the Land Titles Office. I do recall at that time making some enquiries from the LTO about putting on a caveat to protect the Gojkovic’s interests.

81 In cross examination, the solicitor stated that she would have been absent from the office on 6 and 7 January 1993 because it was Christmas Eve and Christmas Day in the Orthodox community (Black 159). Her evidence as to what occurred on 8 January bears some signs of reconstruction based upon the documents and her realisation that she would have been absent during these days (cf Black 159). Nevertheless, she gave firm evidence to the effect that she spoke directly with Mr Gojkovic on 8 January, having discovered on her return from some source that there had been an indication on 6th or 7th that the appellants wished to resile from the mortgage transaction. The file note about the enquiry of the legal officer at the Land Titles office on 6 January tends to corroborate this.

82 The solicitor was quite adamant that she “would have” spoken to Mr Gojkovic on the 8th (see Black 159R, 160G, 161G, 162B, 163P, 165R, 166R, 167X). She readily admitted that there was no file note of any such conversation and that the reference to 7 January 1993 in her letter of 11 January was a mistake. (The judge accepted this: Red 46E.) In re-examination she offered as a possible explanation the fact that someone had come to the office on 7 January to pay the bill, it could have been Mr Gojkovic or someone representing him, but she was firm that she spoke to Mr Gojkovic on the 8th to obtain or confirm his instructions (Black 176).

83 In my view it was open to the primary judge to accept this evidence of the solicitor, particularly since it was essentially corroborated by contemporaneous documents, such corroboration drawing further strength

from the failure of the appellants to respond to the three letters sent to them in January-February 1993. Having done so, it was open to the judge to conclude that Mr Gojkovic had lied when he contended to the contrary in his evidence. That conclusion was further supported by the evidence showing the “development” of the appellants’ case between 1995 and the trial (Red 46ff).

84 Before us, senior counsel for the appellants advanced a possible scenario consistent with Mr Gojkovic’s denial that he had any contact with the solicitor during this period. The argument went thus: Mr Alex Bundalo was himself having second thoughts about the transaction. He resented having had to agree to pay the additional consideration demanded by Nova. He purported to represent the appellants and their interest when he “express(ed) concerns” (cf Blue 136R) via Mr Martin about the transaction, but the appellants were not privy to this in any way.

85 This submission is a possible reconstruction of the events. It gains some support from the solicitor’s observations to counsel of 26 August 1994 (Blue 58), but unfortunately the solicitor was not confronted with this material in her cross-examination (CA Tr p22). Nor was she cross-examined about the detail of her diary note of the conversation with Mr Martin of 8 January 1993, upon which such weight is now put. The suggestion that Mr Bundalo (through his solicitor) was entirely on a frolic of his own remains a debatable inference. But it is no more than that and it depends on inferences based primarily upon a debatable construction of the record of the solicitor’s telephone conversation with Mr Martin on 8 January (see below). It by no means follows that the trial judge erred when he accepted the solicitor’s evidence that she spoke directly to the first appellant. If anything, the objective probabilities favour the solicitor, although it is unnecessary for an appellate court to go that far.

86 It seems to me likely that the solicitor’s note of her conversation with Mr Martin on 8 January 1993 (Blue 136) was entirely consistent with the solicitor’s evidence as accepted by the primary judge. Mr Martin (Alex Bundalo’s solicitor) was confirming to Ms Radjenovic that the information he had received from Mr Bundalo was corroborative of what the solicitor had been told directly by Mr Gojkovic. The note reads:

- Heard – spoken to Bundalo direct –“prof ethics”
- validity of anything to sign.
- Re Gojkovic
[(note in margin) “where [sic] aware when left office and reconsidered their position.” ]
- express concerns re transaction
requested that he not hand over securities but pressure to hand over documents.
[(note in margin) “realized what’s involved & said don’t go ahead” ]
- docs given late on Monday night – not stamped on as yet
reserving rights in relation to all documents.
* withdraw consent*
- & return of documents -

87 The first part confirms that Mr Martin was upset at what he perceived was Mr Heard’s breach of “professional ethics” in dealing behind his back with Mr Bundalo and exchanging contracts late on 4 January.

88 The second part (“Re Gojkovic”) records the solicitor apparently telling Mr Martin about her concerns about the validity of the transaction and asserting that her clients were “aware” when they left her office and that they had “reconsidered their position” . That is entirely consistent with the source of the information and concern being what Mr Gojkovic had told someone at her office on 6 January and told her personally on 8 January. The solicitor’s own note of that conversation and her follow up letter of the same day are to the same effect. The letter records that instructions that the appellants withdrew their consent to the Mortgage had come from the appellants themselves (Blue 137N) and that the solicitor was putting Mr Heard on notice that the appellants reserved their rights.

89 (I reiterate that the challenge to the verdict does not assert that the solicitor should have done more at this time.)

90 It is pertinent to observe that the trial judge also offered specific reasons for being unimpressed with Mr Gojkovic’s testimony (see Red 44N-W, 45G-H). To these I would add the major damage done to the appellants’ case, in effect out of their own mouths, when one compares their witness statements at trial about the perfunctory performance of the solicitor on 31 December 1992 and the material placed on their behalf before barristers in 1994.

91 If, as I therefore conclude, the trial judge was entitled to reach a state of comfortable satisfaction that Mr Gojkovic contacted the solicitor on about 8 January 1993, then it was open to him to conclude that Mr Gojkovic’s denials to the contrary were false and (in the circumstances) false to his knowledge. It is no answer to suggest that the finding was unnecessary or harsh. It was properly open to the trial judge, especially in light of the fact that this had been put expressly to Mr Gojkovic in cross-examination when he was confronted with the letter of 11 January (Black 78-81).

92 It follows that the basic premise in the appellants’ attack on the judgment below cannot be sustained. It is therefore unnecessary to consider the second proposition, which involves an attempt to analyse the extent to which the judgment as a whole was adversely affected by the premised error. Rosenberg v Percival (2001) 75 ALJR 73 at [43], [166] and [222] shows that there can be circumstances in which an unjustified finding of deliberately false evidence will not necessarily bring down the ultimate conclusion based upon that and other factors. In my view it is unnecessary to determine which side of the line this case would have fallen had the appellants made good their basic premise.

93 I would dismiss the appeal with costs.

94 HANDLEY JA: I agree with Mason P.

95 SHELLER JA: I agree with Mason P.

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