Golotta v Incroft Pty Ltd - [2002] NTSC 37

Golotta v Incroft Pty Ltd & Anor [2002] NTSC 37
PARTIES:GOLOTTA, Carmelo & GOLOTTA, Mattia
v

INCROFT PTY LTD
and

BUCKSTON PTY LTD (Trading as Morgan Buckley, Barristers & Solicitors)

TITLE OF COURT:  SUPREME COURT OF THE NORTHERN TERRITORY
JURISDICTION:  SUPREME COURT OF THE NORTHERN TERRITORY EXERCISING TERRITORY JURISDICTION
FILE NO:25 of 1997 (9711680)
DELIVERED:  13 June 2002
HEARING DATES:  23-25 July 2001 and 4-8 March 2002
JUDGMENT OF:  MARTIN CJ
CATCHWORDS:
CONTRACTS – Restraint on trade – whether a solicitor failed to advise inclusion of a restraint on trade clause in a contract for sale of business

CONTRACTS – Solicitor’s duty to advise.
Voli v Inglewood Shire Council (1963) 110 CLR 74, referred to.
Hawkins v Clayton (1988) 164 CLR 539, referred to.
Midland Bank Trust Co Ltd v Hett, Stubbs and Kemp [1979] Ch 384, referred to.
CONTRACTS – Solicitor’s duty of care.
Hawkins v Clayton (1988) 164 CLR 539, referred to.
Yates Property Corp Pty Ltd v Boland (1998) 157, referred to.
Sacca v Adam & R Stuart Nominees (1983) 33 SASR 429, distinguished.
CONVEYANCING – Restrictive covenants – Restraint on trade – Whether a solicitor failed to advise inclusion of a restraint on trade clause in a contract for sale of business.

REPRESENTATION:
Counsel:
Plaintiffs:J. Waters QC
Second Defendant:  S. Walsh QC
Solicitors:
Plaintiffs:Caroline Scicluna & Associates
Second Defendant:  Cridlands Lawyers
Judgment category classification:        B
Judgment ID Number:  mar0218
Number of pages:  33

Mar0218
IN THE SUPREME COURT
OF THE NORTHERN TERRITORY
OF AUSTRALIA
AT DARWIN
Golotta v Incroft Pty Ltd & Anor [2002] NTSC 37
No. 25 of 1997 (9711680)

BETWEEN:
CARMELO GOLOTT & MATTIA GOLOTTA

Plaintiffs
AND:
INCROFT PTY LTD (ACN 053 555 338)

First Defendant
AND:
BUCKSTON PTY LTD (ACN 009 637 398) (Trading as Morgan Buckley, Barristers & Solicitors)

CORAM: MARTIN CJ
REASONS FOR JUDGMENT
(Delivered 13 June 2002)
Background

This is a claim by the plaintiffs against the second defendant for breach of contract in relation to professional advice, given or not given, by the second defendant to the plaintiffs as purchasers of a café business in Alice Springs.

By their statement of claim the plaintiffs plead that the first defendant made misleading and deceptive representations to them to the effect that it would not compete with the plaintiffs in the conduct of a café business which the plaintiffs purchased from it, but that it did. By the time the action came on for hearing the first defendant had been struck off the register, those who controlled it had left Australia, and were said to be in Vanuatu. Its solicitors had ceased to act and the claim by the plaintiffs against it was not pressed at trial.
The plaintiffs pursue the claim against the second defendant, a company carrying on the business of a solicitor under the Legal Practitioners (Incorporation) Act 1989 (NT), (“the solicitor”). They allege that they retained the solicitor to act on their behalf as purchasers of the café business, and that the retainer imposed a duty on the solicitor to advise them of the rights and obligations they were undertaking by entering into the contract for the sale and purchase of the business. Further, they allege that the agreement did not contain a reasonable or any restraint on trade clause to prevent the first defendant and its successors from continuing its café business trade in their adjoining bakery in competition with the plaintiffs. Their particular allegations are that the solicitor failed to advise them that (a) such a clause was not in the agreement, (b) of the desirability and commercial merits of such a clause and to recommend its inclusion in the proposed written agreement.
The plaintiffs plead that had they been so advised they would have insisted on the incorporation of a restraint on trade clause in the written agreement or declined to proceed with the agreement in its absence.
The evidence of the plaintiffs was directed to establishing that the first defendant conducted two businesses in adjoining premises in Todd Street, Alice Springs. In one, they sold bread and filled bread rolls (“the bakery”) and in the other a café (“the café”). The plaintiffs purchased the café business only, and allege that the “first defendant and its successors continued to trade in cooked breakfasts, bacon, egg, sausage and chicken rolls, pies, pasties, croissants, savory pastries and other similar items as well as expresso coffee and tea.” (I think the word “continued” is intended to convey the meaning that after the sale was concluded the first defendant commenced and continued to conduct the sale of those goods in the premises previously used only as a bakery).
The plaintiffs claim to have suffered loss which was eventually formulated in March 2002, during the concluding stages of the proceeding hearing, in the sum of $302,293. As to the history of the attempts to particularise the loss which, in July 2001, was put at over $500,000, including interest, see my reasons for decision on a costs argument of 22 October 2001.
The solicitor denies that it breached its retainer. Further, it says that the type of covenant in restraint of trade which the plaintiffs wished to obtain would have been unreasonable and in any event unenforceable against a purchaser from the first defendant. It also says that the plaintiffs have failed to prove they suffered any loss as a consequence of anything which it may be found it did or failed to do.
Mr Golotta
The plaintiff, Carmelo Golotta, (“Mr Golotta”) was the only witness of any substance in the plaintiffs’ case on liability. There is no evidence that his wife, the other plaintiff, was party to any discussions leading up to the purchase including discussions with the solicitor. Her commitment as purchaser was undertaken by Mr Golotta’s brother, Jesu Golotta under Power of Attorney.
Mr Golotta is Italian by birth. During the course of the proceedings he spoke quite expressively in the Italian language, and on occasion was aggressive in his responses to questions, whether from his counsel or cross-examining counsel. He gave most of his evidence through an interpreter but an issue arises as to his competency in spoken English.
Mr Golotta has been in Australia since 1959, living mainly in Alice Springs, but with breaks when he returned to Italy for periods amounting in all to about ten years. His evidence is that he had had little formal education in Italy and no formal English language education either there or here. He has been engaged in a variety of jobs in Australia, for example, as a concretor and kitchen hand and, as well, has engaged in business having previously owned a café and pizza shop in Alice Springs, and the business which gave rise to this litigation.
He had also bought, sold and leased domestic properties in Alice Springs, built two houses and borrowed money from banks on a few occasions.
Mr Golotta professes not to understand any written English and little spoken English. Apart from recognising his signature on documents, there was nothing in the course of his evidence which would lead me to think that he can read English. He said he relied on others to tell him what was in documents and that he “trusted” them. He was assisted occasionally by a family member. As to his spoken English, it was noticeable on many occasions he answered questions directed to him in English in the course of his evidence, before they were translated into Italian, or answered the questions in English prior to the translator completing the translation from English to Italian.
However, his occasional responses without the aid of an interpreter were not enough to show that he had as good an understanding of the English language as a person for whom English is a first language. As he said he has been here for 30 years and you would expect him to pick up something. But, for reasons which will emerge, I consider he is more proficient than he would have the Court accept.
Events Prior to Seeking Legal Advice
There was an open doorway in the dividing wall between the premises where the two businesses were conducted. According to Mr Golotta, only bread and filled bread rolls were sold from the bakery. In the course of discussions with Mr and Mrs Rodot, the directors of the first defendant, he learnt that both businesses were for sale, but he was not interested in the bakery. He thought about purchasing the café for a couple of weeks, during which time he approached his bank for a loan. His evidence is that when he asked Mr and Mrs Rodot about the bakery he was told that there would be no interference with the café business, the bakery was only dealing with bread and they said, “Don’t worry”. He says he received the same assurance from Ms Ianne Haynes, the vendor’s agent, when he went to her office with his nephew Joe Golotta to pay the deposit. Mr Joe Golotta was living in Alice Springs at the time of the hearing there, but was not called to give evidence.
Mr Golotta said that if Ms Haynes had said something to him and he did not understand he would not have asked a question, but neither would he have signed, rather, he would have gone to somebody else to explain it to him. He affirmed that Ms Haynes had responded, “Trust me” when he asked her to confirm that the vendor would not be selling goods in competition with him and that without that assurance he would not have signed or paid the deposit.
On that occasion Mr Golotta signed an offer to purchase which disclosed that he was buying a café and plant and equipment for $110,000, as to which $11,000 was to be paid by way of deposit and the balance on settlement. Special conditions handwritten into the standard printed offer to purchase form were in the following terms:
“Opening to be fixed by Jean Pierre Rodot, must have skeleton stock in place to keep working during changeover, lease to be in place before settlement. Commission to be paid by vendor”.
Mr Golotta’s attention was drawn to the offer to purchase. He had told Ms Haynes about the special conditions and he knew that it was important to have conditions of purchase in the document itself. With obvious reference to the restraint on trade he said that he had told Ms Haynes about it, but it had not been put into the document.
Mr Golotta denied that Ms Haynes told him that she could not guarantee him anything about restraint, and insisted that she had said, “Trust me”.
Answers to interrogatories supplied by Mr Golotta were put to him through cross-examination. His signature had been witnessed by his present solicitor, and the interpreter at trial had certified on that document that she had truly interpreted it for him.
Mr Golotta’s attention was drawn to a narrative answer regarding conversations he had had concerning, inter alia, the terms of the agreement and restraint of trade. The answer included the following:
“When I went to L J Hooker to pay the deposit I told Ianne Haynes that I would be very worried about any competition so close to the business I was proposing to purchase. Ianne advised me she could not guarantee me anything. I therefore again spoke with Anna Rodot who again assured me that she would do nothing to compete with me once I purchased the business. I accepted what she said in her assurances that the (bakery) would continue to sell its existing items, at that time being bread and filled rolls.”
Mr Golotta was cross-examined about the question of purchasing the bakery. When asked why he did not buy it he said “Because they did not tell me the truth”. He explained that by saying that he understood the bakery was one in which the dough was produced and kneaded and so on and that he had never done that, but if he had been told the truth, that the dough was frozen and you just put it into the oven, he might have bought it. He had the money in reserve. Those explanations on oath before the Court stand in contrast to his answer in the interrogatories that he decided he could only afford to maintain one business and agreed to purchase the café. There are other examples of inconsistencies in his evidence which are not satisfactorily resolved.
The answers to interrogatories were sworn on 22 May 1998 at which stage the plaintiffs were pursuing the remedies claimed against the first defendant, as well as the second defendant. The narrative then given was also prepared much closer to the time of the events, in the presence of his solicitor and with the assistance of the interpreter.
I am not satisfied with the answers given by Mr Golotta to questions put in relation to the inconsistencies between that answer to the interrogatories and his evidence on oath before the Court. As to the conversation with Ms Hayes, he said that when he went to pay the deposit he mentioned to her that he wanted a guarantee that there would be no competition, and she had said “I cannot give you a guarantee now. I’ll give you an answer soon, next time”, but that he had never seen her again. When taxed further on the question of what transpired at the meeting, he answered that perhaps he did not understand properly. When it was put to him that he made up the story about the conversation which took place between himself and Ms Haynes on that occasion, he said that Ms Haynes was a liar. It was put to Mr Golotta that, contrary to his earlier evidence, he had seen Ms Haynes again, at Mr Morgan’s office when he went to see him about the contract. He appeared to concede that he did see her then, but shortly after said he could not remember about that, but that if he remembered correctly he did see her when he saw her at the shop at settlement.
The inconsistencies between Mr Golotta’s answers to interrogatories and his evidence before the Court are not explicable by reference to language problems. On both occasions he was assisted by a competent interpreter.
Ms Haynes gave evidence in the defendant’s case. She had lived in Coober Pedy for 15 years where she had worked in a variety of occupations, including being on the school council for about eight years. She said she had gained a real appreciation of people who had English as a second language, saying she had to be careful about how she said things. She had been with the vendor’s agent, L J Hooker, in Alice Springs for a short time before meeting Mr Golotta. She knew Mr and Mrs Rodot and their business. Mrs Rodot had telephoned her to introduce Mr Golotta as a person who was interested in buying one of the businesses. She had known Joe Golotta for some years. He was a real estate developer. She conducted Mr Golotta on an inspection of the shops.
Ms Haynes does not speak Italian and spoke to Mr Golotta in English. He was speaking English during the course of the inspection and she had no difficulty understanding him, and she believed she was able to communicate with him effectively. She understood what he was saying and she believed his grasp of English was very good. She said she had also acted on instructions from the bank, from which Mr Golotta was seeking a loan, to carry out an appraisal of his house and that she did that with him.
The offer to purchase document had come to Ms Haynes through Mrs Rodot who had written in the special conditions. As to the question of competition, Ms Haynes said that she pointed out to Mr Golotta that because he only wanted to purchase the one business, and Mr and Mrs Rodot needed to sell both businesses before they could go to Vanuatu, they could not offer him a trade restraint clause because they had to continue to trade. She did not recall exactly what Mr Golotta said beyond asserting that he accepted what she had said and paid the deposit. Ms Haynes said there was nothing said by Mr Golotta to indicate that he was not prepared to make an offer unless there was a restraint of trade clause.
Although taxed about her understanding of a restraint of trade clause and its application in the circumstances of this particular case, she was not shown to have erred in her evidence to the court as to what passed between her and Mr Golotta when the offer to purchase was signed or at the office of Mr Morgan whilst she was present. Ms Haynes accepted that she had spoken to Mr and Mrs Rodot on the question of competition generally after she had spoken to Mr Golotta, but that in discussing the matter with them she did not descend in detail about what was to be the subject of the restraint.
Ms Haynes acknowledged that she was friends with both Mr and Mrs Rodot and, of course, as their agent, she was acting in their interests in relation to the negotiations for sale, but I did not detect anything in her evidence which would cause me to consider that that relationship with Mr and Mrs Rodot, and thence the first defendant, gave rise to an inference which would cause me to reject her evidence. Where it conflicts with that of Mr Golotta I prefer it.
Conference with Mr Morgan
Mr Golotta’s nephew suggested he see Mr Tony Morgan, a director of the second defendant, and an admitted legal practitioner in the Northern Territory. According to Mr Golotta, he visited Mr Morgan at his office and firstly said he was alone when he talked about the contract to purchase the café business. He just told Mr Morgan, “I know nothing, you know better.”
When the examination-in-chief was resumed after an adjournment, brought on when Mr Golotta appeared to be indisposed, he confirmed to his counsel that he had spoken with him during the adjournment, with the interpreter, and that when he saw Mr Morgan about signing the contract, he was accompanied by his nephew Joe Golotta, who left before the meeting commenced, and his brother Jesu. Mr Golotta then said that Ms Haynes was also there.
The contract between the first defendant and the plaintiffs was dated 8 May 1996. It reflected the terms set out in the offer to purchase apportioning the purchase price of $110,000, as to business assets, $43,000 and goodwill, $67,000. By that contract the purchaser acknowledged that no representations in connection with the sale had been made by the vendor or the vendor’s agent. There was nothing in it by way of restraint upon the vendor carrying on business in competition to the purchasers. It provided for completion to take place on or before 30 June 1996 and appeared to be in a standard form for that type of transaction.
Joe Golotta had attended Mr Morgan’s office with Mr Golotta and Jesu Golotta when arrangements had been made to see Mr Morgan about the contract, but had left because of delay in meeting the appointment.
Jesu Golotta confirmed that on the occasion of the visit to Mr Morgan’s office Ms Haynes was present and that Joe Golotta had left before the meeting started.
Ms Haynes attended the meeting in Mr Morgan’s office, but did not stay until it concluded and did not see Mr Golotta sign the contract. She confirmed that Joe Golotta was there, but had left before the meeting took place. She said she was there at the request of Mr Golotta.
Ms Haynes’ evidence was that Mr Morgan went through the contract document and he and Mr Golotta discussed it clause by clause, Mr Golotta brought up the question of competition and she had said to Mr Morgan, “I’m sorry you won’t be getting it”. She was adamant that she did not give Mr Morgan a chance to say anything, simply saying, “I’m sorry, it won’t happen” because of her instructions from the vendor. She thought Mr Morgan then said, “We can ask” and that she had said, “Well I’m sorry but, yes, you can ask” because she recognised that anyone involved in a negotiation process was entitled to ask for what they wanted. She checked to see that the various special conditions to the contract had been met and went to the premises when Mr Golotta took possession. In cross-examination, Ms Haynes conceded that she went to the office of Mr Morgan to make sure that everything went smoothly.
According to Mr Golotta, Mr Morgan read the contract very quickly and did not explain anything. Mr Golotta does not remember any of the words that Mr Morgan used and said he sometimes he did not understand. That is why he had asked Joe Golotta to go with him, but he had left. The interview with Mr Morgan took about ten or fifteen minutes and Mr Golotta said he was not clever enough to ask him any questions. I do not accept that. At the end of the meeting he signed the contract as one of the purchasers. “Nothing happened in that meeting besides what I said earlier”. However, when prompted, he recalled that he was asked about whether he wanted to continue to employ any of the existing staff at the café, and, again, that he was asked about the bakery and his reply was that he was not interested in it. He did not recall anything else about the bakery being raised by Mr Morgan. He said that Mr Morgan did not tell him that there was no restraint of trade clause in the draft contract, he did not explain the purpose of such a clause or its effect. He denied that Mr Morgan had raised the issue and that he, Mr Golotta had said, “Just don’t worry about it.”

Mr Golotta said that if he had been told by Mr Morgan that he could have such a clause in the contract he would have said yes, and that had the vendors refused such a clause he would not have bought the business.
As to the restraint which he would have sought, Mr Golotta said that he would want to stop the first defendant from selling all the things that he had to sell and that they should have been limited to selling only bread and bread rolls. That was in accordance with what he had been told by Mr and Mrs Rodot. He did not tell Mr Morgan that he did not read English when he saw him for the first time. He said that was because Mr Morgan did not ask him.
According to Mr Golotta’s evidence, by the time that meeting took place he had been told by Mrs Rodot that the vendor would not compete and he trusted her. He had asked Ms Haynes about competition, and she had said that she would give him an answer later. That is denied by Ms Haynes, but even if one accepts Mr Golotta’s evidence, the fact is, and I find, that at the meeting with Mr Morgan, Ms Haynes made it clear that the vendor would not agree not to compete.
When cross-examined about the question of keeping on staff at the café raised by Mr Morgan, Mr Golotta, when pressed, said that he could not remember everything and that his memory was not that good. His prevarication in relation to questions put in regard to that relatively insignificant matter raises further doubts in my mind as to his credibility. It was put to Mr Golotta that Mr Morgan had said to him that he could ask Mr and Mrs Rodot if they would agree to a restraint of trade clause, and that his response had been, “You are my lawyer, you are my solicitor, you know what you have to do. I am in your hands”. When asked whether at that meeting Ms Haynes said the vendors would not agree, he answered that he did not know what she was saying, that he did not really understand her. He could not even understand why she was there. Although professing not to understand what may have passed between himself and Mr Morgan, or Mr Morgan and Ms Haynes on this subject, when asked if he understood that he could have something in the agreement that would stop the first defendant from competing, but that they would not agree to it, he replied, “Yes, I understand and I understood but I thought that they would – they would have done what I wanted not what they wanted”. He denied that when the issue was raised by Mr Morgan that he had said to Mr Morgan “Just don’t worry about it” saying that it was impossible that he would have said so. If he had understood properly he would not have said such a foolish thing as he would be tying himself with his own hands.
Mr Jesu Golotta was called in the plaintiffs’ case. The interpreter was not needed. He had retired, but had a small farm near Alice Springs, previous to that he had worked at the hospital. He remembered attending the meeting with Mr Morgan in April 1996 at the request of Mr Golotta to sign the contract on behalf of Mrs Golotta. He acknowledged that the real estate agent was present as was his son, Joe, but that he had left before the meeting started. He did not know the name of the real estate agent lady. He did not recall anything that was said by anybody at the meeting. With respect to Mr Jesu Golotta, he was of no assistance to either party and I gain the distinct impression from his evidence and the way he gave it that he was reluctant to be in court.
The evidence of the plaintiff Mr Golotta, Ms Haynes and Mr Jesu Golotta was taken in Alice Springs and was restricted to the question of liability. By the time that evidence was heard there was no further time available in Alice Springs to deal with that issue and the hearing was adjourned to be resumed in Darwin when the defendants case on liability and the case for both parties on quantum would be heard. Unfortunately, although the matter was adjourned from Alice Springs in late July 2001, it was not able to be relisted in Darwin until March 2002.
The evidence of the second defendant regarding liability came through Mr Morgan and its file relating to the transaction. Mr Morgan had been admitted as a legal practitioner in 1989, thus had about seven years experience when consulted by Mr Golotta. At that time he was undertaking general commercial and litigation work as a solicitor in Alice Springs. He had acted on numerous occasions in relation to the sale of small business.
Having received a letter from the agent enclosing a copy of the offer to purchase and a draft contract from the solicitors for the vendor and other documents relating to the lease of the premises in which the café business was conducted, Mr Morgan arranged to meet Mr Golotta in his office on 24 April 1996.
The day prior to that meeting Mr Morgan made a handwritten note regarding the sale and matters to be raised with Mr Golotta, including “business assets $43,000, goodwill $67,000” and “names of employees (if kept on)” and “restraints (if needed)”. He said that the note was to prompt him to raise those matters, including as to whether or not the client wanted a restraint on trade from the vendor. He said it was appropriate to raise that because it is prudent for a purchaser to protect the goodwill by having such a provision.
Mr Morgan’s practice, when communicating with clients who had English as a second language and about whom he had concerns as to their understanding, was to end the discussion so that someone who could interpret could attend with the client, usually a friend or family member. On this occasion Mr Golotta was accompanied by Jesu Golotta and it appeared to Mr Morgan that when Mr Golotta was not clear about a point he spoke to Jesu Golotta about it in Italian language. Mr Morgan indicated that he satisfied himself by those means and Mr Golotta’s English language responses to him that he and Mr Golotta understood each other. It was not Mr Morgan’s practice to read the exact words of a contract to a client but to provide the client with a synopsis of their effect.
With reference to the note relating to the apportionment of purchase price, Mr Morgan said his practice was to explain to the client that the client should obtain advice from accountants relating to taxation implications and to obtain independent financial advice as to the viability of the proposed transaction.
As to the issue of restraint of trade clause Mr Morgan’s evidence was that he explained to Mr Golotta that there was none in the draft contract and Mr Golotta appeared not to understand those words so Mr Morgan proceeded to explain “it’s a clause you could place in the agreement that stops the Rodots – from competing with him for a period of time, over a particular area following the sale …”. Discussion in Italian language took place between Mr Golotta and Mr Jesu Golotta and Mr Golotta said words to the effect “yes, stops competition, stops them competing with me”. Mr Morgan said Ms Haynes intervened and said that the Rodots would not agree. I prefer Mr Morgan’s evidence to that of Ms Haynes as to who raised the question of competition. Nevertheless Mr Morgan says he told Mr Golotta that he could put it to the vendor’s solicitors, whatever he might have been told before was not to the point, the issue was whether or not Mr Golotta wanted a restraint of trade in the contract.
According to Mr Morgan he continued to discuss the issue with Mr Golotta and once he was satisfied Mr Golotta understood he asked whether Mr Golotta wanted him to go to the vendors’ solicitors about it and he said that Mr Golotta replied “No, don’t worry about it”.
In my opinion Mr Golotta well understood the concept of competition and he had an understandable desire that the vendor not compete. It was to restrict its business to the sale of bread and filled bread rolls from the bakery and not sell goods which it had sold from the café which the plaintiffs were interested to purchase. Mr Golotta had raised the subject with Mrs Rodot and he had received such an assurance. As Mr Morgan’s evidence indicates there may have been some misunderstanding as to “restraint of trade” but not when the concept was described as stopping competition.
Referring to his file note, Mr Morgan added that Mr Golotta had said that the vendor was going to trade next door and leave after that business was sold and that he advised Mr Golotta that he would have difficulty in enforcing a restraint of trade against an unknown person who might purchase during the period of any restraint.
After the contract was signed, and before settlement, negotiations took place in regard to securing a sub-lease to the plaintiffs of the café premises. Mr Morgan says that was undertaken on Mr Golotta’s instructions given in conference without the aid of any other person. Differences arose regarding payment of legal costs, stamp duty and registration fees as between the first defendant and the plaintiffs. It was resolved by negotiation, Mr Morgan wrote a letter of advice to Mr Golotta regarding that issue and suggested that he pay stamp duty and registration fees. The letter was in English, the amount suggested was paid by Mr Golotta.
After Settlement
The purchase was settled on 1 July 1996. Mr Golotta confirmed that he had been to see Mr Morgan and complained about the first defendant and the conduct of the bakery business, saying that on 26 September 1996 he telephoned him complaining that he was losing money because of the competition. It was suggested that Mr Morgan reminded him that he had agreed there would be no competition clause and he replied that he could not understand that as he did not understand whether Mr Morgan told him that or not. I find it difficult to accept Mr Golotta’s evidence that he approached Mr Morgan for advice about the competition, but that he could not understand what Mr Morgan said to him. But, if it be so then Mr Golotta was in no position to deny the evidence from Mr Morgan as to what he was told by Mr Morgan on that occasion.
Mr Morgan’s records show that on 26 September 1996 Mr Golotta spoke to him saying he was concerned about the first defendant competing with him. He had made a complaint to a health inspector, he had spoken to the vendor who would not stop what was being done, he queried if the lease of the premises had been returned and Mr Morgan said he would chase it up. Mr Morgan’s note shows that he indicated to Mr Golotta that there was little that he could do. Mr Morgan said that on that occasion Mr Golotta made no complaint to him regarding the absence of any restraint. Mr Golotta later delivered to Mr Morgan a letter from the Alice Springs Town Council regarding the complaint which he had made concerning preparation of cooked food and disposal of garbage from the former bakery premises.
On 16 October Mr Golotta again saw Mr Morgan who recorded that Mr Golotta was complaining regarding the problems with the first defendant in relation to business trading, that he explained to Mr Golotta that no restraint of trade was placed in the agreement. Other issues were raised regarding health matters to do with the former bakery.
On 22 October 1996 Mr Golotta again spoke to Mr Morgan who recorded that he was very upset that the next door business had that day set up a coffee machine; that the former bakery shop was now doing basically what he did in the café and that that was contrary to the verbal discussions that only a bakery business would be conducted there. Mr Morgan’s evidence is that he advised Mr Golotta that he could write demanding that the vendor of the business stop trading in direct competition with him but would most likely be met with the response that whatever was said as between the Rodots and Mr Golotta on that account was not enforceable and to litigate would be protracted and expensive. Mr Morgan’s evidence was that he explained to Mr Golotta that if the vendor sold the bakery business then he would have the same problem with the incoming owner, thus suggested to Mr Golotta that he talk with somebody about improving how he could compete. Mr Golotta responded that he would sort it out for himself and he left the meeting upset.
On 20 February 1997 Mr Joe Golotta telephoned Mr Morgan advising that Mr Golotta was consulting another solicitor regarding his problems with the people next door. Mr Morgan told Mr Joe Golotta that he should not act as an interpreter as between Mr Golotta and his new solicitor and explained to the Court that he said that because Mr Joe Golotta had been involved in the transaction with the vendor and Mr Morgan thought that there should be an independent person to act as interpreter.
Mr Morgan was cross-examined about whether Ms Haynes was at the meeting when he discussed the contract with Mr Golotta. There is no indication of that in Mr Morgan’s notes but I am satisfied she was present. Mr Morgan said she was there, Ms Haynes said she was there, Mr Jesu Golotta said she was there and Mr Golotta was inconsistent. I am satisfied that Ms Haynes was present on that occasion. It was also put to Mr Morgan that he erred in permitting Ms Haynes to be present whilst he was being consulted by Mr Golotta about the contract, Mr Morgan denied that her presence affected his advice and, it will be noted, she left before the conference with Mr Golotta concluded. It was put by senior counsel on behalf of Mr Golotta to Mr Morgan that at that time he had “a long standing commercial arrangement with L J Hooker, did you not?” and that that firm frequently referred work to him “and almost invariably did so, did they not?”. Mr Morgan denied all that, and there was no evidence elicited which would suggest that there was any foundation for that attack upon Mr Morgan’s credibility.
Mr Morgan was cross-examined about his detailed recollection of explanations given to Mr Golotta at the consultation about the contract. He could not recall precisely what he said about those issues depending instead upon his general practice when consulted by clients as to similar matters and his general practice in relation to clients who it appeared may not have a good understanding of English language.
Nothing is put against Mr Morgan in the pleadings in regard to any matter of advice other than that concerning the restraint of trade, or lack of it. What is suggested by the plaintiffs is that because Mr Morgan did not recall the precise details of advice given in relation to matters contained in the contract, his evidence as to what passed between him and Mr Golotta in regard to restraint of trade issue should be rejected. I do not accept that submission. As Mr Morgan explained it was within a few months after he had advised Mr Golotta about the contract that the issue of the vendor’s competing was raised. His notes in relation to the complaints made to him by Mr Golotta demonstrate a consistency between what he said occurred at the conference and what passed between him and Mr Golotta when Mr Golotta complained about the competition.
The attacks made upon Mr Morgan’s credibility based upon his short notes of discussions with Mr Golotta, including in relation to the draft contract, and after settlement do not cause me to come to the view that Mr Morgan was misleading the Court. The notes were obviously not intended to be a verbatim record.
Mr Morgan agreed that it would be an oversight not to advise about restraint of trade. His view was that it was his duty to explain to Mr Golotta what the effect of a restraint of trade clause would be and what the effect of not having it might be, what he would expose himself to and to give him alternatives and let him make the decision. Mr Morgan did not understand it would be his obligation to, in effect, say to Mr Golotta that he would not let him exchange the contract unless he had a restraint of trade clause. Mr Morgan did not regard it as his duty to assess what the effect of competition would be upon Mr Golotta, there were other eateries in the area and he regarded it as being a commercial decision to be made by Mr Golotta. He advised Mr Golotta that he could seek a restraint or not but did not give him advice about whether he should insist upon it or forget about the purchase.
Mr Morgan did not confirm the advice he had given to Mr Golotta regarding restraint of trade and Mr Golotta’s instructions about it in writing to Mr Golotta. Clearly it would have been prudent for him to have done so but the fact that he did not do so does not mean that he did not give the advice in conference, nor that he was not given the instructions which he said came from Mr Golotta. Any doubt raised as to Mr Morgan’s evidence on this issue, by reason of the absence of written confirmation, is insufficient to cast a shadow over his and the other evidence in the case as to what transpired at the conference which I accept.
Mr Morgan was cross-examined about other issues arising from the contract, such as the apportionment of purchase price and the obtaining of a fresh sublease, allowed by me upon the basis that they may go to Mr Morgan’s credit in regard to his evidence about the restraint of trade matter. In many respects Mr Morgan was unable to recall the detail of what he did and there were no file notes to assist his recollection. His evidence in respect of matters such as those were largely derived from reconstruction as to his usual practice and from such information as there was available on the file. In some respects it may be thought to be unsatisfactory, but in my view it is explicable by the lapse of time from the events in question and when the matters were raised in the course of cross-examination at trial. That Mr Morgan may not have recollected in detail issues relating to those events and what he did or did not do, where there had been no issue on the pleadings to direct his attention to them, does not mean that his recollection in respect of the restraint of trade issue, which was raised within a few months after the conference about the contract took place and to which his mind was specifically directed by the statement of claim, is to be doubted.
Cross-examination of Mr Morgan was also directed to the particular issues that he would bear in mind if he was seeking instructions regarding the drafting of a restraint of trade clause generally and in relation to this matter in particular. Questions were directed as to how he would explain those matters to Mr Golotta but his position was that he had raised the issue restraint of trade or competition with Mr Golotta, and that Mr Golotta had instructed him not to worry about it. However he said he had gone into greater detail with reference to time, location and parties. He also thought that he had indicated to Mr Golotta at the time of the conference that there would be difficulties in relation to enforcement against a purchaser from the vendor.
Mr Golotta raised no objection to the account for services rendered by the second defendant in relation to the purchase. Nevertheless counsel for Mr Golotta went to the detailed account and taxed Mr Morgan in respect of a number of entries in it. For example some of the items in the account were not supported by a file note and it was suggested that one of the items was “grossly overcharged”. In respect of omissions of file notes Mr Morgan explained that it could be telephone attendances for which there was no need to make a record beyond that made in the time sheets kept for the purposes of accounts.
I do not find it surprising that Mr Morgan was unable to independently recall by reference to the account alone the detail of the particular item for which a charge was raised about six years prior to his being asked about it. Insofar as Mr Morgan’s credit is called in question by suggestions of overcharging or charging for work that was not undertaken I reject it. There was no evidence of anything untoward arising from the account, the details in it or the rate at which charges were raised for individual services.

Mr Morgan’s attention was drawn to his answers to some interrogatories with a view to undermining his credibility in relation to his evidence in court. I perceive no significant inconsistency in the substance of his answers to interrogatories and that evidence. They convey the same meaning if not in identical words.
Mr Golotta’s Command of English Language
I make allowance in favour of Mr Golotta for the fact that English is not his first language. He has had no special education in language, that he may not always fully understand what is being said to him and others may not always understand his responses. However, he has had experience in property transactions, the borrowing of money, instructions for the preparation of taxation returns, the seeking of legal advice, dealings with real estate agents and has had the assistance of Mr Joe Golotta and other members of his family in relation to some documents. I do not accept his professed lack of understanding offered in response to questions in the context of his own inconsistencies.
The following matters satisfy me that Mr Golotta was more proficient in the English language than he would have the Court accept. Reference has already been made to Mr Golotta’s previous property and business dealings.
When cross-examined, Mr Golotta confirmed his property and business activities, but asserted that he always had somebody to assist him when he was entering into transactions and signing documents. On the other hand, he conceded that his accountant did not speak Italian, but added that, “This is no relevance to the job he has to do for me”, that his present solicitor did not speak Italian, that he had discussed some matters with Mrs Rodot in English and that he had spoken English when he saw Ms Haynes.
The following exchange took place in English in the course of cross-examination:
“Well, you knew that Mr and Mrs Rodot wanted to sell both businesses didn’t you? – Yes I knew.
You understood my question when I said it in English didn’t you? – I didn’t understand. I had the intuition of your question and this is my defect, my fault.”
Mr Golotta confirmed that after he had taken up the café business he had spoken to Mr Morgan, unaccompanied, regarding health issues arising from the conduct of the business then being carried on next door, but claimed that because he was on his own Mr Morgan did not understand him. I do not accept that. Mr Morgan’s evidence and his notes shows that he did understand. No person acted as an interpreter as between Mr Morgan and Mr Golotta in their communications after the consultation regarding the draft contract.
It was submitted on Mr Golotta’s behalf that some questions put to him in cross-examination were confusing and that unsatisfactory answers should not be held against him. I do not necessarily accept that confusing questions were put, if they were then the time to deal with them was at the time they were asked, or perhaps in re-examination but not in final address. I note that on occasion Mr Golotta was quite capable of protecting himself by seeking clarification of questions.
In summary I find:
1.Mr Golotta was told by the first defendant through Mrs Rodot that the first defendant would not compete with him when he purchased the café. That was Mr Golotta’s evidence and it is confirmed by reference to the statement of claim insofar as it relates to the first defendant.
2.Mr Golotta was told by Ms Haynes that the vendor would not include an agreement not to compete in the contract. The absence of a special condition in the offer to purchase concerning competition is confirmatory of Ms Haynes’ evidence as to what transpired at the L J Hooker office.
3.Mr Golotta did not raise the issue of competition with Mr Morgan at the conference to do with the draft contract. That was done by Mr Morgan as a result of his having noted the absence of any provisions in that regard. He had made a note in his file to raise that issue at the conference.
4.The matter was raised in conference and I accept the evidence of Mr Morgan and Ms Haynes where it differs from Mr Golotta in that regard. Mr Morgan’s file note after the conference is confirmatory of that evidence.
5.No foundation has been laid for rejecting the file notes as not being genuine as to the time that they were made nor as to their contents.
6.Mr Morgan’s evidence as to what passed between him and Mr Golotta concerning Mr Golotta’s complaints about competition after settlement is an accurate reflection upon what was said on those occasions. It is supported by the notes made after each conversation.
7.Mr Golotta knew that the first defendant would not agree to having a covenant against competition in the contract “yes, I understand and I understood but I thought that they would – they would have done what I wanted, not what they wanted”. In my opinion he was prepared to rely upon the oral undertakings given by Mrs Rodot rather than press for any formal restraint on trade being included in the formal contract in the face of Ms Haynes’ assertion that he would not get one.
There is no dispute as to the responsibility resting upon a solicitor undertaking work in the way of his profession. In the words of Windeyer J in Voli v Inglewood Shire Council (1963) 110 CLR 74 at 84 he:
“accepts the ordinary liabilities of any man who follows a skilled calling. He is bound to exercise due care, skill and diligence. He is not required to have an extraordinary degree of skill or the highest professional attainments. But he must bring to the task he undertakes the competence and skill that is usual among [architects] practising their profession. And he must use due care. If he fails in these matters and that person who employed him thereby suffers damage, he is liable to that person. This liability can be said to arise either from a breach of his contract or in tort.”
That passage was approved by Deane J in Hawkins v Clayton (1988) 164 CLR 539 at 575. In the same case at 544 Mason CJ and Wilson J referred to the remarks of Oliver J in Midland Bank Trust Co Ltd v Hett, Stubbs and Kemp [1979] Ch 384 at 402-403:
“The extent of [a solicitor’s duties to his client] depends upon the terms and limits of [the retainer] and any duty of care to be implied must be related to what he is instructed to do. Now no doubt the duties owed by a solicitor to his client are high, in the sense that he holds himself out as practising a highly skilled and exacting profession, but I think that the Court must be aware of imposing upon solicitors – or upon professional men in other spheres – duties which go beyond the scope of what they are requested and undertake to do”.
As to the duty of care see the reasons of Deane J in Hawkins v Clayton (supra) and the observations of the Full Court of the Federal Court in Yates Property Corp Pty Ltd v Boland (1998) 157 ALR 30 at 48.
Counsel for the plaintiffs submit that there was a higher standard of care required of Mr Morgan arising from Mr Golotta’s inability to read English and degree of difficulty in understanding and expressing himself in spoken English. I accept that submission. However, upon the evidence I am satisfied that Mr Morgan exercised the required standard. This case is to be distinguished from Sacca v Adam & R Stuart Nominees (1983) 33 SASR 429. There the plaintiff could not read English and his accountant and advisor knew it. In this case Mr Golotta’s ability to read English did not place him at any disadvantage. It is not the content of the document which he says concerns him it is the absence of a written restraint of trade provision. There, the accountant failed to warn Mr Sacca “an illiterate Italian” of possible taxation consequences of an “elaborately contrived system of trust and transfer”. There was nothing elaborate or contrived about this contract and Mr Morgan did warn Mr Golotta about the consequences of the absence of a restraint of trade clause. He satisfied himself that Mr Golotta understood. It is not pleaded that Mr Morgan failed in his duty in this regard. It is alleged that Mr Morgan gave no advice, not that he failed to ensure that his advice was understood.
In this case the plaintiffs have formulated their claim based upon breach of a retainer. In closing address senior counsel for the plaintiffs does not suggest that the outcome in the case would depend upon whether the second defendant be found to have breached a contract or have failed in a common law duty of care.
The plaintiffs have made out a case that the second defendant was obliged to explain to them the rights and obligations they were undertaking by becoming party to the written agreement. They also succeed in showing that the agreement did not contain any restraint of trade clause to prevent the first defendant from continuing its café business trade in the adjoining bakery in competition with the plaintiffs. However I find that the second defendant did not fail to advise the plaintiffs that the written agreement did not contain such a clause nor did it fail to point out the desirability of such a clause. Whether it was part of the second defendant’s duty to advise the plaintiffs as to the commercial merits of such a clause may be debated but it is inherent in the nature of the advice that was given that such a clause, to the extent it was enforceable, would be of commercial benefit to the plaintiffs. The second defendant through Mr Morgan sought instructions as to whether the plaintiffs wished to seek to have a clause of that nature included in the written contract. They were not given any such instructions.
The plaintiffs have not satisfied me that the second defendant failed to properly advise them about that matter.
Judgment for the second defendant with costs.

_____________________