Ipswich Interstate Transport Terminal Pty v Roles

[1995] QSC 17

IN THE SUPREME COURT

OF QUEENSLAND
  No. 1332 of 1991

[Ipswich Interstate Transport Terminal Pty v. Roles & Ors]

BETWEEN:
  IPSWICH INTERSTATE TRANSPORT TERMINAL PTY LTD

First Plaintiff

AND:
  JOHN RONALD ROLES
  Second Plaintiff

AND:
  JAMES BRISDON WALKER
  First Defendant

AND:

MULGOWIE NOMINEES PTY LTD

Second Defendant

JUDGMENT  -  DERRINGTON J.

DELIVERED:  1 March 1995.

CATCHWORDS:       Solicitor and client - Personal business and professional relationship over many years - Sale by solicitor to client of half-share in asset - Negligent misstatement of income - Price paid too high - Negligence - Whether also breach of fiduciary duty - Effect of failure to have client obtain independent advice - Whether businessman client influenced by relationship - Whether relevant that solicitor not formally acting as such at time - Whether fiduciary relationship.

Damages - Negligence - Purchase of property at overprice because of negligent misstatements - Whether later fall in value of property too remote.

Damages - Breach of fiduciary duty - Whether restitutionary measure of damages extend to loss while property in control of plaintiff.

COUNSEL:J. Sullivan for the Plaintiff

K.C. Fleming QC for the Defendant

SOLICITORS: Stokes Panettiere for the Plaintiff

Flower and Hart for the Defendant

HEARING DATES:     22-25 November 1994
IN THE SUPREME COURT

OF QUEENSLAND
  No. 1332 of 1991

[Ipswich Interstate Transport Terminal Pty v.  Roles & Ors]

BETWEEN:
  IPSWICH INTERSTATE TRANSPORT TERMINAL PTY LTD

First Plaintiff

AND:
  JOHN RONALD ROLES
  Second Plaintiff

AND:
  JAMES BRISDON WALKER
  First Defendant

AND:

MULGOWIE NOMINEES PTY LTD

Second Defendant

JUDGMENT  -  DERRINGTON J.

Delivered the 1st day of March 1995

This is an action substantially between the first plaintiff ("IITT") and the second defendant ("Mulgowie") for damages for fraudulent misrepresentation of the income from and value of land and buildings in Ipswich owned by Mulgowie in which the first plaintiff purchased a one half share as tenant in common;  and for other ancillary declarations.  The misrepresentations were alleged to have been made by the first defendant ("Mr Walker"), a solicitor, as the agent of Mulgowie, his family company, to the second plaintiff ("Mr Roles") as the representative of IITT, which was his family company.  Mr Walker is also alleged to have been guilty of breaches of fiduciary duty both in respect of the alleged misrepresentations and by his failure to provide appropriate advice.  It is alleged that he was the solicitor for both plaintiffs, and that in addition to that status there were other features of his relationship with Mr Roles that enlarged or emphasised a fiduciary duty.  Mr Roles claims to have suffered consequential loss as a possible beneficiary of the trust of which Mulgowie was the trustee.
           The transaction referred to in the above allegations took place in August 1986 though the relevant conversations and negotiations took place during the prior month.  IITT was to receive almost $400,000 in cash from the sale of a business at Amberley, in respect of which Mr Walker was attending to the conveyancing for it;  and it was seeking an investment for those moneys.  The possibility of buying into Mulgowie's Ipswich property came up.  In discussions between Mr Roles and Mr Walker the latter is alleged to have said, with details, that the total annual rental from the leases of the subject premises was a sum in excess of $77,000, that rates and expenses were in excess of $8000 and that the net income was in excess of $69,000.  This is denied by him.
           At the time of the negotiations, the actual rental was no more than $67,784 per annum, the expenses $6,785 per annum and the net return $60,999 per annum.  It may have been less, but it is convenient to adopt these figures for present purposes.  Mr Walker says that these were the figures which he provided to Mr Roles after obtaining them from his accountant.
           He is also alleged to have said that in three years with CPI increases the property would return about $91,000 per annum;  but again he denies this.  There is little to be derived from this.  It is a reasonable mathematical extrapolation of the alleged misrepresentation as to the then current rental income.  Of course, if Mr Roles were dishonest, he could easily have made such a calculation and fabricated this evidence to buttress his other evidence;  but this would have had to be a deliberate and calculated act, which is somewhat unlikely.  Further, it is not otherwise explicable by reference to any transference of memory by Mr Roles, for this figure does not appear in any other alleged conversation or documents.  The remaining possibility is that the representation was made.  However, in effect it does no more than supplement the original alleged representation.
           He is also alleged to have said that the then present value of the premises was between $750,000 and $780,000.  He claims that he expressed the opinion, as he believed, that its value was in excess of $800,000, and consequently there is no difficulty on the point as to whether the representation was made.  Further it is common ground that he said that he would accept half of $760,000, and that after some consideration the second plaintiff counter-offered a figure of $320,000 for a half-share leading, after negotiations, to an agreed price of $365,000.  The only acceptable evidence of value is that on the basis of the true rental income, the property was worth $520,000 at the time.  The evidence given by Mr Denman, the valuer, are satisfactory, and, except for one error which is allowed for in the above figure, his evidence was not seriously controverted.  However, Mr Walker's statement was made in the context of negotiations, it was a statement of opinion only, and understood as such, it was not regarded as expert valuation opinion, it was an honest opinion and although mistaken, it was not negligent in the circumstances.  The only real issue is whether he should have insisted that Mr Roles have expert independent advice on the subject.
           Another misrepresentation attributed by the plaintiffs to Mr Walker is that due to current large investment in the proximate area and the overall development of the city in the business area of Ipswich, the buildings would in his opinion be worth between $1 million and $1.5 million in five years.  His memory of this may have been unsure, but he denied it.  At worst, however, this was clearly merely the expression of a speculative opinion as part of a bargaining process.  It was not, and, despite what he has said, was not taken by Mr Roles as, more than an expression of opinion, if it occurred.  It is not shown to have been dishonest and indeed no evidence has been led to show that it was not accurate.  The most that can be said about it is that Mr Roles respected Mr Walker's opinions for reasons that will be discussed below, but he certainly retained a high level of independence on business matters. 
           Even if the statement were made, it was not an unreasonable projection at the then current rate of inflation, assuming that the value of the premises was believed to be of the order of $750,000, particularly if there were an anticipation, however mistaken, that other developments in the Ipswich Central Business District would enhance the value of all properties there.  In summary, if it were made, the representation was clearly one of speculative opinion only, and could not of itself be characterised as fraudulent or negligent, even if it were erroneous.  In any case, the pleadings do not rely upon it. 
           Associated with these was another representation, which is not substantially denied by Mr Walker, that in his thinking he could not see any of the tenants leaving in the short term, and that they would all sign up again for renewals when their leases expired.  As it later turned out, a bank which was the major tenant did not renew its lease.  However, again the statement was clearly an opinion only, given as such in answer to a request for his thoughts on the subject, and the reasoning behind it had sufficient merit, though erroneous, to be justified as honest and reasonable.  Consequently the statement bore no misrepresentation and was not negligent.  The conclusion from Mr Walker's reasoning, as explained in the discussion, that the Bank would renew its lease may have left Mr Roles with a defective memory so that he is now replacing the explained opinion with a definite representation to the same effect.  All tests of reliability seem to favour Mr Walker on this part of the issue.
           On this subject, the real point of criticism which is advanced is that Mr Walker, advising Mr Roles as his solicitor, should have recommended suitable enquiries to discover the true situation and, if that were unsuccessful, to advise Mr Roles of the danger apparent from any refusal by the bank to declare its intentions.  It is argued that he should have been aware of Mr Roles' reliance on him on the point and, if he were not prepared to undertake suitable verification himself,  he should have insisted that Mr Roles obtain independent advice.  He denies that he was Mr Roles' solicitor at that time, but even if he is right their relationship was such, and Mr Roles' reliance on him on this point was such, that he should have had him obtain independent advice.  Mr Walker implicitly recognises such a responsibility in his oral evidence where he claimed that he did do this.  Though the evidence is unacceptable, the fact that it was given is a recognition that the circumstances demanded the precaution.
           Apart from the claims of misrepresentation and negligence based on the allegations as to the amount of income represented in the discussion and the consequences of the advice concerning renewal of the leases, the only real issue arising from all this relates to fiduciary relationship.  As to this question, while there are certainly other factors to be explored, the conversation itself had nothing about its style or content, according to either version, that would imply more than negotiations at arm's length, albeit between business associates and friends.  There was certainly nothing said which was in itself suggestive of quasi-professional advice as between solicitor and client.
           It is agreed that bargaining took place, with an offer and counter-offer as indicated above;  that the price was agreed upon the further offer of Mr Roles of the intermediate figure;  and that to Mr Roles' question, "Will you do the legals?", which meant attend to the conveyancing, Mr Walker agreed, and in the course of time performed that work.  This was the first appearance on that occasion of the re-creation of the solicitor-client relationship in respect of that transaction, though while these negotiations were taking place, Mr Walker was still in the course of performing the conveyancing work for IITT on the Annerley sale.
           At the time he was not in private practice but was the employed solicitor of Brisbane Markets Freight Brokers Pty Ltd  ("BMFB"), the trustee of the business for IITT and Mulgowie;  and he denies that he was the solicitor for either of the plaintiffs at any relevant time.  He was not paid any specific fee for his conveyancing work on either transaction and probably undertook all that work as part of his duties with BMFB, because of the identity between the beneficiaries of the BMFB trust and the parties to the conveyance.  Though not in private practice nor receiving any fee, he was undoubtedly acting as IITT's solicitor in these transactions, but in both cases his instructions were confined to the performance of the conveyancing work.  He was not engaged for the first plaintiff for the purpose, direct or implied, of advising on relevant matters.  He had no practical influence on the discussions other than as part of the general personal relationship between the parties, and Mr Roles really did not suggest the contrary. 
           His engagement to execute the conveyancing work on the relevant transaction did not take place until agreement was reached.  The specific request to this effect by Mr Roles is consistent with that gentleman's own view that the antecedent discussion had not been on a solicitor/client basis.  There was no vague general engagement as solicitor for all purposes, and in any case neither regarded any such engagement as operative in respect of the negotiations.  Where Mr Walker knew that reliance was placed on his statement and opinions, that was not in respect of any role as the solicitor for IITT.  Consequently his negligence related simply to his general responsibility while giving advice, and not to any breach of duty as a solicitor.  It is true that had Mr Roles been referred to independent legal advice, IITT would certainly not have made the purchase;  but the failure to refer has not been pleaded as a feature of negligence.  As it turns out, the result is the same.
           Although he said something to the contrary in evidence, as to which his counsel has been completely ambivalent, he had already admitted by way of answer to an interrogatory that he had not advised Mr Roles to seek independent advice.  His oral evidence should not be accepted on this, and indeed the contrary was not seriously argued.  It was one of a few occasions where he fell into apparent self-contradiction and while its effect should not be exaggerated, this kind of defect tended to reduce the force of his evidence.
           It is necessary now to go back in time in order to study his position in relation to Mr Roles as it bore upon the negotiations that are in issue here.   He had been Mr Roles' solicitor for many years and as such had been consulted many times in relation to that gentleman's personal business and that of IITT.   Although not highly educated, Mr Roles was an experienced businessman and a skilled negotiator.  Further, though he had no formal legal education, he had engaged in many commercial transactions including the purchase of real estate;  but despite his broad knowledge of legal matters so far as they touched on these affairs, he usually referred any serious legal issue to Mr Walker.  His principal talents and experience were associated with the operating side of his various substantial business interests.
           In addition, through their respective family companies he and Mr Walker had acquired some common property, including a farm which was bought as a business, and a holiday house at Stradbroke Island which had, until then, been owned by Mr Walker.  Their respective companies also owned equal shares in the unit trust company which carried on the business of BMFB.  This was a growing business which continued to acquire assets and was managed by Mr Roles.  In the first half of 1986, because he had difficulty in coping with its expanding affairs, he invited Mr Walker to work in the business because he had expressed a desire to leave his legal practice.  This was accepted and Mr Walker then performed the administrative and day-to-day legal work of the business.
           It was later in the same year, that is in July 1986, while this position still obtained, that Mr Roles informed Mr Walker that IITT was selling its property at Amberley for $400,000.  As it has been indicated, Mr Walker did some limited legal work in that transaction, but the terms of the transaction were not under his control or advice.  It was soon after that contract was signed that Mr Roles indicated to Mr Walker that IITT had the $400,000 in cash to invest, and they then discussed whether it should be used to purchase a half interest in Mulgowie's commercial property at Ipswich. 
           It is difficult to know which of the two first introduced the suggestion, but that does not matter.  It is probable that Mr Roles was not committed to any idea of investment in the Mulgowie property and it is possible that he contemplated alternatives, such as the purchase of an industrial shed in a suitable location;  and with IITT's moneys invested in a term deposit with a bank there was no immediate pressure for a rapid disposition of the funds into an alternative investment.
           The subject property consisted of premises on the corner of Brisbane and East Streets, Ipswich, occupied by the Bank of Queensland, and four shops in East Street respectively occupied by AAMI, Medical Benefits Fund, an accountant and a coin dealer.  Brisbane Street was a major street and East Street was only a secondary one, albeit in the central business district.  The area had been in the doldrums for some years, but in more recent times the Kern Corporation had purchased the nearby Walter Reid site for development, but it was having serious difficulties with the local authority.  It had also purchased a number of other business premises in the general district.  Consequently at that time there was considerable movement in real estate in that area, though it was substantially generated by one developer and with a limited base.  On the adverse side there were clear prospects of a very large shopping-centre development only a block away from the subject premises and, being self-contained, when it came into existence it proved to have a deleterious economic effect on less-modern business premises nearby, including those involved in this action.
            That there are serious differences between Mr Roles and Mr Walker concerning features of their conversations that are highly relevant to the plaintiff's claim is not surprising, having regard to the length of time that elapsed before the matter was resurrected, for Mr Walker learned of the dispute for the first time only shortly before the writ was issued in August 1991, that is, five years after the event.  There had been no complaint in the meantime which would have directed his attention to the matter when his recollection might have been more accurate.  From these circumstances it might also be inferred that Mr Roles too did not reflect on the conversation for at least a few years, with consequential reduction in the quality of his memory.  Nevertheless, both witnesses were reasonably definite and even assertive on the more serious aspects in dispute.  This may be because of their significance, which would have caused them to have been more easily recollected;  but differences in perception and understanding of the terms of the conversation at the time, and present difficulties with recollection, even on important matters, are all very real factors likely to produce honest error. 
           One further serious potential difficulty here lies in the chance of rationalisation, which is a very real danger when such a substantial period of time has passed.  It is reflected, for example, in Mr Roles' erroneous pre-trial belief, obviously firmly held at the time, that a sheet of paper which had been introduced by him in interlocutory proceedings had been produced during these relevant conversations.  Further, he is unable to produce either of the two pieces of paper which he says were provided to him by Mr Walker at that time, and while this does not discredit him, it means that such a confirmation of his reliability is absent.
           The dispute essentially turns on the figures which Mr Walker gave for gross rentals, the expenses and the net return.  It is not easy to distinguish between the two witnesses on the issue of credibility.  If anything Mr Roles appeared the more credible though this could in part have been a demonstration of his capacity to simulate associated with his self-professed propensity and ability to haggle.
           However, it is certainly a distinct possibility that the dispute is the product of honest but mistaken rationalisation and memory lapses on one or both sides.  This appeared in a number of issues on which cross-examination exposed each to be in demonstrable error.  Mr Walker justifiably acknowledged his difficulty in recollection, but even allowing for this he was not entirely satisfactory;  and Mr Roles was over-specific on some matters where his confidence was unlikely to be justified, particularly as he made no claim for a considerable time.  In the end it is necessary to acknowledge that, all things considered, the demeanour of the witnesses did not materially assist in distinguishing the truth, except that in this respect Mr Walker seemed to be, by a little, the poorer witness.

           That makes it necessary to have recourse to objective indications of the true facts.  The positive and specific evidence by Mr Roles of figures said to have been supplied by Mr Walker might ordinarily have some force, but that is dissipated in this case, at least to some extent, by his earlier erroneous identification of the written list alleged to have been prepared by Mr Walker.  It is clearly open that in the same way his recollection, no matter how honest, may be seriously affected by his thinking in relation to this.  Equally, Mr Walker is demonstrated to have been in error in the rental figures which he later gave to an auctioneer when the parties tried to sell the property in the following year.  However at that time he must have known of his vulnerability for providing false figures because of their clear publication, so that at least it is unlikely that this misrepresentation was deliberate.  The alternative however is the real possibility that it was due to incompetence or neglect, and this is consistent with his manifest carelessness in not ensuring that Mr Roles had independent advice.
           He also gave evidence that the document, Ex 35, which he claims to have shown Mr Roles at the time of their negotiations, was prepared for that purpose;  but this is unlikely.  Although its figure for insurance would indicate that it was prepared at some time after early May of that year, conversely the figure used in calculating the rates makes it unlikely that it was prepared after the payment of a quarterly instalment of rates made towards the end of May, for that was for a higher amount.
           Further, the document is similar in appearance to others conventionally prepared for him by his accountant at other times;  and while one prepared specially for the relevant occasion might obviously take the same form, its existence can be just as easily explained otherwise.  Consequently its mere existence is equivocal and provides no added force to his evidence.  It is of course possible that although he may not have had it produced especially for the occasion, he may still have shown it to Mr Roles on that occasion, but there is no evidence to that effect.
           On the whole material there is some probability that the gross and net income from the property were overstated, though not necessarily to the extent alleged by Mr Roles.  However there is not the clear and cogent evidence of such matters that would lead safely to a finding on the probabilities that this was the result of fraud, rather than of negligence:  Rejfek v. McElroy (1965) 112 C.L.R. 517 at 521. Apart from that, it is unlikely that Mr Walker would have deliberately prejudiced his long professional and personal relationship with Mr Roles by fraudulent behaviour, particularly as that relationship was profitable to him. Although he was pleased to escape part of the burden which the debt on the properties was imposing on Mulgowie, he is not shown to have been in any financial difficulty at that time which might reasonably have led him to disregard the value of that relationship.
           The correct information was readily available to him and he had the capacity, if he applied himself conscientiously enough, to collocate it and provide it to Mr Roles;  but it is not possible to draw any satisfactory inference of an intention to deceive as distinct from incompetence.  More probably, there was an honest intention to provide a correct result but negligence defeated this: cf. Balfour v. Hollandia (1978) 18 S.A.S.R. 240 at 252, 256. Nor can any such negligence be regarded as so gross as to constitute recklessness amounting to fraud. On the other hand there was knowledge that Mr Roles was placing some reliance upon the information.
           More difficult is the question as to the nature and extent of that reliance.  Mr Roles does not claim that these representations as to income enabled him to make his own expert evaluation of the capital worth of the premises.  Rather, he said that he had trust in Mr Walker because of their relationship without specifically identifying the subject matter of that trust.  Except as to the accuracy of the income figures and the prospect that all lessees would renew their leases, this reliance is overstated, but it may be inferred that he regarded the figures as a broad justification of the asking price.  He probably also had some respect for Mr Walker's opinion as to the value of the asset, and believed in his honesty in expressing that opinion.
           If all of this is taken together, although he does not expressly claim to have been influenced specifically by the figures relating to annual rental or net returns, it is probable that in a broad sense they were of general significance to him as supporting a range of value of which Mr Walker's figure was at the higher end. 
           It would fail to recognise the reality of the situation and to accord proper significance to his enquiries to say that the income return on his investment was not also an important consideration to him.  He relied on Mr Walker's opinion as to the prospects of renewal of the leases as fortifying his expectation of the security of that return.  He was prepared to pay the price he did in order to acquire a property that would produce the stated income, and he would probably not have paid it or any figure like it if he had known the true figure.  It would have represented a return of less than nine percentum per annum on capital, which at that time was too low, even allowing for some possibility of capital gain.
           The prospect of capital gain would have been one serious focus of his attention, but he would have known that Mr Walker was only expressing an opinion on matters on which he himself would have been as competent to exercise his own opinion.  As he knew, the prospects were speculative in that factual situation.  Conversely this factor was not the only reason for his interest.  While it cannot be invoked in support of the plaintiffs' case, the other features in respect of which there was reliance are sufficiently strong to provide that necessary element of this claim. 
           In summary, as a substantial result of Mr Walker's negligent misstatements upon which Mr Roles relied, he had IITT purchase the asset which, if he had been properly informed, it would not have purchased at that price.  Conversely if the correct income was mutually known, Mr Walker probably would not have sold at a price which Mr Roles would have been prepared to pay, for his earlier discussion with the bank indicated that he mistakenly, if honestly, had a seriously inflated idea of the value of the premises.  From his comments to Mr Roles, which seem to have been honest, he also had erroneous expectations of the prospects of renewals of the leases and highly exaggerated expectations for capital growth of the property.  Consequently IITT's loss from Mr Walker's negligence lay in the difference between purchase price and value, and not merely the difference between the expected and the actual income received, as the defendants would argue.   This completes the review of the basis of their liability for negligence.
           Much more serious is the question of fiduciary relationship.  From their long general association as solicitor and client and as business associates and from his status as trusted friend and adviser, Mr Walker had acquired a position of some confidence with Mr Roles.  Apart from joint ownership of the business in which both were working at the time of the relevant transaction, they or their family interests had also jointly owned other property.  He had been the only solicitor consulted by Mr Roles for himself and his family company over many years, and although he had left private practice and was working in their joint venture business, he still performed the technical legal work, not only of the joint business, but of the plaintiffs' private affairs outside that business.  Accordingly, the fact that Mr Walker was no longer in private practice is of no consequence on this issue.  Further, although at the time of the negotiations he was not formally or even informally acting as solicitor for either of the plaintiffs in this transaction, the influences of this lengthy history must still have persisted with some force, and must be taken into account.
           This is not to say that Mr Roles was fully or even substantially dependent on Mr Walker's advice for his business decisions, and indeed on the sale of the Amberley property shortly before the relevant transaction, it is not suggested that he had obtained or even sought other than formal assistance from Mr Walker.  This independence extended to his approach to the business of his and his company's private investments.  Moreover in the conduct of the joint business, Brisbane Markets Freight Brokers, he negotiated many commercial transactions such as the purchase of expensive vehicles.  Though he usually consulted Mr Walker in respect of technical legal aspects of these matters, he relied otherwise on his own business skill and experience.  He was a very adept businessman in his own right.
           Despite this, it is clear that he still reposed confidence in Mr Walker, because of his professional status, in respect of those matters where professional consultation took place.  He also trusted in his honesty as a business associate and friend.  Mr Walker also knew the limits of Mr Roles' experience in purchasing inner city commercial property, though he had generally done well in his dealings with the Amberley property;  whereas Mr Walker himself had the superior experience of a commercial solicitor and the owner of commercial buildings.  It is very likely that, subject to the qualification mentioned above, in their discussions on this transaction, Mr Roles paid some respect to Mr Walker's opinion as to the desirability of his investment in this property and of its value, while retaining his independence derived from his own nature and experience.  Mr Walker either knew all of this or should have known it.
           While this was important in respect of his duty of care in respect of his statement as to the asset's earnings, and his opinions as to the renewal of the leases and the value of the property, that does not mean that any fiduciary relationship was operating in their negotiations.  Mr Roles did not accept Mr Walker's statement of value absolutely and consequently he negotiated the price down.  Although he claims to have accepted Mr Walker's estimate of value without question, he tries to explain away these negotiations by saying that he is a "born haggler", and that this was part of his normal business routine.  Although his description of his general propensity is probably true enough, his explanation was unconvincing.  It is inconsistent with the operative fiduciary relationship alleged that he should try to have his "trusted friend" accept a price which was substantially below what, ex hypothesi, both would have believed to be its fair value.  The explanation is probably that he believed Mr Walker's estimate to be somewhat inflated in his own interest.  In other words, he did not accept Mr Walker's figure, though he probably believed it to be broadly of the right order.  Importantly, he exercised some independence on the subject, implying that he was not reposing full trust in Mr Walker.
           This is perhaps made clearer from the following passage from his evidence:

". . .  What advices if anything did you get about the purchase at all?-- I got no advices at all from anybody or Mr Walker.

Why did you buy?-- Well, he was a business acquaintance, a personal friend, I didn't suspect him in any way, shape or form of touching me in any way."

He regarded him as a business acquaintance (or even a business associate) and a personal friend whom he could trust to be fair and honest, but no more than that.  It is true that he also then referred to their long and exclusive relationship as solicitor/client, but this was at the prompting of his counsel.  While no doubt it was a feature of the background circumstances, it did not play such a significant role as to be critical.  This is all perfectly consistent with what was obvious.  On matters going to value, as both knew, he trusted the other to provide a reasonably honest appraisal but still in a context of negotiation.  The expectation of strict honesty would have applied only to statements of fact and perhaps opinion on matters such as the likelihood of renewal of the leases, but less so on views as to value or capital gain.  None of these is shown to have been dishonest. 
           Mr Roles' attitude of independence in negotiation, probably similar to that exhibited in their past mutual transactions, may well have led Mr Walker into the unhappy error of failing to take the precaution of insisting that Mr Roles have independent advice.  But in the end Mr Roles knew the position well enough and subject to what follows, he was probably generally, if not fully, aware of the desirability of such independent advice in respect of any substantive matter.  It seems that he was not disposed to take advice on such topics as value, probably because of some inflated belief as to his own capacity.
           Still, although he may well not have followed it, he probably placed some implicit reliance on Mr Walker to tell him when to seek independent advice.  Although the negotiations were at arms-length and he knew of Mr Walker's self-interest, and the ramifications of that, he may not have been fully aware of the advantages of having independent advice.  As it has been indicated Mr Walker should have informed him of this and insisted on his obtaining it,  but his failure to do so does not amount to a breach of fiduciary duty in those circumstances.
           The threshold question is whether there was a fiduciary relationship at law such as to give rise to a suitable duty which, on breach, should give rise to an entitlement to restoration.  As there was no strict or formal relationship of solicitor and client controlling the matter, and because the negotiation was not conducted on that basis, there was no fiduciary relationship from that source.  However there was a continuous relationship of some trust and confidence, including a broad one of solicitor and regular client, forming part of the background mosaic, but this does not necessarily mean that there was a fiduciary relationship.
           For that to exist, it is not necessary that there should be a formal relationship between the parties.  It is correct to say that fiduciary relationships recognised by law are essentially those of trust and confidence or of confidential relations:  Phipps v. Boardman (1967) 2 A.C. 46, 127, though these circumstances are not conclusive of such a relationship: Hospital Products Ltd v. United States Surgical Corporation (1984) 156 C.L.R. 41. At p.69 of the latter report Gibbs CJ said:

"I doubt if it is fruitful to attempt to make a general statement of the circumstances in which a fiduciary relationship will be found to exist.  Fiduciary relations are of different types, carrying different obligations (see In re Coomber;  Coomber v. Coomber (79), Jenyns v. Public Curator (Q.) (80) and Phipps v. Boardman (81)) and a test which might seem appropriate to determine whether a fiduciary relationship existed for one purpose might be quite inappropriate for another purpose.  For example, the relation of a physician and patient, and priest and penitent, may be described as fiduciary when the question is whether there is a presumption of undue influence, but may be less likely to be relevant when an alleged conflict between duty and interest is in question.  Moreover, different fiduciary relationships may entail different consequences, as is shown by the discussion of the respective positions of a trustee and a partner in relation to the renewal of a lease:  see In re Biss;  Biss v. Biss (82), Griffith v. Owen (83), and Chan v. Zacharia (84).

In the decided cases, various circumstances have been relied on as indicating the presence of a fiduciary relationship.  One such circumstance is the existence of a relation of confidence, which may be abused:  Tate v. Williamson (85);  Coleman v. Myers (86).  However, an actual relation of confidence - the fact that one person subjectively trusted another - is neither necessary for nor conclusive of the existence of a fiduciary relationship;  on the one hand, a trustee will stand in a fiduciary relationship to a beneficiary notwithstanding that the latter at no time reposed confidence in him, and on the other hand, an ordinary transaction for sale and purchase does not give rise to a fiduciary relationship simply because the purchaser trusted the vendor and the latter defrauded him."

In In re Coomber;  Coomber v. Coomber (1911) 1 Ch. 723 at 728-729 Fletcher Moulton L.J. said:

"It is said that the son was the manager of the stores and therefore was in a fiduciary relationship to his mother.  This illustrates in a most striking form the danger of trusting to verbal formulae.  Fiduciary relations are of many different types;  they extend from the relation of myself to an errand boy who is bound to bring me back my change up to the most intimate and confidential relations which can possibly exist between one party and another where the one is wholly in the hands of the other because of his infinite trust in him.  All these are cases of fiduciary relations, and the Courts have again and again, in cases where there has been a fiduciary relation, interfered and set aside acts which, between persons in a wholly independent position, would have been perfectly valid.  Thereupon in some minds there arises the idea that if there is any fiduciary relation whatever any of these types of interference is warranted by it.  They conclude that every kind of fiduciary relation justifies every kind of interference.  Of course that is absurd.  The nature of the fiduciary relation must be such that it justifies the interference.  There is no class of case in which one ought more carefully to bear in mind the facts of the case, when one reads the judgment of the Court on those facts, than cases which relate to fiduciary and confidential relations and the action of the Court with regard to them."

In the complex circumstances of this case as analysed above, at the relevant time when the transaction was under negotiation the trust and confidence reposed in Mr Walker was not on these principles such as to amount to a fiduciary relationship such that equity would impose on him special obligations that would make him liable to the extent that the plaintiffs seek here.  The trust and confidence placed on his provision of information as to income went no further than reliance which gave rise to a duty of care but not one of a fiduciary nature that would render him liable for all losses which IITT might thereafter suffer in relation to its purchase of the property, no matter how remote or indirect.  Absent was that critical feature of the relationship where a fiduciary is given a special opportunity to exercise a power to the detriment of the other person who is accordingly vulnerable to abuse by the other, nor did Mr Walker undertake, either directly or by implication, to act for or on behalf of the interests of the other:  cf. Fraser Edmiston Pty Ltd v. AGT (Qld) Pty Ltd (1988) 2 Qd.R. 1, 11.
           In any case, the content of a fiduciary duty in relation to an alleged breach must be fashioned by the circumstances, and the relevant content is determined by the alleged breach.  Here, as it has been indicated, at most the extent of such duty was to act honestly, and no breach of this has been demonstrated.  Mr Roles did not place such reliance on Mr Walker to advise him to seek independent help as to give rise to a fiduciary duty in the circumstances of this case.  He knew, and did not have to be told of Mr Walker's conflict of interest, and he acted accordingly.  Given Mr Walker's honesty on the point, there was no conduct amounting to a breach of any duty.  This is the corollary of the limits found to exist relating to any duty in the present circumstances.  Consequently, there is no evidence of any breach of any fiduciary duty that could arise here.  This alone is sufficient to defeat this part of the claim.

           Consequently there is no cause of action of this nature.  Lest this view should be erroneous, it should be said that the plaintiff's submissions on damages seem acceptable, subject to one thing.  They are based on full restitution, extended to include later losses suffered when the property was sold in a forced sale.  Despite the line of authorities in that direction, because the remedy is an equitable one there must be some doubt as to the validity of providing compensation in the present case for such an indirect loss.  IITT had had control of the asset for some time.  It knew well and approved of its being used as security to the bank, as with Mulgowie's interest in it, and they both derived suitable benefits from that.  It is at least doubtful on the evidence that the necessary causal link could be established between any breach and the later loss:  cf. Commonwealth Bank v. Smith (1991) 102 ALR 453, 459; Permanent Building Society v. Wheeler (1994) 12 ACLC 674. Consequently, if this cause of action had succeeded, despite the absence of argument to the contrary, there would have been a serious question as to whether the restitution as to losses should have extended so far.
           It should be specifically found that there was no satisfactory evidence or argument that Mr Walker's conduct in the conveyancing work to effect the transaction or the application of the asset as collateral for BMFB's borrowings was other than proper in all respects;  and any evidence of Mr Roles suggesting the contrary should be rejected.  It is a pity that, as with some other topics, time was wasted on this feature.
           The only issue on this topic that merits mention is Mr Walker's failure as the solicitor acting for the plaintiffs to advise them that as there was no writing supporting the contract, it was still open to Mr Roles to check independently as to the value of the asset, and to invoke the statute of frauds if he wished to avoid enforcement of the contract.  However, Mr Walker knew of no reason why the plaintiffs might want to do this, and was not at fault other than through his negligence.  He was engaged only to perform the conveyancing and not to advise on this issue;  and even if there were any obligation on him to advise, in these circumstances his failure to do so could not constitute a breach of any fiduciary duty.  His negligence related to his advice as to values, etc., and not to his failure to advise as to ways out of the contract.  This causes no practical enlargement of the plaintiffs' remedies on the above finding of negligence as a cause of action in its own right.
           The principles of fiduciary relationship relating to parties to a joint venture or partnership are not relevant here.  Aside from any other features that have already been considered, there was here no question of mutual confidence, reliance or vulnerability, such as that discussed in United Dominions Corporation Ltd v. Brian Pay Ltd (1985) 157 CLR 1, 12. The mere proposed purchase of a share in a property which will then produce joint income and require some joint management does not alone produce a relationship between the parties that is a fiduciary one. It may be different for example if the parties had agreed to a joint venture in the purchase of property and then circumstances came about where the elements of trust, vulnerability and reliance which came into existence through that relationship became relevant in the purchaser's agreement to the acquisition of the vendor's property for the joint venture. Here the proposed joint ownership has no fiduciary feature.
           The next issue then is the measure of damages flowing from the damage caused by Mr Walker's negligent statements.  This too has some unusual and complex features.  The result of that negligence was that IITT paid $365,000 for an asset worth only $265,000, that is, it suffered a loss of $100,000.  But even on the figures provided by Mr Walker, the price paid was too high, for on the rental represented its true value would have been about $315,000 on an eleven percent capitalisation rate.  However, that is irrelevant.
           The later loss on the forced sale was not caused by the negligent misstatement, but by extrinsic circumstances coming after the effects of the negligence were exhausted.  Although the erroneous belief of Mr Roles as to the value of the property at the time of purchase may have persisted, it was not shown that he believed it to be retaining that value, or that such a belief led to any loss which IITT suffered later.  These losses are similar to those excluded by Gibbs C.J. in Gould v. Vaggelas (1984) 157 CLR 215, 220; and that was a case of fraudulent misrepresentation.
           Further, there is a strong chance that a similar loss would have been sustained on whatever property IITT would have purchased had this transaction not taken place.  It is likely that the bank would have required security over it, with a similar forced sale when BMFB encountered its difficulties.   Even if they had been relevant, there is not sufficient evidence to make any award for the element of chance in respect of these factors.
           It follows, therefore, that in order to restore IITT to the position it would have been in at the time but for the negligent representation, it should therefore be compensated in the sum of $100,000 which, with the asset which it received would have provided it with total assets of the value which it would have had if it had not entered into the purchase.
           It should have interest on that loss, fixed at an average rate of ten percent over the whole intervening period.  As an average, that rate would have been reasonably and securely available on a cash sum of that amount.  That comes out at a round figure of $85,000. 
           As there would have been some investment by IITT in real estate in any case if this transaction had not been undertaken, there should be no allowance for duties and conveyancing costs on the transaction.  Another reason is that these expenses were caused by the negligence.
           Costs of the trial should be limited to three days having regard to those claims and issues on which the plaintiffs were unsuccessful, and to unnecessary delays.
           There is therefore judgment for the first plaintiff against both defendants in the sum of $185,000 and costs (limited to three days) and reserved costs (if any) to be taxed.
           The second plaintiff will benefit from the award in favour of the plaintiff, and so any loss he may have suffered will be suitably diminished to the extent that, at best, he would have been entitled to claim damages.  This would have been the case whatever the first plaintiff's aware proved to be.  Had it failed, he must have failed.  In the result, as this judgment, whatever it proved to be, would always have led to the result that he would have suffered no relevant loss,  his action is dismissed with costs.  Those costs should be limited to any enlargement of the defendants' costs by reason of his joinder.