Kermani v Gaylard - [2011] VSC 46

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL AND EQUITY DIVISION

No. 9405 of 2005

HOMAI KERMANI	Plaintiff
V
MICHAEL R GAYLARD & ORS	Defendants

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JUDGE:	SIFRIS J
WHERE HELD:	Melbourne
DATE OF HEARING:	4 - 8 October, 11 - 15 October, 19 - 21 October, 28 October, 4 November and 23 November 2010
DATE OF JUDGMENT:	25 February 2011
CASE MAY BE CITED AS:	Kermani v Gaylard & Ors
MEDIUM NEUTRAL CITATION:	[2011] VSC 46

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LEGAL PRACTITIONERS – SOLICITORS – Professional negligence – Proceeding by former client against solicitors alleging breach of retainer and negligence – Alleged failure to advise adequately about effect of signing letter of offer – Scope of duty of care – Scope of retainer – Duty to warn – Whether duty of care or retainer extends to advising client about the impact of underlying transactions – Relevance of client’s own knowledge of underlying transactions.

LEGAL PRACTITIONERS – SOLICITORS – Negligence – Causation – Whether client would have signed letter of offer irrespective of any advice from solicitor.

TRADE PRACTICES – MISLEADING OR DECEPTIVE CONDUCT – Claim that solicitor’s advice contained multiple misrepresentations - Fair Trading Act 1999 (Vic).

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr G Bigmore QC with Mr P Fary	Comlaw Barristers & Solicitors
For the First and Fourth Defendants	Mr R Heath	Tresscox Lawyers
For the Tenth Defendant	Dr A Hanak	Minter Ellison Lawyers

TABLE OF CONTENTS

A.Introduction............................................................................................................................. 1

B.Background – Pinnacle and the purchase of the Bulla quarry...................................... 1

C.September to November 2001.............................................................................................. 5

Pinnacle’s financial crisis....................................................................................................... 5
The Option Deed..................................................................................................................... 5
The Heads of Agreement....................................................................................................... 7
The FDA Facility..................................................................................................................... 8
The Westpac undertaking.................................................................................................... 10
The position as at 21 November 2001................................................................................ 11
22 November 2001................................................................................................................. 12

D.Events leading to this proceeding..................................................................................... 13

Pinnacle’s failure to repay the FDA facility...................................................................... 13
The Iranis issue proceedings against St George Bank..................................................... 14

E.The Present Proceeding...................................................................................................... 17

F.Retainer and duty of care – Broad or limited?................................................................ 19

G.Breach of Retainer or duty.................................................................................................. 21

What advice would a reasonably competent solicitor give?......................................... 21
Advice by Mr Flory............................................................................................................... 22
Was the advice sufficient to discharge the duty and fulfil the Retainer?..................... 30

H.Causation............................................................................................................................... 33

Misleading or deceptive conduct...................................................................................... 35

J.Disposition............................................................................................................................ 36

K.Orders..................................................................................................................................... 36

HIS HONOUR:

A. Introduction

This case concerns the adequacy and extent of legal advice given to the plaintiff (“Dr Kermani”) by the tenth defendant, Richard Flory (“Mr Flory”), on the night of 22 November 2001. The subject of the advice was a letter dated 21 November 2001 by which St George Bank Limited (“St George Bank”) offered a fully drawn advance facility in the sum of $1,880,000 to Pinnacle Investments Pty Ltd (“Pinnacle”) (“November 01 Letter of Offer”).

By the November 01 Letter of Offer Dr Kermani acknowledged that security she had previously provided to St George Bank to secure Pinnacle’s other facilities would remain as security for the new fully drawn advance facility.

The November 01 Letter of Offer arose in the context of a number…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Kermani v Gaylard

Details

AGLC: Kermani v Gaylard [2011] VSC 46
Case: [2011] VSC 46
Decision Date: 25 February 2011

CaseChat Overview and Summary

Kermani v Gaylard involves a claim by a former client against his solicitors, alleging professional negligence. The client, Mr. Kermani, contends that the solicitors failed to adequately advise him about the implications of signing a letter of offer, leading to significant consequences. The case was heard in the Supreme Court of Victoria, where the central issues revolved around the extent of the solicitors' duty of care and the scope of the retainer agreement.

The primary legal issues addressed by the court were the scope of the duty of care owed by the solicitors to their client and whether this duty extended to advising Mr. Kermani about the broader impact of the underlying transactions. Additionally, the court had to consider whether the solicitors had a duty to warn Mr. Kermani about potential risks, and whether this duty was affected by Mr. Kermani’s own knowledge of the underlying transactions. Another significant issue was the causation of the alleged harm, specifically whether Mr. Kermani would have signed the letter of offer regardless of any advice from the solicitors.

The court found that the solicitors did not breach their retainer or owe a duty of care that encompassed advising Mr. Kermani about the broader consequences of his actions. It was determined that the solicitors had provided sufficient advice within the scope of their retainer. The court also ruled that Mr. Kermani’s own knowledge of the transactions and his decision to proceed despite this knowledge mitigated any potential harm caused by the solicitors' advice. The court concluded that the solicitors were not liable for professional negligence. The court further held that there was no basis for a claim under the Fair Trading Act 1999 (Vic) as the advice provided did not constitute misleading or deceptive conduct.

Orders