King v Benecke - [2013] NSWSC 568

Supreme Court

New South Wales

Amendment notes

Medium Neutral Citation: King v Benecke [2013] NSWSC 568
Hearing dates: 6-10, 29 and 31 August, 13 December 2012
Decision date: 23 August 2013
Before: Harrison J
Decision:
1. Verdict for the defendants.
2. Unless within 14 days I receive notice given to my Associate that either party wishes to contend for a different order, I will order that the plaintiff pay the defendants' costs.

Catchwords: PROFESSIONAL NEGLIGENCE - plaintiff sues former solicitor - where plaintiff sought effective ownership and control of family farming and grazing business - where business shares were to be acquired by plaintiff from family members - whether solicitor was retained by plaintiff - where solicitor denied existence of retainer - no formal retainer - whether retainer implied by conduct of parties - where professional relationship between solicitor and plaintiff's family spanned generations - retainer existed - whether breach of retainer or duty of care - where solicitor advised parties on both sides of transaction - conflict of interest - where misuse of confidential information - where failure to advise client properly - breach of duty and retainer - causation - whether breaches disadvantaged plaintiff's negotiating position at mediation - whether breaches influenced final settlement sum offered - where plaintiff influenced by own conduct independent of defendant
Legislation Cited: Civil Liability Act 2002
Corporations Act 2000
Cases Cited: ACN 070 037 579 Pty Ltd v Larvik Pty Ltd [2008] QCA 416
Adeels Palace Pty Ltd v Moubarak (2009) 239 CLR 420
Astley v Austrust Limited [1999] HCA 6; (1999) 197 CLR 1
Colyer Fehr Tallow Pty Ltd v KNZ Australia Pty Ltd [2011] NSWSC 457
County Securities Pty Ltd v Challenger Group Holdings Pty Ltd [2008] NSWCA 193
Dominic v Riz [2009] NSWCA 216
Ermogeneous v Greek Orthodox Community of SA Inc [2002] HCA 8; (2002) 209 CLR 95
Gates v City Mutual Life Assurance Society Ltd [1986] HCA 3; (1986) 160 CLR 1
Hendricks v McGeoch [2008] NSWCA 53
Johnson v Perez [1988] HCA 64; (1988) 166 CLR 351
Malec v J C Hutton Pty Ltd [1990] HCA 20; (1990) 169 CLR 638
McCrohon v Harith [2010] NSWCA 67
Monaghan Surveyors Pty Ltd v Stratford Glen-Avon Pty Ltd [2012] NSWCA 94
Pegrum v Fatharly (1996) 14 WAR 92
Poseidon Ltd & Sellars v Adelaide Petroleum NL [1994] HCA 4; (1994) 179 CLR 332
Simmons v Story [2001] VSCA 187
State of New South Wales v Mikhael [2012] NSWCA 338
Steele v Marshan [2012] NSWCA 141
Strong v Woolworths Ltd [2012] HCA 5; (2012) 246 CLR 182
Todorovic v Waller [1981] HCA 72; (1981) 150 CLR 402
Watson v Foxman (1995) 49 NSWLR 315
Category: Principal judgment
Parties: George Berkeley Ewart King (Plaintiff)
Ian John Benecke (Defendant)
Representation: Counsel:
D L Williams SC with T J Breakspear and M F Newton (Plaintiff)
I Pike SC with J J Hutton (Defendant)
Solicitors:
Thompson Eslick Solicitors (Plaintiff)
Yeldham Price O'Brien Lusk (Defendant)

File Number(s): 2009/297857

Judgment

HIS HONOUR: George King sues Ian Benecke and others for professional negligence in his capacity as his former solicitor. George King alleges that he retained Mr Benecke to act for him in the performance of legal work related to a series of transactions intended to give him effective ownership and control of the family farming and grazing business conducted on and from a property known as "Coombing Park" near Carcoar in the central west region of New South Wales. George King alleges that he was in effect lured to return to run the property by promises made to him by his father Berkeley King. His case is that he agreed with his father that he would return and conduct the family business, provided that he was able to acquire from his father and his uncle Peter King a large parcel of shares in a series of inter-related companies that owned or controlled the property. Mr Benecke was retained to give effect to that acquisition.

George King alleges that Mr Benecke was negligent, and in breach of the terms of his retainer, in that he failed properly to give effect to the transactions leaving his father free to resile from the agreement and leaving George King without the benefit of the agreement. He further alleges that he was required in the circumstances to purchase the controlling interest that he expected to receive in accordance with the agreement with his father at a premium following a family mediation and settlement, instead of what would otherwise have been an acquisition on the previously negotiated and more beneficial terms. He contends that he was placed in a position of considerable disadvantage, and was thereby vulnerable, in the course of the negotiations that resulted in the settlement. George King alleges that those with whom he was required to deal exploited that vulnerability to his considerable financial disadvantage. George King looks to Mr Benecke for damages calculated as the difference between what he expected to pay and what he was forced to pay.

The circumstances and events that give rise to that claim cover many years and are detailed and complex. Even though not all of the many complicated combinations of facts are equally relevant for present purposes, a proper understanding of at least the following matters is necessary.

Introduction

Coombing Park comprises approximately 3000 hectares and is currently run as an Angus cattle breeding operation. The King family, to the members of which I refer in more detail below, has held an interest in the property for six generations, dating back to George King's great great-grandfather in 1881. Since 1902 those interests have been held primarily by the Whitney Pastoral Company Pty Ltd, which was incorporated pursuant to the Whitney Estates Act 1902. The passing of interests in the property over successive generations has produced a relatively complex shareholding structure. Interests were held both personally and directly or indirectly by a number of different corporate entities and trusts. For ease of reference they will be referred to as follows:

(a) "Whitney" referring to The Whitney Pastoral Co Pty Ltd.

(b) "Esk" referring to Esk Pty Ltd.

(d) "Coombing Pastoral Co" referring to Coombing Pastoral Co Pty Ltd, a wholly owned subsidiary of Whitney.

(e) "Weander" referring to the company known as Weander Pty Ltd, and after 18 June 2002 known as Deerslayer Pty Ltd.

(f) "BKST" referring to the Berkeley King Share Trust, of which Weander was trustee until 8 January 2008.

(g) "Charmdew" referring to Charmdew Pty Ltd, which was the trustee of a trust known as the Peter King Share Trust.

(h) "Brumby Run" referring to Brumby Run Pty Ltd, which was the trustee of a trust known as the Brumby Trust.

The shareholding structure as it existed in 1999 or thereabouts lies at the heart of issues that arise in this case.

A majority of 65.71 percent of shares in Whitney was held by Somers. In 1996 Berkeley King, George King's father, Peter King, George King's uncle and Patricia Bellamy, George King's aunt, held the equity in Somers in one-third shares. Each of these three had inherited those shares from their mother Audrey Emmiline King following the death of her husband E S King in 1994. Audrey King and E S King were George King's grandparents.

There were three classes of shares in Somers held as follows. First, 67,250 non-voting preference shares. Berkeley King/Weander owned 23,416 shares and Patricia Bellamy and Peter King/Charmdew respectively owned 21,917 each. Secondly, 45 ordinary equity shares of which Berkeley King and his brother and sister held 15 shares each. Thirdly, 300 preferred ordinary voting shares. Berkeley King owned one share and Weander owned 99. Patricia Bellamy owned 100 shares. Peter King owned one share and Charmdew owned 99. As at 1999, these interests in Somers amounted to approximately 22 percent of Whitney. Berkeley King held 135 shares in Esk, Peter King held 70 in his name and 23 were held by Charmdew and Patricia Bellamy held 147 shares.

George King was born in 1973. After leaving school he worked in rural operations in the Kimberley and the Riverina. Central to his case in these proceedings are the agreements that George King says he reached with his father and uncle Peter to cease working off farm and to return to manage Coombing Park. He asserts that such agreements were made in two stages in 1996 and 1999.

George King says that in 1996 he agreed to return to manage Coombing Park on the conditions that the property would be kept intact and not sold down and that he would be given ownership and control so that his future was certain. His father agreed that George King would inherit all of his shares in Somers and his uncle agreed that George King would inherit all of his shares in Somers, Whitney and Esk Pty Ltd. Thereafter George King returned to Coombing Park and assumed the day-to-day management of the property. In March 1997 he was appointed as a director of Whitney.

In 1997 Patricia Bellamy began negotiations to sell her interests in Somers, Whitney and Esk. Berkeley King wanted at that time to dispose of some of Coombing Park's land and to use the proceeds to purchase her interest. George King held the view that reducing the size of the property would adversely affect its viability. He felt that his father was resiling from the agreement that they had earlier made to keep the property intact. George King told his father that if Coombing Park was to be sold down, he would leave and pursue farming interests elsewhere.

Peter King advised George King that if he left Coombing Park then he would leave his shares to George King's cousin David Bellamy, the son of Patricia Bellamy. If that were to occur, David Bellamy and his mother would together have a controlling majority interest. The King side of the family would be left with Berkeley King's minority interest in Coombing Park.

George King therefore set about negotiating an arrangement whereby he could secure long term control in order to prevent the piecemeal sale of Coombing Park and to prevent the Bellamy side of the family gaining control. His wish was that he should secure his own future and retain Coombing Park with the Kings for generations to follow.

Over a number of months in 1999 George King negotiated with his parents on the terms upon which this could be achieved. It is George King's case that for him then to agree to stay at Coombing Park, his future had to be secure. That translated in his terms to the need for an enforceable agreement that would prevent his father later changing his mind and selling off the land. George King alleges that the negotiations culminated in an agreement for the transfer of shares from his father to him, which is described in the amended statement of claim as the Berkeley Transaction. Berkeley King allegedly agreed to transfer all of the shares held or controlled by him in Somers to George King, to resign as the chief executive officer of Whitney and to have George King appointed as managing director.

At the time of the negotiation of the Berkeley Transaction, Berkeley King also held or controlled 135 shares in Esk, representing 36 percent of its issued capital, as well as a number of shares directly in Whitney amounting to approximately four percent of its issued capital. These are referred to as the Berkeley Minority Interests.

As part of the Berkeley Transaction, George King agreed that at an appropriate time he would negotiate to purchase the Berkeley Minority Interests for "a fair value". The proceeds of that transaction could then be utilised by Berkeley King to provide for George King's two sisters Kristen King and Katie King as part of their inheritance following Berkeley King's death. George King also understood that his sisters would inherit their father's non-Coombing Park assets, including a substantial share portfolio.

Because Berkeley King held only a one-third interest in Somers, the Berkeley Transaction was not alone sufficient to provide George King with the security or certainty that he required. Each of his uncle Peter King and his aunt Patricia Bellamy held identical interests. Accordingly, in the same period during which the Berkeley Transaction was negotiated, George King also negotiated terms with Peter King. This is referred to in the amended statement of claim as the Peter Transaction.

George King alleges that pursuant to the Peter Transaction his uncle agreed to sell him all of the shares that Peter King held or controlled in Somers, Whitney and Esk for a consideration of $500,000, funded by a loan from Peter King. George King was required to repay the loan in amounts sufficient to support his uncle's living costs. The balance of the debt outstanding at Peter King's death was to be forgiven.

These transactions were both negotiated and documented with the professional assistance of Mr Benecke during 2000 and 2001. George King alleges that Mr Benecke was negligent in respect of both transactions in ways that are referred to in detail below.

Garland Hawthorn Brahe or its predecessors have acted for both sides of George King's family for three generations. George King first met Mr Benecke in the early 1980s when he was still in primary school. The professional relationship with George King commenced when he was 24 in about 1997, shortly after he returned to manage Coombing Park. During that period, Mr Benecke gave legal advice to George King on various issues concerning the property.

From about September 1999, Mr Benecke was retained to act for George King with respect to the negotiations for the acquisition of Patricia Bellamy's minority holding. That negotiation ultimately developed into a protracted dispute that was litigated in this Court between 2003 and 2006 when it was settled. Mr Benecke acted for George King throughout that period.

Mr Benecke prepared the share transfers for the Berkeley Transaction and the loan agreement, deed of release and forgiveness of debt and share transfers for the Peter Transaction. George King contends that he had a retainer with Mr Benecke in respect of both transactions and that he was given advice concerning each of them. Mr Benecke has admitted that there was a retainer with George King in respect of the Peter Transaction and initially, although no longer, contended that the retainer was limited to the preparation of the documentation. Part of that transaction involved the transfer of Peter King's interests in Somers, Whitney and Esk to George King. Mr Benecke does not admit that he gave any advice to George King about the implementation of that transaction.

Mr Benecke denies the existence of any retainer with George King with respect to the Berkeley Transaction or that he gave any advice concerning it. He contends on the contrary that his retainer was from Berkeley King in respect of the Berkley Transaction and that George King was apparently unrepresented.

Background

The parties do not entirely agree about the events that give rise to these proceedings or by inference to the preceding summary of George King's case. However, George King maintains that the evidence establishes the following chronology.

Events occurring before 1999

Berkeley King's Somers shares were issued to him on 15 July 1960, well before the introduction of capital gains tax. On 7 December 1995, the BKST was settled by deed of trust and Weander was appointed as its trustee. The BKST was established to receive shares previously owned by George King's grandmother that were being given to Berkeley King. The BKST was made a discretionary trust, of which Berkeley King and Penny King ("first corpus beneficiaries") and their children/spouses and grandchildren/spouses ("second corpus beneficiaries"/"alternate corpus beneficiaries") were made the objects. Berkeley King was given power under the deed to appoint or to remove the trustee.

In 1996, George King was living and working at a merino stud in the Riverina. He returned to live at Coombing Park in about December 1996 and took over management of the property following discussions with his father and Peter King. As a result of these discussions, an oral agreement was reached with them that if George King returned to Coombing Park to take up the position of manager, Berkeley King would leave his Somers shares to George King under his will, and Peter King promised that he would leave his Somers shares to George King under his will

On 5 March 1997, it was resolved at an extraordinary general meeting of the members of Whitney to appoint George King a director. The minutes noted that George King was then the manager of Coombing Park, the principal asset of Whitney.

Events in 1999

By 1999, George King's aunt Patricia Bellamy had been negotiating for some time to sell her interests in the family companies. During that year, Berkeley King informed George King that he wanted to sell a parcel of land held by Whitney known as Gobabla and use the proceeds to purchase shares from his sister and cause Esk to sell Coombing West. George King was concerned that a sale of Coombing West would affect the viability of the business of Coombing Park and he expressed that concern to his father, indicating that he would leave if a sale were to take place.

George King also had discussions with Peter King at this time. He indicated that if George King did not continue managing Coombing Park, he would leave his shares to David Bellamy. A consequence of this would be that control of Somers, and thus Whitney, would thereafter rest with the Bellamy side of the family.

In the first half of 1999, George King had a number of conversations with his parents about this. On 15 July 1999, he wrote a letter to them expressing concern that he did not have control over decisions that were being made in relation to Coombing Park. The letter states, among other things:

"What I am asking is for you both to decide what you want to do here. Accumulate wealth or distribute wealth. Dad, you have always said I should only come here on my conditions. It's a bit late now I'm already here. I hope I wouldn't be the last person to jump off a burning ship but I don't think it would be sensible for me to try and save the ship while fires are being lit quicker than they can be put out and I am told I am not allowed to put them out..."

Negotiations followed thereafter about whether George King would remain at Coombing Park. In early August 1999, an oral agreement was reached between George King and his father which included promises that his father would transfer his Somers shares to George King, thereby giving him an effective 22 percent interest in Whitney and that he would resign as managing director of Whitney to make way for his son. That conversation was in the following terms:

Berkeley: "I will transfer my Somers shares to you and will resign as CEO to make way for you to be Managing Director. You will be the majority shareholder. I would prefer you to shake a warm hand instead of a cold one. But I expect you to pay fair value for my remaining shares in WPC and Esk."

George: "I agree to this as long as I am not asked to buy out the shares at a time or for an amount that will compromise the business."

Pursuant to the oral agreement between George King and his father, Berkeley King wrote a letter on 6 August 1999 to the secretary of Whitney tendering his immediate resignation as its "CEO". That was subsequently confirmed at a meeting of directors of Whitney on 11 December 1999, at which it was resolved to accept the resignation of Berkeley King as managing director and to appoint George King to that office, with no change to his then current terms and conditions of employment.

Around the middle of 1999, George King and Peter King also discussed George's future at Coombing Park. His uncle Peter indicated that he would sell his shares to George King if Berkeley King's Somers shares were also transferred to George, but on condition that George King kept Coombing Park and its history intact. Then from early September 1999, George King also began negotiating to purchase Patricia Bellamy's shares after her solicitors sounded out Mr Benecke about whether any family members were interested in buying her holdings. Mr Benecke was involved in the negotiation, and on 6 October 1999 he opened a file in the matter with George King as the client.

Mr Benecke had obviously been acting for George King even before then. The relevant events included the following. On about 2 September 1999, Mr Benecke received a letter of that date from Colin Skelton of Hardings Lawyers stating that they acted on behalf of Patricia Bellamy. The letter said that Hardings had written to Berkeley King on 8 January 1999, requesting that he consider the possibility of purchasing some, if not all, of his sister's shares in Whitney, Somers, Esk and Coombing Pastoral Co, and that Berkeley King had responded by saying that he was not in a position to make an offer. Hardings said they were instructed to advise of Patricia Bellamy's intention to sell her shares and that she would prefer them to be sold to family members. They stated they were instructed to advise of the intended sale so that Berkeley King and other family members could consider the matter.

On 3 September 1999, Mr Benecke forwarded a copy of the Hardings letter to George King and referred to a telephone discussion with him. The letter stated, "No doubt you will give the matter some consideration". On 10 September 1999 Mr Benecke and George King discussed a proposed purchase of Patricia Bellamy's shares, including possible terms, purchase price and valuation. On about 30 September 1999, Mr Benecke received a letter from George King setting out the terms and conditions on which he would purchase Patricia Bellamy's shares in Somers, Whitney and Esk. It proposed that the purchase price would be payable over ten years, with the writer "to have effective ownership of shares from beginning of contract". The letter further stated, "There would be very little interest in Patricia's minority shareholding in a private company outside the existing majority shareholders" and that "[Berkeley King] and [Peter King] are not interested in increasing their shareholding".

On 5 October 1999, Mr Benecke prepared a draft letter of offer to Patricia Bellamy's solicitors and faxed it to George King for instructions. The draft stated that neither Berkeley King nor Peter King was interested in increasing his shareholdings, but that Mr Benecke was instructed by George King to put an offer to Patricia Bellamy. The following day Mr Benecke opened a file for George King as his client in relation to his proposed purchase of Patricia Bellamy's shares in Whitney. On 7 October 1999, Mr Benecke sent a letter to Hardings containing an offer by George King to purchase his aunt's shares. The letter was in the form of the draft previously sent to George King for instructions two days earlier.

Events in 2000

In 2000, George King continued to negotiate to acquire Patricia Bellamy's shares, including her one-third interest in Somers. This is evidenced by a Garland Hawthorn Brahe tax invoice addressed to George King dated 28 June 2000, for work done in the period September 1999 to June 2000 in relation to "Proposed Acquisition of Equity/Shareholding in [Whitney] from Mrs P Bellamy". In about mid-2000, further steps were taken in the unfolding of the Berkeley Transaction and the Peter Transaction, the essential features of which, intended to give George King a two-thirds ownership of Somers, having been orally agreed in about mid-1999.

In mid-2000 George King was informed by his father that some of the shares George King understood to be held by his father were in fact held in a trust of which Weander was the trustee. Berkeley King informed George King that he would transfer three of the four shares in Weander to him, thereby giving George King control of the trust (being the BKST). George King says he asked Mr Benecke to prepare documents for the transfer of Peter King's shares to him. No mention of the power to remove or to appoint a new trustee would appear to have been considered or discussed at this time.

These events were confirmed by a letter dated 17 July 2000 from George King to Mr Benecke that included the following:

"Could you please contact my uncle Fr. Peter King on 02 6892 1074 to obtain instructions for the conditions he desires in order to hand over control of Charmdew Pty Ltd to the writer.

My father has indicated that he will follow the same steps to hand over his control of Weander Pty Ltd."

The letter also stated that it enclosed a trust document for Charmdew, which was said to be "verbatim of the Weander Pty Ltd trust document".

On 25 July 2000, Mr Benecke phoned George King and made a file note stating "re: Peter K: Tfr of shares to George". The same day, Mr Benecke also spoke by phone to Peter King. Mr Benecke's file note of that call appears to contain details of Charmdew's shareholdings in Esk, Whitney and Somers as well as instructions to Mr Benecke to prepare an authority and direction.

On 25 July 2000, Peter King also wrote to Mr Benecke asking him to investigate the implications of transferring Charmdew's interest in Whitney to his nephew, on condition of receiving some "honour or obligation document" from George King to "ensure my long term financial security". That letter indicated that Mr Benecke held the trust deed for the trust of which Charmdew was trustee. Peter King also added a note that he thought what he was asking for only applied to "his" voting shares in Somers.

On 28 July 2000, Berkeley King left a telephone message with Mr Benecke regarding a meeting between them scheduled for that morning. Berkeley King said that he had asked his son to ask Mr Benecke some questions regarding Berkeley King's affairs and that it was okay for Mr Benecke to talk to George King about them. George King met Mr Benecke at his office that day. Peter King says that he had conversations with both Mr Benecke and George King the same day and was informed that he understood they were calling from Mr Benecke's office. Peter King discussed the Charmdew trust arrangements and a transfer of shares to George King with Mr Benecke. Both Peter King and George King gave evidence that Mr Benecke advised that George was not a beneficiary of the Peter King Share Trust, because he held an office in relation to the Trust. This was intended by neither of them but instead frustrated their longstanding intention that George King would succeed to his uncle's shares.

George King and Mr Benecke both agree that in the course of the meeting, Mr Benecke prepared the following documents pertaining to these matters. First, transfers to George King of shares that Charmdew held in Somers, Whitney and Esk. Mr Benecke's evidence was that he prepared these share transfers at the meeting on 28 July 2000. Secondly, a form of "Irrevocable Request and Direction to Trustee" from Peter King to the directors of Charmdew as trustee for the Peter King Share Trust with reference to an in specie distribution of the trust's shares in Esk and Whitney and preferred ordinary and preference shares in Somers. The document indicated that Peter King's stated wish, for an irrevocable instruction and direction, was for those shares to be distributed in favour of his nephew notwithstanding that George King was then a director of Charmdew. George King drove straight from the meeting to Lake Cargelligo, a drive of eight or nine hours from Sydney, to have his uncle sign the documents prepared by Mr Benecke.

Around this time, Mr Benecke evidently spoke with GFB Peacocke & Co, accountants, because by letter dated 28 July 2000 they wrote to Mr Benecke "as instructed" and enclosed copies of the Charmdew Annual Return and the Weander Trust Deed. Mr Benecke agrees that at this time his firm accepted a retainer to act for George King on the Peter Transaction. Mr Benecke's 25 November 2011 affidavit includes the following:

"In about July 2000 I was retained by the plaintiff (George) in respect of the sale and transfer to him of shares held by Peter King (Peter) in Whitney Pastoral Company Pty Limited (WPC), Esk Pty Limited (Esk) and Somers Investments Pty Limited (Somers Investments). My work in respect of this retainer was carried out also under GHB file number 210123".

Meanwhile, Mr Benecke continued to act for George King in relation to his negotiations with Patricia Bellamy. George King and Mr Benecke communicated in July and August 2000 following approaches made by Patricia Bellamy's accountant and intermediary, John Knox. On 21 August 2000 Mr Benecke forwarded a letter to George King received from Mr Knox setting out a proposal for George King's acquisition of Patricia Bellamy's shareholding. A meeting was arranged between Mr Benecke and George King for 30 August 2000. Mr Benecke made a file note stating "Geo King avail Wednesday 30 August only".

On 29 August 2000, Mr Benecke wrote a letter to George King that, among other things, reported on a discussion with Mr Knox. Mr Benecke wrote that Mr Knox had said that Patricia Bellamy was seeking at least some cash for the sale of her shares, suggested that George King could enlist the help of his father and uncle, and that Gobabla may not be vital to the business and could generate capital if sold. Mr Benecke said that with George King's permission, he would provide a copy of his letter to Berkeley King.

On the same day George King sent a fax of a draft letter to Mr Knox to Mr Benecke stating that the terms and conditions proposed by Patricia Bellamy were not achievable or realistic, and rejecting a sale of Gobabla in order to obtain capital. That draft letter concluded by saying:

"It would be inappropriate for Berkeley and Peter King to provide guarantees. The writer now controls both their shareholdings."

On 29 August 2000, Mr Benecke had a meeting with Berkeley King at which there was discussion about the shares to be transferred to George King. Mr Benecke's file note of an attendance dated 29 August 2000, states, among other things, "Weander P/L → control to go to George". Berkeley King is said to "confirm happy to do this". On 30 August 2000 at 7:52 am, George King sent a fax to Mr Benecke of a further copy of his draft letter to Mr Knox dated 29 August 2000.

George King's evidence is that he had a meeting this day with Mr Benecke and asked him to explain the share structure relevant to Berkeley King's Somers shares. Mr Benecke denies that this meeting took place. George King's evidence was originally that this meeting occurred in late 2000. However, in his 15 February 2012 affidavit at [14], George King says by reference to his diary that he believes the meeting was 30 August 2000. His diary entry refers to a meeting with Mr Benecke on 30 August 2000 in Sydney.

At [72] of his 31 August 2010 affidavit, George King says that at the 30 August 2000 meeting, Mr Benecke said to him:

"...You will have full and total control of all the shares in the Berkeley King Share Trust as long as you own the majority of the shares in Weander. Also due to the stamp duty costs it would be better for Berkeley to hold the 15 Somers equity shares in trust for you and leave them in his will as stamp duty could be as much as $90,000".

On 6 September 2000, Mr Benecke phoned George King and advised him that it was okay to send the 29 August 2000 draft letter to Mr Knox but suggested that he leave off the last paragraph, cited at [46] above.

On 22 November 2000, Mr Benecke sent a letter to Berkeley King referring to a "meeting during late August" and a "telephone discussion of yesterday" which enclosed unsigned transfers of two shares in Weander to George King from his father and one from his mother. The letter also enclosed for signing forms of resignation by Penny King as a Weander director and secretary and consent by George King to appointment as a Weander director and secretary. Lastly, the letter enclosed for signing a statutory declaration in relation to the shares structure and asset value of Weander. Mr Benecke stated in the letter:

"Following the stamping and registration of these Share Transfers, George will become the holder of seventy five per cent (75%) (three of a total of four shares) in the Company and will thus be in effective control of Weander, the appointed trustee and controller of the Berkeley King Share Trust. I note this is in line with your wishes and instructions to me."

On 4 December 2000, George King again wrote to Mr Benecke referring to a telephone conversation of that day about the valuation of Patricia Bellamy's shareholding in Whitney and some concerns he had about the negotiations. He stated that he had very little experience in the area and was relying heavily on Mr Benecke's advice.

The following day George King and Peter King orally agreed that shares owned or controlled by Peter King would be sold to George King for $500,000, with vendor finance for that sum repayable at $10,000 per annum subject to increases in the Consumer Price Index and with the loan to be forgiven upon Peter King's death. Peter King recalled an agreement to this effect, although he thought that it was reached in about April 2001. He also understood at about December 2000 that Berkeley King was transferring shares to George King.

A letter dated 6 December 2000 from George King to Mr Benecke confirms the timing of the agreement between George King and his uncle. That letter stated that Peter King had agreed to transfer Charmdew's shares to his nephew on conditions consistent with those recalled by both George King and Peter King, and requesting advice as to whether it would be appropriate to transfer part of the shares held in Peter King's name at the same time.

On 7 December 2000, Berkeley and Penny King signed forms for the transfer of three of their four shares in Weander to their son. The transfers were stamped on 11 December 2000. Early in the New Year, Mr Benecke also prepared papers for the appointment of George King, and resignation of Penny King, as directors of Weander.

Events in 2001

By the beginning of 2001, George King had secured control of Weander and of the shares held in the BKST. George King's ultimate objective of acquiring control of Somers, and thus of Whitney, still required him to secure control of Peter King's shares. This process continued in the early part of 2001.

On 23 January 2001, George King and Mr Benecke had a telephone conversation. Mr Benecke made a file note about it. Although the file note is dated 23 February 2001, Mr Benecke agreed that it was recording a conversation on 23 January 2001. It records instructions from George King that "his uncle Peter wishes to transfer/sell his shares in Coombing group/WPC to him".

On 29 January 2001, George King and Mr Benecke spoke by telephone. Mr Benecke's file note of the call records discussions with George King to the effect that Peter King's shares were to be sold to Weander in lieu of George King, with $10,000 payable per annum as a capital sum. The file note states:

"Peter agrees (doesn't want anymore!) even tho worth much more".

The notion of transferring Peter King's shares into Weander therefore arose very shortly after George King obtained control of that company, which in turn had occurred after George King received advice from Mr Benecke about the advantages of holding assets in the BKST.

George King and Mr Benecke also met on 29 January 2001. Mr Benecke made a further file note on that day in which the following matters are recorded. First, all of Peter King's and Charmdew's shares in Esk, Somers and Whitney were to be sold or transferred to Weander as trustee for the BKST. Secondly, therefore, the signed transfers to George King personally were not to be executed. Thirdly, George King was to become a director and secretary of Weander as trustee for the BKST. Fourthly, the BKST was to remain the same, with no change in beneficiaries, who were noted as being Berkeley and Penny King and their children. Fifthly, Berkeley King was to remain as the principal/first beneficiary. Finally, George King was to hold the majority of shares in Weander and "control trustee action/distribution".

On or about 29 January 2001, Mr Benecke also put a line through the share transfers of Peter King's shares prepared in July 2000 and noted on the forms that transfers to George King were not being proceeded with. Mr Benecke thereafter attended to putting the Peter Transaction into effect over the course of several months. The following events are material.

On 29 February 2001, Peter King wrote to Mr Benecke explaining what he had agreed with George King and asking for Mr Benecke's advice and/or suggestion about some matters. On 1 March 2001, Peter King asked George King to have Mr Benecke provide a "plain English" explanation about the arrangements for the transfer of his shares. The same day, George King sent a facsimile letter to Mr Benecke in relation to the proposed sale of Peter King's shares, stating that his uncle wished to receive a letter from Mr Benecke "in very plain English to explain that his intentions are being suitabl[y] attended to".

On 1 March 2001 Mr Benecke asked Peter King to send him a copy of his will.

On 5 March 2001 George King sent Mr Benecke a further facsimile letter in similar terms to the one dated 1 March 2001, but with the addition of some further statements about Peter King's intentions, which were said to involve the following things:

(i) transferring shares from Charmdew to Weander as the Charmdew trust document could not favour George King;

(ii) a change of name for Weander in the near future;

(iii) George King having control of Weander;

(iv) the setting up of a loan account between George King and Peter King (or Peter's chosen representative) with capital only payments of $10,000 per annum until the loan amount was retired or Peter's death;

(v) the loan agreement giving Peter King security over the sale of his shares;

(vi) the trust continuing to deal with Peter King if something unforeseen happened to George King;

(vii) the transfer of all of Peter King's shares such that there would be no need to make provision for them in his will; and

(viii) George King undertaking to ensure that Peter King would be suitably housed in his retirement.

On 8 March 2001, Mr Benecke advised George King by telephone that Peter King should obtain independent legal advice. The following day Mr Benecke sent a letter to George King attaching draft share transfers for the transfer of his uncle's shares to Weander. The letter also referred to the desirability of Peter King taking separate financial and/or legal advice.

On 12 March 2001 George King received correspondence from Mr Benecke, including a letter for Peter King to sign. George King and Mr Benecke had two telephone conversations in the course of that morning. Later that day, George King asked his uncle to write out the letter in his own handwriting. Peter King's letter noted Mr Benecke's concern that he take independent financial or legal advice and stated that he was not concerned to do so as he was giving George King the shares in his will in any event. Peter King asked Mr Benecke to send a document stating that George King will pay him $10,000 per annum. Peter King also signed forms that day for the transfer of his shares to Weander.

The next day Mr Benecke wrote to George King requesting financial statements of Whitney, Somers and Esk for the year ended 30 June 2000 for the purposes of stamp duty assessment on the transfers of Peter King's shares. On 15 March 2001 Mr Benecke wrote to George King enclosing a revised Loan Agreement and Deed of Forgiveness of Debt. Mr Benecke repeated his recommendation that Peter King take independent legal advice.

On 16 March 2001 Mr Benecke wrote to George King seeking financial statements for the year ending 30 June 2000 and an original valuation of Boyce Chartered Accountants. Mr Benecke said the Office of State Revenue would require the material, whether for share transfers from Peter King or Patricia Bellamy. On 26 March 2001 Mr Benecke sent George King final versions of the Loan Agreement and Deed of Forgiveness of Debt for signing. On 6 April 2001 Mr Benecke advised George King that he was preparing the necessary statements for submission to the Office of State Revenue for assessment of stamp duty.

On 9 April 2001 George King and his uncle entered into a Loan Agreement and Deed of Forgiveness of Debt. In May 2001, Peter King told George King that he wished to change the name of Weander to prove that George King controlled the company and that his father did not. In the event, the forms for the transfer of Peter King's shares to Weander were signed and given three different dates. Each of them was also lodged with the Office of State Revenue for assessment of stamp duty and assessed with nominal duty.

The form for the transfer of shares in Esk and Whitney was dated 12 May 2001. In May 2001, those share transfers were assessed for duty: $63 for the shares in Esk and $187.80 for the shares in Whitney. The form for the transfer of Somers preference and ordinary shares was dated 22 August 2001. On 11 September 2001, those share transfers were assessed for stamp duty at $262.

The form for the transfer of Peter King's 15 equity shares in Somers was dated 1 October 2001. It was lodged for stamp duty on 27 November 2001 and was assessed for stamp duty at $3,123.45. The lodgement of the form followed the compilation of supporting material by Mr Benecke, including a statutory declaration dated 20 October 2001 prepared by him and signed by Berkeley King. Mr Benecke accepted in the course of his cross-examination that at that time he considered the terms of that statutory declaration to be wholly correct:

"Q. You say in the second last paragraph, 'I consider the terms of the enclosed statutory declaration by your father to be wholly correct'?

A. I do.

Q. May we take it that you believed that statement to be true and correct at the time you made it?

A. Yes, yes."

Events from 2002 to the end of 2005

By the beginning of 2002, Peter King's shares had been transferred to Weander, providing George King with majority control. George King believed that Mr Benecke's apparent implementation of the Berkeley Transaction and the Peter Transaction had given him ownership and control of Whitney. As a layperson, George King understandably believed that his control of the trustee put him in a secure position with respect to the trust assets. George King said the following in the course of his cross-examination:

"Q. You understood that Weander was the trustee, correct?

A. Yes.

Q. And that it was a trust, as you understood it like all other trusts whereby there was a trustee, that was Weander, and beneficiaries?

A. Yes. I had no idea the two could be separated.

Q. What do you mean by that, Mr King?

A. I understood at that stage that, right up until 2007, that a trust and the trustee were married together, they couldn't be separated."

Significantly, Mr Benecke also understood that George King believed at this time that he controlled Whitney. He gave the following evidence:

"Q. It was clear to you, I suggest, that George King understood from at least 2000 that his rights in relation to Weander meant that he had effective majority ownership and control of Whitney Pastoral Company?

A. Well, I can't speak for George's state of mind but I believe George would have been of the opinion that if he, as the majority shareholder of the trustee company, vested that trust or determined that trust he could vest it wholly in favour of himself.

Q. It was your observation as a result of your dealings with him over those years that he believed that he controlled Whitney Pastoral Company. That's right, isn't it?

A. I would agree with that. Had he acquired his uncle's shares by then? I just can't recall. Assuming he had acquired his uncle's shares, yes."

On 18 June 2002, Weander's name was changed from Weander Pty Ltd to Deerslayer Pty Ltd. This was an agreed step in the Peter Transaction. It occurred on George King's instructions and was not done earlier (as contemplated in the Peter Transaction) on Mr Benecke's advice.

Patricia Bellamy's shares remained an issue in this period. In about 2003, she commenced proceedings in this Court alleging oppression of the minority shareholders in Whitney, Somers and Esk and seeking orders that the companies be wound up. Garland Hawthorn Brahe acted in those proceedings. On 7 August 2003, George King wrote to Mr Benecke's partner, Brenden Miller, in relation to the litigation with his aunt. He commenced the letter by asking whether it was possible to have the action directed at him on the basis that:

"... the First Defendant [my father] is not the majority shareholder of the group. I own and control Deerslayer Pty Limited, the parent company".

It is evident that Mr Benecke also erroneously believed that George King had control of Whitney. This would appear to follow from the fact that on 5 December 2003 he wrote a letter to Champions, chartered accountants, stating that George King was seeking accounting, financial and tax management advice in relation to the Whitney Pastoral Co Group's business and affairs. The letter stated that George King was the Group Managing Director and the "controller of the common shareholder, Weander". Moreover, on 2 June 2004, Mr Benecke wrote a letter to similar effect to Allworths, chartered accountants, repeating that George King was the Group Managing Director and the "controller of the common shareholder, Weander".

Settlement with Patricia Bellamy in 2006

In 2006, the long-running dispute with Patricia Bellamy was concluded. On 16 March 2006, a Deed of Release was finalised in settlement of the Patricia Bellamy's Supreme Court proceedings. The deed provided for the transfer of shares by Patricia Bellamy: her shares in Somers were extinguished and Whitney purchased her shares in Esk. This was a decision taken on 23 June 2006. She received a water licence and a payment of $125,000 for her shares.

The effect of these dealings with Patricia Bellamy's shares was that as at 23 June 2006, the group ownership structure changed. As a consequence of these changes, the Minority Shares that George King was obliged to purchase pursuant to the Berkeley Transaction represented different percentages of the issued capital in the relevant companies. These percentages became as follows:

(a) 135 shares in Esk, representing 36 percent of the shares in that company; and

(b) 44,713 shares representing approximately 6.14 percent of the shares in Whitney. (After the extinguishment of Patricia Bellamy's 19,724 shares in Whitney, there were 728,481 shares on issue in it).

George King was still labouring under the misapprehension at the time of the settlement with Patricia Bellamy, and indeed after its completion, that he owned and controlled Weander and, by that means, Somers and Whitney. That is supported by his anticipation that Patricia Bellamy's shares would be transferred to Weander and his expressed concern that the structuring of the settlement would not affect his position of control.

On 20 March 2006 George King sent an email to Mr Benecke requesting that they discuss the transfer of Patricia Bellamy's shareholding in Whitney, Somers and Esk to Weander, and issues concerning other shareholders. The email attached a schedule of various shareholdings and made reference to a payout of minority shareholders.

On 24 March 2006, George King emailed Mr Benecke again and attached a schedule of shareholder movements from 1998 to 2006. This email stated:

"Will need the [Patricia] shares into [Weander] to keep everything together - before the next generation split happens".

On 20 July 2006 George King wrote to Mr Benecke referring to his effectively having "control of the Group". He asked Mr Benecke about the stamp duty implications of transferring Patricia Bellamy's shares to Weander and also whether her shares in Somers could be extinguished without affecting his "ownership or control position".

Negotiations with Berkeley King in 2006

The issue of George King's purchase of the Minority Shares arose at the time of the settlement of the dispute with his aunt. Around March 2006 when the settlement with her was concluded, Berkeley King said to George King words the effect of, "we need to get some money out for the girls so we can give them a start". George King understood that to mean that his father wanted him to purchase his remaining shares in Whitney and Esk. This request came earlier than George King had expected and during a difficult time due to drought conditions at Coombing Park.

Between March and July 2006 there were a series of discussions amongst the family members. George King made a number of offers, none of which was accepted. For example, in March he made an oral offer to purchase the Minority Shares. He offered $572,720 based on what had been paid to Patricia Bellamy and what he thought was affordable given the drought. He based the offer on calculations that are in evidence. Then in about May, George King made a second offer of $643,604 to the family. That figure was based on calculations that are also in evidence. The offer was rejected. Berkeley King made a counter offer that his son should sell Gobabla and apply the net proceeds (after a fair distribution of debt) to the purchase of the Minority Shares.

On 22 June 2006, there was a family meeting attended by a facilitator named Michael Adamedes at which George King made a third offer to his family to pay them $1,294,702 on terms involving the sale of a parcel of land known as the Coombing South scrub blocks. As far as George King was concerned, that offer was accepted at that meeting. This appears from letters George King wrote to Mr Benecke on 20 July 2006 and to Mr Adamedes on the following day. He said to Mr Benecke that the family resiled from what he understood to be an agreement while he was on holiday for two weeks in early July 2006.

A further family meeting with Mr Adamedes was arranged for 31 July 2006. In advance of that meeting, members of the family sent each other letters and position statements. At the meeting, Berkeley King told George King that he wanted $2M for his shares and that the funds could be obtained by selling Coombing South.

Following that meeting George King made a further offer to pay his family $1,761,412. He regarded the offer as involving a 50 percent premium above the price paid for Patricia Bellamy's shares. This offer was only made after George King began to become concerned about his father's intentions regarding his father's Somers shares.

Agreement was not reached. It is evident from the correspondence that passed between George King and his parents and Mr Adamedes that George King considered the amounts that his father wanted for the Minority Shares to be above their "fair value". It is also clear from documents prepared by George King at this time that he proceeded in this series of negotiations upon the footing that he was negotiating to acquire minority interests, with him holding or controlling approximately 87.4 percent of the Whitney Group.

This inability to reach agreement as to the price to be paid for the Minority Shares caused Berkeley King to apply pressure to his son to increase his offers. That pressure consisted of statements as to the future course with respect to Berkeley King's Somers shares. George King therefore realised or suspected that his father's promise in relation to them may not be as secure as he had been led to understand. That situation would not have arisen but for the fact that his father's Somers shares had not been transferred to George King but had only been dealt with as part of his father's will.

The 22 June 2006 letter George King wrote to his parents explained how he saw the then current position. The terms of that letter are instructive, and are as follows:

"Dear Dad, Mum, Katie and Shish,

It seems that I am in a position that I can only lose. If I destroy the economy of scale of the company and spend the rest of my life working in a failing business I will be resentful, if I don't pay the girls their perceived value they will be resentful, if I pay the girls their actual share value they will feel hard done by, if I do nothing I will be also resented.

I wrote a letter to Mum & Dad in early 1999 outlining in detail my concerns for the direction we were heading and my perceived consequences of that direction. I said if that was the direction that the company was heading I would walk away and pursue a career on my own. The result of that was that if I was to put my career into WPC I would have to have control of my own destiny. Peter agreed to sell his shares to me on the condition BK transferred his shares to me so I effectively had control of the Group. BK transferred 24.5% of the group to me via 12,725 shares in WPC and 170,936 Somers shares. The Somers portion included voting shares. I amalgamated this shareholding with the shares I purchased from Peter equating to his 24% or 179,219 shares plus any rights from Brumby Run. This gave me control of the company.

I have set out in my business career intentionally and deliberately to be successful. Peter would not have sold his shares to anyone else because he could see that I was going to make Coombing work. It was through the amalgamation of Peters and Berkeley's shares that I became majority shareholder. BK never had control of WPC without Peter's favour. As majority shareholder I began negotiations with Tricia to purchase her 33% shareholding. This was within my legal, moral and logical right to do so. This purchase does not affect Katie's and Shish's inheritance as they have no right to inheritance from Tricia.

What is being asked is that I distribute my wealth to my siblings instead of my children before I have died.

WPC has always been a family Company, from Gran Whitney to her five daughters, to Ewart (75%) and Whitney (25%), to Tricia (33%), Berkeley (33%) & Peter (33%). I have received by way of inheritance 24.5% and have purchased both Tricia's and Peter's shareholding to bring my ownership in the WPC Group to just over 90%.

I can't control anyone else's feelings or emotions, I think it is unfair to hold me to ransom to pay out some magical figure of an amount that is not earned and is not able to be paid out. I also do not think it is appropriate for anyone to be jealous of my perceived financial position. The shares in WPC are worth about $5.00 at best. No minority shareholder will ever have control of the asset, and by rights no majority shareholder should think they have the right to disperse a family asset that we have held for the past 126 years and has survived this exact same problem through the past five generations. I don't think it is my right to make that call; it wasn't the right of the Melbourne mob or Tricia to make that call either. I hope Coombing will always be a family base for all of us.

Ewart was in control of the Group for fifty years, in that time he bought out most of the other shareholders except for his brother and built the asset up (only to let it deteriorate again) to distribute to his three children. Fifty years to build asset. Berkeley held his one third shareholding for less than three years and it is expected to achieve more than what Ewart took a lifetime to do. I feel as if the impossible is expected of me also.

If this is seen as a battle it will be un-winnable by all. I would like to see Coombing as our family home and continue to enjoy it as much. Most importantly I would hope that we don't let bad emotions to take over and tarnish the love and friendships we have all held so tightly for so many years."

The 20 July 2006 letter George King wrote to Mr Benecke referred to his father telling him he needed to sell Gobabla and give the proceeds less debt to his sisters. Part of what he wrote is as follows:

"We had a facilitated family meeting on the 22nd of June at the request of my Sisters to come to an agreement as to what was due to them from the WPC Group given that I have received my inheritance from Berkeley around 1999. I put forward a pay-out plans for my sisters... which was agreed to and accepted.

I have been away on annual holidays for the past two weeks and they have decided (Katie in particular) that is not what they want and have asked that 'Gobabla' be sold and the proceeds from that sale less some debt be given equally to my two sisters.

I wrote to Berkeley and Penny [in] about 1999 stating my concerns with the direction of the Company and my future career in a private Company and not having control of my own destiny... Peter King agreed to the transfer of his shares to me on the condition that Berkeley transferred his shares to me: this effectively gave me control of the Group. Berkeley gave a condition on the transfer of his shares that I 'look after the girls' in with respect to purchasing the WPC and ESK shares from his and Penny's estate. It was never expected to be dollar equal."

Berkeley King had also prepared a note dated 23 July 2006, in advance of the meeting on 31 July 2006. He recounted the discussions with his son back in 1999. He said in part:

"At about [the time of the establishment of Brumby Run Pty Ltd] I at George's request made him managing director and signed over to him all my shares in Somers ... which gave him effective control of the WPC. I verbalised again at this time very clearly that while I was giving him control I was also giving him a responsibility of looking after his sisters' interests. There cannot be one iota of misunderstanding about this."

In this note Berkeley King had earlier referred to his goal that "George should have unfragmented control of the WPC". He also wrote:

"I have asked George to sign over Gobabla to the girls or to sell it and give them the net proceeds after a fair distribution of the coy debt. Gobabla equates to approximately 16.2% of the gross value of WPC. George would then have an asset of approximately $19 million less debt which would be totally his without any obligations to anyone.

...

George has the legal right to not give any part of the WPC to anyone, every one else in the family is a minority shareholder in a private coy and we all know only too well what that means. I believe George also has a moral obligation which if he chooses to ignore will have disastrous consequences for our family."

Berkeley King's note supports the proposition that in the negotiations taking place in 2006, he was accepting that his son was the major shareholder in Whitney and that the negotiations were about what was the price to be paid for the acquisition of a minority shareholding. He also accepted that the agreement made with his son back in 1999 was intended to give him control of Whitney.

On 23 July 2006, George King responded to his father's note by email. He said, among other things:

"If you remember the reason you transferred the Somers shares to me in 1999 was because I told you and Mum that I was leaving and going to pursue my own career if I didn't get some certainty into the future of the Company. I gave Peter the same reasons which is what prompted him to begin to sell his shares to me.

Several things prompted me to take that stand two years after I had started the job here ...

My major concern at the time was you were talking seriously about selling Gobabla to pay out [Patricia] and selling Esk to pay out the girls ... I gave you the option then of selling the assets you were talking about and Coombing South, paying everyone out and then employing a paid manager until you were finished with the rural lifestyle and then sell the remainder of Coombing. You promised that this is not what you wanted so I would stay; your guarantee to me was the transfer of the Somers shares. There cannot be one iota of misunderstanding about this promise.

...

You never gave me effective control of WPC, I got that from having Peter on side. Peter's shares are not yours to give away, not legally, morally or logically. The responsibility of 'looking after my sisters' never included destroying the fabric of the business, you promised that to me in 1999 to make me agree to stay. The agreement was that to even up the dollar value of inheritance I had to pay back the shareholder loans which are at call and pay fair value for all the shares in WPC and Esk that you were leaving to the girls. Your residual estate from Weander was also going to the girls. I understood the 22% shareholding via Somers was to be my total inheritance and I could base my career decisions on that. There cannot be one iota of misunderstanding about this either."

George King explained in evidence what was meant by the reference to the "residual estate from Weander". It referred to the other assets held by his parents following the sale of their first property, which had been known as Weander. In 2006, those assets were predominantly shares in blue chip listed companies, which George King understood to be worth between $1M and $2M. He understood the notion of "evening up the inheritance" to be paying fair value to his father for his remaining shares in the Whitney Group.

Berkeley King replied to this email of 23 July 2006 in correspondence two days later. Amongst other things, he restated that his son effectively owned Whitney but also said that "[u]nfragmented control [for George] was a goal, I never said it was reality."

On 28 July 2006, George King emailed Mr Benecke and stated that Somers had 15 shares (his father's Somers shares) still outstanding in his father's name and that his father was "under unbelievable pressure from the girls at the moment". He continued, saying, "Apart from these 15 shares it is my understanding that I control all of Somers". He asked Mr Benecke whether extinguishing Patricia Bellamy's shares in Somers would affect his position as the person with control of Somers save for his father's Somers shares.

Either at or shortly after the mediation of 31 July 2006, George King alleges that his father said to his him, "You need to agree to pay us what we are asking or it will get difficult for you". That was consistent with Berkeley King's note of a few days earlier suggesting that George King's control may not necessarily be unfragmented. These comments, together with the fact that Berkeley King was asking for much more than the value of his remaining shares in Whitney and Esk, made George King concerned about his father's intentions regarding his Somers shares that had been promised to him. That concern had earlier manifested itself in his email to Mr Benecke on 28 July 2006.

By the end of July 2006, therefore, the negotiations had reached a point where Berkeley King and George King had not been able to agree on what was "fair value" for the Minority Shares. It was accepted on both sides that this was a negotiation about fair value for minority interests. George King's last offer was $1,761,412 but his father wanted $2M, funded by the sale of Coombing South. George King contended that if the matter had stopped there, the issue could have been resolved through a valuation of the Minority Shares. The matter, however, did not stop there.

2006 to mid 2007

George King planned to marry in late 2006. On 1 August 2006, Kirsten King sent him an email noting the upcoming wedding and saying "let's move forward I can't have this tension in our family, I can't do this anymore." They then had discussions between themselves and George King negotiated to purchase 3,000 of his sister's shares in Whitney. On 22 September 2006, George King emailed Mr Benecke retaining him to act on that proposed purchase. He asked Mr Benecke whether he needed documentation to purchase the shares.

From about late 2006, George King and his new wife Melinda King also embarked on a project to establish a medical centre called The Wellness House. On 8 January 2007, there was a meeting of the directors of Whitney attended by George King and his parents at which a loan facility from Whitney was unanimously approved to finance The Wellness House transaction.

On 19 January 2007, Mr Benecke emailed George King and advised him to "keep the ball rolling" on the share transfers from Patricia Bellamy and the transfer of 3,000 shares in Whitney from Kristen King to Weander. Mr Benecke thus continued to foster George King's belief that he was safely able to put assets that he intended to own and/or control into the BKST.

In the first half of 2007, Gobabla was sold and the proceeds were used to repay debt. In May 2007 the shareholders of Whitney resolved in their annual general meeting to raise either equity or debt capital to buy back shareholders who no longer wished to be members. It was suggested that the sale of Coombing South be investigated.

Resumption of discussions in mid 2007

In about mid-2007, discussions regarding the Minority Shares resumed. The family situation had by this time become more difficult. For example, George King gave evidence that by "June 2007 relationships had deteriorated to a point where we weren't communicating". Matters did not improve. George King explained in his evidence the context to a handwritten note dated 17 June 2007, in which his father stated that he would love George "no matter what":

"... the handwritten note from my father to me, this was the turning point. Right here is the turning point in the negotiations when everything got really nasty. About two days before this my father came up and the girls were away, phoned me up and said, 'Can I have a drink with you?' He came up with some Aberlour whisky I had brought back from my honeymoon. We spent the night at home, drank the rest of the bottle together. Sunday morning I got this note and that was the end of our relationship. That's when it got bad."

George King then sent a note to his father dated 18 June 2007 saying, "I will sell Coombing South if it will make family relations right."

On 21 June 2007, Berkeley King wrote to his son saying, among other things, that his daughters' "inheritance is from me, not from you - this issue is in reality you giving me fair value for the shares I hold in WPC and ESK." He said he had a problem with how George King had chosen to calculate what he thought was a fair inheritance and that what George King inherited "was a controlling interest in Somers, which had WPC as a subsidiary coy". He also wrote that he had promised to give his son all his Somers shares. Berkeley King concluded the main body of his letter by saying, "If you agree to sell Coombing South and give the net proceeds to Katie and Shish then that will be their inheritance".

Berkeley King sent his son a further note on 21 June 2007, which stated:

"Katie & Shish both have an issue with what Mum & I have got out of this whole deal. I have not thought about that as my whole concentration has been on the girls, however I will flag it as something you and I should discuss."

It has been submitted on behalf of George King that his sisters appear to have prevailed upon their father, because the mooted sale of Coombing South suddenly became inadequate to meet the family's demands. George King gave evidence that he and his father spoke after he received Berkeley King's first letter of 21 June 2007, to the following effect:

Berkeley: "The girls aren't happy with just selling Coombing South. We are going to have to go to mediation again. You need to realise the value of the 15 Somers shares I'm still holding.

George: I do realise the value of those shares. They are equity shares. You are holding them for me."

George King began to strengthen in his view that his father was resiling from what he understood to be their agreement, including in relation to his Somers shares. On 27 June 2007, he wrote a letter to his father setting out his concerns and restating his understanding of the agreement reached. In that letter, George said (amongst other things):

"...At the time the shares you transferred to me equated to 22% capital backing of WPC...I purchased Peter's shares on the condition that I would keep Coombing intact, I was given your shares on the understanding that would be my entire inheritance. I understand that the shares you gave me combined with Peters gave me a controlling interest, Peter shares were not yours to give away at any point. ...

It was my understanding that this was to be the position I could begin my career with and that I would have to purchase Katie and Shish's shares in Esk and Whitney at fair value sometime in the future. At that point in 1999 I thought me getting the equivalent of $800,000 (as your shares were minority shares without Peters) was fair; you said that this transfer was to be the entire of my inheritance...

Until there is an understanding from both sides and all facts are on the table I cannot see any reconciliation of relationships. Katie and Shish will understandably hold resentment and anger towards me as they think I am ripping the family off. I don't think we can move forward until this understanding is taken...

It is now your responsibility to inform yourself and the girls [of] [t]he deal we made in 1999..."

Events in the second half of 2007

It is George King's case that from around August 2007, it ought to have become apparent to Mr Benecke that he was in a position of conflict by continuing to act for both he and his father. The dynamics of the negotiations to acquire the Minority Shares changed from this time, and in the second half of 2007, Berkeley King sought to acquire some leverage in the negotiations by exploiting his continuing ownership of his Somers shares and changing his will so far as it related to them, by exercising his power as appointor in relation to the BKST to remove Weander as trustee, and by seeking to include in the shares to be acquired by George King a notional holding of shares in Brumby Run.

These events occurred with the knowledge and active involvement of Mr Benecke, who continued to act for both Berkeley King and George King over most of that period. The material events are these.

On about 1 August 2007, George King instructed Mr Benecke to prepare a valuation of his father's realisable assets in Whitney and Esk.

Shortly thereafter, George King asked his father if he was planning on doing something different with his Somers shares. His father responded that if George King did not trust him, he would sign the shares over to him. George King accordingly asked Mr Benecke to prepare transfers for those shares in favour of Weander. Mr Benecke was in these circumstances taking instructions from George King to prepare both a valuation and share transfers.

On 13 August 2007 George King wrote to Mr Benecke asking him to run through some matters at a meeting with his parents the following day. One of the items listed by him concerned transfer papers for his father's Somers shares "in favour of the Berkeley King Share Trust". George King asked Mr Benecke, "Can you hold this on your records after Berkeley has signed". Mr Benecke sent an email to George King also noting that he was meeting with Berkeley and Penny King the next day and providing valuation documents. The workings for the valuation prepared by Mr Benecke included a value for Berkeley King's Somers shares ($3,577,500) and a notional half interest in Brumby Run shares ($1,213,700). Mr Benecke concluded that, including Kristin and Katie's shares, the total minority holding was valued at $6,391,348.

Mr Benecke also informed George King around this time that he had advised Berkeley King not to sign transfers for his Somers shares. Mr Benecke's evidence also discloses that a transfer of those shares was being discussed at this time. The conversation deposed to by George King evidently occurred on 13 August 2007, after he had both written his first letter of that day and received Mr Benecke's email relating to valuation. This seems so because on 13 August 2007 George King wrote a further letter to Mr Benecke making reference to the valuation and asking him to make some adjustments in relation to it. He concluded by asking Mr Benecke:

"Can you please explain to me why you told me that it was right and proper for Berkeley to transfer the 15 Somers shares he had promised to me, organized the transfer papers for him to sign and then advised him not to sign them?"

On 14 August 2007, Mr Benecke emailed George King a revised statement of equity held by his father and stated:

"As mentioned to you, I am legally obliged to indicate the currently recorded (with ASIC and in the books and records of the company) holding which your father has in Somers ... (15 shares out of 45 - an effective 1/3rd equity; or an effective 1/2 equity allowing for the extinguishment of the [Patricia] shares; but I will explain the promise/undertaking/gifting position in relation to those shares and the reason why these should not be taken into account in the overall scheme of things."

On 14 August 2007, as shown by a tax invoice subsequently issued by Mr Benecke's firm, he attended on Berkeley King to take instructions and advise him in relation to his ultimate testamentary intentions and current will provisions. Two days later Mr Benecke provided a letter to George King with another revised valuation. This stated that Berkeley King's equity position was calculated "excluding any interest in Somers ... although legally present in his name" and valued it at $2,650,427. The workings of that valuation included a notional value of $879,800 for Brumby Run shares. Despite purporting to exclude Berkeley King's Somers shares, on the last page it contained a valuation that included them, producing figures of $6,276,688 (excluding Kristin's and Katie's interests) and $6,540,627 (including those interests).

Mr Benecke also provided a copy of that valuation to Berkeley King on the same day.

On 7 September 2007, Berkeley King prepared a position paper for a family mediation that recounted a history of events. Among other things, the paper referred to the valuation of 16 August 2007 prepared by Mr Benecke and Berkeley King's calculation as to what he said should be paid for the Minority Shares. The paper mentioned a figure of $3,004,190 and also stated, "again using the same valuations, the 15 ord shares in Somers have a value of $4,314,457". Berkeley King concluded the position paper with a statement that "as of now Berkeley owns just over 50% of the group, George owns under 50% of the group".

These last statements were a marked departure from the position that had been common ground in 2006, when it was accepted that George King was the majority owner and/or controller of the companies in the group. Around this time, Mr Benecke provided advice to Berkeley King regarding his position, as evidenced by the following narrative entry in Garland Hawthorn Brahe's tax invoice for the period:

"...telephone discussion with you on 10 [September] concerning... details of the Somers Investments Pty Limited classes of shares and values to be ascribed to voting shares, further discussion with you on 10 September with regard to proposed meeting, receiving from you summary position, statement of historical position...discussion with you in relation to same, preparing a draft Statement of Ownership of WBS King indicating nett equity in WPC, Somers, Esk Pty Ltd and reconciliation of that position with the GBK view/position."

On 16 October 2007, there was a family mediation at Mr Benecke's offices, with Lyn Sykes of the New South Wales Farmers' Association. Mr Benecke attended the mediation and said he was very privileged to be included in the meeting, having dealt with three generations on both sides of the family. He also confirmed that George and Berkeley King had agreed in 1999 that Berkeley King's Somers shares were not transferred to his son because transfers would attract onerous stamp duty.

A report on the mediation prepared by the New South Wales Farmers' Association records that there were discussions at the mediation as to the value of the shares to be acquired by George King. The table that was tendered lists the value of the Minority Shares "after promise" (that is, after Berkeley King's Somers shares excluded as belonging to George King) as being $2,388,225. This figure is obviously derived from Mr Benecke's valuation of 14 August 2007. Mr Benecke accepted in his evidence that the figure used in the mediation was very close to that which he had advised. Mr Benecke's valuation also included the value of $879,800 for the Brumby Run shares. The table recorded that Katie and Kristen would each be receiving $885,000 from their father's "other assets" (which was "the residual estate of Weander") and was going to them in addition to whatever George King paid for the Minority Shares.

It can be seen from the mediation report that notwithstanding these figures, Berkeley and Penny King and their daughters were looking for George King to pay $3.5M for the Minority Shares. This was some $1.2M above Mr Benecke's valuation for those shares "with the promise" and some $2M above that valuation figure once the Brumby Run shares were excluded.

George King made no offer at the mediation. His evidence is that his parents and sisters agreed amongst themselves that he was to go away and investigate whether Whitney could afford to pay them $3.5M. This was what the other family members collectively proposed they would accept. George King says he did not respond to that request and did not make any such investigation.

The issue of Berkeley King's Somers shares was raised at the mediation. He negotiated on the basis that George King needed to pay $3.5M before Berkeley King would act on his promise with respect to those shares. The mediation report refers to "Suggested Action" that it indicated would form the basis for further discussion. Action item 3 referred to the demand for $3.5M and action item 6 to Berkeley King confirming the promise in relation to his Somers shares. George King was asked about this in cross-examination and his evidence was as follows:

"Q. If we go across to page 701 the outcome is set out, correct?

A. 'Suggested actions'?

Q. Yes. 'Coombing Park South be sold' and various other matters are then set out. The figure that is being discussed is 3.5 million, correct?

A. Yes.

Q. And your father at paragraph 6 renews his promise in the will, correct?

A. That was conditional on the first five actions being met.

Q. What I want to suggest to you is he confirmed at this mediation his promise to leave you the shares in the will?

A. Only if those top five things were confirmed and done, implemented.

Q. What I want to suggest to you is there was no threat of the kind that you suggest at 165 to 166 of your affidavit?

A. The threat was there."

The 16 October 2007 mediation was left on the basis that there was to be another meeting/mediation scheduled for 17 December 2007, as referred to in the mediation report. Following the mediation, Berkeley King somewhat ominously told his son, "you don't realise the value of the Somers shares you could lose them". The day after the mediation, Ms Sykes contacted George King and informed him that his mother and Katie King were saying they wanted $4M. On that or the following day, Berkeley King informed George King that his mother and sister were telling Berkeley King that he should be giving his Somers shares to "the girls".

George King's frustration at the situation he was faced with emerges from an email sent to Ms Sykes on 22 October 2007. He was in no doubt about what was agreed in 1999 and what should have been the legitimate subject of negotiation:

"...If Berkeley stood by his agreement of 1999 about transferring his Somers shares to me, including the equity shares the position would now be that I had 85.5% of WPC and Berkeley would have 14.5% as the majority of shares the Aunt held were in Somers Investments. My understanding from the deal in 1999 was crystal clear that that was to be my only inheritance, the unclear part was that I had to buy Berkley's remaining shares at 'fair value'."

The approach taken by Berkeley King at the mediation and afterwards was to bargain for more money from George King by threatening not to honour his promise in relation to his Somers shares. He was assisted in that course by the conduct of Mr Benecke, who provided valuations that included shares that were not the subject of the original agreement, namely the Brumby Run shares, as well as alternative valuations on an assumption that the promise regarding Berkeley King's Somers shares was not honoured.

On 22 October 2007, a matter of six days after the family mediation, Mr Benecke attended on Berkeley King to take instructions from him and to advise him regarding a proposed modification or addition to the terms of Berkeley King's will, in order to provide for a specific trustee bequest in relation to his Somers shares. Two days later Mr Benecke wrote to Berkeley King and stated that following a meeting two days before, he had prepared a draft codicil to his will. Mr Benecke explained that the effect of the new bequest was that Berkeley King's Somers shares were to be held on trust for Penny King until 2027. Mr Benecke also said that he had referred in the codicil to:

Despite having introduced those allegations into their defence, the defendants have not served or tendered any evidence to support them. There is simply no legitimate evidentiary basis to sustain them. George King's first proposition was that the defence should in those circumstances have been withdrawn. As it was not, he made these additional submissions.

The defendants present a false dichotomy. Their submissions only make sense if one begins with the premise that "proper advice" can only have been that George King should or must take the steps allegedly available to him. The dichotomy is a false one because it excludes the possibility that, for example, some less categorical advice about those steps could appropriately have been given.

The defendants have made no attempt to prove why it was incumbent on Cheney & Wilson and/or Mr Kerr to give categorical advice of that kind. Whether the discharge of their obligations to George King required them to give advice of that kind would depend on a number of matters, including what was made known to them. No evidence was led about the obligations of a legal practitioner in the circumstances in which Cheney & Wilson and/or Mr Kerr were retained or briefed, or about why reasonable or competent legal practitioners in their position would have acted differently. The suggestion that a legal practitioner, acting reasonably, ought to have recommended litigation that was likely to be expensive and complex in preference to alternative dispute resolution through mediation ought not be accepted.

The submission that the conduct of Cheney & Wilson and Mr Kerr could have greater causal significance than Mr Benecke's wrongful conduct should be rejected. Cheney & Wilson and Mr Kerr were helping George King with the difficult legal position, which Mr Benecke accepts, that George King had been put into by reason of Mr Benecke's wrongful conduct. Those who put him in that position obviously bear more responsibility than those who allegedly failed to get him out of it.

Conclusions on apportionable claims

George King's submissions on this issue are unanswerable. Mr Benecke's contention that George King's lawyers were somehow at fault fail for a complete want of supporting evidence.

Although there is a degree of intellectual unreality about the assessment of a contribution to harm allegedly caused by another in circumstances where I have found no harm to have been caused, the starting point for such an assertion must be proof based upon evidence. Mr Benecke's contention that George King's lawyers somehow contributed to his loss, proceeds upon the implication or inference of fault arising from an apparent failure by them to advise George King to pursue his rights to enforce his agreement with his father or perhaps even advising him that the settlement was adequate or not advising him that it was disadvantageous. These are all matters about which I could speculate at length, but I have insufficient material to form a view that George King's lawyers were or may have qualified as "persons whose acts or omissions caused, independently of each other or jointly, the damage or loss that is the subject of the claim."

Mr Benecke's submissions in this respect stand unsupported by any credible evidence and the allegations should be rejected.

Credibility of George King and Mr Benecke

George King

Mr Benecke argued that George King's evidence should not be accepted unless it is consistent with the inherent probabilities or corroborated by contemporaneous documents. It should, of course, be rejected in the many instances where it is inconsistent with the contemporaneous documents. Mr Benecke contended that George King was an unsatisfactory witness and that there are many instances where he exaggerated or gave false evidence in an attempt to address weaknesses in his case.

For example, George King's purported "clarification" of his evidence on what he agreed to at the October 2007 mediation was contrary to documents under his own hand and plainly false. It was obviously an attempt to address a weakness in his case (being the fact that he had agreed to investigate making a payment of $3.5M in October 2007) that had only become apparent to him since he swore his first affidavit. Furthermore, there is his evidence that he considered his legal position to be "weak" in December 2008. Mr Benecke contended that such evidence was false. It is falsified by a contemporaneous letter under George King's own hand to his lawyer. Finally, George King's evidence on his financial position in 2008, including that he could not afford to commence proceedings and did not have any assets outside Whitney, was also false. This evidence is said to go to the heart of the issues I have to decide. George King sought to present himself in his affidavits as someone without means when in fact he had substantial means.

Mr Benecke submitted that George King showed himself to be unreliable on the critical issues of whether he was under pressure by reason of his legal position in 2008 or, as a result, entered into what he says was an extraordinarily disadvantageous settlement.

Mr Benecke

George King mounted a long and sustained attack upon Mr Benecke's truthfulness and reliability as a witness. His submissions about the topic were as follows.

George King maintained that the inconsistent and varying nature of Mr Benecke's evidence was apparent from the commencement of his cross-examination, which began on the topic of the negotiations to purchase the Bellamy shares. A review of his cross-examination reveals the constantly fluctuating nature of his evidence on that topic. He was initially steadfastly positive that George King was not his client in relation to the negotiations for the Bellamy shares:

"Q. You were acting for Mr George King in connection with the purchase of the Bellamy shares at least up until the end of 2001, weren't you?

A. Mr Williams, there was at that stage I don't believe there was any purchase. There was an attempt to acquire those shares, and there were negotiations being conducted with the legal firm of Hardings, a Mr Stammel, Scammel and a Mr John Knox, but nothing had been documented, nothing had been agreed, there were just ongoing negotiations about a price.

Q. You were acting for Mr George King in connection with the retainer you have just described?

A. Incorrect.

Q. Who do you say you were acting for in connection with that retainer?

A. Mr Berkeley King.

Q. That's not true, is it?

A. Yes, to the best of my recollection that is true.

Q. It was George King who was seeking your advice in relation to the purchase of the shares from Bellamy, wasn't it?

A. Incorrect.

Q. Are you sure about that?

A. Positive.

Q. It was Mr George King to whom you were proffering advice about that matter, wasn't it?

A. No, I was advising Mr Berkeley King.

Q. It is from Mr George King that you were obtaining instructions in relation to that matter in 1999, 2000 and 2001, wasn't it?

A. Not to my recollection."

Mr Benecke was also adamant that he did not receive instructions individually from George King:

"Q. May we take it from that that from time to time you were also receiving instructions individually from George King?

A. No.

Q. Are you sure about that?

A. To the best of my recollection, that is correct. Receiving instructions from either Berkeley on his own, or George and Berkeley together.

...

Q. I am wanting to suggest to you that there was a time at which it became clear to you that only Mr George King would be the proposed purchaser, that's right isn't it?

A. Incorrect.

Q. Are you sure about that?

A. Except for one occasion.

Q. When was that?

A. When the deal was done George King came to me and said, "I want all of the Bellamy shares. I've done all the hard work. I want them, they're mine."

Q. Mr Benecke, you actually acted for George King in putting offers to Ms Bellamy on his individual behalf in relation to that matter, didn't you?

A. Incorrect.

Q. You deny that?

A. To the best of my recollection any monetary offer came from Berkeley King and was authorised to me.

Q. You are quite sure about that recollection?

A. That is my best recollection."

Mr Benecke continued to deny that George King was his client despite accepting that he had invoiced him for the work. He denied giving advice to George King on the subject matter of taking over as managing director. He maintained the denial despite having personally signed a client file form naming George King as the client. Mr Benecke subsequently changed his evidence and in light of the overwhelming documentation conceded that it was correct that George King was his client:

"HIS HONOUR

Q. But if you take instructions from George, and you give advice to George, it's not a big step to conclude that he was your client, is it?

A. Your Honour, that's quite correct.

WILLIAMS

Q. And upon reflection, when we now look at the client registration format, Tab 16, it is correct to describe George as the client is it not?

A. Yes."

Mr Benecke continued to accept that he acted for George King as at May 2000:

"Q. In May of 2000 you were continuing to act for George in relation to this matter, weren't you?

A. Sorry, are we in May? Yes, the file record indicates that."

However, he then sought to qualify his evidence by asserting that he only acted for George King in his capacity as a company representative:

"Q. You were attending that meeting, I suggest, as George's legal representative to assist him in the negotiations with Mr Knox, weren't you?

A. The caption would seem to suggest I was there on behalf of the Whitney Pastoral Company Group.

Q. You agreed, didn't you, that your client was Mr George King in relation to this transaction?

A. On behalf of the Whitney Pastoral Company Group."

During the following day (day 5 of the hearing) Mr Benecke continued to maintain that his actual client was the company, not George King:

"Q. You and your firm continued to act on George King's instructions in relation to the dispute with Ms Bellamy up until 2006, didn't you?

A. Correct. I did that for George King in his capacity as a managing director of Whitney Pastoral Co."

That position appeared to change in the course of the following exchange:

"Q. I understood you to say that you had instructions at least from George King either or both in his capacity as managing director of WPC or, alternatively, on behalf of WPC. Is that right?

A. That's correct.

Q. If you had instructions from him to acquire a shareholding interest that would have given him control of WPC, that would hardly be capable of being described as instructions either on behalf of the company or in his capacity as managing director of the company, wouldn't it?

A. Correct."

Despite the apparent logic in the proposition that had been put to him, Mr Benecke soon abandoned his concurrence with it:

"Q. You will see it is dated 10 July 2000 and it involves you sending a memorandum of fees addressed to George King in respect of the Bellamy proposed purchase?

A. I agree with that. In respect of the Bellamy and the Whitney Pastoral Group of companies. I agree.

Q. But once again an indication that you considered George King to be your clients, I suggest?

A. The managing director of the Whitney Pastoral Co.

Q. Is that a yes?

A. Yes.

HIS HONOUR

Q. I'm sorry, was he your client or was he the representative of the company?

A. He was the representative of the company.

...

[WILLIAMS]

Q. You were acting for George personally, weren't you? Isn't that why you opened the file in his name?

A. No."

However, Mr Benecke later changed his evidence again, accepting that he was advising George King:

"Q. So far as the first item under heading WPC is concerned, you will see that refers to the shares purchased from Patricia Bellamy; correct 1(a)?

A. Yeah, I see that.

Q. Those are matters in respect of which you have agreed you took instructions directly from George?

A. George had asked me on behalf of WPC for some advice in relation to a selective buy back of shares.

Q. We went through this at length the other day and I took you to the documents on your file that showed that George himself was personally asking you for advice about the matter; do you remember?

A. Correct.

Q. You agree that you were acting on his behalf, don't you?

A. Advising George, yes."

Far from giving the candid evidence that might be expected of a solicitor, Mr Benecke's evidence as to the identity of his client varied as it suited him depending on the questions being asked.

During the course of cross-examination, Mr Benecke also repeatedly denied or disagreed with the evidence in his own affidavit when it was put to him.

Mr Benecke's evidence as to the scope of his retainer to give advice to George King in relation to the Peter Transaction also fluctuated significantly:

"Q. You accept, don't you, that you were retained by George to provide him with advice as to how to best protect his position in relation to his Uncle Peter's transfer of the interest in the family company or trust to him?

A. No.

...

"Q. Yes, but you understood that to be a request for advice from you as to how he could best protect his position to achieve the transfer of effective control of his uncle's shares to him, that's right isn't it?

A. No."

...

"Q. Were you intending to suggest by paragraph 12.3 of your defence that you were not retained to give any advice in relation to that transaction?

A. No, not intending it at all.

...

Q. You expected as a competent solicitor, didn't you, that when being retained in the fashion you have suggested in 12.3 that it would be incumbent upon you to advise the client about the manner in which that agreement was to be given legal effect?

A. I agree.

Q. Including the wisdom or otherwise of giving it legal effect through particular types of legal transactions?

A. Correct.

...

Q. You understood your duty at all times throughout the Peter transaction was to give George advice as to the various ways in which the intention could be achieved and the advantages and disadvantages of those methods, didn't you?

A. If requested, yes.

Q. You understood him to be requesting that of you, at least implicitly, didn't you?

A. Yes, I did."

Mr Benecke initially refused to accept that he owed a duty to advise George King in respect of the Peter Transaction. He subsequently accepted that he owed that duty but refused to admit that he had breached it:

"Q. You considered it part of your duty at the time, didn't you, to give appropriate advice to your client as to the manner in which the transaction should be effected?

A. No.

Q. No?

A. No.

...

Q. I want to suggest to you that it was part of your duty at the time and even in the circumstances that you describe to give him advice as to whether that was a prudent or imprudent course. Would you agree?

A. Correct.

Q. Did you give him advice as to whether it was a prudent or imprudent course?

A. No.

...

Q. Don't you agree that in those circumstances you had a duty to give advice as to the advantages and disadvantages of structuring that transaction in the various possible ways?

A. Yes.

Q. And you told me, didn't you, that you gave no advice of that nature?

A. To Mr George King?

Q. Yes?

A. In relation to the, his proposal that was shares be transferred to Weander?

HIS HONOUR

Q. No. As to the advantages or disadvantages in structuring the transaction in the way that it ultimately was?

A. Correct.

WILLIAMS

Q. You accept therefore, don't you, that you breached your duty in that regard?

A. If there was a duty to advise him of options, if I was asked to advise on alternative options yes, I didn't do that.

Q. Do you have any difficulty accepting that you breached your duty in relation to that lack of advice?

A. Yes, I guess I do.

...

Q. If you had appreciated a disadvantage do you think it would have been your duty to tell him about it?

A. Yes, I do.

Q. And you now know that there was a disadvantage in carrying out the transaction in that way, don't you?

A. I do.

...

Q. Would you accept that you failed in your duty in failing to advise him as to the advantages and disadvantages of structuring the transaction in the various possible ways?

A. No.

...

Q. But you would accept, wouldn't you, that a responsible solicitor taking on those instructions would want to ensure that the client knew the advantages and disadvantages of implementing the transaction in that way?

A. I accept that, Mr Williams.

Q. You accept you did not in fact give advice about the advantages and disadvantages of implementing the transactions in the way you said?

A. I accept that.

Q. And to that extent you breached your duty?

A. To the extent a duty exists in those circumstances, yes.

Q. But you accept a duty did exist on you in those circumstances, don't you?

A. No, I don't."

Mr Benecke attempted to justify having acted for Berkeley King in December 2007 on the basis that it was two days before Christmas and Berkeley could not readily find alternative representation. The contemporaneous documents show that this was factually false:

"Q. You see that is a copy of a letter written by you on Berkeley's behalf?

A. Correct.

Q. Not written two days before Christmas?

A. Correct.

Q. And you will see that you make reference to the emails of last Wednesday, the 12th. Do you see that?

A. Yes, I see that.

Q. There was no emergency situation that required you to continue to act for Berkeley at this time, was there?

A. If Christmas was on the Monday, that probably would have been two days before Christmas. I don't know which day Christmas was on.

Q. You got the documents on Wednesday, the 12th?

A. Yes."

Mr Benecke attempted to justify the use of George King's confidential information on the suggested basis that his father was a director and shareholder of Weander/Deerslayer and somehow had a legitimate entitlement or interest:

"Q. And you shared privileged information from those files with your other client, Berkeley, didn't you?

A. Yes, I did.

Q. And you knew that was wrong to do that, didn't you?

A. Berkeley King was a director and a shareholder in a trustee company previously called Deerslayer, now called I'm sorry, previously called Weander, now called Deerslayer, and I think it was probably important for him to be aware of things that were being done to that company and it changed the complexion of ownership and it was misreporting of the ownership of shares."

That answer was factually false:

"Q. You see by this stage, that is December 2007, Berkeley was neither a director nor a shareholder of Weander, was he?

A. That I can't recall. I can't recall.

Q. Really, Mr Benecke?

A. I cannot recall."

The answer was also a disingenuous explanation of Mr Benecke's conduct. The true position was that Mr Benecke had not even turned his mind to whether he had a legitimate basis to use the confidential information:

"Q. Did you actually turn your mind to whether what you were doing was proper in December 2007, that is, using documents on George's file against him?

A. Probably not."

Mr Benecke approved the content of Garland Hawthorn Brahe's letter dated 1 February 2008, yet that letter contained numerous statements that Mr Benecke gave evidence he knew to be false. He then failed candidly to accept the falsity of particular aspects of the letter, culminating in the following exchange:

"Q. If you go back to page 982, halfway down after item 6, 'We certainly do not agree that the action by Berkeley in removing the trustee of the trust is in conflict with any advice we have given to George or any action we may have taken on George's behalf.' You would regard that as a false statement, wouldn't you?

A. I'm not sure that I would.

HIS HONOUR

Q. Why not?

A. Your Honour, if the appointor exercises the power of a replacement of a trustee and the trustee does nothing to vest the trust, crystallise any entitlements, then, really, George's position has not been affected at all.

Q. This is the real world, isn't it, Mr Benecke? If someone has a gun and it is loaded and it is pointed at you, it may not be worrying because you rather suspect that they won't squeeze the trigger but the potential is always there?

A. Correct.

Q. In a commercial setting, such as this, the fundamental and underpinning benefit of the transaction was dependent upon the issue about the appointment of the trust. We have gone over this many, many times?

A. Sure.

Q. I want to make it clear, whatever decision anyone comes to in this case, I think everyone would appreciate it would have to be made upon the basis of a commonsense understanding of commercial transactions, not a penny pinching, niggardly assessment of the particular words that might have been used, on the assumption that the benefit of who could appoint or remove the trustee was insignificant?

A. I understand that."

Mr Benecke steadfastly denied having a continued involvement after 1 February 2008. However, it is clear that he continued to be directly involved. He continued to communicate with Miller, drafted a letter dated 11 February 2008 and communicated with Berkeley King in relation to the assault.

George King contended that this review of Mr Benecke's evidence demonstrated clearly that he was not a reliable or candid witness. To the extent his evidence was in conflict with George King, George King's evidence should be preferred.

Conclusions on credit

In my view there is little, if anything, that can be said in answer to George King's submissions concerning Mr Benecke's credit as a witness. I have concluded that Mr Benecke owed duties of the type and with the content alleged by George King and that he breached those duties in the way George King claims. A significant persuasive influence in coming to those conclusions was the exposure of reasonable and obvious propositions put to Mr Benecke during his cross-examination with which he was unable easily to deal. Whether this amounts to dishonesty or confusion is neither easy to determine nor particularly relevant. Either conclusion leads me to discard Mr Benecke's evidence on the questions of whether or not he was acting for George King at any particular time with respect to particular matters, and upon whether he fell short of his obligations as George King's solicitor to act in accordance with acceptable professional standards. The uncontested opinions of Mr Boyce serve only to shore up my views that Mr Benecke was consistently trying to avoid the unavoidable and to deny the undeniable.

In the scheme of this case and in the light of the conclusions I have reached, Mr Benecke's credit is less significant than might at first sight appear. This is for a number of reasons. First, although he did not concede the existence or breach of the alleged duty or retainer, Mr Benecke's case on these issues was to my observation and to some extent conducted with at least some degree of resignation about the outcome. Counter intuitively, Mr Benecke's evidence reviewed above suggests that he may have been less inclined to recognise the strength of George King's case on breach and duty than those representing him. In any event, in general, my decision on these issues does not come down only or exclusively to a choice between whether or not Mr Benecke should be believed over George King or vice versa.

Secondly, it is not necessary to compare Mr Benecke's evidence with George King's evidence on the critical issue of whether or not Mr Benecke's breaches caused George King to suffer loss. The existence of the pressure that George King says Mr Benecke created, or its influence upon the decisions taken by George King, are not matters to which Mr Benecke's testimony was, or could have been, legitimately directed. Indeed, in many respects George King would wish to embrace Mr Benecke's evidence about the events leading up to the settlement, such as Mr Benecke's curiously candid concession that he in effect conspired with Berkeley King to squeeze as much out of George King as they could. George King raises no criticism of Mr Benecke's evidence on such matters and a contest between them based on their credibility does not arise.

The issue and importance of George King's credit is more significant. I have not accepted that he paid more in the 5 December 2008 settlement than he otherwise would because of the position in which Mr Benecke's defaults are said to have placed him. Assessment of that question does not stand or fall only by reference to George King's evidence about it. In analysing his decision to settle for $3.55M, Mr Benecke has emphasised and I have considered the circumstances at play at the relevant times revealed by documents that were brought into existence before this litigation began. These documents have a powerful and persuasive effect.

For example, as has been discussed, George King appears in his own writing to agree to examine the viability of a the equivalent of a $3.5M settlement sum as "a basis for further discussion" at a time when the consequences of Mr Benecke's defaults were arguably yet to emerge. No issue of his father's will had arisen to influence him at this time and the power of appointment controversy was also not yet in bloom. My rejection of George King's evidence that the pressure was affecting him at this time can therefore be seen to be a combination of a rejection of what he said in evidence and a preference for the force of contemporaneous documents written by him. I find that George King did attempt to backdate the emergence of the relevant pressure to a time before he wrote summarising what occurred at the family meeting.

I have also been influenced in my assessment of George King as a witness by my impression of him throughout the course of the historical events that both precede and give rise to this litigation. As uncharitable as it may sound, I formed the view that George King was a man who was incapable of waiting for his parents to die before receiving his inheritance. His expressions of concern for his own security if he returned to Coombing Park were no more or less in my estimation than a desire to wrest control of the property and the business from everyone else in the family as soon as possible. He showed himself in this respect to be as ruthless in his determination to convince his father that the salvation of Coombing Park as a family owned business depended upon meeting his terms of staying or returning to run it, as he was when finally negotiating, on his case from a position of intolerable and debilitating weakness, without making a single offer in response to his family's ever reducing demands.

That ruthlessness and impatience is also evident in the arrogant disregard George King showed when dealing with Whitney's money for his own independent business purposes and purporting to alter the true nature of the BSKT share holding without any right to do so. George King did not give me the impression of a person who would do what he did not want to do, by reason of pressure or otherwise, if he were not entirely comfortable that it was in his best interests to do so. I remain disquieted by the fact that the position he says he was in is completely unreflected in a single document that I have seen contemporaneously complaining of his predicament. Paramount in all of this is the total absence of any reference to a complaint at or during the 5 December 2008 mediation that he was in an invidious or hopeless position of undue influence because of Mr Benecke's negligence.

In short, I cannot accept what George King says were the things that influenced him to settle with his family as he did, and I am not otherwise satisfied there is any extraneous independent material that supports him.

Orders

In the circumstances I consider that the following orders should be made:

1. Verdict for the defendants.

2. Unless within 14 days I receive notice given to my Associate that either party wishes to contend for a different order, I will order that the plaintiff pay the defendants' costs.

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Amendments

13 February 2014 - delete $2.4M and substitute $1.4M

Amended paragraphs: 702

Decision last updated: 13 February 2014

Medium Neutral Citation:	King v Benecke [2013] NSWSC 568
Hearing dates:	6-10, 29 and 31 August, 13 December 2012
Decision date:	23 August 2013
Before:	Harrison J
Decision:	1. Verdict for the defendants. 2. Unless within 14 days I receive notice given to my Associate that either party wishes to contend for a different order, I will order that the plaintiff pay the defendants' costs.
Catchwords:	PROFESSIONAL NEGLIGENCE - plaintiff sues former solicitor - where plaintiff sought effective ownership and control of family farming and grazing business - where business shares were to be acquired by plaintiff from family members - whether solicitor was retained by plaintiff - where solicitor denied existence of retainer - no formal retainer - whether retainer implied by conduct of parties - where professional relationship between solicitor and plaintiff's family spanned generations - retainer existed - whether breach of retainer or duty of care - where solicitor advised parties on both sides of transaction - conflict of interest - where misuse of confidential information - where failure to advise client properly - breach of duty and retainer - causation - whether breaches disadvantaged plaintiff's negotiating position at mediation - whether breaches influenced final settlement sum offered - where plaintiff influenced by own conduct independent of defendant
Legislation Cited:	Civil Liability Act 2002 Corporations Act 2000
Cases Cited:	ACN 070 037 579 Pty Ltd v Larvik Pty Ltd [2008] QCA 416 Adeels Palace Pty Ltd v Moubarak (2009) 239 CLR 420 Astley v Austrust Limited [1999] HCA 6; (1999) 197 CLR 1 Colyer Fehr Tallow Pty Ltd v KNZ Australia Pty Ltd [2011] NSWSC 457 County Securities Pty Ltd v Challenger Group Holdings Pty Ltd [2008] NSWCA 193 Dominic v Riz [2009] NSWCA 216 Ermogeneous v Greek Orthodox Community of SA Inc [2002] HCA 8; (2002) 209 CLR 95 Gates v City Mutual Life Assurance Society Ltd [1986] HCA 3; (1986) 160 CLR 1 Hendricks v McGeoch [2008] NSWCA 53 Johnson v Perez [1988] HCA 64; (1988) 166 CLR 351 Malec v J C Hutton Pty Ltd [1990] HCA 20; (1990) 169 CLR 638 McCrohon v Harith [2010] NSWCA 67 Monaghan Surveyors Pty Ltd v Stratford Glen-Avon Pty Ltd [2012] NSWCA 94 Pegrum v Fatharly (1996) 14 WAR 92 Poseidon Ltd & Sellars v Adelaide Petroleum NL [1994] HCA 4; (1994) 179 CLR 332 Simmons v Story [2001] VSCA 187 State of New South Wales v Mikhael [2012] NSWCA 338 Steele v Marshan [2012] NSWCA 141 Strong v Woolworths Ltd [2012] HCA 5; (2012) 246 CLR 182 Todorovic v Waller [1981] HCA 72; (1981) 150 CLR 402 Watson v Foxman (1995) 49 NSWLR 315
Category:	Principal judgment
Parties:	George Berkeley Ewart King (Plaintiff) Ian John Benecke (Defendant)
Representation:	Counsel: D L Williams SC with T J Breakspear and M F Newton (Plaintiff) I Pike SC with J J Hutton (Defendant) Solicitors: Thompson Eslick Solicitors (Plaintiff) Yeldham Price O'Brien Lusk (Defendant)
File Number(s):	2009/297857