Major v Wakeling

[2000] NSWCA 370

Reported Decision: [2001] Aust Torts Reports 81-596

New South Wales

Court of Appeal

CITATION:	Major v Wakeling [2000] NSWCA 370
FILE NUMBER(S):	CA 40147/99
HEARING DATE(S):	2 August 2000
JUDGMENT DATE:	20 December 2000
PARTIES :	Barbara Major v Donald Wakeling
JUDGMENT OF:	Priestley JA at 1; Giles JA at 114; Fitzgerald JA at 115

LOWER COURT JURISDICTION :	District Court
LOWER COURT FILE NUMBER(S) :	DC 5501/97
LOWER COURT JUDICIAL OFFICER :	Her Honour Judge English

COUNSEL:	Appellant - T.G.R. Parker Respondent - L. McCallum, P.M. Sibtain
SOLICITORS:	Appellant - Michie, Shehadie & Co Respondent - Mallesons Stephen Jaques
CATCHWORDS:	Professional negligence - plaintiff claims solicitor was acting for her and failed to advise her of risks of granting a guarantee & mortgage in connection with a transaction in which solicitor had a personal interest
CASES CITED:	Abalos v Australian Postal Commission (1990) 171 CLR 167 Beach Petroleum NL v Kennedy (1999) 48 NSWLR 1 Brickenden v London Loan & Savings Co [1934] 3 DLR 465 de Vries v Australian National Railways Commission (1993) 177 CLR 472 Kiama Constructions Pty Ltd v Davey (1996) 40 NSWLR 639 O'Halloran v R.T. Thomas & Family Pty Ltd (1998) 45 NSWLR 262 State Rail Authority (NSW) v Earthline Constructions Pty Ltd (in Liquidation) (1999) 73 ALJR 306
DECISION:	Appeal allowed - see par113

THE SUPREME COURT

OF NEW SOUTH WALES

COURT OF APPEAL

CA 40147/99
DC 5501/97

PRIESTLEY JA
GILES JA
FITZGERALD JA

Wednesday, 20 December 2000

MAJOR v WAKELING

PROFESSIONAL NEGLIGENCE - plaintiff claims solicitor was acting for her and failed to advise her of risks of granting a guarantee and mortgage in connection with a transaction in which solicitor had a personal interest - principal issues at trial concerned relationship between solicitor and plaintiff, and solicitor’s assertion that he was not acting for plaintiff and told her so - trial judge accepted solicitor’s claim - contemporary documents, surrounding circumstances and probabilities all heavily against solicitor’s version - inconsistent factual findings by trial judge.

Held : trial judge’s findings set aside, different findings substituted, and judgment entered for plaintiff.


ORDERS

1. Appeal allowed.
2. Judgment below set aside.
3. Judgment to be entered for the appellant/plaintiff.
4. The amount of the judgment to be calculated in accordance with paragraphs 24, 25 and 26 of the appellant’s written submissions, set out in par 110 of the reasons of Priestley JA.
5. Orders 1, 2 and 3 are to operate from the date of delivery of these reasons.
6. Order 4 is to become operative one month after the date of delivery of these reasons, unless within that month submissions are filed on behalf of respondent contending that a different sum of damages should be awarded and giving reasons for that contention, in which case order 4 is not to become operative until further order of the court. If such submissions are filed on behalf of respondent, then any submissions to be filed in reply on behalf of appellant are to be filed within fourteen days after one month from the date of delivery of these reasons.
7. Any submissions for appellant on the question of what costs orders should be made are to be made in writing and filed within one month from the date of delivery of these reasons, together with a draft minute of formal orders to be made pursuant to these reasons. Any submissions in reply concerning costs to be made for respondent are likewise to be made in writing and filed within fourteen days after one month from the date of delivery of these reasons.

THE SUPREME COURT

OF NEW SOUTH WALES

COURT OF APPEAL

CA 40147/99
DC 5501/97

PRIESTLEY JA
GILES JA
FITZGERALD JA

Wednesday, 20 December 2000

MAJOR v WAKELING

1    PRIESTLEY JA:

Introduction
This appeal concerns a claim for damages made by the late Mrs Barbara Major against Mr Wakeling, a solicitor. The claim was commenced in 1992. It was heard by English DCJ in October 1998 and dismissed by her in February 1999.

Mrs Major’s claim was based on Mr Wakeling’s alleged conduct towards her Paragraph 7, Statement of Claim, Red Appeal Book (RAB) 3.
at the time when, in June 1989, she joined with her husband in guaranteeing a debt of Max Studios Pty Limited (Max). The guarantee was secured by a mortgage of a house jointly owned by Mr and Mrs Major. Mrs Major claimed that in the circumstances of their relationship Mr Wakeling owed her a duty to exercise all due care on her behalf and that in breach of that duty, Mr Wakeling negligently failed to advise her about the potential risks of entering the guarantee and granting the mortgage with the result that she suffered damage in the order of $218,000 upon which interest of about $206,000 was claimed to have accumulated by the date of trial (October 1998). She also claimed that on the same facts she had further causes of action: breach of retainer; breach of fiduciary duty; and breach of s 42 of the Fair Trading Act.

2    The conduct of Mr Wakeling on which Mrs Major based her claims was alleged to have taken place in mid 1989. The extent of her loss was crystallised in December 1990. She began proceedings in the Supreme Court of New South Wales against Mr Wakeling in January 1992. She died in July 1994. At some point, the proceedings were transferred to the District Court. There, an order was made on 20 March 1998 substituting Blaize Major, the daughter of Mrs Major, as plaintiff in her mother’s case, to carry on the proceedings. For the sake of simplicity I will refer to plaintiff and appellant as Mrs Major as if she were still alive. The title of the proceedings in this court was not in order when the hearing of the appeal began. An order was made permitting the formal rectification. That order should be complied with, if it has not yet been. 3    In her reasons for decision, English DCJ made three central findings. The first was that Mr Wakeling had not at any stage assumed responsibility to Mrs Major for giving her legal advice in respect of the guarantee and mortgage transactions. The second was the trial judge’s acceptance that Mr Wakeling honestly believed he was not acting for Mrs Major. The third was that Mrs Major’s loss was in any event not caused by Mr Wakeling; she did what she did in reliance on her husband and not because of any act or omission by Mr Wakeling. These findings led her Honour to hold that the case against Mr Wakeling had to be dismissed. 4    The plaintiff appealed. The first step in her appeal was to seek to persuade the court either to change the first two of the trial judge’s three central findings or to understand them in a different way from that adopted by the trial judge. Should the plaintiff have any success in this then the plaintiff would also need to persuade this court to change the causation finding, in her favour. 5    To deal with the arguments about these findings, it is necessary to consider the history of Mr Wakeling’s involvement with Mr and Mrs Major and his connection with the transactions of which the guarantee transaction formed part. I will first set out in chronological order the facts about which there is no controversy. 6    Facts not in dispute

In 1989, Mr and Mrs Major, who had separated in 1982, owned a house at North Sydney as joint tenants, in which Mr Major was living. Mrs Major had been born in about 1936 in Ireland. She had the degree of Bachelor of Arts from London. She had worked for the ABC as a designer and in 1989 was head of Human Resources there. Mr Major, who was born in 1939, was a production designer in the film and television industry. In 1989 Mr Major held a quarter of the shares in Max and was a director of it.

7    Max occupied several studios in Sydney which it hired out to film and television companies. It made sets and scenery, hired out costumes and production aids, and did production work for television stations and film producers. By 1989, Mr D. Cain had interested Max in a cinematic technique called Intravision to which Mr Cain apparently held certain rights. Max was in the course of preparing to float as a public company to finance the development of Intravision in conjunction with Mr Cain. 8    Mr Wakeling was at the time a partner in the firm Wakeling and Nowacki. He had acted for Mr Cain in the early 1980s and when Mr Cain became associated with Max, Mr Wakeling became Max’s solicitor for various purposes.

9    In February 1989, Mr and Mrs Major decided to put their North Sydney house up for sale by auction. Mr Major had got to know Mr Wakeling at Max’s premises, told him what he and his wife wanted to do, and asked him to prepare the auction contract. Mr Wakeling got the necessary details from Mr Major and prepared the contract. Mr Wakeling did not meet Mrs Major, but said in his evidence in chief that he acted for Mr and Mrs Major in doing this.
Combined Appeal Book (CAB) 55, J. Mr Wakeling

went to the auction, held in late February 1989. The property was passed in at $820,000. Mrs Major’s opinion was that it was worth $900,000. It was subject to a mortgage to the Commonwealth Bank securing a loan and an overdraft account. The amounts owing totalled about $200,000. 10    Early in 1989 Max had become interested in buying premises at Alexandria which it was occupying as lessee. The owner and lessor was Goodman Hardie Investments Pty Ltd (Goodman). On 22 May 1989 Mr Wakeling wrote to Messrs Remedios and Martin the firm of solicitors acting for Goodman. Mr Wakeling said that he acted for Max and that an option to purchase the Alexandria property had been discussed between Max and Goodman. Remedios Martin responded by letter of the same date submitting a draft option agreement. Some minor drafting changes were agreed to within a few days. At the time, Max owed Goodman considerable outstanding rent. The principal terms of the proposed option were that the option fee was to be $280,000, which would be forfeited if the purchase did not proceed; Max was to pay $30,000 of the $280,000 to Goodman upon the signing of the option agreement; the balance of $250,000 was to be paid on 15 June 1989; a condition of the transaction going forward was that all arrears of rent be paid; the option was to be exercisable between 1 July 1989 and 15 July 1989; the sale price for the land was to be $2,800,000 and completion was to take place on 31 July 1989. 11    The directors of Max at this time were Messrs Budrys, Allen and Major, although Mr Cain, who was called a consultant, was taking a principal part in the management of the company. 12    Mr Budrys and Mr Cain proposed to Mr Major that Max would borrow the option fee from Asset Backed Securities Limited (ABS) by a transaction in which the Majors’ North Sydney house would be used as mortgage security, Max would borrow $480,000 from ABS, $200,000 of this would be used to pay off the Majors’ mortgagee, and $280,000 would be used to pay the option fee. It seems from parts of Mr Wakeling’s evidence, although it was never brought out clearly, that ABS would subsequently also provide the balance of the purchase money, on the security of the purchased premises. 13    When Mr Major raised with his wife the matter of their providing security for Max’s borrowing of $280,000, she wanted to be reassured that her interest in the North Sydney house would not be at risk. The evidence is not clear how Mr Major communicated this to Max or Mr Wakeling, but that he passed on some such stipulation as a condition of agreement to the guarantee and mortgage request is a necessary inference from what happened later. 14    By letter dated 6 June 1989 Dunhill Morgan, Solicitors, wrote to Mr Wakeling saying they acted for ABS in connection with a proposed mortgage loan to Max over the North Sydney house. The letter set out the new mortgagee’s terms for making the loan to Max. The form of the letter indicates that at that stage Dunhill Morgan were under the impression that Max owned the property proposed to be mortgaged. 15    A valuation was obtained bearing date 7 June 1989 which valued the North Sydney house at $800,000. 16    By letter dated 7 June 1989 Mr Wakeling wrote to Dunhill Morgan confirming that he acted for Max in respect of the advance from ABS of $480,000 on the security of the North Sydney house. He advised that the registered proprietors of the property were Mr and Mrs Major, and gave further details necessary for Dunhill Morgan’s purposes. 17    By letter dated 7 June 1989 to the manager of the Commonwealth Bank at Rosebery Mr Wakeling said:

“ re : mr and mrs r. major
discharge of mortgage
prop : margaret street, north sydney
I confirm that I act for Mr and Mrs Major in respect of their Mortgage on the above property and I note that there is a savings bank loan of approximately $150,000 and a trading bank overdraft of approximately $50,000.
Would you please make the arrangements for settlement of the discharge to be effected as a matter of urgency. ”

18    By letter dated 9 June 1989 Dunhill Morgan wrote to Mr Wakeling, referring to the North Sydney property, enclosing documents relevant to the forthcoming loan including a deed of guarantee and a mortgage as well as requisitions on title. The letter of requisitions was addressed to “David William Ross Major and Barbury (sic) Major, c/- Wakeling and Nowacki Solicitors”. While the covering letter named ASB as the prospective mortgagee lender, the requisition letter named the company making the advance as Permanent Custodians Limited. The requisitions, which ran over eight pages, occupied the lefthand side of each page under the heading “Requisitions on title” leaving space for them to be answered on the righthand side of the page under the heading “Replies”. 19    On a date which is not clear, but which must have been between 9 and 16 June, Mr Wakeling typed, or caused to be typed, answers to each of the requisitions under the “Replies” heading on the righthand side of each page. Requisition 9(a) was “Has the owner or to his knowledge any predecessors in title of his been bankrupt or insolvent?”. The typed answer read: “So for (sic) as the mortgagors are concerned, no. The mortgagors cannot speak for their predecessors in title.” Requisition 12(a) was “Who is in possession of the property and under what right?”. The typed reply was: “The mortgagors as registered proprietors”. When the replies had been added to the requisition letter, Mr Wakeling signed his name on the last page next to Dunhill Morgan’s signature, printed his name in capitals beneath his signature, and beneath his printed name printed in his own hand, in capitals “Sol’r for mortgagor”. In the course of the appeal it was agreed that Mr Wakeling answered the requisitions on behalf of both mortgagors. 20    Two documents dated 13 June 1989 were prepared within Max. One was a later and complete version of the other. (This was called in the appeal “the comfort letter” and I will use that description in what follows, although it was often differently described in the evidence and at the trial.) The earlier document was as follows:

“ Mrs Barbara Hillary Major
c/- No 8 Margaret Street
NORTH SYDNEY 2060
re: mortgage of No 8 margaret street.
north sydney

Max Studios Pty Ltd and its Directors, David William Ross Major, Christopher Harold Budrys and Wayne John Allan, do hereby each guarantee to acquire the interest of Barbara Hillary Major on the property being No 8 Margaret Street, North Sydney, by payments to Barbara Hillary Major of the sum of $350,000.00 [three hundred and fifty thousand dollars] on or before the 31st of October, 1989 and each/all the abovenamed agree to cause . The underlining and emphasis have been added.
Max Studios Pty Ltd and its Directors also agree to pay all Legal costs, Stamp Duty and Disbursements in connection with the present mortgaging of the property and subsequent purchase from Barbara Hillary Major.
Dated this 13th day of June, 1989.
The Common Seal of Max Studios Pty Ltd was here to affixed by its Board of Directors in the Presence of ; -
______________________ _____________________
[ secretary] [director]
______________________ _____________________
Christopher Harold Budrys Wayne John Allan
______________________ _____________________
David William Ross Major ”
(The document is typed, with the exception of the underlined words “ and each/all the abovenamed agree to cause ” which are handwritten in the hand of Mr Wakeling.)

21    The other document (the comfort letter) is all typed, bears the same date as the one in the previous paragraph and is in the same terms, except that the handwritten words are now typed, in slightly different form and somewhat expanded, to read “and each/all the above named undertake to cause to be granted a second mortgage over 19/25 Birmingham Street, Alexandria in favour of Barbara Hillary Major”. This document was sealed with Max’s common seal and signed in the appropriate places by Messrs Budrys, Allan and Major. 22    The option agreement was executed between Max and Goodman on 15 June 1989. It contained the terms earlier mentioned, except that the amount of $30,000 to be paid on execution was changed to $27,000, which was paid on that day, and the date for payment of the balance, now $253,000, was changed from 15 June 1989 to 20 June 1989. The $27,000 came from Mr Wakeling. He had arranged for his mother “to lend on a short term basis $27,000 to Max Studios to make that payment”.
Mr Wakeling’s statement, Exhibit 2, par 12, CAB 224. (Elsewhere in his evidence Mr Wakeling described himself as the lender to Max.) To raise this loan Mr Wakeling’s mother gave a mortgage over the home unit in which she and her husband lived. 23    In the evening of the day when the $27,000 was paid to Goodman (that is 15 June 1989, which was a Thursday) Mr Budrys and Mr Wakeling met with Mr and Mrs Major at the North Sydney house. Different versions of what was said at the meeting were given in evidence by Mr Major (by affidavit and orally), Mrs Major (by statement), Mr Wakeling (by statement and orally) and Mr Budrys (by statement and orally). I will return to the issues arising from these different versions later in these reasons, but for the moment record that there is no doubt that at the meeting the comfort letter dated 13 June 1989 was handed to Mrs Major and she and her husband signed a mortgage of their North Sydney house and each signed a guarantee. All these documents (including the draft and the sealed comfort letter) were in evidence at the trial. 24    The mortgage document was headed “Mortgage” above the words “Real Property Act 1900” and in its operative part said that

“ David William Ross Major and Barbara Hillary Major (the abovenamed Mortgagor) hereby acknowledges (sic) receipt of the principal sum of $ in order to secure their obligations to the undermentioned Mortgagee covenants with the undermentioned Mortgagee that the provisions set forth in the Schedule hereto shall be deemed to be incorporated herein, and, for the purpose of securing to the Mortgagee the payment of the moneys hereby secured mortgages to the Mortgagee Permanent Custodians Limited ... as joint tenants/tenants in common all the Mortgagors’ estate and interest in the land above described... ”

A little lower down in the document there are printed the words “Signed in my presence by the mortgagor who is personally known to me” beneath which appears Mr Wakeling’s signature and printed name above his address and his description “Solicitor”. To the right of his attestation appear the signatures of Mr and Mrs Major.

25    Mr and Mrs Major’s guarantees were contained in one document in which five guarantors were named. (The other three were Mr Budrys, Mr Allen and Presmart Pty Limited.) On the last page of the document is printed “Solicitor’s certificate” underneath which is printed: “I certify that I have explained the terms of this guarantee to the guarantors and each of them has advised me that he understands the terms of this guarantee. I am not the solicitor for the Lender.” Beneath this are the signature and full name and address of Mr Wakeling, all in his hand. 26    On the following day (Friday), by letter dated 16 June 1989, Mr Wakeling wrote in answer to Dunhill Morgan’s letter of 9 June 1989, enclosing the guarantee executed and stamped, the survey report, statutory declarations and certificates, and the replies to requisitions on the Dunhill Morgan requisition letter, signed by Mr Wakeling as earlier described. 27    The following Monday, by letter dated 19 June 1989, Mr Wakeling wrote to the firm of surveyors who had done a survey of the North Sydney house in 1984 and asked them, because at the last moment he had discovered the original survey was not available, to endorse a copy as a true copy of their original for purposes of settlement the following day. His letter was headed:

“ Re Mr and Mrs R. Major
Prop: 8 Margaret Street, North Sydney ”

and in the course of explaining the need for urgency, Mr Wakeling said:
“ In these circumstances, my clients are severely prejudiced in trying to effect a refinance of their property which is listed for 12 noon tomorrow, Tuesday, 20 June. ”

28    Settlement took place on Tuesday 20 June 1989. The balance of the $280,000 was paid to Goodman. The $27,000 raised on the security of Mr Wakeling’s mother’s unit and lent to Max was repaid. The Majors’ mortgage to the Commonwealth Bank was discharged. 29    Max was unable to exercise the option. ABS would not lend the balance of purchase money. The $280,000 was lost. Max was not able to acquire Mrs Major’s interest in the North Sydney property. Max went into liquidation in about February 1990. The mortgagee called on Mr and Mrs Major to repay the loan secured by their house. This was sold for $650,000, and Max’s debt to the mortgagee repaid. Mr and Mrs Major never recovered anything from Max or their co-guarantors. 30    Facts in dispute.

Some further background information is useful for understanding the disputed issues in the case. In the course of the evidence it became known that Mr and Mrs Major had complained to the Law Society in 1990 about the handling of their matter by Mr Wakeling and that he had written a memorandum and a letter dealing with that complaint. These documents were in the possession of the plaintiff’s counsel and he cross-examined from them during the trial. The solicitor acting for Mrs Major when her statement of claim was filed on 22 January 1992 was Mr M.J. Shehadie. He made an affidavit, which was read before English DCJ, and upon which he was cross-examined. In this affidavit he described how the statement of Mrs Major, which was annexed to his affidavit, was prepared. He had had a conference of about two hours with her on 13 September 1991. He listed the documents that he had read in preparation for the conference. One of these was a letter dated 14 December 1990 faxed to him by Mrs Major. Another was a nine page document headed “ File note from material on the Max Studios Pty Ltd held by Wakeling and Nowacki as inspected by Kim Monnox on 9 September 1991 ”. Kim Monnox was a solicitor Mr Shehadie employed at that time.

31    Mr Shehadie’s evidence was given on the voir dire, at the stage of the trial when the admission of Mrs Major’s statement into evidence was objected to. When the objection was overruled, it was agreed that Mr Shehadie’s affidavit and oral evidence should be evidence in the trial. 32    Mr Shehadie’s evidence shows that Mrs Major’s statement was carefully prepared. On pp 5-8 of the statement there are listed twenty-eight things which Mrs Major said Mr Wakeling had not done at the meeting of 15 June 1989. In his affidavit Mr Shehadie said that that list came about

“ by my putting a series of questions to the plaintiff and then recording her answers and those questions in the form of direct statement of the plaintiff. Many of the questions that I put to the plaintiff and which led to this series of numbered paragraphs were formulated by me after reading the notes of Kim Monnox referred to above. Others were questions that I had formulated in my mind as being of relevance generally to a third party guarantor situation. ”

33    From this it seems clear that at the time when Mrs Major’s statement was prepared, parts at least of Mr Wakeling’s answer to the complaints by her and her husband were known to Mr Shehadie. However, one matter of significance is that there is no reference to the matter of the $27,000 lent through or by Mr Wakeling to Max on 15 June 1989. 34    The important questions for purposes of the present proceedings about which there was a conflict of evidence in connection with the meeting of 15 June 1989 were 1. had documentation been forwarded to Mrs Major before the meeting, 2. did Mrs Major know of Mr Wakeling’s interest in the loan of $27,000 to Max earlier in the day, 3. did Mr Wakeling tell Mrs Major about the $27,000 loan, 4. did Mr Wakeling tell Mrs Major he was not acting for her, 5. did Mr Wakeling tell Mrs Major he understood she had been receiving advice from another solicitor? A further question, to which not much attention was paid at the trial as a separate question from Q1 above, is whether Mrs Major had seen the comfort letter before the meeting. 35    Mrs Major’s evidence. Mrs Major’s letter of 14 December 1990 to Mr Shehadie was as follows:

“ Dear Michael,
I spoke to Ross yesterday and he asked me to jot down a few notes relating to the attached piece of paper

This was the comfort letter. and fax them in to you.

When Ross and the MAX Studio people asked me to agree to raising money against the mortgage of 8 Margaret Street I said that I would agree only if the company would buy my interest. They agreed to this proposal and said that the Co. solicitor would draw up an agreement.
When the papers and the new mortgage proposal papers were ready they arranged a meeting between Chris Budrys, Don Wakeling, Ross and myself at 8 Margaret St after work during the second week in June 1989. (Ross’ friend Andrea was also there.)
We met and the papers were signed (Wayne’s signature was already on the paper).
Don explained that my interests were covered and we all had a drink.
I went overseas in Sept/Oct and when I came back Ross rang to say that the deal was off as the proposed plan to buy the building at Alexandria was off.
Don Wakeling knew that I did not have a solicitor.
If you would like me to come in to talk to you next week I would be glad to.
Regards,
Barbara Major. ”

36    In Mrs Major’s statement she said that before the meeting she had had no contact with Mr Wakeling who had forwarded no documents to her or any person on her behalf. (Neither, she said, had Max.) She said that at the meeting her

husband had introduced her to Mr Wakeling saying “... this is Don Wakeling the company solicitor who has drawn up the piece of paper to protect your interests”. Mr Wakeling then said, “These are the papers we need you to sign and this is the piece of paper that will protect you” and showed her the comfort letter (see pars 17 and 18 above). 37    Her statement then continued:

“ Mr Wakeling said: ‘Ross has told you that we’re trying to buy the building and we need you to agree to using your share of the house as collateral.’
I said: ‘Yes I know that. You’re going to be able to give me something that will guarantee the safety of my share.’
Mr Wakeling said: ‘Yes. We’ve drawn up document (sic) and I’ll go through it.’ Mr Wakeling whilst holding the document headed MAX Studios said: ‘This will protect your interest until MAX Studio buys you out on or before the 31st of October. We’ve arranged for you to have a second mortgage over the Alexandria property and don’t worry about any extra costs because we’ll take care of all the legal costs involved in getting rid of the old loan and taking out the new loan. You don’t need to worry about that. The new loan is for the deposit on the Alexandria property. MAX Studios will guarantee to buy you out on or before the 31st of October.’
I said: ‘Is there any danger about running beyond the 31st of October.’
Mr Wakeling said: No. MAX should be able to tie up the deal before October the 31st but it definitely would not take longer than that. So you can think about buying a house. It would be safe to start looking in the middle of September. If you find something mid-September you would be safe enough making an offer then. It is normally six weeks before you have to hand over the money.’
Then Chris Budrys and Ross Major signed the document headed MAX Studios. There was already a signature for Wayne John Allen.
Mr Wakeling then handed me the original of the document headed MAX Studios. ”

38    The statement then went on to recount what Mr Wakeling said about the other documents, which she then signed. She said she was not given copies of the guarantee agreement or the mortgage. 39    On pages 5-8 of her statement Mrs Major listed the twenty-eight things, compiled in the way Mr Shehadie described, which Mr Wakeling had not said to her. Amongst these, she said that Mr Wakeling did not advise her to go and see a solicitor, ask her if she had a solicitor, tell her that he was not acting on her behalf and, of particular relevance in the circumstances of the present case, did not tell her that she should ensure that Max could comply with the conditions of the contract for sale of land before entering into the guarantee. 40    She also said that she believed Mr Wakeling was acting on her behalf, that he had drawn up the comfort letter for her benefit, that the purpose of the meeting was for Max and the directors to provide her with protection in the event that she allowed Max to use the North Sydney property as security, that she was not aware what protection she needed and that she relied on Mr Wakeling to provide her with the appropriate form of guarantee. 41    Mr Major’s evidence. Mr Major’s affidavit said that he went to the meeting with Mr Budrys and that it started at about 6.30; Mr Wakeling arrived “with a bundle of documents” and Mrs Major arrived about 6.30. He said Mr Wakeling spent about twenty minutes going through documents with his wife and himself; that he showed them the comfort letter “and said that this would protect Barbara’s interest”. He said that Mr Wakeling did not say to Mrs Major that he was not acting for her in the matter or that she should seek independent legal advice. 42    In cross-examination Mr Major was asked whether the mortgage and guarantee had been sent to him before the meeting with Mrs Major. He said he did not recall. He was then asked a series of questions about his understanding of the transaction prior to the meeting (which the cross-examiner consistently referred to as having happened on 20 June rather than 15 June) and his answers showed that he had had a reasonable understanding of the situation. (This was of course subject to one thing, which came out later in his evidence, that he had mistakenly understood Max to be in a very sound financial position. Although no details of the financial position of Max at particular times appear in the evidence, there is no sign of it having had any funds at all from June 1989 onwards. It was apparently waiting on payment by various debtors and hoping to obtain funds by the public flotation, which never happened. As earlier mentioned, Max went into liquidation in about February 1990.) 43    Mr Major was asked whether he knew the source of the $27,000 that had been paid earlier on 15 June upon the signing of the option agreement. He said he did but could not remember whether he might have discussed that with Mrs Major. Asked whether it was a possibility that he had discussed it with her he said “It’s a possibility”. 44    It was suggested to him that Mr Wakeling had said to Mrs Major

“ You know I’m not acting for you I act for Max Studios and its directors in relation to the transactions. I understand that the mortgage documents and other documents have been sent to you for you to look at and that you have looked at them and obtained your own legal advice about them? ”

Mr Major answered “ No ” to this question. In answer to later questions he made it clear that he was saying that Mr Wakeling had not said that, and that he doubted whether it was possible that it had been said but he had either not heard it or did not remember it. In a later answer, after being pressed about his not being able to recall every detail about the meeting, and about the possibility that the words were said but he had forgotten them, he answered “ It’s unlikely, I believe they weren’t said ”.

45    It was also suggested to him that what Mr Wakeling had said about the comfort letter was “This is the letter that you wanted from the company signed by the directors” and that he then gave her that letter. Mr Major agreed that that was consistent with his recollection. 46    Mr Major was then asked a series of questions in which it emerged that he also, in about 1992, had filed a statement of claim, which was still pending, seeking damages from Mr Wakeling. (Mr Major had a different solicitor from Mr Shehadie, whose evidence was that he had decided he could not act for both Mr and Mrs Major.) From the questions put by the cross-examiner it appeared that in his statement of claim Mr Major had alleged that Mr Wakeling had failed to advise him before the meeting of 15 June 1989 of Mr Wakeling’s having advanced $27,000 to Max. The cross-examiner put this to Mr Major in order to confront him with the admission he had earlier made that he thought that it was more than likely that he had been aware prior to the meeting of Mr Wakeling having made that advance. Notwithstanding that earlier statement Mr Major did not agree that the allegation in the statement of claim was not correct. 47    Mr Wakeling’s evidence. In his statement Mr Wakeling said in regard to the loan of $27,000 to Max, that he arranged with his mother to lend on a short term basis $27,000 to Max to make a payment on execution of the option. 48    In regard to the loan agreement, the guarantee and the mortgage to be given by Mr and Mrs Major, Mr Wakeling said in his statement that after receipt of the letter dated 9 June 1989 from Dunhill Morgan he spent several hours on most days at Max Studios discussing, advising and exploring numerous matters including the transaction documents. He said that on one of those occasions he explained the terms of the loan agreement, the mortgage and the guarantee to Mr Major. 49    He further said that at around that time he was told by Mr Cain, Mr Budrys and Mr Major that Mrs Major had requested that the documents be sent to her so that she could have her solicitor at the ABC check them. He added that he understood that the documents had in fact been sent to Mrs Major and that she would be bringing the documents to the meeting. He further said that he remembered asking one of the directors of Max, (he could not remember which) who was acting for Mrs Major, and was told that it was the same solicitor at the ABC and that she was using that solicitor in order to avoid spending any money engaging someone outside. 50    In regard to the comfort letter Mr Wakeling said in pars 19 and 20 of his statement that on 13 June 1989 he received by facsimile from Max a document (which must have been the earlier version of the comfort letter before his handwriting was added to it): see par 17 above. He said that Mr Cain had told him that the document was required by Mrs Major to confirm that the company would buy her out. He continued:

“ I had not been asked to draft the document, nor was I asked to give any advice about it. At some stage I provided a form of wording for an additional sentence in that document at the request of David Cain.
At no stage did Ross Major or any other person ask me to look at the provision of that document from Barbara Major’s point of view. ”

51    When he came to deal in his statement with the meeting of 15 June 1989 he said nothing about who brought what documents to the meeting. 52    Mr Wakeling’s account of the material part of the meeting was as follows:

“ Chris Budrys then said words to the following effect:
‘The directors of Max Studios are personally guaranteeing the loan against the property. The company is also guaranteeing the loan.’
I then said words to the following effect:
‘You know I am not acting for you. I act for Max Studios and its directors in relation to the transactions. I understand that the mortgage documents and other documents have been sent to you for you to look at and that you have looked at them and obtained your own legal advice about them.’
Barbara Major said in reply words to the following effect:
‘Yes but I just wanted Ross to assure me that it was ok.’
In relation to the letter on Max Studio’s letterhead, I deny that I said:
‘This will protect Barbara’s interest’
or
‘This is the piece of paper that will protect you.’
I believe that I said words to the effect:
‘This is the letter that you wanted from the company signed by the directors’
Barbara Major appeared to read the document after I handed it to her. I also deny that I was introduced to Barbara Major as ‘the company solicitor who has drawn up the piece of paper to protect your interests’. I had not in fact drawn up that document and would have correct (sic) any suggestion that I had. I also deny that I made the statements in respect of that document which are attributed to me at pages 3 to 4 of the proof of evidence of Mrs Major.
The documents were then executed and I took them and returned them to the solicitors for Asset Backed Securities. ”

53    In the remainder of his statement Mr Wakeling said that at no time prior to 15 June 1989 had he had any discussion with Mrs Major or any approach from her about the loan transaction. He said that he was “told by her husband and his fellow directors and believed that she was being advised by another solicitor”. He said that she did not ask him for any advice at the meeting. 54    In his oral evidence, Mr Wakeling was asked in chief how he explained the letter from him to the Commonwealth Bank dated 7 June 1989 (par 14 above) in which he had confirmed that he acted for Mr and Mrs Major in respect of the discharge of their mortgage. Almost immediately, he said “I did not act for Mrs Major, notwithstanding that this letter to the bank says that I did”.
CAB 55. When asked why the letter said that he did if he did not, he referred to his previously having acted for Mr and Mrs Major when he prepared the auction contract and continued:

“ and my best recollection is that when it came to writing about that property at the stage in this proceeding where we were taking steps to discharge the mortgage as part of the whole transaction of the Max Studios loan, that and in fact letters to pest inspection or to anything mechanical outside that required certificates. The details were being taken by the secretary off the file of Mr and Mrs Major’s sale of property and I think that’s where they got title, particulars and other things from to write letters, but that is in error. To say that I confirm to act for Mr and Mrs Major I didn’t. ”

CAB 55.

55    A little later he said:

“ I didn’t act for her, but I attended on the settlement when the actual mortgage which was in the names of both Mr and Mrs Major was discharged. I didn’t believe that I was acting for her even at that time because my understanding was she’d given her own directions to the bank as to the discharge as required by the Commonwealth Bank. ”

CAB 55. 56    He was next asked about the answers to requisitions that he had sent to Dunhill Madden. He was referred to the letter and the examination then continued:

“ Q. And have you typed answers to those requisitions and signed your answers?
A. Yes I did.
Q. You see that those replies are given in respect of the person referred to in the requisitions as the owner?
A. Yes.
Q. You accept that the owner at that time was Mr and Mrs Major?
A. Yes I do.
Q. What was the source of your answers that you’ve given to those requisitions on title?
A. Well the answers frankly were from Mr Major where they related to personal questions and to such searches as would have been performing at that time in so far as the answers could have been gleaned from searches. I do recall asking Mr Major at one stage, I think I asked him whether his wife had ever been bankrupt and to his knowledge whether he or she were currently bankrupt or had been, personal things of that nature. That’s what I took the requisitions from, not from personal conversation with Mrs Major. I had never personally spoken to Mrs Major at any time until a meeting at her home that she wanted.
Q. Was that on 20 June?
A. Yes.
Q. Was that the first time that you’d met her?
A. Yes and I didn’t arrange that meeting either. ”

CAB 56.

(Here again counsel, who had cross-examined Mr Major on the footing that the meeting of 15 June took place on 20 June, was repeating the error.)

57    He was then shown the letter of 19 June 1989 to the surveyors (see par 24 above). The next question and answer were as follows:

“ Q. And again that document states that you were acting for Mr and Mrs Major as owners of the property?
A. Yes I see that and I accept that’s what it says. It’s again not the position, I in fact acted for Mr Major in this matter not Mrs Major and this again almost certainly arose from the fact of the other file that we had already on Margaret Street in the name of Mr and Mrs Major, together with whatever it had in it, because as you’ll see here I refer in the second paragraph of that to, I enclose a copy of your survey of 13 December. Well I’d already had that or a copy of it, I can’t remember which and the only reason I had it was because of the earlier contract which was in that file. So the letter is in error in saying that, act for Mr and Mrs Major, but certainly the subject matter for the surveyor was that property owned by Mr and Mrs Major. ”

CAB 56-7. 58    Early in his cross-examination, Mr Wakeling was asked about his part in advising about the option and the other transaction documents. He would not agree, in terms at least, that he had been asked to advise Max about the option. For instance in answer to such a question, he said “I was asked to go and see them about it which I did”.
CAB 58. He said Mr Cain was having his own negotiations and dealings with Goodman Hardy. Then:

“ Q. You don’t deny do you that your understanding of your retainer from Max Studios in connection with this transaction required you to advise upon the form of the option agreement?
A. No I didn’t have any - my recollection is that I didn’t have any significant role in that, that they virtually went more or less their own way doing it. I may have pointed out one or two provisions in it to them, but they in fact as I recall saw to the exchange of it, etcetera, mainly through David Cane.
Q. I’m not asking about the exchange at the moment, I’m asking you about advice on the form of the document?
A. Well I can’t recall to what extent I gave them advice on the option, but I believe it was minimal. They mainly wanted to - they gave my name as solicitor, came to me from Remedios & Martin and I was required - I was directed to send it to them as was, which I did. ”

CAB 59. 59    Later, Mr Wakeling was referred to the comfort letter in the light of which he agreed that he probably appreciated before 13 June 1989 that Max was prepared to pay Mrs Major’s costs, as well as Mr Major’s. He also agreed that he was acting for Mr Major personally.
CAB 65-66. He agreed that he appreciated that if Mr Major was to avoid being called upon under the guarantee, Max would need to be able to discharge its obligations to the mortgagee and further that if Max for whatever reason was unable to proceed with the purchase of the property then it would forfeit a substantial amount of money to Goodman and again the guarantors could be called upon. He agreed that he regarded it as his obligation as the solicitor for Mr Major personally to explain those things to him. He further agreed that that was because they were things which any prudent solicitor should explain to a client in such a position.
CAB 67. 60    In regard to the comfort letter, Mr Wakeling agreed a draft had been sent to him for his comment, although in agreeing, he expanded his answer as follows:

“ A. Yes it was sent to me and it was sent when you say for my comment in the context of if I recall David Cane possibly and or Chris Budrys but certainly David Cane saying that he would send it to me and telling me that that is what he’d been informed that Mrs Major precisely wanted.
Q. When you say precisely was it your understanding that that was the exact wording of what she wanted?
A. That that was a letter that she - that was the letter that she wanted and then I was rung again to advise that there was to be a change to it.
Q. Didn’t you in fact suggest some changes to the document?
A. No I don’t believe so. The essential change was that in addition to what the draft said I was advised that she also wanted to be given a second mortgage over the studio property assuming that that was purchased etcetera and Mr Cane and Mr Budrys at Max Studios advised me that by phone and that was added to it, but I was not the author of that document.
Q. You were asked to suggest the wording for that additional matter weren’t you?
A. No I wasn’t, it was simply - the answer is no.
Q. Didn’t you provide the additional wording for that additional matter?
A. I started to write part of it in my --
Q. Can you answer my question yes or no?
A. I can’t answer it in yes or no.
Q. You provided an additional form of wording for an additional sentence in that document, true or false?
A. An additional continuation of a sentence, yes.
Q. And you were asked to provide that additional sentence for the document by Mr Cane, correct?
A. I was told by Mr Cane that it was to be added.
Q. It was your wording wasn’t it?
A. It was a combination of my words and his words over a phone conversation with he telling me that that’s what Mrs Major wanted to have signed by those people.
Q. In the course of proposing that additional wording I take it you read the draft document?
A. I don’t accept that I proposed the additional wording. My answer before was what it was.
Q. You did provide the wording didn’t you?
A. I didn’t adopt that, I said that Mr Cane on the telephone to me partly his words and partly mine combined to form the words which were the last two and a half lines starting with ‘and each/or all the above’ - I can’t read my copy clearly here but the last two and a half lines of the signed document under tab 14 was a combination of words David Cane was saying and the words I was saying. It’s a matter of just --
Q. You said in your statement that you provided a form of wording for an additional sentence in that document at the request of David Cane. Is that true?
A. Well additional - yes - yes part of it. Part of the statement is true. What was supplied was part of that last three lines of the first paragraph.
Q. And in the course of providing that additional wording you read the document didn’t you?
A. Yes. ”

CAB 67-69.

61    When asked about the $27,000 paid on 15 June 1989 on execution of the option agreement, he said that Mr Cain and Mr Budrys had asked whether he could “come up with that 27” and he said he “would raise it with [his] mother”.
CAB 69. He said that Mr Cain went to explain the matter to his mother at her home.
CAB 70. Mr Cain and Mr Budrys told him that Max could not raise the cash at that particular time but also said funds were on the way from major contracts Max had done and “they advised me they were attending to and that they could pay it back but it was virtually short term”.
CAB 70. In other answers, Mr Wakeling said that he was the person

advancing the $27,000
CAB 69 & 71. and that the money was actually loaned to him by virtue of his mother agreeing to mortgage her unit at Parramatta, it being a third party mortgage from her to the Commonwealth Bank which he was to be responsible for as the borrower.
CAB 69. 62    He also said yes to questions which asked him whether he believed he would be repaid from the transaction by which Mr and Mrs Major put up their property to ABS.
CAB 71, 72. 63    What Mr Wakeling said his understanding was of his personal position at this moment is revealed in the following passage:

“ Q. That money, the 27,000, you say that you had a meeting with your mother about that?
A. Yes.
Q. And you asked her to make her flat available as security for that loan?
A. For that loan, yes I did.
Q. Did you consider that gave you a personal interest in this particular transaction?
A. Only to the extent of being repaid the 27,000.
Q. But you did consider that the fact that you were dependant upon the transaction to proceed to repay the $27,000 gave you a personal interest?
A. No I wasn’t, I wasn’t, I’ve already explained that to you.
Q. You did intend didn’t you that the 27,000 would be repaid from the money being advanced by Asset Back Securities --
A. Certainly.
Q. –on the security of this house?
A. Yes, certainly.
Q. That was always your primary intention wasn’t it?
A. It was my intention, yes.
Q. And did you consider that that gave you a personal interest in this transaction?
A. I didn’t consider that was the position, I thought I was lending 27,000 to some clients who although I was liable to pay it back and take the responsibility for it, I didn’t see it as a personal part of this transaction other than I was going to be paid back out of it so that I could pay my mother back and that was the arrangement with David Cane, Chris Budrys, myself and your client Mr Major knew about it, that was the reality of it, simple as that. If you call it a personal interest I don’t know whether you - yes I had an interest in it being repaid. ”

CAB 73. 64    Mr Wakeling was then asked a series of questions about what a prudent solicitor would have advised Mrs Major about the transaction if that solicitor had been acting for her. Mr Wakeling agreed that a prudent solicitor would have done the things that were suggested to him. 65    Some questions in the series examined the enforceability of the promises in the comfort letter. These questions led to the following question and answer:

“ Q. And therefore a solicitor looking at this document from the point of view of advising Mrs Major would have advised her or should have advised her that there was a question as to whether this document was void for uncertainty, do you agree with that?
A. Yeah, a solicitor acting for her probably should have said that to her, yes. ”

CAB 77. 66    The last question in this series was:

“ Q. A prudent solicitor advising Mrs Major about this document would have advised her that if binding and enforceable at all it nevertheless made it essential for her to satisfy herself that Max Studios and the individual directors had sufficient assets to discharge Max Studios’ liabilities to ABS? ”

To this, Mr Wakeling answered “ Yes ”.

CAB 78. 67    In the questions that followed, Mr Wakeling was asked whether he had advised Mrs Major of any of the things which he had agreed a prudent solicitor should advise her about if that solicitor were acting for her. 68    To get a reasonably full understanding of the way Mr Wakeling dealt with these questions and of the way in which he understood the situation he was in, I think it useful to set out the following lengthy passage:

“ Q. --and you don’t say, do you that you in fact advised her any of those things we’ve agreed that a prudent solicitor acting for her should have advised her?
A. I say that I didn’t give her advice but there are matters within the whole range of what you’ve put to me which include the mortgage and the guarantee and this document headed Max Studios which Mrs Major acknowledged to me she had had previous advice on.
Q. I’m not asking about that and I’ll come back to that, what I’m asking you about is what advice you gave her, do you follow the difference?
A. I didn’t advise her on those matters other than what she would have heard at the conversation where guarantee was discussed as Mr Major told you and the mortgage was discussed and the basic essentials of the mortgage that was stated at the meeting but it wasn’t by way of advice to her, she was simply present.
Q. You didn’t advise her or say in her presence that if Max Studios were unable to proceed with the purchase of the property it would forfeit $280,000 and would have to repay that amount to Asset Backed Securities from its own resources?
A. No I didn’t say that in those words at that meeting.
Q. You didn’t say that to Mrs Major at all in any circumstances did you?
A. At that meeting - I didn’t say it to her, correct.
Q. Because you’ve told us that you only met her once and that was at that meeting?
A. Yes.
Q. And you certainly didn’t say that to her at that meeting did you?
A. No I didn’t say that to her.
Q. And you didn’t say to her at that meeting that her ability to avoid coming under any liability to Asset Back Securities was entirely dependent upon the ability of Max Studios and its directors to meet Max Studios’ obligations to Asset Back Securities from their own resources?
A. That’s correct, I didn’t say that to her.
Q. Nor did you say to her that it was essential for her to satisfy herself of the financial ability of Max Studios and its directors to do that?
A. I did not.
Q. Nor did you tell her that from her point of view there was some doubt if this other document, the one on the Max Studios’ letterhead, was binding and enforceable?
A. Correct.
Q. Nor did you tell her that that document did not in fact provide any additional comfort to her in the circumstances?
A. Correct.
Q. You did not advise her that ultimately even taking into account the second document, the one on the Max Studios’ letterhead, that her ability to avoid having to pay on the guarantee to Asset Back Securities was entirely dependent upon the financial ability of Max Studios and its directors to meet their obligations to Asset Back Securities?
A. No I didn’t say that.
Q. Nor at that meeting did you disclose the interest that you had in the $27,000 part of this transaction?
A. I believe that was raised and certainly it was referred to. Mr Budrys was present in addition to Mrs Major and Mr Major.
Q. Who referred to it do you say?
A. I don’t know whether I did or whether Chris Budrys did but it was certainly referred to.
Q. And what was said?
A. Simply the $27,000 - that the proceeds of the loan would be for those - appropriated in that manner, to pay out their first mortgage, to pay out what was either a second mortgage or an overdraft of Mr Major - I forget what that fifty - what it was - and also the 27,000 and the balance was the actual option fee or the balance of the option fee that hadn’t yet been paid.
Q. Is it your evidence that you definitely recall that being said at this meeting on 15 June 1989?
A. Yes.
Q. With Mrs Major present?
A. I recall it being raised, yes.
Q. You’re quite sure about that are you?
A. Yes.
Q. It’s not mentioned in your statement is it?
A. Well no it’s not.
Q. You would recognise that if true it would be a highly material matter in the proceedings, correct?
A. No, I don’t accept that. ”

CAB 79-80. 69    He was then asked about the two documents that he had furnished to the Law Society (see par 30 above) when responding to the complaint made by Mr and Mrs Major in 1990. It was put to him that he did not say anywhere in either of the two documents that Mrs Major was aware of the $27,000 loan at the meeting of 15 June. At first he said he could not remember. After being shown his documents he agreed that it was the case that he had not mentioned the $27,000 in either document.
CAB 83. A little later he said that he had not thought at the time that it would be highly material in responding to the Law Society to say if it were the fact that Mrs Major was aware of his personal $27,000 interest in the transaction at the time that she signed the document.
CAB 84. He agreed that he had at no time sought Mrs Major’s informed consent in relation to the $27,000 matter at the meeting on 15 June.
CAB 84. 70    When asked about the letter to the Commonwealth Bank of 7 June 1989, he gave the following evidence;

“ Q. So if what you say is right that in your mind you had it clearly that you were not acting for Mrs Major that is something that you would have been highly conscious of at the time you signed this letter?
A. Well I wouldn’t necessarily have been highly conscious on the particular day that letter was signed or a batch of letters was signed in relation to essentially standard matters of - that were a normal consequence to what you were doing, ie writing to a copy of a surveyor’s letter or a copy of a search. The document itself would be certainly spring up at me, but that correspondence was as I’ve explained simply happened in the way it did, and I should have been more observant in seeing the letter - the subject on the letter, and the words used. But I certainly didn’t act on Mrs Major.
Q. Who drafted this letter?
A. I imagine I would have dictated it. I don’t have an independent memory but the obvious practice is I would have dictated it.
Q. So if you dictated it you must have said into the dictaphone ‘I act for Mr and Mrs Major’, correct?
A. If I dictated it yes.
Q. And yet --
A. And if I didn’t dictate it --
Q. – you say that at the time you dictated this letter you had in mind clearly that you were not acting for Mrs Major?
objection. not evidence
Q. You’ve already agreed with me that you believed at all times in May and June 1989 that you were not acting for Mrs Major?
A. That’s correct.
Q. And you believed that when you dictated this letter?
A. If I dictated the letter, yes.
Q. And are you able to suggest how the letter could have come to be prepared if you did not dictate it?
A. Yes. There are a number of possibilities. If it was a - it was not uncommon for me to make a list of things to do and if they were things that my then secretary - whoever that may have been, I think I had one secretary and one other typist at that time, it wasn’t uncommon to say for example do a letter to the bank putting them on notice that there’ll be a discharge as we’re acting for whoever it is. Or in the matter of such and such. Or in regard to the North Sydney property do a letter to the surveyor asking for a copy of the survey. Now most - in this particular case if I recall correctly because of the contract that I’d done not so - I don’t think it was all that far back beyond this which was preparation of a contract for the sale of the Major’s home that they wanted to put to auction there were a number of things with that which were common when this cropped up, when this thing came up that were convenient to use them and as I recall it was a file that was Mr and Mrs Major re auction or re North Sydney auction, something like that, and in that was either a contract or a copy of what had been given to Hookers, and it may have occurred in that way and that’s the most likely scenario it occurred. However, I can’t categorically say that that’s how it did occur because I may have dictated it. If I did dictate it specifically rather than just a broad outline of saying do a letter to so and so, then I would have done it probably whilst looking a those searches and things and having that Mr and Mrs Major file in front of me. That’s the only explanation I can give because I certainly didn’t act for her, she never consulted me over this matter at any stage.
Q. You say that it was clear in your mind on 7 June 1989 that you were not acting for Mrs Major?
A. Yes.
Q. In light of the explanation that you have given it’s not possible is it that you could have dictated this letter because you would have been dictating something which was simply untrue to your then belief?
A. Well it’s possible that I did, without stopping to think because I’m thinking in terms of Margaret Street, North Sydney, I’ve just done a file with an auction and perhaps I didn’t separate it out clearly enough. Well obviously clearly enough in the light of the letter, but at the moment of doing it probably along with a stack of other correspondence. But I’m not sure which is the case. The reality is that I was not acting for Mrs Major. ”

CAB 88-89. 71    I set out one further passage on this topic, which shows the attitude of Mr Wakeling and, incidentally, a misunderstanding of the judge.

“ Q. So you were quite clear in your mind as at 7 June that you were not acting for Mrs Major?
A. That’s correct.
Q. Quite clear on that?
A. That’s the reality, yes.
Q. You told her Honour that it is a possibility that you dictated this letter in spite of that being your then state of understanding?
A. Yes, if - this was eight years ago or whenever it was and I was being asked did I do that letter, did I dictate that letter or did I simply do it on a list of saying write to the mortgagee, arrange discharge or write to a surveyor seek copy, I can’t tell you with certainty now, honestly. All I can do is say those are the two scenarios and with that file and what it had in it are in my belief the reasons why that letter generated the way it did. But the reality was in light of what I’d been told people and individual people have told me and what subsequently happened, it is clear that I was not acting for Mrs Major. She never came to my office, she never rang me. Her husband told me he had spoken with her all bout the matter, she still doesn’t ring me.
Q. I’m sorry Mr Wakeling, this is not responsive to my question.
A. Sorry. And the people who told me included Mr Major who told me that he was estranged from his wife, that she had her own people acting for her. I was then advised by David Cane - this was before any of these documents were signed - that Mrs Major was getting her legal advice through solicitors at the ABC where she worked and that she was doing that because she didn’t want to spend money and that’s what I was advised by David Cane. I was asked to send documents to Max Studios by David Cane and was told by David Cane, also told by Mr Major, that those documents were being sent to his wife, the late Mrs Major, at ABC where she was getting her advice. And subsequently when I attended the meeting which I did not convene at a venue I did not choose at a time I didn’t choose, was chosen and sighted, I am told, by Mr Major --
objection
WITNESS: -- these are all the matters that go to the question of --
HER HONOUR: You did ask the question Mr Parker. ”

CAB 90-91. 72    Mr Wakeling was asked a number of questions about his claimed understanding that somebody at the ABC was advising Mrs Major about the mortgage/guarantee transactions. One reason he had said he had been told she had for doing this was to save money. It was pointed out to him that the comfort letter promised that Max and its directors would pay all her legal costs, stamp duty and disbursements in connection with the mortgage and the subsequent purchase of her interest in the North Sydney house. It was put to him that it was nonsense to suggest that in those circumstances she had any need to save money. Mr Wakeling replied “If it’s nonsense sir it comes from Mr Major and Mr Cain and is not a nonsense on my part if that’s what your question implies”.
CAB 92. 73    When asked about the answer to requisitions that he had sent on 16 June 1989, he agreed that the way it had been done “could have conveyed [the] impression” that he was answering for both Mr and Mrs Major.
CAB 93. It was then put to him in various ways that what he did in answering the requisitions showed that he believed at the time that he was acting for Mrs Major and was undertaking a responsibility on her behalf in answering the requisitions. Mr Wakeling did not agree. 74    The unusualness of the position in which Mr Wakeling found himself at the meeting of 15 June 1989 is illustrated by the following passage in his cross-examination:

“ Q. Well you agree with me that if Mrs Major had not been required to sign the document, as you understood it you would have had no need to go to North Sydney at all?
A. Probably that’s right although she could have signed it and returned it and had somebody else witness it and return it to Max Studios where I believe that it emanated from.
Q. If she had had somebody else acting for her or she were acting for herself, that would have been the natural thing for her to do wouldn’t it?
A. Yes that would have been the natural thing for her to do.
Q. If she had somebody else acting for her she did not need you to come and bring the document to her did she?
A. Correct.
Q. You say don’t you that you did not go there with any intention of explaining this document to Mrs Major?
A. No other than to make sure to identify what documents were being signed.
Q. You say you thought that she had somebody else looking after her interests?
A. Yes.
Q. If that was so there was absolutely no reason for you to be present when she signed the document?
A. I didn’t believe so. ”

CAB 95. 75    When asked whether he had explained the terms of the guarantee to Mrs Major at the meeting Mr Wakeling gave the following answer:

“ A. I - in this manner yes, that is that each of those documents was discussed to all of the people present there including Ross Major, Budrys and Mrs Major even though in the case of Ross Major and Mr Budrys, that they’d already gone through them separately previously at Max Studios and I did not go through line by line of the documents then and there with Mrs Major or indeed with the others. Referred to the guarantee as being what it was, a guarantee, and the mortgage as to what it was and the amount and that was following Mrs Major acknowledging my very direct question to her, statement and a question, words to the effect ‘I am not acting for you Mrs Major and I understand that you have your own legal advice or your own advice’. She then said ‘Yes that’s correct’. ”

CAB 96. 76    Questions were then asked of Mr Wakeling about how it happened that he made the solicitor’s certificate certifying he had explained the terms of the guarantee to the guarantors including Mrs Major. This led to the following question and answer:

“ Q. Isn’t it rather extraordinary that you would take on a responsibility of explaining the terms of the guarantee to Mrs Major if as you say you were not acting for her?
A. I explained it to all of them even though I had previously explained it to the others and I don’t believe it was extraordinary as you point out in the context that I had been advised that she had other people acting for her, that they were solicitors of the ABC in the legal section where she worked and that she herself told me she had had other advice even before we started to look at the documents and acknowledged it in the presence of Mr Budrys and her husband. ”

CAB 97-98. 77    I would note at this stage that if it appears from a consideration of the evidence that, whatever may have been the position concerning the conveyancing documents which were to go to the mortgagee’s solicitors, the comfort letter was not seen by Mrs Major before the meeting on 15 June 1989, there would have been no opportunity for her to seek advice about it from anyone. I also note at this point that this answer is one of several given by Mr Wakeling late in his cross-examination in which he asserted that Mrs Major had told him she had had other advice before the meeting although in the earlier answer reproduced at par 72, he had appeared to make it quite clear that he was relying in this respect on what he had been told by Mr Cain and Mr Major, not by Mrs Major herself. This position was consistent with what he had said in his statement. 78    When asked about the letter to the surveyors of 19 June 1989, after some consideration, Mr Wakeling said he thought it was more likely that that letter was one he would have dictated.
CAB 98K. He was asked whether he accepted that the letter “consciously” in two places referred to his acting for both Mr and Mrs Major and he replied “Yes, the letter does say that”.
CAB 98V. Asked whether it remained his explanation that that was a mistake that he made he answered, “Yes, it is a mistake because I wasn’t acting for Mrs Major at that time”.
CAB 98X. In further explanation a little later he referred to the fact that it was obviously a last minute matter the letter was dealing with “and I literally may have just rattled it off as quickly as that without thinking of the implications further beyond that”.
CAB 99D. 79    In answer to further questions raising with him the inconsistency between what he recalled saying to Mrs Major and hearing from her on 15 June 1989 (Thursday) and what he said in the letter to the surveyors on 19 June 1989 (the following Monday) he continued to assert that it was clear in his mind throughout the whole matter that he was not acting for Mrs Major.
CAB 100-101. 80    Mr Wakeling’s re-examination was as follows:

“ McCALLUM: Q. Mr Wakeling you were asked some questions in relation to the omission from your statement of any reference to the loan of $27,000 and do you have any explanation as to why there was no reference in your statement to that issue?
A. I don’t - I think the statement that was prepared was, among other things, also in answer to the plaintiff’s statements and notes, was one aspect of it and I don’t think it was raised there.
Q. You were also asked a series of questions as to the meeting on 15 June 1989 and in particular as to the reason for that meeting being held at the Margaret Street at North Sydney. Were you told any reason why the meeting was at Margaret Street?
A. Yes.
Q. What was that reason?
A. I was told by at least, or I was told by Chris Budrys and David Cane and later but before the meeting by Ross Major that the meeting was to be there because Mrs Major wanted to see the document signed by Ross or one of the documents signed by her husband Ross in her presence and at the meeting Mrs Major actually said that despite anything to do with documents or anything else, she wanted Ross Major to reassure her. And that that’s why the meeting was to be there. Otherwise it would have been - I wouldn’t have had a meeting with her. There have been no need. ”

CAB 101. 81    The last witness to give oral evidence in the case was Mr Budrys. A statement from him made in July 1998 was permitted to go into evidence after some paragraphs had been struck out. In his statement, relevantly to the principal issues in the case, he said that the documents from ASB were sent to Max Studios by Mr Wakeling and then later Mr Major asked Mr Wakeling to go to his home “to explain the transaction to Barbara Major and how it worked”.
CAB 242. 82    Mr Budrys further said in his statement that during the meeting of 15 June 1989 he remembered Mr Wakeling saying words to the effect “I act for Max Studios and the directors. Have you seen your own solicitor about this?”. He also remembered Mr Wakeling saying to Mrs Major during the meeting “Is everything clear? Is there anything you need to know?” and that he did not recall her asking any questions in response. 83    In examination in chief Mr Budrys said that at the meeting he heard Mrs Major say that “she was seeking advice from a solicitor who worked at the ABC”.
CAB 103F. 84    In cross-examination Mr Budrys agreed that he had no recollection of the $27,000 obtained through Mr Wakeling being part of the conversation.
CAB 105. In cross-examination also he repeated that from “overall memory” he remembered Mr Wakeling asking Mrs Major whether she had had her own advice and that her answer was “I have been getting advice from one of the ABC solicitors”.
CAB 108. 85    The trial judge’s reasons.

The trial judge’s reasons for dismissing the plaintiff’s claim were quite extensive. They began with a description of the transaction which had given rise to the proceedings and then summarised the evidence given by the witnesses. She did this largely without comment, except that in the case of Mr Major she observed that he
“ did not present as a credible witness. Whilst I do not believe his intentions were to mislead the court in any way, he presented as forgetful and muddled which was not consistent with a fifty-nine year old production designed (sic) who had been engaged in the film and television industry for many years and had been successful in his endeavours over the years. ”

Reasons for judgment (RJ) 11.

(I find this comment rather baffling.)

86    Then, after a lengthy summary of the arguments of both sides, the trial judge made findings in four numbered groups. Some findings were factual, some mixed fact and law and some purely by way of legal conclusion. I will try first to state her findings of fact and of mixed fact and law. 87    Findings of fact and mixed law and fact. 1. The trial judge was not satisfied that Mr Wakeling was acting as Mrs Major’s solicitor in connection with the transaction.
RJ 28. 2. Mr Wakeling was retained only to act on behalf of Max.
RJ 28. 3. Mrs Major did not rely on Mr Wakeling. She relied at all times and only on the advice of her husband.
RJ 28. 4. Mr Wakeling had no actual knowledge of Mrs Major’s alleged reliance on him.
RJ 28. 5. Mr Wakeling did not draft the comfort letter nor did he advise Max and its directors about the contents of that document.
RJ 28. 6. Mr Wakeling did not assume responsibility to Mrs Major for giving legal advice in respect of the loan transaction documents.
RJ 29. (I take this as being meant in the sense that Mr Wakeling did not subjectively or consciously assume responsibility.) 7. The trial judge said “I accept Mr Wakeling as a witness of truth when he says that he was not acting for her and indeed told her so”.
RJ 29. 8. The trial judge also said “I do not however accept that she told him that she had sought independent advice”.
RJ 29. (This finding appears to have been influenced partly by her earlier finding that Mrs Major relied only on the advice of her husband.) 9. Mrs Major understood the legal effect of the transaction documents.
RJ 29. The trial judge explained this finding as follows:

“ Indeed she expressed that view to Mr Wakeling as he was attempting to explain the import of the documents to her. In any event Mr Major’s evidence was clear and unequivocal that he understood their effect and that he had discussed the transaction at length with her. ”

RJ 29.

10. Mr Major believed the transaction carried no commercial risk and told Mrs Major of his opinion.

RJ 29. 11. The trial judge correctly pointed out that the loan was (in part) to repay moneys owing by Mr and Mrs Major, but added “There was no evidence that they were to give any consideration to the company for the benefit”.
RJ 30. 12. Mrs Major would have entered into the transaction on the advice of her husband even if she had been given the advice which she claimed should have been given by Mr Wakeling.
RJ 30. 13. Mr Wakeling did not believe a solicitor-client relationship existed.
RJ 30. 14. The trial judge further said that she accepted that Mr Wakeling honestly believed he was not acting for Mrs Major, and added “and as a consequence his failure to disclose to her the $27,000 loan was not intentional”.
RJ 31. Although I am not sure that this was intended to be a finding of fact about non-disclosure of the $27,000 loan, I do not see how else it can be taken. This view is strengthened by the fact that the trial judge went on in the next sentence to say that “In any event the non-disclosure does not ... constitute a material fact as laid down by the rule in Brickenden”.
RJ 31. 15. The trial judge accepted Mr Wakeling’s evidence that his references in correspondence to his clients as being Mr and Mrs Major were mistake or carelessness on his part but nothing more.
RJ 31. 16. The trial judge said she accepted

“ Mr Wakeling’s evidence that he did not draft the document referred to as the comfort document and indeed he doubted whether it would offer Mrs Major the protection she was in fact seeking. At no stage was he asked to look at the provisions of the document from Mrs Major’s point of view. ”

RJ 32.

17. The trial judge accepted that Mr Wakeling did not say “ this is the piece of paper that will protect you ” but said “ this is the letter that you wanted from the

company signed by the directors ”.

RJ 32. 18. The conduct of Mr Wakeling in saying “this is the letter that you wanted from the company signed by the directors” was not the cause of any loss suffered by Mrs Major.
RJ 32. 88    Legal conclusions. Based on her findings of fact and mixed law and fact, the trial judge held that Mr Wakeling had not been negligent, that he had not been retained by Mrs Major, that he had not had any fiduciary duty towards her and that in any event he had done nothing which caused her the damage she had suffered this being an additional reason for the failure of her causes of action in negligence, contract and breach of fiduciary duty, as well as being sufficient to dispose of her claim under s 42 of the Fair Trading Act. 89 Defects in trial judge’s fact finding.

I have set out considerable parts of the evidence in an effort to make it clear to readers why I think the fact finding of the trial judge was unsatisfactory in this case.

90    Clearly, it was very important in the trial judge’s approach to the case that she accepted that Mr Wakeling had told Mrs Major at the meeting on 15 June 1989 that he was not acting for her. His evidence about this had been quite definite and the trial judge had been able to consider him as a witness over quite a lengthy period in the witness box. Also, Mr Budrys had given a measure of indirect corroboration, although it was not particularly clear or specific. 91    However, all the contemporary circumstances and documents point very clearly to the fact that Mr Wakeling was acting for Mrs Major in the transactions which were documented, so far as she was concerned, on 15 June 1989. He was receiving instructions concerning the matters directly from Mr Major in his personal capacity as mortgagor and guarantor as well as in his capacity as a director of Max. In receiving instructions from Mr Major as mortgagor he was accepting instructions from one of the two joint owners of the North Sydney property. He agreed that when he had received instructions in January from Mr Major without any contact with Mrs Major concerning the sale of the property he was acting for both of the proprietors. That is, he was accepting Mr Major then as giving instructions on behalf of both himself and his wife. There is no reason why, and he gave no reason why he did not accept that in June of 1989 Mr Major was again giving instructions on behalf both of himself and his wife. That is the only basis on which his actions make sense. Somebody had to act for Mrs Major in the transaction. Mr Wakeling in letters written immediately before and after 15 June 1989 said he was acting for both Mr and Mrs Major. Had he not been there would have been the need for further authorities to be given, for example, to the Commonwealth Bank, in the course of discharging the mortgage that bank had over the North Sydney property. 92    However, if the things I have so far mentioned were the only matters casting doubt on the trial judge’s findings of fact, it may have been necessary to consider whether the case was one of the class of cases of which Kiama Constructions Pty Ltd v Davey (1996) 40 NSWLR 639 is an example; that is cases where the courts have felt constrained, in view of what the High Court had said in Abalos v Australian Postal Commission (1990) 171 CLR 167 and de Vries v Australian National Railways Commission (1993) 177 CLR 472, not to interfere with a trial judge’s findings of fact even though they had significant doubts about them. It may have been a difficult question whether this court should treat the case as one such as State Rail Authority (NSW) v EarthlineConstructions Pty Ltd (in Liq) (1999) 73 ALJR 306, in which the surrounding facts and circumstances so strongly pointed to a different factual conclusion from that arrived at by the judge that the High Court held this court was bound to interfere. I am inclined to think, even if the relevant matters were limited to those mentioned already, that the present case would have been in the Earthline category, but it is unnecessary to decide that question as there are a number of other matters concerning the judge’s fact finding in this case which in my opinion make that answer to the question quite clear. I will explain their significance by reference to various of the numbered findings listed under the sub-heading “Findings of fact and mixed law and fact” in par 87 above. 93    Finding 2 is inaccurate. Mr Wakeling agreed himself that he was retained also to act for Mr Major personally. 94    Finding 3 was made without considering a matter important in this connection. I mentioned earlier (see par 77 above) that if it appeared from a consideration of the evidence that the comfort letter was not seen by Mrs Major before the 15 June 1989 meeting there would have been no opportunity for her to seek advice about it from anyone. The trial judge made no specific finding about this, nor about whether the conveyancing documents which were to go to the mortgagee’s solicitors had been sent to the ABC for Mrs Major’s attention. In any event these documents would not have included the comfort letter which was of no interest to or concern of the mortgagee and only came into existence on 13, 14 or 15 June 1989. On my own reading of the evidence I doubt whether the conveyancing documents had been so sent, but whether that be so or not, it seems to me to be reasonably clear from the evidence that Mrs Major had not seen the comfort letter before it was produced by Mr Wakeling at the 15 June 1989 meeting. That being so, she could not have obtained advice about it from any friendly solicitors at work, nor in the entirety of the evidence of what took place at the meeting (with all its conflicts), is there any sign of there having been any discussion between Mr and Mrs Major about it. Moreover, it seems extremely doubtful whether the promise Max was making to Mrs Major in the comfort letter was in terms which would have been enforceable at law or in equity. This was not something about which Mr Major was competent to advise. For these reasons, finding 3 could, at best, only be acceptable in an extremely qualified way. 95    As to finding 4, although the trial judge accepted that Mr Wakeling said to Mrs Major that the comfort letter was the letter that she wanted from the company signed by the directors, she did not go on to consider what that meant in the circumstances. Mr Wakeling knew that Mrs Major wanted a letter from Max, signed by the directors, which would safeguard her interests. Thus, when he referred to the comfort letter in the way the trial judge accepted that he did, he was referring to a letter which both he and Mrs Major knew was the letter she was expecting would safeguard her interests. That is, to both speaker and hearer, the speaker’s statement in the context necessarily carried the meaning “this letter is your safeguard in the transaction in the form that you wanted it from the company”. A solicitor making the statement in the terms accepted by the judge would, in the ordinary course of human affairs, be understood as telling the person to whom he was speaking that the document would do what he knew it was intended to do. 96    Finding 5 is a quite incomplete statement of the position. Mr Wakeling was spoken to by Mr Cain about the draft of the comfort letter and himself actually wrote out some words on the draft which were incorporated in its final form after the discussion between him and Mr Cain about it. 97    As to finding 6, in light of what I have said about findings 4 and 5, it seems to me that Mr Wakeling’s conduct, looked at objectively, put him in the position of assuming responsibility to Mrs Major in respect of the loan transaction documents. Even if in his own mind he did not think he was assuming responsibility, I do not think that state of mind would save him from the consequences of his actions when looked at objectively. 98    As I have earlier indicated, a finding such as that in finding 7, standing alone, might be difficult for a court of appeal to interfere with. In this case however, not only for the reasons I have already indicated, but also because of the difficulty caused to such a finding by finding 8, the doubtfulness of finding 7 is increased and the way becomes more open for this appellate court to set it aside. Mr Wakeling had twice said in his oral evidence that Mrs Major told him at the meeting that she had had independent advice. The trial judge’s finding 8 was a clear rejection of an important part of Mr Wakeling’s evidence. The trial judge does not appear to have realised that this finding undermined Mr Wakeling’s other alleged statements at the meeting about what he said to Mrs Major (in particular, that he was not acting for her). Similarly, the trial judge does not appear to have considered the effect on the overall credibility of Mr Wakeling’s disputed evidence of her findings mentioned in finding 14 that he had not disclosed the $27,000 loan to Mrs Major. This again was a non-acceptance of something explicitly alleged by Mr Wakeling to have been said at the meeting. 99    Finding 9 is incorrect so far as the comfort letter is concerned. Mrs Major clearly had no idea that the letter she was relying on might be (and probably was) legally unenforceable. Nor could Mr Major have discussed the effect of that letter with her at all, let alone at length, nor, so far as its enforceability was concerned was he competent to do so. 100    Finding 10 is correct, but must be understood in the light of what I have said about finding 9. 101    The second part of finding 11, for which I have quoted the judge’s actual words, was incorrect. Mr and Mrs Major were giving Max the benefit of their house as security for the loan Max was obtaining from the lender. They benefited from the loan to Max to the extent that Max paid out their existing mortgagee but they suffered the detriment of having their house become the security for a further borrowing from which they obtained no benefit and which they were at least contingently liable to repay. 102    As to finding 12, if Mr Wakeling was acting for Mrs Major he should have done at least three things: (1) he should have told her of his personal interest in obtaining money from the transaction which she was about to enter into; (2) he should have told her that from her point of view the safety of the transaction depended entirely on Max being in the financial position to carry out its promise to her and (3) he should have told her that the comfort letter was probably unenforceable. In my view, the last of these three things alone would on the probabilities have led Mrs Major to say she would not enter into the transaction. 103    Findings 13, 14, 16, 17 and 18 are covered by my earlier comments. 104    In view of the defects that I have discussed in the trial judge’s factual findings, it seems to me that such doubt must attend factual finding 15 as to make it necessary for this court to set it aside. The trial judge was only able to make finding 15 by first accepting Mr Wakeling’s evidence that he told Mrs Major in the evening of Thursday 15 June 1989 that he was not acting for her notwithstanding that within twenty-four hours he sent the letter of 16 June 1989 to Dunhill Morgan in which in his own hand he said he was her solicitor (see pars 19 and 26 above) and then accepting that what he wrote was a mistake. She also accepted that the statements in the letters of 7 June 1989 (see par 17) and 19 June 1989 (see par 27) that he was Mrs Major’s solicitor were mistakes. The high unlikelihood of Mr Wakeling’s references to Mr and Mrs Major as being his client in these letters being unintentional and mistaken on his part is easy to see when his position when he sent the answers to requisitions on 16 June 1989 is considered. That was a Friday and settlement was to take place on the following Tuesday, 20 June 1989. Had he said to Dunhill Morgan in his Friday letter that he was answering the requisitions only for Mr Major but not for Mrs Major since he was not acting for her, he could be putting the settlement at risk. A properly cautious intending mortgagee would very probably not be content with answers to requisitions from one only of two borrowers. At best, if Mr Wakeling had disclosed what he later claimed to be the true position to Dunhill Morgan, there would have been some hasty scurrying around on Monday, 19 June 1989 in order to put the position to rights, with incalculable results, and the possibility of either delay in settlement and thus delay in the repayment of the $27,000 owing either to Mr Wakeling or his mother or, if Goodman would not agree to delay, the loss to Goodman of the $27,000. Similar problems, although one day less urgent, would have been apparent to Mr Wakeling had he said to Mrs Major on 15 June 1989 that he was not acting for her. Had he said such a thing, with settlement of the loan transaction very close, he must have realised the need to have someone acting for Mrs Major in the transaction. The fact that none of the evidence of what happened at the meeting of 15 June 1989 makes any reference to the need for Mrs Major to be represented in some way at the settlement scheduled for the following Tuesday, seems to me in itself to be a powerful indication that no reference was made at the meeting by Mr Wakeling to his later claimed position that he was not acting for Mrs Major. The evidence of Mr Budrys is not inconsistent with Mr Wakeling never having positively asserted to Mrs Major that he was not acting for her (see pars 81-84 above). In fact Mr Budrys’s evidence that Mr Major asked Mr Wakeling to go to the meeting of 15 June 1989 to explain the transaction to Mrs Major and how it worked seems to me to support the view that Mrs Major was expected to rely on what Mr Wakeling told her. Further, the parts of Mr Budrys’s evidence set out in pars 83 and 84 were not accepted by the trial judge. In every respect (except as to what he claimed he said to Mrs Major in the evening of 15 June 1989) Mr Wakeling acted as Mrs Major’s solicitor, in the same way as he had done earlier in the year, without meeting her, but by accepting instructions from Mr Major as speaking for the two of them. The whole sequence of the events connected with the lending and conveyancing matters is completely understandable, and completely ordinary, as well as being consistent with all the extant documentation, if Mr Wakeling is taken as having acted as Mrs Major’s solicitor in the parts of the transactions that concerned her. If the two findings made by the trial judge (that Mr Wakeling told Mrs Major he was not acting for her and that his statements in the letters were mistakes) which I have said are highly unlikely in themselves, are allowed to stand then the sequence of events becomes very strange and Mr Wakeling’s behaviour as a conveyancer quite inexplicable. 105    Factual findings in this court. I think the trial judge’s finding that she did not accept that Mrs Major told Mr Wakeling that she had sought independent advice was clearly a proper finding when the whole of the circumstances of the case are considered. Mr Wakeling agreed that he was acting for Mr Major in the transaction from which it seems an inevitable inference that both Mr and Mrs Major understood him to be acting for Mr Major. The inference also seems to me to be obviously correct that Mrs Major knew that the mortgage to the Commonwealth Bank was going to be discharged and a new one for a larger amount was to be entered into and that in the ordinary course a solicitor would attend to these transactions on her behalf. Since she knew that Mr Wakeling was acting for Mr Major in this respect, that he had acted for the two of them earlier in the year and that no-one else was acting for her, the further inference seems to me to be virtually inescapable that she understood that Mr Wakeling was acting for her in the mortgage transactions, and I would add, because they were all being treated as part of the same overall arrangement, the transaction with Max. I further conclude that the reasonable inference for this court to draw, having surveyed the evidence that was before the trial judge and having concluded that findings 2, 3, 5, 7, 11, 13, 14, 15 and 16 should as to some be entirely set aside and as to the others partly set aside, as already explained, is that on 16 June 1989 Mr and Mrs Major believed Mr Wakeling was acting for them, as well as for Max, and that he was in fact acting for them, as a solicitor. 106 Once that conclusion is reached, it follows that he had duties to Mrs Major which he did not carry out. He was in the circumstances under a duty to advise her of a number of things (and to disclose his connection with the transaction via the $27,000 loan) but I need only mention for present purposes the duties he acknowledged in the questions he was asked reproduced in pars 65 and 66 above. In my opinion Mr Wakeling was quite right in agreeing that a prudent solicitor advising Mrs Major should have advised her that there was a question as to whether the comfort letter was void for uncertainty and that she should satisfy herself that Max and its directors had sufficient assets to discharge Max’s liabilities to ABS. 107 On the basis of the facts as in my opinion they should be held to have been, the question of a causal link between Mr Wakeling’s breaches of duty and the loss suffered by Mrs Major becomes quite different from the one dealt with by the trial judge. In my view, the proper inference to draw from the facts, as in my opinion they were, is that had Mr Wakeling given Mrs Major the advice that he acknowledges a prudent solicitor acting for her would have given, she would not have given any guarantee nor entered into the mortgage of the North Sydney property. Mr Wakeling is therefore, in my opinion, liable for the damage that Mrs Major suffered by becoming a guarantor for the loan to Max and by joining in giving the security for that loan over the North Sydney property. 108 In what I have just said about causation, I have been dealing with it on the footing that Mr Wakeling is liable to Mrs Major in tort for negligent breach of his professional duty. The factual findings which I have indicated are in my view the proper ones would also make him liable in contract and for breach of fiduciary duty. It seems unnecessary to say anything about the cause of action based on the Fair Trading Act. Not much attention was paid in the course of the argument in the appeal to the different possible sources of Mr Wakeling’s liability, but the discussion went principally in terms of the tort of negligence. There was considerable argument about the causality question and the possible benefit to Mrs Major of the less onerous burden of proof she had to satisfy in her breach of fiduciary duty claim: see Brickenden v London Loan & Savings Co [1934] 3 DLR 465; O’Halloran v R.T. Thomas & Family Pty Ltd (1998) 45 NSWLR 262 and Beach Petroleum NL v Kennedy (1999) 48 NSWLR 1, but in view of the facts as I have said I think they should be found, it seems simplest to look only at the question by reference to the negligence tort cause of action, where, as already indicated, it seems to me that it is very difficult to draw any other inference than one in favour of Mrs Major that she would not have entered into the transaction if properly advised by Mr Wakeling. 109 Damages.

In the written submissions filed by the parties preparatory for the oral hearing, those for Mr Wakeling did not touch on the question of damages and those for Mrs Major set out a calculation of the loss that she suffered as a result of entering into the guarantee and mortgage transactions, but did not support the calculation by argument. In the oral hearing, there was no discussion of damages by either side. For Mr Wakeling it was submitted that if the court were going to set aside the trial judge’s judgment, then a new trial should be ordered. In my opinion the factual situation is sufficiently clear to make a new trial unnecessary and to enable judgment for Mrs Major to be entered. The court should therefore in my opinion decide the question of the amount of damages to be awarded to Mrs Major.

110    The court however has been left without any assistance from the parties in deciding on what basis damages should be awarded and how much they should be, apart from the calculation set out in the written submissions for Mrs Major. The relevant paragraphs in that submission were as follows, omitting appeal book references:

“ 24. The loss Mrs Major suffered as a result of her entry in the transaction took the form of increased debt, which:
(a) directly reduced the value of her equity; and
(b) resulted in the forced sale of the property the following year.
In the circumstances, the measure of Mrs Major’s loss is the value of her equity in the property as at the date of the transaction, less the amounts received by her from the subsequent sale.
25. The appellant calculates the loss to Mrs Major’s estate as follows (figures are given to the nearest thousand dollars):
Gross value of property $800,000.00
Less amount owed to CBA $196,000.00
Equity in property $604,000.00
Mrs Major’s half share $302,000.00
Less amounts received from sale $84,000.00
Net Loss $218,000.00
26. Interest at Court rates from the date of sale of the property (3 December 1990) down to judgment is calculated as follows:
Period Rate Days Amount
3/12/90-28/2/91 19% 87 $9,872.71
1/3/91-31/8/91 17% 184 $18,682.30
1/9/91-28/2/92 15% 181 $16,215.62
29/2/92-31/8/92 13% 184 $14,286.47
1/9/92-31/8/93 11.25% 365 $24,525.00
1/9/93-28/2/95 10.5% 546 $34,240.93
1/3/95-28/2/97 12% 730 $52,530.00
1/3/97-1/8/97 10.5% 184 $11,539.07
1/9/97-31/8/98 10% 365 $21,800.00
1/9/98-29/2/00 9.5% 547 $31,036.63
Total to 29/2/00 $234,728.73
Plus interest from 1/3/00 accruing at $59.73 per day. ”

111    It may be that there is no dispute between the parties on the calculation of damages, once liability against Mr Wakeling is established. On the other hand, it may be that counsel for Mr Wakeling wished to put argument on the quantification of the damages. It seems convenient to make orders including the quantification of damages on the one basis which has been put to the court, but making provision for the possibility that, for Mr Wakeling, it will be desired to put argument to the court. 112    Costs.

The court was told that if Mrs Major were to be successful there would be further submissions to be put about costs. The court was therefore asked to reserve the question of costs for further submissions after judgment. That matter is also provided for in the orders which I propose should be made.

113    Orders.

I propose that the following orders be made:
1. Appeal allowed.
2. Judgment below set aside.
3. Judgment to be entered for the appellant/plaintiff.
4. The amount of the judgment to be calculated in accordance with paragraphs 24, 25 and 26 of Mrs Major’s written submissions, set out in par 110 above.
5. Orders 1, 2 and 3 are to operate from the date of delivery of these reasons.
6. Order 4 is to become operative one month after the date of delivery of these reasons, unless within that month submissions are filed on behalf of Mr Wakeling contending that a different sum of damages should be awarded and giving reasons for that contention, in which case order 4 is not to become operative until further order of the court. If such submissions are filed on behalf of Mr Wakeling, then any submissions to be filed in reply on behalf of Mrs Major are to be filed within fourteen days after one month from the date of delivery of these reasons.
7. Any submissions for Mrs Major on the question of what costs orders should be made are to be made in writing and filed within one month from the date of delivery of these reasons, together with a draft minute of formal orders to be made pursuant to these reasons. Any submissions in reply concerning costs to be made for Mr Wakeling are likewise to be made in writing and filed within fourteen days after one month from the date of delivery of these reasons.

114    GILES JA: I agree with Priestley JA. 115    FITZGERALD JA: I agree with Priestley JA.

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