Smith v McCusker QC [No 7] - [2011] WASC 88

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL

CITATION: SMITH -v- McCUSKER QC [No 7] [2011] WASC 88

CORAM: MARTIN CJ

HEARD: 19-23 & 27-28 APRIL, 3-4 & 10-11 MAY, 22 SEPTEMBER, 2 NOVEMBER 2010 &
ON THE PAPERS

DELIVERED : 8 APRIL 2011

FILE NO/S: CIV 1230 of 1995

BETWEEN: JAMES GARNETT SMITH
ELIZABETH ANNE SMITH
Plaintiffs
AND
MALCOLM JAMES McCUSKER QC
Defendant

Catchwords:

Torts - Negligence - Whether defendant negligent in preparation of advice regarding plaintiffs' prospects of successful claim against R & I Bank for alleged breach of contract and negligence - Whether defendant negligent in failing to deliver opinion in a timely fashion - Whether plaintiffs suffered any loss - Turns on own facts

Legislation:

Nil

Result:

Plaintiffs' claim dismissed

Category: B

Representation:

Counsel:

Plaintiffs: In person
Defendant: Mr C L Zelestis QC & Mr M N Solomon

Solicitors:

Plaintiffs: In person
Defendant: Jackson McDonald

Case(s) referred to in judgment(s):

Baltic Shipping Co v Dillon [1993] HCA 4; (1993) 176 CLR 344
Commonwealth Bank of Australia v Smith (1991) 102 ALR 453
Commonwealth of Australia v Amman Aviation Pty Ltd [1991] HCA 54; (1991) 174 CLR 64
Cornish v Midland Bank Plc [1985] 3 All ER 513
Darvall McCutcheon (a firm) v HK Frost Holding Pty Ltd (in liq) [2002] VSCA 85; (2002) 4 VR 570
Hammond Worthington v Da Silva [2006] WASCA 180
Heywood v Wellers (a firm) [1976] QB 446
Instant Nominees Pty Ltd v Redman [1987] WAR 218
James v ANZ Banking Group Ltd (1986) 64 ALR 347
Kitchen v Royal Air Forces Association [1958] 1 WLR 563
Lenin v Australian Bank Ltd (Unreported, NSWSC, 21 June 1991)
Metha v Commonwealth Bank of Australia (Unreported, NSWSC, 27 June 1990)
Nikolaou v Papasavas Phillips & Co (No 2) [1989] HCA 11; (1989) 166 CLR 394
Poseidon Ltd & Sellars v Adelaide Petroleum NL [1994] HCA 4; (1994) 179 CLR 332
Ralik Pty Ltd v Commonwealth Bank of Australia (Unreported, NSWSC, 14 August 1990)
Smith v Bank of Western Australia Ltd [2010] WASCA 15
Smith v Commissioners of the Rural & Industries Bank of Western Australia [2009] WASC 100
Smith v McCusker QC [2000] WASCA 320
Smith v McCusker QC [2005] WASCA 226
Smith v McCusker QC [2010] WASCA 55
Smith v McCusker QC [No 4] [2009] WASC 101
Smith v McCusker QC [No 6] [2009] WASC 381
Stanton v Australia & New Zealand Banking Group Ltd (1987) ATPR 48‑191

TABLE OF CONTENTS

Summary

Overview
The issues
The Full Court decision in 2000
The Court of Appeal decision in 2005
The statement of claim

The claim against the bank
The claim against Mr McCusker QC
The particulars of breach of duty
The duty of care
Alleged breaches of duty

Causation

Quantum

Breach of duty
Dealings with the NAB
Dealings with the R & I Bank (as revealed in the instructions to Mr McCusker QC)
The legal proceedings against R & I Bank
The 1986 proof
Subsequent instructions
Mr McCusker QC's opinion
The proper advice case
What advice would or could have been given in performance of the duty of care?
The advice given by Messrs Warren, McDonald, French & Harrison in 1979
The advice of Mr Rowland QC
The opinion of Mr D R Williams QC
The opinion of Mr Van Zalm
The advice of Mr Nisbet QC
The consequences of delay
The period following Mr McCusker QC's advice up to the termination of legal aid
The effect of the termination of legal aid

Quantum
Loss of opportunity claims
Lost opportunity to pursue litigation
The bank's duty of care
Dealings with the NAB
The first meeting with Mr Danks
The cash flow budget
The review in early 1978
The applications for finance from other sources
The cause of the losses
The likely quantum of the claim against the bank
Stress induced illness and mental distress
Summary on quantum

Conclusion

MARTIN CJ:

Summary

The plaintiffs, Mr James Smith and Mrs Libby Smith, were farmers. The defendant, Mr Malcolm McCusker QC, is a legal practitioner. In 1986, in accordance with the terms upon which legal aid had been granted to Mr and Mrs Smith by the Legal Aid Commission of Western Australia, Mr John Gilmour, who was then a solicitor acting on behalf of Mr and Mrs Smith, retained Mr McCusker QC to provide advice in relation to a claim which Mr and Mrs Smith had brought against the Commissioners of the Rural and Industries Bank of Western Australia Ltd (the R & I Bank). Mr and Mrs Smith claim that as a result of Mr McCusker QC's negligence and delay in the provision of advice, they lost the opportunity to pursue their claim against the R & I Bank in a timely fashion and with legal representation. They claim damages.
For the reasons which follow, I have concluded that Mr McCusker QC was not negligent in the advice which he gave. I have also concluded that any reasonable barrister provided with the instructions given to Mr McCusker QC would have advised Mr and Mrs Smith that they had no reasonable prospect of succeeding in their claim against the R & I Bank, and that even if they did succeed, they had no reasonable prospect of establishing an entitlement to any more than nominal damages. I have also concluded that the advice given by Mr McCusker QC did not cause Mr and Mrs Smith to lose the benefit of legal aid, or cause them to forego their claim against the R & I Bank, which was of no value in any case.
I have concluded that Mr McCusker QC breached his obligation to provide his advice within a reasonable time, but I have also concluded that the delay in the provision of his advice did not cause Mr and Mrs Smith to suffer any loss or damage.

Overview

In order to provide a context for the enunciation of the issues that require determination, and the course that will be followed in these reasons, it is necessary to commence with a brief overview of the sequence of events giving rise to these and other related proceedings, and to chart the history of the various proceedings commenced by Mr and Mrs Smith. In the section which follows I will refer only to significant events which are not contentious. It will be necessary to return to assess a number of these events in much greater detail later in these reasons, and to make findings in respect of the facts that are in contention between the parties.
In August 1952, Mr Smith entered in a lease of an area of crown land situated near Borden in the south‑west of Western Australia. The land comprised 2,684 acres and had not previously been developed for farming use. The term of the lease was 29 years. The lease also provided Mr Smith with the option to purchase the land if certain conditions relating to its development were satisfied. I will refer to this land as 'the farm'.
In 1962 Mr and Mrs Smith married. In 1969 they moved to the farm but did not operate it as a farm on a full‑time basis.
In about February 1976, Mr and Mrs Smith resolved to develop and operate the farm on a full‑time basis. The farm was partly cleared, and a portion of it was used for cropping purposes. Other parts of the farm were used for the raising of pigs.
In early 1977, Mr and Mrs Smith wished to acquire a new and larger tractor for use in the development of their farming operations. They approached their bank, the National Bank of Australia (the NAB), to borrow the funds required for a deposit on the tractor, which was to be acquired under a hire purchase agreement. That bank refused their request. They then approached Mr Richard Danks, the manager of the Ongerup branch of the R & I Bank to request the funding that had been refused, and with a view to moving their banking business to the R & I Bank.
The R & I Bank agreed to provide banking services to Mr and Mrs Smith, and to advance $7,000 by way of a loan, being the amount required for the deposit on the tractor. The R & I Bank also agreed to provide an overdraft facility up to an amount of $3,000 by way of working capital for the farming operation. In the course of dealings between Mr and Mrs Smith and Mr Danks, a cash flow budget for the farming operation for the year April 1977 to March 1978 was prepared.
In May 1977, the Smiths entered into a hire purchase agreement with the Commonwealth Development Bank relating to a new heavy duty tractor. The tractor was delivered around that time.
During 1977, Mr and Mrs Smith exceeded the amount of the overdraft approved by the R & I Bank. In early 1978, in the context of an annual review of their account by the bank, the Smiths requested an increase in their overdraft to the amount of $14,000. That request was declined. Mr and Mrs Smith then applied to the Rural Adjustment Authority and to the Commonwealth Development Bank for financial assistance. Both applications were refused. However, in July 1978, the R & I Bank approved a temporary increase in the overdraft facility.
Later in 1978, Mr and Mrs Smith negotiated with Western Livestock, stock agents, for the provision of financial assistance. Around the same time, farm advisers employed by the R & I Bank visited the farm and recommended that the overdraft facility be increased to a limit of $7,000.
In January 1979, the R & I Bank increased the overdraft facility to a limit of $10,000.
In September 1979, Mr and Mrs Smith sought and received legal advice in respect of a possible cause of action against the R & I Bank. In November 1979, the Legal Aid Commission granted legal aid to Mr and Mrs Smith for the purposes of the further investigation and pursuit of that cause of action.
In December 1979, Mr and Mrs Smith requested an advance of $36,000 from the R & I Bank by way of loan. The bank refused that request.
In July 1980, Mr Barry Rowland QC provided advice to solicitors retained by Mr and Mrs Smith in relation to their claim against the bank. In October 1980, Mr Rowland QC provided a preliminary opinion with respect to prospects and a draft statement of claim.
In 1981, Mr and Mrs Smith acquired freehold title to the farm.
In May 1981, Mr Rowland QC provided further advice and a revised statement of claim. In September of that year, Mr Rowland QC provided advice on the quantum of damages Mr and Mrs Smith might receive from the R & I Bank.
In December 1981 the R & I Bank foreshadowed issuing demand against Mr and Mrs Smith for repayment of their debt to the bank. In January 1982, the Legal Aid Commission extended aid to Mr and Mrs Smith for the purposes of commencing proceedings against the bank. Aid was granted to cover all matters up to, but not including, listing the matter for trial.
In August 1982, Mr and Mrs Smith commenced proceedings against the R & I Bank claiming damages for breach of contract and negligence. There were various interlocutory steps in those proceedings in succeeding years.
In October 1982, Mr and Mrs Smith applied to Town and Country Building Society (the Building Society) for debt reconstruction finance, in an amount of $135,000, in order that they could pay out their debt to the R & I Bank. The Building Society approved that request and in January 1983 an amount of approximately $135,000 was advanced by the Building Society to enable Mr and Mrs Smith to pay out creditors including the R & I Bank (approximately $80,000 in total) to acquire some capital items (approximately $23,000), and to provide working capital (approximately $30,000). During 1984, the Building Society made a further advance of $20,000 to enable Mr and Mrs Smith to carry on.
Mr and Mrs Smith did not make the repayments required under the terms of the loan provided by the Building Society. In April 1985, the Building Society issued notice of demand requiring repayment of the loan in full. The Building Society exercised its rights as mortgagee of the farm and attempted to sell the property by auction in May 1986. However, no bids were received at a level acceptable to the Building Society and the property was passed in.
In the meantime, in August 1985, Mr and Mrs Smith had instructed a new solicitor to represent them in their proceedings against the bank, namely Mr John Gilmour (as Justice Gilmour then was) of Gilmour Richardson. In August 1986, Mr Gilmour retained Mr McCusker QC to provide an opinion on the prospects of success in the claim against the R & I Bank. During 1987 and 1988 various communications, conferences and correspondence took place between Mrs Smith, Mr Gilmour and Mr McCusker QC. I will set out the detailed findings I have made in relation to those matters later in these reasons.
In September 1988, the Building Society again issued a notice of demand to Mr and Mrs Smith, requiring payment of the debt in full. The Building Society, in its capacity as mortgagee of the farm, arranged another auction of the farm to take place on 30 March 1989.
On 21 March 1989, Mr McCusker QC provided a draft of his advice to Mrs Smith for her review. That advice was to the effect that there were poor prospects of success in the claim against the bank and that, even if the claim succeeded, the damages recovered would not be substantial. Mr McCusker QC made some changes to the draft opinion, and on 28 March 1989 provided a signed version of the opinion to Mr Gilmour, who in turn provided a copy of the opinion to the Legal Aid Commission on 29 March 1989.
In the meantime, Mrs Smith had convened a media conference in which she made a number of statements critical of Mr McCusker QC.
On 16 May 1989, the Building Society advised Mr and Mrs Smith that the property had been sold by private treaty. The proceeds of sale were insufficient to satisfy the entire debt due to the Building Society. The outstanding balance due to the Building Society was later written off by the Society as a bad debt, and Mr and Mrs Smith were not required to make up the shortfall.
In 1989, Mr and Mrs Smith engaged new solicitors to represent them in their claim against the bank - Messrs Haynes Robinson of Albany. They retained Mr Daryl Williams QC to provide advice. In June 1990, Mr Williams QC provided advice on the prospects of Mr and Mrs Smith succeeding in their claim against the bank which was more positive than that provided by Mr McCusker QC.
In March 1991, Mr David Van Zalm of junior counsel, provided an opinion on prospects, which was also positive. Later that year, the Legal Aid Commission extended aid for the purposes of providing Mr and Mrs Smith with continuing legal representation up to and including trial, and also for the purpose of obtaining advice from senior counsel on the quantum of damages likely to be recovered.
In August 1993, Mr Peter Nisbet QC provided an opinion on quantum.
In August 1994, the Legal Aid Commission terminated the grant of aid to Mr and Mrs Smith. Mr and Mrs Smith requested reconsideration of the termination of aid. In October 1994, the Legal Aid Commission advised Mr and Mrs Smith as to the reasons why aid had been terminated and declined to reinstate the grant of aid. In November 1994, Mr and Mrs Smith requested further reconsideration of the grant of aid, although in the result did not pursue their request for a review of that decision.
In March 1995, Mr and Mrs Smith commenced these proceedings. Mr Gilmour (who had by then been appointed Queen's Counsel) was named as the second defendant. At about the same time, Mr and Mrs Smith commenced proceedings claiming damages from the Building Society and various related entities and individuals. In April 1997, Master Bredmeyer granted summary judgment in favour of the defendants in those proceedings. In September 1997, Master Sanderson entered judgment in favour of Mr McCusker QC and Mr Gilmour QC in these proceedings.
Mr and Mrs Smith appealed from the decisions dismissing their claims against the Building Society and others, and against Mr McCusker QC and Mr Gilmour QC. In 1997, the Full Court dismissed their appeal from the decision dismissing their claim against the Building Society and others. Mr and Mrs Smith applied for special leave to appeal to the High Court of Australia from that dismissal. Special leave was refused.
In October 2000, the Full Court dismissed the appeal by Mr and Mrs Smith in these proceedings insofar as their claim against Mr Gilmour QC was concerned, but upheld the appeal in relation to the proceedings against Mr McCusker QC. It will be necessary to consider in some detail the precise basis upon which the Full Court permitted these proceedings to proceed.
In August 2003, Master Sanderson again entered summary judgment in favour of Mr McCusker QC. In 2005, the Court of Appeal allowed an appeal by Mr and Mrs Smith against that decision, and again set aside the summary judgment.
In 2006, Mr McCusker QC joined the R & I Bank as a third party to these proceedings (albeit that by then, the legal entity responsible for the liabilities of the R & I Bank was different - now being the Bank of Western Australia Ltd). In 2009, solicitors acting on behalf of the defendant in the proceedings which Mr and Mrs Smith had commenced against the R & I Bank in 1982 moved to dismiss those proceedings for want of prosecution. At the same time, application was made to dismiss the third party proceedings against the bank in this action.
No substantive step had been taken by any party in the proceedings commenced by Mr and Mrs Smith against the R & I Bank in 1982 since February 1986. The only document filed on behalf of Mr and Mrs Smith since that time was a notice of change of solicitors filed in 1991. In April 2009, I dismissed those proceedings for want of prosecution, and on the further grounds that the Smiths' election to pursue these proceedings against Mr McCusker QC amounted to an election to discontinue the pursuit of their claim against the bank, and that the continued pursuit of their claim against the bank would constitute an abuse of process (Smith v Commissioners of the Rural & Industries Bank of Western Australia [2009] WASC 100). At the same time, I dismissed the third party claim brought by Mr McCusker QC against the bank in these proceedings (Smith v McCusker QC [No 4] [2009] WASC 101). An appeal by Mr and Mrs Smith against the dismissal of their claim against the bank was dismissed in February 2010 (Smith v Bank of Western Australia Ltd [2010] WASCA 15).
In the latter part of 2009, Mr and Mrs Smith sought to amend their statement of claim to reintroduce a number of issues which the Full Court had determined were unarguable in its decision delivered in 2000 (Smith v McCusker QC [2000] WASCA 320). I disallowed those amendments (Smith v McCusker QC [No 6] [2009] WASC 381). The appeal brought by Mr and Mrs Smith from that decision was dismissed by the Court of Appeal in the month preceding the commencement of the trial of these proceedings (Smith v McCusker QC [2010] WASCA 55).

The issues

The plaintiffs have represented themselves at all times in these proceedings. More particularly, Mrs Smith has prepared all relevant court documents and made all submissions on behalf of herself and Mr Smith. In those circumstances, subject, of course, to the need to ensure that Mr McCusker QC was aware of the case he was called upon to meet, and given adequate opportunity to meet that case, it is appropriate to construe the pleadings filed on behalf of Mr and Mrs Smith with a degree of latitude. The issues that require determination in the case are to be derived from a liberal construction of the statement of claim, read in the context of the opening and closing submissions presented on behalf of Mr and Mrs Smith.
However, there is a constraint upon the construction properly given to the statement of claim arising from prior appellate decisions in this case, particularly the decision of the Full Court delivered in 2000.
Mr and Mrs Smith filed and served the statement of claim which was operative at the time of trial in May 2007. Mr McCusker QC foreshadowed an application to strike out portions of the statement of claim, in part because it was inconsistent with prior appellate rulings, including in particular the judgment of the Full Court in 2000. Given the considerable delays which had resulted from previous interlocutory disputes in the case, I was concerned to try to ensure that the case went to trial without further delays of that kind. I therefore directed that any application to strike out the statement of claim be reserved to be heard at the time of trial, and further indicated that the proper ambit of the statement of claim would, of course, be constrained by prior appellate rulings in these proceedings, including the reasons of the Full Court given in 2000. The trial was conducted on the basis that, given that the parties were obviously bound by prior appellate rulings, it would be unnecessary for me to rule formally upon the objections to the statement of claim which had been foreshadowed.

It is appropriate to first consider the constraints imposed by previous appellate rulings in this case before considering the statement of claim and the submissions advanced on behalf of Mr and Mrs Smith.

The Full Court decision in 2000

Because of difficulties arising from the way in which Mr and Mrs Smith had presented their case to Master Sanderson, the appeal to the Full Court proceeded by way of the determination of a number of questions which were settled in consultation with the parties prior to the hearing of the appeal. It is unnecessary to refer to some of those questions, which are not germane to the issues tried before me. One of the questions posed for the determination of the court was whether various matters set out in the then statement of claim disclosed a cause of action in negligence against Mr McCusker QC.
In addressing that question, Templeman J (with whom the other members of the court agreed), analysed the many particulars of negligence that had been advanced. In the course of that analysis, he referred to what he took to be the case advanced by Mr and Mrs Smith in the following terms:
The point here, I think, is that the Smiths did not just want a loan. They also wanted advice about the viability of their proposed operations, in respect of which they sought finance. They did not want to borrow money on a basis which would result in their becoming hopelessly indebted to the bank [92].
At another point, Templeman J construed the Smiths' case in the following terms:
The reality, I think, is that the statement of claim did not reflect the Smiths' case, as it appears in the proof of evidence given to Mr McCusker. The Smiths did not rely on the budget; they relied on the bank to provide a proper budget. They went to the bank to obtain finance for a development programme which they did not have the expertise to implement unaided. They wanted advice about how they should plan their programme, and they wanted funds to implement it [137]. (Note: the statement of claim referred to is the statement of claim in the proceedings against the R & I Bank)
In that context Templeman J concluded that it was arguable that Mr McCusker QC failed to address the issues raised in Mrs Smith's proof of evidence by focusing on reliance on the budget which was not a real issue.
It is important to note that these observations were made in the context of a consideration of whether pleaded facts were capable of giving rise to an arguable case. When pleading issues of that kind arise, various assumptions are made, including the assumption that the facts pleaded are true. Views expressed by the Full Court in that context are not to be construed as predicating the conclusion properly reached after a trial, at which evidence is adduced and findings of fact are made on the basis of that evidence.
Templeman J also concluded that, on the various assumptions made for the purposes of the pleading issue before the Full Court, there was an arguable case of negligence in the form of failure to read and appreciate the instructions given to Mr McCusker QC.
Templeman J also concluded that there was an arguable case relating to delay in delivery of the opinion. He also considered that the facts asserted in the version of the statement of claim presented to the Full Court gave rise to an arguable case to the effect that by reason of the negligence of Mr McCusker QC, the Smiths had lost their grant of legal aid and thereby their opportunity of recovering damages from the R & I Bank.
In answering the various other questions posed, Templeman J concluded that it was not open to Mr and Mrs Smith to pursue claims against Mr McCusker QC on the basis of alleged conflicts of interest, fraudulent misrepresentation or defamation. As I have mentioned, the court concluded that there was no arguable case against Mr Gilmour QC, and the appeal of Mr and Mrs Smith, insofar as it related to the claim against him, was dismissed.
Following publication of the reasons of the Full Court, Mr McCusker QC moved to set aside some of the orders made on the ground that he was not given an opportunity to be heard in relation to those matters. The court rejected that motion. In the reasons given, the Full Court pithily enunciated its view of the case which it apprehended Mr and Mrs Smith wanted to run:
The Smiths contend that if the respondent had discharged his duty to them, he would not have focused on the insuperable hurdles in the case as pleaded, but would have identified and explored the true case. This no doubt involved an expectation by the Smiths that the [R & I] Bank would provide a proper budget. However, on our view of the Smiths' case, that was not the full extent of the Bank's obligation. On their case, the Smiths were relying on the bank for advice and guidance generally: see par 137 of the previous reasons. That being so, the Smiths' pleading did not necessarily require an allegation that their loss was caused by the bank's failure to provide a proper budget.
It is not for the court to formulate a pleading for the Smiths. However, it may be acknowledged that a failure by the bank to give general advice and guidance, when relied on to do so, has the potential to found a claim for loss [11] ‑ [12]. (Smith v McCusker QC [2001] WASCA 85)
The Full Court allowed the appeal of Mr and Mrs Smith, insofar as it related to Mr McCusker QC, on the basis that the thrust of their case was as enunciated, together with the allegation that Mr McCusker QC was negligent by failing to properly read and appreciate his instructions, and in breach of duty by delaying the delivery of his opinion. In all other respects, the Full Court considered that the matters asserted by Mr and Mrs Smith did not disclose an arguable cause of action. Their current statement of claim should therefore be construed as falling within the ambit of the case permitted to proceed by the Full Court.

The Court of Appeal decision in 2005

As I have mentioned, Master Sanderson granted summary judgment in favour of Mr McCusker QC in 2003. In 2005, the Court of Appeal upheld an appeal by Mr and Mrs Smith against that judgment. In the course of her reasons for upholding the appeal, Wheeler JA characterised the case which the Full Court had considered to be arguable, in its decision in 2001, as a failure by Mr McCusker QC to appreciate that the plaintiffs' case was based upon a failure of the R & I Bank to provide 'proper advice' (Smith v McCusker QC [2005] WASCA 226). Her Honour went on to observe that in order to make out their cause of action, it would also be necessary for Mr and Mrs Smith to establish that a barrister exercising reasonable care and skill would have advised that there was some prospect of success in a claim against the bank based on a failure by the bank to give 'proper advice' and that, if such legal advice had been given, Mr and Mrs Smith would not have lost the opportunity to pursue their case against the bank, as a consequence of their loss of legal aid.
In the view of Wheeler JA, Mr and Mrs Smith should have been required to amend their pleading to identify precisely what advice the bank should have given to them, what they would have done if such advice had been given, and what loss they suffered as a consequence of the bank's failure to give the advice identified. Although McLure JA (with whom Roberts‑Smith JA agreed) upheld the appeal on a different basis to that enunciated by Wheeler JA, she agreed with that aspect of the decision of Wheeler JA which required Mr and Mrs Smith to more fully enunciate the case against the R & I Bank which they assert they lost the opportunity of pursuing. In the view of McLure JA, the entry of summary judgment was precluded by the decision of the Full Court in 2000, as it had then been held that some aspects of the claim which Mr and Mrs Smith wished to advance were arguable.

The statement of claim

The claim against the bank

It is clear from the current form of the statement of claim that Mr and Mrs Smith have done their best to comply with the observations made by the Court of Appeal in 2005 with respect to their pleaded case. However, perhaps understandably, their pleading does not capture with precision the case against the R & I Bank which they assert Mr McCusker QC should have identified and advised upon.
In par 2 of the pleading, there is a general assertion that the R & I Bank, through its manager, Mr Danks, agreed to 'advise the plaintiffs and to draw up a suitable budget and to provide finance and assistance in applying for finance to implement the plaintiffs' proposed expansion plans'. The nature of the advice agreed to be given is not specified in this paragraph.
In par 5 it is asserted that Mr Danks 'failed to use reasonable skill and care in giving of advice and in the preparation of the cash flow budget', although no particulars of negligence are given at this point in the pleading.
Later in the pleading, in par 9, it is asserted that:
The plaintiffs wanted advice about how they should plan their programme, including the most suitable finance to develop their farm and continue farming on the farm in the future, and they wanted funds to implement it.
Paragraph 10 of the pleading states:
The manager, Richard Danks agreed to advise and to provide finance to implement the plaintiffs' proposed expansion plans.
Read in conjunction with par 9, I construe par 10 as asserting an agreement to provide the advice referred to in par 9.
In par 12 it is asserted that Mr Danks represented to Mr and Mrs Smith that 'the budget and financial plan would be a reasonable programme which would assist them to continue developing the farm and living on it in the future'. The pleading does not identify 'the financial plan' referred to in this paragraph, nor is that expression used elsewhere in the pleading. Rather, at other points in the pleading, repeated reference is made to a budget - see for example, pars 13.1.3, 13.2.4, 14.1, 14.3, 17, 18 and 19.
In par 13 it is asserted that there was an agreement between Mr and Mrs Smith and the bank which contained a number of terms, including a term to the effect that the bank would provide a budget suitable for the plaintiffs' needs 'so that they could put into effect their plan to purchase a heavy duty tractor and continue developing the farm'.
Paragraph 14 of the pleading asserts that there were further terms of the agreement, one of which was a term to the effect that Mr Danks 'would prepare a cash flow budget suitable for the plaintiffs' ongoing farming development plans'.
Further, in par 17 of the pleading it is asserted that in purported performance of the agreement, Mr Danks drew up and provided a budget which was not suitable for the purpose - namely, of enabling Mr and Mrs Smith to continue the development of the farm.
Paragraph 18 asserts that Mr Danks was negligent in the preparation of the budget, and par 19 asserts that the budget provided by Mr Danks constituted a breach of the agreement earlier pleaded, in that it was not suitable.
Up to this point of the pleading, the thrust of the case against the R & I Bank appears to focus upon an alleged breach of an obligation assumed by the bank to produce a budget, and provide finance, which would enable Mr and Mrs Smith to acquire a heavy duty tractor and develop the farm in accordance with their plans. However, the case presented by Mrs Smith to the Full Court in 1999 was to the effect that the budget prepared by the bank was an irrelevant distraction, because Mr and Mrs Smith never relied upon it and knew it was unworkable. Indeed, it was put to the Full Court that the essence of Mr McCusker QC's negligence lay in the emphasis which he erroneously placed upon the budget provided by the bank. It is difficult to reconcile these propositions with the various parts of the pleading to which I have referred.
Paragraph 23 of the statement of claim purports to set out the loss and damage suffered by Mr and Mrs Smith. In that context, rather than in the context of the allegations with respect to the duty of care owed by the bank, or the contractual obligations assumed by the bank, there are assertions made as to 'the proper advice' that should have been given. Then follow 28 paragraphs of advice which purport to synthesise the advice which it is asserted Mr Danks should have given. However, those paragraphs are not consistent within themselves, or with the earlier portions of the pleading to which I have referred. For example, in the paragraph numbered 23.5.15, it is asserted that 'the proper advice' would have been that due to the deepening debt revealed by the budget, Mr Danks should have advised Mr and Mrs Smith to reappraise the intended borrowings with an extension of the business plan for one or two more years to reveal the trend of the depending debt levels. Further, par 29.3.9 asserts that advice should have been given to the effect that Mr and Mrs Smith should spend the first two years or whatever time was necessary utilising the overdraft and stock firm finance to 'consolidate their enterprise'.
These paragraphs appear to assert, somewhat inconsistently with the earlier portions of the pleading to which I have referred, that performance of the bank's duty would have resulted in advice being given to defer borrowing to acquire the heavy duty tractor and the plans to develop the farm until some later time. A case put on that basis is also inconsistent with the express assertion made by Mrs Smith to the Court of Appeal during the hearing in 2005, to the effect that the plaintiffs did not assert a 'no borrowing' case.
In the course of opening submissions at trial, the following exchange took place:
SMITH, MS:   So we say that the advice that he [Mr Danks] should have given us was advice that would have given us an idea of what was involved in preparing a plan, a development plan of the type we had in mind and that we had discussed with him.
MARTIN CJ:   So the advice that he should have given you was procedural advice, ie, the steps that you should have taken?
SMITH, MS:   Yes, it was. Also, I have divided the advice into two lots, the advice he should have given us before he did anything, and then the advice he should have given us after he had prepared the budget because it was plain, looking at it, to him anyway - it should have been plain to him; it wasn't plain to us but it was plain to him, or should have been, that it wasn't going to work, so he should have advised us that it wasn't going to work (ts 488).
Shortly thereafter, Mrs Smith read from par 23.5.15 of the pleading, to which I have referred above. The following exchange then took place:
MARTIN CJ:   So your case is that he should have said, 'Well, if you do this reappraisal, then the outcome of that would be that you don't actually borrow the money'.
SMITH, MS:   Yes.
MARTIN CJ:   You spend a couple of years in consolidation and then go to the Commonwealth Development Bank.
SMITH, MS:   Yes, something like that. Well, precisely that, really, that we were in the position where we could go ahead but it had to be properly financed; they couldn't just lend us money, and if he had bothered to go back through the previous two years or however many years of our income, he would have seen that the farm wasn't generating an income, not much of one; it was running at a loss, and so that was really - I mean, that was the reason I have pleaded it like that, because it's the sensible thing for him to have said (ts 489).
Again, this submission appears fundamentally inconsistent with the submission put to the Court of Appeal in 2005 to the effect that the plaintiffs eschewed a case based on the proposition that the bank should have advised against borrowing funds.
During closing submissions I tried to tease out the case that was being put by Mr and Mrs Smith in this respect. It was submitted that the bank breached its duty to advise with respect to the type of borrowing properly taken - and in particular, by failing to suggest that Mr and Mrs Smith seek a development loan with deferred terms of repayment (ts 1322, 1333, 1335). At points in her oral closing submissions, it appeared that Mrs Smith was again reverting to a 'no borrowing' case, although when I put that proposition to her, she resiled from it and asserted that the bank should have advanced funds on overdraft (as compared to the loan for the deposit on the tractor), and recommended additional finance from a stock firm (ts 1336). However, shortly thereafter Mrs Smith characterised the advice that should have been given in these terms:
He should have given us this advice here, 'mark time for a couple of years until you get a cash flow going, then apply ‑ ‑ ‑ (ts 1337).
At another point in closing submissions I asked Mrs Smith whether it was her case that the bank had a duty to tell them not to buy the tractor. She answered affirmatively (ts 1339). That answer is inconsistent with the portions of the pleading to which I have referred, and with the case put to the Court of Appeal in 2005.
At another point, Mrs Smith submitted that the bank had a duty to find out whether the farm could generate the money to repay the loan, which included a duty to inspect the farm. However, in that context Mrs Smith submitted that:
We weren't seeking farming advice; we were seeking advice as to how to set our farm up financially (ts 1351).
I tried again to obtain a clear statement of the case against the bank which Mr and Mrs Smith asserted Mr McCusker QC should have identified and advised upon in the following exchange:
MARTIN CJ:   So that is the no borrowing case then, you are saying, that that three year budget would have resulted in him saying to you, 'You shouldn't buy the tractor because you won't be able to service your debt'. Is that really what you're saying?
SMITH, MS:   I'm not sure what it would have resulted in. It might have resulted in him saying probably the same sort of thing that we - we didn't have a cash flow to start with, you know. We didn't have a past history of surplus money with which to pay debts, so it revealed that we actually would have to repay the debt, the repayments out of further borrowings, and that is not a viable proposition.
MARTIN CJ:   The answer to my question is yes, that would have resulted in a no borrowing case then?
SMITH, MS:   Unless he proposed some longer term finance with a repayment holiday at the start which I know the bank had access to. They had access to farm development loans through the government but it definitely - yes, unfortunately it's impossible to do it now, your Honour so I would say it would have resulted in one of two propositions. They're: either no borrowing or … a different form of finance (ts 1357 ‑ 1358).
Doing the best I can to reconcile the various different ways in which Mr and Mrs Smith have, over the years, expressed the case against the bank which they assert Mr McCusker QC should have identified, it seems clear that they do not rely upon the budget actually produced by Mr Danks, because they have repeatedly asserted, and continue to assert, that they knew immediately that it was unworkable and that they did not rely upon it. Rather, the case seems to be that a different budget should have been prepared, and over a longer time period. It seems to be asserted that if such a budget had been prepared, it would have shown that borrowing in the form undertaken by Mr and Mrs Smith was not sustainable, and that advice should have been given to either limit the borrowing to a modest overdraft facility, or seek some other type of finance with extended repayment terms. This is the case against the R & I Bank which I will describe as 'the proper advice' case.

The claim against Mr McCusker QC

As I reminded the parties many times before and during the trial, these are proceedings in which Mr and Mrs Smith claim damages from their legal adviser, Mr McCusker QC. The bank is no longer a party to these proceedings. The claim which Mr and Mrs Smith brought against the bank, and which they wished to pursue is, however, relevant in two respects. First, it is relevant to the assessment of the allegations of breach of duty by Mr McCusker QC, to the extent that those allegations include a failure to identify and advise upon the 'proper advice case' which the Smiths wished to pursue against the bank, and a failure to properly appreciate the issues raised by the brief in that respect. Second, Mr and Mrs Smith allege that as a consequence of breaches of duty by Mr McCusker QC they lost the opportunity of pursuing their claim against the bank with the benefit of legal representation, and it is therefore necessary to place some value upon that lost opportunity (without, of course, purporting to try that claim in the course of these proceedings - see Nikolaou v Papasavas Phillips & Co (No 2)[1989] HCA 11; (1989) 166 CLR 394, 404; Hammond Worthington v Da Silva [2006] WASCA 180 [114] ‑ [119].

The claims against Mr McCusker QC which Mr and Mrs Smith have enunciated in their statement of claim must be construed in the context of the extensive history of interlocutory appeals to which I have referred. As I have indicated, put shortly, those decisions permit Mr and Mrs Smith to run a case against Mr McCusker QC which has three general components:
(a)an alleged failure to appreciate that the case which Mr and Mrs Smith should have pursued against the bank was a breach of a duty which the bank owed to them to give them proper advice and guidance, and to provide advice in respect of their prospects of success in pursuing a claim formulated on that basis;
(b)an alleged failure to properly appreciate and comprehend the factual and legal issues raised by the brief;
(c)an alleged failure to provide advice in a timely fashion.
These issues are to be determined by reference to the course of dealings between Mr and Mrs Smith, their solicitor, Mr Gilmour, and Mr McCusker QC, including the terms of Mr McCusker QC's retainer, the instructions provided to him in his brief, and the instructions that would have been provided if it was his duty to seek further instructions on particular topics. Put another way, the liability of Mr McCusker QC is to be determined by reference to the instructions he was given with respect to the dealings between Mr and Mrs Smith and the bank, not by reference to findings of objective fact that might be made with respect to the actual dealings which took place between Mr and Mrs Smith and the bank. Findings of the latter kind are relevant to the assessment of the value of the opportunity to pursue a claim against the bank with the benefit of legal representation which Mr and Mrs Smith assert they lost as a consequence of Mr McCusker QC's breaches of duty. But they are not relevant to the question of whether or not Mr McCusker QC breached his duty except to the extent that they shed light on the instructions he would have been provided with, if it were his duty to seek them.
The evidence given by the bank manager, Mr Danks, in the course of the proceedings before me illustrates this point. That evidence was not available to Mr McCusker QC, nor would it have been available had he sought instructions with respect to it. It follows that the evidence given by Mr Danks is not relevant to the liability of Mr McCusker QC. It is, however, relevant to an assessment of the value of the opportunity which Mr and Mrs Smith claim they lost, in the event that liability is established. It follows that the primary source of evidence relevant to the assessment of liability, will be the instructions provided to Mr McCusker QC.
The parties have endeavoured to recreate the written instructions provided to Mr McCusker QC, and that recreation was tendered in evidence. It is largely, but not entirely, complete. The initial written instructions were augmented by information provided by Mr and Mrs Smith in and after conferences with Mr McCusker QC, which is also to be considered. The prefix TB 1, when used in respect of a document referred to in these reasons, indicates that it was a document provided to Mr McCusker QC prior to the provision of his opinion. Relevant also are the instructions which would have been provided by Mr and Mrs Smith if Mr McCusker QC was obliged, by the proper discharge of his duties and responsibilities, to seek further instructions. Relevant also to the allegations of delay, are the terms upon which Mr McCusker QC was retained by Mr Gilmour.

The particulars of breach of duty

I have identified the three general areas of claim which Mr and Mrs Smith were permitted to advance following their successful appeals against the interlocutory dismissal of their claims. Within those general areas of claim, Mr and Mrs Smith have endeavoured to particularise the breaches of duty upon which they rely in their pleading, and in the course of submissions. Those attempts at particularisation are impeded by their lack of legal representation. However, I will set out what I have taken to be their case, derived from their statement of claim and the submissions presented at trial.

The duty of care

Mr and Mrs Smith plead (in par 54) that Mr McCusker QC had a duty to exercise all due professional care, skill and diligence. The existence of that duty is not contested, nor is it disputed that the standard of care which Mr McCusker QC was obliged to provide was that of a senior Queen's Counsel experienced in commercial litigation.
In the written opening submissions provided by Mr and Mrs Smith, it is asserted that the ambit of the duty owed by Mr McCusker QC was somehow shaped or influenced by his experience as a director of Town & Country Building Society. However, this is not asserted in the statement of claim, and in any event, in this case, the duty to provide legal advice cannot be shaped or influenced by expertise in another field, such as banking. The extent of the duties owed to Mr and Mrs Smith by the R & I Bank is a legal issue to be assessed in the context of the particular dealings between Mr and Mrs Smith and the Bank, not by reference to generic banking practice.
In the course of closing submissions, Mrs Smith asserted that the standard of care was also to be assessed by reference to Mr McCusker QC's experience in farming, and in particular in relation to the development of new land farms. That is not a proposition enunciated anywhere in the pleaded case, nor was it identified in the course of opening submissions. Leaving aside the questions of procedural fairness that would arise if a proposition that arose so late in the trial was to be countenanced, it seems to me to be without substance in any event. The evidence falls well short of establishing that Mr McCusker QC had sufficient expertise to qualify him to give expert evidence on farming matters and in any event, the case against him is put on the basis that he should have identified, from the instructions given, that the case that should have been brought against the bank was a case based upon the bank's failure to give 'proper advice'. That alleged breach is a breach of a duty to give legal advice, not breach of a duty to provide expert advice on farming matters. For these reasons I reject the assertion that either the ambit of the duty of care owed by Mr McCusker QC, or the standard of care he was obliged to provide, are influenced by the extent of his farming experience. Otherwise, there is no dispute between the parties as to the duty of care owed by Mr McCusker QC.

Alleged breaches of duty

Mr and Mrs Smith set out the breaches of duty by Mr McCusker QC which they allege in par 55 of the statement of claim. They assert that he placed undue emphasis upon the budget which was prepared, and should instead have focused upon the issue of the bank's obligation 'to provide a proper budget'. It is further asserted that Mr McCusker QC breached his duty by failing to seek instructions upon the expert evidence that might have been available to establish the advice which the bank should have given to Mr and Mrs Smith, and the course of action they would have followed if so advised.
It is further asserted that Mr McCusker QC failed to familiarise himself with those parts of his brief:
(a)in which it was explained how the actual costs for 1977 had exceeded the budget; and
(b)in which Mrs Smith described how the application to the Rural Adjustment Authority came to be made.
Further, in par 63 of their pleading, Mr and Mrs Smith complain of unreasonable delay in the delivery of written advice.

Causation

Mr and Mrs Smith assert that if Mr McCusker QC had performed the duties which he owed to them, he would have provided a more favourable opinion which would have enabled them to pursue their claim against the bank with the benefit of legal representation funded by the Legal Aid Commission. Given the sequence of events following the provision of Mr McCusker QC's written advice, to which I have briefly referred, the general issue of causation includes the following specific issues:
(a)Would the proper discharge of the duty of care owed to Mr and Mrs Smith more likely than not have resulted in the provision of a favourable opinion as to the prospects of success in their claim against the bank? (If the answer to this issue is in the negative, then the only remaining causation issue concerns the consequences of any established delay).
(b)Did any period of delay for which Mr McCusker QC was liable cause or materially contribute to any loss or damage suffered by Mr and Mrs Smith including:
(i)in respect of interest paid to Town and Country Building Society;
(ii)in respect of their prospects of averting a sale by the mortgagee;
(iii)in respect of their prospects of going to trial prior to the termination of legal aid?
(c)Did any breach of duty by Mr McCusker QC cause or materially contribute to the termination of legal aid granted to Mr and Mrs Smith given:
(i)legal aid was continued, and extended repeatedly after the provision of Mr McCusker QC's advice;
(ii)after Mr McCusker QC gave his advice, other opinions were given by three other counsel?
(d)Did any breach of duty by Mr McCusker QC cause or materially contribute to Mr and Mrs Smith's lost opportunity to pursue their claim against the bank, given the manner in which that claim was ultimately determined?

Quantum

Mr and Mrs Smith assert that by reason of breaches of duty by Mr McCusker QC they lost the opportunity to pursue their claim against the bank with the benefit of legal representation in a timely fashion. It will be necessary to make an assessment of the value of that opportunity in due course. In that context I will refer to the legal principles governing such an assessment.
Mr and Mrs Smith also claim, as components of the damages claimed, damages for mental distress and illness, lost opportunities to earn other income, and damage to reputation. Their claim for these matters does not clearly delineate between those components which they assert were components of the damages which they could have obtained in their claim against the bank, or those components which they assert are the consequence of breach of duty by Mr McCusker QC. As will be seen, the levels of generality at which these claims are advanced, and the lack of an evidentiary basis for them, present significant obstacles to their success.

Breach of duty

As I have noted, the only evidence which is relevant to the question of whether Mr McCusker QC breached the duty of care which he owed to Mr and Mrs Smith is, with one exception, evidence which goes to the instructions he was given, and the advice which he gave as a consequence of those instructions. The exception arises if it is concluded that the proper discharge of his professional duties required Mr McCusker QC to seek further instructions upon a particular topic or topics. In that circumstance, evidence as to the instructions that he would have received had he requested them would be relevant.
In January 1982 the Legal Aid Commission granted assistance to Mr and Mrs Smith for the purpose of initiating proceedings against the R & I Bank. The grant of assistance covered work done up to, but not including, listing the matter for trial. At that time the Smiths had engaged Messrs Michael White & McGregor to act on their behalf in the pursuit of their claim against the R & I Bank.
During 1985 Mr and Mrs Smith decided to engage Mr Gilmour to represent them in the proceedings which they had by then commenced against the R & I Bank, in place of Messrs Michael White & McGregor. Mr Gilmour was then practicing as a partner in the firm Gilmour Richardson. In August 1985 the Legal Aid Commission approved the transfer of assistance from Messrs Michael White & McGregor to Gilmour Richardson, and further approved the grant of assistance for the provision of a full opinion from senior counsel on the merits of the proceedings together with an opinion on quantum (TB 1, page 2464). In about July or August 1986 Mr Gilmour enquired whether Mr McCusker QC would be prepared to give an opinion on the merits of the claim Mr and Mrs Smith brought against the R & I Bank. Mr McCusker QC advised that he would be prepared to receive instructions to provide an opinion, but was extremely busy at that time, and could not accept instructions if the advice were required urgently (witness statement of Mr McCusker QC, par 11).
By letter dated 28 August 1986 Mr Gilmour retained Mr McCusker QC to provide an 'opinion as to the merits of the action' (TB 1, page 2722). Either accompanying the letter, or delivered shortly thereafter, was a large quantity of documents contained in approximately nine lever arch files.
It would be misusing language to describe the documents that were delivered to Mr McCusker QC as a brief. There are no observations on contentious issues of fact or law. There was no chronology, overview of the facts or list identifying the roles of the many people referred to in the documents. It seems clear that the documents were compiled by Mrs Smith, without any input from Mr Gilmour, whose contribution appears to have been limited to the covering letter. Mr Gilmour took no part in the trial before me. There may well be an explanation for the form of the materials provided to Mr McCusker QC, but if so, it did not appear from the evidence adduced at trial. Although the documents were provided in very general groupings, within those groupings they were not provided in any particular order or sequence. The documents comprised more than 2,000 pages, many of which, probably most, are entirely irrelevant. Included within the documents was a document described as a 'witness proof' which was prepared by Mrs Smith apparently in 1986 (the 1986 proof) (TB 1, page 2556). Although the document follows a broad chronological sequence, it bears a very distant resemblance to a proof of evidence that would be prepared by a competent lawyer. It contains much material that is plainly irrelevant, a lot of material that is argumentative, rather than evidentiary, and is generally hard to follow.
Mr McCusker QC said in evidence that when he reviewed the documents provided to him he had considerable difficulty in identifying the basis of the claim which Mr and Mrs Smith wished to advance against the R & I Bank and in gleaning from the documents the information and factual instructions that were relevant to that claim. That difficulty is entirely understandable. Having carefully reviewed the documents provided to Mr McCusker QC myself, I have experienced precisely the same difficulties. However, it is necessary to undertake the difficult task of attempting to analyse the information contained within those papers, because the claim which Mr and Mrs Smith make against Mr McCusker QC depends critically upon such an analysis.
In the 1986 proof Mrs Smith provided the background to the dispute with the R & I Bank. She records that she was brought up in the metropolitan area before marrying Mr Smith in 1962. Mr Smith had been brought up on a farm in the Borden area. In 1952, while working as a shearer, he had been granted 2,684 acres of land under a conditional purchase lease which had a term of 29 years.
The 1986 proof confirms that consistently with the terms of the lease, Mr Smith spent money and time improving the land by sinking dams and erecting fences, and carrying out clearing work. Machinery was purchased and a dwelling constructed.
Included within the documents provided to Mr McCusker QC was a proof of the evidence to be given by Mrs Smith prepared in about 1980 by her then solicitors (the 1980 proof) (TB1, page 1673). It seems that this was the proof briefed to Mr Rowland QC prior to the provision of his advice. That document records that in 1969 Mr and Mrs Smith and their children went to reside on the farm. For the seven previous years following their mortgage, they had lived elsewhere, while Mr Smith was working as a contract shearer and truck driver. After the family moved onto the farm in 1969, Mr Smith continued that work part‑time, and operated the farming property part‑time.
According to the 1980 proof, in 1969 when Mr and Mrs Smith moved onto the farm, about one half of the boundary of the property was fenced, there was one internal paddock fenced, and about 500 acres had been cleared. Two hundred sheep were grazed on the farm, and pig farming was undertaken on a small scale. According to the 1980 proof, by 1975, the property had been developed to the point where there was a paddock fenced for pigs, which held approximately 100 pigs, three quarters of the boundary had been fenced, together with three internal paddocks, a grain silo and all purpose shed had been acquired, and three dams had been completed. Various items of plant and machinery had also been acquired.
According to the 1980 proof, in about March 1975 Mr and Mrs Smith moved onto another property in the vicinity pursuant to a share farming arrangements with Mr Des Welstead. However, in about February 1976 they returned to reside at the farm.

Dealings with the NAB

Mr and Mrs Smith had an overdraft facility with the National Australia Bank (NAB). In July 1976 Mrs Smith wrote to the manager of the Gnowangerup branch of the NAB explaining why they had overdrawn the facility provided to them. She asserted that they had become much more reliant on pigs than previously planned, and expected to derive significantly greater revenue than had previously been foreshadowed. Mrs Smith also explained that a crop had not been planted that year, because of seasonal conditions, and that more barley may be required as pig feed before the pigs were sold. In the letter Mrs Smith requested an increase in the overdraft facility to enable the feed to be purchased, and outstanding accounts to be settled (TB 1, page 427).
In his reply, the manager of the Gnowangerup branch of the NAB expressed disappointment that a crop had not been planted, given that the income from cropping was to form the major part of Mr and Mrs Smith's projected income. He declined to extend the overdraft facility, and suggested that more reliance be placed upon contract work in order to meet outstanding liabilities (TB 1, page 430).
In August 1976 Mrs Smith wrote to the Perth office of the NAB complaining of the refusal to extend the overdraft facility, and seeking an explanation (TB 1, page 431). In that letter Mrs Smith asserted that it was:
[A]nnoying and embarrassing to find ourselves in the position of having planned our financial strategy on what we consider to be a sound basis only to have our programme interrupted for no apparent reason. I could understand there being some unwillingness to advance monies which did not have a good chance of being repaid within some reasonable time, but as I have pointed out, we have several options open to us for the repayment of the money.
The regional manager of the NAB replied to that letter by letter dated 18 August 1976. In that letter he referred to discrepancies between the information contained in the letter from Mrs Smith, and the information available to the bank with respect to gross income in the preceding three years (TB 1, page 435). The author of the letter observed:
Even at the anticipated gross income of $6,500 that you expect to realise from the proceeds of sale of pigs, it is doubtful whether you would have the capacity to maintain yourselves and family, including the children at college, work and improve the property and service the commitments to the bank from within the figure available.
Reference is then made in the letter to a mortgage over the farming property securing the debt. The letter then concludes:
We believe that if you can clearly establish to our branch manager's satisfaction your income achievement and ability to repay, he would be receptive to a working limit facility, but there is little point in making such further approach to him unless this is clear. We are more interested in the satisfactory servicing of a debt, than in its repayment being forced through the recovery from proceeds of sale of the security itself.

In the meantime Mrs Smith had written to the manager of the Gnowangerup branch of the NAB by letter dated 4 August 1976 (TB 1, page 437). In that letter she challenged assertions made with respect to likely income and costs by reference to a budget which had been prepared by the NAB for the period up until March 1977. The letter contains a detailed analysis of the comparative cost to be incurred and revenue derived from cropping as compared to raising pigs. The letter displays a facility in the projection of costs and revenue. The manager replied (TB 1, page 440) reiterating his assertion that the cost of raising pigs would exceed the projected costs of cropping, and requiring advice as to the source of funds that would be used to bring the overdraft account back to the approved limit. He also directed that further cheques not be drawn until the account was returned to the approved limit. Mrs Smith replied advising that the scheduled payments from crops harvested in previous years would be used to return the account to the approved limit (TB 1, page 441).
By letter dated 10 March 1977 Mrs Smith wrote to the manager of the Gnowangerup branch of the NAB setting out what she described as 'our proposed budget' (TB 1, page 445). As the letter noted, Mrs Smith did not have the proper form, so she provided estimates of income and expenditure in narrative form, summarised in a table comparing projected income from the sale of pigs and other sources, and projected expenditure. The table suggested a surplus of income over expenditure of just under $3,000.
Both the 1980 proof and the 1986 proof later prepared by Mrs Smith record that shortly thereafter Mr and Mrs Smith decided that they needed to purchase a new tractor, because their existing tractor was not adequate for the future development of the farm. In their view, because of the clearing work that was to be undertaken, and the prospect of undertaking more cropping work, a heavy duty tractor was appropriate, rather than a light duty tractor.
Mr and Mrs Smith approached the manager of the Gnowangerup branch of the NAB with a request that the bank provide finance for the acquisition of the tractor. He advised that the bank would be able to grant the finance for the purchase of a light duty tractor only. It must have been clear to Mr and Mrs Smith that the NAB did not consider that they would be able to satisfactorily service a debt of the magnitude required to acquire a heavy duty tractor. Mr and Mrs Smith then decided to approach the manager of the R & I Bank branch at Ongerup, where Mrs Smith had an account which she had used for the purpose of paying school fees.
I digress at this point to observe that the documents provided to Mr McCusker QC supported the following conclusions in relation to Mr and Mrs Smith's dealings with the NAB:
(a)they had constructed their own farming and financial strategy for the development of their farm, and were committed to that strategy;
(b)they were quite capable of making future estimates of costs and revenue that could be included in a budget;
(c)they were not looking to the NAB for either farming or financial advice, all they wanted from the NAB was financial accommodation;
(d)when the NAB expressed pessimism about the capacity of their farming operation to service the loan they were seeking, instead of reappraising their plans, they sought finance from another source.

Dealings with the R & I Bank (as revealed in the instructions to Mr McCusker QC)

Mr Richard Danks, who was the manager of the Ongerup branch of the R & I Bank in March 1977, gave evidence. Plainly that evidence was not available to Mr McCusker QC, nor would it have been available had he sought instructions from Mr and Mrs Smith. Accordingly, as I have noted, that evidence is relevant only to my assessment of the value of the claim which Mr and Mrs Smith had against the R & I Bank, and is irrelevant to the issue of whether or not Mr McCusker QC breached his professional duties. This portion of my reasons is therefore concerned only with the information available to Mr McCusker QC within the documents he was provided at the time he was retained in August 1986. I will deal in due course with information which he received subsequent to his initial retainer, but prior to the provision of his advice in March 1989.
The 1980 proof records that Mr and Mrs Smith approached the R & I Bank because they 'remained firm with our decision that we required a heavy duty tractor'.
According to the 1980 proof:
Prior to the formal discussion with Mr Danks we had been to Hendry & Associates in Gnowangerup, machinery dealers, and we had selected a tractor which was a Massey Ferguson 1085 tractor, purchase price $17,500, and the deposit was $7,000.
(The reference to 'the formal discussion' appears to be a reference to the second meeting between Mr Danks and Mr and Mrs Smith on 5 April 1977).
An invoice from that company shows that an amount of $17,500 was debited from the account of Mr and Mrs Smith on 1 April 1977, which was shortly after Mr and Mrs Smith approached the R & I Bank in March of that year, and before the cash flow budget had been prepared. Although this invoice does not appear to have been amongst the documents provided to Mr McCusker QC, it is consistent with the instructions he was given as to the sequence of events.
According to the 1980 proof:
We approached the R & I Bank generally because we were unhappy with the situation with the National Bank. They had for example as previously indicated not agreed to allow us sufficient finance to purchase a larger tractor. We had had arguments with them about their refusal to allow us to expand our overdraft facility so that we could in turn expand our business operation on the farm.
Generally we needed a bank which would extend to us sufficient finance to purchase the larger tractor and also allow us sufficient finance so that we could expand our business. We were looking to a bank which would finance us generally at a stage when our assets and liability position was secure such that we could generally expand our operation and the bank that was to back us would be required to generally assist with the expansion programme.
When we approached Mr Danks we explained generally our assets and liability position in that we had partly clear[ed] the property, we had sufficient machinery except the tractor, we had some fuel and super and we wanted to crop part of the property.
We explained generally that we required assistance in our expansion programme firstly for the tractor and also generally and as previously indicated what we required was a bank who would finance us generally and this was made known to Mr Danks.
Mr Danks indicated that his bank would not bounce our cheques and that the bank would assist with our general finances as well as the tractor finance. He indicated that his bank would be prepared to extend the overdraft facility with the overdraft facility to be renewed each year. We had explained to him that we did not require simply a static overdraft but were looking to a more flexible overdraft facility to help with the financial arrangements.
There is nothing in this description of the reasons for approaching Mr Danks which would suggest that Mr and Mrs Smith wanted anything other than financial accommodation.
The 1986 proof described the first meeting with Mr Danks in the following terms:
At our first meeting we explained who we were, where our farm was, our history, the stage of development of the farm, our need for a better tractor and the refusal of the National Bank to finance the size tractor we needed. We went to great lengths to give him every detail that was relevant, and we stressed that we needed a bank which understood that the farm needed fully developing, was not supporting us at that time, and that we knew it was no use going in for finance we couldn't repay. We were worried about the failure of the National Bank manager to grasp even the basics of our situation and we told Richard so. He said, 'we won't bounce your cheques', and we were very relieved and took this to mean that we would be able to sort out problems which might arise, as they do in farming. At this point, in response to our allegations that the National Bank manager did not seem to understand our needs he said as well, 'see, you should have come to the R and I'. We mentioned to him the long term development loans made available to land settlement farmers after the war and we said that we thought that sort of loan would be ideal. He said they were no longer available, but that banks looked after long term development programmes now by other means, but they could still provide suitable finance. I explained that I could not do an expert budget and he said that he would do it. I also said that we had never had a large loan before, and so we were not familiar with the procedure, the paperwork or anything. He told us not to worry about that as it was all done by the bank. We told him what the farm was like, that the cleared land had re‑growth on it and would have to be chained and root raked before cropping; that you could expect a maximum of six bags to the acre off the ground, and that with new ground it was less. Sometimes people got bumper crops, but we thought it was wise to be conservative. We were optimistic because it was good land, sandy loam, and the district average was pretty good, but we went to great lengths to get our point across that it was no use going into debt beyond what we were able to pay back, and stressed that we would need long term help. We said that we could not count on much family help as we were basically developing the property unaided. We said that in order to produce pigs for sale the feed must be kept up to them or they would stop growing and lose weight. We told him that pigs were more practical than sheep or cattle, because our property was covered in box poison, which pigs seldom eat, but sheep and cattle do. We said that we would need to sink another dam to ensure adequate water for increased pig numbers, but that could wait till, say, next summer. We said that we would have to buy a truck before long, as, with the increased cartage of pigs to market and with the increased cartage of grain and fuel and other items it would be cheaper than paying cartage.
…
We said we had about $1,000 in accounts to pay, and that we would need a $3,000 overdraft to pay out the National Bank and our outstanding accounts. We thought that the $3,000 overdraft would be plenty to start with but we had not done a budget and didn't know much about how it should look on paper, or what expenses would be paid out of the overdraft, and what expenses would be paid by other means. We just didn't know how it was done and how it should look on paper, or how long it would take. We went to the R & I with an idea, and we relied on Richard to put it on paper.
…
When we had reached the agreement that the R & I would finance the purchase of the tractor and provide other finance, we left, and in response to our parting words, which were basically that, above all we needed a bank that understood our situation and would provide the right sort of working relationship we needed, he stood at the front door of the bank and let us out, and said, for the second time that day, 'Don't worry, we won't bounce your cheques'. We were very happy that we had found a bank manager that understood and we said, 'Well that's good. We'll go and tell the National Bank manager' (TB 1, pages 254 ‑ 256).
There are a number of observations usefully made about this description of the first meeting with Mr Danks.
First, it is significant that Mr and Mrs Smith considered that they had reached agreement with Mr Danks for the provision of finance at that meeting. That is significant because there is no suggestion that Mr Danks gave any advice during that meeting or that Mr and Mrs Smith thought he had given advice except perhaps as to the form of loan to be utilised. The cash flow budget was not prepared until later. Reaching agreement before the bank had given any significant advice is unequivocally inconsistent with any proposition that Mr and Mrs Smith were looking to the bank for advice, or had relied upon advice from the bank before proceeding to acquire the tractor. As I have stated, their account was debited with the cost of the tractor by the machinery supplier before the meeting with Mr Danks at which he presented the cash flow budget, although this particular fact may not have been known by Mr McCusker QC.
Second, the flavour and thrust of the description of the meeting was that Mr and Mrs Smith wanted finance - a bank that would provide the advances they needed to implement their plan, unlike the NAB which was not supportive. The documentation to be prepared was for the bank's purposes, not theirs.
Third, there is nothing in that description of the meeting with Mr Danks that would suggest he held himself out as being able to provide farming advice, or purported to give such advice. To the contrary, it is clear that all the information as to the strategy to be adopted, and upon such things as likely crop yields, was provided by Mr and Mrs Smith. In that context an assertion that 'it was no use going into debt beyond what we were able to pay back' is a statement of the obvious, perhaps made to foster an impression of fiscal prudence, not a request for advice as to the farming strategy to be adopted, or as to the likely profitability of the farming strategy which Mr and Mrs Smith had decided upon.
On 1 April 1977 Mr and Mrs Smith completed an application form seeking a loan from the R & I Bank in the amount of $10,000, for the purpose of paying out the debt to the NAB ($3,000), and providing the deposit on the tractor ($7,000) (TB 1, page 7). On 5 April 1977 that application was approved (TB 1, pages 13, 64). The finance was to be provided in the form of an overdraft facility in the amount of $3,000 and a term loan of $7,000, which was to be reduced at the rate of $2,000 per annum.
On 5 April 1977 Mr and Mrs Smith met again with Mr Danks. In the course of that meeting he presented to them a document which he had prepared on a form used by the R & I Bank entitled 'R & I Bank Monthly Cash flow Budget' (TB 1, page 17). The form provides 12 columns, corresponding to the months of the year (commencing with April), and allows for the listing of income and expenditure anticipated in each of those months. The form presented to Mr and Mrs Smith shows anticipated income in the form of revenue from cropping, wheat and barley, revenue from the deferred payments in respect of crops produced in previous years, revenue from the sale of pigs, wages, and from a pension.
Then follow estimates of expenses, including such things as the costs of grain, fertiliser, cartage and fuel etc. Estimates are also made of personal expenses, including living expenses and school fees. Next to the entry for 'loan repayments' is shown an amount of $7,000, described as '40% deposit for tractor balance on terms'. There does not appear to be any corresponding entry on the form showing the advance of that amount by the bank, with the result that the balance of cash flow shown at the very bottom of the form is, to that extent, distorted.
The 1980 proof asserts that neither Mrs Smith nor her husband:
[W]ere in any way informed about cash flow budgets or general farm budgeting. We had operated on a small scale and in fact any budgeting arrangements and general financial arrangements had been undertaken for us by the National Bank manager. To that extent we were relying totally on the figures produced by Mr Danks. … The bank manager did not produce to us a cropping or stock programme and for the period of the budget we attempted to operate as closely as possible to the cash flow budget projections (TB 1, page 1680 ‑ 1681).
However, a rather different approach is taken in the 1986 proof. In that document Mrs Smith records that 'Richard took in the information given to him, and wrote it all in the bank documentation'. The 1986 proof sets out in detail the information that Mr Danks was given by Mr and Mrs Smith as to the number of pigs they hoped to raise and sell, sale prices likely to be achieved, the cost of fodder, the work to be undertaken for the purposes of cropping, the likely yields to be derived from cropping, the methodology to be used, the fuel on hand and so on. In that context, the proof asserts:
We discussed all aspects of the farm with Richard, including our comments and replies to his questions about likely costs and incomes, but we did not draw up the budget, and we did not know many of the details required. In drawing up a budget, the approach taken depends on what you are trying to show (TB 1, page 2574).
At a later point in the 1986 proof, Mrs Smith asserts:
It was immediately obvious that the budget could not be adhered to. Richard had left out the accounts and put a large sale of pigs right at the start. Both were untrue so I had to just use my brains and do the best I could. As it happens we did manage very well (TB 1, page 2602).
So, from the 1986 proof it was clear that the assumptions as to the farming operations to be reflected in the budget, such as the number of stock, the area to be cropped, prices likely to be achieved for stock sold etcetera, were all provided to Mr Danks by Mr and Mrs Smith. Further, Mr and Mrs Smith did not rely on the cash flow budget for anything, as it was 'immediately obvious' that it was flawed. As I will note later in these reasons, these conclusions are consistent with oral instructions given by Mr and Mrs Smith to Mr McCusker QC in conference.
Amongst the documents provided to Mr McCusker QC was another version of Mr and Mrs Smith's response to the cash flow budget which was produced by the bank. That is a document prepared by Mr White, of Messrs Michael White & McGregor in response to issues raised by Mr Rowland QC at the time of providing his advice. In that document it is reported that:
When the budget was handed to them they simply went away to farm as farmers on the understanding based on apparently the trust position created by Mr Danks to the effect that from discussions with him they were confident that Mr Danks understood what they proposed to do on the farm and that he had investigated their financial position and their programme had the backing of the bank in relation to future advances etc.
Neither Mr or Mrs Smith when the estimated income figures were produced were able to read the document and make any sense of it at all. Although they would be able to indicate to some extent what change of super for example was required to support the virgin land when the figures were produced to them even though in simple form in the budget they were unable to understand and in fact did not understand the budget figures at all. They simply went away to farm the property however it became apparent early that they would not be able to farm the property even in accordance with Mr Smith's understanding of the limitations of the property.
Although the clients did not actually attempt to follow the terms of the budget strictly as they in fact did not understand it when they went to for example purchase trace elements to put in the ground bearing in mind the fact that the farm was new land when they requested an advance from the bank to complete the purchase of the trace elements Mr Danks would not allow the advance because he said there was not sufficient allowance for it in the budget (TB 1, page 1797 ‑ 1798).
According to this version of their reaction to the budget, they did not rely upon it because they did not understand it, not because they 'immediately' concluded it was flawed. But on either view they placed no reliance upon it, and made all farming and financial decisions without reference to it.

The 1986 proof is extremely difficult to follow. As I have already suggested, viewed in context, perhaps the closest any part of that proof comes to asserting a communication between Mr and Mrs Smith and Mr Danks which could enliven a general duty to advise, is the proposition that Mr and Mrs Smith stated that they did not want to borrow funds which they could not afford to repay. However, as I have already noted, that assertion, if in fact made, appears to be nothing more than a statement of the obvious, or perhaps as an indication of fiscal prudence, is and when viewed in context, quite insufficient to enliven a general duty to provide farming or financial advice.
The 1987 proof sets out in detail the development plan which Mr and Mrs Smith outlined to Mr Danks in their first meeting. It also asserts that Mr Danks was told that Mr and Mrs Smith would require a facility of about $30,000 over a period of several years to implement that plan. As I have noted, this proof was prepared in a context in which Mr and Mrs Smith instructed Mr McCusker QC that the claim which they wished to advance against the bank was a claim in contract based upon the bank's failure to provide them with sufficient finance to implement the development plan which they had formulated. As I have already noted, that assertion is fundamentally inconsistent with the proposition that they went to the bank seeking advice as to the farming and financial strategy which they should implement.
I will deal below with a number of the documents that were prepared by Mr and Mrs Smith in the late 1970s, at the time they were dealing with the R & I Bank. There is nothing in those documents, or in any of the proofs of evidence to which I have referred, that would support the 'proper advice' case which Mr and Mrs Smith say they lost the opportunity to pursue against the bank. It is not a case which found expression in the statement of claim, or in any advice given by any legal advisor engaged by Mrs Smith prior to the termination of legal aid in 1995. There is no evidence that any consideration was given to formulating a claim in this way, nor any evidence adduced to support a claim formulated in this way, prior to the decision of the Full Court in 2000. Of course by then, as I have found, Mr and Mrs Smith had effectively abandoned their claim against the R & I Bank, although for the purposes of this portion of my reasons, I am proceeding upon an alternative hypothesis.
Put shortly, any claim advanced by Mr and Mrs Smith against the R & I Bank on the basis of breach of a duty to give 'proper advice' would face the insuperable obstacle that there was no contemporaneous evidence to support such a claim, which appears to have been formulated many years after the event. Of course the hypothesis upon which this portion of my reasons proceeds is the assumption that that Mr McCusker QC should have given advice in respect of such a claim by 1987, but this was already 10 years after the critical events, by which time the criticism would have been just as valid.
The evidence given before me falls manifestly short of providing any plausible basis for the imposition of a duty to advise upon the bank. The statement which comprised Mrs Smith's evidence‑in‑chief describes the first meeting in these terms:
We both told him of our plans for the farm and made it clear that it was our intention to stay there, to fully develop it and to live on it. We made it very clear that we were seeking finance to do that and that we were willing to change banks if we could be sure the R&I understood our plans and financial needs and was prepared to work with us and advise us financially to achieve our plans, and to lend us money to achieve our plans. We emphasised very strongly that we didn't want to get into debt beyond what we were able to repay and that we would rather carry on the way we were than go into too much debt for the farm to repay [14].
There is nothing in that description of the conversation which is capable of giving rise to a duty to advise. To the contrary, that description of the meeting reinforces the impression gained from the 1980 proof that to the effect that what Mr and Mrs Smith wanted from the R & I Bank was financial support, not advice.
In relation to the form of loan, Mrs Smith's statement proceeds:
We said we needed a long term development loan to give us time to get the farm producing enough money to service the proposed debt and to live on. He said he understood that. We asked about the Commonwealth Development Bank or whether there was any other development finance like the solider settlers got and Danks told me that you couldn't get that sort of loan any more but the bank achieved the same purpose with overdrafts [18].
This evidence appears to go to the proposition that there was some agreement with the bank for the provision of long term support. However, as Mr McCusker QC pointed out in his opinion, that proposition is inconsistent with the documentation which Mr and Mrs Smith signed at the time, with the fact that, as everybody was aware, the cash flow budget was only prepared to cover one year, and with the fact that there is no document in which Mr or Mrs Smith asserted at any time prior to the commencement of proceedings against the bank, that the bank was in breach of an agreement to give them more finance, and over a longer term.
In cross‑examination Mrs Smith was asked repeatedly whether she sought or received any advice from Mr Danks in their first meeting. She was unable to identify anything other than the precise form of the finance which was to be advanced by the bank, although it is clear what Mr and Mrs Smith sought in their meeting with Mr Danks, namely, the deposit of $7,000 required for the tractor, and an overdraft facility of $3,000 (see ts 572 ‑ 578).
The statement which comprised the evidence‑in‑chief of Mr Smith gave the following description of discussions during the first meeting with Mr Danks:
We went to see Danks and showed him the map of what we had cleared and the layout of what we had on the place.
We said we wanted finance to clear more land and to eventually buy the cement floor and internal fittings for a pig shed for the growers. We already had the materials to build the shell of the shed. In order to clear more land for cropping we needed a more reliable tractor so we also needed finance for that. We had looked at a Massey‑Ferguson 1085. Danks told us that he would draw up the budget and any other paperwork needed and he would send it to Head Office. He was enthusiastic and he seemed to think that there would be no problem in the application and it was his opinion that it seemed to be straightforward [29] ‑ [30].
Again, this description of what was actually said in the meeting is quite incapable of giving rise to any duty to provide advice. On the contrary, it is only consistent with a meeting in which customers of the bank sought the provision of finance. It is also consistent with the various portions of the materials provided to Mr McCusker QC which reveal that Mr and Mrs Smith were aware that the primary purpose for the formulation of the budget was to facilitate the grant of the loan - that is, that it was for the bank's internal purposes. There was nothing in Mr Smith's oral evidence which cast any different light upon the matters discussed at the first meeting.
As I have noted in the context of the materials provided to Mr McCusker QC, it is clear that Mr and Mrs Smith left the first meeting with Mr Danks with the view that they had received oral approval for the finance which they sought, and that there was an oral agreement to that effect. In reliance upon that understanding, they placed an order for the tractor, the cost of which was debited to their account on 1 April 1977, prior to their second meeting with Mr Danks.
At the time Mr and Mrs Smith committed themselves to the purchase of the tractor, they had only had one meeting with Mr Danks. They had presented to him their development plan, and sought the provision of finance. He agreed to provide the finance which they sought. As they were well aware, he had given them no advice whatever on farming matters, and on financial matters, had essentially agreed to give the financial accommodation which they sought. It must have been clear to Mr and Mrs Smith that Mr Danks had neither the expertise, nor the opportunity to undertake any meaningful assessment or appraisal of the detailed aspects of their farm development plan. Leaving to one side the various assertions of unexpressed thoughts and argumentative propositions advanced by Mrs Smith over the years, and focusing upon the evidence of what was said in the first meeting, there is simply no evidence capable of giving rise to an arguable case for the imposition of a duty to advise.

The cash flow budget

At the meeting with Mr Danks on 5 April 1977, he presented the cash flow budget which he had prepared, using the information which Mr and Mrs Smith had provided at their first meeting. The evidence, both within the materials provided to Mr McCusker QC, and in the evidence before me, establishes unequivocally that the overwhelming bulk of the information contained within the budget was provided by Mr and Mrs Smith (see Mrs Smith ts 590 and following ts 692 ‑ 693; Mr Smith ts 808 ‑ 809; and Mr Danks' statement pars 21 ‑ 22). Further, as I have noted, Mr Smith confirmed that he told Mr Danks that if there was any shortfall in farm income required to service the debt, he would undertake off farm work.
It was obvious to Mr and Mrs Smith that the budget prepared by Mr Danks was for one year only (ts 686). Further, although Mrs Smith denied in cross‑examination that she was not aware that budgets for succeeding years would depend critically upon the performance achieved in the year covered by the 1977 budget, those denials were implausible, and I do not accept them. It must have been obvious to Mr and Mrs Smith that the accuracy of budgets to be prepared for 1978 and 1979 would depend critically upon financial performance during 1977, in relation to such things as the area of land cleared during that year, the number of breeding pigs retained, cash generated by farming activities, costs incurred and so on.
At the meeting on 5 April 1977 Mr and Mrs Smith signed application forms for the advances they were seeking. Those forms made clear that finance was to be provided for one year only. That was confirmed by the letter which Mr Danks sent them dated 10 May 1977 (TB 2, page 297), which confirmed that repayment of the account would be subject to annual review, and that the term loan was to be reduced at the rate of $2,000 per annum.
As Mr McCusker QC noted in his advice, the contemporaneous documents relating to the grant of financial accommodation by the R & I Bank are unequivocally inconsistent with any assertion that the bank had agreed to provide financial accommodation in any amount greater than $10,000, or for any period longer than one year.
In evidence in these proceedings Mr and Mrs Smith confirmed the instructions they had given to Mr McCusker QC, to the effect that they did not rely upon the budget, in the sense of making farming decisions by reference to it (Mrs Smith ts 624 ‑ 628; Mr Smith ts 815). Rather, they farmed in accordance with decisions which they made having regard to seasonal conditions and their view of appropriate farm management (Mrs Smith ts 698 and following; Mr Smith ts 812 and following). They were both aware of the defects in the budget as soon as they considered its terms. However, significantly, at no point prior to the threatened commencement of proceedings, did they suggest to the bank that they had been given defective advice, and nor did they require further advice from either the bank or any other farming advisor.
Accordingly, there is no evidence which is capable of sustaining the conclusion that the cash flow budget was proffered or received as advice to Mr and Mrs Smith as to how they should conduct their farm, and the evidence establishes unequivocally that no reliance was placed upon the budget by Mr and Mrs Smith when making farming decisions.
As I have mentioned, during 1977, in fact the R & I Bank advanced funds significantly in excess of the overdraft limit which had been agreed earlier in that year.

The review in early 1978

In early 1978 Mrs Smith prepared a document for the bank reviewing their performance over the preceding 12 months (TB 1, page 454). In that document, Mrs Smith wrote:
The dry year made stock grain scarce and expensive, doubling the price from the time when we made out our budget until the time when we needed to make purchases.
At another point in the document Mrs Smith wrote:
Our living expenses were higher than our budget estimate.
These descriptions of the budget as being 'our budget' are entirely inconsistent with any case based upon the budget as a form of advice by the bank.
More generally, the document provides a number of explanations for the failure to perform to expectation. Significantly, at no point in the document is there any suggestion that the bank bore any responsibility whatever for the under achievement. Rather, the explanations proffered focus upon seasonal conditions. The same is true of another document prepared around this time for submission to the bank, in which Mrs Smith wrote:
We commenced 1977 with good prospects and had it not been for altered economical factors due to drought I am sure we would have finished in a much better situation (TB 2, page 474).
When cross‑examined on this statement, she endeavoured to assert that her optimism was attributed to her confidence in Mr Danks (ts 696). However, this is an implausible proposition, which I reject. Plainly the farm development programme was the work of Mr and Mrs Smith, not Mr Danks. As they both acknowledged, no decisions as to how the farm should be worked or developed were ever made in reliance upon any advice given by Mr Danks, or upon the budget which he prepared.

The applications for finance from other sources

In the context of my consideration of Mr McCusker QC's opinion, I have already referred to the materials presented to him relating to the applications made by Mr and Mrs Smith for finance from other sources, following the bank's refusal of continued support in early 1978. I have in that context referred to a document prepared by Mrs Smith dated 29 March 1978, for inclusion in an application to the Rural Adjustment Authority (TB 1, page 124). The terms of that document, consistently with the documents provided to the R & I Bank, make clear that:
(a)Mr and Mrs Smith considered themselves the masters of their own destiny, in terms of the decisions to be made with respect to the management and development of the farm, all of which had been made without reference to the budget or the bank; and
(b)there was no suggestion that any of the difficulties they had experienced were attributable in any way to any advice given by the bank, or any failure by the bank to honour an agreement to provide additional finance.
Further, as I have already noted, during 1978 Mr and Mrs Smith were advised on a number of occasions by those with apparent expertise, notably the Rural Adjustment Authority, that they did not consider their farm development proposal to be viable, and that they should consider leaving the farming industry (TB 2, pages 529, 557). The fact that Mr and Mrs Smith resolutely persisted in their plans reinforces the view that if they had been told by the R & I Bank in early 1977 that their farm development proposal was unwise, and that they should defer their plans, they would not have taken their banking to the R & I Bank, but would have sought financial accommodation to support their plans from another source.
Further, when the R & I Bank sent two farm advisors to visit the farm in the latter part of 1978, Mrs Smith was well aware that their advice was that the viability of their farm was questionable. However, notwithstanding that expression of view from apparently qualified advisors, Mr and Mrs Smith were adamant in their decision to remain on, and expand the farm. Those events tell overwhelmingly against any proposition that Mr and Mrs Smith were looking to the bank for advice as to how they should conduct their farm, or that they would have accepted and acted upon any advice given by the bank.
The first occasion upon which Mr and Mrs Smith attributed any fault to the bank for the financial predicament in which they found themselves was in the letter to the bank of 1 November 1979 (TB 2, page 698). However, the complaint in that letter is put on the basis of reliance upon negligent advice given in the budget, being the cause of action considered by Messrs Warren McDonald French & Harrison as a result of instructions given by Mrs Smith. That cause of action is now conceded to be hopeless. That cause of action was also the central feature of the statement of claim, settled with the concurrence of Mr and Mrs Smith, in the proceedings brought against the bank. These observations reinforce the views I have already expressed with respect to the claim against the bank based upon a failure to give 'proper advice' being unsustained by any document or instruction prior to the engagement of Mr McCusker QC, or indeed, prior to the decision of the Full Court in 2000.

The cause of the losses

The contemporaneous documents to which I have referred reinforce the conclusion that the losses incurred by Mr and Mrs Smith in the conduct of their farming operations were inherent in those operations, attributable either to poor seasonal conditions, or poor farm management, or both. The proposition that Mr and Mrs Smith were inhibited in the management of their farm by the bank's breach of an agreement to provide them with additional finance, must fail, firstly, because there is no evidence of any such agreement and secondly, because the bank did in fact provide significant additional finance. Further and in any event, after many rejections, Mr and Mrs Smith succeeded in obtaining additional finance from the Town and County Building Society, which not only eliminated all existing debt, but provided them with additional capital for improvements, and working capital. Their farming venture still failed, notwithstanding their failure to make any significant repayment of the capital or interest. Their failure to repay either capital or interest on that loan makes it impossible to assert that the failure of their venture was somehow attributable to the financial strictures imposed by their debt.
At all events, the debt owed to the R & I Bank was, in the overall scheme of Mr and Mrs Smith's financial picture, a relatively small component of the debt which was refinanced by the Town and County Building Society. There is no evidence to suggest that it was this component of that debt which had any impact upon the ultimate failure of their farming venture.
The only way in which any causal connection could be established between Mr and Mrs Smith's dealings with the R & I Bank, and the losses which they ultimately incurred, would be through an assertion that Mr and Mrs Smith embarked upon a farming management and development programme in reliance upon advice given by the bank which led to the ultimate failure of their farming venture. However, there are a number of reasons why any such proposition must be rejected, including the lack of any evidence to the effect that the bank gave them any advice of a farming character at all, let alone advice covering the entire period up to the failure of their farming venture, and the evidence which establishes unequivocally that Mr and Mrs Smith were resolutely intent upon developing the farm in accordance with their plans irrespective of the pessimistic views expressed by many financial institutions. And as I have noted, Mr and Mrs Smith eschew any case against the bank based upon the proposition that the bank should have told them not to borrow money to buy a tractor, but continue as they were.

As I indicated at the outset of this portion of my reasons, because it is inappropriate to conduct a trial within a trial, I have not descended in this portion of my reasons to the level of detail that would be appropriate if I had been trying the claim against the bank. It seems to me that the findings I have made above are sufficient for the purposes of the claim against Mr McCusker QC. However, in case a different view should be taken on appeal, it may be appropriate to set out the general views which I formed in relation to credibility of the witnesses whose evidence bore upon the merits of the claim against the bank.
Mrs Smith gave the bulk of the evidence relied upon by the plaintiffs for this purpose. While I did not conclude that she was being deliberately mendacious at any point in her evidence, it is clear that she has made the pursuit of these proceedings her life's work, and that the strong attachment she has to the issues has inevitably distorted and shaped her recollection of events. Generally speaking, I would not accept her evidence on any contentious issue of fact unless it is corroborated by other contemporaneous evidence.
Mr Smith has not been as involved in the prosecution of these proceedings as his wife. He did his best to recall the events in question, although his capacity to do so accurately is no doubt influenced by the lapse of time, and his appreciation of the enormous emotional investment which Mrs Smith has made in the prosecution of these proceedings, and I therefore approach his evidence with caution. At all events, as I have noted, his evidence did not substantially support the plaintiff's case in any significant respect.
Mr Danks was a credible and plausible witness whose evidence I accept. Although his evidence also suffers from a significant lapse in the time between the occurrence of the relevant events, and the time it was given, I accept that the claims made by Mr and Mrs Smith against him within a relatively short period of the occurrence of the events in question would have caused him to bring them to mind, and to retain a recollection of them, to some extent at least, over all the years that have elapsed.
Mr Robinson, one of the farm advisors who visited the farm in late 1978 was also called. He refreshed his memory by reference to notes which he made at the time. I have no reason to doubt in any way the evidence which he gave.
Mr and Mrs Smith and also called Mr Rodney King to give expert evidence. I ruled a substantial quantity of that evidence to be inadmissible. Mr King was called to give evidence on matters which essentially related to an assessment of components of the 1977 cash flow budget. For the reasons I have given, in these proceedings against Mr McCusker QC, there is no need to make findings with respect to the adequacies or inadequacies of the cash flow budget, which was not relied upon. However, should a different view be taken on appeal, I should record the view which I formed to the effect that Mr King's evidence was not convincing, in that he showed very limited familiarity or appreciation of the items included within the budgetary scenarios he assessed.

The likely quantum of the claim against the bank

In order to undertake any assessment of the value of the claim against the bank which Mr and Mrs Smith assert they have foregone as a consequence of Mr McCusker QC's breach of duty, it is necessary to make an assessment of the likely amount of damages that Mr and Mrs Smith would have recovered if their claim against the bank had succeeded. However, there is simply no evidence which would enable me to conclude that Mr and Mrs Smith would have recovered any damages from the bank, even if their claim had succeeded.
There are a number of reasons for this. First, the approach taken by Mr and Mrs Smith, in the formulation of the claim which they would have pursued against the bank for damages is misconceived. That formulation is undertaken on the basis of the value of which the farm would have had, as at the date of trial, if developed and successfully operated.
However, there are only two alternative scenarios with respect to the possible retention of the farm. One is based upon the hypothesis that if Mr McCusker QC had performed his duty to Mr and Mrs Smith the sale of the farm by the building society would have been averted. On this scenario, the case against the bank would have gone to trial claiming damages without a claim for loss of the farm. The other scenario is based upon the hypothesis that if Mr McCusker QC had performed the duties that he owed to Mr and Mrs Smith the farm would nevertheless have been sold by the building society. However, on that hypothesis the claim would have been brought against the bank, and successfully prosecuted within a few years of Mr McCusker QC's advice - say, by 1991 or 1992. The value of the claim against the bank would therefore have crystalised at that time, not at the time of the trial of these proceedings.
On either hypothetical scenario, there is no basis for assessing damages by reference to the value of the farm as at the time of the trial of these proceedings.
The second insuperable obstacle in the path of any assessment of the likely quantum of any claim against the bank is the lack of any admissible evidence with respect to the financial losses incurred by Mr and Mrs Smith. The closest one gets to that evidence is a schedule of claims of various items, none of which have been substantiated by any evidence.
The third impediment to the attribution of any value to the claim against the bank is one I have already mentioned, arising from the relatively modest debt incurred by Mr and Mrs Smith with the bank, which was entirely overtaken by the refinancing by the building society. In the events which occurred, it is difficult, if not impossible to see how anything arising from Mr and Mrs Smith's dealings with the R & I Bank could have had any significant impact upon the ultimate outcome of their farming venture, which was dictated by events which occurred well after there was any continuing impact or influence arising from their dealings with the bank.

Stress induced illness and mental distress

The plaintiffs also claim damages for mental distress and stress induced illness. It is not clear from the way in which these claims are presented whether they are sought as a component of the claim against the bank, or as a component of the claim against Mr McCusker QC. It is unnecessary to consider the legal principles governing the availability of such claims (see Heywood v Wellers (a firm) [1976] QB 446; Baltic Shipping Co v Dillon [1993] HCA 4; (1993) 176 CLR 344) because:
(a)there is no admissible evidence from any medical practitioner establishing any recognisable illness or condition, or its cause;
(b)there is no admissible evidence establishing that any condition suffered by Mrs Smith was caused, in the relevant legal sense, by the conduct of either the bank or Mr McCusker QC; and
(c)there is no evidence disentangling the impact which the conduct of either the bank or Mr McCusker QC had upon Mrs Smith from the effect which the relentless prosecution of these proceedings is likely to have had upon her psychologically.
For these reasons, there is no basis upon which damages for emotional distress, or stress induced illness could be awarded.
There are other components of the schedule of damages which include claims for loss of what I might call lifestyle benefits, loss of reputation and so on that are plainly irrecoverable on any basis, and unsustained by any admissible evidence
For these reasons, even if Mr and Mrs Smith had established that they lost the opportunity to pursue a claim against the bank which had some prospect of success, there is no evidence or other material which would enable me to conclude that the successful prosecution of a claim against the bank would have resulted in the award of any significant damages.

Summary on quantum

As I observed at the outset of this portion of my reasons, in a claim for lost opportunity it is necessary for the claimant to establish that the opportunity foregone had some value. In the context of a claim for the loss of an opportunity to pursue litigation, the claimant must show that the litigation had some prospect of success over and above its 'nuisance value'. For the reasons I have endeavoured to give, in my opinion Mr and Mrs Smith have failed to establish that they had any claim against the bank which had any prospect of success. Put shortly:
(a)there is no evidence of any communications between Mr and Mrs Smith and the bank capable of supporting an argument to the effect that the bank had a duty to advise;
(b)the evidence establishes that Mr and Mrs Smith went to the bank for finance, not advice;
(c)Mr and Mrs Smith were at all times aware that they had not been given any advice by the bank;
(d)the bulk of the information set out in the 1977 cash flow budget was provided by Mr and Mrs Smith;
(e)Mr and Mrs Smith were aware that the cash flow budget was prepared essentially for the bank's purposes, not as a means of providing them with farming advice;
(f)Mr and Mrs Smith never relied upon the budget as the source of advice as to the management or development of their farm;
(g)there is no evidence capable of supporting an argument to the effect that the bank committed to the provision of ongoing finance over and above the approval that was given in April/May 1977;
(h)all the contemporaneous evidence is overwhelmingly against any version of the events which would sustain a claim by Mr and Mrs Smith against the bank;
(i)the complaint initiated and maintained by Mr and Mrs Smith and the bank over many years was a complaint based upon reliance on the budget - a claim which has now been eschewed;
(j)there is no evidence or instructions capable of sustaining a claim against the bank for failure to give 'proper advice' which predates the ruling of the Full Court in 2000;
(k)the evidence establishes overwhelmingly that Mr and Mrs Smith were resolutely intent upon implementation of their plans for the development of the farm, irrespective of the views expressed by any financier, including the bank;
(l)there is no evidence that anything arising from the dealings between Mr and Mrs Smith and the bank caused the ultimate failure of the farming venture;
(m)the evidence strongly supports the conclusion that the failure of Mr and Mrs Smith's farming venture was due to matters unrelated to any advice they did or did not receive, or any finance they did or did not receive; and
(n)there is no evidence to support the conclusion that even if a claim had been successfully prosecuted against the bank, any significant damages would have been recovered.
For these reasons I have no hesitation in concluding that Mr and Mrs Smith's claim against the R & I Bank was always hopeless and doomed to fail. It had no prospect of success, and no value. So, even if Mr and Mrs Smith had made good their claim against Mr McCusker QC, and even if they had shown that his breaches of duty caused them to lose the opportunity of pursuing their claim against the bank, I would have concluded that they had not lost anything of value.

Conclusion

For these various reasons Mr and Mrs Smith's claim must be dismissed.