Smith v Moloney - [2005] SASC 305

SUPREME COURT OF SOUTH AUSTRALIA
(Full Court)
SMITH v MOLONEY
Judgment of The Full Court
(The Honourable Justice Debelle, The Honourable Justice Besanko and The Honourable Justice Vanstone)
10 August 2005
PROFESSIONS AND TRADES - LAWYERS - SOLICITOR AND CLIENT - RETAINER
Appeal from decision of District Court Judge allowing claim by solicitor for payment of his fees and dismissing the appellant's counter-claim - appellant initiated proceedings for unfair dismissal - respondent was the appellant's solicitor - respondent failed to properly advise appellant in respect of costs which might be incurred in unfair dismissal action - appellant lost unfair dismissal action and was ordered to pay costs - respondent sued appellant to recover legal fees - appellant counterclaimed in respect of adverse costs order - trial Judge found respondent had breached implied term of retainer by failing to properly advise appellant in respect of costs - trial Judge found appellant had not sustained loss as a result of breach - whether appellant required to prove on balance of probabilities that, if properly advised, she would have acted differently - whether trial Judge erred in determining question of causation - appeal dismissed by majority.
Trade Practices Act 1974 (Cth) ss 52, 82; Industrial and Employee Relations Act 1994 s 107; Fair Trading Act 1987 ss 56, 84, 85; Misrepresentation Act 1972 s 7, referred to.
Sykes v Midland Bank Executor & Trustee Co Ltd [1971] 1 QB 113; Lillicrap v Nalder & Son [1993] 1 WLR 94; Hanflex Pty Ltd v N S Hope & Associates [1990] 2 Qd R 218; Hall & Ors v Foong (1995) 65 SASR 281; Fox v Percy (2003) 214 CLR 118; Midland Bank Trust Co Ltd v Hett Stubbs & Kemp [1979] Ch 384; Chappel v Hart (1998) 195 CLR 232; Medlin v SGIC (1995) 182 CLR 1; Bennett v Minister for Community Welfare (1992) 176 CLR 408; March v E & MH Stramare Pty Ltd (1991) 171 CLR 506; Rogers v Whitaker (1991) 23 NSWLR 600; Barnes v Hay (1988) 12 NSWLR 337; Gould v Vaggelas (1985) 157 CLR 215; Hartford Holdings Pty Ltd v CP (Adelaide) Pty Ltd & Ors (2004) 234 LSJS 66; Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191; Taco Co of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177; Commonwealth Bank of Australia v Mehta (1991) 23 NSWLR 84; Rhone-Poulenc Agrochimie SA v UIM Chemical Services Pty Ltd (1986) 12 FCR 477; Henville v Walker (2001) 206 CLR 459; Gemstone Corporation of Australia Ltd v Grasso (1994) 62 SASR 239, considered.

SMITH v MOLONEY
[2005] SASC 305
Full Court: Debelle, Besanko and Vanstone JJ

DEBELLE J: The facts are set out in the draft reasons of Besanko and Vanstone JJ which I have had the advantage of reading. I do not agree that this appeal should be dismissed.
The trial judge found that the respondent had breached his duty of care to the appellant in two respects. The first was that the respondent had failed to provide the appellant with an estimate of the costs she was likely to incur in prosecuting her claim. The trial judge found that advice could have been given before mid-July 1999 but the breach of duty operated from mid-July 1999 and thereafter. The second was that the respondent had failed to advise her that an unreasonable failure to settle before the hearing could lead to an order pursuant to s 110 of the Industrial and Employee Relations Act 1994 (“the Act”) that she pay the costs of her former employer in its letter dated 18 May 1999. That advice was necessary given the offer of compromise made by the appellant’s employer in its letter dated 18 May 1999. The trial judge found that the respondent should have advised the appellant as to the amount of the potential liability in costs under that heading by 24 May 1999, before the offer from the employer lapsed or was rejected. He said:
The costs order in favour of the Employer made against Mrs Smith on 11 April 2000 was primarily based on her having acted unreasonably in refusing the offer of 14 May 1999, or at least in not having responded by making her own offer of settlement. While I accept that prior to that offer lapsing on 24 May 1999 the plaintiff had orally informed Mrs Smith of the general operation of s 110 of the Act about costs, and including about its relevance generally to offers which were not bettered, I consider that its duty extended to warning her specifically in relation to that offer that if she did fail in the case because she was not believed or for any other reason her rejection of that offer could be regarded as unreasonable conduct on her part and so precipitate an order for costs against her. That advice should also have included some indication of the likely quantum of the costs which might be ordered against her. The advice given on 18 August, and subsequently on that issue, that they would be comparable with her own costs would have been adequate, although it would have had to be in conjunction with a proper fulfilment of the other duty of the plaintiff to advise on the likely quantum of its own costs. The plaintiff was also in breach of this duty. (Footnote omitted)
The judge dismissed the appellant’s claim that the respondent had been negligent in advising her that she had a strong case. The appellant did not appeal against the dismissal of that part of her claim.
The effect of these findings is that by 24 May 1999, the respondent should have advised the appellant that, if an order for costs was made against her, she was liable to pay about $45,000 and that by mid-July, if not before, that her own liability for costs was of the order of $50,000. The total of the appellant’s potential liability in costs was, therefore, approximately $95,000.
This was an instance of a negligent omission to advise. Where a solicitor has negligently failed to provide proper advice or information on which to make a decision, the person who should have received that advice will be entitled to recover the losses resulting from his decision only where he can prove that, had he been properly advised, he would have acted differently and would have avoided a loss: Sykes v Midland Bank Executor & Trustee Co Ltd [1971] 1 QB 113; Lillicrap v Nalder & Son [1993] 1 WLR 94; Hanflex Pty Ltd v N S Hope & Associates [1990] 2 Qd R 218; and Hall v Foong (1995) 65 SASR 281. In this case the appellant had to prove on the balance of probabilities that, if properly advised, she would have acted differently. If she did not, she was entitled to nominal damages only: Sykes v Midland Bank Executor & Trustee Co Ltd at 127; Lillicrap v Nalder & Son at 99; Hanflex Pty Ltd v N S Hope & Associates at 228; and Hall v Foong at 301. The judge, therefore, had to examine a hypothetical issue. That issue could be stated in these terms: If the respondent had advised the appellant both that the likely costs of her own proceedings were about $50,000 and that the sum of approximately $45,000 was risked by not accepting the offer made by the appellant’s former employer, would the appellant have acted on that advice and not have pursued her claim to the point of a hearing in the Industrial Relations Commission?
The appellant and her husband gave evidence to the effect that, if the appellant had been advised that her costs would have been nearly $50,000 or there was a risk that she would have to pay the employer’s costs of $45,000, she would not have pursued the proceedings. The trial judge rejected that evidence as an ex post facto rationalisation made with the benefit of hindsight. He further found that that evidence was inconsistent with other evidence about the state of mind of the appellant at the relevant times. He said their evidence was based on the footing that the appellant and her husband had acted purely on economic considerations whereas, in the view of the trial judge, there were more powerful non-economic factors at work. The judge also had regard to the conduct of the appellant and her husband after 24 May 1999 for the purpose of reaching this conclusion. For the reasons which follow, the trial judge’s approach was seriously flawed.
When considering whether to accept the evidence of the appellant and her husband that, had they known the true position as to costs, the appellant would not have pursued her claim, it is important to assess the position at about mid‑July 1999, the date when the appellant and her husband would have known the full extent of the total potential liability in costs. In addition, regard must be had to the fact that, at about that time, the duty identified by the trial judge required the respondent to inform the appellant that the potential liability in costs totalled some $95,000, if not more. The trial judge did not proceed in that way. The trial judge not only failed to have regard to those factors when examining the non‑economic factors and the subsequent conduct of the appellant and her husband but has also criticised the appellant and her husband for not making enquiries as to the costs they were incurring. In other words, he has criticised the appellant and her husband for not making enquiries about the very matter upon which he had found the respondent ought to have advised them. In that respect, the judge has seriously erred.
When examining the economic and non-economic factors which caused him to reject this evidence, the trial judge looked at each item of costs separately, that is to say, he did not consider the total amount of the potential liability of some $95,000 in costs for the appellant if she proceeded to litigate her claim. That is clearly illustrated in paras 75 – 77 of his reasons but is apparent elsewhere. In that respect the trial judge has also erred.
In addition, the judge erred in failing to have regard to the fact that the appellant had not been properly advised as to her potential liability in costs and the amount of that liability when examining her conduct after May 1999. Conduct will often be a very useful yardstick against which to measure the reliability of an assertion by a solicitor’s client that, if properly advised, the client would have acted in a particular way. However, care must be taken to ensure that other factors are not also influencing that conduct or that the conduct is itself affected by the very failure to advise for which the court has found the solicitor guilty. The latter applies in this case. The appellant was never properly advised as to the amount of her potential liability in costs, neither on or about 24 May 1999 nor at any subsequent time. Certainly, on some occasions she was told about a potential liability in costs and, when advised on 18 August 1999 and in September 1999 by Mr McRae, she was told that she was at risk of being held to be liable in costs to her former employer. However, as the trial judge found, she was not advised as to the amount of that liability nor of the likely amount of costs payable to the respondent. Both were very material factors for the appellant to consider when deciding whether to continue to prosecute her claim. Had the appellant been fully aware in August and September that the total amount of her potential liability in costs was about $95,000, it is very probable that she would have withdrawn her claim, especially in August when she had a real opportunity to do so and was receiving firm advice to that effect.
The failure to give this advice meant that the appellant was deprived of a very important item of information when considering whether to prosecute her claim, not only when the offer to compromise the proceedings was made by her former employer in May 1999 but also later when she had to consider the advice given by Mr McRae in August 1999 to the effect that she should withdraw her claim. One obvious way in which this kind of information could have been applied by the appellant was to weigh the respective costs and benefits or the reasons for and against proceeding with her claim. It was an objective fact by which she could have examined whether the risk of proceeding with the claim outweighed the issues at stake. The respondent’s neglect meant that the decisions made by the appellant were not properly informed decisions.
The failure to give proper advice had the consequence that the appellant could not make an informed decision whether to accept the offer of compromise made by her former employer in May 1999. It also materially affected her subsequent conduct as well as the conduct of her husband. The appellant continued to prosecute her claim deprived of this very important information.
The trial judge was very critical of the conduct of the appellant and her husband. He speaks of the appellant’s “unshakeable belief that she was almost certain to win because she was telling the truth … She simply fervently believed in the righteousness of her cause. Mr Smith took a similar position.” However, at no stage does the judge have regard to the fact that the appellant’s belief in the success of her cause or that her husband’s belief in the success of her cause was a decision reached in the absence of the advice she ought to have received as to costs, advice which on any view would have had a very material bearing upon her decisions and those of her husband. It is not an uncommon experience for litigants with a fervent belief in the righteousness of their cause, when properly advised, to recognise that financial considerations require a reassessment of earlier decisions to institute legal proceedings and may require a compromise of them. The appellant and her husband were denied this opportunity because they did not receive proper advice. In consequence, the appellant continued to incur further costs payable to the respondent and to expose herself to the liability in costs in the Industrial Relations Commission.
Although the appellant was denied this important information, the trial judge has not taken that fact into account when assessing her evidence. The appellant’s husband was also denied this information but the trial judge again did not take that into account, as he should have done when assessing the evidence of the appellant’s husband. The reasoning of the judge proceeds, therefore, in the absence of a critical factor affecting the decision-making process of the appellant and her husband. It would be reasonable to assume that the appellant and her husband would be concerned about the potential liability in costs. It would be a rare client who was not concerned about the likely costs of litigation. But it is unnecessary to rely on any assumption as to their attitude to costs for there is evidence which demonstrates a concern on the part of both the appellant and her husband on the issue of costs. One example is their reliance on their belief that the appellant’s proceedings were being prosecuted in a no costs jurisdiction. In addition, the judge expressly found that the appellant and her husband “were surprised and shocked” at their liability in costs to the respondent. This finding serves to underline that their conduct would have been very different if they had been informed that they were looking at a potential liability of some $95,000.
The failure of the trial judge to have regard to the fact that advice as to costs would have affected the appellant’s conduct has had a significant bearing upon the reasons of the trial judge.
There are other errors which the trial judge has made. In para 69 of his reasons the judge examines the economic factors which, he said, affected the reasoning of the appellant and her husband. I will deal with each of the factors identified by the judge in order. They constitute the whole of para 69 of his reasons.
The first error of the trial judge is his correction of the appellant’s belief as to the amount at stake in the proceedings in the Industrial Relations Commission. He said:
In their evidence Mr and Mrs Smith treated the economic amount at stake in the Industrial Commission proceedings as the maximum amount of compensation payable if she did not get reinstatement, which was $33,100. If she had obtained reinstatement, the economic stake would probably have been much higher in that she would have been awarded her full wages from the time of the dismissal until the reinstatement and she would have had the salary from that professional employment for some substantial time into the future.
The judge added a footnote which it is not necessary to examine for present purposes. This is a wholly erroneous line of reasoning. The relevant consideration was what Mr and Mrs Smith (the appellant and her husband) believed to be the amount at stake. It is not what the judge assessed it to be. If the appellant had been properly advised as to costs, her decision whether to continue to prosecute her claim would have been made by reference to what she believed to be the amount at stake, not by what the judge subsequently assessed it to be.
The next economic factor identified by the trial judge is that the appellant did not abandon her claim for reinstatement until quite late. He said:
I reject Mrs Smith’s evidence that after the Conciliation Conference on 6 May 1999 she abandoned any claim for reinstatement. I accept the evidence of Ms Carbone that while after that conference she expressed doubts about whether she would go back, she did not give instructions to abandon the claim for reinstatement until close to the trial.
The important fact is the appellant did later abandon her claim for reinstatement and not before it was too late to do so. The question is whether the plaintiff would have decided at an earlier time to discontinue the claim if she had been properly advised as to costs. For the reasons which follow I find that she would have done so.
The third and fourth economic factors identified by the trial judge were as follows:
Although she denied it in evidence, I find from her letter of 31 January 2000 to the plaintiff that during the course of the Industrial Commission proceedings she believed that if she lost the case she would have no prospects of finding alternative employment as a registered nurse which, subject to her psychiatric recovery, would have been a substantial economic detriment to her. Another economic factor was to some significant degree the success of her workers compensation claim against the Employer was dependent upon her summary dismissal not having been justified.
Both are factors which would have been discounted if proper advice as to costs had been given. More importantly, little weight should be attached to them as both would have continued to operate even if the plaintiff had failed in her claim for reinstatement and only had recovered $33,100. They are in a real sense irrelevant.
The final factor identified by the judge was expressed in these terms:
Also Mr and Mrs Smith entertained a substantial hope that under s 110 of the Act that the Employer would be ordered to pay her costs, which also caused her to discount the degree of financial risk which she faced in the case.
There is a real question whether the evidence justifies that conclusion. Nevertheless, I put that consideration to one side. The substance of the matter is that the appellant was not properly advised as to the risk she ran as to the operation of s 110 if her rejection of the employer’s offer was found to be unreasonable. Advice on that issue would have caused a wholesale reassessment of any view on the appellant’s part that her employer would be ordered to pay her costs.
Thus, when the five economic factors are examined, the first proceeds on an erroneous basis, the second would have been discounted, the next two are irrelevant and the final one disregards the advice the appellant should have received. Viewed singly or as a whole, they are not at all persuasive.

The simple fact is that, in economic terms, the appellant claimed reinstatement and believed that, if that was refused, she would recover $33,100. Had the plaintiff been properly advised in May 1999, she would have had to decide whether her prospects of obtaining an order for reinstatement were sufficiently strong for her to risk $45,000 in costs, in addition to both what she had already incurred in costs and the costs payable to the respondent for future advice and representation. She also had to consider whether, if she failed in her claim for reinstatement but received an award, she would recover the maximum of $33,100 or some lesser amount. Had she been properly advised, all those matters would have been drawn to her attention. Nowhere in his reasons does the trial judge examine these issues. These were financial factors which would have been a firm, if not powerful, disincentive for the plaintiff to continue to prosecute her action. Certainly, by mid-July 1999, the appellant would have realised that there was little financial sense in risking $95,000 to recover $33,100, that is to say, to risk an amount about three times greater than the amount claimed. In my view, the financial factors were so compelling that the appellant would have concluded, albeit reluctantly, that she had no alternative but to compromise her claim.
There were, undoubtedly, non-economic factors which played an important part in the thinking of the appellant and her husband. They were identified by the trial judge to be
·the appellant wished to be the victor in a bitter dispute with her employer;
·the appellant sought to vindicate her honesty and professional reputation as a registered nurse;
·the appellant’s continued registration as a nurse was at risk if the allegations as to five dispensing errors had been upheld; and
·the appellant saw the attack upon her as an attack also on her husband, which might be used by his political opponents in the next mayoral elections in Whyalla.
The judge summarised the effect of these non-economic considerations in these terms:
These non-economic considerations were a powerful incentive for Mrs Smith to pursue the unfair dismissal claim even though the economic costs of doing so might be very substantial.
While they were the reasons why the appellant prosecuted her claim, the use of the epithet “powerful” is, in my view, to overstate the position. However, even if they were correctly described as “powerful”, the important fact is that the force of all of those factors would have been substantially diminished by proper advice as to costs. In addition, none of those factors, either standing alone or viewed together, are of such moment that they would have stood in the path of the appellant deciding to compromise the proceedings if she had been properly advised. A compromise would have constituted some measure of victory over the employer and in that way be some vindication of the appellant’s reputation. The risk of deregistration was not as high if the appellant compromised her proceedings. Finally, a compromise would not give any weapon to the political opponents of the appellant’s husband. In short, an examination of these factors leads to the conclusion that none of those factors would justify risking as much as $95,000 in costs. Looked at another way, although the appellant was strongly influenced by the non-economic factors, the financial considerations were so compelling that they would have overridden those factors.
Another significant example of the trial judge’s failure to have regard to the absence of advice as to costs, when he discounted the appellant’s evidence that she would not have proceeded if properly advised, appears in the following paragraph in his reasons.
⁷⁶When Mrs Smith spoke to Lena Carbone on 20 May to respond to the letter enclosing the offer of 14 May her immediate and dismissive comment was to the effect: “The offer is absolutely ridiculous.” This was her instinctive reaction and indicative of her state of mind that she wanted vindication and not compromise. If her motivation had been substantially economic, it would be expected that she and her husband might have explored the economic implications of the offer such as what were the plaintiff’s costs to date and how much would she get in her pocket if she accepted the offer.
When rejecting the offer of compromise the appellant was acting on advice from the respondent to reject the offer. The advice was contained in a letter dated 18 May 1999 which read:
We recommend that you reject the settlement offer but we should discuss it with you. Please therefore telephone our office to discuss the same. If the writer is unavailable at the time you call please speak with our Lena Carbone.
It is not difficult to conclude that, when the appellant spoke to Ms Carbone on 20 May, she was influenced by the advice she had received to reject the offer. Importantly, she did not then nor at any subsequent time get proper advice as to costs. Had she done so, she would have revised her view.
In para 71 of his reasons the trial judge considers what the appellant would have done had she been properly advised as to costs. He said:
⁷¹ On this hypothetical issue of what Mrs Smith would have done if she had been properly advised on [the] likely extent of the cost of her legal representation, it is relevant to look at what she did know about the likely amount of the costs for which she could be liable. She had been told on 6 May that the case would be “very expensive”. While this is a relative term it nevertheless should have alerted her to at least the possibility of big sums of money being involved. By mid July she knew that her costs up to 18 June were $10,600 and she must have realised that there was still a long way to go as she had been told the trial would occupy at least five days. She should have appreciated that her own legal costs were likely to be at least some tens of thousands of dollars, albeit not necessarily as much as nearly $50,000. There is also some significance in neither Mr nor Mrs Smith having pressed Ms Carbone for more interim accounts or a definite estimate of the likely total costs. She realised she was being charged principally on a time basis for the amount of work being done. In effect she was giving the plaintiff a blank cheque to be completed at the end of the case. This is very much the approach of someone who desperately wanted to win, and was prepared to pay whatever was necessary to achieve that result. (Emphasis added)
The first conclusion in the emphasised passage is correct in that it states that the appellant did not realise that her costs would total $50,000. The fault with this conclusion is that it fails to have regard to the other potential liability of $45,000. This is but one of a number of instances when the trial judge has not considered the whole position as to costs. The rest of the emphasised passage contains conclusions which have no support in the evidence. The appellant and her husband were not sophisticated litigants. They were concerned about the costs they were incurring. They were not aware that they could require interim accounts. To criticise the appellant and her husband for not asking for interim accounts or an estimate of their potential liability is quite unfair. More importantly, to criticise the appellant and her husband for failing to ask for an estimate of the total amount of the likely costs they would incur is to hold them responsible for the very breach of the duty of care for which the respondent had been held to be liable. Finally, there is simply no basis for the last two sentences. The assertion that the appellant was in effect giving the respondent a blank cheque is wholly without foundation, if not a non sequitur. It borders on the absurd to conclude that a client would have no concern as to the cost to be expended in prosecuting a claim. The conclusion is belied by the appellant’s later complaints as to the amount of the respondent’s costs. It is also belied by the evidence which suggests the appellant and her husband had modest assets and income. The judge has very seriously erred in relying on the factors identified in the emphasised passages.
The judge then proceeds to examine the appellant’s conduct in August and September 1999 which he classifies as the best and most direct evidence of the attitude of the appellant and her husband. It is unnecessary to deal with each aspect of their conduct on which the judge relies. Here again, the analysis is seriously flawed in that it fails to take into account either the fact that the appellant was not properly advised in May 1999 or the fact that she was never advised as to the whole amount of her potential liability in costs. If the appellant and her husband had received proper advice on that issue, there is every likelihood that it would have caused them to take serious stock of their position, particularly when Mr McRae was advising the appellant of the weaknesses in her case.
When discussing the evidence of the appellant and her husband that they would have acted differently had they been properly advised, the judge consistently fails to bring into account the absence of the very advice which would have had a very material bearing on their decision making processes at that important time. For example, the judge relies heavily on a remark made by the appellant in a letter dated 17 September 1999 which she wrote to Ms Carbone. In that letter she responds to advice from Mr McRae. The appellant said, “Surely right and honesty must prevail otherwise the whole system of Justice is ineffective.” That comment is no more than the cri de coeur of a litigant with a firm belief in the righteousness of her cause. It is the kind of remark many lawyers involved in litigation have not infrequently heard. Contrary to the finding of the trial judge, it is not strong evidence of the non‑economic factors influencing Mrs Smith. The fallacy in the judge’s approach receives particular emphasis when regard is had to the last sentence of the paragraph in which the judge relies on the appellant’s remarks. It reads:
Having gone that far in the trial, and having already risked so much in costs, it was tempting for them to see it through to the end so that there would be a definitive result. However, Mr and Mrs Smith still believed that result would be vindication for them and not a disaster. If it had been principally an issue of economics, they would have asked questions about the amounts involved and have pursued the suggestion of a conference with Mr McRae to further explore the options for getting out of the litigation.
Here again, the judge is criticising the appellant and her husband for not asking questions about the amounts involved in the litigation. He is criticising them for not raising the very issues on which they should have received advice from the respondent at an earlier stage. The respondent’s omission to give proper advice on costs to his client had caused them not to have the very information which the judge criticises them for not seeking from the respondent. The effect of the evidence of the appellant and her husband was that, with proper advice as to their liability in costs, they would not have continued to litigate the appellant’s claim. Had they had that advice, they would not have been in the position of being tempted to proceed because they had risked so much in costs and they would not have believed the result would vindicate them. The judge’s criticism is, therefore, as unfounded as it is unfair and provides no basis for his conclusion. Moreover, it is implicit in the judge’s reasons that had the appellant and her husband asked about the amounts involved, they would have explored the options for getting out of the litigation. Like any litigation the questions which the appellant had to consider were not purely financial. However, the financial considerations were important to her. The respondent’s failure to advise her earlier of the amounts involved denied her the opportunity to make a fully informed decision as to whether she should proceed with the litigation.
Thus, when analysed, the reasons for the judge’s rejection of the evidence of the appellant and her husband that they would have acted differently had they been properly advised are without foundation. In a number of instances they are not supported by the evidence. In my view, the economic factors were so overwhelming that they entirely justified the assertions of the appellant and her husband in their evidence that, with proper advice as to costs, they would have acted differently.
This Court is in as good a position as the trial judge to examine the weight to be attributed to the factors relied upon by the trial judge for rejecting the evidence of the appellant and her husband that they would not have pursued the proceeding had they known they were risking as much as $95,000. For the reasons given, those factors did not have the weight which the trial judge attached to them. The trial judge was very critical of the evidence of the appellant and her husband. However, that criticism is substantially based on his assessment of their conduct, an assessment which is flawed because it does not have regard to the fact that the appellant and his wife were denied important information which would have had a very material bearing on their conduct. In addition, the force of those factors had to be weighed against the potential liability in costs of some $95,000. In my view, neither the economic nor non‑economic factors nor the conduct of the appellant and her husband provide a reason for rejecting their evidence. The appellant and her husband were not making properly informed decisions after May 1999 because they had not received the advice they should have received.
I am especially conscious of the limitations upon an appellate court reviewing findings of a judge at first instance who has had the benefit of seeing the witnesses give their evidence. Those limitations are examined in Fox v Percy (2003) 214 CLR 118 and need not be repeated. Those limitations have particular force when, as here, the trial judge has decided to reject the evidence given before him. Conscious of those limitations, I have read the whole of the evidence, noting particularly the evidence of the appellant and her husband. Making all due allowance for the advantages of the trial judge, I have no hesitation in deciding that the trial judge was wrong to conclude that, if the appellant had been properly advised on the issues of costs, she would nevertheless have continued to prosecute the action. The trial judge’s construct rests on premises which must be rejected. When hearing the appeal, I had some real concerns about that conclusion. On further consideration and on reading the evidence, I find the conclusion to be without proper formulation and hence glaringly improbable.
I turn to the respondent’s notice of contention. The respondent contends that the trial judge erred in deciding that the respondent was under a contractual duty to advise the appellant in respect of the costs implications of rejecting her employer’s offer and, if such a duty existed, the judge erred in finding that the respondent had acted in breach of that duty. The first contention must be rejected. The respondent’s retainer plainly required him to inform the appellant of the implications of s 110 of the Act as part of the overall advice he should give the appellant, a lay client unfamiliar with provisions such as s 110.
The latter contention is grounded on the evidence of the respondent and Ms Carbone to the effect that at different times they had informed the appellant of the implications of s 110. The trial judge acknowledged that evidence but held that the advice was of a general nature. He held that the respondent had failed to warn specifically in relation to the offer made by the appellant’s employer and include in that advice an indication of the likely liability of the appellant in costs under s 110. The reasons for his decision have already been noted. In this respect the trial judge was clearly correct. The duties of a solicitor depend upon the particular retainer and upon the particular circumstances of each case: Midland Bank Trust Co Ltd v Hett Stubbs & Kemp [1979] Ch 384 at 437. Although the appellant had been generally advised in relation to s 110, specific advice on that subject directed to the event which would trigger a potential liability under s 110 was required. If the advice on that question was to mean anything at all, it would have to include advice as to the amount of the potential liability in costs. Only in this way would the plaintiff be properly advised. The respondent must, therefore, fail on the notice of contention.
For these reasons I would allow the appeal and dismiss the respondent’s arguments on the notice of contention. I would set aside the order of the District Court and in lieu thereof substitute orders dismissing the respondent’s claim and allowing the appellant’s claim. I would remit the matter to the District Court for the assessment of the damages payable to the appellant.
BESANKO and VANSTONE JJ: This is an appeal from a decision in the District Court allowing a claim by a solicitor for payment of his fees and dismissing the defendant’s counter-claim.
The appellant, a registered nurse of long experience, worked for 14 years in that capacity for the Whyalla Senior Citizens’ Welfare Association (“the employer”) in a home known as Yeltana. In 1998 a dispute arose between the appellant and the employer. Both sides made serious allegations against the other. Some of those made against the appellant were that in the course of her work she engaged in unsafe practices in relation to dispensing medicines. If true, these were serious enough to justify dismissal. The deterioration of relations led to the appellant consulting the respondent, Mr P N Moloney, a solicitor, on 25 February 1999.
By letter of 1 April 1999 the employer purported to dismiss the appellant on grounds of misconduct. Later that month the appellant took action under s 107 Industrial and Employee Relations Act 1994 (“the Act”) seeking a declaration that the dismissal was harsh, unjust and unreasonable. The respondent continued to act as her solicitor. In due course the matter went to trial. Mr T M McRae was briefed as counsel. The appellant lost the action. As a result of a subsequent application by the employer, the appellant was ordered, pursuant to s 110 of the Act, to pay the employer’s costs of action insofar as they were incurred after 15 July 1999, which was soon after discovery of documents was made. The employer’s costs were taxed at $59,037. The respondent’s fees and disbursements amounted to almost $40,000, and counsel fees approached $9,000. He sued for the unpaid amount of $18,647.80.
The appellant denied liability. By her defence and counter-claim she asserted that she had the benefit of an equitable set-off against the respondent by reason of his negligence, breach of contract and breaches of various duties owed by him to her. The conduct constituting those breaches was also said to amount to misrepresentation and misleading and deceptive conduct. Those claims were centred on the asserted failure by the respondent to fully and accurately advise the appellant in respect of the costs which might be incurred and risked in pursuit of her claim.
Although originally made in the Magistrates Court, the claim went to trial in the District Court. The learned trial Judge found that the respondent had been in breach of his duty to the appellant in two respects. First, he found that in failing to advise the appellant of the total costs she was likely to incur to the respondent in prosecuting her claim – or at least a range of likely costs – the respondent breached an implied term of the retainer, being that he would give all necessary and proper advice to the appellant to enable her to make an informed decision whether or not to pursue her claim. Having made that finding, the Judge decided he did not need to determine whether the same failure gave rise to other causes of action as well. Secondly, the Judge found that the respondent was, in the same manner, in breach of his duty to the appellant in failing to advise her specifically in relation to an offer made by the employer to the effect that, if she failed in her claim, any unreasonable failure to settle the matter before hearing could result in an order of costs against her, pursuant to s 110 of the Act. The terms of that section are:
110. (1) If an application under this Part proceeds to hearing and the Commission is satisfied that a party to the proceedings clearly acted unreasonably in failing to discontinue or settle the matter before the hearing concluded, the Commission may, on the application of the other party to the proceedings, make an order for costs (including – if relevant – the costs of representation) against the party.
(2) If an employee discontinues proceedings under this Part more than 14 days after the conclusion of the conference of the parties, the Commission may, on the application of the employer, make an order for costs (including – if relevant – the costs of representation) against the employee if the Commission is satisfied that the employee has acted unreasonably.
(3) An application for an order for costs under this section must be made within 14 days after the determination or discontinuance of the proceedings.
The duty extended, he found, to giving the appellant an estimate of what such an order might amount to in monetary terms. (The respondent challenged upon the appeal this latter finding of breach, via notice of alternative contention.)

Having made those findings against the respondent, the Judge went on to consider whether the appellant had, as a result of the breaches, sustained loss. His Honour framed the relevant question in this way:
To succeed [the appellant] must show on the balance of probabilities that if the plaintiff had fulfilled the duty in question to give proper advice she would have then acted in a manner which would have avoided all or some of the loss claimed: Allied Maples Group Ltd v Simmons [1995] 4 All ER 907, [1995] 1 WLR 1602; Chappel v Hart (1998) 195 CLR 232; Hotson v East Berkshire Area Health Authority [1987] AC 750. If she could not show it, the necessary chain of causation would not have been demonstrated. This involves a difficult exercise of hypothetically exploring what [the appellant] would have done in relation to the litigation if she had been properly advised by the plaintiff.
By way of footnote the Judge observed that even had the onus been on the solicitor to show that his failure had no impact on the appellant’s actions, he would have found that the onus was so discharged.
The Judge found that the appellant failed on the question of causation in relation to all causes of action because he found that, for a number of reasons identified by him, the appellant would have pursued her claim even had the appropriate advice been given to her. Among other things, the Judge found that the appellant had “an unshakeable belief that she was almost certain to win the case because she was telling the truth”. He found she was motivated not just by economic factors, including a substantial hope that she would receive the benefit of a s 110 costs order in her favour, but that she was further motivated by her feelings of animosity towards the employer, the wish to have her good name and reputation restored and the hope that by winning she would ward off separate proceedings before the Nurses’ Board based on the allegations of inappropriate dispensing of medicines. The Judge further relied on his findings that certain advice as to the matter of costs had been given to the appellant both prior to the trial of the matter commencing and also, in strong terms, by Mr McRae during a lengthy adjournment of the trial. On appeal these findings were not the subject of attack by the appellant; rather, the appellant challenged the legal principles as the Judge found them to be.
This appeal turns principally on whether the Judge correctly determined the question of causation. The appellant argued that in framing the matter as outlined, the Judge inappropriately utilised the “but for” test, a test which she argued had been discredited in the High Court and which was no longer determinative, at least in an exclusive sense, of the issue of causation. It was put on her behalf by Mr Robert Sallis that the “but for” test is inappropriate in cases where there is more than one cause for an event or a decision, and that it is implicit in the Judge’s utilisation of that test that he considered that there was only one reason for the appellant’s decision to prosecute the claim, that being her determination to win. The appellant argued that the Judge should have found that there were a number of causes for the loss sustained by her and that the respondent’s breaches of duty were among them. It was further put that inasmuch as the Judge found that the substantial amount in legal costs which the appellant risked in presenting her claim was “on any possible view of the matter … a material factor for her in any decision to pursue the litigation”, his findings of fact amounted to a finding in the appellant’s favour on the question of causation. Counsel placed particular reliance on the decisions in Chappel v Hart (1998) 195 CLR 232; Medlin v SGIC (1995) 182 CLR 1; Bennett v Minister for Community Welfare (1992) 176 CLR 408 and March v E & MH Stramare Pty Limited (1991) 171 CLR 506.
It is immediately apparent from the facts as set out that the link between the respondent’s breaches of duty and the damage sustained by the appellant was, at best, an indirect one because the respondent’s failure to give what the Judge found was the necessary advice to the appellant had no impact on her chance of success in the trial. This was not a case such as March v Stramare where the defendant’s breach of duty in parking his truck on the inside lane of the highway was found to have contributed to the collision and to the plaintiff’s injuries. Luntz and Hambly, Torts, Cases and Commentary, 5^th edition, Butterworths, 2002, p.301 refer to such cases as being of the “billiard ball” type. Here, what can be said is that the advice the respondent should have given might have had an impact on the appellant’s deliberations in relation to the decision as to whether or not to pursue her claim. In other words the appellant was given to understand that the monetary sum at risk in prosecuting her claim was of a certain magnitude, whereas in fact it was of a greater magnitude. The respondent’s breaches could have had an impact on the appellant’s decision to proceed, although, as we have said, the Judge determined that they did not. It was the decision to proceed with the trial, and the failure of her suit, which ultimately led to the appellant’s loss.
In Rogers v Whitaker (1991) 23 NSWLR 600 the New South Wales Court of Appeal dealt with a comparable situation. Mrs Whitaker had been blind in her right eye since sustaining a penetrating injury to it when aged 9 years. In her forties she consulted an ophthalmic surgeon, Dr Rogers, who advised that he could operate on her right eye with a good chance of restoring some sight to it. Notwithstanding her enquiries as to possible complications of such surgery, Dr Rogers did not warn her of the very mild risk of her left eye suffering “sympathetic ophthalmia” and the consequent risk of loss of sight to it. In due course the surgery was performed, without negligence, but the condition mentioned arose and Mrs Whitaker lost almost all sight in her left eye. The operation failed to restore the sight in her right eye, leaving her almost totally blind. In relation to the matter of causation, Handley JA with whom Priestley JA agreed, acknowledged that there was no direct or physical link between the deficient advice and Mrs Whitaker’s blindness. He said that negligent advice, either in what was said or what was left unsaid, could not in itself cause blindness. He found that the causative link was provided by the fact of reliance; Mrs Whitaker relied on the advice given in deciding whether or not to undergo the surgery. There was no necessity for her to undergo the operation at all. Mahoney JA also dealt with the question of causation. He referred to an earlier decision of the court in Barnes v Hay (1988) 12 NSWLR 337 wherein the relationship between deficient advice and subsequent loss was examined. There, the relevant economic loss was caused by the plaintiff failing to ensure that he had the protection of an appropriate lease. The importance of that had not been adequately explained to him. Mahoney JA there said (at 357):
… the reason why the Court should select the defendant’s faulty advice as the, or a, cause of the plaintiff’s loss is that that loss was the thing, or one of the things, which the advice ought to have been directed to avoid: the reason why the advice given was faulty was because it was apt to lead to the kind of loss which in fact was suffered.
For similar reasons, Mahoney JA held that Mrs Whitaker succeeded on the question of causation.
The case went to the High Court (see Rogers v Whitaker (1992) 175 CLR 479) but there it turned on the extent of the advice which Dr Rogers was obliged to provide as to the risks involved in the surgery. The question of causation was not agitated.
The High Court dealt with this issue in the later case of Chappel v Hart (1998) 195 CLR 232. Mrs Hart suffered from a progressive condition affecting her throat. At some unspecified point in the future she would have required surgery. She saw Dr Chappel. In discussing surgery which would rectify her condition, he failed to warn her of the chance of her oesophageus being perforated and an infection ensuing. In due course he performed the surgery and that very consequence occurred. That led to a loss of voice. She was no longer able to carry out the duties involved in her employment. The surgery was carried out with all skill and care.
The principal argument on behalf of Dr Chappel was that there was no causal connection between his failure to adequately advise of the risks and the damage suffered. The risk of a perforation would have been present, it was argued, no matter when and by whom the surgery was performed. By majority, the High Court dismissed Dr Chappel’s appeal, confirming the finding that causation was made out. The factual finding that Mrs Hart, if properly advised, would have taken steps to reduce the risk by seeking the services of a more experienced surgeon was important to the decision of Gaudron J and Kirby J who formed part of the majority. McHugh and Hayne JJ, the dissentients, concluded that the risk of perforation would have been the same at any stage.
The facts of Chappel v Hart are rather exceptional but it seems clear from the majority decision that it was open to the appellant before us, at least as a matter of theory, to link the losses she sustained at her trial with the respondent’s breaches of duty.
The appellant submitted that the Judge applied the incorrect test of causation. The appellant submitted that the Judge applied a “but for” test of causation and that he erred in doing so. It was said that in the circumstances of this case that meant that the Judge applied a test which required the appellant to prove that there was only one cause of the loss and damage, and it was submitted that this is not the law. A defendant may be liable even if there are two or more causes of the plaintiff’s loss.
There is no doubt the “but for” test of causation has its limitations. On the one hand, it may not exclude causes which are irrelevant for the purposes of legal liability. In March v Stramare, Deane J gave the following graphic example (at 523):
Thirdly, the mere fact that something constitutes an essential condition (in the "but for" sense) of an occurrence does not mean that, for the purposes of ascribing responsibility or fault, it is properly to be seen as a "cause" of that occurrence as a matter of either ordinary language or common sense. Thus, it could not, as a matter of ordinary language, be said that the fact that a person had a head was a "cause" of his being decapitated by a negligently wielded sword notwithstanding that possession of a head is an essential precondition of decapitation. Again, the mere fact that a person makes a gift of money to another is not, in any real sense, a "cause" of the damage sustained by that other person when his agent negligently loses the money notwithstanding that the loss would not have occurred "but for" the original gift.
It is because of this difficulty that the “but for” test has been said to be no more than a negative criterion for causation. In other words, it will exclude causes which do not qualify rather than identify the legal causes of loss and damage. On the other hand, there are difficulties with the application of the test where there are two or more acts or events which would each be sufficient to bring about the plaintiff’s injury. A finding that cause A is not a legal clause because it cannot be said (due to the presence of cause B) that but for cause A the injury would not have occurred, and that cause B is not a cause because it cannot be said (due to the presence of cause A) that but for cause B the injury would not have occurred has been said to be contrary to commonsense (March v Stramare Pty Ltd per Mason CJ (at 516)).
The Judge did not formulate the test of causation which he applied specifically in terms of the “but for” test. In fact, he formulated the test in a way which accords with the way in which the test has been expressed in a number of authorities. In Hall & Ors v Foong (1995) 65 SASR 281 Debelle J (with whom Doyle CJ agreed) referred to a number of authorities and by reference to those authorities he stated the relevant principle. Debelle J said (at 301):
The liability of the defendants for the negligence of the defendant Nield existed both in contract and in tort: Midland Bank Trust Co Ltd v Hett, Stubbs & Kemp [1979] Ch 384; Aluminium Products (Qld) Pty Ltd v Hill [1981] Qd R 33. In order to recover other than nominal damages for the lost opportunity, the plaintiff had to prove not only that the defendant was negligent in failing to advise her of the effect of Mr Cameron's opinion but also that the defendant's failure to advise had caused her loss: Sykes v Midland Bank Executor & Trustee Co Ltd [1971] 1 QB 113; Lillicrap v Nalder & Son [1993] 1 WLR 94; [1993] 1 All ER 724; Hanflex Pty Ltd v N S Hope & Associates [1990] 2 Qd R 218. The plaintiff had to prove on the balance of probabilities that, if properly advised, she would have acted differently. If she did not, she was entitled to nominal damages only for the breach of contract: Sykes v Midland Bank Executor & Trustee Co Ltd (at 127); Lillicrap v Nalder & Son at 99; 729 and Hanflex Pty Ltd v N S Hope & Associates (at 228).
Accordingly, the appellant’s submission could be rejected simply on the basis that it is contrary to well-established authority in this Court. However, it is appropriate that we consider the appellant’s submissions in more detail.
The appellant submitted that the test of causation applied by the Judge excluded the possibility of two causes, each of which would have been sufficient to cause the loss. We reject that argument. The test as formulated by the Judge (and set out in [49]) above, does not exclude the possibility of another cause. Take this case and assume a third party owed a duty to advise and breached that duty. The test of causation formulated by the Judge would not prevent a court from reaching the conclusion that the appellant would have avoided the loss and damage if she had been properly advised by the respondent, or if she had been properly advised by the third party, or if she had taken a proper and more realistic view of the merits of her case.
The appellant further submitted that the Judge erred because he should have applied the test of causation formulated by Wilson J (with whom Gibbs CJ (at 219) and Dawson J (at 262) agreed) in Gould v Vaggelas (1985) 157 CLR 215 (at 236), namely as long as the representations played some part, even if only a minor part, in contributing to the conduct which led to the loss and damage, causation is made out. Alternatively, and perhaps more in accordance with subsequent authority, as long as the representation was a real inducement then causation is made out. (See the discussion by the Chief Justice of this Court in Hartford Holdings Pty Ltd v CP (Adelaide) Pty Ltd & Ors and Colliers Jardine Pty Ltd (2004) 234 LSJS 66.) In a case where there has been a failure to advise, as distinct from the provision of incorrect advice, it is somewhat artificial to formulate the test of causation in terms of real inducement because the Court is required to consider a hypothetical question, namely, what would the plaintiff have done had the defendant provided the advice he was bound to provide. In this case, the Judge said that the appellant was required to prove that she would have acted differently, and as we have said, that is in accordance with well-established authority.
We would add that in our view, even if the test of causation should have been formulated in a way more favourable to the appellant, on the Judge’s findings of fact (which we examine below) the appellant would still fail. The Judge found, not only that the appellant had failed to prove that she would have acted differently but he found that had the onus been on the respondent then the respondent would have discharged the onus of proving that the appellant would not have acted differently. In our opinion, that is a clear finding that the breaches of duty found by the Judge were not a cause of the appellant’s loss and damage.
An examination of the evidence on which that decision was based indicates that it was well open. Since the presentation of the appellant’s appeal did not involve an examination of this material - there being no explicit challenge to this finding - it is unnecessary to set out the evidence in more than summary form. The Judge accepted the evidence of Mr Moloney and his employee as to these matters in preference to that of the appellant and her husband.
Mr Moloney first attended on the appellant on 24 February 1999, when he spent some two hours with her. At that stage she was still employed, but her job appeared to be in immediate jeopardy. Having gained an appreciation of her position and her hopes, he raised the question of legal costs. He explained to her in general terms the way in which work would be charged, that the Supreme Court scale would be utilised, that he would make requests for payments into his trust account from time to time and that he would render accounts periodically. The appellant signed a costs agreement. The respondent also explained that a staff solicitor would work with him on the matter.
During his second meeting with the appellant on 12 April, being some days after her dismissal, Mr Moloney explained the operation of s 110 of the Act. He showed the appellant and her husband its terms and explained the fact that although the relevant jurisdiction was generally considered to be a “no costs jurisdiction”, consequences in terms of costs could flow from the unreasonable failure of a party to discontinue or settle an action.
On 6 May a Commissioner chaired a conciliation conference involving both sides. The respondent attended with the appellant and her husband. After it concluded, the respondent conferred with the appellant and her husband privately. During discussion he expressed the view that the trial would occupy at least five days and would be “very expensive”. He gave a further explanation in relation to s 110 of the Act, as it could bear on the recommendations made by the Commissioner and as regards the desirability of demonstrating a willingness to accept a reasonable offer. In fact, an offer to settle was received from the employer on 18 May. It proposed a payment equivalent to eight weeks salary, which, if taxed at the eligible termination rate, was worth about $7,000. In a telephone conversation with the staff solicitor, the appellant described the offer as “absolutely ridiculous”. No particular reference to s 110 was made in the context of the offer either by the respondent in his letter enclosing the letter of offer, or by the staff solicitor in the telephone conversation which ensued.
The staff solicitor had the day-to-day conduct of the matter. Most contact with the appellant and her husband involved her. In accordance with her requests two amounts of $5,000 were paid into the firm’s trust account, the first on 22 March and the second on 10 June. The staff solicitor’s evidence was that on several occasions she spoke generally with the appellant as to the costs regime in the Industrial Relations Court, including as to s 110. The first such discussion would have occurred in March. Her file note of an attendance on 4 June specifically referred to discussion with the appellant about the need to render a further account because of further extensive work which had been done and a reinforcement of the fact that the jurisdiction was one in which costs were not usually awarded, but that there was some possibility of recovering some costs if a party was found to have acted unreasonably. The appellant was advised not to depend on a favourable order. On 12 July the staff solicitor wrote to the appellant, enclosing an account in the sum of $10,835. It covered work done to 18 June. She advised, inter alia:
We also require that you deposit further monies into our trust account for the further preparation of your matter for trial. There is still considerable work to be done in taking witness statements, briefing Counsel and attending trial, not to mention Counsel fees. At this stage we request that you forward to us a further $5,000. We anticipate however that those monies will not be sufficient to cover the further work to be done and that we will be requesting further monies prior to the hearing of the matter. We shall keep you advised about that.

In response to the letter the appellant paid a further $10,000 into the firm’s trust account on 21 July.
The hearing commenced on 17 August and occupied seven sitting days. It was held both in Whyalla and Adelaide. As a consequence there were disbursements in relation to accommodation and travel. After the second day of the trial, the appellant, her husband, the staff solicitor and Mr McRae conferred. The evidence to that point was discussed. The issue of the appellant’s allegedly unsafe practices in dispensing medicine was again identified as being central. By this time a number of allegations about this had been put to the appellant in cross-examination and denied. It was plain that the employer planned to call witnesses to substantiate the allegations. The appellant was told that there was a real risk of suffering an order for costs against her if the case were lost. It was suggested that if there were to be a withdrawal this was a good time for it. On the following day the appellant advised she would continue with the trial. After the fourth day of the trial there was a lengthy adjournment. On 3 September a conference was held involving Mr McRae, the staff solicitor and the appellant. During that conference counsel again warned the appellant in strong terms that there was substantial evidence contrary to her own, on a number of issues, and that if the verdict went against her she was at risk of an adverse costs order. The appellant was to consider that advice. Counsel confirmed that advice in writing. The appellant later instructed that she would proceed.
On 19 November the respondent’s firm rendered a second bill, this one being for the sum of $26,812. It covered the period 19 June to 11 November. By that time the hearing had been completed and judgment was reserved. In response to the account, the appellant’s husband spoke with the respondent and it was agreed that it could be paid over a period of a couple of months. At that stage there was no complaint about the size of the bill, although there was later. On 3 December $10,000 was received by the firm towards that account. No further payment was received. However on 17 October 2000 a third account was rendered to the appellant in the sum of $2,110, covering the period 12 November 1999 to 7 June 2000. The three accounts totalled $39,757. (That amount apparently included some small amount for work done in relation to the appellant’s workers compensation claim and dispute with the Nurses’ Board.) Counsel fees, amounting to $8,828, must have been billed separately.
It was the appellant’s case that at one of her early meetings with the respondent (probably 12 April) he indicated in response to a question by her husband that, if her unfair dismissal claim went to trial, it would cost up to $10,000. Both the appellant and her husband gave evidence to that effect. That evidence was rejected by the Court. The Judge accepted the respondent’s evidence and that of the staff solicitor that no estimate of the total expected costs was ever provided. The explanation advanced for that was that the matter was complex and that no accurate range of likely fees could have been given. As already observed, the Judge did not accept that that was so. However, it can be seen that the rejection of the appellant’s version had the effect of undermining the appellant’s further evidence that, if she had received adequate advice about the likely costs of the action and the risk of losing costs, she would not have pursued it.
We consider that the evidence amply justified the Judge’s findings that the breach of duty in failing to provide, by mid July, an estimate of the costs likely to be incurred to the end of the trial made no difference to the course of events. On the facts as found by the Judge the appellant knew that almost $11,000 in fees had been incurred by mid June, that a further $5,000 was unlikely to take the matter to the trial stage, that counsel was to be briefed, that the trial would last at least five days and would be “very expensive”. Even without an estimate of likely fees, the appellant should have expected that they would amount to at least some tens of thousands of dollars. So the Judge found. In addition, the Judge placed emphasis on what occurred during the two conferences with counsel on 18 August and 3 September. Even in the face of strong advice that the case against her was extensive and that she was in danger of not only losing the case but also costs, the appellant showed a determination to proceed. In our view this was telling evidence tending strongly to the conclusion that fulfilment of the duties found by the Judge to have been breached would have made no difference to her decision to proceed. The appellant must fail on the issue of breach of contract. That being so, it becomes strictly unnecessary to deal with the respondent’s Notice of Alternative Contention. That said, we consider that the Judge might have pitched too high the obligation in respect of the offer of 18 May. Bearing in mind that clear advice on the topic of s 110 and its relevance to offers had been given only 12 days prior to receipt of the offer and that the offer was far below what the appellant was seeking, it might be that the obligation on the respondent was not as onerous as found by the Judge. Having not heard full argument on the matter and it not requiring determination, we prefer to express no view about it.
Before leaving the facts there is one further aspect of the appellant’s argument which should be considered. As seen, the appellant referred to a conclusion by the Judge to the effect that the substantial amount which the appellant was risking in legal costs was clearly a material consideration for her in deciding whether to pursue, continue or settle the litigation. This conclusion by the Judge was reached in the context of a consideration of whether the duty to advise extended to include advice as to the range within which her costs to the completion of a full trial would have fallen. Nevertheless, the appellant submitted that the conclusion was a finding by the Judge that the failure to advise was a cause of the loss and damage. We do not think that this submission is correct. The conclusion of the Judge was that in considering the extent of the respondent’s duty to advise, objectively speaking, advice about the range of her legal costs was a material matter. The conclusion says nothing as to the appellant’s state of mind in relation to the litigation.
We turn then to the appellant’s argument that she should nevertheless have succeeded on the basis that the respondent’s silence on the issue of the likely costs of the action and the relevance of s 110 to consideration of the offer of 18 May amounted to misleading and deceptive conduct and was actionable under ss 56, 84 and 85 Fair Trading Act 1987 as well as under s 7 Misrepresentation Act 1972.
Prior to trial, these asserted causes of action rested principally on certain statements attributed to the respondent and the staff solicitor, which statements were not found by the Judge to have been made. An example is the failed allegation to the effect that the respondent told the appellant that the claim would cost up to $10,000 if it went to trial.
Those factual findings were not challenged upon the appeal. But the limited nature of the findings which were made in the appellant’s favour had the effect of very much narrowing any claim that could be made under this heading. Moreover, particularly in circumstances where the claim now rested on conduct in the form of the respondent’s silence, it is difficult to discern how resort to the Misrepresentation Act could add anything to the Fair Trading Act claim. For that reason we do not propose to address it further.
Section 56 Fair Trading Act 1987 provides:
56. (1) A person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.
(2) Nothing in the succeeding provisions of this Division limits by implication the generality of subsection (1).
The entitlement to recover for a breach of s 56 is found in s 84(1) which provides:
84. (1) A person who suffers loss or damage by conduct of another in contravention of a provision of Part 10 (other than section 57) may recover the amount of the loss or damage by action against that other person or against any person involved in the contravention.
These provisions are in similar terms to ss 52 and 82(1) Trade Practices Act 1974 (Cth) in which context they have been extensively examined.
The trial Judge’s findings of fact dispose of any suggestion of deception, even if any arose on the pleadings. Misleading conduct is conduct capable of inducing an error: Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191, 198. It must contain or convey a misrepresentation: Taco Co of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177, 202; or convey a “false impression”: Commonwealth Bank of Australia v Mehta (1991) 23 NSWLR 84, 88 per Samuels JA. There is no doubt that silence can, in some circumstances, amount to misleading conduct. That could occur where there was an obligation to disclose a matter: Rhone-Poulenc Agrochimie SA v UIM Chemical Services Pty Ltd (1986) 12 FCR 477; or where the representor purported to give a complete statement of material matters: Commonwealth Bank of Australia v Mehta. However in the circumstances of this case, it is difficult to see how the twin failures of the respondent could be seen as misleading. An absence of advice as to the likely quantum of costs of pursuing a case can hardly convey a false impression or induce an error as to those costs. Nor, in our view, could the failure to mention in the context of the offer the possible operation of s 110 suggest that it was irrelevant. Moreover, the respondent never purported to make a complete statement of the factors bearing on consideration of that offer.
But again the appellant faces the more fundamental difficulty of demonstrating that her loss was caused by the respondent’s conduct. Mr Sallis argued that an adverse finding on the matter of causation with respect to the contractual claim did not dispose of the appellant’s Fair Trading Act and Misrepresentation Act claims. He expressed it in this way:
Clearly, as a matter of law, the test of causation for contractual, tortious and breach of fiduciary cases is not the same as the test for causation in relation to misleading and deceptive conduct and misrepresentation. The High Court has made that abundantly clear. His Honour has treated the test as the same.
There are some statements in Henville v Walker which suggest that the test of causation under s 84 of the FTA (which is in similar terms to s 82 of the Trade Practices Act 1974 (Cth)) is not, or may not be, precisely the same as the test of causation at common law (per Gleeson CJ at [18] and McHugh J (with whom Gummow J agreed) at [135]); Hartford Holdings per Doyle CJ at [61]). However, that is of no consequence in this case. The appellant submitted that the test of causation formulated in Gould v Vaggelas should have been applied by the Judge when he came to consider liability under s 84 Fair Trading Act 1987. However, for the reasons we have given, the application of that test does not avail the appellant.
Some time after the hearing of the appeal, the Court received a letter from the appellant’s solicitors referring to two cases which had not been referred to during the hearing of the appeal. One of those cases is of no assistance in resolving the issues on the appeal. The other case referred to is Gemstone Corporation of Australia Ltd v Grasso (1994) 62 SASR 239. That case discusses the question of causation in circumstances where a company director acted in breach of his fiduciary duty by failing to disclose a material matter to his fellow directors. The suggestion made in the letter from the appellant’s solicitors is that the test of causation for breach of fiduciary duty is distinct and different from the test of causation in relation to breach of contract or negligence. This Court did not give the appellant leave to file further written submissions, and there was no application by the appellant to reopen the argument.
The Judge below did not find it necessary to consider the claims in tort or for breach of fiduciary duty because he said that the appellant could be in no better position in relation to those claims than the claim for breach of contract.
We have re-read the appellant’s written and oral submissions on the appeal, and it is quite clear to us that on the hearing of the appeal the appellant submitted that the test of causation in relation to the causes of action in contract, tort and fiduciary duty was the same. In those circumstances, the appellant should not be permitted to resile from that submission by (without leave) writing to the Court some time after the appeal has been heard referring to a further case. We would add that in any event the Court in Gemstone Corporation of Australia Ltd v Grasso (supra) seems to have been dealing with quite a different situation from that before this Court.
We would dismiss the appeal.