Tekin v Stratford - [2025] NSWSC 541

Supreme Court

New South Wales

Amendment notes

Medium Neutral Citation: Tekin v Stratford & Ors [2025] NSWSC 541
Hearing dates: 25 November 2024 – 3 December 2024
Date of orders: 29 May 2025
Decision date: 29 May 2025
Jurisdiction: Common Law
Before: Faulkner J
Decision:
See [339]

Catchwords:
NEGLIGENCE – professional negligence – where solicitor failed to draft notice to complete with reasonable care – client subsequently repudiated the contract – purchaser sued client for return of the deposit and damages – deposit repaid but no damages or costs awarded against client – whether unpaid deposit instalment would have been unrecoverable as a penalty in any event – causation of loss – whether client suffered loss by not lawfully terminating the contract
BREACH OF FIDUCIARY DUTY – where solicitor continued to act for client in defence of litigation brought against client about defective notice to complete – solicitor acted in circumstances where there was a conflict or possible conflict of interest and duty – where client nonetheless won the litigation – whether client suffered loss
BREACH OF FIDUCIARY DUTY – where solicitor acted for client on negotiation and implementation of refinance – where solicitor received payments from funds drawndown from new finance – payments for past legal costs and refinance expenses not properly accounted for – whether monetary benefit or profit received by solicitors when acting in circumstances where there was a conflict or possible conflict of interest and duty

Legislation Cited:
Australian Consumer Law 2010 (Cth), s 60
Civil Liability Act 2002 (NSW), ss 5, 5A, 5D, 5E
Civil Procedure Act 2005 (NSW), s 100
Evidence Act 1995 (NSW), s 140

Cases Cited:
Andrews v Australia New Zealand Banking Group Pty Ltd (2012) 247 CLR 205; [2012] HCA 30
Beach Petroleum NL v Abbott Tout Russell Kennedy (1999) 48 NSWLR 1; [1999] NSWCA 408
Bluth v Boyded [2024] NSWCA 67
Brickenden v London Loan & Savings Co [1934] 3 DLR 465
Briginshaw v Briginshaw (1938) 60 CLR 336
Chan v Zacharia (1984) 154 CLR 178; [1984] HCA 36
Chappel v Hart (1998) 195 CLR 232
Foresters in Victoria Friendly Society Ltd v Lifeplan Australia Friendly Society Ltd (2018) 265 CLR 1; [2018] HCA 43
Fox v Percy (2003) 214 CLR 118; [2003] HCA 22
Furs Ltd v Tomkies (1936) 54 CLR 583
Gerrard Toltz Pty Ltd v City Garden Australia Pty Ltd (in liq) [2024] NSWCA 232
Hasler v Singtel Optus Pty Ltd 87 NSWLR 609; [2014] NSWCA 266
Hillig v Darkinjung Local Aboriginal Land Council [2006] NSWSC 1371
Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41
Hungerfords v Walker (1988) 171 CLR 125
Iannello v Sharpe (2007) 69 NSWLR 452; [2007] NSWCA 61
Law Society of New South Wales v Harvey [1976] 2 NSWLR 154
Luong Ding Luu v Sovereign Developments Pty Ltd [2006] NSWCA 40
Maguire v Makaronis (1997) 188 CLR 449; [1997] HCA 23
Mao v Bao [2023] NSWCA 298
Pilmer v Duke Group (in liq) (2001) 207 CLR 165; [2001] HCA 31
Salmon v Albarran (2025) NSWCA 42
Sellars v Adelaide Petroleum NL (1994) 179 CLR 332; [1994] HCA 4
Upside Property Group Limited v Tekin [2016] NSWSC 1260
Watson v Foxman (1995) 49 NSWLR 315
Winnote Pty Ltd v Page (2006) 68 NSWLR 531; [2006] NSWCA 287
Woolcock Street Investments Pty Ltd v CDG Pty Ltd (2004) 216 CLR 515; [2004] HCA 16
Xiao v BCEG International (Australia) Pty Ltd (2023) 111 NSWLR 132; [2023] NSWCA 48
Youyang Pty Ltd v Minter Ellison Morris Fletcher (2003) 212 CLR 484; [2005] HCA 15

Category: Principal judgment
Parties: Celal Tekin (Plaintiff)
Phillip Norman Stratford (First Defendant)
Denis Gordon Low (Second Defendant)
Kelvin Reginald Low (Third Defendant)
Gary Patrick Doherty (Fourth Defendant)
Patrick Anthony Doherty (Fifth Defendant)
Representation:
Counsel:
M K Condon SC (Plaintiff)
D A Priestly SC (Defendants)
Solicitors:
Corporate Legal (Plaintiff)
Gilchrist Connell (Defendants)

File Number(s): 2020/00343395

JUDGMENT

Introduction

These proceedings are brought by Mr Tekin, a former client of a firm of solicitors. Mr Tekin alleges professional negligence and breach of other duties during a retainer which relevantly started in 2014. I will refer to the solicitors as the Firm. The Firm acted for Mr Tekin on a contract to sell development land and in the litigation against the purchaser which followed. It is a case where there is no dispute that some negligence occurred and no serious dispute that thereafter the Firm had a conflict of interest yet continued to act. The real issues in the proceedings are questions of causation of loss and receipt of monetary benefits by the Firm when acting under a conflict.
Whilst not as extensive as that claimed, some loss was caused by the Firm’s negligence and Mr Tekin is entitled to damages. In addition, the Firm received some monetary benefits in circumstances where there was a conflict or possible conflict of interest and duty. The Firm is liable to account for those benefits as a constructive trustee yet has not done so. Equitable compensation is an appropriate remedy for that failure.
The reasons for these conclusions are set out below. It is necessary first to address the credit of the witnesses.

Credit

Mr Tekin was the only lay witness who gave evidence for the Plaintiff. Some of Mr Tekin’s previous business activities were relevant but Mr Tekin did not have much documentation about the various transactions which he has undertaken over the years. This meant that Mr Tekin was heavily reliant on his memory when giving evidence about conversations, his past plans and his perspectives from time to time. In his closing submissions, Mr Tekin accepted that he was not always a good historian and the concession was well made. Nonetheless, Mr Tekin was clearly a truthful witness, ready to make concessions and accept errors in his Affidavits when appropriate. I accept that he considered to be true all that he said in Court. However, like any person giving evidence about events which occurred nine or ten years ago, Mr Tekin’s memory was sometimes shown to be unreliable by reference to the contemporaneous documents and other objective facts. In any such case the documents and objective facts are to be preferred.
Mr Tekin’s imperfect memory does not just affect the reliability of his evidence about the couple of conversations which matter in this case, but also his evidence about what his plans were are any particular stage and, ultimately, what hypothetically he would have done had the Firm acted with reasonable skill and care. In some respects, Mr Tekin has naturally come genuinely to believe that he would have avoided adverse consequences which he has in fact suffered even though the objective facts demonstrate otherwise. Although it does not generally affect the outcome of the case, I have treated Mr Tekin’s evidence with caution.
The two solicitors from the Firm who acted for Mr Tekin are Mr Stratford and Mr Doherty. They both gave evidence and both were cross examined as the nature of the case required. The solicitors were better placed than Mr Tekin because they had the benefit of the contemporaneous documents which solicitors usually produced when acting for a client. Mr Stratford generally took file notes which were better than average. Mr Stratford gave his evidence in an honest and straightforward manner. His evidence is to be accepted. Apart from one conversation, the only real point of challenge related to his non-perception of a conflict of interest when Mr Tekin got sued about the Notice to Complete which Mr Stratford had negligently drafted. Thereafter Mr Stratford left Mr Tekin in the hands of Mr Doherty and he may not have given the conflict the consideration he ought to have. It does not ultimately matter, but I think that it is more likely that Mr Stratford chose not to think about the conflict at the time. I do not find that he positively realised that there was a conflict in 2015 and then falsely denied it in these proceedings.
I also found Mr Doherty’s evidence to be on the whole truthful although there were occasions where he was evasive and argumentative rather than forthright. He too said he saw no conflict at the time, although in his case it was because he planned to fix the problem by acting for Mr Tekin without charge in defence of the proceedings caused by the defective Notice to Complete.
Mr Doherty’s evidence was also undermined by the fact that he had to explain the circumstances in which he provided documents to Mr Tekin in February 2016 about the application of the money received by the Firm from the drawdown of the funds which Balmain NB lent to Mr Tekin. However, to the extent that Mr Doherty was asked, he accepted some unattractive propositions which was more an indicator of honest evidence rather than the opposite. It does not generally matter, but I accept Mr Doherty’s evidence with a suitable degree of caution.
I address below the competing evidence on the small number of factual matters which are material to the resolution of Mr Tekin’s claims.

Facts

Background

Mr Tekin was born in Turkey. He moved to Australia 43 years ago and has lived here since. He completed year 12 but has no tertiary education. English is his second language. When he gave evidence in these proceedings in November 2024 there was no discernible deficiency in his ability to understand what was said or to express himself in English. Mr Tekin is sometimes referred to as Jerry.
Since 1987, Mr Tekin has regularly bought and sold Sydney property. It is unclear if all the properties were residential. Some of them were. He has occasionally refurbished and/or subdivided property and then resold it. In addition to the properties which are the subject of the current dispute, Mr Tekin has been either the purchaser or vendor under approximately 16 contracts for the sale of land.
Between March 1989 and March 2012 Mr Tekin owned and operated five takeaway food shops in suburban Sydney. It is unclear whether Mr Tekin generally operated the shops sequentially or owned and operated multiple shops concurrently. He operated at least two shops in 2012. For the purposes of these businesses, Mr Tekin entered into and performed a number of contracts for the sale of a business either as purchaser or as vendor. Mr Tekin has been a tenant under commercial leases and has been party to a number of transactions by which commercial leases have been assigned.
From the outset Mr Tekin has retained the first Defendant, Mr Stratford, as the solicitor to act for him on these property and business transactions. Mr Tekin was originally introduced to Mr Stratford by a relative. Mr Stratford’s best recollection is that they first met in 1988.
Mr Stratford is a member of the partnership of solicitors called Low Doherty & Stratford, which is the Firm. The current five members of the Firm, including Mr Stratford, are the Defendants in these proceedings. Mr Stratford’s practice consists mostly of acting in property transactions. He does not litigate. Mr Stratford had been in practice for more than 40 years at the time relevant to these proceedings.
Another member of the Firm, and the second Defendant in these proceedings, is Mr Doherty. Mr Doherty’s practice includes litigation. He too had been in practice for more than 40 years when the relevant events occurred.
Until early 2015 Mr Stratford performed almost all the legal work that Mr Tekin brought to the Firm. There is a lack of clarity about the billing arrangements between Mr Stratford and Mr Tekin. Mr Tekin says that he was invoiced by Mr Stratford at the end of each transaction and that he paid those invoices. I accept that Mr Tekin paid when invoiced, but there is evidence that Mr Stratford was not an efficient invoicer, especially in more recent years. There were a number of matters upon which he was working for which he did not issue any invoices, whether by design or otherwise. In recent years, the invoicing arrangements lacked rigour.
There is no doubt that Mr Tekin trusted Mr Stratford. By 2014 one had been advising the other for over 25 years. There was a degree of business loyalty between the two men. Mr Stratford was familiar with Mr Tekin’s business activities. There is no evidence, however, that Mr Tekin sought or expected advice from Mr Stratford about anything other than legal matters or that Mr Stratford voluntarily proffered any such advice. There were times in the hearing when Mr Tekin portrayed himself as reliant upon Mr Stratford for commercial advice, but I make no such finding. Watching Mr Tekin in cross-examination and reading the contemporaneous documents makes clear that Mr Tekin was an astute operator within his own areas of business activity who made his own commercial decisions. He may have lacked administration skills but he was business-minded. He ran matters past Mr Stratford, but Mr Stratford was his trusted solicitor and no more.

Mr Tekin’s Land

In addition to the property dealings referred to above, between 1992 and 2003 Mr Tekin progressively purchased four contiguous parcels of land on Cecil Avenue, Castle Hill in New South Wales. I will refer to the four parcels collectively as the Land. Mr Tekin purchased the Land at least in part with funds borrowed from HSBC and La Trobe.
Mr Tekin purchased the Land in order to hold it as an investment and subsequently to develop and sell it. Three of the parcels were improved with residential dwellings which Mr Tekin rented out in the meantime.
In addition to the Land, Mr Tekin purchased another contiguous parcel for the purpose of obtaining a drainage easement to benefit the Land. Once the easement had been created, Mr Tekin sold the other parcel.
By about 2010 the Land had become reasonably well located for an approaching metro line. Mr Tekin took steps to develop the Land. He engaged an architect called Vastu Australia Pty Ltd. On 29 September 2011 Vastu obtained development consent to build 22 townhouses on the Land.
Mr Tekin initially planned to undertake the development in stages. The first five townhouses were to be constructed and sold, with the proceeds from the sale used to fund the construction of the 17 remaining townhouses. In January 2012 Mr Tekin entered into a building contract with ADN Investments Pty Ltd for the purpose of carrying out demolition and excavation work on the Land.
On 16 February 2012 Mr Tekin received an offer from the Commonwealth Bank to provide $7.33m of interest-only funding for a 15-month term. Given CBA’s offer, Mr Tekin changed his mind and decided to proceed with the whole development in a single stage. He arranged for ADN to demolish the existing dwellings and excavate all the Land. Unfortunately, in about April 2012 it became clear that the CBA funding would not proceed because there was a pre-sales precondition which Mr Tekin could not fulfill. It may be inferred that Mr Tekin undertook some work to obtain pre-sales and that some off-the-plan contracts were entered into with townhouse buyers, but there were not enough to fulfill CBA’s condition.
Mr Tekin did not otherwise have the resources to continue the development. Work stopped. Mr Tekin’s attempts to find alternative funding were unsuccessful.
These events left Mr Tekin owing a debt to ADN. On 11 February 2014 the debt matured into a default judgment for just over $250,000. On 13 May 2014 ADN communicated a threat to commence bankruptcy proceedings against Mr Tekin. ADN also lodged a caveat against the Land. Mr Tekin had other debts as well. He was under financial pressure.

Mr Harsany

Mr Tekin engaged in negotiations with another prospective development partner called Denis Harsany. On 23 May 2014 Mr Tekin made a deed with one of Mr Harsany’s companies, WRV Development Pty Ltd. The deed appointed WRV as the “Project Administrator” and contemplated progressing the development on the Land. The details of the deed are not important other than to say that WRV agreed to advance $300,000 to Mr Tekin at the outset. Mr Tekin received the money and used much of it to repay other debts but not his debt to ADN.
No development proceeded with WRV. There is a reference in the evidence to Mr Tekin’s inability to obtain development funding. At some stage WRV terminated the development deed. In July 2014 WRV lodged another caveat over the Land to secure repayment of the $300,000 advance.

Mr Tekin’s plans for the Land from time to time

Before proceeding with the narrative, an important factual issue in the case is Mr Tekin’s attitude to selling the Land. This particular fact is central to Mr Tekin’s claim that the Firm’s breaches of duty caused him loss, especially loss from not selling the Land earlier than ultimately occurred. Mr Tekin’s attitude to selling the Land at any particular time is an objective fact which is highly relevant to the hypothetical question of what would Mr Tekin have done if different events had occurred.
At the hearing, Mr Tekin tended to address this issue in binary terms. It was said that Mr Tekin wanted to sell the Land at a particular time or he did not want to sell. Submissions were also made about whether Mr Tekin ought to have been advised that he “should” sell the Land or he “should not”. Mr Tekin’s submissions also lacked precision about the time period to which they were directed and did not always take into account the fact that his attitude changed over the years.
A more nuanced assessment of Mr Tekin’s attitude is necessary to get an adequate understanding of the causation issues in the case. There is no dispute that in 2011 Mr Tekin wanted to develop the Land by the construction of townhouses which he would then sell as completed properties. At some stage prior to October 2014 Mr Tekin’s attitude changed. He no longer wanted to develop the Land as the developer. By October 2014 he wanted immediately to sell the Land as a single lot. After that it is clear from the evidence that from time to time his views changed as to whether he ought to sell immediately or whether he ought wait and sell at a future date. His views also changed about whether he ought first undertake work in an attempt to get the Land re-zoned before he sold it and, if so, how much work he should undertake. His attitude to these matters depended upon multiple considerations.
Naturally the zoning of the Land at any particular time and the prospect of re-zoning are highly relevant to a finding about Mr Tekin’s attitude towards selling the Land. The evidence on these important issues is limited and imprecise. At some point the Land became subject to a “proposed re-zoning to R4”. The implications of such a re-zoning were potentially significant for the value of the Land. In 2011 Mr Tekin had approval for 22 townhouses. If the Land were to be re-zoned to R4, it may have been possible to develop the Land with high-density apartments. One contemporaneous email refers to the “probability” of 90+ apartments.
The evidence does not reveal when the re-zoning proposal first arose. Nor does it address the nature or likelihood of the proposal. The proposal must have arisen after Mr Tekin excavated the basement for his 22 townhouses in 2012. By February 2015 the possibility of re-zoning was being referred to in contemporaneous emails. Even if Mr Tekin did not know about the prospect of re-zoning when he contracted to sell the Land for $7.8m in October 2014 (see below), the evidence suggests that it is likely that he was aware when he instructed Mr Stratford to issue the Notice to Complete on
3 December 2014. It is clear that Mr Tekin had definitely become aware of the re-zoning prospect by 13 March 2015 when he instructed Mr Stratford to issue the Termination Notice (see below).
Another important factor relevant to Mr Tekin’s attitude to selling the Land is the cost of professional work necessary to assist the re-zoning process and the availability of funds to pay for that work.
Another relevant factor was Mr Tekin’s market experience about how much someone might be willing to pay for the Land, which changed over time.

Drawing on the objective facts, in the narrative below I have included my findings about Mr Tekin’s attitude to selling the Land at moments which are particularly relevant to the claims in the case.

Contract to sell the Land to Upside

By mid-2014 Mr Tekin’s debts to HSBC and La Trobe were about $2m. Since the demolition of the residences on the Land and the sale of his last takeaway shop, Mr Tekin had been without income to service those debts. He also owed about $80,000 in unpaid land tax. As stated above, ADN had served a bankruptcy notice. Mr Tekin also had the new debt to WRV.
In September 2014 Mr Tekin made a decision to sell the Land immediately. He intended to use the proceeds to repay all his debts including his debts to ADN and WRV. Mr Tekin attributes his decision to sell to advice received from Mr Stratford. Given the commercial nature of the decision and Mr Tekin’s evident ability to manage his own business affairs, it is implausible that Mr Stratford gave any such advice or that Mr Tekin made his decision to sell based on any such advice. In any event, nothing flows from it because Mr Tekin does not now criticise Mr Stratford for any role played in Mr Tekin’s decision to sell in September 2014.
Mr Tekin was able to negotiate an acceptable price for a sale to Mr Harsany, who would buy the Land through another one of his companies, Upside Property Group Limited. Upside was incorporated for the purpose of the acquisition. In about October 2014 Mr Tekin instructed Mr Stratford to prepare a contract. Mr Tekin considered his debts to be urgent and he initially instructed Mr Stratford that settlement was to occur before Christmas 2014.
On 21 October 2014 Mr Tekin and Upside exchanged contracts for the sale of the Land.
There are a number of terms of the Contract which are relevant to the current dispute. First, the Completion Date was 1 December 2014, a day or two earlier than the customary six week settlement period. Secondly, the price specified in the Contract was $7.8m. This was not the entire agreement about price because Mr Tekin and Upside made a Side Deed also on 21 October 2014 which potentially affected the amount Mr Tekin would receive for the Land. Clause 3 of the Side Deed provided:

“It is intended that the parties will complete the Contract on or before
1 December 2014. Prior to completion, the parties are free, subject to the terms and conditions of this deed, to market the Property for re-sale by the vendor or sub-sale by the purchaser to a third party.”

There are two copies of the Side Deed in evidence, neither of which is complete. From the pages in evidence and Mr Tekin’s commentary in his Affidavit, the effect of the Side Deed appears to have been that, despite entry into the Contract, both Mr Tekin and Mr Harsany would continue to market the Land up until completion, and if either was able to locate a third party buyer for more than $7.8m Mr Tekin would sell to the third party instead of Upside. The excess proceeds would be split between Mr Tekin and Upside in specified proportions. There was a cap of $1m on Mr Tekin’s share of any excess which could be achieved. This explains the reference in some of the contemporaneous documents to Mr Tekin selling for up to $8.8m.
Thirdly, the specified “deposit” under the Contract was $780,000. The Contract was the 2005 edition of the standard terms and contained standard provisions about payment of the deposit in clause 2.
Special condition 11 more specifically addressed payment of the deposit as follows:

“Deposit by Instalments
The Vendor agrees that the Purchaser can pay the deposit by instalments, on the proviso that:
(a)    for the purposes of clause 2, the deposit payable under this Contract is 10% of the price, which is payable as follows:
i.   the sum of $300,000.00 within seven (7) days of the date of this Contract which said sum will be released to the vendor forthwith and part of which will be used to repay all monies owing to ADN Investments Pty Limited (ACN 107 361 160) and for the balance to be used to enable the vendor to pay other personal debts;
ii.   the balance either:
on termination of this Contract by the Vendor if applicable; or
in accordance with clause 16.7 of this Contract [i.e. on completion],

(b)   the times for payment under this clause 11 (a) are essential;
(b)   if the vendor is entitled to the deposit and the balance is not paid forthwith, the vendor is entitled to sue the purchaser for any unpaid balance of deposit and recover it as a liquidated debt; and
(d)    the right contained in this clause is in addition to and does not limit any remedies available to the vendor in this Contract despite any rule of law or equity to the contrary.”

Standard clause 9.1 provided:

“9 Purchaser’s default
If the purchaser does not comply with this contract (or a notice under or relating to it) in an essential respect, the vendor can terminate by serving notice. After the termination the vendor can –
9.1 keep or recover the deposit (to a maximum of 10% of the price)”

The effect of these clauses is that $300,000 of the deposit was to be paid and released to Mr Tekin immediately and the balance of $480,000 was to be paid on completion unless Mr Tekin terminated the Contract earlier.
The fourth part of the Contract relevant to the current dispute relates to issuing a Notice to Complete. Clause 15 of the Contract provided as follows:

“Completion date
The parties must complete by the completion date and, if they do not, a party can serve a notice to complete if that party is otherwise entitled to do so.”

Special condition 7 provided as follows:

“For the purpose of Clause 15 a "Notice to Complete" shall mean a notice requiring the other party to complete this Contract no earlier than fourteen (14) days after the date of service of the Notice. The vendor and Purchaser acknowledge and agree that the serving of such a Notice shall for all purposes make the time for the obligation of the parties to complete this Contract of the essence and further that the time period referred to in the notice shall in all circumstances be reasonable and sufficient notice. Notwithstanding any other clause herein, service of such Notice may be effected by facsimile transmission and shall be deemed to be served on the day the facsimile transmission has been completed.”

Fifthly, Mr Harsany gave a guarantee of Upside’s obligations under the Contract and the Side Deed.

After the Contract was entered into

On about 21 October 2014 Mr Tekin received $300,000 from Upside which he used to discharge his debt to ADN. ADN removed its caveat and withdrew the bankruptcy notice. Mr Tekin’s most immediate financial pressure was relieved.
Mr Harsany looked for third party purchasers for the Land as contemplated by the Side Deed. As at 1 December 2014, some potential third party purchasers had been identified but no agreement had been reached. One of the potential purchasers indicated a willingness to pay $10.93m and negotiations were under way.
For its part, there is a lack of clarity about Upside’s attitude to completion of the $7.8m purchase as at 1 December 2014. Upside’s solicitors formally wrote to Mr Stratford on 28 November 2014 to say that there had been “a slight delay in finalising matters relating to finance” and requested a 14 day extension. The letter suggests that Upside was trying to arrange finance and therefore was intending to proceed with the purchase.
However, on 1 December 2014 Mr Harsany sent an email directly to Mr Stratford and copied in Mr Tekin and the solicitor acting for Upside. The email stated:

“Hi Phillip,
Jerry has asked me to describe the current status of plans moving forward on 10-16 Cecil Avenue, Castle Hill.
We are currently have 3 scenarios on the table and I will describe them in the order of what is likely to take place -
1.    I have a letter of offer for refinancing being issued today which will allow Jerry to payout all of his existing commitments and have some cashflow for living. My company will be the borrower with Jerry only required to come on board with the property as a guarantor. Jerry will have his $8.8Mil locked in with an extra $100K per Month up to 7 Months should we on-sell after the refinance takes place. From there onwards, we will have a 50/50 share on net profits. I will be paying a deposit amount of $4,500,000 in total by Feb end from the refinance prior to Xmas and the balance in Feb when my project in Berowra completes. Our goal will be to actively apply for spot re-zoning, hold for re-zoning or on-sell as it is getting closer to re-zoning. I will ask Shing [i.e. Upside’s solicitor] to prepare an agreement describing the above prior to settling refinance.
2.    On-sell the property prior to settlement of refinance. We still have a number of potential buyers and agents that we are negotiating with.
3.    For Upside Property Group to settle the property as per the current arrangements. Please note we need 3 weeks from a decision being made to settle this contract for funding to be available. It would be my request to extend the settlement period by this length of time while we confirm the refinance facility and/or the on-sell.

To assist with the existing mortgage holders we have forwarded a letter requesting a settlement extension which you will be able to forward as required.
Please let me know if you require further details on the above at this stage.
Kind Regards,
Denis Harsany”

The meaning of some of the matters referred to in this email is not apparent from the evidence, such as the reference to a deposit amount of $4.5m. The statement towards the end of the email that “we have forwarded a letter requesting a settlement extension” appears to be a reference to the letter dated 28 November 2014 which is referred to at [51] above, in which case that letter appears to have been written to help Mr Tekin ward off HSBC and La Trobe rather than to reflect Upside’s genuine attitude to completion. In any event, Mr Harsany’s email makes clear that his preferred course was not to complete the $7.8m purchase. His preferred course was to refinance in order to have more time to locate a third party purchaser and possibly apply for spot re-zoning.
As for Mr Tekin’s attitude, he said in cross-examination that he does not remember when he read Mr Harsany’s email dated 1 December 2014. It is not Mr Tekin’s document, although there is no evidence of Mr Tekin disputing what was said or instructing Mr Stratford otherwise.
Immediately after Mr Harsany’s email, Upside’s solicitor sent his own email to Mr Stratford which stated:

“Hi Phillip,
If your client would like to settle the current contract with Upside Property Group prior to the Christmas period, our client will need confirmation of this by close of business today.
As we understand it, our respective clients have come to an agreement to refinance the property instead of settle. Should the case be that your client prefers to settle by Christmas, our client will need sufficient notice of this, and hence your client's confirmation will be required today.
Our client has been trying to arrange the $50,000 balance for the deposit, however this has been delayed by a third party. Our client will try to rectify this ASAP.
We urgently await confirmation from your client as to the above.
Thank you in anticipation of the same.
Kind regards
Shing Lam”

The reference to the $50,000 balance for the deposit is unexplained.
After the email from Upside’s solicitor, Mr Tekin had a telephone conversation with Mr Stratford during which he told Mr Stratford that he would discuss “refinancing” with Mr Harsany and advise how to proceed. It is unknown whether Mr Tekin and Mr Harsany then spoke and, if so, what was said. In any event, Mr Tekin did not instruct Mr Stratford to give to Upside’s solicitor confirmation of completion by close of business on 1 December 2014.
When 1 December 2014 came and went, Upside had not completed the purchase as required by the Contract.
On 3 December 2014 Mr Tekin and Mr Stratford had another telephone conversation. According to Mr Stratford’s file note, Mr Tekin said that he was getting nowhere with Mr Harsany. Mr Tekin reported to Mr Stratford that “no finance available. Says will take at least 6 weeks”. The reference is ambiguous. It may be a reference to the finance which Upside needed to complete the $7.8m purchase. It may instead be a reference to the refinance to implement Mr Harsany’s first option in his email on 1 December 2014.
Mr Tekin said in cross-examination that at this time it was his priority to complete the $7.8m sale to Upside. According to Mr Tekin’s Affidavit, Mr Stratford told him that he had to give a 14-day “extension”. He asked what would happen if Upside did not settle after 14 days and Mr Stratford replied that “You’re going to have to find someone else to settle with.”
In paragraph 73 of his Affidavit dated 18 September 2024 Mr Tekin gives the following evidence:

“I understood Mr Stratford's words above to mean that if Upside did not complete the sale of the Properties within 14 days after we had provided the extension, I would be free to sell the Properties to someone else. As a result, I instructed Mr Stratford to agree to the extension to Upside that we had discussed.”

As recorded in Mr Stratford’s file note, Mr Tekin instructed Mr Stratford to issue a Notice to Complete.
In view of the evidence, I find that as at 3 December 2014 Mr Tekin was re-considering his options. If not before, by 3 December 2014 he was alive to the possibility that he could sell the Land for more than $7.8m. He regarded an ability to sell to a third party as a “freedom”. He doubted Mr Harsany’s ability to complete the $7.8m purchase and his most pressing debt had been paid. He had also experienced a degree of interest in the Land at $10.93m, and possibly other interest as well. Mr Tekin would have completed the $7.8m sale if necessary, but he was at least as happy to have the Upside sale terminated so that he could get a new sale at a higher price.

The Notice to Complete

On 4 December 2014 Mr Stratford issued the Notice to Complete. The date for completion was specified as 18 December 2014. There is no dispute that the Notice did not comply with clause 15 and special condition 7 of the Contract because only 13 days were specified for completion after the Notice was issued. Nor is there any dispute that the Notice to Complete suffered from another defect because it was issued at a time when Mr Tekin was himself in breach of the Contract by failing to answer the requisitions. By reason of the defects, the Notice to Complete was not effective to make time of the essence for Upside’s completion of the purchase.
Also on 4 December 2014, Mr Stratford and the solicitor acting for Upside exchanged correspondence about a possible on-sale to a third party and whether the particular on-sale was “legitimate”. The on-sale appears to have been sourced by Mr Harsany. This was the proposed on-sale at $10.93m. The proposal then being discussed included a delayed settlement with the progressive release of proceeds to Mr Tekin (and Mr Harsany). Negotiations continued with the third party.
Upside did not settle the $7.8m purchase on 18 December 2014. There is no evidence of communication about completion between Mr Tekin and Mr Harsany or their respective solicitors. There is no evidence of a communication between Mr Tekin and Mr Stratford about terminating the Contract and nothing was done to terminate at that time.
On 23 December 2014 Mr Harsany sent an email directly to Mr Stratford (copied to Mr Tekin) in which he confirmed that two previously proposed third party purchasers had “fallen over”. Presumably one was the $10.93m on-sale. The email set out “our plans” to refinance the HSBC and La Trobe debts with a less “conventional” lender. The email is not clear about what would be done with the Land if refinance was achieved. In any event, Mr Harsany’s email is inconsistent with an intention that Upside complete the $7.8m purchase. Upside’s $300,000 deposit is listed as a sum to be refunded from the refinance proceeds, albeit postponed to the payment of Mr Tekin’s other debts. Mr Harsany nonetheless stated that it was “critical” to him to “try to refund” the Upside deposit from the refinance.
Again, this email is not Mr Tekin’s document, although Mr Harsany stated that he wrote it at Mr Tekin’s request. There is no evidence of Mr Tekin disputing Mr Harsany’s statements or instructing Mr Stratford otherwise.
Mr Tekin’s evidence is that “from about late December” he was no longer confident that Upside would complete the $7.8m purchase or that Mr Harsany would find another purchaser. Mr Tekin started talking to selling agents himself. By 23 December 2014 he had signed an agency agreement with at least one agent and he subsequently received a proposed agency agreement from another agent. I infer from this conduct that by the end of 2014 Mr Tekin still wanted to sell the Land but he no longer considered $7.8m to be an acceptable price, even if he could get a $1m uplift under the Side Deed. Whether because of the previous prospect of a sale for $10.93m or other knowledge gained about the market, re-zoning and/or refinance, Mr Tekin now wanted to sell the Land for more than $10m.
Mr Tekin also had a changed attitude about timing. Although he had communicated urgency to Mr Stratford when the Contract was entered into in October 2014, Mr Tekin’s Christmas deadline had clearly ceased to apply. His most immediate financial pressure (ADN) had been addressed. He had been exposed to the possibility of a higher price. Some more time may be required to achieve a higher price. There is no evidence of steps being taken to enforce the $7.8m sale to Upside once the Notice to Complete expired, or even communication with Mr Stratford about such steps. By the end of December 2014 Mr Tekin had become willing to delay the sale.
Mr Tekin’s expectation of a price above $10m was fuelled by events in the New Year. He gave evidence of having a number of conversations with prospective purchasers. Someone called Mr Merhi said he would give Mr Tekin a cheque for $10m. People from “Kanebridge” told Mr Tekin that they were interested and would pay $8m up front plus $300,000 for each apartment built on the Land. On 6 February 2015 Mr Tekin sent an email to Mr Stratford and asked him to issue a contract to Kanebridge, which was done. Mr Tekin received an offer from “BV Property Group”. At Mr Tekin’s request, on 9 February 2011 Mr Stratford’s assistant, Ms Pertzel, emailed a contract to shane@bvproperty. A man from “Alpha Fund” offered $8m up front plus 33 apartments upon completion of the development. On 11 February 2015 Mr Tekin gave instructions for a contract to be issued to Alpha Fund. On 24 February 2015 an agent sent Mr Tekin a draft deed which contemplated that Mr Tekin would grant Alpha Fund a ten-day option to purchase the Land for an unspecified price. The draft deed specified an option fee of $10,000. At some stage Alpha Fund changed its offer to an all-cash offer of $17m.
The evidence about these “offers” is largely confined to Mr Tekin’s Affidavits. There are one or two emails and a draft option deed, but otherwise there is no documentary evidence of Mr Tekin’s communications with any of these prospective purchasers. The sale of the Land for a composite consideration (e.g., cash and apartments) or the entry into a development joint venture would be a large and complex transaction. In the ordinary course, a transaction of that nature would generate documentation. However Mr Tekin does not even have a heads of agreement for any of these prospects. I accept that the discussions occurred, but I infer from the minimal documentation that the discussions were of a very preliminary nature. There is no evidence of any “offer” which was capable of giving rise to a binding agreement to buy the Land for a high price or by entry into a lucrative joint venture.

Nonetheless, it is clear from these discussions that in early 2015 Mr Tekin formed the view that the Land was worth significantly more than he had previously thought. He still wanted to sell but it had to be at the right price. He accepted in cross-examination that in February 2015 he would not have been willing to sell for less than $10m. I find that that was his attitude up until July 2015 at least.

Mr Tekin’s interest in refinance

All the while Mr Tekin was still in debt. He was in arrears (or further in arrears) under his loans from HSBC and La Trobe. He did not have the means to bring the loans back into order and could not borrow further money from HSBC or La Trobe. Mr Tekin still owed more than $80,000 in unpaid land tax. Altogether he estimated that he needed $2.35m to discharge his loans and pay his land tax. He still had a debt to WRV.
In paragraph 102 of his Affidavit dated 18 September 2024 Mr Tekin says:

“I decided to enquire with other lenders as well to see if they could help me at this time. Due to the increased potential value of the Properties and the offers I was receiving as deposed to above, I wanted to relieve myself of the financial pressure I was feeling and properly explore the opportunities presented to me by the recent developments in the re-zoning.”

The exact date when Mr Tekin started to consider refinance is not known. The first documented reference to refinance is Mr Harsany’s email on 1 December 2014 referred to in [52] above. There is evidence that Mr Harsany took (ineffectual) steps to help arrange refinance from December 2014. Paragraph 102 of Mr Tekin’s Affidavit appears to be directed to December 2014 or January 2015.
Mr Tekin himself took some steps to find refinance. On 22 February 2015 a lender called Chifley Securities issued an offer of $3.5m finance from which Mr Tekin would receive about $2.9m after deduction of fees and pre-paid interest. Chifley Securities offered the finance for a period of 12 months at 11.5% p.a. (assuming no default). The offer was conditional upon verification of the accuracy of the information contained in the finance application, a valuation of the Land, formal documentation, due diligence and absolute satisfaction of Chifley Securities’ solicitors.

Mr Doherty’s attempts to find refinance for Mr Tekin

At about the time of the offer from Chifley Securities, Mr Doherty began to look for refinance for Mr Tekin. Mr Tekin appears to say in his evidence that he was surprised when he subsequently discovered Mr Doherty’s efforts, but that is inconsistent with some parts of Mr Tekin’s own Affidavit and the contemporaneous documents. In paragraph 108 of his Affidavit dated 18 September 2024 Mr Tekin says:

“Around this time, I had a discussion with Mr Stratford and told him about the Chifley Letter of Offer. I recall that he was encouraging about it at first, however a short time later, he said to me words to the effect of:
PS: "Gary [Doherty] knows someone who might be able to help you with a loan. Maybe they would be better for you. Would you like me to ask him about it?"”

On 26 February 2015, Mr Tekin forwarded the offer from Chifley Securities to Mr Stratford. In the covering email, Mr Tekin wrote:

“Would you be able to have a look at this. Its quite expensive but if Gary can’t something positive from the other guy, this might be still better than Denis’.”

The reference to “Gary” was a reference to Mr Doherty. The “other guy” was an alternative financer. “Denis” was Mr Harsany.
I find that from the outset Mr Tekin was aware of Mr Doherty’s efforts to help him obtain finance and indeed Mr Doherty undertook the task at Mr Tekin’s request (via Mr Stratford).
Mr Doherty had a business relationship with a finance broker called Balmain NB Commercial Mortgages. Presumably Mr Doherty referred clients to Balmain NB and Balmain NB reciprocated. Mr Tekin suggested that Mr Doherty or the Firm had a more formal commission arrangement with Balmain NB. Mr Doherty denied it. On the evidence before the Court, the suggestion never rose higher than speculation.
On 2 March 2015 Mr Stratford sent an email to Mr Tekin in which he stated that Mr Doherty would be meeting with “his finance contact” that afternoon and asked whether Mr Tekin had any valuations of the Land. On 10 March 2015 Mr Stratford asked Mr Tekin for further information which had been requested by Balmain NB.

Termination of the Upside Contract

Mr Tekin gave evidence that after Upside did not comply with the 14-day “extension” given on 3 December 2014, he believed that the $7.8m Contract had automatically come to an end. Any such belief changed in mid-March 2015 when Mr Stratford told Mr Tekin that he could not issue a contract to a new purchaser “until we deal with Upside”. At that point Mr Tekin realised he was still contractually bound to Upside.
As a result of that revelation, Mr Tekin took immediate steps to terminate the Upside Contract. Mr Tekin’s evidence is:

“Earlier that day, I had had the discussion with Mr Stratford set out in paragraph 99 above, in which he told me I could not sell the [Land] while the Upside Contract was still in place. I understood that following that conversation, Mr Stratford would be doing something to deal with the Upside Contract to allow me to sell the [Land], however I did not know what it was, and he did not explain it to me. He said to me words to the effect of "I will take care of if'. I now understand that the Upside Contract had to be terminated in writing.”

The contemporaneous documents show that this evidence is an oversimplification of what happened. On Friday 13 March 2015 Mr Tekin and Mr Stratford had a telephone conversation about terminating the Upside Contract. Mr Stratford made a detailed file note. They discussed whether the Notice to Complete issued on 4 December 2014 might be “stale”. Mr Stratford had done some research and consulted one of his partners. Mr Stratford told Mr Tekin that there was a risk that the Notice to Complete was no longer effective. Mr Tekin’s options were identified as (1) issue a new notice to complete in order to address that risk; (2) forewarn Upside of the intention to terminate and then issue a Termination Notice in a couple of days’ time; or (3) immediately issue a Termination Notice without forewarning. Mr Tekin chose the third option. Mr Stratford’s file note concludes with the following bullet points:

“•   Wants us to terminate now
•   Does not want to take risk that might be able to settle
•   Land worth much more now.”

This documentary evidence clearly establishes that as at 13 March 2015 Mr Tekin did not want to sell the Land to Upside for $7.8m. He wanted immediately to issue a Termination Notice in order to avoid the “risk” that he might otherwise be obliged to complete the sale to Upside at what he considered to be an unacceptably low price.
As instructed, later that day Mr Stratford sent a letter to Upside’s solicitors with which he enclosed a Termination Notice. The ground given for termination was failure to comply with the Notice to Complete dated 4 December 2014. The Termination Notice also stated that the deposit was forfeited.
On the evening of 13 March 2015 an angry Mr Harsany telephoned Mr Tekin. Mr Harsany told Mr Tekin that the Termination Notice should not have been sent and that he would claim his deposit back and sue for damages.
On Monday 16 March 2015 Mr Tekin reported Mr Harsany’s call to Mr Stratford. Mr Tekin says that Mr Stratford responded by saying:

“the firm made a technical error. Gary will be talking to you from here on. I don’t do court matters.”

It may be accepted that Mr Stratford said something like this (he does not deny it) but the conversation is more likely to have taken place on or after 19 March 2015 when the formal letter arrived from Upside’s solicitor (see below). In any event, Mr Tekin says that he was not given any further explanation about the defective Notice to Complete or the Firm’s short coming.
On 19 March 2015 the solicitors acting for Upside wrote to Mr Stratford. They asserted that the Notice to Complete was invalid for a number of reasons, one of which was that it did not allow 14 days for completion as required by the Contract. Another reason was Mr Tekin’s extant failure to answer requisitions. They further asserted that Mr Tekin had repudiated the Contract by issuing the Termination Notice. Upside formally accepted the repudiation and terminated the Contract. It demanded the return of the $300,000 deposit and said that proceedings would be commenced to claim damages. The letter included a demand that Mr Tekin give an undertaking that he would place in trust “any and all” proceeds from any sale of the Land pending the determination of the foreshadowed proceedings.
Mr Stratford read this letter and said that he thought litigation against Mr Tekin was likely. It is probably at this time that Mr Stratford told Mr Tekin that the Firm had made a technical error and Mr Doherty would be taking over.

Refinance with Balmain NB

By this time Mr Doherty had made progress with refinance from Balmain NB. On 17 March 2015 Mr Doherty sent an email to Balmain NB in which he listed the payments to be made from the funds he was seeking for Mr Tekin:

“HSBC Bank $1,700,000
Latrobe    $510,000
Land Tax $90,000
Caveat   $330,000
Legal fees    $110,000
Reimbursement of monies
spent on approval, excavation
     $ 450,000
$3,200,000

Loan   $3,960,000 60%
Brokerage Loan
& Fees
$80,000
Stamp Duty & Legals     $22,000
Valuation   $10,000
Interest prepaid @ 8.5% -
18 months
  $313,000
Net $3,535,000”

The reference to $330,000 for the “caveat” was a reference to the money claimed by WRV under the aborted development deed in 2014. Mr Doherty’s list of payments did not include money to refund the Upside deposit.
Mr Doherty says that he had previously discussed the distribution of the loan funds with Mr Tekin, who had told Mr Doherty what payments he needed. Mr Tekin denies having any such conversation directly with Mr Doherty but the denial is focused on the channel of communication rather than the topic discussed. Mr Doherty evidently had enough information about Mr Tekin’s affairs to submit line items and corresponding amounts to Balmain NB. Mr Tekin clearly participated in a conversation about the figures at this time.
Mr Doherty also says that he told Mr Tekin that the Firm would “cover” certain costs which are ordinarily incurred when applying for finance, such as valuation fees, application fees and other costs. Mr Doherty says that he did so because he understood that Mr Tekin was under financial pressure. Mr Tekin denies such a conversation took place. His denial is focused on the types of costs discussed and not the discussion itself. Mr Tekin accepts that they discussed valuation fees. Some such conversation is consistent with the contemporaneous documents which contain references to the Firm covering some of the finance application costs and Mr Tekin’s gratitude for that cover. I accept that Mr Tekin was told by Mr Doherty either directly or through Mr Stratford that the Firm would cover the upfront expenses of applying for finance.
As at 19 March 2015 Mr Doherty had not yet received an offer back from Balmain NB. As set out above, Mr Tekin knew that Mr Doherty was dealing with Balmain NB, although he may not have known how far the application had progressed. In any event, he must have been pessimistic about being approved by Balmain NB because on 19 March 2015 he decided to proceed with the Chifley Securities offer. He went as far as countersigning the Chifley Securities letter of offer and instructing Mr Stratford to return it to the finance broker. At the last minute, Balmain NB came through with its offer. Balmain NB’s offer was for an 18-month loan of $3.9m at 9.5% p.a. (assuming no default). Apart from the 18-month term, Mr Tekin accepts that the Balmain NB offer was superior to the Chifley Securities offer in every way. In particular the interest rate was lower.
On 20 March 2015 Mr Doherty emailed Balmain NB’s offer to Mr Stratford. In his covering email Mr Doherty set out indicative figures for the distribution of the $3.9m loan. The figures were:

“HSBC      $1,700,000
Latrobe   $510,000
Land Tax       $90,000
Caveat $330,000
Balmain NB Fees 1.5% $60,000
Prepaid interest 18 months $540,000
Stamp Duty & lender legals $20,000
Valuation   $10,000
On account of legal fees to LD&S      $110,000 (incl GST)
LD&S fees on loan $30,000
$3,400,000

Balance to Borrower $500,000”

The reference to the “Caveat” was again a reference to the WRV debt.
The reference to “LD&S” was a reference to the Firm.
Consistent with the figures which Mr Doherty had submitted to Balmain NB on 17 March 2015, no provision had been made for the refund of the deposit to Upside.
Mr Stratford on-sent the Balmain NB offer and the figures to Mr Tekin. Mr Tekin reviewed Balmain NB’s offer. On the first page he saw that the interest rate was lower than Chifley Securities’ but that the term was 18 months. Mr Tekin did not want a loan for 18 months. He says that he does not remember reading the detail of Balmain NB’s offer after seeing the 18-month term. Mr Tekin and Mr Stratford had further discussions about the 18-month term and whether Mr Tekin would have options for early repayment. Mr Stratford made enquiries and was told that Balmain NB would charge a penalty if Mr Tekin repaid early. On 24 March 2015 Mr Tekin sent an email to Mr Stratford in which he stated:

“Can we go for 12 month term on the loan at all or do they want 18 months.
I don’t think I want to keep the land for that long.”

On 25 March 2015 Mr Tekin sent an email to Mr Stratford in which he stated:

“I am definitely going to get out it earlier than later from the site somehow therefore don’t you think we go with 12 months (if lender wouldn’t be a problem for shorter term) which will be lesser amount to borrow because we are paying 6 months less interest and maybe less fees. If you re fine with that i would like to go ahead and borrow 3.75m”

In simplistic terms, Mr Tekin submits that these statements demonstrate that he wanted to sell the Land. It may be accepted that Mr Tekin wanted to sell the Land as at 25 March 2015, but he had a price expectation that would have to be met. To achieve an acceptable price he was happy to wait and do some re-zoning work, and to refinance in the meantime. He did not want to sell the Land at any price.
In April 2015 Mr Tekin received an oral offer to purchase the Land for $20m. It may have fuelled his price expectations. Mr Tekin says that he reported the $20m offer to Mr Stratford. In paragraph 137 of his Affidavit Mr Tekin says:

“After receiving this call from Mr Khalil, I called Mr Stratford and we had a conversation to the following effect:
Me:    "Phillip, I need a contract of sale now, George just offered me 20 million dollars for the property."
Mr Stratford:    "We have to negotiate with Upside first and maybe pay them a couple of million out of the deal."
Me       "Why do I have to give them anything?"
I do not recall if Mr Stratford answered my question. As explained above, I did not know then that the Firm had insurance and that I may have a claim against the Firm for the error made. I understood from the words he said above that I would be liable to pay significant monies to Upside myself, which I did not have access to without either selling the [Land] or borrowing those funds. My preference was to sell the [Land] over taking out a loan.”

In cross-examination Mr Stratford denied this conversation and did so in clear terms. He also said that he does not remember that Mr Tekin ever mentioned to him an offer of $20m.
The $20m offer from “George” did not proceed. Mr Tekin attributes the loss of the sale to him being told by Mr Stratford that he first had to negotiate with Upside. That seems implausible. The concluding words of paragraph 137 of Mr Tekin’s Affidavit are artificial. Mr Tekin’s statement that without selling the Land he lacked the funds to pay Upside makes no sense when the reason to pay Upside was to enable a $20m sale of the Land to occur. A $20m sale would provide ample funds for a payment of a couple of million to which Mr Stratford is said to have referred.
In any event there is no documentary evidence of the $20m offer. There is no basis in the evidence to find that Mr Tekin would have achieved a $20m sale in April 2015 had he received different or further advice from Mr Stratford about dealing with Mr Harsany.

Upside sues Mr Tekin and lodges a caveat over the Land

On 5 May 2015 Upside commenced Supreme Court proceedings against
Mr Tekin. The central allegations were that the Notice to Complete was defective and that Mr Tekin had repudiated the Contract by issuing the Termination Notice in reliance upon it. Upside alleged that it had validly terminated the Contract by accepting the repudiation on 19 March 2015. Apart from declarations, Upside claimed the return of the $300,000 deposit and damages, interest and costs. Upside’s loss was particularised by reference to the difference between the market value of the property and $7.8m.
The Firm acted for Mr Tekin in the proceedings. Mr Stratford did not litigate so Mr Doherty took responsibility for Mr Tekin’s defence.
Mr Stratford and Mr Doherty each say that they did not consider that there was a conflict of interest between Mr Tekin and the Firm after the defect in the Notice to Complete came to light in mid-March 2015. Mr Stratford had told Mr Tekin that he had made an error. Mr Stratford and Mr Doherty each considered that the best way to remedy the defect in the Notice to Complete was for the Firm to act for Mr Tekin in defence of the Upside proceedings free of charge.
In any event, Mr Stratford and Mr Doherty accept that they did not tell Mr Tekin that there was a conflict of interest. Neither told him about any potential liability of the Firm nor the possibility of bringing a cross-claim against the Firm in the Upside proceedings. Neither recommended to Mr Tekin that he get independent advice.
Mr Doherty says that at some stage he told Mr Tekin that the Firm would not charge for the Upside proceedings and that the Firm would pay all barristers’ fees and other disbursements. Mr Tekin denies the conversation. Either way, the Firm did not bill Mr Tekin and Mr Tekin did not pay any defence costs and disbursements. There is no evidence of a costs agreement. There is no evidence that Mr Tekin queried the Firm about why he was not receiving bills.
Mr Tekin claims that he was not consulted about the conduct of his defence and generally did not understand what was going on. Mr Doherty denies the allegation and says that they discussed the proceedings “regularly”. Nothing turns on this issue because there is no criticism of the way the defence was (successfully) conducted by Mr Doherty.
In early May 2015 Upside lodged a caveat over the property asserting a lien to secure the repayment of the $300,000 deposit. On 12 May 2015 Mr Tekin sent an email to Mr Stratford in which he wrote:

“Hi Phillip, Denis has restored a caveat over [the Land]. I hope we can get it lapsed by the time the loan settlement.”

The “loan settlement” was the refinance from Balmain NB. Mr Stratford responded by saying “There will have to be some sort of arrangement made with Denis Harsany”.
Mr Tekin had a meeting with Mr Doherty in which they discussed the caveat. Mr Tekin was told:

“You have to return Denis’ deposit of $300,000, to get rid of the caveat, with the caveat there, we can’t do anything.”

Upside was not the only entity to commence proceedings against Mr Tekin in May 2015. Mr Harsany’s other company, WRV, commenced proceedings in which it claimed repayment of the $300,000 advanced to Mr Tekin under the aborted development deed in May 2014.

Refinance with Balmain NB completed

Mr Doherty continued to perform work in order to conclude the refinance with Balmain NB. One thing Mr Doherty did was arrange a valuation of the Land. There are different figures in the evidence for the cost of the valuation. One figure is $11,000. The Firm also liaised with a geotechnical engineer, the outgoing financiers and the incoming financier. Mr Tekin readily accepts that “a significant amount of work” was performed.
On 20 May 2015 Balmain NB issued a revised offer, this time for a term of 12 months. The letter of offer contained the following figures:

“Refinance HSBC $1,700,00
Refinance Latrobe    $520,000
Repay WRV Developments   $350,000
Land Tax $90,000
Solicitors debt $150,000
Prepaid interest    $345,000
Reimbursement of costs to date    $300,000
Future Professional costs $125,000
Associated costs val/stamp duty etc       $120,000
TOTAL  $3,700,000”

Some of the line items and corresponding figures were different to those set out in the original offer (see [99] above). Mr Tekin says he does not know how the changes occurred after the original offer from Balmain NB. He does not remember discussing the revised figures with anyone. This evidence was specifically directed to the amounts referable to the “Solicitor’s debt” ($150,000) and “Reimbursement of costs to date” ($300,000).
There is no dispute that Mr Tekin and Mr Doherty did discuss the $125,000 in “Future Professional costs”. The discussion occurred in the context of undertaking work to get the Land re-zoned. Mr Tekin’s Affidavit includes the following evidence:

“From about late May 2015, I understood that of the loan proceeds, $125,000.00 would be used for the purposes of re-zoning. I had not wanted to apply for the re-zoning of the [Land] myself before this. I wanted to sell them as quickly as possible or enter into a joint venture or partnership as referred to in the various offers I received in or about early 2015 above. I had no funds available to pay any re-zoning costs myself and no experience with such applications. I thought however that, as I now had these funds available to me, and the Firm had offered to help me, I could follow Mr Doherty's advice as set out in paragraph 155 above and obtain a better sale price for the [Land] if they were rezoned at the time of the sale. I also thought this was a good option while the Upside dispute was being resolved and (as I believed at the time) I could not sell the [Land].”

This evidence must be understood in the context of the evidence as a whole as set out above. The statement that Mr Tekin had previously wanted to sell as quickly as possible does not mean that he wanted to sell at any price, at least not since October 2014. Had he still wanted to sell at any price on 13 March 2015 he would not have instructed Mr Stratford to issue the Termination Notice immediately in order to avoid the “risk” that Upside would complete the $7.8m sale. What Mr Tekin wanted to do as quickly as possible was to sell the Land at a price in the order of those referred to at [71] and [106] above or do a joint venture from which he would receive $300,000 per apartment built or 33 apartments in addition to a large up front cash payment.
Absent a sale at that sort of high price or such a lucrative joint venture, in May 2015 Mr Tekin did not want to sell the Land as quickly as possible. He wanted to spend some time, professional fees, finance costs and other holding costs in order to progress the re-zoning of the Land so that his price expectations might be met in the future. He was willing to include in the new finance from Balmain NB $125,000 for future re-zoning costs.
On 10 June 2015 Balmain NB issued a more formal document called “terms of approval”. The document contemplated that the lender to retain $125,000 to meet future professional cost “re planning and R4 Re-zoning”.
Balmain NB’s more formal approval also provided for $150,000 of the loan funds to be applied to “Solicitors debt repayment”. One of the specified conditions precedent to drawdown was evidence of amounts owing with regard to the solicitors’ debt. In order to satisfy the condition precedent, Mr Doherty prepared a letter dated 26 June 2015 addressed to Balmain NB. The letter stated as follows:

“Balmain NB Non Bank
Dear Sir
RE:   Advance to Celal Tekin
10-16 Cecil Avenue, Castle Hill
We advise that legal fees outstanding by Celal Tekin up to 26^th June, 2015 are as follows:
Account for multiple proposed joint ventures
Sales of sites – 2012 to 2015
   $47,270.00
Account for sale files for 22 town houses       $60,500.00
Account for Affairs in relation to Vastu, Architect
and ADN Pty Limited
  $23,640.00
Account for affairs in relation to WRV Developments
Pty Ltd
$15,460.00

Yours faithfully,
LOW DOHERTY & STRATFORD”

The total of these figures is $146,870.00.
Each of the four items listed in the letter was a matter about which Mr Tekin had previously communicated with Mr Stratford. It may be inferred that for some of those matters Mr Stratford has undertaken some legal work, especially the pre-sales of the townhouses. There is however no evidence about what work was actually performed, the terms upon which it was performed or the volume of that work (if any). There is no evidence of Mr Tekin being billed for any such work or of there otherwise being an “account”.
There is no dispute that Mr Doherty determined the figure for each matter without reference to Mr Stratford. Mr Doherty said the figures were “estimates” which he made from looking at the files. Given the surrounding circumstances, Mr Doherty’s letter dated 26 June 2015 cannot be accepted as evidence of a pre-existing liability for the fees to which it refers.
Mr Tekin accepted the revised offer from Balmain NB. One matter which was clear from Mr Tekin’s evidence is that he undertook his own comparison between the terms offered by Chifley Securities and Balmain NB and made his own choice based on his own commercial interests.
Settlement took place on about 17 July 2015. The application of the new loan funds was set out in the Firm’s letter to the solicitors acting for Balmain NB, which stated:

“Payee                   Amount
Bank Cheque - Office of State Revenue $90,606.72
Bank Cheque - La Trobe Financial   $539,589.23
Bank Cheque - Purcell Partners   $987.80
Bank Cheque - P Bain & Associates    $99.00
Bank Cheque - Kwang Sup Lee $334,602.74
Bank Cheque - Panacea Lawyers Trust Account $13,386.40
Bank Cheque - Sydney Bay Pty Ltd $300,000.00
Bank Cheque – HSBC   $1,750,425.76
Bank Cheque - Low Doherty & Stratford   $127,398.17
Bank cheque fees $90.00
Total:  $3,157,185.82”

The payment of $334,602.74 to Kwang Sup Lee was made to discharge Mr Tekin’s debt to WRV. Thereafter the WRV caveat was removed to allow the registration of Balmain NB’s new mortgage.
Sydney Bay Pty Ltd is a company associated with Upside and Mr Harsany. The payment of $300,000 to that company was the refund of the deposit under the Contract. Shortly before Mr Tekin refunded the deposit he made a deed with Upside which recited the litigation between them and Mr Tekin’s imminent refinancing of the Land. The deed recorded an exchange of promises to refund the deposit and to withdraw Upside’s caveat. The promises were performed on both sides and Upside’s caveat was withdrawn. Mr Tekin says that he agreed to refund the deposit to Upside because of the advice Mr Doherty had given him as set out in [118] above.
A payment of $127,398.17 was made to the Firm from the Balmain NB funds.
The total of the payments does not add up to the $3.7m total of the loan funds. Mr Tekin understood that $345,000 was held back by Balmain NB for pre-paid interest and $125,000 was held back for re-zoning costs. Mr Tekin does not know what happened to the remaining $72,814.18 and the evidence in these proceedings does not explain it.

Re-zoning work

From July 2015 Mr Tekin undertook some work on re-zoning the Land, first with Mr Doherty and a town planner arranged by Mr Doherty (Barker Ryan Stewart) and then with another town planner which Mr Tekin arranged himself. He went to meetings, including one with the local council. Preliminary planning reports were prepared.
From a meeting with the local council and a town planner from Barker Ryan Stewart in September 2015, it became apparent to Mr Doherty that the Land was “on the lower end of the density spectrum” and did not have significant re-zoning potential. After the meeting he told Mr Tekin that an application for re-zoning would be “a waste of money” with “no guarantee of success”. Mr Tekin denies any such conversation.
Mr Tekin says that in about November 2015 he formed a belief that Mr Doherty was not instructing Barker Ryan Stewart to work to re-zone the Land to the maximum extent possible, but was instead instructing them to prepare a report to use in defence of the Upside litigation. Mr Tekin was concerned that there was a conflict because it might be in his interests in the litigation for the development potential of the Land to be minimised given the way Upside had particularised its loss.
Mr Tekin made his own effort to progress re-zoning, including by liaising with another town planner. His re-zoning work was ultimately unsuccessful and came to an end in early 2016. Mr Tekin attributes the re-zoning failure to Balmain NB not releasing the $125,000 for future professional costs. There is no evidence about the circumstances in which those funds were requested and not released.

Further attempts to sell

All the while, Mr Tekin continued to have discussions with potential purchasers of the Land. There is no documentary evidence of these discussions other than a chain of text messages. In his affidavit evidence Mr Tekin refers to one potential purchaser as “a Chinese man by the name of Andrew” and another as “the Aussie guy”. The prices discussed were $15m and $20m. Mr Tekin says that he did not accept the offers because he had been advised by the Firm that he could not sell the Land until after the Upside proceedings were resolved. Whilst a sale at such a price may have been acceptable to Mr Tekin in the second half of 2015, there is no evidence of an offer capable of acceptance.
In November 2015 Mr Tekin received a fee estimate from another firm of solicitors to act for him on the sale of the Land. The evidence does not reveal how Mr Tekin came to obtain the estimate. Mr Tekin says that he engaged the other firm in April 2016. The other firm prepared a new sale contract.
On 5 January 2016 Mr Tekin signed an agency agreement for the sale of the Land. The agent’s estimated selling price was recorded as $10–15m. Mr Tekin says in his Affidavit that he engaged the agent on 8 March 2016 although there is some ambiguity about the date. In the agency agreement, the term of the agency was specified to be from 8 March 2016 until 22 April 2016, but Mr Tekin’s signature was dated 5 January 2016. The agent’s signature was dated 5 April 2016. It is possible that Mr Tekin signed the document in January but did not return it to the agent until March or April. In any event, Mr Tekin engaged the agent before the Upside proceedings were resolved.
Mr Tekin’s undisputed dealings with new solicitors and selling agents are further objective facts which are inconsistent with him thinking that he could not sell the Land until the Upside proceedings were resolved. Mr Tekin says that in mid-April 2016 he asked the agent to stop advertising the Land for sale because he was concerned that a sale would have a bad effect on the litigation, but he does not explain how he came to engage the agent in the first place, nor the new solicitor who drafted a sales contract.

Mr Tekin’s investigation of the payments from the Balmain NB loan funds

In February 2016 Mr Tekin asked the Firm to give him a breakdown of the application of the Balmain NB loan funds. The evidence does not explain the circumstances in which Mr Tekin made the request.
On 10 February 2016 Mr Doherty wrote an email to Mr Tekin which provided a partial breakdown. The email received close attention at the hearing and needs to be set out in full.

“Dear Jerry
Please find attached the following:
1. Copy of direction to pay on settlement of the matter.
2. Copy of our account for work in relation to sales.
3. Copy of account from Conceal in relation to refinance.
Of the $124,698.17 that was paid to Low Doherty & Stratford from the Balmain NB advance, this has been applied to:

Conceal Pty Limited – Consultancy expenses

$59,657.00

Costs and Disbursements for work in relation to sales

$40,500.00

Barker Ryan Stewart - fees

$544.50

Barker Ryan Stewart – fees

$2,623.50

Barker Ryan Stewart – fees

$346.50

Cushman & Wakefield – Valuation fee

$3,080.00

Aaron Cornish – Barrister’s fees

$4,345.00

$111,096.50

In relation to the other advance from Maxwell Mortgage Corporation, the sum of $97,879.45 was received and was paid to you on 20th July, 2015.
Please find attached copy of letter from Terry Leckie of 8th February, 2016. I think we should meet with Leckie on Monday next week, say at 11.00 a.m., at our office, so we can discuss the finance. Leckie could be asked to arrange reimbursement to you of moneys paid to Barker Ryan Stewart, and possibly the valuation fee, and any other expenses you have incurred.
Please ring Gary Doherty to discuss.
Regards”

The email referred to three attachments. The first of these was the letter of settlement directions set out in [131].
The second attachment was an unsigned tax invoice dated 1 August 2015 from the Firm to Mr Tekin. The amount invoiced was $40,500. The author of the tax invoice narrated legal work from 21 March 2012 to 31 July 2015 in relation to the proposed subdivision of the Land including drafting, negotiating, exchanging and rescinding pre-sale contracts with third party purchasers of the townhouses. Mr Tekin’s evidence is that he did not receive any such tax invoice until after the Firm had been paid from the Balmain NB loan funds. Mr Tekin also says that he never received a costs agreement from the Firm for the work described in the tax invoice.
The third attachment was an unsigned invoice dated 4 August 2015 on the letterhead of Conceal Pty Limited. It stated:

“4^th August, 2015
Celal Tekin
[Address]
RE: 1-16 CEClL AVENUE, CASTLE HILL
TO:
Costs in relation to work involving the arranging

of loans from Balmain NB Non-Bank and satisfying
All the Lenders' requirements
$35,000.00
Plus GST $3,500.00
$38,500.00

Disbursements:
Valuation fee   $11,000.00
Public risk Insurance $550.00
Establishment fee   $5,500.00
Geotechnical Engineer   $907.00
Barrister's fees   $3.200.00      $21,157.00
TOTAL   $59,657.00
Yours faithfully
CONCEAL PTY LIMITED”

There is no dispute that Conceal is a company owned and controlled by Mr Doherty, Mr Stratford and their respective wives. It is a vehicle through which they have privately undertaken property development in the past. Given the allegations now made by Mr Tekin, the company has an unfortunate name. The evidence makes reasonably clear that it was the name under which the company was originally registered in 1998 before being sold as a shelf company to the Dohertys and Stratfords.
Mr Doherty prepared the Conceal letter but he does not say when he did so. Despite the letter being dated 4 August 2015, Mr Doherty accepts that he did not send it to Mr Tekin in August 2015. For his part Mr Stratford says he did not know about the letter in August 2015, February 2016 or at any time before Mr Tekin commenced these proceedings against the Firm.
Mr Tekin does not recall seeing the Conceal letter before February 2016. He did not know that a “commission” would be paid to a company associated with Mr Doherty and Mr Stratford. He further says that he would not have agreed to such a commission had he been told. He adds that had he been told about a commission he would have sought independent advice about the terms of the Balmain NB loan.

Extension of the Balmain NB loan

In February 2016 Mr Tekin had a meeting with Mr Doherty, Mr Stratford and a person from Balmain NB. They discussed Mr Tekin’s options for repaying the Balmain NB loan when it fell due on 17 July 2016. Mr Tekin does not remember what was said at the meeting. He does remember leaving the meeting and thinking that he had to sell the Land because “a further refinance will only make my situation worse”. However, Mr Tekin says that he thought that he could not sell the Land until after the Upside proceedings were resolved.
In June 2016 there was a further meeting of Mr Tekin, Mr Doherty, Mr Stratford and a person from Balmain NB. An arrangement was adopted under which the $125,000 in funds not yet drawn on the Balmain NB loan would be applied to further interest payments and the loan would thereby be extended for three months.

Mr Tekin wins the litigation brought by Upside

The final hearing of the case brought by Upside against Mr Tekin commenced on 5 July 2016. Shortly before the hearing Mr Tekin met Mr Cornish, the barrister who had been retained by the Firm. Mr Tekin says that Mr Cornish told him that Mr Stratford had “stuffed up”. Nonetheless, by lunchtime on the first day the mood was buoyant. Mr Doherty told Mr Tekin that he could sell the Land “at any price you want now because we are confident that Upside do not have a case”. Mr Doherty does not recall this conversation, but he does not deny it.
The hearing continued over four days in July and August. On 12 September 2016 Justice Darke dismissed Upside’s claim with costs. Whilst the Notice to Complete was defective and Mr Tekin was found to have repudiated the Contract in March 2015, Upside was not entitled to damages for two reasons. First, Upside had not proven that it was willing and able to complete the Contract in March 2015. Secondly, the market price of the Land was found to be less than the $7.8m which Upside had agreed to pay, with the result that Upside did not suffer any loss from Mr Tekin’s repudiation of the Contract. Upside’s only other potential loss was the $300,000 deposit which had already been repaid. Absent loss, Upside’s proceedings were dismissed.
Upside appealed. On 18 December 2017 Justice Darke’s finding that the market value of the Land was less than $7.8m was upheld by the Court of Appeal and the dismissal of the case affirmed.

Otherwise the “consultancy expenses” were not paid to the Firm but to the private company owned by Mr Doherty, Mr Stratford and their wives. It was relevantly a lump sum payment which bore no discernible relationship to the amount of services provided. If it was for legal services, the documentation of the “consultancy expenses” departed from the statutory regulation of solicitor costs to an extent which deprived the Firm of any entitlement it otherwise had to be paid the money.

Because the $127,398.17 was not for legal services for acting on the refinance, its receipt meant that the Firm was subject to a conflict when acting for Mr Tekin on the refinance transaction. It was in Mr Tekin’s interest that the payments not be made to the Firm. Inclusion of those sums increased the amount to be borrowed by Mr Tekin which he, in another context, feared would increase the prepaid interest he would have to pay and possibly the fees. In the context of a fiduciary duty owed to a company by its director, Rich, Dixon and Evatt JJ said in Furs Ltd v Tomkies (1936) 54 CLR 583 at 592:

“If, when it is his duty to safeguard and further the interests of the company, he uses the occasion as a means of profit to himself, he raises an opposition between the duty he has undertaken and his own self interest, beyond which it is neither wise nor practicable for the law to look for a criterion of liability.”

Turning then to the specifics of the monetary benefits received by the Firm, the email which Mr Doherty sent to Mr Tekin on 10 February 2016 only accounts for $111,096.50. The Firm has not accounted for the remaining $16,301.67. There is no suggestion let alone evidence that the $16,301.67 was for legal fees properly due to the Firm. As an unexplained receipt be a fiduciary, the Firm is to be ordered to pay that sum to Mr Tekin.
The first item listed in the email is $59,657 paid to Conceal as “consultancy expenses”. The only evidence of a liability to make the payment is the form of invoice dated 4 August 2015 referred to in [149] above. It is not signed. Although it purports to include an amount by way of GST, it is doubtful that it is a tax invoice because it does not describe itself as a “tax invoice” which is the usual way that a document is taken to comply with s 29.70(1)(d) of A New Tax System (Goods and Services) Act 1999 (Cth), as set out in the ATO’s Goods and Services Tax Ruling GSTR 2013/1 at paragraphs [17]–[18]. The invoice is addressed to Mr Tekin but I accept his evidence that he did not receive it in August 2015 and that he did not see it until Mr Doherty sent it to him on 10 February 2016. In view of that fact plus the fact that Mr Doherty admits he did not send it in August 2015, the fact that Mr Stratford says that he did not see it until these proceedings were commenced and the absence of any documentary evidence of a contemporaneous payment to Conceal, I find that the letter dated 4 August 2015 was never sent but was prepared after Mr Tekin made his enquiry in February 2016. I further find that no payment was made by the Firm to Conceal, whether in the amount of $59,657 or any other amount.
As a fiduciary recipient of money drawn down from the client’s lender, the Firm bears the onus of proving where the money went. By reason of the matters referred to in the preceding paragraph the Firm has failed to do so. Like the $16,301.67, the further sum of $59,657 is not accounted for. The Firm is to be ordered to pay that further sum to Mr Tekin.
Even if it is assumed that the Firm paid the $59,657 to Conceal on or about 17 July 2015, it is still appropriate that it be ordered to pay an equivalent sum to Mr Tekin as equitable compensation. As set out in Conceal’s invoice, the $59,657 includes a $38,500 fee charged by Conceal. There is no evidence that Mr Tekin had a liability to pay a fee to Conceal. The invoice refers to a further $21,157 which is described as “disbursements”. The term “disbursements” implies that they are sums paid by Conceal to third parties, but no documentary evidence has been adduced to prove that Conceal was liable to pay any such sums or that they were in fact paid. The five recipients of the disbursements are not even named. No explanation has been given as to why such evidence has not been adduced when it would be readily available if it existed given Mr Doherty’s and Mr Stratford’s intimate association with both the Firm and Conceal.
The second item listed in Mr Doherty’s email dated 10 February 2026 is a payment to the Firm of $40,500. Mr Doherty enclosed an unsigned tax invoice for legal fees in that sum. The invoice was dated 1 August 2015. I accept Mr Tekin’s evidence that he did not receive the invoice until after the Firm had been paid and that he did not receive a costs agreement in respect of the work described in the invoice. Whether or not Mr Tekin was liable to pay $40,500 in legal fees, the payment of that sum was a monetary benefit to the Firm. The fees were not for the Firm’s work on the refinance, but for other work previously performed over a period of three years. The payment was made in circumstances where it is unclear that the Firm would otherwise have been paid, not least because of the financial pressure Mr Tekin was under. Receipt of the sum was a monetary benefit to the Firm. The Firm is to be ordered to pay that sum to Mr Tekin.
The next three items listed in Mr Doherty’s email are a total of $3,514.50 in fees to a firm of town planners, Barker Ryan Stewart. Even if it is assumed that the Firm paid $3,514.50 to Barker Ryan Stewart, there is no evidence about the circumstances in which it did so. There is also no evidence of the particular services for which the fees were incurred. The evidence indicates that Barker Ryan Stewart were retained to perform two separate roles, namely the provision of expert evidence in the Upside proceedings and advice to Mr Tekin in relation to re-zoning the Land. If the payments were for Barker Ryan Stewart’s work on the Upside proceedings, then they represent a monetary benefit received by the Firm because the Firm had undertaken to bear the costs and disbursements of those proceedings. If Barker Ryan Stewart’s fees were incurred to assist Mr Tekin with re-zoning, they may not have been a monetary benefit to the Firm. However the Firm is the only party which would be able to prove how these fees should be characterised and it has not done so. Mr Doherty’s email on
10 February 2016 does not even reveal the date on which the fees were paid from which the purpose of the fees might otherwise have been guessed. No explanation is given for why the Firm has not proved these matters. I infer that had further evidence been given by the Firm it would not have assisted the Firm to demonstrate that fees to Barker Ryan Stewart were not a monetary benefit received by the Firm. I therefore find that the sum of $3,514.50 was such a benefit. The Firm is to be ordered to pay that further sum to Mr Tekin.
The same applies to the sum of $3,080.00 said to have been paid by the Firm for “Cushman & Wakefield – Valuation fee”. In the second half of 2015 and in 2016 the Firm obtained valuation advice for two separate reasons, namely provision to Balmain NB in support of the refinance application and as expert evidence for the purposes of the Upside litigation. There may have been other reasons. There is no evidence from which it can be inferred that the $3,080.00 ceased to be a monetary benefit to the Firm even if it was actually paid away to Cushman & Wakefield.
The final item listed in Mr Doherty’s email on 10 February 2016 is $4,345.00 for barrister fees paid to Aaron Cornish. The same analysis applies to this payment. Mr Cornish appeared for Mr Tekin in the Upside litigation although there is no evidence about when he received the brief for the hearing commencing on 5 July 2016. However, Mr Cornish was also briefed soon after the Upside dispute arose, apparently to advise the Firm about its prospective liability to Mr Tekin. It might be inferred from the cross-examination of Mr Doherty that the Firm nonetheless charged Mr Tekin for the cost of that advice.
In its submission, the Firm did not address the problems with the evidence about where the money went. Its case appears to assume the documents emanating from Mr Doherty in February 2016 should be taken at face value despite the fact that, on their face, they are riddled with the problems referred to above.
For these reasons, there is nothing in Mr Doherty’s email on 10 February 2016, or any of the other evidence before the Court, from which it can be inferred that any part of the $127,398.17 was not a monetary benefit to the Firm. Receipt by the Firm of that monetary benefit was subject to the conflict referred to above and occurred in breach of fiduciary duty.
In its Defence, the Firm does not plead that Mr Tekin gave his consent to the payment of $127,398.17 to the Firm (or any part of it), let alone fully informed consent. For the reasons given above this was a matter for specific pleading. In its closing submissions the Firm nonetheless submitted that Mr Tekin did give his consent (except for Mr Cornish’s $4,345 fee). The Firm does not squarely address the requirement that the consent be fully informed.
Dealing with it as a matter of substance, Mr Doherty’s affidavit evidence touches on disclosure and consent. His Affidavit dated 16 October 2024 contains the following evidence:

“30   In response to paragraph 150 of the Fifth Affidavit, I recall that $110,000 was for legal work we had done relating to aborted sales of townhouses on the Properties (off the plan) and for the legal work in arranging the refinance. The other amounts were necessary to pay out the amounts that Mr Tekin had told me he needed. I discussed these points with Mr Tekin at around the time of the email of 17 March 2015.
31   On 20 March 2015 at 3.08 pm I sent an email to Mr Stratford attaching an indicative funding proposal from Balmain NB, and setting out the proposed disbursements. I note this email was passed on to Mr Tekin who entered into an email exchange ending on 24 March 2015. A copy of that email exchange appears at page 46 of CT-4.
32   On 25 March 2015, I received an email from Mr Leckie attaching a funding proposal. A copy of that email appears at page 5 of GD-1.
33   On the same day, Mr Stratford sent an email to Mr Tekin attaching the funding proposal received from Balmain NB. The funding proposal was for $3,750,000. A copy of that email and attachment appears from page 6 of GD-1. I am aware Mr Tekin responded to Mr Stratford's email. A copy of his response is at page 17 of GD-1.
34   Around this time, I told Mr Tekin there were a number of disbursements that needed to be paid for in arranging the Balmain NB Loan. I was aware, based on my previous conversations with Mr Tekin that, he was under financial pressure. I had a conversation with Mr Tekin to the following effect.
Me:   Payment will be required for a number of disbursements for the loan including application fees, valuation fees and the cost of satisfying any other Lender requirements which we will cover.
Mr Tekin:    Thanks for that.

35 I do not recall whether I told Mr Tekin the name of the company that would pay the disbursements was Conceal Pty Ltd (Conceal). Conceal is a company that Mr Stratford and I were, and still are, directors of. Conceal is mainly used by Mr Stratford and myself for our personal property development ventures.
36 To the best of my recollection, Mr Tekin did not raise any issue with the Firm paying the disbursements, or those disbursements being paid from a company associated with the Firm.
…”

Mr Doherty gave further high-level evidence about disclosure of the payments received by the Firm. For example:

“Q.    …As far as you know in the course of 2016 your firm has never made any claim for payment of those matters, is that right?
A.    Well, that's correct, but in my discussions with Mr Tekin he, he acknowledged the fact that these matters - that legal work had been done and he indicated that he was prepared to pay them, right.
Q.    But no figure, on your evidence, had ever quantified as what was owing, is that right?
A.    Correct, yes.
Q.    Certainly you never asked anyone, be it Mr Tekin or perhaps Balmain NB for payment of those particular items, correct?
A.    I - no bill had been rendered to Mr Tekin. The discussion I had with Mr Tekin was that there's work been done here and he said, "I know that", I said, "Well, it's a substantial sum of money", and he said, "I know that". He said, "I would like to pay them". On that basis I prepared some of the estimates. That letter that was referred to previously had estimated figures in it, he was aware of that and had a copy of that.”

This evidence, including the emails referred to in the Affidavit, falls far short of that required to establish that Mr Tekin gave fully informed consent to the payment of $127,398.17 to the Firm, or to any of the individual on-payments said to have been made from that sum. Mr Tekin did not know any of the amounts. He generally did not know the recipients. He did not know that some of the money would be paid to Conceal from which two of the Firm’s partners would benefit and not others. He did not know that Conceal had not issued a compliant tax invoice which might jeopardise Mr Tekin’s entitlement to a valuable input tax credit. He did not know what services had been provided by the barrister. If in fact Mr Cornish has been asked to advise the Firm on its liability to Mr Tekin, Mr Tekin did not know that he was being charges for fees he had no liability to pay. In relation to legal fees charged by the Firm, there is no evidence of a fee disclosure and Mr Tekin did not know the basis upon which those fees would be charged. In the absence of a bill of costs issued in accordance with the Legal Profession Uniform Law in place at the relevant time, Mr Tekin did not know his rights in relation to assessment, dispute and payment. In the context of a client bring asked to pay fees to a solicitor the receipt of which would otherwise be a breach of the solicitor’s fiduciary duty, these are all matters which would have had to be disclosed to Mr Tekin before he could give fully informed consent. The Firm has not discharged its onus to demonstrate that Mr Tekin gave fully informed consent.

Summary

It follows that Mr Tekin has made good his fourth complaint. Upon receipt of the $127,398.17 the Firm became a constructive trustee in the sense described above.
The Firm’s receipt of the monetary benefit in breach of fiduciary duty and its failure subsequently to account should be viewed as a breach of trust. That applies not just to any part of the money kept by the Firm but also to money actually paid away to Conceal or some other third party (if any). In his Second Further Amended Statement of Claim Mr Tekin seeks equitable compensation which is an appropriate remedy in this case. The benefit received by the Firm was at the expense of Mr Tekin and therefore was relevant loss.
Whilst Mr Doherty’s work on Balmain NB finance assisted Mr Tekin by enabling him to refinance on terms which were superior to those offered by Chifley Securities, the Firm makes no claim for a just allowance to compensate it for its time, effort and business contacts. Mr Tekin is to be compensated for loss of the whole $127,398.17 without reduction for any such allowance.
The amount of equitable compensation is to be assessed as at the date of judgment, not the date of the breach of fiduciary duty: Youyang v MinterEllison at 500. In order for the equitable compensation to do equity in this case, the Firm must also pay interest from 17 July 2015.
For equitable compensation, the basis on which interest is ordered is in the discretion of the Court: Hillig v Darkinjung Local Aboriginal Land Council [2006] NSWSC 1371 at [7] (Barrett J). In Hungerfords v Walker (1988) 171 CLR 125 at 148, Mason CJ and Wilson J said:

“Equity has adopted a broad approach to the award of interest. It has long been accepted that the equitable right to interest exists independently of statute: Wallersteiner v Moir (No 2) [1975] QB 373. Equity courts have regularly awarded interest, including not only simple interest but also compound interest, when justice so demanded, eg, money obtained and retained by fraud and money withheld or misapplied by a trustee or fiduciary: La Pintada, at 116.”

The Firm’s breach of fiduciary duty in this case fairly answers the description of money withheld or misapplied by a fiduciary. The facts in this case warrant an order for interest to be paid on a compound basis. In particular (with the possible exception of the $59,657 if it was actually paid to Conceal) the equitable compensation is to remedy a monetary benefit retained by the Firm and not a loss suffered by Mr Tekin. Compound interest will better ensure that the Firm does not retain the benefit. In addition, the payment made to the Firm directly increased the amount Mr Tekin was required to borrow from Balmain NB for which he was required to pay interest on a compound basis. In all the circumstances the Firm is to be ordered to pay interest on the equitable compensation from 17 July 2015, compounded at annual rests. I see no reason to depart from the rates of interest prescribed from time to time for the purposes of the Civil Procedure Act 2005 (Cth). Whilst lower than the rate Mr Tekin had to pay Balmain NB for the relatively short period that he paid interest, the prescribed rates are likely higher than Mr Tekin might otherwise have received on a commercial deposit. The interest is to be compounded up to the date of the judgment. Taking those various matters into account, compound interest for the entire period is equitable.

Acting for Mr Tekin in defence of the Upside proceedings

Mr Tekin’s fifth and final complaint is that the Firm did not cease to act for him when Upside commenced the dispute. Despite the defect in the Notice to Complete, Mr Stratford, who did not litigate, passed the file to Mr Doherty who acted as Mr Tekin’s solicitor in the ensuing proceedings. Rolled up with this complaint are the Firm’s failures to inform Mr Tekin that it had been negligent, to provide a full explanation of Mr Tekin's rights and obligations and to recommend that Mr Tekin obtain independent advice. Mr Tekin also relies on the fact that no cross-claim was filed against the Firm in the Upside proceedings.
As set out above, the Second Further Amended Statement of Claim alleges in paragraph 27:

“In breach of its Fiduciary Duty 1 referred to in paragraph 25B above, and also the Implied Retainer Term 1, Implied Retainer Term 2, Implied Retainer Term 3, and contrary to Firm's Representations 1, the Firm acted for the Plaintiff in the Upside Proceedings and the related appeal proceedings (Appeal Proceedings), from on or about 5 May 2015 to on or about 18 December 2017, while being in a conflict of interest (Conflict of Interest) as:
(a) while the Upside Proceedings and the Appeal Proceedings were on foot, and from the earlier point of Termination of Sales Contract on or about 19 March 2015, it was in the interest of the Firm for the Plaintiff not to sell the Property or to sell, or otherwise dispose or have disposed, the Property at a lower price; and
(b) it was in the interest of the Plaintiff to sell, or otherwise dispose or have disposed, the Property at the highest price possible.”

Paragraph 27A alleges:

“The Firm ought to have informed but did not inform the Plaintiff of the Conflict of Interest referred to in paragraph 27 at any time prior to or during the time it acted for the Plaintiff in the Upside Proceedings and the Appeal Proceedings (Silence Conduct 2).”

Paragraph 37B alleges:

“The conduct after the False Termination Representation and Termination of Sales Contract, constituted by: the Incorrect Negotiation Representation, Silence Conduct 2, Silence Conduct 3, Silence Conduct 3A, the Incorrect Not Sell Representation, the Mid March 2015 Conduct, Silence Conduct 4, Silence Conduct 5 and Silence Conduct 61 was motivated by the Conflict of Interest and was dishonest and in breach of Fiduciary Duty 1 (Dishonest Conduct 1).”

The above pleadings are put forward as a further breach of fiduciary duty. Mr Tekin submitted that the Firm’s conduct was also a breach of its duty of care but the substance of the complaint is focused on the Firm’s conflict and not the Firm’s care and skill.
There is little doubt that the Firm breached its fiduciary duties by acting for Mr Tekin in defence of proceedings brought about by the Firm’s own negligence. It is not necessary to have recourse to the Solicitor Rules or expert solicitor evidence to find that by doing so the Firm placed itself in a position of conflict or a significant possibility of conflict. At the very least, the potential conflict arising from the matters pleaded in paragraph 27 of the Second Further Amended Statement of Claim meant that Mr Tekin was entitled to advice independent of the Firm’s interest. The conflict was not eliminated by the Firm bearing all the costs of the defence nor by hindsight’s revelation that the defence was successful. There was nothing approaching informed consent and the Firm does not suggest otherwise.
However this is a case where the breach of fiduciary duty goes nowhere because there was neither gain to the Firm nor loss to Mr Tekin. The defence of the Upside proceedings was entirely successful. With the possible exception of Mr Cornish’s fee of $4,345 and possibly some expert witness costs which are addressed above, there is no allegation that Mr Tekin suffered any monetary loss by reason of the Firm acting for him.
There is no allegation that Mr Tekin suffered any non-monetary prejudice from the Firm acting for him. There is no suggestion of delay or prolongation of the dispute by the Firm’s conduct.
The Firm was not joined as a cross-defendant to the Upside proceedings, but nothing flows from that when Mr Tekin’s defence was conducted free-of-charge and without prejudice to Mr Tekin’s rights against the Firm. Those rights are now being vindicated in these proceedings and interest will be included in the relief granted in order to compensate Mr Tekin for delay. No argument has been articulated that Mr Tekin would have been better off had the Firm instead been joined to the Upside proceedings which commenced in May 2015.
In these circumstances, the fact that the Firm breached its fiduciary duty by acting for Mr Tekin in the Upside proceedings does not add to the case based on Mr Tekin’s first four complaints.

Summary of Mr Tekin’s entitlements

For the reasons given above, the following orders are to be made in favour of Mr Tekin:

judgment for damages of $300,000;

interest in accordance with s 100 of the Civil Procedure Act 2005 on that judgment sum from 17 July 2015;

in addition, an order that the Firm pay equitable compensation of $127,398.17; and

an order that the Firm pay compound interest on the equitable compensation calculated at yearly rests from 17 July 2015 at the rates prescribed for the purposes of the Civil Liability Act 2005.

Other matters

There are a number of other matters which need to be addressed.
In addition to the claims for breach of retainer, negligence arising from the defective drafting of the Notice to Complete and the Firm’s separate conduct when the Termination Notice was issued, Mr Tekin alleges that breaches occurred of a consumer guarantee arising under s 60 of the Australian Consumer Law 2010 (Cth). It is not contended that this further claim adds to the general law claims or that any additional or alternative relief is warranted. This extra claim needs not be addressed further.
The Second Further Amended Statement of Claim also includes various allegations of misleading or deceptive conduct by the Firm. It is alleged that by reason of the retainer, the Firm impliedly represented that the legal services provided by the Firm would be provided with reasonable care, skill and diligence. By serving the Notice to Complete, the Firm is alleged to have impliedly represented that it had been drafted with reasonable skill and care. Some of the representations are alleged to have been as to future matters for which the Firm did not have a reasonable basis at the time the representation was made.
No submission was made that these allegations add to or alter the case Mr Tekin otherwise brought. There are cases where there is a reason to include an additional statutory cause of action but this is not one. The misleading and deceptive claims need not be considered further.
Mr Tekin expressly pleaded that the Firm’s conduct was dishonest, which allegation was directed to the Firm’s advice about not selling the Land (complaint 2 above), refinancing with Balmain NB (complaint 3 above) and taking $127,308.17 from the refinance (complaint 4 above). The larger scheme which the Firm was alleged to have is described at [287] above. Mr Stratford and Mr Doherty were cross-examined about their motives for the advice they gave after the dispute with Upside arose and the refinance with Balmain NB. Each denied any improper motive. I accept their denials. There are two reasons why. First, this is the kind of issue which is likely to be informed by the impression of the witness derived from the cross-examination: Salmon v Albarran at [95]. I observed the cross-examination and consider that each of Mr Stratford and Mr Doherty gave truthful answers to these key questions. Secondly, the propositions which were being put to them were objectively implausible. The suggestion that Mr Stratford or Mr Doherty sought to influence Mr Tekin about whether he sold the Land immediately or retained it until the Upside litigation concluded was disconnected from reality. As I have found, throughout 2015 Mr Tekin wanted to sell the Land for a very high price or pursuant to a lucrative joint venture and retain ownership in the meantime. Mr Tekin’s attitude was formed before and independently of the discovery of the defect in the Notice to Complete and the onset of the Upside dispute, and independently of anything said by Mr Stratford or Mr Doherty. The occasion simply did not arise for Mr Stratford or Mr Doherty to conceive let alone implement the larger scheme of which they are now accused.
Mr Tekin also alleges that Mr Doherty’s conduct was dishonest in relation to the payment of monetary benefits to the Firm when the refinance was drawn down. The allegations of dishonestly appeared to be more focused on Mr Doherty directing Mr Tekin into refinance with Balmain NB (rather than Chifley Securities) and not so much on taking the $127,398.17. It is not necessary to make a finding about Mr Doherty’s state of mind at any particular time. Irrespective of Mr Doherty’s motive, a breach of a fiduciary duty occurred which is to be remedied in the way set out above. Beyond that, Mr Tekin had to prove dishonesty having regard to s 140(2) of the Evidence Act 1995 (NSW). In this context, dishonesty means contrary to ordinary standards of honest behaviour regardless of whether the fiduciary subjectively viewed it as such: Salmon v Albarran at [117]. There are some unsatisfactory aspects of the way Mr Doherty applied the $127,398.17, especially the way Mr Doherty subsequently accounted for it when Mr Tekin inquired in February 2016. Nonetheless, the evidence falls short of that which would be necessary for the Court to find that Mr Doherty did not act honestly in any particular respect. Mr Doherty apparently regarded the money paid to Conceal as a fee for service which, given Mr Tekin’s wish to retain the Land and the expensive offer from Chifley Securities, was fair and, had he been asked, acceptable to Mr Tekin. The legal fees paid to the Firm were for work which Mr Stratford had actually performed but for reasons not explained never billed. Various disbursements may have actually been paid by the Firm although I have found that the purpose for which the disbursements were incurred has not been explained. The low point of Mr Doherty’s conduct was charging Mr Tekin for Mr Cornish’s advice, although even here the cross-examination of Mr Doherty suggested a confusion of thought rather than a deliberate trespass on Mr Tekin’s rights. Mr Tekin has not proved dishonesty on the part of Mr Doherty or Mr Stratford and I make no such finding.
Significant attention was given in each party’s submissions to the application of the profession standard scheme by which, depending on the facts, a solicitor’s liability might be limited to $1.5m. In view of the findings I have made above, this issue does not arise. Even when interest is taken into account, the $1.5m limit will not be reached. It is not appropriate in this case for me nonetheless to consider the application of the scheme. In his Reply filed on 18 September 2024 Mr Tekin disputes the application of the scheme to some or all of the relief claimed by him for reasons which include the allegedly dishonest conduct of the Firm, the inapplicability of the scheme to equitable compensation, the number of causes of action and whether specific aspects of the Firm’s conduct falls within the statutory definition of “occupational liability”. Each issue needs to be considered having regard to the precise facts. None of the issues lends itself to hypothetical consideration in the absence of the necessary findings of facts.

Orders

I make the following orders:

judgment for damages of $300,000;

interest in accordance with s 100 of the Civil Procedure Act 2005 on that judgment sum from 17 July 2015;

in addition, an order that the Firm pay equitable compensation of $127,398.17;

an order that the Firm pay compound interest on the equitable compensation calculated at yearly rests from 17 July 2015 at the rates prescribed for the purposes of the Civil Liability Act 2005;

an order that the Defendants pay the Plaintiff's costs; and

either party wishing to seek an alternative or additional order in relation to costs has liberty to apply in the next 14 days.

**********

Amendments

29 May 2025 - Orders amended.

Decision last updated: 29 May 2025

Medium Neutral Citation:	Tekin v Stratford & Ors [2025] NSWSC 541
Hearing dates:	25 November 2024 – 3 December 2024
Date of orders:	29 May 2025
Decision date:	29 May 2025
Jurisdiction:	Common Law
Before:	Faulkner J
Decision:	See [339]
Catchwords:	NEGLIGENCE – professional negligence – where solicitor failed to draft notice to complete with reasonable care – client subsequently repudiated the contract – purchaser sued client for return of the deposit and damages – deposit repaid but no damages or costs awarded against client – whether unpaid deposit instalment would have been unrecoverable as a penalty in any event – causation of loss – whether client suffered loss by not lawfully terminating the contract BREACH OF FIDUCIARY DUTY – where solicitor continued to act for client in defence of litigation brought against client about defective notice to complete – solicitor acted in circumstances where there was a conflict or possible conflict of interest and duty – where client nonetheless won the litigation – whether client suffered loss BREACH OF FIDUCIARY DUTY – where solicitor acted for client on negotiation and implementation of refinance – where solicitor received payments from funds drawndown from new finance – payments for past legal costs and refinance expenses not properly accounted for – whether monetary benefit or profit received by solicitors when acting in circumstances where there was a conflict or possible conflict of interest and duty
Legislation Cited:	Australian Consumer Law 2010 (Cth), s 60 Civil Liability Act 2002 (NSW), ss 5, 5A, 5D, 5E Civil Procedure Act 2005 (NSW), s 100 Evidence Act 1995 (NSW), s 140
Cases Cited:	Andrews v Australia New Zealand Banking Group Pty Ltd (2012) 247 CLR 205; [2012] HCA 30 Beach Petroleum NL v Abbott Tout Russell Kennedy (1999) 48 NSWLR 1; [1999] NSWCA 408 Bluth v Boyded [2024] NSWCA 67 Brickenden v London Loan & Savings Co [1934] 3 DLR 465 Briginshaw v Briginshaw (1938) 60 CLR 336 Chan v Zacharia (1984) 154 CLR 178; [1984] HCA 36 Chappel v Hart (1998) 195 CLR 232 Foresters in Victoria Friendly Society Ltd v Lifeplan Australia Friendly Society Ltd (2018) 265 CLR 1; [2018] HCA 43 Fox v Percy (2003) 214 CLR 118; [2003] HCA 22 Furs Ltd v Tomkies (1936) 54 CLR 583 Gerrard Toltz Pty Ltd v City Garden Australia Pty Ltd (in liq) [2024] NSWCA 232 Hasler v Singtel Optus Pty Ltd 87 NSWLR 609; [2014] NSWCA 266 Hillig v Darkinjung Local Aboriginal Land Council [2006] NSWSC 1371 Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41 Hungerfords v Walker (1988) 171 CLR 125 Iannello v Sharpe (2007) 69 NSWLR 452; [2007] NSWCA 61 Law Society of New South Wales v Harvey [1976] 2 NSWLR 154 Luong Ding Luu v Sovereign Developments Pty Ltd [2006] NSWCA 40 Maguire v Makaronis (1997) 188 CLR 449; [1997] HCA 23 Mao v Bao [2023] NSWCA 298 Pilmer v Duke Group (in liq) (2001) 207 CLR 165; [2001] HCA 31 Salmon v Albarran (2025) NSWCA 42 Sellars v Adelaide Petroleum NL (1994) 179 CLR 332; [1994] HCA 4 Upside Property Group Limited v Tekin [2016] NSWSC 1260 Watson v Foxman (1995) 49 NSWLR 315 Winnote Pty Ltd v Page (2006) 68 NSWLR 531; [2006] NSWCA 287 Woolcock Street Investments Pty Ltd v CDG Pty Ltd (2004) 216 CLR 515; [2004] HCA 16 Xiao v BCEG International (Australia) Pty Ltd (2023) 111 NSWLR 132; [2023] NSWCA 48 Youyang Pty Ltd v Minter Ellison Morris Fletcher (2003) 212 CLR 484; [2005] HCA 15
Category:	Principal judgment
Parties:	Celal Tekin (Plaintiff) Phillip Norman Stratford (First Defendant) Denis Gordon Low (Second Defendant) Kelvin Reginald Low (Third Defendant) Gary Patrick Doherty (Fourth Defendant) Patrick Anthony Doherty (Fifth Defendant)
Representation:	Counsel: M K Condon SC (Plaintiff) D A Priestly SC (Defendants) Solicitors: Corporate Legal (Plaintiff) Gilchrist Connell (Defendants)
File Number(s):	2020/00343395

Conceal Pty Limited – Consultancy expenses	$59,657.00
Costs and Disbursements for work in relation to sales	$40,500.00
Barker Ryan Stewart - fees	$544.50
Barker Ryan Stewart – fees	$2,623.50
Barker Ryan Stewart – fees	$346.50
Cushman & Wakefield – Valuation fee	$3,080.00
Aaron Cornish – Barrister’s fees	$4,345.00
$111,096.50