Trajkovski v Simpson - [2019] NSWCA 52

Court of Appeal

Supreme Court

New South Wales

Summary available

Medium Neutral Citation: Trajkovski v Simpson [2019] NSWCA 52
Hearing dates: 1 February 2019
Date of orders: 26 March 2019
Decision date: 26 March 2019
Before: Basten JA and Sackville AJA at [1];
Brereton JA at [58]
Decision:
(1)   Appeal allowed.
(2)   Judgment of trial judge set aside.
(3)   In lieu thereof, judgment that defendants pay plaintiff $814,445.25 (inclusive of interest to date of trial judge’s judgment).
(4)   Respondents to pay the appellant’s costs at first instance and on appeal.

Catchwords:
NEGLIGENCE – professional negligence – legal practitioners – duty of care where solicitor represented husband in family law proceedings – where solicitor retained by husband to act on sale of jointly held property – whether there was a solicitor-client relationship between the solicitors and the wife, and therefore whether they owed her a duty of care

AGENCY – authority – ostensible authority – whether husband had wife’s actual or ostensible authority to direct payment of proceeds of sale
TORT – negligence – concurrent liability – whether the husband was a concurrent wrongdoer, such as to reduce the solicitors’ liability
Legislation Cited: Civil Liability Act 2002 (NSW) ss 5D, 5O(1), 34(1)(a), 34(2), 35(1)
Law Reform (Miscellaneous Provisions) Act 1965 (NSW) s 9
Legal Profession Act 1987 (NSW) s 57B
Legal Profession Act 2004 (NSW) s 309(1)
Legal Profession Uniform Law (NSW) s 174
Legal Profession Uniform Law Australian Solicitors’ Conduct Rules 2015, r 11
Revised Professional Conduct and Practice Rules 1995 (NSW), rr 9.2, 9.3, 45
Trade Practices Act 1974 (Cth) s 51AB
Cases Cited: Al-Kandari v J R Brown & Co [1988] QB 665 (CA)
Badenach v Calvert (2016) 257 CLR 440; [2016] HCA 18
Bebonis v Angelos (2003) 56 NSWLR 127; [2003] NSWCA
Craven v Official Trustee (2003) 127 FCR 217; [2003] FCAFC 26
Davies v Littlejohn (1923) 34 CLR 174; [1923] HCA 64
Ellison v Sandini Pty Ltd (2018) 354 ALR 484; [2018] FCAFC 44
Farrer v Copley Singletons [1997] EWCA Civ 2127
Feldman v GNM Australia Ltd [2017] NSWCA 107
Harris v Walker (1968) 14 FLR 167
Hawkins v Clayton (1988) 164 CLR 539; [1988] HCA 15
Heydon v NRMA Ltd (2000) 51 NSWLR 1; [2000] NSWCA 374
Horsfall v Haywards [1999] PNLR 583
Hunt & Hunt Lawyers v Mitchell Morgan Nominees (2013) 247 CLR 613; [2013] HCA 10
Jones v Daniel (2004) 141 FCR 148; [2004] FCAFC 278
Kowalczuk v Accom Finance (2008) 77 NSWLR 205; [2008] NSWCA 343
Lysaght v Edwards (1876) 2 Ch D 499
Meandarra Aerial Spraying Pty Ltd v GEJ & MA Geldard Pty Ltd as Trustee for the G & M Geldard Family Trust [2013] 1 Qd R 319; [2012] QCA 315
Midland Bank v Hett, Stubbs and Kemp [1979] Ch 384
Mullane v Mullane (1983) 158 CLR 436; [1983] HCA 4
Official Trustee in Bankruptcy v Mateo (2003) 127 FCR 217; [2003] FCAFC 26
Pilkington v Wood [1953] Ch 770
Re Thackwray and Young’s Contract (1888) 40 Ch D 34
Reliance Finance Corporation Pty Ltd v Heid [1982] 1 NSWLR 466
Shrimp v Landmark Operations Ltd (2007) 163 FCR 510; [2007] FCA 1468
Tanwar Enterprises Pty Ltd v Cauchi (2003) 217 CLR 315; [2003] HCA 57
Trajkovski v Simpson [2018] NSWSC 720
Treloar v Henderson [1968] NZLR 1085
Voli v Inglewood Shire Council (1963) 110 CLR 74; [1963] HCA 15
Vukmirica v Betyounan [2008] NSWCA 16
Walker v Geo H Medlicott & Son [1999] 1 WLR 727; [1999] 1 All ER 685
Winter v Lord Anson (1827-28) 3 Russ 488; 38 ER 658)
Wossidlo v Catt (1934) 52 CLR 301; [1934] HCA 52
Category: Principal judgment
Parties: Suzana Trajkovski (Appellant)
Ian Garnet Simpson (First Respondent)
Simpson & Partners Solicitors Pty Ltd (Second Respondent)
Representation:
Counsel:
Ms J McIntosh (Appellant)
Mr J S Emmett / Mr H Grace (Respondents)
Solicitors:
Peter Cornock & Associates (Appellant)
Yeldham Price O’Brien Lusk (Respondents)

File Number(s): 2018/184604
Decision under appeal

Court or tribunal:

Supreme Court of New South Wales

Jurisdiction:

Common Law

Citation:

[2018] NSWSC 720

Date of Decision:

21 May 2018

Before:

Fagan J

File Number(s):

2014/203803

Headnote

[This headnote is not to be read as part of the judgment]

The appellant was separated from her husband. Orders were made by the Family Court that upon payment by the husband to the appellant of $800,000, she transfer to him various assets, including her interest in a property at Dural of which she, he and his parents were joint tenants. The husband instructed the respondent solicitors to act on the sale of the Dural property to a third party, and upon settlement they allowed all the proceeds to be disbursed in accordance with his instructions, and none to be paid to the appellant. The trial judge dismissed the appellant’s claim for damages, holding that there was no retainer between her and the solicitors, and if there was, the husband had her ostensible authority to direct payment of the proceeds.

The principal issues on appeal were:

1) Whether there was a solicitor-client relationship between the solicitors and the appellant, and therefore whether they owed her a duty of care.

2) Whether, if there was a solicitor-client relationship, there was no breach as the husband had the appellant’s ostensible authority.

3) Whether any breach of duty was causative of harm to the appellant.

4) If so, the quantification of the appellant’s loss.

5) Whether the appellant was guilty of contributory negligence in failing to take reasonable steps to protect her own interests.

6) Whether the husband was a concurrent wrongdoer, such as to reduce the solicitors’ liability.

The Court held, allowing the appeal:

(i) There was a solicitor-client relationship between the solicitors and the appellant, and the solicitors owed the appellant a duty of care in relation to the sale of the Dural property (Basten JA and Sackville AJA at [12]; Brereton JA at [109]).

(ii) Permitting disbursement of the appellant’s share of the proceeds without her authority was a clear breach of the solicitors’ duty of care to the appellant (Basten JA and Sackville AJA at [26]-[27]; Brereton JA at [163]-[164]).

(iii) The husband did not have the appellant’s actual or ostensible authority to direct payment of her share of the proceeds (Basten JA and Sackville AJA at [31]; Brereton JA at [139]).

(iv) The solicitors’ breach of duty caused the appellant to sustain the loss of her entitlement to a one-quarter share of the net proceeds of the sale of the Dural property:

(a) by Basten JA and Sackville AJA, on the basis that with the benefit of proper independent advice and reassurance the appellant would have agreed that the contract for the sale of the Dural property should proceed to completion and that she should receive a one quarter share of the net proceeds to which she was entitled as a joint proprietor of the Dural property independently of the Family Court orders (at [45]);
(b) by Brereton JA, on the basis that the effect of the Family Court orders was to convert the appellant’s interest into one in the nature of an unpaid vendor’s lien (at [160]-[161]), and that but for the breach one-fourth of the net proceeds would have been preserved for the appellant’s benefit, so that the question of what properly advised she would have done, does not arise (at [169]).

(v) The appellant’s loss was of a one-quarter share of the net proceeds of the sale of the Dural property (Basten JA and Sackville AJA at [48]; Brereton JA at [173]), and did not extend to an opportunity to procure payment of the balance of the amount due from the husband under the Family Court orders (Basten JA and Sackville AJA at [51]-[52]; Brereton JA at [177]-[180]), or the costs of enforcement of those orders (Brereton JA at [182]).

(vi) Nothing the appellant did or neglected to do contributed to the loss she sustained by reason of the respondents’ breach of duty (Basten JA and Sackville AJA at [49]; Brereton JA at [187]).

(vii) The husband was not a concurrent wrongdoer, because (a) non-payment of the moneys owing under the Family Court orders was not the same loss and damage as that involved in the appellant’s claim, which was the loss of her interest in the proceeds of sale of the Dural property; and (b) it is inherent in the notion of “concurrent wrongdoer” that the plaintiff has or had a good albeit not necessarily recoverable cause of action sounding in damages against the alleged concurrent wrongdoer, and no such cause of action which the appellant would have against the husband in respect of acts or omissions on his part which caused the relevant loss had been identified (Basten JA and Sackville AJA at [56]; Brereton JA at [193]-[196]).

Shrimp v Landmark Operations Ltd (2007) 163 FCR 510; [2007] FCA 1468 at [58]-[59], [62]-[67] (Besanko J); Meandarra Aerial Spraying Pty Ltd v GEJ & MA Geldard Pty Ltd as Trustee for the G & M Geldard Family Trust [2013] 1 Qd R 319; [2012] QCA 315 at [60]-[62], followed.

Judgment

BASTEN JA AND SACKVILLE AJA: We are grateful to Brereton JA for recounting the facts and for identifying the issues debated on the appeal. We agree with the orders proposed by his Honour but prefer to state our own reasons for concluding that the appeal should be allowed.

The retainer issue

One of the difficulties confronting the primary Judge was to identify the case advanced by the appellant insofar as it related to the sale of the Dural property. The Second Further Amended Statement of Claim (2FASC) is a discursive document which is not easy to follow. Although the appellant pleaded that the respondents owed her a duty of care “at a standard expected by [sic] a legal practitioner practicing [sic] in the State of New South Wales”, the source of that duty was not made clear. In particular, the 2FASC did not expressly allege that the respondents were retained to act on the appellant’s behalf in connection with the sale of the Dural property.
The pleading alleged that the respondents breached their duty of care to the appellant by “acting unconscionably”. The particulars of breach included the following:

“q.   Failing to obtain the [appellant’s] instructions in relation to the disbursement of the sale settlement proceeds and deposit funds of the Dural property.
…
v.   Failing to cease acting for MBS [Holdings Pty Ltd], the Husband [Mr Trajkovski] and the [appellant] due to a conflict of interest between the parties.
w.    Failing to refuse to see or contact the [appellant] when he knew she was legally represented by another practitioner.
…
y.   Acting adverse to the [appellant’s] interest in the disbursement of the nett sale proceeds of Dural.
z.   Paying moneys from the sale of Dural to MBS Holdings Pty Ltd. when MBS Holdings Pty Ltd held no charge over Dural.”

The 2FASC also alleged that the respondents breached their duty to the appellant and acted contrary to the Solicitors Rules in a number of respects including:

“ee. Having or allowing or permitting the [appellant] [to] sign a contract for sale and transfer in respect of the sale of Dural in contravention to [sic] Rule 45 [of the Revised Professional Conduct and Practice Rules 1995 (NSW)] or or [sic] its predecessor or equivalent.
ff. Failing to advise the [appellant] in respect of the contract for sale, transfer and disbursement of sale proceeds at all, or alternatively, failing to advise the [appellant] in circumstances where the interests of the [appellant] conflicted with those of his clients, the Husband and/or MBS in contravention of Rule 45 or its equivalent”.

Some particulars of the allegation of breach of duty by “acting unconscionably”, such as (q), (v) and (y), might be read as implying that the respondents were retained to act on behalf of the appellant in connection with the sale of the Dural property. Particular (w) and the further particulars of breach referring to Rule 45 of the Revised Professional Conduct and Practice Rules 1995 (NSW) (1995 Rules) suggest that the respondents were never retained to act for the appellant but nonetheless owed her a duty of care in connection with the Dural transaction. [1]
1. Rule 45 specified the approved practice to be followed by a solicitor when engaged to advise a proposed signatory to loan or security documents. The relevance of rule 45 to the respondents’ role on the sale of the Dural property is not obvious. See generally Kowalczuk v Accom Finance (2008) 77 NSWLR 205; [2008] NSWCA 343 at [237] (Campbell JA, Hodgson and McColl JJA agreeing).
The lack of clarity in the pleadings was compounded by a lack of precision in identifying the loss and damage allegedly sustained by the appellant in consequence of the respondents’ breach of duty. The particulars of loss and damage identified the loss of the opportunity to obtain moneys pursuant to the “Family Law orders”, presumably a reference to the consent orders made by the Family Court on 10 May 2007 (2007 Family Court Orders). The particulars made no reference to the appellant’s entitlement as joint registered proprietor of the Dural property to receive one quarter of the net proceeds of sale. Nor did the particulars quantify the damages claimed by the appellant by reason of the respondents’ breach of duty.
During the opening address by counsel for the appellant at the trial, the primary Judge pointed out that the 2FASC did not allege that the respondents had been retained to act on behalf of the appellant in connection with the sale of the Dural property. His Honour also pointed out, quite correctly, that the pleading alleged that the respondents owed a duty of care to the appellant without any explanation as to how that duty arose. In response, the appellant’s counsel identified documentary evidence demonstrating (so she argued) that the respondents had been retained to act on behalf of the appellant on the sale of the Dural property.
These exchanges indicate that the appellant’s case presented to the primary Judge hinged on an unpleaded allegation that the respondents had been retained as her solicitors in connection with the sale of the Dural property. That the alleged retainer was at the heart of the appellant’s case was confirmed by later exchanges during oral argument and the parties’ written submissions. The appellant did not seek leave to amend the pleadings to reflect the critical issue raised at the trial, and the respondents did not insist on any such amendments being made. Nonetheless, it is clear that the allegation of a retainer was central to the case presented on the appellant’s behalf at trial.
The appellant’s written submissions to the primary Judge contended that the loss sustained by her as a consequence of the respondents’ breach of duty was the amount of $800,000 due under the 2007 Family Court Orders plus accumulated interest. The appellant’s affidavit acknowledged that she had received $164,524 from the sale of a property owned by OKO Pty Ltd, a company associated with Mr Trajkovski, and that that amount had to be offset against the moneys due under the 2007 Family Court Orders. An annexure to the affidavit calculated that as at November 2016 Mr Trajkovski was liable to pay over $1.2 million in interest on the amount outstanding under the 2007 Family Court Orders. [2]
2. The calculations assumed interest rates varying over time from 10.25 to 8 per cent per annum.

Was there a retainer?

Given the rather confused state of the appellant’s pleadings it is perhaps not surprising that the affidavits filed on behalf of the respondents did not address in detail whether the firm had been retained to act on behalf of the appellant in connection with the sale of the Dural property. The first respondent (Mr Simpson) in his affidavit said only that he received instructions from Mr Trajkovski to act on the sale of the Dural property. Mr Simpson did not identify the clients on whose behalf he agreed to act. By contrast, Ms Newman, the paralegal employed by the respondents, stated unequivocally in her affidavit that the respondents acted on behalf of all four registered proprietors of the Dural property.
The documentary evidence relating to a retainer had some notable gaps. There was no evidence of a written retainer and no evidence that the respondents complied with their statutory obligation to disclose to their clients (whoever they were) the basis for the calculation of costs. [3] Mr Simpson acknowledged that his practice at the material times was “not necessarily” to confirm a retainer in writing. Since Mr Simpson did not suggest in his evidence that the firm had made the appropriate costs disclosure in relation to acting on the sale of the Dural property it can readily be inferred that no such disclosure was made. Mr Emmett, who appeared for the respondents, did not dispute that the inference was open.
3. Legal Profession Act 2004 (NSW) s 309(1) (now repealed and replaced by s 174 of the Legal Profession Uniform Law (NSW)).
In the absence of formal documentation recording that the respondents had been retained to act on behalf of the appellant, it is necessary to consider whether the evidence supports the appellant’s contention. We agree with Brereton JA that the contemporaneous documents and the oral evidence given by Mr Simpson and Ms Newman clearly establish that the respondents were retained to act on behalf of all four registered proprietors of the Dural property in connection with the sale. The failure of the respondents to adhere to sound professional practice and indeed to their statutory obligations can hardly detract from the inferences to be drawn from the evidence.
It does not matter whether the retainer was created expressly by instructions given by Trajkovski to Mr Simpson (or Ms Newman)[4] , or whether the existence of the retainer is to be implied from the contemporaneous documentation. The retainer had come into existence by 8 October 2007 when the respondents wrote to the real estate agents with whom the Dural property had been listed, stating that they acted on behalf of the four registered proprietors including the appellant. The retainer continued until the sale was completed nearly a year later and the proceeds of sale disbursed in accordance with Mr Trajkovski’s instructions.
4. As the primary Judge seems to suggest in the Primary Judgment at [19].
It is true that Mr Chesters continued to represent the appellant in relation to the matrimonial dispute (including her rights under the 2007 Family Court Orders) until his instructions were withdrawn on or about 7 August 2008. But he was never retained to act on the appellant’s behalf in connection with the sale of the Dural property. The sale was neither required nor contemplated by the 2007 Family Court Orders. The fact that the appellant retained Mr Chesters to advise her for a period after contracts for the sale of the Dural property had been exchanged is in no way inconsistent with the respondents having been retained to act for the appellant on the sale of the Dural property.

Scope of duty

The general principle is that a legal practitioner is bound to exercise due care and diligence in performing the tasks he or she is retained by the client to perform. [5] Subject to statute, the standard of care and skill is that which is reasonably to be expected of practitioners practising in the relevant area. [6]
5. Voli v Inglewood Shire Council (1963) 110 CLR 74 at 84 (Windeyer J); [1963] HCA 15.
6. Heydon v NRMA Ltd (2000) 51 NSWLR 1; [2000] NSWCA 374 at [146] (Malcolm AJA), [362] (McPherson AJA). In New South Wales s 5O(1) of the Civil Liability Act 2002 (NSW) provides that a professional person does not incur a liability in negligence if he or she has acted in a manner that was widely accepted in Australia by peer professional opinion as competent professional practice.
The scope of a solicitor’s duty of care to a client depends on the terms of and limits imposed by the retainer. [7] As has been noted, in the present case the respondents did not prepare a written retainer or costs disclosure document. There is therefore nothing in writing to suggest that the respondents’ retainer on behalf of the vendors of the Dural property was subject to express limitations. In the absence of any such limitations, the respondents were obliged to exercise the level of skill and care reasonably to be expected of a legal practitioner retained by a vendor to act on the sale of real property.
7. Hawkins v Clayton (1988) 164 CLR 539; [1988] HCA 15 at 544 (Mason CJ and Wilson J) citing Midland Bank v Hett, Stubbs and Kemp [1979] Ch 384 at 402-403 (Oliver J).

As Brereton JA has pointed out, a person may be authorised to retain a solicitor on behalf of other parties to a transaction, yet not have authority to give instructions to the solicitor on behalf of those other parties. The contract of retainer is with each and every client and the solicitor owes duties to each client. Accordingly, where the solicitor is acting on behalf of several clients, the duties owed to each client are distinct and not necessarily co-extensive. [8]
8. Vukmirica v Betyounan [2008] NSWCA 16 at [48] (Giles JA, McColl and Bell JJA agreeing), citing Farrer v Messrs Copley Singletons [1997] EWCA Civ 2127.
The respondents’ duty to the appellant included exercising reasonable care and skill to complete the sale of her interest in the property in accordance with the terms of the contract, but subject to her instructions. The duty extended to seeking instructions from the appellant as to how her share of the net proceeds of sale was to be disbursed. It would plainly be a breach of duty for the respondents to disburse the appellant’s share of the net proceeds of sale to third parties without her express instructions to do so.
The principle that a solicitor owes a duty to each of several clients represented in relation to the same transaction is particularly important in the present case. From the very outset there was at least a potential conflict between the interests of Mr Trajkovski and the appellant. The 2007 Family Court Orders provided that Mr Trajkovski was to pay the appellant the sum of $800,000 within four months. Simultaneously with Mr Trajkovski complying with that obligation the appellant was to transfer to him her interest as joint proprietor of the Dural property. Mr Simpson was aware in October 2007 and at all material times thereafter that Mr Trajkovski had not paid the sum of $800,000 to the appellant. Mr Simpson also must have appreciated that the sale of the Dural property was not a transaction required or contemplated by the 2007 Family Court Orders.
Viewed prospectively at the time the respondents’ retainer came into existence, it was possible that Mr Trajkovski would act in a manner consistent with the appellant’s interests. He might have instructed Mr Simpson, for example, that the sum of $800,000 (plus any interest due) should be paid out of the net proceeds of sale to the appellant, or at least given instructions that an amount equivalent to one half of the net proceeds of sale be paid to her (thereby taking account of the interests of the other two co-owners). However, it was also possible that Mr Trajkovski would seek to advance his own interests by giving directions for the disbursement of the proceeds of sale in a manner that would be detrimental to the appellant’s interests. There was therefore always a potential conflict between the interests of Mr Trajkovski and those of the appellant, depending on the instructions communicated to the respondents by Mr Trajkovski.
The Professional Conduct Rules in force in 2008 addressed the responsibility of a solicitor considering accepting a retainer to act for more than one party to a transaction. Rule 9.2 of the 1995 Rules required a practitioner, before accepting a retainer to act for more than one party to a transaction, to ensure that each of the parties consented to the practitioner acting for the others in the knowledge that the practitioner:

“(a)   may be … prevented from:
(i)   disclosing to each party all information, relevant to the proceedings or transaction, within the practitioner’s knowledge, or,
(ii)   giving advice to one party which is contrary to the interests of another; and

(b) will cease to act for all parties if the practitioner would, otherwise, be obliged to act in a manner contrary to the interests of one or more of them.”[9]

The 1995 Rules further provided that if the practitioner determined that he or she could not continue to act for all parties without acting in a manner contrary to the interests of one or more of them, the practitioner was thereupon required to cease acting for “all parties”. [10]

9. The 1995 Rules were made by the Council of the Law Society pursuant to s 57B of the Legal Profession Act 1987 (NSW). The Legal Profession Act 2004 (NSW) Sch 9, cl 24 provided that any rules made by the Law Society which were in force before the commencement day were taken to have been made pursuant to Part 7.5 of the 2004 Act: see Kowalczuk v Accom Finance at [237].

10. 1995 Rules r 9.3. The Legal Profession Uniform Law Australian Solicitors’ Conduct Rules 2015 r 11 now governs “Conflict of duties concerning current clients”. Rule 11 provides, among other things, that a solicitor must avoid conflicts between the duties owed to two or more current clients. Where there is a potential conflict the solicitor must not act except where permitted by r 11.3. The exception applies only if the client gives informed consent to the solicitor acting.

The respondents did not comply with the 1995 Rules when they accepted the retainer to act for the appellant, since they did not inform her of the potential conflict between her interests and those of Mr Trajkovski. The fact that the appellant had earlier consented to the respondents acting for Mr Trajkovski in the matrimonial proceedings, notwithstanding that the firm had previously acted for both parties, did not constitute compliance with or relieve the respondents from, the obligation to comply with the 1995 Rules.
The potential conflict between the interests of Mr Trajkovski and the appellant became an actual conflict on 7 July 2008 and 13 August 2008. On those dates the respondents were instructed by Mr Trajkovski, without the knowledge or consent of the appellant, to secure the release of portion of the deposit so that the moneys could be applied to the purchase of a property by Mr Trajkovski and his parents. The funds released included moneys to which the appellant was entitled as joint registered proprietor of the Dural property. Moreover, the primary Judge found that by reason of the events of 7 and 8 August 2008 Mr Simpson, Ms Newman and the appellant were each fully aware that Mr Trajkovski had no intention of allowing the appellant to be paid the money owed to her out of the settlement of the Family Law proceedings. [11] By 8 August 2008 the conflict between Mr Trajkovski’s interest in the transaction and the appellant’s interest was, to say the least, obvious.
11. Primary Judgment at [48].
As Brereton JA has explained, the appellant’s interest in the Dural property entitled her to receive one quarter of the net proceeds on completion of the sale, amounting to $436,124.14. This was the case even if Mr Trajkovski had a contingent interest in the Dural property, over and above his interest as a joint proprietor, by reason of the 2007 Family Court Orders. That interest would vest only when Mr Trajkovski paid the appellant the amounts due to her under the Orders. In the meantime, the appellant retained her legal and beneficial interest in the property, subject only to Mr Trajkovski’s contingent interest.
By the date the contract was completed Mr Simpson had been informed by Mr Chesters of the extraordinary events that led to the appellant withdrawing the latter’s instructions. Mr Chesters’ letter of 8 August 2007 made it clear in the starkest terms that the appellant had been traumatised by Mr Trajkovski’s conduct and that Mr Simpson would thenceforth have to take instructions from the appellant directly. If it had not been clear to Mr Simpson before receiving this letter that his firm was obliged to obtain instructions from the appellant, the letter should have removed any misconception. Yet apparently all that Mr Simpson did was to “have a yarn” with Mr Trajkovski, the very person whose interests were in direct conflict with those of the appellant.
It is not in dispute that the respondents acted on Mr Trajkovski’s instructions as to the disbursement of the net proceeds and did so without troubling to inform the appellant or to seek her instructions. In consequence, although the sale proceeded to completion she received none of the net proceeds of sale to which she was entitled as of right. Once it is accepted that the respondents were retained to act on the appellant’s behalf in the transaction, short of dishonesty or deliberate misconduct, it is difficult to conceive of a clearer breach of duty by a solicitor acting for a vendor of real property.
It follows that independently of the information conveyed to the respondents by Mr Chesters’ letter of 8 August 2008, they were in clear breach of their duty to the appellant by disbursing the net proceeds of sale as directed by Mr Trajkovski without reference to her. The letter simply reinforces the inevitable conclusion that the breach of duty was egregious.
In reaching this conclusion we are conscious that the primary Judge accepted Mr Simpson’s evidence in certain matters in part because his Honour formed the impression that he was a “knowledgeable and careful practitioner”. [12] Without impugning the primary Judge’s assessment of Mr Simpson’s credibility, for the reasons that have been given Mr Simpson’s conduct in entering into and performing the retainer for the sale of the Dural property fell a long way short of what would be expected of a knowledgeable and careful practitioner.
12. Primary Judgment at [32].

A circumscribed duty?

It is implicit in the foregoing analysis that we do not accept Mr Emmett’s submission that the professional relationship between the respondents and the appellant was “so attenuated” that the respondents’ only duty to the appellant in connection with the sale of the Dural property was to act in conformity with instructions conveyed by Mr Trajkovski. This submission was a modified version of a contention advanced but later abandoned by Mr Emmett that the relationship between the respondents and the appellant was not that of solicitor and client, but was rather in the nature of principal and agent.
Both submissions suffer from the same defect. As has been explained, the proper conclusion from the evidence is that the respondents accepted a retainer to act as the appellant’s solicitors on the sale of her interest in the Dural property. Once the respondents accepted the retainer, they owed the appellant the same duty of care as that owed by a solicitor who acts for a vendor on the sale of real property. The solicitor-client relationship between the respondents and the appellant was not “attenuated” by express instructions or otherwise.

Ostensible or actual authority

We agree with the reasons given by Brereton JA for rejecting the respondents’ submission that the appellant’s conduct clothed Mr Trajkovski with authority to give instructions as to the disbursement of the proceeds of sale of the Dural property. We also agree that the appellant’s conversation with Ms Newman of 8 August 2008 did not authorise the respondents to act on Mr Trajkovski’s instructions. Nor did the conversation authorise the respondents to complete the transaction on the appellant’s behalf, on the faith of Mr Trajkovski’s assurance that she would receive $100,000 from the proceeds of sale, with the balance of the moneys to be paid at a later date.
Ms Newman acknowledged in her oral evidence that her recollection of the telephone call was based simply on her file note. There is nothing in the file note recording advice by the appellant that the respondents should act solely on instructions given by Mr Trajkovski. Similarly, the file note does not record that the appellant instructed Ms Newman that the sale should proceed to completion regardless of the effect on the appellant’s interest as joint registered proprietor of the Dural property. The file note goes no further than recording Mr Trajkovski’s statement to the appellant and her intention to terminate Mr Chesters’ instructions. Since Mr Chesters was not acting for the appellant on the sale of the Dural property the termination of his instructions, without more, did not alter the content of the duty the respondents owed to the appellant or the need for the firm to act on her instructions.
In any event, Ms Newman did not give evidence that she understood the conversation with the appellant as authority for the respondents to act on Mr Trajkovski’s instructions, without further reference to the appellant. Nor did Ms Newman or Mr Simpson take any steps to confirm that the appellant intended that Mr Trajkovski should give instructions on her behalf. They neglected to do so notwithstanding that the respondents received Mr Chesters’ letter of 8 August 2008 less than two hours after Ms Newman’s conversation with the appellant.
In our view it is not necessary to decide whether the appellant was subjected to pressure of the kind that would amount to duress on common law or equitable principles. Once the respondents received Mr Chesters’ letter, Mr Simpson must have understood that no reliance could be placed on anything the appellant told Ms Newman without addressing and resolving appropriately the obvious conflict between the interests of the appellant and Mr Trajkovski. The respondents made no attempt to do so.

Causation

Because the primary Judge found that the respondents had not been retained to act on behalf of the appellant, his Honour did not address the issue of causation. However, the respondents submitted that their breach of duty in disbursing the net proceeds of sale in accordance with Mr Trajkovski’s instructions was not “a necessary condition of the harm” the appellant sustained within the meaning of s 5D(1)(a) of the Civil Liability Act 2002 (NSW) (factual causation).
Mr Emmett contended that it is necessary to address factual causation by asking what would have happened had the respondents not breached the duty of care they owed to the appellant. In substance, Mr Emmett submitted that the appellant’s conduct over a period of time showed that she was so intimidated by Mr Trajkovski that she would have succumbed to pressure exerted by him. Thus, so he argued, she would not have gone along with Mr Trajkovski’s instructions to the respondents no matter how adverse to her interests and would have been content to accept Mr Trajkovski’s assurances that she would be paid her entitlements some time in the future. As Brereton JA has explained,[13] Mr Emmett relied on findings made by his Honour as to the appellant’s conduct leading up to the events of 7 and 8 August 2008 to support the submission.
13. See at [168] below.
It must be said that this is a most unattractive submission. It would allow a solicitor to escape liability for harm caused by a breach of duty on the ground that the client was subjected to such intimidation by a co-client that she would have been unable to protect her own interests even when given proper advice. Moreover, the submissions would allow the solicitor to escape liability even if he or she was alerted to the intimidation and took no steps to determine how the client’s interests could be adequately protected. If it is correct that Mr Trajkovski’s intimidation of the appellant effectively negates factual causation (s 5D(1)(a)), this might well be a case where it is nonetheless appropriate for the scope of the respondents’ liability to extend to the harm sustained by the appellant as contemplated by s 5D(1)(b) of the Civil Liability Act 2002 (scope of liability). But the appellant placed no reliance on s 5D(1)(b) (scope of liability) and there is no occasion to consider scope of liability further.
If the respondents had acted conformably with the duty they owed to the appellant they would have complied with their obligations under r 9 of the 1995 Rules. They would have been obliged before accepting a retainer to act for the appellant to advise her of the matters identified in r 9.2[14] and to obtain her informed consent to acting on behalf of all four registered proprietors. Among other things, the respondents would have been obliged to inform the appellant that they would cease to act for all parties if they were obliged to act in a manner contrary to her interests (r 9.2(b)). More importantly, the respondents would have been obliged to cease to act for “all parties” if Mr Simpson determined that he was unable to continue acting for all parties without adversely affecting the appellant’s interests (r 9.3).
14. See at [21] above.
Rule 9.3 as it stood in 2008 is ambiguous. It might be read as requiring the practitioner upon perceiving a conflict of interest between the clients to cease acting for any of the parties to the transaction. Alternatively, r 9.3 might be read as merely requiring the practitioner to cease acting for the party whose interests would be adversely affected if the practitioner acted on instructions given by another client.
At the very least, as soon as Mr Simpson became aware that Mr Trajkovski had no intention of paying the appellant any moneys out of the proceeds of sale of the Dural property, the respondents should have ceased acting for the appellant and immediately informed her of the need to obtain independent advice. They could not have continued to represent Mr Trajkovski and to act on his instructions in the transaction unless and until the appellant received independent advice. The primary Judge found that the events of 7 and 8 August 2008 made Mr Trajkovski’s intentions clear. [15]
15. Primary Judgment at [48].
Having regard to the history of Mr Trajkovski’s non-compliance with the 2007 Family Court Orders, the likelihood in our view is that Mr Simpson was aware of Mr Trajkovski’s intentions well before 7 August 2008. In any event, the respondents’ obligations under r 9.3 were triggered no later than 7 July 2008, when Mr Trajkovski instructed Mr Simpson, without reference to the appellant, to seek release of portion of the deposit for his own purposes.
At that point Mr Chesters was still acting for the appellant in relation to the matrimonial dispute. Mr Chesters (or another independent solicitor engaged by the appellant) would have been apprised of Mr Trajkovski’s intentions and of the conflict recognised by Mr Simpson. Mr Chesters would have advised the appellant that she was entitled as a joint proprietor of the Dural property to receive one quarter of the net proceeds of sale. He would have explained that the appellant’s entitlement did not depend in any way on the terms of the 2007 Family Law Orders, but on her position as joint owner of the Dural property. By insisting on her entitlements she would not be enforcing the 2007 Family Law Orders but simply receiving her rightful share of the proceeds of sale. No doubt Mr Chesters would also have explained that the proceeds of sale received by the appellant would be credited against the amount due by Mr Trajkovski under the 2007 Family Law Orders, thereby satisfying part of his debt to the appellant.
Mr Chesters would have further advised the appellant that he could attend settlement of the sale on her behalf, without her having to communicate with Mr Trajkovski. Alternatively Mr Chesters could have protected the appellant’s interests by obtaining an undertaking from Mr Simpson that the respondents would comply with the appellant’s instructions (conveyed by Mr Chesters) as to the disbursement of the proceeds of sale.
In determining what was likely to have occurred if the respondents had not breached their duty to the appellant, it is necessary to take account of the knowledge they would have had in those circumstances of Mr Trajkovski’s conduct and of the appellant’s response to that conduct. If Mr Trajkovski made threats after the appellant was referred to Mr Chesters (or another solicitor) it could be expected that Mr Trajkovski’s conduct would have immediately been drawn to the respondents’ attention with a warning that they should instruct their client not to communicate with the appellant pending completion of the sale. Acting properly, the respondents would be bound to give that instruction to Mr Trajkovski and to reconsider their position as his solicitor if he refused to adhere to their advice.

We accept that it is possible that even with the benefit of a full explanation of her legal entitlements and the means by which her interests could be protected the appellant might have improvidently yielded to Mr Trajkovski’s threats and given affirmative instructions that she wished to abandon her entitlements. But in our opinion it is likely that with the benefit of proper advice and reassurance the appellant would have agreed that the contract for the sale of the Dural property should proceed to completion and that she should receive a one quarter share of the net proceeds. In reaching this conclusion we have taken into account that the respondents did not submit that if the appellant insisted on receiving her entitlements the other vendors would have refused to complete the sale. They were, after all, the vendors under a binding contract of sale. We have also taken into account that within a relatively short time after the sale was in fact completed, the appellant engaged another solicitor (Mr Cornock) who was quite prepared to threaten vigorous enforcement action on behalf of the appellant against Mr Trajkovski. The appellant’s willingness to engage Mr Cornock indicates that with the benefit of independent advice she retained the ability to challenge Mr Trajkovski’s failure to meet his obligations despite his conduct.
In reaching this conclusion we have assumed that even after the respondents (hypothetically) realised that their clients’ interests were in conflict they could continue to act for Mr Trajkovski. There is, however, much to be said for the proposition that r 9.3 of the 1995 Rules should be read as requiring the respondents in the circumstances they faced in July 2008 to cease acting for any of the vendors. There is also a plausible argument that independently of r 9.3, the position in which they had placed themselves required them to relinquish their retainer to act on behalf of Mr Trajkovski.
If the respondents had ceased to act for Mr Trajkovski and his parents, the new solicitors acting for them could be expected to have been alert to the possibility of a conflict between the interests of the appellant and those of Mr Trajkovski. They could be expected to have approached their retainer on the basis that the appellant was entitled to be paid her share of the net proceeds of sale. They could also be expected to have taken action in concert with the appellant’s solicitor to ensure so far as possible that Mr Trajkovski refrained from any inappropriate attempt to exert pressure on the appellant to forego her entitlements. In short, there would be even more reason to conclude that the respondents’ breach of duty caused the appellant to sustain loss.

Conclusion on breach of duty

It follows that the respondents breached the duty they owed to the appellant and that the breach caused her to sustain the loss of her entitlement to a one quarter share of the net proceeds of the sale of the Dural property. Notwithstanding the deficiencies in the pleading, this conclusion is within the scope of the case presented at the trial on behalf of the appellant.

Contributory negligence

We agree with Brereton JA that no finding should be made that the appellant was contributorily negligent. The appellant did not need to lodge a caveat over the title to the Dural property in order to retain her entitlement to a one quarter share of the net proceeds of sale. Had the respondents discharged the duty they owed to the appellant she would have received her entitlement in full. Nothing she did or neglected to do contributed to the loss she sustained by reason of the respondents’ breach of duty.

Loss of opportunity

As Brereton JA has explained, the appellant sought, in addition to damages for the loss of her share of the net proceeds of sale, damages for the loss of opportunity to enforce her entitlement to recover the unpaid balance due to her under the 2007 Family Court Orders.
The basic difficulty with this contention is that the appellant had no security over Mr Trajkovski’s interest in the Dural property. The 2007 Family Court Orders contemplated that the appellant would be paid $800,000 within four months and that simultaneously with the payment the appellant would transfer her interest in the Dural property and other interests to Mr Trajkovski. As has been noted, the sale of the Dural property was not contemplated or required by the 2007 Family Court Orders. Once the appellant executed the contract for sale of the Dural property she was committed to facilitating completion of the sale; while she was entitled to her share of the proceeds of sale, she had no security over Mr Trajkovski’s share of the proceeds.
It would have been open to an independent solicitor acting on behalf of the appellant in relation to the sale of the Dural property to request Mr Trajkovski to pay the appellant his share of the net proceeds of sale in satisfaction of his obligations under the 2007 Family Court Orders. But Mr Trajkovski would not have been bound to comply with the request and was most unlikely to have done so. His non-compliance with the request would not have prevented the sale of the Dural property proceeding to completion.
The appellant’s claim to damages for loss of the opportunity to enforce her entitlements under the 2007 Family Court Orders might perhaps have been put in other ways, although there would have been evidentiary obstacles to overcome. The appellant might have sought to argue, for example, that the respondents breached their duty of care by failing to advise her not to sign the contract of sale until Mr Trajkovski made satisfactory arrangements to pay the amounts due to her under the 2007 Family Court Orders. However, that would have required the appellant to establish that she would have accepted that advice or similar advice proffered by Mr Chesters.
The appellant also might have sought to argue that if she had received independent advice after executing the contract of sale, she might have been advised to seek orders in the Family Court charging Mr Trajkovski’s interest in the Dural property with the obligation to pay the appellant some or all of the amounts due to her. But that claim would have required evidence that the appellant would have been prepared to accept the advice and that an order probably could have been obtained in time.
As neither of these contentions was advanced, there is no occasion to consider them further.

Concurrent wrongdoer

We agree with Brereton JA that Mr Trajkovski was not a concurrent wrongdoer in the relevant sense. Subject to our view that the appellant’s interest in the Dural property is more aptly described as that of a joint registered proprietor rather than a security interest, we agree with his Honour’s reasons.

Orders

We agree with the orders proposed by Brereton JA.
BRERETON JA: In proceedings in the Common Law Division of this Court, the appellant Mrs Trajkovski sued the respondent Mr Simpson and his incorporated law practice Simpson & Partners Solicitors Pty Ltd (together, “Simpsons”), for damages for breach of professional duty, complaining that in acting on the sale of a property at Dural of which she, her former husband Borce (aka Bobby) Trajkovski and his parents were the registered proprietors, they breached duties owed to her by enabling the net proceeds of sale on completion to be disbursed without her authority, in accordance with directions of Mr Trajkovski and without procuring payment of moneys payable by him to her under orders of the Family Court. Mrs Trajkovski appeals to this Court from the dismissal of her claim by Fagan J,[16] who held that Simpsons owed her no duty of care, and that if they did, they were entitled to act on the instructions of Mr Trajkovski alone, who had Mrs Trajkovski’s ostensible authority.
16. Trajkovski v Simpson [2018] NSWSC 720.

Background

Mr Trajkovski and Mrs Trajkovski were married on 19 March 1992. According to Mrs Trajkovski, whose evidence in this respect the trial judge appears not to have doubted, she was physically abused by Mr Trajkovski during the marriage, and was intimidated by him.
Mr Simpson has practised as a solicitor in New South Wales since 1996, and at all relevant times was the sole director and secretary of the incorporated law practice Simpson & Partners Solicitors Pty Ltd. Ms Evelyn Newman was a paralegal employed in the practice. Simpsons acted for Mr and/or Mrs Trajkovski in several matters during their marriage, including on the purchase by Mrs Trajkovski of Skinergy Pty Ltd (Skinergy), a beauty salon business, in September 2004.
On 26 November 2002, Mr Trajkovski, Mrs Trajkovski, and Mr Trajkovski’s parents Milan and Slavka Trajkovski, purchased a property in Dural (“Dural”) for $2,125,000, which they held as joint tenants. Simpsons acted as solicitors for the purchasers on that transaction.
Mrs Trajkovski separated from Mr Trajkovski on 18 March 2006, when she left Dural and moved, with their two sons, to a townhouse.

The Family Law proceedings

Mr Trajkovski retained Simpsons to act for him in connection with the matrimonial dispute and in the Family Court proceedings that ensued. Mrs Trajkovski retained Mr David Chesters of Norwest Family Law (“Chesters”) to act for her, and on 22 March 2006 informed Ms Newman that she had done so. On 23 March, Simpsons informed Chesters that they had been engaged by Mr Trajkovski; they disclosed that they had previously acted for Mrs Trajkovski in several matters, but that they understood that she did not object to their acting for Mr Trajkovski. Chesters replied, on 24 March, that Mrs Trajkovski did not object to Simpsons acting for Mr Trajkovski “in this matter”, being a reference to the matrimonial dispute.
Proceedings for matrimonial financial adjustment were commenced in the Family Court of Australia on 29 November 2006. On 2 May 2007, Mr and Mrs Trajkovski executed consent orders, which were subsequently made by the Family Court on 10 May 2007 (“the Family Court orders”), in the following terms:

1.   That on or before 14 May 2007 the Husband pay to the wife the sum of $50,000 and do all acts and things and sign all documents necessary to transfer to the Wife his right title and interest in the Mercedes motor vehicle registered number xxx.
2.   That within four months the Husband shall pay to the Wife the further sum of $800,000 and do all acts and things and sign all documents necessary to discharge all loans in the joint names of the parties or in the names of the parties jointly with the Husband’s parents or loans to entities in which the parties or either of them have an interest being loans guaranteed by the Wife other than the St George loan to Skinergy Pty Ltd.
3.   Simultaneously with satisfactory compliance with Order 2 the wife will do all acts and things and sign all documents necessary to:
a)   Transfer to the Husband her right title and interest in the property at xxx, Dural being that parcel of land referred to in folio identifier xxx.
b)   Transfer to the Husband her right title and interest in the property at xx Chegwin Street, Botany being that parcel of land referred to in folio identifier xxx.
c)   Transfer to the Husband her right title and interest in OKO Pty Limited.
d)   Transfer to the Husband her right title and interest in MBS Holdings Pty Ltd.
e)   Transfer to the Husband her right title and interest in the Milan Investment Trust.
f)   Transfer to the Husband her right title and interest in the Trajkovski Family Trust.
g)   Discharge the loan from St George to Skinergy Pty Ltd.
h)   Resign as director or officeholder from OKO Pty Ltd and MBS Holdings Pty Ltd.

4. The Wife shall be declared the sole owner to the exclusion of the Husband of her right title and interest in Skinergy Pty Ltd.

The orders also made provision for Mr Trajkovski to pay, and indemnify Mrs Trajkovski in respect of, loans in the joint names of the parties (other than the St George loan to Skinergy); to indemnify her in respect of all liabilities relating to various Trajkovski family entities (namely the partnership Trajkovski Bobby Suzi Milan & Slavka, OKO Pty Ltd, OKO Painting Services Pty Ltd, the Milan Investment Trust, the Trajkovski Family trust, or MBS Holdings Pty Ltd); to indemnify her in relation to any taxation liability arising from or by reason of those entities; and that each of them otherwise retain all property then in his or her respective name or possession.
The consent orders were executed by each of Mr Trajkovski and Mrs Trajkovski, and also by their respective lawyers – in the case of Mr Trajkovski, by Mr Simpson (as is apparent from a comparison of his signature on the consent orders with the signature which appears on his affidavit in these proceedings).
The sum of $50,000 referred to in order (1) was paid by Mr Trajkovski to Mrs Trajkovski, several months after the due date.

The sale of Dural

During 2007 and into 2008, Simpsons continued to act in a number of matters in which Mr and Mrs Trajkovski were both interested, including the refinancing and sale of other properties owned by Mr and Mrs Trajkovski, their companies, and his parents.
On 8 October 2007, Simpsons wrote to Century 21 Prime Property Dural, asserting that they acted on behalf of Mr and Mrs Trajkovski (and Milan and Slavka Trajkovski) on the proposed sale of Dural:

RE: TRAJKOVSKI PROPOSED SALE
PPTY: xxx, Dural
We act on behalf of Bobby & Suzana Trajkovski and Milan & Slavka Trajkovski on their proposed sale of the above property.
We are instructed that you have been engaged by our client(s) to list their property for sale. Accordingly, we enclose a draft copy of the Contract for Sale for the abovementioned property.

On 1 February 2008, Chesters wrote to Simpsons, complaining that order (2) of the Family Court orders had not been complied with, noting that the only apparent attempt to comply involved listing Dural, and pressing for further action:

Re: SUZI TRAJKOVSKI and BOBBY TRAJKOVSKI
We note that Order 2 made on 10 May 2007 has still not been complied with.
Your client's attempts at compliance appear to be limited to listing the former home for sale at a price 30% greater than the value he estimated it to be worth for the purpose of the property settlement whilst remaining properties are apparently not listed for sale.
Interest payable pursuant to the Family Law Rules is now approximately $35,000 and accrues by over $7,000 each month.
Our client has been exceedingly patient but that is coming to an end. Please submit by return a proposal such as sale of other property or sale by auction that will enable your client to comply with the Orders and Family Law Rules as to payment of interest without unnecessary delay. If that is not received by close of business next week we envisage receiving instructions to either enforce the orders or, if that is not practicable, lodge an application pursuant to section 79A.

A sale of Dural was evidently negotiated in early June 2008, because on 12 June 2008, Chesters made a file note of a telephone attendance on Mrs Trajkovski, in the course of which she was advised to consider lodging a caveat “so that she can participate in the settlement and protect her position”:

Suzy Trajkovski
FILE NOTE
Telephone attendance
With Suzy
12.06.08
The family home has finally sold. I am not sure how much for but Suzy is going to sign the contracts for sale in the next few days with Ian Simpson.
I indicated that she may want to consider having a caveat lodged after the exchange goes through or a couple of weeks after so that she can participate in the settlement and protect her position.
Suzy is a bit nervous about claiming the interest which is owed to her because she does not want to jeopardise the sale that again is something that we can deal with after we know the exchange has gone through.
Suzy is going to be in training until next Thursday and will give me a call after that and keep me updated.

Sometime prior to 3 July 2008, Mrs Trajkovski signed the contract for sale, in which the price was stated to be $3,025,000. Rejecting her evidence in this respect, the trial judge found that the contract was not signed by her (or by any of the vendors) in Simpsons’ office, or in the presence of Mr Simpson or any of his staff, and that finding is not challenged. Contracts were exchanged on 3 July; Mrs Trajkovski was informed of this, and that the sale was due for completion on 14 August 2008, by email to her from Ms Newman on 31 July 2008.
Meanwhile, on 7 July 2008, at the written request of Simpsons, on the instructions of Mr Trajkovski and without the knowledge of Mrs Trajkovski, the estate agents released $123,000 from the deposit of $302,500, which was applied to the purchase by Mr Trajkovski and his parents of a property at Sans Souci.

The events of 7 and 8 August

According to Mr Chesters, whose evidence in this respect was accepted by the trial judge, in the period leading up to 8 August 2008, Mrs Trajkovski communicated with him in terms and in a manner which conveyed that she was in fear of her husband, to such a degree that “she had lost the ability to consider her self-interest or even consider basic methods of protecting her financial interests”. Mr Chesters was aware that Mr Trajkovski intended to sell one or more of the matrimonial properties, that the $800,000 due to Mrs Trajkovski under order (2) of 10 May 2007 had still not been paid, and that she was “not in control of any of these intended sales”; in those circumstances, he again advised her, on or very shortly before 7 August 2008, that she should instruct him to lodge a caveat in respect of the properties which were intended to be sold, in order to ensure that the proceeds would be applied in payment of what was due to her.
On 7 August 2008, Mr Chesters had a phone conversation with Mr Simpson. According to his Honour’s findings – derived in part from Mr Chesters’ oral evidence and in part by inference from the terms of the letter he wrote the next day, and which are not challenged – Mr Chesters informed Mr Simpson that he was aware that Mr Trajkovski was intending not to pay Mrs Trajkovski the full balance due to her out of the proceeds of Dural – which was then due to complete the following week – and that he was advising Mrs Trajkovski to lodge a caveat to protect her entitlement to be paid. Later that day, Simpsons sent a letter to Mr Trajkovski, which he apparently received that day, presumably by email. The letter is not in evidence, but it can safely be inferred (as his Honour did), from the subsequent events and communications referred to below, that it informed him of Mr Chesters’ proposal to lodge a caveat.
That evening, Mr Trajkovski attended, without warning, the townhouse to which Mrs Trajkovski and their two sons had moved upon separation. In the course of an emotional exchange, he threatened that he would kill their children and himself, saying:

Sign all documents to let the sale of the matrimonial home go through. If you don’t tell your solicitors to drop the caveat I will kill the kids and kill myself, you will have destroyed everything I have ever worked for.

Mrs Trajkovski described her response as follows:

During and after Bobby’s attendance at my home I felt terrified for the children and my own safety. I asked Bobby to leave which he did. I felt distraught, I was crying. I didn’t know what to do. I felt extremely scared of Bobby. I knew from previous experience in our relationship that Bobby could be very violent. I had seen Bobby’s violent tendencies in the past during our relationship. I was of the view Bobby was sincere when he said he would “kill the children and himself”. I was terrified Bobby would carry out his threat.

At 9.49am on the morning of 8 August, Mrs Trajkovski telephoned Simpsons, and left a message asking that Ms Newman call her back urgently. Ms Newman returned the call at about 10.00am; her note of the conversation was as follows:

8 August 2008
RE: TRAJKVOSKI [sic] – FAMILY LAW
At about 10am I returned Suzi's call. She had words with Bobby last night regarding our letter to Bobby of 7.8.08.
Suzi said she never gave David Chesters instructions to put or consider putting a Caveat on the [Dural]. Suzi said she did not expect this from someone who is supposed to be helping her. She said David Chesters is just pressuring her for payment of his fees.
Suzi said she will try and borrow some money from her parents and just pay Chesters.
I asked if Suzi had seen our letter to Bobby - she said no. Suzi confirmed that Bobby told her that he would give her $100,000 on the sale of [Dural] and when the factories sell she can have the rest.
Suzi said that when she speaks to David Chesters today she will be telling him that as of today he is no longer to act for her.
Suzi mentioned that Bobby said he will not be calling Ian Simpson about his letter.
Thanks
Evelyn Newman

The trial judge rejected Mrs Trajkovski’s evidence that she was told by Mr Simpson (whether in this or any other conversation), “You’ll get your money when the sale goes through”, and that finding is unchallenged.
After her telephone conversation with Ms Newman, Mrs Trajkovski attended Mr Chesters’ office. According to Mr Chesters she was “extremely distressed, crying and shaking”; she would not go to his conference room, and he had to see her in the reception area; she would not even sit down. She was in such a state that he was unable to obtain clear instructions. However, she did convey at least some of what had occurred the previous evening, and that his instructions to act for her were terminated.
Mr Chesters telephoned Simpsons immediately after she left his office and had a conversation with Mr Simpson, in which he reported what he had observed of Mrs Trajkovski, what she had told him, and that he was no longer acting for her. According to Mr Chesters, the conversation was to the following effect:

Me: 'Hello Ian this is David. Suzi has just been in here and withdrawn instructions to me. I am extremely concerned for her. Your client has threatened to kill himself in front of her and the children. She is a mess. It's that bad that if we were still before the court I would be considering a next friend. You need to be careful'.
Simpson: 'There are a number of sales that are due for settlement. I understand what you are saying'.

In his affidavit, Mr Simpson said that he did not recall that conversation, but he did not deny it. In his oral evidence, he said:

Q. What conversation do you recall as you sit there now was said? What do you recall? Mr Simpson, if I could just have your attention. What conversation, as you sit there now, do you recall to the best of your recollection with Mr Chesters prior to receiving that letter?
A. He, he spoke to me and informed me of his position consistent with the wording in that letter.
HIS HONOUR
Q. Can you just put that as near as possible into his words when you say,
“Informed me of his position” he said, “I” what?
A. This is pretty, pretty rough, your Honour. “I’ve just seen Suzie” or “About to see Suzie” or something, “she is very fragile. She’s concerned that there was a, a threat of suicide by Bobby Trajkovski. Further there was a threat to kill the children and care needs to be taken. It could be that she needs a, a friend appointed.” That’s the best of my recollection, your Honour.
Q. Then you received the letter?
A. Yes.
MCINTOSH
Q. Mr Chesters at his affidavit he says that he received no relevant rely from ... (not transcribable)... Within that conversation he says that you didn’t respond to him in a way that was relevant; would you agree?
A. Well, I don’t know what he means by “relevant”.
Q. Responsive.
A. There was not a lot to respond, pardon me, to him. He was telling me what he saw as the position of Mrs Trajkovski.
Q. He said you made no comment with respect to you saying something to him with respect to you protecting yourself.
OBJECTION
EMMETT: I should leap to my feet. When my learned friend says that he said something, she appears to be reading from language that was rejected.
HIS HONOUR: Yes.
MCINTOSH: It was rejected, I apologise if I'm doing that.
HIS HONOUR: The portion concerning an obvious conflict of interest.
MCINTOSH: I don’t have it earmarked.
HIS HONOUR: Okay.
Q. What do you recall your response to have been, as best you can recall?
A. The response I don’t think was very long, your Honour, it may have been to the effect, "Look, I'll have a yarn to Bobby about it and see what's going on." I'm, I'm reasonably confident that that would have been the response.

Chesters then sent a letter to Simpsons (“the 8 August letter”), which the facsimile transmission imprint indicates was transmitted at 11.47am on that day:

Re: SUZI TRAJKOVSKI and BOBBY TRAJKOVSKI
We refer to our conversation yesterday.
Instead of agreeing to put the representations he made to our client to induce her to receive only a partial distribution of property at settlement next week your client threatened our client last night in the presence of the children with suicide and traumatised her.
Our client has withdrawn instructions and has been left with the impression that she will receive nothing and can do nothing about that because of the actions and threats of your client.
Our former client's last instructions to us was to notify you that she did not wish to file a caveat to protect her position or ensure that she has a say in distribution of the settlement proceeds.
You will now have to take instructions from our former client directly. In those circumstances we identified a professional responsibility to notify you of the duress our client has been put under even though she does not want it disclosed. If this matter was still being litigated we would have to consider the appointment of a next friend. That is the severity of our client's distress following the confrontation your client initiated last night.
We note that your office has taken no part in that duress and has at all times interacted with us in a manner that meets the professional standards required.

Mr Simpson recalled receiving that letter. He said he took note of the statements about the duress, the reference to a next friend, and the severity of Mrs Trajkovski’s distress. In his affidavit evidence, he deposed:

6.2 At the time of receiving the letter, I recall taking note of the following statements:
'... the duress our client has been put under even though she does not want it disclosed. If this matter was still being litigated we would have to consider the appointment of a next friend. That is the severity of our client's distress ...

6.3 I do not recall having observed the plaintiff to exhibit an "extremely fragile state of mind" during the interactions I had with her which are referred to in my first affidavit, nor at or around the time of receiving the letter from Norwest Family Lawyers dated 8 August 2008.
6.4 I have 20 years of experience in family law litigation. In my interactions with the plaintiff, I did not observe her to be showing signs of stress to a degree greater than I would normally expect to observe in a party to a family law dispute.

However, there is nothing to suggest that Mr Simpson saw Mrs Trajkovski on, or after, 8 August – at least until a chance encounter long after he had ceased to act for her. Indeed, when asked whether after receiving the 8 August letter he took any steps to approach Mrs Trajkovski, he answered “No, I did not”, and when asked why, “Because I approached my client … Bobby Trajkovski”.
On or around 8 August, Mrs Trajkovski signed and provided to Mr Trajkovski the transfer of Dural. The trial judge’s unchallenged finding was that it was not executed at Simpsons’ office or in the presence of Mr Simpson or any of his staff.
On 13 August 2008, again at the written direction of Simpsons, on the instructions of Mr Trajkovski and without the knowledge of Mrs Trajkovski, the estate agents released a further $133,725 from the deposit, of which $53,144 was used to pay stamp duty on Mr Trajkovski’s purchase of the Sans Souci property, and the balance ($80,581) to reduce the debt to ING secured on Dural.
On 15 August 2008, Ms Newman and Mrs Trajkovski spoke on the telephone. Later that day, in an email which stated that “circumstances have changed since we spoke on the phone this morning”, and invited Mrs Trajkovski to “Let me know if you have any queries and we will see what we can do”, Ms Newman notified Mrs Trajkovski that the settlement was not proceeding that day “due to the Purchaser’s non-readiness”, and that attempts were being made to reschedule settlement for 19 or 20 August. On 21 August 2008, Ms Newman informed Mrs Trajkovski by email that a notice to complete had been issued on 15 August, requiring settlement by 1 September, and that – the purchaser’s solicitor having indicated readiness to settle on 25 August 2008 – settlement had been booked for that date. Mrs Trajkovski did not respond to either of these communications from Ms Newman. On 25 August, settlement was again deferred, this time to 3 September; Mrs Trajkovski was not notified of this last deferment.
The sale of Dural was ultimately completed on 3 September 2008. Directions to the purchaser for payment on settlement were provided by Simpsons in a letter signed by Ms Newman and dated 2 September 2008 to the purchaser’s solicitor William O’Brien, as follows:

We refer to the settlement of this matter booked for 2.30pm on Wednesday, 3 September 2008 at Espreon, 5/77 Castlereagh Street Sydney.
Your client is directed to pay at the settlement of this matter the following cheques:-
1. BAULKHAM HILLS SHIRE COUNCIL   $1,572.00 (Trust/Bank Cheq)
2. ROCKDALE CITY COUNCIL      $1,470.92 (Trust/Bank Cheq)
3. SYDNEY WATER            $139.04 (Trust/Bank Cheq)
4. JOHN B. HAJJE & ASSOCIATES      $1,438.36 (Bank Cheque)
5. GADENS LAWYERS         $374.00 (Trust/Bank Cheq).
6. ST GEORGE BANK LIMITED      $1,107,974.83 (Bank Cheque)
7. SIMPSON & PARTNERS SOLICITORS   $1,046.10 (Trust/Bank Cheq)
8. ING BANK (AUSTRALIA) LIMITED    $1,164,110.89 (Bank Cheque)
9. MBS HOLDINGS PTY LTD      $457,329.42 (Bank Cheque)
TOTAL               $2,735,455.56

The sum payable to ING ($1,164,110.89) discharged debts of Mr Trajkovski and his companies secured on Dural, and was necessary to provide clear title on completion, and that to Gadens ($374.00) the legal costs of the outgoing mortgagee. Likewise the sum payable to Baulkham Hills Council ($1,572.00) was to adjust rates on completion, and the sum payable to Simpsons was presumably their costs for acting on the sale. These sums had to be paid on completion of the sale of Dural. However, the sums payable to Rockdale City Council ($1,470.92), Sydney Water ($139.04), John B. Hajje & Associates ($1,438.36) and St George ($1,107,974.83) were not referable to clearing any encumbrance on, or to costs of the sale of, Dural, but to Mr Trajkovski’s purchase at Sans Souci. The payment to MBS Holdings ($457,329.42) was to a company through which Mr Trajkovski was then carrying on property development activities. These sums, totalling $1,568,352.57, were unrelated to the sale of Dural.
Those instructions were given effect at settlement, with the result that Mrs Trajkovski received nothing. In addition, of the deposit of $302,500, $176,144 had already been released at the direction of Simpsons and applied in accordance with Mr Trajkovski’s instructions to the purchase of the Sans Souci property. The payments towards the purchase of the Sans Souci property and to Mr Trajkovski’s development company, totalling $1,744,496.57, represented what would ordinarily have been regarded as the net proceeds available to the vendors. As each of Mr and Mr Trajkovski and his parents was a joint tenant of Dural, upon its sale, they were each prima facie entitled to one-fourth of those net proceeds; the net proceeds of Mrs Trajkovski’s share was therefore $436,124.14.

Subsequent events

On 16 October 2008, Mrs Trajkovski retained Peter Cornock of Peter Cornock & Associates to act for her in the matrimonial proceedings, including to recover the money which remained outstanding under order (2) of the Family Court orders of 10 May 2007. It is clear that she remained reticent to upset Mr Trajkovski or to jeopardise his enterprises and undertakings by enforcement action. Ultimately, however, on 24 May 2010, further orders were made by the Family Court, by consent, to the effect that:

Mr Trajkovski pay Mrs Trajkovski the sum of $750,000 plus interest, being the balance owing pursuant to the Family Court orders of 10 May 2007;

Mr Trajkovski would cause the sale of Unit 4, 19 Baker Street, Banksmeadow to be completed by 16 August 2010, and would pay Mrs Trajkovski not less than $300,000 from the proceeds; and

Mr Trajkovski would by 16 August 2010 refinance certain other properties and make further payments to Mrs Trajkovski to bring the total paid to her up to $750,000 plus interest at 9.25% from the date of the orders.

Mr Trajkovski did not comply with the 24 May 2010 orders, and on 16 August 2010, further consent orders were made, by which Mr Cornock and Mr Simpson were appointed trustees for sale of Unit 4/19 Baker Street, and a property at 29 Violet Street, Revesby. The Revesby property was sold on 19 April 2011, and from the proceeds Mrs Trajkovski received $188,773.66, of which she subsequently had to reimburse $24,249.99 to a tenant. Before Unit 4 had been sold by the trustees, Bardom Pty Ltd lodged a caveat claiming an interest under an unregistered mortgage which Mr Trajkovski had caused to be granted by MBS Holdings Pty Ltd, the Trajkovski family company which was the registered proprietor of the unit. On 20 November 2012, Bardom was granted leave to intervene in the Family Court proceedings, in which it claimed that its unregistered mortgage had priority over Mrs Trajkovski’s entitlement under the Family Court orders. Bardom’s priority was evidently acknowledged by Mrs Trajkovski as well as by Mr Trajkovski; the earlier orders appointing Mr Cornock and Mr Simpson as trustees for sale of Unit 4 were discharged by consent on 20 November 2012. The trial judge inferred, and there is no reason to doubt, that after satisfying Bardom’s claim, nothing would remain to be applied towards meeting Mr Trajkovski’s obligations to Mrs Trajkovski. However, the 24 May 2010 orders remain in force insofar as they require Mr Trajkovski to pay Mrs Trajkovski the sum of $750,000 plus interest.

The issues

Although complaints that Simpsons had breached various professional duties in the course of acting on transactions other than the sale of Dural were initially pleaded, they were abandoned at trial. The only causes of action that were pressed at trial, and that are in issue on this appeal, relate to the conveyance of Dural, and Mrs Trajkovski’s fundamental complaint is that Simpsons enabled her interest in the net proceeds of sale to be alienated, contrary to her interests and without her instructions.
The trial judge held that:

there was no relevant solicitor-client relationship between Simpsons and Mrs Trajkovski in relation to the sale of Dural, and Simpsons owed her no duty of care;

even if there was a solicitor-client relationship and a duty of care, there was no breach, because Simpsons disbursed the proceeds of sale in accordance with the instructions of Mr Trajkovski, and he had Mrs Trajkovski’s ostensible authority to give instructions as to the disbursement of the proceeds; and

it had not been proved on the balance of probabilities that all reasonable prospects of recovery against Mr Trajkovski had been exhausted, and thus the alleged loss had not been established.

The appeal challenges those conclusions of the trial judge. A notice of contention seeks to uphold the trial judge’s conclusions on alternative grounds, in particular:

that any breach of duty, at law or in equity, by Simpsons, did not cause the loss for which Mrs Trajkovski claims damages;

that Mrs Trajkovski was guilty of contributory negligence in failing to take reasonable steps to protect her interest in the proceeds of the sale of Dural; and

that Mr Trajkovski is a concurrent wrongdoer for the purposes of Part 4 of the Civil Liability Act 2002 (NSW).

Accordingly, the issues are:

Duty of care: did Simpsons owe Mrs Trajkovski a duty of care;

Breach of duty: if so, were Simpsons nonetheless entitled to disburse the proceeds of sale in accordance with the instructions of Mr Trajkovski as Mrs Trajkovski’s ostensible agent;

Causation of harm: did any breach of duty by Simpsons cause harm to Mrs Trajkovski;

Quantification of loss: if so, what is the amount of Mrs Trajkovski’s loss;

Defences: was Mrs Trajkovski guilty of contributory negligence in failing to take reasonable steps to protect her interest in the proceeds of the sale of Dural, and was Mr Trajkovski a concurrent wrongdoer.

Although Mrs Trajkovski filed a timely notice of intention to appeal on 14 June 2018, it was not served until 18 August 2018, with the consequence that when the notice of appeal was filed on 20 August 2018, it was out of time. However, in circumstances where the respondents had been notified, albeit informally, of the intention to appeal, at the hearing, without opposition, the Court ordered that time for the filing of the Notice of Appeal be extended to the date on which it was filed being 20 August 2018.

Duty of care

The trial Judge found that Simpsons were not retained by Mrs Trajkovski in relation to the sale of Dural, and did not owe her a common law duty of care:

68 The primary cause of action propounded by the plaintiff is negligent breach of duty by the defendants in the discharge an alleged retainer from her (and from her husband and her parents-in-law) to act on completion of the sale of the Dural property. I find that the defendants were retained in relation to this sale not by all four vendors but by Mr Trajkovski alone. The plaintiff was a necessary signatory to the contract and the transfer but she did not engage the defendants as her solicitors in the matter. It is open to one of several registered proprietors of a property to engage solicitors with respect to its disposition while the other proprietors are either separately represented or unrepresented. In this case, the plaintiff chose to be unrepresented. At the commencement of the sale process she had Mr Chesters as her solicitor in relation to the matrimonial dispute but she did not ask him to act on the conveyancing transaction.

Like other contracts, the retainer of a solicitor may be express or implied. It may be accepted that there is no evidence of any express retainer by Mrs Trajkovski of Simpsons to act on the sale. Indeed, there is no evidence of any costs agreement or written retainer with any client in relation to the sale of Dural, nor even of any such fee disclosure as Mr Simpson was obliged by law to make to his clients,[17] whoever they were. However, the evidence of the existence of a retainer includes:
17. Under the Legal Profession Uniform Law (NSW) s 174.

the letter from Simpsons providing the draft contract to Century 21, referred to above, in which they state (emphasis added): “We act on behalf of Bobby & Suzana Trajkovski and Milan & Slavka Trajkovski on their proposed sale of the above property”;

the cover sheet of the contract for sale, in which Simpsons are nominated as solicitors for the vendors, and the vendors are described as “Bobby Trajkovski, Milan Trajkovski, Slavka Trajkovski and Suzana Trajkovski”;

the circumstance that on 31 July 2008 – before Chesters’ retainer had been terminated – Ms Newman communicated directly with Mrs Trajkovski by email to inform her that contracts had been exchanged, and of the settlement date (and that such communication was not sent to Chesters);

the 8 August letter, in which Chesters stated: “You will now have to take instructions from our former client directly”, which reflects the position that whereas in respect of the sale until that point Chesters might have served as an intermediary in conveying Mrs Trajkovski’s instructions to those who were acting for the vendors (including her) on the sale, thereafter instructions would have to be taken from her directly;

It must be accepted that, even with the benefit of proper and strong independent advice, Mrs Trajkovksi may well, had her instructions been sought, have agreed to the disbursement as requested by Mr Trajkovski of that part of the proceeds which she was entitled to retain. However, whether a solicitor acting exclusively for her, and aware of the pressures to which she was being subjected, would have been entitled to act on such instructions – or rather ought to have taken some measure for the protection of her interests, such as seeking the appointment of a guardian – need not be determined, because the respondents’ arguments about causation – which are to the effect that, properly advised by solicitors acting exclusively in her interests and unconstrained by any conflicting duty to Mr Trajkovski (as she had been by Mr Chesters), she would nonetheless have authorised payment of the proceeds as demanded by Mr Trajkovski – misconceive the relevant chain of causation in this case. Here, the relevant duty was to use reasonable care not to impair Mrs Trajkovski’s interest in Dural and its proceeds (being her vendor’s lien in respect of her one-fourth interest in Dural). As against the purchaser, all the vendors were bound to complete and a notice to complete had issued, so failing to complete was not an option; in any event, both Mr and Mrs Trajkovski wanted the sale to proceed. The breach was in allowing her security to be released without preserving the proceeds for her benefit. Had the duty been performed, one-fourth of the net proceeds would have been preserved for Mrs Trajkovski. The relevant harm was that her security was sacrificed. Thus, properly understood, this is not a “reliance” case; the breach was not in connection with advice given, and the question of what Mrs Trajkovski, properly advised, would have done, does not arise. The breach involved the negligent sacrifice of her security. The relevant “counter-factual”, to use terminology that appears to be in vogue, is not that Mrs Trajkovski’s instructions were sought, but that in connection with the settlement Simpsons did not give directions to the purchaser for payment that enabled her interest to be disbursed beyond her control.
What Mrs Trajkovski lost was not a mere opportunity, but the right to retain the proceeds of her share, as security for performance of Mr Trajkovski’s obligation under the Family Court orders. It is true that she retained other security, and that she has been able to obtain payment of some of the outstanding amount. But her right to retain the proceeds of her share of Dural was lost. It is beside the point that, had she been asked, she might have agreed to all or part of those proceeds being paid to or at the direction of Mr Trajkovski; she was deprived of a proprietary right, and the value of that right does not depend on whether or not, or how, she would have chosen to exercise it. This was no mere opportunity (such as to bring proceedings which might or might not result in a favourable judgment), but an accrued right. The harm was the loss of that right, and it does not matter whether it would or would not have been exercised. In those circumstances, the law merely values the right, and does not speculate as to whether she would – if asked – have enforced it, and if so to what extent. Rights, as distinct from opportunities, are not valued according to whether or not they would have been exercised. Thus it is irrelevant that Mrs Trajkovski might, voluntarily or involuntarily, have chosen or been pressured not to exercise her lien. The loss of a proprietary right is no less because the owner might not have chosen to enforce it, or might have intended to give it away. The loss is none the less, even if, had her instructions been sought, she might have, for whatever reason, consented to Mr Trajkovski’s demands; the respondents cannot avail themselves of speculation as to what might have happened had they sought her instructions, when they did not do so and when, in the absence of instructions, their duty was clear.
Causation is therefore established: by settling the sale upon directions, conveyed by them to the purchaser, for payment of the purchase price in a manner which would not preserve Mrs Trajkovski’s security interest in Dural and its proceeds, and instead allowing the disbursement of the proceeds of her share other than to her or for her benefit, Simpsons impaired, to the extent of her interest in the proceeds, the security she had for Mr Trajkovski’s obligation to pay her $800,000.

Quantification of Loss

In quantifying Mrs Trajkovski’s loss, it is necessary to consider:

the value of the security interest lost;

the fact that she still has a personal right to be paid the outstanding balance of the $800,000 by Mr Trajkovski; and

Mrs Trajkovski’s claim for consequential loss, in particular the cost of enforcement proceedings against Mr Trajkovski.

The value of the security interest lost

Had Simpsons performed their duty, then upon completion of the sale one-fourth of the net proceeds – that is $436,124 – would have been preserved, which Mrs Trajkovski would have been entitled to retain against the $800,000 due to her. While she retained other security, none was as valuable or as readily realisable as this, and there is no suggestion that it has been or would be possible to realise from the other security the difference between the $436,124 and the unpaid balance of the $800,000. The right of which she was deprived was worth $436,124.
As has been pointed out, this was not a mere opportunity, and the value of the right which Mrs Trajkovski lost is not to be discounted on account of the possibility that, voluntarily or involuntarily, she may have chosen not to exercise it, in full or in part. Her loss was the loss of a right which was worth $436,124, whether or not she chose to exercise it.
I do not think it can be said that she lost the full $800,000 due from Mr Trajkovski. Save to the extent of the unpaid vendor’s lien, her right to that sum was unsecured, and she still has that right – the order is still enforceable. She retained the lien in respect of the other property, and has been able to use it to obtain partial payment; to the extent there is an outstanding balance, it is not attributable to Simpsons’ enabling her lien to be released. Although payment of the $800,000 was long overdue, and Mr Trajkovski was in default, it was not charged on Mr Trajkovski’s interest in the property. Mr Trajkovski was entitled to give directions in respect of his interest in the proceeds, and Mrs Trajkovski had no interest in or charge over it.

The right to recover the outstanding balance

The trial judge found that Mrs Trajkovski had “not proved on the balance of probabilities that all reasonable prospects of recovery against [Mr Trajkovski] have been exhausted. She has therefore not proved her alleged loss”. The respondents submitted that this Court too would conclude that Mrs Trajkovski had failed to prove her loss, as she still had the right to be paid so much of the $800,000 as remains unpaid by Mr Trajkovski, and had not shown that there were no prospects of recovering the outstanding moneys owed to her by Mr Trajkovski. It was submitted that before any alleged negligence on the part of Simpsons, Mrs Trajkovski had a legal right to be paid certain moneys by Mr Trajkovski pursuant to the Family Court orders, and that she still has that right. [44]
44. In closing submissions at trial, Mrs Trajkovski’s counsel conceded that the Family Court orders of 24 May 2010, that Mr Trajkovski pay Mrs Trajkovski the sum of $750,000 plus interest, being the balance owing pursuant to the Family Court Orders made in May 2007, were still enforceable.
That analysis suffers from several defects.
First, it misconceives the true nature of Mrs Trajkovski’s loss, which was not of the right to recover $800,000 from Mr Trajkovski personally, but of the security she held for it to the extent of $436,124, in circumstances where attempts to recover from him personally have been largely unsuccessful. It is beside the point that she retains a personal right against Mr Trajkovski, when her security for it, which would have been her first recourse, has been lost. But for the negligence of Simpsons, Mrs Trajkovski would have had the benefit of (1) Mr Trajkovski’s (personal) liability to pay $800,000; (2) her security as unpaid vendor of her quarter interest in Dural; and (3) her security as unpaid vendor of the other property referred to in order (3). She retained (1) and (3), but lost (2). That loss was not immaterial, because despite retaining (1) and (3) there remains a shortfall.
His Honour found that “The plaintiff has received, from other sources and on other occasions, part of the $800,000. There is a shortfall which she has never recovered, and which has not been satisfactorily quantified in the evidence”. However, there is nothing to suggest that she had received anything approaching the difference between the $800,000 and the amount she should have received from the proceeds of Dural. While there was a dispute as to how much she had been paid pursuant to the Family Court orders, this was apparently resolved by the orders of 24 May 2010, which fixed the outstanding sum at $750,000 plus interest. Since then, Mrs Trajkovski has admittedly received a further $188,773.66 from the proceeds of Revesby, less $24,249.99 which had to be reimbursed; this leaves outstanding principal of $585,476.33, plus interest. For present purposes, what matters is that such amounts as she has received were not referable to her vendor’s lien in respect of Dural, but to her other rights against Mr Trajkovski, and that on any view the amount outstanding well exceeds the proceeds of her interest in Dural. Had her share of the proceeds been preserved, as they ought to have been, she would have been better off to the full extent of its value – that is, by $436,124. What she has managed to recover from other sources and by other methods is referable to her other rights against him, and on any view when subtracted from her total entitlement against Mr Trajkovski leaves a balance well in excess of the lost value of her vendor’s lien.
Secondly, it assumes that Mrs Trajkovski must first exhaust all reasonable measures to enforce her other rights against Mr Trajkovski, before she can be said to have suffered loss. Although the duty to mitigate damages may sometimes require a plaintiff to bring fresh proceedings, it does not ordinarily require a plaintiff to undertake complicated and difficult litigation against a third party; the question is whether the plaintiff ought reasonably embark on such proceedings. [45] Once it is appreciated that what Mrs Trajkovski has lost is her security for the performance of Mr Trajkovski’s obligations, the fallacy is exposed: the purpose of security is to avoid the need for cumbersome and potentially unproductive enforcement proceedings against the debtor personally. The considerable steps already taken to recover from Mr Trajkovski, with minimal success, serve to illustrate why loss of the security is so significant. Mrs Trajkovski has applied to the Family Court to enforce the Family Court orders against Mr Trajkovski, resulting in the 24 May 2010 orders, and then the 16 August 2010 orders appointing trustees for sale, which was ultimately frustrated by the intervention of Bardom. In my judgment it is not at all reasonable that she should be expected – as the respondents suggest – to make enquiries into the assets of the companies of which Mr Trajkovski has been or is a director or shareholder, or take steps to bankrupt him, or to ascertain his current financial position, let alone to make inquiries of accountant for documents relating to the companies in which she had been involved, before recovering compensation for the loss of a security which, had it been preserved, would not have required her to take any of those steps before enforcing it.
45. Pilkington v Wood [1953] Ch 770 at 777 (Harman J), cited in Bebonis v Angelos (2003) 56 NSWLR 127; [2003] NSWCA 13 at [99] (Handley JA, with whom Beazley JA and Heydon JA agreed); see also Treloar v Henderson [1968] NZLR 1085; Horsfall v Haywards [1999] PNLR 583; Walker v Geo H Medlicott & Son [1999] 1 WLR 727 at 743; [1999] 1 All ER 685 at 697.

Consequential loss

Mrs Trajkovski also claimed the costs of the subsequent enforcement proceedings against Mr Trajkovski. However, those costs are referable to the enforcement of rights other than her vendor’s lien, and would have been incurred in any event in enforcing those rights, in endeavouring to recover the balance of her entitlement beyond the $436,124 which ought to have been recovered from Dural. Preservation of her share of the proceeds of Dural would have satisfied her judgment only to their extent, and enforcement proceedings in respect of the balance of her judgment would still have been necessary.
Accordingly, I do not accept that the costs of enforcement proceedings against Mr Trajkovski form part of her damages. Mrs Trajkovski’s loss was $436,124.

Defences

At trial, Simpsons argued that any damages recoverable by Mrs Trajkovski should be reduced on account of her alleged contributory negligence (which was submitted to be predominant), and that their liability should be reduced by reason of Mr Trajkovski being a concurrent wrongdoer, whose responsibility for any damage or loss was said to exceed their own. Because of the conclusions which the trial Judge reached on the questions of duty and breach, his Honour did not address these issues. They are now raised by the respondents’ notice of contention.

Contributory negligence

The respondents submitted that Mrs Trajkovski failed to take reasonable steps to protect her own interests, and that her own acts and omissions were the predominant causes of her loss, so that as between them and her, she should bear the greater share of responsibility for any loss.
The acts and omissions attributed to Mrs Trajkovski on which the respondents relied – while eschewing any suggestion that Mrs Trajkovski was personally to blame for them – were (I have re-arranged them somewhat):

That understanding the effect of the Family Court orders, and in particular that she did not have to transfer any of her interests in the properties or the companies until she was paid the $850,000 owing to her, she agreed to or acquiesced in the transfer of Dural. However, while Mrs Trajkovski did not have to transfer her interest to Mr Trajkovski until paid in full, there was no want of reasonable care for her own interests in agreeing to the sale of the property to a third party, which would ostensibly facilitate payment. Once contracts were exchanged, she was bound (to the purchasers) to complete. Nor would allowing settlement of such a sale to proceed involve any failure to take reasonable care for her own interests, as solicitors acting in her interests could reasonably be expected not to allow her interest in the proceeds to be jeopardised. The only relevant risk she assumed by agreeing to or acquiescing in sale and settlement was that the solicitors might dissipate the proceeds of her share without her consent – a risk which a person in her position would rightly consider inconceivable. Thus, agreeing to the sale and transfer of the property in itself involved no failure to take reasonable care for her own interests, which would not have been jeopardised had Simpsons not allowed her interest in the proceeds to be sacrificed.

That she never requested copies of the documents she signed at the respondents’ office, and failed to seek Chesters’ advice with respect to the documents that she had signed or to raise matters with Chesters out of fear that it would get back to her ex-husband. However, she did not sign the Dural contract or transfer at Simpsons’ office, and such documents as she may have signed there are irrelevant to the Dural sale. In circumstances where nothing turns on her understanding of the Dural contract and transfer, it is not apparent how consultation with Chesters would have made the slightest difference. In any event, Chesters’ retainer was terminated a month before the relevant negligent act. There is no causal relationship between these matters and Mrs Trajkovski’s relevant loss.

That she failed to instruct her solicitors to commence enforcement proceedings against her ex-husband, despite being repeatedly advised to do so, and understood that waiting to enforce her rights would involve the risk that she may end up with nothing. However, all the “repeated advice” to which reference was made occurred after completion of the sale of Dural, by which time her loss had already been incurred. In any event, her hesitancy to commence enforcement proceedings had no causal connection with the sacrifice of her interest in the proceeds of sale of Dural.

That she failed to lodge caveats over the properties in which her husband had an interest, despite being repeatedly advised to do so. This did not refer to Dural, but to other properties in which Mr Trajkovski or entities controlled by him had an interest. It is far from clear that Mrs Trajkovski had any caveatable interest in those properties; the Family Court orders gave her none, and any argument that she had such an interest would have depended on tracing her share of the proceeds of Dural into them. In any event, this was advice given to her after completion of the sale Dural, and any such omission could not have contributed to her relevant loss.

At first sight, there is more substance to an argument that Mrs Trajkovski did not – despite advice from Chesters to do so – lodge a caveat in respect of Dural before completion. As Mr Chesters told her, by lodging a caveat she could have ensured that she was represented at completion. However, Mrs Trajkovski did not wish to obstruct the sale; to the contrary, she wanted it to proceed. She was in any event going to be represented at completion by the solicitors acting for all the vendors, Simpsons. A vendor in her position who wanted the sale to proceed would reasonably expect that lawyers acting for her would ensure that her interest in the proceeds was preserved. A client does not fail to take reasonable care for his or her own interests by failing to anticipate and guard by caveat against the prospect that her or his own lawyer might allow the client’s share of the proceeds to be dissipated.
For those reasons, Mrs Trajkovski should not be regarded as bearing any share of the responsibility for the loss of the proceeds of her interest, and there is no warrant under Law Reform (Miscellaneous Provisions) Act 1965 (NSW) s 9, for reducing the damages recoverable on account of contributory negligence.

Concurrent wrongdoer

The respondents submitted that Mr Trajkovski was a concurrent wrongdoer for the purposes of Civil Liability Act 2002 (NSW), Part 4, and that he was primarily responsible for any loss suffered by Mrs Trajkovski.
Mrs Trajkovski’s cause of action is, relevantly, “a claim for economic loss … in an action for damages … arising from a failure to take reasonable care” which does not include “any claim arising out of personal injury”, and so Part 4 of the Civil Liability Act applies, and her claim against Simpsons is, therefore, “an apportionable claim”. [46] If Simpsons are "concurrent wrongdoers" in relation to that claim, their liability is limited to that amount that reflects the portion of Mrs Trajkovski's loss that the court considers just having regard to the extent of their responsibility for the loss. [47]
46. Civil Liability Act, s 34(1)(a).
47. Civil Liability Act, s 35(1).
A “concurrent wrongdoer”, in relation to a claim, is a person who is one of two or more persons whose acts or omissions (or act or omission) caused, independently of each other or jointly, the damage or loss that is the subject of the claim. [48] As observed by the majority in the High Court in Hunt & Hunt Lawyers v Mitchell Morgan Nominees,[49] this involves two questions:

… what is the damage or loss that is the subject of the claim? Is there a person, other than the defendant, whose acts or omissions also caused that damage or loss?
48. Civil Liability Act, s 34(2).
49. (2013) 247 CLR 613; [2013] HCA 10 at [19].

This directs attention, first, to “the damage or loss that is the subject of the claim”. Here, that is the loss or damage identified above – the loss of Mrs Trajkovski’s vendor’s lien in respect of the proceeds of her one-fourth share in Dural.
The second question, then, is whether acts or omissions of Mr Trajkovski also caused that damage or loss. The respondents contend that the simple fact is that Mrs Trajkovski has not received the moneys owing to her under the Family Court orders because he has not paid her the money he owes her, that the primary reason why Mrs Trajkovski did not receive the proceeds of sale from Dural is because he exerted duress or undue influence on her, which would suffice to make him chiefly responsible for Mrs Trajkovski’s loss.
However, as will now be apparent, non-payment of the moneys owing under the Family Court orders is not the same loss and damage as that which is the subject of Mrs Trajkovski’s claim: the loss and damage in issue here is the security she held for payment of those moneys, as distinct from the payment itself. It was precisely to reduce the risk of payment not being enforceable personally that the law, and the Family Court orders, gave her that security. Mr Trajkovski’s recalcitrance in payment of the debt is not a destruction of the security held for it.
Further, Mr Trajkovski’s undue influence did not cause the relevant loss. While it may well have caused Mrs Trajkovski to terminate Chesters’ retainer and not to lodge a caveat, it was not a cause of the release of her interest in the proceeds of sale, which was solely attributable to Simpsons’ acts and omissions in connection with settlement instructions. That they acted on Mr Trajkovski’s instructions in giving those instructions does not make his undue influence on Mrs Trajkovski a contributing cause.
Moreover, that Mr Trajkovski is not a concurrent wrongdoer is confirmed by the failure of the respondents to identify any cause of action sounding in damages which Mrs Trajkovski would have against Mr Trajkovski in respect of acts or omissions on his part which caused that loss of the security. It is inherent in the notion of “concurrent wrongdoer” that the plaintiff has, or had, a good – albeit not necessarily recoverable – cause of action sounding in damages against the alleged concurrent wrongdoer. [50] Mr Trajkovski owed no duty of care to Mrs Trajkovski, and if his conduct towards her amounted to undue influence, while it might vitiate a transaction under which he took a benefit, it would not sound in damages.
50. Shrimp v Landmark Operations Ltd (2007) 163 FCR 510; [2007] FCA 1468 at [58]-[59], [62]-[67] (Besanko J); Meandarra Aerial Spraying Pty Ltd v GEJ & MA Geldard Pty Ltd as Trustee for the G & M Geldard Family Trust [2013] 1 Qd R 319; [2012] QCA 315 at [60]-[62].
Accordingly, Mr Trajkovski was not a concurrent wrongdoer in respect of the destruction of Mrs Trajkovski’s security constituted by her unpaid vendor’s lien in respect of Dural and its proceeds, and Civil Liability Act, s 35(1), which provides that any damages recoverable from Simpsons should be limited to an amount reflecting that proportion of the damage or loss claimed that the court considers just having regard to the relative extent of their responsibility and that of any concurrent wrongdoer, is not engaged.

Conclusion

My conclusions may be summarised as follows:

There was a solicitor-client relationship between Simpsons and Mrs Trajkovski, and they owed her a duty of care, in relation to their acting on the sale of Dural.

The evidence did not establish any representation by Mrs Trajkovski, on which Simpsons were entitled to rely, that Mr Trajkovski had her authority to give directions as to the disbursement of the proceeds of sale. In particular, any representation in the 8 August conversation was insufficient to convey such authority was conditional, and in any event could not be relied upon because Simpsons were on notice that Mrs Trajkovski was acting under duress or undue influence. Moreover, there was no evidence of reliance on any such representation, and there was evidence inconsistent with reliance.

The effect of the Family Court orders was that the equitable interest in Mrs Trajkovski’s interest in Dural at once passed to Mr Trajkovski, and Mrs Trajkovski had an unpaid vendor’s lien in respect of her interest and its proceeds, securing payment of the $800,000 to which she was entitled under the orders.

Without instructions to the contrary, Simpsons, were they acting exclusively in her interests, and unconstrained by any conflicting duty to Mr Trajkovski, ought to have caused Mrs Trajkovski’s one-fourth share of the net proceeds to be paid to her, or into their trust account for her benefit. Breach of duty is therefore established, by enabling that part of the proceeds of sale to which Mrs Trajkovski was entitled, being one-fourth, to be disbursed.

Causation is established: by settling the sale upon directions, conveyed by them to the purchaser, for payment of the purchase price in a manner which would not preserve Mrs Trajkovski’s security interest in Dural and its proceeds, and instead allowing the disbursement of the proceeds of her share other than to her or for her benefit, Simpsons sacrificed, to the extent of her interest in the proceeds, the security she had for Mr Trajkovski’s obligation to pay her $800,000.

The right of which she was deprived was worth $436,124. This was a proprietary right, not a mere opportunity, and the value of the right lost is not to be discounted on account of the possibility that, voluntarily or involuntarily, Mrs Trajkovski may have chosen not to exercise it, in full or in part.

Given that what she has lost is her security for the performance of Mr Trajkovski’s obligations, and that the purpose of security is to avoid the need for cumbersome and potentially unsuccessful enforcement proceedings against Mr Trajkovski personally, and the considerable steps already taken to recover from Mr Trajkovski with minimal success, Mrs Trajkovski is not required to prove that all reasonable prospects of recovery against Mr Trajkovski have been exhausted.

Mrs Trajkovski should not be regarded as bearing any share of the responsibility for the loss of the proceeds of her interest, and there is no warrant for reducing the damages recoverable on account of contributory negligence.

Mr Trajkovski was not a concurrent wrongdoer in respect of the destruction of Mrs Trajkovski’s security constituted by her unpaid vendor’s lien in respect of Dural, and Civil Liability Act, s 35(1), is not engaged.

The appeal should be allowed, and judgment for the plaintiff for $436,124 and interest substituted for the judgment in the Common Law Division. Interest on $436,124 from the date of the settlement (being 3 September 2008) to the date of the judgment below (being 21 May 2018) is $378,321.28, and the total substituted judgment should therefore be for $814,445.25.

Orders

I propose the following orders:

That the appeal be allowed.

That the judgment of the trial judge be set aside.

That in lieu thereof, there be substituted (with effect from the date of the trial judge’s judgment), judgment that the defendants pay the plaintiff $814,445.25 (being $436,124 plus interest from 3 September 2008 to the date of the trial judge’s judgment).

That the respondents pay the appellant’s costs of the proceedings at first instance and of the appeal.

**********

Endnotes

Decision last updated: 26 March 2019

Medium Neutral Citation:	Trajkovski v Simpson [2019] NSWCA 52
Hearing dates:	1 February 2019
Date of orders:	26 March 2019
Decision date:	26 March 2019
Before:	Basten JA and Sackville AJA at [1]; Brereton JA at [58]
Decision:	(1) Appeal allowed. (2) Judgment of trial judge set aside. (3) In lieu thereof, judgment that defendants pay plaintiff $814,445.25 (inclusive of interest to date of trial judge’s judgment). (4) Respondents to pay the appellant’s costs at first instance and on appeal.
Catchwords:	NEGLIGENCE – professional negligence – legal practitioners – duty of care where solicitor represented husband in family law proceedings – where solicitor retained by husband to act on sale of jointly held property – whether there was a solicitor-client relationship between the solicitors and the wife, and therefore whether they owed her a duty of care AGENCY – authority – ostensible authority – whether husband had wife’s actual or ostensible authority to direct payment of proceeds of sale TORT – negligence – concurrent liability – whether the husband was a concurrent wrongdoer, such as to reduce the solicitors’ liability
Legislation Cited:	Civil Liability Act 2002 (NSW) ss 5D, 5O(1), 34(1)(a), 34(2), 35(1) Law Reform (Miscellaneous Provisions) Act 1965 (NSW) s 9 Legal Profession Act 1987 (NSW) s 57B Legal Profession Act 2004 (NSW) s 309(1) Legal Profession Uniform Law (NSW) s 174 Legal Profession Uniform Law Australian Solicitors’ Conduct Rules 2015, r 11 Revised Professional Conduct and Practice Rules 1995 (NSW), rr 9.2, 9.3, 45 Trade Practices Act 1974 (Cth) s 51AB
Cases Cited:	Al-Kandari v J R Brown & Co [1988] QB 665 (CA) Badenach v Calvert (2016) 257 CLR 440; [2016] HCA 18 Bebonis v Angelos (2003) 56 NSWLR 127; [2003] NSWCA Craven v Official Trustee (2003) 127 FCR 217; [2003] FCAFC 26 Davies v Littlejohn (1923) 34 CLR 174; [1923] HCA 64 Ellison v Sandini Pty Ltd (2018) 354 ALR 484; [2018] FCAFC 44 Farrer v Copley Singletons [1997] EWCA Civ 2127 Feldman v GNM Australia Ltd [2017] NSWCA 107 Harris v Walker (1968) 14 FLR 167 Hawkins v Clayton (1988) 164 CLR 539; [1988] HCA 15 Heydon v NRMA Ltd (2000) 51 NSWLR 1; [2000] NSWCA 374 Horsfall v Haywards [1999] PNLR 583 Hunt & Hunt Lawyers v Mitchell Morgan Nominees (2013) 247 CLR 613; [2013] HCA 10 Jones v Daniel (2004) 141 FCR 148; [2004] FCAFC 278 Kowalczuk v Accom Finance (2008) 77 NSWLR 205; [2008] NSWCA 343 Lysaght v Edwards (1876) 2 Ch D 499 Meandarra Aerial Spraying Pty Ltd v GEJ & MA Geldard Pty Ltd as Trustee for the G & M Geldard Family Trust [2013] 1 Qd R 319; [2012] QCA 315 Midland Bank v Hett, Stubbs and Kemp [1979] Ch 384 Mullane v Mullane (1983) 158 CLR 436; [1983] HCA 4 Official Trustee in Bankruptcy v Mateo (2003) 127 FCR 217; [2003] FCAFC 26 Pilkington v Wood [1953] Ch 770 Re Thackwray and Young’s Contract (1888) 40 Ch D 34 Reliance Finance Corporation Pty Ltd v Heid [1982] 1 NSWLR 466 Shrimp v Landmark Operations Ltd (2007) 163 FCR 510; [2007] FCA 1468 Tanwar Enterprises Pty Ltd v Cauchi (2003) 217 CLR 315; [2003] HCA 57 Trajkovski v Simpson [2018] NSWSC 720 Treloar v Henderson [1968] NZLR 1085 Voli v Inglewood Shire Council (1963) 110 CLR 74; [1963] HCA 15 Vukmirica v Betyounan [2008] NSWCA 16 Walker v Geo H Medlicott & Son [1999] 1 WLR 727; [1999] 1 All ER 685 Winter v Lord Anson (1827-28) 3 Russ 488; 38 ER 658) Wossidlo v Catt (1934) 52 CLR 301; [1934] HCA 52
Category:	Principal judgment
Parties:	Suzana Trajkovski (Appellant) Ian Garnet Simpson (First Respondent) Simpson & Partners Solicitors Pty Ltd (Second Respondent)
Representation:	Counsel: Ms J McIntosh (Appellant) Mr J S Emmett / Mr H Grace (Respondents) Solicitors: Peter Cornock & Associates (Appellant) Yeldham Price O’Brien Lusk (Respondents)
File Number(s):	2018/184604
Decision under appeal	Court or tribunal: Supreme Court of New South Wales Jurisdiction: Common Law Citation: [2018] NSWSC 720 Date of Decision: 21 May 2018 Before: Fagan J File Number(s): 2014/203803