Court of Appeal Supreme Court New South Wales Medium Neutral Citation: Gerrard Toltz Pty Ltd v City Garden Australia Pty Ltd (in liq) (No 2) [2024] NSWCA 232 Hearing dates: 24-26 July 2024 Date of orders: 30 September 2024 Decision date: 30 September 2024 Before: Kirk JA at [1]; Stern JA at [3]; Basten AJA at [186]. Decision: (1) Appeal allowed. (2) Set aside order 3 of the orders made by the primary judge on 5 December 2023. (3) Set aside orders 3 and 4 of the orders made by the primary judge on 31 January 2024. (4) The respondent is to pay the appellant's costs of the appeal and of the proceedings at first instance. Catchwords: CONTRACTS – solicitor client retainer – construction of retainer– where the appellant acted for the respondent in various capacities – where the appellant acted for the lender in respect of a loan to the respondent – where the appellant communicated that it would not act for the respondent on a previous transaction involving similar parties – where the transaction contemplated the respondent receiving independent legal advice – where the respondent received independent legal advice – whether primary judge erred in finding that the appellant was retained to act for the respondent in respect of a loan transaction EQUITY – fiduciary duties – breach – whether the primary judge erred in finding that the appellant owed a fiduciary duty to the respondent in respect of entering the loan transaction – whether the primary judge erred in finding that the appellant was relevantly in a position of conflict of interest EQUITY – fiduciary duties – causation – whether the primary judge erred in assessing causation by reference to what would have happened if informed consent was obtained – whether the primary judge erred in finding that the breach of fiduciary duty caused the respondent to enter the loan transaction EQUITY – fiduciary duties – informed consent – whether the primary judge erred in finding that the appellant required the consent of both directors to establish informed consent to it acting for the lender PROCEDURAL FAIRNESS – whether the primary judge erred by determining issues on a basis that was neither pleaded nor run at trial – whether there was any practical injustice arising from the primary judge's findings PROPORTIONATE LIABILITY – apportionable claims – whether s 34(1) of the Civil Liability Act 2002 (NSW) requires a failure to take reasonable care to be an element of the cause of action Legislation Cited: Civil Liability Act 2002 (NSW), ss 3, 3A, 3B, Pt 1A, ss 5, 5A, 5D, 5Q, Div 8, Pt 4, ss 34, 34A, 35 Fair Trading Act 1987 (NSW), s 42 Trade Practices Act 1974 (Cth), s 52 Cases Cited: Aidzan Pty Ltd (in liq) v K. and A. Laird (N.S.W.) Pty Ltd (in liq) [2024] NSWCA 185 Ancient Order of Foresters in Victoria Friendly Society Ltd v Lifeplan Australia Friendly Society Ltd (2018) 265 CLR 1; [2018] HCA 43 Anderson v Canaccord Genuity Financial Ltd (2023) 113 NSWLR 151; [2023] NSWCA 294 Australian Executor Trustees (SA) v Kerr [2021] NSWCA 5 Beach Petroleum NL v Kennedy (1999) 48 NSWLR 1; [1999] NSWCA 408 Birtchnell v Equity Trustees, Executors and Agency Co Ltd (1929) 42 CLR 384; [1929] HCA 24 Blackmagic Design Pty Ltd v Overliese (2011) 191 FCR 1; [2011] FCAFC 24 Boensch v Pascoe (2019) 268 CLR 593; [2019] HCA 49 Break Fast Investments Pty Ltd v Rigby Cooke Lawyers [2022] VSCA 118 Breen v Williams (1996) 186 CLR 71; [1996] HCA 57 Brickenden v London Loan & Savings Co [1934] 3 DLR 465 Cassegrain v Cassegrain [2016] NSWCA 71 City Garden Australia Pty Ltd (in administration) as trustee for the Ming Tian City Garden Unit Trust v Dai [2023] NSWSC 1498 City Garden Australia Pty Ltd (in administration) as trustee for the Ming Tian City Garden Unit Trust v Dai (No 2) [2024] NSWSC 22 Clark Boyce v Mouat [1994] 1 AC 428 Dartberg Pty Ltd v Wealthcare Financial Planning Pty Ltd (2007) 164 FCR 450; [2007] FCA 1216 David v David [2009] NSWCA 8 Electricity Networks Corporation v Herridge Parties (2022) 276 CLR 271; [2022] HCA 37 Farrington v Rowe McBride & Partners [1985] NZLR 83 Ferguson v John Dawson & Partners (Contractors) Ltd [1976] 1 WLR 1213 Gilbert v Shanahan [1998] 3 NZLR 528 Godfrey Spowers (Victoria) Pty Ltd v Lincoln Scott Australia Pty Ltd (2008) 21 VR 84; [2008] VSCA 208 Herridge Parties v Electricity Networks Corp t/as Western Power (2021) 59 WAR 69; [2021] WASCA 111 Johnston v Brightstar Holding Company Pty Ltd [2014] NSWCA 15 Maguire v Makaronis (1997) 188 CLR 449; [1997] HCA 23 Mantonella P/L v Thompson [2009] QCA 80 Mao v Bao [2023] NSWCA 278 Midland Bank Trust Co Ltd v Hett, Stubbs & Kemp [1979] Ch 384 Re Minister for Immigration and Multicultural Affairs; Ex parte Lam (2003) 214 CLR 1; [2003] HCA 6 Monaghan Surveyors Pty Ltd v Stratford Glen-Avon Pty Ltd [2012] NSWCA 94 O'Halloran v R T Thomas & Family Pty Ltd (1998) 45 NSWLR 262 Perpetual Trustee Company Ltd v CTC Group Pty Ltd (No 2) [2013] NSWCA 58 Perpetual Trustee Company Ltd v Milanex Pty Ltd (in liq) [2011] NSWCA 367 Prince Jefri Bolkiah v KPMG (a Firm) [1999] 2 WLR 215 Provident Capital Ltd v Papa (2013) 84 NSWLR 231; [2013] NSWCA 36 Rahme v Benjamin & Khoury Pty Ltd (2019) 100 NSWLR 550; [2019] NSWCA 211 Reinhold v NSW Lotteries Corporation (No 2) (2008) 82 NSWLR 762; [2008] NSWSC 187 Richtoll Pty Ltd v WW Lawyers (in liq) Pty Ltd [2016] NSWSC 438 Shrimp v Landmark Operations Ltd (2007) 163 FCR 510; [2007] FCA 1468 Stead v State Government Insurance Commission (1986) 161 CLR 141 Stephen James Rigg v Paul Sheridan & Ors [2008] NSWCA 79 Tanah Merah Vic Pty Ltd v Owners Corp No 1 of PS613436 [2021] VSCA 72 White v Illawarra Mutual Building Society Ltd [2002] NSWCA 164 Xiao v BCEG International (Australia) Pty Ltd (2023) 111 NSWLR 132; [2023] NSWCA 48 Youyang Pty Ltd v Minter Ellison Morris Fletcher (2003) 212 CLR 484; [2003] HCA 15 Zakka v Elias [2013] NSWCA 119 Texts Cited: A Scalia and B Garner, Reading Law: The Interpretation of Legal Texts (2012, Thomson/West) B McDonald and JW Carter, "The Lottery of Contractual Risk Allocation and Proportionate Liability" (2009) 26 Journal of Contract Law 1 J Edelman, McGregor on Damages (21st ed, 2021, Sweet & Maxwell) JD Heydon, Heydon on Contract (2019, Thomson Reuters) JD Heydon, MJ Leeming and PG Turner, Meagher, Gummow and Lehane's Equity Doctrines and Remedies (5th ed, 2015, LexisNexis Butterworths Australia) JLR Davis, Inquiry into the Law of Joint and Several Liability: Report of Stage 2 (Australia, Attorney-General's Department, January 1995) Category: Principal judgment Parties: Gerrard Toltz Pty Ltd (Appellant) City Garden Australia Pty Ltd (in liq) as trustee for Ming Tian City Garden Unit Trust (Respondent) Representation: Counsel: R Dick SC and M Hall (Appellant) P Clarke and F Lim (Respondent) Solicitors: Sparke Helmore Lawyers (Appellant) Francis Lim Barristers & Solicitors (Respondent) File Number(s): 2023/461689 Publication restriction: Nil. Decision under appeal Court or tribunal: Supreme Court New South Wales Jurisdiction: Equity Citation: [2023] NSWSC 1498 Date of Decision: 05 December 2023 Before: Rees J File Number(s): 2020/128125 [Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.] HEADNOTE [This headnote is not to be read as part of the judgment] From early 2017, City Garden Australia Pty Ltd (City Garden) was undertaking a property development in North Rocks. Meng (Adam) Dai and (from July 2017) Jian Wei (Victor) Liang were directors of City Garden. On 13 November 2018, City Garden entered into a loan agreement with Gemi Investments Pty Ltd (Gemi Investments) for $2,109,942 (the first loan). The loaned funds were paid to another company involved in the development at the direction of Mr Dai. This loan was subsequently refinanced by a second loan, which was in turn refinanced by a third loan. As of 12 December 2023, $21,870,688.55 (inclusive of legal costs, accrued interest and charges on legal costs) was owing under this third loan. The primary judge found that Mr Liang had no knowledge of these loans and that Lin (Julianne) Zhu, who executed the relevant transaction documents, was not validly appointed as secretary of City Garden at any material time. Gerrard Toltz Pty Ltd (Toltz) was a firm of solicitors that from July 2016 acted for Mr Dai, and City Garden, in a variety of capacities. Toltz also acted for the Gemi Investments, and the broader Gemi group of companies, on all of its lending from at least 2016, including on the first loan. In respect of the first loan, Toltz prepared a document headed "Schedule 1A: Declaration by Borrower" that contemplated the borrower receiving independent legal advice regarding the loan and security documents. This document was signed by Mr Dai and Ms Zhu and certified by Xiuping (Alice) Yang, solicitor. On 29 April 2020, City Garden commenced proceedings alleging that Toltz was retained by City Garden on the first loan and acted in breach of the fiduciary duty it owed to City Garden by also acting for the Gemi group lenders in respect of this loan. City Garden alleged that Toltz was in a position of conflicting duties as regards this loan, and that City Garden did not give informed consent to Toltz acting notwithstanding this conflict. The primary judge found that Toltz was retained by City Garden to assist and advise in respect of the first loan, and that Toltz was in breach of the fiduciary duty which it owed City Garden, as its solicitor, in respect of City Garden's entry into the first loan. The primary judge found that if Toltz had contacted Mr Liang in the course of obtaining fully informed consent or in discharging its obligation to act in City Garden's best interests on the first loan, then Mr Liang would have prevented the first loan from proceeding. The primary judge ordered that Toltz pay City Garden equitable compensation in the sum of $16,403,016 (being 75% of the amount that the primary judge found that City Garden owed under the third loan) and costs. The primary judge rejected Toltz's contention that this was an apportionable claim for the purposes of Part 4 of the Civil Liability Act 2002 (NSW) on the basis that a failure to take reasonable care was not an element of the cause of action against Toltz. Toltz appeals against the orders finding it liable in damages. The principles issues in the appeal were: (i) Did the primary judge err in finding that Toltz's retainer extended to relevantly acting for City Garden in relation to the first loan and was Toltz in a position of conflicting fiduciary duties in respect thereof (appeal grounds 1 to 3). (ii) Was Toltz denied procedural fairness by reason of the primary judge's findings as to breach of fiduciary duty (appeal ground 4). (iii) Was Toltz denied procedural fairness and did the primary judge err in her Honour's findings as to lack of informed consent (appeal grounds 5 and 6). (iv) Was Toltz denied procedural fairness and did the primary judge err in her Honour's findings as to causation (appeal grounds 7 and 8). (v) Was Toltz denied procedural fairness and did the primary judge err in her Honour's findings as to loss (appeal grounds 9 and 10). (vi) Did the primary judge err in finding that the claim against Toltz was not an apportionable claim under s 34 of the Civil Liability Act and in not reducing Toltz's liability on that account (appeal ground 11). The Court (Stern JA, Kirk JA and Basten AJA agreeing in part) held, allowing the appeal: As to issue (i) (per Stern JA, Kirk JA and Basten AJA agreeing) (1) The ambit of a solicitor's retainer is of overarching significance to any claim that the solicitor has acted in breach of fiduciary duty by reason of a conflict between their duty to their client and either their interest or their duty to another client: [37], [40]. Maguire v Makaronis (1997) 188 CLR 449; [1997] HCA 23; Beach Petroleum NL v Kennedy (1999) 48 NSWLR 1; [1999] NSWCA 408, applied. Stephen James Rigg v Paul Sheridan & Ors [2008] NSWCA 79; Anderson v Canaccord Genuity Financial Ltd (2023) 113 NSWLR 151; [2023] NSWCA 294, referred to. (2) The question in such a case as the present is whether the client can establish that the solicitor was retained on the particular transaction, a matter to which an ongoing, general retainer may be relevant: [27], [30], [34]. The evidence disclosed that there were occasions on which Toltz did not act for City Garden in relation to financing transactions, such that the ongoing general retainer that Toltz had should be distinguished from a general retainer of the character discussed in Richtoll Pty Ltd v WW Lawyers (in liq) Pty Ltd [2016] NSWSC 438; Minkin v Landsberg [2016] 1 WLR 1489, where the question was whether tasks usually associated with an extant retainer had been carved-out: [53]-[54]. The primary judge erroneously approached the question of Toltz's retainer regarding the first loan on the basis that it was for Toltz to clearly limit its ongoing general retainer to exclude the first loan: [92]. Midland Bank Trust Co Ltd v Hett, Stubbs & Kemp [1979] Ch 384; Beach Petroleum NL v Kennedy (1999) 48 NSWLR 1; [1999] NSWCA 408, applied. Richtoll Pty Ltd v WW Lawyers (in liq) Pty Ltd [2016] NSWSC 438; Minkin v Landsberg [2016] 1 WLR 1489, distinguished. (3) The objective facts known to both parties, having regard both to the background circumstances and the immediate circumstances of the first loan, are more consistent with Toltz not acting for City Garden on the first loan. The primary judge erred in making findings to the contrary: [91]. (4) Unless Toltz was relevantly assisting or acting for City Garden in respect of the first loan, there is no basis to find that Toltz owed a fiduciary duty to City Garden to act in its best interests as regards its entry into the first loan. The primary judge erred in finding that there was a real sensible possibility of conflict between any duty owed by Toltz to City Garden and Toltz's duty to Gemi Investments in respect of the first loan: [95]-[96]. (5) The assumption underlying the document certified by Ms Yang was that an independent solicitor would provide meaningful independent legal advice: [85]-[87]. As to what Ms Yang should be taken to have known, the Court would infer from the declaration itself that Ms Yang had read, and understood, the loan and security documents. There was no basis to infer that Ms Yang knew very little about City Garden or the transaction, although the evidence did not disclose what, if anything, Ms Yang knew about Mr Liang's involvement in City Garden: [100]-[101]. Provident Capital Ltd v Papa (2013) 84 NSWLR 231; [2013] NSWCA 36, applied. As to issue (ii) (per Stern JA, Kirk JA agreeing, Basten AJA not deciding) (6) The concern of the law as regards procedural fairness is to avoid practical injustice. The primary judge's findings that Toltz was in breach of fiduciary duty fell within the ambit of City Garden's pleaded case such that there was no practical injustice arising out of these findings: [103]-[108], [114], [120]. Re Minister for Immigration and Multicultural Affairs; Ex parte Lam (2003) 214 CLR 1; [2003] HCA 6, applied. Stead v State Government Insurance Commission (1986) 161 CLR 141; [1986] HCA 54, referred to. As to issue (iii) (per Stern JA, Kirk JA agreeing, Basten AJA not deciding) (7) The primary judge's conclusion was predicated upon Toltz being aware that there was a disconformity between the borrower (City Garden) and the recipient of loan funds (the Builder), thus being on notice that Mr Dai may not be acting in the best interests of City Garden, and Toltz taking no steps to confirm that Mr Dai had authority on behalf of all directors of City Garden. Those factual predicates for the primary judge's finding were sufficiently notified to Toltz in City Garden's pleadings: [122]-[123], [125]. Clark Boyce v Mouat [1994] 1 AC 428, considered. Breen v Williams (1996) 186 CLR 71; [1996] HCA 57, Maguire v Makaronis (1997) 188 CLR 449; [1997] HCA 23, Farrington v Rowe McBride & Partners [1985] NZLR 83; Birtchnell v Equity Trustees, Executors and Agency Co Ltd (1929) 42 CLR 384, referred to. (8) The primary judge did not err in finding that informed consent should have included consent from Mr Liang. It was entirely consistent with the purpose underlying the fiduciary duty for informed consent to require the consent of Mr Liang, the director who had no personal interest in the Builder's projects other than at the North Rocks development: [127]. As to issue (iv) (per Stern JA, Kirk JA agreeing, Basten AJA not deciding) (9) As the complaints of a denial of procedural fairness as to breach of duty and causation were necessarily linked, Toltz's contention as to procedural unfairness on the issue of causation must also be rejected: [131]. (per Stern JA, Kirk JA and Basten AJA not deciding) (10) The primary judge erred in approaching the issue of causation by asking what Mr Liang would have done had Toltz contacted him, the proper counterfactual in this case was Toltz desisting from acting for City Garden and thereby avoiding the conflict or Toltz recommending that City Garden obtain independent advice as to the first loan: [147]-[148]. Blackmagic Design Pty Ltd v Overliese (2011) 191 FCR 1; [2011] FCAFC 24; Coope v LCM Litigation Fund Pty Ltd [2016] NSWCA 37, considered. Xiao v BCEG International (Australia) Pty Ltd (2023) 111 NSWLR 132; [2023] NSWCA 48; Mantonella P/L v Thompson [2009] QCA 80; Break Fast Investments Pty Ltd v Rigby Cooke Lawyers [2022] VSCA 118, referred to. As to issue (v) (per Stern JA, Kirk JA and Basten AJA not deciding) (11) Toltz's contentions as to procedural unfairness based upon the failure of City Garden to more fully articulate its case as to causation and the lack of analysis by the primary judge as to the benefits received by City Garden did not lead to any practical unfairness: [162]. (12) The primary judge did not err in finding that City Garden's entry into the second and third loans were caused by Toltz's breach of fiduciary duty as there was no evidentiary basis before the primary judge for a conclusion that City Garden had any alternative other than entry into the second and third loans if it were not simply to remain in default of its obligations under the first loan: [168]. As to issue (vi) (per Stern JA, Kirk JA not deciding) (13) It is unnecessary to reach any concluded view on this issue, however there is doubt as to the correctness of the statement of this Court in Rahme v Benjamin & Khoury Pty Ltd (2019) 100 NSWLR 550; [2019] NSWCA 211 at [135] ("Rahme"), relied upon by the primary judge. There remains considerable support at the appellate level for an approach to s 34(1)(a) that looks to both how a claim is framed, and to the findings of the court, but is not limited in its focus to the narrow question whether a lack of reasonable care is an element of the cause of action: [173]-[182]. Reinhold v NSW Lotteries Corporation (No 2) (2008) 82 NSWLR 762; [2008] NSWSC 187; Perpetual Trustee Company Ltd v CTC Group Pty Ltd (No 2) [2013] NSWCA 58; Rahme; Herridge Parties v Electricity Networks Corp t/as Western Power (2021) 59 WAR 69; [2021] WASCA 111; Tanah Merah Vic Pty Ltd v Owners Corp No 1 of PS613436 [2021] VSCA 72, considered. (per Basten AJA, Kirk JA not deciding) (14) Although the appeal should be upheld on other grounds, this issue raises an independent issue of principle: [186]-[187]. A claim, whatever the pleaded cause of action, which has been upheld on the basis that there was a failure to take reasonable care will constitute an apportionable claim under s 34(1)(a): [240]-[241]. JUDGMENT 1. KIRK JA: I agree with the orders proposed by Stern JA. I also agree with her Honour's judgment, save as follows. Grounds 7-9 address issues of causation. I agree with Stern JA's reasons for concluding that ground 7 is not made out to the extent it raises an issue of procedural fairness. Beyond that, the issues raised by grounds 7-9 are complex and fact-specific. There is a degree of artificiality in seeking to determine the issue where no breach has been made out. I prefer not to do so. 2. Ground 11 relates to apportionment. Like Stern JA, I do not consider it necessary to determine the ground. I express no views, tentative or otherwise, on the matters raised by it. Construing ss 34 and 35 of the Civil Liability Act 2002 (NSW) raises issues which are complex and important. It is appropriate that they be determined in a case where it is necessary to do so and where arguments are presented on point. This is not such a case. Senior counsel for the appellant expressly stated in oral submissions that "we don't seek to challenge Rahme in this appeal", referring to Rahme v Benjamin & Khoury Pty Ltd (2019) 100 NSWLR 550; [2019] NSWCA 211. Consistently with that position, the Court received no written submissions, and only very brief oral submissions, grappling with interpretation of the provisions. 3. STERN JA: These proceedings arise out of three loans entered into or guaranteed by the respondent (the plaintiff at first instance) (City Garden). The loans were entered into on 13 November 2018 (the first loan), 22 May 2019 (the second loan) and most recently 15 October 2019 (the third loan). The essential question on the appeal is whether the appellant, Gerrard Toltz Pty Ltd (Toltz), was relevantly acting as solicitor for City Garden on the first loan, and if so whether it was in breach of fiduciary duty by reason of the fact that it acted for the lender on the first loan. Issues also arise as to the primary judge's approach to causation and loss. The commercial context for the loans was that City Garden was undertaking a property development in North Rocks (the North Rocks Project, and the North Rocks Property, respectively). For the purpose of the North Rocks Project, City Garden entered into a construction contract with a related building company Ming Tian Real Property Pty Ltd (the Builder). Meng (Adam) Dai, the first defendant in the proceedings at first instance, was a director of both City Garden and the Builder at the time of the three loans. 4. There were a number of claims and cross-claims before the primary judge. For present purposes, it suffices to observe that the primary judge found that Mr Dai did not have the actual authority of City Garden to enter any of the first, second or third loans, and that Ms Lin (Julianne) Zhu (Mr Dai's wife), who executed the relevant transaction documents, was not validly appointed as secretary of City Garden at any material time. However, the primary judge dismissed City Garden's claims to have the three loans and a disputed mortgage set aside. Those matters are primarily relevant to the cross-appeal, which is dealt with in a separate judgment. As to the claim against Toltz, the primary judge found that Toltz's retainer included assisting City Garden in financing the North Rocks Project "and incidental matters", that Toltz was retained by City Garden to do this as regards the first loan, and that Toltz was in breach of the fiduciary duty which it owed City Garden, as its solicitor, in respect of City Garden's entry into the first loan. 5. The primary judge ordered that Toltz pay City Garden equitable compensation in the sum of $16,403,016 (being 75% of the amount that the primary judge found that City Garden owed Gemi 130 Pty Ltd (Gemi 130) and Bridge Street Capital No. 2 Pty Ltd (Bridge Street) under the third loan) and costs: City Garden Australia Pty Ltd (in administration) as trustee for the Ming Tian City Garden Unit Trust v Dai [2023] NSWSC 1498 and City Garden Australia Pty Ltd (in administration) as trustee for the Ming Tian City Garden Unit Trust v Dai (No 2) [2024] NSWSC 22 (primary judgment on quantification). The primary judge rejected Toltz's contention that this was an apportionable claim for the purposes of Part 4 of the Civil Liability Act. Toltz appeals against the whole of the judgment and primary judgment on quantification below, primarily on the basis that the primary judge erred in finding that Toltz was acting for City Garden on the first loan. Toltz also challenges the primary judge's findings of breach of fiduciary duty, a lack of informed consent, causation, loss and apportionment and alleges a denial of procedural fairness in a number of respects. A notice of contention filed by City Garden was not pressed. 6. It is evident that the primary judge had very limited assistance in seeking to deal with a large volume of evidence and complex legal issues. On critical questions of law, it is apparent that relevant authority was simply not drawn to her Honour's attention. To the extent that I have found that her Honour erred, it is apparent that those errors were significantly contributed to by the way in which the case was run at first instance. 7. For the reasons set out below, Toltz's appeal should be allowed. Issues arising on the appeal 1. The various matters raised in the Toltz's notice of appeal can be grouped broadly into the following substantive issues: 1. Did the primary judge err in finding that Toltz's retainer extended to relevantly acting for City Garden in relation to the first loan and was Toltz in a position of conflicting fiduciary duties in respect thereof (appeal grounds 1 to 3); 2. Was Toltz denied procedural fairness by reason of the primary judge's findings as to breach of fiduciary duty (appeal ground 4). Whilst ground 4 also alleges error in its chapeau, the matters relied upon went only to denial of procedural fairness; 3. Was Toltz denied procedural fairness and did the primary judge err in her Honour's findings as to lack of informed consent (appeal grounds 5 and 6); 4. Was Toltz denied procedural fairness and did the primary judge err in her Honour's findings as to causation (appeal grounds 7 and 8); 5. Was Toltz denied procedural fairness and did the primary judge err in her Honour's findings as to loss (appeal grounds 9 and 10); and 6. Did the primary judge err in finding that the claim against Toltz was not an apportionable claim under s 34 of the Civil Liability Act and in not reducing Toltz's liability on that account (appeal ground 11). 1. In this judgment, I consider the matters arising by reference to these issues. 2. It should be observed that the matters in issue on the appeal relate essentially to the inferences and conclusions to be drawn from the primary facts. Those primary facts are largely uncontroversial. The key entities and individuals 1. City Garden was incorporated in 2015. At incorporation, Mr Dai and Ms Zhu were both directors and Mr Dai was secretary: J[41]. At that time Mr Dai and Ms Zhu were equal shareholders. Ms Zhu ceased being a director in August 2016 before being purportedly appointed as secretary shortly before the first loan, without Jian Wei (Victor) Liang's knowledge. Mr Liang became a director of City Garden in July 2017. From that time Mr Liang was also the majority shareholder in City Garden: J[92], [100], [118]. City Garden's constitution provided that the business of the company was to be managed by or under the direction of the directors. Facing bankruptcy, on 27 November 2019, Mr Dai resigned as both director and secretary of City Garden: J[443]-[444]. On 18 February 2020, Mr Liang lodged a Form 484 removing Ms Zhu as secretary of City Garden: J[451]. City Garden is now in liquidation. 2. The Builder was incorporated in 2013. At all material times, its largest shareholder was Maxmara Trinity Pty Ltd, one of Mr Dai's family companies. Mr Dai was the sole director of the Builder. On 23 August 2017, City Garden entered into a construction contract for the North Rocks Project with the Builder (the construction contract): J[130]. Under that contract, the Builder was obliged to arrange for the supply of all materials, labour, construction plant and equipment and everything needed to complete the works, and to pay for the supply of such services: clause 2.1(c)(i)(A). In the event that City Garden had paid any workers, consultants or subcontractors directly, these payments could be set-off: cl 38, J[130]. The Builder is also now in liquidation: J[40]. 3. Toltz is a firm of solicitors of which Mr Toltz is the principal. Over a number of years, Toltz had acted for a group of companies associated with George Fleming (which I will describe as the Gemi group), in relation to loans provided by that group: J[46]-[47]. In July 2016 Toltz was approached by Andrew Margi, a finance broker, about working for Mr Dai on a proposed purchase of the North Rocks Property. That was his first involvement with Mr Dai or City Garden. Thereafter, he acted for Mr Dai, or City Garden, in a variety of capacities: for him personally, for him as a director of companies, for various companies with which he was associated and for various trusts with which he was associated: J[54]. There is no doubt that from 2016 Mr Dai and Mr Toltz developed something of a rapport. It is apparent, for example, that on at least one occasion they had a social dinner together, albeit that matters relating to the third loan were also discussed on that social occasion. 4. Companies within the Gemi group lent money to City Garden on 1 August 2017, and through both the first loan (by Gemi Investments Pty Ltd (Gemi Investments)) and the third loan (by Gemi 130 Pty Ltd (Gemi 130)). Mr Fleming was first introduced to Mr Dai by Mr Margi in 2016 when one of his companies lent money to one of Mr Dai's companies for a development in Wallis Island. Mr Toltz acted for the Gemi group on that transaction. Mr Fleming's and Mr Toltz's evidence was that Mr Toltz acted for the Gemi group on all of its lending from at least 2016. The three loans in issue The first loan 1. The first loan was a loan from Gemi Investments to City Garden for $2,109,942 million, payable in two tranches, for a six-month term. It was entered into on 13 November 2018 (erroneously described in some documents as being entered into on 15 October 2018) and completed on 14 November 2018. It was secured in part by a mortgage over the North Rocks Property and guaranteed by Mr Dai and Ms Zhu. On 13 November 2018, Mr Dai and Ms Zhu signed a "Declaration by Borrower", declaring that they, the director and secretary of City Garden, had received independent legal advice regarding the loan and security documents for the first loan, and this declaration was certified by Xiuping (Alice) Yang, solicitor, who confirmed that she had known both Mr Dai and Ms Zhu for at least 12 months. Mr Toltz explained in his affidavit that Ms Yang had previously acted for another of Mr Dai's companies in an unrelated transaction and this evidence was not challenged. 2. The primary judge found that Ms Yang appeared to have been contacted at short notice and charged no fees. On that basis her Honour found that it seemed "unlikely that any substantive advice was given in respect of the proposed transaction beyond the import of documents to be executed" or that she received comprehensive or accurate instructions as to Mr Dai and Ms Zhu's authority to execute the transaction documents on behalf of City Garden. Her Honour also found that it was not clear whether Ms Yang's client was Mr Dai and Ms Zhu or City Garden and that there was no evidence as to how Ms Yang went about her job, what she was told, or the advice she gave: J[176], [496]-[497]. There was also the "problem here … that the persons to whom Ms Yang was giving the advice were unauthorised": J[498]. Toltz challenges the inferences drawn by the primary judge as regards the role of Ms Yang. 3. The funds advanced under the first loan were, at Mr Dai's direction: J[216], advanced to an account in the name of City Garden Australia Pty Ltd, but that was in fact the Builder's bank account. The first tranche of $1.1 million was advanced on 14 November 2018 and the second tranche of $900,000 was advanced on 6 December 2018. Whilst the primary judge found that the stated purpose of the first tranche of the loan was to obtain a bank guarantee, likely for a property other than the North Rocks Property, the primary judge found that the funds were expended on suppliers, subcontractors, consultants, mortgage brokers, director's loans, tax, American Express, and Mr Dai, and it was likely that some of the expenditure, at least, related to the North Rocks Project: J[178]-[180]. The primary judge found that, in a broad sense, City Garden received a benefit from a portion of the first loan as at least some of the money from the first loan was likely used to pay expenditure that related to the North Rocks Project and that the Builder may have issued a progress claim for those amounts and been reimbursed out of the loan funds, but that it was difficult if so and to quantify how much: J[178]-[181], [476]-[477]. Beyond the tender of one invoice linked to the North Rocks Project which was paid out of the proceeds of the first loan, no evidence was led at trial to establish the extent to which money from the first loan was in fact used to benefit City Garden, nor the extent to which, if at all, the expenditure was to meet a progress claim by the Builder for the North Rocks Project, or if City Garden set-off the money paid against money City Garden owed to the Builder under the construction contract. 4. The primary judge also found that Mr Dai had no authority to enter this loan without the agreement of Mr Liang: J[216]. 5. It is common ground that Toltz acted for Gemi Investments on the first loan. The issue is whether Toltz relevantly also acted for City Garden. As to this, the primary judge found that Toltz had a continuing retainer to assist City Gardens in financing and incidental matters relating to the North Rocks Project at the time of the first loan (J[260], [263]), and that this gave rise to "a real sensible possibility of conflict in respect of the first [loan]": J[267]. The primary judge found that City Garden did not give its fully informed consent to Toltz acting for Gemi Investments on the first loan in circumstances where Mr Toltz made no attempt to contact Mr Liang to ensure that the instructions he was receiving from Mr Dai were truly the instructions of City Garden: J[275]-[276]. The primary judge found that, by acting for Gemi Investments on the first loan, Toltz disregarded City Garden's best interests by failing to ensure that the board of directors had resolved to obtain the loan, being precisely the problem that the "conflict of duty and duty" rule seeks to avoid: J[287]-[288]. Toltz thereby breached its fiduciary duties to City Garden: J[288]. The second loan 1. The second loan was a loan from Weriton Finance No 2 Pty Ltd (Weriton) and Saddleback Mountain Estates No 2 Pty Ltd to the Builder for $4.5 million for an approximately six-month term, guaranteed by City Garden and secured in part by a mortgage over the North Rocks Property. It was entered into in May 2019. Piper Alderman, solicitors, acted for City Garden on this loan. Of the money advanced, $2,355,086.66 was used to pay out the first loan and to pay the costs of the second loan. Beyond that, approximately $391,000 was used to discharge City Garden's land tax liability and $746,000, which the primary judge found appeared to have been mostly used in relation to the North Rocks Property, was paid to the Builder: J[355]. A sum of $536,575.82 was retained by the lenders. No complaint is made about Toltz's conduct regarding the second loan. The third loan 1. The third loan was a loan from Gemi 130 and Bridge Street to City Garden for $5,292,543, for a six-month term, entered into on 15 October 2019. Of this, $4,507,617.77 was used to pay out the second loan: J[404], and the balance was for fees and capitalised interest in advance. Mr Holt was City Garden's solicitor on this loan. Gemi 130 and Bridge Street have yet to be repaid and at the time of judgment, interest on the loan was accruing at 27% per annum: J[5]. By 12 December 2023, the amount owing on the third loan, inclusive of legal costs, accrued interest and charges on legal costs, was $21,870,688.55. No complaint is made about Toltz's conduct regarding the third loan in this appeal. The North Rocks Project 1. From around July 2016, Mr Dai and Mr Liang liaised about taking over a loan then in place in respect of the North Rocks Property. On 19 July 2016, Mr Dai sent an email to Mr Toltz, copied to Mr Liang, authorising Mr Toltz: "to act on my behalf for the JV agreement and negotiation of the present deal at North Rocks, Documentation prepared and that will be used will be will be [sic] issued from Piper Alderman or similar category firm". 1. On 1 December 2016, an amended Development Deed relating to the North Rocks Project was executed and a contract of sale exchanged, pursuant to which City Garden agreed to purchase the North Rocks Property. Completion took place in February 2017. To assist in purchasing the North Rocks Property, prior to completion City Garden borrowed $8.25 million from Kenxue Pty Ltd (Kenxue) and signed a term sheet with Weriton for a second mortgage facility of $2.68 million to supplement this funding, which was only for a fixed six-month term: J[76]. On completion, mortgages were granted to Kenxue and Weriton: J[86]. City Garden purchased the North Rocks Property in its capacity as the trustee of the Ming Tian City Garden Unit Trust (the Trust). 2. Over time, Mr Liang, and companies associated with Mr Liang, provided funds for the purpose of the North Rocks Project, at times by way of investment and at times by way of loan. By way of example, on 1 August 2016, Rose Ives Pty Ltd (a company owned by Mr Liang and his wife's company LV.Esb Pty Ltd) invested $4 million in the North Rocks Project, in return for which it was allocated 40 units in the Trust. The primary judge found that by January 2017, Mr Toltz was aware of this: J[81]. Thereafter, Mr Liang continued, through various companies, to provide further finance for the North Rocks Project. 3. On 16 April 2020, a final occupation certificate for the North Rocks Project was issued: J[455]. On 1 May 2020, the first of many sales of lots in the North Rocks Project was completed, with the proceeds of sale deployed to pay down a $25 million construction loan facility with Westpac (the Westpac loan): J[463]. In December 2021, the Westpac loan was paid out and Westpac's mortgages over the North Rocks Property were discharged: J[467]. Lot sales were continuing at the time of trial. On 5 September 2023, voluntary administrators were appointed to City Garden. On 11 October 2023, liquidators were appointed, and on 1 March 2024, a receiver and manager was appointed over certain lots in the North Rocks Property pursuant to the unregistered mortgage (and registered memorandum of common provisions) associated with the third loan. Did Toltz's retainer extend to assisting or advising City Garden and was Toltz in a position of conflict of fiduciary duties on the first loan? 1. As set out above, Toltz contends that the primary judge erred in finding that Toltz was retained to assist or advise City Garden in respect of the first loan and relevantly owed a fiduciary duty to City Garden in respect of the first loan, which it breached. Toltz contends that the proper inference to be drawn is that Toltz was acting only for Gemi Investments on the first loan. Thus, Toltz contends that the primary judge erred in finding that Toltz had an ongoing retainer to assist City Garden in financing and incidental matters relating to the North Rocks Project which encompassed such steps in relation to the first loan: J[260]. For its part, City Garden contends that the primary judge was correct to find that Toltz's retainer included acting for it on the first loan, and that Toltz breached the fiduciary duty which it thereby owed, by also acting for Gemi Investments on that loan without the informed consent of City Garden. Relevant principles A solicitor's retainer 1. The question that arises is whether City Garden have shown that Toltz was relevantly retained to assist in arranging or to advise in relation to the first loan, such that Toltz was in a position of conflicting duties in so acting for City Garden when also acting for Gemi Investments on the first loan. This is because the extent of a solicitor's duty to its client is determined by the retainer. As this Court stated in Beach Petroleum NL v Kennedy (1999) 48 NSWLR 1; [1999] NSWCA 408 ("Beach Petroleum") at [208] (Spigelman CJ, Sheller and Stein JJA), "'Retainer' is a word used to describe a contract between the solicitor and the client for the provision of legal services by the solicitor for a fee and must be proved like any other contract". Whether a retainer exists depends essentially upon whether it was the intention of the parties that it should be created: Maxwell v Chittick [1994] NSWCA 196 (unreported) (Mahoney JA, Priestley and Powell JJA agreeing). That understanding reflects basic contractual principle. A retainer may be implied from conduct: Beach Petroleum at [208]. A retainer will be presumed if the conduct of the parties shows that the relationship of solicitor and client has in fact been established between them: Groom v Crocker [1939] 1 KB 194 at 222 (Scott LJ). 2. The same principles, logically, apply to determine what matters fall within the ambit of a solicitor's retainer. Thus, even if a retainer is established, it is necessary "to determine what legal services the solicitor agreed to provide": Beach Petroleum at [208]. As Oliver J said in Midland Bank Trust Co Ltd v Hett, Stubbs & Kemp [1979] Ch 384 at 402-3 ("Midland Bank"): "Mr. Harman sought to rely upon the fact that Mr. Stubbs was Geoffrey's solicitor under some sort of general retainer imposing a duty to consider all aspects of his interest generally whenever he was consulted, but that cannot be. There is no such thing as a general retainer in that sense. The expression "my solicitor" is as meaningless as the expression "my tailor" or "my bookmaker" in establishing any general duty apart from that arising out of a particular matter in which his services are retained. The extent of his duties depends upon the terms and limits of that retainer …. I think that the court must beware of imposing upon solicitors – or upon professional men in other spheres – duties which go beyond the scope of what they are requested and undertake to do." 1. Relying upon the passage from Midland Bank set out above, Hoeben CJ at CL in Richtoll Pty Ltd v WW Lawyers (in liq) Pty Ltd [2016] NSWSC 438 ("Richtoll") at [28] observed: "…normally a general or overarching retainer is a questionable proposition as a matter of law and requires some precision in the evidence if it is to be open as a finding." 1. It is accepted that the onus of establishing the existence of a retainer rests on the party so asserting: see eg Beach Petroleum at [208]-[209] and that "a written retainer or other document purporting to outline the terms of the retainer will be weighty evidence": Richtoll at [161] (Hoeben CJ at CL). As held by the Court in Beach Petroleum at [227]: "The question of a retainer is not determined by the belief of the solicitor as to the company or companies for whom he or she is acting. It is determined by the objective facts." 1. Factors relevant to the existence and ambit of a retainer can include whether there was any request by the client to undertake the task and whether the solicitor took steps that might have been expected had there been a retainer: Zakka v Elias [2013] NSWCA 119 at [61] (Ward JA, Emmett JA and Tobias AJA agreeing). Conversely, it seems to me, that steps being taken that might not have been expected had there been a retainer may also be relevant. In Richtoll, Hoeben CJ at CL attached some significance to the absence of complaint or comment by the client after the solicitor sent correspondence clearly identifying the limited ambit of its retainer: at [31], [52], [169]. His Honour also placed some weight upon what was included in a memorandum of costs for work on a particular transaction, as being consistent with the solicitor's evidence as to the limited nature of the retainer: at [172]. A statement by solicitors that they could not advise the client on a particular matter, or aspect of a transaction, and the client being "content" with the retainer being completed on that basis may be relevant to the scope of the retainer: David v David [2009] NSWCA 8 at [78] (Allsop P, Hodgson JA and Handley AJA agreeing). Further, if "all usual necessary solicitor functions" are performed only by one firm, this might suggest that another firm was not retained: Beach Petroleum at [242]. 2. Illustrating the importance of identifying with some particularity the nature of any ongoing retainer, Hoeben CJ at CL in Richtoll at [32] found that the solicitor in that case had done no more than propose that it "could provide various legal services relating to loans and could assist clients in arranging for third parties … to source loans". Having regard to the conduct of the parties in the period after the alleged general retainer was entered into, his Honour found that there was no general retainer, but that the solicitor entered into a separate retainer for each loan transaction on which it acted: at [34]. 3. A solicitor may, by agreement, limit the duties that would otherwise form part of its retainer: Minkin v Landsberg [2016] 1 WLR 1489 at [38]. If it is sought to do so, Jackson LJ in Minkin at [38] observed that: "As a matter of good practice the solicitor should confirm such agreement in writing. If the solicitor does not do so, the court may not accept that any such restriction was agreed". 1. In the present case, the primary judge placed some significance upon the statement of Hoeben CJ at CL in Richtoll at [163], citing Minkin at [38]-[39], that a solicitor who seeks to limit their retainer ought to do so "clearly and usually in writing as a matter of prudent practice". However, that was a case in which a solicitor sought to limit the duties that would ordinarily form part of the solicitor's retainer on a loan transaction by excluding any responsibility as regards due diligence in respect of the security property or the borrowers: at [169]. I do not regard the statements from Minkin and Richtoll set out above as having application in a case such as the present, where the question is whether a solicitor should be found to have been retained in respect of a particular transaction by reason of the existence of an ongoing, general retainer of the solicitor by the client. Rather, I consider that the question in such a case as the present is whether the client can establish that the solicitor was retained on the particular transaction, a matter to which an ongoing, general retainer may be relevant. 2. As to the identification of the terms of a contract that is partly oral and partly written, a court can take into account post-contractual conduct as a basis for inferring what was agreed when the contract was made, or as establishing a later variation: see eg Ferguson v John Dawson & Partners (Contractors) Ltd [1976] 1 WLR 1213 at 1229 (Brown LJ) applied in County Securities Pty Ltd v Challenger Group Holdings Pty Ltd [2008] NSWCA 193 at [27]-[28] & [45] (Spigelman CJ). Post-contractual conduct may also be relevant on the question of whether there is a contract: see eg JD Heydon, Heydon on Contract (2019, Thomson Reuters) at [4.170]. To be relevant as to construction such conduct must be known to both parties, or reveal a common assumption as to the existence and terms of an agreement: Johnston v Brightstar Holding Company Pty Ltd [2014] NSWCA 150 at [120]-[124] (Basten JA, Gleeson JA agreeing) recently relied on in Cirrus Real Time Processing Systems Pty Ltd v Jet Aviation Australia Pty Ltd [2023] NSWCA 280 at [92] (Leeming JA, Kirk JA agreeing at [96]). A solicitor's fiduciary duty 1. The duty of "undivided loyalty", which a solicitor owes to the client, is at the heart of the fiduciary obligation owed: Maguire v Makaronis (1997) 188 CLR 449 at 465 (Brennan CJ, Gaudron, McHugh and Gummow JJ); [1997] HCA 23 ("Maguire"). As Lord Millett explained in Prince Jefri Bolkiah v KPMG (a Firm) [1999] 2 WLR 215 at 224-225 (cited with approval in Beach Petroleum at [205]): "…a fiduciary cannot act at the same time both for and against the same client, and his firm is in no better position…". 1. The ambit of a solicitor's retainer is of overarching significance to any claim that the solicitor has acted in breach of fiduciary duty by reason of a conflict between their duty to their client and either their interest or their duty to another client: Beach Petroleum at [188]. As Brennan CJ, Gaudron, McHugh and Gummow JJ observed in Maguire at 464: "…to say that the appellants stood as fiduciaries to the respondents calls for the ascertainment of the particular obligations owed to the respondents and consideration of what acts and omissions amounted to failure to discharge these obligations." 1. As was held in Beach Petroleum at [188], and applied in Stephen James Rigg v Paul Sheridan & Ors [2008] NSWCA 79 at [33] (Handley JA, Beazley and Giles JJA agreeing) ("Rigg v Sheridan"): "Even in the case of a solicitor client relationship, long accepted as a status based fiduciary relationship, the duty is not derived from status. As in all such cases the duty is derived from what the solicitor undertakes, or is deemed to have undertaken, to do in the particular circumstances …." 1. The duty of the fiduciary is to "refrain from engagements which conflict, or which may possibly conflict, with the interests of those whom he is bound to protect": Birtchnell v Equity Trustees, Executors and Agency Co Ltd (1929) 42 CLR 384 at 408 (Dixon J); [1929] HCA 24 ("Birtchnell"). In acting for two principals with potentially conflicting interests there is an automatic breach of fiduciary duty: Bristol and West Building Society v Mothew [1998] Ch 1 CA at 19 (Millett LJ), cited with approval in Rigg v Sheridan at [46] (Handley JA, Beazley and Giles JJA agreeing). 2. There must, however, be "a real sensible possibility of conflict" and it is not enough to identify some conceivable possibility that may result in conflict: Beach Petroleum at [425]; Rigg v Sheridan at [38]. The scope of the retainer will be material to whether a conflict of duty and duty arises relevant to an impeached transaction: Beach Petroleum at [237]; Anderson v Canaccord Genuity Financial Ltd (2023) 113 NSWLR 151; [2023] NSWCA 294 at [146] (Gleeson, Leeming and White JJA). Determination Relevant circumstances other than the immediate circumstances of the first loan 1. There are a number of matters, over and above the immediate circumstances of the first loan, that go to the question of whether Toltz was retained by City Garden to assist in arranging, or relevantly to act in respect of, the first loan so as to put Toltz in a position where its duties to City Garden conflicted with its duties to its client, Gemi Investments. Before turning to these, it should be observed that City Garden did not contend, either at first instance or on appeal, that Mr Dai did not have authority to instruct Toltz on the first appeal and to communicate with him for that purpose. City Garden did not contend, further, that the knowledge of Mr Dai was not the knowledge of City Garden for the purpose of determining whether Toltz was retained on the first loan, and if so in what capacity. It is thus not necessary to consider the principles as to attribution of corporate knowledge: see eg Aidzan Pty Ltd (in liq) v K. and A. Laird (N.S.W.) Pty Ltd (in liq) [2024] NSWCA 185 at [70]-[72] (Meagher JA, Ward P and Adamson JA agreeing). 2. First, there is no evidence of any conversations between Mr Dai and Mr Toltz after July 2017 (discussed at [63] below) bearing on the question of whether it was agreed that Toltz would act for City Garden on the first loan. Mr Dai does not give evidence of anything said or done by Mr Toltz that suggested that Toltz was acting for City Garden on the first loan. For example, there is no evidence that Mr Dai requested that Toltz act for City Garden on the loan, or that Mr Toltz agreed with Mr Dai that he would so act. Nor is there any suggestion that Mr Dai sought, or Toltz gave, any advice to City Garden on the first loan. The position is further clouded having regard to the speed at which the first loan appears to have been put in place, and the fact that the key players in the transaction were already familiar with each other and had ready lines of communication in place. 3. Second, as set out above, the Gemi group (instructing Toltz) had lent money to a company associated with Mr Dai on a development in Wallis Island in 2016. Thus, Mr Dai had had an existing relationship with Mr Fleming such that the willingness of the Gemi group to provide a loan to City Garden did not necessarily turn on the involvement of Toltz. 4. Third, prior to City Garden's entry into the Development Deed or the loan from Kenxue, on 4 August 2016, Mr Toltz sent Mr Dai a Costs Disclosure and Costs Agreement (the August 2016 Costs Disclosure). The primary judge found that, although the client referred to in the agreement was the Builder, Mr Toltz considered himself to be retained by City Garden: J[53]. The scope of work set out was: "You have instructed us to assist in financing, acquisition of development rights, sales of units and incidental matters relating to the development at 221 NORTH ROCKS ROAD NORTH ROCKS NSW." 1. Consistent with this being the scope of work, under the heading "B. Professional Fees", fixed fees for the following work were set out: "Settlement of the Development Agreement", "First Mortgage", "Second Mortgage", "Exchanged Sales", "New Sales" and "Discharge of mortgage and termination of the Project". Under the heading "D. Estimate of Professional Fees, Disbursement and Internal Expenses" were estimates of fees for "Professional fixed fees (excluding sales)", "Professional fixed fees (sales)" and "Professional fees (discharges and termination on an hourly basis (estimate only))". 2. As is apparent, the August 2016 Costs Disclosure was not a written retainer that expressly contemplated work being undertaken by Toltz for City Garden as regards refinancing subsequent to the acquisition of the North Rocks Property and the development rights in respect thereof. Whilst such matters could potentially fall within the ambit of assisting in "financing" of, or "incidental matters" relating to the North Rocks Project, read together with the identification of professional fees and the estimates of fees in the August 2016 Costs Disclosure, having regard to the matters set out above, the better view is that the August 2016 Costs Disclosure does not of itself establish that Toltz was retained by City Garden to assist in arranging, or in respect of, the first loan. So to find is consistent with the case as pleaded by City Garden, namely that the retainer between City Garden and Toltz was oral and entered into in conversations between Mr Dai and Mr Toltz: Second Further Amended Statement of Claim (2FASOC) at [23] and [55]. 3. Fourth, notwithstanding this, it was accepted by Toltz that that there was an ongoing general retainer of Toltz by City Garden and that the provision of legal advice fell within the concept of the scope of works in the retainer. It is also apparent that, on occasion, Toltz's role included assisting in arranging finance for the North Rocks Project. It is thus apparent that the ongoing, general retainer went beyond what was expressly contemplated by the August 2016 Costs Disclosure. So much was accepted by Toltz's Senior Counsel during the appeal hearing. The August 2016 Costs Disclosure is thus part of the context known to both parties, which must be considered in ascertaining the proper ambit of Toltz's general retainer at the time of the first loan but does not itself resolve the issue. The issues on appeal turn on whether Toltz was retained to act for City Garden on the first loan, not upon whether at that time Toltz had an ongoing general retainer with City Garden. 4. Consistent with this, it is apparent from the matters discussed below, that such ongoing general retainer that was in place between Toltz and City Garden did not constitute an undertaking by City Garden to instruct Toltz, nor impose a duty upon Toltz to act for City Garden, on any particular transaction. Rather, the evidence discloses that on some occasions, City Garden did instruct Toltz to act, whereas on others it gave no such instructions or Toltz made it clear that it would not act as regards some, or all, aspects of a transaction. The ongoing general retainer did not mean that Toltz was retained to act on any loan to City Garden for the purpose of financing the North Rocks Project. That is consistent with the August 2016 Costs Disclosure "[setting] out the terms of our offer to provide legal services to you", which should reasonably be understood as setting out the terms that would apply if and when a specific instruction was given by City Garden to Toltz. 5. Fifth, even as regards the initial financing of the North Rocks Project, Toltz was in some respects replaced by King & Wood Mallesons. An email from Mr Dai to Richard Winter of King & Wood Mallesons said: "moving forward, I want Richard Winter from King and Wood Mallesons to handle all the negotiations and communications between NWC and Addison for representing City Garden. … Meanwhile, Toltz Lawyer still represent me in a way of preparing all the relevant legal documents for 2rd [sic] mortgage, deed of development agreement etc." 1. The primary judge found that by virtue of this, Toltz's "broad retainer became confined": J[254]. I would reach a somewhat different conclusion, namely that the significance of this early development is that it shows that such ongoing retainer as Toltz had with City Garden was one to act only when, and to the extent, that City Garden gave Toltz instructions to act in respect of, or on, the particular transaction. The primary judge then attached some significance to invoices from Toltz to City Garden in November 2016 in relation to "the finance and direction of the North Rocks project" and on 1 February 2017 in respect of "advising you on funding for this project". Her Honour found that these invoices demonstrated that Toltz's role had "re-expanded" and that it appeared that Toltz may also be giving strategic and commercial advice: J[85], [254]. Again, I would reach a somewhat different conclusion, namely that these invoices indicate that Toltz acted for City Garden in respect of the initial financing of the North Rocks Project only to the extent it was instructed by City Garden to do so. 2. Sixth, as adverted to above, the evidence discloses that on an ongoing basis after the initial financing of the North Rocks Project, Toltz on occasion acted for City Garden on contracts for sale of lots at the North Rocks Property and, beyond that, if instructed to do so. Thus, Toltz acted for City Garden in litigation which arose in relation to the loan from Kenxue. Also, as the primary judge found, in June 2017, Toltz was advising City Garden in relation to the refinancing of the Kenxue and Weriton mortgages: J[94], [255]. In September 2017, Toltz acted on behalf of City Garden in respect of the Westpac loan, which was settled in December 2017. On settlement of this loan on 18 December 2017, some $4.6 million was used to assist in paying out loans which had been taken out by City Garden in August 2017 (discussed at [55]-[70] below) from interests associated with Mr Fleming: J[134]. The primary judge found that Toltz assisted City Garden in enabling this to occur: J[139], [140], [255]. In October 2018, Mr Dai proposed to Mr Liang that various deeds of loan between City Garden and Mr Liang's company, NCC Fashion Group Pty Ltd (NCC), be replaced with a consolidated deed of loan. A loan agreement between City Garden and NCC for a loan of $13 million, with Mr Dai and Ms Zhu as guarantors, was entered into. Mr Dai's signature was witnessed by Mr Toltz and the loan agreement (undated) is on Toltz letterhead. It should be inferred that Toltz acted for City Garden on that transaction. Further, the primary judge found that Mr Dai also rang Mr Toltz from time to time and talked about issues to do with finance or other legal issues involving the North Rocks Project if it was a matter that needed legal advice: J[255]. 3. These matters are consistent with Toltz acting pursuant to an ongoing general retainer when instructed by City Garden to do so, but do not say anything about whether Toltz was acting for City Garden in relation to the first loan. 4. The evidence also discloses that there were occasions on which Toltz did not act for City Garden in relation to financing transactions. I have already referred to King & Wood Mallesons acting in certain respects on the initial funding of the North Rocks Project. Somewhat later, in October 2018, Mr Liang loaned a further $2 million to City Garden through his company, Tempe Development Pty Ltd (Tempe): J[147]. A letter from Toltz to Mr Liang regarding that loan, copied to Mr Dai, indicated that if Toltz were acting for Tempe then City Garden as borrower, and the guarantors, "will receive separate independent legal advice from another legal firm". That suggests that City Garden, through both Mr Liang and Mr Dai, were made aware that Toltz would not act for City Garden as borrower when he was acting for the lender on a transaction. Mr Toltz then provided Mr Liang with a loan agreement. Mr Liang could not remember if he had signed that agreement but the money was advanced. Subsequent to the first loan, but also relevant when considering the nature of the ongoing general retainer of Toltz by City Garden, in March 2019, on Mr Toltz's suggestion, City Garden retained Piper Alderman to act when it wanted to extract itself from a signed term sheet for further financing from Weriton: J[309]. Then on the second loan, in May 2019, City Garden instructed Piper Alderman and not Toltz. 5. In these circumstances, the ongoing general retainer that Toltz had should be distinguished from a general retainer of the character discussed in both Minkin and Richtoll (see above at [32] to [34]), where the question was whether tasks usually associated with an extant retainer had been carved-out. 6. Seventh, the loan to City Garden in August 2017 from Gemi Investments and Fleming Family Super Fund, and what preceded that loan, requires separate consideration. This is because the primary judge found, as regards this loan, that Toltz was continuing to work with Mr Dai whilst also acting for Gemi: J[121]. It is clear that Toltz acted on behalf of City Garden in taking steps to ascertain whether Mr Fleming would agree to make a loan to City Garden to refinance the loans that City Garden had obtained to fund the acquisition of the North Rocks Property. Consistent with this, in July 2017, Mr Toltz agreed to approach Mr Fleming on behalf of City Garden and Mr Toltz made a submission to Mr Fleming in respect of this loan. Mr Toltz also sought information from Mr Dai for this purpose by email on 16 July 2017, and in an email of 16 July 2017, Mr Toltz asked Mr Dai: "How much should we ask for from George?" 7. Then, on 17 July 2017, Mr Toltz sent an email to Mr Dai telling him that Mr Toltz had met with Mr Fleming, who wanted to meet with Mr Dai. He suggested that Mr Dai contact Mr Fleming to arrange the meeting and gave Mr Dai advice as to what to bring to the meeting, which was to take place at Toltz's offices. A Toltz file note dated 21 July 2017 records a meeting on that day between Mr Dai, Ms Zhu, Mr Liang, someone called Steven and Mr Fleming, and that Mr Fleming would meet "Adam & ors" at Toltz's offices the following Tuesday, 25 July 2017. The primary judge found that the subject of a loan from Mr Fleming to City Garden was likely discussed at this meeting: J[117]. I agree. The 21 July 2017 Toltz file note also records what appears to be telephone discussions with Mr Dai about presales at the North Rocks Property, and then Mr Toltz's "thoughts" about how a loan from "George" could be structured, with a note, "Em to geo re these thoughts". 8. There is no Toltz file note for a meeting on 25 July 2017. I would infer that if the scheduled meeting did take place between Mr Fleming and Mr Dai and others, no one from Toltz attended. 9. The next Toltz file note is dated 28 July 2017. That file note suggests that on that day Mr Toltz may have sent an email to Mr Dai advising him that he should arrange for the caveat lodged by Mr Liang over the North Rocks Property to be lifted "for your own protection". No such email is in evidence, so it is possible that this email was not sent. The entry is headed "Em to Adam, req confirmation (with responses in red)". Under this heading there is reference to three matters. First: "For a withdrawal of the caveat lodged by Victor on North Rocks to be handed to us with the bank cheque to repay Werry entity loan. We also need a written undertaking not to be relodged until after the new 1st and 2nd mortgages have been repaid. You need this for your own protection. Victor is away could you please prepare the withdrawal form and I will ask him to sign once he back on 1st August 2017. He will not lodge the the [sic] caveat" (emphasis in original). 1. This shows that, as at 28 July 2017, Toltz was acting for City Garden regarding repayment of the loan from the "Werry entity", being Weriton, and also giving advice to City Garden as to what preparatory steps were needed to enable the proposed loan from the Gemi group to take effect and as to City Garden's interest in Mr Liang not relodging a caveat on the title to the North Rocks Property. 2. The second matter dealt with under the heading "Em to Adam …" in the 28 July 2017 file note related to the discharge of a mortgage over a property in Villawood owned by Mr Dai. This may have been a precondition to a separate loan to City Gardens from Mr Fleming, as a loan "on Villawood" was one of Mr Toltz's "thoughts" as recorded in the 21 July 2017 file note. There is no evidence before the Court to enable a finding as to this to be made. The third matter under the heading "Em to Adam …" in the 28 July 2017 file note related to a caveat by NWC. The evidence did not disclose the identity of these interests. 3. The 28 July 2017 file note also has the following entry: "2 Draft docs (a) em to Garth (b) resp … Will make arrangements for Miles …will open a file in word (Gemi > Loan to City Garden)" 1. Consistent with this, the primary judge found that on 28 July 2017 Toltz opened a file for the Gemi group in respect of the proposed loan from the Gemi group to City Garden. 2. The primary judge found that these file notes were consistent with Toltz acting for both City Garden and the Gemi group and that, for practical purposes, Toltz was continuing to work with Mr Dai on the loan to City Garden from the Gemi group whilst also acting for the Gemi group: J[96], [121]. So much may be accepted. Noting that no complaint was made about this loan in these proceedings, Mr Toltz gave unchallenged evidence that at some time around July 2017 and, I infer from the file notes discussed above, most likely shortly before 16 July 2017, the following exchange took place: "[Mr Dai]: I need to borrow more funds. Do you know anyone who might be interested in lending to me? What about George [Fleming]? [Mr Toltz]: I can see if he is interested and prepare a finance submission for him. Do you want me to do that? [Mr Dai]: Yes please, see if he is interested. [Mr Toltz]: Ok I can do that. I will be acting for George [Fleming] and his companies for any loan you obtain from him. He has been a client of mine for years so I will act for him and not you. Is that ok? [Mr Dai]: Yes that's fine." 1. City Garden did not contend that Mr Dai's knowledge of this conversation was not the knowledge of City Garden. 2. A further file note dated 31 July 2017 on Toltz's file for City Garden set out the terms of a proposed email to Mr Dai (again no such email is in the evidence and it is not possible to know if one was sent) identifying various matters that had to be attended to for settlement of the loan from the Gemi group to City Garden to take place. That proposed email is, in its terms, (perhaps just) consistent with it being an email from Toltz as solicitor for the Gemi group alone informing Mr Dai of what needed to be done to enable settlement. It included: "5. The Mortgages for the $8.25m (net) advances will be prepared/completed today. Arrangements are being made for independent advice for you from Miles Holt … please make time available to call in with Julianne … Garth will call when documents completed." 1. Consistent with Toltz acting for the Gemi group and not City Garden on this loan, on Mr Fleming's instructions, on 1 August 2017 Toltz prepared transaction documents for loans from Gemi group companies to City Garden in the sum of approximately $9.21 million. There is no evidence that City Garden gave Toltz any instructions, or sought advice, on the terms of the transaction documents. Approximately $9.21 million was advanced by the Gemi group to City Garden on 1 August 2017: J[120]. Mr Dai declared "as borrower" that, as the sole director and secretary of City Garden (which was of course false as by then as Mr Liang was also a director of City Garden), he had received independent legal advice regarding the loan and security documents and this declaration was certified by Mr Miles Holt, a solicitor. The mortgage granted by City Garden to Fleming Family Super Fund Pty Ltd securing this loan has the address for City Garden (the mortgagor) as c/- HWL Ebsworth Lawyers. Mr Toltz's unchallenged evidence was that HWL Ebsworth acted for City Garden in connection with this loan. Mr Dai signed the mortgages (in favour of the Gemi group lenders) for City Garden and Mr Garth Andrews of Toltz signed the mortgages as solicitor for the mortgagees. Further illustrating the various roles Toltz had at this time, it appears that Toltz acted for both City Garden and Gemi for the discharge of City Garden's mortgage to Kenxue. 2. As Toltz submits, if Toltz were acting for City Garden, there would be no need for any independent advice to be given to City Garden as borrower (as opposed, for example, to the position if it were a guarantor). It is not a step that Toltz "might have been expected" to take had it been retained to act for City Garden as regards its entry into this loan: see eg the principles discussed at [31] above. The circumstance, known to both parties, that Toltz took steps to ensure that City Garden had independent advice on the loan documentation, and that City Garden had such advice, supports the conclusion that Toltz was not acting for City Garden as regards its entry into the loan. This is particularly so when understood in the context of the conversation at [61] above. 3. The loan agreements for this loan provided for City Garden to pay the lender's legal fees. That might explain why, on 17 August 2017, Toltz sent invoices to City Garden for Toltz's legal costs "of acting for the First Mortgagees" and the "Second Mortgagees" in relation to the loans advanced from the Gemi group companies to City Garden. 4. On 30 August 2017, Toltz sent an invoice to City Garden with the heading "Refinance of loans, Property: 221 North Rocks Road, North Rocks, Tax Invoice for Professional Services" which included the following: "To our professional costs of acting for you in this matter from the date of initial instructions re refinance of the Weriton loan advance including all discussions leading to settlement: (excluding costs on the loans) far exceeding but say… $7,500…" (emphasis added). 1. Save for a 20 June 2017 invoice relating to the sale of units, this was the first invoice sent by Toltz to City Garden since the February 2017 invoice (at [50] above). As is apparent, the invoice included an express carve out of the "costs on the loans". Mr Toltz was not cross-examined on this invoice. It was thus not put to him that this invoice as a whole was inconsistent with his affidavit evidence that he acted for the Gemi group and not for City Garden on this loan. In the circumstances, the evidence discussed above, including this invoice, supports the conclusion that Mr Toltz drew a distinction as regards steps taken in the lead up to a loan, such as preparing a finance submission and advising City Garden as to what steps needed to be taken by way of preparation, in the case of the July/August 2017 loan, and actually acting for City Garden "for a loan", which I infer means as regards the negotiation of terms of, advice as to, and entry into, a loan agreement. Consistent with that distinction, and with the conversation set out above, I am satisfied that Toltz did not act for City Garden on the loan from the Gemi group on 1 August 2017. In these circumstances, the conversation set out at [63] above had continuing significance in conveying to Mr Dai that Toltz would not act for City Garden "on loans" from a Gemi group company to City Garden. 2. Eighth, it is also necessary to consider the ongoing significance of the conversation between Mr Dai and Mr Toltz in July 2017 at [61] above. The primary judge interpreted this as Mr Toltz seeking informed consent in respect of the transaction in July 2017 only, and not "for all time": J[271]. In my view, the conversation had a different primary purpose, namely that of communicating to Mr Dai that Mr Toltz would not act for City Garden, or for Mr Dai, "for any loan you obtain from him" in July/August 2017. However, it had ongoing significance in communicating to Mr Dai, and through him to City Garden, that notwithstanding the general and long-term retainer City Garden had with Toltz, Toltz would not act for City Garden on any loan from an entity associated with Mr Fleming. 3. It should be observed that there is no suggestion that there was anything about the loan from the Gemi group in July/August 2017 that would have suggested that it, in particular, required that Toltz not act on both sides of the transaction. Indeed, the terms of the conversation suggest that, objectively, there were three reasons why Toltz was taking the position explained to Mr Dai by Mr Toltz. First, because the Gemi group was a longstanding client of Toltz and Toltz would thus act for the Gemi group on any transaction in which it was involved. Second, because Toltz did not intend to act against the interests of the Gemi group. Third, because Toltz did not intend to act for both sides in a transaction. Each of those reasons, which objectively would be understood by Mr Dai from the terms of the conversation, were applicable in respect of any transaction in which City Garden proposed to borrow money from the Gemi group. Thus, whilst in July 2017 that conversation was certainly directed to the anticipated loan from interests associated with Mr Fleming, it had broader significance. 4. Ninth, having regard to all of the matters set out above, it was apparent to both parties well before the first loan that, notwithstanding the ongoing general retainer City Garden had with Toltz, Toltz would only act for City Garden on financing transactions in respect of the North Rocks Project when instructed to do so, and even then would not act on loans from the Gemi group. This is of some significance given the authority set out above as to the need for precision when identifying a general or overarching retainer. Here, the general or overarching retainer encompassed Toltz only sometimes acting for City Garden on financing transactions, and only sometimes assisting in arranging such transactions. There is no basis, in such circumstances, to approach the question of whether Toltz was relevantly acting for City Garden on the first loan by starting from the premise that such work as Toltz did relating to this loan fell within the ambit of Toltz's ongoing general retainer and then to ask whether Toltz had sufficiently clearly communicated that this work was to be carved out from that retainer. Rather, consistent with the authority discussed above in relation to proof of a retainer, as regards the first loan, it was necessary to consider all probative evidence to determine whether there was any retainer by City Garden of Toltz as regards that transaction and, if so, what was the ambit of that retainer. Having regard to this, I consider that the primary judge erred in her approach to whether Toltz was relevantly retained by City Garden on the first loan. The immediate circumstances of the first loan 1. Unlike the primary judge, I consider that the available evidence does not establish that Toltz assisted City Garden in arranging the first loan. Rather, unlike the loan on 1 August 2017 (which Toltz did assist in arranging), the evidence discloses that Toltz only became aware of the first loan very shortly before it was entered into. The primary judge's erroneous conclusion in this regard is in part premised upon her finding that Toltz was having conversations with Mr Fleming and Mr Dai about funding, including in relation to the first loan, in October 2018. That finding is, in turn, premised upon the fact that the date of 15 October 2018 appears on some of the documentation for the first loan: J[145] and [258]. Mr Toltz was not, however, challenged on his affidavit evidence that the date of 15 October 2018, where it appears on documents relating to the first loan, was added in error to those documents and that the date should instead have been 13 November 2018. Elsewhere in her judgment the primary judge accepted this evidence, finding that the loan agreement for the first loan was "incorrectly dated 15 October 2018": J[174]. 2. The primary judge also found that in October 2018, Toltz was "assisting Mr Dai to raise further finance" for City Garden from Mr Liang and that such activities fell within the scope of Toltz's initial retainer: J[258]. To the extent that this was a reference to the loan from Tempe to City Garden, there is no evidence that Toltz took any steps to assist in arranging this beyond responding to instructions that he should act for Tempe on that transaction. Toltz's role in relation to the consolidation of loans to City Garden from Mr Liang's interests in October 2018 (discussed above at [51]) does not say anything about whether he was at that time assisting City Garden to obtain finance. 3. The first communication in the evidence relating to the first loan is an email dated 10 November 2018, from Mr Fleming to Mr Dai indicating what facility the Gemi group could offer. It would appear from the terms of this email that there had already been some discussion between Mr Dai and Mr Fleming as to the terms of any finance facility to be offered by the Gemi group. There is nothing in the evidence to suggest that Toltz had been involved in any such discussion and Toltz was not copied on this email when sent. Mr Toltz's email of 11 November 2018, discussed below at [80], is consistent with Mr Toltz first being informed of the loan at this time. The email concluded: "Please advise if you are happy with these conditions and we will get Documentation prepared." 4. As Toltz submits, this indicates that, as between Mr Fleming and Mr Dai, there was an understanding that it would be Mr Fleming's interests, not City Garden, that would arrange for documentation to be prepared. 5. That email was then in effect forwarded to Mr Toltz by Mr Dai on 11 November 2018 when Mr Dai sent an email to Mr Fleming, copied to Mr Toltz, (with the 10 November 2018 email included as an email chain) with the subject "Re: Loan re Home warranty Insurance" saying: "Hi George, Please go ahead with the funding and I prefer 1.1 million to ming tian [the Builder] Account because the funding need to have ming tian [the Builder] provided BG [Bank Guarantee]. @gerrard please go ahead with the paperwork. Adam" 1. As the primary judge found, the bank guarantee and home warranty insurance referred to in this email were likely unrelated to the North Rocks Project: J[170]. The primary judge held that this email can fairly be read as Mr Dai instructing Mr Toltz as City Garden's solicitor: J[259]. Whilst the matter is finely balanced, I disagree. I would accept Toltz's contention that, having regard to the 10 November 2018 email, set out at [76] above, and the fact that the 11 November 2018 email is sent to Mr Fleming but copied to Mr Toltz, the 11 November 2018 email is more consistent with Mr Dai proceeding on the basis that Gemi Investments, through Toltz, would arrange for the documentation to be prepared. 2. In reply to Mr Dai's email on 11 November 2018, on the same day Mr Toltz sent the following email to Mr Dai, copied also to Mr Fleming and others: "Adam I take this as a loan to Ming Tian [the Builder] with guarantee from City Gardens … secured by an unregistered mortgage over North Rocks and the other security specified by George [Fleming]. We will arrange the documents asap tomorrow and ask Miles Holt to provide the independent advice. Let me know what time suits you and Julianne [Ms Zhu] late pm tomorrow or Tuesday morning. Regards Gerrard" 1. Standing against Toltz's contentions, as City Garden submits, this email has something of the character of Mr Toltz requesting instructions from Mr Dai, but the force of this is tempered by the reference within the email to Toltz asking Mr Holt (who had previously advised City Garden on the 1 August 2017 loan from the Gemi group companies) to provide "the independent advice". Moreover, given that Mr Toltz and Mr Dai clearly knew each other well by then, it is readily understandable that Mr Toltz might, when acting for a Gemi group company as lender, email Mr Dai to confirm who the lender and guarantors were intended to be on the loan. That information was necessary for him to prepare the documents. Thus, in context, I do not read this email as indicating that Toltz would be preparing documentation for the loan on Mr Dai's instructions, or that Toltz was acting for City Garden on this loan. 2. There followed correspondence between Mr Andrews and Mr Toltz and Mr Michael Cooper of Gemi Investments in relation to the loan, including emails from Mr Cooper giving instructions as to terms, and asking about the legal costs. A reference in this email to brokerage suggests that the loan had been brokered by Mr Margi. This again stands against any suggestion that Toltz arranged the loan. At some point Toltz was instructed that the borrower would be City Garden and not the Builder, but it is not known whether this information came from Mr Dai, Mr Fleming or Mr Cooper. 3. On 12 November 2018, Toltz sent the loan documentation to Mr Cooper "for your approval". Five minutes later, Toltz sent the loan documentation to Mr Dai with the message: "Please arrange for these to be signed in front of a solicitor, and deliver hard copies of documents to our office. Interest on the loan will accrue from the earlier of funds being drawn down and Wednesday 14 November." 1. In context, that is consistent with Toltz giving information, not advice, to City Garden as to when interest will accrue on the loan, a key matter for implementation of the loan. It does not involve seeking instructions on the terms of the first loan and, as will be apparent, beyond the email at [80] above, there is no evidence that Toltz sought anything from Mr Dai or City Garden by way of instructions as to, or communicated with City Garden about, the terms or documentation of the first loan. Had Toltz been acting for City Garden on the loan, it would be expected that the 12 November 2018 email would have included some request for instructions on the loan if instructions had not otherwise been obtained before the documents were sent. 2. The documents prepared by Toltz, attached to the 12 November 2018 email to Mr Dai, included a document headed "Schedule 1A: Declaration by Borrower". This document contained typed text providing that Mr Dai and Mr Liang, the directors of City Garden "the Borrower company named in certain loan and security documents in favour of [Gemi Investments] relating to a loan advance for our business", had received "independent legal advice regarding the loan and security documents referred to in paragraph 1". This document has handwritten annotations replacing Mr Liang's name with that of Ms Zhu and amending paragraph 1 to read "[w]e are the Directors and secretary of [City Garden] …". It is then signed by both Mr Dai and Ms Zhu and certified by Xiuping (Alice) Yang, solicitor, who certified that she had known each of Mr Dai and Ms Zhu for at least 12 months. Curiously, the typed text in this section of the document has Ms Zhu, and not Mr Liang, as the person whose signature is to be certified. Ms Yang also certified declarations by Mr Dai and Ms Zhu as guarantors, and on behalf of guarantor companies. 3. Whilst it may be, as City Garden submits, that this document was somewhat "pro forma", the assumption underlying the document is that an independent solicitor will provide meaningful independent legal advice. It should not be assumed that this would be simply a 'tick the box' exercise. As to what is involved in the provision of "independent legal advice" to a borrower in respect of a loan, Allsop P (with whom Sackville AJA agreed) in Provident Capital Ltd v Papa (2013) 84 NSWLR 231; [2013] NSWCA 36 at [2] observed that this will depend on the retainer and the circumstances attending the retainer and its execution. His Honour cautioned against being "in any way dogmatic" about what needs to be done in fulfilment of the retainer. His Honour held that: "The giving of independent legal advice for a mortgage transaction (whether certified or not) is not some formality. It generally involves proper and adequate legal advice being given in and about executing a document or entering into a contract or a transaction." 1. His Honour added (at [6]) that the reason why lenders require the interposition of a trained solicitor to give independent advice and, sometimes, to certify this is because clients may look to the advising lawyer to advise not just as to the law, but also as to "its practical intersection with life". There is nothing to suggest that Mr Toltz knew that Ms Yang would be the person who would provide the advice, or that Ms Yang was not paid for her advice. The assumption that would be made, objectively, is that independent advice consistent with the requirements set out above would be provided. Thus, on balance, the document which Toltz drafted to ensure that independent advice was given to City Garden as borrower, together with the reference to independent advice in the email of 11 November 2018 and the somewhat looser instruction that the documents be executed in front of a solicitor in the 12 November 2018 email, tend strongly towards a conclusion that Toltz was not acting for City Garden as regards its entry into the first loan. 2. Noting the principles discussed at [31] above, it is also of some significance that there was no comment or complaint from Mr Dai in response to the suggestion that City Garden should get independent advice on the first loan. Instead, it is apparent that Mr Dai and Ms Zhu, through Ms Yang, a solicitor who had previously acted for an interest of Mr Dai, obtained independent advice and completed the declaration to this effect drafted by Toltz. Notwithstanding that Mr Dai's lack of complaint may have stemmed from his determination that the first loan take place, that conduct by Mr Dai and Ms Zhu supports the conclusion that Toltz was not retained by City Garden on the first loan. 3. The transaction documents were all executed on 13 November 2018, albeit that, as discussed above, some of the documents were later erroneously dated 15 October 2018. Some (perhaps limited) weight can be given to the fact that the General Security Deed, one of the suite of documents executed by both City Garden and Gemi Investments, gives the address of Gemi Investments as "c/- Toltz Lawyers" but does not do the same for City Garden. On 14 November 2018, Ms Danielle Patterson of Gemi Investments sent an email to Mr Dai, copied to Mr Toltz and Mr Andrews, stating that she had transferred the $1.1 million to "City Garden Australia" and also paid the Toltz bill in full. Whilst the loan funds were in fact paid into an account of the Builder and not City Garden, both the payment submission and Toltz's letter to Gemi Investments (erroneously dated 15 October 2018 and addressed to "Gemi Investors"), confirming that Toltz had received executed documents, stated that City Garden had requested that the loan proceeds be deposited to an account in the name of City Garden Australia Pty Ltd. 4. Toltz billed Gemi Investments but not City Garden in respect of legal services provided for the first loan and City Garden was aware from Ms Patterson's email of 14 November 2018 that Toltz had billed Gemi Investments in respect of the first loan. The fact that Toltz did not bill City Garden in respect of the first loan is post-contractual conduct that is consistent with Toltz not being retained by City Garden to act on its behalf on the first loan. Having regard to the authorities referred to at [35] above, this can be taken into account in determining the existence or subject matter of any retainer between City Garden and Toltz. Conclusion 1. In the circumstances, Toltz's contention that it did not act for City Garden in arranging the first loan, advising on the first loan, or otherwise acting for City Garden as regards its entry into the first loan, should be accepted. The primary judge erred in making findings to the contrary. Whilst, as City Garden submits, the email of 11 November 2018 could be read as Toltz being given or seeking instructions from Mr Dai, the objective facts known to both parties, having regard both to the background circumstances and the immediate circumstances of the first loan, are more consistent with Toltz not acting for City Garden on the first loan. 2. The primary judge also, erroneously, approached the question of Toltz's retainer regarding the first loan on the basis that it was for Toltz to clearly limit its ongoing general retainer to exclude the first loan (see eg at J[257]), whereas I have found that the ongoing general retainer was one only to act regarding financing transactions where instructed by City Garden to do so and that there was thus no onus on Toltz to "limit" its retainer. In any event, notwithstanding that Toltz could have, but did not, send an email to Mr Dai clearly stating that he was not acting for City Garden on this loan, I would have concluded that Toltz provided sufficient indication to City Garden that any general retainer did not include acting for City Garden on the first loan. The conversation in July 2017, together with the steps taken by Toltz to ensure that Mr Dai and Mr Liang (or Ms Zhu) obtained independent advice on the loan documentation, which would have been unnecessary if Toltz were acting for City Garden on the loan, suffice for this purpose, having regard to the nature of the ongoing general retainer. And, as already discussed, there is no evidence of Toltz assisting in arranging the first loan. 3. Appeal ground 1 should be upheld. Was a fiduciary duty relevantly owed and was there any relevant conflict of interest? 1. In appeal ground 3, Toltz relies upon the error alleged in ground 1 (and that in ground 2, which I consider below) in support of a contention that the primary judge erred in finding that Toltz owed a fiduciary duty to City Garden to advise in relation to the first loan and that it was in a position of conflict of interest by reason of also acting for Gemi Investments on the first loan. 2. Unless Toltz was relevantly assisting or acting for City Garden in respect of the first loan, there is no basis to find that Toltz owed a fiduciary duty to City Garden to act in its best interests as regards its entry into the first loan. Toltz had no duty to City Garden to ensure that it was in City Garden's interest to enter the first loan. It necessarily follows that there is also no basis to find that Toltz had a material conflict of duties in acting for Gemi Investments on this transaction. No relevant conflict arose merely from the background circumstance of Toltz's ongoing, general retainer, or its involvement in the loans from Tempe or NCC. It is not contended that Toltz thereby had some confidential information about City Garden that gave rise to a conflict between the interests of City Garden and Gemi Investments. 3. In these circumstances, I would accept Toltz's contention that the primary judge erred in finding at J[267] that there was a real sensible possibility of conflict between any duty owed by Toltz to City Garden and Toltz's duty to Gemi Investments in respect of the first loan. 4. It follows that appeal ground 3 should be upheld. 5. Given that extensive submissions were advanced, and bearing in mind the desirability generally of determining all substantive issues raised on an appeal, that course should (to the extent practicable) be taken notwithstanding that the findings on appeal grounds 1 and 3 are dispositive: Boensch v Pascoe (2019) 268 CLR 593; [2019] HCA 49 at [7]-[8] (Keifel CJ, Gageler and Keane JJ), [101] (Bell, Nettle, Gordon and Edelman JJ). The role of Ms Yang 1. In appeal ground 2, the appellant challenges the primary judge's findings at J[496] that it was not clear whether Ms Yang advised City Garden or Mr Dai and Ms Zhu, and at J[499] that Ms Yang probably knew very little about the company or the transaction. The actual advice provided by Ms Yang does not bear on the issue of Toltz's retainer. 2. I would accept Toltz's contention that the more natural construction of the "Declaration by Borrower" is that Ms Yang was advising City Garden through Mr Dai and Ms Zhu. That follows from the heading to the document, identifying it as a declaration by the "borrower". It also follows from the reference to the loan advance being "for our business" in paragraph 1 of the declaration. Further, there is nothing in the declaration which refers to the obligations of Mr Dai as director, or Ms Zhu as secretary, of City Garden. Whilst that is not determinative, it might be expected that, if such advice had been given, it would have been referred to in paragraph 2 of the declaration which instead simply identifies the receipt of independent legal advice regarding the identified loan and security documents relating to the loan from Gemi Investments to City Garden. 3. As to what Ms Yang should be taken to have known, the Court would infer from the declaration itself that Ms Yang had read, and understood, the loan and security documents. Ms Yang also advised Mr Dai and Ms Zhu as guarantors of the loan from Gemi Investments and witnessed their execution of those guarantees and the loan agreement. All of this appears to have taken place on 13 November 2018, but there is no evidence as to when Mr Dai and Ms Zhu made contact with Ms Yang, how long they spent with her or whether they sent her the relevant documents in the afternoon of 12 November 2018. It is also apparent that Ms Yang had some prior involvement with Mr Dai's interests. In these circumstances, I would accept Toltz's contention that there is no basis to infer that Ms Yang knew very little about City Garden or the transaction, although the evidence does not disclose what, if anything, Ms Yang knew about Mr Liang's involvement in City Garden. 4. It follows that appeal ground 2 should be upheld. Was Toltz denied procedural fairness by reason of the primary judge's findings as to breach of fiduciary duty? 1. Toltz contends that the primary judge determined the issue of breach of fiduciary duty on a basis that was neither pleaded nor run at trial. More particularly, Toltz submits that the primary judge found that the relevant breach of fiduciary duty was a failure by Toltz to ensure that Mr Dai was properly authorised to give instructions on behalf of City Garden to enter the first loan when this was not pleaded, and any contention to this effect was expressly disavowed by counsel for City Garden at trial. Toltz contends that it may have succeeded at trial if City Garden had been kept to its pleaded case, or if it had been given a reasonable opportunity to meet the allegations ultimately upheld by the primary judge. Thus, Toltz contends that it was deprived of the possibility of a successful outcome and is therefore entitled to a new trial: Stead v State Government Insurance Commission (1986) 161 CLR 141 at 147 (Mason, Wilson, Brennan, Deane and Dawson JJ); [1986] HCA 54. 2. For the reasons set out below, these contentions should be rejected. The primary judge's finding that Toltz was in breach of fiduciary duty fell within the ambit of City Garden's pleaded case and City Garden did not, at trial, indicate anything other than that it would be bound by its pleaded case. There was no practical injustice arising out of the primary judge's findings of breach of fiduciary duty. As is well established, the concern of the law as regards procedural fairness is to avoid practical injustice: Re Minister for Immigration and Multicultural Affairs; Ex parte Lam (2003) 214 CLR 1; [2003] HCA 6 at [37] (Gleeson CJ). 3. In the 2FASOC (unless otherwise stated, all paragraph numbers below refer to paragraphs in that pleading), it was alleged that Toltz was retained by City Garden in relation to the purchase and development of the North Rocks Property: [26]; Mr Liang did not authorise the first loan: [50]; Toltz acted as solicitor for Gemi Investments on the first loan: [54] and also had an ongoing retainer to act as solicitor for City Garden at that time: [55]; there was an actual or potential conflict between the interests of City Garden and Gemi Investments: [56]; and Toltz did not obtain the fully informed consent of City Garden to acting for Gemi Investments on the first loan: [57]. It was further pleaded that Toltz knew at that time that Mr Liang was a director of City Garden: [58]; that entry into the first loan was not authorised by the City Garden board: [58A]; that the Builder had other projects: [60], that Mr Liang had no involvement in the first loan: [61]; and that the monies were to be advanced under the first loan to the Builder: [62]. 4. It was then alleged that Toltz breached the fiduciary duties it owed to City Garden as "there was an actual or potential conflict between the interests of [City Garden] and the interests of [Gemi Investments]": [63]. There can be no doubt that this is an allegation of breach arising from Toltz acting in a situation in which it owed conflicting duties to its two clients on the first loan. The pleaded factual matters in the lead up to this allegation of breach plainly informed the allegation of breach. They were matters of context that informed the question of whether Toltz was in a situation of potential or actual conflict. By way of illustration, if entry into the first loan had not been authorised by City Garden and Toltz knew this (as pleaded at [58A]), that went to whether Toltz could rely upon City Garden, through Mr Dai, having properly determined that it was in its interest to enter the loan. That would be relevant to whether the matters relied upon did or did not give rise to an actual or potential conflict of interest. Similarly, if Toltz knew that the Builder was, at the relevant time, carrying on building projects other than the North Rocks Project (as pleaded at [60]), and that the loan money was to be paid to the Builder (as pleaded at [62]), that was relevant by way of context as to whether the first loan was in City Garden's interest. 5. In this regard, I would reject Toltz's contention that the allegations pleaded in the 2FASOC at [58]-[62] went only to the separate question, relevant in the cross-appeal, as to whether Toltz's knowledge could be attributed to Gemi Investments (as pleaded at [65]). To read the 2FASOC in that way is both artificial and counter-intuitive. It is inconsistent with the structure of the pleading, namely that the allegations at [58]-[62] come between the two key allegations of conflict of interest at [57] and [63]. It is also inconsistent with City Garden's pleading at [151], under the heading "[Toltz's] Breaches of Duty", that City Garden "repeats and relies upon [49]-[64] above". 6. At [64], City Garden pleaded: "[f]urther to [63] above, [Toltz] breached the fiduciary duties it owed to [City Garden] as: (a) [City Garden] had an available construction facility with Westpac to be drawn down upon for the construction of the [North Rocks Property]; (b) the interest rate on monies advanced by Westpac was substantially lower than the interest rate on monies advanced pursuant to the [first loan]; (c) the [Westpac loan] required certification of works being performed and completed prior to monies being released, whereas the loan from [Gemi Investments] did not; (d) as a result, there was a real risk that monies advanced would not be applied for the benefit of [City Garden] in respect of the [North Rocks Property], or at all; (e) the monies advanced were not applied for the benefit of [City Garden]; either in respect of the construction of the [North Rocks Project], or at all; (f) [City Garden] had no financial need to enter into the [first loan] as it had the [Westpac loan] available for drawdown; and (g) it was in [Gemi Investment's] interest to enter into the [first loan] to obtain interest, fees and charges it would earn as a result of that transaction." 1. As signalled by use of the word "further", albeit that there was some overlap as regards the matters previously alleged, each of these matters went to the question of whether there was a potential or actual conflict of interest in Toltz acting for both City Garden and Gemi Investments on the first loan. 2. Toltz sought particulars of what was relied upon in [63] to allege that there was an actual or potential conflict of interest. City Garden's response was to refer Toltz to the matters set out at [64]. That is not, however, to say that the matters pleaded at [49]-[63] did not also have relevance by way of context. 3. It is thus apparent that the pleaded case against Toltz was that, in circumstances in which it had knowledge of matters as pleaded at [49]-[62], it was in a position of actual or potential conflict of interest as particularised at [64] and it did not obtain the fully informed consent of City Garden to act on behalf of Gemi Investments on the first loan (at [57]). Whilst, as Toltz contends, it was not alleged by City Garden that Toltz had any duty to ascertain whether Mr Liang had or would authorise City Garden to enter the first loan, its knowledge that he had not done so at the relevant time was relied upon by City Garden by way of context for the breach of fiduciary duty. 4. Consistent with this analysis of City Garden's pleading, Toltz in its defence at [48(e)], repeated at [48A], specifically highlighted that City Garden had not made any allegation of wrongdoing against it "in relation to any alleged lack of authority" of City Garden to enter the first loan. City Garden did not respond to this in its reply to Toltz's defence. As is apparent, and was repeatedly emphasised by counsel for Toltz at trial, City Garden made no allegation that Toltz's breach of fiduciary duty lay in not investigating whether City Garden was authorised to enter the first loan or in not taking steps to ensure that City Garden was so authorised. Toltz also, at [57] of its defence, denied that it failed to obtain the informed consent of City Garden to act for Gemi Investments on the first loan, denied that there was any actual or potential conflict of interest in it so acting, and said that if informed consent was required then it was given by City Garden as Mr Dai had: "actual express or implied authority or ostensible authority to so consent on behalf of [City Garden]." 5. In that way, Toltz itself put the question of Mr Dai's authorisation to act on behalf of City Garden in issue, albeit that this was on the issue of informed consent. 6. City Garden's opening submissions, filed on 27 July 2023, are consistent with its pleading so construed. City Garden alleged that there was a conflict between the interests of City Garden and Gemi Investments and that Toltz had not obtained City Garden's informed consent to act for both parties. The matters in the 2FASOC at [54]-[55], [57]-[58] and [61], set out above at [105], were all relied upon in support of the allegation that Toltz breached its fiduciary duty to City Garden by reason of the conflict of interests as between City Garden and Gemi Investments and the lack of informed consent. City Garden submitted that Toltz knew or was put on inquiry that Mr Dai caused City Garden to enter the first loan not for its own benefit. As set out above, that went to the question of actual or potential conflict of interest. Having regard to these submissions, Toltz was well aware of how the case was being put. 7. Toltz's opening submissions, consistent with its pleaded position, emphasised that there was no allegation of breach of duty made against Toltz in relation to the internal governance of City Garden and matters of authority. This point was made again by counsel for Toltz at trial during the hearing. In response, counsel for City Garden confirmed that City Garden was only intending to press those matters in its pleading and withdrew any part of his opening that went beyond the pleaded case. 8. Turning to the primary judge's reasoning on breach of fiduciary duty, the primary judge found that Toltz's retainer by City Garden on the first loan "gave rise to a real sensible possibility of conflict in respect of the first [loan]": J[267]. I have found that the primary judge erred in this regard. The primary judge also found that City Garden did not give fully informed consent to Toltz so acting: J[276]. Toltz challenges this finding, and I consider that at [122]-[127] below. For present purposes, it suffices to observe that, consistent with the relevant principles already discussed, the primary judge's findings on conflict of interest and the lack of informed consent suffice for Toltz to be in breach of the fiduciary duty which it owed to City Garden as regards the first loan. No further finding was required. Nonetheless, the primary judge went on to consider the question of breach of fiduciary duty by reference to particular matters raised in the parties' submissions, in the context of considering City Garden's submission that, on the facts, there was a conflict between the interests of City Garden and those of Gemi Investments: J[277] 9. In this context, the primary judge identified that City Garden's complaint was that Toltz had placed itself in a position of conflicting duties as a result of which Toltz did not properly perform the duties which it owed to City Garden: J[281]. The primary judge then went on to consider whether this complaint was made out. In context, the primary judge should be understood to have been doing so for the purpose of determining whether there was an actual or potential conflict, as opposed to a merely theoretical conflict, given that, as the primary judge found, there was no allegation that Toltz was retained to, but failed to, advise City Garden in relation to the first loan: J[280]. As held in Beach Petroleum at [425]-[427] and Rigg v Sheridan at [38]-[42], there is no breach in a fiduciary acting for two clients where there is nothing more than "some conceivable possibility" of conflict. 10. The primary judge found that, in the context of the first loan and the matters known to Toltz, Toltz was obliged to ensure that City Garden's board had resolved to obtain the loan: J[288]. That finding provided the necessary context within which the primary judge found that Toltz was in breach of fiduciary duty in acting in a situation in which it had conflicting duties to City Garden and Gemi Investments: J[288]. This finding provided the foundation for a finding that there was a real, sensible possibility of conflict as between the duties Toltz owed to City Garden and those it owed to Gemi Investments. 11. That this was the relevance of the primary judge's finding that Toltz had a duty to ensure that City Garden's board had resolved to obtain the loan is clear from her Honour's judgment at J[279], where her Honour directed herself by reference to Maguire at 463-4 and Beach Petroleum at [188]-[189]. There is nothing in Maguire at 463-4 to suggest that a solicitor's fiduciary obligation includes a prescriptive duty to undertake particular enquiries of a client. The passage from Beach Petroleum (which her Honour extracted at J[279]) makes it clear that the fiduciary duty of a solicitor is not derived from status but is instead "derived from what the solicitor undertakes". Consistent with that, the primary judge looked to what Toltz was obliged to do under its retainer (as her Honour found it to be), in order to ascertain whether the conflict between Toltz's duties to its two clients went beyond the merely theoretical. Having found that it did, and that the practical problem of conflicting interests was "precisely the problem which the 'conflict of duty and duty' rule seeks to avoid": J[288], the primary judge found that Toltz "thereby" breached the fiduciary duties which it owed to City Garden: J[288]. 12. That practical context flowed directly from the matters which City Garden relied upon in its pleading as providing context for the claim that Toltz was in breach of fiduciary duty in acting for both City Garden and Gemi Investments on the first loan: see at [105] above. There was no procedural unfairness to Toltz in the primary judge taking this approach. More particularly, Toltz's complaint that the primary judge found that Toltz breached its fiduciary duty by not ensuring that its instructions to enter the first loan were from those with authority to bind City Garden mischaracterises the primary judge's finding for the reasons set out above. Further, to the extent that the primary judge relied upon Toltz needing to ensure that City Garden was authorised to enter the first loan, in support of her findings as to there being a conflict between the interests of City Garden and Gemi Investments, those matters were sufficiently raised by City Garden's pleadings and opening submissions. 13. It follows that there is no need to consider Toltz's contentions as to how it would have conducted its case had it been alleged that Toltz was in breach of duty in failing to ensure that instructions to enter the first loan were from those with authority to bind City Garden. Appeal ground 4 should be rejected. Was Toltz denied procedural fairness and did the primary judge err in respect of her Honour's findings as to lack of informed consent? 1. The significance of informed consent is that it affords a defence to the fiduciary who has acted with a divided loyalty, negating what otherwise was a breach of duty: Breen v Williams (1996) 186 CLR 71 at 125 (Gummow J); [1996] HCA 57 ("Breen v Williams") and Maguire at 466-467. If there is a conflict in a solicitor's duties to two separate clients, the solicitor "must ensure that he fully discloses the material facts to both clients and obtains their informed consent to his so acting": Farrington v Rowe McBride & Partners [1985] NZLR 83 at 90 (Richardson J), referred to with approval in Maguire at 465 fn 60. The onus of establishing informed consent rests on the fiduciary: Birtchnell at 398 (Isaacs J). Further, as held in Maguire at 466: "What is required for a fully informed consent is a question of fact in all the circumstances of each case and there is no precise formula which will determine in all cases if fully informed consent has been given." (footnotes omitted) 1. Consistent with this reasoning, the Privy Council in Clark Boyce v Mouat [1994] 1 AC 428 at 436 ("Clark Boyce") held that what is required by way of informed consent will depend upon what services are required of a solicitor who is acting for two clients in the one transaction. Further, where a solicitor acts for both parties to a transaction, the solicitor will be in breach of fiduciary duty if he does not disclose to one party "material facts relative to the other party of which he is aware", however this "cannot be prayed in aid to enlarge the scope of contractual duties": at 437. Was there a denial of procedural fairnesss? 1. Toltz contends that the primary judge denied it procedural fairness by finding that City Garden did not give fully informed consent to Toltz acting for both City Garden and Gemi Investments on the first loan because her Honour's finding was premised upon a failure of Toltz to contact Mr Liang. Toltz contends that there was no allegation of breach of fiduciary duty on the part of Toltz in not ensuring that instructions on the first loan were from those with authority to bind City Garden, and that the primary judge's finding as to informed consent at J[275]-[276] (at [19] above) is premised upon Toltz having such a duty. As Senior Counsel for Toltz put it: "If it's no part of the element of the breach of fiduciary duty that you knew that the board of directors hadn't resolved to enter into the transaction and it's no [part] of your breach that you failed to take that into account, in my submission it should follow that that ought not to have been taken into account for an informed consent, i.e. you are entitled to essentially rely on Mr Dai's instructions and Mr Dai's conduct." 1. This contention should be rejected. The primary judge's conclusion that City Garden did not give informed consent to Toltz acting for both City Garden and Gemi Investments on the first loan was predicated upon Toltz being aware that there was a disconformity between the borrower (City Garden) and the recipient of loan funds (the Builder), thus being on notice that Mr Dai may not be acting in the best interests of City Garden, and Toltz having taken no steps to confirm that Mr Dai had authority on behalf of all directors of City Garden: J[275]. Those factual predicates for the primary judge's finding were sufficiently notified to Toltz in the 2FASOC: see above at [105]-[107]. Those matters would plainly inform City Garden's contention in its pleading that Toltz did not obtain the fully informed consent of City Garden to act on behalf of Gemi Investments in the circumstances. The issue of informed consent was engaged with in Toltz's defence at [57], where it pleaded that it obtained informed consent from Mr Dai. In its reply at [7], City Garden pleaded that Mr Dai did not have actual, implied or ostensible authority to consent on City Garden's behalf. 2. In the circumstances, Toltz's contention that it was denied procedural fairness must be rejected. In any event, as is readily apparent from the relevant legal principles discussed above, what is required by way of informed consent is a question of fact that depends upon all of the circumstances of the case. Here, one obviously relevant circumstance, which was apparent from the pleadings, was whether a consent from Mr Dai would suffice to establish that City Garden gave its informed consent to Toltz acting for both City Garden and Gemi Investments on the first loan. It follows that appeal ground 5 should be rejected. Did the primary judge err? 1. I would also reject Toltz's contention that the primary judge erred in her findings as to informed consent because informed consent should not have included consent from Mr Liang unless the breach of fiduciary duty found against Toltz included a breach in not ensuring that City Garden was authorised to enter the first loan. Given that the concern that the transaction may not be in City Garden's interests was inextricably linked to the finding (at J[278]) that Toltz had no knowledge of Mr Liang's level of involvement in City Garden's decision-making, it is entirely consistent with the purpose underlying the fiduciary duty for informed consent to require the consent of Mr Liang, the director who had no personal interest in the Builder's projects other than at the North Rocks Property. It follows that appeal ground 6 should be rejected. Was Toltz denied procedural fairness and did the primary judge err in respect of findings as to causation? The primary judge's findings as to causation 1. As to the question of what, if any, loss was caused by Toltz's breach of fiduciary duty as regards the first loan, the primary judge found that if Toltz had contacted Mr Liang in the course of obtaining fully informed consent or in discharging its obligation to act in City Garden's best interests in the first loan, then Mr Liang would have prevented the first loan from proceeding: J[492]. At J[494] the primary judge found that: "Had [Toltz] discharged its obligation to avoid conflicts, it would have taken the steps necessary to ascertain that where [City Garden's] interests lay, in particular, given that there was a disconformity between the borrower and the recipient of the loan funds. The solicitor failed to ensure that [City Garden], as opposed to Mr Dai, wished to enter into the transaction." 1. The primary judge found that, to the extent that the North Rocks Project required further funds, Mr Liang had been a steady source of such funds and it was in his interests to get the development to completion: J[492]. The primary judge attached no weight to a submission made by Toltz that Mr Liang had cashflow issues at the time of the first loan. As to this, her Honour said that there was no evidence of this, other than Mr Dai's assertion: J[484]. Toltz challenges these findings on appeal. The primary judge also found that the independent advice provided by Ms Yang did not break the chain of causation between Toltz's breach of fiduciary duty and the consequences which followed for City Garden: J[499]. 2. It should also be observed that, when considering Toltz's submissions, the primary judge found that it was "no doubt true" that, but for the asserted conflict, Mr Dai's decision to cause City Garden to enter into the three relevant loans would not have changed. Her Honour found, further, that it did not really matter how comprehensive the advice of Ms Yang was as Mr Dai and Ms Zhu were going to execute the loan documents for the first loan "come what may": J[483], [498]. These findings indicate that, were the relevant counterfactual on causation not to include any involvement of Mr Liang, the likelihood is that City Garden would have entered the first loan irrespective of any breach of fiduciary duty by Toltz. Was there a denial of procedural fairness? 1. The complaints of a denial of procedural fairness as to breach of duty and causation are necessarily linked. It follows that Toltz's contention as to procedural unfairness on the issue of causation must also be rejected. Did the primary judge err? 1. Toltz contends that the primary judge erred in finding that Toltz's breach of fiduciary duty caused City Garden to enter the first loan. More particularly, Toltz contends that a breach of fiduciary duty constituted by Toltz acting in a situation of conflict where the transaction was not in the best interests of City Garden: "would not bring with it the consequence that the transaction would not have taken place because that seemed to turn on Mr Liang's lack of involvement and lack of knowledge". 1. Toltz contends that, unless Mr Liang was to be informed of the first loan, it would have proceeded "come what may". Senior Counsel for Toltz submitted that this contention as to causation finds support in the approach taken in Beach Petroleum at [434]-[435], [444], [446]-[448] which, in turn, rely upon the decisions in Gilbert v Shanahan [1998] 3 NZLR 528 and Brickenden v London Loan & Savings Co [1934] 3 DLR 465 ("Brickenden"). I discuss these cases below. 2. City Garden submits that the primary judge's analysis of the authorities was unexceptional. Relevant principles 1. City Garden's allegation of breach of fiduciary duty relied upon Toltz acting when it had conflicting duties to two clients: 2FASOC [63]-[64]. There was no allegation of breach of fiduciary duty by reason of non-disclosure by Toltz: cf eg Brickenden; White v Illawarra Mutual Building Society Ltd [2002] NSWCA 164 at [134] (Powell JA, Hodgson JA and Hamilton J agreeing) ("White v Illawarra"); Rigg v Sheridan, and there was no suggestion that Toltz stood to benefit from or had an interest in the first loan: cf eg ABN AMRO Bank NV v Bathurst Regional Council (2014) 224 FCR 1; [2014] FCAFC 65 at [1072]-[1080], [1084] (Jacobson, Gilmour and Gordon JJ). 2. The nature of the breach relied upon necessarily informs how the issue of causation should be addressed because the approach to causation in cases of breach of fiduciary duty depends upon identifying the "criteria which supply an adequate or sufficient connection between the equitable compensation claimed and the breach of fiduciary duty": Maguire at 473-474. Consistent with this, in O'Halloran v R T Thomas & Family Pty Ltd (1998) 45 NSWLR 262, ("O'Halloran") (involving the disposition of property in breach of a director's fiduciary duty) Spigelman CJ (Priestley and Meagher JJA agreeing) explained at 273-274: "…a claim for equitable compensation for breach of a fiduciary obligation requires a causal link between the breach and the loss. Causation in equity is not, however, susceptible to the formulation of a single test. It is necessary to identify the purpose of the particular rule to determine the appropriate approach to issues of causation see Environment Agency v Empress Car Co (Abertillery) Ltd and Barnes v Hay as noted above." 1. More recently, in Ancient Order of Foresters in Victoria Friendly Society Ltd v Lifeplan Australia Friendly Society Ltd (2018) 265 CLR 1; [2018] HCA 43 at [89], where the defaulting fiduciary made a gain from the relevant transaction, Gageler J (as his Honour then was) explained: "Obviously enough, as with any other question of causation in equity, the causal connection between a fiduciary's breach of fiduciary obligation and a benefit or gain must be judged using common sense and 'with the full benefit of hindsight'. And as with other questions of causation in equity, the inquiry into causation is not to be constrained by normative limitations imported from the common law. To introduce those limitations would risk confusing distinct legal policies underlying distinct bases of legal liability and limiting equity's capacity to mould equitable relief to the circumstances of the individual case." (footnotes omitted) 1. Whilst losses are to be assessed as at the time of trial and with hindsight: Youyang Pty Ltd v Minter Ellison Morris Fletcher (2003) 212 CLR 484; [2003] HCA 15 at [35] (Gleeson CJ, McHugh, Gummow, Kirby and Hayne JJ) ("Youyang"), in Rigg v Sheridan, Handley JA at [49] observed that: "Causation of this kind, dealing with a past hypothetical event, has to be decided in retrospect, but must be decided prospectively as at the past date, without the distortion of hindsight". 1. In JD Heydon, MJ Leeming and PG Turner, Meagher, Gummow and Lehane's Equity Doctrines and Remedies (5th ed, 2015, LexisNexis Butterworths Australia) at [23-230], it is said that defendant may avoid an order to pay equitable compensation in the full sum of the loss prima facie established by showing that the balance of the loss for which the plaintiff claims is loss the plaintiff would have suffered even had the defendant adhered to the defendant's equitable duties. This was applied in Australian Executor Trustees (SA) v Kerr [2021] NSWCA 5 ("AET v Kerr"), Gleeson JA (Leeming JA and Emmett AJA agreeing) at [99]. Thus, where the court is satisfied that the loss would have occurred whether or not the solicitor's duty had been performed, as was found in Beach Petroleum because "the fraudulent directors and their associates were determined and able to perpetrate the fraud and nothing would have inhibited them from carrying it to fruition" (at [447]), causation is not established. 2. Further, as held by Ward ACJ in Mao v Bao [2023] NSWCA 278 at [175]: "That Brickenden stands for a relatively narrow principle is important. I consider that it is not authority for a general principle that a defaulting trustee may not point to counterfactuals as a defence to causation, rather, confined to its facts, Brickenden is authority for the much narrower principle that a defaulting fiduciary, in circumstances where proper disclosure has not been made, is prohibited from contesting causation on the basis that the principal would have gone ahead with the transaction even if disclosure had been made (see White v Illawarra at [144]-[145] per Hodgson JA)." 1. Where the relevant breach of fiduciary duty creates "difficulties of proof as to what would have occurred but for its breach, which would not exist if the duty had been performed", the party in default will bear an evidentiary onus: AET v Kerr at [128]. This is consistent with the proposition that a robust approach to the assessment of compensation should be taken where evidentiary difficulties are consequential upon the wrongdoing: Libertarian Investments Ltd v Hall (2013) 16 HKCFAR 681; [2013] HKCFA 93 at [138] (Ribeiro PJ). 2. Further, whilst the court will not speculate against the interests of the plaintiff: see eg GM & AM Pearce & Co Pty Ltd v Australian Tallow Producers [2005] VSCA 113 at [66] (Warren CJ, Chernov JA and Dodds-Streeton AJA agreeing), that does not circumvent the requirement that the plaintiff show that the alleged losses, on a common sense view of causation, were caused by the breach: AET v Kerr at [104]; see also Break Fast Investments Pty Ltd v Rigby Cooke Lawyers [2022] VSCA 118 at [87]-[88] ("Break Fast Investments"). 3. Given the role of informed consent as negativing a breach of fiduciary duty, the question arises as to how, if at all, steps that could have been taken to obtain informed consent are relevant to the question of causation in circumstances where there are conflicting duties. More particularly, is the relevant counterfactual the avoidance of a conflict by the fiduciary not placing themselves in the situation of conflict, or is the relevant counterfactual premised upon the breach of fiduciary duty being negatived by the fiduciary having obtained informed consent. As to this, consistent with the authorities set out above, much depends upon what is relied upon by way of breach. 4. Where, as here, the breach lies in acting in circumstances where there are conflicting duties, but non-disclosure does not itself form part of the relevant breach, the relevant counterfactual involves asking what would have happened if the fiduciary had avoided a conflict of interest. The court does not approach this issue by asking what would have happened had informed consent been sought, or by looking to how the solicitor might have acted if only under a duty to act in one client's interests. Thus, in Blackmagic Design Pty Ltd v Overliese (2011) 191 FCR 1; [2011] FCAFC 24 ("Blackmagic") (followed in and Gunesagaram v Blue Visions Management Pty Ltd [2018] NSWCA 179 at [153]; (2018) 129 ACSR 265 (Gleeson JA, Meagher JA agreeing); see also Coope v LCM Litigation Fund Pty Ltd [2016] NSWCA 37 at [122]; (2016) 333 ALR 524 (Payne JA, Gleeson and Leeming JJA agreeing)), which involved alleged breach of fiduciary duty by a computer engineer employee who put himself in a position of conflict, Besanko J (Finkelstein and Jacobson JJ agreeing) held at [109]: " The duty here was a duty to avoid a conflict of interest and duty. The breach was the failure to comply with that duty. An award of equitable compensation involves a comparison between no breach (that is, no conflict of interest and duty) and breach (a conflict of interest and duty). Compliance with the duty does not involve disclosure; rather, it involves avoiding a conflict of interest and duty." 1. Consistent with this, in Xiao v BCEG International (Australia) Pty Ltd (2023) 111 NSWLR 132; [2023] NSWCA 48 ("Xiao"), which involved breaches of fiduciary duties owed by directors to a developer company in relation to a project in the Gold Coast, Gleeson JA (Mitchelmore JA and Griffiths AJA agreeing) found at [144] that the primary judge had erred in determining causation of loss on the premise that the defaulting fiduciaries would have disclosed their conflict in order to obtain informed consent. Gleeson JA held that, as disclosure by a fiduciary of a conflict of interest or duty is not a positive obligation but rather a defence to what would otherwise be a breach of duty, the primary judge's causation finding could not be sustained. Determination 1. Consistent with the relevant principles discussed above (some of which were not drawn to the primary judge's attention), the causation enquiry must focus on the nature of the breach as well as the policy and purpose of the relevant rule. The policy and purpose of the rule forbidding a solicitor fiduciary acting in a situation of conflicting duties is to hold a fiduciary to the duty of utmost loyalty that is owed by a solicitor to their client. Toltz was bound by that duty not to act where he could not properly discharge his duty and could not loyally act in City Garden's interests. Having regard to the nature of the breach, the primary judge erred in having regard to what Toltz would have done if acting only in City Garden's interests when analysing causation. 2. It follows that causation should have been approached by asking what would have happened if Toltz had avoided that situation of conflict, not by asking what would have happened if Toltz had taken steps to obtain informed consent: see Blackmagic and Xiao discussed at [144]-[145] above. Having regard to these authorities, the primary judge erred in approaching the issue of causation by asking what Mr Liang would have done had Toltz contacted him "either in the course of obtaining fully informed consent… or… in discharging the solicitor's obligation to act in the plaintiff's best interests in the first transaction": J[492]. Her Honour should not have approached the issue of causation on the counterfactual that the premise that informed consent was sought, or on the premise that the breach of fiduciary duty was a failure by Toltz to take such steps as were necessary to act in City Garden's best interests. City Garden did not contend that Toltz owed a prescriptive duty to act in City Garden's best interests and the question of causation should not be approached on that basis. 3. The proper counterfactual in this case is Toltz desisting from acting for City Garden and thereby avoiding the conflict or Toltz recommending that City Garden obtain independent advice as to the first loan: see eg Break Fast Investments at [108] and Mantonella P/L v Thompson [2009] QCA 80 at [117] (Muir JA), [149] (Fryburg J). As to the former, given what appeared to be a requirement of Gemi Investments that the lender sign a declaration certifying that they had received independent legal advice, it is likely, if Toltz had desisted from acting for City Garden (as I have in fact held that it did), that Mr Dai and Ms Zhu would have sought, and obtained, independent legal advice before executing the transaction documents for the first loan. As to the latter, that is what in fact happened. There is no reason to suppose that independent advice would have been sought or provided by anyone other than Ms Yang, or that City Garden would not have entered the first loan given that the independent advice Mr Dai and Ms Zhu did obtain from Ms Yang did not lead to any disclosure to Mr Liang and did not prevent City Garden from entering the first loan. 4. Supporting my conclusion that it is unlikely that Toltz avoiding a conflict of interest would have led to Mr Liang becoming aware of the first loan, there is no evidence to suggest that Piper Alderman, City Garden's solicitors on the second loan, took any steps to ensure that Mr Liang was aware of or had authorised that loan, notwithstanding that the borrower on the second loan was the Builder whilst the loan was secured by a mortgage over the North Rocks Property. Similarly, there is no evidence of any such steps being taken by Mr Holt on the third loan where City Garden was the borrower and the loan was secured by a mortgage over the North Rocks Property. It should also be observed that the primary judge's unchallenged finding was that it was "no doubt true" that "[b]ut for the asserted conflict… Mr Dai's decision to cause [City Garden] to enter into the transactions would not have changed": J[483]. That suggests that, had the primary judge approached the question of causation on the correct counterfactual, her Honour would not have found that causation was established. 5. As is clear from the discussion of relevant principles above, City Garden bore the onus of proving causation. Whilst there are some cases in which the breach is such that it is not consistent with policy for the court to enquire into what would have happened but for the breach, this is not such a case. Given that there is evidence before the Court as to what in fact happened when City Garden sought independent advice on the first loan, Toltz's breach of fiduciary duty in acting for both City Garden and Gemi Investments on the first loan did not itself undermine the ability of the court to enquire into what City Garden would have done if Toltz had not been in breach of fiduciary duty. Moreover, the Court also has the evidence of what in fact happened on the second and third loans, where Toltz was not the solicitor for the borrower. 6. Had it been necessary to do so, I would thus have found that the primary judge erred in finding that Toltz's breach of fiduciary duty caused loss to City Garden. I would thus have upheld appeal ground 7 to the extent that it relies upon the primary judge having erred in her approach to causation. 7. In these circumstances, I will deal only briefly with Toltz's further contentions as to causation. I do so on the assumptions (which I have already rejected) that breach of fiduciary duty and causation as regards City Garden entering the first loan were established. 8. Contrary to Toltz's contention, advanced in appeal ground 8, the primary judge did not err in finding that Mr Liang would not have agreed that City Garden should obtain a loan for the payment of the Builder's bank guarantee for a property other than the North Rocks Property, which was the stated purpose for the first loan (albeit that the funds were not used for this). Nor did the primary judge err in finding that Mr Liang would not have agreed that City Garden should enter the first loan to provide working capital for the Builder (as the funds were in fact disbursed). Whilst Toltz challenges the primary judge's finding at J[492] that Mr Liang had been a steady source of funding for the North Rocks Project, it is readily apparent that Mr Liang had provided large amounts of funding for the North Rocks Project over the period 2016-2018, including the loan of $2 million to City Garden from Tempe in October 2018 and the combined NCC loan (consolidating earlier loans) in the sum of some $13 million. 9. The primary judge made adverse credibility findings about Mr Dai as a witness and was entitled to reject Mr Dai's evidence that Mr Liang had financial difficulties at the relevant time. Moreover, Mr Liang's affidavit evidence that in July 2017 he did not have $9 million "of cash in hand" to repay the initial short-term loans for the North Rocks Project said nothing as to whether he may have been able to provide whatever (likely lesser) sum was in fact required as at November 2018 for the North Rocks Project. Contrary to Toltz's submission, Mr Liang was not silent as to what he would have done if told of the first loan. Mr Liang's evidence was that he would not have permitted City Garden to enter the first loan as he had sufficient funds to cover any shortfall in construction finance: J[182]. The primary judge was entitled to accept this evidence. Her Honour's finding did not amount to speculation in favour of City Garden. It follows that I would have rejected appeal ground 8. Was Toltz denied procedural fairness and did the primary judge err in respect of her Honour's findings as to loss? The primary judge's findings 1. The primary judge found that the loss which resulted from Toltz's breach of fiduciary duty was City Garden's indebtedness to Gemi Investments, which ultimately (via part of the second loan) became City Garden's indebtedness to Gemi 130 and Bridge Street on the third loan: J[503]. The primary judge found that, as funds additional to those necessary to pay out the first loan were advanced in the second loan, and because land tax paid out of the second loan benefitted City Garden, an appropriate measure of compensation was 75% of the current indebtedness of City Garden to Gemi 130 and Bridge Street. The reduction of 25% was to take account of the amount of the second loan that was not incurred in order to repay the first loan: J[504]-[505]. The primary judge, at J[475], stated that she did not agree that the onus of proving that the funds advanced under the first loan were not used for the benefit of the plaintiff "necessarily fell on the plaintiff" as: "The fact that the loan funds were provided to the builder and not the plaintiff prima facie indicates that the plaintiff did not receive the benefit of the funds. It was the defendants who contended that, notwithstanding that the funds were provided to the builder, the funds were used for the benefit of the plaintiff. I decline to draw the suggested inference." 1. This was despite the fact that her Honour held that some of the funds from the first loan were disbursed by the Builder for purposes "probably related to the North Rocks [Project]" and that it could be said "in a broad sense, that [City Garden] received a benefit from a portion of the first loan": J[476]. In this regard the primary judge referred to her earlier finding that City Garden had an entitlement under the construction contract with the Builder for the North Rocks Project to set-off any payments City Garden made directly to contractors or workers and others: J[477] referencing J[130], and to the possibility that the Builder may have issued a progress claim and been reimbursed out of the funds from the first loan: J[477]. Was there a denial of procedural fairness? 1. Toltz contends that City Garden advanced its case at trial on the basis that the loss caused by Toltz's breach of fiduciary duty was the amount loaned in the first loan. Thus, Toltz contends, that it was denied procedural fairness because it was denied the opportunity to make submissions as to whether the loss flowing from City Garden entering the second and third loans was caused by its breach of fiduciary duty, including submissions as to any benefits conferred thereby upon City Garden. Toltz says that if the primary judge had confined her consideration to loss occasioned by the first loan, causation would not have been established as the whole amount of the first loan was paid out by the second loan, which was not obtained through any breach of Toltz's fiduciary duty. Toltz submits that it was deprived of the opportunity to lead expert evidence seeking to quantify the amounts of the three loans which conferred benefits upon City Garden. 2. Toltz also contends that, in circumstances where City Garden's case as to causation and loss was not clearly articulated and there was no detailed investigation of the benefits that City Garden received, the primary judge denied Toltz procedural fairness and erred in finding that Toltz was responsible for 75% of the amount now owing under the third loan. Senior Counsel for Toltz accepted in oral submissions, however, that this was ultimately an "evidence and onus" point, rather than a complaint of denial of procedural fairness. This contention will thus be dealt with as a contention of error, rather than procedural unfairness. 3. Turning first to the contention that City Garden's pleaded case as to loss did not include the loss occasioned by City Garden entering the second and third loans, even a cursory look at the 2FASOC requires that this contention be rejected. At [152] of the 2FASOC, City Garden pleaded that it would not have entered into the first loan but for the breaches of fiduciary duty "pleaded at [63]-[64]" and would then not have incurred the liability under the first loan and would not have had to refinance the first loan by entering into the second and third loans. At [153]-[154] of the 2FASOC, City Garden pleaded that it had suffered loss and damage, being either the amount of monies it was found to have owed to Gemi 130 and Bridge Street, being the lenders on the third loan, or (pleaded by way of alternative) its liability under the first loan. Whilst the amount so owing was not particularised, City Garden's pleading was sufficiently clear to put Toltz well on notice of its case as to causation and loss. City Garden's pleaded claim was that its loss was the amount found owing to Gemi 130 and Bridge Street, the lenders on the third loan. This was also identified as City Garden's case as to causation of loss in City Garden's oral closing submissions before the primary judge (albeit erroneously by reference to [162] rather than [153] of the 2FASOC). 4. Second, whilst in its written closing submissions Toltz complained that City Garden had failed to adduce relevant evidence of loss and Toltz also made submissions (which were not supported by Toltz's pleading) that City Garden had failed to mitigate its loss, Toltz's submissions were made at a high level of generality. Toltz did not adduce any evidence to support its broad contention that there was "no reason why City Garden should not have paid money to the other defendants and thereby stemmed the metaphorical haemorrhaging of interest debt". In circumstances where Toltz bore the burden on mitigation: see eg Arsalan v Rixon (2021) 274 CLR 606; [2021] HCA 40 at [32]; Sainsbury's Supermarkets Ltd v Visa Europe Services LLC [2020] UKSC 24 at [211]; J Edelman, McGregor on Damages (21st ed, 2021, Sweet & Maxwell) at [9-020], this allegation required some basis if it were to support a finding that City Garden had cheaper refinancing options available at the time of the second and third loans. 5. Third, Toltz's complaints about mitigation do not give rise to any denial of procedural fairness. Toltz's bare assertion as to mitigation in its written closing submissions did not come close to discharging its onus as to mitigation. Moreover, as is clear from the discussion of relevant principles above, principles such as the duty to mitigate may well not apply in claims for equitable compensation arising out of a breach of fiduciary duty: Re Earth Civil Australia Pty Ltd (in liq) [2021] NSWSC 966 at [2246] (Ward CJ in Eq, as her Honour then was). 6. Toltz's contentions as to procedural unfairness based upon the failure of City Garden to more fully articulate its case as to causation and the lack of analysis by the primary judge as to the benefits received by City Garden should be rejected. Those are not matters that led to any practical unfairness. Did the primary judge err? 1. In appeal ground 9, Toltz challenges the primary judge's finding that City Garden's loss caused by Toltz's breach of fiduciary duty was 75% of City Garden's indebtedness to Gemi 130 and Bridge Street as at 12 December 2023 (being one week after the date of judgment). In summary, Toltz contends that there is no sufficient connection between Toltz's breach of fiduciary duty as regards the first loan and the amounts owing by City Garden as at 12 December 2023 under the third loan, and relies in this regard upon the fact that Toltz was not liable as regards the second and third loans, Mr Dai decided to enter those loans after receiving independent legal advice, Toltz's breach was not dishonest or fraudulent, there was no pleaded non-disclosure by Toltz, and the amount of the third loan as at 12 December 2023 included millions of dollars in default interest and the financiers legal costs. City Garden contends that the first loan had to be, and was, refinanced by the second loan, which in turn had to be and was refinanced by the third loan. City Garden contends that where some of the expenditure was for projects other than the North Rocks Project, calculation of City Garden's loss as being 75% of its current indebtedness is a common sense and logically supportable assessment. 2. As to the matters relied upon by Toltz which focus upon the nature of its breach, I would reject the contention that they militate in favour of a different outcome from that found by the primary judge. There is no reason why those matters should preclude City Garden from being compensated commensurately with the loss occasioned by the breach. Nor do the circumstances in which City Garden entered into the second and third loans suggest that Toltz should not have been liable for the full extent of the loss caused. 3. As to Toltz's contentions that focus upon the amount of interest, and the terms of the second and third loans, these implicitly suggest that City Garden could or should have taken steps other than entering into loans on the terms agreed between the Builder, or City Garden, and the respective lenders. That question, in my judgment, is one on which the relevant breach of fiduciary duty has created difficulties of proof which would not have occurred but for the breach. In these circumstances, consistent with the caselaw discussed at [141] above, Toltz bore the evidentiary onus as to whether City Garden could or should have done anything other than enter the second and third loans, on their respective terms. 4. Toltz did not, however, adduce any evidence that City Garden could have obtained loans or funds to refinance the first loan other than on the terms of the second and third loans. For the period that Mr Liang was not aware of the second and third loans and would have remained unaware on the relevant counterfactual enquiry, Mr Liang's financial position is of no significance. Nor did Toltz adduce any evidence as to Mr Liang's financial position as at around April 2020, when he became aware of the caveat lodged on 19 October 2019 by Toltz Lawyers on behalf of Gemi 130 and Bridge Street Capital, and thus probably become aware of the loans and might potentially have been in a position to repay the third loan. Whilst counsel for Toltz cross-examined Mr Liang briefly at the trial, it was not put to Mr Liang that he could and should have used his own funds to refinance the third loan when he became aware of it. In these circumstances, no finding to this effect was available. 5. Under the terms of the third loan, City Garden was obliged to keep the lenders indemnified against legal costs incurred in the enforcement of its rights under the third loan: primary judgment on quantification at [43]. There was no evidence that City Garden could have obtained a loan to refinance the second loan on terms which did not include this obligation, or which included lower fees. There is thus no basis to find that Toltz's breach of fiduciary duty did not cause City Garden to become liable for those legal fees under the terms of the third loan. 6. In these circumstances, I would have found that the primary judge did not err in finding that City Garden's entry into the second and third loans were caused by Toltz's breach of fiduciary duty. There was no evidentiary basis before the primary judge for a conclusion that City Garden had any alternative other than entry into the second and third loans if it were not simply to remain in default of its obligations under the first loan. That suffices, on a commonsense view and with the benefit of hindsight, to provide a sufficient connection between the breach of fiduciary duty and the obligations of City Garden under the third loan. It follows that I would have rejected appeal ground 9. 7. The essence of Toltz's complaint in ground 10 is that the primary judge failed to consider the benefits accruing to City Garden from the loans and there was no rational foundation for the primary judge's conclusion. City Garden contends that the primary judge's figure of 75% of the outstanding amount under the third loan was based on such evidence as was available, had a rational foundation and was a common sense and logically supportable assessment. 8. Ultimately this is not a question that this Court can resolve. No submissions were made going to the detail of the evidence, and it is not appropriate (given this) for this Court to seek to quantify that benefit. In these circumstances, it is not appropriate to address appeal ground 10. Did the primary judge err in finding that the claim against Toltz was not an apportionable claim? 1. The primary judge rejected Toltz's contention that the claim against Toltz was an apportionable claim for the purposes of Part 4 of the Civil Liability Act on the basis that a failure to take reasonable care was not an element of the cause of action against Toltz: J[509]. Toltz contends that the primary judge erred in this regard having regard to what it contends was the nature of the primary judge's finding as to breach of fiduciary duty. Toltz contends that the liability as found by the primary judge, albeit not as pleaded by City Garden, was predicated upon a finding by the primary judge at J[288] that Toltz breached the fiduciary duty that it owed to City Garden on the first loan by failing to ensure that City Garden's board of directors had resolved to obtain the first loan. Toltz contends that, in light of that reasoning, there is an available characterisation of her Honour's findings as amounting to a failure by Toltz to take reasonable care. Toltz says that such a claim for economic loss falls within the ambit of s 34(1)(a) of the Civil Liability Act, which provides that an apportionable claim includes: "a claim for economic loss or damage to property in an action for damages (whether in contract, tort or otherwise) arising from a failure to take reasonable care, but not including any claim arising out of personal injury". 1. Given my finding (at [103]-[121] above) that the primary judge's reasoning should not be understood in this way, Toltz's contentions as to apportionment do not arise. In these circumstances, it is unnecessary to reach any concluded view on appeal ground 11. 2. Notwithstanding this, it is appropriate to record that I have some doubt as to the correctness of the statement of this Court in Rahme v Benjamin & Khoury Pty Ltd (2019) 100 NSWLR 550; [2019] NSWCA 211 at [135] (Macfarlan JA, Bathurst CJ and McCallum JA agreeing) ("Rahme"), relied upon by the primary judge at J[509], that, to fall within the ambit of s 34(1)(a), a failure to take reasonable care must be an element of the cause of action upon which the plaintiff succeeds. 3. Rahme was a case in which solicitors were found to owe fiduciary duties to the client, and to have breached those duties by acting in circumstances in which the interests of the client conflicted with the financial interests of the solicitors, who stood to gain considerably by the plaintiff entering into the relevant agreement (see Rahme at [88], [97], [117]). In that context, Macfarlan JA found, as a matter of principle, that a defence of proportionate liability was not available. His Honour found that it was necessary for this purpose that "the absence of reasonable care was an element of the, or a, cause of action upon which the plaintiff succeeds" (at [135]). As is apparent, however, in Rahme the successful cause of action did not involve any finding at trial that the solicitors acted without reasonable care. Liability was based upon them acting when they had a conflict of interest. 4. In Rahme, Macfarlan JA relied upon what his Honour had said in Perpetual Trustee Company Ltd v CTC Group Pty Ltd (No 2) [2013] NSWCA 58 at [22]-[23] ("Perpetual v CTC"). Perpetual v CTC was a case where the defendant was found liable in damages for breaching its obligations of care under a mortgage origination deed. Macfarlan JA found that the apportionment provisions in the Civil Liability Act did not apply having regard to s 3A, which provided that the Civil Liability Act does not prevent the parties to a contract making express provision under the contract with respect to any matter to which the Act applied. In Perpetual v CTC, Macfarlan JA found that the parties had made such provision. However, "for completeness", his Honour went on to consider whether the claim was an apportionable claim under s 34(1) of the Civil Liability Act on the assumption, favourable to the plaintiff, that it was entitled to succeed on at least one cause of action that did not require it to prove that the defendant had failed to exercise reasonable care (even though it was also entitled to succeed on other causes of action that did involve a failure to exercise reasonable care) (at [21]). On that assumption, Macfarlan JA would have found in favour of the plaintiff (had it been necessary to decide) that s 34(1)(a) did not apply, because his Honour considered, at [22], that: "For a successful action for damages to have arisen from a failure to take reasonable care, it is in my view necessary that the absence of reasonable care was an element of the, or a, cause of action upon which the plaintiff succeeded." 1. Meagher JA in Perpetual v CTC preferred not to express any view on this reasoning, albeit that his Honour otherwise agreed with the reasons of Macfarlan JA. In this regard, Meagher JA said at [36]: "It must be remembered that the "claim" referred to is one that has been determined or decided and established as a source of liability: Reinhold v New South Wales Lotteries Corporation (No 2) [2008] NSWSC 187 at [18]. Here, the only basis upon which this Court held that CTC was liable to Perpetual was that CTC failed to exercise reasonable care in identifying the proposed borrower and confirming his authority to submit the loan application: Perpetual Trustee Company Ltd v CTC Group Pty Ltd [2012] NSWCA 252 at [4], [5], [23], [33], [34]." 1. Barrett JA in Perpetual v CTC also did not agree with the reasons of Macfarlan JA set out above. Barrett JA said at [42]: "It cannot be suggested (nor do I think it has been suggested in any decided case) that the nature or quality of a 'claim' is, for relevant purposes, to be determined solely by looking at the court's decision in relation to it. Nor is the nature or quality of a 'claim' to be determined solely by looking at the terms in which it is framed. Rather, it is a combination of the terms in which the claim is framed (or pleaded) and relevant findings of the court in relation to it that must be assessed in order to decide whether it is a claim 'in an action for damages… arising from a failure to take reasonable care' and has the other attributes of an 'apportionable claim' under s 34(1)(a)." 1. Barrett JA referred to his own earlier analysis in Reinhold v NSW Lotteries Corporation (No 2) (2008) 82 NSWLR 762; [2008] NSWSC 187 at [19]-[30] ("Reinhold") and to the decision of the Victorian Court of Appeal in Godfrey Spowers (Victoria) Pty Ltd v Lincoln Scott Australia Pty Ltd (2008) 21 VR 84; [2008] VSCA 208 at [105] (Ashley JA, Nettle and Neave JJA agreeing) ("Godfrey Spowers"), considering Victorian statutory provisions equivalent to s 34(1) of the Civil Liability Act. In Reinhold, Barrett J (as his Honour then was) had found that the nature or quality of a claim for the purposes of s 34(1) of the Civil Liability Act could not be determined without taking into account the court's decision on the claim and that it will be the findings ultimately made that determine whether the statutory conditions for proportionate liability are satisfied (at [30], [32]). In Godfrey Spowers, at [109], Ashley JA expressly agreed with the analysis in Reinhold. 2. Subsequent to Perpetual v CTC and Rahme, in Herridge Parties v Electricity Networks Corp t/as Western Power (2021) 59 WAR 69; [2021] WASCA 111, the Western Australian Court of Appeal, considering equivalent legislation in Western Australia, said at [321]-[323]: "We do not accept the plaintiffs' submission that the reference to a 'claim' in s 5AI is to the elements of a form of action, such as negligence. If a claim referred to a cause of action it would, on the post-Judicature Act approach, be taken to be the facts giving rise to liability. Since the Judicature Act, reference to a 'cause of action' is generally to the fact or combination of facts which give rise to a right to sue, rather than the old form of action. We see no reason for reading the term 'claim', as it appears in s 5AI of the Civil Liability Act, in any restrictive fashion. It is sufficient that the claim is for, relevantly, 'damage to property'. The claims in the present case for property damage consequent upon the fire are clearly of that character. The words in parentheses - 'whether in contract, tort or otherwise' - indicate that the form of action is not material. If the claim is for damage to property, it will be an apportionable claim if it is made in 'an action for damages' that arises 'from a failure to take reasonable care' within the meaning of para (a) of the definition of 'apportionable claim' in s 5AI of the Civil Liability Act. The phrase 'an action for damages' refers to any civil proceeding for the recovery of damages. A civil proceeding for the recovery of damages will arise 'from a failure to take reasonable care', within the definition of 'apportionable claim', where, as here, establishing liability in the action for damages requires the plaintiff to prove that the defendant failed to take reasonable care in some respect. The plaintiffs accept that proving an unreasonable interference for the purposes of the law of nuisance in this case requires them to prove a failure to take reasonable care." (footnotes omitted) 1. Notwithstanding this, the Court went on to consider whether the apparently stricter rule propounded in Rahme was satisfied. However, it is apparent that the Court in the paragraphs set out above had rejected the position, upheld in Rahme, that a failure to take reasonable care must be an element of the cause of action. 2. This question was also considered by the Victorian Court of Appeal in Tanah Merah Vic Pty Ltd v Owners Corp No 1 of PS613436 [2021] VSCA 72. The Court held, at [117], that the correct approach was as set out by Barrett JA in Perpetual v CTC. In so finding, the Court found that the "terms in which a claim is framed … are an essential determinant of whether the claim can be said to arise from a failure to take reasonable care" (at [120]). The Court concluded at [124] that, having regard to the analysis of Barrett JA in Perpetual v CTC, the earlier Victorian case of Godfrey Spowers: "is not authority for the proposition that a claim which does not itself arise from a failure to take reasonable care, can be transformed into an apportionable claim by a defendant establishing that the circumstances upon which the plaintiff relies arose out of a failure to take reasonable care." 1. As is apparent, there remains considerable support at the appellate level for an approach to s 34(1)(a) that looks to both how a claim is framed, and to the findings of the court, but is not limited in its focus to the narrow question whether a lack of reasonable care is an element of the cause of action. As is also apparent, in Rahme, the claim did not rely in any way upon a lack of reasonable care. It was thus unnecessary for the Court to determine whether a claim which did rely upon a lack of reasonable care could fall within the ambit of s 34(1)(a) of the Civil Liability Act. In these circumstances, there is room to doubt that the narrow approach adopted in Rahme is required to be adopted. I would add that the approach of Barrett JA in Perpetual v CTC appears to more closely accord with the statutory language and purpose of s 34(1)(a) of the Civil Liability Act. 2. However, given my findings, it is unnecessary to reach any concluded view as to these matters. Conclusion 1. It follows from my reasons as set out above that the appeal should be allowed. Neither party submitted that the costs of the appeal should not follow the usual rule. Neither party to the appeal made any submissions as to what costs orders should be made as to the proceedings at first instance if, as I have found, Toltz succeeds in its appeal. In those circumstances, it is appropriate that the court order that those costs also follow the event. 2. In these circumstances, as I would allow Toltz's appeal, the orders I propose are: 1. Appeal allowed. 2. Set aside order 3 of the orders made by the primary judge on 5 December 2023. 3. Set aside orders 3 and 4 of the orders made by the primary judge on 31 January 2024. 4. The respondent is to pay the appellant's costs of the appeal and of the proceedings at first instance. 1. BASTEN AJA: For the reasons given by Stern JA, I agree that the appeal should be upheld on the basis of grounds 1 and 3. It follows that the grounds pleaded by Toltz1 in relation to findings by the trial judge as to causation and loss do not arise. Further, the conclusions that Toltz did not act for City Garden with respect to the first disputed loan transaction, and did not breach any fiduciary duty owed to City Garden, require that the relevant counterfactual in assessing causation and loss will be based on what in fact happened. In that circumstance, the degree of artificiality in addressing issues of causation and loss make that exercise inappropriate. 2. The question of whether the claim against Toltz was an apportionable claim, rejected by the trial judge but reagitated pursuant to ground 11 raised an independent issue of principle, based on the facts found by the trial judge. At the risk of adding to the number of authorities which have discussed the issue when it was not dispositive, I address my understanding of the principles below. 3. In its amended defence Toltz pleaded, in response to the whole of the statement of claim, that: [1] "(a) the proceedings comprise a claim by the Plaintiff for economic loss in an action for damages (whether in contract, tort [or] otherwise) arising from an alleged failure by the Second Defendant to take reasonable care, such that the Plaintiff's claim against the Second Defendant is an apportionable claim within the meaning of s 34(1) of the Civil Liability Act 2002 (NSW)." 1. The findings of the trial judge with respect to breach of duty appeared from the following passage: "287 … Having proceeded to act for the lender, Mr Toltz considered himself to be acting in the interests of the lender alone. The solicitor was no longer performing its obligation to act in the best interests of the plaintiff. Discharge of that obligation required the solicitor, as a starting point, to ascertain what the plaintiff's interests were. Specifically, a solicitor acting in the best interests of the plaintiff needed to ensure that the plaintiff – as opposed to Mr Dai – wished to enter into the transaction, particularly where the loan was not sought for the plaintiff's purposes but primarily for the builder's Baulkham Hills development (albeit Mr Dai ultimately did not use the loan funds for that purpose). 288 This is precisely the problem which the 'conflict of duty and duty' rule seeks to avoid: the risk that a solicitor will prioritise the interests of one client over the other, such that it fails to properly perform its duties owed to the other. By acting for the lender on the first transaction, the solicitor disregarded the plaintiff's best interests, failing to ensure that the board of directors had resolved to obtain the loan. The solicitor could either have sought a formal resolution or simply checked with the plaintiff's other director, Mr Liang. The need to check this matter was highlighted by the disconformity between the borrower (the plaintiff) and the recipient of the loan funds (the builder), where the solicitor knew that the builder was Mr Dai's company. The solicitor thereby breached its fiduciary duties owed to the plaintiff." 1. The next sentence in the reasoning is also significant, the trial judge noting that "[t]here was no informed consent negativing this breach of duty"; [2] reference was made to Maguire v Makaronis. [3] Descriptions in various texts could be read in one of two ways. Either the absence of informed consent is an element of the breach of duty, or it is a defence "negativing" an existing breach: Maguire v Makaronis supports the later approach. Legal principles 1. Section 34(1)(a) of the Civil Liability Act 2002 (NSW) contains four discrete elements. The first is that there must be "a claim for economic loss or damage to property". The scope of that element is apparent from the fourth element, which excludes "any claim arising out of personal injury". 2. The second element locates the claim "in an action for damages (whether in contract, tort or otherwise)". This element appears to be expansive rather than constrictive. The phrase "or otherwise" at least indicates that the form of action is not intended to be a constraint. On the other hand, the requirement that there be "an action for damages" may exclude some kinds of claim for economic loss, although probably not for damaged property. The word "damages" is defined in s 3 of the Act (for the purposes of the whole Act) as a term which "includes any form of monetary compensation", with certain immaterial exclusions. There is no reason to exclude from that definition amounts claimed by way of equitable compensation. [4] 3. For present purposes, the key element is the third ("arising from a failure to take reasonable care"). The first issue is to identify the subject matter of the connecting phrase "arising from": in a case of ambiguity, the grammatical rule would suggest that it involves the last matter referred to, in this case "an action for damages". [5] That understanding would make sense, but reading the whole of the provision, including the fourth element, that approach may not be correct. The fourth element refers to a "claim arising out of" personal injury, which suggests that everything preceding the qualifying exception relates to the "claim" referred to in the first phrase of par (a). That would require identifying "a claim for economic loss or damage to property … arising from a failure to take reasonable care". Because the second element, appears to be expansive rather than restrictive, in referring to the claim, it makes sense that the first three elements are all referrable to the "claim". That is the claim is (i) "for" economic loss or damage to property, (ii) "in" an action for damages, and (iii) "arising from" a failure to take reasonable care. On the other hand, and reading the first affirmative limb of par (a) consistently with the qualification, "arising from" would refer to "economic loss or damage to property", and not "personal injury". Putting the four elements together, the last approach should be adopted. This is consistent with the terms of s 34A(1) which excludes what might otherwise have been identified as an apportionable claim under s 34(1), referring to intentionally or fraudulently causing economic loss or damage to property. 4. The primary operative provision in Pt 4 of the Civil Liability Act is s 35 which removes the joint and several liability of a defendant who is a "concurrent wrongdoer", namely "who is one of two or more persons whose acts or omissions … caused … the damage or loss that is the subject of the claim": s 34(2). Thus an "excluded concurrent wrongdoer" is, primarily, one who intended to cause the economic loss or damage to property, or who fraudulently caused such loss or damage to property. That is consistent with reference in s 34A(1)(c) to civil liability of a kind excluded by s 3B (that is, in so far as it applies to the whole Act and not to specific parts of the Act), albeit primarily excluding liability for intentional acts done "with intent to cause injury or death". 5. Thus, the definitional element "arising from a failure to take reasonable care" is to be contrasted with intentional conduct intended to cause harm. A person guilty of the latter conduct, involving high moral culpability, is not permitted the benefit of reduced liability. To pursue that purpose, a person whose conduct may not even rise to the level of negligence should not be excluded from such a benefit. The express inclusion of persons liable for misleading and deceptive conduct, which need not be negligent, is consistent with that approach: but are other examples of non-negligent wrongful conduct giving rise to liability for economic loss or damage to property included? 6. Four other matters may be noted. First, because the definition of apportionable claims does not include reference to a concurrent wrongdoer, a claim involving an excluded concurrent wrongdoer remains an apportionable claim. Secondly, the definition of "concurrent wrongdoer" includes excluded concurrent wrongdoers, but Pt 4 does not limit their liability under s 35(1). The liability of the excluded concurrent wrongdoer is to be determined in accordance with legal rules other than Pt 4: s 34A(1). 7. Thirdly, Pt 4 may be excluded by agreement between the parties: 3A Provisions relating to operation of Act … (2) This Act (except Part 2 [6] ) does not prevent the parties to a contract from making express provision for their rights, obligations and liabilities under the contract with respect to any matter to which this Act applies and does not limit or otherwise affect the operation of any such express provision. (3) Subsection (2) extends to any provision of this Act even if the provision applies to liability in contract. 1. Fourthly, whatever the limits on the definition of "apportionable claims" in s 34(1), it may be assumed that there will be claims for damages for economic loss or damaged property which do not fall within the definition. 2. Section 34(1A) provides that "there is a single apportionable claim in proceedings in respect of the same loss or damage even if the claim … is based on more than one cause of action". The assumption underlying that definitional provision is that each cause of action would otherwise give rise to an apportionable claim. For example, a plaintiff may claim damages for economic loss attributable to both nuisance and negligence, each arising from a failure to take reasonable care. Alternatively, a cause of action (for example, against a lawyer) may be pleaded as a breach of a common law duty of care in tort, and a breach of an express or implied contractual obligation to take reasonable care. The question is whether s 34(1A) has any operation in circumstances where there is a cause of action in negligence and, in the same proceeding, an alternative cause of action for intentionally causing economic loss, by which the plaintiff will, if successful, cause the defendant to be an excluded concurrent wrongdoer. The same question will arise if a claim for breach of fiduciary duty is not an apportionable claim within s 34(1)(a), (failure to take reasonable care not being an essential element of the claim) and a claim in negligence are brought in the same proceeding. 3. Section 35(2) provides: 35 Proportionate liability for apportionable claims … (2) If the proceedings involve both an apportionable claim and a claim that is not an apportionable claim— (a) liability for the apportionable claim is to be determined in accordance with the provisions of this Part, and (b) liability for the other claim is to be determined in accordance with the legal rules, if any, that (apart from this Part) are relevant. 1. Some claims will truly be in the alternative, some may not. A claim based on a cause of action involving a failure to take reasonable care may co-exist with a cause of action having no fault element, so that there could only be one judgment against a single defendant. That is a single defendant cannot be liable jointly and severally with others for the whole of the loss and liable for a proportion only of the loss. This is the s 35(2) dilemma. 2. On one approach, the case law resolves the dilemma by accepting that where the claim on one cause of action is found to arise from a failure to take reasonable care, it will be an apportionable claim, even if the other cause of action did not require that element, because the existence of that element will not foreclose the other cause of action. Case law 1. The principal issue discussed in the cases has involved the means of identifying an apportionable claim. Broadly speaking, there are two schools of thought, although they may overlap. The first, chronologically, identified apportionable claims by reference to findings at trial. The reason is, broadly, that no occasion arises for assessing damages until a finding as to liability has been made. The second school accepts that there may need to be a finding that a particular cause of action has been made out, but the claim will only be apportionable if the cause of action upheld involves an essential element of failure to exercise due care. The second view prevents the resolution of the s 35(2) dilemma noted above. 2. In 2007, a single judge in the Federal Court, Middleton J, identified and adopted the first approach in Dartberg Pty Ltd v Wealthcare Financial Planning Pty Ltd [7] dealing with the Victorian equivalent to Pt 4 in the Civil Liability Act, namely Pt IVAA of the Wrongs Act 1958 (Vic): "29 As the respondents observed, in drafting the provisions of [Pt IVAA] of the Wrongs Act, the legislature deliberately chose to define 'apportionable claim' by reference to an action for damages arising from a failure to take reasonable care. The provisions do not require that the claim itself be a claim in negligence or for a breach of duty - it only requires that the claim arise from a failure to take reasonable care. The expressions 'arising from' or 'arising out of' are of wide import …. 30 In my view, Pt IVAA could apply in the circumstances of this proceeding according to its own terms. Where a claim brought by an applicant does not have as one of its necessary elements any allegation of failing to take reasonable care, an additional enquiry into the failure to take reasonable care may become relevant in the course of a trial to determine the application of Pt IVAA. Even though the claims in this proceeding themselves do not rely upon any plea of negligence or a 'failure to take reasonable care' in a strict sense, a failure to take reasonable care may form part of the allegations or the evidence that is tendered in the proceedings. At the end of the trial, after hearing all the evidence, it may be found that Pt IVAA applies. 31 … The court, after hearing all the evidence, will then need to determine, as a matter of fact, whether the relevant claim brought by the applicant is a claim arising from a failure to take reasonable care." 1. Barrett J (in the Equity Division) applied Dartberg in Reinhold v New South Wales Lotteries Corporation (No 2). [8] After quoting Middleton J at [29] in Dartberg, Barrett J stated: "30 I respectfully agree that a claim may properly be regarded as one 'arising from a failure to take reasonable care' if, 'at the end of the trial', the evidence warrants a finding to that effect and regardless of the absence of 'any plea of negligence or a "failure to take reasonable care'''. The nature of the claim, for the purposes of Pt 4, is to be judged in the light of the findings made and is not determined by the words in which it is framed." 1. Reinhold, delivered on 7 March 2008, was followed six months later by the Victorian Court of Appeal in Godfrey Spowers (Victoria) Pty Ltd v Lincolne Scott Australia Pty Ltd. [9] The issue and the answer were set out by Nettle JA: "4 The principal question in this appeal is whether s 24AI [10] prohibits a concurrent wrongdoer who settles an apportionable claim, and thus against whom no judgment is given under Pt IVAA, from claiming contribution under Pt IV in relation to the settlement sum. 5 As Ashley JA demonstrates in his incisive analysis of the legislation, the answer to that question is no. There is nothing in s 24AI or elsewhere in Pt IVAA which prohibits a concurrent wrongdoer from settling an apportionable claim for a settlement sum which is greater than the proportion of the claim that the court would have determined to be just if the claim had gone to judgment. Consequently, if a concurrent wrongdoer settles an apportionable claim for more than that amount, there is nothing in s 24AI or elsewhere in Pt IVAA which prohibits the concurrent wrongdoer from claiming contribution in relation to the settlement sum. 6 Nor in my view is there anything at all surprising about that result once it is remembered that, although the rights of contribution created by Pt IV are purely statutory, [11] they and Pt IVAA reflect the equitable doctrine of contribution that 'persons who are under co-ordinate liabilities to make good the one loss … must share the burden pro rata'. [12] Consequently, whether a settlement sum exceeds the proportion of a claim for which a settling wrongdoer would be adjudged to be responsible under Pt IVAA (I shall call that the wrongdoer's 'proportionate liability') depends not only on the amount of the apportionable claim and the number and degrees of responsibility of concurrent wrongdoers, but also upon the terms and effect of the settlement." 1. The issue may have been understated by Nettle JA: the question was whether the defendant, having settled what appeared to be an apportionable claim, could claim a contribution from a concurrent wrongdoer in respect of the same loss. The Court unanimously held that no prohibition arose. Ashley JA (Neave JA agreeing) referred to Besanko J's observation in Shrimp v Landmark Operations Ltd: [13] "… the mischief to which the amendments were directed was a plaintiff being able to recover 100% of his damages from any one of several wrongdoers when that wrongdoer's 'fault', when compared with other wrongdoers, was less or far less than that. In other words, the amendment was directed to what were considered to be undesirable consequences of the joint and several liability rule. There is no suggest that the mischief the amendments were designed to remedy was any wider than that." Ashley JA continued: "98 … The key to the operation of the Part is the finding of relevant facts and the entry of judgment. The determination that a defendant is a concurrent wrongdoer in an apportionable claim triggers the limitation upon the amount of the judgment which can be entered against that defendant, and in turn protects the defendant against claims for contribution or indemnity by other concurrent wrongdoers. … 100 I have used the phrase 'cases to which [Pt IVAA] applies'. But when does the Part apply? As will be apparent, the respondents placed considerable emphasis upon Spowers' pleading, by its defence and the third party statement of claim in its original form, that the plaintiffs' claim was an 'apportionable claim' and that it was a concurrent wrongdoer, and by its counsel's concession below that the plaintiffs' claim was an apportionable claim. There were two aspects to that emphasis: first, that once a claim was admittedly an apportionable claim and a defendant was admittedly a concurrent wrongdoer, the liability of that defendant was, as it were, sectioned-off; so that any amount paid in compromise of the plaintiffs' claim could only be in respect of the sectioned-off liability. … 101 For two reasons, I do not agree with the proposition contained in the first of those aspects. … 104 The second reason why I do not agree with the proposition that the liability of Spowers was, as it were, immediately confined by operation of the pleadings to proportionate liability under Pt IVAA is that, in my opinion, the operation of Pt IVAA is dependent upon judgment by a plaintiff against a defendant. I consider, contrary to the submission of counsel for the engineer, that it is not simply the quantum of the limitation on liability which depends upon judgment. 105 The definition of 'apportionable claim' by s 24AE, and the description in s 24AF of circumstances in which Pt IVAA applies do not mean that, once something that looks like an apportionable claim is pleaded, a defendant forthwith becomes a 'concurrent wrongdoer'. Section 24AH(1) emphasises that whether a wrongdoer is of that character depends upon the person having been one of two or more persons whose acts or omissions caused the plaintiff's loss and damage. At least absent highly unusual pleadings, determination of the critical circumstances will depend upon findings having been made. Section 24AI(1) is consistent with such an analysis. It limits the liability of a concurrent wrongdoer to an amount reflecting the proportion of the plaintiff's loss or damage claimed which the court considers just in all the circumstances, the court being obliged to take into account the responsibility of other concurrent wrongdoers who are parties to the proceeding, but ordinarily not others. The importance of the court's adjudication is emphasised by this provision, as it is by s 24AJ, which naturally flows from it. The same may be said of s 24AK(1), which takes as its starting point judgment against a concurrent wrongdoer." [Footnotes omitted.] 1. Ashley JA then set out the central reasoning of Barrett J in Reinhold, with which he agreed. [14] 2. A new direction was proposed by Macfarlan JA in Perpetual Trustee Company Ltd v CTC Group Pty Ltd (No 2) ("CTC Group"). [15] Perpetual brought proceedings against CTC Group in damages for breaching an obligation of care under a mortgage origination deed. CTC Group alleged that Part 4 applied. This Court held that Part 4 did not apply because the obligation of CTC to indemnify Perpetual arose under a term of the deed, thereby making express provision for the rights and obligations of the parties with respect to the matter dealt with under Part 4, the provisions of which were thereby excluded pursuant to s 3A(2) of the Civil Liability Act. Macfarlan JA nevertheless dealt with the question as to whether, if Part 4 had applied, Perpetual's claim arose from a failure to take reasonable care. The submission and its consequence were identified as follows: "20 Whilst accepting that its claim was partially based upon CTC's failure to take reasonable care, Perpetual submitted that other bases of its claim were not so founded and that it was entitled to rely on the bases of claim that were most favourable to it (see Perpetual Trustee Co Ltd v Milanex (in liq) Pty Ltd [2011] NSWCA 367 at [86]). … 21 … As Perpetual has succeeded on other grounds and argument on the point has been limited, it is unnecessary and inappropriate to determine whether this submission is correct. It is sufficient to proceed, for the purposes of the following discussion, on the assumption that it is correct and that Perpetual was therefore entitled to judgment on at least one cause of action that did not require it to prove that CTC failed to exercise reasonable care. In referring to apportionable claims, Part 4 is undoubtedly referring to those that are entitled to, and do, succeed. Otherwise, there is no liability of the defendant to apportion." 1. The reasoning continued in terms which were repeated in a later judgment and may therefore be considered here: "22 For a successful action for damages to have arisen from a failure to take reasonable care, it is in my view necessary that the absence of reasonable care was an element of the, or a, cause of action upon which the plaintiff succeeded. As observed by Professors McDonald and Carter in 'The Lottery of Contractual Risk Allocation and Proportionate Liability' (2009) 26 Journal of Contract Law 1 at 18, the contrary view would produce the absurd result that a party to a contract who failed to perform a strict contractual obligation would benefit from being found to have acted negligently rather than 'innocently'." 1. As it had been conceded that a claim made by Perpetual turned on a failure to take reasonable care, it might have been thought that, in accordance with that reasoning, there was an apportionable claim. However, the dicta continued at [22]: "If claims could be apportioned where negligence is not an element of the successful cause of action, but merely arises from the facts, a plaintiff could lose his or her contractual right to full damages from a party whose breach of a contractual provision of strict liability happened to stem from a failure to take reasonable care." 1. The last passage appears to assume there would be injustice to the plaintiff if an apportionable claim arose where the defendant was innocent of any fault, with the result that a defendant would benefit from being found to have acted negligently rather than "innocently". That may be so, but the question which then arises is why a defendant who was without fault should bear the full burden of the loss suffered, in circumstances where there might be other wrongdoers who were at fault? The anomaly is heightened by the consideration that Pt 4 expressly retains the joint and several liability of the fraudulent or intentional wrongdoer. After expressing disagreement with the reasoning of Barrett J in Reinhold, Macfarlan JA concluded: "23 … In my view the application of Part 4 turns not on the facts that happen to be found but on the essential character of the plaintiff's successful cause of action…. The natural meaning of the words used indicates that a failure to take reasonable care must be part of, and therefore an element of, the plaintiff's successful cause of action." 1. The other two members of the court, Meagher JA and Barrett JA, either dissociated themselves from, or disagreed with, the additional observations of Macfarlan JA. Barrett JA noted that his earlier view expressed in Reinhold had been upheld by the Victorian Court of Appeal in Godrey Spowers and quoted key passages from the judgment of Ashley JA at [38]-[40]. 2. Meagher JA observed: "36 There were five other reasons put forward by Perpetual for rejecting CTC's argument that it was entitled to limit its liability under s 35 of the Act. With one exception, I agree with Macfarlan JA's reasons for rejecting or not determining each of those arguments. The exception is Perpetual's argument that its claim is not an apportionable claim because it does not answer the description in s 34(1)(a) of the Act as one made 'in an action for damages ... arising from a failure to take reasonable care'. It must be remembered that the 'claim' referred to is one that has been determined or decided and established as a source of liability: [Reinhold] at [18]. Here, the only basis upon which this Court held that CTC was liable to Perpetual was that CTC failed to exercise reasonable care in identifying the proposed borrower and confirming his authority to submit the loan application …. I agree with Macfarlan JA that it is unnecessary and inappropriate to determine whether Perpetual was entitled to judgment on some other basis in order to deal with this argument of Perpetual as to why its claim is not an apportionable one. In these circumstances, I prefer not to express any view as to the matters which Macfarlan JA goes on to discuss." 1. Aspects of the reasoning of Macfarlan JA require comment. First, his view was not that of a majority of the Court. Arguably, both the other members of the Court disagreed with that particular finding, either by inference (Meagher JA) or expressly (Barrett JA). Secondly, as has been noted, Macfarlan JA's reasoning was not merely obiter but based on assumed facts. Thirdly, the reasoning did not take account of the concession that one basis for the plaintiff's success did rely upon CTC's failure to take reasonable care. There was no explanation as to how that claim was to be dealt with. The section 35(2) dilemma was neither noted nor resolved. Fourthly, despite the express reference by Barrett JA to the Victorian Court of Appeal's approval of the reasoning in Reinhold, the fact that another intermediate court of appeal had held differently was neither considered nor found to be clearly wrong. Fifthly, the anomaly said to arise unless a constrained reading of s 34(1)(a) were to be adopted mistook the true anomaly having regard to the statutory context and purpose. 2. As noted above, this Court was confronted with a proposed defence based on Pt 4 in a case involving knowing receipt of property in breach of a fiduciary duty in Cassegrain v Cassegrain. [16] Had Ms Cassegrain in fact relied at trial on a defence of an apportionable claim, a critical question (which might have invited further evidence from the plaintiffs) was whether she was an excluded concurrent wrongdoer within s 34A(1). The Court dismissed the appeal for procedural reasons, Sackville AJA and Emmett AJA concluding that, not having been run at trial, an apportionment defence could not be the basis of an appeal. I took the view that the appellant had failed to establish that s 35 of the Civil Liability Act was engaged and that the matter could be dealt with on that basis: at [6]. On that approach, the case turned on the application of s 34 and solely upon whether the claim was one "arising from a failure to take reasonable care": at [11]. 3. Three issues of construction were addressed. The first turned on the issue presently being addressed, identified in the following passage: "14 First, there is a question whether the reference to 'a claim' is a reference to the claim pleaded, or to those upon which liability was upheld. In Reinhold v New South Wales Lotteries Corporation (No 2) Barrett J held that the reference to a 'claim' in Pt 4 is a reference to a 'claim as proved and established, not a claim as made or advanced.' The reasoning leading to this conclusion, briefly stated, is that both the definition of 'concurrent wrongdoer', and the definition of 'excluded concurrent wrongdoer', as well as the consequence of a finding of liability, depend upon a determined claim and not simply an allegation. 15 With respect, that analysis is accurate, but it does not require the replacement of the term 'claim' with a more limited concept. Thus a statement of claim may include factual allegations supporting more than one cause of action of which one may be rejected and another upheld. An apportionable claim which is dismissed ceases to be such because it ceases to be a claim. Only a claim which has been upheld gives rise to liability and hence engages s 35. 16 The words in parenthesis in s 34(1)(a) make it clear that the precise formulation of the cause of action is not significant; on the other hand, the proceedings must involve an action for damages (that is, for some form of monetary compensation). Thus, the relief claimed must include an order for payment of damages. The damages must involve compensation for economic loss (or damage to property), but must not include a claim arising out of personal injury. 17 The exclusion of 'any claim arising out of personal injury' suggests that the structure of the first limb of the paragraph is in the form, 'a claim for economic loss … arising from a failure to take reasonable care'. Thus, in language applicable to the present case, the question is whether the claim by the company for loss of its assets arose from 'a failure to take reasonable care'. This formulation allows consideration of the second issue of construction. 18 The second issue of construction turns on whether the particular cause of action pleaded depends upon a failure to take reasonable care, as an essential element, or whether it is sufficient that the conduct the subject of any finding of liability in fact involves a failure to take reasonable care." (Footnotes omitted.) 1. This discussion did not canvass the authorities, nor the dicta in CTC Group. Relevantly, the reasoning continued: "20 There is a strenuous debate in the literature as to whether authorities which apply Pt 4 (and equivalent provisions elsewhere) in the case of liability which is strict and does not require intention or negligence, have been correctly decided. The issue is whether it is correct to apply the proportionate liability provisions in respect of a cause of action which involves strict liability, in circumstances where there is in fact a failure to take reasonable care, even though liability would be established without such a finding. Thus, McDonald and Carter have hypothesized that in such cases, defendants will be driven to plead their own negligence, which is an anomalous result. [17] 21 It is possible to identify potential anomalies because the circumstances in which proportionate liability applies are limited. Whatever the strength or weakness of the critique, it has no application in the present case. The conduct of the appellant in the present case, as a knowing recipient of property transferred in breach of fiduciary duties, involved neither strict liability nor negligence, but a higher level of moral responsibility. 22 The third point of construction is whether there is, implicit in the phrase 'failure to take reasonable care' an assumption as to the existence of a legal duty which has been breached. The formulation of the question may be thought to add unnecessary complexity to relatively straightforward language. However, the question is useful because the answer illustrates the distinction between strict liability, a failure to exercise reasonable care and intentional misconduct. In broad terms, strict liability does not depend upon advertence by the tortfeasor to the consequences of his or her action. An intentional tort, on the other hand, clearly does. One can articulate an intentional tort, such as trespass to the person, in terms of a duty to avoid certain conduct, but the 'duty', so formulated, is to avoid deliberately assaulting another person without his or her consent; it is not a duty to take reasonable care not to assault a person without consent. On the other hand, the tort of negligence is always expressed in terms of a duty to take reasonable care. … 23 In this sense, the phrase 'failure to take reasonable care' does envisage a duty expressed in negative terms but, more importantly, in terms which are inapt with respect to an intentional tort. Similar reasoning applies to the liability based on receipt of property transferred in breach of a fiduciary duty. The duty of a person dealing with fiduciaries is not to take reasonable steps to avoid becoming party to their breach of duty, but rather not knowingly to receive the property of the company with knowledge of circumstances which would allow an honest and reasonable person to recognise that an impropriety had been committed." 1. Reasoning by reference to anomalous results is a risky method of statutory construction, especially where there is more than one potential anomaly. As the circumstances in Cassegrain demonstrate, the persuasive anomaly is not the extension of the definition of apportionable claim to cover cases of faultless breach, but rather the failure to do so. As noted in the Davis Report, [18] "the fairness or justice of a legal rule must be questioned when its effect is to place full liability on a defendant who may have been only marginally at fault, and to provide full compensation to a plaintiff who is able to find one on whom to fix the blame for the loss". That was the rationale for recommending a scheme of proportionate liability in actions where the plaintiff's claim is for property damage or purely economic loss; that reason applies a fortiori to a case in which the defendant is not to any extent at fault or morally culpable. The anomaly is thus the failure of the statute to extend to such cases. 2. In addressing statutory liability for misleading conduct, Professor Davis noted that the statutory imposition of joint and several liability created "an anomaly when compared with liability in negligence": [19] "Although liability in negligence is different from these forms of statutory liability, in that the statutory provisions may be infringed despite all reasonable care having been taken, there are many similarities between the two forms of liability. In particular, so far as the present inquiry is concerned, both forms of liability may arise when a professional person makes a misstatement on which others rely, to their financial detriment. Because of the similarities between professional liability for negligence and under these statutes, it is anomalous that, in the case of multiple wrongdoers, any one of such a group should be exposed to a considerably different extent of liability depending solely on whether action is brought at common law or under one or other of the statutory provisions." Professor Davis recommended proportionate liability for contraventions of s 52 of the Trade Practices Act 1974 (Cth) and its equivalents in fair trading legislation of the States and Territories. 1. As Cassegrain itself illustrated, a person who is morally culpable to a higher degree than negligence is likely to be excluded from the benefits of proportionate liability as an excluded concurrent wrongdoer. The Act does not exclude defendants with a lower level of culpability than a failure to take care. 2. It does not follow that the anomaly can be rectified by an exercise in statutory construction. However, to recognise the true anomaly, based on context and purpose, allows the Court to avoid exacerbating the anomaly by reading s 34(1)(a) as subject to a constraint which the statutory language does not expressly adopt. For that reason, quite apart from authority, the approach adopted in Reinhold is to be preferred. 3. This Court returned to the question of apportionable claims in Rahme v Benjamin & Khoury Pty Ltd. [20] The principal judgment in Rahme was delivered by Macfarlan JA (Bathurst CJ and McCallum JA agreeing). Overturning a finding of the trial judge, the Court held that the respondent legal practice owed a fiduciary duty to Mrs Rahme which it had breached by failing to ensure that she obtained independent legal advice before agreeing to provide security for the legal costs to be incurred in litigation involving her husband and a family company. The trial judge had, however, expressed a tentative view that both the solicitor who sought to give her independent legal advice and counsel involved in the proceedings would have borne a considerable degree of responsibility for the loss had the claim succeeded against the legal practice, on the basis that it was an apportionable claim. The totality of the reasoning with respect to that issue was as follows: "135 For s 34(1)(a) to apply the plaintiff's claim must inter alia be one 'arising from a failure to take reasonable care'. As I concluded in [CTC Group], it is necessary for this purpose that the absence of reasonable care was an element of the, or a, cause of action upon which the plaintiff succeeds. I repeat as follows the reasons I there gave: [CTC Group at [22] and [23] were set out in full.] 136 Whilst Barrett JA expressed a different view in the same case ([37]-[42]) the approach which I consider to be correct is supported by the reasoning in Milanex and Monaghan Surveyors, to which I have referred above at [135], and of Emmett AJA (with whom Sackville AJA relevantly agreed) in Cassegrain v Cassegrain … at [83]-[84]. 137 I accordingly find that as a matter of principle a defence of proportionate liability was not available in the present case." 1. It may well be that on the facts as found, and on the pleading, the breach of fiduciary duty did not arise from a failure to take reasonable care. It was not contended that there was any other cause of action pleaded or found. Accordingly, the issue which had arisen in Reinhold and Godfrey Spowers did not arise here. However, there was no reference to judgment or reasoning of the Victorian Court of Appeal. It is necessary to address the three cases referred to at [136] which were relied upon to support the reasoning in CTC Group. 2. In CTC Group, Macfarlan JA had relied upon a construction of s 5A of the Civil Liability Act, which he considered "relevantly indistinguishable" from s 34(1). [21] That point was derived from Perpetual Trustee Company Ltd v Milanex Pty Ltd (in liq), [22] involving an appeal by Perpetual (a mortgagee) against a mortgage broker which had negotiated a loan for a pensioner in circumstances where it had no instructions from the borrower and the borrower had not signed the documents that were submitted to Perpetual. Perpetual alleged misleading and deceptive conduct under then s 52 of the Trade Practices Act and s 42 of the Fair Trading Act 1987 (NSW). This Court upheld Perpetual's claim, and addressed a defence of contributory negligence relied on by Milanex and not addressed by the trial judge. The defence was available for a contravention of s 52 of the Trade Practices Act, but not under the Fair Trading Act. Macfarlan JA noted that "Milanex did not contend that Perpetual was not entitled to rely upon the cause action most favourable to it, that is, that under the Fair-Trading Act": at [86]. (No issue of inconsistency for the purposes of s 109 of the Constitution appears to have been raised.) The reasoning continued: "87 Further, no other statute or principle of law gives Milanex the right to rely upon a defence of contributory negligence. Milanex relied upon s 5R and s 5S of the Civil Liability Act but those sections do not confer a right to raise a defence of contributory negligence. They operate where that right otherwise exists. In any event Part 1A Civil Liability Act, of which ss 5R and 5S form part, applies only to claims 'for damages for harm resulting from negligence' (s 5A), requiring in my view that negligence be an element of the relevant cause of action (although, as s 5A makes clear, it does not matter whether the claim is brought in tort, in contract, under statute or otherwise). However, negligence is not an element of a claim for damages arising out of contravention of s 42 Fair Trading Act …. A contravention of that section may occur whether or not the defendant has been negligent. That a defendant might as a matter of fact have been careless does not convert a claim against it under s 42 into one based upon negligence." 1. Part 1A of the Civil Liability Act is titled "Negligence". Pursuant to the definitions in s 5, in that part "'negligence' means failure to exercise reasonable care and skill". Section 5A provides: 5A Application of Part (1) This Part applies to any claim for damages for harm resulting from negligence, regardless of whether the claim is brought in tort, in contract, under statute or otherwise. (2) This Part does not apply to civil liability that is excluded from the operation of this Part by section 3B. 1. It is by no means clear that a conclusion based on the proper construction of s 5A can apply otherwise than by analogy to the construction of s 34(1)(a). That is in part because s 5A is a general provision which must be read in its context, with respect to particular applications. Thus, s 5Q (liability based on non-delegable duty) addresses only the "extent of liability in tort": s 5A(1) does not operate to give that provision any wider operation. Division 8 (contributory negligence), as Macfarlan JA recognised, does not create a defence of contributory negligence but clarifies two aspects of the operation of a defence which is otherwise available. By parity of reasoning with the operation of s 5Q, s 5A(1) would not create a defence of contributory negligence in respect of a statutory claim if such a defence did not arise under the statute. 2. Accordingly, the reasoning that s 5A(1) was not engaged because the liability under the Fair Trading Act did not include "harm resulting from [failure to exercise reasonable care and skill]" did not properly arise. It was therefore a false issue to ask whether s 5A(1) was engaged in circumstances where negligence was not an element of a cause of action. Had the issue arisen, it may have been necessary to consider the operation of the dependent clause to the effect that the cause of action, be it in tort, contract, under statute or otherwise, was immaterial. That in turn might have focused attention on the connecting phrase "resulting from" which did not necessarily engage a constraint by reference to negligence being an element of a cause of action. 3. In CTC Group, following the reliance on Milanex, there was reference to Monaghan Surveyors Pty Ltd v Stratford Glen-Avon Pty Ltd. [23] That case involved a claim in damages against a surveyor for erroneously identifying the area of a right of carriageway across the respondent's land by markings on a plan which came to be registered. The damages included the expenses involved in correcting the title and moving a retaining wall, amongst other items. The respondent's claims were based on causes of action in the tort of negligence, misleading and deceptive conduct contrary to the Fair Trading Act and the Trade Practices Act, breach of contract and breach of a statutory warranty. The passage relied upon in CTC Group arose in a discussion of principles of causation relevant to the assessment of damages. The Court accepted that s 5D of the Civil Liability Act was engaged with respect to the claims under the general law. The reasons then addressed the significance of aspects of s 5D and the extent to which it had varied the general law principles with respect to causation. Relevantly, the reasons continued: "75 There is a separate issue as to whether the claim under the Fair Trading Act must assessed in accordance with s 5D of the Civil Liability Act. If the conduct in a particular case involved a negligent misrepresentation, it is arguable that it would be caught by the definition of 'negligence' in s 5 of the Civil Liability Act. However, negligence is not a necessary element of a contravention of s 42 of the Fair Trading Act and it would seem curious if, by a side wind, some claims under s 42 were to be subject to the Civil Liability Act, Pt 1A, and some were not. 76 In [Milanex], in considering whether a defence of contributory negligence was available in response to a claim under s 42 of the Fair Trading Act 1987 (NSW), Macfarlan JA (Campbell and Young JJA agreeing) noted that ss 5R and 5S of the Civil Liability Act did not confer a right to raise a defence of contributory negligence, but operated where such a defence was otherwise available: at [87]. … [An extract from [87] set out above was quoted.] 77 The logic of that reasoning is undeniable, in terms of the language of the statute. However, it does not address an aspect of the history of the legislation which might suggest a different result. … In Booksan Pty Ltd v Wehbe [2006] NSWCA 3 …, Ipp JA stated (with the concurrence of Giles and Tobias JJA) that the repeal of the 1945 Act reinstated the rule laid down in Piro and contributory negligence 'once more became a defence to a cause of action based on breach of statutory duty': at [162]. Whether the assumption as to revival of the old common law principle is correct need not be considered here …. What is of greater concern is the possibility that Pt 1A of the Civil Liability Act should apply in relation to a breach of statutory duty, which, as explained by Latham CJ in Piro 'is absolute in the relevant sense when it requires that a particular thing be done, without reference to any questions of intent or negligence, as distinct from requiring only that the person subject to the statute shall do his best to do a particular thing': at 319. In Booksan, Ipp JA stated at [167]: 'In my opinion the consequences of the repeal of the 1945 Act ... and the insertion of s 5A into the Civil Liability Act, are clear. Irrespective of how a claim is formulated, if - in substance - it is a claim for damages for harm resulting from negligence, a defence of contributory negligence may be raised to that claim even if it is based on a breach of statutory duty.' 78 Having held that there had been no breach of the regulations giving rise to the statutory duty, it was 'not strictly necessary to determine' the issue as to contributory negligence: Booksan at [155]. It may also be said, though perhaps not entirely plausibly given the context of the remarks, that Ipp JA was intending to refer to the elements of a cause of action as involving negligence. No party having identified the issue in the present case, it should not be taken further, as it is not necessary to determine it. … 79 The claim under the Trade Practices Act will not be subject to s 5D, because s 82, which provided the remedy by way of damages for breach of s 52, was not constrained by State law, unless that law were picked up and applied by another Commonwealth law: Insight Vacations Pty Ltd v Young [2010] NSWCA 137; 241 FLR 125 at [85]-[91]. It was not suggested in this case that any relevant Commonwealth law had that operation in respect of s 52 of the Trade Practices Act (as then in force). 80 The relevant legal principles to be applied in considering the statutory causes of action must derive from the statutory purpose, which may be treated as the same in respect of both Commonwealth and State legislation. …" 1. It may be said that the views expressed by Macfarlan JA in Milanex were noted, but without express approval in circumstances where they were not determinative and other considerations might need to be addressed. 2. The reference in Rahme to Cassegrain [24] invoked a passage in the reasons of Emmett AJA with which, it was said, Sackville AJA relevantly agreed, to support Macfarlan JA's reasoning in Milanex. Cassegrain directly involved a claim for the application of Part 4 of the Civil Liability Act, but in circumstances where equitable compensation had been sought by a company. Sackville AJA noted that the finding that she was a knowing recipient may have satisfied the criteria in s 34A(1): at [34]. 3. In the passage in Cassegrain relied upon in Rahme, Emmett AJA commenced by observing that it was "not necessary to deal with the possible application of Part 4 of the Civil Liability Act": at [83]. However, he continued, noting that it was "difficult to see how it could have application in the present circumstances": "84 Felicity's liability arose because she accepted the transfer of the Shares from the Company, knowing that the transfer was effected by Claude and Mr Sarks in breach of the fiduciary duties owed by them to the Company as directors. Her liability does not arise because she failed to take care. The liability arose because she participated in transactions that she knew constituted breaches of fiduciary duty by directors of the Company. It did not arise from a want of care or negligence on her part. 85 Whether or not it could be said that Felicity intended to cause the relevant loss to the Company has not been the subject of any inquiry." 1. Emmett AJA had in mind the exclusion under s 34A(1)(a) where the wrongdoer has intended to cause the harm the subject of the proceeding. [25] The observation of Sackville AJA did not address that point, but nor did it support Milanex. 2. In March 2021, the Victorian Court of Appeal addressed the apportionment provisions of the Victorian Wrongs Act in Tanah Merah Vic Pty Ltd v Owners' Corporation No 1 of PS631436T. [26] In the Court's assessment, it was no longer appropriate to follow the reasoning of Middleton J in Dartberg, nor that of Barrett J in Reinhold, in part because Barrett JA in CTC Group appeared to have qualified his position so as to clarify that "the terms in which the claim is framed are the starting point for deciding whether the claim is of the kind referred to in [the equivalent of s 34(1)(a) of the Civil Liability Act]": at [115]. Then, having referred to Macfarlan JA in CTC Group, the Court opined that: "117 Notwithstanding what Barrett J said in Reinhold, it seems to us that his Honour's view (as expressed in Perpetual Trustee) is now that the terms in which the claim is framed are an essential determinant of whether a claim can be said to arise from a failure to take reasonable care. In our opinion, that is the correct approach." 1. The phrase, "an essential determinant" is ambiguous; in the following paragraph the Court took issue with the view that "the nature of the claim itself is irrelevant to the question whether the claim is one 'arising from a failure to take reasonable care'" and has a number of anomalous consequences. With respect, there would appear to be an alternative reading (that adopted by Barrett JA in CTC Group) which permits both the pleading of the claim and the findings made by the trial court, to be given weight in determining the issue. 2. One of the anomalous results of treating "the nature of the claim itself [as] irrelevant" was said to be that it would "enable a party strictly liable in contract to plead its own negligence as a partial defence to the claim". [27] Ironically, that would only arise if the claim were defined by the other party's pleading and if the pleadings were given determinative force. A second anomalous result was that it would "substantially deprive [the equivalent of s 35(2)] of operative effect", though how it would do that was not discussed. Thirdly, it was said to "enable to the primacy of contract in determining the allocation and extent of risk at common law in certain situations to be displaced". Supposed anomalies in terms of construing other statutory provisions were also identified. 3. This is not the place to explore construction by anomaly, but the straw man (treating the nature of the claim as "irrelevant") and the lack of persuasive force of the anomalies, casts doubt on the conclusion. The Victorian Court's own reasoning in Godfrey Spowers was dismissed as "merely obiter dicta". [28] 4. In November 2021, in Herridge Parties v Electricity Networks Corporation (t/as Western Power) [29] the Western Australian Court of Appeal dealt with claims by a group of persons who suffered economic loss and damage to property as a result of a bushfire caused by the collapse of a pole carrying powerlines. The approach to the Western Australian equivalent of s 34 [30] has been set out by Stern JA at [179] above and need not be repeated. The Court referred to Rahme in the following passage: "327 In [Rahme] the New South Wales Court of Appeal held that the application of the equivalent to s 5AK turned not on the facts which happened to be found, but on the essential character of the plaintiff's successful cause of action. If negligence was an essential element of the cause of action, it will have been pleaded in the statement of claim, and if it is not it will not have been pleaded. That approach looks to the facts which give rise to a right to sue rather than the description of the form of action (such as negligence or nuisance)." 1. The Court in Herridge Parties then went on to consider the pleading, apparently accepting that the alternative approach might be preferred, although it was inconsistent with the primary position taken by the Court, which had been set out earlier. From that it may be inferred that the Western Australian Court of Appeal considered the approach in Rahme was wrong but did not need to decline to follow it. Nevertheless, the principled approach adopted in Herridge Parties provides a further reason for not following Rahme. [31] Conclusions 1. For these reasons, this Court should follow the analysis of s 34(1) adopted by Barrett J in Reinhold, approved by the Victorian Court of Appeal in Godfrey Spowers, and explained in CTC Group, not being inconsistent with Herridge Parties. The Court should not have adopted a different view in Rahme unless comfortably satisfied that the reasoning in Godfrey Spowers either did not apply or was erroneous: it did neither. Furthermore, the reasoning relied upon in Rahme was almost entirely dependent upon acceptance of Macfarlan JA's minority view in CTC Group, which, for the reasons set out above, is not persuasive. 2. Section 34(1)(a) should not be construed as extending to a claim found to have arisen absent any failure to take reasonable care. On the other hand, a claim, whatever the pleaded cause of action, which has been upheld on the basis that there was a failure to take reasonable care will constitute an apportionable claim under s 34(1)(a). Notably, Gemi 130 filed a cross-claim alleging that Toltz had acted for it and had failed to take reasonable care in assisting and advising it. 3. To the extent that s 35(2) presents a dilemma, the resolution is to be found by application of s 34(1A), where, even if a number of causes of action have been pleaded, there will only be a single apportionable claim in respect of proceedings for the same loss or damage. That resolution of the dilemma is available so long as the definition of apportionable claim turns upon factual findings made in the course of the trial, rather than upon merely upon the pleading of an individual cause of action. 4. There is a suggestion, implicit in CTC Group, that a plaintiff can, after pleading different causes of action, one of which involves a claim arising from a failure to take reasonable care and another of which involves fault-free liability, after obtaining a favourable judgment on both, withdraw the former claim so as to avoid a finding of an apportionable claim. That position is not tenable; it finds no basis in the statute and is a false solution to the s 35(2) dilemma. 5. I agree with the orders proposed by Stern JA. ********** Endnotes 1. Adopting the abbreviations used by Stern JA, "Toltz" refers to Gerrard Toltz Pty Ltd and "City Garden" to City Garden Australia Pty Ltd (in liq). 2. Defence filed 8 June 2023, par 168. 3. Primary judgment at [289]. 4. (1997) 188 CLR 449 at 467 (Brennan CJ, Gaudron, McHugh and Gummow JJ); [1997] HCA 23. 5. See Perpetual Trustee Company Ltd v CTC Group Pty Ltd (No 2) [2013] NSWCA 58 at [17]-[18]. 6. A Scalia and B Garner, Reading Law: The Interpretation of Legal Texts (2012, Thomson/West), p 144 "Last-Antecedent Canon". 7. Part 2 concerns personal injury damages and is not presently relevant. 8. (2007) 164 FCR 450; [2007] FCA 1216. 9. (2008) 82 NSWLR 762; [2008] NSWSC 187 at [23] and [29]. 10. (2008) 21 VR 84; [2008] VSCA 208. 11. Being the Victorian equivalent of NSW s 35; s 24AJ is the equivalent of NSW s 36. 12. They are based upon the Law Reform (Married Women and Tortfeasors) Act 1935 (UK) and the Civil Liability (Contribution) Act 1978 (UK). (Original footnote) 13. Albion Insurance Co Ltd v Government Insurance Office (NSW) (1969) 121 CLR 342 at 350 per Kitto J (Original footnote). 14. (2007) 163 FCR 510; [2007] FCA 1468 at [62]; Godfrey Spowers at [93]. 15. Godfrey Spowers at [106]-[109]. 16. [2013] NSWCA 58. 17. Cassegrain, Felicity v Cassegrain, Denis [2016] NSWCA 71 (Basten JA, Sackville and Emmett AJJA). 18. B McDonald and JW Carter, "The Lottery of Contractual Risk Allocation and Proportionate Liability" (2009) 26 Journal of Contract Law 1 at 19. (Footnote in original.) 19. JLR Davis, Inquiry into the Law of Joint and Several Liability: Report of Stage 2 (Australia, Attorney-General's Department, January 1995) (Davis Report) at p 31. 20. Davis Report, p 33, (c) statutory liability. 21. (2019) 100 NSWLR 550; [2019] NSWCA 211. 22. CTC Group at [23]. 23. [2011] NSWCA 367 (Campbell, Macfarlan and Young JJA). 24. [2012] NSWCA 94 at [76], [77]. 25. See fn 17 above. 26. See also my reasons at [26]. 27. [2021] VSCA 72 (Beach and Osborn JJA, Stynes AJA). 28. Tanah Merah at [118]. 29. Tanah Merah at [122]. 30. (2021) 59 WAR 69; [2021] WASCA 111 (Buss P, Murphy and Mitchell JJA). 31. Civil Liability Act 2002 (WA), s 5AI; s 5AK is the equivalent of NSW s 35. 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