JAMES v GAIN SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL GLEESON CJ, POWELL and BEAZLEY JJA 19 February 1998, 26 February 1998 [1998] NSWCA 115 Negligence — Solicitor — Conveyancing transaction — Mental capacity to enter into contract for sale — Differing valuations — Property sold at lowest valuation — Proof of damage. Gleeson CJ, Powell and Beazley JJA The appellant, as executor of the estate of Keith Arkinstall, deceased, brought proceedings in negligence against the respondent, a solicitor, in respect of a conveyancing transaction in which the deceased sold his property at Gundagai, at a time when the deceased did not have the mental capacity to enter into the contract for sale. The conveyancing transaction was entered into on 4 February 1986. On 7 May 1986, an order was made in the Protective Division of the Court declaring that the deceased was a person incapable of managing his affairs. Earlier, on 24 April 1986, Dr Spragg, psychiatrist had diagnosed the deceased as suffering from an advanced state of dementia. In evidence in the proceedings subject of the appeal, Dr Spragg said that any difference in his mental condition between 4 February 1986 and when he saw him in April 1986 "would have been imperceptible". The trial judge appears to have accepted that the deceased did not have the mental capacity to enter into the conveyancing transaction. However, his Honour held that it had not been established on the balance of probabilities, that the respondent "knew or ought to have known that [the deceased's] mental condition was such that he was not capable of properly understanding this transaction". It followed on this finding that there was no breach of the solicitor's duty. We have some sympathy with the appellant's challenge to this part of his Honour's judgment. There was evidence which pointed strongly to a finding that, at the least, the respondent ought to have known of his condition. See for example letter dated 24 October 1985 from Mr Webb solicitor to the appellant; and the respondent's evidence at AB 70, 75. Any successful challenge would of course have to overcome the application of the principles in Abalos v Australian Postal Commission (1990) 171 CLR 1 67. But, whatever be the position in respect of breach of duty, the appellant's claim in negligence cannot succeed without proof of damage. In our opinion, the appellant faces an insurmountable hurdle in that regard. Both parties called evidence from qualified valuers. The appellant's expert, Mr Weir, valued the property as at the date of sale at $18,000. The respondent's expert, Mr Wood, valued it at $10,000 to $15,000. The purchase price was $10,000. The trial judge preferred the evidence of the respondent's expert. In doing so he said: "In my view the price in the circumstances pertaining in February 1986 the price was not unusual. I am comforted by the shrewd view of an expert Real Estate Agent Mr Wood who thought the price of $1000 [sic] in February 1986 2 UNREPORTED JUDGMENTS was within range. The fact that Mr Weir later on looked at the circumstances in February 1986 and formed a different opinion as to evaluation does not detract from the point of view available to the Defendant at the time. In what might be characterised as a "throw away line", his Honour added some confusion to this finding by stating: "There will be a verdict for the Defendant. In case this decision is avoided elsewhere, I direct my attention towards what order I would make if I were to a give a verdict for the Plaintiff. In my view the property a the most was worth $15000 as at February 1986 and as it was sold for $10,000 the amount of loss to the Plaintiff would have been $5000." The appellants submitted that this statement must be viewed as an alternative finding by his Honour that the value of the property as at the date of sale was $15,000 so that the appellant in fact suffered a loss of $5,000. We do not agree. His Honour had before him two expert opinions as to the value of the property. Mr Wood's evidence was that the value of the property was within a range of $10,000 to $15,000. In addition to having expert valuation credentials Mr Wood was a local real estate agent in the small country town in which the property was located. His Honour was entitled to accept his evidence, and to also accept that a price of $10,000 was the price which a willing but not anxious buyer was prepared to pay. There was no evidence that there was a buyer at any other price. As we have said, his Honour's second statement was confusing, but we do not believe it constitutes a finding as to the value of the property as at the date of sale. As the appellant has not proved that any damage was suffered the appeal must fail. The order of the Court is that the appeal is dismissed with costs. Counsel for the appellant: G Turner Solicitors for the appellant: Holman Webb Counsel for the respondent: N Perram Solicitors for the respondent: Malleson Stephen Jaques