New South Wales Supreme Court CITATION : WINNIFRED WAI YUE YU v ALLAN NI KWAN KWOK & ORS. [1999] NSWSC 992 CURRENT JURISDICTION : Equity FILE NUMBER(S) : 2068/96 HEARING DATE(S) : 3, 4 and 5 June, 24, 25, 26 and 27 August 1998. Final original written submissions received 14 September 1998; final supplementary submissions received by request on 27 August 1999. JUDGMENT DATE : 2 September 1999 PARTIES : WINNIFRED WAI YUE YU v ALLAN NI KWAN KWOK & ORS. JUDGMENT OF : Simos J COUNSEL : JA Halley (Plaintiffs) RW White, SC (Defendant) SOLICITORS : Clayton Utz (Plaintiffs) Mallesons Stephen Jaques (Defendant) CATCHWORDS : CONVERSION - Deposit of cheques drawn in favour of plaintiff into trust account of plaintiff's accountants contrary to plaintiff's instructions - Accountants guilty of conversion of cheques but no damages caused by conversion.; EQUITY - FIDUCIARY DUTY - Deposit of cheques drawn in favour of plaintiff into trust account of plaintiff's accountants contrary to plaintiff's instructions - Accountants guilty of breach of fiduciary duty owed to plaintiff but no damages caused by breach.; NEGLIGENCE - DUTY OF CARE - In particular circumstances, accountants owed positive duty in tort to plaintiff to advise (inform) plaintiff of nature of proposed interest bearing investment to be made on plaintiff's behalf including investment risk involved - Breach of duty by accountants causing loss to plaintiff - Accountants liable in damages for loss.; CONTRIBUTORY NEGLIGENCE - In particular circumstances plaintiff contributed to loss as to 15%.; EQUITY - NON-FIDUCIARY EQUITABLE DUTY - In particular circumstances, accountants subject to non-fiduciary equitable duty substantially co-extensive with accountants' duty in tort - Accountants liable to compensate plaintiff for loss.; EQUITY - TRUSTEES - TRUSTEE ACT 1925 - AUTHORISED INVESTMENTS - In particular circumstances, accountants although also trustees, not limited in making interest-bearing investments on behalf of plaintiff to investments authorised by or under the Trustee Act 1925.; EQUITY - TRUSTEES - TRUSTEE ACT 1925 (SECTION 85) - CLAIM FOR RELIEF AGAINT PERSONAL LIABILITY - If accountants otherwise eligible to claim relief against personal liability for breach of trust, in particular circumstances accountants not entitled to relief because although acted honestly did not act reasonably.; TORT - MEASURE OF DAMAGES - Plaintiff entitled to be compensated in amount necessary to put plaintiff in position plaintiff would have been in if wrongful act had not occurred. ACTS CITED : Trustee Act 1925 Belsand Pty Ltd v Bridgewater Securities Ltd (1995) Aust Torts 81-353 Butler v Egg and Egg Pulp Marketing Board (1966) 114 CLR 185 Bristol and West Building Society v Mothew [1998] Ch 1 at 16-18 Bryan v Maloney (1995) 182 CLR 609 Chan v Zachariah (1984) 54 CLR 178 Cook v Cook (1986) 162 CLR 376 Esanda Finance Corporation Ltd v Peat Marwick Hungerfords (1997) 188 CLR 241 Gala v Preston (1991) 172 CLR 243 Gates v City Mutual Life Assurance Society Ltd (1986) 160 CLR 1 Haines v Bendal (1991) 172 CLR 60 Hawkins v Clayton (1988) 157 CLR 424 Hill v Van Erp (1997) 188 CLR 159 CASES CITED : Hunter BNZ Finance v CG Maloney Pty. Ltd. (1988) 18 NSWLR 420 Jaensch v Coffey (1984) 155 CLR 549 Maguire v Makaronis (1996-1997) 188 CLR 449 Penfolds Wines Pty Ltd v Elliott (1946) 74 CLR 204 Perre v Apand Pty Ltd (1999) HCA 36 Pyrenees Shire Council v Day (1998) 192 CLR 330 Romeo v Conservation Commission of the Northern Territory (1998) 192 CLR 431 San Sebastian Pty Ltd v The Minister (1986) 162 CLR 340 Sutherland Shire Council v Heyman (1985) 157 CLR 424 Turner v Belsand Pty Ltd (unreported, Fed Ct (Full Ct), 10 July 1997) Bowstead and Reynolds on Agency, (16 ed - 1996) Meagher, Gummow and Lehane: Equity: Doctrines and Remedies, (3 ed - 1992) Weaver & Craigie: The Law Relating to Banker and Customer in Australia (2 ed - 1990) DECISION : Plaintiff entitled to damages and interest for breach of duty of care by Defendants IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION SIMOS J THURSDAY, 2 SEPTEMBER 1999 NO. 2068/96: WINNIFRED WAI YUE YU v ALLAN NI KWAN KWOK & ORS. JUDGMENT HIS HONOUR: The Proceedings Statement of Claim 1 By her second further amended statement of claim the plaintiff, Winnifred Wai Yue Yu, claimed against the defendants, Allan Ni Kwan Kwok and others, being the partners of the accountancy firm, Powell Kwok Baker, a declaration that upon receipt by the defendants of the sums of $486,043.61 and $82,077.15 on or about 16 and 23 November 1990 respectively from the plaintiff, each of the defendants held the said sums upon trust for the plaintiff. The plaintiff also claimed an order that the defendants account to the plaintiff as constructive trustees in respect of the said sums received by them from the plaintiff, as well as damages, including equitable damages and interest thereon. 2 The moneys claimed by the plaintiff were paid into the trust account of the defendants on the dates mentioned, and were placed by the defendants on interest bearing deposit with BCC Australia Limited ("BCC"). The plaintiff claimed that her solicitor had instructed the defendants to deposit the moneys into the cheque account of the plaintiff, and that in depositing those moneys into the trust account of the defendant and thereafter placing them on interest bearing deposit with BCC, the defendants had acted contrary to her instructions. Subsequently, on 8 July 1991, a provisional liquidator was appointed to BCC as a result of which the plaintiff, after receiving certain dividends from the provisional liquidator, lost $300,929.21. 3 The plaintiff claimed that in these circumstances the defendants had "converted each of the said cheques to their own use and (had) wrongfully deprived the plaintiff of the same and (that) as a result thereof the plaintiff had suffered loss and damage." The plaintiff claimed, alternatively, that, in the circumstances, the defendants owed a fiduciary duty to the plaintiff to apply the said cheques in accordance with the plaintiff's instructions and that in failing to do so the defendants were in breach of their fiduciary duty. 4 In the further alternative, the plaintiff claimed that the defendants owed a duty of care to the plaintiff "to advise the plaintiff of the nature of the investment into which the defendants intended to deposit the said cheques" and that, in breach of that duty of care, the defendant failed to disclose to the plaintiff certain matters relating to BCC . 5 Further and alternatively, the plaintiff claimed that the defendants held the said sums on trust for the plaintiff and were trustees thereof and that in breach of trust the defendants deposited the said funds with BCC which was not an investment authorised by the Trustee Act 1925. Defence 6 By their amended defence to the second further amended statement of claim the defendants, inter alia, denied that they were instructed by the plaintiff's solicitor to place the funds with the plaintiff's cheque account with the Westpac Banking Corporation and claimed that they were instructed, inter alia, to place the funds in a short-term investment account in the name of the plaintiff. The defendants admitted that they deposited the moneys referred to in their trust account, and that those moneys were then placed on deposit with BCC on trust for the plaintiff. The defendants claim that at all times they acted in accordance with the instructions received for and on behalf of the plaintiff. The defendants admitted that the funds which were received by the defendants were held by them subject to a fiduciary duty owed to the plaintiff. The defendants admitted that they did not advise the plaintiff of the various matters relating to BCC but denied that they owed a duty of care to the plaintiff to do so. They also admitted that they did not advise the plaintiff of their intention to deposit the moneys of the plaintiff into their trust account and invest the proceeds with BCC. The defendants also admitted that they did not advise the plaintiff of any of the matters relating to BCC prior to any subsequent roll over of the deposits with BCC. 7 The defendants claimed that, at least on 23 November 1990 or 12 December 1990, or on both dates, and on or about 27 February 1991, they advised the plaintiff that the said proceeds had been invested on her behalf with BCC and advised her of the term of the deposit and the current interest rate. They also claimed that, on or about 12 December 1990, the plaintiff instructed the defendants to roll over the deposit at 30 days call and further, that the plaintiff did not request any advice in relation to the risks of the investment, and that the plaintiff did not rely on the defendants to provide her with any such advice, nor did the defendants assume any responsibility to give any advice, but only to give the information in fact given to the plaintiff. The defendants denied that they owed the plaintiff a duty of care as alleged. 8 The defendants admitted that the funds were placed on deposit with BCC on trust on behalf of the plaintiff but claimed that the plaintiff expressly conferred on the defendants the power to invest the said funds in such securities as in the defendants' full discretion were considered to provide the best short-term interest rate. The defendants admitted that interest bearing deposits with BCC were not authorised investments under the Trustee Act 1925 but denied that they had committed any breach of trust, and claimed that if they had acted in breach of trust (which was denied) they were entitled to relief from liability under section 85 of the Trustee Act 1925. 9 Further and in the alternative the defendants claimed that the plaintiff by reason of certain facts "impliedly affirmed the defendants' instructions, that they were to place the funds in such securities, as in their full discretion, provided the best short-term interest rate." The defendants further claimed that the plaintiff had consented to and concurred in the funds being placed on short-term deposit with BCC and was estopped from bringing these proceedings against the defendants. Finally, the defendants claimed that if the plaintiff was entitled to damages, equitable damages or equitable compensation, such damages or compensation should be reduced to such extent as the Court thought fit by reason of the plaintiff's contributory negligence or share of responsibility for the loss. The Facts Delivery of the Cheques of the Plaintiff to the Defendants and Instructions Given by the Plaintiff to the Defendants. 10 The plaintiff was the owner of a certain property in Bankstown, which she sold in October 1990. Contracts were exchanged on 3 October 1990 and the contract was completed on 16 November 1990. Susan McAlpine, the plaintiff's solicitor, whose evidence I accept, stated that at around lunchtime on that day, and prior to the completion of the contract, she sought instructions from the plaintiff as to what the plaintiff required to be done with the balance of the purchase price to be received on completion. Instructions were sought in the course of a telephone call made by Ms McAlpine to the plaintiff who was in Hong Kong. 11 After some initial conversation concerning the issue of interest payable by the purchaser for late completion of the contract, Ms McAlpine informed the plaintiff that she would be receiving approximately $480,000 on behalf of the plaintiff on completion of the contract, and about another $80,000 from the agent some time after completion of the contract, and asked the plaintiff what she wanted Ms McAlpine to do with these moneys. Ms McAlpine inquired whether the plaintiff had a bank account in Australia as she only had details of a bank account for Jedili Pty Limited, a company in which the plaintiff was interested. Ms McAlpine told the plaintiff that she could put the money into the trust account of the firm of solicitors by which she was employed, but pointed out that it would not earn any interest in that trust account unless it was put into an interest bearing deposit. The plaintiff informed Ms McAlpine that she did have a bank account in Australia and that the money could go into that account and earn interest there. When Ms McAlpine asked the plaintiff for details of the plaintiff's bank account the plaintiff replied that she did not have them with her but that the office of her accountant, Alan Kwok, of Powell Kwok Baker, had all the details. When Ms McAlpine asked whether the plaintiff wanted her to ring Mr. Kwok, the plaintiff replied that Mr. Kwok was too busy, but that Grace (Law) looked after all her affairs and had the account details. The plaintiff instructed Ms McAlpine to take the cheques up to Grace (Law)" and ask her to bank it for me." Ms McAlpine stated, in effect, that she could herself arrange for the moneys to be banked in the bank account if she had the bank account details. The plaintiff replied that she should give the cheque to Grace (Law) who looked after her accounts for her and whom she rang whenever she wanted something. 12 The plaintiff, whose evidence, in general, I accept because she impressed me as a truthful witness, although somewhat nervous in the witness box, gave evidence to the same effect, namely, that she said to Ms McAlpine words to the effect:- "I have a bank account in Australia, the money can go into my bank account and earn interest there. I haven't got my details with me. Give the cheque to Alan's office, Grace knows my bank account details. Take the cheque to her and ask her to bank it for me." 13 It is common ground that at this time the plaintiff had a non-interest bearing cheque account with Westpac Banking Corporation, as well as an interest bearing deposit with that bank. 14 Despite some answers to the contrary, as to which I am not entirely satisfied that the witness understood the purport of the questions and/or answers, the plaintiff in cross-examination stated in effect that she wanted the proceeds of the sale of her Bankstown property to be put into her Westpac cheque account and that she intended Ms. Law to be instructed to do that. The plaintiff also said that she assumed that the moneys would be deposited with the "Westpac Bank in a term deposit, earning interest." She also said that she "intended Grace Law to be instructed to put the money in (her) bank account with Westpac", and that she expected that Mr. Kwok would be putting the money for me to earn some interest." She said that she thought Powell Kwok Baker could operate on her cheque account although she agreed that she had not given Mr. Kwok authority to do so. 15 I am satisfied that, during this initial conversation between the plaintiff and Ms. McAlpine, the plaintiff instructed Ms. McAlpine to give the cheques comprising the balance of the proceeds of sale of the Bankstown property to Ms. Law so that Ms. Law could bank those cheques in the plaintiff's cheque account with Westpac, and so that those moneys could earn interest. It is common ground, as stated above, that the plaintiff's cheque account with Westpac was not an account which earned interest . It should be noted, however, that what Ms. McAlpine later said to Ms. Law differed in certain respects from what was said previously between Ms. McAlpine and the plaintiff. 16 Thus, later, on 16 November 1990 Ms. McAlpine telephoned Ms. Law and informed her that the plaintiff's sale of her Bankstown property was being completed that afternoon, and that she needed certain details as to the land tax payable in respect of the property. In the course of this conversation Ms. McAlpine told Ms. Law that she (Ms. McAlpine) had been told by the plaintiff that Ms. Law had details of the plaintiff's bank account and was told by Ms. Law that they would be on file. Ms. McAlpine then informed Ms. Law that the plaintiff had asked her to give the balance of the settlement moneys to Ms. Law "to bank for her" (the plaintiff). In my opinion the effect of this conversation is that Ms. McAlpine conveyed to Ms. Law that the plaintiff wanted Ms. Law to "bank" the balance of the settlement moneys of the plaintiff in the plaintiff's "bank account". 17 Ms. McAlpine also told Ms. Law that she would not have the cheque until late that afternoon and requested Ms. Law to make sure that she had the bank account details by then. In my opinion, the words "bank account" as used in the relevant circumstances of the present case, meant, and would have been understood to mean, the (Westpac) cheque account of the plaintiff, there being no evidence that either Ms. McAlpine or Ms. Law actually knew that the plaintiff also had a Westpac interest bearing deposit account into which, in any event, it would not have been possible for Ms. Law to deposit the plaintiff's cheques. 18 On completion of the sale later that day Ms. McAlpine received two ANZ bank cheques in favour of the plaintiff, one for $441,569-02 and another for $44,474-59. Ms. McAlpine asked Ms. Law if she had managed to find the plaintiff's bank account details to which Ms. Law replied in the affirmative. Ms. McAlpine then handed the two cheques to Ms. Law and asked her whether she had time to get the cheques into the bank before it closed, to which Ms. Law again replied in the affirmative. Ms. McAlpine then said words to the effect that that was good, because clients did not like missing out on interest when there was such a large amount involved, even if it was only a couple of days' interest. Ms. McAlpine also informed Ms. Law that there would be another cheque some time during the following week, being the balance of the deposit which was still with the agent. In the course of the remainder of the conversation Ms. McAlpine informed Ms. Law that the plaintiff and her husband, Dr. Yu, did not want their son, Patrick, "getting his hands on the money". 19 Ms. McAlpine received the balance of the deposit from the agent on 22 November 1990 in the form of a Westpac bank cheque for $82,077-15, which she took to Ms. Law on 23 November 1990 when she asked Ms. Law whether she could "deposit it to the same account for Winnie". Ms. Law replied that she could and inquired what the plaintiff was going to do with the money now and, in particular, was she going to buy another property. Ms. McAlpine replied that she really did not know but that the plaintiff had been looking and buying a house but that nothing was definite at the moment. She said that she thought that the plaintiff just wanted to leave the moneys in the bank for a while but "if you need to know any more details you had better check with her". 20 During this period Ms. McAlpine was involved in litigation for clients including Jedili Pty Limited, the directors of which were Dr. and Mrs. Yu, and, accordingly, did not write reporting details of the settlement to the plaintiff until 13 February 1991. That letter was addressed to the plaintiff at her Chatswood address and included the following paragraphs:- "The final cheque being the balance of the settlement proceeds was made payable to you, and handed to Powell Kwok Baker & Co. to be invested on your behalf. Following settlement we also received the balance of the deposit being $82,077.15. We note that commission of $34,800.00 had been deducted from the deposit and that your half share of the interest was $877.15. These funds were also forwarded to Powell Kwok Baker & Co. to be invested on your behalf….". 21 Ms. McAlpine said that during late 1990 and early 1991 she spoke to Dr. Yu frequently and, on some occasions, to the plaintiff. Most of the conversations concerned the litigation but Ms. McAlpine recalled at least one telephone call where she discussed the Bankstown sale with both Dr. Yu and the plaintiff. She recalled that during one telephone call, after she had received the balance of the deposit, Dr. Yu or the plaintiff asked her if she knew what interest the money was earning. Ms. McAlpine replied that she didn't know and that the plaintiff or Dr. Yu would have to confirm those details with Grace (Law) or someone from Powell Kwok Baker. She said she could try to find out for them but the plaintiff replied with words to the effect that it was not necessary as she needed to speak to Powell Kwok Baker about some other matters and could find out then. 22 In cross-examination Ms. McAlpine said that she first learned that the moneys had been deposited with BCC some time in mid-1991 after July. Ms. McAlpine said that prior to that time she presumed it was with Westpac although she had no specific knowledge. Ms. McAlpine agreed that she conveyed to Ms. Law that it was the plaintiff's expectation that the moneys would earn interest. 23 Ms. Law's evidence in relation to the conversation differed from Ms. McAlpine in one significant respect, namely, Ms. Law's evidence was to the effect that Ms. McAlpine made no reference in any conversations with Ms. Law to the plaintiff's "bank account" (being the plaintiff's (Westpac) cheque account) (see above). The relevant words of the conversation between Ms. McAlpine and Ms. Law, so far as Ms. Law was concerned, were that Ms. McAlpine said, inter alia, words to the following effect:- "The cheques will be brought up to you to arrange to bank the funds on interest bearing deposit. The money should be easily accessible. I don't know when Mrs. Yu will need it as she may return to Australia. We don't want to lose a day's interest." 24 She did agree, however, that on 23 November 1990 she had a telephone conversation with Ms. McAlpine during which Ms. McAlpine said words to the following effect:- "I have the other cheque. Can I bring it up to you to bank with the rest." 25 Ms. Law said in cross-examination that she could not remember the exact words used by Ms. McAlpine and that her evidence in this connection was as to the substance or effect of what Ms. McAlpine said. Ms. Law's evidence was to the effect that the substance of what Ms. McAlpine said to her was that the plaintiff's funds were to be "banked" on interest bearing deposit, with the word "bank" being used as equivalent to the word "invest", without any instruction that those funds were to be banked in the bank account of the plaintiff. 26 In relation to the significant matter of difference between Ms. McAlpine and Ms. Law, namely, as to whether Ms. McAlpine instructed Ms. Law that the plaintiff's funds were to be banked in the "bank account" of the plaintiff, I am of the opinion that the evidence of Ms. McAlpine is to be preferred . I am of this opinion principally because, in my opinion, it is plain from the evidence of Ms. Law quoted above, as well as from her other evidence, that in the course of giving all her evidence and even where expressed in the first person, Ms. Law was more concerned to state the "effect" of what was said as she remembers that "effect", rather than doing her best to remember in more detail and with precision what was actually said. One example only of Ms. Laws approach can be seen in the following answer given by her in cross-examination:- "A. …Like I said, I cannot recall what was said between Ms. McAlpine and me but I do know that the substance of it, like you said, is come down to the point that I have deposited the previous two cheques with a bank, if you like to call it, and when the second time, when you gave me the cheque it obviously would be for the same institution. She would have no reason to ask me or to tell me to invest the cheque somewhere else." 27 On the other hand, in my opinion, the nature of Ms. McAlpine's evidence and her demeanour in the witness box made it plain to me that she was trying much harder to be accurate and detailed in relation to what was said, even allowing for the fact that the conversations occurred many years ago, even as at the date of her first affidavit in 1994. 28 Ms. McAlpine's evidence was calm and consistent and well considered and was relevantly consistent with the evidence of the plaintiff in respect of these matters (the plaintiff was not shaken in cross-examination in relation to these matters). Ms. McAlpine's evidence in this respect was also consistent with her evidence, and the evidence of others, including Mr. Hancock, as to what she said in later meetings had been said in these initial conversations. 29 So far as concerns the evidence of Ms. McAlpine on this issue, I have also had regard, inter alia, to the consistency of her account as to what was said between her and Ms. Law in November 1990 as recounted by her, according to her evidence, at a meeting in February 1992 at Mr. Kwok's office, attended, inter alia, by the plaintiff and Dr. Yu, Mr. Kwok and Ms. Law, as well as Ms. McAlpine and Mr. Leong, her solicitor employer, and to the fact that, what she said in February 1992 had been said in her conversations with Ms. Law in November 1990, was corroborated by others. Deposit of Cheques of the Plaintiff Into Trust Account of Defendants and Subsequent Deposit of Proceeds of Plaintiff's Cheques with BCC Australia. 30 Following her first conversation with Ms. McAlpine on 16 November 1990 in which Ms. McAlpine told Ms. Law that she would be bringing to Ms. Law the cheques for the proceeds of settlement of the sale of the plaintiff's Bankstown property, Ms. Law spoke to a fellow employee at the offices of Powell Kwok Baker & Co., namely, Miss Nancy Wong. In answer to an inquiry from Ms. Law as to whether she knew of anyone with whom the plaintiff's proceeds of sale could be deposited with interest that day, Ms. Wong said words to the effect:- "I would recommend BCC Australia as it has high interest rates for short term deposits and also good accessibility. A few of our clients have investments with BCC at the moment. I know the contact person there. He is Mr. Wazay." 31 It was not in dispute that Ms. Wong had no expertise in relation to investments 32 Ms. Law then telephoned Mr. Wazay of BCC and informed him that she would like to arrange for some money to be deposited that day with BCC. Mr. Wazay of BCC informed Ms. Law that if the settlement cheques were to be deposited later that day it could only be by way of a Powell Kwok Baker trust account cheque as the plaintiff did not have an account with BCC, whereas Powell Kwok Baker did. Later that day, after Ms. McAlpine delivered the two bank cheques drawn in favour of the plaintiff to Ms. Law at approximately 4.00pm, and Ms. Law had informed Ms. McAlpine that she would be able to get the cheques into the bank before it closed, Ms. Law arranged for Ms. Lynette Evans, a partner of the accountancy firm of the defendant, to sign a Powell Kwok Baker trust account withdrawal voucher and trust cheque in the amount of the total of the two cheques, namely, $486,043.61 in favour of BCC. Ms. Law then deposited the two settlement cheques in favour of the plaintiff into the trust account of the defendants after which the trust account cheque of Powell Kwok Baker was deposited into an account of BCC with the National Australia Bank nominated by Mr. Wazay, in the name of Powell Kwok Baker but on trust for the plaintiff. 33 On 23 November 1990 Ms. McAlpine delivered to Ms. Law a cheque in favour of the plaintiff in the amount of $82,077.15, being the balance of the deposit received the previous day from Ms. McAlpine from the agent on the sale. According to Ms. McAlpine at that time she said to Ms. Law words to the effect:- "This is the balance of the sale proceeds for Winnie Yu. Can you deposit it to the same account for Winnie?" 34 According to Ms. Law Ms. McAlpine said to her on the telephone prior to delivery of the cheque words to the effect:- "I have the other cheque. Can I bring it up to you to bank with the rest." 35 Presumably this cheque was dealt with in the same way as the other two cheques, namely, it was paid into the trust account of Powell Kwok Baker and a trust account cheque drawn on the trust account of Powell Kwok Baker in favour of BCC in the sum of $82,077.15 was deposited in the account of BCC with the National Australia Bank making the total of the deposits into the BCC account $568,120.76. Subsequent Events 36 Ms. Law gave evidence and the plaintiff denied, that she (Ms. Law) had a telephone conversation with the plaintiff in late November or early December 1990 during which Ms. Law informed the plaintiff that she had "banked" the settlement cheques with BCC at call. According to Ms. Law the plaintiff said that she would probably come back (to Sydney) early in the new year to look for "a comfortable house with security". According to Ms. Law she (Ms. Law) said that, in that case, the money should be placed on 30 days' call "as the interest rate is higher", and that as the legal work for the purchase of the property after payment of a deposit would probably take around three to four weeks there should be no problem in getting the money in time. According to Ms. Law the plaintiff replied "Okay", and at the end of some further conversation said that she would call Ms. Law when she arrived in Sydney. Ms. Law says that when the plaintiff did not call her early in the new year she made some enquiries and found out that she was very ill in hospital. 37 In a subsequent affidavit Ms. Law stated that she believed that it was more probable that she had this conversation with the plaintiff on 12 December 1990 having regard to the fact that on 13 December 1990 she sent a facsimile to BCC requesting that the terms of the BCC deposit be changed from call to thirty days. The facsimile was in the following terms:- "We confirm that we have deposited the following amounts in trust for Mrs. Winnifred Wai Yue Yu with your bank, details of which are as follows: Date Deposited Amount Rate Terms 16/11/90 $486,043.61 12.75% 7 day 23/11/90 $82,077.15 12.75% 24 hrs. We advise that as from today's date please rollover the above deposits with accrued interest to thirty days' term deposit @ 12.5% …" 38 In her later affidavit Ms. Law also referred to her diary entry for 12 December 1990 on which beside the name and number for the plaintiff she had written "call confirmation of deposit. Confirm with Mr. Wazay of BCC" followed by some abbreviated reference to withholding tax. 39 Ms. Law also referred in her later affidavit to her time sheet for 23 November 1990 which, again beside the "cost centre name" and "cost centre number" for the plaintiff reads "phone HK re banking funds", but for both these entries as Ms. Law said, the reference to the name of the plaintiff is limited to identifying the "cost centre name" and in my opinion does not necessarily convey that the phone calls referred to were with the plaintiff. Moreover, the initials said to be "HK" are almost illegible and, in addition, I note that there was a fellow employee of Ms. Law in the offices of Powell Kwok Baker who had the initials "HK" being H Kong. Ms. Law agreed in cross-examination that these two time sheet entries had, in effect, not caused her to remember the day upon which she says she had the relevant call with the plaintiff. The facsimile from Ms. Law to BCC Australia dated 13/12/90 does, however, lend some support to Ms. Law's evidence as to that telephone conversation with the plaintiff, and, in addition, it seems to me to accord with the probabilities that the plaintiff, having asked Ms. McAlpine to deliver the settlement cheques to Ms. Law, would have wished to speak to Ms. Law about them and about their investment. 40 Indeed there is, in this connection, the evidence of Ms. McAlpine, referred to earlier, to the effect that during a telephone conversation between Ms. McAlpine, the plaintiff and the plaintiff's husband in late 1990 or early 1991 the plaintiff or her husband asked her if she knew what interest the plaintiff's money was earning, in reply to which Ms. McAlpine said they would have to confirm details with Ms. Law. 41 Accordingly, I find that on the balance of probabilities, Ms. Law did have a telephone conversation with the plaintiff on or about 12 December 1990 generally along the lines as to which Ms. Law gave evidence but with one significant exception. I am satisfied that in that conversation Ms. Law did not refer to or mention BCC. I am of this opinion principally, inter alia, because of the evidence as to what was said in certain later conversations at which the plaintiff and her husband and others were present, and because of the subsequent conduct of the plaintiff who made no attempt to contact the defendants about her investment immediately after becoming aware of adverse publicity concerning BCC.(see later). I also have regard to the plaintiff's evidence to the effect that she assumed her funds had been invested in a Westpac term deposit so that, in my opinion, the plaintiff would not have required to be told the identity of the entity with which the funds had been invested. 42 Ms. Law also gave evidence that she had a conversation with the plaintiff on 27 February 1991 by reference to her time sheet for that day which read:- "Winnifred Yu - meeting with her re land tax and others." 43 According to Ms. Law the plaintiff and her husband and others attended a meeting at the offices of Powell Kwok Baker on that day in which Ms. Law did not participate but saw the plaintiff separately. Ms. Law said that to the best of her recollection, during the course of her discussion with the plaintiff, she said to the plaintiff words to the effect that "Your funds are invested with BCC on thirty day call", and told the plaintiff the current interest rate. Ms. Law also said that during the conversation the plaintiff handed to her a completed land tax variation form which Powell Kwok Baker had sent her earlier under cover of a letter dated 8 February 1991. Ms. Law also produced a letter dated 28 February 1991 from Powell Kwok Baker to the Commissioner of Land Tax enclosing the completed 1991 variation return by way of lodgment. I note that the time sheet makes no mention of anything to do with the deposit of the plaintiff's funds with BCC, and I also note that the a diary note of the plaintiff for that date, although it contains various details of the deposit, also makes no mention of BCC. 44 I am satisfied on the balance of probabilities, more particularly having regard, inter alia, to the diary note of the plaintiff, which makes no mention of BCC, that on 27 February 1991 Ms. Law did have a conversation with the plaintiff in which she informed the plaintiff of details as to the investment of her funds. I am satisfied, however, that in the course of this conversation Ms. Law again did not refer to BCC. I am of this opinion, principally, inter alia, because of the evidence as to what was said in later conversations at which the plaintiff and her husband, among others, were present and also, as stated above, because the plaintiff did not contact the defendants immediately upon becoming aware of unfavourable publicity concerning BCC nor indeed later. I am also of the opinion that it is probable that BCC was not mentioned by Ms. Law, either in this conversation or in her earlier conversation with the plaintiff, because, as revealed by Ms. Law's evidence as to her early conversations with Ms. McAlpine quoted earlier, Ms. Law's principal concern was with the fact that the moneys were earning interest and just as she was unconcerned, as I have found in effect, with Ms. McAlpine's instructions in the earlier conversation to bank the moneys in Mrs. Yu's bank account, so in later conversations she was, in my opinion, unconcerned with the identity of the bank or financial institution with which the interest bearing deposit had been made and because, as stated above, so far as Mrs. Yu was concerned, she had assumed her funds were in a Westpac term deposit. 45 Ms. Law did not have any further communication with the plaintiff about the interest bearing deposit with BCC after February 1991 until a meeting on 7 May 1992 with the plaintiff and others at the offices of Powell Kwok Baker. In the meantime Ms. Law arranged for the funds deposited on behalf of the plaintiff with BCC, to be rolled over each month, with the last roll over of the deposit together with interest occurring on 17 June 1991 for the further period of one month to 17 July 1991. Appointment of Provisional Liquidator to BCC on 8 July 1991 and Events Thereafter 46 On 8 July 1991 a provisional liquidator was appointed to BCC. There followed certain correspondence between Mr. Kwok and the provisional liquidator, Mr. O'Brien, culminating in the submission of a formal proof of debt by Powell Kwok Baker on 30 August 1991. It appears that neither the plaintiff nor her husband were informed either by Ms. Law or by Mr. Kwok of the appointment of a provisional liquidator, although I note that the evidence is that as from the date of appointment of the provisional liquidator the matter of the deposit with the plaintiff's funds with BCC was taken over by Mr. Kwok from Ms. Law. 47 According to the plaintiff she heard nothing from Powell Kwok Baker about her interest bearing deposit until approximately one year after her funds had been handed to Ms. Law, namely, in November 1991 in which month she and her husband had taken a week's holiday with Mr. Kwok, his wife and mother-in-law. Following their return from Thailand to Hong Kong on 13 November 1991, Mr. Kwok, just prior to him returning to Sydney, informed the plaintiff that her money had been deposited with BCC which was in financial difficulties. He told the plaintiff not to worry about this because the company's assets exceeded it's liabilities, and she would get her money back in full, although the company was not selling anything until the market improved. Mr. Kwok said he had not mentioned this before because he wanted to find out more about the current position, and that Mr. Leong, the plaintiff's solicitor, had also agreed to him delaying in informing the plaintiff and her husband about the deposit with BCC. Mr. Kwok also handed the plaintiff an envelope containing the company's first report to creditors dated 23 August 1991 saying words to the effect "You don't have to read this. Everything is okay. This is not important. Your investment is quite safe. Don't worry." 48 The plaintiff said that prior to this meeting she was aware that BCC was in financial difficulties, as that fact had been well publicised in Hong Kong both in newspapers and on television. In my opinion, as stated above, if the plaintiff had been previously informed by Ms. Law that her moneys were deposited with BCC she would certainly have raised the matter with Ms. Law or Mr. Kwok immediately upon her becoming aware of the adverse publicity concerning BCC. The fact that she did not do so is part of the reason why I have formed the view referred to above that the plaintiff was not informed by Ms. Law of the fact that her moneys had been deposited with BCC in either of the two conversations to which they were parties referred to earlier. I have also, as stated above, had regard to the fact that the plaintiff was consistent in her evidence as to what was said at later meetings relevant to what had been said in earlier conversations and that, in that regard, her evidence was generally corroborated by others including Ms. McAlpine and Mr. Hancock as well as her husband. I am also of the view that to the extent that in her affidavit and oral evidence the plaintiff denied that she had spoken to Ms. Law about the investment of her funds she was genuinely mistaken because she had genuinely forgotten the relevant conversations. 49 Dr. Yu, the plaintiff's husband, also gave evidence that he first learnt that the plaintiff's funds were deposited with BCC Australia when he was so informed by Mr. Kwok in November 1991 in Hong Kong. Dr. Yu generally corroborated the evidence of the plaintiff as to what was said at this meeting but also gave evidence that when he said to Mr. Kwok words to the effect "Why did you put it in BCC? We don't even use such banks in Hong Kong", Mr. Kwok did not reply. 50 Mr. Kwok's reply to the evidence of the plaintiff and her husband in relation to the meeting in Hong Kong in November 1991 was contained in paragraph 20 of his affidavit of 2 June 1998 which was in the following terms:- "20. I refer to paragraphs 10 and 11 of the affidavit of Mrs. Yu. I admit that in or about November 1991 I went to Hong Kong and that myself, my wife and her mother, accompanied Mrs. Yu on a trip to Thailand. I deny the contents of the conversations referred to in those affidavits which are attributed to me and I do not otherwise have an accurate recollection of the contents of those conversations. I recall that during that trip, I advised Mrs. Yu that BCC was in financial difficulties. I do not precisely recall the details I provided to Mrs. Yu regarding the circumstances of BCC's collapse or regarding the likelihood of a distribution being made to creditors although I do recall that I initially believed that it was possible that a full distribution would be made." 51 It is plain from this paragraph of his affidavit, as well as from other paragraphs of his affidavit, and from his oral evidence generally, that Mr. Kwok had no real recollection of what was said in the course of the conversation in Hong Kong in November 1991, nor indeed in the course of other conversations of which other parties gave evidence and at which he was present. Thus, for example, the plaintiff gave evidence of a meeting at the offices of Powell Kwok Baker on 7 May 1992 attended by the plaintiff, her husband, Ken Hancock, Susan McAlpine, Gary Leong, for a short while, Grace Law and Glen Bourke (an employee from Mr. Kwok's office). She said that after discussion of certain other matters her husband said words to the effect "I want to discuss the BCC money. Why wasn't the money deposited with Westpac?" The plaintiff said that Mr. Kwok did not reply but that Susan McAlpine said words to the effect that she had telephoned the plaintiff in Hong Kong and offered to bank the money for her but that she didn't have the bank account details. Ms. McAlpine then said that she took the cheque up to Ms. Law and asked her to bank it and was told by Ms. Law that she had the plaintiff's bank account details and said that she would bank it. The plaintiff also gave evidence that her husband asked why the money was put with BCC, and why they were never told about it, and further, that he (her husband) did not know that the money as with BCC until Mr. Kwok came to Hong Kong. Her husband also asked why nobody asked them what to do with the money. She said that Mr. Kwok said nothing. Ms. Law then said words to the effect "You are putting me in an embarrassing situation." Dr. Yu then asked Ms. Law why she didn't tell the plaintiff about the BCC investment to which Ms. Law replied, according to the plaintiff, that she was not supposed to phone the plaintiff. Again, Alan Kwok said nothing, according to the plaintiff. 52 The plaintiff's husband, Dr. Yu, gave evidence to similar effect although with a little more detail in response to those two affidavits yet Mr. Kwok's affidavit contained only the following paragraphs:- "21. I refer to paragraph 16 of the affidavit of Mrs. Yu. Although I do not have an accurate recollection of the content of the discussions at that meeting, I do not believe that I said nothing throughout the entire course of that meeting. It is probable that I said little in substance because of the fact that there were people at that meeting for whom I believe it in inappropriate for the BCC investment to be discussed … 23. I refer to paragraph 5 of the affidavit of Dr. Chi Yu sworn 14 December 1993. I do not have an accurate recollection of the content of the discussions at that meeting. I refer to paragraph 21 above." 53 Ms. McAlpine also gave evidence as to what was said at this meeting in considerably more detail, including evidence of conversation to the effect that both the plaintiff and her husband said that they were not aware that the plaintiff's moneys had been invested with BCC until Mr. Kwok informed them of that fact in Hong Kong in November 1991. 54 Ms. McAlpine also gave evidence that during this conversation Ms. Law said words to the effect that she thought the plaintiff knew where the money was and she thought that she had spoken to once about it and that later Ms. Law said that she was not allowed to ring the plaintiff. 55 Mr. Kwok's response to Ms. McAlpine's affidavit was no more than the following paragraph contained in his affidavit of 2 June 1998:- "22. I refer to paragraphs 2 and 13 of the affidavit of Susan McAlpine sworn 21 January 1994. I do not have an accurate recollection of the content of the discussions at that meeting. I refer to paragraph 21 above." 56 It is plain also from these paragraphs in the affidavit of Mr. Kwok of 2 June 1998 that Mr. Kwok also had no real recollection of what was said at the meeting of 7 May 1992. Accordingly, and notwithstanding some evidence to the contrary of Ms. Law as to what was said at this meeting I prefer the evidence in general of the plaintiff, her husband, Dr. Yu, and in particular Ms. McAlpine as to what was said at that meeting. The evidence of these three witnesses is, in general, consistent between themselves, and also, in general, with the evidence of Mr. Hancock, although Dr. Yu and, in particular, Ms. McAlpine, were able to give more detail as to the substance of what was said. 57 On the other hand, in my opinion, as stated earlier, Ms. Law was in her oral evidence more concerned to debate and interpret the substance of what she said she believed was said rather than to direct attention to her recollection of the words actually used in response to questions of that nature. I observe, in particular, but without limiting the generality of my comments, that in her affidavit of 15 March 1994 Ms. Law said in relation to the meeting of 7 May 1992 at the offices of Powell Kwok Baker that she said that the plaintiff "must have known where the money was as we spoke about it on the phone" but shortly after that said that she "didn't call Mrs. Yu". In oral evidence Ms. Law explained that she was intending to convey only that she had not phoned the plaintiff, and not that she had not spoken to the plaintiff in a telephone call made by the plaintiff. Notwithstanding this, however, I remain, as stated above, of the opinion that the probabilities are that Ms. Law did speak to the plaintiff informing her that the moneys had been placed on interest bearing deposit, but that she did not inform the plaintiff that those moneys had been placed with BCC having regard, inter alia, to the fact, as I have said earlier, that in my opinion Ms. Law was more concerned with the fact that the moneys had been placed on interest bearing deposit than with the identity of the financial institution with which they had been placed and to the various other matters that I have referred to above. 58 I note again in this connection that the evidence of the plaintiff (and others) which I accept as to what was said in the meeting in Hong Kong in November 1991, as well as in the meeting at the offices of Powell Kwok Baker on 7 May 1992, is inconsistent with the plaintiff (or her husband) having been told prior to the meeting of November 1991 that the plaintiff's moneys were invested with BCC. I also note again that the plaintiff's inaction in relation to her first learning that BCC was in financial trouble from the newspapers and television in Hong Kong is also inconsistent with her having been told prior to the meeting in Hong Kong in November 1991 that her moneys were invested with BCC. I further note in passing that there was a further meeting in February 1992 between the plaintiff and her husband with Mr. Kwok and another member of his staff in which that member of the staff informed the plaintiff and her husband that he had attended a BCC's creditors' meeting and that it looked as though they would recover at least 80 cents in the dollar. This meeting, however, in my opinion, is of no consequence in relation to the findings of fact I have made above. 59 The provisional liquidator and subsequently the liquidator of BCC have paid certain dividends to the plaintiff which in aggregate have on some basis reduced the amount of the plaintiff's loss to a net amount of $300,929.21. I propose, however, the hear further argument as to the precise amount of damages and interest to which the plaintiff is entitled. 60 Counsel for the defendant submitted that it was unlikely that the plaintiff had failed to make enquiries about the proceeds of sale of the Bankstown property, in effect, until the meeting of November 1991 in Hong Kong, notwithstanding her illness. However, as I have found, the plaintiff was aware in December 1990 and in December 1990 and in February 1991 of the details of the interest bearing deposit, although not of the identity of the financial institution with which the deposit had been made, and said that she assumed that the moneys were on interest bearing deposit with Westpac, so that thereafter she was not particularly concerned, more especially having regard to her undoubted ill health at the time and even accepting that that did not prevent her from undertaking many other activities, including activities of a business nature. I also note that according to the evidence, which I accept, of Mr. Patrick Yu, a son of the plaintiff, he had a telephone conversation with Mr. Kwok on 9 March 1992 in which Mr Kwok admitted that the plaintiff did not know that the moneys had been deposited with BCC. Decision As to Instructions Given by the Plaintiff to the Defendants 61 In my opinion the relevant substance of the instructions given by Ms McAlpine, on behalf of the plaintiff, to Ms Law, on behalf of the defendants, was that the various cheques of the plaintiff should first be deposited to the credit of the plaintiff's non-interest bearing Westpac cheque account and thereafter, as soon as reasonably practicable, the proceeds of those cheques should be deposited at interest by the defendants on behalf of the plaintiff with some suitable deposit-taking entity. In the relevant circumstances these instructions plainly required the defendants, first to deposit the cheques to the plaintiff's non-interest bearing Westpac cheque account and thereafter, having regard to the practicalities of the situation, including the location of the plaintiff, in Hong Kong, to obtain as soon as reasonably practicable a cheque drawn by the plaintiff on her Westpac cheque account in favour of the relevant deposit-taking entity. There might, of course, have been other ways of achieving the desired result. This would probably have meant that interest was not earned on the proceeds of the cheques as from the date of their deposit to the credit of the plaintiff's Westpac cheque account, but this would have been unavoidable (yet still in accordance with the plaintiff's instructions). 62 There was, in my opinion, no ambiguity or contradiction in the instructions from Ms McAlpine on behalf of the plaintiff. It was, in my opinion, unambiguously clear that the instructions were to the effect that the cheques should first be credited to the bank account of the plaintiff, as to which Ms Law had the details, and which was the plaintiff's non-interest bearing Westpac cheque account. It was also, in my opinion, unambiguously clear that the plaintiff's instructions were to the effect that the proceeds of the cheques should be deposited at interest, as soon as reasonably practicable, as Ms McAlpine made clear by her implied request that the cheques should be deposited to the plaintiff's cheque account on the day they were received (perhaps with a view to expediting the clearance of the cheques) and by her statement to the effect that clients do not like to lose even one day's interest. 63 It is common ground that Ms Law did not follow strictly the instructions of the plaintiff, but instead took it upon herself to deposit the cheques of the plaintiff to the credit of the trust account of the defendants and thereafter, by means of cheques drawn on the trust account of the defendants, to deposit the funds of the plaintiff with BCC in the name of the defendants on trust for the plaintiff. Submissions on Behalf of the Plaintiff 64 In this context, it was submitted on behalf of the plaintiff as follows:- (1) that the defendants were guilty of the tort of conversion in relation to the cheques, by reason of their failing to deposit the cheques to the credit of the plaintiff's Westpac cheque account as instructed, and instead, depositing them to the credit of the trust account of the defendants; (2) that the defendants owed a fiduciary duty to the plaintiff to deposit the plaintiff's cheques to the credit of the plaintiff's Westpac cheque account in respect of which duty the defendants committed a breach; (3) that the defendants owed the plaintiff a duty of care in tort to advise the plaintiff of the nature of the investment into which they proposed to deposit or invest the proceeds of the cheques and subsequently re-invest on a monthly basis [including the investment risk involved] before so depositing or investing or reinvesting the proceeds (counsel for the plaintiff expressly disclaimed any submission to the effect that the defendants had committed any breach of any duty in tort to take care in the selection of an interest-bearing investment for the plaintiff notwithstanding that it was conceded on behalf of the defendants that such a duty of care did exist); and (4) that the defendants were trustees of the plaintiff's funds within the meaning of the Trustee Act, 1925 and committed breaches of trust by investing the plaintiff's funds in an investment not authorised under that Act. Conspectus Conversion 65 For reasons which will appear hereafter I am of the opinion that the defendants were guilty of conversion of the cheques of the plaintiff on the basis alleged by the plaintiff, but that the damages claimed in that connection were not caused by the acts of conversion in depositing the plaintiff's cheques to the credit of the trust account of the defendants, contrary to the instructions of the plaintiff, but rather were caused, in the context of the submissions on behalf of the plaintiff, by the depositing of the plaintiff's funds with BCC before advising (informing) the plaintiff of the nature of the proposed investment, including the investment risk involved. Fiduciary Duty 66 I am further of the opinion that a fiduciary relationship arose between the plaintiff and the defendants, upon the defendants accepting the instructions of the plaintiff in all the circumstances, and that an incident of that fiduciary relationship was a fiduciary duty owed by the defendants to the plaintiff to deposit the cheques of the plaintiff to the credit of the plaintiff's Westpac cheque account. That fiduciary relationship and fiduciary duty came into existence, in my opinion, inter alia, because of the relationship of principal and agent that came into existence between the parties in all the circumstances of the case, including the obvious reposing by the plaintiff of trust and confidence in the defendants, having regard to their past and present relationship and the course of prior dealings between them, as well as the acceptance by the defendants of the responsibility involved in accepting the plaintiff's instructions. 67 This relationship and duty may, in my opinion, properly be described as fiduciary because it clearly involved obligations of loyalty and fidelity and because any breach in performance of the duty by the defendants would almost certainly (although not in the present case) involve disloyalty, dishonesty and/or lack of bona fides in a context of potential conflict of interest in which the defendants had preferred their personal interest to their duty to the plaintiff. 68 I am further of the opinion, however, that the plaintiff suffered no loss by reason of the defendants having breached their fiduciary duty by failing to deposit the cheques to the credit of the plaintiff's Westpac cheque account, and that any loss suffered by the plaintiff was the result of the defendants depositing the funds of the plaintiff with BCC without first advising the plaintiff of the nature and details of the investment including the proposed investment risk involved. Duty of Care 69 So far as concerns the alleged duty of care in tort, I am of the opinion that such a duty as is alleged on behalf of the plaintiff did come into existence in all the circumstances of the case, namely, a positive duty, in effect, owed by the defendants, to advise (inform) the plaintiff of the nature and details of the investment the defendants were proposing to make (including advice (information) as to investment risk) prior to the investment or reinvestment. In my opinion, the defendants committed breaches of that duty which breaches were causative of the plaintiff's loss because, in my opinion, on the evidence, if the duty had been performed, the plaintiff would not have approved the investment and reinvestment with BCC. I am further of the opinion, however, that, for reasons which will appear hereafter, the plaintiff was responsible (contributed) as to 15% for (to) the loss suffered by her. 70 To the extent to which it has been suggested that the defendants owed to the plaintiff a fiduciary duty co-extensive or substantially co-extensive with this duty of care in tort, I am of the opinion that no such "fiduciary" duty arose as an incident of the fiduciary relationship between the parties, and this conclusion accords with the submissions on behalf of the plaintiff. I am of this opinion principally because the breach of the duty of care as formulated on behalf of the plaintiff is, in my opinion, not such that its breach would ordinarily involve (and certainly did not involve in the present case) any disloyalty, dishonesty and/or lack of bona fides in a context of potential conflict of interest in which the defendants had preferred their personal interest to their duty to the client. It might well have been otherwise, however, if the defendants had chosen to invest the plaintiff's funds with BCC because they thereby earned secret commissions from BCC. There was of course no evidence or suggestion to that effect. Alleged Breaches of Trust under the Trustee Act 1925 71 So far as concerns the submissions on behalf of the plaintiff to the effect that the defendants were trustees within the meaning of the Trustee Act 1925, and committed breaches of trust by investing the funds of the plaintiff in an investment (with BCC) which was admittedly not authorised under that Act, I am of the opinion that these submissions should be rejected. In this connection it is plain in my opinion, from, inter alia, the present and past relationship between the parties, from the course of prior dealings between the parties, and from the terms of the instructions given by Ms McAlpine to Ms Law (which contained no limitations as to any particular or any class of investment at interest) that the defendants were not, nor was it the plaintiff's intention that they should be, limited to making investments on behalf of the plaintiff which were authorised under that Act. Claim for Relief under Trustee Act, 1925 (Section 85) 72 Finally, I am of the opinion that to the extent to which, contrary to my view, the defendants may be eligible to claim relief from personal liability pursuant to section 85 of the Trustee Act, 1925, the defendants are not entitled to any such relief by reason of the fact that they did not, in all the circumstances, act reasonably, although it is common ground that they acted honestly. Conversion 73 It was submitted on behalf of the plaintiff that the deposit of the cheques of the plaintiff to the credit of the trust account of the defendants, contrary to the express instructions, in effect, of the plaintiff to deposit those cheques first to the credit of the plaintiff's Westpac cheque account, constituted the commission by the defendants of the tort of conversion of those cheques. Alternatively, so it was submitted on behalf of the plaintiff, the conversion was the act of the defendants in first depositing the plaintiff's cheques to the credit of their trust account and subsequently investing the proceeds of the cheques with BCC. 74 As the tort of conversion in relation to cheques is based upon the legal fiction that cheques are to be regarded as chattels, any conduct of the defendants in relation to the proceeds of cheques is, in my opinion, irrelevant for present purposes. It follows, in my opinion, that the subsequent conduct of the defendants in depositing the proceeds of the cheques with BCC is irrelevant for present purposes and that, to that extent, the alternative submission on behalf of the plaintiff must be rejected. 75 The distinction between the cheque as a piece of paper (chattel) on the one hand, and the proceeds of the cheque on the other hand, appears in the following passages from Weaver & Craigie: The Law Relating to Banker and Customer in Australia (2nd ed - 1990) par 15.230 at page 7093:- "The reference to a 'piece of paper' may appear strange when the real concern is with the sum of money which it represents. The reason for this lies in the difficulty demonstrated by such authorities as Orton v Butler (1822) 5 B & Ald 652; 106 ER 1329 and Foster v Green ( 1862) 7 H & N 881; 158 ER 726 in bringing an action for conversion or trover in relation to money except in cases where the specific notes or coins can be traced and identified. As a result the civil remedy given by the law in relation to the misapplication of a bill or cheque or the proceeds thereof has taken the form of 'treating the conversion as (a conversion) of the chattel, the piece of paper, the cheque under which the money was collected and the value of the chattel converted as the money received under it': Lloyds Bank Ltd v Chartered Bank of India, Australia and China 1 KB 40 at 55 and 56 per Scrutton LJ; Parsons v The Queen HCA 1 at 33; 73 ALJR 270 at 277. "It should be added that in view of the emphasis which is placed on the word 'chattel' in all the definitions of conversion, it follows that there can be no conversion of a chose in action including a balance in an account with a bank or other financial institution: 'the subject matter of an action in conversion must be goods or property capable of possession or being subject to a right to possession': Ferguson v Eakin ( unreported, NSW Sup CT CA, No CA 40362 of 1996, 27 August 1997 per Cole JA, transcript of judgment p 9, citing Doodeward v Spence (1908) 6 CLR 406 at 418-419 per Higgins J; Fleming Law of Torts (8th ed), p 54." 76 And in Hunter BNZ Finance v C G Maloney Pty Ltd (1988) 18 NSWLR 420 at 439 Giles J stated as follows in relation to the conversion of cheques:- "The well-established but somewhat artificial position is that the true owner of a cheque sues for conversion of the piece of paper, the cheque as a piece of paper being treated as having a value equivalent to its face value." 77 In my opinion the defendants are guilty of the tort of conversion in relation to the plaintiff's cheques on the basis of the primary submission made on behalf of the plaintiff. The basic principles in relation to conversion were expounded by Dixon J (as he then was) in the High Court in the case of Penfolds Wines Pty Ltd v Elliott (1946) 74 CLR 204 at 229 in the following passage:- "The essence of conversion is a dealing with a chattel in a manner repugnant to the immediate right of possession of the person who has the property or special property in the chattel. It may take the form of a disposal of the goods by way of sale or pledge or other intended transfer of an interest followed by delivery, or the destruction or change of the nature or character of the thing, as for example, pouring water into wine, or cutting the seals from a deed, or of an appropriation evidenced by refusal to deliver or denial of title. But damage to the chattel is not conversion, nor is use, nor is a transfer of possession otherwise than for the purpose of affecting the immediate right to possession, nor is it always conversion to lose the goods beyond hope of recovery. An intent to do that which would deprive 'the true owner of his immediate right to possession or impair it may be said to form the essential ground of tort. " (underlining supplied) 78 A learned academic has defined conversion as follows: "Conversion may be defined as an intentional exercise of control over a chattel which so seriously interferes with the right of another to control it that the intermeddler may justly be required to pay its full value... In truth, the action is proprietary in substance, only tortious in form. As has been perceptively observed, the action in effect forces an involuntary purchase on the converter; it permits the plaintiff to say to him: 'You have bought yourself something'. This in turn provides the clue for determining whether a tortious intermeddling is serious enough to justify the drastic sanction of compelling the wrongdoer to buy the plaintiff out": John G Fleming, The Law of Torts (9th ed - 1998) at 60-61. 79 It was argued on behalf of the defendants that they were not guilty of conversion of the plaintiff's cheques because they did not deal with the cheques in such a way as to deny the plaintiff's title to the cheques when they deposited them to the credit of their trust account where the proceeds were held on trust for the plaintiff, so that the plaintiff was not deprived of her money, the proceeds of the cheques. 80 In my opinion however, when it is recognised, correctly, as stated above, that the tort of conversion deals with the cheques as chattels (pieces of paper), and not with the proceeds of the cheques, the conditions necessary to give rise to the tort have been satisfied. The plaintiff was plainly entitled to immediate possession of the cheques, subject only to the instructions to deposit them to the credit of her Westpac cheque account, and that right of the plaintiff to immediate possession of the cheques was seriously interfered with when they were deposited to the credit of the trust account of the defendants, albeit on trust for the plaintiff. 81 By reason of that depositing, the plaintiff was deprived of her immediate right to possession of the cheques and thereafter, the cheques were relevantly not recoverable. The conduct of the defendants clearly involved a denial by the defendants of the title of the plaintiff to immediate possession of the cheques and was, in my opinion, sufficiently serious, having regard to the fact that the cheques were relevantly not recoverable, "to justify the drastic sanction of compelling the wrongdoer to buy the plaintiff out". 82 As stated above, however, I am of the opinion that in the present case, the conversion by the defendants of the plaintiff's cheques was not the cause of the loss claimed to have been suffered by the plaintiff. In my opinion, the cause of that loss was, in the context of the submissions made on behalf of the plaintiff, the breach by the defendants of their positive duty in tort to advise (inform) the plaintiff of the notice of the investment into which the defendants proposed to deposit or invest the proceeds of the plaintiff's cheques [including the investment risk involved] prior to making the proposed investment. Fiduciary Duty 83 It was submitted on behalf of the plaintiff that the plaintiff instructed the defendants, who were her accountants, and in whom she reposed substantial trust and confidence, to deposit her cheques to the credit of her Westpac cheque account, and that thereupon a fiduciary relationship arose in that connection between the parties. It was further submitted on behalf of the plaintiff that the defendants owed a fiduciary duty to the plaintiff to deposit the plaintiff's cheques to the credit of her Westpac cheque account in accordance with her instructions. It was further alleged on behalf of the plaintiff that the defendants committed a breach of that fiduciary duty by depositing the cheques of the plaintiff to the credit of their own trust account, albeit on trust for the plaintiff. 84 I am of the opinion that a fiduciary relationship did arise, in all the circumstances, between the plaintiff and the defendants upon the defendants accepting the instructions of the plaintiff. That fiduciary relationship came into existence, in my opinion, inter alia, because of the relationship of principal and agent which thereby came into existence, but also because of their past and present relationship including the course of prior dealings between them. 85 That past and present relationship between the parties was one of accountant and client, but went beyond that to some extent in respect of which it is plain that the plaintiff reposed significant trust and confidence in the defendants. 86 The course of prior dealings between the parties included, as appears from Mr Kwok's affidavit, the following facts:- (1) that the defendants in about 1978 commenced acting as accountants for the plaintiff, the plaintiff's husband and their family company; (2) that since that time the defendants were responsible for most, if not all, the plaintiff's accounting work, including the preparation of her personal income tax returns and the provision of general taxation advice to her; (3) that during the period from 1978 to 1992 Mr Kwok occasionally provided investment advice to the plaintiff and made a number of investments on her behalf; (4) that during the period from the late 1980's to 1992 Mr Kwok discussed with the plaintiff both in Sydney and in Hong Kong her marital affairs and personal problems, including the fact that the plaintiff and her husband were experiencing some marital problems; (5) that the plaintiff told Mr Kwok on several occasions in the course of those discussions that she was concerned that her husband might divorce her, and she would be left penniless, and (6) that she wished to accumulate some personal moneys in case that happened; and that it was not Mr Kwok's practice to invest funds for clients with whom he did not have a personal relationship beyond the professional relationship of client and accountant, but that the plaintiff was a client with whom he had such a personal relationship and that, in view of that relationship, Mr Kwok made a number of recommendations to the plaintiff in relation to certain investments. 87 Those investments were investments made by the plaintiff in New South Wales Treasury Corporation Premier State Bonds (early 1986 - $35,000), Westpac Term Deposit (March 1986), MLC Capital Guaranteed Bond (February 1987) and capital guaranteed bonds from Capita Financial Group (February 1987 $45,000). Relevant also, in my opinion, were the facts that a relatively large sum of money was involved and that the proposed deposit was to be unsecured, which would have been of significance for the plaintiff, having regard to her known requirements. 88 Mr. Kwok's knowledge of the importance of guarding against posible loss in respect of the plaintiff's investments appears from the following questions and answers in his cross-examination:- "Q. You knew, Mr Kwok, that at all times when you provided investment advice to Mrs Yu, that Mrs Yu was relying on you to invest the money in a safe and conservative manner, didn't you? A. She only wanted me to invest the money for her, without any restriction on my recommendation ... Q. It was crucial, wasn't it, to Mrs Yu, that this money was not to be lost? A. It was. Q. And you knew that, didn't you? A. I did. ... Q. And on all occasions you knew that you should look after that money, didn't you? A. I did. Q. And you wouldn't put it anywhere where it might be lost, would you? A. I wouldn't. Q. And you would be careful to ensure that the investments you placed that money in was secure and well protected, wouldn't you? A. At all times." 89 I am further of the opinion, as stated above, that an incident of that fiduciary relationship between the parties was a duty owed by the defendants to the plaintiff to comply with her instructions, and that that duty may properly be described as fiduciary because it involved obligations of loyalty and fidelity in the context of, inter alia, the trust and confidence reposed by the plaintiff in the defendants, and also because breach of that duty by the defendants would almost certainly (although not in this particular case) involve disloyalty, dishonesty and/or lack of bona fides in a context of potential conflict of interest in which the defendants would have preferred their personal interest to the duty they owed to the plaintiff. 90 Nevertheless, although it is plain, in my opinion, that that fiduciary duty was breached by the defendants in depositing the plaintiff's cheques to the credit of their trust account instead of following the plaintiff's instructions, I am of the opinion, as stated earlier, that the breach did not cause the plaintiff any relevant loss. Rather, in my opinion, any loss suffered by the plaintiff was relevantly caused by the conduct of the defendants in depositing and renewing the deposit of the plaintiff's funds with BCC by reason of, in the context of the submissions on behalf of the plaintiff, the failure of the defendants to inform the plaintiff of the nature of the proposed investment (including the investment risk involved) before actually making the investment since, as submitted on behalf of the plaintiff, if this had been done, the plaintiff would not have approved the investment with BCC and her funds would have been invested elsewhere. 91 In this context of the plaintiff's submissions it becomes necessary to identify, if it exists, a duty owed by the defendants to the plaintiff to advise (inform) the plaintiff of the nature of a proposed investment (including the investment risk involved) before making any such investment, and to determine whether any such duty was a "fiduciary" duty. In my opinion no such "fiduciary" duty came into existence between the parties (see later) although a duty to that effect arising in tort did come into existence, and this view accords with the submission on behalf of the plaintiff which was as follows:- "The Plaintiff submits that the better view is that the duty alleged arises in tort rather than by reason of any fiduciary duties that might be owed by the Defendants to the Plaintiff." 92 Alternatively, in my opinion, such a duty arose in equity, although not fiduciary in nature, in the context of the fiduciary relationship which existed between the parties arising from their present and past relationship and the course of prior dealings between them as referred to earlier. 93 In my opinion, although the parties were in a fiduciary relationship, this particular equitable duty was not a fiduciary duty because it did not, in its essential nature, involve duties of loyalty and/or fidelity, nor was it such that any breach would almost certainly involve disloyalty, dishonesty and/or lack of bona fides in a context of conflict of interest in which the defendants had preferred their personal interest to their duty to the plaintiff. 94 That considerations such as these are relevant to the description of a particular duty as being fiduciary, appears, inter alia, from the following passages in judgments and a text: In Bristol and West Building Society v Mothew [1998] Ch 1 at 16-18, Millett LJ held as follows:- "Breach of fiduciary duty Despite the warning given by Fletcher Moulton L.J. in In re Coomber; Coomber v Coomber [1911] 1 Ch. 723, 728, this branch of the law has been bedevilled by unthinking resort to verbal formulae. It is therefore necessary to begin by defining one's terms. The expression "fiduciary duty" is properly confined to those duties which are peculiar to fiduciaries and the breach of which attracts legal consequences differing from those consequent upon the breach of other duties. Unless the expression is so limited it is lacking in practical utility. In this sense it is obvious that not every breach of duty by a fiduciary is a breach of fiduciary duty. I would endorse the observations of Southin J in Girardet v crease & Co. (1987) 11 B.C.L.R. (2d) 361,362:- 'The word 'fiduciary' is flung around now as if it applied to all breaches of duty by solicitors, directors of companies and so forth….That a lawyer can commit a breach of the special duty [of a fiduciary] … by entering into a contract with the client without full disclosure … and so forth is clear. But to say that simple carelessness in giving advice is such a breach is a perversion of words.' These remarks were approved by La Forest J. in LAC Minerals Ltd v International Cornoa Resources Ltd (1989) 61 D.L.R. (4th) 14, 28 where he said: "not every legal claim arising out of a relationship with fiduciary incidents will give rise to a claim for breach of fiduciary duty." It is similarly inappropriate to apply the expression to the obligation of a trustee or other fiduciary to use proper skill and care in the discharge of his duties. If it is confined to cases where the fiduciary nature of the duty has special legal consequences, then the fact that the source of the duty is to be found in equity rather than the common law does not make it a fiduciary duty. The common law and equity each developed the duty of care, but they did so independently of each other and the standard of care required is not always the same. But they influenced each other, and today the substance of the resulting obligations is more significant than their particular historic origin. In Henderson v Merrett Syndicates Ltd [1995] 2 A.C. 145, 205 Lord Browne-Wilkinson said: "The liability of a fiduciary for the negligent transaction of his duties is not a separate head of liability but the paradigm of the general duty to act with care imposed by law on those who take it upon themselves to act for or advise others. Although the historical development of the rules of law and equity have, in the past, caused different labels to be stuck on different manifestations of the duty, in truth the duty of care imposed on bailees, carriers, trustees, directors, agents and others is the same duty: it arises from the circumstances in which the defendants were acting, not from their status or description. It is the fact that they have all assumed responsibility for the property or affairs of others which renders them liable for the careless performance of what they have undertaken to do, not the description of the trade or position which they hold." I respectfully agree, and endorse the comment of Ipp J in Permanent Building Society v Wheeler (1994) 14 A.C.S.R. 109, 157:- "It is essential to bear in mind that the existence of a fiduciary relationship does not mean that every duty owed by a fiduciary to the beneficiary is a fiduciary duty. In particular, a trustee's duty to exercise reasonable care, though equitable, is not specifically a fiduciary duty…" Ipp J explained, at p. 158: "The director's duty to exercise care and sill has nothing to do with any position of disadvantage or vulnerability on the part of the company. It is not a duty that stems from the requirements of trust and confidence imposed on a fiduciary. In my opinion, that duty is not a fiduciary duty, although it is a duty actionable in the equitable jurisdiction of this court….I consider that Hamilton owed P.B.S. a duty, both in law and in equity, to exercise reasonable care and skill, and P.B.S. was able to mount a claim against him for breach of the legal duty, and, in the alternative, breach of the equitable duty. For the reasons I have expressed, in my view the equitable duty is not to be equated with or termed a 'fiduciary' duty." I agree. Historical support for this analysis may be found in Viscount Haldane L.C.'s speech in Nocton v Lord Ashburton [1914] A.C. 932, 956. Discussing the old bill in Chancery for equitable compensation for breach of fiduciary duty, he said that he thought it probable that a demurrer for want of equity would always have lain to a bill which did no more than seek to enforce a claim for damages for negligence against a solicitor. In my judgment this is not just a question of semantics. It goes to the very heart of the concept of breach of fiduciary duty and the availability of equitable remedies. Although the remedy which equity makes available for breach of the equitable duty of skill and care is equitable compensation rather than damages, this is merely the product of history and in this context is in my opinion a distinction without a difference. Equitable compensation for breach of the duty of skill and care resembles common law damages in that it is awarded by way of compensation to the plaintiff for his loss. There is no reason in principle why the common law rules of causation, remoteness of damage and measure of damages should not be applied by analogy in such a case It should not be confused with equitable compensation for breach of fiduciary duty, which may be awarded in lieu of rescission or specific restitution. This leaves those duties which are special to fiduciaries and which attract those remedies which are peculiar to the equitable jurisdiction and are primarily restitutionary or restorative rather than compensatory. A fiduciary is someone who has undertaken to act for or on behalf of another in a particular matter in circumstances which give rise to a relationship of trust and confidence. The distinguishing obligation of a fiduciary is the obligation of loyalty. The principal is entitled to the single-minded loyalty of his fiduciary. This core liability has several facets. A fiduciary must act in good faith; he must not make a profit out of his trust; he must not place himself in a position where his duty and his interest may conflict; he may not act for his own benefit or the benefit of a third person without the informed consent of his principal. This is not intended to be an exhaustive list, but it is sufficient to indicate the nature of fiduciary obligations. They are the defining characteristics of the fiduciary. As Dr Finn pointed out in his classic work Fiduciary Obligations (1977), p.2, he is not subject to fiduciary obligations because he is a fiduciary; it is because he is subject to them that he is a fiduciary… The nature of the obligation determines the nature of the breach. The various obligations of a fiduciary merely reflect different aspects of his core duties of loyalty and fidelity. Breach of fiduciary obligation, therefore, connotes disloyalty or infidelity. Mere incompetence is not enough. A servant who loyally does his incompetent best for his master is not unfaithful and is not guilty of a breach of fiduciary duty." 95 In Meagher, Gummow and Lehane, Equity: Doctrine and Remedies (3rd ed 1992) at 131 the following passage appears:- "To say that a relationship is fiduciary is not – usually, at least – to provide a complete description of the legal nature of the relationship. Aspects of it may be governed by statute, common law principles – contract or tort – or other equitable rules which have nothing to do with fiduciary principles. Thus a trustee's duty to exercise reasonable care, though equitable, is not specifically a fiduciary obligation. More obviously, the relationship between partners or between agent and principal is contractual as well as fiduciary, between an employer and an employee there is a contract of employment as well as a fiduciary relationship; a solicitor occupies a fiduciary position vis-à-vis his client, but also owes his client duties arising out of the contract of retainer and under the law of tort (he has a duty of care in giving advice not because the purpose of the relationship may be described as the furtherance of the client's interests, but because his contract with his client and the law of tort both impose such a duty on him)." 96 And in Chan v Zachariah (1984) 54 CLR 178 AT 198-9 Deane J held as follows: "There is a wide variety of formulations, of the general principle of equity requiring a person in a fiduciary relationship to account for personal benefit or gain…[these variations] are largely the result of the fact that what is conveniently regarded as the one 'fundamental rule' embodies two themes. The first is that which appropriates for the benefit of the person to whom the fiduciary duty is owed any benefit or gain obtained or received by the fiduciary in circumstances where there existed a conflict of personal interest and fiduciary duty or a significant possibility of such conflict: the objective is to preclude the fiduciary from being swayed by considerations of personal interest. The second is that which requires the fiduciary to account for any benefit or gain obtained or received by reason or by use of his fiduciary position or of opportunity or knowledge resulting from it: the objective is to preclude the fiduciary from actually misusing his position for his personal advantage. Notwithstanding authoritative statements to the effect that the 'use of fiduciary position' doctrine (see, e.g., Phipps v Boardman, NZ Netherlands Society 'Oranje' Inc v Kuys), the two themes, while overlapping, are distinct. Neither theme fully comprehends the other and a formulation of the principle by reference to one only of them will be incomplete. Stated comprehensively in terms of the liability to account, the principle of equity is that a person who is under a fiduciary obligation must account to the person to whom the duty is owed for any benefit or gain (i) which has been obtained or received in circumstances where a conflict or significant possibility of conflict existed between his fiduciary duty and his personal interest in the pursuit or possible receipt of such a benefit or gain or (ii) which was obtained or received by use or by reason of his fiduciary position or of opportunity or knowledge resulting from it." 97 See also Maguire v Makaronis (1996-1997) 188 CLR 449 at 463-467 per Brennan CJ, Gaudron, McHugh and Gummow JJ. 98 The application of these principles to the circumstances of the present case, leads, in my opinion, to the conclusion expressed above that the alleged duty of care here being considered was not fiduciary in its nature. Alleged Consent to Breach of Alleged Fiduciary Duty 99 On the assumption, contrary to my view, that there was a fiduciary duty owed by the defendants to the plaintiff which was substantially co-extensive with the duty in tort owed by the defendants to the plaintiff, it was submitted on behalf of the defendants that the plaintiff had, in effect, consented to the alleged breach of that fiduciary duty by reason of her having been informed by Ms Law of the details of the investment with BCC some time after that investment had been made and before any loss was incurred. 100 In my opinion however, any consent which might have been given by the plaintiff, in this way, by implication or otherwise, was not fully informed, and therefore not legally effective, by reason of the fact that she was informed, as I have found, only of the term and rate of interest of the investment with BCC, and was not informed at any relevant time prior to the loss being incurred, either of the identity of BCC, or of the investment risk involved in investing with that entity. Duty of Care in Tort 101 As stated above, it was submitted on behalf of the plaintiff that, in all the circumstances of the present case, there came into existence a duty in tort owed by the defendants to the plaintiff to advise the plaintiff of the nature of the proposed investment or reinvestment (including the investment risk involved) prior to the investment or reinvestment being made. 102 Although described in the Outline of Plaintiff's submissions as "a duty of care to advise the Plaintiff of the nature of the investment into which they proposed to deposit or invest the proceeds of the Settlement Cheques", the duty contended for on behalf of the plaintiff is, in substance a positive duty to advise, in the sense of "inform", rather than "a duty t take care to advise". I also note in passing that, as stated earlier, although it was conceded on behalf of the defendants in the "Defendants' Written Submissions" that the defendants "owed a duty of care in making that investment, it is not alleged on behalf of the plaintiff that there has been any breach by the defendants of that duty of care." 103 As also stated above, I am of the opinion that this submission should be upheld. In my opinion, many of the hallmarks of the coming into existence of a duty of care in tort are present in the circumstances of the present case having regard, inter alia, to the past and present relationship between the parties and to the course of prior dealings between them referred to above, including reasonable foreseeability of loss to the plaintiff, a relationship of proximity between the plaintiff and the defendant, assumption of responsibility on the part of the defendants in accepting the plaintiff's instructions, reliance (and vulnerability) by the plaintiff on the defendants and the absence of any reasons of public policy for holding that a duty of care does not exist. 104 Against this background, the plaintiff's instructions to the defendants to invest her funds, cannot, in my opinion, be construed as giving the defendants a completely unfettered discretion as to choice of investments, particularly as the plaintiff had previously made clear to Mr Kwok that her financial and marital position was such that any investment made on her behalf should not involve any risk of loss. It is therefore plain, in my opinion, that the plaintiff's instructions must be construed as having been to the effect that her funds were to be invested in an interest-bearing investment which did not involve any risk of loss, and as having been accepted by the defendants on that basis. 105 Further, in my opinion, against that background, and notwithstanding that the plaintiff gave evidence that she did not expect subjectively to receive any recommendation, the plaintiff's instructions implied that the defendants would make a recommendation to the plaintiff in respect of any investment proposed to be made by them prior to the investment being made and that any such recommendation would include information as to investment risk, so that the plaintiff could be satisfied that the proposed investment met her known requirements before the investment was made. (Previous investments made by the defendants for the plaintiff had been preceded by such recommendations from Mr Kwok and it appears, prima facie, that all previous investments conformed to the plaintiff's requirements.) Without information as to investment risk and other details of the proposed investment, the plaintiff's decision to approve or disapprove the proposed investment could not be an informed decision. 106 In my further opinion, the acceptance by the defendants of the instructions of the plaintiff against this background involved an assumption of responsibility by the defendants to act accordingly, a course which simple prudence and concern for the best interests of the plaintiff would have dictated in any event. 107 Against this background it was, in my opinion, also foreseeable, in my opinion, that, despite the plaintiff's relative lack of experience in business matters, if the plaintiff was not given the opportunity to make an informed choice, the proposed investment might not satisfy the plaintiff's view of her own requirements, and might, accordingly, result in loss. 108 It was certainly Mr Kwok's view in all the circumstances that he should discuss any proposed investment with his client before making the investment to make sure the client understood the investment, including the relative risk of the proposed investment compared with other available short-term deposit investments. 109 This was made clear in the following passages from Mr Kwok's cross-examination:- "Q. In addition to undertaking enquiries as to what might be available in the market, and forming an assessment as to relevant matters of risk, you would also make it your business, wouldn't you, to discuss the proposed investment with your client before it was made, wouldn't you? A.: I would. Q. Because at the end of the day when you made an investment on behalf of a client, you wanted to make sure that the client understood the investment that you were making, wouldn't you? A. Yes. Q. And that explanation would include, wouldn't it, an explanation of the relative risk of the investment that you were proposing, compared with other available short-term deposit investments, wouldn't it? A. Yes. … Q. What did you mean when you said that neither you or PKB had standing instructions in relation to Mrs Yu's investments? A. Pre-arranged. Q. So do I take it that it was therefore necessary prior to an investment that PKB or you made on Mrs Yu's behalf, for you to obtains specific instructions? A. Yes … Q. Was it your understanding that before your firm placed Mrs Yu's funds on deposit with BCC, it would have been necessary for someone from your firm to have obtained instructions from Mrs Yu to do that? A. Yes … Q. Consistent with your understanding would it be necessary for your office to confirm with her the suggested investment before the investment was made? A. Yes. Q. If Mrs Yu did it in Sydney, would it be necessary for your office to confirm with her, according to your understanding, before the investment was made with a particular financial institution? A. Before – yes. Q. And if it was Mrs Yu's solicitor saying that it was Mrs Yu's instruction to place it on short-term deposit without specifying where, is it your understanding that your office would have to confirm with Mrs Yu the identity of the proposed investment before making the investment? A. Yes … Q. It was your understanding, wasn't it, that prior to each roll over of Mrs Yu's investment with BCC, it would be necessary for somebody from your office to confirm with Mrs Yu that that roll over was appropriate? A. Yes … Q. And you would also expect, to the extent that there was any developments in the market, that it may well be necessary prior to each roll over, to provide an explanation to Mrs Yu of the investment risk of keeping funds with BCC? A. Yes." 110 The many references in authorities and texts to what I have referred to as the hallmarks of the existence of a duty of care in tort include the following: Reasonable Foreseeability 'Reasonable foreseeability on its own indicates no more than that such a duty of care will exist if, and to the extent that, it is not precluded or modified by some applicable overriding requirement or limitation.': Jaensch v Coffey (1984) 155 CLR 549 at 583 per Deane J. 'The necessary, but not always sufficient, foundation for a duty of care in tort is reasonable foreseeability of damage to another if the task in hand is carelessly performed.': Hill v Van Erp (1997) 188 CLR 159 at 166 per Brennan CJ (citing as authority, at 166-7, Voli v Inglewood Shire Council (1963) 110 CLR 74 at 84-5 per Windeyer J.) '…this Court now accepts that reasonable foreseeability of a risk of harm alone is insufficient to ground a duty of care in negligence.': Esanda Finance Corporation Ltd v Peat Marwick Hungerfords (1997) 188 CLR 241 at 271-2 per McHugh J. 'The notion of proximity, because it limits the loss that would otherwise be recoverable if foreseeability were used as an exclusive criterion of the duty of care, is of vital importance when the plaintiff's claim is for pure economic loss.': San Sebastian Pty Ltd v The Minister (1986) 162 CLR 340 at 356 per Gibbs CJ, Mason, Wilson and Dawson JJ. '…a relevant duty of care will arise under the common law of negligence only in a case where the requirement of a relationship of proximity between the plaintiff and the defendant is satisfied.' Cook v Cook (1986) 162 CLR 376 per Mason, Wilson, Deane and Dawson JJ. 'Commencing with Jaensch v Coffey, this Court, in a series of decisions, had accepted that a relevant duty of care will arise under the common law of negligence only in a case where the requirement of a relationship of proximity between the plaintiff and the defendant has been satisfied… The requirement of proximity constitutes the general determinant of the categories of case in which the common law of negligence recognizes the existence of a duty of care to take reasonable care to avoid a reasonably foreseeable and real risk of injury.': Gala v Preston (1991) 172 CLR 243 at 252-3 per Mason CJ, Deane, Gaudron and McHugh JJ. '…for a duty of care to arise in cases of pure economic loss, the law requires, in addition to the foreseeability of harm, a special relationship between the parties which is descried as a relationship of proximity.': Esanda Finance Corporation Ltd v Peat Marwick Hungerfords (1997) 188 CLR 241 at 254 per Dawson J. 'In this country, the question whether there is a duty of care to take reasonable steps to avoid another's economic loss depends on whether there is a relationship of proximity…': Esanda Finance Corporation Ltd v Peat Marwick Hungerfords (1997) 188 CLR 241 at 260 per Toohey and Gaudron JJ. 'Finally, in Hill v Van Erp, four members of this Court recognised the limitations in the usefulness of the notion of proximity in determining individual claims to the existence of a duty of care enforceable at law. When to these voices is added the consistent criticism of "proximity" expressed for a decade by Brennan CJ, it is tolerably clear that proximity's reign in this Court, at least as a universal identifier of the existence of a duty of care at common law, has come to an end.': Pyrenees Shire Council v Day (1998) 192 CLR 330 at 414 per Kirby J. 'The requirement of proximity is directed to the relationship between the parties in so far as it is relevant to the allegedly negligent act or omission of the defendant and the loss or injury sustained by the plaintiff. It involves the notion of nearness or closeness and embraces physical proximity (in the sense of space and time) between the person and property of the plaintiff and the person or property of the defendant, circumstantial proximity such as an overriding relationship of employer and employee or of a professional man and his client and what may (perhaps loosely) be referred to as causal proximity in the sense of the closeness or directness of the causal connection or relationship between the particular act or course of conduct and the loss or injury sustained.': Sutherland Shire Council v Heyman (1985) 157 CLR 424 at 497-8 per Deane J. Assumption of Responsibility 'Thus a duty to act to prevent foreseeable injury to another may arise when a transaction – which may be no more than a single act – has been undertaken by the alleged wrongdoer and that transaction – or act – has created or increased the risk of that injury occurring.': Sutherland Shire Council v Heyman (1985) 157 CLR 424 at 479 per Brennan J. 'In the more settled areas of the law of negligence involving direct physical injury or damage caused by a negligent act, the reasonable foreseeability of such injury or damage is, of itself, commonly an adequate indication that the relationship between the parties possesses the requisite element of proximity… That cannot, however, be said of cases in the area were the plaintiff's claim is for pure economic loss. In that area, the categories of case in which the requisite relationship of proximity is to be found are properly to be seen as special in that they will be characterised by some additional element or elements which will commonly (but not necessarily) consist of known reliance (or dependence) or the assumption of responsibility or a combination of the two.': Hawkins v Clayton (1988) 157 CLR 424 at 479 per Brennan J. '…assumption of responsibility…should be understood as the assumption of responsibility for providing information or advice in circumstances where it is known, or ought reasonably be known, that it will or may be acted upon for a serious purpose, and loss may be suffered if it proves to be inaccurate.': Esanda Finance Corporation Ltd v Peat Marwick Hungerfords (1997) 188 CLR 241 at 264 per Toohey and Gaudron JJ. Reliance by the Plaintiff Upon the Defendant 'Reliance has always been an important element in establishing the existence of a duty of care. It has been suggested that liability in negligence is largely, if not exclusively, based on the plaintiff's reliance on the defendant's taking care in circumstances where the defendant is aware or ought to be aware of that reliance…': Sutherland Shire Council v Heyman (1985) 157 CLR 424 at 461 per Mason J. '…reliance is to be understood, in the context of the provision of information or advice, as an expectation, which is reasonable in the circumstances, that due care will be exercised in relation to that provision.': Esanda Finance Corporation Ltd v Peat Marwick Hungerfords (1997) 188 CLR 241 at 264 per Toohey and Gaudron JJ. '…reliance is not always an essential requirement for the plaintiff in a negligence case. The primary significance of reliance is in cases of alleged negligent provision of advice or information where reliance aids the formulation of a duty of care and detrimental reliance enters into the question of causation of loss.': Pyrenees Shire Council v Day (1998) 192 CLR 330 at 385-6 per Gummow J. Public Policy 'Inevitably, the policy considerations which are legitimately taken into account in determining whether sufficient proximity exists in a novel category will be influenced by the courts' assessment of community standards and demands. One policy consideration which may militate against recognition of a relationship of proximity in a category of case involving mere economic loss is the law's concern to avoid the imposition of liability "in an indeterminate amount for an indeterminate time to an indeterminate class". Another consideration is the perception that, in a competitive world where one person's economic gain is commonly another's loss, a duty to take reasonable care to avoid causing mere economic loss to another, as distinct from physical injury to another's person or property, may be inconsistent with community standards in relation to what is ordinarily legitimate in pursuit of personal advantage. The combined effect of those two distinct policy considerations is that the categories of case in which the requisite relationship of proximity with respect to mere economic loss is to be found are properly to be seen as special. Commonly, but not necessarily, they will involve an identified element of known reliance (or dependence) or the assumption of responsibility or a combination of the two.': Bryan v Maloney (1995) 182 CLR 609 at 618-19 per Mason CJ, Deane and Gaudron JJ. 'In the end, policy considerations will set the outer limits of the tort.': Hill v Van Erp (1997) 188 CLR 159 at 179 per Dawson J. 'Questions of legal policy, reflecting the need sometimes to limit the imposition of a duty of care to that which is fair and reasonable, have also been recognised by this Court. Although this last consideration is sometimes overlooked, it should not be, for the law of negligence must ultimately respond to common notions of fairness and justice. If foreseeability and proximity, alone, take the law into the imposition of duties of care which are unfair, unreasonable and unrealistic, the time will have come to re-express the preconditions for the existence of the duty in a way more harmonious to such considerations.': Romeo v Conservation Commission of the Northern Territory (1998) 192 CLR 431 at 476-7 per Kirby J. 111 The most recent decision of the High Court Perre v Apand Pty Ltd (1999) HCA 36 (12 August 1999) includes the following passages: 'It may well be that, at this stage, the notion of proximity can serve no purpose beyond signifying that it is necessary to identify a factor or factors of special significance in addition to the foreseeability of harm before the law will impose liability for the negligent infliction of economic loss.' (para 27) per Gaudron J. '…[T]he ultimate issue is always whether the defendant in pursuing a course of conduct which would have prevented injury to the plaintiff, or failing to pursue a course of conduct that caused injury to the plaintiff, should have had the interest or interests of the plaintiff in contemplation before he or she pursued or failed to pursue that course of conduct…If the defendant should have had those interests in mind, the law will impose a duty of care. If not, the law will not impose a duty.' (para 100) per McHugh J. 'The principles concerned with reasonable foreseeability of loss, indeterminacy of liability, autonomy of the individual, vulnerability to risk and the defendant's knowledge of the risk and its magnitude are, I think, relevant in determining whether a duty exists in all cases of liability for economic loss.' (para 105) per McHugh J. 'In my view, reliance and assumption of responsibility are merely indicators of the plaintiff's vulnerability to harm from the defendant's conduct, and it is the concept of vulnerability rather than these evidentiary indicators which is the relevant criterion for determining whether a duty of care exists.' (para 125) per McHugh J. 'Reliance may therefore be seen – for the purposes of duty of care – as an indicator of vulnerability: the plaintiff is especially vulnerable to the words and/or conduct of the defendant because he or she reasonably relied on the defendant…' (para 126) per McHugh J. 'The emergency of a coherent body of precedents will be impeded, not assisted, by the imposition of fixed system of categories in which damages in negligence for economic loss may be recovered.' (para 200) per Gummow J. 'I turn now to a consideration of the factors which in combination I think relevant in this case and which establish a sufficient degree of proximity, foreseeability, a special relationship, determinacy of a relatively small class, a large measure of control on the part of the respondent, and special circumstances justifying the compensation of the appellants for their losses.' (para 406) per Callinan J. 112 As to reasonable foreseeability, in my opinion it was reasonably foreseeable by a reasonable person in the position of the defendants, and, indeed, by the defendants themselves, that if they did not advise (inform) the plaintiff of the nature of the investment (and of any reinvestment) they proposed to make on her behalf, including the investment risk involved, prior to the investment (or reinvestment) being made (all previous investments of the plaintiff had been made pursuant to a prior recommendation by Mr Kwok), the plaintiff would be deprived of the opportunity of deciding for herself (albeit after receiving information, inter alia, as to the investment risk involved) whether or not the proposed investment or reinvestment was acceptable for her purposes. The loss of that opportunity might well result in an investment being made on behalf of the plaintiff which was unacceptable to the plaintiff and which might ultimately cause loss to the plaintiff. 113 In this respect the evidence establishes that if the plaintiff had been told that the funds were to be invested with BCC she would not have consented. The relevant passages in the cross-examination of the plaintiff include the following:- "Q. If Mr Kwok or Grace Law recommended that you invest the proceeds with BCC you would probably have done as they suggested, wouldn't you? A. I don't think so because I don't want to. I don't know what is BCC. Q. If they had told you that BCC was part of Bank Credit Commercial you would have known what that meant, wouldn't you? A. No. To my mind I only knew about Westpac. I have been dealing with Westpac since I moved to Australia in 1978 so I only know Westpac. Q. You don't know anything about Capita Finance do you? A. No. But he told me that is a very good insurance bond and very safe. Q. Did you know anything about MLC before you invested the money in that? A. No, but I rely upon Mr Kwok's advice. Q. And the advice of Mr Kwok which you relied on was that you should invest moneys there? A. There or MILC. Q. It's probable then, isn't it, that if you had been advised to invest moneys with BCC Australia, you would have done so? A. I don't think I will because it's a lot of money and when I invest with MLC it is only about $45,000 but this is nearly half a million dollars. I don't think I would put it in BCC." 114 In my opinion, there was also, in the present case, a sufficient relationship of proximity in relation to the matters here being considered, having regard, inter alia, to the past and present relationship of the parties and the course of prior dealings between them to which reference has been made above. 115 There was also, in my opinion, arising from the same circumstances, an assumption of responsibility by the defendants upon their acceptance of the plaintiff's instructions, together with, inter alia, Mr Kwok's knowledge from past experience of the plaintiff's requirements in relation to investments, to advise (inform) the plaintiff of the nature of the proposed investment including the investment risk involved, prior to the investment being made (in accordance with past practice) and a reliance by the plaintiff (again in accordance with past practice) who was relatively inexperienced in business matters (and thus vulnerable) upon the defendants to do this. Moreover, in my opinion, there are no reasons of public policy, in the particular circumstances of the present case, why it should be held that such a duty of care does not exist. [There is also the consideration that Mr Kwok gave the evidence quoted above to the effect that it was consistent with his understanding that the defendants should confirm with the plaintiff the proposed investment before any investment was made. This was consistent with the course of previous dealings between the parties and would have engendered in the plaintiff an expectation that that would be done in the present case: see and cf Belsand Pty Ltd v Bridgewater Securities Ltd (1955) Aust Torts R 81-353; Turner v Belsand Pty Ltd (unreported, Fed Ct (Full Ct), 10 July 1997]. 116 In all the circumstances, I am of the opinion that the defendants were subject to a duty of care in tort owed to the plaintiff to advise (inform) the plaintiff of the nature of any proposed investment, including the investment risk involved, as well as the identity of the deposit taker, prior to the investment being made or renewed. 117 This conclusion is also consistent with the authorities dealing with the duties of gratuitous agents, although those authorities deal with such duties at a higher level of generality. Thus Article 44 in Reynolds, Bowstead and Reynolds on Agency (16th ed - 1996) at paragraphs 6-025 is in the following terms: "LIABILITY OF GRATUITOUS AGENTS A gratuitous agent will be liable to his principal if in carrying out the work he fails to exercise the degree of care which may reasonably be expected of him in all the circumstances." 118 Further, as stated above, I am also of the opinion that a non-fiduciary equitable duty to the same effect came into existence between the parties arising from the fiduciary relationship between the parties and including the whole of their past and present professional and personal relationship and the course of prior dealings between them. Those circumstances, in my opinion, plainly gave rise to an equitable (although not fiduciary) duty owed by the defendants to use their best endeavours to protect and advance the interests of the plaintiff, having regard, in particular, to her known requirements in relation to investments. In the context of all the relevant circumstances and, in particular, the course of prior dealings between the parties, that objective and that equitable duty, in my opinion, also required the defendants to advise (inform) the plaintiff of the nature (details) of the proposed investment, including the investment risk involved, prior to the investment being made or renewed so as to give the opportunity to the plaintiff to finally approve or not the proposed investment. However, whether or not any such non-fiduciary equitable duty arose, the result of the present proceedings for the plaintiff remains the same (see later). Standard of Care 119 The precise matters relevant to investment risk which it was submitted on behalf of the plaintiff should have been brought to the attention of the plaintiff by the defendants were as follows, as set out in paragraph 32 of the Outline of Plaintiff's Submissions:- "32. In breach of that duty of care, the Defendants failed to advise the Plaintiff that they proposed to invest the Settlement Cheques with BCC, and in particular failed to advise the Plaintiff prior to the initial investment and each subsequent monthly rollover that (Joyner pages 4-5): (a) BCC was part of the unofficial money market and accepted deposits only on an unsecured basis with no government or Reserve Bank support likely in the event of its failure to meet client withdrawal requests; (b) the risks associated with investing with BCC on a unsecured basis were significantly higher than the risks with other short term investments available; (c) BCC was a relatively small player on the money market with individual customer deposits of less than $50 million and therefore a substantial deposit of over $500,000 by Mrs Yu, representing in excess of 1% of overall non-bank deposits, would exceed reasonable prudential limits for a single investment; and (d) there had been some articles in the press relating primarily to some problems with the overseas parent company of BCC which might necessitate further research into its financial security before making any substantial individual deposit." 120 This submission, in my opinion, relates in substance, to the standard of care relevant to the discharge of that part of the general duty of care in tort that required the defendants to advise the plaintiff of the investment risk involved in the proposed investment with BCC. 121 This submission was sought to be supported on behalf of the plaintiff by allegedly "expert" evidence from a financial adviser, Mr A R Joyner, who made an affidavit to the effect, inter alia, that a licensed investment adviser, or other professional persons (presumably not being licensed investment advisers) who provide investment recommendations or suggestions to clients incidental to their profession, in the position of the defendants, would be acting unreasonably if they failed to bring the above matters to the plaintiff's attention prior to investing or depositing the plaintiff's funds with BCC. 122 Presumably Mr Joyner was intending to convey, at least by implication that, on the stated assumptions contained in his report, the defendants would be acting unreasonably if they failed to bring these matters to the attention of the plaintiff, because it was the practice amongst the class of persons he identified, to "always fully research and explain the nature of the investment being recommended." I say by implication, because Mr Joyner's report was not expressed in terms of what his opinion was in relation to any such practice, but rather was expressed in terms that it would be unreasonable for the identified class of persons in the position of the defendants to act otherwise, the implication being that it was the practice of such persons to act reasonably. 123 In my opinion, appropriate evidence of a relevant practice existing amongst accountants giving investment advice to clients in comparable circumstances, if there was such a practice, if the circumstances were truly comparable, and if it could be established that the practice was general, would be admissible both in relation to the initial question whether a duty of care existed and also as to the relevant standard of care. However, in my opinion, Mr Joyner's evidence was not sufficient to establish the existence of a general practice of the kind sought to be relied upon by the plaintiff if that is what he was, by implication, seeking to do. In my opinion, although I am satisfied that Mr Joyner had some knowledge and experience of the investment advice that some accountants give or gave to some of their clients, I am by no means persuaded that his experience is sufficiently wide to enable him to express a useful opinion as to what is or was the general practice in relation to all such accountants and clients. 124 Moreover, I am, in any event, of the opinion that the relationship between such accountants and their clients is very likely to depend on the particular circumstances of the particular case so as to make it unwise to attempt to generalise about such matters. Relevant, for example, would be the degree of business acumen and experience of the client and the accountant's knowledge of the client's requirements, as well as any particular circumstances that may exist. In the final analysis I am accordingly unable to attribute any relevant weight to Mr Joyner's opinion on either the issue of the existence of a duty of care or the standard of care involved in any such duty in the particular circumstances of this particular case. 125 For the same reasons I am also unable to attribute any relevant weight to Mr. Joyner's opinion to the extent to which his opinion was tendered as being relevant to the claim by the defendants for relief under section 85 of the Trustee Act 1925. 126 Mr P M Simpson, a financial consultant, was called on behalf of the defendants to give "expert" evidence to the effect that on the various assumptions set out in his report, the defendants had acted "reasonably" in placing the funds of the plaintiff with BCC. His conclusion at the end of his report was expressed as follows:- "I conclude, on the assumption that the defendants had an absolute discretion as to where to invest the funds, that at the relevant time in 1990, given the circumstances and facts existing at that time which were known as ought to have been known by the defendants, the placement of the funds on short term deposit with BCC was 'reasonable' ". (underlining supplied) 127 In my opinion, Mr. Joyner's first assumption is not in accordance with the facts in that, in my opinion, the defendants did not, in the present case, for all the reasons discussed above, have an absolute discretion as to where to invest the plaintiff's funds. 128 Further, it is clear that, not ignoring his oral evidence, Mr Kwok was unaware of many of the facts relating to BCC , as set out in Mr Simpson's report, that Mr Simpson says he (Mr Kwok) "ought to have been aware of". What Mr Kwok first said about his reasons for the investment of the plaintiff's funds with BCC Australia is contained in paragraph 17 of his affidavit of 2 June 1998 which is in the following terms:- "PKB had arranged for the investment of two other client's funds with BCC Australia in May and July 1990. It was not my general practice to recommend to clients that they invest in non-local banks when they were local clients but in view of the fact that BCC were offering a good interest rate for deposits at 24 hour call within the range of rates being offered by other banks and other deposits taken at the time, and since I had no reason to believe or suspect that BCC might be in financial difficulties, I believed that BCC was a relatively safe and appropriate investment." 129 Moreover, Mr Simpson did not, even by implication, purport in his report to give evidence of any general practice amongst accountants who gave investment advice as incidental to the practice of their profession, but rather was retained as he stated in his report, as was Mr Joyner, to provide his "opinion based on my experience as a banker, as to whether, on the assumptions listed below at the relevant time in November 1990, given the circumstances and facts existing at that time and which were known or ought to have been known by the defendants at that same time, the placement of the deposits by the defendants with BCC 'reasonable'." 130 Most significantly, however, the question which Mr Simpson was asked to address was not the question which is relevant for present purposes, namely, the question whether it was reasonable for the defendants to invest the plaintiff's moneys with BCC without first advising (informing) her of the nature and details of the proposed investment (including the investment risk involved). The question addressed by Mr Simpson was whether in the assumed circumstances it was reasonable for the defendants to deposit the plaintiff's funds with BCC, quite apart from any question of whether they should first have advised the plaintiff of the nature of the proposed investment (including the investment risk involved). Nor, in my opinion, was the correct question relevantly addressed by Mr Simpson in his oral evidence. 131 By contrast, although Mr Joyner and Mr Simpson were asked to express their opinion on the same question, only Mr Joyner's opinion purported to deal with the relevant question as to whether the defendants should have advised the plaintiff the nature of the proposed investment with BCC (including the investment risk involved) before that investment was made (notwithstanding that I consider, as stated above, that I am unable to give that opinion any weight for present purposes). 132 And in this connection I note that although most of the material contained under the heading "Factual Assumptions" in Mr Joyner's report, is also contained under the heading "Factual Background" in Mr Simpson's report, Mr Joyner's "Factual Assumptions" include and Mr Simpson's "Factual Background" does not include, the following paragraph:- "9. The nature of the investments being made and the possible risks associated with the investments was not explained by PKB to Mrs Yu prior to or at the time of the placement of the moneys with BCC." 133 In all the circumstances, and as was the case with Mr Joyner, I am unable to attribute any relevant weight to Mr Simpson's evidence on either the issue of the existence of a duty of care or the standard of care involved in any such duty in the particular circumstances of this particular case, or on the issue as to the claim by the defendants for relief under section 85 of the Trustee Act 1925. 134 In my opinion, however, it is unnecessary to formulate the precise content of what the relevant standard of care required the defendants to advise the plaintiff in relation to investment risk in the present case since the defendants made no attempt to so advise the plaintiff. It is sufficient for present purposes to observe that the formulation of the terms of the relevant duty of care in effect required the defendants to give the plaintiff information as to the investment risk involved in the investment of the plaintiff's funds with BCC, and that such information should have had regard to the plaintiff's requirements, known to Mr Kwok from the course of prior dealings, that any investment on her behalf should be safe and secure and not involve any risk of loss. The relevant standard of care would, in my opinion, require at the very least that such information should include the giving to the plaintiff of details as to the relative degrees of risk as between various investments at interest, although not necessarily the whole of the information which the plaintiff submits should have been given. As no information of any kind relevant to investment risk was given by the defendants to the plaintiff at any relevant time, it follows that the defendants were in breach in this respect of their general duty of care without it being necessary, as stated above, to determine with any precision the standard of care relevant to discharge the duty of care owed by the defendants. 135 The standard of care required to discharge the duty of care owed by the defendants also required, in my opinion, the defendants to give other details of the proposed investment to the plaintiff including, at least, the identity of the deposit taker as well as the term of the deposit and the interest rate. Breach of Duty of Care 136 In my opinion, as stated above, the defendants committed breaches of their duty of care, in failing to advise (inform) the plaintiff of the nature of the proposed investment with BCC including the investment risk involved prior to the investment being made or renewed. Notwithstanding that I have found that Ms Law did inform the plaintiff that her funds had been invested at interest for a certain term and at a certain rate of interest (although without informing her of the identity of BCC or the investment risk involved). In my further opinion, as stated above, if the defendants had informed the plaintiff of the proposed investment with BCC and the investment risk involved, prior to the investment being made or renewed, the plaintiff would not have approved it and thus not suffered the loss she in fact suffered. The relevant passages from the cross-examination of the plaintiff have been quoted above. 137 It follows in my opinion that the breach of their duty of care by the defendants was relevantly causative of the plaintiff's loss. Contributory Negligence 138 It was submitted on behalf of the defendants that the plaintiff, by her own negligence, inter alia, in failing to inquire as to the details of the investment made on her behalf by the defendants, beyond what she had been told by Ms Law, contributed to the loss she sustained and that the plaintiff's damages should be reduced accordingly. In my opinion, if the plaintiff had made such an inquiry of the defendants she would have been informed of the identity of BCC and may well also have been informed of the investment risk involved in investing with that entity and in either case would have required her funds to be withdrawn and deposited elsewhere, thereby avoiding the loss she sustained. 139 It is true that the plaintiff had other concerns during the relevant period, not least of all serious concerns in respect of her health, but the evidence establishes that those concerns did not make business and social activity impossible. Moreover she knew or ought to have known, from her Westpac bank statements that her funds had not been deposited to the credit of her Westpac cheque account. The plaintiff also gave evidence to the effect that she expected that her funds would have been invested in a Westpac term deposit but she received no documents from Westpac confirming this. On the other hand it was not in my opinion, unreasonable for her to assume that any such documents had been sent only to the defendants. In my opinion, nevertheless, if the plaintiff had acted reasonably to protect her own interests, especially having regard to the relatively large sum of money involved, she would have sought further details of how the funds had been invested including details of the investment risk involved before she suffered any loss and the probability is that she would have directed that her funds be withdrawn from BCC before sustaining any loss. 140 On the other hand, although the defendants informed the plaintiff of the term and rate of interest payable in respect of her investment, they were in breach of their duty in failing to inform her of the identity of BCC and of the investment risk involved in investing with that entity. That failure was in my opinion, a much more significant cause of the plaintiff's loss having regard, in particular, to the professional and personal relationship between the parties, to the relatively large sum involved, to the course of prior dealings between the parties in the course of which the plaintiff had been informed of the details of any proposed investment, including the investment risk involved, prior to the investment being made, and to the fact that the deposit was unsecured, all in a context in which the defendants were aware through Mr Kwok of the plaintiff's requirement that any investment made on her behalf should be safe and secure and not involve any risk of loss. 141 In all the circumstances I am of the opinion that the plaintiff should be regarded as being responsible as to 15% for the loss she sustained as a result of the breach by the defendants of their duty to her. Alleged Breach of Trust under Trustee Act 1925 142 It was submitted on behalf of the plaintiff that the defendants were trustees of the funds of the plaintiff within the meaning of the Trustee Act, 1925 and were accordingly limited to investing those funds in investments authorised by or under that Act. As it was common ground that an investment with BCC was not an investment authorised by or under that Act, it followed that the defendants had committed breaches of trust in so investing the funds of the plaintiff and were liable accordingly. 143 In my opinion, however, as stated earlier, whilst it is undoubtedly true that the plaintiff's funds were held by the defendants on trust for the plaintiff while those funds were held in the trust account of the defendants and, indeed, whilst they were deposited with BCC in the defendants' name, it is plain from the past and present relationship between the parties and from the course of prior dealings between them, and from the terms of the instructions given by Ms McAlpine to Ms Law, which contained no limitation as to any particular investments at interest, that the defendants were not, nor was it the plaintiff's intention that they should be, limited to making investments, on behalf of the plaintiff, which were authorised by or under that Act. There was accordingly, in my opinion no breach by the defendants of any duty to invest the plaintiff's funds only in investments authorised by or under the Trustee Act, 1925. Claim for Relief Under the Trustee Act, 1925 (Section 85) 144 In my opinion, the defendants in the present case are not guilty of any breach of any duty in respect of which they were acting as trustees within the meaning of the Trustee Act, 1925. Rather, in my opinion, the breach which, in my opinion, the defendants committed in the present case was the breach of a duty in tort as described earlier. 145 However, to the extent to which, contrary to my view, the defendants may be eligible to claim relief under section 85 of the Trustee Act, 1925, I am of the opinion that they are not entitled to any such relief by reason of the fact that they did not, in my opinion, act reasonably, although it is common ground that they acted honestly. 146 In my opinion, in all the circumstances of the present case, including, inter alia, in particular, the past and present professional and personal relationship between the parties, the course of prior dealings between them in the course of which the plaintiff had been provided with details of any proposed investment, including the investment risk involved prior to the investment being made, the relatively large sum of money involved, and the fact that the investment with BCC was unsecured, all in a context in which the defendants, through Mr Kwok were aware of the requirement of the plaintiff that any investment made by them on her behalf should be safe and secure and not involve any risk of loss, the defendants did not act reasonably in failing to inform the plaintiff of any details of the investment with BCC, including details of the investment risk involved, prior to the loss being incurred, beyond informing her, through Ms Law, of the term and interest rate applicable to the investment. 147 Having regard to all these considerations it would have been reasonable for the defendants to advise (inform) the plaintiff of the nature of the proposed investment, including the investment risk involved, prior to investing and renewing the investment of the plaintiff's funds with BCC. The failure of the defendants to act reasonably in this way, disentitles the defendants, in my opinion, to any relief to which they might otherwise have been entitled pursuant to section 85 of the Trustee Act. I add that I have also had regard in reaching this conclusion to the conduct of the defendants, including in particular, the conduct of Mr Kwok, in failing to inform the plaintiff immediately of any adverse newspaper publicity concerning BCC of which he became aware, in failing to inform the plaintiff immediately of the appointment of a provisional liquidator to BCC and in failing to take care in the selection of BCC as an investment suitable to the plaintiff's requirements. The relevant passages from Mr Kwok's cross-examination include the following at T335:- "Q. And investments in the unofficial or secondary market were the most risky A. Yes. Q. And BCC fell into the category of unofficial or secondary market, didn't it? A. Yes … Q. Do you recall in November 1990, speaking to anybody in your office about how your firm come to deposit over half a million dollars on trust for Mrs. Yu with BCC? A. Not that I can remember. Q. Do you remember having any discussion in December 1990 about that with any person in your office? A. No … Q. So, is your evidence that you can't remember ever talking to anybody in your office about Mrs. Yu's investment with BCC at any time, at least proper to November 1991? A. Yes. Q. When you say 'Yes", you mean you cannot remember any such discussion? A. I cannot remember such a discussion … Q. Because it wasn't a systematic part of your practice to read in detail the financial press every day for the purpose of obtaining comfort about the investments that you might recommend to your clients from time to time, was it A. It wasn't … 148 (See also the passage from Mr. Kwok's affidavit quoted earlier.) Q. So the fact is, you made no enquiries to satisfy yourself that BCC remained a safe investment for Mrs. Yu at any time in the period between late November 1990 and the appointment of the provisional liquidator on 8 July 1991, did you? A. I did. Q. What enquiries did you make? A. I haven't got a recollection of that. Q. How do you know that you made enquiries then? A. I must have done something, but I can't recall. Q. Did you speak to anybody else in your office about whether or not you should tell Mrs. Yu that a provisional liquidator had been appointed to BCC? A. No. Q. So it was solely your decision not to tell Mrs. Yu until November 1991? A. If not November 1991, it could have been earlier if I had made the trip (earlier). Q. There was nothing to stop you ringing Mrs. Yu, was there? A. There wasn't." 149 Nor did Mrs Law take care in the selection of BCC as an investment suitable to the plaintiff's requirements as the following parts of her cross-examination reveal:- "Q. What did you know of BCC prior to your discussion with Nancy Wong on 16 November? A. Not very much I must admit. Q. What was the extent of your knowledge? A. Just by name only. Q. It's fair to say that an explanation of investment risk to a client of the firm would be something quite outside your expertise? A. That's right, if it is an investment for the client, but at this time it's just a short-term deposit, I understand, very short. That's you know, been pointed to me all along, it's just a very short-term deposit … Q. So did you understand from that instruction that you could place the money on short-term deposit with any financial institution that you selected? A. No, I didn't think as such, I did go to Nancy Wong for instructions." 150 As stated earlier, it was not in dispute that Ms. Wong had no expertise in relation to investments. Damages 151 In my opinion, the plaintiff is entitled to damages to compensate her for the loss she sustained by reason of the breach by the defendants of their duty of care in tort, or, more accurately, the positive duty owed by them to advise (inform) the plaintiff of the nature of the proposed investment of the plaintiff's funds with BCC, including the investment risk involved, prior to actually investing or reinvesting those funds with BCC. 152 In my opinion, the relevant measure of damages in the present case is that amount which will put the plaintiff in the position that she would have been in if the breach of duty had not occurred. 153 The relevant principles in this connection have been expounded, inter alia, in the following passages:- "…[T]he general principle upon which compensatory damages are assessed, whether in actions of contract or of tort … is that the injured party should receive compensation in a sum which, so far as money can do, will put him in the same position as he would have been in if the contract had been performed or the tort had not been committed": Butler v Egg and Egg Pulp Marketing Board (1966) 114 CLR 185 at 191 per Taylor and Owen JJ. "In tort…damages are awarded with the object of placing the plaintiff in a position in which he would have been had the tort not been committed…": Gates v City Mutual Life Assurance Society Ltd (1986) 160 CLR 1 at 12 per Mason, Wilson and Dawson JJ. "The settled principle governing the assessment of compensatory damages, whether in actions of tort or contract, is that the injured party should receive compensation in a sum which, so far as money can do, will put that party in the same position as he or she would have been in if the contract had been performed or the tort had not been committed. Compensation is the cardinal concept": Haines v Bendall (1991) 172 CLR 60 at 63 per Mason CJ, Dawson, Toohey and Gaudron JJ. 154 In my present opinion, if the defendants had not breached their duty to the plaintiff, they, or the plaintiff, would have invested the plaintiff's funds in an interest earning investment which did not, for all practical purposes, involve any risk of loss during the period from the receipt by the defendants of the plaintiff's funds to the date of the plaintiff's first letter of demand before commencement of the present proceedings. 155 I propose to hear further argument and, as appropriate, further evidence, as to what interest rate would have been payable in respect of such an investment, and generally, but I would have expected the rate to be something in excess of the rate payable on short-term Commonwealth bonds and perhaps of the order of the rate payable in respect of short term deposits with a major trading bank such as the Commonwealth Bank, the National Australia Bank or Westpac. I would also have expected the interest to be compounded on say, monthly rests. 156 As from the date of the plaintiff's first letter of demand before action and until payment, I see no reason why the plaintiff should not be entitled to simple interest on the relevant amount of damages, at the lesser of the prime overdraft bank interest rate payable from time to time in respect of commercial loans of approximately $500,000, and the Supreme Court rate payable from time to time in respect of judgments. In my present opinion, the plaintiff was entitled to be repaid an amount equivalent to the amount of her funds together with interest not later than the date of the plaintiff's first letter of demand and there is, in my opinion, no reason why the interest payable thereafter should be at any lesser rate than would be payable in a debt recovery action. 157 It is also the case, in my opinion, that the defendants have committed breaches of their equitable (but non-fiduciary) duty of care, that duty being relevantly co-extensive with their duty in tort, in respect of which breaches the plaintiff is entitled to equitable compensation in the nature of restitution. 158 I am, however, of the opinion whether or not any such equitable duty came into existence, the result in the present case is the same because in the present case, the measure of damages for breach of duty in tort is the same as the measure of equitable compensation for breach of the relevant equitable duty namely, that amount which will put the plaintiff in the position in which she would have been if there had been no breach of duty. 159 The relevant approach in this connection, in the circumstances of the present case, is that reflected in the relevant paragraph in the extract from the judgment of Millett LJ in Bristol and West Building Society v Mothew (supra) which has been quoted above. 160 I will direct the entry of judgment in favour of the plaintiff with costs in due course after the damages or compensation and interest to which the plaintiff is entitled have been decided by the Court or by agreement. ********** Last Modified: 05/07/2001 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. 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