Esplin v Murray [1999] NSWSC 338

New South Wales Supreme Court CITATION : Esplin v Murray [1999] NSWSC 338 revised - 31/08/99 CURRENT JURISDICTION : Common Law Division FILE NUMBER(S) : 10479/94 HEARING DATE(S) : 17/11/97-20/11/97, 3/12/97, 9/12/97, 11/12/97, 16/12/97, 9/2/98 JUDGMENT DATE : 15 April 1998

Brian Richard Esplin PARTIES : Peter F D Murray Peter F Fogarty Torquil J A Murray JUDGMENT OF : Dowd J

LOWER COURT JURISDICTION : Supreme Court LOWER COURT FILE NUMBER(S) : LOWER COURT JUDICIAL OFFICER :

COUNSEL : Mr Biscoe QC Mr Hutley SC, Mr Perram SOLICITORS : Esplins Solicitors Mallesons Stephen Jaques CATCHWORDS : solicitor retainer; breach of duty of care in negligence; damage ; duty to advise client; causation ; novus actus interviens DECISION : Verdict for the Defendant

- 30 - THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

DOWD J Thursday 15 April 1999 File No. 10479/94 Esplin v Murray

REASONS FOR JUDGMENT

1 This action arises out of the purchase by the plaintiff of residential premises in 1990 at Avalon for $260,000.00 and the mortgage of those premises to the Chase AMP Bank ("Chase"), the plaintiff employing the defendants as his solicitors in both transactions, the first named defendant, Peter Murray ("Murray") having conducted the transactions on behalf of the firm of solicitors in which the three defendants were partners. Murray was a personal friend of the plaintiff and his wife. 2 Acquisition of the investment property was unremarkable except in terms of the mortgage which was used by the plaintiff to acquire the property being a loan from Chase for the sum of $234,000.00. Chase was later acquired by the Westpac Banking Corporation ("Westpac") which became the first mortgagee of the subject property. 3 The loan agreement which was secured by the mortgage contained the following repayment provision: "REPAYMENT AND EARLY REPAYMENT (i) The Loan Terms and Conditions are amended by deleting Clauses 14-21 inclusive. (ii) Subject to these conditions, you may repay the loan in full on any day upon which a payment specified in the Repayment Schedule is due for the payment. (iii) You are not entitled to make a part payment. If you repay an amount in excess of the amount required to be repaid as set out in the Repayment Schedule, the Bank shall be entitled to return such excess amount to you and to charge you for the Incorrect Payment Fee. (iv) You acknowledge that in order to provide the Fixed Interest Rate, the Bank has undertaken long term commitments and that the Bank may incur losses in the event of an early repayment or termination of the loan prior to the end of the term. If you repay the loan or if the loan is terminated for any other reason (including termination as a result renegotiation of the period for repayment or the interest rate) Prior to the end of the term you will pay to the Bank an additional fee on the date of such early repayment or early termination as the case may be. This fee is an estimation of the loss (if any) which may be incurred by the Bank and will only be payable when the Bank's reinvestment rate is less than the Interest rate. The additional fee shall be the sum of the amounts calculated in accordance with the following formula for each year from the time of early repayment until the end of the Term of the loan. F = P ( i - ri) t where F = Fee payable P = Principle otherwise due for payment in a particular year. i = The Bank's Reference Fixed Rate Swap rate in respect of principal (P) as set out in the Funding Profile in the Annexure 'A' hereto. ri = The Bank's Reinvestment Rate which is estimated to be the Bank's Fixed Interbank Swap rate, which at 10 a.m. on the date two business days prior to the date for early repayment, the bank would expect to receive upon entering a fixed/floating interest rate swap having a notional principal of A$10,000,00 and a maturity date equivalent to the last day of period t. t = The period in years from the date of early repayment until the end of the year in which relevant amount of principal (P) would otherwise have been due for repayment. (v) If the Reinvestment Rate cannot be determined or if for any reason special condition (2)(iv) is unenforceable you agree to indemnify the Bank from any cost, damage or loss incurred by the Bank as a result of the Early Repayment and the reinvestment by the bank of the amount of principal repaid." 4 On 18 July 1990 contracts were exchanged for the purchase of the property. Chase's solicitors sent Murray a letter of approval and the proposed mortgage in duplicate and on 23 July 1990 Murray requested the stamp duty from the plaintiff and enclosed documents for execution and return including the mortgage and the letter he had received from Chase dated 4 July. Murray's letter stated in part; "The Bank letter dated the 4th July 1990 now constitutes the Loan Agreement and sets out all terms of the Loan. I realise that this document has previously been signed by yourself, however, it is necessary for it to be signed again where indicated in the presence of a witness and retuned to me. Please initial at the foot of each page. The letter sets out the details of the loan including the loan amount of $234,000 and term of 10 years. In particular you should note the following: - a the interest rate is fixed at 15.75% b 2% additional interest is payable for late payment. c the loan must drawn down within 70 days of the 4th July d I am still awaiting advice of the premium for mortgage guarantee insurance e I am still awaiting further confirmation of insurance details f The document otherwise sets out the details previously advised by myself in an earlier letter …" 5 The purchase of the property was completed on 26 September 1990 but in late 1991 the plaintiff put the property on the market retaining the defendants to act for him. An offer of $275,000.00 was received from a purchaser Frederickson which was accepted by the plaintiff. 6 Murray wrote to Westpac requesting a figure for an early discharge of the mortgage and was advised that the cost was $313,161.00 including a prepayment cost of $75,684.00 for early repayment. There then preceded a series of letters on the plaintiff's behalf by Murray with both Westpac and the Australian Banking Ombudsman, in an endeavour to reduce the prepayment costs on the basis, as Murray contended, that prepayment cost constituted a fine or penalty and that Chase had not adequately explained the problems of early repayment by use of examples. 7 Westpac revised its calculations to reduce the prepayment cost to $55,283.00 finally calculating the sum at $59,677.00. 8 The sale to Frederickson fell through as Frederickson had exchanged contracts to sell his own property in anticipation of his purchase from the plaintiff of the subject Avalon residence. That occurred in April 1992. 9 The plaintiff, a senior Qantas pilot, is a married man born 17 December 1946 who, at the time of the acquisition of the property had a teenage child at boarding school in NSW. The plaintiff commenced employment with Qantas on 16 September 1967. He subsequently retired from Qantas as a senior international pilot with the rank of Captain on the twenty fifth anniversary of his employment, namely 16 September 1992 in a letter of resignation of 22 June 1992. 10 Both the plaintiff and Murray gave affidavit and oral evidence in the proceedings and a vast number of documents were exhibited during the course of the hearing. 11 The plaintiff's evidence was that he was aware of the early repayment provision but did not understand it. He was clearly aware that there was some sort of penalty, the plaintiff having some business experience but the clause as set out above is not one that would be readily understood by a layman nor readily applied by other than someone involved in mathematics or an advanced high school student. 12 Neither party had a very clear recollection of the precise terms of the several conversations. 13 On 9 March 1992 the plaintiff faxed his financial adviser John Stallman of Bongiorno and Partners raising a series of issues about the plaintiff's financial situation subsequent to the plaintiff's discovery. He asked Stallman to "discuss matters with my solicitor, Peter Murray … and then let me know what option seem best" 14 In that letter he further said; "…I am happy for you to provide Peter with any details whatsoever in relation to my affairs. He has my power of attorney and knows something of my financial situation but not the extent of the problems - and he would need the full information in order to come up with the best possible suggestions from the legal point of view. Perhaps a copy of the financial statement you have prepared for me would be a good place to start" 15 The plaintiff outlined to Stallman his three options which were to retire from Qantas, to seek a moratorium on repayment of his debts for a period of two years or bankruptcy. He asked that Stallman discuss the matter with Murray. He said he wished to avoid retiring from Qantas. He stated to Stallman that the falling through of the sale of the house had greatly aggravated the position. He discussed his debt to his father and other creditors. On the same day he sent a fax to Murray about the sale of the Avalon property falling through. He, without outlining to Murray the full extent of the options, asked Murray to ring Stallman to discuss his financial situation raising the possibility of a reletting of the Avalon property to further the negotiations with the Bank. He did not directly ask Murray to advise on the matters the plaintiff had raised with Stallman. He indicated he would be away from the United Kingdom where he was then living for short periods and that he would come back to Murray. 16 Murray subsequently on 11 March 1992 replied to the plaintiff by letter discussing Murray's negotiations with Westpac, including the possibility of the plaintiff paying the whole of the proceeds of the property to Westpac. 17 The following day John Stallman faxed Murray. In that fax Stallman pointed out to Murray that selling the Newport property did not solve the plaintiff's financial problems and that the plaintiff had a $23,000.00 deficit per annum on his current lifestyle. Stallman stated that his resignation was to be avoided. He set out the detail of the plaintiff's financial problems in an attachment to the fax to Murray. Stallman wrote to Murray the following day, being 13 March 1992 indicating that he concurred with Murray's suggestion concerning extinguishing the loan on the Newport property but pointing out the problems of the plaintiff's annual deficit of $23,000.00 per annum and suggesting the only solution was to reduce annual family costs. Notwithstanding the unreality of such a suggestion neither Stallman or Murray specifically mentioned bankruptcy or composition with creditors in the fax from Stallman to Murray or referred to the issues in the letter to Stallman from the plaintiff. 18 On 22 March 1992 the plaintiff sent Murray a somewhat friendly fax talking about his approval for Murray proceeding with the negotiations with Westpac in the letter he said: "The suggestions you raise in that letter seem to me to be as good a direction to proceed in as any, at this stage of play. Now, that we appear to have lost Fredericksen, I have no idea whether or not another buyer might be readily available, but quite honestly, given the current state of my finances, it seems to be the only viable course. I am loathe to make a precipitate departure from Qantas unless there really are no alternatives, and it would seem that they are not entirely exhausted just yet." 19 On 18 May 1992 the plaintiff further wrote to Murray in the following terms; "Just a brief note to keep you up to date with my thinking, such as it is on the current state of play vis-a-vis Westpac, Palmgrove Road ect. I feel that it seems to be unlikely that the house is going to be sold in a hurry, on present indications at least. If I'm right, and that is the case, then I imagine that Westpac's patience will be sooner or later exhausted. What I propose is to continue with the status quo no longer than until the end of September. If the house has been sold by then, well and good, but if not then I feel at this stage that my best course of action would be to retire gracefully (or at least as gracefully as possible !) from Qantas, and pay out any current overdue amount then owing on the mortgage to the bank. At this stage, at least, I seem to be reasonably well assured of one flying job or another for at least the next couple of years, and it would be more than pleasant to climb out from under the debt mountain. " 20 The next part of the letter stated; "This may well arrive after you and Trish depart for France…" 21 The plaintiff's evidence in the hearing was that it was in May 1992 that he decided to resign from Qantas. He had already decided to take leave of absence from Qantas for a period from late 1991 to take up employment with Air Seychelles. 22 On 6 July 1992 the plaintiff sent a fax to Murray advising that the plaintiff understood the property was unlikely to increase in value and that he should sell for $10,000.00 less than the proposed sale to Fredericksen and thus for the price of $265,000.00. The letter went on to say; "Mr Malcolm also advised, I am indeed retiring from Qantas in September which will allow me to bring all outstanding matters up to date with the bank. As I will still be gainfully employed, I am hoping that they will allow me to transfer the mortgage to a more suitable investment property. My proposal would be that I would have a far greater equity in whatever property I may wish to purchase, which should keep them happy as their interests will be more adequately protected. At this stage my idea is only putative, as I haven't been through the whole problem in any depth as yet, but the idea of paying the bank a substantial penalty in order to pay out the mortgage still holds very little appeal, particularly as there are only eight more years to run on the mortgage, and the property market remains fairly depressed. Perhaps you could sound Malcolm out on the subject. At this stage I shall either continue to work for Air Seychelles or alternatively I have a job offer from a new Taiwanese Airline. I will be in Taipei from July 12th until 22nd and I will let you know the outcome when I return, least life is never dull at the moment, although both Celia and I are starting to wish that it might be just a little more so!" 23 The balance of the letter referred to Murray visiting France and other inconsequential matters. 24 Murray then continued to endeavour to negotiate with Westpac to prevent the incurring of the penalty. Murray indicated that he had spoken to Malcolm Cameron at the Bank, he being the person referred to in the plaintiff's previous letter and indicated that it would be possible not to have the loan repaid on the sale of the property and that the loan could be held and transferred to a new property provided the plaintiff was able to service the loan. Murray then continued to conduct the plaintiff's sale of the Avalon property for $265,000.00 25 The plaintiff then entered into an arrangement with Westpac whereby the mortgage and his other loans were eventually extinguished under a compromise agreement. 26 The plaintiff then said at p. 51 of the transcript under cross-examination; "Q: Now, it is far to say that the next step so far as your involvement is concerned. Please correct me if I am wrong, is that you received a letter from Mr Stallman on 13 March 1992. A: Yes, that is correct. Q: And he tells you that Mr Murray has been in contact with him ? A: I believe he says he has been in contact with Mr Murray, yes. Q: There has been contact between them, he says that he thinks Mr Murray's suggestion of trying to negotiate with Westpac was a sensible one ? A: Yes. Q: he then attaches some re-worked figures and I will come to those in due course. You see, it was apparent to you when you received this letter that you had received no advice in relation to the question of bankruptcy or dealing with your creditors at all, correct ? A: Correct. Q: It was apparent to you that you had received no advice one way or the other concerning bankruptcy ? A: That is correct .….. Q: It was apparent to you you had not received any advice one way or the other about the question of bankruptcy ? A: Correct .… Q: It was apparent to you you had not received any advice one way or the other about the question of a moratorium with your creditors ? A: That is correct. Q: IT was apparent to you when you received that that this was a strategy for going forward that was being put to you ? A: It didn't look like much of a strategy. Q: You didn't believe it was much of s strategy ? A: I think it addressed the negative. Resignation was the wrong thing to do. Q: Lest there be any ambiguity, it was apparent to you that what Mr Stallman was saying he thought at that time Mr Murray's strategy of negotiating with the bank was a sensible one ? A: Yes. Q: It was apparent to you that he was suggesting that you should seek to reduce your annual family costs, if possible ? A: Yes. Q: And that was a far better strategy option than resignation ? A: Yes. Q: He wasn't telling you that bankruptcy wasn't an option, was he ? A: No Q: Wasn't telling you that some other moratorium with your creditors wasn't an option ? A: No. Q: He wasn't addressing that issue at that time ? A: That is correct. Q: And you were conscious of that ? A: Yes. Q: And the way forward, insofar as it involved continuing negotiations with Westpac, was one which you gave instructions to pursue ? A: That is correct. Q: Because it seemed to you as a strategy to deal with the problem at that time ? A: That is correct. 27 The plaintiff in evidence at p.55 of the transcript, still under cross-examination; answered the following questions as follows; Q: Now did you know then that you were coming to Sydney in May ? A: I am not sure because - no. I don't recall. Q: But you knew it was critical before making a step of retiring to get legal advice about it, didn't you ? A: That is correct. Q: You knew you hadn't had that legal advice ? A: That is correct. Q: And of course, you knew before you ultimately decided to retire in may, didn't you ? A: I could have made the decision by may that there was no other option, that is correct. Q: And you knew you had no legal advice about bankruptcy, didn't you ? A: I did. 28 In relation to the above letter of 18 may 1992 the plaintiff said that he wasn't sure whether Murray would receive the letter before he left for France. He said that he had visited Sydney in May or June of 1992 and said that he had consulted a new financial adviser. 29 His evidence then at p.59 was that he had decided by 29 may to leave Qantas and he was asked at p.59; "Q: You did that knowing you had received no advice about the options or bankruptcy ? A: That is correct. Q: Knowing you had received no advice about another question of compensation with creditors ? A: that is correct. Q: Knowing that neither of those options had been ruled out ? A: Correct. Q: And knowing it was critical to Westpac on making that decision to have such advice ? A: That is correct." 30 He admitted at p.60 that he knew that Murray was pursuing negotiations with Westpac and that Mr Stallman agreed with that course. The plaintiff then admitted that he did not seek his new financial adviser's advice about the question of bankruptcy. At p.63 31 The plaintiff then gave evidence at p.64 as follows; "Q: And you didn't suggest to Mr Murray that you were awaiting from him any advice concerning bankruptcy or any other composition with your creditors ? A: At that time, no. Q: In fact, once you made the decision you approached Westpac ? A: That is correct." 32 In the course of the proceedings there was evidence both in affidavit and in correspondence, in particular in a fax and in a letter to John Marcarian, in which the plaintiff discussed his plans to become a non-resident in Australia to endeavour to improve his tax position. He had previously written to his financial adviser Mr Venn O'Neill of Bain & Co on 23 July 1992 stating that he had decided to retire from Qantas and to enter into an arrangement with an organisation that would permit him to fly as captain on a contract basis for the then new Taiwan Airline "Mandarin". He then discussed his tax affairs and his proposal to offshore for tax benefits. 33 The plaintiff's evidence was that from the monies he received from Qantas a sum of approximately $560,000.00, he extinguished his various debts and acquired a property, with a substantial deposit, in his wife's name. He was able to extinguish a debt of honour to his father. 34 On 25 August 1992 the plaintiff thanked Murray for all of his assistance and for "holding the fort". The plaintiff endeavoured in my view unsuccessfully in his oral evidence to explain his thanking of Murray by saying that he was emotionally shattered at the time of writing the letter despite the fact that he was still flying a plane which the plaintiff admitted was not a good idea. The Issues for Trial 35 The parties in these proceedings have agreed that the specific matters of fact and law which are really in dispute are:- "1. The existence of a duty on the part of the Defendant to advise the plaintiff in relation to the early repayment provisions of the Chase AMP Loan Agreement of July 1990. 2. The existence of a retainer and/or a duty on the part of the Defendant to advise the plaintiff generally on the purchase of an investment property and the financing of same in 1990. 3. A retainer and/or a duty to advise the plaintiff on the part of the Defendant to act on and resolve the dispute as between the plaintiff and Westpac Banking Corporation Pty Limited in relation to the early repayment provisions of the Chase AMP Loan Term Sheet of July 1990 and so as to provide advice to the plaintiff resulting from the existence of the early repayment provision aforesaid. 4. The existence of a fiduciary duty or a duty of care on the part of the Defendant to advise the plaintiff as to the possibility of a potential claim for negligence against the defendant if the Court is satisfied that the defendant failed to advise the plaintiff and had a duty to so advise with respect to the early repayment provisions of the Chase AMP Loan Terms Sheet of July 1990. 5. Whether the Defendant breached the alleged duties referred to in paragraphs 1 to 4 above. 6. Whether the existence of the early repayment provisions of the Chases AMP Loan Term Sheet of July 1990 and the advice or lack thereof provided by the Defendant to the plaintiff in respect of the resolution of the dispute with the Westpac banking Corporation Pty Limited in respect of the aforesaid provision is causally connected to the Plaintiffs retirement from Qantas and whether the plaintiff's retirement from Qantas so as to take advantage of his superannuation was reasonably foreseeable in the circumstances of the existence of the early repayment provisions aforesaid and the advice or lack thereof provided by the Defendant to the plaintiff with respect thereto." 36 There is also the question of quantum and the assessability to taxation of any amount awarded by the court to the plaintiff in respect of the damages claimed. The duty to Advise the plaintiff as to the Mortgage 37 The plaintiff contends that the defendants failed to exercise reasonable care and skill in advising him as to the unusual and potentially very onerous early repayment clause on the fixed term loan agreement. 38 It is contended on behalf of the defendants that in fact Mr Stallman was the person on whom the defendant relied concerning matters relating to the mortgage on the loan to acquire the Avalon property. It is noteworthy that the plaintiff chose not to call Mr Stallman to explain Stallman's evidence about the circumstances of the creation of the loan or to call him to prove the advice Stallman gave to Esplin. The contention of the defendants is that Mr Stallman prepared the loan application. 39 The plaintiff's evidence was that there was no explanation by Murray of the early repayment clause other than in very general terms to the effect that there was a potential for a repayment fee if interest rates moved. Murray's evidence was that he had one discussion about the plaintiff about the term of the proposed loan agreement and that it was by telephone. His evidence was then that in July 1990 the plaintiff told him of the negotiation of an interest rate one point below the market and Murray's evidence then was; Murray: "I understand that, but interest rates are high and may well fall. If this happens, you will be effectively locked into the mortgage as the loan is a ten year loan. If rates fall you may not be able to get out of it." Plaintiff: "I don't mind, that's the downside I'll have to pay for getting an interest rate below the present market." 40 The plaintiff admitted that Murray may have said the words he claimed to have said but doubted that he would have said "if rates fall you may not be able to get out of it" Murray's affidavit evidence was that he raised the early repayment clause in the mortgage. It should be noted that the early repayment clause was not in the mortgage but in the loan term sheet attached to the loan agreement. This is a not uncommon arrangement for banks to have a loan agreement of which the mortgage security is a component of that arrangement. It is the loan agreement that constitutes the arrangement. The mortgage secures the debt loan. Murray's evidence was that the plaintiff had discussed the loan arrangements with someone from Chase or a personal loan adviser and that in effect he did not have an obligation to advise in detail. 41 I appreciate that a busy solicitor may have difficulty if it is not his practice to make notes that conversations will tend to blur as a matter of recollection. It is however noteworthy that Murray's letter of 23 July 1990 particularly drew the plaintiff's attention to six aspects of the plaintiff's loan agreement all of which were already known to the plaintiff and were in fact quite perfunctory in respect of an explanation which a mortgagor requires on a loan agreement or mortgage. It is clear from the correspondence which Murray subsequently had with the banking Ombudsman that Murray did not even then, notwithstanding that he was aware that the repayment clause was a problem. 42 The obligation of a solicitor as to record keeping is referred to by senior counsel for the plaintiff in Jackson and Powell on Professional Negligence (4th ed. 1997, Sweet & Mawell), paragraph 4 in the following terms; "The importance of attendance notes and written communication However admirable and comprehensive the advice which a solicitor gives, it is of no benefit to his defence unless it can be proved what advice was given. The solicitor is unlikely to recall after a period of several years what advice he gave to his client on a routines matter. The best advice he can do is to describe his usual advice in the particular circumstances or to speculate as to what he 'must' have said, which is unlikely to carry as much weight as the recollection of the plaintiff. There is no substitute for a proper attendance note, recording the gist of the advice which was given. The lack of attendance notes has materially increased the number of successful claims which are brought against solicitors." 43 I accept the plaintiff's evidence that neither Chase nor the plaintiff's accountant nor Murray advised the plaintiff about the onerous provisions of the early repayment clause. The clause is complicated and is not readily understood without examples being given and requires a fairly comprehensive knowledge of mathematics to be understood. If a solicitor is retained to advise on a loan agreement or a mortgage, it is the duty of that solicitor to ensure that the mortgagor understands such a provision. It is clear that both parties realised that there could be a financial detriment in the volatile market of the times for early repayment but Murray failed to ensure that the mortgagor appreciated the consequences of a need to repay earlier that the full term of the mortgage. 44 If a formula such as that in the Chase loan agreement is beyond the financial skills of the solicitor it is clearly the solicitor's duty to ensure that a borrower understands the financial consequences. If necessary the advice of some competent financial adviser may have to be brought in by the solicitor. The manner in which Murray subsequently wrote to the banking Ombudsman demonstrated even at that stage that he did not fully appreciate the nature of the repayment clause even though it had been brought to his attention at that stage that there was a serious financial consequence to the plaintiff. If he didn't understand the clause when he wrote to the Ombudsman, as he clearly didn't then he couldn't have explained it to the plaintiff in the first place in mid 1990. 45 Murray's evidence supports the plaintiff's contention that Murray failed to adequately advise in that Murrays endeavours to excuse his own failure by contending that the plaintiff had sought other financial advice or had been advised by the bank. It cannot be the case that a solicitor retained to act on a mortgage can exonerate himself from the obligation to advise a client unless he personally ensures that specific mathematical and financial advice is given to ensure that the mortgagor understands any advice given by some independent adviser. 46 There was a disturbing tendency in his oral evidence for Murray, being a solicitor, to improve the evidence given in his affidavits. One would expect a solicitor to set out fairly precisely the terms of conversations in affidavits. Claims on behalf of the plaintiff that were made in his oral evidence and statements were that additional to that which was put in the affidavit and thus Murray's evidence lacks credibility. 47 I find that Murray was in breach of his contract of retainer and negligent in the carrying out of his duty as a solicitor to the plaintiff. He had a duty of care requiring a full explanation and the consequences of the documentation: Fox v Everingham (1983) 50 ALR 337. A solicitor is negligent in failing to advise a plaintiff adequately of the risks faced in the clause of a document in respect of which he has been retained to advise: County Personnel (Employment Agency) Ltd v Alan R. Pulver & Co. (1987) 1 All ER 289 (CA). 48 The difficulty about the consequences of the breach of the obligation to explain the terms of the loan agreement and mortgage is that, if the loan continues full term or substantially full term, no financial consequences may flow to the plaintiff. Early repayment is a contingent damages provision in the nature of a "springing use', in that the cost to the plaintiff only arises in certain circumstances applying such as early repayment in a financially detrimental market. The act of negligence does not sound in damages, if the mortgage is paid out full term or assigned to another property there is no damage which flows and in that circumstance. There can be no damage awarded to the plaintiff. If the contract of retainer of a solicitor is breached, as I have found, there is no entitlement for compensation unless circumstances arise to entitle the plaintiff to compensation for loss. 49 For the plaintiff to succeed in damages in tort or contract he must demonstrate that the loss for which he seeks compensation arises from the breach of duty or breach of contract on behalf of the defendants. I find the existence of a duty on the part of the defendant s to advise the plaintiff as to the early repayment provisions of the loan and that duty on the party of the defendants to advise generally on the purchase of the property and the financing of the same. I find that the defendants breached that duty. I am unable to find that the plaintiff has demonstrated any financial loss arising from that breach. Defendant's failure to advise after conflict had arisen 50 The plaintiff further contended that the defendants acted for him when they were in a position of conflict and potential conflict and that the defendants should have advised the plaintiff he had a potential cause of action against him and that he should obtain independent legal advice. The plaintiff further contended that Murray had failed to advise the plaintiff properly as to the alternatives open to him in his dire financial circumstances. 51 On 14 February 1992 the plaintiff sent Murray a fax making it clear to Murray that there was some sort of accusation against Murray and indicated a potential dispute. It did not however occur to Murray that a conflict of interest may have arisen when he received the fax. Murray's evidence, which I accept, was that he was "going flat out trying to get him out of the problem." It is unfortunately common in legal practice that solicitors who are negligent will continue to act in a matter where a conflict has arisen and independent advice should be advised. 52 Even if Murray was not aware of his failure to advise the plaintiff concerning the mortgage, on him becoming aware of the enormous pay out problem some awareness should have dawned on him. On receipt of the fax of 9 March 1992 from the plaintiff to Murray and on the subsequent receipt of the fax by Murray from Stallman, Murray would have become aware of the plaintiff's concern about bankruptcy. At that point in time he would not have had all of the knowledge which Stallman had which is evidenced by the plaintiff's note to Stallman and the consequences of the bankruptcy on the employment with Qantas had not been fully set out to Murray by the plaintiff. 53 I do not accept the submission on behalf of the defendant that Murray could not have done otherwise than to negotiate with the bank in the discharge of his duty to the plaintiff. The defendants contend that there was no conflict of interest. Clearly if the question of Murray's breach of duty in relation to the loan repayment, which I have earlier found, has been established was brought to the attention of the plaintiff that may have made the plaintiff aware of a cause of action against Murray and his partners. This, however, would not realistically have enabled the plaintiff to solve his financial problems A cause of action against a solicitor is fraught with difficulty particularly where the cause of action does not sound in damages since, at that stage, no damages had arisen and may never have arisen. The general financial problems of the plaintiff would still have remained. Clearly Murray acted correctly in endeavouring to resolve the matters with the bank, if he had not been the solicitor who had failed to advise on the mortgage. It may well have been that the plaintiff, whose evidence was that at one stage that he wished to retain the property, as his residence, may have proceeded with the original transaction in any event even if he had understood and had properly explained to him the repayment terms of the mortgage. The conflict of duty on the part of Murray and failure to explain that conflict of duty if he had understood it does not give rise to a cause of action of itself against Murray unless it can be shown it is compensable. Even if compensation were due, it would take years to recover that sum. There was therefore no loss of a financial opportunity at that stage. 54 It is contended by the defendants that it is not enough to establish a breach of fiduciary duty simply to put forward a possible conflict. It is put that it must be shown that the acts of the solicitor said to constitute the breach of duty were deliberate in the sense of actively preferring his own interests over those of his clients: Macedone & Ors v Collins (unreported NSW Court of Appeal 20 December 1996) in which Lord Staughton adopted a passage from the judgment of Crystal & West Building Society v Mothew ( 1997) 2 Weekly Law Reports at p.237 where it can held that conflict must be intentional. 55 I consider, contrary to the defendant's submission, that there was a conflict but in the context of this case I do not see that any consequence flowed from any breach of fiduciary duty or other duty. Nothing could have been done to attain further funds for the plaintiff. The defendant continued to act in relation to the mortgagee quite successfully in the plaintiff's interests and thus any breach of fiduciary duty did not give rise to an entitlement to compensation in the plaintiff. Failure to advise on bankruptcy or creditors' composition 56 The plaintiff contends that the failure of the defendants to advise him in relation to the bankruptcy or composition with creditors arose from the fax to Stallman and the fax to Murray both of 9 March 1992. For the plaintiff to succeed in establishing a contract of retainer or a breach of solicitors duty of care, the onus is on the plaintiff to show that in fact there was an intention to create a contractual relation of solicitor and client as to this particular advice. The issue was raised through Stallman with Murray however the failure to hear Stallman's evidence does not make it clear the nature of that conversation and the instructions Murray received although it is clear that some few days later Murray was aware of the terms of the note to Stallman and the request contained in it for Murray to give advice. None of the subsequent communications, oral or in writing or fax, from the plaintiffs however, evidence an intention that Murray was retained to carry out the obligation to advise on bankruptcy or a composition with creditors. 57 I have outlined in the earlier part of this judgment a series of statements which the plaintiff gave in his oral evidence under cross-examination that he did not pursue the matter or bankruptcy with Murray further. Indeed as outlined above he even thanked Murray for "holding the fort". If there was a period wherein the duty arose on the part of Murray to advise the plaintiff, that opportunity closed fairly promptly on the plaintiff's failure to pursue the matter with him. Murray made it fairly clear that his immediate action was in relation to the mortgage itself. It seems to me a clear inference that after Murray's conversation with Stallman that Murray did not feel he had a duty to advise in relation to bankruptcy or a composition with creditors. The subsequent conduct of the plaintiff makes no reference until very much later in the year to any supposed duty. 58 It is clear that in the few weeks from early March to the middle of May 1992 the plaintiff, who had been considering arranging residence overseas to work with other airlines, had decided to leave Qantas. Obviously he did that reluctantly but his financial problems did not arise out of the loan agreement on the Newport property as such, but arose from the fact, as his accountant Stallman had made it clear that he was living considerably beyond his means. the plaintiff did not come back to Murray to pursue the question of bankruptcy or composition advice and I find that there was no clear retainer and no proper instructions to Murray to advise in relation to bankruptcy or a composition with creditors other than to advise generally and explore the various opportunities. The ready acquiescence by the plaintiff in the course of action taken by Murray underlines his approval of the action taken by Murray. Any obligation to advise as to bankruptcy or a composition, if it had arisen, no longer applied. 59 The decision, therefore of the plaintiff to retire from Qantas to resolve all of his many financial problems as outlined in evidence was an action taken by him without advice and in the absence of a request for alternative advice. The plaintiff in the letter of 18 May 1992, where he realises that Murray may not receive his later before his visit to France in mid 1992 demonstrates an absence of intention to pursue his earlier discussion about alternative remedies, to resignation and negotiation with the banks, which Murray was carrying out on his behalf. 60 Even if there were a failure on the part of Murray to advise in relation to both of those matters, if a clear contract of retainer had been established, and the relationship of solicitor and client in relation to that specific matter had arisen, the actions of the plaintiff in giving notice of resignation to Qantas on 22 June 1992 having made that decision in May 1992 results in a failure on the part of the plaintiff to establish any damage flowing from the supposed failure on the part of Murray. The plaintiff's actions broke the chain of causation. 61 The few weeks from the discussions between Stallman and Murray in March 1992 and the decision of the plaintiff to resign from Qantas and thus result in his financial problems does not resolve any loss on the part of the plaintiff. It has not been demonstrated by the plaintiff that there was, in any event, any other choice for him, other than to resign from Qantas. However reluctant he may have been to take that course he had been exploring other opportunities to earn an income as a pilot and to reduce his tax position by establishing a non-Australian residence and took action to rearrange hos own financial circumstances and has not demonstrated to the court that the resignation from Qantas was a consequence of any failure on the part of Murray, to carry out his duty as a solicitor to advise on all alternate remedies. The plaintiff simply acted off his own accord. His financial position was effected, in part, by the repayment provisions of the Westpac loan but the retention of the Avalon property or the substitution of another security has not been demonstrated on the onus the plaintiff must dischrage to be the reason for the termination of the employment with Qantas. 62 The plaintiff clearly approved of the actions of Murray in concentrating in resolving the Westpac negotiations, at the time that he decided to resign from Qantas and actually resigned, there was then no obligation on the part of Murray to give the advice as to alternative arrangements Causation 63 The plaintiff is obliged to show any wrongful part on behalf of the defendants caused the damage complained of. I reject the submission of the plaintiff that any breaches of duty in 1990 or 1992 were causative of the plaintiff's decision to retire from Qantas. The plaintiff submits that in any fiduciary breach claim against Murray the plaintiff does not have the same burden to prove causation as with common law claims. No loss however has been demonstrated on the part of the plaintiff which was caused by the defendant's conduct. The rule in Brickenden v London Loan & Savings Co [1934] 3 DLR 465 does not apply in that it has not been shown that any damage has flowed from the defendant's actions. The plaintiff had not shown that he has suffered a breach arising out of the transaction or circumstances in which the breach was material: Everest v McEvedy (1996) 3 NZLR 348 at 355. 64 The authority of Medlin v State Government Insurance Office (1994) 182 CLR 1 and Marche v Stramere (1991) 171 CLR 506 establish that the plaintiff must establish that the requisite causal connection exists between a particular breach of duty and particular loss of damage on the basis of the facts and circumstances on the particular case to be resolved as a matter of common sense and experience.